Credit Union Times - October 1, 2008 - (Page 17) WesCorp’s Credit Union Outlook Conference CEO Bob Siravo Finds Positive Message Is a Tough Sell By HEATHER ANDERSON CU Times Correspondent-at-Large LAS VEGAS — WesCorp CEO Bob Siravo faced a tough crowd as he tried repeatedly to pump up conference goers regarding the opportunities in today’s market. In fact, member feedback from the first two days was so negative, Siravo gave unscheduled opening remarks before economist Dwight Johnston’s Wednesday morning presentation (see previous page), restating his positive outlook over and over again. Credit Union Times sat down with Siravo to discuss the resistance to his positive message. CU Times: How can you be so positive, given what’s happening on Wall Street and with the economy? Siravo: I know in my heart this reform is going to be good for our country, consumers and the world in general. We don’t know what the legislation will look like yet, but I’m taking a positive approach to it. I’m perfectly happy to go on record saying America will be just fine. We will recover. CU Times: Why do you think people doubt your positive message? Siravo: Well, in today’s market, people are suspicious of positive stories. People wonder, is there such a thing as a positive story without a hidden agenda. I’m here to say yes, there is. Positive doesn’t have to mean you’re hiding something. Credit unions are caught up in what’s happening in the market, but they should be feeling good about themselves and the work that they do. The positive things credit unions do for the consumers of America is a great story that doesn’t get a lot of press. CU Times: Should corporates play that cheerleader role for the industry? Siravo: Sure, we can be one more supporter and leader; we can encourage and congratulate credit unions on what they’re doing. CU Times: So if credit unions shouldn’t focus on negative headlines, what should they be focused on? Siravo: The same thing they’ve always focused on: meeting the needs of their members. Offer competitive deposit rates and lend to members when no one else will. It goes back to the very beginning of credit unions, when working class people couldn’t get credit. We’re back there now, and it’s an exciting time for our industry. It’s not just mortgages, either. People have credit cards, for example, that they took for a special offer a few years ago at 5% interest and now are up to 18%, while the credit union credit card rate has held steady at 9% or 10%. They should have stayed with the credit union, and they’re realizing that. CU Times: So many consumers are struggling with debt. Should credit unions be doing a better job of promoting the concept of thrift? Siravo: We do have room to grow in that area, promoting thrift and financial literacy. Our culture hasn’t directed us toward thrift in a while, but we may be reawakening those good principles that our country has traditionally used well, not just the government but consumers, too. Shop ’til you drop may not be the best financial course, it turns out. —handerson@cutimes.com The Big Guns: Top WesCorp Investment Chiefs Take Center Stage for Open ALCO Meeting LAS VEGAS — WesCorp laid it all out on the table–literally– providing stacks of financials, copies of Webcast slides and viewer Q&A transcripts for those who attended the corporate’s Sept. 23 open ALCO meeting, which kicked off the second day of its Credit Union Outlook conference. The corporate also brought heavy management artillery to the potentially explosive event, too. President/CEO Bob Siravo, Executive Vice President/Chief Investment Officer Bob Burrell, Chief Risk Officer Timothy Sidley and what appeared to be the rest of WesCorp’s top management team lined up two rows deep, panelstyle across the entire stage for the meeting. The group took turns presenting financials and detailed investment numbers and fielded some tough, but not angry, questions from members in the audience. The hottest topic of the day was the state of the corporate’s substantial mortgage-backed security portfolio. Burrell reported that on Sept. 17, ratings agency Standard & Poor’s said it expects AAArated MBS to continue to pay until maturity. Nearly all of WesCorp’s MBS were AAA-rated at origination, he added, though the percentage of AAAs has slipped to currently 93%. As of Sept. 19, a total of 36 securities have been downgraded, Burrell said, representing 5% of the MBS portfolio. Of those 36, 22 remain at investment grade of BBB or higher, leaving 14 securities, representing $610 million, that have fallen below BBB. However, all are still performing on target, Burrell said. Of WesCorp’s Alt-A securities, 71% are rated investment grade. Around $10 million are currently rated CAA1, but Burrell assured members that the corporate’s $800 million in reserves is more than enough to cover potential losses there. Another topic that generated post-presentation questions was WesCorp’s decision to declare its MBS portfolio held to maturity, from its previous position of available for sale. Chief Financial Officer Jim Hayes said the move, intended as a demonstration of WesCorp’s strength, has generated so much flack for WesCorp, his team may have decided otherwise had the controversy been added into the equation. Hayes also maintained that WesCorp had always intended to hold the securities to maturity, but once a security is taken off the market, it can’t return. The availability status was a strategy to keep the corporate’s options open and isn’t unusual among securities investors. —handerson@cutimes.com In Today’s World, Are You Confident in WesCorp’s Investments and Financials? The issues confronting them are some of the same issues facing natural person credit unions, so we certainly understand their position. I’m very confident with WesCorp’s financials and management. That’s key, their management. They’ve always been supportive of us, and we’ll continue to support them. Norman Ranallo, CFO $1.8 billion Kern Schools FCU, Bakersfield, Calif. Yes, but the trouble is, you don’t know what to believe anymore. Lehman Bros. said everything was fine just three days before they shut their doors. Nobody’s solid anymore, and it falls apart more every day. jeopardize that. Devric Thomas, CFO $90 million Pacific Transportation FCU, Gardena, Calif. RANALLO Yes. WesCorp is the pinnacle of safety and soundness, and if you look at their stress testing, it shows that. Michael Duffy, CEO $300 million Financial Center Credit Union, Stockton, Calif. THOMAS DUFFy FILLBRANDT Jim Fillbrandt, Director $1.8 billion Kern Schools FCU, Bakersfield, Calif. Yes. I don’t think it’s to their advantage to hide the situation. It’s in their best interest to maintain member confidence, and I don’t think they’d deliberately do anything to We are very confident in WesCorp. They’ve been very up front with what they’re doing. Even with this accounting change, they’ve explained it fully, so we are very comfortable with them. Myrna Paulin, CFO $66 million SD Medical FCU, San Diego, Calif. PAULIN 17 cutimes.com Credit Union Times, October 1, 2008 http://www.cutimes.com
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