Union Bankshares Reports Second Quarter Results

Jul 21, 2015, 07:30 ET from Union Bankshares Corporation

RICHMOND, Va., July 21, 2015 /PRNewswire/ -- Union Bankshares Corporation (the "Company" or "Union") (NASDAQ: UBSH) today reported net income of $15.3 million and earnings per share of $0.34 for its second quarter ended June 30, 2015.  The quarterly results include $832,000, or $0.02 per share, in after-tax nonrecurring costs associated with branch closures and represent a decrease of $353,000, or 2.2%, in net income and a decrease of $0.01, or 2.9%, in earnings per share from the first quarter.  For the six months ended June 30, 2015, net income was $31.0 million with earnings per share at $0.69.

"Union's second quarter results clearly demonstrate the steady progress we are making toward the growth objectives we envisioned as the largest community banking institution headquartered in Virginia," said G. William Beale, president and chief executive officer of Union Bankshares Corporation. "During the quarter, loans grew by 9.1% while deposits grew by 8.1% on an annualized basis as we continue to build the core engine to generate sustainable, profitable growth for our shareholders.  Our commercial, retail, and wealth management teams have coalesced and are leveraging Union's unique market position to attract new customers while deepening our relationships with existing customers.  

"We are also pleased to report that the mortgage company returned to profitability during the quarter.  The mortgage company has worked hard to stabilize and restructure the business over the past several quarters and we are beginning to see the positive results of these efforts.  The mortgage team is now able to turn their attention to adding to our mortgage sales teams to grow loan origination levels and generate the revenue that will allow us to profitably leverage our more efficient operating platform."

Select highlights for the second quarter include:

  • The quarterly results include $1.3 million in pre-tax nonrecurring costs related to the previously announced closure of seven branches.
  • Net income for the community bank segment was $15.3 million, or $0.34 per share, for the second quarter compared to $16.0 million, or $0.36 per share, for the first quarter. Net income for the community bank segment for the six months ended June 30, 2015 was $31.2 million, or $0.69 per share.
  • The mortgage segment reported net income of $95,000 for the second quarter, an improvement from a net loss of $267,000 for the first quarter. The mortgage segment had a net loss of $172,000 for the six months ended June 30, 2015.
  • Period end loan balances increased $122.6 million, or 9.1% on an annualized basis, from March 31, 2015. Average loan balances increased $87.5 million, or 6.5% on an annualized basis, from the prior quarter.
  • Asset quality improved due to reductions in nonperforming assets and past due loan levels.

NET INTEREST INCOME

Tax-equivalent net interest income was $66.1 million, an increase of $2.0 million from the first quarter of 2015, primarily driven by the impact of the higher day count in the second quarter and higher earning asset yields.  The second quarter tax-equivalent net interest margin increased 2 basis points to 3.97% from 3.95% in the previous quarter.  Core tax-equivalent net interest margin (which excludes the 11 basis points impact of acquisition accounting accretion) increased by 2 basis points to 3.86% from 3.84% in the previous quarter.  The increase in the core tax-equivalent net interest margin was principally due to the 1 basis point increase in interest-earning asset yields combined with the 1 basis point reduction in cost of funds.  The increase in interest-earning asset yields was primarily driven by higher loan and investment yields.

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

The Company's fully taxable equivalent net interest margin includes the impact of acquisition accounting fair value adjustments.  During the second quarter, net accretion related to acquisition accounting declined by $48,000 from the prior quarter to $1.8 million.  The first and second quarters of 2015 and remaining estimated discount/premium and net accretion impact are reflected in the following table (dollars in thousands):

Accretion

Accretion (Amortization)

Loan

Certificates of Deposit

Borrowings

Total

For the quarter ended March 31, 2015

$

639

$

1,075

$

137

$

1,851

For the quarter ended June 30, 2015

1,052

614

137

1,803

For the remaining six months of 2015

2,096

154

25

2,275

For the years ending:

2016

3,658

-

271

3,929

2017

3,505

-

170

3,675

2018

2,999

-

(143)

2,856

2019

2,351

-

(286)

2,065

2020

1,909

-

(301)

1,608

Thereafter

10,808

-

(5,622)

5,186

 

ASSET QUALITY/LOAN LOSS PROVISION

Overview During the second quarter, the Company experienced declines in nonaccrual and past due loans and other real estate owned ("OREO") balances from the prior quarter and the prior year.  The decline in OREO balances was mostly attributable to sales of foreclosed land and residential real estate property during the quarter.  The loan loss provision increased from the prior quarter due to loan growth and higher specific reserves on impaired loans.  The allowance for loan losses to total loans ratios (both unadjusted and adjusted for acquisition accounting) were consistent with the prior quarter and down from the prior year. 

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired loans ("PCI") totaling $87.8 million (net of fair value mark).

Nonperforming Assets ("NPAs") At June 30, 2015, nonperforming assets totaled $31.7 million, a decrease of $29.9 million, or 48.5%, from a year ago and a decline of $11.1 million, or 25.9%, from March 31, 2015.  In addition, NPAs as a percentage of total outstanding loans declined 60 basis points from 1.18% a year earlier and 21 basis points from 0.79% last quarter to 0.58% in the current quarter.  The following table shows a summary of asset quality balances at the quarter ended (dollars in thousands):

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Nonaccrual loans, excluding PCI loans

$

9,521

$

17,385

$

19,255

$

20,279

$

23,099

Foreclosed properties

18,917

21,727

23,058

28,783

33,739

Former bank premises

3,305

3,707

5,060

8,971

4,755

Total nonperforming assets

31,743

42,819

47,373

58,033

61,593

 

The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Beginning Balance

$

17,385

$

19,255

$

20,279

$

23,099

$

14,722

Net customer payments

(4,647)

(2,996)

(4,352)

(1,654)

(1,088)

Additions

581

4,379

7,413

1,099

11,087

Charge-offs

(2,171)

(3,107)

(1,839)

(604)

(137)

Loans returning to accruing status

(919)

(53)

(2,246)

(723)

(523)

Transfers to OREO

(708)

(93)

-

(938)

(962)

Ending Balance

$

9,521

$

17,385

$

19,255

$

20,279

$

23,099

 

The decline in nonaccrual loans was largely due to payments received in settlements, sales of collateral, and liquidation of customer assets.

