ORLANDO – Seven Florida credit unions have partnered to form The Cypress Group, LLC, a member business lending support CUSO with the mission to have a competitive edge across the Sunshine State. The Cypress Group will provide such back-office functions as underwriting, documentation and portfolio maintenance support of member business loans for its owners as well as facilitate loan participations amongst the seven credit unions. Cypress Group's owners are Campus USA Credit Union (Gainesville); Central Florida Educators' Federal Credit Union (Orlando); Educational Community Credit Union (Jacksonville); MacDill Federal Credit Union (Tampa); Pen Air Federal Credit Union (Pensacola); Space Coast Credit Union (Melbourne); and Tropical Financial Credit Union (Miami). The combined assets of the credit unions total $6.3 billion with 101 branches throughout the state. Larry Scott, president/CEO of Campus USA CU will serve as chairman of the new CUSO. Cypress's office will be located in office space donated by Central Florida Educators' FCU in Orlando. Kevin Dion will serve as president of the new CUSO, bringing more than 20 years of bank commercial lending and credit analyst experience to the position. Dion's staff also consists of an underwriter and documentation officer. Over the past few weeks, he has crisscrossed Florida to visit the credit unions that own Cypress. At press time, he was in the midst of a training session at Pen Air FCU bringing branch managers and other operational staff up to speed on their role with Cypress. Dion said while Cypress formally opened April 1, five months later, the CUSO is already seeing some early activity. "Volume has started to pick up," said Dion, who declined to disclose how many applications are in the pike. "Each credit union has a different take on how they're implementing their (MBL) program." Indeed, Scott said the seven credit unions are at different stages of training and implementation but the longterm mission is to have a footprint on distinctive markets and diversify risks. "We're not competing against each other," Scott assured. "In certain parts of the state, for example, unemployment may be a factor. This (CUSO) helps us to diversify those types of risks." Scott said discussions on forming Cypress started last year and was prompted by the reality that while member business services was an untapped financial mine, all seven credit unions agreed that they didn't have the appropriate internal expertise to carry out such a venture individually. Greg Blount, president/CEO of $620 million Tropical Financial CU served as the catalyst to bring the seven credit unions together through several meetings held last year. Blount had visited MBL models at six credit unions and Tropical held member focus groups that provided feedback on the need for such services. Of its 70,000 members, up to 25% are self-employed or work for a small business, Blount said. Literally starting "from ground zero," Tropical closed its first business loan in July and has since secured several more including a $1 million property loan for a dentist practice. The credit union, as is the other CUSO owners, is scheduled to have a full array of services for members by Jan. 1, 2005, Blount said. "For many credit unions, (member business) start-up costs can be quite significant unless you're a billion-dollar credit union," Blount said. "I wouldn't call it a tsunami but there's certainly a tidal wave of interest from credit unions to offer these services." Blount said while their have been inquiries from other credit unions wanting a piece of the MBL CUSO, the focus will remain among the seven owners for the time being. Cypress will use Appro Systems, Inc. for business underwriting and Bankers Systems' Rembrandt Lending System for automated documentation, Dion said. Each credit union has their own sales team which consists of business development officers. Loans and applications are handled there and then the back-office functions are sent to Cypress. The answer to whether there was a real need for member business services at each of the respective credit unions was found in careful searches through internal member databases, Scott said. At Campus USA FCU, for instance, between 6,000 and 8,000 of its current members either have a business relationship with the credit union or another financial institution. If the $590 million Campus USA would have started its own MBL CUSO, it would have cost the credit union between $300,000 and $350,000 annually to staff it, Scott said. Statistics show that some members who own their own businesses are producing revenue on average between $1 million and $10 million, a range ripe for demand, particularly among banks, Scott said. The rest of the year will see Cypress's perfection of the training and operations, the introduction of business share checking accounts and share money market accounts as well as starting the process to become an SBA lender, Dion said. For now, there will be an immediate concentration on basic products such as owner-occupied mortgages and equipment term loans. As for the criticism coming from community banks in particular, about their claims of credit unions encroaching on their business lending territory, Scott said there's plenty of business to go around. "Our mission is to serve the members," Scott said. "If those members have businesses, we should be in a position to offer opportunities to serve them." [email protected]