GREENVILLE, N.C.--(BUSINESS WIRE)--
UB Bancorp (OTCQX: UBNC), (the “Company”) the parent of Union Bank (the “Bank”), is pleased to report its results for the quarter ended March 31, 2022.
Highlights for the quarter include:
Solid net income of $2.6 million or 44 cents per basic common share for the quarter
Pre-tax net loan fee revenue from the Paycheck Protection Program (PPP) was $402k for the first quarter of 2022
Pre-tax, pre-provision income (*), excluding PPP net revenue, was $2.9 million for the first three months of 2022 vs. $2.7 million for the same three month period one year ago
Total assets of $1.17 billion as of quarter end, an increase of $12.1 million from year end 2021 and $113.7 million from March 31, 2021
Core loans (excluding PPP loans) grew $22.8 million or 3.6% during the first quarter of 2022
Total deposit growth of $38.6 million or 3.8% during the quarter and year-over-year deposit growth of $175.5 million or 20.2%, with non-interest-bearing deposits accounting for $77.1 million of the year-over-year growth
Sound credit quality metrics with nonperforming assets representing only 0.04% of total assets at quarter end
As of March 31, 2022, none of our customers have a COVID-19 related payment deferral
Capital at the Bank is well above regulatory thresholds to be considered ‘Well Capitalized’
Strong liquidity levels
5,981,446 common shares outstanding with tangible book value per share of $12.68 (*) as of March 31, 2022
Year-to-date annualized return on average tangible equity of 12.93% (*)
In April of 2022, the Company’s Board of Directors declared a cash dividend of $0.11 per common share, which represents a 4.8% annualized increase
Rob Jones, President and CEO, commented “We are pleased to report our solid results for the first quarter of 2022. Despite recognizing $685,000 less net PPP revenue during the first quarter of this year versus the first quarter of 2021, our ‘core earnings’ (*) (pre-tax, pre-provision income, excluding net PPP revenue), for the first quarter of 2022 exceeded that of the first quarter of 2021 by $245,000 or 9.2%. In addition, loan growth for the quarter was robust.”
Mr. Jones also noted, “This current environment of elevated inflation and the anticipation of higher interest rates going forward is historically positive for the banking industry. As a result, we anticipate an improved net interest margin in future periods. At the same time, we understand that this increased inflationary environment may be challenging for all businesses as well as for the economy over the long-term. As such, we remain focused on credit underwriting criteria that can withstand future price adjustments.”
Net income for the first quarter of 2022 was $2.64 million, or $0.44 per basic common share, versus $2.98 million, or $0.50 per basic common share, earned for the same three-month period of 2021. The Company’s return on average assets and average tangible equity (*) for the first quarter of 2022 was 0.93% and 12.93%, respectively. Revenues were positively impacted by strong growth in our earning asset base coupled with reduced funding costs and recognition of PPP fees. Average earning assets for first quarter of 2022 were $1.1 billion, an increase of $148.5 million from the same three-month period one year ago. The Company’s cost of funds fell 10 basis points to 0.27% for the first quarter of 2022 versus 0.37% for the same quarter one year ago. This reduction in funding costs helped offset a 67 basis point decline in earning asset yields between these same time periods. Despite a year-over-year reduction, net PPP revenue recognized during the period has also helped offset margin compression during this low rate environment. Net pre-tax revenue from PPP fees totaled $402,000 during the current quarter of 2022 versus $1.1 million generated during the first quarter of 2021. While we will continue to have some residual benefits from PPP fee revenue in coming periods, the level will be well below that recognized in the recent periods as there are very few of these loans that remain on our books that have yet to receive forgiveness. In addition, given the Company’s level of allowance for loan losses, coupled with its sound credit metrics, there was no provision expense booked in the first quarter of either 2022 or 2021.
