Credit Unions Gain Share of Commercial Real Estate Loans

Credit unions’ share of commercial loans remains tiny, but the movement increased its share this year.

Commercial real estate loan balances at credit unions grew nearly three times as fast as the national average in the first nine months of 2022 and four times faster in the third quarter.

Credit unions held $108.8 billion on Sept. 30, up 6.3% from June 30 and up 20% since Dec. 31, according to NCUA data.

A report released Tuesday by the Mortgage Bankers Association showed all institutions held $4.45 trillion in commercial real estate on Sept. 30, up 1.6% from June 30 and up 7.1% from Dec. 31.

The largest chunk was held by banks and other depository institutions. They held $1.71 trillion on Sept. 30, up 3.4% from June 30 and up 9.4% from Dec. 31.

Jamie Woodwell, the MBA’s head of commercial real estate research, said the results generally match those of the MBA’s Quarterly Originations Index, which showed third-quarter 2022 originations down 13% on a quarterly basis, with banks and other depositories the sole major capital source to see an increase.

“The amount of commercial and multifamily mortgage debt outstanding increased during the third quarter, driven almost entirely by a large increase in the portfolio holdings of banks and other depositories,” Woodwell said.

“The increase in bank holdings was the largest quarterly increase of any individual capital source in the history of MBA’s series,” Woodwell said. “For most other capital sources, their holdings of commercial and multifamily mortgages grew at a slower rate than during the second quarter of 2022.”

Credit unions held 2.4% of commercial real estate loans Sept. 30, up from 2.3% on June 30 and 2.2% on Dec. 31.

Credit unions also did better than others on production. They originated $13.1 billion in commercial real estate loans in the third quarter, up 24% from a year earlier, but down 9.4% from $14.4 billion in the second quarter.

Banks and other depositories held 38.4% of commercial real estate loans on Sept. 30, up from 37.8% on June 30 and 37.6% Dec. 31.

Multi-family loans contributed heavily to the gains, especially at credit unions.

At credit unions, multi-family loans were $26.9 billion on Sept. 30, up 7.8% from June 30 and up 25% from Dec. 31.

At banks, multi-family loans were $926.1 billion on Sept. 30, up 0.8% from June 30 and up 81% from Dec. 31.

Among all institutions, multi-family loans were $1.93 trillion on Sept. 30, up 1.9% from June 30 and up 6.4% from Dec. 31.

The 10 largest credit union holders of commercial real estate loans held $17.3 billion on Sept. 30, or 15% of their total loans. The balance rose 8.1% from June 30, and rose 48% from a year earlier. The top 10 were:

1. Greenstate Credit Union of North Liberty, Iowa ($11.2 billion in assets, 395,886 members), which held $2.7 billion in commercial real estate loans on Sept. 30, or 28% of its total loans. The balance rose 8% from June 30, and rose 54% from a year earlier.

2. BECU of Tukwila, Wash., 11 miles south of Seattle ($29.2 billion in assets, 1.4 million members), which held $2.7 billion in commercial real estate loans on Sept. 30, or 17% of its total loans. The balance rose 2.3% from June 30, and rose 22% from a year earlier.

3. Alliant Credit Union of Chicago, ($18 billion in assets, 734,595 members), which held $2 billion in commercial real estate loans on Sept. 30, or 14% of its total loans. The balance rose 28% from June 30, and rose 71% from a year earlier.

4. Bellco Credit Union of Greenwood Village, Colo., 10 miles south of Denver ($7.1 billion in assets, 358,564 members), which held $1.9 billion in commercial real estate loans on Sept. 30, or 32% of its total loans. The balance rose 4.1% from June 30, and rose 69% from a year earlier.

5. PenFed Credit Union of Tysons, Va., outside Washington, D.C. ($35.9 billion in assets, 2.8 million members), which held $1.7 billion in commercial real estate loans on Sept. 30, or 6% of its total loans. The balance rose 1.9% from June 30, and rose 79% from a year earlier.

6. Bethpage Federal Credit Union of Long Island, N.Y. ($11.6 billion in assets, 445,889 members), which held $1.5 billion in commercial real estate loans on Sept. 30, or 19% of its total loans. The balance rose 7.1% from June 30, and rose 32% from a year earlier.

7. Mountain America Federal Credit Union of Salt Lake City, Utah ($15.6 billion in assets, 1.1 million members), which held $1.5 billion in commercial real estate loans on Sept. 30, or 11% of its total loans. The balance rose 9.1% from June 30, and rose 24% from a year earlier.

8. TruStone Financial Credit Union of Plymouth, Minn. ($4.5 billion in assets, 206,401 members), which held $1.2 billion in commercial real estate loans on Sept. 30, or 34% of its total loans. The balance rose 8.5% from June 30, and rose 78% from a year earlier.

9. Royal Credit Union of Eau Claire, Wis. ($4.5 billion in assets, 278,771 members), which held $1.1 billion in commercial real estate loans on Sept. 30, or 30% of its total loans. The balance rose 15% from June 30, and rose 18% from a year earlier.

10. Lake Michigan Credit Union of Grand Rapids, Mich. ($11.8 billion in assets, 451,935 members), which held $1.1 billion in commercial real estate loans on Sept. 30, or 12% of its total loans. The balance rose 3.6% from June 30, and rose 77% from a year earlier.