Union Bankshares Corporation (the “Company” or “Union”)
(NASDAQ:UBSH) today reported net income of $16.6 million and
earnings per share of $0.25 for its first quarter ended March 31,
2018. Net operating earnings(1) were $38.9 million and
operating earnings per share(1) were $0.59 for its first quarter
ended March 31, 2018; these operating results exclude $22.2 million
in after-tax merger-related costs.
The Company's first quarter of 2018 results include the
financial results of Xenith Bankshares, Inc. (“Xenith”), which the
Company acquired on January 1, 2018.
“Union is off to a strong start to the year as demonstrated by
our financial results and the Xenith integration continues to go
well,” said John C. Asbury, President and CEO of Union Bankshares
Corporation. “With solid loan and deposit growth and
meaningful improvements to our profitability metrics, on an
operating basis, I believe our first quarter results signal the
underlying strength and earnings potential of this uniquely
valuable franchise - Virginia’s regional bank.
The ‘new Union’ team is energized and has come together
seamlessly. Core systems conversion remains on track to be
completed in May and we have a clear line of sight to fully achieve
our cost savings target beginning in the fourth quarter of
2018. We remain focused on achieving our 2018 priorities and
generating top-tier financial performance for our
shareholders.”
Select highlights for the first quarter of 2018 include:
- Performance metrics linked quarter
- Return on Average Assets (“ROA”) was 0.52% compared to 0.66% in
the fourth quarter of 2017. The decline was driven by the
increased merger-related costs in the first quarter of 2018
compared to the prior quarter. Operating ROA(1) increased to
1.21% compared to 1.00% in the fourth quarter of 2017.
- Return on Average Equity (“ROE”) was 3.70% compared to 5.75% in
the fourth quarter of 2017. The decline in ROE was related to
the increased merger-related costs in the first quarter of 2018
compared to the prior quarter. Operating ROE(1) was 8.64% compared
to 8.63% in the fourth quarter of 2017.
- Return on Average Tangible Common Equity (“ROTCE”) was 6.40%
compared to 8.20% in the fourth quarter of 2017. The decline
in ROTCE was related to the increased merger-related costs in the
first quarter of 2018 compared to the prior quarter.
Operating ROTCE(1) increased to 14.95% compared to 12.32% in the
fourth quarter of 2017.
- Efficiency ratio increased to 82.5% compared to 66.1% in the
fourth quarter of 2017 and the efficiency ratio (FTE) increased to
81.5% compared to 64.2% in the fourth quarter of 2017 driven by the
increased merger-related costs in the first quarter of 2018
compared to the prior quarter. Operating efficiency ratio(1)
improved to 59.8% compared to 62.1% in the fourth quarter of
2017.
- Segment results
- Net income for the community bank segment was $16.4 million, or
$0.25 per share; operating earnings(1) for the community bank
segment were $38.7 million, or $0.59 per share.
- Net income for the mortgage segment was $208,000 compared to
net income of $199,000 and operating earnings(1), which excludes
nonrecurring tax expenses, of $329,000 in the fourth quarter of
2017.
(1) For a reconciliation of the non-GAAP operating measures that
exclude merger-related costs and/or nonrecurring tax expenses
unrelated to the Company’s normal operations, see Alternative
Performance Measures (non-GAAP) section of the Key Financial
Results.
NET INTEREST INCOME
For the first quarter of 2018, net interest income was $103.7
million, an increase of $30.4 million from the fourth quarter of
2017. Tax-equivalent net interest income was $105.3 million
in the first quarter of 2018, an increase of $29.1 million from the
fourth quarter of 2017. The increases in both net interest income
and tax-equivalent net interest income were primarily the result of
a $3.2 billion increase in average interest-earning assets and a
$2.6 billion increase in average interest-bearing liabilities from
the full quarter impact of the Xenith acquisition. The first
quarter net interest margin increased 16 basis points to 3.67% from
3.51% in the previous quarter, while the tax-equivalent net
interest margin increased 8 basis points to 3.72% from 3.64% during
the same periods. The increase in the net interest margin was
principally due to an increase in the yield on earning assets,
partially offset by a smaller increase in cost of funds.
The Company’s tax-equivalent net interest margin includes the
impact of acquisition accounting fair value adjustments.
During the first quarter of 2018, net accretion related to
acquisition accounting increased $3.4 million from the prior
quarter to $5.6 million for the quarter ended March 31, 2018.
The increase was related to the acquisition of Xenith. The
fourth quarter of 2017, first quarter of 2018, and the remaining
estimated net accretion impact are reflected in the following table
(dollars in thousands):
|
|
|
|
|
|
|
|
|
Loan Accretion |
|
Deposit Accretion |
|
Borrowings Accretion (Amortization) |
|
Total |
For the quarter ended
December 31, 2017 |
$ |
2,107 |
|
|
$ |
— |
|
|
$ |
27 |
|
|
$ |
2,134 |
|
For the quarter ended
March 31, 2018 |
|
4,846 |
|
|
|
832 |
|
|
(98 |
) |
|
5,580 |
|
For the remaining nine
months of 2018 |
|
10,083 |
|
|
|
1,722 |
|
|
(408 |
) |
|
11,397 |
|
For the years ending
(estimated) : |
|
|
|
|
|
|
|
2019 |
|
11,145 |
|
|
|
1,170 |
|
|
(660 |
) |
|
11,655 |
|
2020 |
|
8,635 |
|
|
|
284 |
|
|
(734 |
) |
|
8,185 |
|
2021 |
|
6,776 |
|
|
|
108 |
|
|
(805 |
) |
|
6,079 |
|
2022 |
|
4,830 |
|
|
|
21 |
|
|
(827 |
) |
|
4,024 |
|
2023 |
|
3,052 |
|
|
— |
|
|
(850 |
) |
|
2,202 |
|
Thereafter |
|
12,020 |
|
|
— |
|
|
(11,633 |
) |
|
387 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY/LOAN LOSS PROVISION
OverviewDuring the first quarter of 2018, the Company
experienced increases in nonperforming asset (“NPA”) balances from
the prior quarter, primarily related to nonaccrual additions of
mortgage and commercial & industrial loans and acquired other
real estate owned (“OREO”). At March 31, 2018, NPAs as a
percentage of total outstanding loans declined compared to the
prior quarter and same quarter the prior year. Past due loan
levels as a percentage of total loans held for investment at March
31, 2018 were fairly consistent with past due loan levels at
December 31, 2017 and March 31, 2017. Charge-off levels and the
loan loss provision decreased from the fourth quarter of 2017.
All nonaccrual and past due loan metrics discussed below exclude
purchased credit impaired (“PCI”) loans totaling $102.9 million
(net of fair value mark of $21.7 million).
Nonperforming AssetsAt March 31, 2018, NPAs totaled $35.2
million, an increase of $6.9 million, or 24.2%, from December 31,
2017 and an increase of $3.3 million, or 10.3%, from March 31,
2017. In addition, NPAs as a percentage of total outstanding
loans declined 4 basis points from 0.40% at December 31, 2017 and
13 basis points from 0.49% at March 31, 2017 to 0.36% at March 31,
2018. As the Company's NPAs have been at historic lows over
the last several quarters, certain changes from quarter to quarter
might stand out in comparison to one another but have no
significant impact on the Company's overall asset quality
position.
