MADISON, Wis. - April brought in strong deposit inflows pushed by surplus funds, which were up 1.4% for the month to $229 billion. The just released April edition of CUNA Mutual Group's Credit Union Trends Report showed surplus funds, which is cash plus investments, are up a "healthy" 5.9% but remains 3.6% or $8.6 billion below the April 2004 level. Surplus funds now equal 33% of total assets versus 36% a year ago and more than 52% are in agency securities with 15% at corporate credit unions. Meanwhile, April also saw annual capital growth improve to 8.2%, said Dave Colby, CUNA Mutual chief economist. "This is attributable more to a weak April 2004 than improving current results, as the YTD gain is just 2.2%," Colby said. "Capital additions remain difficult to achieve as the movement average annualized ROA (return on average assets) held at 92 basis points according to NCUA Call Report data." With $74.5 billion in total capital, the capital-to-asset (C/A) ratio was unchanged from March at 10.8%, according to the report, "but was up nicely" from the 10.5% recorded in April 2004. A 1.1% month-only gain in total loans helped push the loan-to-share (L/S) ratio to 73.7%. The L/S ratio is now 390 basis points above April 2004. "Given that the average loan yield is 323 basis points above the average investment yield, a higher L/S ratio is a major factor in CUs' maintaining their ROA," Colby noted. "We expect CUs to increase their L/S ratio to over 75% by year-end as loan growth is forecast to exceed share increases." The C/A ratio is forecast to finish 2005 at its current level, Colby added and a rise in personal bankruptcies by year-end will offset operational gains. The loan delinquency rate (loans two or more months delinquent as a percent of total loans) remained unchanged in April. At 0.64%, this key measure is six basis points below April 2004, the report said.
From March to April, Surplus Funds Buoyed by Strong Deposit Inflows
Want the latest credit union news?
Sign up for our free newsletter today! All the breaking credit union news and information you need to make the right decision for your credit union delivered to your inbox. For free!
Thanks for subscribing, you will start receiving the Daily News Alert tomorrow!