WARRENVILLE, Ill. — Members United Corporate FCU here plans to deplete a little more than half of its remaining member capital shares after posting a $149.6 million loss in October.
The steep loss comes from a $74.6-million charge for all of its remaining capital at U.S. Central, and another $77.1-million writedown for its own OTTI securities. The corporate said its entire retained deficit of $146.8 million would be wiped out by the 50.2% depletion of its MCS, which will be processed on Nov. 30.
In its latest portfolio update, the Members United explained that following the latest depletion, as well as one that took place on Sept. 16, a credit union that held $100,000 of MCS in August would now have a balance of just under $30,000. There could be more bad news down the line as none of Members United's RMBS securities, which have been insured by Ambac, have been written down. If Members United had taken losses on those investments, it would have resulted in an additional $37.5 million OTTI charge.
The corporate said it will be reviewing the decision to forgo charges on those investments, made on the advice of a report by risk-analysis firm Clayton, by the end of the year and admitted that it could still see additional losses on other asset backed securities, loan participation reserves and other insured RMBS securities.
Members United reported it has made major operational expense cuts, generating $12.5 million in savings year-to-date compared to 2008, in an effort to preserve cash, but still stands with a capital ratio of just 1.56%.
