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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Atlantic Union Bankshares Corporation | NYSE:AUB | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.81 | 2.01% | 41.17 | 41.87 | 39.70 | 40.14 | 434,284 | 20:32:00 |
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction | (Commission | (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
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(Address of principal executive offices, including Zip Code)
Registrant’s telephone number, including area code:
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. | ☐ |
Item 2.02 Results of Operations and Financial Condition.
On July 25, 2024, Atlantic Union Bankshares Corporation (the “Company”) issued a press release announcing its financial results for the second quarter 2024. A copy of the press release is being furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information disclosed in or incorporated by reference into this Item 2.02, including Exhibit 99.1, is furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.
Item 7.01 Regulation FD Disclosure
Attached as Exhibit 99.2 and incorporated herein by reference is a presentation that the Company will use in connection with a webcast and conference call for investors and analysts at 9:00 a.m. Eastern Time on Thursday, July 25, 2024. This presentation is also available under the Presentations link in the Investor Relations – News & Events section of the Company’s website at https://investors.atlanticunionbank.com.
The information disclosed in or incorporated by reference into this Item 7.01, including Exhibit 99.2, is furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
| Description of Exhibit |
99.1 |
| Press release dated July 25, 2024 regarding the second quarter 2024 results. |
99.2 | ||
104 | Cover Page Interactive Data File – the cover page iXBRL tags are embedded within the Inline XBRL document |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ATLANTIC UNION BANKSHARES CORPORATION | ||
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Date: July 25, 2024 | By: | /s/ Robert M. Gorman |
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| Robert M. Gorman |
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| Executive Vice President and |
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| Chief Financial Officer |
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Exhibit 99.1
Contact: Robert M. Gorman - (804) 523-7828
Executive Vice President / Chief Financial Officer
ATLANTIC UNION BANKSHARES REPORTS SECOND QUARTER FINANCIAL RESULTS
Richmond, Va., July 25, 2024 – Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (NYSE: AUB) reported net income available to common shareholders of $22.2 million and basic and diluted earnings per common share of $0.25 for the second quarter of 2024 and adjusted operating earnings available to common shareholders(1) of $56.4 million and adjusted diluted operating earnings per common share(1) of $0.63 for the second quarter of 2024.
Merger with American National Bankshares Inc. (“American National”)
On April 1, 2024, the Company completed its acquisition of American National. American National’s results of operations are included in the Company’s consolidated results since the date of acquisition, and, therefore, the Company’s second quarter and first half of 2024 results reflect increased levels of average balances, net interest income, and expense compared to its prior quarter and first half of 2023 results. After purchase accounting fair value adjustments, the acquisition added $2.9 billion of total assets, including $2.2 billion of loans held for investment (“LHFI”), and $2.7 billion of total liabilities, including $2.6 billion in total deposits. The Company recorded preliminary goodwill of $282.3 million related to the acquisition.
In connection with the acquisition, the Company recorded an initial allowance for credit losses (“ACL”) of $18.5 million that consisted of an allowance for loan and lease losses (“ALLL”) of $17.1 million, which included a $3.9 million reserve on acquired loans that experienced a more-than insignificant amount of credit deterioration since origination (“PCD” loans), and a reserve for unfunded commitments (“RUC”) discussed below. The Company also recorded a $13.2 million reserve on purchased non-credit deteriorated loans (“non-PCD” loans) established through provision expense, which represents the CECL “double count” of the non-PCD credit mark, and a $1.4 million RUC through the provision for credit losses.
The Company incurred pre-tax merger costs of approximately $29.8 million during the second quarter of 2024 related to the American National acquisition.
“Atlantic Union delivered solid operating metrics in the second quarter, which is the first to include the financial impact of our merger with American National, which closed on April 1st,” said John C. Asbury, president and chief executive officer of Atlantic Union. “During the second quarter, we successfully completed the core systems integration over Memorial Day weekend, and now operate as one brand across our footprint. We believe the combination positions us well to deliver differentiated financial performance, increases our density and market power in central and western Virginia, and expands our franchise into contiguous markets in southern Virginia and in North Carolina.
Operating under the mantra of soundness, profitability, and growth – in that order of priority – Atlantic Union remains committed to generating sustainable, profitable growth, and building long-term value for our shareholders.”
NET INTEREST INCOME
For the second quarter of 2024, net interest income was $184.5 million, an increase of $36.7 million from $147.8 million in the first quarter of 2024. Net interest income (FTE)(1) was $188.3 million in the second quarter of 2024, an increase of $36.8 million from $151.5 million in the first quarter of 2024. The increases in both net interest income and net interest income (FTE)(1) were primarily the result of a $2.8 billion increase in average interest earning assets, partially offset by a $2.2 billion increase in average interest bearing liabilities, in each case primarily related to the acquisition of American
National. For the second quarter of 2024, the Company’s net interest margin increased 28 basis points to 3.39% and the net interest margin (FTE)(1) increased 27 basis points to 3.46% compared to the prior quarter, primarily due to the impacts associated with the American National acquisition. Earning asset yields for the second quarter of 2024 increased 34 basis points to 5.96% compared to the first quarter of 2024, and the cost of funds increased by 7 basis points to 2.50%, due to changes in deposit mix as depositors continued to move to higher yielding deposit products.
The Company’s net interest margin (FTE) (1) includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $14.3 million for the quarter ended June 30, 2024, compared to $602,000 for the quarter ended March 31, 2024, with the increase due to the American National acquisition. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):
| | | | | | | | | | | | |
| | Loan | | Deposit | | Borrowings | | | | |||
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| Accretion |
| Amortization |
| Amortization |
| Total | ||||
For the quarter ended March 31, 2024 | | $ | 819 | | $ | (1) | | $ | (216) | | $ | 602 |
For the quarter ended June 30, 2024 | | | 15,660 | | | (1,035) | | | (285) | | | 14,340 |
ASSET QUALITY
Overview
At June 30, 2024, nonperforming assets (“NPAs”) as a percentage of total LHFI was 0.20%, a decrease of 3 basis points from the prior quarter and included nonaccrual loans of $35.9 million. This decline in the NPA ratio was primarily due to the effects of the American National acquisition, and the approximately $2.2 billion of LHFI acquired in that transaction. Accruing past due loans as a percentage of total LHFI totaled 22 basis points at June 30, 2024, a decrease of 10 basis points from March 31, 2024, and an increase of 6 basis points from June 30, 2023. Net charge-offs were 0.04% of total average LHFI (annualized) for the second quarter of 2024, a decrease of 9 basis points from March 31, 2024, and consistent with June 30, 2023. The ACL totaled $175.7 million at June 30, 2024, an increase of $23.9 million from the prior quarter and included the initial ACL related to the American National acquisition of $18.5 million, as well as the impact of loan growth and the impact of continued uncertainty in the economic outlook on certain portfolios.
Nonperforming Assets
At June 30, 2024, NPAs totaled $36.1 million, compared to $36.4 million in the prior quarter. The following table shows a summary of NPA balances at the quarters ended (dollars in thousands):
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| June 30, |
| March 31, |
| December 31, |
| September 30, |
| June 30, | |||||
| | 2024 | | 2024 | | 2023 | | 2023 | | 2023 | |||||
Nonaccrual loans | | $ | 35,913 | | $ | 36,389 | | $ | 36,860 | | $ | 28,626 | | $ | 29,105 |
Foreclosed properties | |
| 230 | |
| 29 | |
| 29 | |
| 149 | |
| 50 |
Total nonperforming assets | | $ | 36,143 | | $ | 36,418 | | $ | 36,889 | | $ | 28,775 | | $ | 29,155 |
The following table shows the activity in nonaccrual loans for the quarters ended (dollars in thousands):
|
| June 30, |
| March 31, |
| December 31, |
| September 30, |
| June 30, | |||||
| | 2024 | | 2024 | | 2023 | | 2023 | | 2023 | |||||
Beginning Balance | | $ | 36,389 | | $ | 36,860 | | $ | 28,626 | | $ | 29,105 | | $ | 29,082 |
Net customer payments | |
| (6,293) | |
| (1,583) | |
| (2,198) | |
| (1,947) | |
| (5,950) |
Additions | |
| 6,831 | |
| 5,047 | |
| 10,604 | |
| 1,651 | |
| 6,685 |
Charge-offs | |
| (759) | |
| (3,935) | |
| (172) | |
| (64) | |
| (712) |
Loans returning to accruing status | |
| (54) | |
| — | |
| — | |
| (119) | |
| — |
Transfers to foreclosed property | |
| (201) | |
| — | |
| — | |
| — | |
| — |
Ending Balance | | $ | 35,913 | | $ | 36,389 | | $ | 36,860 | | $ | 28,626 | | $ | 29,105 |
Past Due Loans
At June 30, 2024, past due loans still accruing interest totaled $40.2 million or 0.22% of total LHFI, compared to $50.7 million or 0.32% of total LHFI at March 31, 2024, and $24.1 million or 0.16% of total LHFI at June 30, 2023. The decrease in past due loan levels at June 30, 2024 from March 31, 2024 was primarily within the 30-59 days past due category and driven by decreases in past due relationships within the other commercial, residential 1-4 family consumer, and commercial and industrial portfolios. Of the total past due loans still accruing interest, $15.6 million or 0.09% of total LHFI were past due 90 days or more at June 30, 2024, compared to $11.4 million or 0.07% of total LHFI at March 31, 2024, and $10.1 million or 0.07% of total LHFI at June 30, 2023. The increase in loans past due 90 days or more at June 30, 2024 from both March 31, 2024 and June 30, 2023 was primarily due to one credit relationship within the other commercial portfolio.
At June 30, 2024, the ACL was $175.7 million and included an ALLL of $158.1 million and a RUC of $17.6 million. At April 1, 2024, the initial ACL related to American National was $18.5 million, consisting of an ALLL of $17.1 million, which included a $3.9 million reserve on PCD loans, and a RUC of $1.4 million. Outside of the initial ACL related to the American National acquisition, the ACL at June 30, 2024 increased $5.4 million from March 31, 2024, primarily due to loan growth in the second quarter of 2024 and the impact of continued uncertainty in the economic outlook on certain portfolios.
The ACL as a percentage of total LHFI was 0.96% at June 30, 2024 and March 31, 2024. The ALLL as a percentage of total LHFI was 0.86% at June 30, 2024 and March 31, 2024.
Net Charge-offs
Net charge-offs were $1.7 million or 0.04% of total average LHFI on an annualized basis for the second quarter of 2024, compared to $4.9 million or 0.13% (annualized) for the first quarter of 2024, and $1.6 million or 0.04% (annualized) for the second quarter of 2023.
Provision for Credit Losses
For the second quarter of 2024, the Company recorded a provision for credit losses of $21.8 million, compared to a provision for credit losses of $8.2 million in the prior quarter, and a provision for credit losses of $6.1 million in the second quarter of 2023. Included in the provision for credit losses for the second quarter of 2024 was $13.2 million initial provision expense on non-PCD loans and $1.4 million on unfunded commitments, each acquired from American National. As compared to the prior quarter, the decrease in provision for credit losses, outside of the initial provision expense recorded on non-PCD loans and unfunded commitments acquired from American National, primarily reflects the impact of lower net charge-offs in the second quarter of 2024. As compared to the same period in the prior year, the increase in provision for credit losses, outside of the initial provision expense recorded on non-PCD loans and unfunded commitments acquired from American National, primarily reflects the impact of loan growth and the impact of continued uncertainty in the economic outlook on certain portfolios.
NONINTEREST INCOME
Noninterest income decreased $1.8 million to $23.8 million for the second quarter of 2024 from $25.6 million in the prior quarter, primarily driven by $6.5 million of pre-tax losses incurred on the sale of available for sale (“AFS”) securities as part of the Company’s restructuring of the American National securities portfolio, partially offset by increases in noninterest income due to the full quarter impact of the American National acquisition that closed on April 1, 2024.
Adjusted operating noninterest income,(1) which excludes losses and gains on sale of AFS securities (losses of $6.5 million in the second quarter and gains of $3,000 in the first quarter), increased $4.8 million to $30.3 million for the second quarter from $25.5 million in the prior quarter, primarily due to the impact of the American National acquisition, which drove the majority of the $2.1 million increase in fiduciary and asset management fees, the $832,000 increase in interchange fees, the $517,000 increase in service charges on deposit accounts, the $418,000 increase in loan-related interest rate swap fees, and the $236,000 increase in other service charges, commissions, and fees. In addition to the acquisition impact, BOLI income increased $546,000 compared to the prior quarter, primarily driven by a death benefit received in the second quarter, and mortgage banking income increased $326,000.
NONINTEREST EXPENSE
Noninterest expense increased $44.7 million to $150.0 million for the second quarter of 2024 from $105.3 million in the prior quarter, primarily driven by a $27.9 million increase in pre-tax merger-related expenses, as well as other increases in noninterest expense due to the full quarter impact of the American National acquisition.
Adjusted operating noninterest expense,(1) which excludes merger-related costs ($29.8 million in the second quarter and $1.9 million in the first quarter), amortization of intangible assets ($6.0 million in the second quarter and $1.9 million in the first quarter), and a FDIC special assessment ($840,000 in the first quarter), increased $13.5 million to $114.2 million for the second quarter from $100.7 million in the prior quarter, primarily due to the impact of the American National acquisition, which drove the majority of the $6.6 million increase in salaries and benefits, the $2.1 million increase in technology and data processing, the $1.2 million increase in occupancy expenses, and the $512,000 increase in franchise and other taxes compared to the prior quarter. In addition to the acquisition impact, professional services increased $1.3 million, primarily due to fees associated with various strategic projects, and marketing and advertising expense increased $665,000 compared to the prior quarter.
INCOME TAXES
As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact the future realization of deferred tax assets. The Company’s bank subsidiary, Atlantic Union Bank, is subject to a bank franchise tax but not state income tax in Virginia, its primary place of business. The Company, its subsidiaries, and Atlantic Union Bank’s non-bank subsidiaries are subject to income taxes and may be able to utilize state deferred tax assets, depending on a number of factors including those entities’ financial results. During the quarter ended June 30, 2024, the Company reviewed its business plans considering the American National acquisition and other business changes and noted shifts within its state income tax footprint and other factors that impacted projected future realization of state deferred tax items, including those attributable to operations in Virginia. As a result, the Company concluded it is more likely than not that the benefit for certain state net operating loss carryforwards will not be realized, and the Company recorded a valuation allowance of $4.8 million via a non-cash charge to income tax expense for the second quarter of 2024.
The Company’s effective tax rate for the three months ended June 30, 2024 and 2023 was 31.2% and 14.4%, respectively, and the effective tax rate for the six months ended June 30, 2024 and 2023 was 22.3% and 15.5%. respectively. The increases in the effective tax rate for both the three and six months ended June 30, 2024 were primarily due to the valuation allowance established on June 30, 2024, which resulted in a 13 and 5 percentage point increase, respectively, in the effective tax rate.
BALANCE SHEET
At June 30, 2024, the Company’s consolidated balance sheet includes the impact of the American National acquisition, which closed April 1, 2024, as discussed above. ASC 805, Business Combinations, allows for a measurement period of 12 months beyond the acquisition date to finalize the fair value measurements of the acquired Company’s net assets as additional information existing as of the acquisition date becomes available. Any future measurement period adjustments will be recorded through goodwill upon identification. Below is a summary of the related impact of the acquisition on the Company's consolidated balance sheet as of the acquisition date.
