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CU System
CEOs confidence grim--SW Corporate survey
PLANO, Texas (1/14/10)--Credit union CEOs have never felt so grim about their current financial condition, according to Southwest Corporate FCU’s fourth quarter 2009 Credit Union CEO Confidence Survey. The corporate has conducted the survey for six years. CEOs rated their credit unions’ current condition at 17.84--the lowest in the survey’s history. The overall confidence index slid to 20.23 from 29.01 in third quarter 2009.
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Assessment of financial condition six months from now also dropped by 14 points. CEOs’ expectation for loan demand dropped 11 points and expectation for share deposit growth decreased by seven points from the third quarter. “Many CEOs continue to be shell-shocked from 2009 events, such as a 35% rise in loan delinquency, a modest 1.6% loan growth, diluted capital formation and net incomes that neared industry lows,” said Brian Turner, Southwest Corporate director of advisory services. “Most will continue to face these challenges through the first half of 2010, as cash tills overflow from rising shares the first quarter and loan demand remains weak in the summer. “Credit unions certainly have reason to be concerned about the first half of 2010, but I anticipate many will see their profiles begin to improve by the third quarter,” Turner added. “Short-term rates most likely will bounce around, but steepness in the yield will continue to provide opportunities to retain some profitability. Gaining ground, however, will require each institution to remain proactive in its share pricing and employment of cash.” The survey measured CEOs’ confidence based on region and asset size. CEOs from Midwestern states were the most confident (41.07) while New England-area CEOs were the least confident (16.67). CEOs from institutions with $2 million to $10 million in assets were the most confident (35.19) while CEOs from institutions with fewer than $2 million in assets were the least confident (25). Second-best confident was the largest asset group--more than $500 million--at 25.86. Eldon Ladd, CEO of the $12 million-asset SECU FCU, Richland, Wash., said he could understand the findings. SECU FCU closed a branch one year ago and had more in reserves than it thought it would need to weather the economy. But a write-down in investment losses, charges from the National Credit Union Administration and first-ever bankruptcies in second mortgages, caused Ladd to characterize the last two years as a “financial tsunami.” The quarterly survey, sent to 1,324 credit union CEOs had a response rate of 25.08%. It measures CEOs’ views in six categories. Other categories include members’ current financial condition, members’ financial condition six months from now, credit union loan demand in six months, and credit union share deposit growth in six months.


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