Exhibit 99.1

 

 

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

 

UNION FIRST MARKET BANKSHARES REPORTS FIRST QUARTER RESULTS

 

Richmond, Va., April 22, 2014 - Union First Market Bankshares Corporation (the “Company” or “Union”) (NASDAQ: UBSH) today reported net income of $7.8 million and earnings per share of $0.17 for its first quarter ended March 31, 2014. Excluding after-tax acquisition-related expenses of $9.0 million, operating earnings(1) for the quarter were $16.8 million and operating earnings per share(1) was $0.36. The quarterly results represent an increase of $8.1 million, or 92.2%, in operating earnings from the prior quarter. Operating earnings per share of $0.36 for the current quarter increased $0.01, or 2.9%, from the most recent quarter. These first quarter financial results include the full quarter financial results of StellarOne Corporation (“StellarOne”), which the Company acquired on January 1, 2014.

 

“Our first quarter operating results demonstrate the significant earnings capacity we envisioned the combination of Union and StellarOne would produce as the largest community banking institution headquartered in Virginia,” said G. William Beale, president and chief executive officer of Union First Market Bankshares, “Our merger integration work continues to go well and we are on track for systems conversions and branch consolidations to occur in the second quarter. Our teammates have been working tirelessly to ensure a smooth integration for our customers, and I want to thank them for their commitment during this transition period. I am more excited than ever about the future of Union and our ability to continue to deliver a best-in-class customer experience, offer superior financial services and solutions, provide a rewarding experience for our teammates and generate top-tier financial performance for our shareholders.”

 

Select highlights for the first quarter include:

·Operating earnings(1) for the community bank segment, which excludes after-tax acquisition-related expenses of $9.0 million, were $18.2 million, or $0.39 per share.
·The mortgage segment reported a net loss of $1.4 million, or $0.03 per share.
·Operating Return on Average Tangible Common Equity(1) (“ROTCE”) was 10.33% for the quarter ended March 31, 2014 compared to operating ROTCE(1) of 9.43% for the fourth quarter of 2013. The operating ROTCE(1) of the community bank segment was 11.44%.
·Operating Return on Average Assets(1) (“ROA”) was 0.94% for the quarter ended March 31, 2014 compared to operating ROA(1) of 0.85% for the fourth quarter of 2013. The operating ROA(1) of the community bank segment was 1.02%.
·Operating efficiency ratio(1) declined to 68.4% for the current quarter from 71.6% in the prior quarter. The operating efficiency ratio for the community bank segment was 64.6%.
·On January 31, 2014, the Company’s Board of Directors authorized a share repurchase program to purchase up to $65.0 million worth of the Company’s common stock on the open market or in privately negotiated transactions. The repurchase program is authorized through December 31, 2015. As of April 17, 2014, approximately 822,000 common shares had been repurchased and approximately $44.3 million remained available under the repurchase program.

 

(1)For a reconciliation of the non-GAAP measures operating earnings, ROA, ROE, ROTCE, EPS, and efficiency ratio, see “Alternative Performance Measures (non-GAAP)” section of the Key Financial Results.

 

NET INTEREST INCOME

 

Tax-equivalent net interest income was $65.7 million, an increase of $25.7 million from the fourth quarter of 2013, a result of a $2.7 billion increase in average interest-earning assets and a $2.2 billion increase in average interest-bearing liabilities from the full quarter impact of the StellarOne acquisition. The first quarter tax-equivalent net interest margin decreased by 13 bps to 4.14% compared to 4.27% in the previous quarter. Core tax-equivalent net interest margin (which excludes the 15 bps impact of acquisition accounting accretion) decreased by 25 basis points from 4.24% in the previous quarter to 3.99%. The decrease in the core tax-equivalent net interest margin was principally due to a decrease in earning asset yields (-26 bps), outpacing the decline in cost of funds (+1 bps). The declines in net interest margin and earning asset yields are primarily driven by the impact of the StellarOne acquisition in the current quarter.

 

 
 

 

The Company continues to believe that net interest margin will decline modestly over the next several quarters as decreases in earning asset yields are projected to outpace declines in interest-bearing liabilities rates.

 

The Company’s fully taxable equivalent net interest margin includes the impact of acquisition accounting fair value adjustments. The first quarter 2014 and remaining estimated discount/premium and net accretion impact are reflected in the following table (dollars in thousands):

 

                 
   Loan Accretion   Certificates of Deposit   Borrowings   Total 
                 
For the quarter ended March 31, 2014  $(546)  $2,921   $75   $2,450 
For the remaining nine months of 2014   (260)   5,994    226    5,960 
For the years ending:                    
2015   1,737    1,843    175    3,755 
2016   2,661    -    271    2,932 
2017   3,067    -    170    3,237 
2018   2,742    -    (143)   2,599 
2019   2,205    -    (286)   1,919 
Thereafter   13,521    -    (5,923)   7,598 

 

ASSET QUALITY/LOAN LOSS PROVISION

 

Overview

During the first quarter, the Company had a net loan recovery and reduced levels of provision when compared to the prior quarter and the same quarter of the prior year. There were declines in several asset quality ratios, including nonperforming assets to total loans, accruing loans past due 90 days or more to total loans, allowance to total loans, and allowance to total loans, adjusted for acquisition accounting, while the coverage ratio of allowance to nonaccrual loans remained high. Levels of nonaccrual loans and other real estate owned (“OREO”) remained stable with only slight increases due to the acquisition of StellarOne. The magnitude of any change in the real estate market and its impact on the Company is still largely dependent upon continued recovery of residential housing and commercial real estate and the pace at which the local economies in the Company’s operating markets improve. All metrics discussed below exclude loans acquired with deteriorated credit quality (“PCI”) aggregating $130.3 million (net of fair value mark).

