U & I Financial Corp. Reports Fourth Quarter and Full Year 2024 Financial Results

Rhea-AI Summary

U & I Financial Corp. (OTCQX:UNIF) reported significant losses in Q4 2024, with a net loss of $16.6 million ($3.02 per share) compared to $18.2 million loss in Q4 2023. The full-year 2024 resulted in a net loss of $31.1 million ($5.67 per share), substantially higher than 2023's loss of $10.8 million.

The company faced major challenges with deteriorating commercial-equipment loans, charging off $18.1 million in Q4 2024. Total assets decreased by 14.4% to $522.3 million, net loans fell 16.9% to $386.1 million, and deposits dropped 14.5% to $439.6 million compared to December 2023.

The bank's capital ratios as of December 2024 were: Tier 1 Leverage Ratio at 5.60%, Tier 1 Risk-Based Capital Ratio at 7.53%, and Total Risk-Based Capital Ratio at 8.80%, maintaining 'adequately capitalized' status per regulatory guidelines.

Positive

• Provision for Credit Losses decreased by $20.5 million compared to Q4 2023
• Commercial-equipment loan exposure reduced from $29.6M to $10.8M in Q4 2024
• Bank maintains 'adequately capitalized' status

Negative

• Q4 2024 net loss of $16.6 million ($3.02 per share)
• Full-year 2024 net loss increased to $31.1 million from $10.8 million in 2023
• $18.1 million charge-off in commercial-equipment loans during Q4 2024
• Total assets decreased 14.4% year-over-year
• Net loans declined 16.9% year-over-year
• Deposits dropped 14.5% year-over-year
• $12.0 million Deferred Tax Assets Valuation Allowance expense

LYNNWOOD, WA / ACCESS Newswire / January 31, 2025 / U & I Financial Corp. (OTCQX:UNIF), the holding company ("Company") for UniBank ("Bank"), today reported a quarterly Net Loss of $16.6 million or a loss of $3.02 per share in the fourth quarter of 2024, compared to a Net Loss of $18.2 million or a loss of $3.33 per share for the same quarter of 2023. The Provision for Credit Losses of $5.8 million recognized during the fourth quarter of 2024 was $20.5 million lower than the $26.3 million recognized for the same quarter last year. However, the Bank had an Income Tax Expense of $10.5 million during this quarter as a result of a $12.0 million Deferred Tax Assets Valuation Allowance expense as compared to an Income Tax Benefit of $5.1 million for the same quarter last year, resulting is a $15.7 million increase in Income Tax Expense.

For the year ended December 31, 2024, the Net Loss was $31.1 million or a loss of $5.67 per share, compared to a Net Loss of $10.8 million or a loss of $1.98 per share for the same period of 2023. The decrease was primarily due to less Net Interest Income of $7.1 million and higher Interest Tax Expense of $9.8 million.

At December 31, 2024, Total Assets were $522.3 million, a decrease of $87.7 million or 14.4% from $610.0 million at December 31, 2023. Net Loans were $386.1 million at December 31, 2024, decreasing by $78.5 million or 16.9% from $464.7 million at December 31, 2023. Total Deposits decreased by $74.8 million or 14.5% to $439.6 million at December 31, 2024 compared to $514.4 million a year earlier.

The Bank continued to experience credit deterioration in commercial-equipment loans, with a $18.1 million charged off during the fourth quarter of 2024. As of December 31, 2024, the remaining loans totaled $10.8 million compared to $29.6 million as of September 30, 2024. As of December 31, 2024 the Allowance for Credit Losses ("ACL") on Loans and ACL on Off-Balance Sheet Credit Exposure were $6.3 million and $65 thousand, respectively, compared to $15.4 million and $1.7 million, respectively, as of September 30, 2024.

The Bank's capital ratios were 5.60%, 7.53% and 8.80% for Tier 1 Leverage Ratio, Tier 1 Risk-Based Capital Ratio and Total Risk-Based Capital Ratio, respectively, as of December 31, 2024. The Tier 1 Risk-Based Capital Ratio and Total Risk-Based Capital Ratio were "adequately capitalized" per the regulatory guidelines.

