2018 Annual Report | Union Bank | NC Skip to Content
Important Notice
UB Bancorp, the holding company for Union Bank, has agreed to merge with FNB Corporation. Read the Press Release HERE.

2018 Annual Report

Business and financial report with pen.

Financial Information

A complete 2018 Audited Financial Statement may be obtained by contacting Union Bank. Please request by contacting Doyle M. Thigpen by mail at Union Bank, 1011 Red Banks Road, Greenville, NC 27858. Please remember to provide your return address information.

Annual Shareholders Meeting

The annual meeting of shareholders of Union Bank will be held on May 16, 2019 at 10:00 a.m. at the Hilton Inn, 207 SW Greenville Blvd., Greenville, NC 27834.

20 Years of Committed Service

Dear Union Bank Shareholders,

The Union Bank (“Bank”) board of directors and management are pleased to report 2018 results and a seventh consecutive year of record “core” earnings. 2018 represented the first full year of operations since the acquisition of Union Banc Corp (“UBC”) in July of 2017.

The Bank continues to be in solid financial condition. Capital and liquidity ratios remain strong and asset quality indicators continue to be favorable compared to long term averages. Based on our strong financial condition, and favorable operating results, the Bank continued its strategy of paying semi-annual cash dividends on its common stock. In addition, the Bank paid a 3% stock dividend in November 2018. The Bank paid out $1,101,000 in cash dividends in 2018; the equivalent of $0.185 per share (spilt adjusted), compared to $0.167 (split adjusted) in 2017. This represents a 10.8% in- crease in cash dividends compared to 2017.

During the 4th quarter the Bank applied for and received regulatory approval to repurchase shares of common stock. Repurchase prices are established by the board of directors at prices deemed favorable to shareholders. For fiscal year 2018, the Bank repurchased 9,624 shares of common stock at a cost of approximately $142,000 or an average price per share of $14.71. The Bank will continue to consider repurchasing shares at prices deemed favorable to all shareholders. As of December 31, 2018, shares of common stock issued and outstanding totaled 5,998,618.

Total assets as of December 31, 2018 were $745.2 million, compared to $702.5 million as of December 31, 2017. Total loans, net of reserves, were $504.6 million and deposits were $627.2 million, compared to net loan balances of $505.0 million, and deposits of $593.7 million as of December 31, 2017.

Net income for the twelve months ended December 31, 2018 was $6,737,000 or $1.12 per basic share, compared to $2,653,000, or $0.56 per basic share in the prior year. This represents a 154% increase in earnings for the comparable twelve-month periods. Return on average assets and return on average equity was 0.94% and 9.01%, respectively, for the twelve months ended December 31, 2018. The significant increase in earnings was related to the acquisition of UBC in July of 2017. Considerable non-recurring merger, conversion and income tax related expenses were included in the 2017 financial results. The Bank’s 2018 earnings were favorably impacted by a full year of operations as a combined entity, coupled with efficiencies in operations gained as a larger institution.

Loan levels during 2018 were flat due to a variety of factors which included the integration of UBC, numerous early payoffs related to borrowers choosing to sell portions of their real estate holdings, the impact of Hurricane Florence, and borrowers being more cautious in response to the lengthening economic cycle. The Bank’s loan pipeline improved and the pace of early payoffs slowed in the fourth quarter which in turn led to increased loan levels late in the year. Our loan pipeline is solid as we enter 2019 and we expect moderate growth in 2019.

As we move into 2019, we continue to be cognizant of the potential financial impact associated with the lengthening economic cycle and global slowdown, national and global political unrest and a flattening yield curve. Today we do not see the same type of financial excess and irresponsible lending that led to the 2008 financial crisis, however all economic cycles expand and contract, and we believe that some level of near-term economic slowdown is inevitable. The Bank is well positioned for economic uncertainties and will continue to maintain lending discipline as we move forward.

On behalf of the board of directors, management and staff of Union Bank, we want to thank you for your continued confidence and support and look forward to serving your banking needs in the future.


Robert Lee Burrows, Jr.
Vincent R. Jones
President & Chief Executive Officer

Where “We Want to Know You” is more than a Slogan.

Founded in November of 1998, Union Bank’s guiding principle is that old fashion personal service is as valuable today as it was 100 years ago. At Union Bank, we do want to know who you are. We pride ourselves at being big enough to handle your needs and small enough to know what your needs are.



Local decision-making has been critical to our success, as has our ability to offer a full array of banking products, providing everything from complicated commercial lending transactions to basic mortgage financing for primary and secondary homes.






We are active members in our communities getting to know our neighbors and helping them meet their financial goals. When needs arise, we are there to give back and help the communities in which we live.



