Richmond, Va., July 22, 2013 /PRNewswire/ --Union First Market Bankshares Corporation (the "Company") (NASDAQ: UBSH) today reported net income of $9.5 million and earnings per share of $0.38 for its second quarter ended June 30, 2013. Excluding acquisition-related expenses of $919,000, operating earnings(1) for the quarter were $10.4 million and operating earnings per share(1) was $0.42. The quarterly results represent an increase of $2.0 million, or 23.3%, in operating earnings from the same quarter of the prior year and an increase of $1.4 million, or 15.6%, from the quarter ended March 31, 2013. Operating earnings per share of $0.42 for the current quarter increased $0.10, or 31.3%, from the prior year's second quarter and increased $0.06, or 16.7%, from the most recent quarter. (Logo: http://photos.prnewswire.com/prnh/20091027/NE00206LOGO)
"Second quarter results demonstrate the progress Union First Market Bankshares is making to deliver top quartile financial performance nationally and provide our shareholders with above average returns on their investment over the long term," said G. William Beale, chief executive officer of Union First Market Bankshares. "In addition to reporting continued improvements in key financial performance metrics, the Company saw consistent growth in net new deposit households and in loan balances. Overall asset quality continues to improve and quarterly net charge-offs were at a four year low. The mortgage company results reflect the changing interest rate environment as well as additional expenses associated with moving the mortgage company's headquarters to Richmond and our proactive efforts to improve the mortgage segment's operating capabilities and profitability. Overall, we are pleased with the Company's performance in the first half of 2013 and are poised to generate strong financial results during the second half of the year."
"During the quarter, we announced the signing of a definitive merger agreement to acquire StellarOne Corporation, which is expected to create the largest community banking institution in the Commonwealth of Virginia. This is exciting news for Union as the combination of two of Virginia's largest community banks provides Union with the growth and synergies to continue to deliver a best in class customer experience, offer superior financial services and solutions, provide a rewarding experience for our teammates and generate top-tier financial performance for our shareholders. We have already started the integration planning work with StellarOne and continue to expect to close the transaction on or around January 1, 2014, subject to customary closing conditions, including regulatory and shareholder approvals."
Select highlights:
- Operating Return on Average Equity(1) increased to 9.58% for the quarter ended June 30, 2013 compared to Return on Average Equity ("ROE") of 7.84% and 8.32% for the same quarter of the prior year and the first quarter of 2013, respectively. Including current quarter acquisition-related costs, ROE was 8.73%.
- Operating Return on Average Assets(1) increased to 1.03% for the quarter ended June 30, 2013 compared to Return on Average Assets ("ROA") of 0.86% and 0.90% for the same quarter of the prior year and the first quarter of 2013, respectively. Including current quarter acquisition-related costs, ROA was 0.94%.
- Operating efficiency ratio(1) of 66.73% declined 185 basis points when compared to the prior quarter and 134 basis points when compared to the same quarter of the prior year.
- Loan demand continued to improve with an increase in loans outstanding of $113.1 million, or 3.9%, since June 30, 2012. Loan balances increased $27.3 million, or 3.6% on an annualized basis from the prior quarter.
- During the quarter, the Company added almost 1,100 net new core household accounts consistent with growth in the prior quarter and the 4.4% annualized growth rate in 2012. Deposit balances increased $47.0 million, or 1.5%, from June 30, 2012 whiledeposit balances declined $31.8 million since year end primarily due to net run-off in higher cost time deposits.
- Credit quality metrics continued to improve as nonperforming assets ("NPAs") and the ratio of NPAs compared to total loans declined from the same quarter last year. Net charge-offs declined materially from the same quarter last year and from the most recent quarter.
(1) For a reconciliation of the non-GAAP measures operating earnings, ROA, ROE, EPS, and efficiency ratio, see "Alternative Performance Measures (non-GAAP)" section of the Key Financial Results.
NET INTEREST INCOME
Three Months Ended | ||||||||||||
Dollars in thousands | ||||||||||||
06/30/13 | 03/31/13 | Change | 06/30/12 | Change | ||||||||
Average interest-earning assets | $ | 3,713,392 | $ | 3,735,926 | $ | (22,534) | $ | 3,615,718 | $ | 97,674 | ||
Interest income (FTE) | $ | 43,981 | $ | 44,543 | $ | (562) | $ | 46,340 | $ | (2,359) | ||
Yield on interest-earning assets | 4.75% | 4.84% | (9) | bps | 5.15% | (40) | bps | |||||
Average interest-bearing liabilities | $ | 2,907,523 | $ | 2,956,261 | $ | (48,738) | $ | 2,910,987 | $ | (3,464) | ||
Interest expense | $ | 5,283 | $ | 5,532 | $ | (249) | $ | 7,215 | $ | (1,932) | ||
Cost of interest-bearing liabilities | 0.73% | 0.76% | (3) | bps | 1.00% | (27) | bps | |||||
Cost of funds | 0.57% | 0.60% | (3) | bps | 0.79% | (22) | bps | |||||
Net Interest Income (FTE) | $ | 38,698 | $ | 39,011 | $ | (313) | $ | 39,125 | $ | (427) | ||
Net Interest Margin (FTE) | 4.18% | 4.23% | (5) | bps | 4.36% | (18) | bps | |||||
Core Net Interest Margin (FTE) (1) | 4.14% | 4.18% | (4) | bps | 4.25% | (11) | bps | |||||
(1) Core net interest margin (FTE) excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income. | ||||||||||||
On a linked quarter basis, tax-equivalent net interest income was $38.7 million, a decrease of $313,000, or 0.8%, from the first quarter of 2013. The second quarter tax-equivalent net interest margin declined by 5 basis points to 4.18% from 4.23% in the previous quarter. The change in net interest margin was principally attributable to the continued decline in net accretion on the acquired net earning assets (1 bp) and lower investment and loan yields outpacing the reduction in the cost of interest-bearing liabilities (4 bps). Loan yields continued to be negatively affected by the low rate environment as new and renewed loans were originated and repriced at lower rates. Yields on investment securities were primarily impacted by lower reinvestment rates during the quarter, offset by a shift in mix from taxable securities to higher yielding tax-exempt securities. The cost of interest-bearing liabilities declined during the quarter largely driven by lower time deposit account balances.
For the three months ended June 30, 2013, tax-equivalent net interest income decreased $427,000, or 1.1%, when compared to the same period last year. The tax-equivalent net interest margin decreased by 18 basis points to 4.18% from 4.36% in the prior year. The decline in net interest margin was principally due to the continued decline in accretion on the acquired net earning assets (7 bps) and declines in earning asset yields exceeding the reduction in interest-bearing liabilities rates paid (11 bps). Lower earning asset interest income was principally due to lower yields on loans as new and renewed loans were originated and repriced at lower rates, faster prepayments on mortgage-backed securities, and cash flows from securities investments reinvested at lower yields. The decline in the cost of interest-bearing liabilities from the prior year's first quarter was driven by a shift in mix from time deposits to low cost deposits, reductions in deposit rates and lower wholesale borrowing costs.
The Company believes that its net interest margin will continue to decline modestly over the next several quarters as decreases in earning asset yields are projected to outpace declines in interest-bearing liabilities rates.
Year-over-year results | |||||||
For the Six Months Ended | |||||||
Dollars in thousands | |||||||
06/30/13 | 06/30/12 | Change | |||||
Average interest-earning assets | $ | 3,724,597 | $ | 3,597,115 | $ | 127,482 | |
Interest income (FTE) | $ | 88,524 | $ | 93,259 | $ | (4,735) | |
Yield on interest-earning assets | 4.79% | 5.21% | (42) | bps | |||
Average interest-bearing liabilities | $ | 2,931,758 | $ | 2,909,904 | $ | 21,854 | |
Interest expense | $ | 10,816 | $ | 14,744 | $ | (3,928) | |
Cost of interest-bearing liabilities | 0.74% | 1.02% | (28) | bps | |||
Cost of funds | 0.59% | 0.82% | (23) | bps | |||
Net Interest Income (FTE) | $ | 77,708 | $ | 78,515 | $ | (807) | |
Net Interest Margin (FTE) | 4.21% | 4.39% | (18) | bps | |||
Core Net Interest Margin (FTE) (1) | 4.16% | 4.26% | (10) | bps | |||
(1) Core net interest margin (FTE) excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income. | |||||||
For the six months ended June 30, 2013, tax-equivalent net interest income was $77.7 million, a decrease of $807,000, or 1.0%, when compared to the same period last year. The tax-equivalent net interest margin decreased by 18 basis points to 4.21% from 4.39% in the prior year. The decline in the net interest margin was principally due to the continued decline in accretion on the acquired net earning assets (8 bps) and a decline in the yield on interest-earning assets that outpaced the reduction in the cost of interest-bearing liabilities (10 bps). Lower interest-earning asset income was principally due to lower yields on loans as new loans and renewed loans were originated and repriced at lower rates and declining investment securities yields driven by faster prepayments on mortgage-backed securities and cash flows from securities investments reinvested at lower yields.
The Company's fully taxable equivalent net interest margin includes the impact of acquisition accounting fair value adjustments. The 2013 and remaining estimated discount/premium and net accretion impact are reflected in the following table (dollars in thousands):
Loan Accretion | Certificates of Deposit | Borrowings | Total | |||||||||||
For the quarter ended June 30, 2013 | $ | 534 | $ | 2 | $ | (122) | $ | 414 | ||||||
For the remaining six months of 2013 | 932 | 3 | (245) | 690 | ||||||||||
For the years ending: | ||||||||||||||
2014 | 1,459 | 4 | (489) | 974 | ||||||||||
2015 | 1,002 | - | (489) | 513 | ||||||||||
2016 | 557 | - | (163) | 394 | ||||||||||
2017 | 172 | - | - | 172 | ||||||||||
2018 | 19 | - | - | 19 | ||||||||||
Thereafter | 101 | - | - | 101 | ||||||||||
ASSET QUALITY/LOAN LOSS PROVISION
Overview
During the second quarter, the Company continued to reduce the levels of impaired loans and troubled debt restructurings. Nonperforming assets and past due loans also declined from the same quarter last year. Net charge-offs, the related ratio of net charge-offs to total loans, and the loan loss provision decreased materially from the prior quarter and from the same quarter of the previous year. The allowance to nonperforming loans coverage ratio remained at consistently high levels. The magnitude of any change in the real estate market and its impact on the Company is still largely dependent upon continued recovery of residential housing and commercial real estate and the pace at which the local economies in the Company's operating markets improve.
