Part I [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) Unaudited financials as of September 30, 2020, reflect **$19.9 billion** in assets, **$61.0 million** net income, and higher credit loss allowance Consolidated Balance Sheet Highlights (unaudited) | Metric | September 30, 2020 ($) | December 31, 2019 ($) | | :--- | :--- | :--- | | Total Assets | $19,930,650 | $17,562,990 | | Total Loans Held for Investment, net | $14,209,093 | $12,568,642 | | Total Deposits | $15,576,098 | $13,304,981 | | Total Liabilities | $17,269,765 | $15,049,888 | | Total Stockholders' Equity | $2,660,885 | $2,513,102 | Consolidated Income Statement Highlights (unaudited) | Metric | Three Months Ended Sep 30, 2020 (in thousands) | Three Months Ended Sep 30, 2019 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2019 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $137,381 | $136,601 | $409,694 | $402,743 | | Provision for Credit Losses | $6,558 | $9,100 | $100,954 | $18,192 | | Noninterest Income | $34,407 | $48,106 | $99,245 | $103,621 | | Net Income | $61,000 | $53,238 | $98,798 | $137,692 | | Diluted Earnings Per Common Share | $0.74 | $0.65 | $1.22 | $1.72 | - The company adopted ASC 326 (CECL) on January 1, 2020, resulting in a **$39.1 million** net decrease to retained earnings and an initial increase in the Allowance for Credit Losses of **$51.6 million**[33](index=33&type=chunk)[36](index=36&type=chunk) - In response to COVID-19, the company made **$1.8 billion** in loan modifications under the CARES Act and regulatory guidance. As of September 30, 2020, approximately **$769.6 million** of these loans remained under their modified terms[30](index=30&type=chunk) - The bank processed over **11,000** Paycheck Protection Program (PPP) loans totaling **$1.7 billion**, with a recorded investment of **$1.6 billion** as of September 30, 2020[31](index=31&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=89&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights COVID-19's financial impact, CECL's effect on credit losses, and capital strengthening Q3 2020 vs Q3 2019 Performance Metrics | Metric | Q3 2020 ($) | Q3 2019 ($) | | :--- | :--- | :--- | | Net Income to Common Shareholders | $58.3 million | $53.2 million | | Diluted EPS | $0.74 | $0.65 | | Net Interest Margin (FTE) | 3.14% | 3.64% | | Pre-tax Pre-provision Operating Earnings | $78.6 million | $76.6 million | - The Allowance for Credit Losses (ACL) increased from **$43.2 million** at year-end 2019 to **$186.1 million** at September 30, 2020. This was driven by the adoption of ASC 326 (CECL) and a worsening economic forecast related to COVID-19[248](index=248&type=chunk)[344](index=344&type=chunk) - As of September 30, 2020, approximately **$769.6 million** in loans remained under COVID-19 related modifications. By October 16, 2020, this balance had declined by **32%** to approximately **$522.6 million**[261](index=261&type=chunk) - The company completed the consolidation of **14** branches in September 2020 as part of an expense reduction plan, incurring **$2.6 million** in related expenses during Q3 2020[250](index=250&type=chunk) - On June 9, 2020, the company issued **$166.4 million** in net proceeds from Series A preferred stock to be used for general corporate purposes, strengthening its capital position[249](index=249&type=chunk)[354](index=354&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=142&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with net interest income showing less asset sensitivity than prior year Net Interest Income Sensitivity Analysis (as of Sep 30) | Rate Shock | 2020 % Change | 2019 % Change | | :--- | :--- | :--- | | +300 bps | +11.39% | +13.16% | | +200 bps | +8.26% | +8.71% | | +100 bps | +4.37% | +4.48% | | -100 bps | -0.97% | -5.39% | Economic Value of Equity Sensitivity Analysis (as of Sep 30) | Rate Shock | 2020 % Change | 2019 % Change | | :--- | :--- | :--- | | +300 bps | -1.30% | -4.13% | | +200 bps | +0.49% | -2.44% | | +100 bps | +1.39% | -0.97% | | -100 bps | -5.24% | -3.43% | - Compared to September 30, 2019, the company was less asset sensitive from a net interest income perspective as of September 30, 2020, due to changes in market characteristics of loan and deposit products and other balance sheet strategies[396](index=396&type=chunk) [Item 4. Controls and Procedures](index=145&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2020, with no material internal control changes - The CEO and CFO concluded that as of September 30, 2020, the company's disclosure controls and procedures were effective at the reasonable assurance level[400](index=400&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2020, that have materially affected or are reasonably likely to materially affect internal controls[402](index=402&type=chunk) Part II [Item 1. Legal Proceedings](index=146&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with management expecting no material adverse effect on financials or operations - Management does not expect the aggregate outcome of various legal proceedings to have a material adverse effect on the company's business, financial condition, or results of operations[404](index=404&type=chunk) [Item 1A. Risk Factors](index=146&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from prior 2019 Form 10-K and Q2 2020 Form 10-Q disclosures - No material changes to risk factors were reported during the quarter ended September 30, 2020, from those previously disclosed in the 2019 Form 10-K and Q2 2020 Form 10-Q[405](index=405&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=146&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company had no unregistered equity sales, and its share repurchase program remains suspended since March 20, 2020 - The company's share repurchase program, authorized through June 30, 2021, was suspended on March 20, 2020, with approximately **$20 million** remaining in authorization[407](index=407&type=chunk) Issuer Purchases of Securities (Q3 2020) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jul-20 | 294 | $22.02 | - | | Aug-20 | 450 | $25.04 | - | | Sep-20 | 281 | $22.03 | - | | **Total** | **1,025** | **$23.35** | **-** | [Item 6. Exhibits](index=148&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report, including various agreements and certifications

Atlantic Union Bankshares Corp. (NYSE:AUB) Q3 2020 Earnings Conference Call October 22, 2020 9:00 AM ET Company Participants William Cimino - Senior Vice President, Investor Relations John Asbury - President, Chief Executive Officer & Director Robert Gorman - Executive Vice President & Chief Financial Officer Douglas Woolley - Chief Credit Officer & Senior Vice President Dave Ring - Executive Vice President & Commercial Banking Group Executive Conference Call Participants Eugene Koysman - Barclays Casey Whi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 000-20293 ATLANTIC UNION BANKSHARES CORPORATION (Exact name of registrant as specified in its charter) Virginia 54-1598552 (State or other jurisdiction of (I.R ...

