Atlantic Union Bankshares Corporation · NYSE:AUB
Atlantic Union Bankshares — Union Bankshares — Investor Presentation (October 2018)
49 slides from Atlantic Union Bankshares's investor presentation, Oct 31, 2018
Slide 1: Investor Presentation October/November 2018
Exhibit 99.1 Investor Presentation Nasdaq: UBSH October/November 2018
Slide 2: Table of Contents
Table of Contents Union Third Quarter Investor Presentation Slides 3-28 Union/Access Merger Presentation Slides 29-49 Dated October 5, 2018 2
Slide 3: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation may constitute forward-looking statements within • the quality or composition of the loan or investment portfolios; the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking • concentrations of loans secure
Slide 4: Additional Information
Additional Information Unaudited Pro Forma Financial Information performance by investors. Please see “Reconciliation of Non- GAAP Disclosures” at the end of this presentation for a The unaudited pro forma financial information included herein is reconciliation to the nearest GAAP financial measure.
Slide 5: Our Company Highlights (9/30/18)
Our Company Highlights (9/30/18) $13.4 billion in assets $9.4 billion in loans Maryland BaltimoreBaltimore $2.4 billion market capitalization $9.8 billion in deposits WashingtonWashington FredericksburgFredericksburg StauntonStaunton
Slide 6: Investment Highlights
Investment Highlights • Largest Virginia headquartered regional banking company ($13.4 billion in assets) (1) The Right • #1 deposit market share ranking in Virginia among Virginia-based banks • Operating with a statewide Virginia footprint of 131 branches in all major markets with 9 Scale additiona
Slide 7: Virginia's Bank
Virginia’s Bank Virginia: All Banks Virginia: Banks Headquartered in VA Deposits Deposits Rank Institution ($000) Market Share Branches Rank Institution ($000) Market Share Branches 1 Wells Fargo & Co. $28,074 16.5 265 1 Union Bankshares Corp. 9,419 16.5 131 2 BB&T Corp. 23,464 13.8 300 2 TowneBank
Slide 8: Diversity Supports Growth In Virginia
Diversity Supports Growth In Virginia • State Capital, Fortune 500 headquarters (7), VCU & VCU Medical Center Richmond • $2.6 billion in-market deposits and total deposit market share of 11.4% • Defense and security contractors, Healthcare, Retail, Real Estate development Fredericksburg • $997 milli
Slide 9: Among The Most Attractive Markets in USA
Among The Most Attractive Markets in USA 2018 Median HHI ($) 2018 Population (mm) # State HHI ($) # State Population (mm) 1 District of Columbia $82,192 1 California 39.7 2 Maryland 81,294 2 Texas 28.5 3 Hawaii 80,637 3 Florida 21.1 th 4 Alaska 79,735 4 New York 19.8 ranked Virginia the 4 Best State
Slide 10: Balance Sheet and Net Income Trends (GAAP)
Balance Sheet and Net Income Trends (GAAP) Loans ($M) Deposits ($M) Assets ($M) Net Income ($) Data as of or for the twelve months ended each respective year, except for Q118 data which is as of or for the three months ended March 31, 2018 and Q2 data which is as of or for the three months ended 10
Slide 11: Balance Sheet and Operating Net Income Trends
Balance Sheet and Operating Net Income Trends Loans ($M) Deposits ($M) Assets ($M) Operating Net Income(1)(2) ($) (1) Excludes merger-related costs and nonrecurring tax expenses unrelated to normal operations 11 (2) * excludes the impact of strategic actions taken in 2018 as detailed on slide 22
Slide 12: Strong Track Record of Performance (GAAP)
Strong Track Record of Performance (GAAP) ROA (%) NIM (%) ROE (%) Efficiency Ratio (%) Data as of or for the twelve months ended each respective year, except for Q118 data which is for the three months ended March 31, 2018, Q218 data which is for the three months June 30, 2018 and Q318 data 12 which
