ROCKY HILL, Conn.-Nutmeg State FCU here is looking to grow its portfolio and its marketshare rolling out an indirect loan program with local businesses, including those that offer "lifestyle" enhancements.
"If somebody is looking for Lasik, plastic surgery or to have major repairs done on a vehicle, we are working with those types of business to be able to offer their customers loans to be able to pay for some of those more expensive services," said President and CEO John Holt, who joined the $332 million, 29,000-member credit union in September of 2010.
Together with the help of Utah-based Lifestyle Lending Solutions, Holt and Chief Lending Officer Bob Boucher have contacted a number of local businesses, including dentists' offices, doctors and auto repair shops. So far a half-dozen clients have signed up for the indirect-lending relationship.
The CU uses risk-based pricing on these loans, setting rates between 8% and 13%. "Our lifestyle loans are priced like a personal loan, but at a much more reasonable rate," said Boucher.
The CU hopes to book a minimum of $100,000 per month, with the goal of $1.2 million to $1.5 million by the end of 2012.
Nutmeg State FCU is promoting the new service by meeting with potential providers to go over the benefits. "A lot of them use GE Moneybank-the care credit for the medical providers-and for them it's very similar to a credit card in that they pay a percentage of each loan, which cuts down on the income they're making," said Boucher.
Nutmeg State's program "is a flat rate per provider per month ($99), regardless of whether they send us one loan or 100 loans."
Boucher added that Nutmeg state is looking across a variety of vendors, including local appliance companies, replacement windows, medial providers and veterinarians as potential candidates for lifestyle and business loans. "There's a broad range, which limits the type of risk, instead of doing just one industry which could suffer a downturn."
Holt noted NSFCU is conducting due diligence on all business clients, but plans to avoid potentially higher-risk fields like vinyl siding, after-market auto products or engine alterations. Both Boucher and Holt said they are not concerned about hitting the MBL cap.
Seeking To Be Premier Lender
The indirect loan program is part of a broader effort by Nutmeg State FCU and it will begain offering business lending and deposit accounts on Nov. 1. "We're pricing our products for businesses very competitively and hoping to be one of the premier lenders," said Holt. "We want small and medium sized businesses to come to us for their solutions. Quite honestly ... the sky's the limit."
Nutmeg will be the only CU in the area offering free business accounts, said Holt. "Our approach is that we want to help the small, local businesses in and around the Hartford area," he said. "Our business accounts will be completely free: no transaction limits, no minimum balance, no monthly service charges. We're going head-to-head with some of the more aggressive community banks to help businesses, especially during these hard economic times. Our product will be the best in the market. It will cost us a little bit, but our hope is that we can build a relationship with these small businesses to be able to lend with them and to get some of their employee accounts."
Nutmeg State is also expanding its branches, opening an in-store branch at a Price Chopper grocery store, with hopes to create one or two new in-store branches each year.
