Jeff Stone

Like many of his colleagues in the merger-happy 1990s, Jeff Stone was set adrift as a commercial lender for locally headquartered San Diego Trust & Savings. Stone turned that setback into helping create a nationwide trend of credit unions moving into the business lending space.

“At first, I went to First Interstate and ran their small business banking unit, and that was OK, they were trying to preserve the franchise,” says Stone, now vice president of member business services for $1.5 billion North Island Credit Union. “But then First Interstate got bought by Wells…”

And so, not wanting to work for an even bigger bank, Stone followed another San Diego Trust employee to North Island in 1997 as a consultant, to oversee compliance and other startup issues for the member business services department.

From 1 1/2 employees in 1997, North Island’s business services department has grown to 14 personnel and about $250 million in loans under management. Last year, the business unit did about $58 million, off from the refinance-crazed year of 2003, when it did $85 million. North Island handles both SBA (real estate) 504 and (working capital) 7a loans; its last two 7a loans were in the $300,000 range.

Its largest loan to date was an $18 million deal with Carlsbad Gateway, a commercial real estate development on El Camino Real.

Stone isn’t buying the “unfair competition” argument made by banks against credit unions’ involvement in commercial lending.

“The reason business owners come to us, is that when we were set out on the street back in the wave of bank mergers — we being the bankers — so were a lot of our customers,” Stone says. “The bankers didn’t want to get absorbed into the large statewide institutions. Neither did a lot of their customers because they didn’t have the same personalized level of service. So that’s kind of been our business plan, because credit unions are known for their service and treating people right. We’re not an 800 number, the decision makers are right here.”

Stone says he’s happy to have been in the vanguard of credit union lending to business. “It’s been fun starting something new within the industry,” he explains. “Since we’ve started, many other credit unions have come along to offer business loans, and we’ve helped the national trade association in creating all of this.”