Exhibit 99.1

 

 

Contact:

Robert M. Gorman - (804) 523-7828

Executive Vice President / Chief Financial Officer

 

UNION BANKSHARES REPORTS SECOND QUARTER RESULTS

 

Richmond, Va., July 21, 2015 - Union Bankshares Corporation (the “Company” or “Union”) (NASDAQ: UBSH) today reported net income of $15.3 million and earnings per share of $0.34 for its second quarter ended June 30, 2015. The quarterly results include $832,000, or $0.02 per share, in after-tax nonrecurring costs associated with branch closures and represent a decrease of $353,000, or 2.2%, in net income and a decrease of $0.01, or 2.9%, in earnings per share from the first quarter. For the six months ended June 30, 2015, net income was $31.0 million with earnings per share at $0.69.

 

“Union’s second quarter results clearly demonstrate the steady progress we are making toward the growth objectives we envisioned as the largest community banking institution headquartered in Virginia,” said G. William Beale, president and chief executive officer of Union Bankshares Corporation, “During the quarter, loans grew by 9.1% while deposits grew by 8.1% on an annualized basis as we continue to build the core engine to generate sustainable, profitable growth for our shareholders.  Our commercial, retail, and wealth management teams have coalesced and are leveraging Union’s unique market position to attract new customers while deepening our relationships with existing customers.

 

We are also pleased to report that the mortgage company returned to profitability during the quarter.  The mortgage company has worked hard to stabilize and restructure the business over the past several quarters and we are beginning to see the positive results of these efforts.  The mortgage team is now able to turn their attention to adding to our mortgage sales teams to grow loan origination levels and generate the revenue that will allow us to profitably leverage our more efficient operating platform.”

 

Select highlights for the second quarter include:

·

The quarterly results include $1.3 million in pre-tax nonrecurring costs related to the previously announced closure of seven branches.

·

Net income for the community bank segment was $15.3 million, or $0.34 per share, for the second quarter compared to $16.0 million, or $0.36 per share, for the first quarter. Net income for the community bank segment for the six months ended June 30, 2015 was $31.2 million, or $0.69 per share.

·

The mortgage segment reported net income of $95,000 for the second quarter, an improvement from a net loss of $267,000 for the first quarter. The mortgage segment had a net loss of $172,000 for the six months ended June 30, 2015.

·

Period end loan balances increased $122.6 million, or 9.1% on an annualized basis, from March 31, 2015. Average loan balances increased $87.5 million, or 6.5% on an annualized basis, from the prior quarter.

·

Asset quality improved due to reductions in nonperforming assets and past due loan levels.

 

NET INTEREST INCOME

 

Tax-equivalent net interest income was $66.1 million, an increase of $2.0 million from the first quarter of 2015, primarily driven by the impact of the higher day count in the second quarter and higher earning asset yields. The second quarter tax-equivalent net interest margin increased 2 basis points to 3.97% from 3.95% in the previous quarter. Core tax-equivalent net interest margin (which excludes the 11 basis points impact of acquisition accounting accretion) increased by 2 basis points to 3.86% from 3.84% in the previous quarter. The increase in the core tax-equivalent net interest margin was principally due to the 1 basis point increase in interest-earning asset yields combined with the 1 basis point reduction in cost of funds. The increase in interest-earning asset yields was primarily driven by higher loan and investment yields.

 

 

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

 

The Company’s fully taxable equivalent net interest margin includes the impact of acquisition accounting fair value adjustments. During the second quarter, net accretion related to acquisition accounting declined by $48,000 from the prior quarter to $1.8 million. The first and second quarters of 2015 and remaining estimated discount/premium and net accretion impact are reflected in the following table (dollars in thousands):

 

		Accretion								Accretion (Amortization)
		Loan				Certificates of Deposit				Borrowings				Total
For the quarter ended March 31, 2015		$	639			$	1,075			$	137			$	1,851
For the quarter ended June 30, 2015			1,052				614				137				1,803
For the remaining six months of 2015			2,096				154				25				2,275
For the years ending:
2016			3,658				-				271				3,929
2017			3,505				-				170				3,675
2018			2,999				-				(143	)			2,856
2019			2,351				-				(286	)			2,065
2020			1,909				-				(301	)			1,608
Thereafter			10,808				-				(5,622	)			5,186

 

ASSET QUALITY/LOAN LOSS PROVISION

 

Overview

During the second quarter, the Company experienced declines in nonaccrual and past due loans and other real estate owned (“OREO”) balances from the prior quarter and the prior year. The decline in OREO balances was mostly attributable to sales of foreclosed land and residential real estate property during the quarter. The loan loss provision increased from the prior quarter due to loan growth and higher specific reserves on impaired loans. The allowance for loan losses to total loans ratios (both unadjusted and adjusted for acquisition accounting) were consistent with the prior quarter and down from the prior year.

 

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired loans (“PCI”) totaling $87.8 million (net of fair value mark).

 

Nonperforming Assets (“NPAs”)

At June 30, 2015, nonperforming assets totaled $31.7 million, a decrease of $29.9 million, or 48.5%, from a year ago and a decline of $11.1 million, or 25.9%, from March 31, 2015. In addition, NPAs as a percentage of total outstanding loans declined 60 basis points from 1.18% a year earlier and 21 basis points from 0.79% last quarter to 0.58% in the current quarter. The following table shows a summary of asset quality balances at the quarter ended (dollars in thousands):

 

		June 30,				March 31,				December 31,				September 30,				June 30,
		2015				2015				2014				2014				2014
Nonaccrual loans, excluding PCI loans		$	9,521			$	17,385			$	19,255			$	20,279			$	23,099
Foreclosed properties			18,917				21,727				23,058				28,783				33,739
Former bank premises			3,305				3,707				5,060				8,971				4,755
Total nonperforming assets			31,743				42,819				47,373				58,033				61,593

 

 

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

 

		June 30,				March 31,				December 31,				September 30,				June 30,
		2015				2015				2014				2014				2014
Beginning Balance		$	17,385			$	19,255			$	20,279			$	23,099			$	14,722
Net customer payments			(4,647	)			(2,996	)			(4,352	)			(1,654	)			(1,088	)
Additions			581				4,379				7,413				1,099				11,087
Charge-offs			(2,171	)			(3,107	)			(1,839	)			(604	)			(137	)
Loans returning to accruing status			(919	)			(53	)			(2,246	)			(723	)			(523	)
Transfers to OREO			(708	)			(93	)			-				(938	)			(962	)
Ending Balance		$	9,521			$	17,385			$	19,255			$	20,279			$	23,099

 

The decline in nonaccrual loans was largely due to payments received in settlements, sales of collateral, and liquidation of customer assets.

