Company Quick10K Filing
Quick10K
Union Bankshares
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$36.46 82 $2,990
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-18 Earnings, Other Events, Exhibits
8-K 2019-07-08 Other Events, Exhibits
8-K 2019-07-02 Other Events, Exhibits
8-K 2019-05-20 Regulation FD, Exhibits
8-K 2019-05-13 Regulation FD, Exhibits
8-K 2019-05-06 Other Events, Exhibits
8-K 2019-05-02 Amend Bylaw, Shareholder Vote, Regulation FD, Other Events, Exhibits
8-K 2019-04-24 Earnings, Exhibits
8-K 2019-04-09 Other Events, Exhibits
8-K 2019-02-11 Regulation FD, Exhibits
8-K 2019-02-01 M&A, Officers, Regulation FD, Other Events, Exhibits
8-K 2019-01-31 Other Events, Exhibits
8-K 2019-01-24 Other Events, Exhibits
8-K 2019-01-24 Other Events, Exhibits
8-K 2019-01-22 Earnings, Exhibits
8-K 2019-01-15 Shareholder Vote, Other Events, Exhibits
8-K 2019-01-11 Other Events, Exhibits
8-K 2019-01-08 Other Events, Exhibits
8-K 2018-11-16 Other Events, Exhibits
8-K 2018-11-13 Regulation FD, Other Events, Exhibits
8-K 2018-11-07 Regulation FD, Exhibits
8-K 2018-10-31 Regulation FD, Exhibits
8-K 2018-10-25 Other Events, Exhibits
8-K 2018-10-17 Earnings, Exhibits
8-K 2018-10-08 Other Events, Exhibits
8-K 2018-10-05 Regulation FD, Other Events, Exhibits
8-K 2018-10-04 Enter Agreement, Exhibits
8-K 2018-09-25 Officers
8-K 2018-09-12 Regulation FD, Exhibits
8-K 2018-09-10 Officers, Exhibits
8-K 2018-09-10 Other Events, Exhibits
8-K 2018-09-04 Regulation FD, Exhibits
8-K 2018-08-07 Regulation FD, Exhibits
8-K 2018-07-19 Other Events, Exhibits
8-K 2018-07-18 Earnings, Exhibits
8-K 2018-07-05 Other Events, Exhibits
8-K 2018-06-29 Earnings, Regulation FD
8-K 2018-06-21 Officers, Regulation FD, Exhibits
8-K 2018-05-23 Other Events, Exhibits
8-K 2018-05-02 Officers, Exhibits
8-K 2018-05-01 Shareholder Vote, Other Events, Exhibits
8-K 2018-04-24 Earnings, Exhibits
8-K 2018-04-03 Other Events, Exhibits
8-K 2018-04-01 Other Events
8-K 2018-02-14 Regulation FD, Exhibits
8-K 2018-02-06 Regulation FD, Exhibits
8-K 2018-01-24 Enter Agreement, Other Events, Exhibits
8-K 2018-01-23 Earnings, Other Events, Exhibits
8-K 2018-01-03 Other Events, Exhibits
8-K 2018-01-01 M&A, Officers, Other Events, Exhibits
RHI Half Robert 6,810
BE Bloom Energy 1,550
RMAX RE/MAX 669
MFAC Megalith Financial Acquisition 211
IGLD Internet Gold Golden Lines 12
VGBT Vaulted Gold Bullion Trust 0
RTE Red Trail Energy 0
WMTS World Monitor Trust III - Series J 0
HIT Hospitality Investors Trust 0
UDN Invesco DB US Dollar Index Bearish Fund 0
UBSH 2019-03-31
Part I - Financial Information
Item 1 - Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Item 4 - Controls and Procedures
Part II - Other Information
Item 1 - Legal Proceedings
Item 1A - Risk Factors
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Item 6 - Exhibits
EX-15.01 exhibit1501_1q19.htm
EX-31.01 exhibit3101_1q19.htm
EX-31.02 exhibit3102_1q19.htm
EX-32.01 exhibit3201_1q19.htm

Union Bankshares Earnings 2019-03-31

UBSH 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 ubsh-20190331x10q.htm 10-Q Document
UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-20293
UNION BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Virginia
54-1598552
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 1051 East Cary Street
Suite 1200
Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
 
(804) 633-5031
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
 
 
 
Smaller reporting company
¨
 
 
Emerging growth company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, par value $1.33 per share

UBSH

The NASDAQ Global Select Market

 
Yes ¨ No x

The number of shares of common stock outstanding as of May 1, 2019 was 82,054,117.



UNION BANKSHARES CORPORATION
FORM 10-Q
INDEX
 
ITEM
 
 
PAGE
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 6.
 
 
 
 
 
 
 






Glossary of Acronyms and Defined Terms
 
2018 Form 10-K
Annual Report on Form 10-K for the year ended December 31, 2018
Access
Access National Corporation and its subsidiaries
AFS
Available for sale
ALCO
Asset Liability Committee
ALL
Allowance for loan losses
AOCI
Accumulated other comprehensive income (loss)
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
ATM
Automated teller machine
the Bank
Union Bank & Trust
BOLI
Bank-owned life insurance
bps
Basis points
CCPs
Central Counterparty Clearinghouses
CECL
Current expected credit losses
CME
Chicago Mercantile Exchange
the Company
Union Bankshares Corporation and its subsidiaries
DHFB
Dixon, Hubard, Feinour, & Brown, Inc.
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
EPS
Earnings per share
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
FCMs
Futures Commission Merchants
FDIC
Federal Deposit Insurance Corporation
Federal Reserve
Board of Governors of the Federal Reserve System
Federal Reserve Act
Federal Reserve Act of 1913, as amended
Federal Reserve Bank
 
