The National Association of Federally-Insured Credit Unions (NAFCU) released its first-ever Credit Union Sentiment Index this week, which shows optimism about continued loan and membership growth, but concerns about regulation.
The index is based on responses to eight questions addressing growth and earnings outlook, lending conditions and regulatory burden. The index can range from 0 to 100; a score over 50 indicates a generally positive or optimistic outlook.
The overall index from the first survey is 58.3.
“The prolonged era of robust growth is reflective of credit unions’ prudent business model, which allowed for a speedier recovery from the financial crisis, and the appeal of the not-for-profit, cooperative model as an alternative to big banks,” the index noted.
Credit union respondents were most optimistic about growth, scoring it at 73. The score for earnings outlook was also high at 70. Though credit union return on assets has been on a “mild downward trend,” according the index, respondents were positive when asked about their earnings conditions. The biggest reason for respondents’ earnings outlook was their economic outlook, followed by loan demand and interest rate outlook.
The lending outlook score was also 70. The lending component score is an average of two sub-components: loan demand (68) and applicant quality (71).
However, the score for regulations was just 20. The regulation index component is an average of two subcomponents: the perception of current regulatory burden versus one year ago (18) and the expected change in regulatory burden one year from now (22).