 

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

 

		June 30,				March 31,				December 31,				September 30,				June 30,
		2015				2015				2014				2014				2014
Beginning Balance		$	25,434			$	28,118			$	37,754			$	38,494			$	35,487
Additions of foreclosed property			904				158				367				2,553				1,619
Additions of former bank premises			-				402				63				4,814				6,052
Capitalized improvements			243				56				424				203				59
Valuation adjustments			(710	)			(590	)			(381	)			(6,192	)			(817	)
Proceeds from sales			(3,511	)			(2,748	)			(11,362	)			(2,216	)			(3,913	)
Gains (losses) from sales			(138	)			38				1,253				98				7
Ending Balance		$	22,222			$	25,434			$	28,118			$	37,754			$	38,494

 

During the second quarter of 2015, the majority of sales of OREO were related to land and residential real estate.

 

Past Due Loans

Past due loans still accruing interest totaled $33.5 million, or 0.61% of total loans, at June 30, 2015 compared to $43.2 million, or 0.83%, a year ago and $42.7 million, or 0.79%, at March 31, 2015. At June 30, 2015, loans past due 90 days or more and accruing interest totaled $10.9 million, or 0.20% of total loans, compared to $6.9 million, or 0.13%, a year ago and $7.9 million, or 0.15%, at March 31, 2015.

 

Net Charge-offs

For the quarter ended June 30, 2015, net charge-offs were $2.2 million, or 0.16% on an annualized basis, compared to $1.0 million, or 0.08%, for the same quarter last year and $3.2 million, or 0.24%, for the first quarter of 2015. For the six months ended June 30, 2015, net charge-offs were $5.3 million, or 0.20% on an annualized basis, compared to $256,000, or 0.01%, for the same period in the prior year.

 

Provision

The provision for loan losses for the current quarter was $3.5 million, an increase of $2.0 million compared to the same quarter a year ago and $1.8 million compared to the previous quarter. The increase in provision for loan losses in the current quarter compared to the prior quarter was driven by loan growth and higher specific reserves on impaired loans. Additionally, a $200,000 provision was recognized during the current quarter for unfunded loan commitments, resulting in a total of $3.7 million in provision for credit losses for the quarter.

 

Allowance for Loan Losses

The allowance for loan losses (“ALL”) increased $1.4 million from March 31, 2015 to $32.3 million at June 30, 2015 due to the increase in provision for loan losses primarily driven by loan growth during the quarter. The ALL as a percentage of the total loan portfolio, adjusted for purchase accounting (non-GAAP), was 1.02% at June 30, 2015, a decrease from 1.03% from the prior quarter and from 1.11% at June 30, 2014. The allowance for loan losses as a percentage of the total loan portfolio was 0.59% at June 30, 2015, 0.57% at March 31, 2015, and 0.60% at June 30, 2014. In acquisition accounting, there is no carryover of previously established allowance for loan losses, as acquired loans are recorded at fair value.

 

 

The nonaccrual loan coverage ratio was 339.7% at June 30, 2015, compared to 178.2% at March 31, 2015 and 135.8% at June 30, 2014. 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 $1.1 million, or 7.7%, to $16.2 million from $15.1 million in the prior quarter. Customer-related fee income increased $968,000, primarily driven by higher overdraft, interchange, and letter of credit fees. Gains on sales of mortgage loans, net of commissions, increased $195,000, or 8.2%, from the prior quarter, related to improved gain on sale margins as well as increased mortgage loan originations, partially offset by a decline in unrealized gains on interest rate lock commitments. Mortgage loan originations increased by $1.6 million, or 1.1%, in the current quarter to $140.3 million from $138.7 million in the first quarter, as increased construction and purchase loan production of $23.8 million outpaced declines in refinance originations of $22.2 million during the quarter. Of the loan originations in the current quarter, 30.9% were refinances, which was a decline from 47.3% in the prior quarter. Gains on sales of securities increased $211,000 from the prior quarter. The reduction in other operating income was primarily related to gains from the dissolution of a limited partnership in the prior quarter.

 

NONINTEREST EXPENSE

 

Noninterest expense increased $1.4 million, or 2.6%, to $55.2 million from $53.8 million when compared to the prior quarter. The increase in noninterest expense is primarily driven by $1.3 million in nonrecurring costs related to the previously announced closure of seven branches. Excluding the branch closure costs, noninterest expense increased slightly from the prior quarter. OREO and credit-related costs increased $779,000 related to seasonal real estate taxes, higher legal fees, losses on the sale of properties, and higher valuation adjustments. Marketing expenses increased $685,000 related to the timing of advertising campaigns, and professional fees increased $321,000 related to legal and consulting fees. These increases were offset by a $1.9 million reduction in salaries and benefit expenses due to lower incentive compensation, group insurance, and payroll taxes.

 

BALANCE SHEET

 

At June 30, 2015, total assets were $7.5 billion, an increase of $109.1 million from March 31, 2015 and an increase of $191.0 million from June 30, 2014. The increase in assets was mostly related to loan growth.

 

At June 30, 2015, loans net of deferred fees were $5.5 billion, an increase of $122.6 million, or 9.1% (annualized), from March 31, 2015, while average loans increased $87.5 million, or 6.5% (annualized). Loans increased $277.3 million, or 5.3%, from June 30, 2014.

 

At June 30, 2015, total deposits were $5.8 billion, an increase of $114.2 million, or 8.1% (annualized) from March 31, 2015, while average deposits increased $70.0 million, or 5.0% (annualized). Deposits increased $49.9 million, or 0.9%, from June 30, 2014.

 

At June 30 and March 31, 2015, respectively, the Company had a common equity Tier 1 capital ratio of 10.87% and 10.86%, a Tier 1 capital ratio of 12.30% and 12.32%, a total capital ratio of 12.82% and 12.82%, and a leverage ratio of 10.82% and 10.79%.

