
U & I Financial Corp. Reports Third Quarter 2024 Financial Results
*LYNNWOOD, WA / ACCESSWIRE / October 31, 2024 / *U & I Financial Corp. (OTCQX:UNIF), the holding company ("Company") for UniBank ("Bank"), today reported a quarterly Net Loss of $15.0 million or a loss of $2.73 per share in the third quarter of 2024, compared to the Net Income of $2.4 million or earnings of $0.43 per share for the same quarter of 2023, primarily due to the Provision for Credit Losses of $19.5 million recognized during the third quarter of this year. For the nine months ended September 30, 2024, the Net Loss was $14.5 million or a loss of $2.65 per share, as a result of the $22.4 million Provision for Credit Losses, compared to the Net Income of $7.4 million or earnings of $1.36 per share for the same period of 2023.
At September 30, 2024, Total Assets were $569.6 million, a decrease of $42.6 million or 7.0% from $612.2 million at September 30, 2023. Net Loans were $410.3 million at September 30, 2024, decreasing by $66.6 million or 14.0% from $476.9 million at September 30, 2023. Total Deposits decreased by $54.0 million or 10.3% to $468.2 million at September 30, 2024 compared to $522.1 million a year earlier.
The Bank has experienced credit deterioration from Bank borrowers with "commercial-equipment" loans. As of September 30, 2024, these loans totaled $38.3 million as compared to $49.3 million as of June 30, 2024. The Allowance for Credit Losses (ACL) on Loans and ACL on Off-Balance Sheet Credit Exposure were $24.1 million and $1.7 million, respectively, as of September 30, 2024, compared to $13.1 million and $2.2 million, respectively, as of June 30, 2024. Additional information on credit quality is presented in the tables below.
The Bank's capital ratios remained above the regulatory "well capitalized" minimums at 7.53%, 9.56% and 10.87% for Tier 1 Leverage Ratio, Tier 1 Risk-Based Capital Ratio and Total Risk-Based Capital Ratio, respectively, as of September 30, 2024.
"As a result of the ongoing issues with commercial equipment loans, it was necessary to recognize a large provision in the third quarter. Although the Bank has charged off $23 million of these loans and has reserved for 63% of the remaining $38 million, its capital ratios are still above regulatory ‘well capitalized' minimum ratios," said President & CEO Stephanie Yoon. "While we are disappointed to recognize another large provision in the third quarter due to these loans, we are encouraged by the work of our new, solid credit team as they actively work to resolve these issues."
*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 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)*
*Sep-24*
*Jun-24*
*Sep-23*
*Sep-24*
*Sep-23*
*Dec-23*
(Dollars in thousands except EPS)
*QTD*
*QTD*
*QTD*
*YTD*
*YTD*
*YTD*
Interest Income
$
8,270
$
9,362
$
9,616
$
26,917
$
28,346
$
37,652
Interest Expense
4,820
4,769
4,173
14,287
10,796
15,388
Net Interest Income
3,450
4,593
5,443
12,630
17,550
22,264
Provision for Credit Losses
19,479
2,966
158
22,445
158
26,411
Gain (Loss) on Loan Sales
-
179
609
179
1,433
1,410
Loan Servicing Fees, Net of Amortization
168
175
164
527
541
624
Other Non-interest Income
212
195
176
592
678
851
Non-interest Income
380
549
949
1,298
2,652
2,885
Salaries & Benefits
1,514
1,445
1,962
4,948
6,991
8,241
Occupancy Expense
205
189
187
586
541
