NORWICH - As the repercussions of the COVID-19 health crisis took effect, NBT Bank found itself at the center of the response as businesses and customers turned to their financial advisors on how to weather the economic fallout and navigate relief programs.
“COVID made us focus on what’s most important, our employees, our customers, and our communities, and that’s where our investment was targeted. It was technology-based in terms of ensuring that we had all the products and services that our customers need to use in this kind of environment, so we did a very significant upgrade into our mobile platform,” said NBT Bank President and CEO John H. Watt, Jr.
NBT made all its basic services available on a real-time basis through an upgraded mobile app, so customers could get the same services as if they were at their local bank. The bank had been investing in technology and online services for a number of years before the pandemic, following a trend of demand coming from an increasingly tech-savvy customer base. Being well positioned with technology, at least when it came to online customer services, the bank had a solid foundation to expanded upon.
“We had a mobile platform that we enhanced and that made us accessible to customers who did not want to take the risk of being out and about or in our branch bodies. That was very significant and it had been planned for years and we accelerated it to make sure that it was available on a timely basis,” Watt said.
Making adjustments for staff to perform their work roles online was more of a challenge, so NBT Bank made significant investments to support a remote working environment. With more than a 1,000-plus employees, Watt said it was critical that staff working remotely had a reliable technology platform and that required NBT Bank to invest in a number of upgrades.
The bank bought 750 enhanced laptop computers. “To replace the equipment that some of our folks were using at home that was less user-friendly,” he explained.
The bank sought to keep staff feeling closer where possible, favoring face-to-face virtual engagements.
“So, you know there’s 750 people who have the capacity to do what we’re doing right now, which is to participate in virtual meetings in real time, live faces on the screen. It’s really important to their productivity level,” said Watt.
Banking was deemed an essential service during the lockdown, so NBT also invested in installing safety equipment at their facilities. They installed plexiglass, adopted CDC advised policies such as social distancing, and purchased personal protective gear for onsite staff. They deployed the measures across all 142 branches and at their core operations centers in Norwich, Oneida and Canajoharie.
“A lot of the playbook for 2020 was kind of null and void come March,” said NBT Executive Vice President and Consuming Lending Executive Shauna M. Hyle.
She said NBT Bank was committed to improving its online consumer lending space. “We planned to implement a brand-new platform for all of our home loans and this enables our borrowers and customers to have an enhanced online application portal. That allows them visibility into the status of their loans, and ultimately, get them to the closing table more quickly.”
COVID accelerated the adoption of digital services. She said this was even more important in a suddenly changing market with low interest rates and an all-time high for mortgages.
“Getting out ahead of that continued commitment to investment was really important, and we really profited,” said Hyle.
The bank also embraced the signing of legal contracts digitally, through a secure platform called DocuSign. The move was ahead of others in the industry during COVID and was another example of the how investing in technology had paid off greatly during the pandemic.
NBT Bank was also one of the first banks able to develop secure online signatures for most services by March of 2020.
“Not all banks had gotten there by March 2020,” said Watt. “We were in the final stages of getting there but it was taking time, so we accelerated that because we wanted to make sure our customers were safe and did not have to come to a conference room to sign mortgage documents and could use the DocuSign technology to sign other contracts with us and again allow digitally to provide efficiency and safety,” said Watt.

Advice on PPP loansand relief

One of the key roles NBT Bank played for many was helping businesses apply for Paycheck Protection Program, or PPP loans, that were passed as part of a relief measure by the federal government. Part of that relief helped provide additional employment benefits to laid off workers and spared businesses additional expenses.
“We made over 3,000 PPP loans for 540 million dollars and those loans supported over 60,000 jobs,” said Watt. Many of those jobs and businesses were here in Chenango County. Most recently, round three of the PPP loans began on Jan. 19.
“Our focus is on Main Street here, to ensure that restaurants and other retail businesses that are severely impacted by the pandemic have a bridge to the other side of the vaccine and a bridge to an opportunity to recover,” said Watt.
Calls came in to the bank from customers asking, “How do I open my business digitally and safely?”
The bank trained staff to respond to COVID related relief calls. Staff at the bank’s call centers all began working remotely, and answered customers’ questions from first-hand experience, with the bank learning from its own adaptations and sharing its technology and know-how with smaller area businesses.
“It was seamless and you would not know where they were sitting,” said Watt. The bank helped small businesses and commercial customers adapt to the same technology and challenges. NBT provided their online banking platform to ensure clients could handle deposits, loans and withdrawals through the website, or on mobile devices.
“Quite frankly, there were no glitches of any materiality or significance while we were doing that,” said Watt, praising the bank’s staff.
While working and providing services remotely was a relatively great success, Watt said it was not as sustainable or as productive as working alongside one another.
“Over the long run, we need to get back together as a team once it’s safe for us to do that, and we intend to do that. And, I think that will ensure longer term, higher levels of productivity, but in the short run everybody has stepped up on our team to ensure those customers are supported,” he said.
A number of businesses without comparable knowledge or the resources to keep up with the offered relief turned to NBT for help to ensure their employees could get aid. He said the bank took those confidences very seriously and knew the community was looking to them for help.
“We are glad we could be that trusted advisor and you don’t earn that position easily. Your reputation out there is on the line and we’ve got to make sure we’re giving you the right advice because it’s really critical to your success,” said Watt. “We have to earn that respect every day.”

