RICHMOND, Va., Oct. 17, 2019 (GLOBE NEWSWIRE) — Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (Nasdaq: AUB) today reported net income of $53.2 million and earnings per share of $0.65 for its third quarter ended September 30, 2019. Net operating earnings(1) were $56.1 million and operating earnings per share(1) were $0.69 for its third quarter ended September 30, 2019; these operating results exclude $1.9 million in after-tax merger and $895,000 in after-tax rebranding-related costs.
Net income was $137.7 million and earnings per share were $1.72 for the nine months ended September 30, 2019. Net operating earnings(1) were $163.7 million and operating earnings per share(1) were $2.04 for the nine months ended September 30, 2019; these operating results exclude $21.6 million in after-tax merger and $4.4 million in after-tax rebranding-related costs but include after tax losses from discontinued operations of $128,000 and approximately $1.0 million in after-tax expenses related to branch closure costs.
“Atlantic Union delivered solid financial results in the third quarter despite the challenges of the current interest rate environment,” said John C. Asbury, President and Chief Executive Officer for the Company. “As in the first and second quarters of 2019, third quarter results were noisy as we worked toward completing the Access National Bank integration work and our rebranding efforts and took strategic actions that impacted our reported quarterly financial results such as repositioning the balance sheet for lower interest rates. Nevertheless, the Company continues to perform well and remains committed to deliver on our previously communicated financial performance targets.
“October marks my three-year anniversary of having joined the Company and the considerable enthusiasm and optimism I felt walking in the door is now greater still. It has been an exciting transformation we have experienced, and continue to experience. The future looks bright for Atlantic Union as we set out to execute the next phase of our strategic plan.”
Select highlights for the third 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 third quarter of 2019, net interest income was $136.6 million, a decrease of $2.0 million from the second quarter of 2019. Net interest income (FTE)(1) was $139.4 million in the third quarter of 2019, a decrease of $2.1 million from the second quarter of 2019. The decreases in both net interest income and net interest income (FTE) were primarily driven by $2.7 million lower acquisition accounting accretion income during the three months ended September 30, 2019 compared to the three months ended June 30, 2019. The third quarter net interest margin decreased 14 basis points to 3.57% from 3.71% in the previous quarter, while the net interest margin (FTE)(1) decreased 14 basis points to 3.64% from 3.78% during the same periods. The decreases in the net interest margin and net interest margin (FTE) were principally due to a 19 basis point decrease in the yield on earning assets, partially offset by a 5 basis point decrease in the cost of funds.
The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. During the third quarter of 2019, net accretion related to acquisition accounting decreased $2.7 million from the prior quarter to $5.1 million for the quarter ended September 30, 2019. The second and third 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 June 30, 2019 | $ | 7,659 | 213 | (70 | ) | $ | 7,802 | |||||||
| For the quarter ended September 30, 2019 | 5,018 | 179 | (97 | ) | 5,100 | |||||||||
| For the remaining three months of 2019 (estimated) | 4,596 | 149 | (123 | ) | 4,622 | |||||||||
| For the years ending (estimated): | ||||||||||||||
| 2020 | 16,737 | 132 | (633 | ) | 16,236 | |||||||||
| 2021 | 11,914 | 14 | (807 | ) | 11,121 | |||||||||
| 2022 | 9,560 | (43 | ) | (829 | ) | 8,688 | ||||||||
| 2023 | 6,777 | (32 | ) | (852 | ) | 5,893 | ||||||||
| 2024 | 4,973 | (4 | ) | (877 | ) | 4,092 | ||||||||
| Thereafter | 18,176 | (1 | ) | (10,773 | ) | 7,402 | ||||||||
ASSET QUALITY/LOAN LOSS PROVISION
Overview
During the third quarter of 2019, the Company experienced increases in nonperforming assets (“NPA”) and past due loan levels as a percentage of total loans from the prior quarter. Net charge-off levels increased from the second quarter of 2019 and were primarily related to the consumer loan portfolio and a construction and land development loan; as a result, and due to loan growth, the provision for loan losses increased from the second quarter of 2019.
All nonaccrual and past due loan metrics discussed below exclude purchased credit impaired (“PCI”) loans totaling $89.7 million (net of fair value mark of $24.0 million) at September 30, 2019.
(1) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results
Nonperforming Assets
At September 30, 2019, NPAs totaled $36.4 million, an increase of $2.4 million, or 7.2%, from June 30, 2019 and an increase of $1.5 million, or 4.3%, from September 30, 2018. The increase in NPAs was primarily driven by the addition
of a construction and land development loan.
NPAs as a percentage of total outstanding loans at September 30, 2019 were 0.30%, an increase of 2 basis points from 0.28% at June 30, 2019 and a decline of 7 basis points from 0.37% at September 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.
The following table shows a summary of nonperforming asset balances at the quarter ended (dollars in thousands):
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | |||||||||||
| Nonaccrual loans | $ | 30,032 | $ | 27,462 | $ | 24,841 | $ | 26,953 | $ | 28,110 | |||||
| Foreclosed properties | 6,385 | 6,506 | 7,353 | 6,722 | 6,800 | ||||||||||
| Total nonperforming assets | $ | 36,417 | $ | 33,968 | $ | 32,194 | $ | 33,675 | $ | 34,910 | |||||
The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | ||||||||||||||||
| Beginning Balance | $ | 27,462 | $ | 24,841 | $ | 26,953 | $ | 28,110 | $ | 25,662 | ||||||||||
| Net customer payments | (3,612 | ) | (3,108 | ) | (2,314 | ) | (3,077 | ) | (2,459 | ) | ||||||||||
| Additions | 8,327 | 6,321 | 3,297 | 4,659 | 6,268 | |||||||||||||||
| Charge-offs | (884 | ) | (592 | ) | (1,626 | ) | (2,069 | ) | (1,137 | ) | ||||||||||
| Loans returning to accruing status | (1,103 | ) | — | (952 | ) | (420 | ) | (70 | ) | |||||||||||
| Transfers to foreclosed property | (158 | ) | — | (517 | ) | (250 | ) | (154 | ) | |||||||||||
| Ending Balance | $ | 30,032 | $ | 27,462 | $ | 24,841 | $ | 26,953 | $ | 28,110 | ||||||||||
The following table shows the activity in foreclosed properties for the quarter ended (dollars in thousands):
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | ||||||||||||||||
| Beginning Balance | $ | 6,506 | $ | 7,353 | $ | 6,722 | $ | 6,800 | $ | 7,241 | ||||||||||
| Additions of foreclosed property | 645 | 271 | 900 | 432 | 165 | |||||||||||||||
| Valuation adjustments | (62 | ) | (433 | ) | (51 | ) | (140 | ) | (42 | ) | ||||||||||
| Proceeds from sales | (737 | ) | (638 | ) | (171 | ) | (286 | ) | (889 | ) | ||||||||||
| Gains (losses) from sales | 33 | (47 | ) | (47 | ) | (84 | ) | 325 | ||||||||||||
| Ending Balance | $ | 6,385 | $ | 6,506 | $ | 7,353 | $ | 6,722 | $ | 6,800 | ||||||||||
Past Due Loans
Past due loans still accruing interest totaled $55.1 million or 0.45% of total loans held for investment at September 30, 2019 compared to $43.1 million or 0.35% of total loans held for investment at June 30, 2019, and $46.6 million or 0.49% of total loans held for investment at September 30, 2018. Subsequent to quarter-end, approximately $12.0 million of the accruing past due loans became current. Of the total past due loans still accruing interest $12.0 million or 0.10% of total loans held for investment were loans past due 90 days or more at September 30, 2019, compared to $8.8 million or 0.07% of total loans held for investment at June 30, 2019, and $9.5 million or 0.10% of total loans held for investment at September 30, 2018.
