Building on Business Lending CUSO, Texans Credit Union Rolls Out Commercial Services to Tap Loan Participation Market

RICHARDSON, Texas – Texans Credit Union is continuing to build on the success of its business lending program. The $1.5 billion credit union, which launched its highly-successful Texans Commercial Capital in May 2004, has launched a new CUSO, CU Commercial Services, LLC. The new venture will offer an outsourced loan participation program to the credit union community. CU Commercial Services will help credit unions purchase and service member business loan participations and provide “a manageable and cost-effective way for them to take part in the member business loan market.” “Credit unions are under increasing pressure to maintain net interest margins and profitability while lending opportunities dwindle,” said David Radman, president/CEO of CU Commercial Services. “As a result, many credit unions are looking to member business loans to add yield with acceptable risk.” Through the new venture, Radman said credit unions will have access to the ability to offer “highly diverse portfolios of high-yield, low-risk mortgage assets without having the in-house expertise (and fixed costs) required to originate and service their own portfolios.” CU Commercial Services will assist credit unions, mostly those with less than $1 billion in assets, in a variety of ways with loan participations. The CUSO will formulate loan participation strategies, including determining target portfolio size as well as guidelines for proper diversification within that portfolio and perform necessary diligence to insure that purchased participations meet all necessary requirements. Credit union clients can also expect “state-of-the-art systems” for servicing purchased participations, collecting and remitting principal and interest payments and providing comprehensive “see-through” reporting that can be easily integrated with clients’ accounting systems. Radman has been with the organization since its inception in July 2005 and officially oversees all aspects of its operation. In addition, Radman serves on the board of managers of Texans Commercial Capital. Prior to C.U. Commercial Services, he was a founding organizer of the Lonestar CAPCO Fund, LLC, a Texas CAPCO fund, and the U.S. Investment Director for Strathdon Investments, PLC, a venture capital fund listed on the London Stock Exchange. Radman’s background also includes extensive experience with public and private investment firms and financial institutions with a particular emphasis on commercial real estate and real estate lending. Besides Radman, the CUSO has two other professionals on staff with a combined 60 years of commercial lending experience, he said. Just as important as having the expertise is having the right technology. Over the past few months, the CUSO has been putting in place the systems that will streamline the loan participation process. Meanwhile, word of mouth is certainly spreading about CU Commercial Services. Even though no formal marketing campaign has been launched, Radman is already getting calls from credit unions in part due to its connection with Texans Commercial Capital, which has closed 530 loans with $365 million in outstanding loan balances. In January, it funded the sale of ALM First Financial Advisors, LLC from its parent, Eastern Corporate Federal Credit Union (EasCorp). Dallas-based ALM First is an investment advisory firm that provides service to nearly 100 credit unions. At press time, Radman had several meetings scheduled with CU representatives to talk about the newest CUSO. The next step is completing some housekeeping items, Radman said. Further down the road is considering setting up a fund similar to what CUNA Mutual Group is currently doing. In March, CUNA Mutual launched CU Systems Fund, an investment fund that would allow for the purchase of business loans from credit unions and the sale of shares in them to interested credit unions. Texans Commercial Capital is one of the entities that has sold loans to the new fund. For now, Radman said with the growing interest in commercial loans from credit unions it has become “difficult to compete with limited investment opportunities under the regulation.” “There is a need to do this and we want to be able to provide another value-added service,” Radman said. -