The following table shows a summary of asset quality balances at
the quarter ended (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
2018 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
Nonaccrual loans |
$ |
25,138 |
|
|
$ |
21,743 |
|
|
$ |
20,122 |
|
|
$ |
24,574 |
|
|
$ |
22,338 |
|
Foreclosed
properties |
8,079 |
|
|
5,253 |
|
|
6,449 |
|
|
6,828 |
|
|
6,951 |
|
Former bank
premises |
2,020 |
|
|
1,383 |
|
|
2,315 |
|
|
2,654 |
|
|
2,654 |
|
Total nonperforming
assets |
$ |
35,237 |
|
|
$ |
28,379 |
|
|
$ |
28,886 |
|
|
$ |
34,056 |
|
|
$ |
31,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
2018 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
Beginning Balance |
$ |
21,743 |
|
|
$ |
20,122 |
|
|
$ |
24,574 |
|
|
$ |
22,338 |
|
|
$ |
9,973 |
|
Net
customer payments |
(1,455 |
) |
|
(768 |
) |
|
(4,642 |
) |
|
(1,498 |
) |
|
(1,068 |
) |
Additions |
5,451 |
|
|
4,335 |
|
|
4,114 |
|
|
5,979 |
|
|
13,557 |
|
Charge-offs |
(403 |
) |
|
(1,305 |
) |
|
(3,376 |
) |
|
(2,004 |
) |
|
(97 |
) |
Loans
returning to accruing status |
(182 |
) |
|
(448 |
) |
|
— |
|
|
(134 |
) |
|
(27 |
) |
Transfers
to OREO |
(16 |
) |
|
(193 |
) |
|
(548 |
) |
|
(107 |
) |
|
— |
|
Ending Balance |
$ |
25,138 |
|
|
$ |
21,743 |
|
|
$ |
20,122 |
|
|
$ |
24,574 |
|
|
$ |
22,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
2018 |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
Beginning Balance |
$ |
6,636 |
|
|
$ |
8,764 |
|
|
$ |
9,482 |
|
|
$ |
9,605 |
|
|
$ |
10,084 |
|
Additions
of foreclosed property |
44 |
|
|
325 |
|
|
621 |
|
|
132 |
|
|
— |
|
Acquisitions of foreclosed property |
4,204 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Acquisitions of former bank premises |
1,208 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Valuation
adjustments |
(759 |
) |
|
(1,046 |
) |
|
(588 |
) |
|
(19 |
) |
|
(238 |
) |
Proceeds
from sales |
(1,255 |
) |
|
(1,419 |
) |
|
(648 |
) |
|
(272 |
) |
|
(277 |
) |
Gains
(losses) from sales |
21 |
|
|
12 |
|
|
(103 |
) |
|
36 |
|
|
36 |
|
Ending Balance |
$ |
10,099 |
|
|
$ |
6,636 |
|
|
$ |
8,764 |
|
|
$ |
9,482 |
|
|
$ |
9,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past Due LoansPast due loans still accruing interest totaled
$41.6 million, or 0.42% of total loans, at March 31, 2018 compared
to $27.8 million, or 0.39% of total loans, at December 31, 2017 and
$26.9 million, or 0.41% of total loans, at March 31, 2017. Of
the total past due loans still accruing interest, $2.6 million, or
0.03% of total loans, were loans past due 90 days or more at March
31, 2018, compared to $3.5 million, or 0.05% of total loans, at
December 31, 2017 and $2.3 million, or 0.04% of total loans, at
March 31, 2017.
Net Charge-offsFor the first quarter of 2018, net charge-offs
were $1.1 million, or 0.05% of total average loans on an annualized
basis, compared to $2.7 million, or 0.15%, for the prior quarter
and $788,000, or 0.05%, for the same quarter last year. Of
the net charge-offs in the first quarter of 2018, the majority were
related to consumer loans.
Provision for Loan LossesThe provision for loan losses for the
first quarter of 2018 was $3.5 million, a decrease of $211,000
compared to the previous quarter and an increase of $1.5 million
compared to the same quarter in 2017. The decrease in
provision from the fourth quarter of 2017 was primarily driven by
lower levels of charge-offs partially offset by the impact of loan
growth in the current quarter. The increase in the provision
for loan losses compared to the first quarter of 2017 was primarily
driven by loan growth and higher levels of charge-offs in the first
quarter of 2018.
Allowance for Loan Losses (“ALL”)The ALL increased $2.4 million
from December 31, 2017 to $40.6 million at March 31, 2018 primarily
due to organic loan growth during the quarter. The ALL as a
percentage of the total loan portfolio was 0.41% at March 31, 2018,
0.54% at December 31, 2017, and 0.59% at March 31, 2017. The
decline in the allowance ratio was primarily attributable to the
acquisition of Xenith. In acquisition accounting, there is no
carryover of previously established allowance for loan losses.
The ratio of the ALL to nonaccrual loans was 161.6% at March 31,
2018, compared to 175.7% at December 31, 2017 and 172.0% at March
31, 2017. 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 $5.1 million, or 29.4%, to $22.3
million for the quarter ended March 31, 2018 from $17.2 million in
the prior quarter, primarily driven by the acquisition of
Xenith. Other operating income includes a gain of $1.4
million related to the sale of the Company's ownership interest in
a payments-related company.
Mortgage banking income decreased $77,000, or 3.6%, to $2.0
million in the first quarter of 2018 compared to the fourth quarter
of 2017, primarily related to declines in mortgage loan
originations offset by unrealized gains on mortgage banking
derivatives in the first quarter of 2018 compared to losses in the
fourth quarter of 2017. Mortgage loan originations declined
by $29.4 million, or 24.1%, in the first quarter of 2018 to $92.5
million from $121.9 million in the fourth quarter of 2017. Of
the mortgage loan originations in the first quarter of 2018, 38.5%
were refinances compared with 34.4% in the prior quarter.
NONINTEREST EXPENSE
Noninterest expense increased $44.1 million to $104.0 million
for the quarter ended March 31, 2018 from $59.9 million in the
prior quarter. Excluding merger-related costs of $27.7
million and $1.9 million in the first quarter of 2018 and the
fourth quarter of 2017, respectively, operating noninterest expense
increased $18.3 million to $76.3 million when compared to the
fourth quarter of 2017. The increase in operating noninterest
expense was primarily related to the acquisition of Xenith.
INCOME TAXES
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”)
was signed into law. Among other things, the Tax Act permanently
reduced the corporate tax rate to 21% from the prior maximum rate
of 35%, effective for tax years including or commencing January 1,
2018. As a result of the reduction of the corporate tax rate to
21%, companies are required to revalue their deferred tax assets
and liabilities as of the date of enactment, with resulting tax
effects accounted for in the fourth quarter of 2017. The
Company continues to evaluate the impact on its 2017 tax expense of
the revaluation required by the lower corporate tax rate
implemented by the Tax Act, which management has estimated to fall
between $5.0 million and $8.0 million. During the fourth
quarter of 2017, the Company recorded $6.3 million in additional
tax expense based on the Company's preliminary analysis of the
impact of the Tax Act. The Company's preliminary estimate of
the impact of the Tax Act is based on currently available
information and interpretation of its provisions. The actual
results may differ from the current estimate due to, among other
things, further guidance that may be issued by U.S. tax authorities
or regulatory bodies and/or changes in interpretations and
assumptions that the Company has preliminarily made.
The Company's evaluation of the impact of the Tax Act is subject to
refinement for up to one year after enactment. No additional
adjustments related to the Tax Act were recorded in the first
quarter of 2018.
The effective tax rate for the three months ended March 31, 2018
was 10.3%. During the first quarter of 2018, tax benefits related
to stock compensation of approximately $1.2 million were recorded
in accordance with ASU 2016-09, “Compensation - Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment
Accounting.”
BALANCE SHEET
At March 31, 2018, total assets were $13.1 billion, an increase
of $3.8 billion from December 31, 2017, reflecting the impact of
the Xenith acquisition.
On January 1, 2018 the Company completed its acquisition of
Xenith. Below is a summary of the transaction and related impact on
the Company's balance sheet.
- The fair value of assets acquired equaled $3.249 billion, and
the fair value of liabilities assumed equaled $2.868 billion.
- Loans held for investment acquired totaled $2.507 billion with
a fair value of $2.459 billion.
- Total deposits assumed totaled $2.546 billion with a fair value
of $2.550 billion.
- Total goodwill arising from the transaction equaled $419.6
million.
- Core deposit intangibles acquired totaled $38.5 million.
Fair values are preliminary and subject to refinement for up to
one year after the closing date of the acquisition, in accordance
with ASC 805, Business Combinations. Xenith's 12/31/17
balance sheet can be found at the end of this release.
At March 31, 2018, loans held for investment (net of deferred
fees and costs) were $9.8 billion, an increase of $2.7 billion, or
37.3%, from December 31, 2017, while average loans increased $2.7
billion, or 39.0%, from the prior quarter. Loans held for
investment increased $3.3 billion, or 49.6%, from March 31, 2017,
while average loans increased $3.3 billion, or 51.6%, from the
prior year.
At March 31, 2018, total deposits were $9.7 billion, an increase
of $2.7 billion, or 38.4%, from December 31, 2017, while average
deposits increased $2.5 billion, or 36.1%, from the prior quarter.
Total deposits grew $3.1 billion, or 46.3%, from March 31, 2017,
while average deposits increased $3.1 billion, or 47.7%, from the
prior year.
