The report measures credit union CEOs' feelings on the financialcondition of the credit union and its members today and six monthsfrom now, as well as expectations for loan demand and share depositgrowth in six months.

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

Credit unions' assessment of their own financial conditiondipped almost four points from April 2008. CEOs apparently remainhopeful, however, registering their financial condition in sixmonths with a modest uptick, to 37.22.

Survey respondents also anticipate further slowing of sharedeposit growth and a slight rise in loan demand over the next sixmonths.

"Credit union CEOs obviously are beginning to perceive thathigher gasoline and food prices could put a dent in many members'pocketbooks," said Brian Turner, Southwest Corporate InvestmentServices' director of advisory services. "Moreover, a strugglingeconomy does not necessarily boost member loan demand, so creditunion managers, already experiencing moderate growth, have a morepessimistic outlook for the remainder of 2008."

Economic downturns have credit unions with manufacturing basedFOMs feeling the most negative, Turner said. The numbers also varygeographically, with the South and Midwest faring much better thanUpper East and Western Coastal regions.

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

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

"We have also seen an increase in mortgage refinanceapplications (80% of total mortgage loan applications), but ourapproval rate is only about 25% because of negative equitypositions," he said.

First Financial works to assist members who do not qualify andrecently received favorable press for helping a family facingforeclosure to refinance an adjustable-rate mortgage with anotherlender.

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

Turner did offer credit unions some good news.

"Even though credit union mortgage delinquency rates have risenslightly, 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 tothe financial markets--a fact duly noted by our members."

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

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