Exhibit 99.1
Contact: Robert M. Gorman - (804) 523-7828
Executive Vice President / Chief Financial Officer
UNION BANKSHARES REPORTS FOURTH QUARTER AND FULL YEAR RESULTS
Richmond, Va., January 22, 2019 - Union Bankshares Corporation (the “Company” or “Union”) (Nasdaq: UBSH) today reported net income of $44.1 million and earnings per share of $0.67 for its fourth quarter ended December 31, 2018. Net operating earnings(1) were $46.2 million and operating earnings per share(1) was $0.70 for its fourth quarter ended December 31, 2018; these operating results exclude $2.2 million in after-tax merger-related costs but include losses from discontinued operations of $192,000.
For the year ended December 31, 2018, net income was $146.2 million and earnings per share was $2.22. Net operating earnings(1) were $178.3 million and operating earnings per share(1) was $2.71 for the year ended December 31, 2018; these operating results exclude $32.1 million in after-tax merger-related costs but include losses from discontinued operations of $3.2 million.
“Union closed out our transformative 2018 year with a strong fourth quarter,” said John C. Asbury, President and CEO of Union Bankshares Corporation. “We accomplished what we said we would do by hitting each one of our top tier financial targets showing the underlying strength and earnings potential of this uniquely valuable franchise.
“We had stronger than expected loan growth for the quarter which brought our full year loan growth back in line with our initial expectations for 2018. With the Access National Corporation acquisition about to close, 2019 looks to be another year of positive change and financial improvement as Union evolves into a mid-Atlantic regional bank.”
On January 11, 2019, the Company and Access National Corporation ("Access") jointly announced the receipt of regulatory approval from the Federal Reserve Bank of Richmond and from the Virginia State Corporation Commission to move forward with the proposed merger of Access into the Company (the "Pending Access Merger"). Further, on January 15, 2019, the Company and Access jointly announced that, at separate special meetings, the shareholders of both the Company and Access approved the Pending Access Merger. The Pending Access Merger is expected to close February 1, 2019.
Select highlights for the fourth quarter of 2018
◦ | Return on Average Assets (“ROA”) was 1.29% compared to 1.17% in the third quarter of 2018. Operating ROA(1) was 1.36% compared to 1.21% in the third quarter of 2018. |
◦ | Return on Average Equity (“ROE”) was 9.21% compared to 8.06% in the third quarter of 2018. Operating ROE(1) was 9.66% compared to 8.30% in the third quarter of 2018. |
◦ | Return on Average Tangible Common Equity (“ROTCE”)(1) was 16.42% compared to 14.72% in the third quarter of 2018. Operating ROTCE(1) was 17.18% compared to 15.13% in the third quarter of 2018. |
◦ | Efficiency ratio decreased to 56.2% compared to 60.7% in the third quarter of 2018. Operating efficiency ratio (FTE)(1) decreased to 53.5% compared to 58.6% in the third quarter of 2018. |
Select highlights for the full year 2018
◦ | ROA was 1.11% compared to 0.83% for the year ended 2017. Operating ROA(1) was 1.35% compared to 0.95% for the year ended 2017. |
◦ | ROE was 7.85% compared to 7.07% for the year ended 2017. Operating ROE(1) was 9.57% compared to 8.11% for the year ended 2017. |
◦ | ROTCE(1) was 14.40% compared to 10.75% for the year ended 2017. Operating ROTCE(1) was 17.35% compared to 12.24% for the year ended 2017. |
◦ | Efficiency ratio decreased to 63.6% compared to 66.1% for the year ended 2017. Operating efficiency ratio (FTE)(1) decreased to 55.3% compared to 62.4% for the year ended 2017. |
(1) These are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”). For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.
NET INTEREST INCOME
For the fourth quarter of 2018, net interest income was $109.1 million, an increase of $3.1 million from the third quarter of 2018. Net interest income (FTE)(1) was $111.4 million in the fourth quarter of 2018, an increase of $3.4 million from the third quarter of 2018. The increases in both net interest income and net interest income (FTE) were primarily driven by loan growth during the quarter ended December 31, 2018. The fourth quarter net interest margin decreased 7 basis points to 3.62% from 3.69% in the previous quarter, while the net interest margin (FTE)(1) decreased 6 basis points to 3.70% from 3.76% during the same periods. The decreases in the net interest margin and net interest margin (FTE) were principally due to an approximately 15 basis point increase in the cost of funds, partially offset by an approximately 9 basis point increase in the yield on earnings assets..
The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. During the fourth quarter of 2018, net accretion related to acquisition accounting decreased $182,000 from the prior quarter to $3.8 million for the quarter ended December 31, 2018. The third and fourth 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 September 30, 2018 | 3,496 | 592 | (143) | $ | 3,945 | |||||
For the quarter ended December 31, 2018 | 3,479 | 445 | (161) | 3,763 | ||||||
For the year ended December 31, 2018 | 17,145 | 2,553 | (506) | 19,192 | ||||||
For the years ending (estimated):(2) | ||||||||||
2019 | 10,538 | 1,170 | (660) | 11,048 | ||||||
2020 | 8,130 | 284 | (734) | 7,680 | ||||||
2021 | 6,614 | 108 | (805) | 5,917 | ||||||
2022 | 4,984 | 21 | (827) | 4,178 | ||||||
2023 | 2,996 | — | (850) | 2,146 | ||||||
Thereafter | 10,550 | — | (11,633) | (1,083) | ||||||
(1) For the reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of Key Financial Results.
(2) Estimated net accretion only includes accretion for the previously completed acquisitions. The accretion effects of the Pending Access Merger are not included in the information above.
ASSET QUALITY/LOAN LOSS PROVISION
Overview
During the fourth quarter of 2018, the Company experienced decreases in nonperforming asset (“NPA”) balances from the prior quarter, primarily due to an increase in charge-offs related to two credit relationships composed of construction and land development loans. Past due loan levels as a percentage of total loans held for investment at December 31, 2018 were higher than past due loan levels at September 30, 2018 and December 31, 2017. Charge-off levels increased from the third quarter of 2018 and were primarily related to the consumer loan portfolio; as a result, the provision for loan losses increased from the third quarter of 2018.
All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $90.2 million (net of fair value mark of $23.3 million) at December 31, 2018.
