Union First Market Bankshares Reports Third Quarter Results

RICHMOND, Va., Oct. 22, 2012 /PRNewswire/ -- Union First Market Bankshares Corporation (the "Company") (NASDAQ: UBSH) today reported net income of $9.6 million and earnings per share of $0.37 for its third quarter ended September 30, 2012.  The quarterly results represent an increase of $1.2 million, or 14.3%, in net income from the most recent quarter and an increase of $555,000, or 6.1%, from the same quarter of the prior year.  Reported earnings per share of $0.37 for the current quarter represents an increase of $0.05, or 15.6%, from the most recent quarter and $0.04, or 12.1%, from the prior year's third quarter which included preferred dividends and discount accretion on preferred stock of $528,000

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"The third quarter results show the continued success of our business strategy as well as the early results of our teammates efficiency ratio improvement efforts as Union strives to achieve top quartile financial performance nationally and provide our shareholders with above average returns on their investment," said G. William Beale, Chief Executive Officer of Union First Market Bankshares.  "We remain committed to delivering top tier financial performance by increasing revenues through new products and services, with loan and deposit growth and disciplined pricing as well as pursuing opportunities to more efficiently deliver best in class service to our customers, diligently managing our overall expense base and continuing our efforts to improve asset quality." 

"During the quarter, we analyzed our branch network and decided to close 4 branches by the end of the year, which will reduce expenses while maintaining our strong customer relationships.  On the bank side, our growth strategy continues to show results with more than 750 net new households joining Union during the quarter bringing total new households to nearly 3,000 year-to-date.  The company experienced loan growth for the fourth consecutive quarter and continued strong growth at Union Mortgage.  Finally, asset quality trends continue to improve as non-performing loan and OREO balance levels continued to decline in the latest quarter.  All in all, it was another solid quarter for Union and one that we expect to build upon to show even more progress in the quarters ahead," Beale concluded.

Select highlights:

  • The Company earned a Return on Average Equity ("ROE") of 8.70% and Return on Average Assets ("ROA") of 0.96% for the quarter ended September 30, 2012.  This represents continued improvement in ROE and ROA compared to 7.84% and 0.86%, respectively, for the quarter ended June 30, 2012 and 8.02% and 0.93% respectively, for the quarter ended September 30, 2011.
  • Gains on sales of mortgage loans increased $1.6 million from the prior quarter due to a $65.7 million, or 25.5%, increase in origination volume as mortgage rates remain at historic low levels and the additional mortgage loan originators added in 2012 continued to ramp up to full production capacity.
  • Nonperforming assets ("NPAs") decreased $8.4 million, or 11.2%, from the second quarter and decreased $19.8 million, or 22.9%, compared to the same period a year ago.  NPAs as a percentage of total outstanding loans declined 31 basis points to 2.29% from 2.60% last quarter and 78 basis points from 3.07% a year earlier.
  • Loan demand continued to improve modestly with an increase in loans outstanding of $20.7 million, or 0.7% (2.9% annualized rate), from the prior quarter.

Third quarter net income increased $1.2 million, or 14.3%, compared to the second quarter.  The increase was largely a result of gains on sales of mortgage loans, driven by higher loan production volume and increased net interest income. The increase in net interest income was driven by higher earning asset balances partially offset by the impact of lower net interest margin.  In addition, the Company's provision for loan losses was $600,000 lower than the prior quarter. 

Net income for the quarter ended September 30, 2012 increased $555,000, or 6.1%, from the same quarter in the prior year.  The increase was principally a result of higher gains on sales of mortgage loans, increased service charges, commissions and fees and a $1.2 million lower provision for loan losses, partially offset by an increase in commission expense related to mortgage loan origination volume.  In addition, net interest income decreased as interest income declined at a faster pace than interest expense, a result of lower loan yields and investment opportunities in the current low rate environment.

NET INTEREST INCOME



Three Months Ended




Dollars in thousands




09/30/12


06/30/12


Change



09/30/11


Change















Average interest-earning assets


$       3,671,398


$       3,615,718


$         55,680



$    3,538,752


$       132,646


Interest income


$            46,555


$            46,340


$              215



$         48,673


$          (2,118)


Yield on interest-earning assets


5.04%


5.15%


(11)

bps


5.46%


(42)

bps

Average interest-bearing liabilities


$       2,925,322


$       2,910,987


$         14,335



$    2,873,721


$         51,601


Interest expense


$              6,740


$              7,215


$             (475)



$           8,159


$          (1,419)


Cost of interest-bearing liabilities


0.92%


1.00%


(8)

bps


1.13%


(21)

bps

Net Interest Income (FTE)


$            39,815


$            39,125


$              690



$         40,514


$             (699)


Net Interest Margin (FTE)


4.31%


4.36%


(5)

bps


4.54%


(23)

bps

 

On a linked quarter basis, tax-equivalent net interest income was $39.8 million, an increase of $690,000, or 1.8%, from the second quarter of 2012.  This increase was principally due to higher loan balances offset by the impact of lower net interest margin.  Third quarter tax-equivalent net interest margin declined by 5 basis points to 4.31% from 4.36% in the most recent quarter.  The change in net interest margin was principally attributable to the continued decline in net accretion on the acquired net earning assets (3 bps) and lower investment and loan yields outpacing the reduction in the cost of interest-bearing liabilities (2 bps). Loan yields continue to be negatively affected by competitive pricing and a low rate environment while yields on investment securities were impacted by lower reinvestment rates and faster prepayments related to mortgage-backed securities during the quarter.  The cost of interest-bearing deposits declined during the quarter driven by a shift in mix from time deposits to transaction deposits, reductions in deposit rates and lower wholesale borrowing costs.

For the three months ended September 30, 2012, tax-equivalent net interest income decreased $699,000, or 1.7%, when compared to the same period last year.  The tax-equivalent net interest margin decreased by 23 basis points to 4.31% from 4.54% in the prior year.  This decrease was principally due to the continued decline in accretion on the acquired net earning assets (12 bps) and the decline in interest-earning asset yields exceeding the decrease in interest-bearing liabilities rates (11 bps). Lower interest-earning asset income was principally due to lower yields on loans as new and renewed loans are originated and repriced at lower rates, faster prepayments on mortgage backed securities, and cash flows from securities investments reinvested at lower yields. 

The Company continues to expect that its 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.

