Losses at U.S. Central Federal Credit Union, which was seized by regulators in March, continue to trickle down to other credit unions.
The Lenexa, Kan., credit union posted a massive $1.1 billion loss for the first half. Its 27 corporate credit union members then began accruing an additional $500 million in losses to their capital stock in U.S. Central. Some of those losses will be passed on to their credit union members in the coming months.
Members United Corporate Federal Credit Union of Warrenville, Ill., told its 2,000 members that the U.S. Central move will erase another $81 million of its capital, which, coupled with losses on its mortgage-backed securities, will eventually force it to pass on a $205 million depletion of its own member capital shares.
Southeast Corporate Federal Credit Union in Tallahassee, Fla., said it expects to eventually pass on about $6.1 million in charges from the loss of its capital in U.S. Central to some of its members.
Constitution Corporate Federal Credit Union of Wallingford, Conn. told its members that the losses at U.S. Central will force it to charge off 72% of the shares its members own, a total of $48.4 million.
U.S. Central had been telling its corporate credit union members for months that they could charge off just 23% of their capital shares — roughly $287 million. But on July 31, U.S. Central reported another $537 million of losses on mortgage-backeds, meaning 63% of member capital stock will be wiped out.