Tuesday, January 19, 2010

Truliant Expects to Aggressively Grow Business Loans

The Winston-Salem Journal last week ran a story about Truliant FCU holding a news conference to promote an expansion in credit union business lending authority.

The story says that Truliant could provide up to $325 million in business loans, if the member business loan cap was raised from its current level of 12.25 percent of assets to 25 percent of assets.

Currently, the credit union can make only up to $159 million in business loans.

However as of September 2009, the credit union reported slightly more than $77 million in business loans on an asset base of slightly more than $1.3 billion. That translates into a member business loan ratio of 5.87 percent of assets.

The credit union said it "is 12 to 18 months away from reaching its current business-loan cap."

This would mean business loans may double during this short period.

History has shown with banks as well as credit unions that institutions that experience rapid growth may not have adequate internal controls to manage such growth.

Moreover, such a rapid expansion in business lending should make other credit unions and credit union supervisors wary, especially given the performance of its business loan portfolio.

The credit union reported that slightly more than $10.4 million in business loans was 2 months or more past due, of which $8 million was over 6 months delinquent.

Another $4.38 million in business loans was 1 to 2 months past due.

That means almost 20 percent of all its business loans are at least one month past due.

Additionally, slightly more than $1.2 million of business loans have been charged off (net of recoveries) through the first 9 months of 2009.

Hopefully, this information provides a more complete picture about Truliant's business lending program.


  1. Two questions.

    1.) How would the ABA feel about expanded business lending capabilities for credit unions if such services were taxed?

    2.) Would the ABA still be opposed to expanded business lending capabilities for credit unions if credit unions no longer held their tax exemptions?

  2. Jeffry:

    Those are excellent questions.

    ABA's official position is that if a credit union wants expanded business lending authority, it should change to a mutual savings bank charter.

  3. So the ABA opposes any kind of business lending by credit unions -- period? Even if they were taxed?

    The ABA has publicly stated that credit unions should not conduct business lending because they "lack the experience." Doesn't the ABA's "official position" seem to contradict this assertion? Why would a charter change make them any more qualified to conduct business lending?

  4. There needs to be compitition to these banks before they are going to lend small businesses money. They need to lift the loan restrictions completely, Then take the money back from the banks that we lent them and delve it out to the credit unions who want to make loans so that our economy recovers. Pay backs to Bank of America, Citi Bank, Chase, Goldmansac Bank, all the Big Boys will start to remember what made them Rich. Paybacks are a B...tch. Right now it doesn't matter if the credit unions are tax exempt we can deal with that down the road a year or two but only on business income. The big Banks have had more than adequate opportunity are choosing to be control bullies. I say do it now!!! Before its to late.



The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.