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Atlantic Union Bankshares Corp (AUB)·Q2 2025 Earnings Summary

Executive Summary

  • Adjusted operating EPS of $0.95 beat S&P Global consensus of ~$0.80, driven by a 38 bps NIM (FTE) expansion to 3.83% and accretion from the Sandy Spring acquisition; GAAP EPS of $0.12 was depressed by $78.9M merger costs and $100.9M Day 1 CECL expense . EPS consensus per S&P Global was 0.80 with 6 estimates; AUB delivered 0.95*.
  • Core banking trends were solid: net interest income rose to $321.4M (+74% q/q), adjusted operating efficiency ratio improved to 48.34%, and net charge-offs were 1 bp annualized; deposit costs fell 9 bps q/q to 2.20% .
  • Strategic actions largely de-risked the balance sheet: closing of Sandy Spring (Apr 1), sale of ~$2.0B CRE loans to Blackstone at “low 90s” of par (pre-tax gain $15.7M), and settlement of the equity forward for ~$385M in proceeds .
  • FY2025 outlook mostly maintained but tightened: NII (FTE) ~$1.15–$1.20B (narrowed), NIM (FTE) ~3.75–4.00% (unchanged), ACL/loans ~120–130 bps (unchanged), NCO ~15–20 bps (narrowed), adj. noninterest income raised to ~$175–$185M, and adj. noninterest expense to ~$670–$680M; three 25 bps Fed cuts assumed starting September .
  • Near-term catalysts: Sandy Spring core conversion in October (cost save run-rate), continued NIM grind higher (lower deposit costs, accretion), North Carolina expansion plan, and December Analyst Day; capital build supports potential 2026 buybacks per CFO commentary .

What Went Well and What Went Wrong

  • What Went Well

    • NIM (FTE) expanded 38 bps to 3.83% on acquisition-related accretion and lower deposit costs; loan yield rose 47 bps to 6.48% with ~39 bps from accretion and 9 bps core improvement .
    • Successful CRE de-risking and proceeds deployment: ~$2.0B CRE loans sold to Blackstone at low 90s, with $15.7M gain; proceeds support payoff of high-cost funding and securities reinvestment .
    • Strong operating profitability on an adjusted basis: adjusted EPS $0.95, adjusted ROA 1.46%, adjusted ROTCE 23.79%, and adjusted operating efficiency ratio 48.34% .
    • CEO quote: “Our operating results demonstrate that we are off to a great start with the [Sandy Spring] acquisition,” and “better-than-expected pricing” on the CRE sale .

  • What Went Wrong

    • GAAP earnings were noisy: merger-related costs ($78.9M) and Day 1 CECL ($100.9M) depressed GAAP EPS to $0.12; effective tax rate was -13.2% due to an $8M DTA benefit .
    • NPAs rose to 0.60% of loans (from 0.38% q/q) driven by acquired PCD loans; 90+ day accruing rose to 0.15% of loans (from 0.04% q/q) .
    • Operating expenses surged to $279.7M on merger costs; even on an adjusted basis, noninterest expense increased with full-quarter Sandy Spring run-rate (salaries, technology, occupancy, FDIC premiums) .

Financial Results

P&L snapshot and margins (oldest → newest)

MetricQ2 2024Q1 2025Q2 2025
EPS (Diluted, GAAP)$0.25 $0.52 $0.12
Adjusted Operating EPS (Diluted)$0.76 $0.57 $0.95
Net Interest Income ($M)$184.5 $184.2 $321.4
Noninterest Income ($M)$23.8 $29.2 $81.5
Total Revenue (FTE) ($M)$212.2 $217.1 $407.3
NIM (FTE)3.68% 3.45% 3.83%
Efficiency Ratio (GAAP)72.00% 62.90% 69.42%
Adjusted Operating Efficiency Ratio (FTE)52.24% 57.02% 48.34%

Q2 2025 vs Estimates (S&P Global definitions)

Metric (S&P definitions)ConsensusActualSurprise
Primary EPS (Adjusted)$0.80* (6 est.)$0.95*+$0.15*
Revenue ($M)$368.3* (6 est.)$297.2*-$71.1*
  • Note: Company reports Total Revenue (FTE) of $407.3M and GAAP total revenue (NII + noninterest income) of $402.9M. S&P’s revenue taxonomy differs; use caution comparing to company totals . Values retrieved from S&P Global.*

Key credit and balance sheet KPIs (oldest → newest)

KPIQ2 2024Q1 2025Q2 2025
NPAs / Loans0.20% 0.38% 0.60%
Net Charge-offs / Avg Loans (annualized)0.04% 0.05% 0.01%
ACL / Loans0.96% 1.13% 1.25%
Cost of Deposits2.46% 2.29% 2.20%
CET1 Ratio9.47% 10.07% 9.77%

Loan & deposit scale (period-end)

ItemQ1 2025Q2 2025
Loans Held for Investment ($B)$18.43 $27.33
Deposits ($B)$20.50 $30.97

Loan mix (Q2 2025, period-end)

CategoryBalance ($M)
CRE – Non-owner occupied$6,912.7
CRE – Owner occupied$3,940.4
Construction & Land Dev.$2,444.2
Multifamily$2,083.6
C&I$5,141.7
Res 1–4 Family – Commercial$1,131.3
Res 1–4 Family – Consumer$2,746.0
Res 1–4 Family – Revolving$1,154.1
Auto$245.6
Consumer$119.5
Other Commercial$1,409.4