Nonperforming Assets
At December 31, 2018, NPAs totaled $33.7 million, a decline of $1.2 million, or 3.5%, from September 30, 2018 and an increase of $6.7 million, or 24.7%, from December 31, 2017. NPAs as a percentage of total outstanding loans at December 31, 2018 were 0.35%, a decrease of 2 basis points from 0.37% at September 30, 2018 and a decline of 3 basis points from 0.38% at December 31, 2017. As the Company's NPAs have been at or near historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but do not have a 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):
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
Nonaccrual loans | $ | 26,953 | $ | 28,110 | $ | 25,662 | $ | 25,138 | $ | 21,743 | |||||||||
Foreclosed properties | 6,722 | 6,800 | 7,241 | 8,079 | 5,253 | ||||||||||||||
Total nonperforming assets | $ | 33,675 | $ | 34,910 | $ | 32,903 | $ | 33,217 | $ | 26,996 | |||||||||
The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
Beginning Balance | $ | 28,110 | $ | 25,662 | $ | 25,138 | $ | 21,743 | $ | 20,122 | |||||||||
Net customer payments | (3,077 | ) | (2,459 | ) | (2,651 | ) | (1,455 | ) | (768 | ) | |||||||||
Additions | 4,659 | 6,268 | 5,063 | 5,451 | 4,335 | ||||||||||||||
Charge-offs | (2,069 | ) | (1,137 | ) | (539 | ) | (403 | ) | (1,305 | ) | |||||||||
Loans returning to accruing status | (420 | ) | (70 | ) | (1,349 | ) | (182 | ) | (448 | ) | |||||||||
Transfers to foreclosed property | (250 | ) | (154 | ) | — | (16 | ) | (193 | ) | ||||||||||
Ending Balance | $ | 26,953 | $ | 28,110 | $ | 25,662 | $ | 25,138 | $ | 21,743 | |||||||||
The following table shows the activity in foreclosed properties for the quarter ended (dollars in thousands):
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
Beginning Balance | $ | 6,800 | $ | 7,241 | $ | 8,079 | $ | 5,253 | $ | 6,449 | |||||||||
Additions of foreclosed property | 432 | 165 | 283 | 44 | 325 | ||||||||||||||
Acquisitions of foreclosed property (1) | — | — | (162 | ) | 4,204 | — | |||||||||||||
Valuation adjustments | (140 | ) | (42 | ) | (383 | ) | (759 | ) | (1,046 | ) | |||||||||
Proceeds from sales | (286 | ) | (889 | ) | (580 | ) | (684 | ) | (479 | ) | |||||||||
Gains (losses) from sales | (84 | ) | 325 | 4 | 21 | 4 | |||||||||||||
Ending Balance | $ | 6,722 | $ | 6,800 | $ | 7,241 | $ | 8,079 | $ | 5,253 | |||||||||
(1) Includes subsequent measurement period adjustments.
Past Due Loans
Past due loans still accruing interest totaled $61.9 million, or 0.64% of total loans, at December 31, 2018 compared to $46.6 million, or 0.49% of total loans, at September 30, 2018 and $27.8 million, or 0.39% of total loans, at December 31, 2017. Of the total past due loans still accruing interest, $8.9 million, or 0.09% of total loans, were loans past due 90 days or more at December 31, 2018, compared to $9.5 million, or 0.10% of total loans, at September 30, 2018 and $3.5 million, or 0.05% of total loans, at December 31, 2017. The increase in past due loans was primarily driven by a seasonal increase related to residential 1-4 family loans that were 30 days past due as of year-end of which the majority subsequently became current.
Net Charge-offs
For the fourth quarter of 2018, net charge-offs were $5.0 million, or 0.21% of total average loans on an annualized basis, compared to $3.2 million, or 0.13%, for the prior quarter and $2.7 million, or 0.15%, for the same quarter last year. The majority of net charge-offs in the fourth quarter of 2018 were related to consumer loans. For the year ended December 31, 2018, net charge-offs were $11.1 million, or 0.12% of total average loans, compared to $10.1 million, or 0.15%, for the year ended 2017.
Provision for Loan Losses
The provision for loan losses for the fourth quarter of 2018 was $4.8 million, an increase of $1.7 million compared to the previous quarter and an increase of $1.0 million compared to the same quarter in 2017. The increase in provision for loan losses from the third quarter of 2018 was primarily driven by loan growth and higher levels of net charge-offs in the fourth quarter of 2018.
Allowance for Loan Losses (“ALL”)
The ALL decreased $249,000 from September 30, 2018 to $41.0 million at December 31, 2018 primarily due to a decrease in historical loss rates. The ALL as a percentage of the total loan portfolio was 0.42% at December 31, 2018, 0.44% at September 30, 2018, and 0.54% at December 31, 2017. The year-over-year decline in the allowance ratio was primarily attributable to the acquisition of Xenith Bankshares, Inc. ("Xenith") on January 1, 2018. In acquisition accounting, there is no carryover of previously established allowance for loan losses.
The ratio of the ALL to nonaccrual loans was 152.3% at December 31, 2018, compared to 146.9% at September 30, 2018 and 175.7% at December 31, 2017. The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on loans, net charge-off activity, loan growth, delinquency trends, and other credit risk factors that the Company considers important in assessing the adequacy of the allowance for loan losses.
NONINTEREST INCOME
Noninterest income increased $3.6 million to $23.5 million for the quarter ended December 31, 2018 from $19.9 million in the prior quarter. The increase in noninterest income was primarily driven by life insurance proceeds of approximately $976,000, an increase in customer-related fee income of $222,000 due to higher overdraft fees and fiduciary and asset management fees, an increase in interest rate swap fees of $814,000 due to an increase in transaction volume, and $933,000 adjustment made in the third quarter to reduce the previously recorded gain from the sale of Shore Premier.
NONINTEREST EXPENSE
Noninterest expense decreased $1.8 million to $74.5 million for the quarter ended December 31, 2018 from $76.3 million in the prior quarter. Excluding merger-related costs of $2.3 million and $1.4 million in the fourth and third quarters of 2018, respectively, operating noninterest expense(1) decreased $2.7 million, or 3.6%, to $72.2 million when compared to the third quarter of 2018. The decrease in operating noninterest expense included a decline in marketing and advertising expense of $898,000 due to the timing of marketing campaigns and digital marketing related expenses. Salaries and benefits expenses declined $698,000, primarily due to decreases in incentive compensation and benefit costs. Professional services declined $692,000 primarily due to a decrease in consulting fees. Additionally, operating noninterest expense declined due to lower amortization of intangibles of $536,000 and a decline in branch closure costs of approximately $475,000 compared to the third quarter of 2018.
Partially offsetting these declines, other real estate owned (“OREO”) and credit-related expenses increased $574,000 primarily due to losses on sales of property in the fourth quarter of 2018 compared to gains recognized in the third quarter of 2018.
(1) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.
INCOME TAXES
The effective tax rate for the three months ended December 31, 2018 was 16.5% compared to 15.9% for the three months ended September 30, 2018. The increase in the effective tax rate was primarily due to an increase in non-deductible merger expenses related to the Pending Access Merger.
BALANCE SHEET
At December 31, 2018, total assets were $13.8 billion, an increase of $394.0 million from September 30, 2018, and an increase of $4.5 billion from December 31, 2017. The increase in assets from the previous quarter was primarily a result of loan growth and increases in the investment securities portfolio during the fourth quarter of 2018. The increase from the prior year was primarily a result of the Xenith acquisition and loan growth.
At December 31, 2018, loans held for investment (net of deferred fees and costs) were $9.7 billion, an increase of $304.6 million, or 12.9% (annualized), from September 30, 2018, while average loans increased $259.9 million, or 11.2% (annualized), from the prior quarter. The increase was primarily driven by a combined growth of $256.9 million in commercial and industrial and commercial real estate portfolios. Loans held for investment increased $2.6 billion, or 36.1%, from December 31, 2017, while quarterly average loans increased $2.6 billion or 37.3%, from the prior year. The increase from the prior year was primarily a result of the Xenith acquisition.
At December 31, 2018, total deposits were $10.0 billion, an increase of $136.3 million, or 5.5% (annualized), from September 30, 2018, while average deposits increased $148.5 million, or 6.1 % (annualized), from the prior quarter. Deposits increased $3.0 billion, or 42.6%, from December 31, 2017, while quarterly average deposits increased $3.0 billion, or 43.1%, from the prior year. The increase from the prior year was primarily a result of the Xenith acquisition.
