Welcome to Credit Union Conversations, where we explore the latest in the credit union industry with host Mark Ritter. Today, we’re thrilled to have Rachel Snyder from CU Business Group diving into how credit unions can excel in business lending. From education and training to building strong small business relationships in your community, we’ll cover strategies to grow your portfolio and tackle challenges like delinquency. 

IN THIS EPISODE:

• (00:00) Intro: Meet Rachel Snyder
• (03:00) CU Business Group’s launch in 2002 to support credit unions with business lending 
• (06:17) CU Business Group is committed to education, offering webinars and training 
• (11:56) Small business deposits fund commercial loans, enhancing credit union stability
• (15:15) Specific markets of small business deposits and loans can ensure effective service
• (18:35) Discussion of credit union accounts, ripe for business lending opportunities
• (22:22) Rachel recommends basic business checking/savings and advanced services like remote deposit capture
• (25:49) Rachel addresses rising delinquency in loans, urging credit unions to manage portfolio risks proactively

KEY TAKEAWAYS:

• Education and training are critical for credit unions to develop expertise in business lending. CU Business Group offers webinars and conferences to support small business loans and deposits, enhancing community engagement and portfolio growth.
• Targeting specific community markets for small business deposits and loans allows credit unions to serve effectively, avoiding overextension and building a sustainable commercial portfolio.
• Rising delinquency in commercial loans necessitates proactive management, as credit unions require expert assistance to address distressed credits early and maintain a healthier portfolio.

RESOURCE LINKS

Mark Ritter - Website

Mark Ritter - LinkedIn

Rachel Snyder - LinkedIn

BIOGRAPHY:

Rachel Snyder is a longtime member of CU Business Group and the organization's COO. After a career in corporate credit unions, Rachel leads the educational offering at CUBG and a wide variety of other functions. 

KEYWORDS: Credit Unions, Business Lending, CU Business Group, Education, Training, Small Business, Deposits, Community, Webinars, Conferences, Delinquency, Commercial Loans, Business Deposits, Business Loans, Portfolio Growth, Check Accounts, Savings Accounts

[00:00:30] Please recommend it to your friends and family or anybody, your kids, if you really want to torture them and hear about credit unions. So, uh, yeah, we, we now, we're dropping every Tuesday, uh, on a weekly version and, uh, hopefully you like the new format and get you a little more content. So joining me today is one of my favorite people in the credit union industry, so hopefully this should be a pretty easy episode.

[00:01:14] Rachel Snyder: Everything is fantastic in Oregon. We're right in the midst of summer. Got a little heat wave going on, and it's a good time to be in the Pacific Northwest.

[00:01:46] So many, you, you, many of our listeners may be familiar with you, but for those of you who aren't, kind of give your background career, Jo Journey and, and talk a little bit about CUBG.

[00:02:13] Um, it sort of happened by happenstance, but here we are. Most

[00:02:20] Rachel Snyder: though I actually started really early, uh, when I was in high school. I did an internship through one of the business programs at a local credit union, and that's where I kind of got bit by the credit union bug, so to speak, and learned about.

[00:02:51] And I, oh, no, no, no. I'm not gonna work in credit unions my whole life. I'm gonna go off and I'm gonna go to school, and who knows where I may end up or where I may [00:03:00] land. But several years later, I landed back in the credit union movement, uh, through a co corporate credit union here in the northwest, uh, Northwest Corporate Credit Union at the time, and was, uh, with the corporate doing a variety of things, um, special projects, that sort of thing, when they decided to launch a QO CU business group back in 2002.

[00:03:44] Uh, that was, that's going to limit the potential at some point for credit unions to serve business. So the idea was, let's start a qso. Let's help credit unions get started, let's help them get into this business, and then we'll kind of see where it goes from there. And now 23 years later, we're working with [00:04:00] hundreds of credit unions all across the country, helping them with business lending, business deposits, education, training, compliance, and all of the things that credit unions still need assistance with today from QSOs like ours.

[00:04:44] Rachel Snyder: I would totally agree with that. I don't think any of us had the vision for, um. QSOs continuing to support credit union after they started their programs. I think in the beginning the idea was we'll help 'em get started. We'll help educate them, teach them, and eventually they'll grow us. [00:05:00] Um, but that business lending cap has made it really important for credit unions to outsource and use folks like QSOs to help support, um, their programmed because there is that limit to how big the, the loan portfolio can grow specific to business.

[00:05:53] So, uh, te tell, talk a little bit about kind of way back when, when you started it up, how it's kind of [00:06:00] change and, and what you offer credit unions today. In terms of educational pieces for learning and of developing the staff, the board, the executives, all about business lending.

[00:06:17] We love to share education with the industry, whether they're clients of ours or clients of other QSOs, uh, we really do feel like education is essential and it's an important piece of, of credit union development and growth of their program. We started back in the early two thousands with basic webinars and they were live because back then you didn't do recordings.

