Atlantic Union Bankshares Corporation · NYSE:AUB
Atlantic Union Bankshares — Union Bankshares — Investor Presentation (November 2017)
40 slides from Atlantic Union Bankshares's investor presentation, Nov 1, 2017
Slide 1: Investor Presentation November/December 2017
Investor Presentation November/December 2017 Exhibit 99.1
Slide 2: Forward Looking Statements
2 Forward Looking Statements 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 projections, predictions, expectations, or beliefs about
Slide 3: Company Snapshot
Company Snapshot 3 Overview Branch Map • Shares listed under “UBSH” on NASDAQ • Headquartered in Richmond, VA • 100+ years of banking history • 111 branches across more than 50 counties and 10 MSAs throughout Virginia - Only Virginia-based bank with a statewide footprint - Largest community banking
Slide 4: Diversity Supports Growth in Virginia
Diversity Supports Growth in Virginia 4 • State Capital, Fortune 500 headquarters (6), VCU & VCU Medical Center Richmond • Defense and security contractors, Health care, Real Estate development Fredericksburg • University of Virginia & Medical College, High-tech, Real Estate development Charlottesvi
Slide 5: Union Bank & Trust Key Statistics
Union Bank & Trust Key Statistics • 111 (-10 in 2016; -3 YTD 2017) Branches • 1,322 Full Time Equivalent • 57 Commercial Bankers • $6.90 billion Loans • $6.88 billion Deposits • 180+ thousand Consumer Households 5 Union is the only Virginia-based bank with a statewide footprint
Slide 6: Largest Community Bank Headquartered in Virginia
Source: SNL Financial; Deposit data as of 6/30/2017 Largest Community Bank Headquartered in Virginia 6 Deposit Market Share – Virginia ** pro forma for Xenith Acquisition Rank Company Parent City, State Total Active Branches Total Deposits 2017 ($000) Total Deposit Market Share 2017 (%) YoY Deposit
Slide 7: Strong Presence Across All Major Virginia Markets
MSA Market Share Rank Company Deposits Total Market Deposits Market Share Roanoke Deposits: $427 mm Market Tot.: $7.5 bn Mkt. Share: 5.7% Rank: #6 Branches: 8 Staunton / Harrisonburg Rank: #2 Deposits: $560 mm Market Tot.: $4.0 bn Mkt. Share: 14.1% Branches: 11 Blacksburg Rank: #2 Deposits: $646 mm
Slide 8: Third Quarter Financial Highlights
Third Quarter Financial Highlights • $21.3 million, or $0.49 per share • +$1.0 million, or $0.03 per share from Q2 Net Operating Income • +127.2 million or 7.5% (annualized) from Q2 Loan Growth • $117.4 million, or 6.9% (annualized) from Q2 Deposit Growth • 0.94%; +1 bps from Q2 Operating ROA • 11.7
Slide 9: Year-to-Date Financial Highlights
Year-to-Date Financial Highlights • $60.8 million, or $1.39 per share • +$4.1 million, or $0.10 per share from 2016 Net Operating Income • +749.8 million or 12% from 2016 Loan Growth • $623.3 million, or 10% from 2016 Deposit Growth • 0.93%; -2 bps from 2016 Operating ROA • 11.47%; +22 bps from 2016
Slide 10: Balance Sheet Trends
Balance Sheet Trends 10 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 2012 2013 2014 2015 2016 3Q2017 $4,096 $4,177 $7,359 $7,694 $8,427 $9,029 Assets ($M) $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,
Slide 11: Capital Management
Capital Management 11 • Quarterly Dividend of $0.21/share; 2.4% dividend yield*; 35-45% Dividend Payout Target; raised $0.01 in Q4 2017 Dividend Increases • Repurchased 5.8 million shares since 2012, including ~1.4 million in 2016 Share Repurchases • In 2016, issued $150 million Fixed to Floating su
Slide 12: Profitability Ratios and Income Trends
Profitability Ratios and Income Trends * excludes after-tax acquisition expenses and acquisition accounting impact 12 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2013* 2014* 2015* 2016* 1Q17* 2Q17* 3Q17* 0.90% 0.91% 0.90% 0.96% 0.92% 0.93% 0.94% Operating Return on Average Assets (ROA) 6.00% 7.00% 8.00% 9.0
Slide 13: Top-Tier Financial Performance Focus
Top-Tier Financial Performance Focus • Union is committed to achieving top tier financial performance and providing our shareholders with above average returns on their investment • Key financial performance metrics benchmarked against top quartile peers • Top Tier Financial Performance targets: 13
Slide 14: 2017 Outlook
2017 Outlook • Expect stable economy in Virginia footprint Economy • Low double digit Loan Growth • Flattish with downward bias of 1 to 2 bps assuming current flat rate curve environment persists Net Interest Margin • Expect improvement in return on assets, return on tangible common equity and effic
Slide 15: 2017 Priorities
2017 Priorities 15 • Loan portfolio • Revenue streams Diversification • Pace loan growth with deposit growth • Target 95% loan to deposit ratio over time Core Funding • Drive efficiency ratio <60% • More revenue + lower cost structure Efficiency • Finalize preparations in 2017 $10 billion asset cros
Slide 16: Value Proposition
Value Proposition • Statewide branch footprint is a competitive advantage and brings a unique franchise value Scale • Balance sheet and Capital levels Strength • Organic and acquisition opportunities Growth • Committed to top-tier financial performance Opportunity • Solid dividend yield and payout r
Slide 17: Merger Details
BANKSHARES Merger Details
Slide 18: Transaction Highlights
Solidifies position as Virginia’s preeminent community bank with ~$12 billion in pro forma assets Provides breadth and depth across Virginia, including significant expansion in the attractive Hampton Roads market Leverages Xenith’s C&I expertise throughout the combined footprint Transaction Hi
Slide 19: Overview of Xenith Bankshares, Inc.