The following table shows the Company's capital ratios at the quarters ended:
December 31, | September 30, | December 31, | ||||||
2018 | 2018 | 2017 | ||||||
Common equity Tier 1 capital ratio (1) | 9.93 | % | 9.92 | % | 9.04 | % | ||
Tier 1 capital ratio (1) | 11.10 | % | 11.12 | % | 10.14 | % | ||
Total capital ratio (1) | 12.88 | % | 12.97 | % | 12.43 | % | ||
Leverage ratio (Tier 1 capital to average assets) (1) | 9.71 | % | 9.89 | % | 9.42 | % | ||
Common equity to total assets | 13.98 | % | 14.06 | % | 11.23 | % | ||
Tangible common equity to tangible assets (2) | 8.84 | % | 8.74 | % | 8.14 | % | ||
(1) All ratios at December 31, 2018 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed. | ||||||||
(2) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results. | ||||||||
During the fourth quarter of 2018, the Company declared and paid cash dividends of $0.23 per common share consistent with the third quarter of 2018 and an increase of $0.02, or 9.5%, compared to the fourth quarter of 2017.
ABOUT UNION BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Union Bankshares Corporation (Nasdaq: UBSH) is the holding company for Union Bank & Trust. Union Bank & Trust has 140 branches, 7 of which are operated as Xenith Bank, a division of Union Bank & Trust of Richmond, Virginia, and approximately 190 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., as well as its subsidiary Outfitter Advisors, Ltd., and Dixon, Hubard, Feinour, & Brown, Inc., all of which provide investment advisory services, and Union Insurance Group, LLC, which offers various lines of insurance products.
FOURTH QUARTER AND FULL YEAR 2018 EARNINGS RELEASE CONFERENCE CALL
Union will hold a conference call on Tuesday, January 22nd, 2019 at 9:00 a.m. Eastern Time during which management will review the fourth quarter and full year 2018 financial results and provide an update on recent activities. Interested parties may participate in the 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 4563297.
NON-GAAP FINANCIAL MEASURES
In reporting the results of the quarter and full year ended December 31, 2018, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis. These non-GAAP financial measures are a supplement to GAAP, which is 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 financial measures may not be comparable to non-GAAP financial measures of other companies. The Company uses the non-GAAP financial measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance. For a reconciliation of these measures to their most directly comparable GAAP measures and additional information about these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.
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 include, without limitation, projections, predictions, expectations, or beliefs about future events or results that are not statements of historical fact. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are often accompanied by words that convey projected future events or outcomes 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 Union and its management about future events. Although Union 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 Union will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to:
• | changes in interest rates; |
• | general economic and financial market conditions in the United States generally and particularly in the markets in which Union operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels, slowdowns in economic growth, and prolonged government shutdown; |
• | Union’s ability to manage its growth or implement its growth strategy; |
• | the ability to close the Pending Access Merger on the expected timeframe, or at all, that closing may be more difficult, time-consuming or costly than expected, and that if the Pending Access Merger is consummated, the businesses of Union and Access may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; |
• | Union’s ability to recruit and retain key employees; |
• | 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 Union’s credit processes and management of Union’s credit risk; |
• | demand for loan products and financial services in Union’s market area; |
• | Union’s ability to compete in the market for financial services; |
• | technological risks and developments, and cyber threats, attacks, or events; |
• | performance by Union’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 Cuts and Jobs Act of 2017 (the "Tax Act"), including, but not limited to, the effect of the lower corporate tax rate, including on the valuation of Union's tax assets and liabilities; |
• | any future refinements to Union's preliminary analysis of the impact of the Tax Act on Union; |
• | 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; |
• | changes to applicable accounting principles and guidelines; and |
• | other factors, many of which are beyond the control of Union. |
Please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Union’s Annual Report on Form 10-K for the year ended December 31, 2017 and comparable “Risk Factors” sections of Union’s Quarterly Reports on Form 10-Q and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on Union or its businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and Union does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
Exhibit 99.1
UNION BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
KEY FINANCIAL RESULTS | |||||||||||||||||||
(Dollars in thousands, except share data) | |||||||||||||||||||
As of & For Three Months Ended | As of & For Year Ended | ||||||||||||||||||
12/31/18 | 9/30/18 | 12/31/17 | 12/31/18 | 12/31/17 | |||||||||||||||
Results of Operations | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Interest and dividend income | $ | 140,636 | $ | 131,363 | $ | 87,179 | $ | 528,788 | $ | 329,044 | |||||||||
Interest expense | 31,547 | 25,400 | 14,089 | 102,097 | 50,037 | ||||||||||||||
Net interest income | 109,089 | 105,963 | 73,090 | 426,691 | 279,007 | ||||||||||||||
Provision for credit losses | 4,725 | 3,340 | 3,458 | 13,736 | 10,802 | ||||||||||||||
Net interest income after provision for credit losses | 104,364 | 102,623 | 69,632 | 412,955 | 268,205 | ||||||||||||||
Noninterest income | 23,487 | 19,887 | 15,124 | 104,241 | 62,429 | ||||||||||||||
Noninterest expenses | 74,533 | 76,349 | 57,796 | 337,767 | 225,668 | ||||||||||||||
Income before income taxes | 53,318 | 46,161 | 26,960 | 179,429 | 104,966 | ||||||||||||||
Income tax expense | 9,041 | 7,399 | 11,867 | 30,016 | 32,790 | ||||||||||||||
Income from continuing operations | 44,277 | 38,762 | 15,093 | 149,413 | 72,176 | ||||||||||||||
