Atlantic Union Bankshares Corp

Previous wording

The following discussion and analysis provides information about the major components of our results of operations, financial condition, liquidity, and capital resources. This discussion and analysis should be read in conjunction with our “Consolidated Financial Statements,” our “Notes to the Consolidated Financial Statements,” and the other financial data included in this report, as well as our 2023 Form 10-K, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section therein. Our results of operations for the interim periods are not necessarily indicative of results that may be expected for the full year or for any other period. Amounts are rounded for presentation purposes; however, some of the percentages presented are computed based on unrounded amounts.

Current wording

The following discussion and analysis provides information about the major components of our results of operations, financial condition, liquidity, and capital resources. This discussion and analysis should be read in conjunction with our “Consolidated Financial Statements,” our “Notes to the Consolidated Financial Statements,” and the other financial data included in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”), including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section therein. Our results of operations for the interim periods are not necessarily indicative of results that may be expected for the full year or for any other period. Amounts are rounded for presentation purposes; however, some of the percentages presented are computed based on unrounded amounts.

Previous wording

In the following discussion and analysis, we provide certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which we used 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 our ongoing operations, enhance 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. Non-GAAP financial measures may be identified with the symbol(+) and may be labeled as adjusted. Refer to the “Non-GAAP Financial Measures” section within this Item 2 for more information about these non-GAAP financial measures, including a reconciliation of these measures to the most directly comparable GAAP financial measures.

Current wording

In the following discussion and analysis, we provide certain financial information 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 our 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. Non-GAAP financial measures may be identified with the symbol(+) and may be labeled as adjusted. Refer to the “Non-GAAP Financial Measures” section within this Item 2 for more information about these non-GAAP financial measures, including a reconciliation of these measures to the most directly comparable GAAP financial measures.

Previous wording

Certain statements in this Quarterly Report 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 regarding the pending merger with Sandy Spring, statements regarding the Forward Sale Agreement and transactions related thereto, statements regarding our expectations with regard to the benefits of the American National acquisition, statements regarding our future ability to recognize the benefits of certain tax assets, our business, financial and operating results, including our deposit base and funding, the impact of future economic conditions, changes in economic conditions, management’s beliefs regarding our liquidity, capital resources, asset quality, CRE loan portfolio, and 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:

Current wording

Certain statements in this Quarterly Report 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 regarding the recently completed acquisition of Sandy Spring, including expectations with regard to the benefits of the Sandy Spring acquisition; statements regarding our intended sale of approximately $2 billion of CRE loans; statements regarding our future ability to recognize the benefits of certain tax assets; statements regarding our business, financial and operating results, including our deposit base and funding; the impact of changes in economic conditions, anticipated changes in the interest rate environment and the related impacts on our net interest margin; changes in economic, fiscal or trade policy and the potential impacts on our business, loan demand and economic conditions in our markets and nationally; 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:

Previous wording

Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. As a result of the American National merger, which closed on April 1, 2024, we have updated our critical accounting estimates to include acquisition accounting. Accordingly, we have identified the allowance for loan and lease losses, fair value measurements, and acquisition accounting as accounting policies that require the most difficult, subjective, or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances change. Therefore, we evaluate these accounting policies and related critical accounting estimates on an ongoing basis and update them as needed. Management has discussed these accounting policies and critical accounting estimates summarized below with the Audit Committee of the Board of Directors.

Current wording

Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the allowance for loan and lease losses, fair value measurements, and acquisition accounting as accounting policies that require the most difficult, subjective, or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances change. Therefore, we evaluate these accounting policies and related critical accounting estimates on an ongoing basis and update them as needed. Management has discussed these accounting policies and the critical accounting estimates summarized below with the Audit Committee of the Board of Directors.

Previous wording

We provide additional information about our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2023 Form 10-K, other than with respect to acquisition accounting, which we discuss below. Other than as noted above and discussed below, there have been no material changes to our critical accounting policies or the estimates made pursuant to those policies during the most recent quarter from those disclosed in our 2023 Form 10-K.

