U & I Financial Corp. Reports First Quarter 2025 Financial Results

Rhea-AI Summary

U & I Financial reported challenging first quarter 2025 results with a net loss of $2.1 million ($0.38 per share), compared to net income of $1.3 million in Q1 2024. The decline was primarily due to a $3.1 million provision for credit losses.

Key financial metrics show:

• Total assets decreased 25.7% to $441.9 million
• Net loans fell 21.3% to $359.4 million
• Total deposits dropped 19.3% to $383.4 million

The bank faced a significant $3.7 million impairment on a $6.2 million hotel loan. However, positive signs emerged with commercial-equipment loan charge-offs declining to $2.2 million from $18.2 million year-over-year, and recoveries increasing to $392,000. Capital ratios improved slightly, with the bank maintaining "adequately capitalized" status per regulatory guidelines.

Positive

• Capital ratios improved: Tier 1 Leverage (5.98%), Tier 1 Risk-Based (7.76%), Total Risk-Based (9.01%)
• Loan recoveries increased to $392K in Q1 2025 vs $102K in Q4 2024
• Commercial equipment loan charge-offs decreased significantly to $2.2M from $18.2M year-over-year

Negative

• Net Loss of $2.1M ($0.38 per share) in Q1 2025 vs Net Income of $1.3M year-over-year
• Total Assets decreased 25.7% to $441.9M from $594.7M year-over-year
• Net Loans declined 21.3% to $359.4M from $456.4M year-over-year
• Total Deposits dropped 19.3% to $383.4M from $474.9M year-over-year
• $3.7M impairment on $6.2M commercial real estate (hotel) loan
• Non-performing assets ratio increased to 2.31% from 2.11% in previous quarter
• Bank remains only 'adequately capitalized' per regulatory guidelines

LYNNWOOD, WA / ACCESS Newswire / April 29, 2025 / U & I Financial Corp. (OTCQX:UNIF), the holding company ("Company") for UniBank ("Bank"), today reported a quarterly Net Loss of $2.1 million or a loss of $0.38 per share in the first quarter of 2025, compared to Net Income of $1.3 million or $0.23 earnings per share for the same quarter of 2024. There was $3.1 million of Provision for Credit Losses recognized during the first quarter of 2025 as compared to none recognized for the same quarter last year. However, the Bank had an Income Tax Benefit of $1.1 million during this quarter, primarily due to an adjustment to the Deferred Tax Assets Valuation Allowance.

At March 31, 2025, Total Assets were $441.9 million, a decrease of $152.7 million or 25.7% from $594.7 million at March 31, 2024. Net Loans were $359.4 million at March 31, 2025, decreasing by $97.0 million or 21.3% from $456.4 million at March 31, 2024. Total Deposits decreased by $91.6 million or 19.3% to $383.4 million at March 31, 2025 compared to $474.9 million a year earlier.

The charge-offs of commercial-equipment loans declined to $2.2 million during the first quarter of 2025 as compared to $18.2 million during the first quarter of 2024. Furthermore, the Bank had commercial-equipment loans recoveries of $392 thousand during the first quarter of 2025 as compared to $102 thousand of recoveries during the fourth quarter of 2024. However, the Bank experienced charge-offs of other loan types totaling $4.0 million during the first quarter of 2025, primarily due to a $3.7 million impairment of a $6.2 million commercial real estate loan, which has been on non-accrual status since the fourth quarter of 2024.

The total non-accrual balance was $10.2 million at March 31, 2025 as compared to $11.0 million at December 31, 2024. The nonperforming assets to total assets was 2.31% at March 31, 2025 compared to 2.11% at December 31, 2024. This ratio increased from the prior quarter due to the decrease in Total Assets, as there were no nonperforming assets other than the non-accrual loans.

The Bank's capital ratios were 5.98%, 7.76% and 9.01% for Tier 1 Leverage Ratio, Tier 1 Risk-Based Capital Ratio and Total Risk-Based Capital Ratio, respectively, as of March 31, 2025, increasing from 5.60%, 7.53% and 8.80%, respectively, as of December 31, 2024. The Bank was "adequately capitalized" per the regulatory guidelines as of March 31, 2025.

