Atlantic Union Bankshares Reports First Quarter Results

RICHMOND, Va., April 21, 2022 (GLOBE NEWSWIRE) — Atlantic Union Bankshares Corporation (the “Company” or “Atlantic Union”) (Nasdaq: AUB) today reported net income available to common shareholders of $40.7 million and basic and diluted earnings per common share of $0.54 for the first quarter ended March 31, 2022. Adjusted operating earnings available to common shareholders(1) were $45.1 million, diluted operating earnings per common share(1) were $0.60, and pre-tax pre-provision adjusted operating earnings available to common shareholders(1) were $58.3 million for the first quarter ended March 31, 2022.

“Atlantic Union Bankshares is off to a strong start in 2022 highlighted by double digit annualized loan growth in a traditionally slower quarter for the company,” said John C. Asbury, president and chief executive officer of Atlantic Union. “While we are mindful of the current economic and geopolitical uncertainties, we are encouraged by our competitive positioning, market dynamics and the economic strength in our footprint. This gives us confidence in our ability to achieve our top tier financial targets by the end of the year on a run-rate basis.”

“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.”

Strategic Initiatives

During the fourth quarter of 2021, the Company took certain actions to reduce expenses in light of the period’s prevailing and expected operating environment that included the closure of the Atlantic Union Bankshares operations center and consolidation of 16 branches, all of which were completed in March 2022. These actions resulted in restructuring expenses in the first quarter of 2022 of approximately $5.5 million, compared to $16.5 million in the quarter ended December 31, 2021. Restructuring expenses in the first quarter of 2022 primarily related to lease and other asset write downs, as well as severance costs.

Share Repurchase Program

On December 10, 2021, the Company’s Board of Directors authorized a share repurchase program (the “Repurchase Program”) to purchase up to $100 million of the Company’s common stock through December 9, 2022 in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and / or Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As part of the Repurchase Program, approximately 630,000 shares (or $25.0 million) were repurchased during the quarter ended March 31, 2022, and no shares were repurchased during the quarter ended December 31, 2021.

NET INTEREST INCOME

For the first quarter of 2022, net interest income was $130.9 million, a decrease from $138.3 million reported in the fourth quarter of 2021. Net interest income (FTE)(1) was $134.3 million in the first quarter of 2022, a decrease of approximately $7.3 million from the fourth quarter of 2021. The decreases in net interest income and net interest income (FTE) (1) were primarily driven by lower Paycheck Protection Program (“PPP”) loan related interest and fees, as well as lower prepayment activity, which drove lower accretion from acquisition accounting fair value adjustments. These decreases were partially offset by higher investment interest income due to growth in the average balance of the investment portfolio from the prior quarter, higher interest income driven by average loan growth, lower deposit costs, and lower borrowing costs primarily reflecting the $1 million in interest expense incurred in the fourth quarter of 2021 due to the acceleration of the unamortized discount associated with the Company’s redemption of its outstanding $150 million of 5% fixed-to-floating rate subordinated notes that were due to mature in 2026 (the “2026 Notes”). The first quarter net interest margin decreased 6 basis points to 2.97% from the previous quarter, and the net interest margin (FTE)(1) also decreased 6 basis points during the same period to 3.04%. The cost of funds decreased by 2 basis points compared to the fourth quarter of 2021, driven by lower costs on deposits, and lower borrowing costs 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 $2.0 million for the quarter ended March 31, 2022 representing a decline of $2.2 million from the prior quarter. The fourth quarter of 2021, the first quarter of 2022 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, 2021   $ 4,449   $ (11 )   $ (203 )   $ 4,235  
For the quarter ended March 31, 2022     2,253     (10 )     (203 )     2,040  
For the remaining nine months of 2022 (estimated)     3,599     (32 )     (625 )     2,942  
For the years ending (estimated):                        
2023     3,670     (32 )     (852 )     2,786  
2024     2,997     (4 )     (877 )     2,116  
2025     2,347     (1 )     (900 )     1,446  
2026     1,884           (926 )     958  
2027     1,408           (953 )     455  
Thereafter     6,892           (7,993 )     (1,101 )
Total remaining acquisition accounting fair value adjustments at March 31, 2022   $ 22,797   $ (69 )   $ (13,126 )   $ 9,602  

ASSET QUALITY

Overview
During the first quarter of 2022, nonperforming assets (“NPAs”) as a percentage of loans decreased 2 basis points from the prior quarter and remained low at 0.23% at March 31, 2022. Accruing past due loan levels as a percentage of total loans held for investment at March 31, 2022 decreased 1 basis point as compared to December 31, 2021, and were 3 basis points lower than at March 31, 2021. Net charge-offs were insignificant for the first quarter of 2022 and the fourth quarter of 2021. The allowance for credit losses (“ACL”) totaled $110.6 million at March 31, 2022, a $2.8 million increase from the prior quarter primarily due to increased uncertainty in the macroeconomic outlook and the impact of loan growth in the first quarter of 2022.

Nonperforming Assets
At March 31, 2022, NPAs totaled $30.7 million, a decrease of $2.1 million from December 31, 2021. NPAs as a percentage of total outstanding loans at March 31, 2022 were 0.23%, a decrease of 2 basis points from December 31, 2021.

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, 
    2022   2021   2021   2021   2021
Nonaccrual loans   $ 29,032   $ 31,100   $ 35,472   $ 36,399   $ 41,866
Foreclosed properties     1,696     1,696     1,696     1,696     2,344
Total nonperforming assets   $ 30,728   $ 32,796   $ 37,168   $ 38,095   $ 44,210

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, 
    2022   2021
  2021
  2021
  2021
Beginning Balance   $ 31,100     $ 35,472     $ 36,399     $ 41,866     $ 42,448  
Net customer payments     (4,132 )     (5,068 )     (4,719 )     (9,307 )     (4,133 )
Additions     2,087       1,294       4,177       4,162       3,821  
Charge-offs     (23 )     (598 )     (385 )     (183 )     (270 )
Loans returning to accruing status                       (153 )      
Transfers to foreclosed property                       14        
Ending Balance   $ 29,032     $ 31,100     $ 35,472     $ 36,399     $ 41,866  

Past Due Loans
Past due loans still accruing interest totaled $29.6 million or 0.22% of total loans held for investment at March 31, 2022, compared to $29.9 million or 0.23% of total loans held for investment at December 31, 2021, and $36.0 million or 0.25% of total loans held for investment at March 31, 2021. Of the total past due loans still accruing interest, $8.2 million or 0.06% of total loans held for investment were loans past due 90 days or more at March 31, 2022, compared to $9.1 million or 0.07% of total loans held for investment at December 31, 2021, and $9.8 million or 0.07% of total loans held for investment at March 31, 2021.