A pandemic plan in waiting

In mid-March of 2020, it became apparent that the world was going to significantly change as New York State issued shelter in place orders and businesses tried to work remotely.
“Our technology platform allowed us to migrate to those environments, but we have a very, very detailed and living contingency plan and disaster recovery plan, which dictates how we address various kinds of challenges. Clearly a pandemic would be one we plan for,” said Watt.
About 10 years ago U.S. regulators raised an alarm following an outbreak of a flu-like virus from Hong Kong, and they told larger financial institutions to develop emergency plans just in case. So NBT bank had a pre-established pandemic plan that called on a committee of experts to review and execute a response.
The committee is led by the bank’s chief risk officer and cybersecurity officers.
“It brings together all of the various constituencies across the bank and there is a very thoughtful and ordered itinerary and agenda of items that we review to determine the safety and soundness and security of the banking platform and then of our employees and then of our customers. It maps what we need to do going forward,” explained Watt.
The committee quickly formed and tailored their plan to respond specifically to the fall-out from COVID.
“Clearly everybody was at a heightened sense of concern because nobody knew what it meant to be in an environment like that,” said Watt. “You know, we all have to sit there and take a deep breath and remember that we are responsible for half a million customers, 275,000 plan participants in our Retirement Services Administration business, almost 2,000 employees and that’s a very, very significant responsibility that all of us take very seriously,” he said.
The plan the bank came up with closed the lobbies at the branches and focused on drive-up or walk-up service, along with using the mobile technology to substitute for in person transactions.
“All those things and thousands and thousands of other contingencies were planned for in countless meetings that turned out to be very successful and allowed us to continue to be a high performing bank and to service all of our customer needs,” said Watt.
“I just can’t emphasize enough that I think that the world ended as we knew it and the first thing we tried to do was focus on the safety of our employees and then followed shortly thereafter with the customers,” added Hyle.
She said within two weeks NBT had removed sales staff from external sites, upgraded equipment and had almost all their employees working from home.
As employees went remote, they all had to depend on their private household internet access to do work. Though most were able, some living in rural parts of Chenango County had poor or no internet service available. Like many in the county facing this issue, workers without reliable internet were more likely to have to do on-site work or be laid off. Fortunately, the bank avoided the latter.
“I think most of our people were able to work from home,” said Hyle. “There were some functions that needed to be performed in person at the bank, so there were some essential employees in the building. Moving some paperwork around that still exists in some of our processes, scanning documents, taking in mail. Those things were staffed, and if folks didn’t have internet – and I think there was a handful of folks that have some internet connectivity issues – those were the ones that would volunteer to be in the building,” Hyle said.
Those coming into work had to take temperature checks, observe social distancing and wear masks, along with other guidelines. The bank conducted daily cleanings of the work environments.
“So, we felt really good about the environment that they were operating in. It gave them an opportunity to still contribute,” said Hyle.
“Implied in the question about the internet is what is the resiliency of rural broadband in the markets we serve and what did we learn there? There are certainly areas in our territory that definitely need to be enhanced,” said Watt.
He said stimulus reform passed by the Congress had rural broadband support included. “We as business leaders need to ensure that it’s properly distributed. I think in this next round of stimulus that the president is talking about there will be more money for that, and it’s really important, not only for our employees but for our customers.”
NBT Bank is a major advocate for expanding internet service in rural areas they operate in. “For the most part the system works for us, but there were a couple of gaps,” he said of Chenango County.

