Atlantic Union Bankshares Reports Third Quarter Results

Atlantic Union Bank
·37-min read

RICHMOND, Va., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Atlantic Union Bankshares Corporation (the Company or Atlantic Union) (Nasdaq: AUB) today reported net income available to common shareholders of $58.3 million and diluted earnings per common share of $0.74 for its third quarter ended September 30, 2020. Pre-tax pre-provision operating earnings (1) were $78.6 million for the third quarter ended September 30, 2020.

Net income available to common shareholders was $96.1 million and diluted earnings per common share were $1.22 for the nine months ended September 30, 2020. Pre-tax pre-provision operating earnings (1) were $217.3 million for the nine months ended September 30, 2020.

During the third quarter , Atlantic Union delivered strong financial results and continued to demonstrate the resilience, agility and innovation required to successfully navigate through the challenging economic, credit and interest rate headwinds of COVID-19, said John C. Asbury, president and chief executive officer of Atlantic Union.

Operating under the mantra of soundness, profitability and growth in that order of priority - Atlantic Union continues to be in a strong financial position with ample liquidity and a well-fortified capital base. Our financial performance has and will continue to benefit from the decisive actions the Company has taken to reduce its expense run rate to more closely align with revenue growth pressures driven by the lower for longer interest rate environment. These expense reduc tion actions include the consolidation of 14 branches in September, or nearly 10% of our branch network.

Looking forward, we believe that Atlantic Union will emerge from the challenges of COVID-19 as a stronger company that is well positioned to generate sustainable, profitable growth and is committed to leveraging the Atlantic Union franchise to build long term value for our shareholders.

Small Business Administration (SBA) Paycheck Protection Program (PPP)

During 2020, the Company participated in the SBA PPP under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was intended to provide economic relief to small businesses that have been adversely impacted by the COVID-19 global pandemic (COVID-19). The Company processed over 11,000 PPP loans, which totaled $1.7 billion with a recorded investment of $1.6 billion as of September 30, 2020, which included unamortized deferred fees of $32.6 million. The loans carry a 1% interest rate.

Expense Reduction Measures

During 2020, the Company undertook several actions, including the consolidation of 14 branches, which was completed in September 2020, to reduce expenses in light of the current and expected operating environment. These actions resulted in expenses during the third quarter of 2020 of approximately $2.6 million, primarily related to lease termination costs and real estate write-downs.

(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 Alternative Performance Measures (non-GAAP) section of the Key Financial Results

NET INTEREST INCOME

For the third quarter of 2020, net interest income was $137.4 million, an increase from $137.3 million reported in the second quarter of 2020. Net interest income (FTE) (1)  was $140.3 million in the third quarter of 2020, an increase of $172,000 from the second quarter of 2020. The third quarter net interest margin decreased 15 basis points to 3.08% from 3.23% in the previous quarter, while the net interest margin (FTE) (1)  decreased 15 basis points to 3.14% from 3.29% during the same period. The decreases in the net interest margin and net interest margin (FTE) were principally due to a 31 basis point decrease in the yield on earning assets (FTE) (1) offset by a 16 basis point decrease in cost of funds. The decline in the Companys earning asset yields was driven by lower loan accretion income, an increase in the earning asset mix of lower yielding investment securities and the impact of lower market interest rates. The cost of funds decline was driven by lower deposit costs and wholesale borrowing costs driven by lower interest rate environment and a favorable funding mix.

The Companys net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. Net accretion related to acquisition accounting decreased $2.7 million from the prior quarter to $3.7 million for the quarter ended September 30, 2020. The second and third quarters of 2020, and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit 

 

 

 

 

 

 

 

 

Loan

 

Accretion

 

Borrowings

 

 

 

 

    

Accretion

    

(Amortization)

    

Amortization

    

Total

For the quarter ended March 31, 2020

 

$

9,528

 

 

50

 

 

 

(138

)

 

$

9,440

For the quarter ended June 30, 2020

 

 

6,443

 

 

34

 

 

 

(140

)

 

 

6,337

For the quarter ended September 30, 2020

 

 

3,814

 

 

26

 

 

 

(167

)

 

 

3,673

For the remaining three months of 2020 (estimated)

 

 

2,530

 

 

23

 

 

 

(187

)

 

 

2,366

For the years ending (estimated):

 

 

  

 

 

  

 

 

  

 

 

  

2021

 

 

9,242

 

 

14

 

 

 

(807

)

 

 

8,449

2022

 

 

7,449

 

 

(43

)

 

 

(829

)

 

 

6,577

2023

 

 

5,346

 

 

(32

)

 

 

(852

)

 

 

4,462

2024

 

 

4,334

 

 

(4

)

 

 

(877

)

 

 

3,453

2025

 

 

3,248

 

 

(1

)

 

 

(900

)

 

 

2,347

Thereafter

 

 

14,485

 

 

 

 

 

(9,873

)

 

 

4,612

Total remaining acquisition accounting fair value adjustments at September 30, 2020

 

 

46,634

 

 

(43

)

 

 

(14,325

)

 

 

32,266

ASSET QUALITY

Overview
During the third quarter of 2020, the Company experienced a slight decrease in nonperforming assets (NPAs). Past due loan levels as a percentage of total loans held for investment at September 30, 2020 were higher than past due loan levels at June 30, 2020 and lower than past due loan levels at September 30, 2019. The increase in past due loan levels from June 30, 2020 was primarily within the 30-59 days past due category. Net charge-off levels and the provision for loan losses for the third quarter of 2020 decreased from the second quarter of 2020.

Loan Modifications for Borrowers Affected by COVID-19
On March 22, 2020, the five federal bank regulatory agencies and the Conference of State Bank Supervisors issued joint guidance (subsequently revised on April 7, 2020) with respect to loan modifications for borrowers affected by COVID-19 (the March 22 Joint Guidance). The March 22 Joint Guidance encourages banks, savings associations, and credit unions to make loan modifications for borrowers affected by COVID-19 and, importantly, assures those financial institutions that they will not (i) receive supervisory criticism for such prudent loan modifications and (ii) be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The federal banking regulators have confirmed with the Financial Accounting Standards Board (or FASB) that short-term loan modifications made on a good faith basis in response to COVID-19 to borrowers who were current (i.e., less than 30 days past due on contractual payments) when the modification program was implemented are not considered TDRs.

(1) These are financial measures not calculated in accordance with GAAP . For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results

In addition, Section 4013 of the CARES Act provides banks, savings associations, and credit unions with the ability to make loan modifications related to COVID-19 without categorizing the loan as a TDR or conducting the analysis to make the determination, which is intended to streamline the loan modification process. Any such suspension is effective for the term of the loan modification; however, the suspension is only permitted for loan modifications made during the effective period of Section 4013 and only for those loans that were not more than thirty days past due as of December 31, 2019.

The Company has made certain loan modifications pursuant to the March 22 Joint Guidance or Section 4013 of the CARES Act and as of September 30, 2020 approximately $769.6 million remain under their modified terms, a decline of $831.3 million as compared to June 30, 2020. The majority of the Companys modifications as of September 30, 2020 were in the commercial real estate portfolios.

Nonperforming Assets
At September 30, 2020, NPAs totaled $43.2 million, a decrease of $839,000 from June 30, 2020. NPAs as a percentage of total outstanding loans at September 30, 2020 were 0.30%, a decrease of 1 basis point from 0.31% at June 30, 2020. Excluding the impact of the PPP loans (1) , NPAs as a percentage of total outstanding loans were 0.34%, a decrease of 1 basis point from June 30, 2020.

The Companys adoption of current expected credit loss (CECL) on January 1, 2020 resulted in a change in the accounting and reporting related to purchased credit impaired (PCI) loans, which are now defined as purchased credit deteriorated (PCD) and evaluated at the loan level instead of being evaluated in pools under PCI accounting.   All prior period nonaccrual and past due loan metrics discussed herein have not been restated for CECL accounting and exclude PCI-related loan balances.

