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Union Bankshares Corporation Reports Earnings
BOWLING GREEN, Va., July 24 /PRNewswire-FirstCall/ -- Union Bankshares Corporation (the "Company") (Nasdaq: UBSH) reports net income for the second quarter ended June 30, 2009 of $953 thousand, down $3.4 million from $4.3 million for the same period a year ago. The decrease was driven by an increase in the provision for loan losses, increased Federal Deposit Insurance Corporation ("FDIC") insurance assessments and a decline in net interest income. These were partially offset by increased profitability in the mortgage segment. The Company also incurred acquisition costs related to the announced merger with First Market Bank, FSB, expected to be consummated by year end.
Net income available to common shareholders, which deducts from net income the dividends and discount accretion on preferred stock, was $91 thousand for the quarter ended June 30, 2009. This decline represents a decrease in earnings per common share, on a diluted basis, from $0.32 to $0.01 from the prior year's same quarter. Return on average common equity for the three months ended June 30, 2009 was 1.39%, while return on average assets was 0.15%, compared to 8.10% and 0.74%, respectively, for the same period in 2008.
Select highlights:
- Credit costs continue to impact earnings as increases in nonperforming assets and charge-offs resulted in provisions of $4.9 million for the quarter and $8.0 million year to date. The allowance for loan losses represents 1.58% of total loans.
- FDIC assessments for the quarter included a $360 thousand increase in the regular recurring assessment and a special assessment of $1.2 million.
- Net interest income improved by $1.0 million over the most recent quarter with the net interest margin increasing from 3.22% to 3.30% due largely to reductions in the cost of funds and investment of excess liquidity.
- Mortgage segment income for the quarter ($1.2 million) and year to date ($1.7 million) reflects increased origination volume during this historically low interest rate environment.
- Dividends and accretion related to the preferred stock owned by the U. S. Treasury under the Capital Purchase Program amounted to $862 thousand or $0.06 per share for the quarter.
"This was a difficult quarter as we saw the impact of expenses related to increased provisions for loan losses typical for the tail-end of an economic downturn, the effect of increased fees and special assessments from the FDIC, plus the proposed First Market Bank merger," said G. William Beale, President and Chief Executive Officer of Union Bankshares Corporation. "We expect our financial performance for the next few quarters to be impacted by First Market Bank deal costs, FDIC assessments and loan loss provisions reflecting the performance of our local economy.
There are some positives to report. Union Mortgage is having a record year driven by low interest rates and increased existing home sales. We saw our net interest margin increase during the second quarter and expect continued improvement in the coming quarters. Additionally, we have been able to liquidate some of our non-performing assets while minimizing losses."
On a linked quarter basis, net income of $953 thousand for the quarter ended June 30, 2009 declined $800 thousand from $1.7 million for the first quarter ended March 31, 2009. Net income available to common shareholders, which deducts from net income the dividends and discount accretion on preferred stock, was $91 thousand for the current quarter compared to $985 thousand from the most recent quarter. This represents a decline in earnings per share, on a diluted basis, of $0.06, from $0.07 to $0.01. The second quarter results were largely attributable to increased provision for loan losses and increased FDIC insurance assessments, partially offset by increased net interest income and income from the mortgage segment. Continued historically low interest rates helped drive increased profitability in the mortgage segment during the quarter.
As a supplement to U. S. generally accepted accounting principles ("GAAP"), the Company also uses certain alternate financial measures to review its operating performance. Diluted earnings per share on a cash basis for the quarter ended June 30, 2009 were $0.09 as compared to $0.35 for the same quarter a year ago and $0.15 for the quarter ended March 31, 2009. Additionally, cash basis return on average tangible common equity for the quarter ended June 30, 2009 was 3.29% as compared to 12.64% in the prior year's same quarter and 5.42% for the quarter ended March 31, 2009.
NET INTEREST INCOME
The decline in the target Federal funds rate since last year (from 2.00% to a range of 0% to 0.25%) continued to put significant pressure on the Company's net interest margin and related net interest income during the second quarter. The asset sensitive positioning of the Company's balance sheet combined with the previously mentioned interest rate declines have caused interest-earning assets to reprice faster than the Company's interest-bearing deposits. While this positioning is expected to benefit the Company when interest rates (e.g., Prime rate, Federal funds rate) begin to rise, it will continue to negatively impact the margin in the interim.
For the six months ended June 30, 2009, the Federal Open Market Committee ("FOMC") maintained the target range for the Federal funds rate at 0% to 0.25% and expects that the Federal funds rate will likely remain exceptionally low for an extended period. Additionally, the FOMC agreed to continue using liquidity and asset-purchase programs to support the functioning of financial markets and stimulate the economy. The Company should benefit from an exceptionally low Federal funds rate through lower borrowing costs and transaction deposit rates, which are generally priced off the short-end of the yield curve.
For the three months ended June 30, 2009, net interest income, on a tax-equivalent basis, decreased $996 thousand, or 4.8%, to $19.6 million compared to the same period last year. This decrease was attributable to the decline in interest-earning asset yields outpacing the decline in costs of interest-bearing liabilities, resulting in a reduction in the net interest margin of 62 basis points, from 3.92% to 3.30%. Yields on interest-earning assets declined 95 basis points driven predominantly by lower loan yields and excess liquidity at the Federal Reserve Bank yielding only 0.25%. Costs of interest-bearing liabilities declined only 33 basis points over the same time, principally as a result of lower costs on certificates of deposit and lower Federal Home Loan Bank of Atlanta ("FHLB") advances.
Average money market volumes increased $235 million from this same time last year, of which approximately $181 million relates to new volume resulting from the Company's money market promotion. The money market promotion provided customers who opened these accounts a 3% yield through June 30, 2009. Following expiration of the offer, yields for these money market deposits adjusted to the Company's regular money market rates, which at the time were 1.60% or lower. Compared to June 30, 2008, liquidity generated by this promotion allowed the Company to reduce reliance on other borrowings by approximately $56.5 million and not to reissue any brokered certificates of deposit which had totaled approximately $40 million. It is expected that the repricing of these money market accounts will positively impact the net interest margin beginning in the third quarter.
On a linked quarter basis, tax-equivalent net interest income increased $1.0 million, or 5.5%, to $19.6 million. The tax-equivalent net interest margin increased 8 basis points to 3.30% from 3.22% from the most recent quarter. The net interest margin increase was partially attributable to a steeper decline in costs on interest-bearing liabilities as compared to the yields of interest-earning assets. Yields on interest-earning assets declined 6 basis points to 5.53% while the costs of interest-bearing liabilities declined 14 basis points to 2.63%. The decline in interest-earning asset yields was attributable to lower investment security yields, reduced loan demand and, to a lesser extent, an increase in nonaccrual loans. Excess funds not utilized due to lower loan demand have been deployed into taxable investment securities having yields lower than loans, but greater than alternative Fed Funds sold or Federal Reserve Bank investment options. Improvements in the cost of funds were principally a result of declining costs on certificates of deposit and money market savings accounts.
