Almost a year to the date since Navy Federal Credit Unionlaunched its commercial participation loan program, the country'slargest cooperative said it is ready for changes mandated by anNCUA rule even after the regulator recently extended a compliancedeadline.

“Navy Federal is prepared for the Sept. 23 effective date of theNCUA loan participation rule, and we're monitoring any possibleimpact the new ruling and effective date will have on other creditunions,” said Jim Salmon, vice president of businesses services atthe $54 billion Navy Federal in Vienna, Va.

At its June 20 meeting, the NCUA Board approved severalrevisions to the rule, including subjecting purchasing creditunions to a single-originator concentration limit of $5 million or100% of net worth, whichever is greater.

The NCUA also approved a change that allows federally insuredcredit unions to establish different underwriting standards forloan participations than they use when originating their own loans.Credit unions will also now have the ability to apply for waiverson certain key provisions of the rule.

The initial effective date for the newly revamped loanparticipation rule was July 25. However, on July 3, the NCUA saidit would extend the compliance deadline to Sept 23 because somefederally insured credit unions faced difficulties implementing thenew rule by original deadline date. The regulator said it wouldalso issue guidance.

Nearly a year before, on July 1, 2012, Navy Federal's C-PaL program made its debut to allow partneringcredit unions to originate participation loans with Navy Federalbeing the buyer of between 40% and 60% of the loan amount.

With C-PaL, Navy Federal said it would not take the lead in theparticipation loan deals, choosing to appreciate and respect thefact that other credit unions may want to maintain currentrelationships and run the daily interactions with members. At thesame time, Navy Federal will still hold the partnering creditunions accountable to the covenant of their participationloans.

“Our C-PaL program has been successful in providing relief tocredit unions who are edging closer to their commercial loan caps,and we'll continue to partner with those looking to grow theirbusiness lending ,” Salmon said.

Hard figures were not available on C-PaL's transactions,however, the credit union said it has had some success so far thisyear and is looking to do more deals.

Navy Federal is certainly in a position to share lendingopportunities. The credit union said it book $753 million inconsumer loan originations in May – the best month in thecooperative's 80-year history. So far in 2013, $2.3 billion of itsrecord $3.1 billion in consumer loan originations has stemmed fromauto loans.

Meanwhile, some within the credit union industry have expressedmixed reactions to the revised loan participation rule ranging onthe negative end, from imposing another limitation on memberbusiness lending activities to questioning whether it's evennecessary to mitigate loan default risk.

Others applauded parts of the revised rule saying it adds teethto addressing lead lender risk and provides more room for growthwith the increased in maximum participation purchase from 25% ofnet worth to 100%.

One business lending CUSO CEO gave Credit Union Times aheads up on a turnkey product the company is discussing that willhelp smaller credit unions offer member business loans.

“Most can't make the economic justification required tostart an MBL program. It would involve loanparticipations, originated locally by credit union lenders, notfrom loan brokers,” said the CEO who was not ready to reveal allthe details of the product.

The current 12.25% MBL cap affects those plans, he added, butbeing the greater of $5 million or 100% of capital from any oneoriginator certainly is better than the original 25% of capitalproposed earlier.