8-K
Atlantic Union Bankshares Corp (AUB)
8-K
2022-10-28
For: 2022-10-28
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April 04, 2026
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 2022
ATLANTIC UNION BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
| Virginia | 001-39325 | 54-1598552 |
|---|---|---|
| (State or other jurisdiction | (Commission | (I.R.S. Employer |
| of incorporation) | File Number) | Identification No.) |
1051 East Cary Street
Suite 1200
Richmond , Virginia **** 23219
(Address of principal executive offices, including Zip Code)
Registrant’s telephone number, including area code: (804) 633-5031
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| | | |||
|---|---|---|---|---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, par value $1.33 per share | | AUB | | The NASDAQ Global Select Market |
| Depositary Shares, Each Representing a 1/400^th^ Interest in a Share of 6.875% Perpetual Non-Cumulative Preferred Stock, Series A | | AUBAP | | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|---|
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
| --- | --- |
Item 7.01 Regulation FD Disclosure.
Attached as Exhibit 99.1 is a handout containing information that the members of Atlantic Union Bankshares Corporation (the “Company”) management will use during meetings with investors, analysts, and other interested parties to assist their understanding of the Company from time to time during the fourth quarter of 2022. Other presentations and related materials will be made available as they are presented. This handout is also available under the Presentations link in the Investor Relations section of the Company’s website at http://investors.atlanticunionbank.com. Exhibit 99.1 is incorporated by reference into this Item 7.01.
The information disclosed in or incorporated by reference into this Item 7.01, including Exhibit 99.1, is furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description of Exhibit | |
|---|---|---|
| 99.1 | Atlantic Union Bankshares Corporation investor presentation. | |
| 104 | | Cover Page Interactive Data File – the cover page iXBRL tags are embedded within the Inline XBRL document |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ATLANTIC UNION BANKSHARES CORPORATION | |||
|---|---|---|---|
| Date: October 28, 2022 | By: | /s/ Robert M. Gorman | |
| Robert M. Gorman | |||
| Executive Vice President and | |||
| Chief Financial Officer | |||
| | | | |
2
Exhibit 99.1
| Investor<br>Presentation<br>Nasdaq: AUB<br>November<br>-<br>December 2022 | ||
|---|---|---|
| 2<br>Forward Looking Statements<br>Certain statements in this presentation may constitute “forward<br>-<br>looking statements” within the meaning of the Private Securities<br>Litigation Reform Act of 1995. Forward<br>-<br>looking statements are statements that include, without limitation, statements on slides<br>entitled “Financial Outlook”<br>and<br>“Top<br>-<br>Tier Financial Targets”, statements regarding the<br>Company’s strategic priorities, outlook<br>on future economic conditions and the impacts of<br>current economic uncertainties,<br>and statements that include, projections,<br>predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such<br>fo<br>rward<br>-<br>looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and<br>unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual resul<br>ts,<br>performance, achievements, or trends to be materially different from those expressed or implied by such forward<br>-<br>looking<br>statements. Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “<br>bel<br>ieve,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of<br>sim<br>ilar<br>meaning or other statements concerning opinions or judgment of the Company and its management about future events. Although t<br>he<br>Company believes that its expectations with respect to forward<br>-<br>looking statements are based upon reasonable<br>assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual<br>fu<br>ture results, performance, or achievements of, or trends affecting, the Company will not differ materially from any projected<br>future results, performance, achievements or trends expressed or implied by such forward<br>-<br>looking statements. Actual future resul<br>ts, performance, achievements or trends may differ materially from historical results or those anticipated depending on a<br>variety of factors, including, but not limited to the effects of or changes<br>in:<br>• market<br>interest rates and the impacts on macroeconomic conditions, customer and client behavior, the Company’s funding<br>costs and the Company’s loan and securities portfolio;<br>• inflation<br>and its impacts on economic growth and customer and client behavior;<br>• general<br>economic and financial market conditions, in the United States generally and particularly in the markets in which<br>the Company operates and which its loans are concentrated, including the effects of declines in real estate values, an<br>increase in unemployment levels and slowdowns in economic growth;<br>• monetary<br>and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the<br>Federal Reserve;<br>• the<br>quality or composition of the loan or investment portfolios and changes therein;<br>• demand<br>for loan products and financial services in the Company’s market area;<br>• the<br>Company’s ability to manage its growth or implement its growth strategy;<br>• the<br>effectiveness of expense reduction plans;<br>• the<br>introduction of new lines of business or new products and services;<br>• the<br>Company’s ability to recruit and retain key employees;<br>• real<br>estate values in the Bank’s lending area;<br>• an<br>insufficient ACL;<br>• changes<br>in accounting<br>principles standards, rules and interpretations and the related impact on the Company’s financial<br>statements;<br>•<br>volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by conditions arising out<br>of the Covid<br>-<br>19 pandemic, inflation, changing interest rates or other factors;<br>• the<br>Company’s liquidity and capital positions;<br>• concentrations<br>of loans secured by real estate, particularly commercial real estate;<br>• the<br>effectiveness of the Company’s credit processes and management of the Company’s credit risk;<br>• the<br>Company’s ability to compete in the market for financial services and increased competition from<br>fintech<br>companies;<br>• technological<br>risks and developments, and cyber threats, attacks, or events;<br>• the<br>potential adverse effects of unusual and infrequently occurring events, such as weather<br>-<br>related disasters, terrorist<br>acts, geopolitical conflicts (such as the ongoing conflict between Russia and Ukraine) or public health events (such as<br>COVID<br>-<br>19), and of governmental and societal responses thereto; these potential adverse effects may include, without<br>limitation, adverse effects on the ability of the Company's borrowers to satisfy their obligations to the Company, on the val<br>ue<br>of collateral securing loans, on the demand for the Company's loans or its other products and services, on supply chains<br>and methods used to distribute products and services, on incidents of cyberattack and fraud, on the Company’s liquidity or<br>capital positions, on risks posed by reliance on third<br>-<br>party service providers, on other aspects of the Company's business<br>operations and on financial markets and economic growth;<br>• the<br>effect of steps the Company takes in response to the COVID<br>-<br>19 pandemic, the severity and duration of the pandemic,<br>the uncertainty regarding new variants of COVID<br>-<br>19 that have emerged, the speed and efficacy of vaccine and treatment<br>developments, the impact of loosening or tightening of government restrictions, the pace of recovery when the pandemic<br>subsides and the heightened impact it has on many of the risks described herein;<br>• the<br>discontinuation of LIBOR and its impact on the financial markets, and the Company’s ability to manage operational,<br>legal, and compliance risks related to the discontinuation of LIBOR and implementation of one or more alternate reference<br>rates;<br>• performance<br>by the Company’s counterparties or vendors;<br>• deposit<br>flows;<br>• the<br>availability of financing and the terms thereof;<br>• the<br>level of prepayments on loans and mortgage<br>-<br>backed securities;<br>• legislative<br>or regulatory changes and requirements;<br>• potential<br>claims, damages, and fines related to litigation or government actions;<br>• the<br>effects of changes in federal, state or local tax laws and regulations;<br>• changes<br>to applicable accounting principles and guidelines; and<br>• other<br>factors, many of which are beyond the control of the Company.<br>Please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations<br>” s<br>ections of the Company’s Annual Report on Form 10<br>-<br>K for the year ended December 31, 2021 and related disclosures in<br>other filings, which have been filed with the U.S. Securities and Exchange Commission (“SEC”) and are available on the SEC’s<br>web<br>site at www.sec.gov. All risk factors and uncertainties described herein should be considered in evaluating forward<br>-<br>looking<br>statements, all forward<br>-<br>looking statements made in this presentation are expressly qualified by the cautionary statements contai<br>ned or referred to herein. Readers are cautioned not to rely too heavily on the forward<br>-<br>looking statements in this presentation,<br>and undue reliance should not be placed on such forward<br>-<br>looking statements. The actual results or developments anticipated may<br>not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the<br>Company or its businesses or operations. Forward<br>-<br>looking statements speak only as of the date they are made. The Company does no<br>t intend or assume any obligation to update, revise or clarify any forward<br>-<br>looking statements that may be made from<br>time to time by or on behalf of the Company, whether as a result of new information, future events or otherwise. | ||
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| 3<br>Additional Information<br>Non<br>-<br>GAAP Financial Measures<br>This presentation contains certain financial information determined by methods other than in<br>accordance with generally accepted accounting principles in the United States (“GAAP”).<br>These non<br>-<br>GAAP financial measures are a supplement to GAAP, which is used to prepare<br>the Company’s financial statements, and should not be considered in isolation or as a<br>substitute for comparable measures calculated in accordance with GAAP. In addition, the<br>Company’s non<br>-<br>GAAP financial measures may not be comparable to non<br>-<br>GAAP financial<br>measures of other companies. The Company uses the non<br>-<br>GAAP financial measures<br>discussed herein in its analysis of the Company’s performance. The Company’s<br>management believes that these non<br>-<br>GAAP financial measures provide additional<br>understanding of ongoing operations, enhance comparability of results of operations with<br>prior periods and show the effects of significant gains and charges in the periods presented<br>without the impact of items or events that may obscure trends in the Company’s<br>underlying<br>performance.<br>Please see “Reconciliation of Non<br>-<br>GAAP Disclosures” at the end of this presentation for a<br>reconciliation to the nearest GAAP financial measure.<br>No<br>Offer or Solicitation<br>This presentation does not constitute an offer to sell or a solicitation of an offer to buy any<br>securities. No offer of securities shall be made except by means of a prospectus meeting the<br>requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of<br>an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would<br>be unlawful.<br>About Atlantic Union Bankshares Corporation<br>Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (Nasdaq:<br>AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank has<br>114<br>branches<br>and approximately<br>130<br>ATMs located throughout Virginia, and in portions of Maryland and<br>North Carolina. Certain non<br>-<br>bank financial services affiliates of Atlantic Union Bank include:<br>Atlantic Union Equipment Finance, Inc., which provides equipment financing<br>;<br>Atlantic Union<br>Financial Consultants, LLC, which provides brokerage services; and Union Insurance Group,<br>LLC, which offers various lines of insurance products<br>.. | ||
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| 4<br>Largest Regional Banking Company Headquartered in Virginia<br>Our<br>Company<br>Soundness | Profitability | Growth<br>Data as of 9<br>/30/2022<br>, market capitalization as of<br>10/18/2022<br>1) Regional bank defined as having less than $100 billion in assets; rank determined by asset size;<br>data per S&P Global Market Intelligence<br>Highlights ($bn)<br>•<br>Statewide Virginia footprint<br>of 109<br>branches in all major markets<br>•<br>#1<br>regional bank<br>1<br>deposit market<br>share in Virginia<br>•<br>Strong balance sheet<br>and capital<br>levels<br>•<br>Committed to<br>top<br>-<br>tier financial<br>performance<br>with a highly<br>experienced management team able<br>to execute change<br>4<br>$<br>20<br>..0<br>Assets<br>$<br>13.9<br>Loans<br>$<br>16.5<br>Deposits<br>$<br>2<br>..5<br>Market Capitalization<br>Branch/Office Footprint<br>AUB (114)<br>AUB LPO (3)<br>AUB Equipment Finance Headquarters (1) |
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| 5<br>A Transformation Story<br>From Virginia Community Bank to Virginia’s Bank and More<br>(1) As of September 30, 2022<br>Virginia’s Bank<br>The Atlantic Union “Moat”<br>–<br>Stronger than Ever<br>•<br>Virginia’s first and only statewide, independent bank in over 20 years<br>•<br>The alternative to large competitors<br>•<br>Organic growth model + effective consolidator<br>•<br>Scarcity value<br>-<br>franchise<br>difficult to replicate<br>•<br>“Crown jewel” deposit base<br>-<br>58% transaction<br>accounts<br>1<br>•<br>Dense, compact and contiguous ~$20B<br>bank<br>1<br>Larger Bank Executive Leadership<br>Talent Magnet<br>•<br>Knows the “seams” of the large institutions & how to compete against them<br>•<br>Makes tough decisions<br>–<br>think differently, challenge, escape the past<br>•<br>Does what we say we will do<br>•<br>Extensive hiring from larger institutions at all levels<br>•<br>We know the people we hire and rarely use recruiters<br>•<br>Client facing market leaders and bankers hired from the markets they serve<br>“Soundness, profitability & growth in that order of priority”<br> | Our philosophy for how we run our company | |
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| 6<br>Our<br>Shareholder<br>Value<br>Proposition<br>Leading Regional Presence<br>Dense, uniquely valuable presence<br>across<br>attractive<br>markets<br>Financial<br>Strength<br>Solid balance sheet<br>& capital levels<br>Attractive<br>Financial Profile<br>Solid dividend yield<br>& payout ratio with<br>earnings upside<br>Strong Growth<br>Potential<br>Organic & acquisition<br>opportunities<br>Peer<br>-<br>Leading<br>Performance<br>Committed to top<br>-<br>tier<br>financial performance | ||
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| 7<br>Strong Presence in Prime Virginia Markets<br>(1) Among midsized and community banks less than $100 billion in assets<br>Source: SNL<br>Financial, FDIC deposit data;<br>excludes branches greater than $5 billion<br>Deposit data as of<br>6/30/2022;<br>Fredericksburg market defined as Caroline, Fredericksburg City, King George,<br>Spotsylvania and Stafford counties; all other markets per MSA definitions in SNL<br>7<br>Coastal Virginia<br>Military, Shipbuilding, Fortune 500<br>headquarters (3), Tourism<br>•<br>$<br>1.5<br>billion in<br>-<br>market deposits and total<br>deposit market share of<br>4.3%<br>Roanoke<br>Blacksburg<br>Virginia Tech, Healthcare, Retail<br>•<br>$1.4 billion in<br>-<br>market deposits and total<br>deposit market share of<br>10.2%<br>Northern Virginia<br>Nation’s Capital, Fortune 500<br>headquarters (<br>12),<br>Defense and<br>security contractors, Non<br>-<br>profit<br>Associations (lobbyists), HQ2<br>•<br>$<br>5.3<br>billion in<br>-<br>market deposits and total<br>deposit market share of<br>3.8%<br>Diversity Supports Growth<br>In Virginia<br>Richmond<br>State Capital, Fortune 500<br>headquarters (7), VCU & VCU Medical<br>Center<br>•<br>$<br>4.1<br>billion in<br>-<br>market deposits and total<br>deposit market share of<br>13.6%<br>Fredericksburg<br>Defense and security contractors,<br>Healthcare, Retail, Real Estate<br>development<br>•<br>$<br>1.6<br>billion in<br>-<br>market deposits and total<br>deposit market share of<br>25.2%<br>Charlottesville<br>University of Virginia, High<br>-<br>tech and<br>professional businesses, Real Estate<br>development<br>•<br>$<br>775<br>million in<br>-<br>market deposits and total<br>deposit market share of<br>11.0%<br>#1 Market Share<br>(1)<br>#2 Market Share<br>(1)<br>#2 Market Share<br>(1)<br>#1 Market Share<br>(1)<br>#1 Market Share<br>(1)<br>#1 Market Share<br>(1) | ||
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| 8<br>Virginia’s Bank and Sizeable Opportunity to Take Market Share<br>from the Big Three<br>Source: SNL Financial and FDIC deposit data<br>Deposit and branch data as of<br>6/30/22;<br>pro forma for announced<br>transactions<br>Note: Excludes branches with deposits greater than $5.0 billion<br>Virginia: All Banks<br>Virginia: Banks Headquartered in VA<br>Rank<br>Institution<br>Deposits ($mm)<br>Market Share (%)<br>Branches<br>1<br>Truist Financial Corp<br>$50,865<br>21.6%<br>287<br>2<br>Wells Fargo & Co<br>38,834<br>16.5<br>211<br>3<br>Bank of America Corp.<br>27,157<br>11.5<br>106<br>4<br>Atlantic Union Bankshares Corp<br>15,725<br>6.7<br>109<br>5<br>TowneBank<br>10,929<br>4.6<br>40<br>6<br>United Bankshares Inc.<br>9,205<br>3.9<br>84<br>7<br>Capital<br>One Financial Corp.<br>8,669<br>3.7<br>27<br>8<br>PNC Financial Services Group Inc.<br>5,935<br>2.5<br>93<br>9<br>The Toronto<br>Dominion Bank<br>3,414<br>1.5<br>31<br>10<br>Carter Bank & Trust<br>3,341<br>1.4<br>54<br>Top 10 Banks<br>$174,074<br>73.9%<br>1,042<br>All Institutions in Market<br>$235,670<br>100.0%<br>1,925<br>Rank<br>Institution<br>Deposits ($mm)<br>Market Share (%)<br>Branches<br>1<br>Atlantic Union Bankshares Corp.<br>$15,725<br>19.0%<br>109<br>2<br>TowneBank<br>10,929<br>13.2<br>40<br>3<br>Capital One Financial Corp.<br>8,669<br>10.5<br>27<br>4<br>Carter Bank & Trust<br>3,341<br>4.0<br>54<br>5<br>Burke & Herbert Bank & Trust Co.<br>2,960<br>3.6<br>23<br>6<br>Primis Financial Corp<br>2,446<br>3.0<br>35<br>7<br>Blue Ridge Bankshares Inc.<br>2,317<br>2.8<br>26<br>8<br>First Bancorp Inc.<br>2,213<br>2.7<br>19<br>9<br>American National Bankshares, Inc.<br>2,046<br>2.5<br>18<br>10<br>C&F Financial Corp<br>2,028<br>2.5<br>30<br>Top 10 Banks<br>$52,674<br>63.6%<br>381<br>All Institutions in Market<br>$82,790<br>100.0%<br>809<br>Statewide Branch Footprint Brings Unique Franchise<br>Value and Significant Growth Opportunity<br>Growth<br>Opportunity<br>Franchise<br>Strength | ||
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| 9<br>Virginia Is Among the Most Attractive Markets<br>in USA<br>Source: SNL Financial; Bureau of Economic Analysis; Bureau of Labor Statistics, Fortune.com, U.S. News & World Report;<br>Forbes, CNBC, U.S. Small Business Administration, USA Today; Business<br>Facilities<br>9<br>ranked Virginia the<br>Best State for<br>Business<br>for 2020 and 2021<br>ranked Virginia the<br>4<br>th<br>Best<br>State for Business<br>•<br>3<br>rd<br>in Labor Supply<br>•<br>3<br>rd<br>in Regulatory Environment<br>•<br>1<br>st<br>in Quality of Life<br>ranked Virginia<br>8<br>th<br>for Opportunity<br>•<br>11<br>th<br>for Economic opportunity<br>•<br>5<br>th<br>for Equality<br>•<br>12<br>th<br>for Education<br>•<br>Virginia is home to 723,962 Small<br>Businesses<br>–<br>99.5% of Virginia<br>businesses<br>ranked Virginia 7<br>th<br>of<br>America’s<br>Best States to Live In<br>Virginia rated 1<br>st<br>in<br>Best Business<br>Climate, Tech Talent Pipeline,<br>Cybersecurity<br>#<br>State<br>#<br>Companies<br>1<br>Texas<br>53<br>2<br>New York<br>51<br>3<br>California<br>50<br>4<br>Illinois<br>36<br>5<br>Ohio<br>25<br>6<br>Pennsylvania<br>23<br>7<br>Virginia<br>22<br>7<br>Florida<br>22<br>#<br>State<br>Pop. (mm)<br>1<br>California<br>39.7<br>2<br>Texas<br>29.8<br>3<br>Florida<br>22.0<br>4<br>New York<br>20.2<br>5<br>Pennsylvania<br>13.0<br>6<br>Illinois<br>12.8<br>7<br>Ohio<br>11.8<br>8<br>Georgia<br>10.9<br>#<br>State<br>HHI ($)<br>1<br>District of Columbia<br>102,806<br>2<br>Massachusetts<br>94,232<br>3<br>Maryland<br>94,082<br>4<br>New Jersey<br>94,000<br>5<br>Hawaii<br>90,268<br>6<br>California<br>89,481<br>7<br>Washington<br>88,405<br>8<br>Colorado<br>86,364<br>#<br>State<br>GDP ($bn)<br>1<br>California<br>2,939<br>2<br>Texas<br>1,871<br>3<br>New York<br>1,511<br>4<br>Florida<br>1,031<br>5<br>Illinois<br>780<br>6<br>Pennsylvania<br>722<br>7<br>Ohio<br>621<br>8<br>Georgia<br>580<br>Household<br>Income ($)<br>2022<br>Population (mm)<br>#<br>State<br>Pop. (mm)<br>9<br>North Carolina<br>10.6<br>10<br>Michigan<br>10.1<br>11<br>New Jersey<br>9.3<br>12<br>Virginia<br>8.7<br>13<br>Washington<br>7.9<br>14<br>Arizona<br>7.2<br>15<br>Massachusetts<br>7.1<br>#<br>State<br>HHI ($)<br>9<br>New Hampshire<br>85,417<br>10<br>Utah<br>84,724<br>11<br>Connecticut<br>84,611<br>12<br>Virginia<br>84,251<br>13<br>Minnesota<br>82,165<br>14<br>Alaska<br>81,789<br>15<br>New York<br>80,148<br>GDP ($bn)<br>Fortune 500 Companies<br>#<br>State<br>#<br>Companies<br>9<br>Georgia<br>19<br>9<br>Michigan<br>19<br>11<br>Massachusetts<br>18<br>12<br>Minnesota<br>16<br>13<br>New Jersey<br>15<br>13<br>Connecticut<br>15<br>15<br>North Carolina<br>13<br>#<br>State<br>GDP ($bn)<br>9<br>Washington<br>577<br>10<br>New Jersey<br>570<br>11<br>Massachusetts<br>544<br>12<br>Virginia<br>499<br>13<br>Michigan<br>482<br>14<br>Colorado<br>371<br>15<br>Maryland<br>367 | ||
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| 10<br>Q3 2022 Highlights and 2022 Outlook<br>Loan Growth<br>•<br>7.9% annualized loan growth, ex<br>-<br>Paycheck Protection Program (PPP)<br>(Non<br>-<br>GAAP)<br>1<br>, during Q3 2022<br>•<br>Expect high single digit loan growth for<br>2022<br>Asset Quality<br>•<br>Net Charge<br>-<br>offs at 2 bps annualized for<br>Q3 2022<br>Positioning for Long Term<br>•<br>Building out Asset<br>-<br>Based lending<br>capabilities<br>•<br>Drive organic growth and performance of<br>the core banking franchise<br>Differentiated Client<br>Experience<br>•<br>Continued progress on digital roadmap<br>•<br>Foreign exchange, syndication and SBA<br>7A lending programs help close product<br>gaps<br>Operating Leverage Focus<br>•<br>~13% pre<br>-<br>PPP adjusted revenue<br>1<br>growth from Q3 2021 and ~6% pre<br>-<br>PPP<br>adjusted revenue<br>1<br>growth from Q2 2022<br>•<br>~6% adjusted operating non<br>-<br>interest<br>expense growth<br>1<br>from Q3 2021 and<br>~1.7% adjusted operating non<br>-<br>interest<br>expense growth<br>1<br>from Q2 2022<br>•<br>Pre<br>-<br>PPP adjusted operating leverage<br>1<br>of<br>~7% year over year<br>•<br>Pre<br>-<br>PPP adjusted operating leverage<br>1<br>of<br>~4% quarter over quarter<br>Capitalize on<br>Strategic<br>Opportunities<br>•<br>Selectively<br>consider<br>M&A, minority<br>stakes and strategic partnerships<br>as a<br>supplemental strategy<br>10<br>1<br>For<br>non<br>-<br>GAAP financial measures, see reconciliation to most directly comparable GAAP measures in “Appendix<br>–<br>Reconciliation<br>of Non<br>-<br>GAAP Disclosures” | ||
