Core Insights - The company, Quad 7 Capital, is known for its investment strategy called BAD BEAT Investing, which has been operational for nearly 12 years and emphasizes both long and short trades [1] - The team consists of 7 analysts with diverse expertise in various fields, including business, policy, economics, and game theory [1] - The investment approach focuses on short- and medium-term investments, income generation, special situations, and momentum trades [1] Group 1 - The company has a proven track record of success, highlighted by a significant market call in February 2020 to sell everything and go short [1] - Since May 2020, the company has maintained an average position of 95% long and 5% short [1] - The investment group aims to educate investors on becoming proficient traders through a comprehensive playbook, providing in-depth research with clear entry and exit targets [1] Group 2 - Benefits of BAD BEAT Investing include understanding market dynamics, executing well-researched trade ideas weekly, and access to multiple chat rooms for discussion [2] - Members receive daily summaries of key analyst upgrades and downgrades, along with learning opportunities in basic options trading [2] - The company provides extensive trading tools to enhance the trading experience for its members [2]

Financial Data and Key Metrics Changes - The reported net income available to common shareholders was $16.8 million, with earnings per common share at $0.12. Adjusted operating earnings were $135.1 million or $0.95 per common share, resulting in an adjusted operating return on tangible common equity of 23.8% and an adjusted operating return on assets of 1.46% [18][19] - The CET1 capital ratio was 9.8%, and the loan to deposit ratio was approximately 88% at quarter end [10][24] - The tax equivalent net interest margin expanded by 38 basis points to 3.83%, driven by the incremental net accretion of purchase accounting adjustments related to the Sandy Spring acquisition [20][21] Business Line Data and Key Metrics Changes - The total loan portfolio fair value mark discount was $789.7 million, with loans held for investment totaling $8.6 billion and loans held for sale at $1.9 billion [17] - Non-interest income increased by $52.3 million to $81.5 million, primarily due to gains from the sale of commercial real estate loans and equity interest [22] - Reported non-interest expense increased by $145.5 million to $279.7 million, largely driven by merger-related costs [23] Market Data and Key Metrics Changes - Approximately 23% of total loans are in the Washington Metro Area, with the remaining 77% across other regions [14] - The unemployment rate in Maryland was reported at 3.3%, while Virginia's rate was 3.5%, indicating a robust economic environment [15] Company Strategy and Development Direction - The acquisition of Sandy Spring Bank is expected to bolster the company's position as a premier regional bank in the Lower Mid Atlantic, with plans for organic growth in North Carolina [9][30] - The company plans to open 10 new branches in North Carolina starting in 2026, focusing on markets with significant population growth [31][32] - The strategic plan will be shared during an Analyst Day in December, highlighting the next phase of growth and expansion [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of Sandy Spring and the potential for sustainable growth, despite economic uncertainties [7][12] - The company has lowered its forecast for the 2025 net charge-off ratio to between 15 and 20 basis points, reflecting a stable credit quality outlook [13] - Management noted an improvement in business sentiment and loan pipelines, indicating a positive trajectory for loan growth in the second half of the year [11][66] Other Important Information - The company paid a common stock dividend of $0.34 per share, an increase of 6.3% from the previous year [25] - The effective tax rate for the second quarter was a negative 13.2%, reflecting an income tax benefit related to the reevaluation of state deferred tax assets [23] Q&A Session Summary Question: Loan growth outlook and plans for the Carolinas - Management indicated strong momentum in the loan pipeline and expressed optimism about growth in the Carolinas, particularly with the integration of American National Bank [38][40] Question: Expense outlook and efficiency ratio - The company is targeting a mid-40s efficiency ratio, inclusive of investments in the Carolinas, while maintaining a focus on technology investments [41][42] Question: Capital levels and deployment strategies - The CET1 ratio is expected to increase, with plans to invest in organic growth and consider share repurchases as capital accumulates [44][47] Question: Credit quality and government contractor segment - Credit quality remains stable, with the government contractor finance portfolio performing well due to increased defense spending [52][54] Question: Trends in loan yields and pricing competition - Loan yields have remained stable, with fixed-rate loans repricing in the 6.25% to 6.5% range [80][81] Question: Integration opportunities from the Sandy Spring acquisition - Management highlighted the potential for liquidity and new product offerings to enhance the former Sandy Spring franchise [85][86]