For the six months ended June 30, 2009, tax-equivalent net interest income decreased $2.3 million, or 5.5%, to $38.3 million. The tax-equivalent net interest margin decreased 63 basis points to 3.26% from 3.89% compared to the prior year. The net interest margin decrease was partially attributable to a steeper decline in yields on interest-earning assets as compared to the costs of interest-bearing liabilities. Yields on interest-earning assets declined 112 basis points to 5.56% while the costs of interest-bearing liabilities declined only 53 basis points to 2.70%. The decline in interest-earning asset yields was attributable to lower yields and demand for loans in a declining rate environment, and to a lesser extent, an increase in nonaccrual loans. The decline in the cost of interest-bearing liabilities was attributable to declines in the cost of certificates of deposit, lower volumes and costs of FHLB advances partially offset by increased volumes in promotional money market savings accounts.
On September 29, 2008, because of significant disruption and uncertainty in the financial markets, the Company borrowed $50 million in an FHLB advance at a rate of 3.52% with a maturity of September 28, 2009. Also, during the fourth quarter of 2008, the FOMC lowered the Federal funds target from 2.0% to a range of 0% to 0.25%. At that time, the Company considered the FHLB advance to be a contingency plan against unforeseen and unprecedented market movements. The earnings spread between the advance and the corresponding short-term investment yield was negative and consequently has had an unfavorable impact on the Company's net interest margin. The expected repayment of this advance during the third quarter is expected to favorably impact the net interest margin.
ASSET QUALITY/LOAN LOSS PROVISION
Industry concerns regarding asset quality, precipitated by subprime mortgage lending, declining real estate activity and general economic conditions, continued during the second quarter. These issues are impacting the markets in which the Company operates, mainly by slowing real estate activity and adding to the general economic uncertainty. The risk and performance of the Company's loan portfolio are reflective of the relatively stable markets in which it operates. While these markets have experienced slow economic activity, they remain in much better condition than the well-publicized markets in Arizona, Florida, California and other states where the Company does not lend and does not have loan loss exposure. The Company's loan portfolio also does not include exposure to subprime mortgage loans.
During the current quarter and for the year, the Company continued to experience deterioration in asset quality and anticipates there may be additional softening in the near-term. The Company has a significant concentration in real estate loans. Residential acquisition and development lending and builder/construction lending have been scaled back as housing activity across our markets has declined. While this softening negatively impacts delinquency and nonperforming asset levels, the collateralized nature of real estate loans serves to better protect the Company from loss.
Necessary resources are being devoted to the ongoing review of the portfolio and the workouts of problem assets to minimize any loss to the Company. Management will continue to monitor delinquencies, risk rating changes, charge-offs, market trends and other indicators of risk in the Company's portfolio, particularly those tied to residential and commercial real estate, and adjust the allowance for loan losses accordingly.
Net charge-offs were $2.9 million, or 0.63% of loans on an annualized basis, for the quarter ended June 30, 2009, compared to net charge-offs of $478 thousand, or 0.11%, in the same quarter last year and $922 thousand, or 0.20 %, for the quarter ended March 31, 2009. Net charge-offs in the current quarter included construction loans of $1.8 million, credit cards of $330 thousand, indirect auto loans of $283 thousand, commercial loans of $221 thousand, home equity loans of $165 thousand and the remaining $101 thousand principally related to consumer loan charge-offs. At June 30, 2009, total past due loans were $27.9 million, or 1.49% of total loans, up from 0.62% a year ago, but down from 1.93% at March 31, 2009.
At June 30, 2009, nonperforming assets totaled $52.3 million, an increase of $39.4 million from a year ago and $13.1 million from March 31, 2009. The increases in 2009 and 2008 relate principally to loans in the real estate development and housing sector, including construction related businesses. The net increase in the current quarter of $13.1 million was primarily related to one residential real estate development project. The increase in nonperforming loans has reduced the coverage of these assets as a percentage of the allowance for loan losses from 178% at June 30, 2008 to 79% at June 30, 2009.
Nonperforming assets include $37.6 million in nonperforming loans. This total includes land development loans of $13.3 million, residential real estate loans of $9.1 million, commercial real estate loans of $9.0 million, commercial and industrial loans of $3.1 million, land loans of $1.2 million, and other loans totaling $1.9 million. Historically, and particularly in the current economic environment, the Company seeks to work with its customers on loan collection matters while taking appropriate actions to minimize any losses. These loans are closely monitored and evaluated for collection with appropriate loss reserves established where necessary.
Nonperforming assets also include $14.7 million in other real estate owned. This total includes land of $8.0 million, residential real estate of $2.9 million, land development loans of $1.6 million, commercial real estate of $1.0 million and land for development of bank branch sites of $1.0 million. Foreclosed properties have been adjusted to their fair values at the time of foreclosure and any losses have been taken as loan charge-offs against the allowance for loan losses. Other real estate owned asset valuations are also evaluated at least quarterly in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," and any necessary write down to fair value is recorded as an impairment. During the second quarter of 2009, $48 thousand was recorded as an impairment related to residential real estate. The year to date total impairment for other real estate owned was $62 thousand and related to one residential real estate relationship.
The provision for loan losses for the quarter ended June 30, 2009 was $4.9 million, an increase of $1.8 million over the most recent quarter and $3.2 million from the same quarter a year ago. $2.0 million of the current quarter provision for loan losses related to the one residential real estate development project mentioned above. The increase in the provision for loan losses and the current levels of the allowance for loan losses reflect specific reserves related to nonperforming loans, net charge-off activity, loan growth, delinquency trends and other credit risk factors that the Company considers in assessing the adequacy of the allowance for loan losses. The allowance for loan losses as a percentage of the loan portfolio was 1.58% at June 30, 2009, 1.48% at March 31, 2009 and 1.19% and 1.36% for the periods ending June 30, 2008 and December 31, 2008, respectively.
NONINTEREST INCOME
For the three months ended June 30, 2009, noninterest income increased $1.6 million, or 21.2%, to $9.3 million from the second quarter of 2008. Of this increase, gains on sales of loans in the mortgage segment increased $2.0 million related to higher origination volume. Also, other operating income increased $84 thousand and investment securities gains increased $8 thousand. Partially offsetting these increases were declines in service charges on deposit accounts and other fee income of $224 thousand and $217 thousand, respectively. These declines were predominantly the result of lower overdraft and returned check charges and fewer annuity sales than a year ago. Also contributing to the decline in noninterest income were losses recognized on the sale of other real estate owned of $35 thousand. Excluding the contribution from the mortgage segment, noninterest income declined $370 thousand, or 8.1%, and was primarily related to lower service charges on deposit accounts and other account fees.
