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Section 1: 8-K (8-K)

Document


United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 

 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 17, 2018
 
UNION BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
 

 
Virginia
 
0-20293
 
54-1598552
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
of incorporation)
 
File Number)
 
Identification No.)
 
1051 East Cary Street
Suite 1200
Richmond, Virginia 23219
(Address of principal executive offices, including Zip Code)
 

 
Registrant’s telephone number, including area code: (804) 633-5031
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨

1



Item 2.02 Results of Operations and Financial Condition.
 
On October 17, 2018, Union Bankshares Corporation issued a press release announcing its financial results for the three and nine months ended September 30, 2018. A copy of the press release is being furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.
 
(d)
Exhibits.
Exhibit No.
 
Description
99.1
 

2



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
UNION BANKSHARES CORPORATION
 
 
 
Date: October 17, 2018
By:
/s/ Robert M. Gorman
 
 
Robert M. Gorman
 
 
Executive Vice President and
 
 
Chief Financial Officer


3
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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

395376595_unionbankshares_image1a18.jpg

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

UNION BANKSHARES REPORTS THIRD QUARTER RESULTS

Richmond, Va., October 17, 2018 - Union Bankshares Corporation (the “Company” or “Union”) (Nasdaq: UBSH) today reported net income of $38.2 million and earnings per share of $0.58 for its third quarter ended September 30, 2018. Net operating earnings(1) were $39.3 million and operating earnings per share(1) was $0.60 for its third quarter ended September 30, 2018; these operating results exclude $1.1 million in after-tax merger-related costs but include losses from discontinued operations of $565,000.

Net income was $102.2 million and earnings per share was $1.55 for the nine months ended September 30, 2018. Net operating earnings(1) were $132.1 million and operating earnings per share(1) was $2.01 for the nine months ended September 30, 2018; these operating results exclude $29.9 million in after-tax merger-related costs but include losses from discontinued operations of $3.0 million.

Union made further progress on our stated priorities during the third quarter and we remain on track to deliver our top tier financial performance metrics in the fourth quarter of 2018,” said John C. Asbury, President and CEO of Union Bankshares Corporation. “Loan growth increased in each month of the quarter as we are beginning to see the impact of our commercial and industrial banking efforts on the commercial loan portfolio. Our commercial and industrial banking buildout is largely complete and our team is starting to gain traction in the market. This bodes well for the fourth quarter and more importantly, for 2019 and beyond.

After the quarter closed, we announced our agreement to acquire Access National Corporation, which is nearly a perfect fit with our previously stated M&A strategic and financial objectives. We’re pleased with the enthusiasm about Access becoming a part of Union which substantially completes our Virginia franchise and irrefutably positions Union as Virginia’s bank. While it has been less than two weeks from the announcement, we have already stood up our integration team and work has begun to ensure a smooth transition. Having just completed the Xenith integration, this is a process we know well. We will share more about the implications of this powerful addition to our targeted financial metrics and business strategy at our investor day scheduled in New York on November 14.

On October 5, 2018, the Company announced it has entered into a definitive merger agreement to acquire Access National Corporation (“Access”) in an all-stock transaction (the “Pending Merger”) that is expected to close in the first quarter of 2019.

Select highlights for the third quarter of 2018
Performance metrics - Changes in all metrics below were primarily related to the net gain on the sale of the Shore Premier Finance division in the second quarter of 2018.
Return on Average Assets (“ROA”) was 1.17% compared to 1.44% in the second quarter of 2018. Operating ROA(1) was 1.21% compared to 1.63% in the second quarter of 2018.
Return on Average Equity (“ROE”) was 8.06% compared to 10.28% in the second quarter of 2018. Operating ROE(1) was 8.30% compared to 11.69% in the second quarter of 2018.
Return on Average Tangible Common Equity (“ROTCE”)(1) was 13.73% compared to 17.74% in the second quarter of 2018. Operating ROTCE(1) was 14.14% compared to 20.19% in the second quarter of 2018.
Efficiency ratio increased to 60.7% compared to 57.2% in the second quarter of 2018 and the efficiency ratio (fully taxable equivalent (“FTE”))(1) increased to 59.7% compared to 56.5% in the second quarter of



2018. Operating efficiency ratio (FTE)(1) increased to 58.6% compared to 51.0% in the second quarter of 2018.
Notable activity during the third quarter
On July 1, 2018, Old Dominion Capital Management, Inc., a subsidiary of Union Bank & Trust, completed its acquisition of Outfitter Advisors, Inc., a McLean, Virginia based investment advisory firm with approximately $400 million in assets under management and advisement.
The Company consolidated seven branches during the third quarter of 2018, which resulted in additional after-tax branch closure costs of approximately $375,000 that were recorded in the third quarter of 2018.
The Company incurred approximately $565,000 in after-tax costs related to executive management changes during the quarter.
On June 29, 2018, Union Bank & Trust entered into an agreement to sell substantially all of the assets and certain specific liabilities of its Shore Premier Finance division, consisting primarily of marine loans totaling $383.9 million, for a purchase price consisting of approximately $375.0 million in cash and 1,250,000 shares of the purchasing company's common stock. The initial estimated after-tax gain recorded in the second quarter of 2018 was $16.5 million, net of transaction and other related costs, which was subsequently reduced by $737,000 in the third quarter based on updated information obtained and wind-down costs incurred.
(1) These are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”). For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

NET INTEREST INCOME

For the third quarter of 2018, net interest income was $106.0 million, a decrease of $2.2 million from the second quarter of 2018. Net interest income (FTE)(2) was $108.0 million in the third quarter of 2018, a decrease of $2.2 million from the second quarter of 2018. The decreases in both net interest income and net interest income (FTE) were primarily driven by lower acquisition accounting accretion during the three months ended September 30, 2018 compared to the three months ended June 30, 2018. The third quarter net interest margin decreased 3 basis points to 3.69% from 3.72% in the previous quarter, while the net interest margin (FTE)(2) decreased 3 basis points to 3.76% from 3.79% during the same periods. The decreases in the net interest margin and net interest margin (FTE) were principally due to a 6 basis point increase in the cost of funds, partially offset by a 3 basis point increase in the yield on earnings assets, which was lower by 6 basis points due to the reduced level of earning asset accretion income recorded during the third quarter of 2018 compared to the prior quarter.

