Item 1. - Business
GENERAL
Union Bankshares Corporation (the "Company") is a multi-bank holding company organized under Virginia law which is headquartered in Bowling Green, Virginia. The Company is committed to the delivery of financial services through its four affiliated community banks, Union Bank & Trust Company ("Union Bank"), Northern Neck State Bank ("Northern Neck Bank"), Rappahannock National Bank ("Rappahannock Bank") and the Bank of Williamsburg (collectively, the "Subsidiary Banks") and two non-bank financial services affiliates, Union Investment Services, Inc. ("Union Investment") and Mortgage Capital Investors, Inc. ("MCI").
The Company was formed in connection with the July 12, 1993 merger of Northern Neck Bankshares Corporation with and into Union Bancorp, Inc. On September 1, 1996, King George State Bank and on July 1, 1998, Rappahannock National Bank became wholly-owned subsidiaries of the Company. On February 22, 1999, the Bank of Williamsburg began business as a newly organized bank focused on the Williamsburg market. In June, 1999 King George State Bank was merged into Union Bank and ceased to be a subsidiary bank.
Each of the Subsidiary Banks is a full service retail commercial bank offering a wide range of banking and related financial services, including checking, savings, certificates of deposit and other depository services, and loans for commercial, industrial, residential mortgage and consumer purposes. The Subsidiary Banks also issue credit cards and can deliver automated teller machine services through the use of reciprocally shared ATMs in the MOST, CIRRUS and PLUS networks.
Union Bankshares Corporation had assets of $822 million, deposits of $647 million, and shareholders' equity of $69 million at December 31, 1999. The Company serves, through its Subsidiary Banks, the Virginia counties of Caroline, Hanover, King George, King William, Spotsylvania, Stafford, Richmond, Westmoreland, Essex, Lancaster, Northumberland, the City of Williamsburg, James City County and the City of Fredericksburg. Through its Subsidiary Banks, the Company operated twenty nine branches in its primary trade area at year end.
Union Investment has provided securities brokerage and investment advisory services since February 1993. It is a full service brokerage company which offers a full range of investment services, and sells annuities, mutual funds, bonds and stocks.
On February 22, 1999, the Company opened the Bank of Williamsburg, a full service bank headquartered in Williamsburg, Virginia. The bank was organized and chartered under the laws of Virginia in February 1999. On March 20, 2000, the Bank moved from its temporary location to its headquarters located at 5125 John Tyler Parkway. The Bank's primary trade area is Williamsburg and surrounding James City County.
On February 11, 1999, the Company acquired CMK Corporation t/a "Mortgage Capital Investors," a mortgage loan brokerage company headquartered in Springfield, Virginia, by merger of CMK Corporation into Mortgage Capital Investors, Inc., a wholly owned subsidiary of Union Bank. MCI has offices in Virginia, Maryland, North Carolina, South Carolina, New Jersey and Connecticut. It provides a variety of mortgage products to customers in those states, as well as to customers in the service areas of the Subsidiary Banks. The mortgage loans originated by MCI are generally sold in the secondary market through purchase agreements with institutional investors. MCI also offers insurance services to its customers through a joint venture with an insurance agency. During 1999, Union Mortgage Company, LLC, a mortgage loan brokerage company and subsidiary of Union Bank, merged with and into MCI.
For additional information on the acquisition on MCI, see the discussion below on "Acquisition Program - Purchase of Mortgage Capital Investors, Inc." and Note 1(A) to the Consolidated Financial Statements contained in the Company's 1999 Annual Report to Shareholders.
The Company has two reportable segments: traditional full service community banks and a mortgage loan origination business, each as described above. See Note 17 to the Notes to Consolidated Financial Statements and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" that are included in the Company's 1999 Annual Report to Shareholders for certain financial and other information about each of the Company's operating segments.
ACQUISITION PROGRAM
The Company looks to expand its market area and increase its market share through both internal growth and strategic acquisitions. During 1999, the Company engaged in the following acquisition transactions:
Opening of the Bank of Williamsburg. On February 22, 1999, the Company opened the Bank of Williamsburg in temporary headquarters in the Williamsburg Crossing Shopping Center at 5251 John Tyler Parkway in Williamsburg. On March 20, 2000, Bank of Williamsburg moved to its new headquarters at 5125 John Tyler Parkway. This full service bank puts the Company in a new market area located in a rapidly growing region of Virginia.
