Atlantic Union Bankshares Reports Q3 2026 Results and Loan Growth

Atlantic Union Bankshares (NYSE: AUB ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Atlantic Union Bankshares reported a solid third quarter with healthy loan growth, strong credit quality, and modest increases in adjusted operating earnings. The company is expanding its North Carolina presence, planning to open several new branches and commercial banking teams to enhance deposit gathering and commercial banking growth. Average loans grew by 9.6% annualized, with period-end loans at $29.3 billion, while average deposits increased 1.5% annualized, ending at $31 billion. The fully tax-equivalent net interest margin declined by 6 basis points to 3.88%, but net interest income rose by $3.4 million due to loan growth.

Asset quality remained strong with nonperforming assets declining and a decrease in classified assets. The company lowered its full-year net charge-off guidance. The company achieved medium-term financial targets with a return on assets of 1.43% and return on tangible common equity of 19.59%. Management noted a challenging funding environment and higher rates potentially affecting mortgage banking activity and deposit costs.

The company continues to focus on maintaining soundness, profitability, and growth, with a strategy to protect balance sheet strength and generate profitable growth. Full Transcript OPERATOR Hello and welcome to Atlantic Union Bankshares' third quarter 2026 earnings call. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session.

To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the call over to Bill Cimino, Head of Investor Relations.

You may begin. Bill Cimino (Senior Vice President, Investor Relations) Thank you, Tawanda, and good morning, everyone. I have Atlantic Union Bankshares President and CEO John Asbury and Executive Vice President and CFO Alex Dodd with me today. We also have other members of our executive management team with us for the question-and-answer period.

Please note that today's earnings release and the accompanying slide presentation we are going through on this webcast are available to download on our investor website, investors.atlanticunionbank.com. During today's call we will comment on our financial performance using both GAAP metrics and non-GAAP financial measures. Important information about these non-GAAP financial measures, including reconciliations to comparable GAAP measures, are in the appendix to our slide presentation and in our earnings release for the third quarter of 2026.

We will also make forward-looking statements, which are not statements of historical fact and are subject to risks and uncertainties. There can be no assurance that actual performance will not differ materially from any future expectation or result expressed or implied by these forward-looking statements.

We undertake no obligation to publicly revise or update any forward-looking statement except as required by law, and please refer to our earnings release and slide presentation issued today and our other SEC filings for further discussion of the Company's risk factors and other important information regarding our forward-looking statements, including factors that could cause actual results to differ from those expressed or implied. All comments made during today's call are subject to that safe harbor statement. At the end of the call we will take questions from the research analyst community, and I'll turn the call over to John.

John Asbury (Chief Executive Officer) Thank you, Bill. Good morning, everyone. This was a solid quarter with healthy loan growth, strong credit quality, and a modest increase in adjusted operating earnings. Higher net interest income and lower credit costs supported the result, while funding costs increased and fee income moderated.

I'll briefly cover the quarter's highlights and share some market perspective before Alex reviews the financial results. Our third quarter results reflect disciplined execution and sound underlying performance despite a more challenging funding environment. With merger-related items behind us, the only significant adjustment this quarter was a loss on debt extinguishment related to our subordinated debt refinancing. Over the past several years we have deployed capital deliberately to strengthen the franchise and support long-term growth.

This quarter provides further evidence that our investments in supporting earnings capacity and organic growth, while our earnings and capital generation continue to provide flexibility to invest in the franchise and return capital to shareholders. As always, we remain focused on soundness, profitability, and growth — in that order. Our North Carolina expansion is underway. We began with one branch in the Raleigh region and plan to add seven new branches there, bringing us to eight across the region when complete.

One new location is already open and two more are scheduled to open by early November. Beginning next year, we also expect to add three branches in the Wilmington area. In parallel, we are expanding our commercial banking teams in North Carolina. Together, these investments are designed to build full-service relationships, support long-term deposit gathering and commercial banking growth, and generate attractive risk-adjusted returns over time.

We believe our model translates well to these markets. We combine local market knowledge, local decision-making and responsiveness with the capabilities and balance sheet strength of a larger regional bank. That is the value proposition we're bringing to North Carolina, and it's the value proposition that we have executed well across the rest of the franchise. I'll briefly cover our third quarter highlights and share some market perspective before Alex reviews the financial results.

The operating environment does remain uncertain, shaped by geopolitical tensions, energy price volatility, persistent inflation, and an evolving interest rate outlook. Within our customer base, activity remains constructive though, and loan pipelines are healthy. Customers are becoming more selective as financing and project costs remain elevated, but overall activity level remains supportive of profitable growth. Against that backdrop, client activity and disciplined execution produced healthy loan growth during a traditionally seasonally slower quarter.

