UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 Commission file number: 0-20293 UNION BANKSHARES CORPORATION (Exact name of registrant as specified in its charter) VIRGINIA 54-1598552 (State or other jurisdiction of (I.R.S. Employee incorporation or organization) Identification No.) 212 North Main Street, P.O. Box 446, Bowling Green, Virginia 22427 (Address or principal executive offices) (Zip code) (804) 633-5031 (Registrant's telephone number including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $2 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Aggregate market value of voting stock held by non-affiliates of the registrant as of February 24, 2001 was $84,626,521. Number of shares of common stock outstanding as of February 24, 2000 was 7,516,449. DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Portions of the Registrant's Annual Report to Shareholders for the year ended December 31, 2000 are incorporated into Part II of this Form 10-K and portions of the Proxy Statement for the 2001 Annual Meeting of Shareholders are incorporated into Part III of this Form 10-K. UNION BANKSHARES CORPORATION FORM 10-K INDEX ----- PART 1
Page ---- Item 1. Business........................................ 1 Item 2. Properties...................................... 8 Item 3. Legal Proceedings............................... 9 Item 4. Submission of Matters to a Vote of Security Holders........................ 9 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters................. 10 Item 6. Selected Financial Data......................... 10 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 10 Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................... 11 Item 8. Financial Statements and Supplementary Data.............................. 12 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................ 12 PART III Item 10. Directors and Executive Officers................ 13 Item 11. Executive Compensation.......................... 14 Item 12. Security Ownership of Certain Beneficial Owners and Management........................... 14 Item 13. Certain Relationships and Related Transactions.................................... 14 PART IV Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K......................... 15
i PART I Item 1. - Business GENERAL Union Bankshares Corporation (the "Company") is a multi-bank holding company organized under Virginia law which is headquartered in Bowling Green, Virginia. The Company is committed to the delivery of financial services through its four affiliated community banks, Union Bank & Trust Company ("Union Bank"), Northern Neck State Bank ("Northern Neck Bank"), Rappahannock National Bank ("Rappahannock Bank") and the Bank of Williamsburg (collectively, the "Subsidiary Banks"), and two non-bank financial services affiliates, Union Investment Services, Inc. ("Union Investment") and Mortgage Capital Investors, Inc. ("MCI"). The Company was formed in connection with the July 1993 merger of Northern Neck Bankshares Corporation with and into Union Bancorp, Inc. On September 1, 1996, King George State Bank and on July 1, 1998, Rappahannock National Bank became wholly-owned subsidiaries of the Company. On February 22, 1999, the Bank of Williamsburg began business as a newly organized bank focused on the Williamsburg market. In June 1999, King George State Bank was merged into Union Bank and ceased to be a subsidiary bank. Each of the Subsidiary Banks is a full service retail commercial bank offering a wide range of banking and related financial services, including checking, savings, certificates of deposit and other depository services, and loans for commercial, industrial, residential mortgage and consumer purposes. The Subsidiary Banks also issue credit cards and can deliver automated teller machine services through the use of reciprocally shared ATMs in the STAR, CIRRUS and PLUS networks. Union Bankshares Corporation had assets of $882 million, deposits of $692 million, and shareholders' equity of $78 million at December 31, 2000. The Company serves, through its Subsidiary Banks, the Virginia counties of Caroline, Hanover, King George, King William, Spotsylvania, Stafford, Richmond, Westmoreland, Essex, Lancaster, Northumberland, the City of Williamsburg, James City County and the City of Fredericksburg. Through its Subsidiary Banks, the Company operated twenty-nine branches in its primary trade area at year end. Union Investment has provided securities brokerage and investment advisory services since February 1993. It is a full service brokerage company which offers a wide range of investment services, and sells annuities, mutual funds, bonds and stocks. On February 22, 1999, the Company opened the Bank of Williamsburg, a full service bank headquartered in Williamsburg, Virginia. The bank was organized