Atlantic Union Bankshares investor call today, Monday, October 21, 2024 at 9:00 a.m. (EDT)

Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (NYSE: AUB) reported net income available to common shareholders of $73.4 million and basic and diluted earnings per common share of $0.82 for the third quarter of 2024 and adjusted operating earnings available to common shareholders⁽¹⁾ of $74.5 million and adjusted diluted operating earnings per common share⁽¹⁾ of $0.83 for the third quarter of 2024.

“Atlantic Union delivered solid financial results in the quarter and the enhanced earnings power we envisioned as a result of the American National Bankshares acquisition is now evident,” said John C. Asbury, president and chief executive officer of Atlantic Union. “During the quarter, we completed the integration work associated with American National Bank and added to our teams in our North Carolina markets which we believe offer long term growth and expansion opportunities. October marks the 8-year anniversary of my having joined the Company, and the transformation we have achieved during this time is exactly what we said we’d do at the outset. This would not have been possible without the dedication of our Teammates and support of our customers. We remain excited about what the future holds for Atlantic Union.

“Operating under the mantra of soundness, profitability, and growth – in that order of priority – Atlantic Union remains committed to generating sustainable, profitable growth, and building long-term value for our shareholders.”

NET INTEREST INCOME

For the third quarter of 2024, net interest income was $182.9 million, a decrease of $1.6 million from $184.5 million in the second quarter of 2024. Net interest income - fully taxable equivalent (“FTE”)⁽¹⁾ was $186.8 million in the third quarter of 2024, a decrease of $1.5 million from $188.3 million in the second quarter of 2024. The decreases from the prior quarter in both net interest income and net interest income (FTE)⁽¹⁾ were primarily the result of increased interest expense due to the $111.3 million increase in average interest bearing liabilities and lower net accretion income and investment securities interest income, partially offset by increased interest income due to the $165.4 million increase in average loans held for investment (“LHFI”). For the third quarter of 2024, both the Company’s net interest margin and the net interest margin (FTE)⁽¹⁾ decreased 8 basis points compared to the prior quarter to 3.31% and to 3.38%, respectively, primarily due to higher cost of funds and lower yields on earning assets. Earning asset yields for the third quarter of 2024 decreased 2 basis points to 5.94% compared to the second quarter of 2024, primarily due to lower yields on securities and lower loan accretion income, partially offset by growth in average LHFI. Cost of funds increased from the prior quarter by 6 basis points to 2.56% for the third quarter of 2024, due primarily to average deposit growth in higher yielding deposit products, partially offset by lower borrowing costs.

The Company’s net interest margin (FTE) ⁽¹⁾ includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting declined by $1.6 million to $12.7 million for the quarter ended September 30, 2024, compared to $14.3 million for the quarter ended June 30, 2024. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):

ASSET QUALITY

Overview

At September 30, 2024, nonperforming assets (“NPAs”) as a percentage of total LHFI was 0.20%, consistent with the prior quarter and included nonaccrual loans of $36.8 million. Accruing past due loans as a percentage of total LHFI totaled 30 basis points at September 30, 2024, an increase of 8 basis points from June 30, 2024, and an increase of 3 basis points from September 30, 2023. Net charge-offs were 0.01% of total average LHFI (annualized) for the third quarter of 2024, a decrease of 3 basis points from June 30, 2024, and consistent with September 30, 2023. The allowance for credit losses (“ACL”) totaled $177.6 million at September 30, 2024, a $1.9 million increase from the prior quarter.

Nonperforming Assets

At September 30, 2024, NPAs totaled $37.3 million, compared to $36.1 million in the prior quarter. The following table shows a summary of NPA balances at the quarters ended (dollars in thousands):

The following table shows the activity in nonaccrual loans for the quarters ended (dollars in thousands):

Past Due Loans

At September 30, 2024, past due loans still accruing interest totaled $55.2 million or 0.30% of total LHFI, compared to $40.2 million or 0.22% of total LHFI at June 30, 2024, and $40.6 million or 0.27% of total LHFI at September 30, 2023. The increase in past due loan levels at September 30, 2024 from June 30, 2024 was primarily within the 60-89 days past due category and driven by increases in past due relationships within the Commercial Real Estate (“CRE”) non-owner occupied, CRE owner occupied, and residential 1-4 family consumer as well as increases in Commercial and Industrial (“C&I”) past due relationships within the 30-59 days past due category. Of the total past due loans still accruing interest, $15.2 million or 0.08% of total LHFI were past due 90 days or more at September 30, 2024, compared to $15.6 million or 0.09% of total LHFI at June 30, 2024, and $11.9 million or 0.08% of total LHFI at September 30, 2023.

