8-K: Atlantic Union Bankshares Corporation Presents at Annual Shareholders Meeting, Highlights Sandy Spring Acquisition and 2025 Outlook

Atlantic Union Bankshares Corporation presented at its Annual Meeting of Shareholders on May 6, 2025, focusing on the Sandy Spring Bancorp acquisition, strategic priorities, and the 2025 financial outlook.

Summary

• Atlantic Union Bankshares Corporation held its Annual Meeting of Shareholders on May 6, 2025.
• The presentation highlighted the acquisition of Sandy Spring Bancorp, which closed on April 1, 2025.
• The company discussed its three strategic priorities: organic growth, strategic investments, and innovation and transformation.
• 2024 net income available to common shareholders was $197.3 million, or $2.24 per diluted share, compared to $190.0 million, or $2.53 per diluted share in 2023.
• Adjusted operating earnings available to common shareholders for 2024 were $241.3 million, or $2.74 per diluted share, compared to $221.2 million, or $2.95 per diluted share in 2023.
• Loans held for investment were $18.5 billion at December 31, 2024, an increase of $2.8 billion from December 31, 2023.
• Total deposits at December 31, 2024 were $20.4 billion, an increase of $3.6 billion from December 31, 2023.
• Net income available to common shareholders for the first quarter of 2025 was $46.9 million, or $0.52 per share.
• Adjusted operating earnings available to common shareholders for the first quarter of 2025 decreased $9.8 million to $51.6 million.
• Loans held for investment totaled $18.4 billion, a decrease of $42.9 million from December 31, 2024.
• Total deposits were $20.5 billion, an increase of $105.3 million from December 31, 2024.
• The company expects to sell approximately $2 billion of commercial real estate (CRE) loans by June 30th.
• The company anticipates a pro forma CET1 ratio of approximately 10.0% and a pro forma total risk-based capital ratio of approximately 14.0% at Q2 2025.
• The company projects a pro forma ROTCE of over 20%, a pro forma ROAA of over 1.50%, and a pro forma efficiency ratio of approximately 45% for 2026.
• The company expects 28% EPS accretion in 2026 and a 2.1-year tangible book value earnback period.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. The successful acquisition of Sandy Spring and the positive long-term financial outlook are encouraging. However, the decrease in net income and adjusted operating earnings for the first quarter of 2025 tempers the overall sentiment.

Positives

• The acquisition of Sandy Spring Bancorp closed earlier than expected, on April 1, 2025.
• The company settled the common equity forward sale, receiving approximately $385 million in net proceeds.
• The company is underway with a proposed CRE loan sale of at least $2 billion.
• The company is executing integration planning immediately.
• The company is committed to top-tier financial performance.
• The company has a solid dividend yield and payout ratio with earnings upside.
• The company has strong growth potential through organic and acquisition opportunities.
• The company's capital ratios are well above regulatory well capitalized levels as of March 31, 2025.
• The company increased the common stock dividend by 6.3% from the first quarter of 2024.

Negatives

• Net income available to common shareholders for the first quarter of 2025 was down $7.9 million or $0.08 per share, compared to the prior quarter.
• Adjusted operating earnings available to common shareholders decreased $9.8 million for the first quarter compared to the prior quarter.
• Loans held for investment decreased $42.9 million or 0.9% (annualized) from December 31, 2024.

Risks

• Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially.
• These risks include market interest rates, economic conditions, U.S. and global trade policies, volatility in the financial services sector, legislative or regulatory changes, and the sufficiency of liquidity and changes in capital position.
• Other risks include the diversion of management's attention, the impact of purchase accounting, the possibility that anticipated benefits of acquisitions are not realized, and potential adverse reactions or changes to business or employee relationships.
• Technological risks and developments, cyber threats, attacks, or events, and the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts or public health events (such as pandemics) are also risks.

Future Outlook

The 2025 outlook includes nine months impact of the Sandy Spring acquisition in results, assumes the proposed CRE loan sale closes by June 30, 2025, includes preliminary estimates of merger-related purchase accounting adjustments, assumes the Federal Reserve Bank cuts the Fed Funds rate by 25 bps three times in 2025 starting in June, assumes slower GDP growth but not forecasting recession in 2025, and expects Virginia, Maryland and North Carolina unemployment rate to rise but remain below the national unemployment rate in 2025.

Management Comments

• The acquisition philosophy remains: strategic, disciplined, and measured with an eye towards transactions that increase density and scarcity value, add contiguous markets, increase operating leverage, diversify revenue streams, and enable the reinvestment of cost savings into technology.
• Ensuring merger and acquisition activity complements, enables, and scales technology and the advancement of our customer value proposition, potentially including whole bank, non-bank, minority stakes, and partnerships.

Industry Context

The announcement highlights Atlantic Union Bankshares' strategic focus on expanding its regional presence through acquisitions, particularly the Sandy Spring Bancorp acquisition, positioning it as a leading regional bank in the Mid-Atlantic region. This move aligns with the broader industry trend of consolidation among regional banks to achieve greater scale, improve efficiency, and enhance competitiveness.

Comparison to Industry Standards

• The document compares Atlantic Union Bankshares' performance to its peer group, which is the 2024 peer group used by the compensation committee as disclosed in the definitive proxy statement filed with the SEC on March 26, 2025.
• The document notes that Atlantic Union Bankshares' adjusted operating ROTCE of 16.12% in 2024 is competitive with the peer upper quartile of 16.12% and the peer median of 15.40%.
• The document also notes that Atlantic Union Bankshares' adjusted operating ROA of 1.06% in 2024 is competitive with the peer upper quartile of 1.30% and the peer median of 1.11%.
• The document further notes that Atlantic Union Bankshares' adjusted operating efficiency ratio of 53.31% in 2024 is competitive with the peer upper quartile of 56.00% and the peer median of 57.00%.

Stakeholder Impact

• Shareholders can expect potential EPS accretion and long-term value creation from the Sandy Spring acquisition.
• Employees may experience changes related to the integration of the two companies.
• Customers can expect a broader range of services and a larger branch network.
• The company's performance and strategic decisions will impact suppliers and creditors.

Next Steps

• Complete the CRE loan sale by June 30th.
• Execute integration planning for the Sandy Spring acquisition.
• Monitor and manage capital levels to remain well-capitalized.
• Continue to focus on organic growth, strategic investments, and innovation and transformation.

Key Dates

Keywords

Atlantic Union Bankshares, Sandy Spring Bancorp, Acquisition, Financial Results, Shareholders Meeting, CRE Loan Sale, Capital Ratios, Financial Outlook, Bank, Merger