The following table shows a summary of nonperforming asset balances at the quarter ended (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

September 30, 

    

June 30, 

    

March 31, 

    

December 31, 

    

September 30, 

 

 

2020

 

2020

 

2020

 

2019

 

2019

Nonaccrual loans

 

$

39,023

 

$

39,624

 

$

44,022

 

$

28,232

 

$

30,032

Foreclosed properties

 

 

4,159

 

 

4,397

 

 

4,444

 

 

4,708

 

 

6,385

Total nonperforming assets

 

$

43,182

 

$

44,021

 

$

48,466

 

$

32,940

 

$

36,417

The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

September 30, 

    

June 30, 

    

March 31, 

    

December 31, 

    

September 30, 

 

 

2020

 

2020

 

2020

 

2019

 

2019

Beginning Balance

 

$

39,624

 

 

$

44,022

 

 

$

28,232

 

 

$

30,032

 

 

$

27,462

 

Net customer payments

 

 

(2,803

)

 

 

(6,524

)

 

 

(3,451

)

 

 

(5,741

)

 

 

(3,612

)

Additions

 

 

2,790

 

 

 

3,206

 

 

 

6,059

 

 

 

5,631

 

 

 

8,327

 

Impact of CECL adoption

 

 

 

 

 

 

 

 

14,381

 

 

 

 

 

 

 

Charge-offs

 

 

(588

)

 

 

(1,088

)

 

 

(1,199

)

 

 

(1,690

)

 

 

(884

)

Loans returning to accruing status

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

(1,103

)

Transfers to foreclosed property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(158

)

Ending Balance

 

$

39,023

 

 

$

39,624

 

 

$

44,022

 

 

$

28,232

 

 

$

30,032

 

The following table shows the activity in foreclosed properties for the quarter ended (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

September 30, 

    

June 30, 

    

March 31, 

    

December 31, 

    

September 30, 

 

 

2020

 

2020

 

2020

 

2019

 

2019

Beginning Balance

 

$

4,397

 

 

$

4,444

 

 

$

4,708

 

 

$

6,385

 

 

$

6,506

 

Additions of foreclosed property

 

 

 

 

 

 

 

 

615

 

 

 

62

 

 

 

645

 

Valuation adjustments

 

 

 

 

 

 

 

 

(44

)

 

 

(375

)

 

 

(62

)

Proceeds from sales

 

 

(254

)

 

 

(55

)

 

 

(854

)

 

 

(1,442

)

 

 

(737

)

Gains (losses) from sales

 

 

16

 

 

 

8

 

 

 

19

 

 

 

78

 

 

 

33

 

Ending Balance

 

$

4,159

 

 

$

4,397

 

 

$

4,444

 

 

$

4,708

 

 

$

6,385

 


(1) These are financial measures not calculated in accordance with GAAP . For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results

Past Due Loans
Past due loans still accruing interest totaled $50.9 million or 0.35% of total loans held for investment at September 30, 2020, compared to $40.5 million or 0.28% of total loans held for investment at June 30, 2020, and $55.1 million or 0.45% of total loans held for investment at September 30, 2019. Excluding the impact of the PPP loans (1) , past due loans still accruing interest were 0.40% of total loans held for investment at September 30, 2020, compared to 0.32% of total loans held for investment at June 30, 2020. The increase in past due loans in the third quarter of 2020 as compared to the second quarter was primarily within the 30-59 days past due category and due to increases in past due credit relationships within the owner occupied commercial real estate, commercial & industrial, and residential 1-4 family consumer portfolios.

Of the total past due loans still accruing interest, $15.6 million or 0.11% of total loans held for investment were loans past due 90 days or more at September 30, 2020, compared to $19.3 million or 0.13% of total loans held for investment at June 30, 2020, and $12.0 million or 0.10% of total loans held for investment at September 30, 2019.

Net Charge-offs
For the third quarter of 2020, net charge-offs were $1.4 million, or 0.04% of total average loans on an annualized basis, compared to $3.3 million, or 0.09%, for the second quarter of 2020, and $7.7 million, or 0.25%, for the third quarter last year. Excluding the impact of the PPP loans (1) , net charge-offs were 0.04% of total average loans on an annualized basis, compared to 0.10% for the second quarter of 2020. The majority of net charge-offs in the third quarter of 2020 were related to the third-party consumer loan portfolio .

Provision for Credit Losses
The provision for credit losses for the third quarter of 2020 was $6.6 million, a decrease of $27.6 million compared to the previous quarter and a decrease of $2.5 million compared to the same quarter in 2019. The provision for credit losses for the third quarter of 2020 consisted of $5.6 million in provision for loan losses and $1.0 million in provision for unfunded commitment.

Allowance for Credit Losses (ACL)
At September 30, 2020, the ACL was $186.1 million and included an allowance for loan and lease losses (ALLL) of $174.1 million and a reserve for unfunded commitments (RUC) of $12.0 million. The ACL increased $5.1 million from June 30, 2020, primarily due to the continued economic uncertainty related to COVID-19.

The ALLL increased $4.1 million and the RUC increased $1.0 million from June 30, 2020. The ALLL as a percentage of the total loan portfolio was 1.21% at September 30, 2020 and 1.19% at June 30, 2020. The ACL as percentage of total loans was 1.29% at September 30, 2020 and 1.26% at June 30, 2020. When excluding PPP loans (1) , which are 100% guaranteed by the SBA, the ALLL as a percentage of adjusted loans increased 2 basis points to 1.36% from the prior quarter and the ACL as a percentage of adjusted loans increased 4 basis points to 1.46% from the prior quarter. The ratio of the ALLL to nonaccrual loans was 446.2% at September 30, 2020, compared to 429.0% at June 30, 2020.

(1) These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

NONINTEREST INCOME

Noninterest income decreased $1.5 million to $34.4 million for the quarter ended September 30, 2020 from $35.9 million in the prior quarter primarily driven by a $10.3 million gain on sale of investment securities recorded during the second quarter and a decline of $2.3 million in loan-related interest rate swap income due to lower transaction volumes during the third quarter, which were significantly offset by increases in several other non-interest income categories. These positive offsets include an increase in mortgage banking income of $3.1 million primarily due to increased mortgage loan origination volumes due to the current low interest rate environment. In addition, in the third quarter of 2020, $1.7 million in unrealized gains were recognized related to equity method investments that experienced unrealized losses during the second quarter, bank owned life insurance income increased $1.4 million primarily related to death benefit proceeds received during the quarter, and service charges on deposit accounts increased $1.1 million primarily due to higher NSF and overdraft fees.

NONINTEREST EXPENSE

Noninterest expense decreased $9.6 million to $93.2 million for the quarter ended September 30, 2020 from $102.8 million in the prior quarter primarily driven by the recognition of approximately $10.3 million loss on debt extinguishment in the second quarter resulting from the prepayment of approximately $200.0 million in long-term FHLB advances. In addition, during the third quarter of 2020, there was a decline in the FDIC assessment of approximately $1.1 million due to the positive impact of PPP loans on the Companys assessment rate. Noninterest expense also included approximately $2.6 million in costs related to the Companys expense reduction plans, including the closure of 14 branches in September, approximately $639,000 in costs related to the Companys response to COVID-19, and an increase in marketing expenses related to donations made by the Company to support organizations that fight the injustices of inequality and contribute to change in our communities.

INCOME TAXES

The effective tax rate for the three months ended September 30, 2020 was 15.3% compared to 15.2% for the three months ended June 30, 2020.

BALANCE SHEET

At September 30, 2020, total assets were $19.9 billion, an increase of $178.3 million, or approximately 3.6% (annualized), from June 30, 2020, and an increase of $2.5 billion, or approximately 14.3% from September 30, 2019. The increase in assets from the prior quarter was driven by an increase in the Companys securities portfolio partially offset by a reduction in cash balances while growth from the prior year was primarily a result of both organic and PPP loan growth.

