- Key insight: Credit unions' involvement in commercial real estate lending has grown substantially in recent years.
- Supporting data: CRE loans on credit unions' books totaled $187.1 billion on June 30, up 36% from the same date in 2023.
- Expert quote: "I used to say, `The board likes dirt.' They like to be able to see and feel their collateral." — St. Mary's Credit Union Vice President of Commercial Lending Bryan Moore
A recently closed $50 million deal financing a 29-story office tower in Philadelphia's Center City district ranks as the largest business loan in Citadel Credit Union's 88-year history. It's also a sign of credit unions' growing involvement in commercial real estate, a sector banks have long dominated.
For Citadel, based in Exton, Pennsylvania, a Philadelphia suburb, the office loan is a predictable outgrowth of its
While Citadel is relatively new to commercial lending, Desimone said members of his team are veterans of the market. "We have experience that Citadel as an institution doesn't necessarily possess," he told American Banker.
Desimone doesn't expect the Center City office loan to be a one-off. Indeed, he described it as an "elegant fit" and a "proof point."
"By sourcing and leading the transaction, we demonstrated that we can close complex opportunities at greater scale, while retaining the local knowledge and responsiveness that differentiate Citadel," Desimone said.
Though relatively few credit unions have closed a CRE loan as sizable as Citadel's, there are indications the nonprofit industry's appetite for large-dollar transactions is growing.
Built Technologies runs an online platform that streamlines lending, budgeting and payments for construction projects. Its client list includes more than 40 credit unions, up from "a handful" just a few years ago, Built spokesperson Nick Halliwell told American Banker in an email.
Many of Built's credit-union clients, moreover, are financing larger projects.
"Credit unions now have 16 active CRE loans over $10 million on the platform, up from just three in 2023," Halliwell wrote.
Last week, the National Credit Union Administration released statistics that also indicate a growing involvement in the sector. As of June 30, total commercial loans secured by real estate on credit unions' books totaled $187.1 billion, up 36% from the midway point of 2023.
Credit unions' business lending is restricted by a statutory cap that limits their volume of commercial loans to approximately 12.25% of total assets, but individual institutions have been able to manage the limitation by selling participations in large-dollar transactions.
In the case of the $50 million loan in Philadelphia, Citadel followed the same course, marketing positions to other financial institutions with the assistance of Rhyze Solutions, a credit union service organization.
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Bryan Moore, vice president of commercial lending at the $1 billion-asset St. Mary's Credit Union in Marlborough, Massachusetts, told American Banker that credit unions are much like community banks in that they value "hard collateral" when making loans.
"I used to say, `The board likes dirt,'" said Moore, who joined St. Mary's in 2024 after working more than 17 years at two community banks. "They like to be able to see and feel their collateral. As time has gone on, credit unions have moved more into the commercial space than they were historically. … Now it's becoming an area of growth for many credit unions."
Like Citadel, St. Mary's has become more open to in-footprint CRE lending in recent years, focusing on multifamily and mixed-use properties, Moore said. "In the last 18 months, we've done a few of the larger transactions the credit union has ever done, historically," Moore said. "We're talking $5 million or $6 million deals."
Even larger transactions are a possibility. St. Mary's recently revised its lending-limit policy, replacing a hard cap on loan size with one that increases as the credit union grows. "It allows us to look at deals we might not have been able to take on previously," Moore said.
St. Mary's portfolio of commercial loans secured by real estate totaled $64.5 million as of June 30, up about 20% from the end of 2024, according to NCUA data.
Michael Emancipator, senior vice president and regulatory counsel at the Independent Community Bankers of America, characterized the increasing level of CRE participation among credit unions — especially when it's tied to increasing levels of larger-dollar loans — as problematic.
The trend is moving credit unions away from their historic mission of serving individuals of modest means, he said.
Citadel's Center City loan shows the Philadelphia-area credit union is running toward the CRE sector.
"This is a different ballpark entirely, where I would say … they're competing directly with regional or super-regional banks, financing a deal of that magnitude," Emancipator said.
But Citadel's Desimone said increased CRE lending boosts credit unions' safety-and soundness by adding diversity to their loan portfolios. It creates a similar effect at smaller institutions that frequently buy participations, he added.
