Exhibit 99.2

unionbankshares_image1a10.jpg


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

UNION BANKSHARES REPORTS THIRD QUARTER RESULTS

Richmond, Va., October 18, 2017 - Union Bankshares Corporation (the “Company” or “Union”) (NASDAQ: UBSH) today reported net operating earnings(1) of $21.3 million and operating earnings per share(1) of $0.49 for its third quarter ended September 30, 2017; these operating results exclude $661,000 in after-tax merger-related costs. The Company's net operating earnings and operating earnings per share for the third quarter of 2017 represent increases of $1.0 million, or 4.9%, and $0.03, or 6.5%, respectively, in each case compared to the second quarter of 2017. For the third quarter ended September 30, 2017, net income, which includes the impact of merger-related costs, was $20.7 million, an increase of $2.7 million, or 15.0%, compared to the second quarter of 2017, and earnings per share was $0.47, an increase of $0.06, or 14.6%, compared to the second quarter of 2017.

For the nine months ended September 30, 2017, net operating earnings(1) were $60.8 million and operating earnings per share(1) were $1.39. The Company's net operating earnings and operating earnings per share for the nine months ended September 30, 2017 represent an increase of 7.2% and 7.8%, respectively, compared to the net income and earnings per share for the nine months ended September 30, 2016. For the nine months ended September 30, 2017, net income, which includes the impact of merger-related costs, was $57.7 million, an increase of 1.8% compared to the same period in 2016, and earnings per share were $1.32, an increase of 2.3% compared to the same period in 2016.

“Union delivered another solid quarterly performance with growth in operating earnings and earnings per share as we continue to gain market share and tell our unique story, which we believe is being well received in our markets,” said John C. Asbury, president and chief executive officer of Union Bankshares Corporation. “Our profitability metrics improved, and I was especially pleased to see significant progress made in lowering the efficiency ratio this quarter. The Xenith acquisition remains on track to close in early January, and I am confident that our combination will accelerate the achievement of our top tier financial performance goals, which should provide our shareholders with above average returns on their investments over the long term.  Union is fast becoming something that Virginia hasn’t had in nearly 20 years - a statewide regional bank that is uniquely positioned to provide value to our teammates, customers, shareholders and the communities we serve.”

Select highlights for the third quarter of 2017 include:
•
On October 17, 2017, the Company and Xenith Bankshares, Inc. (“Xenith”) jointly announced the receipt of regulatory approval from the Federal Reserve Bank of Richmond and from the Virginia State Corporation Commission to move forward with the proposed merger of Xenith into the Company (the “Pending Merger”).
•
Net income for the community bank segment was $20.3 million, or $0.46 per share, for the third quarter of 2017, compared to $17.4 million, or $0.40 per share, for the second quarter of 2017. Net operating earnings(1) for the community bank segment were $21.0 million, or $0.48 per share, for the third quarter of 2017, compared to $19.8 million, or $0.45 per share, for the second quarter of 2017. Net income for the community bank segment was $56.8 million, or $1.30 per share, for the nine months ended September 30, 2017, compared to $55.3 million, or $1.26 per share, for the nine months ended September 30, 2016. Net operating earnings(1) for the community bank segment were $59.9 million, or $1.37 per share, for the nine months ended September 30, 2017.
•
The mortgage segment reported net income of $347,000, or $0.01 per share, for the third quarter of 2017, compared to $551,000, or $0.01 per share, in the second quarter of 2017. The mortgage segment reported net income of $901,000, or $0.02 per share, for the nine months ended September 30, 2017 compared to $1.4 million, or $0.03 per share, for the nine months ended September 30, 2016.


•
Return on Average Assets (“ROA”) was 0.91% and operating ROA(1) was 0.94% for the quarter ended September 30, 2017 compared to ROA of 0.82% and operating ROA of 0.93% for the quarter ended June 30, 2017 and ROA of 1.00% for the quarter ended September 30, 2016.
•
Return on Average Equity (“ROE”) was 7.90% and operating ROE(1) was 8.15% for the quarter ended September 30, 2017 compared to ROE of 7.02% and operating ROE of 7.94% for the quarter ended June 30, 2017 and ROE of 8.14% for the quarter ended September 30, 2016.
•
Return on Average Tangible Common Equity (“ROTCE”) was 11.34% and operating ROTCE(1) was 11.70% for the quarter ended September 30, 2017 compared to ROTCE of 10.15% and operating ROTCE of 11.48% for the prior quarter and ROTCE of 12.00% for the third quarter of 2016.
•
The efficiency ratio (FTE) was 62.9% and the operating efficiency ratio (FTE)(1) was 62.1% for the quarter ended September 30, 2017 compared to the efficiency ratio (FTE) of 66.8% and operating efficiency ratio (FTE) of 63.8% for the prior quarter and efficiency ratio (FTE) of 64.4% for the third quarter of 2016.
•
Loans held for investment grew $127.2 million, or 7.5% (annualized), from June 30, 2017 and increased $749.8 million, or 12.2%, from September 30, 2016. Average loans held for investment increased $194.5 million, or 11.7% (annualized), from the prior quarter and increased $788.8 million, or 13.1%, from the same quarter in the prior year.
•
Period-end deposits increased $117.4 million, or 6.9% (annualized), from June 30, 2017 and grew $623.3 million, or 10.0%, from September 30, 2016. Average deposits increased $160.1 million, or 9.6% (annualized), from the prior quarter and increased $592.9 million, or 9.6%, from the same quarter in the prior year.

(1) For a reconciliation of the non-GAAP operating measures that exclude merger-related costs unrelated to the Company’s normal operations, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results. Such costs were only incurred during the second and third quarters of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three and nine months ended September 30, 2016.

NET INTEREST INCOME

For the third quarter of 2017, net interest income was $71.2 million, an increase of $2.2 million from the second quarter of 2017. Tax-equivalent net interest income was $73.8 million, an increase of $2.2 million from the second quarter of 2017. The increases in both net interest income and tax-equivalent net interest income were driven by higher earning asset balances. The third quarter net interest margin decreased 3 basis points to 3.46% from 3.49% in the previous quarter, while the tax-equivalent net interest margin also decreased 3 basis points to 3.59% from 3.62% during the same periods. The decrease in the tax-equivalent net interest margin was principally due to the 4 basis point increase in tax-equivalent cost of funds partially offset by the 1 basis point increase in the 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 third quarter of 2017, net accretion related to acquisition accounting increased $92,000, or 5.7%, from the prior quarter to $1.7 million for the quarter ended September 30, 2017. The second and third 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 June 30, 2017
$
1,570

 
$
47

 
$
1,617

For the quarter ended September 30, 2017
1,662

 
47

 
1,709

For the remaining three months of 2017 (estimated) (1)
1,358

 
28

 
1,386

For the years ending (estimated) (1):
 
 
 
 
 
2018
4,842

 
(143)

 
4,699

2019
3,483

 
(286)

 
3,197

2020
2,689

 
(301)

 
2,388

2021
2,187

 
(316)

 
1,871

2022
1,767

 
(332)

 
1,435

Thereafter
6,589

 
(4,974)

 
1,615

(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 third quarter of 2017, the Company experienced declines in nonperforming asset balances from the prior quarter, primarily related to charge-offs of nonaccrual loans. The loan loss provision increased from the prior quarter due to loan growth and higher levels of charge-offs in the third quarter of 2017. The allowance for loan losses and the related allowance for loan losses to total loans ratio decreased from the prior quarter primarily due to the continued decline in the historical loss rates and reductions in specific reserves on impaired loans that were charged off during the quarter.

