PLANO, Texas—NCUA’s new member business lending rule has the potential to “completely change” they way CUs make loans, and will be part of the focus at Catalyst Corporate’s upcoming Accelerating Success Conference.
Catalyst Corporate noted that “while most credit unions believe this newfound freedom will create opportunity to compete more effectively, many are uncertain whether to completely rewrite their business lending policies or stay the course.
"A lot of credit unions with business lending programs in place have the ability to completely change the way they lend," said Larry Middleman, president and CEO of CU Business Group, "but like eating ice cream, too much, too quickly is not always the wisest choice."
Middleman will address credit unions at the Accelerating Success Conference on Friday, May 6, in a session entitled, "Connecting with your Business Members." He will provide insights into what the new rule means to credit unions, suggest opportunities credit unions should be researching and considering, and identify symptoms that can hint that business lending is expanding too fast.
The MBL rule was adopted in February, and the majority of its provisions will take effect January 1, 2017, with the exception of the waiver of a personal guarantee requirement, which takes effect May 13, 2016. The new MBL rule replaces the current rule's prescriptive requirements and limitations with broad principles to govern safe and sound commercial lending.
These principles are predicated on NCUA's expectation that credit unions will maintain prudent risk management practices and sufficient capital in line with the risks associated with their commercial lending activities.
"Credit standards probably won't change much," Middleman said, "those parameters have already been set by credit unions. MBL legislation does, however, increase prospects for broader, deeper relationships with a credit union's member businesses.”
In addition to discussing the implications of the new MBL regulation, Middleman will share ways credit unions can expand their reach to the right business members.
"Some credit unions take whatever walks in the door and assume it's a commercial lending opportunity," Middleman said. "There are strategies and tactics that can help a credit union identify niches to pursue through targeted marketing – in other words, grow commercial lending proactively, rather than reactively." Middleman said that pursuing specific types of loans and properties within the commercial real estate segment, for example, can increase lending success.
Middleman's presentation also will include: practical tips for increasing branch involvement in business lending; an overview of online lenders and how they can supplement, rather than compete with, a credit union's lending program; current trends in business services, and statistics that will help credit unions compare their performance to credit union peers and other financial institutions.
The Accelerating Success Conference will take place May 5-6 at Caesar’s Palace in Las Vegas. For info: www.catalystcorp.org.