This year in business lending could be equated to something that college football fans like myself find easy to understand. This is the first year that neither Alabama nor Clemson made the college football playoffs. Did they have a bad year? No. Did they slow down a little from record setting prosperous times? Yes. Credit unions experienced boom times during 2021 and the first half of 2022, which will not be replicated for quite some time. Even with the recent softening of loan originations, the pace is still very strong historically and portfolios are growing at a solid pace. With the NCUA Call Report data released for September 2022, let's dig deep to see if credit unions are playing for the national championship, for a New Year's Day Bowl or are barely bowl eligible.

Slower, but Not Slow

Does it feel like you are ahead of budget for the year? It should. The first half of 2022 featured unprecedented loan originations for business loans. However, if we carve out just third quarter data, it reveals a slowdown in the pace of originations. A total of $12.8 billion in business loans were originated in the third quarter of 2022. This pace of loans would eclipse 2021's record year of business loan originations. However, Q3 did mark a 9.5% reduction in the amount of loans funded on average versus in the first half of 2022. Total business loan units funded declined in a nearly identical pattern of 10.1%. The average size of a business loan funded also remained virtually the same at slightly over $600,000. The pace of loans funded in the first half of 2022 represented an astronomical increase over the two previous years and the pace of growth was simply unsustainable. I've spoken with many credit analysts and other support staff for business lending programs who have enjoyed finally having some breathing room to get their work completed at a more normal pace recently.