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $51.0 million (net of fair value mark of $11.7 million).

Nonperforming Assets (“NPAs”)
At September 30, 2017, NPAs totaled $28.9 million, a decline of $5.2 million, or 15.2%, from June 30, 2017 and an increase of $5.6 million, or 24.2%, from September 30, 2016. In addition, NPAs as a percentage of total outstanding loans declined 8 basis points from 0.50% at June 30, 2017 and increased 4 basis points from 0.38% at September 30, 2016 to 0.42% at September 30, 2017. As the Company's NPAs have been at historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but have an insignificant impact on the Company's overall asset quality position. The following table shows a summary of asset quality balances at the quarter ended (dollars in thousands):
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2017
 
2017
 
2017
 
2016
 
2016
Nonaccrual loans
$
20,122

 
$
24,574

 
$
22,338

 
$
9,973

 
$
12,677

Foreclosed properties
6,449

 
6,828

 
6,951

 
7,430

 
7,927

Former bank premises
2,315

 
2,654

 
2,654

 
2,654

 
2,654

Total nonperforming assets
$
28,886

 
$
34,056

 
$
31,943

 
$
20,057

 
$
23,258


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,
 
2017
 
2017
 
2017
 
2016
 
2016
Beginning Balance
$
24,574

 
$
22,338

 
$
9,973

 
$
12,677

 
$
10,861

Net customer payments
(4,642
)
 
(1,498
)
 
(1,068
)
 
(1,451
)
 
(1,645
)
Additions
4,114

 
5,979

 
13,557

 
1,094

 
4,359

Charge-offs
(3,376
)
 
(2,004
)
 
(97
)
 
(1,216
)
 
(660
)
Loans returning to accruing status
—

 
(134
)
 
(27
)
 
(1,039
)
 
(23
)
Transfers to OREO
(548
)
 
(107
)
 
—

 
(92
)
 
(215
)
Ending Balance
$
20,122

 
$
24,574

 
$
22,338

 
$
9,973

 
$
12,677


The net decline in nonaccrual loans from the prior quarter was primarily attributable to charge-offs and customer payments.



The following table shows the activity in other real estate owned ("OREO") for the quarter ended (dollars in thousands):
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2017
 
2017
 
2017
 
2016
 
2016
Beginning Balance
$
9,482

 
$
9,605

 
$
10,084

 
$
10,581

 
$
13,381

Additions of foreclosed property
621

 
132

 
—

 
859

 
246

Valuation adjustments
(588
)
 
(19
)
 
(238
)
 
(138
)
 
(479
)
Proceeds from sales
(648
)
 
(272
)
 
(277
)
 
(1,282
)
 
(2,844
)
Gains (losses) from sales
(103
)
 
36

 
36

 
64

 
277

Ending Balance
$
8,764

 
$
9,482

 
$
9,605

 
$
10,084

 
$
10,581


Past Due Loans
Past due loans still accruing interest totaled $34.3 million, or 0.50% of total loans, at September 30, 2017 compared to $27.4 million, or 0.40% of total loans, at June 30, 2017 and $26.9 million, or 0.44% of total loans, at September 30, 2016. Of the total past due loans still accruing interest, $4.5 million, or 0.07% of total loans, were loans past due 90 days or more at September 30, 2017, compared to $3.6 million, or 0.05% of total loans, at June 30, 2017 and $3.5 million, or 0.06% of total loans, at September 30, 2016.

Net Charge-offs
For the third quarter of 2017, net charge-offs were $4.1 million, or 0.24% of total average loans on an annualized basis, compared to $2.5 million, or 0.15%, for the prior quarter and $929,000, or 0.06%, for the same quarter last year. Of the net charge-offs in the third quarter of 2017, the majority were previously considered impaired. For the nine months ended September 30, 2017, net charge-offs were $7.4 million, or 0.15% of total average loans on annualized basis, compared to $4.7 million, or 0.11%, for the same period in 2016.

Provision for Loan Losses
The provision for loan losses for the third quarter of 2017 was $3.1 million, an increase of $750,000 compared to the previous quarter and an increase of $653,000 compared to the same quarter in 2016. The increase in provision for loan losses was primarily driven by higher loan balances and higher levels of charge-offs in the third quarter of 2017.

Allowance for Loan Losses
The allowance for loan losses (“ALL”) decreased $1.1 million from June 30, 2017 to $37.2 million at September 30, 2017 primarily due to the continued decline in the historical loss rates and reductions in specific reserves on impaired loans that were charged off during the quarter. The ALL as a percentage of the total loan portfolio was 0.54% at September 30, 2017, 0.56% at June 30, 2017, and 0.59% at September 30, 2016.

The ratio of the ALL to nonaccrual loans was 184.7% at September 30, 2017, compared to 155.5% at June 30, 2017 and 288.3% at September 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 $520,000, or 2.9%, to $17.5 million for the quarter ended September 30, 2017 from $18.1 million in the prior quarter, primarily driven by lower loan-related swap fees and mortgage banking income, partially offset by increases in customer-related fee income and higher insurance-related income.

Mortgage banking income decreased $488,000, or 17.5%, to $2.3 million in the third quarter of 2017 compared to $2.8 million in the second quarter of 2017, related to declines in mortgage loan originations. Mortgage loan originations declined by $9.2 million, or 6.8%, in the third quarter to $127.3 million from $136.6 million in the second quarter of 2017. The majority of the decrease was related to purchase-money mortgage loans, which declined by $13.0 million from the prior quarter. Of the mortgage loan originations in the third quarter of 2017, 28.0% were refinances compared with 23.4% in the prior quarter.



