Exhibit 99.1
Contact: Robert M. Gorman - (804) 523-7828
Executive Vice President / Chief Financial Officer
UNION BANKSHARES REPORTS FIRST QUARTER RESULTS
Richmond, Va., April 24, 2019 - Union Bankshares Corporation (the “Company” or “Union”) (Nasdaq: UBSH) today reported net income of $35.6 million and earnings per share of $0.47 for its first quarter ended March 31, 2019. Net operating earnings(1) were $50.2 million and operating earnings per share(1) were $0.66 for its first quarter ended March 31, 2019; these operating results exclude $14.6 million in after-tax merger-related costs but include after tax losses from discontinued operations of $85,000 and approximately $322,000 in after-tax expenses related to the Company's previously announced re-branding to be effective in May 2019.
The Company's results for the first quarter of 2019 include two months of financial results of Access National Corporation ("Access"), which the Company acquired on February 1, 2019.
“Union delivered solid financial results in the first quarter of 2019, while continuing our transformation to become the preeminent mid-Atlantic regional bank,” said John C. Asbury, President and CEO of Union Bankshares Corporation. “During the quarter, we achieved year over year improvements in our operating profitability metrics and delivered strong deposit growth while loan growth was muted by seasonality and elevated commercial real estate pay downs. It was an eventful quarter as we closed the acquisition of Access National Corporation, substantially completing the Virginia jigsaw puzzle by adding a strong franchise in Northern Virginia, and announced that we will rebrand to Atlantic Union Bank, concurrent with the Access systems conversion in mid-May. We are pleased with the first quarter’s financial results and are off to a good start in 2019.”
Select highlights for the first quarter of 2019
• | Performance metrics |
◦ | Return on Average Assets (“ROA”) was 0.92% compared to 1.29% in the fourth quarter of 2018 and 0.52% in the first quarter of 2018. Operating ROA(1) was 1.30% compared to 1.36% in the fourth quarter of 2018 and 1.21% in the first quarter of 2018. |
◦ | Return on Average Equity (“ROE”) was 6.37% compared to 9.21% in the fourth quarter of 2018 and 3.70% in the first quarter of 2018. Operating ROE(1) was 8.97% compared to 9.66% in the fourth quarter of 2018 and 8.64% in the first quarter of 2018. |
◦ | Return on Average Tangible Common Equity (“ROTCE”)(1) was 11.84% compared to 16.42% in the fourth quarter of 2018 and 7.41% in the first quarter of 2018. Operating ROTCE(1) was 16.27% compared to 17.18% in the fourth quarter of 2018 and 16.00% in the first quarter of 2018. |
◦ | Efficiency ratio increased to 69.99% compared to 56.22% in the fourth quarter of 2018 and decreased from 82.22% in the first quarter of 2018. Operating efficiency ratio (FTE)(1) increased to 54.36% compared to 51.34% in the fourth quarter of 2018 and decreased from 56.42% in the first quarter of 2018. |
• | On February 1, 2019, the Company announced that it will re-brand to Atlantic Union Bankshares Corporation (subject to shareholder approval) in May 2019. During the current quarter, in preparation for the re-branding, the Company incurred $407,000 in re-branding costs. |
(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 first quarter of 2019, net interest income was $127.5 million, an increase of $18.5 million from the fourth quarter of 2018. Net interest income (FTE)(1) was $130.3 million in the first quarter of 2019, an increase of $18.9 million from the fourth quarter of 2018. The increases in both net interest income and net interest income (FTE) were primarily the result of a $1.9 billion increase in average interest earning assets and a $1.4 billion increase in average interest bearing liabilities from the acquisition of Access. The first quarter net interest margin increased 10 basis points to 3.72% from 3.62% in the previous quarter, while the net interest margin (FTE)(1) increased 10 basis points to 3.80% from 3.70% during the same periods. The increase in the net interest margin and net interest margin (FTE) were principally due to an approximately 18 basis point increase in the yield on earnings assets, partially offset by an approximately 8 basis point increase in the cost of funds.
The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. During the first quarter of 2019, net accretion related to acquisition accounting increased $2.0 million from the prior quarter to $5.8 million for the quarter ended March 31, 2019. The fourth quarter of 2018, first quarter of 2019, and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):
Loan Accretion | Deposit Accretion (Amortization) | Borrowings Amortization | Total | ||||||||||||
For the quarter ended December 31, 2018 | $ | 3,479 | $ | 445 | $ | (161 | ) | $ | 3,763 | ||||||
For the quarter ended March 31, 2019 | 5,557 | 292 | (70) | 5,779 | |||||||||||
For the remaining nine months of 2019 (estimated) | 13,129 | 541 | (289) | 13,381 | |||||||||||
For the years ending (estimated): | |||||||||||||||
2020 | 14,314 | 132 | (633) | 13,813 | |||||||||||
2021 | 11,477 | 14 | (807) | 10,684 | |||||||||||
2022 | 9,092 | (43) | (829) | 8,220 | |||||||||||
2023 | 6,491 | (32) | (852) | 5,607 | |||||||||||
2024 | 4,977 | (4) | (877) | 4,096 | |||||||||||
Thereafter | 18,540 | (1) | (10,773) | 7,766 | |||||||||||
(1) For the reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of Key Financial Results.
ASSET QUALITY/LOAN LOSS PROVISION
Overview
During the first quarter of 2019, the Company experienced decreases in nonperforming asset (“NPA”) balances from the prior quarter, primarily due to nonaccrual customer payments and charge-offs. The nonaccrual charge-offs related to two credit relationships composed of commercial & industrial as well as construction and land development loans. Past due loan levels as a percentage of total loans held for investment at March 31, 2019 were lower than past due loan levels at December 31, 2018 and higher than past due levels at March 31, 2018. Charge-off levels and the provision for loan losses decreased from the fourth quarter of 2018.
All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $99.9 million (net of fair value mark of $23.1 million) at March 31, 2019.
