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Union Bankshares Corp. Reports Operating Results (10-Q)

May 11, 2009 | About:

Union Bankshares Corp. (NASDAQ:UBSH) filed Quarterly Report for the period ended 2009-03-31.

Union Bankshares Corporation is a multi-bank holding company. Union Bankshares Corp. has a market cap of $244.69 million; its shares were traded at around $18 with a P/E ratio of 20.69 and P/S ratio of 1.48. The dividend yield of Union Bankshares Corp. stocks is 2.67%. 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, FSB (First Market) announced the signing of an agreement pursuant to which the Company will acquire First Market in an all stock transaction valued at approximately $105.4 million (based on preannouncement UBSH stock price of $14.23 as of March 27, 2009). First Market, 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 $3.9 billion.

Net income for the first quarter ended March 31, 2009 was $1.8 million, down $1.9 million from $3.7 million for the same period a year ago. The decrease was driven by a decline in the net interest margin and an increase in the provision for loan losses. These declines were partially offset by increased profitability in the mortgage segment.

Net income available to common shareholders, which deducts from net income the dividends and discount accretion on preferred stock, was $892 thousand for the quarter ended March 31, 2009. This decline represents a decrease in earnings per common share, on a diluted basis, of $0.20 from $0.27 to $0.07. Return on average equity for the three months ended March 31, 2009 was 2.57%, while return on average assets was 0.28%, compared to 6.85% and 0.64%, respectively, for the same period in 2008.

As a supplement to 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 March 31, 2009 were $0.15 as compared to $0.29 for the same quarter a year ago and $0.19 for the quarter ended December 31, 2008. Additionally, cash basis return on average tangible common equity for the quarter ended March 31, 2009 was 5.42% as compared to 10.88% in the prior years same quarter and 6.98% for the quarter ended December 31, 2008.

For the three months ended March 31, 2009, net interest income, on a tax-equivalent basis, decreased $1.3 million, or 6.5%, to $18.6 million compared to the same period last year. This decrease was attributable to the decline in interest-earning asset yields outpacing the decline in costs of interest-bearing liabilities, resulting in a reduction in the net interest margin of 63 basis points, from 3.85% to 3.22%. Yields on interest-earning assets declined 130 basis points driven predominantly by lower loan yields and excess liquidity at the Federal Reserve Bank yielding 0.25% or less. Costs of interest-bearing liabilities declined 73 basis points, principally as a result of lower costs on certificates of deposit and lower Federal Home Loan Bank of Atlanta (FHLB) advances. Average money market

volumes increased $232.1 million, of which approximately $200 million relates to new volume resulting from the Companys money market promotion. The money market promotion provided participating customers a 3% yield through June 2009. This allowed the Company to reduce reliance on other borrowings by approximately $70.8 million and not to reissue brokered certificates of deposit of approximately $40 million. At March 31, 2009, the Company had no brokered certificates of deposit.

Read the The complete Report

Rating: 1.8/5 (6 votes)


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