Business Overview and History
Atlantic Union Bankshares traces its roots back to 1902 when Union Bank & Trust Company was formed. The company was officially incorporated in 1991 under the laws of the Commonwealth of Virginia and completed its bank holding company formation in 1993 through the merger of Northern Neck Bankshares Corporation with and into Union Bancorp, Inc. to form Union Bankshares Corporation. Over the decades, the company has grown through a series of mergers and acquisitions, including the acquisitions of StellarOne Corporation in 2014, Xenith Bankshares, Inc. in 2018, Access National Corporation in 2019, and the most recent acquisition of American National Bankshares Inc. in 2024. These strategic moves have allowed Atlantic Union to significantly increase its asset size, enhance its scale, and expand its footprint throughout Virginia, Maryland, and North Carolina.
The company faced challenges during the global financial crisis of 2008 but successfully navigated this period and continued to grow and evolve. In 2019, the company changed its name from Union Bankshares Corporation to Atlantic Union Bankshares Corporation to better reflect its expanded regional presence. Some of the community banks that were acquired and ultimately merged to form what is now Atlantic Union Bank were among the oldest in Virginia at the time they were acquired.
As of December 31, 2024, Atlantic Union Bankshares reported total assets of $24.6 billion, total loans held for investment (net of deferred fees and costs) of $18.5 billion, and total deposits of $20.4 billion. The company's loan portfolio is diversified, with a focus on commercial and industrial (C&I) loans, commercial real estate (CRE) loans, and residential mortgage loans. Atlantic Union's deposit base is also well-diversified, with a healthy mix of non-interest-bearing demand deposits, interest-bearing deposits, and brokered deposits.
In October 2024, Atlantic Union announced its proposed acquisition of Sandy Spring Bancorp, Inc., a Maryland-based financial holding company. This strategic move will further cement Atlantic Union's position as the largest regional bank headquartered in the lower Mid-Atlantic region, with a robust franchise that spans Virginia, Maryland, and North Carolina. The combined entity will have a strong presence in some of the most attractive and stable markets in the country, with a diverse customer base and a broad range of product offerings.
Atlantic Union Bankshares Corporation is a financial holding company and bank holding company headquartered in Richmond, Virginia. The company provides a wide range of financial services and products to commercial and retail clients through its wholly owned subsidiary bank, Atlantic Union Bank, which has 129 branches throughout Virginia, Maryland, and North Carolina. The company also has non-bank financial services affiliates including Atlantic Union Equipment Finance, Atlantic Union Financial Consultants, and Union Insurance Group.
Financial Performance and Ratios
Atlantic Union Bankshares has demonstrated solid financial performance over the years. For the year ended December 31, 2024, the company reported net income available to common shareholders of $197.3 million, with diluted earnings per common share of $2.24. The company's return on average assets (ROAA) for the full year 2024 was 0.85%, and its return on average tangible common equity (ROTCE) was 13.61%.
The company's net interest margin (NIM) for the full year 2024 was 3.34% on a fully taxable equivalent basis, reflecting the impact of the Federal Reserve's interest rate cuts during the year. Atlantic Union's cost of funds decreased to 2.48% in 2024, down from 1.87% in the prior year, as the company was able to reduce deposit rates and shift its funding mix.
Atlantic Union's asset quality metrics remained strong, with nonperforming assets (NPAs) as a percentage of total loans held for investment at 0.32% as of December 31, 2024. The company's allowance for credit losses (ACL) stood at $193.7 million, or 1.05% of total loans held for investment, at the end of 2024.
The company's capital position also remained solid, with Atlantic Union Bankshares and Atlantic Union Bank exceeding well-capitalized regulatory requirements as of December 31, 2024. The company's common equity Tier 1 capital ratio was 9.96%, its Tier 1 capital ratio was 10.76%, and its total risk-based capital ratio was 13.61%.
Financials
Atlantic Union Bankshares has demonstrated solid financial performance over the years. For the year ended December 31, 2024, the company reported revenue of $1.23 billion and net income of $209.13 million. The company's operating cash flow for the year was $308.46 million, with free cash flow of $301.06 million.
For the most recent quarter (Q4 2024), Atlantic Union reported revenue of $222.52 million and net income of $54.80 million. Operating cash flow and free cash flow figures for the quarter were not provided.
Liquidity
The company's capital position remained solid, with Atlantic Union Bankshares and Atlantic Union Bank exceeding well-capitalized regulatory requirements as of December 31, 2024. The company's common equity Tier 1 capital ratio was 9.96%, its Tier 1 capital ratio was 10.76%, and its total risk-based capital ratio was 13.61%.
