Early Analysis Shows Shares Surged In 1Q

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An early sample of credit union first quarter data shows that the tremendous share growth of the past two years continued in the first three months of 2003.

Callahan & Associates said the 607 credit unions that are part of its First Look sample continue to attract new deposits. The 5.7% increase in shares in the first three months of 2003 is on pace with the strong start of 2002.

The credit unions in the Callahan First Look sample have a total of $156 billion in assets and represent approximately 26% of the industry. "Increased liquidity led to 14.5% growth in investments in the first quarter alone," Callahan's noted. "If the rest of the industry follows suit, the credit union system could increase their investment portfolio by as much as $40 billion in the first quarter."

Loan growth was sluggish at 1.2% for the first quarter. Callahan's said that with lower-yielding investments rising faster than loans, the yield on average earning assets declined 71 basis points, from 6.34% at year-end to 5.63% at the end of March. CUs, the company said, responded by lowering their cost of funds slightly, enabling them to minimize the ROA decline to two basis points over the first three months, from 1.23% to 1.21%.

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