CHARLOTTESVILLE, Va., Oct. 21, 2013 (GLOBE NEWSWIRE) -- StellarOne Corporation (Nasdaq:STEL) ("StellarOne"), today reported third quarter 2013 net income of $6.3 million, or $0.28 net income per diluted common share. This represents a 13.1% increase over net income of $5.6 million or $0.24 per diluted common share recognized during the same quarter in the prior year, and remained constant as compared to net income of $6.3 million or $0.28 per diluted share in the second quarter of 2013.
For the nine months ended September 30, 2013, earnings were $18.5 million or $0.81 per diluted common share, up 16.2% compared to $15.9 million or $0.69 per diluted common share in 2012.
"Our third quarter results were indicative of continued positive momentum with improving asset quality measures, solid loan growth, expense management and stable revenues. As expected, mortgage revenues were impacted by a significant drop in refinance activity during the quarter. However, construction and purchase mortgage activity continue to be robust. Commercial loan growth and associated balance sheet growth mitigated the impact of the mortgage revenue contraction during the quarter. Asset quality measures continued to show incremental improvement, allowing for a continued reduction in loan loss provisioning expense for the quarter," said O. R. Barham, Jr., President and Chief Executive Officer.
On June 10, 2013 StellarOne announced that it will merge with Union First Market Bankshares Corporation (Nasdaq:UBSH) (or "Union"), creating the largest community banking institution in the Commonwealth of Virginia. Under the terms of the agreement, Union will acquire StellarOne, with common shareholders of StellarOne receiving 0.9739 shares of Union common stock for each share of StellarOne. The transaction has received all regulatory approvals, but is subject to shareholder approvals with expected closing on or around January 1, 2014.
Third quarter financial performance highlights included:
- Earnings were impacted by $586 thousand in merger related expenses for the quarter associated with the announced merger with Union.
- Operating earnings for the quarter, excluding the impact of such merger costs, were $6.9 million or $0.30 per diluted share and the ROA and ROE associated with operating earnings were 0.89% and 6.38% or up from 0.74% and 5.21% when compared to the third quarter of 2012, respectively.
- Revenues remained stable, with net revenues totaling $32.0 million, up $300 thousand or 0.95% as compared to $31.7 million for third quarter last year.
- Total period end loans increased 10.2% compared to the third quarter of 2012 and 3.7% compared to the second quarter of 2013 due primarily to loan growth in the construction and commercial real estate portfolios.
- Nonperforming asset levels improved to $30.4 million, a decrease of $12.7 million or 29.4% from 2012, lowering the ratio of non-performing assets as a percentage of total assets to 0.99% as of September 30, 2013, compared to 1.46% as of September 30, 2012.
- Annualized net charge-offs as a percentage of average loans receivable amounted to 0.31% for the third quarter of 2013, up from 0.24% for the second quarter of 2013 and down from 0.42% for same quarter last year.
Growth in Average Earning Assets Supports Revenue Levels
Net interest income for the third quarter of 2013 was $24.8 million, up 2.2% compared to $24.3 million in the second quarter of 2013 and consistent with the $24.3 million for the third quarter of 2012. Average earning assets were $2.7 billion for the third quarter of 2013, up $53.2 million or 2.0% over the second quarter of 2013, and up $93.1 million or 3.5% over the third quarter of 2012. Average loans receivable were $2.3 billion for the third quarter of 2013, up $71.9 million or 3.3% over the second quarter of 2013, and up $186.9 million or 9.0% over the third quarter of 2012.
The net interest margin was 3.70% for the third quarter of 2013, compared to 3.73% for the second quarter of 2013 and 3.77% for the third quarter of 2012. The average yield on earning assets for the current quarter decreased 7 basis points to 4.20% on a sequential basis. Loan and investment yields contracted 10 basis points and 4 basis points, respectively, on a sequential basis. Continued reductions in deposit costs contributed to a 3 basis point improvement in the cost of interest bearing liabilities sequentially, moving from 0.66% during the second quarter of 2013 to 0.63% during the third quarter of 2013.
Operating Noninterest Income Decreases on Mortgage Contraction
On an operating basis, which excludes gains and losses from sales and impairments of securities and other assets, total non-interest income amounted to $7.2 million for the third quarter of 2013, down $642 thousand or 8.2% on a sequential basis compared to $7.8 million for the second quarter of 2013, and down $177 thousand or 2.4% compared to the third quarter last year. The sequential quarter decrease in operating noninterest income stemmed largely from a reduction in mortgage revenues associated with reduced margins and loan production volumes from our mortgage segment. The decrease for the same quarter compared to the prior year is also related to a reduction in mortgage revenues which was substantially offset by increases in wealth management fee income and retail banking fees.
Mortgage banking-related fees totaled $1.3 million for the third quarter of 2013, or down $601 thousand or 31.2% compared to $1.9 million for the second quarter of 2013 and down $538 thousand, or 28.9%, compared to $1.9 million in the same quarter in 2012. Of total mortgage originations for the quarter, 53.6% represented home purchases. Loans sold in the third quarter of 2013 totaled $73.5 million or down $1.2 million or 1.7% from the $74.7 million sold during the second quarter of 2013. The mortgage segment contributed after-tax earnings of $414 thousand for the current quarter, compared to $701 thousand last quarter, and $587 thousand for same quarter last year.
Losses on foreclosed assets were $285 thousand for the quarter, a decrease of $96 thousand or 25.2% compared to $381 thousand for the same quarter in 2012. Other operating income decreased $71 thousand compared to the same quarter in the prior year due to a contraction of revenues associated with commercial lending loan swap fee income.
Retail banking fee income totaled $3.5 million for the third quarter of 2013, an increase of $80 thousand or 2.3% sequentially and an increase of $326 thousand or 10.2% over the same quarter in 2012. An increase in overdraft revenue led to the sequential increase, while an increase in interchange income and newly instituted fees contributed to the year over year increase.
