LENEXA, Kan. – U.S. Central FCU reported the continuing decline in the mortgage market created larger losses in its portfolio of mortgage backed securities, even as it eliminates increasing amounts from market value evaluations.
“Further credit spread widening across all fixed income sectors pushed the fair value of U.S. Central’s available-for-sale securities portfolio lower in July,” pushing unrealized losses to $2.8 billion, from $2.6 billion a month earlier, the central bank for credit unions reported to its corporate credit union members.
For the month of July, U.S. Central accrued an additional $283.8 million in unrealized losses on its mortgage securities, as the mortgage markets continued to deteriorate.
That is even as U.S. Central has moved $12 billion of troubled mortgage securities into its so-called held-to-maturity basket, for which it is not required to report unrealized losses or gains.
Despite the growing unrealized losses, U.S. Central reported net income of $7.3 million for the month of July, and $36.9 million through the first seven months of the year.
U.S. Central and a handful of regional corporates are holding billions of dollars of unrealized losses on troubled mortgage securities, with hopes that a rebound in the mortgage markets will help them recoup some of the losses.
U.S. Central manages $40.8 billion of credit union funds for its corporate members, down from $45.6 billion a year ago.
