How Vista Bank benefitted from participating in the Main Street Lending Program

By Holden Wilen – Staff Writer, Dallas Business Journal

A client recently called Jared Craighead to let him know their company will be sold in a deal set to close on Oct. 2.

During the call, the client thanked Craighhead for Vista Bank’s support during the Covid-19 pandemic with a loan made through the federal government’s Main Street Lending Program.

For Craighead, chief of staff and director of strategic initiatives for Dallas-based Vista Bank, calls like that show him why the bank’s participation in the pandemic-era relief program was worth the time and effort.

The federal government created the $600 billion Main Street Lending Program through passage of the CARES Act in 2020. The program, overseen by the Federal Reserve Bank of Boston, aimed to provide midsize companies impacted by the pandemic with additional liquidity. Unlike the more widely known Paycheck Protection Program, the loans were not forgivable.

While banks could earn origination and servicing fees from the Main Street Lending Program, they also had to take on more risk since the loans weren’t forgivable and fully guaranteed by the federal government.

Many banks decided to not participate. In total, 319 lenders nationwide participated in the program, issuing 1,830 loans with a total value of approximately $17.5 billion, according to a report by the Office of the Special Inspector General for Pandemic Recovery.

Vista went all in with its participation in the program. Craighead said the bank made 80 loans totaling $774 million in origination value.

Payment terms for the loans are for five years with no payments due in the first year and no principal paid in the first or second year. Now, principal payments are beginning to come due.

About half of the loans Vista made through the program have been paid off and only a “handful” — about 10% — are in default and being worked out, Craighead said.

“It’s less than what we had projected we might have whenever we started the program three years ago,” Craighead said.

For Vista, the risk was worth the reward because of what its participation in the program has done for helping the bank develop deeper relationships with existing and new clients. Of the 80 companies that received a loan through Vista, Craighead said about 75% to 80% have expanded their relationship with the bank through additional deposits, treasury management services or other lending products.

He also said participating in the program demonstrated to businesses that Vista is willing to “go the extra mile” to help them.

“If we’re not there for clients in the bad times, then we’re not living up to our people-first mantra,” Craighead said. “It’s really easy for people to be there for clients and entrepreneurs in the good times.” 

New data from the Federal Deposit Insurance Corp. showed Vista Bank grew deposits more than 70% on a year-over-year basis to $826.8 million, as of June 30. While some of that can be attributed to the bank’s acquisition of Charis Bank, Craighead and CEO John Steinmetz both said the bank’s participation in the Main Street Lending Program has helped it grow.

The lending program has also provided Vista with a windfall of fee income. The bank sold 95% of the loans to the Boston Fed and received servicing fees for the loans.

“When borrowers pay as agreed, obviously we’ve been able to make a good profit on our participation in this in this program,” Craighead said. “But again, we didn’t get into this for the profit. That’s a nice benefit.”

Craighead declined to provide a figure for how much fee income Vista has received from its participation.

“Although the Main Street Lending Program has been very good for us financially, it’s in these desperate, uncertain, challenging economic times, that a bank is going to demonstrate it will be there for the entrepreneur that’s trying to save his business and keep his employees on the payroll,” Craighead said. “Who’s going to be there for them to help them survive? That is the ethos of Vista Bank. We’re there to support entrepreneurs who are risking their capital every day.”