Wealth management revenues from trust and brokerage fees for the third quarter of 2013 were $1.3 million or down $76 thousand or 5.5% on a sequential quarter basis and up $141 thousand or 12.0% when compared to the third quarter of 2012. The revenue increase year over year is a result of higher fee realizations and growth in assets. The sequential quarter decrease is related to lower fee realizations from brokerage services. Fiduciary assets amounted to $538.3 million at September 30, 2013, compared to $539.7 million at June 30, 2013. After-tax earnings were $219 thousand for the quarter, compared to $271 thousand sequentially and $166 thousand for the same quarter last year.
Net Charge-Offs Decrease and Overall Asset Quality Improves
Non-performing assets totaled $30.4 million at September 30, 2013, up $228 thousand or 0.8% sequentially from $30.2 million at June 30, 2013 and down $12.7 million or 29.4% compared to $43.1 million at September 30, 2012. The ratio of non-performing assets as a percentage of total assets dropped to 0.99% as of September 30, 2013, compared to 1.0% as of June 30, 2013 and was also down when compared to 1.46% at September 30, 2012.
Net charge-offs for the third quarter of 2013 totaled $1.7 million, increased $440 thousand or 33.9% compared to the $1.3 million for the second quarter of 2013 and down $443 million or 20.3% when compared to $2.2 million for the third quarter of 2012. Annualized net charge-offs as a percentage of average loans receivable amounted to 0.31% for the third quarter of 2013, up from 0.24% for the second quarter of 2013 and down from 0.42% for the third quarter of 2012. StellarOne recorded provision for loan losses of $200 thousand for the third quarter of 2013, an increase of $585 thousand compared to the $385 thousand recovery of provision for the second quarter of 2013 and a decrease of $1.7 million compared to the third quarter of 2012. The decreased provisioning throughout 2013 is reflective of the continued improvement in underlying credit quality metrics used in measuring the risk inherent in the loan portfolio.
The allowance as a percentage of non-performing loans was 99.5% at September 30, 2013, or slightly lower than the 104.9% at June 30, 2013. The allowance for loan losses was $25.8 million at September 30, 2013, compared to $27.4 million at June 30, 2013. The allowance as a percentage of total loans was 1.14% at September 30, 2013, compared to 1.25% at June 30, 2013.
Foreclosed assets totaled $4.4 million at September 30, 2013, up $354 thousand or 8.6% compared to $4.1 million at June 30, 2013 and down $3.5 million or 43.7% compared to $7.9 million at September 30, 2012.
Included in the loan portfolio at September 30, 2013, are loans classified as troubled debt restructurings ("TDRs") totaling $19.2 million or 0.85% of total loans. TDRs were reduced sequentially by 6.8% or $1.4 million as compared to $20.6 million at June 30, 2013. At September 30, 2013, $17.8 million or 93.0% of total TDRs were performing under the modified terms.
Operating Expenses Increase on Merger Costs
Noninterest expenses were $22.8 million for the third quarter of 2013, down sequentially by $432 thousand or 1.9% compared to $23.3 million in the second quarter of 2013, and up $532 thousand or 2.4% compared to third quarter of 2012.
Excluding the effects of non-recurring merger costs of $586 thousand in third quarter 2013 and $871 thousand in second quarter 2013, operating expenses would have been $22.2 million for the third quarter of 2013, down $147 thousand or 0.7% sequentially, and down $54 thousand or 0.2% compared to same quarter last year. Compensation and benefits were $11.8 million for the third quarter of 2013, down sequentially by $167 thousand or 1.4% compared to $12.0 million in the second quarter of 2013, and down $376 thousand or 3.1% compared to third quarter of 2012. The decrease sequentially was attributable to a reduction in salary and overtime costs and ongoing efficiency efforts. The decrease relative to 2012 was related to a $416 thousand decrease in VBA medical costs when compared to the third quarter of 2012.
The efficiency ratio was 66.49% for the third quarter of 2013, compared to 66.81% for the second quarter of 2013 and 66.66% for the same quarter in 2012. The sequential quarter improvement reflects stable revenue for the quarter coupled with lower operating expenses. The year over year decrease reflects similar trends on revenue and operating expenses, but also reflects the impact of severance costs on the third quarter 2012 efficiency ratio.
Effective Tax Rate
The provision for income taxes was $2.7 million for the third quarter of 2013 compared to $2.9 million for the second quarter of 2013, and $2.0 million for the same quarter last year. This produced an effective tax rate for the third quarter of 2013 of 30.0% compared to 31.6% for the prior quarter and 26.0% for same quarter last year. The increase in the tax rate as compared to prior year effective tax rates was due to the impact of $413 thousand of nondeductible expenses included in merger costs incurred during the quarter. Merger costs were higher in the sequential quarter, accounting for the higher effective rate. For the nine months ended September 30, 2013 the effective rate was 29.8%, compared to 26.8% for same period prior year.
Balance Sheet Trends
Period end loans increased $81.3 million sequentially or 3.7% compared to the second quarter of 2013, while average loans for the third quarter of 2013 were $2.3 billion, up $71.9 million or 3.3% compared to the second quarter of 2013. Average securities were $476.9 million for the third quarter, down $10.8 million or 2.2% sequentially and down $71.4 million or 13.0% from $548.3 million for the third quarter of 2012. Average deposits for the third quarter of 2013 were $2.4 billion or essentially flat on a sequential quarter basis compared to the second quarter of 2013. Average interest and noninterest bearing demand deposit accounts were $1.03 billion at September 30, 2013, a $22.7 million or a 2.3% increase over June 30, 2013. At September 30, 2013, total period end assets were $3.1 billion, compared to $3.0 billion at June 30, 2013. Period end cash and cash equivalents were $54.2 million at September 30, 2013, an increase of $2.5 million or 4.9% compared to $51.7 million at June 30, 2013.
