WARRENVILLE, Ill. – Members United Corporate FCU reported a $511 million loss today, wiping out almost two-thirds of its capital.
The troubled corporate, which serves more than 2,300 credit unions, said the failure of U.S. Central FCU eliminated $234 million of its capital and losses on residential mortgage-backed securities claimed another $266 million. The corporate will also take a $9 million charge on loans it made to failed Central States Mortgage Co. and a $1.4 million impairment on its 1% deposit with the National CU Share Insurance Fund. Members United also wrote down the value of almost $50 million of senior unsecured debt it held with Lehman Brothers Holdings to ten cents on the dollar, from 50 cents recorded just after the venerable brokerage filed for bankruptcy last September.
In a letter to members, Joseph Herbst, president of the $9 billion corporate, said that most of the institution’s $866 million in capital will be wiped out, leaving it with $355 million.
The losses will wipe out $303 million of retained earnings, $79 million of paid-in-capital and $484 million of membership capital shares, which will be assessed to members on a pro rata basis. That means all of member PIC accounts will be eliminated and 27% of MCSs.