The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. During the third quarter of 2018, net accretion related to acquisition accounting decreased $2.0 million from the prior quarter to $3.9 million for the quarter ended September 30, 2018. The second and third quarters of 2018 and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):
 
Loan Accretion
 
Deposit Accretion
 
Borrowings Amortization
 
Total
For the quarter ended June 30, 2018
$
5,324

 
$
685

 
$
(104
)
 
$
5,905

For the quarter ended September 30, 2018
3,496

 
592

 
(143)

 
3,945

For the remaining three months of 2018 (estimated)
2,401

 
445

 
(161)

 
2,685

For the years ending (estimated):
 
 
 
 
 
 
 
2019
8,481

 
1,170

 
(660)

 
8,991

2020
6,880

 
284

 
(734)

 
6,430

2021
5,520

 
108

 
(805)

 
4,823

2022
4,157

 
21

 
(827)

 
3,351

2023
2,710

 

 
(850)

 
1,860

Thereafter
9,751

 

 
(11,633)

 
(1,882)


(2) For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.




ASSET QUALITY/LOAN LOSS PROVISION

Overview
During the third quarter of 2018, the Company experienced increases in nonperforming asset (“NPA”) balances from the prior quarter, primarily due to nonaccrual additions related to one credit relationship composed of construction loans. Past due loan levels as a percentage of total loans held for investment at September 30, 2018 were higher than past due loan levels at June 30, 2018 and were down slightly from September 30, 2017. Charge-off levels increased from the second quarter of 2018 and were primarily related to the consumer loan portfolio; as a result, the provision for loan losses increased from the second quarter of 2018.

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $94.7 million (net of fair value mark of $24.3 million) at September 30, 2018.

Nonperforming Assets
At September 30, 2018, NPAs totaled $34.9 million, an increase of $2.0 million, or 6.1%, from June 30, 2018 and an increase of $8.3 million, or 31.4%, from September 30, 2017. NPAs as a percentage of total outstanding loans at September 30, 2018 was 0.37%, an increase of 2 basis points from 0.35% at June 30, 2018 and a decline of 2 basis points from 0.39% at September 30, 2017. As the Company's NPAs have been at or near historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but do not have a significant impact on the Company's overall asset quality position.

The following table shows a summary of nonperforming asset balances at the quarter ended (dollars in thousands):
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
Nonaccrual loans
$
28,110

 
$
25,662

 
$
25,138

 
$
21,743

 
$
20,122

Foreclosed properties
6,800

 
7,241

 
8,079

 
5,253

 
6,449

Total nonperforming assets
$
34,910

 
$
32,903

 
$
33,217

 
$
26,996

 
$
26,571


The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
Beginning Balance
$
25,662

 
$
25,138

 
$
21,743

 
$
20,122

 
$
24,574

Net customer payments
(2,459
)
 
(2,651
)
 
(1,455
)
 
(768
)
 
(4,642
)
Additions
6,268

 
5,063

 
5,451

 
4,335

 
4,114

Charge-offs
(1,137
)
 
(539
)
 
(403
)
 
(1,305
)
 
(3,376
)
Loans returning to accruing status
(70
)
 
(1,349
)
 
(182
)
 
(448
)
 

Transfers to foreclosed property
(154
)
 

 
(16
)
 
(193
)
 
(548
)
Ending Balance
$
28,110

 
$
25,662

 
$
25,138

 
$
21,743

 
$
20,122


Of the nonaccrual additions in the third quarter of 2018, the majority related to one credit relationship, which consisted of construction loans.




The following table shows the activity in foreclosed properties for the quarter ended (dollars in thousands):
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
2018
 
2018
 
2018
 
2017
 
2017
Beginning Balance
$
7,241

 
$
8,079

 
$
5,253

 
$
6,449

 
$
6,828

Additions of foreclosed property
165

 
283

 
44

 
325

 
621

Acquisitions of foreclosed property (1)

 
(162
)
 
4,204

 

 

Valuation adjustments
(42
)
 
(383
)
 
(759
)
 
(1,046
)
 
(249
)
Proceeds from sales
(889
)
 
(580
)
 
(684
)
 
(479
)
 
(648
)
Gains (losses) from sales
325

 
4

 
21

 
4

 
(103
)
Ending Balance
$
6,800

 
$
7,241

 
$
8,079

 
$
5,253

 
$
6,449

(1) Includes subsequent measurement period adjustments.

Past Due Loans
Past due loans still accruing interest totaled $46.6 million, or 0.49% of total loans, at September 30, 2018 compared to $38.2 million, or 0.41% of total loans, at June 30, 2018 and $34.4 million, or 0.50% of total loans, at September 30, 2017. Of the total past due loans still accruing interest, $9.5 million, or 0.10% of total loans, were loans past due 90 days or more at September 30, 2018, compared to $6.9 million, or 0.07% of total loans, at June 30, 2018 and $4.5 million, or 0.07% of total loans, at September 30, 2017.

