Commercial lending has become a core growth engine for credit unions, but rising delinquencies are adding a note of caution, CU Times reported during its latest Inside the PRO Studio webcast. CU Times Senior Director of Content Experience and Strategy Michael Ogden said new data shows commercial loans now account for more than 11% of all credit union loans, surpassing new auto loans for the first time, while commercial loan originations jumped 34% year over year.
Senior reporter Jim DuPlessis attributed the shift to a stronger post-pandemic business environment and more deliberate boardroom strategy, noting that credit unions have become "freer to pursue commercial lending" following legal changes that took effect around 2017-2018. As auto lending growth has slowed and mortgage activity remains muted, DuPlessis said commercial lending has emerged as a key place to grow, but warned it "requires a tremendous amount of expertise," sometimes acquired through credit union purchases of small banks and their commercial lending teams.
DuPlessis said the "anxiety" shows up in delinquency and net charge-off trends, urging boards to ask tougher questions and avoid "hubris" as portfolios expand.
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