Nonperforming Assets ("NPAs")
At June 30, 2013, nonperforming assets totaled $62.2 million, a decline of $12.8 million, or 17.1%, from a year ago and an increase of $3.3 million, or 5.6%, from the first quarter. In addition, NPAs as a percentage of total outstanding loans declined 53 basis points from 2.60% a year earlier and increased 9 basis points from 1.98% last quarter to 2.07% in the current quarter.
Nonperforming assets at June 30, 2013 included $27.0 million in nonaccrual loans (excluding purchased impaired loans), a net decrease of $12.2 million, or 31.1%, from June 30, 2012 and an increase of $4.0 million, or 17.4%, from the prior quarter. The current quarter increase relates to one loan relationship, totaling $5.5 million, being placed on nonaccrual status during the second quarter. The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||
Beginning Balance | $ | 23,033 | $ | 26,206 | $ | 32,159 | $ | 39,171 | $ | 42,391 | |||||
Net customer payments | (3,196) | (1,715) | (1,898) | (5,774) | (3,174) | ||||||||||
Additions | 7,934 | 2,694 | 2,306 | 2,586 | 2,568 | ||||||||||
Charge-offs | (476) | (2,262) | (3,388) | (3,012) | (561) | ||||||||||
Loans returning to accruing status | - | (632) | (840) | (812) | (1,803) | ||||||||||
Transfers to OREO | (273) | (1,258) | (2,133) | - | (250) | ||||||||||
Ending Balance | $ | 27,022 | $ | 23,033 | $ | 26,206 | $ | 32,159 | $ | 39,171 | |||||
The following table presents the composition of nonaccrual loans (excluding purchased impaired loans) and the coverage ratio, which is the allowance for loan losses expressed as a percentage of nonaccrual loans, at the quarter ended (dollars in thousands):
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||
Raw Land and Lots | $ | 4,573 | $ | 6,353 | $ | 8,760 | $ | 10,995 | $ | 12,139 | |||||
Commercial Construction | 5,103 | 4,547 | 5,781 | 7,846 | 9,763 | ||||||||||
Commercial Real Estate | 2,716 | 2,988 | 3,018 | 2,752 | 5,711 | ||||||||||
Single Family Investment Real Estate | 2,859 | 2,117 | 3,420 | 4,081 | 3,476 | ||||||||||
Commercial and Industrial | 7,291 | 2,261 | 2,036 | 2,678 | 4,715 | ||||||||||
Other Commercial | 471 | 190 | 193 | 195 | 231 | ||||||||||
Consumer | 4,009 | 4,577 | 2,998 | 3,612 | 3,136 | ||||||||||
Total | $ | 27,022 | $ | 23,033 | $ | 26,206 | $ | 32,159 | $ | 39,171 | |||||
Coverage Ratio | 127.06% | 149.42% | 133.24% | 124.05% | 104.63% | ||||||||||
Nonperforming assets at June 30, 2013 also included $35.2 million in OREO, a decrease of $649,000, or 1.8%, from the prior year and down $725,000, or 2.0%, from the prior quarter. The following table shows the activity in OREO for the quarter ended (dollars in thousands):
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||
Beginning Balance | $ | 35,878 | $ | 32,834 | $ | 34,440 | $ | 35,802 | $ | 37,663 | |||||
Additions | 1,768 | 3,607 | 2,866 | 929 | 3,887 | ||||||||||
Capitalized Improvements | 164 | 30 | 22 | 16 | 23 | ||||||||||
Valuation Adjustments | - | - | (301) | - | - | ||||||||||
Proceeds from sales | (2,515) | (877) | (4,004) | (2,071) | (5,592) | ||||||||||
Gains (losses) from sales | (142) | 284 | (189) | (236) | (179) | ||||||||||
Ending Balance | $ | 35,153 | $ | 35,878 | $ | 32,834 | $ | 34,440 | $ | 35,802 | |||||
The additions to OREO were principally related to raw land and residential real estate; sales from OREO were principally related to residential real estate and former branch property.
The following table presents the composition of the OREO portfolio at the quarter ended (dollars in thousands):
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||
Land | $ | 10,310 | $ | 9,861 | $ | 8,657 | $ | 6,953 | $ | 6,953 | |||||
Land Development | 10,894 | 11,023 | 10,886 | 11,034 | 11,313 | ||||||||||
Residential Real Estate | 7,274 | 7,467 | 7,939 | 9,729 | 10,431 | ||||||||||
Commercial Real Estate | 6,542 | 6,749 | 5,352 | 5,640 | 6,085 | ||||||||||
Former Bank Premises (1) | 133 | 778 | - | 1,084 | 1,020 | ||||||||||
Total | $ | 35,153 | $ | 35,878 | $ | 32,834 | $ | 34,440 | $ | 35,802 | |||||
(1) Includes closed branch property and land previously held for branch sites. | |||||||||||||||
Included in land development is $9.4 million related to a residential community in the Northern Neck region of Virginia, which includes developed residential lots, a golf course, and undeveloped land. Foreclosed properties were adjusted to their fair values at the time of each foreclosure and any losses were taken as loan charge-offs against the allowance for loan losses at that time. OREO asset balances are evaluated at least quarterly by the Bank's Special Asset Loan Committee and any necessary write downs to fair values are recorded as impairment.
Past Due Loans
At June 30, 2013, total accruing past due loans were $29.7 million, or 0.99% of total loans, a decrease from $33.2 million, or 1.15% of total loans, a year ago and an increase from $24.7 million, or 0.83% of total loans, at March 31, 2013.
Charge-offs
For the quarter ended June 30, 2013, net charge-offs of loans were $1.1 million, or 0.14% on an annualized basis, compared to $2.2 million, or 0.31%, for the same quarter last year and $2.6 million, or 0.35%, for the first quarter of 2013. Nearly all net charge-offs in the current quarter were related to consumer loans.
Provision
The provision for loan losses for the current quarter was $1.0 million, a decrease of $2.0 million from the same quarter a year ago and a decrease of $1.1 million from the previous quarter. The decline in provision for loan losses in the current quarter compared to the prior periods is driven by improving asset quality and the impact of lower historical charge-off factors. The provision to loans ratio for the quarter ended June 30, 2013 was 0.13% on an annualized basis compared to 0.42% for the same quarter a year ago and to 0.28% last quarter.
Allowance for Loan Losses
The allowance for loan losses ("ALL") as a percentage of the total loan portfolio, adjusted for acquired loans (non-GAAP), was 1.33% at June 30, 2013, a decrease from 1.74% at June 30, 2012 and 1.36% from the prior quarter. In acquisition accounting, there is no carryover of previously established allowance for loan losses. The allowance for loan losses as a percentage of the total loan portfolio was 1.14% at June 30, 2013, 1.42% at June 30, 2012, and 1.16% at March 31, 2013. The decrease in the allowance and related ratios was primarily attributable to the reduced levels of provision and improving credit quality metrics. The following table shows the loans and related allowance for loans individually and collectively evaluated for impairment for the quarter ended (dollars in thousands):
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||
Loans individually evaluated for impairment | $ | 112,484 | $ | 133,861 | $ | 142,415 | $ | 161,196 | $ | 189,399 | |||||
Related allowance | 6,109 | 5,712 | 6,921 | 11,438 | 11,500 | ||||||||||
ALL to loans individually evaluated for impairment | 5.43% | 4.27% | 4.86% | 7.10% | 6.07% | ||||||||||
Loans collectively evaluated for impairment | $ | 2,888,371 | $ | 2,839,686 | $ | 2,824,432 | $ | 2,747,314 | $ | 2,698,391 | |||||
Related allowance | 28,224 | 28,703 | 27,995 | 28,456 | 29,485 | ||||||||||
ALL to loans collectively evaluated for impairment | 0.98% | 1.01% | 0.99% | 1.04% | 1.09% | ||||||||||
Total loans | $ | 3,000,855 | $ | 2,973,547 | $ | 2,966,847 | $ | 2,908,510 | $ | 2,887,790 | |||||
Related allowance | 34,333 | 34,415 | 34,916 | 39,894 | 40,985 | ||||||||||
ALL to total loans | 1.14% | 1.16% | 1.18% | 1.37% | 1.42% | ||||||||||
Impaired loans (individually and collectively evaluated for impairment) have declined from $201.3 million at June 30, 2012 and from $145.7 million at March 31, 2013 to $133.8 million at June 30, 2013. The nonaccrual loan coverage ratio remained strong at 127.1% at June 30, 2013, an increase from 104.6% the same quarter last year but a decrease from 149.4% at March 31, 2013. The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on loans, net charge-off activity, loan growth, delinquency trends, and other credit risk factors that the Company considers in assessing the adequacy of the allowance for loan losses.
Troubled Debt Restructurings ("TDRs")
Loans classified as TDRs as of June 30, 2013 totaled $53.0 million, a decline of $27.2 million, or 33.9%, from $80.2 million at June 30, 2012 and a decrease of $1.7 million, or 3.1%, from $54.7 million at March 31, 2013. Of the $53.0 million of TDRs at June 30, 2013, $39.8 million, or 75.1%, were considered performing while the remaining $13.2 million were considered nonperforming. The decline in the TDR balance from the prior quarter is attributable to $4.7 million being removed from TDR status and $2.9 million in net payments, partially offset by additions of $5.9 million. Loans removed from TDR status represent restructured loans with a market rate of interest at the time of the restructuring, which were performing in accordance with their modified terms for a consecutive twelve month period and that were no longer considered impaired.