Net Charge-offs
Net charge-offs were insignificant and less than 0.01% of total average loans on an annualized basis for the quarter ended March 31, 2022, compared to $511,000 or 0.02% for the fourth quarter of 2021, and $1.2 million or 0.03% for the first quarter of 2021.

Provision for Credit Losses
For the quarter ended March 31, 2022, the Company recorded a provision for credit losses of $2.8 million, compared to a negative provision for credit losses of $1.0 million in the previous quarter, and a negative provision for credit losses of $13.6 million recorded during the same quarter in 2021. The provision for credit losses for the first quarter of 2022 reflected a provision of $2.8 million for loan losses and no provision for unfunded commitments.

Allowance for Credit Losses
At March 31, 2022, the ACL was $110.6 million and included an allowance for loan and lease losses (“ALLL”) of $102.6 million and a reserve for unfunded commitments (“RUC”) of $8.0 million. The ACL at March 31, 2022 increased $2.8 million from December 31, 2021, primarily due to increased uncertainty in the macroeconomic outlook and the impact of loan growth in the first quarter of 2022.

The ACL and ALLL as a percentage of total loans was 0.82% and 0.76%, respectively, at March 31, 2022, consistent with December 31, 2021.

NONINTEREST INCOME

Noninterest income declined $6.2 million to $30.2 million for the quarter ended March 31, 2022 from $36.4 million in the prior quarter, primarily due to a $5.1 million gain from the sale of Visa, Inc. Class B common stock recorded in the prior quarter, a decrease in unrealized gains on equity method investments of $1.4 million, a $589,000 decline in bank owned life insurance revenue due to death benefit proceeds received in the prior quarter, a decrease of $217,000 in interchange fees due to a decline in transaction volumes, a decrease in mortgage banking income of $213,000 due to a seasonal decline in mortgage origination volumes, and a $212,000 decline in service charges on deposit accounts. These noninterest category declines were partially offset by an increase in loan interest rate swap fee income of $2.4 million due to higher transaction volumes.

NONINTEREST EXPENSE

Noninterest expense decreased $14.6 million to $105.3 million for the quarter ended March 31, 2022 from $119.9 million in the prior quarter, primarily driven by a decrease in restructuring expenses, as the prior quarter reflected $16.5 million related to the closure of the Company’s operations center and the consolidation of 16 branches that was completed in March 2022, compared to $5.5 million of similar expenses this quarter. In addition, noninterest expenses declined in several expense categories from the prior quarter including a decrease in technology and data processing expenses of $747,000 primarily driven by a software contract termination cost incurred in the prior quarter, a reduction of $590,000 in professional services expenses associated with strategic projects, a $434,000 decrease in equipment expenses, and a decrease in marketing and advertising expenses of $382,000. Partially offsetting these expense reductions, salaries and benefits expense increased by $328,000 during the first quarter, as seasonal increases in payroll related taxes and 401(k) contribution expenses in the first quarter of 2022 were offset by a decrease in performance based variable incentive compensation and profit-sharing expenses.

INCOME TAXES

The effective tax rate for the three months ended March 31, 2022 was 17.5%, compared to 14.4% for the three months ended December 31, 2021, reflecting the impact of changes in the proportion of tax exempt income to pre-tax income.

BALANCE SHEET

At March 31, 2022, total assets were $19.8 billion, a decrease of $282.4 million or approximately 5.7% (annualized) from December 31, 2021, and a decrease of $72.2 million or approximately 0.4% from March 31, 2021. Total assets declined from the prior quarter due to a decrease in cash and cash equivalents of $406.2 million primarily related to the deployment of excess liquidity to fund loan growth of $263.5 million and deposit run-off of $126.8 million. In addition, the Company incurred a decrease in the investment securities portfolio of $159.5 million primarily due to a decline in the market value of the AFS securities portfolio.

At March 31, 2022, loans held for investment (net of deferred fees and costs) totaled $13.5 billion, including $67.4 million in PPP loans, an increase of $263.5 million or 8.1% (annualized) from December 31, 2021, while average loans at March 31, 2022 increased $218.4 million or 6.8% (annualized) from the prior quarter. Excluding the effects of the PPP(1), loans held for investment (net of deferred fees and costs) at March 31, 2022 increased $346.4 million or 10.8% (annualized) from December 31, 2021, and average loans increased $403.5 million or 12.8% (annualized) from the prior quarter. Loans held for investment (net of deferred fees and costs) decreased $812.9 million or 5.7% from March 31, 2021, and quarterly average loans decreased $763.3 million or 5.4% from the same period in the prior year. Excluding the effects of the PPP(1), loans held for investment (net of deferred fees and costs) at March 31, 2022 increased $632.3 million or 5.0% from the same period in the prior year, and quarterly average loans during the first quarter of 2022 increased $443.0 million or 3.5% from the same period in the prior year.

At March 31, 2022, total deposits were $16.5 billion, a decrease of $126.8 million or approximately 3.1% (annualized) from December 31, 2021, and average deposits decreased $346.8 million or 8.3% (annualized) from the prior quarter. Deposits at March 31, 2022 increased $186.2 million or 1.1% from March 31, 2021, and quarterly average deposits at March 31, 2022 increased $439.7 million or 2.7% from the same period in the prior year. The increase in deposits from the prior year was primarily due to additional liquidity of bank customers due to higher levels of government assistance programs since the start of the COVID-19 global pandemic (“COVID-19”) and increased savings. The decrease in deposits from the prior quarter is primarily attributable to maturing time deposits.

