SAN DIMAS, Calif. – WesCorp FCU, the troubled corporate credit union taken over by NCUA March 20, reported a gaping credit loss of $5.6 billion for the first quarter.
Of those losses, $390.5 million is related to almost $600 million of collateralized debt obligations, most of which are backed by mortgages. The remaining $5.2 billion comes from the rest of the $23 billion corporate’s securities portfolio, mostly from Alt-A and Pay-Option Arm collateral-backed investments.
At March 31, unrealized losses on the corporate’s books had surged to more than $6 billion, from less than $3 billion reported prior to the NCUA takeover.
WesCorp estimated the losses by comparing its own internal analysis with that of a third-party provider, Clayton IPS, LLC, and choosing the more conservative of the two estimates. A total of 782 securities were analyzed and compared.
As a result, WesCorp is operating with a Prior Undivided Earnings Deficit of $3.7 billion.
The loss figures make it all but certain that the $2 billion of WesCorp capital held by 1,022 credit unions will be extinguished.