 

 
 

 

Nonperforming Assets (“NPAs”)

At March 31, 2014, nonperforming assets totaled $52.5 million, a decline of $6.4 million, or 10.8%, from a year ago and an increase of $3.4 million, or 6.9%, from December 31, 2013. In addition, NPAs as a percentage of total outstanding loans declined 98 basis points from 1.98% a year earlier and decreased 62 basis points from 1.62% last quarter to 1.00% in the current quarter. The following table shows a summary of asset quality balances at the quarter ended (dollars in thousands):

 

                     
   March 31,   December 31,   September 30,   June 30,   March 31, 
   2014   2013   2013   2013   2013 
Nonaccrual loans, excluding PCI loans  $17,034   $15,035   $19,941   $27,022   $23,033 
Foreclosed properties   35,487    34,116    35,576    35,020    35,100 
Real estate investment   -    -    133    133    778 
Total nonperforming assets  $52,521   $49,151   $55,650   $62,175   $58,911 

 

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

 

                     
   March 31,   December 31,   September 30,   June 30,   March 31, 
   2014   2013   2013   2013   2013 
Beginning Balance  $15,035   $19,941   $27,022   $23,033   $26,206 
Net customer payments   (959)   (1,908)   (5,574)   (3,196)   (1,715)
Additions   3,674    3,077    3,020    7,934    2,694 
Charge-offs   (152)   (4,336)   (1,669)   (476)   (2,262)
Loans returning to accruing status   -    (1,018)   (1,068)   -    (632)
Transfers to OREO   (564)   (721)   (1,790)   (273)   (1,258)
Ending Balance  $17,034   $15,035   $19,941   $27,022   $23,033 

 

Of the $3.7 million in additions to nonaccrual loans in the current quarter, $2.7 million related to the acquisition of Stellar One.

 

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

 

                     
   March 31,   December 31,   September 30,   June 30,   March 31, 
   2014   2013   2013   2013   2013 
Beginning Balance  $34,116   $35,709   $35,153   $35,878   $32,834 
Additions   5,404    1,326    2,841    1,768    3,607 
Capitalized Improvements   -    101    266    164    30 
Valuation Adjustments   (256)   (300)   (491)   -    - 
Proceeds from sales   (3,800)   (2,483)   (1,773)   (2,436)   (877)
Gains (losses) from sales   23    (237)   (287)   (221)   284 
Ending Balance  $35,487   $34,116   $35,709   $35,153   $35,878 

 

Of the $5.4 million in additions to OREO in the current quarter, $4.3 million related to the acquisition of StellarOne.

 

Past Due Loans

At March 31, 2014, loans past due 90 days or more and accruing interest totaled $7.2 million, or 0.14%, of total loans, compared to $6.2 million, or 0.21%, a year ago and $6.7 million, or 0.22%, at December 31, 2013.

 

Charge-offs

For the quarter ended March 31, 2014, net loan recoveries were $772,000, or (0.06%), on an annualized basis, compared to net charge-offs of $2.6 million, or 0.35%, for the same quarter last year and $4.9 million, or 0.65%, for the fourth quarter of 2013. The net recovery in the current quarter largely relates to one recovery of $1.2 million on a commercial loan previously charged off.

 

Provision

The provision for loan losses for the current quarter was $0, a decrease of $2.1 million from the same quarter a year ago and a decrease of $1.2 million from the previous quarter. The decrease in provision for loan losses in the current quarter compared to the prior periods is driven by improving asset quality, the impact of lower historical loss factors, and the current quarter’s net loan recovery.

 

 
 

 

 

Allowance for Loan Losses

The allowance for loan losses (“ALL”) increased $772,000 from December 31, 2013 to $30.9 million at March 31, 2014. The ALL as a percentage of the total loan portfolio, adjusted for purchase accounting (non-GAAP), was 1.07% at March 31, 2014, a decrease from 1.32% at March 31, 2013 and 1.10% from the prior quarter. The allowance for loan losses as a percentage of the total loan portfolio was 0.59% at March 31, 2014, 1.16% at March 31, 2013, and 0.99% at December 31, 2013. The decrease in the allowance-related ratios was primarily attributable to improving credit quality metrics and the acquisition of StellarOne. In acquisition accounting, there is no carryover of previously established allowance for loan losses.

 

The nonaccrual loan coverage ratio was 181.4% at March 31, 2014, compared to 149.4% from the same quarter last year and 200.4% at December 31, 2013. 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 increased $5.8 million, or 69.5%, to $14.2 million from $8.4 million in the prior quarter. The significant majority of this increase is in customer related noninterest income (services charges on deposit accounts, debit card interchange income, and income from wealth management services) and is due to the acquisition of StellarOne that occurred on January 1, 2014. Gains on sales of mortgage loans, net of commissions, increased $978,000, or 74.1%, from the prior quarter primarily related to increased margins, lower indemnifications charges, and the inclusion of StellarOne’s mortgage unit results in the current quarter, partially offset by declines in mortgage loan originations. Mortgage loan originations decreased by $7.1 million, or 4.6%, in the current quarter to $149.1 million from $156.2 million in the fourth quarter of 2013. Originations from Union’s legacy mortgage segment declined $40.3 million, or 25.8%, from the prior quarter which was partially offset by the addition of StellarOne’s mortgage operation. Of the loan originations in the current quarter, 30.4% were refinances, which was consistent with the prior quarter.