On a linked quarter basis, noninterest income increased $1.9 million, or 26.5%, to $9.3 million from $7.3 million at March 31, 2009. Of this increase, gains on sales of loans in the mortgage segment increased $1.7 million related to higher origination volume. Also, other operating income increased $32 thousand and investment securities gains increased $12 thousand. The increase also included increases in service charges on deposit accounts and other fee income of $109 thousand and $77 thousand, respectively. These were predominately the result of increases in overdraft and return check fees and debit card income over the prior quarter. Excluding the contribution of the mortgage segment, noninterest income increased $212 thousand, or 5.3%, and primarily related to higher service charges on deposit accounts and other fee income.
For the six months ended June 30, 2009, noninterest income increased $1.6 million, or 10.7%, to $16.6 million from $15.0 million for the same period in 2008. Of this increase, gains on sales of loans in the mortgage segment increased $2.5 million related to higher origination volume. Partially offsetting this increase were declines in service charges on deposit accounts and other fee income of $348 thousand and $266 thousand, respectively. These declines were predominantly the result of lower overdraft fees and returned check charges ($432 thousand), brokerage commissions ($163 thousand), annuity sales ($128 thousand), third party exchange fee income related to official checks ($114 thousand) and debit card income ($110 thousand) partially offset by increased ATM income ($247 thousand) and service charges on commercial accounts ($116 thousand). During the same period in 2008, the Company recorded gains of $127 thousand from the sale of bank owned real estate and $198 thousand relating to the mandatory redemption of certain classes of common stock to financial institution members of Visa U.S.A. Excluding the contribution of the mortgage segment and prior period gain transactions, noninterest income declined $508 thousand, or 5.9%, principally as a result of the aforementioned lower service charges on deposit accounts and other fee income.
NONINTEREST EXPENSE
For the three months ended June 30, 2009, noninterest expense increased $2.3 million, or 11.6%, to $22.4 million compared to the second quarter of 2008. Other operating expenses increased $2.8 million. Of this increase, FDIC insurance assessment premiums were $1.9 million and were comprised of a special insurance assessment of $1.2 million and an increase in the regular insurance assessment of $720 thousand. Acquisition costs associated with the proposed merger of First Market Bank, FSB were $363 thousand. Other costs contributing to the increase were higher legal expenses of $225 thousand relating to the Company's problem loan workouts and collection, and increased marketing and advertising costs of $171 thousand principally relating to a centennial celebration for a bank affiliate and other advertising campaigns. Salaries and benefits decreased $407 thousand. Driving the decline were lower payroll expense of $388 thousand, lower profit sharing expense of $371 thousand and lower incentive compensation of $255 thousand, partially offset by higher commission expense in the mortgage segment of $658 thousand relating to increased loan origination volume. Furniture and equipment expense decreased $70 thousand and occupancy expenses increased $16 thousand. Excluding mortgage segment operations, increased FDIC special insurance assessment and acquisition related expenses, noninterest expense increased approximately $214 thousand, or 1.3%, primarily related to higher FDIC regular insurance assessments, legal expenses and marketing expenses, partially offset by lower payroll expenses.
On a linked quarter basis, noninterest expense increased $2.4 million, or 12.2%, to $22.4 million for the three months ended June 30, 2009. Other operating expenses increased $2.3 million. Of this increase, FDIC insurance assessment premiums were $1.6 million and were comprised of a special insurance assessment of $1.2 million and an increase in the regular insurance assessment of $361 thousand. Acquisition costs associated with the proposed merger of First Market Bank, FSB increased $85 thousand to $363 thousand in the second quarter compared to $278 thousand in the first quarter. Other costs contributing to the increase were increased legal expenses related to the Company's problem loan workouts and collection activities of $124 thousand, and increased marketing and advertising costs of $270 thousand principally related to a centennial celebration for a bank affiliate and other advertising campaigns. Salary and benefit expense increased $197 thousand, or 1.8%, which included higher commissions in the mortgage segment, partially offset by lower profit sharing and awards and incentive costs. Occupancy expense and furniture and equipment expense declined $62 thousand and $47 thousand, respectively. Excluding mortgage segment operations, increased FDIC special insurance assessment and acquisition related expenses, noninterest expense increased approximately $311 thousand, or 1.9%, primarily related to higher FDIC regular insurance assessments, marketing expenses and legal expenses, offset by lower profit sharing, awards and incentive costs and payroll expenses.
For the six months ended June 30, 2009, noninterest expense increased $2.3 million, or
5.8 %, to $42.3 million compared to $40.0 million for the six month period ended June 30, 2008. Other operating expenses increased $3.1 million. Of this increase, FDIC insurance assessment premiums were $2.5 million and were comprised of a special insurance assessment of $1.2 million and an increase in the regular insurance assessment of $1.3 million. Acquisition costs associated with the proposed merger of First Market Bank, FSB were $641 thousand in 2009. Other costs contributing to the increase were higher legal expenses of $330 thousand relating to the Company's problem loan workouts and collection activities, and increased marketing and advertising costs of $184 thousand principally related to a centennial celebration for a bank affiliate and other advertising campaigns. Costs for maintaining an increased portfolio of other real estate owned increased $106 thousand from $4 thousand in the same period last year. Offsetting higher expenses were lower salary and benefit costs of $792 thousand, primarily due to lower profit sharing and incentive compensation, partially offset by higher commission expense in the mortgage segment related to strong origination volume in 2009. Furniture and equipment expenses declined $126 thousand, or 5.0%, and occupancy expenses increased $105 thousand, or 3.1%. Excluding mortgage segment operations, increased FDIC special insurance assessment, acquisition related expenses and prior year conversion costs related to merging affiliate banks, noninterest expense increased approximately $287 thousand, or 0.9%, primarily due to higher FDIC regular insurance assessments, occupancy expenses, marketing expenses and legal expenses, partially offset by lower salaries and benefits expenses.
During the first quarter of 2009, to replenish the Deposit Insurance Fund ("DIF"), the FDIC approved a final rule to impose a special insurance assessment of 5 basis points calculated on each bank's total assets minus Tier 1 capital. The special insurance assessment was billed on June 30, payable on September 30 and recorded as a second quarter expense for all financial institutions. During the second quarter of 2009, the Company expensed $1.2 million related to the FDIC special insurance assessment. The special insurance assessment is in addition to the regular quarterly risk-based assessment. The assessment base for regular quarterly insurance assessments was not changed. The rule also authorizes the FDIC to impose an additional special insurance assessment of up to 5 basis points later in 2009 if additional replenishment of the DIF is needed. The FDIC indicates that this additional special insurance assessment is probable but the amount is uncertain.
For the six months ended June 30, 2009, acquisition costs associated with the proposed merger of First Market Bank, FSB, expected to be consummated by year end, were $641 thousand and are reported as a component of "Other operating expenses" within the Company's "Condensed Consolidated Statements of Income." These costs were predominantly legal and due diligence costs. The Company expects to incur additional acquisition costs both prior to and after the consummation of the merger.
