Union Bankshares Corporation is a multi-bank holding company. Union Bankshares Corp. has a market cap of $209.33 million; its shares were traded at around $11.42 with a P/E ratio of 30.05 and P/S ratio of 1.26. The dividend yield of Union Bankshares Corp. stocks is 2.1%. Union Bankshares Corp. had an annual average earning growth of 11.4% over the past 5 years.
Highlight of Business Operations:On March 30, 2009, the Company and First Market Bank announced the signing of an agreement, as amended on June 19, 2009, pursuant to which the Company will acquire First Market Bank in an all stock transaction valued at approximately $105.4 million (based on the pre-announcement stock price of $14.23 as of March 27, 2009 for the Companys common stock). First Market Bank, a privately held federally chartered savings bank with more than $1.3 billion in assets, operates 39 branches throughout central Virginia with 31 locations in the greater Richmond metropolitan area. Upon completion of the transaction, expected to occur before year end, the Company will become the largest Virginia-based community banking organization with approximately 97 branch locations and total assets of more than $4.0 billion.
The Company reported net income of $2.8 million for the quarter ended September 30, 2009, representing an increase of $1.9 million from $953 thousand for the second quarter ended June 30, 2009. Net income available to common shareholders, which deducts from net income the dividends and discount accretion on preferred stock, was $1.9 million for the third quarter compared to $91 thousand in the second quarter. This represents an increase in earnings per share, on a diluted basis, of $0.12, from $0.01 to $0.13. The improvement in the third quarter results was largely attributable to strong net interest income, and the absence of the FDIC special assessment, which occurred in the second quarter, partially offset by lower mortgage segment revenue.
The Company reported net income for the third quarter ended September 30, 2009 of $2.8 million, down $1.5 million from $4.3 million for the same period a year ago. The decrease was mainly driven by a prior year third quarter gain absent in the third quarter of 2009. During the third quarter of 2008 the Company sold bank property for a gain of $1.8 million. Other factors contributing to the third quarter 2009 performance were improvements in mortgage segment income and net interest income that have been offset by increased credit costs, FDIC premiums, and acquisition costs. Excluding nonrecurring prior year gains and third quarter acquisition costs, net income declined approximately $86 thousand from the third quarter of 2008.
The Company continues to incur acquisition costs related to the proposed acquisition of First Market Bank. Current quarter and year-to-date costs are $307 thousand and $948 thousand, respectively. Total acquisition costs are estimated to be approximately $10.8 million with the remainder to be expensed over the fourth quarter of 2009 and the first quarter of 2010. Such costs, which will be expensed as incurred, will include legal and accounting fees, lease and contract termination expenses, and employee severance.
As a supplement to U. S. GAAP, the Company also uses certain alternate financial measures to review its operating performance. Diluted earnings per share on a cash basis for the quarter ended September 30, 2009 were $0.21 as compared to $0.34 for the same quarter a year ago and $0.09 for the quarter ended June 30, 2009. Additionally, cash basis return on average tangible common equity for the quarter ended September 30, 2009 was 7.47% as compared to 12.26% in the prior years same quarter and 3.29% for the quarter ended June 30, 2009.
On a linked quarter basis, tax-equivalent net interest income increased $2.1 million, or 10.6%, to $21.7 million. The tax-equivalent net interest margin increased 39 basis points to 3.69% from 3.30% for the second quarter. The net interest margin increase was principally attributable to a decline in costs of interest-bearing liabilities aided by an increase in the yields on interest-earning assets. Costs of interest-bearing liabilities declined 26 basis points to 2.37% while yields on interest-earning assets increased 15 basis points to 5.68%. Improvements in the cost of funds were principally a result of declining costs on certificates of deposit and money market accounts as well as lower Federal Home Loan Bank of Atlanta (FHLB) borrowings. Interest-earning asset yields increased principally as a result of redeploying excess liquidity from the Federal Reserve Bank investments into higher yielding investment securities and de-leveraging the balance sheet (i.e., reducing FHLB borrowings).
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