Aug. 8—From a local banking and credit union perspective, it's almost as though the COVID-19 recession never happened.
Last year's shutdown of a sizable portion of the local economy, and the accompanying layoffs of many hospitality and health-care workers, appears to have had little lasting effect on most local borrowers' ability to keep up with their loan repayment obligations.
Kern County financial institutions credit two main factors: loan forbearance agreements that allowed people extra time to catch up with their debts — even if they didn't need it — and government recovery money for individuals and businesses that fell on hard times.
The result has been relatively clean second-quarter balance sheets at locally based credit unions and commercial banks. Even lenders are surprised at the rebound.
"I didn't expect it to come back this quickly," said A.J. Antongiovanni, president and CEO at Bakersfield-based Mission Bank. "I think people have come out and spent money, especially in hospitality, travel, the entertainment sector and restaurants."
Added Chuck Smith, senior vice president and chief lending officer at Valley Strong Credit Union, also based in Bakersfield: "What looked like really, really dark times 15 months ago, it didn't come to fruition."
Lending institutions say it may be a little too early to declare victory over the recession. The global supply chain still hasn't recovered and signs of inflation are popping up, not to mention risks that the highly contagious Delta variant will bring a return to COVID-19 shutdowns.
Just as big a threat in the eyes of some bankers is that consumers who are hanging on because of government stimulus payments won't be able to keep up once the assistance ends.
"The wildcard is what happens when all the stimulus goes away," Smith said.
Still, considering how deeply the recession disrupted society, borrowers seem to have done remarkably well.
Very little sign of the recession showed up in the second-quarter financial reports filed by Bakersfield-based Safe 1 Credit Union.
The amount of loans that had to be written off through June 30 because of lack of payment, $492,737, was less than half what it was a year prior. And it was less last year at that time than it was a year before.
What's more, fewer of the credit union's members filed for bankruptcy protect as of June 30 than at the same point in 2019, by a margin of 54 to 61.
In one obvious indication that people weren't making debt payments on the same schedule as before, Safe 1's share of delinquent loans to total loans edged up by June 30 to a little more than a third of 1 percent as compared with a quarter of a percent at that point in both of the two previous years.