Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (NYSE: AUB) reported net income available to common shareholders of $22.2 million and basic and diluted earnings per common share of $0.25 for the second quarter of 2024 and adjusted operating earnings available to common shareholders⁽¹⁾ of $56.4 million and adjusted diluted operating earnings per common share⁽¹⁾ of $0.63 for the second quarter of 2024.

Merger with American National Bankshares Inc. (“American National”)

On April 1, 2024, the Company completed its acquisition of American National. American National’s results of operations are included in the Company’s consolidated results since the date of acquisition, and, therefore, the Company’s second quarter and first half of 2024 results reflect increased levels of average balances, net interest income, and expense compared to its prior quarter and first half of 2023 results. After purchase accounting fair value adjustments, the acquisition added $2.9 billion of total assets, including $2.2 billion of loans held for investment (“LHFI”), and $2.7 billion of total liabilities, including $2.6 billion in total deposits. The Company recorded preliminary goodwill of $282.3 million related to the acquisition.

In connection with the acquisition, the Company recorded an initial allowance for credit losses (“ACL”) of $18.5 million that consisted of an allowance for loan and lease losses (“ALLL”) of $17.1 million, which included a $3.9 million reserve on acquired loans that experienced a more-than insignificant amount of credit deterioration since origination (“PCD” loans), and a reserve for unfunded commitments (“RUC”) discussed below. The Company also recorded a $13.2 million reserve on purchased non-credit deteriorated loans (“non-PCD” loans) established through provision expense, which represents the CECL “double count” of the non-PCD credit mark, and a $1.4 million RUC through the provision for credit losses.

The Company incurred pre-tax merger costs of approximately $29.8 million during the second quarter of 2024 related to the American National acquisition.

“Atlantic Union delivered solid operating metrics in the second quarter, which is the first to include the financial impact of our merger with American National, which closed on April 1st,” said John C. Asbury, president and chief executive officer of Atlantic Union. “During the second quarter, we successfully completed the core systems integration over Memorial Day weekend, and now operate as one brand across our footprint. We believe the combination positions us well to deliver differentiated financial performance, increases our density and market power in central and western Virginia, and expands our franchise into contiguous markets in southern Virginia and in North Carolina.

Operating under the mantra of soundness, profitability, and growth – in that order of priority – Atlantic Union remains committed to generating sustainable, profitable growth, and building long-term value for our shareholders.”

NET INTEREST INCOME

For the second quarter of 2024, net interest income was $184.5 million, an increase of $36.7 million from $147.8 million in the first quarter of 2024. Net interest income (FTE)⁽¹⁾ was $188.3 million in the second quarter of 2024, an increase of $36.8 million from $151.5 million in the first quarter of 2024. The increases in both net interest income and net interest income (FTE)⁽¹⁾ were primarily the result of a $2.8 billion increase in average interest earning assets, partially offset by a $2.2 billion increase in average interest bearing liabilities, in each case primarily related to the acquisition of American National. For the second quarter of 2024, the Company’s net interest margin increased 28 basis points to 3.39% and the net interest margin (FTE)⁽¹⁾ increased 27 basis points to 3.46% compared to the prior quarter, primarily due to the impacts associated with the American National acquisition. Earning asset yields for the second quarter of 2024 increased 34 basis points to 5.96% compared to the first quarter of 2024, and the cost of funds increased by 7 basis points to 2.50%, due to changes in deposit mix as depositors continued to move to higher yielding deposit products.

The Company’s net interest margin (FTE) ⁽¹⁾ includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $14.3 million for the quarter ended June 30, 2024, compared to $602,000 for the quarter ended March 31, 2024, with the increase due to the American National acquisition. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):

ASSET QUALITY

Overview

At June 30, 2024, nonperforming assets (“NPAs”) as a percentage of total LHFI was 0.20%, a decrease of 3 basis points from the prior quarter and included nonaccrual loans of $35.9 million. This decline in the NPA ratio was primarily due to the effects of the American National acquisition, and the approximately $2.2 billion of LHFI acquired in that transaction. Accruing past due loans as a percentage of total LHFI totaled 22 basis points at June 30, 2024, a decrease of 10 basis points from March 31, 2024, and an increase of 6 basis points from June 30, 2023. Net charge-offs were 0.04% of total average LHFI (annualized) for the second quarter of 2024, a decrease of 9 basis points from March 31, 2024, and consistent with June 30, 2023. The ACL totaled $175.7 million at June 30, 2024, an increase of $23.9 million from the prior quarter and included the initial ACL related to the American National acquisition of $18.5 million, as well as the impact of loan growth and the impact of continued uncertainty in the economic outlook on certain portfolios.