NONINTEREST EXPENSE

 

Noninterest expense increased $32.4 million, or 91.5%, to $67.8 million from $35.4 million when compared to the prior quarter. Excluding acquisition-related costs, which were $13.2 million and $739,000 in the current and previous quarters, respectively, noninterest expense increased $20.0 million, or 57.7%, compared to the prior quarter. The increase in noninterest expense during the first quarter of 2014 is primarily related to the acquisition of StellarOne. The Company’s operating efficiency ratio declined to 68.4% from 71.6% in the prior quarter.

 

BALANCE SHEET

 

At March 31, 2014, total assets were $7.3 billion, an increase of $3.1 billion from December 31, 2013 reflecting the impact of the StellarOne acquisition.

 

On January 1, 2014 the Company acquired StellarOne. Below is a summary of the transaction and related impact on the Company’s balance sheet:

 

·The fair value of assets acquired equaled $2.959 billion and the fair value of liabilities assumed equaled $2.647 billion.
·Total goodwill arising from the transaction equaled $237.5 million.
·Gross loans acquired equaled $2.283 billion with a fair value of $2.239 billion.
·Total deposits acquired equaled $2.469 billion with a fair value of $2.480 billion.

 

At March 31, 2014 loans net of unearned income were $5.3 billion, an increase of $2.3 billion from December 31, 2013. On a proforma basis, including StellarOne loan balances, period end loans balances were flat when compared to December 31, 2013 while average loans grew approximately $41.7 million, or 3.2% (annualized), to $5.3 billion since January 1, 2014. At March 31, 2014, total deposits were $5.7 billion, an increase of $2.4 billion from December 31, 2013. On a proforma basis, including StellarOne deposit balances, average deposits declined $54.5 million, or 3.8% (annualized) to $5.6 billion since January 1, 2014. The decline in average deposits was driven by a decline in average time deposits partially offset by an increase in average money market balances.

 

 
 

 

 

The Company’s capital ratios continued to be considered “well capitalized” for regulatory purposes. The Company’s estimated ratios of total capital to risk-weighted assets and Tier 1 capital to risk-weighted assets as of March 31, 2014 were 13.69% and 13.02%, respectively. As of December 31, 2013, the Company’s ratio of total capital to risk-weighted assets and Tier 1 capital to risk-weighted assets were 14.17% and 13.05%, respectively. The Company’s common equity to asset ratios at March 31, 2014 and December 31, 2013 were 13.47% and 10.49%, respectively, while its tangible common equity to tangible assets ratio was 9.29% and 8.94% at March 31, 2014 and December 31, 2013, respectively.

 

COMMUNITY BANK SEGMENT INFORMATION

 

The community bank segment reported net income of $9.2 million for first quarter, and includes the full-quarter impact of the StellarOne acquisition. Excluding after-tax acquisition-related expenses of $9.0 million, operating earnings increased $7.6 million from the prior quarter to $18.2 million. As previously discussed, the provision for loan losses declined $1.2 million from the prior quarter due to continued improvements in asset quality and a large recovery of a loan that was previously charged-off. Net interest income was $63.5 million, an increase of $25.2 million from the fourth quarter of 2013. The increase in net interest income was driven by the StellarOne acquisition.

 

Noninterest income increased $4.8 million from $7.2 million in the prior quarter to $12.1 million. The significant majority of this increase is in customer related noninterest income (services charges on deposit accounts, debit card interchange income, and income from wealth management services) and is due to the previously discussed acquisition of StellarOne. Noninterest expense increased $32.2 million from $31.0 million to $63.2 million. Excluding acquisition-related costs of $13.2 million, noninterest expense increased $19.8 million, or 65.4%, compared to the prior quarter. The increase in noninterest expense is largely related to the acquisition of StellarOne. The community banking segment’s operating efficiency ratio was 64.6% compared to 64.5% in the prior quarter.

 

MORTGAGE SEGMENT INFORMATION

 

The mortgage segment reported a net loss of $1.4 million for the first quarter as elevated expense levels resulting from excess loan origination processing capacity, restructuring charges, and project related costs outpaced revenue generated by seasonally low mortgage loan origination volumes.  The net loss declined by $0.5 million from the prior quarter as gains on sales of mortgage loans, net of commissions, increased $978,000, or 74.1%, primarily related to lower indemnification charges, increased net gain on sale margins and the inclusion of StellarOne’s mortgage unit in the current quarter.  The positive impact of these items was partially offset by declines in mortgage loan originations from the prior quarter.  Mortgage loan originations decreased by $7.1 million, or 4.6%, in the current quarter to $149.1 million from $156.2 million in the fourth quarter of 2013, inclusive of the StellarOne mortgage unit in the current quarter.  Originations from Union’s legacy mortgage segment declined $40.3 million, or 25.8%, from the prior quarter reflective of sluggish seasonal demand for mortgage financing.  Of the originations in the current quarter, 30.4% were refinances, which was consistent with the prior quarter.  On a linked quarter basis, the mortgage segment incurred higher noninterest expenses due to the inclusion of the StellarOne mortgage unit in the current quarter.  Noninterest expenses incurred by Union’s legacy mortgage segment declined from the prior quarter as a result of its efforts to recalibrate its cost structure to align with lower mortgage origination levels. 