Net Charge-offs
For the third quarter of 2018, net charge-offs were $3.2 million, or 0.13% of total average loans on an annualized basis, compared to $1.8 million, or 0.07%, for the prior quarter and $4.1 million, or 0.24%, for the same quarter last year. The majority of net charge-offs in the third quarter of 2018 were related to consumer loans.

Provision for Loan Losses
The provision for loan losses for the third quarter of 2018 was $3.1 million, an increase of $440,000 compared to the previous quarter and an increase of $44,000 compared to the same quarter in 2017. The increase in provision for loan losses from the second quarter of 2018 was primarily driven by higher levels of net charge-offs in the third quarter of 2018.

Allowance for Loan Losses (“ALL”)
The ALL at September 30, 2018 was consistent with the prior quarter at $41.3 million. The ALL as a percentage of the total loan portfolio was 0.44% at both September 30, 2018 and June 30, 2018 and was 0.54% at September 30, 2017. The year-over-year 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 146.9% at September 30, 2018, compared to 160.8% at June 30, 2018 and 184.7% at September 30, 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 decreased $20.7 million to $19.9 million for the quarter ended September 30, 2018 from $40.6 million in the prior quarter, primarily driven by the net gain on sale of the Shore Premier Finance division recognized during the second quarter of 2018. The initial estimated gain recorded in the second quarter of 2018 was $20.9 million, which was subsequently reduced by $933,000 in the third quarter based on updated information obtained and wind-down costs incurred. Excluding this gain and its subsequent adjustment from their respective quarters, noninterest income increased $1.1 million, or 5.7%, for the quarter ended September 30, 2018 when compared to the prior quarter. Customer-related fee income increased $1.1 million, primarily due to the acquisition of Outfitter Advisors, Inc. as well as higher overdraft, letter of credit, and debit card interchange fees.





NONINTEREST EXPENSE

Noninterest expense decreased $8.8 million to $76.3 million for the quarter ended September 30, 2018 from $85.1 million in the prior quarter. Excluding merger-related costs of $1.4 million and $8.3 million in the third and second quarters of 2018, respectively, operating noninterest expense(3) decreased $1.9 million, or 2.5%, to $74.9 million when compared to the second quarter of 2018. The decrease in operating noninterest expense included a decline in salaries and benefits of $1.5 million, primarily due to planned synergies arising from the core system conversion from the Xenith acquisition that occurred in the second quarter, partially offset by increased incentive plan expenses of $408,000 recorded in the third quarter of 2018. Other real estate owned (“OREO”) and credit-related expenses declined $670,000 related to higher gains on sales of property and lower valuation adjustments in the third quarter compared to the second quarter of 2018. Additionally, FDIC premiums and other insurance costs declined $519,000 compared to the second quarter of 2018. Included in operating noninterest expense were branch closure costs of approximately $475,000 related to the consolidation of seven branches in the third quarter of 2018, $714,000 in costs related to executive management changes during the quarter, as well as operating losses of $463,000 related to a community development investment fund.

(3) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

INCOME TAXES

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law in December 2017. 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 made on a preliminary basis. 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 third quarter of 2018.

The effective tax rate for the three months ended September 30, 2018 was 15.9% compared to 19.0% for the three months ended June 30, 2018. The decrease in the effective tax rate was primarily due to tax-exempt income being a higher component of pre-tax income in the third quarter of 2018 compared to the second quarter of 2018.

BALANCE SHEET

At September 30, 2018, total assets were $13.4 billion, an increase of $305.6 million from June 30, 2018, primarily a result of increases in the investment securities portfolio and loan growth during the third quarter of 2018, partially offset by lower cash and cash equivalent balances.

At September 30, 2018, total investments were $2.3 billion, an increase of $519.6 million from June 30, 2018, primarily the result of reinvesting the proceeds received at the end of the second quarter from the sale of Shore Premier Finance loans and certain third party lending loans into the investment securities portfolio during the third quarter of 2018.

At September 30, 2018, loans held for investment (net of deferred fees and costs) were $9.4 billion, an increase of $121.3 million, or 5.2% (annualized), from June 30, 2018, while average loans decreased $511.9 million from the prior quarter. Adjusted for the sale of the Shore Premier Finance loans and certain third party lending programs loans in the second quarter of 2018, average loans increased $66.8 million, or 2.9% (annualized), during the third quarter of 2018 compared to the prior quarter.

At September 30, 2018, total deposits were $9.8 billion, an increase of $37.4 million, or 1.5% (annualized), from June 30, 2018, while average deposits increased $158.3 million, or 6.6% (annualized), from the prior quarter.




The following table shows the Company's capital ratios at the quarters ended:
 
September 30,
 
June 30,
 
September 30,
 
2018
 
2018
 
2017
Common equity Tier 1 capital ratio (1)
9.92
%
 
9.80%

 
9.40
%
Tier 1 capital ratio (1)
11.12
%
 
11.02%

 
10.56
%
Total capital ratio (1)
12.97
%
 
12.89%

 
12.94
%
Leverage ratio (Tier 1 capital to average assets) (1)
9.89
%
 
9.46%

 
9.52
%
Common equity to total assets
14.06
%
 
14.27
%
 
11.53
%
Tangible common equity to tangible assets (2)
8.74
%
 
8.86
%
 
8.34
%
 
 
 
 
 
 
(1) All ratios at September 30, 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 third quarter of 2018, the Company declared and paid cash dividends of $0.23 per common share, an increase of $0.02, or 9.5%, compared to the second quarter of 2018 and an increase of $0.03, or 15.0%, compared to the third 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 140 branches, seven of which are operated as Xenith Bank, a division of Union Bank & Trust of Richmond, Virginia, and approximately 190 ATMs located throughout Virginia and in portions of Maryland and North Carolina. Non-bank affiliates of the holding company include: 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.

