Seeking ways to expand their banking offerings, three of Spokanes biggest credit unions are stepping up their commercial lending efforts.


Spokane Teachers Credit Union expects this spring to launch a business services department and roll out a new line of commercial loan products. Last month, Numerica Credit Union, of Spokane, received approval from the U.S. Small Business Administration to provide SBA loans, and it expects to start offering such loans in late summer or early fall. Earlier, Global Credit Union, of Spokane, announced it had bought a downtown building and plans to open a commercial real estate lending center there later this year.


Spokane Teachers, Numerica, and Global are three of the four largest credit unions in Spokane, as ranked by local deposits.


In 2003, our strategic focus is on business banking services, says Scott Adkins, director of lending at Spokane Teachers Credit Union. There is strong demand among our members for the types of business products we plan to offer.


The trend here coincides with a national trend in which credit unions are trying to grow by adding banking services geared toward small to medium-sized businesses.


In the last year or so, its gotten a lot of emphasis in the trade journals as a way to grow business, says Gene Fitzpatrick, Numericas vice president of lending.


Fitzpatrick says commercial lending has become a more viable option for credit unions as the organizations have broadened their fields of membership. For example, Numerica, formerly Spokane Railway Credit Union, was founded with a member base of railroad employees, and years later expanded its membership criteria to include employees of other transportation shippers and systems. Now, the credit union takes in anybody who lives or works in Washington state.


Other credit unions have expanded membership criteria in a similar fashion, Fitzpatrick says, and seeking business customers is a logical next step.


Randall Fewel, president and chief executive officer of Northwest Bancorp., parent of Inland Northwest Bank, says that while banks are confident they can compete against credit unions for business loans, theyre troubled by the fact that credit unions dont pay federal income taxes, which banks must pay. Because credit unions dont pay the same taxes as banks, that gives them a competitive advantage, and in theory at least, they should be able to charge lower loan rates and make more money on a loan than a bank.


With the expanded membership fields, Fewel says, credit unions operate more like banks and should have to pay the same taxes.


Fitzpatrick says credit unions dont pay all of the same taxes that banks pay, but they also are limited in their ability to raise capital, which gives banks a competitive advantage. Banks can sell stock to investors, but credit unions must rely on increasing deposits in order to grow.


In Spokane, Fewel says, the commercial lending market is intensely competitive. The only way credit unions will succeed is by hiring experienced commercial loan officers from banks, he says.


You need good people, and there arent that many out there, Fewel says.


Fitzpatrick says that credit unions need to be cautious in entering the commercial lending market.


Most credit unions dont have much experience, and there arent a lot of delinquencies and losses yet, but that will come, Fitzpatrick says. If it was really easy, everybody would do it.


Numerica has handled a limited amount of commercial lending during the past 15 years and is aware of the risks involved, Fitzpatrick says. Still, before the credit union offers business banking on a broader scale, it needs to train its staff members, recruit a few people who are familiar with commercial banking, and add software to handle such business.


The credit union, however, isnt in a hurry to get those pieces in place.


Were moving in that direction, but its not our primary focus, Fitzpatrick says. We have more than enough business in the consumer market.


Spokane Teachers began offering business checking accounts last year and expects to be ready to offer business loans on a broader basis soon. The credit union currently is installing business-lending software and is assembling its business banking staff.


Larry McDonald, who managed the credit unions main branch north of downtown, has moved into a new position as business-services manager, and Spokane Teachers also is looking to hire a business-loan processor. McDonald will handle all of the credit unions loan activity until its portfolio grows to the point that it needs to hire additional loan officers.


Through its planned business services department, which will be located in the credit unions main branch, Spokane Teachers plans to offer commercial lines of credit and commercial real estate loans. Adkins says the credit unions past business lending activity mostly has involved real estate loans, but it now hopes to build an equal mix of real estate loans and lines of credit.


Weve defined our niche as small- to medium-sized businesses, but were flexible, Adkins says.


Global Credit Union, which has offered commercial real estate lending for years, has begun renovating a building it bought in downtown Spokane late last year and plans to convert it into a commercial real estate lending center and a full-service branch. The three-level structure is scheduled to be completed this spring, and Global plans to launch operations there in June.


Global executives have said the credit union might offer additional banking services at the new location, but they decline to disclose further details.