Credit Unions Are Spending Money To Lend Money

First quarter data shows the cost of funds increased 78 basis points annually as share certificate balance growth helped credit unions build liquidity.

SHARE COMPOSITION AND AVERAGE COST OF FUNDS
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.23
© Callahan & Associates | CreditUnions.com

  • Many credit unions are implementing strategies to attract deposits and bolster their liquidity positions. One popular deposit option is the share certificate, which is attractive to members willing to store cash in a termed deposit product that offers higher returns.
  • Balances in share certificates at U.S. credit unions expanded 22.1% quarterly and 50.1% annually, hitting $365.6 billion as of March 31, 2023. At the same time, the average cost of funds increased 60 basis points quarter-over-quarter and 78 basis points year-over-year to reach 1.17%.
  • With the cost of funds rising, credit unions might begin moving away from share certificates and toward core deposits. Core deposits — share drafts, regular shares, and money market accounts — were down 5.6% annually as of March 31. Together, they comprised 74.4% of the industry share portfolio. Share certificates comprised 19.1% of total share balances, up from 13.0% one year ago.

How Does Your Cost Of Funds Compare?

Use industry data to determine how your credit union performs against others, uncover new areas of opportunity, and support your strategic initiatives. Callahan’s credit union advisors are ready to show you how — are you ready to see how you stack up?
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May 30, 2023

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