Third Quarter Earnings 2018

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Union Bank Releases Third Quarter Earnings, Announces 3% Stock Dividend and Increase in Semi-Annual Cash Dividend

Greenville, NC – (Business Wire) – October 26, 2018 – Union Bank (OTCQX: UBNC) reports earnings results for the quarter and nine months ended September 30, 2018 and announces stock and cash dividends.

Union Bank (the “Bank”) is pleased to report earnings results for the quarter and nine months ended September 30, 2018.  Unaudited net income for the nine months ended September 30, 2018 was $5,000,000 or $.86 per basic share, compared to $2,183,000, or $.52 per basic share in the prior year.  This represents a 129% increase in earnings for the comparable nine-month periods.  Return on average assets and return on average equity was 0.94% and 9.00%, respectively, for the nine months ended September 30, 2018.

Unaudited net income for the third quarter of 2018 was $1,739,000, or $.30 per basic share, compared to $663,000, or $.12 per basic share for the quarter ended September 30, 2017.  Return on average assets and return on average equity was 0.96% and 9.17%, respectively, for the quarter.

Total assets as of September 30, 2018 were $730.5 million, compared to total assets of $715.1 million as of September 30, 2017.  Total loans, net of reserves, were $491.7 million and deposits were $611.6 million, as of September 30, 2018 compared to net loan balances of $503.9 million, and deposits of $611.4 million as of September 30, 2017.  As of September 30, 2018, shares of common stock issued and outstanding totaled 5,833,838.

Rob Jones, President and Chief Executive Officer stated, “We are pleased to report solid earnings for the third quarter and also pleased to announce an increase in our semi-annual cash dividend.  The Bank’s loan pipeline and production remain solid, however, net loan growth continues to be a challenge for the industry and the Bank.  Over the past two quarters the Bank has experienced loan repayments as customers have been selling portions of their real estate holdings.  In addition, September’s loan production was negatively impacted by Hurricane Florence.  Other performance measures, including deposit related fees, continue to be progressing at expected levels.  For example, non-interest income is up over 18% compared to 3rd quarter 2017.”

Mr. Jones continued, “With respect to Hurricane Florence, I am pleased to report that we experienced insignificant damage to our branch facilities.  Also, we believe that the storm will have an immaterial impact on the overall credit quality of our loan portfolio collateral.  However, we do believe that the storm could adversely impact our loan production into the 4th quarter as many borrowers are focused on repairing assets that were damaged during the storm.  Today loan quality metrics are outstanding, and our loan pipeline looks good for the near term.  As I stated last quarter, we will continue to focus on asset quality and will maintain lending discipline as we work through rising interest rates, a flattening yield curve and the realities of a lengthening economic cycle.”

The Bank’s Board of Directors has authorized the issuance of a 3% stock dividend to shareholders.  The 3% stock dividend will be payable November 30, 2018 to shareholders of record as of November 15, 2018.  Cash-in-lieu will be paid on fractional shares based on the stock’s market value at the close of business on November 15, 2018.  Future earnings per share calculations will reflect the stock dividend after the record date.

The Board of Directors has also approved a semi-annual cash dividend payable December 31, 2018 to shareholders of record as of the close of business on December 14, 2018.  The amount payable is at the rate of $0.0975 per common share.  This represents an 8.3% increase over the $0.090 cash dividend paid in June.  Jones commented, “We are pleased to increase our cash dividends based on our solid results for the period.”  The Bank has paid semi-annual cash dividends for fourteen consecutive years since it began in 2005.

Union Bank is headquartered in Greenville, North Carolina and operates 15 branches located in 11 counties throughout Eastern and Central North Carolina.  Union Bank stock is traded on the OTCQX under the symbol UBNC.

This press release includes certain forward-looking statements in reliance on the “safe-harbor” provisions of The Private Securities Litigation Reform Act of 1995.  Any such forward-looking statements are subject to a number of risks and uncertainties.  Actual results may differ materially from those anticipated in any such forward-looking statements.  The Bank undertakes no obligation to update or revise any such forward-looking statements.  This press release contains financial information determined by methods other than in accordance with GAAP. The Bank’s management uses these non-GAAP financial measures in their analysis of the Bank’s performance. These measures typically adjust GAAP performance measures to exclude the effects of transactions that are infrequent in nature.   Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Bank’s core businesses.

 

For More Information Contact:

Doyle M. Thigpen
Chief Financial Officer
(252) 317-2804

Union Bank
Summary of Operations (un-audited)
(000’s omitted except per share data)

 

Three Months
Ended
September 30, 2018
Three Months
Ended
September 30, 2017
Nine Months
Ended
September 30, 2018
Nine Months
Ended
September 30, 2017
Interest Income $7,676 $7,289 $22,817 $14,047
Interest Expense 1,324 724 3,355 1,391
Net Interest Income 6,352 6,565 19,462 12,656
Provision for loan losses 7 310 537 310
Net interest income after Provision for losses 6,345 6,255 18,925 12,346
Non-interest income 797 672 2,497 1,659
Non-interest expense 4,963 5,883 15,109 10,677
Income before taxes 2,179 1,044 6,313 3,328
Income taxes 440 381 1,313 1,145
Net Income $1,739 $663 $5,000 $2,183
Net Income available per basic common share $0.30 $0.12 $0.86 $0.52

Union Bank
Balance Sheets (000’s omitted)

September 30, 2018
(un-audited)
December 31, 2017* September 30, 2017
(un-audited)
Assets
Cash and due from banks $24,240  $25,592 $20,970
Overnight investments 23,348  7,177 23,616
Investment securities AFS 133,988 109,077 110,724
Loans – gross 501,929 514,078 513,098
Net Fair Value Marks (6,312) (5,536) (5,810)
Less Allowance for loan losses (3,939) (3,501) (3,361)
Net Loans 491,678 505,041 503,927
Premises and Equipment, net 16,990 17,034 17,173
Other Real Estate Owned 408 627 549
Core Deposit Intangibles 2,153 2,817 3,059
Goodwill 13,466 10,988 11,876
Bank-Owned Life Insurance 16,338 16,004 15,889
Other Assets 7,844 8,171 7,344
Total Assets $730,453 $702,528 $715,127
Liabilities & Stockholders’ Equity
Liabilities
Deposits $611,644 $593,726 $611,373
FHLB Advances 36,000 34,000 29,000
Subordinated Debt 6,000 0 0
Other liabilities 1,757 1,633 1,039
Total Liabilities 655,401 629,359 641,412
Stockholders’ Equity
Common stock, no par value 69,199 69,027 66,239
Retained earnings 8,665 4,643 7,444
Accumulated other comprehensive income loss (2,812) (501) 32
Total stockholders’ equity $75,052 $73,169 $73,715
Total liabilities and stockholders’ equity $730,453 $702,528 $715,127

*Derived from audited financial statements