Slide 13: Strong Track Record of Performance (Non-GAAP)
Strong Track Record of Performance (Non-GAAP) Operating ROA (1) (2) (%) NIM (FTE) (2) (%) Operating ROTCE (1) (2) (%) Operating Efficiency Ratio (FTE) (1) (2) (%) Data as of or for the twelve months ended each respective year, except for Q118 , Q218 and Q3 18 data which is as of or for the three mon
Slide 14: Financial Targets
Financial Targets Financial Targets Committed to top-tier financial performance • Union is committed to achieving top tier financial performance and providing our ROA 1.3% - 1.5% shareholders with above average returns on their investment ROTCE 15% - 17% • Key financial performance metrics benchmark
Slide 15: Solid Capital Position
Solid Capital Position Capital Position Regulatory Capital Composition TCE / TA (1) 8.7% CET1 Ratio 9.9% Tier 1 Capital Ratio 11.1% Total Capital Ratio 13.0% Leverage Ratio 9.9% CRE / Total Risk-Based Capital (Bank) 309% Total Risk Based Capital: $1,398 mm Dividend Yield (2) 2.6% Capital information
Slide 16: Diversified and Granular Loan Portfolio
Diversified and Granular Loan Portfolio Loan Composition at September 30, 2018 - $9.4 Billion Total Loan Portfolio CRE Composition - $4.2 Billion Composition by Type CRE Composition by Type Total Portfolio Characteristics Duration 1.5 years QTD Weighted Average Yield (Tax Equivalent) 4.96% 16 Note:
Slide 17: Attractive Core Deposit Base
Attractive Core Deposit Base Deposit Composition at September 30, 2018 - $9.8 Billion Deposit Base Characteristics Deposit Composition QTD Cost of deposits – 64 bps 97% core deposits (1) 44% transactional accounts #1 in deposit market share for regional/community banks in Richmond and Charlo
Slide 18: Union's 2018 Strategic Priorities
Union’s 2018 Strategic Priorities Diversify Loan Portfolio • Increase Commercial lending growth (Commercial & Industrial + Owner Occupied Real Estate) in order to better balance the total loan portfolio over time and Revenue Streams • Grow fee-based products and services • Fund loan growth with depo
Slide 19: Investment Thesis
Investment Thesis • $13.4 billion in assets The Right • Strong market share Scale • Extensive product mix, enhanced C&I focus • Growing, economically diversified The Right • Presence across state Markets • Scale in the sizable Richmond and Hampton Roads markets • Deep team with broad experience The
Slide 20: Appendix
Appendix
Slide 21: Delivering the Xenith Economics
Delivering the Xenith Economics 40% Cost Savings + 2018 Focus on Post Announcement Revenue Initiatives Successful Integration Ramping Announced May 22, 2017 Closed January 1, 2018 Savings target of 40% of the Xenith expense base, or Nearly all commercial Focus on seamless approximately $28
Slide 22: Strategic Actions in 2Q 2018
Strategic Actions in 2Q 2018 2018 Strategic Actions ($ in Thousands) Financial Impact to Second Quarter 2018: Strategic Action Net Income Consumer Loans C&I Loans Sale of Shore Premier Finance at a 5% premium $16,510 -$364,900 -$19,000 Sale of Third Pary Originated Consumer Loan Portfolio at par - -
Slide 23: Reconciliation of Non-GAAP Disclosures: Tangible Common Equity
Reconciliation of Non-GAAP Disclosures Tangible Common Equity As of September 30, 2018 Tangible Common Equity Shareholders' equity (GAAP) $ 1,880,029 Less: Intangibles 779,262 Tangible Shareholders' equity (non-GAAP) $ 1,100,767 Assets (GAAP) $ 13,371,742 Intangibles 779,262 Tangible assets (non-GAA
Slide 24: Reconciliation of Non-GAAP Disclosures: Net Operating Income
Reconciliation of Non-GAAP Disclosures Net Operating Income For the Twelve Months Ended 12/31 Three Months Ended Nine Months Ended (Dollars in thousands) 2014 2015 2016 2017 3/31/2018 6/30/2018 9/30/2018 9/30/2018 Net income (GAAP) $52,164 $67,079 $77,476 $72,923 $16,639 $47,327 $38,197 $102,163 Plu