FINANCIAL HIGHLIGHTS Headquarters Richmond, VA Year Established 1987 Branches 42 CEO (Age) T. Gaylon Layfield III (65) Total Assets $3,199 Total Loans 2,357 Deposits 2,620 Loans / Deposits 90.0 % ROAA 0.70 % Net Interest Margin 3.45 Efficiency Ratio 67.8 NPAs / Assets 1.82 % Reserves / NPLs 34.4 Res
Slide 20: Our Combined Company
Our Combined Company Note: Financial data as of 3/31/2017 Dollars in billions (1) Excludes purchase accounting adjustments (2) Regional bank defined as having less than $50 billion in assets UBSH (113) XBKS (42) Pro Forma Branch Footprint Pro Forma Highlights(1) #1 pro forma Regional Bank deposit
Slide 21: Enhanced Presence in Key Markets
Deposits Market Rank Institution ($mm) Share Branches 1 Wells Fargo & Co. $38,613 20.32 % 284 2 Bank of America Corp. 26,154 13.76 130 3 BB&T Corp. 22,631 11.91 344 4 SunTrust Banks Inc. 19,015 10.01 193 5 Capital One Financial Corp. 14,812 7.79 59 Pro Forma 8,105 4.26 143 6 United Bankshares Inc. 7
Slide 22: Market Demographics
Market Demographics Deposits (1) UBSH XBKS Pro Forma '17-'22 2022 Proj. Gross Population Household Domestic Number Market 2017 Growth Income Product (2) of Deposits Deposits Deposits Share Market UBSH XBKS Population (%) ($) ($bn) Businesses ($mm) ($mm) ($mm) (%) Washington, D.C. 6,203,724 5.5% $95,
Slide 23: Hampton Roads Market Highlights
Hampton Roads Market Highlights Source: SNL Financial; Hampton Roads Chamber of Commerce; Hampton Roads Economic Development Alliance (1) Includes companies in the Virginia Beach MSA with NAICs as Healthcare and Social Assistance, Wholesale Trade, Manufacturing or Transportation and Warehousing. Dem
Slide 24: Achieves 2017 Priorities for Union
Achieves 2017 Priorities for Union • Lowers CRE concentration and increases C&I portfolio • Adds dedicated C&I team in Northern Virginia and significant C&I opportunity in Hampton Roads and Raleigh • Lowers loan to deposit ratio to 97% • Adds meaningful retail presence in Hampton Roads • Expands com
Slide 25: Transaction Structure and Key Terms
Consideration(2) Pro Forma Ownership Executive Management Board of Directors Anticipated Close Transaction Structure and Key Terms Note: Financial data as of 3/31/2017, unless otherwise noted Dollars in millions (1) Combined represents the sum of UBSH and XBKS data and excludes any purchase accounti
Slide 26: Key Assumptions
Key Assumptions Cost Savings Credit Mark Gross loan credit mark of approximately 1.5%, or $37 million Expected to be approximately $28 million pre-tax (fully phased-in) − ~40% of XBKS’ 2018 estimated noninterest expense − 80% realized in 2018, 100% annually thereafter Merger & Integration Costs
Slide 27: Estimated Pro Forma Financial Metrics
Estimated Pro Forma Financial Metrics (1) Estimated financial impact is presented solely for illustrative purposes using mean analyst estimates. Includes purchase accounting marks and deal related expenses (2) Projected bank level total capital Key Transaction Impacts to UBSH (1) 2018E & 2019E EPS A
Slide 28: Comprehensive Due Diligence and Preparation
Comprehensive Due Diligence and Preparation Deferred Tax Asset Tax advisors completed thorough analysis on Xenith’s $154.9 million deferred tax asset ‒ Expect no impairment of Xenith’s deferred tax asset due to Section 382 ‒ Anticipate up to $42 million write-off under an assumed federal tax rate
Slide 29: Preparing to Grow Through $10 Billion in Assets
Union has been preparing to grow through $10 billion in assets since 2014 − Union has invested approximately $5 million pre-tax annual run rate in people, systems and infrastructure in IT, Enterprise Risk and DFAST (Dodd Frank Stress Test) − Accelerates Union’s growth over $10 billion in assets by
