MBL Delinquencies, Charge-Offs Continue to Drop
Compared to banks, credit unions are holding their own when it comes to keeping member business loan delinquencies and charge-offs at a minimum.
The MBL delinquency rate for all banks was 6.97% while CUs showed 5.31%, according to Dec. 31, 2009 NCUA and FDIC data analyzed by CU Business Group, a business lending CUSO that serves more than 320 CUs. Banks with less than $1 billion in assets had total MBL delinquencies of 6.19%. For the same period, CUs had total MBL charge-offs of 0.65% while all banks showed 2.45%. Banks with less than $1 billion in assets had 1.59%. All figures represent percentages of net MBLs outstanding as of Dec. 31, 2009, CUBG noted.
"By sticking to plain vanilla deals and avoiding riskier business lending like speculative construction loans and large operating lines of credit, credit unions continue to effectively manage business loan risk," said Larry Middleman, president/CEO of CUBG.
The CU industry has typically focused more on multifamily and commercial real estate loans, so they've had less exposure to commercial, industrial and construction type lending, "where the bulk of the problems lie," Middleman pointed out.