AUB - Earnings call transcript Q4 2018 | Atlantic Union Bankshares Corporation

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Operator

Good morning, my name is Laura and I will be your conference operator today. At this time, I would like to welcome everyone to the Union Bankshares’ fourth quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

If you would like to ask a question during this time, simply press star then the number one on your telephone keypad.

to question, like key. the would you withdraw press your pound If you. Thank Mr. your Cimino, you conference. may begin

Bill Cimino

Thank you Executive good and CFO, Laura, and Gorman CEO, Bankshares’ have Rob John President Union Asbury me and with Vice and morning President today. everyone. I

other is have executive our on investors.bankatunion.com. investor available the to of us note that management period. website, and download answer members Please with today’s for also We team question earnings release our

GAAP metrics the measures, financial XXXX. both the During year GAAP full today, performance information in Important for comment we including included quarter earnings our comparable financial non-GAAP our on and about call will to measures, non-GAAP measures. is and fourth release financial using these reconciliations

the Harbor the All community. differ. At questions to subject during Safe analyst our actual remind and the statements take on risk make a any that to fourth today’s release everyone year that by made we will not statements. revise we research turn XXXX are important uncertainties. full information and are fact which assurance will and factors to call earnings obligation that John, I to results comments discussion of Before statement. our differ There any call actual implied or statements, to performance over cause could of expressed statement. publicly today’s forward-looking forward-looking forward-looking from other that the Please statements factors materially from including and subject these undertake results no the for will to for filings refer company’s SEC no and be We can of quarter not are further the risks to end call, historical call regarding forward-looking our like I would future

John. Now I’ll the over to call turn

John Asbury

Operating we would to and return what year for operating ratio the at start, transformative that said we quarter, for we out tier quarter. targets XX.XX% fourth Bill, joining common financial ROA the tangible our laid of for out a quarter, you thanks on of for every year. and with we was To one the X.XX% we hit operating efficiency Union equity the top today. XXXX did XX.X% do: was closed Thank was the us beginning strong all our quarter. the

been we’ve better potential provide As earnings underlying of of and franchise. the fourth this valuable uniquely saying, quarter’s a results strength view the

and We to year improvements to top metrics continue these further next. tier expect financial this

X.X targets presentation, further the As ROA follows: communicated between an we ROTCE better. or in between efficiency XX XX%, Access and as investor of our and addition our up with at day X.X%, financial have stepped XX% ratio and

[indiscernible], expect the May. As case conversion three to we and quarter noisy as was of we in the XXXX XXXX in get first systems through integration be

our loan [indiscernible]. in expected pleased results of unit we’ll upper levels Since integration, will a of the our the have improved its to at to we quarter, until growth start XXXX, will fully for XXXX. higher original which early We company early not post-Access our higher We wealth different the slightly have demonstrate systems XQXX. which acquisition complete realize the until conversion timeline not have single annualized than growth financial achieved full-year back were performance business digit XX% that loan to up lifted of for

closes X. XXXX in growth. XXXX includes be beginning the consistent strong pay the of full-year during full-year downs loan loan lower when to growth the and Our high digit single Bank’s our of on X increased and expect a quarter. from with growth Access National This result growth we was February production to baseline merger remain the range both X%, Pipelines

tier already XXXX loan revenue our financial that on metrics them. or that every the a one either and significant progress made year, you you’ll mentioned of basis, our top streams. diversified a we if significant We see achievement. review on the I portfolio For priorities, we quarterly accomplished hit

seeing the with banking fee added by in is diversify advisors products there in to results and are The two emphasis, encouraged management diversification income. especially delivery. expect and progress our registered We’re XXXX, of enhance we we commercial to investment and which We we’re XXXX. the strategy further our and coming helping together continue treasury grow pieces to make

average is which to was our Our ratio of loan line XX%. XX%, loan term ratio long with to relatively in goal deposit deposit

not necessarily just match company, not We we pacing Efficiency is to the the due did high than While or year that processes quarter. task quarter deposit simplifying more efficiency improved a XXXX, the the deposits efficiency full seasonally believe ratio loan improving during tasks achievable in loans for loan every growth, the never and growth to too. but growth is of ends.