and chartered under the laws of Virginia in February 1999. On March 20, 2000, the Bank of Williamsburg moved into its headquarters located at 5125 John Tyler Parkway in 1 Williamsburg. The Bank of Williamsburg's primary trade area is Williamsburg and surrounding James City County. On February 11, 1999, the Company acquired CMK Corporation t/a "Mortgage Capital Investors," a mortgage loan brokerage company headquartered in Springfield, Virginia, by merger of CMK Corporation into Mortgage Capital Investors, Inc., a wholly owned subsidiary of Union Bank. MCI has offices in Virginia, Maryland and South Carolina and is also licensed to do business in Connecticut, New Jersey, North Carolina and Washington, D.C. MCI provides a variety of mortgage products to customers in those states. The mortgage loans originated by MCI are generally sold in the secondary market through purchase agreements with institutional investors. In addition, some originated loans are sold to one or more of the Subsidiary Banks to meet a bank's current asset/liability management needs and the current credit quality standards. MCI also offers insurance services to its customers through a joint venture with an insurance agency. The Company has two reportable segments: traditional full service community banks and a mortgage loan origination business, each as described above. See Note 17 to the Notes to Consolidated Financial Statements and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" that are included in the Company's 2000 Annual Report to Shareholders for certain financial and other information about each of the Company's operating segments. ACQUISITION PROGRAM The Company looks to expand its market area and increase its market share through internal growth, de novo expansion and strategic acquisitions. During 2000, the Company purchased $3.0 million in deposits from Bank of Lancaster in a divestiture sale involving First Virginia Bank - Tidewater. This deposit acquisition, which was consummated on November 11, 2000, represented an opportunity to increase the Company's market share in the Kilmarnock market. COMPETITION The Company experiences competition in all aspects of its business. In its market area, the Company competes with large national and regional financial institutions, savings and loans and other independent community banks, as well as credit unions, mutual funds and life insurance companies. Competition has increasingly come from out-of-state banks through their acquisitions of Virginia-based banks. Competition for deposits and loans is affected by factors such as interest rates offered, the number and location of branches and types of products offered, as well as the reputation of the institution. SUPERVISION AND REGULATION Bank holding companies and banks are extensively regulated under both federal and state law. The following description briefly addresses certain provisions of federal 2 and state laws and certain regulations and proposed regulations and the potential impact of such provisions on the Company and its Subsidiary Banks. To the extent statutory or regulatory provisions or proposals are described, the description is qualified in its entirety by reference to the particular statutory or regulatory provisions or proposals. Bank Holding Companies As a bank holding company registered under the Bank Holding Company Act of 1956 (the "BHCA"), the Company is subject to regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Federal Reserve Board has jurisdiction under the BHCA to approve any bank or non-bank acquisition, merger or consolidation proposed by a bank holding company. The BHCA generally limits the activities of a bank holding company and its subsidiaries to that of banking, managing or controlling banks, or any other activity that is so closely related to banking or to managing or controlling banks as to be a proper incident thereto. Since September 1995, the BHCA has permitted bank holding companies from any state to acquire banks and bank holding companies located in any other state, subject to certain conditions, including nationwide and state imposed concentration limits. Banks are also able to branch across state lines, provided certain conditions are met, including that applicable state law must expressly permit such interstate branching. Virginia has adopted legislation that permits branching across state lines, provided there is reciprocity with the state in which the out-of-state bank is based. There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the depositors of such depository institutions and to the Federal Deposit Insurance Corporation (the "FDIC") insurance funds in the event the depository institution becomes in danger of default or is in default. For example, under a policy of the Federal Reserve Board with respect to bank holding company