EX-99.1 2 aub-20190718ex9911d8232.htm EX-99.1 aub_2Q19_Earnings Release_Ex99_1

Exhibit 99.1

Picture 5

Contact:              Robert M. Gorman - (804) 523‑7828

Executive Vice President / Chief Financial Officer

ATLANTIC UNION BANKSHARES REPORTS SECOND QUARTER RESULTS

Richmond, Va., July 18, 2019 – Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (Nasdaq: AUB) today reported net income of $48.8 million and earnings per share of $0.59 for its second quarter ended June 30, 2019. Net operating earnings(1) were $57.1 million and operating earnings per share(1) were $0.70 for its second quarter ended June 30, 2019; these operating results exclude $8.3 million in after-tax merger and rebranding related costs but include after tax losses from discontinued operations of $85,000 and approximately $950,000 in after-tax branch closure costs.

Net income was $84.5 million and earnings per share were $1.06 for the six months ended June 30, 2019. Net operating earnings(1) were $107.6 million and operating earnings per share(1) were $1.36 for the six months ended June 30, 2019; these operating results exclude $23.2 million in after-tax merger and rebranding related costs but include after tax losses from discontinued operations of $170,000 and approximately $950,000 in after-tax expenses related to branch closure costs.

“Atlantic Union followed up on our strong first quarter with a number of accomplishments during the second quarter that align with our stated strategic priorities - positioning us for profitable growth and the delivery of top tier financial metrics,” said John Asbury, President and CEO of Atlantic Union Bankshares. “This quarter’s major accomplishments included seamlessly converting the core data systems of Access National Corporation and successfully rebranding the Company to Atlantic Union.  In addition, we were pleased to achieve the number one ranking in the Mid-Atlantic region in the J.D. Power 2019 Retail Banking Satisfaction Study as we continue our transformation to become the preeminent mid-Atlantic regional bank.”

“With solid loan growth and meaningful improvements to our profitability metrics, on an operating basis, I believe our second quarter results signal the underlying strength and earnings potential of this uniquely valuable franchise.  We remain focused on achieving our 2019 priorities and generating above average investment returns for our shareholders.” 

Select highlights for the second quarter of 2019

·

Performance metrics 

o

Return on Average Assets (“ROA”) was 1.15% compared to 0.92% in the first quarter of 2019. Operating ROA(1) was 1.35% compared to 1.31% in the first quarter of 2019.

o

Return on Average Equity (“ROE”) was 7.86% compared to 6.37% in the first quarter of 2019. Operating ROE(1) was 9.20% compared to 9.03% in the first quarter of 2019.

o

Operating ROTCE(1) was 16.58% compared to 16.37% in the first quarter of 2019.

o

Efficiency ratio improved to 62.43% from 69.99% in the first quarter of 2019. Operating efficiency ratio (FTE)(1) improved to 52.46% from 54.10% in the first quarter of 2019.

·

On May 20, 2019, the Company re-branded to Atlantic Union Bankshares Corporation and successfully completed the integration of Access National Bank (“Access”) branches and operations into Atlantic Union Bank.  Rebranding costs amounted to $4.0 million during the second quarter of 2019 and approximately $407,000 during the first quarter of 2019.

(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 second quarter of 2019, net interest income was $138.6 million, an increase of $11.0 million from the first quarter of 2019.  Net interest income (FTE)(1) was $141.5 million in the second quarter of 2019, an increase of $11.2 million from the first quarter of 2019.  The increases in both net interest income and net interest income (FTE) were primarily the result of a $1.1 billion increase in average interest earning assets and a $598.1 million increase in average interest bearing liabilities from the acquisition of Access. The second quarter net interest margin decreased 1 basis point to 3.71% from 3.72% in the previous quarter, while the net interest margin (FTE)(1) decreased 2 basis points to 3.78% from 3.80% during the same periods. The decrease in the net interest margin and net interest margin (FTE) were principally due to an approximately 2 basis point increase in the cost of funds.

The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments.  During the second quarter of 2019, net accretion related to acquisition accounting increased $2.0 million from the prior quarter to $7.8 million for the quarter ended June 30, 2019.  The first and second quarters of 2019, 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, 2019

 

$

5,557

 

$

292

 

$

(70)

 

$

5,779

For the quarter ended June 30, 2019

 

 

7,659

 

 

213

 

 

(70)

 

 

7,802

For the remaining six months of 2019 (estimated)

 

 

8,307

 

 

328

 

 

(220)

 

 

8,415

For the years ending (estimated):

 

 

  

 

 

  

 

 

  

 

 

  

2020

 

 

13,926

 

 

132

 

 

(633)

 

 

13,425

2021

 

 

11,321

 

 

14

 

 

(807)

 

 

10,528

2022

 

 

9,105

 

 

(43)

 

 

(829)

 

 

8,233

2023

 

 

6,499

 

 

(32)

 

 

(852)

 

 

5,615

2024

 

 

4,906

 

 

(4)

 

 

(877)

 

 

4,025

Thereafter

 

 

18,390

 

 

(1)

 

 

(10,773)

 

 

7,616

 

ASSET QUALITY/LOAN LOSS PROVISION

Overview

During the second quarter of 2019, the Company experienced increases in nonperforming asset (“NPA”) balances from the prior quarter, primarily due to nonaccrual additions of commercial real estate – owner occupied loans and mortgage loans which are attributable to several smaller credit relationships. Past due loan levels as a percentage of total loans held for investment at June 30, 2019 were lower than past due loan levels at March 31, 2019. Charge-off levels as a percentage of loans decreased slightly and the loan loss provision increased from the first quarter of 2019  primarily due to loan growth.

All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $101.3 million (net of fair value mark of $24.3 million) at June 30, 2019.

Nonperforming Assets

At June 30, 2019, NPAs totaled $34.0 million, an increase of $1.8 million, or 5.5%, from March 31, 2019 and an increase of $1.1 million, or 3.2%, from June 30, 2018. NPAs as a percentage of total outstanding loans at June 30, 2019 were 0.28%, an increase of 1 basis point from 0.27% at March 31, 2019 and a decline of 7 basis points from 0.35% at June 30, 2018. As the Company’s NPAs have been at or near historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but do not have a significant impact on the Company’s overall asset quality position. 