As of December 31, 2024, Atlantic Union's debt-to-equity ratio stood at 0.1522, indicating a conservative leverage position. The company held $354.07 million in cash and had access to various credit facilities, including $597 million in federal funds lines with correspondent banks, a $25 million alternate line of credit at a correspondent bank, a $7.4 billion collateral-dependent line of credit with the Federal Home Loan Bank (with $2.4 billion available), and the ability to borrow from the Federal Reserve Discount Window with $3 billion in total capacity.
Business Segments
Atlantic Union Bankshares operates through two primary business segments: Wholesale Banking and Consumer Banking.
Wholesale Banking Segment: This 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. As of December 31, 2024, the Wholesale Banking segment had $15.51 billion in loans held for investment (LHFI), net of deferred fees and costs, an increase of $2.80 billion or 22.3% from the prior year. The segment also held $7.19 billion in deposits, an increase of $790 million or 12.3% from the end of 2023. Income before taxes for this segment was $187.73 million in 2024, an increase of $78.40 million or 71.8% compared to 2023.
Consumer Banking Segment: This segment provides loan and deposit services to consumers and small businesses throughout Virginia, Maryland, and North Carolina. As of December 31, 2024, the Consumer Banking segment had $3.09 billion in LHFI, net of deferred fees and costs, an increase of $126.40 million or 4.3% from the prior year-end. Deposits for this segment were $11.90 billion, an increase of $2.10 billion or 21.2% from the end of 2023. Income before taxes for the Consumer Banking segment was $100.15 million in 2024, an increase of $20.80 million or 26.2% compared to 2023.
Outlook and Recent Developments
Looking ahead, Atlantic Union Bankshares is well-positioned for continued growth and success. The company's pending acquisition of Sandy Spring Bancorp, Inc. is expected to further strengthen its regional presence and create significant value for shareholders. The combined entity will have a robust franchise that spans Virginia, Maryland, and North Carolina, with a diverse customer base and a broad range of product offerings.
In addition to the Sandy Spring acquisition, Atlantic Union Bankshares is also focused on organic growth in its existing markets. The company's management team has expressed confidence in the economic outlook for its markets, which continue to demonstrate favorable employment trends and stable residential and commercial real estate conditions.
The company's guidance for the full year 2025, on a stand-alone basis excluding the pending Sandy Spring acquisition, includes expectations for mid-single-digit loan and deposit growth, fully taxable equivalent net interest income in the range of $775 million to $800 million, and a fully taxable equivalent net interest margin between 3.45% and 3.60%. Atlantic Union also expects its adjusted operating noninterest income to be between $125 million and $135 million, and its adjusted operating noninterest expenses (excluding intangible asset amortization) to be in the range of $475 million to $490 million for the full year.
Regarding the pending Sandy Spring acquisition, Atlantic Union expects the combined margin with Sandy Spring to be in the range of 3.75% to 4.00%, including purchase accounting accretion. The company still plans to sell the $2 billion CRE portfolio as part of the transaction, despite the backup in rates, and expects to take the full equity raise.
Risks and Challenges
Despite its strong performance and positive outlook, Atlantic Union Bankshares is not without its risks and challenges. The company operates in a highly competitive banking environment, facing competition from larger national and regional institutions, as well as from non-bank financial service providers. The company's ability to maintain its competitive edge and continue to attract and retain customers will be crucial.
Additionally, Atlantic Union's business is sensitive to changes in interest rates, economic conditions, and regulatory environments. Fluctuations in these factors could impact the company's net interest margin, asset quality, and overall financial performance.
The successful integration of the American National and Sandy Spring acquisitions will also be a key focus for the company. Failure to effectively integrate these businesses and realize the expected synergies and benefits could adversely affect Atlantic Union's financial results and shareholder value.
Conclusion
Atlantic Union Bankshares has undergone a remarkable transformation, evolving from a Virginia community bank to the largest regional bank headquartered in the lower Mid-Atlantic region. Through strategic acquisitions and organic growth, the company has built a uniquely valuable franchise that offers a diverse range of financial services and products to its customers.
With a strong capital position, solid asset quality metrics, and a favorable economic outlook in its core markets, Atlantic Union Bankshares appears well-positioned to continue its growth trajectory and deliver value to shareholders. The company's strategic focus on growing its Wholesale and Consumer Banking segments, particularly through the acquisition of American National, has contributed to its improved financial performance in 2024.
However, the company must navigate the challenges of a competitive banking environment, changing interest rate and economic conditions, and the successful integration of its recent and pending acquisitions. The company's ability to generate organic loan and deposit growth, while leveraging the benefits of the American National integration and the upcoming Sandy Spring merger, will be key drivers of its future success.
Overall, Atlantic Union Bankshares' story is one of transformation and growth, as the company continues to solidify its position as the premier mid-Atlantic bank. With its strong financial foundation, strategic acquisitions, and focus on organic growth, Atlantic Union is well-positioned to capitalize on opportunities in its core markets and deliver long-term value to its shareholders.