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Subsequent Events
3 Months Ended
Mar. 31, 2020
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
Subsequent Events
Subsequent events represent events or transactions occurring after the balance sheet date but before the financial statements are issued. Financial statements are considered “issued” when they are widely distributed to shareholders and others for general use and reliance in a form and format that complies with GAAP. Events occurring subsequent to March 31, 2020 have been evaluated as to their potential impact to the consolidated financial statements.
On April 3, 2020, Union began its participation in the PPP initiated by the SBA as part of the CARES Act. As of April 30, 2020, Union had submitted and received approval for 626 applications in excess of $66.7 million in PPP loans. The PPP loans are required to be closed and disbursed to the borrowers within 10 calendar days of receiving approval from the SBA. The interest rate on the PPP loans is 1.0% with a maximum maturity date of two years from disbursement. Borrowers receiving PPP loans are granted a six month deferment period where no payments are expected, however, interest will continue to accrue during the deferment period. The PPP loans are unsecured and 100% guaranteed by the SBA. The CARES Act permits forgiveness of PPP loans in whole or in part if certain spending criteria are met and certified by the borrower, with the forgiven portion repaid to Union under the SBA guarantee. The amount of principal and interest owed by Union's borrowers that will be forgiven is unknown at this time. Union will collect an origination fee from the SBA for processing PPP loans. The gross amount of fees expected to be collected is approximately $2.4 million with respect to PPP loans approved through April 30, 2020, which will be recognized in interest and fees on loans over the term of the individual loan or at the time of forgiveness.
Additionally, on April 9, 2020, the FRB authorized the PPPLF which is intended to facilitate lending by eligible borrowers, such as Union, to small businesses under the PPP. Under the PPPLF, the Federal Reserve Banks will lend to eligible banks and other PPP lenders on a non-recourse basis, taking PPP loans (including purchased loans) as collateral. The maturity date of an extension of credit under the PPPLF will be the maturity date of the PPP loans pledged to secure the extension of credit. The maturity date of the PPPLF's extension of credit will be accelerated if the underlying PPP loan goes into default and the PPP loan is sold to the SBA to collect on the SBA guarantee. The maturity date of the PPPLF's extension of credit also will be accelerated to the extent any loan forgiveness reimbursement is received from the SBA. There are no fees associated with extensions of credit under the PPPLF and advances will bear an interest rate of 0.35%. Union has been approved by the Federal Reserve Bank of Boston to participate in the PPPLF and, as of April 30, 2020, had an outstanding advance in the amount of $2.3 million. Available borrowing capacity through the PPPLF will be determined based on the principal amount of the PPP loans pledged to the facility.
Also, in April, Union pledged $42.5 million of qualifying investment securities to the Federal Reserve Bank of Boston to access borrowing capacity at the discount window.
On April 15, 2020, the Company declared a regular quarterly cash dividend of $0.32 per share, payable May 7, 2020, to stockholders of record on April 27, 2020.