Union First Market Bankshares Reports Fourth Quarter And Full Year Results

28 Jan, 2014, 08:00 ET from Union First Market Bankshares Corporation

RICHMOND, Va., Jan. 28, 2014 /PRNewswire/ -- Union First Market Bankshares Corporation (the "Company" or "Union") (NASDAQ: UBSH) today reported net income of $8.1 million and earnings per share of $0.32 for its fourth quarter ended December 31, 2013. Excluding after-tax acquisition-related expenses of $651,000, operating earnings(1) for the quarter were $8.8 million and operating earnings per share(1) was $0.35. The quarterly results represent an increase of $339,000, or 4.0%, in operating earnings from the prior quarter and a decrease of $686,000, or 7.3%, from the quarter ended December 31, 2012. Operating earnings per share of $0.35 for the current quarter increased $0.01, or 2.9%, from the most recent quarter and declined $0.02, or 5.4%, from the prior year's fourth quarter.

(Logo: http://photos.prnewswire.com/prnh/20091027/NE00206LOGO)

For the year ended December 31, 2013 the Company reported net income of $34.5 million and earnings per share of $1.38.  Excluding after-tax acquisition-related expenses of $2.0 million, operating earnings for 2013 were $36.5 million and operating earnings per share was $1.46.  The annual results represent an increase of $1.1 million, or 3.2%, in operating earnings and $0.09 per share, or 6.6%, from 2012 levels.  These fourth quarter and year to date financial results do not include the financial results of StellarOne Corporation ("StellarOne"), which the Company acquired on January 1, 2014, and are prior to the effective date of the merger with StellarOne.

"2013 was a year of significant progress and change at Union and with the closing of the StellarOne acquisition on January 1, 2014, Union became the largest community bank headquartered in Virginia," said G. William Beale, president and chief executive officer of Union First Market Bankshares, "The combination of two of Virginia's largest community banks provides Union with the growth opportunities, asset base and footprint to continue to deliver a best-in-class customer experience, offer superior financial services and solutions, provide a rewarding experience for our teammates and generate top-tier financial performance for our shareholders."

"Union's operating financial performance in the fourth quarter continued to be mixed as the sustained positive performance in the Company's community banking segment was muted by the poor results from our mortgage segment.  The community bank segment turned in another quarter of operating earnings growth fueled by gains in core deposit households, loan growth and improvements in credit quality.  However, overall financial results were negatively impacted by continuing losses from the mortgage business driven by declining mortgage loan originations and the impact of a large, non-recurring indemnification charge in the fourth quarter.  Although not included in Union's 2013 consolidated financial results, StellarOne turned in solid financial results in its final quarter as a stand-alone company driven by strong loan growth and improving credit quality metrics."

"Union remains committed to achieving top-quartile financial performance and providing our shareholders with above average returns on their investment.  In 2014, the company is focused on smoothly integrating StellarOne into Union to achieve cost savings, generating sustainable growth in the combined community banking franchise and returning the mortgage banking segment to profitability as quickly as possible."

Select highlights:

  • The Company's community banking segment reported operating earnings of $10.7 million (or $0.43 per share), an increase of $2.2 million (or $0.10 per share) from the same quarter in the prior year and an increase of $1.0 million (or $0.04 per share) from the prior quarter.  For the year ended December 31, 2013, the community bank segment reported operating earnings of $39.2 million ($1.57 per share), an increase of $6.3 million ($0.30 per share), or 19.3%, from 2012.
  • The Company's mortgage segment reported a net loss of $1.9 million (or $0.08 per share), a decrease of $2.9 million (or $0.12 per share) and $662,000 (or $0.03 per share) from the same quarter in the prior year and the prior quarter, respectively.  For the year ended December 31, 2013, the mortgage segment reported a net loss of $2.7 million ($0.11 per share) compared to net income of $2.5 million ($0.10 per share) during 2012.
  • Operating Return on Average Equity(1) ("ROE")  was 7.89% for the quarter ended December 31, 2013 compared to operating ROE(1) of 8.41% and 7.74% for the same quarter of the prior year and the third quarter of 2013, respectively.  Including current quarter acquisition-related costs, ROE was 7.30%.  The operating ROE(1) of the community bank segment was 9.79% compared to the prior quarter of 9.08% and 7.68% at December 31, 2012. For the year ended December 31 2013, operating ROE for the community bank segment was 9.18% compared to 7.67% for 2012.
  • Operating Return on Average Assets(1) ("ROA") was 0.85% for the quarter ended December 31, 2013 compared to operating ROA(1) of 0.93% and 0.83% for the same quarter of the prior year and the third quarter of 2013, respectively.  Including current quarter acquisition-related costs, ROA was 0.79%.  The operating ROA(1) of the community bank segment was 1.04% compared to the prior quarter of 0.95% and 0.83% at December 31, 2012.  For the year ended December 31, 2013, operating ROA for the community bank segment was 0.97% compared to 0.83% for 2012.
  • Average loans outstanding increased $109.8 million, or 3.8%, in 2013 over 2012.  Ending loan balances increased $37.1 million, or 4.9% on an annualized basis, from the prior quarter.
  • During the quarter, the Company added 1,100 net new core household accounts consistent with growth in the prior quarter and the 4.4% annualized growth rate in 2012.  Deposit balances increased $11.9 million, or 0.4%, from September 30, 2013 while deposit balances declined $60.9 million since year end 2012 primarily due to net run-off in higher cost time deposits.
  • Credit quality metrics continued to improve as nonperforming assets ("NPAs") and the ratio of NPAs compared to total loans declined from the same quarter last year and prior quarter.  

(1)For a reconciliation of the non-GAAP measures operating earnings, ROA, ROE, EPS, and efficiency ratio, see "Alternative Performance Measures (non-GAAP)" section of the Key Financial Results.

 

NET INTEREST INCOME

For the Three Months Ended

Dollars in thousands

12/31/13

09/30/13

Change

12/31/12

Change

Average interest-earning assets

$

3,715,003

$

3,703,449

$

11,554

$

3,732,685

$

(17,682)

Interest income (FTE)

$

44,702

$

44,157

$

545

$

46,272

$

(1,570)

Yield on interest-earning assets

4.77%

4.73%

4

bps

4.93%

(16)

bps

Average interest-bearing liabilities

$

2,900,658

$

2,892,957

$

7,701

$

2,944,086

$

(43,428)

Interest expense

$

4,702

$

4,983

$

(281)

$

6,023

$

(1,321)

Cost of interest-bearing liabilities

0.64%

0.68%

(4)

bps

0.81%

(17)

bps

Cost of funds

0.50%

0.53%

(3)

bps

0.64%

(14)

bps

Net Interest Income (FTE)

$

40,000

$

39,174

$

826

$

40,249

$

(249)

Net Interest Margin (FTE)

4.27%

4.20%

7

bps

4.29%

(2)

bps

Core Net Interest Margin (FTE) (1)

4.24%

4.16%

8

bps

4.22%

2

bps

(1)  Core net interest margin (FTE) excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income.

 

On a linked quarter basis, tax-equivalent net interest income was $40.0 million, an increase of $826,000, or 2.1%, from the third quarter of 2013.  The fourth quarter tax-equivalent net interest margin increased by 7 basis points to 4.27% from 4.20% in the previous quarter.  The increase in net interest margin was principally attributable to the increase in earning asset yields (+4 bps), the decline in cost of funds (+4 bps) and the continued decline in accretion on the acquired net earning assets (-1 bps).  The increase in net interest income was driven by higher average investment balances and higher yields on taxable securities and a decline in the cost of funds.  Loan yields and average balances were largely unchanged from the prior quarter.  Yields on investment securities increased on higher average balances and a higher rate on taxable investments as prepayment speeds slowed. The cost of interest-bearing liabilities declined during the quarter largely driven by lower time deposit account balances.

For the three months ended December 31, 2013, tax-equivalent net interest income decreased $249,000, or 0.6%, when compared to the same period last year.  The tax-equivalent net interest margin decreased by 2 basis points to 4.27% from 4.29% in the prior year.  The decline in net interest margin was principally due to the continued decline in accretion on the acquired net earning assets (-4 bps) and declines in cost of funds exceeding the reduction in earning asset yields (+2 bps).  Lower earning asset interest income was principally due to lower yields on loans as new and renewed loans were originated and repriced at lower rates and cash flows from securities investments reinvested at lower yields.  The decline in the cost of interest-bearing liabilities from the prior year's fourth quarter was driven by a shift in mix from time deposits to demand deposits, reductions in deposit rates and lower wholesale borrowing costs.

The Company continues to believe that net interest margin will decline modestly over the next several quarters as decreases in earning asset yields are projected to outpace declines in interest-bearing liabilities rates.

For the Year Ended

Dollars in thousands

12/31/13

12/31/12

Change

Average interest-earning assets

$

3,716,849

$

3,649,865

$

66,984

Interest income (FTE)

$

177,383

$

186,085

$

(8,702)

Yield on interest-earning assets

4.77%

5.10%

(33)

bps

Average interest-bearing liabilities

$

2,914,139

$

2,922,373

$

(8,234)

Interest expense

$

20,501

$

27,508

$

(7,007)

Cost of interest-bearing liabilities

0.70%

0.94%

(24)

bps

Cost of funds

0.55%

0.76%

(21)

bps

Net Interest Income (FTE)

$

156,882

$

158,577

$

(1,695)

Net Interest Margin (FTE)

4.22%

4.34%

(12)

bps

Core Net Interest Margin (FTE) (1)

4.18%

4.24%

(6)

bps

(1)  Core net interest margin (FTE) excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income.

