The report measures credit union CEOs' feelings on the financial condition of the credit union and its members today and six months from now, as well as expectations for loan demand and share deposit growth in six months.

CEO assessment of members' current financial condition dropped more than six points from last quarter, but outlook figures six months from now were even more gloomy, registering below zero (negative 4.85) for the first time since the survey's inception nearly five years ago.

Credit unions' assessment of their own financial condition dipped almost four points from April 2008. CEOs apparently remain hopeful, however, registering their financial condition in six months with a modest uptick, to 37.22.

Survey respondents also anticipate further slowing of share deposit growth and a slight rise in loan demand over the next six months.

"Credit union CEOs obviously are beginning to perceive that higher gasoline and food prices could put a dent in many members' pocketbooks," said Brian Turner, Southwest Corporate Investment Services' director of advisory services. "Moreover, a struggling economy does not necessarily boost member loan demand, so credit union managers, already experiencing moderate growth, have a more pessimistic outlook for the remainder of 2008."

Economic downturns have credit unions with manufacturing based FOMs feeling the most negative, Turner said. The numbers also vary geographically, with the South and Midwest faring much better than Upper East and Western Coastal regions.

Issa Stephan, president and CEO of the $164 million First Financial Federal Credit Union, said his experience coincides with the survey results.

"Members are very concerned about their ability to keep up with the increasing costs of food and energy," Stephan said. "As a result, we have seen an increase in delinquencies and slow pays on credit cards. They've really spiked the last 30 to 60 days."

"We have also seen an increase in mortgage refinance applications (80% of total mortgage loan applications), but our approval rate is only about 25% because of negative equity positions," he said.

First Financial works to assist members who do not qualify and recently received favorable press for helping a family facing foreclosure to refinance an adjustable-rate mortgage with another lender.

"With new applicants, we've begun running a quick AVM [automated valuation model] on the value of the house to see if it's in the ballpark before we spend a lot of time on paperwork." Stephan added, "I don't expect any big changes in the near future, not even right after the election."

Turner did offer credit unions some good news.

"Even though credit union mortgage delinquency rates have risen slightly, they pale in comparison to the overall mortgage sector," he said. "This also rings true for credit union consumer loans. Overall, credit unions continue to fare very well in comparison to the financial markets--a fact duly noted by our members."

Survey responses numbered 227, the highest number of respondents since the survey's inception, out of 845 CEOs polled, for a 27% response rate. Additional details, including survey historical data, are available at Southwest Corporate's website: www.swcorp.org.

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