Welcome to Credit Union Conversations. Host and CEO of MBFS, Mark Ritter, dives into the world of business lending with Chief Administrative Officer Ellen Thorn. 

In this episode, they reflect on MBFS’s impressive growth from $750 million to nearly $3 billion in assets and explore Ellen’s professional journey to her pivotal role at MBFS. You’ll gain insights into building strong third-party relationships through effective communication, respect, and trust, as well as strategies for successful portfolio management. 

Additionally, Ellen shares her perspective on navigating regulatory challenges, including risk management and cybersecurity, offering a glimpse into the future of the credit union industry.

IN THIS EPISODE:

• (00:00) Intro: Meet Ellen Thorn
• (01:35) Ellen’s career journey and her current role at MBFS
• (03:22) MBFS has grown from $750 million to nearly $3 billion in assets
• (06:49) The importance of communication, respect, and shared goals for successful partnerships
• (09:19) Communication breakdown and loss of trust are common issues in third-party relationships
• (15:51) Ellen highlights the importance of relying on MBFS and constant communication for smooth portfolio management
• (23:27) Ellen outlines regulatory focus on risk management, compliance, and cybersecurity and gives her thoughts on the future

KEY TAKEAWAYS: 

• MBFS has grown significantly from $750 million to nearly $3 billion in assets under management, with staff increasing from 16 to over 50, reflecting substantial organizational and geographic expansion.
• Successful third-party relationships rely on communication, mutual respect, and shared goals, with proactive engagement and trust being critical to smooth operations.
• Effective portfolio management requires constant communication and customization. Credit unions that actively engage with MBFS experience smoother operations compared to those that don’t.

RESOURCE LINKS

Mark Ritter - Website

Mark Ritter - LinkedIn

Ellen Thorn - LinkedIn

BIOGRAPHY:

Ellen Thorn is a finance and accounting professional with over 10 years of achievement within the commercial real estate finance and funds management industries. Extensive experience working in middle and back office operations, including risk management, legal, treasury, budgeting, trade support, investor services, IT, finance, and accounting. Excellent communicator with emphasis on building strong client relationships. Recognized as a resourceful colleague who engineers change and is committed to achieving corporate objectives.

KEYWORDS: Credit Union, MBFS, Business Lending, Chief Administrative Officer, Communication, Commercial Real Estate, Asset Under Management, Growth, PPP Era, Communication, Trust, Third-Party Relationships, Portfolio Management, Due Diligence, Regulatory Environment, Risk Management, Cybersecurity, Loan Servicing, Client Reporting

[00:00:25] Or you just don't have a department and need to get up and running, we certainly help you out with that. But today I am coming to you as the host of Credit Union Conversations, our bimonthly podcast that comes to you and gives you a little bit of education and hopefully a little bit of entertainment, and talking to you about what's going on at the credit union, at the qso, and hopefully we give you some tips and tricks to help out your company.

[00:01:04] Ellen Thorn -: I'm good, mark. Thanks for having me.

[00:01:14] Ellen Thorn -: Yeah.

[00:01:35] Ellen Thorn -: be happy to.

[00:02:03] When I was approached about an opportunity at MDFS and have spent the last seven years here.

[00:02:17] Ellen Thorn -: My current role is as Chief Administrative Officer of MDFS. I currently oversee the originations and servicing team.

[00:02:35] Mark Ritter - Host: I always like to tell people you're in charge of all the stuff that I am absolutely horrible as, as the least detailed person I know. So you, you are my backstop and support the company in many areas that I am the weakest in and pretty lousy at.

[00:02:56] Ellen Thorn -: You're welcome.

[00:03:17] Or things that are twists and turns that we've taken that you didn't expect?

[00:03:38] Along with that, you're correct with, uh, when I got here, it was about 16 people today in the low fifties. So. Growth definitely is there. And certainly the asset under management growth does not happen by itself. It, it comes with a lot of hard work, bringing in new clients and helping existing clients build out their portfolios, [00:04:00] which we've done and, and that is a testament to the credit unions themselves becoming more seasoned in business lending.

[00:04:35] That was a, that was something that I don't think many people saw coming.

[00:04:58] I. Look like [00:05:00] it was today. And I think you're right. I think the COVID pandemic era changed so much and changed your trajectory. Unfortunately it changed for the better. You know, sometimes when we struggle, I've, I made the joke, I'm like, well, we really gotta hope for another pandemic. 'cause that was good for us.