For the year ended December 31, 2013, tax-equivalent net interest income was $156.9 million, a decrease of $1.7 million, or 1.1%, when compared to the same period last year.  The tax-equivalent net interest margin decreased by 12 basis points to 4.22% from 4.34% in the prior year.  The decline in the net interest margin was principally due to the continued decline in accretion on the acquired net earning assets (-6 bps) and a decline in the yield on interest-earning assets that outpaced the reduction in the cost of funds (-6 bps).  Lower interest-earning asset income was principally due to lower yields on loans as new loans and renewed loans were originated and repriced at lower rates and declining investment securities yields driven by cash flows from securities investments reinvested at lower yields.

The Company's fully taxable equivalent net interest margin includes the impact of acquisition accounting fair value adjustments.  The 2013 and remaining estimated discount/premium and net accretion impact are reflected in the following table (dollars in thousands):

Loan Accretion

Certificates of Deposit

Investment Securities

Borrowings

Total

For the year ended December 31, 2013

$

2,065

$

7

$

15

$

(489)

$

1,598

For the years ending:

2014

1,459

4

-

(489)

974

2015

1,002

-

-

(489)

513

2016

557

-

-

(163)

394

2017

172

-

-

-

172

2018

19

-

-

-

19

Thereafter

132

-

-

-

132

ASSET QUALITY/LOAN LOSS PROVISION

Overview During the fourth quarter, the Company continued to reduce the levels of impaired loans, troubled debt restructurings, past due loans, and nonperforming assets, which were at their lowest levels since the fourth quarter of 2009. Net charge-offs, the related ratio of net charge-offs to total loans, and the loan loss provision also decreased from the same quarter of the previous year.  Net charge-offs increased from the prior quarter due to the charge-off of loans specifically reserved for in prior periods, while the provision decreased from the prior quarter due to lower historical loss factors.  The allowance to nonperforming loans coverage ratio was at its highest level since the first quarter of 2008.  The magnitude of any change in the real estate market and its impact on the Company is still largely dependent upon continued recovery of residential housing and commercial real estate and the pace at which the local economies in the Company's operating markets improve.

Nonperforming Assets ("NPAs") At December 31, 2013, nonperforming assets totaled $49.2 million, a decline of $9.8 million, or 16.6%, from a year ago and a decrease of $6.5 million, or 11.7%, from the third quarter.  In addition, NPAs as a percentage of total outstanding loans declined 37 basis points from 1.99% a year earlier and decreased 23 basis points from 1.85% last quarter to 1.62% in the current quarter.

Nonperforming assets at December 31, 2013 included $15.0 million in nonaccrual loans (excluding purchased impaired loans), a net decrease of $11.2 million, or 42.7%, from December 31, 2012 and a net decrease of $4.9 million, or 24.6%, from the prior quarter.  The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands): 

December 31,

September 30,

June 30,

March 31,

December 31,

2013

2013

2013

2013

2012

Beginning Balance

$

19,941

$

27,022

$

23,033

$

26,206

$

32,159

Net customer payments

(1,908)

(5,574)

(3,196)

(1,715)

(1,898)

Additions

3,077

3,020

7,934

2,694

2,306

Charge-offs

(4,336)

(1,669)

(476)

(2,262)

(3,388)

Loans returning to accruing status

(1,018)

(1,068)

-

(632)

(840)

Transfers to OREO

(721)

(1,790)

(273)

(1,258)

(2,133)

Ending Balance

$

15,035

$

19,941

$

27,022

$

23,033

$

26,206

The following table presents the composition of nonaccrual loans (excluding purchased impaired loans) and the coverage ratio, which is the allowance for loan losses expressed as a percentage of nonaccrual loans, at the quarter ended (dollars in thousands):

December 31,

September 30,

June 30,

March 31,

December 31,

2013

2013

2013

2013

2012

Raw Land and Lots

$

2,560

$

3,087

$

4,573

$

6,353

$

8,760

Commercial Construction

1,596

1,167

5,103

4,547

5,781

Commercial Real Estate

2,212

3,962

2,716

2,988

3,018

Single Family Investment Real Estate

1,689

2,076

2,859

2,117

3,420

Commercial and Industrial

3,848

6,675

7,291

2,261

2,036

Other Commercial

126

472

471

190

193

Consumer

3,004

2,502

4,009

4,577

2,998

Total

$

15,035

$

19,941

$

27,022

$

23,033

$

26,206

Coverage Ratio

200.43%

169.89%

127.06%

149.42%

133.24%

Nonperforming assets at December 31, 2013 also included $34.1 million in OREO, an increase of $1.3 million, or 4.0%, from the prior year and down $1.6 million, or 4.5%, from the prior quarter.  The following table shows the activity in OREO for the quarter ended (dollars in thousands):

December 31,

September 30,

June 30,

March 31,

December 31,

2013

2013

2013

2013

2012

Beginning Balance

$

35,709

$

35,153

$

35,878

$

32,834

$

34,440

Additions

1,326

2,841

1,768

3,607

2,866

Capitalized Improvements

101

266

164

30

22

Valuation Adjustments

(300)

(491)

-

-

(301)

Proceeds from sales

(2,483)

(1,773)

(2,436)

(877)

(4,004)

Gains (losses) from sales

(237)

(287)

(221)

284

(189)

Ending Balance

$

34,116

$

35,709

$

35,153

$

35,878

$

32,834

The additions to OREO were principally related to residential real estate; sales from OREO were principally related to residential and commercial real estate.

The following table presents the composition of the OREO portfolio at the quarter ended (dollars in thousands):

December 31,

September 30,

June 30,

March 31,

December 31,

2013

2013

2013

2013

2012

Land

$

10,310

$

10,310

$

10,310

$

9,861

$

8,657

Land Development

10,904

10,901

10,894

11,023

10,886

Residential Real Estate

7,379

7,995

7,274

7,467

7,939

Commercial Real Estate

5,523

6,370

6,542

6,749

5,352

Former Bank Premises (1)

-

133

133

778

-

Total

$

34,116

$

35,709

$

35,153

$

35,878

$

32,834

(1) Includes closed branch property and land previously held for branch sites.

Included in land development is $9.3 million related to a residential community in the Northern Neck region of Virginia, which includes developed residential lots, a golf course, and undeveloped land.  Foreclosed properties were adjusted to their fair values at the time of each foreclosure and any losses were taken as loan charge-offs against the allowance for loan losses at that time.  OREO asset balances are evaluated at least quarterly by the Bank's Special Asset Loan Committee and any necessary write downs to fair values are recorded as impairment. 

Past Due Loans At December 31, 2013, total accruing past due loans were $26.5 million, or 0.87% of total loans, a decline from $32.4 million, or 1.09% of total loans, a year ago and a decrease from $30.5 million, or 1.02% of total loans, at September 30, 2013. 

Charge-offs For the quarter ended December 31, 2013, net charge-offs of loans were $4.9 million, or 0.65% on an annualized basis, compared to $8.3 million, or 1.11%, for the same quarter last year and $2.3 million, or 0.30%, for the third quarter of 2013.  The increase in charge-offs from the prior quarter related to loans that were previously considered impaired and specifically reserved for in prior periods.  Of the $4.9 million in net charge-offs in the current quarter, $4.7 million, or 96%, related to impaired loans specifically reserved for in the prior period.  Net charge-offs in the current quarter included commercial loans of $3.3 million.  

Provision The provision for loan losses for the current quarter was $1.2 million, a decrease of $2.1 million from the same quarter a year ago and a decrease of $594,000 from the previous quarter.  The decrease in provision for loan losses in the current quarter compared to the prior periods is driven by improving asset quality and the impact of lower historical loss factors.  The provision to loans ratio for the quarter ended December 31, 2013 was 0.16% on an annualized basis compared to 0.44% for the same quarter a year ago and to 0.24% last quarter.

Allowance for Loan Losses The allowance for loan losses ("ALL") as a percentage of the total loan portfolio, adjusted for purchase accounting (non-GAAP), was 1.10% at December 31, 2013, a decrease from 1.35% at December 31, 2012 and 1.25% from the prior quarter.  In acquisition accounting, there is no carryover of previously established allowance for loan losses.  The allowance for loan losses as a percentage of the total loan portfolio was 0.99% at December 31, 2013, 1.18% at December 31, 2012, and 1.13% at September 30, 2013.  The decrease in the allowance and related ratios was primarily attributable to the charge-off of impaired loans specifically reserved for in prior periods and improving credit quality metrics.

Impaired loans have declined from $155.4 million at December 31, 2012 and from $119.2 million at September 30, 2013 to $112.6 million at December 31, 2013.  The nonaccrual loan coverage ratio was at its highest level since the first quarter of 2008 at 200.4% at December 31, 2013, an increase from 133.2% from the same quarter last year and 169.9% at September 30, 2013.  The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on 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. 

Troubled Debt Restructurings ("TDRs")

The total recorded investment in TDRs as of December 31, 2013 was $41.8 million, a decline of $21.7 million, or 34.2%, from $63.5 million at December 31, 2012 and a decrease of $6.1 million, or 12.7%, from $47.9 million at September 30, 2013.  Of the $41.8 million of TDRs at December 31, 2013, $34.5 million, or 82.5%, were considered performing while the remaining $7.3 million were considered nonperforming.  The decline in the TDR balance from the prior year is attributable to $13.6 million being removed from TDR status, $11.6 million in net payments, $2.4 million in transfers to OREO, and $1.9 million in charge-offs, partially offset by additions of $7.8 million.  Loans removed from TDR status represent restructured loans with a market rate of interest at the time of the restructuring, which were performing in accordance with their modified terms for a consecutive twelve month period and that were no longer considered impaired.