Discontinued operations, net of tax | (192 | ) | (565 | ) | 92 | (3,165 | ) | 747 | |||||||||||
Net income | $ | 44,085 | $ | 38,197 | $ | 15,185 | $ | 146,248 | $ | 72,923 | |||||||||
Interest earned on earning assets (FTE) (1) | $ | 142,970 | $ | 133,377 | $ | 90,263 | $ | 536,981 | $ | 340,810 | |||||||||
Net interest income (FTE) (1) | 111,424 | 107,977 | 76,173 | 434,884 | 290,774 | ||||||||||||||
Key Ratios | |||||||||||||||||||
Earnings per common share, diluted | $ | 0.67 | $ | 0.58 | $ | 0.35 | $ | 2.22 | $ | 1.67 | |||||||||
Return on average assets (ROA) | 1.29 | % | 1.17 | % | 0.66 | % | 1.11 | % | 0.83 | % | |||||||||
Return on average equity (ROE) | 9.21 | % | 8.06 | % | 5.75 | % | 7.85 | % | 7.07 | % | |||||||||
Return on average tangible common equity (ROTCE) (2) | 16.42 | % | 14.72 | % | 8.70 | % | 14.40 | % | 10.75 | % | |||||||||
Efficiency ratio | 56.22 | % | 60.67 | % | 65.52 | % | 63.62 | % | 66.09 | % | |||||||||
Net interest margin | 3.62 | % | 3.69 | % | 3.51 | % | 3.67 | % | 3.48 | % | |||||||||
Net interest margin (FTE) (1) | 3.70 | % | 3.76 | % | 3.64 | % | 3.74 | % | 3.63 | % | |||||||||
Yields on earning assets (FTE) (1) | 4.74 | % | 4.65 | % | 4.32 | % | 4.62 | % | 4.25 | % | |||||||||
Cost of interest-bearing liabilities | 1.34 | % | 1.15 | % | 0.87 | % | 1.12 | % | 0.80 | % | |||||||||
Cost of deposits | 0.76 | % | 0.65 | % | 0.44 | % | 0.61 | % | 0.39 | % | |||||||||
Cost of funds | 1.04 | % | 0.89 | % | 0.68 | % | 0.88 | % | 0.62 | % | |||||||||
Operating Measures (4) | |||||||||||||||||||
Net operating earnings | $ | 46,248 | $ | 39,326 | $ | 22,821 | $ | 178,313 | $ | 83,578 | |||||||||
Operating earnings per share, diluted | $ | 0.70 | $ | 0.60 | $ | 0.52 | $ | 2.71 | $ | 1.91 | |||||||||
Operating ROA | 1.36 | % | 1.21 | % | 1.00 | % | 1.35 | % | 0.95 | % | |||||||||
Operating ROE | 9.66 | % | 8.30 | % | 8.63 | % | 9.57 | % | 8.11 | % | |||||||||
Operating ROTCE | 17.18 | % | 15.13 | % | 12.82 | % | 17.35 | % | 12.24 | % | |||||||||
Operating efficiency ratio (FTE) (1) | 53.53 | % | 58.59 | % | 61.21 | % | 55.28 | % | 62.36 | % | |||||||||
Per Share Data | |||||||||||||||||||
Earnings per common share, basic | $ | 0.67 | $ | 0.58 | $ | 0.35 | $ | 2.22 | $ | 1.67 | |||||||||
Earnings per common share, diluted | 0.67 | 0.58 | 0.35 | 2.22 | 1.67 | ||||||||||||||
Cash dividends paid per common share | 0.23 | 0.23 | 0.21 | 0.88 | 0.81 | ||||||||||||||
Market value per share | 28.23 | 38.53 | 36.17 | 28.23 | 36.17 | ||||||||||||||
Book value per common share | 29.34 | 28.68 | 24.10 | 29.34 | 24.10 | ||||||||||||||
Tangible book value per common share (2) | 17.51 | 16.79 | 16.88 | 17.51 | 16.88 | ||||||||||||||
Price to earnings ratio, diluted | 12.72 | 16.74 | 26.05 | 10.62 | 21.66 | ||||||||||||||
Price to book value per common share ratio | 0.96 | 1.34 | 1.50 | 0.96 | 1.50 | ||||||||||||||
Price to tangible book value per common share ratio (2) | 1.61 | 2.29 | 2.14 | 1.61 | 2.14 | ||||||||||||||
Weighted average common shares outstanding, basic | 65,982,304 | 65,974,702 | 43,740,001 | 65,859,165 | 43,698,897 | ||||||||||||||
Weighted average common shares outstanding, diluted | 66,013,326 | 66,013,152 | 43,816,018 | 65,908,571 | 43,779,744 | ||||||||||||||
Common shares outstanding at end of period | 65,977,149 | 65,982,669 | 43,743,318 | 65,977,149 | 43,743,318 | ||||||||||||||
As of & For Three Months Ended | As of & For Year End | ||||||||||||||||||
12/31/18 | 9/30/18 | 12/31/17 | 12/31/18 | 12/31/17 | |||||||||||||||
Capital Ratios | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Common equity Tier 1 capital ratio (5) | 9.93 | % | 9.92 | % | 9.04 | % | 9.93 | % | 9.04 | % | |||||||||
Tier 1 capital ratio (5) | 11.10 | % | 11.12 | % | 10.14 | % | 11.10 | % | 10.14 | % | |||||||||
Total capital ratio (5) | 12.88 | % | 12.97 | % | 12.43 | % | 12.88 | % | 12.43 | % | |||||||||
Leverage ratio (Tier 1 capital to average assets) (5) | 9.71 | % | 9.89 | % | 9.42 | % | 9.71 | % | 9.42 | % | |||||||||
Common equity to total assets | 13.98 | % | 14.06 | % | 11.23 | % | 13.98 | % | 11.23 | % | |||||||||
Tangible common equity to tangible assets (2) | 8.84 | % | 8.74 | % | 8.14 | % | 8.84 | % | 8.14 | % | |||||||||
Financial Condition | |||||||||||||||||||
Assets | $ | 13,765,599 | $ | 13,371,742 | $ | 9,315,179 | $ | 13,765,599 | $ | 9,315,179 | |||||||||
Loans held for investment | 9,716,207 | 9,411,598 | 7,141,552 | 9,716,207 | 7,141,552 | ||||||||||||||
Securities | 2,391,695 | 2,258,239 | 1,249,144 | 2,391,695 | 1,249,144 | ||||||||||||||
Earning Assets | 12,202,023 | 11,808,717 | 8,513,145 | 12,202,023 | 8,513,145 | ||||||||||||||
Goodwill | 727,168 | 727,699 | 298,528 | 727,168 | 298,528 | ||||||||||||||
Amortizable intangibles, net | 48,685 | 51,563 | 14,803 | 48,685 | 14,803 | ||||||||||||||
Deposits | 9,970,960 | 9,834,695 | 6,991,718 | 9,970,960 | 6,991,718 | ||||||||||||||
Borrowings | 1,756,278 | 1,554,642 | 1,219,414 | 1,756,278 | 1,219,414 | ||||||||||||||
Stockholders' equity | 1,924,581 | 1,880,029 | 1,046,329 | 1,924,581 | 1,046,329 | ||||||||||||||
Tangible common equity (2) | 1,148,728 | 1,100,767 | 732,998 | 1,148,728 | 732,998 | ||||||||||||||
Loans held for investment, net of deferred fees and costs | |||||||||||||||||||
Construction and land development | $ | 1,194,821 | $ | 1,178,054 | $ | 948,791 | $ | 1,194,821 | $ | 948,791 | |||||||||
Commercial real estate - owner occupied | 1,337,345 | 1,283,125 | 943,933 | 1,337,345 | 943,933 | ||||||||||||||
Commercial real estate - non-owner occupied | 2,467,410 | 2,427,251 | 1,713,659 | 2,467,410 | 1,713,659 | ||||||||||||||
Multifamily real estate | 548,231 | 542,662 | 357,079 | 548,231 | 357,079 | ||||||||||||||
Commercial & Industrial | 1,317,135 | 1,154,583 | 612,023 | 1,317,135 | 612,023 | ||||||||||||||
Residential 1-4 Family - commercial | 713,750 | 719,798 | 612,395 | 713,750 | 612,395 | ||||||||||||||
Residential 1-4 Family - mortgage | 600,578 | 611,728 | 485,690 | 600,578 | 485,690 | ||||||||||||||
Auto | 301,943 | 306,196 | 282,474 | 301,943 | 282,474 | ||||||||||||||
HELOC | 613,383 | 612,116 | 537,521 | 613,383 | 537,521 | ||||||||||||||
Consumer | 379,694 | 345,320 | 408,667 | 379,694 | 408,667 | ||||||||||||||
Other Commercial | 241,917 | 230,765 | 239,320 | 241,917 | 239,320 | ||||||||||||||
Total loans held for investment | $ | 9,716,207 | $ | 9,411,598 | $ | 7,141,552 | $ | 9,716,207 | $ | 7,141,552 | |||||||||
Deposits | |||||||||||||||||||
NOW accounts | $ | 2,288,523 | $ | 2,205,262 | $ | 1,929,416 | $ | 2,288,523 | $ | 1,929,416 | |||||||||
Money market accounts | 2,875,301 | 2,704,480 | 1,685,174 | 2,875,301 | 1,685,174 | ||||||||||||||