NONINTEREST EXPENSE

Noninterest expense decreased $2.4 million, or 4.1%, to $57.5 million for the quarter ended September 30, 2017 from $59.9 million in the prior quarter. Excluding merger-related costs of $732,000 and $2.7 million in the third and second quarters of 2017, respectively, operating noninterest expense decreased $422,000 when compared to the second quarter of 2017. Salaries and benefits expenses declined by $792,000 primarily related to declines in incentive compensation. Marketing and advertising costs decreased $335,000 due to seasonally lower expenses. These decreases were partially offset by an increase in OREO and credit-related expenses of $797,000 primarily due to higher valuation adjustments of $569,000 and losses on sales of OREO property compared to gains on sales of OREO property in the prior quarter.

BALANCE SHEET

At September 30, 2017, total assets were $9.0 billion, an increase of $114.2 million from June 30, 2017 and an increase of $771.2 million from September 30, 2016. The increase in assets was mostly related to loan growth.

At September 30, 2017, loans held for investment (net of deferred fees and costs) were $6.9 billion, an increase of $127.2 million, or 7.5% (annualized), from June 30, 2017, while average loans increased $194.5 million, or 11.7% (annualized), from the prior quarter. Loans held for investment increased $749.8 million, or 12.2%, from September 30, 2016, while quarterly average loans increased $788.8 million, or 13.1%, from the prior year.

At September 30, 2017, total deposits were $6.9 billion, an increase of $117.4 million, or 6.9% (annualized), from June 30, 2017, while average deposits increased $160.1 million, or 9.6% (annualized), from the prior quarter. Total deposits grew $623.3 million, or 10.0%, from September 30, 2016, while quarterly average deposits increased $592.9 million, or 9.6%, from the prior year.

At September 30, 2017, June 30, 2017, and September 30, 2016, respectively, the Company had a common equity Tier 1 capital ratio of 9.40%, 9.39%, and 9.78%; a Tier 1 capital ratio of 10.56%, 10.57%, and 11.07%; a total capital ratio of 12.94%, 13.00%, and 11.60%; and a leverage ratio of 9.52%, 9.61%, and 9.89%.

The Company’s common equity to total assets ratios at September 30, 2017, June 30, 2017, and September 30, 2016 were 11.53%, 11.56%, and 12.12%, respectively, while its tangible common equity to tangible assets ratio was 8.34%, 8.32%, and 8.57%, respectively.

During the third 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 to 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 111 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, October 18th, 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 95436690.



NON-GAAP MEASURES
In reporting the results of the quarter ended September 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 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, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, 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 has filed 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 includes a joint proxy statement of the Company and Xenith and a prospectus of the Company. A definitive joint proxy statement/prospectus was first sent to the shareholders of the Company and Xenith on September 21, 2017 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, including all amendments thereto, because they 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 filed with the SEC in connection with the Pending Merger because they 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
 
Nine Months Ended
 
9/30/17
 
6/30/17
 
9/30/16
 
9/30/17
 
9/30/16
Results of Operations
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Interest and dividend income
$
84,850

 
$
81,221

 
$
74,433

 
$
242,712

 
$
217,964

Interest expense
13,652

 
12,222

 
7,405

 
35,947

 
21,429

Net interest income
71,198

 
68,999

 
67,028

 
206,765

 
196,535

Provision for credit losses
3,050

 
2,173

 
2,472

 
7,345

 
7,376

Net interest income after provision for credit losses
68,148

 
66,826

 
64,556

 
199,420

 
189,159

Noninterest income
17,536

 
18,056

 
18,950

 
54,430

 
52,857

Noninterest expenses
57,496

 
59,930

 
56,913

 
174,821

 
166,436

Income before income taxes
28,188

 
24,952

 
26,593

 
79,029

 
75,580

Income tax expense
7,530

 
6,996

 
6,192

 
21,292

 
18,881

Net income
$
20,658

 
$
17,956

 
$
20,401

 
$
57,737

 
$
56,699

 
 
 
 
 
 
 
 
 
 
Interest earned on earning assets (FTE) (1)
$
87,498

 
$
83,869

 
$
76,860

 
$
250,548

 
$
225,331

Net interest income (FTE) (1)
73,846

 
71,647

 
69,455

 
214,601

 
203,902

 
 
 
 
 
 
 
 
 
 
Net income - community bank segment
$
20,311

 
$
17,405

 
$
19,616

 
$
56,836

 
$
55,321

Net income - mortgage segment
347

 
551

 
785

 
901

 
1,378

 
 
 
 
 
 
 
 
 
 
Key Ratios
 
 
 
 
 
 
 
 
 
Earnings per common share, diluted
$
0.47

 
$
0.41

 
$
0.47

 
$
1.32

 
$
1.29

Return on average assets (ROA)
0.91
%
 
0.82
%
 
1.00
%
 
0.88
%
 
0.95
%
Return on average equity (ROE)
7.90
%
 
7.02
%
 
8.14
%
 
7.53
%
 
7.64
%
Return on average tangible common equity (ROTCE) (2)
11.34
%
 
10.15
%
 
12.00
%
 
10.90
%
 
11.25
%
Efficiency ratio
64.80
%
 
68.84
%
 
66.19
%
 
66.93
%
 
66.74
%
Efficiency ratio (FTE) (1)
62.92
%
 
66.81
%
 
64.38
%
 
64.98
%
 
64.82
%
Net interest margin
3.46
%
 
3.49
%
 
3.63
%
 
3.49
%
 
3.67
%
Net interest margin (FTE) (1)
3.59
%
 
3.62
%
 
3.76
%
 
3.62
%
 
3.80
%
Yields on earning assets (FTE) (1)
4.25
%
 
4.24
%
 
4.16
%
 
4.23
%
 
4.20
%
Cost of interest-bearing liabilities (FTE) (1)
0.85
%
 
0.79
%
 
0.52
%
 
0.78
%
 
0.52
%
Cost of funds (FTE) (1)
0.66
%
 
0.62
%
 
0.40
%
 
0.61
%
 
0.40
%
 
 
 
 
 
 
 
 
 
 
Operating Measures (3)
 
 
 
 
 
 
 
 
 
Net operating earnings
$
21,319

 
$
20,314

 
$
20,401

 
$
60,757

 
$
56,699

Operating earnings per share, diluted
$
0.49

 
$
0.46

 
$
0.47

 
$
1.39

 
$
1.29

Operating ROA
0.94
%
 
0.93
%
 
1.00
%
 
0.93
%
 
0.95
%
Operating ROE
8.15
%
 
7.94
%
 
8.14
%
 
7.93
%
 
7.64
%
Operating ROTCE
11.70
%
 
11.48
%
 
12.00
%
 
11.47
%
 
11.25
%
Operating efficiency ratio (FTE)
62.12
%
 
63.75
%
 
64.38
%
 
63.69
%
 
64.82
%
Community bank segment net operating earnings
$
20,972

 
$
19,763

 
$
19,616

 
$
59,856

 
$
55,321

Community bank segment operating earnings per share, diluted
$
0.48

 
$
0.45

 
$
0.45

 
$
1.37

 
$
1.26

 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
Earnings per common share, basic
$
0.47