The following table shows the Company's performing and nonperforming TDRs by modification type for the quarter ended (dollars in thousands):

December 31,

September 30,

June 30,

March 31,

December 31,

2013

2013

2013

2013

2012

Performing

Modified to interest only, at a market rate

$

1,414

$

1,995

$

1,883

$

2,071

$

1,877

Term modification, at a market rate

24,114

28,243

27,829

30,380

38,974

Term modification, below market rate

6,602

6,659

7,724

7,803

8,227

Interest rate modification, below market rate

2,390

2,390

2,390

2,390

2,390

Total performing

$

34,520

$

39,287

$

39,826

$

42,644

$

51,468

Nonperforming

Modified to interest only, at a market rate

$

592

$

729

$

1,191

$

1,275

$

672

Term modification, at a market rate

2,623

3,395

4,225

2,940

3,653

Term modification, below market rate

4,089

4,489

7,794

7,797

7,666

Total nonperforming

$

7,304

$

8,613

$

13,210

$

12,012

$

11,991

Total performing & nonperforming

$

41,824

$

47,900

$

53,036

$

54,656

$

63,459

 

NONINTEREST INCOME

For the Three Months Ended

Dollars in thousands

12/31/13

09/30/13

$

%

12/31/12

$

%

Noninterest income:

Service charges on deposit accounts

$

2,399

$

2,474

$

(75)

-3.0%

$

2,390

$

9

0.4%

Other service charges, commissions and fees

3,096

3,185

(89)

-2.8%

2,784

312

11.2%

(Losses) gains on securities transactions, net

(26)

5

(31)

NM

185

(211)

NM

Gains on sales of mortgage loans, net of commissions

1,319

2,061

(742)

-36.0%

5,299

(3,980)

-75.1%

Losses on bank premises, net

(3)

(7)

4

NM

(32)

29

NM

Other operating income

1,594

1,498

96

6.4%

1,209

385

31.8%

Total noninterest income

$

8,379

$

9,216

$

(837)

-9.1%

$

11,835

$

(3,456)

-29.2%

Mortgage segment operations

$

(1,320)

$

(2,062)

$

742

-36.0%

$

(5,303)

$

3,983

-75.1%

Intercompany eliminations

167

168

(1)

-0.6%

117

50

42.7%

Community Bank segment

$

7,226

$

7,322

$

(96)

-1.3%

$

6,649

$

577

8.7%

NM - Not Meaningful

On a linked quarter basis, noninterest income decreased $837,000, or 9.1%, to $8.4 million from $9.2 million in the third quarter.  Excluding mortgage segment operations, noninterest income decreased $96,000, or 1.3%.  Service charges on deposit accounts decreased $75,000 primarily related to lower overdraft and returned check fees in the current quarter.  Other service charges decreased $89,000, or 2.8%, due to lower interchange and letter of credit fees in the current quarter.  Gains on sales of mortgage loans, net of commissions, decreased $742,000, or 36.0%, as rising mortgage interest rates led to declines in mortgage loan originations, which decreased by $62.7 million, or 28.6%, in the current quarter to $156.2 million from $218.9 million in the third quarter.  Of the loan originations in the current quarter, 30.7% were refinances, which was up slightly from 28.6% in the third quarter.  Included in the current quarter gain on sale of mortgage loans was a non-recurring charge of $966,000 for indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans.

For the quarter ended December 31, 2013, noninterest income decreased $3.4 million, or 29.2%, to $8.4 million from $11.8 million in the prior year's fourth quarter.  Excluding mortgage segment operations, noninterest income increased $577,000, or 8.7%, from the same period a year ago.  Other service charges, commissions and fees increased $312,000 primarily due to higher net interchange fee income and fees on letters of credit.  Other operating income increased $385,000, or 31.8%, related to increased income on bank owned life insurance.  Gains on sales of mortgage loans, net of commissions, decreased $4.0 million, or 75.1%, primarily due to lower loan origination volume and gain on sale margin compression due to rising mortgage interest rates.  Mortgage loan originations decreased by $175.6 million, or 52.9%, in the current quarter to $156.2 million from $331.8 million in the fourth quarter of 2012.  As noted above, included in the current quarter gain on sale of mortgage loans was a non-recurring charge of $966,000 for indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans. 

For the Year Ended

Dollars in thousands

12/31/13

12/31/12

$

%

Noninterest income:

Service charges on deposit accounts

$

9,492

$

9,033

$

459

5.1%

Other service charges, commissions and fees

12,309

10,898

1,411

12.9%

Gains on securities transactions

21

190

(169)

NM

Gains on sales of mortgage loans, net of commissions

11,900

16,651

(4,751)

-28.5%

(Losses) gains on bank premises

(340)

2

(342)

NM

Other operating income

5,346

4,294

1,052

24.5%

Total noninterest income

$

38,728

$

41,068

$

(2,340)

-5.7%

Mortgage segment operations

$

(11,906)

$

(16,660)

$

4,754

-28.5%

Intercompany eliminations

670

468

202

43.2%

Community Bank segment

$

27,492

$

24,876

$

2,616

10.5%

NM - Not Meaningful

 

For the year ended December 31, 2013, noninterest income decreased $2.4 million, or 5.7%, to $38.7 million, from $41.1 million a year ago.  Excluding mortgage segment operations, noninterest income increased $2.6 million, or 10.5%, from last year.  Service charges on deposit accounts increased $459,000 primarily related to higher overdraft and returned check fees as well as service charges on savings accounts.  Other account service charges and fees increased $1.4 million due to higher net interchange fee income, revenue on retail investment products, and fees on letters of credit. Other operating income increased $1.1 million primarily related to increased income on bank owned life insurance, trust income, and other insurance-related revenues.  Conversely, gains on bank premises decreased $342,000 as the Company recorded a loss in the current year on the closure of bank premises coupled with net gains in the prior year related to sale of bank premises.  Gains on sales of mortgage loans, net of commissions, decreased $4.8 million driven by lower loan origination volume and lower gain on sale margins in 2013.  Mortgage loan originations decreased by $154.8 million, or 14.1%, to $941.4 million in 2013 compared to $1.1 billion in 2012.  Of the loan originations in the current year, 38.9% were refinances compared to 54.3% in 2012.  Lower gain on sale margins were also partly due to reductions resulting from valuation reserves of $363,000 related to aged mortgage loans held-for-sale as well as the non-recurring charge of $966,000 for the indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans.   

NONINTEREST EXPENSE

For the Three Months Ended

Dollars in thousands

12/31/13

09/30/13

$

%

12/31/12

$

%

Noninterest expense:

Salaries and benefits

$

17,076

$

17,416

$

(340)

-2.0%

$

17,620

$

(544)

-3.1%

Occupancy expenses

3,105

2,820

285

10.1%

3,149

(44)

-1.4%

Furniture and equipment expenses

1,633

1,665

(32)

-1.9%

1,811

(178)

-9.8%

OREO and credit-related expenses (1)

1,721

1,601

120

7.5%

1,366

355

26.0%

Acquisition-related expenses

739

473

266

NM

-

739

NM

Other operating expenses

11,101

10,157

944

9.3%

10,390

711

6.8%

Total noninterest expense

$

35,375

$

34,132

$

1,243

3.6%

$

34,336

$

1,039

3.0%

Mortgage segment operations

$

(4,528)

$

(4,396)

$

(132)

3.0%

$

(4,256)

$

(272)

6.4%

Intercompany eliminations

167

168

(1)

-0.6%

117

50

42.7%

Community Bank segment

$

31,014

$

29,904

$

1,110

3.7%

$

30,197

$

817

2.7%

  NM - Not Meaningful

 (1) OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses.

On a linked quarter basis, noninterest expense increased $1.3 million, or 3.6%, to $35.4 million from $34.1 million when compared to the third quarter.  Excluding mortgage segment operations and acquisition-related costs, noninterest expense increased $844,000, or 2.9%, compared to the third quarter.  Occupancy expenses increased $285,000, or 10.1%, primarily related to lease termination costs.  OREO and credit-related costs increased $120,000 from the prior quarter due to increased credit-related legal fees in the current quarter.  Other operating expenses increased $944,000, primarily due to increased legal and litigation-related expenses.  These increases were partially offset by reduced salary-related expenses of $340,000, primarily related to lower levels of incentive compensation and seasonal payroll taxes in the current quarter.

For the quarter ended December 31, 2013, noninterest expense increased $1.0 million, or 3.0%, to $35.4 million from $34.4 million for the fourth quarter of 2012.  Excluding mortgage segment operations and acquisition-related costs, noninterest expense increased $78,000, or 0.3%, compared to the fourth quarter of 2012.  OREO and credit-related costs increased $355,000, as the Company incurred higher credit-related legal fees of $237,000, higher foreclosure and OREO expenses of $70,000, and higher losses on the sales of OREO of $48,000 in the current quarter compared to the same quarter in 2012.  Other operating expenses increased $711,000, mainly due to increased legal and litigation-related expenses.  These increases were partially offset by declines in salaries and benefits expenses of $544,000, primarily related to reduced levels of incentive compensation in the current year, as well as declines in occupancy expenses of $44,000 and furniture and equipment expenses of $178,000, primarily due to branch closures in 2012. 

