Ladies and gentlemen, please welcome to the Atlantic Union Bankshares Investor Day 2022. Please welcome Bill Cimino, Senior Vice President, Investor Relations.
Good morning, everyone. It's so good to see many of you in the room in person again, and welcome to those listening to us online today. Please note that today's slide presentations are available to download through the Investor Day website link, which can be easily found on our investor website at investors.atlanticunionbank.com. To download today's presentation, scroll down and click Download Presentation. For those of you in the room today, just scan the QR code that's provided on the printed agenda. During today's presentations, we'll comment on our financial performance using both GAAP metrics and non-GAAP financial measures. Important information about these non-GAAP financial measures, including reconciliations to comparable GAAP measures, is included in the appendix to our presentation. I would like to remind everyone that we will make forward-looking statements today which are not statements of historical fact and are subject to risks and uncertainties.
There can be no assurance that actual performance will not differ materially from any future expectations or results expressed or implied by these forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statement either. Please refer to our forward-looking statements in the presentation and our other SEC filings for further discussion of the company's risk factors and other important information, including factors that could cause actual results to differ from those expressed or implied in any forward-looking statement. All comments on today's call are subject to that safe harbor statement. Finally, before we begin, I'd like to go over a few housekeeping items. We'll break for lunch probably around 12:45 P.M., maybe a little bit earlier, and we built in a good chunk of time at the end of the day for questions.
If you could hold off on questions until the end, that would help keep us on schedule. For our virtual attendees, to submit a question during the Q&A session, just scroll down and click the Q&A button, type in your question and hit Send, and I'll make sure to include your name and company that you're asking as well. If at any time you have technical difficulties, the first thing you should do, of course, is to try to refresh your browser. I'm sure we're familiar with the virtual world by now. If your internet service seems slow or choppy, be sure you have closed all open and unneeded apps on your device. If those steps don't fix the problem, scroll down and hit the technical help button for any additional hints.
Some of you may recall in my introduction at the last Investor Day in 2018, that I called John Asbury a change agent. I think you'll see from today's presentations we've come a long way on our journey since then on our way to become the premier Mid-Atlantic regional bank. Since he joined the company in 2016, we haven't sat idly back, but have pushed forward. We've assembled a strong team, as I think you'll see today. Even though we've accomplished a lot over the last three years, there's still a lot of opportunities for us to grow and evolve as a company. Now I'll turn it over to John Asbury.
Thank you, Bill. Good morning, everyone. Thank you so much for being here, whether here means in person at Nasdaq headquarters or whether here means that you're watching us on live stream. We're very excited to have the opportunity to tell our story. We were last here for an Investor Day in the fall of 2018. We generally would like to do this every other year. We had intended to do it in 2020, but as it turns out, we weren't able to do it due to the pandemic. We're glad to be back here. I do want to point out we do have the full executive leadership team here with us today in New York.
Obviously, you're not gonna be hearing from everyone in the interest of time, but what we will do is have everyone available for questions as we get to the end. Speaking of executive leadership team, I'm actually excited to be able to introduce you to our newest addition, and that is our incoming Chief Human Resources Officer, Clare Miller. Clare, may I ask you to stand, please? Clare is joining us from Huntington Bank, where she is Chief Talent Officer, and we are thrilled to have her join our team. Okay, let's get going. If we were to have a theme to today's message, this is going to be it. It's gonna be our actions match our words.
If you look at us, the way I think about it is this, you know, we are evolving, maturing, and responding to our changing environment, and we are delivering on what we said we would do. I think of this as an agile form of consistency. Yes, our strategy is consistent, but it is evolving. We are responding to our changing environment. We are not static. Now, we are very intentional when it comes to our investor relations strategy. We pride ourselves on being communicative. We pride ourselves on being transparent. I really don't think you're gonna walk out of here with any great revelations. If we've done our job well, and I hope we have, we've been very communicative about what we've been up to.
However, you are gonna hear a different level of detail today, much more so than we're able to communicate in, quarterly earnings releases or one-on-one meetings. I'm excited mostly for you to hear from some of our key executives as they take you into the details of their business. I hope you come away from here understanding why we are excited about the future of this company. All right, moving on. Transformation story. If you were to rewind back to 2018, you would see a slide that's actually quite similar to this. The Atlantic Union Bank has been, is, and will continue to be a story of transformation. It's really the general thesis that you've seen before that we've had for years. I've now been in role 5.5 years.
From my standpoint, what we saw was the opportunity to bring back a great Virginia-based regional bank, something that had not existed in over 20 years. The Atlantic Union moat, which is the strength of this franchise, it has never been stronger. There's tremendous scarcity value to this franchise. This is a point that I'm going to make over and over, and I will call out proof points. I want you to think about that as you hear the points being made by the different leaders. A crown jewel of a deposit base, a dense, compact, $20 billion asset bank, which is really unusual to see a bank with this level of density, particularly in a mid-sized state like Virginia. Larger bank executive leadership team understands complexity, understands the seams of the large organizations that we're built to take from.
Yes, we do compete against really all banks of all sizes, but we are well-positioned to compete against the largest players that dominate market share, and we're also a talent magnet. Now, the ability to drive change and to adapt and to evolve is absolutely central to who we are as a company and who we are as a team. I think you'll see evidence of that today. We are irrefutably Virginia's bank, but we've grown to be more than that, too. I wanna call out at the bottom our philosophy for how we run this company, soundness, profitability, growth in that order of priority. This is a marker of an old Wachovian, which I am.
If you've seen this before, this came out of John Medlin, who was the iconic CEO of the old Wachovia Bank and Trust in Winston-Salem, North Carolina, in the 1980s and 1990s. I am a product of that environment. I was trained as a commercial credit officer under his tutelage, and this was drilled into us. The more I've seen over the course of my 35-year career, the more I come back to this, sound bank, profitable bank, growing bank. Here's a look at our franchise today. Let's begin. $20 billion dense franchise, the only statewide independent bank in Virginia. It is difficult to imagine how this would be replicated again. Over the course of the 1990s, when I was a Virginia banker, I am a native of Virginia.
I was gone for 20 years, but I witnessed over the course of the 1990s because I was there, the six Virginia regional banks that looked a lot like this were all knocked off due to interstate consolidation. Virginia ran for 20 years without anything like this. What you're looking at here is central to the thesis that I had in mind when I accepted the role with the aspiration and the hope of bringing back to my home state something that was lost so long ago, statewide independent Virginia bank. Very uncommon to see a $20 billion asset bank that's this concentrated, particularly in a mid-sized state, particularly in such a good state to do business as Virginia.
Now, we have a lot of runway ahead of us in Virginia in order to continue to grow the footprint, but we've also used specialized industry strategies and market extensions that carry us beyond Virginia. We also have loan production offices in Maryland and Charlotte, North Carolina. We'll get into those details today. Those are supplementing our growth strategies. A long way to go through this powerful franchise. We'll talk to you about Atlantic Union Equipment Finance, which will demonstrate that we have built a business from scratch that is very successful, and we can do that again. All right, the value proposition from the investor perspective, pretty self-evident. From our standpoint, leading regional presence, financial strength, strong growth potential, peer-leading performance.
Because of the scarcity value of this franchise, because of the fact that this franchise cannot be replicated and it is so powerful, we cannot run this company as an undifferentiated average financial performer. The price of independence for this company and for this team is differentiated financial performance. That is the goal. We have a very attractive financial profile. Our core values, I'll spend a moment on this. Caring, courageous, committed. There's nothing aspirational about this. The leadership team over the course of 2021 stepped back, reflecting on all that we've been through, the great disruption of the pandemic, the madness of the PPP, everything that we had experienced. We began to ask ourselves, "What have we become?
What have we learned from this?" Most importantly, "How do we protect this?" Because it was very clear to us, even more so now, reflecting on the worst of the pandemic, that this company has grown stronger, more agile, more responsive, more courageous as a result of the pandemic. We wanted to be able to articulate this. As we looked at our core values, the six traditional core values that we've had for decades. While they certainly worked, they didn't feel distinctively us. We went through a process among the leaders that was simply one of observation, not things we hope to one day be, but things that we had actually observed. As we went through the process, it really all fell into these three big categories, caring, courageous, committed.
That really defines the core values of the company, that defines the culture of the company. I think, again, you will see proof points, you will see evidence as you listen to the leaders today talking about their stories of change and how much change that we've driven across the organization, working together as one team. The culture, of course, defines how we work together and interact as a team to accomplish our goals. Diversity, equity, and inclusion statement. I do wanna call this out. Something we feel very strongly about in the company. Atlantic Union Bank embraces diversity of thought and identity to better serve our stakeholders and achieve our purpose. We commit to cultivating a welcoming workplace where teammates and customer perspectives are valued and respected, and we have to live those words every single day, and we model that from the top.
We feel strongly about that, and we are excited about the opportunity to really use this for the better of the company, for the better of our customers, for the better of our communities, for the better of our teammates. A balanced approach to all stakeholders. This is how we think about our stakeholders. This is a slide that you'd have seen in 2018. It has been very clear to us for some period of time that we have a responsibility to not just the shareholders, which we most certainly do, but our teammates, our customers, our communities, our regulators, yes, our shareholders. This is a delicate balancing act, and trade-offs have to be made. We can't optimize one at the expense of the other or bad things happen. It is a delicate balancing act.
Now, what's interesting to me is we were here in the fall of 2018 with this exact slide. Nothing has changed. On August 19th, 2019, the Business Roundtable, which consists of the CEOs of the largest corporations in America, issued a press release. You can fact-check me on this. Made a statement very similar to this, that American corporations have responsibilities beyond just their shareholders. I simply want to say we're glad that the Business Roundtable agrees with us. We said it first. We believed it then, we believe it now. Okay. Why is it good to be the Virginia Bank? This is why. Here's depository market share. This is why we wanted to secure the positioning of the Virginia Bank, the clear alternative to the Big Three, who dominate depository market share.
If you look at depository market share, the way we calculate it, which is capping individual branches at $5 billion, Truist, obviously, the merger of BB&T and SunTrust, 24% depository market share, followed by Wells Fargo, 16%, followed by Bank of America, just under 11%, Atlantic Union Bank, 7%, and then it really trails off after us. We are built to compete against these Big Threes. That has been essential to our strategy. Yes, we compete against all banks of all sizes, the smaller banks, particularly in more rural markets, but it's very important that we be able to face off against the Big Three in the markets that matter. If you look at the right-hand side of the slide, these are the Virginia-headquartered banks, and you can see that Atlantic Union is the dominant Virginia-based bank.
That's what scarcity value looks like, a point I'll continue to come back to. Virginia is among the most attractive markets in the United States, and another reason why it's good to be the Virginia Bank. My favorite points show here on the left-hand side of this slide, which is, CNBC ranked Virginia the best state to do business two years in a row, the only state who's ever secured that recognition two years in a row. Then the third point under Forbes, first in quality of life. If you saw the press last week, Boeing Aircraft Corporation announced it's relocating its headquarters to Virginia from Chicago, Arlington, specifically. Another proof point that this is a great place to do business. Strong presence in the prime Virginia markets. Virginia really has six major metropolitan markets from our perspective, and we are located in all six of them.
We're everywhere we really want to be and more. I think the most important point that's being made on this slide is look at our market share, which we are showing here in the context of banks with $100 billion in assets or less. Atlantic Union Bank is number one in four of the six, and we're number two in two of the six. That's what scarcity value looks like. It's a very strong position to be in. All right, another proof point as to why Virginia is a great place to do business. I love this slide because it often surprises people who see it for the first time. These are the top 10 counties in America based on median household income. Virginia is in four of the top 10. Number one and two, Loudoun County, Virginia, Falls Church, Virginia.
Loudoun County includes Middleburg, which some of our investors will recognize from the acquisition of Access National Bank, which also operated as Middleburg Bank. It is the most affluent county in America based on median household income. Notice on the second to the right-hand side column on the top, Howard County, Maryland, just west of Baltimore. That's Columbia, Maryland, where we maintain an LPO. Atlantic Union is actually operating in five of the 10 most affluent markets in America, counties, by this measure. Our markets are likely more affluent than you perhaps realize. Virginia is the only state in the nation that has four of the top 10. The only state that makes more than one of the top 10 is California, which has three.
At the bottom, we show the counties in Virginia, the highest growth rates by county, and we're in nine of the ten. New Kent is just east of Richmond. It's a great place, but it's a fairly rural market that's growing. We're everywhere we wanna be there. Okay, strategic journey. I won't spend any real time on this because I want you to hear more from the leaders in terms of their individual businesses, but this outlines our journey since 2018. A lot has happened since then. I will say this, despite the human tragedy of the pandemic, this company is more capable, it's more agile, it is more courageous as a result of it. PPP was an unexpected brand builder. In the end, we did 17,000 PPP loans for $2.3 billion.
It was a massive brand builder, powerful brand builder for this company. We delivered for our customers, and we delivered for our communities. We have three strategic priorities. Deliver organic growth, by far the most important. Organic performance of this company. This message is not new. You've been hearing this from me for a while. Second, to innovate and to transform. The role of technology is very important here. You'll hear next up, Maria Tedesco, President and Chief Operating Officer, take you into that, followed by Kelly Dakin. I want you to listen to the other business leaders as they talk about the role of technology, how it has impacted their businesses. Last, inorganic opportunity.
Strategic investment, which could take the form of capital investment in companies that could be strategically important to us, possibly M&A, which would most likely take the form of smaller infill types of franchises. This is the third most important priority. M&A is not as important to us as it used to be. It's still an option we may utilize selectively, but it's not as important as the organic performance of the bank and our transformation strategy. These are our strategic imperatives. What do I mean by that? What I mean by that are these are the things we need to do in order to achieve the priorities that I just outlined for you. Achieve and sustain top-tier financial performance, operational excellence, a great place to work and build a career.
The war for talent is actually one of the most significant challenges facing American business today, and there's a lot we have to say about that. Clare Miller will help us with that. Enhance and augment core franchise strength, deliver a differentiated customer experience, and accelerate our growth with strategic investments. We'll be coming back to these over the course of the presentation. We think we're well-positioned in the marketplace. I won't spend much time here, but we understand the role of the fintechs and the neobanks and the challenges they present. We understand the largesse of the national financial institutions and the billions of dollars that they're able to spend, and we understand the historic role of the community banks because we were once one of those. We actually think that we're pretty well-positioned at the confluence of human interaction and technology. We'll talk more about that today.
Looking ahead, we're well-positioned. As we step back and we think about where we are, the right business leaders and teams are in place now. We have a reputation that resonates across our markets. A next-generation technology roadmap, which we'll get into, and a culture of excellence, caring, committed, courageous. Those are the values that define this company. Nothing aspirational. What's here now. We're optimistic about our future, and here's why. We're well-positioned for the current environment, optimistic about the future. The message is this: The bank is on a growth footing. We're happy to report that we've now had two quarters, rather, of low double-digit loan growth. Pipelines look good. We're optimistic that we're on a growth footing. The bank is asset sensitive. For those who study us, know about half the loan book is variable rate. We will benefit from a rising rate environment.
It's already begun. We've already taken difficult expense management actions. Part of the culture of this leadership team is we will make difficult decisions when they need to be made. We've consolidated a quarter of our branch network since the pandemic began. We did it because we needed to do it, and quite candidly, I think we did a pretty darn good job at it, as well. We've taken very difficult expense management actions, not just the branch consolidation, but that's a headliner. Credit is pristine. That's been a hallmark. This company has been around since 1902. I can't prove it, but I'm told that since 1902 we've never had a quarterly loss. I can't prove it, but no one can disprove it either. The records simply don't go back that long.
The point is, it's always been a very responsibly run bank. It's always been a good credit bank. This is a good formula for differentiated financial performance, for top-tier financial performance. I think we're well-positioned in the current environment. All right. With that, I would like to move on to our President and Chief Operating Officer, Maria Tedesco. Maria, you were here for Investor Day in the fall of 2018, and you had been here how long?
A whole six weeks.
Six weeks. You had been here for six weeks.
He made me present something.
Maria's been a fantastic addition to the team. In the beginning of this year, in January, we announced the expansion of her role from President to President and Chief Operating Officer, which includes technology and operations now. What's really happening is we were pushing the center of gravity of the company closer to the customer. Maria is overseeing the entire end-to-end client experience for our customers. President and Chief Operating Officer, Maria Tedesco.
Thank you.
Thank you.