The following table shows the Company's performing and nonperforming TDRs by modification type for the quarter ended (dollars in thousands):
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||
Performing | |||||||||||||||
Modified to interest only, at a market rate | $ | 1,883 | $ | 2,071 | $ | 1,877 | $ | 1,437 | $ | 2,191 | |||||
Term modification, at a market rate | 27,829 | 30,380 | 38,974 | 39,195 | 53,905 | ||||||||||
Term modification, below market rate | 7,724 | 7,803 | 8,227 | 8,911 | 9,004 | ||||||||||
Interest rate modification, below market rate | 2,390 | 2,390 | 2,390 | 2,390 | 2,390 | ||||||||||
Total performing | $ | 39,826 | $ | 42,644 | $ | 51,468 | $ | 51,933 | $ | 67,490 | |||||
Nonperforming | |||||||||||||||
Modified to interest only, at a market rate | $ | 1,191 | $ | 1,275 | $ | 672 | $ | 920 | $ | 642 | |||||
Term modification, at a market rate | 4,225 | 2,940 | 3,653 | 3,288 | 3,451 | ||||||||||
Term modification, below market rate | 7,794 | 7,797 | 7,666 | 7,672 | 8,587 | ||||||||||
Total nonperforming | $ | 13,210 | $ | 12,012 | $ | 11,991 | $ | 11,880 | $ | 12,680 | |||||
Total performing & nonperforming | $ | 53,036 | $ | 54,656 | $ | 63,459 | $ | 63,813 | $ | 80,170 | |||||
NONINTEREST INCOME
For the Three Months Ended | ||||||||||||
Dollars in thousands | ||||||||||||
06/30/13 | 03/31/13 | $ | % | 06/30/12 | $ | % | ||||||
Noninterest income: | ||||||||||||
Service charges on deposit accounts | $ | 2,346 | $ | 2,272 | $ | 74 | 3.3% | $ | 2,291 | $ | 55 | 2.4% |
Other service charges, commissions and fees | 3,222 | 2,807 | 415 | 14.8% | 2,774 | 448 | 16.1% | |||||
Losses (gains) on securities transactions, net | 53 | (11) | 64 | NM | 10 | 43 | 430.0% | |||||
Gains on sales of mortgage loans, net of commissions | 4,668 | 3,852 | 816 | 21.2% | 3,832 | 836 | 21.8% | |||||
Gains (losses) on bank premises, net | (34) | (296) | 262 | NM | 373 | (407) | NM | |||||
Other operating income | 1,044 | 1,211 | (167) | -13.8% | 973 | 71 | 7.3% | |||||
Total noninterest income | $ | 11,299 | $ | 9,835 | $ | 1,464 | 14.9% | $ | 10,253 | $ | 1,046 | 10.2% |
Mortgage segment operations | $ | (4,668) | $ | (3,856) | $ | (812) | 21.1% | $ | (3,833) | $ | (835) | 21.8% |
Intercompany eliminations | 167 | 167 | - | 0.0% | 117 | 50 | 42.7% | |||||
Community Bank segment | $ | 6,798 | $ | 6,146 | $ | 652 | 10.6% | $ | 6,537 | $ | 261 | 4.0% |
NM - Not Meaningful | ||||||||||||
On a linked quarter basis, noninterest income increased $1.5 million, or 14.9%, to $11.3 million from $9.8 million in the first quarter. Other services charges, commissions and fees, increased $415,000 primarily due to increased revenue on retail investment products and higher net interchange fees. Gains on sales of mortgage loans, net of commissions, increased $816,000, or 21.2%, as mortgage loan originations increased by $30.0 million, or 11.2%, in the current quarter to $298.2 million from $268.2 million in the first quarter. Losses on bank premises decreased $262,000 largely due to the write down of a former branch location in the first quarter. Other operating income decreased $167,000 primarily due to elevated insurance related revenue during the first quarter. Excluding mortgage segment operations, noninterest income increased $652,000, or 10.6%.
For the quarter ended June 30, 2013, noninterest income increased $1.0 million, or 10.2%, to $11.3 million from $10.3 million in the prior year's second quarter. Other service charges, commissions and fees increased $448,000 primarily due to increased revenue on retail investment products and letter of credit related fees. Gains on sales of mortgage loans, net of commissions, increased $836,000, or 21.8%, due to higher origination volumes, primarily a result of additional loan originators hired in 2012. Gains on bank premises declined due to branch sales gains recognized during the second quarter of 2012. Excluding mortgage segment operations, noninterest income increased $261,000, or 4.0%, from the same period a year ago.
For the Six Months Ended | |||||||
Dollars in thousands | |||||||
06/30/13 | 06/30/12 | $ | % | ||||
Noninterest income: | |||||||
Service charges on deposit accounts | $ | 4,618 | $ | 4,421 | $ | 197 | 4.5% |
Other service charges, commissions and fees | 6,029 | 5,346 | 683 | 12.8% | |||
Gains on securities transactions | 42 | 5 | 37 | NM | |||
Gains on sales of mortgage loans, net of commissions | 8,520 | 6,597 | 1,923 | 29.1% | |||
Gains (losses) on bank premises | (330) | 343 | (673) | NM | |||
Other operating income | 2,254 | 2,017 | 237 | 11.8% | |||
Total noninterest income | $ | 21,133 | $ | 18,729 | $ | 2,404 | 12.8% |
Mortgage segment operations | $ | (8,522) | $ | (6,600) | $ | (1,922) | 29.1% |
Intercompany eliminations | 334 | 234 | 100 | 42.7% | |||
Community Bank segment | $ | 12,945 | $ | 12,363 | $ | 582 | 4.7% |
NM - Not Meaningful | |||||||
For the six months ending June 30, 2013, noninterest income increased $2.4 million, or 12.8%, to $21.1 million, from $18.7 million a year ago. Service charges on deposit accounts increased $197,000 primarily related to higher overdraft and returned check fees. Other account service charges and fees increased $683,000 due to higher net interchange fee income, revenue on retail investment products, and fees on letters of credit. Gains on sales of mortgage loans, net of commissions, increased $1.9 million driven by an increase in loan origination volume, a result of additional loan originators hired in 2012 and historically low interest rates. Conversely, gains on bank premises decreased $673,000 as the Company recorded a loss in the current year on the closure of bank premises coupled with gains in the prior year related to sale of bank premises. Other operating income increased $237,000 primarily related to increased income on bank owned life insurance and insurance related revenues. Excluding mortgage segment operations, noninterest income increased $582,000, or 4.7%, from the same period a year ago.
NONINTEREST EXPENSE
For the Three Months Ended | ||||||||||||
Dollars in thousands | ||||||||||||
06/30/13 | 03/31/13 | $ | % | 06/30/12 | $ | % | ||||||
Noninterest expense: | ||||||||||||
Salaries and benefits | $ | 17,912 | $ | 17,966 | $ | (54) | -0.3% | $ | 16,935 | $ | 977 | 5.8% |
Occupancy expenses | 2,764 | 2,855 | (91) | -3.2% | 3,092 | (328) | -10.6% | |||||
Furniture and equipment expenses | 1,741 | 1,845 | (104) | -5.6% | 1,868 | (127) | -6.8% | |||||
OREO and credit-related expenses (1) | 984 | 574 | 410 | 71.4% | 1,310 | (326) | -24.9% | |||||
Acquisition-related expenses | 919 | - | 919 | NM | - | 919 | NM | |||||
Other operating expenses | 9,963 | 10,261 | (298) | -2.9% | 10,402 | (439) | -4.2% | |||||
Total noninterest expense | $ | 34,283 | $ | 33,501 | $ | 782 | 2.3% | $ | 33,607 | $ | 676 | 2.0% |
Mortgage segment operations | $ | (4,657) | $ | (4,124) | $ | (533) | 12.9% | $ | (3,338) | $ | (1,319) | 39.5% |
Intercompany eliminations | 167 | 167 | - | 0.0% | 117 | 50 | 42.7% | |||||
Community Bank segment | $ | 29,793 | $ | 29,544 | $ | 249 | 0.8% | $ | 30,386 | $ | (593) | -2.0% |
NM - Not Meaningful | ||||||||||||
(1) OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses. | ||||||||||||
On a linked quarter basis, noninterest expense increased $782,000, or 2.3%, to $34.3 million from $33.5 million when compared to the first quarter. Excluding acquisition-related expenses of $919,000 incurred in the second quarter, noninterest expense decreased $137,000, or 0.4%, from the prior quarter. OREO and credit-related costs increased $410,000 as the Company incurred a loss on the sale of OREO in the current quarter while generating a gain during the prior quarter. Other operating expense decreased $298,000 primarily due to declining core deposit intangible amortization expense. Excluding mortgage segment operations and acquisition related costs, noninterest expense decreased $670,000, or 2.3%, compared to the first quarter.
For the quarter ended June 30, 2013, noninterest expense increased $676,000, or 2.0%, to $34.3 million from $33.6 million for the second quarter of 2012. Excluding of acquisition-related expenses of $919,000, noninterest expense decreased $243,000, or 0.7%, from the prior year. Salaries and benefits expenses increased $997,000 primarily related to the costs associated with the addition of mortgage loan originators and support personnel in 2012 and management incentive payments related to higher earnings. Occupancy expenses decreased $328,000 primarily due to branch closures in 2012. OREO and credit-related costs decreased $326,000 from the prior year's second quarter primarily due to declines in problem loan related legal fees and foreclosure related costs as asset quality continues to improve. Other operating expenses were lower by $439,000 primarily related to declining core deposit intangible amortization expense. Excluding mortgage segment operations and acquisition related costs, noninterest expense decreased $1.5 million, or 5.0%, compared to the second quarter of 2012.
For the Six Months Ended | ||||||||||||||
Dollars in thousands | ||||||||||||||
06/30/13 | 06/30/12 | $ | % | |||||||||||
Noninterest expense: | ||||||||||||||
Salaries and benefits | $ | 35,878 | $ | 33,911 | $ | 1,967 | 5.8% | |||||||
Occupancy expenses | 5,619 | 5,739 | (120) | -2.1% | ||||||||||
Furniture and equipment expenses | 3,585 | 3,631 | (46) | -1.3% | ||||||||||
OREO and credit-related expenses (1) | 1,558 | 2,238 | (680) | -30.4% | ||||||||||
Acquisition-related expenses | 919 | - | 919 | NM | ||||||||||
Other operating expenses | 20,224 | 20,355 | (131) | -0.6% | ||||||||||
Total noninterest expense | $ | 67,783 | $ | 65,874 | $ | 1,909 | 2.9% | |||||||
Mortgage segment operations | $ | (8,779) | $ | (6,039) | $ | (2,740) | 45.4% | |||||||
Intercompany eliminations | 334 | 234 | 100 | 42.7% | ||||||||||
Community Bank segment | $ | 59,338 | $ | 60,069 | $ | (731) | -1.2% | |||||||
NM - Not Meaningful | ||||||||||||||
(1) OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses. | ||||||||||||||
For the six months ending June 30, 2013, noninterest expense increased $1.9 million, or 2.9% to $67.8 million, from $65.9 million a year ago. Excluding acquisition-related expenses of $919,000, noninterest expense increased $990,000, or 1.5%, from the prior year period. Salaries and benefits expense increased $2.0 million due to the addition of mortgage loan originators and support personnel hired in 2012, group insurance cost increases, and severance expense recorded in the current quarter related to the relocation of Union Mortgage Group's headquarters to Richmond. OREO and related costs decreased $680,000, or 30.4%, due to gains on sales of OREO and declines in problem loan legal fees and foreclosure related costs as asset quality continues to improve. Excluding mortgage segment operations and acquisition related costs, noninterest expense declined $1.7 million, or 2.7%, compared to the same period in 2012.
