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Atlantic Union Bankshares Corp (AUB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered solid operating results amid merger-related noise: GAAP EPS $0.63 and adjusted EPS $0.84; NIM (FTE) held at 3.83%, adjusted efficiency 48.8% as Sandy Spring integration continued to drive scale benefits .
  • Versus S&P Global consensus, adjusted EPS was essentially in line ($0.84 actual vs $0.843 est.), while revenue missed ($354.7m* actual vs $379.1m* est.); note S&P revenue definition differs from the company’s GAAP “total revenue” of $371.0m .
  • Credit quality headlines: net charge-offs rose to 0.56% (annualized) on two previously reserved C&I credits; NPAs fell to 0.49% of loans and criticized loans declined >$250m QoQ; management maintained full-year NCO outlook of 15–20 bps .
  • Outlook tightened: Q4 NIM (FTE) targeted at 3.85%–3.90% and FY25 NIM (FTE) 3.75%–3.80%; Q4 NII (FTE) $325–$330m; adjusted noninterest expense $183–$188m; deposit betas expected to fall as Fed cuts aid funding costs .
  • Strategic catalysts: core systems conversion for Sandy Spring completed Oct 11 with five branch consolidations; board subsequently raised the quarterly common dividend to $0.37 (+8.8%) on Oct 30, underpinning capital confidence .

What Went Well and What Went Wrong

What Went Well

  • Core profitability metrics strong: adjusted operating ROA 1.30%, ROTCE 20.09%, and adjusted efficiency ratio (FTE) 48.79%, reflecting merger synergies and cost discipline .
  • NIM defense despite lower accretion: NIM (FTE) held at 3.83% as lower earning asset yields were offset by lower funding costs; cost of deposits fell 2 bps QoQ to 2.18% .
  • Asset quality indicators improved ex one-offs: NPAs declined to 0.49% of loans, past-dues remained low (0.27%), and criticized loans fell >$250m QoQ; management reaffirmed FY NCOs at 15–20 bps .

What Went Wrong

  • Revenue against Street: S&P revenue came in below consensus ($354.7m* actual vs $379.1m* est.), partly reflecting definitional differences vs GAAP total revenue ($371.0m), and the loss related to the final CRE loan sale settlement .
  • Credit costs elevated: net charge-offs increased to 0.56% annualized due to two C&I charge-offs (one tied to a prior borrower misrepresentation), driving higher provision ($16.2m) and a $22.4m ACL decline QoQ .
  • Adjusted noninterest expense ticked up ~1.7% QoQ to $185.5m (marketing, professional services, occupancy, OREO/credit costs), tempering near-term operating leverage until full synergy run-rate in 2026 .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Interest Income (GAAP, $m)$182.9 $321.4 $319.2
Noninterest Income ($m)$34.3 $81.5 $51.8
Provision for Credit Losses ($m)$2.6 $105.7 $16.2
Net Income to Common ($m)$73.4 $16.8 $89.2
Diluted EPS (GAAP, $)$0.82 $0.12 $0.63
Adjusted Operating EPS ($)$0.83 $0.95 $0.84
NIM (FTE, %)3.38 3.83 3.83
Adjusted Efficiency (FTE, %)52.20 48.34 48.79

Versus S&P Global consensus (Q3 2025):

MetricS&P ConsensusActualSurprise
Adjusted/Primary EPS ($)0.8433*0.84~flat*
Revenue ($m, S&P definition)379.1*354.7*(24.4)*

Values retrieved from S&P Global.*

Balance sheet and credit KPIs

KPIQ3 2024Q2 2025Q3 2025
Loans HFI ($m)$18,337.3 $27,328.3 $27,361.2
Deposits ($m)$20,305.3 $30,972.2 $30,665.3
Cost of Deposits (%)2.57 2.20 2.18
NPA / Loans (%)0.20 0.60 0.49
Net Charge-offs / Avg Loans (ann.) (%)0.01 0.01 0.56
ACL / Loans (%)0.97 1.25 1.17
NIB Deposits (% of total)—23 23
Loan-to-Deposit Ratio (%)—88.2 89.2
TCE / Tangible Assets (%)7.29 7.39 7.69

Loan mix (period-end balances, $m)

CategoryQ2 2025Q3 2025
CRE – Non-owner6,912.7 6,805.3
CRE – Owner3,940.4 4,335.9
Construction2,444.2 2,163.2
Multifamily2,083.6 2,196.5
C&I5,141.7 4,956.8
Resi 1–4 Consumer2,746.0 2,799.7
Resi 1–4 Revolving1,154.1 1,186.3
Auto245.6 211.9
Other Consumer119.5 121.6
Other Commercial1,409.4 1,479.0
Total LHFI27,328.3 27,361.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loans (period-end)Q4 2025N/A$27.7–$28.0B New
Deposits (period-end)Q4 2025N/A$30.8–$31.0B New
NII (FTE)Q4 2025N/A$325–$330m New
NIM (FTE)Q4 2025Prior range 3.75%–4.00% (mgmt commentary) 3.85%–3.90% Tightened upward focus vs earlier broad range
NIM (FTE)FY 2025N/A3.75%–3.80% New
Adj. Noninterest IncomeQ4 2025N/A$50–$55m New
Adj. Noninterest Expense (ex amort.)Q4 2025N/A$183–$188m New
Amortization of IntangiblesQ4 2025N/A~$18m New
Credit – Net Charge-off RatioFY 202515–20 bps (maintained) 15–20 bps Maintained
ACL / LoansFY 2025N/A~115–120 bps New
Capital Return2H 2026N/APotential buyback if CET1 >10.5% Framework outlined
Common DividendQ4 2025 declared$0.34 (Q3) $0.37 (announced Oct 30) Raised