BALANCE SHEET
At June 30, 2009, total assets were $2.6 billion compared to $2.4 billion and $2.6 billion at June 30, 2008 and December 31, 2008, respectively. Net loans increased $39.8 million, or 2.2%, from June 30, 2008 and declined $6.7 million compared to December 31, 2008. The year over year increase in loan growth was concentrated in commercial and home equity loan portfolios, partially offset by a decline in construction loans. On a linked quarter basis, net loans decreased $2.4 million and the Company's mortgage segment increased loans held for sale by $30.1 million. Total cash and cash equivalents were $80.3 million and increased $13.5 million from $66.8 million at June 30, 2008 and decreased $68.1 million from $148.5 million at December 31, 2008. The decline from December 31, 2008 is principally a function of reducing brokered certificates of deposits to zero from $66.7 million as well as redeploying cash into higher yielding investment securities. Deposits increased $210.5 million, or 11.8%, from a year ago primarily due to increases in money market savings accounts. The Company reduced brokered certificates of deposit to zero at June 30, 2009, down from $40 million at June 30, 2008. Total borrowings, including repurchase agreements, decreased $54.0 million from June 30, 2008 to $322.5 million at June 30, 2009. The Company's equity to assets ratio was 10.49% and 8.91% at June 30, 2009 and 2008, respectively.
Proceeds of $59 million from the issuance of the Company's Fixed Rate Cumulative Perpetual Preferred Stock added additional capital of $10 million to bank affiliates during the fourth quarter of 2008. Since December 31, 2008, these funds have generally been invested with the Federal Reserve Bank as liquidity for anticipated lending activity, earning a nominal yield. During the second quarter of 2009 the Company began to redeploy some of this excess liquidity into short-term investment securities in order to obtain a more attractive return than Fed funds.
While not immune from the effects of weakening economic conditions, management remains focused on maintaining adequate levels of liquidity and capital during this challenging environment and believes its sound risk management practices in underwriting and lending will enable it to successfully weather this period of economic uncertainty.
SEGMENT INFORMATION
Mortgage Segment
For the three months ended June 30, 2009, the mortgage segment net income increased $1.1 million to $1.2 million from $88 thousand for the same quarter in 2008. Originations increased 71.4% from the same period last year, resulting in an increase in loan revenue of $2.0 million, or 62.5%. Increased originations are principally attributable to historically low mortgage rates that have produced a surge in refinance volume. Loan-related expenses, including early payoff and early payment defaults attributable to current economic conditions, totaled $112 thousand during the period. Total noninterest expenses increased $568 thousand. Salaries and benefits increased $635 thousand primarily related to commission expenses on the increased loan volume. Other operating expenses increased $41 thousand principally due to higher underwriting fees related to loan volume and marketing and advertising in 2009. Occupancy, furniture and equipment expenses declined $80 thousand and $29 thousand, respectively, principally due to the nonrenewal of certain leased office locations.
On a linked quarter basis, mortgage segment net income increased $679 thousand to $1.2 million from $486 thousand in the first quarter of 2009. Originations increased 39.9% from the most recent quarter, resulting in an increase in loan revenue of $1.7 million, or 50.3%, due to attractive mortgage rates, strong refinance loan volume and lower median residential housing prices. Salaries and benefits increased $811 thousand as the result of the increase in commissions related to loan originations. Other operating expenses increased $55 thousand and included higher credit bureau fees, underwriting fees and other loan expenses related to loan volume. Occupancy expense and furniture and equipment expenses decreased $23 thousand and $4 thousand, respectively, principally due to the nonrenewal of certain leased office locations.
For the six months ended June 30, 2009, mortgage segment net income increased $1.6 million from $58 thousand to $1.7 million. Originations increased 58.3% from the same period last year, resulting in an increase in loan revenue of $2.4 million, or 39.5%. Salaries and benefits increased $646 thousand principally due to commission expenses related to increased loan originations. Occupancy costs decreased $125 thousand and furniture and equipment costs decreased $68 thousand, both related to the nonrenewal of certain leased office locations.
ABOUT UNION BANKSHARES CORPORATION
Union Bankshares Corporation is one of the largest community banking organizations based in Virginia, providing full service banking to the Northern, Central, Rappahannock, Tidewater and Northern Neck regions of Virginia through its bank subsidiaries, Union Bank and Trust Company (42 locations in the counties of Albemarle, Caroline, Chesterfield, Fairfax, Fluvanna, Hanover, Henrico, King George, King William, Nelson, Spotsylvania, Stafford, Westmoreland, and the cities of Fredericksburg, Williamsburg, Newport News, Grafton and Charlottesville); Northern Neck State Bank (9 locations in the counties of Richmond, Westmoreland, Essex, Northumberland and Lancaster); and Rappahannock National Bank (7 locations in Washington, Front Royal, Middleburg, Warrenton and Winchester). Union Bank and Trust Company's loan production office in Manassas was open through the first quarter of 2009 but was closed in early April 2009. Union Investment Services, Inc. provides full brokerage services; Union Mortgage Group, Inc. provides a full line of mortgage products; and Union Insurance Group, LLC offers various lines of insurance products. Union Bank and Trust Company also owns a non-controlling interest in Johnson Mortgage Company, LLC.
On March 14, 2008, the Company completed the previously announced merger of its affiliate Prosperity Bank & Trust Company into Union Bank and Trust Company ("Union Bank").
On October 31, 2008, the Company completed the previously announced merger of its affiliate Bay Community Bank into Union Bank.
On March 30, 2009, the Company and First Market Bank, FSB announced the signing of an agreement, as amended on June 19, 2009, pursuant to which First Market Bank, FSB will merge with the Company in an all stock transaction valued at approximately $105.4 million. First Market Bank, FSB, a privately held federally chartered savings bank with over $1.3 billion in assets, operates 39 branches throughout central Virginia with 31 locations in the greater Richmond metropolitan area. Upon completion of the transaction, expected to occur before year end, the Company will become the largest Virginia based community banking organization with approximately 97 branch locations and total assets of over $3.9 billion.
Additional information is available on the Company's website at www.ubsh.com. The shares of the Company are traded on the NASDAQ Global Select Market under the symbol "UBSH."
FORWARD-LOOKING STATEMENTS
Certain statements in this report may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often characterized by the use of qualified words (and their derivatives) such as "expect," "believe," "estimate," "plan," "project," "anticipate" or other statements concerning opinions or judgment of the Company and its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of and changes in: general economic conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, changes in the stock and bond markets, technology, and consumer spending and savings habits. The Company does not update any forward-looking statements that may be made from time to time by or on behalf of the Company.
UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS
(in thousands, except share data)
-------------------------------- --------------------
Three Months Ended Six Months Ended
06/30/09 06/30/08 03/31/09 06/30/09 06/30/08
-------- -------- -------- -------- --------
Results of
Operations
-----------
Interest and
dividend
income $31,977 $33,308 $31,364 $63,341 $68,178
Interest
expense 13,273 13,480 13,650 26,923 29,225
------ ------ ------ ------ ------
Net interest
income 18,704 19,828 17,714 36,418 38,953
Provision
for loan
losses 4,855 1,676 3,130 7,985 3,276
----- ----- ----- ----- -----
Net interest
income after
provision for
loan losses 13,849 18,152 14,584 28,433 35,677
Noninterest
income 9,278 7,656 7,333 16,611 15,004
Noninterest
expenses 22,351 20,034 19,927 42,278 39,967
------ ------ ------ ------ ------
Income before
income taxes 776 5,774 1,990 2,766 10,714
Income tax
(benefit)
expense (177) 1,441 237 60 2,729
---- ----- --- -- -----
Net income $953 $4,333 $1,753 $2,706 $7,985
==== ====== ====== ====== ======
Interest
earned on
loans (FTE) $28,042 $29,857 $27,688 $55,731 $61,246
Interest
earned on
securities
(FTE) 4,822 4,248 4,536 9,357 8,467
Interest
earned on
earning
assets (FTE) 32,924 34,127 32,278 65,202 69,797
Net interest
income (FTE) 19,651 20,647 18,628 38,279 40,572
Interest
expense
on
certificates
of deposit 7,968 9,025 8,434 16,403 19,292
Interest
expense
on interest-
bearing
deposits 10,787 10,676 11,105 21,892 22,411
Core deposit
intangible
amortization 481 487 481 962 973
Net income
(loss) -
community
bank segment $(212) $4,245 $1,267 $1,055 $7,927
Net income -
mortgage
segment 1,165 88 486 1,651 58
Key Ratios
----------
Return on
average
assets (ROA) 0.15% 0.74% 0.28% 0.21% 0.69%
Return on
average
equity (ROE) 1.39% 8.10% 2.57% 1.98% 7.47%
Efficiency
ratio 79.88% 72.89% 79.56% 79.73% 74.07%
Efficiency
ratio -
community
bank segment 82.90% 69.77% 79.56% 81.27% 70.85%
Net interest
margin (FTE) 3.30% 3.92% 3.22% 3.26% 3.89%
Yields on
earning
assets (FTE) 5.53% 6.48% 5.59% 5.56% 6.68%
Cost of
interest-
bearing
liabilities
(FTE) 2.63% 2.96% 2.77% 2.70% 3.23%
Noninterest
expense
less
noninterest
income /
average
assets 2.01% 2.12% 1.99% 2.00% 2.16%
Per Share Data
--------------
Earnings per
common
share, basic $0.01 $0.32 $0.07 $0.07 $0.59
Earnings per
common
share, diluted 0.01 0.32 0.07 0.07 0.59
Cash dividends
paid per
common share 0.060 0.185 0.120 0.180 0.370
Market value
per share 14.97 14.89 13.85 14.97 14.89
Book value
per common
share 16.02 15.81 16.08 16.02 15.81
Tangible common
book value per
common share 11.24 10.84 11.25 11.24 10.84
Price to
earnings
ratio,
diluted 373.22 11.57 48.79 106.05 12.55
Price to book
value per
common share 0.93 0.94 0.86 0.93 0.94
Price to
tangible
common share 1.33 1.37 1.23 1.33 1.37
Weighted
average
common
shares
outstanding,
basic 13,575,807 13,469,589 13,562,785 13,569,332 13,457,911
Weighted
average
common
shares
outstanding,
diluted 13,615,294 13,506,929 13,602,327 13,609,625 13,496,874
Common shares
outstanding
at end of
period 13,604,601 13,503,853 13,595,004 13,604,601 13,503,853
Financial
Condition
----------
Assets $2,615,447 $2,395,930 $2,602,033 $2,615,447 $2,395,930
Loans, net
of unearned
income 1,871,506 1,823,706 1,867,172 1,871,506 1,823,706
Earning
Assets 2,386,503 2,147,877 2,375,864 2,386,503 2,147,877
Goodwill 56,474 56,474 56,474 56,474 56,474
Core deposit
intangibles,
net 8,652 10,577 9,133 8,652 10,577
Deposits 1,997,364 1,786,847 1,993,006 1,997,364 1,786,847
Stockholders'
equity 274,459 213,475 274,912 274,459 213,475
Tangible
common
equity 153,003 146,424 153,098 153,003 146,424
-------------------------------- --------------------
Three Months Ended Six Months Ended
06/30/09 06/30/08 03/31/09 06/30/09 06/30/08
-------- -------- -------- -------- --------
Averages
--------
Assets $2,613,999 $2,345,698 $2,565,918 $2,590,008 $2,328,649
Loans, net
of
unearned
income 1,871,142 1,794,443 1,869,759 1,870,455 1,781,636
Loans held
for sale 51,522 31,021 38,698 45,146 27,265
Securities 380,350 287,234 336,716 358,654 285,494
Earning
assets 2,390,428 2,116,639 2,342,570 2,366,549 2,099,796
Deposits 2,002,148 1,738,866 1,948,300 1,975,372 1,711,952
Certificates
of
deposit 964,952 922,909 986,473 975,652 926,581
Interest-
bearing
deposits 1,710,973 1,461,568 1,680,320 1,695,730 1,439,882
Borrowings 315,517 372,073 319,648 317,488 381,279
Interest-
bearing
liabilities 2,026,490 1,833,641 1,999,968 2,013,218 1,821,161
Stockholders'
equity 275,794 215,223 276,551 276,171 214,836
Tangible
common
equity 154,175 147,937 154,565 154,370 147,311
Asset Quality
-------------
Allowance for
Loan Losses
--------------
Beginning
balance of
allowance
for loan
losses $27,704 $20,452 $25,496 $25,496 $19,336
Add:
Recoveries 208 88 66 274 167
Less: Charge-
offs 3,128 566 988 4,116 1,129
Add:
Provision
for loan
losses 4,855 1,676 3,130 7,985 3,276
----- ----- ----- ----- -----
Ending
balance of
allowance
for loan
losses $29,639 $21,650 $27,704 $29,639 $21,650
------- ------- ------- ------- -------
Allowance for
loan losses /
total
outstanding
loans 1.58% 1.19% 1.48% 1.58% 1.19%
Nonperforming
Assets
--------------
Nonaccrual
loans $37,612 $12,135 $31,039 $37,612 $12,135
Other real
estate and
foreclosed
properties 14,662 781 8,145 14,662 781
------ --- ----- ------ ---
Total
nonperforming
assets 52,274 12,916 39,184 52,274 12,916
Loans > 90
days and
still
accruing 12,944 2,481 7,690 12,944 2,481
------ ----- ----- ------ -----
Total
nonperforming
assets and
loans >
90 days and
still
accruing $65,218 $15,397 $46,874 $65,218 $15,397
------- ------- ------- ------- -------
Nonperforming
assets /
total
outstanding
loans 2.79% 0.71% 2.10% 2.79% 0.71%
Allowance for
loan
losses /
nonperforming
loans 78.80% 178.41% 89.26% 78.80% 178.41%
Allowance for
loan
losses /
nonperforming
assets 56.70% 167.62% 70.70% 56.70% 167.62%
Other Data
----------
Mortgage
loan
originations $217,560 $126,916 $155,552 $373,529 $235,971
% of
originations
that are
refinances 58.76% 36.30% 68.70% 62.99% 44.00%
End of period
full-time
employees 662 705 672 662 705
Number of
full-service
branches 58 58 58 58 58
Number of
community
banks
(subsidiaries) 3 4 3 3 4
Number of full
automatic
transaction
machines
(ATM's) 148 147 148 148 147
Alternative Performance
Measures