Federal Reserve Bank of Richmond
FHLB
Federal Home Loan Bank of Atlanta
FTE
Fully taxable equivalent
U.S. GAAP or GAAP
Accounting principles generally accepted in the United States
HELOC
Home equity line of credit
HTM
Held to maturity
IDC
Interactive Data Corporation
LCH
London Clearing House
LIBOR
London Interbank Offered Rate
MBS
Mortgage Backed Securities
MD&A
Management's Discussion and Analysis of Financial Condition and Results of Operations
NOW
Negotiable order of withdrawal
NPA
Nonperforming assets
OAL
Outfitter Advisors, Ltd.
OCI
Other comprehensive income
ODCM
Old Dominion Capital Management, Inc.
OREO
Other real estate owned
OTTI
Other than temporary impairment
PCI
Purchased credit impaired
ROA
Return on average assets
ROE
Return on average common equity
ROTCE
Return on average tangible common equity
ROU Asset
Right of Use Asset
SEC
Securities and Exchange Commission
Securities Act
Securities Act of 1933, as amended
Shore Premier
Shore Premier Finance, a division of the Bank



Shore Premier sale
The sale of substantially all of the assets and certain specific liabilities of Shore Premier
Tax Act
Tax Cuts and Jobs Act of 2017
TDR
Troubled debt restructuring
TFSB
The Federal Savings Bank
UMG
Union Mortgage Group, Inc.
Xenith
Xenith Bankshares, Inc.



PART I – FINANCIAL INFORMATION
 
ITEM 1 – FINANCIAL STATEMENTS
 
UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
 
March 31,
2019
 
December 31,
2018
ASSETS
(unaudited) 
 
(audited)
Cash and cash equivalents:
 

 
 

Cash and due from banks
$
165,041

 
$
166,927

Interest-bearing deposits in other banks
116,900

 
94,056

Federal funds sold
1,652

 
216

Total cash and cash equivalents
283,593

 
261,199

Securities available for sale, at fair value
2,109,062

 
1,774,821

Securities held to maturity, at carrying value
559,380

 
492,272

Restricted stock, at cost
135,911

 
124,602

Loans held for sale, at fair value
28,712

 

Loans held for investment, net of deferred fees and costs
11,952,310

 
9,716,207

Less allowance for loan losses
40,827

 
41,045

Net loans held for investment
11,911,483

 
9,675,162

Premises and equipment, net
172,522

 
146,967

Goodwill
927,760

 
727,168

Amortizable intangibles, net
88,553

 
48,685

Bank owned life insurance
317,990

 
263,034

Other assets
361,580

 
250,210

Assets of discontinued operations
1,109

 
1,479

Total assets
$
16,897,655

 
$
13,765,599

LIABILITIES
 

 
 

Noninterest-bearing demand deposits
$
2,964,113

 
$
2,094,607

Interest-bearing deposits
9,525,217

 
7,876,353

Total deposits
12,489,330

 
9,970,960

Securities sold under agreements to repurchase
73,774

 
39,197

Other short-term borrowings
939,700

 
1,048,600

Long-term borrowings
739,629

 
668,481

Other liabilities
194,565

 
112,093

Liabilities of discontinued operations
1,192

 
1,687

Total liabilities
14,438,190

 
11,841,018

Commitments and contingencies (Note 8)


 


STOCKHOLDERS' EQUITY
 

 
 

Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding shares at March 31, 2019 and December 31, 2018, 82,037,354 and 65,977,149, respectively.
108,475

 
87,250

Additional paid-in capital
1,859,588

 
1,380,259

Retained earnings
483,005

 
467,345

Accumulated other comprehensive income (loss)
8,397

 
(10,273
)
Total stockholders' equity
2,459,465

 
1,924,581

Total liabilities and stockholders' equity
$
16,897,655

 
$
13,765,599

See accompanying notes to consolidated financial statements.

-2-


UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except share and per share data)
 
Three Months Ended
 
March 31,
2019
 
March 31,
2018
Interest and dividend income:
 
 
 
Interest and fees on loans
$
144,115

 
$
112,652

Interest on deposits in other banks
473

 
647

Interest and dividends on securities:
 
 
 
Taxable
13,081

 
7,072

Nontaxable
7,983

 
4,008

Total interest and dividend income
165,652

 
124,379

Interest expense:
 
 
 
Interest on deposits
24,430

 
11,212

Interest on short-term borrowings
6,551

 
4,249

Interest on long-term borrowings
7,124

 
5,446

Total interest expense
38,105

 
20,907

Net interest income
127,547

 
103,472

Provision for credit losses
3,792

 
3,524

Net interest income after provision for credit losses
123,755

 
99,948

Noninterest income:
 
 
 
Service charges on deposit accounts
7,158

 
5,894

Other service charges and fees
1,664

 
1,233

Interchange fees, net
5,045

 
4,489

Fiduciary and asset management fees
5,054

 
3,056

Mortgage banking income, net
1,454

 

Gains (losses) on securities transactions, net
151

 
213

Bank owned life insurance income
2,055

 
1,667

Loan-related interest rate swap fees
1,460

 
718

Other operating income
897

 
2,997

Total noninterest income
24,938

 
20,267

Noninterest expenses:
 
 
 
Salaries and benefits
48,007

 
40,741

Occupancy expenses
7,399

 
6,067

Furniture and equipment expenses
3,396

 
2,937

Printing, postage, and supplies
1,242

 
1,060

Communications expense
1,005

 
1,095

Technology and data processing
5,676

 
4,560

Professional services
2,958

 
2,554

Marketing and advertising expense
2,383

 
1,436

FDIC assessment premiums and other insurance
2,639

 
2,185

Other taxes
3,764

 
2,886

Loan-related expenses
2,289

 
1,315

OREO and credit-related expenses
684

 
1,532

Amortization of intangible assets
4,218

 
3,181

Training and other personnel costs
1,144

 
1,006

Merger-related costs
18,122

 
27,712

Other expenses
1,802

 
1,476

Total noninterest expenses
106,728

 
101,743

Income from continuing operations before income taxes
41,965

 
18,472

Income tax expense
6,249

 
1,897

Income from continuing operations
35,716

 
16,575


-3-


 
Three Months Ended
 
March 31,
2019
 
March 31,
2018
Discontinued operations:
 
 
 
Income (loss) from operations of discontinued mortgage segment
(115
)
 
76

Income tax expense (benefit)
(30
)
 
12

Income (loss) on discontinued operations
(85
)
 
64

Net income
$
35,631

 
$
16,639

Basic earnings per common share
$
0.47

 
$
0.25

Diluted earnings per common share
$
0.47

 
$
0.25

Dividends declared per common share
$
0.23

 
$
0.21

Basic weighted average number of common shares outstanding
76,472,189

 
65,554,630

Diluted weighted average number of common shares outstanding
76,533,066

 
65,636,262


See accompanying notes to consolidated financial statements.