Nonperforming Assets
At March 31, 2019, NPAs totaled $32.2 million, a decline of $1.5 million, or 4.4%, from December 31, 2018 and a decrease of $1.0 million, or 3.1%, from March 31, 2018. NPAs as a percentage of total outstanding loans at March 31, 2019 were 0.27%, a decrease of 8 basis points from 0.35% at December 31, 2018 and a decline of 7 basis points from 0.34% at March 31, 2018. 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):
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
Nonaccrual loans | $ | 24,841 | $ | 26,953 | $ | 28,110 | $ | 25,662 | $ | 25,138 | |||||||||
Foreclosed properties | 7,353 | 6,722 | 6,800 | 7,241 | 8,079 | ||||||||||||||
Total nonperforming assets | $ | 32,194 | $ | 33,675 | $ | 34,910 | $ | 32,903 | $ | 33,217 | |||||||||
The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
Beginning Balance | $ | 26,953 | $ | 28,110 | $ | 25,662 | $ | 25,138 | $ | 21,743 | |||||||||
Net customer payments | (2,314 | ) | (3,077 | ) | (2,459 | ) | (2,651 | ) | (1,455 | ) | |||||||||
Additions | 3,297 | 4,659 | 6,268 | 5,063 | 5,451 | ||||||||||||||
Charge-offs | (1,626 | ) | (2,069 | ) | (1,137 | ) | (539 | ) | (403 | ) | |||||||||
Loans returning to accruing status | (952 | ) | (420 | ) | (70 | ) | (1,349 | ) | (182 | ) | |||||||||
Transfers to foreclosed property | (517 | ) | (250 | ) | (154 | ) | — | (16 | ) | ||||||||||
Ending Balance | $ | 24,841 | $ | 26,953 | $ | 28,110 | $ | 25,662 | $ | 25,138 | |||||||||
The following table shows the activity in foreclosed properties for the quarter ended (dollars in thousands):
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||||
Beginning Balance | $ | 6,722 | $ | 6,800 | $ | 7,241 | $ | 8,079 | $ | 5,253 | |||||||||
Additions of foreclosed property | 900 | 432 | 165 | 283 | 44 | ||||||||||||||
Acquisitions of foreclosed property (1) | — | — | — | (162 | ) | 4,204 | |||||||||||||
Valuation adjustments | (51 | ) | (140 | ) | (42 | ) | (383 | ) | (759 | ) | |||||||||
Proceeds from sales | (171 | ) | (286 | ) | (889 | ) | (580 | ) | (684 | ) | |||||||||
Gains (losses) from sales | (47 | ) | (84 | ) | 325 | 4 | 21 | ||||||||||||
Ending Balance | $ | 7,353 | $ | 6,722 | $ | 6,800 | $ | 7,241 | $ | 8,079 | |||||||||
(1) Includes subsequent measurement period adjustments.
Past Due Loans
Past due loans still accruing interest totaled $51.4 million, or 0.43% of total loans, at March 31, 2019 compared to $61.9 million, or 0.64% of total loans, at December 31, 2018 and $41.6 million, or 0.42% of total loans, at March 31, 2018. Of the total past due loans still accruing interest, $11.0 million, or 0.09% of total loans, were loans past due 90 days or more at March 31, 2019, compared to $8.9 million, or 0.09% of total loans, at December 31, 2018 and $2.6 million, or 0.03% of total loans, at March 31, 2018.
Net Charge-offs
For the first quarter of 2019, net charge-offs were $4.2 million, or 0.15% of total average loans on an annualized basis, compared to $5.0 million, or 0.21%, for the prior quarter and $1.1 million, or 0.05%, for the first quarter of 2018. The majority of net charge-offs in the first quarter of 2019 were related to consumer loans.
Provision for Loan Losses
The provision for loan losses for the first quarter of 2019 was $4.0 million, a decrease of $775,000 compared to the previous quarter and an increase of $501,000 compared to first quarter of 2018. The decrease in the provision for loan losses from the previous quarter was primarily due to lower net charge offs and lower loan growth.
Allowance for Loan Losses (“ALL”)
The ALL decreased $218,000 from December 31, 2018 to $40.8 million at March 31, 2019 primarily due to a decrease in historical loss rates. The ALL as a percentage of the total loan portfolio was 0.34% at March 31, 2019, 0.42% at December 31, 2018, and 0.41% at March 31, 2018. The decline in the allowance ratio was primarily attributable to the acquisition of Access. In acquisition accounting, there is no carryover of previously established allowance for loan losses.
The ratio of the ALL to nonaccrual loans was 164.4% at March 31, 2019, compared to 152.3% at December 31, 2018 and 161.6% at March 31, 2018. The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on loans, net charge-off activity, loan growth, delinquency trends, and other credit risk factors that the Company considers important in assessing the adequacy of the allowance for loan losses.
NONINTEREST INCOME
Noninterest income increased $1.4 million to $24.9 million for the quarter ended March 31, 2019 from $23.5 million in the prior quarter. The increase in noninterest income was primarily driven by the acquisition of Access on February 1, 2019, partially offset by a decline in other operating income of $1.4 million primarily due to life insurance proceeds of approximately $976,000 recognized in the fourth quarter of 2018.
NONINTEREST EXPENSE
Noninterest expense increased $32.2 million to $106.7 million for the quarter ended March 31, 2019 from $74.5 million in the prior quarter. Excluding merger-related costs and amortization of intangible assets, operating noninterest expense(1) increased $15.1 million, or 21.8%, in the first quarter of 2019, to $84.4 million when compared to the fourth quarter of 2018. The increase in operating noninterest expense was primarily due to the acquisition of Access on February 1, 2019. The Company also incurred $407,000 of re-branding costs in the first quarter of 2019.
(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 quarter ended March 31, 2019 was 14.9% compared to 16.5% for the quarter ended December 31, 2018 and 10.3% for the quarter ended March 31, 2018. The decrease in the effective tax rate as compared to the previous quarter was primarily due to an increase in merger-related expenses related to the acquisition
of Access. The increase from the prior year was primarily due to lower tax benefits related to stock based compensation.
BALANCE SHEET
At March 31, 2019, total assets were $16.9 billion, an increase of $3.1 billion from December 31, 2018, and an increase of $3.7 billion from March 31, 2018, reflecting the impact of the Access acquisition.
On February 1, 2019 the Company completed its acquisition of Access. Below is a summary of the transaction and related impact on the Company's balance sheet.
