The $18 billion Western Corporate Federal Credit Union last week announced $356 million in other-than-temporary-impairment charges.
The OTTIs mostly came from previously impaired securities, with only $11 million representing securities not previously impaired. Additionally, approximately 76% of WesCorp's total OTTI is from option-ARM-backed securities.
To date, the corporate has taken $6.5 billion in OTTI write-downs that have exhausted all capital, resulting in a retained earnings deficit of $4.6 billion as of Sept. 30.
One silver lining for the NCUA-managed WesCorp is that the regulator depleted all U.S. Central capital shortly after the March conservatorship. So, unlike other corporates, WesCorp only has to contend with its own investment losses.
Still, the losses increased WesCorp's retained earnings deficit to $4.6 billion as of Sept. 30, up from $4.2 billion as of Aug. 31. Total other comprehensive loss decreased to $4.6 billion from $5.2 billion as of August month-end.
Southwest Corporate hasn't yet accounted for U.S. Central's third-quarter losses nor any OTTIs that may result from its own third-quarter investment portfolio evaluation. As a result, the $8 billion corporate's September financial statements show some slight capital recovery since July, when it recorded $113 million in OTTIs related to its second-quarter investment report.
Southwest will deplete $158.8 million in member capital accounts in October to cover its Aug. 31 retained earnings deficit per NCUA guidance. However, that deficit has decreased to $155.6 million as of Sept. 30. Likewise, MCA increased from $393 million as of July 30 to $399 million, a $9 million improvement.
Provided October also produces some gains, the Dallas-area corporate will have at least $241 million in MCA to cover against $62.3 million total remaining in U.S. Central-invested capital and any potential third-quarter OTTIs.
Despite the pending elimination of its retained deficit, Southwest Corporate's accumulated other comprehensive loss totaled nearly $1.2 billion as of Sept. 30.
The $3.5 billion Corporate One also has yet to account for U.S. Central losses and conduct its bi-annual investment review with Clayton, usually scheduled to take place in May and November. However, Corporate One is in much better shape than its larger competitors, reporting a $375,000 net income as of Sept. 30.
Corporate One not only has all of its paid-in capital and MCS intact, it can boast $66 million in reserves and undivided earnings to act as a buffer against its $15 million MCA remaining at U.S. Central. Corporate One's PIC coffers stand at $25.6 million, and MCS is $116.5 million.
However, like other corporates, the Columbus, Ohio-based institution is hoping market correction will reverse its accumulated other comprehensive loss. That line item totaled nearly $341 million as of Sept. 30, more than reserves and undivided earnings, paid-in capital and MSC put together.
Of Corporate One's $41.8 million lost from RUDE over the past year, about half was due to U.S. Central losses ($55.7 million) and half to the retail corporate's own investment losses ($54.8 million). The losses were partially offset by nearly $22 million in earnings during that period.

Instant Insights /

WesCorp Has $356 Million OTTI; Southwest and Corp One Wait for Clayton

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