Hi, everyone. Good morning. It's really great to be here. Well, I don't think I need to repeat my title because John did a nice job kind of explaining that. I do lead the bank's operating group, which includes all of our four lines of business. That's wholesale banking. It's consumer and business banking. It also includes home loans and wealth management. I also have the oversight of enterprise operations, technology, digital strategy, marketing, business line intelligence, and the first line of defense. We also have a very close partnership, obviously, with each of the other support areas such as HR, legal, finance, and risk.
At the end of the day, Atlantic Union Bank is made up of people, and those people are driven by a culture of excellence to help our customers bank where they want to bank, when and how they want to bank on their terms, not on what we think they should be doing. We are strategic business partners to clients. We have a wide variety of products and services that we can offer them, whether they want to bank digitally, by phone, in person, or actually, they can also bank by Zoom or over Zoom. So we offer it all. Anyways, John mentioned, you know, the last time we had Investor Day. A lot has changed since then. I'm really excited for you to hear all the change that we've been working on.
in late 2018, I had been with the bank, which at that point was Union Bank & Trust, so even our name has changed. it had been a whole six weeks, and John said, "Here, go present the consumer strategy." So I did. Anyways, at just over $13 billion in assets, we were considered financially strong, yet a traditional community bank offering basic products and services, or the way I would characterize it, a one size fits all service model. So that's actually how it started. Now I wanna tell you how it's going. Through acquisitions and organic growth, as you know, we're now a $20 billion bank operating primarily in the states of Virginia, Maryland, and North Carolina. With a far more mature banking model. I hope you'll see the dramatic change that today with the presentations.
We operate as a financially sound, competitive regional bank that offers the same wide array of services as larger banks for the segments that we choose to operate, and we compete with them every day head to head. The past few years have felt a little like I was driving, or we were all driving the leadership change, we were driving a car really fast, but we needed to change the tires. All while we were seeing these really big, dark clouds up ahead, and we had to just drive straight through it. Even with all the adversity thrown at us, including a pandemic, you know, low rate environment, a little bit of a recession, we didn't just keep the car on the road, we made meaningful advancements in our business. How did we do it?
Well, we did what we said we were gonna do. By executing our strategic plan, providing sophisticated banking solutions and services, coupled with the style of doing business that differentiates us completely from the competitors. We did this with a strong, agile team of executives who, quite frankly, work really well together as a team. A couple of things that we did. We diversified our revenue stream through expanded products and service offerings, and you're gonna hear much more of those initiatives when each and every business gets up and talks today. We invested in technology and our digital capabilities across all businesses to rival even the biggest banks. We're gonna hear how we've positively impacted our customer, 'cause at the end of the day, that's what's really important.
The key to our organic growth, which is number three, is our ability to pivot and capitalize on opportunities in the marketplace. For example, we leveraged the new-to-bank PPP customers who, quite frankly, they all came to us because their banks just let them down, just left them out there with nowhere to turn. But we were there for them. Not only did we deliver a modern digital application process, we had a deliberate plan to capture the operating accounts of these new customers that came over. We also targeted displaced customers from bank consolidations and other disruptions through local direct mail, feet on the street calling efforts and merchandising. The fourth one is we built out critical support functions that are key enablers. Those include the first line of defense, getting more mature data management, analytics, enterprise experience.
Finally, we leaned really hard into our caring for teammates and really leveraged our culture for continuous talent development. AUB now has the largest regional bank deposit share in Virginia, an impressive balance sheet and capital levels with strong growth potential. We also have a highly experienced management team targeting top-tier performance and proven ability to execute on change. We have lots of examples of that. We are also a culture of excellence and a focus on our customers. That's what sets us completely apart from the competition. I want to provide you with a snapshot of many of the key components of our three-year transformation journey. There was a lot that happened in three years, all crammed into one slide, but I did my best.
We dramatically matured from a community bank with individual business units to an even stronger regional bank with an enterprise approach of offering segmented value propositions, stronger capabilities and customer experiences with an efficient and integrated technology stack to support our future state. We're very, very proud of the progress that we've made, but the journey is ongoing. It just can't stop. John mentioned this too, we're gonna continue to evolve, particularly when we watch the landscape and we make sure we're taking the right opportunities as they come to us. Each of these items shown here continue to be optimized, but we are now purposely built around those key customer segments with an enterprise approach. Why? Because we want to bring greater scale and efficiencies to the business. Now, here's the great news.
Our customers are voting for us. They see the changes, they see what we've done, and they're recognizing us for our progress. J.D. Power awarded us number one in customer satisfaction in retail banking in 2021 for the Mid-Atlantic region. We were 22 points ahead of the next competitor and 40 points above the average. This is the second time in three years we have received this honor. It shows we are making a difference to our customers' experiences. We also have the highest satisfaction scores for both mobile and online within the Mid-Atlantic. That's saying quite a bit, and it's showing that our work to deliver an improved customer experience is clearly paying off for us. As I like to say, our customers are voting for us. That's, at the end of the day, what matters.
Our customers are sharing their satisfaction, as demonstrated by numerous other awards. I promise you I won't walk you through them all, but I will draw your attention to the most recent award we were given, and that is the World's Best Bank in 2022 by Forbes. Okay. That's all the consumer side. I'd like to also say that we're knocking it out of the park on the park. I said park right. Sorry, with my Boston accent. I've been practicing. It wasn't pack. Anyways, knocked it out of the park in our business banking segment. As you may know, Greenwich is the business banking equivalent of J.D. Power. Now, in two years in a row, we have been named to their Greenwich Excellence Award for U.S. Middle Market Banking.
Perhaps more telling than any awards in this segment is the results of our Paycheck Protection Program. Atlantic Union Bank was number one in 22 Virginia counties in the first round of PPP loan. Now think about this, effectively, we tie Truist in the number of PPP loans, yet we only represent 30% of the size of their market share. That, to me, I think is outstanding, and it just shows the strength of the franchise. We're embarking on the next generation of transformation agenda. As I've told you, the work cannot stop. We've just gotta keep going. We intend to leverage what we have built for an even stronger bank for the future. As I alluded to earlier, there are six components of our plan. Revenue diversification.
An example of this is the continued work in wholesale banking in line with that line of business with expanded product offerings and geographies. On the consumer side, we're redefining our branches as business banking centers, a few of our branches, and establishing them as outposts for wealth and private banking. The second thing was customer experience. We have taken a more data-driven approach to systematically identifying and eliminating points of customer dissatisfaction. We've built a modern real-time feedback database so we can turn on a dime when we need to if our customers are telling us something. Talent management. Focusing on talent development and pushing the bank towards continuous improvement. I'm so excited to have Clare Miller here because this is one of her key strengths, and she'll be an outstanding benefit to all of us. Our brand. That's what we're known for.
We're gonna work to evolve our brand, moving, you know, upmarket to include not just the bank for consumers, but for business banking and positioning us as the optimal alternative to both community and big banks. I think we've earned that right given the hard work that we did with PPP. We are a great place to bank, but we're also thinking about how can we improve our teammate experience. In partnership with Clare, our leadership team will look for new ways to make banking at AUB even better. The foundation of an ongoing work on transformation in both digital and technology will help us remain competitive in the environment that you see every day around you, even as a consumer, how much it's changing. I have a few slides.
I just wanted to take a little deep dive in those topics because I think it's an important one for our future. As you all know, technology is changing rapidly, and it's imperative that we fully understand the challenges it presents us. The cool thing is, it also presents lots of good opportunities. On the challenges side, you all see this. Fintechs are enabling more seamless digital experiences, but their modular sort of plug-and-play environment doesn't easily integrate with our traditional core banking systems. We have to step up our service experiences to meet customers' expectations. We know this. They've undergone an enormous transformation, particularly when you see these digital-first retailers, you know, such as Amazon and others that have raised the bar on service convenience. That's what customers come to expect.
The opportunities and the positive side of this is the opportunities are significant. The option set of fintech solutions is extensive, in fact, almost overwhelming. That's where our partnerships come in play. They're helping us match the best solutions for our needs. These solutions bring flexibility, customization. They're typically cloud-ready and cost-efficient. That's the great news. Blockchain, artificial intelligence, robotics. They're all changing the speed of efficiency in which we can use technology to serve our customers. When we use modern technology, we're creating a more engaging workforce and enhancing the careers of our teammates. What does it mean for us, this modernizing of our tech stack? It means that we truly have to transform our business in three ways. One, we wanna modernize our core banking system.
That means reducing our dependency on a single core that just really limits our response to product and service enhancement. We wanna create a plug-and-play ecosystem by building a comprehensive integration layer that enables a more seamless environment for fintech solutions to integrate. With recommendations from outside partners, explore and implement new and innovative capabilities to create even better customer experiences. Lastly, we will expand our existing agile approach. Our digital team produces everything with an agile lens. We wanna bring that enterprise-wide to support a faster-to-market approach to products and service solutions. Let me dig into those two key topics. Traditional core infrastructures today are becoming outdated and constantly being challenged by new fintech solutions.
We have seen a proliferation of the next generation of core systems that are cloud native, real-time customer centric, and deliver a speed to the market with new products and services. We'll continue to rely on our traditional core, but reduce reliance as we explore a highly extensible open banking architecture or one that can easily change for easier integration to other platforms and solutions. This next slide I really like, because it just shows you. I don't know if you can see it very well, but this is just a selection. It's not even that many. It's a few fintech solutions out of, I don't know, 800,000 that there are. So you can understand how daunting it can be to weed through the options that are available to address the customer experience that we're looking for.
Often it's necessary, quite frankly, to choose a few fintechs and stick them all together so you can get the end-to-end experience that you want. It can be daunting. This is just a few of the many. The good news for us is we have help. We have invested in several fintech funds. These are our flagship funds. We have Canapi, JAM FINTOP, Mendon Venture Partners, and BankTech Ventures. These venture fund investments are helping us curate and develop digital capabilities and be able to scale some existing products while preparing the bank for industry disrupting changes such as blockchain and cryptocurrency. Kelly's gonna be speaking to this in a little bit more detail in just a second. I'm gonna wrap up here, but I just wanna have a few closing remarks.
I am incredibly proud to be standing here in front of you, to tell you what we've accomplished, and for you to hear from the business leaders what we've accomplished over the three years. It actually shouldn't be a surprise because we're gonna tell you that we did what we said we were gonna do, and we'll do that going forward as well. We're passionate about creating differentiating experiences for our customers and for our teammates. Just as importantly, we're committed to supporting each of our business partners in enabling growth. I'm confident we are well-positioned to do exactly that, just that. We've built a great foundation here over the past few years. We're not gonna stop. We're gonna keep going. I am proud of what we've accomplished. But you can bet we are not resting on our laurels at all.
Organic growth will, as John mentioned, remain our top priority. Customer or client satisfaction will guide our decisions and our actions because we know without them, you know, we don't exist, especially when you wanna grow your bank. We're very optimistic about the future, and we have many of the right ingredients that we need to sort of propel our business forward and prepare ourselves for AUB 2.0. We've got the right team in place to move forward in each of the business lines. You'll see we have aggressive agendas. We're not shy. They are working together to accomplish more than what they could otherwise do on their own. I'm excited, as you can see, I don't know how many times I've mentioned it, for having them come and share what they've accomplished in their business plans.
Now I'd like to introduce you to one of our big change agents, and that's our Chief Digital and Enterprise Experience Officer, Kelly.
Thank you, Maria.
Kelly, welcome. The clicker's right there.
Thanks very much. Good afternoon. Hi, everyone. As Maria said, my name is Kelly Dakin. I'm the Chief Digital and Enterprise Experience Officer at Atlantic Union Bank. I just celebrated my third anniversary with the bank, and while I wasn't here for the last Investor Day, I'm thrilled to share with you all the progress the team has made. Since the last Investor Day, I'm sure you all can appreciate the stunning acceleration of the customer's demand for convenient, relevant, socially distanced, multi-channel capabilities driven by real-time digital experiences. Customers insist on this frictionless, flawless, on-demand experience from their banks that they're used to having from every other facet of their lives. Two years ago, who would have imagined that standing in line at the DMV would have been a thing of the past, with appointment scheduling being the norm?
The weekly chore of going to the grocery store and going through your weekly shopping list would have been replaced by Instacart and other apps? While I can no longer hide my obsession with Little Debbie Oatmeal Crème Cookies, this has become a new norm for me. It's really convenient, and I love this service. As other industries evolve and add convenient features and frictionless experience for customers, so must banking. While the digital and enterprise experience team is accountable for curating new capabilities, designing experiences, accelerating speed to market, while also mitigating risks, it is not without its challenges. Increasing the complexity of digital ecosystems, the continued acceleration of Fintech solutions to the market, the war on talent, and evolving customer demands, banks must think differently about how they approach customer engagement.
Our goal is not to replace our customer's choice of how they want to bank. It's about removing the friction, anticipating what they need to make it more convenient to do the easy stuff, while we protect that very precious time with our teammates to have the really thoughtful discussions as far as being counselors and advisors to our customers. If Starbucks can send me an alert while I'm driving by the store asking me if I wanted my favorite latte order of a venti, one skim, no sugar, little side of cream with a pinch of cinnamon, banks should be able to provide insights to, and recommendations to our customers based on their behavior and their preferences, and help them make banking easier. The pandemic has changed many of our most ordinary experiences.
For example, a night out with your family at a restaurant with your friends and family. We all know that restaurants needed to adapt and digitize their menus with the little QR code that the menus, restaurants provide. While this hurt my no cell phones at dinner policy a little bit, it was an adaptation to digital in response to environmental concerns that was necessary. However, this adaptation is changing rapidly and not always in the benefit of the customer. Last week when I went back to one of my favorite restaurants, a sit-down full service restaurant, not only was that restaurant's policy that I used their QR code for the digitized menu, but during that experience, I had to load my credit card. I had to place the drink order and dinner order, the meal order for my whole entire party.
I had to agree to a 20% service fee, mandatory fee to the bill, and this was all due to the limited server and kitchen staff availability. In that case, I would argue the customer experience was degraded. The work was moved to the customer. There was no discussion about daily specials, what the wait staff recommended as their favorite meal or ability for me to clarify an allergy concern. At the end of the day, I had no choice in this service experience. This example reinforces the need to examine how digital is leveraged in any customer journey to meet the needs of today and anticipate what may come tomorrow with the customer being at the center of that.
This requires financial institutions to thoughtfully consider the agility of their teams and the flexibility of their platforms and drive to a transformative experience. In order to achieve this nimbleness and agility, we have been deliberate about partnering with technology partners that offer low or no-code platforms. The simplicity in both the implementation and maintenance of these platforms enables us to continually optimize our digital products in alignment with evolving end customer needs. These strategic partnerships, coupled with our alignment, our digital strategists with business line expertise embedded in the line of business, position us to provide a unified cross-functional approach to digital optimization and empowers us to take advantage of changes in the industry. Had we not been deliberate in this approach and this mindset, we would not have been able to rise to the challenges posed by COVID-19.
Our mindset of being decisive, courageous, and adaptable enabled programs like PPP to reach the market with speed and agility. It was the perfect example at a critical time of not letting perfection be the enemy of good. Operating in this agile mindset requires a paradigm shift in our culture from a reactive to a more proactive mindset. We are committed to transforming the way we execute on change by leveraging an iterative agile development model. We are operationalizing a customer-centric approach to the way we assess our processes, products, and technologies by leading with an end-to-end customer experience at the forefront of all of our decision-making. Our goal is simple. It sounds simple. It's a little complicated, but the goal is simple.
Build customer experiences that consider the full end-to-end journey of the customer's interaction with the bank, agnostic of channel, and source digital solutions that solve for the customer's needs of today and anticipating the needs of tomorrow, allowing customers to bank where, when, and how they want. Moving on to our evolution. I'm just gonna go into a few of the improvements we've made over the last three years, but we've made some great progress. We're driving digital evolution, both filling those critical gaps and introducing new functionality for all of our lines of businesses.
From the digitization of the home lending closing process with Blend and Encompass, which has resulted in increased customer satisfaction to closing the gaps in our consumer digital customers with things like card controls, branch appointment scheduling, and providing financial wellness tools like credit score analysis. Many of these tools were in support of the real struggles of our customers trying to adapt to living and working in a time of change and new norms. Customers anxious with in-person transactions shifted to mobile deposit capture to deposit their checks, or utilized appointment scheduler to ensure socially distant branch appointments. Areas where we've made significant change include how we've leveled up our digital capabilities within our wealth line of business by introducing the Black Diamond digital platform.