Current wording

We provide additional information about our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2024 Form 10-K. There have been no material changes to our critical accounting policies or the estimates made pursuant to those policies during the most recent quarter from those disclosed in our 2024 Form 10-K.

Previous wording

Our significant accounting policies, other than acquisition accounting, are discussed in Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of our 2023 Form 10-K. Our significant accounting policies regarding acquisition accounting are discussed in Note 1 “Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report.

Current wording

Our significant accounting policies are discussed in Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of our 2024 Form 10-K.

Previous wording

years beginning after December 15, 2024. ASU No. 2023-07 is not expected to have an impact on the Company’s financial condition or results of operations but could change certain disclosures in the Company’s future SEC filings starting with its 2024 Annual Report on Form 10-K.

Current wording

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance requires enhanced disclosure for the rate reconciliation and income taxes paid disclosures and aligns the guidance to SEC Regulation S-X disclosure requirements. The amendments are effective for annual periods beginning after December 15, 2024. ASU No. 2023-09 is not expected to have an impact on our financial condition or results of operations but could change certain disclosures in our SEC filings.

Previous wording

operations. The amendments are effective for fiscal years beginning after December 14, 2023, and interim periods within fiscal

Current wording

In November 2024, the FASB issued ASU No. 2024-03Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. This guidance requires enhanced disclosure of income statement expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are evaluating the impact of ASU No. 2024-03 on our consolidated financial statements.

Previous wording

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank had 129 branches and approximately 150 ATMs located throughout Virginia and in portions of Maryland and North Carolina as of September 30, 2024. 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.

Current wording

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.

Previous wording

On October 21, 2024, the Company also announced that in connection with the execution of the merger agreement, it entered into a forward sale agreement (the “Base Forward Sale Agreement”) with Morgan Stanley & Co. LLC, (“the Forward Purchaser”) relating to an aggregate of 9,859,155 shares of the Company’s common stock. On October 21, 2024, the Company priced the public offering of shares of the Company’s common stock in connection with the Base Forward Sale Agreement and entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co. LLC, as representative for the underwriters named therein, the Forward Purchaser and Morgan Stanley & Co. LLC as forward seller (the “Forward Seller”), relating to the registered public offering and sale of 9,859,155 shares of the Company’s common stock at a public offering price of $35.50 per share (before underwriting discounts and commissions). The underwriters were granted a 30-day option to purchase up to an additional 1,478,873 shares of the Company’s common stock. On October 21, 2024, the underwriters exercised in full their option to purchase the additional 1,478,873 shares of the Company’s common stock pursuant to the Underwriting Agreement and, in connection therewith, the Company entered into an additional forward sale agreement (the “Additional Forward Sale Agreement,” and together with the “Base Forward Sale Agreement,” the “Forward Sale Agreement”) with the Forward Purchaser relating to 1,478,873 shares of the Company’s common stock, on terms substantially similar to those contained in the Base Forward Sale Agreement.

Current wording

On October 21, 2024, in connection with the execution of the Sandy Spring merger agreement, we entered into an initial forward sale agreement with Morgan Stanley & Co. LLC (the “Forward Purchaser”), relating to an aggregate of 9,859,155 shares of our common stock. On October 21, 2024, we priced the public offering of shares of our common stock in connection with such forward sale agreement and entered into an underwriting agreement with Morgan Stanley & Co. LLC, as representative for the underwriters named therein, the Forward Purchaser and Morgan Stanley & Co. LLC as forward seller (the “Forward Seller”), relating to the registered public offering and sale of 9,859,155 shares of our common stock at a public offering price of $35.50 per share (before underwriting discounts and commissions).

Previous wording

We are continually monitoring the impact of various global and national events on our results of operations and financial condition, including inflation, changes in market interest rates, geopolitical conflicts, and the upcoming elections. The timing and impact of inflation, changes in market interest rates, and the competitive landscape of deposits on our business and results of operations will depend on future developments, which are highly uncertain and difficult to predict. In light of the progress on inflation and the balance of risks, on September 18, 2024, the FOMC announced that it was lowering the Federal Funds target rate by 50 bps to its current range of 4.75% to 5.0%. While inflation has eased in 2024, it remains elevated over the FOMC’s long-run target of 2.0%. The FOMC noted that it has gained greater confidence that inflation is moving sustainably toward 2.0%. Further the FOMC has also noted that it will carefully assess incoming data, the evolving outlook, and the balance of risks in considering additional adjustments to the target range for the Federal Funds rate and that its assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. The FOMC noted that it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the FOMC’s goals. The FOMC also confirmed the continued reduction to the Federal Reserve’s holdings of U.S. Treasury securities and agency debt and agency MBS. We will continue to deploy various asset liability management strategies to seek to manage our risk related to interest rate fluctuations and monitor balance sheet trends, deposit flows, and liquidity needs to ensure that we are able to meet the needs of our customers and maintain financial flexibility. Refer to “Liquidity” within this Item 2 for additional information about our liquidity and “Quantitative and Qualitative Disclosures about Market Risk” in Part I, Item 3 of this Quarterly Report for additional information about the Company’s interest rate sensitivity.

Current wording

We are continually monitoring the impact of various global and national events on our results of operations and financial condition, including changes in economic conditions, including inflation and recessionary conditions, changes in market interest rates, geopolitical conflicts, deposit competition, liquidity strains, changes in government policy, including changes in, or the imposition of, tariffs and/or trade barriers, and changes in legislative or regulatory requirements. The timing and impact of such events on our results of operation and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

Previous wording

Financial institutions continue to deal with macroeconomic and industry-specific headwinds. The higher-for-longer interest rate environment and heightened competition for deposits has led to a continued shift within deposit composition toward higher cost products, although the pace of movement has slowed in recent months. The interest rate environment has also affected the affordability of credit to consumers and businesses, moderating loan demand. At September 30, 2024, our LHFI and total deposits increased from December 31, 2023 by $2.7 billion and $3.5 billion, respectively, and our short-term borrowings decreased by $486.6 million from December 31, 2023, which includes the impact of our acquisition of American National. At September 30, 2024, noninterest bearing deposits comprised 22% of total deposits, compared to 24% at December 31, 2023. As of September 30, 2024, we estimate that approximately 72.7% of our deposits were insured or collateralized, and that we maintained available liquidity sources to cover approximately 166.1% of uninsured and uncollateralized deposits. In addition, to further bolster our funding position, we augmented customer deposit growth by also increasing brokered deposits to $1.4 billion at September 30, 2024, an increase of $869.9 million from December 31, 2023.

Current wording

In 2024, the higher-for-longer interest rate environment and heightened competition for deposits led to a shift within deposit composition toward higher cost products, which has continued into 2025, although the pace of movement slowed in late 2024 and so far in 2025. The interest rate environment has also affected the affordability of credit to consumers and businesses, moderating loan demand. At March 31, 2025, our total deposits increased from December 31, 2024 by $105.3 million primarily due to an increase in demand deposits, and our LHFI and short-term borrowings decreased by $42.9 million and $59.3 million, respectively, from December 31, 2024, due primarily to declines in the construction and land development and commercial and industrial loan portfolios and paydowns on FHLB borrowings. At March 31, 2025, noninterest bearing deposits comprised 21.8% of total deposits, compared to 21.0% at December 31, 2024. As of March 31, 2025, we estimate that approximately 70.4% of our deposits were insured or collateralized, and that we maintained available liquidity sources to cover approximately 140.1% of uninsured and uncollateralized deposits. At March 31, 2025, our brokered deposits decreased by $109.4 million to $1.1 billion from December 31, 2024.

Previous wording

Net interest income, which represents our principal source of revenue, is the amount by which interest income exceeds interest expense. Our interest margin represents net interest income expressed as a percentage of average earning assets. Changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on our net interest income, the net interest margin, and net income. In addition, our interest income includes the accretion of discounts on our acquired loans, which will also affect our net interest income and net interest margin.