operations, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such policy. In addition, the "cross-guarantee" provisions of federal law require insured depository institutions under common control to reimburse the FDIC for any loss suffered or reasonably anticipated by either the Savings Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") as a result of the default of a commonly controlled insured depository institution in danger of default. The FDIC may decline to enforce the cross-guarantee provisions if it determines that a waiver is in the best interest of the SAIF or the BIF or both. The FDIC's claim for damages is superior to claims of stockholders of the insured depository institution or its holding company but is subordinate to claims of depositors, secured creditors and holders of subordinated debt (other than affiliates) of the commonly controlled insured depository institutions. The Federal Deposit Insurance Act (the "FDIA") also provides that amounts received from the liquidation or other resolution of any insured depository institution by 3 any receiver must be distributed (after payment of secured claims) to pay the deposit liabilities of the institution prior to payment of any other general creditor or stockholder. This provision would give depositors a preference over general and subordinated creditors and stockholders in the event a receiver is appointed to distribute the assets of the bank. The Company is registered under the bank holding company laws of Virginia. Accordingly, the Company and the Subsidiary Banks are subject to regulation and supervision by the State Corporation Commission of Virginia (the "SCC"). Capital Requirements The Federal Reserve Board, the Office of the Comptroller of the Currency (the "OCC") and the FDIC have issued substantially similar risk-based and leverage capital guidelines applicable to United States banking organizations. In addition, those regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels because of its financial condition or actual or anticipated growth. Under the risk-based capital requirements of these federal bank regulatory agencies, the Company and each of the Subsidiary Banks are required to maintain a minimum ratio of total capital to risk-weighted assets of at least 8%. At least half of the total capital is required to be "Tier 1 capital", which consists principally of common and certain qualifying preferred shareholders' equity, less certain intangibles and other adjustments. The remainder ("Tier 2 capital") consists of a limited amount of subordinated and other qualifying debt (including certain hybrid capital instruments) and a limited amount of the general loan loss allowance. The Tier 1 and total capital to risk-weighted asset ratios of the Company as of December 31, 2000 were 10.72% and 11.82%, respectively, exceeding the minimum requirements. In addition, each of the federal regulatory agencies has established a minimum leverage capital ratio (Tier 1 capital to average tangible assets) ("Tier 1 leverage ratio"). These guidelines provide for a minimum Tier 1 leverage ratio of 3% for banks and bank holding companies that meet certain specified criteria, including that they have the highest regulatory examination rating and are not contemplating significant growth or expansion. All other institutions are expected to maintain a minimum Tier 1 leverage ratio of 3%, plus an additional cushion of 100 to 200 basis points above the minimum. The leverage ratio of the Company as of December 31, 2000, was 8.46%, which is above the minimum requirements. The guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. Limits on Dividends and Other Payments The Company is a legal entity, separate and distinct from its subsidiary institutions. Substantially all of the revenues of the Company result from dividends paid to it by the Subsidiary Banks. There are various legal limitations applicable to the 4 payment of dividends to the Company, as well as the payment of dividends by the Company to its respective shareholders. Under federal law, the Subsidiary Banks may not, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, the Company or take securities of the Company as collateral for loans to any borrower. The Subsidiary Banks are also subject to collateral security requirements for any loans or extensions of credit permitted by such exceptions. The Subsidiary Banks are subject to various statutory restrictions on their ability to pay dividends to the Company. Under the current supervisory practices of the Subsidiary Banks' regulatory agencies, prior approval from those agencies is required if cash dividends declared in any given year exceed net income for that year plus retained net profits of the two proceeding years. The payment of dividends by the Subsidiary Banks or the Company may also be limited