Exhibit 99.1
Contact: Robert M. Gorman - (804) 523-7828
Executive Vice President / Chief Financial Officer
UNION BANKSHARES REPORTS SECOND QUARTER RESULTS
Richmond, Va., July 18, 2018 - 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, 2018 | 5,324 | 685 | (104) | 5,905 | |||||||||||
For the remaining six months of 2018 (estimated) | 5,650 | 1,036 | (304) | 6,382 | |||||||||||
For the years ending (estimated): | |||||||||||||||
2019 | 9,626 | 1,170 | (660) | 10,136 | |||||||||||
2020 | 7,655 | 284 | (734) | 7,205 | |||||||||||
2021 | 6,023 | 108 | (805) | 5,326 | |||||||||||
2022 | 4,319 | 21 | (827) | 3,513 | |||||||||||
2023 | 2,739 | — | (850) | 1,889 | |||||||||||
Thereafter | 9,670 | — | (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 properties | 7,241 | 8,079 | 5,253 | 6,449 | 6,828 | ||||||||||||||
Former bank premises | 754 | 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 | ) | |||||||||
Additions | 5,063 | 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 property | 283 | 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 sales | 16 | 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 assets | 14.27 | % | 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 expense | 24,241 | 20,907 | 12,222 | 45,149 | 22,294 | ||||||||||||||
Net interest income | 108,168 | 103,472 | 68,704 | 211,640 | 135,071 | ||||||||||||||
Provision for credit losses | 2,147 | 3,524 | 2,184 | 5,671 | 4,288 | ||||||||||||||
Net interest income after provision for credit losses | 106,021 | 99,948 | 66,520 | 205,969 | 130,783 | ||||||||||||||
Noninterest income | 40,597 | 20,267 | 15,262 | 60,865 | 32,075 | ||||||||||||||
Noninterest expenses | 85,140 | 101,743 | 57,575 | 186,885 | 112,668 | ||||||||||||||
Income before income taxes | 61,478 | 18,472 | 24,207 | 79,949 | 50,190 | ||||||||||||||
Income tax expense | 11,678 | 1,897 | 6,725 | 13,575 | 13,507 | ||||||||||||||
Income from continuing operations | 49,800 | 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 ratio | 57.23 | % | 82.22 | % | 68.57 | % | 68.58 | % | 67.41 | % | |||||||||
Efficiency ratio (FTE) (1) | 56.47 | % | 81.02 | % | 66.25 | % | 67.63 | % | 65.19 | % | |||||||||
Net interest margin | 3.72 | % | 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 ROA | 1.63 | % | 1.21 | % | 0.93 | % | 1.43 | % | 0.92 | % | |||||||||
Operating ROE | 11.69 | % | 8.64 | % | 7.94 | % | 10.19 | % | 7.81 | % | |||||||||
Operating ROTCE | 20.19 | % | 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, diluted | 0.72 | 0.25 | 0.41 | 0.97 | 0.85 | ||||||||||||||
Cash dividends paid per common share | 0.21 | 0.21 | 0.20 | 0.42 | 0.40 | ||||||||||||||
Market value per share | 38.88 | 36.71 | 33.90 | 38.88 | 33.90 | ||||||||||||||
Book value per common share | 28.47 | 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, diluted | 13.46 | 36.21 | 20.61 | 19.88 | 19.78 | ||||||||||||||
Price to book value per common share ratio | 1.37 | 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, basic | 65,919,055 | 65,554,630 | 43,693,427 | 65,737,849 | 43,674,070 | ||||||||||||||
Weighted average common shares outstanding, diluted | 65,965,577 | 65,636,262 | 43,783,952 | 65,801,926 | 43,755,045 | ||||||||||||||
Common shares outstanding at end of period | 65,939,375 | 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 assets | 14.27 | % | 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 investment | 9,290,259 | 9,805,723 | 6,771,490 | 9,290,259 | 6,771,490 | ||||||||||||||