The following table shows the activity in OREO for the quarter ended (dollars in thousands):

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Beginning Balance

$

25,434

$

28,118

$

37,754

$

38,494

$

35,487

Additions of foreclosed property

904

158

367

2,553

1,619

Additions of former bank premises

-

402

63

4,814

6,052

Capitalized improvements

243

56

424

203

59

Valuation adjustments

(710)

(590)

(381)

(6,192)

(817)

Proceeds from sales

(3,511)

(2,748)

(11,362)

(2,216)

(3,913)

Gains (losses) from sales

(138)

38

1,253

98

7

Ending Balance

$

22,222

$

25,434

$

28,118

$

37,754

$

38,494

 

During the second quarter of 2015, the majority of sales of OREO were related to land and residential real estate.

Past Due Loans Past due loans still accruing interest totaled $33.5 million, or 0.61% of total loans, at June 30, 2015 compared to $43.2 million, or 0.83%, a year ago and $42.7 million, or 0.79%, at March 31, 2015.  At June 30, 2015, loans past due 90 days or more and accruing interest totaled $10.9 million, or 0.20% of total loans, compared to $6.9 million, or 0.13%, a year ago and $7.9 million, or 0.15%, at March 31, 2015. 

Net Charge-offs For the quarter ended June 30, 2015, net charge-offs were $2.2 million, or 0.16% on an annualized basis, compared to $1.0 million, or 0.08%, for the same quarter last year and $3.2 million, or 0.24%, for the first quarter of 2015.  For the six months ended June 30, 2015, net charge-offs were $5.3 million, or 0.20% on an annualized basis, compared to $256,000, or 0.01%, for the same period in the prior year.

Provision The provision for loan losses for the current quarter was $3.5 million, an increase of $2.0 million compared to the same quarter a year ago and $1.8 million compared to the previous quarter.  The increase in provision for loan losses in the current quarter compared to the prior quarter was driven by loan growth and higher specific reserves on impaired loans.  Additionally, a $200,000 provision was recognized during the current quarter for unfunded loan commitments, resulting in a total of $3.7 million in provision for credit losses for the quarter.

Allowance for Loan Losses The allowance for loan losses ("ALL") increased $1.4 million from March 31, 2015 to $32.3 million at June 30, 2015 due to the increase in provision for loan losses primarily driven by loan growth during the quarter.  The ALL as a percentage of the total loan portfolio, adjusted for purchase accounting (non-GAAP), was 1.02% at June 30, 2015, a decrease from 1.03% from the prior quarter and from 1.11% at June 30, 2014.  The allowance for loan losses as a percentage of the total loan portfolio was 0.59% at June 30, 2015, 0.57% at March 31, 2015, and 0.60% at June 30, 2014.  In acquisition accounting, there is no carryover of previously established allowance for loan losses, as acquired loans are recorded at fair value.

The nonaccrual loan coverage ratio was 339.7% at June 30, 2015, compared to 178.2% at March 31, 2015 and 135.8% at June 30, 2014.  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 important in assessing the adequacy of the allowance for loan losses. 

NONINTEREST INCOME

Noninterest income increased $1.1 million, or 7.7%, to $16.2 million from $15.1 million in the prior quarter. Customer-related fee income increased $968,000, primarily driven by higher overdraft, interchange, and letter of credit fees.  Gains on sales of mortgage loans, net of commissions, increased $195,000, or 8.2%, from the prior quarter, related to improved gain on sale margins as well as increased mortgage loan originations, partially offset by a decline in unrealized gains on interest rate lock commitments.  Mortgage loan originations increased by $1.6 million, or 1.1%, in the current quarter to $140.3 million from $138.7 million in the first quarter, as increased construction and purchase loan production of $23.8 million outpaced declines in refinance originations of $22.2 million during the quarter.  Of the loan originations in the current quarter, 30.9% were refinances, which was a decline from 47.3% in the prior quarter.  Gains on sales of securities increased $211,000 from the prior quarter.  The reduction in other operating income was primarily related to gains from the dissolution of a limited partnership in the prior quarter.

NONINTEREST EXPENSE  

Noninterest expense increased $1.4 million, or 2.6%, to $55.2 million from $53.8 million when compared to the prior quarter.  The increase in noninterest expense is primarily driven by $1.3 million in nonrecurring costs related to the previously announced closure of seven branches.  Excluding the branch closure costs, noninterest expense increased slightly from the prior quarter.  OREO and credit-related costs increased $779,000 related to seasonal real estate taxes, higher legal fees, losses on the sale of properties, and higher valuation adjustments.  Marketing expenses increased $685,000 related to the timing of advertising campaigns, and professional fees increased $321,000 related to legal and consulting fees.  These increases were offset by a $1.9 million reduction in salaries and benefit expenses due to lower incentive compensation, group insurance, and payroll taxes.

BALANCE SHEET

At June 30, 2015, total assets were $7.5 billion, an increase of $109.1 million from March 31, 2015 and an increase of $191.0 million from June 30, 2014.  The increase in assets was mostly related to loan growth.

At June 30, 2015, loans net of deferred fees were $5.5 billion, an increase of $122.6 million, or 9.1% (annualized), from March 31, 2015, while average loans increased $87.5 million, or 6.5% (annualized).  Loans increased $277.3 million, or 5.3%, from June 30, 2014.

At June 30, 2015, total deposits were $5.8 billion, an increase of $114.2 million, or 8.1% (annualized) from March 31, 2015, while average deposits increased $70.0 million, or 5.0% (annualized).  Deposits increased $49.9 million, or 0.9%, from June 30, 2014.

At June 30 and March 31, 2015, respectively, the Company had a common equity Tier 1 capital ratio of 10.87% and 10.86%, a Tier 1 capital ratio of 12.30% and 12.32%, a total capital ratio of 12.82% and 12.82%, and a leverage ratio of 10.82% and 10.79%. 

The Company's common equity to asset ratios at June 30, 2015, March 31, 2015, and June 30, 2014 were 13.18%, 13.36%, and 13.36%, respectively, while its tangible common equity to tangible assets ratio was 9.30%, 9.40%, and 9.22% at June 30, 2015, March 31, 2015, and June 30, 2014, respectively. 