Atlantic Union Bankshares Corp (NYSE:AUB) Q2 2020 Earnings Conference Call July 23, 2020 9:00 AM ET Company Participants William Cimino - SVP, IR John Asbury - President, CEO & Director Robert Gorman - EVP & CFO Douglas Woolley - Chief Credit Officer & SVP Maria Tedesco - President Conference Call Participants Eugene Koysman - Barclays Bank Catherine Mealor - KBW Broderick Preston - Stephens Inc. Laurie Hunsicker - Compass Point Research & Trading William Wallace - Raymond James & Associates Operator Ladies ...

[Glossary of Acronyms and Defined Terms](index=3&type=section&id=Glossary%20of%20Acronyms%20and%20Defined%20Terms) This section provides definitions for acronyms and terms used throughout the report [PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the Company's unaudited consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, and cash flows, with detailed notes and the independent auditor's review report [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position at March 31, 2020, and December 31, 2019 | Metric | March 31, 2020 (Unaudited) | December 31, 2019 (Audited) | Change (vs. Dec 31, 2019) | | :---------------------------------- | :------------------------- | :-------------------------- | :------------------------ | | Total Assets | $17.85 billion | $17.56 billion | +$284.39 million | | Total Liabilities | $15.42 billion | $15.05 billion | +$372.04 million | | Total Loans Held for Investment, Net | $12.63 billion | $12.57 billion | +$59.16 million | | Allowance for Loan and Lease Losses | $141.04 million | $42.29 million | +$98.75 million | | Total Deposits | $13.55 billion | $13.30 billion | +$248.05 million | | Total Stockholders' Equity | $2.43 billion | $2.51 billion | -$87.65 million | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) This section details the Company's financial performance for the three months ended March 31, 2020 and 2019 | Metric | Three Months Ended March 31, 2020 (Unaudited) | Three Months Ended March 31, 2019 (Unaudited) | Change (YoY) | | :---------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------- | | Net Interest Income | $135.01 million | $127.55 million | +$7.46 million | | Provision for Credit Losses | $60.20 million | $3.79 million | +$56.40 million | | Total Noninterest Income | $28.91 million | $24.94 million | +$3.97 million | | Total Noninterest Expenses | $95.65 million | $106.73 million | -$11.08 million | | Net Income | $7.09 million | $35.63 million | -$28.54 million | | Basic Earnings Per Common Share | $0.09 | $0.47 | -$0.38 | | Diluted Earnings Per Common Share | $0.09 | $0.47 | -$0.38 | | Dividends Declared Per Common Share | $0.25 | $0.23 | +$0.02 | [Consolidated Statements of Comprehensive Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the Company's comprehensive income, including net income and other comprehensive income, for the periods reported | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net Income | $7.09 million | $35.63 million | | Other Comprehensive Income (Loss) | $12.75 million | $18.67 million | | Comprehensive Income | $19.84 million | $54.30 million | [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section outlines the changes in stockholders' equity, reflecting net income, dividends, and other comprehensive income, for the periods presented | Metric | Balance - December 31, 2019 | Balance - March 31, 2020 | Change | | :---------------------------------- | :-------------------------- | :----------------------- | :------------------- | | Total Stockholders' Equity | $2.51 billion | $2.43 billion | -$87.65 million | | Net Income | N/A | $7.09 million | N/A | | Other Comprehensive Income (net of taxes) | N/A | $12.75 million | N/A | | Dividends on Common Stock | N/A | -$19.83 million | N/A | | Stock Purchased under Repurchase Plan | N/A | -$49.88 million | N/A | | Impact of adoption of ASC 326 | N/A | -$39.05 million | N/A | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for the periods ended March 31, 2020 and 2019 | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Provided by Operating Activities | $48.36 million | $13.09 million | | Net Cash Used in Investing Activities | -$157.12 million | $33.07 million | | Net Cash Provided by Financing Activities | $177.70 million | -$23.77 million | | Increase in Cash and Cash Equivalents | $68.93 million | $22.39 million | | Cash and Cash Equivalents at End of Period | $504.96 million | $283.59 million | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [1. ACCOUNTING POLICIES](index=13&type=section&id=1.%20ACCOUNTING%20POLICIES) This section describes the significant accounting policies adopted by the Company, including the impact of new accounting standards - The Company adopted ASC 326 (CECL) on January 1, 2020, resulting in a **$39.1 million** net decrease to retained earnings and an initial increase of **$47.5 million** to the ALLL and **$4.2 million** to the RUC[26](index=26&type=chunk)[30](index=30&type=chunk) - The ALLL is estimated using a PD/LGD method for most loans, with vintage and loss rate methods for auto and third-party consumer portfolios, considering a two-year forecast period and reverting to historical loss rates[32](index=32&type=chunk) - An interim goodwill impairment review as of March 31, 2020, concluded no impairment existed, consistent with the annual test on April 30, 2019[46](index=46&type=chunk) [2. ACQUISITIONS](index=19&type=section&id=2.