Net Charge-offs
For the third quarter of 2019, net charge-offs were $7.7 million or 0.25% of total average loans on an annualized basis, compared to $4.3 million or 0.14%, for the prior quarter, and $3.2 million or 0.13%, for the third quarter of 2018. The majority of net charge-offs in the third quarter of 2019 were related to consumer loans and a construction and land development loan. On a year to date basis, net charge-offs were $16.2 million, or 0.18% of total average loans on an annualized basis.
Provision for Loan Losses
The provision for loan losses for the third quarter of 2019 was $9.1 million, an increase of $3.2 million compared to the previous quarter and an increase of $6.0 million compared to the third quarter of 2018. The increase in the provision for loan losses from the previous quarter and prior year was primarily due to an increase in net charge-offs and loan growth.
Allowance for Loan Losses (“ALL”)
The ALL increased $1.4 million from June 30, 2019 to $43.8 million at September 30, 2019, primarily due to loan growth during the quarter. The ALL as a percentage of the total loan portfolio was 0.36% at September 30, 2019, 0.35% at June 30, 2019, and 0.44% at September 30, 2018.
The ratio of the ALL to nonaccrual loans was 145.9% at September 30, 2019, compared to 154.6% at June 30, 2019 and 146.9% at September 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 $17.5 million to $48.1 million for the quarter ended September 30, 2019 from $30.6 million in the prior quarter primarily driven by approximately $9.3 million in life insurance proceeds received during the quarter related to a Xenith-acquired loan that had been charged off prior to the Company’s acquisition of Xenith and a gain on sale of investment securities of approximately $7.1 million recorded during the quarter. In addition, loan related interest rate swap income increased $1.8 million and mortgage banking income increased approximately $600,000 from the prior quarter. Partially offsetting these increases was a decline of $3.5 million in net interchange income primarily due to reduced debit card interchange transaction fees as a result of the Durbin Amendment which was effective for the Company on July 1, 2019.
NONINTEREST EXPENSE
Noninterest expense increased $6.1 million to $111.7 million for the quarter ended September 30, 2019 from $105.6 million in the prior quarter. Excluding merger-related costs, amortization of intangible assets, and rebranding-related costs, operating noninterest expense(1) increased $13.1 million, or 14.5%, in the third quarter of 2019, to $103.4 million when compared to the second quarter of 2019. The increase in operating noninterest expense was primarily due to the recognition of approximately $16.4 million loss on debt extinguishment resulting from the repayment of approximately $140.0 million in FHLB advances and the termination of the related cash flow hedges. In addition, third quarter operating noninterest expense included approximately $309,000 in OREO valuation adjustments driven by updated appraisals received during the quarter, $275,000 in recruiting costs related to the new equipment finance division, $1.0 million in support of a community development initiative as well as an FDIC small bank assessment expense credit of approximately $2.4 million as the deposit insurance fund reserve ratio exceeded 1.38% in the second quarter.
(1) For a reconciliation of this non-GAAP financial measure, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results
INCOME TAXES
The effective tax rate for the three months ended September 30, 2019 was 16.8% compared to 16.0% for the three months ended June 30, 2019. The increase in the effective tax rate as compared to the previous quarter was primarily due to the lower proportion of tax-exempt income to pre-tax income.
BALANCE SHEET
At September 30, 2019, total assets were $17.4 billion, an increase of $281.7 million, or approximately 6.6% (annualized), from June 30, 2019, primarily due to higher cash and cash equivalent balances and loan growth during the third quarter of 2019.
At September 30, 2019, loans held for investment (net of deferred fees and costs) were $12.3 billion, an increase of $86.5 million, or 2.8% (annualized), from June 30, 2019, while average loans increased $155.3 million, or 5.1% (annualized), from the prior quarter.
At September 30, 2019, total deposits were $13.0 billion, an increase of $529.2 million, or approximately 16.9% (annualized), from June 30, 2019, while average deposits increased $358.5 million, or 11.5% (annualized), from prior quarter.
The following table shows the Company’s capital ratios at the quarters ended:
| September 30, | December 31, | September 30, | |||||
| 2019 | 2018 | 2018 | |||||
| Common equity Tier 1 capital ratio (2) | 10.48 | % | 9.93 | % | 9.92 | % | |
| Tier 1 capital ratio (2) | 10.48 | % | 11.09 | % | 11.12 | % | |
| Total capital ratio (2) | 12.93 | % | 12.88 | % | 12.97 | % | |
| Leverage ratio (Tier 1 capital to average assets) (2) | 8.94 | % | 9.71 | % | 9.89 | % | |
| Common equity to total assets | 14.48 | % | 13.98 | % | 14.06 | % | |
| Tangible common equity to tangible assets (1) | 9.23 | % | 8.84 | % | 8.74 | % |
(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 September 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 third quarter of 2019, the Company declared and paid cash dividends of $0.25 per common share, an increase of $0.02, or 8.7%, compared to both the second quarter of 2019 and third 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. As of September 30, 2019, authority remained to repurchase approximately $115 million of the Company’s common stock.
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 149 branches and approximately 170 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, and investment advisory 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.
THIRD QUARTER 2019 EARNINGS RELEASE CONFERENCE CALL
Atlantic Union Bank will hold a conference call on Thursday, October 17th, 2019 at 9:00 a.m. Eastern Daylight Time during which management will review the third 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 8187156.
