Financial Data and Key Metrics Changes - Reported net income available to common shareholders was $89.2 million, with earnings per common share at $0.63. Adjusted operating earnings available to common shareholders were $119.7 million or $0.84 per common share, resulting in an adjusted operating return on tangible common equity of 20.1% and an adjusted operating return on assets of 1.3% [16][17] - The total allowance for credit losses decreased to $320 million, down approximately $22.4 million from the second quarter, with net charge-offs increasing to $38.6 million or 56 basis points annualized [17][18] - Tax equivalent net interest income was $323.6 million, a decrease of $2.1 million from the second quarter, while the reported net interest margin remained steady at 3.83% [20][21] Business Line Data and Key Metrics Changes - Quarterly loan growth was approximately 0.5% annualized, with average loan growth quarter over quarter at 4.3% annualized. The company expects loan balances to end the year between $27.7 billion and $28 billion [8][27] - Non-interest income decreased to $51.8 million, primarily due to a $15.7 million preliminary pretax gain on the CRE loan sale in the prior quarter compared to a $4.8 million pretax loss in the current quarter [22] - Adjusted operating non-interest income increased to $56.6 million, driven by a $4.2 million increase in loan-related interest rate swap fees [23] Market Data and Key Metrics Changes - The company maintains a well-diversified portfolio, with approximately 23% of total loans in the Washington metro area and the remaining 77% across a broader footprint [12] - The unemployment rate in the greater Washington, D.C. region stood at 3.6%, well below the national average of 4.3% [14] - The company is monitoring the impact of government employment reductions and the government shutdown, but believes the economic data indicates resilience in the market [11][14] Company Strategy and Development Direction - The integration of the Sandy Spring acquisition is progressing smoothly, with expectations to achieve cost-savings targets and enhanced earnings power by 2026 [7][15] - The company aims to deliver sustainable growth and top-tier financial performance, leveraging strategic advantages gained from the acquisition and continued organic growth opportunities [7][15] - The focus remains on disciplined execution and the integration of Sandy Spring, with plans to capitalize on expanded markets and pursue new growth opportunities in North Carolina [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in asset quality, reaffirming the forecast for the full year 2025 net charge-off ratio to be between 15 and 20 basis points [11] - The company anticipates some increases in unemployment rates across its markets but expects these to remain manageable and below the national average [14] - Management highlighted the resilience of government contractors and essential services during government shutdowns, indicating a positive outlook for the government contractor finance portfolio [13][89] Other Important Information - The company paid a common stock dividend of $0.34 per share, an increase of 6.3% from the previous year's third quarter dividend amount [26] - The full-year financial outlook for 2025 includes preliminary estimates of purchase accounting adjustments related to the Sandy Spring acquisition [27][30] Q&A Session Summary Question: Loan growth outlook and sustainability - Management expects mid-single-digit loan growth for next year, with potential for high single-digit growth in a more normalized environment, emphasizing strength in specialty lines [36][37] Question: Expense outlook and efficiency ratio - The efficiency ratio is expected to be in the mid-40s, inclusive of investments in North Carolina, with a focus on maintaining a flat expense base [40][41] Question: Credit trends and health of the portfolio - Overall credit trends appear strong, with low non-performing assets and past dues, despite two specific charge-offs [70][72] Question: Impact of government shutdown on operations - Management believes government contractors will remain resilient, drawing on lines of credit during shutdowns, and does not foresee significant issues arising from the current situation [89][90]

Financial Data and Key Metrics Changes - The reported net income available to common shareholders for Q3 2025 was $89.2 million, with earnings per common share at $0.63. Adjusted operating earnings were $119.7 million or $0.84 per common share, resulting in an adjusted operating return on tangible common equity of 20.1% and an adjusted operating return on assets of 1.3% [18][19] - The total allowance for credit losses decreased to $320 million, down from $342.4 million in the previous quarter, with the total allowance as a percentage of total loans held for investment decreasing to 117 basis points from 125 basis points [19] - The tax equivalent net interest income was $323.6 million, a decrease of $2.1 million from the previous quarter, while the net interest margin remained steady at 3.83% [20][21] Business Line Data and Key Metrics Changes - Quarterly loan growth was approximately 0.5% annualized, with average loan growth quarter over quarter at 4.3% annualized. Non-interest bearing deposits grew by approximately 4% annualized in Q3 [9][10] - Non-interest income decreased by $29.7 million to $51.8 million, primarily due to a loss related to the final CRE loan sale settlement [21] - Reported non-interest expense decreased by $41.3 million to $238.4 million, driven by a decline in merger-related costs associated with the Sandy Spring acquisition [22] Market Data and Key Metrics Changes - The Greater Washington DC region showed resilience despite concerns over government employment reductions and the government shutdown, with unemployment rates in Maryland and Virginia at 3.6%, below the national average of 4.3% [14][16] - The company maintains a diversified portfolio, with approximately 23% of total loans in the Washington Metro Area, and the remaining 77% across broader markets [14][16] Company Strategy and Development Direction - The company is focused on delivering sustainable growth and top-tier financial performance, leveraging strategic advantages from the Sandy Spring acquisition while pursuing organic growth opportunities in Virginia and North Carolina [8][17] - The integration of Sandy Spring is progressing smoothly, with expectations to achieve cost savings targets and enhanced earnings power by 2026 [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's asset quality, with non-performing assets at 0.49% of loans held for investment and a forecast for the full year 2025 net charge-off ratio to remain between 15 and 20 basis points [12][13] - The company anticipates mid-single-digit loan growth for 2026, with potential for high single-digit growth in a more normalized environment [31][32] Other Important Information - The company paid a common stock dividend of $0.34 per share, an increase of 6.3% from the previous year's third quarter dividend [24] - The financial outlook for year-end loan balances is projected to be between $27.7 billion and $28 billion, with deposit balances expected between $30.8 billion and $31 billion [25] Q&A Session Summary Question: What are the expectations for loan growth in 2026? - Management expects mid-single-digit loan growth for 2026, with potential for high single-digit growth in a normalized environment [31][32] Question: What is the outlook for expenses and efficiency ratios? - The efficiency ratio is expected to be in the mid-40s for 2026, with a focus on maintaining a flat expense base while expanding in North Carolina [36][37] Question: How is the company addressing competition in the market? - The company is experiencing increased competition, particularly from traditional banks returning to the market, but remains committed to consistent capital provision [90][92] Question: What are the revenue synergies expected from the Sandy Spring acquisition? - The acquisition allows for expanded lending capabilities and additional services such as interest rate hedging, with a focus on new client acquisition [94][96]

