Q4 Credit Union Investment Trends: Investment Balances Surpass $600 Billion, Cash Rises 98.2%

Source: Callahan & Associates

Key trends that emerged in the aftermath of the onset of COVID-19 largely continued through the end of 2020, despite several notable shifts occurring in the late summer and early fall as noted in our last update. After moderating in the third quarter with an uptick in loan demand, investment balances at credit unions surged 8.7% from September to December (up by $48.3 billion), totaling $600.9 billion at year-end. Within the portfolio, despite mandates to deploy excess cash into traditional investments to combat shrinking margins, cash balances rose 14.9% from September and were up 98.2% year-over-year. Investments in securities and certificates expanded at a slower, yet historically strong linked quarter pace of 4.9%.

As noted above, loan demand again failed to match the sheer scale of deposit growth in the fourth quarter, compounded by the December stimulus package, which brought more share inflows in the final days of 2020. Fourth quarter member spending came in below expectations and consumer loan demand also struggled to find its footing. In total, share balances rose 3.7% from September and 20.1% over the last 12 months.