Bowling Green-based Union Bankshares Corporation, a community bank with an extensive presence in the Richmond market, has reported a net income of $4.3 million, down 23 percent from same-quarter earnings last year.

"As we sift through the constant barrage of negative news in the media, I am encouraged by our second quarter results which showed improvement over the first quarter of 2008," said CEO G. William Beale in the company’s quarterly report. "During the quarter our deposit growth exceeded loan growth, reducing our reliance on higher cost funding sources. This result was achieved through execution of tighter loan underwriting guidelines and an organizationally focused effort targeted at increasing low costs deposits."

The slow housing market has impacted builders and developers in Union Bankshares’ client base, and the bank has seen increasing consumer credit losses. Non-performing loans increased during the second quarter, but non-performers remained “at a manageable level and well below the peer median,” Beale said. “Overall our credit quality is good."

Said Beale: “We are continuing to monitor closely all borrowers associated with the housing market, as well as our total consumer loan portfolio. As a result of continued uncertainty in the economy, we continue to build our reserves for loan losses that reflect our assessment of risk inherent in our loan portfolio."

The bank has no exposure to subprime mortgage loans.