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Atlantic Union Bank Says Prepaid $350M Of Long-Term Federal Home Loan Bank Advances

In November 2020, Atlantic Union Bank (the “Bank”), a wholly-owned subsidiary of Atlantic Union Bankshares Corporation (together with its subsidiaries, the “Company”), prepaid $350 million of

· 11/17/2020 07:34

In November 2020, Atlantic Union Bank (the “Bank”), a wholly-owned subsidiary of Atlantic Union Bankshares Corporation (together with its subsidiaries, the “Company”), prepaid $350 million of long term Federal Home Loan Bank (“FHLB”) advances (the “Advances”) with a remaining average maturity of approximately 8.5 years. As a result, the Company incurred a prepayment penalty of $20.8 million in the fourth quarter of 2020. The Advances were structured as floating rate advances with quarterly rate resets based on a negative spread to 3 month LIBOR for an initial period of 12 to 18 months that ended in the third and fourth quarters of 2020, at which time they converted to fixed rate advances for the remainder of the term at an average rate of 1.51%. The Company expects the prepayment of the Advances to benefit its future net interest margin by approximately 3 basis points and annual net income available to common shareholders by approximately $3.4 million or 4 cents per share (based on shares currently outstanding).

 

The Company plans to consolidate five branches into other nearby locations in February 2021 and expects to incur approximately $2.5 million in net branch closing costs during the fourth quarter of 2020 and the first quarter of 2021. The Company expects the branch consolidations will result in approximately $1.6 million of annual cost savings.