Atlantic Union Bankshares Reports Fourth Quarter and Fiscal Year 2020 Results

RICHMOND, Va., Jan. 26, 2021 (GLOBE NEWSWIRE) -- Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (Nasdaq: AUB) today reported net income available to common shareholders of $56.5 million and basic and diluted earnings per common share of $0.72 for the fourth quarter ended December 31, 2020. Adjusted operating earnings available to common shareholders(1) were $72.9 million, diluted operating earnings per common share(1) were $0.93, and pre-tax pre-provision adjusted operating earnings(1) were $77.0 million for the fourth quarter ended December 31, 2020.

Net income available to common shareholders was $152.6 million and basic and diluted earnings per common share were $1.93 for the twelve months ended December 31, 2020. Adjusted operating earnings available to common shareholders(1) were $168.8 million, diluted operating earnings per common share(1) were $2.14, and pre-tax pre-provision adjusted operating earnings(1) were $294.0 million, for the twelve months ended December 31, 2020.

“Despite the continued economic disruption caused by the pandemic in 2020, Atlantic Union delivered solid financial results in the fourth quarter and for the full year while demonstrating the flexibility and agility needed for success,” said John C. Asbury, president and chief executive officer of Atlantic Union. “Operating under the mantra of soundness, profitability and growth – in that order of priority - Atlantic Union remains in a strong financial position with ample liquidity and a well-fortified capital base.

“Our conservative credit culture is serving us well as we help our clients weather the storm. While we continue to face near-term uncertainty, as a result of benign credit quality metrics to date and a more optimistic economic outlook due to the roll-out of COVID-19 vaccines and additional government stimulus inclusive of more PPP funding, we are more confident that credit losses will not be as severe as initially feared.

“Looking forward, we are optimistic that the challenges of COVID-19 will ease as 2021 progresses and that Atlantic Union will emerge as a stronger company that is well positioned to generate sustainable, profitable growth and build long term value for our shareholders.”

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

During 2020, the Company participated 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 PPP loans pursuant to the CARES Act, which totaled $1.7 billion with a recorded investment of $1.2 billion and unamortized deferred fees of $17.6 million, each as of December 31, 2020. The loans carry a 1% interest rate. In addition to an insignificant amount of PPP loan pay offs, the Company processed approximately $429.3 million of loan forgiveness on approximately 3,100 PPP loans during the fourth quarter of 2020.

Certain provisions of the CARES Act, including additional PPP funding, were extended as a result of the Consolidated Appropriations Act, 2021 (the “CAA”), which was signed into law on December 27, 2020. The Company began accepting applications on January 19, 2021 for additional PPP loans pursuant to the CAA.

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(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

Expense Reduction Measures

During 2020, the Company launched several initiatives to reduce expenses in light of the current and expected operating environment, including the consolidation of certain branch locations.

The Company completed the consolidation of 14 branches in September 2020 and one branch in December 2020, and five branches are expected to be consolidated in February 2021. These actions resulted in expenses of approximately $6.8 million for the twelve months ended December 31, 2020 with approximately $3.4 million recognized in the second quarter of 2020, approximately $2.6 million in the third quarter of 2020 and approximately $790,000 in the fourth quarter of 2020, primarily related to lease termination costs, severance costs and real estate write-downs.

Additionally, in response to the current rate environment, the Company prepaid certain long-term Federal Home Loan Bank (“FHLB”) advances, which resulted in a prepayment penalty of $20.8 million in the fourth quarter of 2020.

NET INTEREST INCOME

For the fourth quarter of 2020, net interest income was $145.6 million, an increase from $137.4 million reported in the third quarter of 2020. Net interest income (FTE)(1) was $148.7 million in the fourth quarter of 2020, an increase of $8.4 million from the third quarter of 2020. The fourth quarter net interest margin increased 17 basis points to 3.25% from 3.08% in the previous quarter, while the net interest margin (FTE)(1)  increased 18 basis points to 3.32% from 3.14% during the same period. The increases in the net interest margin and net interest margin (FTE) were principally due to the increase in PPP loan accretion to $15.0 million in the fourth quarter of 2020 from $9.9 million in the third quarter of 2020 driven by PPP loan forgiveness approved by the SBA during the fourth quarter.

The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. Net accretion related to acquisition accounting increased $702,000 from the prior quarter to $4.4 million for the quarter ended December 31, 2020. The four 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 quarter ended September 30, 2020   3,814   26       (167 )     3,673
For the quarter ended December 31, 2020   4,541   22       (188 )     4,375
For the years ending (estimated):                    
2021   8,625   14       (807 )     7,832
2022   7,096   (43 )     (829 )     6,224
2023   5,213   (32 )     (852 )     4,329
2024   4,221   (4 )     (877 )     3,340
2025   3,160   (1 )     (900 )     2,259
Thereafter   13,780         (9,873 )     3,907
Total remaining acquisition accounting fair value adjustments at December 31, 2020   42,095   (66 )     (14,138 )     27,891

ASSET QUALITY

Overview
During the fourth quarter of 2020, the Company’s asset quality metrics remained relatively stable. Nonperforming assets (“NPAs”) as a percentage of loans increased slightly, but, remained low at 0.32% at December 31, 2020. Accruing past due loan levels as a percentage of total loans held for investment at December 31, 2020 remained consistent with a 1 basis point increase as compared to September 30, 2020 and lower than accruing past due loan levels at December 31, 2019. Net charge-off levels remained low at 0.05% of average loans for the fourth quarter 2020, which is a 1 basis point increase from the third quarter of 2020 and a 10 basis point decrease from the fourth quarter 2019.

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(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 allowance for credit losses (“ACL”) decreased from September 30, 2020 due to improvements in the macroeconomic outlook which resulted in a decline in the provision for credit losses for the fourth quarter of 2020, as compared to the third 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) when the modification program was implemented are not considered TDRs.

In addition, Section 4013 of the CARES Act, as amended by the CAA, 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 relief afforded by Section 4013 of the CARES Act, as amended by the CAA, is available to loans modified between March 1, 2020 and the earlier of 60 days after the date of termination of the COVID-19 national emergency and January 1, 2022.

The Company has made certain loan modifications pursuant to the March 22 Joint Guidance and Section 4013 of the CARES Act (as amended by the CAA), and as of December 31, 2020 approximately $146.1 million remain under their modified terms, a decline of $623.5 million as compared to September 30, 2020. The majority of the Company’s modifications as of December 31, 2020 were in the commercial real estate portfolios.

Nonperforming Assets
At December 31, 2020, NPAs totaled $45.2 million, an increase of $2.0 million from September 30, 2020. NPAs as a percentage of total outstanding loans at December 31, 2020 were 0.32%, an increase of 2 basis points from 0.30% at September 30, 2020. Excluding the impact of the PPP loans(1), NPAs as a percentage of total outstanding loans were 0.35%, an increase of 1 basis point from September 30, 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.