BALANCE SHEET
At June 30, 2013, total assets were $4.1 billion, an increase of $5.4 million from March 31, 2013, and an increase of $74.3 million from June 30, 2012. Total cash and cash equivalents were $71.5 million at June 30, 2013, a decrease of $837,000 from the same period last year, and a decrease of $5.3 million from March 31, 2013. Investment in securities declined $45.2 million, or 7.2%, from $627.5 million at June 30, 2012 to $582.3 million at June 30, 2013, and decreased $905,000 from March 31, 2013. Mortgage loans held for sale were $109.4 million, an increase of $9.3 million from June 30, 2012, but a decline of $17.7 million from March 31, 2013.
At June 30, 2013, loans (net of unearned income) were $3.0 billion, an increase of $113.1 million, or 3.9% from June 30, 2012, and an increase of $27.3 million, or 0.9%, from March 31, 2013.
As of June 30, 2013, total deposits were $3.3 billion, an increase of $47.0 million, or 1.5%, when compared to June 30, 2012, and a decrease of $45.8 million from March 31, 2013. Year over year deposit growth was driven by increases in low cost deposit levels, which grew $76.5 million, while the drop in linked quarter deposits was driven by lower time deposit balances of $39.7 million.
Net short term borrowings declined as a result of lower mortgage loans held for sale funding requirements during the quarter. During the third quarter of 2012, the Company modified its fixed rate convertible Federal Home Loan Bank of Atlanta ("FHLB") advances to floating rate advances, which resulted in reducing the Company's FHLB borrowing costs. In connection with this modification, the Company incurred a prepayment penalty of $19.6 million which is being amortized, as a component of interest expense on borrowing, over the life of the advances. The prepayment amount is reported as a component of long-term borrowings in the Company's consolidated balance sheet.
The Company's capital ratios continued to be considered "well capitalized" for regulatory purposes. The Company's ratio of total capital to risk-weighted assets was 14.37% and 14.55% on June 30, 2013 and 2012, respectively. The Company's ratio of Tier 1 capital to risk-weighted assets was 13.08% and 12.99% at June 30, 2013 and 2012, respectively. The Company's common equity to asset ratios at June 30, 2013 and 2012 were 10.56% and 10.88%, respectively, while its tangible common equity to tangible assets ratio was 8.92% and 9.11% at June 30, 2013 and 2012. During the first quarter, the Company entered into an agreement to purchase 500,000 shares of its common stock from Markel Corporation, the Company's largest shareholder, for an aggregate purchase price of $9,500,000, or $19.00 per share. The repurchase was funded with cash on hand and the shares were retired. The Company is authorized to repurchase an additional 250,000 shares under its current repurchase program authorization, which expires December 31, 2013. Also, the Company paid a dividend of $0.13 per share during the current quarter, no change from the prior quarter and $0.05 per share, or 62.5%, from the same quarter a year ago.
MORTGAGE SEGMENT INFORMATION
On a linked quarter basis, the mortgage segment's net income of $294,000 for the second quarter represents an increase of $117,000, or 66.1%, from$177,000 in the first quarter. Current quarter results include severance expenses of $186,000 related to the recently announced plan to relocate Union Mortgage Group's headquarters to Richmond, Virginia. The linked quarter net income increase was primarily due to increased mortgage loan origination volumes of $30.0 million, driven by higher seasonal demand during the second quarter. As a result of the higher volumes and stronger gain on sale margins, gains on the sale of loans, net of commission expenses, increased $816,000 or 21.2%, to $4.7 million. Refinanced loans represented 38.4% of the mortgage loan originations during the second quarter compared to 52.7% during the first quarter.
For the three months ended June 30, 2013, net income of $294,000 for the mortgage segment declined by$176,000 or 37.4% fromnet income of $470,000 in the same period last year. Excluding the severance expense impact noted above, net income would have decreased $57,000 or 12.1% over the same period last year. Mortgage loan originations increased by $40.8 million, or 15.9%, to $298.2 million from $257.4 million in the prior year driven by additions in production personnel in 2012 and lower mortgage interest rates. In early 2012, the Company significantly increased its mortgage loan production capacity by hiring additional loan originators and support personnel. During the current quarter, the Company recorded gains on the sale of mortgage loans, net of commission expenses that were $836,000, or 21.8%, higher than the same period last year primarily due to higher loan origination volumes. Excluding severance expenses, year over year expenses increased $1.1 million driven by the personnel additions in 2012 as well as investments made in the current quarter to enhance the mortgage segment's operating capabilities andimprove profitability. Refinanced loans represented 38.4% of mortgage loan originations during the second quarter of 2013 compared to 45.1% during the same period last year.
For the six months ended June 30, 2013, the mortgage segment net income decreased $231,000, or 32.8%, from$704,000 during the same period last year to$473,000. Net income for the current year includes the impact of the severance accrual described above. Mortgage loan originations increased by $125.0 million, or 28.3%, to $566.3 million from $441.3 million during the same period last year due to the addition of mortgage loan originators in 2012 noted above and the low interest rate environment. Gains on sales of loans, net of commission expenses, increased$1.9 million, or 29.1%, a result of the increased mortgage loan origination volumes. Excluding severance expenses, year over year expenses increased by $2.5 million, or 45.3%, due to higher salary and benefit expenses of $2.1 million related to the addition of mortgage loan originators and support personnel in early 2012 as well as investments made in the current year to enhance the mortgage segment's operating capabilities. Refinanced loans represented 45.2% of mortgage loan originations during the year compared to 49.8% during 2012.
* * * * * * *
ABOUT UNION FIRST MARKET BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation is the holding company for Union First Market Bank, which has 90 branches and more than 150 ATMs throughout Virginia. Non-bank affiliates of the holding company include: Union Investment Services, Inc., which provides full brokerage services; Union Mortgage Group, Inc., which provides a full line of mortgage products, and Union Insurance Group, LLC, which offers various lines of insurance products. Union First Market Bank also owns a non-controlling interest in Johnson Mortgage Company, L.L.C.
Additional information is available on the Company's website at http://investors.bankatunion.com. Shares of the Company's common stock are traded on the NASDAQ Global Select Market under the symbol UBSH.
FORWARD-LOOKING STATEMENTS
Certain statements in this report may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise and are not statements of historical fact. Such statements are often characterized by the use of qualified words (and their derivatives) such as "expect," "believe," "estimate," "plan," "project," "anticipate," "intend," "will," or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of and changes in: general economicand bank industry conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, changes in the stock and bond markets,accounting standards or interpretations of existing standards, mergers and acquisitions, technology, and consumer spending and savings habits. More information is available on the Company's website, http://investors.bankatunion.com and on the Securities and Exchange Commission's website, www.sec.gov. The information on the Company's website is not a part of this press release. The Company does not intend or assume any obligation to update or revise any forward-looking statements that may be made from time to time by or on behalf of the Company.
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES | ||||||||||||||
KEY FINANCIAL RESULTS | ||||||||||||||
(in thousands, except share data) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
06/30/13 | 03/31/13 | 06/30/12 | 06/30/13 | 06/30/12 | ||||||||||
Results of Operations | ||||||||||||||
Interest and dividend income | $ | 42,686 | $ | 43,285 | $ | 45,302 | $ | 85,973 | $ | 91,178 | ||||
Interest expense | 5,283 | 5,532 | 7,215 | 10,816 | 14,744 | |||||||||
Net interest income | 37,403 | 37,753 | 38,087 | 75,157 | 76,434 | |||||||||
Provision for loan losses | 1,000 | 2,050 | 3,000 | 3,050 | 6,500 | |||||||||
Net interest income after provision for loan losses | 36,403 | 35,703 | 35,087 | 72,107 | 69,934 | |||||||||
Noninterest income | 11,299 | 9,835 | 10,253 | 21,133 | 18,729 | |||||||||
Noninterest expenses | 34,283 | 33,501 | 33,607 | 67,783 | 65,874 | |||||||||
Income before income taxes | 13,419 | 12,037 | 11,733 | 25,457 | 22,789 | |||||||||
Income tax expense | 3,956 | 3,054 | 3,313 | 7,011 | 6,446 | |||||||||
Net income | $ | 9,463 | $ | 8,983 | $ | 8,420 | $ | 18,446 | $ | 16,343 | ||||
Interest earned on loans (FTE) | $ | 38,876 | $ | 39,413 | $ | 40,371 | $ | 78,288 | $ | 81,061 | ||||
Interest earned on securities (FTE) | 5,099 | 5,125 | 5,937 | 10,224 | 12,143 | |||||||||
Interest earned on earning assets (FTE) | 43,981 | 44,543 | 46,340 | 88,524 | 93,259 | |||||||||
Net interest income (FTE) | 38,698 | 39,011 | 39,125 | 77,708 | 78,515 | |||||||||
Interest expense on certificates of deposit | 2,863 | 3,058 | 3,851 | 5,921 | 7,880 | |||||||||
Interest expense on interest-bearing deposits | 3,701 | 3,962 | 5,023 | 7,663 | 10,358 | |||||||||
Core deposit intangible amortization | 921 | 1,036 | 1,225 | 1,957 | 2,535 | |||||||||
Net income - community bank segment | $ | 9,169 | $ | 8,806 | $ | 7,950 | $ | 17,973 | $ | 15,639 | ||||
Net income - mortgage segment | 294 | 177 | 470 | 473 | 704 | |||||||||
Key Ratios | ||||||||||||||
Return on average assets (ROA) | 0.94% | 0.90% | 0.86% | 0.92% | 0.84% | |||||||||
Return on average equity (ROE) | 8.73% | 8.32% | 7.84% | 8.53% | 7.68% | |||||||||
Efficiency ratio (FTE) | 68.57% | 68.58% | 68.07% | 68.58% | 67.74% | |||||||||
Efficiency ratio - community bank segment (FTE) | 66.13% | 66.26% | 66.98% | 66.19% | 66.54% | |||||||||
Efficiency ratio - mortgage bank segment (FTE) | 91.11% | 93.25% | 80.87% | 92.10% | 83.83% | |||||||||
Net interest margin (FTE) | 4.18% | 4.23% | 4.36% | 4.21% | 4.39% | |||||||||
Net interest margin, core (FTE) (1) | 4.14% | 4.18% | 4.25% | 4.16% | 4.26% | |||||||||
Yields on earning assets (FTE) | 4.75% | 4.84% | 5.15% | 4.79% | 5.21% | |||||||||
Cost of interest-bearing liabilities (FTE) | 0.73% | 0.76% | 1.00% | 0.74% | 1.02% | |||||||||
Cost of funds | 0.57% | 0.60% | 0.79% | 0.59% | 0.82% | |||||||||
Noninterest expense less noninterest income / average assets | 2.28% | 2.37% | 2.38% | 2.32% | 2.42% | |||||||||
Capital Ratios | ||||||||||||||
Tier 1 risk-based capital ratio | 13.08% | 13.02% | 12.99% | 13.08% | 12.99% | |||||||||
Total risk-based capital ratio | 14.37% | 14.44% | 14.55% | 14.37% | 14.55% | |||||||||
Leverage ratio (Tier 1 capital to average assets) | 10.45% | 10.21% | 10.44% | 10.45% | 10.44% | |||||||||
Common equity to total assets | 10.56% | 10.63% | 10.88% | 10.56% | 10.88% | |||||||||
Tangible common equity to tangible assets | 8.92% | 8.97% | 9.11% | 8.92% | 9.11% | |||||||||
Three Months Ended | Six Months Ended | |||||||||||||
06/30/13 | 03/31/13 | 06/30/12 | 06/30/13 | 06/30/12 | ||||||||||
Per Share Data | ||||||||||||||
Earnings per common share, basic | $ | 0.38 | $ | 0.36 | $ | 0.32 | $ | 0.74 | $ | 0.63 | ||||
Earnings per common share, diluted | 0.38 | 0.36 | 0.32 | 0.74 | 0.63 | |||||||||
Cash dividends paid per common share | 0.13 | 0.13 | 0.08 | 0.26 | 0.15 | |||||||||
Market value per share | 20.59 | 19.56 | 14.45 | 20.59 | 14.45 | |||||||||
Book value per common share | 17.32 | 17.43 | 16.75 | 17.32 | 16.75 | |||||||||
Tangible book value per common share | 14.36 | 14.43 | 13.74 | 14.36 | 13.74 | |||||||||
Price to earnings ratio, diluted | 13.51 | 13.40 | 11.23 | 13.80 | 11.41 | |||||||||
Price to book value per common share ratio | 1.19 | 1.12 | 0.86 | 1.19 | 0.86 | |||||||||
Price to tangible common share ratio | 1.43 | 1.36 | 1.05 | 1.43 | 1.05 | |||||||||
Weighted average common shares outstanding, basic | 24,721,771 | 25,063,426 | 25,868,174 | 24,891,655 | 25,899,648 | |||||||||
Weighted average common shares outstanding, diluted | 24,802,231 | 25,138,003 | 25,888,151 | 24,961,431 | 25,923,505 | |||||||||
Common shares outstanding at end of period | 24,880,403 | 24,859,729 | 25,952,035 | 24,880,403 | 25,952,035 | |||||||||
Financial Condition | ||||||||||||||
Assets | $ | 4,056,557 | $ | 4,051,135 | $ | 3,982,288 | $ | 4,056,557 | $ | 3,982,288 | ||||
Loans, net of unearned income | 3,000,855 | 2,973,547 | 2,887,790 | 3,000,855 | 2,887,790 | |||||||||
Earning Assets | 3,722,199 | 3,726,703 | 3,649,829 | 3,722,199 | 3,649,829 | |||||||||
Goodwill | 59,400 | 59,400 | 59,400 | 59,400 | 59,400 | |||||||||
Core deposit intangibles, net | 13,821 | 14,742 | 18,178 | 13,821 | 18,178 | |||||||||
Deposits | 3,265,963 | 3,311,749 | 3,218,986 | 3,265,963 | 3,218,986 | |||||||||
Stockholders' equity | 428,429 | 430,773 | 433,436 | 428,429 | 433,436 | |||||||||
Tangible common equity | 355,209 | 356,631 | 355,625 | 355,209 | 355,625 | |||||||||
Averages | ||||||||||||||
Assets | $ | 4,037,696 | $ | 4,057,156 | $ | 3,942,727 | $ | 4,047,372 | $ | 3,923,243 | ||||
Loans, net of unearned income | 2,975,200 | 2,965,918 | 2,847,087 | 2,970,584 | 2,838,484 | |||||||||
Loans held for sale | 117,467 | 156,766 | 73,518 | 137,008 | 70,712 | |||||||||
Securities | 609,592 | 600,262 | 649,121 | 604,953 | 645,736 | |||||||||
Earning assets | 3,713,392 | 3,735,926 | 3,615,718 | 3,724,597 | 3,597,115 | |||||||||
Deposits | 3,265,128 | 3,284,435 | 3,200,016 | 3,274,728 | 3,183,834 | |||||||||
Certificates of deposit | 979,011 | 1,041,903 | 1,112,964 | 1,010,283 | 1,125,532 | |||||||||
Interest-bearing deposits | 2,608,408 | 2,654,918 | 2,636,390 | 2,631,535 | 2,634,724 | |||||||||
Borrowings | 299,115 | 301,343 | 274,597 | 300,223 | 275,180 | |||||||||
Interest-bearing liabilities | 2,907,523 | 2,956,261 | 2,910,987 | 2,931,758 | 2,909,904 | |||||||||
Stockholders' equity | 434,640 | 437,981 | 431,915 | 436,301 | 428,102 | |||||||||
Tangible common equity | 360,974 | 363,355 | 353,473 | 362,157 | 348,985 | |||||||||
Three Months Ended | Six Months Ended | |||||||||||||
06/30/13 | 03/31/13 | 06/30/12 | 06/30/13 | 06/30/12 | ||||||||||
Asset Quality | ||||||||||||||
Allowance for Loan Losses (ALL) | ||||||||||||||
Beginning balance | $ | 34,415 | $ | 34,916 | $ | 40,204 | $ | 34,916 | $ | 39,470 | ||||
Add: Recoveries | 721 | 834 | 350 | 1,555 | 691 | |||||||||
Less: Charge-offs | 1,803 | 3,385 | 2,569 | 5,188 | 5,676 | |||||||||
Add: Provision for loan losses | 1,000 | 2,050 | 3,000 | 3,050 | 6,500 | |||||||||
Ending balance | $ | 34,333 | $ | 34,415 | $ | 40,985 | $ | 34,333 | $ | 40,985 | ||||
Components of ALL: | ||||||||||||||
ALL for Loans individually evaluated for impairment | $ | 6,109 | $ | 5,712 | $ | 11,500 | $ | 6,109 | $ | 11,500 | ||||
ALL for Loans collectively evaluated for impairment | 28,224 | 28,703 | 29,485 | 28,224 | 29,485 | |||||||||
$ | 34,333 | $ | 34,415 | $ | 40,985 | $ | 34,333 | $ | 40,985 | |||||
ALL / total outstanding loans | 1.14% | 1.16% | 1.42% | 1.14% | 1.42% | |||||||||
ALL / total outstanding loans, adjusted for acquired (2) | 1.33% | 1.36% | 1.74% | 1.33% | 1.74% | |||||||||
Net charge-offs / total outstanding loans | 0.14% | 0.35% | 0.31% | 0.24% | 0.35% | |||||||||
Provision / total outstanding loans | 0.13% | 0.28% | 0.42% | 0.21% | 0.45% | |||||||||
Nonperforming Assets | ||||||||||||||
Commercial | $ | 23,013 | $ | 18,456 | $ | 36,035 | $ | 23,013 | $ | 36,035 | ||||
Consumer | 4,009 | 4,577 | 3,136 | 4,009 | 3,136 | |||||||||
