Union Bankshares Reports Second Quarter Results

RICHMOND, Va., July 18, 2018 (GLOBE NEWSWIRE) -- Union Bankshares Corporation (the “Company” or “Union”) (NASDAQ:UBSH) today reported net income of $47.3 million and earnings per share of $0.72 for its second quarter ended June 30, 2018.  Net operating earnings(1) were $53.9 million and operating earnings per share(1) was $0.82 for its second quarter ended June 30, 2018; these operating results exclude $6.5 million in after-tax merger-related costs.

Net income was $64.0 million and earnings per share was $0.97 for the six months ended June 30, 2018.  Net operating earnings(1) were $92.7 million and operating earnings per share(1) were $1.41 for the six months ended June 30, 2018; these operating results exclude $28.8 million in after-tax merger-related costs.

Union followed up on our strong first quarter with a number of accomplishments during the second quarter that align with our stated strategic priorities - positioning us for profitable growth and the delivery of top tier financial metrics, which we expect to achieve in the fourth quarter of 2018,” said John C. Asbury, President and CEO of Union Bankshares Corporation.  “This quarter’s accomplishments included successfully converting the core data systems for Xenith Bank, exiting the mortgage origination business, divesting the national scope marine finance business acquired from Xenith Bank, divesting a non-strategic third party consumer lending portfolio and continuing to build out the commercial banking teams across the franchise.

Our second quarter actions demonstrate Union is executing on its strategic priorities with intensity and a sharp focus on our core business lines.  We are especially pleased that our commercial banking build out is occurring at an accelerated pace and that we have achieved our long-term loan to deposit ratio target.   Union has never been better positioned to achieve its profitability and growth objectives.

Select highlights for the second quarter of 2018 include:

  • Performance metrics linked quarter
    • Return on Average Assets (“ROA”) was 1.44% compared to 0.52% in the first quarter of 2018. Operating ROA(1) increased to 1.63% compared to 1.21% in the first quarter of 2018.
    • Return on Average Equity (“ROE”) was 10.28% compared to 3.70% in the first quarter of 2018. Operating ROE(1) was 11.69% compared to 8.64% in the first quarter of 2018.
    • Return on Average Tangible Common Equity (“ROTCE”) was 17.74% compared to 6.43% in the first quarter of 2018. Operating ROTCE(1) increased to 20.19% compared to 15.03% in the first quarter of 2018.
    • Efficiency ratio declined to 57.2% compared to 82.2% in the first quarter of 2018 and the efficiency ratio (FTE) declined to 56.5% compared to 81.0% in the first quarter of 2018.  Operating efficiency ratio(1) improved to 51.0% compared to 59.0% in the first quarter of 2018.
  • Notable activity during the second quarter
    • On May 23, 2018, the Company's wholly-owned bank subsidiary, Union Bank & Trust, announced that it had entered into a definitive agreement with a third party mortgage company to team together to offer residential mortgages.  As a result of this arrangement, Union Bank & Trust began winding-down the operations of Union Mortgage Group, its wholly-owned subsidiary.  In connection with this transaction, the Company recorded exit costs totaling approximately $3.4 million, which includes goodwill impairment of approximately $864,000.  These costs and the Company's mortgage segment results are reported within discontinued operations results.
    • On June 29, 2018, Union Bank & Trust entered into an agreement to sell substantially all of the assets and certain specific liabilities of its Shore Premier Finance division, consisting primarily of marine loans totaling approximately $383.9 million, for a purchase price consisting of approximately $375.0 million in cash and 1,250,000 shares of the purchasing company's common stock. The sale generated an after-tax gain of approximately $16.5 million, net of transaction and other related costs.
    • On June 29, 2018, Union Bank & Trust sold approximately $206.3 million in consumer home improvement loans that had been originated through a third-party lending program.  These loans were sold at par.
    • The Company closed three branches during the second quarter of 2018 as part of conversion activities related to its acquisition of Xenith Bankshares, Inc. (“Xenith”).  After further analyzing its branch footprint, the Company has decided to consolidate an additional seven branches, approximately 5% of the Company's branch network, during the third quarter of 2018.  The upcoming branch closures resulted in after-tax branch closure costs of approximately $474,000 that were recorded in the second quarter of 2018.
    • On April 1, 2018, Union Bank & Trust completed its acquisition of Dixon, Hubard, Feinour, & Brown, Inc. ("DHFB"), a Roanoke, Virginia based investment advisory firm with approximately $600 million in assets under management and advisement.  DHFB operates as a subsidiary of Union Bank & Trust and from its offices in Roanoke, Virginia.

(1) For a reconciliation of the non-GAAP operating measures that exclude merger-related costs unrelated to the Company’s normal operations, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.


