RICHMOND, Va., April 24, 2018 (GLOBE NEWSWIRE) -- Union Bankshares Corporation (the “Company” or “Union”) (NASDAQ:UBSH) today reported net income of $16.6 million and earnings per share of $0.25 for its first quarter ended March 31, 2018. Net operating earnings(1) were $38.9 million and operating earnings per share(1) were $0.59 for its first quarter ended March 31, 2018; these operating results exclude $22.2 million in after-tax merger-related costs.
The Company's first quarter of 2018 results include the financial results of Xenith Bankshares, Inc. (“Xenith”), which the Company acquired on January 1, 2018.
“Union is off to a strong start to the year as demonstrated by our financial results and the Xenith integration continues to go well,” said John C. Asbury, President and CEO of Union Bankshares Corporation. “With solid loan and deposit growth and meaningful improvements to our profitability metrics, on an operating basis, I believe our first quarter results signal the underlying strength and earnings potential of this uniquely valuable franchise - Virginia’s regional bank.
The ‘new Union’ team is energized and has come together seamlessly. Core systems conversion remains on track to be completed in May and we have a clear line of sight to fully achieve our cost savings target beginning in the fourth quarter of 2018. We remain focused on achieving our 2018 priorities and generating top-tier financial performance for our shareholders.”
Select highlights for the first quarter of 2018 include:
- Performance metrics linked quarter
- Return on Average Assets (“ROA”) was 0.52% compared to 0.66% in the fourth quarter of 2017. The decline was driven by the increased merger-related costs in the first quarter of 2018 compared to the prior quarter. Operating ROA(1) increased to 1.21% compared to 1.00% in the fourth quarter of 2017.
- Return on Average Equity (“ROE”) was 3.70% compared to 5.75% in the fourth quarter of 2017. The decline in ROE was related to the increased merger-related costs in the first quarter of 2018 compared to the prior quarter. Operating ROE(1) was 8.64% compared to 8.63% in the fourth quarter of 2017.
- Return on Average Tangible Common Equity (“ROTCE”) was 6.40% compared to 8.20% in the fourth quarter of 2017. The decline in ROTCE was related to the increased merger-related costs in the first quarter of 2018 compared to the prior quarter. Operating ROTCE(1) increased to 14.95% compared to 12.32% in the fourth quarter of 2017.
- Efficiency ratio increased to 82.5% compared to 66.1% in the fourth quarter of 2017 and the efficiency ratio (FTE) increased to 81.5% compared to 64.2% in the fourth quarter of 2017 driven by the increased merger-related costs in the first quarter of 2018 compared to the prior quarter. Operating efficiency ratio(1) improved to 59.8% compared to 62.1% in the fourth quarter of 2017.
- Segment results
- Net income for the community bank segment was $16.4 million, or $0.25 per share; operating earnings(1) for the community bank segment were $38.7 million, or $0.59 per share.
- Net income for the mortgage segment was $208,000 compared to net income of $199,000 and operating earnings(1), which excludes nonrecurring tax expenses, of $329,000 in the fourth quarter of 2017.
(1) For a reconciliation of the non-GAAP operating measures that exclude merger-related costs and/or nonrecurring tax expenses unrelated to the Company’s normal operations, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.
NET INTEREST INCOME
For the first quarter of 2018, net interest income was $103.7 million, an increase of $30.4 million from the fourth quarter of 2017. Tax-equivalent net interest income was $105.3 million in the first quarter of 2018, an increase of $29.1 million from the fourth quarter of 2017. The increases in both net interest income and tax-equivalent net interest income were primarily the result of a $3.2 billion increase in average interest-earning assets and a $2.6 billion increase in average interest-bearing liabilities from the full quarter impact of the Xenith acquisition. The first quarter net interest margin increased 16 basis points to 3.67% from 3.51% in the previous quarter, while the tax-equivalent net interest margin increased 8 basis points to 3.72% from 3.64% during the same periods. The increase in the net interest margin was principally due to an increase in the yield on earning assets, partially offset by a smaller increase in cost of funds.
The Company’s tax-equivalent net interest margin includes the impact of acquisition accounting fair value adjustments. During the first quarter of 2018, net accretion related to acquisition accounting increased $3.4 million from the prior quarter to $5.6 million for the quarter ended March 31, 2018. The increase was related to the acquisition of Xenith. The fourth quarter of 2017, first quarter of 2018, and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):
| Loan Accretion | Deposit Accretion | Borrowings Accretion (Amortization) | Total | ||||||||||||
| For the quarter ended December 31, 2017 | $ | 2,107 | $ | — | $ | 27 | $ | 2,134 | |||||||
| For the quarter ended March 31, 2018 | 4,846 | 832 | (98 | ) | 5,580 | ||||||||||
| For the remaining nine months of 2018 | 10,083 | 1,722 | (408 | ) | 11,397 | ||||||||||
| For the years ending (estimated) : | |||||||||||||||
| 2019 | 11,145 | 1,170 | (660 | ) | 11,655 | ||||||||||
| 2020 | 8,635 | 284 | (734 | ) | 8,185 | ||||||||||
| 2021 | 6,776 | 108 | (805 | ) | 6,079 | ||||||||||
| 2022 | 4,830 | 21 | (827 | ) | 4,024 | ||||||||||
| 2023 | 3,052 | — | (850 | ) | 2,202 | ||||||||||
| Thereafter | 12,020 | — | (11,633 | ) | 387 | ||||||||||
ASSET QUALITY/LOAN LOSS PROVISION
Overview
During the first quarter of 2018, the Company experienced increases in nonperforming asset (“NPA”) balances from the prior quarter, primarily related to nonaccrual additions of mortgage and commercial & industrial loans and acquired other real estate owned (“OREO”). At March 31, 2018, NPAs as a percentage of total outstanding loans declined compared to the prior quarter and same quarter the prior year. Past due loan levels as a percentage of total loans held for investment at March 31, 2018 were fairly consistent with past due loan levels at December 31, 2017 and March 31, 2017. Charge-off levels and the loan loss provision decreased from the fourth quarter of 2017.
All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $102.9 million (net of fair value mark of $21.7 million).
Nonperforming Assets
At March 31, 2018, NPAs totaled $35.2 million, an increase of $6.9 million, or 24.2%, from December 31, 2017 and an increase of $3.3 million, or 10.3%, from March 31, 2017. In addition, NPAs as a percentage of total outstanding loans declined 4 basis points from 0.40% at December 31, 2017 and 13 basis points from 0.49% at March 31, 2017 to 0.36% at March 31, 2018. As the Company's NPAs have been at historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but have no significant impact on the Company's overall asset quality position.
