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CU CEO Confidence Rises for Third Consecutive Quarter
Wednesday, August 20, 2014 6:40 AM

Catalyst Corporate FCU’s Credit Union CEO Confidence Index, which climbed to its highest level in six years in the first quarter, rose again in the second quarter of 2014 – the third consecutive quarterly increase. The Index now stands at 32.94, up from 30.32 in the first quarter of 2014. The Present Situation Index also increased to 32.76 from 29.47, while the Expectations Index rose to 33.03 from 30.75 in the first quarter.

CEOs are feeling better about their credit unions than they have in some time. The largest quarter-over-quarter increase in the most recent survey occurred in CEOs’ expectations for the financial condition of their credit unions. The percentage of CEOs expecting conditions to improve over the next six months increased to 45.64 from 39.16. Assessment of their institutions’ current condition also rose to 37.61 from 34.78

CEOs’ assessment of current financial condition and expectations for future financial condition of their members also rose in the current survey by 3.8 points and 3.44 points, respectively.

Expectations for loan demand remained virtually unchanged from the previous quarter. Expectations for share deposit growth declined to 23.27 from 24.15.

“Over the past three years, the industry has experienced unseasonal first quarter growth in consumer loan demand. More recently, with annual auto sales touching the 17 million-unit level – something that has not occurred since 2007 – credit unions have seen much-needed growth in consumer loans,” said Brian Turner, director and chief strategist for Catalyst Strategic Solutions.

“Unfortunately, the industry’s larger credit unions ($500 million and greater) continue to get the lion’s share of that growth. Credit unions under $500 million in assets are collectively experiencing a 12 percent decline.”

“Despite stagnant wage growth, credit unions can expect share growth to continue, albeit possibly at a slightly slower pace,” Turner said. “This should help to sustain manageable liquidity profiles, an important requirement for credit unions to navigate the transition into a potential new rate cycle in 2016.”

Catalyst Corporate’s quarterly confidence survey – started a decade ago – was sent to 2,253 credit union CEOs across the nation in July 2014; 220 credit union professionals responded, for a response rate of 9.76 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

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