Exhibit 99.1

unionbankshares_image1a07.jpg


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

UNION BANKSHARES REPORTS SECOND QUARTER RESULTS

Richmond, Va., July 19, 2017 - Union Bankshares Corporation (the “Company” or “Union”) (NASDAQ: UBSH) today reported net income of $18.0 million and earnings per share of $0.41 for its second quarter ended June 30, 2017. Excluding after-tax acquisition and conversion costs of $2.4 million, net operating earnings(1) were $20.3 million and operating earnings per share(1) were $0.46 for the second quarter of 2017. The Company's net operating earnings and operating earnings per share for the second quarter of 2017 represent an increase of $1.2 million, or 6.2%, over net income and an increase of $0.02, or 4.5%, over earnings per share, in each case compared to the first quarter of 2017. For the six months ended June 30, 2017, net income was $37.1 million and earnings per share were $0.85. Net operating earnings(1) were $39.4 million and operating earnings per share(1) were $0.90 for the six months ended June 30, 2017. The Company's net operating earnings and operating earnings per share for the six months ended June 30, 2017 represent an increase of 8.7% and 9.8%, respectively, compared to the net income and earnings per share for the six months ended June 30, 2016.

“Union continued to generate sustainable, profitable growth for our shareholders in the second quarter,” said John C. Asbury, president and chief executive officer of Union Bankshares Corporation. “Loans grew by 13% and deposits grew by 9% on an annualized basis while profitability metrics on an operating basis continued to improve.  Also during the quarter, we announced the signing of a definitive merger agreement to acquire Xenith Bankshares, Inc., creating the preeminent community banking franchise in Virginia and also gaining retail entry points into North Carolina and Maryland.  This is exciting news for Union as the strategic combination with Xenith will provide Union with the growth, scale and synergies to continue to deliver a best-in-class customer experience, offer superior financial services and solutions to our clients and provide a rewarding experience for our teammates while also generating top-tier financial performance for our shareholders.  We have already started the integration planning work with Xenith and expect to close the transaction on or around January 1, 2018, subject to customary closing conditions, including regulatory and shareholder approvals.”

Select highlights for the second quarter of 2017 include:
•
Entry into a definitive merger agreement to acquire Xenith Bankshares, Inc. (“Xenith”), which was announced on May 22, 2017 (the “Pending Merger”).
•
Net income for the community bank segment was $17.4 million, or $0.40 per share, for the second quarter of 2017, compared to $19.1 million, or $0.44 per share, for the first quarter of 2017. Net operating earnings(1) for the community bank segment were $19.8 million, or $0.45 per share, for the second quarter of 2017. Net income for the community bank segment was $36.5 million, or $0.84 per share, for the six months ended June 30, 2017, compared to $35.7 million, or $0.81 per share, for the six months ended June 30, 2016. Net operating earnings(1) for the community bank segment were $38.9 million, or $0.89 per share, for the six months ended June 30, 2017.
•
The mortgage segment reported net income of $551,000, or $0.01 per share, for the second quarter of 2017, compared to $4,000 in the first quarter of 2017. The mortgage segment reported net income of $555,000, or $0.01 per share, for the six months ended June 30, 2017 compared to $593,000, or $0.01 per share, for the six months ended June 30, 2016.
•
Return on Average Assets (“ROA”) was 0.82% and operating ROA(1) was 0.93% for the quarter ended June 30, 2017 compared to ROA of 0.92% for the quarter ended March 31, 2017 and 0.98% for the quarter ended June 30, of 2016.
•
Return on Average Equity (“ROE”) was 7.02% and operating ROE(1) was 7.94% for the quarter ended June 30, 2017 compared to ROE of 7.68% for the quarter ended March 31, 2017 and 7.88% for the quarter ended June 30,


2016. Return on Average Tangible Common Equity (“ROTCE”) was 10.15% and operating ROTCE(1) was 11.48% for the quarter ended June 30, 2017 compared to ROTCE of 11.20% for the prior quarter and 11.60% for the second quarter of 2016.
•
The efficiency ratio (FTE) was 66.8% and the operating efficiency ratio (FTE)(1) was 63.8% for the quarter ended June 30, 2017 compared to the efficiency ratio (FTE) of 65.3% for the prior quarter and 64.1% for the second quarter of 2016.
•
Loans held for investment grew $217.4 million, or 13.3% (annualized), from March 31, 2017 and increased $830.4 million, or 14.0%, from June 30, 2016. Average loans held for investment increased $244.1 million, or 15.3% (annualized), from the prior quarter and increased $765.0 million, or 13.0%, from the same quarter in the prior year.
•
Period-end deposits increased $150.2 million, or 9.1% (annualized), from March 31, 2017 and grew $668.6 million, or 11.0%, from June 30, 2016. Average deposits increased $230.5 million, or 14.4% (annualized), from the prior quarter and increased $612.2 million, or 10.2%, from the same quarter in the prior year.

(1) For a reconciliation of the non-GAAP operating measures that exclude acquisition and conversion costs unrelated to the Company’s normal operations, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

NET INTEREST INCOME

For the second quarter of 2017, net interest income was $69.0 million, an increase of $2.4 million from the first quarter of 2017. Tax-equivalent net interest income was $71.6 million, an increase of $2.5 million from the first quarter of 2017. The increases in both net interest income and tax-equivalent net interest income were driven by higher earning asset balances. The second quarter net interest margin decreased 3 basis points to 3.49% from 3.52% in the previous quarter, while the tax-equivalent net interest margin decreased 4 basis points to 3.62% from 3.66% during the same periods. Core tax-equivalent net interest margin (which excludes the 8 basis point impact of acquisition accounting accretion in both the current and prior quarters) also decreased by 4 basis points to 3.54% from 3.58% in the previous quarter. The decrease in the core tax-equivalent net interest margin was principally due to the 8 basis point increase in core tax-equivalent cost of funds offset by the 4 basis point increase in the core tax-equivalent yield on earning assets.

The Company’s tax-equivalent net interest margin includes the impact of acquisition accounting fair value adjustments. During the second quarter of 2017, net accretion related to acquisition accounting increased $124,000, or 8.3%, from the prior quarter to $1.6 million for the quarter ended June 30, 2017. The first and second quarters of 2017 as well as the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):
 
Loan Accretion
 
Borrowings Accretion (Amortization)
 
Total
For the quarter ended March 31, 2017
$
1,445

 
$
48

 
$
1,493

For the quarter ended June 30, 2017
1,570

 
47

 
1,617

For the remaining six months of 2017 (estimated) (1)
2,886

 
75

 
2,961

For the years ending (estimated) (1):
 
 
 
 
 
2018
4,911

 
(143)

 
4,768

2019
3,518

 
(286)

 
3,232

2020
2,678

 
(301)

 
2,377

2021
2,112

 
(316)

 
1,796

2022
1,766

 
(332)

 
1,434

Thereafter
6,653

 
(4,974)

 
1,679

(1) Estimated accretion only includes accretion for previously executed acquisitions. The effects of the Pending Merger are not included in the information above.



ASSET QUALITY/LOAN LOSS PROVISION

Overview
During the second quarter of 2017, the Company experienced declines in past due loans as a percentage of total loans from the prior quarter and the second quarter of 2016. Nonaccrual loan levels increased in the second quarter of 2017, primarily related to two credit relationships. Net charge-offs increased from the first quarter of 2017, while year-to-date charge-off levels were down from the prior year. The loan loss provision increased from the prior quarter due to loan growth and increased specific reserves related to increases in nonaccrual loans.

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $56.2 million (net of fair value mark of $12.7 million).