About StellarOne
StellarOne Corporation is a traditional community bank with assets of $3.1 billion offering a full range of business and consumer banking services, including trust and wealth management services. Through the activities of our sole subsidiary, StellarOne Bank, we operate over 50 full-service financial centers, two loan production offices, and over 60 ATMs serving the New River Valley, Roanoke Valley, Shenandoah Valley, Richmond, Tidewater, and Central and North Central Virginia.
Additional information is available on the Company's website at http://www.stellarone.com under "Investor Relations". Shares of the Company's common stock are traded on the NASDAQ Global Select Market under the symbol STEL.
Non-GAAP Financial Measures
This report refers to the efficiency ratio, which is computed by calculating noninterest expense less amortization of intangibles and goodwill impairments and dividing this by the sum of net interest income on a tax equivalent basis and non-interest income excluding gains on securities and losses on foreclosed assets. The report also refers to operating earnings and noninterest income, which reflects both earnings and noninterest income adjusted for non-recurring expenses associated with merger expenses, asset gains and losses or other expenses that are unusual in nature. Comparison of our efficiency ratio and operating earnings with those of other companies may not be possible because other companies may calculate them differently. Pre-tax, pre-provision earnings, which adjusts for tax equivalent items and adds back provision and tax expense to net income, is used to demonstrate a more representative comparison of operational performance without the volatility of credit quality that is typically present in times of economic stress. The tangible common equity ratio is used by management to assess the quality of capital and management believes that investors may find it useful in their analysis of the company. This capital measure is not necessarily comparable to similar capital measures that may be presented by other companies. Such information is not in accordance with generally accepted accounting principles in the United States ("GAAP") and should not be construed as such. These are non-GAAP financial measures that management believes provide investors with important information regarding operational efficiency. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information should not be viewed as a substitute for GAAP. StellarOne, in referring to its net income, is referring to income under GAAP.
Forward-Looking Statements
In addition to historical information, this press release contains forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from historical results, or those anticipated. When we use words such as "expect," "believe," "estimate," "plan," "project," "anticipate," "intend," "will" or similar expressions, we are making forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date thereof. StellarOne wishes to caution the reader that factors, such as those listed below, in some cases have affected and could affect StellarOne's actual results, causing actual results to differ materially from those in any forward-looking statement. These factors include: (i) expected cost savings from StellarOne's acquisitions and dispositions, (ii) competitive pressure in the banking industry or in StellarOne's markets may increase significantly, (iii) changes in the interest rate environment may reduce margins, (iv) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, credit quality deterioration, (v) changes may occur in banking legislation and regulation, (vi) changes may occur in general business conditions, and (vii) changes may occur in the securities markets. Please refer to StellarOne's filings with the Securities and Exchange Commission for additional information, which may be accessed at http://www.stellarone.com.
| STELLARONE CORPORATION (NASDAQ: STEL) | ||||
| SELECTED FINANCIAL DATA (UNAUDITED) | ||||
| (Dollars in thousands, except per share data) | ||||
| SUMMARY INCOME STATEMENT | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2013 | 2012 | 2013 | 2012 | |
| Interest income - taxable equivalent | $ 29,007 | $ 29,586 | $ 86,334 | $ 88,960 |
| Interest expense | 3,494 | 4,544 | 10,971 | 14,361 |
| Net interest income - taxable equivalent | 25,513 | 25,042 | 75,363 | 74,599 |
| Less: taxable equivalent adjustment | 675 | 743 | 2,054 | 2,225 |
| Net interest income | 24,838 | 24,299 | 73,309 | 72,374 |
| Provision for loan and lease losses | 200 | 1,900 | 515 | 4,150 |
| Net interest income after provision for loan and lease losses | 24,638 | 22,399 | 72,794 | 68,224 |
| Noninterest income | 7,162 | 7,401 | 22,428 | 21,446 |
| Noninterest expense | 22,820 | 22,288 | 68,843 | 67,895 |