During the second quarter, the Company declared and paid cash dividends of $0.17 per common share, a $0.02, or 13.3%, increase from the prior quarter dividend of $0.15 per common share.

COMMUNITY BANK SEGMENT INFORMATION

The community bank segment reported net income of $15.3 million for the second quarter, a decrease of $715,000, or 4.5%, from $16.0 million in the first quarter.  Net interest income was $63.4 million, an increase of $1.7 million from the first quarter principally due to the impact of the higher day count in the second quarter and higher earning asset yields.  As previously discussed, the provision for loan losses increased $1.8 million from the prior quarter due to loan growth and higher specific reserves on impaired loans.

Noninterest income increased $675,000 to $13.5 million in the current quarter compared to $12.8 million in the prior quarter.  Customer-related fee income increased $968,000, primarily driven by higher overdraft, interchange, and letter of credit fees.  Gains on sales of securities increased $211,000 from the prior quarter.  Other income decreased $506,000 primarily related to gains from the dissolution of a limited partnership in the prior quarter.

Noninterest expense increased $1.4 million from $51.0 million in the prior quarter to $52.4 million in the current quarter.  The increase in noninterest expense is primarily driven by $1.3 million in nonrecurring costs related to the previously announced closure of seven branches.  Excluding the branch closure costs, noninterest expense increased slightly from the prior quarter.  OREO and credit-related costs increased $771,000 related to seasonal real estate taxes, higher legal fees, losses on the sale of properties, and higher valuation adjustments.  Marketing expenses increased $682,000 related to the timing of advertising campaigns, and professional fees increased $324,000 related to legal and consulting fees.  These increases were offset by a $2.0 million reduction in salaries and benefit expenses due to lower incentive compensation, group insurance, and payroll taxes.

MORTGAGE SEGMENT INFORMATION

The mortgage segment reported net income of $95,000 for the second quarter, an improvement of $362,000 from a net loss of $267,000 in the first quarter. Noninterest income increased $484,000 during the quarter due to higher gains on sales of mortgage loans, net of commissions, and adjustments to required indemnification reserves during the second quarter.  Gains on sales of mortgage loans, net of commissions, increased $195,000, related to improved gain on sale margins as well as increased mortgage loan originations, partially offset by a decline in unrealized gains on interest rate lock commitments. Mortgage loan originations increased by $1.6 million, or 1.1%, in the current quarter to $140.3 million from $138.7 million in the first quarter, as increased construction and purchase loan production of $23.8 million outpaced declines in refinance originations of $22.2 million during the quarter.  Of the loan originations in the current quarter, 30.9% were refinances, which was a decrease from 47.3% in the prior quarter.  Noninterest expenses remained consistent with the prior quarter at $3.0 million and were down $1.2 million, or 29.1%, from the second quarter of the prior year. 

ABOUT UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union Bankshares Corporation (NASDAQ: UBSH) is the holding company for Union Bank & Trust, which has 131 banking offices and approximately 200 ATMs located 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.

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

Union Bankshares Corporation will hold a conference call on Tuesday, July 21st, at 9:00 a.m. Eastern Time during which management will review earnings and performance trends.  Callers wishing to participate may call toll-free by dialing (877) 668-4908.  The conference ID number is 82159353.

ADOPTION OF NEW ACCOUNTING STANDARDS

The Company adopted ASU 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects" as of January 1, 2015.  As permitted by the guidance, the Company adopted the proportional amortization method of accounting for Qualified Affordable Housing Projects.  The proportional amortization method amortizes the cost of the investment over the period in which the Company will receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of income taxes attributable to continuing operations.  Historically, these investments were accounted for under the equity method of accounting and the passive losses related to the investments were recognized within noninterest expense.  The Company adopted this guidance in the first quarter of 2015 with retrospective application as required by the ASU.  Prior period 2014 results and related metrics have been restated to conform to this presentation.

NON-GAAP MEASURES

In reporting the results of the quarter ended June 30, 2015, the Company has provided supplemental performance measures on an operating or tangible basis.  Operating measures exclude acquisition costs unrelated to the Company's normal operations.  The Company believes these measures are useful to investors as they exclude non-operating adjustments resulting from acquisition activity and allow investors to see the combined economic results of the organization.  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.

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. 

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact.  Such statements are often characterized by the use of qualified words (and their derivatives) such as "expect," "believe," "estimate," "plan," "project," "anticipate," "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 projected 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, stock and bond markets, accounting standards or interpretations of existing standards, mergers and acquisitions, technology, and consumer spending and saving habits.  More information is available on the Company's website, http://investors.bankatunion.com. 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 BANKSHARES CORPORATION AND SUBSIDIARIES

KEY FINANCIAL RESULTS

(Dollars in thousands, except share data)

Three Months Ended

Six Months Ended

06/30/15

03/31/15

06/30/14

06/30/15

06/30/14

Results of Operations

Interest and dividend income

$

69,854

$

67,600

$

68,634

$

137,455

$

136,842

Interest expense

6,038

5,631

4,919

11,670

9,369

Net interest income

63,816

61,969

63,715

125,785

127,473

Provision for credit losses

3,749

1,750

1,500

5,499

1,500

Net interest income after provision for credit losses

60,067

60,219

62,215

120,286

125,973

Noninterest income

16,212

15,054

16,280

31,266

30,068

Noninterest expenses

55,241

53,840

58,967

109,081

126,252

Income before income taxes

21,038

21,433

19,528

42,471

29,789

Income tax expense

5,690

5,732

4,855

11,422

7,407

Net income

$

15,348

$

15,701

$

14,673

$

31,049

$

22,382

Interest earned on earning assets (FTE)

$

72,145

$

69,761

$

70,735

$

141,907

$

140,907

Net interest income (FTE)

66,107

64,130

65,816

130,237

131,538

Core deposit intangible amortization

2,138

2,222

2,455

4,361

5,071

Net income - community bank segment

$

15,253

$

15,968

$

15,275

$

31,221

$

24,364

Net income (loss) - mortgage segment

95

(267)

(602)

(172)

(1,982)

Key Ratios

Earnings per common share, diluted

$

0.34

$

0.35

$

0.32

$

0.69

$

0.48

Return on average assets (ROA)