Earning Assets | 11,494,113 | 11,595,325 | 8,094,574 | 11,494,113 | 8,094,574 | ||||||||||||||
Goodwill | 725,195 | 724,106 | 298,191 | 725,195 | 298,191 | ||||||||||||||
Amortizable intangibles, net | 51,211 | 50,092 | 17,422 | 51,211 | 17,422 | ||||||||||||||
Deposits | 9,797,272 | 9,677,955 | 6,764,434 | 9,797,272 | 6,764,434 | ||||||||||||||
Stockholders' equity | 1,864,870 | 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 occupied | 1,293,791 | 1,279,155 | 888,285 | 1,293,791 | 888,285 | ||||||||||||||
Commercial real estate - non-owner occupied | 2,318,589 | 2,230,463 | 1,698,329 | 2,318,589 | 1,698,329 | ||||||||||||||
Multifamily real estate | 541,730 | 547,520 | 367,257 | 541,730 | 367,257 | ||||||||||||||
Commercial & Industrial | 1,093,771 | 1,125,733 | 568,602 | 1,093,771 | 568,602 | ||||||||||||||
Residential 1-4 Family - commercial | 723,945 | 714,660 | 589,398 | 723,945 | 589,398 | ||||||||||||||
Residential 1-4 Family - mortgage | 607,155 | 604,354 | 477,121 | 607,155 | 477,121 | ||||||||||||||
Auto | 296,706 | 288,089 | 274,162 | 296,706 | 274,162 | ||||||||||||||
HELOC | 626,916 | 642,084 | 535,088 | 626,916 | 535,088 | ||||||||||||||
Consumer | 298,021 | 839,699 | 387,782 | 298,021 | 387,782 | ||||||||||||||
Other Commercial | 239,187 | 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 accounts | 2,758,704 | 2,692,662 | 1,559,895 | 2,758,704 | 1,559,895 | ||||||||||||||
Savings accounts | 643,894 | 654,931 | 558,472 | 643,894 | 558,472 | ||||||||||||||
Time deposits of $100,000 and over | 1,019,577 | 819,056 | 580,962 | 1,019,577 | 580,962 | ||||||||||||||
Other time deposits | 1,034,171 | 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 deposits | 2,192,927 | 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 investment | 9,809,083 | 9,680,195 | 6,628,011 | 9,744,995 | 6,506,632 | ||||||||||||||
Securities | 1,625,273 | 1,567,269 | 1,229,593 | 1,596,431 | 1,218,741 | ||||||||||||||
Earning assets | 11,661,189 | 11,475,099 | 7,934,405 | 11,568,658 | 7,798,427 | ||||||||||||||
Deposits | 9,645,186 | 9,463,697 | 6,637,742 | 9,554,943 | 6,523,148 | ||||||||||||||
Time deposits | 2,063,414 | 2,085,930 | 1,248,818 | 2,074,610 | 1,230,045 | ||||||||||||||
Interest-bearing deposits | 7,549,953 | 7,489,893 | 5,179,774 | 7,520,089 | 5,097,004 | ||||||||||||||
Borrowings | 1,617,322 | 1,614,691 | 1,023,599 | 1,616,013 | 1,005,224 | ||||||||||||||
Interest-bearing liabilities | 9,167,275 | 9,104,584 | 6,203,373 | 9,136,102 | 6,102,228 | ||||||||||||||
Stockholders' equity | 1,847,366 | 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: Recoveries | 1,201 | 1,480 | 827 | 2,681 | 1,672 | ||||||||||||||
Less: Charge-offs | 2,980 | 2,559 | 3,327 | 5,539 | 4,960 | ||||||||||||||
Add: Provision for loan losses | 2,660 | 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 loans | 0.44 | % | 0.41 | % | 0.56 | % | 0.44 | % | 0.56 | % | |||||||||
Net charge-offs / total average loans | 0.07 | % | 0.05 | % | 0.15 | % | 0.06 | % | 0.10 | % | |||||||||
Provision / total average loans | 0.11 | % | 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 loans | 36,207 | 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 occupied | 2,845 | 2,539 | 1,279 | 2,845 | 1,279 | ||||||||||||||
Commercial real estate - non-owner occupied | 3,068 | 2,089 | 4,765 | 3,068 | 4,765 | ||||||||||||||
Commercial & Industrial | 1,387 | 1,969 | 4,281 | 1,387 | 4,281 | ||||||||||||||