The following table shows a summary of asset quality balances at the quarter ended (dollars in thousands):
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||
| Nonaccrual loans | $ | 25,138 | $ | 21,743 | $ | 20,122 | $ | 24,574 | $ | 22,338 | |||||||||
| Foreclosed properties | 8,079 | 5,253 | 6,449 | 6,828 | 6,951 | ||||||||||||||
| Former bank premises | 2,020 | 1,383 | 2,315 | 2,654 | 2,654 | ||||||||||||||
| Total nonperforming assets | $ | 35,237 | $ | 28,379 | $ | 28,886 | $ | 34,056 | $ | 31,943 | |||||||||
The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||
| Beginning Balance | $ | 21,743 | $ | 20,122 | $ | 24,574 | $ | 22,338 | $ | 9,973 | |||||||||
| Net customer payments | (1,455 | ) | (768 | ) | (4,642 | ) | (1,498 | ) | (1,068 | ) | |||||||||
| Additions | 5,451 | 4,335 | 4,114 | 5,979 | 13,557 | ||||||||||||||
| Charge-offs | (403 | ) | (1,305 | ) | (3,376 | ) | (2,004 | ) | (97 | ) | |||||||||
| Loans returning to accruing status | (182 | ) | (448 | ) | — | (134 | ) | (27 | ) | ||||||||||
| Transfers to OREO | (16 | ) | (193 | ) | (548 | ) | (107 | ) | — | ||||||||||
| Ending Balance | $ | 25,138 | $ | 21,743 | $ | 20,122 | $ | 24,574 | $ | 22,338 | |||||||||
The following table shows the activity in OREO for the quarter ended (dollars in thousands):
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||
| Beginning Balance | $ | 6,636 | $ | 8,764 | $ | 9,482 | $ | 9,605 | $ | 10,084 | |||||||||
| Additions of foreclosed property | 44 | 325 | 621 | 132 | — | ||||||||||||||
| Acquisitions of foreclosed property | 4,204 | — | — | — | — | ||||||||||||||
| Acquisitions of former bank premises | 1,208 | — | — | — | — | ||||||||||||||
| Valuation adjustments | (759 | ) | (1,046 | ) | (588 | ) | (19 | ) | (238 | ) | |||||||||
| Proceeds from sales | (1,255 | ) | (1,419 | ) | (648 | ) | (272 | ) | (277 | ) | |||||||||
| Gains (losses) from sales | 21 | 12 | (103 | ) | 36 | 36 | |||||||||||||
| Ending Balance | $ | 10,099 | $ | 6,636 | $ | 8,764 | $ | 9,482 | $ | 9,605 | |||||||||
Past Due Loans
Past due loans still accruing interest totaled $41.6 million, or 0.42% of total loans, at March 31, 2018 compared to $27.8 million, or 0.39% of total loans, at December 31, 2017 and $26.9 million, or 0.41% of total loans, at March 31, 2017. Of the total past due loans still accruing interest, $2.6 million, or 0.03% of total loans, were loans past due 90 days or more at March 31, 2018, compared to $3.5 million, or 0.05% of total loans, at December 31, 2017 and $2.3 million, or 0.04% of total loans, at March 31, 2017.
Net Charge-offs
For the first quarter of 2018, net charge-offs were $1.1 million, or 0.05% of total average loans on an annualized basis, compared to $2.7 million, or 0.15%, for the prior quarter and $788,000, or 0.05%, for the same quarter last year. Of the net charge-offs in the first quarter of 2018, the majority were related to consumer loans.
Provision for Loan Losses
The provision for loan losses for the first quarter of 2018 was $3.5 million, a decrease of $211,000 compared to the previous quarter and an increase of $1.5 million compared to the same quarter in 2017. The decrease in provision from the fourth quarter of 2017 was primarily driven by lower levels of charge-offs partially offset by the impact of loan growth in the current quarter. The increase in the provision for loan losses compared to the first quarter of 2017 was primarily driven by loan growth and higher levels of charge-offs in the first quarter of 2018.
Allowance for Loan Losses (“ALL”)
The ALL increased $2.4 million from December 31, 2017 to $40.6 million at March 31, 2018 primarily due to organic loan growth during the quarter. The ALL as a percentage of the total loan portfolio was 0.41% at March 31, 2018, 0.54% at December 31, 2017, and 0.59% at March 31, 2017. The decline in the allowance ratio was primarily attributable to the acquisition of Xenith. In acquisition accounting, there is no carryover of previously established allowance for loan losses.
The ratio of the ALL to nonaccrual loans was 161.6% at March 31, 2018, compared to 175.7% at December 31, 2017 and 172.0% at March 31, 2017. 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 $5.1 million, or 29.4%, to $22.3 million for the quarter ended March 31, 2018 from $17.2 million in the prior quarter, primarily driven by the acquisition of Xenith. Other operating income includes a gain of $1.4 million related to the sale of the Company's ownership interest in a payments-related company.
Mortgage banking income decreased $77,000, or 3.6%, to $2.0 million in the first quarter of 2018 compared to the fourth quarter of 2017, primarily related to declines in mortgage loan originations offset by unrealized gains on mortgage banking derivatives in the first quarter of 2018 compared to losses in the fourth quarter of 2017. Mortgage loan originations declined by $29.4 million, or 24.1%, in the first quarter of 2018 to $92.5 million from $121.9 million in the fourth quarter of 2017. Of the mortgage loan originations in the first quarter of 2018, 38.5% were refinances compared with 34.4% in the prior quarter.
NONINTEREST EXPENSE
Noninterest expense increased $44.1 million to $104.0 million for the quarter ended March 31, 2018 from $59.9 million in the prior quarter. Excluding merger-related costs of $27.7 million and $1.9 million in the first quarter of 2018 and the fourth quarter of 2017, respectively, operating noninterest expense increased $18.3 million to $76.3 million when compared to the fourth quarter of 2017. The increase in operating noninterest expense was primarily related to the acquisition of Xenith.
INCOME TAXES
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law. Among other things, the Tax Act permanently reduced the corporate tax rate to 21% from the prior maximum rate of 35%, effective for tax years including or commencing January 1, 2018. As a result of the reduction of the corporate tax rate to 21%, companies are required to revalue their deferred tax assets and liabilities as of the date of enactment, with resulting tax effects accounted for in the fourth quarter of 2017. The Company continues to evaluate the impact on its 2017 tax expense of the revaluation required by the lower corporate tax rate implemented by the Tax Act, which management has estimated to fall between $5.0 million and $8.0 million. During the fourth quarter of 2017, the Company recorded $6.3 million in additional tax expense based on the Company's preliminary analysis of the impact of the Tax Act. The Company's preliminary estimate of the impact of the Tax Act is based on currently available information and interpretation of its provisions. The actual results may differ from the current estimate due to, among other things, further guidance that may be issued by U.S. tax authorities or regulatory bodies and/or changes in interpretations and assumptions that the Company has preliminarily made. The Company's evaluation of the impact of the Tax Act is subject to refinement for up to one year after enactment. No additional adjustments related to the Tax Act were recorded in the first quarter of 2018.
The effective tax rate for the three months ended March 31, 2018 was 10.3%. During the first quarter of 2018, tax benefits related to stock compensation of approximately $1.2 million were recorded in accordance with ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”
BALANCE SHEET
At March 31, 2018, total assets were $13.1 billion, an increase of $3.8 billion from December 31, 2017, reflecting the impact of the Xenith acquisition.
On January 1, 2018 the Company completed its acquisition of Xenith. Below is a summary of the transaction and related impact on the Company's balance sheet.
- The fair value of assets acquired equaled $3.249 billion, and the fair value of liabilities assumed equaled $2.868 billion.
- Loans held for investment acquired totaled $2.507 billion with a fair value of $2.459 billion.
- Total deposits assumed totaled $2.546 billion with a fair value of $2.550 billion.
- Total goodwill arising from the transaction equaled $419.6 million.
- Core deposit intangibles acquired totaled $38.5 million.
Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition, in accordance with ASC 805, Business Combinations. Xenith's 12/31/17 balance sheet can be found at the end of this release.
At March 31, 2018, loans held for investment (net of deferred fees and costs) were $9.8 billion, an increase of $2.7 billion, or 37.3%, from December 31, 2017, while average loans increased $2.7 billion, or 39.0%, from the prior quarter. Loans held for investment increased $3.3 billion, or 49.6%, from March 31, 2017, while average loans increased $3.3 billion, or 51.6%, from the prior year.
At March 31, 2018, total deposits were $9.7 billion, an increase of $2.7 billion, or 38.4%, from December 31, 2017, while average deposits increased $2.5 billion, or 36.1%, from the prior quarter. Total deposits grew $3.1 billion, or 46.3%, from March 31, 2017, while average deposits increased $3.1 billion, or 47.7%, from the prior year.
The following table shows the Company's regulatory capital ratios at the quarters ended:
| March 31, | December 31, | March 31, | |||||||
| 2018 | 2017 | 2017 | |||||||
| Common equity Tier 1 capital ratio (1) | 9.03 | % | 9.04 | % | 9.55 | % | |||
| Tier 1 capital ratio (1) | 10.19 | % | 10.14 | % | 10.77 | % | |||
| Total capital ratio (1) | 11.97 | % | 12.43 | % | 13.30 | % | |||
| Leverage ratio (Tier 1 capital to average assets) (1) | 9.32 | % | 9.42 | % | 9.79 | % | |||
| Common equity to total assets | 13.93 | % | 11.23 | % | 11.71 | % | |||
| Tangible common equity to tangible assets (2) | 8.59 | % | 8.14 | % | 8.36 | % | |||
| (1) All ratios at March 31, 2018 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed. | |||||||||
| (2) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results. | |||||||||
During the first quarter of 2018, the Company declared and paid cash dividends of $0.21 per common share, consistent with the fourth quarter of 2017 and an increase of $0.01, or 5.0%, compared to the first quarter of 2017.
ABOUT UNION BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Union Bankshares Corporation (NASDAQ: UBSH) is the holding company for Union Bank & Trust, which has 150 branches, 39 of which are operated as Xenith Bank, a division of Union Bank & Trust of Richmond, Virginia, and approximately 216 ATMs located throughout Virginia and in portions of Maryland and North Carolina. Union Bank & Trust also operates Shore Premier Finance, a specialty marine lender. Non-bank affiliates of the holding company include: Union Mortgage Group, Inc., which provides a full line of mortgage products, Old Dominion Capital Management, Inc. and Dixon, Hubard, Feinour, & Brown, Inc., which both provide investment advisory services, and Union Insurance Group, LLC, which offers various lines of insurance products.
Union Bankshares Corporation will hold a conference call on Tuesday, April 24th, 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; international callers wishing to participate may do so by dialing (973) 453-3058. The conference ID number is 4278718.
NON-GAAP MEASURES
In reporting the results of the quarter ended March 31, 2018, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis. These measures are a supplement to GAAP used to prepare the Company’s financial statements and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. 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, are based on certain assumptions as of the time they are made, and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” 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 or changes in:
- the possibility that any of the anticipated benefits of the Merger with Xenith will not be realized or will not be realized within the expected time period, the businesses of the Company and Xenith may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, the expected revenue synergies and cost savings from the Merger may not be fully realized or realized within the expected time frame, revenues following the Merger may be lower than expected, or customer and employee relationships and business operations may be disrupted by the Merger,
- changes in interest rates,
- general economic and financial market conditions,
- the Company’s ability to manage its growth or implement its growth strategy,
- the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets,
- levels of unemployment in the Bank’s lending area,
- real estate values in the Bank’s lending area,
- an insufficient allowance for loan losses,
- the quality or composition of the loan or investment portfolios,
- concentrations of loans secured by real estate, particularly commercial real estate,
- the effectiveness of the Company’s credit processes and management of the Company’s credit risk,
- demand for loan products and financial services in the Company’s market area,
- the Company’s ability to compete in the market for financial services,
- technological risks and developments, and cyber attacks or events,
- performance by the Company’s counterparties or vendors,
- deposit flows,
- the availability of financing and the terms thereof,
- the level of prepayments on loans and mortgage-backed securities,
- legislative or regulatory changes and requirements,
- the impact of the Tax Act, including, but not limited to, the effect of the lower corporate tax rate, including on the valuation of the Company's tax assets and liabilities,
- any future refinements to the Company's preliminary analysis of the impact of the Tax Act on the Company,
- changes in the effect of the Tax Act due to issuance of interpretive regulatory guidance or enactment of corrective or supplement legislation,
- monetary and fiscal policies of the U.S. government including policies of the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System, and
- accounting principles and guidelines.
More information on risk factors that could affect the Company’s forward-looking statements is available on the Company’s website, http://investors.bankatunion.com or the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and other reports filed with the Securities and Exchange Commission. The information on the Company’s website is not a part of this press release. All risk factors and uncertainties described in those documents should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. 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.