 



Year-over-year results




Dollars in thousands




Nine Months Ended 




09/30/12


09/30/11


Change










Average interest-earning assets


$       3,622,057


$       3,494,013


$       128,044


Interest income


$          139,814


$          146,012


$          (6,198)


Yield on interest-earning assets


5.16%


5.59%


(43)

bps

Average interest-bearing liabilities


$       2,915,082


$       2,864,620


$         50,462


Interest expense


$            21,485


$            24,884


$          (3,399)


Cost of interest-bearing liabilities


0.99%


1.16%


(17)

bps

Net Interest Income (FTE)


$          118,329


$          121,128


$          (2,799)


Net Interest Margin (FTE)


4.36%


4.63%


(27)

bps

 

For the nine months ended September 30, 2012, tax-equivalent net interest income decreased $2.8 million, or 2.3%, when compared to the same period last year.  The tax-equivalent net interest margin decreased by 27 basis points to 4.36% from 4.63% 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 (9 bps) and a decline in income from interest-earning assets outpacing lower costs on interest-bearing liabilities (18 bps). Lower interest-earning asset income was principally due to lower yields on loans and investment securities as new loans and renewed loans are originated and repriced at lower rates, faster prepayments on mortgage backed securities, and cash flows from securities investments are reinvested at lower yields. 

Acquisition Activity – Impact on Net Interest Margin

The favorable impact of acquisition accounting fair value adjustments on net interest income was $752,000 ($627,000 – First Market Bank ("FMB"); $125,000Harrisonburg Branch) and $3.0 million ($2.5 million – FMB; $503,000Harrisonburg Branch) for the three and nine months ended September 30, 2012, respectively.  If not for this favorable impact, the net interest margin for the third quarter would have been 4.23%, compared to 4.25% from the second quarter of 2012 and 4.34% from the third quarter of 2011. 

The third quarter and remaining estimated discount/premium are reflected in the following table (dollars in thousands):

 





Harrisonburg Branch


 First Market Bank  
























Loan Accretion


Certificates of Deposit


Loan Accretion


Investment Securities


Borrowings


Certificates of Deposit


Total


















For the quarter ended September 30, 2012

$        122


$             3


$          703


$           46


$        (122)


$            -


$        752

For the remaining three months of 2012

95


2


652


46


(122)


-


673

For the years ending:















2013




148


7


2,142


15


(489)


-


1,823

2014




37


4


1,511


-


(489)


-


1,063

2015




26


-


903


-


(489)


-


440

2016




27


-


345


-


(163)


-


209

2017




23


-


18


-


-


-


41

Thereafter



120


-


-


-


-


-


120

ASSET QUALITY/LOAN LOSS PROVISION

Overview

During the third quarter, the Company continued to experience improvement in asset quality.  Improving market conditions in the Company's local markets led to a reduction in both OREO and nonaccrual loans, which are at their lowest levels since the fourth quarter of 2009. The Company's reduction in nonperforming assets and troubled debt restructurings, favorable trends in provisions for loan losses, and decreased allowance to total loans ratio demonstrate that its diligent efforts to improve asset quality are having a positive impact.  The allowance to nonperforming loans coverage ratio has continued to increase significantly and is at its highest level since the fourth quarter of 2009.  The magnitude of any change in the real estate market and its impact on the Company is still largely dependent upon continued recovery of commercial real estate and residential housing and the pace at which the local economies in the Company's operating markets improve.

Nonperforming Assets ("NPAs")

At September 30, 2012, nonperforming assets totaled $66.6 million, a decrease of $8.4 million, or 11.2%, from the second quarter and a decrease of $19.8 million, or 22.9%, from a year ago.  In addition, NPAs as a percentage of total outstanding loans declined 31 basis points from 2.60% in the second quarter and 78 basis points from 3.07% in the third quarter of the prior year to 2.29% at September 30, 2012.  The current quarter decrease in NPAs from the second quarter related to a net decrease in nonaccrual loans, excluding purchased impaired loans, of $7.0 million as well as a net decrease in OREO of $1.4 million.

Nonperforming assets at September 30, 2012 included $32.2 million in nonaccrual loans (excluding purchased impaired loans), a net decrease of $7.0 million, or 17.9%, from the prior quarter.  The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands): 


September 30,

2012


June 30, 2012


March 31,

2012


December 31,

2011


September 30,

2011

Beginning Balance

$         39,171


$  42,391


$   44,834


$        51,965


$        54,322

Net customer payments

(5,774)


(3,174)


(2,778)


(6,556)


(2,343)

Additions

2,586


2,568


2,805


5,364


1,751

Charge-offs

(3,012)


(561)


(1,549)


(2,304)


(1,268)

Loans returning to accruing status

(812)


(1,803)


-


(1,950)


(497)

Transfers to OREO

-


(250)


(921)


(1,685)


-

Ending Balance

$         32,159


$  39,171


$   42,391


$        44,834


$        51,965

The nonperforming loans added during the quarter were principally related to commercial loans as borrowers continued to experience financial difficulties with the prolonged economic recovery exhausting their cash reserves and other repayment sources. 

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):


September 30,

2012


June 30, 2012


March 31,

2012


December 31,

2011


September 30,

2011

Raw Land and Lots

$          10,995


$  12,139


$   13,064


$        13,322


$          15,997

Commercial Construction

7,846


9,763


9,835


10,276


9,818

Commercial Real Estate

2,752


5,711


6,299


7,993


9,204

Single Family Investment Real Estate

4,081


3,476


4,507


5,048


7,969

Commercial and Industrial

2,678


4,715


5,318


5,297


4,000

Other Commercial

195


231


233


238


259

Consumer

3,612


3,136


3,135


2,660


4,718

Total

$          32,159


$  39,171


$   42,391


$        44,834


$          51,965











Coverage Ratio

124.05%


104.63%


94.84%


88.04%


79.46%

 

Impairment analyses provided appropriate reserves on these nonperforming loans while appropriate reserves on homogenous pools continue to be maintained.  The increase in the coverage ratio is primarily related to a decline in nonperforming loans.