(1)

For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30, 

    

March 31, 

    

December 31, 

    

September 30, 

    

June 30, 

 

 

2019

 

2019

 

2018

 

2018

 

2018

Nonaccrual loans

 

$

27,462

 

$

24,841

 

$

26,953

 

$

28,110

 

$

25,662

Foreclosed properties

 

 

6,506

 

 

7,353

 

 

6,722

 

 

6,800

 

 

7,241

Total nonperforming assets

 

$

33,968

 

$

32,194

 

$

33,675

 

$

34,910

 

$

32,903

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30, 

    

March 31, 

    

December 31, 

    

September 30, 

    

June 30, 

 

 

2019

 

2019

 

2018

 

2018

 

2018

Beginning Balance

 

$

24,841

 

$

26,953

 

$

28,110

 

$

25,662

 

$

25,138

Net customer payments

 

 

(3,108)

 

 

(2,314)

 

 

(3,077)

 

 

(2,459)

 

 

(2,651)

Additions

 

 

6,321

 

 

3,297

 

 

4,659

 

 

6,268

 

 

5,063

Charge-offs

 

 

(592)

 

 

(1,626)

 

 

(2,069)

 

 

(1,137)

 

 

(539)

Loans returning to accruing status

 

 

 —

 

 

(952)

 

 

(420)

 

 

(70)

 

 

(1,349)

Transfers to foreclosed property

 

 

 —

 

 

(517)

 

 

(250)

 

 

(154)

 

 

 —

Ending Balance

 

$

27,462

 

$

24,841

 

$

26,953

 

$

28,110

 

$

25,662

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30, 

    

March 31, 

    

December 31, 

    

September 30, 

    

June 30, 

 

 

2019

 

2019

 

2018

 

2018

 

2018

Beginning Balance

 

$

7,353

 

$

6,722

 

$

6,800

 

$

7,241

 

$

8,079

Additions of foreclosed property

 

 

271

 

 

900

 

 

432

 

 

165

 

 

283

Acquisitions of foreclosed property (1)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(162)

Valuation adjustments

 

 

(433)

 

 

(51)

 

 

(140)

 

 

(42)

 

 

(383)

Proceeds from sales

 

 

(638)

 

 

(171)

 

 

(286)

 

 

(889)

 

 

(580)

Gains (losses) from sales

 

 

(47)

 

 

(47)

 

 

(84)

 

 

325

 

 

 4

Ending Balance

 

$

6,506

 

$

7,353

 

$

6,722

 

$

6,800

 

$

7,241

(1)

Includes subsequent measurement period adjustments.

Past Due Loans

Past due loans still accruing interest totaled $43.1 million, or 0.35% of total loans held for investment, at June 30, 2019 compared to $51.4 million, or 0.43% of total loans held for investment, at March 31, 2019 and $38.2 million, or 0.41% of total loans held for investment, at June 30, 2018. Of the total past due loans still accruing interest, $8.8 million, or 0.07% of total loans held for investment, were loans past due 90 days or more at June 30, 2019, compared to $11.0 million, or 0.09% of total loans held for investment, at March 31, 2019 and $6.9 million, or 0.07% of total loans held for investment, at June 30, 2018.

Net Charge-offs

For the second quarter of 2019, net charge-offs were $4.3 million, or 0.14% of total average loans on an annualized basis, compared to $4.2 million, or 0.15%, for the prior quarter and $1.8 million, or 0.07%, for the second quarter of 2018. The majority of net charge-offs in the second quarter of 2019 were related to consumer loans.

Provision for Loan Losses

The provision for loan losses for the second quarter of 2019 was $5.9 million, an increase of $1.9 million compared to the previous quarter and an increase of $3.2 million compared to second quarter of 2018. The increase in the provision for loan losses from the previous quarter and prior year was primarily driven by loan growth.

Allowance for Loan Losses (“ALL”)

The ALL increased $1.6 million from March 31, 2019 to $42.5 million at June 30, 2019 primarily due to loan growth during the quarter. The ALL as a percentage of the total loan portfolio was  0.35% at June 30, 2019,  0.34% at March 31, 2019, and 0.44% at June 30, 2018.  

The ratio of the ALL to nonaccrual loans was 154.6% at June 30, 2019, compared to 164.4% at March 31, 2019 and 160.8% at June 30, 2018.  The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on loans, net charge-off activity, loan growth, delinquency trends, and other credit risk factors that the Company considers important in assessing the adequacy of the allowance for loan losses.

NONINTEREST INCOME

Noninterest income increased $5.6 million to $30.6 million for the quarter ended June 30, 2019 from $24.9 million in the prior quarter primarily driven by loan-related swap fees and mortgage banking income which is seasonally higher in the second quarter. Also contributing to the increase in noninterest income in the second quarter of 2019 was the full quarter impact of the Access acquisition.

NONINTEREST EXPENSE

Noninterest expense decreased $1.1 million to $105.6 million for the quarter ended June 30, 2019 from $106.7 million in the prior quarter. Excluding merger-related costs, amortization of intangible assets, and rebranding costs, operating noninterest expense(1) increased $6.3 million, or 7.5%, in the second quarter of 2019, to $90.3 million when compared to the first quarter of 2019. The increase in operating noninterest expense was primarily due to the full quarter impact of the Access acquisition.  In addition, operating noninterest expense for the second quarter of 2019 included $1.2 million in branch closure costs related to the Company’s decision to close four branches in the third quarter and approximately $800,000 in OREO valuation adjustments driven by updated appraisals received during the quarter.

 

INCOME TAXES

The effective tax rate for the three months ended June 30, 2019 was 16.0% compared to 14.9% for the three months ended March 31, 2019.  The increase in the effective tax rate as compared to the previous quarter was primarily due to the decrease in merger-related expenses related to the acquisition of Access.  

BALANCE SHEET

At June 30, 2019, total assets were $17.2 billion, an increase of $261.7 million, or approximately 6.0% (annualized), from March 31, 2019, primarily due to loan growth during the second quarter of 2019.

At June 30, 2019, loans held for investment (net of deferred fees and costs) were $12.2 billion, an increase of $268.2 million, or 9.0% (annualized), from March 31, 2019.  

At June 30, 2019, total deposits were $12.5 billion, an increase of $26.2 million, or approximately 1.0% (annualized), from March 31, 2019.  

The following table shows the Company’s capital ratios at the quarters ended:

 

 

 

 

 

 

 

 

 

    

June 30, 

    

December 31, 

    

June 30, 

 

 

 

2019

 

2018

 

2018

 

Common equity Tier 1 capital ratio (2)

 

10.54

%  

9.93

%  

9.80

%

Tier 1 capital ratio (2)

 

10.54

%  

11.09

%  

11.02

%

Total capital ratio (2)

 

13.01

%  

12.88

%  

12.89

%

Leverage ratio (Tier 1 capital to average assets) (2)

 

9.00

%  

9.71

%  

9.46

%

Common equity to total assets

 

14.64

%  

13.98

%  

14.27

%

Tangible common equity to tangible assets (1)

 

9.28

%  

8.84

%  

8.86

%

(1)

For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results

(2)

All ratios at June 30, 2019 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.  

 

During the second quarter of 2019, the Company declared and paid cash dividends of $0.23 per common share consistent with the first quarter of 2019 and an increase of $0.02, or approximately 10.0% compared to the second quarter of 2018. On July 10, 2019, the Company announced that its Board of Directors has authorized a share repurchase program to purchase up to $150 million of the Company’s common stock through June 30, 2021 in open market transactions or privately negotiated transactions.

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 153 branches, seven of which are operated as Xenith Bank, a division of Atlantic Union Bank, and approximately 200 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, investment advisory and brokerage products and services. Certain non-bank affiliates of Atlantic Union Bank include: Old Dominion Capital Management, Inc., and its subsidiary, Outfitter Advisors, Ltd., Dixon, Hubard, Feinour, & Brown, Inc., and Middleburg Investment Services, LLC, which provide investment advisory and/or brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

SECOND QUARTER 2019 EARNINGS RELEASE CONFERENCE CALL

Atlantic Union Bank will hold a conference call on Thursday, July 18th, 2019 at 9:00 a.m. Eastern Time during which management will review the second quarter 2019 financial results and provide an update on recent activities. Interested parties may participate in the call toll-free by dialing (877) 668‑4908; international callers wishing to participate may do so by dialing (973) 453‑3058. The conference ID number is 4593923.

