Union Bankshares Reports Second Quarter Results

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Jul 21, 2015, 07:30 ET

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 21^st, 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.