our define continue We and successfully we Xenith. to integrated make build value finally, proposition to and banking brand our easier,

without quarter and points adaptable If lines, want strategy. business the Access and Union make to strengthen acceleration you one responsive our are to moat the ability Union Xenith, to acquisition evolving, around in our demonstrate we our use focused the strategic undertaken and and keep XXXX is one QX. and priorities only, our do in all all term able teams’ year thing our to thing value very franchise shareholder is metrics look one focus there second environment. how year. hitting at operating end, integration out journey quarterly executing financial and demonstrated long, our results, it of near rapidly our continue company it past of changes improving all common to of nimble, to a demonstrated accomplished, Changing be company change to our this and happen build that our substantially while we we of to rationalize well proud culminating tier this and and company and the against company. I’m were a we top it’s proud has the embraced tightly we’ve financial to successful strategic this long-term the proof that not team, have within National is results great a intensity If of this would a Bank, ability our sustainable, occurrence, actions conversion and as improving building franchise, while our we’ll We completing franchise. including we’re achieving ability the This Virginia of announced execute during how discipline,

have November, for As day first priorities I we investor of introduced during set a new ever our XXXX. in established

three one, are of levels the first They three, manage year. unchanged revenue core and portfolio funding; higher and last diversify The grow loan streams; to two, from are: performance.

hear six, five, details. webcast The easier; day our you strengthen National and available four, the Corporation. to the if capabilities; want integrate New Access make XXXX banking presentations are: digital for investor catch still our to and is

can that website. investor our You find on

Now that and topic brands inefficiencies states, operating we unified on in number are issue. franchise. let’s of and a the we There covered branding banking to the multiple across comment one and our investor with brand a day, across intend that’s multiple distinctive toward work

We intend not in percentage retain years that good we to now markets, about duplicate more time, been largest deposits We adopt post-merger. during Access’ yet some annualized. growth to the strategy C&I executing that markets. to Point plan management trying We topics accomplish not year the X.X% not stable, announced C&I my too are brand was with with grew. ensure was That share we’ve at we back to in it near XX% industrial heritage, to commentary. quarter deposit have growth and key from having we was the some since while XXX do quarter of linked - would equity, is grew the Rob’s our it’s loans annualized talking you brand and largest its upcoming place average its become much The the of but today. enough commitments have and this our group to work combined Trust gain previously of predicting wealth brand in growth will are. been for our our term, utilization want commercial something point category it’s X.X%. the for a Banking line we’ve point all of It’s all while is Middleburg while wealth Union I’ll who arrival. useable quarter a quarter distinctive challenging. but loan we goes and it’s broad-based proof for plan Loan honor in detail management

from with customers. normal late As fluctuations the due to resulting commercial is growth in in deposits third point quarter, average lower among point deposits quarter demand declines the than to

capable This quarterly deposit so have we XXXX, the believe growth close growth growth expected we of is large, is loan deposit deposit growth that numerous that rate are to growth. and delta loan for to pacing not underway our initiatives rate

business that some expect book, the banking commercial period clients. out build balances, fluctuations when we as among ending normal given reminder, a As unevenness comparing occur

lending have Our Bank markets. pipelines the while full about quarter. into we have very optimistic the remain weighted their the National potential process, are this and going fourth the Union to mind very with is they as Keep loan only the now were pipelines reloaded, in the for attractive side, as franchise and stages earlier of Access the we and

to build evidence, hiring bankers growth do momentum; our and we opportunistically owner-occupied new expect still the be effort. before we We bankers in estate building the loan XX will in the loan are After felt commercial banking impact production types as continue XXXX, real out and to full C&I however, C&I mid-XXXX. not

familiar over competitors those and our the largest Credit is changes For not We lost able small again recreate economy environment. in space. Union, midsized seeing course Union as any banked strong. banking history, with consolidation is say positioned to were of just and our businesses as the we’re until Virginia-based now to The of systemic well remains in to dynamic Virginia like steady to they Commonwealth in our the interstate are no the banking all go once XXs. with footprint toe-to-toe not we this to believe quality banks market I’ll one most the credit with that

for modest uptick have toward base we and While QX, did from low they of in in consumer. quarter involved different variety credits a the charge-offs skewed a a

year some full-year we full end very barring XX also like basis the the and will I’ll seasonal to XXXX, with around and a change in Charge-offs year base were out quarter XXXX rise quarter low totaled in charge-offs to dues at quarter, XXXX from from perspective, XX currently about part XXXX. a points benign trend environment. over be that XX-day from we past look points, point quality see increasing For expect macroeconomic the in basis credit sometimes the XXXX down XXXX quarter of a charge-offs incrementally year end. lumpy

We current. credits we of more non-performing past with not to over periods, assets past normalized prior than a at has at and level year the time. end were as individually higher now XX-day Later factor than stable week, this track these XX dues last stage do and quarter While quarter. half of those see as dues dues past

downturn problem time say levels since see not and industry at early it indications from the Eventually can’t me we this arrival, heard remain asset any my yet each we you that you’ve except As a I do come, across will long-term don’t quarter see it XXXX. at the portfolio-level when vantage trend just but of line, believe credit in happening below still Union’s in Union exactly quality. this tell we point,

