Atlantic Union Bankshares Corp

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank (the “Bank”), which provides banking and related financial products and services to consumers and businesses. Except as otherwise indicated or the context suggests otherwise, references to the “Company” refers to Atlantic Union Bankshares Corporation and its subsidiaries.

Basis of Financial Information

The accounting policies and practices of Atlantic Union Bankshares Corporation and subsidiaries conform to accounting principles generally accepted in the United States (“GAAP”) and follow general practices within the banking industry. The consolidated financial statements include the accounts of the Company, which is a financial holding company and a bank holding company that owns all of the outstanding common stock of its banking subsidiary, Atlantic Union Bank, which owns Union Insurance Group, LLC, Atlantic Union Financial Consultants, LLC, and Atlantic Union Equipment Finance, Inc.

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses (“ACL”), the fair value of financial instruments, and the fair values associated with assets acquired and liabilities assumed in a business combination. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other period.

The unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). Certain prior period amounts have been reclassified to conform to current period presentation. None of these reclassifications had a material effect on the Company’s financial statements. See Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2024 Form 10-K for additional information on the Company’s accounting policies. There have not been any significant changes to the Company’s accounting policies from those disclosed in the Company’s 2024 Form 10-K that could have a material effect on the Company’s financial statements.

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2. ACQUISITIONS

On April 1, 2025, the Company completed its merger with Sandy Spring Bancorp, Inc. (“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. Refer to Note 15 “Subsequent Events” within this Item 1 of this Quarterly Report for information on the Company’s completed merger with Sandy Spring.

American National Bankshares Inc. Acquisition

On April 1, 2024, the Company completed its previously announced merger with American National Bankshares Inc. (“American National”), the holding company for American National Bank and Trust Company, headquartered in Danville, Virginia. Under the terms of the American National merger agreement, at the effective time of the American National merger, each outstanding share of American National common stock was converted into 1.35 shares of the Company’s common stock, resulting in 14.3 million additional shares issued, or aggregate consideration of$505.5 million, based on the closing price per share of the Company’s common stock as quoted on the NYSE on March 28, 2024, which was the last trading day prior to the consummation of the acquisition. With the acquisition of American National, the Company acquired 26 branches, deepening its presence in central and western Virginia, and expanding its franchise into contiguous markets in southern Virginia and in North Carolina.

As a result of the American National acquisition, the Company recorded goodwill totaling$288.8 million at March 31, 2025, which reflects expected synergies and economies of scale from the acquisition, allocated between the Company’s Wholesale Banking ($210.8 million) and Consumer Banking ($78.0 million) reporting segments, which is not deductible for tax purposes. While the Company believed the information available on April 1, 2024 provided a reasonable basis for estimating fair value, the Company obtained additional information and evidence within the one year measurement period, that resulted in changes to the estimated fair value amounts and associated goodwill for which measurement period adjustments were recorded. Measurement period adjustments recorded during the third and fourth quarters of 2024 related to the Company’s foreclosed properties, deferred tax assets, long-term borrowings, and franchise tax accruals, which resulted in a$6.5 million increase in the preliminary goodwill recognized as part of the American National acquisition during the second quarter of 2024. In addition, certain reclassification adjustments were made to other assets and other liabilities to conform to the Company’s current balance sheet presentation. The final review of assets acquired and liabilities assumed resulted in no additional measurement period adjustments during the first quarter of 2025, and goodwill was determined to be final as of March 31, 2025.

The following table provides a summary of the consideration transferred and the fair value of the assets acquired and liabilities assumed as of the date of the American National acquisition, reflecting the aforementioned measurement period and reclassification adjustments (dollars in thousands):

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The Company assessed the fair value based on the following methods for the significant assets acquired and liabilities assumed:

Cash and cash equivalents: The fair value was determined to approximate the carrying amount based on the short-term nature of these assets.

Securities Available for Sale (“AFS”): The fair value of the investment portfolio was based on quoted market prices and dealer quotes and pricing obtained from independent pricing services.

Loans held for sale (“LHFS”): The LHFS portfolio was recorded at fair value based on quotes or bids from third parties.

