What does it take to build a thriving credit union business lending program in today's market? Mark Ritter sits down with Joe Hyatt of DFTC to unpack decades of experience in commercial lending, loan underwriting, and portfolio diversity. From navigating NCUA compliance to chasing treasury management goals, they share candid insights on what credit unions are doing right and where they still fall short. If you work in business lending, this conversation will hit close to home.

What You Will Learn in This Episode:

✅ How credit union business lending has shifted from a rigid, prescriptive regulatory framework to a more flexible, opportunity-driven environment, and what that means for your program today.

✅ Why strong credit administration, consistent independent loan review, and thorough annual reviews are the foundation of surviving and succeeding in an NCUA compliance examination.

✅ How portfolio diversity, including a move toward C and I lending, small business lending, and treasury management, is reshaping how credit unions approach growth and member relationships.

✅ Why credit union technology and emerging AI tools are no longer optional, and how embracing innovation will determine which programs lead and which get left behind.

Subscribe to Credit Union Conversations for the latest credit union trends and insights on loan volume and business lending! Connect with MBFS to boost your credit union’s growth today.

TIMESTAMPS:

00:00 Joe Hyatt details DFTC's loan underwriting, training, and independent loan review services built for credit unions nationwide

04:25 Reflecting on the early days of member business lending and the evolution of talent, tools, and portfolio limits

08:39 Joe outlines keys to NCUA compliance: strong policies, solid credit administration, and proactive loan workout planning

12:50 Exploring portfolio diversification, treasury management, and why small-business lending competes with larger commercial real estate deals

18:45 Some of the big differences for better or worse today versus the old days

21:48 Joe's closing thoughts on portfolio diversity, AI adoption, and why credit union technology will separate tomorrow's leaders from the rest

KEY TAKEAWAYS:

💎 Success in credit union business lending is not accidental. Programs that invest in strong policies, consistent credit administration, and proactive, independent loan review hold up under examiner scrutiny and deliver long-term results.

💎 Chasing large commercial real estate transactions is tempting, but sustainable growth requires intentional portfolio diversification, small-business lending, and building full treasury relationships with business members.

💎 The credit unions that will lead in the next decade are those willing to embrace credit union technology and AI tools now. Waiting is not a neutral position; it is a choice to fall behind as the industry rapidly evolves.

ABOUT THE GUEST:

Joe Hyatt - LinkedIn

RESOURCES MENTIONED:

Mark Ritter - Website

Mark Ritter - LinkedIn

SEO KEYWORDS:

Credit Union Conversations, Mark Ritter, MBFS, Credit Unions, CUSO, Credit Union Business Lending, Commercial Real Estate, Loan Underwriting, Portfolio Diversity, Credit Administration, Treasury Management, Independent Loan Review, Commercial Lending Training, C And I Lending

[00:00:29] B, you don't know who to invite on the show, so you end up inviting your good friends because they'll give you a little bit of slack when you suck. And also, you know, you're begging them and feel pretty confident that they say yes, they'll be on the show. So joining me this week is one of my return guests and a good friend, and he was on a few years ago, and I thought, heck, I haven't talked to him in a while.

[00:01:10] Joe Hyatt: Well Mark, thanks for having me back, brother. After my first appearance, you talked about people sucking at podcasts.

[00:01:34] Mark Ritter: The good news is since we're taping this in the spring, we don't, people don't get to listen to about 30 minutes of college football talk.

[00:01:50] Mark Ritter: there, there's always a lower tier, so just fix.

[00:01:57] Joe Hyatt: Absolutely, absolutely. I still love 'em and [00:02:00] am proud of them though, so.

[00:02:14] Joe Hyatt: Well, I'll tell you, I'll start with DFTC. DFTC has been around since about 2003, and DFTC provides third party services, primarily the credit unions, a few other F fis and alternative lenders, but primarily the credit union space is where we operate and we provide loan underwriting services, you know, periodic review.

[00:02:57] Their business lending [00:03:00] certification program that occurs every year in Madison. So we, we built that curriculum and, and deliver that curriculum on, on an annual basis. And we've been doing that since, oh my gosh. I was talking with Kathy Smith over at America's Credit Unions. We, we've been doing that for probably a little over 10 years, or, I'm sorry, almost 15 years.