Financial Data and Key Metrics Changes - The reported net income available to common shareholders was $16.8 million, with earnings per common share at $0.12. Adjusted operating earnings were $135.1 million or $0.95 per common share, resulting in an adjusted operating return on tangible common equity of 23.8% and an adjusted operating return on assets of 1.46% [18][19] - The CET1 capital ratio was 9.8%, and the loan to deposit ratio was approximately 88% at quarter end [9][24] - The tax equivalent net interest margin expanded by 38 basis points to 3.83%, driven by the addition of Sandy Spring acquired loans and deposits [19][20] Business Line Data and Key Metrics Changes - The total loan portfolio fair value mark discount was $789.7 million, with loans held for investment totaling $27.3 billion, an increase of $8.9 billion from the prior quarter [16][24] - Non-interest income increased by $52.3 million to $81.5 million, primarily due to gains from the sale of commercial real estate loans and equity interest [20][21] - Reported non-interest expense increased by $145.5 million to $279.7 million, driven by merger-related costs and the full quarter impact of the Sandy Spring acquisition [22][23] Market Data and Key Metrics Changes - Approximately 23% of total loans are in the Washington Metro Area, with the remaining 77% across other regions [12] - The unemployment rate in Maryland was reported at 3.3%, while Virginia's rate was 3.5%, indicating a robust economic environment [14] Company Strategy and Development Direction - The company is focused on organic growth opportunities in North Carolina, planning to open 10 new branches starting in 2026 [31][32] - The acquisition of Sandy Spring Bank is seen as a strategic move to enhance market presence in Maryland and Virginia, with a goal to leverage this for further growth [30][29] - The company aims to maintain a mid-40s efficiency ratio while investing in technology and organic growth initiatives [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of Sandy Spring and the potential for sustainable growth, despite economic uncertainties [6][8] - The company anticipates solid loan growth in the second half of the year, supported by a robust loan pipeline [10][66] - The outlook for net charge-offs has been lowered to between 15 and 20 basis points for the full year, reflecting confidence in asset quality [12][25] Other Important Information - The company plans to host an Analyst Day in December to share a new three-year strategic plan [28] - The effective tax rate for the second quarter was a negative 13.2%, with an expected increase to 21% to 22% for the full year [23] Q&A Session Summary Question: How should we think about the pro forma growth outlook on a larger balance sheet and plans for The Carolinas? - Management indicated a strong pipeline and record levels of loan growth, particularly in The Carolinas, with optimism for the second half of the year [37][39] Question: What is the expense outlook beyond what has been provided for this year? - The company is targeting a mid-40s efficiency ratio, inclusive of investments in The Carolinas [40][41] Question: How are capital levels being managed, and is there interest in exploring the reversal of the CECL double count? - The CET1 ratio is expected to increase, with plans to evaluate the CECL double count impact and consider share repurchases in the future [43][46] Question: What is the credit quality perspective on the legacy Atlantic Union basis? - The overall credit quality remains stable, with the increase in NPAs attributed to the Sandy Spring portfolio [50][52] Question: What opportunities are there for growth in the DC market? - Management emphasized the focus on Maryland and Northern Virginia, with confidence in the existing team and capabilities to drive growth [95][100]

Atlantic Union (AUB) came out with quarterly earnings of $0.95 per share, beating the Zacks Consensus Estimate of $0.8 per share. This compares to earnings of $0.63 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +18.75%. A quarter ago, it was expected that this holding company for Atlantic Union Bank would post earnings of $0.69 per share when it actually produced earnings of $0.57, delivering a surprise of -17.39%.Over the l ...