The following table shows the Company's regulatory capital
ratios at the quarters ended:
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
2018 |
|
2017 |
|
2017 |
Common equity Tier 1
capital ratio (1) |
9.03 |
% |
|
9.04 |
% |
|
9.55 |
% |
Tier 1 capital ratio
(1) |
10.19 |
% |
|
10.14 |
% |
|
10.77 |
% |
Total capital ratio
(1) |
11.97 |
% |
|
12.43 |
% |
|
13.30 |
% |
Leverage ratio (Tier 1
capital to average assets) (1) |
9.32 |
% |
|
9.42 |
% |
|
9.79 |
% |
Common equity to total
assets |
13.93 |
% |
|
11.23 |
% |
|
11.71 |
% |
Tangible common equity
to tangible assets (2) |
8.59 |
% |
|
8.14 |
% |
|
8.36 |
% |
|
|
|
|
|
|
(1) All
ratios at March 31, 2018 are estimates and subject to change
pending the Company’s filing of its FR Y9-C. All other periods are
presented as filed. |
(2) For a
reconciliation of this non-GAAP financial measure, see Alternative
Performance Measures (non-GAAP) section of the Key Financial
Results. |
|
During the first quarter of 2018, the Company declared and paid
cash dividends of $0.21 per common share, consistent with the
fourth quarter of 2017 and an increase of $0.01, or 5.0%, compared
to the first quarter of 2017.
ABOUT UNION BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Union Bankshares
Corporation (NASDAQ: UBSH) is the holding company for Union Bank
& Trust, which has 150 branches, 39 of which are operated as
Xenith Bank, a division of Union Bank & Trust of Richmond,
Virginia, and approximately 216 ATMs located throughout Virginia
and in portions of Maryland and North Carolina. Union Bank
& Trust also operates Shore Premier Finance, a specialty marine
lender. Non-bank affiliates of the holding company include:
Union Mortgage Group, Inc., which provides a full line of mortgage
products, Old Dominion Capital Management, Inc. and Dixon, Hubard,
Feinour, & Brown, Inc., which both provide investment advisory
services, and Union Insurance Group, LLC, which offers various
lines of insurance products.
Union Bankshares Corporation will hold a conference call on
Tuesday, April 24th, at 9:00 a.m. Eastern Time during which
management will review earnings and performance trends.
Callers wishing to participate may call toll-free by dialing (877)
668-4908; international callers wishing to participate may do so by
dialing (973) 453-3058. The conference ID number is
4278718.
NON-GAAP MEASURES
In reporting the results of the quarter ended March 31, 2018,
the Company has provided supplemental performance measures on a
tax-equivalent, tangible, or operating basis. These measures
are a supplement to GAAP used to prepare the Company’s financial
statements and should not be considered in isolation or as a
substitute for comparable measures calculated in accordance with
GAAP. In addition, the Company’s non-GAAP measures may not be
comparable to non-GAAP measures of other companies.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are statements that include projections, predictions,
expectations, or beliefs about future events or results or
otherwise are not statements of historical fact, are based on
certain assumptions as of the time they are made, and are
inherently subject to risks and uncertainties, some of which cannot
be predicted or quantified. Such statements are often
characterized by the use of qualified words (and their derivatives)
such as “expect,” “believe,” “estimate,” “plan,” “project,”
“anticipate,” “intend,” “will,” “may,” “view,” “opportunity,”
“potential,” or words of similar meaning or other statements
concerning opinions or judgment of the Company and its management
about future events. Although the Company believes that its
expectations with respect to forward-looking statements are based
upon reasonable assumptions within the bounds of its existing
knowledge of its business and operations, there can be no assurance
that actual results, performance, or achievements of the Company
will not differ materially from any projected future results,
performance, or achievements expressed or implied by such
forward-looking statements. Actual future results and trends
may differ materially from historical results or those anticipated
depending on a variety of factors, including, but not limited to,
the effects of or changes in:
- the possibility that any of the anticipated benefits of the
Merger with Xenith will not be realized or will not be realized
within the expected time period, the businesses of the Company and
Xenith may not be integrated successfully or such integration may
be more difficult, time-consuming or costly than expected, the
expected revenue synergies and cost savings from the Merger may not
be fully realized or realized within the expected time frame,
revenues following the Merger may be lower than expected, or
customer and employee relationships and business operations may be
disrupted by the Merger,
- changes in interest rates,
- general economic and financial market conditions,
- the Company’s ability to manage its growth or implement its
growth strategy,
- the incremental cost and/or decreased revenues associated with
exceeding $10 billion in assets,
- levels of unemployment in the Bank’s lending area,
- real estate values in the Bank’s lending area,
- an insufficient allowance for loan losses,
- the quality or composition of the loan or investment
portfolios,
- concentrations of loans secured by real estate, particularly
commercial real estate,
- the effectiveness of the Company’s credit processes and
management of the Company’s credit risk,
- demand for loan products and financial services in the
Company’s market area,
- the Company’s ability to compete in the market for financial
services,
- technological risks and developments, and cyber attacks or
events,
- performance by the Company’s counterparties or vendors,
- deposit flows,
- the availability of financing and the terms thereof,
- the level of prepayments on loans and mortgage-backed
securities,
- legislative or regulatory changes and requirements,
- the impact of the Tax Act, including, but not limited to, the
effect of the lower corporate tax rate, including on the valuation
of the Company's tax assets and liabilities,
- any future refinements to the Company's preliminary analysis of
the impact of the Tax Act on the Company,
- changes in the effect of the Tax Act due to issuance of
interpretive regulatory guidance or enactment of corrective or
supplement legislation,
- monetary and fiscal policies of the U.S. government including
policies of the U.S. Department of the Treasury and the Board of
