The $2.2 billion Corporate One FCU's year-end financials reveal a $4.35 millionnet profit, fortified net worth and the revelation that the NCUAprovided $15 million worth of assistance to merge in the $1.5billion Southeast Corporate FCU, which was effective July 1,2012.

“The assistance provided was in the form of cash and aconditional indemnification agreement to cover losses on certainassets acquired by Corporate One,” the Columbus, Ohio-basedinstitution said in its financial report, posted on itswebsite.

The financial reports go on to state that per NCUA regulations,intangible assets in excess of one half percent of moving dailyaverage net assets must be deducted from a corporate's adjustedcore capital.

Over the next eight years, the NCUA will allow Corporate One toadd back the adjustment to core capital for any excess intangiblesrelated to core deposits.

Corporate One President/CEO Lee Butke said he could not commenton the NCUA's merger assistance, but did say the merger triggeredrequired purchase accounting, as opposed to the “pooling”accounting rules in the past, and created the intangible assets anddeduction from capital ratios.

Adding back the balance of intangible assets that exceed .5% ofaverage assets changed leverage ratios only 0.15%, he said.

As of Dec. 31, 2012, Corporate One's retained earnings ratio was0.87%, its interim leverage ratio was 6.54% and its total riskbased capital ratio was 20.03%, all above NCUA requirements.

“These numbers are all very strong compared to any corporate andare strong in terms of regulatory measures,” Butke said.

Corporate One also passed the liquidity stress testing withflying colors as of 2012 year end. In both the base scenario and a300 basis points increase in rates, the corporate's net economicvalue ratio exceeded 4%, more than double the required 2%.

This represents a significant increase over 2011 year endnumbers, which were just slightly above 2% after the 300 basispoints stress test, according to the financials available on thecorporate's website.

Interestingly, the financial reports said that because NetEconomic Value incorporates unrealized losses on the corporate'ssecurities categorized as “available for sale” due to uncertaintyregarding liquidity and credit, it isn't as effective a tool tomeasure interest rate risk.

“Currently, the NEV and NEV ratio are more reflective ofmarket/spread risk,” the corporate said in its financial report.“Throughout this time, the fundamentals of how we manage interestrate risk have not changed.”

The addition of new capital from the merger and perpetual contributed capital raised by Southeast Corporateprior to the merger increased NEV, as did significant improvementsin the fair values of securities in 2012, the corporate said.

Following the NCUA's collection of toxic legacy assets fromcorporates and improvements in the securities market, thedifference between Corporate One's book value and fair values ismuch smaller than during the height of the financial crisis: $436.7million for book value versus $403 million in fair value as ofDecember 31.

The Southeast Corporate merger did add more mortgage backedsecurities to Corporate One's portfolio, but the book value is just10% of the corporate's total investable portfolio.

Securities with ratings below A- represent the majority of theportfolio, some $318 million worth, with $143 million supported bynear-prime collateral and nearly $100 million supported bysub-prime. Another $86 million in MBS are less-risky agencysecurities.