%20ACQUISITIONS) This section details the Company's acquisition activities, including the Access National Corporation acquisition and related costs - On February 1, 2019, the Company acquired Access National Corporation, issuing approximately **$500.0 million** in common stock and **$12 thousand** cash; the fair value measurement period closed on February 1, 2020, with no adjustments[48](index=48&type=chunk)[49](index=49&type=chunk) - Merger-related costs for the Access acquisition were **$0** for Q1 2020, a significant decrease from **$17.8 million** in Q1 2019[49](index=49&type=chunk) [3. SECURITIES](index=20&type=section&id=3.%20SECURITIES) This section provides information on the Company's investment securities portfolio, including available-for-sale and held-to-maturity securities - Effective January 1, 2020, ASC 326 changed accounting for AFS debt securities (credit losses presented as an allowance) and requires expected credit loss measurement for HTM debt securities under CECL[51](index=51&type=chunk) - As of March 31, 2020, AFS securities had total unrealized losses of **$8.97 million**, primarily due to market volatility, with no allowance for credit losses recorded as the Company does not intend to sell and does not believe credit impairment exists[54](index=54&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - The HTM portfolio primarily consists of highly-rated municipal securities, with an immaterial estimated credit loss and no additional reserve needed at March 31, 2020[65](index=65&type=chunk)[69](index=69&type=chunk) - Gross realized gains on securities sales increased to **$2.16 million** for Q1 2020 from **$1.21 million** in Q1 2019, while proceeds from sales decreased to **$120.7 million** from **$208.2 million**[76](index=76&type=chunk) [4. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES](index=29&type=section&id=4.%20LOANS%20AND%20ALLOWANCE%20FOR%20LOAN%20AND%20LEASE%20LOSSES) This section details the composition of the loan portfolio and the allowance for loan and lease losses, including the impact of CECL adoption | Loan Type | Amount (in millions) | Percentage of Total | | :---------------------------------- | :------------------- | :------------------ | | Commercial Real Estate - Non-Owner Occupied | $3,328.01 million | 26.1% | | Commercial & Industrial | $2,177.93 million | 17.1% | | Construction and Land Development | $1,318.25 million | 10.3% | | Residential 1-4 Family - Consumer | $854.55 million | 6.7% | | Residential 1-4 Family - Commercial | $721.80 million | 5.7% | | Multifamily Real Estate | $679.39 million | 5.3% | | Residential 1-4 Family - Revolving | $652.14 million | 5.1% | | Auto | $358.04 million | 2.8% | | Consumer | $352.57 million | 2.8% | | Other Commercial | $274.26 million | 2.0% | | **Total Loans Held for Investment, Net** | **$12.77 billion** | **100.0%** | | Metric | Commercial (in millions) | Consumer (in millions) | Total (in millions) | | :---------------------------------- | :----------------------- | :--------------------- | :------------------ | | Balance, beginning of year | $30.94 million | $11.35 million | $42.29 million | | Impact of ASC 326 adoption | $6.18 million | $41.30 million | $47.48 million | | Loans charged-off | -$2.97 million | -$4.18 million | -$7.15 million | | Recoveries credited to allowance | $1.15 million | $1.01 million | $2.16 million | | Provision charged to operations | $42.53 million | $13.72 million | $56.26 million | | **Balance, end of period** | **$77.84 million** | **$63.20 million** | **$141.04 million** | - As of March 31, 2020, Troubled Debt Restructurings (TDRs) totaled **$20.4 million**, with **$14.9 million** performing and **$5.5 million** nonperforming. The CARES Act allows for suspension of TDR classification for COVID-19 related loan modifications, of which the Company made approximately **$75 million** in Q1 2020[83](index=83&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) [5. INTANGIBLE ASSETS](index=45&type=section&id=5.%20INTANGIBLE%20ASSETS) This section outlines the Company's intangible assets and their associated amortization expenses - Amortization expense for intangibles was **$4.4 million** for Q1 2020, up from **$4.2 million** in Q1 2019[121](index=121&type=chunk) | Period | Estimated Amortization Expense (in millions) | | :---------------------------------- | :------------------------------------------- | | For the remaining nine months of 2020 | $12.11 million | | 2021 | $13.87 million | | 2022 | $11.49 million | | 2023 | $9.69 million | | 2024 | $7.82 million | | Thereafter | $14.32 million | | **Total estimated amortization expense** | **$69.30 million** | [6. LEASES](index=46&type=section&id=6.%20LEASES) This section provides details on the Company's operating lease liabilities and related expenses - As of March 31, 2020, total operating lease liabilities were **$64.2 million**, with a weighted-average remaining lease term of **7.20 years** and a weighted-average discount rate of **2.56%**[125](index=125&type=chunk)[128](index=128&type=chunk) - Total operating lease expenses for Q1 2020 were **$2.9 million**, a decrease from **$3.2 million** in Q1 2019[126](index=126&type=chunk) [7. BORROWINGS](index=48&type=section&id=7.