Atlantic Union Bankshares (US:AUB)2025-11-04 22:17Merger and Acquisition - The merger with Sandy Spring Bancorp, Inc. was completed on April 1, 2025, with successful integration of operations by October 14, 2025, leading to increased average balances and net interest income [209]. - The integration of Sandy Spring is expected to yield strategic gains and cost savings, although realization of these benefits is subject to various risks [194]. - The company recorded preliminary goodwill of $512.3 million related to the Sandy Spring acquisition as of September 30, 2025 [219]. - The company paid down $116.1 million in brokered deposits in Q3 2025, with total brokered deposits decreasing to $1.0 billion from $1.2 billion at December 31, 2024 [319]. - The company recorded $89.5 million of Day 1 initial provision expense on non-PCD loans acquired from Sandy Spring in Q2 2025 [312]. - Preliminary goodwill associated with the Sandy Spring acquisition totaled $512.3 million at September 30, 2025 [257]. Financial Performance - Net income available to common shareholders for Q3 2025 was $89.2 million, with basic and diluted EPS of $0.63, compared to $73.4 million and $0.82 in Q3 2024 [218]. - For the first nine months of 2025, net income available to common shareholders was $152.8 million, with basic and diluted EPS of $1.23 and $1.22, respectively, compared to $142.4 million and $1.68 in the same period of 2024 [218]. - Adjusted operating earnings for the first nine months of 2025 were $306.4 million, with adjusted diluted operating EPS of $2.46, compared to $191.4 million and $2.25 in the same period of 2024 [218]. - Adjusted operating earnings (non-GAAP) for Q3 2025 were $122,693,000, up from $77,497,000 in Q3 2024, reflecting enhanced operational performance [333]. - Total revenue (FTE) (non-GAAP) for the first nine months of 2025 reached $999,720,000, up from $610,377,000 in the same period of 2024 [329]. Assets and Deposits - Total assets increased to $37.1 billion as of September 30, 2025, up $12.5 billion from December 31, 2024, primarily due to the Sandy Spring acquisition [219]. - Total deposits reached $30.7 billion at September 30, 2025, an increase of $10.3 billion from December 31, 2024, with quarterly average deposits up 53.8% year-over-year [219]. - Total liabilities were $32.2 billion, an increase of $10.7 billion from December 31, 2024, primarily due to growth in deposits from the Sandy Spring acquisition [262]. - Stockholders' equity increased to $4.9 billion, up $1.8 billion from December 31, 2024, mainly due to the issuance of common stock related to the Sandy Spring acquisition [265]. Interest Income and Margin - Net interest income for Q3 2025 was $319.2 million, an increase of $136.3 million from Q3 2024, driven by a $11.6 billion increase in average interest-earning assets [220]. - The net interest margin increased by 46 basis points to 3.77% in Q3 2025 from 3.31% in Q3 2024, attributed to lower cost of funds and higher net accretion from the Sandy Spring acquisition [222]. - For the first nine months of 2025, net interest income was $824.7 million, an increase of $309.5 million from the same period in 2024 [223]. - The net interest margin increased by 40 basis points to 3.68% for the first nine months of 2025 compared to the same period in 2024 [224]. - The average yield on interest-earning assets increased by 11 basis points to 5.89% for the first nine months of 2025 [223]. Noninterest Income and Expense - Noninterest income rose by $78.79 million or 94.2% to $162.44 million for the nine months ended September 30, 2025, compared to $83.65 million in 2024, primarily due to the Sandy Spring acquisition [238]. - Noninterest expense rose by $115.9 million or 94.5% to $238.4 million for the quarter ended September 30, 2025, compared to $122.6 million for the same quarter in 2024, mainly due to a $38.9 million increase in salaries and benefits and a $33.5 million increase in merger-related costs [240]. - Total noninterest expense for the nine months ended September 30, 2025, increased by $274.5 million or 72.6% to $652.3 million, primarily driven by a $93.8 million increase in salaries and benefits and an $85.6 million increase in merger-related costs [243]. Credit Quality and Allowance for Losses - The allowance for credit losses (ACL) rose to $320.0 million as of September 30, 2025, an increase of $126.3 million from December 31, 2024, primarily due to the Sandy Spring acquisition [302]. - Nonaccrual LHFI increased to $131.2 million at September 30, 2025, up from $58.0 million at December 31, 2024, with NPAs as a percentage of LHFI rising to 0.49% from 0.32% [301]. - The provision for credit losses in Q3 2025 was $16.2 million, up $13.6 million from $2.6 million in Q3 2024, with total provisions for the nine months ended September 30, 2025, reaching $139.6 million, an increase of $107.0 million from $32.6 million in the prior year [311]. Economic Environment and Strategy - The economic environment is being closely monitored, with factors such as inflation, unemployment rates, and market interest rates impacting financial results [210]. - The company emphasizes the importance of liquidity and capital resources in light of potential economic changes and market conditions [192]. - The company is focused on managing growth and implementing its growth strategy amid competitive pressures from fintech companies [194]. - The company is committed to monitoring technological risks and cyber threats as part of its operational strategy [194].