• | The fair value of assets acquired equaled to $2.858 billion, and the fair value of the liabilities assumed equaled $2.559 billion |
• | Total loans acquired totaled $2.217 billion with a fair value of $2.176 billion |
• | Total deposits assumed totaled $2.228 billion with a fair value of $2.227 billion |
• | Total goodwill arising from the transaction equaled $200.6 million |
• | Core deposit intangibles acquired totaled $40.9 million |
Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition, in accordance with ASC 805, Business Combinations.
At March 31, 2019, loans held for investment (net of deferred fees and costs) were $12.0 billion, an increase of $2.2 billion from December 31, 2018, while average loans increased $1.6 billion, or 65.7% (annualized), from the prior quarter. The increase in loans held for investment was primarily a result of the Access acquisition.
At March 31, 2019, total deposits were $12.5 billion, an increase of $2.5 billion from December 31, 2018, while average deposits increased $1.5 billion, or 61.0% (annualized), from the prior quarter. The increase in deposits from the prior quarter was primarily a result of the Access acquisition.
The following table shows the Company's capital ratios at the quarters ended:
March 31, | December 31, | March 31, | ||||||
2019 | 2018 | 2018 | ||||||
Common equity Tier 1 capital ratio (1) | 10.26 | % | 9.93 | % | 9.03 | % | ||
Tier 1 capital ratio (1) | 10.26 | % | 11.09 | % | 10.19 | % | ||
Total capital ratio (1) | 12.73 | % | 12.88 | % | 11.97 | % | ||
Leverage ratio (Tier 1 capital to average assets) (1) | 9.51 | % | 9.71 | % | 9.32 | % | ||
Common equity to total assets | 14.56 | % | 13.98 | % | 13.93 | % | ||
Tangible common equity to tangible assets (2) | 9.09 | % | 8.84 | % | 8.54 | % | ||
(1) All ratios at March 31, 2019 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed. | ||||||||
(2) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results. | ||||||||
During the first quarter of 2019, the Company declared and paid cash dividends of $0.23 per common share consistent with the fourth quarter of 2018 and an increase of $0.02, or 9.5%, compared to the first quarter of 2018.
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 155 branches, 15 of which are operated as Access National Bank, a division of Union Bank & Trust of Richmond, Virginia, or Middleburg Bank, a division of Union Bank & Trust of Richmond, Virginia, and seven 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.
Certain non-bank affiliates of the Company include: Old Dominion Capital Management, Inc., and its subsidiary Outfitter Advisors, Ltd., Dixon, Hubard, Feinour, & Brown, Inc., Capital Fiduciary Advisors, LLC, and Middleburg Investment Services, LLC, all of which provide investment advisory and/or brokerage services; Union Insurance Group, LLC, which offers various lines of insurance products; and Middleburg Trust Company, which provides trust services.
FIRST QUARTER 2019 EARNINGS RELEASE CONFERENCE CALL
Union will hold a conference call on Wednesday, April 24th, 2019 at 9:00 a.m. Eastern Time during which management will review the first quarter 2019 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 1658799.
NON-GAAP FINANCIAL MEASURES
In reporting the results of the quarter ended March 31, 2019, 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 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, or trends affecting, 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, performance, achievements or trends 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 the Company operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels, and slowdowns in economic growth, |
• | the Company's ability to manage its growth or implement its growth strategy; |
• | the possibility that any of the anticipated benefits of the acquisition of Access will not be realized or will not be realized within the expected time period, the expected revenue synergies and cost savings from the acquisition may not be fully realized or realized within the expected time frame, revenues following the acquisition may be lower than expected, or customer and employee relationships and business operations may be disrupted by the acquisition; |
• | the Company's ability to recruit and retain key employees; |
• | the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets |
• | real estate values in the Bank's lending area; |
• | an insufficient allowance for loan losses; |
• | the quality or composition of the loan or investment portfolios; |
• | concentrations of loans secured by real estate, particularly commercial real estate; |
• | the effectiveness of the Company’s credit processes and management of the Company’s credit risk; |
• | demand for loan products and financial services in the Company’s market area; |
• | the Company’s ability to compete in the market for financial services; |
• | technological risks and developments, and cyber 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 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 the Company's tax assets and liabilities; |
• | 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 the Company. |
Please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and comparable “Risk Factors” sections of the Company’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 the Company 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 the Company 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 | |||||||||||