Nonperforming assets at September 30, 2012 also included $34.4 million in OREO, a net decrease of $1.4 million, or 3.9%, from the prior quarter.  The following table shows the activity in OREO for the quarter ended (dollars in thousands):


September 30, 2012


June 30, 2012


March 31, 2012


December 31, 2011


September 30, 2011

Beginning Balance

$        35,802


$  37,663


$   32,263


$        34,464


$         36,935

Additions

929


3,887


6,593


2,543


449

Capitalized Improvements

16


23


319


197


241

Valuation Adjustments

-


-


-


(530)


-

Proceeds from sales

(2,071)


(5,592)


(1,485)


(3,674)


(3,285)

Gains (losses) from sales

(236)


(179)


(27)


(737)


124

Ending Balance

$        34,440


$  35,802


$   37,663


$        32,263


$         34,464

The additions to OREO were principally related to closed branch property and residential real estate; sales from OREO were principally related to residential lots and land, land previously held for branch sites, and commercial property. 

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

 


September 30, 2012


June 30, 2012


March 31, 2012


December 31, 2011


September 30, 2011


Land

$           6,953


$    6,953


$     6,327


$           6,327


$           8,559


Land Development

11,034


11,313


11,559


11,309


11,824


Residential Real Estate

9,729


10,431


12,482


11,024


11,903


Commercial Real Estate

5,640


6,085


6,275


2,583


1,158


Former Bank Premises (1)

1,084


1,020


1,020


1,020


1,020


Total

$         34,440


$  35,802


$   37,663


$          32,263


$         34,464


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













Included in land development is $9.1 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 valuations are also evaluated at least quarterly by the Bank's Special Asset Loan Committee and any necessary write downs to fair values are recorded as impairment. 

Accruing Past Due Loans

At September 30, 2012, total accruing past due loans were $39.0 million, or 1.34% of total loans, an increase from 1.15% at June 30, 2012 and but down from 1.61% a year ago.  The increase in past due loans from the prior quarter is attributable to the addition of three large credit relationships previously identified as impaired and evaluated within the Company's allowance for loan losses methodology.

Charge-offs

For the quarter ended September 30, 2012, net charge-offs of loans were $3.5 million, or 0.48% on an annualized basis, compared to $2.2 million, or 0.31%, for the second quarter and $1.9 million, or 0.27%, for the same quarter last year.  The uptick in charge-offs from the prior quarter and prior year quarter relate to loans that were previously considered impaired and specifically reserved for in prior periods.  Of the $3.5 million in net charge-offs, $2.9 million, or 83%, related to impaired loans which had $3.3 million in reserves or credit mark assigned to them.  Net charge-offs in the current quarter included commercial loans of $2.7 million and consumer loans of $800,000

For the nine months ended September 30, 2012, net charge-offs of loans were $8.5 million, or 0.39% on an annualized basis, compared to $11.5 million, or 0.55%, for the nine months ended September 30, 2011.  The decrease in charge-offs is related to the reduced levels of nonperforming loans, as management continues to proactively manage problem credits.

Provision

The provision for loan losses for the current quarter was $2.4 million, a decrease of $600,000 from the second quarter and decline of $1.2 million from the same quarter a year ago.  The lower provision is largely due to the charge off of loans that had been reserved for in earlier periods. 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. 

The allowance for loan losses as a percentage of the total loan portfolio was 1.37% at September 30, 2012, 1.42% at June 30, 2012, and 1.47% at September 30, 2011.  The decrease in the allowance and related ratio was primarily attributable to the charge off of loans specifically reserved for in prior periods.  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, adjusted for loans acquired in the FMB and Harrisonburg Branch acquisitions, was 1.66% at September 30, 2012, a decrease from 1.74% at June 30, 2012 and 1.94% from year ago.    The nonaccrual loan coverage ratio significantly improved, as it increased from 104.63% at June 30, 2012 and from 79.46% the same quarter last year to 124.05% at September 30, 2012.  The rise in the coverage ratio, which is at the highest level since the fourth quarter of 2009, further shows that management's proactive diligence in working through problem credits is having a positive impact on asset quality. 

Troubled Debt Restructurings ("TDRs")

The total recorded investment in TDRs as of September 30, 2012 was $63.8 million, a decrease of $16.4 million, or 20.5%, from $80.2 million at June 30, 2012 and a decline of $52.6 million, or 45.2%, from $116.4 million at September 30, 2011.  Of the $63.8 million of TDRs at September 30, 2012, $51.9 million, or 81.4%, were considered performing while the remaining $11.9 million were considered nonperforming.  The decline in the TDR balance from the prior quarter is attributable to $11.0 million being removed from TDR status and $6.4 million in net payments, partially offset by additions of $1.0 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):


September 30, 2012


June 30, 2012


March 31, 2012


December 31, 2011


September 30, 2011

Performing










Modified to interest only

$             1,437


$   2,191


$          1,812


$             699


$             839

Term modification, at a market rate

39,195


53,905


75,455


87,920


91,039

Term modification, below market rate

8,911


9,004


8,797


10,215


10,254

Interest rate modification, below market rate

2,390


2,390


-


-


-

Total performing

$           51,933


$  67,490


$        86,064


$         98,834


$       102,132











Nonperforming










Modified to interest only

$               920


$      642


$            649


$           1,190


$             658

Term modification, at a market rate

3,288


3,451


4,290


3,660


4,187

Term modification, below market rate

7,672


8,587


8,804


8,954


9,398

Total nonperforming

$           11,880


$  12,680


$        13,743


$         13,804


$        14,243











Total performing & nonperforming

$           63,813


$  80,170


$        99,807


$       112,638


$       116,375

 

NONINTEREST INCOME 


 For the Three Months Ended  


 Dollars in thousands 


09/30/12

06/30/12

$

%

09/30/11

$

%

Noninterest income:








Service charges on deposit accounts

$      2,222

$      2,291

(69)

-3.0%

$    2,294

$         (72)

-3.1%

Other service charges, commissions and fees

3,655

3,627

28

0.8%

3,254

401

12.3%

Losses (gains) on securities transactions, net

(1)

10

(11)

NM

499

(500)

NM

Other-than-temporary impairment losses

-

-

-

0.0%

(400)

400

NM

Gains on sales of loans

8,918

7,315

1,603

21.9%

4,861

4,057

83.5%

Gains (losses) on bank premises, net

(309)

374

(683)

NM

(16)

(293)

NM

Other operating income

1,067

972

95

9.8%

919

148

16.1%

Total noninterest income

$    15,552

$    14,589

$         963

6.6%

$  11,411

$      4,141

36.3%









NM - Not Meaningful








On a linked quarter basis, noninterest income increased $963,000, or 6.6%, to $15.6 million from $14.6 million in the second quarter.  Of this increase, gains on sales of mortgage loans increased $1.6 million or 21.9% driven by an increase in loan origination volume as mortgage rates remain attractive at historic lows.  Gains on bank premises decreased $683,000 largely due to a sale of a former branch building at a gain in the prior quarter, and a write down on a former branch location in the current quarter.  Service charges on deposit accounts and other account fees were largely unchanged from the prior quarter.  Excluding mortgage segment operations and the impact of current and prior period bank property sales, noninterest income was comparatively unchanged, increasing 0.7%.

