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By Nathan Peck | MiBiz
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BATTLE CREEK — In a year that saw the phrase “too big to fail” hammered into the nation’s consciousness, it’s easy to see how good news in the banking industry might be lost. In the first of an ongoing series looking at community banking, OMNI Community Credit Union CEO Theodore Parsons sat down with MiBiz to discuss lending in the midst of an economic recovery, Omni’s entrance into commercial lending, and the prospects for 2010.

With assets of about $250 million, OMNI boasted 12-percent growth in 2009. The credit union has 93 employees located at five locations around Battle Creek, Kalamazoo, Sturgis and Three Rivers.

MiBiz: How did OMNI weather 2009?
Parsons: It certainly is one of the more challenging environments I’ve seen in the banking industry in my 30-year career. How to deal with the devaluing of assets is a challenge across the industry. In residential real estate, we have had some foreclosures, but we can aggressively mark down the property and get it off our books quickly. We really try hard to work with borrowers to keep them in their homes and offer debt counseling.

That being said, we did very well in 2009. Over the last two years we’ve paid out $1.4 million to our members. We’ve originated about $47 million in loans, with about $7 million in business loans.

MiBiz: How did you achieve this?
Parsons: We’ve focused the last several years on building a business model that has provided some diversification in our revenue stream. Through the Commercial Alliance, we are one of six owners of a credit union service organization (CUSO) that originates and services commercial loans. We partner through the CUSO with five other credit unions, so we don’t have to take on all of those assets onto our books, or all of the risk. It allows us to diversify our risk so you’re not putting all your eggs in one basket. I don’t want to take one $3 million loan myself, so we might take on $500,000 of that risk and share it with the other members.

We are well-capitalized, with a strong capital base of 15 percent, where the regulatory sweet spot is 7 percent. We’ve always been conservative in the way in which we’ve made loans.

This also came about because of our people. We’ve never laid off an employee. We have been careful about our hiring practices and focused on keeping our costs under control. I believe that if you treat employees well, and provide great benefits, they will take care of our members and it comes full circle.

MiBiz: What is 2010 looking like?
Parsons: I am excited about what’s happening in 2010. It is a challenging time, sure, but a lot of good things are happening in Battle Creek. I see opportunities for OMNI as consumers look for safe places to place their money. We’ve tried hard to differentiate ourselves in a commodity-based business such as ours, through cash back rebates, above the good rates on our loans. The foundation of our business is trust and integrity to our members and our people.

The regulatory environment has changed, and I’m watching what is going on in Washington, D.C. very closely.

MiBiz: What role do you see for OMNI in the economic recovery?
Parsons: We really feel that when we got into commercial lending, we recognized that there was a tremendous opportunity there. In terms of business lending, I look at the Culvers restaurant we helped finance. That’s 70 jobs we’re bringing to Battle Creek.

There is a market there that is not being served by larger banks. Larger banks have thresholds for lending that small- to middle-market clients have a difficulty finding loans. We feel we can fill a gap.