Safe and Sound

Citizens Union Bank of Shelbyville

Shelbyville, KY
5
Star Rating
Citizens Union Bank of Shelbyville is a Shelbyville, KY-based, FDIC-insured bank dating back to 1888. The bank holds equity of $101.9 million on $727,699,000 in assets, according to June 30, 2017, regulatory filings.

With 176 full-time employees in 16 offices in KY, the bank currently holds loans and leases worth $556.9 million, including real estate loans of $508.5 million. U.S. bank customers currently have $559.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Citizens Union Bank of Shelbyville exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's a breakdown of how the bank faired on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is essential. It acts as a cushion against losses and as protection for depositors during times of financial instability for the bank. When it comes to safety and soundness, more capital is better.
Citizens Union Bank of Shelbyville beat out the national average of 13.38 points on our test to measure capital adequacy, racking up 18 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. Citizens Union Bank of Shelbyville's Tier 1 capital ratio was 13.63 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic challenges.

Overall, Citizens Union Bank of Shelbyville held equity amounting to 14.01 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the effect of troubled assets, such as unpaid loans, on the bank's capitalization and allocated loan loss reserves.

Having large numbers of these kinds of assets means a bank could eventually have to use capital to cover losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's test of asset quality, Citizens Union Bank of Shelbyville scored 36 out of a possible 40 points, less than the national average of 37.62 points.

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.45 percent of Citizens Union Bank of Shelbyville's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the how large that reserve is to the total amount of at-risk loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Citizens Union Bank of Shelbyville's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses reduce a bank's ability to do those things.

Citizens Union Bank of Shelbyville scored 16 out of a possible 30 on Bankrate's earnings test, falling short of the national average of 16.52.

One widely used measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by total equity. The most recent annualized quarterly return on equity for Citizens Union Bank of Shelbyville was 8.48 percent, below the national average of 9.28 percent.

The bank recorded net income of $4.0 million on total equity of $101.9 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.19 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.14 percent.








WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.