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UB Bancorp Releases Earnings for the Second Quarter of 2021 and Record Earnings for the Six Months Ended June 30, 2021

·10 min read

GREENVILLE, N.C., July 22, 2021--(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 six months ended June 30, 2021.

The second quarter of 2021 was another strong quarter for the Company. Some of the highlights include:

  • Net income of $2.9 million, or 49 cents per basic common share for the quarter

  • Record net income for the first six months of $5.9 million, or 99 cents per basic common share

  • Pre-tax revenue from Paycheck Protection Program (PPP) loans were $682k for the second quarter and $1.8 million year-to-date

  • Total assets of $1.1 billion as of quarter end, an increase of $23.5 million from the end of the first quarter of 2021 and $92.4 million from December 2020, placing UB Bancorp among the 10 largest independent community banks headquartered in North Carolina

  • Core loans (excluding PPP loans) grew $35.9 million, or 6.0% during the second quarter

  • Assisted 563 of our small business customers with access to more than $25.9 million of loans through the Small Business Administration’s (SBA) second round of PPP

  • Total deposits growth of $38.8 million, or 4.5% during the quarter, with non-interest-bearing deposits accounting for $20.4 million of the overall deposit growth

  • Sound credit quality metrics

  • Maintenance of solid capital at the Bank, well above regulatory thresholds to be considered ‘Well Capitalized’

  • Extremely strong liquidity levels

  • The Board of Directors authorized an additional $2.0 million share repurchase program

  • 5,956,626 common shares outstanding with tangle book value per share of $13.80 at quarter end

  • Paid a semi-annual cash dividend to our shareholders of $0.105 per share on June 30, 2021

"We are pleased to announce another strong quarter of earnings for our shareholders," said Rob Jones, President and Chief Executive Officer. "The first six months of 2021 represents record earnings for the period. We are especially pleased with our results given the challenges around the existing low interest rate environment and continued uncertainty around COVID-19 recovery. I am proud that our team was able to help more than 550 customers with round two Paycheck Protection Program loans totaling over $25 million."

Mr. Jones continued, "Severe credit quality issues that were anticipated at the beginning of the pandemic have not materialized as of this date. As a result, we have been able to grow our core loan portfolio (excluding PPP loan balances) without adding to loan loss reserves."

Net income for the second quarter of 2021 was $2.9 million, or $0.49 per basic common share, versus $612,000, or $0.10 per basic common share, earned for the same period in 2020. The Company’s return on average assets and average tangible equity (*) for the second quarter of 2021 was 1.08% and 14.98%, 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 second quarter of 2021 were $1.0 billion, an increase of $131.6 million from the same three-month period one year ago. The Company’s cost of funds fell 34 basis points to 0.34% for the second quarter of 2021 versus 0.68% for the same quarter one year ago. This reduction is funding costs helped offset a 47-basis-point decline in earning asset yields between these same time periods. Net pre-tax revenue from PPP fees totaled $682,000 during the second quarter of 2021.

With the onset of the pandemic, during the second quarter of 2020, the Company began setting aside loan loss provisions for this uncertain credit environment. As a result, during the second quarter of 2020 the Company set aside $2.2 million of provisions for loan losses. Given that our asset quality metrics have remained solid and the credit cloudiness is less dense than it was one year ago, the Company has not needed to add to its allowance for loan losses during 2021. On a pre-tax, pre-provision basis the Company earned $3.6 million for the second quarter of 2021. Excluding taxes and $2.2 million of provisions for loan losses, the Company generated $2.9 million of earnings during the second quarter of 2020.

Net income for the six month period ended June 30, 2021 was $5.9 million, or $0.99 per basic common share, and represented a 1.13% return on average assets and a 15.17% return on average tangible equity (*). For the same six-month period of 2020, the Bank posted $2.3 million of net income, or $0.39 per basic common share. On a pre-tax, pre-provision basis the Company earned $7.4 million through the first half of 2021. Excluding taxes and $2.6 million of provisions for loan losses, the Company generated $5.4 million of earnings during the first six months of 2020.

Year-to-date revenues have benefited from a higher level of earning assets than in prior periods. Total assets as of June 30, 2021 were $1.1 billion, an increase of $78.8 million or 7.9%, compared to $1.0 billion of total assets at June 30, 2020. Over this same 12-month time frame, gross loans grew $23.3 million or 3.6%, ending the period at $665.9 million. With a goal of putting to work funds received from our deposit base, as well as our subordinated note offering, our available-for-sale investment portfolio increased $93.5 million over the past year and totaled $299.9 million at June 30, 2021. This earning asset growth was funded primarily through growth in our core deposit base. Total deposits at June 30, 2021 were $905.9 million compared to $748.2 million at June 30, 2020, an increase of $157.7 million, or 21.1%. During this same time period, non-interest-bearing deposits have increased $56.4 million, or 18.8%, to $356.5 million.

