Atlantic Union Lifts Profit as Lending Accelerates
Loans grew at a 10.43% annualized pace during the quarter, led by commercial lending.
Atlantic Union Bankshares (AUB), the regional bank holding company, posted second-quarter net income available to common shareholders of $158.0 million, up from $119.2 million in the prior quarter and $16.8 million a year earlier. Diluted earnings rose to $1.11 a share from 84 cents sequentially and 12 cents a year earlier.
The quarter extended a profitability rebound following the Sandy Spring acquisition. Atlantic Union’s efficiency ratio improved to 47.94% from 57.14% in the first quarter and 69.42% a year earlier, while return on average assets increased sequentially to 1.73% from 1.33%.
Net interest income increased $12.7 million from the prior quarter to $325.1 million as loan growth, higher yields and acquisition-related accretion outweighed increased deposit interest expense. Net interest margin expanded nine basis points to 3.89%, helped by a $7.0 million increase in net accretion income to $39.9 million.
Loans held for investment increased $727 million during the quarter to $28.67 billion, driven by commercial-and-industrial and construction-and-land-development lending. Deposits grew by $77 million to $30.47 billion as gains in interest-bearing accounts exceeded a decline in demand deposits. Borrowings rose $576 million to $1.88 billion, reflecting greater use of Federal Home Loan Bank advances to fund originations.
Noninterest income climbed $35.4 million sequentially to $90.2 million, largely because Atlantic Union recorded a $32.3 million pretax gain on the May sale of Bearing Insurance. Adjusted operating noninterest income increased a more modest $3.1 million to $57.9 million, supported by higher interest-rate swap fees and fiduciary and asset-management revenue.
Credit costs rose alongside the expanding loan book. The provision for credit losses increased to $11.7 million from $2.7 million in the first quarter, while the allowance grew to $331.0 million and remained at 1.15% of loans. Nonperforming assets increased to 0.39% of loans as certain commercial-and-industrial credits moved to nonaccrual status, while accruing past-due loans improved to 0.28% from 0.45%.
Mortgage originations held for sale increased sequentially to $110.9 million, with purchase volume rising as refinancing activity declined. Wealth assets under management grew to $16.52 billion from $15.25 billion in the first quarter.
Atlantic Union authorized a share-repurchase program of as much as $250 million through May 2027 and bought back 265,000 shares for $10.0 million during the quarter. The company ended June with $240.0 million remaining under the authorization as its lending growth continued to outpace deposit growth.