Wednesday, April 13, 2016

CUSOs Fuel Michigan CUs Business Lending Growth

Credit union service organizations (CUSOs) have played a key role in growing business lending at Michigan's credit unions, according to an article in Crain's Detroit Business.

The article notes that Ann Arbor-based Michigan Business Alliance (MBA), which is a CUSO, does underwriting and portfolio management on behalf of some 36 credit unions around the state. MBA started modestly, with a loan portfolio of $3.2 million at the end of 2004, and grew that to $423 million at the end of 2014 and $460 million at the end of last year. MBA stated that its commercial lending sweet spot are loans of $50,000 to $5 million.

Another CUSO, Troy-based Commercial Alliance LLC, has booked commercial loans of $46.3 million in 2011 and serviced a portfolio of $179.7 million. In 2015, it booked commercial loans of $156 million and serviced a portfolio of $388.7 million for 135 credit unions in the state. The CUSO has booked $39 million in loans with two weeks left in the first quarter.

The growth of commercial lending at CUSOs is a potential vulnerability for the credit union industry as the National Credit Union Administration does not have the power to examine third party service providers.

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