Financial Performance - Q2 2025 net income available to common shareholders was $16824 thousand, or $0.12 per diluted share[40] - Adjusted operating earnings available to common shareholders increased $836 million to $135145 thousand[43] - Q2 2025 adjusted operating return on tangible common equity was 238%[26] - Q2 2025 adjusted operating return on assets was 146%[26] - Q2 2025 adjusted operating efficiency ratio (FTE) was 4831%[26] Loan and Deposit Growth - Assuming the Sandy Spring acquisition closed on March 31 instead of April 1, and excluding both the loan fair value marks on the acquired loans and the effect of the CRE loan sale transaction, loan growth was approximately 4% annualized in Q2 2025[25] - Paid down approximately $340 million in brokered deposits[25] - At June 30, 2025, loans held for investment totaled $273 billion, an increase of $89 billion from the prior quarter[58] - At June 30, 2025, total deposits were $310 billion, an increase of $105 billion from the prior quarter[58] - Noninterest-bearing demand deposits accounted for 23% of total deposit balances at the end of the second quarter of 2025[58] Asset Quality and Capital - Q2 2025 net charge-offs at 1 basis point of total average loans held for investment annualized[26] - Increased Allowance for Credit Loss to 125% of loans held for investment[26] - Loan/Deposit ratio of 882% at June 30, 2025[25] - Common Equity Tier 1 Ratio (CET1) is 98%[59]

[Q2 2025 Financial Performance and Strategic Update](index=1&type=section&id=ATLANTIC%20UNION%20BANKSHARES%20REPORTS%20SECOND%20QUARTER%20FINANCIAL%20RESULTS) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported Q2 2025 net income of $16.8 million, heavily impacted by acquisition-related costs Q2 2025 Earnings Summary | Metric | GAAP | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | Net Income to Common Shareholders | $16.8 million | $135.1 million | | Diluted EPS | $0.12 | $0.95 | Key Pre-Tax Adjustments for Q2 2025 | Adjustment Item | Amount (Pre-tax) | | :--- | :--- | | Merger-related costs (Sandy Spring) | $78.9 million | | CECL Day 1 initial provision (Sandy Spring) | $100.9 million | | Gain on sale of CRE loans | $15.7 million | | Gain on sale of Cary Street Partners equity | $14.3 million | [Strategic Activities](index=1&type=section&id=Strategic%20Activities) The quarter was defined by the Sandy Spring acquisition, a major CRE loan sale, and other capital actions - Completed the acquisition of Sandy Spring Bancorp on April 1, 2025, adding **$13.0 billion in total assets**, **$8.6 billion in loans held for investment (LHFI)**, and **$11.2 billion in deposits**, resulting in preliminary goodwill of **$496.9 million**[2](index=2&type=chunk) - Completed the sale of approximately **$2.0 billion** of performing CRE loans acquired from Sandy Spring, generating a pre-tax gain of **$15.7 million**[6](index=6&type=chunk)[8](index=8&type=chunk) - Received net proceeds of approximately **$385.0 million** from the full physical settlement of forward sale agreements by delivering 11,338,028 shares of common stock[4](index=4&type=chunk)[38](index=38&type=chunk) - Sold its equity interest in Cary Street Partners LLC (CSP), resulting in a pre-tax gain of **$14.3 million**[5](index=5&type=chunk)[8](index=8&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) [Net Interest Income](index=2&type=section&id=NET%20INTEREST%20INCOME) Net interest income rose substantially to $321.4 million, driven by the Sandy Spring acquisition and purchase accounting Net Interest Income and Margin (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $321.4M | $184.2M | +$137.2M | | Net Interest Margin (NIM) | 3.78% | 3.38% | +40 bps | | NIM (FTE) | 3.83% | 3.45% | +38 bps | | Earning Asset Yields | 6.05% | 5.68% | +37 bps | | Cost of Funds | 2.22% | 2.23% | -1 bp | Impact of Acquisition Accounting on NII (in thousands) | For the quarter ended | Loan Accretion | Deposit Accretion | Borrowings (Amortization) | Total | | :--- | :--- | :--- | :--- | :--- | | March 31, 2025 | $13,286 | $(415) | $(287) | $12,584 | | June 30, 2025 | $45,744 | $1,884 | $(2,256) | $45,372 | [Asset