Union Bankshares (UNB) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $2.0 million ($0.45/share), down 25.2% year-over-year, and $4.4 million ($0.98/share) for the first half, down 21.8%, driven by lower net interest income, higher noninterest expenses, and increased credit loss expense, partially offset by higher noninterest income and lower tax expense.

• Total assets at June 30, 2024 were $1.40 billion, up 4.8% from $1.33 billion a year earlier, with loans of $1.01 billion, deposits of $1.05 billion, borrowed funds of $247.1 million, and stockholders' equity of $64.0 million.

• The company maintained strong asset quality, regulatory capital above required levels, and a diverse deposit base despite earnings pressure from an inverted yield curve and higher funding costs.

• Board declared a $0.36/share quarterly cash dividend, payable August 1, 2024.

Financial highlights

• Net interest income for Q2 2024 was $9.5 million, down from $9.6 million in Q2 2023; for the first half, it was $18.5 million, down from $19.6 million year-over-year.

• Net interest margin declined to 2.74% for the first half of 2024 from 3.05% in 2023; net interest spread fell to 2.29% from 2.72%.

• Interest income rose 19.9% to $16.6 million, while interest expense increased 69% to $7.1 million due to higher-cost funding.

• Noninterest income rose 11.4% in Q2 2024 to $2.8 million, with $341 thousand in gains from residential loan sales.

• Noninterest expenses increased 7.9% in Q2 and 6.7% for the first half, mainly due to higher salaries, benefits, equipment, and professional fees.

Outlook and guidance

• Management continues to focus on deposit gathering, net interest margin optimization, and asset quality.

• The company is proactively supporting customers affected by recent Vermont flooding, though no property damage was sustained.

• No changes to critical accounting policies or risk factors since the last annual report.

• Management notes forward-looking statements are subject to risks including economic conditions, interest rates, inflation, regulatory changes, and competition.