AUB: Despite NIM Pressures, Growth Expectations Intact; Reducing EPS Estimates but Raising Target Price; Reiterating Outperform Rating.
Atlantic Union Bankshares Corporation (Atlantic Union, AUB, or the Company) reported 3Q19 net income of $53.2 million, up 9.0% compared to the $48.8 million recorded in 2Q19. This translates to 3Q19 EPS of $0.65 compared to $0.59 in the prior quarter. Reported 3Q19 results include $3.6 million ($2.8 million after tax) or $0.04 per share in merger-related and rebranding costs, while 2Q19 results include $10.4 million or $0.11 per share of such costs. Excluding these charges from both periods, adjusted 3Q19 EPS was $0.69 compared to adjusted 2Q19 EPS of $0.70. Adjusted 3Q19 results fell short of our adjusted $0.71 estimate (our estimate was $0.62 including merger-related expenses), and the $0.69 median Street estimate. The 3Q19 results were characterized by a significant recovery, higher-than-expected swap fee revenues, and securities gains, offset partially by higher operating expenses, a higher loan loss provision, and lower net interest income. Highlights from the quarter include: