Michigan credit unions show growth of both members and loans during 2009

“I would anticipate we will conclude the year with well over 4,800 new members,” said Jeff Schillag, vice president of marketing and business development for U-M Credit Union. If so, that also would be the highest number of new members in the last five years.

Why are credit unions growing at that high rate?

“I think it’s pretty simple,” said Bill Beardsley, president and chief lending officer for Michigan Business Connection, an organization that closely works with credit unions. “In troubled times, you go with who you know. Community financial institutions, like credit unions, give eye-to-eye attention.

“More importantly,” he added, “they have money to lend. I hear stories all the time from very well-qualified buyers who were simply told by their bank they don’t make those loans anymore. We’re talking about the most basic lending products, like car loans and small-business loans.”

That has not been a problem for Michigan credit unions, which this year have lent $2.33 billion in new auto loans and $3.9 billion in used auto loans.

“A lot of large banks are so capital challenged, they’re not making any new loans,” Beardsley said. “Those few that have capital are certainly not making loans in Michigan. If your bank isn’t making loans anymore, you’re going to someone that is.”

Consumers are doing just that. Even small business owners, who’ve suffered as banks shut off the financial spigots, have found refuge in credit unions. The state’s credit unions increased small-business lending by 19.3 percent during the last 12 months.

In comparison, a recent report from the U.S. Small Business Administration showed that Michigan lending under its primary 7(a) program declined 25 percent in dollar value, falling to $236 million, in the fiscal year that ended Sept. 30.

The climb in credit union lending "(is) kind of a shock to our system, but a good shock, because that’s what we’re in the market to do,” Community Driven Credit Union CEO Kevin Finneran said.

In a typical year, Ypsilanti-based Community Driven Credit Union might write $3 million in auto loans, Finneran said, but that number ballooned this year to $10.5 million.

Ironically, the so-called financial crisis came at a great time for the credit union. Community Driven used to exist exclusively for Ford Motor Co. employees, but switched to a community charter in May 2008. The credit union now is open to anyone who lives in Washtenaw and Macomb counties.

“We’ve been on the backburner,” Finneran said. “But with some of the banks pulling out of financing, it was good timing for us."

In particular, he said, the federal "Cash for Clunkers" program resulted in a number of finance deals.

Heading into the new year, credit unions will be looking to increase their presence and let consumers know there’s an alternative to national banks, Finneran said.

“We’re gearing some programs toward dealerships and marketing other services,” Finneran said. “Once (consumers) hear about us with these car loans, they’re checking into us further and finding out our fees are nonexistent.”