United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 2012
UNION FIRST MARKET BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Virginia | 0-20293 | 54-1598552 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
1051 East Cary Street
Suite 1200
Richmond, Virginia 23219
(Address of principal executive offices, including Zip Code)
Registrants telephone number, including area code: (804) 633-5031
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b) |
¨ | Pre-commencement communications pursuant to Rule 13c-4(c) under the Exchange Act (17 CFR 240.13c-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On April 24, 2012 Union First Market Bankshares Corporation (the Company) issued a press release announcing its financial results for the three months ended March 31, 2012. A copy of the Companys press release is attached as Exhibit 99.1 hereto and is hereby incorporated herein by reference.
Item 5.07. | Submission of Matters to a Vote of Security Holders. |
The Company held its annual shareholders meeting on April 24, 2012. At the annual meeting, the Companys shareholders: (i) elected each of the persons listed below under Proposal 1 to serve as a Class I directors of the Company for a term that will continue until the 2015 Annual Meeting or the directors mandatory retirement age, whichever is sooner; (ii) ratified the appointment of Yount, Hyde & Barbour, P. C. as the Companys independent registered public accounting firm for 2012; and (iii) approved the advisory (non-binding) vote on compensation of the executives disclosed in the Companys 2012 Proxy Statement.
The Companys independent inspector of elections reported the vote of the shareholders as follows:
Proposal 1: To elect four Class I directors to serve until the 2015 Annual Meeting:
Nominees: | Votes FOR | Votes WITHHELD | Broker Non-Votes | |||||||||
Douglas E. Caton |
16,693,098 | 695,138 | 3,238,923 | |||||||||
David J. Fairchild |
16,938,133 | 450,103 | 3,238,923 | |||||||||
R. Hunter Morin |
16,702,928 | 685,308 | 3,238,923 | |||||||||
Ronald L. Tillett |
17,265,831 | 122,405 | 3,238,923 |
Proposal 2: To ratify the appointment of Yount, Hyde & Barbour, P. C. as the Companys independent registered public accounting firm for 2012:
Votes FOR |
Votes AGAINST | Votes ABSTAIN | Broker Non-Votes | |||
20,415,311 | 110,758 | 101,090 | 0 |
Proposal 3: To approve, in an advisory (non-binding) vote, the compensation of executives disclosed in the Companys 2012 Proxy Statement:
Votes FOR |
Votes AGAINST | Votes ABSTAIN | Broker Non-Votes | |||
13,361,917 | 3,780,365 | 245,954 | 3,238,923 |
The Company holds an annual (non-binding) advisory vote until the next required vote on the frequency of such votes.
Item 8.01 | Other Events. |
On April 25, 2012, the Company issued a press release announcing the declaration of a quarterly dividend payable on May 31, 2012 to shareholders of record as of May 18, 2012. A copy of the press release is attached as Exhibit 99.2 hereto and is hereby incorporated herein by reference.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
99.1 | Union First Market Bankshares Corporation press release dated April 24, 2012 | |
99.2 | Union First Market Bankshares Corporation press release dated April 25, 2012 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
UNION FIRST MARKET BANKSHARES CORPORATION | ||||||
Date: April 26, 2012 | By: | /s/ D. Anthony Peay | ||||
D. Anthony Peay | ||||||
Executive Vice President and | ||||||
Chief Financial Officer |
Exhibit 99.1
Contact: | D. Anthony Peay - (804) 632-2112 | |
Executive Vice President/ Chief Financial Officer |
UNION FIRST MARKET BANKSHARES REPORTS FIRST QUARTER RESULTS
Richmond, Va., April 24, 2012 Union First Market Bankshares Corporation (the Company) (NASDAQ: UBSH) today reported net income of $7.9 million and earnings per share of $0.31 for its first quarter ended March 31, 2012. The quarterly results represent a decrease of $437,000 in net income, but earnings per share increased $0.03 from the fourth quarter 2011 as a result of the redemption of preferred stock in December 2011. The quarterly results represent an increase of $1.7 million in net income or $0.09 in earnings per share from the quarter ended March 31, 2011. Net income available to common shareholders was $7.9 million, compared to $5.7 million for the prior years first quarter which included dividends and discount accretion on preferred stock of $526,000.
Union First Market Bankshares delivered another solid quarter as it continues to build upon its growth strategy. As consumers continued to look to find a better place to bank, Union First Market Bank saw an increase of approximately $40 million in deposits and new customer growth of nearly 1,300 net new households from the prior quarter, said G. William Beale, chief executive officer of Union First Market Bankshares. I am encouraged that net loans grew for the second quarter in a row despite the continued consumer loan portfolio run-off. While we remain committed to growing the business, the Company is focused on controlling expenses and announced the closing of four branches during the quarter. Finally, I am excited about the new mortgage teammates who joined Union during the quarter. The new teammates are getting up to speed quickly and are already starting to generate new business for the Company.
Select highlights:
| The Companys results generated a Return on Average Equity (ROE) of 7.51% and Return on Average Assets (ROA) of 0.82% for the quarter ended March 31, 2012. ROE and ROA were 5.81% and 0.66%, respectively, for the quarter ended March 31, 2011. |
| Loan demand improved slightly with an increase in loans outstanding of $23.2 million or nearly 1% over year end balances. |
| Provision for loan losses increased $1.1 million from the most recent quarter but was $2.8 million lower than the quarter ending March 31, 2011. |
| Total deposits grew $40.6 million, or 1.3%, when compared to December 31, 2011. |
| In early 2012, the Companys wholly owned subsidiary, Union Mortgage Group (UMG), hired 28 mortgage loan originators. These new originators were assigned to UMGs existing mortgage office in Virginia Beach. These originators were formerly employed by a national mortgage company that announced in November 2011 it was exiting the mortgage origination business. |
First quarter net income decreased $437,000, or 5.2%, compared to the fourth quarter in the prior year. The decrease is largely a result of higher salary and benefit expenses partially offset by lower losses on sales of OREO and other Bank property in relation to the prior quarter, lower marketing and advertising costs, lower overdraft losses and recoveries, and lower FDIC insurance expense. In addition, the Company recorded an additional $1.1 million in provision for loan losses above the prior quarter. Also during the quarter, interest income declined at a faster pace than interest expense, a result of a lack of higher yield loan and investment options in the current low-rate market.
Net income for the quarter ended March 31, 2012 increased $1.7 million, or 27.9%, from the prior year. The increase was principally a result of a lower provision for loan losses, and to a lesser extent, an increase in account service charges and fees, favorable gains on sales of mortgage loans, and lower FDIC insurance assessment, partially offset by higher salary expense of additional employees.
NET INTEREST INCOME
On a linked quarter basis, tax-equivalent net interest income was $39.4 million, a decrease of $167,000, or 0.4%, from the fourth quarter of 2011. This decrease was principally due to lower average interest-earning asset balances offset by lower costs of interest-bearing liabilities. First quarter tax-equivalent net interest margin increased to 4.44% from 4.37% compared to the most recent quarter. The change in net interest margin was principally attributable to an increase in investment yields and lower cost of interest-bearing liabilities partially offset by lower loan yields. Loan yields continue to be affected negatively by competitive pricing while yields on investment securities benefitted from a slow- down of prepayments related to taxable securities during the quarter. The cost of interest-bearing deposits was affected positively by a shift in mix from term deposits to transaction deposits.