NET INTEREST INCOME

For the second quarter of 2018, net interest income was $108.2 million, an increase of $4.7 million from the first quarter of 2018.  Tax-equivalent net interest income was $110.2 million in the second quarter of 2018, an increase of $4.9 million from the first quarter of 2018. The increases in both net interest income and tax-equivalent net interest income were primarily driven by higher earning asset balances and higher yields on those balances.  The second quarter net interest margin increased 6 basis points to 3.72% from 3.66% in the previous quarter, while the tax-equivalent net interest margin increased 7 basis points to 3.79% from 3.72% during the same periods.  The increases in the net interest margin and tax-equivalent net interest margin were principally due to an approximate 16 basis point increase in the yield on earning assets, partially offset by an approximate 9 basis point increase in the cost of funds.

The Company’s tax-equivalent net interest margin includes the impact of acquisition accounting fair value adjustments.  During the second quarter of 2018, net accretion related to acquisition accounting increased $325,000 from the prior quarter to $5.9 million for the quarter ended June 30, 2018.  The first and second quarters of 2018 and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):

 Loan
Accretion
 Deposit
Accretion
 Borrowings
Amortization
 Total
For the quarter ended March 31, 2018$4,846 $832 $(98) $5,580 
For the quarter ended June 30, 20185,324 685 (104) 5,905 
For the remaining six months of 2018 (estimated)5,650 1,036 (304) 6,382 
For the years ending (estimated):       
20199,626 1,170 (660) 10,136 
20207,655 284 (734) 7,205 
20216,023 108 (805) 5,326 
20224,319 21 (827) 3,513 
20232,739  (850) 1,889 
Thereafter9,670  (11,633) (1,963)


ASSET QUALITY/LOAN LOSS PROVISION

Overview
During the second quarter of 2018, the Company experienced declines in nonperforming asset (“NPA”) balances from the prior quarter, primarily related to sales of other real estate owned (“OREO”).  Past due loan levels as a percentage of total loans held for investment at June 30, 2018 were consistent with past due loan levels at March 31, 2018 and June 30, 2017.  Charge-off levels increased from the first quarter of 2018 and were primarily related to the consumer loan portfolio, while the provision for loan losses declined from the first quarter of 2018.

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $101.5 million (net of fair value mark of $23.1 million).

Nonperforming Assets
At June 30, 2018, NPAs totaled $33.7 million, a decrease of $1.6 million, or 4.5%, from March 31, 2018 and a decline of $399,000, or 1.2%, from June 30, 2017.  In addition, NPAs as a percentage of total outstanding loans at June 30, 2018 was 0.36%, consistent with March 31, 2018 and a decline of 14 basis points from 0.50% at June 30, 2017.  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 nonperforming asset balances at the quarter ended (dollars in thousands):

 June 30, March 31, December 31, September 30, June 30,
 2018 2018 2017 2017 2017
Nonaccrual loans$25,662  $25,138  $21,743  $20,122  $24,574 
Foreclosed properties7,241  8,079  5,253  6,449  6,828 
Former bank premises754  2,020  1,383  2,315  2,654 
Total nonperforming assets$33,657  $35,237  $28,379  $28,886  $34,056 


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,
 2018 2018 2017 2017 2017
Beginning Balance$25,138  $21,743  $20,122  $24,574  $22,338 
Net customer payments(2,651) (1,455) (768) (4,642) (1,498)
Additions5,063  5,451  4,335  4,114  5,979 
Charge-offs(539) (403) (1,305) (3,376) (2,004)
Loans returning to accruing status(1,349) (182) (448)   (134)
Transfers to OREO  (16) (193) (548) (107)
Ending Balance$25,662  $25,138  $21,743  $20,122  $24,574 


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,
 2018 2018 2017 2017 2017
Beginning Balance$10,099  $6,636  $8,764  $9,482  $9,605 
Additions of foreclosed property283  44  325  621  132 
Acquisitions of foreclosed property (1)(162) 4,204       
Acquisitions of former bank premises  1,208       
Valuation adjustments(383) (759) (1,046) (588) (19)
Proceeds from sales(1,858) (1,255) (1,419) (648) (272)
Gains (losses) from sales16  21  12  (103) 36 
Ending Balance$7,995  $10,099  $6,636  $8,764  $9,482 

(1) Includes subsequent measurement period adjustments.


Past Due Loans

Past due loans still accruing interest totaled $38.2 million, or 0.41% of total loans, at June 30, 2018 compared to $41.6 million, or 0.42% of total loans, at March 31, 2018 and $27.4 million, or 0.40% of total loans, at June 30, 2017.  Of the total past due loans still accruing interest, $6.9 million, or 0.07% of total loans, were loans past due 90 days or more at June 30, 2018, compared to $2.6 million, or 0.03% of total loans, at March 31, 2018 and $3.6 million, or 0.05% of total loans, at June 30, 2017.

Net Charge-offs
For the second quarter of 2018, net charge-offs were $1.8 million, or 0.07% of total average loans on an annualized basis, compared to $1.1 million, or 0.05%, for the prior quarter and $2.5 million, or 0.15%, for the same quarter last year.  Of the net charge-offs in the second quarter of 2018, the majority were related to consumer loans.

Provision for Loan Losses
The provision for loan losses for the second quarter of 2018 was $2.7 million, a decrease of $864,000 compared to the previous quarter and an increase of $349,000 compared to the same quarter in 2017.  The decrease in provision from the first quarter of 2018 was primarily driven by lower levels of loan growth in the current quarter.

