Union Bankshares Reports Third Quarter Results

RICHMOND, Va., Oct. 18, 2017 (GLOBE NEWSWIRE) -- Union Bankshares Corporation (the "Company" or "Union") (NASDAQ:UBSH) today reported net operating earnings (1) of $21.3 million and operating earnings per share (1) of $0.49 for its third quarter ended September 30, 2017; these operating results exclude $661,000 in after-tax merger-related costs.  The Company's net operating earnings and operating earnings per share for the third quarter of 2017 represent increases of $1.0 million, or 4.9%, and $0.03, or 6.5%, respectively, in each case compared to the second quarter of 2017.  For the third quarter ended September 30, 2017, net income, which includes the impact of merger-related costs, was $20.7 million, an increase of $2.7 million, or 15.0%, compared to the second quarter of 2017, and earnings per share was $0.47, an increase of $0.06, or 14.6%, compared to the second quarter of 2017.

For the nine months ended September 30, 2017, net operating earnings (1) were $60.8 million and operating earnings per share (1) were $1.39.  The Company's net operating earnings and operating earnings per share for the nine months ended September 30, 2017 represent an increase of 7.2% and 7.8%, respectively, compared to the net income and earnings per share for the nine months ended September 30, 2016.  For the nine months ended September 30, 2017, net income, which includes the impact of merger-related costs, was $57.7 million, an increase of 1.8% compared to the same period in 2016, and earnings per share were $1.32, an increase of 2.3% compared to the same period in 2016.

" Union delivered another solid quarterly performance with growth in operating earnings and earnings per share as we continue to gain market share and tell our unique story, which we believe is being well received in our markets," said John C. Asbury, president and chief executive officer of Union Bankshares Corporation.  " Our profitability metrics improved, and I was especially pleased to see significant progress made in lowering the efficiency ratio this quarter. The Xenith acquisition remains on track to close in early January, and I am confident that our combination will accelerate the achievement of our top tier financial performance goals, which should provide our shareholders with above average returns on their investments over the long term.  Union is fast becoming something that Virginia hasn't had in nearly 20 years - a statewide regional bank that is uniquely positioned to provide value to our teammates, customers, shareholders and the communities we serve."

Select highlights for the third quarter of 2017 include:
  • On October 17, 2017, the Company and Xenith Bankshares, Inc. ("Xenith") jointly announced the receipt of regulatory approval from the Federal Reserve Bank of Richmond and from the Virginia State Corporation Commission to move forward with the proposed merger of Xenith into the Company (the "Pending Merger").
  • Net income for the community bank segment was $20.3 million, or $0.46 per share, for the third quarter of 2017, compared to $17.4 million, or $0.40 per share, for the second quarter of 2017. Net operating earnings(1) for the community bank segment were $21.0 million, or $0.48 per share, for the third quarter of 2017, compared to $19.8 million, or $0.45 per share, for the second quarter of 2017. Net income for the community bank segment was $56.8 million, or $1.30 per share, for the nine months ended September 30, 2017, compared to $55.3 million, or $1.26 per share, for the nine months ended September 30, 2016. Net operating earnings(1) for the community bank segment were $59.9 million, or $1.37 per share, for the nine months ended September 30, 2017.
  • The mortgage segment reported net income of $347,000, or $0.01 per share, for the third quarter of 2017, compared to $551,000, or $0.01 per share, in the second quarter of 2017.  The mortgage segment reported net income of $901,000, or $0.02 per share, for the nine months ended September 30, 2017 compared to $1.4 million, or $0.03 per share, for the nine months ended September 30, 2016.
  • Return on Average Assets ("ROA") was 0.91% and operating ROA (1) was 0.94% for the quarter ended September 30, 2017 compared to ROA of 0.82% and operating ROA of 0.93% for the quarter ended June 30, 2017 and ROA of 1.00% for the quarter ended September 30, 2016.
  • Return on Average Equity ("ROE") was 7.90% and operating ROE (1) was 8.15% for the quarter ended September 30, 2017 compared to ROE of 7.02% and operating ROE of 7.94% for the quarter ended June 30, 2017 and ROE of 8.14% for the quarter ended September 30, 2016.
  • Return on Average Tangible Common Equity ("ROTCE") was 11.34% and operating ROTCE (1) was 11.70% for the quarter ended September 30, 2017 compared to ROTCE of 10.15% and operating ROTCE of 11.48% for the prior quarter and ROTCE of 12.00% for the third quarter of 2016.
  • The efficiency ratio (FTE) was 62.9% and the operating efficiency ratio (FTE) (1) was 62.1% for the quarter ended September 30, 2017 compared to the efficiency ratio (FTE) of 66.8% and operating efficiency ratio (FTE) of 63.8% for the prior quarter and efficiency ratio (FTE) of 64.4% for the third quarter of 2016.
  • Loans held for investment grew $127.2 million, or 7.5% (annualized), from June 30, 2017 and increased $749.8 million, or 12.2%, from September 30, 2016.  Average loans held for investment increased $194.5 million, or 11.7% (annualized), from the prior quarter and increased $788.8 million, or 13.1%, from the same quarter in the prior year.
  • Period-end deposits increased $117.4 million, or 6.9% (annualized), from June 30, 2017 and grew $623.3 million, or 10.0%, from September 30, 2016.  Average deposits increased $160.1 million, or 9.6% (annualized), from the prior quarter and increased $592.9 million, or 9.6%, from the same quarter in the prior year.

(1) For a reconciliation of the non-GAAP operating measures that exclude merger-related costs unrelated to the Company's normal operations, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results. Such costs were only incurred during the second and third quarters of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three and nine months ended September 30, 2016.

NET INTEREST INCOME

For the third quarter of 2017, net interest income was $71.2 million, an increase of $2.2 million from the second quarter of 2017.  Tax-equivalent net interest income was $73.8 million, an increase of $2.2 million from the second quarter of 2017. The increases in both net interest income and tax-equivalent net interest income were driven by higher earning asset balances.  The third quarter net interest margin decreased 3 basis points to 3.46% from 3.49% in the previous quarter, while the tax-equivalent net interest margin also decreased 3 basis points to 3.59% from 3.62% during the same periods.  The decrease in the tax-equivalent net interest margin was principally due to the 4 basis point increase in tax-equivalent cost of funds partially offset by the 1 basis point increase in the tax-equivalent yield on earning assets.

