Park State Bank News

Park State Bank & Trust Position Statement

As a local community bank, we hold ourselves accountable to all our stakeholders which includes our shareholders, board of directors, community, businesses, individuals, families, and bank regulators.

Our shareholders have empowered management to strike a balance between profitability and safety, with an edge toward safety.

Over the last fifteen years, management has purposefully decided to maintain a higher level of liquidity than is customary in most banks. This means that we did not maximize our potential earnings by maximizing the use of capital.

The management team has implemented an organic growth strategy. We are not chasing business outside of our core focus, and we are content to intelligently grow our bank and our capital position.

We re-invest in our local community, as evidenced by our support of local community organizations and causes that promote community vitality. We do not send our community investment dollars outside of our own stakeholders.

Our bank is subject to forces well beyond our community, and we are not immune to national or international decisions or events. Our management team recognizes there are many things out of our immediate control; however, we believe that by staying focused on our mission and prudently managing every area of our bank, we will navigate the challenges that emerge.

During the 2008 crisis, we are proud that we did not lay off a single team member nor did we foreclose on even one owner-occupied single-family home.

We periodically talk to our customers about any excess deposits and the fact that there are several strategies to ensure all deposits are protected. Our list is small, but we are currently reaching out to all our customers with higher balances to make sure they understand their options, and we encourage them to adopt strategies to protect themselves.

That said, we want to make it clear that we are open for business! We welcome working one-on-one with you to determine whether moving your accounts to our bank makes sense.

We are having discussions with community members and businesses who want to be able to meet in person with their bankers. Feel free to reach out to us. You will not experience a high-pressure environment, just a frank and honest discussion. At Park State, our business model is built on relationships.

We will successfully navigate the latest economic risks and continue to serve and invest in our community for many years to come.

Tony L. Perry
President/CEO

Re: Failures Friday of SVB (Silicon Valley Bank) and Signature Bank in New York

• As a community bank, Park State Bank & Trust remains well-capitalized and stronger than we have ever been, serving you and our community since 1965.
• As a community bank, we take pride in our relationships with our customers and community. As I have said many times, the health of the bank is directly tied to the health of our community and you, our customers.
• None of our customers have ever lost a dime of their FDIC-insured deposits, up to $250,000.

For those customers who have questions, we are prepared to assist you in identifying whether additional insurance coverage is necessary and ensuring your deposit needs are met. The FDIC Deposit Insurance Fund comes from assessments that banks pay, not from taxpayers.

Do not hesitate to contact me on my cell phone at 719.433.4055, if you would like to discuss this, as I do not want you to worry about the safety of your money and our community bank.

Tony L. Perry
President/CEO

As of May 4th, the SBA depleted all funds for PPP lending and abruptly shut the application portal. We are no longer accepting new applications for PPP funds. Should Congress decide to allocate more funds to this program, we will reopen the application process. Currently, that does not seem likely. All PPP borrowers will be contacted to begin the forgiveness process as soon as the timing is appropriate. If you have any further questions, please don’t hesitate to contact Kathryn Perry at [email protected]

The PPP round 2 is scheduled to close on March 31st!

FORGIVENESS – For first-round loans, all borrowers have been sent a forgiveness application to sign electronically. The SBA has forgiven 100% of the loans applied to date.

TAX IMPLICATIONS – You need to work directly with your CPA on this, but under the new Act, for 2020 taxes, PPP funds, and forgiven loans are not included in income. The expenses for which you spent the PPP are still allowable as deductible expenses. In effect, the receipt of a PPP is disregarded for tax purposes in both income and expenses.

IF YOU DID NOT RECEIVE A PPP in 2020 – We are taking applications for a FIRST DRAW PPP – meaning you did not receive a PPP previously. You do not have to meet the revenue reduction requirement of the new Act. The calculations of loan amounts are still 2.5 times the average monthly payroll.

