Long: CUs slow long-term investing

Curt Long
Curt Long

Sept. 3, 2014 – Federally insured credit unions significantly reduced their investment in longer-term assets in the second quarter, a move that positions them well in the event of a near-term rise in interest rates, said NAFCU Chief Economist and Director of Research Curt Long.

NCUA, in releasing second-quarter data, noted only a “slight decrease” in long-term investments and said that interest rate risk “continues to be a key concern.”

“Credit unions have a proven track record when it comes to interest-rate risk,” said Long. “The vast majority of credit unions have very manageable exposures, and the sharp drop in long-term investments during the second quarter shows that credit unions are making meaningful adjustments to their balance sheets as they prepare for a rise in rates.”

Second-quarter data released Tuesday by NCUA show that credit unions’ investments with maturities exceeding five years declined 9.3 percent in the second quarter. As a percent of net worth, these investments fell from 40.8 percent in the first quarter to 36.3 percent in the second quarter.

 

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