Convenience                                                      Local Decisions                                                 Personal Service


Union Bank
Financial Highlights

Years Ended December 31, 2018, 2017 and 2016  (Dollars in thousands, except per share data)

2018 2017 2016
Earnings Summary:
     Net Income $6,737 $2,653 $3,085
Per Common Share:
     Net income basic $1.12 $0.56 $0.83
     Net income diluted $1.12 $0.55 $0.83
     Book value per common share $10.56 $9.92 $10.28
Selected Year-End Balances:
     Loans, net of unearned income $508,628 $508,542 $246,522
     Other interest earning assets 174,328 132,105 94,648
     Total Assets 745,186 702,528 362,057
     Deposits 627,171 593,726 300,622
     Stockholders’ equity 78,194 73,169 36,598
     Intangible assets 14,848 13,805
     Tangible stockholders’ equity 63,346 59,364 36,598
Selected Performance Ratios:
     Return on average assets 0.94% 0.49% 0.85%
     Return on average equity 9.01% 4.77% 8.46%
     Efficiency Ratio 68.26% 72.38% 66.69%
Asset Quality Ratios:
     Allowance for loan losses to period-end loans 0.80% 0.69% 1.40%
     Allowance for loan losses plus unaccreted discounts to period-end loans 1.79% 1.74%
     Net loan charge-offs to average loans 0.05% 0.13% 0.02%
Capital Ratios:
    Total risk-based capital 14.17% 12.28% 15.51%
     Tier 1 risk-based capital 12.25% 11.60% 14.26%
     Common equity Tier 1 to risk-based capital 12.25% 11.60% 14.26%
     Tier 1 leverage ratio 8.77% 8.66% 10.21%
     Equity to assets 10.49% 10.42% 10.11%
Number of Common Shares Outstanding 5,998,618 5,987,017 3,560,353


Union Bank
Balance Sheets

December 31, 2018 and 2017 (Dollars in thousands)

ASSETS 2018 2017
Cash and due from banks $9,355 $9,741
Interest-earning deposits with banks 23,297 20,661
Federal funds sold 2,456 2,367
Investment securities available for sale 148,575 109,077
Loans 508,628 508,542
Allowance for loan losses (4,046) (3,501)
NET LOANS  504,582  505,041
Accrued interest receivable 2,103 1,945
Federal Home Loan Bank stock 1,992 2,041
Bank premises and equipment, net 16,794 17,034
Bank-owned life insurance 16,450 16,004
Goodwill 12,897 10,988
Core deposit intangible 1,951 2,817
Other real estate owned 327 627
Other assets 4,407 4,185
TOTAL ASSETS $745,186 $702,528
     Demand $191,213 $167,363
     Savings 21,299 20,303
     Money market and NOW 185,975 196,193
     Time 228,684 209,867
TOTAL DEPOSITS 627,171 593,726
Federal Home Loan Bank advances 32,000 34,000
Subordinated debt 6,000
Accrued interest payable 512 222
Accrued expenses and other liabilities 1,309 1,411
TOTAL LIABILITIES 666,992 629,359
Stockholders’ Equity:
     Common stock, no par value, 24,000,000 shares authorized 71,879 69,027
     Retained Earning 7,629 4,643
     Accumulated other comprehensive income (loss) (1,314) (501)

Union Bank
Statements of Operations

Years Ended December 31, 2018, 2017 and 2016  (Dollars in thousands, except per share data)

2018 2017 2016
     Loans $27,465 $19,278 $11,521
     Investment securities 2,931 1,938 1,599
     Federal funds sold 62 29 9
     Interest-bearing deposits with banks 583 277 112
    TOTAL INTEREST INCOME 31,041 21,522 13,241
     Money market, NOW and savings deposits 1,037 526 242
     Time deposits 2,922 1,329 789
     Advances from the Federal Home Loan Bank 658 315 252
     Subordinated debt 225
    TOTAL INTEREST EXPENSE 4,842 2,170 1,283
    NET INTEREST INCOME 26,199 19,352 11,958
     Service charges and fees on deposit accounts 1,046 737 518
     Fees from presold mortgages 599 424 344
     Other 1,256 907 680
    TOTAL NONINTEREST INCOME 2,901 2,068 1,542
     Salaries and employee benefits 12,243 8,723 5,338
     Occupancy 2,144 1,468 901
     Data Processing 1,531 1,644 818
     Marketing 147 222 152
     Other 3,798 3,447 1,794
    TOTAL NONINTEREST EXPENSE 19,863 15,504 9,003
    INCOME BEFORE INCOME TAXES 8,458 5,456 4,497
INCOME TAXES 1,721 2,803 1,412
         NET INCOME $6,737 $2,653 $3,085
     Basic $1.12 $0.56 $0.83
     Diluted $1.12 $0.55 $0.83
     Basic 6,002,014 4,747,490 3,701,005
     Diluted 6,041,004 4,780,617 3,723,539



