Iowa Credit Union League Makes Strides Again with Launch of Community Business Lenders CUSO

DES MOINES, Iowa – More than two years ago, the Iowa Credit Union League started getting a number of requests for credit unions here on member business lending support services. Unfortunately, the league’s resources were scant, at best, but that would soon change. Earlier this year, the league launched Community Business Lenders, LLC, a CUSO set up to serve all of Iowa’s 166 credit unions. The new CUSO is more than 50% percent owned by the league with $96 million Members 1st Community Credit Union and $158 million Community Choice Credit Union being the other business partners, according to Murray Williams, ICUL director of strategic alliances and public affairs. Iowa credit unions interested in starting or complementing their own MBL operations, will have access to commercial real estate loans, SBA loans and ancillary products. Deposit services may be added at a future date, Williams said. The league will also provide training for credit union staff in business lending services. Discussions to form the CUSO began in 2002 and several setups were considered, Williams said. The league looked at single credit unions that had MBL programs in place as well as jointly-owned CUSOs and sought out those that might be interested in becoming partners. Back then, there was some reluctance from credit unions due in part to the concerns with set-up costs among other reasons. The league then moved more aggressively in seeking out potential partners, Williams said. It focused its target in Central Iowa, which included Des Moines and the surrounding cities, because of its large concentration of credit unions there. It also sought out credit unions with more than $100 million in assets. Quite a few had already started their own MBL programs and were not interested in a partnership and others simply were not ready to move in that direction, Williams said. Two credit unions would eventually step forward: Members 1st Community Credit Union in Marshalltown here and Community Choice Credit Union in Johnston here. Both were sold on not having to put up the estimated $300,000 it takes to launch an independent MBL CUSO, among other attractive advantages. Williams said other benefits of linking up with the league include being able to mitigate risk and expanded loan participation opportunities. “Because the league can’t bring loans to the members, we needed credit unions that were willing to put in the sweat equity up front and we would provide a commitment of time, staff, marketing and energy to develop their loan base,” Williams said. Mark Kilian was hired in January as its CEO and the CUSO had a soft launch in February. Kilian said that during his previous experience as a consultant to small businesses he found an “ever-shrinking universe of opportunities for them to solicit financing.” A CPA, he previously served as a CFO of a privately-held trucking company, in internal audit and credit analysis and commercial lending. “I certainly believe (financing) opportunities exist in the marketplace for lenders to work with small business prospects and credit union members,” Kilian said. Kilian said one major plus that the CUSO has over its competitors is that its reach extends across the entire state to 850,000 members, many whom have their own businesses or are poised to launch. That’s important considering the growing number of community banks that are making their presence known to business owners in several key areas of the state. “We’ve seen a proliferation of banks move into the Greater Des Moines area,” Kilian said. “They’re moving into these areas to solidify their position and have grown” because there was a void there. In meeting with credit unions, Kilian said he noticed that they were referring their member/business owners to other financial institutions including community banks. “We want to keep the relationship within the credit union,” he said. “We have some deals in the pipelines and were moving from the formative stage to having an infrastructure in place.” The league just hired a loan processor to work at Community Business Lenders. Kilian said the new employee will “wear several different hats” and as the CUSO moves forward, it will be looking to hire more staffers to do internal loan reviews and regulatory compliance reviews among other responsibilities. Iowa is well-known for its close-knit credit union community and its powerful political voice. In 2003, the league spearheaded a grassroots campaign that soundly beat back legislation supported by the Iowa Bankers Association that would have increased taxes on the state’s community-chartered credit unions with more than $150 million in assets. That bill was defeated in May 2003 in large part due to the more than 11,000 letters, 6,000 e-mails, 7,000 petition signatures, and hundreds of phone calls and personal visits by members to their legislators. In addition, 1,000 vocal credit union supporters rallied inside the state Capitol on March 2003 to oppose the tax legislation. Last year, Bob Kressig, chairman of John Deere Community Credit Union beat his Republican incumbent opponent Erv Dennis for the House of Representatives District 19 seat here. -