UNION BANKSHARES INC (UNB)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 net income rose 18.6% year over year to $2.40M, with diluted EPS of $0.53; net interest income increased 10.1% on higher asset yields and loan volume .
• Loans grew 9.8% year over year to $1.11B; deposits increased to $1.10B, while wholesale funds outstanding reached $336.0M, reflecting continued balance sheet expansion and funding mix utilization .
• Noninterest expenses rose 7.2% year over year, primarily from salaries and benefits; credit loss expense decreased versus Q2 2024, consistent with strong asset quality and net recoveries .
• Dividend maintained at $0.36 per share, payable Aug 7, 2025; management highlighted slow but steady improvement in asset yields and net interest margins as a key ongoing driver .

What Went Well and What Went Wrong

What Went Well

• Loan growth and asset yields: “continued a trend of slow but steady improvement in asset yields and net interest margins” with loans +9.8% year over year to $1.11B .
• Net interest income strength: Interest income +13.1% and net interest income +10.1% year over year on higher yields and volume .
• Asset quality: “Asset quality remains strong with minimal past due loans” and net recoveries of $6K year-to-date .

What Went Wrong

• Higher funding costs: Interest expense +17.1% year over year due to higher rates on deposits and, to a lesser extent, volume increases .
• Cost pressures: Noninterest expenses +7.2% year over year driven by salaries and benefits increases .
• Regional tourism headwind: Management expects further decline in Canadian tourism, though local tourism revenues impact should be limited; this is being monitored .

Financial Results

Note: The Q2 2025 shareholder report’s consolidated schedule shows noninterest income of $2.464M, while the press release states $2.8M; management described noninterest income as “steady” year over year—difference likely reflects presentation classifications; we anchor on the press release narrative for period comparison while acknowledging the schedule figure .

Balance Sheet and Operating KPIs

Activity Indicators

Guidance Changes

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available; themes are drawn from shareholder reports and press releases.

Management Commentary

• “We are pleased to share our financial results for the second quarter… continued a trend of slow but steady improvement in asset yields and net interest margins.”
• “Asset quality remains strong with minimal past due loans and net recoveries… We are… monitoring [Canadian] tourism… we do not expect the decline… to impact local tourism revenues substantially.”
• “Interest income increased… due to an increase in yield on earning assets and an increase in volume… interest expense increased… due to an increase in rates paid on customer deposits.”
• “The bank subsidiary has undertaken a company-wide deposit growth initiative in 2025… to increase customer deposits to fund loan demand… enhancing the customer experience… expanding internal training… collaborative approach.”

Q&A Highlights

• No Q2 2025 earnings call transcript or Q&A was available in the filings or press releases reviewed [List: earnings-call-transcript returned none].

Estimates Context

• S&P Global consensus EPS and revenue estimates for Q2 2025 were unavailable; as a result, formal estimate comparisons cannot be provided.
• Reported actuals: EPS $0.53 (company-reported) and “revenue” definition varies for banks; company-reported net interest income $10.446M and noninterest income $2.8M imply total revenue-like measure around ~$13M. S&P’s revenue actual marker shows $12.984M*, but no consensus available .
  Values retrieved from S&P Global.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Core earnings improved: Net income +18.6% y/y; EPS $0.53, supported by double-digit net interest income growth from higher asset yields and volume .
• Funding mix and cost are the swing variables: Interest expense rose 17.1% y/y and wholesale funds reached $336.0M, underscoring sensitivity to deposit pricing and alternative funding costs .
• Credit remains a support: Minimal past dues and net recoveries continue to underpin lower credit loss expense versus prior year .
• Book value and AOCI trending better: Book value per share rose to $15.66; AOCI improved to $(31.2)M, offering capital optics tailwind if rates stabilize or decline further .
• Loan pipeline robust but watch tourism/macro: Strong loan growth persists; monitor regional tourism headwinds from Canada and broader “higher for longer” rate environment for NIM and fee momentum .
• Dividend maintained: $0.36 quarterly dividend supports income profile and signals confidence in core profitability and capital trajectory .
• Near-term positioning: Focus on deposit growth initiative, balancing brokered/wholesale funding with organic deposit momentum to defend margin; NIM improvements remain a key narrative driver .