Nonperforming Assets (“NPAs”)
At June 30, 2017, NPAs totaled $34.1 million, an increase of $2.1 million, or 6.6%, from March 31, 2017 and an increase of $9.8 million, or 40.5%, from June 30, 2016. In addition, NPAs as a percentage of total outstanding loans increased 1 basis point from 0.49% at March 31, 2017 and increased 9 basis points from 0.41% at June 30, 2016 to 0.50% at June 30, 2017. The following table shows a summary of asset quality balances at the quarter ended (dollars in thousands):
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2017
 
2017
 
2016
 
2016
 
2016
Nonaccrual loans
$
24,574

 
$
22,338

 
$
9,973

 
$
12,677

 
$
10,861

Foreclosed properties
6,828

 
6,951

 
7,430

 
7,927

 
10,076

Former bank premises
2,654

 
2,654

 
2,654

 
2,654

 
3,305

Total nonperforming assets
$
34,056

 
$
31,943

 
$
20,057

 
$
23,258

 
$
24,242


The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2017
 
2017
 
2016
 
2016
 
2016
Beginning Balance
$
22,338

 
$
9,973

 
$
12,677

 
$
10,861

 
$
13,092

Net customer payments
(1,498
)
 
(1,068
)
 
(1,451
)
 
(1,645
)
 
(2,859
)
Additions
5,979

 
13,557

 
1,094

 
4,359

 
2,568

Charge-offs
(2,004
)
 
(97
)
 
(1,216
)
 
(660
)
 
(1,096
)
Loans returning to accruing status
(134
)
 
(27
)
 
(1,039
)
 
(23
)
 
(396
)
Transfers to OREO
(107
)
 
—

 
(92
)
 
(215
)
 
(448
)
Ending Balance
$
24,574

 
$
22,338

 
$
9,973

 
$
12,677

 
$
10,861


The nonaccrual additions primarily relate to two unrelated commercial and industrial and commercial real estate-non-owner occupied credit relationships.

The following table shows the activity in other real estate owned ("OREO") for the quarter ended (dollars in thousands):
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
2017
 
2017
 
2016
 
2016
 
2016
Beginning Balance
$
9,605

 
$
10,084

 
$
10,581

 
$
13,381

 
$
14,246

Additions of foreclosed property
132

 
—

 
859

 
246

 
501

Valuation adjustments
(19
)
 
(238
)
 
(138
)
 
(479
)
 
(274
)
Proceeds from sales
(272
)
 
(277
)
 
(1,282
)
 
(2,844
)
 
(1,086
)
Gains (losses) from sales
36

 
36

 
64

 
277

 
(6
)
Ending Balance
$
9,482

 
$
9,605

 
$
10,084

 
$
10,581

 
$
13,381




Past Due Loans
Past due loans still accruing interest totaled $27.4 million, or 0.40% of total loans, at June 30, 2017 compared to $26.9 million, or 0.41%, at March 31, 2017 and $25.3 million, or 0.43%, at June 30, 2016. At June 30, 2017, loans past due 90 days or more and accruing interest totaled $3.6 million, or 0.05% of total loans, compared to $2.3 million, or 0.04%, at March 31, 2017 and $3.5 million, or 0.06%, at June 30, 2016.

Net Charge-offs
For the second quarter of 2017, net charge-offs were $2.5 million, or 0.15% of total average loans on an annualized basis, compared to $788,000, or 0.05%, for the prior quarter and $1.6 million, or 0.11%, for the same quarter last year. Of the net charge-offs in the second quarter of 2017, approximately half were specifically reserved for in the prior quarter. For the six months ended June 30, 2017, net charge-offs were $3.3 million, or 0.10% of total average loans on annualized basis, compared to $3.8 million, or 0.13%, for the same period in 2016.

Provision for Loan Losses
The provision for loan losses for the second quarter of 2017 was $2.3 million, an increase of $290,000 compared to the previous quarter and consistent with the same quarter in 2016. The increase in provision for loan losses was primarily driven by higher loan balances and increases in specific reserves related to nonaccrual loans.

Allowance for Loan Losses
The allowance for loan losses (“ALL”) decreased $200,000 from March 31, 2017 to $38.2 million at June 30, 2017 primarily due to the continued decline in the historical loss rates. The ALL as a percentage of the total loan portfolio was 0.56% at June 30, 2017, 0.59% at March 31, 2017, and 0.59% at June 30, 2016.

The ratio of the ALL to nonaccrual loans was 155.5% at June 30, 2017, compared to 172.0% at March 31, 2017 and 322.9% at June 30, 2016. 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 $783,000, or 4.2%, to $18.1 million for the quarter ended June 30, 2017 from $18.8 million in the prior quarter, primarily driven by lower bank owned life insurance income due to proceeds from death benefits received in the first quarter of 2017, lower gains on sales of securities, and declines in insurance-related income, which is typically seasonally higher in the first quarter.

Mortgage banking income increased $768,000, or 37.9%, to $2.8 million in the second quarter of 2017 compared to $2.0 million in the first quarter of 2017, related to increased mortgage loan originations. Mortgage loan originations increased by $36.4 million, or 36.3%, in the second quarter to $136.6 million from $100.2 million in the first quarter of 2017. The majority of the increase was related to purchase-money mortgage loans, which seasonally increased by $41.5 million from the prior quarter. Of the mortgage loan originations in the second quarter of 2017, 23.4% were refinances compared with 34.3% in the prior quarter.

NONINTEREST EXPENSE

Noninterest expense increased $2.5 million, or 4.4%, to $59.9 million for the quarter ended June 30, 2017 from $57.4 million in the prior quarter. Excluding acquisition and conversion costs of $2.7 million in the second quarter of 2017, noninterest operating expense decreased $209,000 when compared to noninterest expense during the first quarter of 2017. Salaries and benefits expenses declined by $1.6 million primarily related to decreases in payroll taxes, which are typically seasonally higher in the first quarter, as well as lower group insurance costs and unemployment taxes. This decrease was partially offset by increases in marketing expenses of $539,000, professional fees of $434,000 related to higher consulting costs, and printing and postage costs of $256,000.




BALANCE SHEET

At June 30, 2017, total assets were $8.9 billion, an increase of $245.3 million from March 31, 2017 and an increase of $814.6 million from June 30, 2016. The increase in assets was mostly related to loan growth.

At June 30, 2017, loans held for investment (net of deferred fees and costs) were $6.8 billion, an increase of $217.4 million, or 13.3% (annualized), from March 31, 2017, while average loans increased $244.1 million, or 15.3% (annualized), from the prior quarter. Loans held for investment increased $830.4 million, or 14.0%, from June 30, 2016, while quarterly average loans increased $765.0 million, or 13.0%, from the prior year.

At June 30, 2017, total deposits were $6.8 billion, an increase of $150.2 million, or 9.1% (annualized), from March 31, 2017, while average deposits increased $230.5 million, or 14.4% (annualized), from the prior quarter. Total deposits grew $668.6 million, or 11.0%, from June 30, 2016, while quarterly average deposits increased $612.2 million, or 10.2%, from the prior year.

At June 30, 2017, March 31, 2017, and June 30, 2016, respectively, the Company had a common equity Tier 1 capital ratio of 9.39%, 9.55%, and 9.94%; a Tier 1 capital ratio of 10.57%, 10.77%, and 11.27%; a total capital ratio of 13.00%, 13.30%, and 11.79%; and a leverage ratio of 9.61%, 9.79%, and 10.01%.

The Company’s common equity to total assets ratios at June 30, 2017, March 31, 2017, and June 30, 2016 were 11.56%, 11.71%, and 12.21%, respectively, while its tangible common equity to tangible assets ratio was 8.32%, 8.36%, and 8.59%, respectively.

