Atlantic Union Bankshares NYSE: AUB reported third-quarter 2026 net income available to common shareholders of $133.7 million, or $0.94 per diluted share, as loan growth and higher net interest income helped offset rising funding costs and lower fee income.
Adjusted operating earnings, which principally excluded a $2.7 million pre-tax loss on debt extinguishment related to subordinated debt refinancing, were $135.6 million, or $0.96 per diluted share. The company reported a return on tangible common equity of 19.59% and return on assets of 1.43% on a reported basis. Its adjusted operating return on tangible common equity was 19.85%, while adjusted operating return on assets was 1.45%.
President and CEO John Asbury characterized the period as a solid quarter, citing healthy loan growth, strong credit quality and a modest increase in adjusted operating earnings. He said higher net interest income and lower credit costs supported results, though funding costs increased and fee income moderated.
Loan Growth and North Carolina Expansion
Average loans totaled $28.9 billion during the quarter, rising at a 9.6% annualized rate. Period-end loans reached $29.3 billion, up $623 million from June 30, or 8.6% on an annualized basis. Growth was distributed across the franchise and led by commercial and industrial lending and construction lending, according to management.
Atlantic Union said year-to-date annualized loan growth was 7.2% and now expects full-year loan growth toward the lower end of the high single-digit range. The company continues to project year-end loan balances between $29 billion and $30 billion.
Asbury said current construction-loan growth reflects funding on projects already underway, but higher financing and project costs are expected to reduce new construction commitments over time. He said the impact could take six months to a year to emerge as developers delay some projects that are more difficult to finance.
Commercial and industrial demand has remained strong, management said. David Ring, executive vice president and wholesale banking group executive, said C&I lending represented roughly 59% of production and that loan pipelines were growing across the company’s regions.
The company is also expanding in North Carolina, where it began with one branch in the Raleigh region and plans to add seven locations, bringing the regional total to eight. One new branch had opened by the call date, with two additional locations scheduled to open by early November. Atlantic Union also expects to add three branches in Wilmington beginning next year.
Ring said the bank had 29 producers in the Carolinas, including 23 focused on C&I lending and six focused on commercial real estate. He said the third quarter was the company’s best in the Carolinas since the American National acquisition.
Margin Pressure Expected to Ease in Fourth Quarter
Fully tax-equivalent net interest margin declined six basis points from the prior quarter to 3.88%, as the cost of funds rose seven basis points to 2.01%. The company attributed the higher funding expense to customers moving into higher-yielding deposit products and a greater mix of borrowings.
Despite the margin decline, tax-equivalent net interest income rose $3.4 million during the quarter, driven by loan growth. Earning-asset yields increased one basis point to 5.89%.
Chief Financial Officer Alex Dodd said the company expects margin to improve in the fourth quarter. Half of Atlantic Union’s loan portfolio is variable rate, and management said most SOFR-based loans reset early in October, allowing the bank to capture a full-quarter benefit from the Federal Reserve’s September 25-basis-point rate increase.
Dodd said the company is modestly asset sensitive on the short end of the yield curve and that each additional 25-basis-point Federal Reserve rate increase should add about three basis points to quarterly net interest margin. Atlantic Union maintained its full-year fully tax-equivalent net interest margin outlook of 3.90% to 3.95%, though it expects results at the low end of that range.
The company expects full-year tax-equivalent net interest income at the lower end of its $1.32 billion to $1.33 billion range, inclusive of accretion income. Its outlook assumes a 25-basis-point Federal Reserve increase in December and stable term rates at current levels.
Deposits, Credit and Capital
Total deposits ended the quarter at $31 billion, up $497 million from the prior quarter, or 6.5% annualized. Average deposits increased 1.5% annualized. Management said several large customer outflows reduced quarter-end balances, while increased brokered funding contributed to reported deposit growth.
Brokered deposits represented 3.5% of total deposits at quarter-end. Asbury said most of the funds associated with customer outflows returned early in the fourth quarter. The loan-to-deposit ratio improved to 93.7% as of Oct. 19 from 94.6% at Sept. 30, remaining within the company’s preferred 90% to 95% range.
Credit metrics remained favorable. Nonperforming assets declined to 37 basis points of loans held for investment from 39 basis points in the prior quarter, while classified assets decreased to 4.0% from 4.4%. Net charge-offs were $2.3 million, or three basis points annualized.
The allowance for credit losses increased $3.3 million to $334.2 million, primarily due to loan growth, and represented 114 basis points of loans held for investment. The company lowered its 2026 net charge-off forecast to less than five basis points and expects its allowance ratio to remain at the lower end of its 115-to-120-basis-point guidance range.
Atlantic Union repurchased $62.5 million of common stock during the quarter while maintaining its targeted common equity tier 1 ratio range of 10% to 10.5%. Tangible book value per share fell to $20.36 from $20.77 at June 30, primarily because higher long-term rates increased unrealized losses recorded in accumulated other comprehensive income.
Management said it intends to continue repurchases through May 2027, though it would reassess the pace if rates moved sharply higher and affected tangible common equity.
About Atlantic Union Bankshares (NYSE:AUB)
Atlantic Union Bankshares Corporation NYSE: AUB is a financial services holding company headquartered in Richmond, Virginia. Its principal subsidiary, Atlantic Union Bank, provides banking and related financial services to individuals, businesses, institutions and government entities.
The company offers consumer and commercial deposit accounts, residential and commercial real estate lending, business loans, personal loans, treasury and cash management services, mortgage banking, investment and wealth management, and other financial solutions.
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