Atlantic Union Bankshares Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING DISCLOSURES

SEGMENT REPORTING DISCLOSURES

9 Months Ended

Sep. 30, 2017

The Company has two reportable segments: a traditional full service community bank segment and a mortgage loan origination business segment. The community bank segment includes one subsidiary bank, the Bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 111 retail locations in Virginia as of September 30, 2017. The mortgage segment includes UMG, which provides a variety of mortgage loan products principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area. These loans are originated and sold primarily in the secondary market through purchase commitments from investors, which serves to mitigate the Company’s exposure to interest rate risk.

Profit and loss is measured by net income after taxes including realized gains and losses on the Company’s investment portfolio. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Inter-segment transactions are recorded at cost and eliminated as part of the consolidation process.

Both of the Company’s reportable segments are service-based. The mortgage segment's business is a primarily fee-based business, while the community bank segment is driven principally by net interest income. The community bank segment provides a distribution and referral network through its customers for the mortgage loan origination business. The mortgage segment offers a more limited referral network for the bank segment.

The community bank segment provides the mortgage segment with the short-term funds needed to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest. The interest rate on the warehouse line of credit for the three and nine months ended September 30, 2017 and 2016 was the three month LIBOR rate plus 0.15% with no floor. These transactions are eliminated in the consolidation process.

A management fee for operations and administrative support services is charged to all subsidiaries and eliminated in the consolidated totals.

Information about reportable segments and reconciliation of such information to the consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION



	Community Bank		Mortgage			Eliminations			Consolidated
Three Months Ended September 30, 2017
Net interest income	$	70,718	$	480		$	—		$	71,198
Provision for credit losses	3,056		(6		)	—			3,050
Net interest income after provision for credit losses	67,662		486			—			68,148
Noninterest income	15,121		2,527			(112		)	17,536
Noninterest expenses	55,133		2,475			(112		)	57,496
Income before income taxes	27,650		538			—			28,188
Income tax expense	7,339		191			—			7,530
Net income	$	20,311	$	347		$	—		$	20,658
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436

Three Months Ended September 30, 2016
Net interest income	$	66,605	$	423		$	—		$	67,028
Provision for credit losses	2,455		17			—			2,472
Net interest income after provision for credit losses	64,150		406			—			64,556
Noninterest income	15,589		3,501			(140		)	18,950
Noninterest expenses	54,353		2,700			(140		)	56,913
Income before income taxes	25,386		1,207			—			26,593
Income tax expense	5,770		422			—			6,192
Net income	$	19,616	$	785		$	—		$	20,401
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230

Nine Months Ended September 30, 2017
Net interest income	$	205,534	$	1,231		$	—		$	206,765
Provision for credit losses	7,344		1			—			7,345
Net interest income after provision for credit losses	198,190		1,230			—			199,420
Noninterest income	47,080		7,743			(393		)	54,430
Noninterest expenses	167,643		7,571			(393		)	174,821
Income before income taxes	77,627		1,402			—			79,029
Income tax expense	20,791		501			—			21,292
Net income	$	56,836	$	901		$	—		$	57,737
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436

Nine Months Ended September 30, 2016
Net interest income	$	195,508	$	1,027		$	—		$	196,535
Provision for credit losses	7,215		161			—			7,376
Net interest income after provision for credit losses	188,293		866			—			189,159
Noninterest income	44,137		9,185			(465		)	52,857
Noninterest expenses	158,964		7,937			(465		)	166,436
Income before income taxes	73,466		2,114			—			75,580
Income tax expense	18,145		736			—			18,881
Net income	$	55,321	$	1,378		$	—		$	56,699
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230