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Fundamentally sound

First Financial Credit Union has a new approach to banking. (Roberto E. Rosales/Albuquerque Journal)

ALBUQUERQUE, N.M. — With a decade of recovery since the Great Recession, financial institutions say their members and customers are showing signs of economic health.

John Anderson

Both bank and credit union officials said assets are at pre-recession highs.

“When everybody is doing well and making a fair wage, it’s good for all of us,” said John Anderson, executive vice president of the New Mexico Bankers Association.

“Although New Mexico has been slow to come out of the recession, it has been fairly stable,” he said. “We didn’t have the huge number of foreclosures as our neighboring states.”

Jennifer Thomas

Jennifer Thomas, president of Bank of Albuquerque, third largest bank in New Mexico, said that “banks have stronger capital bases than before the recession and most have diversified their loan portfolios to be less dependent upon more risky segments of the economy.”

Bank of Albuquerque has 17 branches and employs about 240-250 people and has more than $1.5 billion in deposits, she says.

Added financial services

Banks have also increased their income from a wider array of financial services. She says Bank of Albuquerque is on track to exceed the success of 2018 this year.

Banks hold the lion’s share of deposits in New Mexico, but the choices of where to put that hard-earned cash have dwindled.

Paul DiPaola, president of the New Mexico operations of U.S. Bank, the fifth largest bank in the nation, said the banking industry has experienced consolidation and a reduction in the number of banks in the national system – from 15,000 in the 1990s to about 5,000 today. “That potentially could continue.”

First Financial Credit Union has a new approach to banking. This branch has kiosks where customers can sign in as they enter and type in the details of their visit. (Roberto E. Rosales/Albuquerque Journal)

Bigger banks can make the necessary investments in technology, digital tools and security that customers expect, he said.

According to information compiled from national banking and credit union associations and regulatory agencies, nationally the largest 100 banks controlled about 75% of the market share in 2018, while smaller community banks had about 17.5% and credit unions had 7.5% of the market.

Thomas said not all clients need the services of an international or giant national bank. “As a regional bank we are able to not only offer large loans to our clients, but a broader array of specialized services.” Those include large commercial and personal investment management, leasing, credit cards, lockbox, retirement plans and personal and corporate trust services.

Banks also do more than take deposits and make loans. Along with paying taxes as part of their for-profit status, they give back with community service.

Paul DiPaola

DiPaola said in the past three years First State Bank has logged more than 3,800 hours and his foundation has donated more than $2.2 million.

Other banks in the state also have similar records of community service.

“If every bank submitted an industry-wide total of their volunteer efforts, how significant would the contribution be?” he asked.

Credit union growth

Credit union growth didn’t suffer during the economic downturn.

“Credit unions did very well during the recession,” said Paul Stull, president and CEO at the Credit Union Association of New Mexico. “Many banks had to stop lending during the recession, but credit unions did not.”

He attributed their success to the differences in the two types of financial institutions. Credit unions are not-for-profit. They didn’t have any profit incentive to make risky mortgages, as did many of the giant national banks – often cited as a cause of the recession.

Robert Chavez

During the recession, credit unions across the state grew at an annual rate of 6%. During the past five years membership has advanced 22% with more than 905,000 members statewide, Stull explained. Assets increased 33% to $11.2 billion.

Robert Chavez, president and CEO of Sandia Laboratory Federal Credit Union, one of the state’s largest, said his organization grew by 9.3% in the fiscal year that started in 2017 and ended in 2018, adding 9,000 members. His credit union has more than $2.5 billion in assets and more than 101,000 members.

The growth has allowed his credit union to open a new commercial lending center and now has more than $300 million of business loans on its books.

Joe Christian, president and CEO of Nusenda, another of the state’s largest credit unions with $2 billion in assets, said the mergers of larger banks have had a beneficial impact on credit union growth.

Good consumer alternative

Joe Christian

“There is another narrative around the loss of major community banks during the recession and a continued trend of merger and acquisitions of local banks,” he said. “Nusenda and other credit unions are benefitting from New Mexicans’ desire to bank with a local, community-based, not-for-profit alternative.”

Nusenda has more members than any other credit union – more than 200,000.

Marsha Majors, president and CEO of U.S. Eagle Federal Credit Union, said her credit union and others are buoyed by the success of their members, some of the strongest growth in the history of her credit union, which began in 1935.

Improvements in the bottom line means the entire community is doing better.

“Our U.S. Eagle mission is to create a world where people matter more than numbers,” she said. “When good things happen for people, good things happen for us. When times aren’t so good, our mission is to be there for them.”

The experts agreed that New Mexico has been slow to come out of the recession.

“New Mexico has had a very rough ride. Many parts of the state had not started to come out of the recession until 2018. The rest of the country came out of the recession way before we did,” Stull said.

Slow recession exit

The slow return to normal is evidenced in the home resale market, Stull said.

Paul Stull

“Most homes here have had deferred maintenance since the recession, because people living in those homes haven’t been able to do the maintenance. If you go looking for a home, you’ll find homes that need new roofs, new plumbing and new electric,” he said. “If you are barely making it, you can’t afford a new roof.”

“Consumer confidence is slow to come back,” Anderson agreed. “There’s reluctance to buy a new roof or a new car because of fear of another dip.”

Commercially, the economy isn’t as strong as in neighboring states, with the exception of the southern New Mexico where drilling the state’s oil and gas is booming, he says. Geologists peg southeast New Mexico as one of the most oil-rich areas in the United States.

“New Mexico is doing better due to an improved economy. We can look at the increased tax dollars available for consideration during this years legislative session as an example,” said DiPaola. “New Mexico does not have the activity levels or number of cranes in the air as our neighboring states. We’re not recovering as well as Dallas, Denver or Phoenix. Southern New Mexico is doing far better than central or northern New Mexico.”

Despite better technology that makes extraction from the Permian Basin more economically feasible, both DiPaola and Anderson said it’s important for New Mexico to have more industries than oil and gas.

“We need to diversify,” Anderson said, adding he’s encouraged by renewed political and economic support for the state’s film industry, along with support for hemp production.

“New Mexico needs to do better in attracting new business to the state and to support existing companies,” DiPaola said, adding he’s seen positive signs for this kind of success with the growth of Facebook, Netflix and several business in Las Cruces.