Here's how Las Cruces banks have adapted to the ‘new normal’ during COVID-19 outbreak
While the future of the financial sector remains unknown — even to those monitoring it closely — industry leaders told the Las Cruces Sun-News they remain committed to providing safety and finding solutions during the outbreak. [Photo: Unsplash]
LAS CRUCES – As the nation’s economy continues to struggle to find its footing following the near-nationwide shutdown during the COVID-19 pandemic, banks and credit unions are continuing to adjust while helping customers and members navigate uncertain times.
In accordance with New Mexico’s stay-at-home public health order, financial institutions around the state shuttered lobbies, leaned on online banking and mobile apps, and conducted in-person services through the drive-thru lanes. Some used ITMs — interactive teller machines — to provide a face-to-face experience while mitigating the risk of spreading the virus.
While the future of the financial sector remains unknown — even to those monitoring it closely — industry leaders told the Las Cruces Sun-News they remain committed to providing safety and finding solutions during the outbreak.
Sanitization measures ramp-up
In order to safely open lobbies to customers, banks and credit unions have been forced to consider how to mitigate spread of the pathogen. This includes installing Plexiglas barriers between tellers and customers, frequently sanitizing commonly touched surfaces and implementing social-distancing practices within branches.
“We used to have cleaning crews, who came in and cleaned things up,” said Ron Moorehead, chief executive officer of First Financial Credit Union, which operates branches throughout New Mexico. “We would make things look nice, but we didn’t think too much about sanitization. That’s changed. In late February, when things weren’t going well in China, I asked our facilities' staffs to start bulking up on hand sanitizers, masks, gloves — anything else we may need.”
During a regular flu season, First Financial puts out hand sanitizers for members.
“We were doing a fair amount of sanitization beforehand, just because of the regular flu,” Moorehead said. “At first, we were having trouble getting things. But then, as distilleries and others began making sanitizers, we were able to get plenty.”
Staff is being trained to sanitize surfaces frequently, he said.
“Now, we’ve got staff assigned to clean doorknobs and surfaces, as needed,” he said. “Gloves are only practical for one-time use. Rather than going through a bazillion gloves, we’ll direct staff to sanitize frequently, so we’re not spreading it from Member A to Member B. We’ll be wiping down things; it could be every hour. It could be more often.”
Right now, drive-thru canisters are disinfected between member visits, Moorehead said.
“The thing about this disease — based on what we know — is that it’s fairly susceptible to lower-level sanitization. It’s not like MRSA, or something like that,” he said.
Meanwhile, at Pioneer Bank locations around Las Cruces, administrators were taking similar measures and awaiting the arrival of Plexiglas barriers, according to Executive Vice President/Las Cruces Market President Kiel Hoffman.
“To make our employees feel more comfortable, we’ll have the Plexiglas shields at every teller’s station and at every desk,” he said. “We’ve ordered them, but we’ve been told they’re on delay but will be here next week,” he said on May 14. “We’ve gone out and found masks, which seem to be becoming more and more prevalent.”
While hand sanitizer has been easier to acquire, Hoffman said surface disinfectants have been in shorter supply.
“Even, in getting ready to open up our lobbies, we’re trying to take away anything and everything that customers usually touch and push on — just to reduce the amount of things that we need to clean,” he added. “I think we’re going to have to spend a whole lot more time and money on this stuff.”
Refinancing varies by institution
Many New Mexicans have taken advantage of historically low interest rates to refinance their home loans, Moorehead said.
“I’m seeing a lot of folks refinancing their mortgages,” he said. “We’ve had to throw a lot of people into that team that didn’t used to be there.”
Hoffman, on the other hand, has noticed it less among customers of Pioneer Bank.
“The investors of the world are definitely tightening the grip,” Hoffman said. “So minimum credit scores, maximum loan-to-value — those kinds of thing are all getting tighter during this time. It’s beginning to get a little more difficult to refinance. And if you want to cash out, I think it’s even tougher these days.”