During the second quarter of 2017, the Company declared and paid cash dividends of $0.20 per common share, consistent with the prior quarter and an increase of $0.01, or 5.3%, compared the same quarter in the prior year.

* * * * * * *

ABOUT UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union Bankshares Corporation (NASDAQ: UBSH) is the holding company for Union Bank & Trust, which has 112 banking offices and approximately 173 ATMs located throughout Virginia. Non-bank affiliates of the holding company include: Union Mortgage Group, Inc., which provides a full line of mortgage products, Old Dominion Capital Management, Inc., which provides investment advisory services, and Union Insurance Group, LLC, which offers various lines of insurance products.

Additional information on the Company is available at http://investors.bankatunion.com.

Union Bankshares Corporation will hold a conference call on Wednesday, July 19th, at 9:00 a.m. Eastern Time during which management will review earnings and performance trends. Callers wishing to participate may 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 51128808.

NON-GAAP MEASURES
In reporting the results of the quarter ended June 30, 2017, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis. These measures are a supplement to GAAP 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 measures may not be comparable to non-GAAP measures of other companies.


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 are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact, are based on certain assumptions as of the time they are made, and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.  Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events.  Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results 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 or changes in:

•
the possibility that any of the anticipated benefits of the Pending Merger with Xenith will not be realized or will not be realized within the expected time period, the businesses of the Company and Xenith may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, the expected revenue synergies and cost savings from the Pending Merger may not be fully realized or realized within the expected time frame, revenues following the Pending Merger may be lower than expected, customer and employee relationships and business operations may be disrupted by the Pending Merger, or obtaining required regulatory and shareholder approvals, or completing the Pending Merger on the expected timeframe, may be more difficult, time-consuming or costly than expected,
•
changes in interest rates,
•
general economic and financial market conditions,
•
the Company’s ability to manage its growth or implement its growth strategy,
•
the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets,
•
levels of unemployment in the Bank’s lending area,
•
real estate values in the Bank’s lending area,
•
an insufficient allowance for loan losses,
•
the quality or composition of the loan or investment portfolios,
•
concentrations of loans secured by real estate, particularly commercial real estate,
•
the effectiveness of the Company’s credit processes and management of the Company’s credit risk,
•
demand for loan products and financial services in the Company’s market area,
•
the Company’s ability to compete in the market for financial services,
•
technological risks and developments, and cyber attacks or events,
•
performance by the Company’s counterparties or vendors,
•
deposit flows,
•
the availability of financing and the terms thereof,
•
the level of prepayments on loans and mortgage-backed securities,
•
legislative or regulatory changes and requirements,
•
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, and
•
accounting principles and guidelines.

More information on risk factors that could affect the Company’s forward-looking statements is available on the Company’s website, http://investors.bankatunion.com or the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and other reports filed with the Securities and Exchange Commission (“SEC”). The information on the Company’s website is not a part of this press release. All risk factors and uncertainties described in those documents should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. 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.



ADDITIONAL INFORMATION ABOUT THE PENDING MERGER AND WHERE TO FIND IT

In connection with the Pending Merger, the Company will file with the SEC a registration statement on Form S-4 to register the shares of the Company’s common stock to be issued to the shareholders of Xenith. The registration statement will include a joint proxy statement of the Company and Xenith and a prospectus of the Company. A definitive joint proxy statement/prospectus will be sent to the shareholders of the Company and Xenith seeking their approval of the Pending Merger and related matters. This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Before making any voting or investment decision, investors and shareholders of the Company and Xenith are urged to read carefully the entire registration statement and joint proxy statement/prospectus when they become available, including any amendments thereto, because they will contain important information about the Pending Merger. Free copies of these documents may be obtained as described below.

Investors and shareholders of both companies are urged to read the registration statement on Form S-4 and the joint proxy statement/prospectus included within the registration statement and any other relevant documents to be filed with the SEC in connection with the Pending Merger because they will contain important information about the Company, Xenith and the Pending Merger. Investors and shareholders of both companies are urged to review carefully and consider all public filings by the Company and Xenith with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Quarterly Reports on Form 10-Q, and their Current Reports on Form 8-K. Investors and shareholders may obtain free copies of these documents through the website maintained by the SEC at www.sec.gov. Free copies of the joint proxy statement/prospectus and other documents filed with the SEC also may be obtained by directing a request by telephone or mail to Union Bankshares Corporation, 1051 East Cary Street, Suite 1200, Richmond, Virginia 23219, Attention: Investor Relations (telephone: (804) 633-5031), or Xenith Bankshares, Inc., 901 E. Cary Street Richmond, Virginia, 23219, Attention: Thomas W. Osgood (telephone: (804) 433-2200), or by accessing the Company’s website at www.bankatunion.com under “Investor Relations” or Xenith’s website at www.xenithbank.com under “Investor Relations” under “About Us.” The information on the Company’s and Xenith’s websites is not, and shall not be deemed to be, a part of this release or incorporated into other filings either company makes with the SEC.

The Company and Xenith and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of the Company and/or Xenith in connection with the Pending Merger. Information about the directors and executive officers of the Company is set forth in the proxy statement for the Company’s 2017 annual meeting of shareholders filed with the SEC on March 21, 2017. Information about the directors and executive officers of Xenith is set forth in Xenith’s Annual Report on Form 10-K, as amended, filed with the SEC on May 1, 2017. Additional information regarding the interests of these participants and other persons who may be deemed participants in the Pending Merger may be obtained by reading the joint proxy statement/prospectus regarding the Pending Merger when it becomes available. Free copies of these documents may be obtained as described above.



UNION BANKSHARES CORPORATION AND SUBSIDIARIES
 
 
 
 
KEY FINANCIAL RESULTS
 
 
 
 
(Dollars in thousands, except share data)
 
 
 
 
(FTE - "Fully Taxable Equivalent")
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
6/30/17
 
3/31/17
 
6/30/16
 
6/30/17
 
6/30/16
Results of Operations
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Interest and dividend income
$
81,221

 
$
76,640

 
$
72,781

 
$
157,861

 
$
143,530

Interest expense
12,222

 
10,073

 
7,005

 
22,294

 
14,023

Net interest income
68,999

 
66,567

 
65,776

 
135,567

 
129,507

Provision for credit losses
2,173

 
2,122

 
2,300

 
4,295

 
4,904

Net interest income after provision for credit losses
66,826

 
64,445

 
63,476

 
131,272

 
124,603

Noninterest income
18,056

 
18,839

 
17,993

 
36,894

 
33,907

Noninterest expenses
59,930

 
57,395

 
55,251

 
117,325

 
109,523

Income before income taxes
24,952

 
25,889

 
26,218

 
50,841

 
48,987

Income tax expense
6,996

 
6,765

 
6,881

 
13,761

 
12,689

Net income
$
17,956

 
$
19,124

 
$
19,337

 
$
37,080

 
$
36,298

 
 
 
 
 
 
 
 
 
 
Interest earned on earning assets (FTE) (1)
$
83,869

 
$
79,180

 
$
75,232

 
$
163,049

 
$
148,471

Net interest income (FTE) (1)
71,647

 
69,107

 
68,227

 
140,755

 
134,448

 
 
 
 
 
 
 
 
 
 
Net income - community bank segment
$
17,405

 
$
19,120

 
$
18,798

 
$
36,525

 
$
35,705

Net income (loss) - mortgage segment
551

 
4

 
539

 
555

 
593

 
 
 
 
 
 
 
 
 
 
Key Ratios
 
 
 
 
 
 
 
 
 