● | The fair value of assets acquired totaled $2.9 billion and included total loans of $2.2 billion with an initial loan discount of $164.6 million. |
● | The fair value of the liabilities assumed totaled $2.7 billion and included total deposits of $2.6 billion with an initial deposit mark related to time deposits of $4.1 million. |
● | Core deposit intangibles and other intangibles acquired totaled $84.7 million. |
● | Preliminary goodwill totaled $282.3 million. |
At June 30, 2024, total assets were $24.8 billion, an increase of $3.4 billion from March 31, 2024 and $4.2 billion or approximately 20.2% from June 30, 2023. The increases in total assets from the prior quarter and prior year were primarily driven by growth in LHFI (net of deferred fees and costs) and the AFS securities portfolio, primarily due to the American National acquisition.
At June 30, 2024, LHFI (net of deferred fees and costs) totaled $18.3 billion, an increase of $2.5 billion from $15.9 billion at March 31, 2024, and an increase of $3.3 billion or 21.8% from June 30, 2023. LHFI increased from the prior quarter and prior year primarily due to the American National acquisition, as well as loan growth.
At June 30, 2024, total investments were $3.5 billion, an increase of $350.1 million from March 31, 2024, and an increase of $348.2 million or 11.1% from June 30, 2023. AFS securities totaled $2.6 billion at June 30, 2024 and $2.2 billion at both March 31, 2024 and June 30, 2023. The increases compared to the prior quarter and prior year were primarily due to the acquisition of American National. Total net unrealized losses on the AFS securities portfolio were $420.7 million at June 30, 2024, compared to $410.9 million at March 31, 2024 and $450.1 million at June 30, 2023. Held to maturity securities are carried at cost and totaled $810.5 million at June 30, 2024, $828.9 million at March 31, 2024, and $849.6 million at June 30, 2023 and had net unrealized losses of $44.0 million at June 30, 2024, $37.6 million at March 31, 2024, and $41.8 million at June 30, 2023.
At June 30, 2024, total deposits were $20.0 billion, an increase of $2.7 billion from the prior quarter, and an increase of $3.6 billion or 21.9% from June 30, 2023. The increases in deposit balances from the prior quarter and prior year are primarily due to increases in interest bearing customer deposits and demand deposits, primarily related to the addition of the American National acquired deposits, as well as increases in brokered deposits.
At June 30, 2024, total borrowings were $1.2 billion, an increase of $149.0 million from March 31, 2024 and a decrease of $113.6 million or 8.6% from June 30, 2023. At June 30, 2024 average borrowings were $1.0 billion, consistent with March 31, 2024, and a decrease of $53.3 million from June 30, 2023. The increase in borrowings from the prior quarter was primarily driven by increased use of short-term borrowings to fund loan growth, as well as increases associated with the American National acquisition, while the decrease from the same period in the prior year was due to paydowns of short-term borrowings due to deposit growth.
The following table shows the Company’s capital ratios at the quarters ended:
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| June 30, |
| March 31, |
| June 30, |
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| | 2024 | | 2024 | | 2023 |
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Common equity Tier 1 capital ratio (2) |
| 9.47 | % | 9.86 | % | 9.86 | % |
Tier 1 capital ratio (2) |
| 10.27 | % | 10.77 | % | 10.81 | % |
Total capital ratio (2) |
| 13.00 | % | 13.62 | % | 13.64 | % |
Leverage ratio (Tier 1 capital to average assets) (2) |
| 9.05 | % | 9.62 | % | 9.64 | % |
Common equity to total assets |
| 11.62 | % | 11.14 | % | 10.96 | % |
Tangible common equity to tangible assets (1) |
| 6.71 | % | 7.05 | % | 6.66 | % |
(1) These are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”). For a reconciliation of these non-GAAP financial measures, see the “Alternative Performance Measures (non-GAAP)” section of the Key Financial Results.
(2) All ratios at June 30, 2024 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.
During the second quarter of 2024, the Company declared and paid a quarterly dividend on the outstanding shares of Series A Preferred Stock of $171.88 per share (equivalent to $0.43 per outstanding depositary share), consistent with the first quarter of 2024 and the second quarter of 2023. During the second quarter of 2024, the Company also declared and paid cash dividends of $0.32 per common share, consistent with the first quarter of 2024 and a $0.02 increase or approximately 6.7% from the second quarter of 2023.
ABOUT ATLANTIC UNION BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank had 129 branches and approximately 150 ATMs located throughout Virginia and in portions of Maryland and North Carolina as of June 30, 2024. Certain non-bank financial services affiliates of Atlantic Union Bank include: Atlantic Union Equipment Finance, Inc., which provides equipment financing; Atlantic Union Financial Consultants, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.
SECOND QUARTER 2024 EARNINGS RELEASE CONFERENCE CALL
The Company will hold a conference call and webcast for investors at 9:00 a.m. Eastern Time on Thursday, July 25, 2024, during which management will review our financial results for the second quarter 2024 and provide an update on our recent activities.
The listen-only webcast and the accompanying slides can be accessed at:
https://edge.media-server.com/mmc/p/ct8s95ox.
For analysts who wish to participate in the conference call, please register at the following URL:
https://register.vevent.com/register/BI670b5991ba5d495ea7c519f17cf6b388. To participate in the conference call, you must use the link to receive an audio dial-in number and an Access PIN.
A replay of the webcast, and the accompanying slides, will be available on the Company’s website for 90 days at: https://investors.atlanticunionbank.com/.
NON-GAAP FINANCIAL MEASURES
In reporting the results as of and for the period ended June 30, 2024, the Company has provided supplemental performance measures determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. The Company uses the non-GAAP financial measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance. For a reconciliation of these measures to their most directly comparable GAAP measures and additional information about these non-GAAP financial measures, see “Alternative Performance Measures (non-GAAP)” in the tables within the section “Key Financial Results.”
FORWARD-LOOKING STATEMENTS
This press release and statements by our management may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, statements made in Mr. Asbury’s quotations, statements regarding our expectations with regard to the benefits of the American National acquisition, statements regarding our future ability to recognize the benefits of certain tax assets, our business, financial and operating results, including our deposit base and funding, the impact of future economic conditions, changes in economic conditions, our asset quality, our customer relationships, and statements that include other projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” “continue,” “confidence,” or words of similar meaning or other statements concerning opinions or judgment of the Company and our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in:
● | market interest rates and their related impacts on macroeconomic conditions, customer and client behavior, our funding costs and our loan and securities portfolios; |
● | inflation and its impacts on economic growth and customer and client behavior; |
● | adverse developments in the financial industry generally, such as bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; |
● | the sufficiency of liquidity and changes in our capital positions; |
● | general economic and financial market conditions, in the United States generally and particularly in the markets in which we operate and which our loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth; |
● | the impact of purchase accounting with respect to the American National acquisition, or any change in the assumptions used regarding the assets acquired and liabilities assumed to determine the fair value and credit marks; |
● | the possibility that the anticipated benefits of the American National acquisition, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the recent integration of the two companies or as a result of the strength of the economy, competitive factors in the areas where we do business, or as a result of other unexpected factors or events; |
● | potential adverse reactions or changes to business or employee relationships, including those resulting from the American National acquisition; |
● | monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve; |
● | the quality or composition of our loan or investment portfolios and changes therein; |
● | demand for loan products and financial services in our market areas; |
● | our ability to manage our growth or implement our growth strategy; |
● | the effectiveness of expense reduction plans; |
● | the introduction of new lines of business or new products and services; |
● | our ability to recruit and retain key employees; |
● | real estate values in our lending area; |
● | changes in accounting principles, standards, rules, and interpretations, and the related impact on our financial statements; |
● | an insufficient ACL or volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by changing economic conditions, credit concentrations, inflation, changing interest rates, or other factors; |
● | concentrations of loans secured by real estate, particularly commercial real estate; |
● | the effectiveness of our credit processes and management of our credit risk; |
● | our ability to compete in the market for financial services and increased competition from fintech companies; |
● | technological risks and developments, and cyber threats, attacks, or events; |
● | operational, technological, cultural, regulatory, legal, credit, and other risks associated with the exploration, consummation and integration of potential future acquisitions, whether involving stock or cash considerations; |
● | the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as pandemics), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of our borrowers to satisfy their obligations to us, on the value of collateral securing loans, on the demand for our loans or our other products and services, on supply chains and methods used to distribute products and services, on incidents of cyberattack and fraud, on our liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of our business operations and on financial markets and economic growth; |
● | performance by our counterparties or vendors; |
● | deposit flows; |
● | the availability of financing and the terms thereof; |
● | the level of prepayments on loans and mortgage-backed securities; |
● | the effects of legislative or regulatory changes and requirements, including changes in federal, state or local tax laws; |
● | actual or potential claims, damages, and fines related to litigation or government actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences; |
● | any event or development that would cause us to conclude that there was an impairment of any asset, including intangible assets, such as goodwill; and |
● | other factors, many of which are beyond our control. |
Please also refer to such other factors as discussed throughout Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023 and related disclosures in other filings, which have been filed with the U.S. Securities and Exchange Commission (“SEC”) and are available on the SEC’s website at www.sec.gov. All risk factors and uncertainties described herein and therein should be considered in evaluating forward-looking statements, and all of the forward-looking statements are expressly qualified by the cautionary statements contained or referred to herein and therein. 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 the Company or our businesses or operations. Readers are cautioned not to rely too heavily on forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not intend or assume any obligation to update, revise or clarify any forward-looking statements that may be made from time to time by or on behalf of the Company, whether as a result of new information, future events or otherwise, except as required by law.
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS (UNAUDITED)
(Dollars in thousands, except share data)
| As of & For Three Months Ended |
| As of & For Six Months Ended | | |||||||||||
| 6/30/24 |
| 3/31/24 |
| 6/30/23 |
| 6/30/24 | | 6/30/23 | | |||||
Results of Operations | | | | | | | | |
| | | | | ||
Interest and dividend income | $ | 320,888 | | $ | 262,915 | | $ | 230,247 | | $ | 583,802 | | $ | 447,793 | |
Interest expense |
| 136,354 | |
| 115,090 | |
| 78,163 | |
| 251,444 | |
| 142,265 | |
Net interest income |
| 184,534 | |
| 147,825 | |
| 152,084 | |
| 332,358 | |
| 305,528 | |
Provision for credit losses |
| 21,751 | |
| 8,239 | |
| 6,069 | |
| 29,989 | |
| 17,920 | |
Net interest income after provision for credit losses |
| 162,783 | |
| 139,586 | |
| 146,015 | |
| 302,369 | |
| 287,608 | |
Noninterest income |
| 23,812 | |
| 25,552 | |
| 24,197 | |
| 49,365 | |
| 33,824 | |
Noninterest expenses |
| 150,005 | |
| 105,273 | |
| 105,661 | |
| 255,279 | |
| 213,934 | |
Income before income taxes |
| 36,590 | |
| 59,865 | |
| 64,551 | |
| 96,455 | |
| 107,498 | |
Income tax expense |
| 11,429 | |
| 10,096 | |
| 9,310 | |
| 21,525 | |
| 16,604 | |
Net income |
| 25,161 | |
| 49,769 | |
| 55,241 | |
| 74,930 | |
| 90,894 | |
Dividends on preferred stock | | 2,967 | | | 2,967 | | | 2,967 | | | 5,934 | | | 5,934 | |
Net income available to common shareholders | $ | 22,194 | | $ | 46,802 | | $ | 52,274 | | $ | 68,996 | | $ | 84,960 | |
| | | | | | | | | | | | | | | |
Interest earned on earning assets (FTE) (1) | $ | 324,702 | | $ | 266,636 | | $ | 233,913 | | $ | 591,339 | | $ | 455,248 | |
Net interest income (FTE) (1) |
| 188,348 | |
| 151,546 | |
| 155,750 | |
| 339,895 | |
| 312,983 | |
Total revenue (FTE) (1) | | 212,160 | | | 177,098 | | | 179,947 | | | 389,260 | | | 346,807 | |
