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Community bank earnings: Kentucky-based Republic, Virginia-based Union see debit card interchange fee increases

In this feature, S&P Global MarketIntelligence takes a look at a handful of community banks around the countrythat reported results July 22 for the three months ended June 30.

Mid-Atlantic

San Juan,Puerto Rico-based OFGBancorp posted net income available to commonshareholders of $10.9 million, or 25 cents, compared with the S&P Capital IQconsensus normalized EPS estimate of 25 cents and its year-ago net loss of $6.6 million, or 15 centsper share. OFG in its earnings release noted a decline in its exposureto the Puerto Rican government — with balances down by $405.3 million from theprevious quarter.

Midwest

Louisville, Ky.-basedRepublic Bancorp Inc.reported net income of $8.3 million, or 40 cents per class A common share, roughly flat from ayear ago. The results include merger-related pretax charges of $704,000. Thecompany had also hired 76 full-time equivalent employees over the previous 12months, on top of those who joined as part of the acquisition.Republic's second quarter saw an increase in interchange fees, largely fromdebit cards and their related retail checking accounts and use ofsignature-based transactions. The company will soon roll out a Dealer Floor PlanLending platform that complements its Indirect Auto Lending platform.

Southeast

Richmond,Va.-based Union BanksharesCorp. posted net income of $19.3 million, or44 cents per share,from $15.3 million, or 34 cents per share, in the second quarter of 2015. Thecompany saw increased fiduciary, asset management and debit card interchangefees, as well as a decline in nonperforming assets to $24.2 million, or 0.41%of outstanding loans, compared with the linked quarter's $27.3 million (0.47%).

On theearnings call, Unionexecutives said they expected 2016 loan growth to be in the upper singledigits, instead of the previously announced mid-single-digit range. They addedthat preparations to hit the $10-billion-asset mark, the opening of acommercial loan production office in Charlotte, N.C., and the of had raised their expected $53 million run rate on expenses to $54.5 million to$55 million over the next quarters. The new Charlotte office is Union's firstexpansion of commercial operations outside Virginia. A small acquisitionoutside its home state in 2.5 to five years is also a possibility, according tothe call transcript.

When askedabout the pricing pressure in Richmond due to competition in 2015, CEO WilliamBeale said: "When a SunTrust or a Wells or a BB&T, or even a FirstCitizens, wants to win a deal, they will win the deal and it has always beenthat way. But we are not even seeing that kind of pressure from them right now,[as no one] seems to be willing to sacrifice their margins in this environment forgrowth."


Columbia,S.C.-based South StateCorp. reported net income of $24.5 million, or$1.01 per share,compared with $24.9 million or $1.03 per share, a year ago. Taking into accountthe termination of FDICloss-share agreements and the ongoing consolidation of 11 branches, netoperating earnings was $28.5 million, or $1.18 per share.

South State'spending of andits consequent growth beyond the $10-billion-asset threshold increasedprofessional fee expenditures by $247,000.

South State'sboard also declared a dividend of 31 cents per common share, up from theprevious 30 cents. It will be paid Aug. 19 to shareholders of record as of Aug.12.


Moultrie,Ga.-based Ameris Bancorpposted net income available to common shareholders of , or 57 cents, comparedwith the S&P Capital IQ consensus normalized EPS estimate of 52cents. The completed integration of Jacksonville Bancorp Inc. is expected to reduceoperating expenses in the third quarter by approximately $500,000.


Hattiesburg,Miss.-based First BancsharesInc. reported net earnings available to commonshareholders of $2.6 million, or 47 cents per share. It was $2.1 million, or 39 cents pershare, a year ago. The company also noted the hiring in the second quarter ofWilson Brunt as market president of Madison County, Miss., and of J.P. Guinn assenior vice president of the newly created Treasury Management Division.

West

And LakeHavasu City, Ariz.-based StateBank Corp. recorded net income of $974,000, or17 cents per share,up from $772,000, or 13 cents per share, a year ago. Its of is expected to close atthe end of July.