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On July 27, 2026, Atlantic Union Bankshares Corporation filed a preliminary prospectus supplement revealing plans to issue fixed-to-floating rate subordinated notes maturing in 2036. These notes will carry a fixed interest rate for the initial five years, then shift to a floating rate linked to the Three-Month Term SOFR. This capital-raising move by the Virginia-based banking firm is contingent on market conditions and regulatory approvals.
Key Points
- NYSE ticker: AUB-PA
- Atlantic Union Bankshares filed a preliminary prospectus for subordinated notes with fixed-to-floating interest rates due in 2036
- Fixed interest rate applies through 2031, thereafter converting to Three-Month Term SOFR plus a spread; specific fixed rate, principal amount, and spread details were not disclosed in the preliminary filing
- Redemption allowed from 2031, subject to Federal Reserve Board approval; investors should await final pricing and terms confirmation
Details of the Subordinated Notes Structure and Terms
Atlantic Union Bankshares outlined a dual interest rate structure for the proposed subordinated notes. From issuance until 2031, the notes will pay a fixed interest rate semi-annually. Starting in 2031 through maturity in 2036, the interest will convert to a floating rate based on the Three-Month Term SOFR plus a spread. If the SOFR rate falls below zero, it will be considered zero for calculation purposes. This design offers investors fixed income stability initially, followed by floating rate exposure later.
The notes will mature in 2036 without a sinking fund provision, meaning the issuer is not obligated to accumulate funds periodically for redemption. The preliminary prospectus did not specify the aggregate principal amount, exact fixed interest rate, spread in basis points, or precise maturity date. These details will be finalized in the definitive prospectus supplement after pricing and market evaluation.
Redemption Provisions and Regulatory Approvals
Atlantic Union Bankshares disclosed redemption rights starting with the 2031 interest payment date and thereafter. The company may redeem all or part of the notes at 100% of principal plus accrued interest. Full redemption (not partial) is also possible upon certain events: changes in law eliminating federal tax deductibility of interest, regulatory events affecting Tier 2 capital recognition, or requirements to register as an investment company under the Investment Company Act of 1940.
All redemptions require approval from the Federal Reserve Board or applicable regulatory bodies, reflecting the subordinated notes’ regulatory oversight and capital management controls. The filing does not specify timing or likelihood of such approvals.
Subordination and Capital Structure Ranking
The notes are general unsecured subordinated obligations ranking junior to all senior debt and general creditors. They are structurally subordinated to secured indebtedness to the extent of collateral value. This ranking affects repayment priority during financial distress.
Additionally, the notes are subordinated to all liabilities of Atlantic Union Bankshares’ subsidiaries, including Atlantic Union Bank. Depositors and creditors of the bank have priority over these notes, which are obligations solely of the parent company without guarantees from subsidiaries. Recovery in default depends on the consolidated holding company’s financial condition after senior claims are satisfied.
Capital Treatment and Regulatory Classification
The notes are intended to qualify as Tier 2 capital under banking regulations and Federal Reserve guidance, serving as supplementary capital under Basel III frameworks. The prospectus highlights redemption triggers linked to loss of Tier 2 capital status, emphasizing regulatory capital considerations in the offering’s structure. Future regulatory changes could impact the instruments’ tax or capital treatment.
Redemption may occur if regulatory events preclude Tier 2 capital recognition, underscoring the evolving nature of banking capital regulations. Investors should consult current Federal Reserve and regulatory guidance to understand the capital classification implications.
Market Availability and Trading Details
Currently, no public trading market exists for these notes, and Atlantic Union Bankshares does not plan to list them on any exchange or quotation system. This limits liquidity options for investors before maturity. The notes will be issued in book-entry form through the Depository Trust Company (DTC), the standard settlement platform for U.S. institutional debt securities.
Underwriters intend to deliver notes in book-entry form on a settlement date following pricing, referenced as "T+" plus a specified number of business days. Final settlement details will be disclosed in the definitive prospectus supplement. Pricing, underwriting discounts, commissions, and net proceeds remain subject to change pending market demand.
Underwriting and Distribution
Keefe, Bruyette & Woods (a Stifel Company) and Piper Sandler serve as joint book-running managers, leading the underwriting syndicate and managing investor orders. Specific underwriting fees are not disclosed in the preliminary filing but will be detailed in the final prospectus. Investors should review the final supplement for compensation details and potential conflicts of interest.
The involvement of these prominent underwriting firms indicates a focus on institutional and sophisticated investors experienced with subordinated bank debt. The joint book-running approach aims to broaden distribution.
Use of Proceeds and Financial Impact
The preliminary prospectus does not specify how proceeds will be used. A "Use of Proceeds" section is referenced but lacks detail. The definitive prospectus will clarify whether funds will support general corporate purposes, capital enhancement, debt repayment, or other objectives.
This issuance will impact Atlantic Union Bankshares’ financial metrics, including capital ratios, leverage, and interest expenses. Qualifying as Tier 2 capital, the notes will enhance regulatory capital, potentially supporting lending and strategic initiatives. The exact effects depend on final principal and interest terms.
Risk Factors and Investor Considerations
Investors are advised to review risk disclosures on page S-8 of the prospectus supplement, page 5 of the accompanying prospectus, and the company’s 2025 Form 10-K. Risks include interest rate fluctuations, credit risk, liquidity constraints, and subordinated status, which places these notes behind senior creditors in default scenarios.
The notes are not bank deposits or insured by the FDIC or any governmental agency. They are unsecured obligations of the parent company only, without guarantees from subsidiaries. Investors should carefully assess suitability and consult financial advisors.
Regulatory Filings and Approval Status
No approvals or disapprovals have been received from the SEC, FDIC, Federal Reserve Board, or state securities commissions regarding this offering. The prospectus supplement dated July 27, 2026, is preliminary and subject to completion.
The offering is made under Rule 424(b)(5) of the Securities Act of 1933, Registration File No. 333-281290, allowing issuance under an existing shelf registration. Federal Reserve Board approval is required for any note redemptions, reflecting regulatory oversight of bank holding company capital instruments. Final pricing and terms will depend on market conditions and investor interest.
