Credit Union Confidence On the Mend
Credit unions’ confidence in the economy rebounded in the final months of 2013, according to results of Catalyst Corporate Federal Credit Union's Fourth Quarter 2013 Credit Union CEO Confidence Survey.
Now in its 10th year, the survey indicated that the confidence of CEOs polled rose a full three points over third quarter results, said the Plano, Texas-based corporate.
The six-question survey, sent in January to 1,330 credit union CEOs nationwide, enabled respondents to register their confidence levels in six key areas:
Current financial condition of members
Current financial condition of the credit union
Anticipated financial condition of members in six months
Anticipated financial condition of the 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 during fourth 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 the previous quarter's results by 1.99 points and 4.65 points, respectively. In addition, CEOs’ outlook for loan demand jumped by more than six points, for the largest increase in the fourth quarter survey.
In 2004, when the survey was first introduced, U.S. GDP was 4% and unemployment was 5.5%, The CU CEO Confidence Index back then registered almost 20 points higher than it does today.
Jeanne Walker, CEO of the $78 million Southern Federal Credit Union in Houston, participated in the first survey as well as the current one. In 2004, Walker expressed concerns regarding employment levels and the ability of members to handle additional debt.
In the current survey, Walker remained concerned about unemployment, but was happy her members, who are concentrated in the oil industry, are able to find jobs plentiful now. She is still concerned about debt, but her members’ higher income levels also mean they spend more, which has been good for lending.
“Our members’ finances appear to be getting better, but we had more bankruptcies last year than usual,” Walker said. “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 were equal to or lower than the average for the past four quarters.
“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,” said Brian Turner, director and chief strategist for Catalyst Strategic Solutions, part of Catalyst Corporate.