Earnings Call Themes & Trends

TopicQ1 2025 (prior)Q2 2025 (prior)Q3 2025 (current)Trend
Sandy Spring integrationDeal closed Apr 1; prepared for accelerated savings CRE sale of ~$2.0B acquired loans; accretion elevated Core systems conversion completed; five overlapping branches closed; unified brand Execution advancing; synergy visibility improving
Margin/NIMNIM (FTE) up to 3.45% on lower funding costs NIM (FTE) 3.83% with purchase accounting accretion NIM (FTE) steady 3.83%; core NIM up; deposit costs down Core NIM expansion despite lower accretion
Credit qualityNegligible NCOs; macro reserve build NCOs 1 bp; CECL Day 1 build from acquisition NCOs 56 bps on two C&I credits; NPAs 0.49%; criticized down >$250m; FY NCOs 15–20 bps maintained One-offs cleared; leading indicators stable
Deposits/fundingDemand deposit growth; lowered brokered Deposits up with acquisition Total deposits down modestly QoQ; NIB 23%; deposit costs -2 bps Mix management; funding costs easing
D.C./macro commentary——Monitoring gov’t shutdown; GC portfolio defense-focused; minimal expected impact Cautious but confident

Management Commentary

  • CEO tone on operating power and transformation: “Atlantic Union had a solid third quarter… While merger-related costs continued to create a noisy quarter, we believe we are on a path to deliver on the expectations related to the acquisition of Sandy Spring… Operating under the mantra of soundness, profitability, and growth…” .
  • Integration milestone: “Over the weekend of October 11, we successfully completed our core systems conversion and closed five overlapping branches… We have now unified Sandy Spring Bank under the Atlantic Union Bank brand” .
  • Credit perspective: “Leading asset quality indicators are encouraging… criticized loans… down to 4.9%… We remain confident in our asset quality and reaffirm our forecast for the full year 2025 net charge-off ratio to be between 15 and 20 bps” .
  • CFO on run-rate earnings and expenses: adjusted ROTCE 20.1%, adjusted ROA 1.3%, adjusted efficiency 48.8%; Q4 NII (FTE) $325–$330m, adjusted opex $183–$188m .

Q&A Highlights

  • Loan growth outlook: Mid-single-digit loan growth expected into 2026, with potential for high single-digit in a more normalized environment; pipelines healthy; utilization dip in Q3 offset by stronger production .
  • Expense/efficiency: Target mid-40s efficiency ratio in 2026 inclusive of North Carolina investments; Q4 adjusted opex run-rate ~$183–$188m with full Sandy Spring cost saves reflected by early 2026 .
  • Margin drivers: Deposit beta “room” as rates fall (mid-50s betas on interest-bearing deposits); core NIM expansion expected as fixed-rate back book reprices higher and deposit costs decline; Q4 NIM (FTE) guided 3.85%–3.90% .
  • Capital return: CET1 comfort zone ~10–10.5%; excess capital above ~10.5% could support buybacks, likely to seek authorization in 2H 2026 .
  • D.C. exposure: Government contractor book focused on defense; shutdowns historically manageable via line draws; office exposure smaller and granular; no systemic issues observed .

Estimates Context

  • S&P Global consensus: Adjusted/Primary EPS $0.8433* vs actual $0.84 (essentially in line); S&P revenue $379.1m* vs actual $354.7m* (miss). Company-reported GAAP total revenue was $371.0m, highlighting definitional differences with S&P’s revenue series .
  • Looking ahead, Q4 NIM (FTE) guidance (3.85%–3.90%) and lower deposit costs imply supportive NII, while management anticipates lower accretion (est. $35–$40m quarterly in 2026) which may temper reported NIM; Street may modestly recalibrate revenue to the company’s GAAP framing and credit cost run-rate after elevated Q3 NCOs .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Core profitability is running at top-quartile levels (adj. ROA 1.30%, adj. ROTCE 20.09%, adj. efficiency 48.79%), reinforcing synergy capture and scale benefits post Sandy Spring .
  • Near-term NIM support from falling deposit costs and higher fixed-rate loan repricing should offset declining purchase accounting accretion; Q4 NIM (FTE) guided above Q3 levels .
  • Credit noise appears idiosyncratic; with NPAs down and criticized loans falling, management maintained FY NCO guidance (15–20 bps), suggesting limited need for outsized provision normalization .
  • Funding mix quality intact (23% NIB, 91% core deposits) with improving cost of deposits; liquidity robust ($15.4b sources, ~157% of uninsured/uncollateralized deposits) .
  • Integration catalyst realized (systems conversion complete); North Carolina expansion planned for 2026 offers incremental organic growth avenues .
  • Capital trajectory supports growing returns to shareholders—dividend increased to $0.37 in Q4; buybacks possible in 2H 2026 subject to CET1 >10.5% .
  • Trading lens: Watch Q4 NIM execution vs 3.85%–3.90% target and opex run-rate discipline ($183–$188m), plus any residual credit clean-up—beats on NIM and stable credit could be positive stock catalysts .
Notes: 
- Company results and qualitative commentary cited to SEC 8‑K/press release and earnings call transcripts as referenced above. 
- S&P Global estimates and “actuals” marked with * are from S&P Global and may use definitions (e.g., revenue) that differ from GAAP totals reported by the company.