LENEXA, Kan. – U.S. Central FCU reported yesterday its securities portfolio took a beating over the past month, declining in value by another $700 million, increasing the corporate credit union’s unrealized losses to $3.8 billion at September 30.
That doesn’t include additional losses of $2.3 billion when U.S. Central marks-to-market its entire portfolio–a total fair value loss of $6.1 billion–which U.S. Central is required to report under generally accepted accounting principles, or GAAP.
"Further credit spread widening in all fixed-income sectors pushed the fair value of U.S. Central's available-for-sale securities portfolio lower again in September," said Kathryn Brick, chief financial officer, in a letter to members yesterday. About $400 million of the new losses were in U.S. Central's holdings of so-called private label mortgage backed securities, while $300 million was attributable to non-mortgage asset backed securities, she said.
The continuing decline in the mortgage market increased the unrealized loss on U.S. Central's $19.9 billion of private label MBSs to $5.1 billion at Sept. 30.
U.S. Central is also sitting on $880 million of unrealized losses on $12 billion worth of other asset backed securities, backed by credit card loans, student loans, auto loans, and commercial real estate, as well as $145 million of losses on corporate bonds and notes that it holds.
For the month of September, U.S. Central realized $1.9 million of losses on financial instruments, and has realized $27.6 million in losses through the first three quarters of the year.
Assets at Sept. 31 were down 27% from last year’s high of $51.8 billion, to $38 billion.
Net income for the first three quarters was $45.9 million, up from $27.1 million for the same period last year.
