UB Bancorp Reports Record Earnings for the Quarter and the Year Ended December 31, 2021

Rhea-AI Summary

UB Bancorp (OTCQX: UBNC) reported record net income of $4.0 million, or $0.68 per share, for Q4 2021, and $13.0 million, or $2.19 per share, for the full year. Total assets reached $1.16 billion, marking a $170.4 million increase from December 2020. Core loans grew by 6.2%, while total deposits rose by 33.3%. The bank maintained strong credit quality, with nonperforming assets at only 0.01%. A semi-annual cash dividend of $0.105 per share was declared, reflecting the bank's solid financial health and commitment to shareholder value.

Positive

• Record net income of $4.0 million for Q4 2021.
• Full year net income increased to $13.0 million, up from $5.1 million in 2020.
• Total assets increased to $1.16 billion, a growth of $170.4 million year-over-year.
• Core loans grew by 6.2%, totaling $37.3 million increase.
• Total deposits increased by $250.6 million or 33.3% year-over-year.
• Nonperforming assets represent only 0.01% of total assets.
• Strong capital levels with total risk-based capital at 15.89%.

Negative

• Loan demand is expected to moderate as deposit influx slows.
• Continued reliance on PPP fee revenue could pose future risks.

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 and twelve months ended December 31, 2021.

Some of the highlights for the quarter and the full year include:

• Record net income of $4.0 million or 68 cents per basic common share for the quarter
• Record net income for the full year 2021 of $13.0 million or $2.19 per basic common share
• Pre-tax net loan fee revenue from the Paycheck Protection Program (PPP) was $721k for the fourth quarter and $3.1 million for the full year of 2021
• Total assets of $1.16 billion as of quarter end, an increase of $51.7 million from the end of the third quarter of 2021 and $170.4 million from December 2020
• Core loans (excluding PPP loans) grew $37.3 million or 6.2% during 2021
• Total deposit growth of $61.3 million or 6.5% during the quarter and $250.6 million or 33.3% deposit growth during 2021, with non-interest-bearing deposits accounting for $82.3 million of the year-over-year growth
• Sound credit quality metrics with nonperforming assets representing only 0.01% of total assets at year end
• Capital at the Bank is well above regulatory thresholds to be considered ‘Well Capitalized’
• Strong liquidity levels
• Paid a semi-annual cash dividend of $0.105 per share in December, $0.21 per share for the full year of 2021
• Repurchased 138,507 shares throughout 2021
• 5,960,946 common shares outstanding with tangible book value per share of $14.50 as of December 31, 2021
• Year-to-date annualized return on average tangible equity of 16.13%

Rob Jones, President and CEO, noted, “we are pleased to report record earnings for the quarter and year to date. As stated in the body of this press release, the credit problems that were anticipated at the beginning of the COVID pandemic have simply not materialized. As a result, we were able to reverse some loan loss reserves set aside in 2020. As of the writing of this press release, loan quality metrics at our Bank are stellar. At year end, the Bank had only one borrower with a pandemic related short term payment deferral.”

Mr. Jones further noted, “today we continue to view our external environment as ‘unusual.’ While the influx of deposits slowed in the fourth quarter, they continue to increase at what we believe is an unsustainable pace. This abundance of liquidity is unusual, and we believe that it will moderate in the future. Absent an unknown economic set back, we believe loan demand will pick up in the coming quarters. Increased loan demand should absorb a portion of the excess liquidity.”

Mr. Jones also commented that, “the last two pandemic years have been a challenge to the world and the Company. I would like to take a moment thank our staff that has worked tirelessly to maintain service to our clients, often while dealing with their own personal pandemic related challenges. While we acknowledge that the pandemic battle is not over, we remain focused on building shareholder value going forward.”

