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Record lending at Southern Nevada credit unions

Consumer and business loans issued by local credit unions hit a record in Southern Nevada, indicating consumers are willing to take on more debt, according to fourth quarter 2015 figures released by the Nevada Credit Union League.

More than $1.51 billion was loaned out by credit unions, an 8.5 percent year-over-year increase and an outstanding dollar amount not seen in Southern Nevada since 2002.

“Generally speaking, credit growth of any type means consumers are in better shape to take on debt and confident in their job prospects to repay that debt,” Dwight Johnston, chief economist for the NCUL, told the Las Vegas Business Press.

Johnston said specifically first mortgages mean more economically when used to purchase a new home. He added that a mortgage on an existing home is less impactful.

“A new home means new construction and the associated jobs,” Johnston said. “Equity lines of credit are almost fully put back into the economy in the form of purchases for home remodelling or other purchases.”

Broken down by sector, first mortgages and home equity lines of credit increased 2.1 percent to $835 million, a figure not reported since 2012. Within combined first mortgages, there is a 30 percent increase in fixed-rate origination in the incoming pipeline, according to the NCUL.

Adjustable rate first mortgages in the pipeline jumped 41.1 percent, while home equity lines of credit in the pipeline were up 106.1 percent.

The fourth quarter report also found a 2.3 percent increase in business loans; a 43.3 percent jump in new auto loans to $78.7 million, an outstanding number not seen since 2012; and a 26.6 percent increase in used auto loans reaching a record of $386.2 million.

Johnston said these numbers, for the most part, show credit unions in Nevada came through the recession in better shape than most financial institutions as most credit unions were conservative in their lending.

“This left them in a strong position to take advantage of opportunities as the economy has recovered,” he said. “Moreover, some credit unions that backed away from the mortgage business in 2005 (and) 2006 have ramped up mortgage lending as the playing field with banks and other lenders for mortgages has levelled.”

Credit unions in Southern Nevada are collectively experiencing increases in membership not seen since 2008. The NCUL report found the eight credit unions headquartered in Southern Nevada were servicing 221,859 members, a 0.7 percent increase year-over-year, or 1,498 members.

In Southern Nevada, deposits hit $2.5 billion, up 6 percent, fuelled by checking, savings, and money market accounts. The percentage increase in deposits hasn’t been seen since 2010, while deposits hit record outstanding amounts in checking, $490 million, and savings, $1.11 billion, accounts.

“It was gratifying to see Nevada’s 17 credit unions put a bow on an excellent 2015 with (a) strong performance in the fourth quarter,” Wally Murray, CEO of Greater Nevada Credit Union and NCUL chairman, told the Business Press. “That included solid growth in a variety of key areas, like membership, loans and deposits.”

Murray said membership statewide topped 330,000 at the end of 2015, with more than 1,110 employees. Statewide, more than $2.2 billion in consumer, real estate and small business loans were issued in the fourth quarter, he said.

“That represented growth of more than 10.5 percent over the prior year, which further demonstrates how our credit unions are helping the state continue the recovery from the previous economic hardships it endured,” Murray said.

According to the NCUL report, credit unions in Southern Nevada spent $107 million on employees and operations, while employment grew 3.3 percent year-over-year to 714 employees throughout the region.

So will these trends hold for 2016?

Johnston believes this year is already shaping up to be another very profitable one for credit unions.

“Anecdotally we are hearing of strong growth again in auto lending and mortgage refinancing,” he said. “The year-over-year percentage growth numbers should begin to slow down though as comparisons will be to larger base numbers than in the past. But credit unions are positioned to accommodate stronger growth.”

Johnston told the Business Press that he didn’t believe there were warning signs in any of the fourth-quarter numbers.

But, he said the way the U.S. economy goes will determine what happens in Nevada, especially since the state’s largest force remains the gaming industry.

“The recovery in Nevada started later than in most of the U.S. but growth has been on a steady upward trajectory for a solid three years,” Johnston said. “The state is now within 20,000 of getting back to the all-time high nonfarm payroll number in 2006. The top three largest sectors of employment have all hit modest new all-time highs.”

He said the one big drag has been in the construction area. In 2006, construction jobs accounted for roughly 10 percent of all jobs in Nevada. Construction employment has grown by 30,000 jobs, but the industry share is only about 5 percent.

Johnston described the difference in construction employment as a “deep hole.” But, he expects steady growth in the largest sectors.

“It is highly unlikely that Nevada will see a building boom close to the last one,” he said. “But the growth in the three sectors of trade/transportation, business/professional, and travel/leisure should carry the state ahead. With the Tesla factory coming and other business growth, the state’s growth could accelerate in the next three years.”

Johnston reiterated that credit unions are positioned to accommodate that stronger growth.

“Capital positions are among the strongest on record, delinquencies are very low, and deposit growth leaves credit unions with funds to lend.”

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