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CU CEO Confidence in Economy Rebounds
Wednesday, February 12, 2014 7:00 AM

Credit union CEOs’ confidence in the economy appears to have rebounded to the level experienced prior to the federal government shutdown in October 2013, according to results of Catalyst Corporate FCU’s Fourth Quarter 2013 Credit Union CEO Confidence Survey. The overall Confidence Index – which Catalyst Corporate has now tracked for a full decade – rose more than three points over the third quarter survey to 27.04, approximating levels recorded for the first and second quarters of 2013.

The six-question survey was sent to 1,330 credit union CEOs across the nation in January; 213 responded, for a response rate of 16.02 percent. Using a scale ranging from negative (-100) to positive (+100), respondents registered their confidence levels in six key areas to create an overall index, as well as a snapshot of present-day feelings and future expectations. The areas CEOs were asked to evaluate are:

  • Current financial condition of members
  • Current financial condition of credit union
  • Anticipated financial condition of members in six months
  • Anticipated financial condition of credit union in six months
  • Anticipated loan demand at the credit union in six months
  • Anticipated share deposit growth at the credit union in six months

All CEO assessments improved this quarter, with the exception of expectations for share deposit growth, which remained static. CEOs’ optimism regarding their members’ current and future financial conditions improved over last quarter, rising 2.19 points and 3.38 points, respectively. Analysis of their own institution’s current and future financial conditions also rose over last quarter’s results by 1.99 points and 4.65 points, respectively. In addition, CEOs’ outlook for loan demand jumped by more than 6 points, for the largest increase in the fourth quarter survey.

This year marks the 10th anniversary of the launch of the confidence survey. Looking back to 2004, U.S. GDP was around 4 percent, unemployment was around 5.5 percent in 2004, and the CU CEO Confidence Index back then registered almost 20 points higher than it does today.

Jeanne Walker, CEO of Southern FCU in Houston, participated in that first survey a decade ago. At the time, Walker expressed concerns regarding employment levels and the ability of members to handle additional debt. Here’s what she said then: “We 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.”

Walker also participated in Catalyst Corporate’s most recent survey. She said that although unemployment is a national concern, her members, who are concentrated in the oil industry, are fortunate to find jobs plentiful now. Walker is still concerned about debt, as she was a decade ago. She explained that many of the credit union’s members bring in large incomes, but they also spend a lot, which has been good for lending.

“Our members’ finances appear to be getting better,” she said, “but we had more bankruptcies last year than usual. Thankfully, charge-offs are low. Our members are loyal, and the majority do repay.”

Only two survey measurements reflected new highs for the year – loan demand and credit union future financial condition – while the remaining measurements remained at or even lower than the average for the past four quarters.

Brian Turner, director and chief strategist for Catalyst Strategic Solutions, offered his perspective: “Mortgage rates are about 50 to 100 basis points higher than a year ago, helping to increase mortgage yields, and auto sales surpassed the coveted 16 million-annual-units level in 2013, helping to increase loan demand for the industry. This would account for the improvement seen in the survey related to loan demand and credit unions’ future financial conditions. Interest rates are not expected to be significantly higher during 2014, loan demand should improve, but most likely will be concentrated with the larger credit unions, and share growth should be at the most, moderately better.”

Additional details, including graphs with the survey’s historical data, are available at www.catalystcorp.org/surveys.aspx.