"It's extremely frustrating," said Members United President David Preter. "This is, by far, the best year ever in terms of member appreciation and the things we can do from an income perspective. In fact, I think September was our best month in history before the extraordinary items were factored in."

Where's the money coming from? It's beginning to sound like a broken record, but the spread between assets earning sky-high Libor rates and liabilities paying out Fed funds rates is so wide, U.S. Central's Chief Financial Officer Kathryn Brick called September's year-to-date net income numbers "pretty normal," at least as far as the end result is concerned.

U.S. Central's Sept. 30 financials reveal a $45.8 million year-to-date net income, despite also recording a year-to-date $27.6 million net loss on financial instruments. This year's Libor-Fed funds spread has allowed U.S. Central to do more with less, allowing it to almost keep pace with net interest income numbers posted this time last year, despite assets shrinking from $51.8 billion to $38 billion.

Is U.S. Central's shrinking assets cause for worry? The corporates' corporate has lost more than a quarter of its assets since Sept. 30, 2007.

"You have to think about our role in the corporate network," Brick said. "We're kind of like a sponge, so if there's excess liquidity, we get puffed up, and if there's not excess, we're the first to be squeezed out."

In fact, U.S. Central's assets fluctuate quite wildly compared to its individual natural person counterparts, and even other corporates. Communications Senior Vice President Austin Braithwait said U.S. Central has experienced numerous asset swings in the past eight years, with 2000 being the biggest. Assets were $17 billion at one point and had doubled just six months later, he said.

"It's a big part of what we do," Braithwait said. "We just stand ready waiting to absorb it or let it out."

Will U.S. Central coast into an average year despite overall financial market turmoil? Brick said she thinks so, though she does expect to take some impairments by year-end.

U.S. Central is still holding out some hope for fair value accounting, citing an Oct. 29 Securities and Exchange Commission roundtable event as proof the issue still has some legs in the U.S., as well as discussion on the topic by the European Union and International Accounting Standards Board.

"You can't write this stuff back up, so many people don't want to write values down until they know for sure what the rules will be," Brick said.

Members United's Preter and CEO Joe Herbst said they made the assumption that the generally accepted accounting principles standards won't change and decided to take their impairments in September.

Members United had its entire portfolio reviewed by three outside parties, as well as conducting its own internal review, before releasing its Sept. 30 financials. Despite the decision to write down some investments, Preter said Members United's securities are still performing as promised.

Preter and Herbst are among many corporate executives who have expressed frustration at having to write down the value of some investments because even those that have suffered losses on the asset side of the balance sheet are still paying full principle and interest on time and as promised.

Members United doesn't expect any more losses like those associated with the Lehman Bros. bankruptcy because the investment was the only of its kind on the books. Members United does hold some corporate debt but nothing that's "of any concern," Preter said.

Will the corporate experience more losses on its securities portfolio this year? Preter said in today's market, financial managers can't predict that with any more certainty than a homeowner could predict how much his or her home value will drop or rise in the next year. But, he said September's losses included a sweep of the entire portfolio, and aggressively pinpointed securities that had suffered downgrades or price volatility and had the potential to suffer future losses.

"Risk is how credit unions manage their business. It's what we do, and risk is inherent in everything we do," Preter said.

Though the losses took a chunk out of retained earnings, Members United had plenty of capital to spare and remains well above the 5% regulatory minimum at 6.83%.

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