THIRD QUARTER 2018 EARNINGS RELEASE CONFERENCE CALL
Union will hold a conference call on Wednesday, October 17th, 2018 at 9:00 a.m. Eastern Time during which management will review the third quarter 2018 financial results. Interested parties may participate in the 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 8775497.

NON-GAAP FINANCIAL MEASURES
In reporting the results of the quarter and nine months ended September 30, 2018, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis. These non-GAAP financial measures are a supplement to GAAP, which is 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 financial measures may not be comparable to non-GAAP financial measures of other companies. The Company uses the non-GAAP financial measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance. For a reconciliation of these measures to their most directly comparable GAAP measures and additional information about these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.




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 include, without limitation, projections, predictions, expectations, or beliefs about future events or results that are not statements of historical fact. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements.  Forward-looking statements are often accompanied by words that convey projected future events or outcomes 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 Union and its management about future events.  Although Union 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 Union will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to:

changes in interest rates;
general economic and financial market conditions in the United States generally and particularly in the markets in which Union operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth;
Union’s ability to manage its growth or implement its growth strategy;
the ability to obtain regulatory, shareholder or other approvals or other conditions to closing the Pending Merger on a timely basis or at all, the ability to close the Pending Merger on the expected timeframe, or at all, that closing may be more difficult, time-consuming or costly than expected, and that if the Pending Merger is consummated, the businesses of Union and Access may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected;
Union’s ability to recruit and retain key employees;
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 Union’s credit processes and management of Union’s credit risk;
demand for loan products and financial services in Union’s market area;
Union’s ability to compete in the market for financial services;
technological risks and developments, and cyber threats, attacks, or events;
performance by Union’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 Union's tax assets and liabilities;
any future refinements to Union's preliminary analysis of the impact of the Tax Act on Union;
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;
changes to applicable accounting principles and guidelines; and
other factors, many of which are beyond the control of Union.

Please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Union’s Annual Report on Form 10-K for the year ended December 31, 2017 and comparable “Risk Factors” sections of Union’s Quarterly Reports on Form 10-Q and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The



actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on Union or its businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and Union does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.





UNION BANKSHARES CORPORATION AND SUBSIDIARIES
 
 
 
 
KEY FINANCIAL RESULTS
 
 
 
 
(Dollars in thousands, except share data)
 
 
 
 
 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/18
 
6/30/18
 
9/30/17
 
9/30/18
 
9/30/17
Results of Operations
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Interest and dividend income
$
131,363

 
$
132,409

 
$
84,499

 
$
388,151

 
$
241,865

Interest expense
25,400

 
24,241

 
13,652

 
70,549

 
35,947

Net interest income
105,963

 
108,168

 
70,847

 
317,602

 
205,918

Provision for credit losses
3,340

 
2,147

 
3,056

 
9,011

 
7,344

Net interest income after provision for credit losses
102,623

 
106,021

 
67,791

 
308,591

 
198,574

Noninterest income
19,887

 
40,597

 
15,230

 
80,752

 
47,305

Noninterest expenses
76,349

 
85,140

 
55,204

 
263,234

 
167,871

Income before income taxes
46,161

 
61,478

 
27,817

 
126,109

 
78,008

Income tax expense
7,399

 
11,678

 
7,397

 
20,973

 
20,924

Income from continuing operations
38,762

 
49,800

 
20,420

 
105,136

 
57,084

Discontinued operations, net of tax
(565
)
 
(2,473
)
 
238

 
(2,973
)
 
653

Net income
$
38,197

 
$
47,327

 
$
20,658

 
$
102,163

 
$
57,737

 
 
 
 
 
 
 
 
 
 
Interest earned on earning assets (FTE) (1)
$
133,377

 
$
134,417

 
$
87,498

 
$
394,011

 
$
250,548

Net interest income (FTE) (1)
107,977

 
110,176

 
73,846

 
323,462

 
214,601

 
 
 
 
 
 
 
 
 
 
Key Ratios
 
 
 
 
 
 
 
 
 
Earnings per common share, diluted
$
0.58

 
$
0.72

 
$
0.47

 
$
1.55

 
$
1.32

Return on average assets (ROA)
1.17
%
 
1.44
%
 
0.91
%
 
1.05
%
 
0.88
%
Return on average equity (ROE)
8.06
%
 
10.28
%
 
7.90
%
 
7.38
%
 
7.53
%
Return on average tangible common equity (ROTCE) (2)
13.73
%
 
17.74
%
 
11.34
%
 
12.71
%
 
10.90
%
Efficiency ratio
60.67
%
 
57.23
%
 
64.13
%
 
66.08
%
 
66.29
%
Efficiency ratio (FTE) (1)
59.71
%
 
56.47
%
 
61.97
%
 
65.12
%
 
64.10
%
Net interest margin
3.69
%
 
3.72
%
 
3.44
%
 
3.69
%
 
3.47
%
Net interest margin (FTE) (1)
3.76
%
 
3.79
%
 
3.59
%
 
3.76
%
 
3.62
%
Yields on earning assets (FTE) (1)
4.65
%
 
4.62
%
 
4.25
%
 
4.58
%
 
4.23
%
Cost of interest-bearing liabilities (FTE) (1)
1.15
%
 
1.06
%
 
0.85
%
 
1.05
%
 
0.78
%
Cost of funds (FTE) (1)
0.89
%
 
0.83
%
 
0.66
%
 
0.82
%
 
0.61
%
 
 
 
 
 
 
 
 
 
 
Operating Measures (3)
 