Nonperforming Assets

At June 30, 2024, NPAs totaled $36.1 million, compared to $36.4 million in the prior quarter. The following table shows a summary of NPA balances at the quarters ended (dollars in thousands):

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

Past Due Loans

At June 30, 2024, past due loans still accruing interest totaled $40.2 million or 0.22% of total LHFI, compared to $50.7 million or 0.32% of total LHFI at March 31, 2024, and $24.1 million or 0.16% of total LHFI at June 30, 2023. The decrease in past due loan levels at June 30, 2024 from March 31, 2024 was primarily within the 30-59 days past due category and driven by decreases in past due relationships within the other commercial, residential 1-4 family consumer, and commercial and industrial portfolios. Of the total past due loans still accruing interest, $15.6 million or 0.09% of total LHFI were past due 90 days or more at June 30, 2024, compared to $11.4 million or 0.07% of total LHFI at March 31, 2024, and $10.1 million or 0.07% of total LHFI at June 30, 2023. The increase in loans past due 90 days or more at June 30, 2024 from both March 31, 2024 and June 30, 2023 was primarily due to one credit relationship within the other commercial portfolio.

Allowance for Credit Losses

At June 30, 2024, the ACL was $175.7 million and included an ALLL of $158.1 million and a RUC of $17.6 million. At April 1, 2024, the initial ACL related to American National was $18.5 million, consisting of an ALLL of $17.1 million, which included a $3.9 million reserve on PCD loans, and a RUC of $1.4 million. Outside of the initial ACL related to the American National acquisition, the ACL at June 30, 2024 increased $5.4 million from March 31, 2024, primarily due to loan growth in the second quarter of 2024 and the impact of continued uncertainty in the economic outlook on certain portfolios.

The ACL as a percentage of total LHFI was 0.96% at June 30, 2024 and March 31, 2024. The ALLL as a percentage of total LHFI was 0.86% at June 30, 2024 and March 31, 2024.

Net Charge-offs

Net charge-offs were $1.7 million or 0.04% of total average LHFI on an annualized basis for the second quarter of 2024, compared to $4.9 million or 0.13% (annualized) for the first quarter of 2024, and $1.6 million or 0.04% (annualized) for the second quarter of 2023.

Provision for Credit Losses

For the second quarter of 2024, the Company recorded a provision for credit losses of $21.8 million, compared to a provision for credit losses of $8.2 million in the prior quarter, and a provision for credit losses of $6.1 million in the second quarter of 2023. Included in the provision for credit losses for the second quarter of 2024 was $13.2 million initial provision expense on non-PCD loans and $1.4 million on unfunded commitments, each acquired from American National. As compared to the prior quarter, the decrease in provision for credit losses, outside of the initial provision expense recorded on non-PCD loans and unfunded commitments acquired from American National, primarily reflects the impact of lower net charge-offs in the second quarter of 2024. As compared to the same period in the prior year, the increase in provision for credit losses, outside of the initial provision expense recorded on non-PCD loans and unfunded commitments acquired from American National, primarily reflects the impact of loan growth and the impact of continued uncertainty in the economic outlook on certain portfolios.

NONINTEREST INCOME

Noninterest income decreased $1.8 million to $23.8 million for the second quarter of 2024 from $25.6 million in the prior quarter, primarily driven by $6.5 million of pre-tax losses incurred on the sale of available for sale (“AFS”) securities as part of the Company’s restructuring of the American National securities portfolio, partially offset by increases in noninterest income due to the full quarter impact of the American National acquisition that closed on April 1, 2024.