The following table shows average interest-earning assets, interest-bearing liabilities, the related income/expense and change for the periods shown:
Linked quarter results Dollars in thousands Three Months Ended |
||||||||||||
03/31/12 | 12/31/11 | Change | ||||||||||
Average interest-earning assets |
$ | 3,578,513 | $ | 3,591,739 | $ | (13,226 | ) | |||||
Interest income |
$ | 46,919 | $ | 47,386 | $ | (467 | ) | |||||
Yield on interest-earning assets |
5.27 | % | 5.23 | % | 4 bps | |||||||
Average interest-bearing liabilities |
$ | 2,908,822 | $ | 2,906,758 | $ | 2,064 | ||||||
Interest expense |
$ | 7,528 | $ | 7,828 | $ | (300 | ) | |||||
Cost of interest-bearing liabilities |
1.04 | % | 1.07 | % | (3) bps |
For the three months ended March 31, 2012, tax-equivalent net interest income decreased $509,000, or 1.3%, when compared to the same period last year. The tax-equivalent net interest margin decreased to 4.44% from 4.68% in the prior year. This decrease was principally due to a decline in income from interest-earning assets outpacing lower costs on interest-bearing liabilities. Lower interest-earning asset income was principally due to lower yields on loans and investment securities as new loans are originated at lower rates and cash flows from securities investments and loans are reinvested at lower yields.
The Company continues to expect that its net interest margin will decline slightly over the next several quarters as decreases in earning asset yields are expected to outpace declines in costs of interest-bearing liabilities.
The following table shows average interest-earning assets, interest-bearing liabilities, the related income/expense and change for the periods shown:
Year-over-year results Dollars in thousands Three Months Ended |
||||||||||||
03/31/12 | 03/31/11 | Change | ||||||||||
Average interest-earning assets |
$ | 3,578,513 | $ | 3,459,834 | $ | 118,679 | ||||||
Interest income |
$ | 46,919 | $ | 48,490 | $ | (1,571 | ) | |||||
Yield on interest-earning assets |
5.27 | % | 5.68 | % | (41) bps | |||||||
Average interest-bearing liabilities |
$ | 2,908,822 | $ | 2,858,406 | $ | 50,416 | ||||||
Interest expense |
$ | 7,528 | $ | 8,591 | $ | (1,063 | ) | |||||
Cost of interest-bearing liabilities |
1.04 | % | 1.22 | % | (18) bps |
Acquisition Activity Net Interest Margin
The favorable impact of acquisition accounting fair value adjustments on net interest income was $1.3 million ($1.1 million First Market Bank (FMB); $214,000 Harrisonburg branch) for the three months ended March 31, 2012. If not for this favorable impact, the net interest margin for the first quarter would have been 4.28%, compared to 4.20% from the fourth quarter of 2011.
The acquired loan portfolios of the Harrisonburg Branch and FMB were marked-to-market with a fair value discount to market rates. Performing loan discount accretion is recognized as interest income over the estimated remaining life of the loans. For the FMB acquisition, the acquired investment security portfolios were marked-to-market with a fair value discount to market rates. The Company also assumed borrowings (Federal Home Loan Bank (FHLB)) and subordinated debt. These liabilities were marked-to-market with estimates of fair value on acquisition date. The resulting discount/premium to market is accreted/amortized as an increase/decrease to net interest income over the estimated lives of the liabilities. Additional credit quality deterioration above the original credit mark is recorded as additional provisions for loan losses. The Company also assumed certificates of deposit at a premium to market. These were marked-to-market with estimates of fair value on acquisition date. The resulting premium to market is being amortized as a decrease to interest expense over the estimated lives of the certificates of deposit.
The first quarter and remaining estimated discount/premium are reflected in the following table (dollars in thousands):
Harrisonburg Branch | First Market Bank | |||||||||||||||||||||||
Loan Accretion |
Certificates of Deposit |
Loan Accretion |
Investment Securities |
Borrowings | Certificates of Deposit |
|||||||||||||||||||
For the quarter ended March 31, 2012 |
$ | 211 | $ | 3 | $ | 1,049 | $ | 62 | $ | (122 | ) | $ | 114 | |||||||||||
For the remaining nine months of 2012 |
377 | 8 | 2,576 | 139 | (367 | ) | 108 | |||||||||||||||||
For the years ending: |
||||||||||||||||||||||||
2013 |
148 | 7 | 2,377 | 15 | (489 | ) | | |||||||||||||||||
2014 |
37 | 4 | 1,478 | | (489 | ) | | |||||||||||||||||
2015 |
26 | | 570 | | (489 | ) | | |||||||||||||||||
2016 |
27 | | 28 | | (163 | ) | | |||||||||||||||||
2017 |
23 | | | | | | ||||||||||||||||||
Thereafter |
120 | | | | | |
ASSET QUALITY/LOAN LOSS PROVISION
Overview
During the first quarter, the Company continued to monitor asset quality and take appropriate action to manage nonperforming assets and related loss exposure. The reduced levels of nonaccrual loans were favorable while OREO balances increased as a result of a small number of larger loans, principally related to commercial real estate, transferred to OREO that were not in nonaccrual status during the previous quarter. Economic conditions are showing improvement and while the future remains uncertain, the Companys reduced trends in provisions for loan losses, increased allowance to nonperforming loans coverage ratio, and decreased levels of troubled debt restructurings and impaired loans demonstrate that its dedicated efforts to improve asset quality continue to have a positive impact. The magnitude of any change in the real estate market and its impact on the Company is still largely dependent upon continued recovery of commercial real estate and residential housing and the pace at which the local economies in the Companys operating markets recover.
Nonperforming Assets (NPAs)
At March 31, 2012, nonperforming assets totaled $80.1 million, an increase of $3.0 million from the fourth quarter of last year and a decrease of $21.2 million compared to a year ago. In addition, NPAs as a percentage of total outstanding loans increased 8 basis points from 2.74% in the fourth quarter of last year and declined 79 basis points from 3.61% in the first quarter of the prior year to 2.82% at March 31, 2012. The current quarter increase in NPAs from the fourth quarter of last year related to a net increase in OREO of $5.4 million, partially offset by a net decrease in nonaccrual loans, excluding purchased impaired loans, of $2.4 million.
Nonperforming assets at March 31, 2012 included $42.4 million in nonaccrual loans (excluding purchased impaired loans), a net decrease of $2.4 million, or 5.36%, from the prior quarter. The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
||||||||||
Beginning Balance |
$ | 44,834 | $ | 51,965 | $ | 61,716 | ||||||
Net customer payments |
(2,778 | ) | (6,556 | ) | (2,163 | ) | ||||||
Additions |
2,805 | 5,364 | 8,567 | |||||||||
Charge-offs |
(1,549 | ) | (2,304 | ) | (1,563 | ) | ||||||
Loans returning to accruing status |
| (1,950 | ) | (502 | ) | |||||||
Transfers to OREO |
(921 | ) | (1,685 | ) | (3,413 | ) | ||||||
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Ending Balance |
$ | 42,391 | $ | 44,834 | $ | 62,642 | ||||||
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The nonperforming loans added during the quarter were principally related to commercial real estate and mortgages as borrowers continued to experience financial difficulties with the prolonged economic recovery exhausting their cash reserves and other repayment sources.
The following table presents the composition of nonaccrual loans (excluding purchased impaired loans) and the coverage ratio, which is the allowance for loan losses expressed as a percentage of nonaccrual loans, at the quarter ended (dollars in thousands):
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
||||||||||
Raw Land and Lots |
$ | 13,064 | $ | 13,322 | $ | 22,808 | ||||||
Commercial Construction |
9,835 | 10,276 | 11,489 | |||||||||
Commercial Real Estate |
6,299 | 7,993 | 10,015 | |||||||||
Single Family Investment Real Estate |
4,507 | 5,048 | 9,340 | |||||||||
Commercial and Industrial |
5,318 | 5,297 | 4,899 | |||||||||
Other Commercial |
233 | 238 | 509 | |||||||||
Consumer |
3,135 | 2,660 | 3,582 | |||||||||
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Total |
$ | 42,391 | $ | 44,834 | $ | 62,642 | ||||||
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Coverage Ratio |
94.84 | % | 88.04 | % | 64.49 | % |
Impairment analyses provided appropriate reserves on these nonperforming loans while appropriate reserves on homogenous pools continue to be maintained. The increase in the coverage ratio is primarily related to a decline in nonperforming loans.