Current wording

Net interest income, which represents our principal source of revenue, is the amount by which interest income exceeds interest expense. Our interest margin represents net interest income expressed as a percentage of average earning assets. Changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on our net interest income, net interest margin, and net income. In addition, our interest income includes the accretion of discounts on our acquired loans, which will also affect our net interest income and net interest margin.

Previous wording

The following tables show interest income on earning assets and related average yields, as well as interest expense on interest-bearing liabilities and related average rates paid for the three and nine months ended September 30, (dollars in thousands):

Current wording

The following tables show interest income on earning assets and related average yields, as well as interest expense on interest-bearing liabilities and related average rates paid for the three months ended March 31, (dollars in thousands):

Previous wording

Our net interest margin and net interest margin (FTE)(+) includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $12.7 million for the third quarter of 2024 compared to approximately $1.1 million for the third quarter of 2023, an increase of $11.6 million due to the impacts from the American National acquisition. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):

Current wording

Our net interest margin and net interest margin (FTE)(+) includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $12.6 million for the first quarter of 2025 compared to $602,000 for the first quarter of 2024, an increase of $12.0 million due to the impacts from the American National acquisition. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):

Previous wording

The following table shows interest income on earning assets and related average yields as well as interest expense on interest-bearing liabilities and related average rates paid for the three and nine months ended September 30, (dollars in thousands):

Current wording

The following table shows interest income on earning assets and related average yields as well as interest expense on interest-bearing liabilities and related average rates paid for the three months ended March 31, (dollars in thousands):

Previous wording

(5)* *Interest expense on time deposits includes $913,000 and $6,000 for the three months ended September 30, 2024 and 2023, respectively, in accretion of the fair market value adjustments related to acquisitions.

Current wording

(5)Interest expense on time deposits includes accretion of the fair market value related to acquisitions, as disclosed above.

Previous wording

(6)* Interest expense on borrowings includes $288,000 and $215,000 for the three months ended September 30, 2024 and 2023, respectively, in amortization of the fair market value adjustments related to acquisitions.*

Current wording

(6) Interest expense on borrowings includes amortization of the fair market value adjustments related to acquisitions, as disclosed above.

Previous wording

The Volume Rate Analysis table below presents changes in net interest income (FTE)(+) and interest expense and distinguishes between the changes related to increases or decreases in average outstanding balances of interest-earning assets and interest-bearing liabilities (volume), and the changes related to increases or decreases in average interest rates on such assets and liabilities (rate). Changes attributable to both volume and rate have been allocated proportionally. Results, on a taxable equivalent basis, are as follows for the three and nine months ended September 30, (dollars in thousands):

Current wording

The Volume Rate Analysis table below presents changes in our net interest income (FTE)(+) and interest expense and distinguishes between the changes related to increases or decreases in our average outstanding balances of interest-earning assets and interest-bearing liabilities (volume), and the changes related to increases or decreases in average interest rates on such assets and liabilities (rate). Changes attributable to both volume and rate have been allocated proportionally. Results, on a taxable equivalent basis, are as follows for the three months ended March 31, (dollars in thousands):

Previous wording

(1)The rate-related changes in interest income on loans includes the impact of higher accretion of the acquisition-related fair market value adjustments of $12.6 million and $26.9 million for the three and nine months, respectively.

Current wording

(1)The rate-related changes in interest income on loans includes the impact of higher accretion of the acquisition-related fair market value adjustments, as disclosed above.

Previous wording

(2)The rate-related changes in interest expense on deposits includes the impact of higher accretion of the acquisition-related fair market value adjustments of $1.0 million and $1.9for the three and nine months, respectively.

Current wording

(2)The rate-related changes in interest expense on deposits includes the impact of higher accretion of the acquisition-related fair market value adjustments, as disclosed above.

Previous wording

(3)The rate-related changes in interest expense on other borrowings include the impact of higher amortization of the acquisition-related fair market value adjustments of $73,000and $152,000 for the three and nine months, respectively.

