Southwest Corporate FCU Depletes More Capital After Additional Losses

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DALLAS – Southwest Corporate FCU on Friday reported that growing losses on its private label mortgage-backed securities created a $30 million loss in April, leaving it with a $23.1 million loss for 2010.

The losses continued to eat away members’ capital at the $10.3 billion corporate and forced it to deplete member capital share accounts again so that now 78% of all MCS’ are gone.

Southwest’s diminishing capital is being eaten away two ways: first by growing losses on its investments, and second by member withdrawals. In April, $3.3 million of members' amortized capital was on notice for withdrawal.

April’s losses were the result of so-called other-than-temporary impairment charges of $31.6 million on private label MBS. The losses wiped out $10.1 million of net operating income for the first four months of the year. As of April 30 Southwest was sitting on unrealized losses on its investments of almost $800 million.

Southwest is one of a handful of large corporate to report continued deterioration of its financials in recent weeks, including Members United Corporate FCU, Constitution Corporate FCU, First Carolina Corporate CU, WesCorp FCU and U.S. Central FCU. Losses at the troubled corporates have erased member capital, in some cases all of it. Members United, a $9.5 billion corporate outside of Chicago, last week reported it has just $3 million left of members’ capital.

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