This new platform not only provides an overall improved client experience, but it provides many new capabilities such as automated trading and rebalancing tasks, account aggregation, simplification of document sharing, custom client reports, and streamlining many internal inefficiencies. The adoption of the Black Diamond platform will allow us to scale more easily, and the open architecture allows for many integration opportunities. This partnership represents a prime example of how leveraging our technology partners to provide digital solutions provided us with a nimble, scalable digital platform poised to absorb change. Another impactful transformation our organization is excited about is the investment we've made in the industry-leading wholesale lending platform, nCino. Not only have we operationalized and optimized this platform by modernizing the delivery of new products and services, but we've truly brought to life our strategy of nimble change and scalability.
The output being that our nCino platform today supports portfolios and processes within the commercial line of business banking, treasury services, loan operations, and equipment finance lines of businesses. How did we do this? We accomplished this by transforming a small support group into a fully dedicated Agile Scrum development team, committed to delivering reliable, predictable, iterative change across the digital product set. I'll go into detail later in my presentation. Moving on to our digital strategic priorities. While we've made great progress digitizing basic banking functionality, the commitment to our digital strategic priorities will be imperative for our journey. First, we are modernizing our technology stack in order to accelerate innovation and product development, and deliver faster. We can open our ability to innovate new capabilities through partnerships with fintechs and find new ways to serve the customer.
Not only can these fintechs close the gap with new features and capabilities our customers demand, but connecting our platforms to real-time data feeds will replace the needs for customer to enter information we should already know about that customer. We can reduce risk and customer frustration. I think we all can appreciate the frustration of entering your phone number and email address and all the information your bank should know about you more times than you can remember. After all, if Netflix can remember which episode of Tiger King I was watching in the middle of the pandemic, then shouldn't my big bank be able to pre-populate my basic information? Another important priority for our team is the unification of our re-origination platforms to create efficiencies, scale, and consistent user experiences across our lines of businesses.
Customers who apply for a credit card and a checking account, and then months later apply for a mortgage, want to feel like the experience is familiar, it's simple, and it's consistent regardless of the product or channel of choice. Customers should not have to enter the basic information for that second account. If we know them, we should make it easy for the customer to deepen their relationship with us. Every time I add a new profile to any one of the 10-20 of the streaming services I use, the experience is the same. I don't need to set up new credentials or add new credit card information. My credit card data is stored. It's in my profile is replicated. This consistency is not just important for customers. The teammates require the same consistency in the process to ensure efficiency and scale.
The next priority extends beyond digital to the entire enterprise. With the transformation of our customer experience strategy, we have built a purposeful data-driven approach to uncover insights, assess impact, and recommend prioritized action to teams throughout the company to drive impactful improvements. We are on our journey to move from a reactive to a proactive approach with the goal of embedding thoughtful end-to-end design during the build of our products and services. Importantly, we have renamed this group Enterprise Experience to be inclusive of the customer and the teammate with our products and services as there's no true exceptional customer experience if our teammates are struggling to provide it. Modernizing our technology stack and reducing the constraints on our traditional core banking system will be an imperative over the next three years, as Maria stated.
Extending this transformation over a three-year timeline will enable quick wins while providing us with infrastructure that is nimble and shock-resistant in the face of industry-disrupting change. I know you heard me say this earlier, but this is one of my favorite quotes: We can't allow perfection to be the enemy of good. By taking a methodical, iterative approach, we can implement foundational changes that help us gain momentum as we adapt our culture, our delivery, and methodologies. As I mentioned earlier, the way we deliver change to the organization has changed significantly, and this is around the Agile Scrum teams that I talked about briefly. We have modernized our delivery approach to full Agile for our digital platforms in order to accelerate speed to market. We have empowered our teammates to deliver differently.
We've assigned dedicated product owners who partner with enterprise experience to use data-driven insights to prioritize enhancements. Product changes are developed and deployed incrementally, allowing transparency, a timely realization of product benefits, and embedding a culture of iterative growth across the organization. The nCino team has completed over a thousand enhancements for our line of business partners with the nCino platform. These enhancements include automation of manual processes, automated checks and balances to high-risk processes, creating dashboards to provide visibility into workloads, and implementing simple, compliant, and efficient workflows for our teammates to leverage. The importance of removing manual work, Excel spreadsheets, or extra inefficient keystrokes cannot be overstated.
As Maria mentioned, the war on talent is real, and we can't retain top talent if we are unable to remove inefficient processes that make it difficult for our teammates to do their jobs. This new operating model enables us to ratchet change throughput up or down in responses to changes in customers' demand or industry conditions. Agile, by nature, not only drives a culture of continuous improvement, but it changes the dynamic for the teammate entirely. Every teammate on an agile team is both individually and jointly responsible for the successful high-quality development and delivery of change to the organizations they serve. As a result of that, the team becomes a self-governed, action-oriented, empowered, and driven ecosystem. The talent is aggregated, problems are solved inclusively, and successes are celebrated amongst the team. These teams and their collective teammates share a vision.
They're self-motivating to provide the best quality incremental change that will continue to propel our transformation. I'm very proud to say that this team's successful execution of an agile delivery model has become the gold standard that we plan to replicate across the organization. As Maria said earlier, we have another very important ally in our search for digital transformation, which is with our fintech alliances. These alliances have minimized the overhead of vetting, curating, and validating the number of fintechs introduced every day. Through our partnerships, we're being introduced to innovative capabilities that are helping the acceleration of our digital transformation by supporting the scalability of existing platforms and those products and new capabilities those platforms offer.
As you can see, we've already partnered with quite a few fintechs to help close the gaps in our current platforms, and many of these capabilities have significantly improved both the teammate and the customer experience through integration hubs, automation, simplification of processes, which all help to extend the life of these platforms. You can expect us to continue to add to our partnerships. For example, last week we became members of the USDF Consortium, and we're excited to begin to pursue the responsible innovation and transformative technology opportunities which will facilitate the compliant transfer of value on the blockchain. Just in closing, I'm tremendously proud of what has been accomplished over the last three years, and I'm excited for what the next generation of digital transformation has in store.
Our teammates are committed and feel as passionate as I do about creating this differentiating experience for both customers and teammates. Our strategy of modernizing the way we deliver, partnering with key enablers such as our fintech and alliances and digital platform providers. Our commitment to enhancing and optimizing our technology for both our customers and teammates will position us well for this journey. Thank you very much. Next up is Dean Hackemer, our Home Loans Group Executive.
Thank you, Kelly. I am Dean Hackemer, the Group Executive for Home Loans. John said earlier he wished we had done this last year, and I echo those sentiments. I wish we were doing this last year. It's certainly better to talk about mortgage lending when rates are at two and three quarters rather than five and three quarters. You know, we'll still talk about it. Maybe a little overview of our mortgage operation. Make no mistake, our priority in home loans is to generate fee income. We do that by originating and selling loans, Fannie Mae, FHA, VA, USDA loans into the secondary market. Historically, that's been about 70% of our business. The other 30% of our business, we leverage the balance sheet of the bank. We make portfolio loans.
They fill in the gaps where secondary loans may be missing, purchase money. Currently, second homes, there's been some add-ons in the second home market, so it's a little more cost-effective to do portfolio loans, so we're seeing a pickup in that business. Construction lending. People can't find. There's not enough homes to buy, so people are building them. We're seeing an increase in the number of construction loans that we're doing. It's a good part of our business. The tale of the tape, and I apologize to Maria Tedesco, I will litter this presentation with sports analogies. I know that she doesn't like those. The tale of the tape last year, a little over $900 million in loan originations. More than 50% of that was purchased business.
We were able to make a little bit of fee income for the bank. We kept the portfolio right around that $800 million mark, and our teammates in total, about 100. Interesting, 65% of that 100 is forward-facing sales folks, sales managers, loan originators, loan assistants. While those numbers look fantastic, I would be remiss if I didn't say that, yes, in 2022, those may be somewhat muted, right? But we will continue to fight to gain our market share on those numbers, even as they, you know, they'll be somewhat smaller. Maybe a little story on the progression. In 2019, we came aboard to Atlantic Union Bank through the merger of Access National Bank. Many of you know me or remember me from Access National.
When we came aboard, it was the easiest integration because there was nothing to integrate. There was no mortgage operation at Atlantic Union Bank. It literally was a lift and insert or another sports analogy, we simply just changed our jersey and kept playing the same game. Easy to do. In fact, you know, coming on board was great for that. At Access, we sold and originated 100% of our business. Coming over to Atlantic Union, larger bank, bigger balance sheet, we were able to expand what we were able to do. Portfolio and construction lending, both, which was a real pickup for our sales folks. They really thought that was a big positive. We did that, and then the construction lending, the beginning of 2020, we realized what a manual process that was, right?
The relationship between us, the borrower, the builder, the inspector, all manual. The reporting done on Excel spreadsheets. We looked right away, and with the help of our folks in Kelly's group, we brought in Built, and we were able to automate most of that process. It worked well for us. In fact, it worked so well that we said, "Hey, we need to do this on our regular book of business," the for sale business. We started to talk with Blend, a company to do that. Then what happens? Well, middle of 2020, we have record low interest rates, and we're, you know, not drowning in refinance business, but boy, we sure had a lot of it. We kept handling the record volumes that we had. We kept working on our Blend implementation through 2021.
By the time we got to the end of 2021, we had automated about 80% of the process, right? Our goal is to get to 100%. Looking forward, where do we go from the end of 2021 to 2022? We wanna finalize, and I'm gonna talk about that in a minute, the digitalization of the entire mortgage process, right? We wanna grow our sales teams, not only in numbers, but in quality. We brought in a sales trainer to work with them. We wanna be ready for opportunities. Where are those opportunities gonna come? They're gonna come from smaller independent mortgage shops. They're gonna come from smaller community banks who, you know, in the last couple years, mortgage banking, you know, it made money. They all generated fee income.
As we go through the next couple years, we may be in the down cycle where it's a little tougher to make money, and they may not have the stomach for what it takes. We wanna be able to take care of those opportunity, take advantage of those opportunities to pick up some additional sales folks. Why aren't we gonna be one of those folks? Why aren't we gonna be an opportunity for somebody else? We're not gonna be an opportunity for somebody else because we've done this before. We have a long history of making money in low interest rate, high volume, you know, markets. That's easy. We've also had a long history of making money when it's high rates and low volume. That's the tricky part. What's our secret sauce?
Again, those of you that have heard me talk about Access, you know, we've been together a long time. Our core management group together almost 15 years. This July, I will celebrate my 30th year with this mortgage group. Those 100 employees we talked about, I hired every one of them. They all understand and they get what it takes to run a mortgage operation that's a very cyclical business, changing rate environments, change in regulatory environments. You know, how do we make that work? We make it work because we ask a lot of our employees. When our times are good, they share in the wealth, right? We pay them, you know, over time and production bonuses. They do what it takes to get the job done. This strategy, you know, I call it the accordion of mortgage.
A lot of companies will simply blow up. They'll add a lot of folks. They'll add operating centers. When times get a little tougher, they shrink it down. This up and down, up and down, I believe creates a real toxic environment. Your employees, if you're not committed to them, they're not committed to you. The fact that we don't, you know, blow it up, and then as soon as times get tough, look around and start laying off head count, they're more committed to us. That commitment comes back to us in spades by higher satisfaction. We didn't lose people in the last two years when you couldn't find an underwriter or a closer or processor. They were being recruited every day. It wasn't because we were paying them more money. They were offered tons of signing bonuses.
They understand and realize that, hey, just like we're in 2022 and they're reading the headlines, the mortgage business is not—everybody knows everybody in the mortgage business. Their friends and colleagues at other institutions are looking at layoffs, and they're not. So big thing with teammate satisfaction. You know, that retention, not only just in the operations people, but our sales folks. If you look at the top 20% of our sales folks, they've been with us almost 10 years. It's the same thing, right? They appreciate the consistency. The consistency just isn't operation. It's in our focus on purchase business. We've always remained focused on purchase business, even during the refi booms. We kept our underwriting term times at 24 hours. We made sure that we met our closing dates on purchase business.
Those people, the spheres of influence, your builders, your realtors, if you forgot about them in the refinance boom, and those purchase deals went bad, they remember it today when you rely on those folks. You know, we have a great story to tell, and we believe this story and this focus on operational excellence and focus on purchase business, it's a great thing for us to recruit new teammates, but we have to find the right ones. Not every loan officer is gonna fit into our model, right? I always said, we're not gonna grow our sales team. You can simply write large checks and go buy loan officers. I will tell you, it's for us, it's never worked. If someone comes because I write them a check, they're going to leave because somebody else writes them a check.
Don't believe it's a great way to build a lasting mortgage operation. Maybe I'll shift a little bit and talk about technology and operations. Our technology, we have two tracks. We have the customer experience, and I'll talk a little bit about this in the Amazoning of banking, right? People want it today. They wanna do it how they wanna do it, when they wanna do it. 6 A.M. in the morning, they wanna do it lunch, they wanna apply for their mortgage at 3 A.M. when they can't sleep, right? We have to be able to do that for them. Operation optimization. People always ask me, "Hey, what do you do?" The easy answer is, "Oh, I'm a banker." But every once in a while, I throw them off. I say, "Oh, I run a manufacturing company." They're like, "What?
What do you manufacture?" I say, "I manufacture mortgages." They look at me very strangely, kind of like the way you're looking at me right now, going, "What's he talking about?" That's really it. When you're doing for-sale mortgages, you're creating a widget. You turn around, and you have to sell it in the secondary market, and that box is relatively small. I look at it like manufacturing. What do you do with manufacturing? The way to improve is how do you do it faster, how do you get better quality, and how do you make it scalable? How do you make it so, you know, in 2020 and 2021, when you really need to step on the gas because you have the opportunity to drive fee income, you can do it.
It doesn't kill you in 2022 and 2023 when that business may not be there. We don't look at it as these are projects. Oh, hey, we're just gonna start doing that. We've been doing this all along. This is our business as usual. That's big part of it. I wanna talk because I'm excited about the digital mortgage, and it's taken a couple of years to get here, and this would not have been possible without the great help from the folks in the digital business. Kelly, I can't see you. There you are. And Kelly's group. E-signing documents been around for a long time, but previously it wasn't easy for the customer, number one. Number two is a lot of customers weren't ready for it.
What do you mean I'm gonna sign here? How does that work and all that? Well, as we get into, you know, COVID-19 really pushed this thing along and kind of it got everybody to understand the need for it. Before I talk about how it's done, let me remind you how it was done, right? Many of you got a mortgage, you went, you applied, you did it in person, you filled out a piece of paper. That piece of paper went back to a, you know, a processor who then looked at it and filled out some more paper, and then they sent you some things and said, "Hey, can you mail us in your pay stubs and your W-2s and your tax returns?" It's a very manual process, right?
Only one person could work on the file. It's a manila folder, right? As that manila folder walks its way through our operation on the third floor, if you have a question, nobody could answer it. I don't know where the manila folder is. We had carts. It looked like candy stripers at a hospital with folders of mortgages being driven around from the processing to the underwriting to the closing department. Totally manual, totally inefficient. What we've done is we've decided, hey, we're gonna get rid of all that. We're digitizing it. We're using Blend. Now the customer originates the loan on their tablet, right? As they go through and they fill out their application, it's learning what documents are gonna be needed.
When they get to the end, they say, "Hey, you're gonna need your pay stub, you're gonna need a bank statement, you're gonna need a W-2," and it knows. It tells you exactly, "Hey, I need your checking account from Access or from Atlantic Union Bank." And instead of mailing it in, they can simply upload it from their house directly into the file. They can't upload it because they're, you know, maybe they don't have that technology, but they have the technology of taking a picture on their cell phone. They can take a picture, and it uploads into the system. That file that, you know, in the cloud manila folder can be being worked on by four different people at the same time. Process is super efficient, super fast. Customers love it.
I told you at the end of 2021, we're 80%. We're at the end. In April, we finally figured out the closing part of it. We closed our first total loan from origination through closing, through sale, all electronically. Loan was originated. It closed on a Friday. We traded that loan on Monday morning. On Tuesday, we had our money. Closed on Friday, had our money on Tuesday. That process only, you know, a year ago was probably 30 days. In reality, you know, probably a year and a half ago, you know, maybe even longer as business is busier, that could even stretch out. Certainly a lot easier for us, a lot faster, right? The customer benefit's great. They can do it whenever they want. The benefit for us is fantastic, right?
We don't need as many FTEs to do the process. We are not losing documents. We're not misplacing things. You know, it's helping us speed the loan through the conveyor belt a lot faster, again, helping us in our manufacturing. What's the future? Again, there's two parts. We have, you know, the customer experience. We love the digitalization of the mortgage process, and we believe that our customers will love that process. But not all of our customers, and we need to be able to bank the customer the way they wanna be banked. If they're 100% fine doing it on their tablet and taking pictures of their documents and uploading it, fantastic. We need to be able to do that.