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

       March 31,       December 31,       March 31,   
    2022   2021   2021  
Common equity Tier 1 capital ratio (2)   9.86 % 10.24 % 10.56 %
Tier 1 capital ratio (2)   10.91 % 11.32 % 11.70 %
Total capital ratio (2)   13.79 % 14.17 % 14.25 %
Leverage ratio (Tier 1 capital to average assets) (2)   9.08 % 9.01 % 9.18 %
Common equity to total assets   11.79 % 12.68 % 12.81 %
Tangible common equity to tangible assets (1)   7.21 % 8.20 % 8.24 %


For the quarter ended March 31, 2022, the Company’s common equity to total assets capital ratio and the tangible common equity to tangible assets capital ratio decreased from the prior quarter primarily due to the unrealized losses on the AFS securities portfolio recorded in other comprehensive income due to market interest rate increases in the first quarter of 2022.

During the first quarter of 2022, 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 2021 and the first quarter of 2021. During the first quarter of 2022, the Company also declared and paid cash dividends of $0.28 per common share, consistent with the fourth quarter of 2021, and an increase of $0.03, or approximately 12.0%, compared to the first quarter of 2021.

On December 10, 2021, the Company’s Board of Directors authorized a Repurchase Program to purchase up to $100 million of the Company’s common stock through December 9, 2022 in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and / or Rule 10b-18 under the Exchange Act. The Repurchase Program followed a prior $125 million share repurchase authorization that was approved by the Company’s Board of Directors during the second quarter of 2021 and was fully utilized by September 30, 2021. During the quarter ended March 31, 2022, the Company repurchased an aggregate of approximately 630,000 shares (or $25.0 million), at an average price of $39.73. No shares were repurchased during the quarter ended December 31, 2021.


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

(2) All ratios at March 31, 2022 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.

(*) Number and amount of PPP loans processed for forgiveness are rounded and approximate values.

ABOUT ATLANTIC UNION BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (Nasdaq: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank has 114 branches and approximately 130 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; Dixon, Hubard, Feinour & Brown, Inc., which provides investment advisory services; Atlantic Union Financial Consultants, LLC, which provides brokerage services; and Union Insurance Group, LLC, which offers various lines of insurance products.

FIRST QUARTER 2022 EARNINGS RELEASE CONFERENCE CALL

The Company will hold a conference call and webcast for analysts on Thursday, April 21, 2022 at 9:00 a.m. Eastern Time during which management will review the first quarter 2022 financial results and provide an update on recent activities. Interested parties may participate in the call toll-free by dialing (866) 220-4170; international callers wishing to participate may do so by dialing (864) 663-5235. The conference ID number is 7067425. Management will conduct a listen-only webcast with accompanying slides, which can be found at: https://edge.media-server.com/mmc/p/9ct7u2eq.

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 periods ended March 31, 2022, 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) section of the Key Financial Results.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release 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 quotes, statements regarding the Company’s outlook on future economic conditions and the impacts of the COVID-19 pandemic and statements that include, 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. Such 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,” or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, the Company 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 the impacts on macroeconomic conditions, customer and client behavior and the Company’s funding costs;
  • higher inflation and its impacts;
  • general economic and financial market conditions, in the United States generally and particularly in the markets in which the Company operates and which its loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels and slowdowns in economic growth, including as a result of COVID-19;
  • the quality or composition of the loan or investment portfolios and changes therein;
  • demand for loan products and financial services in the Company’s market area;
  • the Company’s ability to manage its growth or implement its growth strategy;
  • the effectiveness of expense reduction plans;
  • the introduction of new lines of business or new products and services;
  • the Company’s ability to recruit and retain key employees;
  • real estate values in the Bank’s lending area;
  • an insufficient ACL;
  • changes in accounting principles, including without limitation, relating to the CECL methodology;
  • the Company’s liquidity and capital positions;
  • concentrations of loans secured by real estate, particularly commercial real estate;
  • the effectiveness of the Company’s credit processes and management of the Company’s credit risk;
  • the Company’s 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;
  • the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts (such as the ongoing conflict between Russia and Ukraine) or public health events (such as COVID-19), and of governmental and societal responses thereto; these potential adverse effects may include, without limitation, adverse effects on the ability of the Company’s borrowers to satisfy their obligations to the Company, on the value of collateral securing loans, on the demand for the Company’s loans or its other products and services, on supply chains and methods used to distribute products and services, on incidents of cyberattack and fraud, on the Company’s liquidity or capital positions, on risks posed by reliance on third-party service providers, on other aspects of the Company’s business operations and on financial markets and economic growth;
  • the effect of steps the Company takes in response to COVID-19, the severity and duration of the pandemic, the uncertainty regarding new variants of COVID-19 that have emerged, the speed and efficacy of vaccine and treatment developments, the impact of loosening or tightening of government restrictions, the pace of recovery when the pandemic subsides and the heightened impact it has on many of the risks described herein;
  • the discontinuation of LIBOR and its impact on the financial markets, and the Company’s 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 the Company’s 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, including the impact of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, as amended by the Consolidated Appropriations Act, 2021, and other legislative and regulatory reactions to COVID-19;
  • potential claims, damages, and fines related to litigation or government actions, including litigation or actions arising from the Company’s participation in and administration of programs related to COVID-19, including, among other things, under the CARES Act, as amended by the CAA;
  • the effects of changes in federal, state or local tax laws and regulations;
  • monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve;
  • changes to applicable accounting principles and guidelines; and
  • other factors, many of which are beyond the control of the Company.

