Share Drafts Drive Total Share Growth in the 1st Quarter

While share growth outpaced loan growth in the first three months of 2005, it still lagged behind previous years' growth rates. Find out what forces drove this growth.


Share growth outpaced loan growth in the first three months of 2005 but at a lower than expected rate. Shares grow the fastest in the first quarter because of tax refunds and other adjustments that members make in their share and share draft accounts based on their personal finances. In the first quarter, total shares grew 2.6 percent and reached $583.6 billion in total balances. This was slightly less than the 2.9 percent increase that occurred in the first quarter of 2004.

With membership growth only at 1.4 percent, the bulk of this share growth came from current members increasing their total balances. The average share balance grew from $6,574 at March 2004 to $6,811 at March 2005.

The largest growth came in share drafts. Members increased their share draft balances by $3.7 billion total or 5.0 percent between year-end and March. Share drafts only increased by 4.3 percent during this same period last year. Other short-term liquidity accounts, such as share deposits and money market accounts, increased 2.9 percent and 0.1 percent from year-end respectively.

Growth in these accounts and long-term share products has been small as members are moving their money back into the stock market or putting their money in higher-yield share and money market accounts at other institutions. Financial institutions such as ING Direct offer money market accounts with interest rates as high as 3.0 percent. At the present time, the average money market account interest rate for credit unions is 1.3 percent.

Do you have the resources to keep up with the trends and take advantage of new opportunities? The latest data and analysis of the state of the industry is available in Callahan's Financial Yearbook and Quarterly Reports.