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July 2020 Southwest Corporate Federal Credit Union Capital Distribution

Following a clean financial statement audit report on the National Credit Union Administration, including the NCUA Board’s liquidation activities, an evaluation conducted by the liquidating agent determined that sufficient funds were available for Southwest Corporate Federal Credit Union’s (Southwest Corporate) AME MCA holders to receive a distribution in 2020. The liquidating agent approved a $171.3 million distribution payable in July 2020. This was a pro-rata distribution from the AME to credit unions holding Southwest Corporate MCA claim certificates, equating to a 42.46 percent return of the MCA balance.

This distribution was to the MCA claim holders of Southwest Corporate only; no MCA claimants of other corporate AMEs are eligible for a portion of the distribution. The distribution had no impact on the health or operating level of the Share Insurance Fund.

Frequently Asked Questions on Member Capital Payouts

In July of 2020, MCA holders from the Southwest Corporate Federal Credit Union received a partial distribution. Below are frequently asked questions related to the July 2020 distribution.

Why did the distribution for Southwest Corporate happen in July 2020?

All five corporate asset management estates (U.S. Central, Western Corporate, Members United Corporate, Southwest Corporate, and Constitution Corporate, (AMEs)) 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 $2.4 billion 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 2019 financial statements, and in accordance with standard operating procedures for the AMEs, the liquidating agent compared each AME’s cash to its remaining obligations. The analysis showed that funds were available for a distribution to member capital holders of Southwest Corporate in 2020. This distribution was based solely on cash reserves and was not dependent upon the performance of any other remaining asset or obligation.

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How will the current economic environment affect future distributions?

Economic events, including the fallout from COVID-19, will 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 for the remaining legacy assets.

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How much was the total 2020 Southwest Corporate member capital distribution?

The member capital distribution was approximately $171.3 million, or 42.46 percent of member capital. Member capital holders for Southwest Corporate may receive additional distributions in the future, depending on the performance of, market conditions, and sale date for Southwest Corporate’s remaining legacy assets.

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When and how was the distribution made?

Member capital distributions were remitted via electronic funds transfer (EFT) in July of 2020, using the banking information the liquidating agent has on file.2

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Who received this distributions?

Southwest Corporate member capital holders of record with the liquidating agent received this member capital account distribution. After accounting for mergers, purchases and assumptions, and liquidations, almost 900 open credit unions received a distribution.

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Did capital holders of other corporate AMEs receive a distribution in July 2020?

No. Only the Southwest Corporate AME had sufficient funds at this time for a member capital distribution in July 2020.

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What are the specific costs associated with the Corporate System Resolution Program?

These costs are driven by losses on the Legacy Assets, disposal of other assets acquired in liquidation, bridge corporate transition expenses, interest on borrowings, expenses associated with monitoring the re-securitized Legacy Assets, and other liquidation costs. You can find the current projected range of costs in the "Resolution Costs Detail" section at

For information on current period expenses, refer to the audited financial statements for the Stabilization Fund at the following link: Stabilization Fund Financial Statements

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What are the current borrowing costs from the United States Department of the Treasury?

You can find information on borrowings and associated expenses in the "Borrowing Costs" section of the transparency website at

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Did this distribution affect the Share Insurance Fund equity ratio?

No. Southwest Corporate AME already reimbursed the Share Insurance Fund for all Share Insurance Fund payments related to the liquidation process. The July 2020 Southwest Corporate distribution represented surplus recoveries from the monetization of Southwest Corporate’s 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 Southwest Corporate’s shareholders of record at the time of liquidation.

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1 12 C.F.R. §709.5

2 If a technical issue limits a credit union’s ability to receive the payout via EFT, the payout will be issued in the form of a check and mailed. The NCUA will address these situations on a case-by-case basis.

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