We remain focused on profitable growth supported by relationship-based funding, appropriate pricing, and attractive risk-adjusted returns. With that context, here are the key highlights from the third quarter. Average loans were $28.9 billion, increasing approximately 9.6% annualized during the quarter. Period-end loans reached $29.3 billion, up approximately 8.6% annualized from June 30.

Growth was well distributed across the franchise, led by commercial and industrial lending and construction lending, and line utilization increased modestly. Year to date, annualized loan growth was 7.2%. Based on current pipelines and expected fourth quarter activity, we now expect full-year loan growth toward the lower end of the high single-digit range. Average deposits increased 1.5% annualized during the quarter, while period-end deposits increased 6.5% annualized to $31.0 billion.

Year to date, deposit growth was approximately 2.2%, consistent with our low single-digit outlook. Several larger customer outflows reduced quarter-end deposit balances, and period-end deposit growth reflected increased brokered funding, which represented 3.5% of total deposits at quarter-end. Importantly, most of those funds returned early in the fourth quarter, and as of October 19th our loan-to-deposit ratio had improved to 93.7% compared with 94.6% at September 30th. Brokered deposits were relatively flat year over year.

Our focus remains on growing relationship-based deposits, expanding share of wallet, and maintaining disciplined funding. Reported FTE net interest margin declined 6 basis points to 3.88% as funding costs increased, but FTE net interest income rose $3.4 million as loan growth and accretion income more than offset those pressures. Q3 received no material benefit from the September rate increase because most SOFR-based loans reset in early October. Q4 should reflect a full quarter of that benefit on the variable-rate loan portfolio.

Alex will provide additional details in his comments. Overall asset quality remained strong and trends were favorable across most key metrics. Quarter over quarter, nonperforming assets declined to 37 basis points of loans held for investment from 39 basis points. Classified assets decreased to 4.0% from 4.4%, and net charge-offs remained at 3 basis points.

Annualized accruing past dues increased 6 basis points to 34 basis points but remain low in absolute terms. Given favorable credit trends and our current loss expectations, we are lowering our full-year net charge-off guidance, which Alex will discuss later in the call. The most recent state unemployment data available for this presentation are for August, showing unemployment rates in Virginia and North Carolina remained below the national average while Maryland's was in line with it.

Labor market conditions across our footprint continue to compare favorably with the national picture, supporting our confidence in the resilience and long-term attractiveness of our markets. This quarter's results reflect continued progress in our organic growth initiatives. We are operating as one team across the combined franchise. We also continue to build our North Carolina commercial banking teams, where we see meaningful opportunities to deepen relationships and contribute incremental growth over time.

Conditions across our markets remain resilient, although we expect certain aspects of the operating environment to become more challenging over time. Higher rates may weigh on mortgage banking activity and interest rate swap income, while competition for deposits may increase pressure on funding costs. In commercial real estate, higher financing and project costs are likely to slow new construction and delay some projects. Even so, at this time we believe that healthy pipelines and continued customer activity support our expectations for profitable growth despite the uncertain environment.

Additionally, we have not observed any broad-based deterioration in our loan portfolios. We have a long track record of adapting to changing conditions, and we will continue to respond as the environment evolves. While we remain mindful of the headwinds I just discussed, we believe that our focus on soundness, profitability, and growth — in that order — positions us well to continue creating long-term value. Our priorities remain clear: protect balance sheet strength, generate profitable growth, and allocate capital where we see attractive risk-adjusted returns.

Healthy loan demand, strong credit performance, and continued earnings and capital generation provide the flexibility to invest in the franchise, return capital to shareholders, and create long-term shareholder value. With that, I'll turn the call over to our Chief Financial Officer, Alex Dodd, for a detailed review of our quarterly financial results. Alex Dodd (Chief Financial Officer) Alex, thank you John, and good morning everyone.

The third quarter reported net income available to common shareholders was 133.7 million and fully diluted earnings per common share of 94 cents, resulting in a return on tangible common equity of 19.59%, a return on assets of 1.43% and an efficiency ratio of 52.7%. Our third quarter adjusted operating earnings available to common shareholders, which principally excludes the 2.7 million pretax loss on debt extinguishment, were 135.6 million, or $0.96 per diluted common share, resulting in an adjusted operating return on tangible common equity of 19.85%, adjusted operating return on assets of 1.45% and an adjusted operating efficiency ratio of 48.1%.

