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Press Release

Atlantic Union Bankshares Reports Second Quarter Results

Company Release - 7/23/2020 7:30 AM ET

RICHMOND, Va., July 23, 2020 (GLOBE NEWSWIRE) -- Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (Nasdaq: AUB) today reported net income of $30.7 million and diluted earnings per share of $0.39 for its second quarter ended June 30, 2020.  Pre-tax pre-provision earnings(1) were $70.4 million, or $0.89 per share(1), in the second quarter ended June 30, 2020.

Net income was $37.8 million and earnings per share were $0.48 for the six months ended June 30, 2020.  Pre-tax pre-provision earnings(1) were $138.7 million, or $1.76 per share(1), in the six months ended June 30, 2020.

“During the second quarter Atlantic Union demonstrated resilience, agility and innovation along with its willingness to make the tough decisions required to successfully navigate through the challenges of COVID-19,” said John C. Asbury, President and Chief Executive Officer of Atlantic Union. “We have remained focused on helping our customers and our communities weather the storm as exemplified by our team’s ability to process more than 11,000 loans which provided approximately $1.7 billion to businesses through the Small Business Administration’s Paycheck Protection Program during the second quarter. 

“Operating under the mantra of soundness, profitability and growth – in that order of priority – we believe that Atlantic Union continues to be in a strong financial position with ample liquidity and a well-fortified capital base further enhanced by the issuance of preferred stock during the quarter.  We also took action to better align our expense run rate to the revenue reality of the much lower for longer than expected interest rate environment.  This includes the consolidation of 14 branches, or nearly 10% of our branch network, that is expected to close in September.”

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”)

During the second quarter of 2020, the Company continued to participate in the SBA PPP under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was intended to provide economic relief to small businesses that have been adversely impacted by the COVID-19 global pandemic (“COVID-19”).  The Company processed over 11,000 loans, which totaled $1.7 billion with a recorded investment of $1.6 billion as of June 30, 2020. The loans carry a 1% interest rate and the Company recorded net PPP loan origination fees of approximately $50.2 million which are being amortized over a 24-month period.

Expense Reduction Measures and Balance Sheet Repositioning

During the second quarter of 2020, the Company undertook several actions, including a planned consolidation of 14 branches expected to occur in September, to reduce expenses in light of the current and expected operating environment. These actions resulted in expenses during the second quarter of $1.8 million of severance costs and also $1.6 million related to the real estate write-downs. 

In response to the current rate environment, the Company prepaid a Federal Home Loan Bank (“FHLB”) advance, which resulted in a prepayment penalty of approximately $10.3 million, and sold several securities, which resulted in a gain of approximately $10.3 million.

On June 9, 2020, the Company issued and sold 6,900,000 depositary shares, each representing a 1/400th ownership interest in a share of the Company’s 6.875% Perpetual Non-Cumulative Preferred Stock, Series A (“Series A Preferred Stock”), par value $10.00 per share of Series A Preferred Stock, with a liquidation preference of $10,000 per share of Series A Preferred Stock. The net proceeds received from the issuance of the Series A Preferred Stock were approximately $166.4 million, after deducting the underwriting discount and other offering expenses payable by the Company.

(1) These are financial measures not calculated in accordance with generally accepted accounting principles (“GAAP”). For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

NET INTEREST INCOME

For the second quarter of 2020, net interest income was $137.3 million, an increase from $135.0 million reported in the first quarter of 2020. Net interest income (FTE)(1) was $140.1 million in the second quarter of 2020, an increase of $2.3 million from the first quarter of 2020. The second quarter net interest margin decreased 26 basis points to 3.23% from 3.49% in the previous quarter, while the net interest margin (FTE)(1)  decreased 27 basis points to 3.29% from 3.56% during the same period. The decreases in the net interest margin and net interest margin (FTE) were principally due to a 60 basis point decrease in the yield on earning assets (FTE)(1) offset by a 33 basis point decrease in cost of funds. The decline in the Company’s earning asset yields was driven by the impact of the lower yielding PPP loans originated during the second quarter and the full quarter impact of the lower interest rate environment. The cost of funds decline was driven by lower deposit costs and wholesale borrowing costs driven by lower market interest rates and a favorable funding mix.