 
 
 
 
 
 
 
 
Net operating earnings
$
39,326

 
$
53,864

 
$
21,319

 
$
132,065

 
$
60,757

Operating earnings per share, diluted
$
0.60

 
$
0.82

 
$
0.49

 
$
2.01

 
$
1.39

Operating ROA
1.21
%
 
1.63
%
 
0.94
%
 
1.35
%
 
0.93
%
Operating ROE
8.30
%
 
11.69
%
 
8.15
%
 
9.54
%
 
7.93
%
Operating ROTCE
14.14
%
 
20.19
%
 
11.70
%
 
16.44
%
 
11.47
%
Operating efficiency ratio (FTE) (1)
58.59
%
 
50.98
%
 
61.15
%
 
55.87
%
 
62.77
%
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
Earnings per common share, basic
$
0.58

 
$
0.72

 
$
0.47

 
$
1.55

 
$
1.32

Earnings per common share, diluted
0.58

 
0.72

 
0.47

 
1.55

 
1.32

Cash dividends paid per common share
0.23

 
0.21

 
0.20

 
0.65

 
0.60

Market value per share
38.53

 
38.88

 
35.30

 
38.53

 
35.30

Book value per common share
28.68

 
28.47

 
24.00

 
28.68

 
24.00

Tangible book value per common share (2)
16.79

 
16.62

 
16.76

 
16.79

 
16.76

Price to earnings ratio, diluted
16.74

 
13.46

 
18.93

 
18.59

 
20.00

Price to book value per common share ratio
1.34

 
1.37

 
1.47

 
1.34

 
1.47

Price to tangible book value per common share ratio (2)
2.29

 
2.34

 
2.11

 
2.29

 
2.11

Weighted average common shares outstanding, basic
65,974,702

 
65,919,055

 
43,706,635

 
65,817,668

 
43,685,045

Weighted average common shares outstanding, diluted
66,013,152

 
65,965,577

 
43,792,058

 
65,873,202

 
43,767,502

Common shares outstanding at end of period
65,982,669

 
65,939,375

 
43,729,229

 
65,982,669

 
43,729,229






 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/18
 
6/30/18
 
9/30/17
 
9/30/18
 
9/30/17
Capital Ratios
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Common equity Tier 1 capital ratio (4)
9.92
%
 
9.80
%
 
9.40
%
 
9.92
%
 
9.40
%
Tier 1 capital ratio (4)
11.12
%
 
11.02
%
 
10.56
%
 
11.12
%
 
10.56
%
Total capital ratio (4)
12.97
%
 
12.89
%
 
12.94
%
 
12.97
%
 
12.94
%
Leverage ratio (Tier 1 capital to average assets) (4)
9.89
%
 
9.46
%
 
9.52
%
 
9.89
%
 
9.52
%
Common equity to total assets
14.06
%
 
14.27
%
 
11.53
%
 
14.06
%
 
11.53
%
Tangible common equity to tangible assets (2)
8.74
%
 
8.86
%
 
8.34
%
 
8.74
%
 
8.34
%
 
 
 
 
 
 
 
 
 
 
Financial Condition
 
 
 
 
 
 
 
 
 
Assets
$
13,371,742

 
$
13,066,106

 
$
9,029,436

 
$
13,371,742

 
$
9,029,436

Loans held for investment
9,411,598

 
9,290,259

 
6,898,729

 
9,411,598

 
6,898,729

Earning Assets
11,808,717

 
11,494,113

 
8,232,413

 
11,808,717

 
8,232,413

Goodwill
727,699

 
725,195

 
298,191

 
727,699

 
298,191

Amortizable intangibles, net
51,563

 
51,211

 
16,017

 
51,563

 
16,017

Deposits
9,834,695

 
9,797,272

 
6,881,826

 
9,834,695

 
6,881,826

Stockholders' equity
1,880,029

 
1,864,870

 
1,041,371

 
1,880,029

 
1,041,371

Tangible common equity (2)
1,100,767

 
1,088,464

 
727,163

 
1,100,767

 
727,163

 
 
 
 
 
 
 
 
 
 
Loans held for investment, net of deferred fees and costs
 
 
 
 
 
 
 
 
 
Construction and land development
$
1,178,054

 
$
1,250,448

 
$
841,738

 
$
1,178,054

 
$
841,738

Commercial real estate - owner occupied
1,283,125

 
1,293,791

 
903,523

 
1,283,125

 
903,523

Commercial real estate - non-owner occupied
2,427,251

 
2,318,589

 
1,748,039

 
2,427,251

 
1,748,039

Multifamily real estate
542,662

 
541,730

 
368,686

 
542,662

 
368,686

Commercial & Industrial
1,154,583

 
1,093,771

 
554,522

 
1,154,583

 
554,522

Residential 1-4 Family - commercial
719,798

 
723,945

 
602,937

 
719,798

 
602,937

Residential 1-4 Family - mortgage
611,728

 
607,155

 
480,175

 
611,728

 
480,175

Auto
306,196

 
296,706

 
276,572

 
306,196

 
276,572

HELOC
612,116

 
626,916

 
535,446

 
612,116

 
535,446

Consumer
345,320

 
298,021

 
396,971

 
345,320

 
396,971

Other Commercial
230,765

 
239,187

 
190,120

 
230,765

 
190,120

Total loans held for investment
$
9,411,598

 
$
9,290,259

 
$
6,898,729

 
$
9,411,598

 
$
6,898,729

 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
NOW accounts
$
2,205,262

 
$
2,147,999

 
$
1,851,327

 
$
2,205,262

 
$
1,851,327

Money market accounts
2,704,480

 
2,758,704

 
1,621,443

 
2,704,480

 
1,621,443

Savings accounts
635,788

 
643,894

 
553,082

 
635,788

 
553,082

Time deposits of $100,000 and over
1,078,448

 
1,019,577

 
621,070

 
1,078,448

 
621,070

Other time deposits
1,020,830

 
1,034,171

 
699,755

 
1,020,830

 
699,755

Total interest-bearing deposits
$
7,644,808

 
$
7,604,345

 
$
5,346,677

 
$
7,644,808

 
$
5,346,677

Demand deposits
2,189,887

 
2,192,927

 
1,535,149

 
2,189,887

 
1,535,149

Total deposits
$
9,834,695

 
$
9,797,272

 
$
6,881,826

 
$
9,834,695

 
$
6,881,826

 
 
