How To Make Business Loans In A Bustling Banking Market

Charlotte Metro Credit Union manages risk while growing business deposits and loans faster than credit union averages.

Top-Level Takeaways

  • Charlotte Metro uses a CUSO to ensure efficient, unbiased underwriting in its member business loan portfolio.
  • Loan participations are one way the credit union plans to beef up deposits in its portfolio, which exceeds 100% loans to shares.

It’s not so surprising that a financial institution in one of the nation’s banking meccas is turning out gangbuster commercial growth. After all, Charlotte, NC, is a hot domestic market.

However, that financial institution is a highly regulated, member-owned cooperative.

Charlotte Metro Credit Union ($444.4M, Charlotte, NC) is aggressively expanding its member business lending and services while expertly balancing the assets and liabilities in its commercial portfolio.


Charlotte Metro Credit Union
Data as of 09.30.17

HQ: Charlotte, NC
ASSETS: $444.4M
MEMBERS: 54,080
12-MO LOAN GROWTH: 12.9%
ROA: 1.07%

Charlotte Metro began offering business accounts and loans in 2008. Today it has approximately 1,800 deposit accounts and 200 loans in its portfolio that serves a mix of small entrepreneurs, including hair stylists, landscapers, and in-home e-commerce vendors on up to an operator of several Domino’s Pizza franchises.

The credit union offers them a choice of three checking accounts, including one for people with a previous negative ChexSystem report, and loans that include credit cards, construction, equipment, owner- and non-owner-occupied properties, and lines of credit.

Nicol Matthews, COO, Charlotte Metro Credit Union

MBL originations increased 10 percentage points faster in 2017 than 2016. See which credit unions topped the charts in these three member business lending metrics.

We partner with both a merchant service provider and a payroll vendor to ensure our ability to fulfill our business members’ needs, says COO Nicol Matthews.

And the credit union has plans in place to add remote deposit checking through the mobile app, supplementing existing online capabilities.

The credit union operated with one commercial loan officer until 2016 when it added a second CLO and a support specialist. Charlotte Metro also uses Innovative Business Solutions ? a CUSO it partially owns ? to underwrite and produce loan agreements, which adds a level of compliance and neutrality to the decisions made by Charlotte Metro’s in-house business loan committee. ContentMiddleAd

The city is growing and we’re taking advantage of that growth, Matthews says. We have seasoned commercial lending officers often competing with other lenders for commercial deals. They’ve built their relationships in the community and the referrals they get from those relationships.

Perhaps that’s why Charlotte Metro has one of the fastest-growing business portfolios one that generated $1.5 million in loan profits in the first nine months of 2017 in the credit union industry. Charlotte Metro’s MBL growth rate has hovered between 50% and 70% per quarter since mid-2015, and it has three times the business shares of a typical credit union its size.

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Member business lending growth at Charlotte Metro far exceeded industry averages and ranked 14th among credit unions with $250 million to $500 million in assets as of Sept. 30, 2017.


As of third quarter 2017, Charlotte Metro’s loan portfolio contained 17.39% MBLs, compared with 6.58% for all U.S. credit unions, according to data from Callahan & Associates. Charlotte Metro is a LICU, thus exempt from the NCUA MBL cap of 12.25%.


Charlotte Metro had approximately $6.5 million in business share accounts four years ago. That has jumped to more than $23 million out of $360.1 million in total shares as of September 30, 2017. Asset-based peers averaged $8.0 million and the industry averaged just more than $5 million as of third quarter.

6 Steps To MBL Success

Nicol Matthews, chief operating officer at Charlotte Metro Credit Union, offers tips on how to make the most of business lending and services.

  • Hire a CLO unafraid to talk to anyone. Being able to build relationships and get involved in different referral groups ensures a continued pipeline of commercial loan business.
  • Weigh the costs and benefits of using a CUSO versus in-house production.
  • Don’t forget about the deposit side of the business.
  • Ensure branch staffers are trained and prepared to open business accounts and speak with business members.
  • Create a business loan committee to approve commercial loans.
  • Track progress, including net profit from the business lending department.

How do your MBL metrics compare to credit unions in your peer group? Find out in no time with Peer-to-Peer.

Taking on all those deposits and loans has raised the stakes when it comes to managing risk. Matthews says unbiased underwriting, including collateral assessment and loan pricing, by a CUSO that gets paid whether or not the credit union writes the note is one way of addressing that risk.

So far, the credit union has recorded only one loss a $40,000 credit card balance.

Examiners have been comfortable with the credit union’s lending strategy, Matthews says, and Charlotte Metro’s focus will shift in 2018 to growing deposits, including sharing the wealth by selling loan participations.

While Charlotte Metro already has a big pot of business share dollars, it’s also currently 101% loaned out.

For the past several years, our focus has been on loan acquisitions; now we want to balance that a little more, Matthews says. I’m not saying we’re not going to lend, we just need more deposits. We just want to balance things out.


January 12, 2018

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