Pre-tax pre-provision adjusted operating earnings (7) | | 94,635 | | | 70,815 | | | 74,553 | | | 165,449 | | | 147,751 | |
| | | | | | | | | | | | | | | |
Key Ratios | | | | | | | | | | | | | | | |
Earnings per common share, diluted | $ | 0.25 | | $ | 0.62 | | $ | 0.70 | | $ | 0.84 | | $ | 1.13 | |
Return on average assets (ROA) |
| 0.41 | % |
| 0.94 | % |
| 1.10 | % |
| 0.66 | % |
| 0.90 | % |
Return on average equity (ROE) |
| 3.35 | % |
| 7.79 | % |
| 9.00 | % |
| 5.39 | % |
| 7.51 | % |
Return on average tangible common equity (ROTCE) (2) (3) |
| 6.99 | % |
| 13.32 | % |
| 16.11 | % |
| 10.06 | % |
| 13.46 | % |
Efficiency ratio |
| 72.00 | % |
| 60.72 | % |
| 59.94 | % |
| 66.88 | % |
| 63.04 | % |
Efficiency ratio (FTE) (1) | | 70.70 | % |
| 59.44 | % |
| 58.72 | % |
| 65.58 | % |
| 61.69 | % |
Net interest margin |
| 3.39 | % |
| 3.11 | % |
| 3.37 | % |
| 3.26 | % |
| 3.39 | % |
Net interest margin (FTE) (1) |
| 3.46 | % |
| 3.19 | % |
| 3.45 | % |
| 3.33 | % |
| 3.47 | % |
Yields on earning assets (FTE) (1) |
| 5.96 | % |
| 5.62 | % |
| 5.19 | % |
| 5.80 | % |
| 5.05 | % |
Cost of interest-bearing liabilities |
| 3.33 | % |
| 3.23 | % |
| 2.42 | % |
| 3.28 | % |
| 2.22 | % |
Cost of deposits |
| 2.46 | % |
| 2.39 | % |
| 1.61 | % |
| 2.43 | % |
| 1.44 | % |
Cost of funds |
| 2.50 | % |
| 2.43 | % |
| 1.74 | % |
| 2.47 | % |
| 1.58 | % |
| | | | | | | | | | | | | | | |
Operating Measures (4) | | | | | | | | | | | | | | | |
Adjusted operating earnings | $ | 59,319 | | $ | 51,994 | | $ | 58,348 | | $ | 111,312 | | $ | 108,537 | |
Adjusted operating earnings available to common shareholders | | 56,352 | | | 49,027 | | | 55,381 | | | 105,378 | | | 102,603 | |
Adjusted operating earnings per common share, diluted | $ | 0.63 | | $ | 0.65 | | $ | 0.74 | | $ | 1.28 | | $ | 1.37 | |
Adjusted operating ROA | | 0.97 | % |
| 0.99 | % |
| 1.16 | % |
| 0.98 | % |
| 1.08 | % |
Adjusted operating ROE |
| 7.90 | % |
| 8.14 | % |
| 9.51 | % | | 8.01 | % |
| 8.96 | % |
Adjusted operating ROTCE (2) (3) |
| 15.85 | % |
| 13.93 | % |
| 17.03 | % |
| 14.92 | % |
| 16.14 | % |
Adjusted operating efficiency ratio (FTE) (1)(6) |
| 52.24 | % |
| 56.84 | % |
| 55.30 | % |
| 54.30 | % |
| 55.66 | % |
| | | | | | | | | | | | | | | |
Per Share Data | | | | | | | | | | | | | | | |
Earnings per common share, basic | $ | 0.25 | | $ | 0.62 | | $ | 0.70 | | $ | 0.84 | | $ | 1.13 | |
Earnings per common share, diluted |
| 0.25 | |
| 0.62 | |
| 0.70 | |
| 0.84 | |
| 1.13 | |
Cash dividends paid per common share |
| 0.32 | |
| 0.32 | |
| 0.30 | |
| 0.64 | |
| 0.60 | |
Market value per share |
| 32.85 | |
| 35.31 | |
| 25.95 | |
| 32.85 | |
| 25.95 | |
Book value per common share |
| 32.30 | |
| 31.88 | |
| 30.31 | |
| 32.30 | |
| 30.31 | |
Tangible book value per common share (2) |
| 17.67 | |
| 19.27 | |
| 17.58 | |
| 17.67 | |
| 17.58 | |
Price to earnings ratio, diluted |
| 33.04 | |
| 14.11 | |
| 9.28 | |
| 19.53 | |
| 11.35 | |
Price to book value per common share ratio |
| 1.02 | |
| 1.11 | |
| 0.86 | |
| 1.02 | |
| 0.86 | |
Price to tangible book value per common share ratio (2) |
| 1.86 | |
| 1.83 | |
| 1.48 | |
| 1.86 | |
| 1.48 | |
Weighted average common shares outstanding, basic |
| 89,768,466 | |
| 75,197,113 | |
| 74,995,450 | |
| 82,482,790 | |
| 74,914,247 | |
Weighted average common shares outstanding, diluted |
| 89,768,466 | |
| 75,197,376 | |
| 74,995,557 | |
| 82,482,921 | |
| 74,915,977 | |
Common shares outstanding at end of period |
| 89,769,734 | |
| 75,381,740 | |
| 74,998,075 | |
| 89,769,734 | |
| 74,998,075 | |
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS (UNAUDITED)
(Dollars in thousands, except share data)
| As of & For Three Months Ended |
| As of & For Six Months Ended | | |||||||||||
| 6/30/24 |
| 3/31/24 |
| 6/30/23 |
| 6/30/24 | | 6/30/23 | | |||||
Capital Ratios | | | | | | | | |
| | | | | ||
Common equity Tier 1 capital ratio (5) |
| 9.47 | % | | 9.86 | % |
| 9.86 | % |
| 9.47 | % |
| 9.86 | % |
Tier 1 capital ratio (5) |
| 10.27 | % | | 10.77 | % |
| 10.81 | % |
| 10.27 | % |
| 10.81 | % |
Total capital ratio (5) |
| 13.00 | % | | 13.62 | % |
| 13.64 | % |
| 13.00 | % |
| 13.64 | % |
Leverage ratio (Tier 1 capital to average assets) (5) |
| 9.05 | % | | 9.62 | % |
| 9.64 | % |
| 9.05 | % |
| 9.64 | % |
Common equity to total assets |
| 11.62 | % | | 11.14 | % |
| 10.96 | % |
| 11.62 | % |
| 10.96 | % |
Tangible common equity to tangible assets (2) |
| 6.71 | % | | 7.05 | % |
| 6.66 | % |
| 6.71 | % |
| 6.66 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Condition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets | $ | 24,761,413 | | $ | 21,378,120 |
| $ | 20,602,332 |
| $ | 24,761,413 |
| $ | 20,602,332 | |
LHFI (net of deferred fees and costs) |
| 18,347,190 | | | 15,851,628 |
|
| 15,066,930 |
|
| 18,347,190 |
|
| 15,066,930 | |
Securities |
| 3,491,481 | | | 3,141,416 |
|
| 3,143,236 |
|
| 3,491,481 |
|
| 3,143,236 | |
Earning Assets |
| 22,067,549 | | | 19,236,100 |
|
| 18,452,007 |
|
| 22,067,549 |
|
| 18,452,007 | |
Goodwill |
| 1,207,484 | | | 925,211 |
|
| 925,211 |
|
| 1,207,484 |
|
| 925,211 | |
Amortizable intangibles, net |
| 95,980 | | | 17,288 |
|
| 23,469 |
|
| 95,980 |
|
| 23,469 | |
Deposits |
| 20,000,877 | | | 17,278,435 |
|
| 16,411,987 |
|
| 20,000,877 |
|
| 16,411,987 | |
Borrowings |
| 1,206,734 | | | 1,057,724 |
|
| 1,320,301 |
|
| 1,206,734 |
|
| 1,320,301 | |
Stockholders' equity |
| 3,043,686 | | | 2,548,928 |
|
| 2,424,470 |
|
| 3,043,686 |
|
| 2,424,470 | |
Tangible common equity (2) |
| 1,573,865 | | | 1,440,072 |
|
| 1,309,433 |
|
| 1,573,865 |
|
| 1,309,433 | |
| | | | | | | | | | | | | | | |
Loans held for investment, net of deferred fees and costs | | | | | | | | | | | | | | | |
Construction and land development | $ | 1,454,545 | | $ | 1,246,251 | | $ | 1,231,720 | | $ | 1,454,545 | | $ | 1,231,720 | |
Commercial real estate - owner occupied | | 2,397,700 | | | 1,981,613 | | | 1,952,189 | | | 2,397,700 | | | 1,952,189 | |
Commercial real estate - non-owner occupied | | 4,906,285 | | | 4,225,018 | | | 4,113,318 | | | 4,906,285 | | | 4,113,318 | |
Multifamily real estate | | 1,353,024 | | | 1,074,957 | | | 788,895 | | | 1,353,024 | | | 788,895 | |
Commercial & Industrial |
| 3,944,723 | |
| 3,561,971 | | | 3,373,148 | | | 3,944,723 | | | 3,373,148 | |
Residential 1-4 Family - Commercial |
| 737,687 | |
| 515,667 | | | 518,317 | | | 737,687 | | | 518,317 | |
Residential 1-4 Family - Consumer |
| 1,251,033 | |
| 1,081,094 | | | 1,017,698 | | | 1,251,033 | | | 1,017,698 | |
Residential 1-4 Family - Revolving |
| 718,491 | |
| 616,951 | | | 600,339 | | | 718,491 | | | 600,339 | |
Auto | | 396,776 | |
| 440,118 | | | 585,756 | | | 396,776 | | | 585,756 | |
Consumer |
| 115,541 | |
| 113,414 | | | 134,709 | | | 115,541 | | | 134,709 | |
Other Commercial |
| 1,071,385 | |
| 994,574 | | | 750,841 | | | 1,071,385 | | | 750,841 | |
Total LHFI | $ | 18,347,190 | | $ | 15,851,628 | | $ | 15,066,930 | | $ | 18,347,190 | | $ | 15,066,930 | |
|
| | | | | | | | | | | | | | |
Deposits |
| | | | | | | | | | | | | | |
Interest checking accounts | $ | 5,044,503 | | $ | 4,753,485 | | $ | 4,824,192 | | $ | 5,044,503 | | $ | 4,824,192 | |
Money market accounts | | 4,330,928 | | | 4,104,282 | | | 3,413,936 | | | 4,330,928 | | | 3,413,936 | |
Savings accounts | | 1,056,474 | | | 895,213 | | | 986,081 | | | 1,056,474 | | | 986,081 | |
Customer time deposits of $250,000 and over | | 1,015,032 | | | 721,155 | | | 578,739 | | | 1,015,032 | | | 578,739 | |
Other customer time deposits | | 2,691,600 | | | 2,293,800 | | | 1,813,031 | | | 2,691,600 | | | 1,813,031 | |
Time deposits | | 3,706,632 | | | 3,014,955 | | | 2,391,770 | | | 3,706,632 | | | 2,391,770 | |
Total interest-bearing customer deposits | | 14,138,537 | | | 12,767,935 | | | 11,615,979 | | | 14,138,537 | | | 11,615,979 | |
Brokered deposits | | 1,335,092 | | | 665,309 | | | 485,702 | | | 1,335,092 | | | 485,702 | |
Total interest-bearing deposits | $ | 15,473,629 | | $ | 13,433,244 | | $ | 12,101,681 | | $ | 15,473,629 | | $ | 12,101,681 | |
Demand deposits |
| 4,527,248 | |
| 3,845,191 | |
| 4,310,306 | |
| 4,527,248 | |
| 4,310,306 | |
Total deposits | $ | 20,000,877 | | $ | 17,278,435 | | $ | 16,411,987 | | $ | 20,000,877 | | $ | 16,411,987 | |
| | | | | | | | | | | | | | | |
Averages | | | | | | | | | | | | | | | |
Assets | $ | 24,620,198 | | $ | 21,222,756 | | $ | 20,209,687 | | $ | 22,921,478 | | $ | 20,296,536 | |
LHFI (net of deferred fees and costs) | | 18,154,673 | | | 15,732,599 | | | 14,746,218 | | | 16,943,636 | | | 14,626,579 | |
Loans held for sale |
| 12,392 | |
| 9,142 | |
| 14,413 | |
| 10,767 | |
| 10,168 | |
Securities |
| 3,476,890 | |
| 3,153,556 | |
| 3,176,662 | |
| 3,315,223 | |
| 3,321,308 | |
Earning assets |
| 21,925,128 | |
| 19,089,393 | |
| 18,091,809 | |
| 20,507,261 | |
| 18,164,545 | |
Deposits |
| 20,033,678 | |
| 17,147,181 | |
| 16,280,154 | |
| 18,590,430 | |
| 16,348,304 | |
Time deposits |
| 4,243,344 | |
| 3,459,138 | |
| 2,500,966 | |
| 3,851,241 | |
| 2,396,827 | |
Interest-bearing deposits |
| 15,437,549 | |
| 13,311,837 | |
| 11,903,004 | |
| 14,374,693 | |
| 11,813,929 | |
Borrowings |
| 1,043,297 | |
| 1,012,797 | |
| 1,071,171 | |
| 1,028,047 | |
| 1,096,567 | |
Interest-bearing liabilities |
| 16,480,846 | |
| 14,324,634 | |
| 12,974,175 | |
| 15,402,740 | |
| 12,910,496 | |
Stockholders' equity |
| 3,021,929 | |
| 2,568,243 | |
| 2,460,741 | |
| 2,795,086 | |
| 2,442,273 | |
Tangible common equity (2) |
| 1,549,876 | |
| 1,458,478 | |
| 1,345,426 | |
| 1,504,178 | |
| 1,326,043 | |
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS (UNAUDITED)
(Dollars in thousands, except share data)
| As of & For Three Months Ended |
| As of & For Six Months Ended | | |||||||||||
| 6/30/24 |
| 3/31/24 |
| 6/30/23 |
| 6/30/24 | | 6/30/23 | | |||||
Asset Quality | | | | | | | | |
| | | | | ||
Allowance for Credit Losses (ACL) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance, Allowance for loan and lease losses (ALLL) | $ | 136,190 |
| $ | 132,182 |
| $ | 116,512 |
| $ | 132,182 |
| $ | 110,768 |
|
Add: Recoveries |
| 1,348 |
| | 977 |
|
| 1,035 |
|
| 2,325 |
|
| 2,202 |
|
Less: Charge-offs |
| 3,088 |
| | 5,894 |
|
| 2,602 |
|
| 8,982 |
|
| 8,328 |
|
Add: Initial Allowance - PCD American National loans | | 3,896 | | | — | | | — | | | 3,896 | | | — | |
Add: Initial Provision - Non-PCD American National loans | | 13,229 | | | — | | | — | | | 13,229 | | | — | |
Add: Provision for loan losses |
| 6,556 |
| | 8,925 |
|
| 5,738 |
|
| 15,481 |
|
| 16,041 |
|
Ending balance, ALLL | $ | 158,131 |
| $ | 136,190 |
| $ | 120,683 |
| $ | 158,131 |
| $ | 120,683 |
|
| | | | | | | | | | | | | | | |
Beginning balance, Reserve for unfunded commitment (RUC) | $ | 15,582 | | $ | 16,269 |
| $ | 15,199 |
| $ | 16,269 |
| $ | 13,675 | |
Add: Initial Provision - RUC American National loans | | 1,353 | | | — | | | — | | | 1,353 | | | — | |
Add: Provision for unfunded commitments | | 622 |
| | (687) |
|
| 349 |
|
| (65) |
|
| 1,873 | |
Ending balance, RUC | $ | 17,557 | | $ | 15,582 |
| $ | 15,548 |
| $ | 17,557 |
| $ | 15,548 | |
Total ACL | $ | 175,688 | | $ | 151,772 |
| $ | 136,231 |
| $ | 175,688 |
| $ | 136,231 | |
| | | | | | | | | | | | | | | |
ACL / total LHFI | | 0.96 | % | | 0.96 | % |
| 0.90 | % |
| 0.96 | % |
| 0.90 | % |
ALLL / total LHFI |
| 0.86 | % | | 0.86 | % | | 0.80 | % | | 0.86 | % | | 0.80 | % |
Net charge-offs / total average LHFI (annualized) |
| 0.04 | % | | 0.13 | % | | 0.04 | % | | 0.08 | % | | 0.08 | % |
Provision for loan losses/ total average LHFI (annualized) |
| 0.44 | % | | 0.23 | % | | 0.16 | % | | 0.34 | % | | 0.22 | % |
| | | | | | | | | | | | | | | |
Nonperforming Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Construction and land development | $ | 1,144 | | $ | 342 | | $ | 284 | | $ | 1,144 | | $ | 284 | |
Commercial real estate - owner occupied |
| 4,651 | |
| 2,888 | | | 3,978 | | | 4,651 | | | 3,978 | |
Commercial real estate - non-owner occupied |
| 10,741 | |
| 10,335 | | | 6,473 | | | 10,741 | | | 6,473 | |
Multifamily real estate | | 1 | | | — | | | — | | | 1 | | | — | |
Commercial & Industrial |
| 3,408 | | | 6,480 | | | 2,738 | | | 3,408 | | | 2,738 | |
Residential 1-4 Family - Commercial |
| 1,783 | | | 1,790 | | | 1,844 | | | 1,783 | | | 1,844 | |
Residential 1-4 Family - Consumer |
| 10,799 | | | 10,990 | | | 10,033 | | | 10,799 | | | 10,033 | |
Residential 1-4 Family - Revolving |
| 3,028 | | | 3,135 | | | 3,461 | | | 3,028 | | | 3,461 | |
Auto |
| 354 | | | 429 | | | 291 | | | 354 | | | 291 | |
Consumer | | 4 | | | — | | | 3 | | | 4 | | | 3 | |
Nonaccrual loans | $ | 35,913 | | $ | 36,389 | | $ | 29,105 | | $ | 35,913 | | $ | 29,105 | |
Foreclosed property |
| 230 | |
| 29 | |
| 50 | |
| 230 | |
| 50 | |
Total nonperforming assets (NPAs) | $ | 36,143 | | $ | 36,418 | | $ | 29,155 | | $ | 36,143 | | $ | 29,155 | |
Construction and land development | $ | 764 | | $ | 171 | | $ | 24 | | $ | 764 | | $ | 24 | |
Commercial real estate - owner occupied |
| 1,047 | | | 3,634 | | | 2,463 | | | 1,047 | | | 2,463 | |
Commercial real estate - non-owner occupied | | 1,309 | | | 1,197 | | | 2,763 | | | 1,309 | | | 2,763 | |
Multifamily real estate | | 141 | | | 144 | | | — | | | 141 | | | — | |
Commercial & Industrial |
| 684 | |
| 1,860 | |
| 810 | |
| 684 | |
| 810 | |
Residential 1-4 Family - Commercial |
| 678 | |
| 1,030 | |
| 693 | |
| 678 | |
| 693 | |
Residential 1-4 Family - Consumer |
| 1,645 | |
| 1,641 | |
| 1,716 | |
| 1,645 | |
| 1,716 | |
Residential 1-4 Family - Revolving |
| 1,449 | |
| 1,343 | |
| 1,259 | |
| 1,449 | |
| 1,259 | |
Auto |
| 263 | |
| 284 | |
| 243 | |
| 263 | |
| 243 | |
Consumer |
| 176 | |
| 141 | |
| 74 | |
| 176 | |
| 74 | |
Other Commercial | | 7,464 | |
| — | |
| 66 | |
| 7,464 | |
| 66 | |
LHFI ≥ 90 days and still accruing | $ | 15,620 | | $ | 11,445 | | $ | 10,111 | | $ | 15,620 | | $ | 10,111 | |
Total NPAs and LHFI ≥ 90 days | $ | 51,763 | | $ | 47,863 | | $ | 39,266 | | $ | 51,763 | | $ | 39,266 | |
NPAs / total LHFI | | 0.20 | % |
| 0.23 | % |
| 0.19 | % |
| 0.20 | % |
| 0.19 | % |
NPAs / total assets |
| 0.15 | % | | 0.17 | % | | 0.14 | % | | 0.15 | % | | 0.14 | % |
ALLL / nonaccrual loans |
| 440.32 | % | | 374.26 | % | | 414.65 | % | | 440.32 | % | | 414.65 | % |
ALLL/ nonperforming assets |