Slide 11 shows the year-to-date metrics on a GAAP basis and the corresponding trend over the past five years. As we move to slide 12, this shows the same metrics as slide 11, but on an operating basis for the year-to-date performance. We have reached our medium-term financial targets of 1.4% to 1.5% for return on assets and 19% to 20% for return on tangible common equity. While there will always be quarter-to-quarter variability, we remain confident in our ability to sustain performance within these target ranges over the medium term, which we define as this year and next.

Turning to credit loss reserves, the total allowance for credit losses was 334.2 million, an increase of 3.3 million for the quarter primarily driven by loan growth. The total allowance for credit losses as a percentage of total loans held for investment decreased 1 basis point to 114 basis points at the end of the quarter. Net charge-offs were 2.3 million, or 3 basis points annualized, in the quarter. Turning to net interest margin, the fully tax-equivalent net interest margin declined 6 basis points to 3.88% as higher funding costs more than offset a modest improvement in earning asset yields.

Despite the decline in margin, tax-equivalent net interest income increased $3.4 million during the quarter driven by strong loan growth. Earning asset yields increased 1 basis point from the prior quarter to 5.89%. Loan yields declined modestly during the quarter and did not yet reflect the impact of the Federal Reserve's 25 basis point September rate increase on the variable rate portfolio. Cost of funds increased 7 basis points to 2.01% from continued customer migration into higher-yielding deposit products and a higher funding mix of borrowings during the quarter.

Noninterest income decreased $35.4 million to $54.8 million for the third quarter, primarily driven by the 32.3 million pretax gain on the sale of our equity interest in Bering Insurance recognized during the second quarter. Adjusted operating noninterest income decreased 3.1 million, driven primarily by lower loan-related interest rate swap fees and reduced mortgage banking revenue as higher interest rates tempered customer activity. Fiduciary and asset management fees were also lower when compared to the prior quarter.

Noninterest expense increased $5.2 million to $204.3 million for the third quarter, primarily driven by the $2.7 million pretax loss on debt extinguishment recognized in the third quarter of 2026. Excluding the one-time expense and amortization of intangibles, the adjusted operating noninterest expense increased 2.7 million, primarily from the continued investment in the North Carolina expansion, strategic technology initiatives, and seasonal marketing costs. At September 30, loans held for investment, net of unearned income, were 29.3 billion, an increase of 623 million, or 8.6% annualized, from the prior quarter.

Our average loan growth for the quarter was approximately 9.6%. At September 30th, total deposits were 31 billion, an increase of 497 million, or approximately 6.5% annualized, from the prior quarter. While average deposits increased 1.5% for the quarter, our loan-to-deposit ratio ended the quarter at 94.6%, within our preferred range of 90% to 95%. As John mentioned, those balances have largely returned and our loan-to-deposit ratio as of yesterday was 93.7%.

At the end of the third quarter, Atlantic Union Bankshares and Atlantic Union Bank's regulatory capital ratios were comfortably above well-capitalized levels. In addition, we remain well capitalized on an adjusted basis if you include the negative impact of AOCI and unrealized losses for held-to-maturity securities in the calculation of the regulatory capital ratios. During the quarter, we repurchased 62.5 million of common stock while maintaining a CET1 ratio within our targeted operating range of 10% to 10.5%. Tangible book value per share was $20.36 at quarter end compared with $20.77 at June 30th.

The decline primarily reflects higher unrealized losses recorded in AOCI as long-term rates increased. Before reviewing our full-year outlook, I want to highlight the strength of the franchise's earnings and capital generation capabilities, providing the flexibility to execute buybacks while continuing to support strategic growth and investment opportunities. Our prior guidance called for term rates to remain stable and at the same levels, neither of which occurred in the third quarter. We continue to expect loan balances to end the year between 29 and 30 billion dollars while year-end deposit balances continue to be projected between 31 and 32 billion.

We expect full-year loan growth toward the lower end of the high single-digit range and expect year-end deposits to end up in the lower single-digit range. On the credit front, the allowance for credit losses is projected to remain at the lower end of the 115 basis point to 120 basis point range and we are reducing the projected net charge-off ratio to be less than 5 basis points in 2026. Fully tax-equivalent net interest income for the full year is projected to come in at the lower end of the $1.32 billion to $1.33 billion range inclusive of accretion income.

We expect higher interest-bearing deposit mix as well as greater loan and deposit competition to partially offset increasing loan yields. We believe we will be at the low end of the 3.90% to 3.95% range for our 2026 fully tax-equivalent net interest margin.