For the quarter ended September 30, 2012, noninterest income increased $4.1 million, or 36.3%, to $15.6 million from $11.4 million in the prior year's third quarter.  Gains on sales of mortgage loans increased $4.1 million, or 83.5%, due to higher origination volume, a result of additional loan originators hired in 2012 and historically low interest rates.  Service charges on deposit accounts and other account fees increased $329,000 or 5.9%, driven by higher interchange fee income and higher brokerage commissions.  Gains on securities transactions decreased $500,000 as a result of a gain on the sale of municipal securities in the prior year. Also, an other-than-temporary loss of $400,000 related to a single issuer Trust Preferred security was recorded in the prior year.  Gains on bank premises decreased $309,000 largely due to a write down of a former branch building during the current quarter.  Excluding the mortgage segment operations and the impact of prior period securities transactions and bank premises transactions, noninterest income increased $478,000, or 7.3%, from the same period a year ago.







 For the Nine  Months Ended 


 Dollars in thousands 


09/30/12

09/30/11

$

%

Noninterest income:





Service charges on deposit accounts

$      6,643

$      6,568

75

1.1%

Other service charges, commissions and fees

10,692

9,529

1,163

12.2%

Losses (gains) on securities transactions, net

4

483

(479)

NM

Other-than-temporary impairment losses

-

(400)

400

NM

Gains on sales of loans

21,529

14,132

7,397

52.3%

Gains (losses) on bank premises, net

34

(644)

678

NM

Other operating income

3,084

2,715

369

13.6%

Total noninterest income

$    41,986

$    32,383

$    9,603

29.7%






NM - Not Meaningful





 

For the nine months ending September 30, 2012, noninterest income increased $9.6 million, or 29.7%, to $42.0 million, from $32.4 million a year ago.  Gains on sales of loans in the mortgage segment increased $7.4 million driven by an increase in loan origination volume, a result of additional loan originators hired in 2012 and historically low interest rates.  Service charges on deposit accounts and other account fees increased $1.2 million primarily related to higher interchange fee income, higher brokerage commissions, and higher ATM fee income.  In addition, gains on bank premises increased $678,000 as the Company sold a former branch building and recorded a loss on the sale of $626,000 during 2011.  Gains on securities transactions decreased $479,000 as a result of a gain on the sale of municipal securities in the prior year. Also, an other-than-temporary loss of $400,000 related to a single issuer Trust Preferred security was recorded in the prior year.  Excluding the mortgage segment operations, prior period securities transactions, and the impact of the bank premises related transactions, noninterest income increased $1.6 million or 8.4%, from the same period a year ago.

NONINTEREST EXPENSE










 For the Three Months Ended  


 Dollars in thousands 


09/30/12

06/30/12

$

%

09/30/11

$

%

Noninterest expense:








Salaries and benefits

$    21,279

$    20,418

$      861

4.2%

$  18,076

$    3,203

17.7%

Occupancy expenses

3,262

3,092

170

5.5%

2,885

377

13.1%

Furniture and equipment expenses

1,809

1,868

(59)

-3.2%

1,756

53

3.0%

OREO and related costs(1)

1,036

1,310

(274)

-20.9%

532

504

94.7%

Other operating expenses

10,932

11,256

(324)

-2.9%

11,255

(323)

-2.9%

Total noninterest expense

$    38,318

$    37,944

$      374

1.0%

$  34,504

3,814

11.1%

Mortgage segment operations

$     (7,839)

$     (6,820)

$  (1,019)

14.9%

$   (4,361)

$  (3,478)

79.8%

Intercompany eliminations

117

117

-

0.0%

116

1

0.9%


$    30,596

$    31,241

$     (645)

-2.1%

$  30,259

$      337

1.1%

  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 $374,000, or 1.0%, to $38.3 million from $37.9 million when compared to the second quarter.  This increase was primarily driven by salaries and benefit expense, which increased $861,000 due to higher commission expense related to increased loan origination volume in the mortgage segment.  Offsetting this increase was a decline in other operating expenses of $324,000 which included lower marketing and advertising expenses, lower employee travel costs, and lower account processing expenses.  In addition, OREO and related costs declined $274,000, or 20.9%, due to the Company's continued proactive diligence in resolving problem credits.  Excluding the mortgage segment operations, noninterest expense declined $645,000 or 2.1% compared to the second quarter.

For the quarter ended September 30, 2012, noninterest expense increased $3.8 million, or 11.1%, to $38.3 million from $34.5 million for the third quarter of 2011.  Salaries and benefits expenses increased $3.2 million primarily related to increased mortgage origination volume driven commissions and the costs associated with the addition of mortgage loan originators and support personnel in 2012.  Occupancy expenses increased $377,000 primarily driven by increased mortgage office space.  OREO related costs increased $504,000 from the prior year's third quarter primarily as a result of current quarter losses on the sale of OREO compared to OREO gains recorded in the prior year.  These increases were partially offset by lower other operating expenses of $323,000, related to lower FDIC insurance expense and declining amortization on the acquired deposit portfolio.  Excluding the mortgage segment operations and prior year conversion costs, noninterest expense increased $337,000, or 1.1%, compared to the third quarter of 2011.