For the Year Ended

Dollars in thousands

12/31/13

12/31/12

$

%

Noninterest expense:

Salaries and benefits

$

70,369

$

68,648

$

1,721

2.5%

Occupancy expenses

11,543

12,150

(607)

-5.0%

Furniture and equipment expenses

6,884

7,251

(367)

-5.1%

OREO and credit-related expenses (1)

4,880

4,639

241

5.2%

Acquisition-related expenses

2,132

-

2,132

NM

Other operating expenses

41,481

40,791

690

1.7%

Total noninterest expense

$

137,289

$

133,479

$

3,810

2.9%

Mortgage segment operations

$

(17,703)

$

(13,971)

$

(3,732)

26.7%

Intercompany eliminations

670

468

202

43.2%

Community Bank segment

$

120,256

$

119,976

$

280

0.2%

  NM - Not Meaningful

 (1) OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses.

For the year ended December 31, 2013, noninterest expense increased $3.8 million, or 2.9%, to $137.3 million, from $133.5 million a year ago.  Excluding mortgage segment operations and acquisition-related costs of $2.1 million incurred in 2013, noninterest expense declined $1.8 million, or 1.5%, compared to 2012.  Salaries and benefits expense increased $1.7 million due to costs associated with strategic investments in mortgage segment personnel in 2012 and 2013 and severance expense recorded in the current year related to the relocation of Union Mortgage Group, Inc.'s headquarters to Richmond.  Occupancy expenses decreased $607,000 and furniture and equipment expenses declined $367,000, primarily due to branch closures in 2012.  OREO and credit-related expenses increased $241,000, or 5.2%, mainly related to valuation adjustments on OREO property in the current year.  Other operating expenses increased $690,000, or 1.7%, due to increases in legal and litigation-related expenses of $1.2 million and FDIC insurance expenses of $672,000, partially offset by lower amortization expenses of $1.5 million.

BALANCE SHEET

At December 31, 2013, total assets were $4.2 billion, an increase of $129.5 million from September 30, 2013, and an increase of $80.7 million from December 31, 2012.  Total cash and cash equivalents were $73.0 million at December 31, 2013, a decrease of $9.9 million from the same period last year, and a decrease of $2.1 million from September 30, 2013.  Investment in securities increased $91.9 million, or 15.7%, from $585.4 million at December 31, 2012 to $677.3 million at December 31, 2013, and increased $87.9 million from September 30, 2013, related to current quarter purchases (primarily mortgage backed and tax-free municipals) in anticipation of the StellarOne merger.  Mortgage loans held for sale were $53.2 million, a decrease of $114.5 million from December 31, 2012, and a decline of $5.0 million from September 30, 2013.

At December 31, 2013, loans (net of unearned income) were $3.0 billion, an increase of $72.5 million, or 2.4%, from December 31, 2012, and an increase of $37.1 million, or 4.9% on an annualized basis, from September 30, 2013.  Average loans outstanding increased $109.8 million, or 3.8%, year over year and $7.1 million, or 0.2%, from the prior quarter.

As of December 31, 2013, total deposits were $3.2 billion, a decrease of $60.9 million, or 1.8%, when compared to December 31, 2012, and an increase of $11.9 million, or 0.4%, from September 30, 2013.  The decline of year over year deposit totals were driven by decreases in time deposits of $160.9 million, partially offset by an increase of lower cost deposit levels of $45.8 million and an increase of NOW accounts of $43.9 million.  Linked quarter deposit growth was driven by higher NOW accounts of $34.5 million, partially offset by a decrease in other time deposits of $24.6 million.

Net short term borrowings increased $131.7 million (primarily Federal Home Loan Bank of Atlanta "FHLB") from December 31, 2012, as a result of funding the purchases of securities in advance of the StellarOne merger described above.  During the third quarter of 2012, the Company modified its fixed rate convertible FHLB advances to floating rate advances, which resulted in reducing the Company's FHLB borrowing costs.  In connection with this modification, the Company incurred a prepayment penalty of $19.6 million, which is being amortized as a component of interest expense on borrowing over the life of the advances.  The prepayment amount is reported as a component of long-term borrowings in the Company's consolidated balance sheet. 

The Company's capital ratios continued to be considered "well capitalized" for regulatory purposes.  The Company's ratio of total capital to risk-weighted assets was 14.17% and 14.57% on December 31, 2013 and 2012, respectively.  The Company's ratio of Tier 1 capital to risk-weighted assets was 13.05% and 13.14% at December 31, 2013 and 2012, respectively.  The Company's common equity to asset ratios at December 31, 2013 and 2012 were 10.49% and 10.64%, respectively, while its tangible common equity to tangible assets ratio was 8.94% and 8.97% at December 31, 2013 and 2012.  During the first quarter of 2013, the Company entered into an agreement to purchase 500,000 shares of its common stock from Markel Corporation, the Company's largest shareholder, for an aggregate purchase price of $9,500,000, or $19.00 per share.  The repurchase was funded with cash on hand and the shares were retired.  During the second, third, and fourth quarters of 2013, the Company did not repurchase any shares.  The Company's authorization to repurchase an additional 250,000 shares under its current repurchase program authorization expired December 31, 2013.  Also, the Company paid a dividend of $0.14 per share during the current quarter, no change from the prior quarter and an increase of $0.02 per share from the same quarter a year ago.

COMMUNITY BANK SEGMENT INFORMATION

On a linked quarter basis, the community bank segment reported net income of $10.0 million for the fourth quarter, an increase of $821,000 from $9.2 in the third quarter.  Excluding after-tax acquisition-related expenses, net income increased $1.0 million, or 10.3%, from $9.7 million in the prior quarter to $10.7 million in the fourth quarter.   Net interest income was $38.4 million, an increase of $898,000 from $37.5 million in the third quarter of 2013. The increase in net interest income was driven by higher average investment balances and higher yields on taxable securities and a decline in the cost of funds.  In addition, the provision for loan losses declined by $594,000 during the current quarter due to improving asset quality metrics and the impact of lower historical loss factors.

Noninterest income was consistent with the prior quarter at $7.2 million.  Noninterest expense increased $1.1 million, or 3.7%, to $31.0 million from $29.9 million when compared to the third quarter.  Excluding acquisition-related expenses in the current and prior quarters of $739,000 and $473,000, respectively, noninterest expense increased $844,000, or 2.9%, from the prior quarter, primarily due to increased legal and litigation-related expenses.     

For the three months ended December 31, 2013, the community bank segment's net income of $10.0 million increased $1.5 million, or 18.2%, from the prior year's fourth quarter; excluding after-tax acquisition-related costs of $651,000, net income increased $2.2 million, or 25.9%.  Net interest income declined $404,000, or 1.0%, to $38.4 million due to the impact of net interest margin compression partially offset by loan growth.  In addition, the Company's provision for loan losses was $2.1 million lower than the same quarter of the prior year primarily due to continued improvement in asset quality.

Noninterest income increased $577,000, or 8.7%, to $7.2 million from $6.6 million in the prior year's fourth quarter.  Other service charges, commissions and fees increased $312,000, primarily due to higher net interchange fee income and fees on letters of credit.  Other operating income increased $437,000, primarily related to increased income on bank owned life insurance.  Partially offsetting these increases was a decrease in gains on sale of securities of $211,000, as a loss was recognized in the current quarter compared to gains in the fourth quarter of 2012.

Noninterest expense increased $817,000, or 2.7%, to $31.0 million from $30.2 million when compared to the fourth quarter of 2012.  The increase is primarily attributable to acquisition-related costs, which were $739,000 in the current quarter.  Excluding these acquisition-related costs, noninterest expense was consistent with noninterest expense of the fourth quarter of 2012 at $30.3 million, increasing only $78,000, or 0.3%.

For the year ended December 31, 2013, the community bank segment's net income increased $4.3 million, or 13.0%, to $37.2 million when compared to the prior year; excluding after-tax acquisition-related costs of $2.0 million in 2013, net income increased $6.3 million, or 19.3%.  Net interest income decreased $3.0 million, or 2.0%, to $150.0 million when compared to the prior year due to declines in the net interest margin partially offset by loan growth.  In addition, the Company's provision for loan losses was $6.1 million lower than the prior year due to continued improvement in asset quality.

Noninterest income increased $2.6 million, or 10.5%, to $27.5 million from $24.9 million last year.  Service charges on deposit accounts increased $459,000 primarily related to higher overdraft and returned check fees as well as service charges on savings accounts.  Other account service charges and fees increased $1.4 million due to higher net interchange fee income, revenue on retail investment products, and fees on letters of credit.  Other operating income increased $1.3 million primarily related to increased income on bank owned life insurance, trust income, and other insurance-related revenues.  Partially offsetting these increases were decreases in gains on sale of bank premises of $342,000, as a loss was recognized in the current year compared to gains in 2012, and lower net gains on securities of $169,000.

Noninterest expense increased $280,000, or 0.2%, to $120.3 million in 2013 from $120.0 million in 2012.  Excluding acquisition-related costs of $2.1 million in 2013, noninterest expense decreased $1.8 million, or 1.5%, from the prior year.  Salaries and benefits declined $475,000 related to lower stock compensation expense.  Occupancy expenses and furniture and equipment expenses declined $1.2 million and $367,000, respectively, largely due to branch closures that occurred in 2012. 

MORTGAGE SEGMENT INFORMATION

On a linked quarter basis, the mortgage segment reported a net loss of $1.9 million for the fourth quarter compared to a net loss of $1.2 million in the third quarter, representing an increase in losses of $662,000.  The increase in mortgage rates that began in May 2013 continued to negatively affect mortgage loan origination volumes. Due to the higher rate environment as well as lower seasonal demand that impacted the current quarter, both refinance and purchase origination volumes have steadily declined since the second quarter.  Mortgage originations declined $62.7 million, or 28.6%, from $218.9 million in the third quarter to $156.2 million.  Refinance volume, excluding construction loan conversions, decreased $14.7 million, or 23.5%, to $47.9 million, and represented 30.7% of total originations in the fourth quarter. 