0.83%

0.86%

0.81%

0.84%

0.62%

Return on average equity (ROE)

6.21%

6.48%

6.02%

6.34%

4.57%

Return on average tangible common equity (ROTCE)

9.20%

9.67%

9.15%

9.43%

6.93%

Efficiency ratio (FTE)

67.11%

67.99%

71.83%

67.54%

78.12%

Efficiency ratio - community bank segment (FTE)

66.07%

66.43%

69.48%

66.25%

75.34%

Efficiency ratio - mortgage bank segment (FTE)

94.21%

115.86%

128.53%

103.90%

153.31%

Net interest margin (FTE)

3.97%

3.95%

4.09%

3.96%

4.11%

Yields on earning assets (FTE)

4.33%

4.30%

4.39%

4.32%

4.41%

Cost of interest-bearing liabilities (FTE)

0.47%

0.45%

0.39%

0.46%

0.37%

Cost of funds (FTE)

0.36%

0.35%

0.30%

0.36%

0.30%

Net interest margin, core (FTE) (1)

3.86%

3.84%

3.94%

3.85%

3.97%

Yields on earning assets (FTE), core (1)

4.27%

4.26%

4.40%

4.27%

4.43%

Cost of interest-bearing liabilities (FTE), core (1)

0.53%

0.54%

0.59%

0.54%

0.59%

Cost of funds (FTE), core (1)

0.41%

0.42%

0.46%

0.42%

0.46%

Key Operating Ratios - excluding merger costs (non-GAAP) (2)

Consolidated

Operating net income

$

15,348

$

15,701

$

17,716

$

31,049

$

34,441

Operating diluted earnings per share

$

0.34

$

0.35

$

0.38

$

0.69

$

0.74

Operating ROA

0.83%

0.86%

0.98%

0.84%

0.96%

Operating ROE

6.21%

6.48%

7.26%

6.34%

7.03%

Operating ROTCE

9.20%

9.67%

11.04%

9.43%

10.66%

Operating efficiency ratio (FTE)

67.11%

67.99%

66.15%

67.54%

67.09%

Community Bank Segment

Operating net income

$

15,253

$

15,968

$

18,318

$

31,221

$

36,423

Operating diluted earnings per share

$

0.34

$

0.36

$

0.40

$

0.69

$

0.78

Operating ROA

0.82%

0.88%

1.01%

0.85%

1.01%

Operating ROE

6.19%

6.61%

7.56%

6.40%

7.52%

Operating ROTCE

9.18%

9.88%

11.54%

9.52%

11.46%

Operating efficiency ratio (FTE)

66.07%

66.43%

63.58%

66.25%

63.92%

 

 

Three Months Ended

Six Months Ended

06/30/15

03/31/15

06/30/14

06/30/15

06/30/14

Capital Ratios

Common equity Tier 1 capital ratio (3)

10.87%

10.86%

N/A

10.87%

N/A

Tier 1 capital ratio (3)

12.30%

12.32%

12.93%

12.30%

12.93%

Total capital ratio (3)

12.82%

12.82%

13.56%

12.82%

13.56%

Leverage ratio (Tier 1 capital to average assets) (3)

10.82%

10.79%

10.47%

10.82%

10.47%

Common equity to total assets

13.18%

13.36%

13.36%

13.18%

13.36%

Tangible common equity to tangible assets

9.30%

9.40%

9.22%

9.30%

9.22%

Financial Condition

Assets

$

7,497,706

$

7,388,559

$

7,306,706

$

7,497,706

$

7,306,706

Loans, net of deferred fees

5,510,385

5,387,755

5,233,069

5,510,385

5,233,069

Earning Assets

6,717,137

6,602,453

6,460,753

6,717,137

6,460,753

Goodwill

293,522

293,522

296,876

293,522

296,876

Core deposit intangibles, net

27,394

29,533

36,479

27,394

36,479

Deposits

5,784,474

5,670,228

5,734,563

5,784,474

5,734,563

Stockholders' equity

988,134

986,916

976,326

988,134

976,326

Tangible common equity

667,218

663,861

642,971

667,218

642,971

Loans, net of deferred fees

Raw land and lots

$

201,630

$

197,759

$

212,475

$

201,630

$

212,475

Commercial construction

378,204

358,436

295,503

378,204

295,503

Commercial real estate

2,443,888

2,416,812

2,326,111

2,443,888

2,326,111

Single family investment real estate

435,068

416,984

397,186

435,068

397,186

Commercial and industrial

450,682

426,490

390,682

450,682

390,682

Other commercial

90,556

80,416

80,337

90,556

80,337

Consumer

1,510,357

1,490,858

1,530,775

1,510,357

1,530,775

Total loans, net of deferred fees

$

5,510,385

$

5,387,755

$

5,233,069

$

5,510,385

$

5,233,069

Interest-Bearing Deposits

NOW accounts

$

1,378,129

$

1,328,994

$

1,276,710

$

1,378,129

$

1,276,710

Money market accounts

1,303,792

1,258,564

1,314,116

1,303,792

1,314,116

Savings accounts

565,584

565,506

556,389

565,584

556,389

Time deposits of $100,000 and over

547,492

520,720

588,459

547,492

588,459

Other time deposits

699,801

721,509

799,970

699,801

799,970

Total interest-bearing deposits

$

4,494,798

$

4,395,293

$

4,535,644

$

4,494,798

$

4,535,644

Demand deposits

1,289,676

1,274,935

1,198,919

1,289,676

1,198,919

Total deposits

$

5,784,474

$

5,670,228

$

5,734,563

$

5,784,474

$

5,734,563

Averages

Assets

$

7,459,446

$

7,362,683

$

7,274,356

$

7,411,332

$

7,261,933

Loans, net of deferred fees

5,448,126

5,360,676

5,246,710

5,404,643

5,263,225

Loans held for sale

43,307

38,469

52,895

40,901

51,340

Securities

1,143,343

1,143,632

1,133,807

1,143,487

1,105,301

Earning assets

6,676,440

6,576,415

6,460,798

6,626,704

6,446,641

Deposits

5,709,963

5,639,917

5,693,096

5,675,134

5,669,658

Certificates of deposit

1,233,904

1,269,352

1,411,665

1,251,531

1,437,228

Interest-bearing deposits

4,431,087

4,416,699

4,543,661

4,423,933

4,551,416

Borrowings

703,223

679,341

550,514

691,348

550,091

Interest-bearing liabilities

5,134,310

5,096,040

5,094,175

5,115,281

5,101,507

Stockholders' equity

991,093

982,548

978,251

986,844

987,686

Tangible common equity

669,139

658,429

643,413

663,814

651,611

 

