MADISON, Wis. — After peaking at $216 billion in March, surplus funds dipped in May as member loan demand outpaced deposit inflows, according to CUNA Mutual Group's latest Credit Union Trends Report.
Surplus funds of $207 billion are up 7.8% [$14.9 billion] year-to-date and 5.1% [$10.0 billion] over the past year, the report noted. Dave Colby, chief economist at CUNA Mutual, said “liquidity should not be an issue for most credit unions as surplus funds equal 27.3% of industry assets.”
In addition to surplus funds, credit unions have significant borrowing capacity above the $19.4 billion currently outstanding, Colby said. Surplus funds remain very liquid with 60.6% of holdings scheduled to mature in one year or less, he added.
Still, the time might be right for credit unions to expand.
“Given the growing need for additional basis points to the bottom line and the changing shape of the yield curve, managing this $207 billion asset called surplus funds needs to move to the next level,” Colby said. “Not leveraging economies-of-scale within the credit union system leaves investment yields on the table. This limits future growth potential.”
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