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

                             
  December 31,       September 30,       June 30,       March 31,       December 31, 
  2020   2020   2020   2020   2019
Nonaccrual loans $ 42,448   $ 39,023   $ 39,624   $ 44,022   $ 28,232
Foreclosed properties   2,773     4,159     4,397     4,444     4,708
Total nonperforming assets $ 45,221   $ 43,182   $ 44,021   $ 48,466   $ 32,940

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(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 the activity in nonaccrual loans for the quarter ended (dollars in thousands):

                             
  December 31,       September 30,       June 30,       March 31,       December 31, 
  2020
  2020
  2020
  2020
  2019
Beginning Balance $ 39,023     $ 39,624     $ 44,022     $ 28,232     $ 30,032  
Net customer payments   (4,640 )     (2,803 )     (6,524 )     (3,451 )     (5,741 )
Additions   8,211       2,790       3,206       6,059       5,631  
Impact of CECL adoption                     14,381        
Charge-offs   (146 )     (588 )     (1,088 )     (1,199 )     (1,690 )
Loans returning to accruing status               8              
Ending Balance $ 42,448     $ 39,023     $ 39,624     $ 44,022     $ 28,232  

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

                             
  December 31,       September 30,       June 30,       March 31,       December 31, 
  2020
  2020
  2020
  2020
  2019
Beginning Balance $ 4,159     $ 4,397     $ 4,444     $ 4,708     $ 6,385  
Additions of foreclosed property                     615       62  
Valuation adjustments   (35 )                 (44 )     (375 )
Proceeds from sales   (1,357 )     (254 )     (55 )     (854 )     (1,442 )
Gains (losses) from sales   6       16       8       19       78  
Ending Balance $ 2,773     $ 4,159     $ 4,397     $ 4,444     $ 4,708  

Past Due Loans
Past due loans still accruing interest totaled $49.8 million or 0.36% of total loans held for investment at December 31, 2020, compared to $50.9 million or 0.35% of total loans held for investment at September 30, 2020, and $76.6 million or 0.61% of total loans held for investment at December 31, 2019. Excluding the impact of the PPP loans(1), past due loans still accruing interest were 0.39% of total adjusted loans held for investment at December 31, 2020, compared to 0.40% of total adjusted loans held for investment at September 30, 2020. Of the total past due loans still accruing interest, $13.6 million or 0.10% of total loans held for investment were loans past due 90 days or more at December 31, 2020, compared to $15.7 million or 0.11% of total loans held for investment at September 30, 2020, and $13.4 million or 0.11% of total loans held for investment at December 31, 2019.

Net Charge-offs
For the fourth quarter of 2020, net charge-offs were $1.8 million or 0.05% of total average loans on an annualized basis, compared to $1.4 million or 0.04% for the third quarter of 2020 and $4.6 million or 0.15% for the fourth quarter last year. Excluding the impact of the PPP loans(1), net charge-offs were 0.06% of total adjusted average loans on an annualized basis, compared to 0.04% for the third quarter of 2020. The majority of net charge-offs in the fourth quarter of 2020 were related to the third-party consumer loan portfolio.

For the year ended December 31, 2020, net charge-offs were $11.4 million or 0.08% of total average loans, compared to $20.9 million or 0.17% for the year ended December 31, 2019. Excluding the impact of the PPP loans(1), net charge-offs were 0.09% of total average loans on an annualized basis, compared to 0.17% for the year ended December 31, 2019. The majority of net charge-offs for the year ended December 31, 2020 were related to the third-party consumer loan portfolio.

Provision for Credit Losses
The provision for credit losses decreased $20.4 million for the fourth quarter of 2020 compared to the previous quarter and decreased $16.7 million compared to the same quarter in 2019. The provision for credit losses for the fourth quarter of 2020 reflected a negative provision of $11.8 million in provision for loan losses and a negative provision of $2.0 million in provision for unfunded commitments. The decrease in the provision for credit losses was driven by the improvement in the economic forecast utilized in estimating the final allowance for credit losses (“ACL”) as of December 31, 2020.

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(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.

Allowance for Credit Losses
At December 31, 2020, the ACL was $170.5 million and included an allowance for loan and lease losses (“ALLL”) of $160.5 million and a reserve for unfunded commitments (“RUC”) of $10.0 million. The ACL decreased $15.6 million from September 30, 2020, due to lower expected losses than previously estimated as a result of improvements in Virginia’s unemployment rate, benign credit quality metrics to date, and an improved economic forecast due to the roll-out of COVID-19 vaccines and additional government stimulus inclusive of more PPP funding.

The ALLL decreased $13.6 million and the RUC decreased $2.0 million from September 30, 2020. The ALLL as a percentage of the total loan portfolio was 1.14% at December 31, 2020 and 1.21% at September 30, 2020. The ACL as percentage of total loans was 1.22% at December 31, 2020 and 1.29% at September 30, 2020. When excluding PPP loans(1), which are 100% guaranteed by the SBA, the ALLL as a percentage of adjusted loans decreased 11 basis points to 1.25% from the prior quarter and the ACL as a percentage of adjusted loans decreased 13 basis points to 1.33% from the prior quarter. The ratio of the ALLL to nonaccrual loans was 378.2% at December 31, 2020, compared to 446.2% at September 30, 2020.

NONINTEREST INCOME

Noninterest income decreased $2.2 million to $32.2 million for the quarter ended December 31, 2020 from $34.4 million in the prior quarter, primarily driven by a decline in bank owned life insurance income due to $1.4 million in death benefit proceeds received during the third quarter of 2020, lower insurance related income of approximately $530,000, reduced level of unrealized gains of approximately $550,000 related to the Company’s SBIC investments, and lower loan-related interest rate swap income of $460,000 due to lower transaction volumes. These quarterly declines were partially offset by increases in several other non-interest income categories including an increase in service charges on deposit accounts of $661,000, primarily due to higher NSF and overdraft fees.

NONINTEREST EXPENSE

Noninterest expense increased $28.5 million to $121.7 million for the quarter ended December 31, 2020 from $93.2 million in the prior quarter, primarily driven by the recognition of an approximately $20.8 million loss on debt extinguishment in the fourth quarter, resulting from the prepayment of approximately $350.0 million in long-term FHLB advances. In addition, during the fourth quarter of 2020, there was an increase of approximately $8.6 million in salaries and benefits, driven primarily by performance based variable incentive compensation and profit-sharing expenses of $7.4 million, including a $1.2 million contribution to the Company’s Employee Stock Ownership Plan (“ESOP”), as well as third party expenses of approximately $716,000 incurred to process PPP loans for SBA forgiveness. Other increases from the third quarter of 2020 included approximately $883,000 in professional services driven by higher consulting fees due to LIBOR transition and other projects, and an increase in FDIC assessment premiums of approximately $582,000, driven by the impact of lower PPP loan balances on the Company’s assessment rate. Noninterest expense for the fourth quarter of 2020 also included approximately $790,000 in costs related to the Company’s plans to close five branches in February 2021 and approximately $450,000 in costs related to the Company’s response to the COVID-19 pandemic.

INCOME TAXES

The effective tax rate for the three months ended December 31, 2020 was 15.1% compared to 15.3% for the three months ended September 30, 2020.

BALANCE SHEET

At December 31, 2020, total assets were $19.6 billion, a decrease of $302.2 million or approximately 6.0% (annualized) from September 30, 2020, and an increase of $2.1 billion or approximately 11.8% from December 31, 2019. The decrease in assets from the prior quarter was driven by PPP loan forgiveness, partially offset by organic loan growth while growth from the prior year was primarily a result of growth in both organic and PPP loans.

