UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the Quarterly Period Ended March 31, 2023

OR

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

Commission File Number: 001-39325

ATLANTIC UNION BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)


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

1051 East Cary Street

Suite 1200

Richmond, Virginia 23219

(Address of principal executive offices) (Zip Code)

(804) 633-5031

(Registrant’s telephone number, including area code)

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



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

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

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

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


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

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

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


	Yes ☐ No ☒

The number of shares of common stock outstanding as of April 27, 2023 was 74,994,600.

Table of Contents

Glossary of Acronyms and Defined Terms

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


2022 Form 10-K	–	Annual Report on Form 10-K for the year ended December 31, 2022
ACL	–	Allowance for credit losses
AFS	–	Available for sale
ALLL	–	Allowance for loan and lease losses, a component of ACL
AOCI	–	Accumulated other comprehensive income (loss)
ASC	–	Accounting Standards Codification
ASU	–	Accounting Standards Update
AUB	–	Atlantic Union Bankshares Corporation
the Bank	–	Atlantic Union Bank
BOLI	–	Bank-owned life insurance
bps	–	Basis points
BTFP	–	Bank Term Funding Program
CECL	–	Current expected credit losses
CFPB	–	Consumer Financial Protection Bureau
the Company	–	Atlantic Union Bankshares Corporation and its subsidiaries
depositary shares	–	Depositary shares, each representing a 1/400th ownership interest in a share of the Company’s Series A preferred stock, with a liquidation preference of $10,000 per share of Series A preferred stock (equivalent to $25 per depositary share)
DHFB	–	Dixon, Hubard, Feinour & Brown, Inc.
EPS	–	Earnings per common share
Exchange Act	–	Securities Exchange Act of 1934, as amended
FASB	–	Financial Accounting Standards Board
FDIC	–	Federal Deposit Insurance Corporation
Federal Reserve	–	Board of Governors of the Federal Reserve System
FRB	–	Federal Reserve Bank of Richmond
FHLB	–	Federal Home Loan Bank of Atlanta
FHLMC	–	Federal Home Loan Mortgage Corporation
FNB	–	FNB Corporation
FNMA	–	Federal National Mortgage Association
FOMC	–	Federal Open Market Committee
FTE	–	Fully taxable equivalent
FR Y9-C	–	Consolidated financial statements for a U.S. bank holding company, a savings and loan holding company, a U.S. intermediate holding company, and a securities holding company
GAAP	–	Accounting principles generally accepted in the United States
GNMA	–	Government National Mortgage Association
HTM	–	Held to maturity
ICE	–	Intercontinental Exchange Data Services
LHFI	–	Loans held for investment
LHFS	–	Loans held for sale
LIBOR	–	London Interbank Offered Rate
MBS	–	Mortgage-Backed Securities
MFC	–	Middleburg Financial Corporation
NPA	–	Nonperforming assets
NYSE	–	New York Stock Exchange
OCI	–	Other comprehensive (loss) income
OREO	–	Other real estate owned
PD/LGD	–	Probability of default/loss given default

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2023 AND DECEMBER 31, 2022

(Dollars in thousands, except share data)


	March 31,		December 31,
	2023		2022
ASSETS		(unaudited)		(audited)
Cash and cash equivalents:
Cash and due from banks	$	187,106	$	216,384
Interest-bearing deposits in other banks		184,371		102,107
Federal funds sold		719		1,457
Total cash and cash equivalents		372,196		319,948
Securities available for sale, at fair value		2,252,365		2,741,816
Securities held to maturity, at carrying value		855,418		847,732
Restricted stock, at cost		87,616		120,213
Loans held for sale		14,213		3,936
Loans held for investment, net of deferred fees and costs		14,584,280		14,449,142
Less: allowance for loan and lease losses		116,512		110,768
Total loans held for investment, net		14,467,768		14,338,374
Premises and equipment, net		116,466		118,243
Goodwill		925,211		925,211
Amortizable intangibles, net		24,482		26,761
Bank owned life insurance		443,537		440,656
Other assets		544,098		578,248
Total assets	$	20,103,370	$	20,461,138
LIABILITIES
Noninterest-bearing demand deposits	$	4,578,009	$	4,883,239
Interest-bearing deposits		11,877,901		11,048,438
Total deposits		16,455,910		15,931,677
Securities sold under agreements to repurchase		163,760		142,837
Other short-term borrowings		245,000		1,176,000
Long-term borrowings		390,150		389,863
Other liabilities		408,314		448,024
Total liabilities		17,663,134		18,088,401
Commitments and contingencies (Note 7)
STOCKHOLDERS' EQUITY
Preferred stock, $10.00 par value		173		173
Common stock, $1.33 par value		99,072		98,873
Additional paid-in capital		1,773,118		1,772,440
Retained earnings		929,806		919,537
Accumulated other comprehensive loss		(361,933)		(418,286)
Total stockholders' equity		2,440,236		2,372,737
Total liabilities and stockholders' equity	$	20,103,370	$	20,461,138

