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What changed in Atlantic Union Bankshares Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Atlantic Union Bankshares Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+649 added−520 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-22)

Top changes in Atlantic Union Bankshares Corp's 2024 10-K

649 paragraphs added · 520 removed · 374 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

120 edited+76 added−62 removed62 unchanged
Biggest changeWe have a history of growing through both organic growth and strategic acquisitions, particularly with our three most recent acquisitions—StellarOne Corporation in 2014, Xenith Bankshares, Inc. in 2018, and Access National Corporation in 2019—which allowed us to meaningfully increase our asset size, enhance our scale and expand our footprint throughout Virginia and into portions of Maryland and North Carolina. 1 Table of Contents The table below indicates the year each of our predecessor community banks was formed, acquired by us, and merged into what is now Atlantic Union Bank. ​ ​ ​ ​ ​ ​ ​ ​ ​ Formed Acquired Merged Union Bank & Trust Company 1902 n/a 2010 Northern Neck State Bank 1909 1993 2010 King George State Bank 1974 1996 1999 Rappahannock National Bank 1902 1998 2010 Bay Community Bank 1999 de novo bank 2008 Guaranty Bank 1981 2004 2004 Prosperity Bank & Trust Company 1986 2006 2008 First Market Bank, FSB 2000 2010 2010 StellarOne Bank 1994 2014 2014 Xenith Bank 1987 2018 2018 Access National Bank 1999 2019 2019 ​ Principal Products and Services We are a full-service bank offering consumers and businesses a wide range of banking and related financial services, including checking, savings, certificates of deposit, and other depository services, as well as loans for commercial, industrial, residential mortgage, and consumer purposes.
Biggest changeThe table below indicates the year each of our predecessor community banks was formed, acquired by us, and merged into what is now Atlantic Union Bank. ​ ​ ​ ​ ​ ​ ​ ​ ​ Formed Acquired Merged Union Bank & Trust Company 1902 n/a 2010 Northern Neck State Bank 1909 1993 2010 King George State Bank 1974 1996 1999 Rappahannock National Bank 1902 1998 2010 Bay Community Bank 1999 de novo bank 2008 Guaranty Bank 1981 2004 2004 Prosperity Bank & Trust Company 1986 2006 2008 First Market Bank, FSB 2000 2010 2010 StellarOne Bank 1994 2014 2014 Xenith Bank 1987 2018 2018 Access National Bank 1999 2019 2019 American National Bank and Trust Company ​ 1909 ​ 2024 ​ 2024 ​ Principal Products and Services We are a full-service bank offering consumers and businesses a wide range of banking and related financial services, including checking, savings, certificates of deposit, and other depository services, as well as loans for commercial, industrial, residential mortgage, and consumer purposes.
We provide equipment financing to commercial and corporate customers nationwide through Atlantic Union Equipment Finance, Inc. a wholly-owned subsidiary of the Bank. Atlantic Union Equipment Finance provides financing for a wide array of equipment types, including marine, tractors, trailers, buses, construction, manufacturing, and medical. Wealth Management, Trust and Insurance .
Equipment Finance. We provide equipment financing to commercial and corporate customers nationwide through Atlantic Union Equipment Finance, Inc., a wholly owned subsidiary of the Bank. Atlantic Union Equipment Finance provides financing for a wide array of equipment types, including marine, tractors, trailers, buses, construction, manufacturing, and medical. Wealth Management, Trust and Insurance .
Our management also continues to review the pricing of our products and services, in light of current and expected costs due to inflation, to seek to mitigate the inflationary impact on our financial performance. SUPERVISION AND REGULATION We are extensively regulated under both federal and state laws.
Our management also continues to review the pricing of our products and services, in light of current and expected costs due to inflation, to seek to mitigate the inflationary impact on our financial performance. SUPERVISION AND REGULATION We are extensively regulated and supervised under both federal and state laws.
Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and our operating environment in substantial and unpredictable ways.
Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation or regulation could change banking statutes and our operating environment in substantial and unpredictable ways.
As a result, in connection with such discretionary overdraft services, consumers would receive new disclosures and would be evaluated for their ability to repay the obligation. The proposed rule would exempt “courtesy” overdraft services, which are services where the overdraft fee covers only the break-even cost of the service or falls within a CFPB-prescribed break-even cost.
As a result, in connection with such discretionary overdraft services, consumers would receive new disclosures and would be evaluated for their ability to repay the obligation. The final rule would exempt “courtesy” overdraft services, which are services where the overdraft fee covers only the break-even cost of the service or falls within a CFPB-prescribed break-even cost.
In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount. Qualified mortgages that are “higher-priced” (e.g., subprime loans) garner a rebuttable presumption of compliance with the ability-to-repay rules, while qualified mortgages that are not “higher-priced” (e.g., prime loans) are given a safe harbor of compliance.
In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount. Qualified mortgages that are higher-priced (e.g., subprime loans) garner a rebuttable presumption of compliance with the ability-to-repay rules, while qualified mortgages that are not “higher-priced” (e.g., prime loans) are given a safe harbor of compliance.
Federal Reserve policy provides that bank holding companies, such as the Company, should generally pay dividends to shareholders only if (i) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality and overall financial condition; and (iii) the organization will continue to meet minimum capital adequacy ratios.
Federal Reserve policy provides that bank holding companies, such as the Company, should generally pay dividends to shareholders only if (i) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention appears consistent with the 15 Table of Contents organization’s capital needs, asset quality and overall financial condition; and (iii) the organization will continue to meet minimum capital adequacy ratios.
If the company does not return to compliance within 180 days, the Federal Reserve may require the financial holding company to divest its depository institution subsidiaries or to cease engaging in any activity that is financial in nature (or incident to such financial activity) or complementary to a financial activity. ​ In order for a financial holding company to commence any new activity permitted by the BHCA or to acquire a company engaged in any new activity permitted by the BHCA, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA.
If the company does not return to compliance within 180 days, the Federal Reserve may require the financial holding company to divest its depository institution subsidiaries or to cease engaging in any activity that is financial in nature (or incident to such financial activity) or complementary to a financial activity. ​ For a financial holding company to start any new activity permitted by the BHCA or to acquire a company engaged in any new activity permitted by the BHCA, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA.
In connection with making mortgage loans, we are subject to rules and regulations that, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers, in some cases restrict certain loan features and fix maximum interest rates and fees, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level.
In connection with making mortgage loans, we are subject to rules and regulations that, among other things, establish standards for loan origination and servicing, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers, in some cases restrict certain loan features and fix maximum interest rates and fees, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level, and establish requirements for servicing mortgage loans including loan mitigation.
The Company elected to phase in the regulatory capital impact as permitted under this final rule. The CECL transition amount is being phased out of regulatory capital over a three-year period that began in 2022 and ends in 2024.
The Company elected to phase in the regulatory capital impact as permitted under this final rule. The CECL transition amount is being phased out of regulatory capital over a three-year period that began in 2022 and ended in 2024.
If enacted, such legislation could increase or decrease our cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions.
If enacted or implemented, such legislation or regulation could increase or decrease our cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions.
Our insurance division, Union Insurance Group, LLC, is a wholly owned subsidiary of the Bank that operates under an agreement with Bankers Insurance LLC, a large insurance agency owned by community banks across Virginia and managed by the Virginia Bankers Association.
Our insurance affiliate, Union Insurance Group, LLC, is a wholly owned subsidiary of the Bank that operates under an agreement with Bankers Insurance LLC, a large insurance agency owned by community banks across Virginia and managed by the Virginia Bankers Association.
We also offer a holistic wellbeing program that provides opportunities for teammates to earn financial incentives by participating in wellness activities designed to build and sustain healthy habits. ​ 4 Table of Contents Talent Development and Training ​ We believe our human capital is our most important asset, and we are committed to investing in the growth and development of our teammates.
We also offer a holistic wellbeing program that provides opportunities for teammates to earn financial incentives by participating in wellness activities designed to build and sustain healthy habits. ​ Talent Development and Training ​ We believe our human capital is our most important asset, and we are committed to investing in the growth and development of our teammates.
These and additional mandatory and permissive supervisory actions may be taken with respect to significantly undercapitalized and critically undercapitalized institutions. The Bank met the definition of being “well capitalized” as of December 31, 2023.
These and additional mandatory and permissive supervisory actions may be taken with respect to significantly undercapitalized and critically undercapitalized institutions. The Bank met the definition of being “well capitalized” as of December 31, 2024.
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities with at least $1 billion in total consolidated assets, that encourage inappropriate risks by providing an executive officer, employee, director, or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the entity.
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities with at least $1 billion in total consolidated assets, that encourage inappropriate risks by providing an executive officer, employee, director, or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss 23 Table of Contents to the entity.
We strive to provide a differentiated customer experience that is authentically human and digital forward. Lending Activities. Our loan portfolio consists primarily of commercial, industrial, residential mortgage, and consumer loans. A substantial portion of our loan portfolio is represented by commercial and residential real estate loans (including acquisition and development loans and residential construction loans).
We strive to provide a differentiated customer experience that is authentically human and digital forward. Lending Activities. Our loan portfolio consists primarily of commercial, industrial, residential mortgage, and consumer loans. A substantial portion of our loan portfolio is represented by commercial and residential real estate loans (including 8 Table of Contents acquisition and development loans and residential construction loans).
In addition, for a depository institution to be considered “well capitalized” under the regulatory framework for PCA, its Tier 1 leverage ratio must be at least 5.0%. Banking organizations that have experienced internal growth or made acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets.
In addition, for a depository institution to be considered “well capitalized” under the regulatory framework for Prompt Corrective Action, its Tier 1 leverage ratio must be at least 5.0%. Banking organizations that have experienced internal growth or made acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets.
On August 26, 2020, the federal bank regulatory agencies adopted a final rule that allowed the Company to phase in the impact of adopting the CECL methodology up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.
On August 26, 2020, the federal bank regulatory agencies adopted a final rule that allowed the Company to phase in the impact of adopting the CECL methodology up to two years, with a three-year transition period to phase out the 17 Table of Contents cumulative benefit to regulatory capital provided during the two-year delay.
Immediately upon becoming “undercapitalized,” a depository institution becomes subject to the provisions of Section 38 of the FDIA, which: (i) restrict payment of capital distributions and management fees; (ii) require that the appropriate federal banking agency monitor the condition of the institution and its efforts to restore its capital; (iii) require submission of a capital restoration plan; (iv) restrict the growth of the institution’s assets; and (v) require prior approval of certain expansion proposals.
Immediately upon becoming “undercapitalized,” a depository institution becomes subject to the provisions of Section 38 of the Federal Deposit Insurance Act, which: (i) restrict payment of capital distributions and management fees; (ii) require that the appropriate federal banking agency monitor the condition of the institution and its efforts to restore its capital; (iii) require submission of a capital restoration plan; (iv) restrict the growth of the institution’s assets; and (v) require prior approval of certain expansion proposals.
If we fail to meet the expectations set forth in this regulatory guidance, we could be subject to various regulatory actions and any remediation efforts may require us to devote significant resources. ​ On November 18, 2021, the federal bank regulatory agencies issued a final rule to improve the sharing of information about cyber incidents that may affect the U.S. banking system.
If we fail to meet the expectations set forth in this regulatory guidance, we could be subject to various regulatory actions and any remediation efforts may require us to devote significant resources. ​ The federal bank regulatory agencies issued a final rule to improve the sharing of information about cyber incidents that may affect the U.S. banking system.
These discretionary supervisory actions include: (i) requiring the institution to raise additional capital; (ii) restricting transactions with affiliates; (iii) requiring divestiture of the institution or the sale of the institution to a willing purchaser; and (iv) any other supervisory action that the agency deems appropriate.
These discretionary supervisory actions include: (i) requiring the institution to raise additional capital; (ii) restricting transactions with affiliates; (iii) requiring 18 Table of Contents divestiture of the institution or the sale of the institution to a willing purchaser; and (iv) any other supervisory action that the agency deems appropriate.
The rules permit an upward adjustment to an issuer’s 9 Table of Contents debit card interchange fee of no more than one cent per transaction if the issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards.
The rules permit an upward adjustment to an issuer’s debit card interchange fee of no more than one cent per transaction if the issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards.
We provide both commercial and consumer customers a diverse array of deposit products, including checking accounts, savings accounts, and certificates of deposit, among others. Our deposits are primarily made to 2 Table of Contents customers based in Virginia and portions of Maryland and North Carolina.
We provide both commercial and consumer customers a diverse array of deposit products, including checking accounts, savings accounts, and certificates of deposit, among others. Our deposits are primarily made to customers based in Virginia and portions of Maryland and North Carolina.
The special assessment will be collected at an annual rate of approximately 13.4 basis points for an anticipated total of eight quarterly assessment periods beginning with the first quarterly assessment period in 2024, with the first payment due on June 28, 2024.
The special assessment will be collected at an annual rate of approximately 13.4 bps for an anticipated total of eight quarterly assessment periods beginning with the first quarterly assessment period in 2024, with the first payment due on June 28, 2024.
The appropriate federal banking agency for an undercapitalized institution also may take any number of discretionary supervisory actions if the agency determines that any of these actions is necessary to resolve the problems of the institution at the least possible long-term cost to the DIF, subject in certain cases to specified procedures.
The appropriate federal banking agency for an undercapitalized institution also may take any number of discretionary supervisory actions if the agency determines that any of these actions is necessary to resolve the problems of the institution at the least possible long-term cost to the Deposit Insurance Fund, subject in certain cases to specified procedures.
There are a number of obligations and restrictions imposed on bank holding companies and their subsidiary banks by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and the DIF in the event of a depository institution insolvency, receivership, or default.
There are a number of obligations and restrictions imposed on bank holding companies and their subsidiary banks by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and the Deposit Insurance Fund in the event of a depository institution insolvency, receivership, or default.
Competition for deposits and loans is 5 Table of Contents affected by various factors including, without limitation, interest rates offered, the number and location of branches and types of products offered, digital capabilities, and the reputation of the institution.
Competition for deposits and loans is affected by various factors including, without limitation, interest rates offered, the number and location of branches and types of products offered, digital capabilities, and the reputation of the institution.
The federal bank regulatory agencies expect financial institutions to establish lines of defense and to ensure that their risk management processes address the risk posed by compromised customer credentials, and also expect financial institutions to maintain sufficient business continuity planning processes to ensure rapid recovery, resumption and maintenance of the institution’s operations after a cyberattack.
For example, the federal bank regulatory agencies expect financial institutions to establish lines of defense and to ensure that their risk management processes address the risk posed by compromised customer credentials and also 22 Table of Contents expect financial institutions to maintain sufficient business continuity planning processes to ensure rapid recovery, resumption and maintenance of the institution’s operations after a cyberattack.
We offer a variety of benefit programs that flex to meet the needs of our diverse and multigenerational population, as we strive for a differentiated and personalized experience and to deliver what is most important to teammates throughout the various stages of their lives and careers.
We offer a variety of benefit programs that flex to meet the needs of teammates, as we strive for a differentiated and personalized experience and to deliver what is most important to teammates throughout the various stages of their lives and careers.
We are headquartered in Richmond, Virginia and provide a wide range of financial services and products to commercial and retail clients through our wholly-owned subsidiary bank, Atlantic Union Bank, a Federal Reserve member bank charted under the laws of the Commonwealth of Virginia. ​ The Bank is headquartered in Richmond, Virginia and, as of December 31, 2023, operated 109 branches and 123 ATMs located throughout Virginia, and portions of Maryland and North Carolina.
We are headquartered in Richmond, Virginia and provide a wide range of financial services and products to commercial and retail clients through our wholly owned subsidiary bank, Atlantic Union Bank, a Federal Reserve member bank charted under the laws of the Commonwealth of Virginia. ​ The Bank is headquartered in Richmond, Virginia and, as of December 31, 2024, operated 129 branches located throughout Virginia and portions of Maryland and North Carolina.
The FDIC has adopted a large-bank pricing assessment structure, set a target “designated reserve ratio” of 2% for the DIF, and in lieu of dividends, provides for a lower assessment rate schedule, when the reserve ratio reaches 2% and 2.5%.
The FDIC has adopted a large-bank pricing assessment structure, set a target “designated reserve ratio” of 2% for the Deposit Insurance Fund, and in lieu of dividends, provides for a lower assessment rate schedule, when the reserve ratio reaches 2% and 2.5%.
Supervision, regulation, and examination of banks by regulatory agencies are intended primarily for the protection of depositors and customers, the deposit insurance fund and the U.S. banking and financial system rather than shareholders. ​ 6 Table of Contents Both the scope of the laws and regulations and the intensity of the supervision to which we are subject have increased in recent years, initially in response to the global financial crisis of 2008, and more recently in light of other factors such as continued turmoil and stress in the financial markets, technological factors, market changes, and increased scrutiny of proposed bank mergers and acquisitions by federal and state bank regulators.
Supervision, regulation, and examination of banks by regulatory agencies are intended primarily for the protection of depositors and customers, the Deposit Insurance Fund and the U.S. banking and financial system rather than shareholders. ​ Both the scope of the laws and regulations and the intensity of the supervision to which we are subject have increased in recent years, initially in response to the global financial crisis of 2008, and more recently in light of other factors such as the high-profile bank failures in 2023, stress in the financial markets, technological factors, market changes, and increased scrutiny of proposed bank mergers and acquisitions by federal and state bank regulators.
In order to accomplish this, it is crucial that we continue to attract and retain talent who desire to enrich the lives of the people and communities that we serve.
To accomplish this, it is crucial that we continue to identify, attract and retain talent who desire to enrich the lives of the people and communities that we serve.
See below under “The Bank – Community Reinvestment Act.” 7 Table of Contents Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any activity or to terminate ownership or control of any subsidiary when the Federal Reserve has reasonable cause to believe that a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that bank holding company may result from such an activity.
See below under “The Bank – Community Reinvestment Act.” The Federal Reserve may order a bank holding company or its subsidiaries to terminate any activity or to terminate ownership or control of any subsidiary when the Federal Reserve has reasonable cause to believe that a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that bank holding company may result from such an activity.
For the years ended December 31, 2023, 2022, and 2021, we incurred deposit insurance assessment expenses of $18.0 million, $8.3 million, and $7.8 million, respectively.
For the years ended December 31, 2024, 2023, and 2022, we incurred deposit insurance assessment expenses of $18.3 million, $18.0 million, and $8.3 million, respectively.
To facilitate talent attraction and retention, we strive to create an inclusive, diverse, safe, and healthy workplace, that provides opportunities for our teammates to grow and develop in their careers, supported by strong compensation, benefits, health and welfare programs. ​ Employee Profile ​ As of December 31, 2023, we had 1,804 full-time equivalent employees (who we refer to as “teammates”).
To facilitate talent attraction and retention, we strive to create an inclusive, safe, and healthy workplace, that provides opportunities for our teammates to grow and develop in their careers, supported by strong compensation, benefits, health and welfare programs. ​ Employee Profile ​ As of December 31, 2024, we had 2,125 full-time equivalent employees (who we refer to as “teammates”).
Charitable donations, small business lending, volunteerism, teaching financial literacy and promoting diversity and inclusion within our communities, are some of the ways we give back. ​ Compensation and Benefits ​ Our compensation programs are designed to attract, retain, and motivate high performing talent and provide market aligned pay programs in support of our business strategies.
Charitable donations, small business lending, volunteerism, teaching financial literacy and promoting service within our communities are some of the ways we give back. ​ 10 Table of Contents Compensation and Benefits ​ Our compensation programs are designed to attract, retain, and motivate high performing talent and provide market aligned pay programs in support of our business strategies.
The rule requires a banking organization to notify its primary federal regulator of any significant computer-security incident as soon as possible and no later than 36 hours after the banking organization determines that a cyber incident has occurred.
The rule requires a banking organization to notify its primary federal regulator of any significant “computer-security incident” as soon as possible and no later than 36 hours after the banking organization determines that a notification incident has occurred.
We are committed to cultivating these programs to fortify a robust talent pipeline, allow for continuous growth and support effective leadership transitions. ​ All teammates have access to training opportunities through a learning management system and/or learning experience platform. We offer training through multiple modalities, including e-learning, job aids, videos, instructor-led, and on-the-job practice supported by trained mentors.
Our leadership development efforts are designed to fortify a robust talent pipeline, allow for continuous growth, and support effective leadership transitions. ​ All teammates have access to training opportunities through a learning management system and/or learning experience platform. We offer training through multiple modalities, including e-learning, job aids, videos, instructor-led, and on-the-job practice supported by trained mentors.
Under the FDIA, insured depository institutions such as the Bank, are prohibited from making capital distributions, including the payment of dividends, if, after making such distributions, the institution would become “undercapitalized” (as such term is used in the statute).
Under the Federal Deposit Insurance Act, insured depository institutions such as the Bank, are prohibited from making capital distributions, including the payment of dividends, if, after making such distributions, the institution would become “undercapitalized” (as such term is used in the statute).
The authority of the Bank to engage in transactions with related parties or “affiliates,” or to make loans to insiders, is limited by Sections 23A and 23B of the Federal Reserve Act of 1913, as amended and Regulation W.
The authority of the Bank to engage in transactions with related parties or affiliates, or to make loans to insiders, is limited by Sections 23A and 23B of the Federal Reserve Act of 1913 and Regulation W.
The proposed merger is expected to close in the second quarter of 2024. ​ History The Company was originally incorporated under the laws of the Commonwealth of Virginia in 1991, and we completed our bank holding company formation in July 1993, in connection with the merger of Northern Neck Bankshares Corporation with and into Union Bancorp, Inc. to form Union Bankshares Corporation, which was renamed Atlantic Union Bankshares Corporation in 2019.
History The Company was originally incorporated under the laws of the Commonwealth of Virginia in 1991, and we completed our bank holding company formation in July 1993, in connection with the merger of Northern Neck Bankshares Corporation with and into Union Bancorp, Inc. to form Union Bankshares Corporation, which was renamed Atlantic Union Bankshares Corporation in 2019.
We expect to continue to assess future strategic opportunities based on market and other conditions, applying a number of criteria, including transactions that: ​ ● enhance our footprint, allowing for cost savings and economies of scale, or allow us to expand into contiguous markets, or that otherwise may be strategically compelling (such as transactions that diversify our revenue streams) or add attractive business lines, products, services or technological capabilities; ● meet our financial criteria; and ● are consistent with our risk appetite. ​ These transactions may include whole bank and non-bank mergers and acquisitions, minority investments, or strategic partner equity investments. ​ HUMAN CAPITAL RESOURCES We continuously seek to balance our commitments to our key stakeholders: our teammates, customers, shareholders, regulators, and communities.
Our merger and acquisition strategy has focused on institutions that are a strong cultural fit and that are consistent with our philosophy of soundness, profitability, and growth. 9 Table of Contents We expect to continue to assess future strategic opportunities based on market and other conditions, applying a number of criteria, including transactions that: ​ ● enhance our footprint, allowing for cost savings and economies of scale, or allow us to expand into contiguous markets, or that otherwise may be strategically compelling (such as transactions that diversify our revenue streams) or add attractive business lines, products, services or technological capabilities; ● meet our financial criteria; and ● are consistent with our risk appetite. ​ These transactions may include whole bank and non-bank mergers and acquisitions, minority investments, or strategic partner equity investments. ​ HUMAN CAPITAL RESOURCES We continuously seek to balance our commitments to our key stakeholders: our teammates, customers, shareholders, regulators, and communities.
In November 2023, the FDIC approved a special assessment to recover the loss to the DIF associated with the closures of Silicon Valley Bank and Signature Bank in early 2023.
In November 2023, the FDIC approved a special assessment to recover the loss to the Deposit Insurance Fund associated with the closures of Silicon Valley Bank and Signature Bank in early 2023.
We strive to foster a culture and workplace that, among other things, is inclusive and welcoming, treats everyone with respect and dignity, promotes people on their merits, and promotes diversity of thoughts, ideas, perspective, and values.
We strive to foster a culture and workplace that, among other things, is inclusive and welcoming, treats everyone with respect and dignity, promotes people on their merits, and encourages different ways of thinking, ideas, perspective, and values.
Financial institutions would be responsible for making specified information available through an electronic interface including 24 months of transactional data available, account information (e.g., account balance, upcoming bills, basic account verification) information to initiate payment to and from accounts, and terms and conditions under which the account or card was provided.
Financial institutions are required to make specified information available through an electronic interface including 24 months of transactional data available, account information (e.g., account balance, upcoming bills, basic account verification) information to initiate payment to and from accounts, and terms and conditions under which the account or card was provided.
We also offer annual merit-based salary increases to eligible teammates. ​ Approximately 69% of our teammates are provided with an incentive opportunity under a formal incentive plan with measurable goals and metrics. All incentive programs have both upside and downside potential and are linked to both the individual’s and our performances.
We also offer annual merit-based salary increases to eligible teammates. ​ Approximately 65% of our teammates are provided with an incentive opportunity under a formal incentive plan with measurable goals and metrics. All incentive programs have both upside and downside potential and are linked to both individual and company performance.
Activities that are financial in nature include, but are not limited to, securities underwriting and dealing, insurance underwriting, and making merchant banking investments. To maintain financial holding company status, a financial holding company and all of its depository institution subsidiaries must be “well capitalized” and “well managed” as defined under applicable Federal Reserve requirements.
These activities include securities underwriting and dealing, insurance underwriting, and making merchant banking investments. To maintain financial holding company status, a financial holding company and all of its depository institution subsidiaries must be “well capitalized” and “well managed” as defined under applicable Federal Reserve requirements.
COMPETITION The financial services industry remains highly competitive and is constantly evolving. We experience strong competition in all aspects of our business. In our market areas, we compete with large national and regional financial institutions, credit unions, other independent community banks, as well as consumer finance companies, mortgage companies, loan production offices, mutual funds, life insurance companies and fintech companies.
We experience strong competition in all aspects of our business. In our market areas, we compete with large national and regional financial institutions, credit unions, other independent community banks, as well as consumer finance companies, mortgage companies, loan production offices, mutual funds, life insurance companies and fintech companies.
The Federal Reserve’s regulatory capital rules also provide that the Company’s trust preferred securities qualify as Tier 2 capital. The Company has $143.5 million of trust preferred securities outstanding and approximately $21.2 billion in assets as of December 31, 2023.
The Federal Reserve’s regulatory capital rules also provide that the Company’s trust preferred securities qualify as Tier 2 capital. The Company has $170.5 million of trust preferred securities outstanding and approximately $24.6 billion in assets as of December 31, 2024.
The following description briefly describes certain aspects of those regulations that are material to us and does not purport to be a complete description of all regulations, or aspects of those regulations, that affect us.
The following description describes certain aspects of those regulations that are material to us and is not a complete description of all regulations, or aspects of those regulations, that affect us.
The “prompt corrective action” regulations pursuant to Section 38 of the FDIA require for well-capitalized status a minimum Tier 1 leverage ratio of 5.0%, a minimum common equity Tier 1 capital ratio of 6.5%, a minimum Tier 1 capital ratio of 8.0%, and a minimum total capital ratio of 10.0%. Community Reinvestment Act.
The prompt corrective action regulations pursuant to Section 38 of the Federal Deposit Insurance Act require for well-capitalized status a minimum Tier 1 leverage ratio of 5.0%, a minimum common equity Tier 1 capital ratio of 6.5%, a minimum Tier 1 capital ratio of 8.0%, and a minimum total capital ratio of 10.0%. Community Reinvestment Act.
None of our teammates are represented by a union or covered under a collective bargaining agreement. ​ As of December 31, 2023, our workforce was comprised of approximately 65% women and 22% self-identified minorities, and the average tenure of our teammates was 7.5 years. ​ 3 Table of Contents Our Workplace Culture ​ We seek to be recognized as the Premier Mid-Atlantic Bank – a high performing company that makes banking easy by providing competitive banking solutions, a highly differentiated customer and teammate experience and a great place to work.
None of our teammates are represented by a union or covered under a collective bargaining agreement. ​ As of December 31, 2024, the average tenure of our teammates was 7.5 years. ​ Our Workplace Culture ​ We seek to be recognized as the premier Mid-Atlantic Bank – a high performing company that makes banking easy by providing competitive banking solutions, a highly differentiated customer and teammate experience and a great place to work.
Each Federal Home Loan Bank serves as a reserve, or central bank, for the members within its 12 Table of Contents assigned region, and makes loans to its members in accordance with policies and procedures established by the Board of Directors of the applicable Federal Home Loan Bank.
Each Federal Home Loan Bank serves as a reserve, or central bank, for the members within its assigned region, and makes loans to its members in accordance with policies and procedures established by the Board of Directors of the applicable Federal Home Loan Bank. As a member, the Bank must purchase and maintain stock in the FHLB.
Our deposit market share in Virginia was 5.3% of total bank deposits as of June 30, 2023, making us the largest regional bank headquartered in Virginia at that time. ECONOMY The economies in our market areas are diverse and include local and federal government, military, agriculture, and manufacturing.
Our deposit market share in Virginia was 6.4% of total bank deposits as of June 30, 2024, based on FDIC deposit data, making us the largest regional bank headquartered in Virginia at that time. ECONOMY The economies in our market areas are diverse and include local and federal government, military, agriculture, and manufacturing.
In addition, Virginia law requires the prior approval of the Virginia SCC for (i) the acquisition by a Virginia bank holding company of more than 5% of the voting shares of a Virginia bank or a Virginia bank holding company, or (ii) the acquisition by any other person of control of a Virginia bank holding company or a Virginia bank.
In addition, Virginia law requires the prior approval of the Bureau of Financial Institutions, a division of the Bureau of Financial Institutions, a division of the Virginia State Corporation Commission for (i) the acquisition by a Virginia bank holding company of more than 5% of the voting shares of a Virginia bank or a Virginia bank holding company, or (ii) the acquisition by any other person of control of a Virginia bank holding company or a Virginia bank.
On January 17, 2024, the CFPB issued a notice of proposed rulemaking that would amend Regulation E and Regulation Z, which implement the Truth in Lending Act, and treat discretionary overdraft services offered by financial institutions with more than $10 billion in assets as credit.
On December 12, 2024, the CFPB issued a final rule that would amend Regulation E and Regulation Z, which implement the Truth in Lending Act, and treat discretionary overdraft services offered by financial institutions with more than $10 billion in assets as credit.
We embrace diversity of thought and identity to better serve our stakeholders and achieve our purpose. We are committed to cultivating an inclusive and welcoming workplace where teammate and customer perspectives are valued and respected. We also seek to foster a culture of giving back to the communities where our customers live, work, and play.
We are committed to cultivating an inclusive and welcoming workplace where teammate and customer perspectives are valued and respected. We also seek to foster a culture of giving back to the communities where our customers live, work, and play.
We are also subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act, both as administered by the SEC, as well as the rules of the NYSE that apply to companies with securities listed on the NYSE. The Company General .
We are also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), both as administered by the SEC, as well as the rules of the NYSE that apply to companies with securities listed on the NYSE. 13 Table of Contents The Company General .
In addition to job specific training, all teammates are required to complete mandatory compliance courses on a wide range of Company policies and procedures, such as our anti-discrimination policies and ethical standards and in response to regulatory requirements and changes. ​ Diversity, Equity, Inclusion, and Belonging ​ We are committed to hiring diverse talent and fostering, cultivating, and preserving a culture of diversity, equity, inclusion, and belonging.
In addition to job specific training, all teammates are required to complete 11 Table of Contents mandatory compliance courses on a wide range of Company policies and procedures, such as our anti-discrimination policies and ethical standards and in response to regulatory requirements and changes. ​ Inclusion and Belonging ​ We are committed to fostering, cultivating, and preserving a culture of inclusion and belonging that welcomes varied backgrounds and experiences.
Our mortgage division, Atlantic Union Home Loans, originates the majority of our residential mortgage loans to borrowers nationwide, largely with the intent to sell such loans into the secondary mortgage markets. We also originate certain mortgage loans to our customers within our branch footprint to hold for investment. Equipment Finance.
Our mortgage unit, Atlantic Union Home Loans, originates the majority of our residential mortgage loans to borrowers within our branch footprint, largely with the intent to sell such loans into the secondary mortgage markets. We also originate certain mortgage loans to our customers outside our branch footprint with the intent to sell such loans into the secondary mortgage markets.
The proposed rule adds consumer protection obligations on 14 Table of Contents financial institutions and third parties authorized by the consumer to collect and use that data.
The final rule adds consumer protection obligations on financial institutions and third parties authorized by the consumer to collect and use that data.
In July 2023, the Federal Reserve Board and the FDIC issued proposed rules to implement the final components of the Basel III agreement, often known as the “Basel III endgame.” These proposed rules contain provisions that apply to banks with $100 billion or more in total assets and that will significantly alter how those banks calculate risk-based assets.
In July 2023, the Federal Reserve Board and the FDIC issued proposed rules to implement the final components of the Basel III agreement, commonly known as the “Basel III endgame.” These proposed rules contained provisions that would apply to banks with $100 billion or more in total assets.
The FOMC has noted that it will continue to assess additional information and its implications for monetary policy, and in determining future actions with respect to the target rates, the FOMC 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.
In determining future actions with respect to the target rates, the FOMC 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.
Under the FDIA, the federal bank regulatory agencies have adopted guidelines prescribing safety and soundness standards. These guidelines establish general standards relating to capital management, internal controls and information systems, internal audit systems, information systems, data security, loan documentation, credit underwriting, interest rate exposure and risk management, vendor management, corporate governance, asset growth and compensation, fees, and benefits.
These guidelines establish general standards relating to capital management, internal controls and information systems, internal audit systems, information systems, data security, loan documentation, credit underwriting, interest rate exposure and risk management, vendor management, corporate governance, asset growth and compensation, fees, and benefits.
An institution’s assessment rate is based on a statistical analysis of financial ratios that estimates the likelihood of failure over a three-year period, which considers the institution’s weighted average CAMELS composite rating, which is the rating system bank supervisory authorities use to rate financial institutions and is subject to further adjustments including related to levels of unsecured debt and brokered deposits.
An institution’s assessment rate is based on a statistical analysis of financial ratios that estimates the likelihood of failure over a three-year period, which considers the institution’s weighted average capital adequacy, asset quality, management, earnings, liquidity, and sensitivity, or CAMELS, composite rating and is subject to further adjustments including related to levels of unsecured debt and brokered deposits.
The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall.
Banking 16 Table of Contents institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall.
In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours. The rule became effective May 1, 2022.
In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially disrupted or degraded or is reasonably likely to materially disrupt or degrade covered services provided to such banking organization customers for four or more hours.
A change in applicable laws, regulations, or regulatory guidance, or in the manner such laws, regulations or regulatory guidance are interpreted by regulatory agencies or courts, may have a material adverse effect on our business, operations, and earnings.
In addition to laws and regulations, bank regulatory agencies may issue policy statements, interpretive letters, and similar written guidance applicable to us. A change in applicable laws, regulations, or regulatory guidance, or in the manner such laws, regulations or regulatory guidance are interpreted by regulatory agencies or courts, may have a material adverse effect on our business, operations, and earnings.
Based on the Bank’s current financial condition, the Company does not expect that this provision will have any impact on its ability to receive dividends from the Bank. The Bank General . The Bank is chartered by the Commonwealth of Virginia and is supervised and regularly examined by the Virginia SCC.
Based on the Bank’s current financial condition, the Company does not expect that this provision will have any impact on its ability to receive dividends from the Bank. The Bank General .
The permitted activities of a bank holding company are limited to managing or controlling banks, furnishing services to or performing services for its subsidiaries, and engaging in other activities that the Federal Reserve determines by regulation or order to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
The BHCA generally limits the activities permissible for a bank holding company to the business of banking, managing or controlling banks, and engaging in such other activities that the Federal Reserve determines by regulation or order to be so closely related to banking as to be a proper incident thereto.
The Bank is a member of the FHLB of Atlanta, which is one of 12 regional Federal Home Loan Banks that provide funding to their members for making housing loans as well as for affordable housing and community development loans.
We cannot currently predict the nature and timing of future developments that may potentially impact the final CRA rule. FHLB. The Bank is a member of the FHLB of Atlanta, which is one of 12 regional Federal Home Loan Banks that provide funding to their members for making housing loans as well as for affordable housing and community development loans.
Interchange fees, or “swipe” fees, are charges that merchants pay to the Bank and other card-issuing banks for processing electronic payment transactions.
Certain of these laws and regulations are referenced above under “The Company”. Interchange Fees. Interchange fees, or “swipe” fees, are charges that merchants pay to the Bank and other card-issuing banks for processing electronic payment transactions.
The Bank, as a member of the Federal Reserve System, is also supervised and regularly examined by the Federal Reserve. The Bank is also subject to regulation by the CFPB, as an institution with more than $10 billion in assets.
The Bank is also subject to regulation and supervision by the CFPB, as an institution with more than $10 billion in assets.
The 2023 expense includes the impact of the 2 bps initial base deposit insurance assessment rate increase, effective the first quarter of 2023, as well as $3.4 million attributable to the FDIC’s special assessment described above. 11 Table of Contents Transactions with Affiliates .
The 2024 and 2023 expenses included the impact of the 2 bps initial base deposit insurance assessment rate increase, effective the first quarter of 2023, as well as $840,000 and $3.4 million for the years ended 2024 and 2023, respectively, attributable to the FDIC’s special assessment described above. Transactions with Affiliates .
In addition, our non-bank financial services affiliates 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. ​ At December 31, 2023, we had approximately $21.2 billion in assets, $15.6 billion in LHFI (net of deferred fees and costs), $16.8 billion in deposits, and $2.6 billion in stockholders’ equity. ​ Recent Developments ​ On July 24, 2023, the Company and American National entered into a merger agreement.
In addition, our non-bank financial services affiliates 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. ​ At December 31, 2024, we had $24.6 billion in assets, $18.5 billion in LHFI (net of deferred fees and costs), $20.4 billion in deposits, and $3.1 billion in stockholders’ equity. ​ Recent Developments ​ Acquisition of American National Bankshares Inc. ​ On April 1, 2024, we completed our merger with American National, the holding company for American National Bank and Trust Company.
Based on Virginia Employment Commission data, the state’s seasonally adjusted unemployment rate was 3.0% as of December 31, 2023 and 2022 and continued to be below the national rate of 3.7% at December 31, 2023. Our operations are affected not only by general economic conditions but also by the policies of various regulatory authorities.
Based on Bureau of Labor Statistics data, North Carolina’s seasonally adjusted unemployment rate was 3.7% and 3.6%, respectively, at December 31, 2024 and 2023, also below the national rate. Our operations are affected not only by general economic conditions but also by the policies of various regulatory authorities.
Refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section “Capital Resources” of this Form 10-K for information regarding the impact of this final rule on the Company’s regulatory capital. Deposit Insurance.
Refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section “Capital Resources” of this Form 10-K for information regarding the impact of this final rule on the Company’s regulatory capital. Deposit Insurance. The Bank’s deposits are insured by the FDIC in the standard insurance amount of $250,000 per depositor for each account ownership type.
Our Wholesale Banking segment provides loan, leasing, and deposit services, as well as treasury management, SBA lending and capital market services to our wholesale customers primarily throughout Virginia, Maryland, North Carolina, and South Carolina. These customers include commercial real estate and commercial and industrial customers.
Our Wholesale Banking segment provides loan, leasing, and deposit services, as well as treasury management and capital market services to our 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.
Federal law subjects financial holding companies, such as the Company, to particular restrictions and qualifications on the types of activities in which they may engage, and to a range of supervisory requirements and activities. The Company is also registered under the bank holding company laws of Virginia and is subject to supervision, regulation, and examination by the Virginia SCC.
Federal law subjects financial holding companies, such as the Company, to restrictions and qualifications on the types of activities in which they may engage, and to a range of supervisory requirements and activities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeShareholder litigation could prevent or delay the completion of our proposed merger with American National or otherwise negatively impact our business, financial condition, and results of operations. ​ Shareholders of the Company and/or American National may file lawsuits against the Company, American National and/or the directors and officers of either company in connection with the proposed merger.
Biggest changeCompetitors may target each party’s existing customers by highlighting potential uncertainties and integration difficulties that may result from the merger. ​ In addition, subject to certain exceptions, we and Sandy Spring have agreed to operate our respective businesses in the ordinary course consistent with past practice in all material respects before closing, and we and Sandy Spring have agreed not to take certain actions, which could cause us or Sandy Spring to be unable to pursue other beneficial opportunities that may arise before the completion of the merger. ​ Shareholder litigation could prevent or delay the completion of the merger or otherwise negatively impact our business, financial condition and results of operations. ​ Shareholders of Atlantic Union and/or stockholders of Sandy Spring have filed and may file lawsuits against the Company, Sandy Spring and/or the directors and officers of either company in connection with the merger.
Accordingly, use of such third parties creates an unavoidable inherent risk to our business operations. Additionally, we are exposed to the risk that a service disruption at a common service provider to our third-party service providers could impede their ability to provide service to us.
Accordingly, the use of such third parties creates an unavoidable inherent risk to our business operations. Additionally, we are exposed to the risk that a service disruption at a common service provider to our third-party service providers could impede their ability to provide service to us.
We generally seek to maintain a neutral position in terms of the volume of assets and liabilities that mature or re-price during any period so that we may reasonably maintain our net interest margin; however, interest rate fluctuations, loan prepayments, loan production, deposit flows, and competitive pressures are constantly changing and influence our ability to maintain a neutral position.
We generally seek to maintain a neutral position in terms of the volume of assets and liabilities that mature or re-price during any period so that we may reasonably maintain our net interest margin; however, interest rate fluctuations, loan and securities prepayments, loan production, deposit flows, and competitive pressures are constantly changing and influence our ability to maintain a neutral position.
Our commercial real estate portfolio consists primarily of non-owner-operated properties and other commercial properties. These types of loans are generally viewed as having more risk of default than residential real estate loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt.
Our CRE portfolio consists primarily of non-owner-operated properties and other commercial properties. These types of loans are generally viewed as having more risk of default than residential real estate loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt.
One of the conditions to the closing is that no law order, injunction or decree issued by any court or governmental entity of competent jurisdiction would prevent, prohibit or make illegal the completion of the merger, the bank merger or any of the other transactions contemplated by the merger agreement be in effect.
One of the conditions to the closing is that no law, order, injunction or decree issued by any court or governmental entity of competent jurisdiction that would prevent, prohibit or make illegal the completion of the merger, the subsidiary bank merger, or any of the other transactions contemplated by the merger agreement be in effect.
Additionally, changes in the real estate market could also affect the value of foreclosed assets, which could cause additional losses when management determines it is appropriate to sell the assets . We have significant credit exposure in commercial real estate, which may expose us to additional credit risks, and may adversely affect our business, financial condition, and results of operations.
Additionally, changes in the real estate market could also affect the value of foreclosed assets, which could cause additional losses when management determines it is appropriate to sell the assets . We have significant credit exposure in CRE, which may expose us to additional credit risks, and may adversely affect our business, financial condition, and results of operations.
Markets may also be adversely affected by the current or anticipated impact of climate change, extreme weather events or natural disasters, the emergence or continuation of widespread health emergencies or pandemics, cyberattacks or campaigns, military conflict, terrorism, or other geopolitical events. Market fluctuations may impact net interest margin and affect our business liquidity.
Markets may also be adversely affected by the current or anticipated impact of climate change, extreme weather events or natural disasters, the emergence or continuation of widespread health emergencies or pandemics, cyberattacks or campaigns, military conflict, acts of war or terrorism, or other geopolitical events. Market fluctuations may impact net interest margin and affect our business liquidity.
These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities, frequently have smaller market share than their competitors, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete, and may experience substantial volatility in operating results, any of which, individually or in the aggregate, may impair their ability as a borrower to repay their 19 Table of Contents loans, which could adversely affect our business, results of operations, and financial condition.
These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities, frequently have smaller market share than their competitors, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete, and may experience substantial volatility in operating results, any of which, individually or in the aggregate, may impair their ability as a borrower to repay their loans, which could adversely affect our business, results of operations, and financial condition.
There is no assurance that our credit risk monitoring and loan underwriting and approval procedures are or will be adequate or will reduce the inherent risks associated with lending. In order to manage credit risk successfully, we maintain disciplined and prudent underwriting standards and ensure that our lenders follow those standards.
There is no assurance that our credit risk monitoring and loan underwriting and approval procedures are or will be adequate or will reduce the inherent risks associated with lending. To manage credit risk successfully, we maintain disciplined and prudent underwriting standards and ensure that our lenders follow those standards.
Our governing documents and the provisions of Virginia law to which we are subject contain certain provisions that could have an anti-takeover affect and may delay, make more difficult or prevent an attempted acquisition of the Company that you may favor.
Our governing documents and the provisions of Virginia law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition of the Company that you may favor.
Additionally, to the extent that economic conditions worsen, impacting our consumer and commercial borrowers or underlying collateral, and credit losses are worse than expected, as may be caused by 17 Table of Contents inflation, an economic recession or otherwise, we may increase our provision for loan losses, which could have an adverse effect on our business, financial condition, and results of operations.
Additionally, to the extent that economic conditions worsen, impacting our consumer and commercial borrowers or underlying collateral, and credit losses are worse than expected, as may be caused by inflation, an economic recession or otherwise, we may increase our provision for loan losses, which could have an adverse effect on our business, financial condition, and results of operations.
In addition, our customers access our products and services using personal devices that are necessarily external to our security control systems. There has also been a significant proliferation of consumer information available on the 24 Table of Contents internet resulting from breaches of third-party entities, including personal information, log-in credentials, and authentication data.
In addition, our customers access our products and services using personal devices that are necessarily external to our security control systems. There has also been a significant proliferation of consumer information available on the internet resulting from breaches of third-party entities, including personal information, log-in credentials, and authentication data.
In particular, markets in the U.S. may be affected by the level and volatility of interest rates, availability and market conditions of financing, unexpected changes in gross domestic product, economic growth or its sustainability, inflation, supply chain disruptions, consumer spending, employment levels, labor shortages, wage stagnation, federal government shutdowns, developments related to the U.S. federal debt ceiling, energy prices, home prices, commercial property values, bankruptcies, a default by a significant market participant or class of counterparties, fluctuations or other significant changes in both debt and equity capital markets and currencies, liquidity of the global financial markets, the growth of global trade and commerce, trade policies, the availability and cost of capital and credit, disruption of communication, transportation or energy infrastructure and investor sentiment and confidence.