Slide 30: Appendix
APPENDIX \ EE ———
Slide 31: Diversified Loan Portfolio (Union)
Diversified Loan Portfolio (Union) 31 Source: SNL Financial, Company documents, (1) Other by region includes Indirect Auto, Third Party Consumer Loans and General Ledger adjustments. Loan Composition at September 30, 2017 – $6.899 Billion Portfolio Characteristics Average loan size $148,082 Weighted
Slide 32: Commercial Real Estate Portfolio (Union)
Commercial Real Estate Portfolio (Union) 32 Source: SNL Financial, Company documents CRE Composition at September 30, 2017 - $3.020 Billion Portfolio Characteristics 10 largest loans 6.6% of CRE portfolio 10 largest loans 2.4% of total loan portfolio Weighted average maturity 60 months Weighted aver
Slide 33: Construction and Development Loans (Union)
Construction and Development Loans (Union) 33 Source: Company documents C&D Composition at September 30, 2017 - $841 million Portfolio Characteristics 10 largest loans 16.6% of C&D portfolio 10 largest loans 2.7% of total loan portfolio Weighted average maturity 22 months Weighted average coupon 4.3
Slide 34: Core Deposit Base (Union)
Core Deposit Base (Union) 34 (1) Time deposits greater than $100,000 Note: Minimal exposure to CDARS/ICS deposits Source: SNL Financial, Company documents Deposit Composition at September 30, 2017 - $6.882 Billion Deposit Base Characteristics Average cost of interest bearing deposits 48 basis points
Slide 35: Pro Forma Loan Portfolio
C&D 12% 1-4 Family 24% Multifamily 5% Ow ner- Occupied CRE 13% Non Ow ner- Occupied CRE 25% C&I 9% Consumer & Other 11% Pro Forma Loan Portfolio Source: SNL Financial Dollars in millions Data as of or for the three months ended 3/31/2017 (1) Excludes purchase accounting adjustments UBSH XBKS Pro For
Slide 36: Pro Forma Deposit Composition
Pro Forma Deposit Composition Source: SNL Financial Dollars in millions Data as of or for the three months ended 3/31/2017 Note: Jumbo time deposits defined as time deposits greater than $250,000 (1) Excludes purchase accounting adjustments UBSH XBKS Pro Forma (1) Demand Deposits 23% NOW Accounts 27
Slide 37: Non-GAAP Measures
Non-GAAP Measures In reporting the results of the quarter ended September 30, 2017, and in prior periods, the Company has provided supplemental performance measures on a tax-equivalent, tangible, or operating basis. These measures are a supplement to GAAP used to prepare the Company’s financial stat
Slide 38: Reconciliation to GAAP
Reconciliation to GAAP 38 Nine Months Ended September 30, September 30, June 30, March 31, (Dollars in thousands) 2017 2017 2017 2017 2016 2015 2014 2013 Net Interest Income & Core Net Interest Income (FTE) Net interest income (GAAP) 206,765$ 71,198$ 68,999$ 66,567$ 265,150$ 251,834$ 255,018$ 151,62
Slide 39: Reconciliation to GAAP
Reconciliation to GAAP 39 Nine Months Ended September 30, September 30, June 30, March 31, (Dollars in thousands) 2017 2017 2017 2017 2016 2015 2014 2013 Tangible Assets Ending assets (GAAP) 9,029,436$ 9,029,436$ 8,915,187$ 8,669,920$ 8,426,793$ 7,693,291$ 7,358,643$ 4,176,353$ Less: Ending intangib
Slide 40: Reconciliation to GAAP
Reconciliation to GAAP 40 Nine Months Ended September 30, September 30, June 30, March 31, (Dollars in thousands, except per share amounts) 2017 2017 2017 2017 2016 2015 2014 2013 Operating Measures Net income (GAAP) 57,737$ 20,658$ 17,956$ 19,124$ 77,476$ 67,079$ 52,164$ 34,366$ Acquisition and con
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