COLUMBUS, Ohio (5/7/10)--The $3.7 million asset Corporate One FCU reported its unaudited financial statements for the three months ended March 31, noting that it remains in a positive Reserves and Undivided Earnings (RUDE) position at $25.7 million, with its members' capital shares and paid-in capital intact. Earnings for the quarter totaled $2.17 million, exceeding the Columbus, Ohio-based corporate's budget by $1.42 million. Net interest income was roughly $481,000 more than budgeted, and net settlement income was $143,000 greater than budgeted, largely due to better-than-expected sales of its off-balance sheet products, namely SimpliCD, the corporate said. The financials are on its website. Operating expenses were roughly $403,000 under budget. Corporate One's coverage ratio, which measures the amount of gross settlement expense and total operating expenses covered by gross settlement income, was 87.1% for the period, the corporate said. During first quarter, Corporate One recorded other-than-temporary-impairment (OTTI) charges of $1.56 million related to credit loss on nine mortgage-related securities. Total capital was $169.3 million--which includes the $25.7 million in RUDE, membership capital shares of $117.9 million and paid-in capital (PIC) of $25.7 million. Capital decreased about 20% or $43.2 million since March 31, 2009. That decrease was due to $44.1 million in OTTI charges related to securities, as well as $15.1 million in charges related to U.S. Central FCU capital investments. Corporate One's financial statement noted that if it had classified members' share accounts as liabilities, in accordance with generally accepted accounting principles, members equity as of March 31 would have been at a $159.8 million deficit. Its mortgage-related securities have a book value of about $549.9 million as of March 31, representing 14% of the book value of Corporate One's total investable portfolio. Monoline insurers have accounted for OTTI charges. Corporate One has placed reliance on Financial Security Assurance Inc. and MBIA Inc., which are paying principal and interest claims. Deterioration of these insurers could result in additional OTTI charges, the corporate said. Because monline insurer Ambac has a temporary moratorium on claims payments while it undergoes a plan of rehabilitation, the corporate said it would "continue to place reliance on Ambac for full repayment. However, the realization of surplus note proceeds is subject to many factors including a minimum capital requirement, which in turn is a function of the ultimate performance of Ambac's insured exposures." The corporate noted that since 2008, it recorded total OTTI, or unexpected credit losses, of $52 million. "To date, we have had principal shortfalls of approximately $4.60 million," Corporate One's report said. Its regulatory capital ratio was nearly $169.3 million, with a regulatory capital ratio of 4.53%, while reserves and undivided earnings totaled $25.7 million for a retained earnings ratio of 0.69%.