 
$
0.41

 
$
0.47

 
$
1.32

 
$
1.29

Earnings per common share, diluted
0.47

 
0.41

 
0.47

 
1.32

 
1.29

Cash dividends paid per common share
0.20

 
0.20

 
0.19

 
0.60

 
0.57

Market value per share
35.30

 
33.90

 
26.77

 
35.30

 
26.77

Book value per common share
24.00

 
23.79

 
23.18

 
24.00

 
23.18

Tangible book value per common share (2)
16.76

 
16.50

 
15.75

 
16.76

 
15.75

Price to earnings ratio, diluted
18.93

 
20.61

 
14.32

 
20.00

 
15.54

Price to book value per common share ratio
1.47

 
1.42

 
1.15

 
1.47

 
1.15

Price to tangible book value per common share ratio (2)
2.11

 
2.05

 
1.70

 
2.11

 
1.70

Weighted average common shares outstanding, basic
43,706,635

 
43,693,427

 
43,565,937

 
43,685,045

 
43,853,548

Weighted average common shares outstanding, diluted
43,792,058

 
43,783,952

 
43,754,915

 
43,767,502

 
43,967,725

Common shares outstanding at end of period
43,729,229

 
43,706,000

 
43,556,486

 
43,729,229

 
43,556,486



 


 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/17
 
6/30/17
 
9/30/16
 
9/30/17
 
9/30/16
Capital Ratios
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Common equity Tier 1 capital ratio (4)
9.40
%
 
9.39
%
 
9.78
%
 
9.40
%
 
9.78
%
Tier 1 capital ratio (4)
10.56
%
 
10.57
%
 
11.07
%
 
10.56
%
 
11.07
%
Total capital ratio (4)
12.94
%
 
13.00
%
 
11.60
%
 
12.94
%
 
11.60
%
Leverage ratio (Tier 1 capital to average assets) (4)
9.52
%
 
9.61
%
 
9.89
%
 
9.52
%
 
9.89
%
Common equity to total assets
11.53
%
 
11.56
%
 
12.12
%
 
11.53
%
 
12.12
%
Tangible common equity to tangible assets (2)
8.34
%
 
8.32
%
 
8.57
%
 
8.34
%
 
8.57
%
 
 
 
 
 
 
 
 
 
 
Financial Condition
 
 
 
 
 
 
 
 
 
Assets
$
9,029,436

 
$
8,915,187

 
$
8,258,230

 
$
9,029,436

 
$
8,258,230

Loans held for investment
6,898,729

 
6,771,490

 
6,148,918

 
6,898,729

 
6,148,918

Earning Assets
8,232,413

 
8,094,574

 
7,466,956

 
8,232,413

 
7,466,956

Goodwill
298,191

 
298,191

 
298,191

 
298,191

 
298,191

Amortizable intangibles, net
16,017

 
17,422

 
22,343

 
16,017

 
22,343

Deposits
6,881,826

 
6,764,434

 
6,258,506

 
6,881,826

 
6,258,506

Stockholders' equity
1,041,371

 
1,030,869

 
1,000,964

 
1,041,371

 
1,000,964

Tangible common equity (2)
727,163

 
715,256

 
680,430

 
727,163

 
680,430

 
 
 
 
 
 
 
 
 
 
Loans held for investment, net of deferred fees and costs
 
 
 
 
 
 
 
 
 
Construction and land development
$
841,738

 
$
799,938

 
$
776,430

 
$
841,738

 
$
776,430

Commercial real estate - owner occupied
903,523

 
888,285

 
857,142

 
903,523

 
857,142

Commercial real estate - non-owner occupied
1,748,039

 
1,698,329

 
1,454,828

 
1,748,039

 
1,454,828

Multifamily real estate
368,686

 
367,257

 
339,313

 
368,686

 
339,313

Commercial & Industrial
554,522

 
568,602

 
509,857

 
554,522

 
509,857

Residential 1-4 Family
1,083,112

 
1,066,519

 
999,361

 
1,083,112

 
999,361

Auto
276,572

 
274,162

 
255,188

 
276,572

 
255,188

HELOC
535,446

 
535,088

 
524,097

 
535,446

 
524,097

Consumer and all other
587,091

 
573,310

 
432,702

 
587,091

 
432,702

Total loans held for investment
$
6,898,729

 
$
6,771,490

 
$
6,148,918

 
$
6,898,729

 
$
6,148,918

 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
NOW accounts
$
1,851,327

 
$
1,882,287

 
$
1,635,446

 
$
1,851,327

 
$
1,635,446

Money market accounts
1,621,443

 
1,559,895

 
1,398,177

 
1,621,443

 
1,398,177

Savings accounts
553,082

 
558,472

 
596,702

 
553,082

 
596,702

Time deposits of $100,000 and over
621,070

 
580,962

 
528,227

 
621,070

 
528,227

Other time deposits
699,755

 
681,248

 
657,686

 
699,755

 
657,686

Total interest-bearing deposits
$
5,346,677

 
$
5,262,864

 
$
4,816,238

 
$
5,346,677

 
$
4,816,238

Demand deposits
1,535,149

 
1,501,570

 
1,442,268

 
1,535,149

 
1,442,268

Total deposits
$
6,881,826

 
$
6,764,434

 
$
6,258,506

 
$
6,881,826

 
$
6,258,506

 
 
 
 
 
 
 
 
 
 
Averages
 
 
 
 
 
 
 
 
 
Assets
$
8,973,964

 
$
8,747,377

 
$
8,153,951

 
$
8,730,815

 
$
7,956,841

Loans held for investment
6,822,498

 
6,628,011

 
6,033,723

 
6,613,078

 
5,869,511

Loans held for sale
38,569

 
28,331

 
42,755

 
31,461

 
33,619

Securities
1,243,904

 
1,229,593

 
1,218,552

 
1,227,220

 
1,202,882

Earning assets
8,167,919

 
7,934,405

 
7,354,684

 
7,922,944

 
7,159,813

Deposits
6,797,840

 
6,637,742

 
6,204,958

 
6,615,718

 
6,043,892

Certificates of deposit
1,289,794

 
1,248,818

 
1,181,936

 
1,250,180

 
1,172,856

Interest-bearing deposits
5,302,226

 
5,179,774

 
4,796,505

 
5,166,163

 
4,667,891

Borrowings
1,080,226

 
1,023,599

 
884,597

 
1,030,500

 
860,942

Interest-bearing liabilities
6,382,452

 
6,203,373

 
5,681,102

 
6,196,663

 
5,528,833

Stockholders' equity
1,037,792

 
1,026,148

 
996,668

 
1,024,853

 
991,097

Tangible common equity (2)
722,920

 
709,793

 
676,308

 
708,478

 
673,468






 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/17
 
6/30/17
 
9/30/16
 
9/30/17
 
9/30/16
Asset Quality
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Allowance for Loan Losses (ALL)
 