NON-GAAP FINANCIAL MEASURES
In reporting the results of the quarter and nine months ended September 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:
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 Nine Months Ended | |||||||||||||||||||
| 09/30/19 | 06/30/19 | 09/30/18 | 09/30/19 | 09/30/18 | ||||||||||||||||
| Results of Operations | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||
| Interest and dividend income | $ | 178,345 | $ | 181,125 | $ | 131,363 | $ | 525,122 | $ | 388,151 | ||||||||||
| Interest expense | 41,744 | 42,531 | 25,400 | 122,379 | 70,549 | |||||||||||||||
| Net interest income | 136,601 | 138,594 | 105,963 | 402,743 | 317,602 | |||||||||||||||
| Provision for credit losses | 9,100 | 5,300 | 3,340 | 18,192 | 9,011 | |||||||||||||||
| Net interest income after provision for credit losses | 127,501 | 133,294 | 102,623 | 384,551 | 308,591 | |||||||||||||||
| Noninterest income | 48,106 | 30,578 | 19,887 | 103,621 | 80,752 | |||||||||||||||
| Noninterest expenses | 111,687 | 105,608 | 76,349 | 324,022 | 263,234 | |||||||||||||||
| Income before income taxes | 63,920 | 58,264 | 46,161 | 164,150 | 126,109 | |||||||||||||||
| Income tax expense | 10,724 | 9,356 | 7,399 | 26,330 | 20,973 | |||||||||||||||
| Income from continuing operations | 53,196 | 48,908 | 38,762 | 137,820 | 105,136 | |||||||||||||||
| Discontinued operations, net of tax | 42 | (85 | ) | (565 | ) | (128 | ) | (2,973 | ) | |||||||||||
| Net income | $ | 53,238 | $ | 48,823 | $ | 38,197 | $ | 137,692 | $ | 102,163 | ||||||||||
| Interest earned on earning assets (FTE) (1) | $ | 181,149 | $ | 184,045 | $ | 133,377 | $ | 533,590 | $ | 394,011 | ||||||||||
| Net interest income (FTE) (1) | 139,405 | 141,514 | 107,977 | 411,211 | 323,462 | |||||||||||||||
| Key Ratios | ||||||||||||||||||||
| Earnings per common share, diluted | $ | 0.65 | $ | 0.59 | $ | 0.58 | $ | 1.72 | $ | 1.55 | ||||||||||
| Return on average assets (ROA) | 1.23 | % | 1.15 | % | 1.17 | % | 1.11 | % | 1.05 | % | ||||||||||
| Return on average equity (ROE) | 8.35 | % | 7.86 | % | 8.06 | % | 7.58 | % | 7.38 | % | ||||||||||
| Efficiency ratio | 60.47 | % | 62.43 | % | 60.67 | % | 63.99 | % | 66.08 | % | ||||||||||
| Net interest margin | 3.57 | % | 3.71 | % | 3.69 | % | 3.66 | % | 3.69 | % | ||||||||||
| Net interest margin (FTE) (1) | 3.64 | % | 3.78 | % | 3.76 | % | 3.74 | % | 3.76 | % | ||||||||||
| Yields on earning assets (FTE) (1) | 4.73 | % | 4.92 | % | 4.65 | % | 4.85 | % | 4.58 | % | ||||||||||
| Cost of interest-bearing liabilities | 1.45 | % | 1.50 | % | 1.15 | % | 1.47 | % | 1.05 | % | ||||||||||
| Cost of deposits | 0.95 | % | 0.93 | % | 0.65 | % | 0.92 | % | 0.56 | % | ||||||||||
| Cost of funds | 1.09 | % | 1.14 | % | 0.89 | % | 1.11 | % | 0.82 | % | ||||||||||
| Operating Measures (4) | ||||||||||||||||||||
| Net operating earnings | $ | 56,057 | $ | 57,089 | $ | 39,326 | $ | 163,665 | $ | 132,065 | ||||||||||
| Operating earnings per share, diluted | $ | 0.69 | $ | 0.70 | $ | 0.60 | $ | 2.04 | $ | 2.01 | ||||||||||
| Operating ROA | 1.29 | % | 1.35 | % | 1.21 | % | 1.32 | % | 1.35 | % | ||||||||||
| Operating ROE | 8.80 | % | 9.20 | % | 8.30 | % | 9.01 | % | 9.54 | % | ||||||||||
| Operating ROTCE (2) (3) | 15.64 | % | 16.58 | % | 15.13 | % | 16.18 | % | 17.41 | % | ||||||||||
| Operating efficiency ratio (FTE) (1)(6) | 55.12 | % | 52.46 | % | 58.59 | % | 53.92 | % | 55.87 | % | ||||||||||
| Per Share Data | ||||||||||||||||||||
| Earnings per common share, basic | $ | 0.65 | $ | 0.59 | $ | 0.58 | $ | 1.72 | $ | 1.55 | ||||||||||
| Earnings per common share, diluted | 0.65 | 0.59 | 0.58 | 1.72 | 1.55 | |||||||||||||||
| Cash dividends paid per common share | 0.25 | 0.23 | 0.23 | 0.71 | 0.65 | |||||||||||||||
| Market value per share | 37.25 | 35.33 | 38.53 | 37.25 | 38.53 | |||||||||||||||
| Book value per common share | 31.29 | 30.78 | 28.68 | 31.29 | 28.68 | |||||||||||||||
| Tangible book value per common share (2) | 18.80 | 18.36 | 16.79 | 18.80 | 16.79 | |||||||||||||||
| Price to earnings ratio, diluted | 14.44 | 14.93 | 16.74 | 16.20 | 18.59 | |||||||||||||||
| Price to book value per common share ratio | 1.19 | 1.15 | 1.34 | 1.19 | 1.34 | |||||||||||||||
| Price to tangible book value per common share ratio (2) | 1.98 | 1.92 | 2.29 | 1.98 | 2.29 | |||||||||||||||
| Weighted average common shares outstanding, basic | 81,769,193 | 82,062,585 | 65,974,702 | 80,120,725 | 65,817,668 | |||||||||||||||
| Weighted average common shares outstanding, diluted | 81,832,868 | 82,125,194 | 66,013,152 | 80,183,113 | 65,873,202 | |||||||||||||||
| Common shares outstanding at end of period | 81,147,896 | 82,086,736 | 65,982,669 | 81,147,896 | 65,982,669 | |||||||||||||||
| As of & For Three Months Ended | As of & For Nine Months Ended | |||||||||||||||
| 09/30/19 | 06/30/19 | 09/30/18 | 09/30/19 | 09/30/18 | ||||||||||||
| Capital Ratios | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||
| Common equity Tier 1 capital ratio (5) | 10.48 | % | 10.53 | % | 9.92 | % | 10.48 | % | 9.92 | % | ||||||
| Tier 1 capital ratio (5) | 10.48 | % | 10.53 | % | 11.12 | % | 10.48 | % | 11.12 | % | ||||||
| Total capital ratio (5) | 12.93 | % | 13.00 | % | 12.97 | % | 12.93 | % | 12.97 | % | ||||||
| Leverage ratio (Tier 1 capital to average assets) (5) | 8.94 | % | 9.00 | % | 9.89 | % | 8.94 | % | 9.89 | % | ||||||
| Common equity to total assets | 14.48 | % | 14.64 | % | 14.06 | % | 14.48 | % | 14.06 | % | ||||||
| Tangible common equity to tangible assets (2) | 9.23 | % | 9.28 | % | 8.74 | % | 9.23 | % | 8.74 | % | ||||||
| Financial Condition | ||||||||||||||||
| Assets | $ | 17,441,035 | $ | 17,159,384 | $ | 13,371,742 | $ | 17,441,035 | $ | 13,371,742 | ||||||
