WASHINGTON— An analysis in ABA Banking Journal argues that credit unions have sharply expanded commercial lending in ways that raise questions about mission, risk and oversight, contending larger institutions, low-income designated credit unions and those that have acquired banks are carrying significantly higher business-loan exposure than in the past.
The report, by American Bankers Association economists Daniel Brown and John Vermillion, says those shifts move credit unions away from their traditional focus on serving consumers of “modest means.”
According to the analysis, the expansion accelerated after policy and regulatory changes loosened practical constraints on member business lending. The ABA points in particular to NCUA’s 2016 final rule, which eased the waiver process for exceeding the statutory member business lending cap and removed certain prescriptive underwriting limits, helping fuel a rise in commercial lending that intensified after the pandemic.
The report says the number of credit unions exceeding the statutory cap more than doubled between the first quarter of 2016 and the third quarter of 2025, from 126 to 286. It also argues the growth is concentrated among larger institutions, noting that while only about one-quarter of credit unions have more than $250 million in assets, that group has become disproportionately active in business lending, with 221 larger credit unions above the cap in 2025.
The ABA also highlights especially elevated exposure among credit unions that have acquired banks, saying those institutions hold nearly 20 times the level of commercial loans as other credit unions. In addition, the report argues the expansion of low-income designated status—which exempts institutions from the member business lending cap—has become another major driver, with more than 54% of credit unions holding that designation by 2025 and average business-loan balances at those institutions running 73% higher than at non-LID credit unions.
The ABA analysis concludes that Congress should more closely examine whether credit unions’ commercial activity remains aligned with their statutory purpose and whether NCUA’s supervision is sufficient as institutions take on more exposure to a complex asset class. Brown and Vermillion argue that the rise of larger, more commercially active credit unions could warrant broader oversight, including renewed scrutiny of whether the industry’s tax treatment remains justified.