In particular, markets in the U.S. may be affected by the level and volatility of interest rates, availability and market conditions of financing, unexpected changes in gross domestic product, economic growth or its sustainability, inflation, supply chain disruptions, consumer spending, employment levels, labor shortages, wage stagnation, federal government shutdowns, developments related to the U.S. federal debt ceiling, energy prices, home prices, commercial property values, bankruptcies, a default by a significant market participant or class of counterparties, fluctuations or other significant changes in both debt and equity capital markets and currencies, liquidity of the global financial markets, the growth of global trade and commerce, trade policies, tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars, the availability and cost of capital and credit, disruption of communication, transportation or energy infrastructure and investor sentiment and confidence.
A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines.
A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on 44 Table of Contents expansion, and restrictions on entering new business lines.
Furthermore, failures in our risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could have a material adverse effect on our business, financial condition, and results of operations.
Furthermore, failures in our risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could 29 Table of Contents result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could have a material adverse effect on our business, financial condition, and results of operations.
Although our systems are not breached in retailer incursions, these incursions can still cause customers to be dissatisfied with us and otherwise adversely affect our reputation. These events can also cause us to reissue a significant number of cards and take other costly steps to avoid significant theft or loss to us and our customers.
Although our systems are not breached in retailer incursions, these 39 Table of Contents incursions can still cause customers to be dissatisfied with us and otherwise adversely affect our reputation. These events can also cause us to reissue a significant number of cards and take other costly steps to avoid significant theft or loss to us and our customers.
The extent and duration of the sensitivity will depend on the cumulative variance over time, the velocity and 22 Table of Contents direction of changes in interest rates, shape and slope of the yield curve, and whether we are more asset sensitive or liability sensitive. Accordingly, our net interest margin may be adversely affected.
The extent and duration of the sensitivity will depend on the cumulative variance over time, the velocity and direction of changes in interest rates, shape and slope of the yield curve, and whether we are more asset sensitive or liability sensitive. Accordingly, our net interest margin may be adversely affected.
We may issue equity securities, including common stock and securities convertible into shares of our common stock in connection with future acquisitions. We also may issue debt to finance one or more transactions, including subordinated debt issuances, which could cause us to become more susceptible to economic downturns and competitive pressures.
We have in the past, and may in the future, issue equity securities, including common stock and securities convertible into shares of our common stock in connection with future acquisitions. We also may issue debt to finance one or more transactions, including subordinated debt issuances, which could cause us to become more susceptible to economic downturns and competitive pressures.
We use models in our business and operations, and we could be adversely affected if our design, implementation, or use of models is flawed. ​ The use of statistical and quantitative models and other quantitatively based analyses is central to bank decision-making and regulatory compliance processes, and the employment of such analyses is becoming increasingly widespread in our operations.
We use models in our business, and we could be adversely affected if our design, implementation, or use of models is flawed. ​ 38 Table of Contents The use of statistical and quantitative models and other quantitatively based analyses is central to bank decision-making and regulatory compliance processes, and the employment of such analyses is becoming increasingly widespread in our operations.
Future capital needs could result in dilution of shareholder investment and could adversely affect the market price of our common stock and preferred stock (or depositary shares representing a fractional interest in our preferred stock) .
Future capital needs could result in shareholder dilution and may adversely affect the market price of our common stock and preferred stock (or depositary shares representing a fractional interest in our preferred stock) .
Like all financial institutions, we are exposed to the risk that our borrowers may not repay their loans according to their terms, and the collateral securing the payment of these loans may be insufficient to fully compensate us for the outstanding balance of the loan plus the costs to dispose of the collateral.
Like all financial institutions, we are exposed to the risk that our borrowers may not repay their loans according to their terms, and the collateral securing the 28 Table of Contents payment of these loans may be insufficient to fully compensate us for the outstanding balance of the loan plus the costs to dispose of the collateral.
Any failure to manage such credit risks may adversely affect our business, financial condition, and results of operations. ​ Our focus on lending to small to mid-sized community-based businesses may increase our credit risk. We make most of our commercial business and commercial real estate loans to small business or middle market customers.
Any failure to manage such credit risks may adversely affect our business, financial condition, and results of operations. ​ Our focus on lending to small to mid-sized community-based businesses may increase our credit risk. We make most of our commercial business and CRE loans to small business or middle market customers.
An economic downturn or prolonged recession can result in a deterioration of our credit quality, an increase in the number of loan delinquencies, defaults and charge-offs, foreclosures, additional provisions for loan losses, adverse asset values and a reduction in deposits and assets under management or administration.
An economic downturn or prolonged recession can result in a deterioration of our credit 32 Table of Contents quality, an increase in the number of loan delinquencies, defaults and charge-offs, foreclosures, additional provisions for loan losses, adverse asset values and a reduction in deposits and assets under management or administration.
Any new line of business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls, so we must responsibly innovate in a manner that is consistent with 29 Table of Contents sound risk management and is aligned with our overall business strategies.
Any new line of business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls, so we must responsibly innovate in a manner that is consistent with sound risk management and is aligned with our overall business strategies.
Significant unanticipated deposit outflows have occurred at other financial institutions, and may occur in the future, compounded by advances in technology that increase the speed at which deposits can be moved from bank to bank or outside the banking system, as well as the speed and reach with which 21 Table of Contents information, concerns, and rumors can spread through media, in each case potentially exacerbating liquidity concerns.
Significant unanticipated deposit outflows have occurred at other financial institutions, and may occur in the future, compounded by advances in technology that increase the speed at which deposits can be moved from bank to bank or outside the banking system, as well as the speed and reach with which information, concerns, and rumors can spread through media, in each case potentially exacerbating liquidity concerns.
The loss of these revenue streams and the higher cost of deposits as a source of funds could have a material adverse effect on our business, financial condition, and results of operations. Changes in interest rates could adversely affect our income and cash flows.
The loss of these revenue 33 Table of Contents streams and the higher cost of deposits as a source of funds could have a material adverse effect on our business, financial condition, and results of operations. Changes in interest rates could adversely affect our income and cash flows.
Given these factors, a shareholder may have difficulty selling shares of our common stock at an attractive price (or at all). Additionally, shareholders may not be able to sell a substantial number of our common stock shares for the same price at which shareholders could sell a smaller number of shares.
Given these factors, a shareholder may have difficulty selling shares of our common stock at an attractive price (or at all). Additionally, shareholders may not be able to sell a substantial number of 45 Table of Contents our common stock shares for the same price at which shareholders could sell a smaller number of shares.
Banking regulators generally give commercial real estate lending greater scrutiny and may require banks with higher levels of commercial real estate loans to implement enhanced risk management practices, including stricter underwriting, internal controls, risk management policies, more granular reporting, and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures.
Banking regulators generally give CRE lending greater scrutiny and may require banks with higher levels of CRE loans to implement enhanced risk management practices, including stricter underwriting, internal controls, risk management policies, more granular reporting, and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of CRE lending growth and exposures.
In addition, we, our employees and our customers, are increasingly transitioning our and their computing infrastructure to cloud-based computing, storage, data processing, networking and other services, which may increase these security risks. Cyber-attacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or have material consequences.
In addition, we, our employees and our customers, are increasingly transitioning our and their computing infrastructure to cloud-based computing, storage, data processing, networking and other services, which may increase these security risks. 36 Table of Contents Cyber-attacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or have material consequences.
Our insurance or indemnities may not cover all claims that may be asserted against us. In addition, we may not be able to obtain appropriate types or levels of insurance in the future or be able to obtain adequate replacement policies with acceptable terms.
Our insurance or indemnities may not cover all claims that may be asserted against us. In addition, we may not be able to 41 Table of Contents obtain appropriate types or levels of insurance in the future or be able to obtain adequate replacement policies with acceptable terms.
In addition, our ability to manage growth successfully depends on a variety of factors, including whether we can maintain adequate capital levels, maintain cost controls, effectively manage asset quality, effectively manage increasing regulatory compliance requirements, and successfully integrate any businesses acquired into our organization, including our proposed merger with American National.
In addition, our ability to manage growth successfully depends on a variety of factors, including whether we can maintain adequate capital levels, maintain cost controls, effectively manage asset quality, effectively manage increasing regulatory compliance requirements, and successfully integrate any businesses acquired into our organization, including our proposed merger with Sandy Spring.
Unlike larger financial institutions that are more geographically diversified, we are a regional bank that focuses on providing banking and financial services to customers primarily in Virginia, and in certain markets in Maryland, North Carolina, and South Carolina.
Unlike larger financial institutions that are more geographically diversified, we are a regional bank that focuses on providing banking and financial services to customers primarily in Virginia, and in certain markets in Maryland, North Carolina, South Carolina, and Washington, D.C.
In addition, to access our network, products and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.
In addition, to access our network, products and 35 Table of Contents services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.
We could be materially and adversely affected if employees, clients, counterparties, or other third parties caused an operational breakdown or failure, either as a result of human error, fraudulent manipulation, or purposeful damage to any of our operations or systems. Competition for talent is substantial.
We could be materially and adversely affected if employees, clients, counterparties, or other third parties caused an operational breakdown or failure, either from human error, fraudulent manipulation, or purposeful damage to any of our operations or systems. Competition for talent is substantial.
This could have an adverse effect on our business, financial condition, and results of operations. ​ If we fail to effectively manage credit risk, our business and financial condition will suffer. We must effectively manage credit risk.
This could have an adverse effect on our business, financial condition, and results of operations. ​ 30 Table of Contents If we fail to effectively manage credit risk, our business and financial condition will suffer. We must effectively manage credit risk.
While we assess and seek to improve this program on an ongoing basis, there can be no assurance that our risk management framework and related controls will effectively mitigate all risk and limit losses in 28 Table of Contents our business.
While we assess and seek to improve this program on an ongoing basis, there can be no assurance that our risk management framework and related controls will effectively mitigate all risk and limit losses in our business.
We may be adversely affected by risks associated with future mergers and acquisition, including execution risk which could disrupt our business and dilute shareholder value. ​ 27 Table of Contents Our business growth, profitability, and market share has been enhanced by us engaging in strategic mergers and acquisitions, such as our proposed merger with American National, either within or contiguous to our existing footprint.
We may be adversely affected by risks associated with future mergers and acquisition, including execution risk which could disrupt our business and dilute shareholder value. ​ Our business growth, profitability, and market share has been enhanced by us engaging in strategic mergers and acquisitions, such as our merger with American National and our proposed merger with Sandy Spring, either within or contiguous to our existing footprint.
This regulation is imposed primarily to protect depositors, the FDIC DIF, consumers, and the banking system as a whole. We also are regulated by the SEC and the Financial Industry Regulatory Authority, which regulation is designed to protect investors.
This regulation is imposed primarily to protect depositors, the FDIC Deposit Insurance Fund, consumers, and the banking system as a whole. We also are regulated by the SEC and the Financial Industry Regulatory Authority, which regulation is designed to protect investors.
If our banking regulators determine that our commercial real estate lending activities are particularly risky and are subject to such heightened scrutiny, we may incur significant additional costs or be required to restrict certain of our commercial real estate lending activities.
If our banking regulators determine that our CRE lending activities are particularly risky and are subject to such heightened scrutiny, we may incur significant additional costs or be required to restrict certain of our CRE lending activities.
We may not be insured against all types of losses as a result of third-party failures and our insurance coverage may not be adequate to cover all losses resulting from system failures, third-party breaches, or other disruptions. Replacing these third-party service providers could also create significant delay and expense.
We may not be insured against all types of losses from third-party failures and our insurance coverage may not be adequate to cover all losses resulting from system failures, third-party breaches, or other disruptions. Replacing these third-party service providers could also create significant delays and expense.
Under regulatory rules, if the Bank ceases to be a “well capitalized” institution for bank regulatory purposes, the interest rates that it pays and its ability to accept brokered deposits may be restricted.
Under regulatory rules, if the Bank ceases to be a “well 43 Table of Contents capitalized” institution for bank regulatory purposes, the interest rates that it pays and its ability to accept brokered deposits may be restricted.
If we are unable to generate sufficient taxable income, we may not be able to fully realize our deferred tax assets and would be required to record a valuation allowance against these assets. A valuation allowance would be recorded as income tax expense and would adversely affect our net income.
If we are unable to generate sufficient taxable income, we may not be able to fully realize our deferred tax assets and would be required to record an additional valuation allowance against these assets. Any additional valuation allowance would also be recorded as income tax expense and would adversely affect our net income.
Commercial real estate loans also typically have larger loan balances, and, therefore, the deterioration of one or a few of these loans could cause a significant increase in the percentage of our non-performing loans.
CRE loans also typically have larger loan balances, and, therefore, the deterioration of one or a few of these loans could cause a significant increase in the percentage of our non-performing loans.
Our merger and acquisition activities, including our proposed merger with American National, could involve a number of additional risks, including, among others, the risks of: ● incurring time and expense associated with identifying and evaluating potential merger or acquisition targets; ● our inability to obtain regulatory and other approvals necessary to consummate mergers, acquisitions or other expansion activities, or the risk that such regulatory approvals are delayed, impeded, or conditioned due to existing or new regulatory issues surrounding us, the target institution or the proposed combined entity as a result of, among other things, issues related to anti-money laundering/Bank Secrecy Act compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive or abusive acts or practices regulations, or the Community Reinvestment Act; ● diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combining businesses; ● potential exposure to unknown or contingent liabilities of the acquired or merged company; ● litigation with respect to the proposed transaction; ● potentially inaccurate estimates and judgments used by us to evaluate credit, operations, management and market risks with respect to the acquired or merged company; ● unexpected asset quality problems; ● experiencing higher operating expenses relative to operating income from the new operations; ● significant problems relating to the conversion of the financial and customer data of the entity; ● assuming businesses with internal control deficiencies; and ● the possible loss of our key employees and customers or those of the acquired or merged company. ​ There is no assurance that, following any future mergers or acquisitions, including our proposed merger with American National, our integration efforts will be successful or that we, after giving effect to the acquisition, will achieve the strategic objectives, operating efficiencies, increased revenues comparable to or better than our historical experience, or other benefits expected in the acquisition, and failure to realize such strategic objectives, operating efficiencies, expected revenue increases, cost savings, increases in market presence or other benefits could have a material adverse effect on our business, financial condition, and results of operations.
Generally, acquisitions of financial institutions involve the payment of a premium over book and market values, resulting in dilution of our book value and fully diluted earnings per share, as well as dilution to our existing shareholders. 37 Table of Contents Our merger and acquisition activities, including our proposed merger with Sandy Spring, could involve a number of additional risks, including, among others, the risks of: ● incurring time and expense associated with identifying and evaluating potential merger or acquisition targets; ● our inability to obtain regulatory and other approvals necessary to consummate mergers, acquisitions or other expansion activities, or the risk that such regulatory approvals are delayed, impeded, or conditioned due to existing or new regulatory issues surrounding us, the target institution or the proposed combined entity as a result of, among other things, issues related to compliance with the Bank Secrecy Act, and its implementing regulations, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive or abusive acts or practices regulations, or the Community Reinvestment Act; ● diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combining businesses; ● potential exposure to unknown or contingent liabilities of the acquired or merged company; ● litigation with respect to the proposed transaction; ● potentially inaccurate estimates and judgments used by us to evaluate credit, operations, management and market risks with respect to the acquired or merged company; ● unexpected asset quality problems; ● experiencing higher operating expenses relative to operating income from the new operations; ● significant problems relating to the conversion of the financial and customer data of the entity; ● assuming businesses with internal control deficiencies; and ● the possible loss of our key employees and customers or those of the acquired or merged company. ​ There is no assurance that, following any future mergers or acquisitions, including our proposed merger with Sandy Spring, our integration efforts will be successful or that we, after giving effect to the acquisition, will achieve the strategic objectives, operating efficiencies, increased revenues comparable to or better than our historical experience, or other benefits expected in the acquisition, and failure to realize such strategic objectives, operating efficiencies, expected revenue increases, cost savings, increases in market presence or other benefits could have a material adverse effect on our business, financial condition, and results of operations.
Consumers may increasingly decide not to use banks to complete their financial transactions, which could have a material adverse effect on our business, financial condition, and results of operations. Technology and other changes are allowing parties to complete financial transactions through alternative methods that have historically involved banks.
Consumers may increasingly decide not to use banks to complete their financial transactions, which could materially adversely effect our business, financial condition, and results of operations. Technology and other changes are allowing parties to complete financial transactions through alternative methods that have historically involved banks.
If impaired, we would incur a charge to earnings that would have a significant impact on our results of operations. The carrying value of our goodwill and net amortizable intangibles were approximately $925.2 million and $19.2 million, respectively, at December 31, 2023. Our risk-management framework may not be effective in mitigating risks and/or losses.
If impaired, we would incur a charge to earnings that would have a significant impact on our results of operations. The carrying value of our goodwill and net amortizable intangibles were approximately $1.2 billion and $84.6 million, respectively, at December 31, 2024. Our risk-management framework may not be effective in mitigating risks and/or losses.
Although we have policies and procedures to obtain an environmental study during the underwriting process for certain commercial real estate loan originations and to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be 20 Table of Contents sufficient to detect all potential environmental hazards.
Although we have policies and procedures to obtain an environmental study during the underwriting process for certain CRE loan originations and to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards.
Our stock price can fluctuate significantly in response to a variety of factors, some of which are unrelated to our financial performance, including, among other things: ● actual or anticipated variations in quarterly results of operations; ● changes in our coverage by securities analysts and/or changes in their estimates of our financial performance or recommendations; ● operating and stock price performance of other companies that investors deem comparable to us; ● news reports relating to trends, concerns and other issues in the financial services industry; ● perceptions in the marketplace regarding us and/or our competitors; ● new technology used, or services offered, by competitors; ● significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; ● failure to integrate acquisitions or realize anticipated benefits from acquisitions; ● changes in government regulations; or ● geopolitical conditions such as acts or threats of terrorism, military conflicts, the effects (or perceived effects) of pandemics and trade relations. ​ General market fluctuations, including real or anticipated changes in the strength of the local economy; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions; interest rate changes, oil price volatility or credit loss trends could also cause our stock price to decrease regardless of our operating results. 36 Table of Contents Moreover, in the past, securities class action lawsuits have been instituted against some companies following periods of volatility in the market price of its securities.
Our stock price can fluctuate significantly in response to a variety of factors, some of which are unrelated to our financial performance, including, among other things: 46 Table of Contents ● actual or anticipated variations in quarterly results of operations; ● changes in our coverage by securities analysts and/or changes in their estimates of our financial performance or recommendations; ● operating and stock price performance of other companies that investors deem comparable to us; ● news reports relating to trends, concerns and other issues in the financial services industry; ● perceptions in the marketplace regarding us and/or our competitors; ● new technology used, or services offered, by competitors; ● significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; ● failure to integrate acquisitions or realize anticipated benefits from acquisitions; ● changes in government regulations; ● geopolitical conditions such as acts or threats of terrorism, military conflicts, the effects (or perceived effects) of pandemics and trade relations; or ● the realization of any of the other risks presented in this Form 10-K. ​ General market fluctuations, including real or anticipated changes in the strength of the local economy; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions; interest rate changes, oil price volatility or credit loss trends could also cause our stock price to decrease regardless of our operating results.
Our management currently believes that it is more likely than not that we will realize our deferred tax assets, based on management’s expectation that we will generate taxable income in future years sufficient to absorb substantially all of our net operating loss carryforwards and other tax attributes.
In assessing the realizability of our deferred tax assets, management considers whether it is more likely than not that we will realize our deferred tax assets, based on management’s expectation that we will generate taxable income in future years sufficient to absorb substantially all of our net operating loss carryforwards and other tax attributes.
If any plaintiff were successful in obtaining an injunction prohibiting the Company or American National from completing the merger, the bank merger or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to the Company, including any cost associated with the indemnification of our directors and officers.
If any plaintiff were successful in obtaining an injunction prohibiting the Company or Sandy Spring from completing the merger, the subsidiary bank merger, or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to either party, including any cost associated with the indemnification of its directors and officers.
We maintain an enterprise risk management program that is designed to identify, assess, mitigate, monitor, and report the risks that we face. These risks include: interest-rate, credit, liquidity, operational, reputation, compliance, legal, technology, and model risk.
We maintain an enterprise risk management program that is designed to identify, assess, mitigate, monitor, and report the risks that we face. These risks include: strategic, credit, market (including interest-rate, capital, and liquidity), operational, regulatory (compliance), legal, and technology.
While the FOMC foreshadowed decreases to the target rates in 2024, it also noted it will continue to assess additional information and implications for monetary policy in determining future actions with respect to target rates.
While the FOMC foreshadowed additional decreases to the target rates in 2025, it also noted it will continue to assess additional information and implications for the economic outlook in determining future actions with respect to target rates.
Holders of our indebtedness and of depositary shares related to our Series A preferred stock have rights that are senior to those of our common shareholders. ​ 35 Table of Contents At December 31, 2023, we had outstanding subordinated notes, trust preferred securities and accompanying subordinated debentures and preferred stock totaling $391.2 million.
Holders of our indebtedness and of depositary shares related to our Series A preferred stock have rights that are senior to those of our common shareholders. ​ At December 31, 2024, we had outstanding subordinated notes, trust preferred securities and accompanying subordinated debentures and preferred stock totaling $418.5 million.
The ability of the Bank to pay dividends to us is limited by its obligations to maintain sufficient capital and by other general restrictions on its dividends that are applicable to state member banks that are regulated by the Federal Reserve and the Virginia SCC.
The ability of the Bank to pay dividends to us is limited by its obligations to maintain sufficient capital and by other general restrictions on its dividends that are applicable to state member banks that are regulated by the Federal Reserve and the Bureau of Financial Institutions, a division of the Virginia State Corporation Commission.
It is possible that the integration process could result in the loss of key employees, the disruption of our ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect each company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger.
It is possible that the integration process could result in the loss of key employees, the disruption of our ongoing business, inability to maintain and increase competitive presence, additional costs or unexpected problems with operations, personnel, technology and credit, or inconsistencies in standards, controls, procedures and policies that adversely affect each company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger.
The banking regulatory agencies have recently expressed concerns about weaknesses in the current commercial real estate market.
The banking regulatory agencies have recently expressed concerns about weaknesses in the current CRE market.
We are subject to losses due to errors, omissions or fraud by our employees, clients, counterparties or other third parties. We are exposed to many types of operational risk, including the risk of fraud by third parties, customers and employees, clerical recordkeeping errors, and transactional errors.
We are exposed to many types of operational risk, including the risk of fraud by third parties, customers and employees, clerical recordkeeping errors, and transactional errors.
Our ability to pay dividends is limited by regulatory restrictions and the need to maintain sufficient consolidated capital. In addition, the Company is a financial holding company that conducts substantially all of its operations through the Bank and other subsidiaries. As a result, the Company relies on dividends from its subsidiaries, particularly the Bank, for substantially all of its revenues.
In addition, the Company is a financial holding company that conducts substantially all of its operations through the Bank and other subsidiaries. As a result, the Company relies on dividends from its subsidiaries, particularly the Bank, for substantially all of its revenues.
Our financial condition and results of operations could be negatively 30 Table of Contents impacted to the extent we incorrectly assess the creditworthiness of borrowers due to our reliance on financial statements that do not comply with GAAP or are materially misleading.
Our financial condition and results of operations could be negatively impacted to the extent we incorrectly assess the creditworthiness of borrowers due to our reliance on financial statements that do not comply with GAAP or are materially misleading. We are subject to losses due to errors, omissions or fraud by our employees, clients, counterparties or other third parties.
