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U.S. CENTRAL'S $1 BILLION MEDIUM-TERM NOTE PROGRAM RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, July 23 /PRNewswire/ -- U.S. Central Credit Union's $1 billion medium-term note program is rated "AAA" by Fitch. The rating reflects U.S. Central's superior asset quality, very strong liquidity, conservative track record, and key position within the credit union industry. Furthermore, the rating is enhanced by the senior position of all senior creditors to the share deposits by member corporate credit unions. The credit trend is stable.
 U.S. Central is a $27 billion financial institution that provides investment, settlement, and lending services to its 42 member corporate credit unions. Reflecting its role as the industry's primary intermediary source, investments historically represent over 97 percent of the balance sheet, with loans to members accounting for a mere 2 percent. Liquidity management is very strong due to the maintenance of a high quality, short-term investment portfolio that is effectively match funded with short-term liabilities. Internal liquidity is augmented further by its access to the Treasury through the Central Liquidity Facility, the lender of last resort for credit unions.
 U.S. Central's excellent asset quality is attributable to the high quality, short-term nature of the investment portfolio. Conservative investment policies assure that the portfolio's credit quality is at the higher end of the investment grade scale. At June 30, 1993, more than 80 percent of the portfolio was invested in instruments rated "AA" or better. Additionally, investments are diversified by instrument type, issuer, and geography. Loans to members represent a negligible 2 percent of total assets. U.S. Central has never experienced a principal loss in either its investment or loan portfolios.
 Compared to other financial institutions, profitability and capitalization appear low on an absolute and relative basis. As measured by return on assets (ROA), profitability is understated as U.S. Central passes on the bulk of its net investment earnings (95 percent) as dividends to its members. This practice is consistent with U.S. Central's not-for-profit status and cooperative nature. As a result of its pass-through structure, the credit union's core capital base in the form of retained earnings is low, normally at 0.5-0.6 percent of total assets. However, on a risk-adjusted basis, capitalization is adequate given the minimal retention of asset risk on the balance sheet. The capital structure is further bolstered when including the more permanent membership shares required for membership in U.S. Central.
 Going forward, management's biggest challenge will be the retention of its market share of its members' investable surplus funds. U.S. Central's position as the industry's sole investment vehicle has been tested by some of the larger corporate credit unions that are starting to invest their own surplus funds directly. It is unlikely that this trend will eliminate U.S. Central's intermediary role completely. The majority of corporates depend on U.S. Central's other services and some remain too small to invest efficiently on their own behalf. Other potential factors that could negatively affect U.S. Central include national legislation adverse to credit unions (such as the repeal of their tax-exempt status), which could change the overall industry structure.
 -0- 7/23/93
 /CONTACT: Valerie L. Gerard of Fitch Financial Wire, 212-908-0577/


CO: U.S. Central Credit Union ST: IN: FIN SU: RTG

TS-MG -- NY049 -- 5146 07/23/93 12:14 EDT
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Publication:PR Newswire
Date:Jul 23, 1993
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