729
Other Expense
1,568
1,629
1,120
4,381
3,126
3,712
Non-interest Expense
3,287
3,263
3,269
9,915
10,658
12,682
Net Income (Loss) before Income Taxes
(18,936
)
(1,087
)
2,965
(18,432
)
9,386
(13,944
)
Income Tax Expense (Benefit)
(3,983
)
(260
)
610
(3,921
)
1,986
(3,136
)
*Net Income (Loss)*
*$*
*(14,953*
*)*
*$*
*(827*
*)*
*$*
*2,355*
*$*
*(14,511*
*)*
*$*
*7,400*
*(10,808*
*)*
Total Outstanding Shares (in thousands)
5,477
5,477
5,466
5,477
5,466
5,466
Basic Earnings (Loss) per Share
$
(2.73
)
$
(0.15
)
$
0.43
$
(2.65
)
$
1.36
$
(1.98
)
*Statement of Condition (Unaudited)*
*Sep-24*
*Jun-24*
*Sep-23*
*Variance*
*Variance*
*Dec-23*
(Dollars in thousands)
*Qtr End*
*Qtr End*
*Qtr End*
*Prior Qtr*
*Prior Year*
*Qtr End*
Cash and Due from Banks
$
70,527
$
46,299
$
58,923
$
24,228
$
11,604
$
61,254
Investments
50,344
50,996
48,841
(652
)
1,503
51,346
Loans Held for Sale
-
-
-
-
-
-
Gross Loans
439,233
459,196
482,132
(19,963
)
(42,899
)
490,636
Allowance for Credit Losses (ACL) on Loans
(28,964
)
(17,680
)
(5,234
)
(11,284
)
(23,730
)
(25,950
)
Net Loans
410,269
441,516
476,898
(31,247
)
(66,629
)
464,686
Fixed Assets
6,078
6,140
6,577
(62
)
(499
)
6,438
Other Assets
32,387
27,676
20,978
4,711
11,409
26,325
*Total Assets*
*$*
*569,605*
*$*
*572,627*
*$*
*612,217*
*$*
*(3,022*
*)*
*$*
*(42,612*
*)*
*$*
*610,049*
Checking
$
86,708
$
88,860
$
105,770
$
(2,152
)
$
(19,062
)
$
100,135
NOW
5,233
10,925
14,588
(5,692
)
(9,355
)
13,504
Money Market
128,136
144,471
197,296
(16,335
)
(69,160
)
200,966
Savings
6,258
6,895
9,050
(637
)
(2,792
)
8,063
Certificates of Deposit
241,840
200,758
195,429
41,082
46,411
191,733
Total Deposits
468,175
451,909
522,133
16,266
(53,958
)
514,401
Borrowed Funds
50,000
54,000
8,000
(4,000
)
42,000
20,000
ACL on Off-Balance Sheet Credit Exposure
1,695
2,176
15
(481
)
1,680
5,551
Other Liabilities
2,710
3,387
3,901
(677
)
(1,191
)
8,678
Total Liabilities
522,580
511,472
534,049
11,108
(11,469
)
548,630
Shareholders' Equity
47,025
61,155
78,168
(14,130
)
(31,143
)
61,419
*Total Liabilities & Equity*
*569,605*
*$*
*572,627*
*$*
*612,217*
*$*
*(3,022*
*)*
*$*
*(42,612*
*)*
*$*
*610,049*
*Financial Ratios*
*Sep-24*
*Jun-24*
*Sep-23*
*Sep-24*
*Sep-23*
*Dec-23*
(Dollars in thousands except BVS)
*QTD*
*QTD*
*QTD*
*YTD*
*YTD*
*YTD*
*Performance Ratios*
Return on Average Assets*
(10.30
%)
(0.57
%)
1.54
%
(3.30
%)
1.65
%
(1.85
%)
Return on Average Equity*
(96.78
%)
(5.29
%)
11.92
%
(31.24
%)
13.01
%
(14.53
%)
Net Interest Margin*
2.44
%
3.21
%
3.65
%
2.92
%
4.05
%
3.83
%
Efficiency Ratio
85.82
%
63.43
%
51.14
%
71.36
%
52.76
%
50.36
%
*Quarterly results are annualized
*Capital*
*Sep-24*
*QTD*
*Jun-24*
*QTD*
*Sep-23*
*QTD*
*Well*
*Capitalized*
*Minimum*
Tier 1 Leverage Ratio**
7.53
%
10.22
%
13.26
%
5.00
%
Common Equity Tier 1 Ratio**
9.56
%
12.82
%
16.54
%
6.50
%
Tier 1 Risk-Based Capital Ratio**
9.56
%
12.82
%
16.54
%
8.00
%
Total Risk-Based Capital Ratio **
10.87
%
14.10
%
17.61
%
10.00
%
Book Value per Share (BVS)
$
8.59
$
11.17
$
14.30
**Represents Bank capital ratios
*Asset Quality*
*Sep-24*
*QTD*
*Jun-24*
*QTD*
*Sep-23*
*QTD*
*Sep-24*
*YTD*
*Sep-23*
*YTD*
*Dec-23*
*YTD*
Net Credit Charge-Offs (Recoveries)***
$
8,676
$
$
$
23,288
$
$
Allowance for Credit Losses to Loans %
6.59
%
3.85
%
1.09
%
Nonperforming Assets to Total Assets
2.74
%
1.02
%
0.74
%
