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1st Quarter Member Business Lending by the Numbers
Friday, August 4, 2017 6:25 AM

On Jan. 1, 2017, a new member business loan (MBL) rule took effect that grants greater regulatory flexibility to credit unions than under previous NCUA regulations. Credit unions that participate in member business lending—a full 35.9 percent of the industry—posted 15.2 percent year-over-year growth, and total MBL balances hit a record high of $62.7 billion as of March 31, 2017.

The final MBL rule lifted limits on construction and development loans, and credit unions are capitalizing on this change. Construction and development loans expanded 32.6 percent annually. Loans secured by non-owner occupied, non-farm, non-residential property accelerated at the second-fastest rate of 23.9 percent.

Despite this rate of growth, real estate secured MBLs still comprise the majority, 86.9 percent, of the industry’s MBL portfolio. Real estate secured MBLs have posted double-digit growth since June 2013 and totaled $54.5 billion in the first quarter.

The industry’s total MBL originations and purchases in the first three months of the year reached $6.2 billion, up $1.3 billion, or 28 percent, from one year prior.

Small Business Administration loans—an effective loan product to reach entrepreneurs, start-ups, growing businesses, minorities, and veterans—reached $1.6 billion as of March 31, 2017. Credit unions with assets of $1 billion or more extended nearly $230,000 per SBA loan on average, whereas credit unions within $50 million to $100 million in assets surpassed $151,000, on average.

MBL delinquency remained manageable within every NCUA region except for one. Ten credit unions in the Northeast region had an MBL delinquency greater than 10.0 percent, attributed to non-real estate secured MBLS (taxi cab medallions), which drove up the average 4.5 percent for the region.

Larger institutions underpinned the growth in average loan balances across the country. Whereas the median growth rate increased 2.8 percentage points, credit unions in the top 20th percentile posted gains of 9.6 percent per loan.

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