Earnings per common share, diluted
$
0.41

 
$
0.44

 
$
0.44

 
$
0.85

 
$
0.82

Return on average assets (ROA)
0.82
%
 
0.92
%
 
0.98
%
 
0.87
%
 
0.93
%
Return on average equity (ROE)
7.02
%
 
7.68
%
 
7.88
%
 
7.34
%
 
7.39
%
Return on average tangible common equity (ROTCE) (2)
10.15
%
 
11.20
%
 
11.60
%
 
10.66
%
 
10.86
%
Efficiency ratio
68.84
%
 
67.20
%
 
65.96
%
 
68.03
%
 
67.02
%
Efficiency ratio (FTE) (1)
66.81
%
 
65.26
%
 
64.08
%
 
66.04
%
 
65.06
%
Net interest margin
3.49
%
 
3.52
%
 
3.70
%
 
3.51
%
 
3.69
%
Net interest margin (FTE) (1)
3.62
%
 
3.66
%
 
3.84
%
 
3.64
%
 
3.83
%
Yields on earning assets (FTE) (1)
4.24
%
 
4.19
%
 
4.23
%
 
4.22
%
 
4.23
%
Cost of interest-bearing liabilities (FTE) (1)
0.79
%
 
0.68
%
 
0.51
%
 
0.74
%
 
0.52
%
Cost of funds (FTE) (1)
0.62
%
 
0.53
%
 
0.39
%
 
0.58
%
 
0.40
%
Net interest margin, core (FTE) (3)
3.54
%
 
3.58
%
 
3.76
%
 
3.56
%
 
3.76
%
 
 
 
 
 
 
 
 
 
 
Operating Measures (4)
 
 
 
 
 
 
 
 
 
Net operating earnings
$
20,314

 
$
19,124

 
$
19,337

 
$
39,438

 
$
36,298

Operating earnings per share, diluted
$
0.46

 
$
0.44

 
$
0.44

 
$
0.90

 
$
0.82

Operating ROA
0.93
%
 
0.92
%
 
0.98
%
 
0.92
%
 
0.93
%
Operating ROE
7.94
%
 
7.68
%
 
7.88
%
 
7.81
%
 
7.39
%
Operating ROTCE
11.48
%
 
11.20
%
 
11.60
%
 
11.34
%
 
10.86
%
Operating efficiency ratio (FTE)
63.75
%
 
65.26
%
 
64.08
%
 
64.50
%
 
65.06
%
Community bank segment net operating earnings
$
19,763

 
$
19,120

 
$
18,798

 
$
38,883

 
$
35,705

Community bank segment operating earnings per share, diluted
$
0.45

 
$
0.44

 
$
0.43

 
$
0.89

 
$
0.81

 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
Earnings per common share, basic
$
0.41

 
$
0.44

 
$
0.44

 
$
0.85

 
$
0.82

Earnings per common share, diluted
0.41

 
0.44

 
0.44

 
0.85

 
0.82

Cash dividends paid per common share
0.20

 
0.20

 
0.19

 
0.40

 
0.38

Market value per share
33.90

 
35.18

 
24.71

 
33.90

 
24.71

Book value per common share
23.79

 
23.44

 
22.87

 
23.79

 
22.87

Tangible book value per common share (2)
16.50

 
16.12

 
15.44

 
16.50

 
15.44

Price to earnings ratio, diluted
20.61

 
19.71

 
13.96

 
19.78

 
14.98

Price to book value per common share ratio
1.42

 
1.50

 
1.08

 
1.42

 
1.08

Price to tangible book value per common share ratio (2)
2.05

 
2.18

 
1.60

 
2.05

 
1.60

Weighted average common shares outstanding, basic
43,693,427

 
43,654,498

 
43,746,583

 
43,674,070

 
43,998,929

Weighted average common shares outstanding, diluted
43,783,952

 
43,725,923

 
43,824,183

 
43,755,045

 
44,075,706

Common shares outstanding at end of period
43,706,000

 
43,679,947

 
43,619,867

 
43,706,000

 
43,619,867





 
 
As of & For Three Months Ended
 
As of & For Six Months Ended
 
6/30/17
 
3/31/17
 
6/30/16
 
6/30/17
 
6/30/16
Capital Ratios
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Common equity Tier 1 capital ratio (5)
9.39
%
 
9.55
%
 
9.94
%
 
9.39
%
 
9.94
%
Tier 1 capital ratio (5)
10.57
%
 
10.77
%
 
11.27
%
 
10.57
%
 
11.27
%
Total capital ratio (5)
13.00
%
 
13.30
%
 
11.79
%
 
13.00
%
 
11.79
%
Leverage ratio (Tier 1 capital to average assets) (5)
9.61
%
 
9.79
%
 
10.01
%
 
9.61
%
 
10.01
%
Common equity to total assets
11.56
%
 
11.71
%
 
12.21
%
 
11.56
%
 
12.21
%
Tangible common equity to tangible assets (2)
8.32
%
 
8.36
%
 
8.59
%
 
8.32
%
 
8.59
%
 
 
 
 
 
 
 
 
 
 
Financial Condition
 
 
 
 
 
 
 
 
 
Assets
$
8,915,187

 
$
8,669,920

 
$
8,100,561

 
$
8,915,187

 
$
8,100,561

Loans held for investment
6,771,490

 
6,554,046

 
5,941,098

 
6,771,490

 
5,941,098

Earning Assets
8,094,574

 
7,859,563

 
7,282,137

 
8,094,574

 
7,282,137

Goodwill
298,191

 
298,191

 
297,659

 
298,191

 
297,659

Amortizable intangibles, net
17,422

 
18,965

 
23,449

 
17,422

 
23,449

Deposits
6,764,434

 
6,614,195

 
6,095,826

 
6,764,434

 
6,095,826

Stockholders' equity
1,030,869

 
1,015,631

 
989,201

 
1,030,869

 
989,201

Tangible common equity (2)
715,256

 
698,475

 
668,093

 
715,256

 
668,093

 
 
 
 
 
 
 
 
 
 
Loans held for investment, net of deferred fees and costs
 
 
 
 
 
 
 
 
 
Construction and land development
$
799,938

 
$
770,287

 
$
765,997

 
$
799,938

 
$
765,997

Commercial real estate - owner occupied
888,285

 
870,559

 
831,880

 
888,285

 
831,880

Commercial real estate - non-owner occupied
1,698,329

 
1,631,767

 
1,370,745

 
1,698,329

 
1,370,745

Multifamily real estate
367,257

 
353,769

 
337,723

 
367,257

 
337,723

Commercial & Industrial
568,602

 
576,567

 
469,054

 
568,602

 
469,054

Residential 1-4 Family
1,066,519

 
1,057,439

 
992,457

 
1,066,519

 
992,457

Auto
274,162

 
271,466

 
244,575

 
274,162

 
244,575

HELOC
535,088

 
527,863

 
519,196

 
535,088

 
519,196

Consumer and all other
573,310

 
494,329

 
409,471

 
573,310

 
409,471

Total loans held for investment
$
6,771,490

 
$
6,554,046

 
$
5,941,098

 
$
6,771,490

 
$
5,941,098

 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
NOW accounts
$
1,882,287

 
$
1,792,531

 
$
1,563,297

 
$
1,882,287

 
$
1,563,297

Money market accounts
1,559,895

 
1,499,585

 
1,366,451

 
1,559,895

 
1,366,451

Savings accounts
558,472

 
602,851

 
598,622

 
558,472

 
598,622

Time deposits of $100,000 and over
580,962

 
555,431

 
521,138

 
580,962

 
521,138

Other time deposits
681,248

 
672,998

 
653,584

 
681,248

 
653,584

Total interest-bearing deposits
$
5,262,864

 
$
5,123,396

 
$
4,703,092

 
$
5,262,864

 
$
4,703,092

Demand deposits
1,501,570

 
1,490,799

 
1,392,734

 
1,501,570

 
1,392,734

Total deposits
$
6,764,434

 
$
6,614,195

 
$
6,095,826

 
$
6,764,434

 
$
6,095,826

 
 