Allowance for Credit Losses

At September 30, 2024, the ACL was $177.6 million and included an allowance for loan and lease losses (“ALLL”) of $160.7 million and a reserve for unfunded commitments (“RUC”) of $16.9 million. The ACL at September 30, 2024 increased $1.9 million from June 30, 2024, primarily due to the impact of continued uncertainty in the economic outlook on certain portfolios.

The ACL as a percentage of total LHFI was 0.97% at September 30, 2024, compared to 0.96% at June 30, 2024. The ALLL as a percentage of total LHFI was 0.88% at September 30, 2024, compared to 0.86% at June 30, 2024.

Net Charge-offs

Net charge-offs were $0.7 million or 0.01% of total average LHFI on an annualized basis for the third quarter of 2024, compared to $1.7 million or 0.04% (annualized) for the second quarter of 2024, and $0.3 million or 0.01% (annualized) for the third quarter of 2023.

Provision for Credit Losses

For the third quarter of 2024, the Company recorded a provision for credit losses of $2.6 million, compared to $21.8 million in the prior quarter, and $5.0 million in the third quarter of 2023. Included in the provision for credit losses for the second quarter of 2024 was $13.2 million initial provision expense on non-purchased credit deteriorated loans and $1.4 million on unfunded commitments, each acquired from American National Bankshares Inc. (“American National”).

NONINTEREST INCOME

Noninterest income increased $10.5 million to $34.3 million for the third quarter of 2024 from $23.8 million in the prior quarter, primarily driven by $6.5 million of pre-tax losses incurred in the prior quarter on the sale of available for sale (“AFS”) securities as part of the Company’s restructuring of the American National securities portfolio.

Adjusted operating noninterest income,⁽¹⁾ which excludes losses and gains on sale of AFS securities (pre-tax gains of $4,000 in the third quarter and pre-tax losses of $6.5 million in the second quarter), increased $4.0 million to $34.3 million for the third quarter from $30.3 million for the prior quarter, primarily driven by a $1.9 million increase in other operating income due to an increase in equity method investment income, a $1.2 million increase in bank owned life insurance income primarily driven by death benefits received in the third quarter, and a $706,000 seasonal increase in service charges on deposit accounts.

NONINTEREST EXPENSE

Noninterest expense decreased $27.4 million to $122.6 million for the third quarter of 2024 from $150.0 million in the prior quarter, primarily driven by a $28.4 million decrease in pre-tax merger-related expenses associated with the American National acquisition.

Adjusted operating noninterest expense,⁽¹⁾ which excludes merger-related costs ($1.4 million in the third quarter and $29.8 million in the second quarter) and amortization of intangible assets ($5.8 million in the third quarter and $6.0 million in the second quarter), increased $1.2 million to $115.4 million for the third quarter from $114.2 million in the prior quarter, primarily driven by a $923,000 increase in salaries and benefits due to increases in variable incentive compensation expenses and full-time equivalent employees, as well as a $607,000 increase in Federal Deposit Insurance Corporation (“FDIC”) assessment premiums and other insurance driven by an increase in our assessment base as a result of the American National acquisition. These increases were partially offset by a $537,000 decrease in technology and data processing expense.

INCOME TAXES

The Company’s effective tax rate for the three months ended September 30, 2024 and 2023 was 17.0% and 17.6%, respectively, and the effective tax rate for the nine months ended September 30, 2024 and 2023 was 19.7% and 16.3%. respectively. The increase in the effective tax rate for the nine months ended September 30, 2024 was primarily due to a $4.8 million valuation allowance established during the second quarter of 2024, which resulted in a 250 basis points increase in the effective tax rate.

BALANCE SHEET

At September 30, 2024, total assets were $24.8 billion, an increase of $42.3 million or approximately 0.7% (annualized) from June 30, 2024 and $4.1 billion or approximately 19.6% from September 30, 2023. Total assets increased from the prior quarter due to an increase in cash and cash equivalents primarily due to deposit growth, as well as an increase in the investment securities portfolio due to an increase in the market value of the AFS securities portfolio, partially offset by a decrease in other assets driven by decreases in deferred income taxes associated with other comprehensive income fair value changes related to AFS securities and derivatives in the current quarter. The increase in total assets from the prior year was due to growth in LHFI and the AFS securities portfolio, primarily due to the American National acquisition.

