Avadian Credit Union of Birmingham, Ala., spent $11.8 million to buy an Alabama bank, or about 1% of the credit union’s average assets.

The trend toward commercial lending has been going on for years, but for some credit unions, buying that which they lack has been an important strategy.

While credit unions have been losing auto loans and first mortgage growth is at a crawl, commercial lending has been growing at above-average rates.

Part of that is organic growth, and part might be goosed by the commercial lending teams credit unions have acquired through bank purchases.

Several credit unions have cited gaining commercial loans and lending muscle as a reason for buying banks.

CU Times wanted to get a measure of how much commercial lending was in the mix of bank purchases.

Our 10-digit analysis team picked seven credit unions that closed on bank deals in 2022, or in one case in January 2023.

The year 2022 was just past the pandemic era – far back enough to allow measures of growth for three years.

The bank deals were picked because they were large enough to be a significant percentage of assets to affect results.

The seven had total loan balances on the pre-purchase date of Dec. 31, 2021 that ranged from 7% of loans at Summit Credit Union of Madison, Wis., to 80% at DFCU Financial Credit Union of Dearborn, Mich.

But the bank balance sheets were heavily weighted to commercial loans, giving most of the credit unions huge gains in their commercial balances, but only modest gains in consumer loans.

The consumer category here includes first and second liens, including home equity lines of credit, which could include loans for business purposes.

In fact, the loans for 1- 4-unit residences accounted for 90% of the group’s loans lumped into the consumer category.

This underscores the main takeaway that one of the biggest impacts of these deals has been to boost commercial lending at these credit unions.

The consumer category here includes first and second liens, including home equity lines of credit, which could include loans for business purposes.

In fact, the loans for 1- 4-unit residences accounted for 90% of the group’s loans lumped into the consumer category.

This underscores the main takeaway that one of the biggest impacts of these deals has been to boost commercial lending at these credit unions.

The sample seven bank deals involved $3.8 billion in bank assets as of Dec. 31, which would have boosted the credit unions’ assets by 14% if the purchases had closed on that date. The deals were:

• Arizona Financial Credit Union of Phoenix ($3.4 billion in assets, 170,495 members), which bought Horizon Community Bank of Lake Havasu City, Ariz., 200 miles west of Phoenix. The bank’s $539.5 million in assets on Dec 31, 2021 would have boosted the credit union’s assets by 19.4% on that date.
  
• Avadian Credit Union of Birmingham, Ala. ($1.4 billion in assets, 97,051 members), which bought Citizens State Bank of Vernon, Ala. The bank’s $88.8 million in assets boosted the credit union’s assets by 8%.
  
• DFCU Financial Credit Union of Dearborn, Mich. ($6.7 billion in assets, 241,139 members), which bought First Citrus Bank of Tampa, Fla. The bank’s $659.7 million in assets boosted the credit union’s assets by 10.2%.
  
• FAIRWINDS of Orlando, Fla. ($4.7 billion in assets, 233470 members), which bought Citizens Bank of Florida of near Orlando, Fla. The bank’s $569.2 million in assets boosted the credit union’s assets by 14.1%.
  
• Georgia’s Own Credit Union of Atlanta ($4.2 billion in assets, 240,428 members), which bought Vinings Bank of Atlanta. The bank’s $685.6 million in assets boosted the credit union’s assets by 20.1%.
  
• Royal Credit Union of Eau Claire, Wis. ($5.3 billion in assets, 321,219 members), which bought Lake Area Bank of Lindstrom, Minn., 40 miles northeast of Minneapolis. The bank’s $423.6 million in assets boosted the credit union’s assets by 10.5%.
  
• Summit Credit Union of Madison, Wis. ($7.5 billion in assets, 266,382 members), which bought Commerce State Bank of West Bend, Wis., 40 miles north of Milwaukee, for $14.2 million. The bank’s $837.1 million in assets boosted the credit union’s assets by 17.3%.