 
 
 
 
 
 
 
 
Averages
 
 
 
 
 
 
 
 
 
Assets
$
8,747,377

 
$
8,465,517

 
$
7,949,576

 
$
8,607,225

 
$
7,857,203

Loans held for investment
6,628,011

 
6,383,905

 
5,863,007

 
6,506,632

 
5,786,502

Loans held for sale
28,331

 
27,359

 
30,698

 
27,848

 
29,001

Securities
1,229,593

 
1,207,768

 
1,202,772

 
1,218,741

 
1,194,961

Earning assets
7,934,405

 
7,660,937

 
7,153,627

 
7,798,427

 
7,061,307

Deposits
6,637,742

 
6,407,281

 
6,025,545

 
6,523,148

 
5,962,475

Certificates of deposit
1,248,818

 
1,211,064

 
1,164,561

 
1,230,045

 
1,168,267

Interest-bearing deposits
5,179,774

 
5,013,315

 
4,642,899

 
5,097,004

 
4,602,878

Borrowings
1,023,599

 
986,645

 
881,027

 
1,005,224

 
848,984

Interest-bearing liabilities
6,203,373

 
5,999,960

 
5,523,926

 
6,102,228

 
5,451,862

Stockholders' equity
1,026,148

 
1,010,318

 
987,147

 
1,018,277

 
988,281

Tangible common equity (2)
709,793

 
692,384

 
670,503

 
701,138

 
672,033






 
As of & For Three Months Ended
 
As of & For Six Months Ended
 
6/30/17
 
3/31/17
 
6/30/16
 
6/30/17
 
6/30/16
Asset Quality
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Allowance for Loan Losses (ALL)
 
 
 
 
 
 
 
 
 
Beginning balance
$
38,414

 
$
37,192

 
$
34,399

 
$
37,192

 
$
34,047

Add: Recoveries
827

 
845

 
660

 
1,672

 
1,488

Less: Charge-offs
3,327

 
1,633

 
2,285

 
4,960

 
5,265

Add: Provision for loan losses
2,300

 
2,010

 
2,300

 
4,310

 
4,804

Ending balance
$
38,214

 
$
38,414

 
$
35,074

 
$
38,214

 
$
35,074

 
 
 
 
 
 
 
 
 
 
ALL / total outstanding loans
0.56
%
 
0.59
%
 
0.59
%
 
0.56
%
 
0.59
%
Net charge-offs / total average loans
0.15
%
 
0.05
%
 
0.11
%
 
0.10
%
 
0.13
%
Provision / total average loans
0.14
%
 
0.13
%
 
0.16
%
 
0.13
%
 
0.16
%
 
 
 
 
 
 
 
 
 
 
Total PCI Loans
$
56,167

 
$
57,770

 
$
67,170

 
$
56,167

 
$
67,170

Remaining fair value mark on purchased performing loans
15,382

 
16,121

 
19,092

 
15,382

 
19,092

 
 
 
 
 
 
 
 
 
 
Nonperforming Assets
 
 
 
 
 
 
 
 
 
Construction and land development
$
5,659

 
$
6,545

 
$
1,604

 
$
5,659

 
$
1,604

Commercial real estate - owner occupied
1,279

 
1,298

 
1,661

 
1,279

 
1,661

Commercial real estate - non-owner occupied
4,765

 
2,798

 
—

 
4,765

 
—

Commercial & Industrial
4,281

 
3,245

 
263

 
4,281

 
263

Residential 1-4 Family
6,128

 
5,856

 
5,448

 
6,128

 
5,448

Auto
270

 
393

 
140

 
270

 
140

HELOC
2,059

 
1,902

 
1,495

 
2,059

 
1,495

Consumer and all other
133

 
301

 
250

 
133

 
250

Nonaccrual loans
$
24,574

 
$
22,338

 
$
10,861

 
$
24,574

 
$
10,861

Other real estate owned
9,482

 
9,605

 
13,381

 
9,482

 
13,381

Total nonperforming assets (NPAs)
$
34,056

 
$
31,943

 
$
24,242

 
$
34,056

 
$
24,242

Construction and land development
$
83

 
$
16

 
$
116

 
$
83

 
$
116

Commercial real estate - owner occupied
56

 
93

 
439

 
56

 
439

Commercial real estate - non-owner occupied
298

 
711

 
723

 
298

 
723

Commercial & Industrial
55

 
—

 
117

 
55

 
117

Residential 1-4 Family
2,369

 
686

 
1,302

 
2,369

 
1,302

Auto
35

 
11

 
144

 
35

 
144

HELOC
544

 
680

 
642

 
544

 
642

Consumer and all other
185

 
126

 
50

 
185

 
50

Loans ≥ 90 days and still accruing
$
3,625

 
$
2,323

 
$
3,533

 
$
3,625

 
$
3,533

Total NPAs and loans ≥ 90 days
$
37,681

 
$
34,266

 
$
27,775

 
$
37,681

 
$
27,775

NPAs / total outstanding loans
0.50
%
 
0.49
%
 
0.41
%
 
0.50
%
 
0.41
%
NPAs / total assets
0.38
%
 
0.37
%
 
0.30
%
 
0.38
%
 
0.30
%
ALL / nonaccrual loans
155.51
%
 
171.97
%
 
322.94
%
 
155.51
%
 
322.94
%
ALL / nonperforming assets
112.21
%
 
120.26
%
 
144.68
%
 
112.21
%
 
144.68
%
 
 
 
 
 
 
 
 
 
 
Past Due Detail
 
 
 
 
 
 
 
 
 
Construction and land development
$
602

 
$
630

 
$
402

 
$
602

 
$
402

Commercial real estate - owner occupied
3,148

 
878

 
912

 
3,148

 
912

Commercial real estate - non-owner occupied
1,530

 
1,487

 
267

 
1,530

 
267

Multifamily real estate
500

 
—

 
—

 
500

 
—

Commercial & Industrial
1,652

 
453

 
2,464

 
1,652

 
2,464

Residential 1-4 Family
2,477

 
11,615

 
5,476

 
2,477

 
5,476

Auto
1,562

 
1,534

 
1,282

 
1,562

 
1,282

HELOC
1,405

 
1,490

 
1,347

 
1,405

 
1,347

Consumer and all other
1,891

 
1,766

 
1,364

 
1,891

 
1,364

Loans 30-59 days past due
$
14,767

 
$
19,853

 
$
13,514

 
$
14,767

 
$
13,514





 
As of & For Three Months Ended
 
As of & For Six Months Ended
 
6/30/17
 
3/31/17
 
6/30/16
 
6/30/17
 
6/30/16
Past Due Detail cont'd
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Construction and land development
$
26

 
$
376

 
$
1,177

 
$
26

 
$
1,177

Commercial real estate - owner occupied
194

 
—

 
—

 
194

 
—

Commercial real estate - non-owner occupied
571

 
—

 
—

 
571

 
—

Commercial & Industrial
113

 
126

 
62

 
113

 
62

Residential 1-4 Family
5,663

 
2,104

 
5,033

 
5,663

 
5,033

Auto
240

 
250

 
377

 
240

 
377

HELOC
964

 
365

 
1,228

 
964

 
1,228

Consumer and all other
1,242

 
1,460

 
412

 
1,242

 
412

Loans 60-89 days past due
$
9,013

 
$
4,681

 
$
8,289

 
$
9,013

 
$
8,289

 
 
