Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (NYSE: AUB) reported net income available to common shareholders of $46.8 million and basic and diluted earnings per common share of $0.62 for the first quarter of 2024 and adjusted operating earnings available to common shareholders⁽¹⁾ of $49.0 million and adjusted diluted operating earnings per common share⁽¹⁾ of $0.65 for the first quarter of 2024.

Merger with American National Bankshares Inc. (“American National”)

On April 1, 2024, the Company completed its merger with American National. Under the terms of the merger agreement, at the effective time of the merger, each outstanding share of American National common stock was converted into 1.35 shares of the Company’s common stock. With the acquisition of American National, we acquired 26 branches, deepening our presence in Central, Western and Southern Virginia and providing entry into North Carolina’s Piedmont Triad region and Raleigh.

During the first quarter of 2024, the Company incurred pre-tax merger costs of approximately $1.9 million related to the merger with American National. Because the merger closed on April 1, 2024, the historical consolidated financial results of American National are not included in the Company’s results of operations for the quarter ended March 31, 2024.

“Atlantic Union delivered good operating metrics in the first quarter as the industry saw continued pressure from the higher for longer interest rate environment and economic uncertainty,” said John C. Asbury, president and chief executive officer of Atlantic Union. “Our markets remain healthy, and we grew loans at an annualized mid-single digit rate and more than funded them with growth in customer deposits. Credit metrics remained stable, and operating expenses were well managed in line with our 2024 financial plan. We continue to believe that our business model of a diversified, traditional, full-service bank that delivers the products and services that our customers want and need, combined with local decision making, responsiveness, and client service orientation positively sets us apart from other banks, both larger and smaller. 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.

“I want to welcome our new shareholders, customers and Teammates from the American National Bankshares merger which closed on April 1, 2024. We look forward to a successful integration of American National into Atlantic Union and believe that this combination will be a catalyst for future growth and differentiated financial performance."

NET INTEREST INCOME

For the first quarter of 2024, net interest income was $147.8 million, a decrease of $5.7 million from $153.5 million in the fourth quarter of 2023. Net interest income (FTE)⁽¹⁾ was $151.5 million in the first quarter of 2024, a decrease of $5.8 million from $157.3 million in the fourth quarter of 2023. The decreases in net interest income and net interest income (FTE)^{( 1)} were primarily driven by higher deposit costs due to growth in average deposit balances and changes in the deposit mix as depositors continued to migrate to higher costing interest bearing deposit accounts and the lower day count in the quarter, as well as higher short-term borrowing costs due to an increase in average short-term borrowings in the quarter. These decreases were partially offset by higher yields on the loan portfolio and higher average balances of loans held for investment (“LHFI”). Both our net interest margin and net interest margin (FTE)⁽¹⁾ decreased 15 basis points from the prior quarter to 3.11% and 3.19%, respectively, for the quarter ended March 31, 2024, reflecting higher cost of funds, partially offset by higher yields on earning assets. Earning asset yields for the first quarter of 2024 increased 3 basis points to 5.62% compared to the fourth quarter of 2023, primarily due to higher yields on LHFI, as well as loan growth. The Company’s cost of funds increased by 18 basis points to 2.43% at March 31, 2024 compared to the prior quarter, due primarily to higher deposit costs driven by higher rates and changes in the deposit mix as noted above.

The Company’s net interest margin (FTE) ⁽¹⁾ includes the impact of acquisition accounting fair value adjustments. Net accretion related to acquisition accounting was $602,000 for the quarter ended March 31, 2024. The impact of net accretion in the fourth quarter of 2023 and first quarter of 2024 are reflected in the following table (dollars in thousands):

ASSET QUALITY

Overview

At March 31, 2024, nonperforming assets (“NPAs”) as a percentage of total LHFI was 0.23%, a decrease of 1 basis point from the prior quarter and included nonaccrual loans of $36.4 million. Accruing past due loans as a percentage of total LHFI totaled 32 basis points at March 31, 2024, an increase of 1 basis point from December 31, 2023 and an increase of 11 basis points from March 31, 2023. Net charge-offs were 0.13% of total average LHFI (annualized) for the first quarter of 2024, an increase of 10 basis points from December 31, 2023 and consistent with March 31, 2023. The net charge-offs in the first quarter of 2024 were primarily related to two credit relationships, which were previously reserved for in the prior quarter’s allowance for credit losses (“ACL”). The ACL totaled $151.8 million at March 31, 2024, a $3.3 million increase from the prior quarter, reflecting the impact of loan growth and continued uncertainty in the economic outlook on certain portfolios.

