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Earnings Call Insights: Atlantic Union Bankshares Corporation (AUB) Q3 2025

Management View

• CEO John Asbury stated that Atlantic Union Bankshares delivered a solid third quarter, highlighting ongoing execution and integration of the Sandy Spring acquisition. He emphasized, “Our quarterly operating results illustrate the earnings potential of the company we envisioned. 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 for adjusted operating return on assets, return on tangible common equity and efficiency ratio.”
• Asbury noted the completion of the core systems conversion and the closure of five overlapping branches, bringing all operations under the Atlantic Union Bank brand. He asserted, “With the Sandy Spring systems conversion now behind us, strong pipelines and expanded footprint in attractive markets, specialty lines and increased investment in North Carolina, we believe we are well positioned for continued organic growth.”
• The CEO reported quarterly loan growth of approximately 0.5% annualized, with average loan growth quarter-over-quarter at 4.3% annualized, and expressed confidence in achieving loan growth consistent with a seasonally strong fourth quarter. He projected year-end loan balances between $27.7 billion and $28 billion, inclusive of negative fair value loan marks.
• Asbury highlighted improvements in noninterest-bearing deposits, a stable net interest margin at 3.83%, and fee income growth, particularly from interest rate swaps and wealth management, supported by the Sandy Spring acquisition.
• Credit quality was described as improved, with nonperforming assets at 0.49% of loans held for investment and criticized asset levels decreasing by more than $250 million. Asbury reaffirmed full-year 2025 net charge-off ratio guidance between 15 and 20 basis points.
• Robert Gorman, CFO, stated, “In the third quarter, reported net income available to common shareholders was $89.2 million, and earnings per common share were $0.63. Adjusted operating earnings available to common shareholders for $119.7 million or $0.84 per common share for the third quarter, resulting in an adjusted operating return on tangible common equity of 20.1% and adjusted operating return on assets of 1.3% and an adjusted operating efficiency ratio of 48.8% in the third quarter.”

Outlook

• The company expects year-end loan balances to range between $27.7 billion and $28 billion and year-end deposit balances between $30.8 billion and $31 billion.
• Full year fully tax equivalent net interest income is projected between $1.160 billion and $1.165 billion, with a fourth quarter run rate of $325 million to $330 million.
• Gorman projected the full year fully tax equivalent net interest margin between 3.75% and 3.8%, and between 3.85% and 3.9% for the fourth quarter, assuming two 25 basis point Federal Reserve rate cuts by year-end.
• Adjusted operating noninterest income is expected between $185 million and $190 million for the full year, while adjusted operating noninterest expense should fall in the $675 million to $680 million range.
• The company expects financial returns within the top quartile of its peer group on an operating basis.

Financial Results

• Tax equivalent net interest income for the third quarter was $323.6 million, a decrease of $2.1 million from the second quarter, attributed to lower interest income on loans held for sale and lower net accretion income, partially offset by higher investment income and reduced borrowing costs.
• Noninterest income decreased to $51.8 million, mainly due to a prior quarter gain on CRE loan sale and a decrease in bank-owned life insurance income, but adjusted operating noninterest income increased by $5.1 million to $56.6 million, driven by a $4.2 million rise in loan-related interest rate swap fees.
• Reported noninterest expense decreased by $41.3 million to $238.4 million, primarily due to lower merger-related costs, while adjusted operating noninterest expense increased by $3.1 million to $185.5 million.
• Loans held for investment at quarter end were $27.4 billion, and total deposits were $30.7 billion.

Q&A

• Russell Elliott Gunther, Stephens Inc., inquired about loan growth sustainability and specialty line expansion. CEO Asbury responded they expect mid-single-digit loan growth for 2026, with potential for higher growth in a normalized environment, and highlighted growing specialty lines and “pipelines at Sandy Spring now that they've been converted here since April 1 have grown dramatically, three or fourfold.”
• Gunther also asked about the efficiency ratio target. CFO Gorman confirmed, “we fully expect to see mid-single -- mid-40s on the efficiency ratio, inclusive of the investments in the North Carolina franchise.”
• Stephen Scouten, Piper Sandler, probed on expense run rates and Sandy Spring cost savings. Gorman explained, “it's probably about the $190 million give or take level would be a good run rate for going forward on excluding any of the related or amortization of intangibles.”
• Catherine Mealor, KBW, sought details on margin outlook and deposit cost management. Gorman said, “we think we have a lot of room on the deposit cost side as the Fed gives us cover and continues to lower rates,” and outlined expectations for “core expansion, give or take, in the low single digits per quarter.”
• Sun Young Lee, TD Cowen, asked about the impact of government shutdowns. Asbury replied, “The government contractors should be fine. We have lived through many shutdowns before... The most common thing that you would see might be a payment deferral or a fee deferral. And that's on the consumer side, and we're very happy to work with customers.”
• Brian Wilczynski, Morgan Stanley, and David Bishop, Hovde Group, focused on competition and Sandy Spring revenue synergies. Management emphasized expanded capabilities and new client acquisition, with Ring noting, “35% of our production this quarter was from new clients.”

Sentiment Analysis

• Analysts adopted a neutral to slightly positive tone, focusing on sustainability of growth and expense control, and probing the margin outlook amid rate changes without expressing overt skepticism.
• Management maintained a confident and constructive tone, repeatedly asserting expectations for sustainable loan growth, margin stability, and cost control, and using phrases such as “we believe we are well positioned” and “we feel pretty good.”
• Compared to the previous quarter, both management and analysts appeared incrementally more confident, with management highlighting completed integration milestones and cost saves, and analysts less focused on risk and more on forward-looking growth.

Quarter-over-Quarter Comparison

• The company shifted focus from integration progress and CRE loan sale in Q2 to operational execution, cost savings realization, and organic growth in Q3.
• Loan growth guidance narrowed from $28–$28.5 billion in Q2 to $27.7–$28 billion in Q3, while deposit guidance also narrowed.
• Management tone was more confident, emphasizing successful integration and expanded pipelines, compared to the previous quarter’s focus on transaction closure and transitional noise.
• Analysts’ questions moved from integration and merger-related noise to more detailed queries about growth sustainability, efficiency, and the margin outlook.

Risks and Concerns

• Management acknowledged ongoing uncertainty in forecasting loan growth due to the economic environment, with Asbury noting, “still a lot of uncertainty out there, obviously.”
• The impact of government shutdowns and economic conditions in the Greater Washington, D.C. region was discussed, but management emphasized portfolio diversification and resilience.
• Competition in core markets and the potential for paydowns were highlighted as factors affecting loan growth, with management recognizing pricing pressures.

Final Takeaway

Atlantic Union Bankshares emphasized its completion of the Sandy Spring integration, solid loan production, and disciplined expense management, reaffirming expectations for year-end loan balances between $27.7 billion and $28 billion. Management projected continued organic growth, margin stability, and top-tier financial performance, with cost savings from the acquisition to be fully realized by early 2026. The company’s outlook reflected confidence in its expanded footprint, specialty line momentum, and ability to navigate near-term macroeconomic headwinds while delivering long-term shareholder value.

Read the full Earnings Call Transcript