IF YOUR BUSINESS HAS STILL BEEN IMPACTED – A SECOND DRAW PPP is available for businesses that already received a 2020 PPP and meet these criteria: Must have had a reduction of 25% or more in gross receipts in any quarter of 2020 when compared with the same quarter of 2019. The amount of any forgiven First Draw PPP Loan shall not be included toward any borrower’s gross receipts. For NAICS codes beginning with 72 (mostly restaurants), the PPP factor is 3.5 times monthly payroll rather than 2.5. We are taking applications for a SECOND DRAW PPP.

IF YOU ARE A SOLE PROPRIETOR – You now qualify based on Gross Income rather than net. You may have been turned down for a PPP in 2020 because you showed negative net income, but you can now apply for both a first and second draw loan based on GROSS INCOME.

HOW TO APPLY? There are new forms for all applications. Because we must send you the appropriate form, please email [email protected]

The PPP reopened Monday, January 11, 2021!

FORGIVENESS – For loans under $150,000 there will be a new one-page form to sign for complete forgiveness. The SBA has until January 20th to release this form, so it is NOT available this week. Just as soon as it is available, we will be sending eligible parties a link to complete. In order to focus on second-round PPP’s, we will not be processing forgiveness requests until this one-page form is available later this month.

EIDL GRANTS – Are no longer subtracted from forgiveness. The SBA will automatically adjust for this. You need do nothing.

TAX IMPLICATIONS – You need to work directly with your CPA on this, but under the new Act, for 2020 taxes, PPP funds and forgiven loans are not included in income. The expenses for which you spent the PPP are still allowable as deductible expenses. In effect, the receipt of a PPP is disregarded for tax purposes in both income and expenses.

IF YOU DID NOT RECEIVE A PPP in 2020 – We are taking applications for a FIRST DRAW PPP – meaning you did not receive a PPP previously. You do not have to meet the revenue reduction requirement of the new Act. The calculations of loan amounts are still 2.5 times the average monthly payroll.

IF YOUR BUSINESS HAS STILL BEEN IMPACTED – A SECOND DRAW PPP is available for businesses that already received a 2020 PPP and meet these criteria: Must have had a reduction of 25% or more in gross receipts in any quarter of 2020 when compared with the same quarter of 2019. The amount of any forgiven First Draw PPP Loan shall not be included toward any borrower’s gross receipts. For NAICS codes beginning with 72 (mostly restaurants), the PPP factor is 3.5 times monthly payroll rather than 2.5. We are taking applications for a SECOND DRAW PPP.

HOW TO APPLY? There are new forms for all applications. Because we must send you the appropriate form, please email [email protected] with:

1. Title your email – PPP Application Link Request
2. In the body of the email, please provide your business name,
3. Best contact name for an authorized signor for the business, phone and email for that person, and
4. You must tell me whether you are applying for:
   1. A First Draw PPP
   2. A Second Draw PPP after receiving your first PPP from Park State Bank and Trust, or
   3. A Second Draw PPP after receiving your first PPP from another bank

As we experienced in 2020, we know there will be glitches and changes and questions galore! The SBA is driving this process, so we are prepared to adapt quickly. I certainly appreciate your patience as we all walk through the new rules, new processes and even new SBA systems. The application period is open until March 31 with NO expectation that time is of the essence. Funding of this program is expected to exceed need, just as we saw funds remaining unspent when the first PPP program closed last August.

UPDATE – 8/8/20: Since early April, Park State Bank and Trust has reviewed over 350 PPP applications, extending 215 loans to qualified businesses totaling over $5 million in needed assistance. This program allowed PSB&T to protect 1051 local jobs.

If you have any questions, please email [email protected]

UPDATE – 07/01/20: Since April, Park State Bank and Trust has reviewed over 300 PPP applications, extending 205 Paycheck Protection Program loans for a total value of just over $5 million. This program allowed PSBT to protect 1022 local jobs with this funding.

As of June 30th, the PPP program is closed. Congress is currently considering extending it through August 8, 2020. PSBT has paused accepting applications at this time but will consider reopening the program again if the SBA extends the program.

