Credit unions push further into business loans

Dec 23, 2010

The hiring of a commercial lender to work the Ottawa County market follows Lake Michigan Credit Union’s strategy to aggressively grow business lending across its footprint.

The Grand Rapids-based credit union plans to position a commercial lender in the Kalamazoo and St. Joseph markets in early 2011 and aims to double business loans to members over the next year.

The credit union last spring decided to step up its commercial lending arm, seeing the market opportunity to take advantage of what it sees as a void left in the marketplace by some banks that tightened lending during the recession.



“We’re trying to do business where we have people and operations,” said Mark Hofhines, senior vice president of commercial lending at Lake Michigan Credit Union. “There are a lot of good customers that are not getting what they deserve.”

Lake Michigan, which has 31 offices in West Michigan and assets of $2.07 billion, grew total business loans to members by 55 percent from September 2009 to September 2010 to $35.1 million, according to a quarterly financial report filed with federal regulators.

The credit union presently has a backlog of $15 million in loans, Hofhines said.

After hiring David Huisman to lead commercial lending in Ottawa County, where Lake Michigan has offices in Holland and Grand Haven, the credit union now seeks to add a commercial lender during the first quarter to work in Southwest Michigan, said Hofhines, who joined Lake Michigan in April from Mercantile Bank.

Lake Michigan’s growth in business loans to members reflects the greater commercial lending volumes to small businesses that many credit unions are experiencing.

Statewide, credit unions’ total business loans to members grew 22.9 percent for the 12-month period ending Sept. 30, according to the Michigan Credit Union League. Outstanding business loans to members by credit unions statewide totaled $985.5 million at the end of the third quarter, MCUL reports.




St. Joseph-based United Federal Credit Union grew total business loans to members by two-thirds in a year, to $50.0 million, and Kellogg Community Credit Union in Battle Creek grew them by nearly 45 percent, to $26.2 million.

Honor Credit Union in St. Joseph posted a 26.5 percent increase in business loans, to $24.2 million, and First Community Credit Union in Parchment had 30 percent organic growth between the third quarters of 2009 and 2010.

The organic growth, combined with two acquisitions made in the last year in suburban Detroit and Beloit, Wisconsin, pushed First Community’s total business loans to members to $55.9 million as of Sept. 30, according to the credit union’s quarterly report filed with the National Credit Union Administration.

While the overall commercial loan volumes of credit unions are small compared to banks, they do represent business that bankers did not get.

“We make a small dent and, hopefully, build a good, quality portfolio,” Hofhines said.

Hofhines says credit unions have benefited from the difficulty some banks have had during the recession that caused them to tighten credit and limit exposure to sectors such as commercial real estate in 2009 and 2010.

“There was a market that wasn’t being served,” he said.

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