------------------------
Cash basis
earnings(1)
Net income $953 $4,333 $1,753 $2,706 $7,985
Plus: Core
deposit
intangible
amortization,
net of tax 313 317 313 625 632
--- --- --- --- ---
Cash basis
operating
earnings $1,266 $4,650 $2,066 $3,331 $8,617
------ ------ ------ ------ ------
Average
assets $2,613,999 $2,345,698 $2,565,918 $2,590,008 $2,328,649
Less: Average
goodwill 56,474 56,474 56,474 56,474 56,474
Less: Average
core deposit
intangibles 8,887 10,812 9,362 9,123 11,051
----- ------ ----- ----- ------
Average
tangible
assets $2,548,638 $2,278,412 $2,500,082 $2,524,411 $2,261,124
---------- ---------- ---------- ---------- ----------
Average
equity $275,794 $215,223 $276,551 $276,171 $214,836
Less: Average
goodwill 56,474 56,474 56,474 56,474 56,474
Less: Average
core deposit
intangibles 8,887 10,812 9,362 9,123 11,051
Less: Average
preferred
equity 56,258 - 56,150 56,204 -
------ -- ------ ------ --
Average
tangible
common
equity $154,175 $147,937 $154,565 $154,370 $147,311
-------- -------- -------- -------- --------
Cash basis
earnings per
share,
diluted $0.09 $0.35 $0.15 $0.24 $0.64
Cash basis
return on
average
tangible
assets 0.20% 0.82% 0.34% 0.27% 0.77%
Cash basis
return on
average
tangible
common equity 3.29% 12.64% 5.42% 4.35% 11.76%
(1) Cash basis earnings - as a supplement to accounting principles
generally accepted in the United States ("GAAP"), management also
reviews operating performance based on its "cash basis earnings" to
fully analyze its core business. Cash basis earnings exclude
amortization expense attributable to intangibles (goodwill and core
deposit intangibles) that do not qualify as regulatory capital.
Financial ratios based on cash basis earnings exclude the
amortization of nonqualifying intangible assets from earnings and
the unamortized balance of nonqualifying intangibles from assets
and equity.
In management's opinion, cash basis earnings are useful to investors
because by excluding non-operating adjustments stemming from the
consolidation of our organization, they allow investors to see
clearly the combined economic results of our multi-bank company.
UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
June 30, December 31, June 30,
2009 2008 2008
---- ---- ----
ASSETS (Unaudited) (Audited) (Unaudited)
------
Cash and cash equivalents:
Cash and due from banks $36,111 $144,625 $62,875
Interest-bearing deposits
in other banks 41,242 903 1,054
Money market investments 123 122 223
Other interest-bearing
deposits 2,598 2,598 2,598
Federal funds sold 303 289 90
--- --- --
Total cash and cash
equivalents 80,377 148,537 66,840
------ ------- ------
Securities available for
sale, at fair value 406,662 309,711 288,150
------- ------- -------
Loans held for sale 64,069 29,424 32,056
------ ------ ------
Loans, net of unearned
income 1,871,506 1,874,088 1,823,706
Less allowance for loan
losses 29,639 25,496 21,650
------ ------ ------
Net loans 1,841,867 1,848,592 1,802,056
--------- --------- ---------
Bank premises and
equipment, net 78,787 77,425 77,220
Other real estate owned 14,663 7,140 781
Core deposit intangibles,
net 8,652 9,613 10,577
Goodwill 56,474 56,474 56,474
Other assets 63,896 65,016 61,776
------ ------ ------
Total assets $2,615,447 $2,551,932 $2,395,930
========== ========== ==========
LIABILITIES
-----------
Noninterest-bearing
demand deposits $302,841 $274,829 $294,594
Interest-bearing deposits:
NOW accounts 200,431 201,317 218,747
Money market accounts 452,373 361,138 256,297
Savings accounts 101,145 93,559 102,420
Time deposits of $100,000
and over 453,336 452,297 433,409
Brokered certificates of
deposit - 66,709 40,000
Other time deposits 487,238 477,150 441,380
------- ------- -------
Total interest-bearing
deposits 1,694,523 1,652,170 1,492,253
--------- --------- ---------
Total deposits 1,997,364 1,926,999 1,786,847
--------- --------- ---------
Securities sold under
agreements to repurchase 57,202 68,282 79,980
Other short-term
borrowings 65,000 55,000 86,750
Trust preferred capital notes 60,310 60,310 60,310
Long-term borrowings 140,000 150,000 149,500
Other liabilities 21,112 17,543 19,068
------ ------ ------
Total liabilities 2,340,988 2,278,134 2,182,455
--------- --------- ---------
Commitments and contingencies
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, $10.00 par
value, $1,000 liquidation
value, shares authorized
59,000; issued and
outstanding, 59,000
shares at June 30, 2009
and December 31, 2008
and none at June 30, 2008 590 590 -
Common stock, $1.33 par
value, shares authorized
36,000,000; issued and
outstanding, 13,604,601
shares, 13,570,970 shares,
and 13,503,852 shares,
respectively 18,103 18,055 17,962
Surplus 102,076 101,719 41,811
Retained earnings 153,947 155,140 153,630
Warrant 2,808 2,808 -
Discount on preferred stock (2,544) (2,790) -
Accumulated other
comprehensive (loss) income (521) (1,724) 72
---- ------ --
Total stockholders'
equity 274,459 273,798 213,475
------- ------- -------
Total liabilities and
stockholders' equity $2,615,447 $2,551,932 $2,395,930
========== ========== ==========
UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
--------- ---------
2009 2008 2009 2008
---- ---- ---- ----
Interest and dividend income:
Interest and fees on loans $27,863 $29,725 $55,372 $60,989
Interest on Federal
funds sold - 1 - 29
Interest on deposits in
other banks 60 6 114 14
Interest on money market
investments - - - 1
Interest on other interest-
bearing deposits - 15 - 40
Interest and dividends
on securities:
Taxable 2,630 2,288 5,066 4,577
Nontaxable 1,424 1,273 2,789 2,528
----- ----- ----- -----
Total interest and
dividend income 31,977 33,308 63,341 68,178
------ ------ ------ ------
Interest expense:
Interest on deposits 10,787 10,676 21,892 22,411
Interest on Federal
funds purchased - 96 - 264
Interest on short-term
borrowings 712 1,001 1,343 3,037
Interest on long-term
borrowings 1,774 1,707 3,688 3,513
----- ----- ----- -----
Total interest expense 13,273 13,480 26,923 29,225
------ ------ ------ ------
Net interest income 18,704 19,828 36,418 38,953
Provision for loan losses 4,855 1,676 7,985 3,276
----- ----- ----- -----
Net interest income after
provision for loan losses 13,849 18,152 28,433 35,677
------ ------ ------ ------
Noninterest income:
Service charges on deposit
