Beyond a Niche FOM
It’s been nearly two months since Paul Sheahan was hired to oversee the business lending department at Anheuser-Busch Employees’ Credit Union and its division, American Eagle Credit Union.
During that time, work has begun to streamline some processes and grow loans, Sheahan said. It’s a unique mission given the credit union’s structure.
The St. Louis-based $1.4 billion Anheuser-Busch Employees’ and its division American Eagle, serves 110,000 members with the latter serving several counties in Missouri, Illinois as well as those who live or work within a 10 mile radius of its Lone Star State branch in Dallas.
Sheahan will lead the credit union’s business lending group, which specializes in serving small to mid-sized companies and their members both in the St. Louis market and nationwide. In addition to business loans for equipment, working capital and commercial real-estate, business deposit services including remote-deposit capture and cash management services, are also offered.
“We have a lot of positive things coming. We want to grow loan growth but still keep the level of quality credit,” Sheahan said.
The credit union has $80 million in business loans, said Jim Barrett, who was recently promoted to senior vice president/chief lending officer. Much of the emphasis will be on courting businesses in the areas served by American Eagle. Thus far, relationships have been established all over the gamut, including architects, accountants, manufacturers and physicians that need buildings or equipment to firms applying for a loans for trucks and vans.
“Our overall focus is on the member and helping them with a solution,” Barrett said. “We still have rules and regulations to follow, but we want to know how we can help our members.”
One recent relationship came through a local cheese distributor that was looking to expand its operations. With the credit union’s lending assistance, the business was not only able to grow but is now working with a major pizza company in the St. Louis market.
With 22 years of business lending experience in the greater St. Louis area, Sheahan has a strong barometer read on where potential opportunities can be identified and consummated. A former banker, he has seen firsthand how the upheaval within community banking has affected small business owners.
“It’s been rough and quite frankly, some have had to deleverage their balance sheets,” Sheahan said. “Some of it has been through natural progression and others want to go after the larger companies.”
Those shifts in focus have left some businesses out in the cold forced to seek other capital sources. Still, there is a cadre of community banks that have ramped up their competition against credit unions with some competing more aggressively than they have in the past, Barrett said.
“Their balance sheets are healthier and some of the larger financial institutions are trying to buy more market share,” Barrett noticed.
He said the difference for Anheuser-Busch Employees’ and American Eagle is on top of the 100 years of combined expertise within the business lending group, small to mid-size businesses have access to better rates with add-on products and service.
“Our underwriting hasn’t changed in 20 years. We look at cash flow and collateral,” Barrett said. “What we’ve seen from 2008 to now, every year’s financial statement has approved.”
Four years ago, it was a different scene as the nation’s economy began its free-fall. Barrett said small businesses did all they could to survive by trying to control expenses. Much of that hunkering took place well into 2009. It was only in 2010 that revenue started to pick up again, he pointed out. Through those uncertain times, the credit union was able to work with many of its business members by restructuring their loans.
“As for competition, at the economy continues to improve, although at a slower pace than we would like, and banks continue to improve, they realize that in order to regain profitability, they may need to get out of serving smaller businesses,” Sheahan said.
Credit unions and business lending CUSOs that are seeking to carve a niche with some of those businesses that have been dropped by their long-term banks may hit a brick wall. Barrett said the 12.25% member business lending cap has stifled opportunities to expand.
“It’s significant for all credit unions to have access to higher lending levels to balance out the overall investments and to continue to offer more services to members,” Barrett said.
Meanwhile, collaboration may continue to be the great equalizer. Anheuser-Busch Employees’ and American Eagle have a partnership with Heartland Business Services, a CUSO formed by 18 Missouri credit unions along with the Missouri Credit Union Association and Missouri Corporate Credit Union in 2005.
To critics in the banking industry who question whether credit unions have what it takes to engage in prudent business lending, Barrett said there are countless examples to prove otherwise.
“There is expertise within the industry to the underwriting and there are CUSOs that provide the expertise for those credit unions who might not have it on staff,” Barrett offered. “We believe we have the responsibility to help other credit unions because we understand the value of being served by credit unions.” n