Please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All risk factors and uncertainties described herein should be considered in evaluating forward-looking statements, all forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein, and undue reliance should not be placed on such forward-looking statements. 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. Forward-looking statements speak only as of the date they are made. The Company does 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
       03/31/22      12/31/21      03/31/21
Results of Operations            
Interest and dividend income   $ 138,456   $ 147,456     $ 147,673  
Interest expense     7,525     9,129       12,775  
Net interest income     130,931     138,327       134,898  
Provision for credit losses     2,800     (1,000 )     (13,624 )
Net interest income after provision for credit losses     128,131     139,327       148,522  
Noninterest income     30,153     36,417       30,985  
Noninterest expenses     105,321     119,944       111,937  
Income before income taxes     52,963     55,800       67,570  
Income tax expense     9,273     8,021       11,381  
Net income     43,690     47,779       56,189  
Dividends on preferred stock     2,967     2,967       2,967  
Net income available to common shareholders   $ 40,723   $ 44,812     $ 53,222  
                   
Interest earned on earning assets (FTE) (1)   $ 141,792   $ 150,684     $ 150,726  
Net interest income (FTE) (1)     134,267     141,555       137,951  
Total revenue (FTE) (1)     164,420     177,972       168,936  
Pre-tax pre-provision adjusted operating earnings (8)     61,271     66,199       69,487  
                   
Key Ratios                  
Earnings per common share, diluted   $ 0.54   $ 0.59     $ 0.67  
Return on average assets (ROA)     0.89 %   0.94 %     1.16 %
Return on average equity (ROE)     6.66 %   6.98 %     8.38 %
Return on average tangible common equity (ROTCE) (2) (3)     11.53 %   11.98 %     14.58 %
Efficiency ratio     65.38 %   68.64 %     67.48 %
Net interest margin     2.97 %   3.03 %     3.09 %
Net interest margin (FTE) (1)     3.04 %   3.10 %     3.16 %
Yields on earning assets (FTE) (1)     3.22 %   3.30 %     3.46 %
Cost of interest-bearing liabilities     0.26 %   0.30 %     0.43 %
Cost of deposits     0.11 %   0.12 %     0.23 %
Cost of funds     0.18 %   0.20 %     0.30 %
                   
Operating Measures (4)                  
Adjusted operating earnings   $ 48,041   $ 56,784     $ 68,466  
Adjusted operating earnings available to common shareholders     45,074     53,817       65,499  
Adjusted operating earnings per common share, diluted   $ 0.60   $ 0.71     $ 0.83  
Adjusted operating ROA     0.98 %   1.11 %     1.41 %
Adjusted operating ROE     7.32 %   8.30 %     10.21 %
Adjusted operating ROTCE (2) (3)     12.69 %   14.25 %     17.77 %
Adjusted operating efficiency ratio (FTE) (1)(7)     58.86 %   57.96 %     54.83 %
                   
Per Share Data                  
Earnings per common share, basic   $ 0.54   $ 0.59     $ 0.67  
Earnings per common share, diluted     0.54     0.59       0.67  
Cash dividends paid per common share     0.28     0.28       0.25  
Market value per share     36.69     37.29       38.36  
Book value per common share     31.12     33.80       32.37  
Tangible book value per common share (2)     18.10     20.79       19.78  
Price to earnings ratio, diluted     16.75     15.93       14.12  
Price to book value per common share ratio     1.18     1.10       1.19  
Price to tangible book value per common share ratio (2)     2.03     1.79       1.94  
Weighted average common shares outstanding, basic     75,544,644     75,654,336       78,863,468  
Weighted average common shares outstanding, diluted     75,556,127     75,667,759       78,884,235  
Common shares outstanding at end of period     75,335,956     75,663,648       79,006,331  

                     
    As of & For Three Months Ended  
       03/31/22      12/31/21      03/31/21  
Capital Ratios              
Common equity Tier 1 capital ratio (5)     9.86 %     10.24 %     10.56 %
Tier 1 capital ratio (5)     10.91 %     11.32 %     11.70 %
Total capital ratio (5)     13.79 %     14.17 %     14.25 %
Leverage ratio (Tier 1 capital to average assets) (5)     9.08 %     9.01 %     9.18 %
Common equity to total assets     11.79 %     12.68 %     12.81 %
Tangible common equity to tangible assets (2)     7.21 %     8.20 %     8.24 %
                     
Financial Condition                       
Assets   $ 19,782,430   $ 20,064,796   $ 19,854,612  
Loans held for investment (net of deferred fees and costs)     13,459,349     13,195,843     14,272,280  
Securities     4,027,185     4,186,475     3,317,442  
Earning Assets     17,731,089     18,030,138     17,889,174  
Goodwill     935,560     935,560     935,560  
Amortizable intangibles, net     40,273     43,312     53,471  
Deposits     16,484,223     16,611,068     16,298,017  
Borrowings     504,032     506,594     563,600  
Stockholders’ equity     2,498,335     2,710,071     2,709,732  
Tangible common equity (2)     1,356,145     1,564,842     1,554,344  
                     
Loans held for investment, net of deferred fees and costs                       
Construction and land development   $ 969,059   $ 862,236   $ 884,303  
Commercial real estate – owner occupied     2,007,671     1,995,409     2,083,155  
Commercial real estate – non-owner occupied     3,875,681     3,789,377     3,671,471  
Multifamily real estate     723,940     778,626     842,906  
Commercial & Industrial     2,540,680     2,542,243     3,599,884  
Residential 1-4 Family – Commercial     569,801     607,337     658,051  
Residential 1-4 Family – Consumer     824,163     816,524     816,916  
Residential 1-4 Family – Revolving     568,403     560,796     563,786  
Auto     499,855     461,052     406,349  
Consumer     171,875     176,992     215,711  
Other Commercial     708,221     605,251     529,748  
Total loans held for investment   $ 13,459,349   $ 13,195,843   $ 14,272,280  
                     
Deposits                       
NOW accounts   $ 4,121,257   $ 4,176,032   $ 3,612,135  
Money market accounts     4,151,155     4,249,858     4,244,092  
Savings accounts     1,166,922     1,121,297     991,418  
Time deposits of $250,000 and over     365,796     452,193     619,040  
Other time deposits     1,309,030     1,404,364     1,764,933  
Time deposits     1,674,826     1,856,557     2,383,973  
Total interest-bearing deposits   $ 11,114,160   $ 11,403,744   $ 11,231,618  
Demand deposits     5,370,063     5,207,324     5,066,399  
Total deposits   $ 16,484,223   $ 16,611,068   $ 16,298,017  
                     
