The $8.9 billion Members United Corporate FCU reported a $4.6 million net loss for July 2010, driven by $8 million in new other-than-temporary-impairments from its latest investment review.
The red ink gives the corporate an $11 million year-to-date net loss, but the new OTTIs were absorbed by retained earnings and did not impair its remaining $14.6 million in member capital shares. Retained earnings dropped to about $4 million after accounting for the losses.
When preparing its June financial reports, Members United uncovered a one-time formula error, which overstated OTTI arising from a previous review by $1.16 million. The corporate returned capital to members July 30.
The benefits of this action were allocated equitably across the $130 million in membership capital shares that were depleted as of May 25. Affected credit union received a replenishment entry equal to 0.897% of the depletion.
In total, Members United has recorded $610 million on OTTI on its current investment portfolio. However, actual recorded OTTI losses-and the capital impaired to cover them-exceed current Clayton Holdings and Andrew Davidson & Co. loss projections by 15%, $90 million.
Previously recorded OTTI was based on Clayton reviews, however, Members United has since added AD&Co., which is projecting lower losses than Clayton. Other reasons include loan performance that exceeds previous expectations.
Unrealized losses shrank to $883 million. In July 2009, unrealized losses totaled nearly $1.7 billion.