Summary of Atlantic Union Bankshares Q1 2026 Earnings Call

1Key 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.

2Strategic 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.

3Forward 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.

4Bad 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.

5Notable 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.