Quality](index=3&type=section&id=ASSET%20QUALITY) Asset quality metrics shifted due to acquired PCD loans, with NPAs rising and the ACL growing significantly - The Allowance for Credit Losses (ACL) increased by **$133.3 million to $342.4 million**, primarily due to the Sandy Spring acquisition[12](index=12&type=chunk)[15](index=15&type=chunk) - Net charge-offs were minimal at **$666,000**, or **0.01%** of total average loans (annualized) for Q2 2025[18](index=18&type=chunk) - The provision for credit losses was **$105.7 million**, which included **$100.9 million** in Day 1 initial provision expense related to the Sandy Spring acquisition[19](index=19&type=chunk) [Nonperforming Assets (NPAs)](index=3&type=section&id=Nonperforming%20Assets) NPAs increased to $163.4 million, primarily driven by PCD loans from the Sandy Spring acquisition Nonperforming Assets (in thousands) | Period | Nonaccrual loans | Foreclosed properties | Total NPAs | | :--- | :--- | :--- | :--- | | June 30, 2025 | $162,615 | $774 | $163,389 | | March 31, 2025 | $69,015 | $404 | $69,419 | - The increase in NPAs was primarily due to PCD loans acquired from Sandy Spring, including **$49.4 million** in construction and land development and **$27.1 million** in commercial real estate non-owner occupied loans[13](index=13&type=chunk) - Accruing past due loans increased to **0.28%** of total LHFI, up from 0.27% in the prior quarter[14](index=14&type=chunk) [Allowance for Credit Losses (ACL)](index=3&type=section&id=Allowance%20for%20Credit%20Losses) The ACL grew to $342.4 million, reflecting the acquisition and a significant CECL Day 1 provision - The initial ACL related to the Sandy Spring acquisition was **$129.2 million**, consisting of a **$117.8 million ALLL** and an **$11.4 million RUC**[3](index=3&type=chunk)[15](index=15&type=chunk) - An additional **$89.5 million** reserve on acquired non-PCD loans was established through provision expense, representing the CECL "double count"[3](index=3&type=chunk)[16](index=16&type=chunk) ACL Ratios | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | ACL as % of total LHFI | 1.25% | 1.13% | | ALLL as % of total LHFI | 1.15% | 1.05% | [Noninterest Income](index=5&type=section&id=NONINTEREST%20INCOME) Noninterest income surged to $81.5 million, boosted by gains on asset sales and acquired fee businesses - Total noninterest income increased by **$52.3 million to $81.5 million** in Q2 2025 compared to Q1 2025[20](index=20&type=chunk) - Key drivers of the increase were a **$15.7 million gain** on a CRE loan sale and a **$14.3 million gain** on the sale of an equity interest in CSP[20](index=20&type=chunk) - Adjusted operating noninterest income increased by **$22.2 million to $51.5 million**, largely due to the Sandy Spring acquisition, which led to an **$11.0 million** increase in fiduciary and asset management fees[21](index=21&type=chunk) [Noninterest Expense](index=5&type=section&id=NONINTEREST%20EXPENSE) Noninterest expense increased to $279.7 million, largely due to $78.9 million in merger-related costs - Total noninterest expense increased by **$145.5 million to $279.7 million** in Q2 2025, driven by **$78.9 million** in merger-related costs[22](index=22&type=chunk)[23](index=23&type=chunk) - Adjusted operating noninterest expense increased by **$58.6 million to $182.4 million**, primarily due to the impact of the Sandy Spring acquisition[23](index=23&type=chunk) - The largest component of the adjusted expense increase was a **$34.5 million** rise in salaries and benefits[23](index=23&type=chunk) [Income Taxes](index=7&type=section&id=INCOME%20TAXES) The annual effective tax rate rose to 21.7% post-acquisition, with a one-time benefit impacting the quarterly rate - The estimated annual effective tax rate (AETR) increased from **19.0% in Q1 to 21.7% in Q2** due to the Sandy Spring acquisition[24](index=24&type=chunk) - The effective tax rate for Q2 2025 was **(13.2%)**, reflecting an **$8.0 million** income tax benefit related to the re-evaluation of state deferred tax assets post-acquisition[25](index=25&type=chunk) [Balance Sheet and Capital](index=7&type=section&id=BALANCE%20SHEET%20AND%20CAPITAL) [Balance