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Credit Union Bridges the Asset-Based Lending Gap

Date: Oct 01, 2015 @ 07:00 AM

The phrase “May you live in interesting times” is shrouded in controversy. Some claim it is of Chinese origin, and others dispute this fact. Many call it a curse, while others say it’s a blessing in disguise. Setting the controversies aside, this past spring brought about such “interesting times” in the commercial finance industry.

For example, GE’s intention to simplify its organization by disassembling GE Capital undoubtedly dominated industry headlines in late April. But a few weeks later, ABL Advisor noted that a Silicon Valley-based credit union – Tech CU (Technology Credit Union) – embarked on an interesting path as well by announcing the launch of an asset-based lending operation. To be very clear, the events at GE and Technology Credit Union have no bearing on one another other than to illustrate that when it comes to commercial finance, institutions of all sizes continue to evolve and adapt to the current environment in a sometimes unexpected fashion.

The thought of a credit union launching an asset-based lending platform struck us as singular. As such, we set about to find out more. ABL Advisor spoke with Joe Anzalone, EVP and Chief Banking Officer and Jeff Johnson, SVP and Division Manager of the new ABL division at Tech CU. We learned that while asset-based lending isn’t standard fare for a typical credit union, Anzalone and Johnson are no strangers to this lending specialty. Both emphasize Tech CU’s move into the asset-based lending arena is part of a well-designed and carefully thought-out strategy.

Photo of Joe Anzalone - EVP & Chief Banking Officer - Technology Credit Union

We began our conversation with Anzalone who, as a thirty-year banking veteran, leads the sales and marketing efforts for the Retail, Wealth Management and Commercial Banking divisions at Tech CU. He joined the organization in 2011 as part of Tech CU’s President and CEO Barbara Kamm’s leadership team. Anzalone explains, “We are breaking new ground in terms of what credit unions traditionally offer. This move into asset-based lending is an integral part of a very well-planned diversification strategy for Tech CU. We understand that we really can’t stay reliant on what credit unions have historically offered since their inception as retail banking organizations – mortgages, home equity and auto loans. We’ve done a great job with those offerings, but things keep changing. Today, we have many competitors out there and many of them don’t have regulatory oversight. We see them eating into the traditional banking marketplace.”

With this objective in mind, Anzalone set out to assemble a strong commercial banking group firmly rooted in Tech CU’s market which consists of six counties in the Bay Area. “I know the ABL talent out there and it was great news when Jeff Johnson came on my radar screen. There are a good many commercial lending generalists out there, but not as many great asset-based lenders. I knew both Jeff and Hank Noon, our Vice President and ABL Credit Manager, by reputation. They both fit the bill perfectly and we’re very fortunate to have them join us.”

Photo of Jeffrey Johnson - SVP & Division Manager, Asset-Based Lending - Technology Credit Union

Johnson joins the conversation by noting, “I have 25 years of experience in asset-based lending at BFI Business Finance … the first commercial finance company in the Bay Area.”

Johnson explains that in 2001, while at BFI Business Finance, he co-led a management buyout of the business from its founders. In 2007, the company was sold to CapitalSource. He recalls, “When I met Joe, Barbara and Al Cadman, [Tech CU’s chief credit officer], I shared my experience at BFI and what I knew I could bring to Tech CU. It was music to their ears.

“Barbara and Joe have experience in ABL, but with a greater focus on the technology sector … that really piqued my interest. They’ve given us latitude to come in and design the right platform, with the systems we need. With our team’s experience and expertise, I’ve no doubt we will achieve the goals our institution has established for this product.”

Johnson explains that under the Tech CU shingle, he will seek lending opportunities with manufacturers, distributors and service companies in the lower end of the middle-market spectrum with transactions ranging from $100,000 to $5 million  “These borrowers,” Johnson explains, “have needs and requirements that are different from those middle-market customers served by larger institutions. And these are the people and companies that I love lending to … it all fits.”

Anzalone explains that “fit” by noting the following: “At the risk of overusing the term, we are truly a ‘relationship-minded institution’. It’s in our DNA and  the essence of what credit unions are all about. Tech CU is known throughout the Bay Area as a high-touch institution. That’s what we’re bringing to the ABL market, and I think it’s going to be a big differentiator. With bank consolidations occuring, many smaller- and medium-sized institutions are being absorbed by larger ones, and our sense is that many of their customers don’t like this trend. They’d prefer working with institutions that not only know the markets in which they do business, but want to establish a long-term relationship. Tech CU has a strong local identity of service to its membership and this region. When you add top-notch professionals like Jeff and Hank, this plays into our strategy beautifully.” 

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