With the principle-based MBL guidance released by the NCUA last year, which became effective in January, credit union leadership may be re-evaluating the role that member business loans play in their growth strategy for 2017.
As a sub-segment of MBL, commercial real estate may be one path to growth. If that is the case, the credit union has to have in place the appropriate controls and processes to make sound CRE decisions that satisfy regulators' concerns over risk management of those loans. Best practices related to origination, lending strategy and portfolio management can ensure safe CRE portfolio growth.
The growth in CRE loan demand, competitive pressures and looser underwriting standards have prompted regulators and loan review staff to more closely scrutinize CRE loan concentrations and to warn lenders of the importance of identifying, monitoring, measuring and managing concentration risk in CRE lending.
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