Although we believe we are in compliance with the requirements of 33 Table of Contents the Consent Order, our failure to comply and to successfully implement its requirements may results in additional regulatory action, including civil monetary penalties against the Bank and its officers and directors or enforcement of the Consent Order through court proceedings, which could have a material adverse effect on our business, results of operations, financial condition, and stock price. ​ We are subject to the Bank Secrecy Act and other anti-money laundering statutes and regulations, and any deemed deficiency by the Bank with respect to these laws could result in significant liability and have a material adverse effect on our business strategy.
Our failure to comply and to successfully implement the requirements of the Consent Order may result in additional regulatory enforcement or civil action, including civil monetary penalties against the Bank and its officers and directors or enforcement of the Consent Order through court proceedings, which could have a material adverse effect on our business, results of operations, financial condition, and stock price. ​ The Bank is subject to the Bank Secrecy Act and its implementing regulations and U.S. economic sanctions, and any issues with respect to the Bank’s compliance with the Bank Secrecy Act and its implementing regulations, and U.S. economic sanctions could result in significant civil penalties and have a material adverse effect on our business strategy.
Thus, any borrowing that must be done by the holding company in order to make the required capital injection becomes more difficult and expensive and will adversely impact the holding company’s cash flows, financial condition, results of operations and prospects. 34 Table of Contents Risks Related to Our Securities Our ability to pay dividends is limited, and we may be unable to pay dividends in the future.
Thus, any borrowing that must be done by the holding company in order to make the required capital injection becomes more difficult and expensive and will adversely impact the holding company’s cash flows, financial condition, results of operations and prospects.
While our procedures are designed to follow customary, industry-specific security precautions and while we provide employees with ongoing training and regular communications and guidance to combat fraud, our efforts might not be successful in mitigating or reducing fraudulent attempts resulting in financial losses, increased litigation risk and reputational harm.
While our procedures are designed to follow customary, industry-specific security precautions and while we provide employees with ongoing training and regular communications and guidance to combat fraud, our efforts might not be successful in mitigating or reducing fraudulent attempts resulting in financial losses, increased litigation risk and reputational harm. 40 Table of Contents Our business also depends on our employees, as well as third-party service providers, to process a large number of increasingly complex transactions.
These rates are highly sensitive to many factors beyond our control, including general economic conditions and the policies of the Federal Reserve and other governmental and regulatory agencies.
These rates are highly sensitive to many factors beyond our control, including general economic conditions and the policies of the Federal Reserve and other governmental and regulatory agencies. In 2024, the Federal Reserve’s interest rate policy shifted as inflationary pressure began to ease and economic growth moderated.
In addition, if we decide to raise additional equity capital, our current shareholders’ interests could be diluted. 31 Table of Contents We are or may become party from time to time to various claims and lawsuits incidental to our business.
If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired. In addition, if we decide to raise additional equity capital, our current shareholders’ interests could be diluted. We are or may become party from time to time to various claims and lawsuits incidental to our business.
In addition, regulators may require us to maintain higher levels of regulatory capital based on our condition, risk profile, or growth plans or conditions in the banking industry or economy. In recent years, these market and regulatory expectations have increased substantially and have resulted in higher and more stringent capital requirements for the Company and the Bank.
In addition, regulators may require us to maintain higher levels of regulatory capital based on our condition, risk profile, or growth plans or conditions in the banking industry or economy.
In addition, we may need to take our systems offline if they become infected with malware or a computer virus or as a result of another form of cyber-attack. 23 Table of Contents In the event that backup systems are used, they may not process data as quickly as our primary systems and some data might not have been saved to backup systems, potentially resulting in a temporary or permanent loss of such data.
In the event that backup systems are used, they may not process data as quickly as our primary systems and some data might not have been saved to backup systems, potentially resulting in a temporary or permanent loss of such data.
If the Company and American National are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.
If we and Sandy Spring are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings and anticipated benefits of the merger could be less than anticipated, and integration may result in additional unforeseen expenses.
The use of artificial intelligence, “bots” or other automation software can increase the velocity and efficacy of these types of attacks. As our employees are currently operating under our hybrid work model, our remote interaction with service providers, partners and other third parties on systems, networks, and environments over which we have less control increases our cybersecurity risk exposure.
As our employees are generally continuing to operate under our hybrid work model, our remote interaction with service providers, partners and other third parties on systems, networks, and environments over which we have less control increases our cybersecurity risk exposure.
Risks Related to Our Lending Activities Our ACL may prove to be insufficient to absorb credit losses in our loan portfolio, which may adversely affect our business, financial condition, and results of operations. Our success depends significantly on the quality of our assets, particularly loans.
Such litigation could have an adverse effect on such party’s business, financial condition and results of operations and could prevent or delay the completion of the merger. ​ Risks Related to Our Lending Activities Our ACL may prove to be insufficient to absorb credit losses in our loan portfolio, which may adversely affect our business, financial condition, and results of operations.
If we are required to liquidate the collateral securing a construction and development loan to satisfy the debt and such collateral is not a sufficient source of repayment, our earnings and capital may be adversely affected. 18 Table of Contents Our commercial and industrial loans have contributed significantly to our loan growth, which may expose us to additional credit risks, and may adversely affect our results of operations and financial condition.
If we are required to liquidate the collateral securing a construction and development loan to satisfy the debt and such collateral is not a sufficient source of repayment, our earnings and capital may be adversely affected.
Risks Related to Our Operations A failure and/or breach of our operating or securities systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber-attacks, could disrupt our business, result in a disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
The inability to sell or effectively hedge assets reduces our ability to limit losses in such positions, and the difficulty in valuing assets may increase our risk-weighted assets, which requires us to maintain additional capital and increases our funding costs. 34 Table of Contents Risks Related to Our Operations A failure and/or breach of our operating or securities systems or infrastructure, or those of our third-party vendors and other service providers, including because of cyber-attacks, could disrupt our business, result in a disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
We are subject to a number of laws concerning consumer privacy and data use and security, including information safeguard rules under the Gramm-Leach-Bliley Act.
Current and to-be-effective laws and regulations addressing consumer privacy and data use and security could increase our costs and failure to comply with such laws and regulation could impact our business, financial condition, and reputation. We are subject to a number of laws concerning consumer privacy and data use and security, including information safeguard rules under the Gramm-Leach-Bliley Act.
Risks Related to the Regulatory Environment ​ We are subject to extensive regulation that could limit or restrict our activities. We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various federal and state agencies, including the Federal Reserve, the CFPB, the FDIC, and the Virginia SCC.
We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various federal and state agencies, including the Federal Reserve, the CFPB, the FDIC, and the Bureau of Financial Institutions, a division of the Virginia State Corporation Commission.
When mortgage loans are sold, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to purchasers, guarantors, and insurers, including the GSEs, about the mortgage loans and the manner in which they were originated.
We may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances, which could harm our liquidity, results of operations and financial condition. 31 Table of Contents When mortgage loans are sold, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to purchasers, guarantors, and insurers, including the government-sponsored enterprises, about the mortgage loans and the manner in which they were originated.
Any negative publicity regarding ESG or shifts in investing priorities may result in adverse effects on the trading price of our common stock and/or our business, operations and earnings if we fail to adapt to or comply with investor, shareholder, or other stakeholders’ expectations. ITEM 1B. UNRESOLVED STAFF COMMENTS. We have no unresolved staff comments to report.
Any adverse publicity or adverse impact on our reputation in connection with ESG, any shifts in investing priorities among investors, or any loss of business resulting from any of the foregoing, may result in adverse effects on the trading price of our common stock and/or our business, operations and earnings. ITEM 1B. UNRESOLVED STAFF COMMENTS.
We may incur costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the merger. Shareholder lawsuits may divert management attention from management of our business or operations. Such litigation could have an adverse effect on our business, financial condition and results of operations and could prevent or delay the completion of the merger.
We and Sandy Spring have incurred and may incur additional costs relating to the defense or settlement of any shareholder lawsuits filed in connection with the merger. Shareholder lawsuits may divert management attention from management of each company’s business or operations.
The laws and regulations applicable to the banking industry could change at any time. The extent and timing of any regulatory reform as well as any effect on our business and financial results, are uncertain. Additionally, legislation or regulation may impose unexpected or unintended consequences, the impact of which is difficult to predict.
We are also subject to capital guidelines established by our regulators, which require us to maintain sufficient capital to support our growth. The laws and regulations applicable to the banking industry could change at any time. The extent and timing of any regulatory reform as well as any effect on our business and financial results, are uncertain.
We make commercial and industrial loans to support our borrowers’ need for short-term or seasonal cash flow and equipment/vehicle purchases. These loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses.
These loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses.
Integration efforts may also divert management attention during this transition period 26 Table of Contents and for an undetermined period after completion of the merger, which may have an adverse effect on the combined company.
Integration efforts may also divert management attention during this 25 Table of Contents transition period and for an undetermined period after completion of the merger, which may have an adverse effect on the combined company. ​ We and Sandy Spring have, and the combined company following the merger will, incur significant transaction and merger-related costs in connection with the transactions contemplated by the merger agreement. ​ We and Sandy Spring have incurred and expect to incur significant non-recurring costs associated with combining the operations of Sandy Spring with our operations.
The risk factors discussed below highlight the risks that we believe are material to us, but do not necessarily include all risks that we may face, and an investor in our securities should not interpret the disclosure of a risk in the following risk factors to state or imply that the risk has not already materialized.
The risk factors discussed below highlight the risks that we believe are material to us, but do not necessarily include all risks that we may face, and an investor in our securities should not interpret the disclosure of a risk in the following risk factors to state or imply that the risk has not already materialized. 24 Table of Contents Risks Related to Our Pending Merger with Sandy Spring ​ The dilution caused by the issuance of shares of our common stock in connection with the merger with Sandy Spring may adversely affect the market price of our common stock. ​ We expect to issue approximately 41 million shares of our common stock as merger consideration to Sandy Spring stockholders, and assuming full physical settlement, we expect to issue 11,338,028 shares of our common stock pursuant to the Forward Sale Agreements.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe seek to mitigate cybersecurity risk and associated reputational and compliance risk by, among other things: ​ ● maintaining privacy policies, management oversight, accountability structures, and technology design processes to protect private and personal data; ● actively monitoring and mitigating cybersecurity threats and risks with a three lines of defense structure to provide oversight, governance, challenge, and testing; ● using a third-party cybersecurity oversight program; ● ​ maintaining oversight of our information security program by senior management, our board-level Risk Committee, and our Board of Directors; and ● ​ maintaining an incident response program intended to enable us to mitigate the impact of, and recover from, any cyberattacks, and facilitate communication to internal and external stakeholders, as needed. ​ We had no material cybersecurity incidents in 2023. ​ ​ Risk Management and Strategy ​ Our cybersecurity risk management strategy is integrated into our enterprise risk management framework and is embedded in each of our three lines of defense.
Biggest changeWe seek to mitigate cybersecurity risk and associated reputational and compliance risk by, among other things: ​ ● leveraging the National Institute of Standards and Technology framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover; ● maintaining privacy policies, management oversight, accountability structures, and technology design processes to protect private and personal data; ● actively monitoring and mitigating cybersecurity threats and risks with a three lines of defense structure to provide oversight, governance, challenge, and testing; ● managing a third-party cybersecurity oversight program ; ● ​ maintaining oversight of our information security program by senior management, our board-level Risk Committee, and our Board of Directors; and ● ​ using a comprehensive Cybersecurity Incident Response Plan intended to provide a documented framework to enable us to mitigate the impact of, and recover from, any cyberattacks, and facilitate communication to internal and external stakeholders, as appropriate. ​ We had no material cybersecurity incidents in 2024.
The Committee is responsible for escalating key risks to our Management Risk Committee, which includes all members of our Executive Leadership Team, as well as our Head of Business Risk, who operates within our first line of defense. ​ Internal Audit serves as the third line of defense and provides independent assurance on how effectively we are mitigating, managing, and challenging our cybersecurity risks. ​
The Committee is responsible for escalating key risks to our Management Risk Committee, which includes all members of our Executive Leadership Team, as well as our Head of Business Risk, who operates within our first line of defense. ​ Internal Audit serves as the third line of defense and provides independent assurance on how effectively we are mitigating, managing, and challenging our cybersecurity risks. ​ ​ 52 Table of Contents
These individuals have relevant financial, technical, and business degrees, hold relevant certifications, and each have over 20 years of experience in their respective areas of expertise, with a minimum of 10 years in leadership roles, including multiple years at financial institutions.
These individuals have relevant financial, technical, and business degrees, hold relevant certifications, and each have over 20 years of experience in their respective areas of expertise, with a minimum of ten years in leadership roles, including multiple years at financial institutions.
In addition, the Risk Committee is engaged, as needed, in accordance with our Cybersecurity Incident Response Plan. ​ Role of Management ​ Our cybersecurity risk management program is built on three lines of defense, which collectively are designed to assess, identify, assess, and manage our material risks from cybersecurity threats.
In addition, the Risk Committee is engaged, as needed, in accordance with our Cybersecurity Incident Response Plan. ​ 51 Table of Contents Role of Management ​ Our cybersecurity risk management program is built on three lines of defense, which collectively are designed to identify, assess, and manage our material risks from cybersecurity threats.
In that regard, our Board is actively engaged in the oversight of our cyber risk profile, which includes risks from cybersecurity threats, enterprise cyber strategy, and key cyber initiatives. Our Board regularly receives reports on such matters from our Chief Information Officer, Chief Information Security Officer, and other relevant personnel.
In that regard, our Board is actively engaged in the oversight of our cyber risk profile, which includes, but is not limited to, risks from cybersecurity threats, enterprise cyber strategy, and key cyber initiatives. Our Board regularly receives reports on such matters from our Chief Information Officer, Chief Information Security Officer, and other relevant personnel.
The escalation process includes a weekly escalation report of problem incidents, including cybersecurity threats, which allows for collaborative threat management by the first and second lines of defense. ​ The second line of defense independently evaluates, monitors, and challenges our risk mitigation efforts to proactively identify cybersecurity risks, including early-stage engagement and risk management with emerging threats.
The escalation process includes regular escalation reports of problem incidents, including cybersecurity threats, which allows for collaborative threat management by the first and second lines of defense. ​ The second line of defense independently evaluates, monitors, and challenges our risk mitigation efforts to proactively identify cybersecurity risks, including early-stage engagement and risk management with emerging threats.
These processes and procedures enable our three lines of defense and management to review and manage cybersecurity risks, monitor threats, and provide for further escalation to executive management, our management-level Disclosure Committee, our board-level Risk Committee, or to the full Board, as appropriate. ​ Role of the Board of Directors ​ Our Board of Directors plays a critical role in the oversight of risk, including risks from cybersecurity threats, and has established a risk oversight structure that seeks to ensure that cybersecurity risks are identified, monitored, assessed, and mitigated appropriately.
These processes and procedures help enable our three lines of defense and management to identify, protect, detect, respond, and recover from cybersecurity risks, monitor threats, and provide for further escalation to executive management, our management-level Disclosure Committee, our board-level Risk Committee, or to the full Board, as appropriate. ​ Role of the Board of Directors ​ Our Board of Directors plays a critical role in the oversight of risk, including risks from cybersecurity threats, and has established a risk oversight structure that seeks to ensure that cybersecurity risks are identified, monitored, assessed, and mitigated appropriately.
We cannot guarantee, however, that such agreements will prevent a cyber incident from impacting our systems or information. Additionally, we may not be able to obtain adequate or any reimbursement from our service providers in the event we should suffer any such incidents.
We generally have agreements with our service providers that include requirements related to cybersecurity and data privacy, however, we cannot guarantee that such agreements will prevent a cyber incident from impacting our systems or information. Additionally, we may not be able to obtain adequate or any reimbursement from our service providers in the event we suffer any such incidents.
We implement backup and recovery systems and require the same of our third-party service providers. ​ 38 Table of Contents W e use independent third-party service providers to perform penetration testing of our infrastructure to help us better understand the effectiveness of our controls, improve our defenses, and conduct assessments of our program for compliance with regulatory requirements and industry guidelines.
W e use independent third-party service providers to perform penetration testing of our infrastructure to help us better understand the effectiveness of our controls, improve our defenses, and conduct assessments of our program for compliance with regulatory requirements, industry guidelines, and best practices.
In addition, we use a Third-Party Risk Management program to help mitigate risks with our third- and fourth-party providers; however, our ability to monitor our service providers’ cybersecurity practices is limited. We generally have agreements in place with our service providers that include requirements related to cybersecurity and data privacy.
In addition, we use a Third-Party Risk Management program to help mitigate risks with our third- and fourth-party providers; however, our ability to monitor our service providers’ cybersecurity practices is limited.
Second line teammates provide effective challenge to the cybersecurity risk management efforts of the first line through ongoing engagement in problem incidents, regular reviews of cybersecurity risk reporting, and inquiries into the sufficiency of risk management activities.
Second line teammates provide effective challenge to the cybersecurity risk management efforts of the first line through ongoing engagement in problem incidents, regular reviews of cybersecurity risk reporting, and inquiries into the sufficiency of risk management activities. Our second line of defense leads our management-level Technology and Third-Party Risk Committee, which governs our technology and third-party risk tolerances, including cybersecurity.
ITEM 1C. CYBERSECURITY. ​ Overview ​ The cybersecurity threat environment is volatile and dynamic, requiring a robust and dynamic framework to reduce and mitigate cybersecurity risk. Cybersecurity risk includes exposure to failures or interruptions of service or security breaches resulting from malicious technological attacks that impact the confidentiality, integrity, or availability of our or third parties’ operations, systems, or data.
Our cybersecurity risk includes exposure to failures or interruptions of service or security breaches resulting from malicious technological attacks that impact the confidentiality, integrity, or availability of our or third parties’ operations, systems, or data.
Our Chief Risk Officer is responsible for implementing our enterprise risk management framework and reports directly to our Chief Executive Officer. ​ Our Information Security department, which is our first line of defense, operates under our Chief Information Security Officer, who manages preventative and detective controls to protect against cybersecurity risks and responds to cyber incidents and data breaches At least annually, the first line conducts mandatory teammate training on information security and provides ongoing information security education and awareness for teammates, such as online training classes, mock phishing attacks and information security awareness materials.
Our Chief Risk Officer is responsible for implementing our enterprise risk management framework and reports directly to our Chief Executive Officer. ​ Our Information Security department, which is our first line of defense, operates under our Chief Information Security Officer, who manages preventative and detective controls to protect against cybersecurity risks and responds to cyber incidents and data breaches.
Due to applicable laws and regulations or contractual obligations, we may be held responsible for cyber incidents attributed to our service providers in relation to any data that we share with them. ​ While to date, we have not experienced a significant compromise, attack, or loss of data related to cybersecurity attacks, due to the nature of our business, we are under constant threat of an attack and could experience a significant cybersecurity event in the future.
While to date, we have not experienced a significant compromise, attack, or loss of data related to cybersecurity attacks, due to the nature of our business, we are under constant threat of an attack and could experience a significant cybersecurity event in the future.
O ur cybersecurity risk management program is designed to maintain and challenge our information security defense system, as well as monitor, respond, evaluate, and escalate cyber threats. We also have a business risk manager within our first line of defense whose role is 39 Table of Contents to focus on evaluating, managing, and escalating technology risks.
We also have a business risk manager within our first line of defense whose role is to focus on evaluating, managing, and escalating technology risks.
Potential risks we could face from a cybersecurity event are discussed in “Risk Factors” above. ​ Governance ​ Through established governance structures, including our problem and incident management process and cyber incident response plan, we have processes and procedures to help facilitate appropriate and effective oversight of cybersecurity risk.
Due to applicable laws and regulations or contractual obligations, we may be held responsible for cyber incidents attributed to our service providers in relation to any data that we share with them. ​ Governance ​ Through established governance structures, including our problem and incident management process and Cybersecurity Incident Response Plan, we have processes and procedures to help facilitate appropriate and effective oversight of cybersecurity risk.
Our second line of defense leads our management-level Technology and Operational Risk Committee, which governs our technology and operational risk tolerances, including cybersecurity and third- and fourth party provider risks. This committee includes the Chief Information Security Officer and is co-sponsored by the Chief Information Officer and the Chief Risk Officer.
This committee includes the Chief Information Security Officer and is co-sponsored by the Chief Information Officer, the Chief Risk Officer, and the Director of Vendor Risk Management and Sourcing.
Added
ITEM 1C. CYBERSECURITY. ​ Overview ​ The cybersecurity threat landscape is volatile and dynamic, requiring a robust and resilient framework to reduce and mitigate cybersecurity risk.
Added
Attacks are increasingly sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures.
Added
Accordingly, risks related to a cybersecurity event, including litigation and enforcement risks, are elevated due to the dynamic nature and sophistication and frequency of these threats, and the expanding use of 50 Table of Contents Internet banking, mobile banking and other technology-based products in our industry.
Added
Potential risks we could face from a cybersecurity event are discussed in “Risk Factors” above. ​ ​ Risk Management and Strategy ​ Our cybersecurity risk management strategy is integrated into our enterprise risk management framework and is embedded in each of our three lines of defense.
Added
We implement backup and recovery systems and require the same of our third-party service providers. ​ We devote significant resources to cybersecurity and risk management processes and continue to expand investments in information security and cybersecurity by attracting and retaining top talent, fostering continuous education and improvement, and leveraging advanced technology and innovative solutions, including partnerships with third-party vendors, to strengthen our information security and cybersecurity capabilities.
Added
Our Chief Information Security Officer has 28 years of cybersecurity experience, with 13 years servicing financial institutions in senior leadership or executive security roles.
Added
At least annually, the first line of defense conducts mandatory teammate training on information security and provides ongoing information security education and awareness for teammates, such as online training classes, mock phishing attacks and information security awareness materials.
Added
The first line of defense also conducts regular exercises that simulate mock cyber-attacks and provide lessons learned that continuously improve our incident response plans. O ur cybersecurity risk management program is designed to maintain and challenge our information security defense system, as well as monitor, respond, evaluate, and escalate cyber threats.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed1 unchanged
Biggest changeSee Note 1 “Summary of Significant Accounting Policies,” Note 4 “Premises and Equipment,” Note 6 “Leases,” and Note 17 “Segment Reporting and Revenue” in the “Notes to the Consolidated Financial Statements” of this Form 10-K for information with respect to the amounts at which our premises and equipment are carried and our commitments under long-term leases.
Biggest changeSee Note 1 “Summary of Significant Accounting Policies,” Note 5 “Premises and Equipment,” Note 7 “Leases,” and Note 18 “Segment Reporting and Revenue” in the “Notes to the Consolidated Financial Statements” of this Form 10-K for information with respect to the amounts at which our premises and equipment are carried and our commitments under long-term leases.
ITEM 2. PROPERTIES. We own or lease buildings that are used in the normal course of our business. The Company leases its corporate headquarters, located at 4300 Cox Road, Glen Allen, Virginia. At December 31, 2023, the Bank operated 109 branches throughout Virginia and in portions of Maryland and North Carolina.
ITEM 2. PROPERTIES. We own or lease buildings that are used in the normal course of our business. The Company leases its corporate headquarters, located at 4300 Cox Road, Glen Allen, Virginia. At December 31, 2024, the Bank operated 129 branches throughout Virginia and in portions of Maryland and North Carolina.
