NEW ORLEANS — A few trouble spots have emerged within the business lending realm at some of Michigan’s credit unions and banks as the state continues to grapple with its economic woes.
Speaking at the NACUSO Business Services Collaborative Roger Little, Office of Financial and Insurance Services Michigan Deputy Commissioner and a NASCUS board member, shared a few areas of concern including the area of credit administration. Little said Michigan is seeing “a lot of pressure” in the commercial market regarding “stress of stretching credit standards.” He pointed out that this practice has been more common with banks than at credit unions.
Another area of increased concern is lenders not taking a “global view” in regards to construction and development loans. Little said lately there tends to be more of a focus on the project itself and not the entire company’s financial picture. It is critical for financial institutions “as [they] underwrite credits, you need to look at the global cash flow,” he emphasized.
The question was raised during the session on how aggressive the underwriting process should be on smaller loans. Little said in Michigan, regardless of the dollar amount of the loan–be it over or under $50,000–the credit union has the ability to underwrite the loan.