When Stamford Federal Credit Union brought in Stephen Tedesco last month as its new vice president of commercial lending and business development, the $58 million-asset institution was responding to a need by its membership base to expand its offerings to include business-focused products.
“We’re finding a lot of our members own businesses, so we’re looking to capture that rather than send them off to another institution,” Tedesco said.
Tedesco, who has a quarter-century of banking experience, was previously an assistant vice president and branch manager at The First Bank of Greenwich in Stamford. When he was asked about joining the credit union’s executive team, he was surprised. “It was kind of like: ‘You guys are doing what?’” he recalled, with laugh.
Tedesco’s reaction was not extraordinary if one considers that credit unions have not been major players in the commercial banking arena. For starters, credit unions tend to be on the smallish side — the average credit union asset base is $247 million — and until January 2017 credit unions worked under a ceiling that capped their business lending activity to 12.25 percent of their assets, with an exception made for loans of $50,000 or less. Business lending among credit unions is such a minor part of that industry’s loan origination that its federal regulator, the National Credit Union Association, does not keep statistics on that particular area but lumps it into the “Other” category when measuring loan volume per product category.
As for the Stamford Federal Credit Union, it began in 1952 as the Stamford Municipal Employees Credit Union and did not expand its membership focus to cover the wider residential and occupational population of southern Fairfield County region until 2013. With the new focus on commercial lending, Tedesco identifies small businesses as an ideal target audience.
“I think our sweet spot is going to be the $800,000 — and — below market where sometimes the big banks don’t turn on their alarm clock to wake them and get out of bed for such a small deal,” he said.
The initial product lineup will include commercial real estate loans, business lines of credit, and business-related depository accounts. “We’re not going to be doing everything, but we are going focus on a couple of things as we get started,” Tedesco said.
Of course, Stamford Federal Credit Union is coming into a market that is not lacking for financial institutions. For Tedesco, the secret weapon for standing out will be high-quality service.
“The time frames we are going to be giving back to people in responding to inquiries will be a lot quicker than what the big banks are doing now,” he said. “We’ll try to get as aggressive as we can on rates. We know that anyone who lives in Fairfield County is rate sensitive.”
Another key challenge will be raising awareness, which is no mean feat when one considers the credit union’s sole branch is not a street-level branch but an office on the sixth floor of the Stamford Government Center. Tedesco has already begun doing presentations with Stamford’s public safety employees about the new commercial lending products, and he is looking to grow word-of-mouth awareness before the credit union embarks on a marketing push later this year.
“It’s going to be almost an organic growth,” he said. “It’s not like we’re going to plan on opening up more branches anytime soon.”
Nonetheless, word is slowly getting out and Tedesco is happy with the initial feedback. “I’m starting to hear from people who are saying, ‘I didn’t know you offered that,’” he said. “People are excited by it.”