The National Credit Union Administration (NCUA) is reporting strong business lending growth at federally insured credit unions during the second quarter of 2017.
Outstanding business loans plus unfunded commitments increased from $68.9 billion at the end of the first quarter to $72.5 billion as of June 2017. The quarterly change in business loans was 5.2 percent.
Over the last year, business loans grew at an annualized rate of 17.4 percent.
During the second quarter member business loans increased by 5.1 percent to almost $64 billion, while purchased business loans or participations to nonmembers jumped by 6.1 percent to $8.5 billion.
As of June 2017, business loans less unfunded commitments were 5.02 percent of the credit union industry's assets. This is up 40 basis points from a year ago.
Approximately 88 percent of business loans were real estate secured. During the second quarter, business loans secured by real estate grew by 5.8 percent to $63.5 billion. The fastest growing component of business lending secured by real estate during the second quarter was construction and development loans with dollar outstanding expanding by 11.8 percent and number of loans growing by 9.8 percent.
It appears the growth in construction and development loans benefited from recent regulatory changes to NCUA's Member Business Loan regulation. The NCUA Board removed the aggregate limit on construction and development loans of 15 percent of net worth and the minimum equity requirement of 25 percent.
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