Governors of the Federal Reserve System, and
- accounting principles and guidelines.
More information on risk factors that could affect the Company’s
forward-looking statements is available on the Company’s website,
http://investors.bankatunion.com or the Company’s Annual Report on
Form 10-K for the year ended December 31, 2017 and other reports
filed with the Securities and Exchange Commission. The information
on the Company’s website is not a part of this press release. All
risk factors and uncertainties described in those documents should
be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements. The Company does
not intend or assume any obligation to update or revise any
forward-looking statements that may be made from time to time by or
on behalf of the Company.
Contact:
Robert M. Gorman - (804) 523-7828Executive Vice President / Chief
Financial Officer
|
UNION BANKSHARES CORPORATION AND SUBSIDIARIES |
KEY FINANCIAL RESULTS |
(Dollars
in thousands, except share data) |
(FTE -
"Fully Taxable Equivalent") |
|
As of & For Three Months
Ended |
|
3/31/18 |
|
12/31/17 |
|
3/31/17 |
Results of
Operations |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Interest
and dividend income |
$ |
124,654 |
|
|
$ |
87,482 |
|
|
$ |
76,640 |
|
Interest
expense |
20,907 |
|
|
14,090 |
|
|
10,073 |
|
Net
interest income |
103,747 |
|
|
73,392 |
|
|
66,567 |
|
Provision
for credit losses |
3,500 |
|
|
3,411 |
|
|
2,122 |
|
Net
interest income after provision for credit losses |
100,247 |
|
|
69,981 |
|
|
64,445 |
|
Noninterest income |
22,309 |
|
|
17,243 |
|
|
18,839 |
|
Noninterest expenses |
104,008 |
|
|
59,944 |
|
|
57,395 |
|
Income
before income taxes |
18,548 |
|
|
27,280 |
|
|
25,889 |
|
Income
tax expense |
1,909 |
|
|
12,095 |
|
|
6,765 |
|
Net
income |
$ |
16,639 |
|
|
$ |
15,185 |
|
|
$ |
19,124 |
|
|
|
|
|
|
|
Interest
earned on earning assets (FTE) (1) |
$ |
126,217 |
|
|
$ |
90,263 |
|
|
$ |
79,180 |
|
Net
interest income (FTE) (1) |
105,310 |
|
|
76,173 |
|
|
69,107 |
|
|
|
|
|
|
|
Net
income - community bank segment |
$ |
16,431 |
|
|
$ |
14,986 |
|
|
$ |
19,120 |
|
Net
income - mortgage segment |
208 |
|
|
199 |
|
|
4 |
|
|
|
|
|
|
|
Key
Ratios |
|
|
|
|
|
Earnings
per common share, diluted |
$ |
0.25 |
|
|
$ |
0.35 |
|
|
$ |
0.44 |
|
Return on
average assets (ROA) |
0.52 |
% |
|
0.66 |
% |
|
0.92 |
% |
Return on
average equity (ROE) |
3.70 |
% |
|
5.75 |
% |
|
7.68 |
% |
Return on
average tangible common equity (ROTCE) (2) |
6.40 |
% |
|
8.20 |
% |
|
11.20 |
% |
Efficiency ratio |
82.51 |
% |
|
66.14 |
% |
|
67.20 |
% |
Efficiency ratio (FTE) (1) |
81.50 |
% |
|
64.17 |
% |
|
65.26 |
% |
Net
interest margin |
3.67 |
% |
|
3.51 |
% |
|
3.52 |
% |
Net
interest margin (FTE) (1) |
3.72 |
% |
|
3.64 |
% |
|
3.66 |
% |
Yields on
earning assets (FTE) (1) |
4.46 |
% |
|
4.32 |
% |
|
4.19 |
% |
Cost of
interest-bearing liabilities (FTE) (1) |
0.93 |
% |
|
0.87 |
% |
|
0.68 |
% |
Cost of
funds (FTE) (1) |
0.74 |
% |
|
0.68 |
% |
|
0.53 |
% |
|
|
|
|
|
|
Operating
Measures (3) |
|
|
|
|
|
Net
operating earnings |
$ |
38,875 |
|
|
$ |
22,821 |
|
|
$ |
19,124 |
|
Operating
earnings per share, diluted |
$ |
0.59 |
|
|
$ |
0.52 |
|
|
$ |
0.44 |
|
Operating
ROA |
1.21 |
% |
|
1.00 |
% |
|
0.92 |
% |
Operating
ROE |
8.64 |
% |
|
8.63 |
% |
|
7.68 |
% |
Operating
ROTCE |
14.95 |
% |
|
12.32 |
% |
|
11.20 |
% |
Operating
efficiency ratio (FTE) (1) |
59.79 |
% |
|
62.12 |
% |
|
65.26 |
% |
Community
bank segment net operating earnings |
$ |
38,667 |
|
|
$ |
22,492 |
|
|
$ |
19,120 |
|
Community
bank segment operating earnings per share, diluted |
$ |
0.59 |
|
|
$ |
0.51 |
|
|
$ |
0.44 |
|
Mortgage
segment net operating earnings |
$ |
208 |
|
|
$ |
329 |
|
|
$ |
4 |
|
|
|
|
|
|
|
Per Share
Data |
|
|
|
|
|
Earnings
per common share, basic |
$ |
0.25 |
|
|
$ |
0.35 |
|
|
$ |
0.44 |
|
Earnings
per common share, diluted |
0.25 |
|
|
0.35 |
|
|
0.44 |
|
Cash
dividends paid per common share |
0.21 |
|
|
0.21 |
|
|
0.20 |
|
Market
value per share |
36.71 |
|
|
36.17 |
|
|
35.18 |
|
Book
value per common share |
27.87 |
|
|
24.10 |
|
|
23.44 |
|
Tangible
book value per common share (2) |
16.14 |
|
|
16.88 |
|
|
16.12 |
|
Price to
earnings ratio, diluted |
36.21 |
|
|
26.05 |
|
|
19.71 |
|
Price to
book value per common share ratio |
1.32 |
|
|
1.50 |
|
|
1.50 |
|
Price to
tangible book value per common share ratio (2) |
2.27 |
|
|
2.14 |
|
|
2.18 |
|
Weighted
average common shares outstanding, basic |
65,554,630 |
|
|
43,740,001 |
|
|
43,654,498 |
|
Weighted
average common shares outstanding, diluted |
65,636,262 |
|
|
43,816,018 |
|
|
43,725,923 |
|
Common
shares outstanding at end of period |
65,895,421 |
|
|
43,743,318 |
|
|
43,679,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of & For Three Months
Ended |
|
3/31/18 |
|
12/31/17 |
|
3/31/17 |
Capital
Ratios |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Common
equity Tier 1 capital ratio (4) |
9.03 |
% |
|
9.04 |
% |
|
9.55 |
% |
Tier 1
capital ratio (4) |
10.19 |
% |
|
10.14 |
% |
|
10.77 |
% |
Total
capital ratio (4) |
11.97 |
% |
|
12.43 |
% |
|
13.30 |
% |
Leverage
ratio (Tier 1 capital to average assets) (4) |
9.32 |
% |
|
9.42 |
% |
|
9.79 |
% |
Common
equity to total assets |
13.93 |
% |
|
11.23 |
% |
|
11.71 |
% |
Tangible
common equity to tangible assets (2) |
8.59 |
% |
|
8.14 |
% |
|
8.36 |
% |
|
|
|
|
|
|
Financial
Condition |
|
|
|
|
|
Assets |
$ |
13,143,318 |
|
|
$ |
9,315,179 |
|
|
$ |
8,669,920 |
|
Loans
held for investment |
9,805,723 |
|
|
7,141,552 |
|
|
6,554,046 |
|
Earning
Assets |
11,595,325 |
|
|
8,513,145 |
|
|
7,859,563 |
|
Goodwill |
718,132 |
|
|
298,528 |
|
|
298,191 |
|
Amortizable intangibles, net |
50,092 |
|
|
14,803 |
|
|
18,965 |
|
Deposits |
9,677,955 |
|
|
6,991,718 |
|
|
6,614,195 |
|
Stockholders' equity |
1,831,077 |
|
|
1,046,329 |
|
|
1,015,631 |
|
Tangible
common equity (2) |
1,062,853 |
|
|
732,998 |
|
|
698,475 |
|
|
|
|
|
|
|
Loans held for
investment, net of deferred fees and costs |
|
|
|
|
|
Construction and land development |
$ |
1,249,196 |
|
|
$ |
948,791 |
|
|
$ |
770,287 |
|
Commercial real estate - owner occupied |
1,279,155 |
|
|
943,933 |
|
|
870,559 |
|
Commercial real estate - non-owner occupied |
2,230,463 |
|
|
1,713,659 |
|
|
1,631,767 |
|
Multifamily real estate |
547,520 |
|
|
357,079 |
|
|
353,769 |
|
Commercial & Industrial |
1,125,733 |
|
|
612,023 |
|
|
576,567 |
|
Residential 1-4 Family - commercial |
714,660 |
|
|
612,395 |
|
|
580,568 |
|
Residential 1-4 Family - mortgage |