 

The Company’s common equity to asset ratios at June 30, 2015, March 31, 2015, and June 30, 2014 were 13.18%, 13.36%, and 13.36%, respectively, while its tangible common equity to tangible assets ratio was 9.30%, 9.40%, and 9.22% at June 30, 2015, March 31, 2015, and June 30, 2014, respectively.

 

 

During the second quarter, the Company declared and paid cash dividends of $0.17 per common share, a $0.02, or 13.3%, increase from the prior quarter dividend of $0.15 per common share.

 

COMMUNITY BANK SEGMENT INFORMATION

 

The community bank segment reported net income of $15.3 million for the second quarter, a decrease of $715,000, or 4.5%, from $16.0 million in the first quarter. Net interest income was $63.4 million, an increase of $1.7 million from the first quarter principally due to the impact of the higher day count in the second quarter and higher earning asset yields. As previously discussed, the provision for loan losses increased $1.8 million from the prior quarter due to loan growth and higher specific reserves on impaired loans.

 

Noninterest income increased $675,000 to $13.5 million in the current quarter compared to $12.8 million in the prior quarter. Customer-related fee income increased $968,000, primarily driven by higher overdraft, interchange, and letter of credit fees. Gains on sales of securities increased $211,000 from the prior quarter. Other income decreased $506,000 primarily related to gains from the dissolution of a limited partnership in the prior quarter.

 

Noninterest expense increased $1.4 million from $51.0 million in the prior quarter to $52.4 million in the current quarter. The increase in noninterest expense is primarily driven by $1.3 million in nonrecurring costs related to the previously announced closure of seven branches. Excluding the branch closure costs, noninterest expense increased slightly from the prior quarter. OREO and credit-related costs increased $771,000 related to seasonal real estate taxes, higher legal fees, losses on the sale of properties, and higher valuation adjustments. Marketing expenses increased $682,000 related to the timing of advertising campaigns, and professional fees increased $324,000 related to legal and consulting fees. These increases were offset by a $2.0 million reduction in salaries and benefit expenses due to lower incentive compensation, group insurance, and payroll taxes.

 

MORTGAGE SEGMENT INFORMATION

 

The mortgage segment reported net income of $95,000 for the second quarter, an improvement of $362,000 from a net loss of $267,000 in the first quarter. Noninterest income increased $484,000 during the quarter due to higher gains on sales of mortgage loans, net of commissions, and adjustments to required indemnification reserves during the second quarter. Gains on sales of mortgage loans, net of commissions, increased $195,000, related to improved gain on sale margins as well as increased mortgage loan originations, partially offset by a decline in unrealized gains on interest rate lock commitments. Mortgage loan originations increased by $1.6 million, or 1.1%, in the current quarter to $140.3 million from $138.7 million in the first quarter, as increased construction and purchase loan production of $23.8 million outpaced declines in refinance originations of $22.2 million during the quarter. Of the loan originations in the current quarter, 30.9% were refinances, which was a decrease from 47.3% in the prior quarter. Noninterest expenses remained consistent with the prior quarter at $3.0 million and were down $1.2 million, or 29.1%, from the second quarter of 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 131 banking offices and approximately 200 ATMs located throughout Virginia. 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 Bankshares Corporation will hold a conference call on Tuesday, July 21^st, 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. The conference ID number is 82159353.

 

 

ADOPTION OF NEW ACCOUNTING STANDARDS

 

The Company adopted ASU 2014-01, “Accounting for Investments in Qualified Affordable Housing Projects” as of January 1, 2015. As permitted by the guidance, the Company adopted the proportional amortization method of accounting for Qualified Affordable Housing Projects. The proportional amortization method amortizes the cost of the investment over the period in which the Company will receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of income taxes attributable to continuing operations. Historically, these investments were accounted for under the equity method of accounting and the passive losses related to the investments were recognized within noninterest expense. The Company adopted this guidance in the first quarter of 2015 with retrospective application as required by the ASU. Prior period 2014 results and related metrics have been restated to conform to this presentation.

 

NON-GAAP MEASURES

 

In reporting the results of the quarter ended June 30, 2015, 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 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.  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 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 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 saving habits.  More information is available on the Company’s website, http://investors.bankatunion.com. 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 BANKSHARES CORPORATION AND SUBSIDIARIES

KEY FINANCIAL RESULTS

(Dollars in thousands, except share data)

 