Nonaccrual loans | 27,022 | 23,033 | 39,171 | 27,022 | 39,171 | |||||||||
Other real estate owned | 35,153 | 35,878 | 35,802 | 35,153 | 35,802 | |||||||||
Total nonperforming assets (NPAs) | 62,175 | 58,911 | 74,973 | 62,175 | 74,973 | |||||||||
Commercial | 1,353 | 2,105 | 2,324 | 1,353 | 2,324 | |||||||||
Consumer | 4,938 | 4,082 | 8,444 | 4,938 | 8,444 | |||||||||
Loans greater than or equal to 90 days and still accruing | 6,291 | 6,187 | 10,768 | 6,291 | 10,768 | |||||||||
Total nonperforming assets and loans ‰¥ 90 days | $ | 68,466 | $ | 65,098 | $ | 85,741 | $ | 68,466 | $ | 85,741 | ||||
NPAs / total outstanding loans | 2.07% | 1.98% | 2.60% | 2.07% | 2.60% | |||||||||
NPAs / total assets | 1.53% | 1.45% | 1.88% | 1.53% | 1.88% | |||||||||
ALL / nonperforming loans | 127.06% | 149.42% | 104.63% | 127.06% | 104.63% | |||||||||
ALL / nonperforming assets | 55.22% | 58.42% | 54.67% | 55.22% | 54.67% | |||||||||
Past Due Detail | ||||||||||||||
Commercial | $ | 1,093 | $ | 1,844 | $ | 3,022 | $ | 1,093 | $ | 3,022 | ||||
Consumer | 3,729 | 2,650 | 3,602 | 3,729 | 3,602 | |||||||||
Loans 60-89 days past due | $ | 4,822 | $ | 4,494 | $ | 6,624 | $ | 4,822 | $ | 6,624 | ||||
Commercial | $ | 7,392 | $ | 4,173 | $ | 5,674 | $ | 7,392 | $ | 5,674 | ||||
Consumer | 11,215 | 9,890 | 10,147 | 11,215 | 10,147 | |||||||||
Loans 30-59 days past due | $ | 18,607 | $ | 14,063 | $ | 15,821 | $ | 18,607 | $ | 15,821 | ||||
Commercial | $ | 3,039 | $ | 3,078 | $ | 5,741 | $ | 3,039 | $ | 5,741 | ||||
Consumer | 934 | 941 | 1,034 | 934 | 1,034 | |||||||||
Purchased impaired | $ | 3,973 | $ | 4,019 | $ | 6,775 | $ | 3,973 | $ | 6,775 | ||||
Mortgage Origination Volume | ||||||||||||||
Total Mortgage loan originations | $ | 298,180 | $ | 268,161 | $ | 257,354 | $ | 566,341 | $ | 441,329 | ||||
% of originations that are refinances | 38.40% | 52.70% | 45.10% | 45.20% | 49.80% | |||||||||
Other Data | ||||||||||||||
End of period full-time employees | 1,044 | 1,028 | 1,084 | 1,044 | 1,084 | |||||||||
Number of full-service branches | 90 | 90 | 94 | 90 | 94 | |||||||||
Number of full automatic transaction machines (ATMs) | 155 | 156 | 158 | 155 | 158 | |||||||||
Three Months Ended | Six Months Ended | |||||||||||||
06/30/13 | 03/31/13 | 06/30/12 | 06/30/13 | 06/30/12 | ||||||||||
Alternative Performance Measures (non-GAAP) | ||||||||||||||
Operating Earnings (non-GAAP) (3) | ||||||||||||||
Net Income (GAAP) | $ | 9,463 | $ | 8,983 | $ | 8,420 | $ | 18,446 | $ | 16,343 | ||||
Plus: Merger and conversion related expense | 919 | - | - | 919 | - | |||||||||
Net operating earnings (loss) (non-GAAP) | $ | 10,382 | $ | 8,983 | $ | 8,420 | $ | 19,365 | $ | 16,343 | ||||
Operating earnings per share - Basic | $ | 0.42 | $ | 0.36 | $ | 0.32 | $ | 0.78 | $ | 0.63 | ||||
Operating earnings per share - Diluted | 0.42 | 0.36 | 0.32 | 0.78 | 0.63 | |||||||||
Operating earnings - ROA | 1.03% | 0.90% | 0.86% | 0.96% | 0.84% | |||||||||
Operating earnings - ROE | 9.58% | 8.32% | 7.84% | 8.95% | 7.68% | |||||||||
Operating Efficiency Ratio FTE (non-GAAP) (3) | ||||||||||||||
Net Interest Income (GAAP) | $ | 37,403 | $ | 37,753 | $ | 38,087 | $ | 75,157 | $ | 76,434 | ||||
FTE adjustment | 1,295 | 1,258 | 1,038 | 2,552 | 2,081 | |||||||||
Net Interest Income (FTE) | $ | 38,698 | 39,011 | 39,125 | 77,709 | 78,515 | ||||||||
Noninterest Income (GAAP) | 11,299 | 9,835 | 10,253 | 21,133 | 18,729 | |||||||||
Noninterest Expense (GAAP) | $ | 34,283 | $ | 33,501 | $ | 33,607 | $ | 67,783 | $ | 65,874 | ||||
Merger and conversion related expense | 919 | - | - | 919 | - | |||||||||
Noninterest Expense (Non-GAAP) | $ | 33,364 | $ | 33,501 | $ | 33,607 | $ | 66,864 | $ | 65,874 | ||||
Operating Efficiency Ratio FTE (non-GAAP) | 66.73% | 68.58% | 68.07% | 67.65% | 67.74% | |||||||||
Cash basis earnings (non-GAAP) (4) | ||||||||||||||
Net income | $ | 9,463 | $ | 8,983 | $ | 8,420 | $ | 18,446 | $ | 16,343 | ||||
Plus: Core deposit intangible amortization, net of tax | 599 | 673 | 796 | 1,272 | 1,648 | |||||||||
Plus: Trademark intangible amortization, net of tax | - | 22 | 65 | 22 | 130 | |||||||||
Cash basis earnings | $ | 10,062 | $ | 9,678 | $ | 9,281 | $ | 19,740 | $ | 18,121 | ||||
Average assets | $ | 4,037,696 | $ | 4,057,156 | $ | 3,942,727 | $ | 4,047,372 | $ | 3,923,243 | ||||
Less: Average trademark intangible | - | 5 | 281 | 3 | 331 | |||||||||
Less: Average goodwill | 59,400 | 59,400 | 59,400 | 59,400 | 59,400 | |||||||||
Less: Average core deposit intangibles | 14,266 | 15,221 | 18,761 | 14,741 | 19,386 | |||||||||
Average tangible assets | $ | 3,964,030 | $ | 3,982,530 | $ | 3,864,285 | $ | 3,973,228 | $ | 3,844,126 | ||||
Average equity | $ | 434,640 | $ | 437,981 | $ | 431,915 | $ | 436,301 | $ | 428,102 | ||||
Less: Average trademark intangible | - | 5 | 281 | 3 | 331 | |||||||||
Less: Average goodwill | 59,400 | 59,400 | 59,400 | 59,400 | 59,400 | |||||||||
Less: Average core deposit intangibles | 14,266 | 15,221 | 18,761 | 14,741 | 19,386 | |||||||||
Average tangible common equity | $ | 360,974 | $ | 363,355 | $ | 353,473 | $ | 362,157 | $ | 348,985 | ||||
Cash basis earnings per share, diluted | $ | 0.41 | $ | 0.38 | $ | 0.36 | $ | 0.79 | $ | 0.70 | ||||
Cash basis return on average tangible assets | 1.02% | 0.99% | 0.97% | 1.00% | 0.95% | |||||||||
Cash basis return on average tangible common equity | 11.18% | 10.80% | 10.56% | 10.99% | 10.44% | |||||||||
ALL to legacy loans (non-GAAP) (2) | ||||||||||||||
Gross Loans | $ | 3,000,855 | $ | 2,973,547 | $ | 2,887,790 | $ | 3,000,855 | $ | 2,887,790 | ||||
Less: Acquired loans without additional credit deterioration | (424,402) | (447,406) | (533,087) | (424,402) | (533,087) | |||||||||
Gross Loans, adjusted for acquired | 2,576,453 | 2,526,141 | 2,354,703 | 2,576,453 | 2,354,703 | |||||||||
Allowance for loan losses | 34,333 | 34,415 | 40,985 | 34,333 | 40,985 | |||||||||
ALL / gross loans, adjusted for acquired | 1.33% | 1.36% | 1.74% | 1.33% | 1.74% | |||||||||
(1) The core net interest margin, fully taxable equivalent ("FTE") excludes the impact of acquisition accounting accretion and amortization adjustments in net interest income.
(2) The allowance for loan losses, adjusted for acquired loans (non-GAAP) ratio includes the allowance for loan losses to the total loan portfolio less acquired loans without additional credit deterioration above the original credit mark. Loans with credit deterioration subsequent to being acquired have been provided for in accordance with the Company's ALL methodology. GAAP requires the acquired allowance for loan losses not be carried over in an acquisition or merger. The Company believes the presentation of the allowance for loan losses, adjusted for acquired loans ratio is useful to investors because the acquired loans were purchased at a market discount with no allowance for loan losses carried over to the Company. Therefore, acquired loans without additional credit deterioration above the original credit mark are adjusted out of the loan balance denominator.
(3) The Company has provided supplemental performance measures which the Company believes may be useful to investors as they exclude non-operating adjustments resulting from acquisition and allow investors to see the combined economic results of the organization. These measures are a supplement to GAAP used to prepare the Company's financial statements and should not be viewed as a substitute for GAAP measures. In addition, the Company's non-GAAP measures may not be comparable to non-GAAP measures of other companies.
(4) As a supplement to GAAP, management also reviews operating performance based on its "cash basis earnings" to fully analyze its core business. Cash basis earnings exclude amortization expense attributable to intangibles (goodwill and core deposit intangibles) that do not qualify as regulatory capital. Financial ratios based on cash basis earnings exclude the amortization of nonqualifying intangible assets from earnings and the unamortized balance of nonqualifying intangibles from assets and equity.