Residential 1-4 Family | 9,550 | 9,441 | 6,128 | 9,550 | 6,128 | ||||||||||||||
Auto | 463 | 394 | 270 | 463 | 270 | ||||||||||||||
HELOC | 1,669 | 2,072 | 2,059 | 1,669 | 2,059 | ||||||||||||||
Consumer and all other | 195 | 243 | 133 | 195 | 133 | ||||||||||||||
Nonaccrual loans | $ | 25,662 | $ | 25,138 | $ | 24,574 | $ | 25,662 | $ | 24,574 | |||||||||
Other real estate owned | 7,995 | 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 occupied | 2,512 | — | 56 | 2,512 | 56 | ||||||||||||||
Commercial real estate - non-owner occupied | — | — | 298 | — | 298 | ||||||||||||||
Commercial & Industrial | 100 | 200 | 55 | 100 | 55 | ||||||||||||||
Residential 1-4 Family | 2,801 | 1,261 | 2,369 | 2,801 | 2,369 | ||||||||||||||
Auto | 121 | 170 | 35 | 121 | 35 | ||||||||||||||
HELOC | 570 | 306 | 544 | 570 | 544 | ||||||||||||||
Consumer and all other | 673 | 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 loans | 0.36 | % | 0.36 | % | 0.50 | % | 0.36 | % | 0.50 | % | |||||||||
NPAs / total assets | 0.26 | % | 0.27 | % | 0.38 | % | 0.26 | % | 0.38 | % | |||||||||
ALL / nonaccrual loans | 160.82 | % | 161.62 | % | 155.51 | % | 160.82 | % | 155.51 | % | |||||||||
ALL / nonperforming assets | 122.62 | % | 115.30 | % | 112.21 | % | 122.62 | % | 112.21 | % | |||||||||
Past Due Detail | |||||||||||||||||||
Construction and land development | $ | 648 | $ | 403 | $ | 602 | $ | 648 | $ | 602 | |||||||||
Commercial real estate - owner occupied | 3,775 | 4,985 | 3,148 | 3,775 | 3,148 | ||||||||||||||
Commercial real estate - non-owner occupied | 44 | 1,867 | 1,530 | 44 | 1,530 | ||||||||||||||
Multifamily real estate | 86 | — | 500 | 86 | 500 | ||||||||||||||
Commercial & Industrial | 1,921 | 2,608 | 1,652 | 1,921 | 1,652 | ||||||||||||||
Residential 1-4 Family | 7,142 | 9,917 | 2,477 | 7,142 | 2,477 | ||||||||||||||
Auto | 2,187 | 2,167 | 1,562 | 2,187 | 1,562 | ||||||||||||||
HELOC | 2,505 | 3,564 | 1,405 | 2,505 | 1,405 | ||||||||||||||
Consumer and all other | 2,722 | 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 occupied | 1,819 | 777 | 194 | 1,819 | 194 | ||||||||||||||
Commercial real estate - non-owner occupied | — | — | 571 | — | 571 | ||||||||||||||
Commercial & Industrial | 1,567 | 1,254 | 113 | 1,567 | 113 | ||||||||||||||
Residential 1-4 Family | 3,742 | 2,357 | 5,663 | 3,742 | 5,663 | ||||||||||||||
Auto | 419 | 193 | 240 | 419 | 240 | ||||||||||||||
HELOC | 1,622 | 1,346 | 964 | 1,622 | 964 | ||||||||||||||
Consumer and all other | 761 | 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 | |||||||||
Nonperforming | 4,001 | 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 adjustment | 2,008 | 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 assets | 11,661,189 | 11,475,099 | 7,934,405 | 11,568,658 | 7,798,427 | ||||||||||||||
Net interest margin | 3.72 | % | 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 goodwill | 725,195 | 724,106 | 298,191 | 725,195 | 298,191 | ||||||||||||||
Less: Ending amortizable intangibles | 51,211 | 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 goodwill | 725,195 | 724,106 | 298,191 | 725,195 | 298,191 | ||||||||||||||
Less: Ending amortizable intangibles | 51,211 | 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 goodwill | 726,934 | 724,106 | 298,191 | 725,527 | 298,191 | ||||||||||||||
Less: Average amortizable intangibles | 50,546 | 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 tax | 6,537 | 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 costs | 8,273 | 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 ratio | 57.23 | % | 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 employees | 1,702 | 1,824 | 1,432 | 1,702 | 1,432 | |||||||||
