Central 1 Credit Union posted a profit of $16.7 million for the year ended December 31, 2011, down from $43.6 million in 2010, the central financial facility and trade association for the B.C. and Ontario credit union systems said Tuesday.

The credit union says that market volatility which had resulted in mark-to-market losses on the fair value of financial instruments held by Central 1 improved in the fourth quarter. Credit spreads on provincial and corporate debt also narrowed, resulting in stronger earnings than had been reported earlier in the year.

Fourth quarter profit was $15.4 million.

“Our core business remains strong and profitable,” says Don Rolfe, president and CEO. “The market turbulence resulted in a decrease in the fair value of some financial instruments we hold but the quality of our investment portfolio remains high. The majority of Central 1’s investments are in Canadian government debt and senior bank debt, most of which we expect to hold to maturity.”

Central 1 does not hold any European sovereign debt, the credit union says.

Total assets at year-end were $14.6 billion, compared to $13.7 billion in 2010.

Return on average equity was 2.6%, compared to 7.4% in 2010.

Central 1 paid $7 million in dividends to its member shareholders.

After taxes and dividends, $4.6 million was transferred to retained earnings, which amounted to $304.7 million at year-end. The credit union says Central 1 is very well capitalized, with a regulatory capital base of $675.4 million and a ratio of regulatory capital to risk-weighted assets of 34.8%.

Central 1 represents a consumer-oriented, full-service retail financial system that serves 2.9 million members and holds $80 billion in assets and is owned primarily by its member credit unions, 45 in B.C. and 113 in Ontario.