[00:07:03] Whenever credit unions would add more questions, we would say, oh, we should develop a course for this. And today we have literally hundreds of, of recorded and on demand webinars that are available, and also the content and material that's easy to customize for specific credit unions or their specific needs.

[00:07:42] Um, to the industry. It's one thing for people like me or people like you to tell credit unions what we think they should do and how we think they should do it to be successful based on our experience. But it's a whole nother thing when they hear that same information from their peers and colleagues who are sitting on the side of the desk at the credit union trying to [00:08:00] figure out how to really serve business as well.

[00:08:36] And everybody still needs that educational piece.

[00:08:57] Um, they're retiring and there's gotta be other [00:09:00] folks coming up in the credit union to take their place. Um, there's still, believe it or not, and you probably know this as well as I do, there's still credit unions out there who are just getting started in business lending. So today we have a full team of people focused on education because we have to educate at whole level.

[00:09:35] Mark Ritter - Host: I, I think it's important that people also, even though the headquarters is in Portland. Uh, you have an East Coast conference and a West Coast conference, and the most recent East Coast conference I was I was at is in one of my favorite places in America, Asheville, North Carolina. I was very happy with your scheduling because we all got out of town and the [00:10:00] next day they were hit with historic floods where I would've been trapped in Western North Carolina for weeks at a time.

[00:10:08] Rachel Snyder: Our, our timing was impeccable, and I wish I could say we had planned that we didn't, but we were all fortunate. Most of us were fortunate to get out. There were a few folks that had chose to stay through the weekend and get caught up in some of that. Hurricane, uh, type weather, but most folks got out and, um, yeah, the East Coast conference is a big deal for a, um, the West Coast conferences too.

[00:11:00] Bringing them together is key.

[00:11:31] Uh, there's a handful of credit unions that have been out there. And there's always, I feel like there's, it's like talking to my son, there's always an excuse for delaying something. Right. Um, but, but really how have you seen that evolve? You know, what's new? What technologies are available in terms of the depositories today?

[00:12:18] Mark Ritter - Host: And we just went through a horrible liquidity crunch at every credit union who was jacking up. Uh, every CD rate and rate that they could to get any money they can. Right. And under this business deposit world, it can be a steady base of low cost deposits in your community and or people pay fees for it and it pays for itself.

[00:12:48] Rachel Snyder: Yeah. We, we go do a lot of that consulting where, and. I, I think there's always a couple of pieces to the pricing puzzle, right? One, we know attracting deposits is helpful to the credit union, [00:13:00] especially during liquidity crisis. But two, we know that the, these products and treasury management systems, um, cost money for the credit union to deliver.

[00:13:31] And the business members don't expect that. Um, and there is some perceived value related to what you're charging for services. So if you have a really slick online banking system. And you have true business RDC and ECH, you need to be charging fees accordingly for that one to cover your costs and for offering those services.

[00:14:08] Mark Ritter - Host: And, and I've seen so many credit unions.

[00:14:40] Rachel Snyder: Yeah, absolutely. We like to, um, help folks think of it on at least a three year plan and even do some basic modeling and financial projections specific to deposits and what the growth of the portfolio could look like. How many new accounts their branches might be able to open. You know, take a look at what their business opportunities are.

[00:15:15] Um, depending on what their credit union goals are, who do they wanna serve? Who can they serve really well? We don't wanna try to serve people we can't serve well, but let's go after specific industries and markets that we know. That the credit union could serve well and will hopefully also, um, bring in large deposits and be willing to pay reasonable fees, um, for the products and services they use.

[00:16:05] They could make every single car loan in Oregon and could handle it just fine. But when it comes to business members, you can't handle every single type of business. Yeah. All the time to everybody. You have to bring it in a little bit more. So, so what do you see with credit unions? You know, looking at their own members, reaching to the community, identifying those target markets, you know, what do you see for the people who do it well versus the people that struggle?

[00:17:06] It's mining your existing account data. Who, what, what industries are you serving now? Are you serving those well? Are those, are those profitable relationships for the credit union? Do you wanna do more of those or do you wanna do less of those? Um, and then also, you know, thinking about, um, for some, you know, credit unions who are still SEG based, what business industries fit well with their, with their SEG groups?

[00:17:53] Mark Ritter - Host: Rachel, there will be somebody who turns off this show when I say this, but I have to say it, I have [00:18:00] never, there is no other piece of business in the credit union space other than business services where credit union executives will say, well, we're not really good at that. Right. Learn like you understand your members, you know your community and, and, and, and the basics are people think we're de, you know, we're, we're financing Wall Street Towers or these really large, sophisticated, it's your members now, right?

[00:18:35] Rachel Snyder: I totally agree. I totally agree. Mark, and these are small business owners who may already be on your board of directors or probably hold their consumer accounts or their car loans at your credit union, but you just haven't captured their business. These are businesses that your credit union uses.

