Commercial Loans Grow In The Credit Union Loan Portfolio

Commercial loans comprised 6.9% of the total lending portfolio at U.S. credit unions, an increase of 19 basis points from the same time last year.

 
 

Member business loans at credit unions reached $69.6 billion in the fourth quarter of 2018, translating to an annual increase of 1.9%, or $1.3 billion. As of Dec. 31, 2018, member business loans comprised 6.6% of total loans. That’s down 46 basis points from one year ago.

The NCUA started segmenting member business lending and commercial lending in the third quarter of 2017. Prior to this, credit unions reported all businesspurpose loans as member business lending. Today, credit unions report member business lending balances under a single field and all other business loans under designated commercial lending line items.

Credit unions reported a 12.1% year-over-year increase in total commercial loan balances in 2018. This loan segment jumped from $65.2 billion in the fourth quarter of 2017 to $73.1 billion in the fourth quarter of 2018. The average balance of the total commercial lending portfolio at credit unions was $340,528 as of Dec. 31, 2018. By year-end 2018, commercial loans comprised 6.9% of the $1.1 trillion total lending portfolio at credit unions, an increase of 19 basis points from the same time last year.

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Commercial loan balances to members increased 11.7% year-over-year, from $55.5 billion in 2017 to $61.9 billion at year-end 2018. As of the fourth quarter, commercial loans to members made up 84.8% of total commercial loan balances at credit unions. Purchased non-member commercial loan balances increased 14.4% year-over-year, from $9.7 billion to $11.1 billion. These loans accounted for the remaining 15.2% of the commercial loan portfolio.

Commercial loans secured by non-owner occupied, non-farm, and non-residential property represented the majority of both the member and non-member commercial loan portfolios — 41.3% and 52.0%, respectively. Construction and development loans, which increased 31.6% year-over-year to $3.1 billion as of Dec. 31, 2018, was the fastest-growing segment of commercial loans.

LEADERS IN 12-MONTH MEMBER BUSINESS LOAN GROWTH

FOR U.S. CREDIT UNIONS >$100 MILLION IN ASSETS | DATA AS OF 12.31.18
© Callahan & Associates | CreditUnions.com
Rank Credit Union State 12-Month Growth Total MBLs**
(12.31.18)
Total MBLs**
(12.31.17)
Total MBLs/
Total Loans
Total Assets
1 SELF-HELP* NC 665.00% $80,050,456 $10,464,174 12.19% $1,010,026,709
2 FIRST SOURCE NY 533.92% $28,153,413 $2,863,658 3.33% $587,964,070
3 BRIGHTSTAR FL 372.57% $23,730,746 $5,021,597 6.61% $481,736,746
4 ORION* TN 356.20% $74,380,383 $16,304,451 10.60% $807,661,126
5 ANDREWS MD 335.24% $189,947,195 $43,642,171 12.86% $1,761,373,857
6 MAINE STATE ME 312.12% $4,215,851 $1,022,964 1.35% $411,220,791
7 TELCOE AR 279.25% $7,718,282 $2,035,166 6.51% $361,029,638
8 OREGON COMMUNITY OR 277.84% $36,558,362 $9,675,593 2.32% $1,708,440,591
9 RIVER REGION MO 257.14% $4,645,286 $1,300,681 2.37% $237,246,176
10 1ST COMMUNITY WI 251.40% $17,779,890 $5,059,758 13.37% $169,909,235
* Merged in the past year. ^ Acquired a bank or bank branch(es) in the past year.
** Total MBLs >$2 million on December 31, 2018, and >$1 million on December 31, 2017.

Case Study: No Need To Wait For Small Business Saturday

CU QUICK FACTS

South Carolina FCU
Data as of 12.31.18

HQ: North Charleston, SC
ASSETS: $1.8B
MEMBERS: 159,399
BRANCHES: 21
12-MO SHARE GROWTH: 7.23%
12-MO LOAN GROWTH: 10.29%
ROA: 0.74%

South Carolina Federal Credit Union ($1.8B, North Charleston, SC) didn’t want to take a cookie-cutter approach when expanding its business services from its home base in Charleston into the Columbia, SC, market, so it created the Doing More Together (DOMOTO) campaign to showcase the range of business services it offers.

And that’s just one part of South Carolina FCU’s strategy that began by crunching the numbers and then focusing on potential opportunities and working together through cross-functional teams before launching the campaign in October 2018.

“Our niche is small businesses with $500,000 to $1.5 million in revenue,” says vice president of lending John Stanford. “Larger businesses can go into any financial institution and command attention. These smaller companies tend to be a forgotten group.”

South Carolina FCU offers the loans, checking, savings, merchant services, insurance, and investment resources businesses of all sizes need. But, the Charleston-based cooperative takes business banking a step further by also offering services such as employee benefits — through its benefit solutions CUSO — as well as strategic consulting services that range from the basics of business management to leadership development and succession planning.

“Seldom do you find a solution that encompasses a full array of services for members’ personal and business needs,” Stanford says. “The same is true with leadership consulting services. We want to offer a solution for whatever the business owner might need.”

In the Columbia area, the credit union identified several high-performing retail staff members and provided a two-and-a-half week, in-depth training program to prepare them to handle business member requests and identify opportunities. These hybrid employees are now familiar with the credit union’s internal policies and procedures and know how to read financial statements to uncover business needs and suggest the best credit union solutions.

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May 27, 2019


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