The $9 billion Members United Corporate FCU posted potential loss scenarios in its portfolio update on its Web site, www.membersunited.org.
Assuming a 23% U.S. Central member capital share impairment, Members United estimated a 9% depletion of its member capital accounts. However, a different scenario would build in full impairment of the remaining $155.5 million investment in U.S. Central member capital shares, resulting in a 41% depletion of member capital accounts.
If Members United records additional other-than-temporary-impairments due to losses in its own investment portfolio, member capital would be further impaired. For example, a $100 million OTTI would deplete 62% of MCS.
Members United Senior Vice President of Marketing Vic Vrigian emphasized the $100 million figure was purely for illustrative purposes. The corporate does not yet have audited investment numbers, Vrigian said.
However, the corporate said in the report that "Management anticipates that additional OTTI may be required to be recorded in the month of June due to continued severe market conditions." The corporate cited further declines in home values, increasing the amount of loss in foreclosures and increasing unemployment numbers that are reflected in higher default and foreclosure rates.
As of May 31, Members United reported a $122 million retained deficit, down from a $300 million surplus as of Nov. 30, 2008. Of that, $152.5 million is related to investments in U.S. Central, including $38 million in PIC I, $67.5 million in PIC II and a $47 million depletion of MCS, which represents a 23% impairment. Members United also recorded $265 million in OTTIs from its own investment portfolio. As of May 31, $480 million in MCAs and $79 million in PIC remain.
U.S. Central said it will release audited financials on July 10, and that will allow Members United to provide its statements in time to meet members' June 5300 report deadlines.
–handerson@cutimes.com
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