Embed Size (px)
Citation preview
Business LendingWithin Your Community
Dale Frankhouse
Tristram Coffin
Dale Frankhouse• Director of Business Services
• Launched Business Services in 2008
• 25 years with Sun Federal as of March 2015
• Lending management experience in consumer, mortgage, collections and business.
• Sun Federal Credit Union
• Toledo, OH and Philadelphia, PA
• $460M in Assets; 30,000 Members
Tristram Coffin• CEO, Alternatives Federal Credit Union
• Succeeded founder in 2007
• Prior Experience in financial service CUSOs
• Alternatives FCU
– $95 million asset, one location in Ithaca, NY
– 2014 CUNA Community Credit Union of the Year
A Holistic Approach• Education and community Service
– Individual Development Accounts (IDAs)
– Free Tax Preparation
– Business CENTS
– Financial and Housing Counseling
• Loans– Mortgage / Consumer / Business
• Deposits– Free checking, no minimum balance, ease of access
The Credit Path
Why Business Lending?
• Mission
• History
• Strengthen Local community
• Strategic Fit
• Alignment with Brand
Business consumer impressions
• Bank perception
– Fees and Hassles
– Not invested in your success
• CDCU Attributes
– Supportive
Purchase Factors
• Full range of business services
– Loans from $600 to $600,000
– Business checking/deposit
• Knowledgeable staff
• Access to Supportive ecosystem
Favorable ecosystem helps business
• Classroom/1:1 Technical Assistance
• Networking Opportunities
• Promotion to Alternatives’ member base
Alternatives’ Services
• Business Loans
– Working Capital
– Line of Credit
– Equipment
– Commercial Mortgage
– Women and Minority loan program
Additional Services
• Business CENTS (Training and coaching)– Membership not Required
– Serves about 500 people annually
• Other value added, relationship products through referral
• Considering bundled services through local partners
Credit Union Opportunities
• Smallest Businesses underserved by banks
• Extension of existing credit union brand
• Collaborative nature of credit unions lowers barriers to entry
• Integration with Community Outreach
• Align with public policy solutions
• Loan and Deposit Growth!
Next frontier- Online Lending
• Rapidly Growing
• VC backed
• Business models still emerging
Competitive Environment-
• Online lenders offer very different features
– Merchant Cash Advance (MCA)
– Daily ACH repayment
– Short-term installment
– Long Term loans
Alternatives’ approach
• Partnership with Cooperative Federal CU
– Businessloanconnection.org
– Shared capacity building
– Funded by ESDC Grant
• Online app is generator of 1:1 conversations
• Participant in CDCU-specific platform development
Online Portal
Marketing the website
• Business Journals
• Centers of Influence
• Pandora Radio
Thank You/Contact Info
• Thank you for your attention.
• If you would like to contact me with comments or questions:
– 607-273-4611, extn 417
Sun Federal’s Business Lending Philosophy
• Purpose is to serve more members.
• Serve the business, the owner(s), their employees and their families
• More than one loan; expect to deepen relationship with the business and the owner(s).
Key Strategic Questions1. How will you provide products, services and
fees equal or superior to your competitors?2. What do your business members most need in
a new banking relationship?3. How will your CU differentiate itself from local
competitors?4. Do you want to attract special types of
businesses?
Developing a Business Lending Pipeline
• Your Sponsor Groups.
• Existing members with businesses.
• Sign Local/Regional businesses on as SGs.
• Referrals from Loan Officers & Branch Staff.
• Referrals from members.
• Local Business Journal ads.
Evaluating Local/Regional Markets
• Look for potential business members/SGs within 3-5 mi. from your branches.
• Decide if there are certain types or size of businesses you would like to serve.
•
Realizing Opportunities
• Connect w/business owners or HR managers.
• Promote CU membership as a free employee benefit.
• Promote financial education, financial planning and
wealth management programs.
The Role of a Business Lending CUSO
• Business Loan Origination & Participations• Business Loan Underwriting, Loan Documentation, Closing & Funding• Business Loan Servicing, Portfolio Management & Compliance• SBA Loan Packaging• Business Loan Training• Risk Management/Portfolio Stress Testing• Pre/Post Closing Loan File Audit• Business & Collateral Site Visits
Cooperative Business Services (CBS)
• Founded in 2003
• Owned by 8 CUs and the Ohio CUL
• Based in Cincinnati, OH
• Serving 81 CUs in 10 states
• 32 Professional Employees
• Servicing fee of 40 basis points
Shared BDO Partnership
• Multiple CUs pay for a BDO to cover the area.
• BDO is employed by the CUs.
• One CU is identified as lead for each deal.
• Partner CUs have right of first refusal to participate.
Making a Slash in Your Community• Get Involved/Volunteer – mission in action
• Join the local Chamber of Commerce and/or other civic organizations.
• Attend, support & sponsor events.
• Donate door prizes.
• Lead educational sessions or workshops.
• Be a meeting speaker or sponsor one.
Other Lending Partners
• Small Business Administration (SBA)
• Toledo Port Authority (CDC)
• Philadelphia PIDC
Loan Originations• Loans up to $7.5M.
• Originating CU must fund min of 10% of the loan.
• Opportunity to obtain/deep business account relationship.
• Opportunity to serve more members.
Loan Participations
• Effective way to manage excess liquidity.
• Spreads risk among multiple CUs.
• Due diligence is critical component if you buy.
Analyzing/Underwriting a Business
• Complete application package and supporting documentation; i.e. past 3 yrs tax returns, PFS, etc.
• Visit the business; meet with the owner(s).
• Search info: CBR, Google Search, BBB, PACER Report.
• Learn the history/ask questions.
• CUSO U/W our commercial deals.
Ongoing Review and Monitoring
• Monitor payment history.
• Monitor business account activity and balances.
• Meet face-to-face, at the business at least once a year.
• Response time for updated financials, tax returns or to schedule a meeting could indicate a problem.
Site Visits
• Performs annually for all credits over $250K.
• Photos taken.
• Includes review of updates financials and tax returns.
• Summary issued including risk rating update, if applicable.
Take-Aways• CUs offer competitive business solutions.
• Deepen business and personal account relationships w/business owners; become their trusted advisor.
• Business lending is a pathway to grow your CU and serve more members.
CUNA Lending Council• Offers lending education and resources in consumer,
mortgage, business and collections for lending professionals.
• Virtual Roundtables and White papers/relevant topics.
• Discounts on CUNA conferences, schools/webinars.
• Annual Conference/November/Fort Lauderdale – 2015.
• Scholarships for CLC or other CUNA conferences.
Thank You/Contact Info
• Thank you for your attention.
• If you would like to contact me with comments or questions:
– 419-794-7420