Averages                       
Assets   $ 19,920,368   $ 20,236,889   $ 19,686,854  
Loans held for investment (net of deferred fees and costs)     13,300,789     13,082,412     14,064,123  
Loans held for sale     14,636     26,775     63,022  
Securities     4,198,582     3,998,058     3,209,377  
Earning assets     17,885,018     18,138,285     17,692,095  
Deposits     16,514,375     16,861,219     16,074,650  
Time deposits     1,766,657     1,941,420     2,490,432  
Interest-bearing deposits     11,286,277     11,489,510     11,491,129  
Borrowings     511,722     445,344     574,678  
Interest-bearing liabilities     11,797,999     11,934,854     12,065,807  
Stockholders’ equity     2,660,984     2,715,610     2,719,941  
Tangible common equity (2)     1,517,325     1,568,828     1,562,575  

                   
    As of & For Three Months Ended
       03/31/22      12/31/21      03/31/21
Asset Quality            
Allowance for Credit Losses (ACL)                  
Beginning balance, Allowance for loan and lease losses (ALLL)   $ 99,787   $ 101,798     $ 160,540  
Add: Recoveries     1,513     1,720       2,469  
Less: Charge-offs     1,509     2,231       3,641  
Add: Provision for loan losses     2,800     (1,500 )     (16,457 )
Ending balance, ALLL   $ 102,591   $ 99,787     $ 142,911  
                   
Beginning balance, Reserve for unfunded commitment (RUC)   $ 8,000   $ 7,500     $ 10,000  
Add: Provision for unfunded commitments         500       2,833  
Ending balance, RUC   $ 8,000   $ 8,000     $ 12,833  
Total ACL   $ 110,591   $ 107,787     $ 155,744  
                   
ACL / total outstanding loans     0.82 %     0.82 %     1.09 %
ACL / total adjusted loans(9)     0.83 %     0.83 %     1.22 %
ALLL / total outstanding loans     0.76 %     0.76 %     1.00 %
ALLL / total adjusted loans(9)     0.77 %     0.76 %     1.12 %
Net charge-offs / total average loans     0.00 %     0.02 %     0.03 %
Net charge-offs / total adjusted average loans(9)     0.00 %     0.02 %     0.04 %
Provision for loan losses/ total average loans     0.09 %     (0.05 )%     (0.47 )%
Provision for loan losses/ total adjusted average loans(9)     0.09 %     (0.05 )%     (0.52 )%
  `                
Nonperforming Assets (6)                   
Construction and land development   $ 869   $ 2,697     $ 2,637  
Commercial real estate – owner occupied     4,865     5,637       7,016  
Commercial real estate – non-owner occupied     3,287     3,641       1,958  
Multifamily real estate         113        
Commercial & Industrial     1,975     1,647       2,023  
Residential 1-4 Family – Commercial     2,239     2,285       9,190  
Residential 1-4 Family – Consumer     12,039     11,397       14,770  
Residential 1-4 Family – Revolving     3,371     3,406       3,853  
Auto     333     223       303  
Consumer     54     54       116  
Nonaccrual loans   $ 29,032   $ 31,100     $ 41,866  
Foreclosed property     1,696     1,696       2,344  
Total nonperforming assets (NPAs)   $ 30,728   $ 32,796     $ 44,210  
Construction and land development   $ 1   $ 299     $ 189  
Commercial real estate – owner occupied     2,396     1,257       3,180  
Commercial real estate – non-owner occupied     1,735     433       817  
Commercial & Industrial     763     1,897       654  
Residential 1-4 Family – Commercial     878     990       576  
Residential 1-4 Family – Consumer     1,147     3,013       3,041  
Residential 1-4 Family – Revolving     1,065     882       917  
Auto     192     241       154  
Consumer     70     120       248  
Loans ≥ 90 days and still accruing   $ 8,247   $ 9,132     $ 9,776  
Total NPAs and loans ≥ 90 days   $ 38,975   $ 41,928     $ 53,986  
NPAs / total outstanding loans     0.23 %     0.25 %     0.31 %
NPAs / total adjusted loans(9)     0.23 %     0.25 %     0.35 %
NPAs / total assets     0.16 %     0.16 %     0.22 %
ALLL / nonaccrual loans     353.37 %     320.86 %     341.35 %
ALLL/ nonperforming assets     333.87 %     304.27 %     323.25 %

                     
    As of & For Three Months Ended  
       03/31/22      12/31/21      03/31/21  
Past Due Detail (6)              
Construction and land development   $ 170   $ 1,357   $ 865  
Commercial real estate – owner occupied     5,081     1,230     3,426  
Commercial real estate – non-owner occupied     79     1,965     1,055  
Multifamily real estate     124     84     187  
Commercial & Industrial     1,382     1,161     3,086  
Residential 1-4 Family – Commercial     827     1,844     1,803  
Residential 1-4 Family – Consumer     5,890     3,368     6,831  
Residential 1-4 Family – Revolving     1,157     1,493     1,397  
Auto     1,508     1,866     1,035  
Consumer     467     689     595  
Other Commercial     1,270     37     407  
Loans 30-59 days past due   $ 17,955   $ 15,094   $ 20,687  
Construction and land development   $   $   $ 473  
Commercial real estate – owner occupied         152     514  
Commercial real estate – non-owner occupied     223     127     1,413  
Multifamily real estate             81  
Commercial & Industrial     745     1,438     613  
Residential 1-4 Family – Commercial     251     272     798  
Residential 1-4 Family – Consumer     1,018     2,925     808  
Residential 1-4 Family – Revolving     651     363     284  
Auto     183     249     165  
Consumer     201     186     314  
Other Commercial     95         88  
Loans 60-89 days past due   $ 3,367   $ 5,712   $ 5,551  
                     
Past Due and still accruing   $ 29,569   $ 29,938   $ 36,014  
Past Due and still accruing / total loans     0.22 %     0.23 %   0.25 %
                     
Troubled Debt Restructurings                     
Performing   $ 12,157   $ 10,313   $ 13,670  
Nonperforming     7,552     7,642     6,058  
Total troubled debt restructurings   $ 19,709   $ 17,955   $ 19,728  
                     
