New losses at corporate credit unions increased the Temporary Corporate Credit Union Stabilization Fund loss provision by $1 billion during the month of March, the NCUA reported.
Chief Financial Officer Mary Ann Woodson told the NCUA Board during April's open meeting that the increase was based on analysis that showed a "significant decline in the level of cash flows for mortgage-backed securities at the corporate credit unions." The reduced cash flows resulted in a significant increase to the fund's loss exposure and necessitated the provision increase, she said.
The additional provision increases the stabilization fund's liabilities to just over $7 billion, about a 17% increase.
NCUA Director of Public and Congressional Affairs John McKechnie said the adjustment is consistent with OTTIs being recorded at corporate credit unions.
"Furthermore, every subsequent credit analysis performed by corporates has shown greater losses," he said.
The seized $22 billion Western Corporate FCU reported nearly $50 million in new credit losses in its March 2010 financial reports, following $335 million in new OTTIs recorded in December 2009.
The $32 billion U.S. Central FCU, also under NCUA control, recorded $57.7 million in new OTTIs for first quarter 2010, after applying a whopping $772 million in OTTIs during fourth-quarter 2009. Together, the two have recorded nearly $1.2 billion in new credit losses during the past two quarters.
The $10 billion Members United Corporate FCU has not released any OTTI information for fourth-quarter 2009 or first-quarter 2010. Although the corporate said it expects to record new credit losses once its McGladrey and Pullen review is complete, the amount is not expected to exceed $150 million still remaining in member capital accounts.
The $10 billion Southwest Corporate FCU recorded $103 million in OTTIs during fourth-quarter 2009 but did not take OTTI during first-quarter 2010, recording instead a $6.7 million net profit.