Sheet Overview](index=7&type=section&id=BALANCE%20SHEET) Total assets grew to $37.3 billion following the Sandy Spring acquisition, with significant increases in loans and deposits Balance Sheet Highlights (as of June 30, 2025) | Metric | June 30, 2025 | March 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $37.3B | $24.6B | +$12.7B | | LHFI | $27.3B | $18.4B | +$8.9B | | Total Deposits | $31.0B | $20.5B | +$10.5B | | Cash and cash equivalents | $1.6B | $0.4B | +$1.2B | - The Sandy Spring acquisition added assets with a fair value of **$13.0 billion** and liabilities with a fair value of **$12.2 billion**[31](index=31&type=chunk) [Capital and Dividends](index=8&type=section&id=Capital%20and%20Dividends) Capital ratios remained strong post-acquisition, with a CET1 ratio of 9.77% and a continued quarterly dividend Regulatory Capital Ratios (Estimated) | Ratio | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Common equity Tier 1 | 9.77% | 10.07% | 9.47% | | Tier 1 capital | 10.32% | 10.87% | 10.26% | | Total capital | 13.73% | 13.88% | 12.99% | | Tangible common equity / Tangible assets | 7.39% | 7.39% | 6.71% | - Declared and paid a quarterly cash dividend of **$0.34 per common share**, a **6.3% increase** from the second quarter of 2024[37](index=37&type=chunk) [Supplementary Information](index=9&type=section&id=Supplementary%20Information) [About the Company & Conference Call](index=9&type=section&id=ABOUT%20ATLANTIC%20UNION%20BANKSHARES%20CORPORATION) Atlantic Union Bankshares, now operating across three states, scheduled a conference call to discuss Q2 results - Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank, with operations in Virginia, Maryland, and North Carolina[39](index=39&type=chunk) - A conference call to review Q2 2025 financial results was scheduled for 9:00 a.m. Eastern Time on Thursday, July 24, 2025[40](index=40&type=chunk) [Non-GAAP Financial Measures](index=9&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) The report uses non-GAAP measures like adjusted earnings to clarify underlying operational performance - The company uses non-GAAP measures to supplement GAAP financial statements, which should not be considered in isolation[42](index=42&type=chunk) - Management believes these measures provide additional understanding of ongoing operations and enhance comparability with prior periods[42](index=42&type=chunk) [Forward-Looking Statements](index=10&type=section&id=FORWARD-LOOKING%20STATEMENTS) The report contains forward-looking statements subject to risks including economic conditions and integration challenges - Statements regarding the benefits of the Sandy Spring acquisition and future operating results are forward-looking and subject to risk[43](index=43&type=chunk) - Key risks include changes in market interest rates, economic conditions, integration challenges with Sandy Spring, and regulatory changes[43](index=43&type=chunk)[45](index=45&type=chunk) [Financial Tables](index=13&type=section&id=Financial%20Tables) [Key Financial Results (Unaudited)](index=13&type=section&id=KEY%20FINANCIAL%20RESULTS%20(UNAUDITED)) This section provides detailed unaudited tables on operations, performance ratios, capital, and asset quality [Consolidated Balance Sheets](index=19&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The balance sheets detail the company's financial position, reflecting significant growth from the recent acquisition [Consolidated Statements of Income (Unaudited)](index=20&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(UNAUDITED)) This table itemizes revenues and expenses for the three and six months ended June 30, 2025, and prior periods [Average Balances, Yields, and Rates (Taxable Equivalent Basis)](index=21&type=section&id=AVERAGE%20BALANCES,%20INCOME%20AND%20EXPENSES,%20YIELDS%20AND%20RATES%20(TAXABLE%20EQUIVALENT%20BASIS)%20(UNAUDITED)) This analysis breaks down the components of net interest income and margin drivers on a taxable equivalent basis

The market expects Atlantic Union (AUB) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on July 24, might help the stock move higher if these key numbers are better ...