 

Three Months Ended

Six Months Ended

06/30/15

03/31/15

06/30/14

06/30/15

06/30/14

Asset Quality

Allowance for Loan Losses (ALL)

Beginning balance

$

30,977

$

32,384

$

30,907

$

32,384

$

30,135

Add: Recoveries

1,023

672

512

1,695

2,171

Less: Charge-offs

3,205

3,829

1,540

7,034

2,427

Add: Provision for loan losses

3,549

1,750

1,500

5,299

1,500

Ending balance

$

32,344

$

30,977

$

31,379

$

32,344

$

31,379

ALL / total outstanding loans

0.59%

0.57%

0.60%

0.59%

0.60%

ALL / total outstanding loans, adjusted for acquisition accounting (4)

1.02%

1.03%

1.11%

1.02%

1.11%

Net charge-offs / total outstanding loans

0.16%

0.24%

0.08%

0.20%

0.01%

Provision / total outstanding loans

0.26%

0.13%

0.11%

0.19%

0.06%

Nonperforming Assets

Commercial

$

8,056

$

14,532

$

17,489

$

8,056

$

17,489

Consumer

1,465

2,853

5,610

1,465

5,610

Nonaccrual loans

9,521

17,385

23,099

9,521

23,099

Other real estate owned

22,222

25,434

38,494

22,222

38,494

Total nonperforming assets (NPAs)

31,743

42,819

61,593

31,743

61,593

Commercial

2,781

2,578

649

2,781

649

Consumer

8,122

5,354

6,221

8,122

6,221

Loans ≥ 90 days and still accruing

10,903

7,932

6,870

10,903

6,870

Total NPAs and loans ≥ 90 days

$

42,646

$

50,751

$

68,463

$

42,646

$

68,463

NPAs / total outstanding loans

0.58%

0.79%

1.18%

0.58%

1.18%

NPAs / total assets

0.42%

0.58%

0.84%

0.42%

0.84%

ALL / nonperforming loans

339.71%

178.18%

135.85%

339.71%

135.85%

ALL / nonperforming assets

101.89%

72.34%

50.95%

101.89%

50.95%

Past Due Detail

Commercial

$

2,274

$

1,388

$

3,369

$

2,274

$

3,369

Consumer

5,170

5,833

4,861

5,170

4,861

Loans 60-89 days past due

$

7,444

$

7,221

$

8,230

$

7,444

$

8,230

Commercial

$

6,420

$

6,499

$

5,518

$

6,420

$

5,518

Consumer

8,727

21,090

22,623

8,727

22,623

Loans 30-59 days past due

$

15,147

$

27,589

$

28,141

$

15,147

$

28,141

Commercial

$

77,519

$

81,155

$

114,893

$

77,519

$

114,893

Consumer

10,322

10,191

16,214

10,322

16,214

Purchased impaired

$

87,841

$

91,346

$

131,107

$

87,841

$

131,107

Troubled Debt Restructurings

Performing

$

19,880

$

21,336

$

30,561

$

19,880

$

30,561

Nonperforming

2,244

2,740

3,610

2,244

3,610

Total troubled debt restructurings

$

22,124

$

24,076

$

34,171

$

22,124

$

34,171

Per Share Data

Earnings per common share, basic

$

0.34

$

0.35

$

0.32

$

0.69

$

0.48

Earnings per common share, diluted

0.34

0.35

0.32

0.69

0.48

Cash dividends paid per common share

0.17

0.15

0.14

0.32

0.28

Market value per share

23.24

22.21

25.65

23.24

25.65

Book value per common share

22.02

21.98

21.38

22.02

21.38

Tangible book value per common share

14.87

14.78

14.08

14.87

14.08

Price to earnings ratio, diluted

17.04

15.65

19.98

16.70

26.50

Price to book value per common share ratio

1.06

1.01

1.20

1.06

1.20

Price to tangible common share ratio

1.56

1.50

1.82

1.56

1.82

Weighted average common shares outstanding, basic

45,128,698

45,105,969

46,194,880

45,117,396

46,583,975

Weighted average common shares outstanding, diluted

45,209,814

45,187,516

46,296,870

45,198,727

46,686,592

Common shares outstanding at end of period

45,112,893

45,155,024

45,874,662

45,112,893

45,874,662

 

 

Three Months Ended

Six Months Ended

06/30/15

03/31/15

06/30/14

06/30/15

06/30/14

Alternative Performance Measures (non-GAAP)

Operating Earnings (2)

Net Income (GAAP)

$

15,348

$

15,701

$

14,673

$

31,049

$

22,382

Plus: Merger and conversion related expense, after tax

-

-

3,043

-

12,059

Net operating earnings (loss) (non-GAAP)

$

15,348

$

15,701

$

17,716

$

31,049

$

34,441

Operating earnings per share - Basic

$

0.34

$

0.35

$

0.38

$

0.69

$

0.74

Operating earnings per share - Diluted

0.34

0.35

0.38

0.69

0.74

Operating ROA

0.83%

0.86%

0.98%

0.84%

0.96%

Operating ROE

6.21%

6.48%

7.26%

6.34%

7.03%

Operating ROTCE

9.20%

9.67%

11.04%

9.43%

10.66%

Community Bank Segment Operating Earnings (2)

Net Income (GAAP)

$

15,253

$

15,968

$

15,275

$

31,221

$

24,364

Plus: Merger and conversion related expense, after tax

-

-

3,043

-

12,059

Net operating earnings (loss) (non-GAAP)

