Located in rural Utah, many of Eastern Utah Community Credit Union’s (EUCCU) members are small business owners and EUCCU needed an easier, more efficient way to originate and manage their commercial loans while also satisfying examiners.
Like many business owners, EUCCU’s members who apply for business loans often have their personal and business income comingled, and some even own multiple businesses. With these types of relationships, EUCCU primarily receives tax returns as opposed to personal or company prepared financial statements, and the credit union didn’t have an easy way to analyze this data or to accommodate both tax returns and financial statements when they received them. Additionally, it was a challenge to look at the cash flow generated from the businesses and their owners globally as well as individually.
Beyond the challenges associated with the efficiency and ease of their internal credit analysis and loan review processes, EUCCU’s examiners heavily questioned their ratio analysis. The credit union performed the analysis manually and it was difficult to find current industry benchmarking data. As a result, they had a difficult time validating their portfolio for regulators. Mike Milovich, President of EUCCU, notes, “It was an absolute nightmare convincing the regulators that the data and the ratios we were using were accurate.”
Eastern Utah Community Credit Union implemented Abrigo Credit Analysis for two primary reasons: its simple, easy-to-use tax return interface, which aligned with the type of data they receive most from their members, and the platform’s strength in performing global cash flow analysis. Since Abrigo Credit Analysis easily allows users to incorporate multiple borrowers and multiple businesses into a single analysis as well as individual business or borrower-specific analyses, it solved the problem of comingled financial data among member businesses and their owners.
Ken Bishoff, Vice President of Lending at EUCCU, notes, “The part I like most about Credit Analysis is the global cash flow analysis. By putting in the individual tax return and the business tax return, or even tax returns for multiple businesses, it does the analysis to combine all of those in a meaningful way.” Bishoff continues, “I also like the ability to look at the ratios of the individual as well as the business. You can get the personal look, the business look and then the global look.”
The credit union also needed to appease their examiners. As a result, one of the aspects that Milovich appreciated most was the industry data and comparisons provided within Credit Analysis. “Every time data is put into the system nationwide, it automatically updates our analysis and ratios. When we enter data, we get the latest and greatest of where each business stands in terms of their peers across the country.”
Milovich also found the output was easy to understand and use. “The way the data is laid out in the presentation and placed in the file, it is easy to read and pretty self explanatory. And, if you don’t understand what a ratio means, it has an explanation right there.” Having a web-based solution is also a tremendous benefit for EUCCU. Bishoff notes, “The data is available in whatever office we’re in. I can login at either of our locations and use the system, which is very helpful.”