CORONAVIRUS

Pandemic takes major toll on financial industry

Emily Gowdey-Backus, Correspondent
Michael W. Welch, CEO of Unibank. [T&G Staff/Christine Peterson]

Excepting the devastating and increasing death toll, one of the most prevalent universal outcomes of the COVID-19 pandemic is financial worry. From lost incomes to the closure of non-essential businesses, monetary security is a major concern at the heart of reopening and reviving the economy.

“Slowly and surely, day by day, as a community, we’re going to work ourselves through this,” said Michael Welch, CEO of UniBank.

Welch, who was appointed to the role in July 2019, said the staff at the 150-year-old Whitinsville-based bank has taken this time to “focus on how to safely serve the community while continuing the functionality of banking.”

Across the county, Central Massachusetts banks, financial institutions, and accounting firms report having felt the first inklings of the economic impact of the pandemic as early as December and as recently as early March.

Given their expertise, each company has been affected differently and predicts unique long-term consequences for their corner of the market. However, all see their participation in the federal Paycheck Protection Program, and continued support of the local community, as the most important investment they’ve made during this time, and will continue to make, as businesses reopen and residents learn the new rhythm of life.

What he calls a “war on savings” is the biggest immediate repercussion for Greg DiMarzio, vice president portfolio manager at Rockland Trust. Operating in the investment arm of the company, DiMarzio explained many of his fixed-income clients were living off the dividends of a CD prior to the outbreak.

“The next time they have to roll those over it won’t even be close to what it used to be” he said of the interest on rates on CDs which have plummeted from 2 to 3 percent to less than 1 percent.

“Their income is now cut by two-thirds,” he added.

Veteran accountant and current partner at blumshapiro’s new Worcester office, Alan Osmolowski, said his clients are also fearing liquidity interruptions as they file taxes under the extended timeline.

While Fidelity Bank MA reported challenges among their business and personal banking clients, “the common theme,” said Ed Manzi, Fidelity Bank MA CEO, is cash flow.

“People who have loan payments – mortgages, businesses – we proactively engaged with them and provided temporary relief to get through this very difficult time,” he said.

Manzi estimated approximately 20 percent of loans have been modified, with payments deferred in one way or another, because of COVID-19 related reasons.

And, Fidelity was not alone in providing payment deferral plans to its customers. UniBank has put in place a three-month deferral on mortgages and similar large-scale loan payments.

“This was our opportunity to step up and defer that income,” said Welch. “We’re going to put that off to help people get their footing.”

Local insurers have also begun to see COVID-19-related ramifications. For Fallon Health, which is now seeing incoming COVID-19-related claims, remote work is not the only type of virtual communication on the rise.

“One of the biggest immediate changes is the dramatic increase in the use of Telehealth. It’s here to stay,” said Richard Burke, Fallon’s president and CEO, who estimates 60 percent of visits are taking place over the remote platform. “For a period of time, and maybe permanently, patients and providers will be much more familiar and comfortable with Telehealth where appropriate.”

Whereas Fallon deals with health-related claims, Hanover Insurance; which primarily insures auto, home, and business; has not seen as much of a COVID-19-related impact. In an emailed statement, Jack Roche, president and CEO, said the company has “limited underwriting exposure to COVID-19” and predicts the pandemic’s impact on 2020 business to be “manageable.”

While operating mostly remotely, Central Massachusetts banks, insurers, and accountant firms are relying on new technology to stay in touch. From Fallon Health’s Operation Stay Connected, to Rockland Trust’s weekly investment-centric newsletter and UniBank’s personalized call program, the industry hasn’t stayed quiet.

“Technology in general has been a winning sector for a long time,” said DiMarzio, and in today’s market technology stocks are doing “well” because of the public’s reliance on virtual meeting platforms, cloud-based sharing capabilities and online retail.

Many of these companies expect to prolong the weeks, and months, their staff will work remotely, but the adoption of digital technologies also means a new perspective and perhaps a new challenge or competition.

Digital banking has been “accelerated,” said Manzi, but that shouldn’t replace the relationship between a banker and an everyday savings and checking customer. “There’s going to be a renaissance for banks like us,” he said. “It’s complicated, but if you get it right the value of this approach, of being local, is high.”

Welch, too, is banking on a local approach. The company’s planned branch expansion across Central Massachusetts and MetroWest continues in line with their mission to best serve the needs of the community.

“Reassess your asset allocation. We had a lot of people who were really scared in March … because they were clearly invested more aggressively than their actual risk tolerance. Now that the market has recovered, and this seemed like too aggressive a risk level, you should scale it back.”

-Greg DiMarzio, Rockland Trust

“Look around you. Who stepped up to say we’ll help you in the bad times? [Those businesses and individuals] are the testament to how we’ll get back to where we were before COVID-19.”

-Michael Welch, UniBank 

“Stay in touch with your health insurer because [they’ve most likely] set up a website or a hotline on which you can contact them. Come to us for information and if you think you need can, don’t put it off. During the pandemic, Telehealth is a great way to stay in touch with your physician [if you’re concerned about visiting a clinic or hospital.”

-Richard Burke, Fallon Health 

“Use digital banking services like remote deposit, they’re safer anyway. People think there’s more cybersecurity threats therein but that’s not true.”

-Tony Emerson, IC Federal Credit Union

“If you have cash flow issues, reach out to your lender before you get into any kind of trouble. And, be proactive. Watch out for cybersecurity scams which go up in times of turbulence.”

-Ed Manzi, Fidelity Bank MA

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