 
 
 
 
 
 
 
 
Troubled Debt Restructurings
 
 
 
 
 
 
 
 
 
Performing
$
14,947

 
$
14,325

 
$
11,885

 
$
14,947

 
$
11,885

Nonperforming
4,454

 
4,399

 
1,658

 
4,454

 
1,658

Total troubled debt restructurings
$
19,401

 
$
18,724

 
$
13,543

 
$
19,401

 
$
13,543

 
 
 
 
 
 
 
 
 
 
Alternative Performance Measures (non-GAAP)
 
 
 
 
 
 
 
 
 
Net interest income (FTE) & Core Net Interest Income (FTE)
 
 
 
 
 
 
 
 
 
Net interest income (GAAP)
$
68,999

 
$
66,567

 
$
65,776

 
$
135,567

 
$
129,507

FTE adjustment
2,648

 
2,540

 
2,451

 
5,188

 
4,941

Net interest income (FTE) (non-GAAP) (1)
$
71,647

 
$
69,107

 
$
68,227

 
$
140,755

 
$
134,448

Less: Net accretion of acquisition fair value marks
1,617

 
1,493

 
1,402

 
3,110

 
2,548

Core net interest income (FTE) (non-GAAP) (3)
$
70,030

 
$
67,614

 
$
66,825

 
$
137,645

 
$
131,900

Average earning assets
7,934,405

 
7,660,937

 
7,153,627

 
7,798,427

 
7,061,307

Net interest margin
3.49
%
 
3.52
%
 
3.70
%
 
3.51
%
 
3.69
%
Net interest margin (FTE)
3.62
%
 
3.66
%
 
3.84
%
 
3.64
%
 
3.83
%
Core net interest margin (FTE)
3.54
%
 
3.58
%
 
3.76
%
 
3.56
%
 
3.76
%
 
 
 
 
 
 
 
 
 
 
Tangible Assets
 
 
 
 
 
 
 
 
 
Ending assets (GAAP)
$
8,915,187

 
$
8,669,920

 
$
8,100,561

 
$
8,915,187

 
$
8,100,561

Less: Ending goodwill
298,191

 
298,191

 
297,659

 
298,191

 
297,659

Less: Ending amortizable intangibles
17,422

 
18,965

 
23,449

 
17,422

 
23,449

Ending tangible assets (non-GAAP)
$
8,599,574

 
$
8,352,764

 
$
7,779,453

 
$
8,599,574

 
$
7,779,453

 
 
 
 
 
 
 
 
 
 
Tangible Common Equity (2)
 
 
 
 
 
 
 
 
 
Ending equity (GAAP)
$
1,030,869

 
$
1,015,631

 
$
989,201

 
$
1,030,869

 
$
989,201

Less: Ending goodwill
298,191

 
298,191

 
297,659

 
298,191

 
297,659

Less: Ending amortizable intangibles
17,422

 
18,965

 
23,449

 
17,422

 
23,449

Ending tangible common equity (non-GAAP)
$
715,256

 
$
698,475

 
$
668,093

 
$
715,256

 
$
668,093

 
 
 
 
 
 
 
 
 
 
Average equity (GAAP)
$
1,026,148

 
$
1,010,318

 
$
987,147

 
$
1,018,277

 
$
988,281

Less: Average goodwill
298,191

 
298,191

 
294,886

 
298,191

 
294,204

Less: Average amortizable intangibles
18,164

 
19,743

 
21,758

 
18,948

 
22,044

Average tangible common equity (non-GAAP)
$
709,793

 
$
692,384

 
$
670,503

 
$
701,138

 
$
672,033

 
 
 
 
 
 
 
 
 
 
Operating Measures (4)
 
 
 
 
 
 
 
 
 
Net income (GAAP)
$
17,956

 
$
19,124

 
$
19,337

 
$
37,080

 
$
36,298

Plus: Acquisition and conversion costs, net of tax
2,358

 
—

 
—

 
2,358

 
—

Net operating earnings (non-GAAP)
$
20,314

 
$
19,124

 
$
19,337

 
$
39,438

 
$
36,298

 
 
 
 
 
 
 
 
 
 
Noninterest expense (GAAP)
$
59,930

 
$
57,395

 
$
55,251

 
$
117,325

 
$
109,523

Less: Acquisition and conversion costs
2,744

 
—

 
—

 
2,744

 
—

Operating noninterest expense (non-GAAP)
$
57,186

 
$
57,395

 
$
55,251

 
$
114,581

 
$
109,523

 
 
 
 
 
 
 
 
 
 
Net interest income (FTE) (non-GAAP) (1)
$
71,647

 
$
69,107

 
$
68,227

 
$
140,755

 
$
134,448

Noninterest income (GAAP)
18,056

 
18,839

 
17,993

 
36,894

 
33,907

 
 
 
 
 
 
 
 
 
 
Efficiency ratio
68.84
%
 
67.20
%
 
65.96
%
 
68.03
%
 
67.02
%
Efficiency ratio (FTE) (1)
66.81
%
 
65.26
%
 
64.08
%
 
66.04
%
 
65.06
%
Operating efficiency ratio (FTE)
63.75
%
 
65.26
%
 
64.08
%
 
64.50
%
 
65.06
%





 
As of & For Three Months Ended
 
As of & For Six Months Ended
 
6/30/17
 
3/31/17
 
6/30/16
 
6/30/17
 
6/30/16
Alternative Performance Measures (non-GAAP) cont'd
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Operating Measures cont'd (4)
 
 
 
 
 
 
 
 
 
Community bank segment net income (GAAP)
$
17,405

 
$
19,120

 
$
18,798

 
$
36,525

 
$
35,705

Plus: Acquisition and conversion costs, net of tax
2,358

 
—

 
—

 
2,358

 
—

Community bank segment net operating earnings (non-GAAP)
$
19,763

 
$
19,120

 
$
18,798

 
$
38,883

 
$
35,705

 
 
 
 
 
 
 
 
 
 
Community bank segment earnings per share, diluted (GAAP)
$
0.40

 
$
0.44

 
$
0.43

 
$
0.84

 
$
0.81

Community bank segment operating earnings per share, diluted (non-GAAP)
0.45

 
0.44

 
0.43

 
0.89

 
0.81

 
 
 
 
 
 
 
 
 
 
Mortgage Origination Volume
 
 
 
 
 
 
 
 
 
Refinance Volume
$
31,958

 
$
34,331

 
$
47,033

 
$
66,289

 
$
84,337

Construction Volume
19,909

 
22,669

 
21,751

 
42,579

 
36,645

Purchase Volume
84,713

 
43,216

 
71,297

 
127,928

 
117,310

Total Mortgage loan originations
$
136,580

 
$
100,216

 
$
140,081

 
$
236,796

 
$
238,292

% of originations that are refinances
23.4
%
 
34.3
%
 
33.6
%
 
28.0
%
 
35.4
%
 
 
 
 
 
 
 
 
 
 
Other Data
 
 
 
 
 
 
 
 
 
End of period full-time employees
1,432

 
1,412

 
1,423

 
1,432

 
1,423

Number of full-service branches
112

 
113

 
120

 
112

 
120

Number of full automatic transaction machines (ATMs)
174

 
184

 
200

 
174

 
200


(1) 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) 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) Core net interest income (FTE), which is used in computing core net interest margin (FTE), provides valuable additional insight into the net interest margin by adjusting for differences in tax treatment of interest income sources as well as the net accretion of acquisition-related fair value marks.