During the pandemic, the Bank actively worked with borrowers to provide payment relief. Through June 30, 2021, the Bank had granted Covid related loan payment deferrals on 347 loans with an aggregate maximum outstanding balance of approximately $92.5 million. As of the end of the second quarter of 2021, the Bank had just one loan relationship with an active payment deferral.

Management had anticipated that because of this prolonged pandemic that some of our customers may face economic challenges. During 2020, the Bank added to its allowance for loan losses due to the credit uncertainty created by the COVID-19 pandemic. As of June 30, 2021, our allowance for loan losses totaled $10.1 million and represented 1.52% of total loans outstanding. Furthermore, our allowance relative to our originated loan portfolio (excluding purchased loans), net of PPP loans, stands at 1.73% at the end of the second quarter of 2021. Currently our asset quality remains very strong with total non-performing assets representing only 0.27% of total assets as of June 30, 2021. This represents a slight decrease from our level of 0.36% at the end of the fourth quarter of 2020. Given some of the improvements in the overall economy, coupled with our current asset quality metrics, we do not anticipate a need to build our allowance above its current level at this point in time.

Capital levels at our Bank continue to be strong with total risk-based capital of 15.14%, common equity tier 1 to risk-weighted assets 13.02% and the tier 1 leverage ratio at 8.87% as of June 30, 2021. In addition, the parent company, UB Bancorp, has the capacity to inject additional capital into the Bank should the need arise.

On June 30, 2021, the Company paid a cash dividend of $0.105 per share to shareholders of record at the close of business on June 15, 2021.

UB Bancorp and Union Bank are headquartered in Greenville, North Carolina and operate 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

June 30,

December 31,

June 30,

2021

2020

2020

ASSETS

(un-audited)

*

(un-audited)

Cash and due from banks

$

11,680

$

11,460

$

10,136

Interest-bearing deposits with banks

55,053

17,905

95,028

Investment securities available-for-sale

299,898

249,971

206,425

Loans - gross

665,865

662,770

642,601

Net fair value marks

(1,490

)

(1,807

)

(2,241

)

Allowance for loan losses

(10,113

)

(10,113

)

(7,478

)

Net Loans

654,262

650,850

632,882

Bank premises and equipment, net

14,568

14,923

15,217

Bank-owned life insurance

20,594

17,350

17,121

Other real estate owned

-

118

-

Goodwill

12,897

12,897

12,897

Core deposit intangible

479

694

949

Other assets

10,343

11,203

10,338

Total Assets

$

1,079,774

$

987,371

$

1,000,993

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Deposits

$

905,874

$

753,448

$

748,192

Advances from the Federal Home Loan Bank

8,000

46,500

61,725

Subordinated debentures

30,653

30,633

30,625

Other borrowings

34,694

57,523

65,116

Accrued expenses and other liabilities

4,947

5,274

4,629

Total Liabilities

984,168

893,378

910,287

Stockholders' Equity

Common stock, no par value

69,933

71,088

70,813

Retained earnings

22,775

17,502

15,381

Accumulated other comprehensive income / (loss)

2,898

5,403

4,512

Total Stockholders' Equity

95,606

93,993

90,706

Total Liabilities and Stockholders' Equity

$

1,079,774

$

987,371

$

1,000,993

*

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 Six Months Ended

June 30,

2021

June 30,

2020

June 30,

2021

June 30,

2020

(un-audited)

Interest Income

$

9,068

$

8,907

$

18,235

$

17,637

Interest Expense

844

1,460

1,689

3,179

Net Interest Income

8,224

7,447

16,546

14,458

Provision for Loan Losses

-

2,200

-

2,555

Net Interest Income after Provision for Loan Losses

8,224

5,247

16,546

11,903

Noninterest Income

881

1,033

1,676

1,839

Noninterest Expense

5,466

5,594

10,828

10,913

Income Before Income Taxes

3,639

686

7,394

2,829

Income Taxes

730

74

1,509

484

Net Income

$

2,909

$

612

$

5,885

$

2,345

Net Income Available Per Basic Common Share

$

0.49

$

0.10

$

0.99

$

0.39

View source version on businesswire.com: https://www.businesswire.com/news/home/20210722006011/en/

Contacts

Scott C. McLean
Chief Financial Officer
(252) 917-5735