Atlantic Union Bankshares Corporation · NYSE:AUB
Atlantic Union Bankshares — Q3 2020 Earnings Presentation
26 slides from Atlantic Union Bankshares's earnings presentation, Oct 22, 2020
Slide 1: 3rd Quarter 2020 Earnings Presentation
3rd Quarter 2020 Earnings Presentation Nasdaq: AUB October 22, 2020
Slide 2: Forward Looking Statements
Forward Looking Statements 2 Certain statements in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, projections, predictions, expectati
Slide 3: Additional Information
Additional Information 3 Non-GAAP Financial Measures This presentation contains certain financial information determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP disclosures have limitations as an analytical tool
Slide 4: 2020 Operating Environment – New Reality
2020 Operating Environment – New Reality 4 Soundness Profitability Growth AUB(135) AUB LPO (3) At September 30,2020 Assets $19.9B Loans $14.4B Deposits $15.6B Managing through COVID- 19 pandemic: • Pivoted to a new remote work and branch operating model • Focused on Teammates, clients, communities a
Slide 5: Holistic Response to COVID-19
Teammates • 90% of non-branch Teammates are working remotely • Recognition bonuses for eligible Teammates • Continuing to pay Teammates that have potential exposure • COVID-19 related testing and treatment is free under medical plans • Extra cleaning and protective measures put in place • Educate Te
Slide 6: Banking Differently
Banking Differently 6 Digital logins 21% from January 1, 2020 to September 30, 2020 Mobile check deposit 18% from January 1, 2020 to September 30, 2020 Zelle utilization 290% from September 30, 2019 to September 30, 2020 Card Control active users 102% from April 1, 2020 to September 30, 2020 More to
Slide 7: Covid-19 Loan Modifications
Covid-19 Loan Modifications 7 • As of October 16, ~$523 million in loans are in some form of a COVID Modification of which 93% of the balances are Commercial loans. • ~$1.2 billion in Commercial loans rolled off their initial modification, • 40 clients totaling ~$90MM (~8% of dollars) rolled into a
Slide 8: Asset Quality – COVID-19 Sensitive Loan Segments
Asset Quality – COVID-19 Sensitive Loan Segments 8 Note: Figures may not total to 100% due to rounding 1) Disrupted segment data as of September 30, 2020 Total Loan Portfolio $ 14.4 billion at September 30, 2020 Segments Disrupted by COVID-191: $2.3 Billion Portfolio Highlights No significant exposu
Slide 9: COVID-19 Sensitive Loan Segment Details
COVID-19 Sensitive Loan Segment Details 9 Retail Trade: ~80% secured by real estate; 21% of clients in PPP Restaurants: Early modifications made; 85% secured by real estate; 24% of clients in PPP Senior Living: All clients have come off of modification Hotel: Primarily flagged non-resort hotel prope
Slide 10: 2020 Operating Environment – Adapting to the New Reality
2020 Operating Environment – Adapting to the New Reality 10 Soundness Profitability Growth During challenging times, it is important to remember our governing philosophy –“Soundness, Profitability, & Growth – in that order of priority” This core philosophy is serving us well as we manage the Compa
Slide 11: Q3 2020 Financial Performance At-a-Glance
Q3 2020 Financial Performance At-a-Glance 11 Summarized Income Statement 3Q2020 2Q2020 Net interest income $ 137,381 $ 137,305 Provision for credit losses 6,558 34,200 Noninterest income 34,407 35,932 Noninterest expense 93,222 102,814 Taxes 11,008 5,514 Net income (GAAP) 61,000 30,709 + Provision f
Slide 12: Q3 Allowance For Credit Loss and Provision for Credit Losses
Q3 Allowance For Credit Loss (ACL) and Provision for Credit Losses 12 Q3 Macroeconomic Forecast Q3 Additional Considerations Moody’s September Forecast • US GDP returns to pre-COVID levels in 2022. 2021 GDP forecasted at 3.5% growth relative to Moody’s June forecast of 1.6% for 2021. • US Unemployme
Slide 13: Q3 2020 Net Interest Margin
