8-K: Atlantic Union Bankshares Reports Strong Q4 2025 Results

Atlantic Union Bankshares Corporation announced strong fourth quarter and full year 2025 financial results, driven by disciplined execution and successful integration of the Sandy Spring Bancorp acquisition.

Summary

• Net income available to common shareholders for Q4 2025 was $109.0 million, with basic and diluted earnings per common share of $0.77.
• Adjusted operating earnings available to common shareholders for Q4 2025 were $138.4 million, with adjusted diluted operating earnings per common share of $0.97.
• For the full year 2025, net income available to common shareholders was $261.8 million, with basic and diluted earnings per common share of $2.03.
• Full year 2025 adjusted operating earnings available to common shareholders were $444.8 million, with adjusted diluted operating earnings per common share of $3.44.
• Net interest income (FTE) increased by $11.2 million to $334.8 million in Q4 2025, primarily due to a decrease in interest expense from lower deposit costs, reflecting Federal Reserve rate cuts of 75 basis points from September to December 2025.
• The company's net interest margin (FTE) increased 13 basis points from the prior quarter to 3.96% in Q4 2025.
• Nonperforming assets (NPAs) as a percentage of total loans held for investment (LHFI) decreased by 7 basis points to 0.42% at December 31, 2025.
• Net charge-offs were 0.01% of total average LHFI (annualized) for Q4 2025, a decrease of 55 basis points compared to Q3 2025.
• The provision for credit losses for Q4 2025 was $2.2 million, a decrease from $16.2 million in the prior quarter.
• Total assets increased to $37.6 billion at December 31, 2025, an increase of $513.0 million (5.5% annualized) from September 30, 2025.
• Loans held for investment (LHFI) totaled $27.8 billion, an increase of $435.0 million (6.3% annualized) from the prior quarter.
• Total deposits decreased by $193.7 million (2.5% annualized) to $30.5 billion from the prior quarter, mainly due to decreases in demand deposits and high-cost non-relationship deposits, partially offset by an increase in brokered deposits.
• The common equity Tier 1 capital ratio was 10.10% and the tangible common equity to tangible assets ratio was 7.85% at December 31, 2025.
• The company declared and paid cash dividends of $0.37 per common share in Q4 2025, an 8.8% increase from the prior quarter and Q4 2024.
• Successfully completed the core systems conversion of Sandy Spring Bancorp, Inc. over the weekend of October 11, 2025, and concurrently closed 5 branches.

Sentiment

Score: 8

Explanation: The company reported strong adjusted operating results for Q4 and full year 2025, driven by successful acquisition integration, improved net interest margin, and significantly reduced credit losses. The increase in common dividends and healthy capital position further contribute to a positive outlook, despite a slight decrease in deposits and ongoing merger-related costs.

Positives

• Strong fourth quarter and full year adjusted operating results, showcasing the organization's earnings capacity.
• Successful integration of the Sandy Spring Bancorp, Inc. acquisition, including core systems conversion and branch optimization.
• Net interest income (FTE) increased by $11.2 million, primarily driven by lower deposit costs due to Federal Reserve rate cuts.
• Net interest margin (FTE) improved by 13 basis points to 3.96% in Q4 2025.
• Significant decrease in nonperforming assets (NPAs) as a percentage of total LHFI to 0.42% and net charge-offs to 0.01% (annualized) in Q4 2025.
• Provision for credit losses decreased substantially to $2.2 million in Q4 2025 from $16.2 million in Q3 2025.
• Healthy loan growth of 6.3% annualized in Q4 2025, with LHFI reaching $27.8 billion.
• Capital ratios remain well above regulatory well-capitalized levels, with a Common Equity Tier 1 ratio of 10.10%.
• Increased common stock dividend by $0.03 to $0.37 per share, an 8.8% increase.
• Lending pipelines remain healthy and are higher than at the start of Q4 2025.
• Total liquidity sources of $14.5 billion, providing a liquidity coverage ratio of uninsured/uncollateralized deposits of approximately 152%.

