eBrief: A Key Source of Loan Growth

The fastest growing component of the credit union loan portfolio shows promise for the second half of 2010 and beyond.


Preliminary results for second quarter 2010 indicate first quarter’s struggling loan growth remains a problem. Consumers remain timid about the economy and competition has returned to most lending markets. Although loan growth remained relatively flat for the credit unions that comprise Callahan’s FirstLook program, certain components of the loan portfolio show signs of promise.

Perhaps the most promising segment is member business lending, the fastest growing component of the credit union loan portfolio. According to Callahan’s Peer-to-Peer software, at the end of June, the 7,434 credit unions included in FirstLook reported total outstanding MBL balances of $29.6 billion. This is a 9.5% increase in balances reported in FirstLook for June 2009.

2Q10 FirstLook MBL Outstanding Balances

The economy is a driving factor in this growth. Unemployment provided a catalyst for out-of-work individuals in markets with stagnant hiring to start their own small businesses. In addition to, and perhaps in response to, an increased demand for small business financing, the number of credit unions offering MBL loans also increased. For FirstLook credit unions, 27.8% reported outstanding business loans, an increase from the 26.5% that offered such products in June 2009.




Aug. 12, 2010


  • Frankly, I am not comfortable with credit unions increasing their exposure to member business lending. I have participated in several member business loans with various institutions and my experience indicates the majority of credit unions do not have the expertise to underwrite these loans safely. As we have seen with the Corporate credit union crisis, the cooperative structure makes us only as strong as the weakest link and would prefer to not expose my share of the NCUSIF to member business lending concentrations above the current levels.