However, the bank’s homebuilding department has maintained steady business throughout the crisis, he said.
“We’re a big construction loan lender here in Las Cruces,” Hoffman said. “And our numbers are strong and big. They’re still building houses, which means they’re still selling houses. For the last three months, our mortgage loan officer has had good numbers, even with the tighter rules.”
Rock-bottom interest rates
Moorehead believes members might grow wary of low savings rates, leading them to pay down debts or invest their money elsewhere.
“People are going to save, but they’re going to get a little irritated with savings rates — because savings rates are going to be stupid low. Not just low, but stupid low. I don’t think the Fed will go to negative interest rates. But, this will be a great time to be a borrower and a horrible time to be a saver. Savings rates are not going to go up anytime soon.”
Moorehead also suspects the historically low interest rates will cause used car prices to plummet.
“When you’ve got zero percent interest on new cars — just great deals — the prices of old cars are going to plummet,” he said. “Why buy a three- or four-year-old car — and finance it up to five years — when I can literally buy a brand new one with more bells and whistles that gets better fuel economy for the exact same monthly payment? If you’re trying to sell a used car in the next year and a half, the market’s just not going to be there.”
Uncertainty leads to hoarding
Moorehead said many of the credit union's members have been hanging onto their stimulus payments.
“We went from a $600 million credit union to a $650 million credit union — about a 10 percent increase — over the course of three weeks, when this whole thing started and the stimulus money started coming in,” Moorehead said. “It came in, and it’s still here. It hasn’t left.”
Hoffman said Pioneer Bank has prepared for customers who are sitting on cash, or looking to withdraw large amounts during the pandemic.
“We’ve prepared for cash-hoarding, but we still haven’t seen that materialize,” Hoffman said. “In the beginning of all of this, we had folks coming and looking to withdraw large sums of money, but our employees are pretty well trained to convince them that that’s not a safe thing to do — for many reasons. It’s not safe to have it in your house; it’s not safe to walk out of a building with it. To keep it simple, if you’re under the FDIC guidelines, then you have nothing to worry about.”
Spending vs. saving
Hoffman told the Sun-News that he believes “a vast majority” of Pioneer Bank’s customers spent their stimulus payments shortly after they were deposited into their accounts.
“I would say a majority spent them,” Hoffman said. “We saw our ATMs empty out much faster during those couple of weeks. So, I think people spent it. I’m not sure a lot of folks saved that.”
In the end, Pioneer Bank has had only one customer who walked out “just demanding a large sum of cash,” Hoffman said.
Moorehead’s experience at First Financial has been different, he said.
“We watch swipes — when our members use credit or debit cards to purchase something, whether it’s at the grocery store or online,” he said. “We get what’s called ‘interchange income’ from that, which helps pay for the cost of merchant expenses. But we’re seeing about a 15- to 20-percent drop in those, depending on the day.”
Both institutions have seen a pronounced spike in the use of online banking and mobile apps during the pandemic. At First Financial, mobile banking is up 15 percent, Moorehead said. To accommodate Pioneer Bank’s lobby closure, the bank expanded hours the drive-thru is operational. Pioneer has even been opening new accounts through the drive-thru, Hoffman noted.
Clearly, in these times of uncertainty, each financial institution’s experience is as unique as the clientele it serves — and no one seems to be in a position to predict where the financial recovery will lead.
But Hoffman believes that community banks deserve credit for stepping up to help out communities during these difficult times.
“Even though our employees weren’t working 40 hours a week, we’ve been paying them for 40 hours,” he said. “And I look at the (payroll protection program) as a way that banks have been able to give back to the community. I’m pretty proud of the community banks, standing up and helping — not just their own customers — but also customers of other banks. We were able to help a lot of folks, and community banks deserve kudos for that.”
Damien Willis is a Lead Reporter for the Las Cruces Sun-News. He can be reached at 575-541-5443, dwillis@lcsun-news.com or @DamienWillis on Twitter.
This story originally appeared in the Las Cruces Sun-News on May 28, 2020.