Contact:
Robert M. Gorman - (804) 523-7828
Executive Vice President / Chief Financial Officer
| UNION BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||
| KEY FINANCIAL RESULTS | |||||||||||
| (Dollars in thousands, except share data) | |||||||||||
| (FTE - "Fully Taxable Equivalent") | |||||||||||
| As of & For Three Months Ended | |||||||||||
| 3/31/18 | 12/31/17 | 3/31/17 | |||||||||
| Results of Operations | (unaudited) | (unaudited) | (unaudited) | ||||||||
| Interest and dividend income | $ | 124,654 | $ | 87,482 | $ | 76,640 | |||||
| Interest expense | 20,907 | 14,090 | 10,073 | ||||||||
| Net interest income | 103,747 | 73,392 | 66,567 | ||||||||
| Provision for credit losses | 3,500 | 3,411 | 2,122 | ||||||||
| Net interest income after provision for credit losses | 100,247 | 69,981 | 64,445 | ||||||||
| Noninterest income | 22,309 | 17,243 | 18,839 | ||||||||
| Noninterest expenses | 104,008 | 59,944 | 57,395 | ||||||||
| Income before income taxes | 18,548 | 27,280 | 25,889 | ||||||||
| Income tax expense | 1,909 | 12,095 | 6,765 | ||||||||
| Net income | $ | 16,639 | $ | 15,185 | $ | 19,124 | |||||
| Interest earned on earning assets (FTE) (1) | $ | 126,217 | $ | 90,263 | $ | 79,180 | |||||
| Net interest income (FTE) (1) | 105,310 | 76,173 | 69,107 | ||||||||
| Net income - community bank segment | $ | 16,431 | $ | 14,986 | $ | 19,120 | |||||
| Net income - mortgage segment | 208 | 199 | 4 | ||||||||
| Key Ratios | |||||||||||
| Earnings per common share, diluted | $ | 0.25 | $ | 0.35 | $ | 0.44 | |||||
| Return on average assets (ROA) | 0.52 | % | 0.66 | % | 0.92 | % | |||||
| Return on average equity (ROE) | 3.70 | % | 5.75 | % | 7.68 | % | |||||
| Return on average tangible common equity (ROTCE) (2) | 6.40 | % | 8.20 | % | 11.20 | % | |||||
| Efficiency ratio | 82.51 | % | 66.14 | % | 67.20 | % | |||||
| Efficiency ratio (FTE) (1) | 81.50 | % | 64.17 | % | 65.26 | % | |||||
| Net interest margin | 3.67 | % | 3.51 | % | 3.52 | % | |||||
| Net interest margin (FTE) (1) | 3.72 | % | 3.64 | % | 3.66 | % | |||||
| Yields on earning assets (FTE) (1) | 4.46 | % | 4.32 | % | 4.19 | % | |||||
| Cost of interest-bearing liabilities (FTE) (1) | 0.93 | % | 0.87 | % | 0.68 | % | |||||
| Cost of funds (FTE) (1) | 0.74 | % | 0.68 | % | 0.53 | % | |||||
| Operating Measures (3) | |||||||||||
| Net operating earnings | $ | 38,875 | $ | 22,821 | $ | 19,124 | |||||
| Operating earnings per share, diluted | $ | 0.59 | $ | 0.52 | $ | 0.44 | |||||
| Operating ROA | 1.21 | % | 1.00 | % | 0.92 | % | |||||
| Operating ROE | 8.64 | % | 8.63 | % | 7.68 | % | |||||
| Operating ROTCE | 14.95 | % | 12.32 | % | 11.20 | % | |||||
| Operating efficiency ratio (FTE) (1) | 59.79 | % | 62.12 | % | 65.26 | % | |||||
| Community bank segment net operating earnings | $ | 38,667 | $ | 22,492 | $ | 19,120 | |||||
| Community bank segment operating earnings per share, diluted | $ | 0.59 | $ | 0.51 | $ | 0.44 | |||||
| Mortgage segment net operating earnings | $ | 208 | $ | 329 | $ | 4 | |||||
| Per Share Data | |||||||||||
| Earnings per common share, basic | $ | 0.25 | $ | 0.35 | $ | 0.44 | |||||
| Earnings per common share, diluted | 0.25 | 0.35 | 0.44 | ||||||||
| Cash dividends paid per common share | 0.21 | 0.21 | 0.20 | ||||||||
| Market value per share | 36.71 | 36.17 | 35.18 | ||||||||
| Book value per common share | 27.87 | 24.10 | 23.44 | ||||||||
| Tangible book value per common share (2) | 16.14 | 16.88 | 16.12 | ||||||||
| Price to earnings ratio, diluted | 36.21 | 26.05 | 19.71 | ||||||||
| Price to book value per common share ratio | 1.32 | 1.50 | 1.50 | ||||||||
| Price to tangible book value per common share ratio (2) | 2.27 | 2.14 | 2.18 | ||||||||
| Weighted average common shares outstanding, basic | 65,554,630 | 43,740,001 | 43,654,498 | ||||||||
| Weighted average common shares outstanding, diluted | 65,636,262 | 43,816,018 | 43,725,923 | ||||||||
| Common shares outstanding at end of period | 65,895,421 | 43,743,318 | 43,679,947 | ||||||||
| As of & For Three Months Ended | |||||||||||
| 3/31/18 | 12/31/17 | 3/31/17 | |||||||||
| Capital Ratios | (unaudited) | (unaudited) | (unaudited) | ||||||||
| Common equity Tier 1 capital ratio (4) | 9.03 | % | 9.04 | % | 9.55 | % | |||||
| Tier 1 capital ratio (4) | 10.19 | % | 10.14 | % | 10.77 | % | |||||
| Total capital ratio (4) | 11.97 | % | 12.43 | % | 13.30 | % | |||||
| Leverage ratio (Tier 1 capital to average assets) (4) | 9.32 | % | 9.42 | % | 9.79 | % | |||||
| Common equity to total assets | 13.93 | % | 11.23 | % | 11.71 | % | |||||
| Tangible common equity to tangible assets (2) | 8.59 | % | 8.14 | % | 8.36 | % | |||||
| Financial Condition | |||||||||||
| Assets | $ | 13,143,318 | $ | 9,315,179 | $ | 8,669,920 | |||||
| Loans held for investment | 9,805,723 | 7,141,552 | 6,554,046 | ||||||||
| Earning Assets | 11,595,325 | 8,513,145 | 7,859,563 | ||||||||
| Goodwill | 718,132 | 298,528 | 298,191 | ||||||||
| Amortizable intangibles, net | 50,092 | 14,803 | 18,965 | ||||||||
| Deposits | 9,677,955 | 6,991,718 | 6,614,195 | ||||||||
| Stockholders' equity | 1,831,077 | 1,046,329 | 1,015,631 | ||||||||
| Tangible common equity (2) | 1,062,853 | 732,998 | 698,475 | ||||||||
| Loans held for investment, net of deferred fees and costs | |||||||||||
| Construction and land development | $ | 1,249,196 | $ | 948,791 | $ | 770,287 | |||||
| Commercial real estate - owner occupied | 1,279,155 | 943,933 | 870,559 | ||||||||
| Commercial real estate - non-owner occupied | 2,230,463 | 1,713,659 | 1,631,767 | ||||||||
| Multifamily real estate | 547,520 | 357,079 | 353,769 | ||||||||
| Commercial & Industrial | 1,125,733 | 612,023 | 576,567 | ||||||||
| Residential 1-4 Family - commercial | 714,660 | 612,395 | 580,568 | ||||||||
| Residential 1-4 Family - mortgage | 604,354 | 485,690 | 476,871 | ||||||||
| Auto | 288,089 | 282,474 | 271,466 | ||||||||
| HELOC | 642,084 | 537,521 | 527,863 | ||||||||
| Consumer | 839,699 | 410,089 | 342,134 | ||||||||
| Other Commercial | 284,770 | 237,898 | 152,195 | ||||||||
