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West Michigan credit unions report growth in business lending for 2015

BY Sunday, February 21, 2016 10:23pm

The largest credit unions based in West Michigan posted strong results for 2015, growing assets and consumer and business loans as well as membership.

The two largest credit unions — Grand Rapids-based Lake Michigan Credit Union and United Federal Credit Union in St. Joseph — both even surpassed asset milestones during the year.

Lake Michigan ended 2015 with $4.08 billion in total assets, up 15.2 percent from 2014, and United Federal had $2.01 billion in total assets, an increase of nearly 10 percent from the prior year.

Many credit unions recorded 2015 loan growth in the double digits, said Kenley Penner, a partner and the head of Plante Moran PLLC’s credit union practice. Penner attributes the results and lending growth to a “relatively strong” housing market that’s driving mortgage originations, coupled with strong sales volumes for both new and used vehicles.

“2015 was a great year for the auto industry and credit unions certainly participated,” he said.

Another key growth area for credit unions has been business lending. Several organizations in the region recorded solid growth in 2015 in business loans to members. Lake Michigan Credit Union, for example, added nearly $110 million in business loans to its books during the year.

Business lending by credit unions has been on the upswing for years, as business owners see them as an increasingly viable option for credit, Penner said. That growth has credit unions that do member business loans directly competing more with community banks for commercial lending, he said.

At the same time, consolidation involving some banks in the market over the last couple of years opened an opportunity for credit unions to write loans for small businesses that need credit to buy real estate, finance equipment purchases, or pay for an expansion, he said.

“Up until just several years ago, credit unions weren’t really in the commercial space. The word’s getting out that they are an alternative,” Penner said. “They’re primed at the right time to capture some of that.”

Kalamazoo-based Consumers Credit Union, which grew total business loans by 19.2 percent to $38.4 million in 2015, has done business lending for years. The credit union began putting a higher emphasis on it upon entering the Grand Rapids-area market in 2015 with the development of two new offices. Consumers now plans to add two more offices in the Grand Rapids area in the first half of 2016, said Chief Financial Officer Steve Howard.

Moving further into business lending and other services not only allows Consumers Credit Union to better serve members who own small businesses but also diversifies its lending portfolio and risk of managing the balance sheet.

“It’s probably one of our primary strategies to grow in this area,” Howard said. “Grand Rapids is a vibrant market and that provides us with a whole new opportunity.”

Lake Michigan Credit Union is by far the largest commercial lender among credit unions in West Michigan. Lake Michigan’s member business loans grew 55 percent during 2015 to $304.4 million, according to a quarterly financial report filed with the National Credit Union Administration.

The credit union, which has 42 offices statewide, and this year has plans to open three more in the Grand Rapids area and one in Livonia, was able to put up that kind of growth rate despite doing “very little” marketing, said President and CEO Sandy Jelinski. She believes the high growth in business lending is sustainable for Lake Michigan Credit Union and credits the strong gains to word-of-mouth and greater awareness among small business borrowers.

“Now when they’re looking for that kind of help, they give us a chance. When they didn’t realize it, we weren’t getting that opportunity,” Jelinski said. “Our community is now considering us.”

For 2015, the credit union reported net income of $72.8 million, which compares to $56.4 million in 2014. Total loans grew 29 percent during the year to $3.06 billion, and total deposits increased nearly 15 percent to $3.10 billion, according to the fourth quarter NCUA report.

One of the largest credit unions in Michigan, Lake Michigan operates 38 offices across the region with 270,750 members as of Dec. 31.

United Federal had net income of $17.5 million in 2015, versus $16.3 million in 2014. The credit union ended the year $1.74 billion in total loans, an increase of 11.5 percent, and member business loans of $235.1 million. Total deposits grew 11.9 percent to $1.41 billion.

United Federal, founded in 1949 to serve employees of Whirlpool Corp., has more than 143,000 members with 27 offices in six states, including nine in Michigan, plus locations in Arkansas, Indiana, North Carolina, Nevada, and Ohio.

In January, LMCU and United Federal called off their previously announced plans to merge and create a $6 billion credit union, citing their desire to remain independent.   

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