The Company's tax-equivalent net interest margin includes the impact of acquisition accounting fair value adjustments.  During the third quarter of 2017, net accretion related to acquisition accounting increased $92,000, or 5.7%, from the prior quarter to $1.7 million for the quarter ended September 30, 2017.  The second and third quarters of 2017 as well as the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):

  Loan Accretion   Borrowings Accretion (Amortization)   Total
For the quarter ended June 30, 2017 $ 1,570   $ 47     $ 1,617  
For the quarter ended September 30, 2017 1,662   47     1,709  
For the remaining three months of 2017 (estimated) (1) 1,358   28     1,386  
For the years ending (estimated) (1):          
2018 4,842   (143 )   4,699  
2019 3,483   (286 )   3,197  
2020 2,689   (301 )   2,388  
2021 2,187   (316 )   1,871  
2022 1,767   (332 )   1,435  
Thereafter 6,589   (4,974 )   1,615  

(1) Estimated accretion only includes accretion for previously executed acquisitions.  The effects of the Pending Merger are not included in the information above.

ASSET QUALITY/LOAN LOSS PROVISION

OverviewDuring the third quarter of 2017, the Company experienced declines in nonperforming asset balances from the prior quarter, primarily related to charge-offs of nonaccrual loans.  The loan loss provision increased from the prior quarter due to loan growth and higher levels of charge-offs in the third quarter of 2017.  The allowance for loan losses and the related allowance for loan losses to total loans ratio decreased from the prior quarter primarily due to the continued decline in the historical loss rates and reductions in specific reserves on impaired loans that were charged off during the quarter.

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired ("PCI") loans totaling $51.0 million (net of fair value mark of $11.7 million).

Nonperforming Assets ("NPAs")At September 30, 2017, NPAs totaled $28.9 million, a decline of $5.2 million, or 15.2%, from June 30, 2017 and an increase of $5.6 million, or 24.2%, from September 30, 2016.  In addition, NPAs as a percentage of total outstanding loans declined 8 basis points from 0.50% at June 30, 2017 and increased 4 basis points from 0.38% at September 30, 2016 to 0.42% at September 30, 2017.  As the Company's NPAs have been at historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but have an insignificant impact on the Company's overall asset quality position.  The following table shows a summary of asset quality balances at the quarter ended (dollars in thousands):

  September 30,   June 30,   March 31,   December 31,   September 30,
  2017   2017   2017   2016   2016
Nonaccrual loans $ 20,122     $ 24,574     $ 22,338     $ 9,973     $ 12,677  
Foreclosed properties 6,449     6,828     6,951     7,430     7,927  
Former bank premises 2,315     2,654     2,654     2,654     2,654  
Total nonperforming assets $ 28,886     $ 34,056     $ 31,943     $ 20,057     $ 23,258  
                                       

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,
  2017   2017   2017   2016   2016
Beginning Balance $ 24,574     $ 22,338     $ 9,973     $ 12,677     $ 10,861  
Net customer payments (4,642 )   (1,498 )   (1,068 )   (1,451 )   (1,645 )
Additions 4,114     5,979     13,557     1,094     4,359  
Charge-offs (3,376 )   (2,004 )   (97 )   (1,216 )   (660 )
Loans returning to accruing status     (134 )   (27 )   (1,039 )   (23 )
Transfers to OREO (548 )   (107 )       (92 )   (215 )
Ending Balance $ 20,122     $ 24,574     $ 22,338     $ 9,973     $ 12,677  
                                       

The net decline in nonaccrual loans from the prior quarter was primarily attributable to charge-offs and customer payments.

The following table shows the activity in other real estate owned ("OREO") for the quarter ended (dollars in thousands):

  September 30,   June 30,   March 31,   December 31,   September 30,
  2017   2017   2017   2016   2016
Beginning Balance $ 9,482     $ 9,605     $ 10,084     $ 10,581     $ 13,381  
Additions of foreclosed property 621     132         859     246  
Valuation adjustments (588 )   (19 )   (238 )   (138 )   (479 )
Proceeds from sales (648 )   (272 )   (277 )   (1,282 )   (2,844 )
Gains (losses) from sales (103 )   36     36     64     277  
Ending Balance $ 8,764     $ 9,482     $ 9,605     $ 10,084     $ 10,581  
                                       

Past Due LoansPast due loans still accruing interest totaled $34.3 million, or 0.50% of total loans, at September 30, 2017 compared to $27.4 million, or 0.40% of total loans, at June 30, 2017 and $26.9 million, or 0.44% of total loans, at September 30, 2016.  Of the total past due loans still accruing interest, $4.5 million, or 0.07% of total loans, were loans past due 90 days or more at September 30, 2017, compared to $3.6 million, or 0.05% of total loans, at June 30, 2017 and $3.5 million, or 0.06% of total loans, at September 30, 2016.

Net Charge-offsFor the third quarter of 2017, net charge-offs were $4.1 million, or 0.24% of total average loans on an annualized basis, compared to $2.5 million, or 0.15%, for the prior quarter and $929,000, or 0.06%, for the same quarter last year.  Of the net charge-offs in the third quarter of 2017, the majority were previously considered impaired. For the nine months ended September 30, 2017, net charge-offs were $7.4 million, or 0.15% of total average loans on annualized basis, compared to $4.7 million, or 0.11%, for the same period in 2016.

Provision for Loan LossesThe provision for loan losses for the third quarter of 2017 was $3.1 million, an increase of $750,000 compared to the previous quarter and an increase of $653,000 compared to the same quarter in 2016.  The increase in provision for loan losses was primarily driven by higher loan balances and higher levels of charge-offs in the third quarter of 2017.

Allowance for Loan LossesThe allowance for loan losses ("ALL") decreased $1.1 million from June 30, 2017 to $37.2 million at September 30, 2017 primarily due to the continued decline in the historical loss rates and reductions in specific reserves on impaired loans that were charged off during the quarter.  The ALL as a percentage of the total loan portfolio was 0.54% at September 30, 2017, 0.56% at June 30, 2017, and 0.59% at September 30, 2016.

The ratio of the ALL to nonaccrual loans was 184.7% at September 30, 2017, compared to 155.5% at June 30, 2017 and 288.3% at September 30, 2016.  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 $520,000, or 2.9%, to $17.5 million for the quarter ended September 30, 2017 from $18.1 million in the prior quarter, primarily driven by lower loan-related swap fees and mortgage banking income, partially offset by increases in customer-related fee income and higher insurance-related income.

Mortgage banking income decreased $488,000, or 17.5%, to $2.3 million in the third quarter of 2017 compared to $2.8 million in the second quarter of 2017, related to declines in mortgage loan originations.  Mortgage loan originations declined by $9.2 million, or 6.8%, in the third quarter to $127.3 million from $136.6 million in the second quarter of 2017.  The majority of the decrease was related to purchase-money mortgage loans, which declined by $13.0 million from the prior quarter.   Of the mortgage loan originations in the third quarter of 2017, 28.0% were refinances compared with 23.4% in the prior quarter.

