Atlantic Union Bankshares (US:AUB)2023-11-01 16:00Financial Performance - The Company reported a significant change in its financial condition and results of operations, which should be evaluated in conjunction with its consolidated financial statements and prior reports[194]. - Net income available to common shareholders for Q3 2023 was $51.1 million, with basic and diluted EPS of $0.68, compared to $55.1 million and $0.74 for Q3 2022[223]. - Net interest income for Q3 2023 was $151.9 million, an increase of $1.2 million from Q3 2022, while the net interest margin decreased to 3.27%[227]. - For the first nine months of 2023, net interest income was $457.5 million, an increase of $37.1 million from the same period of 2022[229]. - Noninterest income rose to $27,094 thousand, a 5.9% increase from $25,584 thousand year-over-year, driven by a $27.7 million gain from a sale-leaseback transaction[240]. - Adjusted operating earnings for Q3 2023 were $59.8 million, with adjusted diluted operating EPS of $0.80, compared to $55.1 million and $0.74 in Q3 2022[223]. Assets and Liabilities - As of September 30, 2023, total assets increased to $20.7 billion, up $275.1 million or approximately 1.8% from December 31, 2022[225]. - Total liabilities increased by $259.0 million or approximately 1.9% (annualized) to $18.3 billion as of September 30, 2023, compared to December 31, 2022[272]. - Total deposits reached $16.8 billion, an increase of $854.8 million or approximately 7.2% from December 31, 2022, driven by a $1.6 billion increase in interest-bearing deposits[225]. - Total short-term and long-term borrowings decreased by $688.0 million or 40.3% to $1.0 billion as of September 30, 2023, compared to December 31, 2022[274]. - Liquid assets totaled $5.6 billion, accounting for 27.2% of total assets, while liquid earning assets were $5.4 billion, or 29.2% of total earning assets[289]. Loans and Credit Quality - The loan portfolio (LHFI) net of deferred fees and costs increased to $15.3 billion as of September 30, 2023, compared to $14.4 billion at December 31, 2022[294]. - The allowance for credit losses (ACL) increased by $16.5 million to $140.9 million due to economic uncertainty and net loan growth[298]. - Nonperforming assets (NPAs) totaled $28.8 million, reflecting a 6.1% increase from $27.1 million at December 31, 2022, with NPAs as a percentage of total LHFI remaining stable at 0.19%[300]. - The company reported past due LHFI still accruing interest of $40.6 million, or 0.27% of total LHFI, up from $30.0 million or 0.21% at December 31, 2022[306]. - The company continues to focus on soundly underwritten loans to qualifying borrowers, mitigating risks in concentrated portfolios such as commercial real estate[295]. Interest Income and Expense - Interest and dividend income rose to $694.95 million, a $236.59 million increase compared to the same period in 2022[229]. - Interest expense increased significantly to $237.48 million, up by $199.53 million from the previous year[229]. - The cost of interest-bearing liabilities rose to 2.42%, an increase of 199 bps from 0.43% in the prior year[229]. - The yield on interest-earning assets increased to 5.09%, up from 3.44% in the same period of 2022, reflecting a rise of 165 bps[229]. Strategic Initiatives and Mergers - The pending merger with American National is expected to bring strategic gains and cost savings, although there are risks associated with regulatory approvals and market conditions[198]. - The Company incurred pre-tax merger costs of approximately $2.0 million related to the proposed merger with American National Bankshares Inc.[219]. - The Company initiated strategic cost-saving measures expected to reduce annual expenses by approximately $17 million, incurring pre-tax expenses of $8.7 million in Q3 2023[220]. Regulatory and Accounting Changes - The Company does not expect the recent accounting pronouncement (ASU No. 2023-02) to have a significant impact on its consolidated financial statements[211]. - The Company is allowed to phase in the impact of adopting the CECL methodology over a three-year period that began in 2022 and ends in 2024[325]. Risk Factors - The Company is subject to various risks, including changes in market interest rates, economic conditions, and regulatory changes that could affect its operations[198]. - The company remains cautious about future economic conditions, including inflation and interest rates, which may impact NPAs[299]. Branch and ATM Network - The Company has 109 branches and 123 ATMs across Virginia, Maryland, and North Carolina as of September 30, 2023[212].