Removed
During 2023, we executed transactions for the sale-leaseback of 28 properties, consisting of 26 branches and a drive thru and a parking lot, each adjacent to a subject branch. For additional information about this transaction, refer to the discussion under “Strategic Initiatives—Sale-Leaseback Transactions” in Part II, Item 7 of this Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed4 unchanged
Biggest changeSee Note 9, “Commitments and Contingencies” in the “Notes to the Consolidated Financial Statements” of this Form 10-K for additional information. ITEM 4. MINE SAFETY DISCLOSURES. None. 40 Table of Contents PART II
Biggest changeSee Note 10, “Commitments and Contingencies” in the “Notes to the Consolidated Financial Statements” of this Form 10-K for additional information. ITEM 4. MINE SAFETY DISCLOSURES. None. ​ ​ 53 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 40 ​ ​ PART II ​ ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 41 Item 6. [Reserved] 42 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 43 Item 7A.
Biggest changeItem 4. Mine Safety Disclosures 53 ​ ​ PART II ​ ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 54 Item 6. [Reserved] 55 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 56 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 76 Item 8. Financial Statements and Supplementary Data 77
Quantitative and Qualitative Disclosures About Market Risk 93 Item 8. Financial Statements and Supplementary Data 94

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−3 removed2 unchanged
Biggest changeAs part of the repurchase program, approximately 1.3 million shares (or approximately $48.2 million) were repurchased throughout 2022. ​ We did not have any share repurchase programs in effect in 2023. ​ The following information provides details of our common stock repurchases for the three months ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased (1) ​ ​ Average price paid per share ($) ​ Total number of shares purchased as part of publicly announced plans or programs ​ Approximate dollar value of shares that may yet be purchased under the plans or programs ($) October 1 - October 31, 2023 ​ 965 ​ ​ 28.80 ​ — ​ — November 1 - November 30, 2023 ​ 182 ​ ​ 31.08 ​ — ​ — December 1 - December 31, 2023 ​ 2,191 ​ ​ 34.84 ​ — ​ — Total ​ 3,338 ​ ​ 32.89 ​ — ​ ​ (1) For the three months ended December 31, 2023, 3,338 shares were withheld upon the vesting of restricted shares granted to employees of the Company in order to satisfy tax withholding obligations. ​ 41 Table of Contents Five-Year Stock Performance Graph The following stock performance graph compares the yearly percentage change in the cumulative shareholder return on our common stock during the five years ended December 31, 2023, with (i) the Total Return Index for the NYSE Composite, and (ii) the Total Return Index for KBW NASDAQ Regional Banking.
Biggest changeSee “Supervision and Regulation—The Company—Limits on Dividends, Capital Distributions and Other Payments.” In addition, regulatory restrictions on the ability of the Bank to transfer funds to the Company at December 31, 2024 are set forth in Note 20 “Parent Company Financial Information,” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. ​ Stock Repurchase Programs and Other Repurchases During the years ended December 31, 2024 and 2023, we had no active share repurchase programs. ​ The following information provides details of our common stock repurchases for the three months ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased (1) ​ ​ Average price paid per share ($) ​ Total number of shares purchased as part of publicly announced plans or programs ​ Approximate dollar value of shares that may yet be purchased under the plans or programs ($) October 1 - October 31, 2024 ​ 3,058 ​ ​ 36.50 ​ — ​ — November 1 - November 30, 2024 ​ 1,220 ​ ​ 42.31 ​ — ​ — December 1 - December 31, 2024 ​ 1,092 ​ ​ 42.00 ​ — ​ — Total ​ 5,370 ​ ​ 38.94 ​ — ​ — (1) For the three months ended December 31, 2024, 5,370 shares were withheld upon the vesting of restricted shares granted to employees of the Company in order to satisfy tax withholding obligations. ​ 54 Table of Contents Five-Year Stock Performance Graph The following stock performance graph compares the yearly percentage change in the cumulative shareholder return on our common stock during the five years ended December 31, 2024, with (i) the Total Return Index for the NYSE Composite, and (ii) the Total Return Index for KBW NASDAQ Regional Banking.
Because we are a financial holding company and do not engage directly in business activities of a material nature, our ability to pay dividends to our shareholders depends, in large part, upon our receipt of dividends from the Bank, which is also subject to numerous limitations on the payment of dividends under federal banking laws, regulations and policies.
Because we are a financial holding company and do not engage directly in business activities of a material nature, our ability to pay dividends to our shareholders depends, in large part, on our receipt of dividends from the Bank, which is also subject to numerous limitations on the payment of dividends under federal banking laws, regulations and policies.
During 2023, we declared three quarterly dividends per share of our common stock of $0.30 for the first three quarters of 2023 and one quarterly dividend of $0.32 for the fourth quarter of 2023 for an annual total of $1.22 per share.
During 2024, we declared three quarterly dividends of $0.32 per share on our common stock in the first three quarters of 2024 and one quarterly dividend of $0.34 per share in the fourth quarter of 2024 for an annual total of $1.30 per share.
This comparison assumes $100 was invested on December 31, 2018 in our common stock and the comparison groups and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all stock dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ended Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Atlantic Union Bankshares Corporation ​ $ 100.00 ​ $ 136.63 ​ $ 124.48 ​ $ 145.02 ​ $ 141.21 ​ $ 152.70 NYSE Composite Index ​ ​ 100.00 ​ ​ 125.51 ​ ​ 134.28 ​ ​ 162.04 ​ ​ 146.89 ​ ​ 167.12 KBW NASDAQ Regional Banking Index ​ 100.00 ​ 123.81 ​ 113.03 ​ 154.45 ​ 143.75 ​ 143.17 Source: S&P Global Market Intelligence (2024) The stock performance and related table shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act. ​
This comparison assumes $100 was invested on December 31, 2019 in our common stock and the comparison groups and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all stock dividends. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ended Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Atlantic Union Bankshares Corporation ​ $ 100.00 ​ $ 91.10 ​ $ 106.14 ​ $ 103.35 ​ $ 111.76 ​ $ 120.12 NYSE Composite Index ​ ​ 100.00 ​ ​ 106.99 ​ ​ 129.11 ​ ​ 117.04 ​ ​ 133.16 ​ ​ 154.19 KBW NASDAQ Regional Banking Index ​ 100.00 ​ 91.29 ​ 124.74 ​ 116.10 ​ 115.64 ​ 130.90 Source: S&P Global Market Intelligence (2025) The stock performance and related table shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act. ​
Information on Common Stock, Market Prices and Dividends Our common stock is listed on the NYSE and trades under the symbol “AUB.” There were 75,023,327 shares of our common stock outstanding held by 5,967 shareholders of record at the close of business on December 31, 2023.
ITEM 5. - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Information on Common Stock, Market Prices and Dividends Our common stock is listed on the NYSE and trades under the symbol “AUB.” There were 89,770,231 shares of our common stock outstanding at the close of business on December 31, 2024.
Removed
ITEM 5. - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Added
This figure does not include the 11,338,028 shares of our common stock that were sold relating to the Forward Sale Agreements entered into on October 21, 2024 in connection with the execution of the merger agreement with Sandy Spring, as discussed in Part I, Item 1. “Business—General—Recent Developments—Forward Sale Agreements,” as no physical settlement has occurred under such agreements.
Removed
See “Supervision and Regulation—The Company—Limits on Dividends, Capital Distributions and Other Payments.” In addition, regulatory restrictions on the ability of the Bank to transfer funds to the Company at December 31, 2023 are set forth in Note 19 “Parent Company Financial Information,” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. ​ Stock Repurchase Programs and Other Repurchases On December 10, 2021, our Board of Directors authorized a share repurchase program to purchase up to $100.0 million of our common stock through December 9, 2022 in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and /or Rule 10b-18 under the Exchange Act.
Added
There were 8,747 shareholders of record of our common stock at the close of business on December 31, 2024.
Removed
The repurchase program permitted management to repurchase shares of our common stock from time to time at management’s discretion. The repurchase program did not obligate us to purchase any particular number of shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

134 edited+107 added−53 removed56 unchanged
Biggest changeResults, on a taxable equivalent basis, are as follows for the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 vs. 2022 2022 vs. 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (Decrease) Due to Change in: ​ Increase (Decrease) Due to Change in: ​ Volume Rate Total Volume Rate Total Earning Assets: ​ ​ ​ ​ ​ ​ Securities: ​ ​ ​ ​ ​ ​ Taxable ​ $ (12,182) ​ $ 19,951 ​ $ 7,769 ​ $ 2,415 ​ $ 13,032 ​ $ 15,447 Tax-exempt ​ (9,414) ​ (1,374) ​ (10,788) ​ 6,876 ​ (1,778) ​ 5,098 Total securities ​ (21,596) ​ 18,577 ​ (3,019) ​ 9,291 ​ 11,254 ​ 20,545 Loans, net (1) ​ 56,128 ​ 237,559 ​ 293,687 ​ 1,213 ​ 47,359 ​ 48,572 Other earning assets ​ (819) ​ 4,203 ​ 3,384 ​ (1,839) ​ 3,080 ​ 1,241 Total earning assets ​ $ 33,713 ​ $ 260,339 ​ $ 294,052 ​ $ 8,665 ​ $ 61,693 ​ $ 70,358 Interest-Bearing Liabilities: ​ ​ ​ ​ ​ ​ Interest-Bearing Deposits: ​ ​ ​ ​ ​ ​ Transaction and money market accounts ​ $ 1,656 ​ $ 164,986 ​ $ 166,642 ​ $ 18 ​ $ 33,773 ​ $ 33,791 Regular savings ​ (45) ​ 1,563 ​ 1,518 ​ 30 ​ 29 ​ 59 Time deposits (1) ​ 12,709 ​ 59,619 ​ 72,328 ​ (4,157) ​ (609) ​ (4,766) Total interest-bearing deposits ​ 14,320 ​ 226,168 ​ 240,488 ​ (4,109) ​ 33,193 ​ 29,084 Other borrowings (1) ​ 9,660 ​ 17,115 ​ 26,775 ​ 7,108 ​ (1,117) ​ 5,991 Total interest-bearing liabilities ​ 23,980 ​ 243,283 ​ 267,263 ​ 2,999 ​ 32,076 ​ 35,075 Change in net interest income (FTE) (+) ​ $ 9,733 ​ $ 17,056 ​ $ 26,789 ​ $ 5,666 ​ $ 29,617 ​ $ 35,283 (1) The rate-related changes in interest income on loans, deposits, and other borrowings include the impact of lower accretion of the acquisition-related fair market value adjustments, which are detailed below. ​ The impact of net accretion related to acquisition accounting fair value adjustments for the years ended December 31, are reflected in the following table (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposit ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ Accretion ​ Borrowings ​ ​ ​ ​ ​ Accretion ​ (Amortization) ​ Accretion ​ Total 2021 ​ $ 17,044 ​ $ 13 ​ $ (806) ​ $ 16,251 2022 ​ 7,942 ​ (44) ​ (828) ​ 7,070 2023 ​ ​ 4,416 ​ ​ (31) ​ ​ (852) ​ ​ 3,533 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 52 Table of Contents NONINTEREST INCOME Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 2022 $ % ​ ​ (Dollars in thousands) Noninterest income: ​ ​ ​ ​ ​ Service charges on deposit accounts ​ $ 33,240 ​ $ 30,052 ​ $ 3,188 ​ 10.6 % Other service charges, commissions and fees ​ 7,860 ​ 6,765 ​ 1,095 ​ 16.2 % Interchange fees ​ 9,678 ​ 9,110 ​ 568 ​ 6.2 % Fiduciary and asset management fees ​ 17,695 ​ 22,414 ​ (4,719) ​ (21.1) % Mortgage banking income ​ ​ 2,743 ​ ​ 7,085 ​ ​ (4,342) ​ (61.3) % Loss on sale of securities ​ (40,989) ​ (3) ​ (40,986) ​ NM ​ Bank owned life insurance income ​ 11,759 ​ 11,507 ​ 252 ​ 2.2 % Loan-related interest rate swap fees ​ 10,037 ​ 12,174 ​ (2,137) ​ (17.6) % Other operating income ​ 38,854 ​ 19,419 ​ 19,435 ​ 100.1 % Total noninterest income ​ $ 90,877 ​ $ 118,523 ​ $ (27,646) ​ (23.3) % NM = Not Meaningful For 2023, our noninterest income decreased $27.6 million or 23.3% to $90.9 million compared to $118.5 million for 2022, primarily driven by $41.0 million of losses incurred on the sale of AFS securities executed in the first and third quarters of 2023, partially offset by a $19.4 million increase in other operating income, which included gains related to sale-leaseback transactions during the third and fourth quarters of 2023, partially offset by a gain on the sale of DHFB in the second quarter of 2022. ​ Our adjusted operating noninterest income (+) for 2023, which excludes losses on sale of securities ($41.0 million in 2023 and $3,000 in 2022), gains related to sale-leaseback transactions ($29.6 million in 2023), and the gain on sale of DHFB ($9.1 million in 2022), decreased $7.2 million or 6.5%, to $102.3 million, compared to $109.4 million for 2022.
Biggest changeThese increases were partially offset by a $602,000 decrease in loan-related interest rate swap fees due to lower transaction volumes. ​ 68 Table of Contents Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 2022 $ % ​ ​ (Dollars in thousands) Noninterest income: ​ ​ ​ ​ ​ Service charges on deposit accounts ​ $ 33,240 ​ $ 30,052 ​ $ 3,188 ​ 10.6 % Other service charges, commissions and fees ​ 7,860 ​ 6,765 ​ 1,095 ​ 16.2 % Interchange fees ​ 9,678 ​ 9,110 ​ 568 ​ 6.2 % Fiduciary and asset management fees ​ 17,695 ​ 22,414 ​ (4,719) ​ (21.1) % Mortgage banking income ​ ​ 2,743 ​ ​ 7,085 ​ ​ (4,342) ​ (61.3) % Loss on sale of securities ​ ​ (40,989) ​ ​ (3) ​ ​ (40,986) ​ NM ​ Bank owned life insurance income ​ 11,759 ​ 11,507 ​ 252 ​ 2.2 % Loan-related interest rate swap fees ​ 10,037 ​ 12,174 ​ (2,137) ​ (17.6) % Other operating income ​ 38,854 ​ 19,419 ​ 19,435 ​ 100.1 % Total noninterest income ​ $ 90,877 ​ $ 118,523 ​ $ (27,646) ​ (23.3) % NM = Not Meaningful For 2023, our noninterest income decreased $27.6 million or 23.3% to $90.9 million compared to $118.5 million for 2022, primarily driven by $41.0 million of losses incurred on the sale of AFS securities executed in the first and third quarters of 2023, partially offset by a $19.4 million increase in other operating income, which included gains related to sale-leaseback transactions during the third and fourth quarters of 2023, partially offset by a gain on the sale of DHFB in the second quarter of 2022.
Our net interest margin represents net interest income expressed as a percentage of our average earning assets. Changes in the volume and mix of our 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.
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.
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.
Management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance the comparability of our results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance.
The decrease was primarily due to a decrease in our net interest income driven by spread compression on the deposit portfolio as a result of the rapid rise in interest rates, and an increase in the provision for credit losses due to increased uncertainty in the economic outlook and loan growth during 2023, higher net charge-offs, and an increase in the individually assessed allowance on two loans due to changes in borrower-specific circumstances.
The decrease was primarily due to a decrease in net interest income driven by spread compression on the deposit portfolio as a result of the rapid rise in interest rates, and an increase in the provision for credit losses due to increased uncertainty in the economic outlook and loan growth during 2023, higher net charge-offs, and an increase in the individually assessed allowance on two loans due to changes in borrower-specific circumstances.
We have identified the allowance for loan and lease losses and fair value measurements 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.
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.
Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. ​ 66 Table of Contents On August 26, 2020, the federal bank regulatory agencies adopted a final rule that allowed us to phase in the impact of adopting the CECL methodology up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.
Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. ​ 84 Table of Contents On August 26, 2020, the federal bank regulatory agencies adopted a final rule that allowed us to phase in the impact of adopting the CECL methodology up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.
For additional information and the available balances on various lines of credit, please refer to Note 8 “Borrowings” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10- K.
For additional information and the available balances on various lines of credit, please refer to Note 9 “Borrowings” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10- K.
For more information on these commitments, refer to Note 9 “Commitments and Contingencies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.
For more information on these commitments, refer to Note 10 “Commitments and Contingencies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.
Additional sources of liquidity available to us include our capacity to borrow additional funds, when necessary, through federal funds lines with several correspondent banks, a line of credit with the FHLB, the Federal Reserve Discount Window, the purchase of brokered certificates of deposit, corporate line of credit with a large correspondent bank, and debt and capital issuance.
Additional sources of liquidity available to us include our capacity to borrow additional funds when necessary through federal funds lines with several correspondent banks, a line of credit with the FHLB, the Federal Reserve Discount Window, the purchase of brokered certificates of deposit, a corporate line of credit with a large correspondent bank, and debt and capital issuances.
Also contributing to the increase in net interest income was a decrease in the provision for credit losses primarily driven by runoff in the third-party lending and auto portfolios related to our decision to exit this business.
Also contributing to the increase in net interest income after provision for credit losses was a decrease in the provision for credit losses primarily driven by runoff in the third-party lending and auto portfolios related to the decision to exit this business.
We use earnings simulation and economic value simulation models on a regular basis, which more effectively measure the cash flow and optionality impacts, and these models are discussed below. We determine the overall magnitude of interest sensitivity risk and then we create policies and practices governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments.
We use earnings simulation and economic value simulation models on a regular basis, which more effectively measure the cash flow and optionality impacts, and these models are discussed below. 85 Table of Contents We determine the overall magnitude of interest sensitivity risk and then we create policies and practices governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments.
In management’s 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 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.
These policies and practices are based on management’s expectations regarding future interest rate movements, the states of the national, regional 67 Table of Contents and local economies, and other financial and business risk factors. We use simulation modeling to measure and monitor the effect of various interest rate scenarios and business strategies on our net interest income.
These policies and practices are based on management’s expectations regarding future interest rate movements, the states of the national, regional and local economies, and other financial and business risk factors. We use simulation modeling to measure and monitor the effect of various interest rate scenarios and business strategies on our net interest income.
Determining the appropriateness of the ALLL is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors 43 Table of Contents then prevailing, may result in significant changes in the ALLL in future periods.
Determining the appropriateness of the ALLL is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the ALLL in future periods.
Our management review our capital adequacy on an ongoing basis with reference to size, composition, and quality of our capital resources and consistency with regulatory requirements and industry standards.
Our management reviews our capital adequacy on an ongoing basis with reference to size, composition, and quality of our resources and consistency with regulatory requirements and industry standards.
These changes were partially offset by a $26.8 million increase in net interest income, and a $7.4 million decrease in income tax expense. 47 Table of Contents Adjusted operating earnings available to common shareholders (+) totaled $221.2 million for 2023, compared to $219.0 million for 2022, and diluted adjusted operating EPS (+) was $2.95 for 2023, compared to $2.92 for 2022.
These changes were partially offset by a $26.8 million increase in net interest income, and a $7.4 million decrease in income tax expense. Adjusted operating earnings available to common shareholders (+) totaled $221.2 million for 2023, compared to $219.0 million for 2022, and diluted adjusted operating EPS (+) was $2.95 for 2023, compared to $2.92 for 2022.
If an institution is liability sensitive its liabilities reprice more quickly than its assets and net interest income would be expected to decrease in a rising interest rate environment and increase in a falling interest rate environment. From a net interest income perspective, we were less asset sensitive as of December 31, 2023 compared to 2022.
If an institution is liability sensitive its liabilities reprice more quickly than its assets and net interest income would be expected to decrease in a rising interest rate environment and increase in a falling interest rate environment. ​ 86 Table of Contents From a net interest income perspective, we were more asset sensitive as of December 31, 2024 compared to 2023.
(2) Represents lease payments due on non-cancellable operating leases at December 31, 2023.
(2) Represents lease payments due on non-cancellable operating leases at December 31, 2024.
These customers include commercial real estate and commercial and industrial customers. This segment also includes our equipment finance subsidiary, which has nationwide exposure.
These customers include CRE and commercial and industrial customers. This segment also includes our equipment finance subsidiary, which has nationwide exposure.
These instruments involve elements of credit and interest rate risk in excess of the amount recognized in our Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of our involvement in particular classes of financial instruments.
These financial instruments include commitments to extend credit and letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amount recognized in our Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of our involvement in particular classes of financial instruments.
The increase was primarily driven by an increase in our net interest income due to favorable funding credits on deposits and increased interest income attributable to the higher interest rate environment and higher average loan balances, partially offset by spread compression on the loan portfolio.
The increase was primarily driven by an increase in net interest income after provision for credit losses due to favorable funding credits on deposits and increased interest income attributable to the higher interest rate environment and higher average loan balances, partially offset by spread compression on the loan portfolio.
We seek to mitigate risks attributable to our most highly concentrated portfolios—commercial real estate and commercial and industrial —through our credit underwriting and monitoring processes, including oversight by a centralized credit administration function and credit policy and risk management committee, as well as through our seasoned bankers that focus on lending to borrowers with proven track records in markets that we are familiar with.
We seek to mitigate risks attributable to our most highly concentrated portfolios and our portfolios that pose unique risks to our balance sheet through our credit underwriting and monitoring processes, including oversight by a centralized credit administration function, approval process, credit policy, and risk management committee, as well as through our seasoned bankers that focus on lending to borrowers with proven track records in markets that we are familiar with.
For additional information on our loan activity, please refer to the section “Loan Portfolio” included within this Item 7 and Note 3 “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 this Form 10-K. ​ Total investments at December 31, 2023 were $3.2 billion, a decrease of $525.7 million or 14.2% from December 31, 2022.
For additional information on our loan activity, please refer to the section “Loan Portfolio” included within this Item 7 and 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 this Form 10-K. ​ Total investments at December 31, 2024 were $3.3 billion, an increase of $164.9 million or 5.2% from December 31, 2023.
On January 26, 2024, we announced that our Board of Directors declared a quarterly dividend on our outstanding shares of our Series A preferred stock. The dividend of $171.88 per share (equivalent to $0.43 per outstanding depositary share) is payable on March 1, 2024 to preferred shareholders of record as of February 15, 2024.
On January 31, 2025, we announced that our Board of Directors declared a quarterly dividend on our outstanding shares of our Series A preferred stock. The dividend of $171.88 per share (equivalent to $0.43 per outstanding depositary share) is payable on March 3, 2025 to preferred shareholders of record as of February 14, 2025.
Total interest-bearing deposits consisted of interest checking accounts, money market, savings accounts, time deposits, and brokered deposits. Our time deposits balances with customers totaled $2.8 billion and accounted for 23.1% of total interest-bearing deposits at December 31, 2023, compared to $1.8 billion and 16.3% at December 31, 2022.
Total interest-bearing deposits consisted of interest checking accounts, money market accounts, savings accounts, time deposits, and brokered deposits. Our time deposits balances with customers totaled $4.1 billion and accounted for 27.5% of total interest-bearing customer deposits at December 31, 2024, compared to $2.8 billion and 23.1% at December 31, 2023.
Adjusted operating noninterest income excludes, as applicable, (loss) gain on sale of securities, gain on sale-leaseback transaction, gain on sale of DHFB, and gain on the sale of Visa, Inc. Class B common stock. These measures are similar to the measures we use when analyzing corporate performance and are also similar to the measure we use for incentive compensation.
Adjusted operating noninterest income excludes loss on sale of securities, gain on sale-leaseback transaction and gain on sale of DHFB. These measures are similar to the measures we use when analyzing corporate performance and are also similar to the measure we use for incentive compensation.