(4) Operating measures exclude acquisition and conversion costs unrelated to the Company’s normal operations. Such costs were only incurred during the second quarter of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three months ended March 31, 2017 and June 30, 2016, and for the six months ended June 30, 2016. The Company believes these measures are useful to investors as they exclude certain costs resulting from acquisition activity and allow investors to more clearly see the combined economic results of the organization's operations.

(5) All ratios at June 30, 2017 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.


UNION BANKSHARES CORPORATION AND SUBSIDIARIES
 
 
CONSOLIDATED BALANCE SHEETS
 
 
(Dollars in thousands, except share data)
 
 
 
 
 
 
June 30,
 
December 31,
 
June 30,
 
2017
 
2016
 
2016
ASSETS
(unaudited)
 
 
 
(unaudited)
Cash and cash equivalents:
 
 
 
 
 
Cash and due from banks
$
135,759

 
$
120,758

 
$
128,896

Interest-bearing deposits in other banks
45,473

 
58,030

 
87,887

Federal funds sold
678

 
449

 
251

Total cash and cash equivalents
181,910

 
179,237

 
217,034

Securities available for sale, at fair value
960,537

 
946,764

 
949,663

Securities held to maturity, at carrying value
205,630

 
201,526

 
202,917

Restricted stock, at cost
69,631

 
60,782

 
62,206

Loans held for sale, at fair value
41,135

 
36,487

 
38,114

Loans held for investment, net of deferred fees and costs
6,771,490

 
6,307,060

 
5,941,098

Less allowance for loan losses
38,214

 
37,192

 
35,074

Net loans held for investment
6,733,276

 
6,269,868

 
5,906,024

Premises and equipment, net
121,842

 
122,027

 
124,032

Other real estate owned, net of valuation allowance
9,482

 
10,084

 
13,381

Goodwill
298,191

 
298,191

 
297,659

Amortizable intangibles, net
17,422

 
20,602

 
23,449

Bank owned life insurance
180,110

 
179,318

 
176,413

Other assets
96,021

 
101,907

 
89,669

Total assets
$
8,915,187

 
$
8,426,793

 
$
8,100,561

LIABILITIES
 
 

 
 
Noninterest-bearing demand deposits
$
1,501,570

 
$
1,393,625

 
$
1,392,734

Interest-bearing deposits
5,262,864

 
4,985,864

 
4,703,092

Total deposits
6,764,434

 
6,379,489

 
6,095,826

Securities sold under agreements to repurchase
34,543

 
59,281

 
121,262

Other short-term borrowings
602,000

 
517,500

 
557,000

Long-term borrowings
434,260

 
413,308

 
274,547

Other liabilities
49,081

 
56,183

 
62,725

Total liabilities
7,884,318

 
7,425,761

 
7,111,360

Commitments and contingencies
 
 
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
 
 
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 43,706,000 shares, 43,609,317 shares, and 43,619,867 shares, respectively.
57,643

 
57,506

 
57,537

Additional paid-in capital
607,666

 
605,397

 
605,018

Retained earnings
361,552

 
341,938

 
317,747

Accumulated other comprehensive income
4,008

 
(3,809
)
 
8,899

Total stockholders' equity
1,030,869

 
1,001,032

 
989,201

Total liabilities and stockholders' equity
$
8,915,187

 
$
8,426,793

 
$
8,100,561




UNION BANKSHARES CORPORATION AND SUBSIDIARIES
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
(Dollars in thousands, except share data)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
2017
 
2017
 
2016
 
2017
 
2016
Interest and dividend income:
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Interest and fees on loans
$
72,612

 
$
68,084

 
$
64,747

 
$
140,696

 
$
127,694

Interest on deposits in other banks
115

 
71

 
65

 
186

 
112

Interest and dividends on securities:
 
 
 
 
 
 
 
 
 
Taxable
4,982

 
4,923

 
4,510

 
9,905

 
8,826

Nontaxable
3,512

 
3,562

 
3,459

 
7,074

 
6,898

Total interest and dividend income
81,221

 
76,640

 
72,781

 
157,861

 
143,530

Interest expense:
 
 
 
 
 
 
 
 
 
Interest on deposits
6,100

 
5,077

 
4,197

 
11,176

 
8,393

Interest on short-term borrowings
1,400

 
950

 
710

 
2,350

 
1,332

Interest on long-term borrowings
4,722

 
4,046

 
2,098

 
8,768

 
4,298

Total interest expense
12,222

 
10,073

 
7,005

 
22,294

 
14,023

Net interest income
68,999

 
66,567

 
65,776

 
135,567

 
129,507

Provision for credit losses
2,173

 
2,122

 
2,300

 
4,295

 
4,904

Net interest income after provision for credit losses
66,826

 
64,445

 
63,476

 
131,272

 
124,603

Noninterest income:
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
4,963

 
4,829

 
4,754

 
9,792

 
9,488

Other service charges and fees
4,637

 
4,408

 
4,418

 
9,045

 
8,574

Fiduciary and asset management fees
2,725

 
2,794

 
2,333

 
5,519

 
4,471

Mortgage banking income, net
2,793

 
2,025

 
2,972

 
4,818

 
5,117

Gains on securities transactions, net
117

 
481

 
3

 
598

 
146

Bank owned life insurance income
1,335

 
2,125

 
1,361

 
3,460

 
2,734

Loan-related interest rate swap fees
1,031

 
1,180

 
1,091

 
2,211

 
1,753

Other operating income
455

 
997

 
1,061

 
1,451

 
1,624

Total noninterest income
18,056

 
18,839

 
17,993

 
36,894

 
33,907

Noninterest expenses:
 
 
 
 
 
 
 
 
 
Salaries and benefits
30,561

 
32,168

 
28,519

 
62,730

 
56,567

Occupancy expenses
4,718

 
4,903

 
4,809

 
9,621

 
9,785

Furniture and equipment expenses
2,720

 
2,603

 
2,595

 
5,323

 
5,232

Printing, postage, and supplies
1,406

 
1,150

 
1,280

 
2,556

 
2,419

Communications expense
872

 
910

 
927

 
1,782

 
2,016

Technology and data processing
3,927

 
3,900

 
3,608

 
7,827

 
7,422

Professional services
2,092

 
1,658

 
2,548

 
3,750

 
4,537

Marketing and advertising expense
2,279

 
1,740

 
1,924

 
4,019

 
3,863

FDIC assessment premiums and other insurance
947

 
706

 
1,379

 
1,652

 
2,741

Other taxes
2,022

 
2,022

 
1,607

 
4,043

 
3,225

Loan-related expenses
1,281

 
1,329

 
1,229

 
2,610

 
2,107

OREO and credit-related expenses
342

 
541

 
894

 
884

 
1,463

Amortization of intangible assets
1,544

 
1,637

 
1,745

 
3,180

 
3,625

Training and other personnel costs
1,043

 
969

 
905

 
2,012

 
1,649

Acquisition and conversion costs
2,744

 
—

 
—

 
2,744

 
—

Other expenses
1,432

 
1,159

 
1,282

 
2,592

 
2,872

Total noninterest expenses
59,930

 
57,395

 
55,251

 
117,325

 
109,523

Income before income taxes
24,952

 
25,889

 
26,218

 
50,841

 
48,987

Income tax expense
6,996

 
6,765

 
6,881

 
13,761

 
12,689

Net income
$
17,956

 
$
19,124

 
$
19,337

 
$
37,080

 
$
36,298

Basic earnings per common share
$
0.41

 
$
0.44

 
$
0.44

 
$
0.85

 
$
0.82

Diluted earnings per common share
$
0.41

 
$
0.44

 
$
0.44

 
$
0.85

 
$
0.82




UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(Dollars in thousands)
 
