Atlantic Union Bankshares (US:AUB)2025-02-27 19:58Regulatory Compliance - The Bank incurred deposit insurance assessment expenses of $18.3 million in 2024, up from $18.0 million in 2023 and $8.3 million in 2022, reflecting the impact of the FDIC's special assessment[133]. - The FDIC approved a special assessment at an annual rate of approximately 13.4 basis points, expected to be collected over eight quarterly periods starting in 2024, with the first payment due on June 28, 2024[132]. - The Bank is subject to the Bank Secrecy Act and must implement anti-money laundering compliance programs to prevent money laundering and terrorism financing[143]. - The Bank's compliance with consumer protection laws is critical, as failure to comply may result in penalties or delays in regulatory approvals for mergers or acquisitions[148]. - The CFPB issued a final rule on December 12, 2024, amending Regulation E and Regulation Z, which will impact overdraft services offered by financial institutions with over $10 billion in assets[151]. - The CFPB's final rule requires financial institutions to provide consumers with 24 months of transactional data and account information starting April 1, 2026, with subsequent deadlines based on asset size[152]. - The company is actively monitoring the legal challenges to the Corporate Transparency Act and its implications for compliance[145]. - The final rule to modernize CRA regulations will be applicable starting January 1, 2026, with certain data reporting requirements effective from January 1, 2027[141]. Financial Performance - For 2024, net income available to common shareholders was $197.3 million, representing a 3.8% increase from $190.0 million in 2023, with basic and diluted EPS of $2.29 and $2.24, respectively[381]. - Total assets increased by $3.4 billion or 16.2% to $24.6 billion at December 31, 2024, primarily due to the acquisition of American National[381]. - Total deposits rose by $3.6 billion or 21.3% to $20.4 billion at December 31, 2024, driven by increases in interest-bearing customer deposits and demand deposits[381]. - Net interest income for 2024 totaled $698.5 million, an increase of $87.5 million or 14.3% from 2023, attributed to higher interest-earning assets and yields[384]. - Noninterest income increased by $28.0 million or 30.8% to $118.9 million for 2024, primarily due to a decrease in loss on the sale of AFS securities[385]. - Noninterest expense increased by $77.1 million or 17.9% to $507.5 million for 2024, primarily due to merger-related costs and increases in salaries and benefits[386]. - The company reported a $25.2 million decrease in other operating income in 2024, primarily due to a $29.6 million gain recognized in 2023 related to sale-leaseback transactions[403]. - The company declared and paid cash dividends of $1.30 per common share in 2024, an increase of $0.08 per share or 6.6% over 2023[438]. Acquisition Impact - The acquisition of American National contributed to an initial provision expense of $13.2 million on non-PCD loans, impacting the provision for credit losses which totaled $50.1 million for 2024[381]. - The company entered into a merger agreement with Sandy Spring Bancorp, expected to close on April 1, 2025, with Sandy Spring having total assets of approximately $14.1 billion[373]. - The company recorded an initial provision expense of $13.2 million on non-PCD loans related to the American National acquisition in the second quarter of 2024[470]. - The company experienced a $19.0 million decrease in other expenses in 2024, primarily due to expenses in 2023 associated with strategic cost-saving initiatives[409]. - Wholesale Banking segment's income before income taxes increased by $78.4 million to $187.7 million for 2024, compared to $109.3 million for 2023, primarily due to increased net interest income from the American National acquisition[417]. - Consumer Banking segment's income before income taxes increased by $20.8 million to $100.2 million for 2024, compared to $79.4 million for 2023, driven by higher net interest income from the American National acquisition[422]. Loan and Deposit Growth - Loans held for investment (LHFI) increased by $2.8 billion or 18.1% to $18.5 billion at December 31, 2024, reflecting strong loan growth[432]. - Total deposits reached $20.4 billion, an increase of $3.6 billion or 21.3% compared to December 31, 2023[476]. - Total deposits in the Wholesale Banking segment increased by $790.0 million or 12.3% to $7.2 billion at December 31, 2024, primarily due to the American National acquisition[420]. - Total deposits in the Consumer Banking segment increased by $2.1 billion or 21.2% to $11.9 billion at December 31, 2024, with growth across all deposit categories[425]. - Average deposits rose to $19.5 billion, an increase of $2.9 billion or 17.3% from December 31, 2023[498]. Asset Management and Capital - Common equity Tier 1 capital increased to $2.06 billion, resulting in a common equity Tier 1 capital ratio of 9.96% as of December 31, 2024[484]. - Total risk-based capital rose to $2.82 billion, with a total capital ratio of 13.61% as of December 31, 2024[484]. - Stockholders' equity increased by $586.6 million or 22.9% to $3.1 billion at December 31, 2024, primarily due to the issuance of common stock as merger consideration in the American National acquisition[437]. - The effective tax rate increased to 19.5% for 2024, up from 15.9% in 2023, primarily due to a valuation allowance established in 2024[428]. - The company recorded a specific reserve of $13.1 million on an impaired loan in the commercial and industrial portfolio, contributing to the increase in the ACL[458]. Risk Management - The federal banking agencies have established guidelines for managing risks associated with concentrations in commercial real estate lending, requiring heightened risk management practices if certain concentration metrics are met[159]. - The company emphasizes sound underwriting practices and risk management in its CRE lending, with a focus on collateral values exceeding loan amounts and stress testing for economic conditions[450]. - The allowance for credit losses (ACL) increased to $193,685 thousand in 2024, up from $148,451 thousand in 2023, primarily due to organic loan growth and the American National acquisition[464]. - Nonperforming assets (NPAs) rose to $58.4 million, a 58.2% increase from $36.9 million in 2023, with NPAs as a percentage of total loans increasing to 0.32%[463]. - Provision for credit losses increased by $18.5 million or 58.4% to $50.1 million for the year ended December 31, 2024, primarily due to organic loan growth and economic uncertainty[470].