3/31/19 | 12/31/18 | 3/31/18 | |||||||||
Results of Operations | (unaudited) | (unaudited) | (unaudited) | ||||||||
Interest and dividend income | $ | 165,652 | $ | 140,636 | $ | 124,379 | |||||
Interest expense | 38,105 | 31,547 | 20,907 | ||||||||
Net interest income | 127,547 | 109,089 | 103,472 | ||||||||
Provision for credit losses | 3,792 | 4,725 | 3,524 | ||||||||
Net interest income after provision for credit losses | 123,755 | 104,364 | 99,948 | ||||||||
Noninterest income | 24,938 | 23,487 | 20,267 | ||||||||
Noninterest expenses | 106,728 | 74,533 | 101,743 | ||||||||
Income before income taxes | 41,965 | 53,318 | 18,472 | ||||||||
Income tax expense | 6,249 | 9,041 | 1,897 | ||||||||
Income from continuing operations | 35,716 | 44,277 | 16,575 | ||||||||
Discontinued operations, net of tax | (85 | ) | (192 | ) | 64 | ||||||
Net income | $ | 35,631 | $ | 44,085 | $ | 16,639 | |||||
Interest earned on earning assets (FTE) (1) | $ | 168,400 | $ | 142,970 | $ | 126,217 | |||||
Net interest income (FTE) (1) | 130,295 | 111,424 | 105,310 | ||||||||
Key Ratios | |||||||||||
Earnings per common share, diluted | $ | 0.47 | $ | 0.67 | $ | 0.25 | |||||
Return on average assets (ROA) | 0.92 | % | 1.29 | % | 0.52 | % | |||||
Return on average equity (ROE) | 6.37 | % | 9.21 | % | 3.70 | % | |||||
Return on average tangible common equity (ROTCE) (2) (3) | 11.84 | % | 16.42 | % | 7.41 | % | |||||
Efficiency ratio | 69.99 | % | 56.22 | % | 82.22 | % | |||||
Net interest margin | 3.72 | % | 3.62 | % | 3.66 | % | |||||
Net interest margin (FTE) (1) | 3.80 | % | 3.70 | % | 3.72 | % | |||||
Yields on earning assets (FTE) (1) | 4.92 | % | 4.74 | % | 4.46 | % | |||||
Cost of interest-bearing liabilities | 1.44 | % | 1.34 | % | 0.93 | % | |||||
Cost of deposits | 0.86 | % | 0.76 | % | 0.48 | % | |||||
Cost of funds | 1.12 | % | 1.04 | % | 0.74 | % | |||||
Operating Measures (4) | |||||||||||
Net operating earnings | $ | 50,197 | $ | 46,248 | $ | 38,875 | |||||
Operating earnings per share, diluted | $ | 0.66 | $ | 0.70 | $ | 0.59 | |||||
Operating ROA | 1.30 | % | 1.36 | % | 1.21 | % | |||||
Operating ROE | 8.97 | % | 9.66 | % | 8.64 | % | |||||
Operating ROTCE (2) (3) | 16.27 | % | 17.18 | % | 16.00 | % | |||||
Operating efficiency ratio (FTE) (1)(6) | 54.36 | % | 51.34 | % | 56.42 | % | |||||
Per Share Data | |||||||||||
Earnings per common share, basic | $ | 0.47 | $ | 0.67 | $ | 0.25 | |||||
Earnings per common share, diluted | 0.47 | 0.67 | 0.25 | ||||||||
Cash dividends paid per common share | 0.23 | 0.23 | 0.21 | ||||||||
Market value per share | 32.33 | 28.23 | 36.71 | ||||||||
Book value per common share | 30.16 | 29.34 | 27.87 | ||||||||
Tangible book value per common share (2) | 17.69 | 17.51 | 16.14 | ||||||||
Price to earnings ratio, diluted | 16.96 | 12.72 | 36.21 | ||||||||
Price to book value per common share ratio | 1.07 | 0.96 | 1.32 | ||||||||
Price to tangible book value per common share ratio (2) | 1.83 | 1.61 | 2.27 | ||||||||
Weighted average common shares outstanding, basic | 76,472,189 | 65,982,304 | 65,554,630 | ||||||||
Weighted average common shares outstanding, diluted | 76,553,066 | 66,013,326 | 65,636,262 | ||||||||
Common shares outstanding at end of period | 82,037,354 | 65,977,149 | 65,895,421 | ||||||||
As of & For Three Months Ended | |||||||||||
3/31/19 | 12/31/18 | 3/31/18 | |||||||||
Capital Ratios | (unaudited) | (unaudited) | (unaudited) | ||||||||
Common equity Tier 1 capital ratio (5) | 10.26 | % | 9.93 | % | 9.03 | % | |||||
Tier 1 capital ratio (5) | 10.26 | % | 11.09 | % | 10.19 | % | |||||
Total capital ratio (5) | 12.73 | % | 12.88 | % | 11.97 | % | |||||
Leverage ratio (Tier 1 capital to average assets) (5) | 9.51 | % | 9.71 | % | 9.32 | % | |||||
Common equity to total assets | 14.56 | % | 13.98 | % | 13.93 | % | |||||
Tangible common equity to tangible assets (2) | 9.09 | % | 8.84 | % | 8.54 | % | |||||
Financial Condition | |||||||||||
Assets | $ | 16,897,655 | $ | 13,765,599 | $ | 13,149,292 | |||||
Loans held for investment | 11,952,310 | 9,716,207 | 9,805,723 | ||||||||
Securities | 2,804,353 | 2,391,695 | 1,557,173 | ||||||||
Earning Assets | 14,909,318 | 12,202,023 | 11,595,325 | ||||||||
Goodwill | 927,760 | 727,168 | 724,106 | ||||||||
Amortizable intangibles, net | 88,553 | 48,685 | 50,092 | ||||||||
Deposits | 12,489,330 | 9,970,960 | 9,677,955 | ||||||||
Borrowings | 1,753,103 | 1,756,278 | 1,535,026 | ||||||||
Stockholders' equity | 2,459,465 | 1,924,581 | 1,831,077 | ||||||||
Tangible common equity (2) | 1,443,152 | 1,148,728 | 1,056,879 | ||||||||
Loans held for investment, net of deferred fees and costs | |||||||||||
Construction and land development | $ | 1,326,679 | $ | 1,194,821 | $ | 1,249,196 | |||||
Commercial real estate - owner occupied | 1,921,464 | 1,337,345 | 1,279,155 | ||||||||
Commercial real estate - non-owner occupied | 2,970,453 | 2,467,410 | 2,230,463 | ||||||||
Multifamily real estate | 591,431 | 548,231 | 547,520 | ||||||||
Commercial & Industrial | 1,866,625 | 1,317,135 | 1,125,733 | ||||||||
Residential 1-4 Family - commercial | 815,309 | 713,750 | 714,660 | ||||||||
Residential 1-4 Family - mortgage | 865,502 | 600,578 | 604,354 | ||||||||
