PLANO, Texas — Despite burgeoning loan growth and other signs of a healthy CU system, optimism by credit union CEOs declined slightly in the third quarter, according to Catalyst Corporate FCU's latest Credit Union CEO Confidence Survey.

Credit union CEO confidence in the economy had increased for three consecutive quarters, reaching 32.94 in the second quarter of 2014. Catalyst Corp said its Credit Union CEO Confidence Index now stands at 31.29, which still is the highest in seven years — with the exception of last quarter's index.

The Present Situation Index declined to 31.57 from 32.76 in Q2, while the Expectations Index weakened to 31.15 from 33.03.

According to Steven Houle, Director of Catalyst Strategic Solutions' Advisory Service, "Some of the weakening in confidence could be attributed to the uncertainty created by the recent Ebola scare in the U.S.

Houle said other likely factors include continued political tension around the globe, "particularly in the Ukraine and Russia, and the economic slowdown in Europe and Asia."

Slides In Multiple Categories

Catalyst Corp reported CEOs' outlook on the economy retreated across the board, regarding both the financial condition of their credit unions and the financial condition of their members.

Assessment of their institutions' current condition declined slightly to 37.23 from 37.61, while expectations for their institutions' condition over the next six months experienced a greater drop to 42.80 from 45.64 the previous quarter. CEOs' assessment of their members' current financial condition fell to 25.97 from 27.95, while expectations for members' future financial condition dropped more than four points to 29.53 from 33.64 — the largest decline in the recent survey.

David Green, president and CEO of $630 million Contra Costa Federal Credit Union in Martinez, California, said his sentiments mirror the survey results.

"There is a disconnect between Washington economists who only look at the numbers and CEOs who look at their individual members' financial conditions," Green said in a prepared statement. "A Google employee, for example, with great salary and benefits offsets a long-term unemployed person when only looking at the gross numbers. On the other hand, we see members losing their purchasing power every day, because their salaries are not keeping up with higher prices, especially with healthcare and technology products, such as phones and tablets."

Higher Loan Demand Expected

On the plus side, the survey found CEO expectations for loan demand increased by almost two points over the previous quarter, while expectations for share deposit growth fell by 2.66 points.

Catalyst Corporate's quarterly confidence survey — started a decade ago — was sent to 2,247 credit union CEOs across the nation in October 2014; 233 credit union professionals responded, for a response rate of 10.37%.

Using a scale ranging from negative (-100) to positive (+100), respondents registered their confidence levels in six key areas to create an overall index, as well as a snapshot of present-day feelings and future expectations. The areas CEOs were asked to evaluate are:

  • Current financial condition of members
  • Current financial condition of credit union
  • Anticipated financial condition of members in six months
  • Anticipated financial condition of 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

Additional details, including graphs with the survey's historical data, are available at www.catalystcorp.org/surveys.aspx.

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