The CUSO currently has more than 200 loans with $214 million in outstanding loan balances. RICHARDSON, Texas – For the naysayers who’ve raised concerns on whether credit unions have the seasonality to pull off large business lending transactions, Texans Commercial Capital, LLC is certainly a case study to follow. Since officially opening for business in May 2004, the CUSO, which serves $1.3 billion Texans Credit Union (TCU), has amassed more than 200 loans with $214 million in outstanding loan balances as of Dec. 31, 2004. In January, it funded the sale of ALM First Financial Advisors, LLC from its parent, Eastern Corporate Federal Credit Union (EasCorp). Dallas-based ALM First is an investment advisory firm that provides service to nearly 100 credit unions. In December 2004, Texans Commercial also funded the acquisition and construction financing for Prism Hotel’s purchase of the 280-room Radisson Memphis Hotel in Tennessee. The CUSO has not only provided funding for loans in Florida, Oklahoma, Kansas, Illinois and New Mexico, but also sought out credit unions in those markets to form loan participation relationships with. Despite its venture into larger loan financing, the CUSO still stands firm about meeting the needs of the member who may just need $5,000, said John O’Shea, executive vice president and COO at Texans Commercial. “(Business lending) is a new venture for credit unions so there’s a pretty steep learning curve,” O’Shea said. “We’re very interested in brining credit unions up to speed.” O’Shea came aboard at TCU in April 2003 bringing with him a wealth of bank commercial lending experience, having worked at several local community banks. He quickly hired seasoned lending staff and the decision was made to form a CUSO that would do a range of commercial and loan originations for credit unions. His staff has gone from three to 17 since then, and the CUSO is in the process of moving to a larger facility to accommodate its rapid growth. In all, staff at Texans Commercial have more than 200 years of lending experience. What has helped Texans Commercial grow so quickly is the relationships that the CUSO’s staff have brought to the table, O’Shea said. Many of those alliances have resulted in financing deals in the $10 million to $30 million range. In fact, O’Shea met Emily Hollis, president of ALM First, through a mutual friend. Nearly 45 days after meeting with her to discuss loan participations, Hollis approached O’Shea about the possibility of handling the financing of the ALM First sale, aware of the fact that Texans Commercial had experience doing employee stock purchase loans. “We had a fairly short window of time to get it done,” O’Shea said of the deal. “There were a few wrinkles thrown in at the end but they didn’t pose any problem. We feel real good about the opportunity. The response has been overwhelming considering we’re kind of on the sidelines.” It was the CUSO’s “depth of knowledge” that won ALM First over after looking at a number of different funding sources, said Tom Manley, ALM First managing director. “Texans made it easy for us, they were sensitive to the deal,” Manley said. “They had the whole package. They brought up items that we hadn’t even thought of.” Texans Commercial is still heavily involved in traditional business lending services such as lines of credit of credit and personal installment loans. It is currently working with eight credit unions in loan participations with another three that have expressed interest. “My experience over the past two years (with credit unions) is there’s a focus on small, mom and pop business loans. And, certainly, if a member comes in with an existing need of say, $5,000, we will accommodate them,” O’Shea said. The CUSO chose not to offer SBA loans at this time because “unless you’re a Preferred Lender, it’s hard to streamline.” “Rather than have members serve as guinea pigs for three years, we chose to partner them up with SBA lenders who can assist them,” O’Shea said. On the horizon for 2005, Texans Commercial plans to help more credit unions establish their own business lending programs through such vehicles as loan participations. It also plans to reach out to smaller credit unions who are seeking a resource to become their business lending shop, O’Shea said. More staff will be hired to venture into more markets where relationships have been formed. To the skeptics who wonder how the CUSO has sidestepped risks that come with growing pains, O’Shea can reassure them. “We’ve were examined six times last year and each of the reviews have been favorable,” O’Shea said. “We’ve had no delinquencies, no adverse credit. We’re growing quickly but we like to think we’re doing it the right way.” -msamaad@cutimes.com