Core Insights - The year 2025 has been challenging for smaller bank stocks in America, particularly regional banks, which have underperformed compared to industry-tracking ETFs that have achieved double-digit total returns [1] Group 1: Industry Performance - Smaller bank stocks in America have faced a tumultuous year, with regional banks lagging behind the performance of broader industry-tracking ETFs [1] Group 2: Company Focus - Atlantic Union, a Virginia-based bank, is highlighted within the group of regional banks that have not matched the performance of larger industry players [1]

Merger and Acquisition - The merger with Sandy Spring Bancorp was completed on April 1, 2025, enhancing the company's presence with over 50 branches in Virginia, Maryland, and Washington D.C.[192] - Sandy Spring had total assets of approximately $13.8 billion, total loans of approximately $11.4 billion, and total deposits of approximately $11.2 billion as of March 31, 2025[193]. - Forward-looking statements include expectations regarding the benefits of the Sandy Spring acquisition and the impact of economic conditions on business performance[177]. - Net accretion income related to acquisition accounting was $12.6 million for Q1 2025, compared to $602,000 for Q1 2024, reflecting the impact of the American National acquisition[211]. - Noninterest income increased by $3.6 million or 14.1% to $29.2 million in Q1 2025, driven by higher fiduciary and asset management fees due to the American National acquisition[219]. - Wholesale Banking segment net interest income increased by $18.5 million to $99.3 million for Q1 2025, compared to Q1 2024, driven by the American National acquisition[224]. - Consumer Banking segment net interest income rose by $6.5 million to $75.8 million for Q1 2025, compared to Q1 2024, also influenced by the American National acquisition[227]. - Adjusted operating noninterest expense increased by 22.9% to $123.8 million in Q1 2025, primarily influenced by the American National acquisition[222]. Financial Performance - Net income available to common shareholders for Q1 2025 was $46.9 million, with basic and diluted EPS of $0.53 and $0.52, respectively, compared to $46.8 million and EPS of $0.62 in Q1 2024[207]. - Total assets increased to $24.6 billion as of March 31, 2025, reflecting a $47.3 million or approximately 0.8% increase from December 31, 2024[207]. - Total deposits rose to $20.5 billion, an increase of $105.3 million or 2.1% from December 31, 2024, driven by a $194.1 million increase in demand deposits[207]. - Net interest income for Q1 2025 was $184.2 million, up $36.3 million from Q1 2024, attributed to a $3.0 billion increase in average interest-earning assets[209]. - The net interest margin increased by 27 basis points to 3.38% in Q1 2025 from 3.11% in Q1 2024, driven by lower costs of funds and higher yields on investments[210]. - Noninterest expense surged by $28.9 million or 27.5% to $134.2 million in Q1 2025, primarily due to a $13.5 million increase in salaries and benefits and $3.5 million in amortization of intangible assets[221]. - Total liabilities rose by $5.0 million to $21.4 billion at March 31, 2025, primarily driven by an increase in deposits[237]. - Stockholders' equity increased by $42.3 million to $3.2 billion at March 31, 2025, with regulatory capital ratios exceeding minimum requirements[240]. Risk Management - The company is subject to various risks including changes in market interest rates, economic conditions, and regulatory changes that could impact financial performance[179]. - The company has identified critical accounting estimates that may significantly affect financial results, including the allowance for loan and lease losses and acquisition accounting[183]. - The company actively manages risks in concentrated portfolios through credit underwriting and monitoring processes[266]. - The company has implemented centralized credit administration and risk management processes to mitigate risks in concentrated portfolios[266]. - The company refrains from originating loans to foreign entities and selectively originates loans to higher-risk borrowers[274]. Loan and Deposit Information - Total loans held for investment (LHFI) decreased to $18.4 billion, down $42.9 million or 0.9% from December 31, 2024, primarily due to declines in construction and land development loans[207]. - Total deposits as of March 31, 2025, were $20.5 billion, reflecting an increase of $105.3 million or 0.5% from December 31, 2024[286]. - Interest-bearing customer deposits totaled $16.0 billion as of March 31, 2025, accounting for 78.2% of total deposits, compared to 79.0% on December 31, 2024[287]. - Total deposits in Wholesale Banking increased by $370.4 million to $7.6 billion at March 31, 2025, compared to December 31, 2024, mainly due to higher money market accounts and demand deposits[226]. - Approximately 45.4% of total LHFI, or $8.4 billion, is expected to be paid within one year based on contractual terms[252]. Economic Conditions - The company continues to monitor the impact of global economic conditions, including inflation estimated at 2.4% as of March 2025, which is above the FOMC's target of 2.0%[201]. - The allowance for credit losses (ACL) rose to $209.0 million as of March 31, 2025, reflecting an increase of $15.3 million from December 31, 2024, due to economic uncertainty[273]. - Provision for credit losses in Wholesale Banking increased to $15.0 million in Q1 2025 from $5.4 million in Q1 2024, reflecting increased economic uncertainty[224]. Asset Management - Total earning assets increased to $22.1 billion in Q1 2025, up from $19.1 billion in Q1 2024, reflecting a growth of 15.8%[212]. - Total investments increased by $56.2 million to $3.4 billion at March 31, 2025, accounting for 13.8% of total assets[243]. - The weighted average yield on total held-to-maturity (HTM) securities was 3.56% as of March 31, 2025[246]. - The total balance of CRE non-owner occupied loans was $5,072,694, representing 27.53% of total loans[268]. - The company has increased its borrowing capacity at the Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) to enhance liquidity during market turbulence[253].