 
 
 
 
 
 
 
 
Averages
 
 
 
 
 
 
 
 
 
Assets
$
12,947,352

 
$
13,218,227

 
$
8,973,964

 
$
13,061,453

 
$
8,730,815

Loans held for investment
9,297,213

 
9,809,083

 
6,822,498

 
9,594,094

 
6,613,078

Securities
1,966,010

 
1,625,273

 
1,243,904

 
1,720,978

 
1,227,220

Earning assets
11,383,320

 
11,661,189

 
8,167,919

 
11,506,200

 
7,922,944

Deposits
9,803,475

 
9,645,186

 
6,797,840

 
9,638,698

 
6,615,718

Time deposits
2,079,686

 
2,063,414

 
1,289,794

 
2,076,320

 
1,250,180

Interest-bearing deposits
7,635,710

 
7,549,953

 
5,302,226

 
7,559,053

 
5,166,163

Borrowings
1,155,093

 
1,617,322

 
1,080,226

 
1,460,685

 
1,030,500

Interest-bearing liabilities
8,790,803

 
9,167,275

 
6,382,452

 
9,019,738

 
6,196,663

Stockholders' equity
1,880,582

 
1,847,366

 
1,037,792

 
1,851,072

 
1,024,853

Tangible common equity (2)
1,103,530

 
1,069,886

 
722,920

 
1,074,303

 
708,478







 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/18
 
6/30/18
 
9/30/17
 
9/30/18
 
9/30/17
Asset Quality
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Allowance for Loan Losses (ALL)
 
 
 
 
 
 
 
 
 
Beginning balance
$
41,270

 
$
40,629

 
$
38,214

 
$
38,208

 
$
37,192

Add: Recoveries
1,401

 
1,201

 
887

 
4,082

 
2,559

Less: Charge-offs
4,560

 
2,980

 
4,989

 
10,099

 
9,949

Add: Provision for loan losses
3,100

 
2,660

 
3,056

 
9,284

 
7,359

Add: Provision for loan losses included in discontinued operations
83

 
(240
)
 
(6
)
 
(181
)
 
1

Ending balance
$
41,294

 
$
41,270

 
$
37,162

 
$
41,294

 
$
37,162

 
 
 
 
 
 
 
 
 
 
ALL / total outstanding loans
0.44
%
 
0.44
%
 
0.54
%
 
0.44
%
 
0.54
%
Net charge-offs / total average loans
0.13
%
 
0.07
%
 
0.24
%
 
0.08
%
 
0.15
%
Provision / total average loans
0.13
%
 
0.11
%
 
0.18
%
 
0.13
%
 
0.15
%
 
 
 
 
 
 
 
 
 
 
Total PCI loans, net of fair value mark
$
94,746

 
$
101,524

 
$
51,041

 
$
94,746

 
$
51,041

Remaining fair value mark on purchased performing loans
33,428

 
36,207

 
14,602

 
33,428

 
14,602

 
 
 
 
 
 
 
 
 
 
Nonperforming Assets
 
 
 
 
 
 
 
 
 
Construction and land development
$
9,221

 
$
6,485

 
$
5,671

 
$
9,221

 
$
5,671

Commercial real estate - owner occupied
3,202

 
2,845

 
2,205

 
3,202

 
2,205

Commercial real estate - non-owner occupied
1,812

 
3,068

 
2,701

 
1,812

 
2,701

Commercial & Industrial
1,404

 
1,387

 
1,252

 
1,404

 
1,252

Residential 1-4 Family
10,491

 
9,550

 
6,163

 
10,491

 
6,163

Auto
525

 
463

 
174

 
525

 
174

HELOC
1,273

 
1,669

 
1,791

 
1,273

 
1,791

Consumer and all other
182

 
195

 
165

 
182

 
165

Nonaccrual loans
$
28,110

 
$
25,662

 
$
20,122

 
$
28,110

 
$
20,122

Foreclosed property
6,800

 
7,241

 
6,449

 
6,800

 
6,449

Total nonperforming assets (NPAs)
$
34,910

 
$
32,903

 
$
26,571

 
$
34,910

 
$
26,571

Construction and land development
$
442

 
$
144

 
$
54

 
$
442

 
$
54

Commercial real estate - owner occupied
3,586

 
2,512

 
679

 
3,586

 
679

Commercial real estate - non-owner occupied

 

 
298

 

