Fitch Ratings has upgraded the long-term Issuer Default Rating (IDR) of Constitution Corporate Federal Credit Union (Constitution) to 'AA-' from 'A+' and affirmed the short-term issuer rating at 'F1+'. The Rating Outlook is Stable. A complete list of ratings is provided at the end of this release.
Fitch's rating action reflects Constitution's improved capital position, as well as the company maintaining its low risk profile and highly liquid balance sheet. Constitution's capital position has improved during the past several years. The revised 'cap' on Membership Capital Deposit (MCSD) requirement and the supplemental MCSD offering raised a total of $31.6 million, which contributed to the increase in capital ratios. Additionally, Constitution showed improvement in its profitability despite the challenging interest rate environment. At year-end 2006, the Total Capital ratio was 7.14% and the Retained Earnings ratio was 3.00%; above the National Credit Union Association's (NCUA) regulatory minimum requirements of 5.00% and 2.00%, respectively. Although these capital ratios are still somewhat below the average for corporate credit unions, Fitch's views Constitution's capital in line with its peers.
Fitch upgraded the following ratings with a Stable Rating Outlook:
Constitution Corporate Federal Credit Union
- Long-term IDR to 'AA-' from 'A+';
- Individual to 'A/B' from 'B'.
The following ratings have been affirmed:
Constitution Corporate Federal Credit Union
- Short-term issuer 'F1+';
- Support '4';
- Support Rating Floor is unchanged at 'B'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