Organization and Nature of Operations
Union Bank (“Bank”), formerly known as the little bank, Inc., was originally incorporated as a North Carolina chartered savings bank on September 16, 1998 and began operations on November 9, 1998. On July 7, 2017, the little bank, Inc. acquired Union Banc Corp. (“UBC”), a North Carolina-based holding company with a single wholly-owned banking subsidiary, Union Bank & Trust Company. Effective with the merger, the little bank, Inc. changed its name to Union Bank, established its headquarters in Greenville, North Carolina, and became a North Carolina chartered commercial bank. The merger expanded the Bank’s North Carolina presence, adding eight branches located in Oxford, Youngsville, Henderson, Louisburg, Roxboro, Cary, Raleigh and Creedmoor. Union Bank has as its principal market area Craven, Franklin, Granville, Lenoir, New Hanover, Onslow, Person, Pitt, Vance, Wake and Wayne Counties. The Bank is engaged in general commercial and retail banking in Central and Eastern North Carolina and operates under the banking laws of North Carolina and the rules and regulations of the Federal Deposit Insurance Corporation and the North Carolina Banking Commission. The Bank undergoes periodic examinations by those regulatory authorities.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for losses on loans and other real estate owned.

Business Combinations
Business combinations are accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, “Business Combinations.” Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Management makes significant estimates and exercises significant judgment in accounting for business combinations.

Assets acquired and liabilities assumed from contingencies must also be recognized at fair value if the fair value can be determined during the measurement period. Results of operations of an acquired business are included in the statement of earnings from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.

Investment Securities
Available-for-sale securities are reported at fair value and consist of bonds and notes not classified as trading securities nor as held-to-maturity securities. Unrealized holding gains and losses on available-for-sale securities are reported as a net amount in other comprehensive income, net of income taxes. Gains and losses on the sale of available-for-sale securities are recorded on the trade date and determined using the specific-identification method. Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary would result in write-downs of the individual securities to their fair value. Such write-downs would be included in earnings as realized losses. Premiums and discounts are recognized in interest income using the interest method over the period to maturity.

Real Estate Owned
Real estate acquired through, or in lieu of, loan foreclosure is initially recorded at fair value, less estimated selling costs, at the date of foreclosure establishing a new cost basis. After foreclosure, valuations of the property are periodically performed by management and the real estate is carried at fair value minus the estimated cost to sell the property. Revenues and expenses from operations and changes in the valuation allowance are charged to operations.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at their outstanding principal balance adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment to the yield over the lives of the related loans. The recognition of interest income is discontinued when, in management’s opinion, the collection of all or a portion of interest becomes doubtful or the loan becomes ninety days delinquent. Loans are returned to accrual status when the factors indicating doubtful collectability cease to exist and the loan has performed in accordance with its terms for a demonstrated period of time. The past due status of loans is based on the contractual payment terms.

A loan is considered impaired when, based on current information or events, it is probable that a borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement. For loans determined to be impaired, the allowance is based on discounted cash flows using the loan’s initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. When the ultimate collectability of the impaired loan’s principal is doubtful, all cash receipts are applied to principal. Once the recorded principal balance has been reduced to zero, future cash receipts are first recorded as recoveries of any amounts previously charged-off and are then applied to interest income, to the extent that any interest has been foregone.

Loans, including impaired loans, are generally classified as nonaccrual if they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well secured and in the process of collection. Loans that are current or past due less than 90 days may also be classified as nonaccrual if repayment in full of principal and/or interest is in doubt (as determined by the contractual terms of the note). Loans may be returned to accrual status when all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance (generally a minimum of six months) by the borrower, in accordance with the contractual terms.

While a loan (including an impaired loan) is classified as nonaccrual and the future collectability of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to the principal outstanding. When the future collectability of the recorded loan balance is not in doubt, interest income may be recognized on a cash basis. In the case where a nonaccrual loan had been partially charged-off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Receipts in excess of that amount are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered.

Acquired loans are segregated between those considered to be performing (“acquired performing”) and those with evidence of credit deterioration based on such factors as past due status, nonaccrual status and credit risk ratings.

In determining the acquisition date fair value of purchased credit-impaired (“PCI”) loans, and in subsequent accounting, the Bank generally aggregates purchased loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are referred to as the “accretable yield” and recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows of the pool is reasonably estimable. Subsequent to the acquisition date, significant increases in cash flows over those expected at the acquisition date are recognized as interest income prospectively. Accordingly, such loans are not classified as nonaccrual and they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for PCI loans and not to contractual interest payments. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference.

