8-K: Atlantic Union Bankshares Reports Strong Q3 2025 Earnings

Atlantic Union Bankshares Corporation reported a significant increase in net income available to common shareholders for Q3 2025, driven by lower credit loss provisions and reduced merger costs.

Summary

• Net income available to common shareholders was $89.2 million for the third quarter of 2025, a substantial increase from $16.8 million in the second quarter of 2025.
• Basic and diluted earnings per common share were $0.63 for Q3 2025, up from $0.12 in Q2 2025.
• Adjusted operating earnings available to common shareholders were $119.7 million for Q3 2025, a decrease from $135.1 million in Q2 2025.
• Net interest income was $319.2 million in Q3 2025, a decrease of $2.2 million from $321.4 million in Q2 2025.
• The net interest margin (FTE) remained stable at 3.83% in Q3 2025, consistent with Q2 2025.
• Provision for credit losses decreased significantly to $16.2 million in Q3 2025 from $105.7 million in Q2 2025.
• Noninterest income decreased by $29.7 million to $51.8 million in Q3 2025 from $81.5 million in Q2 2025.
• Noninterest expense decreased by $41.3 million to $238.4 million in Q3 2025 from $279.7 million in Q2 2025, primarily due to a $44.1 million decrease in merger-related costs.
• Total assets were $37.1 billion at September 30, 2025, a decrease of $216.6 million (2.3% annualized) from June 30, 2025.
• Loans held for investment (LHFI) totaled $27.4 billion at September 30, 2025, an increase of $32.8 million (0.5% annualized) from June 30, 2025.
• Total deposits were $30.7 billion at September 30, 2025, a decrease of $306.9 million (3.9% annualized) from June 30, 2025.
• Net charge-offs were 0.56% of total average LHFI (annualized) for Q3 2025, an increase from 0.01% in Q2 2025, driven by two commercial and industrial loan charge-offs.
• Nonperforming assets (NPAs) as a percentage of total LHFI decreased to 0.49% at September 30, 2025, from 0.60% in the prior quarter.
• The Allowance for Credit Losses (ACL) as a percentage of total LHFI was 1.17% at September 30, 2025, down from 1.25% at June 30, 2025.
• The Common Equity Tier 1 capital ratio was 9.92% at September 30, 2025, an increase from 9.77% at June 30, 2025.
• The company declared and paid cash dividends of $0.34 per common share, consistent with Q2 2025 and a 6.3% increase from Q3 2024.

Sentiment

Score: 7

Explanation: The company reported a strong rebound in GAAP net income and EPS, driven by lower credit loss provisions and reduced merger-related costs. While adjusted operating earnings saw a slight dip and net charge-offs increased due to specific loan write-offs, the overall asset quality improved, and capital ratios remain robust. The strategic integration of Sandy Spring is progressing, and the outlook for Q4 2025 and full year 2025 indicates continued growth and profitability, despite some headwinds in net interest income.

Positives

• Net income available to common shareholders increased significantly to $89.2 million in Q3 2025 from $16.8 million in Q2 2025.
• Provision for credit losses decreased substantially to $16.2 million in Q3 2025 from $105.7 million in Q2 2025.
• Noninterest expenses decreased by $41.3 million in Q3 2025, primarily due to a $44.1 million decrease in merger-related costs associated with the Sandy Spring acquisition.
• Net interest margin (FTE) remained stable at 3.83% in Q3 2025.
• Asset quality improved with nonperforming assets (NPAs) as a percentage of total loans held for investment decreasing to 0.49% from 0.60% in the prior quarter.
• Capital ratios remained strong and improved, with the Common Equity Tier 1 capital ratio increasing to 9.92% from 9.77% in the prior quarter.
• The company increased its cash dividend per common share by 6.3% from Q3 2024.
• Successfully converted core systems of Sandy Spring and concurrently closed 5 branches, indicating progress in integration.
• Lending pipelines remain healthy, and the company is focused on generating positive operating leverage.
• Organic expansion in North Carolina is planned for 2026, targeting attractive submarkets.

