Retail Corporate Credit Unions' Assets Reach Highest Levels Ever

The thirty-three retail corporate credit unions (excluding US Central) managed $66.5 billion in total assets at the end of June. This total is a $10 billion increase versus one year earlier for an overall growth rate of 15%. The merger of South Dakota based Corpstar into Empire Corporate during June reduced by one the overall number of retail corporates from a year ago.

 
 

The thirty-three ''retail corporate credit unions'' (excluding US Central) managed $66.5 billion in total assets at the end of June. This total is a $10 billion increase versus one year earlier for an overall growth rate of 15%. The merger of South Dakota based Corpstar into Empire Corporate during June reduced by one the overall number of retail corporates from a year ago.

While total assets increased over the prior 12 months, the percentage of total credit union investments in corporates fell from 35.03% to 32% at the end of June 2002. Total credit union investments grew 23.3% from $149.7 billion to $184.6 billion in this same period. This growth caused total investments in corporates to increase even though there was a 3% decline in their market share.

As shown in the table below, 32% is the second highest market share total of the past six years:

Date
Corporates % share total
cu investments
June 97
25.5%
June 98
27.7%
June 99
27.4%
June 00
26.4%
June 01
35.0%
June 02
32.0%


The primary reason for the drop compared with midyear 2001 is that credit unions, seeking higher yield, have reduced the amount of funds in shorter term maturities by buying longer term securities such as Agency debt.

Operating Results Sound

The collective operating performance of the retail corporates is very stable. Return-on- assets for the month of June of 23 basis points (bp) is the same as the year-to-date return.

Collective operating expenses in June averaged 45 bp of daily average net assets (DANA) of which 25bp was offset by non-interest income from services such as item processing and from gains on sale of investments. Total operating expenses in June range from a low of 18 basis points to a high of 98 bp for corporates over $1 billion in assets.

Total reserves and undivided earnings (RUDE) at midyear was $1.7 billion and all capital, including paid-in capital and membership shares, was $4.2 billion. The capital-to-assets ratio at June 30, using the 12-month trailing DANA, is 7.23%. As shown in the graph below the total capital ratio as a percentage of the 12-month DANA peaked at 9.8% in January 2001. In that same quarter of 2001 monthly share growth increased dramatically with a peak gain of 28% just one month--March 2001.

As month-to-month share growth has declined to single digit monthly increases or outflows, the capital ratio has also stabilized. As shown in the graph above the ratio has begun to increase from its low point of 6.97% in March 2002.

The overall performance trends portray a very sound corporate system. Next week we will look at the trend in the percentage of investments that the retail corporates hold in US Central.



All of the data and graphs in the above are produced by Corporate Peer-to-Peer, a software database program that contains complete data for all corporate credit unions. A complete analysis of the corporate network is included in the 2003 Credit Union Directory which will be published in early November.

 

 

 

Sept. 16, 2002


Comments

 
 
 

No comments have been posted yet. Be the first one.