UNITED BANCSHARES INC/OH (UBOH)·Q2 2022 Earnings Summary

Executive Summary

• Q2 2022 net income was $2.17M and basic EPS $0.66, down 18.3% year over year due to a sharp decline in mortgage-related gains; quarter-over-quarter EPS also fell versus Q1 2022’s $0.77 as PPP fee recognition declined further .
• Net interest income improved modestly YoY to $8.68M (+2.9%), while non-interest income fell to $2.23M (-41.1%) on significantly lower gain-on-sale of residential mortgages; non-interest expenses decreased 5.6% YoY, partially offsetting revenue pressure .
• Management highlighted macro headwinds—record inflation, rapidly rising rates, higher funding costs, and tepid loan demand—while maintaining a tax-equivalent net interest margin at 3.52% and continuing deposit growth; the Board declared a $0.21 per share dividend payable September 15, 2022 .
• No formal financial guidance or earnings call transcript was available; S&P Global Wall Street consensus estimates were unavailable, so estimate comparisons cannot be made.

What Went Well and What Went Wrong

What Went Well

• Net interest income rose to $8.68M (+$247k YoY), supported by higher investment interest and lower interest expense; management maintained a 3.52% tax-equivalent net interest margin despite rate and funding pressures .
• Other non-interest income increased $1.26M YoY, primarily from the loan hedging program (+$1.11M in the quarter), providing a counterweight to weaker mortgage banking revenue .
• Deposits grew to $998.2M (+7.3% from year-end), while gross loans rose to $625.6M, underscoring steady relationship growth amid challenging conditions; ROA 0.87% and ROE 12.7% for the first half reflect resilient underlying profitability metrics .
• Quote: “While these factors were formidable obstacles, the team was able to grow deposits and relationship loans at a steady pace and maintain a reasonable net interest margin at 3.52%.”

What Went Wrong

• Non-interest income fell to $2.23M (-41.1% YoY) as gain-on-sale of loans plunged $2.78M (-96.3% YoY), driven by reduced residential mortgage activity and sharply lower sale margins (net gain (-0.08%) vs. 3.50% in Q2 2021) .
• Loan interest income decreased $672k YoY, primarily due to lower PPP fee accretion ($771k reduction), pressuring total interest income growth despite positive investment portfolio dynamics .
• Shareholders’ equity fell to $87.1M from $119.1M at year-end (-26.9%) due to higher AOCI unrealized losses from rising long-term Treasury yields, partially offset by YTD net income; this capital optics shift may weigh on investor sentiment despite stable operating trends .

Financial Results

Earnings and EPS comparison

Revenue components and expenses

Mortgage banking KPIs

Balance sheet snapshot

Profitability and efficiency ratios

Notes: TE NIM and efficiency ratio are non-GAAP; reconciliations provided in company materials .

Guidance Changes

No quantitative revenue/margin guidance was issued; management commentary focused on strategic execution, macro impacts, and deposit/loan relationship growth .

Earnings Call Themes & Trends

Management Commentary

• “As the result of record inflation, rapidly rising interest rates, and recession fears, the banking industry and our overall economy continues to face significant headwinds… While these factors were formidable obstacles, the team was able to grow deposits and relationship loans at a steady pace and maintain a reasonable net interest margin at 3.52%.” — Brian D. Young, President & CEO
• “Those positive results include income before taxes of $5.2 million, return on average assets of 0.87%, and return on average equity of 12.7%… the Board of Directors declared a $0.21 per share cash dividend.”
• Q1 perspective: “Earnings for the quarter were suppressed by significant headwinds for our residential mortgage team… we believe that continuing to expand in this space will provide strong long-term returns.”
• Year-end 2021: “Margin income may always be our largest source of income, but industry-wide margin compression has made activities related to the generation of non-interest income increasingly more important.”

Q&A Highlights

• No earnings call transcript was available for Q2 2022 in company filings; recap relies on the 8‑K press release and shareholder quarterly report .

Estimates Context

• Wall Street consensus EPS and revenue estimates (S&P Global) for Q2 2022 and Q1 2022 were unavailable; as a result, we cannot assess beats/misses versus consensus. Values retrieved from S&P Global were unavailable due to access limitations.

Key Takeaways for Investors

• Earnings pressure is primarily from mortgage banking normalization and PPP fee runoff; the hedging program and lower interest expense helped cushion the impact .
• Core banking metrics remain resilient: NII growth YoY, stable NIM TE at 3.52%, and strong deposit growth to ~$0.998B provide a base for future earning power as lending reaccelerates .
• Equity/AOCI optics worsen with rising rates; while non-cash, the ~27% decline in equity since year-end may weigh on valuation multiples for a period .
• Operating efficiency deteriorated YTD (efficiency 74.83% vs. 72.95% in Q1), reflecting reduced total revenue amid mortgage softness; careful expense discipline will be critical if volumes stay muted .
• Dividend stability ($0.21/share) signals confidence in capital and earnings durability despite near-term headwinds—a modest support for total return investors .
• Watch for signs of mortgage margin stabilization and SBA pipeline execution to rebuild non-interest income; improved loan demand and pragmatic pricing could lift NII further .
• Macro sensitivity remains high: funding cost pressures and rate volatility will drive NIM dynamics; ongoing hedging gains suggest some mitigation, but core loan growth is the sustainable lever to offset revenue compression .