How Atlantic Union plans to fill a spot in Virginia’s banking market

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Atlantic Union in Richmond, Virginia, accomplished its acquisition of American Nationwide Bankshares on Monday.

John Asbury has been on a mission since his appointment as CEO of the $24.3 billion-asset Atlantic Union Bankshares in October 2016.

The objective? Recreating the franchise owned by Asbury’s first business employer, Richmond-based United Virginia Bankshares. The corporate modified its identify to Crestar Monetary in 1986, throughout Asbury’s second summer season as a part-time worker. Crestar was Virginia’s largest financial institution with practically 500 branches and $27 billion of property on the time of its $9.5 billion sale to SunTrust Banks in December 1998.

Although he joined Wachovia after graduating faculty, Asbury nonetheless remembers Crestar fondly. Certainly, Asbury nonetheless has the lapel pin United Virginia Financial institution gave him when it employed him, and Crestar’s instance has helped information his excited about Atlantic Union’s evolution. 

“There’s actually nothing notably insightful about my imaginative and prescient for Atlantic Union,” Asbury mentioned in a latest interview. “It is really a really retro technique. Once I was being recruited for this job, I used to be learning financial institution technique available in the market. It was evident to me that there was a chance. The hole within the Virginia banking scene was there was no statewide impartial financial institution. 

“As I used to be being requested, ‘What would you do with this good $8 billion-asset group financial institution’ … my reply to the board was, ‘I might carry again Crestar. I might carry again an ideal, Virginia-based regional financial institution that is extra succesful than a group financial institution, that can be a substitute for the massive banks.'”

Placing the items in place

With Richmond-based Atlantic Union’s acquisition of American Nationwide Bankshares in Danville, Virginia, Asbury believes he is largely accomplished the duty. The $507 million all-stock deal — which closed on Monday — extends Atlantic Union’s footprint into Southern Virginia markets like Danville, Martinsville and South Boston. It additionally provides the corporate its first presence in North Carolina’s fast-growing Piedmont Triad. 

Earlier offers, for the Richmond-based Xenith Financial institution in 2018 and the Reston-based Entry Nationwide Financial institution in 2019, pushed Atlantic Union into the Hampton Roads and Northern Virginia areas respectively. Based as Union Financial institution & Belief in Bowling Inexperienced, Virginia, in 1902, Atlantic Union’s roots lie in Central Virginia and Richmond. 

John Asbury

John Asbury, CEO of Atlantic Union.

Southern Virginia is not thought of a high-growth market. The area’s financial system has been transitioning away from conventional staples of tobacco, textiles and furnishings manufacturing. Asbury, nevertheless, likes Southern Virginia’s prospects for continued financial improvement.

“We’re very bullish on this space,” Asbury mentioned. “If you consider the historical past of Southern Virginia, it is tobacco, textiles and furnishings. All these industries have been decimated. They have been changed by way of the years with superior manufacturing, and there is no extra to come back.”

With an extended status for strong asset high quality, the $3.1 billion-asset American Nationwide, based in 1909, has thrived in Southern Virginia, although like establishments all through the nation it felt the sting of upper charges and elevated funding prices final yr. Full yr 2023 internet revenue totaled $26.2 million, down from $34.4 million in 2022. On the identical time, nonperforming property of $5.5 million had been 0.19% of whole property at Dec. 31, considerably decrease than the business common of 0.47%, in accordance with Federal Deposit Insurance coverage Corp. statistics. 

American Nationwide’s efficiency earned the respect of Asbury, who mentioned the 2 banks engaged in years of discussions earlier than coming into into the negotiated merger settlement in July.

“The franchise has been round since 1909,” Asbury mentioned of American Nationwide. “You speak about model energy. … They’ve banked generations of customers and enterprise homeowners, so this actually has plenty of endurance. It’s the gold commonplace for a group financial institution. They’re all the pieces a very good group financial institution must be.”

That mentioned, Atlantic Union’s extra sturdy lending platform, together with gear finance and asset-based lending, ought to assist the merged firm deploy American Nationwide’s $2.6 billion of deposits extra effectively, in accordance with Asbury. “We are able to do issues that American Nationwide can’t at the moment,” he mentioned. “This solely additional positions us for progress. I feel this can be a formidable mixture. They actually had been the right associate for us.”

An even bigger North Carolina presence

Atlantic Union isn’t any stranger to North Carolina. It is operated branches in 4 comparatively small communities on or alongside the Tar Heel State’s East Coast. Nonetheless, buying American Nationwide presents entry to the extra populous Piedmont Triad, anchored by the cities of Greensboro, Winston-Salem and Excessive Level. The area is residence to just about 1.8 million residents. Its inhabitants grew 1.5% from 2020 to 2022, in accordance with North Carolina’s State Demographer’s Workplace. 

Hovde Analyst David Bishop rated Atlantic Union outperform in his most up-to-date analysis report, partly due to the expansion potential the Piedmont Triad enlargement presents. “Our revised earnings mannequin nonetheless contemplates post-merger return on property within the 125-basis-point vary, in line with administration expectations at deal announcement, and we word our “natural” mortgage progress outlook this yr might show conservative,” Bishop wrote. 

In previous years, Asbury talked about enlargement alternatives within the so-called Golden Crescent, stretching from Baltimore south to Richmond. Now, he views North Carolina as a pure extension of Atlantic Union’s Virginia stronghold. “Because the years handed, I got here to higher perceive the panorama and started to broaden my view of the franchise alternative to be not simply Maryland and Virginia, but additionally North Carolina,” Asbury mentioned. “This was an ideal match.”

Crestar, whose CEO Richard Tilghman additionally considered the Golden Crescent as an enlargement template, pivoted north within the years previous to its personal sale, buying Baltimore-based Loyola Capital Corp in 1995 and Residents Bancorp in Laurel, Maryland, in 1997.

For his half, Asbury would not rule out increasing in Maryland at some future date, however added Atlantic Union’s present footprint permits for loads of runway. “From my standpoint, when individuals ask me what the financial institution will appear like 5 years from now, effectively, who is aware of,” Asbury mentioned. “I do suppose that North Carolina provides us new progress alternatives, I nonetheless suppose there’s plenty of alternative in that Better Washington area, into Maryland. We have additionally constructed specialty traces of enterprise that may function exterior of the footprint.”

With American Nationwide now formally contained in the fold, Atlantic Union can speed up the mixing course of. Techniques conversion is scheduled for the Memorial Day weekend. Whereas conversions are at all times “onerous work,” integration has proceeded easily thus far, helped alongside by the banks’ deep pre-merger ties, Asbury mentioned.  

“It is a five-year dialog,” Asbury mentioned. “The timing was lastly proper.”

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