Atlantic Union Bankshares Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

INCOME TAXES

12 Months Ended

Dec. 31, 2023

15. INCOME TAXES

The Company files income tax returns in the U.S., the Commonwealth of Virginia, and other states. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years prior to 2020.

Significant components of the Company’s net deferred tax assets and liabilities consist of the following as of December 31, (dollars in thousands):


	2023		2022
Deferred tax assets:
AFS securities	$	81,507	$	96,732
ACL		32,505		27,260
NOL carryforwards		28,113		38,932
Lease liabilities		18,283		11,982
Cash flow hedges		11,422		14,517
Employee compensation and benefit plans		8,935		5,739
Other		10,695		9,361
Total deferred tax assets		191,460		204,523
Deferred tax liabilities:
Premises and equipment		59,561		59,173
Lease ROU asset		16,427		8,846
Intangibles		6,037		7,778
Other		4,751		4,561
Total deferred tax liabilities		86,776		80,358
Net deferred tax assets	$	104,684	$	124,165

In assessing the ability to realize deferred tax assets, the Company considers the scheduled reversal of temporary differences, projected future taxable income, and tax planning strategies in accordance with ASC 740-10-30, Income Taxes – Initial Measurement. Based on the latest analysis at December 31, 2023, the Company concluded that it is more likely than not that the deferred tax asset will be realizable and no valuation allowance is considered necessary.

The NOL and other carryforwards at December 31, were as follows (dollars in thousands):


			Expiration
	2023		Year
NOL carryforwards – federal ⁽¹⁾ ⁽²⁾	$	50,757		2031-2037
NOL carryforwards – federal ⁽¹⁾		19,902		N/A
NOL carryforwards – states		208,427		2028-2038
NOL carryforwards – states		152,304		N/A
Other carryforwards – federal		3,329		2029

N/A – not applicable as the NOL can be carried forward indefinitely

⁽¹⁾ The Company acquired a portion of these carryforwards and will be subject to limitations that could limit the Company’s utilization in future periods.

⁽²⁾ Included in this balance are recognized built in loss carryforwards that are subject to the same limitations as net operating loss carryforwards.

The Company analyzed the tax positions taken or expected to be taken in its tax returns for the periods ending December 31, 2023, 2022 and 2021, and had no liability related to uncertain tax positions in accordance with applicable ASC 740, Income Taxes.

The components of income tax expense (benefit) for the years ended December 31, were as follows (dollars in thousands):


	2023		2022		2021
Current income tax expense:
Federal	$	33,374	$	19,285	$	10,291
State		2,538		1,104		1,039
Total current income tax expense		35,912		20,389		11,330
Deferred tax expense (benefit):
Federal		3,646		25,145		44,405
State		(1,475)		(90)		(893)
Total deferred income tax expense ⁽¹⁾		2,171		25,055		43,512
Total income tax expense	$	38,083	$	45,444	$	54,842

⁽¹⁾ Does not reflect the deferred tax effects of unrealized gains and losses on AFS securities, unrealized gains and losses for AFS securities transferred to HTM, unrealized gains and losses on BOLI or changes in fair values of cash flow hedges that are included in Accumulated Other Comprehensive (Loss) Income. Refer to Note 11 “Stockholders’ Equity” in this Form 10-K for additional information.

Income tax expense for 2023, 2022, and 2021 varies from the amount computed by applying the statutory U.S. federal income tax rate to income before income taxes. A reconciliation between the expected and actual income tax expense, and resulting effective tax rate, is presented in the following table for the years ended December 31, (dollars in thousands):


	2023		2022		2021
Expected federal income tax expense	$	50,361	$	58,790	$	66,939
Increase (decrease) in taxes resulting from:
State income tax expense (benefit), net of federal effect		530		782		(72)
Tax-exempt income, net of expense disallowance		(11,123)		(11,615)		(9,820)
Bank owned life insurance		(2,469)		(2,415)		(2,412)
Other, net		784		(98)		207
Total income tax expense	$	38,083	$	45,444	$	54,842
Effective income tax rate		15.9%		16.2%		17.2%

For the years ended December 31, 2023, 2022, and 2021 investment tax credits totaled approximately $4.8 million, $4.0 million, and $3.6 million, respectively.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details