"The Company had a very challenging year in 2024 due to the deterioration of the commercial-equipment loans. While the credit exposure of these loans has decreased by year end, the Bank is still actively working with borrowers to prevent further deterioration," said President & CEO Stephanie Yoon. "Looking ahead, we still have much work to do. Hence, we have added new talent in key areas of the Bank in addition to the new Chief Credit Officer who started in September 2024. With a strengthened team, I am hopeful that we can turn things around and continue the rebuilding process."

Non-GAAP Financial Metrics

This news release contains certain non-GAAP financial measure disclosures. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company's operational performance, credit quality and capital levels.

About U & I Financial Corp.

UniBank, the wholly owned subsidiary of U & I Financial Corp. (OTCQX:UNIF). Founded in 2006 and based in Lynnwood, Washington, the Bank serves small to medium-sized businesses, professionals, and individuals across the United States with a particular emphasis on government guaranteed loan programs. Customers can access their accounts in any of the four branches - Lynnwood, Bellevue, Federal Way and Tacoma - online, or through the Bank's ATM network.

For more information visit www.unibankusa.com or call (425) 275-9700.

Forward-Looking Statement Safe Harbor: This news release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Forward-looking statements describe the Company's projections, estimates, plans and expectations of future results and can be identified by words such as "believe," "intend," "estimate," "likely," "anticipate," "expect," "looking forward," and other similar expressions. They are not guarantees of future performance. Actual results may differ materially from the results expressed in these forward-looking statements, which because of their forward-looking nature, are difficult to predict. Investors should not place undue reliance on any forward-looking statement, and should consider factors that might cause differences including but not limited to compliance with the Written Agreement with the Federal Reserve Bank of San Francisco and the Washington Department of Financial Institutions; the degree of competition by traditional and nontraditional competitors, declines in real estate markets, an increase in unemployment or sustained high levels of unemployment; changes in interest rates; adverse changes in local, national and international economies; changes in the Federal Reserve's actions that affect monetary and fiscal policies; changes in legislative or regulatory actions or reform, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act; demand for products and services; further declines in the quality of the loan portfolio that results in continued losses and our ability to succeed in our problem-asset resolution efforts; including, but not limited to, continued credit deterioration of commercial-equipment loans and future increases in the Provision for Credit Losses, the impact of technological advances; changes in tax laws; and other risk factors. U & I Financial Corp. undertakes no obligation to publicly update or clarify any forward-looking statement to reflect the impact of events or circumstances that may arise after the date of this release.

STATEMENT OF INCOME (Unaudited)

