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Constitution Corporate reports 2009 losses
WALLINGFORD, Conn. (2/11/10)--Connecticut-based Constitution Corporate FCU announced Wednesday its losses for 2009, subject to audit, at $100.2 million. That compares with $84.3 million net loss in 2008, according to its December financials posted on the corporate's website. Other than temporary impairment (OTTI) of investments totaled $104.3 million, which depletes members' capital shares of $66.8 million to cover the losses above retained earnings as required by the National Credit Union Administration. The OTTI charge includes roughly $24.4 million charged for the fourth quarter, based on an initial analysis by Clayton IPS of the corporate's residential mortgage backed securities. Changes in accounting required under the FAS 115-2, effective Jan. 1, resulted in a $40.6 million increase to the corporate's undivided loss. That provided a retained earnings balance totaling $8.1 million as of Jan. 1, said the corporate's financial statement. Constitution's core earnings--earned before charges for other than temporary impairment and the writedowns of the corporate's capital in U.S.Central during 2008--totaled $4.1 million in 2009, down from $5.1 million in 2008. The decrease is core earnings is due primarily to a $1.6 million decline in net interest income--the result of a narrowing of the LIBOR to Fed Funds spread, which occurred from 2008 to 2009 as the credit market began stabilizing. A wide spread between the two indices benefits Constitution's earnings because many of its assets are indexed to one-month LIBOR, the corporate said. Fees and other income declined by $48,000 while total operating expenses were reduced by $683,000. Constitution ended the year with a prior undivided earnings deficit totaling $25.2 million, which is guaranteed by the National Credit Union Share Insurance Fund.
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