Financial Data and Key Metrics Changes - Reported net income available to common shareholders was $89.2 million, with earnings per common share at $0.63. Adjusted operating earnings available to common shareholders were $119.7 million or $0.84 per common share, resulting in an adjusted operating return on tangible common equity of 20.1% and an adjusted operating return on assets of 1.3% [15][16] - Total allowance for credit losses decreased to $320 million, down approximately $22.4 million from the second quarter, with net charge-offs increasing to $38.6 million or 56 basis points annualized [16][17] - Tax equivalent net interest income was $323.6 million, a decrease of $2.1 million from the second quarter, with a steady net interest margin at 3.83% [18][19] Business Line Data and Key Metrics Changes - Quarterly loan growth was approximately 0.5% annualized, with average loan growth quarter over quarter at 4.3% annualized. The company expects year-end loan balances to range between $27.7 billion and $28 billion [6][8] - Non-interest income decreased by $29.7 million to $51.8 million, primarily due to a pretax loss related to the final CRE loan sale settlement [20] - Adjusted operating non-interest income increased by $5.1 million to $56.6 million, driven by higher loan-related interest rate swap fees and increased equity method investment income [21] Market Data and Key Metrics Changes - The company maintains a well-diversified portfolio, with approximately 23% of total loans in the Washington metro area and 77% across a broader footprint. Non-performing assets as a percentage of loans held for investment remained low at 0.49% [10][11] - The unemployment rate in Maryland to Virginia stood at 3.6%, below the national average of 4.3%, indicating resilience in the market despite government employment reductions and shutdown concerns [12] Company Strategy and Development Direction - The integration of Sandy Spring Bank is progressing smoothly, with expectations to achieve cost-savings targets and enhanced earnings power visible on a reported basis by 2026 [4][5] - The company aims to deliver sustainable growth and top-tier financial performance, leveraging strategic advantages gained from the Sandy Spring acquisition and continued organic growth opportunities [5][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in asset quality, reaffirming the forecast for the full year 2025 net charge-off ratio to be between 15 and 20 basis points [10] - The company anticipates mid-single-digit loan growth for 2026, with potential for high single-digit growth in a more normalized environment [33][34] Other Important Information - The company paid a common stock dividend of $0.34 per share, an increase of 6.3% from the previous year's third quarter dividend amount [24] - Full-year projections include net interest income between $1.16 billion and $1.165 billion, with an expected net interest margin for the full year between 3.75% and 3.8% [25][26] Q&A Session Summary Question: Loan growth outlook for 2026 - Management expects mid-single-digit loan growth for 2026, with potential for high single-digit growth in a normalized environment, supported by strong pipelines and new client acquisition [33][34] Question: Expense outlook and efficiency ratio - The efficiency ratio is expected to be in the mid-40s for 2026, with a focus on maintaining a flat expense base while expanding in North Carolina [35][36] Question: Credit health and trends - Overall credit trends are positive, with low non-performing assets and past dues. The two charge-offs were isolated events, and management remains confident in the portfolio's health [60][61]

Financial Performance - Q3 2025 adjusted operating return on tangible common equity was 20.1%[26] - Q3 2025 adjusted operating return on assets was 1.30%[26] - Q3 2025 adjusted operating efficiency ratio (FTE) was 48.8%[26] - Net interest margin (FTE) remained stable at 3.83% from Q2 2025 to Q3 2025[44] - Adjusted operating noninterest income increased approximately 10% in Q3 2025 compared to Q2 2025[50] Balance Sheet and Capital - Assets totaled $37.1 billion as of September 30, 2025[17] - Loans totaled $27.4 billion as of September 30, 2025[17] - Deposits totaled $30.7 billion as of September 30, 2025[17] - Non-interest bearing deposits remained at 23% of total deposits[26] - Loan/Deposit ratio was 89.2% at September 30, 2025[26] Strategic Initiatives - Successfully converted core systems of Sandy Spring over weekend of October 11 and concurrently closed 5 branches[30] - Organic expansion in North Carolina planned in 2026, with 10 new branches planned over the next 3 years[30, 68]

Core Viewpoint - Atlantic Union (AUB) reported quarterly earnings of $0.84 per share, slightly missing the Zacks Consensus Estimate of $0.85 per share, but showing an increase from $0.83 per share a year ago [1][2] Financial Performance - The company posted revenues of $375.38 million for the quarter ended September 2025, which was 0.7% below the Zacks Consensus Estimate and an increase from $221.12 million year-over-year [2] - Over the last four quarters, Atlantic Union has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Performance - Atlantic Union shares have declined approximately 10.2% since the beginning of the year, contrasting with the S&P 500's gain of 13.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.85 on revenues of $381.18 million, and for the current fiscal year, it is $3.03 on revenues of $1.37 billion [7] - The estimate revisions trend for Atlantic Union was mixed ahead of the earnings release, which may change following the recent report [6] Industry Context - The Banks - Northeast industry, to which Atlantic Union belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - For Q3 2025, Atlantic Union reported net income of $89.2 million and adjusted operating earnings of $119.7 million, with diluted earnings per share of $0.63 and $0.84 respectively[1][2]. - Net income available to common shareholders for Q3 2025 was $89,173,000, significantly higher than $73,448,000 in Q3 2024, marking a 21.4% increase[37]. - Net income for the three months ended September 30, 2025, was $92,140,000, compared to $19,791,000 for the previous quarter and $76,415,000 for the same period last year, reflecting a significant increase[41]. - Adjusted operating earnings for Q3 2025 were $122,693,000, compared to $77,497,000 in Q3 2024, an increase of 58.2%[37]. - Basic earnings per common share for the nine months ended September 30, 2025, was $1.23, down from $1.68 in the same period last year, indicating a decrease of 26.8%[44]. Income and Expenses - Noninterest income decreased by $29.7 million to $51.8 million, primarily due to a pre-tax loss related to the final CRE loan sale settlement[15]. - Noninterest expense decreased by $41.3 million to $238.4 million, mainly due to a reduction in merger-related costs associated with the Sandy Spring acquisition[17]. - Total noninterest expenses for the nine months ended September 30, 2025, were $652,327 thousand, compared to $377,859 thousand for the same period in 2024, reflecting an increase of 72.3%[44]. Assets and Liabilities - Total assets at September 30, 2025, were $37.1 billion, a decrease of approximately 2.3% from the previous quarter, but an increase of 49.5% from the same period last year[21]. - Total liabilities decreased to $32,510,394 thousand from $33,177,602 thousand in the previous quarter[45]. - Total deposits were $30.7 billion, a decrease of 3.9% from the prior quarter but an increase of 51.0% from September 30, 2024, attributed to the addition of acquired deposits from Sandy Spring[25]. Credit Quality - Nonperforming assets (NPAs) as a percentage of total loans held for investment decreased to 0.49%, with total NPAs at $133.2 million, down from $163.4 million in the prior quarter[7][8]. - The allowance for credit losses (ACL) was $320.0 million, a decrease of $22.4 million from the prior quarter, with the ACL as a percentage of total loans held for investment at 1.17%[11][12]. - The total ACL increased by 80.0% year-over-year from $177,628 thousand to $319,986 thousand[39]. Capital and Ratios - Common equity Tier 1 capital ratio improved to 9.92% as of September 30, 2025, compared to 9.77% in the previous quarter and the same period last year[27]. - The leverage ratio (Tier 1 capital to average assets) stood at 8.92% as of September 30, 2025, up from 9.27% a year ago[38]. - Tangible common equity to tangible assets ratio improved to 7.69% from 7.29% year-over-year[38]. Growth Metrics - Total investments reached $5.3 billion, up 44.3% from June 30, 2025, and 50.3% from September 30, 2024, primarily due to the Sandy Spring acquisition[24]. - Average assets for the nine months ended September 30, 2025, were $37,377,383 thousand, compared to $24,613,518 thousand in the same period last year, showing a growth of 51.7%[38]. - The company reported a total of $5,310,629 thousand in securities, up from $3,533,143 thousand a year ago, reflecting a 50.4% increase[38]. Operational Efficiency - The efficiency ratio (FTE) improved to 63.52% in Q3 2025 from 55.44% in Q3 2024, indicating better cost management[37]. - The efficiency ratio improved to 64.28% for the three months ended September 30, 2025, down from 69.42% in the previous quarter and 66.08% a year ago, demonstrating enhanced operational efficiency[41]. Future Outlook - The company plans to hold a conference call on October 23, 2025, to review financial results and recent activities[31]. - The company emphasizes the importance of non-GAAP financial measures for understanding ongoing operations and performance trends[33].

