Volume Leads Stanford FCU To Turn To MBL Participations
After a sluggish start, Stanford Federal Credit Union's business lending program is growing at a torrid pace-20% per month in 2005, according to the CU's management.
Brian Thornton, Stanford FCU's vice president of real estate and business lending, told The Credit Union Journal the program kicked off in July 2003 and booked less than $5 million in loans in its first six months. Last year, SFCU wrote $15 million in business loans. Thornton expects that total to rise to $40 million in 2005.
The gradual buildup was deliberate, he explained. "We started slow because you don't just run into something like this unless you are looking for failure." One factor behind the growth of SFCU's program was the 2003 hiring of Steven Weiler for the director of business services position. Thornton said Weiler "came over from the banking side" with "significantly more" than the required two years of business lending experience.
The $620-million, 40,000-member credit union serves the "Stanford Community," which includes Stanford University, Stanford Hospital, the Stanford Linear Accelerator Center, Lucile Packard Children's Hospital and other SEGs in San Francisco Bay Area.
Thornton described the membership as "wonderful" and "national, due to the Stanford Alumni Association." He said the types of businesses members wish to open vary widely-from the limousine loan that launched the program to multi-use office space and commercial real estate. "In Palo Alto, we see high credit scores and a lot of wealth, a lot of AAA borrowers," he said. "Then again, we also turn down people who do not have great credit."
To avoid bumping up against the 12.5% business lending cap, Stanford FCU partners with other credit unions. Thornton said SFCU has participated with four credit unions, but said he did not wish to disclose the names.
"Our policy is relatively conservative. If someone wants a $5 million loan, our policy won't let us, so we sell that loan to another credit union."