AUB — Atlantic Union Bankshares Corporation

Atlantic Union Bankshares (AUB) Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Income: Reported net income available to common shareholders was $89.2 million, or $0.63 per share. Adjusted operating earnings were $119.7 million, or $0.84 per share.
• Return Metrics: Adjusted operating return on tangible common equity was 20.1%, and return on assets was 1.3%. The adjusted operating efficiency ratio was 48.8%.
• Loan Growth: Total loans held for investment increased to $27.4 billion, reflecting a 4.3% annualized growth quarter-over-quarter. However, quarterly loan growth was only 0.5% annualized due to increased paydowns and lower credit utilization.
• Deposits: Total deposits decreased by 3.9% annualized to $30.7 billion, driven by a reduction in interest-bearing customer deposits and broker deposits.
• Net Interest Margin: The reported net interest margin remained stable at 3.83%, with core net interest margin improving when excluding accretion income.

2. Strategic Updates and Business Highlights:

• The integration of the Sandy Spring acquisition is complete, with successful core systems conversion and branch closures.
• The company is focused on leveraging synergies from the acquisition, particularly in interest rate swaps and wealth management.
• Atlantic Union is expanding its presence in North Carolina, with plans to increase staffing and enhance lending capabilities in the region.
• The bank maintains a diversified loan portfolio, with 23% in the Greater Washington, D.C. area, which is expected to remain resilient despite local economic uncertainties.

3. Forward Guidance and Outlook:

• AUB expects year-end loan balances to range between $27.7 billion and $28 billion, with mid-single-digit loan growth anticipated for 2026.
• Projected full-year net interest income is expected to be between $1.160 billion and $1.165 billion, with a fourth-quarter run rate of $325 million to $330 million.
• The efficiency ratio is projected to improve to the mid-40s by 2026, excluding amortization expenses.
• The bank anticipates continued credit quality improvements, with a full-year net charge-off ratio forecasted between 15 and 20 basis points.

4. Bad News, Challenges, or Points of Concern:

• The bank experienced increased loan paydowns and a decline in revolving credit utilization, which impacted loan growth.
• Credit quality concerns arose from two commercial and industrial loans that led to significant charge-offs, although overall asset quality indicators remain strong.
• Competitive pressures in the lending market have intensified, with more banks actively seeking business, leading to pricing pressures.
• Economic uncertainties, particularly related to government employment reductions and potential impacts from a government shutdown, could affect growth and confidence in the D.C. market.

5. Notable Q&A Insights:

• Management expressed confidence in achieving mid-single-digit loan growth in 2026, with potential for high single-digit growth in a more normalized environment.
• The bank is optimistic about the potential for revenue synergies from the Sandy Spring acquisition, particularly in expanding commercial lending and treasury management services.
• There is a focus on maintaining a stable expense base while expanding into North Carolina, with expectations for efficiency improvements despite planned investments.
• Management reiterated that the government contractor finance portfolio remains robust, with expectations that government shutdowns would not significantly impact operations, as many contractors provide essential services.

Overall, Atlantic Union Bankshares reported solid financial results for Q3 2025, with a focus on integration and growth strategies, while navigating challenges related to competitive pressures and economic uncertainties.