PORTLAND, Ore. — CU Business Group LLC President/CEO Larry Middleman said banks and credit unions may have different approaches with problem loans.
“In general, banks know where the problem loans are and will deal with them,” Middleman said during an interview with Credit Union Times at the CUBG’s Business Services Conference Monday.
“Credit unions are too fast to extend and pretend,” he suggested, carefully choosing his words.
Middleman offered Credit Union Times a sneak peak of data from an upcoming business lending presentation that showed while banks were making more construction loans in 2008, their chargeoffs had leveled off as of March 2011. While credit unions were not doing nearly as many construction loans as banks, their chargeoffs tended to be high–but not as high as banks–during the same time period.
“Credit unions tend to want to believe that the market will come back. They’re slow to call it what it is,” Middleman said referring to loans that may be showing signs of trouble.
Still, loan losses sustained by credit unions do not compare to what the banks have experienced over the past few years. Middleman said member business lending, particularly among those credit unions that have more than $5 million in business loans on the books, have grown significantly since 2008.