Safe and Sound

Union National Bank and Trust Company of Elgin

Elgin, IL
4
Star Rating
Elgin, IL-based Union National Bank and Trust Company of Elgin is an FDIC-insured bank founded in 1904. The bank has equity of $36.5 million on assets of $302.8 million, according to December 31, 2017, regulatory filings.

With 26 full-time employees in 2 offices in IL, the bank currently holds loans and leases worth $265.1 million, including real estate loans of $240.5 million. U.S. bank customers currently have $265.8 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Union National Bank and Trust Company of Elgin exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank fared on the three major criteria Bankrate used to evaluate American banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and as protection for account holders when a bank is experiencing economic trouble. It follows then that when it comes to measuring an an institution's financial fortitude, capital is important. From a safety and soundness perspective, the more capital, the better.

Union National Bank and Trust Company of Elgin did better than the national average of 13.13 points on our test to measure capital adequacy, scoring 16 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Union National Bank and Trust Company of Elgin's Tier 1 capital ratio was 15.10 percent, higher than the 6 percent level considered adequate by regulators, but lower than the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, Union National Bank and Trust Company of Elgin held equity amounting to 12.06 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 troubled assets, such as past-due mortgages, on the bank's loan loss reserves and overall capitalization.

Having extensive holdings of these types of assets suggests a bank could eventually have to use capital to absorb losses, shrinking its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

Union National Bank and Trust Company of Elgin fell below the national average of 37.49 on Bankrate's test of asset quality, 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, 0.08 percent of Union National Bank and Trust Company of Elgin's loans were noncurrent -- in other words, 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 known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Union National Bank and Trust Company of Elgin's loan loss allowance was 1,657.94 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

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, giving a boost to its capital buffer, or put them to work addressing problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.

On Bankrate's test of earnings, Union National Bank and Trust Company of Elgin scored 14 out of a possible 30, falling short of the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one widely used measure of a bank's earnings. Union National Bank and Trust Company of Elgin's most recent annualized quarterly return on equity was 6.57 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $2.5 million on total equity of $36.5 million. The bank reported an annualized return on average assets, or ROA, of 0.84 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.