Like other corporate credit unions, Constitution Corporate FCU's investment portfolio performed worse than previously estimated, requiring a new $1 million-plus OTTI as of March 31.
However, unlike larger corporates that also operate with a capital deficit, the $1.2 billion Constitution Corporate was able to offset the new losses with net income, rounding out the first quarter with a net profit of $708,000.
As of March 31, the Wallingford, Conn.-based cooperative had gained nearly $3 million in interest income, a $913,000 increase over the same period last year. Investment income was only $5 million compared to $8.4 million during the first quarter of 2009; however, dividends paid to members' accounts decreased from $9.6 million in 2009 to only $5.14 million as of March 31, 2010.
Constitution Corp also credited the net profit to a $439,000 reduction in operating expenses from last year--more than half of which came from salaries and benefits.
The quarter's profits were applied toward the corporate's NCUSIF-guaranteed retained earnings deficit, now worth $24.5 million. The assets responsible for the deficit are likely to be included in NCUA's corporate legacy assets plan, which aims to remove both the investment assets and the retained deficit amount from the books of Constitution and other struggling corporates.