Nonperforming Assets

At March 31, 2024, NPAs totaled $36.4 million, compared to $36.9 million in the prior quarter. The following table shows a summary of NPA balances at the quarter ended (dollars in thousands):

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

Past Due Loans

At March 31, 2024, past due loans still accruing interest totaled $50.7 million or 0.32% of total LHFI, compared to $48.4 million or 0.31% of total LHFI at December 31, 2023, and $30.9 million or 0.21% of total LHFI at March 31, 2023. The increase in past due loan levels at March 31, 2024 from December 31, 2023 and March 31, 2023 was primarily within the 30-59 days past due category. Of the total past due loans still accruing interest, $11.4 million or 0.07% of total LHFI were past due 90 days or more at March 31, 2024, compared to $13.9 million or 0.09% of total LHFI at December 31, 2023, and $7.2 million or 0.05% of total LHFI at March 31, 2023.

Allowance for Credit Losses

At March 31, 2024, the ACL was $151.8 million and included an allowance for loan and lease losses (“ALLL”) of $136.2 million and a reserve for unfunded commitments of $15.6 million. The ACL at March 31, 2024 increased $3.3 million from December 31, 2023 primarily due to loan growth in the first quarter of 2024 and the impact of continued uncertainty in the economic outlook on certain portfolios.

The ACL as a percentage of total LHFI was 0.96% at March 31, 2024, an increase of 1 basis point from December 31, 2023. The ALLL as a percentage of total LHFI was 0.86% at March 31, 2024, compared to 0.85% at December 31, 2023.

Net Charge-offs

Net charge-offs were $4.9 million or 0.13% of total average LHFI on an annualized basis for the first quarter of 2024, compared to $1.2 million or 0.03% (annualized) for the fourth quarter of 2023, and $4.6 million or 0.13% (annualized) for the first quarter of 2023. The net charge-offs in the first quarter of 2024 were primarily related to two credit relationships, which were previously reserved for in the prior quarter’s ACL.

Provision for Credit Losses

For the first quarter of 2024, the Company recorded a provision for credit losses of $8.2 million, compared to a provision for credit losses of $8.7 million in the prior quarter, and a provision for credit losses of $11.9 million in the first quarter of 2023.

NONINTEREST INCOME

Noninterest income decreased $4.4 million to $25.6 million for the first quarter of 2024 from $30.0 million in the prior quarter, primarily driven by a $2.4 million decrease in loan-related interest swap fees in the first quarter as swap transactions decreased from the seasonally high fourth quarter, and a $2.2 million decrease in other operating income, as the prior quarter included a $1.9 million gain related to a sale-leaseback transaction of one branch location.

NONINTEREST EXPENSE

Noninterest expense decreased $2.6 million to $105.3 million for the first quarter of 2024 from $107.9 million in the prior quarter, primarily driven by a $3.5 million decrease in other expenses, which included a $3.3 million legal reserve incurred in the prior quarter related to our previously disclosed settlement with the CFPB; a $2.5 million decrease in FDIC assessment premiums and other insurance, which included a $3.4 million FDIC special assessment in the prior quarter, compared to $840,000 in the first quarter of 2024; a $1.3 million decrease in professional services expense primarily due to a decrease in costs related to strategic initiatives as the Company focused on completing its merger with American National; and a $700,000 decrease in marketing and advertising expenses. These decreases were partially offset by a $5.2 million increase in salaries and benefits due to seasonal increases in payroll related taxes and 401(k) contribution expenses in the first quarter.

INCOME TAXES

The effective tax rate for the three months ended March 31, 2024 and 2023 was 16.9% and 17.0%, respectively.

BALANCE SHEET

At March 31, 2024, total assets were $21.4 billion, an increase of $211.9 million or approximately 4.0% (annualized) from December 31, 2023 and $1.3 billion or approximately 6.3% from March 31, 2023. The increases in total assets were primarily driven by growth in LHFI (net of deferred fees and costs).