| 437.51 | % | | 373.96 | % | | 413.94 | % | | 437.51 | % | | 413.94 | % |
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS (UNAUDITED)
(Dollars in thousands, except share data)
| As of & For Three Months Ended |
| As of & For Six Months Ended | | |||||||||||
| 6/30/24 |
| 3/31/24 |
| 6/30/23 |
| 6/30/24 | | 6/30/23 | | |||||
Past Due Detail | | | | | | | | |
| | | | | ||
Construction and land development | $ | 1,689 | | $ | 2,163 | | $ | 295 | | $ | 1,689 | | $ | 295 | |
Commercial real estate - owner occupied |
| 3,450 | |
| 3,663 | |
| 602 | |
| 3,450 | |
| 602 | |
Commercial real estate - non-owner occupied |
| 1,316 | |
| 2,271 | |
| — | |
| 1,316 | |
| — | |
Multifamily real estate |
| 1,694 | |
| — | |
| — | |
| 1,694 | |
| — | |
Commercial & Industrial |
| 2,154 | |
| 5,540 | |
| 254 | |
| 2,154 | |
| 254 | |
Residential 1-4 Family - Commercial |
| 873 | |
| 1,407 | |
| 1,076 | |
| 873 | |
| 1,076 | |
Residential 1-4 Family - Consumer |
| 1,331 | |
| 6,070 | |
| 1,504 | |
| 1,331 | |
| 1,504 | |
Residential 1-4 Family - Revolving |
| 2,518 | |
| 1,920 | |
| 1,729 | |
| 2,518 | |
| 1,729 | |
Auto |
| 3,463 | |
| 3,192 | |
| 2,877 | |
| 3,463 | |
| 2,877 | |
Consumer | | 385 | | | 418 | | | 334 | | | 385 | | | 334 | |
Other Commercial | | 289 | | | 8,187 | | | 23 | | | 289 | | | 23 | |
LHFI 30-59 days past due | $ | 19,162 | | $ | 34,831 | | $ | 8,694 | | $ | 19,162 | | $ | 8,694 | |
Construction and land development | $ | 155 | | $ | 1,097 | | $ | — | | | 155 | | | — | |
Commercial real estate - owner occupied |
| 72 | |
| — | |
| 10 | |
| 72 | |
| 10 | |
Commercial real estate - non-owner occupied |
| — | |
| 558 | |
| — | |
| — | |
| — | |
Multifamily real estate | | 632 | | | — | | | — | | | 632 | | | — | |
Commercial & Industrial |
| 192 | |
| 348 | |
| 400 | |
| 192 | |
| 400 | |
Residential 1-4 Family - Commercial |
| 689 | |
| 98 | |
| 189 | |
| 689 | |
| 189 | |
Residential 1-4 Family - Consumer |
| 1,960 | |
| 204 | |
| 2,813 | |
| 1,960 | |
| 2,813 | |
Residential 1-4 Family - Revolving |
| 795 | |
| 1,477 | |
| 1,114 | |
| 795 | |
| 1,114 | |
Auto |
| 565 | |
| 330 | |
| 564 | |
| 565 | |
| 564 | |
Consumer | | 309 | | | 197 | | | 214 | | | 309 | | | 214 | |
Other Commercial | | — | | | 102 | | | — | | | — | |
| — | |
LHFI 60-89 days past due | $ | 5,369 | | $ | 4,411 | | $ | 5,304 | | $ | 5,369 | | $ | 5,304 | |
| | | | | | | | | | | | | | | |
Past Due and still accruing | $ | 40,151 | | $ | 50,687 | | $ | 24,109 | | $ | 40,151 | | $ | 24,109 | |
Past Due and still accruing / total LHFI | | 0.22 | % | | 0.32 | % | | 0.16 | % | | 0.22 | % | | 0.16 | % |
| |
| | |
| | |
| | |
| | |
| |
Alternative Performance Measures (non-GAAP) |
| | | | | | | | | | | | | | |
Net interest income (FTE) (1) |
| | | | | | | | | | | | | | |
Net interest income (GAAP) | $ | 184,534 | | $ | 147,825 | | $ | 152,084 | | $ | 332,358 | | $ | 305,528 | |
FTE adjustment |
| 3,814 | |
| 3,721 | |
| 3,666 | |
| 7,537 | |
| 7,455 | |
Net interest income (FTE) (non-GAAP) | $ | 188,348 | | $ | 151,546 | | $ | 155,750 | | $ | 339,895 | | $ | 312,983 | |
Noninterest income (GAAP) | | 23,812 | | | 25,552 | | | 24,197 | | | 49,365 | | | 33,824 | |
Total revenue (FTE) (non-GAAP) | $ | 212,160 | | $ | 177,098 | | $ | 179,947 | | $ | 389,260 | | $ | 346,807 | |
| | | | | | | | | | | | | | | |
Average earning assets | $ | 21,925,128 | | $ | 19,089,393 | | $ | 18,091,809 | | $ | 20,507,261 | | $ | 18,164,545 | |
Net interest margin |
| 3.39 | % |
| 3.11 | % |
| 3.37 | % |
| 3.26 | % |
| 3.39 | % |
Net interest margin (FTE) |
| 3.46 | % |
| 3.19 | % |
| 3.45 | % |
| 3.33 | % |
| 3.47 | % |
| | | | | | | | | | | | | | | |
Tangible Assets (2) |
| | | | | | | | | | | | | | |
Ending assets (GAAP) | $ | 24,761,413 | | $ | 21,378,120 | | $ | 20,602,332 | | $ | 24,761,413 | | $ | 20,602,332 | |
Less: Ending goodwill |
| 1,207,484 | |
| 925,211 | |
| 925,211 | |
| 1,207,484 | |
| 925,211 | |
Less: Ending amortizable intangibles |
| 95,980 | |
| 17,288 | |
| 23,469 | |
| 95,980 | |
| 23,469 | |
Ending tangible assets (non-GAAP) | $ | 23,457,949 | | $ | 20,435,621 | | $ | 19,653,652 | | $ | 23,457,949 | | $ | 19,653,652 | |
| | | | | | | | | | | | | | | |
Tangible Common Equity (2) |
| | | | | | | | | | | | | | |
Ending equity (GAAP) | $ | 3,043,686 | | $ | 2,548,928 | | $ | 2,424,470 | | $ | 3,043,686 | | $ | 2,424,470 | |
Less: Ending goodwill |
| 1,207,484 | |
| 925,211 | |
| 925,211 | |
| 1,207,484 | |
| 925,211 | |
Less: Ending amortizable intangibles |
| 95,980 | |
| 17,288 | |
| 23,469 | |
| 95,980 | |
| 23,469 | |
Less: Perpetual preferred stock | | 166,357 | | | 166,357 | | | 166,357 | | | 166,357 | | | 166,357 | |
Ending tangible common equity (non-GAAP) | $ | 1,573,865 | | $ | 1,440,072 | | $ | 1,309,433 | | $ | 1,573,865 | | $ | 1,309,433 | |
| | | | | | | | | | | | | | | |
Average equity (GAAP) | $ | 3,021,929 | | $ | 2,568,243 | | $ | 2,460,741 | | $ | 2,795,086 | | $ | 2,442,273 | |
Less: Average goodwill |
| 1,208,588 | |
| 925,211 | |
| 925,211 | |
| 1,066,899 | |
| 925,211 | |
Less: Average amortizable intangibles |
| 97,109 | |
| 18,198 | |
| 23,748 | |
| 57,653 | |
| 24,663 | |
Less: Average perpetual preferred stock | | 166,356 | | | 166,356 | | | 166,356 | | | 166,356 | | | 166,356 | |
Average tangible common equity (non-GAAP) | $ | 1,549,876 | | $ | 1,458,478 | | $ | 1,345,426 | | $ | 1,504,178 | | $ | 1,326,043 | |
| | | | | | | | | | | | | | | |
ROTCE (2)(3) | | | | | | | | | | | | | | | |
Net income available to common shareholders (GAAP) | $ | 22,194 | | $ | 46,802 | | $ | 52,274 | | $ | 68,996 | | $ | 84,960 | |
Plus: Amortization of intangibles, tax effected | | 4,736 | | | 1,497 | | | 1,751 | | | 6,232 | | | 3,550 | |
Net income available to common shareholders before amortization of intangibles (non-GAAP) | $ | 26,930 | | $ | 48,299 | | $ | 54,025 | | $ | 75,228 | | $ | 88,510 | |
| | | | | | | | | | | | | | | |
Return on average tangible common equity (ROTCE) | | 6.99 | % | | 13.32 | % | | 16.11 | % | | 10.06 | % | | 13.46 | % |
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS (UNAUDITED)
(Dollars in thousands, except share data)
| As of & For Three Months Ended |
| As of & For Six Months Ended | | |||||||||||
| 6/30/24 |
| 3/31/24 |
| 6/30/23 |
| 6/30/24 | | 6/30/23 | | |||||
Operating Measures (4) | | | | | | | | | | | | | | | |
Net income (GAAP) | $ | 25,161 | | $ | 49,769 | | $ | 55,241 | | $ | 74,930 | | $ | 90,894 | |
Plus: Merger-related costs, net of tax | | 24,236 | | | 1,563 | | | — | | | 25,799 | | | — | |
Plus: Strategic cost saving initiatives, net of tax |
| — | |
| — | |
| 3,109 | |
| — | |
| 3,109 | |
Plus: FDIC special assessment, net of tax | | — | | | 664 | | | — | | | 664 | | | — | |
Plus: Legal reserve, net of tax | | — | |
| — | |
| — | |
| — | |
| 3,950 | |
Plus: Deferred tax asset write-down | | 4,774 | | | — | | | — | | | 4,774 | | | — | |
Less: (Loss) gain on sale of securities, net of tax |
| (5,148) | |
| 2 | |
| 2 | |
| (5,145) | |
| (10,584) | |
Adjusted operating earnings (non-GAAP) |
| 59,319 | |
| 51,994 | |
| 58,348 | |
| 111,312 | |
| 108,537 | |
Less: Dividends on preferred stock | | 2,967 | | | 2,967 | | | 2,967 | | | 5,934 | | | 5,934 | |
Adjusted operating earnings available to common shareholders (non-GAAP) | $ | 56,352 | | $ | 49,027 | | $ | 55,381 | | $ | 105,378 | | $ | 102,603 | |
| | | | | | | | | | | | | | | |
Operating Efficiency Ratio (1)(6) | | | | | | | | | | | | | | | |
Noninterest expense (GAAP) | $ | 150,005 | | $ | 105,273 | | $ | 105,661 | | $ | 255,279 | | $ | 213,934 | |
Less: Amortization of intangible assets | | 5,995 | | | 1,895 | | | 2,216 | | | 7,889 | | | 4,494 | |
Less: Merger-related costs |
| 29,778 | |
| 1,874 | |
| — | |
| 31,652 | |
| — | |
Less: FDIC special assessment | | — | | | 840 | | | — | | | 840 | | | — | |
Less: Strategic cost saving initiatives | | — | | | — | | | 3,935 | | | — | | | 3,935 | |
Less: Legal reserve |
| — | |
| — | |
| — | | | — | | | 5,000 | |
Adjusted operating noninterest expense (non-GAAP) | $ | 114,232 | | $ | 100,664 | | $ | 99,510 | | $ | 214,898 | | $ | 200,505 | |
| | | | | | | | | | | | | | | |
Noninterest income (GAAP) | $ | 23,812 | | $ | 25,552 | | $ | 24,197 | | $ | 49,365 | | $ | 33,824 | |
Less: (Loss) gain on sale of securities | | (6,516) | | | 3 | | | 2 | | | (6,513) | | | (13,398) | |
Adjusted operating noninterest income (non-GAAP) | $ | 30,328 | | $ | 25,549 | | $ | 24,195 | | $ | 55,878 | | $ | 47,222 | |
| | | | | | | | | | | | | | | |
Net interest income (FTE) (non-GAAP) (1) | $ | 188,348 | | $ | 151,546 | | $ | 155,750 | | $ | 339,895 | | $ | 312,983 | |
Adjusted operating noninterest income (non-GAAP) |
| 30,328 | |
| 25,549 | |
| 24,195 | |
| 55,878 | |
| 47,222 | |
Total adjusted revenue (FTE) (non-GAAP) (1) | $ | 218,676 | | $ | 177,095 | | $ | 179,945 | | $ | 395,773 | | $ | 360,205 | |
| | | | | | | | | | | | | | | |
Efficiency ratio |
| 72.00 | % |
| 60.72 | % |
| 59.94 | % |
| 66.88 | % |
| 63.04 | % |
Efficiency ratio (FTE) (1) |
| 70.70 | % |
| 59.44 | % |
| 58.72 | % |
| 65.58 | % |
| 61.69 | % |
Adjusted operating efficiency ratio (FTE) (1)(6) | | 52.24 | % | | 56.84 | % | | 55.30 | % | | 54.30 | % | | 55.66 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating ROA & ROE (4) | | | | | | | | | | | | | | | |
Adjusted operating earnings (non-GAAP) | $ | 59,319 | | $ | 51,994 | | $ | 58,348 | | $ | 111,312 | | $ | 108,537 | |
| | | | | | | | | | | | | | | |
Average assets (GAAP) | $ | 24,620,198 | | $ | 21,222,756 | | $ | 20,209,687 | | $ | 22,921,478 | | $ | 20,296,536 | |
Return on average assets (ROA) (GAAP) | | 0.41 | % | | 0.94 | % | | 1.10 | % | | 0.66 | % | | 0.90 | % |
Adjusted operating return on average assets (ROA) (non-GAAP) |
| 0.97 | % |
| 0.99 | % |
| 1.16 | % |
| 0.98 | % |
| 1.08 | % |
|
| | |
| | |
| | |
| | |
| | |
Average equity (GAAP) | $ | 3,021,929 | | $ | 2,568,243 | | $ | 2,460,741 | | $ | 2,795,086 | | $ | 2,442,273 | |
Return on average equity (ROE) (GAAP) |
| 3.35 | % |
| 7.79 | % |
| 9.00 | % |
| 5.39 | % |
| 7.51 | % |
Adjusted operating return on average equity (ROE) (non-GAAP) | | 7.90 | % | | 8.14 | % | | 9.51 | % | | 8.01 | % | | 8.96 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating ROTCE (2)(3)(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Adjusted operating earnings available to common shareholders (non-GAAP) | $ | 56,352 | | $ | 49,027 | | $ | 55,381 | | $ | 105,378 | | $ | 102,603 | |
Plus: Amortization of intangibles, tax effected | | 4,736 | | | 1,497 | | | 1,751 | | | 6,232 | | | 3,550 | |
Adjusted operating earnings available to common shareholders before amortization of intangibles (non-GAAP) | $ | 61,088 | | $ | 50,524 | | $ | 57,132 | | $ | 111,610 | | $ | 106,153 | |
| | | | | | | | | | | | | | | |
Average tangible common equity (non-GAAP) | $ | 1,549,876 | | $ | 1,458,478 | | $ | 1,345,426 | | $ | 1,504,178 | | $ | 1,326,043 | |
Adjusted operating return on average tangible common equity (non-GAAP) |
| 15.85 | % |
| 13.93 | % |
| 17.03 | % |
| 14.92 | % |
| 16.14 | % |
| | | | | | | | | | | | | | | |
Pre-tax pre-provision adjusted operating earnings (7) | | | | | | | | | | | | | | | |
Net income (GAAP) | $ | 25,161 | | $ | 49,769 | | $ | 55,241 | | $ | 74,930 | | $ | 90,894 | |
Plus: Provision for credit losses | | 21,751 | | | 8,239 | | | 6,069 | | | 29,989 | | | 17,920 | |
Plus: Income tax expense |
| 11,429 | |
| 10,096 | |
| 9,310 | |
| 21,525 | |
| 16,604 | |
Plus: Merger-related costs | | 29,778 | | | 1,874 | | | — | | | 31,652 | | | — | |
Plus: Strategic cost saving initiatives | | — | | | — | | | 3,935 | | | — | | | 3,935 | |
Plus: FDIC special assessment | | — | | | 840 | | | — | | | 840 | | | — | |
Plus: Legal reserve | | — | | | — | | | — | | | — | | | 5,000 | |
Less: (Loss) gain on sale of securities, net of tax | | (6,516) | | | 3 | | | 2 | | | (6,513) | | | (13,398) | |
Pre-tax pre-provision adjusted operating earnings (non-GAAP) | $ | 94,635 | | $ | 70,815 | | $ | 74,553 | | $ | 165,449 | | $ | 147,751 | |
Less: Dividends on preferred stock | | 2,967 | | | 2,967 | | | 2,967 | | | 5,934 | | | 5,934 | |
Pre-tax pre-provision adjusted operating earnings available to common shareholders (non-GAAP) | $ | 91,668 | | $ | 67,848 | | $ | 71,586 | | $ | 159,515 | | $ | 141,817 | |
| | | | | | | | | | | | | | | |
Weighted average common shares outstanding, diluted | | 89,768,466 | | | 75,197,376 | | | 74,995,557 | | | 82,482,921 | | | 74,915,977 | |
Pre-tax pre-provision earnings per common share, diluted | $ | 1.02 | | $ | 0.90 | | $ | 0.95 | | $ | 1.93 | | $ | 1.89 | |
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS (UNAUDITED)
(Dollars in thousands, except share data)
| As of & For Three Months Ended |
| As of & For Six Months Ended | | |||||||||||
| 6/30/24 |
| 3/31/24 |
| 6/30/23 |
| 6/30/24 | | 6/30/23 | | |||||
Mortgage Origination Held for Sale Volume | | | | | | | | | | | | | | | |
Refinance Volume | $ | 4,234 | | $ | 5,638 | | $ | 4,076 | | $ | 9,872 | | $ | 7,528 | |
Purchase Volume |
| 48,487 | |
| 31,768 | |
| 32,168 | |
| 80,255 | |
| 64,361 | |
Total Mortgage loan originations held for sale | $ | 52,721 | | $ | 37,406 | | $ | 36,244 | | $ | 90,127 | | $ | 71,889 | |
% of originations held for sale that are refinances |
| 8.0 | % |
| 15.1 | % |
| 11.2 | % |
| 11.0 | % |
| 10.5 | % |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Wealth |
|
| |
| | |
| | |
| | |
| | |
Assets under management | $ | 6,487,087 | | $ | 5,258,880 | | $ | 4,774,501 | | $ | 6,487,087 | | $ | 4,774,501 | |
|
| | |
| | |
| | |
| | |
| | |
Other Data | |
| | | | | | | | | | | | | |
End of period full-time employees | | 2,083 | | | 1,745 | | | 1,878 | | | 2,083 | |
| 1,878 | |
Number of full-service branches | | 129 | | | 109 | | | 109 | | | 129 | | | 109 | |
Number of automatic transaction machines (ATMs) | | 149 | | | 123 | | | 123 | | | 149 | | | 123 | |
(1) | These are non-GAAP financial measures. The Company believes net interest income (FTE), total revenue (FTE), and total adjusted revenue (FTE), which are used in computing net interest margin (FTE), efficiency ratio (FTE) and adjusted operating efficiency ratio (FTE), provide valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing the yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components. |