If they're not, if they want someone to hold their hand, they wanna bring in the pieces of paper, we still need to be able to do that. You know, for the customer, that's what we're gonna do. Our operations continue to automate. Every process that we do, we will continue to work to automate to make it more efficient for us. Particularly now in 2022, 2023, that's where the real cost savings are. That's, you know, the secret sauce to help us get through the next couple years. It's gonna be a little tougher than it had been. With that, I will bring up Mr. David Zimmerman, who is the Group Executive for Wealth Management.
Thank you, Dean.
Welcome.
Good afternoon. I'm excited to be here today to give you an update on the progress that we've made to get the wealth management businesses ready for the future that we see, and the opportunities. This year, it's hard to believe this year marks 40 years for me, in the investment management and wealth industry. I saw some snarls out there. I was paying attention. Don't take notes. No, it's been a great journey. Being here, actually, I hope it's okay to have fun. We're having fun with the work that we're doing, so we're proud. I joined the bank in November of 2019, right before the pandemic. My onboarding really was during the pandemic. A little bit challenging, but I think we've gotten a lot done.
If we look at the four core businesses that make up our current wealth group, you've got traditional fiduciary services and asset management group. That's our trust and estates, managed with our trust teams, and our trust advisors. We have professional portfolio management group, and it's really supported by a seasoned team of analysts and portfolio managers. If you look at Atlantic Union Financial Consultants, that's our brokerage business. That's the business that's supported through the affiliation with Raymond James today. Of course, our FCs sit in the branches, and they work with our bankers where they get the referrals, so much like other institutions. Private banking, we stood that business back up.
Now, we believe that custom credit, custom deposits, and some of the high-end mortgages brings in opportunities for us to do other work with clients and broaden their relationships. Think asset management. Then you get into the three registered investment advisor businesses that we bought over the last few years, with the last being onboarded in 2019. Those groups really focus on financial planning and investment advisory services. Focusing on a snapshot of our business, we have $6.5 billion in assets under management. Let me check. The market was rough this morning. Actually, that's $6.4 billion. $6.3 billion. Tough day. A little humor, asset management humor, which is hard to do. We've had some challenges in our market recently.
That business generates over $27 million in fees for the bank. That's about 22% of the fee revenue for the institution. Fiduciary services and asset management makes up about $3 billion of that business. The brokerage business is $2 billion, and the registered investment advisor business is $1.5 billion. You see the number of clients that we have. The teammate headcount is down 7% from November 2019 when I joined the institution, so we've really managed that. I think there's an opportunity here. There's always, I think, a story behind the numbers. We've really brought in some key professionals in that group, so that's not just the original mix. As an example, I think most institutions talk about their wealth advisors, their client advisors, kinda that quarterback role.
We call that role our wealth relationship director role. We've added to that position, and we've also brought in the head of advanced financial planning for the firm. Why that's key to point out is, in the past, our target market has been in the $1 million-$5 million range for the clients that we work with. Today, it's about the $5 million-$25 million range. We continue to move upmarket with the ability to work with some of our clients. In fact, as a highlight, David Ring and his team, who've referred us a lot of good opportunities, we're working on clients as large as $100 million.
Really by bringing the right people onto the team, we've been able to move upmarket and really kind of go into new segments from a market standpoint. Another area to point out, just recently, Shawn and his team had their national conference. Got a fun email where the head of our Atlantic Union Financial Consultants received a note. And of course, it was just a follow-up that said, "Nice to meet you, really enjoy the opportunity." The branch manager went out of their way and said, you know, "I've been here 17 years, and I've never worked with someone like Andrew.
The new advisor that you put in our branches to service us has gone out of his way to get to know us, to provide financial planning, and we have more confidence than we've ever had to refer business." Really, I think as I go through the presentation, you're gonna hear a lot about technology, you're gonna hear a lot about process, you're gonna hear a lot about pulling businesses together. It's really about people. Our business is about what we do with people. The interface in our business is not technology, it's people. Having the right people on the team, and the people that we've added over the last several years have really started to make a difference. Looking at some of the strategic progress that we've made.
The thing I like to point out about the first two bullets especially, yes, we're gonna talk about some of the work that we've done with Shawn and his team, to generate opportunities for us to meet clients. We'll do the same thing with Dave Ring, but it's really to acknowledge them. One of the key advantages I think we have at this institution is the way the leadership team works together. We support each other. They believe in what we do in wealth. They trust we're gonna deliver for the clients they bring us in. The real alignment there starts with leadership and the work that we do. It's a critical difference for how we execute. As mentioned, we've stood up the private banking business.
We've really tried to align and work on using the, really, the operations, the credit process that's in place for the bank instead of duplicating cost and having a different risk management profile. That speeds along the lending process for us, and it makes it a better client experience at the end of the day if we focus on it that way. We've also attached deposits to our wealth network high-net-worth clients, so we have more of a holistic view of the client when we're working with the client, and their assets aren't somewhere else in the banks. We also partner with Shawn and his team to service that. Our RIA strategy, one thing to point out here is we don't believe we'll buy any more RIAs going forward.
We think the right way to support that business is to bring them together to create scale and operational efficiency for the future. We've worked on that during this time period. Kelly talked about technology with Black Diamond and the CRM, both SS&C products. We're gonna talk about that. We've made great progress with that. Like to hear her bragging on that because we believe it's had an impact on our business. Then, of course, we always work to expand our offerings. We've added alternative investments, private equity, enhanced yield. The more opportunities we have to work with high-net-worth clients and position solutions, we feel like it expands the relationship. If we stick on strategic progression, this is a timeline slide that we've all kind of used.
I think focus on three different kind of themes that you'll see. Of course, we pulled the businesses together because there were a lot of acquisitions. We had the RIAs to bring together in Middleburg Trust Company and Union Trust Company. We've installed technology throughout this timeline, and we've also added significant leadership in the wealth management area to continue to drive the businesses forward. If you look at the first half of 2019, back to the acquisition of Middleburg Trust Company, again, a lot of work to bring those businesses together, not just the technology, but also the people, the culture, and work was underway. During that time, we looked for a turnkey asset management platform. This is where we started to look and found Black Diamond.
Beginning in the second half of 2019, we started to put the plan together for how we would install Black Diamond, where we would sequence that in and move forward. Of course, we completed and we finished the work that we were doing to bring the two trust companies together because there were two trust platforms. There was other technology other than the asset management platform. We had to bring the different businesses together there. That happens to be when I joined the institution in November 2019. Looking at 2020, the RIAs were really in the best position to begin the work to install Black Diamond. We started with the RIAs.
We also restructured the leadership team at Atlantic Union Financial Consultants, as well as the compensation plan there. Shifting to 2020, the first half, far enough along with the work that we had done with Black Diamond and the RIA businesses that we shifted to the CRM, which is Salentica, which is also an SS&C product. We continued to move them through the process, and we were able to start the same with Black Diamond and the trust. The trust companies had come together. We'd finished the work to bring them together, and we could move them into the first phase of installing Black Diamond. The wealth relationship director role I mentioned in the beginning, that's when we rolled that out, which is our key quarterback role going in to the future.
Looking at first half of 2021, in March, we rebranded. You've heard a lot about the success the institution has had with J.D. Power, with PPP, with Greenwich. It made sense for us, I say it this way, to draft off the success of the bank rather than to try to create a separate brand. It was Middleburg Financial Services. We rebranded as we move forward, and we continued to do some work to stand up the private bank. The trust company was far enough along now with Black Diamond, we could shift to the CRM, to the Salentica, and finish up the work that we needed to do there to update the technology.
Raymond James provides MoneyGuidePro on their platform for financial planning, so we brought financial planning into the wealth side of the business. We brought MoneyGuidePro in. Now all the clients experience the same type of approach when we do financial planning. Looking at the end of 2021, we brought new leadership in to run brokerage business, Atlantic Union Financial Consultants. We also restructured the support team in that business. We put a plan together to expand Atlantic Union, the investment center. That's our central area for small accounts that we take out of the financial advisor books or the financial consultants books, so that we can move them up to work with larger clients from a profitability standpoint. Really, you may have seen it, there's probably a fourth theme in here.
It's the work we've done really to stand up the private bank. Again, we believe that's a critical fourth leg of the stool for the mix of businesses that we have in place for wealth. Going forward, of course, we're gonna continue to work on Black Diamond. There's a lot of rollouts, seems like quarter- to- quarter, as well as the CRM allows us to continue to automate workflows. We're also starting to review FIS as our custodian in our trust business. We're looking at the kind of technology they provide, so we're comparing it to Fidelity, and looking at them as a future technology partner as well, and what they invest to move their business forward. That pilot is underway.
Focusing on our four strategic priorities, and I think these really help us drive to the most important strategic priority here, and that's organic growth, driving organic growth. When we deliver a better client experience, we manage the high levels of performance, we broaden our relationships, we know that we're gonna drive organic growth because we're delivering for not only the client, we're delivering for our partners. We're showing up, doing what we say we're gonna do. We believe advice is quickly becoming the product in the industry. When you look at delivering a better experience for our clients, we know we have to work with our advisors to bring the team together to bring the right expertise for the benefit of the client.
Certainly, they're gonna use technology and they're gonna use the tools, but to do the business the right way, we have to have teams of advisors working together. When you get over to managing high levels of performance, in this area, yes, technology is important. We'll continue to train there and we'll continue to automate workflows. Really, in our business, high levels of performance are driven through what I call practice management, and that's working with the advisor, to show them how to manage their book of business. They can't just show up and start doing something for a client. They have to have a systematic approach for how they use the tools, how they use the products, how they manage the teams. Practice management is a really critical area for us when we drive performance. Broadening relationships.
We talked about some of the additional offerings that we put in. Of course, we have to always have those solutions, and we need to focus on our clients. Really, we believe it's a life-centered approach, not just a goal-based approach, but it's both. We have to know our clients. We have to know what's going on in their lives. The example that I use is, you know, you really think about how the industry is trying to automate, but those are driven by algorithms, and you can't always turn everything into an algorithm. There's trigger events that happen in life. So think about if we're having a conversation and someone says, "David, I just lost my spouse." You can't write an algorithm for that. You have to deal with that very differently.
We need to know where our clients are so we know the right teams to bring in. Again, when we deliver on the first three, it helps us drive the last, which is the most strategically important thing that we need to focus on, and that's continuing to drive organic growth. Mentioned throughout what we do with Dave Ring and his team. Again, great partners. We do joint meetings, joint prospecting, webinars, seminars, I mean, you name it. We really act like we're together. They bring us in for adding value, and we couldn't ask for a better partner. I point out foreign exchange. They've recently added that as a product service for their corporate clients. It's also uniquely a product that we can use for our high net worth clients, where we can execute foreign exchange transactions.
Again, working together, it creates opportunities for us to focus on things where we can broaden relationships. Dave Ring, I couldn't have a better partner. Maybe it's Shawn. Shawn does a great job as well, uncovering opportunities for us and with the FCs and introducing us as we work to deliver on our value proposition with their clients. We also really focus on optimizing the territory where we place the financial consultants, the basket, if you will, of branches, so that we can show up and be good partners and serve the clients. We mentioned go back to Atlantic Union Investment Center. When you think about how we're gonna support not only the small clients, we believe that we can do the same if we begin to segment the branches.
Some branches have more traffic, they have more activity and operations and opportunities. We're gonna want to focus on some of the branches that really might not have as many opportunities and look at how to handle those from a virtual standpoint. With the work we've done with wholesale and consumer, it really sets us up to think about how we can do the same thing with home loans, as well as business banking. Dean and I have already started to talk about how we can take the clients that they do mortgages for and transition some of those, introduce those clients to the opportunities that we have in wealth, organic growth. We're continuing to move within the bank to create other opportunities. The same thing with business banking, very much like wholesale banking.
If we can do joint book reviews and continue to stay connected there, we believe we can drive our business. Hi. We, this model, if you look at it's not unique to the industry. It's a model where we talk about how we take care of the client, kind of our client experience. But I'm showing it today because the work that we've been able to do puts us in a better position to really execute on this experience. We've focused on, you know, the technology, the teams, bringing everyone together to make sure that we can deliver on this. The model is really beginning to work for us as we go forward. Again, just to quickly emphasize the customer experience.
This really talks about the impact of Black Diamond and SS&C, the CRM, looking at the client experience, easier access to their account, to their information, whether it's through the web, whether it's mobile. They can consolidate their statements. If you go into the operational efficiency, what it's done for our business, there's a lot more workflow automation. There are central places for us to meet the client, to share documents. Really, overall, that's been a game changer for us. Kelly talked about that a great deal. For us, it's been leadership, it's been adding the right people, it's been the technology that we've added, and it's also been the great partnership that we've had inside the bank. That's what we've done to move wealth management forward. Thank you very much.
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Thank you to the Nasdaq team for what I thought was a pretty terrific accommodations for lunch. Next up will be Shawn O'Brien, who has, I think, a wonderful story to tell about the journey that we've been on in not just consumer banking, but now consumer and business banking. He will talk you through that. Shawn's been with our company for three years. I do wanna point out something that just occurred to me that's worth noting. Shawn is one of three members of the executive leadership team who have Huntington pedigrees, if you will. Clare Miller, our incoming Chief Human Resources Officer, as I indicated earlier, is currently Chief Talent Officer at Huntington, even as she sits here. Technically, she's on vacation, and she will be starting. I shouldn't have called that out, later this month.
Shawn O'Brien spent his first decade at Huntington Bancshares, coming to us from BBVA Compass. After Shawn, you will hear our head of wholesale banking, David Ring, who came to us from Huntington. That is certainly a credential that we respect in this company. Shawn, welcome.
Thank you, John. It wasn't my very first decade, by the way. It was my first decade working, so about 10, 15 years ago or more, maybe more than that ago. Well, thank you for coming back after lunch. I am very excited to have won this coveted after lunch spot.
You know, John and Maria do mention a lot, we have a great story to tell in consumer banking. I think we absolutely do. If anyone's thinking about a quick after-lunch nap, I'm gonna cover kind of the highlights real quick here at the beginning. There's really four things I think that differentiate us right now from our peers. One, John and Maria talked a little bit about that we have done a really good job in branch consolidation. You know, we have cut costs, we are much more efficient, and we have 25% fewer branches than we had just about a year and a half ago. The second thing would be deposits. John talked about deposits being kind of the crown jewel of our franchise, and we keep growing those.
We've grown them considerably in the last two years, especially the low-cost transactional deposits. Consumer lending. This has been an area that we haven't had a ton of growth until about eight or nine months ago. We really started focusing on it since we had good deposit growth. We've seen month-over-month growth every month since last summer, and we are doing better than we've done, I'll talk about that in a minute, every single month. Last but not least, even as we've shrunk our base of branches, we have good customer growth. All my lines of business continue to see organic customer growth despite us being smaller from a footprint perspective. I'm gonna talk more about each of those four things. First, I wanna talk to you a little bit about what my business looks like.
I'm gonna talk a little bit about our strategic direction, a little bit about some of the opportunities we have. All right. The story being told here. Obviously, this is our branch network. We have 114 branches today. That's 700 teammates, more or less. That is not all in the branches. We had about 1,000 teammates in my team when I started, but there's 65 folks here that are in our call center. There's another 45 folks that are in our business banking team. There's operations folks here, and there's management folks. So 700 all in, everything we do to run all these lines of business. Consumer banking. So we have about 330,000 consumer clients. They have $7 billion in deposits with us.
They have another $568 million in loans. You look at the small business side, we have 48,000 clients there as well. These are businesses with revenue up to $1 million. We have deposits of $2.5 billion and loans of $83 million from those customers. All in, my line of business has about $10 billion in deposits and about $600 million in loans in these two groups. In our branches, we also work with all of Dave's customers who come in. We work with Dave Z's customers. We also work with the mortgage team as well from Dean's world. This is a separate group. This is business banking. There are 45 teammates in our business banking group.
They work with businesses between $1 million and $5 million in size. They have with us about $590 million in deposits, another $800 million in loans, and we have 5,000 clients in this group. I'm gonna talk quite a bit more about business banking. All right, going back to the four things I started with at the beginning. Look at balance growth. In the consumer portfolio, we're up 50% since January of 2020 in our deposit balances. That's actually a little bit misleading because we've run off almost $1 billion in CD balances during that time intentionally. This is pretty low cost deposits that we've brought in mostly into DDA, now savings accounts, a little bit money market.
