INDEX
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| ITEM | | PAGE |
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| PART I | |
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| Item 1. | Business | 7 |
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| Item 1A. | Risk Factors | 22 |
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| Item 1B. | Unresolved Staff Comments | 42 |
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| Item 1C. | Cybersecurity | 43 |
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| Item 2. | Properties | 45 |
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| Item 3. | Legal Proceedings | 45 |
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| Item 4. | Mine Safety Disclosures | 45 |
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| PART II | | |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 46 |
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| Item 6. | [Reserved] | 47 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 48 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 86 |
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| Item 8. | Financial Statements and Supplementary Data | 87 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 174 |
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| Item 9A. | Controls and Procedures | 174 |
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| Item 9B. | Other Information | 175 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdiction That Prevent Inspections | 175 |
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| PART III | | |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 175 |
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| Item 11. | Executive Compensation | 175 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 176 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 176 |
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| Item 14. | Principal Accountant Fees and Services | 176 |
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| PART IV | | |
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| Item 15. | Exhibit and Financial Statement Schedules | 177 |
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| | Signatures | 182 |
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Glossary of Acronyms and Defined Terms
In this Annual Report on Form 10-K, except as otherwise indicated or the context suggests otherwise, references to the “Company” refers to Atlantic Union Bankshares Corporation, a Virginia corporation, and the terms “we”, “us” and “our” refer to the Company and its direct and indirect subsidiaries, including Atlantic Union Bank, which we refer to as the “Bank.” The “Federal Reserve” refers to the Board of Governor of the Federal Reserve System, our primary federal regulator.
*“Our common stock” refers to the Company’s common stock, par value $1.33 per share, and the term “depositary shares” means the Company’s depositary shares, each representing a 1/400th ownership interest in a share of the Company’s Series A preferred stock, with a liquidation preference of $10,000 per share of Series A preferred stock (equivalent to $25 per depositary share). “Series A preferred stock” refers to the Company’s 6.875% Perpetual Non-Cumulative Preferred Stock, Series A, par value $10.00 per share.
*“Sandy Spring” refers to Sandy Spring Bancorp, Inc., which we acquired on April 1, 2025, pursuant to the Agreement and Plan of Merger dated October 21, 2024, by and between the Company and Sandy Spring, which we refer to as the “Sandy Spring merger agreement.”
*“American National” refers to American National Bankshares Inc., which we acquired on April 1, 2024, pursuant to the Agreement and Plan of Merger dated July 24, 2023, by and between the Company and American National.
The “Forward Sale Agreements” refers to the forward sale agreements between the Company and Morgan Stanley & Co. LLC, as forward purchaser (the “Forward Purchaser”), each dated as of October 21, 2024, in connection with which the Forward Purchaser or its affiliate borrowed from third parties an aggregate of 11,338,028 shares of our common stock for sale in a registered public offering.
