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U.S. Central restates 2007 earnings Fitch upholds AA rating
LENEXA, Kan. (7/15/08)--U.S. Central FCU, the nation’s only wholesale corporate credit union, announced Monday its 2007 and first-half 2008 financial results. The corporate also anounced that Fitch Ratings made no change in U.S. Central's long-term debt rating. U.S. Central, which has total assets of more than $45 billion, reported a net loss for 2007 of $51 million. This compares with net income of $63 million in the prior year. For the six months ended June 30, 2008, U.S. Central generated net income of nearly $30 million. The 2007 loss primarily reflected the turbulent conditions in the global credit markets and the resulting impairment of the value of some securities held in U.S. Central’s investment portfolio, the corporate credit union said. “In a challenging period for the financial institution sector, U.S. Central is in a strong and highly liquid position,” said Francis Lee, president/CEO of U.S. Central. “Our $2.6 billion in total regulatory capital, and access to more than $20 billion in liquidity overall, ensure that U.S. Central will continue to serve as a source of liquidity and support to the Corporate Credit Union Network. “More importantly, due to our solid earnings through the first half of 2008, we have already recouped more than half of the previous year’s loss,” he continued. Principal factors affecting U.S. Central’s 2007 results included losses representing market-to-market adjustments on trading assets and write-downs on certain residential mortgage-backed securities. Offsetting these losses was an increase in net interest income after dividends on membership capital shares of 37%, to $145 million, a 3% increase in fee income, to $19 million, and a 4% decline in operating expenses, to $60 million. “The soundness of our investment portfolio and our prudent risk management practices have enabled U.S. Central to perform well despite the turmoil in the financial services industry,” noted David Dickens, executive vice president of asset/liability management, U.S. Central. “After an in-depth evaluation of our investment holdings by both internal and third-party experts, we are confident our $40 billion investment portfolio consists of high-quality assets that will continue to perform in these difficult markets,” he added. U.S. Central also stated Monday that Fitch Ratings made no change in the credit union liquidity provider’s “AA+” long-term debt rating, which was assigned to U.S. Central in March of 2008. U.S. Central’s short-term rating of “F-1+,” individual rating of “A” and support rating of “1” also are unchanged and remain at the highest levels given by Fitch. Fitch issued a statement after its assessment of U.S. Central’s results of its 2007 financials, which showed a $51 million net loss for the year. Fitch’s release stated “… the losses are of a magnitude that Fitch considers absorbable for U.S. Central’s earnings and capital position.” “During this challenging period for the financial institution sector, U.S. Central is in a strong and highly liquid position,” said Francis Lee, president/CEO of U.S. Central. “Our $2.6 billion in total regulatory capital, and access to more than $20 billion in liquidity overall, ensure that U.S. Central will continue to serve as a source of liquidity and support to the Corporate Credit Union Network. "More importantly, due to our solid earnings through the first half of 2008, we already have recouped more than half of the previous year’s loss," he added. "The ‘AA+’ rating is shared by only two other U.S. depository institutions and, at a time of considerable uncertainty in the financial markets, we believe that Fitch’s release is an ongoing acknowledgement of the continued strength of our balance sheet and our high liquidity position.”
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