| Loans held for investment | 12,306,997 | 12,220,514 | 9,411,598 | 12,306,997 | 9,411,598 | |||||||||||
| Securities | 2,607,748 | 2,703,856 | 2,258,239 | 2,607,748 | 2,258,239 | |||||||||||
| Earning Assets | 15,365,753 | 15,140,370 | 11,808,717 | 15,365,753 | 11,808,717 | |||||||||||
| Goodwill | 929,815 | 930,449 | 727,699 | 929,815 | 727,699 | |||||||||||
| Amortizable intangibles, net | 78,241 | 82,976 | 51,563 | 78,241 | 51,563 | |||||||||||
| Deposits | 13,044,712 | 12,515,544 | 9,834,695 | 13,044,712 | 9,834,695 | |||||||||||
| Borrowings | 1,549,181 | 1,909,171 | 1,554,642 | 1,549,181 | 1,554,642 | |||||||||||
| Stockholders’ equity | 2,525,031 | 2,512,295 | 1,880,029 | 2,525,031 | 1,880,029 | |||||||||||
| Tangible common equity (2) | 1,516,975 | 1,498,870 | 1,100,767 | 1,516,975 | 1,100,767 | |||||||||||
| Loans held for investment, net of deferred fees and costs | ||||||||||||||||
| Construction and land development | $ | 1,201,149 | $ | 1,267,712 | $ | 1,178,054 | $ | 1,201,149 | $ | 1,178,054 | ||||||
| Commercial real estate – owner occupied | 1,979,052 | 1,966,776 | 1,283,125 | 1,979,052 | 1,283,125 | |||||||||||
| Commercial real estate – non-owner occupied | 3,198,580 | 3,104,823 | 2,427,251 | 3,198,580 | 2,427,251 | |||||||||||
| Multifamily real estate | 659,946 | 602,115 | 542,662 | 659,946 | 542,662 | |||||||||||
| Commercial & Industrial | 2,058,133 | 2,032,799 | 1,154,583 | 2,058,133 | 1,154,583 | |||||||||||
| Residential 1-4 Family – Commercial | 721,185 | 723,636 | 646,581 | 721,185 | 646,581 | |||||||||||
| Residential 1-4 Family – Consumer | 913,245 | 928,130 | 684,945 | 913,245 | 684,945 | |||||||||||
| Auto | 328,456 | 311,858 | 306,196 | 328,456 | 306,196 | |||||||||||
| HELOC | 660,963 | 660,621 | 612,116 | 660,963 | 612,116 | |||||||||||
| Consumer | 386,848 | 383,653 | 345,320 | 386,848 | 345,320 | |||||||||||
| Other Commercial | 199,440 | 238,391 | 230,765 | 199,440 | 230,765 | |||||||||||
| Total loans held for investment | $ | 12,306,997 | $ | 12,220,514 | $ | 9,411,598 | $ | 12,306,997 | $ | 9,411,598 | ||||||
| Deposits | ||||||||||||||||
| NOW accounts | $ | 2,515,777 | $ | 2,552,159 | $ | 2,205,262 | $ | 2,515,777 | $ | 2,205,262 | ||||||
| Money market accounts | 3,737,426 | 3,592,523 | 2,704,480 | 3,737,426 | 2,704,480 | |||||||||||
| Savings accounts | 739,505 | 749,472 | 635,788 | 739,505 | 635,788 | |||||||||||
| Time deposits of $250,000 and over | 717,090 | 579,786 | 324,253 | 717,090 | 324,253 | |||||||||||
| Other time deposits | 2,179,740 | 2,026,708 | 1,775,025 | 2,179,740 | 1,775,025 | |||||||||||
| Time deposits | 2,896,830 | 2,606,494 | 2,099,278 | 2,896,830 | 2,099,278 | |||||||||||
| Total interest-bearing deposits | $ | 9,889,538 | $ | 9,500,648 | $ | 7,644,808 | $ | 9,889,538 | $ | 7,644,808 | ||||||
| Demand deposits | 3,155,174 | 3,014,896 | 2,189,887 | 3,155,174 | 2,189,887 | |||||||||||
| Total deposits | $ | 13,044,712 | $ | 12,515,544 | $ | 9,834,695 | $ | 13,044,712 | $ | 9,834,695 | ||||||
| Averages | ||||||||||||||||
| Assets | $ | 17,203,328 | $ | 16,997,531 | $ | 12,947,352 | $ | 16,639,041 | $ | 13,061,453 | ||||||
| Loans held for investment | 12,240,254 | 12,084,961 | 9,297,213 | 11,821,612 | 9,594,094 | |||||||||||
| Loans held for sale | 75,558 | 47,061 | 23,892 | 46,095 | 28,151 | |||||||||||
| Securities | 2,660,270 | 2,738,528 | 1,966,010 | 2,681,463 | 1,720,978 | |||||||||||
| Earning assets | 15,191,792 | 15,002,726 | 11,383,320 | 14,700,019 | 11,506,200 | |||||||||||
| Deposits | 12,812,211 | 12,453,702 | 9,803,475 | 12,250,199 | 9,638,698 | |||||||||||
| Time deposits | 2,769,574 | 2,562,498 | 2,079,686 | 2,554,058 | 2,076,321 | |||||||||||
| Interest-bearing deposits | 9,803,624 | 9,555,093 | 7,635,710 | 9,408,182 | 7,559,053 | |||||||||||
| Borrowings | 1,623,681 | 1,847,325 | 1,155,093 | 1,753,276 | 1,460,685 | |||||||||||
| Interest-bearing liabilities | 11,427,305 | 11,402,418 | 8,790,803 | 11,161,458 | 9,019,738 | |||||||||||
| Stockholders’ equity | 2,528,435 | 2,490,049 | 1,880,582 | 2,429,912 | 1,851,072 | |||||||||||
| Tangible common equity (2) | 1,517,400 | 1,475,028 | 1,103,530 | 1,442,831 | 1,074,303 | |||||||||||
| As of & For Three Months Ended | As of & For Nine Months Ended | ||||||||||||||||
| 09/30/19 | 06/30/19 | 09/30/18 | 09/30/19 | 09/30/18 | |||||||||||||
| Asset Quality | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
| Allowance for Loan Losses (ALL) | |||||||||||||||||
| Beginning balance | $ | 42,463 | $ | 40,827 | $ | 41,270 | $ | 41,045 | $ | 38,208 | |||||||
| Add: Recoveries | 1,574 | 1,670 | 1,401 | 4,940 | 4,082 | ||||||||||||
| Less: Charge-offs | 9,317 | 5,934 | 4,560 | 21,190 | 10,099 | ||||||||||||
| Add: Provision for loan losses | 9,100 | 5,900 | 3,100 | 19,025 | 9,284 | ||||||||||||
| Add: Provision for loan losses included in discontinued operations | — | — | 83 | — | (181 | ) | |||||||||||
| Ending balance | $ | 43,820 | $ | 42,463 | $ | 41,294 | $ | 43,820 | $ | 41,294 | |||||||
| ALL / total outstanding loans | 0.36 | % | 0.35 | % | 0.44 | % | 0.36 | % | 0.44 | % | |||||||
| Net charge-offs / total average loans | 0.25 | % | 0.14 | % | 0.13 | % | 0.18 | % | 0.08 | % | |||||||
| Provision / total average loans | 0.29 | % | 0.20 | % | 0.13 | % | 0.22 | % | 0.13 | % | |||||||
| ` | |||||||||||||||||
| Total PCI loans, net of fair value mark | $ | 89,735 | $ | 101,301 | $ | 94,746 | $ | 89,735 | $ | 94,746 | |||||||
| Remaining fair value mark on purchased performing loans | 54,067 | 58,583 | 33,428 | 54,067 | 33,428 | ||||||||||||
| Nonperforming Assets | |||||||||||||||||
| Construction and land development | $ | 7,785 | $ | 5,619 | $ | 9,221 | $ | 7,785 | $ | 9,221 | |||||||
