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Ready, Set, Wait

A Note From the Chairman

April 6, 2020: Henry and Bill were driving a dog sled across the frozen northern Klondike returning the corpse of a wealthy adventurer back to civilization. As the days progressed, a pack of hungry wolves were stalking their every move and had already taken several of their sled dogs during the previous nights. The men had one gun and little ammunition to provide protection. Author Jack London then writes, “But the wolves were growing bolder….the (sled) dogs became frantic with terror…Bill remarked ‘They’re going to get us. They’re sure to get us Henry,’ to which Henry retorted sharply, ‘A man’s half licked when he says he is. An’ you’re half eaten from the way you’re going on about it.’”

When I read these words from “White Fang” the other day it struck me that, as with so many other challenges, the ultimate difference maker to how things turn out is us, our confidence, grit and being ready for whatever might come next. Of course, if you are Bruce Willis in “Die Hard” the plan amidst the gunfire might be that “there is no plan.” The key ingredient is the same, don’t just sit there, do something! What does doing something look like, especially for our customers whose businesses are dealing with the lock down or as a friend recently put it, “It is day 27 of the hostage crisis”?

It may be obvious, but I suggest strongly that now is the time that your community bank relationship presents its value most clearly.

Even during normal times business planning is important, but now more than ever, it is critical. Your banker is a valuable resource as you consider multiple scenarios so that no matter how long it takes you will be 100% ready for when the starter’s gun goes off.

Are you ready today? Obviously the go ahead won’t be next week but would you be ready if it were? Supplies, employees, money and customers all require a plan and well-conceived projections. I suggest sitting down with your banker to build or review a realistic plan for how you will be restarting and gaining new momentum. We don’t know the timing, so several time frames might be evaluated where obviously the longer this lasts the more funds will be needed to bridge the gap.

Paycheck Protection Program

It seems everyone has heard about the Paycheck Protection Program (PPP), and given our bank’s long running successful SBA program we had well over 1,000 takers before the systems were even in place to accept applications. The government’s Small Business Administration, being suddenly tasked with the responsibility to distribute up to $350 billion of small business assistance had to basically develop the entire program from scratch then create an application process, set up criteria, controls, etc.

It has been no easy task for them to get it done quickly (these things usually take years) and then to disseminate it all to thousands of banks and their customers. Now, even as they roll it out, I predict there will be challenges not the least of which is an extraordinary volume of requests but also things like scammers who will attempt to fraud their way to the money (when caught we might consider sending them to the Klondike without a sled). Although the program will present some imperfections and will need tweaking along the way, I believe it is the right idea under today’s circumstances.

Then there are customers. Remember them? Those business owners who are working today, like never before to capture the hearts, minds and attention of all the customers they want to attend their re-grand opening are improving their odds with every card, call, and act of kindness.

My other advice is to stay abreast of the news but listen with care. In a news report today the beat reporter was excitedly going over the growing number of cases. His delivery of the information almost implied that the increase was unexpected. We’ve been told the numbers were going to increase for some time.

The increase will look dramatic and we must not forget those who are victims or on the front lines, but we will do better by not letting the reports on each day’s numbers or bickering and finger pointing distract us from our role. And for the customers of Allegiance Bank, job one is to take care of your families, your employees, your relationships, and your health and to be really ready when the time comes.

Looking Ahead

Although not an economist, here are my personal thoughts surrounding the pandemic and our economic recovery.

First, there has never been one of these before, not in modern times, not this big. However, my outlook is bright and very hopeful.

The closest economic event, from a global economic perspective, that comes to mind was the Great Depression of 1929 but it was also very different and was responded to differently. The Hoover Administration, from what I read, responded with a few spot recovery programs but really relied on industry to handle it themselves and felt the government’s budget should remain balanced.

The breadth and depth of the economic impact developed slowly and the New Deal salve under Roosevelt and other changes implemented later were far reaching. The difference then was that the stimuli were in large part work programs providing gradual beneficial impact over years. The experience also led to the creation of a number of valuable new protections and controls including the SEC, FDIC, FHLB, and more.

Today’s challenge is much different; its cause was sudden and non-economic. Even though we didn’t have enough PPE or ventilators, our system of financial regulatory controls and protections were already in place, are well tested and provide the mechanisms for a massive, immediate surge of assistance. Though costly and probably not perfect, I believe it is the right overall response. These are tools. It is up to all of us to work together, and be responsible as we use them. With them, I anticipate a steady but gradual recovery, months rather than years.

In Closing

I close this rather lengthy note with a deep appreciation for the leadership that I have witnessed by my fellow Allegiance Bankers. Such leadership is not found in clever words or books. It can’t be taught in a classroom. It shows up because it was there all along at the teller line, the relationship bankers, the technology team, the loan and deposit operations staff, the analysts, the specialists, the SBA group and, well, everywhere I look. I am so very proud of everyone.

And to our customers, thank you for relying and trusting in these amazing people as we all get ready while we wait.

Steve Retzloff

Chairman of Allegiance Bank

Allegiance Bank Chairman Steven Retzloff

Steve Retzloff, Chairman

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