Massachusetts banks await return of business loans after COVID drives savings,

For bankers like everyone else, 2020 was a year of dealing with COVID-19: making sure branches were safe, customers cared for and employees healthy while processing a mountain of Paycheck Protection Program loans.

It also was a busy year for home loans — single-family home sales were up across the region — and a year when many Americans saved more money than usual.

The Personal Savings Rate, figured as a percentage of income, spiked in 2020 when people were working but had fewer places to spend. That spike subsided as the summer wore on, but saving still remained higher than it was in 2019.

In 2021, bankers are looking for more traditional lines of business — commercial loans, home mortgages — to replace PPP loans from the federal government.

Between savings and PPP, Monson Savings grew its assets quickly by $30 million to $510 million. It’s a funny time for bankers, said said Steven E. Lowell, the outgoing outgoing CEO and continuing chairman of the board.

“What we need are loans,” Lowell said. “Our challenge will be to put that money back out to work.”

Banks’ ability to loan will largely depend on the willingness of businesses to borrow.

“Loan demand and business optimism go hand in hand,” said Matthew S. Sosik, president and CEO of Hometown Financial Group, the parent of BankESB. “We’re hopeful.”

Associated Industries of Massachusetts’s 100-point Business Confidence Index ended 2020 essentially neutral at 49.3. The organization said that represented a 10-point gain since its April survey.

“Massachusetts companies are optimistic about their own prospects, which provides hope that the economy will rebound once the nation gains control of the pandemic,” Raymond G. Torto, professor at the Harvard Graduate School of Design and chair of the AIM Board of Economic Advisors, said in a statement last month.

Local bankers have long relied, even in an increasingly online world, on the promise of branch offices where customers can talk to a person, get a problem resolved and seal that resolution with a handshake.

Then came the pandemic. Phone and online banking have flourished while people have been reluctant to out of in public and risk contracting or spreading the coronavirus.

“COVID has changed a lot,” said Lowell. “And banking habits have changed dramatically.”

Many local banks closed their branch office lobbies for most of the spring and summer, reopening in the fall as infection numbers fell. As COVID-19 cases rose again in the winter, banks relied on drive-thrus for in-person contact with customers.

“Some people always knew they could bank online but they just wanted to come into the bank,” said Kevin O’Connor, executive vice president and chief banking officer of Westfield Bank. “We’ve had very good online and on-our-website tutorials. But they were also on the phone.”

Westfield Bank started publishing phone numbers for individual branches. That meant folks could easily contact a teller in the “their” branch, O’Connor said, instead of being routed through a central call center.

“Small things, but I guess they make a difference,” he said.

Like all banks, Westfield processed PPP loans. Massachusetts businesses received more than $14 billion through the federal program. A second round of the loans became available thanks to the $900 billion federal stimulus package passed in December.

Some banks farmed out the work to outside contractors, with mixed results. Westfield Bank kept the process in-house, but did automate it halfway through the summer.

“We are in the forgiveness process,” O’Connor said. “It’s going well.”

Sosik said BankESB processed all its PPP loans by hand.

“That was and continues to be a laborious task,” he said.

But those loans kept business customers operating during the worst of the pandemic.

“That’s been a real lifesaver,” he said.

Area banks opened a number of new brick-and-mortar branches in 2020 despite the pandemic.

Monson Savings…