Justin Conrey: Setting Credit Unions Up for Commercial Services Success

Justin Conrey had big shoes to fill when he took over the helm at the Portland, Ore.-based CU Business Group – it meant taking the CEO reins from the retiring Larry Middleman, who began building the business services CUSO from the ground up 20 years prior.

Lucky for him, Conrey brought a wealth of relevant experience, including years developing and running a credit union commercial lending program, time as a chief credit officer for a community bank and five years as a CUBG executive. Now, one year into his first-ever CEO position, Conrey has big plans to strengthen credit unions’ up-and-coming roles as commercial services providers.

Originally from Austin, Texas, Conrey enrolled at Auburn University in Alabama with plans to become a pilot, but ultimately decided to pursue a finance degree. After graduating, he began working for UFCU in Austin ($3.9 billion in assets), where he spent 12 years helping to grow and eventually leading the credit union’s commercial lending department. It was there that Conrey first became acquainted with CUBG, as UFCU worked with the CUSO as a client and the partnership required Conrey to travel to Portland annually for CUBG’s National Conference.

Following a two-year detour at the West Virginia-based BCBank, Conrey accepted a position at CUBG as SVP, credit administration and relocated to Portland. He also served as EVP for CUBG before being named CEO in September 2022 – something that also required him to take on the challenge of leading a team that recently became fully remote.

CU Times caught up with Conrey last month for this Q&A; responses have been lightly edited for space and clarity.

CU Times: You took over the reins at CUBG at a pivotal point – it had just celebrated its 20th anniversary, and recently acquired SBA lending-focused CUSO Member Business Lending. What are your main strategic goals for CUBG as it begins its next 20 years?

Conrey: The acquisition of another CUSO was an unprecedented event that had been happening over the better part of a couple of years. We saw that SBA was going to become a more important factor for credit unions as they mature in the commercial lending space. I’ve always personally felt very passionate about credit unions becoming more involved in SBA because it really at its heart is aligned with what credit unions should be doing. It’s that real community-based lending. Credit unions naturally gravitate toward the commercial real estate space because overall, we’re really limited in the amount of resources we can have because of the regulatory restrictions. So it’s much easier to do more with fewer resources, and that’s why credit unions gravitate that way. But really, if you ask someone off the street, and explain to them what credit unions and banks are all about, and then ask them who does the most SBA lending, by default they would say credit unions, because they’re there to serve the underserved. And that’s what Member Business Lending was all about. They were a CUSO designed like we were, but SBA was their priority, while our priority was conventional [lending].

So we had two big holes to plug in our processes to become a full-service, end-to-end, commercial services CUSO, and they were SBA and loan servicing, and Member Business Lending did both of those. And for Larry, it was perfect timing too. It was a good transition point because we’re a completely different CUSO than we were the last 20 years. We basically took Member Business Lending’s SBA program and remodeled it under that same CUBG framework, and that really set the vision for what we needed to do in the next 20 years. We became really good at serving the commercial lending space, and primarily that was commercial real estate, but now we can help credit unions with this next phase and be able to attract different types of businesses, and reach into their current membership base and serve those business owners that they couldn’t serve before because they weren’t commercial real estate owners – and really get into the community-based lending that I always found to be the most rewarding and fun.

In some respects [our goals for the next 20 years] are a continuation, because Larry did such a good job of laying a foundation, but they are also completely different. SBA is a big initiative for us, as is helping credit unions diversify their portfolios. Credit unions have largely in the last 10 to 15 years either been entering or growing within the commercial space, so compared to our banking peers, we are still in our infancy in this space. And we really haven’t been through the ups and downs and economic cycles that our peers in the banking industry have been through. We’ve been pretty resilient and our quality has been really good, but we want to make sure that looking forward, credit unions are diverse enough to weather any storms that may be coming in the next five to 10 years. And as their portfolios grow, it’s going to be of utmost importance that those credit unions do things safely and soundly.

We’ve also really focused on small business loans – loans under, say, $250,000 or $500,000. Credit unions in my personal experience haven’t done a great job of supporting those loans, and it’s really not the credit union’s fault; it’s a matter of resources. Those loans tend to get trapped in a gray area between a credit union commercial lending department that’s really good at commercial real estate loans and a consumer lending department that doesn’t want to handle commercial loans. There have been significant advances in technology, and fintechs are playing a really big role in that space. In some ways that makes us nervous for credit unions and members, that credit unions don’t have a product to keep those borrowers within their walls and that borrowers are going to these fintechs – some of which are really good, but there are some out there that are predatory. We want to provide the credit union the tools to be able to keep those members within their walls and safe from predatory fintechs. We want to leverage the technology that’s out there and build products that look and act like those [fintech] products, and provide the same efficiencies that those products do, for credit unions to use.

So SBA and small business loans are a big priority going forward, and they go hand in hand with the desire for credit unions to draw in more deposit relationships. Liquidity is one of the big challenges credit unions are having today. Commercial deposits will not only allow them to serve members in that space and continue to be that trusted advisor, but drive deposit relationships and deeper relationships with those members.

CU Times: What’s it like being a first-time CEO? Has this always been a dream of yours?

Conrey: First of all, it is a great honor that the board allowed me to step into this role and lead an organization like CUBG. I had the personal experience of being a client of CUBG’s and know the impact it had on my career, so to be able to come here, work with CUBG for so many years, work closely with Larry and [EVP/COO] Rachel [Snyder] and the senior team, and then have the responsibility of leading the organization going forward, has been great. One of my favorite things about that is that our board of directors basically sent in a vote of confidence for what CUBG was doing by keeping the hire internal. They had every opportunity with the change in leadership to bring in somebody who was going to completely change the trajectory of the organization.

I don’t know that becoming a CEO has necessarily been my primary goal. My goal has always been to achieve success within organizations that I really love and value, and to lead effective teams and make an impact within an organization or sector like commercial lending. So to be able to step into a leadership capacity in this organization and help shape the trajectory of commercial lending in the credit union space, that has been a goal of mine and this role helps me achieve that. [I also hope that] if and when I ever leave the organization that it will be stronger than it was when I came here, that I empower current employees and lead them to greater success in their careers, and that in turn, I make a positive impact on all the credit unions we serve.

CU Times: What was the CEO transition process like? Do you still speak with Larry, and are there any other mentors you rely on for advice as you continue to settle into the role?

Conrey: Specific to Larry, he did a great job, he wanted [the new CEO selection] to be a board decision, and once the decision was made, he and I spent a lot of time together talking about the things he’s learned over the last 20 years, challenges he’s seen at CUBG and challenges he sees potentially in the future. We traveled a little bit together and met with credit unions that have been with us a long time, where he wanted to personally deliver the news that he was retiring, and introduce me and start to build that relationship to ensure those strong, long-term relationships that we had with our credit union clients were carried forward.

CUBG holds its strategic planning session with our board every October, and after he officially retired [in September 2022], he helped me get to that point by talking through all the things he does to get the board prepared, how he interacts with the board and the dynamic of the board, which was really helpful. And then I was able to take over a few weeks after the official transition and lead that meeting effectively.

Rachel [Snyder] has also been a tremendous mentor. She has been with CUBG since day one – she’s an encyclopedia of knowledge and has all the history. So I rely on her quite a bit, and even though we have different titles, there really isn’t much separation between what we do at all. There aren’t many decisions I’m going to make that aren’t in direct consultation with her and vice versa.

Larry continues to send me texts and emails, and we have phone calls every now and then to check in. He still has a vested interest in CUBG as he should, as he founded it 20 years ago. It really is his organization, and I want to make sure I’m fulfilling his vision and CUBG’s potential going forward.