%20BORROWINGS) This section details the Company's short-term and long-term borrowing activities and available credit lines | Type | March 31, 2020 (in millions) | | :---------------------------------- | :--------------------------- | | Securities sold under agreements to repurchase | $56.78 million | | Federal Funds Purchased | $25.00 million | | FHLB advances | $355.00 million | | **Total Short-term Borrowings** | **$436.78 million** | - As of March 31, 2020, total long-term borrowings were **$1.08 billion**, comprising trust preferred capital notes (**$155.2 million**), subordinated notes (**$158.5 million**), and FHLB advances (**$780.0 million**)[143](index=143&type=chunk) - The Bank maintained **$787.0 million** in federal funds lines and a **$5.3 billion** collateral-dependent line of credit with the FHLB as of March 31, 2020[130](index=130&type=chunk) [8. COMMITMENTS AND CONTINGENCIES](index=51&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the Company's off-balance sheet commitments, contingent liabilities, and pledged assets | Type | March 31, 2020 (in millions) | | :---------------------------------- | :------------------- | | Commitments to extend credit | $4.61 billion | | Standby letters of credit | $165.37 million | | **Total Commitments with Off-Balance Sheet Risk** | **$4.77 billion** | - Reserves for off-balance sheet credit risk and indemnification increased to **$10.7 million** at March 31, 2020, from **$2.6 million** at December 31, 2019[146](index=146&type=chunk) - Total pledged assets amounted to **$5.73 billion** at March 31, 2020, primarily consisting of loans (**$4.43 billion**) and AFS securities (**$734.5 million**), used to secure public deposits, repurchase agreements, FHLB advances, and derivatives[151](index=151&type=chunk) [9. DERIVATIVES](index=53&type=section&id=9.%20DERIVATIVES) This section describes the Company's use of derivative instruments for risk management and customer accommodation - The Company uses derivatives to manage interest rate risk and assist customers, classifying them as hedging instruments (cash flow or fair value hedges) or free-standing derivatives (customer accommodation loan swaps)[154](index=154&type=chunk) - The Company terminated one interest rate swap designated as a cash flow hedge in Q1 2020, resulting in a **$1.8 million** loss reclassified into earnings. No cash flow hedges were outstanding at March 31, 2020[160](index=160&type=chunk) - As of March 31, 2020, the aggregate notional amount of hedged items for long-term fixed-rate loans was **$82.0 million** (unrealized loss of **$6.8 million**) and for AFS securities was **$50 million** (unrealized loss of **$8.0 million**)[162](index=162&type=chunk)[163](index=163&type=chunk) [10. STOCKHOLDERS' EQUITY](index=57&type=section&id=10.%20STOCKHOLDERS%27%20EQUITY) This section provides details on the components of stockholders' equity, including AOCI and preferred stock authorization - Accumulated Other Comprehensive Income (AOCI) increased from **$35.58 million** at December 31, 2019, to **$48.33 million** at March 31, 2020, primarily due to unrealized gains on AFS securities[171](index=171&type=chunk) - The Company has the authority to issue up to **500 thousand shares** of serial preferred stock, but none were issued or outstanding as of March 31, 2020[170](index=170&type=chunk) [11. FAIR VALUE MEASUREMENTS](index=58&type=section&id=11.%20FAIR%20VALUE%20MEASUREMENTS) This section explains the Company's fair value measurement hierarchy and the valuation of assets and liabilities - The Company uses a three-level hierarchy (Level 1: quoted prices in active markets, Level 2: observable inputs, Level 3: unobservable inputs) for fair value measurements[174](index=174&type=chunk)[175](index=175&type=chunk) | Asset Type | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | Total (in millions) | | :---------------------------------- | :---------------------- | :---------------------- | :---------------------- | :------------------ | | AFS securities | $0 | $1.97 billion | $0 | $1.97 billion | | Loans held for sale | $0 | $76.69 million | $0 | $76.69 million | | Derivatives (Assets) | $0 | $174.71 million | $0 | $174.71 million | - Assets measured at fair value on a nonrecurring basis (e.g., foreclosed properties, collateral-dependent loans) amounted to **$6.6 million** for Q1 2020, with valuations often based on independent appraisals (Level 3)[184](index=184&type=chunk) [12. REVENUE](index=65&type=section&id=12.%20REVENUE) This section details the components of the Company's noninterest income and their recognition policies | Source | Amount (in millions) | | :---------------------------------- | :------------------- | | Deposit Service Charges | $7.58 million | | Fiduciary and Asset Management Fees | $5.98 million | | Loan-related Interest Rate Swap Fees | $3.95 million | | Mortgage Banking Income | $2.02 million | | Gains (losses) on Securities Transactions | $1.94 million | | Interchange Fees | $1.63 million | | Other Service Charges, Commissions, and Fees | $1.62 million | | Bank Owned Life Insurance Income | $2.05 million | | Other Operating Income | $2.14 million | | **Total Noninterest Income** | **$28.91 million** | - The majority of noninterest income comes from short-term contracts, with performance obligations typically satisfied immediately (interchange fees, deposit accounts) or monthly/quarterly (fiduciary and asset management fees)[199](index=199&type=chunk) [13. EARNINGS PER SHARE](index=66&type=section&id=13.%20EARNINGS%20PER%20SHARE) This section presents the basic and diluted earnings per share calculations for the reported periods | Metric | Q1 2020 | Q1 2019 | | :---------------------------------- | :------ | :------ | | Basic EPS | $0.09 | $0.47 | | Diluted EPS | $0.09 | $0.47 | - For Q1 2020, basic weighted average shares outstanding were **79,290,352**, and diluted weighted average shares outstanding were **79,317,382**[203](index=203&type=chunk) [14. SEGMENT REPORTING & DISCONTINUED OPERATIONS](index=67&type=section&id=14.