 

 

* * * * * * *

 

 
 

 

ABOUT UNION FIRST MARKET BANKSHARES CORPORATION

 

Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation (NASDAQ: UBSH) is the holding company for Union First Market Bank, which has 90 branches and more than 150 ATMs throughout Virginia and StellarOne Bank, which has 54 branches and more than 60 ATMs throughout Virginia as well as trust and wealth management services.  Non-bank affiliates of the holding company include: Union Investment Services, Inc., which provides full brokerage services; Union Mortgage Group, Inc., which provides a full line of mortgage products; and Union Insurance Group, LLC, which offers various lines of insurance products. 

 

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

 

Union First Market Bankshares Corporation will hold a conference call on Tuesday, April 22, at 9:00 a.m. Eastern Time when management will review earnings and performance trends. Callers wishing to participate may call toll-free by dialing (877) 668-4908. The conference ID number is 27512120. Participants can also listen to the live audio webcast by registering at https://engage.vevent.com/rt/unionfirstmarketbank~042214 and through the investor relations section of the Company’s website at http://investors.bankatunion.com. A replay archive of the conference call will be available beginning April 22 at the same URL, https://engage.vevent.com/rt/unionfirstmarketbank~042214 and will be available for 90 days after April 22.

 

NON-GAAP MEASURES

 

In reporting the results of March 31, 2014, the Company has provided supplemental performance measures on an operating or tangible basis. Operating measures exclude acquisition costs unrelated to the Company’s normal operations. The Company believes these measures are useful to investors as they exclude non-operating adjustments resulting from acquisition activity and allow investors to see the combined economic results of the organization. Tangible common equity is used in the calculation of certain 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.

 

These measures are a supplement to GAAP used to prepare the Company’s financial statements and should not be viewed as a substitute for GAAP measures. 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 report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise and are not statements of historical fact.  Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events.  Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of and changes in: general economic and bank industry conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, stock and bond markets, accounting standards or interpretations of existing standards, mergers and acquisitions, technology, and consumer spending and savings habits.  More information is available on the Company’s website, http://investors.bankatunion.com and on the SEC’s website, www.sec.gov. The information on the Company’s website is not a part of this press release. The Company does not intend or assume any obligation to update or revise any forward-looking statements that may be made from time to time by or on behalf of the Company.

 

 
 

 

             
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS            
(in thousands, except share data)            
   Three Months Ended 
   03/31/14   12/31/13   03/31/13 
Results of Operations            
Interest and dividend income  $68,208   $43,315   $43,285 
Interest expense   4,450    4,702    5,532 
Net interest income   63,758    38,613    37,753 
Provision for loan losses   -    1,206    2,050 
Net interest income after provision for loan losses   63,758    37,407    35,703 
Noninterest income   14,200    8,379    9,835 
Noninterest expenses   67,781    35,375    33,501 
Income before income taxes   10,177    10,411    12,037 
Income tax expense   2,362    2,306    3,054 
Net income  $7,815   $8,105   $8,983 
                
Interest earned on earning assets (FTE)   70,154    44,702    44,543 
Net interest income (FTE)   65,704    40,000    39,011 
Core deposit intangible amortization   2,616    919    1,036 
                
Net income - community bank segment  $9,195   $10,002   $8,806 
Net income - mortgage segment   (1,380)   (1,897)   177 
                
Key Ratios               
Earnings per common share, diluted  $0.17   $0.32   $0.36 
Return on average assets (ROA)   0.44%   0.79%   0.90%
Return on average equity (ROE)   3.18%   7.30%   8.32%
Return on average tangible common equity (ROTCE)   4.80%   8.73%   10.03%
Efficiency ratio (FTE)   84.83%   73.12%   68.58%
Efficiency ratio - community bank segment (FTE)   81.56%   66.02%   66.26%
Efficiency ratio - mortgage bank segment (FTE)   186.04%   288.43%   93.25%
Net interest margin (FTE)   4.14%   4.27%   4.23%
Net interest margin, core (FTE) (1)   3.99%   4.24%   4.18%
Yields on earning assets (FTE)   4.42%   4.77%   4.84%
Cost of interest-bearing liabilities (FTE)   0.34%   0.64%   0.76%
Cost of funds   0.28%   0.50%   0.61%
                
Key operating Ratios - excluding merger costs   (non-GAAP) (3)               
Consolidated               
Operating net income  $16,831   $8,756   $8,983 
Operating diluted earnings per share  $0.36   $0.35   $0.36 
Operating return on average assets   0.94%   0.85%   0.90%
Operating return on average equity   6.84%   7.89%   8.32%
Operating return on average tangible common equity   10.33%   9.43%   10.03%
Operating efficiency ratio (FTE)   68.35%   71.59%   68.58%
                
Community Bank Segment               
Operating net income  $18,211   $10,653   $8,806 
Operating diluted earnings per share  $0.39   $0.43   $0.35 
Operating return on average assets   1.02%   1.04%   0.89%
Operating return on average equity   7.52%   9.79%   8.33%
Operating return on average tangible common equity   11.44%   11.74%   10.08%
Operating efficiency ratio (FTE)   64.57%   64.45%   66.26%