Savings accounts | 622,823 | 635,788 | 546,274 | 622,823 | 546,274 | ||||||||||||||
Time deposits of $100,000 and over | 1,067,181 | 1,078,448 | 624,112 | 1,067,181 | 624,112 | ||||||||||||||
Other time deposits | 1,022,525 | 1,020,830 | 704,534 | 1,022,525 | 704,534 | ||||||||||||||
Total interest-bearing deposits | $ | 7,876,353 | $ | 7,644,808 | $ | 5,489,510 | $ | 7,876,353 | $ | 5,489,510 | |||||||||
Demand deposits | 2,094,607 | 2,189,887 | 1,502,208 | 2,094,607 | 1,502,208 | ||||||||||||||
Total deposits | $ | 9,970,960 | $ | 9,834,695 | $ | 6,991,718 | $ | 9,970,960 | $ | 6,991,718 | |||||||||
Averages | |||||||||||||||||||
Assets | $ | 13,538,160 | $ | 12,947,352 | $ | 9,085,211 | $ | 13,181,609 | $ | 8,820,142 | |||||||||
Loans held for investment | 9,557,160 | 9,297,213 | 6,962,299 | 9,584,785 | 6,701,101 | ||||||||||||||
Securities | 2,340,051 | 1,966,010 | 1,238,663 | 1,877,018 | 1,230,105 | ||||||||||||||
Earning assets | 11,961,234 | 11,383,320 | 8,293,366 | 11,620,893 | 8,016,311 | ||||||||||||||
Deposits | 9,951,983 | 9,803,475 | 6,955,949 | 9,717,663 | 6,701,475 | ||||||||||||||
Time deposits | 2,083,270 | 2,079,686 | 1,335,357 | 2,078,073 | 1,271,649 | ||||||||||||||
Interest-bearing deposits | 7,789,642 | 7,635,710 | 5,435,705 | 7,617,174 | 5,234,102 | ||||||||||||||
Borrowings | 1,575,173 | 1,155,093 | 1,022,307 | 1,489,542 | 1,028,434 | ||||||||||||||
Interest-bearing liabilities | 9,364,815 | 8,790,803 | 6,458,012 | 9,106,716 | 6,262,536 | ||||||||||||||
Stockholders' equity | 1,899,249 | 1,880,582 | 1,048,632 | 1,863,215 | 1,030,847 | ||||||||||||||
Tangible common equity (2) | 1,121,788 | 1,103,530 | 734,847 | 1,086,272 | 715,125 | ||||||||||||||
As of & For Three Months Ended | As of & For Year Ended | ||||||||||||||||||
12/31/18 | 9/30/18 | 12/31/17 | 12/31/18 | 12/31/17 | |||||||||||||||
Asset Quality | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Allowance for Loan Losses (ALL) | |||||||||||||||||||
Beginning balance | $ | 41,294 | $ | 41,270 | $ | 37,162 | $ | 38,208 | $ | 37,192 | |||||||||
Add: Recoveries | 830 | 1,401 | 696 | 4,912 | 3,255 | ||||||||||||||
Less: Charge-offs | 5,875 | 4,560 | 3,361 | 15,974 | 13,310 | ||||||||||||||
Add: Provision for loan losses | 4,800 | 3,100 | 3,758 | 14,084 | 11,117 | ||||||||||||||
Add: Provision for loan losses included in discontinued operations | (4 | ) | 83 | (47 | ) | (185 | ) | (46 | ) | ||||||||||
Ending balance | $ | 41,045 | $ | 41,294 | $ | 38,208 | $ | 41,045 | $ | 38,208 | |||||||||
ALL / total outstanding loans | 0.42 | % | 0.44 | % | 0.54 | % | 0.42 | % | 0.54 | % | |||||||||
Net charge-offs / total average loans | 0.21 | % | 0.13 | % | 0.15 | % | 0.12 | % | 0.15 | % | |||||||||
Provision / total average loans | 0.20 | % | 0.13 | % | 0.21 | % | 0.15 | % | 0.17 | % | |||||||||
Total PCI loans, net of fair value mark | $ | 90,221 | $ | 94,746 | $ | 39,021 | $ | 90,221 | $ | 39,021 | |||||||||
Remaining fair value mark on purchased performing loans | 30,281 | 33,428 | 13,726 | 30,281 | 13,726 | ||||||||||||||
Nonperforming Assets | |||||||||||||||||||
Construction and land development | $ | 8,018 | $ | 9,221 | $ | 5,610 | $ | 8,018 | $ | 5,610 | |||||||||
Commercial real estate - owner occupied | 3,636 | 3,202 | 2,708 | 3,636 | 2,708 | ||||||||||||||
Commercial real estate - non-owner occupied | 1,789 | 1,812 | 2,992 | 1,789 | 2,992 | ||||||||||||||
Commercial & Industrial | 1,524 | 1,404 | 316 | 1,524 | 316 | ||||||||||||||
Residential 1-4 Family - commercial | 2,481 | 1,956 | 1,085 | 2,481 | 1,085 | ||||||||||||||
Residential 1-4 Family - mortgage | 7,276 | 8,535 | 6,269 | 7,276 | 6,269 | ||||||||||||||
Auto | 576 | 525 | 413 | 576 | 413 | ||||||||||||||
HELOC | 1,518 | 1,273 | 2,075 | 1,518 | 2,075 | ||||||||||||||
Consumer and all other | 135 | 182 | 275 | 135 | 275 | ||||||||||||||
Nonaccrual loans | $ | 26,953 | $ | 28,110 | $ | 21,743 | $ | 26,953 | $ | 21,743 | |||||||||
Foreclosed property | 6,722 | 6,800 | 5,253 | 6,722 | 5,253 | ||||||||||||||
Total nonperforming assets (NPAs) | $ | 33,675 | $ | 34,910 | $ | 26,996 | $ | 33,675 | $ | 26,996 | |||||||||
Construction and land development | $ | 180 | $ | 442 | $ | 1,340 | $ | 180 | $ | 1,340 | |||||||||
Commercial real estate - owner occupied | 3,193 | 3,586 | — | 3,193 | — | ||||||||||||||
Commercial real estate - non-owner occupied | — | — | 194 | — | 194 | ||||||||||||||
Commercial & Industrial | 132 | 256 | 214 | 132 | 214 | ||||||||||||||
Residential 1-4 Family - commercial | 1,409 | 378 | 579 | 1,409 | 579 | ||||||||||||||
Residential 1-4 Family - mortgage | 2,437 | 2,543 | 546 | 2,437 | 546 | ||||||||||||||
Auto | 195 | 211 | 40 | 195 | 40 | ||||||||||||||
HELOC | 440 | 1,291 | 217 | 440 | 217 | ||||||||||||||
Consumer and all other | 870 | 825 | 402 | 870 | 402 | ||||||||||||||
Loans ≥ 90 days and still accruing | $ | 8,856 | $ | 9,532 | $ | 3,532 | $ | 8,856 | $ | 3,532 | |||||||||
Total NPAs and loans ≥ 90 days | $ | 42,531 | $ | 44,442 | $ | 30,528 | $ | 42,531 | $ | 30,528 | |||||||||
NPAs / total outstanding loans | 0.35 | % | 0.37 | % | 0.38 | % | 0.35 | % | 0.38 | % | |||||||||
NPAs / total assets | 0.24 | % | 0.26 | % | 0.29 | % | 0.24 | % | 0.29 | % | |||||||||
ALL / nonaccrual loans | 152.28 | % | 146.90 | % | 175.73 | % | 152.28 | % | 175.73 | % | |||||||||
ALL / nonperforming assets | 121.89 | % | 118.29 | % | 141.53 | % | 121.89 | % | 141.53 | % | |||||||||
Past Due Detail | |||||||||||||||||||
Construction and land development | $ | 759 | $ | 1,351 | $ | 1,248 | $ | 759 | $ | 1,248 | |||||||||
Commercial real estate - owner occupied | 8,755 | 4,218 | 444 | 8,755 | 444 | ||||||||||||||
Commercial real estate - non-owner occupied | 338 | 492 | 187 | 338 | 187 | ||||||||||||||
Multifamily real estate | — | 553 | — | — | — | ||||||||||||||
Commercial & Industrial | 3,353 | 2,239 | 1,147 | 3,353 | 1,147 | ||||||||||||||
Residential 1-4 Family - commercial | 6,619 | 2,535 | 1,682 | 6,619 | 1,682 | ||||||||||||||
Residential 1-4 Family - mortgage | 12,049 | 4,506 | 3,838 | 12,049 | 3,838 | ||||||||||||||
Auto | 3,320 | 2,414 | 3,541 | 3,320 | 3,541 | ||||||||||||||
HELOC | 4,611 | 4,783 | 2,382 | 4,611 | 2,382 | ||||||||||||||
Consumer and all other | 1,630 | 2,640 | 2,404 | 1,630 | 2,404 | ||||||||||||||
Loans 30-59 days past due | $ | 41,434 | $ | 25,731 | $ | 16,873 | $ | 41,434 | $ | 16,873 | |||||||||
As of & For Three Months Ended | As of & For Year Ended | ||||||||||||||||||
12/31/18 | 9/30/18 | 12/31/17 | 12/31/18 | 12/31/17 | |||||||||||||||
Past Due Detail cont'd | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Construction and land development | $ | 6 | $ | 1,826 | $ | 898 | $ | 6 | $ | 898 | |||||||||