[00:03:19] Joe Hyatt: I actually attended that school back in 2006, which is where I met. Dana Sumner, our former CEO, but that's DFTC in a nutshell. Joe Hyatt's been around for back when I used to have all my hair. I started in in commercial lending and I was in public accounting at one time before that, and then got in with the credit union in Montgomery, Alabama and worked there for several years and then doing basically underwriting back in those days.

[00:03:57] Mark Ritter: I hate to say this, but me and you are [00:04:00] what would be considered old timers in the credit union business lending scene.

[00:04:07] Mark Ritter: And let's reminisce a little bit about what it was like in those early days for people who kind of come along, um, you know, kind, kind of think back to your credit union. What it was like compared to today's world.

[00:04:29] I think it depends a little bit on the credit union. I think it depends on where they are today in their journey. I think there's credit unions out there today that were, if I look back at that first shop I talked about in Montgomery, Alabama, you know, we were trying to build a program. You know, they were smart.

[00:05:00] Mark Ritter: When we started in this business, we were in such a tight box and, and it was a, a tight of a tight box as far as what you could, couldn't do.

[00:05:33] Joe Hyatt: Going back to what you were just saying real quick, Marty, but when we think about the restrictions that we had back in those days.

[00:05:47] Mark Ritter: The school in Madison has just gone so much further. I mean, we've seen people kind of go from being a newbie to really kind of grown up with [00:06:00] that generation of, they learned this business in the credit union space and and are doing well now as a credit union business lending veteran.

[00:06:36] And, and, and, and, and that's it. It's been quite a ride.

[00:06:54] Mark Ritter: Yeah, so it, it has been quite, quite a ride. And I remember at Members [00:07:00] first in, in central Pennsylvania, we were about two hours from Alexandria, the NCUA headquarters, and, and we just seemed to have an awful lot of examinations. Finally we asked the question like, what's going on here? What, what's your concern?

[00:07:42] Joe Hyatt: Wow. Yeah. You know, I work with a group that helps train examiners and you know, it's a constant battle for them to keep folks and keep them trained up and present them with an approach to doing this. So that's another thing that's changed I think, since back in the day Mark, is the examination process I think has [00:08:00] gotten a little bit better.

[00:08:13] Mark Ritter: Yeah, I think it'll always be there. I think that the focus on the specialists have done a little bit better.

[00:08:49] What do you, what do you see as it?

[00:09:09] And lastly, solid credit administration and supported by management reporting that's solid, you know, good systems. And then a, and usually. The most important thing, or one of the most important things that it sort of brings all that together is either a knowledgeable staff or third party. That knows what they're doing in those situations and knows what this should look like.

[00:09:53] And then they get a taste of the revenues that are driven by commercial loans 'cause they are good revenue producers [00:10:00] and kinda lose focus on the fact that, or they don't understand maybe wholly the back end of that where you have to service that portfolio. And if you don't have the team to do that, whether it's internal or an MBFS to do those things for you, then that's where you can get in trouble.

[00:10:45] And I have some people go into an utter panic. They don't have an annual review entirely done. By the time an NCUA examiner comes in, I always say they don't care if it's [00:11:00] done. They wanna know it's still in process and it's getting done. It's, there's always things in motion. If you're waiting for an insurance policy that's two weeks past due when you've had conversations with them, don't panic.

[00:11:24] Joe Hyatt: hundred percent.

[00:11:36] Joe Hyatt: I agree. And I think that all comes with what you're saying though, is having that knowledge about your portfolio, having the reporting and the tracking in place.

[00:12:03] It. They're 30% aren't completed, but you know the status and you know what's going on, and you can tell, talk to them, then you're gonna be okay. That that, I think that's what you're alluding to as well.

[00:12:28] We are in the bizarro world of that now, and pretty much the exact opposite and things are humming along. Part of that's because they can't, consumer loans stink. And liquidity's back to normal, but so what do you see? What's working for people today? What's hitting and is there anything pointing out where you're just like, oh boy, this is a tough one.

