Exhibit 99.1

Contact:              Robert M. Gorman - (804) 523‑7828

Executive Vice President / Chief Financial Officer

ATLANTIC UNION BANKSHARES REPORTS FIRST QUARTER RESULTS

Richmond, Va., April 28, 2020 – Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (Nasdaq: AUB) today reported net income of $7.1 million and diluted earnings per share of $0.09 for its first quarter ended March 31, 2020.   Pre-tax pre-provision earnings(1) were $68.3 million, or $0.86 per share(1), in the first quarter ended March 31, 2020.

“Atlantic Union began 2020 with momentum and an ambitious set of work ahead of us, but as the situation surrounding the COVID-19 coronavirus pandemic unfolded, we quickly adjusted our thinking,” said John C. Asbury, President and CEO of Atlantic Union.  “We believe that we pivoted smoothly to a new operating model with over 90% of non-branch personnel working remotely, demonstrating we’ve built a resilient organization that can react and innovate rapidly to changing economic conditions.  We are laser focused on taking care of our teammates, our clients, and our communities during this uncertain time. 

 

Our first quarter financial results were impacted by the implementation of CECL and the deteriorating economic environment related to COVID-19, which resulted in a material increase in the Company’s provision for credit losses.  We also recognize the possibility of a much lower for longer rate environment post COVID-19, and we will align the Company’s expense structure accordingly in order to maintain top tier financial performance.  We continue to operate under the mantra of soundness, profitability, and growth – in that order of priority.  A sound bank is the highest priority for Atlantic Union.  Our conservative credit culture served our shareholders well during the “Great Recession,” and we anticipate that this culture will carry us through the current crisis and what comes afterwards.”

 

Adoption of Current Expected Credit Loss (“CECL”)

 

On January 1, 2020, the Company adopted the CECL methodology for estimating credit losses, which resulted in an increase of $51.7 million in the allowance for credit losses (“ACL”) on January 1, 2020.  The impact of the worsening economic forecast related to COVID-19 global pandemic (“COVID-19”) subsequent to the adoption of CECL further increased the ACL by $55.1 million to $150.0 million at March 31, 2020.

 

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

 

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 COVID-19.  As of April 16, 2020, the Company had secured funding for nearly 6,500 loans with a total value of approximately $1.4 billion.  The Company continues to fund eligible small business requests now that Congress has appropriated additional funds for the PPP.

 

 

 

 

 

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

NET INTEREST INCOME

For the first quarter of 2020, net interest income was $135.0 million, a slight decrease from $135.1 million reported in the fourth quarter of 2019. Net interest income (FTE)(1) was $137.8 million in the first quarter of 2020,  consistent with the  fourth quarter of 2019.  The first quarter net interest margin increased 1 basis point to 3.49% from 3.48% in the previous quarter, while the net interest margin (FTE)(1) increased 1 basis point to 3.56% from 3.55% during the same period.  The increases in the net interest margin and net interest margin (FTE) were principally due to a 6 basis point decrease in cost of funds, partially offset by a 5 basis point decrease in the yield on earning assets (FTE)(1).

The Company’s net interest margin (FTE) includes the impact of acquisition accounting fair value adjustments. During the first quarter of 2020, net accretion related to acquisition accounting increased $2.8 million from the prior quarter to $9.4 million for the quarter ended March 31, 2020. The fourth quarter of 2019, first quarter of 2020, and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands):

 

 

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

 

ASSET QUALITY

Overview

During the first quarter of 2020, the Company experienced increases in nonperforming assets (“NPAs”) primarily due to the inclusion of assets not previously reported as nonperforming that are now considered such under CECL. Past due loan levels as a percentage of total loans held for investment at March 31, 2020 were down from past due loan levels at December 31, 2019 and up from past due loan levels at March 31, 2019.  Net charge-off levels increased slightly from the fourth quarter of 2019 and were primarily related to the third-party consumer loan portfolio. The allowance for credit losses increased from December 31, 2019, as a result of the adoption of CECL as well as a worsening economic forecast due to the impact of COVID-19, which also led to an increase in the provision for credit losses.