(2) | These are non-GAAP financial measures. Tangible assets and tangible common equity are used in the calculation of certain profitability, capital, and per share ratios. The Company believes tangible assets, tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses. The Company believes tangible common equity is an important indication of its ability to grow organically and through business combinations as well as its ability to pay dividends and to engage in various capital management strategies. |
(3) | These are non-GAAP financial measures. The Company believes that ROTCE is a meaningful supplement to GAAP financial measures and is useful to investors because it measures the performance of a business consistently across time without regard to whether components of the business were acquired or developed internally. |
(4) These are non-GAAP financial measures. Adjusted operating measures exclude, as applicable, merger-related costs, strategic cost saving initiatives (principally composed of severance charges related to headcount reductions and charges for exiting leases), FDIC special assessments, legal reserves associated with our previously disclosed settlement with the CFPB, deferred tax asset write-down, and (loss) gain on sale of securities. The Company believes these non-GAAP adjusted measures provide investors with important information about the continuing economic results of the Company’s operations. |
(5) | All ratios at June 30, 2024 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed. |
(6) | The adjusted operating efficiency ratio (FTE) excludes, as applicable, the amortization of intangible assets, merger-related costs, FDIC special assessments, strategic cost saving initiatives (principally composed of severance charges related to headcount reductions and charges for exiting leases), legal reserves associated with our previously disclosed settlement with the CFPB, and (loss) gain on sale of securities. This measure is similar to the measure used by the Company when analyzing corporate performance and is also similar to the measure used for incentive compensation. The Company believes this adjusted measure provides investors with important information about the continuing economic results of the Company’s operations. |
(7) | These are non-GAAP financial measures. Pre-tax pre-provision adjusted earnings excludes, as applicable, the provision for credit losses, which can fluctuate significantly from period-to-period under the CECL methodology, income tax expense, merger-related costs, strategic cost saving initiatives (principally composed of severance charges related to headcount reductions and charges for exiting leases), FDIC special assessments, legal reserves associated with our previously disclosed settlement with the CFPB, and (loss) gain on sale of securities. The Company believes this adjusted measure provides investors with important information about the continuing economic results of the Company’s operations. |
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
| June 30, | | December 31, | | June 30, | |||
| 2024 |
| 2023 |
| 2023 | |||
ASSETS | | (unaudited) | | | (audited) | | | (unaudited) |
Cash and cash equivalents: | | | | | | | | |
Cash and due from banks | $ | 233,065 | | $ | 196,754 | | $ | 199,778 |
Interest-bearing deposits in other banks | | 207,129 | | | 167,601 | | | 227,015 |
Federal funds sold | | 5,820 | | | 13,776 | | | 1,474 |
Total cash and cash equivalents | | 446,014 | | | 378,131 | | | 428,267 |
Securities available for sale, at fair value | | 2,555,723 | | | 2,231,261 | | | 2,182,448 |
Securities held to maturity, at carrying value | | 810,450 | | | 837,378 | | | 849,610 |
Restricted stock, at cost | | 125,308 | | | 115,472 | | | 111,178 |
Loans held for sale | | 12,906 | | | 6,710 | | | 10,327 |
Loans held for investment, net of deferred fees and costs | | 18,347,190 | | | 15,635,043 | | | 15,066,930 |
Less: allowance for loan and lease losses | | 158,131 | | | 132,182 | | | 120,683 |
Total loans held for investment, net | | 18,189,059 | | | 15,502,861 | | | 14,946,247 |
Premises and equipment, net | | 114,987 | | | 90,959 | | | 114,786 |
Goodwill | | 1,207,484 | | | 925,211 | | | 925,211 |
Amortizable intangibles, net | | 95,980 | | | 19,183 | | | 23,469 |
Bank owned life insurance | | 489,550 | | | 452,565 | | | 446,441 |
Other assets | | 713,952 | | | 606,466 | | | 564,348 |
Total assets | $ | 24,761,413 | | $ | 21,166,197 | | $ | 20,602,332 |
LIABILITIES | | | | | | | | |
Noninterest-bearing demand deposits | $ | 4,527,248 | | $ | 3,963,181 | | $ | 4,310,306 |
Interest-bearing deposits | | 15,473,629 | | | 12,854,948 | | | 12,101,681 |
Total deposits | | 20,000,877 | | | 16,818,129 | | | 16,411,987 |
Securities sold under agreements to repurchase | | 64,585 | | | 110,833 | | | 130,461 |
Other short-term borrowings | | 725,500 | | | 810,000 | | | 799,400 |
Long-term borrowings | | 416,649 | | | 391,025 | | | 390,440 |
Other liabilities | | 510,116 | | | 479,883 | | | 445,574 |
Total liabilities | | 21,717,727 | | | 18,609,870 | | | 18,177,862 |
Commitments and contingencies | | | | | | | | |
STOCKHOLDERS' EQUITY | | | | | | | | |
Preferred stock, $10.00 par value | | 173 | | | 173 | | | 173 |
Common stock, $1.33 par value | | 118,475 | | | 99,147 | | | 99,088 |
Additional paid-in capital | | 2,273,312 | | | 1,782,286 | | | 1,776,494 |
Retained earnings | | 1,034,313 | | | 1,018,070 | | | 959,582 |
Accumulated other comprehensive loss | | (382,587) | | | (343,349) | | | (410,867) |
Total stockholders' equity | | 3,043,686 | | | 2,556,327 | | | 2,424,470 |
Total liabilities and stockholders' equity | $ | 24,761,413 | | $ | 21,166,197 | | $ | 20,602,332 |
| | | | | | | | |
Common shares outstanding | | 89,769,734 | | | 75,023,327 | | | 74,998,075 |
Common shares authorized | | 200,000,000 | | | 200,000,000 | | | 200,000,000 |
Preferred shares outstanding | | 17,250 | | | 17,250 | | | 17,250 |
Preferred shares authorized | | 500,000 | | | 500,000 | | | 500,000 |
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except share data)
| Three Months Ended | | Six Months Ended | |||||||||||
| June 30, | | March 31, | | June 30, | | June 30, | | June 30, | |||||
| 2024 | | 2024 |
| 2023 |
| 2024 | | 2023 | |||||
Interest and dividend income: | | | | | | | | | | | | | | |
Interest and fees on loans | $ | 285,198 | | $ | 234,600 | | $ | 205,172 | | $ | 519,796 | | $ | 395,165 |
Interest on deposits in other banks | | 2,637 | | | 1,280 | | | 1,014 | | | 3,918 | | | 2,507 |
Interest and dividends on securities: | | | | | | | | | | | | | | |
Taxable | | 24,886 | | | 18,879 | | | 15,565 | | | 43,765 | | | 32,317 |
Nontaxable | | 8,167 | | | 8,156 | | | 8,496 | | | 16,323 | | | 17,804 |
Total interest and dividend income | | 320,888 | | | 262,915 | | | 230,247 | | | 583,802 | | | 447,793 |
Interest expense: | | | | | | | | | | | | | | |
Interest on deposits | | 122,504 | | | 101,864 | | | 65,267 | | | 224,368 | | | 117,100 |
Interest on short-term borrowings | | 8,190 | | | 8,161 | | | 8,044 | | | 16,351 | | | 15,607 |
Interest on long-term borrowings | | 5,660 | | | 5,065 | | | 4,852 | | | 10,725 | | | 9,558 |
Total interest expense | | 136,354 | | | 115,090 | | | 78,163 | | | 251,444 | | | 142,265 |
Net interest income | | 184,534 | | | 147,825 | | | 152,084 | | | 332,358 | | | 305,528 |
Provision for credit losses | | 21,751 | | | 8,239 | | | 6,069 | | | 29,989 | | | 17,920 |
Net interest income after provision for credit losses | | 162,783 | | | 139,586 | | | 146,015 | | | 302,369 | | | 287,608 |
Noninterest income: | | | | | | | | | | | | | | |
Service charges on deposit accounts | | 9,086 | | | 8,569 | | | 8,118 | | | 17,655 | | | 16,020 |
Other service charges, commissions and fees | | 1,967 | | | 1,731 | | | 1,693 | | | 3,698 | | | 3,439 |
Interchange fees | | 3,126 | | | 2,294 | | | 2,459 | | | 5,420 | | | 4,784 |
Fiduciary and asset management fees | | 6,907 | | | 4,838 | | | 4,359 | | | 11,745 | | | 8,620 |
Mortgage banking income | | 1,193 | | | 867 | | | 449 | | | 2,060 | | | 1,303 |
(Loss) gain on sale of securities | | (6,516) | | | 3 | | | 2 | | | (6,513) | | | (13,398) |
Bank owned life insurance income | | 3,791 | | | 3,245 | | | 2,870 | | | 7,037 | | | 5,698 |
Loan-related interest rate swap fees | | 1,634 | | | 1,216 | | | 2,316 | | | 2,850 | | | 3,755 |
Other operating income | | 2,624 | | | 2,789 | | | 1,931 | | | 5,413 | | | 3,603 |
Total noninterest income | | 23,812 | | | 25,552 | | | 24,197 | | | 49,365 | | | 33,824 |
Noninterest expenses: | | | | | | | | | | | | | | |
Salaries and benefits | | 68,531 | | | 61,882 | | | 62,019 | | | 130,413 | | | 122,547 |
Occupancy expenses | | 7,836 | | | 6,625 | | | 6,094 | | | 14,462 | | | 12,450 |
Furniture and equipment expenses | | 3,805 | | | 3,309 | | | 3,565 | | | 7,114 | | | 7,317 |
Technology and data processing | | 10,274 | | | 8,127 | | | 8,566 | | | 18,401 | | | 16,708 |
Professional services | | 4,377 | | | 3,081 | | | 4,433 | | | 7,458 | | | 7,847 |
Marketing and advertising expense | | 2,983 | | | 2,318 | | | 2,817 | | | 5,301 | | | 5,168 |
FDIC assessment premiums and other insurance | | 4,675 | | | 5,143 | | | 4,074 | | | 9,818 | | | 7,973 |
Franchise and other taxes | | 5,013 | | | 4,501 | | | 4,499 | | | 9,514 | | | 8,997 |
Loan-related expenses | | 1,275 | | | 1,323 | | | 1,619 | | | 2,598 | | | 3,171 |
Amortization of intangible assets | | 5,995 | | | 1,895 | | | 2,216 | | | 7,889 | | | 4,494 |
Merger-related costs | | 29,778 | | | 1,874 | | | — | | | 31,652 | | | — |
Other expenses | | 5,463 | | | 5,195 | | | 5,759 | | | 10,659 | | | 17,262 |
Total noninterest expenses | | 150,005 | | | 105,273 | | | 105,661 | | | 255,279 | | | 213,934 |
Income before income taxes | | 36,590 | | | 59,865 | | | 64,551 | | | 96,455 | | | 107,498 |
Income tax expense | | 11,429 | | | 10,096 | | | 9,310 | | | 21,525 | | | 16,604 |
Net Income | $ | 25,161 | | $ | 49,769 | | $ | 55,241 | | $ | 74,930 | | $ | 90,894 |
Dividends on preferred stock | | 2,967 | | | 2,967 | | | 2,967 | | | 5,934 | | | 5,934 |
Net income available to common shareholders | $ | 22,194 | | $ | 46,802 | | $ | 52,274 | | $ | 68,996 | | $ | 84,960 |
| | | | | | | | | | | | | | |
Basic earnings per common share | $ | 0.25 | | $ | 0.62 | | $ | 0.70 | | $ | 0.84 | | $ | 1.13 |
Diluted earnings per common share | $ | 0.25 | | $ | 0.62 | | $ | 0.70 | | $ | 0.84 | | $ | 1.13 |
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) (UNAUDITED)
(Dollars in thousands)
| For the Quarter Ended | ||||||||||||||
| June 30, 2024 | | March 31, 2024 | ||||||||||||
| Average |
| Interest |
| Yield / |
| Average |
| Interest |
| Yield / | ||||
Assets: |
| | | | | | | | | | | | |
| |
Securities: |
| | | | | | | | | | | | |
| |
Taxable | $ | 2,221,486 | | $ | 24,886 | | 4.51% | | $ | 1,895,820 | | $ | 18,879 | | 4.01% |
Tax-exempt | | 1,255,404 | | | 10,338 | | 3.31% | | | 1,257,736 | | | 10,324 | | 3.30% |
Total securities | | 3,476,890 | | | 35,224 | | 4.07% | | | 3,153,556 | | | 29,203 | | 3.72% |
LHFI, net of deferred fees and costs (3)(4) | | 18,154,673 | | | 286,391 | | 6.34% | | | 15,732,599 | | | 235,832 | | 6.03% |
Other earning assets | | 293,565 | | | 3,087 | | 4.23% | | | 203,238 | | | 1,601 | | 3.17% |
Total earning assets | | 21,925,128 | | $ | 324,702 | | 5.96% | | | 19,089,393 | | $ | 266,636 | | 5.62% |
Allowance for loan and lease losses | | (157,204) | | | | | | | | (133,090) | | | | | |
Total non-earning assets | | 2,852,274 | | | | | | | | 2,266,453 | | | | | |
Total assets | $ | 24,620,198 | | | | | | | $ | 21,222,756 | | | | | |
| | | | | | | | | | | | | | | |
Liabilities and Stockholders' Equity: | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | |
Transaction and money market accounts | $ | 10,117,794 | | $ | 74,833 | | 2.97% | | $ | 8,952,119 | | $ | 65,254 | | 2.93% |
Regular savings | | 1,076,411 | | | 555 | | 0.21% | | | 900,580 | | | 501 | | 0.22% |
Time deposits (5) | | 4,243,344 | | | 47,116 | | 4.47% | | | 3,459,138 | | | 36,109 | | 4.20% |
Total interest-bearing deposits | | 15,437,549 | | | 122,504 | | 3.19% | | | 13,311,837 | | | 101,864 | | 3.08% |
Other borrowings (6) | | 1,043,297 | | | 13,850 | | 5.34% | | | 1,012,797 | | | 13,226 | | 5.25% |
Total interest-bearing liabilities | $ | 16,480,846 | | $ | 136,354 | | 3.33% | | $ | 14,324,634 | | $ | 115,090 | | 3.23% |
| | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | |
Demand deposits | | 4,596,129 | | | | | | | | 3,835,344 | | | | | |
Other liabilities | | 521,294 | | | | | | | | 494,535 | | | | | |
Total liabilities | | 21,598,269 | | | | | | | | 18,654,513 | | | | | |
Stockholders' equity | | 3,021,929 | | | | | | | | 2,568,243 | | | | | |
Total liabilities and stockholders' equity | $ | 24,620,198 | | | | | | | $ | 21,222,756 | | | | | |
| | | | | | | | | | | | | | | |
Net interest income (FTE) | | | | $ | 188,348 | | | | | | | $ | 151,546 | | |
| | | | | | | | | | | | | | | |
Interest rate spread | | | | | | | 2.63% | | | | | | | | 2.39% |
Cost of funds | | | | | | | 2.50% | | | | | | | | 2.43% |
Net interest margin (FTE) | | | | | | | 3.46% | | | | | | | | 3.19% |
(1) | Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%. |
(2) | Rates and yields are annualized and calculated from rounded amounts in thousands, which appear above. |
(3) | Nonaccrual loans are included in average loans outstanding. |
(4) | Interest income on loans includes $15.7 million and $819,000 for the three months ended June 30, 2024 and March 31, 2024, respectively, in accretion of the fair market value adjustments related to acquisitions. |
(5) | Interest expense on time deposits includes $1.0 million and $1,000 for the three months ended June 30, 2024 and March 31, 2024, respectively, in accretion of the fair market value adjustments related to acquisitions. |
(6) | Interest expense on borrowings includes $285,000 and $216,000 for the three months ended June 30, 2024 and March 31, 2024, respectively, in amortization of the fair market value adjustments related to acquisitions. |
2 nd Quarter 2024 Earnings Presentation NYSE: AUB July 25, 2024 |
