Embold Credit Union CEO: Tougher times are looming

Driven by commercial, indirect auto and home equity lines of credit, Embold Credit Union in Milwaukie, Oregon, saw solid loan growth in the first quarter of this year.

Total loans increased 16% year-over-year to $430.3 million, according to call report data.

Those gains were in line with the credit union industry, which saw total loans outstanding jump 17.6% year-over-year in the first quarter, to $1.53 trillion, according to data recently released by the National Credit Union Administration.

But can that hefty spike in lending continue throughout 2023?

"No, I don't think it's sustainable," Aaron Goff, president and CEO of the $617 million-asset Embold Credit Union, said in an interview with American Banker. "In fact, I think it's already on the decline."

Goff said that on an annualized basis, the industry's first-quarter loan growth would be about 6.5% for the year. Auto lending has already slowed, and so have HELOCs, he said.

Loan-to-share ratios across the industry are still solid but declined in the first quarter, and Goff believes that trend will continue throughout the year.

"Credit unions are keeping a close eye on liquidity, with COVID surge deposits starting to spend down," he said. "A lot of credit unions are intentionally slowing loan growth to manage liquidity."

Embold lost $392,000 in the first quarter of 2023, compared with a gain of $684,000 a year earlier, according to call report data from the NCUA.

But Embold's membership is on the rise, increasing about 2% in the first quarter, to more than 35,000, from a year earlier. Earlier this month, the credit union opened its seventh branch. By comparison, total U.S. credit union membership increased by 4%, to 136.6 million.

Embold was formerly known as Clackamas Federal Credit Union but rebranded earlier this year.