TALLAHASSEE, Fla. – Southeast Corporate FCU, after digesting last week’s third quarter report from U.S. Central FCU, told its 430 members it will deplete all of their paid-in-capital, a total of $20.2 million, and 0.5% of membership capital shares, or $4.5 million.
The move comes after last Friday’s release of third quarter financials by U.S. Central showing a $308.5 million loss for the quarter, with $53.5 million of those losses trickling down to Southeast.
The depletion of member capital comes after Members United Corporate FCU announced it will be forced to deplete its own members’ capital by $51.7 million later this month, based on the U.S. Central third quarter financials.
The Southeast report comes as representatives of the $3 billion corporate are scheduled to meet today with other corporate credit union executives to urge NCUA to allow them to recapture capital if it turns out that losses at U.S. Central and on their own investments are lower than projected. In a recent letter to NCUA Chairman Deborah Matz, William Birdwell, president of Southeast Corporate, said they are making the request because they believe that projected loss figures are based on dubious modeling assumptions used by so-called experts on the bond markets. Projected losses for Southeast, said Birdwell, in an Oct. 13 letter to Matz, have declined for some of their mortgage-backed bonds.
In a recent letter to members, Southeast’s Executive VP Rob Schleiter said the $308.5 million net loss U.S. Central incurred in the third quarter resulted in 100% impairment of PIC and a 0.5% impairment of MCS.
Schleiter also expects all of its $130 million investment at the central corporate to eventually be written down. In addition to other-than-temporary impairment charges, Southeast Corporate would be forced to deplete about 30% of its member capital shares to absorb the loss.
