CU CEOs Pessimistic Over Economy

Register now

After rising briefly, credit union CEO confidence in the economy has again dropped, this time to the lowest level in the 18 months the survey has been conducted by Southwest Corporate FCU. The quarterly survey found that CEOs feel the current financial condition at their credit union has declined, and that a growing number have a negative outlook on their credit union's financial condition six months from now.

Results of the quarterly Credit Union CEO Confidence survey conducted by Southwest Corporate Federal Credit Union are in line with a similar dramatic fall in consumer confidence as reported by the Conference Board's Consumer Confidence Index. The Conference Board's index dropped to its lowest level since October 2003 and reflected how recent behavior of gasoline and heating oil prices have outweighed any other economic news for consumers.

The CU CEO Confidence Index dropped to 30.57 in the September report-down from 37.26 as measured in June. The CU CEO Confidence Index is a compilation of responses measuring credit union CEO's feelings on six key issues: members' current financial conditions; credit union's current financial condition; members' financial condition six months from now; credit union's financial condition six months from now; loan demand at the credit union in six months, and share deposit growth at the credit union in six months

Southwest Corporate reported that measurements showed a decrease across the board, with the exception of loan demand at credit unions six months from now. That number grew modestly from 30.09 in June to 30.13 in September. Expectation for share deposit growth reflected the sharpest decline-falling from 19.50 in June to 7.62 in September, Southwest Corporate reported. The survey asks respondents to numerically rate their confidence in the economy on a 1-100 scale, and is based on responses from 152 CEOs.

"The strong loan growth brought on by the auto manufacturer's employee discount program has enabled many credit unions to reach their annual loan growth targets four months before the end of the year. I would imagine that many managers aren't expecting to retain third quarter growth rates over the next six months," said Brian Turner, manager of advisory services for Southwest Corporate's Investment Service division. Turner noted that there also continues to be upward pressure on cost of funds.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER