Atlantic union bankshares reports first quarter financial results
Richmond, va.--(business wire)--atlantic union bankshares corporation (the “company” or “atlantic union”) (nyse: aub) reported net income available to common shareholders of $32.7 million and basic and diluted earnings per common share of $0.44 for the first quarter of 2023. excluding a pre-tax loss on the sale of securities of $13.4 million due to the sale of available for sale (“afs”) securities and a $5.0 million legal reserve associated with an ongoing regulatory matter we previously disclosed, the company reported for the quarter ended march 31, 2023, adjusted operating earnings available to common shareholders(1) of $47.2 million and adjusted diluted operating earnings per common share(1) of $0.63. on january 18, 2023, february 9, 2023, and march 6th through the 9th of 2023, the company executed a balance sheet repositioning strategy and sold afs securities with a total book value of $505.7 million at a pre-tax loss of $13.4 million and used the net proceeds to reduce existing high costing federal home loan bank borrowings. the deleverage strategy provides the company with improved liquidity, enhanced tangible common equity, and additional run rate earnings. the company estimates the loss will be earned back in approximately two years. “atlantic union’s business model has stood the test of time over our 121-year history,” said john c. asbury, president and chief executive officer of atlantic union. “our franchise remains strong even in these uncertain times as we are a diversified, traditional, full-service bank that delivers the products and services of a larger bank with the local decision making, responsiveness and client service orientation to positively set us apart from other banks, both larger and smaller. we also believe that our stable deposit base remains a particular strength of our franchise.” “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 first quarter of 2023, net interest income was $153.4 million, a decrease of $10.4 million from $163.8 million in the fourth quarter of 2022. net interest income (fte)(1) was $157.2 million in the first quarter of 2023, a decrease of $10.7 million from the fourth quarter of 2022. the decreases in net interest income and net interest income (fte)(1) were primarily driven by the lower day count in the quarter, higher deposit and borrowing costs due to increases in market interest rates, as well as changes in the deposit mix as depositors migrated to higher costing interest bearing deposit accounts. these decreases were partially offset by an increase in loan yields due primarily to variable rate loans repricing as short-term interest rates increased and an increase in average loans. our net interest margin decreased 20 basis points from the prior quarter to 3.41% at march 31, 2023, and our net interest margin (fte)(1) decreased 20 basis points during the same period to 3.50%. earning asset yields increased by 38 basis points to 4.92% in the first quarter of 2023 compared to the fourth quarter of 2022, primarily due to the impact of increases in market interest rates on loans. our cost of funds increased by 58 basis points to 1.42% at march 31, 2023 compared to the prior quarter, driven by higher deposit and borrowing costs and funding mix as noted above. the company’s net interest margin (fte) (1) includes the impact of acquisition accounting fair value adjustments. net accretion related to acquisition accounting was $883,000 for the quarter ended march 31, 2023, representing a decrease of $380,000 from the prior quarter. the fourth quarter of 2022, the first quarter of 2023, and the remaining estimated net accretion impact are reflected in the following table (dollars in thousands): loan deposit borrowings accretion amortization amortization total for the quarter ended december 31, 2022 $ 1,484 $ (12 ) $ (209 ) $ 1,263 for the quarter ended march 31, 2023 1,106 (14 ) (209 ) 883 for the remaining nine months of 2023 (estimated) 2,285 (17 ) (642 ) 1,626 for the years ending (estimated): 2024 2,554 (4 ) (877 ) 1,673 2025 1,983 (1 ) (900 ) 1,082 2026 1,606 — (926 ) 680 2027 1,222 — (953 ) 269 2028 932 — (983 ) (51 ) thereafter 5,446 — (7,011 ) (1,565 ) total remaining acquisition accounting fair value adjustments at march 31, 2023 $ 16,028 $ (22 ) $ (12,292 ) $ 3,714 asset quality overview at march 31, 2023, nonperforming assets (“npas”) as a percentage of loans increased 1 basis point from the prior quarter to 0.20% and included nonaccrual loans of $29.1 million. accruing past due loans as a percentage of total loans held for investment (“lhfi”) totaled 21 basis points at both march 31, 2023 and december 31, 2022, representing a 1 basis point decrease from march 31, 2022. net charge-offs were 0.13% of total average loans (annualized) for the first quarter of 2023, an increase of 11 basis points from december 31, 2022, and an increase of 13 basis points from march 31, 2022, primarily due to charge-offs associated with two commercial loans. the allowance for credit losses (“acl”) totaled $131.7 million at march 31, 2023, a $7.3 million increase from the prior quarter. nonperforming assets at march 31, 2023, npas totaled $29.1 million, an increase of $2.0 million from december 31, 2022. the following table shows a summary of npa balances at the quarter ended (dollars in thousands): march 31, december 31, september 30, june 30, march 31, 2023 2022 2022 2022 2022 nonaccrual loans $ 29,082 $ 27,038 $ 26,500 $ 29,070 $ 29,032 foreclosed properties 29 76 2,087 2,065 1,696 total nonperforming assets $ 29,111 $ 27,114 $ 28,587 $ 31,135 $ 30,728 the following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands): march 31, december 31, september 30, june 30, march 31, 2023 2022 2022 2022 2022 beginning balance $ 27,038 $ 26,500 $ 29,070 $ 29,032 $ 31,100 net customer payments (1,755 ) (1,805 ) (3,725 ) (2,472 ) (4,132 ) additions 4,151 2,935 1,302 3,203 2,087 charge-offs (39 ) (461 ) (125 ) (311 ) (23 ) loans returning to accruing status (313 ) (131 ) — — — transfers to foreclosed property — — (22 ) (382 ) — ending balance $ 29,082 $ 27,038 $ 26,500 $ 29,070 $ 29,032 past due loans at march 31, 2023, past due loans still accruing interest totaled $30.9 million or 0.21% of lhfi, compared to $30.0 million or 0.21% of lhfi at december 31, 2022, and $29.6 million or 0.22% of lhfi at march 31, 2022. of the total past due loans still accruing interest, $7.2 million or 0.05% of lhfi were loans past due 90 days or more at march 31, 2023, compared to $7.5 million or 0.05% of lhfi at december 31, 2022, and $8.2 million or 0.06% of lhfi at march 31, 2022. allowance for credit losses at march 31, 2023, the acl was $131.7 million and included an allowance for loan and lease losses (“alll”) of $116.5 million and a reserve for unfunded commitments of $15.2 million. the acl at march 31, 2023 increased $7.3 million from december 31, 2022 due to increasing uncertainty in the economic outlook and loan growth during the first quarter of 2023. the acl as a percentage of lhfi was 0.90% at march 31, 2023, an increase of 4 basis points from december 31, 2022. the alll as a percentage of lhfi was 0.80% at march 31, 2023, compared to 0.77% at december 31, 2022. net charge-offs net charge-offs were $4.6 million or 0.13% of total average lhfi on an annualized basis for the first quarter of 2023, compared to $810,000 or 0.02% (annualized) for the fourth quarter of 2022, and less than 0.01% of total average lhfi (annualized) for the first quarter of 2022. the majority of net charge-offs in the first quarter of 2023 were related to two commercial loans within the commercial and industrial and commercial real estate portfolios. provision for credit losses for the first quarter of 2023, the company recorded a provision for credit losses of $11.9 million, compared to a provision for credit losses of $6.3 million in the prior quarter, and a provision for credit losses of $2.8 million in the first quarter of 2022. the provision for credit losses for the first quarter of 2023 reflected a provision of $10.4 million for loan losses and a $1.5 million provision for unfunded commitments. noninterest income noninterest income decreased $14.9 million to $9.6 million for the first quarter of 2023 from $24.5 million in the prior quarter, primarily due to $13.4 million of losses incurred on the sale of afs securities, driven by the company’s balance sheet repositioning transactions executed during the quarter. in addition, loan-related interest rate swap fees decreased $2.2 million from the prior quarter due to lower transaction volumes. these declines in noninterest income were partially offset by increases in several noninterest income categories including certain service charges, fiduciary and asset management fees, mortgage banking income, and bank owned life insurance income. noninterest expense noninterest expense for the first quarter of 2023 increased to $108.3 million from $99.8 million in the prior quarter primarily due to a $1.8 million increase in salaries and benefits expense due to seasonal increases in payroll related taxes and 401(k) contribution expenses in the first quarter, (which was partially offset by decreases in performance based variable incentive compensation and profit-sharing expenses), a $2.0 million increase in federal deposit insurance commission (“fdic”) assessment fees due to the increase in the fdic assessment rates, effective january 1, 2023, and the impact of prior periods’ fdic assessment fee refunds reflected in the prior quarter, and other expenses increased $7.0 million, reflecting a $5.0 million legal reserve associated with an ongoing regulatory matter previously disclosed, and a prior quarter gain of $3.2 million related to the sale and leaseback of an office building, partially offset by lower teammate and travel costs. these increases in noninterest expense were partially offset by a $1.3 million decrease in technology and data processing primarily due to the write-down of obsolete software in the prior quarter, and a $1.0 million decrease in professional services related to strategic projects that occurred in the prior quarter. income taxes the effective tax rate for the three months ended march 31, 2023 was 17.0%, compared to 17.5% for the three months ended march 31, 2022. the decrease in the effective tax rate primarily reflects the impact of changes in the proportion of tax-exempt income to pre-tax income. balance sheet at march 31, 2023, total assets were $20.1 billion, a decrease of $357.8 million or approximately 7.1% (annualized) from december 31, 2022, and an increase of $320.9 million or approximately 1.6% from march 31, 2022. total assets decreased from the prior quarter primarily due to a decline in the investment securities portfolio of $514.4 million, primarily due to the sale of afs securities as part of the company’s balance sheet repositioning executed during the quarter. the decrease in assets from the prior quarter was partially offset by a $135.1 million increase in loans held for investment (net of deferred fees and costs), driven by loan growth. total assets increased from the prior year due to the increase in total loans held for investment (net of deferred fees and costs) of $1.1 billion, driven by loan growth, partially offset by a decrease in the investment securities portfolio of $831.8 million primarily due to a decline in the market value of the afs securities portfolio, as well as the sale of afs securities as part of the company’s balance sheet restructuring executed during the first quarter of 2023. at march 31, 2023, loans held for investment (net of deferred fees and costs) totaled $14.6 billion, an increase of $135.1 million or 3.8% (annualized) from $14.4 billion, at december 31, 2022. average loans held for investment (net of deferred fees and costs) totaled $14.5 billion at march 31, 2023, an increase of $388.2 million or 11.2% (annualized) from the prior quarter. at march 31, 2023, loans held for investment (net of deferred fees and costs) increased $1.1 billion or 8.4% from march 31, 2022, and quarterly average loans increased $1.2 billion or 9.1% from the same period in the prior year. at march 31, 2023, total investments were $3.2 billion, a decrease of $514.4 million from december 31, 2022, and a decrease of $831.8 million from march 31, 2022. afs securities totaled $2.3 billion at march 31, 2023, $2.7 billion at december 31, 2022, and $3.2 billion at march 31, 2022. at march 31, 2023, total net unrealized losses on the afs securities portfolio were $407.9 million, an improvement of $54.7 million from total net unrealized losses on afs securities of $462.6 at december 31, 2022. held to maturity (“htm”) securities are carried at cost and totaled $855.4 million at march 31, 2023, $847.7 million at december 31, 2022, and $756.9 million at march 31, 2022 and have net unrealized losses of $32.3 million at march 31, 2023, an improvement of $13.5 million from net unrealized losses on htm securities of $45.8 at december 31, 2022. at march 31, 2023, total deposits were $16.5 billion, an increase of $524.2 million or approximately 13.3% (annualized) from december 31, 2022. average deposits at march 31, 2023 decreased from the prior quarter by $194.5 million or 4.7% (annualized). total deposits at march 31, 2023 decreased $28.3 million or 0.2% from march 31, 2022, and quarterly average deposits at march 31, 2023 decreased $97.1 million or 0.6% from the same period in the prior year. total deposits increased from the prior quarter due to a $829.5 million increase in interest-bearing deposits, which includes approximately $377.9 million in brokered deposits, partially offset by a $305.2 million decrease in demand deposits, as customers moved funds from lower to higher yielding deposit products. the following table shows the company’s capital ratios at the quarters ended: march 31, december 31, march 31, 2023 2022 2022 common equity tier 1 capital ratio (2) 9.91 % 9.95 % 9.86 % tier 1 capital ratio (2) 10.89 % 10.93 % 10.91 % total capital ratio (2) 13.76 % 13.70 % 13.79 % leverage ratio (tier 1 capital to average assets) (2) 9.38 % 9.42 % 9.07 % common equity to total assets 11.31 % 10.78 % 11.79 % tangible common equity to tangible assets (1) 6.91 % 6.43 % 7.21 % _____________________________ at march 31, 2023, the company’s common equity to total assets ratio and tangible common equity to tangible assets ratio increased compared to the prior quarter primarily due to the decline in unrealized losses on the afs securities portfolio, driven by lower long-term interest rates. these ratios decreased compared to the prior year primarily due to unrealized losses on the afs securities portfolio recorded in other comprehensive income due to higher market interest rates. during the first quarter of 2023, 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 fourth quarter of 2022 and the first quarter of 2022. during the first quarter of 2023, the company also declared and paid cash dividends of $0.30 per common share, consistent with the fourth quarter of 2022 and an increase of $0.02 or approximately 7.1% from the first quarter of 2022. _____________________________ (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 march 31, 2023 are estimates and subject to change pending the company’s filing of its fr y9-c. all other periods are presented as filed. 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 has 109 branches and approximately 125 atms located throughout virginia and in portions of maryland and north carolina. 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. first quarter 2023 earnings release conference call the company will hold a conference call and webcast for investors at 9:00 a.m. eastern time on tuesday, april 25, 2023 during which management will review the financial results for the first quarter 2023 and provide an update on recent activities. the listen-only webcast and the accompanying slides can be accessed at: https://edge.media-server.com/mmc/p/uhe7ig3g. for analysts who wish to participate in the conference call, please register at the following url: https://register.vevent.com/register/bifbfa2d1f08f640fdac388b823867a523. 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 march 31, 2023, the company has provided supplemental performance measures on a tax-equivalent, tangible, operating, adjusted or pre-tax pre-provision basis. 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 our business, financial and operating results, including our deposit base, the impact of future economic conditions, estimates with respect to the earn back period related to our recent balance sheet repositioning and the remaining net accretion related to acquisition accounting, 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 the recent 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; 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; 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 inflation, changing interest rates, or other factors; our liquidity and capital positions; 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, 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 the 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; the discontinuation of libor and its impact on the financial markets, and our ability to manage operational, legal, and compliance risks related to the discontinuation of libor and implementation of one or more alternate reference rates; 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; legislative or regulatory changes and requirements; 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; the effects of changes in federal, state or local tax laws and regulations; 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 the company’s annual report on form 10‑k for the year ended december 31, 2022 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 its businesses or operations. readers are cautioned not to rely too heavily on the forward-looking statements, and undue reliance should not be placed on such 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. atlantic union bankshares corporation and subsidiaries key financial results (unaudited) (dollars in thousands, except share data) as of & for three months ended 03/31/23 12/31/22 03/31/22 results of operations interest and dividend income $ 217,546 $ 202,068 $ 138,456 interest expense 64,103 38,220 7,525 net interest income 153,443 163,848 130,931 provision for credit losses 11,850 6,257 2,800 net interest income after provision for credit losses 141,593 157,591 128,131 noninterest income 9,628 24,500 30,153 noninterest expenses 108,274 99,790 105,321 income before income taxes 42,947 82,301 52,963 income tax expense 7,294 11,777 9,273 net income 35,653 70,524 43,690 dividends on preferred stock 2,967 2,967 2,967 net income available to common shareholders $ 32,686 $ 67,557 $ 40,723 interest earned on earning assets (fte) (1) $ 221,334 $ 206,186 $ 141,792 net interest income (fte) (1) 157,231 167,966 134,267 total revenue (fte) (1) 166,859 192,466 164,420 pre-tax pre-provision adjusted operating earnings (7) 73,197 88,559 61,271 key ratios earnings per common share, diluted $ 0.44 $ 0.90 $ 0.54 return on average assets (roa) 0.71 % 1.39 % 0.89 % return on average equity (roe) 5.97 % 12.05 % 6.66 % return on average tangible common equity (rotce) (2) (3) 10.71 % 22.92 % 11.53 % efficiency ratio 66.40 % 52.98 % 65.38 % efficiency ratio (fte) (1) 64.89 % 51.85 % 64.06 % net interest margin 3.41 % 3.61 % 2.97 % net interest margin (fte) (1) 3.50 % 3.70 % 3.04 % yields on earning assets (fte) (1) 4.92 % 4.54 % 3.22 % cost of interest-bearing liabilities 2.02 % 1.24 % 0.26 % cost of deposits 1.28 % 0.72 % 0.11 % cost of funds 1.42 % 0.84 % 0.18 % operating measures (4) adjusted operating earnings $ 50,189 $ 70,525 $ 48,041 adjusted operating earnings available to common shareholders 47,222 67,558 45,074 adjusted operating earnings per common share, diluted $ 0.63 $ 0.90 $ 0.60 adjusted operating roa 1.00 % 1.39 % 0.98 % adjusted operating roe 8.40 % 12.05 % 7.32 % adjusted operating rotce (2) (3) 15.22 % 22.92 % 12.69 % adjusted operating efficiency ratio (fte) (1)(6) 56.03 % 50.61 % 58.86 % per share data earnings per common share, basic $ 0.44 $ 0.90 $ 0.54 earnings per common share, diluted 0.44 0.90 0.54 cash dividends paid per common share 0.30 0.30 0.28 market value per share 35.05 35.14 36.69 book value per common share 30.53 29.68 31.12 tangible book value per common share (2) 17.78 16.87 18.10 price to earnings ratio, diluted 19.77 9.79 16.75 price to book value per common share ratio 1.15 1.18 1.18 price to tangible book value per common share ratio (2) 1.97 2.08 2.03 weighted average common shares outstanding, basic 74,832,141 74,712,040 75,544,644 weighted average common shares outstanding, diluted 74,835,514 74,713,972 75,556,127 common shares outstanding at end of period 74,989,228 74,712,622 75,335,956 atlantic union bankshares corporation and subsidiaries key financial results (unaudited) (dollars in thousands, except share data) as of & for three months ended 03/31/23 12/31/22 03/31/22 capital ratios common equity tier 1 capital ratio (5) 9.91 % 9.95 % 9.86 % tier 1 capital ratio (5) 10.89 % 10.93 % 10.91 % total capital ratio (5) 13.76 % 13.70 % 13.79 % leverage ratio (tier 1 capital to average assets) (5) 9.38 % 9.42 % 9.07 % common equity to total assets 11.31 % 10.78 % 11.79 % tangible common equity to tangible assets (2) 6.91 % 6.43 % 7.21 % financial condition assets $ 20,103,370 $ 20,461,138 $ 19,782,430 lhfi (net of deferred fees and costs) 14,584,280 14,449,142 13,459,349 securities 3,195,399 3,709,761 4,027,185 earning assets 17,984,057 18,271,430 17,731,089 goodwill 925,211 925,211 935,560 amortizable intangibles, net 24,482 26,761 40,273 deposits 16,455,910 15,931,677 16,484,223 borrowings 798,910 1,708,700 504,032 stockholders' equity 2,440,236 2,372,737 2,498,335 tangible common equity (2) 1,324,186 1,254,408 1,356,145 lhfi, net of deferred fees and costs construction and land development $ 1,179,872 $ 1,101,260 $ 969,059 commercial real estate - owner occupied 1,956,585 1,982,608 2,007,671 commercial real estate - non-owner occupied 3,968,085 3,996,130 3,875,681 multifamily real estate 822,006 802,923 723,940 commercial & industrial 3,082,478 2,983,349 2,540,680 residential 1-4 family - commercial 522,760 538,063 569,801 residential 1-4 family - consumer 974,511 940,275 824,163 residential 1-4 family - revolving 589,791 585,184 568,403 auto 600,658 592,976 499,855 consumer 145,090 152,545 171,875 other commercial 742,444 773,829 708,221 total lhfi $ 14,584,280 $ 14,449,142 $ 13,459,349 deposits interest checking accounts $ 4,714,366 $ 4,186,505 $ 4,121,257 money market accounts 3,547,514 3,922,533 4,151,152 savings accounts 1,047,914 1,130,899 1,166,922 customer time deposits of $250,000 and over 541,447 405,060 365,796 other customer time deposits 1,648,747 1,396,011 1,309,030 time deposits 2,190,194 1,801,071 1,674,826 total interest-bearing customer deposits 11,499,988 11,041,008 11,114,157 brokered deposits 377,913 7,430 3 total interest-bearing deposits $ 11,877,901 $ 11,048,438 $ 11,114,160 demand deposits 4,578,009 4,883,239 5,370,063 total deposits $ 16,455,910 $ 15,931,677 $ 16,484,223 averages assets $ 20,384,351 $ 20,174,152 $ 19,920,368 lhfi (net of deferred fees and costs) 14,505,611 14,117,433 13,300,789 loans held for sale 5,876 7,809 14,636 securities 3,467,561 3,644,196 4,198,582 earning assets 18,238,088 18,000,596 17,885,018 deposits 16,417,212 16,611,749 16,514,375 time deposits 2,291,530 1,764,596 1,766,657 interest-bearing deposits 11,723,865 11,415,032 11,286,277 borrowings 1,122,244 816,818 511,722 interest-bearing liabilities 12,846,109 12,231,850 11,797,999 stockholders' equity 2,423,600 2,321,208 2,660,984 tangible common equity (2) 1,306,445 1,201,732 1,517,325 atlantic union bankshares corporation and subsidiaries key financial results (unaudited) (dollars in thousands, except share data) as of & for three months ended 03/31/23 12/31/22 03/31/22 asset quality allowance for credit losses (acl) beginning balance, allowance for loan and lease losses (alll) $ 110,768 $ 108,009 $ 99,787 add: recoveries 1,167 1,332 1,513 less: charge-offs 5,726 2,142 1,509 add: provision for loan losses 10,303 3,569 2,800 ending balance, alll $ 116,512 $ 110,768 $ 102,591 beginning balance, reserve for unfunded commitment (ruc) $ 13,675 $ 11,000 $ 8,000 add: provision for unfunded commitments 1,524 2,675 — ending balance, ruc $ 15,199 $ 13,675 $ 8,000 total acl $ 131,711 $ 124,443 $ 110,591 acl / total lhfi 0.90 % 0.86 % 0.82 % alll / total lhfi 0.80 % 0.77 % 0.76 % net charge-offs / total average lhfi 0.13 % 0.02 % 0.00 % provision for loan losses/ total average lhfi 0.29 % 0.10 % 0.09 % nonperforming assets construction and land development $ 363 $ 307 $ 869 commercial real estate - owner occupied 6,174 7,178 4,865 commercial real estate - non-owner occupied 1,481 1,263 3,287 commercial & industrial 4,815 1,884 1,975 residential 1-4 family - commercial 1,907 1,904 2,239 residential 1-4 family - consumer 10,540 10,846 12,039 residential 1-4 family - revolving 3,449 3,453 3,371 auto 347 200 333 consumer 6 3 54 nonaccrual loans $ 29,082 $ 27,038 $ 29,032 foreclosed property 29 76 1,696 total nonperforming assets (npas) $ 29,111 $ 27,114 $ 30,728 construction and land development $ 249 $ 100 $ 1 commercial real estate - owner occupied 2,133 2,167 2,396 commercial real estate - non-owner occupied 1,032 607 1,735 commercial & industrial 633 459 763 residential 1-4 family - commercial 232 275 878 residential 1-4 family - consumer 859 1,955 1,147 residential 1-4 family - revolving 1,766 1,384 1,065 auto 137 344 192 consumer 137 108 70 other commercial 66 91 — lhfi ≥ 90 days and still accruing $ 7,244 $ 7,490 $ 8,247 total npas and lhfi ≥ 90 days $ 36,355 $ 34,604 $ 38,975 npas / total lhfi 0.20 % 0.19 % 0.23 % npas / total assets 0.14 % 0.13 % 0.16 % alll / nonaccrual loans 400.63 % 409.68 % 353.37 % alll/ nonperforming assets 400.23 % 408.53 % 333.87 % atlantic union bankshares corporation and subsidiaries key financial results (unaudited) (dollars in thousands, except share data) as of & for three months ended 03/31/23 12/31/22 03/31/22 past due detail construction and land development $ 815 $ 1,253 $ 170 commercial real estate - owner occupied 2,251 2,305 5,081 commercial real estate - non-owner occupied 52 1,121 79 multifamily real estate — 1,229 124 commercial & industrial 981 824 1,382 residential 1-4 family - commercial 1,399 1,231 827 residential 1-4 family - consumer 11,579 5,951 5,890 residential 1-4 family - revolving 1,384 1,843 1,157 auto 2,026 2,747 1,508 consumer 295 351 467 other commercial — — 1,270 lhfi 30-59 days past due $ 20,782 $ 18,855 $ 17,955 construction and land development $ — $ 45 $ — commercial real estate - owner occupied 798 635 — commercial real estate - non-owner occupied — 48 223 commercial & industrial 61 174 745 residential 1-4 family - commercial 271 — 251 residential 1-4 family - consumer 158 1,690 1,018 residential 1-4 family - revolving 1,069 511 651 auto 295 450 183 consumer 176 125 201 other commercial — — 95 lhfi 60-89 days past due $ 2,828 $ 3,678 $ 3,367 past due and still accruing $ 30,854 $ 30,023 $ 29,569 past due and still accruing / total lhfi 0.21 % 0.21 % 0.22 % alternative performance measures (non-gaap) net interest income (fte) (1) net interest income (gaap) $ 153,443 $ 163,848 $ 130,931 fte adjustment 3,788 4,118 3,336 net interest income (fte) (non-gaap) $ 157,231 $ 167,966 $ 134,267 noninterest income (gaap) 9,628 24,500 30,153 total revenue (fte) (non-gaap) $ 166,859 $ 192,466 $ 164,420 average earning assets $ 18,238,088 $ 18,000,596 $ 17,885,018 net interest margin 3.41 % 3.61 % 2.97 % net interest margin (fte) 3.50 % 3.70 % 3.04 % tangible assets (2) ending assets (gaap) $ 20,103,370 $ 20,461,138 $ 19,782,430 less: ending goodwill 925,211 925,211 935,560 less: ending amortizable intangibles 24,482 26,761 40,273 ending tangible assets (non-gaap) $ 19,153,677 $ 19,509,166 $ 18,806,597 tangible common equity (2) ending equity (gaap) $ 2,440,236 $ 2,372,737 $ 2,498,335 less: ending goodwill 925,211 925,211 935,560 less: ending amortizable intangibles 24,482 26,761 40,273 less: perpetual preferred stock 166,357 166,357 166,357 ending tangible common equity (non-gaap) $ 1,324,186 $ 1,254,408 $ 1,356,145 average equity (gaap) $ 2,423,600 $ 2,321,208 $ 2,660,984 less: average goodwill 925,211 925,211 935,560 less: average amortizable intangibles 25,588 27,909 41,743 less: average perpetual preferred stock 166,356 166,356 166,356 average tangible common equity (non-gaap) $ 1,306,445 $ 1,201,732 $ 1,517,325 rotce (2)(3) net income available to common shareholders (gaap) $ 32,686 $ 67,557 $ 40,723 plus: amortization of intangibles, tax effected 1,800 1,881 2,401 net income available to common shareholders before amortization of intangibles (non-gaap) $ 34,486 $ 69,438 $ 43,124 return on average tangible common equity (rotce) 10.71 % 22.92 % 11.53 % atlantic union bankshares corporation and subsidiaries key financial results (unaudited) (dollars in thousands, except share data) as of & for three months ended 03/31/23 12/31/22 03/31/22 operating measures (4) net income (gaap) $ 35,653 $ 70,524 $ 43,690 plus: legal reserve, net of tax 3,950 — — plus: strategic branch closing and facility consolidation costs, net of tax — — 4,351 plus: loss on sale of securities, net of tax 10,586 1 — adjusted operating earnings (non-gaap) 50,189 70,525 48,041 less: dividends on preferred stock 2,967 2,967 2,967 adjusted operating earnings available to common shareholders (non-gaap) $ 47,222 $ 67,558 $ 45,074 noninterest expense (gaap) $ 108,274 $ 99,790 $ 105,321 less: amortization of intangible assets 2,279 2,381 3,039 less: legal reserve 5,000 — — less: strategic branch closing and facility consolidation costs — — 5,508 adjusted operating noninterest expense (non-gaap) $ 100,995 $ 97,409 $ 96,774 noninterest income (gaap) $ 9,628 $ 24,500 $ 30,153 plus: loss on sale of securities 13,400 1 — adjusted operating noninterest income (non-gaap) $ 23,028 $ 24,501 $ 30,153 net interest income (fte) (non-gaap) (1) $ 157,231 $ 167,966 $ 134,267 adjusted operating noninterest income (non-gaap) 23,028 24,501 30,153 total adjusted revenue (fte) (non-gaap) (1) $ 180,259 $ 192,467 $ 164,420 efficiency ratio 66.40 % 52.98 % 65.38 % efficiency ratio (fte) (1) 64.89 % 51.85 % 64.06 % adjusted operating efficiency ratio (fte) (1)(6) 56.03 % 50.61 % 58.86 % operating roa & roe (4) adjusted operating earnings (non-gaap) $ 50,189 $ 70,525 $ 48,041 average assets (gaap) $ 20,384,351 $ 20,174,152 $ 19,920,368 return on average assets (roa) (gaap) 0.71 % 1.39 % 0.89 % adjusted operating return on average assets (roa) (non-gaap) 1.00 % 1.39 % 0.98 % average equity (gaap) $ 2,423,600 $ 2,321,208 $ 2,660,984 return on average equity (roe) (gaap) 5.97 % 12.05 % 6.66 % adjusted operating return on average equity (roe) (non-gaap) 8.40 % 12.05 % 7.32 % operating rotce (2)(3)(4) adjusted operating earnings available to common shareholders (non-gaap) $ 47,222 $ 67,558 $ 45,074 plus: amortization of intangibles, tax effected 1,800 1,881 2,401 adjusted operating earnings available to common shareholders before amortization of intangibles (non-gaap) $ 49,022 $ 69,439 $ 47,475 average tangible common equity (non-gaap) $ 1,306,445 $ 1,201,732 $ 1,517,325 adjusted operating return on average tangible common equity (non-gaap) 15.22 % 22.92 % 12.69 % pre-tax pre-provision adjusted operating earnings (7) net income (gaap) $ 35,653 $ 70,524 $ 43,690 plus: provision for credit losses 11,850 6,257 2,800 plus: income tax expense 7,294 11,777 9,273 plus: legal reserve 5,000 — — plus: strategic branch closing and facility consolidation costs — — 5,508 plus: loss on sale of securities 13,400 1 — pre-tax pre-provision adjusted operating earnings (non-gaap) $ 73,197 $ 88,559 $ 61,271 less: dividends on preferred stock 2,967 2,967 2,967 pre-tax pre-provision adjusted operating earnings available to common shareholders (non-gaap) $ 70,230 $ 85,592 $ 58,304 weighted average common shares outstanding, diluted 74,835,514 74,713,972 75,556,127 pre-tax pre-provision earnings per common share, diluted $ 0.94 $ 1.15 $ 0.77 atlantic union bankshares corporation