Safe and Sound

Citizens Union Bank of Shelbyville

Shelbyville, KY
4
Star Rating
Citizens Union Bank of Shelbyville is an FDIC-insured bank founded in 1888 and currently based in Shelbyville, KY. As of December 31, 2017, the bank held equity of $99.7 million on assets of $747.4 million.

U.S. bank customers have $581.9 million on deposit at 16 offices in KY run by 184 full-time employees. With that footprint, the bank has amassed loans and leases worth $579.9 million, including $526.5 million worth of real estate loans.

Overall, Bankrate believes that, as of December 31, 2017, Citizens Union Bank of Shelbyville 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 key criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing economic instability. Therefore, when it comes to measuring an an institution's financial strength, capital is key. When looking at safety and soundness, the higher the capital, the better.

Citizens Union Bank of Shelbyville achieved a score of 16 out of a possible 30 points on our test to measure capital adequacy, better than the national average of 13.13.

A bank's Tier 1 capital ratio is a widely followed measure of this buffer. Citizens Union Bank of Shelbyville's Tier 1 capital ratio was 13.07 percent, exceeding the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic headwinds.

Overall, Citizens Union Bank of Shelbyville held equity amounting to 13.35 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with extensive holdings of these kinds of assets could eventually have to use capital to absorb losses, diminishing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, pushing down earnings and elevating the chances of a future failure.

Citizens Union Bank of Shelbyville fell short of the national average of 37.49 on Bankrate's asset quality test, racking up 36 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.96 percent of Citizens Union Bank of Shelbyville'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 1.01 percent.

Banks keep a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing how large that reserve is to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage troubled 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 affects its safety and soundness. A bank can retain its earnings, increasing its capital cushion, or put them to work addressing problematic loans, likely making the bank better able to withstand economic shocks. Conversely, losses take away from a bank's ability to do those things.

On Bankrate's earnings test, Citizens Union Bank of Shelbyville scored 16 out of a possible 30, better than the national average of 15.12.

One important measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for Citizens Union Bank of Shelbyville was 7.29 percent, below the national average of 8.10 percent.

The bank recorded net income of $7.1 million on total equity of $99.7 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 1.01 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 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.