 
 
 
 
 
 
 
Community Bank
 
Mortgage
 
Eliminations
 
Consolidated
Three Months Ended June 30, 2017 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
68,580

 
$
419

 
$
—

 
$
68,999

Provision for credit losses
2,184

 
(11
)
 
—

 
2,173

Net interest income after provision for credit losses
66,396

 
430

 
—

 
66,826

Noninterest income
15,203

 
2,993

 
(140
)
 
18,056

Noninterest expenses
57,496

 
2,574

 
(140
)
 
59,930

Income before income taxes
24,103

 
849

 
—

 
24,952

Income tax expense
6,698

 
298

 
—

 
6,996

Net income
17,405

 
551

 
—

 
17,956

Plus: Acquisition and conversion costs, net of tax
2,358

 
—

 
—

 
2,358

Net operating earnings (non-GAAP)
$
19,763

 
$
551

 
$
—

 
$
20,314

Total assets
$
8,904,819

 
$
105,429

 
$
(95,061
)
 
$
8,915,187

 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
66,234

 
$
333

 
$
—

 
$
66,567

Provision for credit losses
2,104

 
18

 
—

 
2,122

Net interest income after provision for credit losses
64,130

 
315

 
—

 
64,445

Noninterest income
16,757

 
2,223

 
(141
)
 
18,839

Noninterest expenses
55,014

 
2,522

 
(141
)
 
57,395

Income before income taxes
25,873

 
16

 
—

 
25,889

Income tax expense
6,753

 
12

 
—

 
6,765

Net income
$
19,120

 
$
4

 
$
—

 
$
19,124

Total assets
$
8,660,987

 
$
76,818

 
$
(67,885
)
 
$
8,669,920

 
 
 
 
 
 
 
 
Three Months Ended June 30, 2016 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
65,478

 
$
298

 
$
—

 
$
65,776

Provision for credit losses
2,260

 
40

 
—

 
2,300

Net interest income after provision for credit losses
63,218

 
258

 
—

 
63,476

Noninterest income
14,940

 
3,207

 
(154
)
 
17,993

Noninterest expenses
52,766

 
2,639

 
(154
)
 
55,251

Income before income taxes
25,392

 
826

 
—

 
26,218

Income tax expense
6,594

 
287

 
—

 
6,881

Net income
$
18,798

 
$
539

 
$
—

 
$
19,337

Total assets
$
8,094,176

 
$
75,802

 
$
(69,417
)
 
$
8,100,561

 
 
 
 
 
 
 
 
Six Months Ended June 30, 2017 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
134,816

 
$
751

 
$
—

 
$
135,567

Provision for credit losses
4,288

 
7

 
—

 
4,295

Net interest income after provision for credit losses
130,528

 
744

 
—

 
131,272

Noninterest income
31,959

 
5,216

 
(281
)
 
36,894

Noninterest expenses
112,510

 
5,096

 
(281
)
 
117,325

Income before income taxes
49,977

 
864

 
—

 
50,841

Income tax expense
13,452

 
309

 
—

 
13,761

Net income
36,525

 
555

 
—

 
37,080

Plus: Acquisition and conversion costs, net of tax
2,358

 
—

 
—

 
2,358

Net operating earnings (non-GAAP)
$
38,883

 
$
555

 
$
—

 
$
39,438

Total assets
$
8,904,819

 
$
105,429

 
$
(95,061
)
 
$
8,915,187

 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
128,903

 
$
604

 
$
—

 
$
129,507

Provision for credit losses
4,760

 
144

 
—

 
4,904

Net interest income after provision for credit losses
124,143

 
460

 
—

 
124,603

Noninterest income
28,548

 
5,684

 
(325
)
 
33,907

Noninterest expenses
104,610

 
5,238

 
(325
)
 
109,523

Income before income taxes
48,081

 
906

 
—

 
48,987

Income tax expense
12,376

 
313

 
—

 
12,689

Net income
$
35,705

 
$
593

 
$
—

 
$
36,298

Total assets
$
8,094,176

 
$
75,802

 
$
(69,417
)
 
$
8,100,561




AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
 
For the Quarter Ended
 
June 30, 2017
 
March 31, 2017
 
Average Balance
 
Interest Income / Expense
 
Yield / Rate (1)
 
Average Balance
 
Interest Income / Expense
 
Yield / Rate (1)
Assets:
(unaudited)
 
(unaudited)
Securities:
 
 
 
 
 
 
 
 
 
 
 
Taxable
$
768,648

 
$
4,982

 
2.60
%
 
$
746,359

 
$
4,923

 
2.68
%
Tax-exempt
460,945

 
5,403

 
4.70
%
 
461,409

 
5,480

 
4.82
%
Total securities
1,229,593

 
10,385

 
3.39
%
 
1,207,768

 
10,403

 
3.49
%
Loans, net (2) (3)
6,628,011

 
73,073

 
4.42
%
 
6,383,905

 
68,503

 
4.35
%
Other earning assets
76,801

 
411

 
2.15
%
 
69,264

 
274

 
1.60
%
Total earning assets
7,934,405

 
$
83,869

 
4.24
%
 
7,660,937

 
$
79,180

 
4.19
%
Allowance for loan losses
(38,577
)
 
 
 
 
 
(37,898
)
 
 
 

Total non-earning assets
851,549

 
 
 
 
 
842,478

 
 
 
 
Total assets
$
8,747,377

 
 
 
 
 
$
8,465,517

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Transaction and money market accounts
$
3,367,008

 
$
2,729

 
0.33
%
 
$
3,205,692

 
$
1,969

 
0.25
%
Regular savings
563,948

 
152

 
0.11
%
 
596,559

 
191

 
0.13
%
Time deposits
1,248,818

 
3,219

 
1.03
%
 
1,211,064

 
2,917

 
0.98
%
Total interest-bearing deposits
5,179,774

 
6,100

 
0.47
%
 
5,013,315

 
5,077

 
0.41
%
Other borrowings (4)
1,023,599

 
6,122

 
2.40
%
 
986,645

 
4,996

 
2.05
%
Total interest-bearing liabilities
6,203,373

 
12,222

 
0.79
%
 
5,999,960

 
10,073

 
0.68
%
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
1,457,968

 
 
 
 
 
1,393,966

 
 
 
 
Other liabilities
59,888

 
 
 
 
 
61,273

 
 
 
 
Total liabilities
7,721,229

 
 
 
 
 
7,455,199

 
 
 
 
Stockholders' equity
1,026,148

 
 
 
 
 
1,010,318

 
 
 
 
Total liabilities and stockholders' equity
$
8,747,377

 
 
 
 
 
$
8,465,517

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
71,647

 
 
 
 
 
$
69,107

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread (5)
 
 
 
 
3.45
%
 
 
 
 
 
3.51
%
Cost of funds
 
 
 
 
0.62
%
 
 
 
 
 
0.53
%
Net interest margin (6)
 
 
 
 
3.62
%
 
 
 
 
 
3.66
%
 
 
 
 
 
 
 
 
 
 
 
 
(1) Rates and yields are annualized and calculated from actual, not rounded, amounts in thousands, which appear above.
(2) Nonaccrual loans are included in average loans outstanding.
(3) Interest income on loans includes $1.6 million and $1.4 million for the three months ended June 30, 2017 and March 31, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions.
(4) Interest expense on borrowings includes $47,000 and $48,000 for the three months ended June 30, 2017 and March 31, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.
(6) Core net interest margin excludes purchase accounting adjustments and was 3.54% and 3.58% for the three months ended June 30, 2017 and March 31, 2017, respectively.