Atlantic Union Bankshares Corp [AUB] Filings

10-Q 1 aub-20240630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-39325

ATLANTIC UNION BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)


Virginia	54-1598552
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

4300 Cox Road

Glen Allen, Virginia 23060

(Address of principal executive offices) (Zip Code)

(804) 633-5031

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.33 per share	AUB	The New York Stock Exchange
Depositary Shares, Each Representing a 1/400^th Interest in a Share of 6.875% Perpetual Non-Cumulative Preferred Stock, Series A	AUB.PRA	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐
		Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


	Yes ☐ No ☒

The number of shares of common stock outstanding as of July 30, 2024 was 89,782,844.

Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION

FORM 10-Q

INDEX


ITEM		PAGE

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023 (audited)	2

	Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2024 and 2023	3

	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30, 2024 and 2023	4

	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the six months ended June 30, 2024 and 2023	5

	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2024 and 2023	6

	Notes to Consolidated Financial Statements (unaudited)	8

	Report of Independent Registered Public Accounting Firm	49

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	83

Item 4.	Controls and Procedures	85

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	86

Item 1A.	Risk Factors	86

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86

Item 5.	Other Information	87

Item 6.	Exhibits	88

	Signatures	89

Table of Contents

Glossary of Acronyms and Defined Terms

In this Quarterly Report on Form 10-Q, unless the context suggests otherwise, the terms “we”, “us”, and “our” refer to Atlantic Union Bankshares Corporation and its direct and indirect subsidiaries, including Atlantic Union Bank.


2023 Form 10-K	–	Annual Report on Form 10-K for the year ended December 31, 2023
ACL	–	Allowance for credit losses
AFS	–	Available for sale
ALCO	–	Asset liability management committee
ALLL	–	Allowance for loan and lease losses, a component of ACL
American National	–	American National Bankshares Inc.
AOCI	–	Accumulated other comprehensive income (loss)
ASC	–	Accounting Standards Codification
ASU	–	Accounting Standards Update
AUB	–	Atlantic Union Bankshares Corporation
the Bank	–	Atlantic Union Bank
BOLI	–	Bank-owned life insurance
bps	–	Basis points
BTFP	–	Bank Term Funding Program
CDI	–	Core deposit intangibles
CECL	–	Current expected credit losses
CFPB	–	Consumer Financial Protection Bureau
CME SOFR	–	Chicago Mercantile Exchange Secured Overnight Financing Rate
the Company	–	Atlantic Union Bankshares Corporation and its subsidiaries
CRE	–	Commercial real estate
depositary shares	–	Depositary shares, each representing a 1/400th ownership interest in a share of the Company’s Series A preferred stock, with a liquidation preference of $10,000 per share of Series A preferred stock (equivalent to $25 per depositary share)
EPS	–	Earnings per common share
Exchange Act	–	Securities Exchange Act of 1934, as amended
FASB	–	Financial Accounting Standards Board
FDIC	–	Federal Deposit Insurance Corporation
Federal Reserve	–	Board of Governors of the Federal Reserve System
FHLB	–	Federal Home Loan Bank of Atlanta
FHLMC	–	Federal Home Loan Mortgage Corporation
FNB	–	FNB Corporation
FNMA	–	Federal National Mortgage Association
FOMC	–	Federal Open Market Committee
FRB	–	Federal Reserve Bank of Richmond
FR Y9-C	–	Consolidated financial statements for a U.S. bank holding company, a savings and loan holding company, a U.S. intermediate holding company, and a securities holding company
FTE	–	Fully taxable equivalent
GAAP	–	Accounting principles generally accepted in the United States
GNMA	–	Government National Mortgage Association
HTM	–	Held to maturity
LHFI	–	Loans held for investment
LHFS	–	Loans held for sale
MBS	–	Mortgage-Backed Securities
merger agreement	–	Agreement and Plan of Merger dated July 24, 2023 by and between Atlantic Union Bankshares Corporation and American National Bankshares Inc.
merger	–	The merger of American National Bankshares Inc. with and into Atlantic Union Bankshares Corporation pursuant to the merger agreement

Table of Contents

MFC	–	Middleburg Financial Corporation
NPA	–	Nonperforming assets
NYSE	–	New York Stock Exchange
OCI	–	Other comprehensive (loss) income
PCD	–	Purchased credit deteriorated
ROU asset	–	Right of Use Asset
RPAs	–	Risk Participation Agreements
SEC	–	Securities and Exchange Commission
Series A preferred stock	–	6.875% Perpetual Non-Cumulative Preferred Stock, Series A, par value $10.00 per share
SOFR	–	Secured Overnight Financing Rate
TLM	–	Troubled loan modification
VFG	–	Virginia Financial Group, Inc.