| Income tax expense | 2,691 | 1,952 | 7,862 | 5,833 |
| Net income | $ 6,289 | $ 5,560 | $ 18,517 | $ 15,942 |
| Earnings per share available to common shareholders | ||||
| Basic | $ 0.28 | $ 0.24 | $ 0.81 | $ 0.69 |
| Diluted | $ 0.28 | $ 0.24 | $ 0.81 | $ 0.69 |
| SUMMARY AVERAGE BALANCE SHEET | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2013 | 2012 | 2013 | 2012 | |
| Total loans | $ 2,253,777 | $ 2,066,911 | $ 2,192,911 | $ 2,057,773 |
| Total investment securities | 476,937 | 548,345 | 490,116 | 507,109 |
| Total earning assets | 2,737,018 | 2,643,968 | 2,697,694 | 2,610,999 |
| Total assets | 3,049,761 | 2,973,511 | 3,017,105 | 2,936,311 |
| Total deposits | 2,453,139 | 2,438,057 | 2,456,208 | 2,406,920 |
| Shareholders' equity | 427,325 | 424,686 | 429,143 | 420,811 |
| PERFORMANCE RATIOS | Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2013 | 2012 | 2013 | 2012 | |
| Return on average assets | 0.82% | 0.74% | 0.82% | 0.73% |
| Return on average equity | 5.84% | 5.21% | 5.77% | 5.06% |
| Return on average realized equity (A) | 5.87% | 5.34% | 5.85% | 5.27% |
| Net interest margin (taxable equivalent) | 3.70% | 3.77% | 3.74% | 3.82% |
| Efficiency (taxable equivalent) (B) | 66.49% | 66.66% | 67.49% | 68.71% |
| CAPITAL MANAGEMENT | September 30, | |||
| 2013 | 2012 | |||
| Tangible equity ratio | 10.56% | 10.90% | ||
| Tangible common equity ratio | 10.56% | 10.90% | ||
| Period end shares issued and outstanding | 22,534,554 | 22,881,857 | ||
| Book value per common share | 19.11 | 18.71 | ||
| Tangible book value per common share | 13.90 | 13.54 | ||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Shares issued (cancelled) | 7,950 | (8,278) | (361,152) | 78,753 |
| Average common shares issued and outstanding | 22,732,109 | 23,104,631 | 22,816,837 | 23,086,118 |
| Average diluted common shares issued and outstanding | 22,819,990 | 23,105,549 | 22,858,528 | 23,086,465 |
| Cash dividends paid per common share | $ 0.10 | $ 0.06 | $ 0.28 | $ 0.18 |
| SUMMARY ENDING BALANCE SHEET | September 30, | |||
| 2013 | 2012 | |||
| Total loans | $ 2,264,733 | $ 2,055,099 | ||
| Total investment securities | 480,332 | 557,138 | ||
| Total earning assets | 2,767,152 | 2,647,905 | ||
| Total assets | 3,082,227 | 2,959,846 | ||
| Total deposits | 2,446,381 | 2,421,735 | ||
| Shareholders' equity | 430,716 | 428,077 | ||
| OTHER DATA | ||||
| End of period full-time equivalent employees | 715 | 746 | ||
| NOTES: | ||||
| (A) Excludes the effect on average stockholders' equity of unrealized gains (losses) that result from changes in market values of securities and other comprehensive pension expense. | ||||
| (B) Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently. See Non-GAAP reconciliation for detail. | ||||
| STELLARONE CORPORATION (NASDAQ: STEL) | |||||
| CREDIT QUALITY (UNAUDITED) | |||||
| (Dollars in thousands) | |||||
| CREDIT QUALITY | Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2013 | 2012 | 2013 | 2012 | ||
| Allowance for loan losses: | |||||
| Beginning of period | $ 27,366 | $ 30,142 | $ 29,824 | $ 32,588 | |
| Provision for loan losses | 200 | 1,900 | 515 | 4,150 | |
| Charge-offs | (2,077) | (2,733) | (6,052) | (8,528) | |
| Recoveries | 338 | 551 | 1,540 | 1,650 | |
| Net charge-offs | (1,739) | (2,182) | (4,512) | (6,878) | |
| End of period | $ 25,827 | $ 29,860 | $ 25,827 | $ 29,860 | |
| Accruing Troubled Debt Restructurings | $ 17,826 | $ 25,003 | |||
| Loans greater than 90 days past due still accruing | $ 318 | $ 2 | |||
| September 30, | |||||
| 2013 | 2012 | ||||
| Non accrual loans | $ 24,630 | $ 32,544 | |||
| Non accrual TDR's | 1,338 | 2,628 | |||
| Total non-performing loans | 25,968 | 35,172 | |||
| Foreclosed assets | 4,449 | 7,907 | |||
| Total non-performing assets | $ 30,417 | $ 43,079 | |||
| Nonperforming assets as a % of total assets | 0.99% | 1.46% | |||
| Nonperforming assets as a % of loans plus foreclosed assets | 1.34% | 2.09% | |||
| Allowance for loan losses as a % of total loans | 1.14% | 1.45% | |||
| Annualized net charge-offs as a % of average loans outstanding - 3 months | 0.31% | 0.42% | |||
| Annualized net charge-offs as a % of average loans outstanding - year to date | 0.41% | 0.45% | |||
| September 30, 2013 | |||||
|
Loans Outstanding |
Nonaccrual Loans |
Nonaccrual Loans to Loans Outstanding |
|||
| Construction and land development | $ 213,236 | $ 5,249 | 2.46% | ||
| Commercial real estate: | |||||
| Commercial real estate - owner occupied | 387,649 | 1,459 | 0.38% | ||
| Commercial real estate - non-owner occupied | 548,404 | 2,030 | 0.37% | ||
| Multifamily, nonresidential, farmland and junior liens | 132,254 | 4,268 | 3.23% | ||
| Total commercial real estate | 1,068,307 | 7,757 | 0.73% | ||
| Consumer real estate: | |||||