Common shares outstanding		74,989,228		74,712,622
Common shares authorized		200,000,000		200,000,000
Preferred shares outstanding		17,250		17,250
Preferred shares authorized		500,000		500,000

See accompanying notes to consolidated financial statements.

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

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


	Three Months Ended
	March 31,		March 31,
	2023		2022
Interest and dividend income:
Interest and fees on loans	$	189,992	$	114,200
Interest on deposits in other banks		1,493		131
Interest and dividends on securities:
Taxable		16,753		13,666
Nontaxable		9,308		10,459
Total interest and dividend income		217,546		138,456
Interest expense:
Interest on deposits		51,834		4,483
Interest on short-term borrowings		7,563		21
Interest on long-term borrowings		4,706		3,021
Total interest expense		64,103		7,525
Net interest income		153,443		130,931
Provision for credit losses		11,850		2,800
Net interest income after provision for credit losses		141,593		128,131
Noninterest income:
Service charges on deposit accounts		7,902		7,596
Other service charges, commissions and fees		1,746		1,655
Interchange fees		2,325		1,810
Fiduciary and asset management fees		4,262		7,255
Mortgage banking income		854		3,117
Loss on sale of securities		(13,400)		—
Bank owned life insurance income		2,828		2,697
Loan-related interest rate swap fees		1,439		3,860
Other operating income		1,672		2,163
Total noninterest income		9,628		30,153
Noninterest expenses:
Salaries and benefits		60,529		58,298
Occupancy expenses		6,356		6,883
Furniture and equipment expenses		3,752		3,597
Technology and data processing		8,142		7,796
Professional services		3,413		4,090
Marketing and advertising expense		2,351		2,163
FDIC assessment premiums and other insurance		3,899		2,485
Franchise and other taxes		4,498		4,499
Loan-related expenses		1,552		1,776
Amortization of intangible assets		2,279		3,039
Other expenses		11,503		10,695
Total noninterest expenses		108,274		105,321
Income from continuing operations before income taxes		42,947		52,963
Income tax expense		7,294		9,273
Net income		35,653		43,690
Dividends on preferred stock		2,967		2,967
Net income available to common shareholders	$	32,686	$	40,723

Basic earnings per common share	$	0.44	$	0.54
Diluted earnings per common share	$	0.44	$	0.54
Dividends declared per common share	$	0.30	$	0.28
Basic weighted average number of common shares outstanding		74,832,141		75,544,644
Diluted weighted average number of common shares outstanding		74,835,514		75,556,127

See accompanying notes to consolidated financial statements.

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Dollars in thousands)


	Three Months Ended
	March 31,
	2023		2022
Net income	$	35,653	$	43,690
Other comprehensive income (loss):
Cash flow hedges:
Change in fair value of cash flow hedges (net of tax, $3,645 and $6,197 for the three months ended March 31, 2023 and 2022, respectively)		13,714		(23,313)
AFS securities:
Unrealized holding gains (losses) arising during period (net of tax, $8,525 and $49,700 for the three months ended March 31, 2023 and 2022, respectively)		32,068		(186,967)
Reclassification adjustment for losses included in net income (net of tax, $2,814 and $0 for the three months ended March 31, 2023 and 2022, respectively) ⁽¹⁾		10,586		—
HTM securities:
Reclassification adjustment for accretion of unrealized gain on AFS securities transferred to HTM (net of tax, $1 and $1 for the three months ended March 31, 2023 and 2022, respectively) ⁽²⁾		(3)		(5)
Bank owned life insurance:
Unrealized holding gains arising during the period		10		—
Reclassification adjustment for losses included in net income ⁽³⁾		(22)		167
Other comprehensive income (loss):		56,353		(210,118)
Comprehensive income (loss)	$	92,006	$	(166,428)

