Safe and Sound

First United Bank and Trust Company

Madisonville, KY
5
Star Rating
Started in 1996, First United Bank and Trust Company is an FDIC-insured bank based in Madisonville, KY. As of June 30, 2017, the bank had equity of $40.6 million on $277,762,000 in assets.

Thanks to the work of 67 full-time employees in 4 offices in KY, the bank holds loans and leases worth $177.2 million, $141.3 million of which are for real estate. U.S. bank customers currently have $215.8 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, First United Bank and Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank faired on the three important criteria Bankrate used to grade American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for accountholders during times of financial instability for the bank. It follows then that a bank's level of capital is an essential measurement of a bank's financial strength. When it comes to safety and soundness, the higher the capital, the better.
First United Bank and Trust Company did better than the national average of 13.38 points on our test to measure capital adequacy, racking up 18 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. First United Bank and Trust Company's Tier 1 capital ratio was 19.59 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, First United Bank and Trust Company held equity amounting to 14.61 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as past-due mortgages.

A bank with large numbers of these types of assets may eventually be forced to use capital to absorb losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, pushing down earnings and elevating the chances of a failure in the future.

On Bankrate's test of asset quality, First United Bank and Trust Company scored 40 out of a possible 40 points, beating the national average of 37.62 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.12 percent of First United Bank and Trust Company's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. First United Bank and Trust Company's loan loss allowance was 1,165.38 percent of its total noncurrent loans, higher than the national average. All things being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

A bank's ability to earn money has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank more resilient in times of trouble. However, banks that are losing money are less able to do those things.

First United Bank and Trust Company did above-average on Bankrate's earnings test, achieving a score of 20 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for First United Bank and Trust Company was 11.01 percent, above the national average of 9.28 percent.

The bank reported net income of $2.2 million on total equity of $40.6 million for the twelve months ended June 30, 2017. The bank had an annualized return on average assets, or ROA, of 1.57 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.