The $1.3 billion Constitution Corporate Federal Credit Union sunk further into insolvency, reporting an additional $24.4 million OTTI in December financials and increasing its unaudited prior undivided earnings deficit to $25.2 million.
All member contributed capital was eliminated in September. The deficit is guaranteed by the National Credit Union Share Insurance Fund.
December's losses are the result of Constitution Corp's latest Clayton IPS mortgage backed securities review. However, the Wallingford, Conn.-based corporate said it is working on its internal analysis and may adjust the impairment.
Like other corporates, Constitution's core earnings fell in 2009 due to the decreased spread between LIBOR and Fed Funds, compared to 2008's abnormally wide spread.To its credit, the corporate reduced operating expenses by $683,000 in 2009. Budget cuts included eliminating nearly one-quarter of full time positions, reducing benefits for remaining employees, and restricting travel and marketing spending.