PLANO, Texas—Credit union CEOs are feeling less certain about their own institutions’ current financial condition than they have since 2008, according to Catalyst Corporate Federal Credit Union’s First Quarter 2015 Credit Union CEO Confidence Survey.
The assessment, one of six measured in the survey, retreated more than seven percentage points – from 39.55 to 32.16 – from the previous quarter, according to Catalyst Corporate (see chart below).
“I think the uncertainty of when the Fed will raise rates, and by how much, has many in the market somewhat apprehensive,” Steven Houle, vice president of Catalyst Strategic Solutions’ Advisory Service, said in a released statement. “Obviously, when the Fed does increase rates, higher costs for mortgages and car loans likely will follow. Considering how fragile the economic recovery is already, the big question on the minds of credit union CEOs is how consumers and credit union members will react. What will be their appetite for borrowing?”
Catalyst Corporate found confidence was down across the board in the current survey with regard to credit union and member financial condition, although significantly less in other categories compared to the 7.39 point drop for “credit union current financial condition.” The survey’s overall confidence index fell from 32.64 in the fourth quarter 2014 survey to 30.22 in the most recent survey, the lowest mark in five quarters.
Interestingly, noted Catalyst Corporate, CEO confidence was lower for respondents from credit unions in the higher asset categories and higher for credit unions in the lower asset categories. Expectations for share deposit growth and loan demand each moved less than one percentage point from the previous quarter.
“Smaller credit unions may have a better sense of their membership activity and thus feel more confident in what they are seeing,” Debra McConnell, president/CEO of the $21.5-million Alhambra Credit Union in Phoenix, said in a statement released by Catalyst Corporate. “I agree that all credit unions are concerned about when the Fed will raise rates and by how much. Our members are feeling better about the economy and are making purchases that they have put off for some time. No one knows what members will do when rates start rising, but if there is a gradual increase, borrowing may continue since consumers have postponed those needed purchases.”
Catalyst Corporate’s quarterly confidence survey – started a decade ago – was sent to 2,159 credit union CEOs across the nation in April 2014; 200 credit union professionals responded, for a response rate of 9.26%.
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