The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. During the second quarter of 2020, net accretion related to acquisition accounting decreased $3.1 million from the prior quarter to $6.3 million for the quarter ended June 30, 2020. The first and second quarters of 2020, and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):

             
     Deposit       
  Loan Accretion Borrowings   
  Accretion (Amortization) Amortization Total
For the quarter ended March 31, 2020 $ 9,528 $ 50  $ (138) $ 9,440
For the quarter ended June 30, 2020   6,443   34    (140)   6,337
For the remaining six months of 2020 (estimated)   5,400   49    (355)   5,094
For the years ending (estimated):            
2021   9,405   14    (807)   8,612
2022   7,569   (43)   (829)   6,697
2023   5,415   (32)   (852)   4,531
2024   4,406   (4)   (877)   3,525
2025   3,322   (1)   (900)   2,421
Thereafter   14,931   —    (9,873)   5,058


(1) These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

ASSET QUALITY

Overview
During the second quarter of 2020, the Company experienced decreases in nonperforming assets (“NPAs”) primarily due to nonaccrual loan customer payments. Past due loan levels as a percentage of total loans held for investment at June 30, 2020 were down from past due loan levels at March 31, 2020 and June 30, 2019.  Net charge-off levels and the provision for loan losses decreased from the first quarter of 2020.

Loan Modifications for Borrowers Affected by COVID-19
On March 22, 2020, the five federal bank regulatory agencies and the Conference of State Bank Supervisors issued joint
guidance (subsequently revised on April 7, 2020) with respect to loan modifications for borrowers affected by COVID-19 (the “March 22 Joint Guidance”). The March 22 Joint Guidance encourages banks, savings associations, and credit unions to make loan modifications for borrowers affected by COVID-19 and, importantly, assures those financial institutions that they will not (i) receive supervisory criticism for such prudent loan modifications and (ii) be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The federal banking regulators have confirmed with the Financial Accounting Standards Board (or FASB) that short-term loan modifications made on a good faith basis in response to COVID-19 to borrowers who were current (i.e., less than 30 days past due on contractual payments) prior to any loan modification are not TDRs.

In addition, Section 4013 of the CARES Act provides banks, savings associations, and credit unions with the ability to make loan modifications related to COVID-19 without categorizing the loan as a TDR or conducting the analysis to make the determination, which is intended to streamline the loan modification process. Any such suspension is effective for the term of the loan modification; however, the suspension is only permitted for loan modifications made during the effective period of Section 4013 and only for those loans that were not more than thirty days past due as of December 31, 2019.

The Company has made certain loan modifications pursuant to the March 22 Joint Guidance or Section 4013 of the CARES Act and as of June 30, 2020 approximately $1.6 billion remain under their modified terms.

Nonperforming Assets
At June 30, 2020, NPAs totaled $44.0 million, a decrease of $4.4 million from March 31, 2020. NPAs as a percentage of total outstanding loans at June 30, 2020 were 0.31%, a decrease of 7 basis points from 0.38% at March 31, 2020. Excluding the impact of the PPP loans(1), NPAs as a percentage of total outstanding loans were 0.35%, a decrease of 3 basis points from March 31, 2020. The Company’s adoption of current expected credit loss (“CECL”) on January 1, 2020 resulted in a change in the accounting and reporting related to purchased credit impaired (“PCI”) loans, which are now defined as purchased credit deteriorated (“PCD”) and evaluated at the loan level instead of being evaluated in pools under PCI accounting.  All prior period nonaccrual and past due loan metrics discussed herein have not been restated for CECL accounting and exclude PCI-related loan balances.

(1) These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

The following table shows a summary of nonperforming asset balances at the quarter ended (dollars in thousands):

                
  June 30,  March 31,  December 31,  September 30,  June 30, 
  2020 2020 2019 2019 2019
Nonaccrual loans $ 39,624 $ 44,022 $ 28,232 $ 30,032 $ 27,462
Foreclosed properties   4,397   4,444   4,708   6,385   6,506
Total nonperforming assets $ 44,021 $ 48,466 $ 32,940 $ 36,417 $ 33,968

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

                
  June 30,  March 31,  December 31,  September 30,  June 30, 
  2020
 2020
 2019
 2019
 2019
Beginning Balance $ 44,022  $ 28,232  $ 30,032  $ 27,462  $ 24,841 
Net customer payments   (6,524)   (3,451)   (5,741)   (3,612)   (3,108)
Additions   3,206    6,059    5,631    8,327    6,321 
Impact of CECL adoption   —    14,381    —    —    — 
Charge-offs   (1,088)   (1,199)   (1,690)   (884)   (592)
Loans returning to accruing status   8    —    —    (1,103)   — 
Transfers to foreclosed property   —    —    —    (158)   — 
Ending Balance $ 39,624  $ 44,022  $ 28,232  $ 30,032  $ 27,462 

The following table shows the activity in foreclosed properties for the quarter ended (dollars in thousands):

                
  June 30,  March 31,  December 31,  September 30,  June 30, 
  2020
 2020
 2019
 2019  2019 
Beginning Balance $ 4,444  $ 4,708  $ 6,385  $ 6,506  $ 7,353 
Additions of foreclosed property   —    615    62    645    271 
Valuation adjustments   —    (44)   (375)   (62)   (433)
Proceeds from sales   (55)   (854)   (1,442)   (737)   (638)
Gains (losses) from sales   8    19    78    33    (47)
Ending Balance $ 4,397  $ 4,444  $ 4,708  $ 6,385  $ 6,506 

