DALLAS – Broad-based economic indicators may be trending upwards but you’d never know it by asking your average credit union CEO – with Southwest Corporate FCU’s first quarter CU CEO Confidence Index sinking still more to the lowest point of its seven-year history.
The overall confidence index for the quarterly survey declined from a low of 21.81 at the end of the fourth quarter of 2009, to even lower, just 20.95 for the first quarter of 2010.
And CEOs’ assessment of their own credit unions’ current financial condition slid from a low of 20.62 at year end, to only 16.45 for the first quarter.
In addition, the CEOs’ expectations of their financial condition six months from now fell by three points; and the CEOs’ analysis of their members’ current financial condition fell by five points. CEO expectations for loan demand over the next six months also dropped by nine points this quarter.
The only major gauge trending upwards is that of share growth, with the index showing an 11-point increase over the next six months.
“These responses shouldn’t come as a surprise coming off a year when credit union loan growth was a mere 1.5%, and share growth surpassed 10% – a phenomenon that has continued through the first quarter of 2010,” said Brian Turner, investment services director for Southwest Corporate’s advisory services.
“It is difficult for a CEO to be fully satisfied with growth if it doesn’t include making loans to members,” said Turner. “Short of deleveraging capital formation by regulating share growth the rest of this year, most institutions will be faced with a greater dependence on investment portfolio income to support their existing revenue streams.”
Now in its seventh year, the quarterly Confidence Index measures economic expectations on a five-point scale, from negative to positive, on: 1) members’ current financial condition; 2) members’ financial condition six months from now; 3) the credit union’s current financial condition; 4) the credit union’s financial condition six months from now; 5) loan demand in six months; and, 6) share deposit growth in six months.
The survey goes to 1,293 credit union CEOs all over the country but is weighted toward those in Southwest Corporate’s core southwest states. This quarter 319 CEOs responded, for a response rate of 25%.
