Union Bankshares Reports Third Quarter Results

RICHMOND, Va., Oct. 17, 2018 (GLOBE NEWSWIRE) -- Union Bankshares Corporation (the “Company” or “Union”) (Nasdaq: UBSH) today reported net income of $38.2 million and earnings per share of $0.58 for its third quarter ended September 30, 2018.  Net operating earnings(1) were $39.3 million and operating earnings per share(1) was $0.60 for its third quarter ended September 30, 2018; these operating results exclude $1.1 million in after-tax merger-related costs but include losses from discontinued operations of $565,000.

Net income was $102.2 million and earnings per share was $1.55 for the nine months ended September 30, 2018.  Net operating earnings(1) were $132.1 million and operating earnings per share(1) was $2.01 for the nine months ended September 30, 2018; these operating results exclude $29.9 million in after-tax merger-related costs but include losses from discontinued operations of $3.0 million.

Union made further progress on our stated priorities during the third quarter and we remain on track to deliver our top tier financial performance metrics in the fourth quarter of 2018,” said John C. Asbury, President and CEO of Union Bankshares Corporation.  “Loan growth increased in each month of the quarter as we are beginning to see the impact of our commercial and industrial banking efforts on the commercial loan portfolio.  Our commercial and industrial banking buildout is largely complete and our team is starting to gain traction in the market.  This bodes well for the fourth quarter and more importantly, for 2019 and beyond.

“After the quarter closed, we announced our agreement to acquire Access National Corporation, which is nearly a perfect fit with our previously stated M&A strategic and financial objectives.  We’re pleased with the enthusiasm about Access becoming a part of Union which substantially completes our Virginia franchise and irrefutably positions Union as Virginia’s bank.  While it has been less than two weeks from the announcement, we have already stood up our integration team and work has begun to ensure a smooth transition.  Having just completed the Xenith integration, this is a process we know well.  We will share more about the implications of this powerful addition to our targeted financial metrics and business strategy at our investor day scheduled in New York on November 14.

On October 5, 2018, the Company announced it has entered into a definitive merger agreement to acquire Access National Corporation (“Access”) in an all-stock transaction (the “Pending Merger”) that is expected to close in the first quarter of 2019.

Select highlights for the third quarter of 2018

  • Performance metrics - Changes in all metrics below were primarily related to the net gain on the sale of the Shore Premier Finance division in the second quarter of 2018.
    • Return on Average Assets (“ROA”) was 1.17% compared to 1.44% in the second quarter of 2018. Operating ROA(1) was 1.21% compared to 1.63% in the second quarter of 2018.
    • Return on Average Equity (“ROE”) was 8.06% compared to 10.28% in the second quarter of 2018. Operating ROE(1) was 8.30% compared to 11.69% in the second quarter of 2018.
    • Return on Average Tangible Common Equity (“ROTCE”)(1) was 13.73% compared to 17.74% in the second quarter of 2018. Operating ROTCE(1) was 14.14% compared to 20.19% in the second quarter of 2018.
    • Efficiency ratio increased to 60.7% compared to 57.2% in the second quarter of 2018 and the efficiency ratio (fully taxable equivalent (“FTE”))(1) increased to 59.7% compared to 56.5% in the second quarter of 2018.  Operating efficiency ratio (FTE)(1) increased to 58.6% compared to 51.0% in the second quarter of 2018.
  • Notable activity during the third quarter
    • On July 1, 2018, Old Dominion Capital Management, Inc., a subsidiary of Union Bank & Trust, completed its acquisition of Outfitter Advisors, Inc., a McLean, Virginia based investment advisory firm with approximately $400 million in assets under management and advisement.
    • The Company consolidated seven branches during the third quarter of 2018, which resulted in additional after-tax branch closure costs of approximately $375,000 that were recorded in the third quarter of 2018.
    • The Company incurred approximately $565,000 in after-tax costs related to executive management changes during the quarter.
    • On June 29, 2018, Union Bank & Trust entered into an agreement to sell substantially all of the assets and certain specific liabilities of its Shore Premier Finance division, consisting primarily of marine loans totaling $383.9 million, for a purchase price consisting of approximately $375.0 million in cash and 1,250,000 shares of the purchasing company's common stock. The initial estimated after-tax gain recorded in the second quarter of 2018 was $16.5 million, net of transaction and other related costs, which was subsequently reduced by $737,000 in the third quarter based on updated information obtained and wind-down costs incurred.

(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 third quarter of 2018, net interest income was $106.0 million, a decrease of $2.2 million from the second quarter of 2018.  Net interest income (FTE)(2) was $108.0 million in the third quarter of 2018, a decrease of $2.2 million from the second quarter of 2018. The decreases in both net interest income and net interest income (FTE) were primarily driven by lower acquisition accounting accretion during the three months ended September 30, 2018 compared to the three months ended June 30, 2018. The third quarter net interest margin decreased 3 basis points to 3.69% from 3.72% in the previous quarter, while the net interest margin (FTE)(2) decreased 3 basis points to 3.76% from 3.79% during the same periods.  The decreases in the net interest margin and net interest margin (FTE) were principally due to a 6 basis point increase in the cost of funds, partially offset by a 3 basis point increase in the yield on earnings assets, which was lower by 6 basis points due to the reduced level of earning asset accretion income recorded during the third quarter of 2018 compared to the prior quarter.

The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments.  During the third quarter of 2018, net accretion related to acquisition accounting decreased $2.0 million from the prior quarter to $3.9 million for the quarter ended September 30, 2018.  The second and third quarters of 2018 and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):

               
  Loan
Accretion
  Deposit
Accretion
  Borrowings
Amortization
  Total
For the quarter ended June 30, 2018 $ 5,324   $ 685   $ (104 )   $ 5,905  
For the quarter ended September 30, 2018   3,496     592     (143 )     3,945  
For the remaining three months of 2018 (estimated)   2,401     445     (161 )     2,685  
For the years ending (estimated):                          
2019   8,481     1,170     (660 )     8,991  
2020   6,880     284     (734 )     6,430  
2021   5,520     108     (805 )     4,823  
2022   4,157     21     (827 )     3,351  
2023   2,710         (850 )     1,860  
Thereafter   9,751         (11,633 )     (1,882 )
                           

(2) For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

ASSET QUALITY/LOAN LOSS PROVISION

Overview
During the third quarter of 2018, the Company experienced increases in nonperforming asset (“NPA”) balances from the prior quarter, primarily due to nonaccrual additions related to one credit relationship composed of construction loans.  Past due loan levels as a percentage of total loans held for investment at September 30, 2018 were higher than past due loan levels at June 30, 2018 and were down slightly from September 30, 2017.  Charge-off levels increased from the second quarter of 2018 and were primarily related to the consumer loan portfolio; as a result, the provision for loan losses increased from the second quarter of 2018.

