LANGLEY, B.C. – DBRS Limited (DBRS Morningstar) has confirmed a Long-Term Issuer Rating of BBB (high) and both a Short-Term Issuer Rating and a Short-Term Instruments Rating of R-1 (low) for First West Credit Union, noting that the trend on all ratings is stable.
The ratings reflect First West’s position as the third-largest credit union in B.C. and the fifth-largest in Canada, with total assets and assets under management of more than $15 billion as of June 30, 2020. They also indicate the credit union’s well-established market position through its community-based regional brands, Envision Financial, Valley First, Enderby and District Financial and Island Savings. Notably, the release highlights First West’s solid recurring earnings and diversified revenue base, resulting in the credit union having a higher contribution from non-interest income relative to its credit union peers as well as an above-average revenue per member, in part due to its diverse product offerings.
Importantly, the ratings also reflect the likely impact of the wide and growing scale of the economic disruption caused by the COVID-19 pandemic.
“First West’s robust ratings demonstrate our credit union’s continuing financial health in the midst of challenging global economic conditions,” says Mark Moreland, senior vice-president, Finance at First West. “Our consistently strong performance, combined with prudent financial stewardship and risk management has ensured that First West remains in an advantageous position today, well-prepared to weather the ongoing economic impact of the COVID-19 pandemic.”
Other release highlights
- With a sizable capital buffer relative to regulatory minimums and high-quality capital, First West’s capitalization levels are viewed by DBRS Morningstar as strong.
- First West maintains a liquidity position that is above regulatory requirements and asset quality remains strong with most credit metrics at relatively low and manageable levels.
- In 2019, First West generated net income of $88.2 million, which was up 52% compared with the prior year. This increase was driven by strong overall loan growth of $553.8 million, or 6.5%, the sale of First West’s insurance business which closed in Q3 2019, and improved net interest margin and increased fee-based revenue particularly in investment revenue, wealth management commissions and lending fee revenue.