MADISON, Wis. -- Credit unions finished 2007 with just over $196 billion in surplus funds, according to the latest Credit Union Trends Report from CUNA Mutual Group.
Overall, surplus funds rose $4.0 billion or 2.1% in 2007, but borrowings may have been a big part of the increase. Total borrowings increased 51.5% to $10.9 billion last year with $3.8 billion coming in December.
"Special conditions in December made borrowing very attractive for some credit unions, but we believe this surge will be unwound over the course of 2008," said Dave Colby, chief economist at CUNA Mutual and author of the trends report.
Credit unions saw a $2 billion drawdown in surplus funds in December, but with 61% of these funds in investments with maturities of one year or less, liquidity is not an industry concern, Colby said. Currently, 25.2% of credit union assets are in surplus funds, down a full percentage point from year-end 2006.
"Going forward, credit unions will try to keep as many assets as possible in high quality loans, as their cost of attracting the marginal deposit will likely exceed yields on high-quality, short-term investments," Colby said.