Gains on sales of  mortgage loans, net of commissions decreased $742,000, or 36.0%, to $1.3 million from $2.1 million in the third quarter.  Included in gains on sale revenue was a non-recurring $966,000 charge for indemnification claims of third party loan purchasers related to prior period errors in mortgage insurance premium calculations in certain mortgage loans originated pursuant to insured loan programs administered by the United States Department of Agriculture, as previously discussed in the Company's Form 10-Q as of and for the quarter ended September 30, 2013.  Excluding this indemnification accrual, gains on sales of loans increased $224,000, or 10.9%, reflecting higher gain on sale margins experienced in the fourth quarter compared to the third quarter, and reflective of a more stable interest rate environment. 

For the three months ended December 31, 2013, the mortgage segment reported a net loss of $1.9 million compared to net income of $981,000 for the same period last year, representing a decline of $2.9 million.  Mortgage loan originations decreased by $175.6 million, or 52.9%, to $156.2 million from $331.8 million in the prior year driven by higher mortgage interest rates and lower refinance loan demand.  Refinance volume decreased $141.2 million, or 74.7%, from $189.1 million in the fourth quarter of 2012, which represented 57.0% of total originations, to $47.9 million in the current quarter, which represented 30.7% of total originations. 

During the current quarter, the Company recorded gains on the sale of mortgage loans, net of commission expenses, of $1.3 million, which were $4.0 million, or 75.1%, lower than the same period last year.  The current quarter's gain on sale of mortgage loans, net of commissions includes the non-recurring $966,000 charge for indemnification claims described above.  Excluding this accrual, net gain on sale revenue decreased $3.0 million, or 56.9%, from the same period last year, primarily due to lower loan origination volumes and gain on sale margin compression driven by the higher interest rate environment in the current quarter. Also, in addition to the indemnification claim described above, indemnification reserves arising from the normal course of selling loans to investors was higher than the comparable prior year quarter by $325,000.

For the year ended December 31, 2013, the mortgage segment incurred a net loss of $2.7 million compared to net income of $2.5 million during the prior year, representing a decline of $5.2 million.  Mortgage loan originations decreased by $154.8 million, or 14.1%, to $941.4 million from $1.1 billion during the prior year due to the higher interest rate environment in the second half of 2013 compared to the lower interest rate environment for the full year 2012.  The impact of the interest rate environment was offset by a full year impact of the additional mortgage loan officers added in the first half of 2012. 

Gains on sales of mortgage loans, net of commission expenses, decreased 28.5%, or $4.8 million, and included the non-recurring $966,000 charge for indemnification claims described above.  Excluding this accrual, net gains on sales of loans decreased $3.8 million, or 22.7%, driven by the 14.1% drop in mortgage loan originations at lower margins. 

Expenses increased by $3.7 million, or 26.7%, over last year primarily due to increases in salary and benefit expenses of $2.2 million related to the addition of mortgage loan originators and support personnel in 2012, investments made in the current year to enhance the mortgage segment's operating capabilities, and severance related to the relocation of the mortgage segment's headquarters to Richmond.  In addition, increases in expenses included higher rent expense of $563,000 related to annual rent increases, lease termination costs, and the headquarters relocation, loan-related expenses of $236,000, primarily related to appraisal and credit reporting expenses, and professional fees of $200,000.

While management continues to recalibrate the mortgage segment's cost structure to align with declining mortgage origination levels, in the near term, the return to profitability in the mortgage segment is dependent on increased mortgage production volumes and/or higher gain on sale margins. 

STELLARONE INFORMATION

StellarOne's reported net income was $25.9 million in 2013, an increase of $3.7 million from net income of $22.2 million in 2012.  Excluding after-tax acquisition-related costs of $1.9 million, StellarOne's 2013 operating earnings were $27.8 million, an increase of $5.6 million, or 25.2%, compared to $22.2 million in 2012.  The increase in year over year operating earnings was driven by increases in net interest income as a result of robust loan growth as well as continued credit quality improvements which resulted in a negative loan loss provision in 2013. 

StellarOne's fourth quarter reported earnings increased $1.0 million to $7.3 million from $6.3 million in the third quarter of 2013.  Excluding after-tax acquisition-related costs of $577,000, operating earnings increased $1.1 million, or 16.2%, in the current quarter to $7.9 million from operating earnings of $6.8 million in the third quarter of 2013.  The primary drivers of the linked quarter earnings increase were continued asset quality improvements resulting in a reduction in the provision for loan losses of $2.1 million partially offset by declines in the gain on sale of mortgage loans, net of commissions, of $331,000.

Average loan balances increased $37.0 million, or 6.6 % annualized, on a linked quarter basis to $2.29 billion and increased by $206.0 million, or 9.8%, as compared to the fourth quarter of 2012.

* * * * * * *

ABOUT UNION FIRST MARKET BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation (NASDAQ: UBSH) is the holding company for Union First Market Bank, which has 90 branches and more than 150 ATMs throughout Virginia and StellarOne Bank, which has 54 branches and more than 60 ATMs throughout Virginia as well as trust and wealth management services.  Non-bank affiliates of the holding company include: Union Investment Services, Inc., which provides full brokerage services; Union Mortgage Group, Inc., which provides a full line of mortgage products; and Union Insurance Group, LLC, which offers various lines of insurance products. 

Additional information on the Company is available at http://investors.bankatunion.com

MERGER WITH STELLARONE CORPORATION

On January 1, 2014, the Company completed its previously announced acquisition of StellarOne Corporation. The Company plans to combine the banking subsidiaries, Union First Market Bank and StellarOne Bank, in May of 2014.

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 and 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," "intend," "will," or words of similar meaning 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 and bank industry conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, changes in the stock and bond markets, accounting standards or interpretations of existing standards, mergers and acquisitions, technology, and consumer spending and savings habits.  More information is available on the Company's website, http://investors.bankatunion.com and on the Securities and Exchange Commission's website, www.sec.gov.  The information on the Company's website is not a part of this press release.  The Company does not intend or assume any obligation to update or revise any forward-looking statements that may be made from time to time by or on behalf of the Company. 

 

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

KEY FINANCIAL RESULTS

(in thousands, except share data)

Three Months Ended

Year Ended

12/31/13

09/30/13

12/31/12

12/31/13

12/31/12

Results of Operations

Interest and dividend income

$

43,315

$

42,841

$

45,183

$

172,127

$

181,863

Interest expense

4,702

4,983

6,023

20,501

27,508

Net interest income

38,613

37,858

39,160

151,626

154,355

Provision for loan losses

1,206

1,800

3,300

6,056

12,200

Net interest income after provision for loan losses

37,407

36,058

35,860

145,570

142,155

Noninterest income

8,379

9,216

11,835

38,728

41,068

Noninterest expenses

35,375

34,132

34,336

137,289

133,479

Income before income taxes

10,411

11,142

13,359

47,009

49,744

Income tax expense

2,306

3,196

3,917

12,513

14,333

Net income

$

8,105

$

7,946

$

9,442

$

34,496

$

35,411

Interest earned on loans (FTE)

$

38,930

$

39,083

$

40,981

$

156,301

$

162,955

Interest earned on securities (FTE)

5,769

5,071

5,286

21,064

23,067

Interest earned on earning assets (FTE)

44,702

44,157

46,272

177,383

186,085

Net interest income (FTE)

40,000

39,174

40,249

156,882

158,577

Interest expense on certificates of deposit

2,244

2,556

3,424

10,721

15,015

Interest expense on interest-bearing deposits

3,064

3,371

4,362

14,097

19,446

Core deposit intangible amortization

919

921

1,188

3,797

4,936

Net income - community bank segment

$

10,002

$

9,181

$

8,461

$

37,155

$

32,866

Net income - mortgage segment

(1,897)

(1,235)

981

(2,659)

2,545

Key Ratios

Return on average assets (ROA)

0.79%

0.78%

0.93%

0.85%

0.89%

Return on average equity (ROE)

7.30%

7.31%

8.41%

7.91%

8.13%

Return on average tangible common equity (ROTCE)

8.73%

8.79%

10.13%

9.51%

9.89%

Efficiency ratio (FTE)

73.12%

70.54%

65.92%

70.19%

66.86%

Efficiency ratio - community bank segment (FTE)

66.02%

64.86%

64.93%

65.81%

65.88%

Efficiency ratio - mortgage bank segment (FTE)

288.43%

179.05%

74.72%

130.58%

77.66%

Net interest margin (FTE)

4.27%

4.20%

4.29%

4.22%

4.34%

Net interest margin, core (FTE) (1)

4.24%

4.16%

4.22%

4.18%

4.24%

Yields on earning assets (FTE)

4.77%

4.73%

4.93%

4.77%

5.10%

Cost of interest-bearing liabilities (FTE)

0.64%

0.68%

0.81%

0.70%

0.94%

Cost of funds

0.50%

0.53%

0.64%

0.55%

0.76%

Noninterest expense less noninterest income / average assets

2.63%

2.45%

2.21%

2.43%

2.32%

Capital Ratios

Tier 1 risk-based capital ratio

13.05%

13.13%

13.14%

13.05%

13.14%

Total risk-based capital ratio

14.17%

14.40%

14.57%

14.17%

14.57%

Leverage ratio (Tier 1 capital to average assets)

10.70%

10.62%

10.52%

10.70%

10.52%

Common equity to total assets

10.49%

10.72%

10.64%

10.49%

10.64%

Tangible common equity to tangible assets

8.94%

9.09%

8.97%

8.94%

8.97%

 

