Business lending by credit unions surged during most of 2013, a trend that’s expected to continue into 2014 and beyond as the economy further improves and more institutions start offering commercial loans.
Through the third quarter of 2013, credit union business loans to members grew 18.0 percent statewide from the beginning of the year to $1.57 billion from $1.33 billion for all of last year, according to the most recent data available from the National Credit Union Administration.
Since the end of 2009, business loans to members increased more than 85 percent as of the third quarter of 2013.
Michigan Credit Union League CEO Dave Adams said the growth stems from an alignment of three forces:
• The stress the recession put on many banks and their lending
• A strong liquidity position held by credit unions that gave them the ability to fill the resulting credit void, and
• A desire by credit unions to diversify their loan portfolio by getting involved in business lending.
To diversify their balance sheets from residential mortgage and consumer lending, more credit unions in recent years turned to offering credit to members who own and operate small businesses, Adams said.
“I fully expect credit unions to be well-positioned to gain market share, as they have the last few years,” Adams said.
Among the West Michigan-based credit unions involved in commercial lending, Grand Rapids-based Lake Michigan Credit Union grew business loans during the first nine months of 2013 by 16 percent to $129.9 million, according to a quarterly report filed with the NCUA.
St. Joseph-based United Federal Credit Union increased business loans during the same period by 62 percent to $157.2 million, and Lansing-based Lake Trust Credit Union increased its business loans to members by 37 percent to $110.4 million.
While credit union loans to members have typically been for commercial real estate, more loans are now going to credit union members seeking operating lines of credit or loans to expand their business or make a capital equipment purchase, said Bill Beardsley, president of the Ann Arbor-based Michigan Business Connection, which underwrites commercial loans for three dozen credit unions.