What Is The Largest Segment Of The Credit Union Investment Portfolio?

Take this industry performance pop quiz from Callahan & Associates to learn about trends in credit union investments.

As of March 31, 2018, credit unions held $385.9 billion in investments. That’s up 5.5% from year-end 2017.

Share balances followed the historical trend of first quarter expansion, which caused liquidity to rise and underpinned the quarterly increase in total investments.

Credit unions allocated the net $20.3 billion increase in investments and cash primarily to cash at other financial institutions (Fed balances) as well as cash at corporate credit unions. The former rose 24.6% quarterly, from $66.2 billion to $82.5 billion, while the latter expanded 33.0% quarterly, from $18.4 billion to $24.5 billion.

Answer the questions below to test your credit union investments knowledge.


Click on the question to view the answer.

Question 1: (True or False) The largest segment in the investment portfolio is Fed agency mortgage-backed securities.

True. Fed agency MBS comprised 25.7% of the total investment portfolio in the first quarter, followed by cash at other financial institutions at 21.4%.

Question 2: (True or False) The average investment maturity for all U.S. credit unions increased in the first quarter of 2018.

False. Cash and cash equivalents expanded 22.5% quarterly. As a result, the average investment maturity decreased to 2.02 years from 2.09 in the fourth quarter of 2017.

Question 3: What effect does the increase in the federal funds rate have on the yield on investments at credit unions?

The average yield on investments increased 14 basis points from fourth quarter 2017 and reached 1.80% as of March 31, 2018. Credit unions benefited from three rate hikes in 2017 and one in 2018, to 1.69%, with more rate hikes likely this year.

Yield on investments has increased 72 basis points since the first quarter of 2013.

Total credit union investment revenue income from investments plus trading profit/loss expanded 10.2% quarterly and 21.0% annually. This drove an increase in the yield on investments throughout 2017 and the first quarter of 2018.

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May 28, 2018

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