| Glossary of Acronyms and Defined Terms | | |
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| ACL | – | Allowance for credit losses |
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| AFS | – | Available for sale |
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| ALLL | – | Allowance for loan and lease losses, a component of the ACL |
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| AOCI | – | Accumulated other comprehensive income (loss) |
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| ASC | – | Accounting Standards Codification |
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| ASU | – | Accounting Standards Update |
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| BHCA | – | Bank Holding Company Act of 1956, as amended |
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| BOLI | – | Bank-owned life insurance |
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| bps | – | Basis points |
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| CECL | – | Current expected credit losses |
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| CFPB | – | Consumer Financial Protection Bureau |
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| CRA | – | Community Reinvestment Act of 1977 |
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| CRE | – | Commercial real estate |
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| CSP | – | Cary Street Partners LLC |
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| EPS | – | Earnings per common share |
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| FASB | – | Financial Accounting Standards Board |
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| FDIC | – | Federal Deposit Insurance Corporation |
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| FRB | – | Federal Reserve Bank of Richmond |
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| FHLB | – | Federal Home Loan Bank of Atlanta |
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| FOMC | – | Federal Open Market Committee |
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| FTE | – | Fully taxable equivalent |
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| GAAP | – | Accounting principles generally accepted in the United States |
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| HTM | – | Held to maturity |
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| LHFI | – | Loans held for investment, net of unearned income |
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| LHFS | – | Loans held for sale |
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| MBS | – | Mortgage-Backed Securities |
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| NPA | – | Nonperforming assets |
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| NYSE | – | New York Stock Exchange |
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| PCD | – | Purchased credit deteriorated |
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| SBA | – | Small Business Administration |
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| SEC | – | U.S. Securities and Exchange Commission |
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| SOFR | – | Secured Overnight Financing Rate |
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| TLM | – | Troubled loan modification |
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FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-K 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 acquisition of Sandy Spring, including expectations with regard to the benefits of the Sandy Spring acquisition; statements regarding our expectations with regard to the benefits of the American National acquisition; statements regarding our strategic expansion into North Carolina; 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:
| ● | 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 changes 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 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, U.S. government shutdowns, and slowdowns in economic growth; |
| ● | 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; |
| ● | potential adverse reactions or changes to business or employee relationships, including those resulting from our acquisitions of Sandy Spring and American National; |
| ● | our ability to identify, recruit, and retain key employees; |
| ● | 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; |
| ● | 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; |
| ● | 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. |
More information on risk factors that could affect our forward-looking statements is included under the section entitled “Risk Factors” set forth herein. All risk factors and uncertainties described herein should be considered in evaluating forward-looking statements, and all of the forward-looking statements made in this Form 10-K are expressly qualified by the cautionary statements contained or referred to herein. 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 the forward-looking statements contained in this Form 10-K. 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.
SUMMARY OF RISK FACTORS
An investment in our securities involves risks, including those summarized below. For a more complete discussion of these risk factors, see “Item 1A—Risk Factors.”
Risks Related to Our Lending Activities
| ● | Our ACL may be insufficient to absorb credit losses in our loan portfolio. |
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| ● | Events that negatively impact the real estate market could hurt our business. |
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| ● | Our loan portfolio contains CRE, construction and development loans and commercial and industrial loans, which may expose us to additional credit risks, and may adversely affect our results of operations and financial condition. |
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| ● | The loans we make through federal programs are dependent on the federal government’s continuation and support of these programs and on our compliance with program requirements. |
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| ● | We use independent appraisals and other valuation techniques in evaluating and monitoring loans secured by real estate and other real estate owned, which may not accurately describe the net value of the asset. |
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| ● | If we fail to effectively manage credit risk, our business and financial condition will suffer. |
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| ● | Our lending to small to mid-sized community-based businesses may increase our credit risk. |
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| ● | Nonperforming assets may adversely affect our business, results of operations, and financial condition. |
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| ● | Our mortgage revenue is cyclical and sensitive to interest rates, changes in economic conditions, decreased economic activity, and slowdowns in the housing market, any of which could adversely impact our profits, and we may be required to repurchase mortgage loans or indemnify buyers against losses, which could harm our liquidity, results of operations and financial condition. |
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| ● | We are subject to environmental risks. |
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Risks Related to Our Business, Industry, Markets and Market Interest Rates
| ● | Our business and results of operations may be adversely affected by the financial markets, fiscal, monetary, and regulatory policies, developments impacting the financial services industry specifically and economic conditions. |
