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 June 30, 2020

OR

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

Commission File Number: 000-20293

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 NASDAQ Global Select Market
Depositary Shares, Each Representing a 1/400^th Interest in a Share of 6.875% Perpetual Non-Cumulative Preferred Stock, Series A	AUBAP	The NASDAQ Global Select Market

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 July 29, 2020 was 78,711,847.

Table of Contents

Glossary of Acronyms and Defined Terms


2019 Form 10-K	–	Annual Report on Form 10-K for the year ended December 31, 2019
Access	–	Access National Corporation and its subsidiaries
ACL	–	Allowance for credit losses
AFS	–	Available for sale
ALCO	–	Asset Liability Committee
ALLL	–	Allowance for loan and lease losses, a component of ACL
AOCI	–	Accumulated other comprehensive income (loss)
ASC	–	Accounting Standards Codification
ASC 326	–	ASU 2016-13, Financial Instruments and Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
ASC 820	–	ASC 820, Fair Value Measurements and Disclosures
ASC 842	–	ASU 2016-02, Leases (Topic 842)
ASU	–	Accounting Standards Update
ATM	–	Automated teller machine
the Bank	–	Atlantic Union Bank (formerly, Union Bank & Trust)
BOLI	–	Bank-owned life insurance
bps	–	Basis points
BSA	–	Bank Secrecy Act
CARES Act	–	Coronavirus Aid, Relief, and Economic Security Act
CCPs	–	Central Counterparty Clearinghouses
CECL	–	Current expected credit losses
CME	–	Chicago Mercantile Exchange
the Company	–	Atlantic Union Bankshares Corporation (formerly, Union Bankshares Corporation) and its subsidiaries
COVID-19	–	Novel strain of coronavirus first identified in December 2019 in Wuhan, China
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)
Dodd-Frank Act	–	Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
EPS	–	Earnings per share
Exchange Act	–	Securities Exchange Act of 1934, as amended
FASB	–	Financial Accounting Standards Board
FCMs	–	Futures Commission Merchants
FDIC	–	Federal Deposit Insurance Corporation
Federal Reserve	–	Board of Governors of the Federal Reserve System
Federal Reserve Act	–	Federal Reserve Act of 1913, as amended
Federal Reserve Bank	–	Federal Reserve Bank of Richmond
FHLB	–	Federal Home Loan Bank of Atlanta
FOMC	–	Federal Open Markets Committee
FTE	–	Fully taxable equivalent
GAAP or U.S. GAAP	–	Accounting principles generally accepted in the United States
HTM	–	Held to maturity
IDC	–	Interactive Data Corporation
LCH	–	London Clearing House
LIBOR	–	London Interbank Offered Rate
March 22 Joint Guidance	–	The five federal bank regulatory agencies and the Conference of State Bank Supervisors guidance
MSLP	–	Main Street Lending Program
MBS	–	Mortgage Backed Securities
MD&A	–	Management’s Discussion and Analysis of Financial Condition and Results of Operations
NOW	–	Negotiable order of withdrawal

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)


	June 30,		December 31,
	2020		2019
ASSETS		(unaudited)		(audited)
Cash and cash equivalents:
Cash and due from banks	$	202,947	$	163,050
Interest-bearing deposits in other banks		636,211		234,810
Federal funds sold		2,862		38,172
Total cash and cash equivalents		842,020		436,032
Securities available for sale, at fair value		2,019,164		1,945,445
Securities held to maturity, at carrying value		547,561		555,144
Restricted stock, at cost		105,832		130,848
Loans held for sale, at fair value		55,067		55,405
Loans held for investment, net of deferred fees and costs		14,308,646		12,610,936
Less allowance for loan and lease losses		169,977		42,294
Total loans held for investment, net		14,138,669		12,568,642
Premises and equipment, net		164,321		161,073
Goodwill		935,560		935,560
Amortizable intangibles, net		65,105		73,669
Bank owned life insurance		327,075		322,917
Other assets		551,943		378,255
Total assets	$	19,752,317	$	17,562,990
LIABILITIES
Noninterest-bearing demand deposits	$	4,345,960	$	2,970,139
Interest-bearing deposits		11,259,179		10,334,842
Total deposits		15,605,139		13,304,981
Securities sold under agreements to repurchase		77,216		66,053
Other short-term borrowings		—		370,200
Long-term borrowings		1,047,814		1,077,495
Other liabilities		403,922		231,159
Total liabilities		17,134,091		15,049,888
Commitments and contingencies (Note 8)
STOCKHOLDERS' EQUITY
Preferred stock, $10.00 par value		173		—
Common stock, $1.33 par value		104,126		105,827
Additional paid-in capital		1,911,985		1,790,305
Retained earnings		540,638		581,395
Accumulated other comprehensive income (loss)		61,304		35,575
Total stockholders' equity		2,618,226		2,513,102
Total liabilities and stockholders' equity	$	19,752,317	$	17,562,990

Common shares outstanding		78,713,056		80,001,185
Common shares authorized		200,000,000		200,000,000
Preferred shares outstanding		17,250		—
Preferred shares authorized		500,000		500,000

See accompanying notes to consolidated financial statements.