Auto | 300,631 | 301,943 | 288,089 | ||||||||
HELOC | 672,087 | 613,383 | 642,084 | ||||||||
Consumer | 397,491 | 379,694 | 839,699 | ||||||||
Other Commercial | 224,638 | 241,917 | 284,770 | ||||||||
Total loans held for investment | $ | 11,952,310 | $ | 9,716,207 | $ | 9,805,723 | |||||
Deposits | |||||||||||
NOW accounts | $ | 2,643,228 | $ | 2,288,523 | $ | 2,185,562 | |||||
Money market accounts | 3,579,249 | 2,875,301 | 2,692,662 | ||||||||
Savings accounts | 798,670 | 622,823 | 654,931 | ||||||||
Time deposits of $100,000 and over | 1,264,525 | 1,067,181 | 819,056 | ||||||||
Other time deposits | 1,239,545 | 1,022,525 | 1,268,319 | ||||||||
Total interest-bearing deposits | $ | 9,525,217 | $ | 7,876,353 | $ | 7,620,530 | |||||
Demand deposits | 2,964,113 | 2,094,607 | 2,057,425 | ||||||||
Total deposits | $ | 12,489,330 | $ | 9,970,960 | $ | 9,677,955 | |||||
Averages | |||||||||||
Assets | $ | 15,699,743 | $ | 13,538,160 | $ | 13,019,572 | |||||
Loans held for investment | 11,127,390 | 9,557,160 | 9,680,195 | ||||||||
Loans held for sale | 14,999 | 118 | 28,709 | ||||||||
Securities | 2,645,429 | 2,340,051 | 1,567,269 | ||||||||
Earning assets | 13,891,248 | 11,961,234 | 11,475,099 | ||||||||
Deposits | 11,469,935 | 9,951,983 | 9,463,697 | ||||||||
Time deposits | 2,325,218 | 2,083,270 | 2,085,930 | ||||||||
Interest-bearing deposits | 8,934,995 | 7,789,642 | 7,489,893 | ||||||||
Borrowings | 1,790,656 | 1,575,173 | 1,614,691 | ||||||||
Interest-bearing liabilities | 10,725,651 | 9,364,815 | 9,104,584 | ||||||||
Stockholders' equity | 2,268,395 | 1,899,249 | 1,824,588 | ||||||||
Tangible common equity (2) | 1,334,051 | 1,121,788 | 1,048,824 | ||||||||
As of & For Three Months Ended | |||||||||||
3/31/19 | 12/31/18 | 3/31/18 | |||||||||
Asset Quality | (unaudited) | (unaudited) | (unaudited) | ||||||||
Allowance for Loan Losses (ALL) | |||||||||||
Beginning balance | $ | 41,045 | $ | 41,294 | $ | 38,208 | |||||
Add: Recoveries | 1,696 | 830 | 1,480 | ||||||||
Less: Charge-offs | 5,939 | 5,875 | 2,559 | ||||||||
Add: Provision for loan losses | 4,025 | 4,800 | 3,524 | ||||||||
Add: Provision for loan losses included in discontinued operations | — | (4 | ) | (24 | ) | ||||||
Ending balance | $ | 40,827 | $ | 41,045 | $ | 40,629 | |||||
ALL / total outstanding loans | 0.34 | % | 0.42 | % | 0.41 | % | |||||
Net charge-offs / total average loans | 0.15 | % | 0.21 | % | 0.05 | % | |||||
Provision / total average loans | 0.15 | % | 0.20 | % | 0.15 | % | |||||
Total PCI loans, net of fair value mark | $ | 99,932 | $ | 90,221 | $ | 102,861 | |||||
Remaining fair value mark on purchased performing loans | 63,506 | 30,281 | 44,766 | ||||||||
Nonperforming Assets | |||||||||||
Construction and land development | $ | 5,513 | $ | 8,018 | $ | 6,391 | |||||
Commercial real estate - owner occupied | 3,307 | 3,636 | 2,539 | ||||||||
Commercial real estate - non-owner occupied | 1,787 | 1,789 | 2,089 | ||||||||
Commercial & Industrial | 721 | 1,524 | 1,969 | ||||||||
Residential 1-4 Family - commercial | 4,244 | 2,481 | 1,512 | ||||||||
Residential 1-4 Family - mortgage | 7,119 | 7,276 | 7,929 | ||||||||
Auto | 523 | 576 | 394 | ||||||||
HELOC | 1,395 | 1,518 | 2,072 | ||||||||
Consumer and all other | 232 | 135 | 243 | ||||||||
Nonaccrual loans | $ | 24,841 | $ | 26,953 | $ | 25,138 | |||||
Foreclosed property | 7,353 | 6,722 | 8,079 | ||||||||
Total nonperforming assets (NPAs) | $ | 32,194 | $ | 33,675 | $ | 33,217 | |||||
Construction and land development | $ | 1,997 | $ | 180 | $ | 322 | |||||
Commercial real estate - owner occupied | 2,908 | 3,193 | — | ||||||||
Commercial & Industrial | 313 | 132 | 200 | ||||||||
Residential 1-4 Family - commercial | 1,490 | 1,409 | 113 | ||||||||
Residential 1-4 Family - mortgage | 2,476 | 2,437 | 1,148 | ||||||||
Auto | 153 | 195 | 170 | ||||||||
HELOC | 518 | 440 | 306 | ||||||||
Consumer and all other | 1,098 | 870 | 371 | ||||||||
Loans ≥ 90 days and still accruing | $ | 10,953 | $ | 8,856 | $ | 2,630 | |||||
Total NPAs and loans ≥ 90 days | $ | 43,147 | $ | 42,531 | $ | 35,847 | |||||
NPAs / total outstanding loans | 0.27 | % | 0.35 | % | 0.34 | % | |||||
NPAs / total assets | 0.19 | % | 0.24 | % | 0.25 | % | |||||
ALL / nonaccrual loans | 164.35 | % | 152.28 | % | 161.62 | % | |||||
ALL / nonperforming assets | 126.82 | % | 121.89 | % | 122.31 | % | |||||
Past Due Detail | |||||||||||
Construction and land development | $ | 1,019 | $ | 759 | $ | 403 | |||||
Commercial real estate - owner occupied | 4,052 | 8,755 | 4,985 | ||||||||
Commercial real estate - non-owner occupied | 760 | 338 | 1,867 | ||||||||
Multifamily real estate | 596 | — | — | ||||||||
Commercial & Industrial | 2,565 | 3,353 | 2,608 | ||||||||
Residential 1-4 Family - commercial | 4,059 | 6,619 | 3,707 | ||||||||
Residential 1-4 Family - mortgage | 5,889 | 12,049 | 6,210 | ||||||||
Auto | 2,152 | 3,320 | 2,167 | ||||||||
HELOC | 5,020 | 4,611 | 3,564 | ||||||||
Consumer and all other | 1,963 | 1,630 | 4,179 | ||||||||
Loans 30-59 days past due | $ | 28,075 | $ | 41,434 | $ | 29,690 | |||||
As of & For Three Months Ended | |||||||||||
3/31/19 | 12/31/18 | 3/31/18 | |||||||||
Past Due Detail cont'd | (unaudited) | (unaudited) | (unaudited) | ||||||||
Construction and land development | $ | 526 | $ | 6 | $ | 1,291 | |||||