At September 30, 2020, loans held for investment (net of deferred fees and costs) were $14.4 billion, an increase of $74.6 million, or 2.1% (annualized), from June 30, 2020, while average loans increased $401.0 million, or 11.4% (annualized), from the prior quarter. Loans held for investment (net of deferred fees and costs) increased $2.1 billion, or 16.9% from September 30, 2019, while quarterly average loans increased $2.1 billion, or 17.3% from the prior year. Excluding the effects of the PPP (2) , loans held for investment (net of deferred fees and costs) increased $475.6 million, or 3.9%, while quarterly average loans increased $480.2 million, or 3.9% from the prior year.

At September 30, 2020, total deposits were $15.6 billion, a slight decrease of $29.0 million, or approximately 0.7% (annualized), from June 30, 2020, while average deposits increased $620.1 million, or 16.5% (annualized), from the prior quarter. Deposits increased $2.5 billion, or 19.4% from September 30, 2019, while quarterly average deposits increased $2.8 billion, or 21.6% from the prior year. The increase in deposits from the prior year was primarily due to the impact of PPP loan related deposits and government stimulus.

The following table shows the Companys capital ratios at the quarters ended:

 

 

 

 

 

 

 

 

 

    

September 30, 

    

June 30, 

    

September 30, 

 

 

 

2020

 

2020

 

2019

 

Common equity Tier 1 capital ratio (1)

 

10.04

%  

9.88

%  

10.48

%

Tier 1 capital ratio (1)

 

11.18

%  

11.03

%  

10.48

%

Total capital ratio (1)

 

13.92

%  

13.81

%  

12.93

%

Leverage ratio (Tier 1 capital to average assets) (1)

 

8.82

%  

8.82

%  

8.94

%

Common equity to total assets

 

12.52

%  

12.41

%  

14.48

%

Tangible common equity to tangible assets (2)

 

7.91

%  

7.74

%  

9.23

%


(1)  All ratios at September 30, 2020 are estimates and subject to change pending the Companys filing of its FR Y9-C. All other periods are presented as filed.
(2)  These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measure s , see Alternative Performance Measures (non-GAAP) section of the Key Financial Results .

On June 9, 2020, the Company issued and sold 6,900,000 depositary shares, each representing a 1/400th ownership interest in a share of the Companys 6.875% Perpetual Non-Cumulative Preferred Stock, Series A (Series A Preferred Stock), par value $10.00 per share of Series A Preferred Stock, with a liquidation preference of $10,000 per share of Series A Preferred Stock. The net proceeds received from the issuance of the Series A Preferred Stock was approximately $166.4 million, after deducting the underwriting discount and other offering expenses payable by the Company. The Series A Preferred Stock is included in Tier 1 capital.  

During the third quarter of 2020, the Company declared and paid cash dividends of $0.25 per common share, consistent with the second quarter of 2020 and the third quarter of 2019. During the third quarter of 2020, the Board also declared and paid a quarterly dividend on the outstanding shares of Series A Preferred Stock of $156.60 per share (equivalent to $0.39 per outstanding depositary share). On July 10, 2019, the Company announced that its Board of Directors had authorized a share repurchase program (effective July 8, 2019) to purchase up to $150 million of the Companys common stock through June 30, 2021 in open market transactions or privately negotiated transactions. On March 20, 2020, the Company suspended its share repurchase program, which had $20 million remaining in the authorization when it was suspended. The Company repurchased an aggregate of approximately 3.7 million shares, at an average price of $35.48 per share, under the authorization prior to the suspension.

ABOUT ATLANTIC UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (Nasdaq: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank has 135 branches and approximately 155 ATMs located throughout Virginia, and in portions of Maryland and North Carolina. Middleburg Financial is a brand name used by Atlantic Union Bank and certain affiliates when providing trust, wealth management, private banking, and investment advisory products and services. Certain non-bank affiliates of Atlantic Union Bank include: Old Dominion Capital Management, Inc., and its subsidiary, Outfitter Advisors, Ltd., and Dixon, Hubard, Feinour, & Brown, Inc., which provide investment advisory services; Middleburg Investment Services, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

THIRD QUARTER 2020 EARNINGS RELEASE CONFERENCE CALL

The Company will hold a conference call on Thursday, October 22, 2020 at 9:00 a.m. Eastern Time during which management will review the third quarter 2020 financial results and provide an update on recent activities. Interested parties may participate in the call toll-free by dialing (866) 2204170; international callers wishing to participate may do so by dialing (864) 6635235. The conference ID number is 9936549.   Management will conduct a listen-only webcast with accompanying slides, which can be found at: https://edge.media-server.com/mmc/p/s65vcnnd

A replay of the webcast, and the accompanying slides, will be available on the Companys website for 90 days at: https://investors.atlanticunionbank.com/
                                                                                                                                                                                                                                  
NON-GAAP FINANCIAL MEASURES

In reporting the results of the quarter ended September 30, 2020, the Company has provided supplemental performance measures on a tax-equivalent, tangible, operating, adjusted or pre-tax pre-provision basis. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Companys financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Companys 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 Companys performance. The Companys 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 Companys 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) section of the Key Financial Results.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including without limitation, statements made in Mr. Asburys quotes, are statements that include, projections, predictions, expectations, or beliefs about future events or results that are not statements of historical fact. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, 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 accompanied by words that convey projected future events or outcomes such as expect, believe, estimate, plan, project, anticipate, intend, will, may, view, opportunity, potential, or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of, or trends affecting, the Company will not differ materially from any projected future results, performance, or achievements 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:

  • changes in interest rates;

  • general economic and financial market conditions, in the United States generally and particularly in the markets in which the Company operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth, including as a result of COVID-19;

  • the quality or composition of the loan or investment portfolios and changes therein;

  • demand for loan products and financial services in the Companys market area;

  • the Companys ability to manage its growth or implement its growth strategy;

  • the effectiveness of expense reduction plans;

  • the introduction of new lines of business or new products and services;

  • the Companys ability to recruit and retain key employees;

  • the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets;

  • real estate values in the Banks lending area;

  • an insufficient ACL;

  • changes in accounting principles relating to loan loss recognition (CECL);

  • the Companys liquidity and capital positions;

  • concentrations of loans secured by real estate, particularly commercial real estate;

  • the effectiveness of the Companys credit processes and management of the Companys credit risk;

  • the Companys ability to compete in the market for financial services and increased competition relating to fintech;

  • technological risks and developments, and cyber threats, attacks, or events;

  • the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as COVID-19), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Companys liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on financial markets and economic growth;

  • the effect of steps the Company takes in response to COVID-19, the severity and duration of the pandemic, including whether there is a resurgence of COVID-19 infections in connection with the seasonal flu, the impact of loosening or tightening of government restrictions, the pace of recovery when the pandemic subsides and the heightened impact it has on many of the risks described herein;

  • performance by the Companys counterparties or vendors;

  • deposit flows;

  • the availability of financing and the terms thereof;

  • the level of prepayments on loans and mortgage-backed securities;

  • legislative or regulatory changes and requirements, including the impact of the CARES Act and other legislative and regulatory reactions to COVID-19;

  • potential claims, damages, and fines related to litigation or government actions, including litigation or actions arising from the Companys participation in and administration of programs related to COVID-19, including, among other things, the CARES Act;

  • the effects of changes in federal, state or local tax laws and regulations;

  • monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve;

  • changes to applicable accounting principles and guidelines; and

  • other factors, many of which are beyond the control of the Company.

Please refer to the Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations sections of the Companys Annual Report on Form 10K for the year ended December 31, 2019 and comparable Risk Factors sections of the Companys Quarterly Reports on Form 10Q and related disclosures in other filings, which have been filed with the SEC and are available on the SECs website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the Company or its businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and the Company does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.


ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS
(Dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Nine Months Ended

 

    

09/30/20

    

06/30/20

    

09/30/19

 

09/30/20

 

09/30/19

Results of Operations

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Interest and dividend income

 

$

157,414

 

$

162,867

 

$

178,345

 

$

491,607

 

$

525,122

 

Interest expense

 

 

20,033

 

 

25,562

 

 

41,744

 

 

81,913

 

 

122,379

 

Net interest income

 

 

137,381

 

 

137,305

 

 

136,601

 

 

409,694

 

 

402,743

 

Provision for credit losses

 

 

6,558

 

 

34,200

 

 

9,100

 

 

100,954

 

 

18,192

 

Net interest income after provision for credit losses

 

 

130,823

 

 

103,105

 

 

127,501

 

 

308,740

 

 

384,551

 

Noninterest income

 

 

34,407

 

 

35,932

 

 

48,106

 

 

99,245

 

 

103,621

 

Noninterest expenses

 

 

93,222

 

 

102,814

 

 

111,687

 

 

291,681

 

 

324,022

 

Income before income taxes

 

 

72,008

 

 

36,223

 

 

63,920

 

 

116,304

 

 

164,150

 

Income tax expense

 

 

11,008

 

 

5,514

 

 

10,724

 

 

17,506

 

 

26,330

 

Income from continuing operations

 

 

61,000

 

 

30,709

 

 

53,196

 

 

98,798

 

 

137,820

 

Discontinued operations, net of tax

 

 

 

 

 

 

42

 

 

 

 

(128

)

Net income

 

 

61,000

 

 

30,709

 

 

53,238

 

 

98,798

 

 

137,692

 

Dividends on preferred stock

 

 

2,691

 

 

 

 

 

 

2,691

 

 

 

Net income available to common shareholders

 

$

58,309

 

$

30,709

 

$

53,238

 

$

96,107

 

$

137,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earned on earning assets (FTE) (1)

 

$

160,315

 

$

165,672

 

$

181,149

 

$

500,069

 

$

533,590

 

Net interest income (FTE) (1)

 

 

140,282

 

 

140,110

 

 

139,405

 

 

418,156

 

 

411,211

 

Total revenue (FTE) (1)

 

 

174,689

 

 

176,042

 

 

187,511

 

 

517,401

 

 

514,832

 

Pre-tax pre-provision operating earnings (8)

 

 

78,566

 

 

70,423

 

 

76,630

 

 

217,258

 

 

214,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, diluted

 

$

0.74

 

$

0.39

 

$

0.65

 

$

1.22

 

$

1.72

 

Return on average assets (ROA)

 

 

1.23

%  

 

0.64

%  

 

1.23

%

 

0.70

%  

 

1.11

Return on average equity (ROE)

 

 

9.16

%  

 

4.96

%  

 

8.35

%

 

5.19

%  

 

7.58

Efficiency ratio

 

 

54.27

%  

 

59.35

%  

 

60.47

%

 

57.31

%  

 

63.99

Net interest margin

 

 

3.08

%  

 

3.23

%  

 

3.57

%

 

3.26

%  

 

3.66

Net interest margin (FTE) (1)

 

 

3.14

%  

 

3.29

%  

 

3.64

%

 

3.32

%  

 

3.74

Yields on earning assets (FTE) (1)

 

 

3.59

%  

 

3.90

%  

 

4.73

%

 

3.97

%  

 

4.85

Cost of interest-bearing liabilities

 

 

0.64

%  

 

0.84

%  

 

1.45

%

 

0.90

%  

 

1.47

Cost of deposits

 

 

0.39

%  

 

0.53

%  

 

0.95

%

 

0.58

%  

 

0.92

Cost of funds

 

 

0.45

%  

 

0.61

%  

 

1.09

%

 

0.65

%  

 

1.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Measures (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating earnings

 

$

61,000

 

$

30,709

 

$

56,057

 

$

98,798

 

$

163,665

 

Net operating earnings available to common shareholders

 

 

58,309

 

 

30,709

 

 

56,057

 

 

96,107

 

 

163,665

 

Operating earnings per share, diluted

 

$

0.74

 

$

0.39

 

$

0.69

 

$

1.22

 

$

2.04

 

Operating ROA

 

 

1.23

%  

 

0.64

%  

 

1.29

%

 

0.70

%  

 

1.32

Operating ROE

 

 

9.16

%  

 

4.96

%  

 

8.80

%

 

5.19

%  

 

9.01

Operating ROTCE (2) (3)

 

 

16.49

%  

 

9.46

%  

 

15.64

%

 

9.64

%  

 

16.18

Operating efficiency ratio (FTE) (1)(7)

 

 

51.04

%  

 

56.00

%  

 

55.12

%

 

53.92

%  

 

53.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, basic

 

$

0.74

 

$

0.39

 

$

0.65

 

$

1.22

 

$

1.72

 

Earnings per common share, diluted

 

 

0.74

 

 

0.39

 

 

0.65

 

 

1.22

 

 

1.72

 

Cash dividends paid per common share

 

 

0.25

 

 

0.25

 

 

0.25

 

 

0.75

 

 

0.71

 

Market value per share

 

 

21.37

 

 

23.16

 

 

37.25

 

 

21.37

 

 

37.25

 

Book value per common share

 

 

31.86

 

 

31.32

 

 

31.29

 

 

31.86

 

 

31.29

 

Tangible book value per common share (2)

 

 

19.13

 

 

18.54

 

 

18.80

 

 

19.13

 

 

18.80

 

Price to earnings ratio, diluted

 

 

7.26

 

 

14.77

 

 

14.44

 

 

13.11

 

 

16.20

 

Price to book value per common share ratio

 

 

0.67

 

 

0.74

 

 

1.19

 

 

0.67

 

 

1.19

 

Price to tangible book value per common share ratio (2)

 

 

1.12

 

 

1.25

 

 

1.98

 

 

1.12

 

 

1.98

 

Weighted average common shares outstanding, basic

 

 

78,714,353

 

 

78,711,765

 

 

81,769,193

 

 

78,904,792

 

 

80,120,725

 

Weighted average common shares outstanding, diluted

 

 

78,725,346

 

 

78,722,690

 

 

81,832,868

 

 

78,921,108

 

 

80,183,113

 

Common shares outstanding at end of period

 

 

78,718,850

 

 

78,713,056

 

 

81,147,896

 

 

78,718,850

 

 

81,147,896

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Nine Months Ended

 

 

    

09/30/20

    

06/30/20

    

09/30/19

 

09/30/20

 

09/30/19

 

Capital Ratios

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Common equity Tier 1 capital ratio (5)

 

 

10.04

%  

 

9.88

%  

 

10.48

%

 

10.04

%  

 

10.48

%

Tier 1 capital ratio (5)

 

 

11.18

%  

 

11.03

%  

 

10.48

%

 

11.18

%  

 

10.48

%

Total capital ratio (5)

 

 

13.92

%  

 

13.81

%  

 

12.93

%

 

13.92

%  

 

12.93

%

Leverage ratio (Tier 1 capital to average assets) (5)

 

 

8.82

%  

 

8.82

%  

 

8.94

%

 

8.82

%  

 

8.94

%

Common equity to total assets

 

 

12.52

%  

 

12.41

%  

 

14.48

%

 

12.52

%  

 

14.48

%

Tangible common equity to tangible assets (2)

 

 

7.91

%  

 

7.74

%  

 

9.23

%

 

7.91

%  

 

9.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Condition

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Assets

 

$

19,930,650

 

$

19,752,317

 

$

17,441,035

 

$

19,930,650

 

$

17,441,035

 

Loans held for investment

 

 

14,383,215

 

 

14,308,646

 

 

12,306,997

 

 

14,383,215

 

 

12,306,997

 

Securities

 

 

