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LIVINGSTON, Mont. – Over a three-year period, Sky Federal Credit Union has taken its business services program to several levels. The $70 million credit union started its business lending program two years prior to signing on with CU Business Group, LLC last March. But even before the alliance, it saw robust activity especially among self-employed, home-based businesses and storefront retail shops. The demand was there given that one of the counties it served, Park County, was considered small with 10,000 to 15,000 residents. Then, the unexpected happened. The credit union’s business lender, with more than 20 years of business lending experience, decided he wanted to move on, said Annamarie DeYoung, president/CEO, Sky FCU. Because requests for service continued to come in, the credit union hired a part-time person to keep the momentum going. “In our small area, business lenders are hard to come by and expensive,” DeYoung said. “As a $70 million credit union we’re relatively small in the big scheme of things, but we still needed to be able to offer business services with expertise.” Sky FCU kept the part-time staffer, started with real estate loans and “expanded quickly,” added lines of credit, three different business checking accounts and bankcard services. The credit union was ready to go even further when it approached Helena, Mont.-based Treasure State Corporate Credit Union, which had a relationship with Larry Middleman, president/CEO of CU Business Group. DeYoung remembers telling Middleman that they wanted to keep their part-time person but welcomed any additional training the CUSO could provide. The alliance now allows the credit union to take in more business loan applications while CU Business Group handles the underwriting. “We wanted to be sure we were doing everything up to par and that the underwriting was strong,” DeYoung said. In 2005, the credit union had $7 million in member business loans on the books, growing a net of $1 million last year, DeYoung said. An SBA-approved lender since 2004, Sky FCU has $879,100 approved in those types of loans. It also has three loan participations in its lending fold. Being able to accommodate members in a number of ways is critical to keeping pace with area financial institutions. “It’s a very competitive area. The competition is coming from community banks,” DeYoung said. “We have to price (loans) based on risk. CU Business Group taught us how to risk rate so we went back and risk-rated all our loans.” Risk rating involves a periodic analysis of credit quality after the deal is closed. A number of factors are looked at in monitoring the financial health of a business, including industry and economic conditions that may adversely affect the business. Sky FCU has the distinction of being the first credit union in Montana to partner with CU Business Group, a CUSO owned by eight corporate credit unions and currently working with 179 credit unions in 26 states. DeYoung said the past year has helped the credit union serve more types of businesses: from a brewery to construction companies and everything in between, with loans ranging from $10,000 to $1 million. One of its biggest clients, a sporting goods store, continues to take in large deposits each month. The store’s growth hasn’t hampered what the credit union can do for it. “We noticed that the number of physical checks has dropped but electronic items increased,” DeYoung said. “That’s less (paper) items for us to process.” The question of whether credit unions are encroaching on community banks’ business lending turf is all about perspective, DeYoung said. “It’s like comparing it to banks not wanting to finance washing machines. Banks won’t turn away from $500,000 loans but they might (for a) $50,000 loan,” DeYoung explained. “Our niche is for members wanting that choice. There’s enough business to go around for everyone.” -

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