8-K: Atlantic Union Bankshares Outlines Strong 2025, Growth Plans

Atlantic Union Bankshares Corporation presents a robust 2025 performance, highlighting strong loan and deposit growth, successful acquisition integration, and an optimistic 2026 financial outlook with strategic expansion into North Carolina.

Summary

• Q4 2025 annualized loan growth was approximately 6.3%.
• Non-interest bearing deposits constituted 22% of total deposits at December 31, 2025.
• The Loan/Deposit ratio stood at 91.2% as of December 31, 2025.
• Successfully converted core systems of Sandy Spring over the weekend of October 11, 2025, and concurrently closed 5 branches.
• Planned organic expansion in North Carolina in 2026 includes 10 new branches over the next 3 years (7 in Raleigh, 3 in Wilmington) and 86 off-site ATMs.
• Total assets were $37.6 billion, total loans were $27.8 billion, and total deposits were $30.5 billion as of December 31, 2025.
• Market capitalization was $5.7 billion as of January 21, 2026.
• The company is positioned as the largest regional bank headquartered in the lower Mid-Atlantic, Maryland, and Virginia based on deposit market share.
• The 2026 financial outlook projects end-of-period loans between $29.0 and $30.0 billion, and deposits between $31.5 and $32.5 billion.
• Credit outlook for 2026 includes an Allowance for Credit Loss (ACL) to loans of approximately 115-120 basis points and a net charge-off ratio of approximately 10-15 basis points.
• Net Interest Income (FTE) for 2026 is estimated at ~$1.350 $1.375 billion, with a Net Interest Margin (FTE) of ~3.90% 4.00%.
• Noninterest Income for 2026 is projected at ~$220 $230 million, and Adjusted Operating Noninterest Expense (excluding amortization of intangible assets) at ~$750 $760 million.
• Amortization of intangible assets is estimated at ~$60 million for 2026, with Tangible Book Value Growth Per Share projected at ~12-15%.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance report, demonstrating effective integration of acquisitions, robust organic growth, and superior non-GAAP financial metrics compared to peers, alongside a clear strategic vision for future expansion.

Positives

• Strong Q4 2025 annualized loan growth of 6.3% indicates robust demand and effective lending strategies.
• Adjusted operating return on tangible common equity (ROTCE) of 22.1% in Q4 2025 and 20.4% for Full Year 2025 significantly outperformed the peer median and top quartile, demonstrating superior profitability.
• Adjusted operating return on assets (ROA) of 1.50% in Q4 2025 and 1.33% for Full Year 2025 exceeded the peer median, reflecting efficient asset utilization.
• Adjusted operating efficiency ratio (FTE) of 47.8% in Q4 2025 and 49.7% for Full Year 2025 was better than both the peer median and top quartile, indicating strong cost management.
• Q4 2025 net charge-offs were exceptionally low at 1 basis point of total average loans held for investment annualized, highlighting strong asset quality.
• The Allowance for Credit Loss (ACL) as a percentage of loans held for investment stood at a healthy 1.16% at December 31, 2025.
• Capital ratios are well above regulatory well-capitalized levels as of December 31, 2025, with a Common Equity Tier 1 Ratio (CET1) of 10.1% for Bankshares (regulatory minimum 6.5%).
• Tangible Book Value per share (non-GAAP) increased by 3.7% from Q3 2025 to $19.69 at December 31, 2025.
• The company has a consistent common stock dividend growth (7% 8-year CAGR) and a target payout ratio of 35%-45%, indicating commitment to shareholder returns.
• Successful integration of the Sandy Spring acquisition, including core systems conversion and branch optimization, demonstrates effective M&A execution.
• Strategic organic expansion into attractive North Carolina markets (Raleigh and Wilmington) is planned, offering new growth avenues.
• A high liquidity coverage ratio of approximately 152% of uninsured/uncollateralized deposits ($9.6 billion) ensures strong financial stability.
• The loan and deposit portfolios are diversified and granular, reducing concentration risk.