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(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.

At December 31, 2020, loans held for investment (net of deferred fees and costs) were $14.0 billion, a decrease of $361.9 million or 10.0% (annualized) from September 30, 2020, while average loans decreased $170.0 million or 4.7% (annualized), from the prior quarter. Excluding the effects of the PPP(1), loans held for investment (net of deferred fees and costs) increased $59.2 million, or 1.8% (annualized), while average loans increased $22.6 million, or 0.7% (annualized) during this period. Loans held for investment (net of deferred fees and costs) increased $1.4 billion or 11.2% from December 31, 2019, while quarterly average loans increased $1.9 billion or 15.1% from the prior year. Excluding the effects of the PPP(1), loans held for investment (net of deferred fees and costs) at December 31, 2020 increased $230.9 million or 1.8% from the prior year, while quarterly average loans during the fourth quarter of 2020 increased $415.4 million or 3.4% from the prior year. In addition to an insignificant amount of PPP loan payoffs, the Company processed $429.3 million of loan forgiveness on approximately 3,100 PPP loans during the fourth quarter of 2020.

At December 31, 2020, total deposits were $15.7 billion, an increase of $146.7 million or approximately 3.7% (annualized) from September 30, 2020, while average deposits increased $315.7 million or 8.1% (annualized) from the prior quarter. Deposits increased $2.4 billion or 18.2% from December 31, 2019, while quarterly average deposits increased $2.6 billion or 19.5% from the prior year. The increase in deposits from the prior year was primarily due to the impact of PPP loan related deposits and government stimulus.

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

                 
  December 31,         September 30,         December 31,   
  2020     2020     2019  
Common equity Tier 1 capital ratio (2) 10.26 %     10.05 %     10.24 %
Tier 1 capital ratio (2) 11.39 %     11.18 %     10.24 %
Total capital ratio (2) 14.00 %     13.93 %     12.63 %
Leverage ratio (Tier 1 capital to average assets) (2) 8.95 %     8.82 %     8.79 %
Common equity to total assets 12.95 %     12.52 %     14.31 %
Tangible common equity to tangible assets (1) 8.31 %     7.91 %     9.08 %

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(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.
(2)   All ratios at December 31, 2020 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.

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 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.  

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(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.

During the fourth quarter of 2020, the Company declared and paid cash dividends of $0.25 per common share, consistent with the third quarter of 2020 and the fourth quarter of 2019. During the fourth quarter of 2020, the Company also 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).

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 134 branches and approximately 155 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., and Dixon, Hubard, Feinour, & Brown, Inc., which provide investment advisory services; Middleburg Investment Services, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

FOURTH QUARTER AND FISCAL YEAR 2020 EARNINGS RELEASE CONFERENCE CALL

The Company will hold a conference call and webcast for analysts on Tuesday, January 26, 2021 at 9:00 a.m. Eastern Time during which management will review the fourth quarter and fiscal year 2020 financial results and provide an update on recent activities. Interested parties may participate in the call toll-free by dialing (866) 2204170; international callers wishing to participate may do so by dialing (864) 6635235. The conference ID number is 2886812. Management will conduct a listen-only webcast with accompanying slides, which can be found at: https://edge.media-server.com/mmc/p/ze3ax9o8.

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 and fiscal year ended December 31, 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 and statements regarding the Company’s planned branch consolidations and statements regarding the impact of additional PPP funding on the Company, are statements that include, 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;
  • the effectiveness of expense reduction plans;
  • 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 and increased competition relating to fintech;
  • 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, the speed and efficacy of vaccine and treatment developments, the impact of loosening or tightening of government 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, as amended by the CAA, 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, as amended by the CAA;
  • 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 10K for the year ended December 31, 2019 and comparable “Risk Factors” sections of the Company’s Quarterly Reports on Form 10Q 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 Year Ended  
  12/31/20      09/30/20      12/31/19   12/31/20   12/31/19  
Results of Operations (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Interest and dividend income $ 161,847     $ 157,414   $ 174,211     $ 653,454   $ 699,332    
Interest expense   16,243       20,033     39,081       98,156     161,460    
Net interest income   145,604       137,381     135,130       555,298     537,872    
Provision for credit losses   (13,813 )     6,558     2,900       87,141     21,092    
Net interest income after provision for credit losses   159,417       130,823     132,230       468,157     516,780    
Noninterest income   32,241       34,407     29,193       131,486     132,815    
Noninterest expenses   121,668       93,222     94,318       413,349     418,340    
Income before income taxes   69,990       72,008     67,105       186,294     231,255    
Income tax expense   10,560       11,008     11,227       28,066     37,557    
Income from continuing operations   59,430       61,000     55,878       158,228     193,698    
Discontinued operations, net of tax             (42 )         (170 )  
Net income   59,430       61,000     55,836       158,228     193,528    
Dividends on preferred stock   2,967       2,691           5,658        
Net income available to common shareholders $ 56,463     $ 58,309   $ 55,836     $ 152,570   $ 193,528    
                               
Interest earned on earning assets (FTE) (1) $ 164,931     $ 160,315   $ 176,868     $ 665,001   $ 710,453    
Net interest income (FTE) (1)   148,688       140,282     137,787       566,845     548,993    
Total revenue (FTE) (1)   180,929       174,689     166,980       698,331     681,808    
Pre-tax pre-provision operating earnings (8)   76,987       78,548     71,392       294,026     295,178    
                               
Key Ratios                              
Earnings per common share, diluted $ 0.72     $ 0.74   $ 0.69     $ 1.93   $ 2.41    
Return on average assets (ROA)   1.19   %   1.23 %   1.27   %   0.83 %   1.15   %
Return on average equity (ROE)   8.82   %   9.16 %   8.81   %   6.14 %   7.89   %
Return on average tangible common equity (ROTCE) (2) (3)   15.60   %   16.49 %   15.64   %   11.18 %   14.26   %
Efficiency ratio   68.41   %   54.27 %   57.40   %   60.19 %   62.37   %
Net interest margin   3.25   %   3.08 %   3.48   %   3.26 %   3.61   %
Net interest margin (FTE) (1)   3.32   %   3.14 %   3.55   %   3.32 %   3.69   %
Yields on earning assets (FTE) (1)   3.69   %   3.59 %   4.55   %   3.90 %   4.77   %
Cost of interest-bearing liabilities   0.52   %   0.64 %   1.33   %   0.80 %   1.43   %
Cost of deposits   0.30   %   0.39 %   0.92   %   0.51 %   0.92   %
Cost of funds   0.37   %   0.45 %   1.00   %   0.58 %   1.08   %
                               
Operating Measures (4)                              
Adjusted operating earnings $ 75,870     $ 60,986   $ 56,966     $ 174,495   $ 227,813    
Adjusted operating earnings available to common shareholders   72,903       58,295     56,966       168,837     227,813    
Adjusted operating earnings per share, diluted $ 0.93     $ 0.74   $ 0.71     $ 2.14   $ 2.84    
Adjusted operating ROA   1.52   %   1.23 %   1.30   %   0.91 %   1.35   %
Adjusted operating ROE   11.27   %   9.16 %   8.99   %   6.77 %   9.29   %
Adjusted operating ROTCE (2) (3)   19.91   %   16.49 %   15.93   %   12.28 %   16.61   %
Adjusted operating efficiency ratio (FTE) (1)(7)   53.59   %   51.05 %   52.77   %   53.16 %   51.79   %
                               