Past Due Loans
Past due loans still accruing interest totaled $40.5 million or 0.28% of total loans held for investment at June 30, 2020, compared to $75.1 million or 0.59% of total loans held for investment at March 31, 2020, and $43.1 million or 0.35% of total loans held for investment at June 30, 2019. Excluding the impact of the PPP loans(1), past due loans still accruing interest were 0.32% of total loans held for investment at June 30, 2020. Of the total past due loans still accruing interest, $19.3 million or 0.13% of total loans held for investment were loans past due 90 days or more at June 30, 2020, compared to $12.9 million or 0.10% of total loans held for investment at March 31, 2020, and $8.8 million or 0.07% of total loans held for investment at June 30, 2019.

(1) These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

Net Charge-offs
For the second quarter of 2020, net charge-offs were $3.3 million, or 0.09% of total average loans on an annualized basis, compared to $5.0 million, or 0.16%, for the prior quarter, and $4.3 million, or 0.14%, for the second quarter last year. Excluding the impact of the PPP loans(1), net charge-offs were 0.10% of total average loans on an annualized basis. The majority of net charge-offs in the second quarter of 2020 were related to the third-party consumer loan portfolio.

(1) These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

Provision for Credit Losses
The provision for credit losses for the second quarter of 2020 was $34.2 million, a decrease of $26.0 million compared to the previous quarter. The provision for credit losses for the second quarter of 2020 consisted of $32.2 million in provision for loan losses and $2.0 million in provision for unfunded commitments.  

Allowance for Credit Losses (“ACL”)
At June 30, 2020, the ACL was $181.0 million and included an allowance for loan and lease losses (“ALLL”) of $170.0 million and a reserve for unfunded commitments (“RUC”) of $11.0 million. The ACL increased $30.9 million from March 31, 2020, primarily due to the worsening economic forecast related to COVID-19.

The ALLL increased $28.9 million and the RUC increased $2.0 million from March 31, 2020, due to the worsening economic forecast related to COVID-19. The ALLL as a percentage of the total loan portfolio was 1.19% at June 30, 2020 and 1.10% at March 31, 2020, and the ACL as percentage of total loans was 1.26% at June 30, 2020. When excluding PPP loans(1), which are 100% guaranteed by the SBA, the ALLL as a percentage of adjusted loans increased 24 bps to 1.34% from the prior quarter and the ACL as a percentage of adjusted loans increased 24 bps to 1.42% from the prior quarter. The ratio of the ALLL to nonaccrual loans was 429.0% at June 30, 2020, compared to 320.4% at March 31, 2020.

(1) These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

NONINTEREST INCOME

Noninterest income increased $7.0 million to $35.9 million for the quarter ended June 30, 2020 from $28.9 million in the prior quarter primarily driven by a $10.3 million gain on sale of investment securities recorded during the quarter and an increase of $1.5 million in loan related interest rate swap income. In addition, mortgage banking income was higher by $3.8 million primarily due to increased mortgage loan refinance volumes due to the current low interest rate environment. Partially offsetting these increases was a decline in service charges on deposit accounts of $2.6 million primarily due to lower NSF and overdraft incident fees, $2.5 million in unrealized losses related to equity method investments due to the current economic environment related to COVID-19, and a decline of $469,000 in fiduciary and asset management fees.

NONINTEREST EXPENSE

Noninterest expense increased $7.2 million to $102.8 million for the quarter ended June 30, 2020 from $95.6 million in the prior quarter primarily driven by the recognition of approximately $10.3 million loss on debt extinguishment resulting from the prepayment of approximately $200.0 million in long-term FHLB advances. The increases were partially offset by a decline in marketing and advertising expense of approximately $696,000 and training and other personnel costs of approximately $695,000. Noninterest expense also included approximately $1.6 million in real estate-related branch closure costs and approximately $1.8 million in severance expenses related to the Company’s expense reduction plans.  Also included in noninterest expense are costs related to the Company’s response to COVID-19 of approximately $620,000.

INCOME TAXES

The effective tax rate for the three months ended June 30, 2020 was 15.2% compared to 12.2% for the three months ended March 31, 2020. The increase in the effective tax rate was primarily due to tax benefits related to stock compensation during the first quarter of 2020 in accordance with ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” as well as tax-exempt income being a higher component of pre-tax income in the first quarter of 2020 compared to the second quarter of 2020.