Loans held for investment (“LHFI”): Fair values for LHFI were estimated using a discounted cash flow analysis that considered factors including loan type, interest rate type, prepayment speeds, duration, and current discount rates. The discount rates used for loans were based on current market rates for new originations of comparable loans and factored in adjustments for any expected liquidity events. Expected cash flows were derived using inputs that considered estimated credit losses and prepayments.

Premises and equipment: The fair value of bank premises and equipment held for use was valued by obtaining recent market data for similar property types with adjustments for characteristics of individual properties.

Core deposit intangible (“CDI”) and other intangibles: CDI represents the future economic benefit of acquired customer deposits. The fair value of the CDI asset was estimated based on a discounted cash flow methodology that incorporated expected customer attrition rates, cost of deposit base, net maintenance cost associated with customer deposits, and the cost for alternative funding sources. The discount rates used were based on market rates. Other intangibles include customer relationship intangible assets and non-compete intangible assets. Customer relationship intangible assets represent the value associated with customer relationships related to the wealth management business that was acquired. Non-compete intangible assets represent the value associated with non-compete agreements for former employees in place at the date of the acquisition.

*Bank owned life insurance (“BOLI”):The fair value of BOLI is carried at its current cash surrender value, which is the most reasonable estimate of fair value. *

Deposits: The fair value of interest-bearing and non-interest-bearing deposits is the amount payable on demand at the acquisition date. The fair value of time deposits was estimated using a discounted cash flow calculation that includes a market rate analysis of the current rates offered by market participants for certificates of deposits that mature in the same period.

Short-Term Borrowings: Acquired short term borrowings consist of Federal Home Loan Bank of Atlanta (“FHLB”) overnight borrowings and borrowings under repurchase agreements. The fair value of the short-term borrowings was determined to approximate the carrying amounts.

Long-Term Borrowings: The fair values of the Company’s long-term borrowings, including trust preferred securities, were estimated using discounted cash flow analyses, based on the current incremental borrowing rates for similar types of borrowing arrangements.

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The following table presents for illustrative purposes only certain pro forma information as if the Company had acquired American National on January 1, 2024. These results combine the historical results of American National in the Company's Consolidated Statements of Income and while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2024. No adjustments have been made to the pro forma results regarding possible revenue enhancements, provision for credit losses, or expense efficiencies. Pro forma adjustments below include the net impact of American National’s accretion and the elimination of merger-related costs, as disclosed below. The Company expects to achieve further operating cost savings and other business synergies, including branch closures, as a result of the acquisition, which are not reflected in the pro forma amounts below (dollars in thousands):

(1)* Includes net interest income and noninterest income.*

(2)* Includes the net impact of American National’s accretion adjustments of**$5.0** million for the three months ended March 31, 2024. There wereno pro forma net accretion adjustments for the three months ended March 31, 2025.*

(3)* For the three months ended March 31, 2025 and 2024, excludes merger-related costs as noted below.*

Merger-related costs, net of tax, were$4.6 million and$1.6 million, for the three months ended March 31,2025 and 2024, respectively, and are recorded in “Merger-related costs” on the Company’s Consolidated Statements of Income and have been expensed as incurred. For the three months ended March 31, 2025, merger-related costs were related to the Sandy Spring acquisition, primarily related to professional fees. All the merger-related costs for the three months ended March 31, 2024 were related to the American National acquisition. American National merger-related costs include costs such as employee severance, professional fees, system conversion, and lease and contract termination expenses

The Company’s operating results for the three months ended March 31, 2025 include the operating results of the acquired assets and assumed liabilities of American National subsequent to the acquisition on April 1, 2024. Due to the merging of certain processes and the conversion of American National’s systems during the second quarter of 2024, historical reporting for the former American National operations is impracticable and thus disclosures of the revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to acquisition.

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3. SECURITIES AND OTHER INVESTMENTS

Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of March 31, 2025 are as follows (dollars in thousands):

The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of December 31, 2024 are as follows (dollars in thousands):

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The following table shows the gross unrealized losses and fair value of the Company’s AFS securities with unrealized losses, which are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position for the following periods ended (dollars in thousands).

(2)* Comprised of715 and726 individual securities as of March 31, 2025 and December 31, 2024, respectively.*

The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at March 31, 2025 and December 31, 2024 and concludedno impairment existed based on several factors which included: (1) the majority of these securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the cost basis of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis.

Additionally, the majority of the Company’s mortgage-backed securities (“MBS”) are issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association and do not have credit risk given the implicit and explicit government guarantees associated with these agencies. In addition, the non-agency mortgage-backed and asset-backed securities generally received a 20% simplified supervisory formula approach rating. The Company’s AFS investment portfolio is generally highly-rated or agency backed. At March 31, 2025 and December 31, 2024, all AFS securities were current withno securities past due or on non-accrual, andno ACL was held against the Company’s AFS securities portfolio.

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The following table presents the amortized cost and estimated fair value of AFS securities as of the periods ended, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Refer to Note 8 “Commitments and Contingencies” within this Item 1 of this Quarterly Reportfor information regarding the estimated fair value of AFS securities that were pledged to secure public deposits, repurchase agreements and for other purposes as permitted or required by law as of March 31, 2025 and December 31, 2024.

Accrued interest receivable on AFS securities totaled$9.7 million and$10.1 million at March 31, 2025 and December 31, 2024, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2025 and 2024, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

Held to Maturity

The Company reports held to maturity (“HTM”) securities on the Company’s Consolidated Balance Sheets at carrying value. Carrying value is amortized cost, which includes any unamortized unrealized gains and losses recognized in accumulated other comprehensive income (loss) (“AOCI”) prior to reclassifying the securities from AFS securities to HTM securities. The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securitiesas of March 31, 2025 are as follows (dollars in thousands):

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The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securitiesas of December 31, 2024 are as follows (dollars in thousands):

The following table presents the amortized cost of HTM securities as of the periods ended, by security type and credit rating (dollars in thousands):

(1)* Generally considered not to have credit risk given the government guarantees associated with these agencies.*

(2) Non-agency mortgage-backed and asset-backed securities have limited credit risk, supported by most receiving a20% simplified supervisory formula approach rating.

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The following table presents the amortized cost and estimated fair value of HTM securities as of the periods ended, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Refer to Note 8 “Commitments and Contingencies” within this Item 1 of this Quarterly Report for information regarding the estimated fair value of HTM securities that were pledged to secure public deposits as permitted or required by law as of March 31, 2025 and December 31, 2024.

Accrued interest receivable on HTM securities totaled$6.8 million and$8.4 million at March 31, 2025 and December 31, 2024, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three months ended March 31, 2025 and 2024, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

The Company’s HTM investment portfolio primarily consists of highly-rated municipal securities. At March 31, 2025 and December 31, 2024, the Company’s HTM securities were all current, withno securities past due or on non-accrual. The Company’s HTM securities ACL was immaterial at March 31, 2025 and December 31, 2024.

Restricted Stock, at cost

The FHLB required the Bank to maintain stock in an amount equal to 4.75% of outstanding borrowings and a specific percentage of the member’s total assets at March 31, 2025 and December 31, 2024, respectively. The Federal Reserve Bank of Richmond (“FRB”) requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. At March 31, 2025 and December 31, 2024, restricted stock consisted of FRB stock in the amount of$82.9 million for both periods, and FHLB stock in the amount of$17.4 million and$20.1 million, respectively.

Realized Gains and Losses

The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three months ended March 31,(dollars in thousands):

(1)* Includes gains (losses) on sales and calls of securities.*

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4. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

The following tables exclude LHFS. The Company’s LHFI are stated at their face amount, net of deferred fees and costs, and consisted of the following as of the periods ended (dollars in thousands):

(1)Total loans included unamortized premiums and discounts, and unamortized deferred fees and costs totaling*$206.0 million and**$220.6** million as of March 31, 2025 and December 31, 2024, respectively.*

Accrued interest receivable on LHFI totaled$71.4 million and$73.7 million at March 31, 2025 and December 31, 2024, respectively. Accrued interest receivable write-offs were not material to the Company’s consolidated financial statements for the three months ended March 31, 2025 and 2024.

