Atlantic Union Bankshares Corporation Announces Q3 2024 Results and Merger with Sandy Spring Bancorp

Overview
Atlantic Union Bankshares (NYSE:AUB) reported robust Q3 2024 financial results, with net income of $73.4 million ($0.82 per share) and adjusted operating earnings of $74.5 million, a 32.3% increase from the prior quarter.

The company is merging with Sandy Spring Bancorp to create the largest regional bank in the Mid-Atlantic, with combined assets of $39 billion. The merger is expected to close by Q3 2025 and includes a $9.5 billion community benefits plan over five years.

Key Takeaways

• Q3 net income of $73.4 million; adjusted operating earnings grew 32.3%.
• Strategic merger with Sandy Spring Bancorp aims at $39 billion combined assets.
• Loan growth was flat, but deposits increased by 6.1% annually.
• Projected net interest margin between 3.35% and 3.40% for the year.
• The merger involves a 100% stock transaction and emphasizes community support.

Company Outlook

• Expected loan balances between $18.5 billion to $19 billion by year-end.
• Projected deposits between $20 billion to $20.5 billion.
• Anticipated fully taxable equivalent net interest income of $720 million to $725 million.
• Targeted net interest margin of 3.4% to 3.45% for Q4.

Bearish Highlights

• Loan growth at -0.2%.
• Decline in securities portfolio yield influenced by market rate drops.

Bullish Highlights

• Exceptional asset quality; net charge-offs at only one basis point.
• Loan portfolio yield grew to 6.35% from origination of higher-rate loans.
• Increased non-interest income from higher equity investment income.

Misses

• Total loans held for investment decreased by $10 million from last quarter.

Q&A Highlights

• The merger is projected to yield a 23% EPS accretion and 20% internal rate of return.
• Up to $2 billion in commercial real estate loans may be sold to enhance liquidity.
• Estimated net interest margin to stabilize between 3.75% and 3.85% post-acquisition.

The merger with Sandy Spring Bancorp enhances financial strength and community focus. It is structured as a 100% stock transaction, valuing Sandy Spring at a 7% premium. The merger aims to support communities with a strong community benefits plan and align the companies' strategies.

InvestingPro Insights
Atlantic Union’s solid Q3 results highlight its financial strength and commitment to shareholders, with continuous dividend growth and a focus on maintaining profitability. The merger may address current challenges related to gross profit margins while aligning with long-term strategic goals.

Full Transcript

Operator

Good day and welcome to Atlantic Union Bankshares Third Quarter 2024 Earnings Call and Sandy Spring Bank Acquisition Announcement…

Bill Cimino

Thank you, Michelle, and good morning, everyone. I have Atlantic Union Bancshares' President and CEO, John Asbury…

John Asbury

Thank you, Bill. Good morning, everyone. Today, we're excited to announce the merger of Atlantic Union Bancshares with Olney, Maryland-based Sandy Spring Bancorp…

Robert Gorman

Well, thank you, John, and good morning, everyone…

Questions & Answers

Catherine Mealor
Good morning. Congrats on this acquisition…
Russell Gunther
Hey, good morning, guys…
Steve Moss
Hi. Good morning, guys…
David Bishop
Hey, good morning, gentlemen…

Operator
Thank you for your participation. You may now disconnect. Everyone have a great day.