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Catalyst CEO Survey: Declining Confidence in Members’ Finances
Monday, February 29, 2016 6:35 AM

Credit union CEOs reported declining confidence in their members’ current and future expected financial condition, according to the Catalyst Corporate's fourth quarter Credit Union CEO Confidence Index.

CEOs’ assessment of members’ current financial condition dropped nearly 7 points to 16.19 from the third quarter and 11.31 points year-over-year. Expectations for their members’ financial condition in six months slid 7.3 points to 18.8—down 13.01 points year-over-year.

Overall optimism decreased 1.87 points to 27.02, following a 2.57 decrease in the third quarter of 2015. CEOs cited potential interest-rate increases, the presidential election, and low oil prices, Catalyst reported.

"I tend to be on the cautious side when it comes to the economy, rates and confidence overall," said Shirley Cate, president/CEO, Providence FCU, Milwaukie, Ore. "While we ended the year fairly well, concern is still top of my mind with regard to consumers in Oregon and Washington.

"We serve employees of the healthcare industry in both states," Cate said, adding, "We see quite a bit of caution on the part of our members. Partnerships and mergers are happening across the region to help healthcare organizations of all sizes; however, it can be viewed as unstable to our members and potential members. Will their job or their family member's job be eliminated, or regionalized? Of course, this affects their confidence not only in their finances, but also in their communities."

Added Steven Houle, vice president of Catalyst Strategic Solutions' advisory service: “CEOs are very in tune with the changing economic landscape and the impact it will have on their members. Depending on geographical location, the impact will be different, but eventually the economic headwinds the U.S. faces will spread beyond regional pockets. Hopefully, it's short-lived."

Expectations increased from the previous quarter for both loan demand (1.64 points) and share deposit growth (3.47 points) over the next six months.

"Loan growth should continue to be strong, especially with the lower rates we’ve seen through January," Houle said. "The worst scenario for lending would be if rates were to jump significantly; that’s when members would pull back. As for share growth, expect the traditional first quarter inflows."