| Total loans held for investment | $ | 9,805,723 | $ | 7,141,552 | $ | 6,554,046 | |||||
| Deposits | |||||||||||
| NOW accounts | $ | 2,185,562 | $ | 1,929,416 | $ | 1,792,531 | |||||
| Money market accounts | 2,692,662 | 1,685,174 | 1,499,585 | ||||||||
| Savings accounts | 654,931 | 546,274 | 602,851 | ||||||||
| Time deposits of $100,000 and over | 819,056 | 624,112 | 555,431 | ||||||||
| Other time deposits | 1,268,319 | 704,534 | 672,998 | ||||||||
| Total interest-bearing deposits | $ | 7,620,530 | $ | 5,489,510 | $ | 5,123,396 | |||||
| Demand deposits | 2,057,425 | 1,502,208 | 1,490,799 | ||||||||
| Total deposits | $ | 9,677,955 | $ | 6,991,718 | $ | 6,614,195 | |||||
| Averages | |||||||||||
| Assets | $ | 13,013,598 | $ | 9,085,211 | $ | 8,465,517 | |||||
| Loans held for investment | 9,680,195 | 6,962,299 | 6,383,905 | ||||||||
| Loans held for sale | 28,709 | 31,448 | 27,359 | ||||||||
| Securities | 1,567,269 | 1,238,663 | 1,207,768 | ||||||||
| Earning assets | 11,475,099 | 8,293,366 | 7,660,937 | ||||||||
| Deposits | 9,463,697 | 6,955,949 | 6,407,281 | ||||||||
| Certificates of deposit | 2,085,930 | 1,335,357 | 1,211,064 | ||||||||
| Interest-bearing deposits | 7,489,893 | 5,435,705 | 5,013,315 | ||||||||
| Borrowings | 1,614,691 | 1,022,307 | 986,645 | ||||||||
| Interest-bearing liabilities | 9,104,584 | 6,458,012 | 5,999,960 | ||||||||
| Stockholders' equity | 1,824,588 | 1,048,632 | 1,010,318 | ||||||||
| Tangible common equity (2) | 1,054,798 | 734,847 | 692,384 | ||||||||
| As of & For Three Months Ended | |||||||||||
| 3/31/18 | 12/31/17 | 3/31/17 | |||||||||
| Asset Quality | (unaudited) | (unaudited) | (unaudited) | ||||||||
| Allowance for Loan Losses (ALL) | |||||||||||
| Beginning balance | $ | 38,208 | $ | 37,162 | $ | 37,192 | |||||
| Add: Recoveries | 1,480 | 696 | 845 | ||||||||
| Less: Charge-offs | 2,559 | 3,361 | 1,633 | ||||||||
| Add: Provision for loan losses | 3,500 | 3,711 | 2,010 | ||||||||
| Ending balance | $ | 40,629 | $ | 38,208 | $ | 38,414 | |||||
| ALL / total outstanding loans | 0.41 | % | 0.54 | % | 0.59 | % | |||||
| Net charge-offs / total average loans | 0.05 | % | 0.15 | % | 0.05 | % | |||||
| Provision / total average loans | 0.15 | % | 0.21 | % | 0.13 | % | |||||
| Total PCI Loans | $ | 102,861 | $ | 39,021 | $ | 57,770 | |||||
| Remaining fair value mark on purchased performing loans | 44,766 | 13,726 | 16,121 | ||||||||
| Nonperforming Assets | |||||||||||
| Construction and land development | $ | 6,391 | $ | 5,610 | $ | 6,545 | |||||
| Commercial real estate - owner occupied | 2,539 | 2,708 | 1,298 | ||||||||
| Commercial real estate - non-owner occupied | 2,089 | 2,992 | 2,798 | ||||||||
| Commercial & Industrial | 1,969 | 316 | 3,245 | ||||||||
| Residential 1-4 Family | 9,441 | 7,354 | 5,856 | ||||||||
| Auto | 394 | 413 | 393 | ||||||||
| HELOC | 2,072 | 2,075 | 1,902 | ||||||||
| Consumer and all other | 243 | 275 | 301 | ||||||||
| Nonaccrual loans | $ | 25,138 | $ | 21,743 | $ | 22,338 | |||||
| Other real estate owned | 10,099 | 6,636 | 9,605 | ||||||||
| Total nonperforming assets (NPAs) | $ | 35,237 | $ | 28,379 | $ | 31,943 | |||||
| Construction and land development | $ | 322 | $ | 1,340 | $ | 16 | |||||
| Commercial real estate - owner occupied | — | — | 93 | ||||||||
| Commercial real estate - non-owner occupied | — | 194 | 711 | ||||||||
| Commercial & Industrial | 200 | 214 | — | ||||||||
| Residential 1-4 Family | 1,261 | 1,125 | 686 | ||||||||
| Auto | 170 | 40 | 11 | ||||||||
| HELOC | 306 | 217 | 680 | ||||||||
| Consumer and all other | 371 | 402 | 126 | ||||||||
| Loans ≥ 90 days and still accruing | $ | 2,630 | $ | 3,532 | $ | 2,323 | |||||
| Total NPAs and loans ≥ 90 days | $ | 37,867 | $ | 31,911 | $ | 34,266 | |||||
| NPAs / total outstanding loans | 0.36 | % | 0.40 | % | 0.49 | % | |||||
| NPAs / total assets | 0.27 | % | 0.30 | % | 0.37 | % | |||||
| ALL / nonaccrual loans | 161.62 | % | 175.73 | % | 171.97 | % | |||||
| ALL / nonperforming assets | 115.30 | % | 134.63 | % | 120.26 | % | |||||
| Past Due Detail | |||||||||||
| Construction and land development | $ | 403 | $ | 1,248 | $ | 630 | |||||
| Commercial real estate - owner occupied | 4,985 | 444 | 878 | ||||||||
| Commercial real estate - non-owner occupied | 1,867 | 187 | 1,487 | ||||||||
| Commercial & Industrial | 2,608 | 1,147 | 453 | ||||||||
| Residential 1-4 Family | 9,917 | 5,520 | 11,615 | ||||||||
| Auto | 2,167 | 3,541 | 1,534 | ||||||||
| HELOC | 3,564 | 2,382 | 1,490 | ||||||||
| Consumer and all other | 4,179 | 2,404 | 1,766 | ||||||||
| Loans 30-59 days past due | $ | 29,690 | $ | 16,873 | $ | 19,853 | |||||
| As of & For Three Months Ended | |||||||||||
| 3/31/18 | 12/31/17 | 3/31/17 | |||||||||
| Past Due Detail cont'd | (unaudited) | (unaudited) | (unaudited) | ||||||||
| Construction and land development | $ | 1,291 | $ | 898 | $ | 376 | |||||
| Commercial real estate - owner occupied | 777 | 81 | — | ||||||||
| Commercial real estate - non-owner occupied | — | 84 | — | ||||||||
| Commercial & Industrial | 1,254 | 109 | 126 | ||||||||
| Residential 1-4 Family | 2,357 | 3,241 | 2,104 | ||||||||
| Auto | 193 | 185 | 250 | ||||||||
| HELOC | 1,346 | 717 | 365 | ||||||||
| Consumer and all other | 2,074 | 2,052 | 1,460 | ||||||||
| Loans 60-89 days past due | $ | 9,292 | $ | 7,367 | $ | 4,681 | |||||
| Troubled Debt Restructurings | |||||||||||
| Performing | $ | 13,292 | $ | 14,553 | $ | 14,325 | |||||
| Nonperforming | 4,284 | 2,849 | 4,399 | ||||||||
| Total troubled debt restructurings | $ | 17,576 | $ | 17,402 | $ | 18,724 | |||||
| Alternative Performance Measures (non-GAAP) | |||||||||||
| Net interest income (FTE) | |||||||||||
| Net interest income (GAAP) | $ | 103,747 | $ | 73,392 | $ | 66,567 | |||||
| FTE adjustment | 1,563 | 2,781 | 2,540 | ||||||||
| Net interest income (FTE) (non-GAAP) (1) | $ | 105,310 | $ | 76,173 | $ | 69,107 | |||||
| Average earning assets | 11,475,099 | 8,293,366 | 7,660,937 | ||||||||
| Net interest margin | 3.67 | % | 3.51 | % | 3.52 | % | |||||
| Net interest margin (FTE) (1) | 3.72 | % | 3.64 | % | 3.66 | % | |||||
| Tangible Assets | |||||||||||
