MONTEREY, Calif. – The $30-billion WesCorp will report the best financials in its history when it releases year-end 2007 numbers in approximately 30 days, according to CEO Bob Siravo.
Siravo acknowledged the robust financials reflect what he termed “windfall accounting” that will show income beyond what was actually earned. Despite widespread problems in the financial markets, he said WesCorp does not “intend to write off anything,” saying 90% of its portfolio is in AAA-rated investments, the remainder in AA-rated investments, and that WesCorp has not invested in any subprime-backed paper since 2006.
Siravo did say the “market dislocation” means WesCorp will mark down some “impaired” investments, but those are not required to be shown on the income statement. “We have always intended to hold bonds until maturity, that has always been the liquidity proposition of corporate credit unions. That’s what happened with Bear Stearns; they did not have the liquidity and were leveraged. We are not.”
Siravo added that like all other corporates except U.S. Central, WesCorp has nearly all its funds in overnights and has for approximately a year. “We’ve been holding cash and are in a strong liquidity position,” he said. “What that means is that when the market does shake loose, we are very confident we are going to do very well for our members.”
One issue WesCorp has resolved, said Siravo, is a difference of opinion between its former auditor and its current auditor, both Big Four firms. The firms differed on their accounting methodology for derivatives held by WesCorp. The two firms were asked by WesCorp to resolve the difference, but were unable to after seven months. He said WesCorp has opted for the original opinion it was issued “and we have moved forward.”