NONINTEREST EXPENSE

Noninterest expense decreased $2.4 million, or 4.1%, to $57.5 million for the quarter ended September 30, 2017 from $59.9 million in the prior quarter.  Excluding merger-related costs of $732,000 and $2.7 million in the third and second quarters of 2017, respectively, operating noninterest expense decreased $422,000 when compared to the second quarter of 2017. Salaries and benefits expenses declined by $792,000 primarily related to declines in incentive compensation.  Marketing and advertising costs decreased $335,000 due to seasonally lower expenses.  These decreases were partially offset by an increase in OREO and credit-related expenses of $797,000 primarily due to higher valuation adjustments of $569,000 and losses on sales of OREO property compared to gains on sales of OREO property in the prior quarter.

BALANCE SHEET

At September 30, 2017, total assets were $9.0 billion, an increase of $114.2 million from June 30, 2017 and an increase of $771.2 million from September 30, 2016.  The increase in assets was mostly related to loan growth.

At September 30, 2017, loans held for investment (net of deferred fees and costs) were $6.9 billion, an increase of $127.2 million, or 7.5% (annualized), from June 30, 2017, while average loans increased $194.5 million, or 11.7% (annualized), from the prior quarter.  Loans held for investment increased $749.8 million, or 12.2%, from September 30, 2016, while quarterly average loans increased $788.8 million, or 13.1%, from the prior year.

At September 30, 2017, total deposits were $6.9 billion, an increase of $117.4 million, or 6.9% (annualized), from June 30, 2017, while average deposits increased $160.1 million, or 9.6% (annualized), from the prior quarter. Total deposits grew $623.3 million, or 10.0%, from September 30, 2016, while quarterly average deposits increased $592.9 million, or 9.6%, from the prior year.

At September 30, 2017, June 30, 2017, and September 30, 2016, respectively, the Company had a common equity Tier 1 capital ratio of 9.40%, 9.39%, and 9.78%; a Tier 1 capital ratio of 10.56%, 10.57%, and 11.07%; a total capital ratio of 12.94%, 13.00%, and 11.60%; and a leverage ratio of 9.52%, 9.61%, and 9.89%.

The Company's common equity to total assets ratios at September 30, 2017, June 30, 2017, and September 30, 2016 were 11.53%, 11.56%, and 12.12%, respectively, while its tangible common equity to tangible assets ratio was 8.34%, 8.32%, and 8.57%, respectively.

During the third quarter of 2017, the Company declared and paid cash dividends of $0.20 per common share, consistent with the prior quarter and an increase of $0.01, or 5.3%, compared to the same quarter in the prior year.

ABOUT UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union Bankshares Corporation (NASDAQ:UBSH) is the holding company for Union Bank & Trust, which has 111 banking offices and approximately 173 ATMs located throughout Virginia. Non-bank affiliates of the holding company include: Union Mortgage Group, Inc., which provides a full line of mortgage products, Old Dominion Capital Management, Inc., which provides investment advisory services, and Union Insurance Group, LLC, which offers various lines of insurance products.

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

Union Bankshares Corporation will hold a conference call on Wednesday, October 18th, at 9:00 a.m. Eastern Time during which management will review earnings and performance trends.  Callers wishing to participate may call toll-free by dialing (877) 668-4908; international callers wishing to participate may do so by dialing (973) 453-3058.  The conference ID number is 95436690.

NON-GAAP MEASURES

In reporting the results of the quarter ended September 30, 2017, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis.  These measures are a supplement to GAAP used to prepare the Company's financial statements and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP.  In addition, the Company's non-GAAP measures may not be comparable to non-GAAP measures of other companies.

FORWARD-LOOKING STATEMENTSCertain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact, are based on certain assumptions as of the time they are made, and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.  Such statements are often characterized by the use of qualified words (and their derivatives) such as "expect," "believe," "estimate," "plan," "project," "anticipate," "intend," "will," "may," "view," "opportunity," "potential," or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events.  Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in:
  • the possibility that any of the anticipated benefits of the Pending Merger with Xenith will not be realized or will not be realized within the expected time period, the businesses of the Company and Xenith may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, the expected revenue synergies and cost savings from the Pending Merger may not be fully realized or realized within the expected time frame, revenues following the Pending Merger may be lower than expected, customer and employee relationships and business operations may be disrupted by the Pending Merger, or obtaining required shareholder approvals, or completing the Pending Merger on the expected timeframe, may be more difficult, time-consuming or costly than expected,
  • changes in interest rates,
  • general economic and financial market conditions,
  • the Company's ability to manage its growth or implement its growth strategy,
  • the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets,
  • levels of unemployment in the Bank's lending area,
  • real estate values in the Bank's lending area,
  • an insufficient allowance for loan losses,
  • the quality or composition of the loan or investment portfolios,
  • concentrations of loans secured by real estate, particularly commercial real estate,
  • the effectiveness of the Company's credit processes and management of the Company's credit risk,
  • demand for loan products and financial services in the Company's market area,
  • the Company's ability to compete in the market for financial services,
  • technological risks and developments, and cyber attacks or events,
  • performance by the Company's counterparties or vendors,
  • deposit flows,
  • the availability of financing and the terms thereof,
  • the level of prepayments on loans and mortgage-backed securities,
  • legislative or regulatory changes and requirements,
  • monetary and fiscal policies of the U.S. government including policies of the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System, and
  • accounting principles and guidelines.

More information on risk factors that could affect the Company's forward-looking statements is available on the Company's website, http://investors.bankatunion.com or the Company's Annual Report on Form 10-K for the year ended December 31, 2016, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, and other reports filed with the Securities and Exchange Commission ("SEC"). The information on the Company's website is not a part of this press release. All risk factors and uncertainties described in those documents should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not intend or assume any obligation to update or revise any forward-looking statements that may be made from time to time by or on behalf of the Company.

ADDITIONAL INFORMATION ABOUT THE PENDING MERGER AND WHERE TO FIND IT

In connection with the Pending Merger, the Company has filed with the SEC a registration statement on Form S-4 to register the shares of the Company's common stock to be issued to the shareholders of Xenith. The registration statement includes a joint proxy statement of the Company and Xenith and a prospectus of the Company. A definitive joint proxy statement/prospectus was first sent to the shareholders of the Company and Xenith on September 21, 2017 seeking their approval of the Pending Merger and related matters. This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Before making any voting or investment decision, investors and shareholders of the Company and Xenith are urged to read carefully the entire registration statement and joint proxy statement/prospectus, including all amendments thereto, because they contain important information about the Pending Merger. Free copies of these documents may be obtained as described below.