BALANCE SHEET

At June 30, 2020, total assets were $19.8 billion, an increase of $1.9 billion, or approximately 42.9% (annualized), from March 31, 2020, and an increase of $2.6 billion, or approximately 15.1% from June 30, 2019. The increase in assets from the prior quarter was driven by PPP loans while growth from the prior year was primarily a result of both organic and PPP loan growth.

At June 30, 2020, loans held for investment (net of deferred fees and costs) were $14.3 billion, an increase of $1.5 billion, or 48.5% (annualized), from March 31, 2020, while average loans increased $1.4 billion, or 43.6% (annualized), from the prior quarter. Excluding the effects of the PPP(2), loans held for investment (net of deferred fees and costs) declined $58.9 million, or 1.9% (annualized), while average loans increased $89.9 million, or 2.9% (annualized) during this period. Loans held for investment (net of deferred fees and costs) increased $2.1 billion, or 17.1% from June 30, 2019, while quarterly average loans increased $1.9 billion, or 15.5% from the prior year. Excluding the effects of the PPP(2), loans held for investment (net of deferred fees and costs) increased $489.4 million, or 4.0%, while quarterly average loans increased $598.9 million, or 5.0% from the prior year.

At June 30, 2020, total deposits were $15.6 billion, an increase of $2.1 billion, or approximately 60.9% (annualized), from March 31, 2020, while average deposits increased $1.6 billion, or 48.6% (annualized), from the prior quarter.  Deposits increased $3.1 billion, or 24.7% from June 30, 2019, while quarterly average deposits increased $2.5 billion, or 20.1% from the prior year. The increase in deposits from the prior quarter was primarily due to the impact of PPP loan related deposits and government stimulus check deposits.

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

        
  June 30,  March 31,  June 30,  
  2020 2020 2019 
Common equity Tier 1 capital ratio (1)  9.81 9.74 10.53%
Tier 1 capital ratio (1)  10.95 9.74 10.53%
Total capital ratio (1)  13.71 12.37 13.00%
Leverage ratio (Tier 1 capital to average assets) (1)  8.82 8.44 9.00%
Common equity to total assets  12.41 13.59 14.64%
Tangible common equity to tangible assets (2)  7.74 8.43 9.28%

(1)       All ratios at June 30, 2020 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.
(2)       These are financial measures not calculated in accordance with GAAP. For a reconciliation of these non-GAAP financial measures, see Alternative Performance Measures (non-GAAP) section of the Key Financial Results.

On June 9, 2020, the Company issued and sold 6,900,000 depositary shares, each representing a 1/400th ownership interest in a share of the Company’s 6.875% Series A Preferred Stock, par value $10.00 per share of Series A Preferred Stock, with a liquidation preference of $10,000 per share of Series A Preferred Stock. The net proceeds received from the issuance of the Series A Preferred Stock was approximately $166.4 million, after deducting the underwriting discount and other offering expenses payable by the Company. The Series A Preferred Stock is included in Tier 1 capital.  

During the second quarter of 2020, the Company declared and paid cash dividends of $0.25 per common share, consistent with the first quarter of 2020 and an increase of $0.02, or 8.7% compared to the second quarter of 2019. On July 10, 2019, the Company announced that its Board of Directors had authorized a share repurchase program (effective July 8, 2019) to purchase up to $150 million of the Company’s common stock through June 30, 2021 in open market transactions or privately negotiated transactions.  On March 20, 2020, the Company suspended its share repurchase program, which had $20 million remaining in the authorization when it was suspended.  The Company repurchased an aggregate of approximately 3.7 million shares, at an average price of $35.48 per share, under the authorization prior to the suspension.

ABOUT ATLANTIC UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (Nasdaq: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank has 149 branches and approximately 170 ATMs located throughout Virginia, and in portions of Maryland and North Carolina. Middleburg Financial is a brand name used by Atlantic Union Bank and certain affiliates when providing trust, wealth management, private banking, and investment advisory products and services. Certain non-bank affiliates of Atlantic Union Bank include: Old Dominion Capital Management, Inc., and its subsidiary, Outfitter Advisors, Ltd., Dixon, Hubard, Feinour, & Brown, Inc., and Middleburg Investment Services, LLC, which provide investment advisory and/or brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

SECOND QUARTER 2020 EARNINGS RELEASE CONFERENCE CALL

The Company will hold a conference call on Thursday, July 23, 2020 at 9:00 a.m. Eastern Daylight Time during which management will review the second quarter 2020 financial results and provide an update on recent activities. Interested parties may participate in the call toll-free by dialing (866) 220‑4170; international callers wishing to participate may do so by dialing (864) 663‑5235. The conference ID number is 6176635.   Management will conduct a listen-only webcast with accompanying slides, which can be found at: https://edge.media-server.com/mmc/p/7vrpdxva.