Nonperforming assets at March 31, 2012 also included $37.7 million in OREO, a net increase of $5.4 million, or 16.72%, from the prior quarter. The following table shows the activity in OREO for the quarter ended (dollars in thousands):
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
||||||||||
Beginning Balance |
$ | 32,263 | $ | 34,464 | $ | 36,122 | ||||||
Additions |
6,593 | 2,543 | 6,406 | |||||||||
Capitalized Improvements |
319 | 197 | 37 | |||||||||
Valuation Adjustments |
| (530 | ) | (12 | ) | |||||||
Proceeds from sales |
(1,485 | ) | (3,674 | ) | (3,580 | ) | ||||||
Gains (losses) from sales |
(27 | ) | (737 | ) | (299 | ) | ||||||
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Ending Balance |
$ | 37,663 | $ | 32,263 | $ | 38,674 | ||||||
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The additions were principally related to residential and commercial real estate; sales from OREO were principally related to residential real estate and lots.
The following table presents the composition of the OREO portfolio at the quarter ended (dollars in thousands):
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
||||||||||
Land |
$ | 6,327 | $ | 6,327 | $ | 8,885 | ||||||
Land Development |
11,559 | 11,309 | 12,192 | |||||||||
Residential Real Estate |
12,482 | 11,024 | 15,345 | |||||||||
Commercial Real Estate |
6,275 | 2,583 | 1,232 | |||||||||
Land Previously Held for Branch Sites |
1,020 | 1,020 | 1,020 | |||||||||
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Total |
$ | 37,663 | $ | 32,263 | $ | 38,674 | ||||||
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Included in land development is $9.1 million related to a residential community in the Northern Neck region of Virginia, which includes developed residential lots, a golf course, and undeveloped land. Foreclosed properties were adjusted to their fair values at the time of each foreclosure and any losses were taken as loan charge-offs against the allowance for loan losses at that time. OREO asset valuations are also evaluated at least quarterly and any necessary write downs to fair values are recorded as impairment.
Charge-offs
For the quarter ended March 31, 2012, net charge-offs of loans were $2.8 million, or 0.39%, on an annualized basis, compared to $4.2 million, or 0.59%, for the fourth quarter of 2011 and $4.3 million, or 0.62%, for the same quarter last year. Net charge-offs in the current quarter included commercial loans of $1.3 million and consumer loans of $1.5 million. At March 31, 2012, total accruing past due loans were $41.0 million, or 1.44%, of total loans, a slight increase from 1.40% at December 31, 2011 and a decrease from 1.52% a year ago.
Provision
The provision for loan losses for the current quarter was $3.5 million, an increase of $1.1 million from the fourth quarter of last year and a $2.8 million decrease from the same quarter a year ago. The increased provision from the most recent quarter reflects the need to increase reserves on impaired loans. While the impaired loan balances declined, the reserve requirements increased as management continued to monitor collateral values and guarantor support. 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 in assessing the adequacy of the allowance for loan losses.
The allowance for loan losses as a percentage of the total loan portfolio, including net loans acquired in the FMB and the Harrisonburg branch acquisitions, was 1.41% at March 31, 2012, 1.40% at December 31, 2011, and 1.44% at March 31, 2011. The allowance for loan losses as a percentage of the total loan portfolio, adjusted for acquired loans, was 1.77% at March 31, 2012, a decrease from 1.83% at December 31, 2011 and 1.96% from year ago. While the allowance for loan losses as a percentage of the adjusted loan portfolio declined, the nonaccrual loan coverage ratio significantly improved, as it increased from 88.04% at December 31, 2011 and from 64.49% the same quarter last year to 94.84% at March 31, 2012. The rise in the coverage ratio, which is at the highest level since the first quarter of 2010, further shows that managements proactive diligence in working through problem credits is having a positive impact on asset quality. The lower allowance for loan losses as a percentage of loans compared to the loan portfolio, adjusted for acquired loans, is related to the elimination of FMBs allowance for loan losses at acquisition. In acquisition accounting, there is no carryover of previously established allowance for loan losses.
Troubled Debt Restructurings (TDRs)
The total recorded investment in TDRs as of March 31, 2012 was $99.8 million, a decrease of $12.8 million from $112.6 million at December 31, 2011. Of the $99.8 million of TDRs at March 31, 2012, $86.1 million, or 86.27%, were considered performing while the remaining $13.7 million were considered nonperforming. The primary cause for the decline in TDRs is related to restructured loans with a market rate of interest at the time of the restructuring; these loans were considered performing in accordance with their modified terms for a consecutive twelve month period and were no longer considered impaired.
The following table shows the Companys performing and nonperforming TDRs by modification type for the quarter ended (dollars in thousands):
3/31/2012 | 12/31/2011 | 9/30/2011 | ||||||||||
Performing |
||||||||||||
Modified to interest only |
$ | 1,812 | $ | 699 | $ | 839 | ||||||
Term modification, at a market rate |
75,455 | 87,920 | 91,039 | |||||||||
Term modification, below market rate |
8,797 | 10,215 | 10,254 | |||||||||
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Total performing |
$ | 86,064 | $ | 98,834 | $ | 102,132 | ||||||
Nonperforming |
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Modified to interest only |
$ | 649 | $ | 1,190 | $ | 658 | ||||||
Term modification, at a market rate |
4,290 | 3,660 | 4,187 | |||||||||
Term modification, below market rate |
8,804 | 8,954 | 9,398 | |||||||||
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Total nonperforming |
$ | 13,743 | $ | 13,804 | $ | 14,243 | ||||||
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Total performing & nonperforming |
$ | 99,807 | $ | 112,638 | $ | 116,375 | ||||||
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NONINTEREST INCOME
On a linked quarter basis, noninterest income increased $95,000, or 0.8%, to $11.8 million from $11.7 million in the fourth quarter. During the first quarter, the Company incurred approximately $1.0 million lower losses on disposal of Bank owned property, primarily related to the Companys recorded loss of $351,000 on disposal of bank premises and incurred losses on sales of OREO of $737,000 in the prior quarter. Also during the prior quarter, the Company recorded gains on sales of investment securities of $430,000. Gains on sales of mortgage loans decreased $412,000, or 7.2%, and were driven by compressed loan margins related to refinance volume. Excluding sales of Bank owned real estate, property, mortgage segment operations, and securities transactions, noninterest income decreased $95,000 or 1.4%.
For the quarter ended March 31, 2012, noninterest income increased $1.3 million, or 12.1%, to $11.8 million from $10.5 million in the prior years same quarter. Service charges on deposit accounts and other account fees increased $558,000, related to higher VISA interchange fee income, overdraft and return check charges, letter of credit fees, and ATM charges. Gains on sales of mortgage loans increased $328,000, or 6.6%, due to higher origination volume. During the first quarter 2011, the Company recorded losses on sales of OREO of $299,000 compared to $27,000 in the current quarter. Other operating income increased $133,000 primarily as a result of higher trust services income. Excluding the mortgage segment operations and prior year losses on sales of OREO, noninterest income increased $690,000 or 11.5%, from the same period a year ago.