If you have any questions, please email [email protected]

The following message was emailed to PPP applicants and interested parties yesterday. If you did not receive it and are interested in applying for a PPP loan through Park State Bank and Trust, please email [email protected] with your business name and a good contact phone number. The application link will be live on this page soon!

A message from the President & CEO of Park State Bank and Trust:

Thank you so much for reaching out to Park State Bank and Trust to facilitate the Paycheck Protection Program. As your community bank, we are participating and will try to facilitate a loan for every eligible applicant. By receiving this email, know that you are in our system of applicants!

I apologize for the slow flow of information. Because PSB&T is under the same COVID-19 business restrictions that many of you are, our staff is forcibly reduced and our capacity to return every phone call and email promptly is not at its usual pace. Our ability to meet with you in person to discuss your business is also limited. We have received over a hundred applications to date and our priority is to see each small business receive maximum benefit from these programs. We are your community bank, so our health is tied to your health!

Please understand that these loans were put in place by the federal government without clear guidelines and with rapidly changing criteria. Most applications that have been submitted have since become obsolete, beyond our control. PSB&T has engaged in a process that will allow you to submit all your data electronically and upload supporting documents as well. It is a simple to use interface that will guide you through the process.

I know that you are feeling a time pressure to get this done. Know that banks across the country are experiencing the same frustrations, and we are working almost round the clock to solve these frustrations for you and get you in the pipeline for lending.

Also remember that unless you have W2 employees, you cannot apply until this coming Friday, April 10th. For those with W2 employees, we are working to get you in the system now.

The bank has temporarily engaged Kathryn Perry, my wife, former Assistant Vice President with Citibank, to personally handle this special project. She will be your point of contact throughout and is very knowledgeable about the programs, staying current with any changes or adaptations as we receive guidance.

Once we have this new link in place, Kathryn will personally be reaching out to you to keep you updated on where you are in the process. In the meantime, please trust that because you are receiving this email today, you will be receiving the link immediately upon its availability. If you are concerned about timing, please feel free to reach out to other banks.

Please be prepared to submit your W3 or 941 forms for 2019. For those with seasonal employees, the SBA is allowing you to report payroll for an eight-week period of your choice that falls between February 15, 2019, and June 30, 2019, rather than the entire year, if that period increases your monthly average. We understand that for Coloradoans, winter and summer tend to be the high season and that February to June may not reflect your highest payroll average, but the intent of this program is to alleviate your payroll burden during this time of forcibly reduced business, which is falling during the early season.

We will work through this together! The link for application will be on our website soon and simultaneously sent to you personally by email. We hope to be up and running within 24 to 48 hours.

Thank you for your patience through this process,
Tony L. Perry
Park State Bank & Trust

As your Community Bank, Park State Bank and Trust is here to assist any of our local businesses, self-employed individuals, contractors and gig workers who have experienced financial difficulty or economic impact as a result of the COVID-19 virus.

PSBT is participating in the Paycheck Protection Program (PPP) introduced by the SBA as part of the CARES Act. We are here to help you navigate this process and will work with each customer individually to determine the programs that will best fit you and your business.

The array of federal and state programs introduced as a result of these circumstances is changing rapidly, and you can be assured PSB&T is constantly assessing the individual programs and their requirements. Banks across the country are working to get connected to the SBA systems, which are understandably overloaded with the influx of applications. We are establishing an online secure file transfer system that will allow you to upload your PPP application and supporting documents directly to us.

We have received over 100 requests from local customers for assistance through these programs. If you have not yet reached out, please send best phone and email contact to [email protected] and we will contact you with further information.

We encourage everyone to apply to any applicable program, including Colorado state unemployment, SBA online EIDL loans and grants, and the Paycheck Protection Program. Many of these programs include forgivable loans. We are encouraging all customers to use funds for business emergency expenses only until there is further clarity on repayment expectations.