These decreases were partially offset by an increase in capital market transaction-related fees and by a $6.6 million increase in loan-related interest rate swap fees due to higher transaction volumes. ​ NONINTEREST EXPENSE Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 2022 $ % ​ ​ (Dollars in thousands) Noninterest expense: ​ ​ ​ ​ ​ Salaries and benefits ​ $ 236,682 ​ $ 228,926 ​ $ 7,756 ​ 3.4 % Occupancy expenses ​ 25,146 ​ 26,013 ​ (867) ​ (3.3) % Furniture and equipment expenses ​ 14,282 ​ 14,838 ​ (556) ​ (3.7) % Technology and data processing ​ 32,484 ​ 33,372 ​ (888) ​ (2.7) % Professional services ​ 15,483 ​ 16,730 ​ (1,247) ​ (7.5) % Marketing and advertising expense ​ 10,406 ​ 9,236 ​ 1,170 ​ 12.7 % FDIC assessment premiums and other insurance ​ 19,861 ​ 10,241 ​ 9,620 ​ 93.9 % Franchise and other taxes ​ 18,013 ​ 18,006 ​ 7 ​ NM ​ Loan-related expenses ​ 5,619 ​ 6,574 ​ (955) ​ (14.5) % Amortization of intangible assets ​ 8,781 ​ 10,815 ​ (2,034) ​ (18.8) % Other expenses ​ 43,614 ​ 29,051 ​ 14,563 ​ 50.1 % Total noninterest expense ​ $ 430,371 ​ $ 403,802 ​ $ 26,569 ​ 6.6 % NM = Not Meaningful For 2023, our noninterest expense increased $26.6 million or 6.6% to $430.4 million, compared to $403.8 million for 2022, primarily driven by a $14.6 million increase in other expenses due mainly to expenses associated with strategic cost saving initiatives, the legal reserve related to our previously disclosed settlement with the CFPB, and merger-related costs associated with our pending merger with American National, partially offset by strategic branch closing and facility consolidation costs in 2022 not repeated in 2023, and a $9.6 million increase in FDIC assessment premiums and other insurance primarily due to the increase in the FDIC assessment rates, effective January 1, 2023 and a FDIC special assessment recognized in the fourth quarter of 2023. ​ Our adjusted operating noninterest expense (+) for 2023, which excludes expenses associated with strategic cost saving initiatives ($12.6 million in 2023), amortization of intangible assets ($8.8 million in 2023 and $10.8 million in 2022), the legal reserve related to our previously disclosed settlement with the CFPB ($8.3 million in 2023), a FDIC special assessment ($3.4 million in 2023), merger-related costs associated with our pending merger with American National ($3.0 million in 2023), and strategic branch closing and facility consolidation costs ($5.5 million in 2022), increased $6.8 million or 1.8% to $394.3 million, compared to $387.5 million for 2022.
These increases were partially offset by a $903,000 decrease in other expenses primarily due to a decrease in non-credit related losses on customer transactions. ​ 70 Table of Contents Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 ​ 2022 $ % ​ ​ ​ (Dollars in thousands) Noninterest expense: ​ ​ ​ ​ ​ ​ Salaries and benefits ​ $ 236,682 ​ ​ $ 228,926 ​ $ 7,756 ​ 3.4 % Occupancy expenses ​ 25,146 ​ ​ 26,013 ​ (867) ​ (3.3) % Furniture and equipment expenses ​ 14,282 ​ ​ 14,838 ​ (556) ​ (3.7) % Technology and data processing ​ 32,484 ​ ​ 33,372 ​ (888) ​ (2.7) % Professional services ​ 15,483 ​ ​ 16,730 ​ (1,247) ​ (7.5) % Marketing and advertising expense ​ 10,406 ​ ​ 9,236 ​ 1,170 ​ 12.7 % FDIC assessment premiums and other insurance ​ 19,861 ​ ​ 10,241 ​ 9,620 ​ 93.9 % Franchise and other taxes ​ 18,013 ​ ​ 18,006 ​ 7 ​ NM ​ Loan-related expenses ​ 5,619 ​ ​ 6,574 ​ (955) ​ (14.5) % Amortization of intangible assets ​ 8,781 ​ ​ 10,815 ​ (2,034) ​ (18.8) % Merger-related costs ​ ​ 2,995 ​ ​ ​ — ​ ​ 2,995 ​ 100.0 % Other expenses ​ 40,619 ​ ​ ​ 29,051 ​ 11,568 ​ 39.8 % Total noninterest expense ​ $ 430,371 ​ ​ $ 403,802 ​ $ 26,569 ​ 6.6 % NM = Not Meaningful For 2023, our noninterest expense increased $26.6 million or 6.6% to $430.4 million, compared to $403.8 million for 2022, primarily driven by a $14.6 million increase in other expenses due mainly to expenses associated with strategic cost saving initiatives, the legal reserve related to our previously disclosed settlement with the CFPB, and merger-related costs associated with our pending merger with American National, partially offset by strategic branch closing and facility consolidation costs in 2022 not repeated in 2023, and a $9.6 million increase in FDIC assessment premiums and other insurance primarily due to the increase in the FDIC assessment rates, effective January 1, 2023 and a FDIC special assessment recognized in the fourth quarter of 2023.
In a decreasing interest rate environment, we expect a decline in net interest income as interest-earning assets re-price more quickly than interest-bearing deposits. 68 Table of Contents Economic Value Simulation Modeling We use economic value simulation modeling to calculate the estimated fair value of assets and liabilities over different interest rate environments.
In a decreasing interest rate environment, we expect a decline in net interest income as interest-earning assets re-price more quickly than interest-bearing deposits. Economic Value Simulation Modeling We use economic value simulation modeling to calculate the estimated fair value of assets and liabilities over different interest rate environments. We calculate the economic values based on discounted cash flow analysis.
As a result, we reallocated $9.6 million of goodwill from the Consumer Banking segment to the Wholesale Banking segment and restated our prior segment information for the year ended December 31, 2022, based on this organizational change. Goodwill was evaluated for impairment prior to and immediately following the organizational change.
Based on that reorganizational change, we also reallocated $9.6 million of goodwill from the Consumer Banking segment to the Wholesale Banking segment and revised our prior segment information for the year ended December 31, 2022. Goodwill was evaluated for impairment prior to and immediately following the organizational change.
We elected to phase in the regulatory capital impact as permitted under this final rule. The CECL transition amount is being phased out of regulatory capital over a three-year period that began in 2022 and ends in 2024.
We elected to phase in the regulatory capital impact as permitted under this final rule. The CECL transition amount was phased into the regulatory capital over a three-year period that began in 2022 and ended in 2024.
The following table reflects the estimated change in net economic value over different rate environments using economic value simulation for the balances as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Change In Economic Value of Equity ​ ​ 2023 ​ 2022 ​ ​ % % Change in Yield Curve: ​ ​ +300 basis points (8.11) ​ (12.32) ​ +200 basis points (5.36) ​ (8.41) ​ +100 basis points (2.53) ​ (4.25) ​ Most likely rate scenario — ​ — ​ -100 basis points 2.34 ​ 3.55 ​ -200 basis points 3.07 ​ 6.41 ​ -300 basis points ​ 0.76 ​ 5.71 ​ ​ As of December 31, 2023, our economic value of equity is generally less asset sensitive in a rising interest rate environment compared to its position as of December 31, 2022, primarily due to the composition of our Consolidated Balance Sheets and also due to the pricing characteristics and assumptions of certain deposits.
The following table reflects the estimated change in net economic value over different rate environments using economic value simulation for the balances as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Change In Economic Value of Equity ​ ​ 2024 ​ 2023 ​ % % Change in Yield Curve: ​ +300 bps (6.98) ​ (8.11) +200 bps (4.75) ​ (5.36) +100 bps (2.47) ​ (2.53) Most likely rate scenario — ​ — -100 bps 1.88 ​ 2.34 -200 bps 0.94 ​ 3.07 -300 bps ​ (1.09) ​ 0.76 ​ As of December 31, 2024, our economic value of equity is generally less liability sensitive in a rising interest rate environment compared to its position as of December 31, 2023, primarily due to the composition of our Consolidated Balance Sheets and also due to the pricing characteristics and assumptions of certain deposits and loans.
Of the total past due loans still accruing interest, $13.9 million or 0.09% of total LHFI were loans past due 90 days or more at December 31, 2023, compared to $7.5 million or 0.05% of total LHFI at December 31, 2022.
Of the total past due loans still accruing interest, $14.1 million or 0.08% of total LHFI were loans past due 90 days or more at December 31, 2024, compared to $13.9 million or 0.09% of total LHFI at December 31, 2023.
Our market risk is composed primarily of interest rate risk. Our ALCO is responsible for reviewing our interest rate sensitivity position and establishing policies to monitor and limit exposure to this risk. Our Board of Directors reviews and approves the policies established by ALCO.
Our asset liability management committee is responsible for reviewing our interest rate sensitivity position and establishing policies to monitor and limit exposure to this risk. Our Board of Directors reviews and approves the policies established by our asset liability management committee.
Total borrowings decreased from the prior year due to paydowns of short-term borrowings. ​ NET INCOME Years Ended December 31, 2023 and 2022 Net income available to common shareholders was $190.0 million for 2023, a decrease of $32.7 million or 14.7% and represented diluted EPS of $2.53, compared to $222.6 million and $2.97, respectively, for 2022.
Years Ended December 31, 2023 and 2022 Net income available to common shareholders was $190.0 million for 2023, a decrease of $32.7 million or 14.7% and represented diluted EPS of $2.53, compared to $222.6 million and $2.97, respectively, for 2022.
Held to maturity securities are carried at cost and totaled $837.4 million at December 31, 2023, a decrease of $10.3 million from $847.7 million at December 31, 2022 with net unrealized losses of $29.3 million at December 31, 2023, a decrease of $16.5 million from $45.8 million at December 31, 2022. ● LHFI (net of deferred fees and costs) were $15.6 billion at December 31, 2023, an increase of $1.2 billion or 8.2% from December 31, 2022 .
Held to maturity securities are carried at cost and totaled $803.9 million at December 31, 2024, a decrease of $33.5 million from $837.4 million at December 31, 2023 with net unrealized losses of $44.5 million at December 31, 2024, an increase of $15.2 million from $29.3 million at December 31, 2023. ● LHFI (net of deferred fees and costs) were $18.5 billion at December 31, 2024, an increase of $2.8 billion or 18.1% from December 31, 2023.
Class B common stock. We believe these non-GAAP adjusted measures provide investors with important information about our continuing results of operations.
We believe these non-GAAP adjusted measures provide investors with important information about the continuing economic results of our operations.
ASSET QUALITY Overview At December 31, 2023, NPAs as a percentage of total LHFI were 0.24%, an increase of 5 bps from the prior year and included nonaccrual loans of $36.9 million. Our net charge-offs remain low at 0.05% of total loans for 2023, a 3 bps increase from the prior year.
ASSET QUALITY Overview At December 31, 2024, NPAs as a percentage of total LHFI were 0.32%, an increase of 8 bps from the prior year and included nonaccrual loans of $58.0 million. Our net charge-offs remain low at 0.05% of total loans for 2024, consistent with the prior year.
Our Board of Directors also declared a quarterly dividend of $0.32 per share of common stock, which is payable on February 23, 2024 to common shareholders of record as of February 9, 2024.
Our Board of Directors also declared a quarterly dividend of $0.34 per share of common stock, which is payable on February 28, 2025 to common shareholders of record as of February 14, 2025.
The following table represents the interest rate sensitivity on our net interest income across the rate paths modeled for balances for the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Change In Net Interest Income ​ ​ 2023 ​ 2022 ​ ​ % % Change in Yield Curve: ​ +300 basis points 4.41 11.73 ​ +200 basis points 3.20 8.25 ​ +100 basis points 1.79 4.65 ​ Most likely rate scenario — — ​ -100 basis points (1.68) (3.18) ​ -200 basis points (3.92) (7.40) ​ -300 basis points ​ (7.62) ​ (12.21) ​ ​ If an institution is asset sensitive its assets reprice more quickly than its liabilities and net interest income would be expected to increase in a rising interest rate environment and decrease in a falling interest rate environment.
The following table represents the interest rate sensitivity on our net interest income across the rate paths modeled for balances for the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Change In Net Interest Income ​ ​ 2024 ​ 2023 ​ % % Change in Yield Curve: +300 bps 6.23 4.41 +200 bps 4.50 3.20 +100 bps 2.48 1.79 Most likely rate scenario — — -100 bps (2.35) (1.68) -200 bps (5.85) (3.92) -300 bps ​ (10.64) ​ (7.62) ​ If an institution is asset sensitive its assets reprice more quickly than its liabilities and net interest income would be expected to increase in a rising interest rate environment and decrease in a falling interest rate environment.
As of December 31, 2023, liquid assets totaled $5.8 billion or 27.6% of total assets, and liquid earning assets totaled $5.7 billion or 29.7% of total earning assets. Asset liquidity is also provided by managing loan and securities maturities and cash flows.
As of December 31, 2024, our liquid assets totaled $8.8 billion or 35.6% of total assets, and liquid earning assets totaled $8.6 billion or 39.0% of total earning assets. Asset liquidity is also provided by managing loan and securities maturities and cash flows.
Our future commitments related to the aforementioned leases totaled $473 million and $296 million, respectively, at December 31, 2023 and 2022. 71 Table of Contents ​ Impact of Inflation and Changing Prices Our financial statements included in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K below have been prepared in accordance with GAAP, which requires the financial position and operating results to be measured principally in terms of historic dollars without considering the change in the relative purchasing power of money over time due to inflation.
Impact of Inflation and Changing Prices Our financial statements included in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K have been prepared in accordance with GAAP, which requires the financial position and operating results to be measured principally in terms of historic dollars without considering the change in the relative purchasing power of money over time due to inflation.
The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Interest Income (FTE) ​ ​ ​ Interest and dividend income (GAAP) ​ $ 954,450 ​ $ 660,435 ​ $ 592,359 ​ FTE adjustment ​ 14,910 ​ 14,873 ​ 12,591 ​ Interest and dividend income (FTE) (non-GAAP) ​ $ 969,360 ​ $ 675,308 ​ $ 604,950 ​ Average earning assets ​ $ 18,368,806 ​ $ 17,853,216 ​ $ 17,903,671 ​ Yield on interest-earning assets (GAAP) ​ 5.20 % 3.70 % 3.31 % Yield on interest-earning assets (FTE) (non-GAAP) ​ 5.28 % 3.78 % 3.38 % Net Interest Income (FTE) ​ ​ ​ ​ ​ Net interest income (GAAP) ​ $ 611,013 ​ $ 584,261 ​ $ 551,260 ​ FTE adjustment ​ 14,910 ​ 14,873 ​ 12,591 ​ Net interest income (FTE) (non-GAAP) ​ $ 625,923 ​ $ 599,134 ​ $ 563,851 ​ Noninterest income (GAAP) ​ ​ 90,877 ​ ​ 118,523 ​ ​ 125,806 ​ Total revenue (FTE) (non-GAAP) ​ $ 716,800 ​ $ 717,657 ​ $ 689,657 ​ Average earning assets ​ $ 18,368,806 ​ $ 17,853,216 ​ $ 17,903,671 ​ Net interest margin (GAAP) ​ 3.33 % 3.27 % 3.08 % Net interest margin (FTE) (non-GAAP) ​ 3.41 % 3.36 % 3.15 % ​ ​ ​ 72 Table of Contents Tangible assets and tangible common equity are used in the calculation of certain profitability, capital, and per share ratios.
The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 2022 Interest Income (FTE) ​ ​ ​ Interest and dividend income (GAAP) ​ $ 1,227,535 ​ $ 954,450 ​ $ 660,435 ​ FTE adjustment ​ 15,226 ​ 14,910 ​ 14,873 ​ Interest and dividend income (FTE) (non-GAAP) ​ $ 1,242,761 ​ $ 969,360 ​ $ 675,308 ​ Average earning assets ​ $ 21,347,677 ​ $ 18,368,806 ​ $ 17,853,216 ​ Yield on interest-earning assets (GAAP) ​ 5.75 % 5.20 % 3.70 % Yield on interest-earning assets (FTE) (non-GAAP) ​ 5.82 % 5.28 % 3.78 % Net Interest Income (FTE) ​ ​ ​ ​ ​ Net interest income (GAAP) ​ $ 698,539 ​ $ 611,013 ​ $ 584,261 ​ FTE adjustment ​ 15,226 ​ 14,910 ​ 14,873 ​ Net interest income (FTE) (non-GAAP) ​ $ 713,765 ​ $ 625,923 ​ $ 599,134 ​ Noninterest income (GAAP) ​ ​ 118,878 ​ ​ 90,877 ​ ​ 118,523 ​ Total revenue (FTE) (non-GAAP) ​ $ 832,643 ​ $ 716,800 ​ $ 717,657 ​ Average earning assets ​ $ 21,347,677 ​ $ 18,368,806 ​ $ 17,853,216 ​ Net interest margin (GAAP) ​ 3.27 % 3.33 % 3.27 % Net interest margin (FTE) (non-GAAP) ​ 3.34 % 3.41 % 3.36 % ​ ​ ​ 90 Table of Contents Tangible assets and tangible common equity are used in the calculation of certain profitability, capital, and per share ratios.
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 years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Change ​ Average interest-earning assets ​ $ 18,368,806 ​ $ 17,853,216 ​ $ 515,590 Interest and dividend income ​ $ 954,450 ​ $ 660,435 ​ $ 294,015 Interest and dividend income (FTE) (+) ​ $ 969,360 ​ $ 675,308 ​ $ 294,052 Yield on interest-earning assets ​ 5.20 % 3.70 % 150 bps Yield on interest-earning assets (FTE) (+) ​ 5.28 % 3.78 % 150 bps Average interest-bearing liabilities ​ $ 13,283,466 ​ $ 11,873,030 ​ $ 1,410,436 Interest expense ​ $ 343,437 ​ $ 76,174 ​ $ 267,263 Cost of interest-bearing liabilities ​ 2.59 % 0.64 % 195 bps Cost of funds ​ 1.87 % 0.42 % 145 bps Net interest income ​ $ 611,013 ​ $ 584,261 ​ $ 26,752 Net interest income (FTE) (+) ​ $ 625,923 ​ $ 599,134 ​ $ 26,789 Net interest margin ​ 3.33 % 3.27 % 6 bps Net interest margin (FTE) (+) ​ 3.41 % 3.36 % 5 bps ​ For 2023, net interest income was $611.0 million, an increase of $26.8 million from 2022.
The decreases in net interest margin and net interest margin (FTE) (+) were primarily driven by the increase in the cost of funds, reflecting higher deposit rates and changes in deposit mix as depositors moved to higher yielding deposit products, partially offset by an increase in yield on interest-earning assets, primarily due to the increase in loan balances and accretion income, primarily due to the acquisition of American National, as well as the impact of higher market interest rates. ​ 64 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Change ​ Average interest-earning assets ​ $ 18,368,806 ​ $ 17,853,216 ​ $ 515,590 Interest and dividend income ​ $ 954,450 ​ $ 660,435 ​ $ 294,015 Interest and dividend income (FTE) (+) ​ $ 969,360 ​ $ 675,308 ​ $ 294,052 Yield on interest-earning assets ​ 5.20 % 3.70 % 150 bps Yield on interest-earning assets (FTE) (+) ​ 5.28 % 3.78 % 150 bps Average interest-bearing liabilities ​ $ 13,283,466 ​ $ 11,873,030 ​ $ 1,410,436 Interest expense ​ $ 343,437 ​ $ 76,174 ​ $ 267,263 Cost of interest-bearing liabilities ​ 2.59 % 0.64 % 195 bps Cost of funds ​ 1.87 % 0.42 % 145 bps Net interest income ​ $ 611,013 ​ $ 584,261 ​ $ 26,752 Net interest income (FTE) (+) ​ $ 625,923 ​ $ 599,134 ​ $ 26,789 Net interest margin ​ 3.33 % 3.27 % 6 bps Net interest margin (FTE) (+) ​ 3.41 % 3.36 % 5 bps ​ For 2023, net interest income was $611.0 million, an increase of $26.8 million from 2022.
These assumptions may not be realized and unanticipated events and circumstances may also occur that cause the assumptions to be inaccurate. The model also does not take into account any future actions of management to mitigate the impact of interest rate changes. Our ALCO monitors the assumptions at least quarterly and periodically adjusts them as it deems appropriate.
These assumptions may not be realized and unanticipated events and circumstances may also occur that cause the assumptions to be inaccurate. The model also does not take into account any future actions of management to mitigate the impact of interest rate changes.
Maturities of time deposits in excess of FDIC insurance limits were as follows as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 3 Months or Less $ 141,146 ​ $ 14,225 Over 3 Months through 6 Months 62,006 ​ 36,907 Over 6 Months through 12 Months ​ 32,672 ​ ​ 88,410 Over 12 Months 43,865 ​ 53,666 Total $ 279,689 ​ $ 193,208 ​ ​ CAPITAL RESOURCES Capital resources represent funds, earned or obtained, over which financial institutions can exercise greater or longer control in comparison with deposits and borrowed funds.
Maturities of time deposits in excess of FDIC insurance limits were as follows as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 3 Months or Less $ 291,391 ​ $ 141,146 Over 3 Months through 6 Months 159,194 ​ 62,006 Over 6 Months through 12 Months ​ 78,090 ​ ​ 32,672 Over 12 Months 51,982 ​ 43,865 Total $ 580,657 ​ $ 279,689 ​ ​ CAPITAL RESOURCES Capital resources represent funds, earned or obtained, over which financial institutions can exercise greater or longer control in comparison with deposits and borrowed funds.
During 2023, we also declared and paid cash dividends of $1.22 per common share, an increase of $0.06 per share or 5.2% over 2022. ​ SECURITIES At December 31, 2023, we had total investments of $3.2 billion or 15.0% of total assets, compared to $3.7 billion or 18.1% of total assets at December 31, 2022.
During 2024, we also declared and paid cash dividends of $1.30 per common share, an increase of $0.08 per share or 6.6% over 2023. ​ ​ ​ 76 Table of Contents SECURITIES At December 31, 2024, we had total investments of $3.3 billion or 13.6% of total assets, compared to $3.2 billion or 15.0% of total assets at December 31, 2023.
We believe this adjusted measure provides investors with important information about the continuing economic results of our operations. ​ The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Adjusted Operating Noninterest Expense & Noninterest Income ​ ​ ​ ​ ​ ​ ​ Noninterest expense (GAAP) ​ $ 430,371 ​ $ 403,802 ​ $ 419,195 ​ Less: Amortization of intangible assets ​ ​ 8,781 ​ ​ 10,815 ​ ​ 13,904 ​ Less: Strategic cost saving initiatives ​ ​ 12,607 ​ ​ — ​ ​ — ​ Less: Merger-related costs ​ ​ 2,995 ​ ​ — ​ ​ — ​ Less: Legal reserve ​ ​ 8,300 ​ ​ — ​ ​ — ​ Less: FDIC special assessment ​ ​ 3,362 ​ ​ — ​ ​ — ​ Less: Strategic branch closing and facility consolidation costs ​ ​ — ​ ​ 5,508 ​ ​ 17,437 ​ Less: Losses related to balance sheet repositioning ​ ​ — ​ ​ — ​ ​ 14,695 ​ Adjusted operating noninterest expense (non-GAAP) ​ $ 394,326 ​ $ 387,479 ​ $ 373,159 ​ Noninterest income (GAAP) ​ $ 90,877 ​ $ 118,523 ​ $ 125,806 ​ Less: (Loss) gain on sale of securities ​ ​ (40,989) ​ ​ (3) ​ ​ 87 ​ Less: Gain on sale-leaseback transaction ​ ​ 29,579 ​ ​ — ​ ​ — ​ Less: Gain on sale of DHFB ​ ​ — ​ ​ 9,082 ​ ​ — ​ Less: Gain on Visa, Inc.