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| 11<br>Caring<br>Working together toward<br>common goals, acting with<br>kindness, respect and a<br>genuine concern for others.<br>Courageous<br>Speaking openly, honestly and<br>accepting our challenges and<br>mistakes as opportunities to<br>learn and grow.<br>Committed<br>Driven to help our clients,<br>Teammates and company<br>succeed, doing what is right and<br>accountable for our actions.<br>Our Core Values<br>Culture<br>—<br>HOW<br>we come together<br>and interact as a team to<br>accomplish our business<br>and societal goals.<br>Diversity, Equity, and Inclusion Statement<br>Atlantic Union Bank embraces diversity of thought and identity to<br>better serve our stakeholders and achieve our purpose. We<br>commit to cultivating a welcoming workplace where Teammate<br>and customer perspectives are valued and respected. | ||
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| 12<br>We<br>are focused on three<br>Strategic Priorities<br>Organic<br>Deliver Organic Growth<br>•<br>Overweighting opportunities in Wholesale<br>Banking Group<br>•<br>Directing consumer efforts to market<br>segments and delivery channels with the<br>strongest value proposition<br>•<br>Prioritizing fee income growth<br>•<br>Maintaining a reliable low<br>-<br>cost deposit base<br>•<br>Maximizing operating leverage, productivity,<br>efficiency, and scale<br>•<br>Attract and retain top talent in alignment with<br>broader business goals and strategic<br>priorities<br>Innovate<br>and Transform<br>•<br>Pressing the relationship model advantage<br>where bankers provide advocacy and advice,<br>form stickier relationships, and use<br>technology to enable deeper relationships<br>•<br>Creating a frictionless experience for<br>customers by integrating human interactions<br>with digital capabilities<br>•<br>Eliminating low value tasks and enabling<br>more high value interactions with customers<br>•<br>Eliminating legacy system constraints and<br>accelerating modernization of technology<br>while rationalizing operating costs and<br>reengineering processes<br>•<br>Emphasizing robotics, automation and<br>FinTech partnerships<br>Inorganic<br>Strategic Investments<br>•<br>Leverage FinTech partnerships, strategic partner equity<br>investments, as well as non<br>-<br>bank and whole<br>-<br>bank acquisition<br>opportunities for step<br>-<br>change accelerants of growth<br>•<br>Acquisition philosophy remains: proactive, strategic,<br>disciplined, and measured with an eye towards transactions<br>that increase density and scarcity value, add contiguous<br>markets, increase operating leverage, diversify revenue<br>streams, and enable the reinvestment of cost savings into<br>technology<br>•<br>Ensuring merger and acquisition activity complements,<br>enables, and scales technology and the advancement of our<br>customer value proposition, potentially including whole bank,<br>non<br>-<br>bank, minority stakes, and partnerships | ||
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| 13<br>•<br>Maintain a top tier financial position over<br>time as the price of independence<br>•<br>Invest in our core business lines, people<br>and operations to drive performance<br>Strategic Imperatives have Evolved Alongside our Transformation<br>Achieve & Sustain Top Tier<br>Financial Performance<br>•<br>Accelerate the modernization of our technology<br>base while rationalizing operating costs<br>•<br>Reengineer processes across the enterprise,<br>with an emphasis on data management,<br>robotics, and automation<br>•<br>Maintain the culture, rewards, and career<br>development opportunities that attract and<br>retain top talent<br>•<br>Embrace “the future of work” and integrate<br>disruptive forces in the modern workplace<br>•<br>Deliver organic growth<br>•<br>Drive disproportionate lending growth through<br>Wholesale Banking and Business Banking<br>•<br>Maintain a strong core funding base<br>•<br>Grow fee revenues<br>•<br>Disciplined management of credit, risk, capital,<br>and expense<br>Enhance & Augment Core<br>Franchise Strength<br>Achieve Operational<br>Excellence<br>Deliver a Differentiated<br>Customer Experience<br>Great Place to Work &<br>Build A Career<br>Accelerate Growth with<br>Strategic Investments<br>•<br>Relentlessly focus on customer<br>experience<br>and<br>exploit large competitor weakness of less<br>flexible models<br>•<br>Couple a human factor relationship advantage,<br>responsiveness, deep customer and local<br>market knowledge with technology enabled<br>experiences<br>•<br>Leverage FinTech partnerships, strategic<br>partner equity investments, as well as<br>non<br>-<br>bank and whole<br>-<br>bank acquisition<br>opportunities for step<br>-<br>change accelerants<br>of growth<br>This is how we intend to achieve our priorities | ||
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| 14<br>Balance Sheet Trends (GAAP)<br>Data as of or for the twelve months ended each respective<br>year, except for 3Q 2022 which are as of or for the three months ended September 30, 2022<br>Loans<br>($mm)<br>Deposits<br>($mm)<br>Assets<br>($mm)<br>$7,142<br>$9,716<br>$12,611<br>$14,021<br>$13,196<br>$13,919<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q 2022<br>15<br>%<br>CAGR<br>$6,992<br>$9,971<br>$13,305<br>$15,723<br>$16,611<br>$16,546<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q 2022<br>20<br>%<br>CAGR<br>$9,315<br>$13,766<br>$17,563<br>$19,628<br>$20,065<br>$19,950<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q 2022<br>17<br>%<br>CAGR | ||
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| 15<br>Strong Track Record of Performance (GAAP<br>)<br>Earnings Per Share Available to Common Shareholders<br>($)<br>Return on Equity (ROE)<br>(%)<br>Return on Assets (ROA)<br>(%)<br>Efficiency Ratio<br>(%)<br>$1.67<br>$2.22<br>$2.41<br>$1.93<br>$3.26<br>$2.07<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months<br>2022<br>7.07%<br>7.85%<br>7.89%<br>6.14%<br>9.68%<br>8.72%<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months of<br>2022<br>66.09%<br>63.62%<br>62.37%<br>60.19%<br>61.91%<br>59.10%<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months of<br>2022<br>0.83%<br>1.11%<br>1.15%<br>0.83%<br>1.32%<br>1.10%<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months of<br>2022<br>Data as of or for the twelve months ended each respective year, except for 1<br>st<br>9 months of 2022 which is as of or for the nine months ended September 30, 2022 | ||
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| 16<br>Strong Track Record of Performance (Non<br>-<br>GAAP<br>)<br>Data as of or for the twelve months ended each respective year, except for 1<br>st<br>9 months of 2022 which is as of or for the nine months ended September 30, 2022<br>(<br>1) Non<br>-<br>GAAP financial measure; See reconciliation to most directly comparable GAAP measure in "Appendix<br>--<br>Reconciliation of Non<br>-<br>GAAP Disclosures”<br>Adjusted Operating Earnings Per Share Available to Common<br>Shareholders, diluted<br>($)<br>(1)<br>Adjusted Operating Return on Tangible Common Equity<br>(ROTCE)<br>(%)<br>(1)<br>Adjusted Operating Return on Assets (ROA)<br>(%)<br>(1)<br>Adjusted Operating Efficiency Ratio (FTE)<br>(%)<br>(1)<br>$1.90<br>$2.71<br>$2.84<br>$2.21<br>$3.53<br>$2.02<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months of<br>2022<br>12.17%<br>17.40%<br>16.61%<br>12.64%<br>18.07%<br>15.34%<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months of<br>2022<br>60.78%<br>52.74%<br>51.79%<br>52.18%<br>54.52%<br>56.20%<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months of<br>2022<br>0.94%<br>1.36%<br>1.35%<br>0.94%<br>1.43%<br>1.08%<br>2017<br>2018<br>2019<br>2020<br>2021<br>1st 9 months of<br>2022 | ||