Investors and shareholders of both companies are urged to read the registration statement on Form S-4 and the joint proxy statement/prospectus included within the registration statement and any other relevant documents filed with the SEC in connection with the Pending Merger because they contain important information about the Company, Xenith and the Pending Merger. Investors and shareholders of both companies are urged to review carefully and consider all public filings by the Company and Xenith with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Quarterly Reports on Form 10-Q, and their Current Reports on Form 8-K. Investors and shareholders may obtain free copies of these documents through the website maintained by the SEC at www.sec.gov. Free copies of the joint proxy statement/prospectus and other documents filed with the SEC also may be obtained by directing a request by telephone or mail to Union Bankshares Corporation, 1051 East Cary Street, Suite 1200, Richmond, Virginia 23219, Attention: Investor Relations (telephone: (804) 633-5031), or Xenith Bankshares, Inc., 901 E. Cary Street Richmond, Virginia, 23219, Attention: Thomas W. Osgood (telephone: (804) 433-2200), or by accessing the Company's website at www.bankatunion.com under "Investor Relations" or Xenith's website at www.xenithbank.com under "Investor Relations" under "About Us." The information on the Company's and Xenith's websites is not, and shall not be deemed to be, a part of this release or incorporated into other filings either company makes with the SEC.

The Company and Xenith and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of the Company and/or Xenith in connection with the Pending Merger. Information about the directors and executive officers of the Company is set forth in the proxy statement for the Company's 2017 annual meeting of shareholders filed with the SEC on March 21, 2017. Information about the directors and executive officers of Xenith is set forth in Xenith's Annual Report on Form 10-K, as amended, filed with the SEC on May 1, 2017. Additional information regarding the interests of these participants and other persons who may be deemed participants in the Pending Merger may be obtained by reading the joint proxy statement/prospectus regarding the Pending Merger when it becomes available. Free copies of these documents may be obtained as described above.
UNION BANKSHARES CORPORATION AND SUBSIDIARIES        
KEY FINANCIAL RESULTS        
(Dollars in thousands, except share data)        
(FTE - "Fully Taxable Equivalent")        
  Three Months Ended   Nine Months Ended
  9/30/17   6/30/17   9/30/16   9/30/17   9/30/16
Results of Operations (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Interest and dividend income $ 84,850     $ 81,221     $ 74,433     $ 242,712     $ 217,964  
Interest expense 13,652     12,222     7,405     35,947     21,429  
Net interest income 71,198     68,999     67,028     206,765     196,535  
Provision for credit losses 3,050     2,173     2,472     7,345     7,376  
Net interest income after provision for credit losses 68,148     66,826     64,556     199,420     189,159  
Noninterest income 17,536     18,056     18,950     54,430     52,857  
Noninterest expenses 57,496     59,930     56,913     174,821     166,436  
Income before income taxes 28,188     24,952     26,593     79,029     75,580  
Income tax expense 7,530     6,996     6,192     21,292     18,881  
Net income $ 20,658     $ 17,956     $ 20,401     $ 57,737     $ 56,699  
                   
Interest earned on earning assets (FTE) (1) $ 87,498     $ 83,869     $ 76,860     $ 250,548     $ 225,331  
Net interest income (FTE) (1) 73,846     71,647     69,455     214,601     203,902  
                   
Net income - community bank segment $ 20,311     $ 17,405     $ 19,616     $ 56,836     $ 55,321  
Net income - mortgage segment 347     551     785     901     1,378  
                   
Key Ratios                  
Earnings per common share, diluted $ 0.47     $ 0.41     $ 0.47     $ 1.32     $ 1.29  
Return on average assets (ROA) 0.91 %   0.82 %   1.00 %   0.88 %   0.95 %
Return on average equity (ROE) 7.90 %   7.02 %   8.14 %   7.53 %   7.64 %
Return on average tangible common equity (ROTCE) (2) 11.34 %   10.15 %   12.00 %   10.90 %   11.25 %
Efficiency ratio 64.80 %   68.84 %   66.19 %   66.93 %   66.74 %
Efficiency ratio (FTE) (1) 62.92 %   66.81 %   64.38 %   64.98 %   64.82 %
Net interest margin 3.46 %   3.49 %   3.63 %   3.49 %   3.67 %
Net interest margin (FTE) (1) 3.59 %   3.62 %   3.76 %   3.62 %   3.80 %
Yields on earning assets (FTE) (1) 4.25 %   4.24 %   4.16 %   4.23 %   4.20 %
Cost of interest-bearing liabilities (FTE) (1) 0.85 %   0.79 %   0.52 %   0.78 %   0.52 %
Cost of funds (FTE) (1) 0.66 %   0.62 %   0.40 %   0.61 %   0.40 %
                                       
Operating Measures (3)                                      
Net operating earnings $ 21,319     $ 20,314     $ 20,401     $ 60,757     $ 56,699  
Operating earnings per share, diluted $ 0.49     $ 0.46     $ 0.47     $ 1.39     $ 1.29  
Operating ROA 0.94 %   0.93 %   1.00 %   0.93 %   0.95 %
Operating ROE 8.15 %   7.94 %   8.14 %   7.93 %   7.64 %
Operating ROTCE 11.70 %   11.48 %   12.00 %   11.47 %   11.25 %
Operating efficiency ratio (FTE) 62.12 %   63.75 %   64.38 %   63.69 %   64.82 %
Community bank segment net operating earnings $ 20,972     $ 19,763     $ 19,616     $ 59,856     $ 55,321  
Community bank segment operating earnings per share, diluted $ 0.48     $ 0.45     $ 0.45     $ 1.37     $ 1.26  
                   
Per Share Data                  
Earnings per common share, basic $ 0.47     $ 0.41     $ 0.47     $ 1.32     $ 1.29  
Earnings per common share, diluted 0.47     0.41     0.47     1.32     1.29  
Cash dividends paid per common share 0.20     0.20     0.19     0.60     0.57  
Market value per share 35.30     33.90     26.77     35.30     26.77  
Book value per common share 24.00     23.79     23.18     24.00     23.18  
Tangible book value per common share (2) 16.76     16.50     15.75     16.76     15.75  
Price to earnings ratio, diluted 18.93     20.61     14.32     20.00     15.54  
Price to book value per common share ratio 1.47     1.42     1.15     1.47     1.15  
Price to tangible book value per common share ratio (2) 2.11     2.05     1.70     2.11     1.70  
Weighted average common shares outstanding, basic 43,706,635     43,693,427     43,565,937     43,685,045     43,853,548  
Weighted average common shares outstanding, diluted 43,792,058     43,783,952     43,754,915     43,767,502     43,967,725  
Common shares outstanding at end of period 43,729,229     43,706,000     43,556,486     43,729,229     43,556,486  

