First Look Credit Unions Find Investments Growing, Yields Falling

With interest rates low and economic uncertainty high, shares continue to pour into credit unions in the 1st quarter of 2003. The preliminary data, from First Look credit unions representing approximately 31% of the industry's assets, show shares growing 5.2% and investments jumping 13.2% in the first quarter alone.

 
 

With interest rates low and economic uncertainty high, shares continue to pour into credit unions in the 1st quarter of 2003. The preliminary data, from First Look credit unions representing approximately 31% of the industry's assets, show shares growing 5.2% and investments jumping 13.2% in the first quarter alone.

Callahan & Associates' First Look project is a free service through CreditUnions.com where credit unions can access industry trends and individual call reports well before the information is released by NCUA. So far, 959 credit unions holding a combined $184 billion in assets have submitted their reports. To participate, you simply need to email your 5300 call report file (5300Data-CharterNumber.XML) to 5300@callahan.com.

Since loan growth has remained stable during this build-up of liquidity, credit unions have been forced to move their excess funds into lower-paying investments. From 1995-2001, the ratio of yield on loans to yield on investments stayed in the 1.50-1.75 range (see below). However, starting in the first quarter of 2002, reported investment yields at credit unions began to drop, pushing this ratio from 1.64 at 4th quarter 2001, to 2.22 in the 1st quarter of 2002. The ratio stayed above 2 throughout 2002, and the First Look data shows the ratio experiencing another first quarter-jump this year to 2.56, as investment yields decline even further.

 

 

 

May 12, 2003


Comments

 
 
 
  • You hit the nail right on the head with this story
    Anonymous