SEGMENT REPORTING DISCLOSURES

9 Months Ended

Sep. 30, 2014

SEGMENT REPORTING DISCLOSURES [Abstract]

SEGMENT REPORTING DISCLOSURES

13.SEGMENT REPORTING DISCLOSURES

The Company has two reportable segments: a traditional full service community bank segment and a mortgage loan origination business segment. The community bank segment provides loan, deposit, investment, and trust services to retail and commercial customers throughout Virginia.  The community bank segment includes the Company’s one banking subsidiary which has131 branches in total throughout Virginia as well as trust and wealth management services.  Non-bank affiliates of the Company include Union Investment Services, Inc., which provides full brokerage services, and Union Insurance Group, LLC, which offers various lines of insurance products.  The mortgage segment includes UMG, which provides a variety of mortgage loan products principally in Virginia, North Carolina, South Carolina, Maryland, and the Washington D.C. metro area.  These loans are originated and sold primarily in the secondary market through purchase commitments from investors, which serves to mitigate the Company’s exposure to interest rate risk.

Profit and loss is measured by net income after taxes including realized gains and losses on the Company’s investment portfolio.  The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.  Inter-segment transactions are recorded at cost and eliminated as part of the consolidation process.

Both of the Company’s reportable segments are service-based.  The mortgage business is a fee-based business while the bank is driven principally by net interest income.  The bank segment provides a distribution and referral network through its customers for the mortgage loan origination business.  The mortgage segment offers a more limited referral network for the bank segment.

The community bank segment provides the mortgage segment with the short-term funds needed to originate mortgage loans through a warehouse line of credit and charged the mortgage banking segment interest at the one month LIBOR rate plus 1.5% with no floor.  These transactions are eliminated in the consolidation process.  A management fee for operations and administrative support services is charged to all subsidiaries and eliminated in the consolidated totals.

Information about reportable segments and reconciliation of such information to the consolidated financial statements for the three and nine months ended September 30, 2014 and 2013 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(Dollars in thousands)
	Community Bank		Mortgage		Eliminations		Consolidated
Three Months Ended September 30, 2014
Net interest income	$	64,162	$	317	$	-	$	64,479
Provision for loan losses		1,800		-		-		1,800
Net interest income after provision for loan losses		62,362		317		-		62,679
Noninterest income		14,308		2,604		(170)		16,742
Noninterest expenses		56,188		3,903		(170)		59,921
Income (loss) before income taxes		20,482		(982)		-		19,500
Income tax expense (benefit)		4,930		(354)		-		4,576
Net income (loss)	$	15,552	$	(628)	$	-	$	14,924
Total assets	$	7,189,047	$	41,857	$	(36,570)	$	7,194,334
Three Months Ended September 30, 2013
Net interest income	$	37,465	$	393	$	-	$	37,858
Provision for loan losses		1,800		-		-		1,800
Net interest income after provision for loan losses		35,665		393		-		36,058
Noninterest income		7,322		2,062		(168)		9,216
Noninterest expenses		29,904		4,396		(168)		34,132
Income (loss) before income taxes		13,083		(1,941)		-		11,142
Income tax expense (benefit)		3,902		(706)		-		3,196
Net income (loss)	$	9,181	$	(1,235)	$	-	$	7,946
Total assets	$	4,041,661	$	69,010	$	(63,563)	$	4,047,108
Nine Months Ended September 30, 2014
Net interest income	$	191,090	$	863	$	-	$	191,953
Provision for loan losses		3,300		-		-		3,300
Net interest income after provision for loan losses		187,790		863		-		188,653
Noninterest income		40,224		7,932		(511)		47,645
Noninterest expenses		174,780		12,908		(511)		187,177
Income (loss) before income taxes		53,234		(4,113)		-		49,121
Income tax expense (benefit)		13,106		(1,504)		-		11,602
Net income (loss)	$	40,128	$	(2,609)	$	-	$	37,519
Total assets	$	7,189,047	$	41,857	$	(36,570)	$	7,194,334
Nine Months Ended September 30, 2013
Net interest income	$	111,612	$	1,402	$	-	$	113,014
Provision for loan losses		4,850		-		-		4,850
Net interest income after provision for loan losses		106,762		1,402		-		108,164
Noninterest income		20,266		10,586		(503)		30,349
Noninterest expenses		89,242		13,176		(503)		101,915
Income (loss) before income taxes		37,786		(1,188)		-		36,598
Income tax expense (benefit)		10,633		(427)		-		10,206
Net income (loss)	$	27,153	$	(761)	$	-	$	26,392
Total assets	$	4,041,661	$	69,010	$	(63,563)	$	4,047,108