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Dollars in thousands, except share data) | ||||||||
June 30, | December 31, | June 30, | ||||||
2013 | 2012 | 2012 | ||||||
ASSETS | (Unaudited) | (Audited) | (Unaudited) | |||||
Cash and cash equivalents: | ||||||||
Cash and due from banks | $ | 59,867 | $ | 71,426 | $ | 57,245 | ||
Interest-bearing deposits in other banks | 11,526 | 11,320 | 14,975 | |||||
Money market investments | 1 | 1 | 1 | |||||
Federal funds sold | 153 | 155 | 163 | |||||
Total cash and cash equivalents | 71,547 | 82,902 | 72,384 | |||||
Securities available for sale, at fair value | 582,312 | 585,382 | 627,543 | |||||
Restricted stock, at cost | 17,956 | 20,687 | 19,291 | |||||
Loans held for sale | 109,395 | 167,698 | 100,066 | |||||
Loans, net of unearned income | 3,000,855 | 2,966,847 | 2,887,790 | |||||
Less allowance for loan losses | 34,333 | 34,916 | 40,985 | |||||
Net loans | 2,966,522 | 2,931,931 | 2,846,805 | |||||
Bank premises and equipment, net | 82,857 | 85,409 | 91,122 | |||||
Other real estate owned, net of valuation allowance | 35,153 | 32,834 | 35,802 | |||||
Core deposit intangibles, net | 13,821 | 15,778 | 18,178 | |||||
Goodwill | 59,400 | 59,400 | 59,400 | |||||
Other assets | 117,594 | 113,844 | 111,697 | |||||
Total assets | $ | 4,056,557 | $ | 4,095,865 | $ | 3,982,288 | ||
LIABILITIES | ||||||||
Noninterest-bearing demand deposits | 668,303 | 645,901 | 591,757 | |||||
Interest-bearing deposits: | ||||||||
NOW accounts | 456,459 | 454,150 | 425,188 | |||||
Money market accounts | 953,978 | 957,130 | 905,739 | |||||
Savings accounts | 225,821 | 207,846 | 198,728 | |||||
Time deposits of $100,000 and over | 468,263 | 508,630 | 534,682 | |||||
Other time deposits | 493,139 | 524,110 | 562,892 | |||||
Total interest-bearing deposits | 2,597,660 | 2,651,866 | 2,627,229 | |||||
Total deposits | 3,265,963 | 3,297,767 | 3,218,986 | |||||
Securities sold under agreements to repurchase | 101,418 | 54,270 | 75,394 | |||||
Other short-term borrowings | 28,000 | 78,000 | - | |||||
Trust preferred capital notes | 60,310 | 60,310 | 60,310 | |||||
Long-term borrowings | 137,919 | 136,815 | 155,625 | |||||
Other liabilities | 34,518 | 32,840 | 38,537 | |||||
Total liabilities | 3,628,128 | 3,660,002 | 3,548,852 | |||||
Commitments and contingencies | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, $1.33 par value, shares authorized 36,000,000; issued and outstanding, 24,880,403 shares, 25,270,970 shares, and 25,952,035 shares, respectively. | 32,901 | 33,510 | 34,415 | |||||
Surplus | 168,600 | 176,635 | 185,733 | |||||
Retained earnings | 227,563 | 215,634 | 202,278 | |||||
Accumulated other comprehensive income | (635) | 10,084 | 11,010 | |||||
Total stockholders' equity | 428,429 | 435,863 | 433,436 | |||||
Total liabilities and stockholders' equity | $ | 4,056,557 | $ | 4,095,865 | $ | 3,982,288 | ||
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
Interest and dividend income: | |||||||||||
Interest and fees on loans | $ | 38,687 | $ | 40,299 | $ | 77,912 | $ | 80,907 | |||
Interest on Federal funds sold | - | - | 1 | - | |||||||
Interest on deposits in other banks | 6 | 32 | 11 | 54 | |||||||
Interest and dividends on securities: | |||||||||||
Taxable | 1,939 | 3,184 | 4,008 | 6,640 | |||||||
Nontaxable | 2,054 | 1,787 | 4,041 | 3,577 | |||||||
Total interest and dividend income | 42,686 | 45,302 | 85,973 | 91,178 | |||||||
Interest expense: | |||||||||||
Interest on deposits | 3,701 | 5,023 | 7,663 | 10,358 | |||||||
Interest on federal funds purchased | 21 | 1 | 36 | 1 | |||||||
Interest on short-term borrowings | 54 | 47 | 108 | 91 | |||||||
Interest on long-term borrowings | 1,507 | 2,144 | 3,009 | 4,294 | |||||||
Total interest expense | 5,283 | 7,215 | 10,816 | 14,744 | |||||||
Net interest income | 37,403 | 38,087 | 75,157 | 76,434 | |||||||
Provision for loan losses | 1,000 | 3,000 | 3,050 | 6,500 | |||||||
Net interest income after provision for loan losses | 36,403 | 35,087 | 72,107 | 69,934 | |||||||
Noninterest income: | |||||||||||
Service charges on deposit accounts | 2,346 | 2,291 | 4,618 | 4,421 | |||||||
Other service charges, commissions and fees | 3,222 | 2,774 | 6,029 | 5,346 | |||||||
Losses on securities transactions, net | 53 | 10 | 42 | 5 | |||||||
Gains on sales of mortgage loans, net of commissions | 4,668 | 3,832 | 8,520 | 6,597 | |||||||
Losses on sales of bank premises | (34) | 373 | (330) | 343 | |||||||
Other operating income | 1,044 | 973 | 2,254 | 2,017 | |||||||
Total noninterest income | 11,299 | 10,253 | 21,133 | 18,729 | |||||||
Noninterest expenses: | |||||||||||
Salaries and benefits | 17,912 | 16,935 | 35,878 | 33,911 | |||||||
Occupancy expenses | 2,764 | 3,092 | 5,619 | 5,739 | |||||||
Furniture and equipment expenses | 1,741 | 1,868 | 3,585 | 3,631 | |||||||
Other operating expenses | 11,866 | 11,712 | 22,701 | 22,593 | |||||||
Total noninterest expenses | 34,283 | 33,607 | 67,783 | 65,874 | |||||||
Income before income taxes | 13,419 | 11,733 | 25,457 | 22,789 | |||||||
Income tax expense | 3,956 | 3,313 | 7,011 | 6,446 | |||||||
Net income | $ | 9,463 | $ | 8,420 | $ | 18,446 | $ | 16,343 | |||
Earnings per common share, basic | $ | 0.38 | $ | 0.32 | $ | 0.74 | $ | 0.63 | |||
Earnings per common share, diluted | $ | 0.38 | $ | 0.32 | $ | 0.74 | $ | 0.63 | |||
UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES | |||||||||||
SEGMENT FINANCIAL INFORMATION | |||||||||||
(Dollars in thousands) | |||||||||||
Community Bank | Mortgage | Eliminations | Consolidated | ||||||||
Three Months Ended June 30, 2013 | |||||||||||
Net interest income | $ | 36,960 | $ | 443 | $ | - | $ | 37,403 | |||
Provision for loan losses | 1,000 | - | - | 1,000 | |||||||
Net interest income after provision for loan losses | 35,960 | 443 | - | 36,403 | |||||||
Noninterest income | 6,798 | 4,668 | (167) | 11,299 | |||||||
Noninterest expenses | 29,793 | 4,657 | (167) | 34,283 | |||||||
Income before income taxes | 12,965 | 454 | - | 13,419 | |||||||
Income tax expense | 3,796 | 160 | - | 3,956 | |||||||
Net income | $ | 9,169 | $ | 294 | $ | - | $ | 9,463 | |||
Total assets | $ | 4,045,163 | $ | 121,392 | $ | (109,998) | $ | 4,056,557 | |||
Three Months Ended June 30, 2012 | |||||||||||
Net interest income | $ | 37,792 | $ | 295 | $ | - | $ | 38,087 | |||
Provision for loan losses | 3,000 | - | - | 3,000 | |||||||
Net interest income after provision for loan losses | 34,792 | 295 | - | 35,087 | |||||||
Noninterest income | 6,537 | 3,833 | (117) | 10,253 | |||||||
Noninterest expenses | 30,386 | 3,338 | (117) | 33,607 | |||||||
Income before income taxes | 10,943 | 790 | - | 11,733 | |||||||
Income tax expense | 2,993 | 320 | - | 3,313 | |||||||
Net income | $ | 7,950 | $ | 470 | $ | - | $ | 8,420 | |||
Total assets | $ | 3,967,690 | $ | 110,374 | $ | (95,776) | $ | 3,982,288 | |||
Six Months Ended June 30, 2013 | |||||||||||
Net interest income | $ | 74,147 | $ | 1,010 | $ | - | $ | 75,157 | |||
Provision for loan losses | 3,050 | - | - | 3,050 | |||||||
Net interest income after provision for loan losses | 71,097 | 1,010 | - | 72,107 | |||||||
Noninterest income | 12,945 | 8,522 | (334) | 21,133 | |||||||
Noninterest expenses | 59,338 | 8,779 | (334) | 67,783 | |||||||
Income before income taxes | 24,704 | 753 | - | 25,457 | |||||||
Income tax expense | 6,731 | 280 | - | 7,011 | |||||||
Net income | $ | 17,973 | $ | 473 | $ | - | $ | 18,446 | |||
Total assets | $ | 4,045,163 | $ | 121,392 | $ | (109,998) | $ | 4,056,557 | |||
Six Months Ended June 30, 2012 | |||||||||||
Net interest income | $ | 75,830 | $ | 604 | $ | - | $ | 76,434 | |||
Provision for loan losses | 6,500 | - | - | 6,500 | |||||||
Net interest income after provision for loan losses | 69,330 | 604 | - | 69,934 | |||||||
Noninterest income | 12,363 | 6,600 | (234) | 18,729 | |||||||
Noninterest expenses | 60,069 | 6,039 | (234) | 65,874 | |||||||
Income before income taxes | 21,624 | 1,165 | - | 22,789 | |||||||
Income tax (benefit) expense | 5,985 | 461 | - | 6,446 | |||||||
Net income | $ | 15,639 | $ | 704 | $ | - | $ | 16,343 | |||
Total assets | $ | 3,967,690 | $ | 110,374 | $ | (95,776) | $ | 3,982,288 | |||
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) | |||||||||||||||||||||||
For the Three Months Ended June 30, | |||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||
Average Balance | Interest Income / Expense | Yield / Rate (1) | Average Balance | Interest Income / Expense | Yield / Rate (1) | Average Balance | Interest Income / Expense | Yield / Rate (1) | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Securities: | |||||||||||||||||||||||
Taxable | $ | 389,662 | $ | 1,939 | 2.00% | $ | 473,158 | $ | 3,185 | 2.71% | $ | 419,747 | $ | 3,627 | 3.47% | ||||||||
Tax-exempt | 219,930 | 3,160 | 5.76% | 175,963 | 2,752 | 6.29% | 166,660 | 2,722 | 6.55% | ||||||||||||||
Total securities (2) | 609,592 | 5,099 | 3.35% | 649,121 | 5,937 | 3.68% | 586,407 | 6,349 | 4.34% | ||||||||||||||
Loans, net (3) (4) | 2,975,200 | 37,928 | 5.11% | 2,847,087 | 39,734 | 5.61% | 2,823,186 | 42,004 | 5.97% | ||||||||||||||