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

(Dollars in thousands, except share data)


	June 30,		December 31,
	2024		2023
ASSETS		(unaudited)		(audited)
Cash and cash equivalents:
Cash and due from banks	$	233,065	$	196,754
Interest-bearing deposits in other banks		207,129		167,601
Federal funds sold		5,820		13,776
Total cash and cash equivalents		446,014		378,131
Securities available for sale, at fair value		2,555,723		2,231,261
Securities held to maturity, at carrying value		810,450		837,378
Restricted stock, at cost		125,308		115,472
Loans held for sale		12,906		6,710
Loans held for investment, net of deferred fees and costs		18,347,190		15,635,043
Less: allowance for loan and lease losses		158,131		132,182
Total loans held for investment, net		18,189,059		15,502,861
Premises and equipment, net		114,987		90,959
Goodwill		1,207,484		925,211
Amortizable intangibles, net		95,980		19,183
Bank owned life insurance		489,550		452,565
Other assets		713,952		606,466
Total assets	$	24,761,413	$	21,166,197
LIABILITIES
Noninterest-bearing demand deposits	$	4,527,248	$	3,963,181
Interest-bearing deposits		15,473,629		12,854,948
Total deposits		20,000,877		16,818,129
Securities sold under agreements to repurchase		64,585		110,833
Other short-term borrowings		725,500		810,000
Long-term borrowings		416,649		391,025
Other liabilities		510,116		479,883
Total liabilities		21,717,727		18,609,870
Commitments and contingencies (Note 8)
STOCKHOLDERS' EQUITY
Preferred stock, $10.00 par value		173		173
Common stock, $1.33 par value		118,475		99,147
Additional paid-in capital		2,273,312		1,782,286
Retained earnings		1,034,313		1,018,070
Accumulated other comprehensive loss		(382,587)		(343,349)
Total stockholders' equity		3,043,686		2,556,327
Total liabilities and stockholders' equity	$	24,761,413	$	21,166,197

Common shares outstanding		89,769,734		75,023,327
Common shares authorized		200,000,000		200,000,000
Preferred shares outstanding		17,250		17,250
Preferred shares authorized		500,000		500,000

See accompanying notes to consolidated financial statements.

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Dollars in thousands, except share and per share data)


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023
Interest and dividend income:
Interest and fees on loans	$	285,198	$	205,172	$	519,796	$	395,165
Interest on deposits in other banks		2,637		1,014		3,918		2,507
Interest and dividends on securities:
Taxable		24,886		15,565		43,765		32,317
Nontaxable		8,167		8,496		16,323		17,804
Total interest and dividend income		320,888		230,247		583,802		447,793
Interest expense:
Interest on deposits		122,504		65,267		224,368		117,100
Interest on short-term borrowings		8,190		8,044		16,351		15,607
Interest on long-term borrowings		5,660		4,852		10,725		9,558
Total interest expense		136,354		78,163		251,444		142,265
Net interest income		184,534		152,084		332,358		305,528
Provision for credit losses		21,751		6,069		29,989		17,920
Net interest income after provision for credit losses		162,783		146,015		302,369		287,608
Noninterest income:
Service charges on deposit accounts		9,086		8,118		17,655		16,020
Other service charges, commissions and fees		1,967		1,693		3,698		3,439
Interchange fees		3,126		2,459		5,420		4,784
Fiduciary and asset management fees		6,907		4,359		11,745		8,620
Mortgage banking income		1,193		449		2,060		1,303
(Loss) gain on sale of securities		(6,516)		2		(6,513)		(13,398)
Bank owned life insurance income		3,791		2,870		7,037		5,698
Loan-related interest rate swap fees		1,634		2,316		2,850		3,755
Other operating income		2,624		1,931		5,413		3,603
Total noninterest income		23,812		24,197		49,365		33,824
Noninterest expenses:
Salaries and benefits		68,531		62,019		130,413		122,547
Occupancy expenses		7,836		6,094		14,462		12,450
Furniture and equipment expenses		3,805		3,565		7,114		7,317
Technology and data processing		10,274		8,566		18,401		16,708
Professional services		4,377		4,433		7,458		7,847
Marketing and advertising expense		2,983		2,817		5,301		5,168
FDIC assessment premiums and other insurance		4,675		4,074		9,818		7,973
Franchise and other taxes		5,013		4,499		9,514		8,997
Loan-related expenses		1,275		1,619		2,598		3,171
Amortization of intangible assets		5,995		2,216		7,889		4,494
Merger-related costs		29,778		—		31,652		—
Other expenses		5,463		5,759		10,659		17,262
Total noninterest expenses		150,005		105,661	$	255,279	$	213,934
Income before income taxes		36,590		64,551		96,455		107,498
Income tax expense		11,429		9,310		21,525		16,604
Net Income	$	25,161	$	55,241		74,930		90,894
Dividends on preferred stock		2,967		2,967		5,934		5,934
Net income available to common shareholders		22,194		52,274		68,996		84,960