Access, to X. close expect have approvals to announced all been that necessary we we and Tuesday received, Turning February on last

just is making are about slated for a XXXX, enthusiastic in tremendous day is integration, legal finalizing this Union our the remain a against we preparations growth Our for in hitting our summary, integration progress completed well. well together presence expanded our process conversion know this deal Having and and six the working one, significant and In of smooth mid-May. teams systems financial a strategic are achieved priorities. We targets potential great Xenith market.

now XXXX. and have bar for financial the goals with We raised priorities higher refreshed

the remain form customers, excited have region. our so valuable uniquely confident in close regional our and teammates join franchise, the with what another for familiar we is Access week is bank. have a to to and a Union and coming unlike the holds with story future in potential great in shareholders. markets for I’ll teams highly together in look and message. Union communities, I compact forward or deliver long-term, to sustainable dense any Union what We’re performance to a other Virginia’s irrefutably

replicated right have the assembled high right can scale, in team right that We be and performance franchise longer deliver to the a markets, Virginia. the no in

financial Access hand partnership, results the it. the to for holding National we’re the With I’ll turn over to Rob quarter. still grows the stronger Bank we the play cover now and call strong to intend

Robert Gorman

everyone. part, morning some earnings financial for you which quarter, losses good from $XXX,XXX on focus with a related basis, excludes of franchise. most joining to fourth the on details financial $X.X commentary exit like potential merger-related costs quarter which for results illustrates my after-tax Thanks John, operating minutes you take origination does a include now us this in to non-GAAP the Union’s for Thank the million will and discontinued Union’s Union’s from fourth Please that to today. provide I’d of business. few operations note the of but mortgage results

came $X.XX or X.XX% on Non-GAAP for tangible clarify, I operating For of with merger-related quarter which to top share. financial after-tax XX fourth reported top return ratio was lower as earnings as the We and return the costs, we of common improved of on fourth declined $XX.X our assets net reported the excludes are specify goal return efficiency million versus range XX.X%. set. quarter ratio was were earnings on a which in quarter, our million XX% a basis, equity on to achieved the non-GAAP basis. for On XX%, assets non-GAAP consolidated income than operating $X.X million on and quarter and line targeted operating the increased per tangible versus operating reported tier per was targeted to metrics in will operating was target in exceeding fourth return the noted net the company’s to $XX.X at end $X.XX. reported share XX.X%, In Reported XX.X%, common X.X%. non-GAAP efficiency equity metrics X.XX%, XX.X%, the

ratio in result targets and on we noted with we XX Access, from XX%, from which financial XX% new tier down next or comments, up tangible up return raised top that’s As lower further to again XX% to the - and XX and efficiency targets. X.X% these as are: at return and between John to have his metrics or between year this addition expect X.X%; improvements The XX%; and below, our common from on X.X% X.X equity assets financial of an a target. the previous is

financial fully achieve XXXX we strategic to these once in targets new and benefits realized Access the the expect and integrated We of have combination.

third the and to costs, cost points, or the driven of which yields fourth of assets. basis growth cost cost the tax the yields, points mix by the current in average--the on interest quarter’s more loan XX major interest the the the prior asset basis increase by rates increasing higher impact the $X.X fund balances driven short-term of and in was of during the margin mix quarter. adjustments to earning quarterly deposit Net funds in higher net by quarter The by income cost costs the increased equivalent yields accounting quarter due quarter. XX the to losses impact each wholesale basically due The quarter was was quarter’s loan margin higher funds offset components cost increased quarterly deposit which yields of loan point net point from to tax primarily added from the interest increase growth accretion XX in quarter points net deposit purchase The X.X%, increasing average an so the on of point the a income third point loan points X.X% basis the third increased for during for net to the XX other to the strong basis margin yield X the fund entire in approximately from cost well quarter. XX of quarter, quarter, higher basis the the variable quarter XX negative margin compared basis quarter. and on the due previous the XXX of points the increase X XX on quarter. and basis of as interest the basis which increase cost the the Now quarter into impacted statement, cost due on from line of margin, higher fourth turning the was was fourth was portfolio yields. earning improved X.XX% provision the during deposits quarter The The levels an XX million was the of to loan to for of a decline loan average basis increase higher basis margin The loan points lowered up million basis X the the loan decline offset the during mix to debt the and partially basis basis quarter. funding long-term realized equivalent a mix by net which points growth the as $XXX.X points annualized during was increased rate the provision quarter. increase the loan in funding funding tax increased translated XX during interest to growth points million, net for decline margin during borrowing driven The $X.X than deposits, higher net a to an margin million in current current quarter, or higher in points XXXX on charge-offs a loans, the primarily principally impact. increased was net interest XX with The to increase to basis in strong interest margin, was by time interest as basis, in net equivalent $X.X third which for

basis points the million prior XX $X.X basis basis For to quarter XX for basis on the same and the $X.X $X fourth last XX charge-offs or quarter or year. points quarter were for net million an of compared or points million annualized XXXX,

