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ANCHORAGE, Alaska – When it comes to member business lending, Alaska stands out among credit unions in the Lower 48 and Hawaii. Of the 13 credit unions here in the “Last Frontier” state, 10 currently have MBLs on the books. The distinction is the average loan is roughly $545,000, which is the highest in the nation, according to CUNA’s Department of Economic & Statistics, which recently looked at how business lending at credit unions stacks up against banks. CUNA culled its own data as well as data from the FDIC, NCUA and the U.S. Census Bureau. In total, Alaska’s credit unions have $104 million in business loans outstanding, and command 2.99% of the market share. In just the last three years, the industry has seen $75 million in business lending with 2.73% of its total assets targeted here. “Alaska is unique in many ways,” said Nancy Bear Usera, senior vice president for corporate development at $2.5 billion AlaskaUSA Federal Credit Union. “The composition of our private sector is very different compared to other states. We have a high preponderance of oil field support, construction and heavy equipment but we also have a robust service sector.” At AlaskaUSA, the average business loan is about $600,000 and its total portfolio is $46.5 million. When the credit union looked at the characteristics of their members’ borrowing needs, they tended to be on the high side and higher than the national average, Usera said. “In a small state like Alaska, it’s very important to have retail relationships,” Usera said. “Most of (AlaskaUSA’s) loans are the result of personal relationships or with contacts in the business community.” AlaskaUSA has been offering business loans for more than a year but discovered early on that it had 6,000 business deposit accounts, clearly identifying a need here, Usera said. “Here in Alaska, we have wonderful community banks and super mega banks,” Usera said. “The popularity that Alaskans have in their credit unions is reflected in them coming to us for their business needs. There’s plenty of business to go around and pent up demand.” Still, while the state’s credit unions are seeing high MBL averages, banks still have nearly commandeered the business lending arena here. According to CUNA, Alaska’s banks have $3.4 billion in business loans and command 97% of the market share here. Business loans also account for 86.55% of their assets and over the last three years, banks have seen $1.5 billion in loans. AlaskaUSA’s numbers may shift a bit when it starts offering SBA loans in early 2006. “Our current loan average is a little bit higher because we haven’t done SBA loans yet,” Usera said. “We anticipate a broader range of applicants and the average loan to be about $150,000.” For the most part, Matanuska Valley FCU doesn’t compete head-to-head with banks in some of the communities in outlying areas and that really didn’t have an impact on the strategic decision to offer business loans. The $207 million CU, which serves more than 30,000 members and has three branches in rural, Northern Alaska, has been funding primarily construction loans over the past two years, said Al Strawn, general manager. When refinancing was rampant, construction lending prevented mortgage loans from declining, he added. It also enabled them to hire the experienced staff they needed and proved to be a strong asset when it came to asset liability management. “Construction lending has been a boon for us,” Strawn said. “They’re a perfect asset because they price great and the money turns over in six to nine months.” Part of Matanuska’s success has come from the relationships it has with a dozen developers. The credit union also hired two experienced commercial loan officers, one of which brought over existing clients, Strawn said. Growth came so quickly for Matanuska that NCUA took a hard look at the portfolio’s activity. “NCUA got freaked out because we were growing so fast,” Strawn said. “We’ve gone through two exams and the portfolios have been doing very well.” Strawn said Matanuska was one of those credit unions “that had to build rapidly to get to a break even point” to recoup its investments into its MBL launch. The CU is almost at its cap and has started selling loan participations, he added. The average loan is about $150,000 and it has $21 million MBLs outstanding. Even though Matanuska is an SBA lender, most of its field of membership has rural development loans. Usera said she’s not surprised that Alaska’s averages are on the high side when compared to other states but more importantly, credit unions are meeting a need. “It was an eye-opener for us,” Usera said. “These were people who had businesses that were settling for consumer services because they wanted to continue do business with us. It’s heartening to be able to provide a core piece of (AlaskaUSA’s) membership with the services we now offer.” [email protected]

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