Commercial real estate - owner occupied | 1,142 | 539 | 81 | 1,142 | 81 | ||||||||||||||
Commercial real estate - non-owner occupied | 41 | — | 84 | 41 | 84 | ||||||||||||||
Multifamily Real Estate | 146 | — | — | 146 | — | ||||||||||||||
Commercial & Industrial | 389 | 428 | 109 | 389 | 109 | ||||||||||||||
Residential 1-4 Family - commercial | 1,577 | 1,892 | 700 | 1,577 | 700 | ||||||||||||||
Residential 1-4 Family - mortgage | 5,143 | 3,793 | 2,541 | 5,143 | 2,541 | ||||||||||||||
Auto | 403 | 299 | 185 | 403 | 185 | ||||||||||||||
HELOC | 1,644 | 1,392 | 717 | 1,644 | 717 | ||||||||||||||
Consumer and all other | 1,096 | 1,140 | 2,052 | 1,096 | 2,052 | ||||||||||||||
Loans 60-89 days past due | $ | 11,587 | $ | 11,309 | $ | 7,367 | $ | 11,587 | $ | 7,367 | |||||||||
Troubled Debt Restructurings | |||||||||||||||||||
Performing | $ | 19,201 | $ | 19,854 | $ | 14,553 | $ | 19,201 | $ | 14,553 | |||||||||
Nonperforming | 7,397 | 8,425 | 2,849 | 7,397 | 2,849 | ||||||||||||||
Total troubled debt restructurings | $ | 26,598 | $ | 28,279 | $ | 17,402 | $ | 26,598 | $ | 17,402 | |||||||||
Alternative Performance Measures (non-GAAP) | |||||||||||||||||||
Net interest income (FTE) | |||||||||||||||||||
Net interest income (GAAP) | $ | 109,089 | $ | 105,963 | $ | 73,090 | $ | 426,691 | $ | 279,007 | |||||||||
FTE adjustment | 2,335 | 2,014 | 3,083 | 8,193 | 11,767 | ||||||||||||||
Net interest income (FTE) (non-GAAP) (1) | $ | 111,424 | $ | 107,977 | $ | 76,173 | $ | 434,884 | $ | 290,774 | |||||||||
Average earning assets | 11,961,234 | 11,383,320 | 8,293,366 | 11,620,893 | 8,016,311 | ||||||||||||||
Net interest margin | 3.62 | % | 3.69 | % | 3.51 | % | 3.67 | % | 3.48 | % | |||||||||
Net interest margin (FTE) (1) | 3.70 | % | 3.76 | % | 3.64 | % | 3.74 | % | 3.63 | % | |||||||||
Tangible Assets | |||||||||||||||||||
Ending assets (GAAP) | $ | 13,765,599 | $ | 13,371,742 | $ | 9,315,179 | $ | 13,765,599 | $ | 9,315,179 | |||||||||
Less: Ending goodwill | 727,168 | 727,699 | 298,528 | 727,168 | 298,528 | ||||||||||||||
Less: Ending amortizable intangibles | 48,685 | 51,563 | 14,803 | 48,685 | 14,803 | ||||||||||||||
Ending tangible assets (non-GAAP) | $ | 12,989,746 | $ | 12,592,480 | $ | 9,001,848 | $ | 12,989,746 | $ | 9,001,848 | |||||||||
Tangible Common Equity (2) | |||||||||||||||||||
Ending equity (GAAP) | $ | 1,924,581 | $ | 1,880,029 | $ | 1,046,329 | $ | 1,924,581 | $ | 1,046,329 | |||||||||
Less: Ending goodwill | 727,168 | 727,699 | 298,528 | 727,168 | 298,528 | ||||||||||||||
Less: Ending amortizable intangibles | 48,685 | 51,563 | 14,803 | 48,685 | 14,803 | ||||||||||||||
Ending tangible common equity (non-GAAP) | $ | 1,148,728 | $ | 1,100,767 | $ | 732,998 | $ | 1,148,728 | $ | 732,998 | |||||||||
Average equity (GAAP) | $ | 1,899,249 | $ | 1,880,582 | $ | 1,048,632 | $ | 1,863,216 | $ | 1,030,847 | |||||||||
Less: Average goodwill | 727,544 | 723,785 | 298,385 | 725,597 | 298,240 | ||||||||||||||
Less: Average amortizable intangibles | 49,917 | 53,267 | 15,400 | 51,347 | 17,482 | ||||||||||||||
Average tangible common equity (non-GAAP) | $ | 1,121,788 | $ | 1,103,530 | $ | 734,847 | $ | 1,086,272 | $ | 715,125 | |||||||||
Operating Measures (4) | |||||||||||||||||||
Net income (GAAP) | $ | 44,085 | $ | 38,197 | $ | 15,185 | $ | 146,248 | $ | 72,923 | |||||||||
Plus: Merger-related costs, net of tax | 2,163 | 1,129 | 1,386 | 32,065 | 4,405 | ||||||||||||||
Plus: Nonrecurring tax expenses | — | — | 6,250 | — | 6,250 | ||||||||||||||
Net operating earnings (non-GAAP) | $ | 46,248 | $ | 39,326 | $ | 22,821 | $ | 178,313 | $ | 83,578 | |||||||||
Noninterest expense (GAAP) | $ | 74,533 | $ | 76,349 | $ | 57,796 | $ | 337,767 | $ | 225,668 | |||||||||
Less: Merger-related costs | 2,314 | 1,429 | 1,917 | 39,728 | 5,393 | ||||||||||||||
Operating noninterest expense (non-GAAP) | $ | 72,219 | $ | 74,920 | $ | 55,879 | $ | 298,039 | $ | 220,275 | |||||||||
Net interest income (FTE) (non-GAAP) (1) | $ | 111,424 | $ | 107,977 | $ | 76,173 | $ | 434,886 | $ | 290,774 | |||||||||
Noninterest income (GAAP) | 23,487 | 19,887 | 15,124 | 104,241 | 62,429 | ||||||||||||||
Efficiency ratio | 56.22 | % | 60.67 | % | 65.52 | % | 63.62 | % | 66.09 | % | |||||||||
Operating efficiency ratio (FTE) | 53.53 | % | 58.59 | % | 61.21 | % | 55.28 | % | 62.36 | % | |||||||||
As of & For Three Months Ended | As of & For Year Ended | ||||||||||||||||||
12/31/18 | 9/30/18 | 12/31/17 | 12/31/18 | 12/31/17 | |||||||||||||||
ROTCE (2)(3) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Net Income (GAAP) | $ | 44,085 | $ | 38,197 | $ | 15,185 | $ | 146,248 | $ | 72,923 | |||||||||
Plus: Amortization of intangibles, tax effected | 2,334 | 2,757 | 928 | 10,143 | 3,957 | ||||||||||||||
Net Income before amortization of intangibles (non-GAAP) | $ | 46,419 | $ | 40,954 | $ | 16,113 | $ | 156,391 | $ | 76,880 | |||||||||
Average tangible common equity (non-GAAP) | $ | 1,121,788 | $ | 1,103,530 | $ | 734,847 | $ | 1,086,272 | $ | 715,125 | |||||||||
Return on average tangible common equity (non-GAAP) | 16.42 | % | 14.72 | % | 8.70 | % | 14.40 | % | 10.75 | % | |||||||||
Operating ROTCE (2)(3) | |||||||||||||||||||
Operating Net Income (non-GAAP) | $ | 46,248 | $ | 39,326 | $ | 22,821 | $ | 178,313 | $ | 83,578 | |||||||||
Plus: Amortization of intangibles, tax effected | 2,334 | 2,757 | 928 | 10,143 | 3,957 | ||||||||||||||
Net Income before amortization of intangibles (non-GAAP) | $ | 48,582 | $ | 42,083 | $ | 23,749 | $ | 188,456 | $ | 87,535 | |||||||||
Average tangible common equity (non-GAAP) | $ | 1,121,788 | $ | 1,103,530 | $ | 734,847 | $ | 1,086,272 | $ | 715,125 | |||||||||
Operating return on average tangible common equity (non-GAAP) | 17.18 | % | 15.13 | % | 12.82 | % | 17.35 | % | 12.24 | % | |||||||||
Other Data | |||||||||||||||||||
End of period full-time employees | 1,609 | 1,621 | 1,419 | 1,609 | 1,419 | ||||||||||||||
Number of full-service branches | 140 | 140 | 111 | 140 | 111 | ||||||||||||||
Number of full automatic transaction machines ("ATMs") | 188 | 190 | 176 | 188 | 176 | ||||||||||||||
(1) These are non-GAAP financial measures. 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) These are non-GAAP financial measures. 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) These are non-GAAP financial measures. The Company believes that ROTCE is a meaningful supplement to GAAP financial measures and useful to investors because it measures the performance of a business consistently across time without regard to whether components of the business were acquired or developed internally.
