LENEXA, Kan. — Fitch Ratings didn't downgrade U.S. Central Credit Union's ratings yesterday, despite the corporate's release of its final, externally audited 2007 financials, which show a $51 million net loss for the year. U.S. Central's IDR 'AA+' and Senior debt 'AA+' still remain on ratings watch negative.
The loss is a reversal from previously reported profits of $7 million, and will also result in changes to first-half 2008 numbers.
What happened? Unrealized losses were deemed 'other-than-temporary impairments' (OTTI), forcing the corporate to recognize additional losses of almost $87 million in its securities portfolio. Non-agency residential mortgage-backed securities are to blame, largely from securities in which complete payment of principal was viewed as uncertain.
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On the bright side, external auditors added $29 million in net income after reversing a charge taken by U.S. Central during 3rd quarter 2007 related to the consolidation of its asset-backed commercial paper (ABCP) conduit, Sandlot Funding.
Fitch said in a released statement, "while the above losses are sizeable, the losses are of a magnitude that Fitch considers absorbable for USC's earnings and capital position."
U.S. Central's investment portfolio totals $40 billion.
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