CA & NV Loan Growth Cooling as Rates Rise and Deposits Slow

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From San Diego to far Northern California, and Reno-Sparks to Las Vegas, loans to consumers and businesses across California and Nevada have been accelerating for most of 2022 at high year-over-year rates in many localities while deposit growth noticeably declined. However, this recent rapid loan growth is quickly slowing down going into late 2022 and early 2023.

From June 30, 2021 – June 30, 2022, credit unions across California experienced these trends for the following 10 local regions (click to view): Bay Area, California, Central Coast, Central Valley, Greater Napa Valley, Northern California, Sacramento County, San Diego Region, Southern California, Ventura County (all regions are located here). Figures represent the latest available local data analyzed by the California Credit Union League.

During the same period, credit unions across Nevada experienced these trends for the following three local regions (click to view): Nevada, Northern Nevada, and Southern Nevada (all regions are located here). Figures represent the latest available local data analyzed by the Nevada Credit Union League.

As 272 locally headquartered credit unions and 13.1 million members across the Golden State blew through mid-year 2022 — and 15 credit unions with 386,000 members across the Silver State — annual savings growth in deposit accounts versus loan growth were taking very divergent paths during January to June of 2022. Overall lending growth had been red hot, but this trend is most likely cooling in the second half of 2022 as consumers head into the holiday season and a new year.

This is on top of savings growth already slowing down much earlier this year as annualized inflation continues.

Local California and Nevada credit union CEOs and boards of directors are well aware of these and other recent trends all emerging at the same time, including quick and drastic short-term interest rate increases by the Federal Reserve, as well as many economists continuing to forecast economic volatility well into 2023.

“Yearly loan growth at several financial institutions — many credit unions and banks alike — should start noticeably slowing down as we transition into late 2022 and early 2023,” said Robert Eyler, economist for the California and Nevada Credit Union Leagues. “2022’s hot loan growth for much of the year was probably a sign of consumers trying to borrow before interest rates go even higher. Many consumers had rising-rate expectations throughout 2022 and attempted to lock-in rates on loans while they were relatively low. That’s changing.”

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