SAFE & SOUND® STAR RATINGS™

Memorandum on findings

OAK TRUST
1811 W Diehl Rd, Suite 700
Naperville, IL 60563

STAR RATING: 5 starstarstarstarstar
Predictive Indicator neutral
As of June 30, 2014
Credit Union ID 62513
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 unions are chartered to serve the needs of low income members who reside in financially distressed or under-served communities.

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://projects.propublica.org/bailout/list/index.

INSTITUTIONAL HIGHLIGHTS
Institution Name OAK TRUST
Report Date June 30, 2014
Report Period 6 months
Star Composite Rating, Percentile Rank 5 /99.73
Predictive Indicator neutral
Earnings Rating, Percentile Rank 4 /91.50
Asset Quality Rating, Percentile Rank 5 /75.66
Capital Rating, Percentile Rank 5 /100.00
Liquidity Rating, Percentile Rank 5 /84.03
Institution Asset Size 44.9000 million
Deposits 35.1326 million
Loans 26.5776 million
Equity 8.7912 million
Net Profit/Loss -411.9010 thousand

COMPONENT HIGHLIGHTS

Component star rating: 5 starstarstarstarstar
Capital highlights

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.

Key measures of Capital AdequacyRatio (%)Assessment
Net Capital / Assets 19.58Well Above Peer Norm
Capital (1) / Assets 20.51Well above Peer Norm
(1) Includes loan loss allowance.

Component star rating: 5 starstarstarstarstar
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.

Key Asset Quality information and ratios:Ratio (%)Assessment
Nonperforming Asset Ratio (2)2.39Relatively Low
Loss Reserve Coverage (3)189.39Much Better Than Normal
Asset Growth Rate -34.62Below Normal
(2) Nonperforming Assets/Equity plus Loss Reserves

(3) Loan Loss reserves/Delinquent Loans


Component star rating: 4 starstarstarstar
Earnings highlights

A credit union's profitability is critical to building capital and establishing adequate loss reserves.

Key Earnings information and ratios:Ratio (%)Assessment
Return on Average Assets 1.68Substantially Better Than Normal
Overhead / Average Assets 4.89Significantly Higher Than Average
Note: The earnings assessment is based on the latest four quarters of income and expense.


Component star rating: 5 starstarstarstarstar
Liquidity highlights

Liquidity provides funding for normal operations and represents a reserve for unanticipated disintermediation.

Key measures of Liquidity:Ratio (%)Assessment
Balance Sheet Liquidity19.34reasonably 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:

  • Overhead

Institution Commentary

OVERVIEW of Institution
OAK TRUST is a state chartered credit union, which, as of June 30, 2014, reported total assets of approximately $44.9000 million. At that date, loans and deposits held by the institution amounted to $26.5776 million and $35.1326 million, respectively. Equity, the difference between a credit union's total assets and total liabilities, was determined to have been $8.7912 million, which was 19.58% of total assets.

COMPOSITE SUMMARY
Bankrate believes that, as of June 30, 2014, this credit union exhibited a superior condition, characterized by very strong capitalization, a very high measure of asset quality, normal profitability, and ample liquidity.

CAPITAL ANALYSIS
For the one year period ended June 30, 2014, this credit union reported a very strong rate of growth in equity capital. Balance sheet structural changes, through the one year period of time ended June 30, 2014, have improved 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 very strong capitalization.

ASSET QUALITY ANALYSIS
The institution reveals, as previously stated, a very high measure of asset quality. That conclusion incorporates our analysis of data depicting regional economic conditions as well as our computations of a relatively low June 30, 2014 nonperforming asset ratio and much better than normal reserve coverage for nonperforming loans.

Credit card lending activities should not, based on our analysis of asset quality trends and conditions, have a substantial negative impact upon future results.

EARNINGS ANALYSIS
For the year ended June 30, 2014, this institution recorded a net profit of $752.49 thousand, which represented a return on average assets (ROA) of 1.68%. Year earlier four quarter results amounted to a net profit of $2,177, or a 0.00% 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, 2014, approximated 0.81%.


We have concluded that, for the four quarters ending June 30 2014, the institution achieved a substantially better than normal return on average assets. A significantly higher than average overhead ratio is in evidence. We have noted that the insitution's profitability performance, between the twelve months ending June 30 , 2013 and the twelve months ending June 30 , 2014 exceeded the industry peer comparison.

LIQUIDITY ANALYSIS
As of June 30, 2014, 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 might not have a substantial impact upon future net worth of the credit union.

INSTITUTION SUMMARY
This credit union has been rated superior.
Positive factors that impacted that rating follow:

  • Capitalization
  • Asset Quality
  • Liquidity
As noted previously, early warning indicators possibly requiring specific investigation include:
  • Overhead

As stated, we have determined a Composite Star rating for this credit union of 5 starstarstarstarstar , indicative of a superior 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.

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