We believe these adjusted measures provide investors with important information about the continuing economic results of our operations. ​ The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 2022 Adjusted Operating Noninterest Expense & Noninterest Income ​ ​ ​ ​ ​ ​ ​ Noninterest expense (GAAP) ​ $ 507,534 ​ $ 430,371 ​ $ 403,802 ​ Less: Amortization of intangible assets ​ ​ 19,307 ​ ​ 8,781 ​ ​ 10,815 ​ Less: Merger-related costs ​ ​ 40,018 ​ ​ 2,995 ​ ​ — ​ Less: FDIC special assessments ​ ​ 840 ​ ​ 3,362 ​ ​ — ​ Less: Strategic cost saving initiatives ​ ​ — ​ ​ 12,607 ​ ​ — ​ Less: Legal reserve ​ ​ — ​ ​ 8,300 ​ ​ — ​ Less: Strategic branch closing and facility consolidation costs ​ ​ — ​ ​ — ​ ​ 5,508 ​ Adjusted operating noninterest expense (non-GAAP) ​ $ 447,369 ​ $ 394,326 ​ $ 387,479 ​ Noninterest income (GAAP) ​ $ 118,878 ​ $ 90,877 ​ $ 118,523 ​ Less: Loss on sale of securities ​ ​ (6,493) ​ ​ (40,989) ​ ​ (3) ​ Less: Gain on sale-leaseback transaction ​ ​ — ​ ​ 29,579 ​ ​ — ​ Less: Gain on sale of DHFB ​ ​ — ​ ​ — ​ ​ 9,082 ​ Adjusted operating noninterest income (non-GAAP) ​ $ 125,371 ​ $ 102,287 ​ $ 109,444 ​ ​ ​
(2 ) Rates and yields are calculated from actual, not rounded amounts in thousands, which appear above .
(2) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above. (3) Nonaccrual loans are included in average loans outstanding.
Before September 30, 2023, the most significant of these external economic variables was the Virginia unemployment rate. We now consider various national economic variables in developing the ALLL, including the national unemployment rate, national gross domestic product, the national commercial real estate pricing index, the national home price index, and national retail sales.
We consider various national economic variables in developing the ALLL, including the national unemployment rate, national gross domestic product, the national commercial real estate pricing index, the national home price index, and national retail sales.
(+) Refer to “Non-GAAP Financial Measures” within this Item 7 for more information about this non-GAAP financial measure, including a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with GAAP. ​ For more information about our off-balance sheet obligations and cash requirements refer to section “Liquidity” included within this Item 7. ​ MARKET RISK Interest Sensitivity Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, and equity prices.
(+) Refer to “Non-GAAP Financial Measures” within this Item 7 for more information about this non-GAAP financial measure, including a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with GAAP. ​ For more information about our off-balance sheet obligations and cash requirements refer to section “Liquidity” included within this Item 7.
The following table shows the activity in nonaccrual loans for the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Beginning Balance ​ $ 27,038 ​ $ 31,100 Net customer payments ​ (11,850) ​ (12,134) Additions ​ 23,091 ​ 9,527 Charge-offs ​ (987) ​ (920) Loans returning to accruing status ​ (432) ​ (131) Transfers to foreclosed property ​ — ​ (404) Ending Balance ​ $ 36,860 ​ $ 27,038 ​ The following table presents the composition of nonaccrual loans and the coverage ratio, which is the ALLL expressed as a percentage of nonaccrual loans, as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Construction and Land Development ​ $ 348 ​ $ 307 ​ Commercial Real Estate - Owner Occupied ​ 3,001 ​ 7,178 ​ Commercial Real Estate - Non-Owner Occupied ​ 12,616 ​ 1,263 ​ Commercial & Industrial ​ 4,556 ​ 1,884 ​ Residential 1-4 Family - Commercial ​ 1,804 ​ 1,904 ​ Residential 1-4 Family - Consumer ​ 11,098 ​ 10,846 ​ Residential 1-4 Family - Revolving ​ 3,087 ​ 3,453 ​ Auto ​ 350 ​ 200 ​ Consumer ​ ​ — ​ ​ 3 ​ Total ​ $ 36,860 ​ $ 27,038 ​ Coverage Ratio (1) ​ ​ 358.61 % ​ 409.68 % (1) Represents the ALLL divided by nonaccrual loans. 63 Table of Contents Past Due Loans At December 31, 2023, past due loans still accruing interest totaled $48.4 million or 0.31% of total LHFI, compared to $30.0 million or 0.21% of total LHFI at December 31, 2022.
The following table shows the activity in nonaccrual loans for the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Beginning Balance ​ $ 36,860 ​ $ 27,038 Net customer payments ​ (21,586) ​ (11,850) Additions ​ 51,671 ​ 23,091 Charge-offs ​ (6,467) ​ (987) Loans returning to accruing status ​ (2,134) ​ (432) Transfers to foreclosed property ​ (375) ​ — Ending Balance ​ $ 57,969 ​ $ 36,860 ​ 81 Table of Contents The following table presents the composition of nonaccrual loans and the coverage ratio, which is the ALLL expressed as a percentage of nonaccrual loans, as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Construction and Land Development ​ $ 1,313 ​ $ 348 ​ Commercial Real Estate - Owner Occupied ​ 2,915 ​ 3,001 ​ Commercial Real Estate - Non-Owner Occupied ​ 1,167 ​ 12,616 ​ Multifamily Real Estate ​ ​ 132 ​ ​ — ​ Commercial & Industrial ​ 33,702 ​ 4,556 ​ Residential 1-4 Family - Commercial ​ 1,510 ​ 1,804 ​ Residential 1-4 Family - Consumer ​ 12,725 ​ 11,098 ​ Residential 1-4 Family - Revolving ​ 3,826 ​ 3,087 ​ Auto ​ 659 ​ 350 ​ Consumer ​ ​ 20 ​ ​ — ​ Total ​ $ 57,969 ​ $ 36,860 ​ Coverage Ratio ​ ​ 308.17 % ​ 358.61 % ​ Past Due Loans At December 31, 2024, past due loans still accruing interest totaled $57.7 million or 0.31% of total LHFI, compared to $48.4 million or 0.31% of total LHFI at December 31, 2023.
As of December 31, 2023, loan payments of approximately $5.1 billion or 32.8% of total loans are expected within one year based on contractual terms, adjusted for expected prepayments, and approximately $341.5 million or 10.7% of total securities are scheduled to be paid down within one year based on contractual terms, adjusted for expected prepayments.
As of December 31, 2024, loan payments of approximately $8.0 billion or 43.5% of total LHFI are expected within one year based on contractual terms and expected prepayments, and approximately $355.1 million or 10.6% of total investments as of December 31, 2024 are scheduled to be paid down within one year based on contractual terms and expected prepayments.
In the modeling, we assume that all maturities, calls, and prepayments in the securities portfolio are reinvested in like instruments, and we base the MBS prepayment assumptions on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning.
Our asset liability management committee monitors the assumptions at least quarterly and periodically adjusts them as it deems appropriate. In the modeling, we assume that all maturities, calls, and prepayments in the securities portfolio are reinvested in like instruments, and we base the MBS prepayment assumptions on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning.
The cash required to repay these obligations will be sourced from future debt and capital issuances and from other general liquidity sources as described under “Liquidity” within this Item 7. ​ The following table presents our contractual obligations related to our major cash requirements and the scheduled payments due at the various intervals over the next year and beyond as of December 31, 2023 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than More than ​ ​ Total ​ 1 year ​ 1 year Long-term debt (1) ​ $ 250,000 ​ $ — ​ $ 250,000 Trust preferred capital notes (1) ​ 155,159 ​ — ​ 155,159 Leases (2) ​ 116,456 ​ 13,967 ​ 102,489 Repurchase agreements ​ 110,833 ​ 110,833 ​ — Total contractual obligations ​ $ 632,448 ​ $ 124,800 ​ $ 507,648 (1) Excludes related unamortized premium/discount and interest payments.
We expect that the cash required to repay these obligations will be sourced from future debt and capital issuances and from other general liquidity sources as described under “Liquidity” within this Item 7. ​ The following table presents our contractual obligations related to our major cash requirements and the scheduled payments due at the various intervals over the next year and beyond as of December 31, 2024 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than More than ​ ​ Total ​ 1 year ​ 1 year Long-term debt (1) ​ $ 250,000 ​ $ — ​ $ 250,000 Trust preferred capital notes (1) ​ 184,542 ​ — ​ 184,542 Leases (2) ​ 115,442 ​ 14,663 ​ 100,779 Repurchase agreements ​ 56,275 ​ 56,275 ​ — Total contractual obligations ​ $ 606,259 ​ $ 70,938 ​ $ 535,321 (1) Excludes related unamortized premium/discount and interest payments.
The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Tangible Assets ​ ​ ​ ​ Ending Assets (GAAP) ​ $ 21,166,197 ​ $ 20,461,138 ​ $ 20,064,796 ​ Less: Ending goodwill ​ 925,211 ​ 925,211 ​ 935,560 ​ Less: Ending amortizable intangibles ​ 19,183 ​ 26,761 ​ 43,312 ​ Ending tangible assets (non-GAAP) ​ $ 20,221,803 ​ $ 19,509,166 ​ $ 19,085,924 ​ Tangible Common Equity ​ ​ ​ ​ Ending Equity (GAAP) ​ $ 2,556,327 ​ $ 2,372,737 ​ $ 2,710,071 ​ Less: Ending goodwill ​ 925,211 ​ 925,211 ​ 935,560 ​ Less: Ending amortizable intangibles ​ 19,183 ​ 26,761 ​ 43,312 ​ Less: Perpetual preferred stock ​ ​ 166,357 ​ ​ 166,357 ​ 166,357 ​ Ending tangible common equity (non-GAAP) ​ $ 1,445,576 ​ $ 1,254,408 ​ $ 1,564,842 ​ Average equity (GAAP) ​ $ 2,440,525 ​ $ 2,465,049 ​ $ 2,725,330 ​ Less: Average goodwill ​ 925,211 ​ 930,315 ​ 935,560 ​ Less: Average amortizable intangibles ​ 22,951 ​ 34,627 ​ 49,999 ​ Less: Average perpetual preferred stock ​ ​ 166,356 ​ ​ 166,356 ​ ​ 166,356 ​ Average tangible common equity (non-GAAP) ​ $ 1,326,007 ​ $ 1,333,751 ​ $ 1,573,415 ​ Common equity to total assets (GAAP) ​ 11.29 % 10.78 % 12.68 % Tangible common equity to tangible assets (non-GAAP) ​ 7.15 % 6.43 % 8.20 % Book value per common share (GAAP) ​ $ 32.06 ​ $ 29.68 ​ $ 33.80 ​ ​ ​ 73 Table of Contents Adjusted operating measures exclude, as applicable, expenses related to strategic cost saving initiatives (principally composed of severance charges related to headcount reductions, costs related to modifying certain third party vendor contracts, and charges for exiting certain leases), merger-related costs, a legal reserve associated with our previously disclosed settlement with the CFPB, a FDIC special assessment, strategic branch closing and related facility consolidation costs (principally composed of real estate, leases and other assets write downs, as well as severance and expense reduction initiatives), losses related to balance sheet repositioning (principally composed of losses on debt extinguishment), (loss) gain on sale of securities, gain on sale-leaseback transaction, gain on sale of DHFB, and gain on the sale of Visa, Inc.
The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 2022 Tangible Assets ​ ​ ​ ​ Ending Assets (GAAP) ​ $ 24,585,323 ​ $ 21,166,197 ​ $ 20,461,138 ​ Less: Ending goodwill ​ 1,214,053 ​ 925,211 ​ 925,211 ​ Less: Ending amortizable intangibles ​ 84,563 ​ 19,183 ​ 26,761 ​ Ending tangible assets (non-GAAP) ​ $ 23,286,707 ​ $ 20,221,803 ​ $ 19,509,166 ​ Tangible Common Equity ​ ​ ​ ​ Ending Equity (GAAP) ​ $ 3,142,879 ​ $ 2,556,327 ​ $ 2,372,737 ​ Less: Ending goodwill ​ 1,214,053 ​ 925,211 ​ 925,211 ​ Less: Ending amortizable intangibles ​ 84,563 ​ 19,183 ​ 26,761 ​ Less: Perpetual preferred stock ​ ​ 166,357 ​ ​ 166,357 ​ 166,357 ​ Ending tangible common equity (non-GAAP) ​ $ 1,677,906 ​ $ 1,445,576 ​ $ 1,254,408 ​ Average equity (GAAP) ​ $ 2,971,111 ​ $ 2,440,525 ​ $ 2,465,049 ​ Less: Average goodwill ​ 1,139,422 ​ 925,211 ​ 930,315 ​ Less: Average amortizable intangibles ​ 73,984 ​ 22,951 ​ 34,627 ​ Less: Average perpetual preferred stock ​ ​ 166,356 ​ ​ 166,356 ​ ​ 166,356 ​ Average tangible common equity (non-GAAP) ​ $ 1,591,349 ​ $ 1,326,007 ​ $ 1,333,751 ​ Common equity to total assets (GAAP) ​ 12.11 % 11.29 % 10.78 % Tangible common equity to tangible assets (non-GAAP) ​ 7.21 % 7.15 % 6.43 % ​ ​ 91 Table of Contents Adjusted operating measures exclude, as applicable, expenses related to merger-related costs, deferred tax asset write-down, FDIC special assessments, strategic cost saving initiatives (principally composed of severance charges related to headcount reductions and charges for exiting certain leases), legal reserves associated with our previously disclosed settlement with the CFPB, strategic branch closing and related facility consolidation costs (principally composed of real estate, leases and other assets write downs, as well as severance and expense reduction initiatives), loss on sale of securities, gain on sale-leaseback transaction, and gain on sale of DHFB.
We calculate the economic values based on discounted cash flow analysis. The net economic value of equity is the economic value of all assets minus the economic value of all liabilities. The change in net economic value over different rate environments is an indication of the longer-term earnings capability of the balance sheet.
The net economic value of equity is the economic value of all assets minus the economic value of all liabilities. The change in net economic value over different rate environments is an indication of the longer-term earnings capability of the balance sheet. We use the same assumptions in the economic value simulation model as in the earnings simulation model.
We closely monitor changes in the industry and market conditions that may impact our liquidity and will use other borrowing means or other liquidity and funding strategies to fund our liquidity needs as needed.
Refer to “Deposits” within this Item 7 for additional information on this topic. ​ We closely monitor changes in the industry and market conditions that may impact our liquidity and will use other borrowing means or other liquidity and funding strategies sources to fund our liquidity needs.
Refer to “Liquidity” within this Item 7 for additional information about our liquidity and “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of this Form 10-K for additional information about our interest rate sensitivity. ​ 45 Table of Contents Strategic Initiatives Pending Merger with American National Bankshares Inc.
Refer to “Liquidity” within this Item 7 for additional information about our liquidity and “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of this Form 10-K for additional information about our interest rate sensitivity. ​ Financial institutions continue to deal with macroeconomic headwinds.
For additional information on deposits, refer to the section “Deposits” included within this Item 7 of this Form 10-K. ​ Total borrowings at December 31, 2023 were $1.3 billion, a decrease of $396.8 million or 23.2% compared to $1.7 billion at December 31, 2022. The decrease in borrowings was primarily due to paydowns of short-term borrowings due to deposit growth.
For additional information on deposits, refer to the section “Deposits” included within this Item 7 of this Form 10-K. ​ Total borrowings at December 31, 2024 were $534.6 million, a decrease of $777.3 million or 59.3% compared to $1.3 billion at December 31, 2023.
We seek to diversify our investment portfolio to minimize risk, as we focus on purchasing MBS for cash flow and reinvestment opportunities and securities issued by states and political subdivisions due to the tax benefits and the higher yield offered from these securities. The majority of our MBS are agency-backed securities, which have a government guarantee.
This increase was primarily due to the American National acquisition. We seek to diversify our investment portfolio to minimize risk, and we focus on purchasing MBS for cash flow and reinvestment opportunities and securities issued by states and political subdivisions due to the tax benefits and the higher tax-equivalent yield offered from these securities.
For 2022, net interest margin increased 19 bps and net interest margin (FTE) (+) increased 21 bps, compared to 2021. ​ 50 Table of Contents 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 years ended December 31, (dollars in thousands): AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ Interest ​ ​ ​ Interest ​ ​ ​ Interest ​ ​ ​ Average ​ Income / ​ Yield / ​ Average ​ Income / ​ Yield / ​ Average ​ Income / ​ Yield / ​ ​ Balance ​ Expense (1) ​ Rate (1)(2) ​ Balance ​ Expense (1) ​ Rate (1)(2) ​ Balance ​ Expense (1) ​ Rate (1)(2) Assets: ​ ​ ​ ​ ​ ​ ​ Securities: ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 1,867,679 ​ $ 67,075 ​ 3.59 % $ 2,285,423 ​ $ 59,306 2.59 % $ 2,170,983 ​ $ 43,859 2.02 % Tax-exempt ​ 1,325,212 ​ 43,520 ​ 3.28 % 1,610,914 ​ 54,308 3.37 % 1,408,395 ​ 49,210 3.49 % Total securities ​ 3,192,891 ​ 110,595 3.46 % 3,896,337 ​ 113,614 2.92 % 3,579,378 ​ 93,069 2.60 % LHFI, net of deferred fees and costs (3) ​ 14,949,487 ​ 852,016 5.70 % 13,671,714 ​ 558,329 4.08 % 13,639,325 ​ 509,757 3.74 % Other earning assets ​ 226,428 ​ 6,749 2.98 % 285,165 ​ 3,365 1.18 % 684,968 ​ 2,124 0.31 % Total earning assets ​ 18,368,806 ​ $ 969,360 5.28 % 17,853,216 ​ $ 675,308 3.78 % 17,903,671 ​ $ 604,950 3.38 % Allowance for loan and lease losses ​ (118,789) ​ ​ (104,485) ​ ​ (128,100) ​ ​ Total non-earning assets ​ 2,262,385 ​ ​ 2,200,657 ​ ​ 2,201,980 ​ ​ Total assets ​ $ 20,512,402 ​ ​ $ 19,949,388 ​ ​ $ 19,977,551 ​ ​ Liabilities and Stockholders' Equity: ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ Transaction and money market accounts ​ $ 8,603,142 ​ $ 207,102 2.41 % $ 8,277,146 ​ $ 40,460 0.49 % $ 8,254,615 ​ $ 6,669 0.08 % Regular savings ​ 997,118 ​ 1,803 0.18 % 1,159,630 ​ 285 0.02 % 1,029,476 ​ 226 0.02 % Time deposits ​ 2,711,491 ​ 87,784 3.24 % 1,735,983 ​ 15,456 0.89 % 2,201,039 ​ 20,222 0.92 % Total interest-bearing deposits ​ 12,311,751 ​ 296,689 2.41 % 11,172,759 ​ 56,201 0.50 % 11,485,130 ​ 27,117 0.24 % Other borrowings ​ 971,715 ​ 46,748 4.81 % 700,271 ​ 19,973 2.85 % 453,452 ​ 13,982 3.08 % Total interest-bearing liabilities ​ 13,283,466 ​ $ 343,437 2.59 % 11,873,030 ​ $ 76,174 0.64 % 11,938,582 ​ $ 41,099 0.34 % Noninterest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ 4,342,137 ​ ​ 5,278,959 ​ ​ 5,056,156 ​ ​ Other liabilities ​ 446,274 ​ ​ 332,350 ​ ​ 257,483 ​ ​ Total liabilities ​ 18,071,877 ​ ​ 17,484,339 ​ ​ 17,252,221 ​ ​ Stockholders' equity ​ 2,440,525 ​ ​ 2,465,049 ​ ​ 2,725,330 ​ ​ Total liabilities and stockholders' equity ​ $ 20,512,402 ​ ​ $ 19,949,388 ​ ​ $ 19,977,551 ​ ​ Net interest income (FTE) (+) ​ ​ $ 625,923 ​ ​ $ 599,134 ​ ​ $ 563,851 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate spread ​ ​ 2.69 % ​ 3.14 % ​ 3.04 % Cost of funds ​ ​ 1.87 % ​ 0.42 % ​ 0.23 % Net interest margin (FTE) (+) ​ ​ 3.41 % ​ 3.36 % ​ 3.15 % (1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.
The impact of accretion and amortization related to acquisition accounting fair value adjustments for the years ended December 31, are reflected in the following table (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ Deposit ​ Borrowings ​ ​ ​ ​ ​ Accretion ​ Amortization ​ Accretion ​ Total 2022 ​ $ 7,942 ​ $ (44) ​ $ (828) ​ $ 7,070 2023 ​ 4,416 ​ ​ (31) ​ ​ (852) ​ ​ 3,533 2024 ​ ​ 44,073 ​ ​ (2,724) ​ ​ (1,078) ​ ​ 40,271 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 65 Table of Contents 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 years ended December 31, (dollars in thousands): AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ Interest ​ ​ ​ Interest ​ ​ ​ Interest ​ ​ ​ Average ​ Income / ​ Yield / ​ Average ​ Income / ​ Yield / ​ Average ​ Income / ​ Yield / ​ ​ Balance ​ Expense (1) ​ Rate (1)(2) ​ Balance ​ Expense (1) ​ Rate (1)(2) ​ Balance ​ Expense (1) ​ Rate (1)(2) Assets: ​ ​ ​ ​ ​ ​ ​ Securities: ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 2,138,786 ​ $ 91,191 4.26 % $ 1,867,679 ​ $ 67,075 3.59 % $ 2,285,423 ​ $ 59,306 2.59 % Tax-exempt ​ 1,255,309 ​ 41,252 3.29 % 1,325,212 ​ 43,520 3.28 % 1,610,914 ​ 54,308 3.37 % Total securities ​ 3,394,095 ​ 132,443 3.90 % 3,192,891 ​ 110,595 3.46 % 3,896,337 ​ 113,614 2.92 % LHFI, net of deferred fees and costs (3)(4) ​ 17,647,589 ​ 1,098,151 6.22 % 14,949,487 ​ 852,016 5.70 % 13,671,714 ​ 558,329 4.08 % Other earning assets ​ 305,993 ​ 12,167 3.98 % 226,428 ​ 6,749 2.98 % 285,165 ​ 3,365 1.18 % Total earning assets ​ 21,347,677 ​ $ 1,242,761 5.82 % 18,368,806 ​ $ 969,360 5.28 % 17,853,216 ​ $ 675,308 3.78 % Allowance for loan and lease losses ​ (152,540) ​ ​ ​ ​ (118,789) ​ ​ (104,485) ​ ​ Total non-earning assets ​ 2,667,053 ​ ​ ​ ​ 2,262,385 ​ ​ 2,200,657 ​ ​ Total assets ​ $ 23,862,190 ​ ​ ​ ​ $ 20,512,402 ​ ​ $ 19,949,388 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders' Equity: ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ Transaction and money market accounts ​ $ 9,865,496 ​ $ 289,492 2.93 % $ 8,603,142 ​ $ 207,102 2.41 % $ 8,277,146 ​ $ 40,460 0.49 % Regular savings ​ 1,013,175 ​ 2,203 0.22 % 997,118 ​ 1,803 0.18 % 1,159,630 ​ 285 0.02 % Time deposits (5) ​ 4,333,362 ​ 192,199 4.44 % 2,711,491 ​ 87,784 3.24 % 1,735,983 ​ 15,456 0.89 % Total interest-bearing deposits ​ 15,212,033 ​ 483,894 3.18 % 12,311,751 ​ 296,689 2.41 % 11,172,759 ​ 56,201 0.50 % Other borrowings (6) ​ 862,716 ​ 45,102 5.23 % 971,715 ​ 46,748 4.81 % 700,271 ​ 19,973 2.85 % Total interest-bearing liabilities ​ 16,074,749 ​ $ 528,996 3.29 % 13,283,466 ​ $ 343,437 2.59 % 11,873,030 ​ $ 76,174 0.64 % Noninterest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ 4,321,226 ​ ​ ​ ​ 4,342,137 ​ ​ 5,278,959 ​ ​ Other liabilities ​ 495,104 ​ ​ ​ ​ 446,274 ​ ​ 332,350 ​ ​ Total liabilities ​ 20,891,079 ​ ​ ​ ​ 18,071,877 ​ ​ 17,484,339 ​ ​ Stockholders' equity ​ 2,971,111 ​ ​ ​ ​ 2,440,525 ​ ​ 2,465,049 ​ ​ Total liabilities and stockholders' equity ​ $ 23,862,190 ​ ​ ​ ​ $ 20,512,402 ​ ​ $ 19,949,388 ​ ​ Net interest income (FTE) (+) ​ ​ ​ $ 713,765 ​ ​ $ 625,923 ​ ​ $ 599,134 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate spread ​ ​ ​ ​ ​ 2.53 % ​ 2.69 % ​ 3.14 % Cost of funds ​ ​ ​ ​ ​ 2.48 % ​ 1.87 % ​ 0.42 % Net interest margin (FTE) (+) ​ ​ ​ ​ ​ 3.34 % ​ 3.41 % ​ 3.36 % (1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.
