Corporate Capital Distribution Process

Following the liquidation of five corporate credit unions during the Corporate System Resolution effort, the NCUA Board, as liquidating agent, issued claim certificates to all liquidated corporate credit union membership-capital account (MCA) and paid-in capital (PIC) holders. The claim amounts were based on the balance each credit union holding MCA and PIC was instructed to write off in the year preceding liquidation, during the financial crisis, regarding MCA and PIC balances at corporate credit unions. These certificates represent claims against the individual asset management estates (AMEs) of each failed corporate credit union.

Since then, employees in the NCUA’s Office of General Counsel, Office of Examination and Insurance, the Asset Management and Assistance Center (AMAC), and members of the NCUA Guaranteed Note (NGN) Committee have been working to maximize recoveries to the AMEs. Until the AMEs are closed, an annual evaluation of recoveries and obligations will be done to determine if sufficient funds are available for distribution to MCA and PIC holders.

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 is 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 is 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 has no impact on the health or operating level of the Share Insurance Fund.

Per the NCUA regulations, 12 C.F.R. §709.5(e), “[a]ll unsecured claims of any category or class or priority described in paragraphs (b)(1) through (b)(7) of [§ 709.5] shall be paid in full, or provisions made for such payment, before any claims of lesser priority are paid. If there are insufficient funds to pay all claims of a category or class, payment shall be made pro rata. Notwithstanding anything to the contrary in [§ 709.5], the liquidating agent may, at any time, and from time to time, prior to the payment in full of all claims of a category or class with higher priority, make such distributions to claimants in priority categories described in paragraphs (b)(1), (b)(2), (b)(3), (b)(4), and (b)(5) of [§ 709.5] as the liquidating agent believes are reasonably necessary to conduct the liquidation, provided that the liquidating agent determines that adequate funds exist or will be recovered during the liquidation to pay in full all claims of any higher priority. If a surplus remains after making distribution in full on all allowed claims described in paragraphs (b)(1) through (b)(9) of [§ 709.5], such surplus shall be distributed pro rata to the credit union's shareholders.”

After ensuring adequate funds exist to fully pay all prior levels, it was determined that a partial distribution MCA holders at § 709.5(b)(7) for Southwest Corporate is permissible.

Calculating the Capital Distribution

On a quarterly basis, the liquidating agent calculates the anticipated recovery on assets and estimated expenditures for each corporate AME, along with tabulating past actual results. The reports on these calculations for the last three years can be found on the NCUA’s website.

All five corporate AMEs (U.S. Central, Western Corporate, Members United Corporate, Southwest Corporate, and Constitution Corporate) still have potential obligations to reimburse the NCUA for guaranty payment obligations on the NGNs, which represent more senior claims than those of MCA and PIC holders. The guaranty payment obligations total approximately $2.4 billion between now and the middle of 2021. NCUA regulations permit distributions to MCA and PIC holders only after all senior claims have been fully satisfied, or sufficient provisions have been made for them.

Using a conservative provisioning approach and audited year-end 2019 financial statements, the liquidating agent has compared each estate’s cash to its remaining obligations. This analysis, which is completed annually in accordance with standard procedures, shows that funds are available for an interim payout to MCA holders of Southwest Corporate.

In Millions of Dollars
As of December 31, 2019
U.S. Central Western Corporate Members United Southwest Corporate Constitution Corporate
Available Cash (outside of NGNs) 301 0 141 267 0
NGN Notes – NGN Cash/Treasuries (1,118) (1,228) (127) (92) (84)
All Remaining Fiduciary Liabilities (16) (2,747) (4) (3) (23)
Distribution Potential (832) (3,975) 10 171 (107)
Approved Distribution 0 0 0 (171) 0

The chart below reflects the expected eventual payment to members and capital holders of the liquidated corporates as of December 31, 2019. Our projections indicate that additional funds will be available for distribution to Southwest MCA holders, along with U.S. Central, Members United, and Constitution. However, until the underlying distressed assets securing the related NGN securities have been monetized, and liabilities paid, there are no guarantees of future performance. The liquidating agent will continue to take whatever actions are needed to safeguard and monetize assets under its management and will evaluate future distributions based on December 31, 2020, audited financial statements.

In Millions of Dollars as of Dec. 31, 2019 U.S. Central Western Corporate Members United Southwest Corporate Constitution Corporate
Distribution Potential (see above) (832) (3,975) 10 171 (107)
MCA/PIC Distributions Approved/Paid 0 0 0 (171) 0
Net Realizable Value Estimate of Remaining Assets 2,498 1,491 311 298 113
Projected Recovery from US Central AME N/A 67 267 234 30
Projected Funds Available to Distribute 1,6661 (2,417) 588 532 36
Remaining MCA/PIC to Distribute (1,986) (1,144) (572) (232) (67)
Potential Dividend to Members 0 0 16 299 0

Corporate Capital Distributions and the Share Insurance Fund

The Temporary Corporate Credit Union Stabilization Fund was established for the corporate credit union liquidations as part of the financial crisis in 2010. The Stabilization Fund was principally responsible for covering losses of the failed corporates until it was closed and the liabilities were assumed entirely by the Share Insurance Fund in 2017.

The payment of insured shares by the Share Insurance Fund becomes a claim against the liquidation estate of the closed institution, under 12 C.F.R. § 709.5(b)(6). Before any funds can be paid out at the (b)(7) level – MCA – all higher levels must be paid in full, or provisions made for such payment.

The Share Insurance Fund has been made whole for the payout of insured member shares with respect to Southwest Corporate. Additionally, provisions were made for all anticipated continuing liquidation expenses, including obligations to reimburse the Insurance Fund for potential guaranty payments or the funding of other liquidating expenses. Thus, the distribution to MCA claim certificate holders will have no impact on the Share Insurance Fund.

Electronic Funds Transfer Payments Form

This authorization agreement for electronic funds transfers (EFT) is intended for use by federally insured credit unions, not NCUA vendors or the public.

NCUSIF Authorization for EFT Payments in PDF (28 KB)

This form provides credit unions with a convenient means of providing the liquidating agents with needed information to make electronic payments to credit unions. The completed form can be mailed or faxed to the liquidating agents using the information provided on the bottom of the form.

Any comments or questions should be directed to the NCUA’s Office of the Chief Financial Officer at or hotline 877.452.1463.

Corporate Capital Distributions and COVID-19

This distribution is entirely unrelated to the COVID-19 pandemic. Rather, it is the result of the liquidating agents’ annual evaluation of funds available for distribution. Although recent news coverage has focused on the federal government’s injection of funds into the economy to help American citizens in response to COVID-19, it should be noted that the liquidating agents have been diligently working on the corporate liquidation cases since 2010. In past years, distributions were made from all corporate AMEs to various creditor levels, based on available recoveries.


1 As this amount is gross, and the prior line in the chart shows distributions from U.S. Central to the other four corporates. The funds available to distribute to the system equal $1.67 billion less the funds projected to be distributed to the other four corporates.

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