604,354 |
|
|
485,690 |
|
|
476,871 |
|
Auto |
288,089 |
|
|
282,474 |
|
|
271,466 |
|
HELOC |
642,084 |
|
|
537,521 |
|
|
527,863 |
|
Consumer |
839,699 |
|
|
410,089 |
|
|
342,134 |
|
Other
Commercial |
284,770 |
|
|
237,898 |
|
|
152,195 |
|
Total
loans held for investment |
$ |
9,805,723 |
|
|
$ |
7,141,552 |
|
|
$ |
6,554,046 |
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
NOW
accounts |
$ |
2,185,562 |
|
|
$ |
1,929,416 |
|
|
$ |
1,792,531 |
|
Money
market accounts |
2,692,662 |
|
|
1,685,174 |
|
|
1,499,585 |
|
Savings
accounts |
654,931 |
|
|
546,274 |
|
|
602,851 |
|
Time
deposits of $100,000 and over |
819,056 |
|
|
624,112 |
|
|
555,431 |
|
Other
time deposits |
1,268,319 |
|
|
704,534 |
|
|
672,998 |
|
Total
interest-bearing deposits |
$ |
7,620,530 |
|
|
$ |
5,489,510 |
|
|
$ |
5,123,396 |
|
Demand
deposits |
2,057,425 |
|
|
1,502,208 |
|
|
1,490,799 |
|
Total
deposits |
$ |
9,677,955 |
|
|
$ |
6,991,718 |
|
|
$ |
6,614,195 |
|
|
|
|
|
|
|
Averages |
|
|
|
|
|
Assets |
$ |
13,013,598 |
|
|
$ |
9,085,211 |
|
|
$ |
8,465,517 |
|
Loans
held for investment |
9,680,195 |
|
|
6,962,299 |
|
|
6,383,905 |
|
Loans
held for sale |
28,709 |
|
|
31,448 |
|
|
27,359 |
|
Securities |
1,567,269 |
|
|
1,238,663 |
|
|
1,207,768 |
|
Earning
assets |
11,475,099 |
|
|
8,293,366 |
|
|
7,660,937 |
|
Deposits |
9,463,697 |
|
|
6,955,949 |
|
|
6,407,281 |
|
Certificates of deposit |
2,085,930 |
|
|
1,335,357 |
|
|
1,211,064 |
|
Interest-bearing deposits |
7,489,893 |
|
|
5,435,705 |
|
|
5,013,315 |
|
Borrowings |
1,614,691 |
|
|
1,022,307 |
|
|
986,645 |
|
Interest-bearing liabilities |
9,104,584 |
|
|
6,458,012 |
|
|
5,999,960 |
|
Stockholders' equity |
1,824,588 |
|
|
1,048,632 |
|
|
1,010,318 |
|
Tangible
common equity (2) |
1,054,798 |
|
|
734,847 |
|
|
692,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of & For Three Months
Ended |
|
3/31/18 |
|
12/31/17 |
|
3/31/17 |
Asset
Quality |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Allowance for Loan Losses (ALL) |
|
|
|
|
|
Beginning
balance |
$ |
38,208 |
|
|
$ |
37,162 |
|
|
$ |
37,192 |
|
Add:
Recoveries |
1,480 |
|
|
696 |
|
|
845 |
|
Less:
Charge-offs |
2,559 |
|
|
3,361 |
|
|
1,633 |
|
Add:
Provision for loan losses |
3,500 |
|
|
3,711 |
|
|
2,010 |
|
Ending
balance |
$ |
40,629 |
|
|
$ |
38,208 |
|
|
$ |
38,414 |
|
|
|
|
|
|
|
ALL /
total outstanding loans |
0.41 |
% |
|
0.54 |
% |
|
0.59 |
% |
Net
charge-offs / total average loans |
0.05 |
% |
|
0.15 |
% |
|
0.05 |
% |
Provision
/ total average loans |
0.15 |
% |
|
0.21 |
% |
|
0.13 |
% |
|
|
|
|
|
|
Total PCI
Loans |
$ |
102,861 |
|
|
$ |
39,021 |
|
|
$ |
57,770 |
|
Remaining
fair value mark on purchased performing loans |
44,766 |
|
|
13,726 |
|
|
16,121 |
|
|
|
|
|
|
|
Nonperforming Assets |
|
|
|
|
|
Construction and land development |
$ |
6,391 |
|
|
$ |
5,610 |
|
|
$ |
6,545 |
|
Commercial real estate - owner occupied |
2,539 |
|
|
2,708 |
|
|
1,298 |
|
Commercial real estate - non-owner occupied |
2,089 |
|
|
2,992 |
|
|
2,798 |
|
Commercial & Industrial |
1,969 |
|
|
316 |
|
|
3,245 |
|
Residential 1-4 Family |
9,441 |
|
|
7,354 |
|
|
5,856 |
|
Auto |
394 |
|
|
413 |
|
|
393 |
|
HELOC |
2,072 |
|
|
2,075 |
|
|
1,902 |
|
Consumer
and all other |
243 |
|
|
275 |
|
|
301 |
|
Nonaccrual loans |
$ |
25,138 |
|
|
$ |
21,743 |
|
|
$ |
22,338 |
|
Other
real estate owned |
10,099 |
|
|
6,636 |
|
|
9,605 |
|
Total
nonperforming assets (NPAs) |
$ |
35,237 |
|
|
$ |
28,379 |
|
|
$ |
31,943 |
|
Construction and land development |
$ |
322 |
|
|
$ |
1,340 |
|
|
$ |
16 |
|
Commercial real estate - owner occupied |
— |
|
|
— |
|
|
93 |
|
Commercial real estate - non-owner occupied |
— |
|
|
194 |
|
|
711 |
|
Commercial & Industrial |
200 |
|
|
214 |
|
|
— |
|
Residential 1-4 Family |
1,261 |
|
|
1,125 |
|
|
686 |
|
Auto |
170 |
|
|
40 |
|
|
11 |
|
HELOC |
306 |
|
|
217 |
|
|
680 |
|
Consumer
and all other |
371 |
|
|
402 |
|
|
126 |
|
Loans ≥
90 days and still accruing |
$ |
2,630 |
|
|
$ |
3,532 |
|
|
$ |
2,323 |
|
Total
NPAs and loans ≥ 90 days |
$ |
37,867 |
|
|
$ |
31,911 |
|
|
$ |
34,266 |
|
NPAs /
total outstanding loans |
0.36 |
% |
|
0.40 |
% |
|
0.49 |
% |
NPAs /
total assets |
0.27 |
% |
|
0.30 |
% |
|
0.37 |
% |
ALL /
nonaccrual loans |
161.62 |
% |
|
175.73 |
% |
|
171.97 |
% |
ALL /
nonperforming assets |
115.30 |
% |
|
134.63 |
% |
|
120.26 |
% |
|
|
|
|
|
|
Past Due Detail |
|
|
|
|
|
Construction and land development |
$ |
403 |
|
|
$ |
1,248 |
|
|
$ |
630 |
|
Commercial real estate - owner occupied |
4,985 |
|
|
444 |
|
|
878 |
|
Commercial real estate - non-owner occupied |
1,867 |
|
|
187 |
|
|
1,487 |
|
Commercial & Industrial |
2,608 |
|
|
1,147 |
|
|
453 |
|
Residential 1-4 Family |
9,917 |
|
|
5,520 |
|
|
11,615 |
|
Auto |
2,167 |
|
|
3,541 |
|
|
1,534 |
|
HELOC |
3,564 |
|
|
2,382 |
|
|
1,490 |
|
Consumer
and all other |
4,179 |
|
|
2,404 |
|
|
1,766 |
|
Loans
30-59 days past due |
$ |
29,690 |
|
|
$ |
16,873 |
|
|
$ |
19,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of & For Three Months
Ended |
|
3/31/18 |
|
12/31/17 |
|
3/31/17 |
Past Due Detail cont'd |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Construction and land development |
$ |
1,291 |
|
|
$ |
898 |
|
|
$ |
376 |
|
Commercial real estate - owner occupied |
777 |
|
|
81 |
|
|
— |
|
Commercial real estate - non-owner occupied |
— |
|
|
84 |
|
|
— |
|
Commercial & Industrial |
1,254 |
|
|
109 |
|
|
126 |
|
Residential 1-4 Family |
2,357 |
|
|
3,241 |
|
|
2,104 |
|
Auto |
193 |
|
|
185 |
|
|
250 |
|
HELOC |
1,346 |
|
|
717 |
|
|
365 |
|
Consumer
and all other |
2,074 |
|
|
2,052 |
|
|
1,460 |
|
Loans
60-89 days past due |
$ |
9,292 |
|
|
$ |
7,367 |
|
|
$ |
4,681 |
|
|
|
|
|
|
|
Troubled Debt Restructurings |
|
|
|
|
|
Performing |
$ |
13,292 |
|
|
$ |
14,553 |
|
|
$ |
14,325 |
|
Nonperforming |
4,284 |
|
|
2,849 |
|
|
4,399 |
|
Total
troubled debt restructurings |
$ |
17,576 |
|
|
$ |
17,402 |
|
|
$ |
18,724 |
|
|
|
|
|
|
|
Alternative
Performance Measures (non-GAAP) |
|
|
|
|
|
Net interest income (FTE) |
|
|
|
|
|
Net
interest income (GAAP) |
$ |
103,747 |
|
|
$ |
73,392 |
|
|
$ |
66,567 |
|
FTE
adjustment |
1,563 |
|
|
2,781 |
|
|
2,540 |
|
Net
interest income (FTE) (non-GAAP) (1) |
$ |
105,310 |
|
|
$ |
76,173 |
|
|
$ |
69,107 |
|
Average
earning assets |
11,475,099 |
|
|
8,293,366 |
|
|
7,660,937 |
|
Net
interest margin |
3.67 |
% |
|
3.51 |
% |
|
3.52 |
% |
Net
interest margin (FTE) (1) |
3.72 |
% |
|
3.64 |
% |
|
3.66 |
% |
|
|
|
|
|
|
Tangible Assets |
|
|
|
|
|
Ending
assets (GAAP) |
