Safe and Sound

United Community Bank

Blairsville, GA
4
Star Rating
Blairsville, GA-based United Community Bank is an FDIC-insured bank started in 1950. As of June 30, 2017, the bank had equity of $1.22 billion on $10,817,173,000 in assets.

With 1,922 full-time employees in 128 offices in multiple states, the bank holds loans and leases worth $7.01 billion, including real estate loans of $5.42 billion. U.S. bank customers currently have $8.82 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, United Community Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a bulwark against losses and as protection for depositors when a bank is struggling financially. Therefore, a bank's level of capital is a useful measurement of a bank's financial strength. When looking at safety and soundness, the higher the capital, the better.
United Community Bank received a score of 10 out of a possible 30 points on our test to measure capital adequacy, falling short of the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. United Community Bank's Tier 1 capital ratio was 12.84 percent, exceeding 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 weather economic difficulties.

Overall, United Community Bank held equity amounting to 11.28 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having a large number of these kinds of assets means a bank may eventually have to use capital to absorb losses, shrinking its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, reducing earnings and elevating the risk of a failure in the future.

On Bankrate's asset quality test, United Community Bank scored 40 out of a possible 40 points, exceeding the national average of 37.62 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.39 percent of United Community Bank'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 maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . The size of that reserve can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on United Community Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its safety and soundness. A bank can retain its earnings, boosting its capital buffer, or put them to work addressing 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.

On Bankrate's test of earnings, United Community Bank scored 18 out of a possible 30, above the national average of 16.52.

One important way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by the total amount of equity. United Community Bank's most recent annualized quarterly return on equity was 9.28 percent, identical to the national average.

The bank earned net income of $55.7 million on total equity of $1.22 billion for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.04 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below 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.