Slide 25: Reconciliation of Non-GAAP Disclosures: Return on Assets
Reconciliation of Non-GAAP Disclosures Return on Assets (ROA) For the Twelve Months Ended 12/31 Three Months Ended (Dollars in thousands) 2013 2014 2015 2016 2017 3/31/2018 6/30/2018 9/30/2018 Average assets (GAAP) $4,051,850 $7,250,494 $7,492,895 $8,046,305 $8,820,142 $13,019,572 $13,218,227 $12,94
Slide 26: Reconciliation of Non-GAAP Disclosures: ROTCE
Reconciliation of Non-GAAP Disclosures Return on Tangible Common Equity (ROTCE) For the Twelve Months Ended 12/31 Three Months Ended (Dollars in thousands) 2013 2014 2015 2016 2017 3/31/2018 6/30/2018 9/30/2018 Average equity (GAAP) $435,635 $983,727 $991,977 $994,785 $1,030,847 $1,824,588 $1,847,36
Slide 27: Reconciliation of Non-GAAP Disclosures: Efficiency Ratio
Reconciliation of Non-GAAP Disclosures Efficiency Ratio For the Twelve Months Ended 12/31 Three Months Ended (Dollars in thousands) 2013 2014 2015 2016 2017 3/31/2018 6/30/2018 9/30/2018 Noninterest expense (GAAP) $137,047 $238,216 $216,882 $222,703 $234,765 $101,743 $85,140 $76,349 Less: Merger-rel
Slide 28: Reconciliation of Non-GAAP Disclosures: Net Interest Margin
Reconciliation of Non-GAAP Disclosures Net Interest Margin For the Twelve Months Ended 12/31 Three Months Ended (Dollars in thousands) 2013 2014 2015 2016 2017 3/31/2018 6/30/2018 9/30/2018 Net interest income (GAAP) $151,626 $255,018 $251,834 $265,150 $280,157 $103,747 $108,168 $105,963 FTE adjustm
Slide 29: Merger
Merger Investor Presentation October 5, 2018
Slide 30: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation may constitute “forward-looking proposed acquisition may be lower than expected, customer and employee statements” within the meaning of the Private Securities Litigation Reform relationships and business operations may be disrupted
Slide 31: Additional Information
Additional Information Important Additional Information will be Filed with the SEC This presentation does not constitute an offer to sell or the solicitation of an websites is not, and shall not be deemed to be, a part of this presentation or offer to buy any securities or a solicitation of any vote
Slide 32: Strategic Fit
Strategic Fit Standalone Strategic Priorities (1) Transaction with ANCX Diversify Loan • Increase commercial and industrial + owner occupied real Portfolio and estate lending growth in the total loan portfolio Revenue Streams • Grow fee-based products and services • Target 95% loan-to-deposit rati
Slide 33: Transaction Highlights
Transaction Highlights Provides significant scale in the demographically attractive Northern Virginia market Strategic Large C&I portfolio that is well underwritten with history of low charge-offs Merit Adds scale in wealth management business Further solidifies Union as Virginia’s regional
Slide 34: Overview of Access National Corporation
Overview of Access National Corporation Q2 ’18 Financials Standalone Access Footprint Headquarters Reston, VA ANCX (15) Year Established 1999 Branches 15 Total Assets $2,921 Total Loans 2,036 Deposits 2,127 ROAA 1.26 % (1) ROTCE 15.8 Net Interest Margin 3.62 Efficiency Ratio 61.0 Cost of Deposits 0.
Slide 35: Our Combined Company
Our Combined Company Pro Forma Highlights ($bn) (1) Pro Forma Branch Footprint UBSH (140) Maryland Assets $16.0 BaltimoreBaltimore ANCX (15) RestonReston UBSH LPO (2) WashingtonWashington Loans $11.4 FredericksburgFredericksburg
Slide 36: Enhancing Our Presence in Key Markets
Enhancing Our Presence in Key Markets Virginia Deposits Market Rank Institution ($mm) Share Branches 1 Wells Fargo & Co. $24,074 15.12 % 261 2 BB&T Corp. 23,464 14.74 300 3 Bank of America Corp. 17,676 11.10 126 4 SunTrust Banks Inc. 15,637 9.82 177 Pro Forma 11,567 7.27 146 5 Union Bankshares Corp.
