Memorandum on findings

ENTRUST

PO Box 6882
Richmond, VA 23230

STAR RATING: 2
Predictive Indicator neutral
As of June 30, 2011
Credit Union ID 20250

INTRODUCTION

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 HIGHLIGHTS

Institution Commentary

OVERVIEW of Institution
ENTRUST is a federally chartered credit union, which, as of June 30, 2011, 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 June 30, 2011, 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 June 30, 2011, have 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 capitalization. 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 June 30, 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 June 30, 2011, this institution recorded a net loss of -$39.83 thousand, which represented a return on average assets (ROA) of -0.06%. Year earlier four quarter results amounted to a net loss of -$112,328, or a -0.17% 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, 2011, approximated 0.77%.

We have concluded that, for the four quarters ending June 30 2011, 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.

LIQUIDITY ANALYSIS
As of June 30, 2011, the institution displayed reasonably good 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.

INSTITUTION SUMMARY
This credit union has been rated below average.
Negative factors that impacted that rating follow:

• Capitalization
• Earnings

Positive factors that impacted that rating follow:

• Liquidity

As noted previously, early warning indicators possibly requiring specific investigation include:

• Capital Adequacy
• Credit Card Loans
• Overhead

As stated, we have determined a Composite Star rating for this credit union of 2 , 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.