$

15,253

$

15,968

$

18,318

$

31,221

$

36,423

Operating earnings per share - Basic

$

0.34

$

0.36

$

0.40

$

0.69

$

0.78

Operating earnings per share - Diluted

0.34

0.36

0.40

0.69

0.78

Operating ROA

0.82%

0.88%

1.01%

0.85%

1.01%

Operating ROE

6.19%

6.61%

7.56%

6.40%

7.52%

Operating ROTCE

9.18%

9.88%

11.54%

9.52%

11.46%

Operating Efficiency Ratio FTE (2)

Net Interest Income (GAAP)

$

63,816

$

61,969

$

63,715

$

125,785

$

127,473

FTE adjustment

2,291

2,161

2,101

4,452

4,065

Net Interest Income (FTE)

$

66,107

$

64,130

$

65,816

$

130,237

$

131,538

Noninterest Income (GAAP)

16,212

15,054

16,280

31,266

30,068

Noninterest Expense (GAAP)

$

55,241

$

53,840

$

58,967

$

109,081

$

126,252

Merger and conversion related expense

-

-

4,661

-

17,829

Noninterest Expense (Non-GAAP)

$

55,241

$

53,840

$

54,306

$

109,081

$

108,423

Operating Efficiency Ratio FTE (non-GAAP)

67.11%

67.99%

66.15%

67.54%

67.09%

Community Bank Segment Operating Efficiency Ratio FTE (2)

Net Interest Income (GAAP)

$

63,441

$

61,723

$

63,401

$

125,164

$

126,927

FTE adjustment

2,291

2,161

2,102

4,453

4,064

Net Interest Income (FTE)

$

65,732

$

63,884

$

65,503

$

129,617

$

130,991

Noninterest Income (GAAP)

13,523

12,848

13,422

26,371

25,081

Noninterest Expense (GAAP)

$

52,365

$

50,972

$

54,841

$

103,337

$

117,587

Merger and conversion related expense

-

-

4,661

-

17,829

Noninterest Expense (Non-GAAP)

$

52,365

$

50,972

$

50,180

$

103,337

$

99,758

Operating Efficiency Ratio FTE (non-GAAP)

66.07%

66.43%

63.58%

66.25%

63.92%

Tangible Common Equity (5)

Ending equity

$

988,134

$

986,916

$

976,326

$

988,134

$

976,326

Less: Ending goodwill

293,522

293,522

296,876

293,522

296,876

Less: Ending core deposit intangibles

27,394

29,533

36,479

27,394

36,479

Ending tangible common equity

$

667,218

$

663,861

$

642,971

$

667,218

$

642,971

Average equity

$

991,093

$

982,548

$

978,251

$

986,844

$

987,686

Less: Average goodwill

293,522

293,522

296,876

293,522

296,876

Less: Average core deposit intangibles

28,432

30,597

37,962

29,508

39,199

Average tangible common equity

$

669,139

$

658,429

$

643,413

$

663,814

$

651,611

 

 

Three Months Ended

Six Months Ended

06/30/15

03/31/15

06/30/14

06/30/15

06/30/14

ALL to loans, adjusted for acquisition accounting (non-GAAP)(4)

Allowance for loan losses

$

32,344

$

30,977

$

31,379

$

32,344

$

31,379

Remaining fair value mark on purchased performing loans

23,010

23,794

25,632

23,010

25,632

Adjusted allowance for loan losses

55,354

54,771

57,011

55,354

57,011

Loans, net of deferred fees

5,510,385

5,387,755

5,233,069

5,510,385

5,233,069

Remaining fair value mark on purchased performing loans

23,010

23,794

25,632

23,010

25,632

Less: Purchased credit impaired loans, net of fair value mark

87,841

91,346

131,107

87,841

131,107

Adjusted loans, net of deferred fees

$

5,445,554

$

5,320,203

$

5,127,594

$

5,445,554

$

5,127,594

ALL / gross loans, adjusted for acquisition accounting

1.02%

1.03%

1.11%

1.02%

1.11%

Mortgage Origination Volume

Refinance Volume

$

43,385

$

65,549

$

47,640

$

108,934

$

92,962

Construction Volume

20,946

19,552

39,441

40,498

71,544

Purchase Volume

75,971

53,613

108,039

129,584

179,675

Total Mortgage loan originations

$

140,302

$

138,714

$

195,120

$

279,016

$

344,181

% of originations that are refinances

30.92%

47.26%

24.42%

39.04%

27.01%

Other Data

End of period full-time employees

1,443

1,445

1,511

1,443

1,511

Number of full-service branches

131

131

131

131

131

Number of full automatic transaction machines (ATMs)

199

200

200

199

200

 

(1)

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

(2)

The Company has provided supplemental performance measures which it believes may be useful to investors as they exclude non-operating adjustments resulting from acquisition activity 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.

(3)

Beginning January 1, 2015, the Company calculates its regulatory capital under the Basel III Standardized Approach.  The Company calculated regulatory capital measures for periods prior to 2015 under previous regulatory requirements.  All ratios at June 30, 2015 are estimates and subject to change pending the Company's filing of its FR Y9-C. All other periods presented as filed.

(4)

The allowance for loan losses ratio, adjusted for acquisition accounting (non-GAAP), includes an adjustment for the fair value mark on purchased performing loans. The purchased performing loans are reported net of the related fair value mark in loans, net of deferred fees, on the Company's Consolidated Balance Sheet; therefore, the fair value mark is added back to the balance to represent the total loan portfolio. The adjusted allowance for loan losses, including the fair value mark, represents the total reserve on the Company's loan portfolio. The PCI loans, net of the respective fair value mark, are removed from the loans, net of deferred fees, as these PCI loans are not covered by the allowance established by the Company unless changes in expected cash flows indicate that one of the PCI loan pools are impaired, at which time an allowance for PCI loans will be established. 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 ratio, adjusted for acquisition accounting, 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 fair value 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.