-4-


UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollars in thousands)
 
 
Three Months Ended
March 31,
 
2019
 
2018
 
 
 
 
Net income
$
35,631

 
$
16,639

Other comprehensive income (loss):
 

 
 

Cash flow hedges:
 
 
 
Change in fair value of cash flow hedges
(1,460
)
 
1,964

Reclassification adjustment for losses included in net income (net of tax, $32 and $66 for the three months ended March 31, 2019 and 2018, respectively) (1)
120

 
249

AFS securities:
 

 
 
Unrealized holding gains (losses) arising during period (net of tax, $5,338 and $3,506 for the three months ended March 31, 2019 and 2018, respectively)
20,081

 
(13,191
)
Reclassification adjustment for losses (gains) included in net income (net of tax, $23 and $45 for the three months ended March 31, 2019 and 2018, respectively) (2)
(85
)
 
(168
)
HTM securities:
 

 
 
Reclassification adjustment for accretion of unrealized gain on AFS securities transferred to HTM (net of tax, $1 and $80 for the three months ended March 31, 2019 and 2018, respectively) (3)
(5
)
 
(299
)
Bank owned life insurance:
 
 
 
  Reclassification adjustment for losses included in net income (4)
19

 
19

Other comprehensive income (loss)
18,670

 
(11,426
)
Comprehensive income
$
54,301

 
$
5,213


(1) The gross amounts reclassified into earnings are reported in the interest income and interest expense sections of the Company's Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.
(2) The gross amounts reclassified into earnings are reported as "Gains (losses) on securities transactions, net" on the Company's Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.
(3) The gross amounts reclassified into earnings are reported within interest income on the Company's Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.
(4) Reclassifications in earnings are reported in "Salaries and benefits" expense on the Company's Consolidated Statements of Income.

See accompanying notes to consolidated financial statements.

-5-


UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(Dollars in thousands, except share and per share amounts)
 
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
 
 
 
 
 
 
 
 
 
 
Balance - December 31, 2017
$
57,744

 
$
610,001

 
$
379,468

 
$
(884
)
 
$
1,046,329

Net income - 2018
 

 
 

 
16,639

 
 

 
16,639

Other comprehensive income (net of taxes of $3,565)
 

 
 

 
 

 
(11,426
)
 
(11,426
)
Issuance of common stock in regard to acquisition (21,922,077 shares)(1)
29,156

 
765,653

 
 
 
 
 
794,809

Dividends on common stock ($0.21 per share)
 

 
 

 
(13,808
)
 
 

 
(13,808
)
Issuance of common stock under Equity Compensation Plans (68,495 shares)
91

 
836

 
 

 
 

 
927

Issuance of common stock for services rendered (4,914 shares)
7

 
177

 
 

 
 

 
184

Vesting of restricted stock, net of shares held for taxes, under Equity Compensation Plans (69,562 shares)
93

 
(2,363
)
 
 

 
 

 
(2,270
)
Cancellation of warrants
 
 
(1,530
)
 
 
 
 
 
(1,530
)
Stock-based compensation expense
 

 
1,223

 
 

 
 

 
1,223

Balance - March 31, 2018
$
87,091

 
$
1,373,997

 
$
382,299

 
$
(12,310
)
 
$
1,831,077

 
 
 
 
 
 
 
 
 
 
Balance - December 31, 2018
$
87,250

 
$
1,380,259

 
$
467,345

 
$
(10,273
)
 
$
1,924,581

Net income - 2019
 

 
 

 
35,631

 
 

 
35,631

Other comprehensive income (net of taxes of $5,346)
 

 
 

 
 

 
18,670

 
18,670

Issuance of common stock in regard to acquisitions (15,842,026 shares)
21,070

 
478,904

 
 
 
 
 
499,974

Dividends on common stock ($0.23 per share)
 

 
 

 
(18,838
)
 
 

 
(18,838
)
Issuance of common stock under Equity Compensation Plans (6,127 shares)
8

 
130

 
 

 
 

 
138

Issuance of common stock for services rendered (6,085 shares)
8

 
211

 
 

 
 

 
219

Vesting of restricted stock, net of shares held for taxes, under Equity Compensation Plans (104,151 shares)
139

 
(1,786
)
 
 

 
 

 
(1,647
)
Impact of adoption of new guidance(2)
 
 
 
 
(1,133
)
 


 
(1,133
)
Stock-based compensation expense
 

 
1,870

 
 

 
 

 
1,870

Balance - March 31, 2019
$
108,475

 
$
1,859,588

 
$
483,005

 
$
8,397

 
$
2,459,465

(1) Includes conversion of Xenith warrants to the Company's warrants.
(2) Adoption of ASU No. 2016-02, "Leases (Topic 842)." in the first quarter of 2019.
See accompanying notes to consolidated financial statements.

