Earnings call · Jun 2026 (Q2 FY26)

Atlantic Union Bankshares Q2 FY26 earnings call AUB

Jul 21, 2026 Source

Executive summary

Atlantic Union Bankshares Q2 FY26 — Strong Operating Performance and Margin Improvement

Atlantic Union Bankshares delivered strong Q2 FY26 results, showcasing improved earnings capacity and capital generation. The quarter was marked by solid loan growth, margin expansion, and disciplined expense management, despite increased funding costs due to deposit mix shifts. The company remains focused on organic growth and capital efficiency, aiming for top-quartile financial performance and long-term shareholder value.

Highlights

Adjusted operating net income available to common shareholders was $134 million or $0.94 per common share, resulting in an adjusted operating return on tangible common equity of 20.1%.
Period-end loans increased approximately 10.4% annualized to $28.7 billion, driven by record loan production.
Reported fully tax equivalent net interest margin increased 9 basis points to 3.94%, primarily due to higher accretion income.
Annualized net charge-offs remained low at 3 basis points for both Q2 and year-to-date.
Tangible book value per common share increased $0.84 or 4.2% linked quarter, and 13% year-over-year.

Concerns

Deposit costs increased 3 basis points for the full quarter and 2 basis points in June, driven by customer migration to higher-yielding interest-bearing accounts.
Brokered deposits were reduced by $53 million during the quarter and $571 million year-to-date, indicating a shift away from this funding source.
Nonperforming assets increased modestly from the prior quarter, though remained low at 39 basis points of loans held for investment.

Guidance & targets

Category	Target	Timeline	Confidence
Full year loan growth	tracking toward the higher end of our mid-single-digit outlook high materiality	FY26	High
Full year deposit growth	low single-digit 2026 outlook medium materiality	FY26	Medium
Year-end loan balances	between $29 billion and $30 billion high materiality	FY26	High
Year-end deposit balances	between $31 billion and $32 billion high materiality	FY26	High
Allowance for credit losses	remain in the 115 to 120 basis point range medium materiality	FY26	High
Full year net charge-off ratio	between 5 and 10 basis points medium materiality	FY26	High
Full year fully tax equivalent net interest income	between $1.32 billion and $1.33 billion high materiality	FY26	Medium
Full year fully tax equivalent net interest margin	between 3.90% and 3.95% high materiality	FY26	Medium
Full year noninterest income	between $220 million and $230 million medium materiality	FY26	Medium
Full year adjusted operating noninterest expense	between $742 million to $752 million medium materiality	FY26	Medium
Annual growth in tangible book value per share	approximately 12% high materiality	FY26	High
Financial returns relative to peers	within the top quartile of our proxy peer group high materiality	FY26	High
Purchase Accounting Adjustments (PAA)	$140 million to $150 million medium materiality	FY26	High

Operational metrics

Adjusted operating net income available to common shareholders

$134 million

Q2 FY26

Excludes the pretax gain from the sale of equity interest in Bearing Insurance.

Adjusted operating EPS

$0.94

Q2 FY26

Adjusted operating earnings per common share.

Adjusted operating return on tangible common equity

20.1%

Q2 FY26

Adjusted operating return on tangible common equity.

Adjusted operating return on assets

1.47%

Q2 FY26

Adjusted operating return on assets.

Adjusted operating efficiency ratio

47.47%

Q2 FY26

Adjusted operating efficiency ratio.

Total allowance for credit losses

$331 million increased $9.1 million QoQ

Q2 FY26

Primarily driven by loan growth during the quarter.

Total allowance for credit losses as % of total loans held for investment

115 flat QoQ

Q2 FY26

Allowance for credit losses as a percentage of total loans held for investment.

Net charge-offs (annualized)

$2 million 3 bps annualized

Q2 FY26

Annualized net charge-offs for the quarter.

Tax equivalent net interest income

$329.7 million increased $12.8 million QoQ

Q2 FY26

Primarily driven by an increase in loan volumes, higher loan yields, and increased loan accretion income.

Earning asset yields

5.88% increased 9 bps QoQ

Q2 FY26

Primarily due to higher loan accretion income of $5 million and higher loan yields.

Cost of funds

flat flat QoQ

Q2 FY26

A 3 bps increase in cost of deposits was offset by lower borrowing amortization costs.

Core net interest margin (excluding accretion income)

3.46% increased 1 bp QoQ

Q2 FY26

Core net interest margin excluding the impact of accretion income.