Alternative Performance Measures (non-GAAP)                     
Net interest income (FTE) (1)                     
Net interest income (GAAP)   $ 130,931   $ 138,327   $ 134,898  
FTE adjustment     3,336     3,228     3,053  
Net interest income (FTE) (non-GAAP)   $ 134,267   $ 141,555   $ 137,951  
Noninterest income (GAAP)     30,153     36,417     30,985  
Total revenue (FTE) (non-GAAP)   $ 164,420   $ 177,972   $ 168,936  
                     
Average earning assets   $ 17,885,018   $ 18,138,285   $ 17,692,095  
Net interest margin     2.97 %     3.03 %   3.09 %
Net interest margin (FTE)     3.04 %     3.10 %   3.16 %
                     
Tangible Assets (2)                     
Ending assets (GAAP)   $ 19,782,430   $ 20,064,796   $ 19,854,612  
Less: Ending goodwill     935,560     935,560     935,560  
Less: Ending amortizable intangibles     40,273     43,312     53,471  
Ending tangible assets (non-GAAP)   $ 18,806,597   $ 19,085,924   $ 18,865,581  
                     
Tangible Common Equity (2)                     
Ending equity (GAAP)   $ 2,498,335   $ 2,710,071   $ 2,709,732  
Less: Ending goodwill     935,560     935,560     935,560  
Less: Ending amortizable intangibles     40,273     43,312     53,471  
Less: Perpetual preferred stock     166,357     166,357     166,357  
Ending tangible common equity (non-GAAP)   $ 1,356,145   $ 1,564,842   $ 1,554,344  
                     
Average equity (GAAP)   $ 2,660,984   $ 2,715,610   $ 2,719,941  
Less: Average goodwill     935,560     935,560     935,560  
Less: Average amortizable intangibles     41,743     44,866     55,450  
Less: Average perpetual preferred stock     166,356     166,356     166,356  
Average tangible common equity (non-GAAP)   $ 1,517,325   $ 1,568,828   $ 1,562,575  
                     
ROTCE (2)(3)                    
Net income available to common shareholders (GAAP)   $ 40,723   $ 44,812   $ 53,222  
Plus: Amortization of intangibles, tax effected     2,401     2,548     2,947  
Net income available to common shareholders before amortization of intangibles (non-GAAP)   $ 43,124   $ 47,360   $ 56,169  
                     
Return on average tangible common equity (ROTCE)     11.53 %     11.98 %   14.58 %

                   
    As of & For Three Months Ended
     03/31/22     12/31/21    03/31/21
Operating Measures (4)                  
Net income (GAAP)   $ 43,690   $ 47,779     $ 56,189  
Plus: Net loss related to balance sheet repositioning, net of tax               11,609  
Less: Gain on sale of securities, net of tax               62  
Less: Gain on Visa, Inc. Class B common stock, net of tax         4,058        
Plus: Branch closing and facility consolidation costs, net of tax     4,351     13,063       730  
Adjusted operating earnings (non-GAAP)     48,041     56,784       68,466  
Less: Dividends on preferred stock     2,967     2,967       2,967  
Adjusted operating earnings available to common shareholders (non-GAAP)   $ 45,074   $ 53,817     $ 65,499  
                   
Noninterest expense (GAAP)   $ 105,321   $ 119,944     $ 111,937  
Less: Amortization of intangible assets     3,039     3,225       3,730  
Less: Losses related to balance sheet repositioning               14,695  
Less: Branch closing and facility consolidation costs     5,508     16,536       924  
Adjusted operating noninterest expense (non-GAAP)   $ 96,774   $ 100,183     $ 92,588  
                   
Noninterest income (GAAP)   $ 30,153   $ 36,417     $ 30,985  
Less: Gain on sale of securities               78  
Less: Gain on Visa, Inc. Class B common stock         5,137        
Adjusted operating noninterest income (non-GAAP)   $ 30,153   $ 31,280     $ 30,907  
                   
Net interest income (FTE) (non-GAAP) (1)   $ 134,267   $ 141,555     $ 137,951  
Adjusted operating noninterest income (non-GAAP)     30,153     31,280       30,907  
Total adjusted revenue (FTE) (non-GAAP) (1)   $ 164,420   $ 172,835     $ 168,858  
                   
Efficiency ratio     65.38 %     68.64 %     67.48 %
Adjusted operating efficiency ratio (FTE) (1)(7)     58.86 %     57.96 %     54.83 %
                   
Operating ROTCE (2)(3)(4)                   
Adjusted operating earnings available to common shareholders (non-GAAP)   $ 45,074   $ 53,817     $ 65,499  
Plus: Amortization of intangibles, tax effected     2,401     2,548       2,947  
Adjusted operating earnings available to common shareholders before amortization of intangibles (non-GAAP)   $ 47,475   $ 56,365     $ 68,446  
                   
Average tangible common equity (non-GAAP)   $ 1,517,325   $ 1,568,828     $ 1,562,575  
Adjusted operating return on average tangible common equity (non-GAAP)     12.69 %     14.25 %     17.77 %
                   
Pre-tax pre-provision adjusted operating earnings (8)                  
Net income (GAAP)   $ 43,690   $ 47,779     $ 56,189  
Plus: Provision for credit losses     2,800     (1,000 )     (13,624 )
Plus: Income tax expense     9,273     8,021       11,381  
Plus: Net loss related to balance sheet repositioning               14,695  
Less: Gain on sale of securities               78  
Less: Gain on Visa, Inc. Class B common stock         5,137        
Plus: Branch closing and facility consolidation costs     5,508     16,536       924  
Pre-tax pre-provision adjusted operating earnings (non-GAAP)   $ 61,271   $ 66,199     $ 69,487  
Less: Dividends on preferred stock     2,967     2,967       2,967  
Pre-tax pre-provision adjusted operating earnings available to common shareholders (non-GAAP)   $ 58,304   $ 63,232     $ 66,520  
                   
Weighted average common shares outstanding, diluted     75,556,127     75,667,759       78,884,235  
Pre-tax pre-provision earnings per common share, diluted   $ 0.77   $ 0.84     $ 0.84  
                   
Adjusted Loans (9)                  
Loans held for investment (net of deferred fees and costs) (GAAP)   $ 13,459,349   $ 13,195,843     $ 14,272,280  
Less: PPP adjustments (net of deferred fees and costs)     67,444     150,363       1,512,714  
Total adjusted loans (non-GAAP)   $ 13,391,905   $ 13,045,480     $ 12,759,566  
                   
