AUB — Atlantic Union Bankshares Corporation

Atlantic Union Bankshares Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: Adjusted operating earnings available to common shareholders were $126.2 million, or $0.89 per share, compared to $119.2 million, or $0.84 per share in Q4 2025.
• Return Metrics: Adjusted operating return on tangible common equity was 19.6%, and return on assets was 1.41%. The adjusted operating efficiency ratio improved to 49.9%.
• Loan Growth: Total loans increased by 2.2% annualized to $27.9 billion. The loan pipeline is reported to be higher than at the beginning of the quarter, with a strong construction and development pipeline.
• Deposits: Total deposits decreased by approximately 1% to $30.4 billion, primarily due to a reduction in high-cost broker deposits, which now represent only 2% of total deposits.
• Net Interest Margin: Reported FTE net interest margin declined by 11 basis points to 3.85%, largely due to lower accretion income. Core net interest margin, excluding accretion, improved by 4 basis points to 3.45%.

2. Strategic Updates and Business Highlights

• The integration of Sandy Spring Bank has been successfully concluded, with final merger-related charges impacting Q1 results.
• The bank is focusing on organic growth opportunities, particularly in North Carolina, where commercial real estate production reached record levels.
• The company is committed to enhancing shareholder value and plans to report results without merger-related noise starting next quarter.
• New CFO Alex Dodd is expected to bring valuable experience as the company continues to drive growth and innovation.

3. Forward Guidance and Outlook

• Loan Balances: Projected year-end loan balances are expected to range between $29 billion and $30 billion.
• Deposits: Year-end deposit balances are anticipated to be between $31 billion and $32 billion.
• Net Interest Income: Full-year net interest income is projected to be between $1.34 billion and $1.35 billion, with accretion income expected to be between $145 million and $150 million.
• Credit Quality: The allowance for credit losses is expected to remain stable at 115 to 120 basis points, with net charge-offs projected between 10 and 15 basis points for the year.

4. Bad News, Challenges, or Points of Concern

• The bank experienced elevated payoffs in its commercial real estate portfolio, which could impact future loan growth.
• There is uncertainty regarding macroeconomic conditions, particularly due to geopolitical tensions affecting energy prices, which could impact consumer and business confidence.
• The competitive landscape for deposits is intensifying, with rising rates in certain markets leading to increased deposit costs.
• The bank's guidance for net interest income was lowered by approximately $18 million at the midpoint, primarily due to decreased accretion income and increased deposit costs.

5. Notable Q&A Insights

• Core Margin Outlook: The core net interest margin is expected to gradually improve, with the potential for higher yields as fixed-rate loans mature and reprice.
• Deposit Costs: The bank anticipates stable deposit costs, with some potential increases due to competition, particularly in the Metro D.C. area and North Carolina.
• Loan Pipeline Sentiment: Customer sentiment remains positive, with a strong loan pipeline, although some companies are pausing transactions due to interest rate concerns.
• Capital Management: The bank is well-capitalized and may consider share buybacks later in the year if capital ratios allow.
• Credit Quality: There are no systemic risks identified in the loan portfolio, and the bank remains confident in its credit quality metrics.

Overall, Atlantic Union Bankshares reported solid results for Q1 2026, with a focus on growth and strategic positioning, despite facing challenges related to competition and macroeconomic uncertainties.