$ |
13,143,318 |
|
|
$ |
9,315,179 |
|
|
$ |
8,669,920 |
|
Less:
Ending goodwill |
718,132 |
|
|
298,528 |
|
|
298,191 |
|
Less:
Ending amortizable intangibles |
50,092 |
|
|
14,803 |
|
|
18,965 |
|
Ending
tangible assets (non-GAAP) |
$ |
12,375,094 |
|
|
$ |
9,001,848 |
|
|
$ |
8,352,764 |
|
|
|
|
|
|
|
Tangible Common Equity (2) |
|
|
|
|
|
Ending
equity (GAAP) |
$ |
1,831,077 |
|
|
$ |
1,046,329 |
|
|
$ |
1,015,631 |
|
Less:
Ending goodwill |
718,132 |
|
|
298,528 |
|
|
298,191 |
|
Less:
Ending amortizable intangibles |
50,092 |
|
|
14,803 |
|
|
18,965 |
|
Ending
tangible common equity (non-GAAP) |
$ |
1,062,853 |
|
|
$ |
732,998 |
|
|
$ |
698,475 |
|
|
|
|
|
|
|
Average
equity (GAAP) |
$ |
1,824,588 |
|
|
$ |
1,048,632 |
|
|
$ |
1,010,318 |
|
Less:
Average goodwill |
718,132 |
|
|
298,385 |
|
|
298,191 |
|
Less:
Average amortizable intangibles |
51,658 |
|
|
15,400 |
|
|
19,743 |
|
Average
tangible common equity (non-GAAP) |
$ |
1,054,798 |
|
|
$ |
734,847 |
|
|
$ |
692,384 |
|
|
|
|
|
|
|
Operating Measures (3) |
|
|
|
|
|
Net
income (GAAP) |
$ |
16,639 |
|
|
$ |
15,185 |
|
|
$ |
19,124 |
|
Plus:
Merger-related costs, net of tax |
22,236 |
|
|
1,386 |
|
|
— |
|
Plus:
Nonrecurring tax expenses |
— |
|
|
6,250 |
|
|
— |
|
Net
operating earnings (non-GAAP) |
$ |
38,875 |
|
|
$ |
22,821 |
|
|
$ |
19,124 |
|
|
|
|
|
|
|
Noninterest expense (GAAP) |
$ |
104,008 |
|
|
$ |
59,944 |
|
|
$ |
57,395 |
|
Less:
Merger-related costs |
27,712 |
|
|
1,917 |
|
|
— |
|
Operating
noninterest expense (non-GAAP) |
$ |
76,296 |
|
|
$ |
58,027 |
|
|
$ |
57,395 |
|
|
|
|
|
|
|
Net
interest income (FTE) (non-GAAP) (1) |
$ |
105,310 |
|
|
$ |
76,173 |
|
|
$ |
69,107 |
|
Noninterest income (GAAP) |
22,309 |
|
|
17,243 |
|
|
18,839 |
|
|
|
|
|
|
|
Efficiency ratio |
82.51 |
% |
|
66.14 |
% |
|
67.20 |
% |
Efficiency ratio (FTE) (1) |
81.50 |
% |
|
64.17 |
% |
|
65.26 |
% |
Operating
efficiency ratio (FTE) |
59.79 |
% |
|
62.12 |
% |
|
65.26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
As of & For Three Months
Ended |
|
3/31/18 |
|
12/31/17 |
|
3/31/17 |
Alternative
Performance Measures (non-GAAP) cont'd |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Operating Measures cont'd
(3) |
|
|
|
|
|
Community
bank segment net income (GAAP) |
$ |
16,431 |
|
|
$ |
14,986 |
|
|
$ |
19,120 |
|
Plus:
Merger-related costs, net of tax |
22,236 |
|
|
1,386 |
|
|
— |
|
Plus:
Nonrecurring tax expenses |
— |
|
|
6,120 |
|
|
— |
|
Community
bank segment net operating earnings (non-GAAP) |
$ |
38,667 |
|
|
$ |
22,492 |
|
|
$ |
19,120 |
|
|
|
|
|
|
|
Community
bank segment earnings per share, diluted (GAAP) |
$ |
0.25 |
|
|
$ |
0.34 |
|
|
$ |
0.44 |
|
Community
bank segment operating earnings per share, diluted (non-GAAP) |
0.59 |
|
|
0.51 |
|
|
0.44 |
|
|
|
|
|
|
|
Mortgage
segment net income (GAAP) |
$ |
208 |
|
|
$ |
199 |
|
|
$ |
4 |
|
Plus:
Nonrecurring tax expenses |
— |
|
|
130 |
|
|
— |
|
Mortgage
segment net operating earnings (non-GAAP) |
$ |
208 |
|
|
$ |
329 |
|
|
$ |
4 |
|
|
|
|
|
|
|
Mortgage
Origination Volume |
|
|
|
|
|
Refinance
Volume |
$ |
35,599 |
|
|
$ |
41,889 |
|
|
$ |
34,331 |
|
Construction Volume |
13,867 |
|
|
20,186 |
|
|
22,669 |
|
Purchase
Volume |
43,082 |
|
|
59,840 |
|
|
43,216 |
|
Total
Mortgage loan originations |
$ |
92,548 |
|
|
$ |
121,915 |
|
|
$ |
100,216 |
|
% of
originations that are refinances |
38.5 |
% |
|
34.4 |
% |
|
34.3 |
% |
|
|
|
|
|
|
Other
Data |
|
|
|
|
|
End of
period full-time employees |
1,824 |
|
|
1,419 |
|
|
1,412 |
|
Number of
full-service branches |
150 |
|
|
111 |
|
|
113 |
|
Number of
full automatic transaction machines ("ATMs") |
216 |
|
|
176 |
|
|
184 |
|
|
|
|
|
|
|
|
|
|
(1) Net interest income (FTE), which is used in computing net
interest margin (FTE) and efficiency ratio (FTE), provides valuable
additional insight into the net interest margin and the efficiency
ratio by adjusting for differences in tax treatment of interest
income sources. The entire FTE adjustment is attributable to
interest income on earning assets, which is used in computing yield
on earning assets. Interest expense and the related cost of
interest-bearing liabilities and cost of funds ratios are not
affected by the FTE components.
(2) Tangible common equity is used in the calculation of
certain profitability, capital, and per share ratios. The
Company believes tangible common equity and the related ratios are
meaningful measures of capital adequacy because they provide a
meaningful base for period-to-period and company-to-company
comparisons, which the Company believes will assist investors in
assessing the capital of the Company and its ability to absorb
potential losses.
(3) Operating measures exclude merger-related costs and
nonrecurring tax expenses unrelated to the Company’s normal
operations. Such costs were not incurred during the first quarter
of 2017; thus each of these operating measures is equivalent to the
corresponding GAAP financial measure for the three months ended
March 31, 2017. The Company believes these measures are useful to
investors as they exclude certain costs resulting from acquisition
activity and allow investors to more clearly see the combined
economic results of the organization's operations.
(4) All ratios at March 31, 2018 are estimates and subject to
change pending the Company’s filing of its FR Y9-C. All other
periods are presented as filed.
|
|
|
UNION BANKSHARES CORPORATION AND SUBSIDIARIES |
|
|
CONSOLIDATED BALANCE SHEETS |
|
|
(Dollars in thousands,
except share data) |
|
|
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
2018 |
|
2017 |
|
2017 |
ASSETS |
(unaudited) |
|
(audited) |
|
(unaudited) |
Cash and cash equivalents: |
|
|
|
|
|
Cash and
due from banks |
$ |
137,761 |
|
|
$ |
117,586 |
|
|
$ |
120,216 |
|
Interest-bearing deposits in other banks |
196,456 |
|
|
81,291 |
|
|
62,656 |
|
Federal
funds sold |
8,246 |
|
|
496 |
|
|
947 |
|
Total cash and cash equivalents |
342,463 |
|
|
199,373 |
|
|
183,819 |
|
Securities available for sale, at fair value |
1,253,179 |
|
|
974,222 |
|
|
953,058 |
|
Securities held to maturity, at carrying
value |
198,733 |
|
|
199,639 |
|
|
203,478 |
|
Restricted stock, at cost |
105,261 |
|
|
75,283 |
|
|
65,402 |
|
Loans held for sale, at fair value |
27,727 |
|
|
40,662 |
|
|
19,976 |
|
Loans held for investment, net of deferred fees and
costs |
9,805,723 |
|
|
7,141,552 |
|
|
6,554,046 |
|
Less allowance for loan losses |
40,629 |
|
|
38,208 |
|
|
38,414 |
|
Net loans held for investment |
9,765,094 |
|
|
7,103,344 |