| Commercial real estate – owner occupied | 5,684 | 4,062 | 3,202 | 5,684 | 3,202 | ||||||||||||
| Commercial real estate – non-owner occupied | 381 | 1,685 | 1,812 | 381 | 1,812 | ||||||||||||
| Commercial & Industrial | 1,585 | 1,183 | 1,404 | 1,585 | 1,404 | ||||||||||||
| Residential 1-4 Family – Commercial | 3,879 | 4,135 | 1,956 | 3,879 | 1,956 | ||||||||||||
| Residential 1-4 Family – Consumer | 8,292 | 8,677 | 8,535 | 8,292 | 8,535 | ||||||||||||
| Auto | 604 | 449 | 525 | 604 | 525 | ||||||||||||
| HELOC | 1,641 | 1,432 | 1,273 | 1,641 | 1,273 | ||||||||||||
| Consumer and all other | 181 | 220 | 182 | 181 | 182 | ||||||||||||
| Nonaccrual loans | $ | 30,032 | $ | 27,462 | $ | 28,110 | $ | 30,032 | $ | 28,110 | |||||||
| Foreclosed property | 6,385 | 6,506 | 6,800 | 6,385 | 6,800 | ||||||||||||
| Total nonperforming assets (NPAs) | $ | 36,417 | $ | 33,968 | $ | 34,910 | $ | 36,417 | $ | 34,910 | |||||||
| Construction and land development | $ | 171 | $ | 855 | $ | 442 | $ | 171 | $ | 442 | |||||||
| Commercial real estate – owner occupied | 2,571 | 2,540 | 3,586 | 2,571 | 3,586 | ||||||||||||
| Commercial real estate – non-owner occupied | 36 | 1,489 | — | 36 | — | ||||||||||||
| Multifamily real estate | 1,212 | — | — | 1,212 | — | ||||||||||||
| Commercial & Industrial | 265 | 295 | 256 | 265 | 256 | ||||||||||||
| Residential 1-4 Family – Commercial | 916 | 863 | 378 | 916 | 378 | ||||||||||||
| Residential 1-4 Family – Consumer | 3,815 | 845 | 2,543 | 3,815 | 2,543 | ||||||||||||
| Auto | 183 | 122 | 211 | 183 | 211 | ||||||||||||
| HELOC | 1,674 | 658 | 1,291 | 1,674 | 1,291 | ||||||||||||
| Consumer and all other | 1,193 | 1,161 | 825 | 1,193 | 825 | ||||||||||||
| Loans ≥ 90 days and still accruing | $ | 12,036 | $ | 8,828 | $ | 9,532 | $ | 12,036 | $ | 9,532 | |||||||
| Total NPAs and loans ≥ 90 days | $ | 48,453 | $ | 42,796 | $ | 44,442 | $ | 48,453 | $ | 44,442 | |||||||
| NPAs / total outstanding loans | 0.30 | % | 0.28 | % | 0.37 | % | 0.30 | % | 0.37 | % | |||||||
| NPAs / total assets | 0.21 | % | 0.20 | % | 0.26 | % | 0.21 | % | 0.26 | % | |||||||
| ALL / nonaccrual loans | 145.91 | % | 154.62 | % | 146.90 | % | 145.91 | % | 146.90 | % | |||||||
| ALL / nonperforming assets | 120.33 | % | 125.01 | % | 118.29 | % | 120.33 | % | 118.29 | % | |||||||
| Past Due Detail | |||||||||||||||||
| Construction and land development | $ | 1,062 | $ | 2,327 | $ | 1,351 | $ | 1,062 | $ | 1,351 | |||||||
| Commercial real estate – owner occupied | 4,977 | 1,707 | 4,218 | 4,977 | 4,218 | ||||||||||||
| Commercial real estate – non-owner occupied | 5,757 | 141 | 492 | 5,757 | 492 | ||||||||||||
| Multifamily real estate | 107 | 1,218 | 553 | 107 | 553 | ||||||||||||
| Commercial & Industrial | 2,079 | 3,223 | 2,239 | 2,079 | 2,239 | ||||||||||||
| Residential 1-4 Family – Commercial | 1,842 | 1,622 | 2,535 | 1,842 | 2,535 | ||||||||||||
| Residential 1-4 Family – Consumer | 1,527 | 5,969 | 4,506 | 1,527 | 4,506 | ||||||||||||
| Auto | 1,787 | 2,120 | 2,414 | 1,787 | 2,414 | ||||||||||||
| HELOC | 4,965 | 4,978 | 4,783 | 4,965 | 4,783 | ||||||||||||
| Consumer and all other | 2,579 | 2,824 | 2,640 | 2,579 | 2,640 | ||||||||||||
| Loans 30-59 days past due | $ | 26,682 | $ | 26,129 | $ | 25,731 | $ | 26,682 | $ | 25,731 | |||||||
| As of & For Three Months Ended | As of & For Nine Months Ended | |||||||||||||||
| 09/30/19 | 06/30/19 | 09/30/18 | 09/30/19 | 9/30/2018 | ||||||||||||
| Past Due Detail cont’d | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||
| Construction and land development | $ | 351 | $ | 318 | $ | 1,826 | $ | 351 | $ | 1,826 | ||||||
| Commercial real estate – owner occupied | — | — | 539 | — | 539 | |||||||||||
| Commercial real estate – non-owner occupied | 1,878 | 164 | — | 1,878 | — | |||||||||||
| Multifamily real estate | 164 | — | — | 164 | — | |||||||||||
| Commercial & Industrial | 1,946 | 1,175 | 428 | 1,946 | 428 | |||||||||||
| Residential 1-4 Family – Commercial | 3,081 | 651 | 1,892 | 3,081 | 1,892 | |||||||||||
| Residential 1-4 Family – Consumer | 5,182 | 2,801 | 3,793 | 5,182 | 3,793 | |||||||||||
| Auto | 407 | 299 | 299 | 407 | 299 | |||||||||||
| HELOC | 1,747 | 1,336 | 1,392 | 1,747 | 1,392 | |||||||||||
| Consumer and all other | 1,675 | 1,423 | 1,140 | 1,675 | 1,140 | |||||||||||
| Loans 60-89 days past due | $ | 16,431 | $ | 8,167 | $ | 11,309 | $ | 16,431 | $ | 11,309 | ||||||
| Troubled Debt Restructurings | ||||||||||||||||
| Performing | $ | 15,156 | $ | 19,144 | $ | 19,854 | $ | 15,156 | $ | 19,854 | ||||||
| Nonperforming | 3,582 | 4,536 | 8,425 | 3,582 | 8,425 | |||||||||||
| Total troubled debt restructurings | $ | 18,738 | $ | 23,680 | $ | 28,279 | $ | 18,738 | $ | 28,279 | ||||||
| Alternative Performance Measures (non-GAAP) | ||||||||||||||||
| Net interest income (FTE) | ||||||||||||||||
| Net interest income (GAAP) | $ | 136,601 | $ | 138,594 | $ | 105,963 | $ | 402,743 | $ | 317,602 | ||||||
| FTE adjustment | 2,804 | 2,920 | 2,014 | 8,468 | 5,860 | |||||||||||
| Net interest income (FTE) (non-GAAP) (1) | $ | 139,405 | $ | 141,514 | $ | 107,977 | $ | 411,211 | $ | 323,462 | ||||||
| Average earning assets | 15,191,792 | 15,002,726 | 11,383,320 | 14,700,019 | 11,506,200 | |||||||||||
| Net interest margin | 3.57 | % | 3.71 | % | 3.69 | % | 3.66 | % | 3.69 | % | ||||||
| Net interest margin (FTE) (1) | 3.64 | % | 3.78 | % | 3.76 | % | 3.74 | % | 3.76 | % | ||||||
| Tangible Assets | ||||||||||||||||
| Ending assets (GAAP) | $ | 17,441,035 | $ | 17,159,384 | $ | 13,371,742 | $ | 17,441,035 | $ | 13,371,742 | ||||||
| Less: Ending goodwill | 929,815 | 930,449 | 727,699 | 929,815 | 727,699 | |||||||||||
| Less: Ending amortizable intangibles | 78,241 | 82,976 | 51,563 | 78,241 | 51,563 | |||||||||||