Core Insights - Atlantic Union has successfully completed the conversion of Sandy Spring Bank, marking a significant milestone in its operational strategy [1] Company Summary - The conversion process signifies Atlantic Union's commitment to enhancing its service offerings and operational efficiency [1] - This strategic move is expected to strengthen Atlantic Union's market position and expand its customer base [1]

Group 1 - Atlantic Union Bankshares Corporation (NYSE: AUB) has seen its shares increase by approximately 50% after a significant decline of nearly 50% over a five-month period ending in April 2025 [2] - The Insiders Forum focuses on small and mid-cap stocks that are being actively purchased by insiders, aiming to outperform the Russell 2000 benchmark over time [2] Group 2 - The Insiders Forum portfolio consists of 12-25 top stocks across various market sectors that are attractively valued and have experienced notable recent insider purchases [2]

Core Insights - Atlantic Union Bankshares Corporation (NYSE: AUB) reported an adjusted profit of $0.95 per share for Q2 2025, exceeding expectations by $0.15, marking the best performance for the company in recent times [1] Financial Performance - The adjusted profit of $0.95 per share represents a significant achievement for Atlantic Union Bankshares, indicating strong financial health and operational efficiency [1]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the periods ended June 30, 2025, and 2024 [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024%20(audited)) Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | June 30, 2025 (unaudited) | December 31, 2024 (audited) | | :--- | :--- | :--- | | **ASSETS** | | | | Total cash and cash equivalents | $1,588,648 | $354,074 | | Securities available for sale | $3,809,281 | $2,442,166 | | Loans held for investment, net | $27,012,759 | $18,291,977 | | Goodwill | $1,710,912 | $1,214,053 | | Total assets | $37,289,371 | $24,585,323 | | **LIABILITIES** | | | | Total deposits | $30,972,175 | $20,397,619 | | Total liabilities | $32,456,732 | $21,442,444 | | **STOCKHOLDERS' EQUITY** | | | | Total stockholders' equity | $4,832,639 | $3,142,879 | - Total assets increased by **$12.7 billion** (approximately 51.6%) from December 31, 2024, to June 30, 2025, primarily driven by the Sandy Spring acquisition[15](index=15&type=chunk)[274](index=274&type=chunk) - Loans held for investment, net, increased by **$8.7 billion** (approximately 47.7%) from December 31, 2024, to June 30, 2025, largely due to the Sandy Spring acquisition and organic loan growth[15](index=15&type=chunk)[276](index=276&type=chunk) [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Consolidated Statements of Income Highlights (Dollars in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total interest and dividend income | $510,372 | $320,888 | $816,208 | $583,802 | | Total interest expense | $189,001 | $136,354 | $310,672 | $251,444 | | Net interest income | $321,371 | $184,534 | $505,536 | $332,358 | | Provision for credit losses | $105,707 | $21,751 | $123,345 | $29,989 | | Total noninterest income | $81,522 | $23,812 | $110,685 | $49,365 | | Total noninterest expenses | $279,698 | $150,005 | $413,882 | $255,279 | | Net Income | $19,791 | $25,161 | $69,610 | $74,930 | | Net income available to common shareholders | $16,824 | $22,194 | $63,676 | $68,996 | | Basic earnings per common share | $0.12 | $0.25 | $0.55 | $0.84 | | Diluted earnings per common share | $0.12 | $0.25 | $0.55 | $0.84 | - Net income available to common shareholders decreased by **$5.37 million (24.2%)** for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to increased provision for credit losses and noninterest expenses[17](index=17&type=chunk)[229](index=229&type=chunk)[255](index=255&type=chunk) - Diluted EPS decreased from **$0.25 in Q2 2024 to $0.12 in Q2 2025**, and from **$0.84 in H1 2024 to $0.55 in H1 2025**[17](index=17&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Consolidated Statements of Comprehensive Income (Loss) Highlights (Dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $19,791 | $25,161 | $69,610 | $74,930 | | Other comprehensive income (loss) | $12,929 | $(8,289) | $38,900 | $(39,238) | | Comprehensive income | $32,720 | $16,872 | $108,510 | $35,692 | - Other comprehensive income (loss) significantly improved, moving from a loss of **$8.29 million in Q2 2024** to an income of **$12.93 million in Q2 2025**, primarily due to changes in fair value of cash flow hedges and unrealized holding gains on AFS securities[18](index=18&type=chunk)[155](index=155&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(unaudited)%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Consolidated Statements of Changes in Stockholders' Equity Highlights (Dollars in thousands) | Metric | December 31, 2024 Balance | June 30, 2025 Balance | December 31, 2023 Balance | June 30, 2024 Balance | | :--- | :--- | :--- | :--- | :--- | | Common Stock | $118,519 | $188,454 | $99,147 | $118,475 | | Additional Paid-In Capital | $2,280,547 | $3,876,831 | $1,782,286 | $2,273,312 | | Retained Earnings | $1,103,326 | $1,087,967 | $1,018,070 | $1,034,313 | | Accumulated Other Comprehensive Income (Loss) | $(359,686) | $(320,786) | $(343,349) | $(382,587) | | Total Stockholders' Equity | $3,142,879 | $4,832,639 | $2,556,327 | $3,043,686 | - Total stockholders' equity increased by **$1.69 billion** from December 31, 2024, to June 30, 2025, primarily due to the issuance of common stock related to the Sandy Spring acquisition and forward sale settlement[22](index=22&type=chunk)[281](index=281&type=chunk) - Common stock increased by **$69.9 million**, and additional paid-in capital increased by **$1.6 billion**, reflecting the issuance of 41.0 million shares for the Sandy Spring acquisition and 11.3 million shares for forward sale settlement[22](index=22&type=chunk)[39](index=39&type=chunk)[152](index=152&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Consolidated Statements of Cash Flows Highlights (Dollars in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,965,957 | $142,651 | | Net cash provided by (used in) investing activities | $87,401 | $(382,202) | | Net cash (used in) provided by financing activities | $(818,784) | $307,434 | | Increase in cash and cash equivalents | $1,234,574 | $67,883 | | Cash, cash equivalents and restricted cash at end of the period | $1,588,648 | $446,014 | - Net cash provided by operating activities significantly increased to **$1.97 billion in H1 2025** from $142.65 million in H1 2024, driven by higher net income and provision for credit losses[24](index=24&type=chunk) - Investing activities shifted from a net cash outflow of **$382.20 million in H1 2024** to a net cash inflow of **$87.40 million in H1 2025**, largely due to net cash received in acquisitions and proceeds from sales of loans held for sale[24](index=24&type=chunk) - Financing activities resulted in a net cash outflow of **$818.78 million in H1 2025**, compared to an inflow of $307.43 million in H1 2024, primarily due to net decreases in deposits and short-term borrowings[24](index=24&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) [1. Summary of Significant Accounting Policies](index=14&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the Company's adherence to GAAP, consolidation practices, and accounting policies for acquired loans - The Company's consolidated financial statements conform to GAAP and include Atlantic Union Bankshares Corporation and its wholly-owned subsidiaries[28](index=28&type=chunk) - The Company completed the acquisition of Sandy Spring Bancorp, Inc on April 1, 2025, and American National Bankshares Inc on April 1, 2024, with their results included from the acquisition dates[30](index=30&type=chunk) - Acquired loans are recorded at fair value at acquisition; PCD loans establish an initial ALLL, and the difference between amortized cost and par value is a noncredit discount/premium amortized into interest income[32](index=32&type=chunk)[36](index=36&type=chunk) [2. Acquisitions](index=16&type=section&id=2.