 

 
 

 

             
   Three Months Ended 
   03/31/14   12/31/13   03/31/13 
             
Capital Ratios               
Tier 1 risk-based capital ratio (5)   13.02%   13.05%   13.02%
Total risk-based capital ratio (5)   13.69%   14.17%   14.44%
Leverage ratio (Tier 1 capital to average assets) (5)   10.67%   10.70%   10.21%
Common equity to total assets   13.47%   10.49%   10.63%
Tangible common equity to tangible assets   9.29%   8.94%   8.97%
                
Per Share Data               
Earnings per common share, basic  $0.17   $0.32   $0.36 
Earnings per common share, diluted   0.17    0.32    0.36 
Cash dividends paid per common share   0.14    0.14    0.13 
Market value per share   25.42    24.81    19.56 
Book value per common share   21.15    17.56    17.43 
Tangible book value per common share   13.92    14.69    14.43 
Price to earnings ratio, diluted   36.87    19.54    13.40 
Price to book value per common share ratio   1.20    1.41    1.12 
Price to tangible common share ratio   1.83    1.69    1.36 
Weighted average common shares outstanding, basic   46,977,416    24,939,360    25,063,426 
Weighted average common shares outstanding, diluted   47,080,661    25,028,760    25,138,003 
Common shares outstanding at end of period   46,677,821    24,976,434    24,859,729 
                
Financial Condition               
Assets  $7,294,637   $4,176,571   $4,051,135 
Loans, net of unearned income   5,274,198    3,039,368    2,973,547 
Earning Assets   6,469,151    3,802,870    3,726,703 
Goodwill   296,876    59,400    59,400 
Core deposit intangibles, net   38,935    11,980    14,742 
Deposits   5,686,131    3,236,842    3,311,749 
Stockholders' equity   982,513    438,239    430,773 
Tangible common equity   646,702    366,859    356,631 
                
Averages               
Assets  $7,249,746   $4,075,443   $4,057,156 
Loans, net of unearned income   5,279,924    3,004,186    2,965,918 
Loans held for sale   49,767    50,819    156,766 
Securities   1,076,479    650,351    600,262 
Earning assets   6,432,326    3,715,003    3,735,926 
Deposits   5,645,961    3,232,688    3,284,435 
Certificates of deposit   1,463,076    892,164    1,041,903 
Interest-bearing deposits   4,686,438    2,536,769    2,654,918 
Borrowings   549,663    363,889    301,343 
Interest-bearing liabilities   5,236,101    2,900,658    2,956,261 
Stockholders' equity   997,868    440,344    437,981 
Tangible common equity   660,543    368,523    363,355 

 

 
 

  

             
   Three Months Ended 
   03/31/14   12/31/13   03/31/13 
Asset Quality               
Allowance for Loan Losses (ALL)               
Beginning balance  $30,135   $33,877   $34,916 
Add: Recoveries   1,659    889    834 
Less: Charge-offs   887    5,837    3,385 
Add: Provision for loan losses   -    1,206    2,050 
Ending balance  $30,907   $30,135   $34,415 
                
ALL / total outstanding loans   0.59%   0.99%   1.16%
ALL / total outstanding loans, adjusted for purchase accounting (2)   1.07%   1.10%   1.32%
Net charge-offs / total outstanding loans   -0.06%   0.65%   0.35%
Provision / total outstanding loans   0.00%   0.16%   0.28%
Nonperforming Assets               
Commercial  $12,591   $12,031   $18,456 
Consumer   4,443    3,004    4,577 
Nonaccrual loans   17,034    15,035    23,033 
                
Other real estate owned   35,487    34,116    35,878 
Total nonperforming assets (NPAs)   52,521    49,151    58,911 
                
Commercial   3,485    3,087    2,105 
Consumer   3,720    3,659    4,082 
Loans 90 days and still accruing   7,205    6,746    6,187 
                
Total nonperforming assets and loans 90 days  $59,726   $55,897   $65,098 
NPAs / total outstanding loans   1.00%   1.62%   1.98%
NPAs / total assets   0.72%   1.18%   1.45%
ALL / nonperforming loans   181.44%   200.43%   149.42%
ALL / nonperforming assets   58.85%   61.31%   58.42%
                
Past Due Detail               
Commercial  $2,599   $1,017   $1,844 
Consumer   4,511    2,330    2,650 
Loans 60-89 days past due  $7,110   $3,347   $4,494 
Commercial  $13,566   $3,839   $4,173 
Consumer   23,017    12,592    9,890 
Loans 30-59 days past due  $36,583   $16,431   $14,063 
Commercial  $114,834   $2,732   $3,078 
Consumer   15,488    890    941 
Purchased impaired  $130,322   $3,622   $4,019 
                
Mortgage Origination Volume               
Refinance Volume  $45,322   $47,887   $141,248 
Construction Volume   32,103    25,248    26,188 
Purchase Volume   71,635    83,043    100,725 
Total Mortgage loan originations  $149,060   $156,178   $268,161 
% of originations that are refinances   30.41%   30.70%   52.70%
                
Other Data               
End of period full-time employees   1,628    1,024    1,028 
Number of full-service branches   144    90    90 
Number of full automatic transaction machines (ATMs)   210    154    156 
                

