10-K: Atlantic Union Bankshares Reports Strong 2025 Growth Driven by Sandy Spring Acquisition

Atlantic Union Bankshares Corporation reported a significant increase in net income and total assets for 2025, primarily driven by the successful acquisition and integration of Sandy Spring Bancorp, Inc.

Summary

• Net income available to common shareholders increased to $261.8 million in 2025, up 32.7% from $197.3 million in 2024.
• Basic and diluted EPS were $2.03 in 2025, compared to $2.29 and $2.24, respectively, in 2024, reflecting share dilution from acquisitions.
• Adjusted diluted operating EPS rose to $3.44 in 2025 from $2.88 in 2024.
• Total assets grew by 52.9% to $37.6 billion at December 31, 2025, primarily due to the Sandy Spring acquisition.
• Loans Held for Investment (LHFI) increased by 50.5% to $27.8 billion, and total deposits grew by 49.4% to $30.5 billion at year-end 2025.
• Net interest income increased by 65.3% to $1.2 billion in 2025, with the net interest margin (FTE) improving by 46 bps to 3.80%.
• Noninterest income surged by 84.6% to $219.4 million, boosted by the Sandy Spring acquisition, a $14.8 million pre-tax gain on the sale of equity interest in CSP, and a $10.9 million pre-tax gain on CRE loan sale.
• Noninterest expense increased by 76.5% to $895.6 million, largely due to $157.3 million in merger-related costs and $59.7 million in amortization of intangible assets from the Sandy Spring acquisition.
• The provision for credit losses increased to $141.8 million in 2025, including $89.5 million of Day 1 initial provision for Sandy Spring non-PCD loans and $11.4 million for unfunded commitments.
• The acquisition of Sandy Spring Bancorp, Inc. was completed on April 1, 2025, with branch and operations integration finalized on October 14, 2025.
• A sale of $2.0 billion in performing CRE loans acquired from Sandy Spring generated a $10.9 million pre-tax gain.
• The company physically settled Forward Sale Agreements on April 1, 2025, delivering 11,338,028 shares of common stock and receiving approximately $385.0 million in net proceeds.
• Strategic expansion into North Carolina is underway, with plans for ten new branches and 86 AUB branded ATMs over the next three years.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, primarily driven by successful strategic acquisitions that significantly expanded the company's asset base and revenue. While increased expenses and credit loss provisions are noted, they are largely attributable to the integration of acquired entities and are offset by substantial growth in key financial metrics and a robust capital position.

Positives

• Net income available to common shareholders increased significantly by 32.7% to $261.8 million in 2025.
• Adjusted diluted operating EPS improved to $3.44 in 2025 from $2.88 in 2024, indicating strong underlying operational performance.
• Total assets grew substantially by 52.9% to $37.6 billion, driven by successful strategic acquisitions and organic growth.
• Loans Held for Investment (LHFI) increased by 50.5% to $27.8 billion, and total deposits grew by 49.4% to $30.5 billion, demonstrating expanded scale.
• Net interest income increased by $456.4 million (65.3%) to $1.2 billion, and the net interest margin (FTE) improved by 46 bps to 3.80%, benefiting from lower funding costs and higher earning asset yields.
• Noninterest income saw an impressive 84.6% increase, supported by the Sandy Spring acquisition and notable gains from asset sales ($14.8 million pre-tax gain on CSP equity sale, $10.9 million pre-tax gain on CRE loan sale).
• The successful completion and integration of the Sandy Spring Bancorp, Inc. acquisition significantly enhanced the company's presence in Northern Virginia and Maryland.
• Regulatory capital ratios remain strong and well above minimum requirements, with the company categorized as 'well capitalized'.
• Total net unrealized losses on the AFS securities portfolio decreased by $106.9 million to $295.7 million at December 31, 2025, indicating an improvement in market conditions for its investment holdings.
• A strong core deposit base is maintained, with approximately 68.7% of deposits insured or collateralized, and available liquidity sources covering 151.7% of uninsured and uncollateralized deposits.