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| 17<br>Strong Capital Position at<br>September 30, 2022<br>Capital Ratio<br>Regulatory<br>Well Capitalized<br>Atlantic Union<br>Bankshares*<br>Atlantic<br>Union Bank*<br>Common Equity Tier 1 Ratio (CET1)<br>7.0%<br>10.0%<br>12.9%<br>Tier 1 Capital Ratio<br>8.5%<br>11.0%<br>12.9%<br>Total Risk<br>Based<br>Capital Ratio<br>10.5%<br>13.8%<br>13.4%<br>Leverage Ratio<br>5.0%<br>9.3%<br>10.9%<br>Tangible Equity to Tangible Assets (<br>non<br>-<br>GAAP)<br>2<br>-<br>7.0%<br>8.6%<br>Tangible Common Equity Ratio<br>(<br>non<br>-<br>GAAP)<br>2<br>-<br>6.1%<br>8.6%<br>Figures may not foot due to rounding<br>2<br>)<br>For non<br>-<br>GAAP financial measures, see reconciliation to most directly comparable GAAP measures in<br>“Appendix<br>–<br>Reconciliation of Non<br>-<br>GAAP Disclosures”<br>Capital Management Strategy<br>Atlantic Union capital management objectives are to:<br>•<br>Maintain designation as a “well capitalized” institution.<br>•<br>Ensure capital levels are commensurate with the<br>Company’s risk profile, capital stress test projections,<br>and strategic plan objectives.<br>•<br>The<br>Company’s capital ratios are well above<br>regulatory well capitalized levels as of<br>9/30/2022.<br>Capital Management Actions<br>•<br>During<br>the<br>third quarter<br>, the Company<br>paid dividends<br>of<br>$171.88 per outstanding share of Series A<br>Preferred Stock<br>and<br>$<br>0.30<br>per common<br>share which is<br>a 7% increase from the<br>prior quarter’s<br>and prior year’s<br>dividend.<br>•<br>The Company did not repurchase common shares<br>during the third quarter and has ~$52 million<br>remaining on its current $100 million share repurchase<br>authorization.<br>Quarterly Roll Forward<br>Common<br>Equity Tier 1<br>Ratio<br>Tangible<br>Common<br>Equity<br>Ratio<br>Tangible Book<br>Value per Share<br>At<br>6/30/22<br>9.96%<br>6.78%<br>$17.07<br>Pre<br>-<br>Provision Net Income<br>0.38%<br>0.32%<br>0.81<br>After<br>-<br>Tax Provision<br>-<br>0.03%<br>-<br>0.03%<br>(<br>0.07)<br>Common Dividends<br>(1)<br>-<br>0.14%<br>-<br>0.12%<br>(<br>0.30)<br>AOCI<br>---<br>-<br>0.78%<br>(<br>1.96)<br>Goodwill & Intangibles<br>0.01%<br>0.01%<br>0.03<br>Other<br>0.04%<br>0.00%<br>0.04<br>Asset Growth<br>-<br>0.25%<br>-<br>0.08%<br>---<br>At<br>9/30/22<br>–<br>Reported<br>9.96%<br>6.11%<br>$15.61<br>AOCI<br>Total Impact<br>---<br>2.43%<br>6.22<br>At 9/30/22<br>–<br>ex AOCI<br>2<br>9.96%<br>8.54%<br>$21.83<br>(1)<br>30<br>cents per share<br>*Capital information presented herein is based on estimates and subject to change pending the Company’s filing of its regulat<br>or<br>y reports | ||
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| 18<br>Top<br>-<br>Tier<br>Financial Targets<br>Committed to top<br>-<br>tier<br>financial performance<br>16<br>%<br>–<br>18<br>%<br>Return on Tangible<br>Common Equity<br>1.3<br>%<br>–<br>1.5<br>%<br>Return on Assets<br>≤ 51<br>%<br>(1)<br>Efficiency Ratio (FTE)<br>Atlantic Union is committed to achieving<br>top tier financial performance and<br>providing our shareholders with above<br>average returns on their investment<br>regardless of the operating environment<br>Key financial performance operating<br>metrics benchmarked against top<br>quartile peers<br>18<br>(1<br>)<br>includes the approximately 2.5% efficiency<br>ratio impact of the Virginia franchise tax<br>expense (vs. state income tax).<br>We expect to achieve these financial targets in the<br>Fourth Quarter 2022 and Full Year 2023 | ||
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| 19<br>Financial<br>Outlook<br>1<br>1<br>Key Economic Assumptions<br>•<br>Rising rate environment<br>•<br>The Federal Reserve Bank fed funds rate:<br>•<br>4.50% by the end of<br>2022;<br>and<br>•<br>4.50<br>%<br>average for 2023<br>•<br>Shallow to Mild recession in 2023<br>•<br>Expect<br>relatively stable<br>economy in AUB’s<br>Virginia footprint<br>•<br>Virginia unemployment remains low at<br><4%<br>Q4 2022 Outlook<br>Full Year<br>2023<br>Targets<br>versus Q3 2022<br>versus<br>FY 2022<br>Loan<br>Growth<br>Upper single<br>digits (annualized)<br>Upper single<br>digits<br>Net<br>Interest Income (FTE)<br>Growth<br>~5<br>%<br>from Q3 2022<br>~10%<br>–<br>15%<br>Net<br>Interest Margin (FTE)<br>3.55%<br>–<br>3.65%<br>~<br>3.70%<br>–<br>3.80<br>%<br>Noninterest Income<br>Growth<br>Flat<br>Low<br>-<br>single digits (ex DHFB<br>)<br>Noninterest<br>Expense<br>Growth<br>Flat<br>Mid<br>-<br>single digits<br>Positive Operating Leverage<br>Revenue Growth:<br>Mid<br>-<br>single digits<br>Operating<br>Expense Growth: Flat<br>Revenue Growth:<br>Low<br>teens<br>Operating Expense Growth: M<br>id<br>-<br>single digits<br>Credit Outlook<br>Allowance for Credit Losses (ACL) to Loans:<br>~<br>85<br>–<br>90 basis<br>points<br>Net charge<br>-<br>off ratio: <<br>5 basis<br>points<br>ACL to loans: ~<br>85<br>–<br>90 basis<br>points<br>Net charge<br>-<br>off ratio: ~10<br>-<br>15<br>basis points<br>1)<br>Information on this slide is presented as of October 20, 2022, reflects the Company’s updated financial outlook, certain of t<br>he<br>company’s financial targets, and key economic assumptions, and will not be updated or affirmed unless and until the Company<br>publicly announces such an update or affirmation. The Q4 2022 outlook, the FY 2023 financial targets and the key economic<br>assumptions contain forward<br>-<br>looking statements and actual results or conditions may differ materially. See the information set<br>forth<br>below the heading “Forward Looking Statements” on slide 2 of this presentation. | ||
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| 20<br>We<br>Believe We Are<br>Well Positioned<br>For<br>The<br>Current<br>Environment<br>And<br>Optimistic<br>About Our Future<br>Top Tier<br>Financial Performance<br>Increased Shareholder Value<br>Strong<br>Credit<br>Expense Management Actions<br>Asset Sensitivity<br>Growth Footing | ||
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| 21<br>Appendix | ||
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| 22<br>Market<br>Highlights<br>Opportunity in<br>Affluent<br>Markets<br>Source: S&P Global Market Intelligence<br>Boxes denote county/city of operation<br>(1) Median HH Income projected for<br>2022<br>Top Counties in the U.S.<br>—<br>Projected Median HH Income ($000s)<br>(1)<br>$162<br>$149<br>$147<br>$142<br>$137<br>$137<br>$<br>136<br>$133<br>$132<br>$<br>129<br>$129<br>$126<br>Loudoun, VA<br>San Mateo, CA<br>Santa Clara, CA<br>Falls Church, VA<br>(City)<br>Fairfax, VA<br>San Francisco, CA<br>Los Alamos, NM<br>Fairfax, VA (City)<br>Douglas, CO<br>Nassau, NY<br>Arlington, VA<br>Howard, MD | ||
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| 23<br>Q3 2022 Allowance For Credit Loss (ACL) and<br>Provision for Credit Losses<br>23<br>Q3 Macroeconomic Forecast<br>Moody’s September 2022 Baseline<br>Forecast:<br>•<br>US GDP expected to increase 1.6% in 2022 and<br>1.4% in 2023. The US unemployment rate<br>expected to average around 3.7% in the fourth<br>quarter of 2022 and 3.9% in 2023.<br>•<br>Virginia’s unemployment rate averages 3.0% over<br>the 2<br>-<br>year forecast.<br>Q3 ACL<br>Considerations<br>•<br>The baseline<br>forecast<br>was adjusted for the<br>probability of worse<br>-<br>than baseline economic<br>performance over the forecast period<br>resulting in a<br>weighted forecast scenario that increased<br>Virginia’s average unemployment<br>rate<br>to ~5.4%<br>over the 2<br>-<br>year<br>forecast period.<br>•<br>Additional qualitative factors<br>were applied<br>for tail<br>-<br>end COVID<br>-<br>19 sensitive portfolios and other<br>factors deemed appropriate.<br>•<br>The reasonable<br>and supportable<br>forecast period is<br>2 years;<br>followed by reversion to the historical loss<br>average over 2 years<br>;<br>consistent with CECL<br>adoption.<br>($mm)<br>Allowance<br>for Loan<br>& Lease Losses<br>Reserve for Unfunded<br>Commitments<br>Allowance for<br>Credit Losses<br>3/31/2022<br>Ending Balance<br>% of loans<br>$103MM<br>(.<br>76%;<br>..77%<br>excl. PPP<br>loans<br>1<br>)<br>$8MM<br>(.06%;<br>..06% excl. PPP<br>loans<br>1<br>)<br>$111MM<br>(.82<br>%;<br>..83% excl. PPP<br>loans<br>1<br>)<br>Q2<br>2022 Activity<br>+$1MM<br>Increase due to increased risks<br>related to economic outlook and<br>the impact of loan growth<br>+$1MM<br>Increase due to the impact of<br>unfunded loan commitment growth<br>+$2MM<br>$3 million Provision for Credit<br>Losses and $900<br>thousand net<br>charge<br>-<br>offs<br>06/30/2022<br>Ending Balance<br>% of loans<br>$104MM<br>(.76%;<br>..76% excl. PPP<br>loans<br>1<br>)<br>$9MM<br>(.07%;<br>..07% excl. PPP<br>loans<br>1<br>)<br>$113MM<br>(.83%;<br>..83% excl. PPP<br>loans<br>1<br>)<br>Q3<br>2022 Activity<br>+$4MM<br>Increase due to increased risks<br>related to the economic outlook<br>and the impact of loan growth in<br>the current quarter<br>+$2MM<br>Increase due to increased risks<br>related to the economic outlook<br>+$6MM<br>$6.4 million Provision for Credit<br>Losses and $600<br>thousand net<br>charge<br>-<br>offs<br>09/30/2022<br>Ending Balance<br>% of loans<br>$108MM<br>(.78%)<br>$11MM<br>(.08%)<br>$119MM<br>(.86%)<br>..<br>(1) Non<br>-<br>GAAP financial measure; See reconciliation to most directly comparable GAAP measure in "Appendix<br>--<br>Reconciliation of<br>Non<br>-<br>GAAP Disclosures” | ||