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

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

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

See accompanying notes to consolidated financial statements.

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

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

Accumulated

Additional

Other

Common

Preferred

Paid-In

Retained

Comprehensive

Stock

Capital

Earnings

Income (Loss)

Total

Balance - December 31, 2022

98,873

173

1,772,440

919,537

(418,286)

2,372,737

Net Income

35,653

Other comprehensive income (net of taxes of $14,983)

56,353

Dividends on common stock ($0.30 per share)

(22,417)

Dividends on preferred stock ($171.88 per share)

(2,967)

Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (149,684 shares)

199

(1,654)

(1,455)

Stock-based compensation expense

2,332

Balance - March 31, 2023

99,072

173

1,773,118

929,806

(361,933)

2,440,236



Balance - December 31, 2021	$	100,101	$	173	$	1,807,368	$	783,794	$	18,635	$	2,710,071
Net Income								43,690				43,690
Other comprehensive loss (net of taxes of $49,701)										(210,118)		(210,118)
Dividends on common stock ($0.28 per share)								(21,163)				(21,163)
Dividends on preferred stock ($171.88 per share)								(2,967)				(2,967)
Stock purchased under stock repurchase plan (629,691 shares)		(837)				(24,181)						(25,018)
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (291,723 shares)		387				1,044						1,431
Stock-based compensation expense						2,409						2,409
Balance - March 31, 2022	$	99,651	$	173	$	1,786,640	$	803,354	$	(191,483)	$	2,498,335

See accompanying notes to consolidated financial statements.

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Dollars in thousands)


	2023		2022
Operating activities:
Net income	$	35,653	$	43,690
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of premises and equipment		3,427		3,599
Writedown of ROU assets, foreclosed properties and equipment		112		4,570
Amortization, net		6,417		8,619
Amortization related to acquisitions, net		1,288		875
Provision for credit losses		11,850		2,800
Losses on securities transactions		13,400		—
BOLI income		(2,828)		(2,697)
Originations and purchases of LHFS		(286,526)		(91,957)
Proceeds from sales of LHFS		283,316		91,434
Stock-based compensation expenses		2,332		2,409
Issuance of common stock for services		187		217
Net decrease in other assets		18,840		46,434
Net (decrease) increase in other liabilities		(27,901)		1,454
Net cash provided by operating activities		59,567		111,447
Investing activities:
Purchases of AFS securities, restricted stock, and other investments		(45,633)		(62,773)
Purchases of HTM securities		(13,826)		(130,533)
Proceeds from sales of AFS securities and restricted stock		558,466		—
Proceeds from maturities, calls and paydowns of AFS securities		47,338		109,974
Proceeds from maturities, calls and paydowns of HTM securities		5,218		550
Net increase in LHFI		(145,260)		(258,502)
Net increase in premises and equipment		(1,624)		(797)
Proceeds from BOLI settlements		353		2,068
Proceeds from sales of foreclosed properties and former bank premises		533		—
Net cash provided by (used in) investing activities		405,565		(340,013)
Financing activities:
Net (decrease) increase in noninterest-bearing deposits		(305,230)		162,739
Net increase (decrease) in interest-bearing deposits		829,449		(289,594)
Net decrease in short-term borrowings		(910,077)		(2,843)
Cash dividends paid - common stock		(22,417)		(21,163)
Cash dividends paid - preferred stock		(2,967)		(2,967)
Repurchase of common stock		—		(25,018)
Issuance of common stock		474		3,804
Vesting of restricted stock, net of shares held for taxes		(2,116)		(2,590)
Net cash used in financing activities		(412,884)		(177,632)
Increase (decrease) in cash and cash equivalents		52,248		(406,198)
Cash, cash equivalents and restricted cash at beginning of the period		319,948		802,501
Cash, cash equivalents and restricted cash at end of the period	$	372,196	$	396,303