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $94.7 million (net of fair value mark of $24.3 million) at September 30, 2018.

Nonperforming Assets
At September 30, 2018, NPAs totaled $34.9 million, an increase of $2.0 million, or 6.1%, from June 30, 2018 and an increase of $8.3 million, or 31.4%, from September 30, 2017.  NPAs as a percentage of total outstanding loans at September 30, 2018 was 0.37%, an increase of 2 basis points from 0.35% at June 30, 2018 and a decline of 2 basis points from 0.39% at September 30, 2017.  As the Company's NPAs have been at or near historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but do not have a significant impact on the Company's overall asset quality position.

The following table shows a summary of nonperforming asset balances at the quarter ended (dollars in thousands):

                   
  September 30,   June 30,   March 31,   December 31,   September 30,
  2018   2018   2018   2017   2017
Nonaccrual loans $ 28,110     $ 25,662     $ 25,138     $ 21,743     $ 20,122  
Foreclosed properties 6,800     7,241     8,079     5,253     6,449  
Total nonperforming assets $ 34,910     $ 32,903     $ 33,217     $ 26,996     $ 26,571  
                                       

The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):

                   
  September 30,   June 30,   March 31,   December 31,   September 30,
  2018   2018   2018   2017   2017
Beginning Balance $ 25,662     $ 25,138     $ 21,743     $ 20,122     $ 24,574  
Net customer payments (2,459 )   (2,651 )   (1,455 )   (768 )   (4,642 )
Additions 6,268     5,063     5,451     4,335     4,114  
Charge-offs (1,137 )   (539 )   (403 )   (1,305 )   (3,376 )
Loans returning to accruing status (70 )   (1,349 )   (182 )   (448 )    
Transfers to foreclosed property (154 )       (16 )   (193 )   (548 )
Ending Balance $ 28,110     $ 25,662     $ 25,138     $ 21,743     $ 20,122  
                                       

Of the nonaccrual additions in the third quarter of 2018, the majority related to one credit relationship, which consisted of construction loans.

The following table shows the activity in foreclosed properties for the quarter ended (dollars in thousands):

                   
  September 30,   June 30,   March 31,   December 31,   September 30,
  2018   2018   2018   2017   2017
Beginning Balance $ 7,241     $ 8,079     $ 5,253     $ 6,449     $ 6,828  
Additions of foreclosed property 165     283     44     325     621  
Acquisitions of foreclosed property (1)     (162 )   4,204          
Valuation adjustments (42 )   (383 )   (759 )   (1,046 )   (249 )
Proceeds from sales (889 )   (580 )   (684 )   (479 )   (648 )
Gains (losses) from sales 325     4     21     4     (103 )
Ending Balance $ 6,800     $ 7,241     $ 8,079     $ 5,253     $ 6,449  
(1) Includes subsequent measurement period adjustments.
                                       

Past Due Loans
Past due loans still accruing interest totaled $46.6 million, or 0.49% of total loans, at September 30, 2018 compared to $38.2 million, or 0.41% of total loans, at June 30, 2018 and $34.4 million, or 0.50% of total loans, at September 30, 2017.  Of the total past due loans still accruing interest, $9.5 million, or 0.10% of total loans, were loans past due 90 days or more at September 30, 2018, compared to $6.9 million, or 0.07% of total loans, at June 30, 2018 and $4.5 million, or 0.07% of total loans, at September 30, 2017.

Net Charge-offs
For the third quarter of 2018, net charge-offs were $3.2 million, or 0.13% of total average loans on an annualized basis, compared to $1.8 million, or 0.07%, for the prior quarter and $4.1 million, or 0.24%, for the same quarter last year.  The majority of net charge-offs in the third quarter of 2018 were related to consumer loans.

Provision for Loan Losses
The provision for loan losses for the third quarter of 2018 was $3.1 million, an increase of $440,000 compared to the previous quarter and an increase of $44,000 compared to the same quarter in 2017.  The increase in provision for loan losses from the second quarter of 2018 was primarily driven by higher levels of net charge-offs in the third quarter of 2018.

Allowance for Loan Losses (“ALL”)
The ALL at September 30, 2018 was consistent with the prior quarter at $41.3 million.  The ALL as a percentage of the total loan portfolio was 0.44% at both September 30, 2018 and June 30, 2018 and was 0.54% at September 30, 2017.  The year-over-year decline in the allowance ratio was primarily attributable to the acquisition of Xenith.  In acquisition accounting, there is no carryover of previously established allowance for loan losses.

The ratio of the ALL to nonaccrual loans was 146.9% at September 30, 2018, compared to 160.8% at June 30, 2018 and 184.7% at September 30, 2017.  The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on loans, net charge-off activity, loan growth, delinquency trends, and other credit risk factors that the Company considers important in assessing the adequacy of the allowance for loan losses.

NONINTEREST INCOME

Noninterest income decreased $20.7 million to $19.9 million for the quarter ended September 30, 2018 from $40.6 million in the prior quarter, primarily driven by the net gain on sale of the Shore Premier Finance division recognized during the second quarter of 2018.  The initial estimated gain recorded in the second quarter of 2018 was $20.9 million, which was subsequently reduced by $933,000 in the third quarter based on updated information obtained and wind-down costs incurred.  Excluding this gain and its subsequent adjustment from their respective quarters, noninterest income increased $1.1 million, or 5.7%, for the quarter ended September 30, 2018 when compared to the prior quarter.  Customer-related fee income increased $1.1 million, primarily due to the acquisition of Outfitter Advisors, Inc. as well as higher overdraft, letter of credit, and debit card interchange fees.