 For the Nine Months Ended 



 Dollars in thousands 



09/30/12

09/30/11

$

%

Noninterest expense:





Salaries and benefits

$    61,204

$    53,310

$    7,894

14.8%

Occupancy expenses

9,001

8,307

694

8.4%

Furniture and equipment expenses

5,440

5,097

343

6.7%

OREO and related costs(1)

3,273

3,389

(115)

-3.4%

Other operating expenses

32,979

35,502

(2,524)

-7.1%

Total noninterest expense

$   111,897

$   105,605

6,292

6.0%

Mortgage segment operations

$   (19,891)

$   (13,614)

$  (6,277)

46.1%

Acquisition and conversion costs

-

(426)

426

NM

Intercompany eliminations

351

351

-

0.0%


$    92,357

$    91,916

$      441

0.5%

(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 nine months ending September 30, 2012, noninterest expense increased $6.3 million, or 6.0% to $111.9 million, from $105.6 million a year ago.  Salaries and benefits expense increased $7.9 million due to higher mortgage loan origination related commission expense, the addition of mortgage loan originators and support personnel hired in 2012, group insurance cost increases, and severance payments to affected employees.  Occupancy costs increased $694,000 due to bank branch rent increases and additional office space in the mortgage segment, and furniture and equipment expense increased $343,000, primarily related to equipment maintenance contracts and software amortization.  Partially offsetting these cost increases were other operating expenses which decreased $2.5 million, or 7.1%.  Included in the reduction of other operating expenses was a $2.1 million reduction in FDIC insurance due to change in base assessment and rate, lower amortization on the acquired deposit portfolio of $926,000, and a decrease in conversion costs of $426,000 related to acquisition activity during the prior year.  Excluding the mortgage segment operations and prior year conversion costs, noninterest expense increased $441,000, or 0.5%, compared to the same period in 2011.

BALANCE SHEET

At September 30, 2012, total assets were $4.0 billion, an increase of $45.9 million compared to the second quarter, and an increase of $121.1 million from December 31, 2011.   At September 30, 2012, total cash and cash equivalents were $62.3 million, a decrease of $10.1 million from June 30, 2012, and a decrease of $34.3 million from December 31, 2011.  At September 30, 2012, investment in securities decreased $5.5 million on a linked quarter basis and increased $1.9 million from December 31, 2011.  At September 30, 2012, loans (net of unearned income) were $2.9 billion, an increase of $20.7 million, or 0.7% (2.9% on an annualized basis), from the prior quarter, and an increase of $89.9 million, or 3.2% (4.3% on an annualized basis), from December 31, 2011.  Mortgage loans held for sale were $142.0 million, an increase of $41.9 million when compared to the prior quarter, and an increase of $67.1 million from December 31, 2011, which was primarily due to the increase in origination volume due to the impact of the favorable rate environment and the addition of mortgage loan originators during 2012. 

As of September 30, 2012, total deposits were $3.2 billion a decrease of $19.2 million, or 0.6%, when compared to June 30, 2012 and an increase of $24.7 million, or 0.8%, when compared to December 31, 2011.  Total short-term borrowings, including FHLB borrowings and repurchase agreements, increased $78.7 million on a linked quarter basis and increased $91.1 million from December 31, 2011, as the Company relied on short-term borrowings to fund loan growth and customer preference for repurchase agreements increased.  As of September 30, 2012 long-term borrowings declined $19.4 million and $19.1 million when compared to June 30, 2012 and December 31, 2011.  During the current quarter, 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 on the original advances 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 had a ratio of total capital to risk-weighted assets of 15.00% and 15.36% on September 30, 2012 and 2011, respectively.  The Company's ratio of Tier 1 capital to risk-weighted assets was 13.44% and 13.71% at September 30, 2012 and 2011, respectively, allowing the Company to exceed the definition of "well capitalized" for regulatory purposes.  During the fourth quarter of 2011, the Company paid the U.S.Treasury $35.7 million to redeem the Preferred Stock issued to the Treasury and assumed in the FMB acquisition.  This redemption caused the Company's total capital and Tier 1 capital to risk-weighted assets ratios to decline from the prior year. In addition, the Company's review of the regulatory risk weightings of the mortgage loans held for sale during the current quarter resulted in a reduction of risk weighted assets.  The impact of this change was not considered to be material to the Company's regulatory capital ratios. The Company's common equity to asset ratios at September 30, 2012 and 2011 were 11.00% and 10.63%, respectively, while its tangible common equity to tangible assets ratio increased to 9.27% from 8.74% at September 30, 2011.

MORTGAGE SEGMENT INFORMATION

On a linked quarter basis, the mortgage segment net income for the third quarter increased $389,000, or 82.8%, from $470,000 in the second quarter to $859,000.  In early 2012, the Company hired additional loan originators and support personnel who were formerly employed by a national mortgage company that exited the mortgage origination business.  As new originators have increased their production, and aided by historically low interest rates, mortgage loan originations increased by $65.7 million or 25.5% in the current quarter to $323.1 million from $257.4 million in the second quarter.  As a result, gains on the sale of loans increased $1.6 million, or 21.9% to $8.9 million.  Salary and benefit expenses increased $1.0 million, or 18.9% to $6.4 million, primarily due to commission expenses related to the increased loan volume levels.  Operating expenses increased $105,000, or 35.5%, from the prior quarter due to increased rental expense related to mortgage offices added in 2012.  Refinanced loans represented 57.6% of the originations during the third quarter compared to 45.1% during the second quarter. 

For the three months ended September 30, 2012, the mortgage segment net income increased $396,000 or 85.5% from $463,000 to $859,000 compared to the same period last year.  Originations increased by $147.6 million, or 84.1%, to $323.1 million from $175.5 million due to the additions in production personnel described above and the sustained low interest rate environment which resulted in increased gains on the sale of loans of $4.1 million, or 83.5%, over the same period last year.  Salaries and benefits increased $3.1 million, or 93.8%, as a result of personnel additions and higher commissions related to the growth in mortgage loan originations.  Refinanced loans represented 57.6% of originations during the third quarter of 2012 compared to 37.5% during the same period a year ago. 

For the nine months ended September 30, 2012, the mortgage segment net income increased $605,000, or 63.1%, to $1.6 million from $958,000 during the same period last year.  Originations increased by $291.5 million or 61.6% from $472.9 million to $764.4 million during the same period last year due to the addition of mortgage loan originators in 2012 and a sustained low interest rate environment.  Gains on sales of loans increased $7.4 million, or 52.3%, while salary and benefit expenses increased $5.6 million, or 53.7%, primarily due to commissions related to the increased loan production.  Refinanced loans represented 53.1% of originations during the first nine months of the year compared to 31.6% during the same period a year ago. 