Adjusted operating noninterest income,⁽¹⁾ which excludes losses and gains on sale of AFS securities (losses of $6.5 million in the second quarter and gains of $3,000 in the first quarter), increased $4.8 million to $30.3 million for the second quarter from $25.5 million in the prior quarter, primarily due to the impact of the American National acquisition, which drove the majority of the $2.1 million increase in fiduciary and asset management fees, the $832,000 increase in interchange fees, the $517,000 increase in service charges on deposit accounts, the $418,000 increase in loan-related interest rate swap fees, and the $236,000 increase in other service charges, commissions, and fees. In addition to the acquisition impact, BOLI income increased $546,000 compared to the prior quarter, primarily driven by a death benefit received in the second quarter, and mortgage banking income increased $326,000.

NONINTEREST EXPENSE

Noninterest expense increased $44.7 million to $150.0 million for the second quarter of 2024 from $105.3 million in the prior quarter, primarily driven by a $27.9 million increase in pre-tax merger-related expenses, as well as other increases in noninterest expense due to the full quarter impact of the American National acquisition.

Adjusted operating noninterest expense,⁽¹⁾ which excludes merger-related costs ($29.8 million in the second quarter and $1.9 million in the first quarter), amortization of intangible assets ($6.0 million in the second quarter and $1.9 million in the first quarter), and a FDIC special assessment ($840,000 in the first quarter), increased $13.5 million to $114.2 million for the second quarter from $100.7 million in the prior quarter, primarily due to the impact of the American National acquisition, which drove the majority of the $6.6 million increase in salaries and benefits, the $2.1 million increase in technology and data processing, the $1.2 million increase in occupancy expenses, and the $512,000 increase in franchise and other taxes compared to the prior quarter. In addition to the acquisition impact, professional services increased $1.3 million, primarily due to fees associated with various strategic projects, and marketing and advertising expense increased $665,000 compared to the prior quarter.

INCOME TAXES

As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact the future realization of deferred tax assets. The Company’s bank subsidiary, Atlantic Union Bank, is subject to a bank franchise tax but not state income tax in Virginia, its primary place of business. The Company, its subsidiaries, and Atlantic Union Bank’s non-bank subsidiaries are subject to income taxes and may be able to utilize state deferred tax assets, depending on a number of factors including those entities’ financial results. During the quarter ended June 30, 2024, the Company reviewed its business plans considering the American National acquisition and other business changes and noted shifts within its state income tax footprint and other factors that impacted projected future realization of state deferred tax items, including those attributable to operations in Virginia. As a result, the Company concluded it is more likely than not that the benefit for certain state net operating loss carryforwards will not be realized, and the Company recorded a valuation allowance of $4.8 million via a non-cash charge to income tax expense for the second quarter of 2024.

The Company’s effective tax rate for the three months ended June 30, 2024 and 2023 was 31.2% and 14.4%, respectively, and the effective tax rate for the six months ended June 30, 2024 and 2023 was 22.3% and 15.5%. respectively. The increases in the effective tax rate for both the three and six months ended June 30, 2024 were primarily due to the valuation allowance established on June 30, 2024, which resulted in a 13 and 5 percentage point increase, respectively, in the effective tax rate.

BALANCE SHEET

At June 30, 2024, the Company’s consolidated balance sheet includes the impact of the American National acquisition, which closed April 1, 2024, as discussed above. ASC 805, Business Combinations, allows for a measurement period of 12 months beyond the acquisition date to finalize the fair value measurements of the acquired Company’s net assets as additional information existing as of the acquisition date becomes available. Any future measurement period adjustments will be recorded through goodwill upon identification. Below is a summary of the related impact of the acquisition on the Company's consolidated balance sheet as of the acquisition date.

• The fair value of assets acquired totaled $2.9 billion and included total loans of $2.2 billion with an initial loan discount of $164.6 million.
• The fair value of the liabilities assumed totaled $2.7 billion and included total deposits of $2.6 billion with an initial deposit mark related to time deposits of $4.1 million.
• Core deposit intangibles and other intangibles acquired totaled $84.7 million.
• Preliminary goodwill totaled $282.3 million.