In prior periods, the Company has not added amortization of intangibles, tax effected to net income (GAAP) and operating net income (non-GAAP) when calculating ROTCE and operating ROTCE, respectively. The Company has adjusted its presentation for all periods in this release.
(4) These are non-GAAP financial measures. 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.
(5) All ratios at December 31, 2018 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.
UNION BANKSHARES CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Dollars in thousands, except share data) | ||||||||
December 31, | December 31, | |||||||
2018 | 2017 | |||||||
ASSETS | (unaudited) | (unaudited) | ||||||
Cash and cash equivalents: | ||||||||
Cash and due from banks | $ | 166,927 | $ | 117,586 | ||||
Interest-bearing deposits in other banks | 94,056 | 81,291 | ||||||
Federal funds sold | 216 | 496 | ||||||
Total cash and cash equivalents | 261,199 | 199,373 | ||||||
Securities available for sale, at fair value | 1,774,821 | 974,222 | ||||||
Securities held to maturity, at carrying value | 492,272 | 199,639 | ||||||
Restricted stock, at cost | 124,602 | 75,283 | ||||||
Loans held for investment, net of deferred fees and costs | 9,716,207 | 7,141,552 | ||||||
Less allowance for loan losses | 41,045 | 38,208 | ||||||
Net loans held for investment | 9,675,162 | 7,103,344 | ||||||
Premises and equipment, net | 146,967 | 119,604 | ||||||
Goodwill | 727,168 | 298,528 | ||||||
Amortizable intangibles, net | 48,685 | 14,803 | ||||||
Bank owned life insurance | 263,034 | 182,854 | ||||||
Other assets | 250,210 | 102,871 | ||||||
Assets of discontinued operations | 1,479 | 44,658 | ||||||
Total assets | $ | 13,765,599 | $ | 9,315,179 | ||||
LIABILITIES | ||||||||
Noninterest-bearing demand deposits | $ | 2,094,607 | $ | 1,502,208 | ||||
Interest-bearing deposits | 7,876,353 | 5,489,510 | ||||||
Total deposits | 9,970,960 | 6,991,718 | ||||||
Securities sold under agreements to repurchase | 39,197 | 49,152 | ||||||
Other short-term borrowings | 1,048,600 | 745,000 | ||||||
Long-term borrowings | 668,481 | 425,262 | ||||||
Other liabilities | 112,093 | 54,008 | ||||||
Liabilities of discontinued operations | 1,687 | 3,710 | ||||||
Total liabilities | 11,841,018 | 8,268,850 | ||||||
Commitments and contingencies | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 65,977,149 shares, and 43,743,318 shares, respectively. | 87,250 | 57,744 | ||||||
Additional paid-in capital | 1,380,259 | 610,001 | ||||||
Retained earnings | 467,345 | 379,468 | ||||||
Accumulated other comprehensive income (loss) | (10,273 | ) | (884 | ) | ||||
Total stockholders' equity | 1,924,581 | 1,046,329 | ||||||
Total liabilities and stockholders' equity | $ | 13,765,599 | $ | 9,315,179 | ||||
UNION BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
(Dollars in thousands, except share data) | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
Interest and dividend income: | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Interest and fees on loans | $ | 121,846 | $ | 115,817 | $ | 78,198 | $ | 469,856 | $ | 293,996 | |||||||||
Interest on deposits in other banks | 309 | 492 | 172 | 2,125 | 539 | ||||||||||||||
Interest and dividends on securities: | |||||||||||||||||||
Taxable | 11,623 | 10,145 | 5,225 | 36,851 | 20,305 | ||||||||||||||
Nontaxable | 6,858 | 4,909 | 3,584 | 19,956 | 14,204 | ||||||||||||||
Total interest and dividend income | 140,636 | 131,363 | 87,179 | 528,788 | 329,044 | ||||||||||||||
Interest expense: | |||||||||||||||||||
Interest on deposits | 19,149 | 15,928 | 7,696 | 59,336 | 26,106 | ||||||||||||||
Interest on short-term borrowings | 5,663 | 3,379 | 1,813 | 18,458 | 6,035 | ||||||||||||||
Interest on long-term borrowings | 6,735 | 6,093 | 4,580 | 24,303 | 17,896 | ||||||||||||||
Total interest expense | 31,547 | 25,400 | 14,089 | 102,097 | 50,037 | ||||||||||||||
Net interest income | 109,089 | 105,963 | 73,090 | 426,691 | 279,007 | ||||||||||||||
Provision for credit losses | 4,725 | 3,340 | 3,458 | 13,736 | 10,802 | ||||||||||||||
Net interest income after provision for credit losses | 104,364 | 102,623 | 69,632 | 412,955 | 268,205 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Service charges on deposit accounts | 6,873 | 6,483 | 4,925 | 25,439 | 18,850 | ||||||||||||||
Other service charges and fees | 1,467 | 1,625 | 1,202 | 5,603 | 4,593 | ||||||||||||||
Interchange fees, net | 4,640 | 4,882 | 3,769 | 18,803 | 14,974 | ||||||||||||||
Fiduciary and asset management fees | 4,643 | 4,411 | 2,933 | 16,150 | 11,245 | ||||||||||||||
Gains (losses) on securities transactions, net | 161 | 97 | 18 | 383 | 800 | ||||||||||||||
Bank owned life insurance income | 2,072 | 1,732 | 1,306 | 7,198 | 6,144 | ||||||||||||||
Loan-related interest rate swap fees | 1,376 | 562 | 424 | 3,554 | 3,051 | ||||||||||||||
Gain on Shore Premier Finance sale | — | (933 | ) | — | 19,966 | — | |||||||||||||
Other operating income | 2,255 | 1,028 | 547 | 7,145 | 2,772 | ||||||||||||||
Total noninterest income | 23,487 | 19,887 | 15,124 | 104,241 | 62,429 | ||||||||||||||
Noninterest expenses: | |||||||||||||||||||
Salaries and benefits | 38,581 | 39,279 | 28,228 | 159,378 | 115,968 | ||||||||||||||
Occupancy expenses | 6,590 | 6,551 | 4,775 | 25,368 | 18,558 | ||||||||||||||
Furniture and equipment expenses | 2,967 | 2,983 | 2,529 | 11,991 | 10,047 | ||||||||||||||
Printing, postage, and supplies | 1,125 | 1,183 | 1,237 | 4,650 | 4,901 | ||||||||||||||
Communications expense | 923 | 872 | 738 | 3,898 | 3,304 | ||||||||||||||