| Home equity lines | 233,395 | 1,658 | 0.71% | ||
| Secured by 1-4 family residential, secured by deeds of trust | 495,908 | 10,428 | 2.10% | ||
| Total consumer real estate | 729,303 | 12,086 | 1.66% | ||
| Commercial and industrial loans (except those secured by real estate) | 191,732 | 742 | 0.39% | ||
| Consumer and other | 62,155 | 134 | 0.22% | ||
| Total loans | $ 2,264,733 | $ 25,968 | 1.15% | ||
| STELLARONE CORPORATION (NASDAQ: STEL) | |||
| BALANCE SHEET (UNAUDITED) | |||
| (Dollars in thousands, except per share data) | |||
| SELECTED BALANCE SHEET DATA | 9/30/2013 | 9/30/2012 |
Percent Increase (Decrease) |
| Assets | |||
| Cash and cash equivalents | $ 54,232 | $ 54,857 | -1.14% |
| Investment securities, at fair value | 480,332 | 557,138 | -13.79% |
| Mortgage loans held for sale | 18,696 | 26,006 | -28.11% |
| Loans: | |||
| Construction and land development | 213,236 | 188,868 | 12.90% |
| Commercial real estate | 1,068,307 | 913,324 | 16.97% |
| Consumer real estate | 729,303 | 738,464 | -1.24% |
| Commercial and industrial loans (except those secured by real estate) | 191,732 | 185,041 | 3.62% |
| Consumer and other | 62,155 | 29,402 | >100% |
| Total loans | 2,264,733 | 2,055,099 | 10.20% |
| Deferred loan fees | (649) | (191) | >100% |
| Allowance for loan losses | (25,827) | (29,860) | -13.51% |
| Net loans | 2,238,257 | 2,025,048 | 10.53% |
| Premises and equipment, net | 74,033 | 72,195 | 2.55% |
| Core deposit intangibles, net | 2,728 | 3,773 | -27.70% |
| Goodwill | 114,167 | 113,652 | 0.45% |
| Bank owned life insurance | 45,491 | 43,736 | 4.01% |
| Foreclosed assets | 4,449 | 7,907 | -43.73% |
| Other assets | 49,842 | 55,534 | -10.25% |
| Total assets | 3,082,227 | 2,959,846 | 4.13% |
| Liabilities | |||
| Deposits: | |||
| Noninterest bearing deposits | 416,087 | 349,099 | 19.19% |
| Money market & interest checking | 1,069,109 | 1,030,434 | 3.75% |
| Savings | 310,361 | 317,077 | -2.12% |
| CD's and other time deposits | 650,824 | 725,125 | -10.25% |
| Total deposits | 2,446,381 | 2,421,735 | 1.02% |
| Federal funds purchased and securities sold under agreements to repurchase | 29,380 | 870 | >100% |
| Federal Home Loan Bank advances | 126,700 | 55,000 | >100% |
| Subordinated debt | 32,991 | 32,991 | 0.00% |
| Other liabilities | 15,734 | 17,161 | -8.32% |
| Total liabilities | 2,651,511 | 2,531,769 | 4.73% |
| Stockholders' equity | |||
| Common stock | 22,535 | 22,882 | -1.52% |
| Additional paid-in capital | 266,282 | 271,537 | -1.94% |
| Retained earnings | 139,222 | 122,726 | 13.44% |
| Accumulated other comprehensive income | 2,677 | 10,932 | -75.51% |
| Total stockholders' equity | 430,716 | 428,077 | 0.62% |
| Total liabilities and stockholders' equity | $ 3,082,227 | $ 2,959,846 | 4.13% |
| STELLARONE CORPORATION (NASDAQ: STEL) | |||
| QUARTERLY INCOME STATEMENT (UNAUDITED) | |||
| (Dollars in thousands) | |||
| Percent | |||
| For the three months ended | Increase | ||
| 9/30/2013 | 9/30/2012 | (Decrease) | |
| Interest Income | |||
| Loans, including fees | $ 25,884 | $ 25,812 | 0.28% |
| Federal funds sold and deposits in other banks | 4 | 24 | -83.33% |
| Investment securities: | |||
| Taxable | 1,292 | 1,725 | -25.10% |
| Tax-exempt | 1,152 | 1,282 | -10.14% |
| Total interest income | 28,332 | 28,843 | -1.77% |
| Interest Expense | |||
| Deposits | 2,654 | 3,779 | -29.77% |
| Federal funds purchased and securities sold under agreements to repurchase | 24 | 8 | >100% |
| Federal Home Loan Bank advances | 471 | 413 | 14.04% |
| Subordinated debt | 345 | 344 | 0.29% |
| Total interest expense | 3,494 | 4,544 | -23.11% |
| Net interest income | 24,838 | 24,299 | 2.22% |
| Provision for loan losses | 200 | 1,900 | -89.47% |
| Net interest income after provision for loan losses | 24,638 | 22,399 | 10.00% |
| Noninterest Income | |||
| Retail banking fees | 3,535 | 3,209 | 10.16% |
| Fiduciary and brokerage fee income | 1,313 | 1,172 | 12.03% |
| Mortgage banking-related fees | 1,326 | 1,864 | -28.86% |
| Losses on mortgage indemnifications and repurchases | (144) | (28) | >100% |
| (Losses) gains on sale of premises and equipment | (36) | 17 | >100% |
| Gains on securities available for sale | -- | 9 | -100.00% |
| Losses on sale / impairments of foreclosed assets | (285) | (381) | -25.20% |
| Income from bank owned life insurance | 440 | 445 | -1.12% |
| Insurance income | 127 | 137 | -7.30% |
| Other operating income | 886 | 957 | -7.42% |
| Total noninterest income | 7,162 | 7,401 | -3.23% |
| Noninterest Expense | |||
| Compensation and employee benefits | 11,812 | 12,188 | -3.09% |
| Net occupancy | 2,363 | 2,223 | 6.30% |
| Equipment | 2,117 | 1,885 | 12.31% |
| Amortization-intangible assets | 320 | 413 | -22.52% |
| Marketing | 482 | 376 | 28.19% |
| State franchise taxes | 588 | 564 | 4.26% |