At June 30, 2024, total assets were $24.8 billion, an increase of $3.4 billion from March 31, 2024 and $4.2 billion or approximately 20.2% from June 30, 2023. The increases in total assets from the prior quarter and prior year were primarily driven by growth in LHFI (net of deferred fees and costs) and the AFS securities portfolio, primarily due to the American National acquisition.

At June 30, 2024, LHFI (net of deferred fees and costs) totaled $18.3 billion, an increase of $2.5 billion from $15.9 billion at March 31, 2024, and an increase of $3.3 billion or 21.8% from June 30, 2023. LHFI increased from the prior quarter and prior year primarily due to the American National acquisition, as well as loan growth.

At June 30, 2024, total investments were $3.5 billion, an increase of $350.1 million from March 31, 2024, and an increase of $348.2 million or 11.1% from June 30, 2023. AFS securities totaled $2.6 billion at June 30, 2024 and $2.2 billion at both March 31, 2024 and June 30, 2023. The increases compared to the prior quarter and prior year were primarily due to the acquisition of American National. Total net unrealized losses on the AFS securities portfolio were $420.7 million at June 30, 2024, compared to $410.9 million at March 31, 2024 and $450.1 million at June 30, 2023. Held to maturity securities are carried at cost and totaled $810.5 million at June 30, 2024, $828.9 million at March 31, 2024, and $849.6 million at June 30, 2023 and had net unrealized losses of $44.0 million at June 30, 2024, $37.6 million at March 31, 2024, and $41.8 million at June 30, 2023.

At June 30, 2024, total deposits were $20.0 billion, an increase of $2.7 billion from the prior quarter, and an increase of $3.6 billion or 21.9% from June 30, 2023. The increases in deposit balances from the prior quarter and prior year are primarily due to increases in interest bearing customer deposits and demand deposits, primarily related to the addition of the American National acquired deposits, as well as increases in brokered deposits.

At June 30, 2024, total borrowings were $1.2 billion, an increase of $149.0 million from March 31, 2024 and a decrease of $113.6 million or 8.6% from June 30, 2023. At June 30, 2024 average borrowings were $1.0 billion, consistent with March 31, 2024, and a decrease of $53.3 million from June 30, 2023. The increase in borrowings from the prior quarter was primarily driven by increased use of short-term borrowings to fund loan growth, as well as increases associated with the American National acquisition, while the decrease from the same period in the prior year was due to paydowns of short-term borrowings due to deposit growth.

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

⁽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 the “Alternative Performance Measures (non-GAAP)” section of the Key Financial Results.

⁽²⁾ All ratios at June 30, 2024 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.

During the second quarter of 2024, the Company declared and paid a quarterly dividend on the outstanding shares of Series A Preferred Stock of $171.88 per share (equivalent to $0.43 per outstanding depositary share), consistent with the first quarter of 2024 and the second quarter of 2023. During the second quarter of 2024, the Company also declared and paid cash dividends of $0.32 per common share, consistent with the first quarter of 2024 and a $0.02 increase or approximately 6.7% from the second quarter of 2023.

ABOUT ATLANTIC UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank had 129 branches and approximately 150 ATMs located throughout Virginia and in portions of Maryland and North Carolina as of June 30, 2024. Certain non-bank financial services affiliates of Atlantic Union Bank include: Atlantic Union Equipment Finance, Inc., which provides equipment financing; Atlantic Union Financial Consultants, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

SECOND QUARTER 2024 EARNINGS RELEASE CONFERENCE CALL

The Company will hold a conference call and webcast for investors at 9:00 a.m. Eastern Time on Thursday, July 25, 2024, during which management will review our financial results for the second quarter 2024 and provide an update on our recent activities.

The listen-only webcast and the accompanying slides can be accessed at: https://edge.media-server.com/mmc/p/ct8s95ox.

For analysts who wish to participate in the conference call, please register at the following URL: https://register.vevent.com/register/BI670b5991ba5d495ea7c519f17cf6b388. To participate in the conference call, you must use the link to receive an audio dial-in number and an Access PIN.

A replay of the webcast, and the accompanying slides, will be available on the Company’s website for 90 days at: https://investors.atlanticunionbank.com/.