ABOUT UNION FIRST MARKET BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation is the holding company for Union First Market Bank, which has 94 branches and more than 150 ATMs throughout Virginia.  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.  Union First Market Bank also owns a non-controlling interest in Johnson Mortgage Company, L.L.C. 

Additional information is available on the Company's website at http://investors.bankatunion.com.  Shares of the Company's common stock are traded on the NASDAQ Global Select Market under the symbol UBSH.

FORWARD-LOOKING STATEMENTS

Certain statements in this report may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise 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


Nine Months Ended


09/30/12


06/30/12


09/30/11


09/30/12


09/30/11

Results of Operations










Interest and dividend income

$          45,503


$          45,304


$          47,606


$      136,681


$      142,754

Interest expense

6,741


7,217


8,160


21,485


24,885

Net interest income

38,762


38,087


39,446


115,196


117,869

Provision for loan losses

2,400


3,000


3,600


8,900


14,400

Net interest income after provision for loan losses

36,362


35,087


35,846


106,296


103,469

Noninterest income

15,552


14,589


11,411


41,986


32,383

Noninterest expenses

38,318


37,944


34,504


111,897


105,605

Income before income taxes

13,596


11,733


12,753


36,385


30,247

Income tax expense 

3,970


3,313


3,682


10,416


8,162

Net income

$           9,626


$           8,420


$           9,071


$        25,969


$        22,085











Interest earned on loans (FTE)

$          40,913


$          40,371


$          42,777


$      121,974


$      127,406

Interest earned on securities (FTE)

5,638


5,937


5,874


17,781


18,550

Interest earned on earning assets (FTE)

46,555


46,340


48,673


139,814


146,012

Net interest income (FTE)

39,815


39,125


40,514


118,329


121,128

Interest expense on certificates of deposit

3,710


3,851


4,205


11,590


13,475

Interest expense on interest-bearing deposits 

4,725


5,023


5,923


15,084


18,774

Core deposit intangible amortization

1,212


1,225


1,496


3,748


4,674











Net income - community bank segment

$           8,767


$           7,950


$           8,607


$        24,406


$        21,126

Net income - mortgage segment

859


470


463


1,563


958











Key Ratios










Return on average assets (ROA)

0.96%


0.86%


0.93%


0.88%


0.77%

Return on average equity (ROE)

8.70%


7.84%


8.02%


8.03%


6.70%

Efficiency ratio (FTE)

69.21%


70.54%


66.54%


69.80%


68.73%

Efficiency ratio - community bank segment (FTE)

66.18%


67.59%


64.46%


66.83%


66.57%

Efficiency ratio - mortgage bank segment (FTE)

84.72%


89.63%


85.55%


88.52%


89.92%











Net interest margin (FTE)

4.31%


4.36%


4.54%


4.36%


4.63%

Net interest margin, core (FTE)1

4.23%


4.25%


4.34%


4.25%


4.43%

Yields on earning assets (FTE)

5.04%


5.15%


5.46%


5.16%


5.59%

Cost of interest-bearing liabilities (FTE)

0.92%


1.00%


1.13%


0.99%


1.16%

Noninterest expense less noninterest income / average assets

2.27%


2.38%


2.36%


2.37%


2.55%











Capital Ratios










Tier 1 risk-based capital ratio

13.44%


12.99%


13.71%


13.44%


13.71%

Total risk-based capital ratio

15.00%


14.55%


15.36%


15.00%


15.36%

Leverage ratio (Tier 1 capital to average assets)

10.53%


10.44%


11.00%


10.53%


11.00%

Common equity to total assets

11.00%


10.88%


10.63%


11.00%


10.63%

Tangible common equity to tangible assets

9.27%


9.11%


8.74%


9.27%


8.74%











Per Share Data










Earnings per common share, basic

$             0.37


$             0.32


$             0.33


$           1.00


$           0.79

Earnings per common share, diluted

0.37


0.32


0.33


1.00


0.79

Cash dividends paid per common share

0.10


0.08


0.07


0.25


0.21

Market value per share

15.56


14.45


10.72


15.56


10.72

Book value per common share

17.11


16.75


16.04


17.11


16.04

Tangible book value per common share 

14.15


13.74


12.88


14.15


12.88

Price to earnings ratio, diluted

10.57


11.23


8.19


11.65


10.15

Price to book value per common share ratio

0.91


0.86


0.67


0.91


0.67

Price to tangible common share ratio

1.10


1.05


0.83


1.10


0.83

Weighted average common shares outstanding, basic

25,884,972


25,868,174


25,986,677


25,894,720


25,971,639

Weighted average common shares outstanding, diluted

25,911,987


25,888,151


26,001,900


25,922,261


25,993,611

Common shares outstanding at end of period

25,967,705


25,952,035


26,057,501


25,967,705


26,057,501












Three Months Ended




Nine Months Ended


09/30/12


06/30/12


09/30/11


09/30/12


09/30/11

Financial Condition










Assets

$     4,028,193


$     3,982,288


$     3,914,457


$   4,028,193


$   3,914,457

Loans, net of unearned income

2,908,510


2,887,790


2,818,342


2,908,510


2,818,342

Earning Assets

3,703,468


3,649,829


3,573,844


3,703,468


3,573,844

Goodwill

59,400


59,400


59,400


59,400


59,400

Core deposit intangibles, net

16,966


18,178


22,162


16,966


22,162

Deposits

3,199,779


3,218,986


3,134,876


3,199,779


3,134,876

Stockholders' equity

442,949


433,436


451,581


442,949


451,581

Tangible common equity

366,450


355,625


334,874


366,450


334,874











Averages










Assets

$     3,994,830


$     3,942,727


$     3,876,740


$   3,947,279


$   3,838,747

Loans, net of unearned income

2,890,666


2,847,087


2,831,924


2,856,005


2,822,579

Loans held for sale

119,190


73,518


48,664


86,989


48,366

Securities

651,855


649,121


597,489


647,791


587,186

Earning assets

3,671,398


3,615,718


3,538,752


3,622,057


3,494,013

Deposits

3,192,239


3,200,016


3,105,792


3,186,656


3,079,347

Certificates of deposit

1,080,022


1,112,964


1,160,662


1,110,252


1,183,813

Interest-bearing deposits

2,604,760


2,636,390


2,583,864


2,624,664


2,574,685

Borrowings

320,562


274,597


289,857


290,418


289,935

Interest-bearing liabilities

2,925,322


2,910,987


2,873,721


2,915,082


2,864,620

Stockholders' equity

440,122


431,915


448,618


432,138


440,521

Tangible common equity

362,996


353,473


331,170


353,781


322,726











Asset Quality










Allowance for Loan Losses (ALLL)










