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

Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING AND REVENUE

SEGMENT REPORTING AND REVENUE

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

SEGMENT REPORTING AND REVENUE

17. SEGMENT REPORTING AND REVENUE

Operating Segments

Prior to the third quarter of 2022, the Company had one reportable operating segment, the Bank; however, in the third quarter of 2022, the Company completed system conversions that allow its chief operating decision makers to evaluate the business, establish the overall business strategy, allocate resources, and assess business performance within two reportable operating segments—Wholesale Banking and Consumer Banking—while corporate functions such as corporate treasury and others are included in Corporate Other. As a result, the Company restated its segment information for the year ended December 31, 2021 under the new basis with two reportable operating segments.

Effective January 1, 2023, the Company made an organizational change to move certain lines of business in the wealth management division that primarily serve Wholesale Banking customers from the Consumer Banking segment to the Wholesale Banking segment. As a result, the Company reallocated $9.6 million of goodwill from the Consumer Banking segment to the Wholesale Banking segment and restated its prior segment information for the year ended December 31, 2022, based on this organizational change. Goodwill was evaluated for impairment prior to and immediately following the organizational change. Refer to Note 5 “Goodwill and Intangible Assets” in this Form 10-K. In addition, the Company restated its prior segment operating results for the years ended December 31, 2022 and 2021, resulting in a reallocation of noninterest income ($12.5 million and $12.3 million, respectively) and noninterest expense ($16.0 million and $14.3 million, respectively) from the Consumer Banking segment to the Wholesale Banking segment.

As of December 31, 2023, the Company’s operating segments include Wholesale Banking, Consumer Banking, and Corporate Other.

Refer to Note 1 “Summary of Significant Accounting Policies” in this Form 10-K for more information on operating segments, segment reporting methodology, and the accounting practices for revenue from contracts with customers.

Segment Results

The following tables present the Company’s operating segment results for the years ended December 31, (dollars in thousands):


	Wholesale Banking		Consumer Banking		Corporate Other ⁽¹⁾ ⁽²⁾		Total
2023
Net interest income	$	270,985	$	253,846	$	86,182	$	611,013
Provision for credit losses		34,229		(2,616)		5		31,618
Net interest income after provision for credit losses		236,756		256,462		86,177		579,395
Noninterest income		36,791		51,347		2,739		90,877
Noninterest expenses		165,499		227,158		37,714		430,371
Income before income taxes	$	108,048	$	80,651	$	51,202	$	239,901
2022 ⁽³⁾
Net interest income	$	301,803	$	222,787	$	59,671	$	584,261
Provision for credit losses		11,758		7,231		39		19,028
Net interest income after provision for credit losses		290,045		215,556		59,632		565,233
Noninterest income		36,557		56,899		25,067		118,523
Noninterest expenses		159,033		218,939		25,830		403,802
Income before income taxes	$	167,569	$	53,516	$	58,869	$	279,954
2021 ⁽³⁾
Net interest income	$	300,440	$	223,140	$	27,680	$	551,260
Provision for credit losses		(34,877)		(26,011)		—		(60,888)
Net interest income after provision for credit losses		335,317		249,151		27,680		612,148
Noninterest income		26,263		72,747		26,796		125,806
Noninterest expenses		144,482		220,357		54,356		419,195
Income before income taxes	$	217,098	$	101,541	$	120	$	318,759

⁽¹⁾ For the years ended December 31, 2021 and 2022, noninterest expenses include $17.4 million and $5.5 million, respectively, in strategic branch closing and facility consolidation costs.

⁽²⁾ For the year ended December 31, 2023, noninterest expenses include $12.6 million ($9.8 million included within other expenses and $2.8 million included within salaries and benefits), in expenses associated with strategic cost saving initiatives, principally composed of severance costs related to headcount reductions, costs related to modifying certain third-party vendor contracts, and charges for exiting certain leases.

⁽³⁾ As discussed above, the segment operating results for the years ended December 31, 2022 and 2021 include a reallocation from Consumer Banking to Wholesale Banking.

The following table presents the Company’s operating segment results for key balance sheet metrics as of December 31, (dollars in thousands):


	Wholesale Banking		Consumer Banking		Corporate Other		Total
2023
LHFI, net of deferred fees and costs ⁽¹⁾	$	12,688,833	$	2,958,811	$	(12,601)	$	15,635,043
Goodwill		639,180		286,031		—		925,211
Deposits		6,403,432		9,816,562		598,135		16,818,129
2022
LHFI, net of deferred fees and costs ⁽¹⁾⁽²⁾	$	11,476,258	$	2,990,017	$	(17,133)	$	14,449,142
Goodwill⁽³⁾		639,180		286,031		—		925,211
Deposits⁽⁴⁾		6,128,729		9,724,598		78,350		15,931,677

⁽¹⁾Corporate Other includes acquisition accounting fair value adjustments

⁽²⁾Wholesale Banking includes a $136.6 million reallocation from Consumer Banking due to the January 1, 2023 organizational change discussed above.

