Yahoo Finance Atlantic Union Bankshares Corp (AUB) (Q1 2024) Earnings Call Transcript Highlights: Key ...
Net Income: Reported at $46.8 million.
Earnings Per Share (EPS): Reported at $0.62, adjusted operating EPS at $0.65.
Total Deposits: Increased by 5% year-over-year and 11% quarter-over-quarter to $17.3 billion.
Loan Growth: Annualized loan growth of 5.6% during the first quarter.
Net Interest Margin: Decreased by 15 basis points to 3.19%.
Provision for Credit Losses: $0.2 million in the first quarter, down from $8.7 million in the prior quarter.
Net Charge-offs: Increased to $4.9 million or 13 basis points annualized in the first quarter.
Noninterest Income: Adjusted operating noninterest income was $25.5 million.
Noninterest Expense: Adjusted operating noninterest expense was $100.7 million.
Dividend: Paid a common stock dividend of $0.32 per share, a 6.7% increase from the previous year.
Loan-to-Deposit Ratio: Declined to 91.7% at quarter end.
Full Year Outlook: Loan balances expected to end the year at or above $18 billion; deposit balances at or above $19.8 billion.
Release Date: April 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: In the NIM guidance that you lay out, is there any way just to put a range on where you're thinking accruable yield will go? And then maybe even outside of that, where you think the core NIM will go within that guidance. A: Robert Michael Gorman, Executive VP & CFO of Atlantic Union Bankshares, explained that the core net interest margin (NIM) for 2024 is projected to fall within a $3.20 to $3.30 range. Additionally, the reported numbers could see an increase of 20 to 25 basis points primarily due to the impact of the American National acquisition, including accretion income.
: And so then you still then -- and that core $320 million to $330 million, that assumes 2 rate cuts. So it seems like you still -- with the 2 rate cuts, you feel like you're going to get some expansion from this quarter's level. What does that look like if we don't get any rate cuts? How much sensitivity is that? A: CFO Gorman noted that if there are no rate cuts, the impact would actually be beneficial by 2 or 3 basis points for 2024, as variable rate loan yields would not decline.
Q: And then within that margin guide, if we look at deposit cost, deposit costs increased a little bit more than I had expected this quarter. Are you seeing stabilization towards the end of the quarter? And just any kind of comments on maybe spot rates on deposit costs towards March or April? And then maybe even what that looks like with American National. A: Gorman responded that deposit costs were expected to increase through the second quarter and stabilize in the third quarter, with a potential decline in the fourth quarter if rate cuts occur. He projected that deposit costs would stabilize around approximately 2.5%, assuming Fed cuts in the latter half of the year.
Q: John, I think you mentioned that you think we're nearing the bottom for the mix shift out of noninterest-bearing. Can you just -- I mean what gives you confidence there? Or what can you point to for us? A: John C. Asbury, President & CEO, indicated that the pace of decline in noninterest-bearing deposits has become more shallow, suggesting an inflection point. He noted that businesses are likely becoming more efficient in cash management due to the higher cost of borrowing.
Q: And then piggybacking on some of Catherine's questions. Just, I guess, Rob, can you walk us through what the size of the overall balance sheet that might be with American National? A: CFO Gorman stated that American National's total assets at closing were about $3 billion, and he expected the combined assets to grow, projecting a 5% growth in the loan book on a full-year basis.
Q: And then maybe just a bigger picture question on M&A. Obviously, you just closed American National, you've got the systems conversion, I think, going on May. John, can you walk us through sort of your thoughts around future M&A? And how we should think about the... A: CEO Asbury emphasized the priority of maximizing the performance of the existing operations, including American National, and mentioned ongoing innovation and transformation activities. He indicated that while they are open to strategic investments, including whole bank acquisitions, the immediate focus remains on integration and organic growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