3.29% 3.14% 2.50% 2.60% 2.70% 2.80% 2.90% 3.00% 3.10% 3.20% 3.30% 3.40% Quarter 2 NIM Core Loan Yield Loan Accretion PPP Loans with Fees Securities Yield Deposit Costs Funding Mix and Borrowing Costs Quarter 3 NIM Net Interest Margin: Drivers of Change Q2 2020 to Q3 2020 -18 bps -7 bps 1 bp -6 bps 1
Slide 14: Noninterest Income
14 Noninterest income decreased from the prior quarter to $34.4 million from $35.9 million due to: .. A $10.3 million in gain on the sale of investment securities occurred in the second quarter .. Mortgage banking income increased $3.1 million due to increased mortgage loan origination volumes .. Se
Slide 15: Q3 2020 Loan and Deposit Growth
15 Q3 2020 Loan and Deposit Growth For non-GAAP financial measures, see reconciliation to most directly comparable GAAP measures in “Appendix – Reconciliation of Non-GAAP Disclosures” • At quarter end, loans held for investment increased $74.6 million, or 2.1% (annualized) from the prior quarter • F
Slide 16: Liquidity Position and Sources
Liquidity Position and Sources 16 • Strong liquidity metrics: ~$7.3 billion in cash, unpledged securities, and secured and unsecured borrowing capacity. Loans to Total Deposits Ratio of 92%. • Paycheck Protection Program loans of approximately $1.6 billion outstanding which are funded with deposits,
Slide 17: Strong Capital Position at September 30, 2020
Strong Capital Position at September 30, 2020 17 Capital Ratio Regulatory Well Capitalized Atlantic Union Bankshares* Atlantic Union Bank* Common Equity Tier 1 Ratio (CET1) 7.0% 10.0% 12.0% Tier 1 Capital Ratio 8.5% 11.2% 12.0% Total Risk Based Capital Ratio 10.5% 13.9% 12.8% Leverage Ratio 5.0% 8.8
Slide 18: Appendix
Appendix 7) Atlantic /4 Union Bankshares
Slide 19: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 19 Operating Earnings Per Share The Company has provided supplemental performance measures on a tax-equivalent, tangible, operating, or pre- tax pre-provision basis. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Compan
Slide 20: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 20 Operating Earnings Per Share Pre-tax pre-provision (PTPP) earnings excludes the provision for credit losses, which can fluctuate significantly from period-to-period under the recently adopted CECL methodology, and income tax expense. The Company believes thi
Slide 21: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 21 Operating Earnings Per Share 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
Slide 22: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 22 Operating Earnings Per Share Net interest income (FTE), which is used in computing net interest margin (FTE) , provides valuable additional insight into the net interest margin by adjusting for differences in tax treatment of interest income sources. The ent
Slide 23: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 23 Operating Earnings Per Share 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 the
Slide 24: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 24 ($ IN THOUSANDS) Operating Earnings Per Share The Company believes loans held for investment (net of deferred fees and costs), excluding PPP is useful to investors as it provides more clarity on the Company’s organic growth. The Company also believes that th
Slide 25: Paycheck Protection Program (PPP)
25 Paycheck Protection Program (PPP) • AUB had 11.1% of dollar share for VA loans, compared to deposit market share of 7% • AUB effectively shared the top spot for number of PPP loans originated in VA and was #1 among VA headquartered banks • AUB had nearly twice the count as the nearest VA headquar
Slide 26: Paycheck Protection Program (PPP)
26 Paycheck Protection Program (PPP) Note: Virginia branches: AUB 140 Truist 445 Italics indicates a VA HQ'd Lender Rank Lender Count of Loans % of Total 1 Truist Bank 10,203 9.3% 2 Atlantic Union Bank 10,197 9.3% 3 Bank of America, National Association 8,487 7.8% 4 Wells Fargo Bank, National Associ
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