%20ACQUISITIONS) This note details the purchase consideration and financial impact of the Sandy Spring and American National acquisitions - On April 1, 2025, the Company acquired Sandy Spring Bancorp, Inc for approximately **$1.3 billion**, issuing 41.0 million shares of common stock, enhancing its presence in Virginia, Maryland, and Washington D.C[39](index=39&type=chunk) Sandy Spring Acquisition Financial Impact (Dollars in thousands) | Metric | Amount | | :--- | :--- | | Purchase price consideration | $1,275,969 | | Fair value of assets acquired | $12,988,972 | | Fair value of liabilities assumed | $12,209,862 | | Goodwill recorded | $496,859 | - On April 1, 2024, the Company acquired American National Bankshares Inc for **$505.5 million**, issuing 14.3 million shares, expanding its franchise in central and western Virginia and North Carolina[45](index=45&type=chunk) American National Acquisition Financial Impact (Dollars in thousands) | Metric | Amount | | :--- | :--- | | Purchase price consideration | $505,473 | | Fair value of assets acquired | $2,946,897 | | Fair value of liabilities assumed | $2,730,266 | | Goodwill recorded | $288,842 | [3. Securities and Other Investments](index=21&type=section&id=3.%20SECURITIES%20AND%20OTHER%20INVESTMENTS) This section details the Company's AFS and HTM securities portfolios, including fair values and unrealized gains and losses Total AFS Securities (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Amortized Cost | $4,182,109 | $2,844,763 | | Estimated Fair Value | $3,809,281 | $2,442,166 | | Gross Unrealized Losses | $(384,400) | $(405,975) | Total HTM Securities (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Carrying Value | $827,135 | $803,851 | | Estimated Fair Value | $777,925 | $759,335 | | Gross Unrealized Losses | $(49,904) | $(45,259) | - The Company concluded **no credit-related impairment existed** for AFS securities in an unrealized loss position, citing high credit quality and market volatility as the primary cause of losses[67](index=67&type=chunk) Net Realized Gains (Losses) on Securities Sales (Dollars in thousands) | Period | Net Realized Gains (Losses) | | :--- | :--- | | Three Months Ended June 30, 2025 | $16 | | Three Months Ended June 30, 2024 | $(6,516) | | Six Months Ended June 30, 2025 | $(87) | | Six Months Ended June 30, 2024 | $(6,513) | [4. Loans and Allowance for Loan and Lease Losses](index=29&type=section&id=4.%20LOANS%20AND%20ALLOWANCE%20FOR%20LOAN%20AND%20LEASE%20LOSSES) This note details the loan portfolio, a significant CRE loan sale, and ALLL activity, including acquisition impacts - On June 26, 2025, the Company sold **$2.0 billion** of performing CRE loans acquired from Sandy Spring, generating a **$15.7 million pre-tax gain**[84](index=84&type=chunk) Loans Held for Investment (LHFI) (Dollars in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Construction and Land Development | $2,444,151 | $1,731,108 | | CRE – Owner Occupied | $3,940,371 | $2,370,119 | | CRE – Non-Owner Occupied | $6,912,692 | $4,935,590 | | Multifamily Real Estate | $2,083,559 | $1,240,209 | | Commercial & Industrial | $5,141,691 | $3,864,695 | | Residential 1-4 Family – Commercial | $1,131,288 | $719,425 | | Residential 1-4 Family – Consumer | $2,746,046 | $1,293,817 | | Residential 1-4 Family – Revolving | $1,154,085 | $756,944 | | Auto | $245,554 | $316,368 | | Consumer | $119,526 | $104,882 | | Other Commercial | $1,409,370 | $1,137,464 | | Total LHFI, net of deferred fees and costs | $27,328,333 | $18,470,621 | Allowance for Loan and Lease Losses (ALLL) Activity (Dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Balance at beginning of period | $193,796 | $178,644 | | Initial allowance on Sandy Spring PCD loans | $28,265 | $28,265 | | Initial Provision - Sandy Spring non-PCD loans | $89,538 | $89,538 | | Provision charged to operations | $4,641 | $22,071 | | Balance at end of period | $315,574 | $315,574 | - Nonaccrual LHFI increased to **$162.6 million** at June 30, 2025, from $58.0 million at December 31, 2024, primarily due to PCD loans acquired from Sandy Spring[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[113](index=113&type=chunk) [5. Goodwill and Intangible Assets](index=40&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note provides information on goodwill and other intangible assets arising from recent acquisitions - Goodwill increased to **$1.71 billion** at June 30, 2025, from $1.21 billion at December 31, 2024, primarily due to **$496.9 million** recorded from the Sandy Spring acquisition[108](index=108&type=chunk)[109](index=109&type=chunk) Goodwill and Other Acquired Intangible Assets (Dollars in thousands) | Metric | June 30, 2025 Net Carrying Value | December 31, 2024 Net Carrying Value | | :--- | :--- | :--- | | Goodwill | $1,710,912 | $1,214,053 | | Core Deposit Intangibles (CDIs) | $296,750 | $74,133 | | Other amortizable intangibles | $54,631 | $10,430 | - Amortization expense for intangibles totaled **$18.4 million for Q2 2025** (up from $6.0 million in Q2 2024) and **$23.8 million for H1 2025** (up from $7.9 million in H1 2024)[113](index=113&type=chunk) [6. Leases](index=42&type=section&id=6.%20LEASES) This note outlines the Company's lessor and lessee arrangements, primarily for equipment and real estate Net Investment in Sales-Type and Direct Financing Leases (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Lease receivables, net | $533,895 | $529,657 | | Unguaranteed residual values, net | $37,881 | $34,546 | | Total net investment | $571,776 | $564,203 | Lessee Lease Portfolio Information (Dollars in thousands) | Metric | June 30, 2025 Operating | June 30, 2025 Finance | December 31, 2024 Operating | December 31, 2024 Finance | | :--- | :--- | :--- | :--- | :--- | | ROU assets | $111,487 | $3,291 | $74,782 | $3,751 | | Lease liabilities | $124,973 | $5,109 | $79,642 | $5,769 | | Weighted-average remaining lease term (years) | 8.23 | 3.58 | 10.96 | 4.08 | Total Lease Cost (Dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Operating Lease Cost | $5,860 | $3,438 | $9,348 | $6,546 | | Finance Lease Cost | $245 | $249 | $490 | $498 | | Total Lease Cost | $6,105 | $3,687 | $9,838 | $7,044 | [7. Borrowings](index=44&type=section&id=7.%20BORROWINGS) This note details the Company's short-term and long-term borrowings, including additions from the Sandy Spring acquisition Total Short-Term Borrowings (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securities sold under agreements to repurchase | $127,351 | $56,275 | | FHLB Advances | $— | $60,000 | | Total short-term borrowings | $127,351 | $116,275 | | Average outstanding balance during the period | $236,865 | $445,339 | | Average interest rate during the period | 3.80% | 5.22% | - The Company assumed **$358.0 million in subordinated debt** in connection with the Sandy Spring acquisition, significantly increasing long-term borrowings[124](index=124&type=chunk) Total Long-Term Borrowings (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trust Preferred Capital Securities | $179,000 | $179,000 | | Subordinated Debt | $608,000 | $250,000 | | Fair Value Discount | $(27,126) | $(16,239) | | Total Long-term Borrowings | $765,416 | $418,303 | - The Company maintains significant available liquidity sources, including **$1.2 billion** in federal funds lines, **$7.4 billion** in FHLB collateral-dependent lines, and **$3.5 billion** with the Federal Reserve Discount Window[121](index=121&type=chunk) [8. Commitments and Contingencies](index=49&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details off-balance sheet instruments, litigation matters including a CFPB Consent Order, and pledged collateral Commitments with Off-Balance Sheet Risk (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commitments to extend credit | $9,483,098 | $5,987,562 | | Letters of credit | $226,035 | $145,985 | | Total commitments with off-balance sheet risk | $9,709,133 | $6,133,547 | - The Company entered into a Consent Order with the CFPB on December 7, 2023, to resolve alleged violations related to overdraft practices, maintaining a probable and estimable liability[131](index=131&type=chunk)[132](index=132&type=chunk) Total Pledged Assets (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $100,203 | $134,668 | | AFS Securities (market value) | $1,796,666 | $1,526,012 | | HTM Securities (market value) | $602,937 | $610,838 | | Loans (book value) | $13,421,842 | $8,447,750 | | Total pledged assets | $15,921,648 | $10,719,268 | [9. Derivatives](index=51&type=section&id=9.