and subsidiaries key financial results (unaudited) (dollars in thousands, except share data) as of & for three months ended 03/31/23 12/31/22 03/31/22 mortgage origination held for sale volume refinance volume $ 3,452 $ 2,312 $ 33,201 purchase volume 32,192 29,262 58,295 total mortgage loan originations held for sale $ 35,644 $ 31,574 $ 91,496 % of originations held for sale that are refinances 9.7 % 7.3 % 36.3 % wealth assets under management $ 4,494,268 $ 4,271,728 $ 6,519,974 other data end of period full-time employees 1,840 1,877 1,853 number of full-service branches 109 114 114 number of automatic transaction machines ("atms") 127 131 132 _____________________________ (1) these are non-gaap financial measures. the company believes net interest income (fte), total revenue (fte), and total adjusted revenue (fte), which are used in computing net interest margin (fte), efficiency ratio (fte) and adjusted operating efficiency ratio (fte), provide valuable additional insight into the net interest margin and the efficiency ratio by adjusting for differences in tax treatment of interest income sources. the entire fte adjustment is attributable to interest income on earning assets, which is used in computing yield on earning assets. interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the fte components. (2) these are non-gaap financial measures. tangible assets and tangible common equity are used in the calculation of certain profitability, capital, and per share ratios. the company believes tangible assets, tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the company believes will assist investors in assessing the capital of the company and its ability to absorb potential losses. the company believes tangible common equity is an important indication of its ability to grow organically and through business combinations as well as its ability to pay dividends and to engage in various capital management strategies. (3) these are non-gaap financial measures. the company believes that rotce is a meaningful supplement to gaap financial measures and is useful to investors because it measures the performance of a business consistently across time without regard to whether components of the business were acquired or developed internally. (4) these are non-gaap financial measures. adjusted operating measures exclude losses on sale of securities, a legal reserve associated with an ongoing regulatory matter previously disclosed, as well as strategic branch closure initiatives and related facility consolidation costs (principally composed of real estate, leases and other assets write downs, as well as severance and expense reduction initiatives). the company believes these non-gaap adjusted measures provide investors with important information about the continuing economic results of the organization’s operations. (5) all ratios at march 31, 2023 are estimates and subject to change pending the company’s filing of its fr y9 c. all other periods are presented as filed. (6) the adjusted operating efficiency ratio (fte) excludes the amortization of intangible assets, losses on sale of securities, a legal reserve associated with an ongoing regulatory matter previously disclosed, as well as strategic branch closure initiatives and related facility consolidation costs. this measure is similar to the measure utilized by the company when analyzing corporate performance and is also similar to the measure utilized for incentive compensation. the company believes this adjusted measure provides investors with important information about the continuing economic results of the organization’s operations. (7) these are non-gaap financial measures. pre-tax pre-provision adjusted earnings excludes the provision for credit losses, which can fluctuate significantly from period-to-period under the cecl methodology, income tax expense, losses on sale of securities, a legal reserve associated with an ongoing regulatory matter previously disclosed, as well as strategic branch closure initiatives and related facility consolidation costs. the company believes this adjusted measure provides investors with important information about the continuing economic results of the company’s operations. atlantic union bankshares corporation and subsidiaries consolidated balance sheets (dollars in thousands, except share data) march 31, december 31, march 31, 2023 2022 2022 assets (unaudited) (audited) (unaudited) cash and cash equivalents: cash and due from banks $ 187,106 $ 216,384 $ 178,225 interest-bearing deposits in other banks 184,371 102,107 213,140 federal funds sold 719 1,457 4,938 total cash and cash equivalents 372,196 319,948 396,303 securities available for sale, at fair value 2,252,365 2,741,816 3,193,280 securities held to maturity, at carrying value 855,418 847,732 756,872 restricted stock, at cost 87,616 120,213 77,033 loans held for sale, at fair value 14,213 3,936 21,227 loans held for investment, net of deferred fees and costs 14,584,280 14,449,142 13,459,349 less: allowance for loan and lease losses 116,512 110,768 102,591 total loans held for investment, net 14,467,768 14,338,374 13,356,758 premises and equipment, net 116,466 118,243 130,998 goodwill 925,211 925,211 935,560 amortizable intangibles, net 24,482 26,761 40,273 bank owned life insurance 443,537 440,656 434,012 other assets 544,098 578,248 440,114 total assets $ 20,103,370 $ 20,461,138 $ 19,782,430 liabilities noninterest-bearing demand deposits $ 4,578,009 $ 4,883,239 $ 5,370,063 interest-bearing deposits 11,877,901 11,048,438 11,114,160 total deposits 16,455,910 15,931,677 16,484,223 securities sold under agreements to repurchase 163,760 142,837 115,027 other short-term borrowings 245,000 1,176,000 — long-term borrowings 390,150 389,863 389,005 other liabilities 408,314 448,024 295,840 total liabilities 17,663,134 18,088,401 17,284,095 commitments and contingencies stockholders' equity preferred stock, $10.00 par value 173 173 173 common stock, $1.33 par value 99,072 98,873 99,651 additional paid-in capital 1,773,118 1,772,440 1,786,640 retained earnings 929,806 919,537 803,354 accumulated other comprehensive loss (361,933 ) (418,286 ) (191,483 ) total stockholders' equity 2,440,236 2,372,737 2,498,335 total liabilities and stockholders' equity $ 20,103,370 $ 20,461,138 $ 19,782,430 common shares outstanding 74,989,228 74,712,622 75,335,956 common shares authorized 200,000,000 200,000,000 200,000,000 preferred shares outstanding 17,250 17,250 17,250 preferred shares authorized 500,000 500,000 500,000 atlantic union bankshares corporation and subsidiaries consolidated statements of income (unaudited) (dollars in thousands, except share data) three months ended march 31, december 31, march 31, 2023 2022 2022 interest and dividend income: interest and fees on loans $ 189,992 $ 173,475 $ 114,200 interest on deposits in other banks 1,493 1,383 131 interest and dividends on securities: taxable 16,753 16,196 13,666 nontaxable 9,308 11,014 10,459 total interest and dividend income 217,546 202,068 138,456 interest expense: interest on deposits 51,834 30,236 4,483 interest on short-term borrowings 7,563 3,588 21 interest on long-term borrowings 4,706 4,396 3,021 total interest expense 64,103 38,220 7,525 net interest income 153,443 163,848 130,931 provision for credit losses 11,850 6,257 2,800 net interest income after provision for credit losses 141,593 157,591 128,131 noninterest income: service charges on deposit accounts 7,902 7,631 7,596 other service charges, commissions and fees 1,746 1,631 1,655 interchange fees 2,325 2,571 1,810 fiduciary and asset management fees 4,262 4,085 7,255 mortgage banking income 854 379 3,117 loss on sale of securities (13,400 ) (1 ) — bank owned life insurance income 2,828 2,649 2,697 loan-related interest rate swap fees 1,439 3,664 3,860 other operating income 1,672 1,891 2,163 total noninterest income 9,628 24,500 30,153 noninterest expenses: salaries and benefits 60,529 58,723 58,298 occupancy expenses 6,356 6,328 6,883 furniture and equipment expenses 3,752 3,978 3,597 technology and data processing 8,142 9,442 7,796 professional services 3,413 4,456 4,090 marketing and advertising expense 2,351 2,228 2,163 fdic assessment premiums and other insurance 3,899 1,896 2,485 franchise and other taxes 4,498 4,500 4,499 loan-related expenses 1,552 1,356 1,776 amortization of intangible assets 2,279 2,381 3,039 other expenses 11,503 4,502 10,695 total noninterest expenses 108,274 99,790 105,321 income before income taxes 42,947 82,301 52,963 income tax expense 7,294 11,777 9,273 net income $ 35,653 $ 70,524 $ 43,690 dividends on preferred stock 2,967 2,967 2,967 net income available to common shareholders $ 32,686 $ 67,557 $ 40,723 basic earnings per common share $ 0.44 $ 0.90 $ 0.54 diluted earnings per common share $ 0.44 $ 0.90 $ 0.54 average balances, income and expenses, yields and rates (taxable equivalent basis) (unaudited) (dollars in thousands) for the quarter ended march 31, 2023 december 31, 2022 average balance interest income / expense (1) yield / rate (1)(2) average balance interest income / expense (1) yield / rate (1)(2) assets: securities: taxable $ 2,038,215 $ 16,753 3.33 % $ 2,016,845 $ 16,196 3.19 % tax-exempt 1,429,346 11,782 3.34 % 1,627,351 13,942 3.40 % total securities 3,467,561 28,535 3.34 % 3,644,196 30,138 3.28 % loans, net (3) 14,505,611 191,178 5.35 % 14,117,433 174,531 4.90 % other earning assets 264,916 1,621 2.48 % 238,967 1,517 2.52 % total earning assets 18,238,088 $ 221,334 4.92 % 18,000,596 $ 206,186 4.54 % allowance for loan and lease losses (112,172 ) (109,535 ) total non-earning assets 2,258,435 2,283,091 total assets $ 20,384,351 $ 20,174,152 liabilities and stockholders' equity: interest-bearing deposits: transaction and money market accounts $ 8,344,900 $ 38,315 1.86 % $ 8,495,299 $ 24,712 1.15 % regular savings 1,087,435 364 0.14 % 1,155,137 110 0.04 % time deposits 2,291,530 13,155 2.33 % 1,764,596 5,414 1.22 % total interest-bearing deposits 11,723,865 51,834 1.79 % 11,415,032 30,236 1.05 % other borrowings 1,122,244 12,269 4.43 % 816,818 7,984 3.88 % total interest-bearing liabilities $ 12,846,109 $ 64,103 2.02 % $ 12,231,850 $ 38,220 1.24 % noninterest-bearing liabilities: demand deposits 4,693,347 5,196,717 other liabilities 421,295 424,377 total liabilities 17,960,751 17,852,944 stockholders' equity 2,423,600 2,321,208 total liabilities and stockholders' equity $ 20,384,351 $ 20,174,152 net interest income $ 157,231 $ 167,966 interest rate spread 2.90 % 3.30 % cost of funds 1.42 % 0.84 % net interest margin 3.50 % 3.70 % _____________________________ income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%. rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above. nonaccrual loans are included in average loans outstanding.