 
298

Commercial & Industrial
256

 
100

 
101

 
256

 
101

Residential 1-4 Family
2,921

 
2,801

 
2,360

 
2,921

 
2,360

Auto
211

 
121

 
143

 
211

 
143

HELOC
1,291

 
570

 
709

 
1,291

 
709

Consumer and all other
825

 
673

 
188

 
825

 
188

Loans ≥ 90 days and still accruing
$
9,532

 
$
6,921

 
$
4,532

 
$
9,532

 
$
4,532

Total NPAs and loans ≥ 90 days
$
44,442

 
$
39,824

 
$
31,103

 
$
44,442

 
$
31,103

NPAs / total outstanding loans
0.37
%
 
0.35
%
 
0.39
%
 
0.37
%
 
0.39
%
NPAs / total assets
0.26
%
 
0.25
%
 
0.29
%
 
0.26
%
 
0.29
%
ALL / nonaccrual loans
146.90
%
 
160.82
%
 
184.68
%
 
146.90
%
 
184.68
%
ALL / nonperforming assets
118.29
%
 
125.43
%
 
139.86
%
 
118.29
%
 
139.86
%
 
 
 
 
 
 
 
 
 
 
Past Due Detail
 
 
 
 
 
 
 
 
 
Construction and land development
$
1,351

 
$
648

 
$
7,221

 
$
1,351

 
$
7,221

Commercial real estate - owner occupied
4,218

 
3,775

 
1,707

 
4,218

 
1,707

Commercial real estate - non-owner occupied
492

 
44

 
909

 
492

 
909

Multifamily real estate
553

 
86

 

 
553

 

Commercial & Industrial
2,239

 
1,921

 
1,558

 
2,239

 
1,558

Residential 1-4 Family
7,041

 
7,142

 
5,633

 
7,041

 
5,633

Auto
2,414

 
2,187

 
2,415

 
2,414

 
2,415

HELOC
4,783

 
2,505

 
1,400

 
4,783

 
1,400

Consumer and all other
2,640

 
2,722

 
3,469

 
2,640

 
3,469

Loans 30-59 days past due
$
25,731

 
$
21,030

 
$
24,312

 
$
25,731

 
$
24,312






 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/18
 
6/30/18
 
9/30/17
 
9/30/18
 
9/30/17
Past Due Detail cont'd
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Construction and land development
$
1,826

 
$
292

 
$
54

 
$
1,826

 
$
54

Commercial real estate - owner occupied
539

 
1,819

 
679

 
539

 
679

Commercial real estate - non-owner occupied

 

 
298

 

 
298

Commercial & Industrial
428

 
1,567

 
101

 
428

 
101

Residential 1-4 Family
5,685

 
3,742

 
2,360

 
5,685

 
2,360

Auto
299

 
419

 
143

 
299

 
143

HELOC
1,392

 
1,622

 
709

 
1,392

 
709

Consumer and all other
1,140

 
761

 
188

 
1,140

 
188

Loans 60-89 days past due
$
11,309

 
$
10,222

 
$
4,532

 
$
11,309

 
$
4,532

 
 
 
 
 
 
 
 
 
 
Troubled Debt Restructurings
 
 
 
 
 
 
 
 
 
Performing
$
19,854

 
$
15,696

 
$
16,519

 
$
19,854

 
$
16,519

Nonperforming
8,425

 
4,001

 
2,725

 
8,425

 
2,725

Total troubled debt restructurings
$
28,279

 
$
19,697

 
$
19,244

 
$
28,279

 
$
19,244

 
 
 
 
 
 
 
 
 
 
Alternative Performance Measures (non-GAAP)
 
 
 
 
 
 
 
 
 
Net interest income (FTE)
 
 
 
 
 
 
 
 
 
Net interest income (GAAP)
$
105,963

 
$
108,168

 
$
70,847

 
$
317,602

 
$
205,918

FTE adjustment
2,014

 
2,008

 
2,999

 
5,860

 
8,683

Net interest income (FTE) (non-GAAP) (1)
$
107,977

 
$
110,176

 
$
73,846

 
$
323,462

 
$
214,601

Average earning assets
11,383,320

 
11,661,189

 
8,167,919

 
11,506,200

 
7,922,944

Net interest margin
3.69
%
 
3.72
%
 
3.44
%
 
3.69
%
 
3.47
%
Net interest margin (FTE) (1)
3.76
%
 
3.79
%
 
3.59
%
 
3.76
%
 
3.62
%
 
 
 
 
 
 
 
 
 
 
Tangible Assets
 
 
 
 
 
 
 
 
 
Ending assets (GAAP)
$
13,371,742

 
$
13,066,106

 
$
9,029,436

 
$
13,371,742

 
$
9,029,436

Less: Ending goodwill
727,699

 
725,195

 
298,191

 
727,699

 
298,191

Less: Ending amortizable intangibles
51,563

 
51,211

 
16,017

 
51,563

 
16,017

Ending tangible assets (non-GAAP)
$
12,592,480

 
$
12,289,700

 
$
8,715,228

 
$
12,592,480

 
$
8,715,228

 
 
 
 
 
 
 
 
 
 
Tangible Common Equity (2)
 
 
 
 
 
 
 
 
 
Ending equity (GAAP)
$
1,880,029

 
$
1,864,870

 
$
1,041,371

 
$
1,880,029

 
$
1,041,371

Less: Ending goodwill
727,699

 
725,195

 
298,191

 
727,699

 
298,191

Less: Ending amortizable intangibles
51,563

 
51,211

 
16,017

 
51,563

 
16,017

Ending tangible common equity (non-GAAP)
$
1,100,767

 
$
1,088,464

 
$
727,163

 
$
1,100,767

 
$
727,163

 
 
 
 
 
 
 
 
 
 
Average equity (GAAP)
$
1,880,582

 
$
1,847,366

 
$
1,037,792

 
$
1,851,072

 
$
1,024,853

Less: Average goodwill
723,785

 
726,934

 
298,191

 
724,940

 
298,191

Less: Average amortizable intangibles
53,267

 
50,546

 
16,681

 
51,829

 
18,184

Average tangible common equity (non-GAAP)
$
1,103,530

 
$
1,069,886

 
$
722,920

 
$
1,074,303

 
$
708,478

 
 