Negatives

• Merger-related charges continued to affect Q4 2025 results, with a $3.8 million increase in merger-related costs in noninterest expense.
• Total deposits decreased by $193.7 million (2.5% annualized) from the prior quarter, primarily due to decreases in demand deposits and high-cost non-relationship deposits.
• Accruing past due loans as a percentage of total LHFI increased by 14 basis points from September 30, 2025, to 0.41% at December 31, 2025.
• Noninterest expense increased by $4.8 million, driven by merger-related costs and a $2.4 million increase in other expenses due to non-credit-related losses on customer transactions.
• The effective tax rate for Q4 2025 increased to 21.0% from 19.0% in Q4 2024, reflecting the impact of the Sandy Spring acquisition which expanded the company's state income tax footprint.

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.
• Volatility in the financial services sector, including failures or rumors of failures of other depository institutions, and the effects on the ability 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 federal banking agencies.
• The sufficiency of liquidity and changes in capital position.
• General economic and financial market conditions, particularly in the markets where loans are concentrated, including declines in real estate values, increased unemployment, and U.S. fiscal matters.
• The impact of purchase accounting with respect to the Sandy Spring acquisition, or any change in assumptions used to determine fair value and credit marks.
• The possibility that anticipated benefits of acquisition activity, including cost savings and strategic gains, are not realized when 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.
• The 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.
• The effectiveness of expense reduction plans.
• The introduction of new lines of business or new products and services.
• Real estate values in the lending area, particularly concentrations of loans secured by commercial real estate (CRE).
• Changes in accounting principles, standards, rules, and interpretations, and the 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.
• 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.
• The 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.
• The 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 2026 outlook incorporates the full year impact of the Sandy Spring acquisition. The company anticipates the Federal Reserve will implement two 25 basis point fed funds rate cuts in 2026 (in April and September), with term rates remaining stable. Moderate GDP growth and a stable economy are assumed for AUB's branch footprint, with unemployment rates in Virginia, Maryland, and North Carolina expected to rise but stay below the national average. End-of-period loans are projected to be between $29.0 billion and $30.0 billion, and deposits between $31.5 billion and $32.5 billion. The Allowance for Credit Losses (ACL) to loans is expected to be approximately 115-120 basis points, with a net charge-off ratio of 10-15 basis points. Net Interest Income (FTE) is forecast at ~$1.350 $1.375 billion, and Net Interest Margin (FTE) at ~3.90% 4.00%. Noninterest income is projected to be ~$220 $230 million, and adjusted operating noninterest expense (excluding amortization of intangible assets) ~$750 $760 million. Amortization of intangible assets is estimated at ~$60 million, and tangible book value per share growth is targeted at 12-15%.

Management Comments

• John C. Asbury, President and CEO: "Atlantic Union had a strong fourth quarter, reflecting disciplined execution and a successful integration of the Sandy Spring Bancorp, Inc. acquisition."
• John C. Asbury, President and CEO: "We believe that the adjusted operating results for the quarter showcase the organizations earnings capacity."
• John C. Asbury, President and CEO: "While merger-related charges continued to affect this quarters results, the underlying operating performance supports our continued confidence in achieving the strategic goals associated with the Sandy Spring acquisition—namely, the targets for adjusted operating return on assets, return on tangible common equity, and efficiency ratio."
• John C. Asbury, President and CEO: "Atlantic Union is a story of transformation from a Virginia community bank to the largest regional bank headquartered in the lower Mid-Atlantic, with operations in Virginia, Maryland, and a growing presence in North Carolina."
• John C. Asbury, President and CEO: "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."
• Management believes AUB was built for this moment, having invested the capital, built the platform, and assembled the team, and now is the time to demonstrate the power of what has been built by delivering sustainable, top-tier performance and returns.
• Management is focused on maximizing the franchise's potential through organic growth, deepening relationships, growing the company organically, and leveraging its scale efficiently, while shifting from capital deployment to capital creation.