 
 
 
 
 
 
 
 
Beginning balance
$
38,214

 
$
38,414

 
$
35,074

 
$
37,192

 
$
34,047

Add: Recoveries
887

 
827

 
534

 
2,559

 
2,022

Less: Charge-offs
4,989

 
3,327

 
1,463

 
9,949

 
6,728

Add: Provision for loan losses
3,050

 
2,300

 
2,397

 
7,360

 
7,201

Ending balance
$
37,162

 
$
38,214

 
$
36,542

 
$
37,162

 
$
36,542

 
 
 
 
 
 
 
 
 
 
ALL / total outstanding loans
0.54
%
 
0.56
%
 
0.59
%
 
0.54
%
 
0.59
%
Net charge-offs / total average loans
0.24
%
 
0.15
%
 
0.06
%
 
0.15
%
 
0.11
%
Provision / total average loans
0.18
%
 
0.14
%
 
0.16
%
 
0.15
%
 
0.16
%
 
 
 
 
 
 
 
 
 
 
Total PCI Loans
$
51,041

 
$
56,167

 
$
62,346

 
$
51,041

 
$
62,346

Remaining fair value mark on purchased performing loans
14,602

 
15,382

 
18,154

 
14,602

 
18,154

 
 
 
 
 
 
 
 
 
 
Nonperforming Assets
 
 
 
 
 
 
 
 
 
Construction and land development
$
5,671

 
$
5,659

 
$
2,301

 
$
5,671

 
$
2,301

Commercial real estate - owner occupied
2,205

 
1,279

 
1,609

 
2,205

 
1,609

Commercial real estate - non-owner occupied
2,701

 
4,765

 
—

 
2,701

 
—

Commercial & Industrial
1,252

 
4,281

 
1,344

 
1,252

 
1,344

Residential 1-4 Family
6,163

 
6,128

 
5,279

 
6,163

 
5,279

Auto
174

 
270

 
231

 
174

 
231

HELOC
1,791

 
2,059

 
1,464

 
1,791

 
1,464

Consumer and all other
165

 
133

 
449

 
165

 
449

Nonaccrual loans
$
20,122

 
$
24,574

 
$
12,677

 
$
20,122

 
$
12,677

Other real estate owned
8,764

 
9,482

 
10,581

 
8,764

 
10,581

Total nonperforming assets (NPAs)
$
28,886

 
$
34,056

 
$
23,258

 
$
28,886

 
$
23,258

Construction and land development
$
54

 
$
83

 
$
610

 
$
54

 
$
610

Commercial real estate - owner occupied
679

 
56

 
304

 
679

 
304

Commercial real estate - non-owner occupied
298

 
298

 
—

 
298

 
—

Commercial & Industrial
101

 
55

 
77

 
101

 
77

Residential 1-4 Family
2,360

 
2,369

 
2,005

 
2,360

 
2,005

Auto
143

 
35

 
28

 
143

 
28

HELOC
709

 
544

 
407

 
709

 
407

Consumer and all other
188

 
185

 
98

 
188

 
98

Loans ≥ 90 days and still accruing
$
4,532

 
$
3,625

 
$
3,529

 
$
4,532

 
$
3,529

Total NPAs and loans ≥ 90 days
$
33,418

 
$
37,681

 
$
26,787

 
$
33,418

 
$
26,787

NPAs / total outstanding loans
0.42
%
 
0.50
%
 
0.38
%
 
0.42
%
 
0.38
%
NPAs / total assets
0.32
%
 
0.38
%
 
0.28
%
 
0.32
%
 
0.28
%
ALL / nonaccrual loans
184.68
%
 
155.51
%
 
288.25
%
 
184.68
%
 
288.25
%
ALL / nonperforming assets
128.65
%
 
112.21
%
 
157.12
%
 
128.65
%
 
157.12
%
 
 
 
 
 
 
 
 
 
 
Past Due Detail
 
 
 
 
 
 
 
 
 
Construction and land development
$
7,221

 
$
602

 
$
309

 
$
7,221

 
$
309

Commercial real estate - owner occupied
1,707

 
3,148

 
1,411

 
1,707

 
1,411

Commercial real estate - non-owner occupied
909

 
1,530

 
324

 
909

 
324

Multifamily real estate
—

 
500

 
—

 
—

 
—

Commercial & Industrial
1,558

 
1,652

 
567

 
1,558

 
567

Residential 1-4 Family
5,633

 
2,477

 
4,985

 
5,633

 
4,985

Auto
2,415

 
1,562

 
1,846

 
2,415

 
1,846

HELOC
1,400

 
1,405

 
2,600

 
1,400

 
2,600

Consumer and all other
3,469

 
1,891

 
1,713

 
3,469

 
1,713

Loans 30-59 days past due
$
24,312

 
$
14,767

 
$
13,755

 
$
24,312

 
$
13,755





 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/17
 
6/30/17
 
9/30/16
 
9/30/17
 
9/30/16
Past Due Detail cont'd
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Construction and land development
$
100

 
$
26

 
$
697

 
$
100

 
$
697

Commercial real estate - owner occupied
689

 
194

 
365

 
689

 
365

Commercial real estate - non-owner occupied
571

 
571

 
—

 
571

 
—

Commercial & Industrial
255

 
113

 
51

 
255

 
51

Residential 1-4 Family
1,439

 
5,663

 
6,345

 
1,439

 
6,345

Auto
293

 
240

 
239

 
293

 
239

HELOC
628

 
964

 
899

 
628

 
899

Consumer and all other
1,445

 
1,242

 
1,037

 
1,445

 
1,037

Loans 60-89 days past due
$
5,420

 
$
9,013

 
$
9,633

 
$
5,420

 
$
9,633

 
 
 
 
 
 
 
 
 
 
Troubled Debt Restructurings
 
 
 
 
 
 
 
 
 
Performing
$
16,519

 
$
14,947

 
$
11,824

 
$
16,519

 
$
11,824

Nonperforming
2,725

 
4,454

 
1,452

 
2,725

 
1,452

Total troubled debt restructurings
$
19,244

 
$
19,401

 
$
13,276

 
$
19,244

 
$
13,276

 
 
