Retiring CUBG CEO Reflects on 20 Years

Larry Middleman wrote the original business plan for the Portland, Ore.-based commercial services CUSO CU Business Group by hand on a piece of paper, front and back, while stuck in an airport for five hours back in 2001. Now he’s gearing up to retire from his role as president/CEO of the CUSO – which still practices some of the original business model concepts he jotted down during that long layover – but not before enjoying CUBG’s first in-person conferences since 2019.

Over 20 years, Middleman has grown CUBG from that handwritten business plan into the industry’s largest commercial services CUSO. Now owned by six corporate credit unions, CUBG employs 75 people, services more than $2.5 billion in commercial loans, hosts numerous educational events and recently expanded into SBA lending through its acquisition of another CUSO. He will retire at the end of September, just after the CUSO wraps up its first post-pandemic in-person conferences in Portland and Memphis, Tenn., and will be succeeded by Justin Conrey, who has spent the last five years as a CUBG executive.

Middleman took his first step into the financial services industry while attending college, when he accepted a job as a ­part-time, drive-up teller at a savings bank in Portland. Finding that he performed well in the role, he took it full-time while earning his accounting degree, then forayed into public accounting for about five years.

While working as a CPA, Middleman said he began working with banks on audits and consulting projects, as well as with some credit unions. “It became very clear to me that I was drawn much more to the credit unions, given my style and people skills, and the types of interactions I was looking for. It just was a different feel,” he said.

He later served as SVP – CFO for Northwest Corporate Federal Credit Union in Portland before launching CUBG in 2002 as a wholly-owned CUSO of the corporate (in 2007, Northwest Corporate merged into Southwest Corporate Federal Credit Union of Plano, Texas, which was then liquidated in 2010).

For this Q&A, CU Times caught up with Middleman just as CUBG’s Portland conference was kicking off on Aug. 8. Responses have been edited for length and clarity.

CU Times: Why retire now?

Middleman: CUBG just celebrated 20 years of being in business down to the day, and after 20 years of being in this industry, growing the company and all the associated work, travel and demands, there came a point where I felt that time was my most precious resource.

Another reason for my timing was that about a year and a half ago, we acquired the CUSO Member Business Lending, and I wanted to make sure that was well-integrated. I also wanted to get back to the in-person conferences, and I feel like now my work is done here to an extent and it’s time to have people [leading CUBG] who are youthful, energetic, maybe more up on the latest technology and willing to travel.

CU Times: How does it feel to be reuniting with all your colleagues in person while knowing these are also your final conferences as CUBG’s CEO?

Middleman: It feels great. We just had our Members Only Lunch [for CUBG member credit unions], which is what we traditionally do to start off the conference, and I was going to say a few words as the lunch got going. The noise level was so high in the room that it took me a few tries to get people to stop talking and listen, which I think is a testament to the success of our conference. It means people are engaged, and they’re talking to colleagues and sharing information. So it’s a great way for me to have a last hurrah here and see people I’ve developed a lot of close relationships with over 20 years.

CU Times: What were some of the early challenges of getting CUBG off the ground?

Middleman: Like any brand new business, you have to get customers, earn revenue and deliver a product that people want. I had the benefit of being the CFO of Northwest Corporate, and through the corporate’s board and committees, I had an audience of about 20 executives in the Northwest who were not only considering whether they should invest in the business, but were interested in it themselves. So I essentially had about 10 to 20 clients sitting right in front of me before we even opened, and that gave us a nice head start. The business model caught on quite well in terms of other credit unions from other states showing interest, so then the challenge quickly became how to handle all the demand for our services, hire the right people, and put all the policies, processes and systems in place while we were building it.

CU Times: What accomplishments are you most proud of during the past 20 years as CUBG’s CEO?

Middleman: Taking that original business plan, and going from literally nothing to what we have today is a big accomplishment – the building of it, growing of it, being able to manage that growth, continuing to provide quality service and quality analysis of underwriting commercial deals, and being consistent with it over the years.

Another thing is that being a solid, stable influence for the industry has been very rewarding. And, it is so rewarding to have provided the economics and environment for our employees to be able to have had gainful employment, and buy cars and houses, raise families and grow in their careers.

CU Times: What was the most economically challenging time period in the past 20 years for the credit unions CUBG serves, and how did CUBG step up to help them weather that?

Middleman: The most challenging time was the Great Recession from 2008 to 2012, because the credit union industry at that time didn’t have the depth of experience [that they have now with commercial lending]. Everybody was focused on origination deals, but when loans started to go bad, credit unions needed a special level of expertise. We saw a lot of slowdown because credit unions put the brakes on their programs, and it was a turbulent economic time for everybody. But we got through it just fine, we helped credit unions with loan workout strategies, shifted our focus and provided a lot of education. And from CUBG’s standpoint, we were able to remain profitable during that time, which I think is a testament to our flexibility.

CU Times: How would you describe your leadership style, and what have you learned about how to be a better leader?

Middleman: I was told early on when I was in management training programs that I have a calm confidence and a nice demeanor, so I’ve adopted that and it’s served well. I try not to sweat the small stuff. I think one of the most important things that I’ve learned and continue to hone over time is to just listen. Sometimes when you get into a leadership position you may think you know best, and you may ask for feedback but not really be listening. I highly value others’ opinions and encourage them to tell me what they really think, even if they totally disagree. So not just hearing the words, but letting them sink in and considering whether I should use that information to change course.

CU Times: Credit unions have seen strong commercial lending growth in the past couple of years. Do you see that growth slowing or other challenges emerging for credit unions engaged in commercial lending in this uncertain economic environment?

Middleman: There has definitely been some slowing, I would call it an easing of the gas pedal.

But people who own businesses or are investors in commercial real estate still see real value in real estate. The cost has gone up because interest rates have risen, but that hasn’t derailed plans. Unfortunately, it’s kind of a classic inflation situation – if my cost of borrowing goes up, I have to raise the cost for tenants in my building.

There’s definitely some proceeding with caution versus going full speed ahead right now. In the first half of this year though, we set records for underwriting volumes and new deals that were coming in – not refinances of deals, but brand new deals because the rates were rising.

And especially with the staffing shortages going on, [some credit unions have said], you know, we’re having trouble keeping staff and hiring people, so let’s just slow it down a little bit. And I don’t view that as a bad thing, since we did not see the losses that we anticipated with the pandemic. You have to go at different speeds at different times of the economic cycle.