accounts 2,105 2,329 4,101 4,449
Other service charges,
commissions and fees 1,496 1,713 2,915 3,181
Gains on securities
transactions, net 13 5 14 28
Gains on sales of loans 5,183 3,179 8,635 6,177
Gains (losses) on sales
of other real estate and
bank premises, net (35) (2) (54) 135
Other operating income 516 432 1,000 1,034
--- --- ----- -----
Total noninterest income 9,278 7,656 16,611 15,004
----- ----- ------ ------
Noninterest expenses:
Salaries and benefits 10,872 11,279 21,547 22,339
Occupancy expenses 1,735 1,719 3,532 3,427
Furniture and equipment
expenses 1,162 1,232 2,371 2,497
Other operating expenses 8,582 5,804 14,828 11,704
----- ----- ------ ------
Total noninterest
expenses 22,351 20,034 42,278 39,967
------ ------ ------ ------
Income before income taxes 776 5,774 2,766 10,714
Income tax (benefit) expense (177) 1,441 60 2,729
---- ----- -- -----
Net income $953 $4,333 $2,706 $7,985
Dividends paid and
accumulated on
preferred stock 738 - 1,475 -
Accretion of discount on
preferred stock 124 - 246 -
--- -- --- --
Net income available to
common shareholders $91 $4,333 $985 $7,985
=== ====== ==== ======
Earnings per share, basic $0.01 $0.32 $0.07 $0.59
===== ===== ===== =====
Earnings per share, diluted $0.01 $0.32 $0.07 $0.59
===== ===== ===== =====
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES
(TAXABLE EQUIVALENT BASIS)
For The Three Months Ended June 30,
-----------------------------------
2009
----
Interest
Average Income / Yield /
Balance Expense Rate (1)
-------- ---------- ---------
(Dollars in thousands)
Assets:
-------
Securities:
Taxable $258,950 $2,630 4.07%
Tax-exempt 121,400 2,192 7.24%
------- -----
Total securities 380,350 4,822 5.08%
Loans, net (2) 1,871,142 27,462 5.89%
Loans held for sale 51,522 580 4.52%
Federal funds sold 304 - 0.17%
Money market investments 104 - 0.00%
Interest-bearing deposits
in other banks 84,408 60 0.29%
Other interest-bearing deposits 2,598 - 0.00%
----- --
Total earning assets 2,390,428 32,924 5.53%
------
Allowance for loan losses (28,249)
Total non-earning assets 251,820
-------
Total assets $2,613,999
==========
Liabilities and Stockholders' Equity:
-------------------------------------
Interest-bearing deposits:
Checking $203,276 86 0.17%
Money market savings 442,436 2,636 2.39%
Regular savings 100,309 97 0.39%
Certificates of deposit:
$100,000 and over 475,200 3,962 3.34%
Under $100,000 489,752 4,006 3.28%
------- -----
Total interest-bearing
deposits 1,710,973 10,787 2.53%
Other borrowings 315,517 2,486 3.18%
------- -----
Total interest-bearing
liabilities 2,026,490 13,273 2.63%
------
Noninterest-bearing liabilities:
Demand deposits 291,175
Other liabilities 20,540
------
Total liabilities 2,338,205
Stockholders' equity 275,794
-------
Total liabilities and
stockholders' equity $2,613,999
==========
Net interest income $19,651
=======
Interest rate spread (3) 2.90%
Interest expense as a
percent of average
earning assets 2.23%
Net interest margin 3.30%
For The Three Months Ended June 30,
-----------------------------------
2008
----
Interest
Average Income / Yield /
Balance Expense Rate (1)
-------- ---------- ---------
(Dollars in thousands)
Assets:
-------
Securities:
Taxable $177,859 $2,289 5.18%
Tax-exempt 109,375 1,959 7.20%
------- -----
Total securities 287,234 4,248 5.95%
Loans, net (2) 1,794,443 29,408 6.59%
Loans held for sale 31,021 449 5.82%
Federal funds sold 240 1 2.16%
Money market investments 152 - 0.01%
Interest-bearing deposits
in other banks 951 5 2.29%
Other interest-bearing deposits 2,598 16 2.42%
----- --
Total earning assets 2,116,639 34,127 6.48%
------
Allowance for loan losses (20,746)
Total non-earning assets 249,805
-------
Total assets $2,345,698
==========
Liabilities and Stockholders' Equity:
-------------------------------------
Interest-bearing deposits:
Checking $228,009 362 0.64%
Money market savings 207,603 1,149 2.23%
Regular savings 103,047 140 0.54%
Certificates of deposit:
$100,000 and over 439,298 4,348 3.98%
Under $100,000 483,611 4,677 3.89%
------- -----
Total interest-bearing
deposits 1,461,568 10,676 2.94%
Other borrowings 372,073 2,804 3.03%
------- -----
Total interest-bearing
liabilities 1,833,641 13,480 2.96%
------
Noninterest-bearing liabilities:
Demand deposits 277,298
Other liabilities 19,536
------
Total liabilities 2,130,475
Stockholders' equity 215,223
-------
Total liabilities and
stockholders' equity $2,345,698
==========
Net interest income $20,647
=======
Interest rate spread (3) 3.52%
Interest expense as a
percent of average
earning assets 2.56%
Net interest margin 3.92%
For The Three Months Ended June 30,
-----------------------------------
2007
----
Interest
Average Income / Yield /
Balance Expense Rate (1)
-------- ---------- ---------
(Dollars in thousands)
Assets:
-------
Securities:
Taxable $169,359 $2,174 5.15%
Tax-exempt 97,521 1,760 7.24%
------ -----
Total securities 266,880 3,934 5.91%
Loans, net (2) 1,612,164 31,401 7.81%
Loans held for sale 22,332 359 6.45%
Federal funds sold 1,802 122 5.49%
Money market investments 146 1 1.72%
Interest-bearing deposits
in other banks 901 12 5.21%
Other interest-bearing deposits 2,598 35 5.39%
----- --
Total earning assets 1,906,823 35,864 7.54%
------
Allowance for loan losses (18,306)
Total non-earning assets 242,636
-------
Total assets $2,131,153
==========
Liabilities and Stockholders' Equity:
-------------------------------------
Interest-bearing deposits:
Checking $208,068 334 0.64%
Money market savings 154,105 885 2.30%
Regular savings 104,743 200 0.76%
Certificates of deposit:
$100,000 and over 448,728 5,535 4.95%
Under $100,000 451,845 5,086 4.51%
------- -----
Total interest-bearing
deposits 1,367,489 12,040 3.53%
Other borrowings 256,380 3,868 6.05%
------- -----
Total interest-bearing
liabilities 1,623,869 15,908 3.93%
------
Noninterest-bearing liabilities:
Demand deposits 285,414
Other liabilities 17,499
------
Total liabilities 1,926,782
Stockholders' equity 204,371
-------
Total liabilities and
stockholders' equity $2,131,153
==========
Net interest income $19,956
=======
Interest rate spread (3) 3.61%
Interest expense as a
percent of average
earning assets 3.35%
Net interest margin 4.20%
(1) Rates and yields are annualized and calculated from actual, not
rounded amounts in thousands, which appear above.