| Ending tangible assets (non-GAAP) | $ | 16,432,979 | $ | 16,145,959 | $ | 12,592,480 | $ | 16,432,979 | $ | 12,592,480 | ||||||
| Tangible Common Equity (2) | ||||||||||||||||
| Ending equity (GAAP) | $ | 2,525,031 | $ | 2,512,295 | $ | 1,880,029 | $ | 2,525,031 | $ | 1,880,029 | ||||||
| Less: Ending goodwill | 929,815 | 930,449 | 727,699 | 929,815 | 727,699 | |||||||||||
| Less: Ending amortizable intangibles | 78,241 | 82,976 | 51,563 | 78,241 | 51,563 | |||||||||||
| Ending tangible common equity (non-GAAP) | $ | 1,516,975 | $ | 1,498,870 | $ | 1,100,767 | $ | 1,516,975 | $ | 1,100,767 | ||||||
| Average equity (GAAP) | $ | 2,528,435 | $ | 2,490,049 | $ | 1,880,582 | $ | 2,429,912 | $ | 1,851,072 | ||||||
| Less: Average goodwill | 930,525 | 929,455 | 723,785 | 906,476 | 724,940 | |||||||||||
| Less: Average amortizable intangibles | 80,510 | 85,566 | 53,267 | 80,605 | 51,829 | |||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,517,400 | $ | 1,475,028 | $ | 1,103,530 | $ | 1,442,831 | $ | 1,074,303 | ||||||
| Operating Measures (4) | ||||||||||||||||
| Net income (GAAP) | $ | 53,238 | $ | 48,823 | $ | 38,197 | $ | 137,692 | $ | 102,163 | ||||||
| Plus: Merger and rebranding-related costs, net of tax | 2,819 | 8,266 | 1,129 | 25,973 | 29,902 | |||||||||||
| Net operating earnings (non-GAAP) | $ | 56,057 | $ | 57,089 | $ | 39,326 | $ | 163,665 | $ | 132,065 | ||||||
| Noninterest expense (GAAP) | $ | 111,687 | $ | 105,608 | $ | 76,349 | $ | 324,022 | $ | 263,234 | ||||||
| Less: Merger Related Costs | 2,435 | 6,371 | 1,429 | 26,928 | 37,414 | |||||||||||
| Less: Rebranding Costs | 1,133 | 4,012 | — | 5,553 | — | |||||||||||
| Less: Amortization of intangible assets | 4,764 | 4,937 | 3,490 | 13,919 | 9,885 | |||||||||||
| Operating noninterest expense (non-GAAP) | $ | 103,355 | $ | 90,288 | $ | 71,430 | $ | 277,622 | $ | 215,935 | ||||||
| Net interest income (FTE) (non-GAAP) (1) | $ | 139,405 | $ | 141,514 | $ | 107,977 | $ | 411,211 | $ | 323,462 | ||||||
| Noninterest income (GAAP) | 48,106 | 30,578 | 19,887 | 103,621 | 80,752 | |||||||||||
| Efficiency ratio | 60.47 | % | 62.43 | % | 60.67 | % | 63.99 | % | 66.08 | % | ||||||
| Operating efficiency ratio (FTE)(6) | 55.12 | % | 52.46 | % | 58.59 | % | 53.92 | % | 55.87 | % | ||||||
| As of & For Three Months Ended | As of & For Nine Months Ended | |||||||||||||||
| 09/30/19 | 06/30/19 | 09/30/18 | 09/30/19 | 09/30/18 | ||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
| Operating ROTCE (2)(3) | ||||||||||||||||
| Operating Net Income (non-GAAP) | $ | 56,057 | $ | 57,089 | $ | 39,326 | $ | 163,665 | $ | 132,065 | ||||||
| Plus: Amortization of intangibles, tax effected | 3,764 | 3,900 | 2,757 | 10,996 | 7,809 | |||||||||||
| Net Income before amortization of intangibles (non-GAAP) | $ | 59,821 | $ | 60,989 | $ | 42,083 | $ | 174,661 | $ | 139,874 | ||||||
| Average tangible common equity (non-GAAP) | $ | 1,517,400 | $ | 1,475,028 | $ | 1,103,530 | $ | 1,442,831 | $ | 1,074,303 | ||||||
| Operating return on average tangible common equity (non-GAAP) | 15.64 | % | 16.58 | % | 15.13 | % | 16.18 | % | 17.41 | % | ||||||
| Mortgage Origination Volume | ||||||||||||||||
| Refinance Volume | $ | 62,230 | $ | 27,870 | $ | — | $ | 102,069 | $ | 35,599 | ||||||
| Construction Volume | 3,915 | 360 | — | 4,275 | 13,867 | |||||||||||
| Purchase Volume | 78,113 | 84,225 | — | 194,445 | 43,082 | |||||||||||
| Total Mortgage loan originations | $ | 144,258 | $ | 112,455 | $ | — | $ | 300,789 | $ | 92,548 | ||||||
| % of originations that are refinances | 43.1 | % | 24.8 | % | 0.00 | % | 33.9 | % | 38.5 | % | ||||||
| Wealth | ||||||||||||||||
| Assets under management (“AUM”) | $ | 5,451,796 | $ | 5,332,203 | $ | 3,683,682 | $ | 5,451,796 | $ | 3,683,682 | ||||||
| Other Data | ||||||||||||||||
| End of period full-time employees | 1,946 | 1,931 | 1,621 | 1,946 | 1,621 | |||||||||||
| Number of full-service branches | 149 | 153 | 140 | 149 | 140 | |||||||||||
| Number of full automatic transaction machines (“ATMs”) | 169 | 197 | 190 | 169 | 190 | |||||||||||
| Notable Transactions During the Third Quarter of 2019 (dollars in thousands): | September 30, 2019 | |||||
| Noninterest income | Noninterest expense | |||||
| Recovery of an acquired loan charged off prior to being acquired | $ | 9,300 | $ | – | ||
| Gain on the sale of investment securities | 7,100 | – | ||||
| Prepayment of $140.0 million FHLB advances | – | 7,400 | ||||
| Cash flow hedge termination related to the prepayment of FHLB advances | – | 9,000 | ||||
| $ | 16,400 | $ | 16,400 | |||
(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 September 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)
| September 30, | June 30, | December 31, | September 30, | ||||||||||
| 2019 | 2019 | 2018 | 2018 | ||||||||||
| ASSETS | (unaudited) | (unaudited) | (audited) | (unaudited) | |||||||||
| Cash and cash equivalents: | |||||||||||||
| Cash and due from banks | $ | 218,584 | 171,441 | $ | 166,927 | $ | 143,693 | ||||||
| Interest-bearing deposits in other banks | 370,673 | 146,514 | 94,056 | 130,098 | |||||||||
| Federal funds sold | 2,663 | 2,523 | 216 | 8,421 | |||||||||
| Total cash and cash equivalents | 591,920 | 320,478 | 261,199 | 282,212 | |||||||||
| Securities available for sale, at fair value | 1,918,859 | 1,999,494 | 1,774,821 | 1,883,141 | |||||||||
| Securities held to maturity, at carrying value | 556,579 | 558,503 | 492,272 | 235,333 | |||||||||
| Marketable equity securities, at fair value | — | — | — | 27,375 | |||||||||
| Restricted stock, at cost | 132,310 | 145,859 | 124,602 | 112,390 | |||||||||
| Loans held for sale, at fair value | 72,208 | 62,908 | — | — | |||||||||