-6-


UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(Dollar in thousands)
 
2019
 
2018
Operating activities (1):
 

 
 

Net income
$
35,631

 
$
16,639

Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:
 

 
 

Depreciation of premises and equipment
3,638

 
3,480

Writedown of foreclosed properties and former bank premises
52

 
759

Amortization, net
4,780

 
3,776

Amortization (accretion) related to acquisitions, net
(1,624
)
 
(2,691
)
Provision for credit losses
3,792

 
3,500

Gains on securities transactions, net
(151
)
 
(213
)
BOLI income
(2,055
)
 
(1,667
)
Decrease (increase) in loans held for sale, net
(7,485
)
 
12,935

Losses (gains) on sales of foreclosed properties and former bank premises, net
47

 
(174
)
Stock-based compensation expenses
1,870

 
1,223

Issuance of common stock for services
219

 
184

Net decrease (increase) in other assets
(17,681
)
 
(18,216
)
Net increase in other liabilities
(7,943
)
 
16,228

Net cash and cash equivalents provided by (used in) operating activities
13,090

 
35,763

Investing activities:
 

 
 

Purchases of AFS securities and restricted stock
(146,193
)
 
(154,512
)
Purchases of HTM securities
(47,217
)
 

Proceeds from sales of AFS securities and restricted stock
208,249

 
115,850

Proceeds from maturities, calls and paydowns of AFS securities
53,439

 
33,909

Proceeds from maturities, calls and paydowns of HTM securities
1,320

 

Net increase in loans held for investment
(81,391
)
 
(201,369
)
Net increase in premises and equipment
(1,460
)
 
(902
)
Proceeds from sales of foreclosed properties and former bank premises
171

 
1,157

Cash paid in acquisitions
(12
)
 
(6,170
)
Cash acquired in acquisitions
46,164

 
174,218

Net cash and cash equivalents provided by (used in) investing activities
33,070

 
(37,819
)
Financing activities:
 

 
 

Net increase in noninterest-bearing deposits
185,099

 
43,846

Net increase in interest-bearing deposits
106,490

 
93,540

Net increase (decrease) in short-term borrowings
(295,008
)
 
24,441

Cash dividends paid - common stock
(18,838
)
 
(13,808
)
Cancellation of warrants

 
(1,530
)
Issuance of common stock
138

 
927

Vesting of restricted stock, net of shares held for taxes
(1,647
)
 
(2,270
)
Net cash and cash equivalents provided by (used in) financing activities
(23,766
)
 
145,146

Increase (decrease) in cash and cash equivalents
22,394

 
143,090

Cash and cash equivalents at beginning of the period
261,199

 
199,373

Cash and cash equivalents at end of the period
$
283,593

 
$
342,463











-7-


UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(Dollars in thousands)
 
2019
 
2018
Supplemental Disclosure of Cash Flow Information
 
 
 
Cash payments for:
 
 
 
Interest
$
34,871

 
$
18,011

Income taxes

 

 
 
 
 
Supplemental schedule of noncash investing and financing activities
 
 
 
Transfers from loans (foreclosed properties) to foreclosed properties (loans)
900

 
(54
)
Issuance of common stock in exchange for net assets in acquisitions
499,974

 
794,809

 
 
 
 
Transactions related to acquisitions
 
 
 
Assets acquired
2,858,048

 
3,249,420

Liabilities assumed
2,558,638

 
2,874,018

(1) Discontinued operations have an immaterial impact to the Company's Consolidated Statement of Cash Flows. The change in loans held for sale included in the Operating Activities section for the three months ended March 31, 2018 are fully attributable to discontinued operations.

See accompanying notes to consolidated financial statements.

-8-


UNION BANKSHARES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)

1. ACCOUNTING POLICIES

The Company
Headquartered in Richmond, Virginia, Union Bankshares Corporation is the holding company for Union Bank & Trust. Union Banks & Trust has 155 branches, 15 of which are operated as Access National Bank, a division of Union Bank & Trust of Richmond Virginia, or Middleburg Bank, a division of Union Bank & Trust of Virginia and 7 of which are operated as Xenith Bank, a division of Union Bank & Trust of Richmond, Virginia, and approximately 200 ATMs located throughout Virginia and in portions of Maryland and North Carolina. Certain non-bank affiliates of the Company include: Old Dominion Capital Management, Inc., and its subsidiary Outfitter Advisors, Ltd., Dixon, Hubard, Feinour & Brown, Inc., Capital Fiduciary Advisors, LLC, and Middleburg Investment Services, LLC, all of which provide investment advisory and/or brokerage services; Union Insurance Group, LLC, which offers various line of insurance products; and Middleburg Trust Company, which provides trust services.

Effective May 17, 2019 (after market close), Union Bankshares Corporation will change its name to Atlantic Union Bankshares Corporation and Union Bank & Trust will change its name to Atlantic Union Bank. The name change was approved by the Board of Directors at the Company's January 23, 2019 Board meeting and a related amendment to the Company’s articles of incorporation was approved by the Company’s shareholders at its 2019 Annual Meeting on May 2, 2019. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and follow general practice within the banking industry. Accordingly, the unaudited consolidated financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements; however, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other period.
 
These unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company’s 2018 Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation.

Business Combinations and Divestitures
On February 1, 2019, the Company completed the acquisition of Access National Corporation (and its subsidiaries), a bank holding company based in Reston, Virginia for a purchase price of approximately $500.0 million. Access's common stockholders received 0.75 shares of the Company's common stock in exchange for each share of Access's common stock, resulting in the Company issuing 15,842,026 shares of common stock. In addition, the Company paid cash of approximately$12,000 in lieu of fractional shares.

In connection with the transaction, the Company recorded $200.6 million in goodwill and $44.2 million of amortizable assets, which primarily relate to core deposit intangibles. The Company currently estimates that these other intangibles assets will be amortized over 10 years using various methods. The transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition.

Affordable Housing Entities
The Company invests in private investment funds that make equity investments in multifamily affordable housing properties that provide affordable housing tax credits for these investments. The activities of these entities are financed with a combination of invested equity capital and debt. For the three months ended March 31, 2019 and March 31, 2018, the Company recognized amortization of $500,000 and $235,000, respectively, and tax credits of $611,000 and $283,000, respectively, associated with these investments within “Income tax expense” on the Company’s Consolidated Statements of Income. The carrying value of the Company’s investments in these qualified affordable housing projects was $28.4 million and $10.8 million as of March 31, 2019 and December 31, 2018, respectively. At March 31, 2019 and December 31, 2018, the Company's recorded liability totaled $16.0 million and $9.9 million, respectively, for the related unfunded commitments, which are expected to be paid throughout the years 2019 - 2033.