Negatives

• Net interest income decreased by $2.2 million from Q2 2025, primarily due to lower interest income on loans held for sale and lower net accretion income.
• Noninterest income decreased by $29.7 million from Q2 2025, mainly due to a $4.8 million pre-tax loss on the CRE loan sale (compared to a $15.7 million gain in Q2) and the absence of a $14.3 million pre-tax gain on the sale of equity interest in CSP recorded in Q2.
• Adjusted operating earnings available to common shareholders decreased by $15.4 million from Q2 2025, primarily due to increased income tax expense and higher net charge-offs.
• Net charge-offs increased significantly to 0.56% of total average LHFI (annualized) in Q3 2025 from 0.01% in Q2 2025, driven by the charge-off of two individually assessed commercial and industrial loans.
• Total assets decreased by $216.6 million and total deposits decreased by $306.9 million from the prior quarter.

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 tariffs and trade barriers, and geopolitical instability.
• Volatility in the financial services sector, including failures or rumors of failures of other depository institutions, and effects on attracting and retaining depositors and raising capital.
• Legislative or regulatory changes and requirements, including federal, state, or local tax laws and changes impacting banking agencies' priorities.
• Sufficiency of liquidity and changes in capital position.
• General economic and financial market conditions, particularly in operating markets, including declines in real estate values, increased unemployment, and U.S. fiscal matters.
• Impact of purchase accounting with respect to the Sandy Spring acquisition, or any change in assumptions used for fair value and credit marks.
• The possibility that anticipated benefits of acquisition activity (Sandy Spring, American National), including cost savings and strategic gains, are not realized as expected or at all.
• Potential adverse reactions or changes to business or employee relationships resulting from acquisitions.
• Ability to identify, recruit, and retain key employees.
• Monetary, fiscal, and regulatory policies of the U.S. government, including the U.S. Department of the Treasury and the Federal Reserve.
• Quality or composition of loan or investment portfolios and changes in these portfolios.
• Demand for loan products and financial services in market areas.
• Ability to manage growth or implement growth strategy.
• Effectiveness of expense reduction plans.
• Introduction of new lines of business or new products and services.
• Real estate values in the lending area, particularly Commercial Real Estate (CRE).
• Changes in accounting principles, standards, rules, and interpretations, and their related impact on financial statements.
• An insufficient Allowance for Credit Losses (ACL) or volatility in the ACL resulting from the CECL methodology, affected by changing economic conditions, credit concentrations, inflation, or interest rates.
• Concentrations of loans secured by real estate, particularly CRE.
• Effectiveness of credit processes and management of credit risk.
• 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.
• Potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts, geopolitical conflicts, or public health events.
• Performance by counterparties or vendors.
• Deposit flows and the availability and terms of financing.
• Level of prepayments on loans and mortgage-backed securities.
• Actual or potential claims, damages, and fines related to litigation or government actions.
• Any event or development that would cause an impairment of any asset, including intangible assets such as goodwill.

Future Outlook

The full year 2025 outlook includes nine months of impact from the Sandy Spring acquisition, with the company remaining on track for a cost-savings target of 27% of Sandy Spring non-interest expense. The Federal Reserve Bank is expected to cut the Fed Funds rate by 25 basis points two more times in 2025, with term rates remaining stable. Unemployment rates in Virginia, Maryland, and North Carolina are projected to rise but stay below the national average in 2025. For Q4 2025, the company targets mid-single-digit annualized loan growth ($27.7 $28.0 billion) and low-single-digit annualized deposit growth ($30.8 $31.0 billion). The credit outlook for the full year 2025 anticipates a net charge-off ratio of approximately 15-20 basis points and an ACL to loans ratio of 115-120 basis points. Net interest income (FTE) is projected to be ~$325 $330 million for Q4 2025 and ~$1.160 $1.165 billion for the full year 2025, with net interest margin (FTE) at ~3.85% 3.90% for Q4 2025 and ~3.75% 3.80% for the full year 2025.

