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WASHINGTON – The share growth credit unions witnessed the past two years showed no signs of abating in the first quarter of 2003, according to Callahan’s First Look. The first quarter is typically the strongest quarter for share growth, and the first three months of this year were no exception. “The 5.7% increase in shares in the first three months of 2003 is on pace with the strong start of 2002, indicating no slow down in credit union growth,” said Callahan Executive Vice President Jay Johnson. Six hundred-seven credit unions were included in Callahan’s First Look sample. The CUs had a total of $156 billion in assets and represent about 26% of the industry. The increased liquidity, said Callahan, led to 14.5% growth in investments just in the first quarter of the year. If the rest of the industry follows their lead, the credit union system could increase their investment portfolio by as much as $40 billion in the first quarter, it said. While shares grew healthfully, loan growth was “sluggish” – only 1.2% for the first quarter. “With lower-yielding investments rising faster than loans, the yield on average assets declined 71 basis points, from 6.34% at year-end to 5.63% at the end of March. Credit unions responded by lowering their cost of funds slightly, enabling them to minimize their return on assets decline to two basis points over the first three months, from 1.23% to 1.21%,” the First Look report stated. -

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