For the Three Months Ended | ||||||||||||||||||||||||||||
03/31/12 | 12/31/11 | $ | % | 03/31/11 | $ | % | ||||||||||||||||||||||
Noninterest income: |
||||||||||||||||||||||||||||
Service charges on deposit accounts |
$ | 2,130 | $ | 2,258 | (128 | ) | -5.7 | % | $ | 2,058 | $ | 72 | 3.5 | % | ||||||||||||||
Other service charges, commissions and fees |
3,410 | 3,296 | 114 | 3.5 | % | 2,924 | 486 | 16.6 | % | |||||||||||||||||||
Gains on securities transactions, net |
(5 | ) | 430 | (435 | ) | -101.2 | % | (16 | ) | 11 | -68.8 | % | ||||||||||||||||
Gains on sales of loans |
5,296 | 5,708 | (412 | ) | -7.2 | % | 4,968 | 328 | 6.6 | % | ||||||||||||||||||
Gains (losses) on sales of other real estate owned and bank premises, net |
(58 | ) | (1,088 | ) | 1,030 | -94.7 | % | (299 | ) | 241 | -80.6 | % | ||||||||||||||||
Other operating income |
1,045 | 1,119 | (74 | ) | -6.6 | % | 912 | 133 | 14.6 | % | ||||||||||||||||||
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Total noninterest income |
$ | 11,818 | $ | 11,723 | $ | 95 | 0.8 | % | $ | 10,547 | $ | 1,271 | 12.1 | % | ||||||||||||||
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NONINTEREST EXPENSE
On a linked quarter basis, noninterest expense decreased $744,000, or 2.0%, to $35.6 million from $36.4 million when compared to the fourth quarter of 2011. Other operating expenses decreased $1.7 million, or 12.7%. Included in the decrease were lower OREO expenses of $575,000, primarily related to writedowns of $529,000 which occurred in the prior quarter, and lower marketing and advertising costs. Also adding to the decline were lower overdraft losses and favorable charge-off recoveries of $322,000 in the current quarter, and $230,000 lower FDIC insurance expense. Salaries and benefits expense increased $1.2 million
related to timing of annual merit increases, the effect of certain annual salary tax caps effective in the prior quarter, and severance payments to affected employees. Excluding the mortgage segment operations, noninterest expense decreased $1.0 million, or 3.2%, compared to the fourth quarter of the prior year.
For the quarter ended March 31, 2012, noninterest expense increased $842,000, or 2.4%, to $35.6 million from $34.8 million for the first quarter of 2011. Salaries and benefits expenses increased $1.9 million primarily related to increased salary costs of $1.3 million related to additional personnel in acquired branches, higher group insurance costs of $216,000 due to additional employees and cost increases, higher profit sharing of $143,000 based on higher net income, and other employee benefit expenses of $225,000 related to severance payments to affected employees. Other operating expenses decreased $1.0 million, or 7.9%. This expense decrease included lower FDIC insurance expense of $1.0 million based on lower assessment and rate, lower amortization expense on the acquired deposit portfolio of $345,000, and lack of conversion costs in the current quarter compared to $294,000 in the first quarter 2011. Partially offsetting these decreases were higher marketing and advertising costs of $305,000 for free checking account campaigns and higher account service costs of $196,000. Excluding the mortgage segment operations, noninterest expense increased $832,000, or 2.8%, compared to the first quarter of 2011.
For the Three Months Ended | ||||||||||||||||||||||||||||
03/31/12 | 12/31/11 | $ | % | 03/31/11 | $ | % | ||||||||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||||||
Salaries and benefits |
$ | 19,507 | $ | 18,342 | $ | 1,165 | 6.3 | % | $ | 17,654 | $ | 1,853 | 10.5 | % | ||||||||||||||
Occupancy expenses |
2,647 | 2,797 | (150 | ) | -5.4 | % | 2,754 | (107 | ) | -3.9 | % | |||||||||||||||||
Furniture and equipment expenses |
1,763 | 1,823 | (60 | ) | -3.3 | % | 1,662 | 101 | 6.1 | % | ||||||||||||||||||
Other operating expenses |
11,692 | 13,390 | (1,698 | ) | -12.7 | % | 12,697 | (1,005 | ) | -7.9 | % | |||||||||||||||||
|
|
|
|
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|
|
|
|
|
|
|||||||||||||||||
Total noninterest expense |
$ | 35,609 | $ | 36,352 | $ | (744 | ) | -2.0 | % | $ | 34,767 | 842 | 2.4 | % | ||||||||||||||
Mortgage segment operations |
$ | (5,232 | ) | $ | (4,969 | ) | $ | (264 | ) | 5.3 | % | $ | (4,928 | ) | $ | (304 | ) | 6.2 | % | |||||||||
Acquisition and conversion costs |
| | | | (294 | ) | 294 | -100.1 | % | |||||||||||||||||||
Other non-recurring costs |
| | | | | | | |||||||||||||||||||||
Intercompany eliminations |
117 | 117 | | 0.0 | % | 117 | | 0.0 | % | |||||||||||||||||||
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|
|
|||||||||||||||||||
$ | 30,494 | $ | 31,501 | $ | (1,008 | ) | -3.2 | % | $ | 29,662 | $ | 832 | 2.8 | % | ||||||||||||||
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BALANCE SHEET
At March 31, 2012, total cash and cash equivalents were $111.2 million, an increase of $14.5 million from December 31, 2011, and an increase of $26.4 million from March 31, 2011. During the fourth quarter, the Company paid the Treasury $35.7 million to redeem the Preferred Stock issued to the Treasury and assumed in the FMB acquisition. At March 31, 2012, investment in securities increased $60.1 million when compared to prior years first quarter. At March 31, 2012, net loans were $2.8 billion, an increase of $22.4 million from the prior quarter, and an increase of $35.0 million from March 31, 2011. Mortgage loans held for sale of $73.6 million decreased by $1.2 million, virtually unchanged from the prior quarter, and an increase of $23.0 million from March 31, 2011. At March 31, 2012, total assets were $3.9 billion, an increase of $40.7 million compared to the fourth quarter, and an increase of $135.1 million from $3.8 billion at March 31, 2011.
For three months ended March 31, 2012, total deposits grew $40.6 million, or 1.3%, when compared to December 31, 2011, and grew $149.1 million, or 4.9%, from March 31, 2011. Of this amount, interest- bearing deposits increased $10.3 million compared to the fourth quarter driven by higher volumes in NOW and savings accounts. Similarly, interest-bearing deposits increased $91.8 million from March 31, 2011, as money market, NOW accounts, and saving accounts balances increases were partially offset by runoff in certificates of deposit. Total borrowings, including repurchase agreements, decreased $9.8 million on a linked quarter basis and decreased $12.7 million from March 31, 2011 as the Company experienced lower demand for securities sold under agreements for repurchase. The Companys equity to assets ratio was 10.79% and 11.42% at March 31, 2012 and 2011, respectively. The decrease in the equity to assets ratio was due to the Companys redemption of the preferred stock described above. The Companys tangible common equity to tangible assets ratio was 8.97% and 8.51% at March 31, 2012 and 2011, respectively.
MORTGAGE SEGMENT INFORMATION
On a linked quarter basis, the mortgage segment net income for the first quarter decreased $420,000, or 64.2%, from $654,000 in the fourth quarter to $234,000, related to lower gains on sale of loans and additional salary and benefits expense. Gains on the sale of loans decreased $412,000, or 7.2%, due to compressed loan margins driven by refinance loan volume. During the quarter, the Company hired additional loan originators and support personnel who were formerly employed by a national mortgage company that exited the mortgage origination business. As a result, salary and benefit expenses increased $383,000. Originations decreased by $2.6 million from $186.6 million to $184.0 million, or 1.4%, from the fourth quarter. Refinanced loans represented 56.5% of the originations during the first quarter compared to 52.2% during the fourth quarter. Loan related expenses were $172,000, decreasing $126,000, or 42.3% from the prior quarter as a result of write offs of uncollectible appraisals in the previous quarter.
For the three months ended March 31, 2012, the mortgage segment net income decreased $94,000 from $328,000 to $234,000, or 28.7%, compared to the same period last year primarily due to narrower loan margins and higher salaries and benefits expense for additional personnel described above. Originations increased by $34.9 million from $149.1 million to $184.0 million, or 23.4%, from the first quarter last year. As a result, gains on the sale of loans increased $328,000, or 6.6%. Refinanced loans represented 56.5% of originations during the first quarter of 2012 compared to 38.1% during the same period a year ago. Salaries and benefits increased $253,000 primarily as a result of additional personnel. In addition, interest income declined by $179,000, or 36.8% due to an increase in the warehouse line of credit borrowing rate.