Current wording

(3)The rate-related changes in interest expense on other borrowings include the impact of higher amortization of the acquisition-related fair market value adjustments, as disclosed above.

Previous wording

Our adjusted operating noninterest income(+), which excludes losses on sale of securities ($6.5 million in 2024 and $41.0 million in 2023) and the gain on sale-leaseback transaction ($27.7 million in 2023), increased $16.0 million or 21.5% to $90.2 million for the nine months ended September 30, 2024, compared to $74.2 million for the nine months ended September 30, 2023. The increase in adjusted operating noninterest income(+) was primarily due to the impact of the American National acquisition, which drove the majority of the $5.4 million increase in fiduciary and asset management fees and the $1.7 million increase in interchange fees. In addition to the American National acquisition impact, other operating income increased $3.7 million primarily due to increases in equity method investment income and capital market transaction-related fees, BOLI income increased $3.4 million primarily due to death benefits received in 2024, service charges on deposit accounts increased $2.9 million primarily due to improved margins in treasury management services, and mortgage banking income increased $1.3 million due to an increase in mortgage loan origination volumes and gain on sale margins. These increases were partially offset by a $2.1 million decrease in loan-related interest rate swap fees due to lower transaction volumes.

Current wording

Our noninterest income increased $3.6 million or 14.1% to $29.2 million for the quarter ended March 31, 2025, compared to $25.6 million for the quarter ended March 31, 2024, primarily due to the impact of the American National acquisition, which drove the majority of the $1.9 million increase in fiduciary and asset management fees, the $1.1 million increase in service charges on deposit accounts, and the $655,000 increase in interchange fees. In addition to the American National impact, loan-related interest rate swap fees increased $1.2 million due to higher transaction volumes. These increases were partially offset by a $1.5 million decrease in other operating income primarily due to a decline in equity method investment income.

Previous wording

Our adjusted operating noninterest expense(+), which excludes expenses related to strategic cost saving initiatives principally composed of severance charges related to headcount reductions and charges for exiting leases ($8.7 million in 2023), merger-related costs ($1.4 million in 2024 and $2.0 million in 2023), and amortization of intangible assets ($5.8 million in 2024 and $2.2 million in 2023), increased $19.7 million or 20.7% to $115.4 million for the quarter ended September 30, 2024, compared to $95.7 million for the quarter ended September 30, 2023. The increase in adjusted operating noninterest expense(+) was primarily due to the impact of the American National acquisition, which drove the majority of the $11.9 million increase in salaries and benefits, the $1.8 million increase in technology and data processing, the $1.8 million increase in occupancy expenses, the $1.0 million increase in FDIC assessment premiums and other insurance, and the $746,000 increase in franchise and other taxes. In addition to the American National acquisition impact, marketing and advertising expense increased $1.1 million and professional services increased $703,000.

Current wording

Our adjusted operating noninterest expense(+), which excludes amortization of intangible assets ($5.4 million in the first quarter 2025 and $1.9 million in the first quarter 2024), merger-related costs ($4.9 million in the first quarter 2025 and $1.9 million in the first quarter 2024), and a FDIC special assessment ($840,000 in the first quarter 2024) increased $23.1 million or 22.9% to $123.8 million for the quarter ended March 31, 2025, compared to $100.7 million for the quarter ended March 31, 2024. The increase in adjusted operating noninterest expense(+) was primarily due to the impact of the American National acquisition, which drove the majority of the $13.5 million increase in salaries and benefits, the $2.1 million increase in technology and data processing, the $2.0 million increase in occupancy expenses, and the $605,000 increase in furniture and equipment expenses. In addition to the American National acquisition impact, professional services increased $1.6 million related to projects that occurred during the first quarter of 2025, other expenses increased $1.6 million primarily due to an increase in non-credit related losses on customer transactions, and marketing and advertising expense increased $866,000.