Guidance Changes

MetricPeriodPrevious Guidance (Q1’25)Current Guidance (Q2’25)Change
Loans (end of period)FY2025$28.0–$29.0B $28.0–$28.5B Narrowed/lowered top end
Deposits (end of period)FY2025$31.0–$32.0B $31.0–$31.5B Narrowed/lowered top end
ACL / LoansFY2025~120–130 bps ~120–130 bps Maintained
Net charge-offsFY2025~15–25 bps ~15–20 bps Narrowed (improved)
NII (FTE)FY2025~$1.15–$1.25B ~$1.15–$1.20B Narrowed (lower top)
NIM (FTE)FY2025~3.75%–4.00% ~3.75%–4.00% Maintained
Adj. Noninterest IncomeFY2025~$165–$185M ~$175–$185M Raised floor
Adj. Noninterest Expense (excl. intang.)FY2025~$665–$685M ~$670–$680M Tightened (slightly higher mid)
Amortization of IntangiblesFY2025~$55M ~$60M Raised
Macro AssumptionFY20253 cuts starting June 3 cuts starting September Updated timing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 & Q1’25)Current Period (Q2’25)Trend
Sandy Spring integrationClosed Apr 1; systems conversion moved up to Oct’25; cost saves 27% targeted Integration “progressing smoothly”; Q2 a better starting point for linked comparisons On track
CRE loan saleTarget ~$2B by Q2; majority retail/multifamily; duration ~3–4 yrs ~$2B sold to Blackstone at low 90s, $15.7M gain; retains servicing Executed/derisked
NIM trajectoryExpect core NIM grind higher on lower deposit costs; fixed-rate repricing higher NIM (FTE) +38 bps to 3.83%; further “grind higher,” but slower pace Improving
Tariffs/macroElevated uncertainty; overlays added; no recession forecast; pipelines strong but pull-through uncertain Similar caution; customers building inventory pre-tariffs; sentiment improved late Q2 Stabilizing
GovCon & office exposureGovCon: no charge-offs; office not concentrated; DC exposure limited GovCon benefiting from record defense spend; office portfolio metrics healthy Constructive
Capital/deploymentCET1 ~10% pro forma; potential buybacks after capital builds CET1 9.8%; building +25–30 bps/quarter; buybacks evaluated in 1H’26 Building
Technology/AI—Incremental AI-related investment requests; capacity to invest while targeting mid‑40s efficiency Investing
North Carolina expansionStrategy outlined; entry with American National Plan to open 10 branches (7 Raleigh, 3 Wilmington) over 3 years from 2026 Accelerating

Management Commentary

  • CEO John Asbury: “Our operating results demonstrate that we are off to a great start with the [Sandy Spring] acquisition… our team achieved better-than-expected pricing on the [~$2B] CRE loan sale” .
  • CFO Rob Gorman: Adjusted operating EPS $0.95; adjusted ROTCE 23.8%; provision elevated by Day 1 CECL on non‑PCD loans and RUC; core NIM improved ~8 bps excluding accretion .
  • Strategy and growth: “We now have the number one regional bank by depository market share in both Maryland and Virginia… Chapter three focuses on organic expansion in North Carolina” .

Q&A Highlights

  • NIM outlook: Core NIM should continue to “grind higher,” aided by deposit repricing; CD book rolling from ~4.40% into ~3.75–4.00% with some offset from variable loan resets .
  • Capital and buybacks: CET1 at 9.8%, expected to accrete 25–30 bps per quarter; potential share repurchases to be evaluated as CET1 approaches 10.5–11% (likely 1H 2026) .
  • Accretion income: ~$45M accretion this quarter viewed as a reasonable run rate, but inherently volatile .
  • Loan growth: Pro forma Q2 annualized ~4% core growth; pipelines at record levels (ex‑Sandy) and improving sentiment; CRE focus shifting to stabilized properties .
  • Liquidity deployment: ~$1.6B cash at quarter-end to pay down brokered CDs ($200–300M+ in Q3), add ~$500M to securities, and support loan growth; comfortable L/D range 90–95% vs 88% current .

Estimates Context

  • Primary (adjusted) EPS: AUB delivered $0.95 vs ~$0.80 consensus (6 estimates), a ~19% beat, reflecting stronger NIM expansion and accretion than modeled*.
  • Revenue: S&P revenue actual and consensus figures differ from company’s “Total revenue (FTE)”; treat revenue “miss” cautiously given tax-equivalent and non-GAAP versus S&P taxonomy*.
  • Forward quarters: Q3’25 EPS consensus at ~$0.84 (9 estimates); Q4’25 at ~$0.86 (9 estimates). Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core earnings power is stronger than GAAP EPS indicates; adjusted metrics (EPS $0.95, ROTCE ~24%) highlight accretive Sandy Spring economics and positive operating leverage .
  • Margin tailwinds remain: lower deposit costs, fixed-rate loan repricing, and accretion support NIM; management still targets full-year NIM (FTE) ~3.75–4.00% despite later-dated cut assumptions .
  • Balance sheet de-risked: ~$2B CRE sale executed at better-than-expected pricing; NPAs higher due to acquired PCD loans but credit costs guided to a benign 15–20 bps for 2025 .
  • Cost synergy realization should step up post-October conversion; adj. efficiency ratio already improved to 48.34% Q2 .
  • Capital build supports optionality in 2026 (dividends and buybacks) while funding North Carolina expansion (10 planned branches) and tech/AI investments .
  • Watch items: integration execution, accretion volatility, and regional macro (tariffs/government workforce); however, GovCon and office exposures appear manageable with favorable defense spending backdrop .
  • Near-term catalysts: October systems conversion, deposit cost decline cadence, and December Analyst Day updates on the 3-year strategic plan .

Notes: Values retrieved from S&P Global.*

Citations:

  • Earnings release and 8‑K data:
  • Q2’25 call transcript:
  • Q1’25 release and call:
  • CRE sale press release: