... one other observation!
✅ As you know, the major angst about credit unions in the banking industry centers on the growth in commercial lending. As you saw in yesterday's post [link] according to the NCUA, commercial lending by credit unions now exceeds $174 billion, topping both total credit card lending [$85 billion] and total new car lending [$164 billion] - that's all CU card/newcar loans for 142 million members!
Why would the banking industry argue against "small" business loans to help folks "get by" or get started - sounds pretty hard-hearted! Because that doesn't appear to be what's going on. Take a look:
✅ Here are the stats on commercial loans at the largest U.S. credit unions as of December, 2024:
NavyFed 1300 loans total balances: $820 million avg. loan amount: $630 thousand
SECU -0-
PenFed 455 loans total balances: $1.35 billion avg. loan amount: $2.96 million
Boeing 957 loans total balances: $3.27 billion avg. loan amount: $3.40 million
SchoolsFirst 88 loans total balances: $2.33 billion avg. loan amount: $ 2.80 million
😎... not exactly your small engine repair shop, lawn maintenance service, or Ebay start up.
✅ How about in North Carolina:
SECU -0-
Coastal 184 loans total balances: $174 million avg. loan amount: $945 thousand
Truliant 2400 loans total balances: $885 million avg. loan amount: $369 thousand
Allegacy 507 loans total balances: $361 million avg. loan amount: $712 thousand
Skyla 342 loans total balances: $280 million avg. loan amount: $819 thousand
... again not exactly a "small" lending business! **
😎 The banking industry has always felt that credit unions should not be tax-favored on these large commercial loans and that CUs cherry-pick the easy, real estate secured loans - and, of course, are unfairly, skimming off banking profits.
✅ By the way, two-thirds of all U.S. credit unions do not make commercial loans.
... that's what the "tax fight" is about! Who's right?
** CCUL's H.187 seems to be a "small business" sham show.
Another flaw in your logic is thinking that 3 million is large for a CRE loan. It's not, and other lendings, including banks, insurance companies, and private lenders have much higher average amounts.
ReplyDelete3 million loan with annual debt service of 225,000 and a 1.25 DSCR equates to $250,000 in annual operating income. These loans are typically to LLC's with 1 or 2 members on small or very modest size properties. 250k income. Is that not a small business? Not exactly lending to donald trump.
I work with banks, credit unions, and CDFIs so this is not my fight. However, I will weigh in with my opinion on this one. Having spent a long time in commercial lending, $3 million is indeed a large loan. Businesses who qualify for a loan of this size are very established with solid cashflow, and both primary, secondary, and tertiary sources of repayment. If not, they would never qualify. They often will choose credit unions because the rate is better. (Credit unions can offer lower rates because they have competeitive advantages over banks.)
ReplyDeleteI personally don't think it's fair for credit unions to be tax-exempt AND compete with banks in this arena. They shouldn't be able to have their cake AND eat their cake. It's just not fair.
It's also my opinion that the people pushing this bill seem to be very disingenuous. They should just be honest about what they are actually doing.