| Loans held for investment, net of deferred fees and costs | 12,306,997 | 12,220,514 | 9,716,207 | 9,411,598 | |||||||||
| Less allowance for loan losses | 43,820 | 42,463 | 41,045 | 41,294 | |||||||||
| Total loans held for investment, net | 12,263,177 | 12,178,051 | 9,675,162 | 9,370,304 | |||||||||
| Premises and equipment, net | 168,122 | 168,514 | 146,967 | 155,001 | |||||||||
| Goodwill | 929,815 | 930,449 | 727,168 | 727,699 | |||||||||
| Amortizable intangibles, net | 78,241 | 82,976 | 48,685 | 51,563 | |||||||||
| Bank owned life insurance | 320,779 | 318,734 | 263,034 | 261,874 | |||||||||
| Other assets | 408,162 | 392,454 | 250,210 | 262,716 | |||||||||
| Assets of discontinued operations | 863 | 964 | 1,479 | 2,134 | |||||||||
| Total assets | $ | 17,441,035 | 17,159,384 | $ | 13,765,599 | $ | 13,371,742 | ||||||
| LIABILITIES | |||||||||||||
| Noninterest-bearing demand deposits | $ | 3,155,174 | 3,014,896 | $ | 2,094,607 | $ | 2,189,887 | ||||||
| Interest-bearing deposits | 9,889,538 | 9,500,648 | 7,876,353 | 7,644,808 | |||||||||
| Total deposits | 13,044,712 | 12,515,544 | 9,970,960 | 9,834,695 | |||||||||
| Securities sold under agreements to repurchase | 67,260 | 70,870 | 39,197 | 40,624 | |||||||||
| Other short-term borrowings | 344,600 | 618,050 | 1,048,600 | 1,016,250 | |||||||||
| Long-term borrowings | 1,137,321 | 1,220,251 | 668,481 | 497,768 | |||||||||
| Other liabilities | 321,348 | 221,353 | 112,093 | 99,757 | |||||||||
| Liabilities of discontinued operations | 763 | 1,021 | 1,687 | 2,619 | |||||||||
| Total liabilities | 14,916,004 | 14,647,089 | 11,841,018 | 11,491,713 | |||||||||
| Commitments and contingencies | |||||||||||||
| STOCKHOLDERS’ EQUITY | |||||||||||||
| Common stock, $1.33 par value, shares authorized of 200,000,000 at both September 30, 2019 and June 30, 2019, and 100,000,000 at both December 31, 2018 and September 30, 2018, respectively; shares issued and outstanding of 81,147,896 at September 30, 2019, 82,086,736 at June 30, 2019, 65,977,149 at December 31, 2018, and 65,982,669 at September 30, 2018. | 107,330 | 108,560 | 87,250 | 87,192 | |||||||||
| Additional paid-in capital | 1,831,667 | 1,862,716 | 1,380,259 | 1,378,940 | |||||||||
| Retained earnings | 545,665 | 512,952 | 467,345 | 438,513 | |||||||||
| Accumulated other comprehensive income (loss) | 40,369 | 28,067 | (10,273 | ) | (24,616 | ) | |||||||
| Total stockholders’ equity | 2,525,031 | 2,512,295 | 1,924,581 | 1,880,029 | |||||||||
| Total liabilities and stockholders’ equity | $ | 17,441,035 | 17,159,384 | $ | 13,765,599 | $ | 13,371,742 | ||||||
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Interest and dividend income: | ||||||||||||||||||
| Interest and fees on loans | $ | 156,651 | $ | 158,838 | $ | 115,817 | $ | 459,603 | $ | 348,009 | ||||||||
| Interest on deposits in other banks | 1,030 | 544 | 492 | 2,047 | 1,815 | |||||||||||||
| Interest and dividends on securities: | ||||||||||||||||||
| Taxable | 12,625 | 13,353 | 10,145 | 39,059 | 25,229 | |||||||||||||
| Nontaxable | 8,039 | 8,390 | 4,909 | 24,413 | 13,098 | |||||||||||||
| Total interest and dividend income | 178,345 | 181,125 | 131,363 | 525,122 | 388,151 | |||||||||||||
| Interest expense: | ||||||||||||||||||
| Interest on deposits | 30,849 | 28,809 | 15,928 | 84,088 | 40,187 | |||||||||||||
| Interest on short-term borrowings | 2,200 | 5,563 | 3,379 | 14,313 | 12,794 | |||||||||||||
| Interest on long-term borrowings | 8,695 | 8,159 | 6,093 | 23,978 | 17,568 | |||||||||||||
| Total interest expense | 41,744 | 42,531 | 25,400 | 122,379 | 70,549 | |||||||||||||
| Net interest income | 136,601 | 138,594 | 105,963 | 402,743 | 317,602 | |||||||||||||
| Provision for credit losses | 9,100 | 5,300 | 3,340 | 18,192 | 9,011 | |||||||||||||
| Net interest income after provision for credit losses | 127,501 | 133,294 | 102,623 | 384,551 | 308,591 | |||||||||||||
| Noninterest income: | ||||||||||||||||||
| Service charges on deposit accounts | 7,675 | 7,499 | 6,483 | 22,331 | 18,566 | |||||||||||||
| Other service charges and fees | 1,513 | 1,702 | 1,625 | 4,879 | 4,137 | |||||||||||||
| Interchange fees, net | 2,108 | 5,612 | 4,882 | 12,765 | 14,163 | |||||||||||||
| Fiduciary and asset management fees | 6,082 | 5,698 | 4,411 | 16,834 | 11,507 | |||||||||||||
| Mortgage banking income, net | 3,374 | 2,785 | — | 7,614 | — | |||||||||||||
| Gains (losses) on securities transactions, net | 7,104 | 51 | 97 | 7,306 | 222 | |||||||||||||
| Bank owned life insurance income | 2,062 | 2,075 | 1,732 | 6,191 | 5,126 | |||||||||||||
| Loan-related interest rate swap fees, net | 5,480 | 3,716 | 562 | 10,656 | 2,178 | |||||||||||||
| Gain on Shore Premier sale | — | — | (933 | ) | — | 19,966 | ||||||||||||
| Other operating income | 12,708 | 1,440 | 1,028 | 15,045 | 4,887 | |||||||||||||
| Total noninterest income | 48,106 | 30,578 | 19,887 | 103,621 | 80,752 | |||||||||||||
| Noninterest expenses: | ||||||||||||||||||
| Salaries and benefits | 49,718 | 50,390 | 39,279 | 148,116 | 120,797 | |||||||||||||
| Occupancy expenses | 7,493 | 7,534 | 6,551 | 22,427 | 18,778 | |||||||||||||
| Furniture and equipment expenses | 3,719 | 3,542 | 2,983 | 10,656 | 9,024 | |||||||||||||
| Printing, postage, and supplies | 1,268 | 1,252 | 1,183 | 3,763 | 3,525 | |||||||||||||
| Communications expense | 1,037 | 1,157 | 872 | 3,199 | 2,976 | |||||||||||||
| Technology and data processing | 5,787 | 5,739 | 4,841 | 17,203 | 13,722 | |||||||||||||
| Professional services | 2,681 | 2,630 | 2,875 | 8,269 | 8,101 | |||||||||||||
| Marketing and advertising expense | 2,600 | 2,908 | 3,109 | 7,891 | 7,834 | |||||||||||||
| FDIC assessment premiums and other insurance | 381 | 2,601 | 1,363 | 5,620 | 5,430 | |||||||||||||