I also have several mentors from UFCU that I still talk to today. James Nastars [former chief lending officer for UFCU] is the CEO of Meritrust Credit Union [$1.8 billion, Wichita, Kan.] now, and he was a mentor along the way; Tony Budet, the CEO of UFCU who recently retired, was a big mentor for me; and current CEO Michael Crowl – he and I used to go to leadership lunches together when I was just taking over a management-level position, and the wisdom he was able to impart was super beneficial for me.

CU Times: How did working for a credit union that was a CUBG client help uniquely prepare you for a career at CUBG?

Conrey: I think that was the most valuable part of my experience coming into CUBG – being able to relate to our credit union clients as someone who sat in almost every seat that our clients I’m talking to are in. I’ll never say I did everything perfectly, but I can provide real-world examples of challenges and advice, whether they want to take it or not, from being in a similar situation and having a similar challenge that they have today.

It’s helped grow relationships with credit unions because I think they appreciate the perspective of someone who has been on that side versus on the consulting side. We have several employees who have that experience, and that’s something that differentiates us from a lot of other CUSOs that are strictly [made up of] consultants.

CU Times: What are the key differences between commercial lending and business services in the community banking world versus in the credit union world?

Conrey: Regulatory limits that are placed on credit unions, largely by the banking associations to limit our ability to compete in the commercial space, do impede the ability for credit unions to have the same resources they might have if that didn’t exist. There are loopholes, but in general, there’s a limit to the amount of commercial loans a credit union can have in their overall loan portfolio based on their asset size. You can work around that with participations, and there’s the Low-Income Designation and other ways around it, but in general it limits credit unions from making commercial services their primary objective, because they can only do so much.

For most commercial banks, commercial services are a primary deposit product and loan relationship. They place a high priority on that, and that’s based on the fact that the majority of bank leadership comes from a commercial background, versus credit union leadership that is usually [from a] consumer, audit or finance [background].

At true community banks, like the one I was in, it was great to see how they embraced their role within the community as a developer of commerce and a vehicle that allowed the local community to thrive. There is a segment of community banks that culturally act a lot like credit unions, but there is still a distinct difference in the level of collaboration. Credit unions do a much better job of collaboration, and I really like that about the credit union space.

CU Times: How would you describe your leadership and management style?

Conrey: I find it difficult to pigeon hole a management style, but servant leadership is thrown round a lot, and I really like the general concept of that, where you’re there to serve the employees in the organization. You’re not there to grab power, and it’s not that my opinion matters more than anyone else’s. For me, it’s about ensuring that we have a very capable and wonderful staff who are way better at their jobs than I could ever be, and empowering them and giving them the tools to not only be as effective as they can and impact credit unions as effectively as they can, but also to grow and develop individually as employees and leaders. I’m also an advocate of not micromanaging employees. We are hiring individuals who are super talented, and putting them in roles where we trust them.

CU Times: What was the biggest challenge you faced going into the CEO role?

Conrey: It wasn’t so much what we were going to do strategically with CUBG, what new products we were going to develop, or how we were going to differentiate ourselves from what we did the last 20 years – Larry, Rachel and the senior leadership team did a tremendous job of setting that foundation. That part was easy. It was managing a company that is now fully remote, and carrying forward the culture that CUBG developed in person over the last 20 years and doing that remotely.

We did a big culture and values project with all of our employees, where we brought in external leadership to take control of that and define on paper what our culture and values were, and I wanted that to be what our employees thought our culture and values should be. I didn’t want to unduly influence them and say, ‘We’re going to be this.’ I wanted it to be natural, and we came up with five core values – people first, integrity, quality, flexibility and collaboration. And we wanted to make sure we defined our culture and values not just within our walls, but when we interacted with CUBG clients. The greatest thing to me was, I felt like five years ago when we were all in the office, those same core values would have come up. They were instilled previously within CUBG, so it was nice and interesting to see that carry forward in the remote environment.