(5)

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 BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

June 30,

December 31,

June 30,

2015

2014

2014

ASSETS

Cash and cash equivalents:

Cash and due from banks

$

109,480

$

112,752

$

136,799

Interest-bearing deposits in other banks

26,333

19,344

21,769

Money market investments

1

1

1

Federal funds sold

1,019

1,163

311

Total cash and cash equivalents

136,833

133,260

158,880

Securities available for sale, at fair value

888,362

1,102,114

1,094,777

Securities held to maturity, at carrying value

201,072

-

-

Restricted stock, at cost

50,171

54,854

47,204

Loans held for sale

39,450

42,519

62,891

Loans held for investment, net of deferred fees and costs

5,510,385

5,345,996

5,233,069

Less allowance for loan losses

32,344

32,384

31,379

Net loans held for investment

5,478,041

5,313,612

5,201,690

Premises and equipment, net

132,681

135,247

145,662

Other real estate owned, net of valuation allowance

22,222

28,118

38,494

Core deposit intangibles, net

27,394

31,755

36,479

Goodwill

293,522

293,522

296,876

Bank owned life insurance

141,284

139,005

136,537

Other assets

86,674

84,637

87,216

Total assets

$

7,497,706

$

7,358,643

$

7,306,706

LIABILITIES

Noninterest-bearing demand deposits

$

1,289,676

$

1,199,378

$

1,198,919

Interest-bearing deposits

4,494,798

4,439,392

4,535,644

Total deposits

5,784,474

5,638,770

5,734,563

Securities sold under agreements to repurchase

119,680

44,393

42,276

Other short-term borrowings

261,000

343,000

200,000

Long-term borrowings

300,294

299,542

298,786

Other liabilities

44,124

55,769

54,755

Total liabilities

6,509,572

6,381,474

6,330,380

Commitments and contingencies

STOCKHOLDERS' EQUITY

Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 45,112,893 shares, 45,162,853 shares, and 45,874,662 shares, respectively.

59,672

59,795

60,731

Surplus

640,936

643,443

659,179

Retained earnings

278,297

261,676

245,535

Accumulated other comprehensive income

9,229

12,255

10,881

Total stockholders' equity

988,134

977,169

976,326

Total liabilities and stockholders' equity

$

7,497,706

$

7,358,643

$

7,306,706

 

 

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except share data)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2015

2015

2014

2015

2014

Interest and dividend income:

Interest and fees on loans

$

62,604

$

60,452

$

61,386

$

123,056

$

122,655

Interest on federal funds sold

-

-

-

1

-

Interest on deposits in other banks

24

17

9

41

21

Interest and dividends on securities:

Taxable

3,860

3,807

3,860

7,667

7,508

Nontaxable

3,366

3,324

3,379

6,690

6,658

Total interest and dividend income

69,854

67,600

68,634

137,455

136,842

Interest expense:

Interest on deposits

3,680

3,321

2,550

7,000

4,806

Interest on federal funds purchased

4

1

23

5

46

Interest on short-term borrowings

255

249

146

505

265

Interest on long-term borrowings

2,099

2,060

2,200

4,160

4,252

Total interest expense

6,038

5,631

4,919

11,670

9,369

Net interest income

63,816

61,969

63,715

125,785

127,473

Provision for credit losses

3,749

1,750

1,500

5,499

1,500

Net interest income after provision for credit losses

60,067

60,219

62,215

120,286

125,973

Noninterest income:

Service charges on deposit accounts

4,622

4,214

4,525

8,835

8,822

Other service charges and fees

4,051

3,584

4,164

7,634

7,508

Fiduciary and asset management fees

2,312

2,219

2,330

4,531

4,633

Gains on sales of mortgage loans, net of commissions

2,574

2,379

3,030

4,952

5,328

Gains on securities transactions, net

404

193

426

597

455

Bank owned life insurance income

1,134

1,135

1,183

2,269

2,272

Other operating income

1,115

1,330

622

2,448

1,050

Total noninterest income

16,212

15,054

16,280

31,266

30,068

Noninterest expenses:

Salaries and benefits

25,561

27,492

27,616

53,052

56,830

Occupancy expenses

5,173

5,133

5,102

10,305

10,282

Furniture and equipment expenses

2,989

2,813

2,637

5,803

5,505

Printing, postage, and supplies

1,408

1,370

1,170

2,779

2,392

Communications expense

1,143

1,179

1,351

2,322

2,450

Technology and data processing

3,216

3,255

2,792

6,471

5,866

Professional services

1,669

1,348

1,442

3,017

2,497

Marketing and advertising expense

2,372

1,687

1,692

4,060

2,757

FDIC assessment premiums and other insurance

1,280

1,398

1,593

2,679

2,986

Other taxes

1,554

1,551

1,507

3,105

2,892

Loan-related expenses

687

684

630

1,371

1,172

OREO and credit-related expenses

1,965

1,186

2,244

3,152

3,694

Amortization of intangible assets

2,138

2,222

2,455

4,361

5,071

Acquisition and conversion costs

-

-

4,661

-

17,829

Branch closure expenses

1,280

-

-

1,280

-

Other expenses

2,806

2,522

2,075

5,324

4,029

Total noninterest expenses

55,241

53,840

58,967

109,081

126,252

Income before income taxes

21,038

21,433

19,528

42,471

29,789

Income tax expense

5,690

5,732

4,855

11,422

7,407

Net income

$

15,348

$

15,701

$

14,673

$

31,049

$

22,382

Basic earnings per common share

$

0.34

$

0.35

$

0.32

$

0.69

$

0.48

Diluted earnings per common share

$

0.34

$

0.35

$

0.32

$

0.69

$

0.48

 

 

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

(Dollars in thousands)

Community Bank

Mortgage

Eliminations

Consolidated

Three Months Ended June 30, 2015

Net interest income

$

63,441

$

375

$

-

$

63,816

Provision for credit losses

3,700

49

-

3,749

Net interest income after provision for credit losses

59,741

326

-

60,067

Noninterest income

13,523

2,860

(171)

16,212

Noninterest expenses

52,365

3,047

(171)

55,241

Income before income taxes

20,899

139

-

21,038

Income tax expense

5,646

44

-

5,690

Net income

$

15,253

$

95

$

-

$

15,348

Plus:  Merger and conversion related expense, after tax

-

-

-

-

Net operating earnings (non-GAAP)

$

15,253

$

95

$

-

$

15,348

Total assets

$

7,495,564

$

55,563

$

(53,421)

$

7,497,706

Three Months Ended March 31, 2015

Net interest income

$

61,723

$

246

$

-

$

61,969

Provision for credit losses

1,750

-

-

1,750

Net interest income after provision for credit losses

59,973

246

-

60,219

Noninterest income

12,848

2,376

(170)