* * * * * * *
ABOUT UNION FIRST MARKET BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation is the holding company for Union First Market Bank, which has 98 branches and more than 160 ATMs throughout Virginia. Non-bank affiliates of the holding company include: Union Investment Services, Inc., which provides full brokerage services; Union Mortgage Group, Inc., which provides a full line of mortgage products, and Union Insurance Group, LLC, which offers various lines of insurance products. Union First Market Bank also owns a non-controlling interest in Johnson Mortgage Company, L.L.C.
Additional information is available on the Companys website at http://investors.bankatunion.com. Shares of the Companys common stock are traded on the NASDAQ Global Select Market under the symbol UBSH.
FORWARD-LOOKING STATEMENTS
Certain statements in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise and are not statements of historical fact. Such statements are often characterized by the use of qualified words (and their derivatives) such as expect, believe, estimate, plan, project, anticipate, intend, will, or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Actual future results and trends
may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of and changes in: general economic and bank industry conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, changes in the stock and bond markets, accounting standards or interpretations of existing standards, mergers and acquisitions, technology, and consumer spending and savings habits. More information is available on the Companys website, http://investors.bankatunion.com and on the Securities and Exchange Commissions website, www.sec.gov. The information on the Companys website is not a part of this press release. The Company does not intend or assume any obligation to update or revise any forward-looking statements that may be made from time to time by or on behalf of the Company.
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS
(in thousands, except share data)
Three Months Ended | ||||||||||||
03/31/12 | 12/31/11 | 03/31/11 | ||||||||||
Results of Operations |
||||||||||||
Interest and dividend income |
$ | 45,874 | $ | 46,319 | $ | 47,392 | ||||||
Interest expense |
7,527 | 7,828 | 8,592 | |||||||||
|
|
|
|
|
|
|||||||
Net interest income |
38,347 | 38,491 | 38,800 | |||||||||
Provision for loan losses |
3,500 | 2,400 | 6,300 | |||||||||
|
|
|
|
|
|
|||||||
Net interest income after provision for loan losses |
34,847 | 36,091 | 32,500 | |||||||||
Noninterest income |
11,818 | 11,723 | 10,547 | |||||||||
Noninterest expenses |
35,609 | 36,352 | 34,767 | |||||||||
|
|
|
|
|
|
|||||||
Income before income taxes |
11,056 | 11,462 | 8,280 | |||||||||
Income tax expense |
3,133 | 3,102 | 2,086 | |||||||||
|
|
|
|
|
|
|||||||
Net income |
$ | 7,923 | $ | 8,360 | $ | 6,194 | ||||||
|
|
|
|
|
|
|||||||
Interest earned on loans (FTE) |
$ | 40,690 | $ | 41,584 | $ | 42,157 | ||||||
Interest earned on securities (FTE) |
6,206 | 5,734 | 6,328 | |||||||||
Interest earned on earning assets (FTE) |
46,919 | 47,386 | 48,490 | |||||||||
Net interest income (FTE) |
39,391 | 39,558 | 39,899 | |||||||||
Interest expense on certificates of deposit |
4,029 | 4,183 | 4,916 | |||||||||
Interest expense on interest-bearing deposits |
5,335 | 5,572 | 6,683 | |||||||||
Core deposit intangible amortization |
1,310 | 1,448 | 1,655 | |||||||||
Net income - community bank segment |
$ | 7,689 | $ | 7,707 | $ | 5,865 | ||||||
Net income - mortgage segment |
234 | 654 | 328 | |||||||||
Key Ratios |
||||||||||||
Return on average assets (ROA) |
0.82 | % | 0.84 | % | 0.66 | % | ||||||
Return on average equity (ROE) |
7.51 | % | 7.49 | % | 5.81 | % | ||||||
Efficiency ratio |
70.98 | % | 72.39 | % | 70.45 | % | ||||||
Efficiency ratio - community bank segment |
68.26 | % | 71.08 | % | 68.07 | % | ||||||
Net interest margin (FTE) |
4.44 | % | 4.37 | % | 4.68 | % | ||||||
Net interest margin, core (FTE)1 |
4.28 | % | 4.20 | % | 4.47 | % | ||||||
Yields on earning assets (FTE) |
5.27 | % | 5.23 | % | 5.68 | % | ||||||
Cost of interest-bearing liabilities (FTE) |
1.04 | % | 1.07 | % | 1.22 | % | ||||||
Noninterest expense less noninterest income / average assets |
2.45 | % | 2.49 | % | 2.58 | % | ||||||
Capital Ratios |
||||||||||||
Tier 1 risk-based capital ratio |
12.85 | % | 12.85 | % | 13.37 | % | ||||||
Total risk-based capital ratio |
14.50 | % | 14.51 | % | 15.12 | % | ||||||
Leverage ratio (Tier 1 capital to average assets) |
10.34 | % | 10.14 | % | 10.85 | % | ||||||
Equity to total assets |
10.79 | % | 10.79 | % | 11.42 | % | ||||||
Tangible common equity to tangible assets |
8.97 | % | 8.91 | % | 8.51 | % | ||||||
Per Share Data |
||||||||||||
Earnings per common share, basic |
$ | 0.31 | $ | 0.28 | $ | 0.22 | ||||||
Earnings per common share, diluted |
0.31 | 0.28 | 0.22 | |||||||||
Cash dividends paid per common share |
0.07 | 0.07 | 0.07 | |||||||||
Market value per share |
14.00 | 13.29 | 11.25 | |||||||||
Book value per common share |
16.48 | 16.17 | 15.43 | |||||||||
Tangible book value per common share |
13.42 | 13.08 | 12.22 | |||||||||
Price to earnings ratio, diluted |
11.41 | 11.96 | 12.67 | |||||||||
Price to book value per common share ratio |
0.85 | 0.82 | 0.73 | |||||||||
Price to tangible common share ratio |
1.04 | 1.02 | 0.92 | |||||||||
Weighted average common shares outstanding, basic |
25,856,916 | 26,011,465 | 25,958,121 | |||||||||
Weighted average common shares outstanding, diluted |
25,879,158 | 26,036,922 | 25,980,698 | |||||||||
Common shares outstanding at end of period |
25,944,530 | 26,134,830 | 26,034,989 |
Three Months Ended | ||||||||||||
03/31/12 | 12/31/11 | 03/31/11 | ||||||||||
Financial Condition |
||||||||||||
Assets |
$ | 3,947,799 | $ | 3,907,087 | $ | 3,812,700 | ||||||
Loans, net of unearned income |
2,841,758 | 2,818,583 | 2,806,928 | |||||||||
Earning Assets |
3,606,637 | 3,561,106 | 3,470,309 | |||||||||
Goodwill |
59,400 | 59,400 | 57,567 | |||||||||
Core deposit intangibles, net |
19,403 | 20,714 | 25,171 | |||||||||
Deposits |
3,215,707 | 3,175,105 | 3,066,616 | |||||||||
Stockholders equity |
426,104 | 421,639 | 435,489 | |||||||||
Tangible common equity |
346,968 | 341,092 | 317,536 | |||||||||
Averages |
||||||||||||
Assets |
$ | 3,903,758 | $ | 3,929,529 | $ | 3,807,960 | ||||||
Loans, net of unearned income |
2,829,881 | 2,804,500 | 2,812,412 | |||||||||
Loans held for sale |
67,906 | 68,587 | 54,152 | |||||||||
Securities |
642,351 | 619,228 | 577,440 | |||||||||
Earning assets |
3,578,513 | 3,591,739 | 3,459,834 | |||||||||
Deposits |
3,167,652 | 3,156,596 | 3,053,858 | |||||||||
Certificates of deposit |
1,138,100 | 1,158,561 | 1,221,100 | |||||||||
Interest-bearing deposits |
2,633,059 | 2,617,459 | 2,566,994 | |||||||||
Borrowings |
275,763 | 289,299 | 291,412 | |||||||||
Interest-bearing liabilities |
