U.S. Central quarterly financial report posted

LENEXA, Kan. (5/14/09)--U.S. Central FCU's first-quarter 2009 financial results Wednesday were as expected, with additional other-than-temporary impairment (OTTI) charges at year-end 2008 and first quarter 2009 exhausting all retained earnings and Paid-in-Capital (PIC). Membership Capital Shares (MCS) were depleted by roughly 23%.

U.S. Central noted that its approach to OTTI was revised after the National Credit Union Administration (NCUA) placed it into conservatorship on March 20.

"The revised approach to OTTI will change reported OTTI as of year-end 2008 from $1.2 billion to approximate $3.8 billion, based on Generally Accepted Accounting Principles (GAAP) in effect through 2008, whereby OTTI is recognized based on the mark-to-market value of the securities expected to experience credit losses," said the report.

As of Jan. 1, roughly $2.7 billion of the OTTI charge, representing the non-credit portion of the loss, is added back to the retained earnings under new GAAP issued in April.

For first-quarter, U.S. Central recorded an OTTI charge of $687 million, which represents the projected principal loss of $918 million discounted to reflect the net present value based on the respective effective yield or spread to LIBOR of each security on the date of purchase.

On a cumulative basis through March, principal shortfalls of $2.3 billion with an associated net present value of $1.8 billion are projected from 229 securities. All 525 non-agency residential mortgage-backed and commercial mortgage-backed securities were evaluated by an independent consultant.

The report could be revised further since the 2008 financial statement audit for the wholesale corporate credit union is not yet complete.

To review the entire report, use the resource link.

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U.S. Central First Quarter 2009 Financials


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