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 the analysis of our performance.
We use the non-GAAP financial measures discussed herein in our analysis of our performance.
Total net unrealized losses on the HTM securities portfolio were $29.3 million at December 31, 2023, compared to $45.8 million at December 31, 2022. ​ Liabilities and Stockholders’ Equity At December 31, 2023, we had total liabilities of $18.6 billion, an increase of $521.5 million or 2.9% from December 31, 2022, primarily driven by an increase in total deposits, partially offset by a decrease in short-term borrowings.
Total net unrealized losses on the HTM securities portfolio were $44.5 million at December 31, 2024, compared to $29.3 million at December 31, 2023. ​ Liabilities and Stockholders’ Equity At December 31, 2024, we had total liabilities of $21.4 billion, an increase of $2.8 billion or 15.2% from December 31, 2023, which was primarily driven by an increase in deposits of $3.6 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 $777.3 million due to paydowns during 2024.
We use the same assumptions in the economic value simulation model as in the earnings simulation model. The economic value simulation model uses instantaneous rate shocks to the balance sheet.
The economic value simulation model uses instantaneous rate shocks to the balance sheet.
AFS securities totaled $2.2 billion at December 31, 2023, a decrease of $510.6 million or 18.6% from December 31, 2022. At December 31, 2023, total net unrealized losses on the AFS securities portfolio were $384.3 million, 58 Table of Contents compared to $462.5 million at December 31, 2022.
AFS securities totaled $2.4 billion at December 31, 2024, an increase of $210.9 million or 9.5% from December 31, 2023. At December 31, 2024, total net unrealized losses on the AFS securities portfolio were $402.6 million, compared to $384.3 million at December 31, 2023.
The FOMC has noted that it will continue to assess additional information and its implications for monetary policy, and in determining future actions with respect to the target rates, the FOMC 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 has noted that it will continue to 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.
Provision for Credit Losses We recorded a provision for credit losses of $31.6 million for the year ended December 31, 2023, an increase of $12.6 million or 66.2% from the prior year.
Provision for Credit Losses We recorded a provision for credit losses of $50.1 million for the year ended December 31, 2024, an increase of $18.5 million or 58.4% from the prior year.
In addition, our noninterest income in 2023 decreased from 2022, primarily due to a decline in fiduciary and asset management fees driven by a decrease in assets under management primarily due to the sale of DHFB in the second quarter of 2022, and a continued decrease in mortgage banking income from the prior year due to a decline in mortgage loan origination volumes and a decline in gain on sale margins due to increases in market interest rates. ​ 57 Table of Contents Consumer Banking income before income taxes decreased $48.0 million to $53.5 million for 2022, compared to $101.5 million for 2021.
The increase in net interest income after provision for credit losses was partially offset by a decrease in noninterest income, primarily due to a decline in fiduciary and asset management fees driven by a decrease in assets under management primarily due to the sale of DHFB in the second quarter of 2022, and a continued decrease in mortgage banking income from the prior year due to a decline in mortgage loan origination volumes and a decline in gain on sale margins due to increases in market interest rates.
The following table summarizes our regulatory capital and related ratios as of December 31, ( dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Common equity Tier 1 capital ​ $ 1,790,183 ​ $ 1,684,088 ​ Tier 1 capital ​ 1,956,539 ​ 1,850,444 ​ Tier 2 capital ​ 508,278 ​ 468,716 ​ Total risk-based capital ​ 2,464,817 ​ 2,319,160 ​ Risk-weighted assets ​ 18,184,252 ​ 16,930,559 ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital ratios: ​ ​ ​ Common equity Tier 1 capital ratio ​ 9.84 % 9.95 % Tier 1 capital ratio ​ 10.76 % 10.93 % Total capital ratio ​ 13.55 % 13.70 % Leverage ratio (Tier 1 capital to average assets) ​ 9.63 % 9.42 % Capital conservation buffer ratio (1) ​ ​ 4.76 % ​ 4.93 % Common equity to total assets ​ 11.29 % 10.78 % Tangible common equity to tangible assets (+) ​ 7.15 % 6.43 % (1) Calculated by subtracting the regulatory minimum capital ratio requirements from the Company’s actual ratio results for Common equity, Tier 1, and Total risk-based capital.
The following table summarizes our regulatory capital and related ratios as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Common equity Tier 1 capital ​ $ 2,063,163 ​ $ 1,790,183 ​ Tier 1 capital ​ 2,229,519 ​ 1,956,539 ​ Tier 2 capital ​ 589,879 ​ 508,279 ​ Total risk-based capital ​ 2,819,398 ​ 2,464,818 ​ Risk-weighted assets ​ 20,713,030 ​ 18,187,785 ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital ratios: ​ ​ ​ Common equity Tier 1 capital ratio ​ 9.96 % 9.84 % Tier 1 capital ratio ​ 10.76 % 10.76 % Total capital ratio ​ 13.61 % 13.55 % Leverage ratio (Tier 1 capital to average assets) ​ 9.29 % 9.63 % Capital conservation buffer ratio (1) ​ ​ 4.76 % ​ 4.76 % Common equity to total assets ​ 12.11 % 11.29 % Tangible common equity to tangible assets (+) ​ 7.21 % 7.15 % (1) Calculated by subtracting the regulatory minimum capital ratio requirements from the Company’s actual ratio results for Common equity, Tier 1, and Total risk-based capital.
These decreases in noninterest expense were partially offset by increases in salaries and benefits, technology and data processing, and FDIC assessment premiums and other insurance. 48 Table of Contents NET INTEREST INCOME Net interest income, which represents our principal source of revenue, is the amount by which our interest income exceeds our interest expense.
These increases in noninterest expense were partially offset by decreases in amortization of intangible assets, professional services, loan-related expenses, technology and data processing, and occupancy expenses. NET INTEREST INCOME Net interest income, which represents our principal source of revenue, is the amount by which interest income exceeds interest expense.
Net Charge-offs For the year ended December 31, 2023, our net charge-offs were $7.6 million or 0.05% of total average loans, compared to $2.3 million or 0.02%, respectively, for the year ended December 31, 2022.
As of December 31, 2024 and 2023, unfunded commitments on loans modified and designated as TLMs were $198,000 and $1.6 million, respectively. ​ Net Charge-offs For the year ended December 31, 2024, our net charge-offs were $8.8 million or 0.05% of total average loans, compared to $7.6 million or 0.05%, respectively, for the year ended December 31, 2023.
Excluded from these tables are variable lease payments or renewals. ​ For more information pertaining to the previous table, refer to Note 6 “Leases” and Note 8 “Borrowings” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.
Excluded from these tables are variable lease payments or renewals. ​ For more information pertaining to the previous table, refer to Note 7 “Leases” and Note 9 “Borrowings” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. ​ 88 Table of Contents Off-Balance Sheet Obligations In the normal course of business, we are party to financial instruments with off-balance sheet risk to meet the financing needs of our customers and to reduce our own exposure to fluctuations in interest rates.
Average LHFI (net of deferred fees and costs) totaled $14.9 billion at December 31, 2023, an increase of $1.3 billion or 9.4% from December 31, 2022.
Average LHFI (net of deferred fees and costs) totaled $17.6 billion at December 31, 2024, an increase of $2.7 billion or 18.0% from December 31, 2023.
NON-GAAP FINANCIAL MEASURES In this Form 10-K, we have provided supplemental performance measures on a tax-equivalent, tangible, operating, adjusted or pre-tax pre-provision basis. 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.
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.
For information regarding the hedge transaction related to AFS securities, see Note 10 “Derivatives” in “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K. 59 Table of Contents The table below sets forth a summary of the AFS securities, HTM securities, and restricted stock as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 Available for Sale: ​ ​ U.S. government and agency securities ​ $ 63,356 ​ $ 61,943 Obligations of states and political subdivisions ​ 475,447 ​ 807,435 Corporate and other bonds ​ 241,889 ​ 226,380 MBS ​ ​ ​ ​ Commercial ​ ​ 257,646 ​ ​ 306,161 Residential ​ ​ 1,191,171 ​ ​ 1,338,233 Total MBS ​ ​ 1,448,817 ​ ​ 1,644,394 Other securities ​ 1,752 ​ 1,664 Total AFS securities, at fair value ​ 2,231,261 ​ 2,741,816 Held to Maturity: ​ ​ U.S. government and agency securities ​ ​ — ​ ​ 687 Obligations of states and political subdivisions ​ 699,189 ​ 705,990 Corporate and other bonds ​ ​ 4,349 ​ ​ 5,159 MBS ​ ​ ​ ​ Commercial ​ ​ 51,980 ​ ​ 42,761 Residential ​ ​ 81,860 ​ ​ 93,135 Total MBS ​ ​ 133,840 ​ ​ 135,896 Total held to maturity securities, at carrying value ​ 837,378 ​ 847,732 Restricted Stock: ​ ​ FRB stock ​ 67,032 ​ 67,032 FHLB stock ​ 48,440 ​ 53,181 Total restricted stock, at cost ​ 115,472 ​ 120,213 Total investments ​ $ 3,184,111 ​ $ 3,709,761 ​ The following table summarizes the weighted average yields (1) for AFS securities by contractual maturity date of the underlying securities as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Year or ​ ​ 5 – 10 Over 10 ​ ​ ​ ​ Less ​ 1 - 5 Years ​ Years ​ Years ​ Total U.S. government and agency securities ​ — % ​ 4.61 % ​ 6.33 % ​ — % ​ 4.64 % Obligations of states and political subdivisions ​ 4.38 % 3.65 % ​ 2.02 % ​ 2.19 % ​ 2.22 % Corporate bonds and other securities ​ 5.03 % 7.26 % ​ 4.63 % ​ 6.01 % ​ 4.99 % MBS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ 4.98 % ​ 6.61 % ​ 6.17 % ​ 2.40 % ​ 3.32 % Residential ​ ​ 2.40 % ​ 6.25 % ​ 4.70 % ​ 2.41 % ​ 2.55 % Total MBS ​ ​ 4.97 % ​ 6.31 % ​ 5.56 % ​ 2.41 % ​ 2.69 % Total AFS securities ​ 4.97 % ​ 5.67 % ​ 4.74 % ​ 2.36 % ​ 2.86 % (1) Yields on tax-exempt securities have been computed on a tax-equivalent basis. 60 Table of Contents ​ The following table summarizes the weighted average yields (1) for HTM securities by contractual maturity date of the underlying securities as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Year or ​ ​ 5 – 10 Over 10 ​ ​ ​ ​ Less ​ 1 - 5 Years ​ Years ​ Years ​ Total Obligations of states and political subdivisions ​ ​ 2.51 % ​ 4.12 % ​ 3.34 % ​ 3.49 % ​ 3.49 % Corporate bonds and other securities ​ ​ — % ​ — % ​ — % ​ 5.80 % ​ 5.80 % MBS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ — % ​ — % ​ — % ​ 4.44 % ​ 4.44 % Residential ​ ​ — % ​ 5.57 % ​ — % ​ 3.53 % ​ 4.05 % Total MBS ​ ​ — % ​ 5.57 % ​ — % ​ 3.95 % ​ 4.20 % Total HTM securities ​ 2.51 % ​ 5.01 % ​ 3.34 % ​ 3.58 % ​ 3.62 % (1) Yields on tax-exempt securities have been computed on a tax-equivalent basis. ​ Weighted average yield is calculated as the tax-equivalent yield on a pro rata basis for each security based on its relative amortized cost. ​ As of December 31, 2023, we maintained a diversified municipal bond portfolio with approximately 67% of our holdings in general obligation issues and the majority of the remainder primarily backed by revenue bonds.
The table below sets forth a summary of the AFS securities, HTM securities, and restricted stock as of December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Available for Sale: ​ ​ U.S. government and agency securities ​ $ 66,013 ​ $ 63,356 Obligations of states and political subdivisions ​ 468,337 ​ 475,447 Corporate and other bonds ​ 244,712 ​ 241,889 MBS ​ ​ ​ ​ Commercial ​ ​ 301,065 ​ ​ 257,646 Residential ​ ​ 1,360,179 ​ ​ 1,191,171 Total MBS ​ ​ 1,661,244 ​ ​ 1,448,817 Other securities ​ 1,860 ​ 1,752 Total AFS securities, at fair value ​ 2,442,166 ​ 2,231,261 Held to Maturity: ​ ​ Obligations of states and political subdivisions ​ 697,683 ​ 699,189 Corporate and other bonds ​ ​ 3,322 ​ ​ 4,349 MBS ​ ​ ​ ​ Commercial ​ ​ 44,709 ​ ​ 51,980 Residential ​ ​ 58,137 ​ ​ 81,860 Total MBS ​ ​ 102,846 ​ ​ 133,840 Total held to maturity securities, at carrying value ​ 803,851 ​ 837,378 Restricted Stock: ​ ​ FRB stock ​ 82,902 ​ 67,032 FHLB stock ​ 20,052 ​ 48,440 Total restricted stock, at cost ​ 102,954 ​ 115,472 Total investments ​ $ 3,348,971 ​ $ 3,184,111 ​ ​ The following table summarizes the weighted average yields (1) for AFS securities by contractual maturity date of the underlying securities as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Year or ​ ​ 5 – 10 Over 10 ​ ​ ​ ​ Less ​ 1 - 5 Years ​ Years ​ Years ​ Total U.S. government and agency securities ​ 6.09 % ​ 4.61 % ​ 5.23 % ​ — % ​ 4.63 % Obligations of states and political subdivisions ​ 4.86 % 3.83 % ​ 2.03 % ​ 2.20 % ​ 2.27 % Corporate bonds and other securities ​ 5.19 % 6.29 % ​ 4.36 % ​ 5.01 % ​ 4.91 % MBS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ 2.63 % ​ 5.05 % ​ 5.35 % ​ 3.26 % ​ 3.57 % Residential ​ ​ 3.86 % ​ 7.24 % ​ 5.28 % ​ 2.93 % ​ 3.11 % Total MBS ​ ​ 2.63 % ​ 6.58 % ​ 5.32 % ​ 2.98 % ​ 3.20 % Total AFS securities ​ 3.54 % ​ 5.67 % ​ 4.33 % ​ 2.81 % ​ 3.19 % (1) Yields on tax-exempt securities have been computed on an estimated tax-equivalent basis. 77 Table of Contents The following table summarizes the weighted average yields (1) for HTM securities by contractual maturity date of the underlying securities as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Year or ​ ​ 5 – 10 Over 10 ​ ​ ​ ​ Less ​ 1 - 5 Years ​ Years ​ Years ​ Total Obligations of states and political subdivisions ​ ​ — % ​ 4.04 % ​ 3.25 % ​ 3.54 % ​ 3.51 % Corporate bonds and other securities ​ ​ — % ​ — % ​ — % ​ 4.90 % ​ 4.90 % MBS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ ​ — % ​ — % ​ — % ​ 3.71 % ​ 3.71 % Residential ​ ​ 4.21 % ​ — % ​ — % ​ 3.62 % ​ 3.66 % Total MBS ​ ​ 4.21 % ​ — % ​ — % ​ 3.66 % ​ 3.68 % Total HTM securities ​ 4.21 % ​ 4.04 % ​ 3.25 % ​ 3.57 % ​ 3.54 % (1) Yields on tax-exempt securities have been computed on an estimated tax-equivalent basis. ​ Weighted average yield is calculated as the tax-equivalent yield on a pro rata basis for each security based on its relative amortized cost. ​ As of December 31, 2024, we maintained a diversified municipal bond portfolio with approximately 66% of our holdings in general obligation issues and the majority of the remainder primarily backed by revenue bonds.
Our significant accounting policies are discussed in detail 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 this Form 10-K.
Our significant accounting policies are discussed in detail 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 this Form 10-K. ​ 56 Table of Contents Allowance for Loan and Lease Losses The ALLL represents the estimated balance that we consider adequate to absorb expected credit losses over the expected contractual life of the loan portfolio.
The increase in NPAs was primarily due to two new nonaccrual loans within the commercial real estate – non-owner occupied and commercial and industrial portfolios. 62 Table of Contents The following table shows a summary of asset quality balances and related ratios as of and for the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Nonaccrual LHFI ​ $ 36,860 ​ $ 27,038 ​ Foreclosed properties ​ 29 ​ 76 ​ Total NPAs ​ 36,889 ​ 27,114 ​ LHFI past due 90 days and accruing interest ​ 13,863 ​ 7,490 ​ Total NPAs and LHFI past due 90 days and accruing interest ​ $ 50,752 ​ $ 34,604 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances ​ ​ ​ Allowance for loan and lease losses ​ $ 132,182 ​ $ 110,768 ​ Allowance for credit losses ​ ​ 148,451 ​ ​ 124,443 ​ Average LHFI, net of deferred fees and costs ​ 14,949,487 ​ 13,671,714 ​ LHFI, net of deferred fees and costs ​ 15,635,043 ​ 14,449,142 ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratios ​ ​ ​ Nonaccrual LHFI to total LHFI ​ ​ 0.24 % ​ 0.19 % NPAs to total LHFI ​ 0.24 % 0.19 % NPAs & LHFI 90 days past due and accruing interest to total LHFI ​ 0.32 % 0.24 % NPAs to total LHFI & foreclosed property ​ 0.24 % 0.19 % NPAs & LHFI 90 days past due and accruing interest to total LHFI & foreclosed property ​ 0.32 % 0.24 % ALLL to nonaccrual LHFI ​ 358.61 % 409.68 % ALLL to nonaccrual LHFI & LHFI 90 days past due and accruing interest ​ 260.60 % 320.81 % ACL to nonaccrual LHFI ​ ​ 402.74 % ​ 460.25 % ​ NPAs include non-accrual loans, which totaled $36.9 million and $27.0 million at December 31, 2023 and December 31, 2022 respectively.
The following table shows a summary of asset quality balances and related ratios as of and for the years ended December 31, (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Nonaccrual LHFI ​ $ 57,969 ​ $ 36,860 ​ Foreclosed properties ​ 404 ​ 29 ​ Total NPAs ​ 58,373 ​ 36,889 ​ LHFI past due 90 days and accruing interest ​ 14,143 ​ 13,863 ​ Total NPAs and LHFI past due 90 days and accruing interest ​ $ 72,516 ​ $ 50,752 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances ​ ​ ​ Allowance for loan and lease losses ​ $ 178,644 ​ $ 132,182 ​ Allowance for credit losses ​ ​ 193,685 ​ ​ 148,451 ​ Average LHFI, net of deferred fees and costs ​ 17,647,589 ​ 14,949,487 ​ LHFI, net of deferred fees and costs ​ 18,470,621 ​ 15,635,043 ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratios ​ ​ ​ Nonaccrual LHFI to total LHFI ​ ​ 0.31 % ​ 0.24 % NPAs to total LHFI ​ 0.32 % 0.24 % NPAs & LHFI 90 days past due and accruing interest to total LHFI ​ 0.39 % 0.32 % NPAs to total LHFI & foreclosed property ​ 0.32 % 0.24 % NPAs & LHFI 90 days past due and accruing interest to total LHFI & foreclosed property ​ 0.39 % 0.32 % ALLL to nonaccrual LHFI ​ 308.17 % 358.61 % ALLL to nonaccrual LHFI & LHFI 90 days past due and accruing interest ​ 247.73 % 260.60 % ACL to nonaccrual LHFI ​ ​ 334.12 % ​ 402.74 % ​ NPAs include non-accrual loans, which totaled $58.0 million and $36.9 million at December 31, 2024 and 2023, respectively.
Total deposits increased from the prior year primarily due to increases in interest bearing customer deposits and brokered deposits, partially offset by decreases in noninterest-bearing demand deposits. ● Total borrowings at December 31, 2023 were $1.3 billion, a decrease of $396.8 million or 23.2% from December 31, 2022.
Total deposits increased from the prior year primarily due to increases in interest-bearing customer deposits of $2.6 billion and demand deposits of $313.9 million, primarily due to the American National acquisition, as well as a $669.5 million increase in brokered deposits. ● Total borrowings at December 31, 2024 were $534.6 million, a decrease of $777.3 million or 59.3% from December 31, 2023.
We are also closely tracking the potential impacts on our liquidity of declines in the fair value of our securities portfolio due to rising market interest rates and developments in the banking industry that may change the availability of traditional sources of liquidity or market expectations with respect to available sources and amounts of additional liquidity.
We also closely track the potential impacts on our liquidity from declines in the fair value of our securities portfolio due to changing market interest rates and developments in the banking industry that may change the availability of traditional sources of liquidity or market expectations with respect to available sources and amounts of additional liquidity. 87 Table of Contents We consider our liquid assets to include cash, interest-bearing deposits with banks, money market investments, federal funds sold, LHFS, and securities and loans maturing or re-pricing within one year.
These decreases in noninterest income were partially offset by increases in other operating income, service charges on deposit accounts, and other service charges, commissions, and fees. For additional details on noninterest income, refer to the section “Noninterest Income” included within this Item 7 of this Form 10-K.
For additional details on noninterest income, refer to the section “Noninterest Income” included within this Item 7 of this Form 10-K.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. This information is incorporated herein by reference to the information in section “Market Risk” within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K. 76 Table of Contents
Biggest changeITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. This information is incorporated herein by reference to the information in section “Market Risk” within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K. ​ 93 Table of Contents

Other AUB 10-K year-over-year comparisons