Allowance for Loan Losses (“ALL”)
The ALL increased $641,000 from March 31, 2018 to $41.3 million at June 30, 2018 primarily due to organic loan growth during the quarter.  The ALL as a percentage of the total loan portfolio was 0.44% at June 30, 2018, 0.41% at March 31, 2018, and 0.56% at June 30, 2017.  The quarter-over-quarter increase in the allowance ratio was primarily due to the sale of loans during the second quarter of 2018, while the year-over-year 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 160.8% at June 30, 2018, compared to 161.6% at March 31, 2018 and 155.5% at June 30, 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 $20.3 million to $40.6 million for the quarter ended June 30, 2018 from $20.3 million in the prior quarter, primarily driven by the net gain on sale of the Shore Premier Finance division of $20.9 million.  During the first quarter of 2018, noninterest income included a gain of $1.4 million related to the sale of the Company's ownership interest in a payments-related company.  Excluding these gains from their respective quarters, noninterest income increased $847,000, or 4.5%, for the quarter ended June 30, 2018 when compared to the prior quarter.  The increase in customer-related fee income of $1.6 million was primarily due to the acquisition of DHFB as well as higher overdraft fees and debit card interchange fees.  Partially offsetting this increase, the Company experienced losses on the sales of securities in the second quarter of 2018 compared to gains in the first quarter of 2018.

NONINTEREST EXPENSE

Noninterest expense decreased $16.6 million to $85.1 million for the quarter ended June 30, 2018 from $101.7 million in the prior quarter.  Excluding merger-related costs of $8.3 million and $27.7 million in the second and first quarters of 2018, respectively, operating noninterest expense increased $2.8 million, or 3.8%, to $76.9 million when compared to the first quarter of 2018.  The increase in operating noninterest expense was primarily related to increased marketing expenses of $1.9 million associated with the launch of the Union Bank & Trust brand in Xenith's footprint as well as higher levels of debit card rewards expenses. In addition, operating noninterest expense in the second quarter of 2018 included approximately $770,000 in expenses for DHFB and branch closure costs of approximately $600,000 related to the decision to consolidate seven branches in the third quarter of 2018.

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 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 second quarter of 2018.

The effective tax rate for the three months ended June 30, 2018 was 19.0% compared to 10.3% for the three months ended March 31, 2018. The increase in the effective tax rate was primarily due to tax benefits related to stock compensation of approximately $1.2 million recorded during the first quarter of 2018 in accordance with ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” as well as tax-exempt income being a lower component of pre-tax income in the second quarter of 2018 compared to the first quarter of 2018.

BALANCE SHEET

At June 30, 2018, total assets were $13.1 billion, a decrease of $83.2 million from March 31, 2018, a result of the sale of the Shore Premier loans and certain third party lending loans at the end of the quarter.

At June 30, 2018, loans held for investment (net of deferred fees and costs) were $9.3 billion, a decrease of $515.5 million from March 31, 2018, while average loans increased $128.9 million, or 5.3% (annualized), from the prior quarter.  Adjusted for the sale of the Shore Premier loans and certain third party lending program loans, loans held for investment grew $66.7 million, or 2.9% (annualized), from March 31, 2018.

At June 30, 2018, total deposits were $9.8 billion, an increase of $119.3 million, or 4.9% (annualized), from March 31, 2018, while average deposits increased $181.5 million, or 7.7% (annualized), from the prior quarter.

The following table shows the Company's regulatory capital ratios at the quarters ended:

 June 30, March 31, June 30,
 2018 2018 2017
Common equity Tier 1 capital ratio (1)9.74% 9.03% 9.39%
Tier 1 capital ratio (1)10.95% 10.19% 10.57%
Total capital ratio (1)12.81% 11.97% 13.00%
Leverage ratio (Tier 1 capital to average assets) (1)9.46% 9.32% 9.61%
Common equity to total assets14.27% 13.93% 11.56%
Tangible common equity to tangible assets (2)8.86% 8.54% 8.32%
      
(1) All ratios at June 30, 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 second quarter of 2018, the Company declared and paid cash dividends of $0.21 per common share, consistent with the first quarter of 2018 and an increase of $0.01, or 5.0%, compared to the second 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 147 branches, 7 of which are operated as Xenith Bank, a division of Union Bank & Trust of Richmond, Virginia, and approximately 200 ATMs located throughout Virginia and in portions of Maryland and North Carolina.  Non-bank affiliates of the holding company include: 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 Wednesday, July 18th, 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 7389206.

NON-GAAP MEASURES

In reporting the results of the quarter and six months ended June 30, 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 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 Union Bank & Trust’s lending area,
  • real estate values in Union Bank & Trust’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 threats, 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.


