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ALEXANDRIA, Va. – For most credit unions, maximizing yield is just as crucial as having liquidity, according to NAFCU’s May Flash Survey. When asked to describe their investment strategy, 89% of credit unions surveyed said they strive to achieve a balance between maximizing yield and maintaining a liquid position. NAFCU found that 8% indicated that they are staying extremely liquid, while 3% are attempting to maximize the yield on investments. In the midst of a rising interest rate environment, the median credit union investment portfolio as a percent of assets was 32%, with 56% indicating that their portfolio was between 25% and 50% of assets. One quarter of the credit unions said that their portfolio was less than 25% of assets, while nearly 20% indicated that their investments comprised 50% or more of their assets. The majority of the surveyed respondents (57%) indicated that their current investment maturity structure is largely unchanged from that of the first quarter of 2003 while 26% have shortened the duration of their investments and 17% have lengthened the duration of their portfolios. Sixty-four percent responded that their investment committee meets on a monthly basis, with 24% indicating that they meet either weekly or quarterly. The remaining 12% were divided between meeting semi-annually, “as needed,” and having no formal committee structure. The Flash Survey then queried credit unions about policy restrictions on their investments. Ninety percent indicated that they have policy restrictions on investment exposure, with many indicating they do not invest in some NCUA approved investments. Only 10% responded they do not have investment policy restrictions except for the NCUA mandated restrictions. “It appears that the majority of credit unions are maintaining a relatively conservative investment strategy that seeks to balance liquidity with yield maximization,” according to the NAFCU survey. The survey respondent’s average investment to assets ratio of 34.5% is somewhat higher than the average ratio of 25.8% for all federally insured credit unions. [email protected]


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