Atlantic Union Bank's Strategic Integration of Sandy Spring Bank and Its Impact on Long-Term Value Creation

The merger between Atlantic Union Bank and Sandy Spring Bank, completed on April 1, 2025, represents a pivotal moment in regional banking consolidation. By acquiring Sandy Spring Bancorp, Inc. in a stock-based deal valued at $1.3 billion, Atlantic Union Bankshares Corporation expanded its footprint in Virginia and Maryland, creating the largest regional banking franchise in the lower Mid-Atlantic. The integration, finalized by October 14, 2025, was executed with a disciplined approach that prioritized operational continuity and cost efficiency. This analysis evaluates the financial and operational synergies emerging from the merger and their implications for long-term value creation.

Financial Synergies: Efficiency and Profitability

The merger's financial benefits are already materializing. In Q3 2025, Atlantic Union reported adjusted earnings per share of $0.84, aligning with analyst expectations despite merger-related costs. A key metric highlighting the integration's success is the adjusted efficiency ratio, which improved to 48.8%, reflecting better cost management and scale economies.

Management projects this ratio will fall to the mid-40s by early 2026 as full cost savings are realized.

Revenue growth has also been robust, with Q3 2025 revenue reaching $375.4 million-a 72.8% year-on-year increase. This growth is underpinned by strong core profitability metrics: an adjusted operating return on assets (ROA) of 1.30% and an adjusted operating return on tangible common equity (ROTCE) of 20.09% according to Q3 2025 reports. These figures underscore the merger's ability to enhance capital efficiency and shareholder returns.

The net interest margin (NIM), a critical indicator for banks, remained stable at 3.83% in Q3 2025, supported by a declining cost of funds driven by reduced short-term borrowing and customer deposit rates. Looking ahead, the bank anticipates further NIM expansion as the Federal Reserve cuts interest rates, lowering deposit costs and amplifying margins.

Operational Integration: Streamlining for Scale

Operationally, the merger's integration playbook focused on system harmonization and branch rationalization. By October 2025, core banking systems were fully converted, and five overlapping branches were consolidated, reducing redundancies and operational friction. These steps are critical for sustaining the efficiency gains observed in Q3 2025.

The integration also improved credit quality, with nonperforming assets declining to 0.49% of loans and criticized loans shrinking by over $250 million quarter-over-quarter. Such improvements signal effective risk management post-merger and bolster confidence in the combined entity's balance sheet resilience.

Long-Term Value Creation and Strategic Positioning

Atlantic Union's strategic vision for the merger extends beyond short-term gains. By solidifying its position as a dominant regional player, the bank is well-positioned to capitalize on market share growth in Virginia and Maryland. The integration's cost discipline and operational streamlining create a foundation for sustainable profitability, while the expanded deposit base enhances liquidity and lending capacity.

However, challenges remain. The bank must navigate ongoing integration costs and ensure cultural alignment between the two organizations. Additionally, macroeconomic risks-such as potential credit stress from a slowing economy-could test the merger's benefits. Yet, the current trajectory suggests these hurdles are manageable given the strong operational execution and financial discipline demonstrated thus far.

Conclusion

Atlantic Union Bank's integration of Sandy Spring Bank exemplifies how strategic mergers, when executed with precision, can unlock significant value. The combination of improved efficiency ratios, robust revenue growth, and a disciplined approach to branch and system consolidation positions the bank for long-term success. As the financial and operational synergies fully materialize by 2026, investors may find Atlantic Union's shares increasingly attractive, particularly in a regulatory and interest rate environment that favors well-capitalized regional banks.