Management Comments

• "Atlantic Union had a solid third quarter with operating results that illustrate the earnings power of our banking franchise."
• "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 Bancorp, Inc, for adjusted operating return on assets, return on tangible common equity and efficiency ratio."
• "Operating under the mantra of soundness, profitability, and growth in that order of priority Atlantic Union remains committed to generating sustainable, profitable growth and building long-term value for our shareholders."

Industry Context

Atlantic Union Bankshares operates as the largest regional bank headquartered in the lower Mid-Atlantic, with operations throughout Virginia, Maryland, and a growing presence in North Carolina. The company positions itself as a strong and capable alternative to large national banks, while remaining competitive with smaller banks. The macroeconomic forecast from Moody's (September 2025 baseline) projects US GDP growth to average ~1.8% in 2025 and ~1.5% in 2026, with the national unemployment rate averaging 4.2% for 2025 and 4.6% for 2026. The Federal Reserve is expected to implement two more 25 basis point cuts to the Fed Funds rate in 2025, which will influence the company's funding costs and loan/securities portfolios.

Comparison to Industry Standards

• Virginia is rated 1st in Workforce Training and Cybersecurity, 2nd in Tech Talent Pipeline, and 3rd in Business Climate.
• North Carolina is rated 2nd in Business Climate.
• Virginia is ranked 3rd and Maryland is ranked 4th in AI Growth Hubs.
• CNBC ranked Virginia the Best State for Business for 2024, 2021, and 2020, and 2nd best in 2023.
• CNBC ranked North Carolina best in 2025 and 2023, and 2nd best in 2024.
• Maryland is ranked 8th for Technology and Innovation in 2024.
• The company's liquidity coverage ratio of uninsured/uncollateralized deposits is approximately 157%.

Stakeholder Impact

• Shareholders: Experienced increased net income and EPS, received a 6.3% increase in common stock dividend from Q3 2024, and can expect continued focus on long-term value creation.
• Employees: Saw reductions in full-time equivalent employees, which contributed to decreased salaries and benefits expense, though partially offset by increased variable incentive compensation.
• Customers: Benefit from a differentiated client experience, positioning the bank as a strong and capable alternative to larger national banks.
• Acquired entities (Sandy Spring): Undergoing successful core systems conversion and branch optimization, indicating progress in integration efforts.

Next Steps

• Deliver on expectations related to the Sandy Spring Bancorp, Inc. acquisition for adjusted operating return on assets, return on tangible common equity, and efficiency ratio.
• Continue generating sustainable, profitable growth and building long-term value for shareholders.
• Focus on execution and integration of the Sandy Spring franchise.
• Implement organic expansion in North Carolina in 2026, including opening 10 new branches (7 in Raleigh, 3 in Wilmington) and 49 off-site ATMs.
• Monitor US GDP growth, national unemployment rate, and Fed Funds rate changes as per Moody's September 2025 baseline forecast.
• Maintain a net charge-off ratio outlook of 15-20 bps for the full year.

Key Dates

Recommendation

The company demonstrated a strong rebound in GAAP net income and EPS for Q3 2025, significantly exceeding the prior quarter's performance. This improvement was primarily driven by a substantial decrease in the provision for credit losses and effective management of noninterest expenses, particularly the reduction in merger-related costs. While adjusted operating earnings saw a slight sequential decline and net charge-offs increased due to specific loan write-offs, the overall asset quality metrics improved, and the company maintains robust capital ratios well above regulatory minimums. The successful integration of the Sandy Spring acquisition, including core systems conversion and branch optimization, along with planned organic expansion in attractive North Carolina markets, positions the company for future growth. The commitment to a strong dividend and a positive financial outlook for Q4 2025 and full year 2025, despite anticipated Fed rate cuts, suggests a favorable investment opportunity for long-term value creation.

Keywords

Atlantic Union Bankshares, AUB, Financial Results, Q3 2025, Earnings, Banking, Regional Bank, Net Income, EPS, Net Interest Margin, Loan Growth, Deposit Growth, Asset Quality, Capital Ratios, Sandy Spring Acquisition, Commercial Real Estate, Credit Losses, Virginia, Maryland, North Carolina, Financial Services