%20SEGMENT%20REPORTING%20%26%20DISCONTINUED%20OPERATIONS) This section identifies the Company's reportable segments and details discontinued operations - The Company's mortgage segment (UMG) was wound down effective June 1, 2018, and its operations remain discontinued, with assets and liabilities being immaterial as of March 31, 2020[205](index=205&type=chunk)[206](index=206&type=chunk) - The community bank segment is the only remaining reportable segment[205](index=205&type=chunk) [15. SUBSEQUENT EVENTS](index=68&type=section&id=15.%20SUBSEQUENT%20EVENTS) This section discloses significant events occurring after the balance sheet date, including COVID-19 related initiatives - The Bank received SBA approval for over **10,000** Paycheck Protection Program (PPP) loans totaling approximately **$1.8 billion**[210](index=210&type=chunk) - The Company approved approximately **$1.9 billion** in loan modifications for borrowers affected by COVID-19, leveraging CARES Act provisions to suspend TDR classification[211](index=211&type=chunk) [Review Report of Independent Registered Public Accounting Firm](index=69&type=section&id=Review%20Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) This section contains the independent auditor's report on the review of the Company's interim financial statements - Ernst & Young LLP conducted a review of the interim financial statements for Q1 2020 and found no material modifications needed for conformity with U.S. GAAP[213](index=213&type=chunk) - The report highlights the Company's change in accounting for credit losses effective January 1, 2020, due to the adoption of ASC 326[215](index=215&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition and results of operations, highlighting the impact of acquisitions, accounting changes, and the COVID-19 pandemic [Executive Overview](index=75&type=section&id=Executive%20Overview) This section provides a high-level summary of the Company's financial performance and key strategic initiatives | Metric | Q1 2020 | Q1 2019 | Change | | :---------------------------------- | :------ | :------ | :----- | | Net Income | $7.1 million | $35.6 million | -$28.5 million | | EPS | $0.09 | $0.47 | -$0.38 | | Metric | March 31, 2020 | December 31, 2019 | Annualized Growth | | :---------------------------------- | :------------- | :---------------- | :---------------- | | Loans held for investment | $12.8 billion | $12.6 billion | 5.0% | | Total deposits | $13.6 billion | $13.3 billion | 7.5% | - The Allowance for Credit Losses (ACL) increased by **$51.7 million** upon ASC 326 adoption and by an additional **$55.1 million** due to COVID-19's economic impact, reaching **$150.0 million** by March 31, 2020[228](index=228&type=chunk) - The Bank is participating in the SBA PPP, approving over **10,000** loans totaling approximately **$1.8 billion**, and anticipates participating in the Main Street Lending Program[234](index=234&type=chunk) [Net Interest Income](index=78&type=section&id=Net%20Interest%20Income) This section analyzes the Company's net interest income and net interest margin, including factors influencing changes | Metric | Q1 2020 | Q1 2019 | Change | | :---------------------------------- | :------ | :------ | :----- | | Net Interest Income (FTE) | $137.8 million | $130.3 million | +$7.5 million | | Net Interest Margin (FTE) | 3.56% | 3.80% | -24 bps | - The increase in net interest income was driven by higher average loan balances and increased purchased loan discount accretion (**$9.4 million** in Q1 2020 vs. **$5.8 million** in Q1 2019). The decline in net interest margin was due to decreased yield on interest-earning assets, partially offset by lower cost of funds, influenced by Federal Funds rate cuts[237](index=237&type=chunk)[238](index=238&type=chunk)[245](index=245&type=chunk) - The FOMC lowered Federal Funds target rates by **150 basis points** in March 2020, anticipating continued downward pressure on net interest margin[238](index=238&type=chunk) [Noninterest Income](index=82&type=section&id=Noninterest%20Income) This section details the components and drivers of the Company's noninterest income for the reported periods | Metric | Q1 2020 | Q1 2019 | Change | | :---------------------------------- | :------ | :------ | :----- | | Total Noninterest Income | $28.9 million | $24.9 million | +$4.0 million (15.9%) | - The increase was partially due to the full-quarter impact of the Access acquisition. Significant increases were seen in gains on securities transactions (**+$1.8 million**), loan-related interest rate swap income (**+$2.5 million**), and insurance-related revenue (**+$0.8 million**). This was partially offset by a **$3.4 million** decline in interchange income due to the Durbin Amendment[247](index=247&type=chunk) [Noninterest Expense](index=83&type=section&id=Noninterest%20Expense) This section analyzes the Company's noninterest expenses, including operating costs and specific expense categories | Metric | Q1 2020 | Q1 2019 | Change | | :---------------------------------- | :------ | :------ | :----- | | Total Noninterest Expense | $95.6 million | $106.7 million | -$11.1 million (-10.4%) | - Excluding merger-related costs, amortization of intangible assets, and rebranding-related costs, operating noninterest expense increased by **$7.3 million** (**8.6%**) in Q1 2020, partly due to the Access acquisition[250](index=250&type=chunk) - Salaries