Technology and data processing | 4,675 | 4,841 | 4,339 | 18,397 | 16,132 | ||||||||||||||
Professional services | 2,183 | 2,875 | 2,155 | 10,283 | 7,767 | ||||||||||||||
Marketing and advertising expense | 2,211 | 3,109 | 1,863 | 10,043 | 7,795 | ||||||||||||||
FDIC assessment premiums and other | 1,214 | 1,363 | 1,255 | 6,644 | 4,048 | ||||||||||||||
Other taxes | 2,882 | 2,878 | 2,022 | 11,542 | 8,087 | ||||||||||||||
Loan-related expenses | 2,109 | 1,939 | 1,249 | 7,206 | 4,733 | ||||||||||||||
OREO and credit-related expenses | 1,026 | 452 | 1,741 | 4,131 | 3,764 | ||||||||||||||
Amortization of intangible assets | 2,954 | 3,490 | 1,427 | 12,839 | 6,088 | ||||||||||||||
Training and other personnel costs | 1,104 | 1,024 | 1,014 | 4,259 | 3,843 | ||||||||||||||
Merger-related costs | 2,314 | 1,429 | 1,917 | 39,728 | 5,393 | ||||||||||||||
Other expenses | 1,675 | 2,081 | 1,307 | 7,410 | 5,240 | ||||||||||||||
Total noninterest expenses | 74,533 | 76,349 | 57,796 | 337,767 | 225,668 | ||||||||||||||
Income from continuing operations before income taxes | 53,318 | 46,161 | 26,960 | 179,429 | 104,966 | ||||||||||||||
Income tax expense | 9,041 | 7,399 | 11,867 | 30,016 | 32,790 | ||||||||||||||
Income from continuing operations | 44,277 | 38,762 | $ | 15,093 | 149,413 | $ | 72,176 | ||||||||||||
UNION BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (continued) | |||||||||||||||||||
(Dollars in thousands, except share data) | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
Discontinued operations: | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Income (loss) from operations of discontinued mortgage segment | $ | (509 | ) | $ | (761 | ) | $ | 320 | $ | (4,280 | ) | $ | 1,344 | ||||||
Income tax expense (benefit) | (317 | ) | (196 | ) | 228 | (1,115 | ) | 597 | |||||||||||
Income (loss) on discontinued operations | (192 | ) | (565 | ) | 92 | (3,165 | ) | 747 | |||||||||||
Net income | $ | 44,085 | $ | 38,197 | $ | 15,185 | $ | 146,248 | $ | 72,923 | |||||||||
Basic earnings per common share | $ | 0.67 | $ | 0.58 | $ | 0.35 | $ | 2.22 | $ | 1.67 | |||||||||
Diluted earnings per common share | $ | 0.67 | $ | 0.58 | $ | 0.35 | $ | 2.22 | $ | 1.67 | |||||||||
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) | ||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||
December 31, 2018 | September 30, 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 | $ | 1,477,670 | 11,623,000 | $ | 11,623 | 3.12 | % | $ | 1,333,960 | $ | 10,145 | 3.02 | % | |||||||||
Tax-exempt | 862,381 | 8,681 | 3.99 | % | 632,050 | 6,214 | 3.90 | % | ||||||||||||||
Total securities | 2,340,051 | 20,304 | 3.44 | % | 1,966,010 | 16,359 | 3.30 | % | ||||||||||||||
Loans, net (3) (4) | 9,557,160 | 122,330 | 5.08 | % | 9,297,213 | 116,266 | 4.96 | % | ||||||||||||||
Other earning assets | 64,023 | 336 | 2.09 | % | 120,097 | 752 | 2.49 | % | ||||||||||||||
Total earning assets | 11,961,234 | $ | 142,970 | 4.74 | % | 11,383,320 | $ | 133,377 | 4.65 | % | ||||||||||||
Allowance for loan losses | (41,556 | ) | (41,799 | ) | ||||||||||||||||||
Total non-earning assets | 1,618,482 | 1,605,831 | ||||||||||||||||||||
Total assets | $ | 13,538,160 | $ | 12,947,352 | ||||||||||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Transaction and money market accounts | $ | 5,080,120 | $ | 11,086 | 0.87 | % | $ | 4,915,070 | $ | 8,789 | 0.71 | % | ||||||||||
Regular savings | 626,252 | 211 | 0.13 | % | 640,954 | 209 | 0.13 | % | ||||||||||||||
Time deposits (5) | 2,083,270 | 7,851 | 1.50 | % | 2,079,686 | 6,930 | 1.32 | % | ||||||||||||||
Total interest-bearing deposits | 7,789,642 | 19,148 | 0.98 | % | 7,635,710 | 15,928 | 0.83 | % | ||||||||||||||
Other borrowings (6) | 1,575,173 | 12,398 | 3.12 | % | 1,155,093 | 9,472 | 3.25 | % | ||||||||||||||
Total interest-bearing liabilities | 9,364,815 | 31,546 | 1.34 | % | 8,790,803 | 25,400 | 1.15 | % | ||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||
Demand deposits | 2,162,341 | 2,167,765 | ||||||||||||||||||||
Other liabilities | 111,755 | 108,202 | ||||||||||||||||||||
Total liabilities | 11,638,911 | 11,066,770 | ||||||||||||||||||||
Stockholders' equity | 1,899,249 | 1,880,582 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 13,538,160 | $ | 12,947,352 | ||||||||||||||||||
Net interest income | $ | 111,424 | $ | 107,977 | ||||||||||||||||||
Interest rate spread | 3.40 | % | 3.50 | % | ||||||||||||||||||
Cost of funds | 1.04 | % | 0.89 | % | ||||||||||||||||||
Net interest margin | 3.70 | % | 3.76 | % | ||||||||||||||||||
(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21% for both the three months ended December 31, 2018 and December 31, 2017. | ||||||||||||||||||||||
(2) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above. | ||||||||||||||||||||||
(3) Nonaccrual loans are included in average loans outstanding. | ||||||||||||||||||||||
(4) Interest income on loans includes $3.5 million for both the three months ended December 31, 2018 and September 30, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions. | ||||||||||||||||||||||
(5) Interest expense on time deposits includes $445,000 and $592,000 for the three months ended December 31, 2018 and September 30, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions. | ||||||||||||||||||||||
(6) Interest expense on borrowings includes $161,000 and $143,000 for the three months ended December 31, 2018 and September 30, 2018, respectively, in amortization of the fair market value adjustments related to acquisitions. | ||||||||||||||||||||||