Some credit unions are making lots of very profitable member business loans. Most aren't. In fact, by Mark Ritter's count, maybe 300 of the nation's credit unions are genuine players in this business. The rest are dabblers, he says.
That's a shock because in the last couple years there has been a stampede of credit unions eager to get into member business lending. The reasons are obvious. There has been an avalanche of deposits that need to be put to work. Meantime, both the home mortgage and car loan markets are sputtering, definitely as far as credit unions go.
The eyes in the credit union c-suite shift to local businesses and the question gets asked: how do we lend to them?
Ritter, longtime CEO of Pennsylvania based CUSO Member Business Financial Services, which specializes in member business lending, knows the reality.
About 80 credit unions are active with MBFS - 13 are owners - and they range in size from tiny to over $1 billion in assets. Ritter pegs the MBFS sweet spot as institutions in the $300 million to $1 billion range but, he says, MBFS has no size limits, big or small.
MBFS in many ways provides credit unions with turnkey service. That means they prospect for borrowers, negotiate the terms, service the loan, and do pretty much everything except provide the capital to lend.
Want to know why member business lending initiatives sputter at many credit unions? Also want to know who not to hire to make those loans?
Ritter has the answers in this wide ranging podcast that is a must listen for any credit union exec who wants to get into member business lending - or wants to do better at it.
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