Why One CU Tapped Biz Lending Vets To Launch Operation

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Tri-Co Federal Credit Union has created a new Business Lending Group for small to mid-sized businesses within its field of membership.

Created by its VP of Lending, Margaret A. Frey, a 35-year commercial banking veteran, Tri-Co plans to target a niche that it says local banks have neglected.

"Our membership has been patiently waiting for member small business services fora couple of years," said Tri-Co President/CEO Michael R. Prettyman. "But we didn't want to rush into something unprepared."

With Frey's expertise and the more recent hiring of Gerald Reiner, who brought with him 30 years of commercial lending experience, Prettyman said the $125-million, 15,000-member CU is ready to see the success of its efforts.

"Our research indicated that many of our members have small, home office businesses and need commercial services to match their needs," he said. "It is a niche we've discovered that banks don't always fill."

Frey, who spent about eight months creating the Business Lending Group "from concept to implementation," said her goal was to provide the members with every product and service available to them elsewhere in a timely manner.

"We built our systems to do a smaller end of credit to compete with the American Expresses of the world," she said.

Since its launch in May, she said the average loan amount has been in the $150,000 range -typical for small businesses and reasonable for a CU of Tri-Co's asset size.

Before Proceeding...

Frey, who previously worked for Summit/Fleet and Commerce Bank, advised that as more credit unions consider adding business lending products and services, they should do so with caution.

"My experience has been that as credit unions begin to get more and more involved in business lending, they need to focus on their core competencies," she said, noting that while the higher return rate is an attractive draw, CUs need to weigh the fact that the risk is also higher. "If this is not their area of experience, they need to hire people who have it. Between us, we have 65 years of commercial lending experience."

Reiner was formerly a business lender at Lakeland Bank.

After surveying the members about their business needs, Frey was able to profile member businesses and create a core of prospects.

"Then we went to development and research to conduct a competitive analysis and find out what the NCUA was looking for," she said. Once the CU's board approved the concept, Frey said her team put together a "very well defined project plan" that included financing, staffing, training and delivery channels.

"We engaged everybody at the CU-even the tellers-to participate in subcommittees," she said. "We wanted to see the impact this would have on everybody."

Since its launch last May, she said, the CU has "significantly improved" its loan ratio.

She expects it'll only get better.

As for her decision to cross over to CUs after 35 years with banks, Frey said, "I actually wish I had found it 35 years ago . . . Credit union folk are top-notch. Anyone you call and ask for help is willing. It's a family type of feeling."

She said while bankers claim they care about their customers, "you know they are serving the shareholders. I love the idea that our members are our owners."

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