and benefits increased by **$2.1 million** due to merit adjustments, group insurance costs, and the Access acquisition impact. Other expenses included **$1.0 million** for community development and **$380 thousand** for COVID-19 response[250](index=250&type=chunk) [Income Taxes](index=83&type=section&id=Income%20Taxes) This section discusses the Company's income tax expense and effective tax rate for the reported periods | Metric | Q1 2020 | Q1 2019 | | :---------------------------------- | :------ | :------ | | Effective Tax Rate | 12.2% | 14.9% | - The change in the effective tax rate is primarily due to the proportion of tax-exempt income to pre-tax income[253](index=253&type=chunk) [Discussion and Analysis of Financial Condition](index=85&type=section&id=Discussion%20and%20Analysis%20of%20Financial%20Condition) This section provides a detailed analysis of the Company's financial condition, including assets, liabilities, and equity [Overview](index=85&type=section&id=Overview) This section summarizes key changes in the Company's total assets, loans, deposits, and stockholders' equity - Total assets increased by **$284.4 million** (**6.5%** annualized) to **$17.8 billion** at March 31, 2020, primarily due to loan growth[255](index=255&type=chunk) - Loans held for investment were **$12.8 billion** at March 31, 2020, up **$157.9 million** (**5.0%** annualized) from December 31, 2019[255](index=255&type=chunk) - Total deposits increased by **$248.1 million** (**7.5%** annualized) to **$13.6 billion** at March 31, 2020[256](index=256&type=chunk) - Stockholders' equity decreased by **$87.7 million** to **$2.4 billion** at March 31, 2020, due to stock repurchases and ASC 326 adoption[257](index=257&type=chunk) [Securities](index=86&type=section&id=Securities) This section details the Company's investment securities portfolio, including AFS and HTM securities and their characteristics - Total investments were **$2.7 billion** at March 31, 2020, representing **14.9%** of total assets, with a focus on mortgage-backed securities and tax-benefited municipal securities[259](index=259&type=chunk)[261](index=261&type=chunk) - AFS securities had a fair value of **$1.97 billion** at March 31, 2020, with total amortized cost of **$1.90 billion** and gross unrealized gains of **$81.6 million** and losses of **$9.0 million**[261](index=261&type=chunk)[264](index=264&type=chunk) - HTM securities had a carrying value of **$552.2 million** at March 31, 2020, with an estimated fair value of **$604.8 million** and gross unrealized gains of **$52.8 million** and losses of **$0.2 million**[261](index=261&type=chunk)[265](index=265&type=chunk) - The municipal bond portfolio is diversified, with approximately **65%** in general obligation issues and no single state concentration above **10%** (except Texas at **19%**), and substantially all holdings are considered investment grade[266](index=266&type=chunk) [Liquidity](index=89&type=section&id=Liquidity) This section assesses the Company's liquidity position, including liquid assets and available funding sources - Liquid assets totaled **$5.8 billion** (**32.4%** of total assets) at March 31, 2020, with liquid earning assets at **$5.6 billion** (**35.4%** of total earning assets)[268](index=268&type=chunk) - Approximately **$4.8 billion** (**37.8%**) of total loans and **$378.4 million** (**14.3%**) of total securities are scheduled to mature within one year[268](index=268&type=chunk) - Additional liquidity sources include federal funds lines (**$787.0 million** available), FHLB line of credit (**$5.3 billion** available), Federal Reserve Discount Window, and brokered certificates of deposit[269](index=269&type=chunk) [Loan Portfolio](index=90&type=section&id=Loan%20Portfolio) This section provides an overview of the Company's loan portfolio composition and maturity distribution - Loans held for investment were **$12.8 billion** at March 31, 2020, an increase from **$12.6 billion** at December 31, 2019[271](index=271&type=chunk) - The largest loan categories at March 31, 2020, were commercial real estate - non-owner occupied (**26.1%**), Commercial & Industrial (**17.1%**), and Construction and Land Development (**10.3%**)[272](index=272&type=chunk) - As of March 31, 2020, **$2.1 billion** (**16.5%**) of total loans mature within one year, **$4.85 billion** (**38.0%**) in 1-5 years, and **$5.81 billion** (**45.5%**) in more than 5 years[273](index=273&type=chunk) [Asset Quality](index=92&type=section&id=Asset%20Quality) This section analyzes the Company's asset quality, including nonperforming assets, TDRs, and the allowance for credit losses - Nonperforming Assets (NPAs) totaled **$48.5 million** at March 31, 2020, an increase of **$15.5 million** from December 31, 2019, primarily due to the inclusion of **$14.4 million** in loans previously accounted for as PCI under CECL. NPAs as a percentage of total outstanding loans increased to **0.38%** from **0.26%**[280](index=280&type=chunk) - Troubled Debt Restructurings (TDRs) were **$20.4 million** at March 31, 2020, with **$14.9 million** performing and **$5.5 million** nonperforming. The Company made approximately **$75 million** in COVID-19 related loan modifications in Q1 2020, with **$1.9 billion** approved as of May 7, 2020, which are not automatically categorized as TDRs under the CARES Act[278](index=278&type=chunk)[280](index=280&type=chunk) - The Allowance for Credit Losses (ACL) increased by **$106.8 million** to **$150.0 million** at March 31, 2020, due to the