NONINTEREST EXPENSE

Noninterest expense decreased $8.8 million to $76.3 million for the quarter ended September 30, 2018 from $85.1 million in the prior quarter.  Excluding merger-related costs of $1.4 million and $8.3 million in the third and second quarters of 2018, respectively, operating noninterest expense(3) decreased $1.9 million, or 2.5%, to $74.9 million when compared to the second quarter of 2018.  The decrease in operating noninterest expense included a decline in salaries and benefits of $1.5 million, primarily due to planned synergies arising from the core system conversion from the Xenith acquisition that occurred in the second quarter, partially offset by increased incentive plan expenses of $408,000 recorded in the third quarter of 2018.  Other real estate owned (“OREO”) and credit-related expenses declined $670,000 related to higher gains on sales of property and lower valuation adjustments in the third quarter compared to the second quarter of 2018. Additionally, FDIC premiums and other insurance costs declined $519,000 compared to the second quarter of 2018.  Included in operating noninterest expense were branch closure costs of approximately $475,000 related to the consolidation of seven branches in the third quarter of 2018, $714,000 in costs related to executive management changes during the quarter, as well as operating losses of $463,000 related to a community development investment fund.

(3) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

INCOME TAXES

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law in December 2017.  The Company's preliminary estimate of the impact of the Tax Act is based on currently available information and interpretation of its provisions.  The actual results may differ from the current estimate due to, among other things, further guidance that may be issued by U.S. tax authorities or regulatory bodies and/or changes in interpretations and assumptions that the Company has made on a preliminary basis.   The Company's evaluation of the impact of the Tax Act is subject to refinement for up to one year after enactment.  No additional adjustments related to the Tax Act were recorded in the third quarter of 2018.

The effective tax rate for the three months ended September 30, 2018 was 15.9% compared to 19.0% for the three months ended June 30, 2018. The decrease in the effective tax rate was primarily due to tax-exempt income being a higher component of pre-tax income in the third quarter of 2018 compared to the second quarter of 2018.

BALANCE SHEET

At September 30, 2018, total assets were $13.4 billion, an increase of $305.6 million from June 30, 2018, primarily a result of increases in the investment securities portfolio and loan growth during the third quarter of 2018, partially offset by lower cash and cash equivalent balances.

At September 30, 2018, total investments were $2.3 billion, an increase of $519.6 million from June 30, 2018, primarily the result of reinvesting the proceeds received at the end of the second quarter from the sale of Shore Premier Finance loans and certain third party lending loans into the investment securities portfolio during the third quarter of 2018.

At September 30, 2018, loans held for investment (net of deferred fees and costs) were $9.4 billion, an increase of $121.3 million, or 5.2% (annualized), from June 30, 2018, while average loans decreased $511.9 million from the prior quarter.  Adjusted for the sale of the Shore Premier Finance loans and certain third party lending programs loans in the second quarter of 2018, average loans increased $66.8 million, or 2.9% (annualized), during the third quarter of 2018 compared to the prior quarter.

At September 30, 2018, total deposits were $9.8 billion, an increase of $37.4 million, or 1.5% (annualized), from June 30, 2018, while average deposits increased $158.3 million, or 6.6% (annualized), from the prior quarter.

The following table shows the Company's capital ratios at the quarters ended:

           
  September 30,   June 30,   September 30,
  2018   2018     2017
Common equity Tier 1 capital ratio (1) 9.92 %   9.80 %   9.40 %
Tier 1 capital ratio (1) 11.12 %   11.02 %   10.56 %
Total capital ratio (1) 12.97 %   12.89 %   12.94 %
Leverage ratio (Tier 1 capital to average assets) (1) 9.89 %   9.46 %   9.52 %
Common equity to total assets 14.06 %   14.27 %   11.53 %
Tangible common equity to tangible assets (2) 8.74 %   8.86 %   8.34 %
           
(1) All ratios at September 30, 2018 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.
(2) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.
 

During the third quarter of 2018, the Company declared and paid cash dividends of $0.23 per common share, an increase of $0.02, or 9.5%, compared to the second quarter of 2018 and an increase of $0.03, or 15.0%, compared to the third quarter of 2017.

ABOUT UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union Bankshares Corporation (Nasdaq: UBSH) is the holding company for Union Bank & Trust, which has 140 branches, seven of which are operated as Xenith Bank, a division of Union Bank & Trust of Richmond, Virginia, and approximately 190 ATMs located throughout Virginia and in portions of Maryland and North Carolina.  Non-bank affiliates of the holding company include: Old Dominion Capital Management, Inc. and Dixon, Hubard, Feinour, & Brown, Inc., which both provide investment advisory services, and Union Insurance Group, LLC, which offers various lines of insurance products.

THIRD QUARTER 2018 EARNINGS RELEASE CONFERENCE CALL

Union will hold a conference call on Wednesday, October 17th, 2018 at 9:00 a.m. Eastern Time during which management will review the third quarter 2018 financial results.  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 8775497.

NON-GAAP FINANCIAL MEASURES

In reporting the results of the quarter and nine months ended September 30, 2018, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis.  These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP.  In addition, the Company’s non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies.  The Company uses the non-GAAP financial measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance.  For a reconciliation of these measures to their most directly comparable GAAP measures and additional information about these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future events or results that are not statements of historical fact. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements.  Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of Union and its management about future events.  Although Union believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of Union will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to:

  • changes in interest rates;
  • general economic and financial market conditions in the United States generally and particularly in the markets in which Union operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth;
  • Union’s ability to manage its growth or implement its growth strategy;
  • the ability to obtain regulatory, shareholder or other approvals or other conditions to closing the Pending Merger on a timely basis or at all, the ability to close the Pending Merger on the expected timeframe, or at all, that closing may be more difficult, time-consuming or costly than expected, and that if the Pending Merger is consummated, the businesses of Union and Access may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected;
  • Union’s ability to recruit and retain key employees;
  • an insufficient allowance for loan losses;
  • the quality or composition of the loan or investment portfolios;
  • concentrations of loans secured by real estate, particularly commercial real estate;
  • the effectiveness of Union’s credit processes and management of Union’s credit risk;
  • demand for loan products and financial services in Union’s market area;
  • Union’s ability to compete in the market for financial services;
  • technological risks and developments, and cyber threats, attacks, or events;
  • performance by Union’s counterparties or vendors;
  • deposit flows;
  • the availability of financing and the terms thereof;
  • the level of prepayments on loans and mortgage-backed securities;
  • legislative or regulatory changes and requirements;
  • the impact of the Tax Act, including, but not limited to, the effect of the lower corporate tax rate, including on the valuation of Union's tax assets and liabilities;
  • any future refinements to Union's preliminary analysis of the impact of the Tax Act on Union;
  • changes in the effect of the Tax Act due to issuance of interpretive regulatory guidance or enactment of corrective or supplement legislation;
  • monetary and fiscal policies of the U.S. government including policies of the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System;
  • changes to applicable accounting principles and guidelines; and
  • other factors, many of which are beyond the control of Union.

Please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Union’s Annual Report on Form 10-K for the year ended December 31, 2017 and comparable “Risk Factors” sections of Union’s Quarterly Reports on Form 10-Q and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on Union or its businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and Union does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

         
UNION BANKSHARES CORPORATION AND SUBSIDIARIES        
KEY FINANCIAL RESULTS        
(Dollars in thousands, except share data)        
  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/18   6/30/18   9/30/17   9/30/18   9/30/17
Results of Operations (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Interest and dividend income $ 131,363     $ 132,409     $ 84,499     $ 388,151     $ 241,865  
Interest expense 25,400     24,241     13,652     70,549     35,947  
Net interest income 105,963     108,168     70,847     317,602     205,918  
Provision for credit losses 3,340     2,147     3,056     9,011     7,344  
Net interest income after provision for credit losses 102,623     106,021     67,791     308,591     198,574  
Noninterest income 19,887     40,597     15,230     80,752     47,305  
Noninterest expenses 76,349     85,140     55,204     263,234     167,871  
Income before income taxes 46,161     61,478     27,817     126,109     78,008  
Income tax expense 7,399     11,678     7,397     20,973     20,924  
Income from continuing operations 38,762     49,800     20,420     105,136     57,084  
Discontinued operations, net of tax (565 )   (2,473 )   238     (2,973 )   653  
Net income $ 38,197     $ 47,327     $ 20,658     $ 102,163     $ 57,737  
                   
Interest earned on earning assets (FTE) (1) $ 133,377     $ 134,417     $ 87,498     $ 394,011     $ 250,548  
Net interest income (FTE) (1) 107,977     110,176     73,846     323,462     214,601  
                   
Key Ratios                  
Earnings per common share, diluted $ 0.58     $ 0.72     $ 0.47     $ 1.55     $ 1.32  
Return on average assets (ROA) 1.17 %   1.44 %   0.91 %   1.05 %   0.88 %
Return on average equity (ROE) 8.06 %   10.28 %   7.90 %   7.38 %   7.53 %
Return on average tangible common equity (ROTCE) (2) 13.73 %   17.74 %   11.34 %   12.71 %   10.90 %
Efficiency ratio 60.67 %   57.23 %   64.13 %   66.08 %   66.29 %
Efficiency ratio (FTE) (1) 59.71 %   56.47 %   61.97 %   65.12 %   64.10 %
Net interest margin 3.69 %   3.72 %   3.44 %   3.69 %   3.47 %
Net interest margin (FTE) (1) 3.76 %   3.79 %   3.59 %   3.76 %   3.62 %
Yields on earning assets (FTE) (1) 4.65 %   4.62 %   4.25 %   4.58 %   4.23 %
Cost of interest-bearing liabilities (FTE) (1) 1.15 %   1.06 %   0.85 %   1.05 %   0.78 %
Cost of funds (FTE) (1) 0.89 %   0.83 %   0.66 %   0.82 %   0.61 %
                   
Operating Measures (3)                  
Net operating earnings $ 39,326     $ 53,864     $ 21,319     $ 132,065     $ 60,757  
Operating earnings per share, diluted $ 0.60     $ 0.82     $ 0.49     $ 2.01     $ 1.39  
Operating ROA 1.21 %   1.63 %   0.94 %   1.35 %   0.93 %
Operating ROE 8.30 %   11.69 %   8.15 %   9.54 %   7.93 %
Operating ROTCE 14.14 %   20.19 %   11.70 %   16.44 %   11.47 %
Operating efficiency ratio (FTE) (1) 58.59 %   50.98 %   61.15 %   55.87 %   62.77 %
                   
Per Share Data                  
Earnings per common share, basic $ 0.58     $ 0.72     $ 0.47     $ 1.55     $ 1.32  
Earnings per common share, diluted 0.58     0.72     0.47     1.55     1.32  
Cash dividends paid per common share 0.23     0.21     0.20     0.65     0.60  
Market value per share 38.53     38.88     35.30     38.53     35.30  
Book value per common share 28.68     28.47     24.00     28.68     24.00  
Tangible book value per common share (2) 16.79     16.62     16.76     16.79     16.76  
Price to earnings ratio, diluted 16.74     13.46     18.93     18.59     20.00  
Price to book value per common share ratio 1.34     1.37     1.47     1.34     1.47  
Price to tangible book value per common share ratio (2) 2.29     2.34     2.11     2.29     2.11  
Weighted average common shares outstanding, basic 65,974,702     65,919,055     43,706,635     65,817,668     43,685,045  
Weighted average common shares outstanding, diluted 66,013,152     65,965,577     43,792,058     65,873,202     43,767,502  
Common shares outstanding at end of period 65,982,669     65,939,375     43,729,229     65,982,669     43,729,229  
                             


