WASHINGTON - U.S. Central FCU said it will report $1.2 billion in other-than-temporary-impairments for 2008, writing down $2.3 billion worth of private label mortgage backed securities to slightly less than 50 cents on the dollar.

Dave Dickens, U.S. Central's executive vice president of ALM, said the subprime and Alt-A securities were rated triple-A at time of purchase; however, remittance reports show chinks in the armor of the underlying collateral, and management decided to recognize a permanent impairment. Of the $1.2 billion, $420 million is principal shortfall that won't be recovered; however, the remaining $800 million could return in the form of repayment revenue.

The end result is a $1.1 billion net loss for the year, which compromised U.S. Central's capital to the extent that it required a $1 billion capital injection from the NCUSIF. Dickens said the funds are in the form of a perpetual capital note, which U.S. Central expects to pay back when its existing capital can support its assets. However, thanks to the uncertain nature of the securities market, the note does not have a maturity date.

Despite NCUSIF involvement, Dickens said his credit union is not under conservatorship, and there has not been any management turnover.

Dickens is in Washington meeting with the NCUA; however, he said nobody from U.S. Central is participating in CUNA's corporate task force meeting today, also in Washington. Dickens said he will return to U.S. Central headquarters tomorrow.