MADISON, Wis. – Credit unions continue to hold the largest share of their surplus funds in agency securities. According to the latest CUNA Mutual Group Trends Report, while surplus funds fell by nearly $10 billion in August reflecting both the decline in savings and the increase in loans, 39% of credit unions parked funds there as of August 2003. At $220 billion, surplus funds are 4.3% below the prior year level and up just 0.3% year-to-date. With approximately 46% of surplus funds maturing in one year or less, CU investment returns may benefit from the flattening of the yield curve due to the rise in short-term interest rates, according to the report. CUNA Economics & Statistics estimates 34% of surplus funds have a maturity of 1-3 years and 17% are held in 3-10 year investments, based on mid-year data. Both of these shares are up about four percentage points from mid-year 2003, reflecting a "yield from longer durations."

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