WALL STREET - Fitch Ratings affirmed the long- and short-term issuer default ratings for U.S. Central FCU at its highest AAA and F1+, respectively, but changed the overall rating outlook for the corporates’ corporate to “negative” from “stable” due to U.S. Central’s continued exposure to the subprime mortgage market. U.S. Central’s “balance sheet has a low-risk profile and its funding and liquidity positions remain strong,” said Fitch. “At the same time, Fitch recognizes USC’s exposure to the troubled mortgage market, particularly non-prime mortgage-backed securities, which have generated meaningful losses and has heightened credit risk on the balance sheet.”
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“While losses to date have been absorbed through earnings and management has taken steps to reduce its mortgage exposure, the portfolio still has meaningful exposure to the non-prime mortgage market and contains securities that could generate additional realized losses,” the Wall Street rating firm said.
Another Wall Street ratings firm, Standard & Poor’s, also downgraded U.S. Central’s short-term outlook to “negative” from “stable” after the corporate reported a third-quarter, $17- million loss and increasing problems in its mortgage backed securities portfolio.
At the end of October, U.S. Central held almost $13 billion in MBSs and another $7 billion worth of securities backed by home equity loans. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com