Three Months Ended

Year Ended

12/31/13

09/30/13

12/31/12

12/31/13

12/31/12

Per Share Data

Earnings per common share, basic

$

0.32

$

0.32

$

0.37

$

1.38

$

1.37

Earnings per common share, diluted

0.32

0.32

0.37

1.38

1.37

Cash dividends paid per common share

0.14

0.14

0.12

0.54

0.37

Market value per share

24.81

23.37

15.77

24.81

15.77

Book value per common share

17.56

17.52

17.30

17.56

17.30

Tangible book value per common share

14.69

14.60

14.31

14.69

14.31

Price to earnings ratio, diluted

19.54

18.41

10.71

17.98

11.51

Price to book value per common share ratio

1.41

1.33

0.91

1.41

0.91

Price to tangible common share ratio

1.69

1.60

1.10

1.69

1.10

Weighted average common shares outstanding, basic

24,939,360

24,894,664

25,809,667

24,975,077

25,872,316

Weighted average common shares outstanding, diluted

25,028,760

24,962,976

25,854,623

25,030,711

25,900,863

Common shares outstanding at end of period

24,976,434

24,916,425

25,270,970

24,976,434

25,270,970

Financial Condition

Assets

$

4,176,571

$

4,047,108

$

4,095,865

$

4,176,571

$

4,095,865

Loans, net of unearned income

3,039,368

3,002,246

2,966,847

3,039,368

2,966,847

Earning Assets

3,802,870

3,678,772

3,752,089

3,802,870

3,752,089

Goodwill

59,400

59,400

59,400

59,400

59,400

Core deposit intangibles, net

11,980

12,900

15,778

11,980

15,778

Deposits

3,236,842

3,224,925

3,297,767

3,236,842

3,297,767

Stockholders' equity

438,239

433,671

435,863

438,239

435,863

Tangible common equity

366,859

361,371

360,652

366,859

360,652

Averages

Assets

$

4,075,443

$

4,037,930

$

4,058,455

$

4,052,068

$

3,975,225

Loans, net of unearned income

3,004,186

2,997,083

2,935,214

2,985,733

2,875,916

Loans held for sale

50,819

97,993

157,177

105,450

104,632

Securities

650,351

598,852

628,626

614,858

642,973

Earning assets

3,715,003

3,703,449

3,732,685

3,716,849

3,649,865

Deposits

3,232,688

3,240,983

3,252,380

3,255,626

3,203,178

Certificates of deposit

892,164

934,302

1,066,492

961,359

1,099,252

Interest-bearing deposits

2,536,769

2,567,160

2,627,741

2,591,423

2,625,438

Borrowings

363,889

325,797

316,345

322,716

296,935

Interest-bearing liabilities

2,900,658

2,892,957

2,944,086

2,914,139

2,922,373

Stockholders' equity

440,344

431,312

446,603

436,064

435,774

Tangible common equity

368,523

358,569

370,775

362,859

357,984

 

Three Months Ended

Year Ended

12/31/13

09/30/13

12/31/12

12/31/13

12/31/12

Asset Quality

Allowance for Loan Losses (ALL)

Beginning balance

$

33,877

$

34,333

$

39,894

$

34,916

$

39,470

Add: Recoveries

889

337

340

2,781

1,711

Less: Charge-offs

5,837

2,593

8,618

13,618

18,465

Add: Provision for loan losses

1,206

1,800

3,300

6,056

12,200

Ending balance

$

30,135

$

33,877

$

34,916

$

30,135

$

34,916

ALL / total outstanding loans

0.99%

1.13%

1.18%

0.99%

1.18%

ALL / total outstanding loans, adjusted for purchase accounting (2)

1.10%

1.25%

1.35%

1.10%

1.35%

Net charge-offs / total outstanding loans

0.65%

0.30%

1.11%

0.36%

0.56%

Provision / total outstanding loans

0.16%

0.24%

0.44%

0.20%

0.41%

Nonperforming Assets

Commercial

$

12,031

$

17,439

$

23,208

$

12,031

$

23,208

Consumer

3,004

2,502

2,998

3,004

2,998

Nonaccrual loans

15,035

19,941

26,206

15,035

26,206

Other real estate owned

34,116

35,709

32,834

34,116

32,834

Total nonperforming assets (NPAs)

49,151

55,650

59,040

49,151

59,040

Commercial

3,087

3,107

3,191

3,087

3,191

Consumer

3,659

4,219

5,652

3,659

5,652

Loans ≥ 90 days and still accruing

6,746

7,326

8,843

6,746

8,843

Total nonperforming assets and loans ≥ 90 days

$

55,897

$

62,976

$

67,883

$

55,897

$

67,883

NPAs / total outstanding loans

1.62%

1.85%

1.99%

1.62%

1.99%

NPAs / total assets

1.18%

1.38%

1.44%

1.18%

1.44%

ALL / nonperforming loans

200.43%

169.89%

133.24%

200.43%

133.24%

ALL / nonperforming assets

61.31%

60.88%

59.14%

61.31%

59.14%

Past Due Detail

Commercial

$

1,017

$

4,287

$

929

$

1,017

$

929

Consumer

2,330

2,896

3,748

2,330

3,748

Loans 60-89 days past due

$

3,347

$

7,183

$

4,677

$

3,347

$

4,677

Commercial

$

3,839

$

5,575

$

5,643

$

3,839

$

5,643

Consumer

12,592

10,424

13,195

12,592

13,195

Loans 30-59 days past due

$

16,431

$

15,999

$

18,838

$

16,431

$

18,838

Commercial

$

2,732

$

3,031

$

3,594

$

2,732

$

3,594

Consumer

890

920

971

890

971

Purchased impaired

$

3,622

$

3,951

$

4,565

$

3,622

$

4,565

Mortgage Origination Volume

Refinance Volume

$

47,887

$

62,625

$

189,119

$

366,262

$

595,033

Construction Volume

25,248

33,522

23,500

119,383

67,564

Purchase Volume

83,043

122,741

119,170

455,766

433,598

Total Mortgage loan originations

$

156,178

$

218,888

$

331,789

$

941,411

$

1,096,195

% of originations that are refinances

30.70%

28.60%

57.00%

38.90%

54.30%

Other Data

End of period full-time employees

1,024

1,015

1,044

1,024

1,044

Number of full-service branches

90

90

90

90

90

Number of full automatic transaction machines (ATMs)

154

154

155

154

155

 

Three Months Ended

Year Ended

12/31/13

09/30/13

12/31/12

12/31/13

12/31/12

Alternative Performance Measures (non-GAAP)

Operating Earnings (non-GAAP) (3)

Net Income (GAAP)

$

8,105

$

7,946

$

9,442

$

34,496

$

35,411

Plus: Merger and conversion related expense, after tax

651

471

-

2,042

-

Net operating earnings (loss) (non-GAAP)

$

8,756

$

8,417

$

9,442

$

36,538

$

35,411

Operating earnings per share - Basic

$

0.35

$

0.34

$

0.37

$

1.46

$

1.37

Operating earnings per share - Diluted

0.35

0.34

0.37

1.46

1.37

Operating ROA

0.85%

0.83%

0.93%

0.90%

0.89%

Operating ROE

7.89%

7.74%

8.41%

8.38%

8.13%

Operating ROTCE

9.43%

9.31%

10.13%

10.07%

9.89%

Community Bank Segment Operating Earnings (non-GAAP) (3)

Net Income (GAAP)

$

10,002

$

9,181

$

8,461

$

37,155

$

32,866

Plus: Merger and conversion related expense, after tax

651

471

-

2,042

-

Net operating earnings (loss) (non-GAAP)

$

10,653

$

9,652

$

8,461

$

39,197

$

32,866

Operating earnings per share - Basic

$

0.43

$

0.39

$

0.33

$

1.57

$

1.27

Operating earnings per share - Diluted

0.43

0.39

0.33

1.57

1.27

Operating ROA

1.04%

0.95%

0.83%

0.97%

0.83%

Operating ROE

9.79%

9.08%

7.68%

9.18%

7.67%

Operating ROTCE

11.73%

10.97%

9.29%

11.08%

9.37%

Operating Efficiency Ratio FTE (non-GAAP) (3)

Net Interest Income (GAAP)

$

38,613

$

37,858

$

39,160

$

151,626

$

154,355

FTE adjustment

1,387

1,316

1,089

5,256

4,222

Net Interest Income (FTE)

$

40,000

39,174

40,249

156,882

158,577

Noninterest Income (GAAP)

8,379

9,216

11,835

38,728

41,068

Noninterest Expense (GAAP)

$

35,375

$

34,132

$

34,336

$

137,289

$

133,479

Merger and conversion related expense

739

473

-

2,132

-

Noninterest Expense (Non-GAAP)

$

34,636

$

33,659

$

34,336

$

135,157

$

133,479

Operating Efficiency Ratio FTE (non-GAAP)

71.59%

69.56%

65.92%

69.10%

66.86%

Community Bank Segment Operating Efficiency Ratio FTE (non-GAAP) (3)

Net Interest Income (GAAP)

$

38,363

$

37,465

$

38,767

$

149,975

$

153,024

FTE adjustment

1,387

1,315

1,090

5,256

4,223

Net Interest Income (FTE)

$

39,750

38,780

39,857

155,231

157,247

Noninterest Income (GAAP)

7,226

7,322

6,649

27,492

24,876

Noninterest Expense (GAAP)

$

31,014

$

29,904

$

30,197

$

120,256

$

119,976

Merger and conversion related expense

739

473

-

2,132

-

Noninterest Expense (Non-GAAP)

$

30,275

$

29,431

$

30,197

$

118,124

$

119,976

Operating Efficiency Ratio FTE (non-GAAP)