Per Share Data                              
Earnings per common share, basic $ 0.72     $ 0.74   $ 0.69     $ 1.93   $ 2.41    
Earnings per common share, diluted   0.72       0.74     0.69       1.93     2.41    
Cash dividends paid per common share   0.25       0.25     0.25       1.00     0.96    
Market value per share   32.94       21.37     37.55       32.94     37.55    
Book value per common share   32.46       31.86     31.58       32.46     31.58    
Tangible book value per common share (2)   19.78       19.13     18.90       19.78     18.90    
Price to earnings ratio, diluted   11.50       7.26     13.72       17.07     15.58    
Price to book value per common share ratio   1.01       0.67     1.19       1.01     1.19    
Price to tangible book value per common share ratio (2)   1.67       1.12     1.99       1.67     1.99    
Weighted average common shares outstanding, basic   78,721,530       78,714,353     80,439,007       78,858,726     80,200,950    
Weighted average common shares outstanding, diluted   78,740,351       78,725,346     80,502,269       78,875,668     80,263,557    
Common shares outstanding at end of period   78,729,212       78,718,850     80,001,185       78,729,212     80,001,185    


                               
  As of & For Three Months Ended   As of & For Year Ended  
  12/31/20      09/30/20      12/31/19   12/31/20   12/31/19  
Capital Ratios (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Common equity Tier 1 capital ratio (5)   10.26 %   10.05 %   10.24 %   10.26 %   10.24 %
Tier 1 capital ratio (5)   11.39 %   11.18 %   10.24 %   11.39 %   10.24 %
Total capital ratio (5)   14.00 %   13.93 %   12.63 %   14.00 %   12.63 %
Leverage ratio (Tier 1 capital to average assets) (5)   8.95 %   8.82 %   8.79 %   8.95 %   8.79 %
Common equity to total assets   12.95 %   12.52 %   14.31 %   12.95 %   14.31 %
Tangible common equity to tangible assets (2)   8.31 %   7.91 %   9.08 %   8.31 %   9.08 %
                               
Financial Condition                              
Assets $ 19,628,449   $ 19,930,650   $ 17,562,990   $ 19,628,449   $ 17,562,990  
Loans held for investment   14,021,314     14,383,215     12,610,936     14,021,314     12,610,936  
Securities   3,180,052     3,102,217     2,631,437     3,180,052     2,631,437  
Earning Assets   17,624,618     17,885,975     15,576,208     17,624,618     15,576,208  
Goodwill   935,560     935,560     935,560     935,560     935,560  
Amortizable intangibles, net   57,185     61,068     73,669     57,185     73,669  
Deposits   15,722,765     15,576,098     13,304,981     15,722,765     13,304,981  
Borrowings   840,717     1,314,322     1,513,748     840,717     1,513,748  
Stockholders' equity   2,708,490     2,660,885     2,513,102     2,708,490     2,513,102  
Tangible common equity (2)   1,549,388     1,497,900     1,503,873     1,549,388     1,503,873  
                               
Loans held for investment, net of deferred fees and costs                              
Construction and land development $ 925,798   $ 1,207,190   $ 1,250,924   $ 925,798   $ 1,250,924  
Commercial real estate - owner occupied   2,128,909     2,107,333     2,041,243     2,128,909     2,041,243  
Commercial real estate - non-owner occupied   3,657,562     3,497,929     3,286,098     3,657,562     3,286,098  
Multifamily real estate   814,745     731,582     633,743     814,745     633,743  
Commercial & Industrial   3,263,460     3,536,249     2,114,033     3,263,460     2,114,033  
Residential 1-4 Family - Commercial   671,949     696,944     724,337     671,949     724,337  
Residential 1-4 Family - Consumer   822,866     830,144     890,503     822,866     890,503  
Residential 1-4 Family - Revolving   596,996     618,320     659,504     596,996     659,504  
Auto   401,324     387,417     350,419     401,324     350,419  
Consumer   247,730     276,023     372,853     247,730     372,853  
Other Commercial   489,975     494,084     287,279     489,975     287,279  
Total loans held for investment $ 14,021,314   $ 14,383,215   $ 12,610,936   $ 14,021,314   $ 12,610,936  
                               
Deposits                              
NOW accounts $ 3,621,181   $ 3,460,480   $ 2,905,714   $ 3,621,181   $ 2,905,714  
Money market accounts   4,248,335     4,269,696     3,951,856     4,248,335     3,951,856  
Savings accounts   904,095     861,685     727,847     904,095     727,847  
Time deposits of $250,000 and over   654,224     633,252     684,797     654,224     684,797  
Other time deposits   1,926,227     1,930,320     2,064,628     1,926,227     2,064,628  
Time deposits   2,580,451     2,563,572     2,749,425     2,580,451     2,749,425  
Total interest-bearing deposits $ 11,354,062   $ 11,155,433   $ 10,334,842   $ 11,354,062   $ 10,334,842  
Demand deposits   4,368,703     4,420,665     2,970,139     4,368,703     2,970,139  
Total deposits $ 15,722,765   $ 15,576,098   $ 13,304,981   $ 15,722,765   $ 13,304,981  
                               
Averages                              
Assets $ 19,817,318   $ 19,785,167   $ 17,437,552   $ 19,083,853   $ 16,840,310  
Loans held for investment   14,188,661     14,358,666     12,327,692     13,777,467     11,949,171  
Loans held for sale   59,312     45,201     75,038     53,016     53,390  
Securities   3,140,243     2,891,210     2,608,942     2,826,504     2,663,184  
Earning assets   17,801,490     17,748,152     15,418,605     17,058,795     14,881,142  
Deposits   15,896,149     15,580,469     13,302,955     14,950,295     12,515,552  
Time deposits   2,571,639     2,579,991     2,847,366     2,643,229     2,627,987  
Interest-bearing deposits   11,482,105     11,260,244     10,265,986     11,028,169     9,624,396  
Borrowings   891,699     1,183,839     1,369,035     1,215,676     1,656,426  
Interest-bearing liabilities   12,373,804     12,444,083     11,635,021     12,243,845     11,280,822  
Stockholders' equity   2,679,170     2,648,777     2,515,303     2,576,372     2,451,435  
Tangible common equity (2)   1,518,223     1,483,848     1,509,001     1,482,060     1,459,509  


                               
  As of & For Three Months Ended   As of & For Year Ended  
  12/31/20      09/30/20      12/31/19   12/31/20   12/31/19  
Asset Quality (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Allowance for Credit Losses (ACL)                              
Beginning balance, Allowance for loan and lease losses (ALLL) $ 174,122     $ 169,977   $ 43,820     $ 42,294   $ 41,045    
Add: Day 1 impact from adoption of CECL                   47,484        
Add: Recoveries   1,617       1,566     2,292       6,754     7,232    
Less: Charge-offs   3,386       2,978     6,918       18,193     28,108    
Add: Provision for loan losses   (11,813 )     5,557     3,100       82,201     22,125    
Ending balance, ALLL $ 160,540     $ 174,122   $ 42,294     $ 160,540   $ 42,294    
                               