 

 
 

 

             
   Three Months Ended 
   03/31/14   12/31/13   03/31/13 
Alternative Performance Measures (non-GAAP)               
Operating Earnings (non-GAAP) (3)               
Net Income (GAAP)  $7,815   $8,105   $8,983 
Plus: Merger and conversion related expense, after tax   9,016    651    - 
Net operating earnings (loss) (non-GAAP)  $16,831   $8,756   $8,983 
                
Operating earnings per share - Basic  $0.36   $0.35   $0.36 
Operating earnings per share - Diluted   0.36    0.35    0.36 
                
Operating ROA   0.94%   0.85%   0.90%
Operating ROE   6.84%   7.89%   8.32%
Operating ROTCE   10.33%   9.43%   10.03%
                
Community Bank Segment Operating Earnings (non-GAAP) (3)               
Net Income (GAAP)  $9,195   $10,002   $8,806 
Plus: Merger and conversion related expense, after tax   9,016    651    - 
Net operating earnings (loss) (non-GAAP)  $18,211   $10,653   $8,806 
                
Operating earnings per share - Basic  $0.39   $0.43   $0.35 
Operating earnings per share - Diluted   0.39    0.43    0.35 
                
Operating ROA   1.02%   1.04%   0.89%
Operating ROE   7.52%   9.79%   8.33%
Operating ROTCE   11.44%   11.74%   10.08%
                
Operating Efficiency Ratio FTE (non-GAAP) (3)               
Net Interest Income (GAAP)  $63,758   $38,613   $37,753 
FTE adjustment   1,946    1,387    1,258 
Net Interest Income (FTE)  $65,704    40,000    39,011 
Noninterest Income (GAAP)   14,200    8,379    9,835 
Noninterest Expense (GAAP)  $67,781   $35,375   $33,501 
Merger and conversion related expense   13,168    739    - 
Noninterest Expense (Non-GAAP)  $54,613   $34,636   $33,501 
                
Operating Efficiency Ratio FTE (non-GAAP)   68.35%   71.59%   68.58%
                
Community Bank Segment Operating Efficiency Ratio FTE (non-GAAP) (3)               
Net Interest Income (GAAP)  $63,526   $38,363   $37,188 
FTE adjustment   1,947    1,387    1,258 
Net Interest Income (FTE)  $65,473    39,750    38,446 
Noninterest Income (GAAP)   12,071    7,226    6,146 
Noninterest Expense (GAAP)  $63,242   $31,014   $29,544 
Merger and conversion related expense   13,168    739    - 
Noninterest Expense (Non-GAAP)  $50,074   $30,275   $29,544 
                
Operating Efficiency Ratio FTE (non-GAAP)   64.57%   64.45%   66.26%
                
Tangible Common Equity (4)               
Ending equity  $982,513   $438,239   $430,773 
Less: Ending goodwill   296,876    59,400    59,400 
Less: Ending core deposit intangibles   38,935    11,980    14,742 
Ending tangible common equity  $646,702   $366,859   $356,631 
                
Average equity  $997,868   $440,344   $437,981 
Less: Average trademark intangible   -    -    5 
Less: Average goodwill   296,876    59,400    59,400 
Less: Average core deposit intangibles   40,449    12,421    15,221 
Average tangible common equity  $660,543   $368,523   $363,355 

 

 

 
 

 

             
     
   Three Months Ended 
   03/31/14   12/31/13   03/31/13 
ALL to loans, adjusted for purchase accounting (non-GAAP)(2)               
Allowance for loan losses  $30,907   $30,135   $34,415 
Remaining credit mark on purchased performing loans   25,756    3,341    4,771 
Adjusted allowance for loan losses   56,663    33,476    39,186 
                
Loans, net of unearned income   5,274,198    3,039,368    2,973,547 
Remaining credit mark on purchased performing loans   25,756    3,341    4,771 
Adjusted loans, net of unearned income  $5,299,954   $3,042,709   $2,978,318 
                
ALL / gross loans, adjusted for purchase accounting   1.07%   1.10%   1.32%

 

(1) The core net interest margin, fully taxable equivalent (“FTE”) excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income.

 

2) The allowance for loan losses, adjusted for purchase accounting (non-GAAP) ratio includes an adjustment for the credit mark on purchased performing loans. The purchased performing loans are reported net of the related credit mark in loans, net of unearned income, on the balance sheet; therefore, the credit mark is added back to the balance to represent the total loan portfolio. The adjusted allowance for loan losses, including the credit mark, represents the total reserve on the Company’s loan portfolio. GAAP requires the acquired allowance for loan losses not be carried over in an acquisition or merger.  The Company believes the presentation of the allowance for loan losses, adjusted for purchase accounting ratio is useful to investors because the acquired loans were purchased at a market discount with no allowance for loan losses carried over to the Company and the credit mark on the purchased performing loans represents the allowance associated with those purchased loans.  The Company believes that this measure is a better reflection of the reserves on the Company’s loan portfolio.

 

(3) The Company has provided supplemental performance measures which the Company believes may be useful to investors as they exclude non-operating adjustments resulting from acquisition and allow investors to see the combined economic results of the organization. These measures are a supplement to GAAP used to prepare the Company’s financial statements and should not be viewed as a substitute for GAAP measures. In addition, the Company’s non-GAAP measures may not be comparable to non-GAAP measures of other companies.

