DALLAS (7/1/09)--Southwest Corporate FCU’s most recent CU CEO Confidence Index did an about-face, rebounding 17 points from the all-time low recorded in the previous survey. The second quarter 2009 index registered 24.54 on a scale that ranges from -100 to +100. The jump to 24.54 compares with 7.90 in the first quarter of 2009. In the five-year history of the survey, CEO confidence reached its peak of 46.79 in the second quarter of 2004. The quarterly confidence index measures credit union CEOs’ feelings in six categories:
* Members’ current financial condition; * Members’ financial condition six months from now; * A credit union’s current financial condition; * A credit union’s financial condition six months from now; * Loan demand at a credit union in six months; and * Share deposit growth at a credit union in six months.
All six survey categories showed positive gains this quarter. The biggest was the 41-point vote of confidence that CEOs gave members’ current financial condition over last quarter. Their expectations for members’ financial condition six months from now, while somewhat tempered, still showed a 19-point quarterly increase. Credit unions were less optimistic about their own current financial condition, but did record marks 4.22 points above last quarter. Expectations for six months from now were better, reflecting a 22.78-point increase. “The survey mirrors other national and regional assessments,” said Brian Turner, Southwest Corporate’s director of advisory services. “Pockets of the country have experienced a decline in economic freefall, primarily as a result of stabilized home values, while others have seen slight improvement.” The improved outlook may be a “correction” of the dismal perception CEOs have had over the past few quarters as a result of declining margins, rising National Credit Union Shared Insurance Fund premiums and special assessment charges diluting their capitalization, Turner said. “So, whereas most of the CEOs renewed optimism comes from the hope that their institutions and the markets in general may have the worst behind them, let’s pray that it is not just post-traumatic stress syndrome,” Turner added. However, Turner noted signs that suggest the economy is beginning to improve, or at least not decline at the same rapid rate. “Consumers are paying off credit cards and deferring big ticket acquisitions to alleviate troublesome debt burdens,” he said. “This increases their disposable income, helps to save a few dollars along the way, and in turn, helps to stabilize credit union shares.” CEOs believe loan demand will improve in six months, as indicated by a 12.11-point increase in that metric, according to the survey. Expectations for share deposit growth in six months were up one point over last quarter’s results. “In southeast Texas, we’ve seen tremendous share growth the last 12 months,” said Jimmy Lackey, CEO of Education First FCU in Beaumont, Texas. “Loan demand has been very soft, so we’ve had to work to curb deposits. Delinquencies, while still low, are above our norm. Thankfully, we’re well-capitalized.” Lackey says the credit union will be better off in six months. “We’re not putting mortgages in the portfolio now, because rates below 5% are lower than we want to go,” he said. “Hopefully by the end of the year, the economy will improve, but it will probably be slower coming around this time.” “Regarding the members, I think people are doing what they should have been doing in the ’90s--saving and paying down debt,” Lackey added. “Loan demand will improve when consumers feel more confident about their jobs.” A record number of respondents--342--answered the survey, marking the highest level of participation in the five years the data has been gathered. The CU CEO Confidence Survey was sent to 1,344 credit union CEOs and generated a 25% response rate.