Looking at even the worst-performing member business lending portfolios, credit unions still have low delinquency rates.
CU Business Group LLC discovered that after reviewing NCUA data as of Dec. 31, 2010. At the end of last year, there were 2,136 CUs with MBLs on their books. The overall average percentage of delinquencies for all CUs was 5.55%.
Taking it another step, the Portland, Ore.-based CUSO found that the 659 of those CUs with $5 million or more in MBLs on their books had an average delinquency rate of 4.23%.
CUBG also discovered that 222 of these CUs had 0.0% delinquencies and 61 of them had between 0.01% and 0.49% in delinquencies.
According to CUBG President/CEO Larry Middleman, “if we remove the 10-worst performing CUs, the average delinquency rate changes to 3.64%. If we remove the 50 worst-performing CUs, the average becomes 2.65%.”
“Credit unions look pristine when you look at the whole picture,” Middleman told attendees Wednesday at CUBG’s National Business Services Conference in Portland, Ore. “It’s unfortunate that there were a few bad ones out there that have tainted the industry.”
Since 2008, MBL activity has continued to grow. Middleman said 578 CUs had more than $5 million in MBLs on their books. That figure grew to 659 in 2010. In 2008, 124 CUs had more than $50 million MBLs compared with 149 last year. In 2010, 71 CUs had more than $100 million, up from 55 in 2008.
Looking ahead, Middleman said there will be more commercial real estate loan activity and increased competition especially from insurance companies. To get more deals, he encouraged CUs to get very specific when identifying their niche and the type of loans that will work within those segments.
He also suggested acting fast on turnaround times, being a steady and consistent lender, market “no prepayment penalties” and use selective broker relationships.