3,102,217

 

 

2,672,557

 

 

2,607,748

 

 

3,102,217

 

 

2,607,748

 

Earning Assets

 

 

17,885,975

 

 

17,680,876

 

 

15,365,753

 

 

17,885,975

 

 

15,365,753

 

Goodwill

 

 

935,560

 

 

935,560

 

 

929,815

 

 

935,560

 

 

929,815

 

Amortizable intangibles, net

 

 

61,068

 

 

65,105

 

 

78,241

 

 

61,068

 

 

78,241

 

Deposits

 

 

15,576,098

 

 

15,605,139

 

 

13,044,712

 

 

15,576,098

 

 

13,044,712

 

Borrowings

 

 

1,314,322

 

 

1,125,030

 

 

1,549,181

 

 

1,314,322

 

 

1,549,181

 

Stockholders' equity

 

 

2,660,885

 

 

2,618,226

 

 

2,525,031

 

 

2,660,885

 

 

2,525,031

 

Tangible common equity (2)

 

 

1,497,900

 

 

1,451,197

 

 

1,516,975

 

 

1,497,900

 

 

1,516,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment, net of deferred fees and costs

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Construction and land development

 

$

1,207,190

 

$

1,247,939

 

$

1,201,149

 

$

1,207,190

 

$

1,201,149

 

Commercial real estate - owner occupied

 

 

2,107,333

 

 

2,067,087

 

 

1,979,052

 

 

2,107,333

 

 

1,979,052

 

Commercial real estate - non-owner occupied

 

 

3,497,929

 

 

3,455,125

 

 

3,198,580

 

 

3,497,929

 

 

3,198,580

 

Multifamily real estate

 

 

731,582

 

 

717,719

 

 

659,946

 

 

731,582

 

 

659,946

 

Commercial & Industrial

 

 

3,536,249

 

 

3,555,971

 

 

2,058,133

 

 

3,536,249

 

 

2,058,133

 

Residential 1-4 Family - Commercial

 

 

696,944

 

 

715,384

 

 

721,185

 

 

696,944

 

 

721,185

 

Residential 1-4 Family - Consumer

 

 

830,144

 

 

841,051

 

 

913,245

 

 

830,144

 

 

913,245

 

Residential 1-4 Family - Revolving

 

 

618,320

 

 

627,765

 

 

660,963

 

 

618,320

 

 

660,963

 

Auto

 

 

387,417

 

 

380,053

 

 

328,456

 

 

387,417

 

 

328,456

 

Consumer

 

 

276,023

 

 

311,362

 

 

386,848

 

 

276,023

 

 

386,848

 

Other Commercial

 

 

494,084

 

 

389,190

 

 

199,440

 

 

494,084

 

 

199,440

 

Total loans held for investment

 

$

14,383,215

 

$

14,308,646

 

$

12,306,997

 

$

14,383,215

 

$

12,306,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

NOW accounts

 

$

3,460,480

 

$

3,618,523

 

$

2,515,777

 

$

3,460,480

 

$

2,515,777

 

Money market accounts

 

 

4,269,696

 

 

4,158,325

 

 

3,737,426

 

 

4,269,696

 

 

3,737,426

 

Savings accounts

 

 

861,685

 

 

824,164

 

 

739,505

 

 

861,685

 

 

739,505

 

Time deposits of $250,000 and over

 

 

633,252

 

 

689,693

 

 

717,090

 

 

633,252

 

 

717,090

 

Other time deposits

 

 

1,930,320

 

 

1,968,474

 

 

2,179,740

 

 

1,930,320

 

 

2,179,740

 

Time deposits

 

 

2,563,572

 

 

2,658,167

 

 

2,896,830

 

 

2,563,572

 

 

2,896,830

 

Total interest-bearing deposits

 

$

11,155,433

 

$

11,259,179

 

$

9,889,538

 

$

11,155,433

 

$

9,889,538

 

Demand deposits

 

 

4,420,665

 

 

4,345,960

 

 

3,155,174

 

 

4,420,665

 

 

3,155,174

 

Total deposits

 

$

15,576,098

 

$

15,605,139

 

$

13,044,712

 

$

15,576,098

 

$

13,044,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Averages

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Assets

 

$

19,785,167

 

$

19,157,238

 

$

17,203,328

 

$

18,837,580

 

$

16,639,041

 

Loans held for investment

 

 

14,358,666

 

 

13,957,711

 

 

12,240,254

 

 

13,639,401

 

 

11,821,612

 

Loans held for sale

 

 

45,201

 

 

56,846

 

 

75,558

 

 

50,902

 

 

46,095

 

Securities

 

 

2,891,210

 

 

2,648,967

 

 

2,660,270

 

 

2,721,161

 

 

2,681,463

 

Earning assets

 

 

17,748,152

 

 

17,106,132

 

 

15,191,792

 

 

16,809,423

 

 

14,700,019

 

Deposits

 

 

15,580,469

 

 

14,960,386

 

 

12,812,211

 

 

14,632,709

 

 

12,250,199

 

Time deposits

 

 

2,579,991

 

 

2,667,268

 

 

2,769,574

 

 

2,667,267

 

 

2,554,058

 

Interest-bearing deposits

 

 

11,260,244

 

 

10,941,368

 

 

9,803,624

 

 

10,875,752

 

 

9,408,182

 

Borrowings

 

 

1,183,839

 

 

1,344,994

 

 

1,623,681

 

 

1,324,457

 

 

1,753,276

 

Interest-bearing liabilities

 

 

12,444,083

 

 

12,286,362

 

 

11,427,305

 

 

12,200,209

 

 

11,161,458

 

Stockholders' equity

 

 

2,648,777

 

 

2,489,969

 

 

2,528,435

 

 

2,541,856

 

 

2,429,912

 

Tangible common equity (2)

 

 

1,483,848

 

 

1,446,948

 

 

1,517,400

 

 

1,469,918

 

 

1,442,831

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Nine Months Ended

 

    

09/30/20

    

06/30/20

    

09/30/19

 

09/30/20

 

09/30/19

Asset Quality

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Allowance for Credit Losses (ACL)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Beginning balance, Allowance for loan and lease losses (ALLL)

 

$

169,977

 

$

141,043

 

$

42,463

 

$

42,294

 

$

41,045

 

Add: Day 1 impact from adoption of CECL

 

 

 

 

 

 

 

 

47,484

 

 

 

Add: Recoveries

 

 

1,566

 

 

1,411

 

 

1,574

 

 

5,137

 

 

4,940

 

Less: Charge-offs

 

 

2,978

 

 

4,677

 

 

9,317

 

 

14,806

 

 

21,190

 

Add: Provision for loan losses

 

 

5,557

 

 

32,200

 

 

9,100

 

 

94,013

 

 

19,025

 

Ending balance, ALLL

 

$

174,122

 

$

169,977

 

$

43,820

 

$

174,122

 

$

43,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, Reserve for unfunded commitment (RUC)

 

$

11,000

 

$

9,000

 

$

1,100

 

 

900

 

 

900

 

Add: Day 1 impact from adoption of CECL

 

 

 

 

 

 

 

 

4,160

 

 

 

Add: Impact of acquisition accounting

 

 

 

 

 

 

 

 

 

 

1,033

 

Add: Provision for unfunded commitments

 

 

1,000

 

 

2,000

 

 

 

 

6,940

 

 

(833

)

Ending balance, RUC

 

$

12,000

 

$

11,000

 

$

1,100

 

 

12,000

 

 

1,100

 

Total ACL

 

$

186,122

 

$

180,977

 

$

44,920

 

$

186,122

 

$

44,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL / total outstanding loans

 

 

1.29

%  

 

1.26

%  

 

0.36

%

 

1.29

%  

 

0.36

ACL / total adjusted loans (9)

 

 

1.46

%  

 

1.42

%  

 

0.36

%

 

1.46

%  

 