As a result of the American National acquisition, the Company’s associated goodwill at September 30, 2024 totaled $287.5 million. During the quarter ended September 30, 2024, the Company adjusted the allocation of the purchase price for certain provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period adjustments recorded in this quarter relate to deferred taxes, the fair values of long-term borrowings, and foreclosed properties, which resulted in a $5.2 million increase in the preliminary goodwill recognized during the second quarter of 2024.

At September 30, 2024, LHFI totaled $18.3 billion, a decrease of $9.9 million or 0.2% (annualized) from June 30, 2024, and an increase of $3.1 billion or 20.0% from September 30, 2023. LHFI decreased from the prior quarter primarily due to decreases in the commercial and industrial loan portfolio as a result of loan paydowns and lower revolving credit usage, partially offset by increases in the construction and land development loan portfolio as construction projects continued to fund up. The increase from the same period in the prior year was primarily due to the American National acquisition. Quarterly average LHFI totaled $18.3 billion, an increase of $165.4 million or 3.6% (annualized) from the prior quarter, and an increase of $3.5 billion or 23.8% (annualized) from September 30, 2023. Quarterly average LHFI increased from the prior quarter primarily due to an increase in the CRE owner occupied, multifamily real estate, and construction and land development loan portfolios, partially offset by a decrease in the CRE non-owner occupied loan portfolio. The increase from the same period in the prior year was primarily due to the American National acquisition, as well as loan growth.

At September 30, 2024, total investments were $3.5 billion, an increase of $41.7 million or 4.7% (annualized) from June 30, 2024, and an increase of $500.2 million or 16.5% from September 30, 2023. The increase compared to the prior quarter was primarily due to the increase in the market value of the AFS securities portfolio, and the increase compared to the same period in the prior year was primarily due to the American National acquisition. AFS securities totaled $2.6 billion at both September 30, 2024 and June 30, 2024 and increased from $2.1 billion at September 30, 2023. Total net unrealized losses on the AFS securities portfolio were $334.5 million at September 30, 2024, compared to $420.7 million at June 30, 2024, and $523.1 million at September 30, 2023. Held to maturity securities are carried at cost and totaled $807.1 million at September 30, 2024, $810.5 million at June 30, 2024, and $843.3 million at September 30, 2023 and had net unrealized losses of $30.3 million at September 30, 2024, $44.0 million at June 30, 2024, and $81.2 million at September 30, 2023.

At September 30, 2024, total deposits were $20.3 billion, an increase of $304.4 million or 6.1% (annualized) from the prior quarter. Average deposits at September 30, 2024 increased from the prior quarter by $140.5 million or 2.8% (annualized). Total deposits at September 30, 2024 increased $3.5 billion or 21.0% from September 30, 2023, and quarterly average deposits at September 30, 2024 increased $3.4 billion or 20.1% from the same period in the prior year. The increase in deposit balances from the prior quarter are primarily due to increases in interest bearing customer deposits and brokered deposits of $325.6 million and $83.2 million, respectively, partially offset by decreases of $104.4 million in demand deposits. The increase from the same period in the prior year is primarily related to the addition of the American National acquired deposits, as well as an increase of $901.5 million in brokered deposits.

At September 30, 2024, total borrowings were $852.2 million, a decrease of $354.6 million from June 30, 2024 and a decrease of $168.5 million from September 30, 2023. At September 30, 2024 average borrowings were $855.3 million, a decrease of $188.0 million from June 30, 2024, and a decrease of $49.9 million from September 30, 2023. The decreases in average borrowings from the prior quarter and the same period in the prior year were primarily due to paydowns of short-term borrowings due to deposit growth.

The following table shows the Company’s capital ratios at the quarters ended:

During the third quarter of 2024, the Company declared and paid a quarterly dividend on the outstanding shares of Series A Preferred Stock of $171.88 per share (equivalent to $0.43 per outstanding depositary share), consistent with the second quarter of 2024 and the third quarter of 2023. During the third quarter of 2024, the Company also declared and paid cash dividends of $0.32 per common share, consistent with the second quarter of 2024 and a $0.02 increase or approximately 6.7% from the third quarter of 2023.

ABOUT ATLANTIC UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank had 129 branches and approximately 150 ATMs located throughout Virginia and in portions of Maryland and North Carolina as of September 30, 2024. Certain non-bank financial services affiliates of Atlantic Union Bank include: Atlantic Union Equipment Finance, Inc., which provides equipment financing; Atlantic Union Financial Consultants, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

THIRD QUARTER 2024 EARNINGS RELEASE CONFERENCE CALL

The Company will hold a conference call and webcast for investors at 9:00 a.m. Eastern Time on Monday, October 21, 2024, during which management will review our financial results for the third quarter 2024 and provide an update on our recent activities. This call has been rescheduled from the previously announced date and time.

