ARLINGTON, Va.—CU leaders’ outlook for the future remains muted, according to a new report from NAFCU.
The trade association’s latest Economic & CU Monitor includes results from its Credit Union Sentiment Index (CUSI), an index based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden, which saw a moderate increase in January. The three-month moving average, however, hit a new low, according to NAFCU.
A mix of responses indicated greater optimism for lending and regulatory burden, but did not translate into stronger readings for growth and earnings. The earning index plunged during the month as a result of concerns over interest rates and rising labor costs, NAFCU said.
The Economic & CU Monitor also found just 16.7% of respondents were more likely to consider purchasing subordinated debt under new enhanced disclosure requirements. As CUToday.info reported.
the NCUA board has moved forward with a proposed rule that would expand credit unions' ability to issue subordinated debt during its January meeting.
How Rule Works
Under the proposed rule, low-income credit unions, complex credit unions, and newly-formed credit unions would be allowed to issue subordinated debt for the purpose of regulatory capital treatment, albeit with more rigorous requirements for new offerings. As a form of regulatory capital, subordinated debt would contribute to a credit union’s risk-based net worth ratio under the RBC rule but would not count towards net worth.
Of note, respondents were split on whether the proposed limits should be modified or eliminated, while 44% of respondents indicated they were unsure whether the limit was strictly necessary.