 
 
 
 
 
 
 
 
Alternative Performance Measures (non-GAAP)
 
 
 
 
 
 
 
 
 
Net interest income (FTE)
 
 
 
 
 
 
 
 
 
Net interest income (GAAP)
$
71,198

 
$
68,999

 
$
67,028

 
$
206,765

 
$
196,535

FTE adjustment
2,648

 
2,648

 
2,427

 
7,836

 
7,367

Net interest income (FTE) (non-GAAP) (1)
$
73,846

 
$
71,647

 
$
69,455

 
$
214,601

 
$
203,902

Average earning assets
8,167,919

 
7,934,405

 
7,354,684

 
7,922,944

 
7,159,813

Net interest margin
3.46
%
 
3.49
%
 
3.63
%
 
3.49
%
 
3.67
%
Net interest margin (FTE)
3.59
%
 
3.62
%
 
3.76
%
 
3.62
%
 
3.80
%
 
 
 
 
 
 
 
 
 
 
Tangible Assets
 
 
 
 
 
 
 
 
 
Ending assets (GAAP)
$
9,029,436

 
$
8,915,187

 
$
8,258,230

 
$
9,029,436

 
$
8,258,230

Less: Ending goodwill
298,191

 
298,191

 
298,191

 
298,191

 
298,191

Less: Ending amortizable intangibles
16,017

 
17,422

 
22,343

 
16,017

 
22,343

Ending tangible assets (non-GAAP)
$
8,715,228

 
$
8,599,574

 
$
7,937,696

 
$
8,715,228

 
$
7,937,696

 
 
 
 
 
 
 
 
 
 
Tangible Common Equity (2)
 
 
 
 
 
 
 
 
 
Ending equity (GAAP)
$
1,041,371

 
$
1,030,869

 
$
1,000,964

 
$
1,041,371

 
$
1,000,964

Less: Ending goodwill
298,191

 
298,191

 
298,191

 
298,191

 
298,191

Less: Ending amortizable intangibles
16,017

 
17,422

 
22,343

 
16,017

 
22,343

Ending tangible common equity (non-GAAP)
$
727,163

 
$
715,256

 
$
680,430

 
$
727,163

 
$
680,430

 
 
 
 
 
 
 
 
 
 
Average equity (GAAP)
$
1,037,792

 
$
1,026,148

 
$
996,668

 
$
1,024,853

 
$
991,097

Less: Average goodwill
298,191

 
298,191

 
297,707

 
298,191

 
295,380

Less: Average amortizable intangibles
16,681

 
18,164

 
22,653

 
18,184

 
22,249

Average tangible common equity (non-GAAP)
$
722,920

 
$
709,793

 
$
676,308

 
$
708,478

 
$
673,468

 
 
 
 
 
 
 
 
 
 
Operating Measures (3)
 
 
 
 
 
 
 
 
 
Net income (GAAP)
$
20,658

 
$
17,956

 
$
20,401

 
$
57,737

 
$
56,699

Plus: Merger-related costs, net of tax
661

 
2,358

 
—

 
3,020

 
—

Net operating earnings (non-GAAP)
$
21,319

 
$
20,314

 
$
20,401

 
$
60,757

 
$
56,699

 
 
 
 
 
 
 
 
 
 
Noninterest expense (GAAP)
$
57,496

 
$
59,930

 
$
56,913

 
$
174,821

 
$
166,436

Less: Merger-related costs
732

 
2,744

 
—

 
3,476

 
—

Operating noninterest expense (non-GAAP)
$
56,764

 
$
57,186

 
$
56,913

 
$
171,345

 
$
166,436

 
 
 
 
 
 
 
 
 
 
Net interest income (FTE) (non-GAAP) (1)
$
73,846

 
$
71,647

 
$
69,455

 
$
214,601

 
$
203,902

Noninterest income (GAAP)
17,536

 
18,056

 
18,950

 
54,430

 
52,857

 
 
 
 
 
 
 
 
 
 
Efficiency ratio
64.80
%
 
68.84
%
 
66.19
%
 
66.93
%
 
66.74
%
Efficiency ratio (FTE) (1)
62.92
%
 
66.81
%
 
64.38
%
 
64.98
%
 
64.82
%
Operating efficiency ratio (FTE)
62.12
%
 
63.75
%
 
64.38
%
 
63.69
%
 
64.82
%





 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/17
 
6/30/17
 
9/30/16
 
9/30/17
 
9/30/16
Alternative Performance Measures (non-GAAP) cont'd
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Operating Measures cont'd (3)
 
 
 
 
 
 
 
 
 
Community bank segment net income (GAAP)
$
20,311

 
$
17,405

 
$
19,616

 
$
56,836

 
$
55,321

Plus: Merger-related costs, net of tax
661

 
2,358

 
—

 
3,020

 
—

Community bank segment net operating earnings (non-GAAP)
$
20,972

 
$
19,763

 
$
19,616

 
$
59,856

 
$
55,321

 
 
 
 
 
 
 
 
 
 
Community bank segment earnings per share, diluted (GAAP)
$
0.46

 
$
0.40

 
$
0.45

 
$
1.30

 
$
1.26

Community bank segment operating earnings per share, diluted (non-GAAP)
0.48

 
0.45

 
0.45

 
1.37

 
1.26

 
 
 
 
 
 
 
 
 
 
Mortgage Origination Volume
 
 
 
 
 
 
 
 
 
Refinance Volume
$
35,678

 
$
31,958

 
$
52,883

 
$
101,967

 
$
137,221

Construction Volume
19,966

 
19,909

 
20,760

 
62,545

 
57,405

Purchase Volume
71,694

 
84,713

 
83,014

 
199,622

 
200,323

Total Mortgage loan originations
$
127,338

 
$
136,580

 
$
156,657

 
$
364,134

 
$
394,949

% of originations that are refinances
28.0
%
 
23.4
%
 
33.8
%
 
28.0
%
 
34.7
%
 
 
 
 
 
 
 
 
 
 
Other Data
 
 
 
 
 
 
 
 
 
End of period full-time employees
1,427

 
1,432

 
1,391

 
1,427

 
1,391

Number of full-service branches
111

 
112

 
115

 
111

 
115

Number of full automatic transaction machines (ATMs)
173

 
174

 
193

 
173

 
193


(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) Operating measures exclude merger-related costs unrelated to the Company’s normal operations. Such costs were only incurred during the second and third quarters of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three and nine months ended September 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.

