WesCorp accepting $1 billion in non-member deposits

SAN DIMAS, Calif. - For the first time in its history, WesCorp has unveiled a program to accept non-member deposits. WesCorp will be accepting non-member deposits up to $1 billion until June 30, 2001. According to WesCorp CEO Richard Johnson the move is to attract the some $54 billion credit unions have invested in government and agency securities, and the $15 billion invested in bank and S&L CDs. WesCorp did extensive research on this issue and found that many large credit unions are heavily invested in these two areas, and have very little money invested in the corporate system. WesCorp identified roughly 200 large CUs that have little money in the corporate system as its initial target market. Johnson said the corporate will send letters to a sampling off these CUs informing them of the new non-member offering. Non-members will be given a rate that is 5 basis points below the rate that WesCorp members receive, but Johnson said even with that 5 basis points, the rate is still higher than CUs will get from most agency securities. "We know we consistently beat agency rates by 5 to 35 basis points," he said. Johnson said the high loan demand on credit unions made this an optimum time for WesCorp to start accepting non-member deposits. "The circumstances are that credit unions are lending out more money, so we have a lot more room in our capital ratio for more funds," said Johnson. "We didn't have that in January, we do have it now. Our goal is to attract some of the $50 odd billion that's not invested in corporates," he said. Non-member CUs that join WesCorp within 12 months of their certificate investment will receive the WesCorp member rate retroactively. Johnson expects this offering to be especially attractive to large credit unions that don't belong to a large corporate. As an example, he said large CUs aren't likely to invest $100 million or so in a $500 million corporate because they wind up having too much influence on that corporate. Withdrawing that $100 million could have a big effect on the corporate. He said WesCorp can easily handle those types of swings because of its $11 billion in assets. He said this is not a move to attract new members to WesCorp (WesCorp now has a national FOM). WesCorp notified all other corporates of its plan. "We add value to the credit union system every day. This initiative is not intended to actively seek deposits from other corporates. Our goal is the same as it's always been, to contribute to a strong, sound credit union system." Johnson also noted that it's been slow going for WesCorp's new broker/ dealer arm, WesCorp Investment Services, LLC. "It's very slow getting started...It takes time." -pgentile@cutimes.com