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Atlantic Union Bankshares Corp (AUB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was operationally solid but headline results missed Street: adjusted diluted EPS $0.57 vs S&P Global consensus $0.70 (GAAP diluted $0.52); revenue $195.7M vs $221.3M consensus; misses were driven by lower noninterest income (softer swap fees) and a proactive provision build tied to macro/tariff uncertainty, not portfolio-specific deterioration . Estimates marked with * are from S&P Global.
  • Net interest margin expanded 12 bps q/q to 3.45% (FTE) as cost of funds fell 18 bps to 2.23%, aided by late-2024 Fed cuts; noninterest-bearing deposits increased $194M and brokered deposits declined >$100M, improving funding mix .
  • Strategic execution accelerated: Sandy Spring merger closed April 1 (one quarter early) and core conversion moved up to October 2025; a $2B CRE loan sale process was launched to de-risk concentration and support growth, with management reiterating comfort on pricing and scope .
  • 2025 outlook (post-close) implies higher earnings power: full-year FTE NIM 3.75%–4.00%, FTE NII $1.15–$1.25B, ACL/loans 1.20%–1.30%, and NCOs 15–25 bps; prior AUB standalone NIM guide (Jan) was 3.45%–3.60%—directionally raised for the combined company as accretion and mix tailwinds ramp .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin and funding costs improved: “we experienced net interest margin expansion and average loan and customer deposit balance growth,” as cost of funds fell to 2.23% (−18 bps q/q) and NIM (FTE) rose to 3.45% (+12 bps q/q) .
    • Core deposit mix strengthened: noninterest-bearing deposits increased $194M q/q while brokered deposits were reduced by >$100M, supporting margin resilience .
    • Integration momentum: “we closed our acquisition of Sandy Spring on April 1… able to move up our planned core systems conversion to October 2025… expected to accelerate our cost saves,” and “the acquisition checks all of our strategic and financial boxes” .

  • What Went Wrong

    • Noninterest income softness: down $6.0M q/q to $29.2M on seasonally lower swap fees (−$2.7M) and lower equity-method gains/lease equipment gains (−$2.5M) .
    • Provision build and NPA uptick: provision was $17.6M (flat q/q) primarily from macro/tariff uncertainty overlays; NPAs/LHFI rose to 0.38% on a new $9.4M C&I nonaccrual (overall net charge-offs still just 0.05%) .
    • Operating expenses rose to $134.2M (+$4.5M q/q), led by seasonal payroll/401(k), taxes, tech upgrades, and winter occupancy costs; adjusted op ex rose to $123.8M (+$6.8M q/q) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total revenue (FTE) ($M)221.117 222.266 217.084
Net interest income (FTE) ($M)186.831 187.039 187.921
Noninterest income ($M)34.286 35.227 29.163
Provision for credit losses ($M)2.603 17.496 17.638
Diluted EPS ($)0.82 0.60 0.52
Adjusted diluted operating EPS ($)0.83 0.67 0.57
Margin/Efficiency/KPIsQ3 2024Q4 2024Q1 2025
Net interest margin (FTE)3.38% 3.33% 3.45%
Cost of funds2.56% 2.41% 2.23%
Cost of deposits2.57% 2.48% 2.29%
Efficiency ratio (FTE)55.44% 58.34% 61.81%
ROA (GAAP)1.24% 0.92% 0.82%
Adjusted ROTCE19.15% 15.30% 13.15%
Asset QualityQ3 2024Q4 2024Q1 2025
ACL / LHFI0.97% 1.05% 1.13%
NPAs / total LHFI0.20% 0.32% 0.38%
Net charge-offs / avg LHFI (ann.)0.01% 0.03% 0.05%
Provision for loan losses / avg LHFI (ann.)0.07% 0.42% 0.38%
Balance SheetQ3 2024Q4 2024Q1 2025
Loans HFI ($B)18.337 18.471 18.428
Deposits ($B)20.305 20.398 20.503
Demand deposits ($B)4.423 4.277 4.471
Brokered deposits ($B)1.418 1.218 1.108
CET1 ratio9.77% 9.96% 10.07%

Segment/KPI Breakdowns

  • Loan mix (select categories, $MM)
CategoryQ4 2024Q1 2025
CRE – non-owner occupied4,935.6 5,072.7
Commercial & Industrial3,864.7 3,819.4
Multifamily1,240.2 1,531.5
Construction & land dev.1,731.1 1,306.0
Resi 1–4 family – consumer1,293.8 1,286.5
  • Deposit mix (select categories, $MM)
CategoryQ4 2024Q1 2025
Demand deposits4,277.0 4,471.2
Time deposits (total)4,091.1 3,951.4
Brokered deposits1,217.9 1,108.5
Total interest-bearing deposits16,120.6 16,031.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loans (YE balance)FY 2025N/A$28B–$29B New
Deposits (YE balance)FY 2025N/A$31B–$32B New
FTE Net Interest IncomeFY 2025N/A$1.15B–$1.25B New
FTE Net Interest MarginFY 2025AUB standalone 3.45%–3.60% (Jan) 3.75%–4.00% (combined) Raised (scope broadened)
Adjusted noninterest incomeFY 2025N/A$165M–$185M New
Adjusted op noninterest expense (ex amort.)FY 2025N/A$665M–$685M New
ACL / LoansFY 2025N/A1.20%–1.30% New
Net charge-offsFY 202515–25 bps 15–25 bps Maintained
CET1 ratio (illustrative)Mid-2025N/A~10% by end of current quarter New
CRE loan saleQ2 2025 targetUp to $2B (announce)At least $2B; on track to close by quarter-end Clarified scope/timing

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
Net interest margin trajectoryNIM (FTE) 3.38%, funding costs up; accretion down NIM (FTE) 3.33%; early Fed cuts begin lowering costs NIM (FTE) 3.45%; cost of funds 2.23% (−18 bps q/q) Improving margin from rate cuts and mix
Macro/tariffsLimited commentarySpecific reserve on C&I loan; macro uncertainty noted Provision overlay tied to tariff-driven recession risk; not portfolio-specific Elevated uncertainty; proactive reserving
Sandy Spring acquisitionAnnounced 10/21; approvals later [19] Pending; forward sale arranged Closed 4/1; conversion pulled forward to Oct ’25; EPS accretion durable Integration accelerated
CRE risk/actionsTypical monitoringN/ALaunching ~$2B CRE loan sale; comfortable on pricing, mainly retail/multifamily, short duration Proactive de-risk
Government contractorsN/AN/APortfolio focused on defense; 15 yrs with no charge-offs; limited D.C. office exposure Stable/defense-oriented
Deposit mixBrokered up y/y post ANB deal Mix shifted to interest-bearing; brokered down q/q NIB +$194M; brokered −$100M+; mix helps NIM Improving

Management Commentary

  • “It was also a good start to the year as we experienced net interest margin expansion and average loan and customer deposit balance growth… Asset quality also remained solid with negligible net charge offs.” — John C. Asbury, CEO .
  • “Adjusted diluted operating earnings per common share were $0.57… adjusted operating ROTCE 13.2%… adjusted operating efficiency ratio 57%.” — Rob Gorman, CFO .
  • “We closed our acquisition of Sandy Spring on April 1… we were able to move up our planned core systems conversion to October 2025… expected to accelerate our cost saves.” — John C. Asbury .
  • “The acquisition checks all of our strategic and financial boxes… FTE NIM projection 3.75%–4.00% for 2025… FTE NII $1.15–$1.25 billion.” — Rob Gorman .

Q&A Highlights

  • Sandy Spring marks/earnings accretion: Interest rate loan mark 7% ($800M) to accrete over ~7 years; credit mark ~1.3%, better than initial projection .
  • CRE loan sale: “At least $2B” perimeter, largely retail and multifamily, 3–4 year duration; process “moving along well” with comfort on discount despite rate volatility; not distressed .
  • Loan growth outlook: Medium term mid-single digit; long term upper-single digit as disruption passes and capabilities scale in Sandy Spring markets .
  • Reserve overlay: Build primarily macro/tariff uncertainty; specific reserve on one C&I credit modest; combined company ACL guide 1.20%–1.30% could be lower if tariff risks abate .
  • NII sensitivity: More/faster Fed cuts or sharp term-rate declines could pressure NII/NIM; deposit repricing and fixed-loan repricing currently favorable; accretion timing volatile quarter-to-quarter .

Estimates Context

  • Q1 2025 vs S&P Global consensus:
    • Primary EPS: Actual $0.57* vs $0.70* consensus → miss of ~$0.13* (GAAP diluted EPS $0.52) .
    • Revenue: Actual $195.7M* vs $221.3M* consensus → miss of ~$25.6M*.
    • Drivers: Seasonally lower swap fees and equity-method/lease gains reduced noninterest income; management lifted qualitative overlays in provision due to macro/tariff uncertainty .
      Values marked with * are retrieved from S&P Global.
Q1 2025 (S&P Global)Consensus*Actual*Delta*
Primary EPS ($)0.70330.57−0.1333
Revenue ($MM)221.338195.689−25.649

Key Takeaways for Investors

  • Margin turning point: NIM (FTE) rose to 3.45% with cost of funds down 18 bps; funding mix improved (NIB up, brokered down), creating a supportive backdrop into 2H 2025 even if loan growth is modest near term .
  • Proactive risk management: Provision overlays reflect macro ambiguity rather than acute portfolio stress; NCOs remain low (5 bps annualized), ACL/LHFI at 1.13%, and loan book benefits from sizable fair value marks post recent M&A .
  • Integration/cost-synergy catalyst: Early Sandy Spring close and accelerated core conversion pull forward expense saves; combined-company guide implies a higher NIM/NII run-rate with accretion tailwinds converting to core cash earnings over time .
  • De-risking CRE exposure: The targeted ~$2B loan sale should ease concentration constraints and support capital/liquidity, a key step ahead of growth in attractive Mid-Atlantic markets .
  • Near-term estimate risk skew: Q1 miss on EPS/revenue and overlay-driven provision may prompt modest near-term estimate cuts; offset by improving margin trajectory and synergy visibility, which underpin medium-term EPS normalization .
  • Focused end markets: Defense-heavy government contractor book with 15-year no-charge-off record and limited large D.C. office exposure mitigate high-profile regional risks .
  • Dividend consistency: Common dividend held at $0.34 and preferred maintained; capital ratios remain comfortably above “well-capitalized,” offering income support during integration .

Notes on sources:

  • We searched for an 8‑K 2.02 for Q1 2025 but did not find a separately labeled 8‑K 2.02 in our index; the primary Q1 results press release and the Q1 2025 earnings call transcript were used as the principal sources .
  • Additional relevant press releases in the period: completion of Sandy Spring merger (4/1/25) and subsequent dividend announcement .