[00:05:36] Ellen Thorn -: Definitely a good problem to have.

[00:05:44] Ellen Thorn -: Absolutely.

[00:06:13] I hate to say that I tend to be more of the salesperson where, you know, sometimes I'm dealing with the CEO or the person who signs off the agreement and they say, okay, let's do it. And then it often gets handed over to a different group of people at the credit union to execute on from your perspective, and not even thinking of MBFS specifically, but MBFS and other types of, or third parties that a credit union may deal with.

[00:06:49] Ellen Thorn -: Sure. You know, and like you said, I'm glad you said that. You know something that's not just specific to MBFS. It's, you know, it's creating successful partnerships. You know, at its core, it's a common [00:07:00] theme, and that is communication number one, respect and shared goals.

[00:07:30] You know, making yourself that trusted industry professional, which we are because we have a lot of seasoned people here. So, and you know, trust, trust is another big thing. Once clients and your partners trust you, then you know, that opens doors.

[00:07:57] Who can pull in and coordinate [00:08:00] all of those efforts. And that really seems to work because yeah, we know our side of it, but at the credit union, every piece of the pie that this impacts, you have to get them involved and figure out. What, what you need, what you don't need and, and how it's going to translate to your organization.

[00:08:42] Mark Ritter - Host: So Ellen, I'd like to lie and tell you that every relationship is perfect and things are flawless and we never have anybody have any problems. But the reality is sometimes things go sideways on us. E even [00:09:00] when all the parties are doing everything they, they need to now. Now you live and live and breathe this much more on a day-to-day basis.

[00:09:19] Ellen Thorn -: Usually what, what I see, it's, it's a decline or a breakdown in communication or something goes sideways with a deal and people get impatient, you know, and, and then that, that leads to a, a loss of trust and people get frustrated.

[00:10:00] Usually when there's ruckus to close deals, you know, time is of the essence. They don't have time for this or that, but. It, it's usually a breakdown communication is what I say.

[00:10:36] As far as what's going on is just gone and you're almost start e even when in a program is up and running and we've been, it, it, it's you, you're really starting over from scratch.

[00:11:05] Done this in the past, it's an opportunity for MBFS to cement that relationship. So, for instance, we had a credit union that just had a long-term employee leave, it's a newer credit union of ours, and someone was, was put into a position where they did not anticipate and we're struggling and reached out to NBFS.

[00:11:39] Mark Ritter - Host: I see that when somebody gets that new role that they want to do well, but they just are learning this new job. And the complexity of adding a third person, a third party into that puts it as more where we can, if you jump in and offer solutions.

[00:12:22] The company is sold, the vendor is sold. Then it just goes to, to slide. I mean, we, there's a lot of companies that we partner with and we see the same thing where people don't do that. They're sold to new private equity company, they're sold to new ownership. There's a merger and it just, it's hard. I hate to say it's almost though sometimes like when two banks merge and you're the customer and you say, what the heck is going on?

[00:13:01] Mark Ritter - Host: Yeah. And, and then just at the credit union level or the buyer level, it really comes in there. There really, I also see that management support that needs done.

[00:13:37] And the more people that we can involve. To understand the process and roles, the better off we are. Because if it's just one person and, and it's not a strategic part of the organization, it really goes sideways. It, it goes sideways quick.

[00:14:02] You know, especially when have the, we have those initial conversations with the clients. You know, a lot of times we're talking to the lending area. Well, my, my originations in the servicing area, while having the lending folks on the call is important, we need to get to the right people in the organization.

[00:14:40] So we've learned along the way to how to manage that particular piece of it.

[00:15:14] Where now there is so much more due diligence on the front end and credit unions, any financial institutions and even us. Has to manage our relationships throughout the lifecycle of the loan, the initial due diligence package, the ongoing due diligence package, the security updates, everything from your side.

[00:15:51] Ellen Thorn -: You know what I see a lot is them reaching out, leaning on us for, you know, information on our due [00:16:00] diligence because we know that the regulators are out there now doing due diligence or looking at their third party vendor relationships.

[00:16:31] Mark Ritter - Host: Yeah, it's, it's just really important that people stay on top of their game. I have confidence in what we do. But you also have to, they have to have, to have confidence that our key vendors are, that we're relying upon are stable operational and we're watching them. So it it, there's so many more moving interconnected parks than there ever used to be.

