PLANO, Texas (11/26/13)--Credit union CEOs' confidence in the economy fell in the third quarter, according to a survey conducted by Catalyst Corporate FCU.
The Plano, Texas-based wholesale cooperative financial institution's CEO confidence index fell to 24.02, from 27.46 in the second quarter.
Measurements of credit union CEOs' assessment of present conditions and future expectations fell to 23.42 and 24.32--from 25.44 and 28.48, respectively.
The increase in pessimism can most likely be attributed to the partial government shutdown in October, another round of congressional fiscal negotiations anticipated in the new year and weak economic growth, said the corporate.
"A lot hangs in the balance with the U.S. government," one CEO who responded to the survey commented. "With the weak leadership in D.C., it could all go south quickly and not be good for the consumer."
Bob Steensma, CEO of the $256 million-asset Dothan, Ala.-based Five Star CU agreed that the dysfunction in Washington hangs over credit unions, but noted generally that the economy is "not what we were hoping for, especially heading into the end of the year, when real estate sales are traditionally slower and loans are fewer."
The third quarter survey indicated that credit union CEOs are more concerned about individual members' well-being than their own financial institution's health. An index measuring members' current financial conditions dropped to 16.59 from 21.14 in the second quarter, while a gauge of credit unions' financial condition actually ticked upward, to 30.32 from 29.80.
CEOs' expectations for members' financial condition in six months also plummeted, to 21.27 from 28.17, while expectations for their own credit union's financial situation in that time dropped to 33.56 from 35.28.
Indexes predicting both loan demand and share deposit growth in six months also receded in the third quarter by about four points.
Catalyst Strategic Solutions' Director and Chief Strategist Brian Turner pointed out that while credit unions with over $500 million in assets saw their loan portfolios balloon by over 9% in the third quarter, these larger institutions account for only 7% of all credit unions.
"The industry overall is experiencing a 5.5% increase, indicating the remaining 93% of credit unions have been more challenged in attracting loans," he said.
"The survey appears to represent the thoughts of the '93%,'" Turner added. "Whereas the outlook for consumer spending next year is positive, loan production will continue to challenge most credit unions."
The survey, which contains six questions, has been conducted quarterly since 2004. This quarter, it was sent on Oct. 10 to 1,343 credit union CEOs around the country, with 224 responding by the Oct. 31 deadline.
Catalyst Corporate FCU serves more than 1,200 member credit unions.