		Dec-24				Sep-24				Dec-23				Dec-24				Dec-23
(Dollars in thousands except EPS)		QTD				QTD				QTD				YTD				YTD
Interest Income		$	7,165			$	8,270			$	9,306			$	34,082			$	37,652
Interest Expense			4,643				4,820				4,592				18,930				15,388
Net Interest Income			2,522				3,450				4,714				15,152				22,264
Provision for Credit Losses			5,801				19,479				26,253				28,246				26,411
Gain (Loss) on Loan Sales			-				-				(23	)			179				1,410
Loan Servicing Fees, Net of Amortization			141				168				83				668				624
Other Non-interest Income			184				212				173				776				851
Non-interest Income			325				380				233				1,623				2,885
Salaries & Benefits			1,629				1,514				1,250				6,577				8,241
Occupancy Expense			193				205				188				779				729
Other Expense			1,238				1,568				586				5,619				3,712
Non-interest Expense			3,060				3,287				2,024				12,975				12,682
Net Income (Loss) before Income Taxes			(6,014	)			(18,936	)			(23,330	)			(24,446	)			(13,944	)
Income Tax Expense (Benefit)			10,543				(3,983	)			(5,122	)			6,622				(3,136	)
Net Income (Loss)		$	(16,557	)		$	(14,953	)		$	(18,208	)		$	(31,068	)		$	(10,808	)
Total Outstanding Shares (in thousands)			5,477				5,477				5,466				5,477				5,466
Basic Earnings (Loss) per Share		$	(3.02	)		$	(2.73	)		$	(3.33	)		$	(5.67	)		$	(1.98	)
Statement of Condition (Unaudited)
(Dollars in thousands)		Dec-24 Qtr End				Sep-24 Qtr End				Dec-23 Qtr End				Variance Prior Qtr				Variance Prior Year
Cash and Due from Banks		$	61,684			$	70,527			$	61,254			$	(8,843	)		$	430
Investments			48,511				50,344				51,346				(1,833	)			(2,835	)
Gross Loans			395,768				430,523				490,636				(34,755	)			(94,868	)
Allowance for Credit Losses (ACL) on Loans			(9,620	)			(20,254	)			(25,950	)			10,634				16,330
Net Loans			386,148				410,269				464,686				(24,121	)			(78,538	)
Fixed Assets			5,936				6,078				6,438				(142	)			(502	)
Deferred Tax Assets			12,542				11,192				6,880				1,350				5,662
Valuation Allowance			(12,014	)			-				-				(12,014	)			(12,014	)
Net Deferred Tax Assets			528				11,192				6,880				(10,664	)			(6,352	)
Other Assets			19,512				21,195				19,445				(1,683	)			67
Total Assets		$	522,319			$	569,605			$	610,049			$	(47,286	)		$	(87,730	)
Checking		$	76,165			$	86,708			$	100,135			$	(10,543	)		$	(23,970	)
NOW			5,739				5,233				13,504				506				(7,765	)
Money Market			124,530				128,136				200,966				(3,606	)			(76,436	)
Savings			6,184				6,258				8,063				(74	)			(1,879	)
Certificates of Deposit			226,984				241,840				191,733				(14,856	)			35,251
Total Deposits			439,602				468,175				514,401				(28,573	)			(74,799	)
Borrowed Funds			50,000				50,000				20,000				-				30,000
ACL on Off-Balance Sheet Credit Exposure			65				1,695				5,551				(1,630	)			(5,486	)
Other Liabilities			2,721				2,710				8,678				11				(5,957	)
Total Liabilities			492,388				522,580				548,630				(30,192	)			(56,242	)
Shareholders' Equity			29,931				47,025				61,419				(17,094	)			(31,488	)
Total Liabilities & Equity		$	522,319			$	569,605			$	610,049			$	(47,286	)		$	(87,730	)

Financial Ratios

		Dec-24				Sep-24				Dec-23				Dec-24				Dec-23
(Dollars in thousands except BVS)		QTD				QTD				QTD				YTD				YTD
Performance Ratios
Return on Average Assets*			(11.87	%)			(10.30	%)			(11.85	%)			(5.37	%)			(1.85	%)
Return on Average Equity*			(141.93	%)			(96.78	%)			(92.41	%)			(53.46	%)			(14.53	%)
Net Interest Margin*			1.86	%			2.44	%			3.18	%			2.67	%			3.83	%
Efficiency Ratio			107.48	%			85.82	%			40.91	%			77.50	%			50.36	%
*Quarterly results are annualized														Adequately				Well
		Dec-24				Sep-24				Dec-23				Capitalized				Capitalized
Capital		QTD				QTD				QTD				Minimum				Minimum
Tier 1 Leverage Ratio**			5.60	%			7.22	%			10.16	%			4.00	%			5.00	%
Common Equity Tier 1 Ratio**			7.53	%			9.33	%			12.42	%			4.50	%			6.50	%
Tier 1 Risk-Based Capital Ratio**			7.53	%			9.33	%			12.42	%			6.00	%			8.00	%
Total Risk-Based Capital Ratio **			8.80	%			10.62	%			13.71	%			8.00	%			10.00	%
Book Value per Share (BVS)		$	5.47			$	8.59			$	11.24
**Represents Bank capital ratios
		Dec-24				Sep-24				Dec-23				Dec-24				Dec-23
Asset Quality		QTD				QTD				QTD				YTD				YTD
Net Credit Charge-Offs (Recoveries)***		$	18,064			$	17,386			$	0			$	50,063			$	0
Allowance for Credit Losses to Loans %			2.43	%			4.70	%			5.29	%
Nonperforming Assets to Total Assets			2.11	%			1.29	%			2.42	%
*** Includes Off-Balance Sheet Credit Exposure

