Business Impact Of Covid-19

3 Months Ended

Mar. 31, 2020

7. BUSINESS IMPACT OF

COVID-19

In December 2019, a novel strain of coronavirus, COVID-19, was reported in Wuhan, China. The COVID-19 virus continues to aggressively spread globally and has spread to over 185 countries, including all 50 states in the United States. A prolonged COVID-19 outbreak, or any other epidemic that harms the global economy, U.S. economy, or the economies in which we operate could adversely affect our operations. While the spread of the COVID-19 virus has minimally impacted our operations as of March 31, 2020, it has caused significant economic disruption throughout the United States as state and local governments issued “shelter at home” orders along with the closing of non-essential businesses. The potential financial impact is unknown at this time. However, if these actions are sustained, it may adversely impact several industries within our geographic footprint and impair the ability of our customers to fulfill their contractual obligations to the Company. This could result in a material adverse effect on our business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include all or a combination of valuation impairments for investments, loans, and intangible assets.

Loan Portfolio

As a result of the novel coronavirus

COVID-19,

the Company has granted payment deferments through the date of this filing on over

400 loans with an aggregate outstanding balance of approximately $365.0 million and aggregate monthly principal and interest payments of approximately $3.7 million. The payment deferments have been granted initially for up to 90 days, and the Company will consider an additional 90 days based on the circumstances on both a macro and micro level at the time.

The Company is also participating in the SBA Paycheck Protection Program (PPP). Key Features of the PPP include:

•

24-month

term

•

Interest-rate of 1%, deferred payments for the first

6-months

•

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). No collateral or personal guarantees are required. Neither the government nor lenders will charge any fees.

•

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

•

Loans are guaranteed by the United States Treasury Department.

The Company has approved

approximately 720 PPP

loan applications from new and existing clients, totaling

over $370.0 million.

The Company is not acting as an agent but will be receiving the full fee provided by the SBA for making these types of loans.

Goodwill

The company completed an impairment analysis of Goodwill as of March 31, 2020 and has determined there was no impairment.

As part of the Company’s assessment of goodwill impairment, management considered coronavirus

COVID-19

and determined that the significant change in the general economic environment and financial markets represents an interim impairment indicator that will require continued evaluation. As a result, there is a reasonable possibility that goodwill impairment could occur in the near term.