Customers above the bottom line

As the economic fallout from COVID became apparent, the bank realized many customers with loans or other payment obligations may have a harder time meeting them.
“Initially we assembled and looked at our loans across the company and determined what support we need to provide to our customers in terms of relief,” said Hyle.
Within the first few weeks before the state issued a mandatory lockdown, NBT began offering emergency deferral programs and waived many of their own fees.
“That was one of our most important focuses in the onset,” said Hyle.
“So basically, if a customer or a borrower came to us and said I’m being impacted by the pandemic-reduced hours, loss of job, daycare challenges, whatever it was, I’m being impacted by the pandemic, we offered them deferrals on their loan payments so they did not have to pay us for a certain period of time,” she said.
“What did that do? It provided security and relief to customers who weren’t sure how they’re going to pay the rent and weren’t sure how they were going to make their family budget stretch in an environment where they weren’t sure they were going to be employed,” added Watt.
The bank issued relief on car loans and mortgages. However, many only took temporary relief and the peak of deferral request has passed, they said. Individual circumstances became clearer after the initial lockdown, and many customers began to recover.
“Now the number of businesses and individuals who have sought deferrals is the minimum relative to the high point,” said Watt.
“It was just great to be able to provide that safety net for those folks and make one less thing that they had to worry about in the middle of everything else that they had to worry about,” Hyle added.
NBT Bank handled over a billion dollars in loans that needed to have some level of relief associated with them at certain points, but as businesses began to adjust to the new normal the amount dropped significantly.
Comparing on-time payment ratios in January 2021 to January 2020, the bank reported they were nearly the same, meaning most were back on track.
“What’s that tell us? The customers are feeling that their jobs are secure and they have faith, and they are able to make their loan payments,” said Watt.
By planning to offer people relief the bank also changed its own expectations, which allowed it to avoid unintended delinquencies and have a solid financial plan.
“It is mutually beneficial to plan ahead, but definitely really important to the borrowers,” said Hyle.
Watt confirmed that changing expectations likely reduced the expected profit generated by the bank, but he said investing in customers during a time of need was of much greater value to NBT.
The bank reduced earning expectations in the short term. “But that’s OK. We are very well capitalized. We have lots of liquidity and lots of room to absorb that kind of short-term slowdown, and that’s our job as a corporate citizen in this emergency – to use our strength to support the community and customers,” said Watt.
“Our earnings were definitely at risk there for a while because of all of these concessions we knew were critical to offer, and if that impacts us a little bit, that’s OK because it’ll come back,” he said.

Opportunities of an economic snap back

The economic future will be governed by how the pandemic is managed.
“There’s this bright light at the end of the tunnel, and it is the vaccine and it is herd immunity in our country. It is our obligation to have as many folks vaccinated as is possible in a short period of time,” said Watt.
The bank is preparing for the effects of vaccinations to take between three to five months or more. Once COVID is under control and restrictions are lifted, a number of financial organizations expect the economic void left by the pandemic to quickly fill back up as businesses and people rush to return to a more normal life.
NBT Bank is working now to position itself as best it can to participate in the recovery.
“I foresee a snapback in our economy. There is huge pent-up demand from folks who are trapped at home and who are unable to do many of the things that are normal in their lives, and that demand is going to be relieved once we are able to interact with each other and once we feel comfortable that the vaccine has helped manage the pandemic,” said Watt.
A number of economic analysts, including NBT Bank, predict unemployment is going to go down by the end of 2021 and that GDP is going to go up.
“I’m a longer term optimist. I also believe it’s absolutely critical that in the short run we are disciplined about our behavior and how we expose ourselves in the community to the coronavirus,” said Watt.
Listen to the health experts if you want a faster economic recovery, he advised.
“We’ve got to double down. Masks, social distancing, hand washing, all of those things. Wouldn’t it be absolutely tragic if, with the vaccine right on the horizon, that we didn’t get as many of our citizens to it as possible? We, as a leader in the community, set that example and we hope and we see that people are doing the same thing,” said Watt.
“I will tell you that I look for this every time I’m out in the community. Is everybody wearing a mask? And the answer is yes. I see it no matter where I go and I think that’s a sign of respect from my neighbor to me, and me to that neighbor and other neighbors. So, I feel really good about what we do here in Chenango County, continuing to respect each other in that regard, and we’ll get there. I appreciate that.”