Previous wording

Our Wholesale Banking segment provides loan, leasing, and deposit services, as well as treasury management, SBA lending and capital market services to wholesale customers primarily throughout Virginia, Maryland, North Carolina, and South Carolina. These customers include CRE and commercial and industrial customers. This segment also includes our equipment finance subsidiary, which has nationwide exposure. The private banking and trust businesses also reside in the Wholesale Banking segment.

Current wording

Our Wholesale Banking segment provides loan, leasing, and deposit services, as well as treasury management and capital market services to wholesale customers primarily throughout Virginia, Maryland, North Carolina, and South Carolina. These customers include CRE and commercial and industrial customers. This segment also includes our equipment finance subsidiary, which has nationwide exposure. The wealth management business also resides in the Wholesale Banking segment.

Previous wording

The following table presents operating results for the three and nine months ended September 30, for the Wholesale Banking segment (dollars in thousands):

Current wording

The following table presents operating results for the three months ended March 31, for the Wholesale Banking segment (dollars in thousands):

Previous wording

Wholesale Banking income before income taxes increased by $32.6 million and $58.5 million, respectively, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. The increase for the three months ended September 30, 2024 was primarily due to increases in net interest income driven by the impact of the American National acquisition and favorable spreads on both the loan and deposit portfolios, as well as a decrease in the provision for credit losses. The increase for the nine months ended September 30, 2024 was primarily due to increases in net interest income driven by the impact of the American National acquisition and favorable spreads on both the loan and deposit portfolios. Wholesale Banking’s noninterest income also increased for the three and nine months ended September 30, 2024 compared to the same periods in 2023, primarily due to the impact of the American National acquisition, which drove the majority of the increases in fiduciary and asset management fees. The increases in income before income taxes were partially offset by increases in noninterest expense primarily due to the impact of the American National acquisition, which drove the majority of the increases in salaries and benefits.

Current wording

Wholesale Banking income before income taxes increased by $966,000 for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase for the three months ended March 31, 2025 was primarily due to an increase in net interest income driven by the impact of the American National acquisition, partially offset by an increase in the provision for credit losses primarily reflecting the impacts of the increased uncertainty in the economic outlook. Wholesale Banking noninterest income also increased for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the impact of the American National acquisition, which drove the majority of the increases in fiduciary and asset management fees and service charges on deposits. In addition to the American National impact, Wholesale Banking noninterest income increased due to an increase in loan-related interest rate swap fees due to higher transaction volumes. The increase in income before income taxes was partially offset by an increase in noninterest expense primarily due to the impact of the American National acquisition, which drove the majority of the increases in salaries and benefits.

Previous wording

Wholesale banking deposits increased $680.3 million to $7.1 billion at September 30, 2024, compared to December 31, 2023, primarily due to increases in interest checking accounts and demand deposits, primarily driven by the American National acquisition.

Current wording

Wholesale Banking deposits increased $370.4 million to $7.6 billion at March 31, 2025, compared to December 31, 2024, primarily due to increases in money market accounts and demand deposits.

Previous wording

Our Consumer Banking segment provides loan and deposit services to consumers and small businesses throughout Virginia, Maryland, and North Carolina. Consumer Banking includes the home loan division, which has limited nationwide exposure, and investment management, and advisory services businesses.

Current wording

Our Consumer Banking segment provides loan and deposit services to consumers and small businesses throughout Virginia, Maryland, and North Carolina. Consumer Banking includes the home loan division and investment management, and advisory services businesses.

Previous wording

The following table presents operating results for the three and nine months ended September 30, for the Consumer Banking segment (dollars in thousands):

Current wording

The following table presents operating results for the three months ended March 31, for the Consumer Banking segment (dollars in thousands):

Previous wording

Consumer Banking income before income taxes increased by $1.2 million and $13.7 million, respectively, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. The increases were primarily due to increases in net interest income driven by the impact of the American National acquisition and higher funding credit on deposits, partially offset by increases in the provision for credit losses. Consumer Banking’s noninterest income also increased for the three and nine months ended September 30, 2024 compared to the same periods in 2023, primarily due to the impact of the American National acquisition, which drove the majority of the increases in fiduciary and asset management fees, interchange fee income, and service charges on deposit accounts. The increases in income before income taxes were partially offset by increases in noninterest expense primarily due to the impact of the American National acquisition, which drove the majority of the increases in salaries and benefits and occupancy expense.

