Union Bankshares(UNB) - 2020 Q2 - Quarterly Report

Financial Performance - Consolidated net income increased by $138 thousand, or 5.5%, to $2.7 million for Q2 2020 compared to $2.5 million for Q2 2019, driven by increases in net interest income and noninterest income [139]. - Consolidated net income for the six months ended June 30, 2020, was $4.9 million, or $1.09 per share, down from $5.2 million, or $1.15 per share, for the same period in 2019 [142]. - Earnings per share for Q2 2020 was $0.60, compared to $0.56 for Q2 2019 [149]. - Return on average assets decreased to 1.11% for Q2 2020 from 1.25% in Q2 2019 [149]. - Total stockholders' equity increased by $3.9 million to $75.8 million at June 30, 2020, from $71.8 million at December 31, 2019 [176]. Income and Expenses - Net interest income increased by $412 thousand, or 2.8%, to $15.3 million for the six months ended June 30, 2020, despite a 150 basis point reduction in short-term interest rates [143]. - Total noninterest income amounted to $5.5 million for the six months ended June 30, 2020, an increase of $803 thousand, or 17.1%, primarily due to gains on the sale of residential loans [145]. - Total noninterest expenses were $14.3 million for the six months ended June 30, 2020, compared to $13.3 million for the same period in 2019, driven by planned technology spending and hiring [146]. - Noninterest expense increased by $311 thousand, or 4.6%, for the three months ended June 30, 2020, compared to the same period in 2019 [169]. Loan and Asset Management - Union originated $68.5 million in PPP loans during Q2 2020, generating interest income and origination fees of $368 thousand [140]. - Sales of qualifying residential loans for Q2 2020 were $55.4 million, resulting in a gain on sales of $1.2 million, compared to $35.2 million and a gain of $683 thousand in Q2 2019 [141]. - Average loans increased by $65.5 million, or 10.12%, to $713.2 million for the six months ended June 30, 2020 [157]. - The Company originated $72.8 million in loans guaranteed under various government programs, including $68.5 million in PPP loans, as of June 30, 2020 [179]. - As of June 30, 2020, the total loan portfolio amounted to $736.2 million, an increase from $677.7 million as of December 31, 2019, representing an 8.6% growth [177]. Asset Quality - The provision for loan losses was $800 thousand for the six months ended June 30, 2020, compared to $200 thousand for the same period in 2019, reflecting adjustments due to economic disruptions [144]. - Nonperforming assets to total assets increased to 0.35% in Q2 2020 from 0.20% in Q2 2019 [149]. - Nonperforming assets totaled $3.2 million as of June 30, 2020, a decrease from $3.5 million at December 31, 2019, indicating improved asset quality [186]. - The allowance for loan losses (ALL) was $6.9 million as of June 30, 2020, compared to $6.1 million at December 31, 2019, reflecting a proactive approach to potential credit losses [195]. Capital and Liquidity - The Company's total capital increased from $71.8 million at December 31, 2019, to $75.8 million at June 30, 2020, primarily due to net income and an increase in accumulated other comprehensive income [148]. - Total capital to risk-weighted assets increased to 13.44% for Q2 2020 from 13.06% in Q2 2019 [149]. - The Company maintained access to unused lines of credit up to $108.7 million as of June 30, 2020, in addition to $32.3 million in outstanding borrowings [215]. - Management believes the Company has sufficient liquidity to meet all reasonable borrower, depositor, and creditor needs in the current economic environment [219]. Deposits and Borrowings - Total deposits increased by $75.5 million, or 10.1%, to $819.5 million at June 30, 2020, from $744.0 million at December 31, 2019 [175]. - The Company had $593.0 million, or 72.4%, of total deposits below the FDIC insurance limit of $250,000 as of June 30, 2020 [206]. - Total borrowed funds decreased by $37.7 million, or 79.9%, from $47.2 million at December 31, 2019, to $9.5 million at June 30, 2020, primarily due to the maturity of $40.0 million in advances [207]. Market Conditions - The unemployment rate in Vermont was reported at 9.4% for June 2020, significantly higher than 2.1% in June 2019, highlighting the economic impact of COVID-19 [185]. - The Company continues to evaluate growth opportunities through internal growth or potential acquisitions [220].