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| 24<br>Diversified and Granular Loan Portfolio<br>Total Loan Portfolio $<br>13.9<br>billion at<br>September 30, 2022<br>Non<br>-<br>Owner Occupied CRE Composition<br>—<br>$<br>4.7<br>billion<br>Total Portfolio Characteristics<br>Duration<br>Q3 2022<br>Weighted Average Yield (Tax Equivalent)<br>1.3<br>years<br>4.20%<br>Figures may not total to 100% due to<br>rounding<br>Duration and Weighted Average Yield Data is as<br>of or for the<br>three months<br>ended<br>September<br>30, 2022<br>C&D<br>7.7%<br>Owner<br>Occupied CRE<br>14.0%<br>C&I<br>19.5%<br>Non<br>-<br>Owner<br>Occupied CRE<br>33.6%<br>1<br>-<br>4 Family<br>10.3%<br>Other<br>5.4%<br>Residential 1<br>-<br>4<br>family<br>-<br>Revolving<br>4.2%<br>Consumer<br>5.3%<br>Retail<br>17.8%<br>Office<br>14.9%<br>Office<br>Warehouse<br>13.1%<br>Multi Family<br>16.6%<br>Hotel, Motel,<br>B&B<br>15.2%<br>Senior Living<br>8.9%<br>Special Use<br>12.5%<br>Small Mixed<br>Use Building<br>1.0% | ||
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| 25<br>Attractive Core Deposit Base<br>Deposit Base Characteristics<br>Deposit Composition at<br>September 30, 2022<br>—<br>$<br>16.5<br>billion<br>Cost of deposit data<br>is as of or for the three months ended<br>September<br>30,<br>2022<br>(<br>1) Core deposits defined as total deposits less jumbo time deposits<br>•<br>Q3 2022<br>cost of deposits<br>–<br>37<br>bps<br>•<br>97%<br>core deposits<br>(1)<br>•<br>58%<br>transactional accounts<br>Non<br>-<br>Interest<br>Bearing<br>,<br>32%<br>Interest Checking,<br>26%<br>Money Market<br>,<br>24%<br>Retail Time<br>,<br>8%<br>Jumbo Time<br>,<br>3%<br>Savings<br>,<br>7% | ||
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| 26<br>Reconciliation of Non<br>-<br>GAAP Disclosures<br>The Company has provided supplemental performance measures on a tax<br>-<br>equivalent, tangible, operating, adjusted, or pre<br>-<br>tax pre<br>-<br>pr<br>ovision basis.<br>These non<br>-<br>GAAP financial measures are a supplement to GAAP, which is used to prepare the Company’s financial statements, and sho<br>uld not be<br>considered in isolation or as a substitute for<br>comparable measures calculated in accordance with GAAP<br>.. In addition, the Company’s non<br>-<br>GAAP<br>financial measures may not be comparable to non<br>-<br>GAAP financial measures of other companies. The Company uses the non<br>-<br>GAAP financ<br>ial<br>measures discussed herein in its analysis of the Company’s performance. The Company’s management believes that these non<br>-<br>GAAP fi<br>nancial<br>measures provide additional understanding of ongoing operations, enhance comparability of results of operations with prior pe<br>rio<br>ds and show the<br>effects of significant gains and charges in the periods presented without the impact of items or events that may obscure tren<br>ds<br>in the Company’s<br>underlying performance. | ||
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| 27<br>Reconciliation of Non<br>-<br>GAAP Disclosures<br>Adjusted operating measures exclude the<br>gains<br>or losses<br>on sale of<br>securities and<br>gain on the sale of<br>DHFB.<br>The<br>Company believes these non<br>-<br>GAAP adjusted measures<br>provide investors with important information about the<br>continuing economic results of the<br>Company’s operations.<br>Net<br>interest income (FTE) and total adjusted revenue<br>(FTE), which are used in computing net interest margin<br>(FTE), efficiency ratio (FTE) and adjusted operating<br>efficiency ratio (FTE), respectively, provide valuable<br>additional insight into the net interest margin and the<br>efficiency ratio by adjusting for differences in tax treatment<br>of interest income sources. The entire FTE adjustment is<br>attributable to interest income on earning assets, which is<br>used in computing yield on earning assets. Interest<br>expense and the related cost of interest<br>-<br>bearing liabilities<br>and cost of funds ratios are not affected by the FTE<br>components.<br>The<br>Company believes excluding PPP<br>accretion interest income and fees from operating<br>earnings is useful to investors as it provides more clarity<br>on the Company’s non<br>-<br>PPP related income<br>..<br>Also presented is a computation of the pre<br>-<br>PPP adjusted<br>operating leverage ratio (non<br>-<br>GAAP) which is the period<br>to period percentage change in pre<br>-<br>PPP total adjusted<br>revenue on a taxable<br>-<br>equivalent basis (non<br>-<br>GAAP) less<br>the percentage change in adjusted operating noninterest<br>expense (non<br>-<br>GAAP).<br>(Dollars in thousands, except per share amounts)<br>3Q2022<br>2Q2022<br>3Q2021<br>2Q22<br>3Q21<br>Noninterest expense (GAAP)<br>99,923<br>$<br><br>98,768<br>$<br><br>95,343<br>$<br><br>1.17%<br>4.80%<br>Less: Amortization of intangible assets<br>2,480<br><br><br>2,915<br><br><br>3,381<br><br><br>Adjusted operating noninterest expense (non-GAAP)<br>97,443<br>$<br><br>95,853<br>$<br><br>91,962<br>$<br><br>1.66%<br>5.96%<br>Noninterest income (GAAP)<br>25,584<br>$<br><br>38,286<br>$<br><br>29,938<br>$<br><br>Less: Gain on sale of securities<br>-<br><br><br>(2)<br><br><br>9<br><br><br>Less: Gain on sale of DHFB<br>-<br><br><br>9,082<br><br><br>-<br><br><br>Adjusted operating noninterest income (non-GAAP)<br>25,584<br>$<br><br>29,206<br>$<br><br>29,929<br>$<br><br>Net interest income (GAAP)<br>150,715<br>$<br><br>138,767<br>$<br><br>137,488<br>$<br><br>Noninterest income (GAAP)<br>25,584<br><br><br>38,286<br><br><br>29,938<br><br><br>Total revenue (GAAP)<br>176,299<br>$<br><br>177,053<br>$<br><br>167,426<br>$<br><br>(0.43%)<br>5.30%<br>Net interest income (FTE) (non-GAAP)<br>154,557<br>$<br><br>142,344<br>$<br><br>140,652<br>$<br><br>Adjusted operating noninterest income (non-GAAP)<br>25,584<br><br><br>29,206<br><br><br>29,929<br><br><br>Total adjusted revenue (FTE) (non-GAAP)<br>180,141<br><br><br>171,550<br><br><br>170,581<br><br><br>5.01%<br>5.60%<br>Less: PPP accretion interest income and fees<br>454<br><br><br>1,346<br><br><br>11,173<br><br><br>Pre-PPP total adjusted revenue (FTE) (non-GAAP)<br>179,687<br>$<br><br>170,204<br>$<br><br>159,408<br>$<br><br>5.57%<br>12.72%<br>Operating leverage ratio (GAAP)<br>(1.60%)<br>0.50%<br>Pre-PPP adjusted operating leverage ratio (non-GAAP)<br>3.91%<br>6.76%<br>ADJUSTED OPERATING EARNINGS AND OPERATING LEVERAGE<br>For the three months ended<br>3Q22 % Change | ||
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| 28<br>Reconciliation of Non<br>-<br>GAAP Disclosures<br>Adjusted operating measures exclude merger and<br>rebranding<br>-<br>related costs, nonrecurring tax expenses,<br>the gains or losses related to balance sheet<br>repositioning (principally composed of gains and<br>losses on debt extinguishment), gains or losses on<br>sale of securities<br>,<br>gains on the sale of Visa, Inc.<br>Class B common<br>stock, gain on the sale DHFB,<br>as<br>well as branch closing and facility consolidation costs<br>(principally composed of real estate, leases and<br>other assets write<br>downs, as<br>well as severance<br>associated with branch closing and corporate<br>expense reduction initiatives). The Company<br>believes these non<br>-<br>GAAP adjusted measures<br>provide investors with important information about<br>the continuing economic results of the organization’s<br>operations. Non<br>-<br>GAAP adjusted measures for prior<br>periods reflect adjustments for previously announced<br>branch closing and corporate expense reduction<br>initiatives.<br>Tangible<br>assets and tangible common equity are<br>used in the calculation of certain profitability, capital,<br>and per share ratios. The Company believes tangible<br>assets, tangible common equity and the related<br>ratios are meaningful measures of capital adequacy<br>because they provide a meaningful base for period<br>-<br>to<br>-<br>period and company<br>-<br>to<br>-<br>company comparisons,<br>which the Company believes will assist investors in<br>assessing the capital of the Company and its ability<br>to absorb potential losses.<br>Additionally<br>, the Company believes that return on<br>tangible common equity (ROTCE) is a meaningful<br>supplement to GAAP financial measures and useful<br>to investors because it measures the performance of<br>a business consistently across time without regard to<br>whether components of the business were acquired<br>or developed internally.<br>For the nine<br>months ended<br>(Dollars in thousands, except per share amounts)<br>September 30, 2022<br>2021<br>2020<br>2019<br>2018<br>2017<br>Adjusted Operating Earnings<br>Net Income (GAAP)<br>163,986<br>$<br><br>263,917<br>$<br><br>158,228<br>$<br><br>193,528<br>$<br><br>146,248<br>$<br><br>72,923<br>$<br><br>Plus: Merger and rebranding-related costs, net of tax<br>-<br><br><br>-<br><br><br>-<br><br><br>27,395<br><br><br>32,065<br><br><br>4,405<br><br><br>Plus: Nonrecurring tax expenses<br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>6,250<br><br><br>Plus: Net loss related to balance sheet repositioning, net of tax<br>-<br><br><br>11,609<br><br><br>25,979<br><br><br>12,953<br><br><br>-<br><br><br>-<br><br><br>Less: (Loss) gain on sale of securities, net of tax<br>(2)<br><br><br>69<br><br><br>9,712<br><br><br>6,063<br><br><br>303<br><br><br>520<br><br><br>Less: Gain on Visa, Inc. Class B common stock, net of tax<br>-<br><br><br>4,058<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Less: Gain on sale of DHFB, net of tax<br>7,984<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Plus: Branch closing and facility consolidation costs, net of tax<br>4,351<br><br><br>13,775<br><br><br>5,343<br><br><br>-<br><br><br>849<br><br><br>-<br><br><br>Adjusted operating earnings (non-GAAP)<br>160,355<br>$<br><br>285,174<br>$<br><br>179,838<br>$<br><br>227,813<br>$<br><br>178,859<br>$<br><br>83,058<br>$<br><br>Less: Dividends on preferred stock<br>8,901<br><br><br>11,868<br><br><br>5,658<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Adjusted operating earnings available to common shareholders (non-GAAP)<br>151,454<br>$<br><br>273,306<br>$<br><br>174,180<br>$<br><br>227,813<br>$<br><br>178,859<br>$<br><br>83,058<br>$<br><br>Earnings per share (EPS)<br>Weighted average common shares outstanding, diluted<br>75,034,084<br><br><br>77,417,801<br><br><br>78,875,668<br><br><br>80,263,557<br><br><br>65,908,573<br><br><br>43,779,744<br><br><br>EPS available to common shareholders, diluted (GAAP)<br>2.07<br>$<br><br>3.26<br>$<br><br>1.93<br>$<br><br>2.41<br>$<br><br>2.22<br>$<br><br>1.67<br>$<br><br>Adjusted operating EPS available to common shareholders, diluted (non-GAAP)<br>2.02<br>$<br><br>3.53<br>$<br><br>2.21<br>$<br><br>2.84<br>$<br><br>2.71<br>$<br><br>1.90<br>$<br><br>Return on assets (ROA)<br>Average assets<br>19,873,644<br>$<br><br>19,977,551<br>$<br><br>19,083,853<br>$<br><br>16,840,310<br>$<br><br>13,181,609<br>$<br><br>8,820,142<br>$<br><br>ROA (GAAP)<br>1.10%<br>1.32%<br>0.83%<br>1.15%<br>1.11%<br>0.83%<br>Adjusted operating ROA (non-GAAP)<br>1.08%<br>1.43%<br>0.94%<br>1.35%<br>1.36%<br>0.94%<br>Return on equity (ROE)<br>Adjusted operating earnings available to common shareholders (non-GAAP)<br>151,454<br>$<br><br>273,306<br>$<br><br>174,180<br>$<br><br>227,813<br>$<br><br>178,859<br>$<br><br>83,058<br>$<br><br>Plus: Amortization of intangibles, tax effected<br>6,663<br><br><br>10,984<br><br><br>13,093<br><br><br>14,632<br><br><br>10,143<br><br><br>3,957<br><br><br>Adjusted operating earnings available to common shareholders before amortization<br>of intangibles (non-GAAP)<br>158,117<br>$<br><br>284,290<br>$<br><br>187,273<br>$<br><br>242,445<br>$<br><br>189,002<br>$<br><br>87,015<br>$<br><br>Average common equity (GAAP)<br>2,513,522<br>$<br><br>2,725,330<br>$<br><br>2,576,372<br>$<br><br>2,451,435<br>$<br><br>1,863,216<br>$<br><br>1,030,847<br>$<br><br>Less: Average intangible assets<br>968,926<br><br><br>985,559<br><br><br>1,000,654<br><br><br>991,926<br><br><br>776,944<br><br><br>315,722<br><br><br>Less: Average perpetual preferred stock<br>166,356<br><br><br>166,356<br><br><br>93,658<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Average tangible common equity (non-GAAP)<br>1,378,240<br>$<br><br>1,573,415<br>$<br><br>1,482,060<br>$<br><br>1,459,509<br>$<br><br>1,086,272<br>$<br><br>715,125<br>$<br><br>ROE (GAAP)<br>8.72%<br>9.68%<br>6.14%<br>7.89%<br>7.85%<br>7.07%<br>Return on tangible common equity (ROTCE)<br>Net Income available to common shareholders (GAAP)<br>155,085<br>$<br><br>252,049<br>$<br><br>152,570<br>$<br><br>193,528<br>$<br><br>146,248<br>$<br><br>72,923<br>$<br><br>Plus: Amortization of intangibles, tax effected<br>6,663<br><br><br>10,984<br><br><br>13,093<br><br><br>14,632<br><br><br>10,143<br><br><br>3,957<br><br><br>Net Income available to common shareholders before amortization of intangibles<br>(non-GAAP)<br>161,748<br>$<br><br>263,033<br>$<br><br>165,663<br>$<br><br>208,160<br>$<br><br>156,391<br>$<br><br>76,880<br>$<br><br>ROTCE<br>15.69%<br>16.72%<br>11.18%<br>14.26%<br>14.40%<br>10.75%<br>Adjusted operating ROTCE (non-GAAP)<br>15.34%<br>18.07%<br>12.64%<br>16.61%<br>17.40%<br>12.17%<br>ADJUSTED OPERATING EARNINGS & FINANCIAL METRICS<br>For the years ended December 31, | ||
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| 29<br>Reconciliation of Non<br>-<br>GAAP Disclosures<br>The adjusted operating efficiency ratio (FTE)<br>excludes merger<br>-<br>related costs, rebranding<br>costs, the amortization of intangible assets,<br>gains or losses on sale of securities, gains on<br>the sale of Visa, Inc. Class B common stock<br>,<br>gain on the sale of DHFB,<br>gains or losses<br>related to balance sheet repositioning<br>(principally composed of gains and losses on<br>debt extinguishment), as well as branch<br>closing and facility consolidation<br>costs<br>(principally composed of real estate, leases<br>and other assets write<br>downs,<br>as well as<br>severance associated with branch closing<br>and corporate expense reduction initiatives<br>)<br>..<br>This measure is similar to the measure<br>utilized by the Company when analyzing<br>corporate performance and is also similar to<br>the measure utilized for incentive<br>compensation. The Company believes this<br>adjusted measure provides investors with<br>important information about the combined<br>economic results of the organization’s<br>operations. Non<br>-<br>GAAP adjusted measures<br>for prior periods reflect adjustments for<br>previously announced branch closing and<br>corporate expense reduction initiatives.