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March 6, 2021
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Business Review Western MI
Business Review Western MI
Credit Union Growth
(2007-05-08)
(wgvu) -
Duane Nelson calls it the Meijer Effect, after the Grand Rapids-based
retailer that pioneered one-stop shopping.

Years after credit unions moved into mortgages and home equity loans,
members are increasingly asking them to provide business services,
including commercial loans.

They say, Geez, you do all that other stuff. How about doing our small
business?' They want the convenience of having all their services at one
institution, said Nelson, the interim CEO of St. Joseph-based United
Federal Credit Union.

Credit unions needs to get serious about it, Nelson said.
And they are, apparently, generating further, albeit incremental,
competition for their bank counterparts for commercial accounts,
services and loans.

In western Michigan, the trend led the leading credit unions in the
market to score significant gains in the past year in business lending.

United Federal doubled its member business loans from a year earlier to
$8.8 million, though some of the increase is attributed to the October
2006 merger with First Resource Federal Credit Union. The growth in
commercial lending came with virtually no marketing of the service,
Nelson said.

Elsewhere, Grand Rapids-based Lake Michigan Credit Union ended the first
quarter with $7.6 million in member business loans, up from just
$440,544 a year earlier, according to a quarterly regulatory filing with
the National Credit Union Administration.

Option 1 Credit Union, also in Grand Rapids, had $10.2 million in member
business loans, which compares to $404,444 as of the first quarter in
2006, according to its NCUA report.

Battle Creek-based Omni Community Credit Union, which entered the
commercial lending field last summer, recorded $657,363 in member
business loans.

The growth reflects the increasing focus that credit unions are placing
on commercial loans, as well as business services such as payroll
processing, commercial checking, deposit products and business credit cards.

United Federal, for instance, recently began offering merchant services
to small businesses, processing their credit card transactions, Nelson said.

It plans to soon launch remote deposit, a service that allows a business
owner to deposit checks into his account via an electronic scanner.

In doing more business services, credit unions are tapping a built-in
growth opportunity within their memberships.

Why let these businesses go elsewhere? said Glenn Tresemer, executive
president of Lake Michigan Insurance Agency, a three-year-old unit of
Lake Michigan Credit Union.

The agency recently added commercial lines of insurance worker's
compensation, property and casualty, liability and group health to its
consumer policies.

Tresemer expects revenue from commercial lines to outweigh consumer
premiums by year's end.

Hopefully it will be our lead horse, he said.

Further building its business offerings, Lake Michigan Credit Union
the region's largest with 20 offices, more than 125,000 members and
$1.23 billion in assets is awaiting federal approval to move into U.S.
Small Business Administration lending.

Winning approval will provide Lake Michigan Credit Union a new growth
driver in member business lending, said Scott Wiggins, director of
commercial and consumer lending.

This is going to create a lot of doors for us to people who are wanting
to start new businesses, Wiggins said.

Even if the growth rate in member business loans experienced in the past
year continues, credit unions still represent only incremental
competition to banks. Current law caps their member business lending to
12.25 percent of assets.

Legislation introduced in Congress in March would raise the lending cap
to 20 percent of assets.
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