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Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank had 109 branches and approximately 125 ATMs located throughout Virginia, and in portions of Maryland and North Carolina as of March 31, 2023. Certain non-bank financial services affiliates of Atlantic Union Bank include: Atlantic Union Equipment Finance, Inc., which provides equipment financing; Atlantic Union Financial Consultants, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and follow general practice within the banking industry. Accordingly, the unaudited consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements; however, in the opinion of management all adjustments necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other period.

The unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s 2022 Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation.

Adoption of New Accounting Standards

In March 2022, the FASB issued ASU No. 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method to allow nonprepayable financial assets to be included in a closed portfolio hedge using the portfolio layer method and to allow multiple hedged layers to be designated for a single closed portfolio of financial assets or one or more beneficial interests secured by a portfolio of financial instruments. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2022-01 effective January 1, 2023 and concluded that it did not have significant impact on its consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-02 Financial Instruments- Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the accounting guidance for TDRs by creditors and instead requires that an entity evaluate whether a loan modification represents a new loan or a continuation of an existing loan, consistent with the accounting for other loan modifications. The amendment also introduces new disclosure requirements for modifications to loans made to a borrower experiencing financial difficulty in the form of principal forgiveness, interest rate reductions, term extensions, or other-than-insignificant payment delays. The Company refers to these modifications to borrowers experiencing financial difficulty as Troubled Loan Modifications, or TLMs. In addition, the amendments require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted the amendments of ASU 2022-02 effective January 1, 2023 on a prospective basis. See below in Note 1 “Summary of Significant Accounting Policies” within this Item 1 of this Quarterly Report for discussion of the Company’s accounting policy for Loan Modifications and Note 3 “Loans and Allowance for Loan and Lease Losses” within this Item 1 of this Quarterly Report for more information.

In March 2020, the FASB issued ASC 848, Reference Rate Reform. This guidance provides temporary, optional guidance to ease the potential burden in accounting for reference rate reform associated with the LIBOR transition. LIBOR and other interbank offered rates are widely used benchmark or reference rates that have been used in the valuation of loans, derivatives, and other financial contracts. ASC 848 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. ASC 848 is intended to help stakeholders during the global market-wide reference rate transition period. The amendments are effective as of March 12, 2020 through December 31, 2024 and can be adopted at an instrument level. The Company has elected the practical expedients provided in ASC 848 related to (1) accounting for contract modifications on its loans and securities tied to LIBOR and (2) asserting probability of the hedged item occurring, regardless of any expected modification in terms related to reference rate reform for the newly executed cash flow hedges. The Company

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ITEM		PAGE

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022 (audited)	2

	Consolidated Statements of Income (unaudited) for the three months ended March 31, 2023 and 2022	3

	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2023 and 2022	4

	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three months ended March 31, 2023 and 2022	5

	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2023 and 2022	6

	Notes to Consolidated Financial Statements (unaudited)	8

	Report of Independent Registered Public Accounting Firm	51

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	76

Item 4.	Controls and Procedures	78

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	80

Item 1A.	Risk Factors	80

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81

Item 6.	Exhibits	81

	Signatures	83


	2023		2022
Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest	$	58,678	$	5,393

Supplemental schedule of noncash investing and financing activities
Transfer from LHFI to LHFS		7,087		—

ROU asset	–	Right of Use Asset
RPAs	–	Risk Participation Agreements
SBA	–	Small Business Administration
SEC	–	Securities and Exchange Commission
Series A preferred stock	–	6.875% Perpetual Non-Cumulative Preferred Stock, Series A, par value $10.00 per share
SOFR	–	Secured Overnight Financing Rate
TLM	–	Troubled loan modification
TDR	–	Troubled debt restructuring
VFG	–	Virginia Financial Group, Inc.