-2-

Table of Contents

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Interest and dividend income:
Interest and fees on loans	$	143,234	$	158,838	$	294,361	$	302,952
Interest on deposits in other banks		155		544		1,017		1,017
Interest and dividends on securities:
Taxable		11,267		13,353		22,895		26,434
Nontaxable		8,211		8,390		15,920		16,374
Total interest and dividend income		162,867		181,125		334,193		346,777
Interest expense:
Interest on deposits		19,861		28,809		48,375		53,239
Interest on short-term borrowings		186		5,563		1,526		12,114
Interest on long-term borrowings		5,515		8,159		11,979		15,283
Total interest expense		25,562		42,531		61,880		80,636
Net interest income		137,305		138,594		272,313		266,141
Provision for credit losses		34,200		5,300		94,396		9,092
Net interest income after provision for credit losses		103,105		133,294		177,917		257,049
Noninterest income:
Service charges on deposit accounts		4,930		7,499		12,508		14,656
Other service charges, commissions and fees		1,354		1,702		2,978		3,367
Interchange fees		1,697		5,612		3,321		10,656
Fiduciary and asset management fees		5,515		5,698		11,499		10,752
Mortgage banking income		5,826		2,785		7,847		4,240
Gains on securities transactions		10,339		51		12,275		202
Bank owned life insurance income		2,027		2,075		4,076		4,129
Loan-related interest rate swap fees		5,484		3,716		9,432		5,176
Other operating income		(1,240)		1,440		902		2,337
Total noninterest income		35,932		30,578		64,838		55,515
Noninterest expenses:
Salaries and benefits		49,896		50,390		100,013		98,398
Occupancy expenses		7,224		7,534		14,357		14,935
Furniture and equipment expenses		3,406		3,542		7,147		6,938
Printing, postage, and supplies		999		1,252		2,289		2,494
Technology and data processing		6,454		5,739		12,623		11,415
Professional services		2,989		2,630		6,297		5,587
Marketing and advertising expense		2,043		2,908		4,782		5,291
FDIC assessment premiums and other insurance		2,907		2,601		5,768		5,239
Other taxes		4,120		4,044		8,240		7,808
Loan-related expenses		2,501		2,396		5,198		4,685
OREO and credit-related expenses		411		1,473		1,099		2,157
Amortization of intangible assets		4,223		4,937		8,624		9,154
Training and other personnel costs		876		1,477		2,446		2,621
Merger-related costs		—		6,371		—		24,493
Rebranding expense		—		4,012		—		4,420
Loss on debt extinguishment		10,306		—		10,306		—
Other expenses		4,459		4,302		9,270		6,700
Total noninterest expenses		102,814		105,608		198,459		212,335
Income from continuing operations before income taxes		36,223		58,264


ITEM		PAGE

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019 (audited)	2

	Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2020 and 2019	3

	Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2020 and 2019	4

	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three and six months ended June 30, 2020 and 2019	5

	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2020 and 2019	7

	Notes to Consolidated Financial Statements (unaudited)	9

	Review Report of Independent Registered Public Accounting Firm	58

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	59

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	91

Item 4.	Controls and Procedures	93

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	94

Item 1A.	Risk Factors	94

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	96

Item 6.	Exhibits	97

	Signatures	98

NPA	–	Nonperforming assets
NSF	–	Nonsufficient funds
OCI	–	Other comprehensive income
OREO	–	Other real estate owned
OTTI	–	Other than temporary impairment
PCD	–	Purchased credit deteriorated
PCI	–	Purchased credit impaired
PD/LGD	–	Probability of default/loss given default
PPPLF	–	Paycheck Protection Program Liquidity Facility
PPP	–	Paycheck Protection Program
Quarterly Report	–	Quarterly Report on Form 10-Q for the quarter ended June 30, 2020
ROA	–	Return on average assets
ROE	–	Return on average common equity
ROTCE	–	Return on average tangible common equity
ROU Asset	–	Right of Use Asset
RUC	–	Reserve for unfunded commitments
RVI	–	Residual value insurance
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
SSFA	–	Simplified supervisory formula approach
TDR	–	Troubled debt restructuring
Topic 606	–	ASU No. 2014-09, “Revenue from Contracts with Customers: Topic 606”
TFSB	–	The Federal Savings Bank
UMG	–	Union Mortgage Group, Inc.
WHO	–	World Health Organization
Xenith	–	Xenith Bankshares, Inc.