| Ending assets (GAAP) | $ | 13,143,318 | $ | 9,315,179 | $ | 8,669,920 | |||||
| Less: Ending goodwill | 718,132 | 298,528 | 298,191 | ||||||||
| Less: Ending amortizable intangibles | 50,092 | 14,803 | 18,965 | ||||||||
| Ending tangible assets (non-GAAP) | $ | 12,375,094 | $ | 9,001,848 | $ | 8,352,764 | |||||
| Tangible Common Equity (2) | |||||||||||
| Ending equity (GAAP) | $ | 1,831,077 | $ | 1,046,329 | $ | 1,015,631 | |||||
| Less: Ending goodwill | 718,132 | 298,528 | 298,191 | ||||||||
| Less: Ending amortizable intangibles | 50,092 | 14,803 | 18,965 | ||||||||
| Ending tangible common equity (non-GAAP) | $ | 1,062,853 | $ | 732,998 | $ | 698,475 | |||||
| Average equity (GAAP) | $ | 1,824,588 | $ | 1,048,632 | $ | 1,010,318 | |||||
| Less: Average goodwill | 718,132 | 298,385 | 298,191 | ||||||||
| Less: Average amortizable intangibles | 51,658 | 15,400 | 19,743 | ||||||||
| Average tangible common equity (non-GAAP) | $ | 1,054,798 | $ | 734,847 | $ | 692,384 | |||||
| Operating Measures (3) | |||||||||||
| Net income (GAAP) | $ | 16,639 | $ | 15,185 | $ | 19,124 | |||||
| Plus: Merger-related costs, net of tax | 22,236 | 1,386 | — | ||||||||
| Plus: Nonrecurring tax expenses | — | 6,250 | — | ||||||||
| Net operating earnings (non-GAAP) | $ | 38,875 | $ | 22,821 | $ | 19,124 | |||||
| Noninterest expense (GAAP) | $ | 104,008 | $ | 59,944 | $ | 57,395 | |||||
| Less: Merger-related costs | 27,712 | 1,917 | — | ||||||||
| Operating noninterest expense (non-GAAP) | $ | 76,296 | $ | 58,027 | $ | 57,395 | |||||
| Net interest income (FTE) (non-GAAP) (1) | $ | 105,310 | $ | 76,173 | $ | 69,107 | |||||
| Noninterest income (GAAP) | 22,309 | 17,243 | 18,839 | ||||||||
| Efficiency ratio | 82.51 | % | 66.14 | % | 67.20 | % | |||||
| Efficiency ratio (FTE) (1) | 81.50 | % | 64.17 | % | 65.26 | % | |||||
| Operating efficiency ratio (FTE) | 59.79 | % | 62.12 | % | 65.26 | % | |||||
| As of & For Three Months Ended | |||||||||||
| 3/31/18 | 12/31/17 | 3/31/17 | |||||||||
| Alternative Performance Measures (non-GAAP) cont'd | (unaudited) | (unaudited) | (unaudited) | ||||||||
| Operating Measures cont'd (3) | |||||||||||
| Community bank segment net income (GAAP) | $ | 16,431 | $ | 14,986 | $ | 19,120 | |||||
| Plus: Merger-related costs, net of tax | 22,236 | 1,386 | — | ||||||||
| Plus: Nonrecurring tax expenses | — | 6,120 | — | ||||||||
| Community bank segment net operating earnings (non-GAAP) | $ | 38,667 | $ | 22,492 | $ | 19,120 | |||||
| Community bank segment earnings per share, diluted (GAAP) | $ | 0.25 | $ | 0.34 | $ | 0.44 | |||||
| Community bank segment operating earnings per share, diluted (non-GAAP) | 0.59 | 0.51 | 0.44 | ||||||||
| Mortgage segment net income (GAAP) | $ | 208 | $ | 199 | $ | 4 | |||||
| Plus: Nonrecurring tax expenses | — | 130 | — | ||||||||
| Mortgage segment net operating earnings (non-GAAP) | $ | 208 | $ | 329 | $ | 4 | |||||
| Mortgage Origination Volume | |||||||||||
| Refinance Volume | $ | 35,599 | $ | 41,889 | $ | 34,331 | |||||
| Construction Volume | 13,867 | 20,186 | 22,669 | ||||||||
| Purchase Volume | 43,082 | 59,840 | 43,216 | ||||||||
| Total Mortgage loan originations | $ | 92,548 | $ | 121,915 | $ | 100,216 | |||||
| % of originations that are refinances | 38.5 | % | 34.4 | % | 34.3 | % | |||||
| Other Data | |||||||||||
| End of period full-time employees | 1,824 | 1,419 | 1,412 | ||||||||
| Number of full-service branches | 150 | 111 | 113 | ||||||||
| Number of full automatic transaction machines ("ATMs") | 216 | 176 | 184 | ||||||||
(1) Net interest income (FTE), which is used in computing net interest margin (FTE) and efficiency ratio (FTE), provides valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components.
(2) Tangible common equity is used in the calculation of certain profitability, 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.
(3) Operating measures exclude merger-related costs and nonrecurring tax expenses unrelated to the Company’s normal operations. Such costs were not incurred during the first quarter of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three months ended March 31, 2017. The Company believes these measures are useful to investors as they exclude certain costs resulting from acquisition activity and allow investors to more clearly see the combined economic results of the organization's operations.
(4) All ratios at March 31, 2018 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.
| UNION BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Dollars in thousands, except share data) | |||||||||||
| March 31, | December 31, | March 31, | |||||||||
| 2018 | 2017 | 2017 | |||||||||
| ASSETS | (unaudited) | (audited) | (unaudited) | ||||||||
| Cash and cash equivalents: | |||||||||||
| Cash and due from banks | $ | 137,761 | $ | 117,586 | $ | 120,216 | |||||
| Interest-bearing deposits in other banks | 196,456 | 81,291 | 62,656 | ||||||||
| Federal funds sold | 8,246 | 496 | 947 | ||||||||
| Total cash and cash equivalents | 342,463 | 199,373 | 183,819 | ||||||||
| Securities available for sale, at fair value | 1,253,179 | 974,222 | 953,058 | ||||||||
| Securities held to maturity, at carrying value | 198,733 | 199,639 | 203,478 | ||||||||
| Restricted stock, at cost | 105,261 | 75,283 | 65,402 | ||||||||
| Loans held for sale, at fair value | 27,727 | 40,662 | 19,976 | ||||||||
| Loans held for investment, net of deferred fees and costs | 9,805,723 | 7,141,552 | 6,554,046 | ||||||||
| Less allowance for loan losses | 40,629 | 38,208 | 38,414 | ||||||||
| Net loans held for investment | 9,765,094 | 7,103,344 | 6,515,632 | ||||||||
| Premises and equipment, net | 163,076 | 119,981 | 122,512 | ||||||||
| Other real estate owned, net of valuation allowance | 10,099 | 6,636 | 9,605 | ||||||||
| Goodwill | 718,132 | 298,528 | 298,191 | ||||||||
| Amortizable intangibles, net | 50,092 | 14,803 | 18,965 | ||||||||
| Bank owned life insurance | 258,381 | 182,854 | 178,774 | ||||||||
| Other assets | 251,081 | 99,854 | 100,508 | ||||||||
| Total assets | $ | 13,143,318 | $ | 9,315,179 | $ | 8,669,920 | |||||
| LIABILITIES | |||||||||||
| Noninterest-bearing demand deposits | $ | 2,057,425 | $ | 1,502,208 | $ | 1,490,799 | |||||
