Atlantic Union Bankshares (US:AUB)2022-01-25 19:09Financial Data and Key Metrics Changes - Reported net income available to common shareholders was $44.8 million, down approximately $26.8 million from the third quarter, with earnings per common share at $0.59 [21] - Non-GAAP adjusted operating earnings available to common shareholders were $53.8 million, down approximately $17.8 million from the third quarter, with adjusted operating earnings per common share at $0.71 [21] - The reported return on equity for the fourth quarter was 6.98%, while the non-GAAP adjusted operating return on tangible common equity was 14.25% [21] - Total allowance for credit losses was $107.8 million, down approximately $1.5 million from the previous quarter [22] Business Line Data and Key Metrics Changes - Fourth quarter loan production was the best since the pandemic started, with 11.7% annualized loan growth during the quarter, excluding PPP [9][10] - Commercial loan balances increased by $345 million or 12.8% linked quarter annualized, while consumer loan balances grew $27 million or 5.4% annualized [31] - Non-interest income increased by $6.5 million to $36.4 million, primarily driven by a gain on the sale of Visa Class B stock [28] Market Data and Key Metrics Changes - Virginia's unemployment rate improved to 3.4% in November, down from 3.8% in September, better than the national average of 4.2% [12] - The company expects upper single-digit loan growth for 2022, supported by solid pipelines and competitive positioning [11] Company Strategy and Development Direction - The company aims to diversify income streams, focusing on both net interest income and non-interest income, with initiatives in foreign exchange solutions and specialty finance operations [16] - The strategic focus includes leveraging financial technology and fintech partnerships to generate new sources of income [17] - The company plans to close 16 branches, which will reduce its retail branch network by approximately 12% [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic outlook, citing a benign credit environment and expected Federal Reserve rate hikes in 2022 [7][8] - The company is confident in maintaining differentiated financial performance and achieving top-tier financial targets for 2022 [14][34] Other Important Information - The company raised tier two regulatory capital by issuing $250 million of subordinated notes [33] - A share repurchase program was authorized to purchase up to $100 million of the company's common stock [33] Q&A Session Summary Question: Loan growth towards the end of the quarter - Management noted strong loan growth with average yields on new commercial loans around 3% [39] Question: Rate hikes and deposit betas - Management expects three rate hikes from the Fed in 2022, with deposit costs not expected to rise significantly until later in the year [41] Question: Core NII growth guidance - Management revised the core NII growth guidance to 7.5% to 8% for the year, primarily due to higher rates and putting excess liquidity to work [50] Question: Service charges and overdraft policies - Management acknowledged seasonal increases in service charges and indicated ongoing adjustments to overdraft policies to remain consumer-friendly [56][57]