NON-GAAP FINANCIAL MEASURES

In reporting the results of the quarter ended June 30, 2019, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis.  These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP.  In addition, the Company’s 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 Company’s performance. The Company’s 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 Company’s 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 include, without limitation, 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 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,

·

the Company’s ability to manage its growth or implement its growth strategy;

·

the possibility that any of the anticipated benefits of the acquisition of Access will not be realized or will not be realized within the expected time period, the expected revenue synergies and cost savings from the acquisition may not be fully realized or realized within the expected time frame, revenues following the acquisition may be lower than expected, or customer and employee relationships and business operations may be disrupted by the acquisition;

·

the Company’s 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 Bank’s lending area;

·

an insufficient allowance for loan losses;

·

the quality or composition of the loan or investment portfolios;

·

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

·

the effectiveness of the Company’s credit processes and management of the Company’s credit risk;

·

demand for loan products and financial services in the Company’s market area;

·

the Company’s ability to compete in the market for financial services;

·

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

·

performance by the Company’s 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;

·

the impact of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), including, but not limited to, the effect of the lower corporate tax rate, including on the valuation of the Company’s tax assets and liabilities;

·

changes in the effect of the Tax Act due to issuance of interpretive regulatory guidance or enactment of corrective or supplement legislation;

·

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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018 and comparable “Risk Factors” sections of the Company’s Quarterly Reports on Form 10‑Q and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s 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 Six Months Ended

 

 

    

6/30/2019

    

3/31/2019

    

6/30/2018

 

6/30/2019

 

6/30/2018

 

Results of Operations

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Interest and dividend income

 

$

181,125

 

$

165,652

 

$

132,409

 

$

346,777

 

$

256,789

 

Interest expense

 

 

42,531

 

 

38,105

 

 

24,241

 

 

80,636

 

 

45,149

 

Net interest income

 

 

138,594

 

 

127,547

 

 

108,168

 

 

266,141

 

 

211,640

 

Provision for credit losses

 

 

5,300

 

 

3,792

 

 

2,147

 

 

9,092

 

 

5,671

 

Net interest income after provision for credit losses

 

 

133,294

 

 

123,755

 

 

106,021

 

 

257,049

 

 

205,969

 

Noninterest income

 

 

30,578

 

 

24,938

 

 

40,597

 

 

55,515

 

 

60,865

 

Noninterest expenses

 

 

105,608

 

 

106,728

 

 

85,140

 

 

212,335

 

 

186,885

 

Income before income taxes

 

 

58,264

 

 

41,965

 

 

61,478

 

 

100,229

 

 

79,949

 

Income tax expense

 

 

9,356

 

 

6,249

 

 

11,678

 

 

15,606

 

 

13,575

 

Income from continuing operations

 

 

48,908

 

 

35,716

 

 

49,800

 

 

84,623

 

 

66,374

 

Discontinued operations, net of tax

 

 

(85)

 

 

(85)

 

 

(2,473)

 

 

(170)

 

 

(2,408)

 

Net income

 

$

48,823

 

$

35,631

 

$

47,327

 

$

84,453

 

$

63,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earned on earning assets (FTE) (1)

 

$

184,045

 

$

168,400

 

$

134,417

 

$

352,445

 

$

260,634

 

Net interest income (FTE) (1)

 

 

141,514

 

 

130,295

 

 

110,176

 

 

271,809

 

 

215,485

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, diluted

 

$

0.59

 

$

0.47

 

$

0.72

 

$

1.06

 

$

0.97

 

Return on average assets (ROA)

 

 

1.15

%  

 

0.92

%  

 

1.44

%

 

1.04

%  

 

0.98

%

Return on average equity (ROE)

 

 

7.86

%  

 

6.37

%  

 

10.28

%

 

7.16

%  

 

7.03

%

Efficiency ratio

 

 

62.43

%  

 

69.99

%  

 

57.23

%

 

66.01

%  

 

68.58

%

Net interest margin

 

 

3.71

%  

 

3.72

%  

 

3.72

%

 

3.71

%  

 

3.69

%

Net interest margin (FTE) (1)

 

 

3.78

%  

 

3.80

%  

 

3.79

%

 

3.79

%  

 

3.76

%

Yields on earning assets (FTE) (1)

 

 

4.92

%  

 

4.92

%  

 

4.62

%

 

4.92

%  

 

4.54

%

Cost of interest-bearing liabilities

 

 

1.50

%  

 

1.44

%  

 

1.06

%

 

1.46

%  

 

1.00

%

Cost of deposits

 

 

0.93

%  

 

0.86

%  

 

0.54

%

 

0.90

%  

 

0.51

%

Cost of funds

 

 

1.14

%  

 

1.12

%  

 

0.83

%

 

1.13

%  

 

0.78

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Measures (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating earnings

 

$

57,089

 

$

50,519

 

$

53,864

 

$

107,607

 

$

92,739

 

Operating earnings per share, diluted

 

$

0.70

 

$

0.66

 

$

0.82

 

$

1.36

 

$

1.41

 

Operating ROA

 

 

1.35

%  

 

1.31

%  

 

1.63

%

 

1.33

%  

 

1.43

%

Operating ROE

 

 

9.20

%  

 

9.03

%  

 

11.69

%

 

9.12

%  

 

10.19

%

Operating ROTCE (2) (3)

 

 

16.58

%  

 

16.37

%  

 

21.15

%

 

16.48

%  

 

18.61

%

Operating efficiency ratio (FTE) (1)(6)

 

 

52.46

%  

 

54.10

%  

 

48.85

%

 

53.24

%  

 

52.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, basic

 

$

0.59

 

$

0.47

 

$

0.72

 

$

1.06

 

$

0.97

 

Earnings per common share, diluted

 

 

0.59

 

 

0.47

 

 

0.72

 

 

1.06

 

 

0.97

 

Cash dividends paid per common share

 

 

0.23

 

 

0.23

 

 

0.21

 

 

0.46

 

 

0.42

 

Market value per share

 

 

35.33

 

 

32.33

 

 

38.88

 

 

35.33

 

 

38.88

 

Book value per common share

 

 

30.78

 

 

30.16

 

 

28.47

 

 

30.78

 

 

28.47

 

Tangible book value per common share (2)

 

 

18.36

 

 

17.69

 

 

16.62

 

 

18.36

 

 

16.62

 

Price to earnings ratio, diluted

 

 

14.93

 

 

16.96

 

 

13.46

 

 

16.37

 

 

19.88

 

Price to book value per common share ratio

 

 

1.15

 

 

1.07

 

 

1.37

 

 

1.15

 

 

1.37

 

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

 

 

1.92

 

 

1.83

 

 

2.34

 

 

1.92

 

 

2.34

 

Weighted average common shares outstanding, basic

 

 

82,062,585

 

 

76,472,189

 

 

65,919,055

 

 

79,282,830

 

 

65,737,849

 

Weighted average common shares outstanding, diluted

 

 

82,125,194

 

 

76,553,066

 

 

65,965,577

 

 

79,344,573

 

 

65,801,926

 

Common shares outstanding at end of period

 

 

82,086,736

 

 

82,037,354

 

 

65,939,375

 

 

82,086,736

 

 

65,939,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Six Months Ended

 