Beginning balance 

$          40,985


$          40,204


$          39,631


$        39,470


$        38,406

Add: Recoveries

680


350


674


1,371


1,561

Less: Charge-offs

4,171


2,569


2,615


9,847


13,077

Add: Provision for loan losses

2,400


3,000


3,600


8,900


14,400

Ending balance 

$          39,894


$          40,985


$          41,290


$        39,894


$        41,290

ALLL / total outstanding loans

1.37%


1.42%


1.47%


1.37%


1.47%

ALLL / total outstanding loans, adjusted for acquired2

1.66%


1.74%


1.89%


1.66%


1.89%

Net charge-offs / total outstanding loans

0.48%


0.31%


0.27%


0.39%


0.55%

Nonperforming Assets










Commercial

$          28,547


$          36,035


$          47,247


$        28,547


$        47,247

Consumer

3,612


3,136


4,718


3,612


4,718

Nonaccrual loans

32,159


39,171


51,965


32,159


51,965











Other real estate owned

34,440


35,802


34,464


34,440


34,464

Total nonperforming assets (NPAs)

66,599


74,973


86,429


66,599


86,429











Commercial

1,931


2,324


3,674


1,931


3,674

Consumer

7,165


8,444


8,480


7,165


8,480

Loans >/= 90 days and still accruing

9,096


10,768


12,159


9,096


12,159











Total nonperforming assets and loans >/= 90 days

$          75,695


$          85,741


$          98,588


$        75,695


$        98,588

NPAs / total outstanding loans

2.29%


2.60%


3.07%


2.29%


3.07%

NPAs / total assets

1.65%


1.88%


2.21%


1.65%


2.21%

ALLL / nonperforming loans

124.05%


104.63%


79.46%


124.05%


79.46%

ALLL / nonperforming assets

59.90%


54.67%


47.77%


59.90%


47.77%






















Three Months Ended




Nine Months Ended


09/30/12


06/30/12


09/30/11


09/30/12


09/30/11

Past Due Detail










Commercial

382


3,022


3,630


382


3,630

Consumer

4,625


3,602


6,236


4,625


6,236

Loans 60-89 days past due

$           5,007


$           6,624


$           9,866


$         5,007


$         9,866

Commercial

15,421


5,674


11,648


15,421


11,648

Consumer

9,486


10,147


11,783


9,486


11,783

Loans 30-59 days past due

$          24,907


$          15,821


$          23,431


$        24,907


$        23,431

Commercial

5,431


5,741


9,089


5,431


9,089

Consumer

1,006


1,034


1,061


1,006


1,061

Purchased impaired

$           6,437


$           6,775


$          10,150


$         6,437


$        10,150











Other Data










Mortgage loan originations

$        323,077


$        257,354


$        176,040


$      764,409


$      472,882

% of originations that are refinances

57.60%


45.10%


35.70%


53.10%


31.60%

End of period full-time employees

1,054


1,084


1,047


1,054


1,047

Number of full-service branches

94


94


99


94


99

Number of full automatic transaction machines (ATMs)

158


158


167


158


167











Alternative Performance Measures 










Cash basis earnings3










Net income

$           9,626


$           8,420


$           9,071


$        25,969


$        22,085

Plus: Core deposit intangible amortization, net of tax

788


796


972


2,436


3,038

Plus: Trademark intangible amortization, net of tax

65


65


65


195


195

Cash basis operating earnings

$          10,479


$           9,281


$          10,108


$        28,600


$        25,318











Average assets

$     3,994,830


$     3,942,727


$     3,876,740


$   3,947,279


$   3,838,748

Less: Average trademark intangible

181


281


582


281


681

Less: Average goodwill

59,400


59,400


59,400


59,400


58,189

Less: Average core deposit intangibles

17,546


18,761


22,890


18,677


24,411

Average tangible assets

$     3,917,704


$     3,864,285


$     3,793,868


$   3,868,922


$   3,755,467











Average equity

$        440,122


$        431,915


$        448,618


$      432,138


$      440,521

Less: Average trademark intangible

181


281


582


281


681

Less: Average goodwill

59,400


59,400


59,400


59,400


58,189

Less: Average core deposit intangibles

17,546


18,761


22,890


18,677


24,411

Less: Average preferred equity

-


-


34,576


-


34,514

Average tangible common equity

$        362,996


$        353,473


$        331,170


$      353,781


$      322,726











Cash basis operating earnings per share, diluted

$             0.40


$             0.36


$             0.39


$           1.10


$           0.97

Cash basis operating return on average tangible assets

1.06%


0.97%


1.06%


0.99%


0.90%

Cash basis operating return on average tangible common equity

11.48%


10.56%


12.11%


10.80%


10.49%











 

(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 acquired loans (non-GAAP) ratio includes the allowance for loan losses to the total loan portfolio less acquired loans without additional credit deterioration above the original credit mark (which have been provided for in the ALLL subsequent to acquisition).  GAAP requires the acquired allowance for loan losses not be carried over in an acquisition or merger.  We believe the presentation of the allowance for loan losses, adjusted for acquired loans 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.  Therefore, acquired loans without additional credit deterioration above the original credit mark are adjusted out of the loan balance denominator. 


Gross Loans

$           2,908,510


$           2,887,790


$           2,818,342


$        2,908,510


$        2,818,342

  less acquired loans without additional credit deterioration

(505,362)


(533,087)


(635,072)


(505,362)


(635,072)

Gross Loans, adjusted for acquired

2,403,148


2,354,703


2,183,270


2,403,148


2,183,270

Allowance for loan losses

39,894


40,985


41,290


39,894


41,290

ALLL / gross loans, adjusted for acquired

1.66%


1.74%


1.89%


1.66%


1.89%


(3) As a supplement to GAAP, management also reviews operating performance based on its "cash basis earnings" to fully analyze its core business.  Cash basis earnings exclude amortization expense attributable to intangibles (goodwill and core deposit intangibles) that do not qualify as regulatory capital.  Financial ratios based on cash basis earnings exclude the amortization of nonqualifying intangible assets from earnings and the unamortized balance of nonqualifying  intangibles from assets and equity. 
      