⁽³⁾Wholesale Banking includes a $9.6 million reallocation from Consumer Banking due to the January 1, 2023 organizational change discussed above.

⁽⁴⁾Wholesale Banking includes a $258.7 million reallocation from Consumer Banking due to the January 1, 2023 organizational change discussed above.

Revenue

Noninterest income disaggregated by major source for the years ended December 31, consisted of the following (dollars in thousands):


	2023		2022		2021
Noninterest income:
Service charges on deposit accounts ⁽¹⁾:
Overdraft fees	$	20,045	$	18,749	$	17,126
Maintenance fees & other		13,195		11,303		9,996
Other service charges, commissions, and fees ⁽¹⁾		7,860		6,765		6,595
Interchange fees ⁽¹⁾		9,678		9,110		8,279
Fiduciary and asset management fees ⁽¹⁾:
Trust asset management fees		12,396		12,720		12,571
Registered advisor management fees		—		5,088		9,856
Brokerage management fees		5,299		4,606		5,135
Mortgage banking income		2,743		7,085		21,022
(Loss) gain on sale of securities		(40,989)		(3)		87
Bank owned life insurance income		11,759		11,507		11,488
Loan-related interest rate swap fees		10,037		12,174		5,620
Other operating income ^(2)(3)(4)		38,854		19,419		18,031
Total noninterest income	$	90,877	$	118,523	$	125,806

⁽¹⁾ Income within scope of ASC 606, Revenue from Contracts with Customers.

⁽²⁾ Includes a $5.1 million gain on sale of Visa, Inc. Class B common stock for the year ended December 31, 2021.

⁽³⁾ Includes a $9.1 million gain related to the sale of DHFB for the year ended December 31, 2022.

⁽⁴⁾ Includes a $29.6 million gain related to the sale-leaseback transactions for the year ended December 31, 2023.

The following tables present noninterest income disaggregated by reportable operating segment for the years ended December 31, (dollars in thousands):


	Wholesale Banking		Consumer Banking		Corporate Other^(1)(2)(3)		Total
2023
Noninterest income:
Service charges on deposit accounts	$	8,562	$	24,678	$	—	$	33,240
Other service charges and fees		1,654		6,206		—		7,860
Fiduciary and asset management fees		12,117		5,578		—		17,695
Mortgage banking income		—		2,743		—		2,743
Other income		14,458		12,142		2,739		29,339
Total noninterest income	$	36,791	$	51,347	$	2,739	$	90,877
2022 ⁽⁴⁾
Noninterest income:
Service charges on deposit accounts	$	6,814	$	23,238	$	—	$	30,052
Other service charges and fees		1,769		4,996		—		6,765
Fiduciary and asset management fees		12,424		9,990		—		22,414
Mortgage banking income		—		7,085		—		7,085
Other income		15,550		11,590		25,067		52,207
Total noninterest income	$	36,557	$	56,899	$	25,067	$	118,523
2021 ⁽⁴⁾
Noninterest income:
Service charges on deposit accounts	$	6,009	$	21,113	$	—	$	27,122
Other service charges and fees		1,684		4,911		—		6,595
Fiduciary and asset management fees		12,280		15,282		—		27,562
Mortgage banking income		—		21,022		—		21,022
Other income		6,290		10,419		26,796		43,505
Total noninterest income	$	26,263	$	72,747	$	26,796	$	125,806

⁽¹⁾ For the year ended December 31, 2021, other income primarily includes a $5.1 million gain on the sale of Visa Inc. Class B common stock, income from BOLI, and equity method investment income.

⁽²⁾ For the year ended December 31, 2022, other income primarily includes a $9.1 million gain related to the sale of DHFB, income from BOLI, and equity method investment income.

⁽³⁾ For the year ended December 31, 2023, other income primarily includes a $29.6 million gain related to the sale-leaseback transactions, a $41.0 million loss incurred on the sale of AFS securities, and income from BOLI.

⁽⁴⁾ As discussed above, noninterest income for the years ended December 31, 2022 and 2021 includes a reallocation from Consumer Banking to Wholesale Banking.