Atlantic Union Bank's Q4 2024 Earnings Call: Unpacking Contradictions in Loan Growth, NIM Outlook, and Government Policy Impact

Regulatory Approvals and Merger Progress:
- Atlantic Union Bankshares received regulatory approvals from the Federal Reserve Bank of Richmond and is awaiting approval from the Virginia Bureau of Financial Institutions and Maryland Office of Financial Regulation for its proposed acquisition of Sandy Spring Bancorp.
- The acquisition is expected to benefit customers, markets, and shareholders due to expanded branch networks, enhanced product offerings, and access to more capital.

Loan and Deposit Growth:
- Loan growth was approximately 3% annualized in the fourth quarter, while deposit growth was 2% annualized after reducing brokered deposits by more than $200 million.
- The growth in loans was driven by increases in construction and land development and commercial and industrial loan portfolios, despite elevated payoffs. Deposit growth was supported by a decline in interest rates due to Fed cuts.

Net Interest Margin (NIM) Outlook:
- The company expects an expansion in NIM in 2025, supported by lower cost of funds, a steeper yield curve, and reprising of the fixed-rate loan portfolio.
- The anticipated NIM expansion is due to lower variable rate loan yields and favorable funding mix dynamics, despite the impact of specific credit loss provisions.

Credit Loss Reserves and Asset Quality:
- Total allowance for credit losses increased to 105 basis points, driven by a $13.1 million specific reserve on a non- Performing asset and organic loan growth.
- Despite this, asset quality remains solid with only 3 basis points of net charge-offs in the quarter, indicating stable and healthy credit conditions.