       
  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/18   6/30/18   9/30/17   9/30/18   9/30/17
Capital Ratios (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Common equity Tier 1 capital ratio (4) 9.92 %   9.80 %   9.40 %   9.92 %   9.40 %
Tier 1 capital ratio (4) 11.12 %   11.02 %   10.56 %   11.12 %   10.56 %
Total capital ratio (4) 12.97 %   12.89 %   12.94 %   12.97 %   12.94 %
Leverage ratio (Tier 1 capital to average assets) (4) 9.89 %   9.46 %   9.52 %   9.89 %   9.52 %
Common equity to total assets 14.06 %   14.27 %   11.53 %   14.06 %   11.53 %
Tangible common equity to tangible assets (2) 8.74 %   8.86 %   8.34 %   8.74 %   8.34 %
                                       
Financial Condition                                      
Assets $ 13,371,742     $ 13,066,106     $ 9,029,436     $ 13,371,742     $ 9,029,436  
Loans held for investment 9,411,598     9,290,259     6,898,729     9,411,598     6,898,729  
Earning Assets 11,808,717     11,494,113     8,232,413     11,808,717     8,232,413  
Goodwill 727,699     725,195     298,191     727,699     298,191  
Amortizable intangibles, net 51,563     51,211     16,017     51,563     16,017  
Deposits 9,834,695     9,797,272     6,881,826     9,834,695     6,881,826  
Stockholders' equity 1,880,029     1,864,870     1,041,371     1,880,029     1,041,371  
Tangible common equity (2) 1,100,767     1,088,464     727,163     1,100,767     727,163  
                   
Loans held for investment, net of deferred fees and costs                  
Construction and land development $ 1,178,054     $ 1,250,448     $ 841,738     $ 1,178,054     $ 841,738  
Commercial real estate - owner occupied 1,283,125     1,293,791     903,523     1,283,125     903,523  
Commercial real estate - non-owner occupied 2,427,251     2,318,589     1,748,039     2,427,251     1,748,039  
Multifamily real estate 542,662     541,730     368,686     542,662     368,686  
Commercial & Industrial 1,154,583     1,093,771     554,522     1,154,583     554,522  
Residential 1-4 Family - commercial 719,798     723,945     602,937     719,798     602,937  
Residential 1-4 Family - mortgage 611,728     607,155     480,175     611,728     480,175  
Auto 306,196     296,706     276,572     306,196     276,572  
HELOC 612,116     626,916     535,446     612,116     535,446  
Consumer 345,320     298,021     396,971     345,320     396,971  
Other Commercial 230,765     239,187     190,120     230,765     190,120  
Total loans held for investment $ 9,411,598     $ 9,290,259     $ 6,898,729     $ 9,411,598     $ 6,898,729  
                   
Deposits                  
NOW accounts $ 2,205,262     $ 2,147,999     $ 1,851,327     $ 2,205,262     $ 1,851,327  
Money market accounts 2,704,480     2,758,704     1,621,443     2,704,480     1,621,443  
Savings accounts 635,788     643,894     553,082     635,788     553,082  
Time deposits of $100,000 and over 1,078,448     1,019,577     621,070     1,078,448     621,070  
Other time deposits 1,020,830     1,034,171     699,755     1,020,830     699,755  
Total interest-bearing deposits $ 7,644,808     $ 7,604,345     $ 5,346,677     $ 7,644,808     $ 5,346,677  
Demand deposits 2,189,887     2,192,927     1,535,149     2,189,887     1,535,149  
Total deposits $ 9,834,695     $ 9,797,272     $ 6,881,826     $ 9,834,695     $ 6,881,826  
                   
Averages                  
Assets $ 12,947,352     $ 13,218,227     $ 8,973,964     $ 13,061,453     $ 8,730,815  
Loans held for investment 9,297,213     9,809,083     6,822,498     9,594,094     6,613,078  
Securities 1,966,010     1,625,273     1,243,904     1,720,978     1,227,220  
Earning assets 11,383,320     11,661,189     8,167,919     11,506,200     7,922,944  
Deposits 9,803,475     9,645,186     6,797,840     9,638,698     6,615,718  
Time deposits 2,079,686     2,063,414     1,289,794     2,076,320     1,250,180  
Interest-bearing deposits 7,635,710     7,549,953     5,302,226     7,559,053     5,166,163  
Borrowings 1,155,093     1,617,322     1,080,226     1,460,685     1,030,500  
Interest-bearing liabilities 8,790,803     9,167,275     6,382,452     9,019,738     6,196,663  
Stockholders' equity 1,880,582     1,847,366     1,037,792     1,851,072     1,024,853  
Tangible common equity (2) 1,103,530     1,069,886     722,920     1,074,303     708,478  
                             


       
  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/18   6/30/18   9/30/17   9/30/18   9/30/17
Asset Quality (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Allowance for Loan Losses (ALL)                  
Beginning balance $ 41,270     $ 40,629     $ 38,214     $ 38,208     $ 37,192  
Add: Recoveries 1,401     1,201     887     4,082     2,559  
Less: Charge-offs 4,560     2,980     4,989     10,099     9,949  
Add: Provision for loan losses 3,100     2,660     3,056     9,284     7,359  
Add: Provision for loan losses included in discontinued operations 83     (240 )   (6 )   (181 )   1  
Ending balance $ 41,294     $ 41,270     $ 37,162     $ 41,294     $ 37,162  
                   
ALL / total outstanding loans 0.44 %   0.44 %   0.54 %   0.44 %   0.54 %
Net charge-offs / total average loans 0.13 %   0.07 %   0.24 %   0.08 %   0.15 %
Provision / total average loans 0.13 %   0.11 %   0.18 %   0.13 %   0.15 %
                   
Total PCI loans, net of fair value mark $ 94,746     $ 101,524     $ 51,041     $ 94,746     $ 51,041  
Remaining fair value mark on purchased performing loans 33,428     36,207     14,602     33,428     14,602  
                   