Adjusted operating noninterest income

$57.9 million increased $3.1 million QoQ

Q2 FY26

Excludes the one-time gain on sale of Bearing Insurance equity interest.

Adjusted operating noninterest expense

$184 million decreased $1.3 million QoQ

Q2 FY26

Excludes merger-related costs and amortization of intangible assets.

Loans held for investment (period-end)

$28.7 billion increased $727 million or 10.4% annualized QoQ

Q2 FY26

Loans held for investment net of unearned income.

Average loan growth

6% annualized

Q2 FY26

Average loan growth for the quarter.

Total deposits (period-end)

$30.5 billion increased $77 million or 1% annualized QoQ

Q2 FY26

Total deposits at quarter end.

Average deposits growth

decreased 2.4% QoQ

Q2 FY26

Average deposits decreased for the quarter.

Loan-to-deposit ratio

94.1%

Q2 FY26

Ended the quarter within the preferred range of 90% to 95%.

Tangible book value per share

$20.77 increased $0.84 or 4.2% QoQ; increased $2.39 or 13% YoY

Q2 FY26

Tangible book value per common share at quarter end.

Share repurchase executed

$10 million

Q2 FY26

Common shares repurchased during the quarter.

Remaining share repurchase authorization

$240 million

Q2 FY26

Amount remaining under the company's share repurchase authorization.

Brokered deposits as % of total deposits

2% reduced $53 million QoQ; reduced $571 million YTD

Q2 FY26

Brokered deposits represented only 2% of total deposits at quarter end.

Contribution to interest rate swap transactions

27%

Q2 FY26

Percentage of total interest rate swap transactions generated by former Sandy Spring Bank teams.

Contribution to foreign exchange revenue

32%

Q2 FY26

Percentage of total foreign exchange revenue generated by former Sandy Spring Bank teams.

Fixed rate loan new production spreads

200

Q2 FY26

New loan spreads for fixed rate loans.

Variable rate loan new production spreads

200

Q2 FY26

New loan spreads for variable rate loans.

Variable rate loan maturities

$800 million-$900 million

per quarter

Quarterly variable rate loan maturities with current and expected repricing rates.

Deposit cost increase (monthly)

June

This was the increase in cost of deposits for the month of June.

Deposit cost increase (quarterly)

Q2 FY26

Increase in cost of deposits for the full quarter.

Cost of new interest-bearing deposits

over 3%

Q2 FY26

Combined cost of new interest-bearing deposits.

Spot deposit cost

1.95%

June

Spot deposit cost for the month of June. The transcript states '$1.95' but context strongly suggests a percentage, likely 1.95% or 195 bps, given other deposit cost discussions.

Deposit beta for interest-bearing products

50%

future

Assumed deposit beta for a 25 basis point rate increase.

Securities portfolio as % of total assets

13%

Q2 FY26

The securities portfolio was reduced by over $200 million in Q2 to fund lending growth.

Purchase Accounting Adjustments (PAA) guidance

$140 million to $150 million

FY26

Full year guidance for Purchase Accounting Adjustments.

Criticized and classified assets as % of total loans

4.4% down from 4.5% QoQ

Q2 FY26

Improved from the prior quarter.

Nonperforming assets as % of loans held for investment

39 increased modestly QoQ

Q2 FY26

Nonperforming assets remained low despite a modest increase.

Industry KPIs

Metric	Value	Period
Loans	$28.7 billion USD	Q2 FY26
Deposits	$30.5 billion USD	Q2 FY26
Rotce ROE	20.1% %	Q2 FY26
Cet1 ratio	10.41% %	Q2 FY26
Capital returns	$10 million USD	Q2 FY26
Fee income lines	$220 million to $230 million USD	FY26
Allowance reserves	115 to 120 bps	FY26
Net interest income	$1.32 billion to $1.33 billion USD	FY26
Net interest margin	3.90% to 3.95% %	FY26
Net charge offs npls	3 bps	Q2 FY26
Total operating expenses	$742 million to $752 million USD	FY26
Efficiency ratio operating leverage	47.47% %	Q2 FY26

Deals & partnerships

Bearing Insurance Sale of equity interest $32.3 million pretax gain

The company realized a significant pretax gain from the sale of its equity interest in Bearing Insurance.

