CU CEOs Not Buying Yellen's Optimism: Catalyst
November 18, 2015 11:00 AM
Credit union leaders expressed less confidence in financial conditions in Q3, according to Catalyst Corporate's Third Quarter Credit Union CEO Confidence Survey.
Present Situation Index
Catalyst noted the results contradicted recent statements by Federal Reserve Chair Janet Yellen that the U.S. economy is "performing well" and that an interest rate move in December is a "live possibility."
CU CEO Confidence Index
The overall confidence index fell 2.57 points from the previous quarter, the corporate CU reported, with every survey category but one losing ground.
Members' Current Financial Condition
The largest quarterly declines in CEO confidence related to their members' financial condition. Optimism regarding Members' Current Financial Condition slid almost four (3.91) points to 23.18 quarter-over-quarter. Similarly, CEO expectations for their Members' Financial Condition in Six Months retreated 3.56 points to 26.10 in the most recent survey.
Members' Financial Condition in 6 Months
"The decline in confidence related to members' financial condition surprises me," Steven Houle, vice president of Catalyst Strategic Solutions' Advisory Service, said in a statement. "Household wealth continues to improve when considering home values and the stock market," he continued, noting that according to the S&P/Case-Shiller National Home Price Index, the value of existing family homes has been rising at an annual rate of 6.3% since 2012, and the stock market has recovered nicely since the middle of August.
Loan Demand at Credit Union in 6 Months
"I would have to think this sentiment might be short-lived, especially after Friday's strong nonfarm payroll report, which reported job gains of 271,000," Houle said. "Generally speaking, I think credit unions will finish 2015 with very good earnings numbers, and should turn in much the same next year."
Credit Union's Financial Condition in 6 Months
CEO sentiment regarding expectations for their own Credit Union's Financial Condition in Six Months also dropped, although with less vigor than the outlook for their members, from 41.91 in the second quarter survey to 40.41 in the third quarter.
Credit Union's Current Financial Condition
The one positive change in the current survey was in CEOs' assessment of their Credit Union's Current Financial Condition. That gauge inched up ever-so-slightly quarter-over-quarter from 35.05 to 35.26.
Expectations Index
Expectations were down in the third quarter survey for both loan demand (by 2.07 points) and share deposit growth (by 4.47 points) over the next six months.
Share Deposit Growth at Credit Union in 6 Months
Catalyst Corporate's quarterly confidence survey started more than a decade ago was sent to 2,107 credit union CEOs across the nation in October 2015; 274 credit union professionals responded, for a response rate of 13%.
