Corporates grow by 14% in first quarter 2000

WASHINGTON - Assets jumped 14% in the corporate system in the first quarter of 2000, according to Callahan & Associates. Assets increased from approximately $39 billion at year-end 1999 to some $45 billion by the end of March 2000. One trigger for the increase was that credit unions increased their investments in corporate credit unions by 17%, according to the data. NCUA data shows that deposits in corporate credit unions went from $13.8 billion in the last quarter of `99, to $16.2 billion this first quarter. Robert Schafer, director of NCUA's Office of Corporate Credit Unions, said there are a number of reasons for increasing or decreasing assets in the corporate system. He called the asset fluctuation in the system the "accordion effect." "The accordion effect has been going on ever since corporates started. Assets are always going up and down for a number of reasons. Corporates are really just a mirror of natural person credit unions," said Schafer. According to Schafer, common reasons assets in the corporate system go up include the following: * credit unions have an expanding loan portfolio and move long-term investments to shorter corporate account vehicles; * rates on corporate investments are comparable or better than alternative investments; * anticipation of member withdrawals results in increased money in credit unions' corporate accounts. Schafer also said as the credit union industry grows in size, corporates are likely to reflect that growth. "Once they divvy up their investments to the Treasury, CDs, and others, there might be a bigger piece than normal left for their corporate investments," said Schafer. Schafer said credit unions' investments in corporates have remained around 23 to 25% for the past several years. That number went up to the 27% range during Y2K in anticipation of member cash withdrawals. The first quarter Callahan's data shows credit unions had about 25% of their investments in corporates in the first quarter of 2000. Callahan's announced that it has just lunched a corporate credit union version of its popular Peer-to-Peer program. Schafer said the corporate system is very healthy at present, and he didn't see any warning signs on the horizon. Below is a look at the top 10 corporate CUs by assets at the end of first quarter 2000. -pgentile@cutimes.com