| Interest-bearing deposits | 7,620,530 | 5,489,510 | 5,123,396 | ||||||||
| Total deposits | 9,677,955 | 6,991,718 | 6,614,195 | ||||||||
| Securities sold under agreements to repurchase | 31,593 | 49,152 | 44,587 | ||||||||
| Other short-term borrowings | 1,022,000 | 745,000 | 522,500 | ||||||||
| Long-term borrowings | 481,433 | 425,262 | 413,779 | ||||||||
| Other liabilities | 99,260 | 57,718 | 59,228 | ||||||||
| Total liabilities | 11,312,241 | 8,268,850 | 7,654,289 | ||||||||
| Commitments and contingencies | |||||||||||
| STOCKHOLDERS' EQUITY | |||||||||||
| Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 65,895,421 shares, 43,743,318 shares, and 43,679,947 shares, respectively. | 87,091 | 57,744 | 57,629 | ||||||||
| Additional paid-in capital | 1,373,997 | 610,001 | 606,078 | ||||||||
| Retained earnings | 382,299 | 379,468 | 352,335 | ||||||||
| Accumulated other comprehensive income (loss) | (12,310 | ) | (884 | ) | (411 | ) | |||||
| Total stockholders' equity | 1,831,077 | 1,046,329 | 1,015,631 | ||||||||
| Total liabilities and stockholders' equity | $ | 13,143,318 | $ | 9,315,179 | $ | 8,669,920 | |||||
| UNION BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
| (Dollars in thousands, except share data) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | |||||||||
| 2018 | 2017 | 2017 | |||||||||
| Interest and dividend income: | (unaudited) | (unaudited) | (unaudited) | ||||||||
| Interest and fees on loans | $ | 112,927 | $ | 78,501 | $ | 68,084 | |||||
| Interest on deposits in other banks | 647 | 172 | 71 | ||||||||
| Interest and dividends on securities: | |||||||||||
| Taxable | 7,072 | 5,225 | 4,923 | ||||||||
| Nontaxable | 4,008 | 3,584 | 3,562 | ||||||||
| Total interest and dividend income | 124,654 | 87,482 | 76,640 | ||||||||
| Interest expense: | |||||||||||
| Interest on deposits | 11,212 | 7,696 | 5,077 | ||||||||
| Interest on short-term borrowings | 4,249 | 1,814 | 950 | ||||||||
| Interest on long-term borrowings | 5,446 | 4,580 | 4,046 | ||||||||
| Total interest expense | 20,907 | 14,090 | 10,073 | ||||||||
| Net interest income | 103,747 | 73,392 | 66,567 | ||||||||
| Provision for credit losses | 3,500 | 3,411 | 2,122 | ||||||||
| Net interest income after provision for credit losses | 100,247 | 69,981 | 64,445 | ||||||||
| Noninterest income: | |||||||||||
| Service charges on deposit accounts | 5,894 | 4,925 | 4,516 | ||||||||
| Other service charges and fees | 1,233 | 1,202 | 1,139 | ||||||||
| Interchange fees, net | 4,489 | 3,769 | 3,582 | ||||||||
| Fiduciary and asset management fees | 3,056 | 2,933 | 2,794 | ||||||||
| Mortgage banking income, net | 2,041 | 2,118 | 2,025 | ||||||||
| Gains on securities transactions, net | 213 | 18 | 481 | ||||||||
| Bank owned life insurance income | 1,667 | 1,306 | 2,125 | ||||||||
| Loan-related interest rate swap fees | 718 | 424 | 1,180 | ||||||||
| Other operating income | 2,998 | 548 | 997 | ||||||||
| Total noninterest income | 22,309 | 17,243 | 18,839 | ||||||||
| Noninterest expenses: | |||||||||||
| Salaries and benefits | 42,329 | 29,723 | 32,168 | ||||||||
| Occupancy expenses | 6,310 | 5,034 | 4,903 | ||||||||
| Furniture and equipment expenses | 3,033 | 2,621 | 2,603 | ||||||||
| Printing, postage, and supplies | 1,073 | 1,252 | 1,150 | ||||||||
| Communications expense | 1,097 | 740 | 910 | ||||||||
| Technology and data processing | 4,649 | 4,426 | 3,900 | ||||||||
| Professional services | 2,597 | 2,190 | 1,658 | ||||||||
| Marketing and advertising expense | 1,443 | 1,876 | 1,740 | ||||||||
| FDIC assessment premiums and other insurance | 2,185 | 1,255 | 706 | ||||||||
| Other taxes | 2,886 | 2,022 | 2,022 | ||||||||
| Loan-related expenses | 1,471 | 1,369 | 1,329 | ||||||||
| OREO and credit-related expenses | 1,532 | 1,741 | 541 | ||||||||
| Amortization of intangible assets | 3,181 | 1,427 | 1,637 | ||||||||
| Training and other personnel costs | 1,027 | 1,034 | 969 | ||||||||
| Merger-related costs | 27,712 | 1,917 | — | ||||||||
| Other expenses | 1,483 | 1,317 | 1,159 | ||||||||
| Total noninterest expenses | 104,008 | 59,944 | 57,395 | ||||||||
| Income before income taxes | 18,548 | 27,280 | 25,889 | ||||||||
| Income tax expense | 1,909 | 12,095 | 6,765 | ||||||||
| Net income | $ | 16,639 | $ | 15,185 | $ | 19,124 | |||||
| Basic earnings per common share | $ | 0.25 | $ | 0.35 | $ | 0.44 | |||||
| Diluted earnings per common share | $ | 0.25 | $ | 0.35 | $ | 0.44 | |||||
| UNION BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||||||
| SEGMENT FINANCIAL INFORMATION | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| Community Bank | Mortgage | Eliminations | Consolidated | ||||||||||||
| Three Months Ended March 31, 2018 (unaudited) | |||||||||||||||
| Net interest income | $ | 103,314 | $ | 433 | $ | — | $ | 103,747 | |||||||
| Provision for credit losses | 3,524 | (24 | ) | — | 3,500 | ||||||||||
| Net interest income after provision for credit losses | 99,790 | 457 | — | 100,247 | |||||||||||
| Noninterest income | 20,157 | 2,278 | (126 | ) | 22,309 | ||||||||||
| Noninterest expenses | 101,669 | 2,465 | (126 | ) | 104,008 | ||||||||||
| Income before income taxes | 18,278 | 270 | — | 18,548 | |||||||||||
| Income tax expense | 1,847 | 62 | — | 1,909 | |||||||||||
| Net income | 16,431 | 208 | — | 16,639 | |||||||||||
| Plus: Merger-related costs, net of tax | 22,236 | — | — | 22,236 | |||||||||||
| Net operating earnings (non-GAAP) | $ | 38,667 | $ | 208 | $ | — | $ | 38,875 | |||||||
| Total assets | $ | 13,134,342 | $ | 100,587 | $ | (91,611 | ) | $ | 13,143,318 | ||||||
| Three Months Ended December 31, 2017 (unaudited) | |||||||||||||||
| Net interest income | $ | 72,936 | $ | 456 | $ | — | $ | 73,392 | |||||||
| Provision for credit losses | 3,458 | (47 | ) | — | 3,411 | ||||||||||
| Net interest income after provision for credit losses | 69,478 | 503 | — | 69,981 | |||||||||||
| Noninterest income | 15,040 | 2,329 | (126 | ) | 17,243 | ||||||||||
| Noninterest expenses | 57,722 | 2,348 | (126 | ) | 59,944 | ||||||||||
| Income before income taxes | 26,796 | 484 | — | 27,280 | |||||||||||
| Income tax expense | 11,810 | 285 | — | 12,095 | |||||||||||
