CU Direct will combine its expertise and networks in online lending with Member Business Lending LLC’s 14 years of experience originating commercial loans to allow small business owners to find more loan options at credit unions.
Commercial lending is one of the fastest areas of credit union portfolio growth. Federally-insured credit unions held $70.4 billion in member business loans as of March 31, up 15.7% from a year earlier. MBLs accounted for 7.2% of total loans, up from just 2.8% at the end of 2004, according to NCUA data.
CU Direct COO Bob Child said Thursday that the Los Angeles-based CUSO’s strength has been in developing software for credit unions to offer members ways to obtain a loan online. Its first area was indirect automobile lending through its CUDL network, but it has been expanding its offerings to direct car loans, home equity lines of credit and, most recently, mortgages. CU Direct now works with more than 1,000 credit unions and 60% of the nation’s automobile dealers.
Through this alliance, CU Direct will be able to offer business lending with processes that incorporate the Salt Lake City-based MBL’s expertise in commercial underwriting. Greater access to commercial lending will provide CU Direct and its clients with another way to diversify.
Member business loans grew at an annual rate of 14% to 15% from 2014 to 2017, compared with about 10% for all loans. The annual growth in the car loan portfolio has fallen from 16% in 2014 to 11% last year and in the first quarter.
“I want to keep doing auto lending—don’t get me wrong,” Child said. “At the same time, I’m recognizing that we’re in the 10th year of a cycle of auto lending. I don’t know how many more years of growth we’ll have. It’s going to start slowing down.”
The CUSOs said the alliance exemplifies the cooperative model of credit unions, and will allow the movement to develop next-generation lending solutions to remain competitive, drive more loans through the business lending channel and better serve their small business members.
“This collaboration will afford credit unions of all sizes the ability to provide their members access to all types of business loans,” MBL President/CEO Gordon Dames said. “Once businesses are in the door, that opens a wide variety of opportunities to increase member services.”
Dames founded MBL LLC in 2004 when he was president/CEO of Mountain America Federal Credit Union ($7.5 billion in assets, 746,526 members), also in Salt Lake City. Dames left that position in 2008 after 17 years, and became MBL LLC’s CEO in 2014. He was previously president/CEO of San Diego County Credit Union ($8.4 billion in assets, 384,579 members) for eight years and a principal examiner for the NCUA for 12 years.
CU Direct has been devising online solutions for credit union lending for more than 20 years, including its CUDL auto lending platform, Lending 360 Loan Origination System and Lending Insights dynamic analytic tools.