		Three Months Ended												Six Months Ended
		06/30/15				03/31/15				06/30/14				06/30/15				06/30/14
Results of Operations
Interest and dividend income		$	69,854			$	67,600			$	68,634			$	137,455			$	136,842
Interest expense			6,038				5,631				4,919				11,670				9,369
Net interest income			63,816				61,969				63,715				125,785				127,473
Provision for credit losses			3,749				1,750				1,500				5,499				1,500
Net interest income after provision for credit losses			60,067				60,219				62,215				120,286				125,973
Noninterest income			16,212				15,054				16,280				31,266				30,068
Noninterest expenses			55,241				53,840				58,967				109,081				126,252
Income before income taxes			21,038				21,433				19,528				42,471				29,789
Income tax expense			5,690				5,732				4,855				11,422				7,407
Net income		$	15,348			$	15,701			$	14,673			$	31,049			$	22,382
Interest earned on earning assets (FTE)		$	72,145			$	69,761			$	70,735			$	141,907			$	140,907
Net interest income (FTE)			66,107				64,130				65,816				130,237				131,538
Core deposit intangible amortization			2,138				2,222				2,455				4,361				5,071
Net income - community bank segment		$	15,253			$	15,968			$	15,275			$	31,221			$	24,364
Net income (loss) - mortgage segment			95				(267	)			(602	)			(172	)			(1,982	)
Key Ratios
Earnings per common share, diluted		$	0.34			$	0.35			$	0.32			$	0.69			$	0.48
Return on average assets (ROA)			0.83	%			0.86	%			0.81	%			0.84	%			0.62	%
Return on average equity (ROE)			6.21	%			6.48	%			6.02	%			6.34	%			4.57	%
Return on average tangible common equity (ROTCE)			9.20	%			9.67	%			9.15	%			9.43	%			6.93	%
Efficiency ratio (FTE)			67.11	%			67.99	%			71.83	%			67.54	%			78.12	%
Efficiency ratio - community bank segment (FTE)			66.07	%			66.43	%			69.48	%			66.25	%			75.34	%
Efficiency ratio - mortgage bank segment (FTE)			94.21	%			115.86	%			128.53	%			103.90	%			153.31	%
Net interest margin (FTE)			3.97	%			3.95	%			4.09	%			3.96	%			4.11	%
Yields on earning assets (FTE)			4.33	%			4.30	%			4.39	%			4.32	%			4.41	%
Cost of interest-bearing liabilities (FTE)			0.47	%			0.45	%			0.39	%			0.46	%			0.37	%
Cost of funds (FTE)			0.36	%			0.35	%			0.30	%			0.36	%			0.30	%
Net interest margin, core (FTE) (1)			3.86	%			3.84	%			3.94	%			3.85	%			3.97	%
Yields on earning assets (FTE), core (1)			4.27	%			4.26	%			4.40	%			4.27	%			4.43	%
Cost of interest-bearing liabilities (FTE), core (1)			0.53	%			0.54	%			0.59	%			0.54	%			0.59	%
Cost of funds (FTE), core (1)			0.41	%			0.42	%			0.46	%			0.42	%			0.46	%
Key Operating Ratios - excluding merger costs (non-GAAP) (2)
Consolidated
Operating net income		$	15,348			$	15,701			$	17,716			$	31,049			$	34,441
Operating diluted earnings per share		$	0.34			$	0.35			$	0.38			$	0.69			$	0.74
Operating ROA			0.83	%			0.86	%			0.98	%			0.84	%			0.96	%
Operating ROE			6.21	%			6.48	%			7.26	%			6.34	%			7.03	%
Operating ROTCE			9.20	%			9.67	%			11.04	%			9.43	%			10.66	%
Operating efficiency ratio (FTE)			67.11	%			67.99	%			66.15	%			67.54	%			67.09	%
Community Bank Segment
Operating net income		$	15,253			$	15,968			$	18,318			$	31,221			$	36,423
Operating diluted earnings per share		$	0.34			$	0.36			$	0.40			$	0.69			$	0.78
Operating ROA			0.82	%			0.88	%			1.01	%			0.85	%			1.01	%
Operating ROE			6.19	%			6.61	%			7.56	%			6.40	%			7.52	%
Operating ROTCE			9.18	%			9.88	%			11.54	%			9.52	%			11.46	%
Operating efficiency ratio (FTE)			66.07	%			66.43	%			63.58	%			66.25	%			63.92	%

 

 

		Three Months Ended												Six Months Ended
		06/30/15				03/31/15				06/30/14				06/30/15				06/30/14
Capital Ratios
Common equity Tier 1 capital ratio (3)			10.87	%			10.86	%			N/A				10.87	%			N/A
Tier 1 capital ratio (3)			12.30	%			12.32	%			12.93	%			12.30	%			12.93	%
Total capital ratio (3)			12.82	%			12.82	%			13.56	%			12.82	%			13.56	%
Leverage ratio (Tier 1 capital to average assets) (3)			10.82	%			10.79	%			10.47	%			10.82	%			10.47	%
Common equity to total assets			13.18	%			13.36	%			13.36	%			13.18	%			13.36	%
Tangible common equity to tangible assets			9.30	%			9.40	%			9.22	%			9.30	%			9.22	%
Financial Condition
Assets		$	7,497,706			$	7,388,559			$	7,306,706			$	7,497,706			$	7,306,706
Loans, net of deferred fees			5,510,385				5,387,755				5,233,069				5,510,385				5,233,069
Earning Assets			6,717,137				6,602,453				6,460,753				6,717,137				6,460,753
Goodwill			293,522				293,522				296,876				293,522				296,876
Core deposit intangibles, net			27,394				29,533				36,479				27,394				36,479
Deposits			5,784,474				5,670,228				5,734,563				5,784,474				5,734,563
Stockholders' equity			988,134				986,916				976,326				988,134				976,326
Tangible common equity			667,218				663,861				642,971				667,218				642,971
Loans, net of deferred fees
Raw land and lots		$	201,630			$	197,759			$	212,475			$	201,630			$	212,475
Commercial construction			378,204				358,436				295,503				378,204				295,503
Commercial real estate			2,443,888				2,416,812				2,326,111				2,443,888				2,326,111
Single family investment real estate			435,068				416,984				397,186				435,068				397,186
Commercial and industrial			450,682				426,490				390,682				450,682				390,682
Other commercial			90,556				80,416				80,337				90,556				80,337
Consumer			1,510,357				1,490,858				1,530,775				1,510,357				1,530,775
Total loans, net of deferred fees		$	5,510,385			$	5,387,755			$	5,233,069			$	5,510,385			$	5,233,069
Interest-Bearing Deposits
NOW accounts		$	1,378,129			$	1,328,994			$	1,276,710			$	1,378,129			$	1,276,710
Money market accounts			1,303,792				1,258,564				1,314,116				1,303,792				1,314,116
Savings accounts			565,584				565,506				556,389				565,584				556,389
Time deposits of $100,000 and over			547,492				520,720				588,459				547,492				588,459
Other time deposits			699,801				721,509				799,970				699,801				799,970
Total interest-bearing deposits		$	4,494,798			$	4,395,293			$	4,535,644			$	4,494,798			$	4,535,644
Demand deposits			1,289,676				1,274,935				1,198,919				1,289,676				1,198,919
Total deposits		$	5,784,474			$	5,670,228			$	5,734,563			$	5,784,474			$	5,734,563
Averages
Assets		$	7,459,446			$	7,362,683			$	7,274,356			$	7,411,332			$	7,261,933
Loans, net of deferred fees			5,448,126				5,360,676				5,246,710				5,404,643				5,263,225
Loans held for sale			43,307				38,469				52,895				40,901				51,340
Securities			1,143,343				1,143,632				1,133,807				1,143,487				1,105,301
Earning assets			6,676,440				6,576,415				6,460,798				6,626,704				6,446,641
Deposits			5,709,963				5,639,917				5,693,096				5,675,134				5,669,658
Certificates of deposit			1,233,904				1,269,352				1,411,665				1,251,531				1,437,228
Interest-bearing deposits			4,431,087				4,416,699				4,543,661				4,423,933				4,551,416
Borrowings			703,223				679,341				550,514				691,348				550,091
Interest-bearing liabilities			5,134,310				5,096,040				5,094,175				5,115,281				5,101,507
Stockholders' equity			991,093				982,548				978,251				986,844				987,686
Tangible common equity			669,139				658,429				643,413				663,814				651,611

