Access National Finishes Year with Exceptional Loan Growth

Access National Corporation (NASDAQ: ANCX) (the “Corporation” or “Access”), parent company for Access National Bank (the “Bank”) and Middleburg Investment Group, reported fourth quarter 2018 net income of $8.7 million, or $0.41 per diluted share. This represents the Corporation’s 74th consecutive quarterly profit over its 76 quarter history. Due to the timing of the pending merger with Union Bankshares (“Union”), the Access Board of Directors did not declare a dividend for this reporting period.

On January 24, 2019, the Union Board of Directors declared a $0.23 per share dividend for Union common shareholders of record as of February 8, 2019 and payable on February 22, 2019. At the exchange rate of 0.75 for Access shares to Union shares, which will occur on February 1, 2019, the dividend to be paid equates to a $0.1725 per share dividend for Access common shareholders.

Highlights

• All shareholder and regulatory approvals are in place for the Union merger to close as expected in February, 2019;
• For the three month period ended December 31, 2018, net income increased 186.6% compared to the same period of the prior year;
• Gross loans held for investment increased $196.5 million during the twelve-month period ended December 31, 2018, inclusive of a growth of $81.2 million in the fourth quarter 2018;
• Customer deposits increased $26.6 million during the twelve month period ended December 31, 2018 to $2.3 billion;
• Demand deposits of $1.2 billion at December 31, 2018 comprised 53.3% of total deposits, inclusive of $731.4 million of non-interest bearing demand deposits or 32.4% of the deposit portfolio;
• Merger related expenses totaled $1.5 million during the fourth quarter of 2018 accounting for a $0.07 decrease in fourth quarter earnings per share; and
• Tangible book value1 per common share was $12.88 at December 31, 2018, an increase of $1.36 from the prior year ended December 31, 2017.

According to CEO Michael Clarke, “For the second consecutive quarter, net loan growth exceeded our stated goal of annualized growth of $200 million per annum. On a linked quarter basis, net loans grew at an annualized pace of 15.5% compared to an annualized rate of 22% in the period ended September 30, 2018. The exceptional growth evidences the enthusiasm our relationship managers and their clients have concerning our pending combination with Union.” Mr. Clarke continued, “The convincing approval of the merger by our shareholders on January 15, 2019 made an equally strong statement concerning the anticipated benefits of investing with Union to create Virginia’s regional bank.”

Gross loans held for investment increased $81.2 million during the quarter to $2.2 billion at December 31, 2018 resulting in a total growth of $196.5 million in 2018. As of December 31, 2018, commercial and industrial loans as well as owner occupied commercial real estate loans combined to account for 51.2% of the loan portfolio, reflecting the Corporation’s continued focus on lower-middle-market businesses. The Corporation’s priority focus remains on expanding borrowers in these portfolios as a driver of future growth in the loan portfolio, along with related core deposits.

Noninterest-bearing deposits at December 31, 2018 were $731.4 million, a decrease of $13.5 million compared to December 31, 2017 and remain the largest and most attractive source of funding for the Corporation, comprising 32.4% of the deposit portfolio. When combined with interest-bearing demand deposit accounts, total transaction accounts comprise 53.3% of the total deposit portfolio, reducing reliance of non-core and more price sensitive funding. Total deposits grew $26.6 million from December 31, 2017 to December 31, 2018 ending the year at $2.3 billion.

The net interest margin on a fully tax equivalent (non-GAAP) basis was 3.69% at December 31, 2018 compared to 3.88% at December 31, 2017. Net purchase mark accretion included in net interest income was $504 thousand for the fourth quarter 2018 and $2.7 million for the year.

Non-performing assets (“NPAs”) increased to $7.1 million at December 31, 2018 from $6.1 million at September 30, 2018, representing 0.23% and 0.20% of total assets, respectively. Included in the NPA total is $585 thousand in other real estate owned. The provision for loan loss was $1.5 million during the fourth quarter 2018 and was due mainly to the growth in the loan portfolio. The allowance for loan loss represented 0.84% of total loans held for investment at December 31, 2018.

Tangible book value2 per common share increased to $12.88 at December 31, 2018 from $12.33 at September 30, 2018 and $11.52 at December 31, 2017. The tangible common equity ratio for Access National Corporation and its subsidiary bank was 9.51% at December 31, 2018, at the top of the Corporation’s target range of 8.50% to 9.50%.

Access National Corporation is the parent company of Access National Bank and Middleburg Investment Group serving Northern and Central Virginia. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future events or results and are not statements of historical fact. Such statements also include statements as to the anticipated impact of the proposed Union acquisition of Access, including future financial and operating results, ability to successfully integrate the combined businesses, the amount of cost savings, overall operational efficiencies and enhanced revenues and the expected closing date, as well as other statements regarding the acquisition. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of Access or its management about future events. Although Access believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of Access will not differ materially from any projected future results, performance or achievements expressed or implied by such forward-looking statements. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, including but not limited to, economic and financial market conditions in the United States generally and particularly in the markets in which Access operates and which its loans are concentrated including declines in real estate values, the effects an increase in unemployment levels, slowdowns in economic growth, and a prolonged federal government shutdown, changes in asset quality and credit risk, changes in interest rates and capital markets, competitive conditions, the quality or composition of the loan or investment portfolios, the fact that the businesses of Union and Access may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, expected revenue synergies and cost savings from the proposed acquisition may not be fully realized or realized within the expected time frame, revenues following the proposed acquisition may be lower than expected, customer and employee relationships and business operations may be disrupted by the proposed acquisition, the diversion of management time on merger-related issues, changes in Union’s share price before closing, risks relating to the potential dilutive effect of shares of Union common stock to be issued in the proposed transaction, the ability to close the proposed acquisition on the expected timeframe, or at all, and that closing may be more difficult, time-consuming or costly than expected, the reaction to the proposed acquisition of the companies’ customers, employees and counterparties, and other risk factors, many of which are beyond the control of Access. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Access’s Annual Report on Form 10-K for the year ended December 31, 2017 and comparable “risk factors” sections of Access’s Quarterly Reports on Form 10-Q and other filings, which have been filed with the Securities and Exchange Commission (the “SEC”) and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on Union, Access or its businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and Access does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Reconciliation of Non-GAAP Financial Measures - Unaudited

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are “tangible book value per common shares”, “tangible common equity ratio”, and “net interest margin on a fully tax equivalent basis.” This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Corporation’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.

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