Additional Credit Disclosures

Loan Segmentation - The following tables present the Bank's total loans outstanding at amortized cost by portfolio segment and by internally assigned grades as of December 31, 2024 and September 30, 2024 (in thousands):

December 31, 2024						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	181,316			$	24,012			$	6,762			$	924			$	-			$	213,014
Residential real estate			159,725				234				-				-				-				159,959
Commercial - equipment			-				881				7,986				1,899				-				10,766
Commercial - all other			8,124				-				100				-				-				8,224
Multifamily			2,802				-				-				-				-				2,802
Construction and land			883				-				-				-				-				883
Consumer and other			120				-				-				-				-				120
		$	352,970			$	25,127			$	14,848			$	2,823			$	-			$	395,768
September 30, 2024						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	188,980			$	29,274			$	792			$	-			$	-			$	219,046
Residential real estate			168,715				-				-				499				-				169,214
Commercial - equipment			-				18,066				7,985				3,554				-				29,605
Commercial - all other			8,857				-				-				-				-				8,857
Multifamily			2,823				-				-				-				-				2,823
Construction and land			907				-				-				-				-				907
Consumer and other			71				-				-				-				-				71
		$	370,353			$	47,340			$	8,777			$	4,053			$	-			$	430,523

Descriptions of the various risk grades are as follows:

Special Mention: Assets having potential weaknesses that if left uncorrected, may result in decline in borrower's repayment ability. However, these assets are not adversely classified and do not expose the Bank to sufficent risk to warrant adverse classificaiton.

Substandard: An asset is considered substandard if it is inadequately protected by the current net worth and pay capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful: Assets classified as doubtful have all the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions, and values.

Loss: Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Any loans downgraded to this category are generally charged off soon after.

Allowance for Credit Losses on Loans - The following tables present the allowance for credit losses under ASC 326, Financial Instruments - Credit Losses by portfolio segment and by internally assigned grades as of December 31, 2024 and September 30, 2024 (in thousands):

December 31, 2024						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	1,214			$	163			$	49			$	79			$	-			$	1,505
Residential real estate			1,629				2				-				-				-				1,631
Commercial - equipment			-				441				3,993				1,899				-				6,333
Commercial - all other			121				-				2				-				-				123
Multifamily			2				-				-				-				-				2
Construction and land			23				-				-				-				-				23
Consumer and other			3				-				-				-				-				3
		$	2,992			$	606			$	4,044			$	1,978			$	-			$	9,620
September 30, 2024						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	1,234			$	113			$	48			$	-			$	-			$	1,395
Residential real estate			3,088				-				-				195				-				3,283
Commercial - equipment			-				9,033				3,901				2,475				-				15,409
Commercial - all other			135				-				-				-				-				135
Multifamily			2				-				-				-				-				2
Construction and land			27				-				-				-				-				27
Consumer and other			3				-				-				-				-				3
		$	4,489			$	9,146			$	3,949			$	2,670			$	-			$	20,254

Past due loans -The following table presents past due loans at amortized cost by portfolio segment as of December 31, 2024 and September 30, 2024 (in thousands):

December 31, 2024		30 - 59 Days				60 - 89 Days				90 Days or				Total								Total
Portfolio Segment		Past Due				Past Due				More				Past Due				Current				Loans
Commercial real estate		$	-			$	-			$	7,306			$	7,306			$	205,708			$	213,014
Residential real estate			-				-				-				-				159,959				159,959
Commercial - equipment			1,817				754				403				2,974				7,792				10,766
Commercial - all other			100				-				-				100				8,124				8,224
Multifamily			-				-				-				-				2,802				2,802
Construction and land			-				-				-				-				883				883
Consumer and other			-				-				-				-				120				120
		$	1,917			$	754			$	7,709			$	10,380			$	385,388			$	395,768
September 30, 2024		30 - 59 Days				60 - 89 Days				90 Days or				Total								Total
Portfolio Segment		Past Due				Past Due				More				Past Due				Current				Loans
Commercial real estate		$	930			$	3,896			$	-			$	4,826			$	214,220			$	219,046
Residential real estate			-				-				-				-				169,214				169,214
Commercial - equipment			6,425				5,810				3,272				15,507				14,098				29,605
Commercial - all other			-				-				-				-				8,857				8,857
Multifamily			-				-				-				-				2,823				2,823
Construction and land			-				-				-				-				907				907
Consumer and other			-				-				-				-				71				71
		$	7,355			$	9,706			$	3,272			$	20,333			$	410,190			$	430,523

