Union Bankshares(UNB) - 2023 Q2 - Quarterly Report

Financial Performance - Consolidated net income decreased by $232 thousand, or 7.9%, to $2.7 million for Q2 2023 compared to $2.9 million for Q2 2022, primarily due to a decrease in net interest income and an increase in noninterest expenses [129]. - For the six months ended June 30, 2023, consolidated net income increased by $263 thousand, or 4.9%, to $5.7 million compared to $5.4 million for the same period in 2022, driven by increases in net interest income and noninterest income [130]. - Return on average assets for Q2 2023 was 0.79%, down from 0.94% in Q2 2022, while return on average equity was 17.98%, slightly lower than 18.30% in the prior year [133]. Assets and Liabilities - Total consolidated assets as of June 30, 2023, were $1.33 billion, with gross loans totaling $938.7 million and deposits amounting to $1.12 billion [131]. - Total consolidated assets as of June 30, 2023, were $1.33 billion, a decrease of $1.7 million or 0.1% from $1.34 billion at December 31, 2022, but an increase of $142.8 million or 12.0% compared to June 30, 2022 [163]. - Net loans and loans held for sale decreased by $18.9 million or 2.0% to $933.5 million, representing 69.9% of total assets at June 30, 2023, compared to 71.3% at December 31, 2022 [165]. Interest Income and Expenses - The net interest margin for the six months ended June 30, 2023, was 3.05%, down from 3.23% for the same period in 2022, reflecting the impact of rising deposit and funding costs [126]. - Net interest income for the first six months of 2023 was $19.6 million, an increase of $959 thousand or 5.15% compared to the same period in 2022 [144]. - Interest income on loans increased by $2.9 million due to an increase in average loan volume of $146.2 million and an increase of 54 bps in average yield [141]. Noninterest Income and Expenses - Noninterest income for Q2 2023 was $2,483 thousand, a 9.0% increase from $2,279 thousand in Q2 2022, driven by a $200 thousand increase in net gains on sales of loans held for sale [156]. - Total noninterest expense for Q2 2023 was $9,063 thousand, a 7.8% increase from $8,409 thousand in Q2 2022, with significant increases in professional fees and FDIC insurance assessments [159]. - Salaries and wages increased by $153 thousand (4.3%) in Q2 2023 compared to Q2 2022, and for the first half of 2023, they rose by $245 thousand (3.5%) [158]. Capital and Equity - The Company's total capital increased to $59.1 million at June 30, 2023, from $55.2 million at December 31, 2022, resulting in a book value per share increase to $13.10 [132]. - Stockholders' equity increased from $55.2 million at December 31, 2022, to $59.1 million at June 30, 2023, driven by net income of $5.7 million for the first six months of 2023 [165]. - Total capital to risk weighted assets for the company is $117,580, representing a ratio of 13.48% as of June 30, 2023, exceeding the minimum requirement of 8.00% [215]. Loan Quality and Credit Losses - Nonperforming assets to total assets ratio was 0.15% as of June 30, 2023, compared to 0.13% in the same period of 2022, suggesting a slight increase in asset quality concerns [133]. - Credit loss benefit for loans was $151 thousand in Q2 2023, compared to no credit loss in Q2 2022, indicating improved credit quality [156]. - The Allowance for Credit Losses (ACL) on loans was $6.8 million as of June 30, 2023, down from $8.3 million at December 31, 2022, reflecting a decrease of 18.1% [177]. Deposits and Funding - Total deposits decreased by $78.2 million or 6.5% to $1.12 billion at June 30, 2023, with noninterest bearing deposits down by $47.5 million or 16.6% [165]. - Average total deposits increased by $74.3 million, or 6.6%, to $1.205 billion for the six months ended June 30, 2023, compared to the same period in 2022 [185]. - The Company had $88.0 million in retail brokered deposits at a weighted average rate of 4.66% as of June 30, 2023, compared to $33.0 million at 3.45% at December 31, 2022 [188]. Regulatory Compliance - As of June 30, 2023, the Company met all capital adequacy requirements and exceeded the "well capitalized" standards under the FDIC's framework [214]. - The Company is subject to federal banking laws and regulations that establish minimum levels of capital and restrict dividend distributions [215]. - The Company completed a private placement of $16.5 million in subordinated notes in August 2021, which qualify as Tier 2 capital under regulatory guidelines [205].