Risks & headwinds

Geopolitical developments and conflict involving Iran Q2 FY26

Unquantified

Mitigation:Customer confidence remained resilient and economic activity across the footprint held up well despite the backdrop.

Increased funding competition and deposit mix shift Second half of 2026

Deposit costs increased 3 bps QoQ, 2 bps in June.

Mitigation:Updated guidance reflects expectations; focus on core deposit growth and relationship-based funding. Management expects the monthly pace of deposit cost increase to be slightly under 2 bps for the rest of the year.

Seasonality in deposit balances Q2 FY26 (seasonal)

Unquantified downdraft in balances from tax payments and larger commercial depositors.

Mitigation:Management expects to see some improvement over time, but forecasting is difficult in this environment.

What to watch in Q3 FY26

Loan growth trajectory

Q3 FY26

Current 10.4% annualized period-end growth in Q2 FY26, 6% average growth.

Target Towards higher end of mid-single-digit outlook for FY26.

Why it matters

Sustained loan growth is a key driver of Net Interest Income and overall revenue.

Overall, we believe that our underlying credit activity and pipeline depth support our full year outlook, and we currently expect loan growth to finish toward the higher end of our mid-single-digit range.

Q&A highlights

What are current new loan production yields (fixed/variable) and what is the benefit from fixed-rate loan maturities?

New fixed and variable rate loans are coming on at around 200 bps spreads. $800 million to $900 million of variable rate loans mature quarterly at ~5% and are expected to reprice at ~610 bps, providing a 100-110 bps benefit.

“we have about $800 million to $900 million per quarter of variable rate loans that are maturing with rates around 5%. And we expect to put those back on around 610 basis points.”

asked by Russell Elliott Gunther · answered by John Asbury

2 min read 6 chapters

Detailed narrative

Strategic Focus and Market Position

Atlantic Union Bankshares emphasized its disciplined execution and strategic investments over the past two years, which are now translating into stronger earnings capacity and capital generation. The company highlighted its robust presence in attractive markets, reinforcing its status as a premier regional bank in the Lower Mid-Atlantic. Management reiterated its commitment to soundness, profitability, and growth, in that order, with no additional acquisitions planned in this phase.

Loan and Deposit Dynamics

The bank achieved record loan production, exceeding Q4 2025 levels by 8%, with period-end loans growing 10.4% annualized to $28.7 billion. Growth was broad-based across commercial, construction, multifamily, and select consumer categories. Deposits saw low single-digit annualized growth, concentrated in interest-bearing accounts, while brokered deposits were significantly reduced by $53 million in Q2 and $571 million year-to-date. The loan-to-deposit ratio ended at 94.1%, within the preferred 90%-95% range.

Margin and Funding Trends

Reported fully tax equivalent net interest margin expanded by 9 basis points to 3.94%, primarily due to higher accretion income and loan yields. Core net interest margin, excluding purchase accounting adjustments, increased by 1 basis point to 3.46%. However, the company noted increased funding costs driven by customer migration to higher-yielding deposit products, with deposit costs rising 3 bps in Q2 and 2 bps in June, which informed the updated NII and NIM guidance.

Credit Quality and Outlook

Credit quality remained strong, with annualized net charge-offs at a low 3 basis points for the quarter and year-to-date. Nonperforming assets increased modestly but stayed low at 39 basis points of loans held for investment, and criticized and classified assets improved to 4.4% of total loans, down from 4.5% in the prior quarter. The allowance for credit losses remained stable at 115 basis points, and the full-year net charge-off guidance was lowered to 5-10 basis points.

Capital Management and Shareholder Value

The company's regulatory capital ratios remained comfortably above well-capitalized levels, with a CET1 ratio of 10.41%, within the target range of 10% to 10.5%. Tangible book value per share grew 4.2% linked quarter and 13% year-over-year. Atlantic Union repurchased $10 million of common shares at an average price of $37.76, with $240 million remaining under authorization, demonstrating a commitment to capital return and long-term shareholder value creation.

North Carolina Expansion

The company detailed its 'densification strategy' in Raleigh and Wilmington, North Carolina, with the first of 10 new branches opening in Raleigh this month. Two more Raleigh branches are planned for October and November, with the remaining branches expected by 2027-2028. The commercial banking teams in North Carolina are also seeing double-digit loan balance growth and successful talent acquisition, working closely with the consumer segment.

AI-generated summary of the company's earnings call. Not investment advice.