64.45%

63.84%

64.93%

64.65%

65.88%

Tangible Common Equity (4)

Ending equity

$

438,239

$

433,671

$

435,863

$

438,239

$

435,863

Less: Ending trademark intangible

-

-

33

-

33

Less: Ending goodwill

59,400

59,400

59,400

59,400

59,400

Less: Ending core deposit intangibles

11,980

12,900

15,778

11,980

15,778

Ending tangible common equity

$

366,859

$

361,371

$

360,652

$

366,859

$

360,652

Average equity

$

440,344

$

431,312

$

446,603

$

436,064

$

435,774

Less: Average trademark intangible

-

-

82

1

231

Less: Average goodwill

59,400

59,400

59,400

59,400

59,400

Less: Average core deposit intangibles

12,421

13,343

16,346

13,804

18,159

Average tangible common equity

$

368,523

$

358,569

$

370,775

$

362,859

$

357,984

 

Three Months Ended

Year Ended

12/31/13

09/30/13

12/31/12

12/31/13

12/31/12

ALL to loans, adjusted for purchase accounting (non-GAAP)(2)

Allowance for loan losses

$

30,135

$

33,877

$

34,916

$

30,135

$

34,916

Remaining credit mark on purchased loans

3,341

3,780

5,350

3,341

5,350

Adjusted allowance for loan losses

33,476

37,657

40,266

33,476

40,266

Loans, net of unearned income

3,039,368

3,002,246

2,966,847

3,039,368

2,966,847

Remaining credit mark on purchased loans

3,341

3,780

5,350

3,341

5,350

Adjusted loans, net of unearned income

$

3,042,709

$

3,006,026

$

2,972,197

$

3,042,709

$

2,972,197

ALL / gross loans, adjusted for purcahse accounting

1.10%

1.25%

1.35%

1.10%

1.35%

 

(1)  The core net interest margin, fully taxable equivalent ("FTE") excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income.

(2) The allowance for loan losses, adjusted for purchase accounting (non-GAAP) ratio includes an adjustment for the credit mark on purchased performing loans.  The purchased performing loans are reported net of the related credit mark in loans, net of unearned income, on the balance sheet; therefore, the credit mark is added back to the balance to represent the total loan portfolio.  The adjusted allowance for loan losses, including the credit mark, represents the total reserve on the Company's loan portfolio.  GAAP requires the acquired allowance for loan losses not be carried over in an acquisition or merger.  The Company believes the presentation of the allowance for loan losses, adjusted for purchase accounting ratio is useful to investors because the acquired loans were purchased at a market discount with no allowance for loan losses carried over to the Company and the credit mark on the purchased performing loans represents the allowance associated with those purchased loans.  The Company believes that this measure is a better reflection of the reserves on the Company's loan portfolio.

(3) The Company has provided supplemental performance measures which the Company believes may be useful to investors as they exclude non-operating adjustments resulting from acquisition and allow investors to see the combined economic results of the organization. These measures are a supplement to GAAP used to prepare the Company's financial statements and should not be viewed as a substitute for GAAP measures. In addition, the Company's non-GAAP measures may not be comparable to non-GAAP measures of other companies.

(4) Tangible common equity is used in the calculation of certain capital and per share ratios.  The Company believes tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses.

 

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

December 31,

December 31,

2013

2012

ASSETS

(Unaudited)

(Audited)

Cash and cash equivalents:

Cash and due from banks

$

66,090

$

71,426

Interest-bearing deposits in other banks

6,781

11,320

Money market investments

1

1

Federal funds sold

151

155

Total cash and cash equivalents

73,023

82,902

Securities available for sale, at fair value

677,348

585,382

Restricted stock, at cost

26,036

20,687

Loans held for sale

53,185

167,698

Loans, net of unearned income

3,039,368

2,966,847

Less allowance for loan losses

30,135

34,916

Net loans

3,009,233

2,931,931

Bank premises and equipment, net

82,815

85,409

Other real estate owned, net of valuation allowance

34,116

32,834

Core deposit intangibles, net

11,980

15,778

Goodwill

59,400

59,400

Other assets

149,435

113,844

Total assets

$

4,176,571

$

4,095,865

LIABILITIES

Noninterest-bearing demand deposits

691,674

645,901

Interest-bearing deposits:

NOW accounts

498,068

454,150

Money market accounts

940,215

957,130

Savings accounts

235,034

207,846

Time deposits of $100,000 and over

427,597

508,630

Other time deposits

444,254

524,110

Total interest-bearing deposits

2,545,168

2,651,866

Total deposits

3,236,842

3,297,767

Securities sold under agreements to repurchase

52,455

54,270

Other short-term borrowings

211,500

78,000

Trust preferred capital notes

60,310

60,310

Long-term borrowings

139,049

136,815

Other liabilities

38,176

32,840

Total liabilities

3,738,332

3,660,002

Commitments and contingencies

STOCKHOLDERS' EQUITY

Common stock, $1.33 par value, shares authorized 36,000,000;       issued and outstanding, 24,976,434 shares and 25,270,970 shares, respectively.

33,020

33,510

Surplus

170,770

176,635

Retained earnings

236,639

215,634

Accumulated other comprehensive (loss) income

(2,190)

10,084

Total stockholders' equity

438,239

435,863

Total liabilities and stockholders' equity

$

4,176,571

$

4,095,865

 

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

Three Months Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

Interest and dividend income:

Interest and fees on loans

$

38,741

$

40,894

$

155,547

$

162,637

Interest on Federal funds sold

-

-

1

1

Interest on deposits in other banks

3

5

17

62

Interest and dividends on securities:

Taxable

2,345

2,424

8,202

11,912

Nontaxable

2,226

1,860

8,360

7,251

Total interest and dividend income

43,315

45,183

172,127

181,863

Interest expense:

Interest on deposits

3,064

4,362

14,097

19,446

Interest on federal funds purchased

27

21

89

50

Interest on short-term borrowings

95

74

265

234

Interest on long-term borrowings

1,516

1,566

6,050

7,778

Total interest expense

4,702

6,023

20,501

27,508

Net interest income

38,613

39,160

151,626

154,355

Provision for loan losses

1,206

3,300

6,056

12,200

Net interest income after provision for loan losses

37,407

35,860

145,570

142,155

Noninterest income:

Service charges on deposit accounts

2,399

2,390

9,492

9,033

Other service charges, commissions and fees

3,096

2,784

12,309

10,898

Gains (losses) on securities transactions, net

(26)

185

21

190

Gains on sales of mortgage loans, net of commissions

1,319

5,299

11,900

16,651

Gains (losses) on sales of bank premises

(3)

(32)

(340)

2

Other operating income

1,594

1,209

5,346

4,294

Total noninterest income

8,379

11,835

38,728

41,068

Noninterest expenses:

Salaries and benefits

17,076

17,620

70,369

68,648

Occupancy expenses

3,105

3,149

11,543

12,150

Furniture and equipment expenses

1,633

1,811

6,884

7,251

Other operating expenses

13,561

11,756

48,493

45,430

Total noninterest expenses

35,375

34,336

137,289

133,479

Income before income taxes

10,411

13,359

47,009

49,744

Income tax expense

2,306

3,917

12,513

14,333

Net income

$

8,105

$

9,442

$

34,496

$

35,411

Earnings per common share, basic

$

0.32

$

0.37

$

1.38

$

1.37

Earnings per common share, diluted

$

0.32

$

0.37

$

1.38

$

1.37

 

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

(Dollars in thousands)

Community Bank

Mortgage

Eliminations

Consolidated

Three Months Ended December 31, 2013

Net interest income

$

38,363

$

250

$

-

$

38,613

Provision for loan losses

1,206

-

-

1,206

Net interest income after provision for loan losses

37,157

250

-

37,407

Noninterest income

7,226

1,320

(167)

8,379

Noninterest expenses

31,014

4,528

(167)

35,375

Income before income taxes

13,369

(2,958)

-

10,411

Income tax expense

3,367

(1,061)

-

2,306

Net income

$

10,002

$

(1,897)

$

-

$

8,105

Plus:  Merger and conversion related expense, after tax

651

-

-

651

Net operating earnings (loss) (non-GAAP)

$

10,653

$

(1,897)

$

-

$

8,756

Total assets

$

4,170,682

$

63,715

$

(57,826)

$

4,176,571

Three Months Ended December 31, 2012

Net interest income

$

38,767

$

393

$

-

$

39,160

Provision for loan losses

3,300

-

-

3,300

Net interest income after provision for loan losses

35,467

393

-

35,860

Noninterest income

6,649

5,303

(117)

11,835

Noninterest expenses

30,197

4,256

(117)

34,336

Income before income taxes

11,919

1,440

-

13,359

Income tax expense

3,458

459

-

3,917

Net income

$

8,461

$

981

$

-

$

9,442

Total assets

$

4,081,544

$

187,836

$

(173,515)

$

4,095,865

Year Ended December 31, 2013

Net interest income

$

149,975

$

1,651

$

-

$

151,626

Provision for loan losses

6,056

-

-

6,056

Net interest income after provision for loan losses

143,919

1,651

-

145,570

Noninterest income

27,492

11,906

(670)

38,728

Noninterest expenses

120,256

17,703

(670)

137,289

Income before income taxes

51,155

(4,146)

-

47,009

Income tax expense

14,000

(1,487)

-

12,513

Net income

$

37,155

$

(2,659)

$

-

$

34,496

Plus:  Merger and conversion related expense, after tax

2,042

-

-

2,042

Net operating earnings (loss) (non-GAAP)

$

39,197

$

(2,659)