 

 

		Three Months Ended												Six Months Ended
		06/30/15				03/31/15				06/30/14				06/30/15				06/30/14
Asset Quality
Allowance for Loan Losses (ALL)
Beginning balance		$	30,977			$	32,384			$	30,907			$	32,384			$	30,135
Add: Recoveries			1,023				672				512				1,695				2,171
Less: Charge-offs			3,205				3,829				1,540				7,034				2,427
Add: Provision for loan losses			3,549				1,750				1,500				5,299				1,500
Ending balance		$	32,344			$	30,977			$	31,379			$	32,344			$	31,379
ALL / total outstanding loans			0.59	%			0.57	%			0.60	%			0.59	%			0.60	%
ALL / total outstanding loans, adjusted for acquisition accounting (4)			1.02	%			1.03	%			1.11	%			1.02	%			1.11	%
Net charge-offs / total outstanding loans			0.16	%			0.24	%			0.08	%			0.20	%			0.01	%
Provision / total outstanding loans			0.26	%			0.13	%			0.11	%			0.19	%			0.06	%
Nonperforming Assets
Commercial		$	8,056			$	14,532			$	17,489			$	8,056			$	17,489
Consumer			1,465				2,853				5,610				1,465				5,610
Nonaccrual loans			9,521				17,385				23,099				9,521				23,099
Other real estate owned			22,222				25,434				38,494				22,222				38,494
Total nonperforming assets (NPAs)			31,743				42,819				61,593				31,743				61,593
Commercial			2,781				2,578				649				2,781				649
Consumer			8,122				5,354				6,221				8,122				6,221
Loans ≥ 90 days and still accruing			10,903				7,932				6,870				10,903				6,870
Total NPAs and loans ≥ 90 days		$	42,646			$	50,751			$	68,463			$	42,646			$	68,463
NPAs / total outstanding loans			0.58	%			0.79	%			1.18	%			0.58	%			1.18	%
NPAs / total assets			0.42	%			0.58	%			0.84	%			0.42	%			0.84	%
ALL / nonperforming loans			339.71	%			178.18	%			135.85	%			339.71	%			135.85	%
ALL / nonperforming assets			101.89	%			72.34	%			50.95	%			101.89	%			50.95	%
Past Due Detail
Commercial		$	2,274			$	1,388			$	3,369			$	2,274			$	3,369
Consumer			5,170				5,833				4,861				5,170				4,861
Loans 60-89 days past due		$	7,444			$	7,221			$	8,230			$	7,444			$	8,230
Commercial		$	6,420			$	6,499			$	5,518			$	6,420			$	5,518
Consumer			8,727				21,090				22,623				8,727				22,623
Loans 30-59 days past due		$	15,147			$	27,589			$	28,141			$	15,147			$	28,141
Commercial		$	77,519			$	81,155			$	114,893			$	77,519			$	114,893
Consumer			10,322				10,191				16,214				10,322				16,214
Purchased impaired		$	87,841			$	91,346			$	131,107			$	87,841			$	131,107
Troubled Debt Restructurings
Performing		$	19,880			$	21,336			$	30,561			$	19,880			$	30,561
Nonperforming			2,244				2,740				3,610				2,244				3,610
Total troubled debt restructurings		$	22,124			$	24,076			$	34,171			$	22,124			$	34,171
Per Share Data
Earnings per common share, basic		$	0.34			$	0.35			$	0.32			$	0.69			$	0.48
Earnings per common share, diluted			0.34				0.35				0.32				0.69				0.48
Cash dividends paid per common share			0.17				0.15				0.14				0.32				0.28
Market value per share			23.24				22.21				25.65				23.24				25.65
Book value per common share			22.02				21.98				21.38				22.02				21.38
Tangible book value per common share			14.87				14.78				14.08				14.87				14.08
Price to earnings ratio, diluted			17.04				15.65				19.98				16.70				26.50
Price to book value per common share ratio			1.06				1.01				1.20				1.06				1.20
Price to tangible common share ratio			1.56				1.50				1.82				1.56				1.82
Weighted average common shares outstanding, basic			45,128,698				45,105,969				46,194,880				45,117,396				46,583,975
Weighted average common shares outstanding, diluted			45,209,814				45,187,516				46,296,870				45,198,727				46,686,592
Common shares outstanding at end of period			45,112,893				45,155,024				45,874,662				45,112,893				45,874,662

 

 

		Three Months Ended												Six Months Ended
		06/30/15				03/31/15				06/30/14				06/30/15				06/30/14
Alternative Performance Measures (non-GAAP)
Operating Earnings (2)
Net Income (GAAP)		$	15,348			$	15,701			$	14,673			$	31,049			$	22,382
Plus: Merger and conversion related expense, after tax			-				-				3,043				-				12,059
Net operating earnings (loss) (non-GAAP)		$	15,348			$	15,701			$	17,716			$	31,049			$	34,441
Operating earnings per share - Basic		$	0.34			$	0.35			$	0.38			$	0.69			$	0.74
Operating earnings per share - Diluted			0.34				0.35				0.38				0.69				0.74
Operating ROA			0.83	%			0.86	%			0.98	%			0.84	%			0.96	%
Operating ROE			6.21	%			6.48	%			7.26	%			6.34	%			7.03	%
Operating ROTCE			9.20	%			9.67	%			11.04	%			9.43	%			10.66	%
Community Bank Segment Operating Earnings (2)
Net Income (GAAP)		$	15,253			$	15,968			$	15,275			$	31,221			$	24,364
Plus: Merger and conversion related expense, after tax			-				-				3,043				-				12,059
Net operating earnings (loss) (non-GAAP)		$	15,253			$	15,968			$	18,318			$	31,221			$	36,423
Operating earnings per share - Basic		$	0.34			$	0.36			$	0.40			$	0.69			$	0.78
Operating earnings per share - Diluted			0.34				0.36				0.40				0.69				0.78
Operating ROA			0.82	%			0.88	%			1.01	%			0.85	%			1.01	%
Operating ROE			6.19	%			6.61	%			7.56	%			6.40	%			7.52	%
Operating ROTCE			9.18	%			9.88	%			11.54	%			9.52	%			11.46	%
Operating Efficiency Ratio FTE (2)
Net Interest Income (GAAP)		$	63,816			$	61,969			$	63,715			$	125,785			$	127,473
FTE adjustment			2,291				2,161				2,101				4,452				4,065
Net Interest Income (FTE)		$	66,107			$	64,130			$	65,816			$	130,237			$	131,538
Noninterest Income (GAAP)			16,212				15,054				16,280				31,266				30,068
Noninterest Expense (GAAP)		$	55,241			$	53,840			$	58,967			$	109,081			$	126,252
Merger and conversion related expense			-				-				4,661				-				17,829
Noninterest Expense (Non-GAAP)		$	55,241			$	53,840			$	54,306			$	109,081			$	108,423
Operating Efficiency Ratio FTE (non-GAAP)			67.11	%			67.99	%			66.15	%			67.54	%			67.09	%
Community Bank Segment Operating Efficiency Ratio FTE (2)
Net Interest Income (GAAP)		$	63,441			$	61,723			$	63,401			$	125,164			$	126,927
FTE adjustment			2,291				2,161				2,102				4,453				4,064
Net Interest Income (FTE)		$	65,732			$	63,884			$	65,503			$	129,617			$	130,991
Noninterest Income (GAAP)			13,523				12,848				13,422				26,371				25,081
Noninterest Expense (GAAP)		$	52,365			$	50,972			$	54,841			$	103,337			$	117,587
Merger and conversion related expense			-				-				4,661				-				17,829
Noninterest Expense (Non-GAAP)		$	52,365			$	50,972			$	50,180			$	103,337			$	99,758
Operating Efficiency Ratio FTE (non-GAAP)			66.07	%			66.43	%			63.58	%			66.25	%			63.92	%
Tangible Common Equity (5)
Ending equity		$	988,134			$	986,916			$	976,326			$	988,134			$	976,326
Less: Ending goodwill			293,522				293,522				296,876				293,522				296,876
Less: Ending core deposit intangibles			27,394				29,533				36,479				27,394				36,479
Ending tangible common equity		$	667,218			$	663,861			$	642,971			$	667,218			$	642,971
Average equity		$	991,093			$	982,548			$	978,251			$	986,844			$	987,686
Less: Average goodwill			293,522				293,522				296,876				293,522				296,876
Less: Average core deposit intangibles			28,432				30,597				37,962				29,508				39,199
Average tangible common equity		$	669,139			$	658,429			$	643,413			$	663,814			$	651,611

 

 

		Three Months Ended												Six Months Ended
		06/30/15				03/31/15				06/30/14				06/30/15				06/30/14
ALL to loans, adjusted for acquisition accounting (non-GAAP)(4)
Allowance for loan losses		$	32,344			$	30,977			$	31,379			$	32,344			$	31,379
Remaining fair value mark on purchased performing loans			23,010				23,794				25,632				23,010				25,632
Adjusted allowance for loan losses			55,354				54,771				57,011				55,354				57,011
Loans, net of deferred fees			5,510,385				5,387,755				5,233,069				5,510,385				5,233,069
Remaining fair value mark on purchased performing loans			23,010				23,794				25,632				23,010				25,632
Less: Purchased credit impaired loans, net of fair value mark			87,841				91,346				131,107				87,841				131,107
Adjusted loans, net of deferred fees		$	5,445,554			$	5,320,203			$	5,127,594			$	5,445,554			$	5,127,594
ALL / gross loans, adjusted for acquisition accounting			1.02	%			1.03	%			1.11	%			1.02	%			1.11	%
Mortgage Origination Volume
Refinance Volume		$	43,385			$	65,549			$	47,640			$	108,934			$	92,962
Construction Volume			20,946				19,552				39,441				40,498				71,544
Purchase Volume			75,971				53,613				108,039				129,584				179,675
Total Mortgage loan originations		$	140,302			$	138,714			$	195,120			$	279,016			$	344,181
% of originations that are refinances			30.92	%			47.26	%			24.42	%			39.04	%			27.01	%
Other Data
End of period full-time employees			1,443				1,445				1,511				1,443				1,511
Number of full-service branches			131				131				131				131				131
Number of full automatic transaction machines (ATMs)			199				200				200				199				200

 

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

 

(2) The Company has provided supplemental performance measures which it believes may be 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. 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.

 

(3) Beginning January 1, 2015, the Company calculates its regulatory capital under the Basel III Standardized Approach. The Company calculated regulatory capital measures for periods prior to 2015 under previous regulatory requirements. All ratios at June 30, 2015 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods presented as filed.

 

(4) The allowance for loan losses ratio, adjusted for acquisition accounting (non-GAAP), includes an adjustment for the fair value mark on purchased performing loans. The purchased performing loans are reported net of the related fair value mark in loans, net of deferred fees, on the Company’s Consolidated Balance Sheet; therefore, the fair value mark is added back to the balance to represent the total loan portfolio. The adjusted allowance for loan losses, including the fair value mark, represents the total reserve on the Company’s loan portfolio. The PCI loans, net of the respective fair value mark, are removed from the loans, net of deferred fees, as these PCI loans are not covered by the allowance established by the Company unless changes in expected cash flows indicate that one of the PCI loan pools are impaired, at which time an allowance for PCI loans will be established. 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 ratio, adjusted for acquisition accounting, 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 fair value 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.

 

(5) 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.

