DALLAS – Southwest Corporate FCU, one of a handful of corporate credit unions struggling under the weight of distressed mortgage-backed securities, said yesterday it recorded another $113 million of losses in July on its MBSs, along with an additional impairment of $67.6 million on its capital in U.S. Central FCU-creating a loss of $178.2 million for the month.
The figures for July give the $9 billion corporate a year-to-date loss of $161.6 million and a retained deficit of $160.9 million. Southwest had operating earnings of $21.4 million before recording the investment losses.
Southwest said it is waiting to record any depletion in its own member capital until after U.S. Central reports its audited financials for 2008, expected later this week.
Southwest officials did not return phone calls seeking comment.
Southwest said it recorded the additional losses for July based on an external review conducted by Clayton Investments, which projected losses for the corporate’s private-label MBSs of $436 million, up from projected losses of $288 million at the end of the first quarter.
"The projected losses on securities increased from the analysis performed in the first quarter due to continued deterioration in economic conditions and mortgage collateral performance over the second quarter of 2009," Southwest told members in its July report. "Mortgage defaults have been driven higher due to the current recession and home prices have continued to decline, further increasing the number of foreclosures and the loan loss severities associated with foreclosures."
