COLUMBUS, Ohio – Corporate One FCU reported a $9.6 million loss last week for the first five months of the year after taking $17.1 million in charges against troubled mortgage backed securities.
The loss for the first five months compares to net income of $10.9 million for the same period last year.
The $4 billion corporate said that 30 of its MBS had so-called other-than-temporary impairments and that using a third-party service it determined the projected cash flows were expected to be less than the securities’ book value. More troubling is the fact that most of the MBS are insured by private bond insurers that probably will not have the resources to cover all of the losses.
"These estimated credit losses of $17.1 million, which were recognized in the income statement, is a calculation of the difference between the discounted cash flows of the securities with OTTI and their current book value," reported Corporate One. "Total credit losses in these securities are estimated to be closer to $25 million."
