MARLBOROUGH, Mass. – The number of credit unions forgoing singleventures to form jointly-owned member business lending CUSOsrecently added another alliance to the list. Five New Englandcredit unions and one corporate credit union have aligned to formMBL Services, LLC. The CUSO is jointly owned by Digital FCU,Marlboro, Mass.; EasCorp, Woburn, Mass.; First Citizens' FCU, NewBedford, Mass.; Jeanne D'Arc CU, Lowell, Mass.; Northeast CU,Portsmouth, N.H.; and Rockland FCU, Rockland, Mass. Together, thefive credit unions have more than $4.5 billion in assets. EasCorpis the nation's 13th largest corporate credit union, with more than$1.5 billion in assets. Besides providing centralized underwritingand servicing of small business and commercial real estate loans,the CUSO will also help credit unions establish product packagingand pricing strategies, gain access to SBA guaranteed lendingprograms, and implement other types of member business products andservices. “Credit unions have served business people and smallbusinesses since their inception, though often without formalpolicies and practices, or deliberate intent to expand within thismarket,” said Tom Ryan, Digital FCU's senior vice president and MBLServices' newly-elected chairman. “Our research and recent surveysof credit unions indicate that this is about to change in adramatic way.” That research came from EasCorp, which hadpinpointed specific desires and needs credit unions in the NewEngland region had indicated in their quest to offer businesslending services. They included the lack of financial and humanresources as well as delivery channels and how to price businessservices, Ryan said. From there, a short list of credit unions wereidentified that may be open to the idea of forming an MBL CUSO. The$2.5 billion Digital FCU, with its $104 million commercial loanportfolio, was the first to be tapped for its expertise, Ryan said.“We were focused mainly on multi-million dollar commercial realestate loans,” Ryan said. “While we recognized that there waswithin our field of membership (a need) for smaller business loansunder $250,000, it was, quite frankly, a back burner issue.” Ryansaid that niche might have remained off the radar screen if DigitalFCU did not get involved in the CUSO. The credit unions andcorporate that came to form MBL Services were aware of the manybusiness lending CUSOs that had sprang up and decided to take aregional approach. “We felt that credit unions in the region willbe best served by those that they already knew,” Ryan said. The newCUSO aims to serve credit unions in the six New England states:Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, andVermont. Operations are scheduled to be up and running by the endof the year with actual service to start in early 2005. FredHashway, a former business lending executive at US Capital/FirstInternational Bank has been named as the CUSO's CEO. Over the nextfew months, Hashway will be charged with building the CUSO's team,which could include several business development officers, a creditanalyst and other key staff. MBL Services will be headquarteredwithin Digital FCU's main office. MBL Services will initiallyfacilitate small business loans up to $250,000 and real estateloans up to $500,000 with the projection that those limits mayevolve upward going forward, Ryan said. The credit union ownerswill also explore loan participations, a feature many MBL CUSOscurrently share to spread the risk around. Business depositservices will also be offered as demand picks up, Ryan said. As forthe outcry from some community bank executives who feel creditunions' growing entry in business lending is an encroachment on an“uneven playing field”, Ryan shrugs it off. “Anything positivecredit unions do, it's always going to draw the interest of thebanks and trade associations,” Ryan said. “If we're doing somethinggood and vital for our members, should we worry about theirreaction? The obvious answer is no.” Banks may need to look at thebigger picture by looking inward, he offered. “If I were a banker,I would ask myself, `what can I do to remain competitive?'”Meanwhile, the days of “working for a company for 45 years” arelong gone, Ryan said, adding that the growing number of smallbusiness start-ups, particularly among credit union members, meansthere's a need for service there. “Small businesses are a growingpart of our nation's economy and oftentimes not adequately servedby banks, a fact that credit unions are discovering and attendingto in their business strategies,” Ryan said. -

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