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 of the quarter ended June 30, 2020, 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) section of the Key Financial Results.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including without limitation, statements made in Mr. Asbury’s quotes, are statements that include, without limitation, projections, predictions, expectations, or beliefs about future events or results that are not statements of historical fact. Such forward-looking statements are based on various 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 accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of, or trends affecting, the Company will not differ materially from any projected future results, performance, or achievements 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:

  • changes in interest rates;
  • general economic and financial market conditions, in the United States generally and particularly in the markets in which the Company operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth, including as a result of COVID-19;
  • the quality or composition of the loan or investment portfolios and changes therein;
  • demand for loan products and financial services in the Company’s market area;
  • the Company’s ability to manage its growth or implement its growth strategy;
  • planned branch consolidations;
  • the introduction of new lines of business or new products and services;
  • the Company’s ability to recruit and retain key employees;
  • the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets;
  • real estate values in the Bank’s lending area;
  • an insufficient ACL;
  • changes in accounting principles relating to loan loss recognition (CECL);
  • the Company’s liquidity and capital positions;
  • concentrations of loans secured by real estate, particularly commercial real estate;
  • the effectiveness of the Company’s credit processes and management of the Company’s credit risk;
  • the Company’s ability to compete in the market for financial services;
  • technological risks and developments, and cyber threats, attacks, or events;
  • the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as COVID-19), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company's loans or its other products and services, on incidents of cyberattack and fraud, on the Company’s liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company's business operations and on financial markets and economic growth;
  • the effect of steps the Company takes in response to COVID-19, the severity and duration of the pandemic, including whether there is a “second wave” as a result of the loosening of governmental restrictions, the pace of recovery when the pandemic subsides and the heightened impact it has on many of the risks described herein;
  • performance by the Company’s 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, including the impact of the CARES Act and other legislative and regulatory reactions to COVID-19;
  • potential claims, damages, and fines related to litigation or government actions, including litigation or actions arising from the Company’s participation in and administration of programs related to COVID-19, including, among other things, the CARES Act;
  • the effects of changes in federal, state or local tax laws and regulations;
  • monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve;
  • changes to applicable accounting principles and guidelines; and
  • other factors, many of which are beyond the control of the Company.

Please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10‑K for the year ended December 31, 2019 and comparable “Risk Factors” sections of the Company’s Quarterly Reports on Form 10‑Q and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. 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 its businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and the Company does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
KEY FINANCIAL RESULTS
(Dollars in thousands, except share data)

                
  As of & For Three Months Ended As of & For Six Months Ended
  06/30/20 03/31/20 06/30/19 06/30/20 06/30/19
Results of Operations (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Interest and dividend income $ 162,867 $ 171,325 $ 181,125  $ 334,193 $ 346,777 
Interest expense   25,562   36,317   42,531    61,880   80,636 
Net interest income   137,305   135,008   138,594    272,313   266,141 
Provision for credit losses   34,200   60,196   5,300    94,396   9,092 
Net interest income after provision for credit losses   103,105   74,812   133,294    177,917   257,049 
Noninterest income   35,932   28,907   30,578    64,838   55,515 
Noninterest expenses   102,814   95,645   105,608    198,459   212,335 
Income before income taxes   36,223   8,074   58,264    44,296   100,229 
Income tax expense   5,514   985   9,356    6,498   15,606 
Income from continuing operations   30,709   7,089   48,908    37,798   84,623 
Discontinued operations, net of tax   —   —   (85)   —   (170)
Net income available to common shareholders $ 30,709 $ 7,089 $ 48,823  $ 37,798 $ 84,453 
                
Interest earned on earning assets (FTE) (1) $ 165,672 $ 174,083 $ 184,045  $ 339,755 $ 352,445 
Net interest income (FTE) (1)   140,110   137,766   141,514    277,875   271,809 
Total revenue (FTE) (1)   176,042   166,673   172,092    342,713   327,324 
Pre-tax pre-provision earnings (8)   70,423   68,270   73,862    138,692   138,064 
                
Key Ratios               
Earnings per common share, diluted $0.39 $0.09 $0.59  $0.48 $1.06 
Return on average assets (ROA)  0.64 0.16 1.15%  0.41 1.04%
Return on average equity (ROE)  4.96 1.15 7.86%  3.06 7.16%
Efficiency ratio  59.35 58.35 62.43%  58.86 66.01%
Net interest margin  3.23 3.49 3.71%  3.35 3.71%
Net interest margin (FTE) (1)  3.29 3.56 3.78%  3.42 3.79%
Yields on earning assets (FTE) (1)  3.90 4.50 4.92%  4.18 4.92%
Cost of interest-bearing liabilities  0.84 1.23 1.50%  1.03 1.46%
Cost of deposits  0.53 0.86 0.93%  0.68 0.90%
Cost of funds  0.61 0.94 1.14%  0.76 1.13%
                