The difference between the fair value of an acquired performing loan pool and the contractual amounts due at the acquisition date (the “fair value discount”) is accreted into income over the estimated life of the pool. The Bank’s policy for determining when to continue accruing interest on acquired performing loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans.

Allowance for Loan Losses
The provision for loan losses is based upon management’s estimate of the amount needed to maintain the allowance for loan losses at an adequate level. In making the evaluation of the adequacy of the allowance for loan losses, management gives consideration to current and anticipated economic conditions, statutory examinations of the loan portfolio by regulatory agencies, delinquency information and management’s internal review of the loan portfolio. Loans are considered impaired when it is probable that all amounts due under the contractual terms of the loan will not be collected. The measurement of impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate, or upon the fair value of the collateral if the loss is collateral dependent. If the recorded investment in the loan exceeds the measure of fair value, a valuation allowance is established as a component of the allowance for loan losses. While management uses the best information available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the assumptions previously used in making the evaluations. In addition, regulatory examiners may require the Bank to recognize changes to the allowance for loan losses based on their judgments about information available to them at the time of their examination. Historical loss calculations are based on a twelve quarter rolling average loss ratio calculation with the most recent year’s loss history included in the model. The impact is to more quickly recognize and apply the most relevant loss history for the loan portfolio.

Decreases in expected cash flows of PCI loans with an accompanying decrease in the present value of the expected cash flows after the acquisition date are recognized by recording an allowance for credit loss. In pools where impairment has already been recognized, an increase in present values will result in a reversal of prior impairment. Management analyzes these acquired loan pools using various assessments of risk to determine and calculate an expected loss. In addition, the relationship between the change in the unpaid principal balance and change in the fair value mark is assessed to correlate the directional consistency of the expected loss for each pool.

Earnings Per Common Share
Basic and diluted earnings per common share have been computed by dividing net income available to common stockholders for each period by the weighted average number of shares of common stock outstanding during each period. Diluted earnings per common share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Bank relate solely to outstanding stock options. Diluted earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common stock equivalents and other potentially dilutive securities using the treasury stock method.

Regulatory Matters
The Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. As of December 31, 2018, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category.

Map of Union Bank locations


Union Bank Leadership

Executive Officers

Vincent R. Jones
Chief Executive Officer
Susan W. Barrett
Executive Vice President
Chief Operations Officer
John E. Burns
Executive Vice President
Chief Banking Officer

Anne R. Corey

Executive Vice President
Chief Credit Officer

David C. Morgan

Executive Vice President
Area Executive

Doyle M. Thigpen

Executive Vice President
Chief Financial Officer & Secretary

Amy F. Watts

Executive Vice President
Senior Credit Officer

Board of Directors

Robert Lee Burrows, Jr.
Chairman of the Board,
Union Bank

Vincent R. Jones
President and Chief Executive Officer
Union Bank
Dr. Raymond C. Ball, Jr.
Coastal Carolina Orthodontics
Marty Beam
W.A. Moore & Co.

Joseph E. Blizzard
President and Owner,
Contract Flooring & Design
Chandler T. Currin, Jr.

Lawrence Davenport

J.P. Davenport & Son, Inc.

F. Wills Hancock, Jr.
Owner, Century 21 Hancock
Properties, Inc.

James T. Hill, Jr.

Tull Hill Farms, Inc.

C. Dwight Howard

President, Carolina Greenhouses, Carolina
Soil Company, Howard Development Inc.
East Coast Modular, How Corp, LLC,
and Eastern Warehouse, LLC
Crawford A. Knott
Partner, Holden Moss Knott Clark
& Copley, P.A., Certified Public

Cameron McRae

President, Tands, Inc., Bojangles
Franchisee, President, McRae &
Associates, Inc., Management
Company for the Franchise

Conrad B. Sturges, III

Attorney/Partner, Davis, Sturges &
Tomlinson, PLLC

David Weil

President, Weil Enterprises, Real Estate
Development & Management
Robert T. Williford, II
Hardware Retailer
T. Gray Yancey
Vice President,
Yancey Properties, Inc.

Stephen K. Zaytoun

Owner, Zaytoun & Associates, Inc.
Employee Benefit Insurance Firm

Stock Transfer Agent

Broadridge Corporate Issuer Solutions, Inc.
P.O. Box 1342
Brentwood, NY 11717

Market for Common Stock

Union Bank’s common stock is
traded on the OTCQX under
the symbol “UBNC.”

Independent Auditors

Dixon Hughes Goodman LLP
1003 Red Banks Road
Greenville, NC 27858