Commercial real estate - owner occupied | 480 | 1,142 | 777 | ||||||||
Commercial real estate - non-owner occupied | 4,129 | 41 | — | ||||||||
Multifamily Real Estate | — | 146 | — | ||||||||
Commercial & Industrial | 438 | 389 | 1,254 | ||||||||
Residential 1-4 Family - commercial | 1,365 | 1,577 | 960 | ||||||||
Residential 1-4 Family - mortgage | 2,196 | 5,143 | 1,397 | ||||||||
Auto | 297 | 403 | 193 | ||||||||
HELOC | 1,753 | 1,644 | 1,346 | ||||||||
Consumer and all other | 1,197 | 1,096 | 2,074 | ||||||||
Loans 60-89 days past due | $ | 12,381 | $ | 11,587 | $ | 9,292 | |||||
Troubled Debt Restructurings | |||||||||||
Performing | $ | 20,808 | $ | 19,201 | $ | 13,292 | |||||
Nonperforming | 4,682 | 7,397 | 4,284 | ||||||||
Total troubled debt restructurings | $ | 25,490 | $ | 26,598 | $ | 17,576 | |||||
Alternative Performance Measures (non-GAAP) | |||||||||||
Net interest income (FTE) | |||||||||||
Net interest income (GAAP) | $ | 127,547 | $ | 109,089 | $ | 103,472 | |||||
FTE adjustment | 2,748 | 2,335 | 1,838 | ||||||||
Net interest income (FTE) (non-GAAP) (1) | $ | 130,295 | $ | 111,424 | $ | 105,310 | |||||
Average earning assets | 13,891,248 | 11,961,234 | 11,475,099 | ||||||||
Net interest margin | 3.72 | % | 3.62 | % | 3.66 | % | |||||
Net interest margin (FTE) (1) | 3.80 | % | 3.70 | % | 3.72 | % | |||||
Tangible Assets | |||||||||||
Ending assets (GAAP) | $ | 16,897,655 | $ | 13,765,599 | $ | 13,149,292 | |||||
Less: Ending goodwill | 927,760 | 727,168 | 724,106 | ||||||||
Less: Ending amortizable intangibles | 88,553 | 48,685 | 50,092 | ||||||||
Ending tangible assets (non-GAAP) | $ | 15,881,342 | $ | 12,989,746 | $ | 12,375,094 | |||||
Tangible Common Equity (2) | |||||||||||
Ending equity (GAAP) | $ | 2,459,465 | $ | 1,924,581 | $ | 1,831,077 | |||||
Less: Ending goodwill | 927,760 | 727,168 | 724,106 | ||||||||
Less: Ending amortizable intangibles | 88,553 | 48,685 | 50,092 | ||||||||
Ending tangible common equity (non-GAAP) | $ | 1,443,152 | $ | 1,148,728 | $ | 1,056,879 | |||||
Average equity (GAAP) | $ | 2,268,395 | $ | 1,899,249 | $ | 1,824,588 | |||||
Less: Average goodwill | 858,658 | 727,544 | 724,106 | ||||||||
Less: Average amortizable intangibles | 75,686 | 49,917 | 51,658 | ||||||||
Average tangible common equity (non-GAAP) | $ | 1,334,051 | $ | 1,121,788 | $ | 1,048,824 | |||||
Operating Measures (4) | |||||||||||
Net income (GAAP) | $ | 35,631 | $ | 44,085 | $ | 16,639 | |||||
Plus: Merger-related costs, net of tax | 14,566 | 2,163 | 22,236 | ||||||||
Net operating earnings (non-GAAP) | $ | 50,197 | $ | 46,248 | $ | 38,875 | |||||
Noninterest expense (GAAP) | $ | 106,728 | $ | 74,533 | $ | 101,743 | |||||
Less: Merger-related costs | 18,122 | 2,314 | 27,712 | ||||||||
Less: Amortization of intangible assets | 4,218 | 2,954 | 3,181 | ||||||||
Operating noninterest expense (non-GAAP) | $ | 84,388 | $ | 69,265 | $ | 70,850 | |||||
Net interest income (FTE) (non-GAAP) (1) | $ | 130,295 | $ | 111,424 | $ | 105,310 | |||||
Noninterest income (GAAP) | 24,938 | 23,487 | 20,267 | ||||||||
Efficiency ratio | 69.99 | % | 56.22 | % | 82.22 | % | |||||
Operating efficiency ratio (FTE)(6) | 54.36 | % | 51.34 | % | 56.42 | % | |||||
As of & For Three Months Ended | |||||||||||
3/31/19 | 12/31/18 | 3/31/18 | |||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||
ROTCE (2)(3) | |||||||||||
Net Income (GAAP) | $ | 35,631 | $ | 44,085 | $ | 16,639 | |||||
Plus: Amortization of intangibles, tax effected | 3,332 | 2,334 | 2,513 | ||||||||
Net Income before amortization of intangibles (non-GAAP) | $ | 38,963 | $ | 46,419 | $ | 19,152 | |||||
Average tangible common equity (non-GAAP) | $ | 1,334,051 | $ | 1,121,788 | $ | 1,048,824 | |||||
Return on average tangible common equity (non-GAAP) | 11.84 | % | 16.42 | % | 7.41 | % | |||||
Operating ROTCE (2)(3) | |||||||||||
Operating Net Income (non-GAAP) | $ | 50,197 | $ | 46,248 | $ | 38,875 | |||||
Plus: Amortization of intangibles, tax effected | 3,332 | 2,334 | 2,513 | ||||||||
Net Income before amortization of intangibles (non-GAAP) | $ | 53,529 | $ | 48,582 | $ | 41,388 | |||||
Average tangible common equity (non-GAAP) | $ | 1,334,051 | $ | 1,121,788 | $ | 1,048,824 | |||||
Operating return on average tangible common equity (non-GAAP) | 16.27 | % | 17.18 | % | 16.00 | % | |||||
Mortgage Origination Volume | |||||||||||
Refinance Volume | $ | 11,969 | $ | — | $ | 35,599 | |||||
Construction Volume | — | — | 13,867 | ||||||||
Purchase Volume | 32,107 | — | 43,082 | ||||||||
Total Mortgage loan originations | $ | 44,076 | $ | — | $ | 92,548 | |||||
% of originations that are refinances | 27.2 | % | — | % | 38.5 | % | |||||
Wealth | |||||||||||
Assets under management ("AUM") | $ | 5,425,804 | $ | 3,379,340 | $ | 2,603,740 | |||||
Other Data | |||||||||||
End of period full-time employees | 1,947 | 1,609 | 1,824 | ||||||||
Number of full-service branches | 155 | 140 | 150 | ||||||||
Number of full automatic transaction machines ("ATMs") | 197 | 188 | 216 | ||||||||
(1) These are non-GAAP financial measures. Net interest income (FTE), which is used in computing net interest margin (FTE) and operating 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 periods prior to December 31,2018, 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 March 31, 2019 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.
