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Executive Summary
Atlantic Union Bankshares (NYSE:AUB) reported its first quarter 2025 financial results on April 24, highlighting an improved net interest margin despite some pressure on profitability metrics. The company also detailed its successful early closing of the Sandy Spring Bancorp (NASDAQ:SASR) acquisition, which significantly expands its Mid-Atlantic footprint and scale.
The bank reported net income of $49.8 million or $0.52 per share for Q1 2025, down from $57.8 million or $0.60 per share in the previous quarter. However, net interest margin improved to 3.45% from 3.33% in Q4 2024, reflecting the bank’s ability to manage funding costs in the current rate environment.
As shown in the following financial performance summary, while profitability metrics declined quarter-over-quarter, the bank maintained solid performance with an adjusted operating return on tangible common equity of 12.04%:
Quarterly Performance Highlights
Atlantic Union reported modest growth in both loans and deposits during the first quarter, with average loan growth of approximately 1.3% annualized and deposit growth of approximately 2.1% annualized. The bank’s loan-to-deposit ratio stood at 89.9%.
Cost of deposits decreased to 2.29% from 2.48% in the previous quarter, while loan yields declined slightly to 6.01% from 6.14%. The net interest margin improvement was driven by lower funding costs that more than offset the slight decrease in earning asset yields.
The following chart details the components of the bank’s net interest margin improvement:
The bank’s loan and deposit composition remained relatively stable, with total loans of $18.4 billion and total deposits of $20.5 billion at quarter-end:
Atlantic Union maintained a strong capital position, with a Common Equity Tier 1 (CET1) ratio of 10.1%, well above regulatory minimums:
Sandy Spring Acquisition Details
A significant highlight of the quarter was the successful closing of the Sandy Spring Bancorp acquisition on April 1, 2025, more than one quarter earlier than initially expected. The transaction significantly increases Atlantic Union’s scale and market presence in the Mid-Atlantic region.
"The acquisition of Sandy Spring was successfully closed on April 1, 2025, with regulatory approvals received expeditiously," the company noted in its presentation. The forward sale of common equity was physically settled in full on April 1st, with net proceeds of approximately $385 million received before expenses.
The company is now focused on integration, with the core systems conversion scheduled for October 2025, earlier than the initially planned February 2026 date. A CRE loan sale process is underway and expected to involve at least $2 billion in loans.
The following chart illustrates the significant increase in scale resulting from the Sandy Spring acquisition:
The acquisition creates a leading regional banking franchise with a combined $38.4 billion in assets, $29.9 billion in loans, $31.7 billion in deposits, and $13.5 billion in wealth assets under management. The bank now operates 183 branches across Virginia, Maryland, and North Carolina.
Strategic Positioning
Atlantic Union positions itself as the largest regional bank headquartered in the Lower Mid-Atlantic region, with a strong presence in economically attractive markets. The company highlighted the strength of its operating states, which feature high median household incomes, low unemployment rates, and favorable business environments.
The following image shows the bank’s expanded Mid-Atlantic footprint following the Sandy Spring acquisition:
The bank emphasized its diversified loan portfolio, with a focus on maintaining strong asset quality. Net charge-offs were reported at just 5 basis points annualized, while the allowance for credit losses was increased to 1.13% of loans.
The presentation also addressed the bank’s exposure to commercial real estate, particularly office properties, noting geographic diversification and strong credit metrics in these portfolios.
Forward-Looking Statements
Atlantic Union provided a financial outlook for 2025 that incorporates nine months of impact from the Sandy Spring acquisition. The company projects end-of-period loans to be between $28.0-29.0 billion and average earning assets to be between $31.0-32.0 billion by year-end.
The outlook assumes the Federal Reserve will cut interest rates by 25 basis points three times during 2025, and that the proposed CRE loan sales will close by June 30, 2025.
The following chart presents the company’s projected earnings composition, highlighting the expected impact of loan interest rate mark accretion:
Management expects to maintain a CET1 ratio of approximately 10.0% following the acquisition and planned loan sales, demonstrating the bank’s commitment to maintaining strong capital levels while pursuing growth.
Atlantic Union’s 2025 financial outlook reflects the company’s confidence in its ability to successfully integrate Sandy Spring and deliver on its strategic objectives:
The bank remains focused on leveraging its expanded scale and market presence to drive long-term shareholder value, positioning itself as a preeminent regional bank in the attractive Mid-Atlantic market.
Full presentation:
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