If you look at small business, we've seen even greater growth there, 82% in our balances on the deposit side. That is largely because of PPP. You heard Maria talk about that. We have had a lot of success. 3,000 new customers have come into my line of business as part of PPP. If you look at business banking group, they're up over 100% in deposits since January 2020. Again, PPP is a big part of that. We've also completely redesigned business banking so that folks are not just looking at deposits, they're also looking at the entire relationship. That is helping drive that as well. On the account side, you see since January 2020 in consumer, we've grown about 4%.
That may not sound like a whole lot, but you think about that we have 25% fewer branches. You know, we've continued to focus on things like solutions banking, which is our program for our bankers to get out of the branches, go to our businesses and open accounts. Online origination has also helped a lot with new account generation for consumers. You think about 4%, a lot of our peers are flat, a lot of peers are negative in customer growth and account growth. We're very happy with that. If you look at small business, that's even greater. We've had 10% DDA growth since January of 2020. Business banking, 23% more customers.
Again, that reflects a lot of our success with PPP, but also renewed focus in small business and business banking. I talked about consumer lending at the beginning. We have 7.5% in our consumer lending balances since summer of 2021. This slide talks a little bit about that and shows kinda that in August was our lowest point. We have been growing month-over-month, and I'm proud to say April was our best month ever for consumer lending production. We did $42 million in new consumer loans, mostly HELOC. So that's where most of this production is coming from is in our home equity business. That makes sense, right? Rates are up. People are less likely to refinance their mortgages.
We are seeing a lot more home equity available to people, and we are focusing on it and we are growing that business. There is a lot on this slide, so I'm gonna only cover some of the things. Maria talked a little bit about J.D. Power, how we've won that two out of the last three years, and about Greenwich. That reflects our culture, our sales culture. We have a really strong one in the organization. You know, what's equally important is our internal culture. Our culture, especially at this time where it's so hard to find good talent and to retain good talent, it's really important that our culture is strong, and we've done a lot to work on that. John and Maria, obviously, as leaders are very strong at keeping a strong culture.
We also have a mentor program we've put in place where 100 of our best bankers work with all the new bankers that come on board and make sure that they are onboarded and that they are ready to work. That really helps with our retention. We have a top talent program we've put in place so that the best people on our teams can meet other people within the bank that they can learn from, and they can also see what their career progression looks like. Last but not least, we did have an off-site last week for our top bankers. We all got together. We celebrated. We had a good time. It's just important. People love getting together. They love knowing that they're valued. A perfect story of that, I think.
We have one of our top talent bankers. She chose to leave the organization. You know, she got a much higher offer from a peer bank. She called back about two weeks later, and she said, "You know, I miss my Atlantic Union Bank family. I miss the culture. I miss knowing what our direction is. I miss knowing the management team." We welcomed her back. In fact, John talked to her, Maria talked to her, I spoke with her. I think right now that is a differentiator for us, having that strong culture that keeps our best and most talented people here. John mentioned 25% branch closure. This really tells that story. When I joined the bank back in 2018, we had about $71 million in balances per branch.
That is pretty consistent with being a smaller community bank. You can see the peer median at that time was $75 million per branch. Today, we're at $145 million per branch. That reflects the fact that deposits have grown, and that we have many fewer branches. You can see the peer median today is $108 million. They've closed some branches as well. They also have grown their deposit base, but not nearly as much as we have. This is really the story right here on the right. We are double. You know, we have 100% growth in deposits per branch over this period. Peer median is 50%. I think that's pretty differentiating. You've heard a lot from folks, Kelly and others, about technology.
We've done a lot with Kelly's help, with other folks' help to introduce technology to consumer banking. Appointment scheduling. This is something we were very fortunate. We are piloting this program at the start of the pandemic, and so we were able to launch this in all our branches. We're approaching 100,000 appointments. It's now today the way a lot of our transactions are handled in our branch network. Zoom, everyone uses it. All of you use it, I'm sure. But we have set up every branch so that they can do Zoom interaction with our customer base. So we've had thousands of those. You can reach out to schedule an appointment, do it via Zoom, and you can do anything from opening an account to getting service. DocuSign.
We had a lot of wet signatures prior to COVID. You can see we're up to almost 19,000 DocuSign envelopes that have been completed. That means one less trip to the branch for a lot of our customers, so they can do everything online. Grow, this is the new tool that Kelly's team rolled out. This is an online origination tool, and it is much better than our old one. It is quicker, easier, and a great way for folks to open new accounts online. We have almost 14,000 new accounts just since January 2021. I'm not gonna talk to you a whole lot that's on this slide, just a couple things. Sales and service. We partnered with a learning tech company called Unboxed.
They're a local company in Richmond, and they helped us completely redo our sales process. We have brand new sales training, we have brand new sales reporting. Our goal setting has changed. We have people that are inspecting behaviors. A very new approach to sales for our organization. If you look at service, for me, that's a lot about the operations piece. We have now just taken our operations staff and assigned them to each market, which kinda leads to the next point, which is the consumer banking network. Our network has gotten a lot smaller. When I say that, obviously, we have fewer branches, but we have a lot smaller management structure. Initially, we had, I think, 14 markets when I joined and four regional presidents. Today, we have eight markets and two regional presidents.
Obviously, that's much less expensive, but it also makes it much easier for me to create a consistent message down to all of our team. By doing that, we also were able to take our operations teammates and assign them each to a market so that they can support the markets better. All right, this is moving forward. This is kind of our six strategies as we move forward. Some of them are consistent with what we already talked about. Some of them are a bit different. On the core deposit side, this will always be what we do as a consumer bank. It is the most important thing we do. We are the funding source for the bank. We're in a rising rate environment.
It is our role to make sure we maintain all of these deposits that we grew. You know, we have a number of ways to do that. One is we have plans in place, Allison, and her team are working on for how we retain deposits. We also have places we can go to grow deposits. We have the business banking business that we have. We have room to grow there. We also have mass affluent. That is a place that we could grow deposits. I'll talk about that in a minute. Consumer lending. I've told you that we are seeing a really strong surge in consumer lending. We're gonna improve upon that. We have MeridianLink rolling out this summer.
That is a new tool that helps us with origination, and makes it much quicker for our teammates to enter loans, get approvals, and get funding. That will be a big change for us moving forward. We also are trying to stay up to date on what's happening in the blockchain space, because not just for rapid funding, but for all of the data we collect, it appears there's gonna be some ways for blockchain to help us do that much more quickly. Business banking. This is my focus. If the four things I talked about at the beginning were kind of, "Hey, these are our great accomplishments," this is what we are gonna grow. We have completely revamped this line of business. We have a new leader. We have an all-new organizational structure.
We've taken folks, and we've assigned them to servicing roles, or we have assigned them to business development roles. We're changing what kind of loans we go after, and we're also making sure that we're going after the whole customer. They were primary lenders in the past, and we are gonna make this much more about a complete relationship, including treasury management services. The big opportunity we have here, and Dave Ring will talk about this a little bit, is we are moving into the SBA 7(a) space. We don't really do that at all today. We have a big opportunity there, and Dave will talk about that more, but business banking folks will play a big role in that. Small business. This is something that we have.
As you saw earlier, we have a lot of deposits from small business. We have very few loans. You'd always expect the loans would be less, but we have fewer than I'd like to see, and we have a really good opportunity here. We are partnering with Numerated, which is a fintech that will allow us to do real-time underwriting for a lot of these customers. It is a very different segment than business banking. These folks expect very rapid underwriting and funding. This is a tool that allows us to do that. It allows us to get an application and very quickly provide an approval, maybe real time for many people and maybe next-day funding for some folks as well. That is a big opportunity for us.
It also allows us to do SBA Express, which we don't really do in consumer at all today. We've picked a new leader for small business, and he already is in our organization today. He has already taken 19 branches and turned them into small business-focused branches. He will be a great addition to the team as we move forward. All right. This is a complicated-looking thing. It is that John asked me about yesterday. Really all it's showing is that it is a cyclical process to figure out what the customer's journey is. You've heard a lot today about technology, about new products. What we're trying to do is really think about what does the customer wanna do, and how do they wanna interact with us?
You know, that kind of starts with, you know, breaking it down between self-service and value-added service that people can give. I was thinking the other day when I was getting ready to do this that it's really strange. I don't even know if Amazon has a call center. I have no idea. I've never. I use them all the time. I've never even thought about reaching out to them, right? I mean, everything I need, I can get from the website or from the app, whether that's returning something or whether that is complaining about something. I have no idea. That's kind of the point. We don't wanna get to the point we're a completely automated provider of services, but we do wanna make the self-service stuff really, really easy.
We have a great example of that. Kelly's team has been working on an upgrade to our systems. This is gonna sound really simple, and I'll take it back a second. If you talk to a lot of banks, especially if you talk to their call centers or branches, they'll tell you that the majority of their time is spent on very simple requests, things like, "What is my balance? What is my PIN number? How do I change my password for online banking?" Just those three are huge time components for almost any bank. We're looking at those and thinking why should someone call or visit a branch and spend their time driving or waiting online or waiting on a phone queue just to get that answer?
We're going through and trying to methodically correct those things and provide solutions. We've done that. You now can even if you get locked out of online banking, you can get a text to your phone that will allow you to unlock it yourself. That sounds small, but that takes so much pressure off of our call center. That means we can do a lot more for our customers with that group. That takes us to delivery channels. I will tell you, and if you guys wanna try it, I'd be glad to help you open accounts anytime you want. I'm here afterwards. I will tell you that our online and mobile banking is as good as anybody in the industry. It works well. It's clean. It visually is appealing.
Our branch channels are very strong. Obviously, we win a lot of awards for our customer service. The one area that we are optimizing is our customer care center, which is our call center. That is a team that does a fantastic job with the technology we've given them, but we need to give them better technology. It'll allow people to do more self-servicing, which means they won't spend as much time on those rote questions. It also means we'll incorporate Dave's treasury management folks into that group so that they can answer questions on treasury management. We'll include wealth. We'll make it a universal call center that all our lines of business can use to have questions answered. All right. Segments and solutions.
I talked at the beginning about the fact that we have deposits, and we need to retain those deposits because we've grown them a lot. One of the ways we'll do that is with mass affluent. We have a good value proposition we've developed, and we will be rolling that out. It's in the perfect time for this because of a rising rate environment. In a rising rate environment, we can pick and choose our best customers and the best prospects and encourage them to move into this new product suite. This will be a way for us to both retain deposits and grow new deposits. You may have also heard that we are making some changes June 30th to overdraft.
As part of that, we are launching a new checking account product, the Bank On product. This product is for folks that can be underserved, or it can just be folks that are brand new to the banking system that don't wanna overdraw their accounts. That is something that will be a new offering for us. Obviously last but not least, I've talked a lot about business and small business, and that is our focus. John talks about the fact that we deliver on what we say we're gonna do, and we are saying we are gonna be the bank for small business in our footprint. That is certainly my focus. When we come back and talk next time about this, that will be one of the successes we talk about. That's what I have.
I am going to now introduce my friend and head of Wholesale Banking, David Ring.
Thanks, Shawn. Working here is kinda like being in a family of overachievers, and I'm the other guy. You know, Maria and John constantly say, "Why can't you be like Shawn?" or Kelly. I can't. I'm myself. I do my own thing. I've been here a little longer than them, so I am their elder, technically. I could tell them what to do, and I often try to, but I don't get away with it. First thing I wanna talk about is there's a lot of things in these slides going forward that we've achieved in wholesale. In 2018, I was one of the few folks that were here in 2018 that were presenting to you.
I remember Rob Gorman saying, "Don't say something that you're not going to do because these folks will write it down, and they will remember." I'm very happy to tell you that I also gave that advice to the previous presenters. We have achieved an awful lot, and we have checked the boxes in virtually everything we said we were gonna do as an organization in wholesale. I'm really proud of that. What I wanted to mention were there are a few people in the room that really had to align with our strategy. Our Chief Risk Officer, Dave Bilko, Doug, our Chief Credit Officer, Dean Brown, sitting there humbly in the back, in operations.
Unless we pulled together and gotten on the same page, we couldn't have executed from back to front and front to back on a lot of the things we were trying to do. I just wanted to point that out. But in 2018, I was very optimistic about what the organization could look like. When we got here, it was more of a community bank, old-style community bank that would be primarily focused on, you know, funding, you know, real estate loans, doing things like that. You know, they would get loans from brokers, and they would do deals with, you know, developers. There was no clear strategy, although we were really good at real estate.
In order to, you know, take advantage of the great Virginia market, like John talked about at the beginning, we had to be much more than a real estate bank. We had to develop products and services that could serve more than just the, you know, home builder, real estate developer, small real estate investor. We had to do a lot of different things. We have done that. Here's a snapshot of what wholesale looks like, and I'll stand over to the side so you could see it. Wholesale has grown since about four years ago. Loans are about $4.5 billion more. Production is around $5 billion a year of loan production. That would be new commitments out there in the market.
We have a lot of runoff and things like that, you know, property sales, company sales. We generate a lot of production. Deposits are where they are. Like Shawn said, he's the main driver of deposits, but our deposits are growing because of our treasury services platform. A lot of our deposits are now really operating funds, which is really what you want as a company. As a bank, you want their operating funds because you become their primary bank. Fee income is consistently growing, and we're seeing the new products and services we add every year are just stacking dollar bills on top of that. We are continuing to add fee income. Hopefully the mix will continue to improve between NII and fee income over time. We acquired a lot of clients through PPP.
We acquired about 600 middle-market clients. The rest of the clients that were acquired were really in the business, small business. We acquired 600, and that's great because that gave us the opportunity to present our other products and services to an entirely new client base. We track that, and we monitor that. We are all over those new clients. Plus, we had an effort throughout COVID, which a lot of banks were kinda internally focused. We have 5,000 prospects within Virginia, Maryland that we're focused on all through COVID, cold calling, doing all those things. Maybe not to bank them right away, but to establish ourselves and be there, get to know them when needed. Our teammates are primarily producers, portfolio managers and service-oriented and documentation-oriented people.
If this slide was up in 2018, it would really be two columns, regional banking and treasury management. When I say treasury management, I mean the basics, you know, deposits and checks, stuff like that. We've to take advantage of the market opportunities we have, we've reorganized the organization. We've changed the culture. We've brought in people. A lot of people did buy into what we were trying to do, but we've done a lot of things to help people kinda define what their strong suit is. I'll just quickly move from left to right. Regional commercial banking is exactly what you think it is. It's kinda generalist banking, local banking in the marketplaces. We went from eight regions to three, so we could drive consistency throughout, and so we could make quality relationships through and through.
We focus on companies of $5 million or up to $250 million. If I don't say it, if I forget to say it, that's what all our products and services are focused on. We're not trying to be IBM's bank. We're not trying to be, you know, the bank to the largest corporations in the United States. We wanna stay in a footprint. That way, if you think about it, the suite of services you have to develop looks a lot different. We don't have investment banking, so you know, that's a primary service that you'd wanna present to companies larger than that. We have everything in the capital market space other than private banking. I mean, investment banking, so we can deliver.
We've created specialty banking groups that focus expertise on certain things. Government contracting is very tricky. It's a who you know business, and it's structured. Loans are structured differently. They could be more risky. We focus on essential services providers. That's it in GovCon. Commercial real estate, they focus on the higher end developers, and we know 'em all. Thanks to the work that Doug Woolley and others who have been here for a long time, we've built a tremendous book. We've added some corporate banking because companies have been asking us for it. We have a couple of people in that practice. We focus on treasurers, CFOs, and CEOs we know, and that's who we call on. Get invited into deals, and we get extra services at the same time.
Asset-based lending is fairly new to us that we're expanding now. It's mostly participations in credits inside our market, but now we're doing the direct deals where you know, we are becoming the lead provider in asset-based lending. Just on the left, because responsible banking looks a little weird. Shouldn't banking be responsible? This is about CRA, low-income housing, so community development. We've built a division really focused on that that marries up fair lending on the consumer side with what is the equivalent on the commercial side. We're constantly moving towards a bank that gets bigger, so the responsibility for us in our communities gets bigger and bigger.
You know, I think it was Henry Ford who said something like, "If all you do is make money, you're a poor business." You have to be part of the community if you really wanna make an impact, and that's what we're doing in all our markets through this group. Lastly, on the far right, these are really growth engines for us. Treasury management is growing at a 20% clip per year. It's 4 x bigger than it was just three and a half years ago. Equipment finance is something we started that I'll get to later, a proof point that I'm very proud of. Public finance, we started three years ago, already over $400 million in exposure there, and we service the tax-exempt market.
