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 goal? Recreating the franchise owned by Asbury's first industry employer, Richmond-based United Virginia Bankshares. The company changed its name to Crestar Financial in 1986, during Asbury's second summer as a part-time employee. Crestar was Virginia's largest bank with nearly 500 branches and $27 billion of assets at the time of its
Though he joined Wachovia after graduating college, Asbury still remembers Crestar fondly. Indeed, Asbury still has the lapel pin United Virginia Bank gave him when it hired him, and Crestar's example has helped guide his thinking about Atlantic Union's evolution.
"There's really nothing particularly insightful about my vision for Atlantic Union," Asbury said in a recent interview. "It's actually a very retro strategy. When I was being recruited for this job, I was studying bank strategy in the market. It was evident to me that there was an opportunity. The gap in the Virginia banking scene was there was no statewide independent bank.
"As I was being asked, 'What would you do with this nice $8 billion-asset community bank' ... my answer to the board was, 'I would bring back Crestar. I would
Putting the pieces in place
With Richmond-based Atlantic Union's
Previous deals, for the Richmond-based Xenith Bank in 2018 and the Reston-based Access National Bank in 2019, pushed Atlantic Union into the Hampton Roads and Northern Virginia regions respectively. Founded as Union Bank & Trust in Bowling Green, Virginia, in 1902, Atlantic Union's roots lie in Central Virginia and Richmond.
Southern Virginia isn't considered a high-growth market. The region's economy has been transitioning away from traditional staples of tobacco, textiles and furniture manufacturing. Asbury, however, likes Southern Virginia's prospects for continued economic development.
"We're very bullish on this area," Asbury said. "If you think about the history of Southern Virginia, it's tobacco, textiles and furniture. All those industries have been decimated. They've been replaced through the years with advanced manufacturing, and there's more to come."
With a long reputation for solid asset quality, the $3.1 billion-asset American National, founded in 1909, has thrived in Southern Virginia, though like institutions throughout the country it felt the sting of higher rates and increased funding costs last year. Full year 2023 net income totaled $26.2 million, down from $34.4 million in 2022. At the same time, nonperforming assets of $5.5 million were 0.19% of total assets at Dec. 31, significantly lower than the industry average of 0.47%, according to Federal Deposit Insurance Corp. statistics.
American National's performance earned the respect of Asbury, who said the two banks engaged in years of discussions before entering into the negotiated merger agreement in July.
"The franchise has been around since 1909," Asbury said of American National. "You talk about brand power. … They've banked generations of consumers and business owners, so this really has a lot of staying power. It is the gold standard for a community bank. They're everything a good community bank should be."
That said, Atlantic Union's more robust lending platform, including equipment finance and asset-based lending, should help the merged company deploy American National's $2.6 billion of deposits more efficiently, according to Asbury. "We can do things that American National cannot currently," he said. "This only further positions us for growth. I think this is a formidable combination. They really were the perfect partner for us."
A bigger North Carolina presence
Atlantic Union is no stranger to North Carolina. It's operated branches in four relatively small communities on or along the Tar Heel State's East Coast. Still, acquiring American National offers entry to the more populous Piedmont Triad, anchored by the cities of Greensboro, Winston-Salem and High Point. The region is home to nearly 1.8 million residents. Its population grew 1.5% from 2020 to 2022, according to North Carolina's State Demographer's Office.
Hovde Analyst David Bishop rated Atlantic Union outperform in his most recent research report, in part because of the growth potential the Piedmont Triad expansion offers. "Our revised earnings model still contemplates post-merger return on assets in the 125-basis-point range, consistent with management expectations at deal announcement, and we note our "organic" loan growth outlook this year may prove conservative," Bishop wrote.
In past years, Asbury talked about expansion opportunities in the so-called Golden Crescent, stretching from Baltimore south to Richmond. Now, he views North Carolina as a natural extension of Atlantic Union's Virginia stronghold. "As the years passed, I came to better understand the landscape and began to broaden my view of the franchise opportunity to be not just Maryland and Virginia, but also North Carolina," Asbury said. "This was a perfect fit."
Crestar, whose CEO Richard Tilghman
For his part, Asbury doesn't rule out expanding in Maryland at some future date, but added Atlantic Union's current footprint allows for plenty of runway. "From my standpoint, when people ask me what the bank will look like five years from now, well, who knows," Asbury said. "I do think that North Carolina gives us new growth opportunities, I still think there's a lot of opportunity in that Greater Washington region, into Maryland. We've also built specialty lines of business that can operate outside of the footprint."
With American National now officially inside the fold, Atlantic Union can accelerate the integration process. Systems conversion is scheduled for the Memorial Day weekend. While conversions are always "hard work," integration has proceeded smoothly to date, helped along by the banks' deep pre-merger ties, Asbury said.
"This is a five-year conversation," Asbury said. "The timing was finally right."