Loans held for sale | 117,467 | 948 | 3.24% | 73,518 | 637 | 3.48% | 42,341 | 468 | 4.43% | ||||||||||||||
Federal funds sold | 446 | 0 | 0.23% | 380 | 0 | 0.24% | 165 | (0) | 0.22% | ||||||||||||||
Money market investments | 1 | - | 0.00% | 10 | - | 0.00% | 153 | - | 0.00% | ||||||||||||||
Interest-bearing deposits in other banks | 10,686 | 6 | 0.23% | 45,602 | 32 | 0.28% | 34,697 | 27 | 0.32% | ||||||||||||||
Other interest-bearing deposits | - | - | 0.00% | - | - | 0.00% | - | - | 0.00% | ||||||||||||||
Total earning assets | 3,713,392 | 43,981 | 4.75% | 3,615,718 | 46,340 | 5.15% | 3,486,949 | 48,848 | 5.62% | ||||||||||||||
Allowance for loan losses | (34,874) | (40,635) | (39,999) | ||||||||||||||||||||
Total non-earning assets | 359,178 | 367,644 | 383,836 | ||||||||||||||||||||
Total assets | $ | 4,037,696 | $ | 3,942,727 | $ | 3,830,786 | |||||||||||||||||
Liabilities and Stockholders' Equity: | |||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||
Checking | $ | 454,652 | 79 | 0.07% | $ | 423,044 | 116 | 0.11% | $ | 386,107 | 157 | 0.16% | |||||||||||
Money market savings | 948,992 | 590 | 0.25% | 903,682 | 881 | 0.39% | 840,696 | 1,465 | 0.70% | ||||||||||||||
Regular savings | 225,753 | 169 | 0.30% | 196,700 | 175 | 0.36% | 175,869 | 192 | 0.44% | ||||||||||||||
Time deposits: (5) | |||||||||||||||||||||||
$100,000 and over | 479,274 | 1,527 | 1.28% | 543,271 | 2,054 | 1.52% | 569,587 | 2,217 | 1.56% | ||||||||||||||
Under $100,000 | 499,737 | 1,336 | 1.07% | 569,693 | 1,797 | 1.27% | 600,754 | 2,135 | 1.43% | ||||||||||||||
Total interest-bearing deposits | 2,608,408 | 3,701 | 0.57% | 2,636,390 | 5,023 | 0.77% | 2,573,013 | 6,166 | 0.96% | ||||||||||||||
Other borrowings (6) | 299,115 | 1,582 | 2.12% | 274,597 | 2,192 | 3.21% | 288,554 | 1,967 | 2.73% | ||||||||||||||
Total interest-bearing liabilities | 2,907,523 | 5,283 | 0.73% | 2,910,987 | 7,215 | 1.00% | 2,861,567 | 8,133 | 1.14% | ||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||
Demand deposits | 656,720 | 563,626 | 504,810 | ||||||||||||||||||||
Other liabilities | 38,813 | 36,199 | 24,050 | ||||||||||||||||||||
Total liabilities | 3,603,056 | 3,510,812 | 3,390,427 | ||||||||||||||||||||
Stockholders' equity | 434,640 | 431,915 | 440,359 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 4,037,696 | $ | 3,942,727 | $ | 3,830,786 | |||||||||||||||||
Net interest income | $ | 38,698 | $ | 39,125 | $ | 40,715 | |||||||||||||||||
Interest rate spread (7) | 4.02% | 4.16% | 4.48% | ||||||||||||||||||||
Interest expense as a percent of average earning assets | 0.57% | 0.79% | 0.94% | ||||||||||||||||||||
Net interest margin (8) | 4.18% | 4.36% | 4.68% | ||||||||||||||||||||
(1) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above. | |||||||||||||||||||||||
(2) Interest income on securities includes $0, $46 thousand, and $93 thousand for the three months ended June 30, 2013, 2012, and 2011 in | |||||||||||||||||||||||
accretion of the fair market value adjustments. | |||||||||||||||||||||||
(3) Nonaccrual loans are included in average loans outstanding. | |||||||||||||||||||||||
(4) Interest income on loans includes $534 thousand, $915 thousand, and $1.6 million for the three months ended June 30, 2013, 2012, and 2011 | |||||||||||||||||||||||
in accretion of the fair market value adjustments related to the acquisitions. | |||||||||||||||||||||||
(5) Interest expense on certificates of deposits includes $2 thousand, $111 thousand, and $216 thousand for the three months ended June 30, 2013, 2012, | |||||||||||||||||||||||
and 2011 in accretion of the fair market value adjustments related to the acquisitions. | |||||||||||||||||||||||
(6) Interest expense on borrowings includes $122 thousand for the three months ended June 30, 2013, 2012, and 2011. | |||||||||||||||||||||||
(7) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%. | |||||||||||||||||||||||
(8) Core net interest margin excludes purchase accounting adjustments and was 4.14%, 4.25%, and 4.47% for the three months ended June 30, 2013, 2012, and 2011. | |||||||||||||||||||||||
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) | |||||||||||||||||||||||
For the Six Months Ended June 30, | |||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||
Average Balance | Interest Income / Expense | Yield / Rate (1) | Average Balance | Interest Income / Expense | Yield / Rate (1) | Average Balance | Interest Income / Expense | Yield / Rate (1) | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Securities: | |||||||||||||||||||||||
Taxable | $ | 389,986 | $ | 4,008 | 2.07% | $ | 471,605 | $ | 6,640 | 2.83% | $ | 416,150 | $ | 7,257 | 3.52% | ||||||||
Tax-exempt | 214,967 | 6,216 | 5.83% | 174,131 | 5,503 | 6.36% | 165,799 | 5,420 | 6.59% | ||||||||||||||
Total securities (2) | 604,953 | 10,224 | 3.41% | 645,736 | 12,143 | 3.78% | 581,949 | 12,677 | 4.39% | ||||||||||||||
Loans, net (3) (4) | 2,970,584 | 76,142 | 5.17% | 2,838,484 | 79,825 | 5.66% | 2,817,829 | 83,597 | 5.98% | ||||||||||||||
Loans held for sale | 137,008 | 2,146 | 3.16% | 70,712 | 1,236 | 3.51% | 48,214 | 1,032 | 4.32% | ||||||||||||||
Federal funds sold | 486 | 1 | 0.24% | 397 | 1 | 0.24% | 215 | 0 | 0.23% | ||||||||||||||
Money market investments | 1 | - | 0.00% | 24 | - | 0.00% | 157 | - | 0.00% | ||||||||||||||
Interest-bearing deposits in other banks | 11,565 | 11 | 0.19% | 41,762 | 54 | 0.26% | 25,103 | 33 | 0.26% | ||||||||||||||
Other interest-bearing deposits | - | - | 0.00% | - | - | 0.00% | - | - | 0.00% | ||||||||||||||
Total earning assets | 3,724,597 | 88,524 | 4.79% | 3,597,115 | 93,259 | 5.21% | 3,473,467 | 97,339 | 5.65% | ||||||||||||||
Allowance for loan losses | (35,208) | (40,328) | (39,386) | ||||||||||||||||||||
Total non-earning assets | 357,983 | 366,456 | 385,355 | ||||||||||||||||||||
Total assets | $ | 4,047,372 | $ | 3,923,243 | $ | 3,819,436 | |||||||||||||||||
Liabilities and Stockholders' Equity: | |||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||
Checking | $ | 451,107 | 172 | 0.08% | $ | 416,557 | 247 | 0.12% | $ | 380,463 | 316 | 0.17% | |||||||||||
Money market savings | 949,035 | 1,244 | 0.26% | 901,110 | 1,878 | 0.42% | 825,717 | 2,970 | 0.73% | ||||||||||||||
Regular savings | 221,110 | 326 | 0.30% | 191,525 | 353 | 0.37% | 168,259 | 295 | 0.35% | ||||||||||||||
Time deposits: (5) | |||||||||||||||||||||||
$100,000 and over | 502,595 | 3,193 | 1.28% | 549,157 | 4,164 | 1.52% | 585,173 | 4,700 | 1.62% | ||||||||||||||
Under $100,000 | 507,688 | 2,728 | 1.08% | 576,375 | 3,716 | 1.30% | 610,407 | 4,570 | 1.51% | ||||||||||||||
Total interest-bearing deposits | 2,631,535 | 7,663 | 0.59% | 2,634,724 | 10,358 | 0.79% | 2,570,019 | 12,851 | 1.01% | ||||||||||||||
Other borrowings (6) | 300,223 | 3,153 | 2.12% | 275,180 | 4,386 | 3.21% | 289,976 | 3,874 | 2.69% | ||||||||||||||
Total interest-bearing liabilities | 2,931,758 | 10,816 | 0.74% | 2,909,904 | 14,744 | 1.02% | 2,859,995 | 16,725 | 1.18% | ||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||
Demand deposits | 643,193 | 549,109 | 495,886 | ||||||||||||||||||||
Other liabilities | 36,120 | 36,128 | 27,150 | ||||||||||||||||||||
Total liabilities | 3,611,071 | 3,495,141 | 3,383,031 | ||||||||||||||||||||
Stockholders' equity | 436,301 | 428,102 | 436,405 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 4,047,372 | $ | 3,923,243 | $ | 3,819,436 | |||||||||||||||||
Net interest income | $ | 77,708 | $ | 78,515 | $ | 80,614 | |||||||||||||||||
Interest rate spread (7) | 4.05% | 4.19% | 4.47% | ||||||||||||||||||||
Interest expense as a percent of average earning assets | 0.59% | 0.82% | 0.97% | ||||||||||||||||||||
Net interest margin (8) | 4.21% | 4.39% | 4.68% | ||||||||||||||||||||
(1) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above. | |||||||||||||||||||||||
(2) Interest income on securities includes $15 thousand, $108 thousand, and $201 thousand for the six months ended June 30, 2013, 2012, and 2011 in | |||||||||||||||||||||||
accretion of the fair market value adjustments. | |||||||||||||||||||||||
(3) Nonaccrual loans are included in average loans outstanding. | |||||||||||||||||||||||
(4) Interest income on loans includes $1.1 million, $2.2 million, and $3.2 million for the six months ended June 30, 2013, 2012, and 2011 | |||||||||||||||||||||||
in accretion of the fair market value adjustments related to the acquisitions. | |||||||||||||||||||||||
(5) Interest expense on certificates of deposits includes $4 thousand, $228 thousand, and $474 thousand for the six months ended June 30, 2013, 2012, | |||||||||||||||||||||||
and 2011 in accretion of the fair market value adjustments related to the acquisitions. | |||||||||||||||||||||||
(6) Interest expense on borrowings includes $244 thousand for the six months ended June 30, 2013, 2012, and 2011. | |||||||||||||||||||||||
(7) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%. | |||||||||||||||||||||||
(8) Core net interest margin excludes purchase accounting adjustments and was 4.16%, 4.26%, and 4.47% for the six months ended June 30, 2013, 2012, and 2011. | |||||||||||||||||||||||
SOURCE Union First Market Bankshares Corporation