2,908,822 | 2,906,758 | 2,858,406 | |||||||||
Stockholders equity |
424,289 | 442,580 | 432,407 | |||||||||
Tangible common equity |
344,447 | 336,076 | 313,617 | |||||||||
Asset Quality |
||||||||||||
Allowance for Loan Losses (ALLL) |
||||||||||||
Beginning balance |
$ | 39,470 | $ | 41,290 | $ | 38,406 | ||||||
Add: Recoveries |
341 | 569 | 373 | |||||||||
Less: Charge-offs |
3,107 | 4,789 | 4,680 | |||||||||
Add: Provision for loan losses |
3,500 | 2,400 | 6,300 | |||||||||
|
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|
|||||||
Ending balance |
$ | 40,204 | $ | 39,470 | $ | 40,399 | ||||||
|
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|
|||||||
ALLL / total outstanding loans |
1.41 | % | 1.40 | % | 1.44 | % | ||||||
ALLL / total outstanding loans, adjusted for acquired2 |
1.77 | % | 1.83 | % | 1.96 | % | ||||||
Net charge-offs / total outstanding loans |
0.02 | % | 0.59 | % | 0.62 | % | ||||||
Nonperforming Assets |
||||||||||||
Commercial |
$ | 39,256 | $ | 42,174 | $ | 59,060 | ||||||
Consumer |
3,135 | 2,660 | 3,582 | |||||||||
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|
|
|
|
|
|||||||
Nonaccrual loans |
42,391 | 44,834 | 62,642 | |||||||||
Other real estate owned |
37,663 | 32,263 | 38,674 | |||||||||
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|
|
|
|
|||||||
Total nonperforming assets (NPAs) |
80,054 | 77,097 | 101,316 | |||||||||
|
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|
|
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|
|||||||
Commercial |
4,435 | 12,865 | 2,334 | |||||||||
Consumer |
7,832 | 7,047 | 8,513 | |||||||||
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|
|
|||||||
Loans ³ 90 days and still accruing |
12,267 | 19,912 | 10,847 | |||||||||
|
|
|
|
|
|
|||||||
Total nonperforming assets and loans ³ 90 days |
$ | 92,321 | $ | 97,009 | $ | 112,163 | ||||||
|
|
|
|
|
|
|||||||
NPAs / total outstanding loans |
2.82 | % | 2.74 | % | 3.61 | % | ||||||
NPAs / total assets |
2.03 | % | 1.97 | % | 2.66 | % | ||||||
ALLL / nonperforming loans |
94.84 | % | 88.04 | % | 64.49 | % |
Three Months Ended | ||||||||||||
03/31/12 | 12/31/11 | 03/31/11 | ||||||||||
Past Due Detail |
||||||||||||
Commercial |
3,693 | 1,468 | 3,590 | |||||||||
Consumer |
4,801 | 2,797 | 4,954 | |||||||||
|
|
|
|
|
|
|||||||
Loans 60-89 days past due |
$ | 8,494 | $ | 4,265 | $ | 8,544 | ||||||
Commercial |
8,829 | 2,184 | 9,683 | |||||||||
Consumer |
11,449 | 12,934 | 13,593 | |||||||||
|
|
|
|
|
|
|||||||
Loans 30-59 days past due |
$ | 20,278 | $ | 15,118 | $ | 23,276 | ||||||
Commercial |
7,071 | 8,828 | 7,694 | |||||||||
Consumer |
1,069 | 1,069 | 1,099 | |||||||||
|
|
|
|
|
|
|||||||
Purchased impaired |
$ | 8,140 | $ | 9,897 | $ | 8,793 | ||||||
Other Data |
||||||||||||
Mortgage loan originations |
$ | 183,975 | $ | 186,559 | $ | 149,125 | ||||||
% of originations that are refinances |
56.50 | % | 52.20 | % | 38.10 | % | ||||||
End of period full-time employees |
1,060 | 1,045 | 1,019 | |||||||||
Number of full-service branches |
98 | 99 | 91 | |||||||||
Number of full automatic transaction machines (ATMs) |
161 | 165 | 160 | |||||||||
Alternative Performance Measures |
||||||||||||
Cash basis earnings3 |
||||||||||||
Net income |
$ | 7,923 | $ | 8,360 | $ | 6,194 | ||||||
Plus: Core deposit intangible amortization, net of tax |
852 | 941 | 1,076 | |||||||||
Plus: Trademark intangible amortization, net of tax |
65 | 65 | 65 | |||||||||
|
|
|
|
|
|
|||||||
Cash basis operating earnings |
$ | 8,840 | $ | 9,366 | $ | 7,335 | ||||||
|
|
|
|
|
|
|||||||
Average assets |
$ | 3,903,758 | $ | 3,929,529 | $ | 3,807,960 | ||||||
Less: Average trademark intangible |
383 | 482 | 782 | |||||||||
Less: Average goodwill |
59,400 | 59,400 | 57,566 | |||||||||
Less: Average core deposit intangibles |
20,059 | 21,408 | 25,994 | |||||||||
|
|
|
|
|
|
|||||||
Average tangible assets |
$ | 3,823,915 | $ | 3,848,240 | $ | 3,723,618 | ||||||
|
|
|
|
|
|
|||||||
Average equity |
$ | 424,289 | $ | 442,580 | $ | 432,407 | ||||||
Less: Average trademark intangible |
383 | 482 | 782 | |||||||||
Less: Average goodwill |
59,400 | 59,400 | 57,566 | |||||||||
Less: Average core deposit intangibles |
20,059 | 21,408 | 25,994 | |||||||||
Less: Average preferred equity |
| 25,215 | 34,448 | |||||||||
|
|
|
|
|
|
|||||||
Average tangible common equity |
$ | 344,446 | $ | 336,076 | $ | 313,617 | ||||||
|
|
|
|
|
|
|||||||
Cash basis operating earnings per share, diluted |
$ | 0.34 | $ | 0.36 | $ | 0.28 | ||||||
Cash basis operating return on average tangible assets |
0.93 | % | 0.97 | % | 0.80 | % | ||||||
Cash basis operating return on average tangible common equity |
10.32 | % | 11.06 | % | 9.49 | % |
(1) | The core net interest margin, fully taxable equivalent (FTE) excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income. |
(2) | The allowance for loan losses, adjusted for acquired loans (non-GAAP) ratio includes the allowance for loan losses to the total loan portfolio less acquired loans without additional credit deterioration above the original credit mark (which have been provided for in the ALLL subsequent to acquisition). GAAP requires the acquired allowance for loan losses not be carried over in an acquisition or merger. We believe the presentation of the allowance for loan losses, adjusted for acquired loans ratio is useful to investors because the acquired loans were purchased at a market discount with no allowance for loan losses carried over to the Company. Therefore, acquired loans without additional credit deterioration above the original credit mark are adjusted out of the loan balance denominator. |
Gross Loans |
$ | 2,841,758 | $ | 2,818,583 | $ | 2,806,928 | ||||||
less acquired loans without additional credit deterioration |
(571,580 | ) | (661,531 | ) | (743,308 | ) | ||||||
|
|
|
|
|
|
|||||||
Gross Loans, adjusted for acquired |
2,270,178 | 2,157,052 | 2,063,620 | |||||||||
Allowance for loan losses |
40,204 | 39,470 | 40,399 | |||||||||
ALLL / gross loans, adjusted for acquired |
1.77 | % | 1.83 | % | 1.96 | % |
(3) | As a supplement to GAAP, management also reviews operating performance based on its cash basis earnings to fully analyze its core business. Cash basis earnings exclude amortization expense attributable to intangibles (goodwill and core deposit intangibles) that do not qualify as regulatory capital. Financial ratios based on cash basis earnings exclude the amortization of nonqualifying intangible assets from earnings and the unamortized balance of nonqualifying intangibles from assets and equity. |
In managements opinion, cash basis earnings are useful to investors because by excluding non-operating adjustments they allow investors to see clearly the economic impact on the results of Company. These non-GAAP disclosures should not, however, be viewed in direct comparison with non-GAAP measures of other companies.
