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Big L.A. CUs returning to real estate loans
LOS ANGELES (2/8/11)--Large credit unions in Los Angeles are beginning to pick up commercial real estate lending now that the economy is starting to improve, said Los Angeles Business Journal ( Feb. 7). Of the 170 or so credit unions in Los Angeles County, only about a dozen are big enough to offer this type of loan, said the article. John Bretthauer, senior vice president of commercial lending for $1 billion asset California CU, based in Glendale, Calif., told the publication that the number of active lenders is much smaller than before the recession. His credit union stopped making those loans in 2009 and had no plans to resume, he told the publication, adding that most credit unions are shrinking their assets. California and Nevada Credit Union Leagues analyst Daniel Penrod told the publication that credit unions are feeling more comfortable branching out or expanding the lines of business available to them as economic stability sets in. Some credit unions that offered the loans stopped during the recession, either to tend to the economy's impact on their loan portfolios or because the overall lending decline resulted in their assets shrinking. That, in turn, pushed them up against the regulatory business lending cap of 12.25% of total assets. The Credit Union National association and credit unions have been pushing for Congress to lift the cap to 27.5%--something that would create $10 billion in loans and 100,000 jobs without expense to the taxpayer. Kinecta FCU, a $3.5 billion asset credit union based in Manhattan Beach, resumed real estate lending last summer ago after a year-long break. It cited the cap as a major factor why it stopped commercial real estate lending. When it resumed the loans last summer, it tightened its underwriting. Paul Cleary, Kinecta's vice president of business lending told the Business Journal that the credit union did not have significant problems with the loans during the recession but decided to play it safe anyway. Since resuming the loans, he said, the credit union has noticed that there is a clear desire in the market for such loans that is not being met by traditional commercial property lenders. Credit unions, however, are coming out in the market and looking for deals, he added. Penrod said commercial loans, which include commercial real estate, held steady at $2.1 billion among all credit unions in Los Angeles County during the first three quarters last year. During the same period, equivalent loans at local banks dropped 6%, according to the Federal Deposit Insurance Corp.


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