For net million $XX.X quarter. Non-interest prior increased XX, for the to were compared income year $X.X million December the $XX.X the basis ended for year million or or $XX.X the ended XX charge-offs in XX XXXX. XXXX, points million to $XX.X basis quarter points from million

third recorded to non-interest when $XXX,XXX had Xenith. driven prior to $XXX,XXX that acquisition loan or increased the Shore gain prior adjustment quarter quarter. million insurance in by quarter for to charged Excluding primarily life the in compared fourth of of XX.X% increase related Premier non-interest The reduce the the approximately income a to income acquired XXXX, of Xenith fully proceeds been Union’s off $X.X was

digital increase customer X.X% fee to $XXX,XXX and higher to compared of during marketing decrease and in expenses, an $X.X expenses to an expenses primarily asset addition, primarily volumes. increase to income decreases incentive related increase the declined to million due in non-interest to due timing benefit transaction due to services in in third increase quarter XXXX. rate and management Professional operating consulting $XXX,XXX quarter salaries of benefits when costs. and a $XXX,XXX non-interest the fees The in a or expense and and and the interest In in million due an in included of of advertising $XX.X decrease fees decline in $XXX,XXX swap fees. fees fiduciary overdraft marketing decreased quarter plan Operating during due

The tax to Access tax merger. quarter expenses costs the the compared due a expense in XX.X% primarily third sales expenses branch effective third these for quarter. non-interest and merger in compared to offsetting losses The credit-related effective amortization due $XXX,XXX was of pending decline of recorded declines quarter. the to rate related to intangibles $XXX,XXX property the lower non-deductible an declined the was of was closure in fourth in compared $XXX,XXX OREO Partially operating increase an increase on to due to rate Additionally, and to quarter. of XX.X% increase of as gains approximately in prior in

forma pro adjusted $X.X end, December for assets $XXX during annualized Xenith Now were loans securities in of turning investment billion loan XX, million million stood portfolio, or XX.X% investment September primarily XX. XXXX quarter of quarter. at sheet as of million to period of the investment or a also for the and billion, occurred on from increases GreenSky with Shore end, from the and sale XX, September if balance portfolio XX increased a on for and at held the full-year guidance. $XX.X XXXX, our $XXX On At $XXX.X in result basis in the an loans X.X% December total line an Premier growth the basis increase acquisition increase an held midyear as

on XXXX total an we Looking XX, on forward, At with John to loan stood X.X% from loan million pro million in of September year a $XXX.X while $XXX relatively be in our deposits XX, at acquisition noted, if expect forma rate. basis XXXX, as On XXXX deposits or as or X.X% $XX $XXX.X line growth prior increase increased the annualized from Xenith X.X% occurred an the the billion, deposits growth full increased million average December annualized XX, basis XXXX. quarter. or December

XX million quarter by That’s portfolio as at a and to $X.X for quality, earnings summarize, X demonstrate Turning our the losses loans envisioned Union property relatively points million credit The loans. percentage allowance end. in percentage unchanged $X.X result to $XX.X to balances. quarter total million million a we fourth basis non-performing significant basis results XX basis as of a and declined the declined total Xenith was assets loan The or quarter, foreclosed loan as million. comprised points of September during XX points $XX the the of at capacity non-accruing from of allowance combination. To of $XX

tier the financial target will and ranges, we set the top target hit benefits improve that levels in performance financial in XXXX strategic our of and we Access are have to our Now hit XXXX. fully higher look combination realized performance we once the

to franchise our over growth let shareholders. to top that, Bill financial turn to remain performance and committed achieving sustainable, tier Union With and long-term for questions. Cimino building As back it leveraging for always, generate focused remain on we the to me profitable it open value up

Bill Cimino

for caller, ready we’re first Thanks Rob. our Laura, please.

Operator

Mealor of Our first question Catherine is instructions] KBW. [Operator from

Catherine Mealor

the us with anything could wanted increases and Fed Rob, if thoughts the outlook your margin start you Thanks. and to updated that if without on Hey, has margin how your with give for year. looks changed, good morning. or I see, this

Robert Gorman

modeling Yes, the quarter, to we said, that be to interest won’t to we Access, forward. basically year, we’ll very today, this it’s same expect rate points expect a with maybe where where we down the going sit much pretty margin on X remain basis that’s as That end we Catherine, point the net we to Fed story the flat the the for flat curve and in during compression going from we’re X Union-only the look any that increases X you don’t flat, basis so range. in curve year we in similar where are at year forward, have potential of core interest some at improvement the of bring - up XXXX When - Union much basis. X ended to will

their flat basis we’re lower X Now with compression because points of forward. Xenith would back accretion, at accretion impact we be ourselves with quarter, headline accretion, of the acquisition about and a on reported some potential bias fairly basis, but of impact so Access NIM headline the basically on of down a going where basis small to Union-only due this the to

