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.
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.