AUB — Atlantic Union Bankshares Corporation

Summary of Atlantic Union Bankshares Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Operating Earnings: $126.2 million, or $0.89 per share, resulting in an adjusted operating return on tangible common equity of 19.6% and return on assets of 1.41%.
• Net Interest Margin (NIM): Reported NIM declined by 11 basis points to 3.85%, primarily due to lower accretion income. Core NIM (excluding accretion) improved by 4 basis points to 3.45%.
• Loan Growth: Total loans increased by 2.2% annualized to $27.9 billion. Loan pipelines are strong, particularly in construction and commercial real estate.
• Deposits: Total deposits decreased by approximately 1% to $30.4 billion, largely due to a reduction in high-cost broker deposits, which now represent only 2% of total deposits.
• Credit Quality: Net charge-off ratio was 2 basis points, with nonperforming assets declining to 0.36% of loans. The allowance for credit losses was 115 basis points of total loans.

2. Strategic Updates and Business Highlights

• The integration of Sandy Spring Bank has concluded, with expectations of clearer financial results in upcoming quarters.
• New CFO Alex Dodd is expected to add value as the company focuses on growth and innovation.
• The bank is expanding its presence in North Carolina, with plans to open new branches and capitalize on organic growth opportunities.
• The bank's strategic focus is on enhancing shareholder value through disciplined execution and operational efficiency.

3. Forward Guidance and Outlook

• Loan Balances: Expected to end 2026 between $29 billion and $30 billion.
• Deposits: Projected to be between $31 billion and $32 billion by year-end.
• Net Interest Income: Full-year guidance adjusted to $1.34 billion to $1.35 billion, with accretion income expected to range from $145 million to $150 million.
• Credit Quality: Net charge-off ratio projected to remain between 10 and 15 basis points for the year.

4. Bad News, Challenges, or Points of Concern

• Declining Metrics: The decrease in net interest margin and total deposits raises concerns about profitability and funding strategies.
• Geopolitical Risks: Ongoing conflicts, particularly in Iran, could impact consumer and business confidence, although the bank's portfolio is not directly sensitive to energy prices.
• Competitive Pressures: Increased competition in deposit rates and loan pricing, particularly in the Metro D.C. and North Carolina markets, could affect margins and growth.
• Uncertainty in Loan Growth: Elevated payoffs in the commercial real estate portfolio and macroeconomic uncertainties could hinder loan growth.

5. Notable Q&A Insights

• Core Margin Trends: Management expects core margin to gradually improve, driven by fixed-rate loan repricing, but acknowledges challenges in reducing deposit costs.
• Expense Management: The company has lowered its expense guidance, with expectations for a decrease in payroll taxes and other costs in the coming quarters.
• Loan Pipeline Sentiment: Positive sentiment in the loan pipeline, with companies moving forward on transactions as interest rates stabilize.
• Impact of Basel III: Potential regulatory changes could positively impact capital ratios, allowing for share buybacks if CET1 ratios exceed 10.5%.

Overall, Atlantic Union Bankshares reported solid financial results for Q1 2026, with a focus on strategic growth and operational efficiency while navigating challenges related to competition and macroeconomic uncertainties.