Nonperforming Assets                  
Construction and land development $ 9,221     $ 6,485     $ 5,671     $ 9,221     $ 5,671  
Commercial real estate - owner occupied 3,202     2,845     2,205     3,202     2,205  
Commercial real estate - non-owner occupied 1,812     3,068     2,701     1,812     2,701  
Commercial & Industrial 1,404     1,387     1,252     1,404     1,252  
Residential 1-4 Family 10,491     9,550     6,163     10,491     6,163  
Auto 525     463     174     525     174  
HELOC 1,273     1,669     1,791     1,273     1,791  
Consumer and all other 182     195     165     182     165  
Nonaccrual loans $ 28,110     $ 25,662     $ 20,122     $ 28,110     $ 20,122  
Foreclosed property 6,800     7,241     6,449     6,800     6,449  
Total nonperforming assets (NPAs) $ 34,910     $ 32,903     $ 26,571     $ 34,910     $ 26,571  
Construction and land development $ 442     $ 144     $ 54     $ 442     $ 54  
Commercial real estate - owner occupied 3,586     2,512     679     3,586     679  
Commercial real estate - non-owner occupied         298         298  
Commercial & Industrial 256     100     101     256     101  
Residential 1-4 Family 2,921     2,801     2,360     2,921     2,360  
Auto 211     121     143     211     143  
HELOC 1,291     570     709     1,291     709  
Consumer and all other 825     673     188     825     188  
Loans ≥ 90 days and still accruing $ 9,532     $ 6,921     $ 4,532     $ 9,532     $ 4,532  
Total NPAs and loans ≥ 90 days $ 44,442     $ 39,824     $ 31,103     $ 44,442     $ 31,103  
NPAs / total outstanding loans 0.37 %   0.35 %   0.39 %   0.37 %   0.39 %
NPAs / total assets 0.26 %   0.25 %   0.29 %   0.26 %   0.29 %
ALL / nonaccrual loans 146.90 %   160.82 %   184.68 %   146.90 %   184.68 %
ALL / nonperforming assets 118.29 %   125.43 %   139.86 %   118.29 %   139.86 %
                   
Past Due Detail                  
Construction and land development $ 1,351     $ 648     $ 7,221     $ 1,351     $ 7,221  
Commercial real estate - owner occupied 4,218     3,775     1,707     4,218     1,707  
Commercial real estate - non-owner occupied 492     44     909     492     909  
Multifamily real estate 553     86         553      
Commercial & Industrial 2,239     1,921     1,558     2,239     1,558  
Residential 1-4 Family 7,041     7,142     5,633     7,041     5,633  
Auto 2,414     2,187     2,415     2,414     2,415  
HELOC 4,783     2,505     1,400     4,783     1,400  
Consumer and all other 2,640     2,722     3,469     2,640     3,469  
Loans 30-59 days past due $ 25,731     $ 21,030     $ 24,312     $ 25,731     $ 24,312  
                                       


       
  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/18   6/30/18   9/30/17   9/30/18   9/30/17
Past Due Detail cont'd (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Construction and land development $ 1,826     $ 292     $ 54     $ 1,826     $ 54  
Commercial real estate - owner occupied 539     1,819     679     539     679  
Commercial real estate - non-owner occupied         298         298  
Commercial & Industrial 428     1,567     101     428     101  
Residential 1-4 Family 5,685     3,742     2,360     5,685     2,360  
Auto 299     419     143     299     143  
HELOC 1,392     1,622     709     1,392     709  
Consumer and all other 1,140     761     188     1,140     188  
Loans 60-89 days past due $ 11,309     $ 10,222     $ 4,532     $ 11,309     $ 4,532  
                   
Troubled Debt Restructurings                  
Performing $ 19,854     $ 15,696     $ 16,519     $ 19,854     $ 16,519  
Nonperforming 8,425     4,001     2,725     8,425     2,725  
Total troubled debt restructurings $ 28,279     $ 19,697     $ 19,244     $ 28,279     $ 19,244  
                   
Alternative Performance Measures (non-GAAP)                  
Net interest income (FTE)                  
Net interest income (GAAP) $ 105,963     $ 108,168     $ 70,847     $ 317,602     $ 205,918  
FTE adjustment 2,014     2,008     2,999     5,860     8,683  
Net interest income (FTE) (non-GAAP) (1) $ 107,977     $ 110,176     $ 73,846     $ 323,462     $ 214,601  
Average earning assets 11,383,320     11,661,189     8,167,919     11,506,200     7,922,944  
Net interest margin 3.69 %   3.72 %   3.44 %   3.69 %   3.47 %
Net interest margin (FTE) (1) 3.76 %   3.79 %   3.59 %   3.76 %   3.62 %
                   
Tangible Assets                  
Ending assets (GAAP) $ 13,371,742     $ 13,066,106     $ 9,029,436     $ 13,371,742     $ 9,029,436  
Less: Ending goodwill 727,699     725,195     298,191     727,699     298,191  
Less: Ending amortizable intangibles 51,563     51,211     16,017     51,563     16,017  
Ending tangible assets (non-GAAP) $ 12,592,480     $ 12,289,700     $ 8,715,228     $ 12,592,480     $ 8,715,228  
                   
Tangible Common Equity (2)                  
Ending equity (GAAP) $ 1,880,029     $ 1,864,870     $ 1,041,371     $ 1,880,029     $ 1,041,371  
Less: Ending goodwill 727,699     725,195     298,191     727,699     298,191  
Less: Ending amortizable intangibles 51,563     51,211     16,017     51,563     16,017  
Ending tangible common equity (non-GAAP) $ 1,100,767     $ 1,088,464     $ 727,163     $ 1,100,767     $ 727,163  
                   
Average equity (GAAP) $ 1,880,582     $ 1,847,366     $ 1,037,792     $ 1,851,072     $ 1,024,853  
Less: Average goodwill 723,785     726,934     298,191     724,940     298,191  
Less: Average amortizable intangibles 53,267     50,546     16,681     51,829     18,184  
Average tangible common equity (non-GAAP) $ 1,103,530     $ 1,069,886     $ 722,920     $ 1,074,303     $ 708,478  
                   
Operating Measures (3)                  
Net income (GAAP) $ 38,197     $ 47,327     $ 20,658     $ 102,163     $ 57,737  
Plus: Merger-related costs, net of tax 1,129     6,537     661     29,902     3,020  
Net operating earnings (non-GAAP) $ 39,326     $ 53,864     $ 21,319     $ 132,065     $ 60,757  
                   
