PLANO, Texas-Credit union CEOs are feeling better about the bottom lines of their members, but are not as optimistic when it comes to their own credit unions.
In the latest CU CEO Confidence Survey released by Catalyst Corporate FCU and taken during the first quarter of this year, CEO confidence in their members' current financial condition and future financial condition (six months from now) increased by 4.13 points and 1.17 points, respectively, over Q4 2012.
However, CEO confidence in their own institution's financial condition-both current and future-decreased by 1.99 points and .18 points, respectively, over marks from the previous quarter, Catalyst Corporate reported.
"Credit union executives see member finances improving as a result of declining unemployment, a protracted low interest rate environment and practically no inflation," said Brian Turner, Catalyst Strategic Solutions' director and chief strategist. "Although wages remain flat and job growth continues to be weak-keeping job security a concern-the consumer has been branching out a little more with their spending, which certainly helps economic growth.
"On the other hand," Turner said, "tight marginal spreads between asset yields and cost of funds continue to challenge most credit unions' net interest margins. Only two NCUA peer groups-representing just 31% of total credit unions-experienced loan growth in 2012. That means the remaining 69% have elevated surplus cash and a greater reliance on investment portfolio income to replicate revenue streams-a difficult task to accomplish in this environment. With an outlook that reflects a continuation of the low rate environment for two to three more years, CEOs don't see these challenges for their institutions going away anytime soon."
The overall Confidence Index in the most recent survey inched up by just half a point over 4th Quarter 2012. Similarly, CEO expectations for loan demand and share deposit growth saw relatively little movement from the previous report. Started in 2004, Catalyst Corporate's quarterly survey measures CEO confidence in the economy from very negative to very positive (-100 to +100) in six key areas.