by other factors, such as requirements to maintain capital above regulatory guidelines. Bank regulatory agencies have the authority to prohibit the Subsidiary Banks or the Company from engaging in an unsafe or unsound practice in conducting their business. The payment of dividends, depending on the financial condition of the Subsidiary Banks, or the Company, could be deemed to constitute such an unsafe or unsound practice. Under the FDIA, insured depository institutions such as the Subsidiary Banks are prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become "undercapitalized" (as such term is used in the statute). Based on the Subsidiary Banks' current financial condition, the Company does not expect that this provision will have any impact on its ability to obtain dividends from the Subsidiary Banks. The Subsidiary Banks The Subsidiary Banks are supervised and regularly examined by the Federal Reserve Board, OCC for Rappahannock and the SCC. The various laws and regulations administered by the regulatory agencies affect corporate practices, such as the payment of dividends, incurring debt and acquisition of financial institutions and other companies, and affect business practices, such as the payment of interest on deposits, the charging of interest on loans, types of business conducted and location of offices. The Subsidiary Banks are also subject to the requirements of the Community Reinvestment Act (the "CRA"). The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of the local communities, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of those institutions. Each financial institution's efforts in meeting community credit needs currently are evaluated as part of the examination process pursuant to twelve assessment factors. These factors also are considered in evaluating mergers, acquisitions and applications to open a branch or facility. 5 As an institution with deposits insured by the BIF, the Bank also is subject to insurance assessments imposed by the FDIC. The FDIC has implemented a risk-based assessment schedule, imposing assessments ranging from zero (a minimum of $2,000) to 0.27% of an institution's average assessment base. The actual assessment to be paid by each BIF member is based on the institution's assessment risk classification, which is determined based on whether the institution is considered "well capitalized," "adequately capitalized" or "undercapitalized," as such terms have been defined in applicable federal regulations, and whether such institution is considered by its supervisory agency to be financially sound or to have supervisory concerns. In 2000, the Subsidiary Banks paid $128,694 in deposit insurance premiums. Other Safety and Soundness Regulations The federal banking agencies have broad powers under current federal law to make prompt corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institutions in question are "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" or "critically undercapitalized." All such terms are defined under uniform regulations defining such capital levels issued by each of the federal banking agencies. The Gramm-Leach-Bliley Act of 1999 The Gramm-Leach-Bliley Act of 1999 ("GLBA") was signed into law on November 12, 1999. The main purpose of GLBA is to permit greater affiliations within the financial services industry, primarily banking, securities and insurance. The provisions of GLBA that are believed to be of most significance to the Company are discussed below. GLBA repeals sections 20 and 32 of the Glass-Steagall Act, which separated commercial banking from investment banking, and substantially amends the BHCA, which limited the ability of bank holding companies to engage in the securities and insurance businesses. To achieve this purpose, GLBA creates a new type of company, the "financial holding company." A financial holding company may engage in or acquire companies that engage in a broad range of financial services, including . securities activities such as underwriting, dealing, brokerage, investment and merchant banking; and . insurance underwriting, sales and brokerage activities. A bank holding company may elect to become a financial holding company only if all of its depository institution subsidiaries are well-capitalized, well- managed and have at least a satisfactory Community Reinvestment Act rating. For various reasons, the Company has not elected to be treated as a financial holding company under GLBA. 6 GLBA establishes a system of functional regulation under which the federal banking agencies will regulate the banking activities of financial holding companies and banks' financial subsidiaries, the Securities and Exchange Commission ("SEC") will regulate their securities activities and state insurance regulators will regulate their insurance activities. With regard to Federal