(4) All ratios at September 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)
 
 
 
 
 
 
September 30,
 
December 31,
 
September 30,
 
2017
 
2016
 
2016
ASSETS
(unaudited)
 
(audited)
 
(unaudited)
Cash and cash equivalents:
 
 
 
 
 
Cash and due from banks
$
115,776

 
$
120,758

 
$
103,979

Interest-bearing deposits in other banks
60,294

 
58,030

 
51,303

Federal funds sold
891

 
449

 
893

Total cash and cash equivalents
176,961

 
179,237

 
156,175

Securities available for sale, at fair value
968,361

 
946,764

 
954,984

Securities held to maturity, at carrying value
204,801

 
201,526

 
200,839

Restricted stock, at cost
68,441

 
60,782

 
63,204

Loans held for sale, at fair value
30,896

 
36,487

 
46,814

Loans held for investment, net of deferred fees and costs
6,898,729

 
6,307,060

 
6,148,918

Less allowance for loan losses
37,162

 
37,192

 
36,542

Net loans held for investment
6,861,567

 
6,269,868

 
6,112,376

Premises and equipment, net
120,808

 
122,027

 
123,416

Other real estate owned, net of valuation allowance
8,764

 
10,084

 
10,581

Goodwill
298,191

 
298,191

 
298,191

Amortizable intangibles, net
16,017

 
20,602

 
22,343

Bank owned life insurance
181,451

 
179,318

 
177,847

Other assets
93,178

 
101,907

 
91,460

Total assets
$
9,029,436

 
$
8,426,793

 
$
8,258,230

LIABILITIES
 
 

 
 
Noninterest-bearing demand deposits
$
1,535,149

 
$
1,393,625

 
$
1,442,268

Interest-bearing deposits
5,346,677

 
4,985,864

 
4,816,238

Total deposits
6,881,826

 
6,379,489

 
6,258,506

Securities sold under agreements to repurchase
43,337

 
59,281

 
64,225

Other short-term borrowings
574,000

 
517,500

 
601,500

Long-term borrowings
434,750

 
413,308

 
259,902

Other liabilities
54,152

 
56,183

 
73,133

Total liabilities
7,988,065

 
7,425,761

 
7,257,266

Commitments and contingencies
 
 
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
 
 
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 43,729,229 shares, 43,609,317 shares, and 43,556,486 shares, respectively.
57,708

 
57,506

 
57,444

Additional paid-in capital
608,884

 
605,397

 
603,785

Retained earnings
373,468

 
341,938

 
329,876

Accumulated other comprehensive income
1,311

 
(3,809
)
 
9,859

Total stockholders' equity
1,041,371

 
1,001,032

 
1,000,964

Total liabilities and stockholders' equity
$
9,029,436

 
$
8,426,793

 
$
8,258,230




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,
 
2017
 
2017
 
2016
 
2017
 
2016
Interest and dividend income:
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Interest and fees on loans
$
75,948

 
$
72,612

 
$
66,190

 
$
216,644

 
$
193,884

Interest on deposits in other banks
181

 
115

 
65

 
367

 
178

Interest and dividends on securities:
 
 
 
 
 
 
 
 
 
Taxable
5,175

 
4,982

 
4,732

 
15,081

 
13,558

Nontaxable
3,546

 
3,512

 
3,446

 
10,620

 
10,344

Total interest and dividend income
84,850

 
81,221

 
74,433

 
242,712

 
217,964

Interest expense:
 
 
 
 
 
 
 
 
 
Interest on deposits
7,234

 
6,100

 
4,552

 
18,410

 
12,945

Interest on short-term borrowings
1,871

 
1,400

 
765

 
4,221

 
2,098

Interest on long-term borrowings
4,547

 
4,722

 
2,088

 
13,316

 
6,386

Total interest expense
13,652

 
12,222

 
7,405

 
35,947

 
21,429

Net interest income
71,198

 
68,999

 
67,028

 
206,765

 
196,535

Provision for credit losses
3,050

 
2,173

 
2,472

 
7,345

 
7,376

Net interest income after provision for credit losses
68,148

 
66,826

 
64,556

 
199,420

 
189,159

Noninterest income:
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
5,153

 
4,963

 
4,965

 
14,945

 
14,454

Other service charges and fees
4,529

 
4,637

 
4,397

 
13,575

 
12,971

Fiduciary and asset management fees
2,794

 
2,725

 
2,844

 
8,313

 
7,315

Mortgage banking income, net
2,305

 
2,793

 
3,207

 
7,123

 
8,324

Gains on securities transactions, net
184

 
117

 
—

 
782

 
145

Bank owned life insurance income
1,377

 
1,335

 
1,389

 
4,837

 
4,122

Loan-related interest rate swap fees
416

 
1,031

 
1,303

 
2,627

 
3,056

Other operating income
778

 
455

 
845

 
2,228

 
2,470

Total noninterest income
17,536

 
18,056

 
18,950

 
54,430

 
52,857

Noninterest expenses:
 
 
 
 
 
 
 
 
 
Salaries and benefits
29,769

 
30,561

 
30,493

 
92,499

 
87,061

Occupancy expenses
4,939

 
4,718

 
4,841

 
14,560

 
14,627

Furniture and equipment expenses
2,559

 
2,720

 
2,635

 
7,882

 
7,867

Printing, postage, and supplies
1,154

 
1,406

 
1,147

 
3,710

 
3,566

Communications expense
798

 
872

 
948

 
2,580

 
2,964

Technology and data processing
4,232

 
3,927

 
3,917

 
12,059

 
11,340

Professional services
1,985

 
2,092

 
1,895

 
5,734

 
6,432

Marketing and advertising expense
1,944

 
2,279

 
1,975

 
5,963

 
5,838

FDIC assessment premiums and other insurance
1,141

 
947

 
1,262

 
2,793

 
4,003

Other taxes
2,022

 
2,022

 
639

 
6,065

 
3,864

Loan-related expenses
1,349

 
1,281

 
1,531

 
3,959

 
3,638

OREO and credit-related expenses
1,139

 
342

 
503

 
2,023

 
1,965

Amortization of intangible assets
1,480

 
1,544

 
1,843

 
4,661

 
5,468

Training and other personnel costs
887

 
1,043

 
863

 
2,900

 
2,512

Merger-related costs
732

 
2,744

 
—

 
3,476

 
—

Other expenses
1,366

 
1,432

 
2,421

 
3,957

 
5,291

Total noninterest expenses
57,496

 
59,930

 
56,913

 
174,821

 
166,436

Income before income taxes
28,188

 
24,952

 
26,593

 
79,029

 
75,580

Income tax expense
7,530

 
6,996

 
6,192

 
21,292

 
18,881

Net income
$
20,658

 
$
17,956

 
$
20,401

 
$
57,737

 
$
56,699

Basic earnings per common share
$
0.47

 
$
0.41

 
$
0.47

 
$
1.32

 
$
1.29

Diluted earnings per common share
$
0.47

 
$
0.41

 
$
0.47

 
$
1.32

 
$
1.29




UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(Dollars in thousands)
 