-9-


 
Adoption of New Accounting Standards
On January 1, 2019, the Company adopted ASU No. 2016-02, "Leases (Topic 842)." The adoption of this standard required lessees to recognize right of use assets and lease liabilities on the Consolidated Balance Sheet and disclose key information about leasing arrangements. The Company adopted this ASU on January 1, 2019 under the modified retrospective approach. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to not reassess the lease classification of existing leases, as well as not reassess whether any expired or existing contracts are or contain a lease; and maintain consistent treatment of initial direct costs on existing leases. In addition, the Company elected the short-term lease exemption practical expedient in which leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheet. The Company also elected the practical expedient related to accounting for lease and non-lease components as a single lease component. Adoption of this standard resulted in the Company recording a lease liability of $53.2 million and right of use assets of $48.9 million as of January 1, 2019. Operating leases have been included within other assets and other liabilities on the Company's Consolidated Balance Sheet. The implementation of this standard resulted in a $1.1 million decrease to Retained Earnings. There was no impact on the Company's Consolidated Statement of Cash Flows. Refer to Note 6 "Leases" for further discussion regarding the adoption.

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." This ASU amends the Intangibles—Goodwill and Other Topic of the Accounting Standards Codification to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU will be effective for the Company for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted this standard in the first quarter of 2019 using the prospective approach. The adoption of ASU 2018-15 did not have a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU contains significant differences from existing GAAP and is effective for fiscal years beginning after December 15, 2019. This ASU updates the existing guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The CECL model will replace the Company's current accounting for PCI and impaired loans. This ASU also amends the AFS debt securities OTTI model. The Company has established a cross-functional governance structure for the implementation of CECL. In addition, the Company is beginning the process of validating the models that will be used upon adoption of the standard. The implementation of this ASU will result in increases to the Company's reserves for credit losses of financial instruments; however, the quantitative impact cannot be reasonably estimated since this ASU relies on economic conditions and trends that will impact the Company's portfolio at the time of adoption. The Company is continuing to evaluate the impact ASU No. 2016-13 will have on its consolidated financial statements.




-10-


2. ACQUISITIONS

Access Acquisition
On February 1, 2019, the Company completed its acquisition of Access National Corporation (and its subsidiaries), a bank holding company based in Reston, Virginia. Holders of shares of Access's common stock received 0.75 shares of the Company's common stock in exchange for each share of Access's common stock, resulting in the Company issuing 15,842,026 shares of the Company's common stock at a fair value of approximately $500.0 million. In addition, the Company paid approximately$12,000 cash in lieu of fractional shares.

The transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition, in accordance with ASC 350, Intangibles-Goodwill and Other. The goodwill is not expected to be deductible for tax purposes. The following table provides a preliminary assessment of the consideration transferred, assets acquired, and liabilities assumed as of the date of the acquisition (dollars in thousands):
Purchase Price:
 
 
Fair value of shares of the Company's common stock issued
 
$
499,974

Cash paid for fractional shares
 
12

Total purchase price
 
$
499,986

 
 
 
Fair value of assets acquired:
 
 
Cash and cash equivalents
$
46,164

 
Investments
464,742

 
Loans
2,175,525

 
Premises and equipment
27,675

 
Core deposit intangibles
40,860

 
Other assets
103,082

 
Total assets
$
2,858,048

 
 
 
 
Fair value of liabilities assumed:
 
 
Deposits
$
2,227,073

 
Short-term borrowings
220,685

 
Long-term borrowings
70,535

 
Other liabilities
40,345

 
Total liabilities
$
2,558,638

 
 
 
 
Net assets acquired
 
$
299,410

Preliminary goodwill
 
$
200,576


The acquired loans were recorded at fair value at the acquisition date without carryover of Access’s previously established ALL. The fair value of the loans was determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected on the loans and leases and then applying a market-based discount rate to those cash flows. In this regard, the acquired loans were segregated into pools based on loan type and credit risk. Loan type was determined based on collateral type, purpose, and lien position. Credit risk characteristics included risk rating groups (pass rated loans and adversely classified loans) and past due status. For valuation purposes, these pools were further disaggregated by maturity, pricing characteristics (e.g., fixed-rate, adjustable-rate) and re-payment structure (e.g., interest only, fully amortizing, balloon). If new information is obtained about facts and circumstances about expected cash flows that existed as of the acquisition date, management will adjust fair values in accordance with accounting for business combinations.

The acquired loans were divided into loans with evidence of credit quality deterioration which are accounted for under ASC 310-30, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality, (acquired impaired) and loans that do not meet these criteria, which are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs, (acquired performing). The fair values of the acquired performing loans were $2.1 billion and the fair values of the acquired

-11-


impaired loans were $17.9 million. The gross contractually required principal and interest payments receivable for acquired performing loans was $2.5 billion. The best estimate of contractual cash flows not expected to be collected related to the acquired performing loans is $12.3 million.

The following table presents the acquired impaired loans receivable at the acquisition date (dollars in thousands):
Contractually required principal and interest payments
$
24,329

Nonaccretable difference
(4,003
)
Cash flows expected to be collected
20,326

Accretable difference
(2,432
)
Fair value of loans acquired with a deterioration of credit quality
$
17,894


The following table presents certain pro forma information as if Access had been acquired on January 1, 2018. These results combine the historical results of Access in the Company's Consolidated Statements of Income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2018. In particular, no adjustments have been made to eliminate the amount of Access’s provision for credit losses that would not have been necessary had the acquired loans been recorded at fair value as of January 1, 2018. Pro forma adjustments below include the net impact of accretion for 2018 and the elimination of merger-related costs for 2019. The Company expects to achieve further operating cost savings and other business synergies, including branch closures, as a result of the acquisition which are not reflected in the pro forma amounts below (dollars in thousands):
 
Pro forma for the three months ended
 
March 31,
 
2019
 
2018
 
(unaudited)
 
(unaudited)
Total revenues (1)
$
163,210

 
$
156,414

Net income
$
52,336

 
$
24,667

EPS
$
0.64

 
$
0.30

(1) Includes net interest income and noninterest income.

