Members United's Legacy Assets Could Generate $60 Million Profit
The struggling $9 billion Members United Corporate FCU today reported some good news in its May financial reports: long-term OTTI projections have improved by $35 million to $60 million, depending upon loss projection model.
However, under current accounting rules, Members United can't record the amount as a one-time gain; rather, it must be recovered over the life of the investment as an adjustment to the interest yield, the corporate explained in the financial reports, posted online.
"Once OTTI calculations stabilize for a couple of quarters, Members United will evaluate adjusting the net interest income yield to recapture the $35 million to $60 million difference," management wrote in the reports.
But, a couple of quarters from now, NCUA will have released its corporate legacy assets plan, which it said will separate toxic assets from corporate balance sheets.
Members United's aforementioned investments are private-label mortgage backed securities that have suffered capital-depleting OTTIs, and are assumed to be among those that will be sold or otherwise separated from individual corporates.
So far, NCUA has refused to make any details of its legacy assets plan public.