Noninterest expense (GAAP) $ 76,349     $ 85,140     $ 55,204     $ 263,234     $ 167,871  
Less: Merger-related costs 1,429     8,273     732     37,414     3,476  
Operating noninterest expense (non-GAAP) $ 74,920     $ 76,867     $ 54,472     $ 225,820     $ 164,395  
                   
Net interest income (FTE) (non-GAAP) (1) $ 107,977     $ 110,176     $ 73,846     $ 323,462     $ 214,601  
Noninterest income (GAAP) 19,887     40,597     15,230     80,752     47,305  
                   
Efficiency ratio 60.67 %   57.23 %   64.13 %   66.08 %   66.29 %
Efficiency ratio (FTE) (1) 59.71 %   56.47 %   61.97 %   65.12 %   64.10 %
Operating efficiency ratio (FTE) 58.59 %   50.98 %   61.15 %   55.87 %   62.77 %
                             


       
  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/18   6/30/18   9/30/17   9/30/18   9/30/17
Other Data (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
End of period full-time employees 1,621     1,702     1,427     1,621     1,427  
Number of full-service branches 140     147     111     140     111  
Number of full automatic transaction machines ("ATMs") 190     199     173     190     173  

(1) These are non-GAAP financial measures. Net interest income (FTE), which is used in computing net interest margin (FTE) and efficiency ratio (FTE), provides valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources.  The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing yield on earning assets.  Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components.

(2)  These are non-GAAP financial measures. Tangible common equity is used in the calculation of certain profitability, capital, and per share ratios.  The Company believes tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses.

(3) These are non-GAAP financial measures. Operating measures exclude merger-related costs unrelated to the Company’s normal operations. The Company believes these measures are useful to investors as they exclude certain costs resulting from acquisition activity and allow investors to more clearly see the combined economic results of the organization's operations.

(4) All ratios at September 30, 2018 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.

     
UNION BANKSHARES CORPORATION AND SUBSIDIARIES    
CONSOLIDATED BALANCE SHEETS (UNAUDITED)    
(Dollars in thousands, except share data)          
  September 30,   December 31,   September 30,
  2018   2017   2017
ASSETS          
Cash and cash equivalents:          
Cash and due from banks $ 143,693     $ 117,586     $ 115,776  
Interest-bearing deposits in other banks 130,098     81,291     60,294  
Federal funds sold 8,421     496     891  
Total cash and cash equivalents 282,212     199,373     176,961  
Securities available for sale, at fair value 1,883,141     974,222     968,361  
Securities held to maturity, at carrying value 235,333     199,639     204,801  
Marketable equity securities, at fair value 27,375          
Restricted stock, at cost 112,390     75,283     68,441  
Loans held for investment, net of deferred fees and costs 9,411,598     7,141,552     6,898,729  
Less allowance for loan losses 41,294     38,208     37,162  
Net loans held for investment 9,370,304     7,103,344     6,861,567  
Premises and equipment, net 155,001     119,604     120,380  
Goodwill 727,699     298,528     298,191  
Amortizable intangibles, net 51,563     14,803     16,017  
Bank owned life insurance 261,874     182,854     181,451  
Other assets 262,716     102,871     97,990  
Assets of discontinued operations 2,134     44,658     35,276  
Total assets $ 13,371,742     $ 9,315,179     $ 9,029,436  
LIABILITIES          
Noninterest-bearing demand deposits $ 2,189,887     $ 1,502,208     $ 1,535,149  
Interest-bearing deposits 7,644,808     5,489,510     5,346,677  
Total deposits 9,834,695     6,991,718     6,881,826  
Securities sold under agreements to repurchase 40,624     49,152     43,337  
Other short-term borrowings 1,016,250     745,000     574,000  
Long-term borrowings 497,768     425,262     434,750  
Other liabilities 99,757     54,008     51,385  
Liabilities of discontinued operations 2,619     3,710     2,767  
Total liabilities 11,491,713     8,268,850     7,988,065  
Commitments and contingencies          
STOCKHOLDERS' EQUITY          
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 65,982,669 shares, 43,743,318 shares, and 43,729,229 shares, respectively. 87,192     57,744     57,708  
Additional paid-in capital 1,378,940     610,001     608,884  
Retained earnings 438,513     379,468     373,468  
Accumulated other comprehensive income (loss) (24,616 )   (884 )   1,311  
Total stockholders' equity 1,880,029     1,046,329     1,041,371  
Total liabilities and stockholders' equity $ 13,371,742     $ 9,315,179     $ 9,029,436  
                       