Beginning balance, Reserve for unfunded commitment (RUC) $ 12,000     $ 11,000   $ 1,100       900     900    
Add: Day 1 impact from adoption of CECL                   4,160        
Add: Impact of acquisition accounting                       1,033    
Add: Provision for unfunded commitments   (2,000 )     1,000     (200 )     4,940     (1,033 )  
Ending balance, RUC $ 10,000     $ 12,000   $ 900       10,000     900    
Total ACL $ 170,540     $ 186,122   $ 43,194     $ 170,540   $ 43,194    
                               
ACL / total outstanding loans   1.22   %   1.29 %   0.34   %   1.22 %   0.34   %
ACL / total adjusted loans(9)   1.33   %   1.46 %   0.34   %   1.33 %   0.34   %
ALLL / total outstanding loans   1.14   %   1.21 %   0.34   %   1.14 %   0.34   %
ALLL / total adjusted loans(9)   1.25   %   1.36 %   0.34   %   1.25 %   0.34   %
Net charge-offs / total average loans   0.05   %   0.04 %   0.15   %   0.08 %   0.17   %
Net charge-offs / total adjusted average loans(9)   0.06   %   0.04 %   0.15   %   0.09 %   0.17   %
Provision for loan losses/ total average loans   (0.33 ) %   0.15 %   0.10   %   0.60 %   0.19   %
Provision for loan losses/ total adjusted average loans(9)   (0.37 ) %   0.17 %   0.10   %   0.65 %   0.19   %
                               
Nonperforming Assets(6)                              
Construction and land development $ 3,072     $ 3,520   $ 3,703     $ 3,072   $ 3,703    
Commercial real estate - owner occupied   7,128       9,267     6,003       7,128     6,003    
Commercial real estate - non-owner occupied   2,317       1,992     381       2,317     381    
Multifamily real estate   33       33           33        
Commercial & Industrial   2,107       1,592     1,735       2,107     1,735    
Residential 1-4 Family - Commercial   9,993       5,743     4,301       9,993     4,301    
Residential 1-4 Family - Consumer   12,600       12,620     9,292       12,600     9,292    
Residential 1-4 Family - Revolving   4,629       3,664     2,080       4,629     2,080    
Auto   500       517     563       500     563    
Consumer   69       75     77       69     77    
Other Commercial             97           97    
Nonaccrual loans $ 42,448     $ 39,023   $ 28,232     $ 42,448   $ 28,232    
Foreclosed property   2,773       4,159     4,708       2,773     4,708    
Total nonperforming assets (NPAs) $ 45,221     $ 43,182   $ 32,940     $ 45,221   $ 32,940    
Construction and land development $     $ 93   $ 189     $   $ 189    
Commercial real estate - owner occupied   3,727       1,726     1,062       3,727     1,062    
Commercial real estate - non-owner occupied   148       168     1,451       148     1,451    
Multifamily real estate         359     474           474    
Commercial & Industrial   1,114       604     449       1,114     449    
Residential 1-4 Family - Commercial   1,560       5,298     674       1,560     674    
Residential 1-4 Family - Consumer   5,699       4,495     4,515       5,699     4,515    
Residential 1-4 Family - Revolving   826       2,276     3,357       826     3,357    
Auto   166       315     272       166     272    
Consumer   394       327     953       394     953    
Other Commercial                          
Loans ≥ 90 days and still accruing $ 13,634     $ 15,661   $ 13,396     $ 13,634   $ 13,396    
Total NPAs and loans ≥ 90 days $ 58,855     $ 58,843   $ 46,336     $ 58,855   $ 46,336    
NPAs / total outstanding loans   0.32   %   0.30 %   0.26   %   0.32 %   0.26   %
NPAs / total adjusted loans(9)   0.35   %   0.34 %   0.26   %   0.35 %   0.26   %
NPAs / total assets   0.23   %   0.22 %   0.19   %   0.23 %   0.19   %
ALLL / nonaccrual loans   378.20   %   446.20 %   149.81   %   378.20 %   149.81   %
ALLL/ nonperforming assets   355.01   %   403.23 %   128.40   %   355.01 %   128.40   %
                               


                               
  As of & For Three Months Ended   As of & For Year Ended  
  12/31/20      09/30/20      12/31/19   12/31/20   12/31/19  
Past Due Detail(6) (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Construction and land development $ 1,903   $ 2,625   $ 4,563   $ 1,903   $ 4,563  
Commercial real estate - owner occupied   1,870     4,924     3,482     1,870     3,482  
Commercial real estate - non-owner occupied   2,144     1,291     457     2,144     457  
Multifamily real estate   617         223     617     223  
Commercial & Industrial   1,848     4,322     8,698     1,848     8,698  
Residential 1-4 Family - Commercial   2,227     1,236     1,479     2,227     1,479  
Residential 1-4 Family - Consumer   10,182     2,998     16,244     10,182     16,244  
Residential 1-4 Family - Revolving   2,975     2,669     10,190     2,975     10,190  
Auto   2,076     1,513     2,525     2,076     2,525  
Consumer   1,166     1,020     2,128     1,166     2,128  
Other Commercial   16     613     464     16     464  
Loans 30-59 days past due $ 27,024   $ 23,211   $ 50,453   $ 27,024   $ 50,453  
Construction and land development $ 547   $ 223   $ 482   $ 547   $ 482  
Commercial real estate - owner occupied   1,380     1,310     2,184     1,380     2,184  
Commercial real estate - non-owner occupied   1,721     1,371         1,721      
Multifamily real estate                    
Commercial & Industrial   1,190     1,448     1,598     1,190     1,598  
Residential 1-4 Family - Commercial   818     937     2,207     818     2,207  
Residential 1-4 Family - Consumer   1,533     3,976     3,072     1,533     3,072  
Residential 1-4 Family - Revolving   1,044     1,141     1,784     1,044     1,784  
Auto   376     453     236     376     236  
Consumer   550     772     1,233     550     1,233  
Other Commercial       427              
Loans 60-89 days past due $ 9,159   $ 12,058   $ 12,796   $ 9,159   $ 12,796  
                               
Past Due and still accruing $ 49,817   $ 50,930   $ 76,645   $ 49,817   $ 76,645  
Past Due and still accruing / total loans   0.36 %     0.35 %     0.61 %     0.36 %     0.61 %  
Past Due and still accruing / total adjusted loans(9)   0.39 %     0.40 %     0.61 %     0.39 %     0.61 %  
                               
Troubled Debt Restructurings                                   
Performing $ 13,961   $ 14,515   $ 15,686   $ 13,961   $ 15,686  
Nonperforming   6,655     7,045     3,810     6,655     3,810  
Total troubled debt restructurings $ 20,616   $ 21,560   $ 19,496   $ 20,616   $ 19,496  
                               
Alternative Performance Measures (non-GAAP)                                   
Net interest income (FTE)                                   
Net interest income (GAAP) $ 145,604   $ 137,381   $ 135,130   $ 555,298   $ 537,872  
FTE adjustment   3,084     2,901     2,657     11,547     11,121  
Net interest income (FTE) (non-GAAP) (1) $ 148,688   $ 140,282   $ 137,787   $ 566,845   $ 548,993  
Noninterest income (GAAP)   32,241     34,407     29,193     131,486     132,815  
Total revenue (FTE) (non-GAAP) (1) $ 180,929   $ 174,689   $ 166,980   $ 698,331   $ 681,808  
                               
