PLANO, Texas – Credit union CEOs’ expectations for loan demand rose in the third quarter to their highest point in three years, according to Catalyst Corporate FCU’s most recent quarterly CEO Confidence Survey.
Loan expectations have been trending upward in the survey since first quarter 2011, when they registered negative 1.02, but the most recent mark of 19.18 was a jump of more than six points from the previous quarter. The last time loan expectations registered this high was third quarter 2009, at 20.65.
CUNA data shows loan growth for the third quarter was 1.3%, compared to 1.8% in the second quarter and slightly negative for the first quarter – making 3.1% growth for the first nine months of the year. That compares to less than 1% growth for the first three quarters last year, and negative 1% for the same period in 2010.
Still, overall confidence among CEOs remained little changed, ticking up to 24.03 from 23.25. Survey data suggested CEOs expect both the financial condition of their institutions – which showed an overall decline in confidence from last quarter’s survey – and the financial condition of their members – which showed an overall increase from last quarter’s survey – to be better in six months than today.
“With loan growth up about 4% through the first three quarters of 2012, it is not surprising that many CEOs are encouraged,” said Brian Turner, Catalyst Strategic Solutions director/chief strategist. “Peer data suggests growth might be limited to larger credit unions, which have greater perceived risk appetites and capacity.”
“Still,” Turner said, “most credit unions with assets greater than $100 million did experience an increase in non-revolving credit this year. Loan growth in 2012 may not compare historically, but it is welcome news compared to last year’s 1.2% growth and 2010’s 1.4% decline.”
In other survey results, credit union CEOs indicated they believe share deposit growth will be flat over the next six months.
Begun in 2004, Catalyst (then known as Southwest) Corporate’s quarterly survey measures CEO confidence in the economy from very negative to very positive (-100 to +100) in six key areas. Questions are designed to capture a snapshot of CEOs’ present state of mind, as well as future expectations.
The areas CEOs are asked to evaluate are:
• 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
Questionnaires for the most recent survey were sent to 1,445 CEOs of Catalyst Corporate member credit unions in October. Responses numbered 283 for a response rate of 19.58%.