UNION BANKSHARES CORPORATION AND SUBSIDIARIES    
KEY FINANCIAL RESULTS    
(Dollars in thousands, except share data)    
(FTE - "Fully Taxable Equivalent")    
 As of & For Three Months Ended Six Months Ended
 6/30/18 3/31/18 6/30/17 6/30/18 6/30/17
Results of Operations(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Interest and dividend income$132,409  $124,379  $80,926  $256,789  $157,365 
Interest expense24,241  20,907  12,222  45,149  22,294 
Net interest income108,168  103,472  68,704  211,640  135,071 
Provision for credit losses2,147  3,524  2,184  5,671  4,288 
Net interest income after provision for credit losses106,021  99,948  66,520  205,969  130,783 
Noninterest income40,597  20,267  15,262  60,865  32,075 
Noninterest expenses85,140  101,743  57,575  186,885  112,668 
Income before income taxes61,478  18,472  24,207  79,949  50,190 
Income tax expense11,678  1,897  6,725  13,575  13,507 
Income from continuing operations49,800  16,575  17,482  66,374  36,683 
Discontinued operations, net of tax(2,473) 64  474  (2,408) 397 
Net income$47,327  $16,639  $17,956  $63,966  $37,080 
          
Interest earned on earning assets (FTE) (1)$134,417  $126,217  $83,869  $260,634  $163,049 
Net interest income (FTE) (1)110,176  105,310  71,647  215,485  140,755 
          
Key Ratios         
Earnings per common share, diluted$0.72  $0.25  $0.41  $0.97  $0.85 
Return on average assets (ROA)1.44% 0.52% 0.82% 0.98% 0.87%
Return on average equity (ROE)10.28% 3.70% 7.02% 7.03% 7.34%
Return on average tangible common equity (ROTCE) (2)17.74% 6.43% 10.15% 12.18% 10.66%
Efficiency ratio57.23% 82.22% 68.57% 68.58% 67.41%
Efficiency ratio (FTE) (1)56.47% 81.02% 66.25% 67.63% 65.19%
Net interest margin3.72% 3.66% 3.47% 3.69% 3.49%
Net interest margin (FTE) (1)3.79% 3.72% 3.62% 3.76% 3.64%
Yields on earning assets (FTE) (1)4.62% 4.46% 4.24% 4.54% 4.22%
Cost of interest-bearing liabilities (FTE) (1)1.06% 0.93% 0.79% 1.00% 0.74%
Cost of funds (FTE) (1)0.83% 0.74% 0.62% 0.78% 0.58%
          
Operating Measures (3)         
Net operating earnings$53,864  $38,875  $20,314  $92,739  $39,438 
Operating earnings per share, diluted$0.82  $0.59  $0.46  $1.41  $0.90 
Operating ROA1.63% 1.21% 0.93% 1.43% 0.92%
Operating ROE11.69% 8.64% 7.94% 10.19% 7.81%
Operating ROTCE20.19% 15.03% 11.48% 17.65% 11.35%
Operating efficiency ratio (FTE) (1)50.98% 58.95% 63.09% 54.60% 63.60%
          
Per Share Data         
Earnings per common share, basic$0.72  $0.25  $0.41  $0.97  $0.85 
Earnings per common share, diluted0.72  0.25  0.41  0.97  0.85 
Cash dividends paid per common share0.21  0.21  0.20  0.42  0.40 
Market value per share38.88  36.71  33.90  38.88  33.90 
Book value per common share28.47  27.87  23.79  28.47  23.79 
Tangible book value per common share (2)16.62  16.14  16.50  16.62  16.50 
Price to earnings ratio, diluted13.46  36.21  20.61  19.88  19.78 
Price to book value per common share ratio1.37  1.32  1.42  1.37  1.42 
Price to tangible book value per common share ratio (2)2.34  2.27  2.05  2.34  2.05 
Weighted average common shares outstanding, basic65,919,055  65,554,630  43,693,427  65,737,849  43,674,070 
Weighted average common shares outstanding, diluted65,965,577  65,636,262  43,783,952  65,801,926  43,755,045 
Common shares outstanding at end of period65,939,375  65,895,421  43,706,000  65,939,375  43,706,000 


 As of & For Three Months Ended As of & For Six Months Ended
 6/30/18 3/31/18 6/30/17 6/30/18 6/30/17
Capital Ratios(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Common equity Tier 1 capital ratio (4)9.74% 9.03% 9.39% 9.74% 9.39%
Tier 1 capital ratio (4)10.95% 10.19% 10.57% 10.95% 10.57%
Total capital ratio (4)12.81% 11.97% 13.00% 12.81% 13.00%
Leverage ratio (Tier 1 capital to average assets) (4)9.46% 9.32% 9.61% 9.46% 9.61%
Common equity to total assets14.27% 13.93% 11.56% 14.27% 11.56%
Tangible common equity to tangible assets (2)8.86% 8.54% 8.32% 8.86% 8.32%
          
Financial Condition         
Assets$13,066,106  $13,149,292  $8,915,187  $13,066,106  $8,915,187 
Loans held for investment9,290,259  9,805,723  6,771,490  9,290,259  6,771,490 
Earning Assets11,494,113  11,595,325  8,094,574  11,494,113  8,094,574 
Goodwill725,195  724,106  298,191  725,195  298,191 
Amortizable intangibles, net51,211  50,092  17,422  51,211  17,422 
Deposits9,797,272  9,677,955  6,764,434  9,797,272  6,764,434 
Stockholders' equity1,864,870  1,831,077  1,030,869  1,864,870  1,030,869 
Tangible common equity (2)1,088,464  1,056,879  715,256  1,088,464  715,256 
          
