Every now and then, Centennial Lending LLC will spot a gem but lately, the business and mortgage lending CUSO has had to turn down many shoddy loans previously serviced by banks.
Mark Bostock, president of the Denver-based CUSO, said with the recent shutdown of New Frontier Bank in Colorado, there's been an increase in loans coming in. Local banks are capped out leaving a glut of development loans around. Centennial serves 123 CUs in Colorado, Nebraska and Wyoming.
"It's a scramble out there," said Bostock, who will speak on lending trends at a NACUSO annual conference session today. "Banks just don't have the capital. Every once in a while, you'll get a gem in the rough. But, I can see why some of the banks got into trouble. The loans were not great."
Bostock said with the bankruptcies and ongoing upheaval in the auto industry, credit unions can also expect to see a shutdown in auxiliary businesses. He predicts that rising unemployment will lead to an increase in strip mall closures and the demise of "mom and pop" shops.
"For us, we're seeing the bottom of the residential [loan slump]," Bostock said. "At the other end, we're starting to see the beginning of the commercial loan defaults."