The revenue and earnings amounts specific to Access since the acquisition date that are included in the consolidated results for 2019 are not readily determinable. The disclosures of these amounts are impracticable due to the merging of certain processes and systems at the acquisition date.

Merger-related costs associated with the acquisition of Access were $17.8 million and $0 for the three months ended March 31, 2019 and 2018, respectively. Such costs include legal and accounting fees, lease and contract termination expenses, system conversion, and employee severances, which have been expensed as incurred.

-12-


3. SECURITIES 

Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of March 31, 2019 and December 31, 2018 are summarized as follows (dollars in thousands):
 
 
Amortized
 
Gross Unrealized
 
Estimated
 
Cost
 
Gains
 
(Losses)
 
Fair Value
March 31, 2019
 

 
 

 
 

 
 

U.S. government and agency securities
$
4,451

 
$
6

 
$

 
$
4,457

Obligations of states and political subdivisions
516,897

 
14,972

 
(81
)
 
531,788

Corporate and other bonds (1)
177,910

 
1,784

 
(807
)
 
178,887

Mortgage-backed securities
1,386,056

 
10,465

 
(6,128
)
 
1,390,393

Other securities
3,537

 

 

 
3,537

Total AFS securities
$
2,088,851

 
$
27,227

 
$
(7,016
)
 
$
2,109,062

 
 
 
 
 
 
 
 
December 31, 2018
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
466,588

 
$
3,844

 
$
(1,941
)
 
$
468,491

Corporate and other bonds (1)
167,561

 
1,118

 
(983
)
 
167,696

Mortgage-backed securities
1,138,034

 
4,452

 
(12,621
)
 
1,129,865

Other securities
8,769

 

 

 
8,769

Total AFS securities
$
1,780,952

 
$
9,414

 
$
(15,545
)
 
$
1,774,821

(1) Other bonds includes asset-backed securities.

The following table shows the gross unrealized losses and fair value of the Company’s AFS securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of March 31, 2019 and December 31, 2018 (dollars in thousands). These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.
 
 
Less than 12 months
 
More than 12 months
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
March 31, 2019
 

 
 

 
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
777

 
$
(4
)
 
$
4,823

 
$
(77
)
 
$
5,600

 
$
(81
)
Corporate bonds and other securities
34,413

 
(206
)
 
39,561

 
(601
)
 
73,974

 
(807
)
Mortgage-backed securities
69,850

 
(207
)
 
458,646

 
(5,921
)
 
528,496

 
(6,128
)
Total AFS securities
$
105,040

 
$
(417
)
 
$
503,030

 
$
(6,599
)
 
$
608,070

 
$
(7,016
)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 

 
 

 
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
133,513

 
$
(1,566
)
 
$
10,145

 
$
(375
)
 
$
143,658

 
$
(1,941
)
Corporate bonds and other securities
35,478

 
(315
)
 
33,888

 
(668
)
 
69,366

 
(983
)
Mortgage-backed securities
306,038

 
(3,480
)
 
341,400

 
(9,141
)
 
647,438

 
(12,621
)
Total AFS securities
$
475,029

 
$
(5,361
)
 
$
385,433

 
$
(10,184
)
 
$
860,462

 
$
(15,545
)
 
As of March 31, 2019, there were $503.0 million, or 187 issues, of individual AFS securities that had been in a continuous loss position for more than 12 months and had an aggregate unrealized loss of $6.6 million. As of December 31, 2018, there were $385.4 million, or 138 issues, of individual securities that had been in a continuous loss position for more than 12 months and had an aggregate unrealized loss of $10.2 million. The Company has determined that these securities were temporarily impaired at March 31, 2019 and December 31, 2018 for the reasons set out below:
 

 

-13-


Obligations of state and political subdivisions. This category’s unrealized losses are primarily the result of interest rate fluctuations and ratings downgrades for a limited number of securities. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired.

Corporate and other bonds. This category's unrealized losses are the result of interest rate fluctuations and ratings downgrades for a limited number of securities. The majority of these securities remain investment grade and the Company’s analysis did not indicate the existence of a credit loss. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired.

Mortgage-backed securities. This category’s unrealized losses are primarily the result of interest rate fluctuations. Because the decline in market value is attributable to changes in interest rates and not credit quality, the Company does not intend to sell the investments, and the accounting standard of "more likely than not" has not been met for the Company to be required to sell any of the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired. Also, the majority of the Company’s mortgage-backed securities are agency-backed securities, which have a government guarantee.

 
The following table presents the amortized cost and estimated fair value of AFS securities as of March 31, 2019 and December 31, 2018, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
March 31, 2019
 
December 31, 2018
 
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Due in one year or less
$
21,087

 
$
21,214

 
$
22,653

 
$
22,789

Due after one year through five years
280,969

 
281,047

 
191,003

 
188,999

Due after five years through ten years
257,437

 
258,813

 
218,211

 
217,304

Due after ten years
1,529,358

 
1,547,988

 
1,349,085

 
1,345,729

Total AFS securities
$
2,088,851

 
$
2,109,062

 
$
1,780,952

 
$
1,774,821

 

Refer to Note 8 "Commitments and Contingencies" for information regarding the estimated fair value of AFS securities that were pledged to secure public deposits, repurchase agreements, and for other purposes as permitted or required by law as of March 31, 2019 and December 31, 2018.

Held to Maturity
The Company reports HTM securities on the Company's Consolidated Balance Sheets at carrying value. Carrying value is amortized cost which includes any unamortized unrealized gains and losses recognized in accumulated other comprehensive income prior to reclassifying the securities from AFS securities to HTM securities. Investment securities transferred into the HTM category from the AFS category are recorded at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the HTM securities. Such unrealized gains or losses are accreted over the remaining life of the security with no impact on future net income.
 

