NCUA Outlines ‘Elements of Effective MBL Program’

Member demand has sparked an increase in the number of credit unions offering member business loans (MBL), and by the end of 2011, federally-insured credit unions had a combined MBL portfolio of $39.1 billion, the National Credit Union Administration (NCUA) noted in its monthly NCUA Report.

That total portfolio represents an MBL jump of more than 5 percent for the year, the agency noted in an article that went on to outline areas that need specific attention when offering an MBL program. The report helpfully notes many bad signs that examiners have encountered when evaluating MBL programs, including several common situations:

  • the credit union has not investigated the originator itself, instead relying merely on the reputation of the originator;
  • the risk portfolio is not balanced, and the credit union instead has an abundance of high-risk loans;
  • collateral for the loan is located out of state, so the credit union has not observed the collateral and may have limited knowledge of market conditions; and
  • the borrower’s risk rating was improperly evaluated.

The NCUA stressed that this is by no means an exhaustive list of the concerns but rather a handful of the most common potential pitfalls.

Other topics addressed by the NCUA in the report include interest rate risk (IRR), indirect lending and trends in consumer complaints.


Interested in Learning More?

Both State and Federal regulators are carefully scrutinizing the business lending activities of the credit unions they examine. They are very concerned that each individual credit union has the staff capability inside its own walls to effectively underwrite business loan requests. They also want to make sure that the credit union has adequate, structurally sound business credit administration practices and procedures in place so that they can effectively monitor business credit risk on an ongoing basis.

The Business Lending School (TBLS) is a comprehensive, interactive and hands-on training program that will dramatically increase credit union professionals’ business lending skills. Designed to help participants become superior lending officers, relationship managers and business advisors, TBLS enables participants to more effectively communicate with clients and prospects, and successfully sell appropriate business related products and services through a program that includes:

  • Twenty-eight days of in-class training featuring an extensive training curriculum divided into five one-week sessions and three final days of review and testing;
  • An innovative Mentor Program that partners each student with a senior team member from their credit union for the duration of the Lending School;
  • Support from top-tier instructors for individual assistance or additional insights;
  • Daily quizzes, weekly exams and regular homework that reinforce the information covered in classroom.
  • Additional assignments and case studies to be completed between class sessions.

The school session begins next week and is limited to 35 participants to increase participation and ensure that every student has ample opportunity to learn—and practice—the principles being taught. Classes are conducted in an informal, interactive environment.

More information, including the opportunity to register, is available online.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in NCUA.