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
||||||||||
(Unaudited) | (Audited) | (Unaudited) | ||||||||||
ASSETS |
||||||||||||
Cash and cash equivalents: |
||||||||||||
Cash and due from banks |
$ | 62,345 | $ | 69,786 | $ | 54,403 | ||||||
Interest-bearing deposits in other banks |
48,504 | 26,556 | 30,050 | |||||||||
Money market investments |
179 | 155 | 178 | |||||||||
Federal funds sold |
155 | 162 | 175 | |||||||||
|
|
|
|
|
|
|||||||
Total cash and cash equivalents |
111,183 | 96,659 | 84,806 | |||||||||
|
|
|
|
|
|
|||||||
Securities available for sale, at fair value |
642,466 | 640,827 | 582,394 | |||||||||
|
|
|
|
|
|
|||||||
Loans held for sale |
73,575 | 74,823 | 50,584 | |||||||||
|
|
|
|
|
|
|||||||
Loans, net of unearned income |
2,841,758 | 2,818,583 | 2,806,928 | |||||||||
Less allowance for loan losses |
40,204 | 39,470 | 40,399 | |||||||||
|
|
|
|
|
|
|||||||
Net loans |
2,801,554 | 2,779,113 | 2,766,529 | |||||||||
|
|
|
|
|
|
|||||||
Bank premises and equipment, net |
90,986 | 90,589 | 90,594 | |||||||||
Other real estate owned |
37,663 | 32,263 | 38,674 | |||||||||
Core deposit intangibles, net |
19,403 | 20,714 | 25,171 | |||||||||
Goodwill |
59,400 | 59,400 | 57,567 | |||||||||
Other assets |
111,569 | 112,699 | 116,381 | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
$ | 3,947,799 | $ | 3,907,087 | $ | 3,812,700 | ||||||
|
|
|
|
|
|
|||||||
LIABILITIES |
||||||||||||
Noninterest-bearing demand deposits |
$ | 564,811 | $ | 534,535 | $ | 507,565 | ||||||
Interest-bearing deposits: |
||||||||||||
NOW accounts |
434,625 | 412,605 | 381,887 | |||||||||
Money market accounts |
904,272 | 904,893 | 827,076 | |||||||||
Savings accounts |
194,473 | 179,157 | 174,244 | |||||||||
Time deposits of $100,000 and over |
516,829 | 511,614 | 521,940 | |||||||||
Other time deposits |
600,697 | 632,301 | 653,904 | |||||||||
|
|
|
|
|
|
|||||||
Total interest-bearing deposits |
2,650,896 | 2,640,570 | 2,559,051 | |||||||||
|
|
|
|
|
|
|||||||
Total deposits |
3,215,707 | 3,175,105 | 3,066,616 | |||||||||
|
|
|
|
|
|
|||||||
Securities sold under agreements to repurchase |
53,043 | 62,995 | 66,225 | |||||||||
Trust preferred capital notes |
60,310 | 60,310 | 60,310 | |||||||||
Long-term borrowings |
155,503 | 155,381 | 155,014 | |||||||||
Other liabilities |
37,132 | 31,657 | 29,046 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
3,521,695 | 3,485,448 | 3,377,211 | |||||||||
|
|
|
|
|
|
|||||||
Commitments and contingencies |
||||||||||||
STOCKHOLDERS EQUITY |
||||||||||||
Preferred stock, $10.00 par value, $1,000 liquidation value, shares authorized 500,000; issued and outstanding, 35,595 shares at March 31, 2011 and zero at December 31, 2011 and March 31, 2012. |
| | 35,595 | |||||||||
Common stock, $1.33 par value, shares authorized 36,000,000; issued and outstanding, 25,944,530 shares, 26,134,830 shares, and 26,034,989 shares, respectively. |
34,396 | 34,672 | 34,559 | |||||||||
Surplus |
185,263 | 187,493 | 185,962 | |||||||||
Retained earnings |
195,933 | 189,824 | 173,655 | |||||||||
Discount on preferred stock |
| | (1,113 | ) | ||||||||
Accumulated other comprehensive income |
10,512 | 9,650 | 6,831 | |||||||||
|
|
|
|
|
|
|||||||
Total stockholders equity |
426,104 | 421,639 | 435,489 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities and stockholders equity |
$ | 3,947,799 | $ | 3,907,087 | $ | 3,812,700 | ||||||
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
Three Months Ended March 31 |
||||||||
2012 | 2011 | |||||||
(Unaudited) | (Unaudited) | |||||||
Interest and dividend income: |
||||||||
Interest and fees on loans |
$ | 40,608 | $ | 42,003 | ||||
Interest on deposits in other banks |
24 | 5 | ||||||
Interest and dividends on securities: |
||||||||
Taxable |
3,454 | 3,630 | ||||||
Nontaxable |
1,788 | 1,754 | ||||||
|
|
|
|
|||||
Total interest and dividend income |
45,874 | 47,392 | ||||||
|
|
|
|
|||||
Interest expense: |
||||||||
Interest on deposits |
5,335 | 6,684 | ||||||
Interest on Federal funds purchased |
| 7 | ||||||
Interest on short-term borrowings |
404 | 161 | ||||||
Interest on long-term borrowings |
1,788 | 1,740 | ||||||
|
|
|
|
|||||
Total interest expense |
7,527 | 8,592 | ||||||
|
|
|
|
|||||
Net interest income |
38,347 | 38,800 | ||||||
Provision for loan losses |
3,500 | 6,300 | ||||||
|
|
|
|
|||||
Net interest income after provision for loan losses |
34,847 | 32,500 | ||||||
|
|
|
|
|||||
Noninterest income: |
||||||||
Service charges on deposit accounts |
2,130 | 2,058 | ||||||
Other service charges, commissions and fees |
3,410 | 2,924 | ||||||
Gains on securities transactions, net |
(5 | ) | (16 | ) | ||||
Gains on sales of loans |
5,296 | 4,968 | ||||||
Gains (losses) on sales of other real estate and bank premises, net |
(58 | ) | (299 | ) | ||||
Other operating income |
1,045 | 912 | ||||||
|
|
|
|
|||||
Total noninterest income |
11,818 | 10,547 | ||||||
|
|
|
|
|||||
Noninterest expenses: |
||||||||
Salaries and benefits |
19,507 | 17,654 | ||||||
Occupancy expenses |
2,647 | 2,754 | ||||||
Furniture and equipment expenses |
1,763 | 1,662 | ||||||
Other operating expenses |
11,692 | 12,697 | ||||||
|
|
|
|
|||||
Total noninterest expenses |
35,609 | 34,767 | ||||||
|
|
|
|
|||||
Income before income taxes |
11,056 | 8,280 | ||||||
Income tax expense |
3,133 | 2,086 | ||||||
|
|
|
|
|||||
Net income |
$ | 7,923 | $ | 6,194 | ||||
Dividends paid and accumulated on preferred stock |
| 462 | ||||||
Accretion of discount on preferred stock |
| 64 | ||||||
|
|
|
|
|||||
Net income available to common shareholders |
$ | 7,923 | $ | 5,668 | ||||
|
|
|
|
|||||
Earnings per common share, basic |
$ | 0.31 | $ | 0.22 | ||||
|
|
|
|
|||||
Earnings per common share, diluted |
$ | 0.31 | $ | 0.22 | ||||
|
|
|
|
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
2012 | 2011 | 2010 | ||||||||||||||||||||||||||||||||||
Average Balance |
Interest Income / Expense |
Yield / Rate (1) |
Average Balance |
Interest Income / Expense |
Yield / Rate (1) |
Average Balance |
Interest Income / Expense |
Yield / Rate (1) |
||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||||||
Securities: |
||||||||||||||||||||||||||||||||||||
Taxable |
$ | 470,052 | $ | 3,456 | 2.96 | % | $ | 412,512 | $ | 3,630 | 3.57 | % | $ | 378,494 | $ | 3,539 | 3.79 | % | ||||||||||||||||||
Tax-exempt |
172,299 | 2,751 | 6.42 | % | 164,928 | 2,698 | 6.63 | % | 119,602 | 2,100 | 7.12 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total securities (2) |