The following table shows the aging of the Company’s LHFI portfolio by class at March 31, 2025 (dollars in thousands):

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The following table shows the aging of the Company’s LHFI portfolio by class at December 31, 2024 (dollars in thousands):

The following table shows the Company’s amortized cost basis of loans on nonaccrual status with no related allowance for loan and lease losses (“ALLL”), a component of the ACL as of the periods ended (dollars in thousands):

There wasno interest income recognized on nonaccrual loans during the three months ended March 31, 2025 and 2024.

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Troubled Loan Modifications (“TLMs”)

The following table presents the amortized cost basis of loan modifications to borrowers experiencing financial difficulty for the three months ended March 31, 2025 (dollars in thousands). TLMs for the quarter ended March 31, 2024 were not significant at approximately$36,000.

The following table describes the financial effects of TLMs on a weighted average basis for TLMs within that loan type for the three months ended March 31,:

The Company considers a default of a TLM to occur when the borrower is 90 days past due following the modification or a foreclosure and repossession of the applicable collateral occurs. During the three months ended March 31, 2025 and 2024, the Company didnot have any material loans that went into default that had been modified and designated as TLMs in the twelve-month period prior to the time of default.

The Company monitors the performance of TLMs to determine the effectiveness of the modifications. During the three months ended March 31, 2025 and 2024, the Company didnot have any material loans that had been modified and designated as TLMs that were past due.

As of March 31, 2025 and December 31, 2024, there wereno material unfunded commitments on loans modified and designated as TLMs.

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Allowance for Loan and Lease Losses

ALLL on the loan portfolio is a material estimate for the Company. The Company estimates its ALLL on its loan portfolio on a quarterly basis. The Company models the ALLL usingtwo primary segments, Commercial and Consumer. Each loan segment is further disaggregated into classes based on similar risk characteristics. The Company has identified the following classes within each loan segment:

The following tables show the ALLL activity by loan segment for the three months ended March 31, (dollars in thousands):

Credit Quality Indicators

Credit quality indicators are used to help estimate the collectability of each loan class within the Commercial and Consumer loan segments. For classes of loans within the Commercial segment, the primary credit quality indicator used for evaluating credit quality and estimating the ALLL is risk rating categories of Pass (including Pass-Watch), Special Mention, Substandard, and Doubtful. For classes of loans within the Consumer segment, the primary credit quality indicator used for evaluating credit quality and estimating ALLL is delinquency bands of current, 30-59, 60-89, 90+, and nonaccrual. While other credit quality indicators are evaluated and analyzed as part of the Company’s credit risk management activities, these indicators are primarily used in estimating the ALLL. The Company evaluates the credit risk of its loan portfolio on at least a quarterly basis.

The Company presents loan and lease portfolio segments and classes by credit quality indicator and vintage year. The Company defines the vintage date for the purpose of this disclosure as the date of the most recent credit decision. Renewals are categorized as new credit decisions and reflect the renewal date as the vintage date, except for renewals of loans modified for borrowers experiencing financial difficulty or TLMs, which are presented in the original vintage.

Refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2024 Form 10-K for additional information on the Company’s policies and for further information on the Company’s credit quality indicators.

Commercial Loans

The Company uses a risk rating system as the primary credit quality indicator for classes of loans within the Commercial segment. The Company defines pass loans as risk rated 1-5 and criticized loans as risk rated 6-9. See Note 4 “Loans and

Allowance For Loan and Lease Losses” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of the Company’s 2024 Form 10-K for information on the Company’s risk rating system.

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The table below details the amortized cost and gross write-offs of the classes of loans within the Commercial segment by risk level and year of origination as of March 31, (dollars in thousands):

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The table below details the amortized cost and gross write-offs of the classes of loans within the Commercial segment by risk level and year of origination as of December 31, (dollars in thousands):

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Consumer Loans

For Consumer loans, the Company evaluates credit quality based on the delinquency status of the loan. The following table details the amortized cost and gross write-offs of the classes of loans within the Consumer segment based on their delinquency status and year of origination as of March 31, (dollars in thousands):

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The following table details the amortized cost and gross write-offs of the classes of loans within the Consumer segment based on their delinquency status and year of origination as of December 31, (dollars in thousands):