The fragility of the economy's recovery and the FederalReserve's reluctance to raise rates has knocked credit union CEOs'confidence in their institutions' future down a couple notches,according to Catalyst Corporate Federal Credit Union's firstquarter 2015 Credit Union CEO Confidence Survey.

The survey's overall confidence index fell from 32.64in Q4 2014 survey to 30.22 in the most recent survey, the lowestmark in five quarters. The assessment regarding credit union andmember financial condition, one of six measured in the survey,dropped from 39.55 to 32.16 – a decline of 7.39 percentage points –from the previous quarter.

“I think the uncertainty of when the Fed will raise rates, andby how much, has many in the market somewhat apprehensive,”Catalyst Strategic Solutions Advisory Service Vice PresidentSteven Houle said. “Obviously, when the Fed does increaserates, higher costs for mortgages and car loans likely will follow.Considering how fragile the economic recovery is already, the bigquestion on the minds of credit union CEOs is how consumers andcredit union members will react. What will be their appetitefor borrowing?”

Catalyst Corporate's quarterly confidence survey – started adecade ago – was sent to 2,159 credit union CEOs across the nationin April 2014. Of that number, 200 credit unions responded, a 9.26%response rate.

Using a scale ranging from negative (-100) to positive (+100),respondents registered their confidence levels in six key areas tocreate an overall index, as well as a snapshot of present-dayfeelings and future expectations.

The areas CEOs evaluated included current financial condition ofmembers and the credit union, anticipated financial condition ofmembers and the credit union in six months, anticipated creditunion loan demand in six months and anticipated credit union sharedeposit growth in six months.

Interestingly, CEO confidence ranked lower among respondentsfrom higher-asset credit unions than those from lower-assetinstitutions. Share deposit growth and loan demand expectationseach moved less than one percentage point from the previousquarter.

“Smaller credit unions may have a better sense of theirmembership activity and, thus, feel more confident in what they areseeing,” Debra McConnell, president/CEO of the $21.5 million inassets Alhambra Credit Union in Phoenix, Ariz., said. “No one knowswhat members will do when rates start rising, but if there is agradual increase, borrowing may continue since consumers havepostponed those needed purchases.”