Credit Union Hired Banking Professionals To Tackle Philadelphia’s Biggest Lenders | Credit Union Journal
Philadelphia’s commercial loan market is dominated by the big banks, but one credit union wants to grab its own slice of the pie.
The Citadel Credit Union, with assets of $4.8 billion in Exton, Pa., plans to launch its new business banking division in August. Earlier this year, the company raised a team of investment bankers from Santander Bank to build the new division and establish partnerships with customers in the eastern Pennsylvania region.
Phil Sutliff, who worked for Santander for more than six years before joining Blue Federal Credit Union and then joining Citadel in October, will lead the five-member team.
Historically, the main hurdle for credit unions trying to enter the business space has been finding the right staff. But Sutliff said he enlisted bankers known to Philly’s business community who were “born and bred” in big banks.
“A lot of it is the people you bring in. It’s the reality,” he said. “A lot of credit unions will just do inside promotion and call it business services.”
Citadel’s sweet spot for commercial loans will be between $5 million and $15 million, with an overall range of $1 million to $20 million, Sutliff said.
Commercial loans in Philadelphia today are extremely competitive. PNC Financial Services Group, Bank of America and Wells Fargo hold the top three spots by market share in the city, according to Jeff Marsico, president of the Kafafian Group, a consulting firm based outside of Philadelphia.
These banks will generally spend less time on small commercial loans that Citadel appears to be targeting, given what it takes to drive loan growth for banks of their size, he said.
“So for a commercial real estate borrower looking for a favorable rate and structure regardless of the relationship, Citadel could be a formidable foe, especially with the tax benefits and its equity position,” Marsico said. . Credit unions, as non-profit organizations, do not have the tax burden that banks have; without this cost, they can offer more competitive prices.
For comparison, Marsico mentioned First Resource Bank, with $475 million in assets, also based in Exton. First Resource has a loan portfolio of $405 million, about half of which is commercial, he said.
“The two would compete in this $5-7 million lending space, as would WSFS Bank, Meridian Bank, S&T Bank, and Univest. [Bank and Trust],” he said.
And credit unions are becoming more aggressive in the commercial loan market. Commercial loans from federally insured credit unions increased $19.7 billion, or 20.2% year over year, to $117.2 billion in the first quarter of 2022, according to the National Credit Union Administration.
Many Citadel loans will go to private medical, veterinary and dental practices that have been particularly hard hit by the pandemic. Many of these companies have merged or formed partnerships and now need new funding, Sutliff said.
While Citadel competes with some of the largest banks in the United States, many companies in the market have been unable to obtain the financing they need during the pandemic from these large players, and they could therefore look for a new bank, Sutliff said.
“I was on the front line taking calls in Santander, just like the people who work for me now,” he said. “A lot of those experiences weren’t great.”
Under current law, credit unions are restricted from lending more than 12.25% of total assets to member companies, and Marsico expects area banks to closely monitor the portfolio. of the credit union.
“The more aggressive they are, the more the banking trade associations will seek relief,” he said. “But legislative action remains unlikely and the NCUA has been accommodating.”