 
 
 
 
 
 
 
Community Bank
 
Mortgage
 
Eliminations
 
Consolidated
Three Months Ended September 30, 2017 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
70,718

 
$
480

 
$
—

 
$
71,198

Provision for credit losses
3,056

 
(6
)
 
—

 
3,050

Net interest income after provision for credit losses
67,662

 
486

 
—

 
68,148

Noninterest income
15,121

 
2,527

 
(112
)
 
17,536

Noninterest expenses
55,133

 
2,475

 
(112
)
 
57,496

Income before income taxes
27,650

 
538

 
—

 
28,188

Income tax expense
7,339

 
191

 
—

 
7,530

Net income
20,311

 
347

 
—

 
20,658

Plus: Merger-related costs, net of tax
661

 
—

 
—

 
661

Net operating earnings (non-GAAP)
$
20,972

 
$
347

 
$
—

 
$
21,319

Total assets
$
9,020,486

 
$
97,154

 
$
(88,204
)
 
$
9,029,436

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: Merger-related 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 September 30, 2016 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
66,605

 
$
423

 
$
—

 
$
67,028

Provision for credit losses
2,455

 
17

 
—

 
2,472

Net interest income after provision for credit losses
64,150

 
406

 
—

 
64,556

Noninterest income
15,589

 
3,501

 
(140
)
 
18,950

Noninterest expenses
54,353

 
2,700

 
(140
)
 
56,913

Income before income taxes
25,386

 
1,207

 
—

 
26,593

Income tax expense
5,770

 
422

 
—

 
6,192

Net income
$
19,616

 
$
785

 
$
—

 
$
20,401

Total assets
$
8,251,351

 
$
90,692

 
$
(83,813
)
 
$
8,258,230

Nine Months Ended September 30, 2017 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
205,534

 
$
1,231

 
$
—

 
$
206,765

Provision for credit losses
7,344

 
1

 
—

 
7,345

Net interest income after provision for credit losses
198,190

 
1,230

 
—

 
199,420

Noninterest income
47,080

 
7,743

 
(393
)
 
54,430

Noninterest expenses
167,643

 
7,571

 
(393
)
 
174,821

Income before income taxes
77,627

 
1,402

 
—

 
79,029

Income tax expense
20,791

 
501

 
—

 
21,292

Net income
56,836

 
901

 
—

 
57,737

Plus: Merger-related costs, net of tax
3,020

 
—

 
—

 
3,020

Net operating earnings (non-GAAP)
$
59,856

 
$
901

 
$
—

 
$
60,757

Total assets
$
9,020,486

 
$
97,154

 
$
(88,204
)
 
$
9,029,436

Nine Months Ended September 30, 2016 (unaudited)
 
 
 
 
 
 
 
Net interest income
$
195,508

 
$
1,027

 
$
—

 
$
196,535

Provision for credit losses
7,215

 
161

 
—

 
7,376

Net interest income after provision for credit losses
188,293

 
866

 
—

 
189,159

Noninterest income
44,137

 
9,185

 
(465
)
 
52,857

Noninterest expenses
158,964

 
7,937

 
(465
)
 
166,436

Income before income taxes
73,466

 
2,114

 
—

 
75,580

Income tax expense
18,145

 
736

 
—

 
18,881

Net income
$
55,321

 
$
1,378

 
$
—

 
$
56,699

Total assets
$
8,251,351

 
$
90,692

 
$
(83,813
)
 
$
8,258,230




AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
 
For the Quarter Ended
 
September 30, 2017
 
June 30, 2017
 
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
$
774,513

 
$
5,175

 
2.65
%
 
$
768,648

 
$
4,982

 
2.60
%
Tax-exempt
469,391

 
5,455

 
4.61
%
 
460,945

 
5,403

 
4.70
%
Total securities
1,243,904

 
10,630

 
3.39
%
 
1,229,593

 
10,385

 
3.39
%
Loans, net (3) (4)
6,822,498

 
76,333

 
4.44
%
 
6,628,011

 
73,073

 
4.42
%
Other earning assets
101,517

 
535

 
2.09
%
 
76,801

 
411

 
2.15
%
Total earning assets
8,167,919

 
$
87,498

 
4.25
%
 
7,934,405

 
$
83,869

 
4.24
%
Allowance for loan losses
(38,138
)
 
 
 
 
 
(38,577
)
 
 
 

Total non-earning assets
844,183

 
 
 
 
 
851,549

 
 
 
 
Total assets
$
8,973,964

 
 
 
 
 
$
8,747,377

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Transaction and money market accounts
$
3,457,279

 
$
3,491

 
0.40
%
 
$
3,367,008

 
$
2,729

 
0.33
%
Regular savings
555,153

 
151

 
0.11
%
 
563,948

 
152

 
0.11
%
Time deposits
1,289,794

 
3,592

 
1.10
%
 
1,248,818

 
3,219

 
1.03
%
Total interest-bearing deposits
5,302,226

 
7,234

 
0.54
%
 
5,179,774

 
6,100

 
0.47
%
Other borrowings (5)
1,080,226

 
6,418

 
2.36
%
 
1,023,599

 
6,122

 
2.40
%
Total interest-bearing liabilities
6,382,452

 
13,652

 
0.85
%
 
6,203,373

 
12,222

 
0.79
%
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
1,495,614

 
 
 
 
 
1,457,968

 
 
 
 
Other liabilities
58,106

 
 
 
 
 
59,888

 
 
 
 
Total liabilities
7,936,172

 
 
 
 
 
7,721,229

 
 
 
 
Stockholders' equity
1,037,792

 
 
 
 
 
1,026,148

 
 
 
 
Total liabilities and stockholders' equity
$
8,973,964

 
 
 
 
 
$
8,747,377

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
73,846

 
 
 
 
 
$
71,647

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
3.40
%
 
 
 
 
 
3.45
%
Cost of funds
 
 
 
 
0.66
%
 
 
 
 
 
0.62
%
Net interest margin
 
 
 
 
3.59
%
 
 
 
 
 
3.62
%
 
 
 
 
 
 
 
 
 
 
 
 
(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.
(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 $1.7 million and $1.6 million for the three months ended September 30, 2017 and June 30, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5) Interest expense on borrowings includes $47,000 for the both three months ended September 30, 2017 and June 30, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions.