While CUSOs offering brokerage and insurance products and services to members have garnered the lion's share of notice, Grace Mayo, president of Telesis Community Credit Union, Chatsworth California, proudly noted that TCCU's business lending and loan participation CUSO has quietly underwritten $500 million in member loans since 1992 without a single delinquency.
''CUSOs represent the creative side of the our industry,'' said Mayo, ''it's different from the bread and butter. We know we can't hold 30-year fixed rate real estate loans forever- we've got to sell them at a premium or hold the servicing. The strength of credit unions is their ability to adapt to their members' needs, Mayo believes. ''We used to be Teledyne Aerospace CU, and saw that our members- engineers and other professionals- were getting laid off and becoming entrepreneurs. Our members didn't go away, but they changed.'' So when a member came asking for a loan to buy a new lift for his gas station's service bay, Mayo found a way to do it. ''We had to do a HELOC, but I knew even then that that wasn't going to work for future growth.''
Mayo sought and found the business underwriting knowledge she needed for her staff at Louisiana State University, where NCUA sends its auditors. ''We're audited frequently because we're called 'complex,' which is like saying, 'you don't know what you're doing! But it's not a bad tag,'' she laughs. ''But we do know what we're doing, and let me emphasize that underwriting is critical.''
Telesis Partnerships, Inc. does real property loans at fixed rate, 5-year balloon and variable- 20, 25 and 30 years amortization; unsecured loans up to $50,000 (by MBL regulations); business lines up to $50,000 maximum (unless secured by collateral) and SBA loans up to $2 million. They do retail (with anchor), office, mixed use, industrial and apartment units. They offer business checking as well. ''The deposit side of the business can be as profitable as the MBL side,'' said Mayo. She has many stories of members who started small and credit the CU for the boost, earning loyalty that pays big dividends when they succeed.
The CUSO has a staff of 16 (with 12 open positions) that underwrites and services all loans. ''We inspect our properties every year, and if a loan is one day late, they get a call,'' Mayo assures. TPI has generated $9.6 million in gross capital, $8.6 million net, and has an ROA just shy of 2% and does participations with some 70 credit union business partners. 'We're creating a securitization program within our industry,'' said Mayo, who thinks that CUs need to revisit one of their original purposes-business and agricultural lending- in order to keep up with their changing memberships. ''Most people would be shocked to learn of the opportunity that resides in their membership.''
She is also an advocate for pushing CU data vendors to create the platforms credit unions will need to move into business lending and advises that once they do, CUs must advertise that those services are available. ''You think it's been tough to get members to think of us for home mortgages? How tough do you think it is to get them to think of us for their business needs?''
To find out key trends and more information about credit unions and their CUSO relationships look no further than our 2002 National Guide to CUSOs and Investment Program Providers. Click here for more information!