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Sunday, 31 March 2013 22:00

Credit unions’ biz loans top $1B in Michigan

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Adams Adams

Business lending by Michigan credit unions surpassed $1 billion for the first time in 2012, as the state’s credit unions posted another year of strong volume growth.

Assets, loans, deposits and memberships at the 307 credit unions in the state collectively grew last year, as Michigan’s economy improved and the industry picked up market share, said David Adams, CEO of the Michigan Credit Union League.

The 17-percent growth in business loans to members was a key 2012 highlight for credit unions. The growth continued a trend of the last several years that has been driven in part by much more aggressive marketing by the industry. Eight years ago, the MCUL spent about $400,000 annually on collective marketing for member credit unions. Last year, ad spending by the MCUL was about $4.5 million.

The elevated marketing push — that’s been occurring since before the recession — coincided in 2012 with an improving state economy to continue the growth in business lending to members, Adams said.

“It is the one part of lending that is consistently growing year to year,” he said. “More and more credit unions see business lending as an important part of the business.”

Adams expects the growth in member business loans to continue at strong rates for the foreseeable future. He cites growth in business loans of more than 20 percent for three of four years from 2008 to 2011. Even in 2009, at the depths of the recession, member business loans grew 5.6 percent.

As the economy looks to improve, “it’s a good time for credit unions to be in the market” for small business lending, Adams said.

“If that kind of growth can occur in a tough economic climate, you can imagine during an improved economy we’re going to continue to see strong growth,” he said. “Credit unions have always been making loans to small businesses and it just so happens that they are doing it in a more sophisticated way and at a higher level.”

Credit unions, however, will face more competition for small business loans from banks that have repaired their balance sheets and are returning to a growth mode following the recession, Adams said. They are also limited by federal law to keep business loans at no more than 12.5 percent of assets.

Locally, Lake Michigan Credit Union grew member business loans in 2012 by 38.3 percent to $111.8 million from $80.8 million at the end of 2011, according to an annual financial report filed with the National Credit Union Administration.

The increase in business loans was just one of a number of growth areas for the Grand Rapids-based Lake Michigan Credit Union, which has 32 offices across West Michigan. Lake Michigan’s assets grew 12.8 percent for the year to $2.73 billion. Deposits increased 3.3 percent to $2.18 billion.

Lake Michigan Credit Union finished 2012 with net income of $78.4 million, which compares to $37.0 million in 2011, according to its annual NCUA report.

Another large credit union in West Michigan, St.  Joseph-based United Federal Credit Union, grew business loans to members by more than 45 percent during 2012 to $96.7 million from $66.3 million at the end of 2011. United Federal, with assets of $1.17 billion and nearly 125,000 members, recorded 2012 net income of $16.5 million, nearly double the $8.9 million of 2011.

Lansing-based Lake Trust Credit Union grew business lending 77.3 percent to $80.5 million. The credit union has assets of $1.56 billion and 21 offices across the Lower Peninsula, including in Holland, Grand Haven, Jenison and Hastings.

In other areas, the 307 credit unions across the state grew by nearly 77,000 members last year and assets grew by 5.9 percent to $44.3 billion. Overall lending — including business, auto, consumer and mortgages — grew to $24.0 billion from $23.2 billion in 2011, according to the MCUL.

Read 5587 times Last modified on Friday, 29 March 2013 13:11

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