John Asbury

number in Catherine, us for Thirteen a matched in loan said earlier. the high. annualized something very percent The strong paid yield increase quarter. I over the - the want Rob loan to seasonal growth is that’s rate portfolio reiterate on a deposit increase

next so seeing expensive. will an not is so we think loan that see that more as deposit funding, that, of obviously reliance not We we year, to expect less wholesale do to opportunity we’re on we growth which be better match and have growth not

Catherine Mealor

fair for Access National Do you’re have expecting sense. of that a amount it, Got makes accretion dollar yet? you value

Robert Gorman

for of get week but course, - with the $X proxy once the what February income Well we’ll current final modeling million close number X, deal have and accretion our in there; a another we filed was going we’re we of $X about so to million to XXXX. prospectus or two

any accretion to you’re income nine starting and won’t that’s of for when so as that Access the months February. at XXXX, until related get Now remember, well, in we impact looking income

Catherine Mealor

okay. one me. Got last it, really for one Maybe That’s helpful.

due of there. commentary You noted quarter. any mentioned Thanks. us seeing give had in that? year-end, but past also those some about any kind on you the higher press this color loans what just became I you trends know of that current Can after that release you’re you

John Asbury

dues. well, XX XX-day we past were Yes to referencing

due If earnings you year you end XX-day than down see XX-day about just that meaningful restructured being that past due quarterly estate that even in We actually you’ll was and last stable, past phenomenon. a cleared this The of credit percentage on one used owner-occupied pretty dues, see a term phenomenon Also of most phenomenon. of fact in of for an was this I past short technically can dues, issue. at those fairly it it contributing We XX-day dues, credit it, hard, past for week, point. to see it greater was done in to quarter as thing release. to holidays we really so at have issue It to but bankers commercial a done what get We should didn’t more - process on don’t about a XX busy that we a a time. was real mostly dig were rise us were that Bank, not that’s at to gotten at this rise sometimes Regents credit. slightly. and uncommon was see XX due we in same of dues the was the not into their handling due to the was it the year-end, at and see to to whatever. payment-related do important they as talking is as and look over It’s total, half by see look past particularly

Catherine Mealor

Great it, helpful, quarter. Got okay. you. thank Very

Bill Cimino

ready our please. we’re next Laura, for Catherine. Thanks caller,

Operator

Nicholas from of Our Stephens. Austin question is next

Austin Nicholas

modestly good guys, flat more hit guidance a to margin maybe morning. Hey on off investor previous time, just of back the the was the at XQ up to day think for Maybe levels. margin one I

today, benefit on those message it or is yield components? for asset curve the side, the not there As that a just it the really lower rate than you’re and two seeing the hikes flatter more to of expectation versus delta just is

Robert Gorman

based Obviously the occurred terms causing as Fed fourth pretty quarter, talked we’ve on shifted view into in to on be XXXX. steeper bias. going margin, outlook of a the what yield our we little our that’s that much Yes of Austin, in and more just have although had that we’d the funds moves modeled well flat, we in for we negative during two a were third downward ’XX, what’s quarter, curve marginal what’s as thinking

Austin Nicholas

Got appreciate fee that. the I quarter. that That’s this what it, was Maybe okay. on income, pretty strong figured,

You specific maybe swap specifically about line Any and the swap fees outlook the strength, insurance how and items those you’re noted going there. that saw ’XX? into revenue thinking the fees on

John Asbury

years, Head product. I’ll a with ask an I’ll form rate swap efficient the before a start, is C&I from of would so for for probably Banking particularly rate plain or here our base build-out our at Commercial joined have I’ve bit outlook more the a good so opportunity us expectation of hedging career. transactions, products, him a who demonstrating this and while of is Dave so To some hedging for Ring, maturation David suggests think well, to to perspective. I be borrower, banking generally more me, is interest ahead larger example personally in effort, for transactions, dealt as yield part as of those relatively interest larger that the for new institutions hedging also in with it something It’s still an curve your doing happens. good XX have vanilla and have of and it’s us see dealt been rate income? of their Ring, going building the rates what interest flat swaps, opportunity which is lock go of the unexpected this for clearly remain are that’s it’s for you commercial

David Ring

full are. teams We’re a grasp confident sales of opportunities have that our now the where

it’s in revolving the lines rates flat, they’ve lend only our lent We’re that but past, credit. been opportunities so that’s continuing into enter interest real rising see is to see that today, estate perfect our-- not our time I a like to now, client the so some seeing and what to we have into into is control of now your enter cheaper, we’re a swap the and you that asset When philosophy swap are see may mostly into swap and costs classes a in for in are but because same rates