Links to these programs include:

Colorado State Unemployment: https://www.colorado.gov/pacific/cdle/unemployment

SBA Emergency Grants: https://covid19relief.sba.gov/#/

The PPP – Paycheck Protection Program: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

Guide to all SBA lending resources: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options

The Big Picture is Shifting Rapidly

These are challenging times in financial markets. Frankly, I nor anyone else has any experience with economic and financial disruptions caused by proclamation from policy makers around the globe. Two weeks ago I did not expect the entire global economy to be closed almost overnight. Normally, policy makers blundering with monetary or fiscal policy cause recessions. Not this time, this is a disease-­‐induced problem with enormous economic and financial consequences. What I know, or think I know shifts daily. This is an attempt to help explain with the caveat that understanding will evolve next week and the week after, so I will start with this and send updates often.

In the past two weeks, Covid-­‐19 grew from a distant threat to reality. Most Americans did not anticipate this or how long it will remain a threat. The biggest change for me is the acceptance that the damage is not likely to pass in a month or two. It now appears there will be a sharp drop in global activity, followed by a period of significant weakness lasting at least two quarters, followed by a partial recovery. At some point, the expectations of worse outcomes will give way to expecting better outcomes and the panic in markets will cease.

The Economy Will Recover

Perspective is important. After the Great Recession from 2007 to the second quarter of 2009, it took two years, until the second quarter of 2011, for growth to recover to the pre-­‐recessionary peak. The market recovery begins before the economic recovery, and the economic recovery begins years before growth and employment recover cycle highs. A few weeks ago, none of us were familiar with social distancing, but apparently it is the only means of suppression of a virus as contagious as this one. It requires an unprecedented disruption to daily activities and the economy. How the economy reacts once these measures are lifted us largely unknown.

Best guess for a timeline:

• Step 1: until this week, economists focused on how long it takes to get to peak infection, when the spread of the virus is “under control.” They thought the economy would return to normal at that point. Markets traded accordingly.
• Step 2: this week, people began thinking about the measures needed to prevent further increases once peak infection is reached. No school, no office work, no movies, no sports, no bars, no restaurants, and no retail beyond groceries and pharmacies, except online. These restrictions will not be dropped all at once just because the number of cases levels off. And certain activities may be permanently altered.
• Step 3: Peak infection, normal life resumes and with it -­‐ restarting the economic engine.

Judging from China and a few other Asian countries, step 1 takes months. The CDC estimates the US will reach peak cases in July or August. Steps 2 and 3 are still unknown.

Policy Response

The Federal Reserve and Congress are working hard for answers. I am confident they will find them. Some stimulus measures will have immediate impact and some delayed, but they will all help. The Fed cut the fed funds rate 150bp to 0-­‐.25%. Last week, they have provided credit markets with several trillion in various programs providing badly needed liquidity, and transformed their $60bn/mo balance sheet expansion program from not-­‐QE (using one short term asset to buy another short term asset) into sort-­‐of-­‐QE (using a short term asset to buy longer-­‐duration assets, but with no pre-­‐announced time line or quantity).

The Fed decision to invoke quantitative easing is a signal to markets. And they are not alone, more than half a dozen central banks acted or pledged action in the past 24 hours. Policy makers will not get everything right, but they will react and adapt.

Fiscal policy takes longer to formulate than monetary policy, but US policymakers have set aside politics and gotten to work. They have passed what they term two phases of stimulus and they are currently working on phase three – expected to be north of 1.5 Trillion. Markets have whipsawed. The global drop in stocks is as big as in the first 150 days of 2008-­‐09, but in a fraction of the time.

Don’t Panic

This is a globally synchronous event. Even the global financial crisis hit the world in a staggered fashion. This time, all of the biggest economies are sinking within a few months of each other. There will be significant job losses. I’ve seen estimates Global GDP could drop 10% in the first half of 2020, implying about $8.5 trillion of lost income. A 1% drop in global GDP, by the way, would be the worst ever. The fallout from a 10% drop is hard to imagine. I know that sounds scary, and it is, but it is important to state the economy will recover from whatever is thrown at it. No matter how deep the downturn, there will be a recovery.