Two CUs, Two Approaches To Moving Into MBLs
Two more prominent credit unions will begin offering business services to their members this year, but are pursuing slightly different strategies.
Seattle, Wash.-based Boeing Employees CU and Riverside County's Credit Union, which has its headquarters here in one of the fastest-growing areas of Southern California, are taking two very different approaches to member business lending.
BECU, which is scheduled to introduce its pilot program at two of its 28 branches in March, brought outside expertise inside. RCCU, on the other hand, recently entered into a partnership agreement with Business Partners, LLC, a credit union service organization (CUSO) founded by Telesis Community CU in Chatsworth, Calif.
Bringing Expertise In-House
Arnie Gunderson had done small business lending for banks in the Seattle area for 16 years before being hired as BECU's director of small business services in May 2003. In preparation for the rollout of business services, Gunderson has hired a staff of four-one in September, three this month.
BECU will offer deposit and credit products, business checking, and loans. Gunderson said more products will be added as it is "appropriate," and depending on what members are looking for.
"We are going to see how the pilot program goes, and will roll out to the other locations based on demand-that is one way we will manage the levels," he explained. "We don't want to overwhelm our capacity. We want to offer service levels our members have come to expect. It might seem counterintuitive, but if demand is too high, we will stay with just offering services at two branches."
BECU members repeatedly have requested business products services in response to surveys over the years, said Gunderson. "Many Boeing employees have been laid off and have started their own businesses."
Membership in Riverside County's CU is open to anyone who lives, works, attends school or worships in this rapidly expanding part of the "Inland Empire." Gerry Agnes, executive vice president and chief operating officer for RCCU, told The Credit Union Journal the partnership with Business Partners will allow it to be competitive immediately with the area's real estate brokers, developers and business owners.
"As a fast-growing community credit union, serving the business sector is very important. We have served the consumer sector in the area for many years, but we don't have experience in business lending. We could hire business-lending experts, or we could partner with a company that has expertise and leverage that know-how. Telesis already has built this platform, and it is an excellent platform. Business Partners will be our entr?e to this important market sector."
"Business Partners has built a big bank, small business lending platform, and is delivering it to credit unions," Agnes continued. "To develop something of this capacity would be cost prohibitive for us. We would have to hire a lot of expertise to do things in the manner we can with Business Partners."
As part of the agreement between RCCU and Business Partners, the latter will not sell its system to the other seven credit unions in Riverside County.
Agnes said RCCU will offer two categories of services: commercial real estate services for investors or owner-occupied facilities with loans up to $40 million; and small business services including loans of $250,000 or less, Small Business Administration loans, merchant bank cards, deposit and checking.
Targets for these services include sole proprietorships such as physicians and dentists, small retail stores, and other basic businesses.
Not Seeking Larger Businesses
"RCCU will focus on the small business sector instead of seeking large business relationships, as the community consists mostly of small businesses," he said.
RCCU will market the commercial real estate products and services to the community in late January or early February. The small business platform will be launched around June 1.
"Riverside County's Credit Union brings brand identity, a branch distribution network and contacts in the community," he said. "We will start with our SEGs and our existing members. The loans will be serviced by Business Partners, but deposits and merchant cards will be performed by the credit union."
"Business Partners fills our gaps, and we fill theirs, and the synergy makes for a wonderful partnership."