SAN DIMAS, Calif. – WesCorp FCU on Friday became the third corporate credit union over the past two weeks to take a charge for exposure to Lehman Brothers Holdings, after the brokerage filed for bankruptcy last month.
WesCorp paid Lehman $3.9 million to cancel and replace several derivatives it had with Lehman under procedures laid out by the International Swaps and Derivatives Association, the $27 billion corporate reported Friday. Lehman filed for Chapter 11 bankruptcy on Sept. 15 causing thousands of counterparties to record losses, helping to set off the current market frenzy.
Last Thursday, Southwest Corporate FCU reported it wrote off $24.7 million of unsecured debt it held in Lehman Brothers Holdings. And the week before, Members United Corporate FCU reported a $43 million loss for September, due mostly to charges on Lehman Brothers debt.
WesCorp also reported its mortgage securities holdings continue to deteriorate, with unrealized losses on the portfolio growing by $145 million in September, to $1.8 billion.
In its report to members, WesCorp said it continues to plan to hold the impaired securities to maturity, so the securities are not considered other-than-temporarily impaired. "WesCorp remains very confident that our security holdings will continue to perform to expectations and return principal and interest in full," the corporate told its member credit unions.
Several other corporates reported growing losses on their mortgage securities last week, including Southwest Corporate $1.1 billion of unrealized losses; Southeast Corporate FCU $120 million; SunCorp FCU $100 million; First Carolina Corporate CU $43.4 million; and Corporate Central CU $9.6 million.
