U.S. Central Federal Credit Union's 2008 audit, released Sept. 11, produced a balance sheet with $740 million less capital as of Dec. 31 than reported just one month ago.
The additional bottom-line losses were derived from further hits to investments, OTTIs driven by failed monoline insurers and some previously impaired securities which were reversed.
Ultimately, it means 2009′s losses recorded so far this year were covered by capital that didn't exist, and PIC II was impaired before the ink even dried on the issuance.
Recommended For You
That leaves U.S. Central and its member corporates without any member-contributed capital whatsoever, and possible impairments to the NCUSIF's $1 billion capital note, which will be U.S. Central's only form of capital remaining once the dust settles.
Furthermore, at least $3.7 billion worth of negative retained earnings, AKA retained deficit, remains unresolved.
Upon conservatorship, the NCUA Board authorized up to $3 billion to guarantee an undivided earnings deficit or infuse capital in addition to the $1 billion provided in January 2009. NCUA Board approval is required to support U.S. Central beyond $3 billion; if necessary, it could mean more corporate-related hits to the share insurance fund.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