Loans held for investment, net of deferred fees and costs         
Construction and land development$1,250,448  $1,249,196  $799,938  $1,250,448  $799,938 
Commercial real estate - owner occupied1,293,791  1,279,155  888,285  1,293,791  888,285 
Commercial real estate - non-owner occupied2,318,589  2,230,463  1,698,329  2,318,589  1,698,329 
Multifamily real estate541,730  547,520  367,257  541,730  367,257 
Commercial & Industrial1,093,771  1,125,733  568,602  1,093,771  568,602 
Residential 1-4 Family - commercial723,945  714,660  589,398  723,945  589,398 
Residential 1-4 Family - mortgage607,155  604,354  477,121  607,155  477,121 
Auto296,706  288,089  274,162  296,706  274,162 
HELOC626,916  642,084  535,088  626,916  535,088 
Consumer298,021  839,699  387,782  298,021  387,782 
Other Commercial239,187  284,770  185,528  239,187  185,528 
Total loans held for investment$9,290,259  $9,805,723  $6,771,490  $9,290,259  $6,771,490 
          
Deposits         
NOW accounts$2,147,999  $2,185,562  $1,882,287  $2,147,999  $1,882,287 
Money market accounts2,758,704  2,692,662  1,559,895  2,758,704  1,559,895 
Savings accounts643,894  654,931  558,472  643,894  558,472 
Time deposits of $100,000 and over1,019,577  819,056  580,962  1,019,577  580,962 
Other time deposits1,034,171  1,268,319  681,248  1,034,171  681,248 
Total interest-bearing deposits$7,604,345  $7,620,530  $5,262,864  $7,604,345  $5,262,864 
Demand deposits2,192,927  2,057,425  1,501,570  2,192,927  1,501,570 
Total deposits$9,797,272  $9,677,955  $6,764,434  $9,797,272  $6,764,434 
          
Averages         
Assets$13,218,227  $13,019,572  $8,747,377  $13,119,448  $8,607,225 
Loans held for investment9,809,083  9,680,195  6,628,011  9,744,995  6,506,632 
Securities1,625,273  1,567,269  1,229,593  1,596,431  1,218,741 
Earning assets11,661,189  11,475,099  7,934,405  11,568,658  7,798,427 
Deposits9,645,186  9,463,697  6,637,742  9,554,943  6,523,148 
Time deposits2,063,414  2,085,930  1,248,818  2,074,610  1,230,045 
Interest-bearing deposits7,549,953  7,489,893  5,179,774  7,520,089  5,097,004 
Borrowings1,617,322  1,614,691  1,023,599  1,616,013  1,005,224 
Interest-bearing liabilities9,167,275  9,104,584  6,203,373  9,136,102  6,102,228 
Stockholders' equity1,847,366  1,824,588  1,026,148  1,836,072  1,018,277 
Tangible common equity (2)1,069,886  1,048,824  709,793  1,059,446  701,138 


 As of & For Three Months Ended As of & For Six Months Ended
 6/30/18 3/31/18 6/30/17 6/30/18 6/30/17
Asset Quality(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Allowance for Loan Losses (ALL)         
Beginning balance$40,629  $38,208  $38,414  $38,208  $37,192 
Add: Recoveries1,201  1,480  827  2,681  1,672 
Less: Charge-offs2,980  2,559  3,327  5,539  4,960 
Add: Provision for loan losses2,660  3,524  2,311  6,184  4,303 
Add: Provision for loan losses included in discontinued operations(240) (24) (11) (264) 7 
Ending balance$41,270  $40,629  $38,214  $41,270  $38,214 
          
ALL / total outstanding loans0.44% 0.41% 0.56% 0.44% 0.56%
Net charge-offs / total average loans0.07% 0.05% 0.15% 0.06% 0.10%
Provision / total average loans0.11% 0.15% 0.14% 0.13% 0.13%
          
Total PCI loans, net of fair value mark$101,524  $102,861  $56,167  $101,524  $56,167 
Remaining fair value mark on purchased performing loans36,207  44,766  15,382  36,207  15,382 
          