CECL Day 1 impact (**$51.7 million**) and the CECL Day 2 impact from COVID-19's economic forecast (**$55.1 million**). The ALLL to total loan portfolio ratio was **1.10%** (vs. **0.34%** at Dec 31, 2019)[294](index=294&type=chunk) - Net charge-offs for Q1 2020 were **$5.0 million** (**0.16%** annualized), up from **$4.2 million** (**0.15%**) in Q1 2019, mainly from the third-party consumer loan portfolio[290](index=290&type=chunk) [Deposits](index=100&type=section&id=Deposits) This section details the Company's deposit base, including types of deposits and their composition - Total deposits were **$13.6 billion** at March 31, 2020, an increase of **$248.1 million** (**7.5%** annualized) from December 31, 2019[298](index=298&type=chunk) | Deposit Type | Amount (in millions) | % of Total Deposits | | :---------------------------------- | :------------------- | :------------------ | | Non-interest bearing | $3.07 billion | 22.6% | | NOW accounts | $3.18 billion | 23.5% | | Money market accounts | $3.82 billion | 28.1% | | Savings accounts | $745.40 million | 5.5% | | Time deposits of $100,000 and over | $1.61 billion | 11.9% | | Other time deposits | $1.13 billion | 8.4% | | **Total Deposits** | **$13.55 billion** | **100.0%** | - Purchased certificates of deposit outstanding amounted to **$153.2 million** at March 31, 2020[300](index=300&type=chunk) [Capital Resources](index=100&type=section&id=Capital%20Resources) This section discusses the Company's capital ratios, share repurchase program, and regulatory capital adjustments | Ratio | Value | | :---------------------------------- | :------ | | Common Equity Tier 1 Capital Ratio | 9.74% | | Tier 1 Capital Ratio | 9.74% | | Total Capital Ratio | 12.36% | | Leverage Ratio | 8.44% | - The **$150.0 million** share repurchase program, authorized through June 30, 2021, was suspended on March 20, 2020, with approximately **$20 million** remaining in authorization[304](index=304&type=chunk) - The Company elected to phase in the impact of CECL adoption on regulatory capital over two years, with a three-year transition period to phase out the cumulative benefit[306](index=306&type=chunk) [Supervision and Regulation](index=102&type=section&id=Supervision%20and%20Regulation) This section outlines the regulatory environment and its impact on the Company, including responses to the COVID-19 pandemic - The CARES Act provides **$2.2 trillion** in economic relief, including the Paycheck Protection Program (PPP) for small businesses, and allows for suspension of TDR classification for COVID-19 related loan modifications[312](index=312&type=chunk)[313](index=313&type=chunk) - The FOMC lowered the federal funds target rate to **0-0.25%** and expanded/established programs (e.g., Main Street Lending Program, Money Market Mutual Fund Liquidity Facility) to support credit flow during COVID-19[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - Banking organizations can delay the estimated impact of CECL adoption on regulatory capital for up to **two years**, with a **three-year** transition period; the Company has elected this option[317](index=317&type=chunk)[319](index=319&type=chunk) - FinCEN provided targeted relief from certain BSA reporting requirements, including for PPP loans to existing customers and acknowledging potential delays[319](index=319&type=chunk) [Non-GAAP Financial Measures](index=107&type=section&id=Non-GAAP%20Financial%20Measures) This section presents supplemental non-GAAP financial measures used by management to evaluate performance - The Company provides supplemental performance measures on a tax-equivalent (FTE), tangible, operating, and pre-tax pre-provision basis to offer additional insight beyond GAAP[321](index=321&type=chunk) | Metric | Q1 2020 (in millions) | | :---------------------------------- | :-------------------- | | GAAP Net Interest Income | $135.01 million | | FTE adjustment | $2.76 million | | **FTE Net Interest Income (non-GAAP)** | **$137.77 million** | | Metric | March 31, 2020 (in millions) | | :---------------------------------- | :--------------------------- | | GAAP Equity | $2.43 billion | | Less: Ending goodwill | $935.56 million | | Less: Ending amortizable intangibles | $69.30 million | | **Ending Tangible Common Equity (non-GAAP)** | **$1.42 billion** | | Metric | Q1 2020 (in millions) | | :---------------------------------- | :-------------------- | | GAAP Net Income | $7.09 million | | Plus: Provision for credit losses | $60.20 million | | Plus: Income tax expenses | $0.99 million | | Plus: Merger and rebranding-related costs | $0 | | **Pre-tax Pre-provision Earnings (non-GAAP)** | **$68.27 million** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=113&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's market risk, primarily interest rate risk, and its management through earnings and economic value simulation models [Earnings Simulation Analysis](index=113&type=section&id=Earnings%20Simulation%20Analysis) This section analyzes the sensitivity of net interest income to various interest rate changes using earnings simulation models - The Company's ALCO reviews and limits exposure to interest rate risk using static gap analysis, earnings simulation, and economic value simulation models[335](index=335&type=chunk)[336](index=336&type=chunk) | Change in Yield Curve | % Change in Net Interest Income | | :---------------------------------- | :------------------------------ | | +300 basis points | 11.05% | | +200 basis points | 7.85% | | +100 basis points | 