 

 

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

		June 30,				December 31,				June 30,
		2015				2014				2014
ASSETS
Cash and cash equivalents:
Cash and due from banks		$	109,480			$	112,752			$	136,799
Interest-bearing deposits in other banks			26,333				19,344				21,769
Money market investments			1				1				1
Federal funds sold			1,019				1,163				311
Total cash and cash equivalents			136,833				133,260				158,880
Securities available for sale, at fair value			888,362				1,102,114				1,094,777
Securities held to maturity, at carrying value			201,072				-				-
Restricted stock, at cost			50,171				54,854				47,204
Loans held for sale			39,450				42,519				62,891
Loans held for investment, net of deferred fees and costs			5,510,385				5,345,996				5,233,069
Less allowance for loan losses			32,344				32,384				31,379
Net loans held for investment			5,478,041				5,313,612				5,201,690
Premises and equipment, net			132,681				135,247				145,662
Other real estate owned, net of valuation allowance			22,222				28,118				38,494
Core deposit intangibles, net			27,394				31,755				36,479
Goodwill			293,522				293,522				296,876
Bank owned life insurance			141,284				139,005				136,537
Other assets			86,674				84,637				87,216
Total assets		$	7,497,706			$	7,358,643			$	7,306,706
LIABILITIES
Noninterest-bearing demand deposits		$	1,289,676			$	1,199,378			$	1,198,919
Interest-bearing deposits			4,494,798				4,439,392				4,535,644
Total deposits			5,784,474				5,638,770				5,734,563
Securities sold under agreements to repurchase			119,680				44,393				42,276
Other short-term borrowings			261,000				343,000				200,000
Long-term borrowings			300,294				299,542				298,786
Other liabilities			44,124				55,769				54,755
Total liabilities			6,509,572				6,381,474				6,330,380
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 45,112,893 shares, 45,162,853 shares, and 45,874,662 shares, respectively.			59,672				59,795				60,731
Surplus			640,936				643,443				659,179
Retained earnings			278,297				261,676				245,535
Accumulated other comprehensive income			9,229				12,255				10,881
Total stockholders' equity			988,134				977,169				976,326
Total liabilities and stockholders' equity		$	7,497,706			$	7,358,643			$	7,306,706

 

 

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except share data)

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
		2015				2015				2014				2015				2014
Interest and dividend income:
Interest and fees on loans		$	62,604			$	60,452			$	61,386			$	123,056			$	122,655
Interest on federal funds sold			-				-				-				1				-
Interest on deposits in other banks			24				17				9				41				21
Interest and dividends on securities:
Taxable			3,860				3,807				3,860				7,667				7,508
Nontaxable			3,366				3,324				3,379				6,690				6,658
Total interest and dividend income			69,854				67,600				68,634				137,455				136,842
Interest expense:
Interest on deposits			3,680				3,321				2,550				7,000				4,806
Interest on federal funds purchased			4				1				23				5				46
Interest on short-term borrowings			255				249				146				505				265
Interest on long-term borrowings			2,099				2,060				2,200				4,160				4,252
Total interest expense			6,038				5,631				4,919				11,670				9,369
Net interest income			63,816				61,969				63,715				125,785				127,473
Provision for credit losses			3,749				1,750				1,500				5,499				1,500
Net interest income after provision for credit losses			60,067				60,219				62,215				120,286				125,973
Noninterest income:
Service charges on deposit accounts			4,622				4,214				4,525				8,835				8,822
Other service charges and fees			4,051				3,584				4,164				7,634				7,508
Fiduciary and asset management fees			2,312				2,219				2,330				4,531				4,633
Gains on sales of mortgage loans, net of commissions			2,574				2,379				3,030				4,952				5,328
Gains on securities transactions, net			404				193				426				597				455
Bank owned life insurance income			1,134				1,135				1,183				2,269				2,272
Other operating income			1,115				1,330				622				2,448				1,050
Total noninterest income			16,212				15,054				16,280				31,266				30,068
Noninterest expenses:
Salaries and benefits			25,561				27,492				27,616				53,052				56,830
Occupancy expenses			5,173				5,133				5,102				10,305				10,282
Furniture and equipment expenses			2,989				2,813				2,637				5,803				5,505
Printing, postage, and supplies			1,408				1,370				1,170				2,779				2,392
Communications expense			1,143				1,179				1,351				2,322				2,450
Technology and data processing			3,216				3,255				2,792				6,471				5,866
Professional services			1,669				1,348				1,442				3,017				2,497
Marketing and advertising expense			2,372				1,687				1,692				4,060				2,757
FDIC assessment premiums and other insurance			1,280				1,398				1,593				2,679				2,986
Other taxes			1,554				1,551				1,507				3,105				2,892
Loan-related expenses			687				684				630				1,371				1,172
OREO and credit-related expenses			1,965				1,186				2,244				3,152				3,694
Amortization of intangible assets			2,138				2,222				2,455				4,361				5,071
Acquisition and conversion costs			-				-				4,661				-				17,829
Branch closure expenses			1,280				-				-				1,280				-
Other expenses			2,806				2,522				2,075				5,324				4,029
Total noninterest expenses			55,241				53,840				58,967				109,081				126,252
Income before income taxes			21,038				21,433				19,528				42,471				29,789
Income tax expense			5,690				5,732				4,855				11,422				7,407
Net income		$	15,348			$	15,701			$	14,673			$	31,049			$	22,382
Basic earnings per common share		$	0.34			$	0.35			$	0.32			$	0.69			$	0.48
Diluted earnings per common share		$	0.34			$	0.35			$	0.32			$	0.69			$	0.48

 

 

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

(Dollars in thousands)

 

		Community Bank				Mortgage				Eliminations				Consolidated
Three Months Ended June 30, 2015
Net interest income		$	63,441			$	375			$	-			$	63,816
Provision for credit losses			3,700				49				-				3,749
Net interest income after provision for credit losses			59,741				326				-				60,067
Noninterest income			13,523				2,860				(171	)			16,212
Noninterest expenses			52,365				3,047				(171	)			55,241
Income before income taxes			20,899				139				-				21,038
Income tax expense			5,646				44				-				5,690
Net income		$	15,253			$	95			$	-			$	15,348
Plus:  Merger and conversion related expense, after tax			-				-				-				-
Net operating earnings (non-GAAP)		$	15,253			$	95			$	-			$	15,348
Total assets		$	7,495,564			$	55,563			$	(53,421	)		$	7,497,706
Three Months Ended March 31, 2015
Net interest income		$	61,723			$	246			$	-			$	61,969
Provision for credit losses			1,750				-				-				1,750
Net interest income after provision for credit losses			59,973				246				-				60,219
Noninterest income			12,848				2,376				(170	)			15,054
Noninterest expenses			50,972				3,038				(170	)			53,840
Income (loss) before income taxes			21,849				(416	)			-				21,433
Income tax expense (benefit)			5,881				(149	)			-				5,732
Net income (loss)		$	15,968			$	(267	)		$	-			$	15,701
Plus:  Merger and conversion related expense, after tax			-				-				-				-
Net operating earnings (loss) (non-GAAP)		$	15,968			$	(267	)		$	-			$	15,701
Total assets		$	7,382,266			$	55,380			$	(49,087	)		$	7,388,559
Three Months Ended June 30, 2014
Net interest income		$	63,401			$	314			$	-			$	63,715
Provision for credit losses			1,500				-				-				1,500
Net interest income after provision for credit losses			61,901				314				-				62,215
Noninterest income			13,422				3,028				(170	)			16,280
Noninterest expenses			54,841				4,296				(170	)			58,967
Income (loss) before income taxes			20,482				(954	)			-				19,528
Income tax expense (benefit)			5,207				(352	)			-				4,855
Net income (loss)		$	15,275			$	(602	)		$	-			$	14,673
Plus:  Merger and conversion related expense, after tax			3,043				-				-				3,043
Net operating earnings (loss) (non-GAAP)		$	18,318			$	(602	)		$	-			$	17,716
Total assets		$	7,304,704			$	77,299			$	(75,297	)		$	7,306,706

