Atlantic Union Bankshares Reports First Quarter Financial Results

Atlantic Union Bankshares Corporation (the "Company" or "Atlantic Union") (NYSE:AUB) reported net income available to common shareholders of $46.9 million and basic and diluted earnings per common share of $0.53 and $0.52, respectively, for the first quarter of 2025 and adjusted operating earnings available to common shareholders⁽¹⁾ of $51.6 million and adjusted diluted operating earnings per common share⁽¹⁾ of $0.57 for the first quarter of 2025.

Merger with Sandy Spring Bancorp, Inc. ("Sandy Spring") and Full Physical Settlement of the Forward Sale Agreements

On April 1, 2025, the Company completed its merger with Sandy Spring. Under the terms of the merger agreement, at the effective time of the merger, each outstanding share of Sandy Spring common stock, other than shares of restricted Sandy Spring common stock and shares of Sandy Spring common stock held by the Company or Sandy Spring, was converted into the right to receive 0.900 shares of the Company's common stock, with cash to be paid in lieu of fractional shares. With the acquisition of Sandy Spring, the Company acquired 53 branches, strengthening the Company's presence in Virginia and Maryland and creating the largest regional banking franchise headquartered in the lower Mid-Atlantic.

Also on April 1, 2025, the Company physically settled in full the previously disclosed forward sale agreements between the Company and Morgan Stanley & Co. LLC, as forward purchaser, by delivering 11,338,028 shares of the Company's common stock to the forward purchaser. The Company received net proceeds from such sale of shares of the Company's common stock and full physical settlement of the forward sale agreements, before expenses, of approximately $385.0 million.

During the first quarter of 2025, the Company incurred merger-related costs of approximately $4.9 million related to the merger with Sandy Spring. Because the merger closed on April 1, 2025, the historical consolidated financial results of Sandy Spring are not included in the Company's financial results for the quarter ended March 31, 2025.

"It was an eventful first quarter for Atlantic Union," said John C. Asbury, president and chief executive officer of Atlantic Union. "We were pleased to close our acquisition of Sandy Spring on April 1st, a full quarter ahead of our original expectations due to our receipt of required regulatory approvals earlier than anticipated. The earlier close is expected to accelerate the achievement of our anticipated cost savings from the transaction.

It was also a good start to the year as we experienced net interest margin expansion and average loan and customer deposit balance growth for the quarter. Asset quality also remained solid with negligible net charge offs. Over the quarter, however, the economic outlook became more uncertain, financial markets became more volatile, and governmental policies changed abruptly. Consequently, we took proactive steps to fortify our loan loss reserves in recognition of the increased uncertainty surrounding the macroeconomic environment.

Atlantic Union is a story of transformation from a Virginia community bank to the largest regional bank headquartered in the lower Mid-Atlantic with operations throughout Virginia, Maryland and a growing presence in North Carolina. Operating under the mantra of soundness, profitability, and growth – in that order of priority – Atlantic Union remains committed to generating sustainable, profitable growth, and building long-term value for our shareholders."

NET INTEREST INCOME

For the first quarter of 2025, net interest income was $184.2 million, an increase of $916,000 from $183.2 million in the fourth quarter of 2024. Net interest income - fully taxable equivalent ("FTE")⁽¹⁾ was $187.9 million in the first quarter of 2025, an increase of $882,000 from $187.0 million in the fourth quarter of 2024. The increases from the prior quarter in both net interest income and net interest income (FTE)⁽¹⁾ are due primarily to the impact of lower deposit costs, driven by the decrease in the federal funds rate, reflecting the full quarter impact of the Federal Reserve lowering rates three times between September and December in 2024, resulting in the current federal funds target rate range of 4.25% to 4.5%. The increases were partially offset by a decrease in interest income on loans held for investment ("LHFI") due to lower loan yields, primarily driven by the impact of the interest rate cuts on our variable rate loans, as well as the lower day count in the first quarter.

For the first quarter of 2025, both the Company's net interest margin and the net interest margin (FTE)⁽¹⁾ increased 12 basis points to 3.38% and 3.45%, respectively, compared to the fourth quarter of 2024, due to lower cost of funds on interest bearing liabilities, partially offset by a decline in earning assets yields. Cost of funds decreased by 18 basis points to 2.23% for the first quarter of 2025, compared to the fourth quarter of 2024, reflecting lower borrowing and deposit costs. Earning asset yields for the first quarter of 2025 decreased 6 basis points to 5.68%, compared to the fourth quarter of 2024, primarily due to lower yields on loans, as a result of the decreases in the Federal Fund rates.

The Company's net interest margin (FTE)⁽¹⁾ includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $12.6 million for the quarters ended March 31, 2025 and December 31, 2024. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):

ASSET QUALITY

Overview

At March 31, 2025, nonperforming assets ("NPAs") as a percentage of total LHFI was 0.38%, an increase of 6 basis points from the prior quarter and included nonaccrual loans of $69.0 million. The increase in NPAs was primarily due to one new nonaccrual loan within the commercial and industrial portfolio of $9.4 million. Accruing past due loans as a percentage of total LHFI totaled 27 basis points at March 31, 2025, a decrease of 4 basis points from December 31, 2024, and a decrease of 5 basis points from March 31, 2024. Net charge-offs were 0.05% of total average LHFI (annualized) for the first quarter of 2025, an increase of 2 basis points compared to December 31, 2024, and a decrease of 8 basis points from March 31, 2024. The allowance for credit losses ("ACL") totaled $209.0 million at March 31, 2025, a $15.3 million increase from the prior quarter, primarily reflecting the impacts of the increased uncertainty in the economic outlook.

