Atlantic Union Bankshares (US:AUB)2021-04-22 19:30Financial Data and Key Metrics Changes - Reported net income available to common shareholders was $53.2 million, with earnings per share of $0.67, down approximately $3.2 million or $0.05 per common share from the fourth quarter [29] - Reported return on equity for the first quarter was 8.4%, down from 8.8% in the prior quarter [29] - Non-GAAP adjusted operating earnings available to common shareholders in the first quarter was $64.8 million, with earnings per common share of $0.82, down approximately $8.1 million or $0.11 per common share from the fourth quarter [30] Business Line Data and Key Metrics Changes - The company closed five branches in the quarter, reducing the total number of branches by 20, or 13% since the same time last year [9] - Commercial loan growth was relatively flat excluding PPP loans, with commercial line utilization dropping one percentage point over the quarter to 25% [22] - The loan book showed a decline in commercial loan balances of $16 million or 4.6% annualized, and reductions in consumer loan balances of $66 million or 80% on an annualized basis [43] Market Data and Key Metrics Changes - The unemployment rate in Virginia improved to 5.1% in March, down from 5.6% in December, and is 90 basis points better than the national average [16] - Total deposits stood at $16.3 billion, an increase of $575 million or approximately 15% annualized from the prior quarter [45] - The overall decline in consumer loan balances was driven by continued pay downs in the HELOC and residential mortgage loan portfolios [44] Company Strategy and Development Direction - The company aims to become the premier Mid Atlantic bank, focusing on soundness, profitability, and growth [7] - The management is optimistic about organic growth and potential M&A opportunities, particularly due to disruptions at larger competitors [11] - The company is investing in projects to improve efficiency and scalability, with a focus on enhancing the customer experience [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in credit quality, noting minimal credit losses and a positive economic outlook due to government stimulus and vaccine rollout [21] - The company expects loan growth in the second half of the year to be better than the first half, potentially reaching 4% to 5% for the full year [23] - Management remains focused on mitigating credit risk while positioning for success in a recovering economy [24] Other Important Information - The total allowance for credit losses was $155.7 million, with a decrease of $14.8 million due to lower expected losses [31] - Noninterest expense declined to $111.9 million in the first quarter, down from $121.7 million in the prior quarter [40] - The effective tax rate for the first quarter increased to 16.8% from 15.1% in the fourth quarter [42] Q&A Session Summary Question: Inquiry about expense outlook and expected returns on investments - Management indicated that the annual run rate of expenses is expected to be around $92 million, with returns from investments anticipated to materialize in the second half of the year and more significantly in 2022 [48][52] Question: Discussion on net interest income and funding side - Management expects continued compression in earning asset yields but noted a steepening of the curve that could mitigate some of the compression [55][59] Question: Inquiry about M&A appetite and geographic focus - Management expressed interest in M&A opportunities, particularly in regions where they see growth potential, while maintaining a focus on organic growth [71]