Auditor Doubts SW Corp's 'Ability to Continue'
Accounting firm Crowe Horwath put an asterisk on its audit approval of Southwest Corporate FCU's 2009 annual report, and it wasn't the usual exception that member capital shares should be reported as liabilities instead of equity.
Instead, the Oak Brook, Ill.-based auditor said uncertainties in the corporate network raise "substantial doubt about Southwest Corporate's ability to continue as a growing concern."
Crowe Horwath listed among the uncertainties the continuance of NCUA's regulatory forbearance on corporate capital requirements, proposed new corporate regulations that include tougher capital requirements, and the NCUA's plan for corporate legacy assets, which is still under wraps.
Southwest Corp reported a $134.6 million retained members' deficit as of Dec. 31, 2009, but also $240.6 million in membership capital shares. That deficit has since been resolved: Southwest reported $6.7 million in retained earnings and $107 million in member capital accounts as of March 31, 2010, resulting in a 1.36% capital ratio.
Chief Financial Officer Melissa Wardell said Southwest Corporate "remains committed to developing a business and capitalization model that will allow it to adapt to whatever regulation and legacy asset plan emerges."
The $10 billion corporate is one of the first to make its 2009 audited financial reports public. Southwest Corp's April 21 annual meeting was attended by approximately 30 members, said a credit union spokesman.