Number of full-service branches | 147 | 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 banks | 417,423 | 81,291 | 45,473 | ||||||||
Federal funds sold | 7,552 | 496 | 678 | ||||||||
Total cash and cash equivalents | 578,053 | 199,373 | 181,910 | ||||||||
Securities available for sale, at fair value | 1,586,248 | 974,222 | 960,537 | ||||||||
Securities held to maturity, at carrying value | 47,604 | 199,639 | 205,630 | ||||||||
Restricted stock, at cost | 104,837 | 75,283 | 69,631 | ||||||||
Loans held for investment, net of deferred fees and costs | 9,290,259 | 7,141,552 | 6,771,490 | ||||||||
Less allowance for loan losses | 41,270 | 38,208 | 38,214 | ||||||||
Net loans held for investment | 9,248,989 | 7,103,344 | 6,733,276 | ||||||||
Premises and equipment, net | 160,508 | 119,604 | 121,367 | ||||||||
Other real estate owned, net of valuation allowance | 7,995 | 6,636 | 9,482 | ||||||||
Goodwill | 725,195 | 298,528 | 298,191 | ||||||||
Amortizable intangibles, net | 51,211 | 14,803 | 17,422 | ||||||||
Bank owned life insurance | 260,124 | 182,854 | 180,110 | ||||||||
Other assets | 251,878 | 96,235 | 90,297 | ||||||||
Assets of discontinued operations | 43,464 | 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 deposits | 7,604,345 | 5,489,510 | 5,262,864 | ||||||||
Total deposits | 9,797,272 | 6,991,718 | 6,764,434 | ||||||||
Securities sold under agreements to repurchase | 50,299 | 49,152 | 34,543 | ||||||||
Other short-term borrowings | 742,900 | 745,000 | 602,000 | ||||||||
Long-term borrowings | 507,077 | 425,262 | 434,260 | ||||||||
Other liabilities | 99,327 | 54,008 | 45,026 | ||||||||
Liabilities of discontinued operations | 4,361 | 3,710 | 4,055 | ||||||||
Total liabilities | 11,201,236 | 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 capital | 1,376,294 | 610,001 | 607,666 | ||||||||
Retained earnings | 415,492 | 379,468 | 361,552 | ||||||||
Accumulated other comprehensive income (loss) | (14,045 | ) | (884 | ) | 4,008 | ||||||
Total stockholders' equity | 1,864,870 | 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 banks | 676 | 647 | 115 | 1,323 | 186 | ||||||||||||||
Interest and dividends on securities: | |||||||||||||||||||
Taxable | 8,012 | 7,072 | 4,982 | 15,084 | 9,905 | ||||||||||||||
Nontaxable | 4,181 | 4,008 | 3,512 | 8,189 | 7,074 | ||||||||||||||
Total interest and dividend income | 132,409 | 124,379 | 80,926 | 256,789 | 157,365 | ||||||||||||||
Interest expense: | |||||||||||||||||||
Interest on deposits | 13,047 | 11,212 | 6,100 | 24,259 | 11,176 | ||||||||||||||
Interest on short-term borrowings | 5,166 | 4,249 | 1,400 | 9,415 | 2,350 | ||||||||||||||
Interest on long-term borrowings | 6,028 | 5,446 | 4,722 | 11,475 | 8,768 | ||||||||||||||
Total interest expense | 24,241 | 20,907 | 12,222 | 45,149 | 22,294 | ||||||||||||||
Net interest income | 108,168 | 103,472 | 68,704 | 211,640 | 135,071 | ||||||||||||||
Provision for credit losses | 2,147 | 3,524 | 2,184 | 5,671 | 4,288 | ||||||||||||||
Net interest income after provision for credit losses | 106,021 | 99,948 | 66,520 | 205,969 | 130,783 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Service charges on deposit accounts | 6,189 | 5,894 | 4,613 | 12,083 | 9,129 | ||||||||||||||
Other service charges and fees | 1,278 | 1,233 | 1,120 | 2,512 | 2,259 | ||||||||||||||