Average earning assets $ 17,801,490   $ 17,748,152   $ 15,418,605   $ 17,058,795   $ 14,881,142  
Net interest margin   3.25 %     3.08 %     3.48 %   3.26 %     3.61 %
Net interest margin (FTE) (1)   3.32 %     3.14 %     3.55 %   3.32 %     3.69 %
                               
Tangible Assets (2)                                   
Ending assets (GAAP) $ 19,628,449   $ 19,930,650   $ 17,562,990   $ 19,628,449   $ 17,562,990  
Less: Ending goodwill   935,560     935,560     935,560     935,560     935,560  
Less: Ending amortizable intangibles   57,185     61,068     73,669     57,185     73,669  
Ending tangible assets (non-GAAP) $ 18,635,704   $ 18,934,022   $ 16,553,761   $ 18,635,704   $ 16,553,761  
                               
Tangible Common Equity (2)                                   
Ending equity (GAAP) $ 2,708,490   $ 2,660,885   $ 2,513,102   $ 2,708,490   $ 2,513,102  
Less: Ending goodwill   935,560     935,560     935,560     935,560     935,560  
Less: Ending amortizable intangibles   57,185     61,068     73,669     57,185     73,669  
Less: Perpetual preferred stock   166,357     166,357         166,357      
Ending tangible common equity (non-GAAP) $ 1,549,388   $ 1,497,900   $ 1,503,873   $ 1,549,388   $ 1,503,873  
                               
Average equity (GAAP) $ 2,679,170   $ 2,648,777   $ 2,515,303   $ 2,576,372   $ 2,451,435  
Less: Average goodwill   935,560     935,560     930,457     935,560     912,521  
Less: Average amortizable intangibles   59,031     63,016     75,845     65,094     79,405  
Less: Average perpetual preferred stock   166,356     166,353     -     93,658     -  
Average tangible common equity (non-GAAP) $ 1,518,223   $ 1,483,848   $ 1,509,001   $ 1,482,060   $ 1,459,509  
                               
ROTCE (2)(3)                              
Net income available to common shareholders (GAAP) $ 56,463   $ 58,309   $ 55,836   $ 152,570   $ 193,528  
Plus: Amortization of intangibles, tax effected   3,079     3,202     3,636     13,093     14,632  
Net income available to common shareholders before amortization of intangibles (non-GAAP) $ 59,542   $ 61,511   $ 59,472   $ 165,663   $ 208,160  
                               
Return on average tangible common equity (ROTCE) (2) (3)   15.60 %     16.49 %     15.64 %     11.18 %     14.26 %  


                               
  As of & For Three Months Ended   As of & For Year Ended  
  12/31/20     09/30/20    12/31/19    12/31/20   12/31/19  
  (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Operating Measures (4)                              
Net income (GAAP) $ 59,430     $ 61,000   $ 55,836   $ 158,228     $ 193,528  
Plus: Merger and rebranding-related costs, net of tax             1,422           27,395  
Plus: Net loss related to balance sheet repositioning, net of tax   16,440               25,979       12,953  
Less: Gain on sale of securities, net of tax         14     292     9,712       6,063  
Adjusted operating earnings (non-GAAP)   75,870       60,986     56,966     174,495       227,813  
Less: Dividends on preferred stock   2,967       2,691         5,658        
Adjusted operating earnings available to common shareholders (non-GAAP) $ 72,903     $ 58,295   $ 56,966   $ 168,837     $ 227,813  
                               
Noninterest expense (GAAP) $ 121,668     $ 93,222   $ 94,318   $ 413,349     $ 418,340  
Less: Merger Related Costs             896           27,824  
Less: Rebranding Costs             902           6,455  
Less: Amortization of intangible assets   3,897       4,053     4,603     16,574       18,521  
Less: Losses related to balance sheet repositioning   20,810               31,116       16,397  
Adjusted operating noninterest expense (non-GAAP) $ 96,961     $ 89,169   $ 87,917   $ 365,659     $ 349,143  
                               
Noninterest income (GAAP) $ 32,241     $ 34,407   $ 29,193   $ 131,486     $ 132,815  
Less: Gains related to balance sheet repositioning                 (1,769 )      
Less: Gain on sale of securities         18     369     12,294       7,675  
Operating noninterest income (non-GAAP) $ 32,241     $ 34,389   $ 28,824   $ 120,961     $ 125,140  
                               
Net interest income (FTE) (non-GAAP) (1) $ 148,688     $ 140,282   $ 137,787   $ 566,845     $ 548,993  
Operating noninterest income (non-GAAP)   32,241       34,389     28,824     120,961       125,140  
Total adjusted revenue (FTE) (non-GAAP) (1) $ 180,929     $ 174,671   $ 166,611   $ 687,806     $ 674,133  
                               
Efficiency ratio   68.41   %   54.27 %   57.40 %   60.19   %   62.37 %
Adjusted operating efficiency ratio (FTE) (1)(7)   53.59   %   51.05 %   52.77 %   53.16   %   51.79 %
                               
Operating ROTCE (2)(3)(4)                              
Adjusted operating earnings available to common shareholders (non-GAAP) $ 72,903     $ 58,295   $ 56,966   $ 168,837     $ 227,813  
Plus: Amortization of intangibles, tax effected   3,079       3,202     3,636     13,093       14,632  
Adjusted operating earnings available to common shareholders before amortization of intangibles (non-GAAP) $ 75,982     $ 61,497   $ 60,602   $ 181,930     $ 242,445  
                               
Average tangible common equity (non-GAAP) $ 1,518,223     $ 1,483,848   $ 1,509,001   $ 1,482,060     $ 1,459,509  
Adjusted operating return on average tangible common equity (non-GAAP)   19.91   %   16.49 %   15.93 %   12.28   %   16.61 %
                               
Pre-tax pre-provision adjusted operating earnings (8)                              
Net income (GAAP) $ 59,430     $ 61,000   $ 55,836   $ 158,228     $ 193,528  
Plus: Provision for credit losses   (13,813 )     6,558     2,900     87,141       21,092  
Plus: Income tax expense   10,560       11,008     11,227     28,066       37,557  
Plus: Merger and rebranding-related costs             1,798           34,279  
Plus: Net loss related to balance sheet repositioning   20,810               32,885       16,397  
Less: Gain on sale of securities         18     369     12,294       7,675  
Pre-tax pre-provision adjusted operating earnings (non-GAAP) $ 76,987     $ 78,548   $ 71,392   $ 294,026     $ 295,178  
                               
Weighted average common shares outstanding, diluted   78,740,351       78,725,346     80,502,269     78,875,668       80,263,557  
Pre-tax pre-provision earnings per share, diluted $ 0.98     $ 1.00   $ 0.89   $ 3.73     $ 3.68  
                               
Paycheck Protection Program adjustment impact (9)                              
Loans held for investment (net of deferred fees and costs)(GAAP) $ 14,021,314     $ 14,383,215   $ 12,610,936   $ 14,021,314     $ 12,610,936  
Less: PPP adjustments   1,179,522       1,600,577         1,179,522        
Loans held for investment (net of deferred fees and costs),net adjustments, excluding PPP (non-GAAP) $ 12,841,792     $ 12,782,638   $ 12,610,936   $ 12,841,792     $ 12,610,936  
                               
