LANGLEY, B.C. — DBRS Limited (DBRS) has today assigned a Short-Term Instruments Rating of R-1 (low) to First West Credit Union (First West); the trend is stable.
The rating reflects First West’s position as the third largest credit union in British Columbia (B.C.) and its operations through several brands that lend to successful product diversification and a larger portion of non-interest income.
First West provides services to more than 250,000 British Columbians through its divisions: Envision Financial, Valley First, Enderby & District Financial and Island Savings, which merged with First West on Jan. 1, 2015. The merger added approximately $1.5 billion of assets and further organic growth has increased First West’s balance sheet to $8.7 billion at the end of 2015. It is now the fifth largest credit union in Canada with a material market presence in its footprint in Southern B.C. and Southern Vancouver Island, with a membership that equates to an estimated 10 per cent of the population in its operating area.
Around 69 per cent of First West’s $7.2 billion gross loan portfolio is in retail loans, the majority of which are residential mortgages. Branch raised deposits make up the majority of liabilities and fund more than 100 per cent of First West’s loans. In terms of liquidity, First West benefits from the liquidity pool it shares with the other credit unions in B.C. through Central 1. First West’s liquidity levels have significantly improved in the last year and are expected to remain higher than in the past, showing strong liquidity metrics for future periods.
First West’s capital ratios provide a sizeable cushion above regulatory requirements. Specifically, First West reported a B.C. capital adequacy ratio of 14.2 per cent, well above the minimum eight per cent required.
“This is a strong rating which reflects First West’s strong performance and dedication to serving our members,” states Tom Webster, First West’s Chief Financial Officer. “With this rating, First West is demonstrating its financial strength and the value of our multi-brand model.”
Under the DBRS’s support assessment criteria, First West has been designated as a SA2, reflecting the expectation of timely systemic external support from the provincial government through Central 1 Credit Union (Central 1), particularly in the form of liquidity, which is reflected in First West’s short-term rating. DBRS currently rates Central 1’s Medium & Long-Term Senior Notes & Deposits at A (high) and it’s Short-Term Notes at R-1 (middle); all trends are stable.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating
Organizations are hereby incorporated by reference and can be found on the issuer page at
www.dbrs.com.
The applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (July 2016) and Criteria: Support Assessment for Banks and Banking Organisations (March 2016), as well as Rating Canadian Residential Mortgages, Home Equity Lines of Credit and Reverse Mortgages (November 2016), which can be found on the DBRS website under Methodologies.