At March 31, 2024, LHFI (net of deferred fees and costs) totaled $15.9 billion, an increase of $216.6 million or 5.6% (annualized) from $15.6 billion at December 31, 2023, and an increase of $1.3 billion or 8.7% from March 31, 2023. Quarterly average LHFI (net of deferred fees and costs) totaled $15.7 billion at March 31, 2024, an increase of $338.1 million or 8.8% (annualized) from the prior quarter, and an increase of $1.2 billion or 8.5% from March 31, 2023. LHFI (net of deferred fees and costs) increased from the prior quarter primarily due to increases in the construction and land development and other commercial loan portfolios, and increased from the same period in the prior year primarily due to increases in the commercial and industrial, commercial real estate non-owner occupied, multifamily real estate, and other commercial loan portfolios.

At March 31, 2024, total investments were $3.1 billion, a decrease of $42.7 million or 5.4% (annualized) from December 31, 2023, and a decrease of $54.0 million or 1.7% from March 31, 2023. Available for sale (“AFS”) securities totaled $2.2 billion at both March 31, 2024 and December 31, 2023 and decreased slightly from $2.3 billion at March 31, 2023. Total net unrealized losses on the AFS securities portfolio were $410.9 million at March 31, 2024, compared to $384.3 million at December 31, 2023 and $407.9 million at March 31, 2023. Held to maturity securities are carried at cost and totaled $828.9 million at March 31, 2024, $837.4 million at December 31, 2023, and $855.4 million at March 31, 2023 and had net unrealized losses of $37.6 million at March 31, 2024, compared to $29.3 million at December 31, 2023 and $32.3 million at March 31, 2023.

At March 31, 2024, total deposits were $17.3 billion, an increase of $460.3 million or 11.0% (annualized) from the prior quarter. Average deposits at March 31, 2024 increased from the prior quarter by $33.8 million or 0.8% (annualized). Total deposits at March 31, 2024 increased $822.5 million or 5.0% from March 31, 2023, and quarterly average deposits at March 31, 2024 increased $730.0 million or 4.4% from the same period in the prior year. Total deposits increased from the prior quarter and the same period in the prior year primarily due to increases in interest bearing customer deposits and brokered deposits, partially offset by decreases in demand deposits.

At March 31, 2024, total borrowings were $1.1 billion, a decrease of $254.1 million from December 31, 2023 and an increase of $258.8 million from March 31, 2023. At March 31, 2024, average borrowings were $1.0 billion, an increase of $220.5 million from December 31, 2023, and a decrease of $108.2 million from March 31, 2023. The increase in average borrowings from the prior quarter was primarily driven by increased use of short-term borrowings to fund loan growth, while the decrease from the same period in the prior year was due to paydowns of short-term borrowings due to deposit growth.

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

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During the first 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 fourth quarter of 2023 and the first quarter of 2023. During the first quarter of 2024, the Company also declared and paid cash dividends of $0.32 per common share, consistent with the fourth quarter of 2023 and a $0.02 increase or approximately 6.7% from the first 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 has 135 branches and approximately 150 ATMs located throughout Virginia and in portions of Maryland and North Carolina as of April 1, 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.

FIRST 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 Tuesday, April 23, 2024, during which management will review our financial results for the first quarter 2024 and provide an update on our recent activities.

The listen-only webcast and the accompanying slides can be accessed at: https://edge.media-server.com/mmc/p/m7656v4x.

For analysts who wish to participate in the conference call, please register at the following URL: https://register.vevent.com/register/BI5e168257724b4c1d8f709d38b7cc139c. 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 March 31, 2024, the Company has provided supplemental performance measures on a tax-equivalent, tangible, operating, adjusted or pre-tax pre-provision basis. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. The Company uses the non-GAAP financial measures discussed herein in its analysis of the Company’s performance. The Company’s 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 the Company’s 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 expectations with regard to 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;
• 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 impact of purchase accounting with respect to our merger with American National, or any change in the assumptions used regarding the assets acquired and liabilities assumed to determine the fair value and credit marks;
• the possibility that the anticipated benefits of our merger with American National, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy, competitive factors in the areas where we do business, or as a result of other unexpected factors or events;
• potential adverse reactions or changes to business or employee relationships, including those resulting from our merger with American National;
• the integration of the business and operations of American National may take longer or be more costly than anticipated;
• 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;
• our liquidity and capital positions;
• 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;
• legislative or regulatory changes and requirements;
• 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;
• the effects of changes in federal, state or local tax laws and regulations;
• 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.