 

 

		Community Bank				Mortgage				Eliminations				Consolidated
Six Months Ended June 30, 2015
Net interest income		$	125,164			$	621			$	-			$	125,785
Provision for credit losses			5,450				49				-				5,499
Net interest income after provision for credit losses			119,714				572				-				120,286
Noninterest income			26,371				5,236				(341	)			31,266
Noninterest expenses			103,337				6,085				(341	)			109,081
Income (loss) before income taxes			42,748				(277	)			-				42,471
Income tax expense (benefit)			11,527				(105	)			-				11,422
Net income (loss)		$	31,221			$	(172	)		$	-			$	31,049
Plus:  Merger and conversion related expense, after tax			-				-				-				-
Net operating earnings (loss) (non-GAAP)		$	31,221			$	(172	)		$	-			$	31,049
Total assets		$	7,495,564			$	55,563			$	(53,421	)		$	7,497,706
Six Months Ended June 30, 2014
Net interest income		$	126,927			$	546			$	-			$	127,473
Provision for credit losses			1,500				-				-				1,500
Net interest income after provision for credit losses			125,427				546				-				125,973
Noninterest income			25,081				5,328				(341	)			30,068
Noninterest expenses			117,587				9,006				(341	)			126,252
Income (loss) before income taxes			32,921				(3,132	)			-				29,789
Income tax expense (benefit)			8,557				(1,150	)			-				7,407
Net income (loss)		$	24,364			$	(1,982	)		$	-			$	22,382
Plus:  Merger and conversion related expense, after tax			12,059				-				-				12,059
Net operating earnings (loss) (non-GAAP)		$	36,423			$	(1,982	)		$	-			$	34,441
Total assets		$	7,304,704			$	77,299			$	(75,297	)		$	7,306,706

 

 

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

 

		For the Quarter Ended
		June 30, 2015												March 31, 2015
		Average Balance				Interest Income / Expense				Yield / Rate (1)				Average Balance				Interest Income / Expense				Yield / Rate (1)
		(Dollars in thousands)
Assets:
Securities:
Taxable		$	720,939			$	3,860				2.15	%		$	730,404			$	3,807				2.11	%
Tax-exempt			422,404				5,179				4.92	%			413,228				5,114				5.02	%
Total securities			1,143,343				9,039				3.17	%			1,143,632				8,921				3.16	%
Loans, net (2) (3)			5,448,126				62,687				4.62	%			5,360,676				60,527				4.58	%
Loans held for sale			43,307				395				3.66	%			38,469				296				3.12	%
Federal funds sold			572				-				0.17	%			792				-				0.20	%
Money market investments			1				-				0.00	%			1				-				0.00	%
Interest-bearing deposits in other banks			41,091				24				0.23	%			32,845				17				0.20	%
Total earning assets			6,676,440			$	72,145				4.33	%			6,576,415			$	69,761				4.30	%
Allowance for loan losses			(31,675	)											(32,992	)
Total non-earning assets			814,681												819,260
Total assets		$	7,459,446											$	7,362,683
Liabilities and Stockholders' Equity:
Interest-bearing deposits:
Transaction and money market accounts		$	2,632,835			$	1,201				0.18	%		$	2,591,991			$	1,160				0.18	%
Regular savings			564,348				262				0.19	%			555,356				268				0.20	%
Time deposits (4)			1,233,904				2,217				0.72	%			1,269,352				1,893				0.60	%
Total interest-bearing deposits			4,431,087				3,680				0.33	%			4,416,699				3,321				0.30	%
Other borrowings (5)			703,223				2,358				1.34	%			679,341				2,310				1.38	%
Total interest-bearing liabilities			5,134,310			$	6,038				0.47	%			5,096,040			$	5,631				0.45	%
Noninterest-bearing liabilities:
Demand deposits			1,278,876												1,223,218
Other liabilities			55,167												60,877
Total liabilities			6,468,353												6,380,135
Stockholders' equity			991,093												982,548
Total liabilities and stockholders' equity		$	7,459,446											$	7,362,683
Net interest income						$	66,107											$	64,130
Interest rate spread (6)											3.86	%											3.85	%
Cost of funds											0.36	%											0.35	%
Net interest margin (7)											3.97	%											3.95	%

 

(1) Rates and yields are annualized and calculated from actual, not rounded, amounts in thousands, which appear above.

(2) Nonaccrual loans are included in average loans outstanding.

(3) Interest income on loans includes $1.1 million and $639,000 for the three months ended June 30, 2015 and March 31, 2015, respectively, in accretion of the fair market value adjustments related to acquisitions.

(4) Interest expense on certificates of deposits includes $614,000 and $1.1 million for the three months ended June 30, 2015 and March 31, 2015, respectively, in accretion of the fair market value adjustments related to acquisitions.

(5) Interest expense on borrowings includes $137,000 for both the three months ended June 30, 2015 and March 31, 2015, respectively, in accretion of the fair market value adjustments related to acquisitions.

(6) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.

(7) Core net interest margin excludes purchase accounting adjustments and was 3.86% and 3.84% for the three months ended June 30, 2015 and March 31, 2015, respectively.