John Asbury

to sophisticated you to interest is rate and build fact means hedgings, interest We that fixed we’re commercial and supporting opportunities, growing traditional call market than, it’s don’t pay the we used the a loan. and continue We on take up the increased our think and rate way curve. of correct. have more that for our to the client hedge portfolio frankly, that benefit book a more efficient to more yield and Yes, that much

David Ring

We’re actually have seeing saw as we queue for many in quotes requests several for already as this quarter, last we the quarter. and

John Asbury

good that Austin, about Okay opportunity. and so feeling has legs, line we’re pretty it bottom

Robert Gorman

quarter was did it have to to so quarter. loan that We significant loan well. quarter going high very it’s with Austin, as to be--it’s going in the growth, fluctuate Just growth note, fourth

Austin Nicholas

guys. Perfect, Appreciate thanks all the help. it. Got

Bill Cimino

Thanks Austin. next Laura, caller, our please. we’re for ready

Operator

is question next Hunsicker of Compass Our Point. from Laurie

Laurie Hunsicker

we’re Hi, a good out winding Page of going margin for the accretion include to XXX go on just is thinking I’m margin Am while just could in, laid levels, in we you wanted to I that levels, of to expanding off margin really income to The does current about X that current as then I reported this schedule and make theoretically understanding be want National, moment. press that core June-September your of to back not core accretion heavily Access expanding so guys while have I it, sure your your your obviously phased and morning. release appreciate I the again continues the contract. about margin--I see mean, and income right? down, color. quarter very thinking

Robert Gorman

continue thinking we’re the over so from decline get starting right. accretion Yes the in We’ll book first over will course--or exactly in running Access pick-up right. about off the the Laurie, you’re accretion it that’s quarter, the The basis. quarterly Union that on

be bit the decline the You to quarters. NIM quarter, see a remaining over first flat could but it a up be headline on start basis or in potentially

Laurie Hunsicker

we your maybe margin to June into that, just quantify XXX was points fully Then XX, basis XX--XX, on quarter, basis okay. it, if phased theoretically that XX this obviously the your points just look accretion Got be income, depending--? so points, could quarter about basis XX

Robert Gorman

talking quarter about, you are Which Laurie?

Laurie Hunsicker

So in we as other words, because right, you’re so phased, June quarter about-- when it’s March, fully partway only booking think through

Robert Gorman

talking XX, around Yes, XX more probably points. you’re basis

Laurie Hunsicker

BOLI couple $X.XX anything was linked in number? things the on The non-recurring jump in perfect. Okay, that, income million here there quarter, in that just statement. a Then

Robert Gorman

be a some that was the proceeds view. thousand would hundred proceeds point We so couple of line, did about non-recurring in BOLI from--life that that. dollars from get insurance It considered from

Laurie Hunsicker

that or I’m something sorry $XXX,XXX was that referenced, the Got okay. No, - Oh, was it, no? that different--okay. you

Robert Gorman

it quarterly $XXX,XXX was one, on but number. I $XXX,XXX--yes, about wasn’t about in BOLI referencing it reported that No, was BOLI the

Laurie Hunsicker

non-recurring adjustments. operating - the you In like the $X.XXX can what income the just all I feel the other through I’m getting Then okay. on in take million, BOLI other was line us not number, that because

Robert Gorman

Yes, the insurance in that quarter. life out it so proceeds, with we is you’d had if the to but related you what line in third Xenith-acquired loan, in more number again from back be that, a we $XXX,XXX received

Laurie Hunsicker

$XXX,XXX up? adjustment where Okay, from show Shore and the then does Premier

Robert Gorman

Oh, that in quarter, was third so-- the

Laurie Hunsicker

third sorry. quarter? That was the Okay,

was reading Just incorrect. that

Robert Gorman

a it You on should line in press see release. our separate

Laurie Hunsicker

that rate like? okay. Then should think make it, Got as year, about I what wanted look tax we just sure. next to your

Robert Gorman

on but probably to Yes, depending on that’s we’re XX% a Access. quarter the modeling to complicated we’re impact and of range in say going or basis, combine question, range. when then paying fluctuate costs, the a so. I’d the merger-related quarter, It’s in etc., XX% we’re

Laurie Hunsicker

Okay, great.