 

(4) Tangible common equity is used in the calculation of certain 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.

 

(5) March 31, 2014 ratios are estimates and subject to change pending the filing of the FR Y9-C. All other periods presented as filed.

 

 
 

 

             
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES        
CONSOLIDATED BALANCE SHEETS            
(Dollars in thousands, except share data)            
   March 31,   December 31,   March 31, 
   2014   2013   2013 
ASSETS   (Unaudited)    (Audited)    (Unaudited) 
Cash and cash equivalents:               
Cash and due from banks  $117,189   $66,090   $52,017 
Interest-bearing deposits in other banks   24,541    6,781    24,715 
Money market investments   1    1    1 
Federal funds sold   519    151    160 
Total cash and cash equivalents   142,250    73,023    76,893 
                
Securities available for sale, at fair value   1,078,699    677,348    583,217 
Restricted stock, at cost   42,441    26,036    17,956 
                
Loans held for sale   48,753    53,185    127,106 
                
Loans, net of unearned income   5,274,198    3,039,368    2,973,547 
Less allowance for loan losses   30,907    30,135    34,415 
Net loans   5,243,291    3,009,233    2,939,132 
                
Bank premises and equipment, net   151,840    82,815    83,366 
Other real estate owned, net of valuation allowance   35,487    34,116    35,878 
Core deposit intangibles, net   38,935    11,980    14,742 
Goodwill   296,876    59,400    59,400 
Other assets   216,065    149,435    113,445 
Total assets  $7,294,637   $4,176,571   $4,051,135 
                
LIABILITIES               
Noninterest-bearing demand deposits   1,018,663    691,674    665,992 
Interest-bearing deposits:               
NOW accounts   1,256,910    498,068    459,117 
Money market accounts   1,414,918    940,215    945,273 
Savings accounts   559,299    235,034    225,543 
Time deposits of $100,000 and over   608,753    427,597    507,972 
Other time deposits   827,588    444,254    507,852 
Total interest-bearing deposits   4,667,468    2,545,168    2,645,757 
Total deposits   5,686,131    3,236,842    3,311,749 
                
Securities sold under agreements to repurchase   57,681    52,455    72,047 
Other short-term borrowings   216,600    211,500    - 
Trust preferred capital notes   93,301    60,310    60,310 
Long-term borrowings   205,116    139,049    137,364 
Other liabilities   53,295    38,176    38,892 
Total liabilities   6,312,124    3,738,332    3,620,362 
                
Commitments and contingencies               
                
STOCKHOLDERS' EQUITY               
Common stock, $1.33 par value, shares authorized 100,000,000, 36,000,000, and 36,000,000, respectively; issued and outstanding, 46,677,821 shares, 24,976,434 shares, and 24,859,729 shares, respectively.   61,780    33,020    32,869 
Surplus   678,143    170,770    168,304 
Retained earnings   237,864    236,639    221,330 
Accumulated other comprehensive (loss) income   4,726    (2,190)   8,270 
Total stockholders' equity   982,513    438,239    430,773 
                
Total liabilities and stockholders' equity  $7,294,637   $4,176,571   $4,051,135 

 

 
 

 

             
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)            
             
   Three Months Ended 
   March 31,   December 31,   March 31, 
   2014   2013   2013 
   (Unaudited)   (Unaudited)   (Unaudited) 
Interest and dividend income:               
Interest and fees on loans  $61,269   $38,741   $39,224 
Interest on deposits in other banks   12    3    5 
Interest and dividends on securities:               
Taxable   3,648    2,345    2,069 
Nontaxable   3,279    2,226    1,987 
Total interest and dividend income   68,208    43,315    43,285 
                
Interest expense:               
Interest on deposits   2,256    3,064    3,962 
Interest on federal funds purchased   24    27    15 
Interest on short-term borrowings   119    95    54 
Interest on long-term borrowings   2,051    1,516    1,501 
Total interest expense   4,450    4,702    5,532 
                
Net interest income   63,758    38,613    37,753 
Provision for loan losses   -    1,206    2,050 
Net interest income after provision for loan losses   63,758    37,407    35,703 
                
Noninterest income:               
Service charges on deposit accounts   4,298    2,399    2,272 
Other service charges, commissions and fees   4,671    3,096    2,807 
Gains (losses) on securities transactions, net   29    (26)   (11)
Gains on sales of mortgage loans, net of commissions   2,297    1,319    3,852 
Gains (losses) on sales of bank premises   (233)   (3)   (296)
Other operating income   3,138    1,594    1,211 
Total noninterest income   14,200    8,379    9,835 
                
Noninterest expenses:               
Salaries and benefits   29,626    17,076    17,966 
Occupancy expenses   5,180    3,105    2,855 
Furniture and equipment expenses   2,868    1,633    1,845 
Communications expense   1,098    611    696 
Technology and data processing   3,074    1,975    1,744 
Professional services   1,055    1,237    725 
Marketing and advertising expense   1,065    1,135    1,052 
FDIC assessment premiums and other insurance   1,393    805    790 
OREO and credit-related expenses   1,451    1,721    574 
Amortization of intangible assets   2,616    919    1,069 
Acquisition and conversion costs   13,168    739    - 
Other expenses   5,187    4,419    4,185 
Total noninterest expenses   67,781    35,375    33,501 
                