| Other taxes | 3,971 | 4,044 | 2,878 | 11,779 | 8,660 | |||||||||||||
| Loan-related expenses | 2,566 | 2,396 | 1,939 | 7,250 | 5,097 | |||||||||||||
| OREO and credit-related expenses | 1,005 | 1,473 | 452 | 3,162 | 3,106 | |||||||||||||
| Amortization of intangible assets | 4,764 | 4,937 | 3,490 | 13,919 | 9,885 | |||||||||||||
| Training and other personnel costs | 1,618 | 1,477 | 1,024 | 4,240 | 3,155 | |||||||||||||
| Merger-related costs | 2,435 | 6,371 | 1,429 | 26,928 | 37,414 | |||||||||||||
| Rebranding expense | 1,133 | 4,012 | — | 5,553 | — | |||||||||||||
| Loss on debt extinguishment | 16,397 | — | — | 16,397 | — | |||||||||||||
| Other expenses | 3,114 | 3,145 | 2,081 | 7,650 | 5,730 | |||||||||||||
| Total noninterest expenses | 111,687 | 105,608 | 76,349 | 324,022 | 263,234 | |||||||||||||
| Income from continuing operations before income taxes | 63,920 | 58,264 | 46,161 | 164,150 | 126,109 | |||||||||||||
| Income tax expense | 10,724 | 9,356 | 7,399 | 26,330 | 20,973 | |||||||||||||
| Income from continuing operations | $ | 53,196 | $ | 48,908 | $ | 38,762 | $ | 137,820 | $ | 105,136 | ||||||||
| Discontinued operations: | ||||||||||||||||||
| Income (loss) from operations of discontinued mortgage segment | $ | 56 | $ | (114 | ) | $ | (761 | ) | $ | (173 | ) | $ | (3,768 | ) | ||||
| Income tax expense (benefit) | 14 | (29 | ) | (196 | ) | (45 | ) | (795 | ) | |||||||||
| Income (loss) on discontinued operations | 42 | (85 | ) | (565 | ) | (128 | ) | (2,973 | ) | |||||||||
| Net income | 53,238 | 48,823 | 38,197 | 137,692 | 102,163 | |||||||||||||
| Basic earnings per common share | $ | 0.65 | $ | 0.59 | $ | 0.58 | $ | 1.72 | $ | 1.55 | ||||||||
| Diluted earnings per common share | $ | 0.65 | $ | 0.59 | $ | 0.58 | $ | 1.72 | $ | 1.55 | ||||||||
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
| For the Quarter Ended | |||||||||||||||||||
| September 30, 2019 | June 30, 2019 | ||||||||||||||||||
| Average Balance | Interest Income / Expense (1) | Yield / Rate (1)(2) | Average Balance | Interest Income / Expense (1) | Yield / Rate (1)(2) | ||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||
| Assets: | |||||||||||||||||||
| Securities: | |||||||||||||||||||
| Taxable | $ | 1,670,270 | $ | 12,625 | 3.00 | % | $ | 1,705,977 | $ | 13,333 | 3.13 | % | |||||||
| Tax-exempt | 990,000 | 10,181 | 4.08 | % | 1,032,551 | 10,646 | 4.14 | % | |||||||||||
| Total securities | 2,660,270 | 22,806 | 3.40 | % | 2,738,528 | 23,979 | 3.51 | % | |||||||||||
| Loans, net (3) (4) | 12,240,254 | 156,471 | 5.07 | % | 12,084,961 | 158,935 | 5.28 | % | |||||||||||
| Other earning assets | 291,268 | 1,872 | 2.55 | % | 179,237 | 1,131 | 2.53 | % | |||||||||||
| Total earning assets | 15,191,792 | $ | 181,149 | 4.73 | % | 15,002,726 | $ | 184,045 | 4.92 | % | |||||||||
| Allowance for loan losses | (46,229 | ) | (41,174 | ) | |||||||||||||||
| Total non-earning assets | 2,057,765 | 2,035,979 | |||||||||||||||||
| Total assets | $ | 17,203,328 | $ | 16,997,531 | |||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||
| Transaction and money market accounts | $ | 6,290,112 | $ | 16,389 | 1.03 | % | $ | 6,215,912 | $ | 16,139 | 1.04 | % | |||||||
| Regular savings | 743,938 | 266 | 0.14 | % | 776,683 | 416 | 0.21 | % | |||||||||||
| Time deposits (5) | 2,769,574 | 14,194 | 2.03 | % | 2,562,498 | 12,254 | 1.92 | % | |||||||||||
| Total interest-bearing deposits | 9,803,624 | 30,849 | 1.25 | % | 9,555,093 | 28,809 | 1.21 | % | |||||||||||
| Other borrowings (6) | 1,623,681 | 10,895 | 2.66 | % | 1,847,325 | 13,722 | 2.98 | % | |||||||||||
| Total interest-bearing liabilities | 11,427,305 | 41,744 | 1.45 | % | 11,402,418 | $ | 42,531 | 1.50 | % | ||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||
| Demand deposits | 3,008,587 | 2,898,609 | |||||||||||||||||
| Other liabilities | 239,001 | 206,455 | |||||||||||||||||
| Total liabilities | 14,674,893 | 14,507,482 | |||||||||||||||||
| Stockholders’ equity | 2,528,435 | 2,490,049 | |||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 17,203,328 | $ | 16,997,531 | |||||||||||||||
| Net interest income | $ | 139,405 | $ | 141,514 | |||||||||||||||
| Interest rate spread | 3.28 | % | 3.42 | % | |||||||||||||||
| Cost of funds | 1.09 | % | 1.14 | % | |||||||||||||||
| Net interest margin | 3.64 | % | 3.78 | % | |||||||||||||||
(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 $5.0 million and $7.7 million for the three months ended September 30, 2019 and June 30, 2019, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5) Interest expense on time deposits includes $179,000 and $213,000 for the three months ended September 30, 2019 and June 30, 2019, respectively, in accretion of the fair market value adjustments related to acquisitions.
(6) Interest expense on borrowings includes $97,000 and $70,000 for the three months ended September 30, 2019 and June 30, 2019, in amortization of the fair market value adjustments related to acquisitions.
Contact:
Robert M. Gorman – (804) 523‑7828
Executive Vice President / Chief Financial Officer
As Prepared for DeliveryThank you for joining me here today. President Biden’s American Rescue Plan was…
Program created by President Biden’s Inflation Reduction Act provides up to 20-percentage point credit boost…
WASHINGTON — Acting Comptroller of the Currency Michael J. Hsu today issued the following statement…
WASHINGTON — The Financial Stability Oversight Council (Council) today released its Report on Nonbank Mortgage…
WASHINGTON – Today, U.S. Secretary of the Treasury Janet L. Yellen convened a meeting of…
WASHINGTON – The U.S. Department of the Treasury announced today its intention to conduct a…