DALLAS – Credit union executives expressed rising optimism for the near-term for the second quarter in a row in Southwest Corporate FCU’s quarterly Credit Union CEO Confidence Survey.
The third quarter Confidence Index registered a 29.09, a 4.5-point increase over second-quarter results. The index represents a 21-point improvement over the survey's all-time low of just 7.9, recorded for the first quarter of 2009.
Despite challenges of the current economic environment, survey results suggested that credit unions have an overall positive outlook for their own institutions. Assessments of their financial condition now and six months from now climbed by 9 points and 2 points, respectively. Confidence in their members' financial condition now and in six months rose by 4 points and 5 points, respectively.
"Recent news that the economy appears to be stabilizing a bit may be a source of encouragement to credit union CEOs, especially those still shell-shocked by narrowing interest margins, rising insurance assessments and stabilization expenses. Having most of that behind us not only provides a sense of relief, but also helps us to focus on the future again," said Brian Turner, Southwest Corporate's Director of Advisory Services.
"Fears about the economy, particularly about jobs, have led consumers to curtail purchases of big-ticket items like new homes, cars and appliances, electing instead to reduce their debt burdens. This year alone, outstanding consumer credit has declined more than $103 billion, reducing the personal debt service ratio from 19% to 14% of disposable income," Turner said. "But we are starting to see signs of a consumer spending rebound, which eventually would lead to renewed loan growth and additional demand for products and services."
In fact, a 12-point increase from second-quarter to third-quarter survey results indicated credit union CEOs are anticipating a turnaround in loan demand over the next six months. Meanwhile, their expectations for share deposit growth the next six months dropped by four points.
The quarterly survey was mailed to 1328 credit union CEOs; 320 responded for a response rate of 24.10%. The survey measures CEO confidence in six categories: members' current financial condition; members' financial condition six months from now; credit union's current financial condition; 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.