Negatives

• GAAP Earnings Per Share (EPS) available to common shareholders, diluted, has shown a declining trend, from $3.26 in 2021 to $2.03 in 2025.
• GAAP Return on Equity (ROE) decreased from 9.68% in 2021 to 6.16% in 2025.
• GAAP Return on Assets (ROA) decreased from 1.32% in 2021 to 0.80% in 2025.
• The GAAP Efficiency Ratio has increased from 57.46% in 2022 to 65.16% in 2025, indicating a rise in operating costs relative to revenue.
• The total securities portfolio held a total unrealized loss of $323.1 million as of December 31, 2025, primarily in available-for-sale securities.
• The Multifamily CRE portfolio showed 2.01% delinquencies and 1.88% non-performing loans (NPL) as of December 31, 2025, with criticized loans at 13.94%.

Risks

• Market interest rates and their related impacts on macroeconomic conditions, customer and client behavior, funding costs, and loan and securities portfolios.
• Economic conditions, including inflation and recessionary conditions and their related impacts on economic growth and customer and client behavior.
• U.S. and global trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility, and uncertainty resulting therefrom, and geopolitical instability.
• Volatility in the financial services sector, including failures or rumors of failures of other depository institutions, along with actions taken by governmental agencies to address such turmoil, and the effects on the ability of depository institutions, including us, to attract and retain depositors and to borrow or raise capital.
• Legislative or regulatory changes and requirements, including changes in federal, state, or local tax laws and changes impacting the rulemaking, supervision, examination, and enforcement priorities of the federal banking agencies.
• The sufficiency of liquidity and changes in our capital position.
• General economic and financial market conditions in the United States generally and particularly in the markets in which we operate and which our loans are concentrated, including the effects of declines in real estate values, an increase in unemployment levels, U.S. fiscal debt, budget and tax matters, U.S. government shutdowns, and slowdowns in economic growth.
• The impact of purchase accounting with respect to the Sandy Spring acquisition, or any change in the assumptions used regarding the assets acquired and liabilities assumed to determine the fair value and credit marks.
• The possibility that the anticipated benefits of our acquisition activity, including our acquisitions of Sandy Spring and American National, including anticipated cost savings and strategic gains, are not realized when expected or at all.
• Potential adverse reactions or changes to business or employee relationships, including those resulting from our acquisitions of Sandy Spring and American National.
• Our ability to identify, recruit, and retain key employees.
• Monetary, fiscal, and regulatory policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve.
• The quality or composition of our loan or investment portfolios and changes in these portfolios.
• Demand for loan products and financial services in our market areas.
• Our ability to manage our growth or implement our growth strategy.
• The effectiveness of expense reduction plans.
• The introduction of new lines of business or new products and services.
• Real estate values in our lending area.
• Changes in accounting principles, standards, rules, and interpretations, and the related impact on our financial statements.
• An insufficient ACL or volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by changing economic conditions, credit concentrations, inflation, changing interest rates, or other factors.
• Concentrations of loans secured by real estate, particularly commercial real estate.
• The effectiveness of our credit processes and management of our credit risk.
• Our ability to compete in the market for financial services and increased competition from fintech companies.
• Technological risks and developments, and cyber threats, attacks, or events.
• Operational, technological, cultural, regulatory, legal, credit, and other risks associated with the exploration, consummation, and integration of potential future acquisitions, whether involving stock or cash consideration.
• 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), and of governmental and societal responses thereto.
• Performance by our counterparties or vendors.
• Deposit flows.
• The availability of financing and the terms thereof.
• The level of prepayments on loans and mortgage-backed securities.
• Actual or potential claims, damages, and fines related to litigation or government actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences.
• Any event or development that would cause us to conclude that there was an impairment of any asset, including intangible assets, such as goodwill.

Future Outlook

The company projects strong growth for 2026, with loans expected to reach $29.0-$30.0 billion and deposits $31.5-$32.5 billion. They anticipate a net interest income of $1.350-$1.375 billion and a net interest margin of 3.90%-4.00%. Key assumptions include two 25 basis point Federal Reserve rate cuts in April and September 2026, moderate GDP growth, a stable economy in their branch footprint, and a rising but below national average unemployment rate in Virginia, Maryland, and North Carolina. They also target 12-15% tangible book value growth per share.