*** 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 September 30, 2024 and June 30, 2024 (in thousands):
*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
168,714
-
-
499
-
169,213
Commercial - equipment
-
18,066
7,639
3,554
9,057
38,316
Commercial - all other
8,857
-
-
-
-
8,857
Multifamily
2,823
-
-
-
-
2,823
Construction and land
907
-
-
-
-
907
Consumer and other
71
-
-
-
-
71
$
370,352
$
47,340
$
8,431
$
4,053
$
9,057
$
439,233
*June 30, 2024*
*Special*
*Portfolio Segment*
*Pass*
*Mention*
*Substandard*
*Doubtful*
*Loss*
*Total*
Commercial real estate
$
199,692
$
24,254
$
492
$
-
$
-
$
224,438
Residential real estate
172,278
-
-
-
-
172,278
Commercial - equipment
28,072
2,972
15,319
2,985
-
49,348
Commercial - all other
9,267
-
-
-
-
9,267
Multifamily
2,844
-
-
-
-
2,844
Construction and land
932
-
-
-
-
932
Consumer and other
89
-
-
-
-
89
$
413,174
$
27,226
$
15,811
$
2,985
$
-
$
459,196
*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 sufficient risk to warrant adverse classification.
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 September 30, 2024 and June 30, 2024 (in thousands):
*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
3,820
2,475
8,791
24,119
Commercial - all other
135
-
-
-
-
135
Multifamily
2
-
-
-
-
2
Construction and land
27
-
-
-
-
27
Consumer and other
3
-
-
-
-
3
$
4,489
$
9,146
$
3,868
$
2,670
$
8,791
$
28,964
*June 30, 2024*
*Special*
*Portfolio Segment*
*Pass*
*Mention*
*Substandard*
*Doubtful*
*Loss*
*Total*
Commercial real estate
$
1,182
$
113
$
4
$
-
$
-
$
1,299
Residential real estate
3,124
-
-
-
-
3,124
Commercial - equipment
865
1,972
7,281
2,985
-
13,103
Commercial - all other
120
-
-
-
-
120
Multifamily
3
-
-
-
-
3
Construction and land
27
-
-
-
-
27
Consumer and other
4
-
-
-
-
4
$
5,325
$
2,085
$
7,285
$
2,985
$
-
$
17,680
Past due loans -The following table presents past due loans at amortized cost by portfolio segment as of September 30, 2024 and June 30, 2024 (in thousands):
*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
-
-
-
-
169,213
169,213
Commercial - equipment
6,425
5,810
8,093
20,328
17,988
38,316
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
$
8,093
$
25,154
$
414,079
$
439,233
*June 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
$
220
$
1,053
$
572
$
1,845
$
222,593
$
224,438
Residential real estate
-
-
-
-
172,278
172,278
Commercial - equipment
5,562
5,058
3,448
14,068
35,280
49,348
Commercial - all other
-
-
-
-
9,267
9,267
Multifamily
-
-
-
-
2,844
2,844
Construction and land
-
-
-
-
932
932
Consumer and other
-
-
-
-
89
89
$
5,782
$
6,111
$
4,020
$
15,913
$
443,283
$
459,196
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 September 30, 2024 and June 30, 2024 (in thousands):
*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
$
-
Commercial - equipment
-
12,976
12,976
-
$
-
$
15,539
$
15,539
$
-
*June 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
$
-
$
2,402
$
2,402
$
-
Commercial - equipment
-
3,448
3,448
-
$
-
$
5,850
$
5,850
$
-
*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 September 30, 2024 and June 30, 2024 the Bank had $2.6 million and $3.5 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 $1.7 million and $2.2 million as of September 30, 2024 and June 30, 2024, respectively.
U & I Financial Corp.
Investor Relations
IR@unibankusa.com
*SOURCE*: U & I Financial Corp.
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