securities laws, GLBA removes the blanket exemption for banks from being considered brokers or dealers under the Securities Exchange Act of 1934, and sets out a number of limited activities, including trust and fiduciary activities, in which a bank may engage without being considered a broker, and a set of activities in which a bank may engage without being considered a dealer. The Investment Advisers Act of 1940 also will be amended to eliminate certain provisions exempting banks from the registration requirements of that statute, and the Investment Company Act of 1940 will be amended to provide the SEC with regulatory authority over various bank mutual fund activities. GLBA also provides new protections against the transfer and use by financial institutions of consumers nonpublic personal information. A financial institution must provide to its customers, at the beginning of the customer relationship and annually thereafter, the institution's policies and procedures regarding the handling of customers' nonpublic personal financial information. The new privacy provisions will generally prohibit a financial institution from providing a customer's personal financial information to unaffiliated third parties unless the institution discloses to the customer that the information may be so provided and the customer is given the opportunity to opt out of such disclosure. Many of GLBA's provisions, including the customer privacy protection provisions, require the Federal bank regulatory agencies and other regulatory bodies to adopt regulations to implement those respective provisions. Most of the required implementing regulations have been proposed and/or adopted by the bank regulatory agencies as of December 31, 2000. Neither the provisions of GLBA nor the act's implementing regulations as proposed or adopted have had a material impact on the Company's or the Subsidiary Banks' regulatory capital ratios (as discussed above) or ability to continue to operate in a safe and sound manner. 7 Item 2. - Properties The Company, through its subsidiaries, owns or leases buildings that are used in the normal course of business. The main office is located at 212 N. Main Street, Bowling Green, Virginia, in a building owned by the Company. The Company's subsidiaries own or lease various other offices in the counties and cities in which they operate. See Notes to Consolidated Financial Statements for information with respect to the amounts at which bank premises and equipment are carried and commitments under long-term leases. The properties on the following page are those owned or leased by the Company and its subsidiaries as of December 31, 2000. Locations --------- Corporate Headquarters 212 North Main Street, Bowling Green, Virginia Banking Offices - Union Bank & Trust Company 211 North Main Street, Bowling Green, Virginia Route 1, Ladysmith, Virginia Route 301, Port Royal, Virginia 4540 Lafayette Boulevard, Fredericksburg, Virginia Route 1 and Ashcake Road, Ashland, Virginia 4210 Plank Road, Fredericksburg, Virginia 10415 Courthouse Road, Fredericksburg, Virginia 10469 Atlee Station Road, Ashland, Virginia 700 Kenmore Avenue, Fredericksburg, Virginia Route 360, Manquin, Virginia 9534 Chamberlayne Road, Mechanicsville, Virginia Cambridge and Layhill Road, Falmouth, Virginia Massaponax Church Road and Route 1, Spotsylvania, Virginia Brock Road and Route 3, Fredericksburg, Virginia 2811 Fall Hill Avenue, Fredericksburg, Virginia 610 Mechanicsville Turnpike, Mechanicsville, Virginia 10045 Kings Highway, King George, Virginia 840 McKinney Blvd., Colonial Beach, Virginia 8 Banking Offices - Northern Neck State Bank 5839 Richmond Road, Warsaw, Virginia 4256 Richmond Road, Warsaw, Virginia Route 3, Kings Highway, Montross, Virginia Route 17 and Earl Street, Tappahannock, Virginia 1660 Tappahannock Blvd, Tappahannock, Virginia 15043 Northumberland Highway, Burgess, Virginia 284 North Main Street, Kilmarnock, Virginia 876 Main Street, Reedville, Virginia 485 Chesapeake Drive, White Stone, Virginia Banking Office - Rappahannock National Bank 257 Gay Street, Washington, Virginia Banking Office - Bank of Williamsburg 5125 John Tyler Parkway, Williamsburg, Virginia Union Investment Services, Inc. 111 Davis Court, Bowling Green, Virginia 10469 Atlee Station Road, Ashland, Virginia 2811 Fall Hill Avenue, Fredericksburg, Virginia Mortgage Capital Investors, Inc. 5835 Allentown Way, Camp Spring, Maryland 5440 Jeff Davis Highway, #103, Fredericksburg, Virginia 3 Hillcrest Drive #A100, Frederick, Maryland 7501 Greenway Center, Greenbelt, Maryland 7901 N. Ocean Boulevard, Myrtle Beach, South Carolina 6330 Newtown Road, #211, Norfolk, Virginia 6571 Edsall Road, Springfield, Virginia Item 3. - Legal Proceedings In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, in the aggregate, will not have a material adverse effect on the business or the financial condition or results of operations. Item 4. - Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 2000. 