NON-GAAP FINANCIAL MEASURES

In reporting the results as of and for the period ended June 30, 2024, the Company has provided supplemental performance measures determined by methods other than in accordance with GAAP. 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)” in the tables within the section “Key Financial Results.”

FORWARD-LOOKING STATEMENTS

This press release and statements by our management 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, statements made in Mr. Asbury’s quotations, statements regarding our expectations with regard to the benefits of the American National acquisition, statements regarding our future ability to recognize the benefits of certain tax assets, our business, financial and operating results, including our deposit base and funding, the impact of future economic conditions, changes in economic conditions, our asset quality, our customer relationships, and statements that include other projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such forward-looking statements are based on certain 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 characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” “continue,” “confidence,” or words of similar meaning or other statements concerning opinions or judgment of the Company and our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends 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, the effects of or changes in:

• market interest rates and their related impacts on macroeconomic conditions, customer and client behavior, our funding costs and our loan and securities portfolios;
• inflation and its impacts on economic growth and customer and client behavior;
• adverse developments in the financial industry generally, such as bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior;
• the sufficiency of liquidity and changes in our capital positions;
• general economic and financial market conditions, in the United States generally and particularly in the markets in which we operate and which our loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth;
• the impact of purchase accounting with respect to the American National acquisition, or any change in the assumptions used regarding the assets acquired and liabilities assumed to determine the fair value and credit marks;
• the possibility that the anticipated benefits of the American National acquisition, including anticipated cost savings and strategic gains, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the recent integration of the two companies or as a result of the strength of the economy, competitive factors in the areas where we do business, or as a result of other unexpected factors or events;
• potential adverse reactions or changes to business or employee relationships, including those resulting from the American National acquisition;
• monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve;
• the quality or composition of our loan or investment portfolios and changes therein;
• demand for loan products and financial services in our market areas;
• our ability to manage our growth or implement our growth strategy;
• the effectiveness of expense reduction plans;
• the introduction of new lines of business or new products and services;
• our ability to recruit and retain key employees;
• real estate values in our lending area;
• changes in accounting principles, standards, rules, and interpretations, and the related impact on our financial statements;
• an insufficient ACL or volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by changing economic conditions, credit concentrations, inflation, changing interest rates, or other factors;
• concentrations of loans secured by real estate, particularly commercial real estate;
• the effectiveness of our credit processes and management of our credit risk;
• our ability to compete in the market for financial services and increased competition from fintech companies;
• technological risks and developments, and cyber threats, attacks, or events;
• operational, technological, cultural, regulatory, legal, credit, and other risks associated with the exploration, consummation and integration of potential future acquisitions, whether involving stock or cash considerations;
• the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as pandemics), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of our borrowers to satisfy their obligations to us, on the value of collateral securing loans, on the demand for our loans or our other products and services, on supply chains and methods used to distribute products and services, on incidents of cyberattack and fraud, on our liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of our business operations and on financial markets and economic growth;
• performance by our counterparties or vendors;
• deposit flows;
• the availability of financing and the terms thereof;
• the level of prepayments on loans and mortgage-backed securities;
• the effects of legislative or regulatory changes and requirements, including changes in federal, state or local tax laws;
• actual or potential claims, damages, and fines related to litigation or government actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;
• any event or development that would cause us to conclude that there was an impairment of any asset, including intangible assets, such as goodwill; and
• other factors, many of which are beyond our control.

Please also refer to such other factors as discussed throughout Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10‑K for the year ended December 31, 2023 and related disclosures in other filings, which have been filed with the U.S. Securities and Exchange Commission (“SEC”) and are available on the SEC’s website at www.sec.gov. All risk factors and uncertainties described herein and therein should be considered in evaluating forward-looking statements, and all of the forward-looking statements are expressly qualified by the cautionary statements contained or referred to herein and therein. 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 our businesses or operations. Readers are cautioned not to rely too heavily on forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not intend or assume any obligation to update, revise or clarify any forward-looking statements that may be made from time to time by or on behalf of the Company, whether as a result of new information, future events or otherwise, except as required by law.