Union Bankshares Inc (UNB, Financial) released its 8-K filing on October 16, 2024, detailing the financial results for the third quarter and nine months ended September 30, 2024. The company, a community bank offering a range of financial services, reported a significant decrease in net income due to strategic balance sheet repositioning.
Company Overview
Union Bankshares Inc operates as a community bank in the financial services industry, providing retail and commercial banking services through its branches, ATMs, telebanking, and internet banking systems. The company serves individuals, small and medium-sized businesses, nonprofit organizations, local municipalities, and school districts in the United States. Additionally, it offers fiduciary and asset management services through its Asset Management Group.
Performance and Challenges
For the third quarter of 2024, Union Bankshares Inc reported a consolidated net income of $1.3 million, or $0.29 per share, a decline from $2.5 million, or $0.56 per share, in the same period of 2023. The nine-month net income was $5.8 million, or $1.27 per share, compared to $8.2 million, or $1.82 per share, in 2023. The decrease was primarily due to a strategic repositioning involving the sale of $38.8 million in lower-yielding available-for-sale debt securities, resulting in a pre-tax realized loss of $1.3 million.
Financial Achievements
Despite the earnings decline, Union Bankshares Inc achieved notable financial milestones. Total assets increased by 8.9% to $1.52 billion as of September 30, 2024, driven by loan growth. Total loans reached $1.13 billion, reflecting strong demand across residential, commercial, and municipal portfolios. The company's asset quality remained robust, with minimal past due loans and net recoveries.
Key Financial Metrics
Union Bankshares Inc's balance sheet showed total deposits of $1.17 billion, including $80.0 million of purchased brokered deposits. Federal Home Loan Bank advances increased to $230.7 million, and the company utilized $10.0 million in advances from the Federal Reserve's Bank Term Funding Program. Total equity capital stood at $72.3 million, with a book value per share of $15.98.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income | $1.3 million | $2.5 million |
| Net Interest Income | $9.4 million | $9.1 million |
| Interest Income | $17.2 million | $14.8 million |
| Interest Expense | $7.8 million | $5.7 million |
Income Statement Highlights
Net interest income increased by 3.3% to $9.4 million, driven by a larger earning asset base and higher interest rates on new loan volume. Interest income rose by 16.2% to $17.2 million, while interest expense increased due to higher-cost wholesale funding. Noninterest income, excluding the bond sale loss, was $2.9 million, with gains from residential loan sales contributing positively.
Analysis and Commentary
The strategic repositioning, while impacting short-term earnings, positions Union Bankshares Inc for future growth by optimizing its asset portfolio. The company's ability to maintain strong asset quality and achieve loan growth despite higher interest rates is noteworthy. However, the increased reliance on higher-cost funding sources and the impact of strategic losses highlight challenges in managing interest rate environments.
David S. Silverman, a representative of Union Bankshares, commented on the earnings, emphasizing the strategic balance sheet repositioning as a necessary step for long-term growth despite its immediate impact on earnings.
Union Bankshares Inc declared a quarterly cash dividend of $0.36 per share, payable on November 7, 2024, to shareholders of record as of October 26, 2024, reflecting the company's commitment to returning value to shareholders.
Explore the complete 8-K earnings release (here) from Union Bankshares Inc for further details.