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| ● | We may not be able to maintain a strong core deposit base or access other low-cost funding sources. |
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| ● | We face substantial competition that could adversely affect our growth and/or operating results. |
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| ● | Consumers may decide not to use banks, which could materially adversely affect our financial condition and results. |
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| ● | Changes in interest rates could adversely affect our income and cash flows. |
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| ● | We may incur losses if asset values decline, including due to changes in interest rates and prepayment speeds. |
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Risks Related to Our Operations
| ● | A failure and/or breach of our operating or securities systems or infrastructure, or those of our third-party providers, including because of cyber-attacks, could disrupt our business, result in disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses. |
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| ● | We face information security risks that could result in the disclosure of confidential information, adversely affect our business or reputation, and create significant legal and financial exposure. |
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| ● | Our business strategy includes continued growth, and our financial condition and results of operation could be negatively affected if we fail to grow or fail to manage our growth effectively. |
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| ● | We may be adversely affected by risks associated with future mergers and acquisitions, including execution risk, which could disrupt our business and dilute shareholder value. |
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| ● | The carrying value of goodwill and other intangible assets may be adversely affected. |
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| ● | Our risk-management framework may not be effective in mitigating risks and/or losses. |
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| ● | We could be adversely affected if our design, implementation, or use of models in our business is flawed. |
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| ● | Failure to keep pace with technological change could adversely affect our business and competitive position, and we may experience operational challenges when implementing new technologies. |
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| ● | The implementation of new lines of business or new products and services may subject us to additional risk. |
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| ● | Our business could be adversely affected by the operational functions of such counterparties over which we have limited or no control that provide key components of our infrastructure. |
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| ● | Our financial condition could be adversely affected if we rely on misleading information. |
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| ● | We are subject to losses due to errors, omissions or fraud by our employees, clients, counterparties, or others. |
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| ● | If we are unable to attract, retain, develop, and motivate our human capital, our business, results of operations, and prospects could be adversely affected. |
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| ● | Our internal controls and procedures may fail or be circumvented, which could have a material adverse effect on our business, financial condition, and results of operation. |
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| ● | Our business needs and future growth may require additional capital, which may not be available or may be dilutive. |
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| ● | We are or may become involved from time to time in various claims and lawsuits or information-gathering requests, investigations, and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences, including expenses and ultimate exposures that cannot be ascertained. |
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| ● | We may not be able to generate sufficient taxable income to fully realize our deferred tax assets. |
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| ● | Challenges to our tax positions could result in tax liability. |
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Risks Related to the Regulatory Environment
| ● | We are subject to extensive regulation that could limit or restrict our activities, and legal, regulatory and policy changes could affect the banking industry and the economy. |
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| ● | Laws and regulations addressing consumer privacy and data use and security could increase our costs and failure to comply could impact our business, financial condition, and reputation. |
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| ● | If we fail to maintain sufficient capital, our financial condition, liquidity, and results of operations, as well as our ability to maintain regulatory compliance, would be adversely affected. |
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| ● | New regulations and new approaches to regulation or enforcement by the CFPB could adversely impact us. |
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| ● | Any issues with respect to the Bank’s compliance with the Bank Secrecy Act, as amended, and its implementing regulations could result in significant civil penalties and have a material adverse effect on our business strategy. |
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| ● | We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to material penalties and other sanctions. |
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| ● | The Federal Reserve may require us to commit capital resources to support the Bank. |
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Risks Related to Our Securities
| ● | Our ability to pay dividends is limited, and we may be unable to pay dividends in the future. |
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| ● | The trading volumes in our common stock may not provide adequate liquidity for investors. |
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| ● | Future capital needs could result in shareholder dilution and may adversely affect the market price of our securities. |
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| ● | Holders of our indebtedness and depositary shares have senior rights to those of our common shareholders. |
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| ● | Our governing documents and certain provisions of Virginia law could have an anti-takeover effect. |
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| ● | Our stock price may be volatile, which could result in losses to our investors and litigation against us. |
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General Risk Factors
| ● | Failure to maintain our reputation may materially adversely affect our performance. |
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| ● | Changes in accounting standards could impact reported earnings. |
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| ● | We are subject to risks associated with climate change and other weather and natural disaster impacts. |
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| ● | We are subject to environmental, social and governance risks that could adversely affect our reputation, the trading price of our common stock and/or our business, operations, and earnings. |
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