COLUMBUS, Ohio — Just days before NCUA forecast even more losses and charges to replenish the National CU Share Insurance Fund, two corporates posted third quarter financial results.
Corporate One FCU reported it will not be forced to deplete any paid-in capital or member capital shares, despite losses it took on U.S. Central FCU capital and mortgage-backed investments.
The $4-billion corporate reported a $55.7-million impairment from its capital in U.S. Central and has another $15 million in U.S. Central exposure that remains at risk. Corporate One is currently sitting on $65 million in reserves to absorb further portfolio losses before it must tap into member capital, but CFO Melissa Ashley stated firmly that Corporate One's projections show there will be no need for write-offs that impact the membership.
"We're very concerned about our (membership capital shares) not being written down and our focus is on that," Ashley said. "One hundred percent of paid-in capital and MCS will be intact at the end of 2009."
The news at Southwest Corporate FCU, however, was bleaker. The corporate giant is being forced to deplete about 40% of its member capital shares after posting a $692 million net loss for 2008, mostly due to $561 million of losses on investments. That included losses of $522 million on mortgage-backed securities and $40 million on Lehman Brothers debt, as well as a $194 million loss on its U.S. Central capital. The bleeding has not stopped in 2009 as Southwest posted a $92 million loss through Aug. 31, bumping its retained deficit up to $159 million.
Officials at Southwest Corp had been expecting the depletion of capital once U.S. Central issued its 2008 financials.
"For the past several months, Southwest Corporate has been communicating to its members about the possible need to deplete capital from their Southwest Corporate member capital accounts," Melissa Wardell, CFO at Southwest Corp, told Credit Union Journal. "With this action, credit unions can move past a long period of uncertainty and use this information to adjust their accounts. Going forward, Southwest Corporate will be working closely with its members to continue its tradition of developing and providing products and services that deliver value to credit unions."
Southwest is the third corporate, following Members United Corporate FCU and Constitution Corporate FCU, to announce the depletion of member capital accounts since U.S. Central issued its belated 2008 financials.