Average loans held for investment (GAAP) $ 14,188,661     $ 14,358,666   $ 12,327,692   $ 13,777,467     $ 11,949,171  
Less: Average PPP adjustments   1,445,602       1,638,204         1,091,921        
Average loans held for investment, net adjustments, excluding PPP (non-GAAP) $ 12,743,059     $ 12,720,462   $ 12,327,692   $ 12,685,546     $ 11,949,171  


                               
  As of & For Three Months Ended   As of & For Year Ended  
  12/31/20     09/30/20    12/31/19    12/31/20   12/31/19  
  (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Mortgage Origination Volume                              
Refinance Volume $ 165,042   $ 145,718   $ 50,555   $ 542,880   $ 152,624  
Construction Volume       6,448     14,571     27,251     18,846  
Purchase Volume   83,214     130,185     63,836     361,138     258,282  
Total Mortgage loan originations $ 248,256   $ 282,351   $ 128,962   $ 931,269   $ 429,752  
% of originations that are refinances   66.5 %   51.6 %   39.2 %   58.3 %   35.5 %
                               
Wealth                              
Assets under management ("AUM") $ 5,865,264   $ 5,455,268   $ 5,650,757   $ 5,865,264   $ 5,650,757  
                               
Other Data                              
End of period full-time employees   1,879     1,883     1,989     1,879     1,989  
Number of full-service branches   134     135     149     134     149  
Number of full automatic transaction machines ("ATMs")   156     157     169     156     169  

_________________________

(1)   These are non-GAAP financial measures. Net interest income (FTE) and total adjusted revenue (FTE), which are used in computing net interest margin (FTE) and adjusted operating efficiency ratio (FTE), respectively, provide valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components.
(2)   These are non-GAAP financial measures. Tangible common equity is used in the calculation of certain profitability, capital, and per share ratios. The Company believes tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses.
(3)   These are non-GAAP financial measures. The Company believes that ROTCE is a meaningful supplement to GAAP financial measures and useful to investors because it measures the performance of a business consistently across time without regard to whether components of the business were acquired or developed internally.
(4)   These are non-GAAP financial measures. Adjusted operating measures exclude the after-tax effect of merger and rebranding-related costs unrelated to the Company’s normal operations. In addition, adjusted operating measures now exclude the gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment) and gains or losses on sale of securities. The Company believes these non-GAAP adjusted measures provide investors with important information about the combined economic results of the organization’s operations.
(5)   All ratios at December 31, 2020 are estimates and subject to change pending the Company’s filing of its FR Y9C. All other periods are presented as filed.
(6)   Amounts are not directly comparable due to the Company’s adoption of CECL on January 1, 2020. Prior to January 1, 2020, nonaccrual and past due loan information excluded PCI-related loan balances. These balances also reflect the impact of the CARES Act and March 22 Joint Guidance, which provides relief for TDR designations and also provides guidance on past due reporting for modified loans.
(7)   The adjusted operating efficiency ratio (FTE) excludes the amortization of intangible assets, merger and rebranding-related costs and gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment). This measure is similar to the measure utilized by the Company when analyzing corporate performance and is also similar to the measure utilized for incentive compensation. The Company believes this adjusted measure provides investors with important information about the combined economic results of the organization’s operations.
(8)   This is a non-GAAP financial measure. Pre-tax pre-provision adjusted earnings excludes the provision for credit losses, which can fluctuate significantly from period-to-period under the recently adopted CECL methodology, merger and rebranding-related costs, income tax expense, gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment), and gains or losses on sale of securities. The Company believes this adjusted measure provides investors with important information about the combined economic results of the organization’s operations.
(9)   These are non-GAAP financial measures. PPP adjustment impact excludes the SBA guaranteed loans funded during 2020. The Company believes loans held for investment (net of deferred fees and costs), excluding PPP is useful to investors as it provides more clarity on the Company’s organic growth. The Company also believes that the related non-GAAP financial measures of past due loans still accruing interest as a percentage of total loans held for investment (net of deferred fees and costs), excluding PPP, are useful to investors as loans originated under the PPP carry an SBA guarantee. The Company believes that the ALLL as a percentage of loans held for investment (net of deferred fees and costs), excluding PPP, is useful to investors because of the size of the Company’s PPP originations and the impact of the embedded credit enhancement provided by the SBA guarantee.

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)

                   
  December 31,   September 30,   December 31,  
  2020   2020   2019  
ASSETS   (unaudited)     (unaudited)     (audited)  
Cash and cash equivalents:                  
Cash and due from banks $ 172,307   $ 178,563   $ 163,050  
Interest-bearing deposits in other banks   318,974     335,111     234,810  
Federal funds sold   2,013     7,292     38,172  
Total cash and cash equivalents   493,294     520,966     436,032  
Securities available for sale, at fair value   2,540,419     2,443,340     1,945,445  
Securities held to maturity, at carrying value   544,851     546,661     555,144  
Restricted stock, at cost   94,782     112,216     130,848  
Loans held for sale, at fair value   96,742     52,607     55,405  
Loans held for investment, net of deferred fees and costs   14,021,314     14,383,215     12,610,936  
Less allowance for loan and lease losses   160,540     174,122     42,294  
Total loans held for investment, net   13,860,774     14,209,093     12,568,642  
Premises and equipment, net   163,829     156,934     161,073  
Goodwill   935,560     935,560     935,560  
Amortizable intangibles, net   57,185     61,068     73,669  
Bank owned life insurance   326,892     325,538     322,917  
Other assets   514,121     566,667     378,255  
Total assets $ 19,628,449   $ 19,930,650   $ 17,562,990  
LIABILITIES                  
Noninterest-bearing demand deposits $ 4,368,703   $ 4,420,665   $ 2,970,139  
Interest-bearing deposits   11,354,062     11,155,433     10,334,842  
Total deposits   15,722,765     15,576,098     13,304,981  
Securities sold under agreements to repurchase   100,888     91,086     66,053  
Other short-term borrowings   250,000     175,200     370,200  
Long-term borrowings   489,829     1,048,036     1,077,495  
Other liabilities   356,477     379,345     231,159  
Total liabilities   16,919,959     17,269,765     15,049,888  
Commitments and contingencies                  
STOCKHOLDERS' EQUITY                  
Preferred stock, $10.00 par value   173     173      
Common stock, $1.33 par value   104,169     104,141     105,827  
Additional paid-in capital   1,917,081     1,914,640     1,790,305  
Retained earnings   616,052     579,269     581,395  
Accumulated other comprehensive income (loss)   71,015     62,662     35,575  
Total stockholders' equity   2,708,490     2,660,885     2,513,102  
Total liabilities and stockholders' equity $ 19,628,449   $ 19,930,650   $ 17,562,990  
                   
Common shares outstanding   78,729,212     78,718,850     80,001,185  
Common shares authorized   200,000,000     200,000,000     200,000,000  
Preferred shares outstanding   17,250     17,250     -  
Preferred shares authorized   500,000     500,000     500,000  

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)

