Credit union CEOs generally feel good about the condition of their credit unions today, and are expecting conditions to improve even more over the next six months.
That sentiment is based on results of the initial Credit Union CEO Confidence Index, produced in January by Southwest Corporate Federal Credit Union.
Responses from a nationwide sampling of 370 credit union CEOs were used to gauge sentiment regarding how the current economy is affecting credit unions and their members, and what those CEOs are forecasting for the economy six months from now.
According to Southwest Corporate, compilations of the responses were used to create a CEO Confidence Index, loosely patterned on the well-publicized surveys to determine U.S. consumer confidence. Based on the CEO responses, the index for current credit union conditions was set at 63.8-with 100 (positive) and 0 (neutral) and -100 (negative). CEO responses placed the index for their credit union's financial conditions six months from now at 65.1.
While credit union CEOs have an upbeat view about how their institutions are faring in the present economy, they believe their members are having a tougher time," Southwest Corporate said.
Some Worries Expressed
Worries about employment levels and the ability of members to handle additional debt may be fueling a low index score provided by the credit union CEOs, according to Jeanne Walker, who is CEO of Southern Federal Credit Union in Houston.
CEO responses to the survey placed the index of their member's current financial condition at 23.1. CEOs expect members will experience steady improvement, and set the index for future conditions at 38.6. "Like other CEOs, my credit union is well-capitalized and I feel pretty good about the future," Walker said. "We are loaned out."
However, Walker worries if Americans are generally carrying too much debt. "We've had more charge-offs and repos last year than normal and I worry about what may happen to a lot of people when interest rates begin to go back up."
The survey was sent to 370 credit union CEOs across the nation in January, with more than 30% responding.
CEOs were invited to report their sentiments about the economy in terms of positive, neutral or negative to the following questions: What is your assessment of your credit union's current financial condition?; What is your expectation of your credit union's financial condition six months from now?; What is your assessment of your members' current financial condition?, and What is your expectation of your members' financial condition six months from now?
"Because of the significant response rate, we think this index creates a good 'optimism barometer' for current conditions and an indication of credit union CEOs' expectations of future conditions," according to Bob Rehm, SVP of Marketing and Sales for Southwest Corporate.
The $7-billion Southwest Corporate said comparison figures will be available in April when the second quarter survey is conducted. Southwest Corporate is planning to measure CEO expectations quarterly during 2004 and will then conduct this survey on a monthly basis beginning in 2005.
"It will be interesting over time to see how closely aligned the credit union specific index is when measured against attitudes revealed in U.S. consumer confidence surveys," Rehm said. "However, the real value of such an index may be the ongoing ability to gain insight from the people who know the business best-credit union CEOs."