 
 
 
 
 
 
 
 
Operating Measures (3)
 
 
 
 
 
 
 
 
 
Net income (GAAP)
$
38,197

 
$
47,327

 
$
20,658

 
$
102,163

 
$
57,737

Plus: Merger-related costs, net of tax
1,129

 
6,537

 
661

 
29,902

 
3,020

Net operating earnings (non-GAAP)
$
39,326

 
$
53,864

 
$
21,319

 
$
132,065

 
$
60,757

 
 
 
 
 
 
 
 
 
 
Noninterest expense (GAAP)
$
76,349

 
$
85,140

 
$
55,204

 
$
263,234

 
$
167,871

Less: Merger-related costs
1,429

 
8,273

 
732

 
37,414

 
3,476

Operating noninterest expense (non-GAAP)
$
74,920

 
$
76,867

 
$
54,472

 
$
225,820

 
$
164,395

 
 
 
 
 
 
 
 
 
 
Net interest income (FTE) (non-GAAP) (1)
$
107,977

 
$
110,176

 
$
73,846

 
$
323,462

 
$
214,601

Noninterest income (GAAP)
19,887

 
40,597

 
15,230

 
80,752

 
47,305

 
 
 
 
 
 
 
 
 
 
Efficiency ratio
60.67
%
 
57.23
%
 
64.13
%
 
66.08
%
 
66.29
%
Efficiency ratio (FTE) (1)
59.71
%
 
56.47
%
 
61.97
%
 
65.12
%
 
64.10
%
Operating efficiency ratio (FTE)
58.59
%
 
50.98
%
 
61.15
%
 
55.87
%
 
62.77
%






 
As of & For Three Months Ended
 
As of & For Nine Months Ended
 
9/30/18
 
6/30/18
 
9/30/17
 
9/30/18
 
9/30/17
Other Data
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
End of period full-time employees
1,621

 
1,702

 
1,427

 
1,621

 
1,427

Number of full-service branches
140

 
147

 
111

 
140

 
111

Number of full automatic transaction machines ("ATMs")
190

 
199

 
173

 
190

 
173


(1) These are non-GAAP financial measures. 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) These are non-GAAP financial measures. 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) These are non-GAAP financial measures. Operating measures exclude merger-related costs unrelated to the Company’s normal operations. The Company believes these measures are useful to investors as they exclude certain costs resulting from acquisition activity and allow investors to more clearly see the combined economic results of the organization's operations.

(4) All ratios at September 30, 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 (UNAUDITED)
 
 
(Dollars in thousands, except share data)
 
 
 
 
 
 
September 30,
 
December 31,
 
September 30,
 
2018
 
2017
 
2017
ASSETS
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
Cash and due from banks
$
143,693

 
$
117,586

 
$
115,776

Interest-bearing deposits in other banks
130,098

 
81,291

 
60,294

Federal funds sold
8,421

 
496

 
891

Total cash and cash equivalents
282,212

 
199,373

 
176,961

Securities available for sale, at fair value
1,883,141

 
974,222

 
968,361

Securities held to maturity, at carrying value
235,333

 
199,639

 
204,801

Marketable equity securities, at fair value
27,375

 

 

Restricted stock, at cost
112,390

 
75,283

 
68,441

Loans held for investment, net of deferred fees and costs
9,411,598

 
7,141,552

 
6,898,729

Less allowance for loan losses
41,294

 
38,208

 
37,162

Net loans held for investment
9,370,304

 
7,103,344

 
6,861,567

Premises and equipment, net
155,001

 
119,604

 
120,380

Goodwill
727,699

 
298,528

 
298,191

Amortizable intangibles, net
51,563

 
14,803

 
16,017

Bank owned life insurance
261,874

 
182,854

 
181,451

Other assets
262,716

 
102,871

 
97,990

Assets of discontinued operations
2,134

 
44,658

 
35,276

Total assets
$
13,371,742

 
$
9,315,179

 
$
9,029,436

LIABILITIES
 
 

 
 
Noninterest-bearing demand deposits
$
2,189,887

 
$
1,502,208

 
$
1,535,149

Interest-bearing deposits
7,644,808

 
5,489,510

 
5,346,677

Total deposits
9,834,695

 
6,991,718

 
6,881,826

Securities sold under agreements to repurchase
40,624

 
49,152

 
43,337

Other short-term borrowings
1,016,250

 
745,000

 
574,000

Long-term borrowings
497,768

 
425,262

 
434,750

Other liabilities
99,757

 
54,008

 
51,385

Liabilities of discontinued operations
2,619

 
3,710

 
2,767

Total liabilities
11,491,713

 
8,268,850

 
7,988,065

Commitments and contingencies
 
 
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
 
 
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 65,982,669 shares, 43,743,318 shares, and 43,729,229 shares, respectively.
87,192

 
57,744

 
57,708

Additional paid-in capital
1,378,940

 
610,001

 
608,884

Retained earnings
438,513

 
379,468

 
373,468

Accumulated other comprehensive income (loss)
(24,616
)
 
(884
)
 
1,311

Total stockholders' equity
1,880,029

 
1,046,329

 
1,041,371

Total liabilities and stockholders' equity
$
13,371,742

 
$
9,315,179

 
$
9,029,436





UNION BANKSHARES CORPORATION AND SUBSIDIARIES
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
(Dollars in thousands, except share data)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
 
2018
 
2018
 
2017
 
2018
 
2017
Interest and dividend income:
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Interest and fees on loans
$
115,817

 
$
119,540

 
$
75,597

 
$
348,009