Safe and Sound

Union National Bank & Trust Company

Sparta, WI
5
Star Rating
Union National Bank & Trust Company is a Sparta, WI-based, FDIC-insured bank started in 1934. The bank has equity of $23.5 million on assets of $136.3 million, according to December 31, 2017, regulatory filings.

With 23 full-time employees in 2 offices in WI, the bank has amassed loans and leases worth $99.2 million, including real estate loans of $82.6 million. U.S. bank customers currently have $112.6 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Union National Bank & Trust Company exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for an analysis of how the bank fared on the three major criteria Bankrate used to grade U.S. banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital is a useful measurement of an institution's financial strength. It acts as a cushion against losses and provides protection for depositors during periods of financial instability for the bank. From a safety and soundness perspective, the more capital, the better.

Union National Bank & Trust Company scored 20 out of a possible 30 points on our test to measure the adequacy of a bank's capital, beating the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. Union National Bank & Trust Company's Tier 1 capital ratio was 18.36 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic headwinds.

Overall, Union National Bank & Trust Company held equity amounting to 17.25 percent of its assets, which exceeded the national average of 12.03 percent.

Asset Quality Score

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

A bank with lots of these types of assets could eventually be required to use capital to cover losses, diminishing its equity buffer. 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, pushing down earnings and increasing the chances of a failure in the future.

Union National Bank & Trust Company did better than the national average of 37.49 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.43 percent of Union National Bank & Trust Company'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 to handle troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a useful indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Union National Bank & Trust Company's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank better prepared to withstand economic shocks. Losses, on the other hand, lessen a bank's ability to do those things.

On Bankrate's earnings test, Union National Bank & Trust Company scored 12 out of a possible 30, failing to reach the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (profit, essentially) divided by the total amount of equity. The most recent annualized quarterly return on equity for Union National Bank & Trust Company was 5.84 percent, below the national average of 8.10 percent.

The bank earned net income of $1.3 million on total equity of $23.5 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.99 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.