4.19% | | -100 basis points | (2.54)% | | -200 basis points | (2.68)% | - The Company was more asset sensitive at March 31, 2020, compared to March 31, 2019, indicating expected net interest income increases in a rising rate environment and declines in a decreasing rate environment[343](index=343&type=chunk) [Economic Value Simulation](index=114&type=section&id=Economic%20Value%20Simulation) This section assesses the sensitivity of the Company's economic value of equity to different interest rate scenarios | Change in Yield Curve | % Change in Economic Value of Equity | | :---------------------------------- | :----------------------------------- | | +300 basis points | (2.88)% | | +200 basis points | (0.86)% | | +100 basis points | 0.75% | | -100 basis points | (7.76)% | | -200 basis points | (8.42)% | - As of March 31, 2020, the Company's economic value of equity is less sensitive to rising interest rates compared to March 31, 2019, due to balance sheet composition and market characteristics[345](index=345&type=chunk) [Item 4. Controls and Procedures](index=116&type=section&id=Item%204.%20Controls%20and%20Procedures) This section evaluates the effectiveness of disclosure controls and procedures and reports on changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=116&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents management's conclusion on the effectiveness of the Company's disclosure controls and procedures - As of March 31, 2020, the Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at a reasonable assurance level[347](index=347&type=chunk) [Changes in Internal Control Over Financial Reporting](index=116&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes to the Company's internal control over financial reporting during the quarter - There have been no changes that materially affected, or are reasonably likely to materially affect, the internal control over financial reporting during Q1 2020[349](index=349&type=chunk) [PART II - OTHER INFORMATION](index=117&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, exhibits, and signatures [Item 1. Legal Proceedings](index=117&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses ongoing legal proceedings and management's assessment of their potential impact on the Company - Management, after consulting legal counsel, believes that the ultimate outcome of ongoing legal proceedings will not materially adversely affect the Company's business, financial condition, or results of operations[351](index=351&type=chunk) [Item 1A. Risk Factors](index=117&type=section&id=Item%201A.%20Risk%20Factors) This section updates key risk factors, emphasizing the significant adverse impacts of the COVID-19 pandemic on the Company's operations and financial health - The ongoing COVID-19 pandemic has already adversely impacted the Company's business and results, causing disruptions, increasing costs, reducing customer traffic, and leading to increased loan modification requests[354](index=354&type=chunk)[355](index=355&type=chunk) - The pandemic may lead to increased delinquencies, charge-offs, foreclosures, and credit losses, potentially affecting the adequacy of the ACL and leading to higher provision for credit losses[355](index=355&type=chunk) - The Federal Reserve's lowering of the federal funds rate to near zero could prolong a period of very low interest rates, reducing net interest income and adversely impacting cash flows[356](index=356&type=chunk) - Operational and market volatility risks include impacts on key personnel, third-party service providers, increased fraud/cybercrime, and continued volatility in the Company's stock price[358](index=358&type=chunk)[359](index=359&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=120&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the Company's common stock repurchase program, including its suspension and remaining authorization - The Company suspended its **$150.0 million** share repurchase program on March 20, 2020, with approximately **$19.95 million** remaining in authorization[361](index=361&type=chunk)[362](index=362&type=chunk) - The Company repurchased **1,493,472 shares** under the program at an average price of **$33.37** per share during the three months ended March 31, 2020[362](index=362&type=chunk) [Item 6. Exhibits](index=121&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements, organizational documents, and certifications - The exhibit list includes the Agreement and Plan of Reorganization for Access National Corporation, Amended and Restated Articles of Incorporation and Bylaws, various compensation plans, and certifications (e.g., Section 302, 906 Sarbanes-Oxley Act)[365](index=365&type=chunk) [Signatures](index=123&type=section&id=Signatures) This section contains the official signatures of the Company's principal executive and financial officers certifying the report - The report was signed by John C. Asbury (President and CEO) and Robert M. Gorman (EVP and CFO) on May 8, 2020[367](index=367&type=chunk)

Atlantic Union Bankshares Corporation (NYSE:AUB) Q1 2020 Results Conference Call April 28, 2020 9:00 AM ET Company Participants Bill Cimino - VP, IR John Asbury - President & CEO Rob Gorman - EVP & CFO Maria Tedesco - President Shawn O'Brien - Executive Vice President & Consumer Banking Group Executive Kelly Dakin - Head of Digital Strategy and Customer Experience Douglas Woolley - EVP and Chief Credit Officer at Atlantic Union Bank Conference Call Participants Eugene Koysman - Barclays William Wallace - Ra ...