Capital markets is our growing business, where it used to be just interest rate derivatives. Now it's trade finance and foreign exchange. If you think about all these products and services, look at something and ask yourself, "What would a $100 million company need that we don't have?" It's all there. Everybody has their strategic progression, but let me just show you how we built the organization we now have, which can offer products and services to virtually any company in our market. First thing we had to do was build out treasury management because it wouldn't do any good to offer a metal stamper in Richmond, Virginia, just a loan. They need to do something. They need to disperse funds. They need to accept funds.
As you move upmarket, the sophistication level gets higher. Kelly actually had on her slide Paymerang. Paymerang was a business that Rob Gorman, I believe, invested in and we own 20% of. That is actually a fintech that became our integrated payables provider within treasury management. We built solutions with. We've been building solutions with treasury management for the last three years. We now have a full product management group. We have. Let me put it to you this way. Now when you buy treasury management from us, we have implementation people. We have the sales folks, you know. That you're a prospect at the time, so you never know what you're gonna get. You're you have the sales folks.
You have the implementation folks who deliver on time those services, and they're right. They're set up perfectly. We have the service-oriented people called the TSAs. We have the product people making sure those products work, along with the digital folks who work in concert with the product folks. Now, you know, we treat our customers like prospects all the time in this space, that we're always trying to get better for them. We built out treasury management. That allowed us to start to acquire commercial and industrial customers, not just the real estate customers. With the acquisition of Access and Xenith, which were branch-light, business banking models, that gave us a real jump start into the C&I space.
All along the way, we've reorganized, re-regioned, found people the right place in the organization to sit. If they didn't, if we had gaps, we brought people in, and our story was very exciting to people. Looking forward, I'll get to that in a little while, but we are not stopping here. Let me just point out one thing 'cause it's gonna come up later. Revenue per producer now has increased 33%, since we started to do this. Obviously, you could see our wholesale mix has changed quite a bit too. If you looked at it just from a commitment perspective, it's 52% real estate, 48% C&I. We're almost a completely 50/50 organization now. Name many community banks that made this move that could say that.
I'll just point one thing out on this slide, the controlled expansion into attractive markets. You know, this is primarily contiguous expansion or doubling down in markets that we're in, where we've found it to be a nice market. We're welcome there. We're finding good talent. We are focused on controlled expansion. We're not gonna write the biggest check and acquire a team in every market. We're focused on where we can make hay and where it pays for itself. That's, you know, the example I'll show later is what we did with equipment finance. In Charlotte, we did that very well, where it's a huge book now of business. We've expanded controlled expansion into South Carolina, where we have an office in Charleston, and it's in the works of having a Georgia office.
Simply because we don't want you to your flight to get hit by lightning anymore, and maybe we'll have the meeting in Georgia. By the way, Georgia is where our equipment finance business is. So let me talk a little bit about our revenue model. We are still a NII-driven bank. We make loans, we make good spreads on our loans, and we generate a lot of net interest income. Our goal is to drive fee income through the capital markets and through treasury management. Fee income for the bank by using a relationship planning model to align our customers with the other products and services we have. The difference between us and other banks is we don't have referral goals. There are no referral goals that our bankers have to.
In commercial, our bankers do not have to refer a certain number or a certain amount to anyone. What we want them to do is sit with the partners with a complete relationship plan, and we want the partners to come with ideas that'll benefit the client. Then we're proud to present those ideas to the client. We're proud to present those partners to the client. I think with every company downsizing a little bit, we're really taking advantage of the time they have to put our best foot forward. Nobody calls a client and says, "Will you please meet with my wealth management partner? They're really bugging me." That doesn't happen in our organization. We're very proud of that because that has made hay for other groups, and it's led to referrals right back to us.
It's a real two-way street. Our priorities pretty much align with the bank's strategy, but I'd like to take advantage of this slide to talk a little bit about our talent management. We couldn't do anything that we've been trying to do without kind of rejiggering our talent and looking at our talent in a different way and making sure our talent fits. We also have taken our internal talent and tried to raise their game. We've done it so well sometimes that we've lost folks, you know. Let me tell you who we've lost.
We've lost folks who are now two bank presidents, a bank COO, the most senior credit officer, real estate credit officer at another bank, a peer now at a $15 billion bank, and one vertical leader, the head of GovCon for Truist, just came from our bank. We're proud that we're able to lift their game to where we're being recognized by so many other banks as a talent pool for them. The flip side of that is, people are coming to us for that same reason. They wanna be part of the story, but they also know that we invest in them. You know, they get great opportunity here. We have good intellectual capital to share with them, and they're gonna be better ultimately when they're here.
Thanks for letting me get a little off track just to mention that, but I thought this would be a good break. Although we lost all those wonderful teammates, and we wish them well, but not too well, we are attracting talent just as quickly or even quicker to our organization. As previously noted, we've developed a lot of complementary products. Some of the things we've developed that you might not know about is a direct placement of secondary market debt for. We do a lot of construction lending. A lot of the time, there will be a middle person organization that would place that debt with an institution down the road.
We'll take all the risk and build that building or build that warehouse, then it'll go into the institutional market through a third-party intermediary that collects a fee. We now can do that for the customers. That's a nice capital market product. We can get them to sign up for it upfront, and it's a nice revenue stream for us, but it's also expertise that a bank our size typically can't offer. Our FX platform, our clients will be able to buy on the retail, not retail consumer, but they'll use a retail platform. They'll be able to buy foreign exchange on their own using a white-labeled platform that ties right into our treasury management platform.
They'll be able to buy their own foreign exchange, but we've also hired the head of Wells Fargo's foreign exchange for North Carolina and Virginia to be our head of foreign exchange. They could buy over the phone or make trades and negotiate trades forwards. All types of trades, forwards, you know, spot deals, through our foreign exchange. We virtually had zero foreign exchange revenue here as a company. We've already done things like help a company buy in euros the largest crane coming to the U.S. from Germany. We're already starting to see transactions from customers that not new customers that were already ours, that were doing it someplace else. Plus also our international wires were pretty much a wash.
We weren't making any fee income on international wires, although we do thousands of them. We'll now be able to do the international wires and collect foreign exchange spread on those. There's a lot of revenue right there. The 7(a) loans that Shawn talked about. How can you be Virginia's bank for business without being a leader in 7(a) and 504 lending? We're already number one in 504 lending two out of the last three years, but we're like 37 in SBA lending. Now, partnering with small business banking and wholesale, we can offer a 7(a) type product, and those loans are guaranteed 75%, and that 75% guarantee can be sold to an investor.
For every $1 million, we'll make about $100,000-$120,000 of fee income by selling off that transaction. You're kind of reusing your capital and making fees. It's terrific. We took six months and built out the back of the office first, up to the front and rolled it out. Now we already have a pipeline of those deals, and we'll close our first one in the next couple of weeks, actually. There are just a couple of revenue opportunities. Commodity hedging is 2023, we're focused on, and you could see that there are other things we can do. I'm gonna power through these slides with my six minutes left. We will and have lifted out folks that could enhance our business.
Our strategy is to focus on skill sets that on people that will fit into our culture, that'll drive the customers that we love, and also build out specialty units, verticals, within our market and then expand them outside our market. Couple of things we're already doing. We've tested the senior living specialty lending, and we're ready to roll that out in a bigger way. We've tested not-for-profit lending in Northern Virginia, the largest not-for-profit market in the entire country, and we're gonna roll that out bank-wide. You saw 7(a). Shipbuilding and repair is very unique. It's the largest shipbuilding and repair market in Virginia Beach. So we're building that expertise now, so we can create a vertical there.
If you think about it, the shipbuilding in Baltimore, the shipbuilding in Savannah, Georgia, Charleston, all that stuff. It's not building, it's the contractors that support all that. They're focused on it. Think of it as GovCon for shipbuilding. That's kinda what it looks like. These are just things we could do without cannibalizing our existing franchise. We could just expand our franchise out through these things. The top one, dealer real estate finance and floor plan. We already do dealer real estate finance, but we hired Truist SunTrust's head of dealer, and he's now building out the plan for us to get into floor planning. As Maria said, you know, we want clients to bank how, when, and where they wanna bank.
One of the things they want is a speedy process, and nCino that Kelly has developed has helped us build, you know, from beginning to end all the way to documentation, a process where paper doesn't have to be lifted and shifted to desk, from desk to desk to desk. People can work on things at the same time. We could also pull incredible data from it, since it's all loaded in. Our main use of digital technology right now is some of our mobile applications, but mostly to try to make our processes work so smoothly that customers really feel it. The next thing we're doing, and it's in process right now, is a app-only three-hour turnaround equipment loan.
For small-ticket equipment, we want clients to be able to just put in the app, and we'll turn around quickly in three hours using all the different data sources and the technology we have. That should be in place by 2023. On the other part of the technology side, we're fully aware that payments are going to be disrupted. Not only the payments, but how we advance loans could also be disrupted by blockchain and other things. As other folks have said, we're fully engaged in the conversation around how we're gonna make that part of our business so we don't get overtaken by other folks who could do it faster, better than we can.
All right, this is the case study I wanted to give you. My main question is, why would you believe anything I just said unless I can prove it with some sort of case study? This is just one, but this is our equipment finance business. We looked in 2018, we said, you know, asset-based lending, equipment finance, that we started naming things we thought we could do, but we said we'd be opportunistic because we didn't wanna force ourselves to do something silly. We looked at several equipment finance companies to purchase. We looked at other ways of doing equipment finance underwriting in Utah and other places. We looked all over the place. We found we could lift out an entire division from another bank, not purchase any of their loans, so pay no premium.
Just bring the people over. We literally lifted them out. We put them in their homes and in some remote space. We negotiated with their former bank, and we brought them. We re-leased the same space, and we put them back in the same space they were accustomed to working in. I mean, it was. It worked perfectly. It was a perfect negotiation. This team has done a magical job internally helping surround the equipment finance group with the operational support, the accounting support. We've been able to build out this equipment finance in a real hurry. Our first deal. Think of starting a business from scratch and doing your first deal just 10 weeks later. That's what we did. We did our first deal 10 weeks later.
In the last two years, we've grown the business to almost $600 million of outstanding $780 million in commitments, unused commitments so far. It's now the 49th largest equipment finance company, bank or otherwise, in the country. We did something very similar with public finance without lifting and shifting. We just did something internally so we could create a tax-exempt finance unit, so we can compete in that market. There are so many opportunities just in the Maryland, North Carolina, and Virginia footprint that we could do things like this with. With equipment finance, it's the only business we really have that's a national platform. Although we primarily focus on supporting the bankers inside our marketplace, we do have a national platform for this business.
We just added and looked for about a year and a half how can we supplement this business? We added a specialty vehicle unit subsidiary to this business. There are only six other finance companies in the country that do this. We thought it was a great niche for us. They're getting off to a great start. We pulled over folks who are experts in specialty vehicles. That would be a college or university that has a shuttle bus system. We would finance the shuttle buses under contract. What we require are COVID language in all the contracts. If COVID happens again, they can't stop paying. The primary customer is an institution. It's a nice little business for us.
That's an example of how we can continue to grow off equipment finance, not just try to think of a new idea like equipment finance. We're really proud of this as a proof point that we can build a business from scratch, and we're constantly looking for other opportunities to do it. That's all I have. I think we're really positioned with people, with strategy to continue to grow. You can count on us to generate the loan growth and fee income that Rob's about to talk about now. Our pipelines are stoked, and we feel really good about 2022 and 2023 already. Thank you. Rob Gorman, our CFO.
Well, thank you, Dave. Appreciate that.
Yeah.
Good afternoon, everyone. As Dave said, I'm Rob Gorman, the Chief Financial Officer of the company, and I've had the pleasure of holding this position since 2012. I'm one of the old executive management team members. Actually, I am the oldest, literally and the longest tenured. I can tell you know, I've had a front-row seat to see how the company has transformed significantly since 2012. Let me start off my comments by noting that what I hope you heard throughout the presentation today is that Atlantic Union is built to differentiate itself and is well-positioned to continue to generate above-average returns for our shareholders. As noted throughout the day, we have a dense, uniquely valuable presence across several attractive markets with significant organic potential.
Combined with a strong balance sheet, conservative credit mindset, and ample capital to support our organic growth objectives, Atlantic Union is primed to continue to generate top-tier financial performance and long-term shareholder value. One of the themes that we hope came through today is that now that we are a $20 billion asset midsize bank, we have the scale to make the necessary investments to further grow our business lines and to invest in next-generation technology that is required for the bank to remain competitive. As you all know, scale is critically important. It allows us to invest in the numerous opportunities to grow our business lines by expanding the products and services that our clients and customers want and to enhance our omni-channel capabilities through further investments in digital technology and fintech solutions.
We also have the scale required to invest in the tools that make our teammates' jobs easier and make them more effective and efficient as they serve our clients across the franchise. Finally, scale has allowed us to put the right team in place throughout the bank to execute the strategy that we presented to you today. I'm not just talking about the quality of executive team in the room today, but also the talented and experienced teammates we have back home in Virginia, North Carolina, Maryland, and Atlanta that help us execute the strategy on a daily basis. As John mentioned earlier today, we have created a banking franchise that can't be replicated, which has created tremendous scarcity value underlying the company's valuation.
That said, our executive leadership team understands that we have to earn the company's independence by consistently delivering top-tier financial performance and creating shareholder value. We know that if we don't do it, there will be plenty of suitors that will come in and do it for us. I'm not sure everybody attending today fully understands that we think Atlantic Union has been a successful growth story. When I started with Union Bank & Trust in 2012, we were a $4 billion asset organization. Fast forward 10 years, we're now 5 x that size in terms of assets, loans, and deposits. More recently, since 2017, we have grown loans at a compound annual growth rate of 16%, while deposits have grown at a 22% annual clip.
Of course, part of that balance sheet growth was driven by the acquisitions of Xenith and Access National Bank in 2018 and 2019. Excluding the impact of these acquisitions, on an organic basis, we estimate that loans grew approximately 6% and deposits grew approximately 13% annually over the past four years. That's despite COVID-19's dampening impact on non-PPP loan growth in 2020 and 2021. As mentioned, the pump is primed for further upper single-digit loan growth as we go forward. Importantly, the bottom line has also expanded materially as operating earnings per share have grown 17% annually since 2017.
As we have said many times in the past, we are committed to generating top-tier financial results versus our proxy peer banks and as measured by operating return on tangible common equity, operating return on assets, and the operating efficiency ratio. As you can see on this slide, the company has made material improvements on each of these metrics since 2017. I'll have more to say about our go-forward top-tier financial performance targets in a few minutes, although I know many of you have already flipped through a couple of slides and know what I'm going to say. Turning to capital. From a shareholder stewardship and capital management perspective, we remain committed to managing the company's capital resources prudently, as the deployment of capital for the enhancement of long-term shareholder value remains one of our highest priorities.
Regarding the company's capital management strategy, we set our capital ratio targets to ensure that we can maintain the company's designation as a well-capitalized financial institution and to ensure that capital levels are commensurate with the company's risk profile, in line with our capital stress test projections and our strategic plan growth objectives. At the end of the first quarter, Atlantic Union Bankshares and Atlantic Union Bank's regulatory capital ratios remain well above well-capitalized levels. As noted earlier, current capital levels, coupled with the company's ongoing capacity to generate internal capital, provides us confidence that ample capital is available to support the company's organic growth objectives discussed today.
Now, as noted on this slide, capital management priorities are, first, to support the organic growth of the company, and secondly, to maintain a sustainable common shareholder dividend payout ratio of 35%-40%. In addition, any excess capital generated can be returned to shareholders through the repurchase of common shares and/or deployed for mergers and acquisitions, activity, assuming such capital deployment creates shareholder value. Interestingly enough, from 2013 through 2021, the company has returned just over $800 million to common shareholders while maintaining strong capital ratio levels. We've done this through dividend payments totaling $435 million, with a compound, annual growth rate in our common dividend per share of 9% over the last eight years.
We also did it through the repurchase of 11.7 million common shares in the amount of $367 million, which averages out at a repurchase price per share of $31.21. We'd like to think that Atlantic Union is a shareholder value-driven company, and by that we mean we are committed to producing above average stock price appreciation and paying a competitive dividend to our shareholders over time. From that perspective, the company has been successful in generating total shareholder returns that have consistently exceeded the returns of our peer banks over multiple time periods, as noted on this slide. Now let's get to the real stuff everybody's waiting for, the targets.
With the financial impact of the PPP loan program winding down in 2022, almost over, the pandemic-driven volatility related to expected credit losses and credit loss reserve levels subsiding, and importantly, the positive revenue impact from the company's asset sensitive position, combined with the recent initiation of Fed funds rate increases by the Federal Reserve Bank and our expectation that the Fed funds rate will move up to 2.5% by the end of this year and to 3.25% in 2023, we are resetting our top-tier financial metrics to the following. Return on tangible common equity within a range of 16%-18%, return on assets in the range of 1.3%-1.5%, and an efficiency ratio of 51% or lower.
