DBRS Limited (DBRS Morningstar) assigned a Long-Term Senior Debt Rating of BBB (high) with a Stable trend to First West Credit Union’s (First West or the Credit Union) Fixed Rate Senior Deposit Notes (the Notes). The $150 million Notes issuance has a maturity date of November 29, 2024, and will be a direct unsecured deposit liability of the Credit Union ranking pari passu with all other unsecured and unsubordinated debt of First West. The assigned rating is in line with First West’s Long-Term Issuer Rating of BBB (high) with a Stable trend.
The rating of the Notes will move in tandem with First West’s Long-Term Issuer Rating. Over the longer term, DBRS Morningstar would upgrade First West’s Long-Term Issuer Rating if the Credit Union is able to further strengthen its franchise through a sustained increase in membership resulting in a material improvement in earnings while maintaining a conservative risk profile.
Conversely, a downgrade of First West’s Long-Term Issuer Rating would result in a downgrade of the Notes. DBRS Morningstar would downgrade the Credit Union’s Long-Term Issuer Rating in the event of a material and sustained weakness in loan performance resulting in a significant increase in loan losses and weakened financial performance.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Social (S) Factors
DBRS Morningstar finds that the Social Impact of Products and Services ESG subfactor was relevant to the credit rating but does not affect the assigned rating or trend. As a credit union, First West operates a membership-based community banking model where the social aspect of its activities strengthens its franchise. As a result, this factor is incorporated into the Credit Union’s Franchise Strength grid grades.
There were no Environmental/Governance factors that had a significant or relevant effect on the credit analysis.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022).
All figures are in Canadian dollars unless otherwise noted.
The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (June 23, 2022; https://www.dbrsmorningstar.com/research/398692). In addition DBRS Morningstar uses the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings, https://www.dbrsmorningstar.com/research/396929 (May 17, 2022) in its consideration of ESG factors.
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.dbrsmorningstar.com.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are under regular surveillance.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com.
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