%20DERIVATIVES) This note summarizes the Company's derivative instruments used for managing interest rate and credit risk Derivative Instruments Summary (Dollars in thousands) | Derivative Type | June 30, 2025 Notional Amount | June 30, 2025 Assets | June 30, 2025 Liabilities | December 31, 2024 Notional Amount | December 31, 2024 Assets | December 31, 2024 Liabilities | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash flow hedges | $900,000 | $1,266 | $1,532 | $900,000 | $— | $6,467 | | Fair value hedges (Loans) | $70,257 | $898 | $— | $72,807 | $1,469 | $— | | Fair value hedges (Securities) | $50,000 | $606 | $— | $50,000 | $1,157 | $— | | Non-hedging interest rate contracts | $8,511,903 | $106,793 | $173,678 | $7,529,494 | $94,772 | $192,683 | | Foreign exchange contracts | $16,421 | $110 | $1,849 | $12,449 | $47 | $398 | - The Company uses interest rate contracts to hedge various exposures and modify interest rate characteristics of balance sheet accounts[140](index=140&type=chunk)[147](index=147&type=chunk) [10. Stockholders' Equity](index=53&type=section&id=10.%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including the settlement of Forward Sale Agreements and AOCI components - On April 1, 2025, the Company physically settled Forward Sale Agreements by delivering 11,338,028 shares of common stock, receiving net proceeds of approximately **$385.0 million**[152](index=152&type=chunk) - **No active share repurchase programs** were in effect during the quarters ended June 30, 2025, and 2024[153](index=153&type=chunk)[366](index=366&type=chunk) Accumulated Other Comprehensive Income (Loss) (AOCI) (Dollars in thousands) | Metric | AOCI (loss) – March 31, 2025 | AOCI (loss) – June 30, 2025 | AOCI (loss) – December 31, 2024 | AOCI (loss) – June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Unrealized Gains (Losses) on AFS Securities | $(301,307) | $(294,373) | $(317,142) | $(330,804) | | Change in Fair Value of Cash Flow Hedge | $(32,742) | $(26,540) | $(43,078) | $(52,775) | | Total AOCI (loss) | $(333,715) | $(320,786) | $(359,686) | $(382,587) | [11. Fair Value Measurements](index=56&type=section&id=11.%20FAIR%20VALUE%20MEASUREMENTS) This note details the Company's fair value measurements for financial instruments, categorized by a three-level hierarchy - The Company uses a fair value hierarchy (Level 1, 2, 3) based on observable and unobservable inputs for valuation[159](index=159&type=chunk) Financial Assets Measured at Fair Value on a Recurring Basis (June 30, 2025, Dollars in thousands) | Asset Type | Level 1 | Level 2 | Level 3 | Total Balance | | :--- | :--- | :--- | :--- | :--- | | AFS securities | $137,093 | $3,672,188 | $— | $3,809,281 | | LHFS | $— | $32,987 | $— | $32,987 | | Financial Derivatives | $— | $109,673 | $— | $109,673 | Fair Value of Financial Instruments (June 30, 2025, Dollars in thousands) | Instrument | Carrying Value | Total Fair Value | | :--- | :--- | :--- | | Cash and cash equivalents | $1,588,648 | $1,588,648 | | AFS securities | $3,809,281 | $3,809,281 | | HTM securities | $827,135 | $777,925 | | LHFI, net | $27,328,333 | $26,928,260 | | Deposits | $30,972,175 | $30,956,133 | | Borrowings | $892,767 | $807,087 | [12. Income Taxes](index=62&type=section&id=12.%20INCOME%20TAXES) This note discusses the Company's effective tax rates, deferred tax assets, and the impact of recent acquisitions Effective Tax Rates | Period | 2025 Effective Tax Rate | 2024 Effective Tax Rate | | :--- | :--- | :--- | | Three Months Ended June 30 | (13.2)% | 31.2% | | Six Months Ended June 30 | 11.9% | 22.3% | - The decrease in effective tax rates for both periods in 2025 reflects an **$8.0 million income tax benefit** from re-evaluating state deferred tax assets due to the Sandy Spring acquisition[172](index=172&type=chunk) - The valuation allowance increased to **$11.1 million** at June 30, 2025, from $4.4 million at December 31, 2024, primarily due to the Sandy Spring acquisition[173](index=173&type=chunk) - New tax legislation, the One Big Beautiful Bill Act, enacted on July 4, 2025, will be recognized as a discrete event in the quarter ended September 30, 2025[174](index=174&type=chunk) [13. Earnings Per Share](index=63&type=section&id=13.%20EARNINGS%20PER%20SHARE) This note provides the calculations for basic and diluted Earnings Per Share (EPS) Earnings Per Share (Dollars in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income available to common shareholders | $16,824 | $22,194 | $63,676 | $68,996 | | Weighted average shares outstanding, basic | 141,680 | 89,768 | 115,596 | 82,483 | | Weighted average shares outstanding, diluted | 141,738 | 89,768 | 116,057 | 82,483 | | Basic earnings per common share | $0.12 | $0.25 | $0.55 | $0.84 | | Diluted earnings per common share | $0.12 | $0.25 | $0.55 | $0.84 | - Diluted EPS decreased from **$0.25 in Q2 2024 to $0.12 in Q2 2025**, and from **$0.84 in H1 2024 to $0.55 in H1 2025**, reflecting lower net income and a higher number of shares outstanding[177](index=177&type=chunk) [14. Segment Reporting and Revenue](index=64&type=section&id=14.%20SEGMENT%20REPORTING%20AND%20REVENUE) This note disaggregates financial performance into Wholesale Banking, Consumer Banking, and Corporate Other segments Income Before Income Taxes by Segment (Three Months Ended June 30, Dollars in thousands) | Segment | 2025 Income Before Income Taxes | 2024 Income Before Income Taxes | | :--- | :--- | :--- | | Wholesale Banking | $17,416 | $37,054 | | Consumer Banking | $8,312 | $24,625 | | Corporate Other | $(8,240) | $(25,089) | | Total | $17,488 | $36,590 | Key Balance Sheet Metrics by Segment (June 30, 2025, Dollars in thousands) | Segment | LHFI, net of deferred fees and costs | Total Deposits | | :--- | :--- | :--- | | Wholesale Banking | $22,889,472 | $11,733,733 | | Consumer Banking | $5,228,222 | $17,908,932 | | Corporate Other | $(789,361) | $1,329,510 | | Total | $27,328,333 | $30,972,175 | Total Noninterest Income (Three Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Service charges on deposit accounts | $12,220 | $9,086 | | Fiduciary and asset management fees | $17,723 | $6,907 | | Mortgage banking income | $2,821 | $1,193 | | Other operating income | $33,658 | $2,624 | Total Noninterest Expense (Three Months Ended June 30, Dollars in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Salaries and benefits | $109,942 | $68,531 | | Amortization of intangible assets | $18,433 | $5,995 | | Merger-related costs | $78,900 | $29,778 | [15. Subsequent Events](index=70&type=section&id=15.%20SUBSEQUENT%20EVENTS) This note discloses the declaration of quarterly dividends for preferred and common stock after the reporting period - On July 24, 2025, the Board of Directors declared a quarterly dividend of **$171.88 per share** on Series A preferred stock, payable September 2, 2025[189](index=189&type=chunk) - A quarterly dividend of **$0.34 per share** of common stock was declared, payable August 18, 2025[190](index=190&type=chunk) [Report of Independent Registered Public Accounting Firm](index=71&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Ernst & Young LLP provided an **unqualified review opinion** on the consolidated interim financial statements for conformity with U.S. GAAP[191](index=191&type=chunk) - The information in the consolidated balance sheet as of December 31, 2024, is **fairly stated in all material respects**, as previously audited[192](index=192&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=72&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition, operating results, and capital resources [Economic Environment and Industry Events](index=80&type=section&id=Economic%20Environment%20and%20Industry%20Events) - The Company monitors global and national events, including inflation (estimated at **2.7%** as of June 2025), interest rate changes (Federal Funds target rate **4.25%-4.50%**), and deposit competition[220](index=220&type=chunk)[222](index=222&type=chunk) - Higher-for-longer interest rates and deposit competition continued to shift deposit composition towards higher-cost products in H1 2025, though at a slower pace[224](index=224&type=chunk) - At June 30, 2025, approximately **68.0% of deposits were insured or collateralized**, with available liquidity covering **157.2%** of uninsured/uncollateralized deposits[224](index=224&type=chunk) [Summary of Financial Results](index=82&type=section&id=Summary%20of%20Financial%20Results) Net Income & EPS Summary | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income available to common shareholders | $16.8M | $22.2M | $63.7M | $69.0M | | Basic and diluted EPS | $0.12 | $0.25 | $0.55 | $0.84 | | Adjusted operating earnings available to common shareholders (+) | $135.1M | $67.9M | $186.7M | $116.9M | | Adjusted diluted operating EPS (+) | $0.95 | $0.76 | $1.61 | $1.42 | - The Sandy Spring acquisition (April 1, 2025) significantly impacted the balance sheet: **$13.0 billion in acquired assets** and **$12.2 billion in assumed liabilities**[229](index=229&type=chunk) Balance Sheet Highlights (Dollars in billions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $37.3 | $24.6 | | LHFI | $27.3 | $18.5 | | Total investments | $4.8 | $3.3 | | Total deposits | $31.0 | $20.4 | | Total borrowings | $0.89 | $0.53 | [Net Interest Income](index=84&type=section&id=Net%20Interest%20Income) Net Interest Income (FTE) and Margin (FTE) (Dollars in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income (FTE) (+) | $325,733 | $188,348 | $513,656 | $339,895 | | Net interest margin (FTE) (+) | 3.83% | 3.46% | 3.68% | 3.33% | | Average interest-earning assets | $34.1B | $21.9B | $28.1B | $20.5B | | Average interest-bearing liabilities | $25.5B | $16.5B | $21.1B | $15.4B | - Net interest income (FTE) increased by **$137.4 million (72.9%) in Q2 2025** and **$173.8 million (51.1%) in H1 2025**, primarily due to growth in average interest-earning assets from the Sandy Spring acquisition[233](index=233&type=chunk)[237](index=237&type=chunk) - Net interest margin (FTE) increased by **37 bps in Q2 2025** and **35 bps in H1 2025**, mainly driven by net accretion of purchase accounting adjustments from the Sandy Spring acquisition[234](index=234&type=chunk)[238](index=238&type=chunk) Acquisition Accounting Accretion and Amortization (Dollars in thousands) | Period | Loan Accretion | Deposit (Amortization) | Borrowings Amortization | Total | | :--- | :--- | :--- | :--- | :--- | | Q1 2024 | $819 | $(1) | $(216) | $602 | | Q2 2024 | $15,660 | $(1,035) | $(285) | $14,340 | | Q1 2025 | $13,286 | $(415) | $(287) | $12,584 | | Q2 2025 | $45,744 | $1,884 | $(2,256) | $45,372 | [Noninterest Income](index=91&type=section&id=Noninterest%20Income) Noninterest Income (Dollars in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total noninterest income | $81,522 | $23,812 | $110,685 | $49,365 | | Service charges on deposit accounts | $12,220 | $9,086 | $21,905 | $17,655 | | Fiduciary and asset management fees | $17,723 | $6,907 | $24,420 | $11,745 | | Mortgage banking income | $2,821 | $1,193 | $3,794 | $2,060 | | Gain (loss) on sale of securities | $16 | $(6,516) | $(87) | $(6,513) | | Bank owned life insurance income | $7,327 | $3,791 | $10,864 | $7,037 | | Other operating income | $33,658 | $2,624 | $34,922 | $5,413 | - Total noninterest income increased by **$57.7 million (242.4%) in Q2 2025** and **$61.3 million (124.2%) in H1 2025**, primarily due to a **$15.7 million pre-tax gain on a CRE loan sale** and the impact of the Sandy Spring acquisition[249](index=249&type=chunk)[252](index=252&type=chunk) - Adjusted operating noninterest income (+) increased by **$21.2 million (69.8%) in Q2 2025** and **$24.9 million (44.5%) in H1 2025**, mainly driven by the Sandy Spring acquisition's impact on fiduciary fees and service charges[250](index=250&type=chunk)[253](index=253&type=chunk) [Noninterest Expense](index=93&type=section&id=Noninterest%20Expense) Noninterest Expense (Dollars in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total noninterest expense | $279,698 | $150,005 | $413,882 | $255,279 | | Salaries and benefits | $109,942 | $68,531 | $185,357 | $130,413 | | Occupancy expenses | $12,782 | $7,836 | $21,362 | $14,462 | | Technology and data processing | $17,248 | $10,274 | $27,435 | $18,401 | | Amortization of intangible assets | $18,433 | $5,995 | $23,832 | $7,889 | | Merger-related costs | $78,900 | $29,778 | $83,840 | $31,652 | - Total noninterest expense increased by **$129.7 million (86.5%) in Q2 2025** and **$158.6 million (62.1%) in H1 2025**, primarily due to higher merger-related costs and salaries from the Sandy Spring acquisition[255](index=255&type=chunk)[258](index=258&type=chunk) - Adjusted operating noninterest expense (+) increased by **$68.2 million (59.6%) in Q2 2025** and **$91.3 million (42.5%) in H1 2025**, driven by the Sandy Spring acquisition's impact on operating costs[256](index=256&type=chunk)[259](index=259&type=chunk) [Segment Results](index=95&type=section&id=Segment%20Results) [Wholesale Banking](index=95&type=section&id=Wholesale%20Banking) The Wholesale Banking segment experienced a decrease in income before taxes due to increased credit provisions and expenses from the Sandy Spring acquisition Wholesale Banking Income Before Income Taxes (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $17,416 | $37,054 | | Six Months Ended June 30 | $58,298 | $76,970 | - LHFI for Wholesale Banking increased by **$7.4 billion to $22.9 billion** at June 30, 2025, from December 31, 2024, primarily due to the Sandy Spring acquisition and organic loan growth[262](index=262&type=chunk) - Wholesale Banking deposits increased by **$4.5 billion to $11.7 billion** at June 30, 2025, from December 31, 2024, mainly due to the Sandy Spring acquisition[263](index=263&type=chunk) [Consumer Banking](index=96&type=section&id=Consumer%20Banking) The Consumer Banking segment saw a decrease in income before taxes due to higher expenses and credit provisions from the Sandy Spring acquisition Consumer Banking Income Before Income Taxes (Dollars in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $8,312 | $24,625 | | Six Months Ended June 30 | $28,569 | $47,726 | - LHFI for Consumer Banking increased by **$2.1 billion to $5.2 billion** at June 30, 2025, from December 31, 2024, primarily due to growth from the Sandy Spring acquisition[265](index=265&type=chunk) - Consumer Banking deposits increased by **$6.0 billion to $17.9 billion** at June 30, 2025, from December 31, 2024, driven by the Sandy Spring acquisition[266](index=266&type=chunk) [Income Taxes](index=97&type=section&id=Income%20Taxes) - The estimated annual effective tax rate increased to **21.7%** as of June 30, 2025, from 19.0% in Q1 2025, due to Sandy Spring operating in a higher state tax jurisdiction[267](index=267&type=chunk) Effective Tax Rates | Period | 2025 Effective Tax Rate | 2024 Effective Tax Rate | | :--- | :--- | :--- | | Three Months Ended June 30 | (13.2)% | 31.2% | | Six Months Ended June 30 | 11.9% | 22.3% | - The valuation allowance increased to **$11.1 million** at June 30, 2025, from $4.4 million at December 31, 2024, primarily due to the Sandy Spring acquisition's impact on state net operating losses[270](index=270&type=chunk) [Discussion and Analysis of Financial Condition](index=97&type=section&id=Discussion%20and%20Analysis%20of%20Financial%20Condition) [Balance Sheet](index=97&type=section&id=Balance%20Sheet) The balance sheet reflects significant growth in assets, loans, and deposits, primarily driven by the Sandy Spring acquisition - Total assets reached **$37.3 billion** at June 30, 2025, an increase of **$12.7 billion** (104.2% annualized) from December 31, 2024, primarily due to the Sandy Spring acquisition[274](index=274&type=chunk) - LHFI increased by **$8.9 billion** (96.7% annualized) to **$27.3 billion**, driven by the Sandy Spring acquisition and organic growth[276](index=276&type=chunk) - Total deposits increased by **$10.6 billion** (104.5% annualized) to **$31.0 billion**, mainly from the Sandy Spring acquisition[279](index=279&type=chunk) - Stockholders' equity grew by **$1.7 billion to $4.8 billion**, primarily due to common stock issuance for the Sandy Spring acquisition[281](index=281&type=chunk) [Securities](index=101&type=section&id=Securities) The investment portfolio increased significantly due to the Sandy Spring acquisition and is diversified with a focus on highly-rated securities - Total investments increased to **$4.8 billion** at June 30, 2025, from $3.3 billion at December 31, 2024, primarily due to the Sandy Spring acquisition[284](index=284&type=chunk) Total Investments (Dollars in thousands) | Security Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total AFS securities, at fair value | $3,809,281 | $2,442,166 | | Total HTM securities, at carrying value | $827,135 | $803,851 | | Total restricted stock, at cost | $140,606 | $102,954 | | Total investments | $4,777,022 | $3,348,971 | - Net unrealized losses on AFS securities decreased by **$29.8 million to $372.8 million** at June 30, 2025, while net unrealized losses on HTM securities increased by **$4.7 million to $49.2 million**[231](index=231&type=chunk)[277](index=277&type=chunk) [Liquidity](index=103&type=section&id=Liquidity) The Company maintains strong liquidity from its customer deposit base, supplemented by various borrowing facilities and boosted by a recent loan sale - Total deposits, the largest source of liquidity, increased by **$10.6 billion (51.8%) to $31.0 billion** at June 30, 2025[289](index=289&type=chunk) - Liquid assets totaled **$13.5 billion** (36.3% of total assets) at June 30, 2025[291](index=291&type=chunk) - The sale of **$2.0 billion in CRE loans** generated **$1.87 billion in net proceeds**, increasing cash balances and used to repay short-term borrowings[292](index=292&type=chunk) - Additional liquidity sources include federal funds lines (**$1.2 billion available**), FHLB line of credit (**$7.4 billion capacity**), and Federal Reserve Discount Window (**$3.5 billion capacity**)[121](index=121&type=chunk)[293](index=293&type=chunk) [Cash Requirements](index=105&type=section&id=Cash%20Requirements) The Company's cash requirements primarily involve repaying borrowings, leases, and debt, which are expected to be met through general liquidity Contractual Obligations (June 30, 2025, Dollars in thousands) | Obligation | Total | Less than 1 year | More than 1 year | | :--- | :--- | :--- | :--- | | Long-term debt | $608,000 | $— | $608,000 | | Trust preferred capital notes | $184,542 | $— | $184,542 | | Leases | $163,700 | $12,982 | $150,718 | | Repurchase agreements | $127,351 | $127,351 | $— | | Total contractual obligations | $1,083,593 | $140,333 | $943,260 | [Off-Balance Sheet Obligations](index=105&type=section&id=Off-Balance%20Sheet%20Obligations) The Company engages in off-balance sheet activities, including credit commitments and letters of credit, to meet customer financing needs - Off-balance sheet obligations include commitments to extend credit and letters of credit, totaling **$9.71 billion** at June 30, 2025[138](index=138&type=chunk)[298](index=298&type=chunk)[300](index=300&type=chunk) - The Company's exposure to credit loss from these instruments is represented by their contractual amount, with credit policies consistent with on-balance sheet instruments[299](index=299&type=chunk) [Impact of Inflation and Changing Prices](index=107&type=section&id=Impact%20of%20Inflation%20and%20Changing%20Prices) Inflation primarily affects operating costs, but changes in interest rates have a greater impact on the Company's financial condition - Inflation affects the Company mainly through increased operating costs[302](index=302&type=chunk) - Changes in interest rates generally affect the Company's financial condition more significantly than changes in the inflation rate[302](index=302&type=chunk) [Loan Portfolio](index=107&type=section&id=Loan%20Portfolio) The loan portfolio increased significantly to $27.3 billion, driven by the Sandy Spring acquisition, with CRE remaining the largest category - LHFI totaled **$27.3 billion** at June 30, 2025, up from $18.5 billion at December 31, 2024, primarily due to the Sandy Spring acquisition[303](index=303&type=chunk) - CRE loans represent the highest concentration of credit, totaling **$16.5 billion** (60.42% of total LHFI) at June 30, 2025[311](index=311&type=chunk) - CRE concentration as a percentage of capital decreased to **283.8%** at June 30, 2025 (from 292.7% at Dec 31, 2024), driven by the Sandy Spring acquisition and a **$2.0 billion CRE loan sale**[214](index=214&type=chunk)[306](index=306&type=chunk) - The office portfolio is generally in suburban markets with strong occupancy, and the Company does not finance large, major metropolitan central business district office buildings[313](index=313&type=chunk) [Asset Quality](index=111&type=section&id=Asset%20Quality) [Overview](index=111&type=section&id=Overview) Asset quality metrics show an increase in nonperforming assets due to acquired PCD loans, while net charge-offs remained low - Nonaccrual LHFI increased to **$162.6 million** at June 30, 2025, from $58.0 million at December 31, 2024, primarily due to PCD loans acquired from Sandy Spring[314](index=314&type=chunk) - NPAs as a percentage of LHFI increased to **0.60%** at June 30, 2025, from 0.32% at December 31, 2024[314](index=314&type=chunk) - Net charge-offs were **$2.9 million for H1 2025**, compared to $6.7 million for H1 2024[314](index=314&type=chunk) - The ACL increased by **$148.7 million to $342.4 million** at June 30, 2025, reflecting the Sandy Spring acquisition's initial ACL of $129.2 million and deteriorating macroeconomic forecasts[314](index=314&type=chunk) [Nonperforming Assets](index=113&type=section&id=Nonperforming%20Assets) Nonperforming assets increased significantly due to the inclusion of nonperforming PCD loans from the Sandy Spring acquisition Nonperforming Assets (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonaccrual LHFI | $162,615 | $57,969 | | Foreclosed properties | $774 | $404 | | Total NPAs | $163,389 | $58,373 | | NPAs to total LHFI | 0.60% | 0.32% | - The increase in NPAs was primarily due to **$49.4 million** in acquired construction and land development loans and **$27.1 million** in acquired commercial real estate non-owner occupied loans from Sandy Spring[317](index=317&type=chunk) [Past Due Loans](index=114&type=section&id=Past%20Due%20Loans) Past due loans still accruing interest increased, with a notable rise in loans past due 90 days or more - Past due LHFI still accruing interest totaled **$77.7 million** (0.28% of total LHFI) at June 30, 2025, up from $57.7 million (0.31%) at December 31, 2024[320](index=320&type=chunk) - Loans past due 90 days or more and still accruing interest increased to **$39.8 million** (0.15% of total LHFI) at June 30, 2025, from $14.1 million (0.08%) at December 31, 2024[320](index=320&type=chunk) [Troubled Loan Modifications](index=114&type=section&id=Troubled%20Loan%20Modifications) The amortized cost basis of Troubled Loan Modifications decreased slightly, with no material allowance or unfunded commitments - TLMs had an amortized cost basis of **$20.2 million** at June 30, 2025, compared to $24.1 million at June 30, 2024[321](index=321&type=chunk) - **No material allowance** was held on TLMs, and no material unfunded commitments existed for TLMs at June 30, 2025 and 2024[321](index=321&type=chunk) [Net Charge-offs](index=114&type=section&id=Net%20Charge-offs) Net charge-offs remained low for the second quarter of 2025, showing a decrease compared to the prior year Net Charge-offs (Dollars in thousands) | Period | Net Charge-offs | Net Charge-offs to average loans (annualized) | | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | $(666) | 0.01% | | Three Months Ended June 30, 2024 | $(1,740) | 0.04% | | Six Months Ended June 30, 2025 | $(2,944) | 0.03% | | Six Months Ended June 30, 2024 | $(6,657) | 0.08% | [Provision for Credit Losses](index=115&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses increased significantly in Q2 2025, driven by the Day 1 provision for the Sandy Spring acquisition - Provision for credit losses was **$105.7 million for Q2 2025**, an increase of $83.9 million from $21.8 million in Q2 2024[323](index=323&type=chunk) - Included in the Q2 2025 provision was **$89.5 million** for Day 1 initial provision expense on non-PCD loans and **$11.4 million** on unfunded commitments from the Sandy Spring acquisition[323](index=323&type=chunk) [Allowance for Credit Losses](index=115&type=section&id=Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses increased significantly due to the Sandy Spring acquisition and deteriorating macroeconomic forecasts Allowance for Credit Losses (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total ALLL | $315,574 | $178,644 | | Total Reserve for Unfunded Commitments | $26,778 | $15,041 | | Total ACL | $342,352 | $193,685 | | ALLL to total LHFI | 1.15% | 0.97% | | ACL to total LHFI | 1.25% | 1.05% | - The initial ACL related to the Sandy Spring acquisition was **$129.2 million**, comprising $117.8 million ALLL and $11.4 million RUC[324](index=324&type=chunk) [Deposits](index=117&type=section&id=Deposits) Total deposits increased significantly due to the Sandy Spring acquisition, with growth across most categories - Total deposits increased by **$10.6 billion (51.8%) to $31.0 billion** at June 30, 2025, from December 31, 2024, primarily due to the Sandy Spring acquisition[330](index=330&type=chunk) Deposit Balances by Category (Dollars in thousands) | Deposit Type | June 30, 2025 Amount | June 30, 2025 % of total | December 31, 2024 Amount | December 31, 2024 % of total | | :--- | :--- | :--- | :--- | :--- | | Total interest-bearing customer deposits | $22,769,474 | 73.5% | $14,902,676 | 73.0% | | Brokered deposits | $1,163,580 | 3.8% | $1,217,895 | 6.0% | | Demand deposits | $7,039,121 | 22.7% | $4,277,048 | 21.0% | | Total Deposits | $30,972,175 | 100.0% | $20,397,619 | 100.0% | - Uninsured deposits totaled **$11.3 billion** and collateralized deposits were **$1.3 billion** at June 30, 2025[331](index=331&type=chunk) [Capital Resources](index=119&type=section&id=Capital%20Resources) The Company maintains a strong capital position, with all regulatory capital ratios exceeding 'well-capitalized' standards - All regulatory capital ratios continue to exceed minimum requirements, classifying the Company as **'well-capitalized'**[335](index=335&type=chunk) Regulatory Capital Ratios | Ratio | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Common equity Tier 1 capital ratio | 9.77% | 9.96% | 9.47% | | Tier 1 capital ratio | 10.32% | 10.76% | 10.26% | | Total capital ratio | 13.73% | 13.61% | 12.99% | | Leverage ratio | 8.65% | 9.29% | 9.05% | | Common equity to total assets | 12.51% | 12.11% | 11.62% | | Tangible common equity to tangible assets (+) | 7.39% | 7.21% | 6.71% | [Non-GAAP Financial Measures](index=121&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) - The Company provides non-GAAP financial measures to offer additional understanding of ongoing operations and enhance comparability[339](index=339&type=chunk) Net Interest Income (FTE) Reconciliation (Dollars in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income (GAAP) | $321,371 | $184,534 | $505,536 | $332,358 | | FTE adjustment | $4,362 | $3,814 | $8,120 | $7,537 | | Net interest income (FTE) (non-GAAP) | $325,733 | $188,348 | $513,656 | $339,895 | Tangible Common Equity Reconciliation (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Ending Equity (GAAP) | $4,832,639 | $3,142,879 | $3,043,686 | | Less: Ending goodwill | $1,710,912 | $1,214,053 | $1,207,484 | | Less: Ending amortizable intangibles | $351,381 | $84,563 | $95,980 | | Less: Perpetual preferred stock | $166,357 | $166,357 | $166,357 | | Ending tangible common equity (non-GAAP) | $2,603,989 | $1,677,906 | $1,573,865 | Adjusted Operating Earnings & EPS Reconciliation (Dollars in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | $19,791 | $25,161 | $69,610 | $74,930 | | Plus: Merger-related costs, net of tax | $63,349 | $24,236 | $67,992 | $25,799 | | Plus: CECL Day 1 non-PCD loans and RUC provision expense, net of tax | $77,742 | $11,520 | $77,742 | $11,520 | | Adjusted operating earnings available to common shareholders (non-GAAP) | $135,145 | $67,872 | $186,719 | $116,898 | | Adjusted operating earnings per common share, diluted (non-GAAP) | $0.95 | $0.76 | $1.61 | $1.42 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=124&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the Company's exposure to market risk, primarily interest rate risk, and its management strategies [Interest Rate Sensitivity](index=124&type=section&id=Interest%20Rate%20Sensitivity) The Company manages interest rate risk through its asset liability management committee, utilizing various simulation models - Market risk is primarily composed of interest rate risk, monitored by the asset liability management committee[346](index=346&type=chunk) - Three modeling tools are used: static gap analysis, earnings simulation modeling, and economic value simulation[347](index=347&type=chunk) [Earnings Simulation Modeling](index=126&type=section&id=Earnings%20Simulation%20Modeling) This model measures the sensitivity of net interest income to interest rate changes, showing the Company was less asset sensitive at June 30, 2025 Change in Net Interest Income from Yield Curve Shocks | Change in Yield Curve | June 30, 2025 (%) | December 31, 2024 (%) | June 30, 2024 (%) | | :--- | :--- | :--- | :--- | | +300 bps | 5.49 | 6.23 | 8.00 | | +200 bps | 4.03 | 4.50 | 5.58 | | +100 bps | 2.21 | 2.48 | 2.97 | | -100 bps | (1.53) | (2.35) | (3.18) | | -200 bps | (2.82) | (5.85) | (6.58) | | -300 bps | (3.07) | (10.64) | (10.78) | - The Company was **less asset sensitive** at June 30, 2025, compared to prior periods, due to changing market characteristics and balance sheet strategies[353](index=353&type=chunk) [Economic Value Simulation Modeling](index=127&type=section&id=Economic%20Value%20Simulation%20Modeling) This model estimates the fair value of assets and liabilities, showing the Company was more liability sensitive in a rising rate environment Change in Economic Value of Equity from Yield Curve Shocks | Change in Yield Curve | June 30, 2025 (%) | December 31, 2024 (%) | June 30, 2024 (%) | | :--- | :--- | :--- | :--- | | +300 bps | (9.75) | (6.98) | (6.82) | | +200 bps | (6.40) | (4.75) | (4.39) | | +100 bps | (3.18) | (2.47) | (2.07) | | -100 bps | 2.40 | 1.88 | 1.15 | | -200 bps | 3.52 | 0.94 | 0.86 | | -300 bps | 2.13 | (1.09) | (1.54) | - At June 30, 2025, the economic value of equity was generally **more liability sensitive** in a rising interest rate environment compared to prior periods[356](index=356&type=chunk) [Item 4. Controls and Procedures](index=128&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and procedures, concluding their effectiveness as of June 30, 2025 [Evaluation of Disclosure Controls and Procedures](index=128&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025 - The Company's disclosure controls and procedures were evaluated as **effective** at the reasonable assurance level as of June 30, 2025[358](index=358&type=chunk) [Changes in Internal Control Over Financial Reporting](index=128&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no material changes in the Company's internal control over financial reporting during the quarter - **No material changes** occurred in the Company's internal control over financial reporting during the quarter ended June 30, 2025[360](index=360&type=chunk) [PART II - OTHER INFORMATION](index=128&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=128&type=section&id=Item%201.%20Legal%20Proceedings) This section outlines the Company's involvement in legal proceedings, including a previously disclosed Consent Order with the CFPB - The Company is party to various legal proceedings, but management believes the ultimate outcome will **not have a material adverse effect** on the business[362](index=362&type=chunk) - The Bank entered into a Consent Order with the CFPB on December 7, 2023, to resolve alleged overdraft practice violations, requiring at least **$5.0 million in restitution** and a **$1.2 million civil monetary penalty**[363](index=363&type=chunk) [Item 1A. Risk Factors](index=130&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the Company's 2024 Form 10-K - **No material changes** to risk factors were identified during the quarter ended June 30, 2025, from those disclosed in the 2024 Form 10-K[364](index=364&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=130&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on common stock repurchases, noting no authorized share repurchase program was in effect - **No authorized share repurchase program** was in effect as of June 30, 2025[366](index=366&type=chunk) Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total shares purchased | Average price paid per share ($) | | :--- | :--- | :--- | | April 1 - April 30, 2025 | 5,931 | 30.05 | | May 1 - May 31, 2025 | 371 | 28.95 | | June 1 - June 30, 2025 | 1,426 | 30.36 | | Total | 7,728 | 30.06 | - The shares purchased were withheld upon vesting of restricted shares to satisfy tax withholding obligations[366](index=366&type=chunk) [Item 5. Other Information](index=130&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - **No directors or officers** adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[367](index=367&type=chunk) [Item 6. Exhibits](index=131&type=section&id=Item%206.%20Exhibits) This section provides a list of exhibits filed as part of the Quarterly Report, including merger agreements and certifications - Exhibits include the Agreement and Plan of Merger with Sandy Spring Bancorp, Inc, Amended and Restated Articles of Incorporation and Bylaws, various stock and incentive plans, and certifications[369](index=369&type=chunk) - Interactive data files formatted in Inline eXtensible Business Reporting Language (iXBRL) for the quarter ended June 30, 2025, are included[369](index=369&type=chunk) [Signatures](index=134&type=section&id=Signatures) This section contains the duly authorized signatures of the registrant's President and CEO, and Executive Vice President and CFO - The report is signed by John C Asbury, President and Chief Executive Officer, and Robert M Gorman, Executive Vice President and Chief Financial Officer, on August 5, 2025[374](index=374&type=chunk)