In management's opinion, cash basis earnings are useful to investors because by excluding non-operating adjustments they allow investors to see clearly the economic impact on the results of Company.  These non-GAAP disclosures should not, however, be viewed in direct comparison with non-GAAP measures of other companies.    

 

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS



(Dollars in thousands)







 September 30, 


 December 31, 


 September 30, 


2012


2011


2011

ASSETS

(Unaudited)


(Audited)


(Unaudited)

Cash and cash equivalents:






Cash and due from banks

$                 52,095


$                 64,412


$                 57,171

Interest-bearing deposits in other banks

10,081


31,930


92,247

Money market investments

1


155


199

Federal funds sold

157


162


160

Total cash and cash equivalents

62,334


96,659


149,777







Securities available for sale, at fair value

622,067


620,166


584,668

Restricted stock, at cost

20,687


20,661


21,817







Loans held for sale

141,965


74,823


61,786







Loans, net of unearned income

2,908,510


2,818,583


2,818,342

Less allowance for loan losses

39,894


39,470


41,290

Net loans

2,868,616


2,779,113


2,777,052







Bank premises and equipment, net

87,305


90,589


90,936

Other real estate owned, net of valuation allowance

34,440


32,263


34,464

Core deposit intangibles, net

16,966


20,714


22,162

Goodwill

59,400


59,400


59,400

Other assets

114,413


112,699


112,395

Total assets

$             4,028,193


$             3,907,087


$             3,914,457







LIABILITIES






Noninterest-bearing demand deposits

$                604,274


$                534,535


$                542,692

Interest-bearing deposits:






NOW accounts

418,988


412,605


395,822

Money market accounts

898,625


904,893


858,426

Savings accounts

204,317


179,157


176,531

Time deposits of $100,000 and over

534,797


551,349


561,303

Other time deposits

538,778


592,566


600,102

Total interest-bearing deposits

2,595,505


2,640,570


2,592,184

Total deposits

3,199,779


3,175,105


3,134,876







Securities sold under agreements to repurchase

94,616


62,995


70,450

Other short-term borrowings

59,500


-


-

Trust preferred capital notes

60,310


60,310


60,310

Long-term borrowings

136,260


155,381


155,258

Other liabilities

34,779


31,657


41,982

Total liabilities

3,585,244


3,485,448


3,462,876













STOCKHOLDERS' EQUITY






Preferred stock, $10.00 par value, $1,000 liquidation value, shares authorized 500,000; issued and outstanding, 35,595 shares at September 30, 2011 and zero at December 31, 2011 and September 30, 2012.

-


-


35,595

Common stock, $1.33 par value, shares authorized 36,000,000; issued and outstanding, 25,967,705 shares, 26,134,830 shares, and 26,057,500 shares, respectively.

34,433


34,672


34,581

Surplus

186,225


187,493


186,505

Retained earnings

209,308


189,824


184,845

Discount on preferred stock

-


-


(982)

Accumulated other comprehensive income 

12,983


9,650


11,037

Total stockholders' equity

442,949


421,639


451,581







Total liabilities and stockholders' equity

$             4,028,193


$             3,907,087


$             3,914,457

 

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF INCOME



(Dollars in thousands, except per share amounts)












 Three Months Ended 


 Nine Months Ended 


 September 30 


 September 30 


2012


2011


2012


2011

Interest and dividend income:

(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Interest and fees on loans

$          40,836


$          42,664


$        121,743


$        126,999

Interest on Federal funds sold

1


1


1


1

Interest on deposits in other banks

6


24


64


60

Interest and dividends on securities:








Taxable

2,846


3,146


9,482


10,400

Nontaxable

1,814


1,771


5,391


5,294

Total interest and dividend income

45,503


47,606


136,681


142,754









Interest expense:








Interest on deposits

4,726


5,924


15,084


18,774

Interest on Federal funds purchased

28


-


29


7

Interest on short-term borrowings

69


92


160


258

Interest on long-term borrowings

1,918


2,144


6,212


5,846

Total interest expense

6,741


8,160


21,485


24,885









Net interest income

38,762


39,446


115,196


117,869

Provision for loan losses

2,400


3,600


8,900


14,400

Net interest income after provision for loan losses

36,362


35,846


106,296


103,469









Noninterest income:








Service charges on deposit accounts

2,222


2,294


6,643


6,568

Other service charges, commissions and fees

3,655


3,254


10,692


9,529

Gains (losses) on securities transactions, net

(1)


499


4


483

Other-than-temporary impairment losses

-


(400)


-


(400)

Gains on sales of mortgage loans

8,918


4,861


21,529


14,132

Gains (losses) on bank premises, net

(309)


(16)


34


(644)

Other operating income

1,067


919


3,084


2,715

Total noninterest income

15,552


11,411


41,986


32,383









Noninterest expenses:








Salaries and benefits

21,279


18,076


61,204


53,310

Occupancy expenses

3,262


2,885


9,001


8,307

Furniture and equipment expenses

1,809


1,756


5,440


5,097

Other operating expenses

11,968


11,787


36,252


38,891

Total noninterest expenses

38,318


34,504


111,897


105,605









Income before income taxes

13,596


12,753


36,385


30,247

Income tax expense

3,970


3,682


10,416


8,162

Net income

$            9,626


$            9,071


$          25,969


$          22,085

Dividends paid and accumulated on preferred stock

-


462


-


1,386

Accretion of discount on preferred stock

-


66


-


195

Net income available to common shareholders

$            9,626


$            8,543


$          25,969


$          20,504

Earnings per common share, basic

$             0.37


$             0.33


$             1.00


$             0.79

Earnings per common share, diluted

$             0.37


$             0.33


$             1.00


$             0.79

 

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES



SEGMENT REPORTING




Community Bank


Mortgage


Eliminations


Consolidated

Three Months Ended September 30, 2012








Net interest income

$           38,428


$               334


$                 -


$           38,762

Provision for loan losses

2,400


-


-


2,400

Net interest income after provision for loan losses

36,028


334


-


36,362

Noninterest income

6,750


8,919


(117)


15,552

Noninterest expenses

30,596


7,839