 

    

6/30/2019

    

3/31/2019

    

6/30/2018

 

6/30/2019

 

6/30/2018

 

Capital Ratios

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Common equity Tier 1 capital ratio (5)

 

 

10.54

%  

 

10.26

%  

 

9.80

%

 

10.54

%  

 

9.80

%

Tier 1 capital ratio (5)

 

 

10.54

%  

 

10.26

%  

 

11.02

%

 

10.54

%  

 

11.02

%

Total capital ratio (5)

 

 

13.01

%  

 

12.73

%  

 

12.89

%

 

13.01

%  

 

12.89

%

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

 

 

9.00

%  

 

9.51

%  

 

9.46

%

 

9.00

%  

 

9.46

%

Common equity to total assets

 

 

14.64

%  

 

14.56

%  

 

14.27

%

 

14.64

%  

 

14.27

%

Tangible common equity to tangible assets (2)

 

 

9.28

%  

 

9.09

%  

 

8.86

%

 

9.28

%  

 

8.86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Condition

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Assets

 

$

17,159,384

 

$

16,897,655

 

$

13,066,106

 

$

17,159,384

 

$

13,066,106

 

Loans held for investment

 

 

12,220,514

 

 

11,952,310

 

 

9,290,259

 

 

12,220,514

 

 

9,290,259

 

Securities

 

 

2,703,855

 

 

2,804,353

 

 

1,738,689

 

 

2,703,855

 

 

1,738,689

 

Earning Assets

 

 

15,140,370

 

 

14,909,318

 

 

11,494,113

 

 

15,140,370

 

 

11,494,113

 

Goodwill

 

 

930,449

 

 

927,760

 

 

725,195

 

 

930,449

 

 

725,195

 

Amortizable intangibles, net

 

 

82,976

 

 

88,553

 

 

51,211

 

 

82,976

 

 

51,211

 

Deposits

 

 

12,515,544

 

 

12,489,330

 

 

9,797,272

 

 

12,515,544

 

 

9,797,272

 

Borrowings

 

 

1,909,171

 

 

1,753,103

 

 

1,300,276

 

 

1,909,171

 

 

1,300,276

 

Stockholders' equity

 

 

2,512,295

 

 

2,459,465

 

 

1,864,870

 

 

2,512,295

 

 

1,864,870

 

Tangible common equity (2)

 

 

1,498,870

 

 

1,443,152

 

 

1,088,464

 

 

1,498,870

 

 

1,088,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment, net of deferred fees and costs

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Construction and land development

 

$

1,267,712

 

$

1,326,679

 

$

1,250,448

 

$

1,267,712

 

$

1,250,448

 

Commercial real estate - owner occupied

 

 

1,966,776

 

 

1,921,464

 

 

1,293,791

 

 

1,966,776

 

 

1,293,791

 

Commercial real estate - non-owner occupied

 

 

3,104,823

 

 

2,970,453

 

 

2,318,589

 

 

3,104,823

 

 

2,318,589

 

Multifamily real estate

 

 

602,115

 

 

591,431

 

 

541,730

 

 

602,115

 

 

541,730

 

Commercial & Industrial

 

 

2,032,799

 

 

1,866,625

 

 

1,093,771

 

 

2,032,799

 

 

1,093,771

 

Residential 1-4 Family - commercial

 

 

801,703

 

 

815,309

 

 

723,945

 

 

801,703

 

 

723,945

 

Residential 1-4 Family - mortgage

 

 

850,063

 

 

865,502

 

 

607,155

 

 

850,063

 

 

607,155

 

Auto

 

 

311,858

 

 

300,631

 

 

296,706

 

 

311,858

 

 

296,706

 

HELOC

 

 

660,621

 

 

672,087

 

 

626,916

 

 

660,621

 

 

626,916

 

Consumer

 

 

383,653

 

 

397,491

 

 

298,021

 

 

383,653

 

 

298,021

 

Other Commercial

 

 

238,391

 

 

224,638

 

 

239,187

 

 

238,391

 

 

239,187

 

Total loans held for investment

 

$

12,220,514

 

$

11,952,310

 

$

9,290,259

 

$

12,220,514

 

$

9,290,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

NOW accounts

 

$

2,552,159

 

$

2,643,228

 

$

2,147,999

 

$

2,552,159

 

$

2,147,999

 

Money market accounts

 

 

3,592,523

 

 

3,579,249

 

 

2,758,704

 

 

3,592,523

 

 

2,758,704

 

Savings accounts

 

 

749,472

 

 

798,670

 

 

643,894

 

 

749,472

 

 

643,894

 

Time deposits

 

 

2,606,494

 

 

2,504,070

 

 

2,053,748

 

 

2,606,494

 

 

2,053,748

 

Total interest-bearing deposits

 

$

9,500,648

 

$

9,525,217

 

$

7,604,345

 

$

9,500,648

 

$

7,604,345

 

Demand deposits

 

 

3,014,896

 

 

2,964,113

 

 

2,192,927

 

 

3,014,896

 

 

2,192,927

 

Total deposits

 

$

12,515,544

 

$

12,489,330

 

$

9,797,272

 

$

12,515,544

 

$

9,797,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Averages

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Assets

 

$

16,997,531

 

$

15,699,743

 

$

13,218,227

 

$

16,352,222

 

$

13,119,448

 

Loans held for investment

 

 

12,084,961

 

 

11,127,390

 

 

9,809,083

 

 

11,608,821

 

 

9,744,995

 

Loans held for sale

 

 

47,061

 

 

14,999

 

 

31,904

 

 

31,119

 

 

30,315

 

Securities

 

 

2,738,528

 

 

2,645,429

 

 

1,625,273

 

 

2,692,236

 

 

1,596,431

 

Earning assets

 

 

15,002,726

 

 

13,891,248

 

 

11,661,189

 

 

14,450,057

 

 

11,568,658

 

Deposits

 

 

12,453,702

 

 

11,469,935

 

 

9,645,186

 

 

11,964,536

 

 

9,554,943

 

Time deposits

 

 

2,562,498

 

 

2,325,218

 

 

2,063,414

 

 

2,444,513

 

 

2,074,610

 

Interest-bearing deposits

 

 

9,555,093

 

 

8,934,995

 

 

7,549,953

 

 

9,285,895

 

 

7,520,089

 

Borrowings

 

 

1,847,325

 

 

1,790,656

 

 

1,617,322

 

 

1,819,147

 

 

1,616,013

 

Interest-bearing liabilities

 

 

11,402,418

 

 

10,725,651

 

 

9,167,275

 

 

11,105,042

 

 

9,136,102

 

Stockholders' equity

 

 

2,490,049

 

 

2,268,395

 

 

1,847,366

 

 

2,379,834

 

 

1,836,072

 

Tangible common equity (2)

 

 

1,475,028

 

 

1,334,051

 

 

1,069,886

 

 

1,404,929

 

 

1,059,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Six Months Ended

 

 

    

6/30/2019

    

3/31/2019

    

6/30/2018

 

6/30/2019

 

6/30/2018

 

Asset Quality

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Allowance for Loan Losses (ALL)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Beginning balance

 

$

40,827

 

$

41,045

 

$

40,629

 

$

41,045

 

$

38,208

 

Add: Recoveries

 

 

1,670

 

 

1,696

 

 

