CU Times - 5/4/2009
Members United recorded a $511 million of losses against its capital base as of February month-end, wiping out all of the $10 billion institution’s retained earnings and paid-in capital. Member capital shares will also take a $129 million hit.
The losses include a $234 million total capital loss from U.S. Central PIC and a $266 million OTTI that represents future credit losses on Member United’s residential mortgage backed securities.
“Total capital of $866 million can absorb this base case loss estimate, and the remaining $355 million will either serve as the foundation to rebuild upon or will absorb future losses if the markets continue to deteriorate,” Members United told members in an e-mail this morning that preceded today’s financial update Webinar. Slides from the Webinar will be posted to Member United’s Web site later today. (www.membersunited.org)
The securities portfolio OTTI includes an additional write down on Lehman Brothers unsecured debt. Other losses include an additional loan loss allowance for a line of credit extended to the failed Central States Mortgage, and a $2 million NCUSIF impairment.
“After 23 years of working to put money in the pockets of credit unions, it pains me to have to report these results to you. But with these actions, some of the items causing uncertainty are behind us,” said CEO Joseph Herbst.