A ‘turtle bank’ plays catch-up in small-business lending
American Banker
By John Reosti
2 July 2019
Provident Financial in Iselin, N.J., has partnered with a fintech to become a stronger small- business lender.
The $9.8 billion-asset company is working with Fundation to offer unsecured small-dollar loans to commercial clients. While available in Provident’s more than 80 branches, applications for loans as big as $250,000 are also being accepted online.
“We wanted to offer something for our customers that was convenient,” said Josephine Moran, Provident’s director of retail banking. The goal is “to offer options to customers. We were searching for solutions for that part of our business.”
The decision to offer unsecured loans might seem odd for a bank known for its conservatism.
“They’re slow and steady,” said Mark Fitzgibbon, director of research at Sandler O’Neill, adding that analysts at his company often refer to Provident as “the turtle bank.”
Provident “just plods along and produces good results in good environments and bad environments,” Fitzgibbon added. “They’re very disciplined on credit and interest rate risk. I think it’s a fabulously well-run bank.” Net income totaled $30.9 million for the quarter that ended March 31 and $116 million in 2018.
That being said, the digital lending push still meshes with Provident’s risk appetite since Fundation holds most of the loans, Fitzgibbon said.
Provident has hit on “a creative way to help small-business customers,” he added.
Indeed, creating new relationships with small businesses should over time help Provident make progress diversifying its loan portfolio. More than half of its loans at March 31 were commercial mortgages or multifamily credits. “It’s important that you’re with the business from start to finish,” Moran said. “If you can capture the startups, earn their trust, gain their relationships, you assist them with their growth, they’re going to be with you for life.”
Similar moves could make sense for other banks that want more contact with small businesses “but do not want to underwrite risk below a certain threshold,” said Walt Levengood, vice president for sales and business development at the business financing firm Nav.
“If you want to fund the loan, by all means put it on your balance sheet,” Levengood said. “But you won’t insult the businesses in the instances where you don’t want to fund loans.”
While it may not immediately lead to meaningful loan growth, the Fundation partnership should give Provident a better shot at capturing the rest of the banking relationship from potential small-business clients, including low-cost deposits.
To that end, Provident is developing a product that combines a checking account with other products from its small-business suite.
“It’s still in the process, but what we’re looking at is a checking account that bundles things such as such as merchant services, payroll and lending,” Moran said. “You want to offer convenience at optimal pricing. You want to make it very easy for them, because small businesses need all these services and it entices them to bring their entire relationship to us.”
Small business “is such an important part of Provident’s funding base,” Fitzgibbon said.
Provident began the Fundation partnership at the end of February. While she declined to discussion the amount of loans processed, Moran said she is satisfied with the early results and bullish on small-business banking prospects generally.
“So far we’re very pleased with our relationship” with Fundation, she said. “It’s opened up another door for us. … There’s a huge opportunity for us, and we’re going for it.”

More News
Visa boasts of fintech Fast Track success
May 14, 2020
New York City Credit Program Aims to Help Female Entrepreneurs
November 14, 2019
Import/Export SMBs Introduced to Fintech Lending Options
August 7, 2019
Online Loans You Can Take To The Bank
April 23, 2019
Case study: Citizens Bank – fintech friendly
February 19, 2019
2018 Best of FinXTech Awards Finalists Announced
March 29, 2018
Citizens Digitizes SMB Lending Process With Fundation
November 6, 2017
Park Bank Announces Expansion of Small Business Lending Efforts
November 2, 2017
Defining, Adopting and Executing on Fintech
September 5, 2017
Fundation CEO Talks Partnership Strategy
August 4, 2017
Fundation works with, not in place of, banks
April 3, 2017
Fundation Secures Credit Facility from MidCap Financial
March 21, 2017
Where the money is: A small business lending gap
March 3, 2017
Q&A Break with Sam Graziano, CEO of Fundation
January 18, 2017
Fintech Ideas Festival Rapid Fire Emerging Tech Panel
January 17, 2017
Citizens Bank Next To Take The Leap With Alt-Lender
December 21, 2016
Regions Eyes Small Business Loans in Latest Tech Deal
September 22, 2016
Is The Future Of Alt-Lending Playing Well With Others?
August 30, 2016
Best Alternative Small Business Loans 2016
May 27, 2016
Frenemies In the Marketplace
April 29, 2016
Bigger Bang In Small Biz
April 1, 2016
How To Get A Small Business Loan (Webinar)
March 29, 2016
Fundation Expands Small Business Lending
March 4, 2016
Top 25 Financial Blogs for Small Businesses – 2016
February 22, 2016
CEO Sam Graziano on MSNBC’s Your Business
February 18, 2016
Bank Branches Are Still Good for at Least One Thing
February 17, 2016
Fundation Named Finalist In 2016 Stevie® Awards
February 12, 2016
A “Meaningful” Platform-Bank Partnership?
January 6, 2016
Late on a Loan Payment? How To Do Damage Control
October 21, 2015
Regions Inks Unique Deal to Tap Booming Fintech Industry
October 13, 2015
Best Alternative Small Business Loans – 2015
October 6, 2015
Fintech strikes again; Regions partners with start-up
October 5, 2015
Investing in Alternative Lending?
May 1, 2015