As a reminder, our top-tier financial performance targets are dynamic and are set to be consistently in the top quartile among our peer group, regardless of the operating environment we're in. As such, we reset these targets periodically to ensure that they are reflective of the financial metrics required to achieve top-tier financial performance versus our peer banks in the prevailing economic environment. As a reminder, the executive management team's annual short-term cash incentives are tied directly to achieving these top-tier financial, corporate metrics, which we believe aligns well with our shareholder objectives. Finally, in my last slide, but I'd like to briefly discuss the financial assumptions underlying our confidence in achieving the top-tier metrics I just outlined in the second half of 2022, second half of this year, and over the medium term of 2023 and 2024.
As previously stated, we expect to produce upper single-digit loan growth on an annual basis and grow core deposits at a level that maintains a loan-to-deposit ratio in a 85%-95% range over time. The company's net interest margin, excluding PPP fees, is expected to expand significantly throughout the balance of this year and over the medium term as a result of the company's asset- sensitive position and the assumption noted earlier that the Federal Reserve Bank will increase the fed funds rate to 2.5% by the end of 2022 and to 3.25% in 2023. As a result of loan growth and rising interest rates, net interest income is expected to see double-digit growth in 2022 ex- PPP impacts and high single-digit growth beyond 2022.
We expect that the company will generate meaningful positive operating leverage in 2022 ex- PPP and beyond due to upper single-digit revenue growth outpacing expense growth of low to mid-single digits, which should drive double-digit earnings per share growth going forward. On the credit front, while we still don't see any systemic credit quality issues lurking at the moment, we expect that the benign asset quality environment we see today will normalize over the next few years, ultimately resulting in an uptick in the net charge-off ratio to between 10 and 20 basis points. The allowance for credit losses to loan balances is projected to remain at current levels, which is at in the 80-85 basis point range. Well, that concludes my prepared remarks.
In closing, I'd like to assure you that our executive management team, folks in the room, remain focused on leveraging this valuable Atlantic Union Bank franchise to generate sustainable, profitable growth and is firmly committed to building long-term value for all of our shareholders. With that, let me turn the podium back over to John, who has a few closing comments.
Thank you, Rob.
Here you go, John.
Don't go too far. I have a feeling.
Uh-oh.
You'll be receiving a few questions here. All right. I'd like to make a few closing comments, and then we have plenty of time for questions. Let me begin my ending with this. Our strategy has been consistent, and it is working, but it's evolving based on our experience and changes in our environment, customer expectations, and behaviors. I hope you've seen evidence of that today. We're doing what we said we would do, and we always will. We try very hard not to surprise you. We might disappoint you from time to time, but we'll try not to surprise you. We pride ourselves on being transparent and clear and intentional. We're well-positioned for the current environment, and we're optimistic about our future. I hope you have a better sense now of why I say that.
For those of you who've known us for some time, who know our history, I hope you can see how the company has evolved. I hope that you were able to see the maturation of this organization. I hope you can see the professionalism of the leaders that you've heard from today. I hope you can see the threads of strategy and culture, leadership, caring, technology that have been pulled through the different presentations today. I've worked for 35 years. This is the best team I've ever been a part of. It's not just the leaders, but the leaders are the manifestation. They're representing the culture of this company. This is a real bank for real people. We are providing services and financing for economically worthwhile initiatives that improve the economies of the markets that we serve, that help people, that do productive things.
Notice what we've not talked about in terms of our strategy. We've not talked about what I like to refer to in the industry as we'll do anything for money. Let's do speculative cryptocurrency financing because we just figured out how to do it safely. We will focus on our communities, our customers, providing economically worthwhile financing and services and initiatives that help people. That's what gives me confidence that this is not going to an entirely self-service fintech world. Fintech are our partners. Fintechs can be a threat. At the end of the day, this bank is centered at the confluence of human interaction and technology. This is a uniquely valuable franchise. It is the only statewide independent Virginia bank. As you saw today, it's more than just a Virginia bank. Pretty excited about our future. With that, what questions can we answer for you?
We have the entire executive leadership team here, not just the speakers that you heard from today, but many others as well. Catherine?
All right. This is kind of a hard question, but I just.
Lay it on me.
I said that I felt this in every bank meeting I've had over the past month. Everything sounds almost like in a vacuum because it sounds awesome. If then we turn and we look at the market.
Sure.
We're heading into a recession.
Yeah.
From what the markets tell us. How does that fear or maybe reality kind of play into the strategic plan? How -- like, where do you see the biggest risk to this plan just from the macro environment, and how nimble can you be in cutting expenses or doing other things within your plan to still hit these targets?
Well, we have a three-year strategic plan. The truth is, we don't contemplate just when times are good. I think if you look at our track record going back 120 years, you know, this company has withstood the test of time, Catherine. Notice we're not a go-go, we're gonna grow, you know, the way into the double digits. You know. That's not us. We're guiding over time. We think that high single digit growth, good control of operating expenses, being able to invest and do what we need to do is gonna give us, you know, good returns. The reality is that at the end of the day, 35 years of banking have taught me this, banks fail for one reason and one reason only, credit.
You'd better understand the types of credit that you are financing. As an investor, you can't see as well as we can see the nature of the risk that we're managing, so you better have confidence in the leadership and the strategies of these institutions. I would say that we're not gonna continue to have one basis point of net charge-off. I've never seen that before like we did in 2020. I would say, you know, Catherine, bottom line, it's fundamentally strong. In the very short term, it is difficult to see how we're gonna have a recession in Virginia in the very short term, just given where unemployment is, but anything could happen. Black swan events happen all the time. I'll go on record saying that. Whatever's the next unexpected thing happens, and we have to react to it.
At the end of the day, you're basically reliant on the strength of the franchise, the judgment of the leadership team, the capital base. I think we'll be okay. You know, we will come what may. At the end of the day, if we don't see the economic growth that we're expecting, so be it. We can deal with that. We don't wanna give the impression that we are excessively optimistic, we're not. What I will say is we feel pretty good about where we are. Remember, Virginia does tend to perform better during more difficult times, in part because of the diversification of the economy, in part because of the stabilizing force of the U.S. government, which in some way, shape, or form influences about 20% of the economy.
The unfortunate reality of the current geopolitical environment is it's unlikely that we're gonna see less defense spending in this country. It's unlikely we're gonna see less spending by the U.S. government on cybersecurity, and security measures, and these are the types of things that we finance. So I feel pretty good about it. Rob, what would you say to that? If you wanna talk about what could go wrong, there's plenty of things that can go wrong. We can speak about that too, but.
What I would say is, in terms of the targets that we set, just John mentioned, credit would be a critical assumption there. We don't wanna see that spike. We don't think it will, but who knows? We do expect it to normalize a bit as we go out a couple of years. The other part that could put that at risk is we don't see that loan growth that we were expecting and, of course, the Fed not moving as aggressively.
Yeah.
We feel like we're pretty confident that we can get that. Now, if we go into a recession, that could dampen, you know, some of that growth.
Yes.
I think that's the risks to what we're seeing from a target point of view.
Deposit betas may rise maybe more than people think, but the reality is we're among the more asset-sensitive banks. Look at the strength. The crown jewel of this franchise is the core deposit base. It's transaction accounts. We're about 58% transaction accounts. That will do better than those banks who have more rate-dependent depository strategies. Given that we're about half variable, we're gonna do better as rates go up, you know, regardless. Maybe deposit betas are higher than we think, but we'll still benefit from that. I agree with Rob. In the relatively near term, something that's a shock to lending demand that slows down lending growth, that's probably something that would be, you know, a more plausible scenario. Again, we're not talking about double-digit loan growth objectives here. You know, we're talking about high single digit.
I just think that fundamentally, you take the long view, we're feeling pretty good about what we see. We have a question coming in over the Internet, I presume.
We do. Laurie Hunsicker from Compass Point asks, "John, can you comment further on whole bank M&A? You have a very strong stock currency, yet you stated it's not as important as it used to be. Is it fewer institutions raising their hands for sale or credit or rate marks hurting your tangible book, breakeven?
It's the opportunity cost. I will say this. We've been pretty clear in our messaging and have been for some time in terms of what our thought process may be regarding additional mergers and acquisitions. I go back to the three priorities I already laid out. What is the single most important thing we have to do? The organic performance of the bank. What is the second most important thing we have to do? It's really the transformation, the continuation of the transformation that you clearly heard described today. What do we not need? We do not need a distraction.
What we've been trying to do as a leadership team is increase our confidence level that if we were to take on M&A, that the opportunity cost of that is such that we would not turn around and say, "And now we can't do this or that," that's actually more important. At this point in time, we're pretty confident that if we had the opportunity to look at something that was you know, more of a straightforward infill type of acquisitions, as our President and Chief Operating Officer, Maria Tedesco, would say. She knows what I'm about to say. We can walk and chew gum at the same time. I think at this point in time, it wouldn't be a distraction, so we can look at it. I'm just being very clear.
When I make statements like, "It's not as important," it's a tertiary or third priority, all I'm doing is trying to signal you that we understand what our most important objectives are. Our most important objectives are drive the organic performance of this company. Listen to the strategies that you heard from the leaders. Yes, M&A was critical to get us over $10 billion. Yes, it was critical, essential to securing this irreplaceable Virginia footprint that we now have. Beyond that, we've kind of done everything else organically and on our own, and we'll continue to do that. I do think we're gonna have opportunities, and we will consider those opportunities, but we'll be thoughtful. We wouldn't do anything that would surprise you. Everything has to make financial and strategic sense.
I would just say, having given a lot of thought to a lot of options over the last year or two on the M&A front, we come back to it's all about cultural fit, it's about strategic alignment, it's about execution risk, it's about opportunity cost, and that presumes that the obvious boxes of, yes, it must make financial sense, yes, it must be strategically compelling, are checked. It's an option. It's something that we may do. Brody? Question.
John, I guess I wanted to ask you. I guess I thought it was interesting that you had Dean present. You know, he's a great speaker, obviously. But just with revenues, you know, mortgage is 3% of revenues last year, 2% of revenues in the most recent quarter. Like, the fact that you dedicated a time slot-
Mm-hmm.
... to mortgage, I thought was interesting. You know, I guess why was mortgage a focal point today, and what do you want it to be going forward?
Mortgage is an essential offering for the bank. With all due respect to the former regime at the Union Mortgage Company, which I made the decision to shut that down. Why did I do that? It made this much money when times were good, and it lost that much money when times were bad. That's called asymmetric business risk. That was a bad business. We exited it. I think we pretty quickly figured out that we were missing something when we didn't have a mortgage offering. I do think that Atlantic Union Home Loans is an integral part of our offerings. I think it's a great case study. I think that it is a business that we would like to see grow organically, but we don't want it to be outsized.
Mortgage, the mortgage business is one of the few businesses in the industry where the bigger it becomes, the lower your valuation, the more volatile your earnings. I think it may be a relatively small business, but is a strategically important part of what we do. You can't look at these businesses in isolation. That should be clear that we take a holistic view of the client relationship. The ability to deliver complex mortgages through this group is important to the commercial strategy because many are commercial clients. It's important to the home loan strategy. Dean, I'll see if you have anything you wanna add to this as well. Think about the consumer. Also, I hope it was a surprisingly good example to you of how we're not just talking about our digital strategy, but how we've implemented the digital strategy.
That's part of what's changed over the past few years and why I'm excited to have the leaders in front of you. We're not just talking about this stuff. We have probably done more than you think. Dean, why do home loans matter?
If John would've come and said, "Hey, rates are low and the mortgage business is picking up in February of 2020, there's no way possible he would have a mortgage operation up and running to take advantage of the time. I would say you have to be in it to win it. You can't all of a sudden set up a mortgage operation to take advantage of the opportunities to drive the fee revenue. You could have set it up, and you'd had it in place by, you know, the middle of 2021, just as rates started to go up.
Mm-hmm.
You know, it's good to have. It's gotta be around, so when the time comes, you're able to, you know, get up and running right away.
Dean, in 20 years, how many times have you lost money?
In one year, we had in you know, 2007 was a little tough.
All right. We'll give you a hall pass on that one.
Other than that, we've done pretty well.
You get the point. I think for those of you who know our history and know the history of Access National Bank and the mortgage company, which was there from inception, this may be a small business, but this is a mighty business. They do a wonderful job for our customers. It's really a part of the brand, and we wanted to showcase it to show you we're in this business. We can manage this business through good times and bad. We suboptimize its potential. We effectively cap the business for the reasons Dean described, when things are really, 'cause we don't want it to be yo-yoing or doing the accordion. There's the best answer, maybe actually, and because we're proud of it. How's that? Other questions?
I have one more from Laurie Hunsicker. This is actually for David Zimmerman. I know you spoke to this, but in your remarks, were there any more comments about any potential other AUM acquisition opportunities? There were three deals done in 2018 and 2019. Are you seeing any opportunities now?
I would briefly say no, not at this time. I mean, we have enough to focus on to continue to bring the businesses together, as well as get the technology into the system and being utilized completely. In the short run, no.
Yeah. Just to give a little more clarity, the three registered investment advisors that were done, that was done prior to the Access National Bank, also known as Middleburg Bank, which included Middleburg Trust merger. One of those was done prior to my time here, and two were done during my time here. Access National Bank, Middleburg joining us changed everything. It gave us more scale in the wealth management business, as did having David Zimmerman join us, where we had a change in leadership, change in strategy. It had became very clear that the most important opportunity to focus on was what you heard David describe.
It's really about mining and leveraging the existing client base in the franchise and really integrating Middleburg, which we've done well with the existing wealth management business that we have. We're grateful for the registered investment advisors that we have. We do not think that that is the best strategy to you know continue to add to that portfolio. We have other things to do. Doesn't mean we'll never have any sort of inorganic or acquisition orientation in the wealth management group. It just means that we've got a good strategy that we're working right now. Kasey?
Yeah. Maybe going back to, I think, the latter part of Laurie's question. You know, just with the AOCI hits that we saw.
Mm-hmm.
The first quarter. You know, with rates going up, probably a question for Rob.
Yeah. Hand it to Rob.
With rates going up in the second quarter, sort of, is there anything we should consider that you're doing to mitigate that sort of move? Or sort of how are you thinking about, I guess, tangible value going forward here?
Yeah. As you know, Kasey, we did take unrealized losses that went through capital, tangible capital during the first quarter as rates spiked up materially. We've seen them continue to go up a bit more, so our expectation is you may see a bit more an increase in that unrealized loss this quarter. Now, over time, you know, that plays its way out as these investments mature and we get repaid. We don't think about it. It's unrealized losses. It's not that critical to us in the way we think about running the business. There's no economic harm related, so we don't have any expectation that we would actually sell these investments and realize a loss, so that's off the table.
Over time, we'll see that come back to us, those unrealized losses reverse themselves. It really has no significant impact on how we manage the company going forward.
I agree.
We'll continue to evaluate, you know, our dividend policy, repurchases, et cetera, both with and without that, you know, impact going forward. You know, you gotta also remember, you know, No, probably a few CPAs in the exam. I'm actually one. CPAs, I think, it's like, you know, it's one side and it's crazy, you know, to take a hit for one little, you know, rate spike. You know how much the value of our deposits are right now? It's like way overwhelming.
Right.
Anything related to what we just took a hit on. You know, it's not economic impacts, but I do understand that investors and others look at that, the tangible common equity ratio and the impacts of that. But we're not alone. I also say you know, we're not alone.
Right.
In the banking business. To you, it's, you know, I think you also asked a follow-up question. We aren't taking any additional actions to move AFS available for sale to held to maturity. We're about 20%. We've kind of been running at 20% for a long time. And there's no. It doesn't make any sense to take a realized loss, you know, and see that hit through equity. We'll see it come back over time.
I agree. Rob points out correctly, you have to look at the total picture. Look at the whole balance sheet. Don't just look at the half of the balance sheet. Remember, there's a reason why that's happening. It's because we're so asset sensitive. If we were liability sensitive, which you probably wouldn't like right now, if we were, you know, we would probably have very little duration in the securities portfolio. The reason why that's happening is it's to protect us in down rate environments, right? We would've doubled down on being asset sensitive in the face of a falling rate environment in the absence of that. We are benefiting due to our asset sensitivity, as rates are rising, we are benefiting from having 58% of our deposit base being transaction accounts. The strength, the crown jewel of this franchise is that core deposit base.
No, we're not gonna liquidate our securities portfolio. There's no need to do that. We're just gonna let it run off.
