Sandy Spring's Q2 2025: Navigating Contradictions in Credit Losses, Loan Growth, and Strategic Moves

Acquisition Impact and Integration:
- Atlantic Union Bankshares reported a quarter-end loan-to-deposit ratio of 88%, indicating growth primarily driven by the Sandy Spring acquisition.
- The acquisition closed a quarter earlier than anticipated, resulting in a more conservative approach to loan marking and credit quality assessment.

Loan and Deposit Growth:
- Pro forma loan growth was approximately 4% annualized, exceeding internal expectations, despite economic uncertainties.
- Deposit growth was notable, with total deposits reaching $31 billion, reflecting the addition of Sandy Spring's deposits.

Net Interest Margin Expansion:
- The reported FTE net interest margin expanded by 38 basis points to 3.83%, with the core net interest margin improving by 8 basis points.
- This was primarily driven by acquisition-related net accretion interest income and organic loan growth.

Credit Quality and Provision for Credit Losses:
- Net charge-offs decreased to 1 basis point annualized, reflecting a stable credit quality environment.
- The provision for credit losses increased primarily due to the initial allowance for Sandy Spring's acquired loans, which was recorded as part of the Day 1 CECL provision.