                             
  Three Months Ended   Year Ended
  December 31,   September 30,   December 31,   December 31,   December 31,
  2020
  2020   2019
  2020   2019
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Audited)
Interest and dividend income:                            
Interest and fees on loans $ 142,108     $ 138,402   $ 152,513     $ 574,871   $ 612,115  
Interest on deposits in other banks   117       137     1,686       1,270     3,733  
Interest and dividends on securities:                            
Taxable   10,414       10,275     12,378       43,585     51,437  
Nontaxable   9,208       8,600     7,634       33,728     32,047  
Total interest and dividend income   161,847       157,414     174,211       653,454     699,332  
Interest expense:                            
Interest on deposits   12,000       15,568     30,884       75,943     114,972  
Interest on short-term borrowings   93       72     1,166       1,691     15,479  
Interest on long-term borrowings   4,150       4,393     7,031       20,522     31,009  
Total interest expense   16,243       20,033     39,081       98,156     161,460  
Net interest income   145,604       137,381     135,130       555,298     537,872  
Provision for credit losses   (13,813 )     6,558     2,900       87,141     21,092  
Net interest income after provision for credit losses   159,417       130,823     132,230       468,157     516,780  
Noninterest income:                            
Service charges on deposit accounts   6,702       6,041     7,871       25,251     30,202  
Other service charges, commissions and fees   1,692       1,621     1,544       6,292     6,423  
Interchange fees   1,884       1,979     1,854       7,184     14,619  
Fiduciary and asset management fees   6,107       6,045     6,531       23,650     23,365  
Mortgage banking income   9,113       8,897     2,689       25,857     10,303  
Gains on securities transactions         18     369       12,294     7,675  
Bank owned life insurance income   2,057       3,421     2,119       9,554     8,311  
Loan-related interest rate swap fees   2,704       3,170     3,470       15,306     14,126  
Other operating income   1,982       3,215     2,746       6,098     17,791  
Total noninterest income   32,241       34,407     29,193       131,486     132,815  
Noninterest expenses:                            
Salaries and benefits   57,649       49,000     47,233       206,662     195,349  
Occupancy expenses   7,043       7,441     7,366       28,841     29,793  
Furniture and equipment expenses   3,881       3,895     3,559       14,923     14,216  
Technology and data processing   6,742       6,564     6,483       25,929     23,686  
Professional services   3,797       2,914     3,636       13,007     11,905  
Marketing and advertising expense   2,473       2,631     3,675       9,886     11,566  
FDIC assessment premiums and other insurance   2,393       1,811     1,254       9,971     6,874  
Other taxes   4,119       4,124     3,970       16,483     15,749  
Loan-related expenses   2,004       2,314     2,793       9,515     10,043  
OREO and credit-related expenses   511       413     1,547       2,023     4,708  
Amortization of intangible assets   3,897       4,053     4,603       16,574     18,521  
Merger-related costs             896           27,824  
Rebranding expense             902           6,455  
Loss on debt extinguishment   20,810                 31,116     16,397  
Other expenses   6,349       8,062     6,401       28,419     25,254  
Total noninterest expenses   121,668       93,222     94,318       413,349     418,340  
Income from continuing operations before income taxes   69,990       72,008     67,105       186,294     231,255  
Income tax expense   10,560       11,008     11,227       28,066     37,557  
Income from continuing operations $ 59,430     $ 61,000   $ 55,878     $ 158,228   $ 193,698  
Discontinued operations:                            
Income (loss) from operations of discontinued mortgage segment $     $   $ (56 )   $   $ (230 )
Income tax expense (benefit)             (14 )         (60 )
Income (loss) on discontinued operations             (42 )         (170 )
Net income   59,430       61,000     55,836       158,228     193,528  
Dividends on preferred stock   2,967       2,691           5,658      
Net income available to common shareholders $ 56,463     $ 58,309   $ 55,836     $ 152,570   $ 193,528  
                             
Basic earnings per common share $ 0.72     $ 0.74   $ 0.69     $ 1.93   $ 2.41  
Diluted earnings per common share $ 0.72     $ 0.74   $ 0.69     $ 1.93   $ 2.41  

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

                               
  For the Quarter Ended
  December 31, 2020   September 30, 2020
  Average 
Balance
     Interest 
Income /
Expense (1)
     Yield /
Rate (1)(2)
     Average 
Balance
     Interest 
Income /
Expense (1)
     Yield /
Rate (1)(2)
                       
  (unaudited)     (unaudited)
Assets:                              
Securities:                              
Taxable $ 1,848,655     $ 10,414   2.24 %   $ 1,738,033     $ 10,275   2.35 %
Tax-exempt   1,291,588       11,656   3.59 %     1,153,177       10,886   3.76 %
Total securities   3,140,243       22,070   2.80 %     2,891,210       21,161   2.91 %
Loans, net (3) (4)   14,188,661       142,289   3.99 %     14,358,666       138,635   3.84 %
Other earning assets   472,586       572   0.48 %     498,276       519   0.41 %
Total earning assets   17,801,490     $ 164,931   3.69 %     17,748,152     $ 160,315   3.59 %
Allowance for credit losses   (174,761 )               (174,171 )          
Total non-earning assets   2,190,589                 2,211,186            
Total assets $ 19,817,318               $ 19,785,167            
                               
Liabilities and Stockholders' Equity:                              
Interest-bearing deposits:                              
Transaction and money market accounts $ 8,029,168     $ 3,167   0.16 %   $ 7,834,317     $ 4,684   0.24 %
Regular savings   881,298       88   0.04 %     845,936       128   0.06 %
Time deposits (5)   2,571,639       8,745   1.35 %     2,579,991       10,756   1.66 %
Total interest-bearing deposits   11,482,105       12,000   0.42 %     11,260,244       15,568   0.55 %
Other borrowings (6)   891,699       4,243   1.89 %     1,183,839       4,465   1.50 %
Total interest-bearing liabilities   12,373,804     $ 16,243   0.52 %     12,444,083     $ 20,033   0.64 %
                               
Noninterest-bearing liabilities:                              
Demand deposits   4,414,044                 4,320,225            
Other liabilities   350,300                 372,082            
Total liabilities   17,138,148                 17,136,390            
Stockholders' equity   2,679,170                 2,648,777            
Total liabilities and stockholders' equity $ 19,817,318               $ 19,785,167            
Net interest income       $ 148,688             $ 140,282    
                               
Interest rate spread             3.17 %               2.95 %
Cost of funds             0.37 %               0.45 %
Net interest margin             3.32 %               3.14 %

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(1)   Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.
(2)   Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.
(3)   Nonaccrual loans are included in average loans outstanding.
(4)   Interest income on loans includes $4.5 million and $3.8 million for the three months ended December 31, 2020 and September 30, 2020, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5)   Interest expense on time deposits includes $22,000 and $26,000 for the three months ended December 31, 2020 and September 30, 2020, respectively, in accretion of the fair market value adjustments related to acquisitions.
(6)   Interest expense on borrowings includes $188,000 and $167,000 for the three months ended December 31, 2020 and September 30, 2020, in amortization of the fair market value adjustments related to acquisitions.

Contact:               Robert M. Gorman - (804) 523-7828
  Executive Vice President / Chief Financial Officer

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Source: Atlantic Union Bank