(2) Nonaccrual loans are included in average loans outstanding.
(3) Income and yields are reported on a taxable equivalent basis using
the statutory federal corporate tax rate of 35%.
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES
(TAXABLE EQUIVALENT BASIS)
For the Six Months Ended June 30,
---------------------------------
2009
----
Interest
Average Income / Yield /
Balance Expense Rate (1)
-------- ---------- ---------
(Dollars in thousands)
Assets:
-------
Securities:
Taxable $239,572 $5,066 4.26%
Tax-exempt 119,082 4,291 7.27%
------- -----
Total securities 358,654 9,357 5.26%
Loans, net (2) 1,870,455 54,720 5.90%
Loans held for sale 45,146 1,011 4.52%
Federal funds sold 304 - 0.19%
Money market investments 98 - 0.00%
Interest-bearing deposits
in other banks 89,294 114 0.26%
Other interest-bearing
deposits 2,598 - 0.00%
----- --
Total earning assets 2,366,549 65,202 5.56%
------
Allowance for loan losses (27,202)
Total non-earning assets 250,661
-------
Total assets $2,590,008
==========
Liabilities and Stockholders' Equity:
-------------------------------------
Interest-bearing deposits:
Checking $200,712 166 0.17%
Money market savings 421,413 5,125 2.45%
Regular savings 97,953 198 0.41%
Certificates of deposit:
$100,000 and over 472,448 8,014 3.42%
Under $100,000 503,204 8,389 3.36%
------- -----
Total interest-bearing
deposits 1,695,730 21,892 2.60%
Other borrowings 317,488 5,031 3.20%
------- -----
Total interest-bearing
liabilities 2,013,218 26,923 2.70%
------
Noninterest-bearing liabilities:
Demand deposits 279,642
Other liabilities 20,977
------
Total liabilities 2,313,837
Stockholders' equity 276,171
-------
Total liabilities and
stockholders' equity $2,590,008
==========
Net interest income $38,279
=======
Interest rate spread (3) 2.86%
Interest expense as a
percent of average
earning assets 2.29%
Net interest margin 3.26%
For the Six Months Ended June 30,
---------------------------------
2008
----
Interest
Average Income / Yield /
Balance Expense Rate (1)
-------- ---------- ---------
(Dollars in thousands)
Assets:
-------
Securities:
Taxable $177,298 $4,577 5.19%
Tax-exempt 108,196 3,890 7.23%
------- -----
Total securities 285,494 8,467 5.96%
Loans, net (2) 1,781,636 60,520 6.83%
Loans held for sale 27,265 726 5.35%
Federal funds sold 1,592 29 3.66%
Money market investments 194 1 0.63%
Interest-bearing deposits
in other banks 1,017 14 2.68%
Other interest-bearing
deposits 2,598 40 3.12%
----- --
Total earning assets 2,099,796 69,797 6.68%
------
Allowance for loan losses (20,180)
Total non-earning assets 249,033
-------
Total assets $2,328,649
==========
Liabilities and Stockholders' Equity:
-------------------------------------
Interest-bearing deposits:
Checking $223,131 $736 0.66%
Money market savings 187,817 2,075 2.22%
Regular savings 102,353 308 0.60%
Certificates of deposit:
$100,000 and over 444,711 9,420 4.26%
Under $100,000 481,870 9,872 4.12%
------- -----
Total interest-bearing
deposits 1,439,882 22,411 3.13%
Other borrowings 381,279 6,814 3.59%
------- -----
Total interest-bearing
liabilities 1,821,161 29,225 3.23%
------
Noninterest-bearing liabilities:
Demand deposits 272,070
Other liabilities 20,582
------
Total liabilities 2,113,813
Stockholders' equity 214,836
-------
Total liabilities and
stockholders' equity $2,328,649
==========
Net interest income $40,572
=======
Interest rate spread (3) 3.45%
Interest expense as a
percent of average
earning assets 2.80%
Net interest margin 3.89%
For the Six Months Ended June 30,
---------------------------------
2007
----
Interest
Average Income / Yield /
Balance Expense Rate (1)
-------- ---------- ---------
(Dollars in thousands)
Assets:
-------
Securities:
Taxable $175,324 $4,505 5.18%
Tax-exempt 96,529 3,502 7.32%
------ -----
Total securities 271,853 8,007 5.94%
Loans, net (2) 1,589,154 61,061 7.75%
Loans held for sale 21,989 660 6.05%
Federal funds sold 2,801 385 5.47%
Money market investments 205 2 1.97%
Interest-bearing deposits
in other banks 1,018 27 5.27%
Other interest-bearing
deposits 2,598 69 5.36%
----- --
Total earning assets 1,889,618 70,211 7.49%
------
Allowance for loan losses (18,704)
Total non-earning assets 237,918
-------
Total assets $2,108,832
==========
Liabilities and Stockholders' Equity:
-------------------------------------
Interest-bearing deposits:
Checking $207,137 652 0.63%
Money market savings 158,008 1,802 2.30%
Regular savings 105,022 426 0.82%
Certificates of deposit:
$100,000 and over 447,017 10,942 4.94%
Under $100,000 452,264 10,078 4.49%
------- ------
Total interest-bearing
deposits 1,369,448 23,900 3.52%
Other borrowings 239,017 7,476 6.31%
------- -----
Total interest-bearing
liabilities 1,608,465 31,376 3.93%
------
Noninterest-bearing liabilities:
Demand deposits 280,430
Other liabilities 17,185
------
Total liabilities 1,906,080
Stockholders' equity 202,752
-------
Total liabilities and
stockholders' equity $2,108,832
==========
Net interest income $38,835
=======
Interest rate spread (3) 3.56%
Interest expense as a
percent of average
earning assets 3.35%
Net interest margin 4.14%
(1) Rates and yields are annualized and calculated from actual, not
rounded amounts in thousands, which appear above.
(2) Nonaccrual loans are included in average loans outstanding.
(3) Income and yields are reported on a taxable equivalent basis using
the statutory federal corporate tax rate of 35%.
SOURCE Union Bankshares Corp.