On July 25, 2024, Atlantic Union Bankshares Corp (AUB, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Atlantic Union Bankshares Corp is a financial holding company and a bank holding company that provides a wide range of financial services through its community bank subsidiary, including banking, trust, and wealth management services.
Performance Overview
Atlantic Union Bankshares Corp reported net income available to common shareholders of $22.2 million for Q2 2024, translating to basic and diluted earnings per share (EPS) of $0.25. This result fell short of the analyst estimates of $0.29 EPS. The company also reported adjusted operating earnings available to common shareholders of $56.4 million and adjusted diluted operating earnings per common share of $0.63.
Merger with American National Bankshares Inc.
On April 1, 2024, Atlantic Union completed its acquisition of American National Bankshares Inc., which significantly impacted the company's financials. The acquisition added $2.9 billion in total assets and $2.7 billion in total liabilities. The company recorded preliminary goodwill of $282.3 million and an initial allowance for credit losses (ACL) of $18.5 million.
Net Interest Income and Margin
Net interest income for Q2 2024 was $184.5 million, up from $147.8 million in Q1 2024. The net interest margin increased by 28 basis points to 3.39%, primarily due to the acquisition of American National. The increase in net interest income was driven by a $2.8 billion rise in average interest-earning assets, partially offset by a $2.2 billion increase in average interest-bearing liabilities.
Asset Quality
At the end of Q2 2024, nonperforming assets (NPAs) as a percentage of total loans held for investment (LHFI) stood at 0.20%, down 3 basis points from the previous quarter. The ACL totaled $175.7 million, an increase of $23.9 million from the prior quarter, reflecting the initial ACL related to the American National acquisition and loan growth.
Noninterest Income and Expenses
Noninterest income decreased by $1.8 million to $23.8 million in Q2 2024, primarily due to $6.5 million in pre-tax losses on the sale of available-for-sale securities. Noninterest expenses rose significantly by $44.7 million to $150.0 million, driven by $27.9 million in pre-tax merger-related expenses.
Balance Sheet and Capital Ratios
As of June 30, 2024, total assets were $24.8 billion, an increase of $3.4 billion from March 31, 2024. Total deposits were $20.0 billion, up by $2.7 billion from the prior quarter. The company's common equity Tier 1 capital ratio was 9.47%, down from 9.86% in the previous quarter.
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income Available to Common Shareholders | $22.2 million | $46.8 million | $52.3 million |
| EPS (Diluted) | $0.25 | $0.62 | $0.70 |
| Net Interest Income | $184.5 million | $147.8 million | $152.1 million |
| Net Interest Margin | 3.39% | 3.11% | 3.37% |
Analysis
The second quarter of 2024 was marked by significant merger-related activities for Atlantic Union Bankshares Corp, which impacted its financial performance. While the acquisition of American National Bankshares Inc. has expanded the company's asset base and market presence, it also brought substantial merger-related costs that affected net income and EPS. The increase in net interest income and margin is a positive sign, but the company needs to manage its noninterest expenses effectively to improve profitability.
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Explore the complete 8-K earnings release (here) from Atlantic Union Bankshares Corp for further details.