9 PART II Item 5. - Market for Registrant's Common Equity and Related Stockholder Matters This information is incorporated herein by reference from the inside back cover of the Annual Report to Shareholders for the year ended December 31, 2000. Item 6. - Selected Financial Data This information is incorporated herein by reference from the section captioned "Selected Financial Data" on page 2 in the Annual Report to Shareholders for the year ended December 31, 2000. Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations With the exception of the information below, the information required under this item is incorporated herein by reference from the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 10 through 20 in the Annual Report to Shareholders for the year ended December 31, 2000. LOAN PORTFOLIO The following table gives detail of the Company's loan maturities as of December 31, 2000. Remaining Maturities of Selected Loans
December 31, 2000 ----------------------------- Real Estate Commercial Construction ----------------------------- Within 1 year $37,918 $28,089 Variable Rate: 1 to 5 years 749 857 ------- ------- Total 749 857 Fixed Rate: 1 to 5 years 30,793 3,574 After 5 years 4,801 1,040 ------- ------- Total 35,594 4,614 ------- ------- Total maturities $74,261 $33,560
10 ASSET QUALITY - ALLOWANCE/PROVISION FOR LOAN LOSSES Union Bankshares maintains a general allowance for loan losses and does not allocate its allowance for loan losses to individual categories for management purposes. The table below shows an allocation among loan categories based upon analysis of the loan portfolio's composition, historical loan loss experience, and other factors and the ratio of the related outstanding loan balances to total loans.
Allocation of Allowance for Loan Losses 2000 1999 1998 1997 1996 ----------------------------------------------------------------------------------------------------------------- Allowance Percent of Allowance Percent of Allowance Percent of Allowance Percent of Allowance Percent of Loans in Loans in Loans in Loans in Loans in Each Each Each Each Each Category Category Category Category Category to Total to Total to Total to Total to Total Loans Loans Loans Loans Loans ----------------------------------------------------------------------------------------------------------------- December 31: (Dollars in thousands) Commercial, financial and agriculture $3,369 13.3% $3,215 13.0% $3,382 13.4% $2,433 11.8% $2,338 11.4% Real Estate Construction 1,467 5.8% 1,511 6.1% 2,007 7.9% 1,299 7.1% 1,249 3.9% Real estate mortgage 406 59.3% 264 59.7% 189 60.3% 166 61.1% 160 62.2% Consumer & other 2,147 21.6% 1,627 21.2% 829 18.4% 900 20.0% 865 22.5% ------------------------------------------------------------------------------------------------------------- $7,389 100.0% $6,617 100.0% $6,407 100.0% $4,798 100.0% $4,612 100.0%
Item 7A. - Quantitative and Qualitative Disclosures About Market Risk This information is incorporated herein by reference from the Management's Discussion and Analysis of Financial Condition and Results of Operations on pages 12 through 13 of the Annual Report to Shareholders for the year ended December 31, 2000. 11 Item 8. - Financial Statements and Supplementary Data This information is incorporated herein by reference from the Consolidated Financial Statements on pages 21 through 40 and the Quarterly Earnings Summary on page 7 of the Annual Report to Shareholders for the year ended December 31, 2000. Item 9. - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Previously reported on October 4, 1999, when the Company filed a Current Report on Form 8-K dated September 27, 1999, to report a change in its certifying accountant from KPMG LLP to Yount, Hyde & Barbour, P.C. On October 20, 1999, the Company engaged Cherry, Bekaert & Holland, LLP as independent accountants to audit MCI's year ended December 31, 2000. 12 PART III Item 10. - Directors and Executive Officers of the Registrant This information, as applicable to directors, is incorporated herein by reference from pages 2 and 3 of the Proxy Statement for the Annual Meeting of Shareholders to be held April 17, 2001 ("Proxy Statement") from the section titled "Election of Directors." Executive officers of the Company are listed below:
Title and Principal Occupation Name (Age) During Past Five Years - ---------- ---------------------------------------------- G. William Beale (51) President and Chief Executive Officer of the Company since its inception; President of Union Bank since 1991. D. Anthony Peay (41) Senior Vice President since 2000 and Vice President and Chief Financial Officer of the Company since December 1994.