2 Forward Looking Statements This presentation and statements by our management may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, statements on slides entitled “Q2 2024 Highlights,“ “Loan and Deposit Trends,” and “2024 Financial Outlook,” statements regarding our expectations with regard to the benefits of the American National Bankshares Inc. ("American National") acquisition, our business, financial and operating results, including our deposit base and funding, the impact of future economic conditions, changes in economic conditions, our asset quality, our customer relationships, and statements that include other projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” “continue,” “confidence,” or words of similar meaning or other statements concerning opinions or judgment of the Company and our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in: • market interest rates and their related impacts on macroeconomic conditions, customer and client behavior, our funding costs and our loan and securities portfolios; • inflation and its impacts on economic growth and customer and client behavior; • adverse developments in the financial industry generally, such as bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; • the sufficiency of liquidity and changes in our capital position; • general economic and financial market conditions, in the United States generally and particularly in the markets in which we operate and which our loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth; • the impact of purchase accounting with respect to our acquisition of American National, or any change in the assumptions used regarding the assets acquired and liabilities assumed to determine the fair value and credit marks; • the possibility that the anticipated benefits of the American National acquisition, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the recent integration of the two companies or as a result of the strength of the economy, competitive factors in the areas where we do business, or as a result of other unexpected factors or events; • potential adverse reactions or changes to business or employee relationships, including those resulting from the American National acquisition; • monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve; • the quality or composition of our loan or investment portfolios and changes therein; • demand for loan products and financial services in our market areas; • our ability to manage our growth or implement our growth strategy; • the effectiveness of expense reduction plans; • the introduction of new lines of business or new products and services; • our ability to recruit and retain key employees; • real estate values in our lending area; • changes in accounting principles, standards, rules, and interpretations, and the related impact on our financial statements; • an insufficient ACL or volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by changing economic conditions, credit concentrations, inflation, changing interest rates, or other factors; • concentrations of loans secured by real estate, particularly commercial real estate; • the effectiveness of our credit processes and management of our credit risk; • our ability to compete in the market for financial services and increased competition from fintech companies; • technological risks and developments, and cyber threats, attacks, or events; • operational, technological, cultural, regulatory, legal, credit, and other risks associated with the exploration, consummation and integration of potential future acquisitions, whether involving stock or cash considerations; • the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as pandemics), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of our borrowers to satisfy their obligations to us, on the value of collateral securing loans, on the demand for our loans or our other products and services, on supply chains and methods used to distribute products and services, on incidents of cyberattack and fraud, on our liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of our business operations and on financial markets and economic growth; • performance by our counterparties or vendors; • deposit flows; • the availability of financing and the terms thereof; • the level of prepayments on loans and mortgage-backed securities; • the effects of legislative or regulatory changes and requirements, including changes in federal, state or local tax laws; • actual or potential claims, damages, and fines related to litigation or government actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences; • any event or development that would cause us to conclude that there was an impairment of any asset, including intangible assets, such as goodwill; and • other factors, many of which are beyond our control. Please also refer to such other factors as discussed throughout Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, and related disclosures in other filings, which have been filed with the U.S. Securities and Exchange Commission (“SEC”) and are available on the SEC’s website at www.sec.gov. All risk factors and uncertainties described herein and therein should be considered in evaluating forward-looking statements, and all of the forward-looking statements are expressly qualified by the cautionary statements contained or referred to herein and therein. 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 the Company or our businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not intend or assume any obligation to update, revise or clarify any forward-looking statements that may be made from time to time by or on behalf of the Company, whether as a result of new information, future events or otherwise, except as required by law. |
3 Additional Information Non-GAAP Financial Measures This presentation contains certain financial information determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. The Company uses the non-GAAP financial measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods, show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance, or show the potential effects of accumulated other comprehensive income (or AOCI) or unrealized losses on securities on the Company's capital. This presentation also includes certain projections of non-GAAP financial measures. Due to the inherent variability and difficulty associated with making accurate forecasts and projections of information that is excluded from these projected non-GAAP measures, and the fact that some of the excluded information is not currently ascertainable or accessible, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable projected GAAP financial measures without unreasonable effort. Consequently, no disclosure of projected comparable GAAP measures is included, and no reconciliation of forward-looking non-GAAP financial information is included. Please see “Reconciliation of Non-GAAP Disclosures” at the end of this presentation for a reconciliation to the nearest GAAP financial measure. No Offer or Solicitation This presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful. About Atlantic Union Bankshares Corporation Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank had 129 branches and approximately 150 ATMs located throughout Virginia and in portions of Maryland and North Carolina as of June 30, 2024. Certain non-bank financial services affiliates of Atlantic Union Bank include: Atlantic Union Equipment Finance, Inc., which provides equipment financing; Atlantic Union Financial Consultants, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products. |
4 Largest Regional Banking Company Headquartered in Virginia Our Company Soundness | Profitability | Growth *Data as of 6/30/2024, market capitalization as of 7/24/2024 1) Regional bank defined as having less than $100 billion in assets; rank determined by asset size; data per S&P Global Market Intelligence as of June 30, 2023 Highlights ($bn) • 129 branches across Virginia, North Carolina and Maryland footprint • #1 regional bank1 deposit market share in Virginia • Strong balance sheet and capital levels • Committed to top-tier financial performance with a highly experienced management team able to execute change 4 $24.8 Assets $18.3 Loans $20.0 Deposits $3.6 Market Capitalization Branch/Office Footprint |
5 Our Shareholder Value Proposition Leading Regional Presence Dense, uniquely valuable presence across attractive markets Financial Strength Solid balance sheet & capital levels Attractive Financial Profile Solid dividend yield & payout ratio with earnings upside Strong Growth Potential Organic & acquisition opportunities Peer-Leading Performance Committed to top-tier financial performance |
6 Q2 2024 Highlights Loan and Deposit Growth • Pro forma loan growth, as if the American National balances were included as of March 31, 2024, was 3.9% annualized in Q2 2024 from Q1 2024, inclusive of the fair value marks on American National loans • Pro forma deposit growth, as if the American National balances were included as of March 31, 2024, was 2.8% annualized in Q2 2024 from Q1 2024 Asset Quality • Q2 2024 net charge-offs at 4 bps annualized • Nonperforming assets consistent with last two quarters Positioning for Long Term • Lending pipelines positioned for mid-single digit annualized loan growth in second half of 2024 • Granular growing deposit base • Focus on organic growth and performance of the core banking franchise Differentiated Client Experience • Responsive, strong and capable alternative to large national banks, while competitive with and more capable than smaller banks Focus on Integration • Core Systems integration completed over Memorial Day weekend 2024 • For the month after integration, we more than doubled new account opening averages in converted American National branches compared to the prior 8 weeks • Experienced integration team with our third integration of a $3 billion bank in 6 years Capitalize on Strategic Opportunities • Closed acquisition of American National Bankshares Inc. on April 1, 2024 • Selectively adding commercial bankers in North Carolina 6 |
7 Q2 2024 Financial Performance At-a-Glance 1For non-GAAP financial measures, see reconciliation to most directly comparable GAAP measures in “Appendix – Reconciliation of Non-GAAP Disclosures” Note: all tables presented dollars in thousands, except per share amounts • Reported net income available to common shareholders for the second quarter of 2024 was $22.2 million or $0.25 per share, down $24.6 million or $0.37 per share compared to the prior quarter, primarily driven by the net impact of the following items: • An increase in net interest income, primarily driven by a $2.8 billion increase in average interest earning assets, partially offset by a $2.2 billion increase in average interest bearing liabilities, in each case primarily related to the American National acquisition; • An increase in noninterest expense, primarily driven by a $27.9 million increase in merger-related expenses, as well as other increases in noninterest expense due to the full quarter impact of the American National acquisition; • An increase in the provision for credit losses, due primarily to the American National acquisition, which included an initial provision expense of $13.2 million on non-PCD loans, which represents the CECL "double count" of the non-PCD credit mark, and $1.4 million on unfunded commitments; • A decrease in noninterest income, primarily driven by $6.5 million of pre-tax losses incurred on the sale of available for sale (“AFS”) securities as part of the Company’s restructure of the American National securities portfolio, partially offset by increases in noninterest income due to the full quarter impact of the American National acquisition; • An increase in income tax expense, primarily the result of a $4.8 million tax valuation allowance recorded for the second quarter of 2024. • Adjusted operating earnings available to common shareholders1 increased $7.3 million to $56.4 million at June 30, 2024 compared to the prior quarter, primarily driven by the net impact of the following items: • An increase in net interest income as described above; • An increase in adjusted operating noninterest expense1 , primarily due to the impact of the American National acquisition, which drove the majority of the increases in salaries and benefits, technology and data processing, occupancy expenses, and franchise and other taxes. In addition to the acquisition impact, professional services and marketing and advertising expense increased compared to the prior quarter; • An increase in the provision for credit losses, due primarily to the American National acquisition as described above; • An increase in adjusted operating noninterest income1 , primarily due to the impact of the American National acquisition, which drove the majority of the increases in fiduciary and asset management fees interchange fees, service charges on deposit accounts, loan-related interest rate swap fees, and other service charges, commissions, and fees. In addition to the acquisition impact, BOLI income and mortgage banking income increased compared to the prior quarter. 2Q2024 1Q2024 Net Income available to common shareholders $ 22,194 $ 46,802 Common EPS, diluted $ 0.25 $ 0.62 ROE 3.35% 7.79% ROTCE (non-GAAP)1 6.99% 13.32% ROA 0.41% 0.94% Efficiency ratio 72.00% 60.72% Efficiency ratio (FTE)1 70.70% 59.44% Net interest margin 3.39% 3.11% Net interest margin (FTE)1 3.46% 3.19% Earnings Metrics 2Q2024 1Q2024 Net interest income $ 184,534 $ 147,825 - Provision for credit losses 21,751 8,239 + Noninterest income 23,812 25,552 - Noninterest expense 150,005 105,273 - Taxes 11,429 10,096 Net income (GAAP) $ 25,161 $ 49,769 - Dividends on preferred stock 2,967 2,967 Net income available to common shareholders (GAAP) $ 22,194 $ 46,802 + Merger-related costs, net of tax 24,236 1,563 + FDIC special assessment, net of tax — 664 + Deferred tax asset write-down 4,774 — - (Loss) gain on sale of securities, net of tax (5,148) 2 Adjusted operating earnings available to common shareholders (non-GAAP)1 $ 56,352 $ 49,027 Summarized Income Statement 2Q2024 1Q2024 Adjusted operating earnings available to common shareholders $ 56,352 $ 49,027 Adjusted operating common EPS, diluted $ 0.63 $ 0.65 Adjusted operating ROA 0.97% 0.99% Adjusted operating ROTCE 15.85% 13.93% Adjusted operating efficiency ratio (FTE) 52.24% 56.84% Adjusted operating earnings PTPP $ 94,635 $ 70,815 PTPP = Pre-tax Pre-provision Adjusted Operating Earnings Metrics - non-GAAP1 |
