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Smaller Banks Use PPP Loans To Win Over New Customers

David Lane

NASHUA — A loyal customer of a large bank for more than 25 years, Jodi Gould still waited three weeks to hear whether she would receive a loan designed to bring back idled workers and help weather a pandemic’s economic storm.

What’s Working

“I got excuse after excuse” but no money, recalled Gould, chief financial officer of Christian Party Rental in Hollis.

So she turned to Millyard Bank, which opened in a freshly minted building right before Christmas.

The bank, whose name and brick facade are a nod to millyards around New England, took about a week from when Gould first contacted it to notify her she had been approved for a $316,500 loan through the Paycheck Protection Program.

In the process, the bank earned a new customer.

“I feel like I have someone behind me who kind of understands my business, understands my goals and understands how I want to grow versus with a bigger bank,” Gould said last week by phone.

Millyard, the only bank headquartered in Nashua, found an opening amid the pandemic.

The bank said it approved 160 loans under the Paycheck Protection Program totaling $22 million, saving the jobs of nearly 2,000 workers. Doctor and dental offices, real estate firms and sheet metal companies were among the beneficiaries.

“If you think about where we were at, only three months old, we had a unique opportunity where we could serve both existing clients and new clients,” said G. Frank Teas, the bank’s president and CEO, during an interview at the bank. “We had capacity, so yes, we ended up earning new business that way.”

More than 200 lenders approved 22,600 loans in New Hampshire worth a combined $2.5 billion through June 6, according to the U.S. Small Business Administration.

Millyard Bank

G. Frank Teas, president and CEO of the new Millyard Bank, rings a teller at the bank’s drive-through in Nashua last week.


New business

Without the loan program, “I think a lot of people would have either had to close or would have laid more people off,” said Rachael Roderick, SBA’s acting director in New Hampshire.

She said five to six community lenders in the state agreed to approve PPP loans for non-customers.

“I think that opened the door for them to get some new customers,” said Roderick, who noted funds remain for businesses to apply for by June 30.

In May, the New Hampshire Bankers Association said that 33 of its member banks reported approving PPP loans that would save nearly 94,000 New Hampshire jobs as of May 8, the latest figures available. Those banks had issued 74% of all PPP loans in New Hampshire at that point.

Banks often turned to help their own customers first. “Because of the first-come, first-served nature of the program, that added a sense of urgency to make sure their customers were taken care of,” said Kristy Merrill, the association’s president.

“PPP loans helped deepen the relationships people already had with their bank,” Merrill said. “The good work generally being done by banks on PPP loans resulted in goodwill and positive shares through word of mouth, which always helps gain new business.”

Good timing

This isn’t the first time Teas has fallen upon good timing.

Nashua Bank, which Teas co-founded, opened in October 2007, followed by Optima Bank & Trust in Portsmouth three months later.

Millyard Bank

G. Frank Teas, president and CEO of the new Millyard Bank, poses at the bank’s headquarters in Nashua last week.


“The timing of both of those entities was fantastic, a little bit lucky, obviously,” Teas said.

In 2008, when “the entire financial universe kind of goes into the proverbial hell in a handbasket,” the two new banks were positioned to accept more customers, Teas said.

“We had folks running across the street from much larger national-type banks with their three-part check waving and flapping in the wind, ‘We want to move our money out of these big banks in case they fail and put ’em with the local guy,’” Teas recalled.

Dan Morrison opened Optima in January 2008, a month after the Great Recession officially started and just months before the most severe economic pain set in.

That year, “all the big banks were either failing or getting bailed out by the government,” Morrison said.

“Things were actually going well for us. We were new in the market. We were a new local story. We were lending. We were giving people a safe place to put their money,” said Morrison, CEO of Cambridge Trust New Hampshire, whose parent company acquired Optima last year.

But some of his bank’s own directors had doubts.

“There were some members asking that question, let’s put it that way: not shut down the bank but curtail lending and not do anything,” Morrison said. “That would have been a disaster for us if we had done that.”

Putting the brakes on expanding the bank’s loan business wasn’t the answer.

“When you’re one of the smallest banks in the country, you can’t stop growing,” Morrison said.

Primary benefits

Bedford-based Primary Bank, which in 2015 became the first new bank to open in New Hampshire since Optima, made more than 800 PPP loans totaling $133 million.

Primary Bank had $300 million in assets, chiefly loans made by the bank, as of Dec. 31, “so to do an additional $133 million in what was three weeks was a huge amount of volume,” said President and CEO William Stone. “We did get a lot of new customers that came to us because they weren’t able to get loans processed through their bank.”

Employees whose companies received loans could keep working or be called back rather than collect unemployment. “The added advantage for the company is to keep that employee on the payroll, so when things open back up again, they don’t lose that employee,” Stone said.

“We helped a lot of new customers, and I’m expecting a lot of those new customers that we gave PPP loans will expand the relationship further,” Stone said.

PPP loans can be forgiven if employers spend a required percentage on payroll. Banks earn a 1% to 5% fee on the loan amount, depending on its size, he said.

Millyard Bank is on pace to meet projections its first year. The pandemic helped speed the bank’s growth curve with customers, according to Teas.

“They were going to get here at some point, but the pandemic kind of forced them to get here a little earlier,” he said.

Nashua needed a home-grown bank, according to Millyard Bank board Chairman John P. Stabile II, founder and chairman of the Stabile Companies, a real estate-related holding company.

“I thought it was important a city like Nashua would have a locally owned bank that catered to smaller customers here in the Nashua area that the larger banks aren’t able to do,” said Stabile, who also co-founded Nashua Bank with Teas.

Another benefit

The timing of the opening means the bank won’t be burdened with loan portfolios filled with businesses struggling to pay and won’t be devoting resources to working out loan repayment plans.

“We will be working on loaning out money,” Stabile said.

Millyard Bank board member Jack Tulley, retired CEO of Tulley Automotive Group, said other banks were setting their loan minimums too high for many small businesses.

“We are here to serve a market that was underserved previously,” Tulley said.

Gould’s Christian Party Rental enjoyed a “stellar month” in February but now will be lucky this year to earn half of last year’s revenues.

In March, she reduced her 23-person staff to five. The PPP loan allowed her to bring back a dozen employees. Two more return this week.

Money from the busy April-through-October period typically helps cover paychecks over the winter. Gould would have faced laying off a substantial number of workers through the winter if not for the loan.

“It would have been a very different outlook in terms of how we were going to pull through the winter season,” she said.

What’s Working

What’s Working, a series exploring solutions for New Hampshire’s workforce needs, is sponsored by the New Hampshire Solutions Journalism Lab at the Nackey S. Loeb School of Communications and is funded by Eversource, the New Hampshire Charitable Foundation, Dartmouth-Hitchcock Medical Center, the New Hampshire College & University Council, Northeast Delta Dental and the New Hampshire Coalition for Business and Education.

Contact reporter Michael Cousineau at mcousineau@unionleader.com. To read stories in the series, visit unionleader.com/whatsworking.