The $8 billion Members United Corporate Federal Credit Union reported an $81.9 million OTTI in its newly released June financial reports, resulting in a $79.3 million net loss for the month.
The failure of two monoline insurers, FGIC and Syncora Guarantee, contributed to the losses. Members United also warned that Ambac and MBIA, which provide credit enhancements to a greater percentage of its investment portfolio, "have experienced ratings downgrades and their credit spreads are trending unfavorably."
The Warrenville, Ill.-based corporate has not yet applied the losses to member capital; Members United said it will wait until it receives financial statements from U.S. Central Federal Credit Union, expected today.
Regardless of the news from Kansas City, Members United is expecting to deplete 100% of paid-in capital shares. However, U.S. Central will determine Members United's exact membership capital shares impairment, estimated to be from 26% with no additional U.S. Central or Members United OTTIs, to as high as 58% impairment, assuming a total loss of U.S. Central's member capital shares.
The optimistic scenario would leave Members United with a 3.93% capital ratio, while the pessimistic scenario leaves the corporate with just 2.21% net worth.
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