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CU System
WesCorps June financials An OTTI hit of 541M
SAN DIMAS, Calif. (7/31/09)--Western Corporate FCU (WesCorp) recorded an additional $541.1 million in Other-Than-Temporary-Impairment (OTTI) costs on its term portfolio for second quarter, WesCorp announced Thursday. That resulted in a net loss for the corporate credit union totaling $538.3 million in June. It was the third consecutive month that OTTI overshadowed WesCorp's positive income from core operations, which reached $2.9 million in June. Most of the OTTI originated with securities that had already experienced prior credit impairment and had further credit deterioration, WesCorp said in a news release. The OTTI on securities previously impaired totaled $519 million, while $22 million of OTTI were from securities not previously impaired. Roughly 70% of June's OTTI is from the portfolio's Option ARM sector, with another 11% from Alt-As. To date, WesCorp has recorded a total OTTI of $6.1 billion, with $4.7 billion--or 77%--stemming from Option ARMs. Net-interest income in June decreased by $700,000 while fee income rose by $1.2 million from May 2009, the corporate said. SFAS 133 expense adjustments of $2.5 million, previously recognized as income during 2007, contributed to the decrease. Adding to that was the recognition of $702,000 previously written down in December 2008 for the restoration of the National Credit Union Share Insurance Fund. Also, operating expenses increased overall by $78,000 from May 2009. "I'm disappointed but not shocked by further OTTI losses in our portfolio," said WesCorp President/CEO Philip Perkins. "Housing market conditions, loss severities, and delinquency pipelines not only failed to improve in the second quarter, there were pockets of further decline which the additional credit losses reflect." Perkins, along with Chief Financial Officer Jim Hayes and Chief Investment Officer Joseph DeMichele, hosted a WesCorp Member webcast Thursday. They provided commentary and analysis on the statements and took questions from participants. For more detail, use the link to WesCorp's website and click on the Financial Report icon.
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