Management Comments

• "We Believe AUB Was Built For This Moment. We have invested the capital, built the platform, and assembled the team. Now is the time to demonstrate the power of what we have built delivering sustainable, top-tier performance and returns."
• "Our Core Values Continue to Make us Successful: Caring, Courageous, Committed."
• "Atlantic Union is committed to achieving top tier financial performance and providing our shareholders with above average returns on their investment regardless of the operating environment."

Industry Context

StockSavvy.ai notes that Atlantic Union Bankshares is positioning itself as a leading regional bank in the Mid-Atlantic, successfully integrating acquisitions like Sandy Spring Bancorp while simultaneously pursuing organic growth, particularly in the attractive North Carolina market. This strategy allows them to compete effectively against larger national banks by offering a responsive, capable alternative, and against smaller banks with greater scale and capabilities. The focus on top-tier financial performance and capital generation aligns with broader industry trends emphasizing efficiency and shareholder returns in a dynamic interest rate environment.

Comparison to Industry Standards

• Full Year 2025 Adjusted Operating Return on Tangible Common Equity (ROTCE) of 20.4% significantly exceeded the 2025 Peer Top Quartile of 17.6% and the Peer Median of 14.7%.
• Full Year 2025 Adjusted Operating Return on Assets (ROA) of 1.33% was below the 2025 Peer Top Quartile of 1.43% but above the Peer Median of 1.28%.
• Full Year 2025 Adjusted Operating Efficiency Ratio (FTE) of 49.7% was better than the 2025 Peer Top Quartile of 51.0% and the Peer Median of 55.0%.
• The company's Common Equity Tier 1 (CET1) ratio of 10.1% (for Bankshares) is well above the regulatory minimum of 6.5%, indicating strong capital adequacy compared to industry requirements.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, above-peer returns, consistent dividend growth, and a clear strategy for long-term value creation. Potential risks from unrealized losses on securities and general economic conditions.
• Employees: Impact from branch closures (5 branches concurrently closed with Sandy Spring core systems conversion) and potential headcount reductions from strategic cost savings initiatives (mentioned in non-GAAP adjustments). Opportunities for employees in expanding North Carolina markets.
• Customers: Enhanced client experience as a responsive alternative to large national banks, with expanded services and a growing branch footprint in new markets.
• Creditors: Strong capital position and liquidity provide assurance.

Next Steps

• Fully integrate and execute upon the Sandy Spring acquisition, realizing its expectations and potential.
• Continue to build infrastructure, risk management, workforce, processes, and capabilities to support scaling over time.
• Leverage the core franchise to deepen relationships, grow market share, and increase operating leverage.
• Capitalize on technology to enhance organic growth, increase efficiency and quality, and outpace customer expectations.
• Supplement organic growth with other strategic investments to enhance organic growth and transformation, while deprioritizing whole bank acquisitions under the current strategic plan.
• Execute organic expansion in North Carolina planned in 2026, with 10 new branches over the next 3 years (7 in Raleigh, 3 in Wilmington) and 86 off-site ATMs.

Key Dates

Recommendation

The company demonstrates exceptional financial health and strategic execution, significantly outperforming peers in key non-GAAP metrics like ROTCE and efficiency ratio. The successful integration of Sandy Spring, coupled with a disciplined organic growth strategy in attractive markets like North Carolina, positions it for sustained long-term value creation. While GAAP metrics show some decline, the adjusted operating metrics, which management uses for performance analysis, are robust. The strong capital position, high liquidity, and consistent dividend growth further bolster confidence. The 2026 outlook is positive, indicating continued momentum.

Keywords

Atlantic Union Bankshares, AUB, Regional Bank, Financial Performance, Investor Presentation, Banking, Virginia, Maryland, North Carolina, Acquisition Integration, Sandy Spring Bancorp, Loan Growth, Deposit Growth, Capital Ratios, Efficiency Ratio, Return on Equity, Commercial Real Estate, Credit Quality, Liquidity, Dividend, Strategic Expansion