Slide 37: Northern Virginia Market Highlights
Northern Virginia Market Highlights Northern Virginia Market Overview Demographics Comparison ’19 − ’24 Projected Population Growth (%) . Most populated region in Virginia with more than 2 5.9% million residents 5.2% . 4.1% Among the most highly educated regions of the 3.7% 3.7% 3.6% country, suppor
Slide 38: Northern Virginia Demographics
Northern Virginia Demographics Opportunity in Fast-Growing, Affluent Markets Top 10 Counties in the U.S. – Median HH Income ($000s) (1) $160 $141 $128 $124 $123 $123 $123 $120 $119 $116 $116 $120 $80 $40 $0 Loudoun, VA Howard, MD Fairfax, VA Falls Church, VA San Mateo, CA Santa Clara, CA Hunterdon,
Slide 39: Access Loan and Deposit Portfolios
Access Loan and Deposit Portfolios Access’s Loans 6/30/18 Access’s Deposits 6/30/18 Consumer Jumbo & Other Time C&I 1% Multifamily Deposits 23% 2% Retail Time 7% Deposits Commercial 7% Loans 1-4 Family 47% 25% Demand Deposits 34% Owner- Money Occupied Market & CRE Savings 24% C&D 29% 5% Transaction
Slide 40: Pro Forma Loan & Deposit Portfolio
Pro Forma Loan & Deposit Portfolio UBSH ANCX Pro Forma (1) Consumer Consumer Consumer & Other & Other C&I & Other C&I C&I 1% 7% 12% 8% Multifamily Commercial 14% Commercial Multifamily 23% 2% C&D 6% Loans 12% Loans Commercial 30% 26% Loans 1-4 Family 1-4 Family 47% 25% 22% Owner- Owner- Occupied Occ
Slide 41: Transaction Structure and Key Terms
Transaction Structure and Key Terms Pro Forma (1) Total assets $13,067 $2,921 $15,988 Total gross loans 9,330 2,036 11,366 Total deposits 9,797 2,127 11,924 Market capitalization (2) 2,568 558 3,175 Branches 140 15 155 Consideration . 100% Stock Fixed Exchange Ratio . 0.75 shares of UBSH for each sh
Slide 42: Comprehensive Due Diligence
Comprehensive Due Diligence Engaged third party resources for Credit, Tax and Legal diligence of Access Credit diligence of Access ‒ Reviewed 51% of all outstanding commercial loan balances ‒ Reviewed 95% of all commercial loans risk-graded special mention or worse ‒ Reviewed 98% of all commerci
Slide 43: Key Assumptions
Key Assumptions Credit Mark . Gross loan credit mark of ($24.5) million, or 1.2% . Expected to be approximately $25 million pre-tax (fully phased-in) Expense Savings − ~30% of ANCX’s consensus 2019 non-interest expense − 60% realized in 2019 and 100% thereafter Merger & Integration Costs . Approxima
Slide 44: Union M&A Financial Criteria
Union M&A Financial Criteria Financial Impact UBSH Criteria Transaction with ANCX Immediate earnings EPS Impact accretion Tangible Book Value Earnback < 3 years IRR >18% 44
Slide 45: Estimated Pro Forma Financial Metrics
Estimated Pro Forma Financial Metrics Key Transaction Impacts to UBSH (1) Pro Forma at Close Union Bank (2) Capital Ratios UBSH & Trust 2019E / 2020E TCE / TA EPS Accretion ~3% / ~5% 8.6% 10.1% Leverage Ratio 8.5% 10.0% IRR (2) >20% Common Equity Tier 1 Ratio 9.9% 11.8% Initial Tangible Book Value I
Slide 46: Summary
Summary Solidifies Union’s position as Virginia’s preeminent regional bank Enhances presence in key Northern Virginia market Delivers improvements to top tier financial performance Financially attractive transaction for shareholders Proven track record of successful conversions and integra
Slide 47: Appendix
Appendix
Slide 48: Access Fee Income: Mortgage and Wealth Management
Access Fee Income: Mortgage and Wealth Management Mortgage Banking Wealth Management . Originates ~$400 million of loans annually for resale, not . $1.4 billion Middleburg Trust Company AUM (1) loan portfolio − Separately chartered Virginia trust company . Stable, experienced and tenured leadership
Slide 49: Non-GAAP Reconciliation: Access ROTCE
Non-GAAP Reconciliation Access ROTCE Reconciliation ($000) Q2 ’18 Net Income $8,962 Amortization of Intangibles & Goodwill Impairment 802 Less: Effect of Taxes on Amortization & Impairment (168) Adjusted Net Income $9,596 Average Common Equity $428,590 Less: Average Intangibles (185,242) Average Tan
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