[00:13:15] And most of it's CRE as that's typical. I think the, if you look at the CU portfolio across the country as a whole, I think it's what, 97% CRE secured or what, you know, that's not gonna go away overnight. But I believe, and you mentioned this and I think the, the port, the liquidity crisis that we went through has piqued the interest of credit unions in understanding more about garnering business deposits.

[00:14:06] I see that growing in the industry. I won't say it's going well yet. I think it is for some folks,

[00:14:21] Joe Hyatt: I like that. Best of intentions, right? Best of intentions.

[00:14:42] And when you have that, when you have the million dollar loan. Everybody can point and say, look at, there's my revenue. We're making money. Versus the slow churn of deposits coming in where you can't just [00:15:00] brag and say, look, we're making money because of my low cost deposits. You know, everybody likes that shiny object,

[00:15:10] I think that's, and I'll go one step further with your point, is. But think about it from this perspective, it is very difficult to sell a c and I loan. It's a whole lot easier to sell a $2 million commercial real estate transaction that, you know, once it comes back to understanding those transactions and, and knowing how to underwrite them and all of those things.

[00:15:47] That all comes back to strategic planning for the credit unions.

[00:16:10] Well, that can mean a lot of different things. Business loans, we want to grow by 10%. Well, that's sometimes easy. Just let me crank out a few big deals. I'll buy some participations versus the quality behind it.

[00:16:30] So.

[00:16:44] Joe Hyatt: true.

[00:16:55] Well, these caps matter. Like you said, if you only can fill up your bucket so [00:17:00] much, you can make a loan, sell it off, and keep making more loans, but you can't sell off that revolving line of credit for the local carpet store to go buy inventory.

[00:17:14] And with those limits, hitting those limits, I mean, I have several clients that that's how they manage their limits is through. Participation sales. I think there's a ton of them out there. So maybe as an industry we'll get more comfortable with this whole concept of small business lending, is what I would call it.

[00:17:34] Mark Ritter: Let's get around to another old timer topic.

[00:17:38] Mark Ritter: And nearly 10 years ago, our industry went from, here's the box you have to lend in. Here's the rules that you have to lend in. If you want to go outside of those during the process, you have to write a letter to the federal government asking for [00:18:00] permission, and by the time you, we respond back to you that borrower has gotten three other loans.

[00:18:34] What have you seen as some of the big differences, for better or worse, to today's world versus the old days?

[00:19:15] Fault and and which created all of these exceptions that had to be dealt with by the NCUA. So first of all, for them it made it better for them 'cause they don't have to do that anymore, right? That took away all that stuff. But for our industry, I think it made us grow. I think it made us grow. It presented tremendous opportunities and I think there's too few still.

[00:19:59] Just the, [00:20:00] to the members, to the, you know, and to the institutions themselves.

[00:20:27] Sometimes I get credit unions that kind of think somebody's gonna tap 'em on the shoulder and knock 'em down for this. But no, it actually exists where you, you can do this now. Sometimes people will call me and say, can we do this? The answer is Absolutely. Can you do it? Should you do it is a different story.

[00:20:51] Mark Ritter: So there is a big, big difference in, can you versus should you. Which I always find is very interesting.

[00:21:15] If as a business owner I bank it with, with my credit union. Who's the first person I'm gonna call? If I wanna go buy a car, who's the first person I'm gonna call? Yes. If I need a mortgage or a HELOC or you know, my kid needs something or whatever. If I, you know, that's relationship that presents that opportunity for credit unions.

[00:21:48] Joe Hyatt: I, I think portfolio diversity and I, you know, I'm gonna jump on the, i the AI train for a minute and say, you know, this stuff's coming for us as an industry.

[00:22:08] Mark Ritter: well said, because many PR industry is the worst at the acceptance and use of technology. So if you don't accept that as a loan originator, as a company, you will be left behind before you know it.

[00:22:29] Mark Ritter: Alright, Joe, where should somebody get in touch with DFTC if they're interested in talking to you?

[00:22:45] Mark Ritter: All right, so joining me today was Joe Hyde of DFTC. They help credit unions across the country on all sorts of training, reviews, education, and a whole bunch more.