Average loans held for investment (net of deferred fees and costs) (GAAP)   $ 13,300,789   $ 13,082,412     $ 14,064,123  
Less: Average PPP adjustments (net of deferred fees and costs)     103,041     288,204       1,309,326  
Total adjusted average loans (non-GAAP)   $ 13,197,748   $ 12,794,208     $ 12,754,797  

                     
    As of & For Three Months Ended  
     03/31/22     12/31/21    03/31/21   
Mortgage Origination Held for Sale Volume (10)                    
Refinance Volume   $ 33,201   $ 46,575   $ 118,918  
Purchase Volume     58,295     71,969     67,957  
Total Mortgage loan originations held for sale   $ 91,496   $ 118,544   $ 186,875  
% of originations held for sale that are refinances     36.3 %     39.3 %   63.6 %
                     
Wealth                     
Assets under management (AUM)   $ 6,519,974   $ 6,741,022   $ 6,056,475  
                     
Other Data                     
End of period full-time employees     1,853     1,876     1,869  
Number of full-service branches     114     130     129  
Number of automatic transaction machines (ATMs)     132     148     153  

(1)   These are non-GAAP financial measures. Net interest income (FTE) and total adjusted revenue (FTE), which are used in computing net interest margin (FTE) and adjusted operating efficiency ratio (FTE), respectively, 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.
(3)   These are non-GAAP financial measures. The Company believes that ROTCE is a meaningful supplement to GAAP financial measures and 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 the gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment), gains or losses on sale of securities, gains on the sale of Visa, Inc. Class B common stock, as well as branch closing and facility consolidation costs (principally composed of real estate, leases and other assets write downs, gains or losses on related real estate sales, as well as severance associated with branch closing and corporate 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. Prior periods reflect adjustments for previously announced branch closing and corporate expense reduction initiatives.
(5)   All ratios at March 31, 2022 are estimates and subject to change pending the Company’s filing of its FR Y9-C. All other periods are presented as filed.
(6)   These balances reflect the impact of the CARES Act and the joint guidance issued by the five federal bank regulatory agencies and the Conference of State Bank Supervisors on March 22, 2020, as subsequently revised on April 7, 2020, which provides relief for TDR designations and also provides guidance on past due reporting for modified loans.
(7)   The adjusted operating efficiency ratio (FTE) excludes the amortization of intangible assets, gains or losses on sale of securities, gains on the sale of Visa, Inc. Class B common stock, gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment), as well as branch closing and 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 combined economic results of the organization’s operations. Prior periods reflect adjustments for previously announced branch closing and corporate expense reduction initiatives.
(8)   This is a non-GAAP financial measure. 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, gains or losses related to balance sheet repositioning (principally composed of gains and losses on debt extinguishment), gains or losses on sale of securities, gains on the sale of Visa, Inc. Class B common stock, as well as branch closing and facility consolidation costs. The Company believes this adjusted measure provides investors with important information about the combined economic results of the organization’s operations. Prior periods reflect adjustments for previously announced branch closing and corporate expense reduction initiatives.
(9)   These are non-GAAP financial measures. PPP adjustment impact excludes the unforgiven portion of PPP loans. The Company believes loans held for investment (net of deferred fees and costs), excluding PPP is useful to investors as it provides more clarity on the Company’s organic growth. The Company also believes that the related non-GAAP financial measures of past due loans still accruing interest as a percentage of total loans held for investment (net of deferred fees and costs), excluding PPP, are useful to investors as loans originated under the PPP carry a Small Business Administration (“SBA”) guarantee. The Company believes that the ALLL as a percentage of loans held for investment (net of deferred fees and costs), excluding PPP, is useful to investors because of the size of the Company’s PPP originations and the impact of the embedded credit enhancement provided by the SBA guarantee.
(10)   The period ended March 31, 2021 has been restated to adjust for certain mortgage loans held for investment that were previously included.

ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)

  March 31,   December 31,   March 31,
  2022   2021   2021
ASSETS   (unaudited)     (audited)     (unaudited)
Cash and cash equivalents:                
Cash and due from banks $ 178,225     $ 180,963   $ 155,972
Interest-bearing deposits in other banks   213,140       618,714     244,593
Federal funds sold   4,938       2,824     315
Total cash and cash equivalents   396,303       802,501     400,880
Securities available for sale, at fair value   3,193,280       3,481,650     2,697,043
Securities held to maturity, at carrying value   756,872       628,000     543,575
Restricted stock, at cost   77,033       76,825     76,824
Loans held for sale, at fair value   21,227       20,861     49,082
Loans held for investment, net of deferred fees and costs   13,459,349       13,195,843     14,272,280
Less: allowance for loan and lease losses   102,591       99,787     142,911
Total loans held for investment, net   13,356,758       13,096,056     14,129,369
Premises and equipment, net   130,998       134,808     161,478
Goodwill   935,560       935,560     935,560
Amortizable intangibles, net   40,273       43,312     53,471
Bank owned life insurance   434,012       431,517     328,627
Other assets   440,114       413,706     478,703
Total assets $ 19,782,430     $ 20,064,796   $ 19,854,612
LIABILITIES                
Noninterest-bearing demand deposits $ 5,370,063     $ 5,207,324   $ 5,066,399
Interest-bearing deposits   11,114,160       11,403,744     11,231,618
Total deposits   16,484,223       16,611,068     16,298,017
Securities sold under agreements to repurchase   115,027       117,870     105,522
Other short-term borrowings             168,000
Long-term borrowings   389,005       388,724     290,078
Other liabilities   295,840       237,063     283,263
Total liabilities   17,284,095       17,354,725     17,144,880
Commitments and contingencies                
STOCKHOLDERS’ EQUITY                
Preferred stock, $10.00 par value   173       173     173
Common stock, $1.33 par value   99,651       100,101     104,493
Additional paid-in capital   1,786,640       1,807,368     1,918,991
Retained earnings   803,354       783,794     649,574
Accumulated other comprehensive income (loss)   (191,483 )     18,635     36,501
Total stockholders’ equity   2,498,335       2,710,071     2,709,732
Total liabilities and stockholders’ equity $ 19,782,430     $ 20,064,796   $ 19,854,612
                 