  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/17   6/30/17   9/30/16   9/30/17   9/30/16
Capital Ratios (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Common equity Tier 1 capital ratio (4) 9.40 %   9.39 %   9.78 %   9.40 %   9.78 %
Tier 1 capital ratio (4) 10.56 %   10.57 %   11.07 %   10.56 %   11.07 %
Total capital ratio (4) 12.94 %   13.00 %   11.60 %   12.94 %   11.60 %
Leverage ratio (Tier 1 capital to average assets) (4) 9.52 %   9.61 %   9.89 %   9.52 %   9.89 %
Common equity to total assets 11.53 %   11.56 %   12.12 %   11.53 %   12.12 %
Tangible common equity to tangible assets (2) 8.34 %   8.32 %   8.57 %   8.34 %   8.57 %
                   
Financial Condition                  
Assets $ 9,029,436     $ 8,915,187     $ 8,258,230     $ 9,029,436     $ 8,258,230  
Loans held for investment 6,898,729     6,771,490     6,148,918     6,898,729     6,148,918  
Earning Assets 8,232,413     8,094,574     7,466,956     8,232,413     7,466,956  
Goodwill 298,191     298,191     298,191     298,191     298,191  
Amortizable intangibles, net 16,017     17,422     22,343     16,017     22,343  
Deposits 6,881,826     6,764,434     6,258,506     6,881,826     6,258,506  
Stockholders' equity 1,041,371     1,030,869     1,000,964     1,041,371     1,000,964  
Tangible common equity (2) 727,163     715,256     680,430     727,163     680,430  
                   
Loans held for investment, net of deferred fees and costs                  
Construction and land development $ 841,738     $ 799,938     $ 776,430     $ 841,738     $ 776,430  
Commercial real estate - owner occupied 903,523     888,285     857,142     903,523     857,142  
Commercial real estate - non-owner occupied 1,748,039     1,698,329     1,454,828     1,748,039     1,454,828  
Multifamily real estate 368,686     367,257     339,313     368,686     339,313  
Commercial & Industrial 554,522     568,602     509,857     554,522     509,857  
Residential 1-4 Family 1,083,112     1,066,519     999,361     1,083,112     999,361  
Auto 276,572     274,162     255,188     276,572     255,188  
HELOC 535,446     535,088     524,097     535,446     524,097  
Consumer and all other 587,091     573,310     432,702     587,091     432,702  
Total loans held for investment $ 6,898,729     $ 6,771,490     $ 6,148,918     $ 6,898,729     $ 6,148,918  
                   
Deposits                  
NOW accounts $ 1,851,327     $ 1,882,287     $ 1,635,446     $ 1,851,327     $ 1,635,446  
Money market accounts 1,621,443     1,559,895     1,398,177     1,621,443     1,398,177  
Savings accounts 553,082     558,472     596,702     553,082     596,702  
Time deposits of $100,000 and over 621,070     580,962     528,227     621,070     528,227  
Other time deposits 699,755     681,248     657,686     699,755     657,686  
Total interest-bearing deposits $ 5,346,677     $ 5,262,864     $ 4,816,238     $ 5,346,677     $ 4,816,238  
Demand deposits 1,535,149     1,501,570     1,442,268     1,535,149     1,442,268  
Total deposits $ 6,881,826     $ 6,764,434     $ 6,258,506     $ 6,881,826     $ 6,258,506  
                   
Averages                  
Assets $ 8,973,964     $ 8,747,377     $ 8,153,951     $ 8,730,815     $ 7,956,841  
Loans held for investment 6,822,498     6,628,011     6,033,723     6,613,078     5,869,511  
Loans held for sale 38,569     28,331     42,755     31,461     33,619  
Securities 1,243,904     1,229,593     1,218,552     1,227,220     1,202,882  
Earning assets 8,167,919     7,934,405     7,354,684     7,922,944     7,159,813  
Deposits 6,797,840     6,637,742     6,204,958     6,615,718     6,043,892  
Certificates of deposit 1,289,794     1,248,818     1,181,936     1,250,180     1,172,856  
Interest-bearing deposits 5,302,226     5,179,774     4,796,505     5,166,163     4,667,891  
Borrowings 1,080,226     1,023,599     884,597     1,030,500     860,942  
Interest-bearing liabilities 6,382,452     6,203,373     5,681,102     6,196,663     5,528,833  
Stockholders' equity 1,037,792     1,026,148     996,668     1,024,853     991,097  
Tangible common equity (2) 722,920     709,793     676,308     708,478     673,468  

  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/17   6/30/17   9/30/16   9/30/17   9/30/16
Asset Quality (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Allowance for Loan Losses (ALL)                  
Beginning balance $ 38,214     $ 38,414     $ 35,074     $ 37,192     $ 34,047  
Add: Recoveries 887     827     534     2,559     2,022  
Less: Charge-offs 4,989     3,327     1,463     9,949     6,728  
Add: Provision for loan losses 3,050     2,300     2,397     7,360     7,201  
Ending balance $ 37,162     $ 38,214     $ 36,542     $ 37,162     $ 36,542  
                   
ALL / total outstanding loans 0.54 %   0.56 %   0.59 %   0.54 %   0.59 %
Net charge-offs / total average loans 0.24 %   0.15 %   0.06 %   0.15 %   0.11 %
Provision / total average loans 0.18 %   0.14 %   0.16 %   0.15 %   0.16 %
                   
Total PCI Loans $ 51,041     $ 56,167     $ 62,346     $ 51,041     $ 62,346  
Remaining fair value mark on purchased performing loans 14,602     15,382     18,154     14,602     18,154  
                   
Nonperforming Assets                  
Construction and land development $ 5,671     $ 5,659     $ 2,301     $ 5,671     $ 2,301  
Commercial real estate - owner occupied 2,205     1,279     1,609     2,205     1,609  
Commercial real estate - non-owner occupied 2,701     4,765         2,701      
Commercial & Industrial 1,252     4,281     1,344     1,252     1,344  
Residential 1-4 Family 6,163     6,128     5,279     6,163     5,279  
Auto 174     270     231     174     231  
HELOC 1,791     2,059     1,464     1,791     1,464  
Consumer and all other 165     133     449     165     449  
Nonaccrual loans $ 20,122     $ 24,574     $ 12,677     $ 20,122     $ 12,677  
Other real estate owned 8,764     9,482     10,581     8,764     10,581  
Total nonperforming assets (NPAs) $ 28,886     $ 34,056     $ 23,258     $ 28,886     $ 23,258  
Construction and land development $ 54     $ 83     $ 610     $ 54     $ 610  
Commercial real estate - owner occupied 679     56     304     679     304  
Commercial real estate - non-owner occupied 298     298         298      
Commercial & Industrial 101     55     77     101     77  
Residential 1-4 Family 2,360     2,369     2,005     2,360     2,005  
Auto 143     35     28     143     28  
HELOC 709     544     407     709     407  
Consumer and all other 188     185     98     188     98  
Loans = 90 days and still accruing $ 4,532     $ 3,625     $ 3,529     $ 4,532     $ 3,529  
Total NPAs and loans = 90 days $ 33,418     $ 37,681     $ 26,787     $ 33,418     $ 26,787  
NPAs / total outstanding loans 0.42 %   0.50 %   0.38 %   0.42 %   0.38 %
NPAs / total assets 0.32 %   0.38 %   0.28 %   0.32 %   0.28 %
ALL / nonaccrual loans 184.68 %   155.51 %   288.25 %   184.68 %   288.25 %
ALL / nonperforming assets 128.65 %   112.21 %   157.12 %   128.65 %   157.12 %
                   
