Seasoned MBL Lenders vs. New – How are Credit Unions Performing?

Business lending is becoming an increasingly important service to provide members. How are credit unions with significant experience in this area performing against ones that have become more recently involved? Some interesting results arise.


With business lending being a key area where credit unions can expand services to fulfill their members’ growing needs, experience in this area is becoming more important than ever.  Because of the larger loan amounts involved and the need for connections to the business community, business lending experience can make or break a program.  It is not surprising, therefore that salaries for those business lenders with a track record of success are highly competitive.

So how is credit union performance in this area of lending impacted by program tenure.  Member business lending for those credit unions that have been actively involved in the area for a significant amount of time continue to post strong results, while those institutions that are newer to MBL are realizing faster portfolio growth while lending larger amounts to members.   When comparing credit unions that have had at least ten years of member business lending experience and those that have had three or less, some interesting results arise. 

With average assets of $332.4 million for the 842 experienced lenders, conventional wisdom would expect the larger credit unions to be growing faster.  However, the 688 less-experienced lenders with an average asset size of $225.2 are posting higher growth rates in shares, loans, and members as seen above. 

Looking at business lending performance, a few findings should be noted.  The more experienced business lenders had a significantly higher amount of member business loans outstanding, with an average balance of $19.4 million as opposed to $2.2 million for the less experienced lenders.  Another benefit of experience in business lending is lower delinquency.  Credit unions with more experience had an MBL delinquency rate of 1.11%, 26 basis points lower than those with three years or less experience.  As time goes on, underwriting decisions improve and more information on the local market is gathered to help those decisions.

Experience is the key to business lending.  Whether it be through a CUSO, or the in-house professionals you bring in, their experience and expertise will be a significant factor in the success of your credit union’s business lending program.

How can your credit union become involved in this lending area that members are increasingly demanding?  Join us for 3 Models for Achieving Business Lending Success, a webinar brought to you by Callahan & Associates.




Sept. 24, 2007


  • The article ignores the issue of credit quality. New business lenders typically make "quality mistakes" that show up 12 to 24 months later as charge-offs. It will be interesting to see the extent that MBL charge-offs jump in the next few years. The recent Florida debacle is one example.