On July 18, 2024, Union Bankshares Inc (UNB, Financial) released its 8-K filing for the three and six months ended June 30, 2024. Union Bankshares Inc operates as a community bank in the financial services industry, offering retail and commercial banking services through its branches, ATMs, telebanking, and internet banking systems. The company serves individuals, small and medium-sized corporations, partnerships, sole proprietorships, nonprofit organizations, local municipalities, and school districts within its market area in the United States.
Performance Overview
Union Bankshares Inc (UNB, Financial) reported consolidated net income of $2.0 million, or $0.45 per share, for the second quarter of 2024, a decrease from $2.7 million, or $0.60 per share, in the same period of 2023. For the six months ended June 30, 2024, net income was $4.4 million, or $0.98 per share, compared to $5.7 million, or $1.26 per share, for the same period in 2023. This decline in earnings highlights the challenges faced by the company amid rising interest rates and increased noninterest expenses.
Financial Achievements and Challenges
Despite the decline in net income, Union Bankshares Inc (UNB, Financial) saw a 4.8% increase in total assets, reaching $1.40 billion as of June 30, 2024, compared to $1.33 billion as of June 30, 2023. This growth was primarily driven by loan growth, with total loans reaching $1.01 billion, including $6.2 million in loans held for sale, compared to $940.2 million, with $3.1 million in loans held for sale, in the previous year.
However, the company faced challenges with its investment securities, which were valued at $254.2 million as of June 30, 2024, down from $268.9 million a year earlier. The unrealized losses in the investment portfolio amounted to $45.1 million due to the interest rate environment, which resulted in fair market values lower than the book values of these securities.
Income Statement Highlights
Net interest income for the second quarter of 2024 was $9.5 million, a slight decrease from $9.6 million in the same period of 2023. Interest income increased by 19.9% to $16.6 million, driven by a larger earning asset base and higher interest rates on new loan volume. However, interest expense rose significantly by $2.9 million to $7.1 million due to higher cost wholesale funding and customers seeking higher returns on their deposits.
Credit loss expense for the second quarter of 2024 was $388 thousand, compared to a benefit of $96 thousand in the same period of 2023. Noninterest income increased to $2.8 million from $2.5 million, while noninterest expenses rose by 7.9% to $9.8 million, driven by increases in salaries, employee benefits, occupancy expenses, equipment expenses, and other expenses.
Balance Sheet and Cash Flow
Total deposits were $1.05 billion as of June 30, 2024, including $65.0 million of purchased brokered deposits, compared to $1.12 billion, with $138.0 million of purchased deposits, as of June 30, 2023. Federal Home Loan Bank advances increased to $212.1 million from $120.5 million, and the company had $35.0 million in advances from the Federal Reserve's Bank Term Funding Program.
Total equity capital stood at $64.0 million, with a book value per share of $14.16, compared to $59.1 million and a book value of $13.10 per share a year earlier. Accumulated other comprehensive loss related to the fair market value adjustment for investment securities was $35.2 million, compared to $36.3 million in the previous year.
Dividend Declaration
The Board of Directors declared a cash dividend of $0.36 per share for the quarter, payable on August 1, 2024, to shareholders of record as of July 27, 2024.
Conclusion
Union Bankshares Inc (UNB, Financial) continues to navigate a challenging economic environment with rising interest rates impacting its earnings. However, the company's growth in total assets and loan portfolio, along with its commitment to providing dividends, reflects its resilience and dedication to shareholder value. Investors will be closely monitoring how Union Bankshares Inc (UNB) manages these challenges in the coming quarters.
Explore the complete 8-K earnings release (here) from Union Bankshares Inc for further details.