Nonperforming Assets         
Construction and land development$6,485  $6,391  $5,659  $6,485  $5,659 
Commercial real estate - owner occupied2,845  2,539  1,279  2,845  1,279 
Commercial real estate - non-owner occupied3,068  2,089  4,765  3,068  4,765 
Commercial & Industrial1,387  1,969  4,281  1,387  4,281 
Residential 1-4 Family9,550  9,441  6,128  9,550  6,128 
Auto463  394  270  463  270 
HELOC1,669  2,072  2,059  1,669  2,059 
Consumer and all other195  243  133  195  133 
Nonaccrual loans$25,662  $25,138  $24,574  $25,662  $24,574 
Other real estate owned7,995  10,099  9,482  7,995  9,482 
Total nonperforming assets (NPAs)$33,657  $35,237  $34,056  $33,657  $34,056 
Construction and land development$144  $322  $83  $144  $83 
Commercial real estate - owner occupied2,512    56  2,512  56 
Commercial real estate - non-owner occupied    298    298 
Commercial & Industrial100  200  55  100  55 
Residential 1-4 Family2,801  1,261  2,369  2,801  2,369 
Auto121  170  35  121  35 
HELOC570  306  544  570  544 
Consumer and all other673  371  185  673  185 
Loans ≥ 90 days and still accruing$6,921  $2,630  $3,625  $6,921  $3,625 
Total NPAs and loans ≥ 90 days$40,578  $37,867  $37,681  $40,578  $37,681 
NPAs / total outstanding loans0.36% 0.36% 0.50% 0.36% 0.50%
NPAs / total assets0.26% 0.27% 0.38% 0.26% 0.38%
ALL / nonaccrual loans160.82% 161.62% 155.51% 160.82% 155.51%
ALL / nonperforming assets122.62% 115.30% 112.21% 122.62% 112.21%
          
Past Due Detail         
Construction and land development$648  $403  $602  $648  $602 
Commercial real estate - owner occupied3,775  4,985  3,148  3,775  3,148 
Commercial real estate - non-owner occupied44  1,867  1,530  44  1,530 
Multifamily real estate86    500  86  500 
Commercial & Industrial1,921  2,608  1,652  1,921  1,652 
Residential 1-4 Family7,142  9,917  2,477  7,142  2,477 
Auto2,187  2,167  1,562  2,187  1,562 
HELOC2,505  3,564  1,405  2,505  1,405 
Consumer and all other2,722  4,179  1,891  2,722  1,891 
Loans 30-59 days past due$21,030  $29,690  $14,767  $21,030  $14,767 


 As of & For Three Months Ended As of & For Six Months Ended
 6/30/18 3/31/18 6/30/17 6/30/18 6/30/17
Past Due Detail cont'd(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Construction and land development$292  $1,291  $26  $292  $26 
Commercial real estate - owner occupied1,819  777  194  1,819  194 
Commercial real estate - non-owner occupied    571    571 
Commercial & Industrial1,567  1,254  113  1,567  113 
Residential 1-4 Family3,742  2,357  5,663  3,742  5,663 
Auto419  193  240  419  240 
HELOC1,622  1,346  964  1,622  964 
Consumer and all other761  2,074  1,242  761  1,242 
Loans 60-89 days past due$10,222  $9,292  $9,013  $10,222  $9,013 
          
Troubled Debt Restructurings         
Performing$15,696  $13,292  $14,947  $15,696  $14,947 
Nonperforming4,001  4,284  4,454  4,001  4,454 
Total troubled debt restructurings$19,697  $17,576  $19,401  $19,697  $19,401 
          
Alternative Performance Measures (non-GAAP)         
Net interest income (FTE)         
Net interest income (GAAP)$108,168  $103,472  $68,704  $211,640  $135,071 
FTE adjustment2,008  1,838  2,943  3,845  5,684 
Net interest income (FTE) (non-GAAP) (1)$110,176  $105,310  $71,647  $215,485  $140,755 
Average earning assets11,661,189  11,475,099  7,934,405  11,568,658  7,798,427 
Net interest margin3.72% 3.66% 3.47% 3.69% 3.49%
Net interest margin (FTE) (1)3.79% 3.72% 3.62% 3.76% 3.64%
          
Tangible Assets         
Ending assets (GAAP)$13,066,106  $13,149,292  $8,915,187  $13,066,106  $8,915,187 
Less: Ending goodwill725,195  724,106  298,191  725,195  298,191 
Less: Ending amortizable intangibles51,211  50,092  17,422  51,211  17,422 
Ending tangible assets (non-GAAP)$12,289,700  $12,375,094  $8,599,574  $12,289,700  $8,599,574 
          
Tangible Common Equity (2)         
Ending equity (GAAP)$1,864,870  $1,831,077  $1,030,869  $1,864,870  $1,030,869 
Less: Ending goodwill725,195  724,106  298,191  725,195  298,191 
Less: Ending amortizable intangibles51,211  50,092  17,422  51,211  17,422 
Ending tangible common equity (non-GAAP)$1,088,464  $1,056,879  $715,256  $1,088,464  $715,256 
          
Average equity (GAAP)$1,847,366  $1,824,588  $1,026,148  $1,836,072  $1,018,277 
Less: Average goodwill726,934  724,106  298,191  725,527  298,191 
Less: Average amortizable intangibles50,546  51,658  18,164  51,099  18,948 
Average tangible common equity (non-GAAP)$1,069,886  $1,048,824  $709,793  $1,059,446  $701,138 
          
Operating Measures (3)         
Net income (GAAP)$47,327  $16,639  $17,956  $63,966  $37,080 
Plus: Merger-related costs, net of tax6,537  22,236  2,358  28,773  2,358 
Net operating earnings (non-GAAP)$53,864  $38,875  $20,314  $92,739  $39,438 
          