Nonperforming Assets

At March 31, 2025, NPAs totaled $69.4 million, compared to $58.4 million in the prior quarter. The following table shows a summary of NPA balances at the quarters ended (dollars in thousands):

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

Past Due Loans

At March 31, 2025, past due loans still accruing interest totaled $50.0 million or 0.27% of total LHFI, compared to $57.7 million or 0.31% of total LHFI at December 31, 2024, and $50.7 million or 0.32% of total LHFI at March 31, 2024. The decrease in past due loan levels at March 31, 2025 from December 31, 2024 was primarily within the commercial and industrial, commercial real estate non-owner occupied, and residential 1-4 family – consumer portfolios. Of the total past due loans still accruing interest, $6.8 million or 0.04% of total LHFI were past due 90 days or more at March 31, 2025, compared to $14.1 million or 0.08% of total LHFI at December 31, 2024, and $11.4 million or 0.07% of total LHFI at March 31, 2024.

Allowance for Credit Losses

At March 31, 2025, the ACL was $209.0 million and included an allowance for loan and lease losses ("ALLL") of $193.8 million and a reserve for unfunded commitments ("RUC") of $15.2 million. The ACL at March 31, 2025 increased $15.3 million from December 31, 2024, primarily reflecting the impacts of the increased uncertainty in the economic outlook. The RUC at March 31, 2025 increased $208,000 from December 31, 2024.

The ACL as a percentage of total LHFI was 1.13% at March 31, 2025, compared to 1.05% at December 31, 2024. The ALLL as a percentage of total LHFI was 1.05% at March 31, 2025, compared to 0.97% at December 31, 2024.

Net Charge-offs

Net charge-offs were $2.3 million or 0.05% of total average LHFI on an annualized basis for the first quarter of 2025, compared to $1.4 million or 0.03% (annualized) for the fourth quarter of 2024, and $4.9 million or 0.13% (annualized) for the first quarter of 2024.

Provision for Credit Losses

For the first quarter of 2025, the Company recorded a provision for credit losses of $17.6 million, compared to $17.5 million in the prior quarter, and $8.2 million in the first quarter of 2024.

NONINTEREST INCOME

Noninterest income decreased $6.0 million to $29.2 million for the first quarter of 2025 from $35.2 million in the prior quarter, primarily driven by a $2.7 million decrease in loan-related interest rate swap fees due to seasonally lower transaction volumes, and a $2.5 million decrease in other operating income primarily due to a decline in equity method investment income and lower gains on the sale of lease equipment.

NONINTEREST EXPENSE

Noninterest expense increased $4.5 million to $134.2 million for the first quarter of 2025 from $129.7 million in the prior quarter, primarily driven by a $4.1 million increase in salaries and benefits expense due primarily to seasonal increases of $4.7 million in payroll taxes and 401(k) contribution expenses in the first quarter, a $1.3 million increase in other expenses primarily driven by OREO-related gains recognized in the prior quarter, a $1.0 million increase in franchise and other taxes, a $805,000 increase in technology and data processing expense primarily driven by expense related to an upgrade to the consumer online banking system in the first quarter, and a $616,000 increase in occupancy expenses primarily driven by seasonal winter weather-related expenses. These increases were partially offset by a $2.1 million decrease in merger-related costs and a $666,000 decrease in professional services fees.

INCOME TAXES

The Company's effective tax rate for both quarters ended March 31, 2025 and December 31, 2024 was 19.0%.

BALANCE SHEET

At March 31, 2025, total assets were $24.6 billion, an increase of $47.3 million or approximately 0.8% (annualized) from December 31, 2024, and an increase of $3.3 billion or approximately 15.2% from March 31, 2024. Total assets were relatively consistent with the prior quarter, and increased from the prior year primarily due to the American National Bankshares Inc. ("American National") acquisition.

At March 31, 2025, LHFI totaled $18.4 billion, a decrease of $42.9 million or 0.9% (annualized) from December 31, 2024, and an increase of $2.6 billion or 16.3% from March 31, 2024. Quarterly average LHFI totaled $18.4 billion at March 31, 2025, an increase of $61.1 million or 1.3% (annualized) from the prior quarter, and an increase of $2.7 billion or 17.1% from March 31, 2024. LHFI decreased from the prior quarter primarily due to declines in the construction and land development and commercial and industrial loan portfolios, partially offset by increases in the multifamily real estate and non-owner occupied commercial real estate loan portfolios. The increase from the prior year was primarily due to the American National acquisition.

