Florida Bankers Continue Tirade Against South Florida CUs' Business Lending Programs

MIRAMAR, Fla. – The Florida Bankers Association continues to voice its disapproval of some of South Florida's credit unions' entry into business lending. An Oct. 24 article in the South Florida Business Journal highlighted a number of credit unions that have launched MBL programs including $2 billion Eastern Financial Florida CU, which has a business loan portfolio that accounts for 1.5% of its assets totaling $30 million. The article also mentioned Eastern's new CUSO, CU Business Capital, which has been profiled in Credit Union Times. “Commercial lending is not what credit unions were formed to do,” Alex Sanchez, president/CEO of the Florida Bankers Association told the publication. “But we feel it is not right that a family of four pays more in taxes than large credit unions that are expanding in activities that Congress originally did not envision for them.” The article also mentioned several other South Florida credit unions including Power 1 CU, Tropical Financial CU, IBM Southeast Employees CU, Jetstream FCU, Miami FCU, Dade County FCU, Gold Coast FCU, and City County CU. Tropical Financial is one of seven Florida credit unions that formed Cypress Group, an Orlando-based MBL CUSO formed last year and also profiled by Credit Union Times. For many of the CUs, the Credit Union Regulatory Improvements Act (H.R. 2317) would let any credit union have up to 20% of assets in business loans, compared with the current maximum 12.25%, the article reported. Credit union business lending may be “irking some banks” around the Southeast, Jefferson Harralson, an analyst for Keefe, Bruyette & Woods in Atlanta told the publication, but he added he has not heard of “many cases where they are competing with banks for loans, but some banks expect they will see that.” Eastern Financial CU President/CEO Stephen McGill said it-along with other credit unions-focus on small businesses, including some that cannot qualify for bank loans, the article said. -msamaad@cutimes.com