More than 1,000 people tuned in yesterday to the NCUA's Webinar on member business lending with delinquencies and examiners' expectations being among the hottest topics of discussion.
Hosted by NCUA Board Member Gigi Hyland, she kicked off the session with a poll question asking attendees if they offered MBLs. Roughly 80% said yes, another 2% did so through loan participations and nearly 17% said they do not but are interested. Since December 2000, MBL activity has grown substantially from $4.7 million to $32 billion as of June 30, 2009. With that growth has come a rise in delinquencies.
"This is cause for consternation at the examiner level," Hyland noted, adding more questions are being asked about risk monitoring and collections.
Some of the MBL weaknesses examiners are seeing are inadequate management systems, inappropriate risk rating systems given the size of a portfolio, uncontrolled growth and insufficient due diligence with third party providers, said Linda Vick former agricultural and commercial lending specialist who currently serves as problem case officer for NCUA region IV.
Another area crying out for improvement is the risk rating system, said Linda Jekel, director of credit unions for the State of Washington, Division of Credit Unions. A good portion of the Webinar was spent on the examination process and the NCUA requirement that executives have at least two years of commercial lending experience.
