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#Here’s how much money banks snagged for distributing PPP funds

#Here’s how much money banks snagged for distributing PPP funds

July 7, 2020 | 7:32pm

Big banks bagged a fortune in fees from distributing cash in the US government’s aid program for small businesses stricken by the coronavirus, according to fresh data.

JPMorgan Chase reaped $864 million as it handed out $28.8 billion in loans for the Paycheck Protection Program, according to an analysis by S&P Global Market Intelligence. Bank of America, meanwhile, pulled in $755 million on loans totaling just over $36 billion.

The eye-popping estimates — which could be conservative, according to some academics — assume an average fee of 3 percent. As it doled out more than $521 billion this spring, the program administered by the Small Business Administration entitled lenders to fees of 1 percent to 5 percent, sliding down as the size of the loan went up.

The fees have become a hot-button issue, as the loans are guaranteed by the US government, making them risk-free for the banks that distribute them. JPMorgan Chase Chief Executive Jamie Dimon and Bank of America’s Brian Moynihan have both pledged to donate their fees to small businesses that couldn’t get funding, and so has Wells Fargo.

“We will not earn a profit from the program,” a Chase spokesperson told The Post. “And remain fully committed to supporting underserved communities that have been economically impacted by the pandemic.”

But thousands of other banks, whose loan volumes in some cases exceeded the value of the banks themselves, will keep their windfalls. The nation’s 10 biggest lenders generated about $4 billion in fees, while the rest accounted for nearly $20 billion.

For a midsize bank like $21 billion Zions Bancorp of Salt Lake City, the $205 million earned in PPP fees amounts to almost 20 percent of the bank’s entire net revenue for 2019.

“It’s definitely a lot of money,” said Nathan Stovall, principal analyst at S&P Global. “But they only collect the fees when the loans are forgiven, and that might not happen until the last quarter of this year or even next year.”

Once the money does hit the books, banks can use it like any other revenue. Since it will technically be earnings, they can even use it to increase their dividends under new rules from the Federal Reserve after its stress test of banks in late June.

But experts see that as unlikely thanks to the COVID-related uncertainty.

“Think of these fees as more of a capital raise,” explained Stovall. “They have no risk weighting and they are a boost to earnings.”

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