Current wording

Consumer Banking income before income taxes decreased by $2.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease for the three months ended March 31, 2025 was primarily due to an increase in Consumer Banking noninterest expense primarily due to the impact of the American National acquisition, which drove the majority of the increases in salaries and benefits and occupancy expense. This decrease was partially offset by an increase in net interest income driven by the impact of the American National acquisition. In addition, Consumer Banking noninterest income increased for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the impact of the American National acquisition, which drove the majority of the increases in service charges on deposit accounts, interchange fee income, and fiduciary and asset management fees.

Previous wording

LHFI, net of deferred fees and costs, for the Wholesale Banking segment increased $2.7 billion to $15.4 billion at September 30, 2024, compared to December 31, 2023 primarily due to an increase in the CRE loan portfolio, primarily driven by the American National acquisition and organic loan growth.

Current wording

LHFI, net of deferred fees and costs, for the Consumer Banking segment decreased $46.1 million to $3.0 billion at March 31, 2025, compared to December 31, 2024 primarily due to a decrease in the auto loan portfolio.

Previous wording

As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets. Our bank subsidiary, Atlantic Union Bank, is subject to a bank franchise tax but not a state income tax in Virginia, its primary place of business. We, our subsidiaries, and Atlantic Union Bank’s non-bank subsidiaries are subject to Virginia income taxes and may be able to utilize existing state deferred tax assets, depending on a number of factors including those entities’ financial results. During the quarter ended June 30, 2024, we reviewed our business plan considering the American National acquisition and other business changes and noted shifts within our state income tax footprint and other factors that impacted projected future realization of state deferred tax items, including those attributable to operations in Virginia. As a result, we concluded it is more likely than not that the benefit for certain state net operating loss carryforwards will not be realized, and we recorded a valuation allowance of $4.8 million via a non-cash charge to income tax expense for the second quarter of 2024. There has been no change in the valuation allowance for the quarter ended September 30, 2024.

Current wording

As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view regarding our future realization of deferred tax assets. At March 31, 2025 and December 31, 2024, we had a valuation allowance of $4.4 million.

Previous wording

Our effective tax rate for the three months ended September 30, 2024 and 2023 was 17.0% and 17.6%, respectively. Our effective tax rate for the nine months ended September 30, 2024 and 2023 was 19.7% and 16.3%, respectively. The increase in the effective tax rate for the nine months ended September 30, 2024 was primarily due to the valuation allowance established during the second quarter of 2024, which resulted in a 250 bps increase in the effective tax rate.

Current wording

Our effective tax rate for both quarters ended March 31, 2025 and December 31, 2024 was 19.0%.

Previous wording

At September 30, 2024, our consolidated balance sheet includes the impact of the American National acquisition, which closed April 1, 2024. During the quarter ended September 30, 2024, we adjusted the allocation of the purchase price for certain provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and resulted in a $5.2 million increase, which was recognized during the third quarter of 2024, in the preliminary goodwill initially recognized during the second quarter of 2024, resulting in preliminary goodwill of $287.5 million at September 30, 2024.

Current wording

At March 31, 2025, our consolidated balance sheet includes the impact of the American National acquisition, which closed April 1, 2024, but excludes the impact of the Sandy Spring acquisition.

Previous wording

LHFI were $18.3 billion at September 30, 2024, an increase of $2.7 billion or 17.3% from December 31, 2023. At September 30, 2024, quarterly average LHFI increased $3.2 billion or 21.0% from the same period in the prior year. Refer to "Loan Portfolio" within this Item 2 and Note 4 "Loans and Allowance for Loan and Lease Losses" in Part I, Item 1 of this Quarterly Report for additional information on our loan activity.

