SAFE & SOUND® STAR RATINGS™
Memorandum on findings
PO Box 6882
Richmond, VA 23230STAR RATING:
Credit Union ID 20250
A credit union is a nonprofit, cooperative financial institution,
owned and administered by individual members, who must meet
eligibility requirements to join. Credit unions pay no federal
income tax. Community development credit union are chartered to
serve the needs of low income members who reside in financially
distressed or under-served communities. Seventeen corporate
credit unions, located throughout the country, function as
central banking facilities for the U.S. credit union industry.
The Bankrate proprietary credit union rating model analyzes capitalization, asset quality, earnings, and liquidity to produce composite and component "Star" ratings that can be used as a measure of the rated entity's financial safety and soundness. Additionally, early warning components of the model highlight operating characteristics of immediate concern and recommended follow-up actions.
The analyses are not adjusted for TARP funding and those institutions receiving funds may receive ratings that would differ were the TARP funds adjusted out of the analyses. You can check whether or not this institution has received TARP funding and whether or not they have paid it back at http://bailout.propublica.org/main/list/index
Component star rating:
Capitalization stands as protection against loss for credit union members, creditors and, if applicable, the insurer. Regulators place a high degree of importance upon assessments of capitalization.
Net Capital / Assets
||7.78||Below Peer Norm|
Capital (1) / Assets
||8.07||Below Peer Norm|
(1) Includes loan loss allowance.
Asset quality highlights
Asset quality is a major determinant of the viability of any banking
institution. Poor asset quality will have a very direct impact upon other
components and regulators invest substantial amounts of time and
resources in gauging the quality of loans and investments.
|Nonperforming Asset Ratio (2)||13.74||Higher Than Standard|
|Loss Reserve Coverage (3)||26.91||Well Below Normal|
Asset Growth Rate
(2) Nonperforming Assets/Equity plus Loss Reserves
(3) Loan Loss reserves/Delinquent Loans
Component star rating:
A credit union's profitability is critical to building capital and establishing adequate loss
Return on Average Assets
||-0.06||Substantially Below Average|
Overhead / Average Assets
||5.70||Significantly Higher Than Average|
Note: The earnings assessment is based on the latest four quarters of income and expense.
Liquidity provides funding for normal operations and represents a reserve for
|Balance Sheet Liquidity||25.85||Reasonably good|
Early warning highlights
Early warning indicators identify areas of potential concern, which may lead to financial
deterioration and thus, require inquiry or in depth investigation.
For this institution we have noted:
- Capital Adequacy
- Credit Card Loans
Institution CommentaryOVERVIEW of Institution
ENTRUST is a
chartered credit union, which, as of
reported total assets of approximately $68.5875 million. At that
date, loans and deposits held by the institution amounted to $28.9063 million
and $62.8577 million,
respectively. Equity, the difference between a credit union's total assets and total liabilities, was
determined to have been
$5.3327 million, which was 7.78% of total assets.COMPOSITE SUMMARY
Bankrate believes that, as of
this credit union exhibited a below average condition, characterized by
well below standard capitalization,
satisfactory asset quality,
substantially lower than normal profitability, and
ample liquidity.CAPITAL ANALYSIS
Balance sheet structural changes, through the one year period of time ended
had little or no positive, and quite possibly a negative, impact upon
the institution's capital position.
Our analytical methodology does take into account the quantity,
quality, durability, and direction of net worth, and, as set forth above, we have determined, based upon
our series of tests, that this credit union demonstrates
well below standard
Notwithstanding any of the information contained within this section, we believe, based on our analysis,
that the institution should consider plans for enhancing reported capitalization.
ASSET QUALITY ANALYSIS
The institution reveals, as previously stated, satisfactory
asset quality. That conclusion incorporates our analysis
of data depicting regional economic conditions as well as our computations of
a higher than standard
2011 nonperforming asset ratio and
well below normal
reserve coverage for nonperforming loans.
This credit union does reveal a sizable portfolio of credit card loans.
Credit card approvals should demonstrate managements determinations that borrowers
possess solid capacity to repay such obligations. Specifically, credit card administration
and collection efforts should include steps for dealing with borrower violations of credit
limitations, the monitoring of low monthly payments that result in negative amortization,
the establishment of appropriate workout agreements, and the accurate reporting of credit
card losses.EARNINGS ANALYSIS
For the year ended
this institution recorded a
of -$39.83 thousand, which represented a return on average assets
(ROA) of -0.06%. Year earlier four quarter results amounted to a
of -$112,328, or a
ROA. ROA is the key measurement of profitability within the credit union industry,
and the industry's ROA, for the
six months ended June 30,
We have concluded that, for the four quarters ending
the institution achieved a substantially below average
return on average assets
, and, in fact,
sustained an actual loss for the period as noted perviously
A significantly higher than average overhead ratio is in evidence.
2011, the institution displayed
balance sheet liquidity.
Accounting principles require some securities to be categorized as "Available-for-Sale." Changes in market value of these securities are reflected through the GAAP (Generally Accepted Accounting Principles) net worth of the institution.
Based upon the credit union's present balance sheet, changes in the value of the current level of securities reported as upon future net worth of the credit union.
This credit union has been rated
Negative factors that impacted that rating follow:
Positive factors that impacted that rating follow:
As noted previously, early warning indicators possibly requiring specific
- Capital Adequacy
- Credit Card Loans
As stated, we have determined a Composite Star rating for this credit union of
, indicative of a
below average financial condition. At times, conditions
of financial institutions change rapidly and significantly. Hence, our Safe & Sound Star ratings
should not be deemed predictive of likely future ratings. However, in view of early warning
indicators set forth within this report, in combination with the institution's
financial data, we believe that the Star rating for this institution is
unlikely to change
within the ensuing twelve month period.