15,054

Noninterest expenses

50,972

3,038

(170)

53,840

Income (loss) before income taxes

21,849

(416)

-

21,433

Income tax expense (benefit)

5,881

(149)

-

5,732

Net income (loss)

$

15,968

$

(267)

$

-

$

15,701

Plus:  Merger and conversion related expense, after tax

-

-

-

-

Net operating earnings (loss) (non-GAAP)

$

15,968

$

(267)

$

-

$

15,701

Total assets

$

7,382,266

$

55,380

$

(49,087)

$

7,388,559

Three Months Ended June 30, 2014

Net interest income

$

63,401

$

314

$

-

$

63,715

Provision for credit losses

1,500

-

-

1,500

Net interest income after provision for credit losses

61,901

314

-

62,215

Noninterest income

13,422

3,028

(170)

16,280

Noninterest expenses

54,841

4,296

(170)

58,967

Income (loss) before income taxes

20,482

(954)

-

19,528

Income tax expense (benefit)

5,207

(352)

-

4,855

Net income (loss)

$

15,275

$

(602)

$

-

$

14,673

Plus:  Merger and conversion related expense, after tax

3,043

-

-

3,043

Net operating earnings (loss) (non-GAAP)

$

18,318

$

(602)

$

-

$

17,716

Total assets

$

7,304,704

$

77,299

$

(75,297)

$

7,306,706

 

 

Community Bank

Mortgage

Eliminations

Consolidated

Six Months Ended June 30, 2015

Net interest income

$

125,164

$

621

$

-

$

125,785

Provision for credit losses

5,450

49

-

5,499

Net interest income after provision for credit losses

119,714

572

-

120,286

Noninterest income

26,371

5,236

(341)

31,266

Noninterest expenses

103,337

6,085

(341)

109,081

Income (loss) before income taxes

42,748

(277)

-

42,471

Income tax expense (benefit)

11,527

(105)

-

11,422

Net income (loss)

$

31,221

$

(172)

$

-

$

31,049

Plus:  Merger and conversion related expense, after tax

-

-

-

-

Net operating earnings (loss) (non-GAAP)

$

31,221

$

(172)

$

-

$

31,049

Total assets

$

7,495,564

$

55,563

$

(53,421)

$

7,497,706

Six Months Ended June 30, 2014

Net interest income

$

126,927

$

546

$

-

$

127,473

Provision for credit losses

1,500

-

-

1,500

Net interest income after provision for credit losses

125,427

546

-

125,973

Noninterest income

25,081

5,328

(341)

30,068

Noninterest expenses

117,587

9,006

(341)

126,252

Income (loss) before income taxes

32,921

(3,132)

-

29,789

Income tax expense (benefit)

8,557

(1,150)

-

7,407

Net income (loss)

$

24,364

$

(1,982)

$

-

$

22,382

Plus:  Merger and conversion related expense, after tax

12,059

-

-

12,059

Net operating earnings (loss) (non-GAAP)

$

36,423

$

(1,982)

$

-

$

34,441

Total assets

$

7,304,704

$

77,299

$

(75,297)

$

7,306,706

 

 

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

For the Quarter Ended

June 30, 2015

March 31, 2015

Average Balance

Interest Income / Expense

Yield / Rate (1)

Average Balance

Interest Income / Expense

Yield / Rate (1)

(Dollars in thousands)

Assets:

Securities:

Taxable

$

720,939

$

3,860

2.15%

$

730,404

$

3,807

2.11%

Tax-exempt

422,404

5,179

4.92%

413,228

5,114

5.02%

Total securities

1,143,343

9,039

3.17%

1,143,632

8,921

3.16%

Loans, net (2) (3)

5,448,126

62,687

4.62%

5,360,676

60,527

4.58%

Loans held for sale

43,307

395

3.66%

38,469

296

3.12%

Federal funds sold

572

-

0.17%

792

-

0.20%

Money market investments

1

-

0.00%

1

-

0.00%

Interest-bearing deposits in other banks

41,091

24

0.23%

32,845

17

0.20%

Total earning assets

6,676,440

$

72,145

4.33%

6,576,415

$

69,761

4.30%

Allowance for loan losses

(31,675)

(32,992)

Total non-earning assets

814,681

819,260

Total assets

$

7,459,446

$

7,362,683

Liabilities and Stockholders' Equity:

Interest-bearing deposits:

Transaction and money market accounts

$

2,632,835

$

1,201

0.18%

$

2,591,991

$

1,160

0.18%

Regular savings

564,348

262

0.19%

555,356

268

0.20%

Time deposits (4)

1,233,904

2,217

0.72%

1,269,352

1,893

0.60%

Total interest-bearing deposits

4,431,087

3,680

0.33%

4,416,699

3,321

0.30%

Other borrowings (5)

703,223

2,358

1.34%

679,341

2,310

1.38%

Total interest-bearing liabilities

5,134,310

$

6,038

0.47%

5,096,040

$

5,631

0.45%

Noninterest-bearing liabilities:

Demand deposits

1,278,876

1,223,218

Other liabilities

55,167

60,877

Total liabilities

6,468,353

6,380,135

Stockholders' equity

991,093

982,548

Total liabilities and stockholders' equity

$

7,459,446

$

7,362,683

Net interest income

$

66,107

$

64,130

Interest rate spread (6)

3.86%

3.85%

Cost of funds

0.36%

0.35%

Net interest margin (7)

3.97%

3.95%

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

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

(3) Interest income on loans includes $1.1 million and $639,000 for the three months ended June 30, 2015 and March 31, 2015, respectively, in accretion of the fair market value adjustments related to acquisitions.

(4) Interest expense on certificates of deposits includes $614,000 and $1.1 million for the three months ended June 30, 2015 and March 31, 2015, respectively, in accretion of the fair market value adjustments related to acquisitions.

(5) Interest expense on borrowings includes $137,000 for both the three months ended June 30, 2015 and March 31, 2015, respectively, in accretion of the fair market value adjustments related to acquisitions.

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

(7) Core net interest margin excludes purchase accounting adjustments and was 3.86% and 3.84% for the three months ended June 30, 2015 and March 31, 2015, respectively.

 

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SOURCE Union Bankshares Corporation



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