[00:19:10] And maybe not everyone is a perfect match, but there certainly are businesses that's credit unions are doing businesses with today that they could also serve well from the banking perspective. I,

[00:19:32] You deal with a lot of insurance agents in town, right? You deal with a lot of real, all of these people want to be in your good graces and if you, you can have that conversation to, to make it and, and keep it going. You have the people, you have the relationships already and, and, and just. Focus on that.

[00:20:32] Rachel Snyder: Yeah, build building that network of relationship with your business members. And getting them to use the credit union and getting the credit union then, and now even extending that out to getting your business members to utilize your other business members in creating somewhat of an exclusive club, uh, with your business members in your community is huge.

[00:21:14] Mark Ritter - Host: I, I always have this conversation where I tell people, nobody wants to be your first business loan. Right, right. No, no, no. Nobody wants to for you to look at them and say, oh, this is the first time we've ever done that. Right. But. You have people in relationships who will give you the slack to learn and grow the systems.

[00:21:58] Yeah,

[00:22:22] Um, but from there, I think you quickly have to think about true business remote deposit capture. Business owners, anybody depositing more than 15 checks a month is not gonna take a picture with their cell phone. They need scanners at their place of business. And then I think, um, a CH origination, giving your business owners the ability to originate and, and easily receive a CH debits and credits into their business checking account is incredibly important.

[00:23:12] But the truth is, um, businesses and especially small businesses need those types of services. This well.

[00:23:38] Where, where people can shop and, and, and small and midsize credit unions can either get it through a qso. You know, we, we we're, we're, we use nCino, uh, and, and, and which, if a credit union was going to, and get into that. Today it's a $300,000 investment. [00:24:00] Uh, and, and, but through QSOs and people like us and you, you know, these systems are widely available.

[00:24:34] And it's easy to incorporate, uh, those types of, of products into the product suite. So there's really no excuse anymore for credit unions to say, that's too hard. We can't do that. Businesses need those services and credit unions can offer them and offer them well, um, had an affordable price in their market.

[00:25:18] Now, today, unfor, we are seeing great volumes, but unfortunately we are seeing some of these commercial loans, consumer loans, credit cards across the board, increases in delinquency. What are you seeing this as kind of the, the hot button issue of the day for NCUA or credit unions in general? Gimme your thoughts on this.

[00:25:49] Rachel Snyder: So, uh, here at CBG, we like to call that delay and pray, and it is something that as an industry, credit unions tend to do when it comes to their commercial portfolio. [00:26:00] I saw the headlines in CU times this morning. Um, it was wild. That article was mostly focused on consumer auto and credit cards.

[00:26:30] Uh, you know. Much higher than we've seen in the last few year. Now whether those 30 day delinquencies turn into 60 to 90 and go further than that, we'll see. Time will tell. I do think in general, because credit unions do tend to delay and pray when it comes to that sort of thing, it may take a while for that to work its way out.

[00:27:12] Those concentration limits are always challenging. People, you know, set it once when they write their policy and they hesitate to go back and change it and let's, they need to increase it because they wanna do more of a, the, a specific loan type. And that's probably not the right way to think about concentration limits and policy.

[00:27:35] Mark Ritter - Host: I, I have two pieces that where I see it as an issue and that. Credit unions sometimes take the consumer stance of, well, they're still making a payment, so I'm not going to worry about it. Right? Well, they're still making a payment, but they're not paying their taxes.

[00:28:18] Expertise in underwriting alone. Expertise in originating alone is not expertise in managing. Distress credits or working out alone. And sometimes I think credit unions, you, you have to realize, you know, the credit people tell you everything's bad. Oh, I looked at the credit and it's bad. Well, we already know it's bad.

[00:29:16] Everybody who's an ex expert in business lending is not an expert in everything, right? And pull in people who can do this, right?

[00:29:34] And I do think you're right when it comes to managing troubled loans, distressed credits, you need to get somebody outside of that who doesn't have skin in the game. Andes could look clearly at the numbers. The situation, understand the story of the business and help the credit union make decisions about how you work through that and when you delay and pray and when it's time to finally start making some decisions and, and stepped [00:30:00] towards, uh, resolving the situation.

[00:30:15] Rachel Snyder: yeah, I then I, I feel the same. I, I worry about credit unions and I worry about, um, if they start to run into issues and if they'll get help soon enough.

[00:30:44] Mark Ritter - Host: Well, Rachel, we are in a cooperative industry where people can help each other by cooperating with each other, and that is important for credit unions. And I'm so glad over the [00:31:00] years it's been important with you. With Larry back in the day with Justin now and with our entire QSO network because I think it makes our whole industry healthier.

[00:31:15] Rachel Snyder: It was absolutely my pleasure. I appreciate the opportunity to be here, and if anybody wants to reach out to me directly, you can always find me. Uh, my email address is really easy. It's r snyder R-S-N-Y-D-E-R-C-U-B g.org. And I'm always happy to talk about anything we covered here today or any other questions, uh, that someone may have.