Negatives

• Basic and diluted EPS decreased to $2.03 in 2025 from $2.29 and $2.24 in 2024, respectively, primarily due to the significant increase in common shares outstanding from acquisitions.
• Provision for credit losses increased substantially to $141.8 million in 2025 from $50.1 million in 2024, partly due to Day 1 initial provision for the Sandy Spring acquisition and higher net charge-offs.
• Noninterest expense rose significantly by 76.5% to $895.6 million in 2025, driven by $157.3 million in merger-related costs and $59.7 million in amortization of intangible assets from the Sandy Spring acquisition.
• Net charge-offs increased to $42.5 million (0.17% of total average LHFI) in 2025 from $8.8 million (0.05%) in 2024, primarily due to the charge-off of two individually assessed commercial and industrial loans.
• Nonperforming assets (NPAs) as a percentage of total LHFI increased to 0.42% at December 31, 2025, from 0.32% in 2024, mainly due to Purchased Credit Deteriorated (PCD) loans acquired from Sandy Spring.
• Consumer Banking income before income taxes decreased by $26.2 million to $74.0 million in 2025, impacted by increased noninterest expense and provision for credit losses related to the Sandy Spring acquisition.
• The Federal Reserve issued proposed rules in October 2023 that would reduce the maximum permissible interchange fee cap, which could negatively impact future noninterest income from interchange fees.
• Uncertainty about the economic outlook remains elevated, as noted by the FOMC in January 2026, posing potential challenges to future growth and stability.

Risks

• The Allowance for Credit Losses (ACL) may be insufficient to absorb credit losses in the loan portfolio, particularly if economic conditions deteriorate.
• Events negatively impacting the real estate market could adversely affect the business, given a significant portion of the loan portfolio is secured by real estate.
• Significant credit exposure in Commercial Real Estate (CRE), construction and development loans, and commercial and industrial loans may expose the company to additional credit risks.
• Loans made through federal programs are dependent on the federal government's continuation and support of these programs and compliance with program requirements.
• Independent appraisals and other valuation techniques used for real estate-secured loans and other real estate owned may not accurately describe the net value of the asset.
• Failure to effectively manage credit risk could adversely affect the business and financial condition.
• Lending to small to mid-sized community-based businesses may increase credit risk due to their potentially fewer financial resources and greater vulnerability to economic downturns.
• Nonperforming assets take significant time to resolve and may adversely affect business, results of operations, and financial condition.
• Mortgage revenue is cyclical and sensitive to interest rates, changes in economic conditions, decreased economic activity, and slowdowns in the housing market.
• The company may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances, harming liquidity and results of operations.
• Exposure to environmental liabilities with respect to owned properties or foreclosed real property.
• Business and results of operations may be adversely affected by financial markets, fiscal, monetary, and regulatory policies, and economic conditions, particularly in the regional markets where the company operates.
• Inability to maintain a strong core deposit base or access other low-cost funding sources could hinder growth and negatively impact liquidity.
• Substantial competition from larger national and regional financial institutions, credit unions, and fintech companies could adversely affect growth and operating results.
• Consumers may increasingly decide not to use banks for financial transactions, leading to disintermediation and loss of fee income and deposits.
• Changes in interest rates could adversely affect net interest income and cash flows, particularly if the Federal Reserve reverses course on rate reductions.
• Losses may be incurred if asset values decline, including due to changes in interest rates and prepayment speeds, impacting fair value assessments.
• A failure or breach of operating or securities systems or infrastructure, or those of third-party providers, including cyber-attacks, could disrupt business, result in data disclosure, damage reputation, and increase costs.
• Information security risks, including denial of service attacks, hacking, social engineering, malware, and identity theft, could lead to disclosure of confidential information and significant legal/financial exposure.
• Failure to grow or manage growth effectively, especially after significant acquisitions, could negatively affect financial condition and results of operations.
• Risks associated with future mergers and acquisitions, including execution risk, potential dilution of shareholder value, and integration challenges.
• The carrying value of goodwill and other intangible assets may be adversely affected by impairment charges.
• The enterprise risk-management framework may not be effective in mitigating all risks and/or losses.
• Flaws in the design, implementation, or use of statistical and quantitative models, including those employing artificial intelligence or machine learning, could yield adverse outcomes or regulatory scrutiny.
• Failure to keep pace with technological change could adversely affect business and competitive position, and new technology implementation may cause operational challenges.
• Implementation of new lines of business or new products and services may subject the company to additional risks.
• Operational functions of business counterparties (e.g., retailers, credit reporting agencies, third-party service providers) over which the company has limited control could adversely affect business.
• Reliance on misleading information furnished by clients and counterparties could negatively impact financial condition.
• Losses due to errors, omissions, or fraud by employees, clients, counterparties, or other third parties.
• Inability to attract, retain, develop, and motivate human capital could adversely affect business, results of operations, and prospects.
• Internal controls and procedures may fail or be circumvented, leading to material adverse effects on business and financial reporting.
• Future capital needs may require raising additional capital, which may not be available or could be dilutive to shareholders.
• Involvement in various claims and lawsuits or information-gathering requests, investigations, and proceedings by governmental and self-regulatory agencies may lead to adverse consequences.
• Inability to generate sufficient taxable income to fully realize deferred tax assets could result in additional valuation allowances.
• Challenges to tax positions by tax authorities could result in additional tax liability.
• Extensive regulation could limit or restrict activities, and legal, regulatory, and policy changes could affect the banking industry and economy.
• Laws and regulations addressing consumer privacy and data use and security could increase costs, and failure to comply could impact business, financial condition, and reputation.
• Failure to maintain sufficient capital could adversely affect financial condition, liquidity, results of operations, and regulatory compliance.
• New regulations and new approaches to regulation or enforcement by the CFPB could adversely impact deposit, consumer lending, mortgage lending, loan collection, or overdraft coverage programs.
• Issues with compliance with the Bank Secrecy Act and U.S. economic sanctions could result in significant civil penalties and adverse effects on business strategy.
• Failure to comply with consumer protection laws, including the Community Reinvestment Act and fair lending laws, could lead to material penalties and other sanctions.
• The Federal Reserve may require the company to commit capital resources to support the Bank, potentially at times when resources are limited.
• Ability to pay dividends is limited by regulatory restrictions and the need to maintain sufficient consolidated capital.
• Trading volumes in common stock may not provide adequate liquidity for investors, potentially leading to difficulty selling shares at attractive prices.
• Future capital needs could result in shareholder dilution and adversely affect the market price of common and preferred stock.
• Holders of indebtedness and depositary shares have rights senior to those of common shareholders.
• Governing documents and Virginia law contain provisions that could have an anti-takeover effect, potentially discouraging acquisitions.
• Stock price may be volatile, resulting in losses to investors and potential litigation.
• Failure to maintain reputation may materially adversely affect performance.
• Changes in accounting standards could impact reported earnings.
• Physical and financial risks associated with climate change and other weather and natural disaster impacts.
• Environmental, social, and governance (ESG) risks could adversely affect reputation, stock price, business, operations, and earnings, particularly due to conflicting stakeholder expectations and anti-ESG efforts.

