Credit Unions in Northwestern States Post Above Average Loan Growth

While credit unions in some states endure their boom and bust cycles, credit unions in Northwestern states continue their growth trajectory another quarter.

Western states showed above average loan growth, at 13.8 percent, led by new auto loans (16.8 percent growth), used autos (13.3 percent), first mortgages (10.4 percent), and showing a positive trend for credit unions, member business loans (15.5 percent, up from 10.0 percent the previous year). Many credit unions are seizing the opportunity to offer Member Business Lending (MBL), taking advantage of revised NCUA rules for MBL’s including carving out non-member loan from the statutory MBL cap, the ability to waive personal guarantee, and lifting limits on construction and development loans.

The loan growth total average was brought down by a still respectable 7.9 percent growth in revolving credit card debt, and 4.9 percent growth in other types of real-estate loans, including HELOCs.

Source: Callahan’s Peer-to-Peer Analytics

The positive loan growth contributed to higher than average asset growth due to acquisition of new members seeking auto and real-estate loans.

While new members, some of whom bring their checking (share draft) and savings accounts with them, contributed to this growth, the average share balance rose by 3.1 percent, which reflects a stronger labor market for existing members. This also indicates the desire to keep assets liquid, and safer, in credit unions, rather than invest in a potentially inflated stock market.

While there are a few headwinds in the economy that could slow growth, such as the lack of progress in Washington to move forward with big agenda items, or the geopolitical risk of terrorist attacks, the positive indications all point to continued growth. A strong labor market, especially in the Northwest, continued consumer optimism, and a Federal Reserve poised to move forward with monetary normalization, all point the way to even sunnier days.

Lou Grilli is Director of Payments Strategy at Card Services for Credit Unions (CSCU). For more information on our Strategic Link partnership with CSCU, contact Northwest Credit Union Association Program Manager Kaitlin Ramos at kramos@nwcua.org.