At March 31, 2025, total investments were $3.4 billion, an increase of $56.2 million or 6.8% (annualized) from December 31, 2024, and an increase of $263.8 million or 8.4% from March 31, 2024. The increase compared to the prior quarter was primarily due to purchases of mortgage-backed securities and an increase in market value of the Company's existing available-for-sale ("AFS") securities portfolio. The increase compared to the prior year was primarily due to the American National acquisition. AFS securities totaled $2.5 billion at March 31, 2025, $2.4 billion at December 31, 2024, and $2.2 billion at March 31, 2024. Total net unrealized losses on the AFS securities portfolio were $382.0 million at March 31, 2025, compared to $402.6 million at December 31, 2024, and $410.9 million at March 31, 2024. Held to maturity securities are carried at cost and totaled $821.1 million at March 31, 2025, $803.9 million at December 31, 2024, and $828.9 million at March 31, 2024 and had net unrealized losses of $48.6 million at March 31, 2025, $44.5 million at December 31, 2024, and $37.6 million at March 31, 2024.

At March 31, 2025, total deposits were $20.5 billion, an increase of $105.3 million or 2.1% (annualized) from the prior quarter. Average deposits at March 31, 2025 decreased $291.4 million or 5.7% (annualized) from the prior quarter. Total deposits at March 31, 2025 increased $3.2 billion or 18.7% from March 31, 2024 and average deposits at March 31, 2025 increased $3.3 billion or 19.4% from March 31, 2024. The increase in deposit balances from the prior quarter was primarily due to an increase in demand deposits of $194.1 million, partially offset by a decrease in brokered deposits. The increase from the prior year was primarily due to the American National acquisition.

At March 31, 2025, total borrowings were $475.7 million, a decrease of $58.9 million from December 31, 2024, and a decrease of $582.0 million from March 31, 2024. At March 31, 2025 average borrowings were $525.9 million, a decrease of $17.2 million from December 31, 2024, and a decrease of $486.9 million from March 31, 2024. The decreases in average borrowings from the prior quarter and the prior year were primarily due to repayment of short-term Federal Home Loan Bank advances using funds from customer deposit growth.

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

During the first quarter of 2025, 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 2024 and the first quarter of 2024. During the first quarter of 2025, the Company also declared and paid cash dividends of $0.34 per common share, which is the same as the fourth quarter of 2024 and a $0.02, or an approximately 6.0%, increase from the dividend in the first quarter of 2024.

ABOUT ATLANTIC UNION BANKSHARES CORPORATION

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

FIRST QUARTER 2025 EARNINGS RELEASE CONFERENCE CALL

The Company will hold a conference call and webcast for investors at 9:00 a.m. Eastern Time on Thursday, April 24, 2025, during which management will review our financial results for the first quarter 2025 and provide an update on our recent activities.

The listen-only webcast and the accompanying slides can be accessed at:

https://edge.media-server.com/mmc/p/3hko8gh5.

For analysts who wish to participate in the conference call, please register at the following URL:

https://register-conf.media-server.com/register/BI7cdca0ca853c407f8506fb4f9b4f3640. To participate in the conference call, you must use the link to receive an audio dial-in number and an Access PIN.

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

NON-GAAP FINANCIAL MEASURES

In reporting the results as of and for the period ended March 31, 2025, we have provided supplemental performance measures determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which we use to prepare our financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. We use the non-GAAP financial measures discussed herein in our analysis of our performance. Management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance the comparability of our 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 our underlying performance. For a reconciliation of these measures to their most directly comparable GAAP measures and additional information about these non-GAAP financial measures, see "Alternative Performance Measures (non-GAAP)" in the tables within the section "Key Financial Results."

FORWARD-LOOKING STATEMENTS

This press release and statements by our management may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, statements made in Mr. Asbury's quotations, statements regarding the recently completed acquisition of Sandy Spring, including expectations with regard to the benefits of the Sandy Spring acquisition; statements regarding our business, financial and operating results, including our deposit base and funding; the impact of future economic conditions, anticipated changes in the interest rate environment and the related impacts on our net interest margin, changes in economic conditions; management's beliefs regarding our liquidity, capital resources, asset quality, CRE loan portfolio and our customer relationships; and statements that include other projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are often characterized by the use of qualified words (and their derivatives) such as "expect," "believe," "estimate," "plan," "project," "anticipate," "intend," "will," "may," "view," "opportunity," "seek to," "potential," "continue," "confidence," or words of similar meaning or other statements concerning opinions or judgment of the Company and our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in:

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

Please also refer to such other factors as discussed throughout Part I, Item 1A. "Risk Factors" and Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10‑K for the year ended December 31, 2024, and related disclosures in other filings, which have been filed with the U.S. Securities and Exchange Commission ("SEC") and are available on the SEC's website at www.sec.gov. All risk factors and uncertainties described herein and therein should be considered in evaluating forward-looking statements, and all the forward-looking statements are expressly qualified by the cautionary statements contained or referred to herein and therein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the Company or our businesses or operations. Readers are cautioned not to rely too heavily on forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not intend or assume any obligation to update, revise or clarify any forward-looking statements that may be made from time to time by or on behalf of the Company, whether as a result of new information, future events or otherwise, except as required by law.