WESCORP $150 MILLION CP PROGRAM RATED
WESCORP $150 MILLION CP PROGRAM RATED F-1+' BY FITCH
-- FITCH FINANCIAL WIRE --
NEW YORK, Nov. 12 /PRNewswire/ -- Wescorp's $150 million commercial paper program is rated "F-1+" by Fitch. The rating reflects the senior position of unsecured debt holders to all share deposit investors. Share deposits and capital total $6.5 billion, contrasted with $1.8 billion of borrowed funds, and there is no short-term debt outstanding. The commercial paper program is presently inactive and viewed as a liquidity alternative. At present, the company has significant excess liquidity.
Operating principally in three Western states, Wescorp provides investment and lending services to its 930-plus members, most of whom are located in its home state of California. Because its member/owner credit unions deposit funds in the form of member shares and certificates, the balance sheet is liability, not asset, driven. Investments represent the majority of assets (96 percent) and are very liquid due to Wescorp's concentration of high-quality short-term assets. Match funding assets to liabilities by cash flows and amount minimizes interest rate risk. The capital base of $271 million consists of retained earnings and capital certificates, provided by and required for membership in Wescorp. There is no minimum required capital ratio in the credit union industry. Wescorp's current capital level of 3.3 percent is low on an absolute basis but adequate on a risk-adjusted basis.
Over the past several years, the balance sheet has grown rapidly, pinching capital ratios. Concurrent with that growth, the company has shifted the investment mix toward more complex and higher yielding mortgage securities. The company is in the process of upgrading management systems to provide better asset/liability management, duration matching, and stress testing. Investments are concentrated in short maturities with an average life of 2.2 years for the mortgage- backed securities portfolio. Minimal asset risk combined with the short funding maturities and ample liquidity translates into relatively predictable performance, thereby protecting commercial paper holders.
/CONTACT: Valerie Gerard, 212-908-0500, or Nancy E. Stroker, 212-908-0533, both of Fitch/ CO: Wescorp ST: California IN: FIN SU: RTG GK -- NY036 -- 3384 11/12/91 10:47 EST