ALEXANDRA, Va. - (02/23/05) -- Profitability for credit unionsplummeted last year to its lowest in a decade--a return-on-averageassets of just 0.92%-- as yields on loans and investments continuedto fall, according to fourth-quarter data released Tuesday by NCUA.Lending continued at a strong pace, growing by 2% for the fourthquarter and by 10% for the year, but record low interest rates onhome mortgages and car loans continued to take a toll. Thecombination of continued low yields on investments and risingexpenses, helped squeeze profits, according to Jeff Taylor, aneconomist with NAFCU. "If your main money maker--interest onloans--goes down and your expenses go up, that's a tough situationto be in," Taylor told The Credit Union Journal. NCUA said theaverage yield on loans plunged to just 6.19% for 2004, perhaps thelowest ever for credit unions, and down from 6.78% for 2003. At thesame time, average yield on investments continued to linger nearall-time lows at just 2.58%, compared to 2.68% for 2003. On theother side of the ledger, non-interest operating expenses rose by7% last year.
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