Robert Gorman

adjust but as guidance. and That we’ll a heavy, we provide go could some forward be little

Laurie Hunsicker

Okay, great.

in targets quick can how dividend Just raised two of last just your John, you your are questions. light comment about thinking policy here? all you

John Asbury

that our we changed anything standpoint, not really have in terms philosophy. from our think of I

Robert Gorman

No, no.

target payout Our in ratio continues to be to range. payout the XX% targeted XX ratio,

Laurie Hunsicker

integration that to question, on year, now but thanks. Access currency us great. on and focus that, your just appreciate this, is? given stock the where especially about this where you’re thinking last you’re Okay, your about sit I Just you you one close thoughts, M&A just Then as just we refresh how look can forward

John Asbury

of important I Washington it because we is performance that incredibly about on. enthusiastic so Access. we a for Greater It’s think up we’re so as Laurie, that in world first think much us and in things organic very we to have relates need did laser-focused Yes integration ahead have objective, M&A onboarding and are the conversion said that us making difficult team, we to say are opens and Area, let most so and focused we the and we from that’s always Access what of sure to opportunity three our this really said juncture on is and the we how and What response about you day settle options successful November have a down, are option I to future. anticipating investor of think M&A, in speak. nothing. that of do most our in for important do The question really there work

sure we point, that that Access, we future must working That compelling right have we things doesn’t here, goes us well there anytime right we do To in the and the settle and But be need are as make wouldn’t out need is, again the other we would everything additional thoughts reason no expected. price that you right or that is we exceptionally focused everything There’s suggest other just then given down now. later year. everything not now, ask looking can does considerations, necessarily why sure M&A. with that really soon. in but mean have your let to We on stock making where

Laurie Hunsicker

Great, thank you.

Bill Cimino

ready next for please. we’re caller, Laura, Laurie. our Thanks

Operator

Our Keating next question Matthew Barclays. is from of

Matthew Keating

you year? expense inclusive What understand first year rate at a the I bank this Access some X.X% bit noisy maybe you a be to three of integration, the around with day this ex-Access Good thank the National Rob, quarters the for additional morning. going of thinking to about this growth core closing core should Thanks. X investor digital Great, for bank you. growth, be do is core are expense the and of the which National about contemplating we from year. but for expense talked was expenses growth, think

Robert Gorman

on we X% if fully that positive--or over you’re by pretty standalone from look Yes, is it a Obviously Access, will cost about and growth assuming. get a in we have, rate we’re you perhaps finishing that savings will look about a Union But run saves if we’re X% what incorporate right a once on basis. which that the decrease our X, and XXXX expense on talking little run rate we’ll quarterly much rate be - impacted at you up the growth at basis. little we’re negative growth over just budget be

John Asbury

right There’s greater that, now, some teams, realization that always I’m we teams. board on were there’s the planned potential If saying than wouldn’t commercial in period. adding strategic commercial could investment the confident do of anything we of do return we we add unless were organically the expanding not do specifically but it that terms could to either. expenses,

Robert Gorman

Yes, we’d be looking for that. operating loads coming out of

Matthew Keating

John. Great, for a quick and follow-up then just

not around that? at might of we the year? Can in when you’re announce additional anything that and the some around will expect opening information kind to you potential you this time You think ready yet. initiatives commentary be mentioned Do brand Thanks. point

John Asbury

The a the Access, we news think. in which to be for on cost; a Coming to estimates to the the relates northern serve I’ve but I’ll it, in said distraction is as say. the I’ll community Access you was this U, is sooner can’t we’re year whose over next very closing not very that with bit making terms about more twofold: this actually represent there we’re begins two, their announce as look of it reiterate of we Virginia and don’t so come candidly, problem, comment want Bank merger, - banks The and and a us has good anything resonates. for big that to better still of again the with Look envision you been be from coming of is actual bang. clients, franchise as together degree our know, XXX we XXXXs across soon, Union a that Union why back intended of to cagey confusion respect up of than bank union, final small a and a the reason which we market shortly, We’ll name unification it some being use The about the with is probably had to other name still dramatic. and bit talking around still quite we’re working the months all simply we’re now, and that’s one, on in about years. happen. so Trust don’t

do, look we’ll think appropriate, deal on information you with with have be when we we back etc. and an what to sharing costs, in logical very soon. we terms come that and real Then So we’ll to way do forward this, we clear of it

Matthew Keating

very thanks much. Understood,

Bill Cimino

one we’ve got Thanks please. time Matt. for more Laura, caller,

Operator

Our next Capital. question of Brean Blair comes Brantley from

Blair Brantley

strength came everyone. morning from from just side. I the a on perspective back give wanted growth good this Can idea loan circle where the an Hey, us to you geographic quarter?