Noninterest expense (GAAP)$85,140  $101,743  $57,575  $186,885  $112,668 
Less: Merger-related costs8,273  27,712  2,744  35,985  2,744 
Operating noninterest expense (non-GAAP)$76,867  $74,031  $54,831  $150,900  $109,924 
          
Net interest income (FTE) (non-GAAP) (1)$110,176  $105,310  $71,647  $215,485  $140,755 
Noninterest income (GAAP)40,597  20,267  15,262  60,865  32,075 
          
Efficiency ratio57.23% 82.22% 68.57% 68.58% 67.41%
Efficiency ratio (FTE) (1)56.47% 81.02% 66.25% 67.63% 65.19%
Operating efficiency ratio (FTE)50.98% 58.95% 63.09% 54.60% 63.60%


 As of & For Three Months Ended As of & For Six Months Ended
 6/30/18 3/31/18 6/30/17 6/30/18 6/30/17
Other Data(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
End of period full-time employees1,702  1,824  1,432  1,702  1,432 
Number of full-service branches147  150  112  147  112 
Number of full automatic transaction machines ("ATMs")199
  216  174  199
  174 

(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 unrelated to the Company’s normal operations. 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 June 30, 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)     
 June 30, December 31, June 30,
 2018 2017 2017
ASSETS(unaudited) (audited) (unaudited)
Cash and cash equivalents:     
Cash and due from banks$153,078  $117,586  $135,759 
Interest-bearing deposits in other banks417,423  81,291  45,473 
Federal funds sold7,552  496  678 
Total cash and cash equivalents578,053  199,373  181,910 
Securities available for sale, at fair value1,586,248  974,222  960,537 
Securities held to maturity, at carrying value47,604  199,639  205,630 
Restricted stock, at cost104,837  75,283  69,631 
Loans held for investment, net of deferred fees and costs9,290,259  7,141,552  6,771,490 
Less allowance for loan losses41,270  38,208  38,214 
Net loans held for investment9,248,989  7,103,344  6,733,276 
Premises and equipment, net160,508  119,604  121,367 
Other real estate owned, net of valuation allowance7,995  6,636  9,482 
Goodwill725,195  298,528  298,191 
Amortizable intangibles, net51,211  14,803  17,422 
Bank owned life insurance260,124  182,854  180,110 
Other assets251,878  96,235  90,297 
Assets of discontinued operations43,464  44,658  47,334 
Total assets$13,066,106  $9,315,179  $8,915,187 
LIABILITIES     
Noninterest-bearing demand deposits$2,192,927  $1,502,208  $1,501,570 
Interest-bearing deposits7,604,345  5,489,510  5,262,864 
Total deposits9,797,272  6,991,718  6,764,434 
Securities sold under agreements to repurchase50,299  49,152  34,543 
Other short-term borrowings742,900  745,000  602,000 
Long-term borrowings507,077  425,262  434,260 
Other liabilities99,327  54,008  45,026 
Liabilities of discontinued operations4,361  3,710  4,055 
Total liabilities11,201,236  8,268,850  7,884,318 
Commitments and contingencies     
STOCKHOLDERS' EQUITY     
Common stock, $1.33 par value, shares authorized 100,000,000;
issued and outstanding, 65,939,375 shares, 43,743,318 shares, and
43,706,000 shares, respectively.
87,129  57,744  57,643 
Additional paid-in capital1,376,294  610,001  607,666 
Retained earnings415,492  379,468  361,552 
Accumulated other comprehensive income (loss)(14,045) (884) 4,008 
Total stockholders' equity1,864,870  1,046,329  1,030,869 
Total liabilities and stockholders' equity$13,066,106  $9,315,179  $8,915,187 