1,201

 

 

3,366

 

 

2,681

 

Less: Charge-offs

 

 

5,934

 

 

5,939

 

 

2,980

 

 

11,873

 

 

5,539

 

Add: Provision for loan losses

 

 

5,900

 

 

4,025

 

 

2,660

 

 

9,925

 

 

6,184

 

Add: Provision for loan losses included in discontinued operations

 

 

 —

 

 

 —

 

 

(240)

 

 

 —

 

 

(264)

 

Ending balance

 

$

42,463

 

$

40,827

 

$

41,270

 

$

42,463

 

$

41,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALL / total outstanding loans

 

 

0.35

%  

 

0.34

%  

 

0.44

%

 

0.35

%  

 

0.44

%

Net charge-offs / total average loans

 

 

0.14

%  

 

0.15

%  

 

0.07

%

 

0.15

%  

 

0.06

%

Provision / total average loans

 

 

0.20

%  

 

0.15

%  

 

0.11

%

 

0.17

%  

 

0.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total PCI loans, net of fair value mark

 

$

101,301

 

$

99,932

 

$

101,524

 

$

101,301

 

$

101,524

 

Remaining fair value mark on purchased performing loans

 

 

58,583

 

 

63,506

 

 

36,207

 

 

58,583

 

 

36,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Construction and land development

 

$

5,619

 

$

5,513

 

$

6,485

 

$

5,619

 

$

6,485

 

Commercial real estate - owner occupied

 

 

4,062

 

 

3,307

 

 

2,845

 

 

4,062

 

 

2,845

 

Commercial real estate - non-owner occupied

 

 

1,685

 

 

1,787

 

 

3,068

 

 

1,685

 

 

3,068

 

Commercial & Industrial

 

 

1,183

 

 

721

 

 

1,387

 

 

1,183

 

 

1,387

 

Residential 1-4 Family - commercial

 

 

4,135

 

 

4,244

 

 

1,998

 

 

4,135

 

 

1,998

 

Residential 1-4 Family - mortgage

 

 

8,677

 

 

7,119

 

 

7,552

 

 

8,677

 

 

7,552

 

Auto

 

 

449

 

 

523

 

 

463

 

 

449

 

 

463

 

HELOC

 

 

1,432

 

 

1,395

 

 

1,669

 

 

1,432

 

 

1,669

 

Consumer and all other

 

 

220

 

 

232

 

 

195

 

 

220

 

 

195

 

Nonaccrual loans

 

$

27,462

 

$

24,841

 

$

25,662

 

$

27,462

 

$

25,662

 

Foreclosed property

 

 

6,506

 

 

7,353

 

 

7,241

 

 

6,506

 

 

7,241

 

Total nonperforming assets (NPAs)

 

$

33,968

 

$

32,194

 

$

32,903

 

$

33,968

 

$

32,903

 

Construction and land development

 

$

855

 

$

1,997

 

$

144

 

$

855

 

$

144

 

Commercial real estate - owner occupied

 

 

2,540

 

 

2,908

 

 

2,512

 

 

2,540

 

 

2,512

 

Commercial real estate - non-owner occupied

 

 

1,489

 

 

 —

 

 

 —

 

 

1,489

 

 

 —

 

Commercial & Industrial

 

 

295

 

 

313

 

 

100

 

 

295

 

 

100

 

Residential 1-4 Family - commercial

 

 

863

 

 

1,490

 

 

132

 

 

863

 

 

132

 

Residential 1-4 Family - mortgage

 

 

845

 

 

2,476

 

 

2,669

 

 

845

 

 

2,669

 

Auto

 

 

122

 

 

153

 

 

121

 

 

122

 

 

121

 

HELOC

 

 

658

 

 

518

 

 

570

 

 

658

 

 

570

 

Consumer and all other

 

 

1,161

 

 

1,098

 

 

673

 

 

1,161

 

 

673

 

Loans ≥ 90 days and still accruing

 

$

8,828

 

$

10,953

 

$

6,921

 

$

8,828

 

$

6,921

 

Total NPAs and loans ≥ 90 days

 

$

42,796

 

$

43,147

 

$

39,824

 

$

42,796

 

$

39,824

 

NPAs / total outstanding loans

 

 

0.28

%  

 

0.27

%  

 

0.36

%

 

0.28

%  

 

0.36

%

NPAs / total assets

 

 

0.20

%  

 

0.19

%  

 

0.26

%

 

0.20

%  

 

0.26

%

ALL / nonaccrual loans

 

 

154.62

%  

 

164.35

%  

 

160.82

%

 

154.62

%  

 

160.82

%

ALL / nonperforming assets

 

 

125.01

%  

 

126.82

%  

 

122.62

%

 

125.01

%  

 

122.62

%

Past Due Detail

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Construction and land development

 

$

2,327

 

$

1,019

 

$

648

 

$

2,327

 

$

648

 

Commercial real estate - owner occupied

 

 

1,707

 

 

4,052

 

 

3,775

 

 

1,707

 

 

3,775

 

Commercial real estate - non-owner occupied

 

 

141

 

 

760

 

 

44

 

 

141

 

 

44

 

Multifamily real estate

 

 

1,218

 

 

596

 

 

86

 

 

1,218

 

 

86

 

Commercial & Industrial

 

 

3,223

 

 

2,565

 

 

1,921

 

 

3,223

 

 

1,921

 

Residential 1-4 Family - commercial

 

 

1,622

 

 

4,059

 

 

2,216

 

 

1,622

 

 

2,216

 

Residential 1-4 Family - mortgage

 

 

5,969

 

 

5,889

 

 

4,926

 

 

5,969

 

 

4,926

 

Auto

 

 

2,120

 

 

2,152

 

 

2,187

 

 

2,120

 

 

2,187

 

HELOC

 

 

4,978

 

 

5,020

 

 

2,505

 

 

4,978

 

 

2,505

 

Consumer and all other

 

 

2,824

 

 

1,963

 

 

2,722

 

 

2,824

 

 

2,722

 

Loans 30-59 days past due

 

$

26,129

 

$

28,075

 

$

21,030

 

$

26,129

 

$

21,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Six Months Ended

 

 

    

6/30/2019

    

3/31/2019

    

6/30/2018

 

6/30/2019

 

6/30/2018

 

Past Due Detail cont'd

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Construction and land development

 

$

318

 

$

526

 

$

292

 

$

318

 

$

292

 

Commercial real estate - owner occupied

 

 

 —

 

 

480

 

 

1,819

 

 

 —

 

 

1,819

 

Commercial real estate - non-owner occupied

 

 

164

 

 

4,129

 

 

 —

 

 

164

 

 

 —

 

Commercial & Industrial

 

 

1,175

 

 

438

 

 

1,567

 

 

1,175

 

 

1,567

 

Residential 1-4 Family - commercial

 

 

651

 

 

1,365

 

 

754

 

 

651

 

 

754

 

Residential 1-4 Family - mortgage

 

 

2,801

 

 

2,196

 

 

2,988

 

 

2,801

 

 

2,988

 

Auto

 

 

299

 

 

297

 

 

419

 

 

299

 

 

419

 

HELOC

 

 

1,336

 

 

1,753

 

 

1,622

 

 

1,336

 

 

1,622

 

Consumer and all other

 

 

1,423

 

 

1,197

 

 

761

 

 

1,423

 

 

761

 

Loans 60-89 days past due

 

$

8,167

 

$

12,381

 

$

10,222

 

$

8,167

 

$

10,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Troubled Debt Restructurings

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Performing

 

$

19,144

 

$

20,809

 

$

15,696

 

$

19,144

 

$

15,696

 

Nonperforming

 

 

4,536

 

 

4,682

 

 

4,001

 

 

4,536

 

 

4,001

 

Total troubled debt restructurings

 

$

23,680

 

$

25,491

 

$

19,697

 

$

23,680

 

$

19,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alternative Performance Measures (non-GAAP)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Net interest income (FTE)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Net interest income (GAAP)

 

$

138,594

 

$

127,547

 

$

108,168

 

$

266,141

 

$

211,640

 

FTE adjustment

 

 

2,920

 

 

2,748

 

 

2,008

 

 

5,668

 

 

3,845

 

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

 

$

141,514

 

$

130,295

 

$

110,176

 

$

271,809

 

$

215,485

 

Average earning assets

 

 

15,002,726

 

 

13,891,248

 

 

11,661,189

 

 

14,450,057

 

 

11,568,658

 

Net interest margin

 

 

3.71

%  

 

3.72

%  

 

3.72

%

 

3.71

%  

 

3.69

%

Net interest margin (FTE) (1)

 

 

3.78

%  

 

3.80

%  

 

3.79

%

 

3.79

%  

 

3.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Assets

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Ending assets (GAAP)

 

$

17,159,384

 

$

16,897,655

 

$

13,066,106

 

$

17,159,384

 

$

13,066,106

 

Less: Ending goodwill

 

 

930,449

 

 

927,760

 

 

725,195

 

 

930,449

 

 

725,195

 

Less: Ending amortizable intangibles

 

 

82,976

 

 

88,553

 

 

51,211

 

 

82,976

 

 

51,211

 

Ending tangible assets (non-GAAP)

 

$

16,145,959

 

$

15,881,342

 

$

12,289,700

 

$

16,145,959

 

$

12,289,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity (2)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Ending equity (GAAP)

 

$

2,512,295

 

$

2,459,465

 

$

1,864,870

 

$

2,512,295

 

$

1,864,870

 

Less: Ending goodwill

 

 

930,449

 

 

927,760

 

 

725,195

 

 

930,449

 

 

725,195

 

Less: Ending amortizable intangibles

 

 

82,976

 

 

88,553

 

 

51,211

 

 

82,976

 

 

51,211

 

Ending tangible common equity (non-GAAP)

 

$

1,498,870

 

$

1,443,152

 

$

1,088,464

 

$

1,498,870

 

$

1,088,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average equity (GAAP)

 

$

2,490,049

 

$

2,268,395

 

$

1,847,366

 

$

2,379,834

 

$

1,836,072

 

Less: Average goodwill

 

 

929,455

 

 

858,658

 

 

726,934

 

 

894,252

 

 

725,527

 

Less: Average amortizable intangibles

 

 

85,566

 

 

75,686

 

 

50,546

 

 

80,653

 

 

51,099

 

Average tangible common equity (non-GAAP)

 

$

1,475,028

 

$

1,334,051

 

$

1,069,886

 

$

1,404,929

 

$

1,059,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Measures (4)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Net income (GAAP)

 

$

48,823

 

$

35,631

 

$

47,327

 

$

84,453

 

$

63,966

 

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

 

 

8,266

 

 

14,888

 

 

6,537

 

 

23,154

 

 

28,773

 

Net operating earnings (non-GAAP)

 

$

57,089

 

$

50,519

 

$

53,864

 

$

107,607

 

$

92,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (GAAP)

 

$

105,608

 

$

106,728

 

$

85,140

 

$

212,335

 

$

186,885

 

Less: Merger Related Costs

 

 

6,371

 

 

18,122

 

 

8,273

 

 

24,493

 

 

35,985

 

Less: Rebranding Costs

 

 

4,012

 

 

407

 

 

 —

 

 

4,420

 

 

 —

 

Less: Amortization of intangible assets

 

 

4,937

 

 

4,218

 

 

3,215

 

 

9,154

 

 

6,396

 

Operating noninterest expense (non-GAAP)

 

$

90,288

 

$

83,981

 

$

73,652

 

$

174,268

 

$

144,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

141,514

 

$

130,295

 

$

110,176

 

$

271,809

 

$

215,485

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income (GAAP)

 

 

30,578

 

 

24,938

 

 

40,597

 

 

55,515

 

 

60,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio

 

 

62.43

%  

 

69.99

%  

 

57.23

%

 

66.01

%  

 

68.58

%

Operating efficiency ratio (FTE)(6)

 

 

52.46

%  

 

54.10

%  

 

48.85

%

 

53.24

%  

 

52.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of & For Three Months Ended

 

As of & For Six Months Ended

 

 

    

6/30/2019

    

3/31/2019

    

6/30/2018

 

6/30/2019

 

6/30/2018

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Operating ROTCE (2)(3)

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Operating Net Income (non-GAAP)

 

$

57,089

 

$

50,519

 

$

53,864

 

$

107,607

 

$

92,739

 

Plus: Amortization of intangibles, tax effected

 

 

3,900

 

 

3,332

 

 

2,540

 

 

7,232

 

 

5,053

 

Net Income before amortization of intangibles (non-GAAP)

 

$

60,989

 

$

53,851

 

$

56,404

 

$

114,839

 

$

97,792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average tangible common equity (non-GAAP)

 

$

1,475,028

 

$

1,334,051

 

$

1,069,886

 

$

1,404,929

 

$

1,059,446

 

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

 

 

16.58

%  

 

16.37

%  

 

21.15

%

 

16.48

%  

 

18.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Origination Volume

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

Refinance Volume

 

$

27,870

 

$

11,969

 

$

 —

 

$

39,839

 

$

35,599

 

Construction Volume

 

 

360

 

 

 —

 

 

 —

 

 

360

 

 

13,867

 

Purchase Volume

 

 

84,225

 

 

32,107

 

 

 —

 

 

116,332

 

 

43,082

 

Total Mortgage loan originations

 

$

112,455

 

$

44,076

 

$

 —

 

$

156,531

 

$

92,548

 

% of originations that are refinances

 

 

24.8

%  

 

27.2

%  

 

 —

%

 

25.5

%  

 

38.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

End of period full-time employees

 

 

1,931

 

 

1,947

 

 

1,702

 

 

1,931

 

 

1,702

 

Number of full-service branches

 

 

153

 

 

155

 

 

147

 

 

153

 

 

147

 

Number of full automatic transaction machines ("ATMs")

 

 

197

 

 

197

 

 

199

 

 

197

 

 

199

 

 

(1)

These are non-GAAP financial measures. Net interest income (FTE), which is used in computing net interest margin (FTE) and operating efficiency ratio (FTE), provides 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.

In periods prior to December 31,2018, the Company has not added amortization of intangibles, tax effected to operating net income (non-GAAP) when calculating operating ROTCE. The Company has adjusted its presentation for all periods in this release.

(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 June 30, 2019 are estimates and subject to change pending the Company’s filing of its FR Y9‑C. All other periods are presented as filed.

(6)

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.

