Espresso small business

Deposits Key to Becoming Full Service Provider

Deposit services are key to moving your credit union from a transactional lender to a full service financial institution for the businesses in your community.

It all starts with the business checking account but quickly moves through the process of developing and or upgrading your current package of services to a program that best fits your credit union and your members. For example:

  • Business checking accounts
  • Business savings and money market accounts
  • Account analysis
  • Online banking for business
  • Merchant bankcards
  • Business tax payments
  • Remote deposit capture
  • ACH origination
  • Sweep accounts
  • Online cash management
  • Payroll services
  • Managing deposits greater than $250,000

Of course, in assembling this package there are many important considerations to address. CU Business Group can provide the necessary expertise to evaluate these key areas:

  • Your system capabilities – what investments are needed and when?
  • Package products – do we buy it or build it in-house?
  • Volumes – what about businesses with large deposits and high cash/coin usage?
  • Pricing – how do I set appropriate fees that are competitive in my community?
  • Targeting – how do I find the businesses that I am looking for?

For more on CUBG’s deposit consulting, contact us at

CGI person looking at the word "review" with a magnifying glass

Expert Tip: Appraisal Reviews Critical in Loan Underwriting

From Nick Reynolds, VP/Credit Services Manager

While appraisal reviews are a necessary step to ensure that the appraisal is accurate and compliant, they are also a critical component of the loan underwriting. Many of the findings that result from performing an appraisal review are key to include in the credit write-up and in making a decision on the loan.

For example, with an appraisal on a single family residential home in a subdivision, you could conceivably have hundreds of comparable properties that are from recent sales, are close by, and result in a high-level of confidence in the appraisal figure.

In the case of a unique property such as a large church in a rural location, the story is different. The comparable sales will be similar, likely also large churches in rural areas. However, there is little likelihood of recent local comparable sales. Comparables will probably be older, and won’t represent local demographics, traffic flow, employment, etc. While the appraiser may have concluded a reasonable value, there is a great deal more variability in possible values of the property. The underwriting must acknowledge the additional risk this variability in value represents, typically by lending at a lower advance rate.

Consider the residential property example above. If you know the value within +/-2%, you can use that value in your underwriting with confidence. In the church loan, you might only have confidence that the value is representative within +/-15%. As a result, it would be recommended that you limit your advance rate to the lower value, which would indicate 15% less than your usual advance rate of 80%.

Essentially, the appraisal review helps you answer this question: How confident am I in the valuation, and can I lend at 80%? This level of confidence will be different with every appraisal, and needs to be assessed as part of the underwriting process. Your appraisal review should indicate where this might be a significant issue.

Other questions the appraisal review can help with in underwriting – Is the term of the loan within the remaining economic life of the property? Are there other unique features of the property that increase the potential viability of the value? Are actual rents significantly different than market rents? All of these issues should be pointed out in an appraisal review, and are features of the appraisal that impact the underwriting, but are not typically pointed out as weaknesses by the appraiser.

Looking at the transaction from a credit perspective and commenting on features of an appraisal that may create credit or loan structure issues for credit unions is critical, and something CUBG consistently does in our appraisal reviews. CUBG also takes a conservative view of unique properties, taking into account the difficulties that can arise in working out a loan where those properties need to be liquidated or resold.

For additional information on CUBG’s appraisal review services, contact us at

Bar graph increasing

Real-Time Monitoring Aids in Early Problem Identification

Proper risk monitoring throughout the life of the loan is critical in identifying potential problems before they become big issues. Simply doing an annual review on the loan isn’t always enough, as things can change quickly.  Frequent touches of the loan can be effective and efficient.  To aid credit unions in this, CUBG recently enhanced our risk monitoring services to provide real-time monitoring for deteriorating business credit items such as:

  • A negative change in credit score
  • Additional UCC filings
  • Recent bankruptcies
  • Adverse environmental issues on the property securing the loan
  • Plus a number of other risk areas

Any time an alert on your borrower is received, it will be sent to you via email, along with an explanation of the meaning, and suggestions for appropriate follow-up.

These frequent updates give credit unions an improved means of knowing whether there are adverse events that occur for their borrowers. This is an excellent credit practice, and of great value when talking to your examiners.

To learn more about CUBG’s enhanced risk monitoring services, email us at

Know the rules

MBL Regulation 723 Published in Federal Register

The MBL final rule, which significantly amends regulation 723, and will allow credit unions greater flexibility in business lending, was published in the Federal Register on Monday, March 14th.

In accordance with the change on personal guarantee requirements that will take effect on May 13, 2016, CUBG will issue a revision to the personal guarantee section of our MBL policy template and distribute to our Member credit unions in May. We will also issue a fully-revised version of our policy template in 4th quarter, to reflect the changes that will take effect January 1, 2017, and additional supervisory guidance that is expected to be released in September.

CUBG has carefully reviewed the revisions and provided a summary of the changes below.

The new MBL Regulation 723:

  • Removes prescriptive limits on business lending and eliminates the need for NCUA waivers
  • Requires each credit union to clearly lay out its credit risk tolerances and parameters in the business loan policy
  • Removes the personal guarantee requirement but requires articulation of offsetting credit strengths that justify the lack of guarantee. Takes effect May 13, 2016.
  • Includes more robust underwriting requirements for a commercial loan (business purpose) versus a member business loan (1-4 family residential)
  • Mandates use of a credit risk rating system for commercial loans
  • Replaces specific loan to value requirements with the need to obtain sufficient collateral to support the risk inherent in the loan
  • Construction & Development Loans
    • Eliminates portfolio limit of 15% of net worth
    • Expands definition of loans and the additional methods by which collateral values can be established, in addition to including more complete definition of the costs that can be included in Construction & Development loans
    • Requires policy specifics on monitoring and disbursements
  • Eliminates the need to count non-member participations purchased in the MBL cap
  • Allows CUs to extend the 15% loans to one borrower limit by 10% if the excess is fully secured by marketable collateral
  • Removes 12.25% of assets criteria for the MBL cap and leaves the calculations as 1.75 times minimum net worth needed to be considered well-capitalized (currently 7%)
  • Spells out general policy requirements for MBL oversight and expertise
  • Revises prohibited loans and conflicts of interest
  • Provides streamlined program parameters for credit unions with less than $250 million assets and low commercial loan volumes
  • Preserves the grandfathering of MBL regulations of the seven states that have their own MBL rules

The full text of the final rule is available in the Federal Register.

Small business - come in, we're open

NCUA/SBA Alliance to Boost Lending

The NCUA and SBA recently announced a joint initiative to help small businesses and credit unions connect, with the goals of providing small businesses with better access to capital and boosting awareness of SBA programs. Read more

Larry Middlemand, President/CEO, CU Business Group

Middleman Elected to Foundation Board

CUBG President/CEO Larry Middleman was recently elected to the National Credit Union Foundation Board. Middleman will serve a two-year term, through the end of 2016.

The Foundation is considered the charitable arm of the credit union movement and works to improve people’s financial lives through credit unions. Through Foundation grants and programs, credit unions provide widespread financial education, create greater access to affordable financial services, and empower more consumers to save, build assets, and own homes.

Read the full press release or learn more about The Foundation.

Larry Middleman and Elijah Diggins at Spring Training

Elijah’s Story: “A Bad Dream Followed With a Lot of Good Stuff Happening”

Last spring, CUBG sent Elijah Diggins, a young cancer survivor, and his family to Arizona for a dream trip to watch spring training baseball.

Elijah recently celebrated two years of being cancer free and still keeps in touch with CUBG regularly. Click here for an updated article on Elijah’s story from the Northwest Credit Union Association.