Purchase of Mortgage Capital Investors. On February 11, 1999, the Company purchased CMK Corporation t/a "Mortgage Capital Investors" to augment its mortgage origination business. MCI originates and sells mortgage loans in the mortgage market and is strategically designed to increase fee income with limited or no asset quality risk.
COMPETITION
The Company experiences competition in all aspects of its business. In its market area, the Company competes with large regional financial institutions, savings and loans and other independent community banks, as well as credit unions, mutual funds and life insurance companies. Competition has also increasingly come from out-of-state banks through their acquisitions of Virginia-based banks. Competition for deposits and loans is affected by factors such as interest rates offered, the number and location of branches and types of products offered, as well as the reputation of the institution.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both federal and state law. The following description briefly discusses certain provisions of federal and state laws and certain regulations and proposed regulations and the potential impact of such provisions on the Company and its Subsidiary Banks.
Bank Holding Companies
As a bank holding company registered under the Bank Holding Company Act of 1956 (the "BHCA"), the Company is subject to regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Federal Reserve Board has jurisdiction under the BHCA to approve any bank or non-bank acquisition, merger or consolidation proposed by a bank holding company. The BHCA generally limits the activities of a bank holding company and its subsidiaries to that of banking, managing or controlling banks, or any other activity that is so closely related to banking or to managing or controlling banks as to be a proper incident thereto.
Since September 1995, the BHCA has permitted bank holding companies from any state to acquire banks and bank holding companies located in any other state, subject to certain conditions, including nationwide and state imposed concentration limits. Banks are also able to branch across state lines, provided certain conditions are met, including that applicable state law must expressly permit such interstate branching. Virginia has adopted legislation that permits branching across state lines, provided there is reciprocity with the state in which the out-of-state bank is based.
There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the depositors of such depository institutions and to the Federal Deposit Insurance Corporation (the "FDIC") insurance funds in the event the depository institution becomes in danger of default or is in default. For example, under a policy of the Federal Reserve Board with respect to bank holding company operations, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such policy. In addition, the "cross-guarantee" provisions of federal law require insured depository institutions under common control to reimburse the FDIC for any loss suffered or reasonably anticipated by either the Savings Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") as a result of the default of a commonly controlled insured depository institution in danger of default. The FDIC may decline to enforce the cross-guarantee provisions if it determines that a waiver is in the best interest of the SAIF or the BIF or both. The FDIC's claim for damages is superior to claims of stockholders of the insured depository institution or its holding company but is subordinate to claims of depositors, secured creditors and holders of subordinated debt (other than affiliates) of the commonly controlled insured depository institutions.
The Federal Deposit Insurance Act ("FDIA") also provides that amounts received from the liquidation or other resolution of any insured depository institution by any receiver must be distributed (after payment of secured claims) to pay the deposit liabilities of the institution prior to payment of any other general creditor or stockholder. This provision would give depositors a preference over general and subordinated creditors and stockholders in the event a receiver is appointed to distribute the assets of the bank.
The Company is registered under the bank holding company laws of Virginia. Accordingly, the Company and the Subsidiary Banks are subject to regulation and supervision by the State Corporation Commission of Virginia (the "SCC").
Capital Requirements
The Federal Reserve Board, the Office of the Comptroller of the Currency and the FDIC have issued substantially similar risk-based and leverage capital guidelines applicable to United States banking organizations. In addition, those regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels because of its financial condition or actual or anticipated growth. Under the risk-based capital requirements of these federal bank regulatory agencies, the Company and each of the Subsidiary Banks are required to maintain a minimum ratio of total capital to risk-weighted assets of at least 8%. At least half of the total capital is required to be "Tier 1 capital", which consists principally of common and certain qualifying preferred shareholders' equity, less certain intangibles and other adjustments. The remainder ("Tier 2 capital") consists of a limited amount of subordinated and other qualifying debt (including certain hybrid capital instruments) and a limited amount of the general loan loss allowance. The Tier 1 and total capital to risk-weighted asset ratios of the Company as of December 31, 1999 were 11.11% and 12.21%, respectively, exceeding the minimum requirements.
In addition, each of the federal regulatory agencies has established a minimum leverage capital ratio (Tier 1 capital to average tangible assets). These guidelines provide for a minimum ratio of 3% for banks and bank holding companies that meet certain specified criteria, including that they have the highest regulatory examination rating and are not contemplating significant growth or expansion. All other institutions are expected to maintain a leverage ratio of at least 100 to 200 basis points above the minimum. The leverage ratio of the Company as of December 31, 1999, was 8.35%, which is above the minimum requirements. The guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets.
Limits on Dividends and Other Payments
The Company is a legal entity, separate and distinct from its subsidiary institutions. Substantially all of the revenues of the Company result from dividends paid to it by the Subsidiary Banks. There are various legal limitations applicable to the payment of dividends to the Company, as well as the payment of dividends by the Company to its respective shareholders.
Under federal law, the Subsidiary Banks may not, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, the Company or take securities of the Company as collateral for loans to any borrower. The Subsidiary Banks are also subject to collateral security requirements for any loans or extensions of credit permitted by such exceptions.
The Subsidiary Banks are subject to various statutory restrictions on their ability to pay dividends to the Company. Under the current supervisory practices of the Subsidiary Banks' regulatory agencies, prior approval from those agencies is required if cash dividends declared in any given year exceed net income for that year plus retained earnings of the two proceeding years. The payment of dividends by the Subsidiary Banks or the Company may also be limited by other factors, such as requirements to maintain capital above regulatory guidelines. Bank regulatory agencies have the authority to prohibit the Subsidiary Banks or the Company from engaging in an unsafe or unsound practice in conducting their business. The payment of dividends, depending on the financial condition of the Subsidiary Banks, or the Company, could be deemed to constitute such an unsafe or unsound practice.
Under the FDIA, insured depository institutions such as the Subsidiary Banks are prohibited from making capital distributions, including the payment of dividends, if, after making such distribution, the institution would become "undercapitalized" (as such term is used in the statute). Based on the Subsidiary Banks' current financial condition, the Company does not expect that this provision will have any impact on its ability to obtain dividends from the Subsidiary Banks.
The Subsidiary Banks
The Subsidiary Banks are supervised and regularly examined by the Federal Reserve Board, OCC for Rappahannock and the SCC. The various laws and regulations administered by the regulatory agencies affect corporate practices, such as the payment of dividends, incurring debt and acquisition of financial institutions and other companies, and affect business practices, such as the payment of interest on deposits, the charging of interest on loans, types of business conducted and location of offices.
The Subsidiary Banks are also subject to the requirements of the Community Reinvestment Act (the "CRA"). The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of the local communities, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of those institutions. Each financial institution's efforts in meeting community credit needs currently are evaluated as part of the examination process pursuant to twelve assessment factors. These factors also are considered in evaluating mergers, acquisitions and applications to open a branch or facility.
As an institution with deposits insured by the BIF, the Bank also is subject to insurance assessments imposed by the FDIC. The FDIC has implemented a risk-based assessment schedule, imposing assessments ranging from zero (a minimum of $2,000) to 0.53% of an institution's average assessment base. The actual assessment to be paid by each BIF member is based on the institution's assessment risk classification, which is determined based on whether the institution is considered "well capitalized," "adequately capitalized" or "undercapitalized," as such terms have been defined in applicable federal regulations, and whether such institution is considered by its supervisory agency to be financially sound or to have supervisory concerns. In 1999, the Subsidiary Banks paid $75,316 in deposit insurance premiums.
Other Safety and Soundness Regulations
The federal banking agencies have broad powers under current federal law to make prompt corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institutions in question are "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" or "critically undercapitalized." All such terms are defined under uniform regulations defining such capital levels issued by each of the federal banking agencies.
The Gramm-Leach-Bliley Act of 1999
The Gramm-Leach-Bliley Act of 1999 ("GLBA") was signed into law on November 12, 1999. The main purpose of GLBA is to permit greater affiliations within the financial services industry, primarily banking, securities and insurance. While certain portions of GLBA became effective upon enactment and on March 11, 2000, many other provisions do not become effective until May 2001 and most of the regulations implementing the law have not yet been issued. As a result, the overall impact of GLBA on the Company cannot be predicted at this time. The provisions of GLBA that are believed to be of most significance to the Company are discussed below.
GLBA repeals sections 20 and 32 of the Glass-Steagall Act, which separated commercial banking from investment banking, and substantially amends the BHCA, which limited the ability of bank holding companies to engage in the securities and insurance businesses. To achieve this purpose, GLBA creates a new type of company, the "financial holding company." A financial holding company may engage in or acquire companies that engage in a broad range of financial services, including
o securities activities such as underwriting, dealing, brokerage, investment and merchant banking; and
o insurance underwriting, sales and brokerage activities.
A bank holding company may elect to become a financial holding company only if all of its depository institution subsidiaries are well-capitalized, well- managed and have at least a satisfactory Community Reinvestment Act rating.
GLBA establishes a system of functional regulation under which the federal banking agencies will regulate the banking activities of financial holding companies and banks' financial subsidiaries, the Securities and Exchange Commission ("SEC") will regulate their securities activities and state insurance regulators will regulate their insurance activities.
With regard to Federal securities laws, GLBA removes the blanket exemption for banks from being considered brokers or dealers under the Securities Exchange Act of 1934, and sets out a number of limited activities, including trust and fiduciary activities, in which a bank may engage without being considered a broker, and a set of activities in which a bank may engage without being considered a dealer. The Investment Advisers Act of 1940 also will be amended to eliminate certain provisions exempting banks from the registration requirements of that statute, and the Investment Company Act of 1940 will be amended to provide the SEC with regulatory authority over various bank mutual fund activities.
GLBA also provides new protections against the transfer and use by financial institutions of consumers nonpublic personal information. A financial institution must provide to its customers, at the beginning of the customer relationship and annually thereafter, the institution's policies and procedures regarding the handling of customers' nonpublic personal financial information. The new privacy provisions will generally prohibit a financial institution from providing a customer's personal financial information to unaffiliated third parties unless the institution discloses to the customer that the information may be so provided and the customer is given the opportunity to opt out of such disclosure.
At this time, the Company is unable to predict the impact GLBA may have upon its or its subsidiaries' financial condition or results of operations. The Company is currently reviewing the new law and at this time has not elected to be treated as a financial holding company under GLBA.
Item 2.
Item 2. - Properties
The Company, through its subsidiaries, owns or leases buildings that are used in the normal course of business. The main office is located at 212 N. Main Street, Bowling Green, Virginia, in a building owned by the Company. The Company's subsidiaries own or lease various other offices in the counties and cities in which they operate. See Notes to Consolidated Financial Statements for information with respect to the amounts at which bank premises and equipment are carried and commitments under long-term leases.
The properties on the following page are those owned or leased by the Company and its subsidiaries as of December 31, 1999.
Locations ---------
Corporate Headquarters 212 North Main Street, Bowling Green, Virginia
Banking Offices - Union Bank & Trust Company 211 North Main Street, Bowling Green, Virginia Route 1, Ladysmith, Virginia Route 301, Port Royal, Virginia 4540 Lafayette Boulevard, Fredericksburg, Virginia Route 1 & Ashcake Road, Ashland, Virginia 4210 Plank Road, Fredericksburg, Virginia 10415 Courthouse Road, Fredericksburg, Virginia 10469 Atlee Station Road, Ashland, Virginia 700 Kenmore Avenue, Fredericksburg, Virginia Route 360, Manquin, Virginia 9534 Chamberlayne Road, Mechanicsville, Virginia Cambridge & Layhill Road, Falmouth, Virginia Massaponax Church Road & Route 1, Spotsylvania, Virginia Brock Road and Route 3, Fredericksburg, Virginia 2811 Fall Hill Avenue, Fredericksburg, Virginia 610 Mechanicsville Turnpike, Mechanicsville, Virginia 10045 Kings Highway, King George, Virginia 840 McKinney Blvd., Colonial Beach, Virginia
Banking Offices - Northern Neck State Bank 5839 Richmond Road, Warsaw, Virginia 4256 Richmond Road, Warsaw, Virginia Route 3, Kings Highway, Montross, Virginia Route 17 & Earl Street, Tappahannock, Virginia 1660 Tappahannock Blvd, Tappahannock, Virginia 15043 Northumberland Highway, Burgess, Virginia 284 North Main Street, Kilmarnock, Virginia 876 Main Street, Reedville, Virginia 485 Chesapeake Drive, White Stone, Virginia
Banking Office - Rappahannock National Bank 257 Gay Street, Washington, Virginia
Banking Office - Bank of Williamsburg 5125 John Tyler Parkway, Williamsburg, Virginia
Union Investment Services, Inc. 111 Davis Court, Bowling Green, Virginia 10469 Atlee Station Road, Ashland, Virginia 2811 Fall Hill Avenue, Fredericksburg, Virginia
Mortgage Capital Investors, Inc. 1421 Prince Street #230, Alexandria , Virginia 3012 Mitchellville Road, Bowie, Maryland 5835 Allentown Way, Camp Spring, Maryland 5440 Jeff Davis Highway, #103, Fredericksburg, Virginia 3 Hillcrest Drive #A100, Fredrick, Maryland 7501 Greenway Center, Greenbelt, Maryland 1898 Andell Bluff Boulevard, John's Island, South Carolina 5000 Dearborn Circle, #200, Mount Laurel, New Jersey 7901 N. Ocean Boulevard, Myrtle Beach, South Carolina 6330 Newtown Road, #211, Norfolk, Virginia 15800 Crabbs Branch Way #200, Rockville, Maryland 2600 Post Road, Southport, Connecticut 6571 Edsall Road, Springfield, Virginia
Item 3.
Item 3. - Legal Proceedings
In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, in the aggregate, will not have a material adverse effect on the business or the financial condition or results of operations.
Item 4.
Item 4. - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 1999.
PART II
Item 5.
Item 5. - Market for Registrant's Common Equity and Related Stockholder Matters
This information is incorporated herein by reference from the inside back cover of the Annual Report to Shareholders for the year ended December 31, 1999.
Item 6.
Item 6. - Selected Financial Data
This information is incorporated herein by reference from the section captioned "Selected Financial Data" on page 2 in the Annual Report to Shareholders for the year ended December 31, 1999.
Item 7.
Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations
With the exception of the information below, the information required under this item is incorporated herein by reference from the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 10 through 20 in the Annual Report to Shareholders for the year ended December 31, 1999.
LOAN PORTFOLIO The following table gives detail of the maturities as of December 31, 1999.
Remaining Maturities of Selected Loans
December 31, 1999 ------------------------------
Commercial Real Estate Construction ------------------------------ Within 1 year $38,850 $26,888
Variable Rate: 1 to 5 years After 5 years ------- ------- Total - -
Fixed Rate: 1 to 5 years 22,697 4,987
After 5 years 6,102 1,343
------- ------- Total 28,799 6,330 ------- ------- Total $67,649 $33,218 maturities
ASSET QUALITY - ALLOWANCE/PROVISION FOR LOAN LOSS
Union Bankshares maintains a general allowance for loan loss and does not allocate its allowance for loan losses to individual categories for management purposes. The table below shows an allocation among loan categories based upon analysis of the loan portfolio's composition, historical loan loss experience, and other factors and the ratio of the related outstanding loan balances to total loans.
Item 7A.
Item 7A. - Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and rates. The Company's primary market risk is interest rate risk. The main objective of interest rate risk management is to avoid large fluctuations in net interest income from changes in interest rates on interest-sensitive assets and interest-sensitive liabilities. The Asset/Liability Management Committee of the Company ("ALCO") is responsible for monitoring and limiting exposure to interest rate risk. Management uses balance sheet repositioning as a tool to manage interest rate risk. This is accomplished through pricing of asset and liability accounts. The expected result of pricing is the development of appropriate maturity and repricing opportunities in those accounts to produce consistent net interest income during changing interest rate environments. The ALCO also sets policy guidelines and establishes strategies with respect to interest rate exposures. The ALCO meets quarterly to review the Company's interest rate exposure in relation to present and prospective market and business conditions, and reviews balance sheet management strategies intended to ensure the potential impact of changes in interest rates on earnings is within acceptable standards.
The Company uses three methods to measure interest rate risk; static gap analysis, earnings simulation analysis and market value simulation analysis.
Static Gap Analysis
Gap analysis measures the amount of repricing risk in the balance sheet. It does this by taking the difference between the amount of rate sensitive assets and rate sensitive liabilities which reprice within a specified time period. This is the least reliable measurement of interest rate risk because it only measures rate sensitive assets minus rate sensitive liabilities at one point in time. It does not reflect the different degrees of rate sensitivity each asset and liability account has. An example of this: If prime rate changes by 100 bps, the interest rate change on a money market account might be 25 bps and that of a certificate of deposit might be 75 bps. The best information obtained from a gap report is the amount of assets or liabilities which can be repriced at any one point in the future, not the degree of rate sensitivity.
The following table shows the Company's gap report over the next five years. To reflect anticipated prepayments, mortgage backed securities are included in the table based on estimated rather than contractual maturity dates.
(1) The repricing dates may differ from maturity dates for certain assets due to prepayment assumptions.
(2) Excludes non-accrual loans
(3) The Company has determined that interest-bearing checking deposits and regular savings deposits are not sensitive to changes in related market rates and therefore, it has placed them in the "1-5 Years" column.
Earnings Simulation Analysis
Management uses simulation analysis to measure the sensitivity of net interest income to changes in interest rates. The model calculates an earnings estimate based on current and projected balances and rates. This method is subject to the accuracy of the assumptions that underlie the process, but it provides a better analysis of the sensitivity of earnings to changes in interest rates than other analysis such as the static gap analysis.
Assumptions used in the model rates are derived from historical trends and management's outlook and include loan and deposit growth rates and projected yields and rates. All maturities, calls and prepayments in the securities portfolio are assumed to be reinvested in like instruments. Mortgage loans and mortgage backed securities prepayment assumptions are based on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning. Different interest rate scenarios and yield curves are used to measure the sensitivity of earnings to changing interest rates. Interest rates on different asset and liability accounts move differently when the prime rate changes and are reflected in the different rate scenarios.
The following table represents the interest rate sensitivity on net interest income for the Company using different rate scenarios:
% Change in Change in Prime Rate Net Interest Income -------------------- ------------------- +200 basis points -9.02% Flat 0 -200 basis points +11.33%
Market Value Simulation
Market value simulation is used to calculate the estimated fair value of assets and liabilities over different interest rate environments. Market values are calculated based on discounted cash flow analysis. The net market value is the market value of all assets minus the market value of all liabilities. The change in net market value over different rate environments is an indication of the larger term repricing risk in the balance sheet. The same assumptions are used in the market value simulation as in the earnings simulation.
The following chart reflects the change in net market value over different rate environments:
Change in Net Market Value Change in Prime Rate (dollars in thousands) -------------------- ---------------------- +200 basis points $-47,781 +100 basis points -31,932 Flat -16,911 -100 basis points 550 -200 basis points 15,970
Item 8.
Item 8. - Financial Statements and Supplementary Data
This information is incorporated herein by reference from the Consolidated Financial Statements on pages 21 through 40 and the Quarterly Earnings Summary on page 7 of the Annual Report to Shareholders for the year ended December 31, 1999.
Item 9.
Item 9. - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
See Part IV, Item 14(b) of this report for information about the Company's change in its independent public accountants, which was previously reported.
On October 20, 1999, the Company engaged Cherry, Bekaert & Holland, LLP as independent accountants to audit MCI's year ended December 31, 1999.
PART III
Item 10.
Item 10. - Directors and Executive Officers of the Registrant
This information, as applicable to directors, is incorporated herein by reference from pages 2 and 3 of the Proxy Statement for the Annual Meeting of Shareholders to be held April 18, 2000 ("Proxy Statement") from the section titled "Election of Directors." Executive officers of the Company are listed below:
Title and Principal Occupation ------------------------------- Name (Age) During Past Five Years - ---------- ---------------------- G. William Beale (50) President and Chief Executive Officer of the Company since its inception; President of Union Bank since 1991.
D. Anthony Peay (40) Vice President and Chief Financial Officer of the Company since December 1994.
John C. Neal (50) Executive Vice President - Union Bank since 1991 and Chief Operating Officer - Union Bank since August 1998.
Myles W. H. Gaythwaite (55) Vice President - Sales and Marketing since September 1997. During 1995 to September 1997, self-employed executive consultant. During 1994 and 1995, Executive Vice President, Centura Securities, Inc., and Senior Vice President, Centura Insurance Services, Inc., wholly owned subsidiaries of Centura Bank, Inc., Rocky Mount, North Carolina.
David S. Wilson (58) Senior Vice President - Operations and Technology since January 1999. Vice President - Information Technology Bank of Hudson, Poughkeepsie, N.Y., from January 1987 to January 1999.
Information on Section 16(a) beneficial ownership reporting compliance for the directors and executive officers of the Company is incorporated herein by reference from page 12 of the Proxy Statement from the section titled "Section 16(a) Beneficial Ownership Reporting Compliance."
Item 11.
Item 11. - Executive Compensation
This information is incorporated herein by reference from pages 4 through 11 of the Proxy Statement from the sections titled "Election of Directors-- Directors' Fees" and "Executive Compensation."
Item 12.
Item 12. - Security Ownership of Certain Beneficial Owners and Management
This information is incorporated herein by reference from page 4 of the Proxy Statement from section titled "Ownership of Company Common Stock."
Item 13.
Item 13. - Certain Relationships and Related Transactions
This information is incorporated herein by reference from pages 11-12 of the Proxy Statement from the section titled "Interest of Directors and Officers in Certain Transactions."
PART IV
Item 14.
Item 14. - Exhibits, Financial Statement Schedules and Reports on Form 8-K
The following documents are filed as part of this report:
(a) (1) Financial Statements The following documents are included in the 1999 Annual Report to Shareholders and are incorporated by reference in this report:
Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report
Note: The independent auditors' report for the year ended December 31, 1998 is included in this report as Exhibit 99.0
(a) (2) Financial Statement Schedules All schedules are omitted since they are not required, are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.
(a)(3) Exhibits Exhibit No. Description - ----------- --------------------------- 3.1 Articles of Incorporation (incorporated by reference to Form S-4 Registration Statement - 33-60458)
3.2 By-Laws (incorporated by reference to Form S-4 Registration Statement - 33-60458)
10.1 Change in Control Employment Agreement of G. William Beale (incorporated by reference to the registrant's Annual Report on Form 10-K for the year ended December 31, 1996)
10.2 Employment Agreement of G. William Beale
11.0 Statement re Computation of Per Share Earnings (incorporated by reference to note 12 of the notes to consolidated financial statements included in the 1999 Annual Report to Shareholders)
13.0 1999 Annual Report to Shareholders
21.0 Subsidiaries of the Registrant
23.1 Consent of Yount, Hyde & Barbour, P.C.
23.2 Consent of KPMG LLP
27.0 Financial Data Schedule
99.0 Report of KPMG LLP, as the Registrant's independent public accountant for the year ended December 31, 1998.
(b) Reports on Form 8-K
On October 4, 1999, the Company filed a Current Report on Form 8-K dated September 27, 1999, disclosing in Item 4 of the report a change in the Company's independent public accountants. The Company filed an amendment to the Form 8-K on October 14, 1999. No financial statements were included in either of the filings.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Union Bankshares Corporation
By: / s/ G. William Beale Date: March 30, 2000 ------------------------------ President and Chief Executive Officer G. William Beale
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on March 30, 2000.
Signature Title --------- ----- / s/ G. William Beale President, Chief Executive Officer and ----------------------------- Director G. William Beale
/ s/ D. Anthony Peay Vice President and Chief Financial ---------------------------- Officer D. Anthony Peay
/s/ Ronald L. Hicks Chairman of the Board of Directors ----------------------------- Ronald L. Hicks
/ s/ Charles H. Ryland Vice Chairman of the Board of Directors -------------------------- Charles H. Ryland
/ s/ W. Tayloe Murphy, Jr. Director - --------------------------- W. Tayloe Murphy, Jr.
/s/ Walton Mahon Director ----------------------------- Walton Mahon
/s/ M. Raymond Piland, III Director -------------------------- M. Raymond Piland, III
/s/ A.D. Whittaker Director -------------------------- A.D. Whittaker