Union First Market Bankshares Reports Fourth Quarter And Full Year Results

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

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.