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Members United reports 81.9M in OTTI
WARRENVILLE, Ill. (8/4/09)--Members United Corporate FCU reported an $81.9 million loss in other than temporarily impairment (OTTI) funds in its June financial report, just released. That means its net loss for the month will be $79.3 million. At the time of the report, Members United had not applied the losses to member capital because it was waiting for the audited financials from U.S. Central FCU. Members United attributed the losses to the downgrading of several monoline insurers who continue to experience significant losses from guarantees they made on credit default swaps (CDS) and collateralized debt obligations (CDO) backed by residential mortgage securities. The corporate does not own any CDOs or hold any CDS contracts. Two monoline insurers, FGIC and Syncora Guarantee (SGI), were deemed permanently impaired and RMBS securities wrapped by these insurers were subjected to OTTI. Also, MBIA and Ambac have experienced ratings downgrades and their credit spreads are trending unfavorably, said the corporate's financial statement. Assets at Members United as of June 30 totaled $8.4 billion. Cash and overnight deposits at U.S. Central FCU totaled $2.8 billion, fair value of marketable securities represented $3.5 billion, loans to members totaled $0.9 billion, and term deposits at U.S. Central totaled about $1.1 billion. Members United's capital ratio stands at 3.93%--below the 5% regulatory requirement. However, the National Credit Union Administration issued an order recently allowing corporates to reference their Nov. 30, 2008 capital levels, which exceeded the 5% requirement for Members United. To access the report, use the resource link.
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