8 Q2 2024 Allowance For Credit Losses (ACL) and Provision for Credit Losses Q2 Macroeconomic Forecast Q2 ACL Considerations Numbers may not foot due to rounding. Moody’s June 2024 Baseline Forecast: • US GDP expected to average ~2.4% growth in 2024 and ~1.8% in 2025. • The national unemployment rate expected to average ~4.0% in 2024 and ~4.1% in 2025. • Utilizes a weighted Moody’s forecast economic scenarios approach in the quantitative model. • Qualitative factors were added for certain portfolios and other factors as deemed appropriate. • The reasonable and supportable forecast period is 2 years; followed by reversion to the historical loss average over 2 years. Allowance for Loan & Lease Losses (ALLL) Reserve for Unfunded Commitments (RUC) Allowance for Credit Losses 12/31/2023 Ending Balance % of loans $132.2MM (0.85%) $16.3MM (0.10%) $148.5MM (0.95%) Q1 2024 Activity +$4.0MM Increase due to loan growth and the impact of continued uncertainty in the economic outlook on certain portfolios. -$0.7MM Slight decrease from prior quarter due to a decline in unfunded balances. +$3.3MM $8.2 million Provision for Credit Losses and $4.9 million net charge-offs 03/31/2024 Ending Balance % of loans $136.2MM (0.86%) $15.6MM (0.10%) $151.8MM (0.96%) American National Initial Allowance - Non-PCD recorded via provision expense +$13.2MM +$1.4MM +14.6MM Provision for credit losses American National Initial Allowance - PCD recorded via PCD gross up of ALLL +3.9MM ─ +3.9MM Q2 2024 Activity +$4.8MM Increase due to loan growth and the impact of continued uncertainty in the economic outlook on certain portfolios. +$0.6MM Slight increase from last quarter due to increase in unfunded balances. +$5.4MM $7.2 million Provision for Credit Losses and $1.7 million net charge-offs 06/30/2024 Ending Balance % of loans $158.1MM (0.86%) $17.6MM (0.10%) $175.7MM (0.96%) |
9 Q2 2024 Net Interest Margin Market Rates 2Q 2024 1Q 2024 EOP Avg EOP Avg Fed funds 5.50% 5.50% 5.50% 5.50% Prime 8.50% 8.50% 8.50% 8.50% 1-month SOFR 5.34% 5.33% 5.33% 5.33% 2-year Treasury 4.75% 4.83% 4.62% 4.48% 10- year Treasury 4.40% 4.44% 4.20% 4.14% Margin Overview 2Q 2024 1Q 2024 Net interest margin (FTE)1 3.46% 3.19% Loan yield 6.34% 6.03% Investment yield 4.07% 3.72% Earning asset yield 5.96% 5.62% Cost of deposits 2.46% 2.39% Cost of interest-bearing deposits 3.19% 3.08% Cost of interest-bearing liabilities 3.33% 3.23% Cost of funds 2.50% 2.43% Presented on an FTE basis (non-GAAP)1 Approximately 32% of the variable rate loan portfolio at 6/30/2024 have floors and all are above floors Loan Portfolio Pricing Mix 2Q 2024 Fixed 51% 1-month SOFR 39% Prime 7% Other 4% Total 100% 1 For non-GAAP financial measures, see reconciliation to most directly comparable GAAP measures in “Appendix – Reconciliation of Non-GAAP Disclosures” Numbers may not foot due to rounding 3.19% 2 bps -6 bps 5 bps 3.19% 26 bps 3.46% |
10 Adjusted operating noninterest expense1 increased $13.5 million to $114.2 million for the quarter ended June 30, 2024 from $100.7 million in the prior quarter primarily due to: • The impact of the American National acquisition, which drove the majority of the: • $6.6 million increase in salaries and benefits • $1.2 million increase in occupancy expenses • $2.1 million increase in technology and data processing • $512,000 increase in franchise and other taxes • In addition to the acquisition impact, • Professional services increased $1.3 million due to fees associated with various strategic projects • Marketing and advertising expense increased $665,000 Adjusted operating noninterest income1 increased $4.8 million to $30.3 million for the quarter ended June 30, 2024 from $25.5 million in the prior quarter primarily due to: • The impact of the American National acquisition, which drove the majority of the: • $517,000 increase in service charges on deposit accounts • $236,000 increase in other service charges, commissions and fees • $832,000 increase in interchange fees • $2.1 million increase in fiduciary and asset management fees • $418,000 increase in loan-related interest rate swap fees • In addition to the acquisition impact, • BOLI income increased $546,000 primarily driven by a death benefit received in the second quarter • Mortgage banking income increased $326,000 Q2 2024 Noninterest Income and Noninterest Expense 1For non-GAAP financial measures, see reconciliation to most directly comparable GAAP measures in “Appendix – Reconciliation of Non-GAAP Disclosures” 2 Included within FDIC assessment premiums and other insurance Noninterest Expense ($ thousands) 2Q2024 1Q2024 Salaries and benefits $ 68,531 $ 61,882 Occupancy expenses 7,836 6,625 Furniture and equipment expenses 3,805 3,309 Technology and data processing 10,274 8,127 Professional services 4,377 3,081 Marketing and advertising expense 2,983 2,318 FDIC assessment premiums and other insurance 4,675 5,143 Franchise and other taxes 5,013 4,501 Loan-related expenses 1,275 1,323 Amortization of intangible assets 5,995 1,895 Merger-related costs 29,778 1,874 Other expenses 5,463 5,195 Total noninterest expenses $ 150,005 $ 105,273 Less: Amortization of intangible assets 5,995 1,895 Less: Merger-related costs 29,778 1,874 Less: FDIC special assessment2 — 840 Total adjusted operating noninterest expense (non-GAAP)1 $ 114,232 $ 100,664 Noninterest Income ($ thousands) 2Q2024 1Q2024 Service charges on deposit accounts $ 9,086 $ 8,569 Other service charges, commissions and fees 1,967 1,731 Interchange fees 3,126 2,294 Fiduciary and asset management fees 6,907 4,838 Mortgage banking income 1,193 867 (Loss) gain on sale of securities (6,516) 3 Bank owned life insurance income 3,791 3,245 Loan-related interest rate swap fees 1,634 1,216 Other operating income 2,624 2,789 Total noninterest income $ 23,812 $ 25,552 Less: (Loss) gain on sale of securities (6,516) 3 Total adjusted operating noninterest income (non-GAAP)1 $ 30,328 $ 25,549 |
11 Q2 2024 Loan and Deposit Growth • At June 30, 2024, LHFI totaled $18.3 billion, an increase of $2.5 billion from the prior quarter, primarily driven by the impact of the American National acquisition, as well as organic loan growth. • At June 30, 2024, total deposits were $20.0 billion, an increase of $2.7 billion from the prior quarter, primarily due to increases in interest bearing customer deposits and demand deposits, primarily related to the addition of the American National acquired deposits, as well as increases in brokered deposits. In addition: • Noninterest-bearing demand deposits accounted for 23% of total deposit balances at the end of the second quarter of 2024, up from 22% in the prior quarter. • Interest checking accounts included approximately $1.1 billion of fully insured cash sweep (“ICS”) deposits. • The cost of deposits increased by 7 basis points compared to the prior quarter, reflective of changes in deposit mix as depositors continued to move to higher yielding deposit products. Loan Growth ($ thousands) 2Q2024 1Q2024 QTD Annualized Growth Commercial real estate - non-owner occupied $ 4,906,285 $ 4,225,018 64.9% Commercial real estate - owner occupied 2,397,700 1,981,613 84.5% Construction and land development 1,454,545 1,246,251 67.2% Multifamily real estate 1,353,024 1,074,957 104.0% Residential 1-4 Family - Commercial 737,687 515,667 173.2% Total Commercial Real Estate (CRE) 10,849,241 9,043,506 80.3% Commercial & Industrial 3,944,723 3,561,971 43.2% Other Commercial 1,071,385 994,574 31.1% Total Commercial & Industrial 5,016,108 4,556,545 40.6% Total Commercial Loans 15,865,349 13,600,051 67.0% Residential 1-4 Family - Consumer 1,251,033 1,081,094 63.2% Residential 1-4 Family - Revolving 718,491 616,951 66.2% Auto 396,776 440,118 (39.6%) Consumer 115,541 113,414 7.5% Total Consumer Loans 2,481,841 2,251,577 41.1% Total LHFI (net of deferred fees and costs) $ 18,347,190 $ 15,851,628 63.3% Average Loan Yield 6.34% 6.03% Deposit Growth ($ thousands) 2Q2024 1Q2024 QTD Annualized Growth Interest checking accounts $ 5,044,503 $ 4,753,485 24.6% Money market accounts 4,330,928 4,104,282 22.2% Savings accounts 1,056,474 895,213 72.5% Customer time deposits of $250,000 and over 1,015,032 721,155 163.9% Other customer time deposits 2,691,600 2,293,800 69.8% Time deposits 3,706,632 3,014,955 92.3% Total interest-bearing customer deposits 14,138,537 12,767,935 43.2% Brokered deposits 1,335,092 665,309 404.9% Total interest-bearing deposits 15,473,629 13,433,244 61.1% Demand deposits 4,527,248 3,845,191 71.3% Total Deposits $ 20,000,877 $ 17,278,435 63.4% Average Cost of Deposits 2.46% 2.39% Loan to Deposit Ratio 91.7% 91.7% |
12 Capital Ratio Regulatory Well Capitalized Minimums Atlantic Union Bankshares Atlantic Union Bank Atlantic Union Bankshares Atlantic Union Bank Common Equity Tier 1 Ratio (CET1) 6.5% 9.5% 11.9% 7.6% 10.1% Tier 1 Capital Ratio 8.0% 10.3% 11.9% 8.4% 10.1% Total Risk Based Capital Ratio 10.0% 13.0% 12.7% 11.2% 10.9% Leverage Ratio 5.0% 9.1% 10.5% 7.3% 8.7% Tangible Equity to Tangible Assets (non-GAAP)1 - 7.4% 8.9% 7.2% 8.7% Tangible Common Equity Ratio (non-GAAP) 1 - 6.7% 8.9% 6.5% 8.7% Strong Capital Position at June 30, 2024 1) For non-GAAP financial measures, see reconciliation to most directly comparable GAAP measures in “Appendix – Reconciliation of Non-GAAP Disclosures” *Capital information presented herein is based on estimates and subject to change pending the Company’s filing of its regulatory reports Capital Management Strategy Atlantic Union capital management objectives are to: • Maintain designation as a “well capitalized” institution. • Ensure capital levels are commensurate with the Company’s risk profile, capital stress test projections, and strategic plan objectives. The Company’s capital ratios are well above regulatory well capitalized levels as of June 30, 2024 • On a proforma basis, the Company would be well capitalized if unrealized losses on securities were realized at June 30, 2024. Capital Management Actions • During the second quarter of 2024, the Company paid dividends of $171.88 per outstanding share of Series A Preferred Stock and $0.32 per common share. The common dividend is 6.7% higher than the prior year’s dividend and consistent with the prior quarter’s dividend. Reported Proforma including AOCI and HTM unrealized losses |
13 2024 Financial Outlook1 1Key Assumptions • 2024 outlook includes nine months impact of American National in results • The outlook includes estimates of merger-related purchase accounting adjustments that are subject to change • Remain on track for cost saving target of 40% of American National non-interest expense, expected to be fully recognized beginning 4Q24 • The Federal Reserve Bank cuts the fed funds rate by 25 bps two times beginning in September 2024 • Increased likelihood of soft landing and expect relatively stable economy in AUB’s Virginia footprint in 2024 • Expect Virginia unemployment rate to remain low and below national unemployment rate in 2024 Full Year 2024 Outlook 1 Notes1 Loans (end of period) ~$18.5 - $19.0B Deposits (end of period) ~$20.0 - $20.5B Credit Outlook ACL to loans: ~95 – 100 bps Net charge-off ratio: 10 – 15 bps Net Interest Income (FTE) 2,3 ~$730 - $740MM Targeting ~$195 to $200 million for 4Q24 Net Interest Margin (FTE) 2,3 ~3.40% - 3.50% Targeting ~3.55% - 3.60% for 4Q24 Adjusted Operating Noninterest Income2 ~$115 - $120MM Targeting ~$30-35 million for 4Q24 Adjusted Operating Noninterest Expense 2 (excludes amortization of intangible assets) ~$445 - $450MM Targeting ~$110 - $115MM for 4Q24 reflecting cost-savings and synergies related to the American National merger Amortization of intangible assets ~$20MM Estimated at ~$5 - $7MM for 4Q24 1) Information on this slide is presented as of July 25, 2024, reflects the Company’s updated financial outlook, certain of the Company’s financial targets, and key economic assumptions, and will not be updated or affirmed unless and until the Company publicly announces such an update or affirmation. The adjusted operating noninterest expense outlook excludes amortization of intangible assets, merger-related costs, and FDIC special assessments, and the adjusted operating noninterest income outlook excludes gains and losses on the sale of securities. The FY 2024 financial outlook, the Company’s financial targets and the key economic assumptions contain forward-looking statements and actual results or conditions may differ materially. See the information set forth below the heading “Forward Looking Statements” on slide 2 of this presentation. 2) Refer to “Additional Information” slide and Appendix for non-GAAP disclosures. 3) Includes estimates of accretion income from the American National acquisition which are subject to change. |
14 Appendix |
15 Commercial Real Estate (“CRE”) portfolio at June 30, 2024 Figures may not foot due to rounding CRE by class $ in millions Total Outstandings % of Portfolio Hotel/Motel B&B $962 5.3% Industrial/Warehouse $842 4.6% Office $886 4.8% Retail $1,052 5.7% Self Storage $424 2.3% Senior Living $371 2.0% Other $369 2.0% Total Non-Owner Occupied CRE $4,906 26.7% Owner Occupied CRE $2,398 13.1% Construction and Land Development $1,455 7.9% Multifamily Real Estate $1,353 7.4% Residential 1-4 Family - Commercial $738 4.0% Total CRE $10,849 59.1% |
16 Other Office 77.0% Medical Office 23.0% Medical vs Other Office By Market ($ millions) Key Portfolio Metrics Carolinas $311 Western VA $137 Fredericksburg Area $116 Central VA $100 Coastal VA $68 Northern VA/Maryland $65 Eastern VA $47 Other $42 Total $886 Avg. Office Loan ($ thousands) $1,634 Median Office Loan ($ thousands) $523 Loan Loss Reserve / Office Loans 2.77% NCOs / Office Loans1 0.10% Delinquencies / Office Loans 0.58% NPL / Office Loans 0.39% Criticized Loans / Office Loans 9.12% Non-Owner Occupied Office CRE Portfolio at June 30, 2024 $886MM Non-Owner Occupied Office Portfolio Non-Owner Occupied Office Portfolio Credit Quality Geographically Diverse Non-Owner Occupied Office Portfolio 1Trailing 4 Quarters Avg NCO/Trailing 4 Quarter Avg Office Portfolio |
17 By Market ($ millions) Key Portfolio Metrics Carolinas $415 Central VA $285 Western VA $247 Coastal VA $153 Eastern VA $129 Fredericksburg Area $93 Northern VA/Maryland $29 Other $2 Total $1,353 Multifamily CRE Portfolio at June 30, 2024 Multifamily Portfolio Credit Quality Geographically Diverse Multifamily Portfolio 1Trailing 4 Quarters Avg NCO/Trailing 4 Quarter Avg Multifamily Portfolio Avg. Multifamily Loan ($ thousands) $2,632 Median Multifamily Loan ($ thousands) $605 Loan Loss Reserve / Multifamily Loans 0.44% NCOs / Multifamily Loans1 0.00% Delinquencies / Multifamily Loans 0.18% NPL / Multifamily Loans 0.00% Criticized Loans / Multifamily Loans 1.23% |