Nonperforming Assets

At March 31, 2020, NPAs totaled $48.5 million, an increase of $15.5 million from December 31, 2019. NPAs as a percentage of total outstanding loans at March 31, 2020 were 0.38%, an increase of 12 basis points from 0.26% at December 31, 2019.  The increase in NPAs is due to the addition of $14.4 million of loans previously accounted for as purchased credit impaired (“PCI”).  The Company’s adoption of CECL resulted in a change in the accounting and reporting related to 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):

 

 

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

 

 

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

 

Past Due Loans

Past due loans still accruing interest totaled $75.1 million or 0.59% of total loans held for investment at March 31, 2020,  compared to $76.6 million or 0.61% of total loans held for investment at December 31, 2019, and $51.4 million or 0.43% of total loans held for investment at March 31, 2019. Of the total past due loans still accruing interest $12.9 million or 0.10% of total loans held for investment were loans past due 90 days or more at March 31, 2020, compared to $13.4 million or 0.11% of total loans held for investment at December 31, 2019, and $11.0 million or 0.09% of total loans held for investment at March 31, 2019.

Net Charge-offs

For the first quarter of 2020, net charge-offs were $5.0 million, or 0.16% of total average loans on an annualized basis, compared to $4.6 million, or 0.15%, for the prior quarter, and $4.2 million, or 0.15%, for the first quarter last year. The majority of net charge-offs in the first quarter of 2020 were related to the third-party consumer loan portfolio.  

Provision for Credit Losses

The provision for credit losses for the first quarter of 2020 was $60.2 million, an increase of $57.3 million compared to the previous quarter. The provision for credit losses for the first quarter of 2020 included $56.3 million in provision for loan losses and $3.9 million in provision for unfunded commitments. The increase in the provision for credit losses was due to the impact of the worsening economic forecast due to the impact of COVID-19 under CECL accounting for credit losses.    

Allowance for Credit Losses

At March 31, 2020, the ACL was $150.0 million and included an allowance for loan and lease losses (“ALLL”) of $141.0 million and a reserve for unfunded commitments (“RUC”) of $9.0 million. The ACL  increased $106.8 million from December 31, 2019, primarily due to the adoption of CECL (the “CECL Day 1 impact”) as well as the impact of the worsening economic forecast related to COVID-19 subsequent to the adoption of CECL (the “CECL Day 2 impact”).

The ALLL increased $98.7 million from December 31, 2019, due to the CECL Day 1 impact of $47.5 million and the CECL Day 2 impact of $51.2 million. The ALLL as a percentage of the total loan portfolio was 1.10% at March 31, 2020 and 0.34% at December 31, 2019. The ratio of the ALLL to nonaccrual loans was 320.4% at March 31, 2020, compared to 149.8% at December 31, 2019.

The RUC increased $8.1 million from December 31, 2019, due to the CECL Day 1 impact of $4.2 million and the CECL Day 2 impact of $3.9 million.

NONINTEREST INCOME

Noninterest income decreased $286,000 to $28.9 million for the quarter ended March 31, 2020 from $29.2 million in the prior quarter. Mortgage banking income was lower by $667,000 primarily due to hedging-related results negatively impacted by COVID-19-driven mortgage market volatility more than offsetting the impact of higher loan origination volumes.  Fiduciary and asset management fees declined $547,000 from the prior quarter primarily due to lower investment advisory fees resulting from the equity market driven drop in Assets Under Management during the quarter.  Service charges on deposit accounts declined $293,000 primarily due to lower overdraft fees, and interchange fees declined $229,000 from the prior quarter.  In addition, the Company recorded a $1.8 million loss to unwind an interest rate swap related to short-term FHLB advances in the first quarter of 2020.  These declines were partially offset by increases in insurance-related revenue of $836,000, loan-related interest rate swap income of $478,000, and gains on sales of securities of $1.6 million from the prior quarter.