-14-


The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities as of March 31, 2019 and December 31, 2018 are summarized as follows (dollars in thousands):
 
 
Carrying
 
Gross Unrealized
 
Estimated
 
Value
 
Gains
 
(Losses)
 
Fair Value
March 31, 2019
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
548,383

 
$
25,179

 
$

 
$
573,562

  Mortgage-backed securities
10,997

 
47

 

 
11,044

Total held-to-maturity securities
$
559,380

 
$
25,226

 
$

 
$
584,606

December 31, 2018
 

 
 

 
 

 
 

Obligations of states and political subdivisions
$
492,272

 
$
7,375

 
$
(146
)
 
$
499,501

 

 
The following table shows the gross unrealized losses and fair value (dollars in thousands) of the Company’s HTM securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of March 31, 2019 and December 31, 2018 (dollars in thousands). These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.
 
 
Less than 12 months
 
More than 12 months
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
March 31, 2019
 

 
 

 
 

 
 

 
 

 
 

  Mortgage-backed securities
1,219

 

 

 

 
1,219

 

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and political subdivisions
$
43,206

 
$
(146
)
 
$

 
$

 
$
43,206

 
$
(146
)
 
As of March 31, 2019 and December 31, 2018 there were no issues of individual HTM securities that had been in a continuous loss position for more than 12 months.

The following table presents the amortized cost and estimated fair value of HTM securities as of March 31, 2019 and December 31, 2018, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
March 31, 2019
 
December 31, 2018
 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Due in one year or less
$
252

 
$
252

 
$

 
$

Due after one year through five years
8,212

 
8,332

 
3,893

 
3,900

Due after five years through ten years
4,010

 
4,054

 
3,480

 
3,507

Due after ten years
546,906

 
571,968

 
484,899

 
492,094

Total HTM securities
$
559,380

 
$
584,606

 
$
492,272

 
$
499,501

 

Refer to Note 8 "Commitments and Contingencies" for information regarding the estimated fair value of HTM securities that were pledged to secure public deposits as permitted or required by law as of March 31, 2019 and December 31, 2018.

Restricted Stock, at cost
Due to restrictions placed upon the Bank’s common stock investment in the Federal Reserve Bank and FHLB, these securities have been classified as restricted equity securities and carried at cost. These restricted securities are not subject to the investment security classifications and are included as a separate line item on the Company’s Consolidated Balance Sheets. At March 31, 2019 and December 31, 2018, the FHLB required the Bank to maintain stock in an amount equal to 4.25% of outstanding borrowings and a specific percentage of the Bank’s total assets. The Federal Reserve Bank required the Bank to

-15-


maintain stock with a par value equal to 6% of the Bank's outstanding capital at both March 31, 2019 and December 31, 2018. Restricted equity securities consist of Federal Reserve Bank stock in the amount of $61.8 million and $52.6 million for March 31, 2019 and December 31, 2018 and FHLB stock in the amount of $74.1 million and $72.0 million as of March 31, 2019 and December 31, 2018, respectively.
 
Other-Than-Temporary-Impairment
During each quarter, the Company conducts an assessment of the securities portfolio for OTTI consideration. The assessment considers factors such as external credit ratings, delinquency coverage ratios, market price, management’s judgment, expectations of future performance, and relevant industry research and analysis. An impairment is other-than-temporary if any of the following conditions exist: the entity intends to sell the security; it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis; or the entity does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). If a credit loss exists, but an entity does not intend to sell the impaired debt security and is not more likely than not to be required to sell before recovery, the impairment is other-than-temporary and should be separated into a credit portion to be recognized in earnings and the remaining amount relating to all other factors recognized as other comprehensive loss. Based on the assessment for the three months ended March 31, 2019, and in accordance with accounting guidance, no OTTI was recognized.

Realized Gains and Losses
The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three months ended March 31, 2019 and 2018 (dollars in thousands).
 
 
Three Months Ended
March 31, 2019
 
Three Months Ended March 31, 2018
Realized gains (losses):
 

 
 

Gross realized gains
$
1,213

 
$
697

Gross realized losses
(1,062
)
 
(484
)
Net realized gains
$
151

 
$
213

 
 
 
 
Proceeds from sales of securities
$
208,249

 
$
115,850


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4. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are stated at their face amount, net of deferred fees and costs, and consist of the following at March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31, 2019
 
December 31, 2018
Construction and Land Development
$
1,326,679

 
$
1,194,821

Commercial Real Estate - Owner Occupied
1,921,464

 
1,337,345

Commercial Real Estate - Non-Owner Occupied
2,970,453

 
2,467,410

Multifamily Real Estate
591,431

 
548,231

Commercial & Industrial
1,866,625

 
1,317,135

Residential 1-4 Family - Commercial
815,309

 
713,750

Residential 1-4 Family - Mortgage
865,502

 
600,578

Auto
300,631

 
301,943

HELOC
672,087

 
613,383

Consumer
397,491

 
379,694

Other Commercial
224,638

 
241,917

Total loans held for investment, net (1)
$
11,952,310

 
$
9,716,207

 
(1) Loans, as presented, are net of deferred fees and costs totaling $5.8 million and $5.1 million as of March 31, 2019 and December 31, 2018, respectively.
 