[00:17:19] Mark Ritter - Host: Speaking of complexity. So I, I, I, I would love, you know, for people to kind of take a peek at our operation sometime. Currently we're servicing for over 60 credit unions. There's how many thousands of loans in the portfolio now, Alan?

[00:17:43] Mark Ritter - Host: 7200 for almost 3 billion in loans. And then a large percentage of those are participated out.

[00:17:52] Mark Ritter - Host: So you, you would say, we have a complex portfolio and it's much more so than [00:18:00] if we were just a lender doing this all under our own umbrella as a, it would be significantly simpler if we were just an institution managing 7,000 loans ourselves and had direct access to everything. So the inner workings of our servicing area are, are, are fascinating to me on everything.

[00:18:36] Ellen Thorn -: Right. The ones that are having it run smooth one, you know, rely, rely on M-B-F-S-A lot where the con, again, I keep coming back to constant communication, but it, it really is that simple, you know, them reaching out to us, inquiring about their portfolios.

[00:19:16] Those that aren't, you know, they struggle with reporting. We have a lot of customization that we can do on the servicing side, and while we try to push that with all new relationships. And, and by and large our credit unions are accept, you know, acceptive of that. You know, there's so many ways that we can make things easier for them.

[00:19:55] I, I think if there's a dividing line is those that are grabbing a [00:20:00] hold of some of the offerings that we can give to them and some that aren't and, and those that don't in the end, if their portfolio starts to grow, become frustrated.

[00:20:24] And really until they, they just make a payment and, and I hate to say it runs on autopilot, but it really runs on autopilot until somebody stops paying you. And under the commercial lending world, it's really a different philosophy because we make payment. We, we, we make loans, but that relationship is constantly managed and maintained.

[00:21:18] All of that hits you all of a sudden. And I hate to say it doesn't make you money like it does originating loans, but you have to do it. And getting people to shift the resources to maintaining that portfolio as opposed to originating is sometimes a challenge.

[00:21:48] You know, for delinquencies, you know, troubled loans, credit deterioration, all the things that come along with that. And that's a very important piece because as you know, lows, loans can go south in a [00:22:00] hurry, and you don't wanna be on the side of, not, you know, of an examiner not having, you know, managed your portfolio.

[00:22:18] Mark Ritter - Host: and, and when I look back to my early days at the credit union for commercial lending, when credit union commercial lending was microscopic compared to today's marketplace, I mean, it was microscopic.

[00:23:03] Well, that's lazy. Whereas today I see very few examiners crack credit memos. It's more about the management of the portfolio and I don't know, what are you seeing in terms of that shifting tide of the regulatory environment and where people are going as opposed to where they've been or what they're doing now?

[00:23:52] Those are the, those are the big things. And when I talk about risk, I talk about sufficiency of underwriting standards. Collections [00:24:00] programs, loss reserves, management and board reporting. That has been a big one that we've seen, you know, and now we're seeing the requests for our third party vendors that we use.

[00:24:37] You know, were those workouts completed with proper oversight? So, you know, it's, it's the risk management definitely. And in compliance with, you know, CFPB laws that are currently in place. And the big thing that keeps people up at night is the cybersecurity and information security piece of it. You know, there's no shortage of, [00:25:00] you know, bad actors out there with different schemes that, and methods that try to trip you up.

[00:25:08] Mark Ritter - Host: Well, thank you for the conversation today, Ellen. I always enjoy our time when we're not being recorded and published out the internet, but I'll wrap it up with a question here. Just kind of give me your thoughts. On the marketplace, the climate and, and kind of where things are heading over the next year or so, or even beyond.

[00:25:54] Looking at our pipelines as we sit here approaching the summer months, our pipelines are strong, and [00:26:00] right now they don't show any signs of weakening. So it'll be interesting if it we're just in that, in that era. You never know, but. You know, if I were to predict that, I, I think pipelines are gonna remain strong and lending's gonna remain strong from a regulatory perspective.

[00:26:26] Mark Ritter - Host: I, I would have to agree with you on, on that. We, we are getting more, the more in-depth analytical requests that than I have ever seen or anticipated.

[00:27:01] Please give Ellen a call myself a call, and we'd love to, to help and talk with you whether you're an existing client or not. You can go to our website, www.mbfs.org. Also, Ellen and myself are available on LinkedIn. You could send us an email through our website. So this was Mark Ritter, host of Credit Union conversations.