Seven credit unions that account for just 2.3% of the movement's commercial loans accounted for 22% of commercial loan delinquencies in December.
A CU Times analysis found the seven held $4.4 billion in commercial loans on Dec. 31, accounting for 9.7% of their total loans. Their delinquency rate was 9.54% for commercial loans, up from 5.95% a year earlier. The commercial delinquency rate for all credit unions was 0.97% on Dec. 31, but by removing the seven it fell to 0.76%, according to NCUA data drawn from Callahan's Peer Suite.
Commercial loans are as diverse as snowflakes, and credit unions reported different ways their delinquencies rose and different paths for repairing their portfolios. One factor seemed to be lenders who were not ready for the rise in interest rates after they fell to historic lows during the pandemic. And large charge-offs have been common for those digging out.
Former NCUA Chair Todd Harper first raised concerns about commercial loan quality in 2023, saying the NCUA was putting commercial loans under greater scrutiny.
CU Times first identified five credit unions with high delinquency rates in the third quarter. The cutoffs were credit unions with at least $200 million in commercial loans and 60-day-plus delinquency rates of at least 10%. Two credit unions below the 10% threshold were included because of their size: Pentagon Federal Credit Union of McLean, Va. ($29.3 billion in assets, 2.7 million members) and the pre-merger First Tech Federal Credit Union of San Jose, Calif. ($16.45 billion in assets, 709,298 members).
With fourth-quarter data, PenFed would have dropped out, but was retained because it cut its delinquency rate with large write-offs. Two other credit unions were added that met the criteria with rising delinquency rates in the fourth quarter.
For more information on each credit union, click on their name below. The seven credit unions were:
- PenFed, which held $915.8 million in commercial loans Dec. 31, accounting for 4% of total loans. The delinquency rate was 4.72% for commercial loans, compared with 1.13% for its other loans.
- First Tech, which held $1.48 billion in commercial loans on Dec. 31, accounting for 12.2% of total loans. The delinquency rate was 6.23% for commercial loans, compared with 0.87% for other loans.
- Greater Nevada Credit Union of Carson City, Nev. ($1.69 billion in assets, 88,408 members), which held $480.5 million in commercial loans on Dec. 31, accounting for 37% of total loans. The delinquency rate was 11.9% for commercial loans, compared with 0.6% for other loans.
- U.S. Eagle Federal Credit Union of Albuquerque, N.M. ($1.45 billion in assets, 97,686 members), which held $261 million in commercial loans on Dec. 31, accounting for 24.4% of total loans. The delinquency rate was 28.1% for commercial loans, compared with 0.26% for other loans.
- State Employees Credit Union of Santa Fe, N.M. ($1.3 billion in assets, 53,700 members at Dec. 31), which held $220.3 million in commercial loans on Dec. 31, accounting for 23.8% of total loans. The delinquency rate was 12% for commercial loans, compared with 2.93% for other loans.
- Service Federal Credit Union of Portsmouth, N.H. ($6.46 billion in assets, 380,457 members), which held $757.1 million in commercial loans on Dec. 31, accounting for 14.2% of total loans. The delinquency rate was 12.9% for commercial loans, compared with 0.83% for other loans.
- Rivermark Community Credit Union of Oregon City, Ore. ($3.15 billion in assets, 174,887 members), which held $303.7 million in commercial loans on Dec. 31, accounting for 14.1% of total loans. The delinquency rate was 10.2% for commercial loans, compared with 1.19% for other loans.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.