Net income for the fourth quarter of 2021 was $4.0 million, or $0.68 per basic common share, versus $1.9 million, or $0.32 per basic common share, earned for the same period in 2020. The Company’s return on average assets and average tangible equity (*) for the fourth quarter of 2021 was 1.42% and 19.25%, respectively. Revenues were positively impacted by solid growth in our earning asset base coupled with reduced funding costs and recognition of PPP fees. Average earning assets for fourth quarter of 2021 were $1.07 billion, an increase of $152.3 million from the same three-month period one year ago. The Company’s cost of funds fell 16 basis points to 0.30% for the fourth quarter of 2021 versus 0.46% for the same quarter one year ago. This reduction in funding costs helped offset a 42 basis point decline in earning asset yields between these same time periods. 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 $721,000 during the current quarter of 2021 versus $564,000 generated during the fourth quarter of 2020. While we will continue to benefit from PPP fee revenue in coming periods, the level will be below that recognized in the current quarter.

Earnings for the quarters ended December 31, 2021, and 2020 were also impacted by provisions for loan losses. With the onset of the pandemic the Company began setting aside loan loss provisions for this uncertain credit environment. During the fourth quarter of 2020 the Company set aside $595,000 of provisions for loan losses. Given that our asset quality metrics have remained solid, coupled with less credit cloudiness than a year ago and significant improvement with a specific lending relationship that was initially negatively impacted by the pandemic, the Company has been able to hold less in its allowance for loan losses. During the current quarter we were able to reverse $1.9 million in provisions for loan losses. Should we continue to maintain our credit quality metrics into 2022, we anticipate that the Company may be able to release additional reserves in future periods.

Net income for the year ended December 31, 2021, was $13.0 million, or $2.19 per basic common share, and represented a 1.21% return on average assets and a 16.13% return on average tangible equity (*). For the same twelve month period of 2020, the Company posted $5.1 million of net income, or $0.85 per basic common share. On a pre-tax, pre-provision basis the Company earned $14.0 million during 2021 versus $11.4 million for the year ended December 31, 2020.

Earnings for 2021 benefited from a higher level of earning assets and PPP related fee income, coupled with reduced funding costs and reversal of provisions for loan losses. Average earning assets for the twelve months ended December 31, 2021, were $1.0 billion, an increase of $142.6 million or 16.3%, compared to average earning assets for the same twelve month period one year ago. This earning asset growth was funded primarily through growth in our core deposit base. Deposits as of the end of the fourth quarter of 2021 totaled $1.0 billion compared to $753.4 million at December 31, 2020, an increase of $250.6 million, or 33.3%. During this same time frame, non-interest-bearing deposits increased $82.3 million, or 26.8%, to $389.3 million. When comparing the cost of funds for the full year of 2021 to that of 2020, the Company has been able to reduce its funding costs 32 basis points to 0.33%, helping to offset margin compression due to declining earning assets yields in this low interest rate environment. Net pre-tax revenue from PPP fees of $3.1 million realized during 2021 versus $1.5 million generated during 2020 has also helped offset margin compression for the Company.

During 2020 management anticipated that our customers may experience economic challenges due to the impacts of this prolonged pandemic. Throughout the pandemic, the Bank actively has worked with borrowers by assisting them to acquire funds through the PPP or by providing payment relief. Along with these events and the credit uncertainty created by the COVID-19 pandemic the Bank added significantly to its allowance for loan losses during 2020. Through December 31, 2021, the Bank has granted COVID related loan payment deferrals on 348 loans with an aggregate maximum outstanding balance of approximately $92.5 million. In addition, the Bank assisted customers with obtaining 1,475 of loans and $91.3 million of funding through the Small Business Administration’s PPP. As of December 31, 2021, the Bank had just one loan relationship with a short-term active COVID-19 related payment deferral. In addition, our asset quality remains very strong with total non-performing assets representing only 0.01% of total assets as of December 31, 2021, a favorable change when compared to our level of 0.36% for this same ratio at the end of the fourth quarter of 2020. These changes, in conjunction with others noted above, allowed for the reversal of $2.4 million of provisions for loan losses during 2021 versus $5.3 million of provision expense taken over this same twelve month period in 2020. As of December 31, 2021, our allowance for loan losses totaled $7.6 million and represented 1.16% of total loans outstanding. Furthermore, our allowance relative to our originated loan portfolio (excluding purchased loans), net of PPP loans, stands at 1.24% at the end of the fourth quarter of 2021.