Operating Measures (4)               
Net operating earnings $ 30,709 $ 7,089 $ 57,089  $ 37,798 $ 107,607 
Net operating earnings available to common shareholders   30,709   7,089   57,089    37,798   107,607 
Operating earnings per share, diluted $0.39 $0.09 $0.70  $0.48 $1.36 
Operating ROA  0.64 0.16 1.35%  0.41 1.33%
Operating ROE  4.96 1.15 9.20%  3.06 9.12%
Operating ROTCE (2)(3)  9.46 2.87 16.58%  6.13 16.48%
Operating efficiency ratio (FTE) (1)(7)  56.00 54.74 52.46%  55.39 53.24%
                
Per Share Data               
Earnings per common share, basic $0.39 $0.09 $0.59  $0.48 $1.06 
Earnings per common share, diluted  0.39  0.09  0.59   0.48  1.06 
Cash dividends paid per common share  0.25  0.25  0.23   0.50  0.46 
Market value per share  23.16  21.90  35.33   23.16  35.33 
Book value per common share  31.32  30.99  30.78   31.32  30.78 
Tangible book value per common share (2)  18.54  18.15  18.36   18.54  18.36 
Price to earnings ratio, diluted  14.77  60.50  14.93   23.99  16.37 
Price to book value per common share ratio  0.74  0.71  1.15   0.74  1.15 
Price to tangible book value per common share ratio (2)  1.25  1.21  1.92   1.25  1.92 
Weighted average common shares outstanding, basic   78,711,765   79,290,352   82,062,585    79,001,058   79,282,830 
Weighted average common shares outstanding, diluted   78,722,690   79,317,382   82,125,194    79,020,036   79,344,573 
Common shares outstanding at end of period   78,713,056   78,710,448   82,086,736    78,713,056   82,086,736 


                 
  As of & For Three Months Ended As of & For Six Months Ended 
  06/30/20 03/31/20 06/30/19 06/30/20 06/30/19 
Capital Ratios (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 
Common equity Tier 1 capital ratio (5)  9.81 9.74 10.53% 9.81 10.53%
Tier 1 capital ratio (5)  10.95 9.74 10.53% 10.95 10.53%
Total capital ratio (5)  13.71 12.37 13.00% 13.71 13.00%
Leverage ratio (Tier 1 capital to average assets) (5)  8.82 8.44 9.00% 8.82 9.00%
Common equity to total assets  12.41 13.59 14.64% 12.41 14.64%
Tangible common equity to tangible assets (2)  7.74 8.43 9.28% 7.74 9.28%
                 
Financial Condition                
Assets $ 19,752,317 $ 17,847,376 $ 17,159,384 $ 19,752,317 $ 17,159,384 
Loans held for investment   14,308,646   12,768,841   12,220,514   14,308,646   12,220,514 
Securities   2,672,557   2,655,306   2,703,856   2,672,557   2,703,856 
Earning Assets   17,680,876   15,813,780   15,140,370   17,680,876   15,140,370 
Goodwill   935,560   935,560   930,449   935,560   930,449 
Amortizable intangibles, net   65,105   69,298   82,976   65,105   82,976 
Deposits   15,605,139   13,553,035   12,515,544   15,605,139   12,515,544 
Borrowings   1,125,030   1,514,464   1,909,171   1,125,030   1,909,171 
Stockholders' equity   2,618,226   2,425,450   2,512,295   2,618,226   2,512,295 
Tangible common equity (2)   1,451,197   1,420,592   1,498,870   1,451,197   1,498,870 
                 
Loans held for investment, net of deferred fees and costs                
Construction and land development $ 1,247,939 $ 1,318,252 $ 1,267,712 $ 1,247,939 $ 1,267,712 
Commercial real estate - owner occupied   2,067,087   2,051,904   1,966,776   2,067,087   1,966,776 
Commercial real estate - non-owner occupied   3,455,125   3,328,012   3,104,823   3,455,125   3,104,823 
Multifamily real estate   717,719   679,390   602,115   717,719   602,115 
Commercial & Industrial   3,555,971   2,177,932   2,032,799   3,555,971   2,032,799 
Residential 1-4 Family - Commercial   715,384   721,800   723,636   715,384   723,636 
Residential 1-4 Family - Consumer   841,051   854,550   928,130   841,051   928,130 
Residential 1-4 Family - Revolving   627,765   652,135   660,621   627,765   660,621 
Auto   380,053   358,039   311,858   380,053   311,858 
Consumer   311,362   352,572   383,653   311,362   383,653 
Other Commercial   389,190   274,255   238,391   389,190   238,391 
Total loans held for investment $ 14,308,646 $ 12,768,841 $ 12,220,514 $ 14,308,646 $ 12,220,514 
                 