(6) The operating efficiency ratio (FTE) excludes the amortization of intangible assets and merger-related costs. This measure is similar to the measure utilized by the Company when analyzing corporate performance and is also similar to the measure utilized for incentive compensation. The Company believes this measure is useful to investors as it excludes certain costs resulting from acquisition activity allowing for greater comparability with others in the industry and allowing investors to more clearly see the combined economic results of the organization's operations.
In prior periods, the Company has not excluded the amortization of intangibles from noninterest expense when calculating the operating efficiency ratio (FTE). The Company has adjusted its presentation for all periods in this release to exclude the amortization of intangibles from noninterest expense.
UNION BANKSHARES CORPORATION AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
(Dollars in thousands, except share data) | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2019 | 2018 | 2018 | ||||||||||
ASSETS | (unaudited) | (audited) | (unaudited) | |||||||||
Cash and cash equivalents: | ||||||||||||
Cash and due from banks | $ | 165,041 | $ | 166,927 | $ | 137,761 | ||||||
Interest-bearing deposits in other banks | 116,900 | 94,056 | 196,456 | |||||||||
Federal funds sold | 1,652 | 216 | 8,246 | |||||||||
Total cash and cash equivalents | 283,593 | 261,199 | 342,463 | |||||||||
Securities available for sale, at fair value | 2,109,062 | 1,774,821 | 1,253,179 | |||||||||
Securities held to maturity, at carrying value | 559,380 | 492,272 | 198,733 | |||||||||
Restricted stock, at cost | 135,911 | 124,602 | 105,261 | |||||||||
Loans held for sale, at fair value | 28,712 | — | — | |||||||||
Loans held for investment, net of deferred fees and costs | 11,952,310 | 9,716,207 | 9,805,723 | |||||||||
Less allowance for loan losses | 40,827 | 41,045 | 40,629 | |||||||||
Net loans held for investment | 11,911,483 | 9,675,162 | 9,765,094 | |||||||||
Premises and equipment, net | 172,522 | 146,967 | 162,746 | |||||||||
Goodwill | 927,760 | 727,168 | 724,106 | |||||||||
Amortizable intangibles, net | 88,553 | 48,685 | 50,092 | |||||||||
Bank owned life insurance | 317,990 | 263,034 | 258,381 | |||||||||
Other assets | 361,580 | 250,210 | 257,390 | |||||||||
Assets of discontinued operations | 1,109 | 1,479 | 31,847 | |||||||||
Total assets | $ | 16,897,655 | $ | 13,765,599 | $ | 13,149,292 | ||||||
LIABILITIES | ||||||||||||
Noninterest-bearing demand deposits | $ | 2,964,113 | $ | 2,094,607 | $ | 2,057,425 | ||||||
Interest-bearing deposits | 9,525,217 | 7,876,353 | 7,620,530 | |||||||||
Total deposits | 12,489,330 | 9,970,960 | 9,677,955 | |||||||||
Securities sold under agreements to repurchase | 73,774 | 39,197 | 31,593 | |||||||||
Other short-term borrowings | 939,700 | 1,048,600 | 1,022,000 | |||||||||
Long-term borrowings | 739,629 | 668,481 | 481,433 | |||||||||
Other liabilities | 194,565 | 112,093 | 101,985 | |||||||||
Liabilities of discontinued operations | 1,192 | 1,687 | 3,249 | |||||||||
Total liabilities | 14,438,190 | 11,841,018 | 11,318,215 | |||||||||
Commitments and contingencies | ||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 82,037,354 shares, and 65,977,149 shares, respectively. | 108,475 | 87,250 | 87,091 | |||||||||
Additional paid-in capital | 1,859,588 | 1,380,259 | 1,373,782 | |||||||||
Retained earnings | 483,005 | 467,345 | 382,514 | |||||||||
Accumulated other comprehensive income (loss) | 8,397 | (10,273 | ) | (12,310 | ) | |||||||
Total stockholders' equity | 2,459,465 | 1,924,581 | 1,831,077 | |||||||||
Total liabilities and stockholders' equity | $ | 16,897,655 | $ | 13,765,599 | $ | 13,149,292 | ||||||
UNION BANKSHARES CORPORATION AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
(Dollars in thousands, except share data) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2019 | 2018 | 2018 | ||||||||||
Interest and dividend income: | (unaudited) | (unaudited) | (unaudited) | |||||||||
Interest and fees on loans | $ | 144,115 | $ | 121,846 | $ | 112,652 | ||||||
Interest on deposits in other banks | 473 | 309 | 647 | |||||||||
Interest and dividends on securities: | ||||||||||||
Taxable | 13,081 | 11,623 | 7,072 | |||||||||
Nontaxable | 7,983 | 6,858 | 4,008 | |||||||||
Total interest and dividend income | 165,652 | 140,636 | 124,379 | |||||||||
Interest expense: | ||||||||||||
Interest on deposits | 24,430 | 19,149 | 11,212 | |||||||||
Interest on short-term borrowings | 6,551 | 5,663 | 4,249 | |||||||||
Interest on long-term borrowings | 7,124 | 6,735 | 5,446 | |||||||||
Total interest expense | 38,105 | 31,547 | 20,907 | |||||||||
Net interest income | 127,547 | 109,089 | 103,472 | |||||||||
Provision for credit losses | 3,792 | 4,725 | 3,524 | |||||||||
Net interest income after provision for credit losses | 123,755 | 104,364 | 99,948 | |||||||||
Noninterest income: | ||||||||||||
Service charges on deposit accounts | 7,158 | 6,873 | 5,894 | |||||||||
Other service charges and fees | 1,664 | 1,467 | 1,233 | |||||||||
Interchange fees, net | 5,045 | 4,640 | 4,489 | |||||||||
Fiduciary and asset management fees | 5,054 | 4,643 | 3,056 | |||||||||
Mortgage banking income, net | 1,454 | — | — | |||||||||
Gains (losses) on securities transactions, net | 151 | 161 | 213 | |||||||||
Bank owned life insurance income | 2,055 | 2,072 | 1,667 | |||||||||