| FDIC insurance | 463 | 490 | -5.51% |
| Data processing | 371 | 376 | -1.33% |
| Professional fees | 370 | 587 | -36.97% |
| Telecommunications | 368 | 420 | -12.38% |
| Merger related costs | 586 | -- | 100.00% |
| Other operating expenses | 2,980 | 2,766 | 7.74% |
| Total noninterest expense | 22,820 | 22,288 | 2.39% |
| Income before income taxes | 8,980 | 7,512 | 19.54% |
| Income tax expense | 2,691 | 1,952 | 37.86% |
| Net income | $ 6,289 | $ 5,560 | 13.11% |
| STELLARONE CORPORATION (NASDAQ: STEL) | |||
| YEAR TO DATE INCOME STATEMENT (UNAUDITED) | |||
| (Dollars in thousands) | |||
| Percent | |||
| For the Nine Months Ended | Increase | ||
| 9/30/2013 | 9/30/2012 | (Decrease) | |
| Interest Income | |||
| Loans, including fees | $ 76,648 | $ 77,705 | -1.36% |
| Federal funds sold and deposits in other banks | 34 | 90 | -62.22% |
| Investment securities: | |||
| Taxable | 4,101 | 5,054 | -18.86% |
| Tax-exempt | 3,497 | 3,886 | -10.01% |
| Total interest income | 84,280 | 86,735 | -2.83% |
| Interest Expense | |||
| Deposits | 8,621 | 12,053 | -28.47% |
| Federal funds purchased and securities sold under agreements to repurchase | 40 | 20 | 100.00% |
| Federal Home Loan Bank advances | 1,287 | 1,260 | 2.14% |
| Subordinated debt | 1,023 | 1,028 | -0.49% |
| Total interest expense | 10,971 | 14,361 | -23.61% |
| Net interest income | 73,309 | 72,374 | 1.29% |
| Provision for loan losses | 515 | 4,150 | -87.59% |
| Net interest income after provision for loan losses | 72,794 | 68,224 | 6.70% |
| Noninterest Income | |||
| Retail banking fees | 10,042 | 9,801 | 2.46% |
| Fiduciary and brokerage fee income | 3,930 | 3,583 | 9.68% |
| Mortgage banking-related fees | 5,088 | 5,023 | 1.29% |
| Losses on mortgage indemnifications and repurchases | (215) | (584) | -63.18% |
| (Losses) gains on sale of premises and equipment | (60) | 10 | >100% |
| Gains on securities available for sale | 6 | 88 | -93.18% |
| Losses on sale / impairments of foreclosed assets | (659) | (1,051) | -37.30% |
| Income from bank owned life insurance | 1,309 | 1,323 | -1.06% |
| Insurance income | 778 | 796 | -2.26% |
| Other operating income | 2,209 | 2,457 | -10.09% |
| Total noninterest income | 22,428 | 21,446 | 4.58% |
| Noninterest Expense | |||
| Compensation and employee benefits | 36,214 | 37,112 | -2.42% |
| Net occupancy | 6,926 | 6,382 | 8.52% |
| Equipment | 6,397 | 6,255 | 2.27% |
| Amortization-intangible assets | 951 | 1,238 | -23.18% |
| Marketing | 1,020 | 1,004 | 1.59% |
| State franchise taxes | 1,763 | 1,691 | 4.26% |
| FDIC insurance | 1,475 | 1,673 | -11.84% |
| Data processing | 1,180 | 1,052 | 12.17% |
| Professional fees | 1,718 | 2,152 | -20.17% |
| Telecommunications | 1,125 | 1,256 | -10.43% |
| Merger related costs | 1,457 | -- | 100.00% |
| Other operating expenses | 8,617 | 8,080 | 6.65% |
| Total noninterest expense | 68,843 | 67,895 | 1.40% |
| Income before income taxes | 26,379 | 21,775 | 21.14% |
| Income tax expense | 7,862 | 5,833 | 34.78% |
| Net income | $ 18,517 | $ 15,942 | 16.15% |
| STELLARONE CORPORATION (NASDAQ: STEL) | ||||||
| CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED) | ||||||
| THREE MONTHS ENDED September 30, 2013 AND 2012 | ||||||
| (Dollars in thousands) | ||||||
| For the Three Months Ended September 30, | ||||||
| 2013 | 2012 | |||||
| Average | Interest | Average | Average | Interest | Average | |
| Dollars in thousands | Balance | Inc/Exp | Rates | Balance | Inc/Exp | Rates |
| Assets | ||||||
| Loans receivable, net (1) | $ 2,253,777 | $ 25,939 | 4.57% | $ 2,066,911 | $ 25,865 | 4.98% |
| Investment securities | ||||||
| Taxable | 353,221 | 1,292 | 1.43% | 414,806 | 1,725 | 1.63% |
| Tax exempt (1) | 123,716 | 1,772 | 5.60% | 133,539 | 1,972 | 5.78% |
| Total investments | 476,937 | 3,064 | 2.51% | 548,345 | 3,697 | 2.64% |
| Federal funds sold and deposits in other banks | 6,304 | 4 | 0.25% | 28,712 | 24 | 0.33% |
| 483,241 | 3,068 | 2.48% | 577,057 | 3,721 | 2.53% | |
| Total earning assets | 2,737,018 | $ 29,007 | 4.20% | 2,643,968 | $ 29,586 | 4.45% |
| Total nonearning assets | 312,743 | 329,543 | ||||
| Total assets | $ 3,049,761 | $ 2,973,511 | ||||
| Liabilities and Stockholders' Equity | ||||||
| Interest-bearing deposits | ||||||
| Interest checking | $ 628,026 | $ 142 | 0.09% | $ 604,102 | $ 309 | 0.20% |
| Money market | 452,570 | 356 | 0.31% | 437,761 | 506 | 0.46% |
| Savings | 312,845 | 66 | 0.08% | 316,922 | 219 | 0.27% |
| Time deposits: | ||||||
| Less than $100,000 | 441,680 | 1,276 | 1.15% | 484,365 | 1,699 | 1.40% |
| $100,000 and more | 220,485 | 814 | 1.46% | 251,863 | 1,046 | 1.65% |
| Total interest-bearing deposits | 2,055,606 | 2,654 | 0.51% | 2,095,013 | 3,779 | 0.72% |
| Federal funds purchased and securities sold under agreements to repurchase | 16,003 | 24 | 0.59% | 1,920 | 8 | 1.55% |
| Federal Home Loan Bank advances | 105,159 | 471 | 1.75% | 55,000 | 413 | 2.94% |
| Subordinated debt | 32,991 | 345 | 4.10% | 32,991 | 344 | 4.09% |
| 154,153 | 840 | 2.13% | 89,911 | 765 | 3.33% | |
| Total interest-bearing liabilities | 2,209,759 | 3,494 | 0.63% | 2,184,924 | 4,544 | 0.83% |
| Total noninterest-bearing liabilities | 412,677 | 363,901 | ||||
| Total liabilities | 2,622,436 | 2,548,825 | ||||
| Stockholders' equity | 427,325 | 424,686 | ||||
| Total liabilities and stockholders' equity | $ 3,049,761 | $ 2,973,511 | ||||
| Net interest income (tax equivalent) | $ 25,513 | $ 25,042 | ||||
| Average interest rate spread | 3.57% | 3.62% | ||||
| Interest expense as percentage of average earning assets | 0.51% | 0.68% | ||||
| Net interest margin | 3.70% | 3.77% | ||||
| (1) Income and yields are reported on a taxable equivalent basis using a 35% tax rate. | ||||||
| STELLARONE CORPORATION (NASDAQ: STEL) | ||||||
| CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED) | ||||||
| NINE MONTHS ENDED September 30, 2013 AND 2012 | ||||||
| (Dollars in thousands) | ||||||
| For the Nine Months Ended September 30, | ||||||
| 2013 | 2012 | |||||
| Average | Interest | Average | Average | Interest | Average | |
| Dollars in thousands | Balance | Inc/Exp | Rates | Balance | Inc/Exp | Rates |
| Assets | ||||||
| Loans receivable, net (1) | $ 2,192,911 | $ 76,820 | 4.68% | $ 2,057,773 | $ 77,836 | 5.05% |
| Investment securities | ||||||
| Taxable | 365,135 | 4,101 | 1.48% | 370,541 | 5,054 | 1.79% |
| Tax exempt (1) | 124,981 | 5,379 | 5.68% | 136,568 | 5,980 | 5.75% |
| Total investments | 490,116 | 9,480 | 2.55% | 507,109 | 11,034 | 2.86% |
| Federal funds sold and deposits in other banks | 14,667 | 34 | 0.31% | 46,117 | 90 | 0.26% |
| 504,783 | 9,514 | 2.49% | 553,226 | 11,124 | 2.64% | |
| Total earning assets | 2,697,694 | $ 86,334 | 4.28% | 2,610,999 | $ 88,960 | 4.55% |
| Total nonearning assets | 319,411 | 325,312 | ||||
| Total assets | $ 3,017,105 | $ 2,936,311 | ||||
| Liabilities and Stockholders' Equity | ||||||
| Interest-bearing deposits | ||||||
| Interest checking | $ 626,472 | $ 496 | 0.11% | $ 593,817 | $ 1,101 | 0.25% |
| Money market | 458,729 | 1,231 | 0.36% | 421,755 | 1,551 | 0.49% |
| Savings | 313,930 | 247 | 0.11% | 307,840 | 800 | 0.35% |
| Time deposits: | ||||||
| Less than $100,000 | 452,333 | 4,085 | 1.21% | 495,902 | 5,381 | 1.45% |
| $100,000 and more | 226,922 | 2,562 | 1.51% | 255,595 | 3,220 | 1.68% |
| Total interest-bearing deposits | 2,078,386 | 8,621 | 0.55% | 2,074,909 | 12,053 | 0.78% |
| Federal funds purchased and securities sold under agreements to repurchase | 7,256 | 40 | 0.73% | 1,209 | 20 | 2.17% |
| Federal Home Loan Bank advances | 73,617 | 1,287 | 2.30% | 55,785 | 1,260 | 2.97% |
| Subordinated debt | 32,991 | 1,023 | 4.09% | 32,991 | 1,028 | 4.09% |
| 113,864 | 2,350 | 2.72% | 89,985 | 2,308 | 3.37% | |
| Total interest-bearing liabilities | 2,192,250 | 10,971 | 0.67% | 2,164,894 | 14,361 | 0.89% |
| Total noninterest-bearing liabilities | 395,712 | 350,606 | ||||
| Total liabilities | 2,587,962 | 2,515,500 | ||||
| Stockholders' equity | 429,143 | 420,811 | ||||
| Total liabilities and stockholders' equity | $ 3,017,105 | $ 2,936,311 | ||||
| Net interest income (tax equivalent) | $ 75,363 | $ 74,599 | ||||
| Average interest rate spread | 3.61% | 3.66% | ||||
| Interest expense as percentage of average earning assets | 0.54% | 0.73% | ||||
| Net interest margin | 3.74% | 3.82% | ||||
| (1) Income and yields are reported on a taxable equivalent basis using a 35% tax rate. | ||||||
| STELLARONE CORPORATION (NASDAQ: STEL) | ||||||
| SEGMENT INFORMATION (UNAUDITED) | ||||||
| (Dollars in thousands) | ||||||
| At and for the Three Months Ended September 30, 2013 | ||||||
| Commercial | Mortgage | Wealth | Intersegment | |||
| Bank | Banking | Management | Other | Elimination | Consolidated | |
| Net interest income | $ 24,375 | $ 790 | $ 18 | $ (345) | $ -- | $ 24,838 |
| Provision for loan losses | 200 | -- | -- | -- | -- | 200 |
| Noninterest income | 5,858 | 1,182 | 1,313 | 26 | (1,217) | 7,162 |
| Noninterest expense | 20,864 | 1,380 | 1,018 | 775 | (1,217) | 22,820 |
| Provision for income taxes | 2,662 | 178 | 94 | (243) | -- | 2,691 |
| Net income (loss) | $ 6,507 | $ 414 | $ 219 | $ (851) | $ -- | $ 6,289 |
| Total Assets | $ 2,989,592 | $ 80,267 | $ 4,528 | $ 468,514 | $ (460,674) | $ 3,082,227 |
| Average Assets | $ 2,970,257 | $ 69,485 | $ 2,167 | $ 465,135 | $ (457,283) | $ 3,049,761 |
| At and for the Three Months Ended September 30, 2012 | ||||||
| Commercial | Mortgage | Wealth | Intersegment | |||
| Bank | Banking | Management | Other | Elimination | Consolidated | |
| Net interest income | $ 24,482 | $ 161 | $ -- | $ (344) | $ -- | $ 24,299 |