<br>For the nine<br>months ended<br>(Dollars in thousands)<br>September 30, 2022<br>2021<br>2020<br>2019<br>2018<br>2017<br>Noninterest expense (GAAP)<br>304,012<br>$<br><br>419,195<br>$<br><br>413,349<br>$<br><br>418,340<br>$<br><br>337,767<br>$<br><br>225,668<br>$<br><br>Less: Merger-related costs<br>-<br><br><br>-<br><br><br>-<br><br><br>27,824<br><br><br>39,728<br><br><br>5,393<br><br><br>Less: Rebranding costs<br>-<br><br><br>-<br><br><br>-<br><br><br>6,455<br><br><br>-<br><br><br>-<br><br><br>Less: Amortization of intangible assets<br>8,434<br><br><br>13,904<br><br><br>16,574<br><br><br>18,521<br><br><br>12,839<br><br><br>6,088<br><br><br>Less: Losses related to balance sheet repositioning<br>-<br><br><br>14,695<br><br><br>31,116<br><br><br>16,397<br><br><br>-<br><br><br>-<br><br><br>Less: Branch closing and facility consolidation costs<br>5,508<br><br><br>17,437<br><br><br>6,764<br><br><br>-<br><br><br>1,075<br><br><br>-<br><br><br>Adjusted operating noninterest expense (non-GAAP)<br>290,070<br>$<br><br>373,159<br>$<br><br>358,895<br>$<br><br>349,143<br>$<br><br>284,125<br>$<br><br>214,187<br>$<br><br>Net interest income (GAAP)<br>420,413<br>$<br><br>551,260<br>$<br><br>555,298<br>$<br><br>537,872<br>$<br><br>426,691<br>$<br><br>279,007<br>$<br><br>Net interest income (FTE) (non-GAAP)<br>431,168<br><br><br>563,851<br><br><br>566,845<br><br><br>548,993<br><br><br>434,886<br><br><br>290,774<br><br><br>Noninterest income (GAAP)<br>94,023<br>$<br><br>125,806<br>$<br><br>131,486<br>$<br><br>132,815<br>$<br><br>104,241<br>$<br><br>62,429<br>$<br><br>Plus: Losses related to balance sheet repositioning<br>-<br><br><br>-<br><br><br>1,769<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Less: (Loss) gain on sale of securities<br>(2)<br><br><br>87<br><br><br>12,294<br><br><br>7,675<br><br><br>383<br><br><br>800<br><br><br>Less: Gain on sale of DHFB<br>9,082<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Less: Gain on Visa, Inc. Class B common stock<br>-<br><br><br>5,137<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Adjusted operating noninterest income (non-GAAP)<br>84,943<br>$<br><br>120,582<br>$<br><br>120,961<br>$<br><br>125,140<br>$<br><br>103,858<br>$<br><br>61,629<br>$<br><br>Efficiency ratio (GAAP)<br>59.10%<br>61.91%<br>60.19%<br>62.37%<br>63.62%<br>66.09%<br>Adjusted operating efficiency ratio (FTE) (non-GAAP)<br>56.20%<br>54.52%<br>52.18%<br>51.79%<br>52.74%<br>60.78%<br>ADJUSTED OPERATING EFFICIENCY RATIO<br>For the years ended December 31, | ||
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| 30<br>Reconciliation of Non<br>-<br>GAAP Disclosures<br>Tangible assets and tangible common equity<br>are used in the calculation of certain<br>profitability, capital, and per share ratios. The<br>Company believes tangible assets, tangible<br>common equity and the related ratios are<br>meaningful measures of capital adequacy<br>because they provide a meaningful base for<br>period<br>-<br>to<br>-<br>period and company<br>-<br>to<br>-<br>company<br>comparisons, which the Company believes<br>will assist investors in assessing the capital<br>of the Company and its ability to absorb<br>potential losses.<br>(Dollars in thousands, except share data)<br>Atlantic Union<br>Bankshares<br>Atlantic Union Bank<br>Tangible Assets<br>Ending Assets (GAAP)<br>19,950,231<br>$<br><br>19,829,553<br>$<br><br>Less: Ending goodwill<br>925,211<br><br><br>925,211<br><br><br>Less: Ending amortizable intangibles<br>29,142<br><br><br>29,142<br><br><br>Ending tangible assets (non-GAAP)<br>18,995,878<br>$<br><br>18,875,200<br>$<br><br>Tangible Common Equity<br>Ending equity (GAAP)<br>2,281,150<br>$<br><br>2,572,616<br>$<br><br>Less: Ending goodwill<br>925,211<br><br><br>925,211<br><br><br>Less: Ending amortizable intangibles<br>29,142<br><br><br>29,142<br><br><br>Less: Perpetual preferred stock<br>166,357<br><br><br>-<br><br><br>Ending tangible common equity (non-GAAP)<br>1,160,440<br>$<br><br>1,618,263<br>$<br><br>Accumulated other comprehensive loss (AOCI)<br>(462,119)<br><br><br>Common shares outstanding at end of period<br>74,703,774<br><br><br>Average common equity (GAAP)<br>2,436,999<br>$<br><br>2,772,047<br>$<br><br>Less: Average goodwill<br>925,211<br><br><br>925,211<br><br><br>Less: Average amortizable intangibles<br>30,347<br><br><br>30,347<br><br><br>Less: Average perpetual preferred stock<br>166,356<br><br><br>-<br><br><br>Average tangible common equity (non-GAAP)<br>1,315,085<br>$<br><br>1,816,489<br>$<br><br>Less: Perpetual preferred stock<br>Common equity to assets (GAAP)<br>10.6%<br>13.0%<br>Tangible equity to tangible assets (non-GAAP)<br>7.0%<br>8.6%<br>Tangible common equity to tangible assets (non-GAAP)<br>6.1%<br>8.6%<br>Tangible common equity to tangible assets ex AOCI (non-GAAP)<br>1<br>8.54%<br>Book value per common share (GAAP)<br>28.46<br>$<br><br>Tangible book value per common share (non-GAAP)<br>15.61<br>$<br><br>Tangible book value per common share ex AOCI (non-GAAP)<br>1<br>21.83<br>$<br><br>Leverage Ratio<br>Tier 1 Capital<br>1,799,428<br>$<br><br>2,100,702<br>$<br><br>Total average assets for leverage ratio<br>19,300,563<br>$<br><br>19,187,252<br>$<br><br>Leverage Ratio<br>9.3%<br>10.9%<br>1<br>Calculation excludes the impact of 384,366 unvested restricted stock awards (RSAs) outstanding as of September 30, 2022<br>TANGIBLE ASSETS, TANGIBLE COMMON EQUITY, AND LEVERAGE RATIO<br>As of September 30, 2022 | ||
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| 31<br>Reconciliation of Non<br>-<br>GAAP Disclosures<br>PPP adjustment impact excludes the<br>unforgiven portion of PPP loans. The<br>Company believes loans held for investment<br>(net of deferred fees and costs), excluding<br>PPP is useful to investors as it provides more<br>clarity on the Company’s organic growth. The<br>Company also believes that the related non<br>-<br>GAAP financial measures of past due loans<br>still accruing interest as a percentage of total<br>loans held for investment (net of deferred<br>fees and costs), excluding PPP, are useful to<br>investors as loans originated under the PPP<br>carry an SBA guarantee. The Company<br>believes that the ALLL as a percentage of<br>loans held for investment (net of deferred<br>fees and costs), excluding PPP, is useful to<br>investors because of the size of the<br>Company’s PPP originations and the impact<br>of the embedded credit enhancement<br>provided by the SBA guarantee.<br>(Dollars in thousands)<br>As of<br>September 30, 2022<br>As of<br>June 30, 2022<br>As of<br>March 31, 2022<br>Allowance for loan and lease losses (ALLL)<br>108,009<br>$<br><br>104,184<br>$<br><br>102,591<br>$<br><br>Reserve for unfunded commitment (RUC)<br>11,000<br><br><br>9,000<br><br><br>8,000<br><br><br>Allowance for credit losses (ACL)<br>119,009<br>$<br><br>113,184<br>$<br><br>110,591<br>$<br><br>Loans held for investment (net of deferred fees and costs)(GAAP)<br>13,918,720<br>$<br><br>13,655,408<br>$<br><br>13,459,349<br>$<br><br>Less: PPP adjustments (net of deferred fees and costs)<br>12,146<br><br><br>21,749<br><br><br>67,444<br><br><br>Total adjusted loans (non-GAAP)<br>13,906,574<br>$<br><br>13,633,659<br>$<br><br>13,391,905<br>$<br><br>Average loans held for investment (net of deferred fees and costs)(GAAP)<br>13,733,447<br>$<br><br>13,525,529<br>$<br><br>13,300,789<br>$<br><br>Less: Average PPP adjustments (net of deferred fees and costs)<br>14,280<br><br><br>43,391<br><br><br>103,041<br><br><br>Total adjusted average loans (non-GAAP)<br>13,719,167<br>$<br><br>13,482,138<br>$<br><br>13,197,748<br>$<br><br>Annualized loan growth - QTD (GAAP)<br>7.65%<br>Annualized loan growth, excluding PPP - QTD (non-GAAP)<br>7.94%<br>ALLL to total loans held for investment (GAAP)<br>0.78%<br>0.76%<br>0.76%<br>ALLL to total adjusted loans held for investment, excluding PPP (non-GAAP)<br>0.78%<br>0.76%<br>0.77%<br>RUC to total loans held for investment (GAAP)<br>0.08%<br>0.07%<br>0.06%<br>RUC to total adjusted loans held for investment, excluding PPP (non-GAAP)<br>0.08%<br>0.07%<br>0.06%<br>ACL to total loans held for investment (GAAP)<br>0.86%<br>0.83%<br>0.82%<br>ACL to total adjusted loans held for investment, excluding PPP (non-GAAP)<br>0.86%<br>0.83%<br>0.83%<br>ALLOWANCE FOR CREDIT LOSS RATIOS AND TOTAL ADJUSTED LOANS | ||
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