In prior periods, the Company has not excluded the amortization of intangibles from noninterest expense when calculating the operating efficiency ratio (FTE). The Company has adjusted its presentation for all periods in this release to exclude the amortization of intangibles from noninterest expense.

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30, 

    

December 31, 

    

June 30, 

 

 

2019

 

2018

 

2018

ASSETS

 

(unaudited)

 

(audited)

 

(unaudited)

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

171,441

 

$

166,927

 

$

153,078

Interest-bearing deposits in other banks

 

 

146,514

 

 

94,056

 

 

417,423

Federal funds sold

 

 

2,523

 

 

216

 

 

7,552

Total cash and cash equivalents

 

 

320,478

 

 

261,199

 

 

578,053

Securities available for sale, at fair value

 

 

1,999,494

 

 

1,774,821

 

 

1,558,048

Securities held to maturity, at carrying value

 

 

558,503

 

 

492,272

 

 

47,604

Marketable equity securities, at fair value

 

 

 —

 

 

 —

 

 

28,200

Restricted stock, at cost

 

 

145,859

 

 

124,602

 

 

104,837

Loans held for sale, at fair value

 

 

62,908

 

 

 —

 

 

 —

Loans held for investment, net of deferred fees and costs

 

 

12,220,514

 

 

9,716,207

 

 

9,290,259

Less allowance for loan losses

 

 

42,463

 

 

41,045

 

 

41,270

Total loans held for investment, net

 

 

12,178,051

 

 

9,675,162

 

 

9,248,989

Premises and equipment, net

 

 

168,514

 

 

146,967

 

 

160,508

Goodwill

 

 

930,449

 

 

727,168

 

 

725,195

Amortizable intangibles, net

 

 

82,976

 

 

48,685

 

 

51,211

Bank owned life insurance

 

 

318,734

 

 

263,034

 

 

260,124

Other assets

 

 

392,454

 

 

250,210

 

 

259,873

Assets of discontinued operations

 

 

964

 

 

1,479

 

 

43,464

Total assets

 

$

17,159,384

 

$

13,765,599

 

$

13,066,106

LIABILITIES

 

 

 

 

 

  

 

 

  

Noninterest-bearing demand deposits

 

$

3,014,896

 

$

2,094,607

 

$

2,192,927

Interest-bearing deposits

 

 

9,500,648

 

 

7,876,353

 

 

7,604,345

Total deposits

 

 

12,515,544

 

 

9,970,960

 

 

9,797,272

Securities sold under agreements to repurchase

 

 

70,870

 

 

39,197

 

 

50,299

Other short-term borrowings

 

 

618,050

 

 

1,048,600

 

 

742,900

Long-term borrowings

 

 

1,220,251

 

 

668,481

 

 

507,077

Other liabilities

 

 

221,353

 

 

112,093

 

 

99,327

Liabilities of discontinued operations

 

 

1,021

 

 

1,687

 

 

4,361

Total liabilities

 

 

14,647,089

 

 

11,841,018

 

 

11,201,236

Commitments and contingencies

 

 

 

 

 

  

 

 

  

STOCKHOLDERS' EQUITY

 

 

 

 

 

  

 

 

  

Common stock, $1.33 par value, shares authorized 200,000,000; issued and outstanding, 82,086,736 shares, 65,977,149 shares, and 65,939,375 shares respectively.

 

 

108,560

 

 

87,250

 

 

87,129

Additional paid-in capital

 

 

1,862,716

 

 

1,380,259

 

 

1,376,294

Retained earnings

 

 

512,952

 

 

467,345

 

 

415,492

Accumulated other comprehensive income (loss)

 

 

28,067

 

 

(10,273)

 

 

(14,045)

Total stockholders' equity

 

 

2,512,295

 

 

1,924,581

 

 

1,864,870

Total liabilities and stockholders' equity

 

$

17,159,384

 

$

13,765,599

 

$

13,066,106

 

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 

 

March 31, 

 

June 30, 

 

June 30, 

 

June 30, 

 

    

2019

    

2019

    

2018

 

2019

 

2018

Interest and dividend income:

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Interest and fees on loans

 

$

158,838

 

$

144,115

 

$

119,540

 

$

302,952

 

$

232,193

Interest on deposits in other banks

 

 

544

 

 

473

 

 

676

 

 

1,017

 

 

1,323

Interest and dividends on securities:

 

 

 

 

 

 

 

 

  

 

 

 

 

 

  

Taxable

 

 

13,353

 

 

13,081

 

 

8,012

 

 

26,434

 

 

15,084

Nontaxable

 

 

8,390

 

 

7,983

 

 

4,181

 

 

16,374

 

 

8,189

Total interest and dividend income

 

 

181,125

 

 

165,652

 

 

132,409

 

 

346,777

 

 

256,789

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

28,809

 

 

24,430

 

 

13,047

 

 

53,239

 

 

24,259

Interest on short-term borrowings

 

 

5,563

 

 

6,551

 

 

5,166

 

 

12,114

 

 

9,415

Interest on long-term borrowings

 

 

8,159

 

 

7,124

 

 

6,028

 

 

15,283

 

 

11,475

Total interest expense

 

 

42,531

 

 

38,105

 

 

24,241

 

 

80,636

 

 

45,149

Net interest income

 

 

138,594

 

 

127,547

 

 

108,168

 

 

266,141

 

 

211,640

Provision for credit losses

 

 

5,300

 

 

3,792

 

 

2,147

 

 

9,092

 

 

5,671

Net interest income after provision for credit losses

 

 

133,294

 

 

123,755

 

 

106,021

 

 

257,049

 

 

205,969

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

7,499

 

 

7,158

 

 

6,189

 

 

14,656

 

 

12,083

Other service charges and fees

 

 

1,702

 

 

1,664

 

 

1,278

 

 

3,367

 

 

2,512

Interchange fees, net

 

 

5,612

 

 

5,045

 

 

4,792

 

 

10,656

 

 

9,280

Fiduciary and asset management fees

 

 

5,698

 

 

5,054

 

 

4,040

 

 

10,752

 

 

7,096

Mortgage banking income, net

 

 

2,785

 

 

1,454

 

 

 —

 

 

4,240

 

 

 —

Gains (losses) on securities transactions, net

 

 

51

 

 

151

 

 

(88)

 

 

202

 

 

125

Bank owned life insurance income

 

 

2,075

 

 

2,055

 

 

1,728

 

 

4,129

 

 

3,395

Loan-related interest rate swap fees, net

 

 

3,716

 

 

1,460

 

 

898

 

 

5,176

 

 

1,617

Gain on Shore Premier sale

 

 

 —

 

 

 —

 

 

20,899

 

 

 —

 

 

20,899

Other operating income

 

 

1,440

 

 

897

 

 

861

 

 

2,337

 

 

3,858

Total noninterest income

 

 

30,578

 

 

24,938

 

 

40,597

 

 

55,515

 

 

60,865

Noninterest expenses:

 

 

 

 

 

  

 

 

  

 

 

 

 

 

 

Salaries and benefits

 

 

50,390

 

 

48,007

 

 

40,777

 

 

98,398

 

 

81,518

Occupancy expenses

 

 

7,534

 

 

7,399

 

 

6,159

 

 

14,935

 

 

12,226

Furniture and equipment expenses

 

 

3,542

 

 

3,396

 

 

3,103

 

 

