Atlantic Union Bankshares NYSE: AUB reported what management described as a strong second quarter of 2026, with higher loan balances, improved net interest margin and continued low credit losses, while a one-time gain from an equity investment sale boosted reported earnings.
President and CEO John Asbury said the quarter offered “an encouraging indication of the earnings power of the franchise” the company has been building. He highlighted that Atlantic Union incurred no merger-related costs for the first time in two years and recorded a $32.3 million pre-tax gain from the sale of its equity interest in Bearing Insurance.
Excluding that gain, Executive Vice President and CFO Alex Dodd said adjusted operating earnings available to common shareholders were $134 million, or $0.94 per common share. Reported net income available to common shareholders was $158 million, or $1.11 per common share. On an adjusted operating basis, the company posted a return on tangible common equity of 20.11%, return on assets of 1.47% and an efficiency ratio of 47.47%.
Loan Growth Strengthens as Pipelines Remain Healthy
Asbury said Atlantic Union delivered record loan production during the quarter, exceeding its fourth-quarter 2025 production level by about 8%, even though the fourth quarter is typically the company’s strongest period. He said the bank expects some seasonal moderation in the third quarter but that pipelines remain healthy.
Average loans were $28.2 billion and grew at about a 6% annualized pace during the quarter, while period-end loans increased 10.4% annualized from the first quarter to about $28.7 billion. Asbury said growth was broad-based, led by commercial lending, construction lending, multifamily and select consumer categories. Year-to-date annualized loan growth was 6.4%.
Management said full-year loan growth is now tracking toward the higher end of its mid-single-digit outlook. Dodd said the company continues to expect loan balances to end the year between $29 billion and $30 billion.
In the question-and-answer portion, David Ring, executive vice president and wholesale banking group executive, said the former Sandy Spring markets in Greater Washington and Maryland were showing double-digit pipeline growth and double-digit production growth. “We’re seeing very balanced, stable growth,” Ring said, adding that the company was not seeing an acquisition-related hangover.
Net Interest Income Rises, but Deposit Mix Pressures Outlook
Tax-equivalent net interest income was $329.7 million, up $12.8 million from the first quarter, driven by higher loan volumes, higher loan yields and increased loan accretion income. The company’s tax-equivalent net interest margin rose nine basis points from the prior quarter to 3.94%. Dodd said the increase was primarily due to higher earning asset yields, partially offset by modestly higher deposit costs.
Excluding purchase accounting accretion, core net interest margin increased one basis point to 3.46%. Dodd said core margin is expected to “grind higher over time” because of fixed-rate loan repricing, though higher funding costs and deposit mix are expected to limit the pace of improvement.
Total deposits were $30.5 billion at June 30, up $77 million, or about 1% annualized, from the prior quarter. Asbury said growth was concentrated in interest-bearing deposits. The company reduced brokered deposits by about $53 million during the quarter and about $571 million year to date, leaving brokered deposits at 2% of total deposits at quarter-end.
Dodd said the company’s updated net interest income guidance was driven by funding-side pressures, particularly customer migration into higher-yielding interest-bearing products. He said deposit competition is “elevated but stable,” and that the change is primarily a mix issue. New interest-bearing deposits were coming in at a combined cost of more than 3%, generally between 3% and 3.5%, depending on product mix.
For 2026, Atlantic Union now projects fully tax-equivalent net interest income of $1.32 billion to $1.33 billion, including accretion income, and fully tax-equivalent net interest margin of 3.90% to 3.95%. Dodd said the outlook assumes the Federal Reserve increases rates by 25 basis points in September and term rates remain stable at current levels.
Credit Quality Remains Strong
Credit performance remained favorable in the quarter. Net charge-offs were $2 million, or three basis points annualized, both for the quarter and year to date. The total allowance for credit losses was $331 million at quarter-end, up $9.1 million, primarily because of loan growth. The allowance as a percentage of loans held for investment was unchanged at 115 basis points.
Asbury said nonperforming assets increased modestly from the prior quarter but remained low at 39 basis points of loans held for investment. Past dues declined considerably, and criticized and classified assets improved to 4.4% of total loans from 4.5% in the prior quarter.
Based on first-half performance and current loss expectations, management lowered its full-year net charge-off outlook to a range of five to 10 basis points. Dodd said the allowance for credit losses is expected to remain in a 115- to 120-basis-point range.
Asked about C&I loans placed on nonaccrual during the quarter, Chief Credit Officer Doug Woolley said the increase involved two smaller credits that had “gone a little bit sideways” and did not indicate a broader portfolio issue.
Capital, Buybacks and Strategic Investments
Dodd said the company and Atlantic Union Bank remained comfortably above well-capitalized regulatory levels. Tangible book value per common share increased $0.84, or 4.2%, from the prior quarter to $20.77, and was up 13% year over year. The CET1 ratio was 10.41%, within the company’s preferred range of 10% to 10.5%.
Atlantic Union repurchased about $10 million of common stock during the quarter at an average price of $37.76, leaving about $240 million under its share repurchase authorization. Dodd said the company plans to complete the program, though the timing will depend on share price, capital levels and loan growth.
Management also provided an update on its North Carolina expansion. Shawn O’Brien, executive vice president and consumer and business banking group executive, said Atlantic Union plans to open 10 new branches in North Carolina, focused on Raleigh and Wilmington. The first Raleigh branch was set to open in July, with two more Raleigh branches expected later in 2026. The company expects to complete most of the 10-branch plan in 2027, though some locations could extend into 2028.
Asbury said the company has no additional acquisitions currently planned during this phase of its strategic plan and is focused on demonstrating sustained performance and capital generation.
About Atlantic Union Bankshares (NYSE:AUB)
Atlantic Union Bankshares, Inc is a bank holding company headquartered in Richmond, Virginia, operating through its principal subsidiary Atlantic Union Bank. The company offers a full suite of commercial and consumer banking services to individuals, businesses and institutions across Virginia, Maryland, North Carolina and the District of Columbia. Leveraging a network of full-service branches, commercial lending offices and digital platforms, Atlantic Union Bankshares focuses on relationship-driven solutions tailored to its regional client base.
Atlantic Union’s product lineup includes traditional deposit accounts, such as checking, savings and money market accounts, along with certificates of deposit.
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