Non-accrual loans -Loans are placed on nonaccrual once the loan is 90 days past due or sooner if, in management's opinion, the borrower may be unable to meet payment of obligations as they become due, as well as when required by regulatory provisions. The following table presents the nonaccrual loans at amortized cost by portfolio segment as of December 31, 2024 and September 30, 2024 (in thousands):

December 31, 2024 Portfolio Segment		Nonaccrual with no Allowance for Credit Losses				Nonaccrual with Allowance for Credit Losses				Total Nonaccrual				Loans Past Due Over 89 Days Still Accruing
Commercial real estate		$	-			$	9,401			$	9,401			$	-
Residential real estate			-				-				-				-
Commercial - equipment			-				1,638				1,638				-
		$	-			$	11,039			$	11,039			$	-
September 30, 2024 Portfolio Segment		Nonaccrual with no Allowance for Credit Losses				Nonaccrual with Allowance for Credit Losses				Total Nonaccrual				Loans Past Due Over 89 Days Still Accruing
Commercial real estate		$	-			$	2,564			$	2,564			$	-
Residential real estate			-				500				500				-
Commercial - equipment			-				4,265				4,265				-
		$	-			$	7,329			$	7,329			$	-

Off-Balance Sheet Credit Exposure - The Bank has originated certain loans in the commercial-equipment segment with government guarantees and has subsequently sold many of the guaranteed portions of these loans in the secondary market. Upon defaults by the borrowers, the Bank would be required to repurchase the guaranteed portions of the loans and submit the repayment requests to the respective government agency. The agency may decide not to honor the guarantees if certain conditions are not met. Guarantees, as defined under ASC 460, Guarantees, that create off-balance sheet credit exposure are in the scope of ASC 326-20 (CECL) when such guarantees for loans have an implicit repurchase arrangement and thus may present an off-balance sheet credit risk. As of December 31, 2024 and September 30, 2024 the Bank had $126 thousand and $2.6 million, respectively, of such guarantees sold of commercial-equipment loans that were graded below Pass. The Allowance for Credit Losses on Off-Balance Sheet Credit Exposure for these sold guarantees was $65 thousand and $1.7 million as of December 31, 2024 and September 30, 2024, respectively.

U & I Financial Corp.
Investor Relations
IR@unibankusa.com

SOURCE: U & I Financial Corp. (Washington)

View the original press release on ACCESS Newswire

FAQ

What was UNIF's net loss for Q4 2024?

U & I Financial Corp. reported a net loss of $16.6 million, or $3.02 per share, in Q4 2024.

How much did UNIF's total assets decrease in 2024?

UNIF's total assets decreased by $87.7 million or 14.4%, from $610.0 million to $522.3 million during 2024.

What was the amount of commercial-equipment loans charged off by UNIF in Q4 2024?

UNIF charged off $18.1 million in commercial-equipment loans during Q4 2024.

What are UNIF's current capital ratios as of December 31, 2024?

As of December 31, 2024, UNIF's capital ratios were: Tier 1 Leverage Ratio at 5.60%, Tier 1 Risk-Based Capital Ratio at 7.53%, and Total Risk-Based Capital Ratio at 8.80%.

How did UNIF's full-year 2024 performance compare to 2023?

UNIF's net loss for 2024 was $31.1 million ($5.67 per share), compared to a net loss of $10.8 million ($1.98 per share) in 2023.