Income before income taxes   10,177    10,411    12,037 
Income tax expense   2,362    2,306    3,054 
Net income  $7,815   $8,105   $8,983 
Earnings per common share, basic  $0.17   $0.32   $0.36 
Earnings per common share, diluted  $0.17   $0.32   $0.36 

 

 

 
 

 

                 
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION                
(Dollars in thousands)                
   Community Bank   Mortgage   Eliminations   Consolidated 
Three Months Ended March 31, 2014                    
Net interest income  $63,526   $232   $-   $63,758 
Provision for loan losses   -    -    -    - 
Net interest income after provision for loan losses   63,526    232    -    63,758 
Noninterest income   12,071    2,300    (171)   14,200 
Noninterest expenses   63,242    4,710    (171)   67,781 
Income before income taxes   12,355    (2,178)   -    10,177 
Income tax expense   3,160    (798)   -    2,362 
Net income  $9,195   $(1,380)  $-   $7,815 
Plus:  Merger and conversion related expense, after tax   9,016    -    -    9,016 
Net operating earnings (loss) (non-GAAP)  $18,211   $(1,380)  $-   $16,831 
Total assets  $7,282,443   $57,705   $(45,511)  $7,294,637 
                     
Three Months Ended March 31, 2013                    
Net interest income  $37,188   $565   $-   $37,753 
Provision for loan losses   2,050    -    -    2,050 
Net interest income after provision for loan losses   35,138    565    -    35,703 
Noninterest income   6,146    3,856    (167)   9,835 
Noninterest expenses   29,544    4,124    (167)   33,501 
Income before income taxes   11,740    297    -    12,037 
Income tax expense   2,934    120    -    3,054 
Net income  $8,806   $177   $-   $8,983 
Total assets  $4,031,302   $136,238   $(116,405)  $4,051,135 
                     
                     

 

 

 

 

 
 

 

                         
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
                         
   For the quarter ended 
   March 31, 2014   December 31, 2013 
   Average Balance   Interest Income / Expense   Yield / Rate (1)   Average Balance   Interest Income / Expense   Yield / Rate (1) 
   (Dollars in thousands) 
Assets:                              
Securities:                              
Taxable  $683,620   $3,648    2.16%  $411,927   $2,345    2.26%
Tax-exempt   392,859    5,044    5.21%   238,424    3,424    5.70%
Total securities (2)   1,076,479    8,692    3.27%   650,351    5,769    3.52%
Loans, net (3) (4)   5,279,924    61,033    4.69%   3,004,186    38,455    5.08%
Loans held for sale   49,767    417    3.40%   50,819    475    3.71%
Federal funds sold   268    -    0.17%   298    -    0.17%
Money market investments   1    -    0.00%   1    -    0.00%
Interest-bearing deposits in other banks   25,887    12    0.19%   9,348    3    0.13%
Total earning assets   6,432,326    70,154    4.42%   3,715,003    44,702    4.77%
Allowance for loan losses   (30,925)             (33,435)          
Total non-earning assets   848,345              393,875           
Total assets  $7,249,746             $4,075,443           
                               
Liabilities and Stockholders' Equity:                              
Interest-bearing deposits:                              
Checking  $1,252,927    225    0.07%  $481,152    93    0.08%
Money market savings   1,421,558    913    0.26%   929,816    547    0.23%
Regular savings   548,877    247    0.18%   233,637    180    0.31%
Time deposits (5)   1,463,076    871    0.24%   892,164    2,244    1.02%
Total interest-bearing deposits   4,686,438    2,256    0.20%   2,536,769    3,064    0.48%
Other borrowings (6)   549,663    2,194    1.62%   363,889    1,638    1.79%
Total interest-bearing liabilities   5,236,101    4,450    0.34%   2,900,658    4,702    0.64%
                               
Noninterest-bearing liabilities:                              
Demand deposits   959,523              695,919           
Other liabilities   56,254              38,522           
Total liabilities   6,251,878              3,635,099           
Stockholders' equity   997,868              440,344           
Total liabilities and stockholders' equity  $7,249,746             $4,075,443           
                               
Net interest income       $65,704             $40,000      
                               
Interest rate spread (7)             4.08%             4.13%
Interest expense as a percent of average earning assets   0.28%             0.50%                
Net interest margin (8)             4.14%             4.27%
                               

 

(1) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.
(2) Interest income on securities includes $0 for the three months ended March 31, 2014 and December 31, 2013, respectively, in accretion of the fair market value adjustments.
(3) Nonaccrual loans are included in average loans outstanding.
(4) Interest income on loans includes $546 thousand and $495 thousand for the three month periods ended March 31, 2104 and December 31, 2013 in accretion of the fair market value adjustments related to the acquisitions.
(5) Interest expense on certificates of deposits includes $2.9 million and $2 thousand for  the three month periods ended March 31, 2014 and December 31, 2013, respectively, in accretion of the fair market value adjustments related to the acquisitions.
(6) Interest expense on borrowings includes $75 thousand and $122 thousand for the three month periods ended March 31, 2014, and December 31, 2013, respectively,  in amortization of the fair market value adjustments related to acquisitions.
(7) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.
(8) Core net interest margin excludes purchase accounting adjustments and was 3.99% and 4.24% for the three months ended March 31, 2014 and December 31, 2013.