Current wording

LHFI were $18.4 billion at March 31, 2025, a decrease of $42.9 million or 0.9% (annualized) from December 31, 2024. At March 31, 2025, quarterly average LHFI increased $2.7 billion or 17.1% from the same period in the prior year. Refer to "Loan Portfolio" within this Item 2 and Note 4 "Loans and Allowance for Loan and Lease Losses" in Part I, Item 1 of this Quarterly Report for additional information on our loan activity.

Previous wording

At September 30, 2024, we had total investments of $3.5 billion, an increase of $349.0 million or 11.0% from December 31, 2023. AFS securities totaled $2.6 billion at September 30, 2024, compared to $2.2 billion at December 31, 2023. At September 30, 2024, total net unrealized losses on the AFS securities portfolio were $334.5 million, compared to $384.3 million at December 31, 2023. HTM securities totaled $807.1 million at September 30, 2024, compared to $837.4 million at December 31, 2023, with net unrealized losses of $30.3 million at September 30, 2024, compared to $29.3 million at December 31, 2023.

Current wording

At March 31, 2025, we had total investments of $3.4 billion, an increase of $56.2 million or 6.8% (annualized) from December 31, 2024. AFS securities totaled $2.5 billion at March 31, 2025, compared to $2.4 billion at December 31, 2024. At March 31, 2025, total net unrealized losses on the AFS securities portfolio were $382.0 million, compared to $402.6 million at December 31, 2024. HTM securities totaled $821.1 million at March 31, 2024, compared to $803.9 million at December 31, 2024, with net unrealized losses of $48.6 million at March 31, 2025, compared to $44.5 million at December 31, 2024.

Previous wording

At September 30, 2024, we had total liabilities of $21.6 billion, an increase of $3.0 billion or approximately 16.2% from December 31, 2023, which was primarily driven by an increase in deposits of $3.5 billion, primarily due to the American National assumed deposits, as well as increased usage of brokered deposits, partially offset by a decrease in total borrowings of $459.7 million.

Current wording

At March 31, 2025, we had total liabilities of $21.4 billion, an increase of $5.0 million or approximately 0.1% (annualized) from December 31, 2024, which was primarily driven by an increase in deposits of $105.3 million, partially offset by the repayment of short-term FHLB advances of $60.0 million and a decrease in other liabilities of $41.4 million.

Previous wording

Total deposits at September 30, 2024 were $20.3 billion, an increase of $3.5 billion or approximately 20.7% from December 31, 2023. At September 30, 2024, quarterly average deposits increased $3.4 billion or 20.1%from the same period in the prior year. Total deposits increased from December 31, 2023 due to a $2.2 billion increase in interest-bearing customer deposits and $460.0 million increase in demand deposits, primarily due to the American National acquisition, as well as an increase of $870.0 million in brokered deposits. Refer to “Deposits” within this Item 2 for additional information on this topic.

Current wording

Total deposits at March 31, 2025 were $20.5 billion, an increase of $105.3 million or approximately 2.1% (annualized) from December 31, 2024. At March 31, 2025, quarterly average deposits increased $3.3 billion or 19.4% from the same period in the prior year. Total deposits increased from December 31, 2024 due to an increase in demand deposits of $194.1 million, partially offset by a decrease in brokered deposits. Refer to “Deposits” within this Item 2 for additional information on this topic.

Previous wording

Total borrowings at September 30, 2024 were $852.2 million, a decrease of $459.7 million or 35.0% from December 31, 2023, primarily due to paydowns of short-term borrowings due to deposit growth. Refer to Note 7 “Borrowings” in Part I, Item 1 of this Quarterly Report for additional information on our borrowing activity.

Current wording

Total borrowings at March 31, 2025 were $475.7 million, a decrease of $58.9 million or 44.7% (annualized) from December 31, 2024, primarily due to repayment of short-term FHLB advances using funds from customer deposit growth. Refer to Note 7 “Borrowings” in Part I, Item 1 of this Quarterly Report for additional information on our borrowing activity.