Navy Federal Seeks Partners to Grow MBL Programs
With a robust business deposit program and ample room to grow its business loan portfolio, Navy Federal Credit Union wants to create alliances across the country to help other credit unions expand too.
On July 1, the $49 billion cooperative in Vienna, Va., launched its commercial participation loan program in an effort to help credit unions grow their business lending programs. Through C-PaL, partnering credit unions would originate the loan and Navy Federal would be the buyer of between 40% and 60% of the loan amount, said Jim Salmon, executive vice president of business services at Navy Federal. The entire transaction, including the loan amount, would be looked at on a case by case basis, he added.
“Clearly, loan participations have a lot to offer but also include a lot of risk,” Keeney wrote in an guest opinion article published in Credit Union Times. “With basically no return on overnight funds and the loan demand from the members a little soft, some credit unions that have loans to sell through loan participations are helping the yield of other credit unions so long as the transaction is properly structured and as many protections are in place as possible.”
Keeney reminded credit unions to refer to Section 701.22, the NCUA regulation on loan participation, which details steps for the non-originating lender. He also said NCUA Letter No. 08-CU-26 continues to be the leading authority on the subject as it considered the template for future NCUA examinations.