Capital levels at our Bank continue to be strong with total risk-based capital of 15.89%, common equity tier 1 to risk-weighted assets 14.04% and the tier 1 leverage ratio at 8.95% as of December 31, 2021.

On October 21, 2021, the Company’s Board of Directors approved a cash dividend of $0.105 per share which was paid on December 31, 2021, to shareholders of record at the close of business on December 15, 2021.

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
				December 31,
				2021				2020				2019
ASSETS				(un-audited)				*				*
Cash and due from banks			$	7,296			$	11,460			$	9,359
Interest-bearing deposits with banks				171,795				17,905				16,867
Investment securities available-for-sale				275,498				249,971				164,040
Loans - gross				653,221				662,770				580,024
Net fair value marks				(1,061	)			(1,807	)			(3,285	)
Allowance for loan losses				(7,593	)			(10,113	)			(4,988	)
	Net Loans			644,567				650,850				571,751
Bank premises and equipment, net				14,108				14,923				18,819
Bank-owned life insurance				20,864				17,350				16,897
Other real estate owned				-				118				-
Goodwill				12,897				12,897				12,897
Core deposit intangible				304				694				1,243
Other assets				10,490				11,203				9,448
		Total Assets	$	1,157,819			$	987,371			$	821,321
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
	Deposits		$	1,004,016			$	753,448			$	678,190
	Advances from the Federal Home Loan Bank			8,000				46,500				47,000
	Subordinated debentures			30,672				30,633				6,000
	Other borrowings			10,364				57,523				-
	Accrued expenses and other liabilities			5,120				5,274				4,686
		Total Liabilities		1,058,172				893,378				735,876
Stockholders' Equity
	Common stock, no par value			69,742				71,088				70,928
	Retained earnings			29,318				17,502				13,623
	Accumulated other comprehensive income / (loss)			587				5,403				894
		Total Stockholders' Equity		99,647				93,993				85,445
		Total Liabilities and Stockholders' Equity	$	1,157,819			$	987,371			$	821,321
	*	Derived from audited financial statements

UB Bancorp
Consolidated Statements of Operations
($000's omitted except per share data)
			For the Three Months Ended						For the Twelve Months Ended
			Dec 31, 2021			Dec 31, 2020			Dec 31, 2021			Dec 31, 2020
			(un-audited)			(un-audited)			(un-audited)			*
Interest Income		$	9,301		$	8,899		$	36,804		$	35,307
Interest Expense			765			1,019			3,254			5,511
	Net Interest Income		8,536			7,880			33,550			29,796
Provision for Loan Losses			(1,941)			595			(2,430)			5,291
	Net Interest Income after Provision for Loan Losses		10,477			7,285			35,980			24,505
Noninterest Income			815			951			3,264			3,609
Noninterest Expense			6,168			5,875			22,823			21,987
	Income Before Income Taxes		5,124			2,361			16,421			6,127
Income Taxes			1,080			444			3,382			1,071
	Net Income	$	4,044		$	1,917		$	13,039		$	5,056
	Net Income Available Per Basic Common Share	$	0.68		$	0.32		$	2.19		$	0.85
*	Derived from audited financial statements

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220121005478/en/

Scott C. McLean

Chief Financial Officer

(252) 917-5735

Source: UB Bancorp

FAQ

What were the earnings results for UB Bancorp in Q4 2021?

UB Bancorp reported net income of $4.0 million, or $0.68 per share, for Q4 2021.

How did UB Bancorp perform in the full year 2021?

In 2021, UB Bancorp achieved a net income of $13.0 million, or $2.19 per share.

What is the total deposit growth for UB Bancorp in 2021?

Total deposits grew by $250.6 million, or 33.3%, during 2021.

What are the current credit quality metrics for UB Bancorp?

As of December 31, 2021, nonperforming assets represented only 0.01% of total assets.

What dividend did UB Bancorp declare in December 2021?

UB Bancorp declared a semi-annual cash dividend of $0.105 per share in December 2021.