|
|
6,515,632 |
|
Premises and equipment, net |
163,076 |
|
|
119,981 |
|
|
122,512 |
|
Other real estate owned, net of valuation
allowance |
10,099 |
|
|
6,636 |
|
|
9,605 |
|
Goodwill |
718,132 |
|
|
298,528 |
|
|
298,191 |
|
Amortizable intangibles, net |
50,092 |
|
|
14,803 |
|
|
18,965 |
|
Bank owned life insurance |
258,381 |
|
|
182,854 |
|
|
178,774 |
|
Other assets |
251,081 |
|
|
99,854 |
|
|
100,508 |
|
Total assets |
$ |
13,143,318 |
|
|
$ |
9,315,179 |
|
|
$ |
8,669,920 |
|
LIABILITIES |
|
|
|
|
|
Noninterest-bearing demand deposits |
$ |
2,057,425 |
|
|
$ |
1,502,208 |
|
|
$ |
1,490,799 |
|
Interest-bearing deposits |
7,620,530 |
|
|
5,489,510 |
|
|
5,123,396 |
|
Total deposits |
9,677,955 |
|
|
6,991,718 |
|
|
6,614,195 |
|
Securities sold under agreements to
repurchase |
31,593 |
|
|
49,152 |
|
|
44,587 |
|
Other short-term borrowings |
1,022,000 |
|
|
745,000 |
|
|
522,500 |
|
Long-term borrowings |
481,433 |
|
|
425,262 |
|
|
413,779 |
|
Other liabilities |
99,260 |
|
|
57,718 |
|
|
59,228 |
|
Total liabilities |
11,312,241 |
|
|
8,268,850 |
|
|
7,654,289 |
|
Commitments and contingencies |
|
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Common stock,
$1.33 par value, shares authorized 100,000,000; issued and
outstanding, 65,895,421 shares, 43,743,318 shares, and 43,679,947
shares, respectively. |
87,091 |
|
|
57,744 |
|
|
57,629 |
|
Additional paid-in capital |
1,373,997 |
|
|
610,001 |
|
|
606,078 |
|
Retained earnings |
382,299 |
|
|
379,468 |
|
|
352,335 |
|
Accumulated other comprehensive income (loss) |
(12,310 |
) |
|
(884 |
) |
|
(411 |
) |
Total stockholders' equity |
1,831,077 |
|
|
1,046,329 |
|
|
1,015,631 |
|
Total liabilities and stockholders' equity |
$ |
13,143,318 |
|
|
$ |
9,315,179 |
|
|
$ |
8,669,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNION BANKSHARES CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME |
(Dollars in thousands,
except share data) |
|
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
2018 |
|
2017 |
|
2017 |
Interest and
dividend income: |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Interest
and fees on loans |
$ |
112,927 |
|
|
$ |
78,501 |
|
|
$ |
68,084 |
|
Interest
on deposits in other banks |
647 |
|
|
172 |
|
|
71 |
|
Interest
and dividends on securities: |
|
|
|
|
|
Taxable |
7,072 |
|
|
5,225 |
|
|
4,923 |
|
Nontaxable |
4,008 |
|
|
3,584 |
|
|
3,562 |
|
Total interest and dividend income |
124,654 |
|
|
87,482 |
|
|
76,640 |
|
Interest
expense: |
|
|
|
|
|
Interest
on deposits |
11,212 |
|
|
7,696 |
|
|
5,077 |
|
Interest
on short-term borrowings |
4,249 |
|
|
1,814 |
|
|
950 |
|
Interest
on long-term borrowings |
5,446 |
|
|
4,580 |
|
|
4,046 |
|
Total interest expense |
20,907 |
|
|
14,090 |
|
|
10,073 |
|
Net interest income |
103,747 |
|
|
73,392 |
|
|
66,567 |
|
Provision for
credit losses |
3,500 |
|
|
3,411 |
|
|
2,122 |
|
Net interest income after provision for credit
losses |
100,247 |
|
|
69,981 |
|
|
64,445 |
|
Noninterest
income: |
|
|
|
|
|
Service
charges on deposit accounts |
5,894 |
|
|
4,925 |
|
|
4,516 |
|
Other
service charges and fees |
1,233 |
|
|
1,202 |
|
|
1,139 |
|
Interchange fees, net |
4,489 |
|
|
3,769 |
|
|
3,582 |
|
Fiduciary
and asset management fees |
3,056 |
|
|
2,933 |
|
|
2,794 |
|
Mortgage
banking income, net |
2,041 |
|
|
2,118 |
|
|
2,025 |
|
Gains on
securities transactions, net |
213 |
|
|
18 |
|
|
481 |
|
Bank
owned life insurance income |
1,667 |
|
|
1,306 |
|
|
2,125 |
|
Loan-related interest rate swap fees |
718 |
|
|
424 |
|
|
1,180 |
|
Other
operating income |
2,998 |
|
|
548 |
|
|
997 |
|
Total noninterest income |
22,309 |
|
|
17,243 |
|
|
18,839 |
|
Noninterest
expenses: |
|
|
|
|
|
Salaries
and benefits |
42,329 |
|
|
29,723 |
|
|
32,168 |
|
Occupancy
expenses |
6,310 |
|
|
5,034 |
|
|
4,903 |
|
Furniture
and equipment expenses |
3,033 |
|
|
2,621 |
|
|
2,603 |
|
Printing,
postage, and supplies |
1,073 |
|
|
1,252 |
|
|
1,150 |
|
Communications expense |
1,097 |
|
|
740 |
|
|
910 |
|
Technology and data processing |
4,649 |
|
|
4,426 |
|
|
3,900 |
|
Professional services |
2,597 |
|
|
2,190 |
|
|
1,658 |
|
Marketing
and advertising expense |
1,443 |
|
|
1,876 |
|
|
1,740 |
|
FDIC
assessment premiums and other insurance |
2,185 |
|
|
1,255 |
|
|
706 |
|
Other
taxes |
2,886 |
|
|
2,022 |
|
|
2,022 |
|
Loan-related expenses |
1,471 |
|
|
1,369 |
|
|
1,329 |
|
OREO and
credit-related expenses |
1,532 |
|
|
1,741 |
|
|
541 |
|
Amortization of intangible assets |
3,181 |
|
|
1,427 |
|
|
1,637 |
|
Training
and other personnel costs |
1,027 |
|
|
1,034 |
|
|
969 |
|
Merger-related costs |
27,712 |
|
|
1,917 |
|
|
— |
|
Other
expenses |
1,483 |
|
|
1,317 |
|
|
1,159 |
|
Total noninterest expenses |
104,008 |
|
|
59,944 |
|
|
57,395 |
|
Income before income
taxes |
18,548 |
|
|
27,280 |
|
|
25,889 |
|
Income tax expense |
1,909 |
|
|
12,095 |
|
|
6,765 |
|
Net income |
$ |
16,639 |
|
|
$ |
15,185 |
|
|
$ |
19,124 |
|
Basic earnings per
common share |
$ |
0.25 |
|
|
$ |
0.35 |
|
|
$ |
0.44 |
|
Diluted earnings per
common share |
$ |
0.25 |
|
|
$ |
0.35 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNION BANKSHARES CORPORATION AND SUBSIDIARIES |
SEGMENT FINANCIAL INFORMATION |
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
Community Bank |
|
Mortgage |
|
Eliminations |
|
Consolidated |
Three Months
Ended March 31, 2018 (unaudited) |
|
|
|
|
|
|
|
Net interest income |
$ |
103,314 |
|
|
$ |
433 |
|
|
$ |
— |
|
|
$ |
103,747 |
|
Provision for credit losses |
3,524 |
|
|
(24 |
) |
|
— |
|
|
3,500 |
|
Net interest income after provision for credit
losses |
99,790 |
|
|
457 |
|
|
— |
|
|
100,247 |
|
Noninterest income |
20,157 |
|
|
2,278 |
|
|
(126 |
) |
|
22,309 |
|
Noninterest expenses |
101,669 |
|
|
2,465 |
|
|
(126 |
) |
|
104,008 |
|
Income before income taxes |
18,278 |
|
|
270 |
|
|
— |
|
|
18,548 |
|
Income tax expense |
1,847 |
|
|
62 |
|
|
— |
|
|
1,909 |
|
Net income |
16,431 |
|
|
208 |
|
|
— |
|
|
16,639 |
|
Plus: Merger-related costs, net of tax |
22,236 |
|
|
— |
|
|
— |
|
|
22,236 |
|
Net operating earnings (non-GAAP) |
$ |
38,667 |
|
|
$ |
208 |
|
|
$ |
— |
|
|
$ |
38,875 |
|
Total assets |
$ |
13,134,342 |
|
|
$ |
100,587 |
|
|
$ |
(91,611 |
) |
|
$ |
13,143,318 |
|
Three Months
Ended December 31, 2017 (unaudited) |
|
|
|
|
|
|
|
Net interest income |
$ |
72,936 |
|
|
$ |
456 |
|
|
$ |
— |
|
|
$ |
73,392 |
|
Provision for credit losses |
3,458 |
|
|
(47 |
) |
|
— |
|
|
3,411 |
|
Net interest income after provision for credit
losses |
