Spokane-area credit unions looks to expand commercial lending
Several cooperatives expand business lending services hereMarch 2nd, 2017
Following several years of increased demand for commercial lending services here, several credit unions say they’re looking to put greater emphasis on building up that portion of their loan portfolios.
Lynn Heider, vice president of public relations and communications for the Portland-based Northwest Credit Union Association, says demand for what credit unions call member business loans has been rising consistently in the years since the recession.
According to association data, she says, credit union business lending in Washington stood at $3.33 billion as of the end of the third quarter last year, the latest quarter for which data is available, which was up from $2.56 billion through the first three quarters of the prior year.
Heider says in addition to loans that help members to start or expand their business, credit unions also grant commercial real estate loans and micro loans that help small businesses to purchase or upgrade equipment.
Gregory Hansen, senior vice president of business services for Numerica Credit Union, says he believes commercial lending has increased here in recent years due to a pent-up demand for capital expansion.
Hansen says Numerica saw record growth in commercial lending production starting in 2015, with a total of $74 million in commercial loans.
“That was a big year,” he says. “Our 2016 goal was $74 million, but we then saw commercial lending grow 35 percent, moving from $80 million, to its current $108 million in loans and commitments.”
Hansen estimates Numerica currently has about 800 commercial lending client relationships, which he says may seem a small percentage relative to the credit union’s total membership of 128,500.
“We’ve seen some growth in small-business referrals,” he says. “But the majority of increased lending activity has been in commercial real estate. We’ve seen a lot of activity in owner-occupied spaces, with many businesses moving from leased space into newly constructed space that they own.”
Although Numerica isn’t planning any new branches, Hansen says the increased interest in commercial lending is one of several factors that have led the credit union to begin making plans to expand its business services offices into additional space at its Spokane Valley headquarters.
“Numerica is building out space at our headquarters in the Spokane Valley to accommodate the growth we have experienced in commercial lending, SBA lending, and private banking,” he says. “Business services alone has grown by four times in the past seven years, and with that larger portfolio, we’ve determined now is the time to grow that space.”
Set to begin in May, Hansen says the expansion will involve transforming 18,000 square feet of previously unused space into the new business services and home loan center offices. The space will be configured to include 20 offices, 20 open-concept work areas, three conference rooms, and a waiting area for business members.
Hansen says Numerica currently has 38 employees on its business services team and may add more following the expansion.
“The expansion will be good for us, our members, and the community,” he says. “Businesses employ people, so when we can help a business to grow, that in turn helps transform the community through added jobs and services.”
Scott Bleeker, commercial lending manager with Spokane Teachers Credit Union, says STCU also saw a record amount of commercial lending activity last year.
“Our commercial loan portfolio grew a little over 20 percent in 2016, up from $250 million in 2015 to $301 million by the end of 2016,” he says. “I would estimate about 15 percent of STCU’s overall lending portfolio is commercial lending, and we have roughly 400 commercial clients currently.”
STCU opened its commercial lending and business services offices downtown, on the seventh floor of the Hutton Building at 9 S. Washington, in 2013.
“Many of our members start out meeting their personal banking needs with us, and through that relationship come to ask about small business services,” Bleeker says. “Our focus now is on continuing to develop and strengthen those relationships.”
He says most of the increased commercial lending activity has come in the form of commercial real estate loans from members looking to buy apartment properties, due to current low vacancy rates.
STCU currently has five lenders on its commercial lending team, he says. but it’s looking to hire additional staff and to form a new lending team that will focus on small-business lending.
“Commercial real estate is still kind of our foundation, although we are starting to focus more on business lending,” he says. “We’ve also been seeing more demand from members for smaller business loans, in the $250,000-or-less range, so we’re looking to slowly add staff to accommodate those needs.”
Bleeker says STCU, which currently operates 20 branches, plans to add a new branch in the Hayford Crossing retail plaza in Airway Heights later this year, a move that he says also could add more commercial loan demand.
“The West Plains is an area that has some great potential for commercial and industrial business,” he says. “It has infrastructure in place for those kinds of projects, and I think it’s an area we’ll continue to see grow.”
Bleeker says STCU also has placed signs near some of the commercial projects that it helped to finance, like last year’s development of the Peppertree Plaza strip mall at the northwest corner Third Avenue and Division Street.
“It’s just our way of letting people know we offer financing for commercial projects,” he says. “We’ve seen record growth this past year in commercial lending and we expect that will continue.”
Another credit union joining the area’s growing commercial lending market is Richland-based Gesa Credit Union, which last month opened a home-loan center and commercial lending office in the former Bank of Whitman building at 618 W. Riverside.
Gesa still is working to add to its current staff of nine there, but expects to have filled its 6,600 square feet of office space by early April.
Ben Rutledge, Tri-Cities-based vice president of commercial services at Gesa, says Spokane’s commercial lending market is strong.
“In the last few years, activity has been increasing in commercial construction with businesses wanting to expand,” he says. “Our commercial lending office at the new Spokane branch is still fairly new with only two lenders, but we hope to grow that team to include more in the next year or so.”
Rutledge says the credit union’s Spokane branch has a current commercial lending portfolio of $25 million, but its goal is to expand its commercial lending team and increase that to $50 million in the next five years.
In addition to Gesa, another of Washington’s larger credit unions also recently has taken steps to building its presence here. Boeing Employees Credit Union opened its first two Spokane branches this past September, one at 916 N. Division, in the Cataldo Square Shopping Center, and the other at 615 N. Sullivan, in Spokane Valley.
Last month BECU announced that it plans to open a third branch here, at the corner of Newport Highway and Holland Avenue, later this year.
Steve Hauschild, director of business services for BECU’s Spokane branches, says the credit union is doing well in its new offices, and has seen some success with commercial lending already.
“We’re excited to continue in our commitment to serving the Spokane area,” he says. “We’re have seen a good amount of inquiries into commercial lending this year, and are encouraged by the continued stability of the market here.”