         
UNION BANKSHARES CORPORATION AND SUBSIDIARIES        
CONSOLIDATED STATEMENTS OF INCOME        
(Dollars in thousands, except share data)                  
  Three Months Ended   Nine Months Ended
  September 30,   June 30,   September 30,   September 30,   September 30,
  2018   2018   2017   2018   2017
Interest and dividend income: (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Interest and fees on loans $ 115,817     $ 119,540     $ 75,597     $ 348,009     $ 215,797  
Interest on deposits in other banks 492     676     181     1,815     367  
Interest and dividends on securities:                  
Taxable 10,145     8,012     5,175     25,229     15,081  
Nontaxable 4,909     4,181     3,546     13,098     10,620  
Total interest and dividend income 131,363     132,409     84,499     388,151     241,865  
Interest expense:                  
Interest on deposits 15,928     13,047     7,234     40,187     18,410  
Interest on short-term borrowings 3,379     5,166     1,871     12,794     4,221  
Interest on long-term borrowings 6,093     6,028     4,547     17,568     13,316  
Total interest expense 25,400     24,241     13,652     70,549     35,947  
Net interest income 105,963     108,168     70,847     317,602     205,918  
Provision for credit losses 3,340     2,147     3,056     9,011     7,344  
Net interest income after provision for credit losses 102,623     106,021     67,791     308,591     198,574  
Noninterest income:                  
Service charges on deposit accounts 6,483     6,189     4,795     18,566     13,924  
Other service charges and fees 1,625     1,278     1,131     4,137     3,391  
Interchange fees, net 4,882     4,792     3,756     14,163     11,205  
Fiduciary and asset management fees 4,411     4,040     2,794     11,507     8,313  
Gains (losses) on securities transactions, net 97     (88 )   184     222     782  
Bank owned life insurance income 1,732     1,728     1,377     5,126     4,837  
Loan-related interest rate swap fees 562     898     416     2,178     2,627  
Gain on Shore Premier sale (933 )   20,899         19,966      
Other operating income 1,028     861     777     4,887     2,226  
Total noninterest income 19,887     40,597     15,230     80,752     47,305  
Noninterest expenses:                  
Salaries and benefits 39,279     40,777     28,187     120,797     87,740  
Occupancy expenses 6,551     6,159     4,678     18,778     13,783  
Furniture and equipment expenses 2,983     3,103     2,454     9,024     7,518  
Printing, postage, and supplies 1,183     1,282     1,139     3,525     3,664  
Communications expense 872     1,009     796     2,976     2,567  
Technology and data processing 4,841     4,322     4,148     13,722     11,793  
Professional services 2,875     2,671     1,948     8,101     5,611  
Marketing and advertising expense 3,109     3,288     1,931     7,834     5,933  
FDIC assessment premiums and other insurance 1,363     1,882     1,141     5,430     2,793  
Other taxes 2,878     2,895     2,022     8,660     6,065  
Loan-related expenses 1,939     1,843     1,193     5,097     3,484  
OREO and credit-related expenses 452     1,122     1,139     3,106     2,023  
Amortization of intangible assets 3,490     3,215     1,480     9,885     4,661  
Training and other personnel costs 1,024     1,125     861     3,155     2,829  
Merger-related costs 1,429     8,273     732     37,414     3,476  
Other expenses 2,081     2,174     1,355     5,730     3,931  
Total noninterest expenses 76,349     85,140     55,204     263,234     167,871  
Income from continuing operations before income taxes 46,161     61,478     27,817     126,109     78,008  
Income tax expense 7,399     11,678     7,397     20,973     20,924  
Income from continuing operations $ 38,762     $ 49,800     $ 20,420     $ 105,136     $ 57,084  
                                       


         
UNION BANKSHARES CORPORATION AND SUBSIDIARIES        
CONSOLIDATED STATEMENTS OF INCOME (continued)        
(Dollars in thousands, except share data)                  
  Three Months Ended   Nine Months Ended
  September 30,   June 30,   September 30,   September 30,   September 30,
  2018   2018   2017   2018   2017
Discontinued operations: (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Income (loss) from operations of discontinued mortgage segment $ (761 )   $ (3,085 )   $ 371     $ (3,768 )   1,021  
Income tax expense (benefit) (196 )   (612 )   133     (795 )   368  
Income (loss) on discontinued operations (565 )   (2,473 )   238     (2,973 )   653  
Net income $ 38,197     $ 47,327     $ 20,658     $ 102,163     $ 57,737  
Basic earnings per common share $ 0.58     $ 0.72     $ 0.47     $ 1.55     $ 1.32  
Diluted earnings per common share $ 0.58     $ 0.72     $ 0.47     $ 1.55     $ 1.32  
                                       


 
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
  For the Quarter Ended
  September 30, 2018   June 30, 2018
  Average
Balance
  Interest
Income /
Expense (1)
  Yield /
Rate (1)(2)
  Average
Balance
  Interest
Income /
Expense (1)
  Yield /
Rate (1)(2)
       
Assets: (unaudited)   (unaudited)
Securities:                      
Taxable $ 1,333,960     $ 10,145   3.02 %   $ 1,077,656     $ 8,012   2.98 %
Tax-exempt 632,050     6,214   3.90 %   547,617     5,293   3.88 %
Total securities 1,966,010     16,359   3.30 %   1,625,273     13,305   3.28 %
Loans, net (3) (4) 9,297,213     116,266   4.96 %   9,809,083     120,039   4.91 %
Other earning assets 120,097     752   2.49 %   226,833     1,073   1.90 %
Total earning assets 11,383,320     $ 133,377   4.65 %   11,661,189     $ 134,417   4.62 %
Allowance for loan losses (41,799 )           (41,645 )        
Total non-earning assets 1,605,831             1,598,683          
Total assets $ 12,947,352             $ 13,218,227          
                       
Liabilities and Stockholders' Equity:                      
Interest-bearing deposits:                      
Transaction and money market accounts $ 4,915,070     $ 8,789   0.71 %   $ 4,836,642     $ 6,790   0.56 %
Regular savings 640,954     209   0.13 %   649,897     217   0.13 %
Time deposits (5) 2,079,686     6,930   1.32 %   2,063,414     6,040   1.17 %
Total interest-bearing deposits 7,635,710     15,928   0.83 %   7,549,953     13,047   0.69 %
Other borrowings (6) 1,155,093     9,472   3.25 %   1,617,322     11,194   2.78 %
Total interest-bearing liabilities 8,790,803     25,400   1.15 %   9,167,275     24,241   1.06 %
                       
Noninterest-bearing liabilities:                      
Demand deposits 2,167,765             2,095,233          
Other liabilities 108,202             108,353          
Total liabilities 11,066,770             11,370,861          
Stockholders' equity 1,880,582             1,847,366          
Total liabilities and stockholders' equity $ 12,947,352             $ 13,218,227          
                       
Net interest income     $ 107,977           $ 110,176    
                       
Interest rate spread         3.50 %           3.56 %
Cost of funds         0.89 %           0.83 %
Net interest margin         3.76 %           3.79 %
                       
(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.
(2) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.
(3) Nonaccrual loans are included in average loans outstanding.
(4) Interest income on loans includes $3.5 million and $5.3 million for the three months ended September 30, 2018 and June 30, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5) Interest expense on time deposits includes $592,000 and $685,000 for the three months ended September 30, 2018 and June 30, 2018, respectively, in accretion of the fair market value adjustments related to acquisitions.
(6) Interest expense on borrowings includes $143,000 and $104,000 for the three months ended September 30, 2018 and June 30, 2018, respectively, in amortization of the fair market value adjustments related to acquisitions.
 

Contact:
Robert M. Gorman - (804) 523-7828
Executive Vice President / Chief Financial Officer

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Source: Union Bankshares Corporation