0.36

ALLL / total outstanding loans

 

 

1.21

%  

 

1.19

%  

 

0.36

%

 

1.21

%  

 

0.36

ALLL / total adjusted loans (9)

 

 

1.36

%  

 

1.34

%  

 

0.36

%  

 

1.36

%  

 

0.36

Net charge-offs / total average loans

 

 

0.04

%  

 

0.09

%  

 

0.25

%

 

0.09

%  

 

0.18

Net charge-offs / total adjusted average loans (9)

 

 

0.04

%  

 

0.10

%  

 

0.25

%

 

0.11

%  

 

0.18

Provision for loan losses/ total average loans

 

 

0.15

%  

 

0.93

%  

 

0.29

%

 

0.92

%  

 

0.22

Provision for loan losses/ total adjusted average loans (9)

 

 

0.17

%  

 

1.02

%  

 

0.29

%

 

1.03

%  

 

0.22

 

`

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets (6)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Construction and land development

 

$

3,520

 

$

3,977

 

$

7,785

 

$

3,520

 

$

7,785

 

Commercial real estate - owner occupied

 

 

9,267

 

 

8,924

 

 

5,684

 

 

9,267

 

 

5,684

 

Commercial real estate - non-owner occupied

 

 

1,992

 

 

1,877

 

 

381

 

 

1,992

 

 

381

 

Multifamily real estate

 

 

33

 

 

33

 

 

 

 

33

 

 

 

Commercial & Industrial

 

 

1,592

 

 

2,708

 

 

1,585

 

 

1,592

 

 

1,585

 

Residential 1-4 Family - Commercial

 

 

5,743

 

 

5,784

 

 

3,879

 

 

5,743

 

 

3,879

 

Residential 1-4 Family - Consumer

 

 

12,620

 

 

12,029

 

 

8,292

 

 

12,620

 

 

8,292

 

Residential 1-4 Family - Revolving

 

 

3,664

 

 

3,626

 

 

1,641

 

 

3,664

 

 

1,641

 

Auto

 

 

517

 

 

584

 

 

604

 

 

517

 

 

604

 

Consumer

 

 

75

 

 

81

 

 

84

 

 

75

 

 

84

 

Other Commercial

 

 

 

 

1

 

 

97

 

 

 

 

97

 

Nonaccrual loans

 

$

39,023

 

$

39,624

 

$

30,032

 

$

39,023

 

$

30,032

 

Foreclosed property

 

 

4,159

 

 

4,397

 

 

6,385

 

 

4,159

 

 

6,385

 

Total nonperforming assets (NPAs)

 

$

43,182

 

$

44,021

 

$

36,417

 

$

43,182

 

$

36,417

 

Construction and land development

 

$

93

 

$

473

 

$

171

 

$

93

 

$

171

 

Commercial real estate - owner occupied

 

 

1,726

 

 

7,851

 

 

2,571

 

 

1,726

 

 

2,571

 

Commercial real estate - non-owner occupied

 

 

168

 

 

878

 

 

36

 

 

168

 

 

36

 

Multifamily real estate

 

 

359

 

 

366

 

 

1,212

 

 

359

 

 

1,212

 

Commercial & Industrial

 

 

604

 

 

178

 

 

265

 

 

604

 

 

265

 

Residential 1-4 Family - Commercial

 

 

5,298

 

 

578

 

 

916

 

 

5,298

 

 

916

 

Residential 1-4 Family - Consumer

 

 

4,495

 

 

5,099

 

 

3,815

 

 

4,495

 

 

3,815

 

Residential 1-4 Family - Revolving

 

 

2,276

 

 

1,995

 

 

1,674

 

 

2,276

 

 

1,674

 

Auto

 

 

315

 

 

181

 

 

183

 

 

315

 

 

183

 

Consumer

 

 

327

 

 

1,157

 

 

1,163

 

 

327

 

 

1,163

 

Other Commercial

 

 

 

 

499

 

 

30

 

 

 

 

30

 

Loans e 90 days and still accruing

 

$

15,661

 

$

19,255

 

$

12,036

 

$

15,661

 

$

12,036

 

Total NPAs and loans e 90 days

 

$

58,843

 

$

63,276

 

$

48,453

 

$

58,843

 

$

48,453

 

NPAs / total outstanding loans

 

 

0.30

%  

 

0.31

%  

 

0.30

%

 

0.30

%  

 

0.30

NPAs / total adjusted loans (9)

 

 

0.34

%  

 

0.35

%  

 

0.30

%  

 

0.34

%  

 

0.30

NPAs / total assets

 

 

0.22

%  

 

0.22

%  

 

0.21

%

 

0.22

%  

 

0.21

ALLL / nonaccrual loans

 

 

446.20

%  

 

428.97

%  

 

145.91

%

 

446.20

%  

 

145.91

ALLL/ nonperforming assets

 

 

403.23

%  

 

386.13

%  

 

120.33

%

 

403.23

%  

 

120.33

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Nine Months Ended

 

 

    

09/30/20

    

06/30/20

    

09/30/19

 

09/30/20

 

09/30/19

 

Past Due Detail (6)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Construction and land development

 

$

2,625

 

$

1,683

 

$

1,062

 

$

2,625

 

$

1,062

 

Commercial real estate - owner occupied

 

 

4,924

 

 

1,679

 

 

4,977

 

 

4,924

 

 

4,977

 

Commercial real estate - non-owner occupied

 

 

1,291

 

 

930

 

 

5,757

 

 

1,291

 

 

5,757

 

Multifamily real estate

 

 

 

 

 

 

107

 

 

 

 

107

 

Commercial & Industrial

 

 

4,322

 

 

1,602

 

 

2,079

 

 

4,322

 

 

2,079

 

Residential 1-4 Family - Commercial

 

 

1,236

 

 

480

 

 

1,842

 

 

1,236

 

1,842 Residential 1-4 Family - Consumer 2,998 1,229 1,527 2,998 1,527 Residential 1-4 Family - Revolving 2,669 1,924 4,965 2,669 4,965 Auto 1,513 1,176 1,787 1,513 1,787 Consumer 1,020 844 2,000 1,020 2,000 Other Commercial 613 456 579 613 579 Loans 30-59 days past due $23,211 $12,003 $26,682 $23,211 $26,682 Construction and land development $223 $294 $351 $223 $351 Commercial real estate - owner occupied 1,310 430 — 1,310 — Commercial real estate - non-owner occupied 1,371 369 1,878 1,371 1,878 Multifamily real estate — — 164 — 164 Commercial & Industrial 1,448 296 1,946 1,448 1,946 Residential 1-4 Family - Commercial 937 2,105 3,081 937 3,081 Residential 1-4 Family - Consumer 3,976 3,817 5,182 3,976 5,182 Residential 1-4 Family - Revolving 1,141 1,048 1,747 1,141 1,747 Auto 453 290 407 453 407 Consumer 772 561 1,666 772 1,666 Other Commercial 427 — 9 427 9 Loans 60-89 days past due $12,058 $9,210 $16,431 $12,058 $16,431 Past Due and still accruing $50,930 $40,468 $55,149 $50,930 $55,149 Past Due and still accruing / total adjusted loans(9) 0.40% 0.32% 0.45% 0.40% 0.45% Troubled Debt Restructurings Performing $17,076 $15,303 $15,156 $17,076 $15,156 Nonperforming 7,045 5,042 3,582 7,045 3,582 Total troubled debt restructurings $24,121 $20,345 $18,738 $24,121 $18,738 Alternative Performance Measures (non-GAAP) Net interest income (FTE) Net interest income (GAAP) $137,381 $137,305 $136,601 $409,694 $402,743 FTE adjustment 2,901 2,805 2,804 8,462 8,468 Net interest income (FTE) (non-GAAP) (1) $140,282 $140,110 $139,405 $418,156 $411,211 Noninterest income (GAAP) 34,407 35,932 48,106 99,245 103,621 Total revenue (FTE) (non-GAAP) (1) $174,689 $176,042 $187,511 $517,401 $514,832 Average earning assets $17,748,152 $17,106,132 $15,191,792 $16,809,423 $14,700,019 Net interest margin 3.08% 3.23% 3.57% 3.26% 3.66%Net interest margin (FTE) (1) 3.14% 3.29% 3.64% 3.32% 3.74% Tangible Assets Ending assets (GAAP) $19,930,650 $19,752,317 $17,441,035 $19,930,650 $17,441,035 Less: Ending goodwill 935,560 935,560 929,815 935,560 929,815 Less: Ending amortizable intangibles 61,068 65,105 78,241 61,068 78,241 Ending tangible assets (non-GAAP) $18,934,022 $18,751,652 $16,432,979 $18,934,022 $16,432,979 Tangible Common Equity (2) Ending equity (GAAP) $2,660,885 $2,618,226 $2,525,031 $2,660,885 $2,525,031 Less: Ending goodwill 935,560 935,560 929,815 935,560 929,815 Less: Ending amortizable intangibles 61,068 65,105 78,241 61,068 78,241 Less: Perpetual preferred stock 166,357 166,364 — 166,357 — Ending tangible common equity (non-GAAP) $1,497,900 $1,451,197 $1,516,975 $1,497,900 $1,516,975 Average equity (GAAP) $2,648,777 $2,489,969 $2,528,435 $2,541,856 $2,429,912 Less: Average goodwill 935,560 935,560 930,525 935,560 906,476 Less: Average amortizable intangibles 63,016 67,136 80,510 67,130 80,605 Less: Average perpetual preferred stock 166,353 40,325 - 69,248 - Average tangible common equity (non-GAAP) $1,483,848 $1,446,948 $1,517,400 $1,469,918 $1,442,831


