Atlantic Union Bankshares Corporation Reports Strong First Quarter Results

Richmond, VA - Atlantic Union Bankshares Corporation (NYSE: AUB), the holding company for Atlantic Union Bank, recently released its financial results for the first quarter of 2025. The company reported solid performance, with net income available to common shareholders of $46.9 million and earnings per share of $0.52.

Financial Highlights:

• Net interest income increased 24.6% year-over-year to $184.2 million, driven by growth in interest-earning assets and higher net interest margin.
• Noninterest income rose 14.1% to $29.2 million, boosted by increases in service charges, fiduciary fees, and loan-related swap income.
• Noninterest expense grew 27.5% to $134.2 million, primarily due to higher salaries, benefits, and merger-related costs from the acquisition of Sandy Spring Bancorp.
• The company’s net interest margin expanded 27 basis points to 3.38% compared to the first quarter of 2024.
• Asset quality remained strong, with nonperforming assets at 0.38% of total loans, though the allowance for credit losses increased to 1.13% of total loans to reflect economic uncertainty.
• Atlantic Union’s regulatory capital ratios continued to exceed “well-capitalized” requirements, with a common equity Tier 1 ratio of 10.07%.

“We are pleased to report another quarter of solid financial performance, highlighted by strong net interest income growth and an expanded net interest margin,” said John Asbury, President and CEO of Atlantic Union Bankshares. “Our recent acquisition of Sandy Spring Bancorp has enhanced our presence in key markets, and we remain focused on delivering value to our shareholders through disciplined growth and operational excellence.”

Acquisition of Sandy Spring Bancorp

The highlight of the quarter was the completion of Atlantic Union’s merger with Sandy Spring Bancorp on April 1, 2025. The $13.8 billion Sandy Spring acquisition expanded Atlantic Union’s footprint in Virginia, Maryland, and Washington D.C., adding over 50 branches to the company’s network.

As part of the integration, Atlantic Union plans to sell approximately $2 billion of commercial real estate (CRE) loans from the combined portfolio. This strategic move is intended to optimize the company’s CRE exposure and risk profile going forward.

To fund the Sandy Spring acquisition, Atlantic Union entered into forward sale agreements in October 2024 to issue 11.3 million shares of common stock, generating $385 million in net proceeds. The dilutive impact of these forward contracts was reflected in Atlantic Union’s diluted earnings per share during the first quarter.

Net Interest Income and Margin Expansion

The primary driver of Atlantic Union’s strong financial performance was a 24.6% increase in net interest income to $184.2 million. This was driven by a $3 billion, or 17.1%, increase in average interest-earning assets compared to the first quarter of 2024, as well as a 27-basis-point expansion in the net interest margin to 3.38%.

The higher net interest margin was attributable to several factors:

• Increased yields on the investment portfolio, which offset a slight decline in loan yields.
• Lower funding costs, as both deposit and borrowing rates declined.
• Higher net accretion income of $12.6 million related to the American National acquisition, up from $602,000 in the prior-year quarter.

Atlantic Union’s deposit base grew 2.1% from the prior quarter, though average deposits declined 5.7% on an annualized basis. The company continued to see a shift toward higher-cost deposit products like time deposits, which comprised 19.3% of total deposits at quarter-end.

Noninterest Income and Expense

Noninterest income increased 14.1% to $29.2 million, primarily due to the impact of the American National acquisition. Key drivers included:

• A $1.9 million increase in fiduciary and asset management fees
• A $1.1 million rise in service charges on deposit accounts
• A $655,000 increase in interchange fees

These gains were partially offset by a $1.5 million decrease in other operating income, mainly from lower equity method investment income.

On the expense side, noninterest expense grew 27.5% to $134.2 million. The primary factors were:

• A $13.5 million increase in salaries and benefits, largely from the American National acquisition
• A $3.5 million rise in amortization of intangible assets
• A $3.1 million jump in merger-related costs associated with the Sandy Spring acquisition

Excluding these one-time and acquisition-related items, Atlantic Union’s adjusted operating noninterest expense increased 22.9% year-over-year.

Asset Quality and Credit Metrics

Atlantic Union’s asset quality metrics remained strong, though there were some signs of increased risk. Nonperforming assets rose to 0.38% of total loans, up from 0.32% at the end of 2024, primarily due to one new nonaccrual commercial and industrial loan relationship.

Net charge-offs for the quarter were $2.3 million, or 0.05% of average loans on an annualized basis, down from $4.9 million, or 0.13%, in the prior-year period.

However, the company increased its allowance for credit losses to $209.0 million, or 1.13% of total loans, to reflect the heightened economic uncertainty. This was up from $193.7 million, or 1.05% of loans, at the end of 2024.

“While our asset quality metrics remain strong, we are closely monitoring the economic environment and have proactively increased our allowance for credit losses,” said Asbury. “We remain vigilant in our credit underwriting and risk management practices to position the bank for continued success.”

Capital and Liquidity

Atlantic Union’s capital ratios continued to exceed regulatory “well-capitalized” requirements. The company’s common equity Tier 1 ratio was 10.07% at March 31, 2025, up from 9.96% at the end of 2024. The total risk-based capital ratio stood at 13.88%.

In terms of liquidity, Atlantic Union’s liquid assets totaled $9.2 billion, or 37.2% of total assets, at the end of the quarter. The company also maintained significant borrowing capacity with the Federal Home Loan Bank and Federal Reserve to supplement its strong deposit base.

“Our solid capital position and ample liquidity provide us with the financial flexibility to navigate the current economic environment and pursue strategic growth opportunities,” Asbury noted.

Outlook and Conclusion

Looking ahead, Atlantic Union remains cautiously optimistic about the economic outlook, though uncertainties persist around the potential impacts of trade policy changes, inflation, and the risk of a recession.

“We will continue to closely monitor economic conditions and deploy prudent asset-liability management strategies to manage our interest rate and credit risk,” said Asbury. “At the same time, we are excited about the growth prospects afforded by our recent acquisitions and are committed to delivering long-term value to our shareholders.”

Overall, Atlantic Union Bankshares delivered a strong first quarter performance, demonstrating the company’s ability to generate profitable growth while navigating a challenging economic environment. The successful integration of Sandy Spring Bancorp, coupled with the company’s disciplined approach to risk management, position Atlantic Union for continued success in the quarters ahead.