July 19, 2010


  • I am concerned about the restrictive MBL lending cap making it difficult for many credit unions, who want to engage in business lending, to devote the necessary resources, in terms of staffing, systems and developing adequate procedures, because they won’t be able to generate a loan portfolio of sufficient size to support their initial investment. What many credit unions do is sell participations in their MBL's to other credit unions. This creates unwarranted risk in the system, as the purchasing credit unions often do not have sufficient expertise to properly underwrite what they are buying.
    Dan Sweet
  • I have over 30 experience in banking and credit unions with most of it being it commercial banking. My credit union has significant challenges with its deteriorating commercial loan participation portfolio. Based on this I feel that the cap should stay at its current level. Raising it could eventually lead to the demise of the credit union industry.
    Denny Keyes
  • Buying loan participations is a very different, and much riskier, MBL model than making direct loans to your members. Direct lending will allow you to know your borrower, and to get their deposits, all of which will reduce your risk. NCUA should allow credit unions who will focus on direct lending to raise their caps.
  • MBL's are a great opportunity for the credit union expand its ability to serve its membership. CU's can compete if you get the right people on board and establish slow and conservative guidelines. You can't be everything to everyone and expect to be good at it. Focus on owner occupied CRE on strong borrowers and build and expand from there. Banks are not lending and there are great opportunites to refinance and obtain very solid deposit and loan relationships right now but do it slow and do it right.
  • Similar to the respondent in Comment 1, I have 26+ years in commercial lending, virtually all of which was in the Middle Market and Small Business Depts. of large banks.

    Each individual brings a different skill set and level of lending experience to their respective CU's Business Services Dept. Placing a 12.25% (of assets) industry-wide cap on every CU's business loan portfolio not only ignores that fact, but in some cases it limits a CU's ability to take full advantage of the talents/skills of those they hired.

    I'd rather see a CU's cap established based upon a predetermined set of criteria (prior audit/exam results, delinquencies, covenant violations, etc.) that rewarded CUs who demonstrated the ability to manage a commercial portfolio, and limited those CUs from MBL activity who's results were not as favorable.
    Scott Kemp