CenCorp is Latest Corporate to Enter Business Services Arena; Does So Via Purchase of Existing CUSO

SOUTHFIELD, Mich. – Count the $3 billion CenCorp among the corporates offering products to help their member credit unions serve business accounts. Corporates jumped into business services last year when Northwest Corporate formed a business services CUSO. Later, Empire and FirstCorp joined the Northwest CUSO to bring business services to their members. Just recently, Southeast Corporate announced the formation of its new business services CUSO, Member Business Solutions, LLC. CenCorp came on the business scene in a unique way. It purchased Credit Union Business Solutions, LLC, the business lending CUSO of Northland Area FCU in Oscoda, Mich. The CUSO was started in May of 2000, providing business loan underwriting services to 12 Michigan credit unions. It closed about $10 million in loans so far in 2003. CenCorp is using this purchase to offer its members business lending services through its new CUSO, CenCorp Business Solutions, LLC. “We had an opportunity to service an existing base of users that were already CenCorp members. That is why we ended up here,” said CenCorp President/CEO Bill Walby. “The credit union that was spearheading it had a model in place that was being used by a dozen credit unions. They were looking to expand it, but from their location, they would have a hard time doing that.” CenCorp paid just $10,000 in cash to Northland Area FCU to purchase the CUSO. The real value, said Walby, is the deal also included a five-year agreement in which Northland Area FCU will get services from CenCorp’s CUSO at reduced pricing. The CUSO will provide business loan underwriting services on an out-source basis. The service also includes business lending education for directors and staff members, assistance in business lending policy development and marketing and assistance with business lending regulations. The plan, said Walby, is to eventually offer all necessary business services, not just lending. “Deposit services, ACH origination; all those will play into this as we go into the future,” said Walby. This is the corporate’s first wholly-owned CUSO, but with about 20% of the state’s 435 member credit unions expressing interest in offering business services, Walby said the corporate wanted to step up. “Credit unions are looking to get into that market. The aggregator role of a corporate I think fits this need,” said Walby. He said the CUSO will bring a lot of value for those credit unions that don’t want to build business services from the ground up, which can be expensive. Walby said CenCorp won’t even try to build the CUSO internally, in terms of training existing employees. CenCorp has hired a commercial lending expert – M.B. Ducher – who has 20-plus years of commercial lending experience at a community bank and who knows credit unions, spending the last four years at SOC CU in Troy, Michigan. CenCorp plans to add more staffers next year. Ron Wilson, who was running Credit Union Business Solutions, LLC, will stay on and continue to underwrite loans for the new CUSO. CenCorp plans to quickly bring a high-tech angle to business lending. An automated loan application and document delivery process through EDGE ON-line (CenCorp’s Internet communication and information system) is being developed and should be finished by the first quarter of 2004. Walby said although CenCorp did not partner with any other corporates in this endeavor, he believes in national cooperation among corporates in new areas such as business services, and could see national partnerships in the future. [email protected]