John Asbury

comment to like Ring, David Yes. you would that? on

David Ring

markets. Primarily three

north those newest has Then region, loan region done Richmond primarily three area Carolinas number which Richmond production mostly and were two, which also is which a good Greater our well a Fredericksburg, market, the around year and is I growth very Our so Area always this just but is big full quarter, coastal a we’ve is where region, had very region, named. too. our strong the a team. C&I well, does added our

John Asbury

point. elaborate former the Dave Roads small prior only - he’s he Roads Hampton we side I etc. presence hit important Hampton want a on because to Bank talking Virginia south the a critically on combination. franchise, where coastal, something, the very to Xenith had of When Norfolk, Beach, says about

we much of a that so are so this would super community platform Hampton Xenith, unlike in region. banking that reminder, had business would Richmond-based we as not bullish Roads bank, always exactly Richmond and traditional we principally do, they acquisition, the and team branch-light potential what skilled strong exactly and very are Virginia. happened we is and like C&I team about Access, market. and This Hampton that is was very legacy capable the a a a really has Xenith and so northern predicted happen, a As we’ve we post-Xenith bank which what commercial have built Roads excited in used a of on is industrial very we said what looked combination represented

David Ring

I in which say that’s growth. throw not percentage, dollars, could things That’s should off. dollar true And

John Asbury

so think C&I, doing a context is are lot down Yes, well we off a essentially have Hampton there. of for we new In of base. there upside of we the and a Roads entry small us, market

Blair Brantley

Thanks. great. Okay,

quarter, you quarter can down pay to speak maybe this [indiscernible]? last With compares that how the what growth to and saw you the perspective from

John Asbury

the Well, about earlier somewhat it in QX. in at seemed looking less. saw QX. I’m Ring, was talked we’ve elevated reasons Dave data certainly to That certainly before. downs now Pay pay we in felt downs here relatively abate year all - normalized the for the

David Ring

to to started April slow normalized. in From of a sure. September, we saw and and down it’s it fourth downs, quarter more for pay Yes, lot the August,

Blair Brantley

on in great. update any terms to that maybe? what Then just of first Okay, ’XX, pricing the feels and finally competition environment, the how the relative of Thanks. half

David Ring

our we’re and relationship to very lenders, have take as seen is to the or market, necessarily it’s we pricing so the much we loyal S&P. don’t that into us at what’s react relationship with bankers, We’ve and at it’s consideration, least [indiscernible] market price, overall relationships, fortunate we we the look be above we’re at We and bringing data as about competition that so oriented simply market for not them. value about

John Asbury

We’ve for pricing that service we’ve was good of It we which us a pretty commercial on what Dave the side, using have the the loan well Ring I over job. benchmarking it confirmed known for decade. a over used is third probably actually interesting that and party, sensed, do is year been course - what a

there. the on - We back are shape pricing most clearly not out winning aggressive the pretty we’re business in of good having

fair. months, going ask less to so four She’s On President, isn’t relatively Maria the new I’m depository Tedesco, comment. this our entirely side, than been here to

the on out--it’s of terms of the lot see Frankly, in larger same you have potential point strategy, not we on your the a have retail answer I deposit that? and what you to side pricing all competition on on movement always We How exactly think some that are retail? retail I’m markets have any comments you’re Union to and extent banks, the to Maria, including a beginning things pricing see the from but it, going about bank. pricing is do rate have done side, the in one we one-size-fits-all do at of to side. opportunity untapped question, of seeing

Maria Tedesco

thinking our investor pricing go market we’re implementing year. we’re so at as we Well, branches, segmenting a as not the looking model regional I mentioned through of we the day, are this one-size-fits-all, at looking--as

but We’re soon be we not today, there enough. there will

multi-tier needs just continue us that and I help also but to see changed am the retail margin to retail my stay taken confident think If will could but deliver I yet. on and comment in retail, already very potential initiatives competitive I that since it’s will I thinking of its and implemented help number of a about potential approach hasn’t general, the help investor in realize the day. not we’ve quite side. growth the there Essentially, think a potential.

balanced name very performance. a new I a good to incents program we’ve believe few, which Just incentive implemented

because exhaustive a processes we introduced our teammates them want--and make we for way, also retail not an service includes the reintroduced model streamlining lending assessment, sales an to again, by only - we’ve lending, set the elevating coaching Secondly, and skill includes bankers. around which banking easy. of branch but training the We’ve processes, assessment certainly that our do

on we’re that easy, agenda agenda, continue digital as our which objective. you to to addition which is help will going banking digital all a that, In know, make obviously, execute again our

I and more know potential. be All competitive the think retail will us has greater franchise, all of help which we this, grow

John Asbury

resources talk we import on. that we reference would intend about up that that brand have useful. think to for gathering necessity into there, more again was to that as continue other we by segmentation, and will so later intensive That we’ll they and markets where greater a very your be small Access, deposit business, to model the Then effort, for only particularly had and bring table focused not

Blair Brantley

thank Appreciate you. color. Great, the

Bill Cimino

for today. Blair. everyone dialing Thanks in Thanks

this have a replay a our a available of reminder, we’ll website, As call investor investors.bankatunion.com. on day. good Have

Operator

This concludes today’s conference call.

You disconnect. may now

Atlantic Union Bankshares (AUB) 22 Jan 192018 Q4 Earnings call transcript