18 Granular Deposit Base 26% 27% 29% 29% 27% $4,343 $4,492 $4,922 $5,094 $5,375 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Period End Uninsured and Uncollateralized Deposits as a Percentage of Total Deposits ($ in Millions) $18,000 $19,000 $20,000 $98,000 $100,000 $89,000 Q2 2023 Q1 2024 Q2 2024 Customer Deposit Granularity Retail Avg. Deposits Acct Size Business Avg. Deposits Acct Size |
19 Cash and Cash Equivalents (unrestricted) $487 Unencumbered Securities $1,118 FHLB Borrowing Capacity $1,715 Fed Funds Lines $592 Discount Window $1,101 Secondary Sources* $1,055 ($ in millions) Liquidity Position at June 30, 2024 Total Liquidity Sources of $6.1 billion ~113% liquidity coverage ratio of uninsured/uncollateralized deposits of $5.4 billion * Includes brokered deposits and other sources of liquidity Figures may not foot due to rounding Liquidity Sources Total $6.1 billion |
20 Securities Portfolio at June 30, 2024 • Total securities portfolio of $3.4 billion with a total unrealized loss of $464.7 million • 79% of total portfolio in available-for-sale at an unrealized loss of $420.7 million • 21% of total portfolio designated as held-to-maturity with an unrealized loss of $44.0 million • Total effective duration of 4.9 years. Securities portfolio is used defensively to neutralize overall asset sensitive interest rate risk profile • ~34% municipals, ~61% treasuries, agency MBS/CMOs and ~5% corporates and other investments • Securities to total assets of 13.6% as of June 30, 2024, down from 14.5% on December 31, 2023 • In April 2024, sold $372 million in AFS securities acquired from American National, resulting in a pre-tax loss of $6.5 million. A majority of the proceeds were reinvested into higher yielding securities; expected to be accretive to forward earnings with a 3 year earnback $3,032 $3,032 $3,031 $3,366 2Q 2023 1Q 2024 2Q 2024 Securities Balances $ M illions Total AFS (fair value) and HTM (carrying value) 4.07% Yield 3.72% Yield 3.32% Yield |
21 Reconciliation of Non-GAAP Disclosures The Company has provided supplemental performance measures determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. The Company uses the non-GAAP financial measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in the Company’s underlying performance. |
22 Reconciliation of Non-GAAP Disclosures Adjusted operating measures exclude, as applicable, merger-related costs, an FDIC special assessment, a deferred tax asset write-down, and (loss) gain on sale of securities. The Company believes these non-GAAP adjusted measures provide investors with important information about the continuing economic results of the Company’s operations. The Company believes net interest income (FTE), total revenue (FTE), and total adjusted revenue (FTE), which are used in computing net interest margin (FTE), efficiency ratio (FTE) and adjusted operating efficiency ratio (FTE), provide valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing the yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components. The adjusted operating efficiency ratio (FTE) excludes, as applicable, the amortization of intangible assets, merger-related costs, an FDIC special assessment, and (loss) gain on sale of securities. This measure is similar to the measure used by the Company when analyzing corporate performance and is also similar to the measure used for incentive compensation. The Company believes this adjusted measure provides investors with important information about the continuing economic results of the Company’s operations. (Dollars in thousands, except per share amounts) 2Q2024 1Q2024 Operating Measures Net Income (GAAP) $ 25,161 $ 49,769 Plus: Merger-related costs, net of tax 24,236 1,563 Plus: FDIC special assessment, net of tax — 664 Plus: Deferred tax asset write-down 4,774 — Less: (Loss) gain on sale of securities, net of tax (5,148) 2 Adjusted operating earnings (non-GAAP) $ 59,319 $ 51,994 Less: Dividends on preferred stock 2,967 2,967 Adjusted operating earnings available to common shareholders (non-GAAP) $ 56,352 $ 49,027 Weighted average common shares outstanding, diluted 89,768,466 75,197,376 EPS available to common shareholders, diluted (GAAP) $ 0.25 $ 0.62 Adjusted operating EPS available to common shareholders (non-GAAP) $ 0.63 $ 0.65 Operating Efficiency Ratio Noninterest expense (GAAP) $ 150,005 $ 105,273 Less: Amortization of intangible assets 5,995 1,895 Less: Merger-related costs 29,778 1,874 Less: FDIC special assessment — 840 Adjusted operating noninterest expense (non-GAAP) $ 114,232 $ 100,664 Noninterest income (GAAP) $ 23,812 $ 25,552 Less: (Loss) gain on sale of securities (6,516) 3 Adjusted operating noninterest income (non-GAAP) $ 30,328 $ 25,549 Net interest income (GAAP) $ 184,534 $ 147,825 Noninterest income (GAAP) 23,812 25,552 Total revenue (GAAP) $ 208,346 $ 173,377 Net interest income (FTE) (non-GAAP) $ 188,348 $ 151,546 Adjusted operating noninterest income (non-GAAP) 30,328 25,549 Total adjusted revenue (FTE) (non-GAAP) $ 218,676 $ 177,095 Efficiency ratio (GAAP) 72.00% 60.72% Efficiency ratio FTE (non-GAAP) 70.70% 59.44% Adjusted operating efficiency ratio (FTE) (non-GAAP) 52.24% 56.84% ADJUSTED OPERATING EARNINGS AND EFFICIENCY RATIO For the three months ended |
23 Reconciliation of Non-GAAP Disclosures The Company believes net interest income (FTE), total revenue (FTE), and total adjusted revenue (FTE), which are used in computing net interest margin (FTE), efficiency ratio (FTE) and adjusted operating efficiency ratio (FTE), provide valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing the yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components. (Dollars in thousands) 2Q2024 1Q2024 Net interest income (GAAP) $ 184,534 $ 147,825 FTE adjustment 3,814 3,721 Net interest income (FTE) (non-GAAP) $ 188,348 $ 151,546 Noninterest income (GAAP) 23,812 25,552 Total revenue (FTE) (non-GAAP) $ 212,160 $ 177,098 Average earning assets $ 21,925,128 $19,089,393 Net interest margin (GAAP) 3.39% 3.11% Net interest margin (FTE) 3.46% 3.19% NET INTEREST MARGIN For the three months ended |
24 Reconciliation of Non-GAAP Disclosures Tangible assets and tangible common equity are used in the calculation of certain profitability, capital, and per share ratios. The Company believes tangible assets, tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses. The Company believes tangible common equity is an important indication of its ability to grow organically and through business combinations, as well as its ability to pay dividends and to engage in various capital management strategies. The Company also calculates adjusted tangible common equity to tangible assets ratios to exclude AOCI, which is principally comprised of unrealized losses on AFS securities, and to include the impact of unrealized losses on HTM securities. The Company believes that each of these ratios enables investors to assess the Company's capital levels and capital adequacy without the effects of changes in AOCI, some of which are uncertain and difficult to predict, or assuming that the Company realized all previously unrealized losses on HTM securities at the end of the period, as applicable. (Dollars in thousands, except per share amounts) Atlantic Union Bankshares Atlantic Union Bank Tangible Assets Ending Assets (GAAP) $ 24,761,413 $ 24,638,455 Less: Ending goodwill 1,207,484 1,207,484 Less: Ending amortizable intangibles 95,980 95,980 Ending tangible assets (non-GAAP) $ 23,457,949 $ 23,334,991 Tangible Common Equity Ending equity (GAAP) $ 3,043,686 $ 3,369,915 Less: Ending goodwill 1,207,484 1,207,484 Less: Ending amortizable intangibles 95,980 95,980 Less: Perpetual preferred stock 166,357 — Ending tangible common equity (non-GAAP) $ 1,573,865 $ 2,066,451 Net unrealized losses on HTM securities, net of tax $ (43,978) $ (43,978) Accumulated other comprehensive loss (AOCI) $ (382,587) $ (382,587) Common shares outstanding at end of period 89,769,734 Average equity (GAAP) $ 3,021,929 $ 3,330,540 Less: Average goodwill 1,208,588 1,208,588 Less: Average amortizable intangibles 97,109 97,109 Less: Average perpetual preferred stock 166,356 — Average tangible common equity (non-GAAP) $ 1,549,876 $ 2,024,843 Less: Perpetual preferred stock Common equity to total assets (GAAP) 11.6% 13.7% Tangible equity to tangible assets (non-GAAP) 7.4% 8.9% Tangible equity to tangible assets, incl net unrealized losses on HTM securities (non-GAAP) 7.2% 8.7% Tangible common equity to tangible assets (non-GAAP) 6.7% 8.9% Tangible common equity to tangible assets, incl net unrealized losses on HTM securities (non-GAAP) 6.5% 8.7% Tangible common equity to tangible assets, ex AOCI (non-GAAP)1 8.3% Book value per common share (GAAP) $ 32.30 Tangible book value per common share (non-GAAP) $ 17.67 Tangible book value per common share, ex AOCI (non-GAAP)1 $ 21.96 Leverage Ratio Tier 1 capital $ 2,144,671 $ 2,477,377 Total average assets for leverage ratio $ 23,693,440 $ 23,572,634 Leverage ratio 9.1% 10.5% Leverage ratio, incl AOCI and net unrealized losses on HTM securities (non-GAAP) 7.3% 8.7% TANGIBLE ASSETS, TANGIBLE COMMON EQUITY, AND LEVERAGE RATIO As of June 30, 2024 1Calculation excludes the impact of 691,111 unvested restricted stock awards (RSAs) outstanding as of June 30, 2024 |
25 Reconciliation of Non-GAAP Disclosures All regulatory capital ratios at June 30, 2024 are estimates and subject to change pending the Company’s filing of its FR Y-9 C. In addition to these regulatory capital ratios, the Company adjusts certain regulatory capital ratios to include the impacts of AOCI, which the Company has elected to exclude from regulatory capital ratios under applicable regulations, and net unrealized losses on HTM securities, assuming that those unrealized losses were realized at the end of the period, as applicable. The Company believes that each of these ratios help investors to assess the Company's regulatory capital levels and capital adequacy. (Dollars in thousands) Atlantic Union Bankshares Atlantic Union Bank Risk-Based Capital Ratios Net unrealized losses on HTM securities, net of tax $ (43,978) $ (43,978) Accumulated other comprehensive loss (AOCI) $ (382,587) $ (382,587) Common equity tier 1 capital $ 1,978,315 $ 2,477,377 Tier 1 capital $ 2,144,671 $ 2,477,377 Total capital $ 2,715,022 $ 2,636,309 Total risk-weighted assets $ 20,892,383 $ 20,777,714 Common equity tier 1 capital ratio 9.5% 11.9% Common equity tier 1 capital ratio, incl AOCI and net unrealized losses on HTM securities (non-GAAP) 7.6% 10.1% Tier 1 capital ratio 10.3% 11.9% Tier 1 capital ratio, incl AOCI and net unrealized losses on HTM securities (non-GAAP) 8.4% 10.1% Total capital ratio 13.0% 12.7% Total capital ratio, incl AOCI and net unrealized losses on HTM securities (non-GAAP) 11.2% 10.9% RISK-BASED CAPITAL RATIOS As of June 30, 2024 |
26 Reconciliation of Non-GAAP Disclosures Tangible assets and tangible common equity are used in the calculation of certain profitability, capital, and per share ratios. The Company believes tangible assets, tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses. The Company believes tangible common equity is an important indication of its ability to grow organically and through business combinations as well as its ability to pay dividends and to engage in various capital management strategies. The Company believes that ROTCE is a meaningful supplement to GAAP financial measures and is useful to investors because it measures the performance of a business consistently across time without regard to whether components of the business were acquired or developed internally. Adjusted operating measures exclude, as applicable, merger-related costs, an FDIC special assessment, a deferred tax asset write-down, and (loss) gain on sale of securities. The Company believes these non-GAAP adjusted measures provide investors with important information about the continuing economic results of the Company’s operations. (Dollars in thousands) 2Q2024 1Q2024 Return on average assets (ROA) Average assets (GAAP) $ 24,620,198 $ 21,222,756 ROA (GAAP) 0.41% 0.94% Adjusted operating ROA (non-GAAP) 0.97% 0.99% Return on average equity (ROE) Adjusted operating earnings available to common shareholders (non-GAAP) $ 56,352 $ 49,027 Plus: Amortization of intangibles, tax effected 4,736 1,497 Adjusted operating earnings available to common shareholders before amortization of intangibles (non-GAAP) $ 61,088 $ 50,524 Average equity (GAAP) $ 3,021,929 $ 2,568,243 Less: Average goodwill 1,208,588 925,211 Less: Average amortizable intangibles 97,109 18,198 Less: Average perpetual preferred stock 166,356 166,356 Average tangible common equity (non-GAAP) $ 1,549,876 $ 1,458,478 ROE (GAAP) 3.35% 7.79% Return on tangible common equity (ROTCE) Net Income available to common shareholders (GAAP) $ 22,194 $ 46,802 Plus: Amortization of intangibles, tax effected 4,736 1,497 Net Income available to common shareholders before amortization of intangibles (non-GAAP) $ 26,930 $ 48,299 ROTCE (non-GAAP) 6.99% 13.32% Adjusted operating ROTCE (non-GAAP) 15.85% 13.93% For the three months ended OPERATING MEASURES |
27 Reconciliation of Non-GAAP Disclosures Pre-tax pre-provision adjusted earnings excludes, as applicable, the provision for credit losses, which can fluctuate significantly from period-to-period under the CECL methodology, income tax expense, merger-related costs, an FDIC special assessment, and (loss) gain on sale of securities. The Company believes this adjusted measure provides investors with important information about the continuing economic results of the Company’s operations. (Dollars in thousands) 2Q2024 1Q2024 Net income (GAAP) $ 25,161 $ 49,769 Plus: Provision for credit losses 21,751 8,239 Plus: Income tax expense 11,429 10,096 Plus: Merger-related costs 29,778 1,874 Plus: FDIC special assessment — 840 Less: (Loss) gain on sale of securities (6,516) 3 PTPP adjusted operating earnings (non-GAAP) $ 94,635 $ 70,815 For the three months ended PRE-TAX PRE-PROVISION ADJUSTED OPERATING EARNINGS |
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