| Net income | 14,986 | 199 | — | 15,185 | |||||||||||
| Plus: Merger-related costs, net of tax | 1,386 | — | — | 1,386 | |||||||||||
| Plus: Nonrecurring tax expenses | 6,120 | 130 | — | 6,250 | |||||||||||
| Net operating earnings (non-GAAP) | $ | 22,492 | $ | 329 | $ | — | $ | 22,821 | |||||||
| Total assets | $ | 9,305,660 | $ | 111,845 | $ | (102,326 | ) | $ | 9,315,179 | ||||||
| Three Months Ended March 31, 2017 (unaudited) | |||||||||||||||
| Net interest income | $ | 66,234 | $ | 333 | $ | — | $ | 66,567 | |||||||
| Provision for credit losses | 2,104 | 18 | — | 2,122 | |||||||||||
| Net interest income after provision for credit losses | 64,130 | 315 | — | 64,445 | |||||||||||
| Noninterest income | 16,757 | 2,223 | (141 | ) | 18,839 | ||||||||||
| Noninterest expenses | 55,014 | 2,522 | (141 | ) | 57,395 | ||||||||||
| Income before income taxes | 25,873 | 16 | — | 25,889 | |||||||||||
| Income tax expense | 6,753 | 12 | — | 6,765 | |||||||||||
| Net income | $ | 19,120 | $ | 4 | $ | — | $ | 19,124 | |||||||
| Total assets | $ | 8,660,987 | $ | 76,818 | $ | (67,885 | ) | $ | 8,669,920 | ||||||
| AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) | |||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||
| March 31, 2018 | December 31, 2017 | ||||||||||||||||||||
| Average Balance | Interest Income / Expense (1) | Yield / Rate (1)(2) | Average Balance | Interest Income / Expense (1) | Yield / Rate (1)(2) | ||||||||||||||||
| Assets: | (unaudited) | (unaudited) | |||||||||||||||||||
| Securities: | |||||||||||||||||||||
| Taxable | $ | 1,020,691 | $ | 7,072 | 2.81 | % | $ | 758,189 | $ | 5,225 | 2.73 | % | |||||||||
| Tax-exempt | 546,578 | 5,073 | 3.76 | % | 480,474 | 5,513 | 4.55 | % | |||||||||||||
| Total securities | 1,567,269 | 12,145 | 3.14 | % | 1,238,663 | 10,738 | 3.44 | % | |||||||||||||
| Loans, net (3) (4) | 9,680,195 | 113,135 | 4.74 | % | 6,962,299 | 79,048 | 4.50 | % | |||||||||||||
| Other earning assets | 227,635 | 937 | 1.67 | % | 92,404 | 477 | 2.05 | % | |||||||||||||
| Total earning assets | 11,475,099 | $ | 126,217 | 4.46 | % | 8,293,366 | $ | 90,263 | 4.32 | % | |||||||||||
| Allowance for loan losses | (39,847 | ) | (37,449 | ) | |||||||||||||||||
| Total non-earning assets | 1,578,346 | 829,294 | |||||||||||||||||||
| Total assets | $ | 13,013,598 | $ | 9,085,211 | |||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||
| Transaction and money market accounts | $ | 4,759,523 | $ | 5,555 | 0.47 | % | $ | 3,551,759 | $ | 3,703 | 0.41 | % | |||||||||
| Regular savings | 644,440 | 212 | 0.13 | % | 548,589 | 150 | 0.11 | % | |||||||||||||
| Time deposits (5) | 2,085,930 | 5,445 | 1.06 | % | 1,335,357 | 3,843 | 1.14 | % | |||||||||||||
| Total interest-bearing deposits | 7,489,893 | 11,212 | 0.61 | % | 5,435,705 | 7,696 | 0.56 | % | |||||||||||||
| Other borrowings (6) | 1,614,691 | 9,695 | 2.44 | % | 1,022,307 | 6,394 | 2.48 | % | |||||||||||||
| Total interest-bearing liabilities | 9,104,584 | 20,907 | 0.93 | % | 6,458,012 | 14,090 | 0.87 | % | |||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||
| Demand deposits | 1,973,804 | 1,520,244 | |||||||||||||||||||
| Other liabilities | 110,622 | 58,323 | |||||||||||||||||||
| Total liabilities | 11,189,010 | 8,036,579 | |||||||||||||||||||
| Stockholders' equity | 1,824,588 | 1,048,632 | |||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 13,013,598 | $ | 9,085,211 | |||||||||||||||||
| Net interest income | $ | 105,310 | $ | 76,173 | |||||||||||||||||
| Interest rate spread | 3.53 | % | 3.45 | % | |||||||||||||||||
| Cost of funds | 0.74 | % | 0.68 | % | |||||||||||||||||
| Net interest margin | 3.72 | % | 3.64 | % | |||||||||||||||||
| (1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21% for the three months ended March 31, 2018 and 35% for the three months ended December 31, 2017. | |||||||||||||||||||||
| (2) Rates and yields are annualized and calculated from actual, not rounded, amounts in thousands, which appear above. | |||||||||||||||||||||
| (3) Nonaccrual loans are included in average loans outstanding. | |||||||||||||||||||||
| (4) Interest income on loans includes $4.8 million and $2.1 million for the three months ended March 31, 2018 and December 31, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions. | |||||||||||||||||||||
| (5) Interest expense on time deposits includes $832,000 and $0 for the three months ended March 31, 2018 and December 31, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions. | |||||||||||||||||||||
| (6) Interest expense on borrowings includes $98,000 and ($27,000) for the three months ended March 31, 2018 and December 31, 2017, respectively, in amortization (accretion) of the fair market value adjustments related to acquisitions. | |||||||||||||||||||||
| XENITH BANKSHARES, INC. | |||
| CONSOLIDATED BALANCE SHEET | |||
| As of December 31, 2017 | |||
| (Dollars in thousands) | |||
| ASSETS | (Audited) | ||
| Cash and cash equivalents | $ | 174,218 | |
| Securities available for sale, at fair value | 295,782 | ||
| Restricted stock, at cost | 27,569 | ||
| Loans held for investment, net of deferred fees and costs | 2,506,589 | ||
| Less allowance for loan losses | 16,829 | ||
| Net loans held for investment | 2,489,760 | ||
| Premises and equipment, net | 54,633 | ||
| Other real estate owned, net of valuation allowance | 4,214 | ||
| Goodwill | 26,931 | ||
| Amortizable intangibles, net | 3,261 | ||
| Bank owned life insurance | 73,853 | ||
| Other assets | 120,505 | ||
| Total assets | $ | 3,270,726 | |
| LIABILITIES | |||
| Noninterest-bearing demand deposits | $ | 511,371 | |
| Interest-bearing deposits | 2,034,176 | ||
| Total deposits | 2,545,547 | ||
| Other short-term borrowings | 235,000 | ||
| Long-term borrowings | 39,331 | ||
| Other liabilities | 21,107 | ||
| Total liabilities | 2,840,985 | ||
| STOCKHOLDERS' EQUITY | |||
| Common stock | 234 | ||
| Surplus | 713,630 | ||
| Retained earnings (deficit) | (282,073 | ) | |
| Accumulated other comprehensive income (loss) | (2,050 | ) | |
| Total stockholders' equity | 429,741 | ||
| Total liabilities and stockholders' equity | $ | 3,270,726 | |