69,478 |
|
|
503 |
|
|
— |
|
|
69,981 |
|
Noninterest income |
15,040 |
|
|
2,329 |
|
|
(126 |
) |
|
17,243 |
|
Noninterest expenses |
57,722 |
|
|
2,348 |
|
|
(126 |
) |
|
59,944 |
|
Income before income taxes |
26,796 |
|
|
484 |
|
|
— |
|
|
27,280 |
|
Income tax expense |
11,810 |
|
|
285 |
|
|
— |
|
|
12,095 |
|
Net income |
14,986 |
|
|
199 |
|
|
— |
|
|
15,185 |
|
Plus: Merger-related costs, net of tax |
1,386 |
|
|
— |
|
|
— |
|
|
1,386 |
|
Plus: Nonrecurring tax expenses |
6,120 |
|
|
130 |
|
|
— |
|
|
6,250 |
|
Net operating earnings (non-GAAP) |
$ |
22,492 |
|
|
$ |
329 |
|
|
$ |
— |
|
|
$ |
22,821 |
|
Total assets |
$ |
9,305,660 |
|
|
$ |
111,845 |
|
|
$ |
(102,326 |
) |
|
$ |
9,315,179 |
|
Three Months
Ended March 31, 2017 (unaudited) |
|
|
|
|
|
|
|
Net interest income |
$ |
66,234 |
|
|
$ |
333 |
|
|
$ |
— |
|
|
$ |
66,567 |
|
Provision for credit losses |
2,104 |
|
|
18 |
|
|
— |
|
|
2,122 |
|
Net interest income after provision for credit
losses |
64,130 |
|
|
315 |
|
|
— |
|
|
64,445 |
|
Noninterest income |
16,757 |
|
|
2,223 |
|
|
(141 |
) |
|
18,839 |
|
Noninterest expenses |
55,014 |
|
|
2,522 |
|
|
(141 |
) |
|
57,395 |
|
Income before income taxes |
25,873 |
|
|
16 |
|
|
— |
|
|
25,889 |
|
Income tax expense |
6,753 |
|
|
12 |
|
|
— |
|
|
6,765 |
|
Net income |
$ |
19,120 |
|
|
$ |
4 |
|
|
$ |
— |
|
|
$ |
19,124 |
|
Total assets |
$ |
8,660,987 |
|
|
$ |
76,818 |
|
|
$ |
(67,885 |
) |
|
$ |
8,669,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES
(TAXABLE EQUIVALENT BASIS) |
|
For the Quarter Ended |
|
March 31, 2018 |
|
December 31, 2017 |
|
Average Balance |
|
Interest Income / Expense (1) |
|
Yield / Rate (1)(2) |
|
Average Balance |
|
Interest Income / Expense (1) |
|
Yield / Rate (1)(2) |
Assets: |
(unaudited) |
|
(unaudited) |
Securities: |
|
|
|
|
|
|
|
|
|
|
|
Taxable |
$ |
1,020,691 |
|
|
$ |
7,072 |
|
|
2.81 |
% |
|
$ |
758,189 |
|
|
$ |
5,225 |
|
|
2.73 |
% |
Tax-exempt |
546,578 |
|
|
5,073 |
|
|
3.76 |
% |
|
480,474 |
|
|
5,513 |
|
|
4.55 |
% |
Total
securities |
1,567,269 |
|
|
12,145 |
|
|
3.14 |
% |
|
1,238,663 |
|
|
10,738 |
|
|
3.44 |
% |
Loans, net (3) (4) |
9,680,195 |
|
|
113,135 |
|
|
4.74 |
% |
|
6,962,299 |
|
|
79,048 |
|
|
4.50 |
% |
Other earning
assets |
227,635 |
|
|
937 |
|
|
1.67 |
% |
|
92,404 |
|
|
477 |
|
|
2.05 |
% |
Total earning assets |
11,475,099 |
|
|
$ |
126,217 |
|
|
4.46 |
% |
|
8,293,366 |
|
|
$ |
90,263 |
|
|
4.32 |
% |
Allowance for loan
losses |
(39,847 |
) |
|
|
|
|
|
(37,449 |
) |
|
|
|
|
Total
non-earning assets |
1,578,346 |
|
|
|
|
|
|
829,294 |
|
|
|
|
|
Total
assets |
$ |
13,013,598 |
|
|
|
|
|
|
$ |
9,085,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
Transaction and money market accounts |
$ |
4,759,523 |
|
|
$ |
5,555 |
|
|
0.47 |
% |
|
$ |
3,551,759 |
|
|
$ |
3,703 |
|
|
0.41 |
% |
Regular
savings |
644,440 |
|
|
212 |
|
|
0.13 |
% |
|
548,589 |
|
|
150 |
|
|
0.11 |
% |
Time
deposits (5) |
2,085,930 |
|
|
5,445 |
|
|
1.06 |
% |
|
1,335,357 |
|
|
3,843 |
|
|
1.14 |
% |
Total interest-bearing deposits |
7,489,893 |
|
|
11,212 |
|
|
0.61 |
% |
|
5,435,705 |
|
|
7,696 |
|
|
0.56 |
% |
Other borrowings
(6) |
1,614,691 |
|
|
9,695 |
|
|
2.44 |
% |
|
1,022,307 |
|
|
6,394 |
|
|
2.48 |
% |
Total interest-bearing liabilities |
9,104,584 |
|
|
20,907 |
|
|
0.93 |
% |
|
6,458,012 |
|
|
14,090 |
|
|
0.87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits |
1,973,804 |
|
|
|
|
|
|
1,520,244 |
|
|
|
|
|
Other
liabilities |
110,622 |
|
|
|
|
|
|
58,323 |
|
|
|
|
|
Total liabilities |
11,189,010 |
|
|
|
|
|
|
8,036,579 |
|
|
|
|
|
Stockholders'
equity |
1,824,588 |
|
|
|
|
|
|
1,048,632 |
|
|
|
|
|
Total
liabilities and stockholders' equity |
$ |
13,013,598 |
|
|
|
|
|
|
$ |
9,085,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income |
|
|
$ |
105,310 |
|
|
|
|
|
|
$ |
76,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
spread |
|
|
|
|
3.53 |
% |
|
|
|
|
|
3.45 |
% |
Cost of
funds |
|
|
|
|
0.74 |
% |
|
|
|
|
|
0.68 |
% |
Net interest
margin |
|
|
|
|
3.72 |
% |
|
|
|
|
|
3.64 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Income
and yields are reported on a taxable equivalent basis using the
statutory federal corporate tax rate of 21% for the three months
ended March 31, 2018 and 35% for the three months ended December
31, 2017. |
(2) Rates
and yields are annualized and calculated from actual, not rounded,
amounts in thousands, which appear above. |
(3)
Nonaccrual loans are included in average loans outstanding. |
(4)
Interest income on loans includes $4.8 million and $2.1 million for
the three months ended March 31, 2018 and December 31, 2017,
respectively, in accretion of the fair market value adjustments
related to acquisitions. |
(5)
Interest expense on time deposits includes $832,000 and $0 for the
three months ended March 31, 2018 and December 31, 2017,
respectively, in accretion of the fair market value adjustments
related to acquisitions. |
(6)
Interest expense on borrowings includes $98,000 and ($27,000) for
the three months ended March 31, 2018 and December 31, 2017,
respectively, in amortization (accretion) of the fair market value
adjustments related to acquisitions. |
|
|
XENITH BANKSHARES, INC. |
CONSOLIDATED BALANCE SHEET |
As
of December 31, 2017 |
(Dollars in
thousands) |
|
|
ASSETS |
(Audited) |
Cash and cash
equivalents |
$ |
174,218 |
|
Securities
available for sale, at fair value |
295,782 |
|
Restricted
stock, at cost |
27,569 |
|
|
|
Loans held for
investment, net of deferred fees and costs |
2,506,589 |
|
Less allowance
for loan losses |
16,829 |
|
Net loans held
for investment |
2,489,760 |
|
|
|
Premises and
equipment, net |
54,633 |
|
Other real
estate owned, net of valuation allowance |
4,214 |
|
Goodwill |
26,931 |
|
Amortizable
intangibles, net |
3,261 |
|
Bank owned life
insurance |
73,853 |
|
Other
assets |
120,505 |
|
Total
assets |
$ |
3,270,726 |
|
|
|
LIABILITIES |
|
Noninterest-bearing demand deposits |
$ |
511,371 |
|
Interest-bearing deposits |
2,034,176 |
|
Total
deposits |
2,545,547 |
|
|
|
Other
short-term borrowings |
235,000 |
|
Long-term
borrowings |
39,331 |
|
Other
liabilities |
21,107 |
|
Total
liabilities |
2,840,985 |
|
|
|
STOCKHOLDERS'
EQUITY |
|
Common
stock |
234 |
|
Surplus |
713,630 |
|
Retained
earnings (deficit) |
(282,073 |
) |
Accumulated
other comprehensive income (loss) |
(2,050 |
) |
Total
stockholders' equity |
429,741 |
|
|
|
Total
liabilities and stockholders' equity |
$ |
3,270,726 |
|
|
|
|
|
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