LAKE BLUFF, Ill.—Even though credit union and bank balance sheets have improved since the financial crisis, loan growth has mostly stalled or has fallen at small credit unions and community banks, according to a new study from Moebs Services.
A quarterly stress test of financial institutions’ call report data by Moebs Services found that even though loans at FIs overall increased 0.9% in the first half of 2013, community banks with less than $1 billion in assets and credit unions with less than $500 million in assets reduced their portfolios.
“Main Street financial institutions lend to Main Street businesses,” said Michael Moebs, economist and CEO at Moebs Services. “The 27 million small businesses, especially those with less than 50 employees that provide over 65% of the new jobs, cannot obtain loans to advance their business.”
At the close of 2007, Moebs pointed out, total loans at financial institutions were 2.4% more than at the end of the second quarter of this year. “Today the stock market is doing well, some big businesses are doing well, but Main Street businesses, including community banks, thrifts and the majority of credit unions, have yet to come back.”
The study’s data reflects what Credit Union Journal’s ongoing “Great Divide” series has pointed out—a small percentage of CUs continue to drive most of the industry's growth. Based on data from NCUA and CUNA Mutual Group, 2,000 CUs (29% of the entire industry) reported losses during Q3 of 2012, the majority (1,692) with assets of $50 million or less. Though overall industry lending was up, 47% of CUs reported declines in loans between Q3 2011 and Q3 2012. And—more importantly--only 2.8% of CUs accounted for 84% of all loan growth.