Loan-related interest rate swap fees | 1,460 | 1,376 | 718 | |||||||||
Other operating income | 897 | 2,255 | 2,997 | |||||||||
Total noninterest income | 24,938 | 23,487 | 20,267 | |||||||||
Noninterest expenses: | ||||||||||||
Salaries and benefits | 48,007 | 38,581 | 40,741 | |||||||||
Occupancy expenses | 7,399 | 6,590 | 6,067 | |||||||||
Furniture and equipment expenses | 3,396 | 2,967 | 2,937 | |||||||||
Printing, postage, and supplies | 1,242 | 1,125 | 1,060 | |||||||||
Communications expense | 1,005 | 923 | 1,095 | |||||||||
Technology and data processing | 5,676 | 4,675 | 4,560 | |||||||||
Professional services | 2,958 | 2,183 | 2,554 | |||||||||
Marketing and advertising expense | 2,383 | 2,211 | 1,436 | |||||||||
FDIC assessment premiums and other | 2,639 | 1,214 | 2,185 | |||||||||
Other taxes | 3,764 | 2,882 | 2,886 | |||||||||
Loan-related expenses | 2,289 | 2,109 | 1,315 | |||||||||
OREO and credit-related expenses | 684 | 1,026 | 1,532 | |||||||||
Amortization of intangible assets | 4,218 | 2,954 | 3,181 | |||||||||
Training and other personnel costs | 1,144 | 1,104 | 1,006 | |||||||||
Merger-related costs | 18,122 | 2,314 | 27,712 | |||||||||
Other expenses | 1,802 | 1,675 | 1,476 | |||||||||
Total noninterest expenses | 106,728 | 74,533 | 101,743 | |||||||||
Income from continuing operations before income taxes | 41,965 | 53,318 | 18,472 | |||||||||
Income tax expense | 6,249 | 9,041 | 1,897 | |||||||||
Income from continuing operations | 35,716 | 44,277 | $ | 16,575 | ||||||||
UNION BANKSHARES CORPORATION AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (continued) | ||||||||||||
(Dollars in thousands, except share data) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2019 | 2018 | 2018 | ||||||||||
Discontinued operations: | (unaudited) | (unaudited) | (unaudited) | |||||||||
Income (loss) from operations of discontinued mortgage segment | $ | (115 | ) | $ | (509 | ) | $ | 76 | ||||
Income tax expense (benefit) | (30 | ) | (317 | ) | 12 | |||||||
Income (loss) on discontinued operations | (85 | ) | (192 | ) | 64 | |||||||
Net income | $ | 35,631 | $ | 44,085 | $ | 16,639 | ||||||
Basic earnings per common share | $ | 0.47 | $ | 0.67 | $ | 0.25 | ||||||
Diluted earnings per common share | $ | 0.47 | $ | 0.67 | $ | 0.25 | ||||||
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) | ||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||
March 31, 2019 | December 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 | $ | 1,661,179 | 11,623,000 | $ | 13,067 | 3.19 | % | $ | 1,477,670 | $ | 11,623 | 3.12 | % | |||||||||
Tax-exempt | 984,250 | 10,123 | 4.17 | % | 862,381 | 8,681 | 3.99 | % | ||||||||||||||
Total securities | 2,645,429 | 23,190 | 3.56 | % | 2,340,051 | 20,304 | 3.44 | % | ||||||||||||||
Loans, net (3) (4) | 11,127,390 | 144,499 | 5.27 | % | 9,557,160 | 122,330 | 5.08 | % | ||||||||||||||
Other earning assets | 118,429 | 711 | 2.43 | % | 64,023 | 336 | 2.09 | % | ||||||||||||||
Total earning assets | 13,891,248 | $ | 168,400 | 4.92 | % | 11,961,234 | $ | 142,970 | 4.74 | % | ||||||||||||
Allowance for loan losses | (43,002 | ) | (41,556 | ) | ||||||||||||||||||
Total non-earning assets | 1,851,497 | 1,618,482 | ||||||||||||||||||||
Total assets | $ | 15,699,743 | $ | 13,538,160 | ||||||||||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Transaction and money market accounts | $ | 5,876,491 | $ | 14,369 | 0.99 | % | $ | 5,080,120 | $ | 11,086 | 0.87 | % | ||||||||||
Regular savings | 733,286 | 400 | 0.22 | % | 626,252 | 211 | 0.13 | % | ||||||||||||||
Time deposits (5) | 2,325,218 | 9,661 | 1.69 | % | 2,083,270 | 7,851 | 1.50 | % | ||||||||||||||
Total interest-bearing deposits | 8,934,995 | 24,430 | 1.11 | % | 7,789,642 | 19,148 | 0.98 | % | ||||||||||||||
Other borrowings (6) | 1,790,656 | 13,675 | 3.10 | % | 1,575,173 | 12,398 | 3.12 | % | ||||||||||||||
Total interest-bearing liabilities | 10,725,651 | 38,105 | 1.44 | % | 9,364,815 | 31,546 | 1.34 | % | ||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||
Demand deposits | 2,534,940 | 2,162,341 | ||||||||||||||||||||
Other liabilities | 170,757 | 111,755 | ||||||||||||||||||||
Total liabilities | 13,431,348 | 11,638,911 | ||||||||||||||||||||
Stockholders' equity | 2,268,395 | 1,899,249 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 15,699,743 | $ | 13,538,160 | ||||||||||||||||||
Net interest income | $ | 130,295 | $ | 111,424 | ||||||||||||||||||
Interest rate spread | 3.48 | % | 3.40 | % | ||||||||||||||||||
Cost of funds | 1.12 | % | 1.04 | % | ||||||||||||||||||
Net interest margin | 3.80 | % | 3.70 | % | ||||||||||||||||||
(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 March 31, 2019 and December 31, 2018. | ||||||||||||||||||||||
(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 $5.6 million and $3.5 million for the three months ended March 31, 2019 and December 31, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions. | ||||||||||||||||||||||
(5) Interest expense on time deposits includes $292,000 and $445,000 for the three months ended March 31, 2019 and December 31, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions. | ||||||||||||||||||||||
(6) Interest expense on borrowings includes $70,000 and $161,000 for the three months ended March 31, 2019 and December 31, 2018, respectively, in amortization of the fair market value adjustments related to acquisitions. | ||||||||||||||||||||||