6,938

 

 

6,041

Printing, postage, and supplies

 

 

1,252

 

 

1,242

 

 

1,282

 

 

2,494

 

 

2,342

Communications expense

 

 

1,157

 

 

1,005

 

 

1,009

 

 

2,162

 

 

2,104

Technology and data processing

 

 

5,739

 

 

5,676

 

 

4,322

 

 

11,415

 

 

8,881

Professional services

 

 

2,630

 

 

2,958

 

 

2,671

 

 

5,587

 

 

5,225

Marketing and advertising expense

 

 

2,908

 

 

2,383

 

 

3,288

 

 

5,291

 

 

4,725

FDIC assessment premiums and other insurance

 

 

2,601

 

 

2,639

 

 

1,882

 

 

5,239

 

 

4,067

Other taxes

 

 

4,044

 

 

3,764

 

 

2,895

 

 

7,808

 

 

5,782

Loan-related expenses

 

 

2,396

 

 

2,289

 

 

1,843

 

 

4,685

 

 

3,158

OREO and credit-related expenses

 

 

1,473

 

 

684

 

 

1,122

 

 

2,157

 

 

2,654

Amortization of intangible assets

 

 

4,937

 

 

4,218

 

 

3,215

 

 

9,154

 

 

6,396

Training and other personnel costs

 

 

1,477

 

 

1,144

 

 

1,125

 

 

2,621

 

 

2,132

Merger-related costs

 

 

6,371

 

 

18,122

 

 

8,273

 

 

24,493

 

 

35,985

Rebranding expense

 

 

4,012

 

 

407

 

 

 —

 

 

4,420

 

 

 —

Other expenses

 

 

3,145

 

 

1,395

 

 

2,174

 

 

4,538

 

 

3,649

Total noninterest expenses

 

 

105,608

 

 

106,728

 

 

85,140

 

 

212,335

 

 

186,885

Income from continuing operations before income taxes

 

 

58,264

 

 

41,965

 

 

61,478

 

 

100,229

 

 

79,949

Income tax expense

 

 

9,356

 

 

6,249

 

 

11,678

 

 

15,606

 

 

13,575

Income from continuing operations

 

 

48,908

 

 

35,716

 

$

49,800

 

 

84,623

 

 

66,374

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations of discontinued mortgage segment

 

$

(114)

 

$

(115)

 

$

(3,085)

 

 

(229)

 

 

(3,008)

Income tax expense (benefit)

 

 

(29)

 

 

(30)

 

 

(612)

 

 

(59)

 

 

(600)

Income (loss) on discontinued operations

 

 

(85)

 

 

(85)

 

 

(2,473)

 

 

(170)

 

 

(2,408)

Net income

 

$

48,823

 

$

35,631

 

$

47,327

 

$

84,453

 

$

63,966

Basic earnings per common share

 

$

0.59

 

$

0.47

 

$

0.72

 

$

1.06

 

$

0.97

Diluted earnings per common share

 

$

0.59

 

$

0.47

 

$

0.72

 

$

1.06

 

$

0.97

 

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

 

June 30, 2019

 

March 31, 2019

 

 

    

 

 

    

Interest

    

 

    

 

 

    

Interest

    

 

    

 

 

Average

 

Income /

 

Yield /

 

Average

 

Income /

 

Yield /

 

 

 

Balance

 

Expense (1)

 

Rate (1)(2)

 

Balance

 

Expense (1)

 

Rate (1)(2)

 

Assets:

 

(unaudited)

 

(unaudited)

 

Securities:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Taxable

 

$

1,705,977

 

$

13,333

 

3.13

%  

$

1,661,179

 

$

13,067

 

3.19

%

Tax-exempt

 

 

1,032,551

 

 

10,646

 

4.14

%  

 

984,250

 

 

10,123

 

4.17

%

Total securities

 

 

2,738,528

 

 

23,979

 

3.51

%  

 

2,645,429

 

 

23,190

 

3.56

%

Loans, net (3) (4)

 

 

12,084,961

 

 

158,935

 

5.28

%  

 

11,127,390

 

 

144,499

 

5.27

%

Other earning assets

 

 

179,237

 

 

1,131

 

2.53

%  

 

118,429

 

 

711

 

2.43

%

Total earning assets

 

 

15,002,726

 

$

184,045

 

4.92

%  

 

13,891,248

 

$

168,400

 

4.92

%

Allowance for loan losses

 

 

(41,174)

 

 

 

 

  

 

 

(43,002)

 

 

  

 

  

 

Total non-earning assets

 

 

2,035,979

 

 

 

 

  

 

 

1,851,497

 

 

  

 

  

 

Total assets

 

$

16,997,531

 

 

 

 

  

 

$

15,699,743

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Interest-bearing deposits:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Transaction and money market accounts

 

$

6,215,912

 

$

16,139

 

1.04

%  

$

5,876,491

 

$

14,369

 

0.99

%  

Regular savings

 

 

776,683

 

 

416

 

0.21

%  

 

733,286

 

 

400

 

0.22

%  

Time deposits (5)

 

 

2,562,498

 

 

12,254

 

1.92

%  

 

2,325,218

 

 

9,661

 

1.69

%  

Total interest-bearing deposits

 

 

9,555,093

 

 

28,809

 

1.21

%  

 

8,934,995

 

 

24,430

 

1.11

%  

Other borrowings (6)

 

 

1,847,325

 

 

13,722

 

2.98

%  

 

1,790,656

 

 

13,675

 

3.10

%  

Total interest-bearing liabilities

 

 

11,402,418

 

 

42,531

 

1.50

%  

 

10,725,651

 

 

38,105

 

1.44

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

  

 

 

  

 

  

 

 

  

 

 

  

 

  

 

Demand deposits

 

 

2,898,609

 

 

 

 

  

 

 

2,534,940

 

 

  

 

  

 

Other liabilities

 

 

206,455

 

 

 

 

  

 

 

170,757

 

 

  

 

  

 

Total liabilities

 

 

14,507,482

 

 

 

 

  

 

 

13,431,348

 

 

  

 

  

 

Stockholders' equity

 

 

2,490,049

 

 

 

 

  

 

 

2,268,395

 

 

  

 

  

 

Total liabilities and stockholders' equity

 

$

16,997,531

 

 

 

 

  

 

$

15,699,743

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

141,514

 

  

 

 

  

 

$

130,295

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

 

 

3.42

%  

 

  

 

 

  

 

3.48

%  

Cost of funds

 

 

 

 

 

 

 

1.14

%  

 

  

 

 

  

 

1.12

%  

Net interest margin

 

 

 

 

 

 

 

3.78

%  

 

  

 

 

  

 

3.80

%  

(1)

Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%

(2)

Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.

(3)

Nonaccrual loans are included in average loans outstanding.

(4)

Interest income on loans includes $7.7 million and $5.6 million for the three months ended June 30, 2019 and March 31, 2019, respectively, in accretion of the fair market value adjustments related to acquisitions.

(5)

Interest expense on time deposits includes $213,000 and $292,000 for the three months ended June 30, 2019 and March 31, 2019, respectively, in accretion of the fair market value adjustments related to acquisitions.

(6)

Interest expense on borrowings includes $70,000 for both the three months ended June 30, 2019 and March 31, 2019, in amortization of the fair market value adjustments related to acquisitions.