Arrowhead banking group president offers advice on business services

<p>MONTEREY, Calif. – Credit unions that offer products and services to serve business members will help grow their financial institutions, but they also should be aware of some of the issues they will be facing, says the president of Arrowhead Credit Union’s Business Banking Group. “Your members are going to benefit from the additional services and the convenience of being able to conduct their personal and business transactions with you,” said Steve von Rajcs. Speaking at the Big Valley Educational Conference sponsored by the California/Nevada Credit Union League, von Rajcs discussed the services the banking group offered and planned to offer. He said the future looked bright for Arrowhead as it expands to serve businesses – including its plans to open a state-chartered bank solely to service business members. Von Rajcs, who came to Arrowhead eight months ago from the banking industry, said it makes sense for credit unions to serve business members. “They’re asking us for these services,” he said. “They’ve got their personal accounts with the credit union and their banking business somewhere else because we can’t give them what they need. So we’re going to develop those products and services to give them what they want.” In response to a question, Von Rajcs said community perceptions that a credit union was not geared for business services were unfounded. “What we’re finding . . . is that they (community members) can’t wait for us to start offering this,” he said. “So when we tell them we can do it, they’re giving us that opportunity.” He said the biggest challenge is explaining the services available to people who know little or nothing about credit unions. “What we’re finding as we go out and talk to these people is that after the initial, `Gee, I didn’t know you could do that,’ they’re excited that we can.” On the lending side, Arrowhead’s offerings include commercial real estate loans, credit lines for working capital, and equipment and machinery financing. On the deposit side, it offers such things as checking accounts, payroll services, merchant bank card services, and online banking and payment services. More programs are planned. To find and attract business members, von Rajcs said he relied in part on the natural synergy between the branches and the credit union’s 1,600 select employee groups. Referrals from the credit union’s two other CUSO’s were also bringing in new members, he said. The banking group also employed calling officers by region. “You already have members who own companies that would like to do business with you,” he noted. Among the issues that credit unions needed to be aware of was the regulatory restriction on lending limits (12.25% of assets). He also urged credit unions to hire experienced commercial lenders and calling officers. He said employees from the banking side needed to fit into a credit union’s culture. “Integrating the bankers with the credit union people can sometimes be a little tricky,” he said. He also warned that computer systems utilized by credit unions might not be up to the task of handling business services. Other advice that he offered: Hire the right people. Be aware of startup costs (“It’s going to be expensive,” he warned.) Don’t try to reinvent the wheel when it comes to documentation. (“There are lots of places that can tell you how to document a business loan, how to document new accounts for businesses, what kinds of things you need to protect yourself and the credit union.”) Utilize third-party vendors for some services. (Otherwise, he said, “you need an army of people and a whole lot of equipment and software to do all those things and you don’t need to.”) Know your market area before introducing products and services. (“You don’t want to invent something that nobody wants.”) Move slowly. (“Don’t try to do it all at once.”) Von Rajcs said the benefits of business services not only helps the credit union, but also serves the entire community. “And,” he added, “you’ll drive the bankers crazy.” -</p> <p>[email protected]</p>