Past Due Detail                  
Construction and land development $ 7,221     $ 602     $ 309     $ 7,221     $ 309  
Commercial real estate - owner occupied 1,707     3,148     1,411     1,707     1,411  
Commercial real estate - non-owner occupied 909     1,530     324     909     324  
Multifamily real estate     500              
Commercial & Industrial 1,558     1,652     567     1,558     567  
Residential 1-4 Family 5,633     2,477     4,985     5,633     4,985  
Auto 2,415     1,562     1,846     2,415     1,846  
HELOC 1,400     1,405     2,600     1,400     2,600  
Consumer and all other 3,469     1,891     1,713     3,469     1,713  
Loans 30-59 days past due $ 24,312     $ 14,767     $ 13,755     $ 24,312     $ 13,755  

  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/17   6/30/17   9/30/16   9/30/17   9/30/16
Past Due Detail cont'd (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Construction and land development $ 100     $ 26     $ 697     $ 100     $ 697  
Commercial real estate - owner occupied 689     194     365     689     365  
Commercial real estate - non-owner occupied 571     571         571      
Commercial & Industrial 255     113     51     255     51  
Residential 1-4 Family 1,439     5,663     6,345     1,439     6,345  
Auto 293     240     239     293     239  
HELOC 628     964     899     628     899  
Consumer and all other 1,445     1,242     1,037     1,445     1,037  
Loans 60-89 days past due $ 5,420     $ 9,013     $ 9,633     $ 5,420     $ 9,633  
                   
Troubled Debt Restructurings                  
Performing $ 16,519     $ 14,947     $ 11,824     $ 16,519     $ 11,824  
Nonperforming 2,725     4,454     1,452     2,725     1,452  
Total troubled debt restructurings $ 19,244     $ 19,401     $ 13,276     $ 19,244     $ 13,276  
                   
Alternative Performance Measures (non-GAAP)                  
Net interest income (FTE)                  
Net interest income (GAAP) $ 71,198     $ 68,999     $ 67,028     $ 206,765     $ 196,535  
FTE adjustment 2,648     2,648     2,427     7,836     7,367  
Net interest income (FTE) (non-GAAP) (1) $ 73,846     $ 71,647     $ 69,455     $ 214,601     $ 203,902  
Average earning assets 8,167,919     7,934,405     7,354,684     7,922,944     7,159,813  
Net interest margin 3.46 %   3.49 %   3.63 %   3.49 %   3.67 %
Net interest margin (FTE) 3.59 %   3.62 %   3.76 %   3.62 %   3.80 %
                   
Tangible Assets                  
Ending assets (GAAP) $ 9,029,436     $ 8,915,187     $ 8,258,230     $ 9,029,436     $ 8,258,230  
Less: Ending goodwill 298,191     298,191     298,191     298,191     298,191  
Less: Ending amortizable intangibles 16,017     17,422     22,343     16,017     22,343  
Ending tangible assets (non-GAAP) $ 8,715,228     $ 8,599,574     $ 7,937,696     $ 8,715,228     $ 7,937,696  
                   
Tangible Common Equity (2)                  
Ending equity (GAAP) $ 1,041,371     $ 1,030,869     $ 1,000,964     $ 1,041,371     $ 1,000,964  
Less: Ending goodwill 298,191     298,191     298,191     298,191     298,191  
Less: Ending amortizable intangibles 16,017     17,422     22,343     16,017     22,343  
Ending tangible common equity (non-GAAP) $ 727,163     $ 715,256     $ 680,430     $ 727,163     $ 680,430  
                   
Average equity (GAAP) $ 1,037,792     $ 1,026,148     $ 996,668     $ 1,024,853     $ 991,097  
Less: Average goodwill 298,191     298,191     297,707     298,191     295,380  
Less: Average amortizable intangibles 16,681     18,164     22,653     18,184     22,249  
Average tangible common equity (non-GAAP) $ 722,920     $ 709,793     $ 676,308     $ 708,478     $ 673,468  
                   
Operating Measures (3)                  
Net income (GAAP) $ 20,658     $ 17,956     $ 20,401     $ 57,737     $ 56,699  
Plus: Merger-related costs, net of tax 661     2,358         3,020      
Net operating earnings (non-GAAP) $ 21,319     $ 20,314     $ 20,401     $ 60,757     $ 56,699  
                   
Noninterest expense (GAAP) $ 57,496     $ 59,930     $ 56,913     $ 174,821     $ 166,436  
Less: Merger-related costs 732     2,744         3,476      
Operating noninterest expense (non-GAAP) $ 56,764     $ 57,186     $ 56,913     $ 171,345     $ 166,436  
                   
Net interest income (FTE) (non-GAAP) (1) $ 73,846     $ 71,647     $ 69,455     $ 214,601     $ 203,902  
Noninterest income (GAAP) 17,536     18,056     18,950     54,430     52,857  
                   
Efficiency ratio 64.80 %   68.84 %   66.19 %   66.93 %   66.74 %
Efficiency ratio (FTE) (1) 62.92 %   66.81 %   64.38 %   64.98 %   64.82 %
Operating efficiency ratio (FTE) 62.12 %   63.75 %   64.38 %   63.69 %   64.82 %

  As of & For Three Months Ended   As of & For Nine Months Ended
  9/30/17   6/30/17   9/30/16   9/30/17   9/30/16
Alternative Performance Measures (non-GAAP) cont'd (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Operating Measures cont'd (3)                  
Community bank segment net income (GAAP) $ 20,311     $ 17,405     $ 19,616     $ 56,836     $ 55,321  
Plus: Merger-related costs, net of tax 661     2,358         3,020      
Community bank segment net operating earnings (non-GAAP) $ 20,972     $ 19,763     $ 19,616     $ 59,856     $ 55,321  
                   
Community bank segment earnings per share, diluted (GAAP) $ 0.46     $ 0.40     $ 0.45     $ 1.30     $ 1.26  
Community bank segment operating earnings per share, diluted (non-GAAP) 0.48     0.45     0.45     1.37     1.26  
                   
Mortgage Origination Volume                  
Refinance Volume $ 35,678     $ 31,958     $ 52,883     $ 101,967     $ 137,221  
Construction Volume 19,966     19,909     20,760     62,545     57,405  
Purchase Volume 71,694     84,713     83,014     199,622     200,323  
Total Mortgage loan originations $ 127,338     $ 136,580     $ 156,657     $ 364,134     $ 394,949  
% of originations that are refinances 28.0 %   23.4 %   33.8 %   28.0 %   34.7 %
                   
Other Data                  
End of period full-time employees 1,427     1,432     1,391     1,427     1,391  
Number of full-service branches 111     112     115     111     115  
Number of full automatic transaction machines (ATMs) 173     174     193     173     193  

(1) Net interest income (FTE), which is used in computing net interest margin (FTE) and efficiency ratio (FTE), provides valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources.  The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing yield on earning assets.  Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components.