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,
 2018 2018 2017 2018 2017
Interest and dividend income:(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Interest and fees on loans$119,540  $112,652  $72,317  $232,193  $140,200 
Interest on deposits in other banks676  647  115  1,323  186 
Interest and dividends on securities:         
Taxable8,012  7,072  4,982  15,084  9,905 
Nontaxable4,181  4,008  3,512  8,189  7,074 
Total interest and dividend income132,409  124,379  80,926  256,789  157,365 
Interest expense:         
Interest on deposits13,047  11,212  6,100  24,259  11,176 
Interest on short-term borrowings5,166  4,249  1,400  9,415  2,350 
Interest on long-term borrowings6,028  5,446  4,722  11,475  8,768 
Total interest expense24,241  20,907  12,222  45,149  22,294 
Net interest income108,168  103,472  68,704  211,640  135,071 
Provision for credit losses2,147  3,524  2,184  5,671  4,288 
Net interest income after provision for credit losses106,021  99,948  66,520  205,969  130,783 
Noninterest income:         
Service charges on deposit accounts6,189  5,894  4,613  12,083  9,129 
Other service charges and fees1,278  1,233  1,120  2,512  2,259 
Interchange fees, net4,792  4,489  3,867  9,280  7,449 
Fiduciary and asset management fees4,040  3,056  2,725  7,096  5,519 
Gains on securities transactions, net(88) 213  117  125  598 
Bank owned life insurance income1,728  1,667  1,335  3,395  3,460 
Loan-related interest rate swap fees898  718  1,031  1,617  2,211 
Gain on Shore Premier sale20,899      20,899   
Other operating income861  2,997  454  3,858  1,450 
Total noninterest income40,597  20,267  15,262  60,865  32,075 
Noninterest expenses:         
Salaries and benefits40,777  40,741  28,930  81,518  59,553 
Occupancy expenses6,159  6,067  4,453  12,226  9,106 
Furniture and equipment expenses3,103  2,937  2,598  6,041  5,064 
Printing, postage, and supplies1,282  1,060  1,393  2,342  2,525 
Communications expense1,009  1,095  870  2,104  1,771 
Technology and data processing4,322  4,560  3,842  8,881  7,646 
Professional services2,671  2,554  2,054  5,225  3,664 
Marketing and advertising expense3,288  1,436  2,270  4,725  4,002 
FDIC assessment premiums and other insurance1,882  2,185  947  4,067  1,652 
Other taxes2,895  2,886  2,022  5,782  4,043 
Loan-related expenses1,843  1,315  1,128  3,158  2,292 
OREO and credit-related expenses1,122  1,532  342  2,654  884 
Amortization of intangible assets3,215  3,181  1,544  6,396  3,180 
Training and other personnel costs1,125  1,006  1,018  2,132  1,967 
Merger-related costs8,273  27,712  2,744  35,985  2,744 
Other expenses2,174  1,476  1,420  3,649  2,575 
Total noninterest expenses85,140  101,743  57,575  186,885  112,668 
Income from continuing operations before income taxes61,478  18,472  24,207  79,949  50,190 
Income tax expense11,678  1,897  6,725  13,575  13,507 
Income from continuing operations$49,800  $16,575  $17,482  $66,374  $36,683 


UNION BANKSHARES CORPORATION AND SUBSIDIARIES    
CONSOLIDATED STATEMENTS OF INCOME (continued)    
(Dollars in thousands, except share data)         
 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30, June 30,
 2018 2018 2017 2018 2017
Discontinued operations:(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Income (loss) from operations of discontinued mortgage segment$(3,085) $76  $745  $(3,008) 651 
Income tax expense (benefit)(612) 12  271  (600) 254 
Income (loss) on discontinued operations(2,473) 64  474  (2,408) 397 
Net income$47,327  $16,639  $17,956  $63,966  $37,080 
Basic earnings per common share$0.72  $0.25  $0.41  $0.97  $0.85 
Diluted earnings per common share$0.72  $0.25  $0.41  $0.97  $0.85 


AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
 For the Quarter Ended
 June 30, 2018 March 31, 2018
 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$1,077,656  $8,012  2.98% $1,020,691  $7,072  2.81%
Tax-exempt547,617  5,293  3.88% 546,578  5,073  3.76%
Total securities1,625,273  13,305  3.28% 1,567,269  12,145  3.14%
Loans, net (3) (4)9,809,083  120,039  4.91% 9,680,195  113,135  4.74%
Other earning assets226,833  1,073  1.90% 227,635  937  1.67%
Total earning assets11,661,189  $134,417  4.62% 11,475,099  $126,217  4.46%
Allowance for loan losses(41,645)     (39,847)    
Total non-earning assets1,598,683      1,584,320     
Total assets$13,218,227      $13,019,572     
            
Liabilities and Stockholders' Equity:           
Interest-bearing deposits:           
Transaction and money market accounts$4,836,642  $6,790  0.56% $4,759,523  $5,555  0.47%
Regular savings649,897  217  0.13% 644,440  212  0.13%
Time deposits (5)2,063,414  6,040  1.17% 2,085,930  5,445  1.06%
Total interest-bearing deposits7,549,953  13,047  0.69% 7,489,893  11,212  0.61%
Other borrowings (6)1,617,322  11,194  2.78% 1,614,691  9,695  2.44%
Total interest-bearing liabilities9,167,275  24,241  1.06% 9,104,584  20,907  0.93%
            
Noninterest-bearing liabilities:           
Demand deposits2,095,233      1,973,804     
Other liabilities108,353      116,596     
Total liabilities11,370,861      11,194,984     
Stockholders' equity1,847,366      1,824,588     
Total liabilities and stockholders' equity$13,218,227      $13,019,572     
            
Net interest income  $110,176      $105,310   
            
Interest rate spread    3.56%     3.53%
Cost of funds    0.83%     0.74%
Net interest margin    3.79%     3.72%
            
(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.
(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 $5.3 million and $4.8 million for the three months ended June 30, 2018 and March 31, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5) Interest expense on time deposits includes $685,000 and $832,000 for the three months ended June 30, 2018 and March 31, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions.
(6) Interest expense on borrowings includes $104,000 and $98,000 for the three months ended June 30, 2018 and March 31, 2018, respectively, in amortization of the fair market value adjustments related to acquisitions.


Contact:
Robert M. Gorman - (804) 523-7828
Executive Vice President / Chief Financial Officer

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.