April 2021 Corporate Capital Credit Union Distributions

All five corporate asset management estates (AMEs), U.S. Central, Western Corporate Federal Credit Union, Members United, Southwest, and Constitution Corporate Federal Credit Union, still have potential obligations to reimburse the NCUA for guaranty payment obligations made on the NCUA Guaranteed Notes (NGNs), which represent more senior claims in the payout priorities.¹ The obligation to reimburse the NCUA for guaranty payments totals approximately $130 million between now and the middle of 2021. NCUA regulations permit distributions to depleted capital holders only after all more senior claims have been fully paid or sufficient provisions have been made for them.

Using a conservative provisioning approach and audited year-end 2020 financial statements, and in accordance with standard operating procedures for the AMEs, the liquidating agent has compared each AME’s cash to its remaining obligations. This analysis shows that funds are available for a distribution to member capital holders of U.S. Central, Members United, and Southwest. The distributions can occur, regardless of current and future economic events, as they are based solely on cash reserves, and not dependent upon the performance of any other remaining asset or obligation.

Economic events, including the fallout from COVID-19, may impact the amount and timing of any future distributions as the future performance and ultimate monetization of remaining assets will depend on underlying market conditions and investor demand.

The member capital distributions are shown in this chart. Member capital holders may receive additional distributions in the future, depending on market conditions and the sale of remaining legacy assets.

Member capital distributions will be remitted via electronic funds transfer (EFT) in April of 2021, using the banking information the liquidating agent has on file.² If the credit union previously provided its EFT information to the NCUA and no changes are required, no further action is needed. If NCUA does not have your EFT information or you are unsure, please complete authorization agreement for EFT payments make necessary updates. If the NCUA does not have EFT information on file, we will reach out to distribution recipients to complete the authorization agreement for EFT payments. The liquidating agent will work with each non-credit union distribution recipient to ensure timely receipt of the distribution.

U.S. Central, Members United, and Southwest member capital holders of record with the liquidating agent will receive member capital account distributions. After accounting for mergers, purchases and assumptions, and liquidations, over 1,800 active credit unions will receive a distribution.

Corporate member capital holders can use the membership-capital account (MCA) balance as noted on the 2010 claim receipt and multiply that balance using the percent stated above to arrive at its estimated distribution. A capital holder may recognize that amount in its income statement as other operating income and record a receivable on its balance sheet for the same amount.

For example, Credit Union ABC calculates its payment from the capital distribution to be $106,150. Credit union ABC would make the following journal entry:

Debit:Accounts Receivable$106,150
Credit:Other Operating Income$106,150

For Call Report purposes, if necessary, the member capital distribution should be reported on the Statement of Income and Expense on line item 13 – Other Operating Income. The corresponding receivable should be reported on the Statement of Financial Condition on line item 24c – All Other Assets.

The three corporate AMEs referenced above have sufficient funds at this time for a member capital distribution in 2021. The liquidating agent will perform this analysis semi-annually to determine if sufficient funds are available at that time for additional distributions.

It does not. The three corporate AMEs already reimbursed the Share Insurance Fund for all Share Insurance Fund payments related to the liquidation process. This distribution represents surplus recoveries from the monetization of these corporates’ assets. Once the Share Insurance Fund is repaid, any remaining funds (after monetization) must be distributed first to the capital holders, and then (should funds remain) as a pro rata dividend to each of the corporate’s shareholders of record at the time of liquidation.

For updates and more detailed information, visit these sites:

• Corporate Asset Management Estate Recoveries and Claims;
• NGN Questions and Answers;
• Corporate System Resolutions Costs; and
• NGN Program