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Credit Union Investments Soar High, But Yields Still Grounded

WASHINGTON - The scales have tipped favorably for credit union investment balances, which have increased to a record high of $223 billion. Callahan & Associates reports that an increase in investment balances from $159 billion to $223 billion over the past 18 months is pivotal because balances had only grown...

By Michelle A. Samaad | Updated on November 04, 2003

WASHINGTON – The scales have tipped favorably for credit union investment balances, which have increased to a record high of $223 billion. Callahan & Associates reports that an increase in investment balances from $159 billion to $223 billion over the past 18 months is pivotal because balances had only grown a paltry $45 billion between 1992 and 2001. “Overall, loan share and growth rates were a lot closer in the 1990s,” said John Marron, corporate associate at Callahan & Associates. “Balance between the two became a lot more in sync when shares started flooding in.” The news is not so good for credit union yield on investments, which hit an all-time low of 2.7% in June, a 234 basis point decrease since December 2001. Average yield on loans also fell during this period but not nearly at the rate of investment yield, which stayed above 7%, according to Callahan. Still, many credit unions are reaping encouraging yields on their investment portfolios, with more than 300 yielding over 4% on their investments by June 2003. Callahan hosted an audio conference on Oct. 30 with a number of credit union CFOs who discussed their investment strategies and ways to bolster yields in the midst of the existing low-rate environment. [email protected]

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