| Provision for loan losses | 1,900 | -- | -- | -- | -- | 1,900 |
| Noninterest income | 5,525 | 1,955 | 1,172 | (99) | (1,152) | 7,401 |
| Noninterest expense | 21,059 | 1,277 | 937 | 167 | (1,152) | 22,288 |
| Provision for income taxes | 1,848 | 252 | 69 | (217) | -- | 1,952 |
| Net income (loss) | $ 5,200 | $ 587 | $ 166 | $ (393) | $ -- | $ 5,560 |
| Total Assets | $ 2,925,559 | $ 26,309 | $ 636 | $ 466,591 | $ (459,249) | $ 2,959,846 |
| Average Assets | $ 2,945,031 | $ 20,368 | $ 617 | $ 462,947 | $ (455,452) | $ 2,973,511 |
| At and for the Nine Months Ended September 30, 2013 | ||||||
| Commercial | Mortgage | Wealth | Intersegment | |||
| Bank | Banking | Management | Other | Elimination | Consolidated | |
| Net interest income | $ 72,714 | $ 1,598 | $ 19 | $ (1,022) | $ -- | $ 73,309 |
| Provision for loan losses | 515 | -- | -- | -- | -- | 515 |
| Noninterest income | 17,217 | 4,854 | 3,930 | 79 | (3,652) | 22,428 |
| Noninterest expense | 63,479 | 4,172 | 3,056 | 1,788 | (3,652) | 68,843 |
| Provision for income taxes | 7,470 | 684 | 268 | (560) | -- | 7,862 |
| Net income (loss) | $ 18,467 | $ 1,596 | $ 625 | $ (2,171) | $ -- | $ 18,517 |
| Average Assets | $ 2,955,487 | $ 51,893 | $ 1,777 | $ 467,295 | $ (459,347) | $ 3,017,105 |
| At and for the Nine Months Ended September 30, 2012 | ||||||
| Commercial | Mortgage | Wealth | Intersegment | |||
| Bank | Banking | Management | Other | Elimination | Consolidated | |
| Net interest income | $ 72,863 | $ 538 | $ -- | $ (1,027) | $ -- | $ 72,374 |
| Provision for loan losses | 4,150 | -- | -- | -- | -- | 4,150 |
| Noninterest income | 16,827 | 4,678 | 3,632 | (235) | (3,456) | 21,446 |
| Noninterest expense | 64,114 | 3,766 | 2,998 | 473 | (3,456) | 67,895 |
| Provision for income taxes | 5,828 | 434 | 192 | (621) | -- | 5,833 |
| Net income (loss) | $ 15,598 | $ 1,016 | $ 442 | $ (1,114) | $ -- | $ 15,942 |
| Average Assets | $ 2,908,031 | $ 20,585 | $ 525 | $ 458,776 | $ (451,606) | $ 2,936,311 |
| STELLARONE CORPORATION (NASDAQ: STEL) | |||||
| NON-GAAP RECONCILIATION (UNAUDITED) | |||||
| (Dollars in thousands) | |||||
| For the Three Months Ended | For the Nine Months Ended | ||||
| September 30, 2013 | June 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | |
| Noninterest expense | $ 22,820 | $ 23,252 | $ 22,288 | $ 68,843 | $ 67,895 |
| Less: | |||||
| Merger expense | 586 | 871 | -- | 1,457 | -- |
| Amortization of intangible assets | 320 | 320 | 413 | 951 | 1,238 |
| Adjusted noninterest expense | 21,914 | 22,061 | 21,875 | 66,435 | 66,657 |
| Net interest income (tax equivalent) | 25,513 | 24,950 | 25,042 | 75,363 | 74,599 |
| Noninterest income | 7,162 | 7,826 | 7,401 | 22,428 | 21,446 |
| Less: | |||||
| Gains on sale of securities available for sale | -- | -- | 9 | 6 | 88 |
| Losses / impairments on foreclosed assets | (285) | (244) | (381) | (659) | (1,051) |
| Net revenues | $ 32,960 | $ 33,020 | $ 32,815 | $ 98,444 | $ 97,008 |
| Efficiency ratio | 66.49% | 66.81% | 66.66% | 67.49% | 68.71% |
| For the Three Months Ended | For the Nine Months Ended | ||||
| September 30, 2013 | June 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | |
| Noninterest income | $ 7,162 | $ 7,826 | $ 7,401 | $ 22,428 | $ 21,446 |
| Less: | |||||
| Gains on securities available for sale | -- | -- | 9 | 6 | 88 |
| (Losses) gains on sale of premises and equipment | (36) | (14) | 17 | (60) | 10 |
| Operating noninterest income | $ 7,198 | $ 7,840 | $ 7,375 | $ 22,482 | $ 21,348 |
| For the Three Months Ended | For the Nine Months Ended | ||||
| September 30, 2013 | June 30, 2013 | September 30, 2012 | September 30, 2013 | September 30, 2012 | |
| Net income | $ 6,289 | $ 6,317 | $ 5,560 | $ 18,517 | $ 15,942 |
| Plus: | |||||
| Income tax expense | 2,691 | 2,914 | 1,952 | 7,862 | 5,833 |
| Provision for loan losses | 200 | (385) | 1,900 | 515 | 4,150 |
| Tax equivalent adjustment | 675 | 678 | 743 | 2,054 | 2,225 |
| Pre-tax pre-provision earnings | $ 9,855 | $ 9,524 | $ 10,155 | $ 28,948 | $ 28,150 |
| For the Three Months Ended | |||||
| September 30, 2013 | June 30, 2013 | September 30, 2012 | |||
| Total stockholders' equity | $ 430,716 | $ 426,329 | $ 428,077 | ||
| Less: | |||||
| Core deposit intangibles, net | 2,728 | 3,048 | 3,773 | ||
| Goodwill | 114,167 | 114,167 | 113,652 | ||
| Net other intangibles | 645 | 708 | 1,084 | ||
| Tangible common equity | 313,176 | 308,406 | 309,568 | ||
| Total assets | 3,082,227 | 3,014,166 | 2,959,846 | ||
| Less: | |||||
| Core deposit intangibles, net | 2,728 | 3,048 | 3,773 | ||
| Goodwill | 114,167 | 114,167 | 113,652 | ||
| Net other intangibles | 645 | 708 | 1,084 | ||
| Tangible assets | $ 2,964,687 | $ 2,896,243 | $ 2,841,337 | ||
| Tangible common equity ratio | 10.56% | 10.65% | 10.90% | ||