The following table shows the aging of the Company’s loan portfolio, by segment, at March 31, 2019 (dollars in thousands):
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
Greater than 90
Days and still
Accruing
 
PCI
 
Nonaccrual
 
Current
 
Total Loans
Construction and Land Development
$
1,019

 
$
526

 
$
1,997

 
$
12,600

 
$
5,513

 
$
1,305,024

 
$
1,326,679

Commercial Real Estate - Owner Occupied
4,052

 
480

 
2,908

 
26,836

 
3,307

 
1,883,881

 
1,921,464

Commercial Real Estate - Non-Owner Occupied
760

 
4,129

 

 
18,850

 
1,787

 
2,944,927

 
2,970,453

Multifamily Real Estate
596

 

 

 
90

 

 
590,745

 
591,431

Commercial & Industrial
2,565

 
438

 
313

 
4,159

 
721

 
1,858,429

 
1,866,625

Residential 1-4 Family - Commercial
4,059

 
1,365

 
1,490

 
13,693

 
4,244

 
790,458

 
815,309

Residential 1-4 Family - Mortgage
5,889

 
2,196

 
2,476

 
17,180

 
7,119

 
830,642

 
865,502

Auto
2,152

 
297

 
153

 
7

 
523

 
297,499

 
300,631

HELOC
5,020

 
1,753

 
518

 
5,138

 
1,395

 
658,263

 
672,087

Consumer
1,963

 
1,135

 
1,098

 
693

 
124

 
392,478

 
397,491

Other Commercial

 
62

 

 
686

 
108

 
223,782

 
224,638

Total loans held for investment
$
28,075

 
$
12,381

 
$
10,953

 
$
99,932

 
$
24,841

 
$
11,776,128

 
$
11,952,310

 

-17-


The following table shows the aging of the Company’s loan portfolio, by segment, at December 31, 2018 (dollars in thousands):
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
Greater than 90
Days and still
Accruing
 
PCI
 
Nonaccrual
 
Current
 
Total Loans
Construction and Land Development
$
759

 
$
6

 
$
180

 
$
8,654

 
$
8,018

 
$
1,177,204

 
$
1,194,821

Commercial Real Estate - Owner Occupied
8,755

 
1,142

 
3,193

 
25,644

 
3,636

 
1,294,975

 
1,337,345

Commercial Real Estate - Non-Owner Occupied
338

 
41

 

 
17,335

 
1,789

 
2,447,907

 
2,467,410

Multifamily Real Estate

 
146

 

 
88

 

 
547,997

 
548,231

Commercial & Industrial
3,353

 
389

 
132

 
2,156

 
1,524

 
1,309,581

 
1,317,135

Residential 1-4 Family - Commercial
6,619

 
1,577

 
1,409

 
13,707

 
2,481

 
687,957

 
713,750

Residential 1-4 Family - Mortgage
12,049

 
5,143

 
2,437

 
16,766

 
7,276

 
556,907

 
600,578

Auto
3,320

 
403

 
195

 
7

 
576

 
297,442

 
301,943

HELOC
4,611

 
1,644

 
440

 
5,115

 
1,518

 
600,055

 
613,383

Consumer
1,504

 
1,096

 
870

 
32

 
135

 
376,057

 
379,694

Other Commercial
126

 

 

 
717

 

 
241,074

 
241,917

Total loans held for investment
$
41,434

 
$
11,587

 
$
8,856

 
$
90,221

 
$
26,953

 
$
9,537,156

 
$
9,716,207

 

The following table shows the PCI loan portfolios, by segment and their delinquency status, at March 31, 2019 (dollars in thousands):
 
30-89 Days Past
Due
 
Greater than 90
Days
 
Current
 
Total
Construction and Land Development
$
220

 
$
1,257

 
$
11,123

 
$
12,600

Commercial Real Estate - Owner Occupied
453

 
4,891

 
21,492

 
26,836

Commercial Real Estate - Non-Owner Occupied
146

 
1,773

 
16,931

 
18,850

Multifamily Real Estate

 

 
90

 
90

Commercial & Industrial
275

 
1,283

 
2,601

 
4,159

Residential 1-4 Family - Commercial
2,990

 
971

 
9,732

 
13,693

Residential 1-4 Family - Mortgage
2,761

 
2,158

 
12,261

 
17,180

Auto

 

 
7

 
7

HELOC
808

 
105

 
4,225

 
5,138

Consumer
5

 
7

 
681

 
693

Other Commercial

 

 
686

 
686

Total
$
7,658

 
$
12,445

 
$
79,829

 
$
99,932

 


-18-


The following table shows the PCI loan portfolios, by segment and their delinquency status, at December 31, 2018 (dollars in thousands):
 
 
30-89 Days Past
Due
 
Greater than 90
Days
 
Current
 
Total
Construction and Land Development
$
108

 
$
1,424

 
$
7,122

 
$
8,654

Commercial Real Estate - Owner Occupied
658

 
4,281

 
20,705

 
25,644

Commercial Real Estate - Non-Owner Occupied
61

 
1,810

 
15,464

 
17,335

Multifamily Real Estate

 

 
88

 
88

Commercial & Industrial
47

 
1,092

 
1,017

 
2,156

Residential 1-4 Family - Commercial
931

 
3,464

 
9,312

 
13,707

Residential 1-4 Family - Mortgage
1,899

 
2,412

 
12,455

 
16,766

Auto

 

 
7

 
7

HELOC
498

 
252

 
4,365

 
5,115

Consumer
5

 
9

 
18

 
32

Other Commercial
57

 

 
660

 
717

Total
$
4,264

 
$
14,744

 
$
71,213

 
$
90,221

 

-19-


The Company measures the amount of impairment by evaluating loans either in their collective homogeneous pools or individually. The following table shows the Company’s impaired loans, excluding PCI loans, by segment at March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31, 2019
 
December 31, 2018
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
Loans without a specific allowance
 

 
 

 
 

 
 

 
 

 
 

Construction and Land Development
$
4,954

 
$
5,858

 
$

 
$
10,290

 
$
12,038

 
$

Commercial Real Estate - Owner Occupied
7,315

 
7,750

 

 
8,386

 
9,067

 

Commercial Real Estate - Non-Owner Occupied
4,717

 
4,791

 

 
6,578

 
6,929

 

Commercial & Industrial
1,028

 
1,045

 

 
3,059

 
3,251

 

Residential 1-4 Family - Commercial
4,686

 
4,773

 

 
4,516

 
4,576

 

Residential 1-4 Family - Mortgage
8,338

 
8,975

 

 
8,504

 
9,180

 

HELOC
2,247

 
2,262

 

 
1,150

 
1,269

 

Consumer
31

 
102

 

 
30

 
102

 

Other Commercial