"The first quarter 2025 results did not improve as much as we would have liked due to the impairment of a single, large hotel loan," said President & CEO Stephanie Yoon. "However, because of our continued deleveraging efforts, the regulatory capital ratios still improved. Also, we had more recoveries this quarter thanks to the efforts of the Credit staff."

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 compliance with the Written Agreement with the Federal Reserve Bank of San Francisco and the Washington Department of Financial Institutions; 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; the potential for new or increased tariffs, trade restrictions or geopolitical tensions that could affect economic activity or specific industry sectors, 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 (LOSS) (Unaudited)
		Mar-25				Dec-24				Mar-24				Mar-24				Mar-24
(Dollars in thousands except EPS)		QTD				QTD				QTD				$ Var				% Var
Interest Income		$	6,643			$	7,165			$	9,285			$	(2,642	)			(28.5	%)
Interest Expense			3,906				4,643				4,698				(792	)			(16.9	%)
Net Interest Income			2,737				2,522				4,587				(1,850	)			(40.3	%)
Provision for Credit Losses			3,104				5,801				-				3,104				-
Gain (Loss) on Loan Sales			-				-				-				-				100.0	%
Loan Servicing Fees, Net of Amortization			123				141				184				(61	)			(33.2	%)
Other Non-interest Income			156				184				185				(29	)			(15.7	%)
Non-interest Income			279				325				369				(90	)			(24.4	%)
Salaries & Benefits			1,628				1,629				1,989				(361	)			(18.1	%)
Occupancy Expense			201				193				192				9				4.7	%
Other Expense			1,249				1,238				1,184				65				5.5	%
Non-interest Expense			3,078				3,060				3,365				(287	)			(8.5	%)
Net Income (Loss) before Income Taxes			(3,166	)			(6,014	)			1,591				(4,757	)			(299.0	%)
Income Tax Expense (Benefit)			(1,093	)			10,543				322				(1,415	)			(439.4	%)
Net Income (Loss)		$	(2,073	)		$	(16,557	)		$	1,269			$	(3,342	)			(263.4	%)
Total Outstanding Shares (in thousands)			5,477				5,477				5,476				1
Basic Earnings (Loss) per Share		$	(0.38	)		$	(3.02	)		$	0.23			$	(0.61	)

Statement of Condition (Unaudited)
		Mar-25				Dec-24				Mar-24				Mar-24				Mar-24
(Dollars in thousands)		Qtr End				Qtr End				Qtr End				$ Var				% Var
Cash and Due from Banks		$	22,564			$	61,684			$	46,495			$	(23,931	)			(51.5	%)
Investments			47,090				48,511				52,355				(5,265	)			(10.1	%)
Loans Held for Sale			-				-				6,110				(6,110	)			(100.0	%)
Gross Loans			366,427				395,768				471,081				(104,654	)			(22.2	%)
Allowance for Credit Losses (ACL) on Loans			(6,991	)			(9,620	)			(14,634	)			7,643				(52.2	%)
Net Loans			359,436				386,148				456,447				(97,011	)			(21.3	%)
Fixed Assets			5,791				5,936				6,268				(477	)			(7.6	%)
Deferred Tax Assets			13,180				12,542				6,953				6,227				89.6	%
Valuation Allowance			(11,709	)			(12,014	)			-				(11,709	)			(100.0	%)
Net Deferred Tax Assets			1,471				528				6,953				(5,482	)			(78.8	%)
Other Assets			5,585				19,512				20,076				(14,491	)			(72.2	%)
Total Assets		$	441,937			$	522,319			$	594,704			$	(152,767	)			(25.7	%)
Checking		$	72,303			$	76,165			$	95,698			$	(23,395	)			(24.4	%)
NOW			5,984				5,739				13,025				(7,041	)			(54.1	%)
Money Market			79,451				124,530				151,058				(71,607	)			(47.4	%)
Savings			5,232				6,184				7,468				(2,236	)			(29.9	%)
Certificates of Deposit			220,382				226,984				207,696				12,686				6.1	%
Total Deposits			383,352				439,602				474,945				(91,593	)			(19.3	%)
Borrowed Funds			29,000				50,000				52,000				(23,000	)			(44.2	%)
ACL on Off-Balance Sheet Credit Exposure			68				65				2,256				(2,188	)			100.0	%
Other Liabilities			1,810				2,721				3,039				(1,229	)			(40.4	%)
Total Liabilities			414,230				492,388				532,240				(118,010	)			(22.2	%)
Shareholders' Equity			27,707				29,931				62,464				(34,757	)			(55.6	%)
Total Liabilities & Equity		$	441,937			$	522,319			$	594,704			$	(152,767	)			(25.7	%)

