PORTLAND, Ore. (9/10/12)--CU Business Group (CUBG), which celebrated its 10th anniversary last month, continues to help credit unions perform better than industry peers in member-business lending (MBL) credit quality.
During the past three years, the business loan delinquency rate for CUBG credit unions has consistently been less than one-third that of all credit unions. Likewise, charge-off rates for CUBG credit unions have steadily been less than half that of the overall industry.
Credit unions that worked with CUBG reported a 1.56% delinquency rate on March 31, compared with a 5.16% delinquency rate for all credit unions, a 4.84% rate for banks with less than $1 billion in assets and a 3.71% rate for all banks. (See Chart 1).
CUBG credit unions had a 1.46% delinquency rate on Dec. 31, compared with a 5.08% delinquency rate for all credit unions, a 5.03% rate for banks with less than $1 billion in assets and a 4% rate for all banks.
Client credit unions of CUBG reported a 0.24% MBL charge-off rate on March 31, compared with a 0.78% charge-off for all credit unions, a 0.72% rate for banks with less than $1 billion in assets and a 0.82% rate for all banks. (See Chart 2).
CUBG clients also indicated a 0.22% MBL charge-off rate on Dec. 31, compared with a 5.16% charge-off rate for all credit unions, a 4.84% rate for banks with less than $1 billion in assets and a 3.71% rate for all banks.
"Credit unions have a real opportunity to be a player in the financial services arena in their communities, " CUBG Founder and CEO Larry Middleman told attendees at CUBG's annual national business services conference. "Most banks today are not interested in the average small business for business deposits or lending. They're looking for the bigger, more substantial companies, which is why community lending is a real niche for credit unions."
In addition to business lending, CUBG offers deposit programs and package services for small business needs, Middleman said. "Credit unions that have successful programs consider interest and fee income on loans, fee income on deposits, and supplemental revenue from the package products to round out their program and strategic direction," he added.
The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.