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Second Quarter 2016 Investment Trends Review

Continued loan demand draws down investment balances.

According to the latest Investment Trends Review published by TRUST for Credit Unions, total credit union investment portfolios decreased from the previous quarter but were up slightly year-over-year as of June 30, 2016.

Total Credit Union Investments

Continued Loan Demand Draws Down Balances

As of June 30, 2016, credit unions held $366.9 billion in investments, a 3.7% decrease from the first quarter total of $381.1 billion. Total credit union assets expanded 1.3% over the same period while loan balances increased at a faster rate of 3.1% due to investments being diverted to relatively higher yielding loan products.

The industry’s loan-to-share ratio increased 2.2 percentage points from June 2015 to 77.7%. Investment balances are up slightly from the same period one year ago, 0.7%, from the second quarter of 2015.

Callahan Associates | www.creditunions.com

Source: Peer-to-Peer Analytics by Callahan Associates.

Investment Composition

Decrease In Fed Balances Drags Down Portfolio Growth

The net $13.9 billion decrease in investments and cash for the quarter was largely due to a $9.2 billion decline in cash at other financial institutions (Fed balances), which fell from $75.9 billion to $66.7 billion. Cash in corporate credit union and agency non-MBS also contracted over the period, falling $3.2 billion and $3.8 billion, respectively.

Agency MBS increased from $99.0 billion to $100.8 billion, and account for 26.7% of total credit union investments. Collectively, agency debt and MBS continue to be the preferred investments, representing 46.1% of the investment portfolio.

Callahan Associates | www.creditunions.com

Source: Peer-to-Peer Analytics by Callahan Associates

Interested in more information about the overall industry’s average yield on investments, new weighted average life data, and derivatives usage? Download a complimentary copy of the full Q2 Investment Trends Review from www.trustcu.com today or contact us at TCUGroup@callahan.com.

TRUST helps credit unions succeed in serving their members by providing a professionally managed family of mutual funds exclusive to credit unions as well as the information and analysis they need to support investment decisions. Created by some of the leading credit unions with oversight by a board of trustees, TRUST’s mutual fund options allow credit unions to meet their short duration needs, are professionally managed, and are based on the cooperative values of credit unions.

Visit www.trustcu.comor call us at 800-237-5678 to learn more.

The Trust for Credit Unions (TCU) is a family of institutional mutual funds offered exclusively to credit unions. Callahan Financial Services is a wholly-owned subsidiary of Callahan Associate and is the distributor of the TCU mutual funds. Goldman Sachs Asset Management is the advisor of the TCU mutual funds. To obtain a prospectus which contains detailed fund information including investment policies, risk considerations, charges and expenses, call Callahan Financial Services, Inc. at 800-CFS-5678. Please read the prospectus carefully before investing or sending money. Units of the Trust portfolios are not endorsed by, insured by, obligations of, or otherwise supported by the U.S. Government, the NCUSIF, the NCUA or any other governmental agency. An investment in the portfolios involves risk including possible loss of principal.

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
September 19, 2016

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