COLUMBUS, Ohio – Corporate One FCU, one of a handful of corporate credit unions struggling under the weight of large mortgage-backed securities holdings, said yesterday its expects to record additional losses on its MBSs due to the continued deterioration of the U.S. housing and mortgage and the global credit markets.
The $4 billion corporate, which recorded a $17.1 million loss in May on 30 MBSs, told its members it expects to book additional losses based on bonds determined to have other-than-temporary impairment. Earlier, Corporate One reported those losses could be as much as $25 million.
However, Corporate One CEO Lee Butke said he does not expect those losses or any additional losses related to the write-down of capital in U.S. Central will exceed the $65 million in capital the corporate holds, meaning members will not be forced to write-down the value of their Corporate One capital. "This means that the capital you have placed with Corporate One – both paid-in capital and Membership Capital Shares – should remain intact," Butke told his members yesterday.
Corporate One still holds $15 million in membership capital shares in U.S. Central FCU, which is currently at risk after U.S. Central reported a revised $4.9 billion loss for 2008.
The U.S. Central report will allow Corporate One and other corporates to now complete their own financial audits for 2008 to determine whether to write-down additional capital in U.S. Central.