$

-

$

36,538

Total assets

$

4,170,682

$

63,715

$

(57,826)

$

4,176,571

Year Ended December 31, 2012

Net interest income

$

153,024

$

1,331

$

-

$

154,355

Provision for loan losses

12,200

-

-

12,200

Net interest income after provision for loan losses

140,824

1,331

-

142,155

Noninterest income

24,876

16,660

(468)

41,068

Noninterest expenses

119,976

13,971

(468)

133,479

Income before income taxes

45,724

4,020

-

49,744

Income tax expense

12,858

1,475

-

14,333

Net income

$

32,866

$

2,545

$

-

$

35,411

Total assets

$

4,081,544

$

187,836

$

(173,515)

$

4,095,865

 

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

For the Three Months Ended December 31,

2013

2012

Average Balance

Interest Income / Expense

Yield / Rate (1)

Average Balance

Interest Income / Expense

Yield / Rate (1)

(Dollars in thousands)

Assets:

Securities:

Taxable

$

411,927

$

2,345

2.26%

$

438,399

$

2,424

2.20%

Tax-exempt

238,424

3,424

5.70%

190,227

2,862

5.98%

Total securities (2)

650,351

5,769

3.52%

628,626

5,286

3.35%

Loans, net (3) (4)

3,004,186

38,455

5.08%

2,935,214

39,831

5.40%

Loans held for sale

50,819

475

3.71%

157,177

1,150

2.91%

Federal funds sold

298

-

0.17%

352

-

0.24%

Money market investments

1

-

0.00%

(25)

-

0.00%

Interest-bearing deposits in other banks

9,348

3

0.13%

11,341

5

0.16%

Other interest-bearing deposits

-

-

0.00%

-

-

0.00%

Total earning assets

3,715,003

44,702

4.77%

3,732,685

46,272

4.93%

Allowance for loan losses

(33,435)

(40,058)

Total non-earning assets

393,875

365,828

Total assets

$

4,075,443

$

4,058,455

Liabilities and Stockholders' Equity:

Interest-bearing deposits:

Checking

$

481,152

93

0.08%

$

431,267

98

0.09%

Money market savings

929,816

547

0.23%

925,309

690

0.30%

Regular savings

233,637

180

0.31%

204,673

150

0.29%

Time deposits: (5)

$100,000 and over

436,252

1,200

1.09%

535,519

1,814

1.35%

Under $100,000

455,912

1,044

0.91%

530,973

1,610

1.21%

Total interest-bearing deposits

2,536,769

3,064

0.48%

2,627,741

4,362

0.66%

Other borrowings (6)

363,889

1,638

1.79%

316,345

1,661

2.09%

Total interest-bearing liabilities

2,900,658

4,702

0.64%

2,944,086

6,023

0.81%

Noninterest-bearing liabilities:

Demand deposits

695,919

624,639

Other liabilities

38,522

43,127

Total liabilities

3,635,099

3,611,852

Stockholders' equity

440,344

446,603

Total liabilities and stockholders' equity

$

4,075,443

$

4,058,455

Net interest income

$

40,000

$

40,249

Interest rate spread (7)

4.13%

4.12%

Interest expense as a percent of average earning assets

0.50%

0.64%

Net interest margin (8)

4.27%

4.29%

(1) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.

(2) Interest income on securities includes $0 and $46 thousand for the three months ended December 31, 2013 and 2012 in accretion of the fair market value adjustments.

(3) Nonaccrual loans are included in average loans outstanding.

(4) Interest income on loans includes $495 thousand and $717 thousand for the three months ended December 31, 2013 and 2012 in accretion of the fair market value adjustments related to the acquisitions.

(5) Interest expense on certificates of deposits includes $2 thousand for both the three months ended December 31, 2013 and 2012 in accretion of the fair market value adjustments related to the acquisitions.

(6) Interest expense on borrowings includes $122 thousand for both the three months ended December 31, 2013 and 2012 in amortization of the fair market value adjustments related to acquisitions.

(7) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.

(8) Core net interest margin excludes purchase accounting adjustments and was 4.24% and 4.22% for the three months ended December 31, 2013 and 2012.

 

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

For the Year Ended December 31,

2013

2012

Average Balance

Interest Income / Expense

Yield / Rate (1)

Average Balance

Interest Income / Expense

Yield / Rate (1)

(Dollars in thousands)

Assets:

Securities:

Taxable

$

391,804

$

8,202

2.09%

$

462,996

$

11,912

2.57%

Tax-exempt

223,054

12,862

5.77%

179,977

11,155

6.20%

Total securities (2)

614,858

21,064

3.43%

642,973

23,067

3.59%

Loans, net (3) (4)

2,985,733

152,868

5.12%

2,875,916

159,682

5.55%

Loans held for sale

105,450

3,433

3.26%

104,632

3,273

3.13%

Federal funds sold

421

1

0.22%

365

1

0.24%

Money market investments

1

-

0.00%

-

-

0.00%

Interest-bearing deposits in other banks

10,386

17

0.17%

25,979

62

0.24%

Other interest-bearing deposits

-

-

0.00%

-

-

0.00%

Total earning assets

3,716,849

177,383

4.77%

3,649,865

186,085

5.10%

Allowance for loan losses

(34,533)

(40,460)

Total non-earning assets

369,752

365,820

Total assets

$

4,052,068

$

3,975,225

Liabilities and Stockholders' Equity:

Interest-bearing deposits:

Checking

$

461,594

351

0.08%

$

419,550

445

0.11%

Money market savings

942,127

2,345

0.25%

909,408

3,324

0.37%

Regular savings

226,343

680

0.30%

197,228

662

0.34%

Time deposits: (5)

$100,000 and over

473,244

5,751

1.22%

540,501

7,957

1.47%

Under $100,000

488,115

4,970

1.02%

558,751

7,058

1.26%

Total interest-bearing deposits

2,591,423

14,097

0.54%

2,625,438

19,446

0.74%

Other borrowings (6)

322,716

6,404

1.98%

296,935

8,062

2.72%

Total interest-bearing liabilities

2,914,139

20,501

0.70%

2,922,373

27,508

0.94%

Noninterest-bearing liabilities:

Demand deposits

664,203

577,740

Other liabilities

37,662

39,338

Total liabilities

3,616,004

3,539,451

Stockholders' equity

436,064

435,774

Total liabilities and stockholders' equity

$

4,052,068

$

3,975,225

Net interest income

$

156,882

$

158,577

Interest rate spread (7)

4.07%

4.16%

Interest expense as a percent of average earning assets

0.55%

0.76%

Net interest margin (8)

4.22%

4.34%

(1) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.

(2) Interest income on securities includes $15 thousand and $201 thousand for the year ended December 31, 2013 and 2012 in accretion of the fair market value adjustments.

(3) Nonaccrual loans are included in average loans outstanding.

(4) Interest income on loans includes $2.1 million and $3.7 million for the year ended December 31, 2013 and 2012 in accretion of the fair market value adjustments related to the acquisitions.

(5) Interest expense on certificates of deposits includes $7 thousand and $233 thousand for the year ended December 31, 2013 and 2012 in accretion of the fair market value adjustments related to the acquisitions.

(6) Interest expense on borrowings includes $489 thousand for both the years ended December 31, 2013 and 2012 in amortization of the fair market value adjustments related to acquisitions.

(7) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.

(8) Core net interest margin excludes purchase accounting adjustments and was 4.18% and 4.24% for the year ended December 31, 2013 and 2012.

 

STELLARONE CORPORATION

KEY FINANCIAL RESULTS

(in thousands)

Three Months Ended

Year  Ended

12/31/13

09/30/13

12/31/12

12/31/13

12/31/12

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

Results of Operations

Interest and dividend income

$

28,431

$

28,332

$

28,321

$

112,709

$

115,056

Interest expense

3,440

3,494

4,118

14,409

18,479

Net interest income

24,991

24,838

24,203

98,300

96,577

Provision for loan losses

(1,862)

200

1,400

(1,347)

5,550

Net interest income after provision for loan losses

26,853

24,638

22,803

99,647

91,027

Noninterest income

6,847

7,162

9,417

29,275

34,343

Noninterest expenses

23,414

22,820

23,754

92,257

95,128

Income before income taxes

10,286

8,980

8,466

36,665

30,242

Income tax expense

2,944

2,691

2,245

10,806

8,079

Net income

7,342

6,289

6,221

25,859

22,163

After tax merger costs

577

525

-

1,934

-

Operating net income (Non-GAAP)

$

7,919

$

6,814

$

6,221

$

27,793

$

22,163

Net interest margin (FTE)

3.68%

3.70%

3.75%

3.72%

3.80%

Financial Condition

Assets

$

3,070,652

$

3,082,227

$

3,023,204

$

3,070,652

$

3,023,204

Loans, net of unearned income

2,283,535

2,264,733

2,080,068

2,283,535

2,080,068

Earning Assets

2,759,418

2,767,152

2,709,183

2,759,418

2,709,183

Goodwill

114,167

114,167

113,652

114,167

113,652

Core deposit intangibles, net

2,408

2,728

3,462

2,408

3,462

Deposits

2,469,121

2,446,381

2,484,324

2,469,121

2,484,324

Stockholders' equity

433,313

430,716

431,642

433,313

431,642

Tangible common equity

316,738

313,821

314,528

316,738

314,528

Averages

Loans, net of unearned income

$

2,290,743

$

2,253,777

$

2,084,741

$

2,217,570

$

2,064,552

Deposits

2,459,255

2,453,139

2,433,728

2,456,976

2,413,658

 

SOURCE Union First Market Bankshares Corporation



RELATED LINKS

http://www.ubsh.com