"With all the attention lately from the housing slowdown, subprime mortgages and low loan demand, it would be reasonable to expect some apprehension from credit unions, particularly with CEOs' concerns pertaining to their members' present financial condition, said Brian Turner, manager of Southwest Corporate's Investment Advisory Service. "This is supported by rising overall consumer debt over the past few years, although consumer installment debt service ratios have been on the decline for more than three years. Thankfully, we continue to have a very strong labor market, and overall wages have remained at relatively strong levels."

Turner pointed out that weak loan and share growth during the first half of the year has led many to drop their expectations for the remainder of 2007. The index revealed that expectation for loan demand fell from 29.69 in July to 23.51 in September. Expectation for share growth took an even greater dive, with September's tick mark at 15.30, down from 23.75 in July.

Barbara Stephens, president/CEO of $26 million Houston Municipal Employees FCU, doesn't have high expectations for growth before the end of this year.

"Our members are just having problems making ends meet," Stephens said. "These are not people who have lost their jobs or typically over spend. The dollar just seems to be getting more difficult to stretch. We have had several meetings to see how we can help our members during this difficult time, but I don't anticipate significant changes any time soon."

Pete Gates of $730 million Michigan Schools and Government Credit Union agrees. While his credit union's financial performance is at about 90% to 95% of last year's, job losses and an overall poor economy are affecting his members.

"Our members' status, if you will, has declined and is not really projected to improve in the near future," Gates said. "Keep in mind, though, that our credit union is in Michigan, and our economy is pretty much 50th in the nation."

Even with apparent slow downs this year, there are some positive economic indicators, Turner offered. First-lien mortgage originations have grown 12%, despite the present housing slow down and, in the absence of "any meaningful auto manufacturer incentive this year," vehicle loans are still up 2.5%, he said. Meanwhile, share growth is running at a 6.0% pace, which is slightly faster than last year's 4.7% pace.

"There's still a lot to be thankful for in credit union land," Turner said. "There's still growth in the industry, we're very well capitalized, loan quality is stellar and membership continues to grow at a 1.5 percent to 2.0 percent annual pace. Most credit unions have enough asset duration built into their balance sheets to benefit from further declining rates–if it were to occur–but also retain present cash flow structures to benefit from the steeper treasury curve and wider marginal spreads."

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