Financial Ratios
		Mar-25				Dec-24				Mar-24
(Dollars in thousands except BVS)		QTD				QTD				QTD
Performance Ratios
Return on Average Assets*			(1.73	%)			(11.87	%)			0.86	%
Return on Average Equity*			(28.13	%)			(141.93	%)			8.25	%
Net Interest Margin*			2.35	%			1.86	%			3.10	%
Efficiency Ratio			102.06	%			107.48	%			67.87	%
*Quarterly results are annualized														Adequately				Well
		Mar-25				Dec-24				Mar-24				Capitalized				Capitalized
Capital		QTD				QTD				QTD				Minimum				Minimum
Tier 1 Leverage Ratio**			5.98	%			5.60	%			10.22	%			4.00	%			5.00	%
Common Equity Tier 1 Ratio**			7.76	%			7.53	%			12.56	%			4.50	%			6.50	%
Tier 1 Risk-Based Capital Ratio**			7.76	%			7.53	%			12.56	%			6.00	%			8.00	%
Total Risk-Based Capital Ratio **			9.01	%			8.80	%			13.83	%			8.00	%			10.00	%
Book Value per Share (BVS)		$	5.06			$	5.47			$	11.41
**Represents Bank capital ratios
		Mar-25				Dec-24				Mar-24
Asset Quality		QTD				QTD				QTD
Charge Offs: Commercial-Equipment		$	2,173			$	18,166			$	14,611
(Recoveries): Commercial-Equipment		$	(392	)		$	(102	)		$	0
Charge Offs: All Other		$	4,020			$	0			$	0
(Recoveries): All Other		$	(71	)		$	0			$	0
Allowance for Credit Losses to Loans %			1.91	%			2.43	%			3.11	%
Non-accrual Loans		$	10,202			$	11,038			$	4,631
Nonperforming Assets to Total Assets%			2.31	%			2.11	%			0.78	%

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 March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	171,421			$	18,182			$	5,437			$	3,566			$	-			$	198,606
Residential real estate			135,280				10,886				2,623				-				-				148,789
Commercial - equipment			-				-				5,195				2,423				-				7,618
Commercial - all other			7,479				257				-				-				-				7,736
Multifamily			2,780				-				-				-				-				2,780
Construction and land			857				-				-				-				-				857
Consumer and other			41				-				-				-				-				41
		$	317,858			$	29,325			$	13,255			$	5,989			$	-			$	366,427

December 31, 2024						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	181,316			$	24,012			$	6,762			$	924			$	-			$	213,014
Residential real estate			159,725				234				-				-				-				159,959
Commercial - equipment			-				881				7,986				1,899				-				10,766
Commercial - all other			8,124				-				100				-				-				8,224
Multifamily			2,802				-				-				-				-				2,802
Construction and land			883				-				-				-				-				883
Consumer and other			120				-				-				-				-				120
		$	352,970			$	25,127			$	14,848			$	2,823			$	-			$	395,768

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 March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	1,195			$	66			$	14			$	-			$	-			$	1,275
Residential real estate			1,044				68				125				-				-				1,237
Commercial - equipment			-				-				2,597				1,624				-				4,221
Commercial - all other			237				3				-				-				-				240
Multifamily			1				-				-				-				-				1
Construction and land			15				-				-				-				-				15
Consumer and other			2				-				-				-				-				2
		$	2,494			$	137			$	2,736			$	1,624			$	-			$	6,991

