Atlantic Union Bankshares Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Catherine Mealor - Keefe, Bruyette & Woods - Analyst : Congrats on this acquisition. I wanted to start maybe just with the CRE loan sale. Just curious if you can talk us through how you've prepared for that, the logistics of how that looks? And then I also saw in your presentation, you mentioned that the series sale takes about $0.29 out of book value. So just kind of curious what kind of discount you're assuming within that number? Thanks.

Question: Catherine Mealor - Keefe, Bruyette & Woods - Analyst : The headwind allows you to grow as you move out of that -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 21, 2024 / 1:00PM, AUB.N - Q3 2024 Atlantic Union Bankshares Corp Earnings Call

Question: Catherine Mealor - Keefe, Bruyette & Woods - Analyst : And those targeted ratios, is it -- I assume more than just below 300%? Is it like 272% is the targeted there of capital that you're looking at?

Question: Catherine Mealor - Keefe, Bruyette & Woods - Analyst : Great. That's really helpful. And then just on a standalone basis for Atlantic Union, it looks like the margin is coming down a little bit in the fourth quarter just as we added more rate hikes. Is there any way to kind of think about how that impacts the NIM at which we should start for 2025?

Question: Russell Gunther - Stephens - Analyst : Just to quickly follow up on Catherine's line of question for the NIM. Could you give us a sense for where you would expect the pro forma margin to shake out with deal close -- and does the -- I think, the $364 million you referred to on slide 16. Does that include marks taken on the $2 billion, potential $2 billion of CRE sales or not? How should we be thinking about that number?

Question: Russell Gunther - Stephens - Analyst : The $364 million contemplates that up to $2 billion of loans sold.

Question: Russell Gunther - Stephens - Analyst : Got it. And then switching gears to loans and the loan growth outlook. I think Sandy Spring struggled a bit to grow C&I the way they would have liked -- this is very much a core competency at Atlantic Union. So could you give us the playbook for overlaying the AUV model on Sandy Spring. And then how should we think about the overall pro forma loan growth rate going forward.

Question: Russell Gunther - Stephens - Analyst : All right. Great. Thank you, guys. And then just last one for me would be a follow-up on the CRE loan sale. Understand solving for a math equation in terms of loan to deposit the ratio and concentration. But is there anything you could share in terms of the profile of the loans sold, whether it's asset classes like office or geographies? Just how did you kind of ring in the characteristics of the potential CRE to be sold?

Question: Russell Gunther - Stephens - Analyst : Thanks, John, and thank you, guys, for taking my questions.

Question: Steve Moss - Raymond James - Analyst : Just following up on the commercial real estate loans you plan to sell here. Just kind of curious kind of what's the average life of the type of loans you're looking to sell versus the average life of the CRE loans you're looking to retain?

Question: Steve Moss - Raymond James - Analyst : That's the total portfolio, Rob, or just the part you're selling, I'm sorry.

Question: Steve Moss - Raymond James - Analyst : Okay. And then in terms of just the -- that mark that you guys are talking about -- and I think in the low 90s you guys said, that is not included in this $575 million interest rate mark? Or is that included?

Question: Steve Moss - Raymond James - Analyst : Okay. Got you. And then in terms of just thinking about the market here today. It sounds like you guys saw loan yields came in during the quarter. Just kind of curious I mean what kind of rate you guys are seeing on new originations here and how you guys are thinking about the pro forma combined origination rate.

Question: Steve Moss - Raymond James - Analyst : Okay. And I meant to ask before that question. Just going back to the loans you're looking to sell, are you guys doing any hedging around the loans to locking a price on loans you plan to sell? And also just curious, since the five year has moved up quite a bit here in the last couple of weeks, is that reflective of the rate mark you're taking on the $2 billion portfolio? Or is that kind of closer in the five years?

Question: Steve Moss - Raymond James - Analyst : Okay. Got you. And then just Chris here on deposit cost side. It sounds like trends were a little bit ahead of what you guys were expecting for the quarter. curious here with the 50 basis point Fed cut what you guys are seeing for deposit cost trends going forward?

Question: David Bishop - Hovde Group - Analyst : John, I'm curious, obviously, you get a lot bigger here following the transaction. Obviously, you guys are very strong community bank-oriented franchises, both you and Dan. Do you see that the nature of the types of loan relationships changing materially post close here to move upmarket in terms of that upper middle market. Just curious you think the business model may change.

Question: David Bishop - Hovde Group - Analyst : Great. Thanks. And maybe just curious, it's obviously maybe somewhat Boston and shuffle a little bit. But your experience thus far in terms of retention and maybe growth in the American national deposit base, maybe some trends there post close?

Question: David Bishop - Hovde Group - Analyst : Got it. I appreciate that color. I guess one final question, John, it sounds like you had some line of sight maybe to additional commercial real estate paydowns coming up here, maybe talk about where you're seeing some of that pressure coming from?

Question: David Bishop - Hovde Group - Analyst : Putting that all together, maybe on an organic basis, does that sort of imply maybe a mid-single-digit loan growth maybe as opposed to a high single-digit growth rate. Just curious maybe holistically.