Future Outlook

The Federal Open Market Committee (FOMC) held the target range for the Federal Funds rate at 3.50% to 3.75% in January 2026, noting that uncertainty about the economic outlook remains elevated. It is difficult to predict how the Federal Reserve will balance possible inflationary pressure with the potential of slower economic growth and rising risks in employment. The company expects net interest income to increase with an immediate rise in market rates but decline in a decreasing interest rate environment. Strategic expansion into North Carolina is planned with ten new branches over the next three years, focusing initially on Raleigh and Wilmington, along with 86 planned AUB branded ATMs. The company will continue to assess future strategic opportunities based on market conditions, aiming to enhance its footprint, achieve cost savings, diversify revenue streams, and meet financial criteria.

Management Comments

• We will continue to deploy various asset liability management strategies to seek to manage our risk related to interest rate fluctuations and monitor balance sheet trends, deposit flows, and liquidity needs to enable us to meet the needs of our customers and maintain financial flexibility.
• Management believes our overall liquidity to be sufficient to satisfy our depositors requirements and to meet our customers credit needs.

Industry Context

StockSavvy.ai notes that the banking sector continues to navigate a complex environment marked by fluctuating interest rates and intense competition, including from fintech companies. The company's significant growth through acquisitions, particularly Sandy Spring, aligns with a broader industry trend of consolidation among regional banks seeking scale and expanded geographic footprints to enhance competitiveness and diversify revenue streams. The strategic expansion into North Carolina reflects a proactive approach to capture growth in attractive submarkets, a common strategy for regional banks looking to deepen market penetration. The reduction in brokered deposits and focus on core deposits is a positive trend in an environment where deposit stability and cost of funds are critical.

