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So in the business lending space, how are credit unions different? How are you responding differently than the other retail financial sectors?
ADAMSON: When the rest of the for-profit markets were shutting down in 2008 and 2009, we still were actively petitioning our members, marketing to our members, to bring in business loans. But we’ve been so close to our cap for years that we haven’t been able to serve all of the members we need to. So we have to be very picky about the ones we take. But we were still actively out there trying to get them.
NIELSEN: We have a great amount of volume in the pipeline right now. There’s still demand out there. There’s still a need. And we’ve been there to meet it. We just need to make sure that we continue to be able to have capacity to do so.
ADAMSON: Even in 2009, 2010, as an industry we were still doing business loans where others had just shut off.
LUND: Our sweet spot tends to be a lower amount. We’re not after the huge development loans. A typical business loan is tending to be a smaller business owner that many of the larger, for-profit institutions typically aren’t real interested in anyway. We’ve seen many loan applications come in that were actually denied by other institutions.
MOODY: During this last economic cycle, we’ve seen commercial banks that traditionally went after these large loans, and when that business slowed down, they just encroached upon smaller loans. So you have regional and even national banks that are willing to do smaller loans than they were just five years ago. The community banks have been hurt by that because regional banks are now in their space. And it’s been more competitive for credit unions to be in that market—because even the big guys want to do the $500,000 loans, where before they wouldn’t even take a look at it.
It’ll go back to the way it was as the economy continues to improve; the larger banks will move out of the small business loan environment and there will continue to be that demand for credit unions to meet those capital needs.
WAHLEN: Small businesses can’t grow unless they have access to capital. And we provide access to capital not only through our business lending, but also through our consumer side. We have members that are tapping into their home equity loans to start small businesses. That’s the heart of America—our economy grows based upon small business growth. And we’re a catalyst to provide that economic growth in Utah.
How is technology helping, and how is it presenting a challenge?
BARBER: From the standpoint of a smaller organization, it does provide a greater ease for members to be able to continue to do business with us regardless of where they are. But in the same vein, it also provides greater capability for them to quickly see what everyone else is doing. In today’s economy, and the fact that people are willing to go out and search, they’ll be up and gone for an eighth of a percent at the blink of an eye. So it’s a double-edged sword.
VANAUSDEL: While we recognize the importance of technology, it’s very expensive and members expect it for free for the most part. It’s a real challenge putting the new technology in and figuring out ways to pay for it.
PAYNE: Technology is a great equalizer. On the consumer side, they get an advantage there where they can comparison shop. And Bret’s right as well—it is expensive. Fortunately, there seems to be a service bureau model set up to where its price is scaled on institution size. We were able to introduce a mobile deposit product late last year. It’s not perfect; it’s got a few wrinkles. But it’s good. We were able to roll out and be one of the early adopters of mobile deposit technology.
GOURDIN: One of the biggest reasons individuals will join a credit union or a bank is, obviously, for the deal they’re getting, but the other big reason is convenience. For a small institution that only has one location and that serves memberships throughout the state, online banking and other technological services are the only equalizers that we have, with the exception, of course, of shared branching. So even though it is expensive, we believe it’s necessary to make that investment for us to not only survive, but to thrive.
PAYNE: Because it’s more expensive
HOFELING: We’re kind of middle of the road, as far as size, but I’m sure many of you have seen the same results. We know that 53 percent of all of our teller transactions are electronic, which to me was kind of a surprise. More normal, day-by-day transactions are done electronically than they are in person.
When you start looking at the numbers, it’s not young versus old, it’s everybody. I’ve got as many senior members using the technology as I do high school kids. It’s not should you, it’s how come you don’t? It’s just the same thing as not having a pencil anymore.