William Wallace's questions to UNION BANKSHARES (UNB) leadership • Q4 2015
Question
William Wallace asked about the OREO valuation methodology, the net interest margin outlook for 2016, competitive pressures on deposit costs following the Fed rate hike, the outlook for the loan loss reserve ratio, and expectations for loan growth and the competitive environment in Richmond.
Answer
CEO Bill Beale and CFO Rob Gorman explained the OREO valuation change was a new methodology based on a discounted absorption analysis, not just standard appraisals. CFO Rob Gorman projected margin compression of 3-4 basis points per quarter in 2016, assuming two Fed rate hikes, and noted no significant competitive movement on deposit costs yet. He expects the reserve ratio to stabilize around current levels. Chief Banking Officer Tony Peay stated that mid-single-digit loan growth remains the target, acknowledging intense competition but noting Union is winning its fair share of deals.