Common shares outstanding   75,335,956       75,663,648     79,006,331
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,
  2022      2021      2021
Interest and dividend income:                
Interest and fees on loans $ 114,200   $ 125,195     $ 128,006  
Interest on deposits in other banks   131     401       77  
Interest and dividends on securities:                
Taxable   13,666     11,757       10,353  
Nontaxable   10,459     10,103       9,237  
Total interest and dividend income   138,456     147,456       147,673  
Interest expense:                
Interest on deposits   4,483     4,915       9,128  
Interest on short-term borrowings   21     17       48  
Interest on long-term borrowings   3,021     4,197       3,599  
Total interest expense   7,525     9,129       12,775  
Net interest income   130,931     138,327       134,898  
Provision for credit losses   2,800     (1,000 )     (13,624 )
Net interest income after provision for credit losses   128,131     139,327       148,522  
Noninterest income:                
Service charges on deposit accounts   7,596     7,808       5,509  
Other service charges, commissions and fees   1,655     1,625       1,701  
Interchange fees   1,810     2,027       1,847  
Fiduciary and asset management fees   7,255     7,239       6,475  
Mortgage banking income   3,117     3,330       8,255  
Gains on securities transactions             78  
Bank owned life insurance income   2,697     3,286       2,265  
Loan-related interest rate swap fees   3,860     1,443       1,754  
Other operating income   2,163     9,659       3,101  
Total noninterest income   30,153     36,417       30,985  
Noninterest expenses:                
Salaries and benefits   58,298     57,970       52,660  
Occupancy expenses   6,883     7,013       7,315  
Furniture and equipment expenses   3,597     4,031       3,968  
Technology and data processing   7,796     8,543       6,904  
Professional services   4,090     4,680       4,960  
Marketing and advertising expense   2,163     2,545       2,044  
FDIC assessment premiums and other insurance   2,485     2,684       2,307  
Other taxes   4,499     4,436       4,436  
Loan-related expenses   1,776     1,715       1,877  
Amortization of intangible assets   3,039     3,225       3,730  
Loss on debt extinguishment             14,695  
Other expenses   10,695     23,102       7,041  
Total noninterest expenses   105,321     119,944       111,937  
Income before income taxes   52,963     55,800       67,570  
Income tax expense   9,273     8,021       11,381  
Net income $ 43,690   $ 47,779     $ 56,189  
Dividends on preferred stock   2,967     2,967       2,967  
Net income available to common shareholders $ 40,723   $ 44,812     $ 53,222  
                 
Basic earnings per common share $ 0.54   $ 0.59     $ 0.67  
Diluted earnings per common share $ 0.54   $ 0.59     $ 0.67  


AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) (UNAUDITED)

  For the Quarter Ended
  March 31, 2022   December 31, 2021
  Average
Balance
     Interest
Income /
Expense (1)
     Yield /
Rate (1)(2)
     Average
Balance
     Interest
Income /
Expense (1)
     Yield /
Rate (1)(2)
Assets:                              
Securities:                              
Taxable $ 2,617,156     $ 13,666   2.12 %   $ 2,492,935     $ 11,757   1.87 %
Tax-exempt   1,581,426       13,240   3.40 %     1,505,123       12,788   3.37 %
Total securities   4,198,582       26,906   2.60 %     3,998,058       24,545   2.44 %
Loans, net (3) (4)   13,300,789       114,602   3.49 %     13,082,412       125,505   3.81 %
Other earning assets   385,647       284   0.30 %     1,057,815       634   0.24 %
Total earning assets $ 17,885,018     $ 141,792   3.22 %   $ 18,138,285     $ 150,684   3.30 %
Allowance for loan and lease losses   (100,342 )               (99,940 )          
Total non-earning assets   2,135,692                 2,198,544            
Total assets $ 19,920,368               $ 20,236,889            
                               
Liabilities and Stockholders’ Equity:                              
Interest-bearing deposits:                              
Transaction and money market accounts $ 8,376,766     $ 1,324   0.06 %   $ 8,447,579     $ 1,208   0.06 %
Regular savings   1,142,854       55   0.02 %     1,100,511       56   0.02 %
Time deposits (5)   1,766,657       3,104   0.71 %     1,941,420       3,651   0.75 %
Total interest-bearing deposits   11,286,277       4,483   0.16 %     11,489,510       4,915   0.17 %
Other borrowings (6)   511,722       3,042   2.41 %     445,344       4,214   3.75 %
Total interest-bearing liabilities $ 11,797,999     $ 7,525   0.26 %   $ 11,934,854     $ 9,129   0.30 %
                               
Noninterest-bearing liabilities:                              
Demand deposits   5,228,098                 5,371,709            
Other liabilities   233,287                 214,716            
Total liabilities $ 17,259,384               $ 17,521,279            
Stockholders’ equity   2,660,984                 2,715,610            
Total liabilities and stockholders’ equity $ 19,920,368               $ 20,236,889            
Net interest income       $ 134,267             $ 141,555    
                               
Interest rate spread             2.96 %               3.00 %
Cost of funds             0.18 %               0.20 %
Net interest margin             3.04 %               3.10 %


(1)   Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.
(2)   Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.
(3)   Nonaccrual loans are included in average loans outstanding.
(4)   Interest income on loans includes $2.3 million and $4.4 million for the three months ended March 31, 2022 and December 31, 2021, respectively, in accretion of the fair market value adjustments related to acquisitions.
(5)   Interest expense on time deposits includes amortization of $10,000 and $11,000 for the three months ended
March 31, 2022 and December 31, 2021, respectively, for the fair market value adjustments related to acquisitions.
(6)   Interest expense on borrowings includes $203,000 for both the three months ended March 31, 2022 and December 31, 2021, in amortization of the fair market value adjustments related to acquisitions.

Contact: Robert M. Gorman – (804) 523-7828
  Executive Vice President / Chief Financial Officer

 

Atlantic Union Bank Atlantic Union Bankshares Reports First Quarter Results