Deposits                
NOW accounts $ 3,618,523 $ 3,180,913 $ 2,552,159 $ 3,618,523 $ 2,552,159 
Money market accounts   4,158,325   3,817,959   3,592,523   4,158,325   3,592,523 
Savings accounts   824,164   745,402   749,472   824,164   749,472 
Time deposits of $250,000 and over   689,693   696,520   579,786   689,693   579,786 
Other time deposits   1,968,474   2,044,668   2,026,708   1,968,474   2,026,708 
Time deposits   2,658,167   2,741,188   2,606,494   2,658,167   2,606,494 
Total interest-bearing deposits $ 11,259,179 $ 10,485,462 $ 9,500,648 $ 11,259,179 $ 9,500,648 
Demand deposits   4,345,960   3,067,573   3,014,896   4,345,960   3,014,896 
Total deposits $ 15,605,139 $ 13,553,035 $ 12,515,544 $ 15,605,139 $ 12,515,544 
                 
Averages                
Assets $ 19,157,238 $ 17,559,921 $ 16,997,531 $ 18,358,579 $ 16,352,222 
Loans held for investment   13,957,711   12,593,923   12,084,961   13,275,817   11,608,821 
Loans held for sale   56,846   50,721   47,061   53,783   31,119 
Securities   2,648,967   2,621,437   2,738,528   2,635,202   2,692,236 
Earning assets   17,106,132   15,563,670   15,002,726   16,334,901   14,450,057 
Deposits   14,960,386   13,346,857   12,453,702   14,153,621   11,964,536 
Time deposits   2,667,268   2,755,500   2,562,498   2,711,384   2,444,513 
Interest-bearing deposits   10,941,368   10,421,419   9,555,093   10,681,393   9,285,895 
Borrowings   1,344,994   1,442,525   1,847,325   1,395,539   1,819,147 
Interest-bearing liabilities   12,286,362   11,863,944   11,402,418   12,076,932   11,105,042 
Stockholders' equity   2,489,969   2,485,646   2,490,049   2,487,807   2,379,834 
Tangible common equity (2)   1,446,948   1,478,803   1,475,028   1,462,875   1,404,929 


                 
  As of & For Three Months Ended As of & For Six Months Ended 
  06/30/20 03/31/20 06/30/19 06/30/20 06/30/19 
Asset Quality (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 
Allowance for Credit Losses (ACL)                
Beginning balance, Allowance for loan and lease losses (ALLL) $ 141,043 $ 42,294 $ 40,827  $ 42,294 $ 41,045  
Add: Day 1 impact from adoption of CECL   —   47,484   —    47,484   —  
Add: Recoveries   1,411   2,160   1,670    3,571   3,366  
Less: Charge-offs   4,677   7,151   5,934    11,828   11,873  
Add: Provision for loan losses   32,200   56,256   5,900    88,456   9,925  
Ending balance, ALLL $ 169,977 $ 141,043 $ 42,463  $ 169,977 $ 42,463  
                 
Beginning balance, Reserve for unfunded commitment (RUC) $ 9,000 $ 900 $ 1,700    900   900  
Add: Day 1 impact from adoption of CECL   —   4,160   —    4,160   —  
Add: Impact of acquisition accounting   —   —   —    —   1,033  
Add: Provision for unfunded commitments   2,000   3,940   (600)   5,940   (833) 
Ending balance, RUC $ 11,000 $ 9,000 $ 1,100    11,000   1,100  
Total ACL $ 180,977 $ 150,043 $ 43,563  $ 180,977 $ 43,563  
                 