642,351 | 6,206 | 3.89 | % | 577,440 | 6,328 | 4.44 | % | 498,096 | 5,639 | 4.59 | % | ||||||||||||||||||||||||
Loans, net (3) (4) |
2,829,881 | 40,091 | 5.70 | % | 2,812,412 | 41,592 | 6.00 | % | 2,515,652 | 38,151 | 6.15 | % | ||||||||||||||||||||||||
Loans held for sale |
67,906 | 599 | 3.55 | % | 54,152 | 565 | 4.23 | % | 44,607 | 446 | 4.05 | % | ||||||||||||||||||||||||
Federal funds sold |
413 | 0 | 0.24 | % | 266 | | 0.32 | % | 28,205 | 12 | 0.17 | % | ||||||||||||||||||||||||
Money market investments |
39 | | 0.00 | % | 161 | | 0.00 | % | 112 | | 0.00 | % | ||||||||||||||||||||||||
Interest-bearing deposits in other banks |
37,923 | 22 | 0.23 | % | 15,403 | 5 | 0.14 | % | 14,694 | 8 | 0.22 | % | ||||||||||||||||||||||||
Other interest-bearing deposits |
| | 0.00 | % | | | 0.00 | % | 2,598 | | 0.00 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total earning assets |
3,578,513 | 46,919 | 5.27 | % | 3,459,834 | 48,490 | 5.68 | % | 3,103,964 | 44,256 | 5.78 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Allowance for loan losses |
(40,022 | ) | (38,765 | ) | (31,579 | ) | ||||||||||||||||||||||||||||||
Total non-earning assets |
365,267 | 386,891 | 368,028 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total assets |
$ | 3,903,758 | $ | 3,807,960 | $ | 3,440,413 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Liabilities and Stockholders Equity: |
||||||||||||||||||||||||||||||||||||
Interest-bearing deposits: |
||||||||||||||||||||||||||||||||||||
Checking |
$ | 410,070 | 132 | 0.13 | % | $ | 374,756 | 159 | 0.17 | % | $ | 303,824 | 177 | 0.24 | % | |||||||||||||||||||||
Money market savings |
898,539 | 997 | 0.45 | % | 810,573 | 1,505 | 0.75 | % | 634,090 | 1,476 | 0.94 | % | ||||||||||||||||||||||||
Regular savings |
186,351 | 178 | 0.38 | % | 160,565 | 103 | 0.26 | % | 147,045 | 189 | 0.52 | % | ||||||||||||||||||||||||
Certificates of deposit: (5) |
||||||||||||||||||||||||||||||||||||
$100,000 and over |
555,042 | 2,110 | 1.53 | % | 600,932 | 2,482 | 1.68 | % | 583,442 | 2,854 | 1.98 | % | ||||||||||||||||||||||||
Under $100,000 |
583,058 | 1,919 | 1.32 | % | 620,168 | 2,434 | 1.59 | % | 588,981 | 2,568 | 1.77 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total interest-bearing deposits |
2,633,059 | 5,335 | 0.82 | % | 2,566,994 | 6,683 | 1.06 | % | 2,257,382 | 7,264 | 1.30 | % | ||||||||||||||||||||||||
Other borrowings (6) |
275,763 | 2,193 | 3.20 | % | 291,412 | 1,908 | 2.66 | % | 364,433 | 1,895 | 2.11 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total interest-bearing liabilities |
2,908,822 | 7,528 | 1.04 | % | 2,858,406 | 8,591 | 1.22 | % | 2,621,815 | 9,159 | 1.42 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Noninterest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||
Demand deposits |
534,593 | 486,864 | 401,971 | |||||||||||||||||||||||||||||||||
Other liabilities |
36,055 | 30,283 | 26,901 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total liabilities |
3,479,469 | 3,375,553 | 3,050,687 | |||||||||||||||||||||||||||||||||
Stockholders equity |
424,289 | 432,407 | 389,726 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 3,903,758 | $ | 3,807,960 | $ | 3,440,413 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Net interest income |
$ | 39,391 | $ | 39,899 | $ | 35,097 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Interest rate spread (7) |
4.23 | % | 4.46 | % | 4.36 | % | ||||||||||||||||||||||||||||||
Interest expense as a percent of average earning assets |
0.85 | % | 1.01 | % | 1.20 | % | ||||||||||||||||||||||||||||||
Net interest margin (8) |
4.44 | % | 4.68 | % | 4.59 | % |
(1) | Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above. |
(2) | Interest income on securities includes $62 thousand in accretion of the fair market value adjustments related to the acquisition of FMB. Remaining estimated accretion for 2012 is $139 thousand. |
(3) | Nonaccrual loans are included in average loans outstanding. |
(4) | Interest income on loans includes $1.3 million in accretion of the fair market value adjustments related to the acquisition of FMB. Remaining estimated accretion for 2012 is $3.0 million. |
(5) | Interest expense on certificates of deposits includes $118 thousand in accretion of the fair market value adjustments related to the acquisition of FMB. Remaining estimated accretion for 2012 is $115 thousand. |
(6) | Interest expense on borrowings includes $122 thousand in amortization of the fair market value adjustments related to the acquisition of FMB. Remaining estimated amortization for 2012 is $367 thousand. |
(7) | Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%. |
(8) | Core net interest margin excludes purchase accounting adjustments and was 4.28% for the quarter ending 3/31/12. |
Exhibit 99.2
Union First Market Bankshares Declares Quarterly Cash Dividend
Richmond, Va., April 25, 2012 Union First Market Bankshares Corporation (NASDAQ: UBSH) has declared a quarterly dividend of $0.08 per share. The dividend amount is a one cent increase from the prior quarter dividend.
First quarter net income available to common shareholders was $7.92 million or $0.31 per fully diluted share, compared to $8.36 million or $0.28 per share, in the fourth quarter and $6.19 million or $0.22 per share, for the first quarter last year. Net income available to common shareholders in the prior year included a deduction for preferred stock dividends and discount accretion.
Based on the stocks closing price of $13.47 on April 18, 2012, the dividend yield is 2.38%. The dividend is payable on May 31, 2012 to shareholders of record as of May 18, 2012.
ABOUT UNION FIRST MARKET BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation is the holding company for Union First Market Bank, which has 98 branches and more than 160 ATMs throughout Virginia. Non-bank affiliates of the holding company include: Union Investment Services, Inc., which provides full brokerage services; Union Mortgage Group, Inc., which provides a full line of mortgage products; and Union Insurance Group, LLC, which offers various lines of insurance products. Union First Market Bank also owns a non-controlling interest in Johnson Mortgage Company, L.L.C.
Additional information is available on the Companys website at http://investors.bankatunion.com. The shares of the Company are traded on the NASDAQ Global Select Market under the symbol UBSH.
###
Contact: Bill Cimino (804) 448-0937, VP and Director of Corporate Communications