As of March 31, 2022, the Company had total assets of $1.2 billion, an increase of $113.7 million or 10.8% from the end of the first quarter of 2021. Over this same period gross loans have grown $18.9 million or 2.9%, ending the period at $669.3 million. This loan growth includes the impact of $50.0 million of PPP loans that have paid off with forgiveness during this same 12-month period. Excluding the impact of PPP forgiveness, the Company’s core loans increased $69.6 million or 11.7% on a year-over-year basis. As of the end of the first quarter of 2022 the Bank had $3.4 million of PPP loans remaining on its books. This strong loan demand was funded with growth in our core deposit base. Total deposits on March 31, 2022, were $1.0 billion compared to $867.1 million on March 31, 2021, an increase of $175.5 million or 20.2%. During this same period noninterest bearing deposits increased $77.1 million or 22.9% to $413.2 million. The deposit growth rates experienced by the banking industry since the beginning of the pandemic, including Union Bank, has been highly unusual. Given the all the changes taking place in the economy, we cannot predict how deposit customers will behave in the coming periods. However, we do not anticipate this deposit expansion to continue and expect that at some point in the future, we, as well as our industry as a whole, could experience lower deposit levels as customers find alternative investment options for their excess funds.
Capital levels at our Bank continue to be strong with total risk-based capital of 15.73%, common equity tier 1 to risk-weighted assets 13.87% and the tier 1 leverage ratio at 8.96% as of March 31, 2022. These regulatory capital ratios exclude the impact of net unrealized gains and losses within our investment portfolio. During the first quarter of 2022 bond yields increased sharply, creating significant reductions in investment portfolio values. As a result, despite achieving strong earnings through the first three months of 2022, our tangible book value per share (*) fell from $14.50 at year end 2021 to $12.68 as of March 31, 2022. This reduction is not unique to our Company, as it is impacting our industry overall. However, given the sound quality of our investment portfolio, the Company expects to recover these unrealized losses over time either as bond yields reverse course or as these investments approach their maturities.
On April 20, 2022, the Company’s Board of Directors approved a cash dividend of $0.11 per share to be paid on June 30, 2022, to shareholders of record at the close of business on June 15, 2022.
UB Bancorp and Union Bank are headquartered in Greenville, North Carolina and operates 14 branches located in 12 counties throughout Eastern and Central North Carolina. UB Bancorp 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 Company 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 Company’s management uses these non-GAAP financial measures in their analysis of the Company’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 Company’s core businesses.
UB Bancorp
Consolidated Balance Sheets
($000's omitted)
As of the Period Ended
March 31,
December 31,
March 31,
2022
2021
2021
ASSETS
(un-audited)
*
(un-audited)
Cash and due from banks
$
8,038
$
7,296
$
12,621
Interest-bearing deposits with banks
188,500
171,795
51,410
Investment securities available-for-sale
251,042
275,498
297,045
Loans - gross
669,323
653,221
650,398
Net fair value marks
(948)
(1,061)
(1,656)
Allowance for loan losses
(7,710)
(7,593)
(10,119)
Net Loans
660,665
644,567
638,623
Bank premises and equipment, net
13,933
14,108
14,704
Bank-owned life insurance
20,998
20,864
17,462
Other real estate owned
-
-
-
Goodwill
12,897
12,897
12,897
Core deposit intangible
231
304
582
Other assets
13,632
10,490
10,941
Total Assets
$
1,169,936
$
1,157,819
$
1,056,285
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
$
1,042,569
$
1,004,016
$
867,076
Advances from the Federal Home Loan Bank
-
8,000
8,000
Subordinated debentures
30,682
30,672
30,643
Other borrowings
3,377
10,364
53,089
Accrued expenses and other liabilities
4,358
5,120
5,386
Total Liabilities
1,080,986
1,058,172
964,194
Stockholders' Equity
Common stock, no par value
70,064
69,742
70,729
Retained earnings
31,958
29,318
20,478
Accumulated other comprehensive income / (loss)
(13,072)
587
884
Total Stockholders' Equity
88,950
99,647
92,091
Total Liabilities and Stockholders' Equity
$
1,169,936
$
1,157,819
$
1,056,285
* Derived from audited financial statements
UB Bancorp
Consolidated Statements of Operations
($000's omitted except per share data)
For the Three Months Ended
March 31, 2022
March 31, 2021
(un-audited)
Interest Income
$
8,801
$
9,168
Interest Expense
694
846
Net Interest Income
8,107
8,322
Provision for Loan Losses
-
-
Net Interest Income after Provision for Loan Losses
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