AUBAP — Atlantic Union Bankshares Corporation

Atlantic Union Bankshares (AUBAP) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Income: Reported net income available to common shareholders was $109 million for Q4 2025, with earnings per share (EPS) of $0.77. For the full year, net income was $261.8 million, and EPS was $2.03.
• Adjusted Operating Earnings: Adjusted operating earnings for Q4 were $138.4 million ($0.97 per share), with an adjusted operating return on tangible common equity of 22.1% and return on assets of 1.5%. For the full year, adjusted operating earnings were $444.8 million ($3.44 per share).
• Loan Growth: Loans grew by approximately 6.3% annualized, ending the year at $27.8 billion. The company expects loan balances to reach between $29 billion and $30 billion by year-end 2026.
• Net Interest Margin: The FTE net interest margin increased by 13 basis points to 3.96%, driven by reduced deposit costs and stable loan yields.
• Credit Quality: The net charge-off ratio was 1 basis point for Q4 and 17 basis points for the full year, indicating strong credit quality. Non-performing assets decreased to 0.42% of loans held for investment.

2. Strategic Updates and Business Highlights

• Sandy Spring Acquisition: Successful integration of the Sandy Spring acquisition was highlighted, with the core systems conversion completed in October 2025. The company anticipates reduced merger-related expenses moving forward.
• Market Presence: AUB is focusing on leveraging its presence in attractive markets, particularly in Virginia and North Carolina, where it is expanding its commercial banking teams and branch footprint.
• Fee Income: Strong fee income was reported, particularly from loan-related interest rate swap fees and fiduciary services, benefiting from the Sandy Spring acquisition.

3. Forward Guidance and Outlook

• 2026 Projections: The company maintains its guidance for 2026, projecting loan balances of $29 billion to $30 billion and deposit balances of $31.5 billion to $32.5 billion. The net charge-off ratio is expected to be between 10 and 15 basis points.
• Interest Income: Full-year tax-equivalent net interest income is projected to be between $1.35 billion and $1.375 billion, with expectations for modest core margin expansion.
• Capital Management: AUB plans to consider share repurchases once capital exceeds 10.5% CET1 ratio, potentially in late Q2 or Q3 2026.

4. Bad News, Challenges, or Points of Concern

• Deposit Decline: Total deposits decreased by 2.5% annualized in Q4, attributed to seasonal fluctuations and the return of large commercial deposits. The company anticipates a challenging environment for deposit growth.
• Economic Uncertainty: The company acknowledged ongoing economic uncertainties, including potential increases in unemployment rates and the impact of federal government restructuring.
• Fraud-Related Losses: There were elevated noncredit-related losses due to fraud incidents, which could pose risks to operational expenses going forward.

5. Notable Q&A Insights

• Loan Pipeline: The loan pipeline showed a modest increase at the end of Q4, with management expressing optimism about continued growth in 2026, despite typical seasonal slowdowns in Q1.
• Deposit Costs: Management expects to maintain a mid-50s beta for interest-bearing deposits, with efforts to lower deposit costs as the Fed reduces rates.
• North Carolina Expansion: The company is making progress in North Carolina, with plans for branch openings and hiring, although they are cautious about accelerating hiring due to current market conditions.
• Expense Management: The company anticipates a flattish expense run rate in Q1, with some seasonal increases but expects to see a decline in merger-related costs as integration efforts conclude.

Overall, Atlantic Union Bankshares reported strong financial results in Q4 2025, driven by effective integration of the Sandy Spring acquisition and solid loan growth, while navigating challenges related to deposit fluctuations and economic uncertainty. The outlook for 2026 remains positive, with a focus on sustainable growth and capital management.