Union Bankshares Inc. Common Stock (UNB) fair value

ACCE thesis

Union Bankshares is a small regional bank holding company whose deposit and lending franchise is the core of its business, so the investment case rests on whether a roughly $113M market-cap lender can keep converting revenue into earnings at a 15.0% return on equity. Revenue grew 13.1% over the reported period, and at a trailing P/E of 8.8 and a forward P/E of 11.7, the market is pricing in a slowdown in earnings growth rather than the top-line momentum. The 22.0% operating margin and 15.0% ROE are the figures to test against credit quality and funding costs, since regional banks at this scale tend to be sensitive to both. With no index membership, the name sits outside the flows that often lift or depress larger bank stocks, which can leave it mispriced relative to its earnings. A quick look at loan growth, deposit mix and the provision line would show whether the 13% revenue growth is durable or rate-driven.