Comparison to Industry Standards

• The company's deposit market share in Virginia (6.3% as of June 30, 2025) and Maryland (4.8% as of June 30, 2025) positions it as the largest regional bank headquartered in the lower mid-Atlantic, indicating a strong regional presence compared to smaller community banks.
• The increase in nonperforming assets to 0.42% of total LHFI, while still relatively low, warrants monitoring as it approaches the average for regional banks, which typically range from 0.5% to 1.0% depending on economic cycles.
• The company's capital ratios (Common Equity Tier 1 at 10.10%, Tier 1 at 10.64%, Total Capital at 13.90%, Leverage at 9.10%) are well above regulatory minimums and generally compare favorably to industry averages for well-capitalized institutions, demonstrating robust financial health. For example, the minimum for well-capitalized status for Tier 1 leverage ratio is 5.0%, and the company is at 9.10%.
• The average loan size in the CRE portfolio ($1.2 million) and median loan size ($311,000) suggest a granular portfolio, which is generally considered less risky than portfolios with a few very large CRE exposures, aligning with prudent risk management practices seen in comparable regional banks.

Management Changes

Corporate Governance

Legal Proceedings

• The company is party to various legal proceedings in the ordinary course of operations, but management believes the ultimate outcome will not have a material adverse effect on business, financial condition, or results of operations.
• A legal reserve of $8.3 million was recorded in 2023 related to a previously disclosed settlement with the Consumer Financial Protection Bureau (CFPB).

Related Party Transactions

• The company may have loans issued to its executive officers, directors, and principal shareholders in the ordinary course of business, which do not involve more than the normal risk of collectability.

Stakeholder Impact

• Shareholders experienced dilution from common stock issuance for acquisitions but benefited from increased net income and adjusted EPS, as well as a higher common stock dividend ($1.39 per share in 2025).
• Employees saw increased salaries and benefits expense due to acquisitions and continue to benefit from stock-based compensation plans and talent development initiatives.
• Customers gained access to an expanded branch footprint and ATM network, particularly in Northern Virginia, Maryland, and planned expansion into North Carolina, along with a wider range of financial services.
• Communities in Virginia, Maryland, Washington D.C., and North Carolina benefit from the company's expanded presence, commitment to local engagement, and initiatives in small business lending and financial literacy.
• Creditors face increased total borrowings due to acquisitions, with subordinated debt and trust preferred securities holding senior rights to common shareholders.

Next Steps

• Continue strategic expansion into North Carolina with 10 new branches over the next three years, focusing initially on Raleigh and Wilmington, combined with 86 planned AUB branded ATMs.
• Assess future strategic opportunities based on market and other conditions, applying criteria such as footprint enhancement, cost savings, revenue diversification, and financial criteria.
• Monitor the economic outlook and Federal Reserve policies to balance inflationary pressure with potential slower economic growth and rising employment risks.
• Continue to deploy asset liability management strategies to manage interest rate risk and monitor balance sheet trends, deposit flows, and liquidity needs.
• Evaluate the impact of new FASB ASUs (2025-06, 2025-08, 2025-09, 2025-10, 2025-11) on consolidated financial statements.
• Monitor state tax developments and filing requirements for compliance and to manage related risks, particularly regarding unrecognized tax benefits.
• Complete the chief financial officer transition.

Key Dates

Recommendation

The company demonstrates robust growth through strategic acquisitions, significantly expanding its market presence and asset base. Despite increased expenses and credit loss provisions associated with integration, key profitability metrics like net interest income and adjusted EPS show strong improvement. The company maintains a well-capitalized position and is actively pursuing further organic growth in new markets, indicating a strong long-term trajectory. The decrease in unrealized losses on AFS securities also points to improving market conditions for its investment portfolio. These factors suggest a positive outlook for future performance and shareholder value.

Keywords

Banking, Financial Services, Bank Holding Company, Acquisitions, Mergers, Sandy Spring Bancorp, Net Interest Income, Deposits, Loans, Credit Quality, Capital Ratios, Cybersecurity, Risk Management, SEC Filing, 10-K, Virginia, Maryland, Washington D.C., North Carolina, Wealth Management, Equipment Finance, Mortgage Banking, Regional Bank