Introduction to Red Oak Credit Union
Red Oak Credit Union has been operating for 67 years, having first been established in the year 1955. The credit union mainly focuses on the provision of auto loans which represent 58% of its loans outstanding. In terms of its overall asset base, Red Oak Credit Union is larger than 45% of credit unions in the country. The National Credit Union Administration (NCUA) insures deposits at credit unions in addition to regulating and supervising them. The NCUA was formed by the U.S. Congress in 1970. The company has a total of 2 branches and employs a total of 14 employees.
Details on the Credit Union’s Balance Sheet
The credit union currently has total assets of $39 million, total deposits of $34 million and net loans outstanding of $10 million. On average its members had a total of $7,225 deposited with the credit union – this is a helpful metric to monitor as it provides us with an idea of the level of engagement of the credit union’s membership base. The average credit union in Red Oak Credit Union’s peer set has a loan to deposit ratio of approximately 49%. In comparison, Red Oak Credit Union has a loan to deposit ratio of 28% which is clearly lower than the peer set. A lower ratio is generally better as it indicates that the lending activities of a credit union are more comfortably covered by its deposit base. Deposits are often the most cost effective source of funding for banks and credit unions. Taking a closer look at the credit union’s loan portfolio, we see that auto loans represent 58% of the total and currently stands at $6 million, while there is $2 million of loans outstanding from mortgages and lines of credit which represents 17% of the credit union’s loan portfolio.
Contact and Other Helpful Information
- Main Office Address: 1008 Veterans Memorial Pkwy, Tuscaloosa, AL 35404
- Website: http://www.redoakcu.com
- Phone: (205) 759-7317
- Charter Number: 63940
- Charter Year: 1955
- Employees: 14
- Routing Number: 262277215
- Membership: Credit unions in the state of Alabama have an average membership base of 23,867 compared with Red Oak Credit Union which has total members of 4,731. Over the past three years, the credit union’s total base of members has declined by 1%.
Red Oak Credit Union: Financial Overview
As shown in the above chart, Red Oak Credit Union’s assets have expanded by 4.3% over the past year, while its auto loans – which is its largest category of lending – have fallen by 2.7% over the past year. Furthermore, the company’s deposits have grown by 17.1% while its total loans have grown by 0.8%. ‘Net worth’ is a good way to assess the long-term performance of a credit union as it represents the accumulated value of the entity over time. Importantly this is value that accrues to the credit union’s owners: its members. Red Oak Credit Union has a total net worth of $4 million. This implies that the credit union has a net worth per member of $897 which is below the national average of $1,606.
Overview of the Credit Union’s Performance Metrics
The chart above compares Red Oak Credit Union’s performance on three metrics to credit unions in its peer group and also shows the credit union’s performance on each metric in the prior year. These are some of the important measures for a credit union’s performance that we look at. If we take a look at Red Oak Credit Union’s return on assets – which is usually a good measure of how efficiently a company is using its assets to produce profits – we see that the credit union is below the average comparable credit union and also that over the past year ROA has declined given the year over year change of 0.45%. We look at the delinquency rate within a loan portfolio as a way to assess the performance and quality of a credit union’s loan book. A lower delinquency rate indicates a better performing portfolio. Red Oak Credit Union has a delinquency rate that is well above its peer group average and when compared with the prior year, we can see that it has improved substantially. Finally, the net worth ratio for the credit union is 11.0% which is above its peer group average of 10.6%. This metric has declined on a year over year basis and stood at 12.3% a year ago. Based on the NCUA guidelines, the credit union is considered to be well capitalized.
After factoring in all the relevant information and data, our final rating for Red Oak Credit Union is 2.1 out of 5.0, which is below average. Importantly, please be aware that none of the information presented is meant to be investment advice or advice of any form. All of the information and views expressed in this note and on this site are purely for informational purposes.