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Arkansas, Oklahoma and Texas CUs Experience Strong Loan Growth, Turner Says
Monday, April 21, 2014 6:55 AM

The first quarter has shown some encouraging signs for many credit unions in the Cornerstone region, according to Brian Turner, director and chief strategist with Catalyst Strategic Solutions. For the second consecutive year, stronger-than-usual sales of car and light trucks during the first quarter were met with traditionally strong share growth, Turner tells the Leaguer.

“Although tax refund deposits were later than usual due to the immense number of new tax laws that went into effect on January 1, most credit unions were able to retain a relatively strong liquidity profile,” notes Turner.

According to Turner, recent data from the Federal Reserve shows that credit unions were able to retain its relative market share during the first few months of 2014. In 2013, the industry reported loan growth of about 7.9 percent, although it’s largest peer group ($500 million or greater in assets), with a 12.6 percent increase in loans, influenced the result. Since they account for only 6 percent of the total number of credit unions in the industry, this means the remaining 94 percent of the industry collectively experienced a very modest 1.2 percent increase in loans last year.

“Regionally, Texas credit unions saw loans increase about +9.3 percent, Oklahoma credit union loans rose by +12.0 percent and Arkansas credit union loans were up +5.9 percent,” Turner tells Leaguer readers. “This trend appears to be continuing during the first part of 2014 although it is expected to slow during the rest of the year.”

“The stronger-than-industry results for this region certainly can be attributable to rising oil prices and increased domestic production. The area also benefits from a more stable economic and housing base when compared to the nation,” Turner continued. “This means average home prices are less volatile, wage growth is stronger and unemployment is lower in our core area. Five of the top 10 metropolitan money centers in financial performance reside in our core area.”

Still, with mortgage originations expected to be on the decline in 2014, Turner suspects that many credit unions will be challenged to produce enough consumer loans to experience overall loan growth for the year.

“But unlike 2013, the ‘94 percenters’ should see their loan demand increase as consumer spending behavior returns due to our strong employment sector, stable housing market and corporate diversity,” adds Turner.