(2)  Tangible common equity is used in the calculation of certain profitability, capital, and per share ratios.  The Company believes tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses.

(3) Operating measures exclude merger-related costs unrelated to the Company's normal operations. Such costs were only incurred during the second and third quarters of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three and nine months ended September 30, 2016. 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, 2017 are estimates and subject to change pending the Company's filing of its FR Y9-C. All other periods are presented as filed.
     
UNION BANKSHARES CORPORATION AND SUBSIDIARIES    
CONSOLIDATED BALANCE SHEETS    
(Dollars in thousands, except share data)          
  September 30,   December 31,   September 30,
  2017   2016   2016
ASSETS (unaudited)   (audited)   (unaudited)
Cash and cash equivalents:          
Cash and due from banks $ 115,776     $ 120,758     $ 103,979  
Interest-bearing deposits in other banks 60,294     58,030     51,303  
Federal funds sold 891     449     893  
Total cash and cash equivalents 176,961     179,237     156,175  
Securities available for sale, at fair value 968,361     946,764     954,984  
Securities held to maturity, at carrying value 204,801     201,526     200,839  
Restricted stock, at cost 68,441     60,782     63,204  
Loans held for sale, at fair value 30,896     36,487     46,814  
Loans held for investment, net of deferred fees and costs 6,898,729     6,307,060     6,148,918  
Less allowance for loan losses 37,162     37,192     36,542  
Net loans held for investment 6,861,567     6,269,868     6,112,376  
Premises and equipment, net 120,808     122,027     123,416  
Other real estate owned, net of valuation allowance 8,764     10,084     10,581  
Goodwill 298,191     298,191     298,191  
Amortizable intangibles, net 16,017     20,602     22,343  
Bank owned life insurance 181,451     179,318     177,847  
Other assets 93,178     101,907     91,460  
Total assets $ 9,029,436     $ 8,426,793     $ 8,258,230  
LIABILITIES          
Noninterest-bearing demand deposits $ 1,535,149     $ 1,393,625     $ 1,442,268  
Interest-bearing deposits 5,346,677     4,985,864     4,816,238  
Total deposits 6,881,826     6,379,489     6,258,506  
Securities sold under agreements to repurchase 43,337     59,281     64,225  
Other short-term borrowings 574,000     517,500     601,500  
Long-term borrowings 434,750     413,308     259,902  
Other liabilities 54,152     56,183     73,133  
Total liabilities 7,988,065     7,425,761     7,257,266  
Commitments and contingencies          
STOCKHOLDERS' EQUITY          
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 43,729,229 shares, 43,609,317 shares, and 43,556,486 shares, respectively. 57,708     57,506     57,444  
Additional paid-in capital 608,884     605,397     603,785  
Retained earnings 373,468     341,938     329,876  
Accumulated other comprehensive income 1,311     (3,809 )   9,859  
Total stockholders' equity 1,041,371     1,001,032     1,000,964  
Total liabilities and stockholders' equity $ 9,029,436     $ 8,426,793     $ 8,258,230  
                       

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,
  2017   2017   2016   2017   2016
Interest and dividend income: (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Interest and fees on loans $ 75,948     $ 72,612     $ 66,190     $ 216,644     $ 193,884  
Interest on deposits in other banks 181     115     65     367     178  
Interest and dividends on securities:                  
Taxable 5,175     4,982     4,732     15,081     13,558  
Nontaxable 3,546     3,512     3,446     10,620     10,344  
Total interest and dividend income 84,850     81,221     74,433     242,712     217,964  
Interest expense:                  
Interest on deposits 7,234     6,100     4,552     18,410     12,945  
Interest on short-term borrowings 1,871     1,400     765     4,221     2,098  
Interest on long-term borrowings 4,547     4,722     2,088     13,316     6,386  
Total interest expense 13,652     12,222     7,405     35,947     21,429  
Net interest income 71,198     68,999     67,028     206,765     196,535  
Provision for credit losses 3,050     2,173     2,472     7,345     7,376  
Net interest income after provision for credit losses 68,148     66,826     64,556     199,420     189,159  
Noninterest income:                  
Service charges on deposit accounts 5,153     4,963     4,965     14,945     14,454  
Other service charges and fees 4,529     4,637     4,397     13,575     12,971  
Fiduciary and asset management fees 2,794     2,725     2,844     8,313     7,315  
Mortgage banking income, net 2,305     2,793     3,207     7,123     8,324  
Gains on securities transactions, net 184     117         782     145  
Bank owned life insurance income 1,377     1,335     1,389     4,837     4,122  
Loan-related interest rate swap fees 416     1,031     1,303     2,627     3,056  
Other operating income 778     455     845     2,228     2,470  
Total noninterest income 17,536     18,056     18,950     54,430     52,857  
Noninterest expenses:                  
Salaries and benefits 29,769     30,561     30,493     92,499     87,061  
Occupancy expenses 4,939     4,718     4,841     14,560     14,627  
Furniture and equipment expenses 2,559     2,720     2,635     7,882     7,867  
Printing, postage, and supplies 1,154     1,406     1,147     3,710     3,566  
Communications expense 798     872     948     2,580     2,964  
Technology and data processing 4,232     3,927     3,917     12,059     11,340  
Professional services 1,985     2,092     1,895     5,734     6,432  
Marketing and advertising expense 1,944     2,279     1,975     5,963     5,838  
FDIC assessment premiums and other insurance 1,141     947     1,262     2,793     4,003  
Other taxes 2,022     2,022     639     6,065     3,864  
Loan-related expenses 1,349     1,281     1,531     3,959     3,638  
OREO and credit-related expenses 1,139     342     503     2,023     1,965  
Amortization of intangible assets 1,480     1,544     1,843     4,661     5,468  
Training and other personnel costs 887     1,043     863     2,900     2,512  
Merger-related costs 732     2,744         3,476      
Other expenses 1,366     1,432     2,421     3,957     5,291  
Total noninterest expenses 57,496     59,930     56,913     174,821     166,436  
Income before income taxes 28,188     24,952     26,593     79,029     75,580  
Income tax expense 7,530     6,996     6,192     21,292     18,881  
Net income $ 20,658     $ 17,956     $ 20,401     $ 57,737     $ 56,699  
Basic earnings per common share $ 0.47     $ 0.41     $ 0.47     $ 1.32     $ 1.29  
Diluted earnings per common share $ 0.47     $ 0.41     $ 0.47     $ 1.32     $ 1.29  
                                       

UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(Dollars in thousands)              
  Community Bank   Mortgage   Eliminations   Consolidated
Three Months Ended September 30, 2017 (unaudited)              
Net interest income $ 70,718     $ 480     $     $ 71,198  
Provision for credit losses 3,056     (6 )       3,050  
Net interest income after provision for credit losses 67,662     486         68,148  
Noninterest income 15,121     2,527     (112 )   17,536  
Noninterest expenses 55,133     2,475     (112 )   57,496  
Income before income taxes 27,650     538         28,188  
Income tax expense 7,339     191         7,530  
Net income 20,311     347         20,658  
Plus: Merger-related costs, net of tax 661             661  
Net operating earnings (non-GAAP) $ 20,972     $ 347     $     $ 21,319  
Total assets $ 9,020,486     $ 97,154     $ (88,204 )   $ 9,029,436  
Three Months Ended June 30, 2017 (unaudited)              
Net interest income $ 68,580     $ 419     $     $ 68,999  
Provision for credit losses 2,184     (11 )       2,173  
Net interest income after provision for credit losses 66,396     430         66,826  
Noninterest income 15,203     2,993     (140 )   18,056  
Noninterest expenses 57,496     2,574     (140 )   59,930  
Income before income taxes 24,103     849         24,952  
Income tax expense 6,698     298         6,996  
Net income 17,405     551         17,956  
Plus: Merger-related costs, net of tax 2,358             2,358  
Net operating earnings (non-GAAP) $ 19,763     $ 551     $     $ 20,314  
Total assets $ 8,904,819     $ 105,429     $ (95,061 )   $ 8,915,187  
Three Months Ended September 30, 2016 (unaudited)              
Net interest income $ 66,605     $ 423     $     $ 67,028  
Provision for credit losses 2,455     17         2,472  
Net interest income after provision for credit losses 64,150     406         64,556  
Noninterest income 15,589     3,501     (140 )   18,950  
Noninterest expenses 54,353     2,700     (140 )   56,913  
Income before income taxes 25,386     1,207         26,593  
Income tax expense 5,770     422         6,192  
Net income $ 19,616     $ 785     $     $ 20,401  
Total assets $ 8,251,351     $ 90,692     $ (83,813 )   $ 8,258,230  
Nine Months Ended September 30, 2017 (unaudited)              
Net interest income $ 205,534     $ 1,231     $     $ 206,765  
Provision for credit losses 7,344     1         7,345  
Net interest income after provision for credit losses 198,190     1,230         199,420  
Noninterest income 47,080     7,743     (393 )   54,430  
Noninterest expenses 167,643     7,571     (393 )   174,821  
Income before income taxes 77,627     1,402         79,029  
Income tax expense 20,791     501         21,292  
Net income 56,836     901         57,737  
Plus: Merger-related costs, net of tax 3,020             3,020  
Net operating earnings (non-GAAP) $ 59,856     $ 901     $     $ 60,757  
Total assets $ 9,020,486     $ 97,154     $ (88,204 )   $ 9,029,436  
Nine Months Ended September 30, 2016 (unaudited)              
Net interest income $ 195,508     $ 1,027     $     $ 196,535  
Provision for credit losses 7,215     161         7,376  
Net interest income after provision for credit losses 188,293     866         189,159  
Noninterest income 44,137     9,185     (465 )   52,857  
Noninterest expenses 158,964     7,937     (465 )   166,436  
Income before income taxes 73,466     2,114         75,580  
Income tax expense 18,145     736         18,881  
Net income $ 55,321     $ 1,378     $     $ 56,699  
Total assets $ 8,251,351     $ 90,692     $ (83,813 )   $ 8,258,230  
                               

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
  For the Quarter Ended
  September 30, 2017   June 30, 2017
  Average Balance   Interest Income / Expense (1)   Yield / Rate (1)(2)   Average Balance   Interest Income / Expense (1)   Yield / Rate (1)(2)
                                           
Assets: (unaudited)   (unaudited)
Securities:                      
Taxable $ 774,513     $ 5,175     2.65 %   $ 768,648     $ 4,982     2.60 %
Tax-exempt 469,391     5,455     4.61 %   460,945     5,403     4.70 %
Total securities 1,243,904     10,630     3.39 %   1,229,593     10,385     3.39 %
Loans, net (3) (4) 6,822,498     76,333     4.44 %   6,628,011     73,073     4.42 %
Other earning assets 101,517     535     2.09 %   76,801     411     2.15 %
Total earning assets 8,167,919     $ 87,498     4.25 %   7,934,405     $ 83,869     4.24 %
Allowance for loan losses (38,138 )             (38,577 )          
Total non-earning assets 844,183               851,549            
Total assets $ 8,973,964               $ 8,747,377            
                           
Liabilities and Stockholders' Equity:                          
Interest-bearing deposits:                          
Transaction and money market accounts $ 3,457,279     $ 3,491     0.40 %   $ 3,367,008     $ 2,729     0.33 %
Regular savings 555,153     151     0.11 %   563,948     152     0.11 %
Time deposits 1,289,794     3,592     1.10 %   1,248,818     3,219     1.03 %
Total interest-bearing deposits 5,302,226     7,234     0.54 %   5,179,774     6,100     0.47 %
Other borrowings (5) 1,080,226     6,418     2.36 %   1,023,599     6,122     2.40 %
Total interest-bearing liabilities 6,382,452     13,652     0.85 %   6,203,373     12,222     0.79 %
                       
Noninterest-bearing liabilities:                      
Demand deposits 1,495,614             1,457,968          
Other liabilities 58,106             59,888          
Total liabilities 7,936,172             7,721,229          
Stockholders' equity 1,037,792             1,026,148          
Total liabilities and stockholders' equity $ 8,973,964             $ 8,747,377          
                       
Net interest income     $ 73,846             $ 71,647      
                       
Interest rate spread         3.40 %           3.45 %
Cost of funds         0.66 %           0.62 %
Net interest margin         3.59 %           3.62 %
                       
(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.
(2) Rates and yields are annualized and calculated from actual, not rounded, amounts in thousands, which appear above.
(3) Nonaccrual loans are included in average loans outstanding.
(4) Interest income on loans includes $1.7 million and $1.6 million for the three months ended September 30, 2017 and June 30, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5) Interest expense on borrowings includes $47,000 for the both three months ended September 30, 2017 and June 30, 2017, respectively, in accretion of the fair market value adjustments related to acquisitions.

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

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