On fees, this past quarter, you walked back your fee growth guidance.
Mm-hmm. Yes.
from mortgage and, because of the NSF-
Yeah.
... changes that you made. If we look at your guidance, it looks like you've got kind of better growth for fees as we go into 2023, or at least your mid-term targets. Can you kind of walk us through, put numbers maybe to the capital markets and FX trading and those kind of other lines of the treasury management, you know, all of that that kind of gets lumped into other, and help us see kind of where those are today and where you think from a growth perspective that's going in the next couple of years?
Yeah, you're right. If you look at our assumptions for our financial targets in 2022, we're basically saying we'll be flat year-over-year in terms of fee income. We had previously said we'd be at 8%-9% growth. And that was really on the backs of a lot of the capital markets fee revenues, new fee revenue sources that we were seeing, you know, FX, SBA 7(a), and some of the other things that Dave described. But that was before mortgage rates spiked, and we're seeing that, you know, that decline. We've also got the NSF overdraft impact that hits us.
That's kind of level setting us back in 2022, and then we're growing off of that in 2023, primarily due to the growth in capital markets and some of the other ancillary fees that aren't impacted by the overdrafts and service charges. We'll see interchange continue to grow based on growth in accounts and those sort of things. That's really kind of what we're looking at.
Catherine, I don't think we're quite mature enough to parse out the different subsets of capital markets fees other than traditionally what we had was the interest rate hedging program, which has been very successful. We have added new offerings as Dave Ring walked us through. I would say, let's give that a little bit of time to mature. Foreign exchange, placement of non-recourse institutional term debt, loan originations, the loan syndications business. The sale of SBA on a flow basis. You've got a portfolio, if you will, of opportunities there. We need to let that season just a little bit. What it does is it's providing diversity, diversification, pardon me, to the capital markets businesses.
Treasury management continues to grow at a double-digit rate, as you heard, David Ring say, and so we're always interested in other, you know, value-added fee-based services that we can add. Business banking is a whole other conversation for another day in terms of what we're gonna be able to offer there.
I should mention, you know, we're only talking about 4%-6% growth in 2023 and beyond in fee income. I think, you know, we get these things underway, we should be able to see that growth rate.
Mm-hmm. We'll be more transparent as we gain more experience. It's just too speculative right now. Bill?
Brody.
Oh, Brody.
I guess across every business line, you had a low single-digit expense growth target for 2022.
Yes.
I think Kelly and the technology front is playing a role in that. We didn't talk about what the technology budget has kinda looked like. How has that evolved over the last couple of years?
Yes.
Sort of, how much do you envision technology making up as a percent of your budget going forward?
Yeah. It's a hard question to answer. I will tell you this, it's a pay-as-you-go strategy. The technology spend is incorporated or embedded into the financial guidance that Rob laid out. If things are going well, we'll be spending more. If things aren't going well, we'll be spending less, and we'll throttle it. You know, we can speed it up, and we can slow it down. It's not a big spend initiative. It's not an announcement that we're gonna spend $X million as a bucket, and then we're done. We'll never be done. We'll be talking about this forever. It's just the nature of the beast, Brody. The reality is that we will modulate this basically depending upon how well the bank is doing.
The reality is a lot of this is also self-funding in terms of looking for opportunities to remove some of these laborious manual processes. Think about what you heard Dean Hackemer explain, shopping carts. You know, in the mortgage business. We still have some equivalence of that in certain areas of the bank, so some of it needs to be self-funded as well. We should talk about that low single-digit expense guidance. Recall for 2022 why is that happening? That's a net expense growth because we are benefiting from the expense actions already announced, already implemented. We're not really growing expenses by low single digits, certainly not on a growth basis. Do you wanna pick up from there, Rob?
Yeah. It's more in the 4%-5% range.
Yeah.
You know, when you take out the actions that we took to reduce expenses this year. That's what we're forecasting as we go forward, a 4%-5% expense growth rate going forward. Now part of that is some of the costs for this new generation technology and the things that we talked about. But offsetting that is kind of industrializing process improvements and robotic process automation, which we can take costs out, but reinvest it in the technology side.
There are particularly on the blockchain side certain infrastructure opportunities, various systems, I won't get into the details, that look like they can be substantially more efficient inside of bank operations, and we will be looking at such things to see, you know, what is our confidence level that they work as advertised, we can risk manage them properly, et cetera. We're going to be pretty aggressively looking for improved technologies to eliminate manual processes and frankly, speed things up.
Yeah.
We'll see.
I should also mention, you know, we've got legacy costs here too. Those will come out and kinda get transformed into the new generation as well.
Mm-hmm. I would agree. Again, Brody, think of it not so much as, you know, there is a budgeted bucket of spend, and its initiative, and then we're done. Just simply think of it as what's the run rate and what is our ability to speed that up or slow that down depending upon the environment. We're constantly juggling and reprioritizing initiatives. We've done a pretty good job of that over the last couple of years, and I think that'll be true from now on.
At the same time, we wanna make sure we follow a critical path, so we gotta make sure these things are happening to get to the other end.
Yeah.
All right. I'd ask one more while I have the mic, and maybe this is for John and for Dave. You mentioned potentially opening a Georgia office, right?
Mm-hmm.
Georgia's a big state, but if I guess if I split it between, you know, Atlanta and then the ports, I guess, where in Georgia are you thinking? You know, are you leveraging your expertise as, you know, banking along the ports of Virginia and the ports of Georgia? I guess how do you plan to leverage a brand down in that market?
Oh, David Ring, why don't you answer this one? I would say we're thinking first and foremost about the success that we've had in our Charlotte LPO, which is principally a commercial real estate operation. Atlantic Union Equipment Finance is based in Alpharetta, Georgia. By the way, the mortgage company also has an operation in Marietta. I think that when you think about industry specialization, particularly, maritime finance, and by that I mean things related to ports, shipbuilding, et cetera, that could be an opportunity. Dave, why would we be interested in Georgia and, you know, what are we not going to do?
Yeah. Well, first of all, they would co-locate with the equipment finance folks.
Yeah. Without a doubt.
We have no intention of adding additional office space. We're gonna you know, we're a hybrid model, so they'll have hoteling spots in that office. Our primary focus is actually real estate, like we did in Charlotte. It's a specialty banking product. We're gonna focus on the same asset classes as we focus on today. We looked at nine markets before choosing Georgia, and we think Georgia is the that looks a lot like Charlotte in the way that we go to market. We feel really confident that on the real estate side, that's how we'll grow. Real estate has a huge runoff of assets. Real estate has been growing at about 1% per year. Everything else has helped the bank grow the rest.
This is a new market to help us offset the runoff growth, use the expertise we have, and we're only gonna hire people that are in that market today. That fit our culture. We're not gonna move some of our people who don't know the right-
Yeah.
... contacts and the right developers in that market.
Yeah, I would agree.
Yeah.
Again, the Charlotte LPO is a great success story.
Yeah. On the shipbuilding and repair side, you know, we're gonna test it first on our home court where we, you know, where we win a lot more than we lose. Once we develop that expertise, we'll move to the other markets.
By the way, I've lived in Atlanta twice and done business there for a long, long time, so I'm personally pretty familiar with that market.
John is on the Port of Virginia board.
Yes. Port of Virginia.
Virginia.
I'll put in a plug.
Mm-hmm.
Third largest container port on the East Coast of the U.S. Brody, you can finish this for me 'cause I do it every time. The most automated port in America, the fastest growing port in America, Port of Virginia. No backlog, Port of Virginia. It's a fantastic resource on the East Coast.
There are no specialty lenders supporting that market.
That's right.
Zero. We'll be the first.
Right. What's the second-largest port on the East Coast by container volume? Savannah.
Savannah.
New York ports are number one.
Yeah.
Anyway, there's a real opportunity there. Without going too much into that, I would just point out, strategically speaking, just for clarity, everything I've said about this franchise, keep it dense, keep it compact, keep it tight, keep it powerful. This brand in Virginia, nothing has changed there. What I've been saying for a while, and we're giving you specific evidence and examples of, is we can use specialized industry strategies to extend opportunity. That's what we did with Atlantic Union Equipment Finance. That's what we did with the Charlotte LPO. Bill, question?
We do have one more question that came in from Jimmy Hanna at North Reef Capital. He wants to know, what are your top one or two investments that you've made that you think potential partners, i.e. smaller banks, should realize makes Atlantic Union the best partner for them?
The people. I think the investment in the culture of this company, that's what brings people here. Not everyone is for sale, and we don't hire mercenaries. It's really gonna come down to the culture of the people is the first thing we're gonna point to. This is not an uncommon conversation to have with other bank leadership teams, and so we're very accustomed to having this conversation. We'll point to the culture. We'll point to the clarity of the strategy, the uniquely valuable franchise that we have. I think that that's really important. Yes, for a smaller organization, we'll point to the investments that we've made in terms of technology, digital strategy, our capabilities, et cetera. I ran a...
I know I'm perceived as a large bank background person because I am. I'm technically retired from Bank of America. I ran all wholesale banking for Regions Bank. After I decided I had enough in the huge bank land, remember, I had opportunity to go run a just under $2 billion privately held, super capitalized, business-oriented bank in the Southwest. I know what that looks like. I didn't much care for was lots of single points of failure and the extremely limited resources that I saw. I'm grateful that we are of a scale to where we can attract, you know, people with the expertise that we have, that we have enough scale to be able to make the investment that we make. Things are happening pretty rapidly out there.
A point I've made in the press a few times, I'll make again here. The traditional hallmark of community banks, and that's our heritage, is great service. Here's the problem. Great service is no longer good enough. Great service has been redefined. It's not just we know who you are, we're nice people. It's also great service includes competitive technology offerings because like it or not, the Amazonification of America is very real. Kelly told the story, you know. People, "Hey, you know, Starbucks can do this for me. If I can order my groceries with a few strokes of my iPhone, that's something I want to do." I think that this is very much on the minds of many, you know, people in the industry. We don't have to outspend and never can.
The largest institutions will leverage fintech partnerships where there are, in fact, billions of dollars of money being invested. We have to be smart, and we have to be careful in terms of what we decide to pursue. I think we have enough scale to be able to bring all this to the table. At the end of the day, we still have award-winning customer service. We have a culture of caring. I think it's a good opportunity. It also creates career developmental opportunities for bankers as well. I always think about, you know, I don't have kids, unfortunately, but I've got lots of nieces and nephews. I'll often ask the leaders: "Would your kids wanna work here? Would they?" Think about it. You know? This is a modern leadership team.
We're a contemporary group of people, and I think we recognize that the world is changing, the industry is changing, but we still think this is a great career path. I think we've got a pretty good story in terms of, you know, why we would make the case, Jimmy, and I hope that makes some sense. Brody?
I'll be letting this if anybody else wants to go. I promise I've only got two more.
Oh, keep going. You came all the way from Maine to be here.
Well, my flight didn't get delayed like Catherine's did, so it wasn't too hard. Just a quick follow-up on the equipment finance. It's one of the only national business lines you have.
Yes.
You said it's primarily focused in Virginia. Could you delineate what's the like what balances are within Virginia? What balances are, you know-
Yeah. It's
Within footprint versus out of footprint.
Right. Yeah. Footprint more broad. When we talk about footprint in our company, we're generally talking about Maryland down through North Carolina. That is an important component, but is certainly by no means all of what Atlantic Union Equipment Finance does. We'll have more out of footprint by that definition than we will in footprint.
Got it.
It was built to be a national origination strategy. Why were we interested in it? We were interested in it for clarity because we had a gap. We were getting killed by the super regionals and the large nationals because we could not lease equipment, we did not have expertise to competitively finance yellow iron, barges, tugboats, stevedoring equipment, cranes, things like that. Remember, Virginia sits right in the center of the East Coast. If you look at the map, we're in massive hubs for logistics and transportation. This plugged a whole lot of gaps, but we don't have enough scale. If we simply said we're only gonna have a Virginia or even Mid-Atlantic equipment finance initiative, that wouldn't be enough to support the business and to attract the type of team that we have.
The average risk ratings and, if you will, the credit profile of their typical client is actually higher than what we see in our own footprint, only because they're tending to deal with somewhat larger companies. That's a team that's worked together for a long, long time, that has long-standing client relationships.
Got it. Thank you. My last one, and maybe this would be for Kelly as well, is one of the early slides you talked about, you know, leveraging some of the next generation cores going forward.
Mm-hmm.
I guess what was described to me sounded a lot like hollowing out the core over time, you know?
Right.
You know, leveraging Nymbus, Finxact.
Right.
Others to do specific business cases.
Yes.
I guess one of the things I've always been confused about is when banks talk about kind of hollowing out their cores, how long and how many business cases do you need to get to until, you know, you just replace the core?
Well, replacing the core sounds like a big bang transition. Here's the problem. I would have told you two years ago we were headed to the next generation of the core that we have right now, and I won't name names. We concluded that was not a good idea because there's an opportunity to leapfrog it. We may do what's called a progressive migration, which means you'll incrementally move things over to more of a cloud-based modern system. There aren't really many, if any, true ready to go now cloud-based core operating systems that are capable of doing everything. Maria, you're welcome to chime in, or perhaps Kelly or Dean. But at the end of the day, it's gonna look more like a progressive migration. This is very much a part of the digital roadmap that we're looking at right now.
You can take pieces of the operation, move them onto something different and more modern, and you do that over a period of time, and then eventually you would go lights out, perhaps to the core. I would love to hollow out the core. I would love to render the core irrelevant. The core is doing us no favors in terms of. This will be offensive to some, but I think it's really, really important that we not wait in line with the core operating system provider to try to get them to make changes that they aren't gonna make. Why? Because they're not really investing in these legacy core operating systems. They want you to buy the latest and greatest. We want to be able to buy anything that we think makes sense for us. We need flexibility.
This is the role of things like, you know, the integration layer, so we can more easily plug things into the core. We've been successful in doing what we need to do, but it involves a whole lot of work. Do you have anything to add, Maria?
Sure. I think you actually said it very well, John. For us it's about what do we need to solve for in the next two-three years and what platforms make sense for us, what platforms as a service make sense for us. We're going to sort of test our way into that a bit.
Yeah.
It is about reducing our reliance on the core. The core is stable. It works.
It works.
It-
Absolutely works.
There's no reason to sort of switch it out, big bang for any reason. Also, I think that would be an expensive move. I think this is the way to go.
Things are evolving very rapidly right now.
Yeah.
Stay tuned. We're being very thoughtful on this. Bill, are we about done?
Yeah. Yes.
Okay, one more question then we're getting the hook. By the way, we're closing the bell on Nasdaq, and they're telling us we have to get down there plenty early. Be sure to look at that if you can. Joel, question.
John, thank you for the added disclosure today. It's been very helpful. Question on loan growth, the medium-term targets upper single digits?
Mm-hmm.
That's in a rising rate environment. That would imply that you get some market share gain.
Mm-hmm.
Over the next couple of years. Am I thinking about that the right way?
Mm-hmm. Yeah. I would say that the number one driver of our growth has really been, you know, we've been taking market share. All the arguments that I made earlier. In part, there's the rising tide lifts all boats, which is, you know, sort of the underlying growth of the economy in our markets. In part, if you look at where most of our new clients come from, they're coming out of larger organizations. Not all, but most. That every single time implies we are gaining market share, in part because we've added new business lines such as equipment finance, the build-out of government contractor finance. Dave Ring outlined other new business initiatives. Sure, we have plenty of room to run. We are not about to run out of room in terms of the ability to grow market share over time.
The pace of that growth is to be determined. You know, it's great that we've had two quarters of low double-digit growth, loan growth. We're not ready to revise upward guidance beyond high single digit only because we wanna see more calendar behind us, as we said on the Q1 earnings release, because of all the uncertainty that's out there. We're actually trying to be, you know, somewhat. We are optimistic, we wanna be somewhat cautious. Okay. With that, we are definitely getting the hook. I'm getting the high sign here. I do wanna say thank you very much for those of you who are watching on live stream or perhaps watching at a later date. This is a big investment of your time. A special thank you to those of you who showed up in person here in New York.
I am very proud of the teammates of Atlantic Union Bank. I've been here five and a half years. The folks who've been around for a while have been put through an incredible amount of change. This is fundamentally a transformation story, but it's a good story, and it's an exciting story, and it doesn't really end. The company will continue to evolve. It'll continue to adapt to its changing environment. We do have a pretty clear strategy. We're intentional with everything that we do. Thank you for your support. As you know, we're always very receptive to questions from the investor community. Reach out anytime, and we'll be happy to chat with you. Thank you very much and have a good trip home for those of you who are traveling.