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. The corporate also wrote down the rest of almost $50 million of senior unsecured debt it held with Lehman Brothers Holdings to ten cents on the dollar.
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.