Basic earnings per common share	$	0.25	$	0.70	$	0.84	$	1.13
Diluted earnings per common share	$	0.25	$	0.70	$	0.84	$	1.13
Dividends declared per common share	$	0.32	$	0.30	$	0.64	$	0.60
Basic weighted average number of common shares outstanding		89,768,466		74,995,450		82,482,790		74,914,247
Diluted weighted average number of common shares outstanding		89,768,466		74,995,557		82,482,921		74,915,977

See accompanying notes to consolidated financial statements.

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Dollars in thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income	$	25,161	$	55,241	$	74,930	$	90,894
Other comprehensive (loss) income:
Cash flow hedges:
Change in fair value of cash flow hedges (net of tax, $95 and $4,340 for the three months and $2,820 and $694 for the six months ended June 30, 2024 and 2023, respectively)		(357)		(16,325)		(10,610)		(2,611)
AFS securities:
Unrealized holding losses arising during period (net of tax, $3,433 and $8,651 for the three months and $8,883 and $126 for the six months ended June 30, 2024 and 2023, respectively)		(12,917)		(32,544)		(33,417)		(476)
Reclassification adjustment for losses (gains) included in net income (net of tax, $1,368 and $0 for the three months and $1,368 and $2,814 for the six months ended June 30, 2024 and 2023, respectively) ⁽¹⁾		5,148		(2)		5,145		10,584
HTM securities:
Reclassification adjustment for accretion of unrealized gain on AFS securities transferred to HTM (net of tax) ⁽²⁾		(3)		(2)		(5)		(5)
Bank owned life insurance:
Unrealized holding (losses) gains arising during the period		—		—		(16)		10
Reclassification adjustment for gains included in net income ⁽³⁾		(160)		(61)		(335)		(83)
Other comprehensive (loss) income:		(8,289)		(48,934)		(39,238)		7,419
Comprehensive income	$	16,872	$	6,307	$	35,692	$	98,313

⁽¹⁾ The gross amounts reclassified into earnings are reported as "Other operating income" on the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.

⁽²⁾ The gross amounts reclassified into earnings are reported within interest income on the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.

⁽³⁾ Reclassifications in earnings are reported in "Salaries and benefits" expense on the Company’s Consolidated Statements of Income.

See accompanying notes to consolidated financial statements.

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Dollars in thousands, except share and per share amounts)

Accumulated

Additional

Other

Common

Preferred

Paid-In

Retained

Comprehensive

Stock

Capital

Earnings

Income (Loss)

Total

Balance - December 31, 2023

99,147

173

1,782,286

1,018,070

(343,349)

2,556,327

Net Income

49,769

Other comprehensive loss (net of taxes of $8,182)

(30,949)

Dividends on common stock ($0.32 per share)

(24,027)

Dividends on preferred stock ($171.88 per share)

(2,967)

Atlantic Union Bankshares Corp [AUB] Filings

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