As of & For Three Months Ended

As of & For Nine Months Ended

09/30/20

06/30/20

09/30/19

09/30/20

09/30/19

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Operating Measures (4)

Net income (GAAP)

$

61,000

$

30,709

$

53,238

$

98,798

$

137,692

Plus: Merger and rebranding-related costs, net of tax

2,819

25,973

Net operating earnings (non-GAAP)

61,000

30,709

56,057

98,798

163,665

Less: Dividends on preferred stock

2,691

2,691

Net operating earnings available to common shareholders (non-GAAP)

$

58,309

$

30,709

$

56,057

$

96,107

$

163,665

Noninterest expense (GAAP)

$

93,222

$

102,814

$

111,687

$

291,681

$

324,022

Less: Merger Related Costs

2,435

26,928

Less: Rebranding Costs

1,133

5,553

Less: Amortization of intangible assets

4,053

4,223

4,764

12,676

13,919

Operating noninterest expense (non-GAAP)

$

89,169

$

98,591

$

103,355

$

279,005

$

277,622

Net interest income (FTE) (non-GAAP) (1)

$

140,282

$

140,110

$

139,405

$

418,156

$

411,211

Noninterest income (GAAP)

34,407

35,932

48,106

99,245

103,621

Total revenue (FTE) (non-GAAP) (1)

$

174,689

$

176,042

$

187,511

$

517,401

$

514,832

Efficiency ratio

54.27

%

59.35

%

60.47

%

57.31

%

63.99

%

Operating efficiency ratio (FTE) (1)(7)

51.04

%

56.00

%

55.12

%

53.92

%

53.92

%

Operating ROTCE (2)(3)(4)

Net operating earnings available to common shareholders (non-GAAP)

$

58,309

$

30,709

$

56,057

$

96,107

$

163,665

Plus: Amortization of intangibles, tax effected

3,202

3,336

3,764

10,014

10,996

Net operating earnings available to common shareholders before amortization of intangibles (non-GAAP)

$

61,511

$

34,045

$

59,821

$

106,121

$

174,661

Average tangible common equity (non-GAAP)

$

1,483,848

$

1,446,948

$

1,517,400

$

1,469,918

$

1,442,831

Operating return on average tangible common equity (non-GAAP)

16.49

%

9.46

%

15.64

%

9.64

%

16.18

%

Pre-tax pre-provision operating earnings (8)

Net income (GAAP)

$

61,000

$

30,709

$

53,238

$

98,798

$

137,692

Plus: Provision for credit losses

6,558

34,200

9,100

100,954

18,192

Plus: Income tax expense

11,008

5,514

10,724

17,506

26,330

Plus: Merger and rebranding-related costs

3,568

32,481

Pre-tax pre-provision operating earnings (non-GAAP)

$

78,566

$

70,423

$

76,630

$

217,258

$

214,695

Paycheck Protection Program adjustment impact (9)

Loans held for investment (net of deferred fees and costs)(GAAP)

$

14,383,215

$

14,308,646

$

12,306,997

$

14,383,215

$

12,306,997

Less: PPP adjustments

1,600,577

1,598,718

1,600,577

Loans held for investment (net of deferred fees and costs),net adjustments, excluding PPP (non-GAAP)

$

12,782,638

$

12,709,928

$

12,306,997

$

12,782,638

$

12,306,997

Average loans held for investment (GAAP)

$

14,358,666

$

13,957,711

$

12,240,254

$

13,639,401

$

11,821,612

Less: Average PPP adjustments

1,638,204

1,273,883

1,457,091

Average loans held for investment, net adjustments, excluding PPP (non-GAAP)

$

12,720,462

$

12,683,828

$

12,240,254

$

12,182,310

$

11,821,612

Mortgage Origination Volume

Refinance Volume

$

145,718

$

163,737

$

62,230

$

377,837

$

102,069

Construction Volume

6,448

12,966

3,915

27,251

4,275

Purchase Volume

130,185

83,248

78,113

277,925

194,445

Total Mortgage loan originations

$

282,351

$

259,951

$

144,258

$

683,013

$

300,789

% of originations that are refinances

51.6

%

63.0

%

43.1

%

55.3

%

33.9

%

Wealth

Assets under management ("AUM")

$

5,455,268

$

5,271,288

$

5,451,796

$

5,455,268

$

5,451,796

Other Data

End of period full-time employees

1,883

1,973

1,946

1,883

1,946

Number of full-service branches

135

149

149

135

149

Number of full automatic transaction machines ("ATMs")

157

169

169

157

169


(1) These are non-GAAP financial measures. Net interest income (FTE) and total revenue (FTE), which are used in computing net interest margin (FTE) and operating efficiency ratio (FTE), respectively, 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 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 common equity is used in the calculation of certain profitability, capital, and per share ratios. The Company believes 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.
(3) These are non-GAAP financial measures. The Company believes that ROTCE is a meaningful supplement to GAAP financial measures and 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. Operating measures exclude merger and rebranding-related costs unrelated to the Company’s normal operations. The Company believes these measures are useful to investors as they exclude certain costs resulting from acquisition activity and allow investors to more clearly see the combined economic results of the organization’s operations.
(5) All ratios at September 30, 2020 are estimates and subject to change pending the Company’s filing of its FR Y9C. All other periods are presented as filed.
(6) Amounts are not directly comparable due to the Company’s adoption of CECL on January 1, 2020. Prior to January 1, 2020, nonaccrual and past due loan information excluded PCI-related loan balances. These balances also reflect the impact of the CARES Act and March 22 Joint Guidance, which provides relief for TDR designations and also provides guidance on past due reporting for modified loans.
(7) The operating efficiency ratio (FTE) excludes the amortization of intangible assets and merger-related costs. This measure is similar to the measure utilized by the Company when analyzing corporate performance and is also similar to the measure utilized for incentive compensation. The Company believes this measure is useful to investors as it excludes certain costs resulting from acquisition activity allowing for greater comparability with others in the industry and allowing investors to more clearly see the combined economic results of the organization’s operations.
(8) This is a non-GAAP financial measure. Pre-tax pre-provision earnings excludes the provision for credit losses, which can fluctuate significantly from period-to-period under the recently adopted CECL methodology, merger and rebranding-related costs unrelated to the Company’s normal operations, and income tax expense. The Company believes this measure is useful to investors as it excludes certain costs resulting from acquisition activity as well as the potentially volatile provision measure, and allows for greater comparability with others in the industry and for investors to more clearly see the combined economic results of the organization’s operations.
(9) These are non-GAAP financial measures. PPP adjustment impact excludes the SBA guaranteed loans funded during the first half of 2020. The Company believes loans held for investment (net of deferred fees and costs), excluding PPP is useful to investors as it provides more clarity on the Company’s organic growth. The Company also believes that the related non-GAAP financial measures of past due loans still accruing interest as a percentage of total loans held for investment (net of deferred fees and costs), excluding PPP, are useful to investors as loans originated under the PPP carry an SBA guarantee. The Company believes that the ALLL as a percentage of loans held for investment (net of deferred fees and costs), excluding PPP, is useful to investors because of the size of the Company’s PPP originations and the impact of the embedded credit enhancement provided by the SBA guarantee.


ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)

September 30,

June 30,

December 31,

September 30,

2020

2020

2019

2019

ASSETS

(unaudited)

(unaudited)

(audited)

(unaudited)

Cash and cash equivalents:

Cash and due from banks

$

178,563

$

202,947

$

163,050

$

218,584

Interest-bearing deposits in other banks

335,111

636,211

234,810

370,673

Federal funds sold

7,292

2,862

38,172

2,663

Total cash and cash equivalents

520,966

842,020

436,032

591,920

Securities available for sale, at fair value

2,443,340

2,019,164

1,945,445

1,918,859

Securities held to maturity, at carrying value

546,661

547,561

555,144

556,579

Restricted stock, at cost

112,216

105,832

130,848

132,310

Loans held for sale, at fair value

52,607

55,067

55,405

72,208

Loans held for investment, net of deferred fees and costs

14,383,215

14,308,646

12,610,936

12,306,997

Less allowance for loan and lease losses

174,122

169,977

42,294

43,820

Total loans held for investment, net

14,209,093

14,138,669

12,568,642

12,263,177

Premises and equipment, net

156,934

164,321

161,073

168,122

Goodwill

935,560

935,560

935,560

929,815

Amortizable intangibles, net

61,068

65,105

73,669

78,241

Bank owned life insurance

325,538

327,075

322,917

320,779

Other assets

566,667

551,943

378,255

409,025

Total assets

$

19,930,650

$

19,752,317

$

17,562,990

$

17,441,035

LIABILITIES

Noninterest-bearing demand deposits

$

4,420,665

$

4,345,960

$

2,970,139

$

3,155,174

Interest-bearing deposits

11,155,433

11,259,179

10,334,842

9,889,538

Total deposits

15,576,098

15,605,139

13,304,981

13,044,712

Securities sold under agreements to repurchase

91,086

77,216

66,053

67,260

Other short-term borrowings

175,200

370,200

344,600

Long-term borrowings

1,048,036

1,047,814

1,077,495

1,137,321

Other liabilities

379,345

403,922

231,159

322,111

Total liabilities

17,269,765

17,134,091

15,049,888

14,916,004

Commitments and contingencies

STOCKHOLDERS' EQUITY

Preferred stock, $10.00 par value

173

173

Common stock, $1.33 par value

104,141

104,126

105,827

107,330

Additional paid-in capital

1,914,640

1,911,985

1,790,305

1,831,667

Retained earnings

579,269

540,638

581,395

545,665

Accumulated other comprehensive income (loss)

62,662

61,304

35,575

40,369

Total stockholders' equity

2,660,885

2,618,226

2,513,102

2,525,031

Total liabilities and stockholders' equity

$

19,930,650

$

19,752,317

$

17,562,990

$

17,441,035

Common shares outstanding

78,718,850

78,713,056

80,001,185

81,147,896

Common shares authorized

200,000,000

200,000,000

200,000,000

200,000,000

Preferred shares outstanding

17,250

17,250

-

-

Preferred shares authorized

500,000

500,000

500,000

500,000

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Interest and dividend income:

Interest and fees on loans

$

138,402

$

143,234

$

156,651

$

432,763

$

459,603

Interest on deposits in other banks

137

155

1,030

1,154

2,047

Interest and dividends on securities:

Taxable

10,275

11,267

12,625

33,170

39,059

Nontaxable

8,600

8,211

8,039

24,520

24,413

Total interest and dividend income

157,414

162,867

178,345

491,607

525,122

Interest expense:

Interest on deposits

15,568

19,861

30,849

63,943

84,088

Interest on short-term borrowings

72

186

2,200

1,598

14,313

Interest on long-term borrowings

4,393

5,515

8,695

16,372

23,978

Total interest expense

20,033

25,562

41,744

81,913

122,379

Net interest income

137,381

137,305

136,601

409,694

402,743

Provision for credit losses

6,558

34,200

9,100

100,954

18,192

Net interest income after provision for credit losses

130,823

103,105

127,501

308,740

384,551

Noninterest income:

Service charges on deposit accounts

6,041

4,930

7,675

18,549

22,331

Other service charges, commissions and fees

1,621

1,354

1,513

4,600

4,879

Interchange fees

1,979

1,697

2,108

5,300

12,765

Fiduciary and asset management fees

6,045

5,515

6,082

17,543

16,834

Mortgage banking income

8,897

5,826

3,374

16,744

7,614

Gains on securities transactions

18

10,339

7,104

12,293

7,306

Bank owned life insurance income

3,421

2,027

2,062

7,498

6,191

Loan-related interest rate swap fees

3,170

5,484

5,480

12,602

10,656

Other operating income

3,215

(1,240

)

12,708

4,116

15,045

Total noninterest income

34,407

35,932

48,106

99,245

103,621

Noninterest expenses:

Salaries and benefits

49,000

49,896

49,718

149,013

148,116

Occupancy expenses

7,441

7,224

7,493

21,798

22,427

Furniture and equipment expenses

3,895

3,406

3,719

11,042

10,656

Printing, postage, and supplies

904

999

1,268

3,194

3,763

Technology and data processing

6,564

6,454

5,787

19,187

17,203

Professional services

2,914

2,989

2,681

9,211

8,269

Marketing and advertising expense

2,631

2,043

2,600

7,413

7,891

FDIC assessment premiums and other insurance

1,811

2,907

381

7,578

5,620

Other taxes

4,124

4,120

3,971

12,364

11,779

Loan-related expenses

2,314

2,501

2,566

7,512

7,250

OREO and credit-related expenses

413

411

1,005

1,512

3,162

Amortization of intangible assets

4,053

4,223

4,764

12,676

13,919

Training and other personnel costs

746

876

1,618

3,192

4,240

Merger-related costs

2,435

26,928

Rebranding expense

1,133

5,553

Loss on debt extinguishment

10,306

16,397

10,306

16,397

Other expenses

6,412

4,459

4,151

15,683

10,849

Total noninterest expenses

93,222

102,814

111,687

291,681

324,022

Income from continuing operations before income taxes

72,008

36,223

63,920

116,304

164,150

Income tax expense

11,008

5,514

10,724

17,506

26,330

Income from continuing operations

$

61,000

$

30,709

$

53,196

$

98,798

$

137,820

Discontinued operations:

Income (loss) from operations of discontinued mortgage segment

$

$

$

56

$

$

(173

)

Income tax expense (benefit)

14

(45

)

Income (loss) on discontinued operations

42

(128

)

Net income

61,000

30,709

53,238

98,798

137,692

Dividends on preferred stock

2,691

-

-

2,691

-

Net income available to common shareholders

$

58,309

$

30,709

$

53,238

$

96,107

$

137,692