After releasing November financial statements, in which manycorporate credit unions wrote off 100% of their U.S. Centralcapital investments, only five can say their capital remainsunimpaired: the $2 billion Corporate America Credit Union, the $2.2billion Corporate Central Credit Union, the $3.5 billion CorporateOne Federal Credit Union, the $92 million Iowa Corporate CentralCredit Union and the $1 billion Volunteer Corporate CreditUnion.
Of the five, Corporate America and Corporate Central have evenraised paid-in capital from members, getting a head start onproposed NCUA regulations that will likely increase the requiredratio of noncallable, GAAP-approved PIC to moving averageassets.
As of Nov. 30, Corporate Central reported $59 million in Tier Onecore capital, the result of its successful 2009 “PIC-50″ issuancethat converted member capital shares into $47.4 million in PIC. Thenest egg puts the Muskegon, Wis.-based corporate at 3.03% Tier Onecapital and nearly 8% total capital after including $95.5 millionin unimpaired membership capital shares.
And President/CEO Bob Fouch played Santa on Christmas Eve,delivering some good news in the form of December's investmentreport, posted on Corporate Central's Web site(www.corpcu.com).
“The impairment of capital shares at U.S. Central reduced CorporateCentral's retained earnings significantly, but it is very importantto note that NONE of our members' capital shares were impaired as aresult,” Fouch wrote in the report.
Corporate Central doesn't appear to have much risk in its ownportfolio to worry about, either.
“As we have communicated many times in the past, we have notpurchased any nonagency mortgage-related securities since early2004,” Fouch wrote. “Of the $1.68 million in home equity ABS weown, $1.49 million are securities that were issued in 1999.”
It appears Corporate Central's only pressing concern is buildingretained earnings, $11.8 million as of Nov. 30, which produces an0.60% retained earnings ratio.
Corporate America President/CEO Thomas Bonds dubbed the fiveinstitutions “The Solvent Five” in a letter to Credit Union Timesin which he objected to industry analyst Marvin Umholtz's statementthat the corporate system has no capital left.
“It is indisputable that the corporate network, taken as a whole,failed its members. But to paint all corporates with the same broadbrush is doing a disservice to the member/owners of thosecorporates that actually benefited them throughout this crisis,”Bonds said.
Corporate America has not yet written off 100% of its U.S. Centralcapital, Bonds said, but the remaining amount is “less than ourDecember net income.”
The Irondale, Ala.-based corporate raised $40.6 million in PIC lastyear, including more than $4 million in the fourth quarter, for atotal of $54 million as of Nov. 30. Member capital accountsnumbered $22 million, and undivided earnings add another $8 millionto capital.
Bonds also said his corporate also added 39 new members in2009.
The Columbus, Ohio-based Corporate One survived a November Claytonportfolio review with all member capital intact, writing off $32.2million, but leaving more than $25 million in reserves.
In November financial reports posted online(www.corporateone.coop), CEO Lee Butke said current Claytonanalysis indicates Corporate One does “not anticipate having toimpair our members' capital in the future.”
Corporate One reported $25.7 million in PIC and another $118.4million MCS. Add in $25.6 million RUDE, and Corporate One membershave nearly $170 million in their coffers.
Corporate One does have some investment worries of its own, writingoff $28 million in November from its own securities portfolio,which included a $10 million hit on securities covered by failedmonoline insurer Financial Guarantee Insurance Corp.
Of Corporate One's $2 billion securities portfolio, $1.35 billionare asset-backed, $454 million are mortgage-backed, $187 millionare corporate debt, with the $17 million balance ingovernment-sponsored enterprises.
Regardless, the corporate picked up eight new members in Octoberand November, Butke reported.
VolCorp CFO Jeff Merry said his corporate will have $2.9 million inretained earnings at year-end after writing off its remaining $2.1million in U.S. Central capital.
According to VolCorp's November month-end financials, posted on itsWeb site (www.volcorp.org), the Nashville, Tenn.-based institutionreported another $50.5 million in membership capital shares.
Like Corporate Central, VolCorp's primary concern is retainedearnings, currently at 0.37% to moving average assets. Merry alsoreported that “high asset levels” had put “a squeeze on the RE andcapital ratios.”
Nonetheless, President/CEO Rick Veach also played Santa to members,announcing in his December newsletter that “we could meet thecontributed capital requirements of the new NCUA corporate ruleswithout any additional capital from members.” This is assuming asuccessful conversion to PIC, as the institution does not have thetier-one qualifying accounts on its books.
Iowa Central Corporate does not make its monthly financial reportsavailable to the public. However, the Des Moines, Iowa-basedinstitution had already written off 100% of its U.S. Centralcapital as of Sept. 30 per its NCUA 5310 report. Member capitalaccounts numbered $8.3 million and retained earnings stood at $5.5million as of Sept. 30. The comparatively tiny $92 millioncorporate reported nearly $14 million total capital.
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