Atlantic Union Bankshares Corp Q3 FY2024 earnings call

Merger Announcement

• Announced merger with Sandy Spring Bancorp, a $14.4 billion asset bank with a 156-year history and strong asset quality in attractive markets. The merger is a stock deal with an exchange ratio of 0.90 shares of AUB common stock for each share of Sandy Spring's common stock.

Q3 Results Highlights

• Completed acquisition of American National Bank in second quarter, with third quarter not impacted by merger-related items. Deposit base grew 6.1% linked-quarter annualized. Loan balances were relatively flat despite headwinds like commercial real estate payoffs and indirect auto portfolio wind-down. Net charge-offs were one basis point annualized, with asset quality remaining benign. Adjusted return on tangible common equity was 19.2%, return on assets was 1.25%, and efficiency ratio was 52.2%.

For Atlantic Union Bankshares' third quarter 2024, tax equivalent net interest income was $186.8 million, down approximately $1.5 million from the second quarter. The net interest margin was 3.38%, a net decrease of eight basis points from the previous quarter. Loans held for investment totaled $18.3 billion, a decrease of approximately $10 million from the prior quarter. Total deposits stood at $20.3 million, an increase of $304 million or approximately 6.1% annualized from the prior quarter. Adjusted operating earnings available to common shareholders were $74.5 million or $0.83 per common share for the third quarter, an increase of $18.2 million or 32.3% from the second quarter.

• Full year 2024 loan balances expected between $18.5 billion and $19 billion, deposits between $20 billion and $20.5 billion. Fully taxable equivalent net interest income projected between $720 million and $725 million, with full year net interest margin between 3.35% and 3.40%, and Q4 target between 3.4% and 3.45%. Adjusted operating non-interest income expected between $120 million and $125 million, with Q4 target between $30 million and $35 million. Adjusted operating non-interest expenses estimated between $445 million and $450 million, with Q4 target between $115 million and $120 million.

• Market risks associated with economic conditions and interest rate fluctuations. Regulatory risks related to compliance with banking regulations. Integration risks of the merger with Sandy Spring Bancorp, including potential challenges in combining operations and cultures. Uncertainties regarding commercial real estate payoffs and their impact on loan balances.

Q: What is the organic loan growth outlook?

A: Robert Gorman stated they are still calling for mid-single-digit loan growth, supported by healthy commercial banking pipelines despite some headwinds