NONINTEREST EXPENSE

Noninterest expense increased $1.3 million for the quarter ended March 31, 2020 from $94.3 million in the prior quarter. Salaries and benefits increased $2.9 million primarily related to seasonal increases in payroll taxes, group insurance, and annual merit adjustments.  FDIC and other insurance expenses increased $1.6 million due to an FDIC small bank assessment credit received in the fourth quarter of 2019.  Other expenses in the first quarter of 2020 included $1.0 million in support of a community development initiative and approximately $380,000 of expenses incurred related to the Company’s response to COVID-19.  These increases were partially offset by declines in marketing and advertising expense of approximately $936,000 as well as OREO and credit-related expense of approximately $859,000 due to lower OREO valuation adjustments.  Additionally, there were no merger-related or rebranding costs recognized in the first quarter of 2020 compared to $896,000 and $902,000, respectively, in the fourth quarter of 2019.

 

INCOME TAXES

The effective tax rate for the three months ended March 31, 2020 was 12.2% compared to 16.7% for the three months ended December 31, 2019.  The decline in effective tax rate is primarily related to excess tax benefits related to share-based compensation recorded.

BALANCE SHEET

At March 31, 2020, total assets were $17.8 billion, an increase of $284.4 million, or approximately 6.5% (annualized), from December 31, 2019, and an increase of $949.7 million, or approximately 5.6% from March 31, 2019. The increase in assets from the previous quarter was primarily due to loan growth during the first quarter of 2020. The increase from the prior year was primarily a result of loan growth.

At March 31, 2020, loans held for investment (net of deferred fees and costs) were $12.8 billion, an increase of $157.9 million, or 5.0% (annualized), from December 31, 2019, while average loans increased $266.2 million, or 8.7% (annualized), from the prior quarter. Loans held for investment increased $816.5 million, or 6.8% from March 31, 2019, while quarterly average loans increased $1.5 billion, or 13.2% from the prior year. The quarterly average increase from the first quarter of 2019 is due to the full-quarter impact of loans acquired in February of 2019.  

 

At March 31, 2020, total deposits were $13.6 billion, an increase of $248.1 million, or approximately 7.5% (annualized), from December 31, 2019, while average deposits increased $43.9 million, or 1.3% (annualized), from prior quarter.  Deposits increased $1.1 billion, or 8.5% from March 31, 2019, while quarterly average deposits increased $1.9 billion, or 16.4% from the prior year.  The quarterly average increase from the first quarter of 2019 is due to the full-quarter impact of deposits acquired in February of 2019.

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

 

During the first quarter of 2020, the Company declared and paid cash dividends of $0.25 per common share, consistent with the fourth quarter of 2019 and an increase of $0.02, or 8.7% compared to the first quarter of 2019.  On July 10, 2019, the Company announced that its Board of Directors had authorized a share repurchase program 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 authorization at the time.  The Company repurchased an aggregate of approximately 3.7 million shares, at an average price of $35.48 per share, to date under the authorization, prior to suspension.

ABOUT ATLANTIC UNION BANKSHARES CORPORATION

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

FIRST QUARTER 2020 EARNINGS RELEASE CONFERENCE CALL

Atlantic Union Bank will hold a conference call on Tuesday,  April 28, 2020 at 9:00 a.m. Eastern Daylight Time during which management will review the first quarter 2020 financial results and provide an update on recent activities. Interested parties may participate in the call toll-free by dialing (866) 220‑4170; international callers wishing to participate may do so by dialing (864) 663‑5235. The conference ID number is 1273006.     Management will conduct a listen-only webcast with accompanying slides, which can be found at: https://edge.media-server.com/mmc/p/2tfrj3my.

 

A replay of the webcast, and the accompanying slides, will be available by the end of day on April 28 on the Company’s website at: https://investors.atlanticunionbank.com/.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

NON-GAAP FINANCIAL MEASURES

In reporting the results of the quarter ended March 31, 2020, the Company has provided supplemental performance measures on a tax-equivalent, tangible, operating, 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 are statements that include, without limitation, projections, predictions, expectations, or beliefs about future events or results that are not statements of historical fact. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements.  Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events.  Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of, or trends affecting, the Company will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to:

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

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

KEY FINANCIAL RESULTS

(Dollars in thousands, except share data)