Interchange fees, net | 4,792 | 4,489 | 3,867 | 9,280 | 7,449 | ||||||||||||||
Fiduciary and asset management fees | 4,040 | 3,056 | 2,725 | 7,096 | 5,519 | ||||||||||||||
Gains on securities transactions, net | (88 | ) | 213 | 117 | 125 | 598 | |||||||||||||
Bank owned life insurance income | 1,728 | 1,667 | 1,335 | 3,395 | 3,460 | ||||||||||||||
Loan-related interest rate swap fees | 898 | 718 | 1,031 | 1,617 | 2,211 | ||||||||||||||
Gain on Shore Premier sale | 20,899 | — | — | 20,899 | — | ||||||||||||||
Other operating income | 861 | 2,997 | 454 | 3,858 | 1,450 | ||||||||||||||
Total noninterest income | 40,597 | 20,267 | 15,262 | 60,865 | 32,075 | ||||||||||||||
Noninterest expenses: | |||||||||||||||||||
Salaries and benefits | 40,777 | 40,741 | 28,930 | 81,518 | 59,553 | ||||||||||||||
Occupancy expenses | 6,159 | 6,067 | 4,453 | 12,226 | 9,106 | ||||||||||||||
Furniture and equipment expenses | 3,103 | 2,937 | 2,598 | 6,041 | 5,064 | ||||||||||||||
Printing, postage, and supplies | 1,282 | 1,060 | 1,393 | 2,342 | 2,525 | ||||||||||||||
Communications expense | 1,009 | 1,095 | 870 | 2,104 | 1,771 | ||||||||||||||
Technology and data processing | 4,322 | 4,560 | 3,842 | 8,881 | 7,646 | ||||||||||||||
Professional services | 2,671 | 2,554 | 2,054 | 5,225 | 3,664 | ||||||||||||||
Marketing and advertising expense | 3,288 | 1,436 | 2,270 | 4,725 | 4,002 | ||||||||||||||
FDIC assessment premiums and other insurance | 1,882 | 2,185 | 947 | 4,067 | 1,652 | ||||||||||||||
Other taxes | 2,895 | 2,886 | 2,022 | 5,782 | 4,043 | ||||||||||||||
Loan-related expenses | 1,843 | 1,315 | 1,128 | 3,158 | 2,292 | ||||||||||||||
OREO and credit-related expenses | 1,122 | 1,532 | 342 | 2,654 | 884 | ||||||||||||||
Amortization of intangible assets | 3,215 | 3,181 | 1,544 | 6,396 | 3,180 | ||||||||||||||
Training and other personnel costs | 1,125 | 1,006 | 1,018 | 2,132 | 1,967 | ||||||||||||||
Merger-related costs | 8,273 | 27,712 | 2,744 | 35,985 | 2,744 | ||||||||||||||
Other expenses | 2,174 | 1,476 | 1,420 | 3,649 | 2,575 | ||||||||||||||
Total noninterest expenses | 85,140 | 101,743 | 57,575 | 186,885 | 112,668 | ||||||||||||||
Income from continuing operations before income taxes | 61,478 | 18,472 | 24,207 | 79,949 | 50,190 | ||||||||||||||
Income tax expense | 11,678 | 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-exempt | 547,617 | 5,293 | 3.88 | % | 546,578 | 5,073 | 3.76 | % | |||||||||||||
Total securities | 1,625,273 | 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 assets | 226,833 | 1,073 | 1.90 | % | 227,635 | 937 | 1.67 | % | |||||||||||||
Total earning assets | 11,661,189 | $ | 134,417 | 4.62 | % | 11,475,099 | $ | 126,217 | 4.46 | % | |||||||||||
Allowance for loan losses | (41,645 | ) | (39,847 | ) | |||||||||||||||||
Total non-earning assets | 1,598,683 | 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 savings | 649,897 | 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 deposits | 7,549,953 | 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 liabilities | 9,167,275 | 24,241 | 1.06 | % | 9,104,584 | 20,907 | 0.93 | % | |||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||
Demand deposits | 2,095,233 | 1,973,804 | |||||||||||||||||||
Other liabilities | 108,353 | 116,596 | |||||||||||||||||||
Total liabilities | 11,370,861 | 11,194,984 | |||||||||||||||||||
Stockholders' equity | 1,847,366 | 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. | |||||||||||||||||||||