ACL / total outstanding loans  1.26 1.18 0.36 % 1.26 0.36 %
ACL / total adjusted loans(9)  1.42 1.18 0.36 % 1.42 0.36 %
ALLL / total outstanding loans  1.19 1.10 0.35 % 1.19 0.35 %
ALLL / total adjusted loans(9)  1.34 1.10 0.35  1.34 0.35 
Net charge-offs / total average loans  0.09 0.16 0.14 % 0.13 0.15 %
Net charge-offs / total adjusted average loans(9)  0.10 0.16 0.14 % 0.14 0.15 %
Provision for loan losses/ total average loans  0.93 1.80 0.20 % 1.34 0.17 %
Provision for loan losses/ total adjusted average loans(9)  1.02 1.80 0.20 % 1.48 0.17 %
 `               
Nonperforming Assets(6)                
Construction and land development $ 3,977 $ 3,234 $ 5,619  $ 3,977 $ 5,619  
Commercial real estate - owner occupied   8,924   11,250   4,062    8,924   4,062  
Commercial real estate - non-owner occupied   1,877   1,642   1,685    1,877   1,685  
Multifamily real estate   33   53   —    33   —  
Commercial & Industrial   2,708   3,431   1,183    2,708   1,183  
Residential 1-4 Family - Commercial   5,784   7,040   4,135    5,784   4,135  
Residential 1-4 Family - Consumer   12,029   13,088   8,677    12,029   8,677  
Residential 1-4 Family - Revolving   3,626   3,547   1,432    3,626   1,432  
Auto   584   550   449    584   449  
Consumer and all other   82   187   220    82   220  
Nonaccrual loans $ 39,624 $ 44,022 $ 27,462  $ 39,624 $ 27,462  
Foreclosed property   4,397   4,444   6,506    4,397   6,506  
Total nonperforming assets (NPAs) $ 44,021 $ 48,466 $ 33,968  $ 44,021 $ 33,968  
Construction and land development $ 473 $ 317 $ 855  $ 473 $ 855  
Commercial real estate - owner occupied   7,851   1,690   2,540    7,851   2,540  
Commercial real estate - non-owner occupied   878   2,037   1,489    878   1,489  
Multifamily real estate   366   377   —    366   —  
Commercial & Industrial   178   517   295    178   295  
Residential 1-4 Family - Commercial   578   777   863    578   863  
Residential 1-4 Family - Consumer   5,099   4,407   845    5,099   845  
Residential 1-4 Family - Revolving   1,995   2,005   658    1,995   658  
Auto   181   127   122    181   122  
Consumer and all other   1,656   622   1,161    1,656   1,161  
Loans ≥ 90 days and still accruing $ 19,255 $ 12,876 $ 8,828  $ 19,255 $ 8,828  
Total NPAs and loans ≥ 90 days $ 63,276 $ 61,342 $ 42,796  $ 63,276 $ 42,796  
NPAs / total outstanding loans   0.31 0.38 0.28 %  0.31 0.28 %
NPAs / total adjusted loans(9)   0.35  0.38  0.28   0.35  0.28 
NPAs / total assets   0.22 0.27 0.20 %  0.22 0.20 %
ALLL / nonaccrual loans  428.97 320.39 154.62 % 428.97 154.62 %
ALLL/ nonperforming assets  386.13 291.01 125.01 % 386.13 125.01 %
Past Due Detail(6)                
Construction and land development $ 1,683 $ 2,786 $ 2,327  $ 1,683 $ 2,327  
Commercial real estate - owner occupied   1,679   10,779   1,707    1,679   1,707  
Commercial real estate - non-owner occupied   930   2,087   141    930   141  
Multifamily real estate   —   623   1,218    —   1,218  
Commercial & Industrial   1,602   4,893   3,223    1,602   3,223  
Residential 1-4 Family - Commercial   480   4,145   1,622    480   1,622  
Residential 1-4 Family - Consumer   1,229   15,667   5,969    1,229   5,969  
Residential 1-4 Family - Revolving   1,924   4,308   4,978    1,924   4,978  
Auto   1,176   1,967   2,120    1,176   2,120  
Consumer and all other   1,300   1,613   2,824    1,300   2,824  
Loans 30-59 days past due $ 12,003 $ 48,868 $ 26,129  $ 12,003 $ 26,129  


                 
  As of & For Three Months Ended As of & For Six Months Ended 
  06/30/20 03/31/20 06/30/19 06/30/20 06/30/19 
Past Due Detail cont'd(6) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) 
Construction and land development $ 294 $ 316 $ 318 $ 294 $ 318 
Commercial real estate - owner occupied   430   1,444   —   430   — 
Commercial real estate - non-owner occupied   369   2,765   164   369   164 
Multifamily real estate   —   1,994   —   —   — 
Commercial & Industrial   296   1,218   1,175   296   1,175 
Residential 1-4 Family - Commercial   2,105   1,066   651   2,105   651 
Residential 1-4 Family - Consumer   3,817   570   2,801   3,817   2,801 
Residential 1-4 Family - Revolving   1,048   1,286   1,336   1,048   1,336 
Auto   290   311   299   290   299 
Consumer and all other   561   2,362   1,423   561   1,423 
Loans 60-89 days past due $ 9,210 $ 13,332 $ 8,167 $ 9,210 $ 8,167 
                 
Troubled Debt Restructurings                
Performing $ 15,303 $ 14,865 $ 19,144 $ 15,303 $ 19,144 
Nonperforming   5,042   5,491   4,536   5,042   4,536 
Total troubled debt restructurings $ 20,345 $ 20,356 $ 23,680 $ 20,345 $ 23,680 
                 
Alternative Performance Measures (non-GAAP)