December 31, 2024						Special
Portfolio Segment		Pass				Mention				Substandard				Doubtful				Loss				Total
Commercial real estate		$	1,214			$	163			$	49			$	79			$	-			$	1,505
Residential real estate			1,629				2				-				-				-				1,631
Commercial - equipment			-				441				3,993				1,899				-				6,333
Commercial - all other			121				-				2				-				-				123
Multifamily			2				-				-				-				-				2
Construction and land			23				-				-				-				-				23
Consumer and other			3				-				-				-				-				3
		$	2,992			$	606			$	4,044			$	1,978			$	-			$	9,620

Past due loans -The following table presents past due loans at amortized cost by portfolio segment as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025		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		$	3,566			$	-			$	2,646			$	6,212			$	192,394			$	198,606
Residential real estate			-				-				-				-				148,789				148,789
Commercial - equipment			1,692				405				-				2,097				5,521				7,618
Commercial - all other			257				-				-				257				7,479				7,736
Multifamily			-				-				-				-				2,780				2,780
Construction and land			-				-				-				-				857				857
Consumer and other			-				-				-				-				41				41
		$	5,515			$	405			$	2,646			$	8,566			$	357,861			$	366,427

December 31, 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		$	-			$	-			$	7,306			$	7,306			$	205,708			$	213,014
Residential real estate			-				-				-				-				159,959				159,959
Commercial - equipment			1,817				754				403				2,974				7,792				10,766
Commercial - all other			100				-				-				100				8,124				8,224
Multifamily			-				-				-				-				2,802				2,802
Construction and land			-				-				-				-				883				883
Consumer and other			-				-				-				-				120				120
		$	1,917			$	754			$	7,709			$	10,380			$	385,388			$	395,768

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 March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 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		$	7,779			$	-			$	7,779			$	-
Commercial - equipment			-				2,423				2,423				-
		$	7,779			$	2,423			$	10,202			$	-

December 31, 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		$	6,383			$	3,018			$	9,401			$	-
Commercial - equipment			-				1,637				1,637				-
		$	6,383			$	4,655			$	11,038			$	-

U & I Financial Corp.
Investor Relations
IR@unibankusa.com

SOURCE: U & I Financial Corp. (Washington)

View the original press release on ACCESS Newswire

FAQ

Why did UNIF stock report a $2.1 million loss in Q1 2025?

UNIF reported a Q1 2025 loss due to a $3.1 million Provision for Credit Losses and a $3.7 million impairment on a commercial real estate hotel loan. This resulted in a loss of $0.38 per share, compared to earnings of $0.23 per share in Q1 2024.

What caused the 25.7% decrease in UNIF total assets for Q1 2025?

UNIF's total assets decreased by $152.7 million (25.7%) to $441.9 million due to significant reductions in net loans ($97.0 million decrease) and total deposits ($91.6 million decrease) as part of their deleveraging efforts.

How did UNIF's loan charge-offs compare between Q1 2024 and Q1 2025?

UNIF's commercial-equipment loan charge-offs improved significantly, dropping from $18.2 million in Q1 2024 to $2.2 million in Q1 2025. However, the bank faced $4.0 million in other loan charge-offs, mainly from a $3.7 million hotel loan impairment.

Is UNIF bank adequately capitalized as of March 2025?

Yes, UNIF was 'adequately capitalized' per regulatory guidelines as of March 31, 2025, with improved capital ratios: Tier 1 Leverage Ratio at 5.98%, Tier 1 Risk-Based Capital Ratio at 7.76%, and Total Risk-Based Capital Ratio at 9.01%.

What is UNIF's current non-performing assets ratio?

UNIF's nonperforming assets to total assets ratio increased to 2.31% as of March 31, 2025, up from 2.11% in December 2024, primarily due to decreased total assets rather than an increase in non-performing assets.