Information on Section 16(a) beneficial ownership reporting compliance for the directors and executive officers of the Company is incorporated herein by reference from page 12 of the Proxy Statement from the section titled "Section 16(a) Beneficial Ownership Reporting Compliance." 13 Item 11. - Executive Compensation This information is incorporated herein by reference from pages 4 and 6 through 10 of the Proxy Statement from the sections titled "Election of Directors--Directors' Fees" and "Executive Compensation." Item 12. - Security Ownership of Certain Beneficial Owners and Management This information is incorporated herein by reference from pages 5-6 of the Proxy Statement from section titled "Ownership of Company Common Stock." Item 13. - Certain Relationships and Related Transactions This information is incorporated herein by reference from pages 11-12 of the Proxy Statement from the section titled "Interest of Directors and Officers in Certain Transactions." 14 PART IV Item 14. - Exhibits, Financial Statement Schedules and Reports on Form 8-K The following documents are filed as part of this report: (a)(1) Financial Statements The following documents are included in the 2000 Annual Report to Shareholders and are incorporated by reference in this report: Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditor's Report Note: The independent auditor's report for the year ended December 31, 1998 is included in this report as Exhibit 99.0 (a)(2) Financial Statement Schedules All schedules are omitted since they are not required, are not applicable, or the required information is shown in the consolidated financial statements or notes thereto. 15 (a)(3) Exhibits
Exhibit No. Description ----------- ----------- 3.1 Articles of Incorporation (incorporate by reference to Form S-4 Registration Statement - 33-60458) 3.2 By-Laws (incorporated by reference to Form S-4 Registration Statement - 33-60458) 10.1 Change in Control Employment Agreement of G. William Beale (incorporated by reference to the registrant's Annual Report on Form 10-K for the year ended December 31, 1996) 10.2 Employment Agreement of G. William Beale (incorporated by reference to the registrant's Annual Report on Form 10-K for the year ended December 31, 1999). 11.0 Statement re: Computation of Per Share Earnings (incorporated by reference to note 12 of the notes to consolidated financial statements included in the 2000 Annual Report to Shareholders) 13.0 2000 Annual Report to Shareholders 21.0 Subsidiaries of the Registrant 23.1 Consent of Yount, Hyde & Barbour, P.C. 23.2 Consent of KPMG LLP 99.0 Report of KPMG LLP, as the Registrant's independent public accountant for the year ended December 31, 1998.
(b) Reports on Form 8-K None 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Union Bankshares Corporation By: /s/ G. William Beale Date: March 30, 2001 ------------------------------ President and Chief Executive Officer G. William Beale Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 30, 2001. Signature Title --------- ----- /s/ G. William Beale President, Chief Executive Officer and - ------------------------- Director (principal executive officer) G. William Beale /s/ Frank B. Bradley, III Director - ------------------------- Frank B. Bradley, III /s/ Ronald L. Hicks Chairman of the Board of Directors - ------------------------- Ronald L. Hicks /s/ Charles H. Ryland Vice Chairman of the Board of Directors - ------------------------- Charles H. Ryland /s/ Walton Mahon Director - ------------------------- Walton Mahon /s/ W. Tayloe Murphy, Jr. Director - ------------------------- W. Tayloe Murphy, Jr. /s/ D. Anthony Peay Senior Vice President and Chief - ------------------------- Financial Officer (principal financial officer) D. Anthony Peay /s/ M. Raymond Piland, III Director - -------------------------- M. Raymond Piland, III /s/ A.D. Whittaker Director - -------------------------- A.D. Whittaker /s/ William M. Wright Director - -------------------------- William M. Wright 17