Atlantic Union Bankshares Q1 2025: Key Contradictions on Loan Growth, Sandy Spring Acquisition, and Margin Impact

Loan growth expectations, impact of Sandy Spring acquisition on accretion income, impact of loan sales on pro forma margin, expense growth rate post-integration, and loan growth projections are the key contradictions discussed in Atlantic Union Bankshares' latest 2025Q1 earnings call.



Earnings and Financial Performance:
- Atlantic Union Bankshares reported adjusted operating earnings of $51.6 million for Q1 2025, resulting in an adjusted operating return on tangible common equity of 13.2%.
- The earnings were supported by a 12-basis point net interest margin expansion and a 18-basis point reduction in cost of funds.

Loan and Deposit Growth:
- Average loan growth was approximately 1.3% annualized in Q1, following a seasonally strong fourth quarter.
- Deposit growth was approximately 2.1% annualized, including a reduction in broker deposits by more than $100 million.
- The growth in loans and deposits was driven by non-interest-bearing deposit increases and reduced broker deposit reliance.

Credit Quality and Provisions:
- A $17.6 million loan loss provision expense was recorded, reflecting increased uncertainty and elevated risk of a national recession.
- The allowance for loan losses increased to 1.05% of loans held for investment, and total credit quality metrics remained strong with a 0.9% annualized net charge-off rate.

Sandy Spring Acquisition Impact:
- The acquisition of Sandy Spring is anticipated to create the largest regional bank in the Mid-Atlantic region, with approximately $2 billion in commercial real estate loans set to be sold by the end of Q2.
- The financial logic of the acquisition remains intact, with expected top-quartile profitability metrics and significant future capital generation.