The listen-only webcast and the accompanying slides can be accessed at:

https://edge.media-server.com/mmc/p/6q92at5j.

For analysts who wish to participate in the conference call, please register at the following URL:

https://register.vevent.com/register/BI352e42e841fa454e85cc98ae24ac2697. To participate in the conference call, you must use the link to receive an audio dial-in number and an Access PIN.

A replay of the webcast, and the accompanying slides, will be available on the Company’s website for 90 days at:

https://investors.atlanticunionbank.com/.

NON-GAAP FINANCIAL MEASURES

In reporting the results as of and for the period ended September 30, 2024, we have provided supplemental performance measures determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare our financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. We use the non-GAAP financial measures discussed herein in its analysis of our performance. Our management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance. For a reconciliation of these measures to their most directly comparable GAAP measures and additional information about these non-GAAP financial measures, see “Alternative Performance Measures (non-GAAP)” in the tables within the section “Key Financial Results.”

FORWARD-LOOKING STATEMENTS

This press release and statements by our management may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, statements made in Mr. Asbury’s quotations, statements regarding our future ability to recognize the benefits of certain tax assets, our business, financial and operating results, including our deposit base and funding, the impact of future economic conditions, changes in economic conditions, our asset quality, our customer relationships, and statements that include other projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” “continue,” “confidence,” or words of similar meaning or other statements concerning opinions or judgment of the Company and our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in:

• market interest rates and their related impacts on macroeconomic conditions, customer and client behavior, our funding costs and our loan and securities portfolios;
• inflation and its impacts on economic growth and customer and client behavior;
• adverse developments in the financial industry generally, such as bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior;
• the sufficiency of liquidity and changes in our capital positions;
• general economic and financial market conditions, in the United States generally and particularly in the markets in which we operate and which our loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth;
• the American National acquisition, including the impact of purchase accounting, any change in the assumptions used regarding the assets acquired and liabilities assumed to determine the fair value and credit marks, and the possibility that the anticipated benefits are not realized when expected or at all;
• potential adverse reactions or changes to business or employee relationships, including those resulting from the American National acquisition;
• monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve;
• the quality or composition of our loan or investment portfolios and changes therein;
• demand for loan products and financial services in our market areas;
• our ability to manage our growth or implement our growth strategy;
• the effectiveness of expense reduction plans;
• the introduction of new lines of business or new products and services;
• our ability to recruit and retain key employees;
• real estate values in our lending area;
• changes in accounting principles, standards, rules, and interpretations, and the related impact on our financial statements;
• an insufficient ACL or volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by changing economic conditions, credit concentrations, inflation, changing interest rates, or other factors;
• concentrations of loans secured by real estate, particularly commercial real estate;
• the effectiveness of our credit processes and management of our credit risk;
• our ability to compete in the market for financial services and increased competition from fintech companies;
• technological risks and developments, and cyber threats, attacks, or events;
• operational, technological, cultural, regulatory, legal, credit, and other risks associated with the exploration, consummation and integration of potential future acquisitions, whether involving stock or cash considerations;
• the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as pandemics), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of our borrowers to satisfy their obligations to us, on the value of collateral securing loans, on the demand for our loans or our other products and services, on supply chains and methods used to distribute products and services, on incidents of cyberattack and fraud, on our liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of our business operations and on financial markets and economic growth;
• performance by our counterparties or vendors;
• deposit flows;
• the availability of financing and the terms thereof;
• the level of prepayments on loans and mortgage-backed securities;
• the effects of legislative or regulatory changes and requirements, including changes in federal, state or local tax laws;
• actual or potential claims, damages, and fines related to litigation or government actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;
• any event or development that would cause us to conclude that there was an impairment of any asset, including intangible assets, such as goodwill; and
• other factors, many of which are beyond our control.

Please also refer to such other factors as discussed throughout Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10‑K for the year ended December 31, 2023 and related disclosures in other filings, which have been filed with the U.S. Securities and Exchange Commission (“SEC”) and are available on the SEC’s website at www.sec.gov. All risk factors and uncertainties described herein and therein should be considered in evaluating forward-looking statements, and all of the forward-looking statements are expressly qualified by the cautionary statements contained or referred to herein and therein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the Company or our businesses or operations. Readers are cautioned not to rely too heavily on forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not intend or assume any obligation to update, revise or clarify any forward-looking statements that may be made from time to time by or on behalf of the Company, whether as a result of new information, future events or otherwise, except as required by law.