Financial Data and Key Metrics Changes - The company reported net income available to common shareholders of $46.9 million, with diluted earnings per common share at $0.52. Adjusted operating earnings were $51.6 million or $0.57 per diluted common share, resulting in an adjusted operating return on tangible common equity of 13.2% and adjusted operating return on assets of 0.90% [25][32] - The tax equivalent net interest income increased to $187.9 million, up approximately $8.88 million from the previous quarter, driven by lower deposit costs [26][27] - The net interest margin expanded by 12 basis points to 3.45%, attributed to an 18 basis point reduction in the cost of funds [27][32] - Noninterest income decreased by $6 million to $29.2 million, primarily due to a decline in loan-related interest rate swap fees and other operating income [28] Business Line Data and Key Metrics Changes - Loans held for investment decreased by $42.9 million or 0.9% annualized from the previous quarter, primarily due to declines in construction and land development loans [31] - Total deposits increased by $105.3 million or 2.1% annualized, with noninterest-bearing deposits rising by $194 million during the quarter [14][31] - The total allowance for credit losses increased to $209 million, up approximately $15.3 million from the previous quarter, reflecting increased economic uncertainty [25][32] Market Data and Key Metrics Changes - The company noted that the Greater Washington region, where it operates, is projected to be a significant AI growth hub and has a highly educated workforce [39][41] - The unemployment rate in the Greater Washington area is expected to rise but remains below the national average, providing some capacity to absorb federal job cuts [41][42] Company Strategy and Development Direction - The company aims for upper single-digit loan growth in the long term, with mid-single-digit growth expected in the medium term due to current economic conditions [99][100] - The acquisition of Sandy Spring is seen as a strategic move to enhance the company's market presence, with plans to expand in North Carolina over time [52][53] - The company is focused on soundness, profitability, and growth, prioritizing these aspects in its operational strategy [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain economic outlook and potential impacts from trade policies, but expressed confidence in asset quality and market strength [16][17] - The company does not forecast a recession for 2025, despite acknowledging the risks associated with economic uncertainty [71][128] - Management highlighted a strong pipeline for business opportunities, indicating that disruptions in the market could lead to unforeseen benefits [110] Other Important Information - The company updated its full-year 2025 financial outlook to include the expected impact of the Sandy Spring acquisition, projecting loan balances between $28 billion and $29 billion and deposit balances between $31 billion and $32 billion [70] - The company plans to complete a $2 billion commercial real estate loan sale by the end of the current quarter, which is expected to align with initial projections [58][60] Q&A Session Summary Question: Update on Sandy Spring deal marks - The loan mark as of March 31 is about 7% of loans, higher than the initial projection of 6% [78] Question: Credit mark changes with Sandy Spring - The credit mark came in better than projected at about 1.3% for the entire portfolio [85] Question: Risks associated with the commercial real estate loan sale - Current projections for the loan sale remain stable, with no major negative impacts anticipated [87] Question: Long-term loan growth perspective - The company aims for upper single-digit loan growth in the long term, with mid-single-digit growth expected in the medium term [99][100] Question: Current portfolio health and economic outlook - There are no significant signs of deterioration in the portfolio, but uncertainty from tariffs is being monitored closely [124][128]