Region 11

2013 Beige Book Responses

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region-11Devora Mitchell, CEO/President
WesTex Community CU ($52M, Kermit, TX)

Our credit union serves a large land area with two distinct economic industries. The majority is located smack dab in the West Texas oil field and the other has the federal government to thank for their jobs (Border Patrol, DEA, etc). The oil industry is considered to be in a boom at present. As a result deposit growth has out paced loan growth. We’ve been seeing what we call the toy phase for a while now. When we have sustained good times, members tend to start buying toys more and more. Whether it be boats, ATVs, or motorcycles these are what they are wanting, and these are the things we start getting back when the inevitable bust hits.

In the area near the Texas/Mexico border there always seems to be uncertainty. You get as many different projections as different people you talk to. Salary cuts and/or lay offs are always top of mind. This group tends to be more conservative in borrowing and savings habits. (A lot of them actually read disclosures.) 2012 was a year of 24% growth for the credit union and 2013 looks to be shaping up the same.ROA has remained north of 100 bps through the last few years even with our loan mix dropping.

Gary Tuma, CEO
Smart Financial ($528M, Houston, TX)

I would summarize the environment as TEPID. Certainly not HOT, but we are fortunate to operate in Houston, TX where energy based employment and the Medical Center are definitely huge cogs in a stronger economy. We are fighting hand-to-hand for loans and have been able to establish a trend of loan growth in the last half of 2012. The local mortgage market is stable and did not suffer the loss in valuations we saw elsewhere in the U.S. With so many positives, it may seem odd that we are not seeing double digit loan growth, but members are still borrowing very CAUTIOUSLY. They are uncertain about the long-term stability of the economy; the issue of rising taxes and medical care. Hopefully, confidence will continue to build and stronger loan growth will follow.

We did see strong growth in MBL’s last year and anticipate this will continue as members are very active in referring business loans to us. Of course, at current MBL growth rates, we won’t have long before the CAP starts to become an issue. We intentionally decreased our focus on indirect auto several years ago and have run down outstanding balances over $150 million. A strong focus on direct auto has been able to produce offsetting growth, and, of course, improved yields. We changed our marketing strategies two years ago to a targeted direct mail plan to improve organic growth while measuring dollar-for-dollar returns on campaigns. This has been a HUGE help in our efforts to grow direct relationships.

For 2013 we see potential for continued growth in mortgage loans, MBL’s and consumer lending with a continuation of our marketing plan. We hope this will translate into something better than 5-6%, but only continued economic performance will provide excess lift. Funds growth has been at the 8% level and seems to be consistent in that range for 2013.

Oscar Carbajal, CFO
One Source FCU ($87M, El Paso, TX)

I see the market conditions in El Paso as being very good compared to other parts of the country. Our loans grew in 2012 by roughly 7.5%. Our deposits and assets grew at just about the same pace as loans. We have a large Army Base here (Fort Bliss) that is expanding and all of the new construction has really helped the local economy. I see a lot of construction around the city as well. El Paso has never been a hotspot as far as the economy goes but in the last few years I would say we are doing better than I’ve ever seen it. This is the case even as most of the country has gone through a recession. Hopefully it continues.

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June 5, 2014

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