DALLAS – Southwest Corporate FCU yesterday reported a $317 million in reduction of capital for May, leaving it with just $13.7 million in retained earnings, meaning it will likely require a depletion of member capital.
The $10 billion corporate said however it is still awaiting the audited financials for U.S. Central FCU to determine how much more it will have to charge against its capital.
Several other corporates, including Members United Corporate FCU and Constitution Corporate FCU, have indicated they will be depleting their members’ capital after U.S. Central reports its financials, which is expected any day. That’s when they will know whether they will have to charge off more than the 23% of their membership capital shares in U.S. Central, which is considered almost certain.
More than 1,000 credit unions have either taken a charge or are preparing to take a charge of representing their capital in WesCorp FCU, a total of $2 billion.
Southwest said it took a charge of $127 million in its U.S. Central capital, representing the 23% mark, for May, as well as a loss of $190 million on its mortgage securities. Southwest has $129.8 million of membership capital shares in U.S. Central still, after taking a charge of $127.2 million in paid-in-capital and MCS in May.
Southwest told its members the $13.7 million will act as a reserve against losses for the time being, but acknowledged it "represents a relatively small buffer to absorb additional investment losses before depletion of (members’ capital) would be necessary."