Industry Context

The company's transformation from a Virginia community bank to the largest regional bank headquartered in the lower Mid-Atlantic, with expanding operations in Maryland and North Carolina, reflects a broader trend of consolidation and regional expansion within the U.S. banking sector. The reported increase in net interest income due to lower deposit costs, influenced by Federal Reserve rate cuts, highlights the significant impact of the prevailing interest rate environment on bank profitability. The emphasis on disciplined execution and successful integration post-acquisition is a critical factor for success in a consolidating industry, where scale and efficiency are key competitive advantages. By positioning itself as a 'responsive, strong and capable alternative to large national banks, while competitive with and more capable than smaller banks,' the company is strategically navigating the competitive landscape to capture market share and differentiate its client experience.

Comparison to Industry Standards

• The company positions itself as the '#1 largest regional bank in Mid-Atlantic, Maryland and Virginia' based on deposit market share among U.S. Banks with less than $100 billion in assets.
• Management is committed to 'top-tier financial performance' and 'top tier returns,' implying a goal to outperform industry averages.
• The company's capital ratios are 'well above regulatory well capitalized levels,' indicating a stronger capital position compared to minimum regulatory requirements.
• The adjusted operating return on tangible common equity of 22.12% and adjusted operating return on assets of 1.50% for Q4 2025 are presented as strong performance indicators, suggesting favorable comparison to peers, although specific comparable companies or benchmarks are not explicitly named in the filing.

Stakeholder Impact

• Shareholders: Positive impact due to increased net income, higher adjusted operating earnings, an increased common stock dividend, strong capital position, and a positive future outlook for tangible book value growth.
• Employees: Implied stability and potential growth opportunities resulting from successful acquisition integration and planned organic expansion.
• Customers: Continued focus on providing a 'differentiated client experience' as a strong alternative to large national banks, suggesting efforts to maintain and grow customer relationships.
• Creditors: Strong capital ratios and a robust liquidity position indicate a healthy financial standing, which reduces credit risk.

Next Steps

• Generate sustainable, profitable growth and build long-term value for shareholders.
• Achieve strategic goals associated with the Sandy Spring acquisition, specifically targets for adjusted operating return on assets, return on tangible common equity, and efficiency ratio.
• Maximize the potential of the established franchise through organic growth, deepening relationships, and leveraging scale efficiently.
• Shift from capital deployment to capital creation, targeting top-tier returns, earnings growth, and tangible book value per share growth.
• Maintain disciplined execution to deliver on promises made to stakeholders.
• Plan for organic expansion in North Carolina in 2026.
• Hold a conference call and webcast for investors and analysts on January 22, 2026, to review financial results and provide an update on recent activities.

Key Dates

Recommendation

The company delivered robust Q4 and full-year 2025 results, exceeding expectations with significant improvements in net income, adjusted operating earnings, and key profitability ratios like ROTCE and ROA. The successful integration of the Sandy Spring acquisition, marked by core systems conversion and branch optimization, positions the company for enhanced efficiency and scale. A notable reduction in net charge-offs and provision for credit losses, coupled with healthy loan growth and an increased common dividend, signals strong underlying financial health and effective risk management. The positive 2026 outlook, including projected tangible book value growth and continued focus on organic expansion in attractive markets, suggests sustained value creation. The company's strong capital position, well above regulatory minimums, provides a solid foundation for future growth and shareholder returns.

Keywords

Atlantic Union Bankshares, AUB, Financial Results, Q4 2025, Full Year 2025, Earnings, Net Income, EPS, Net Interest Margin, Loan Growth, Deposit Trends, Asset Quality, Capital Ratios, Sandy Spring Acquisition, Banking, Regional Bank, Virginia, Maryland, North Carolina, SEC Filing, 8-K