HealthScore Chart of the Week: Member Business Lending

This week’s HealthScore Chart of the Week focuses on credit union member business lending, specifically looking at the comparison of HealthScore averages of credit unions engaged in member business lending vs. those that are not.

This chart clearly shows that credit unions engaged in member business lending are healthier than their non-MBL peers. There could  be many reasons for the difference, but the reason is likely a combination of the following two factors:

  1. In evaluating score distributions by asset peer groups we see that each peer group is healthier than peer groups smaller than itself. Credit unions engaged in MBL tend to be larger, and larger credit unions tend to have higher health scores than smaller credit unions. As a result, MBL credit unions will reflect greater health because of the concentration of larger credit unions involved in such programs.
  2. Though not true in all cases, credit unions engaged in successful MBL programs generally possess an above-average ability to identify and mitigate risk not only in their business loan underwriting processes but for consumer loans, as well. Sound, diversified, well-managed portfolios unequivocally contribute to institutional health.

Your own comments and interpretations are welcome. To share your thoughts, use the comments feature below.

Interested in learning more about where your credit union stands in relation to Glatt Consulting’s Credit Union Industry HealthScore? Let us know. You may also want to learn more about our approach to credit union strategy consulting. In addition, and with particular relevance to this week’s chart, you may want to read Sageworks’ “Member Business Lending Landscape: Managing Risk & Opportunity” white paper. Glatt Consulting’s Tom Glatt, Jr. was a source for the paper’s author.

Data is as of 3/31/2013

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