AUB Q4 Deep Dive: Sandy Spring Integration and Core Loan Growth Shape 2025 Finish

Regional banking company Atlantic Union Bankshares (NYSE:AUB) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 76.1% year on year to $391.3 million. Its non-GAAP profit of $0.97 per share was 12.9% above analysts’ consensus estimates.

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StockStory’s Take

Atlantic Union Bankshares’ fourth quarter results reflected the impact of its Sandy Spring acquisition and operational discipline, with management calling out successful integration and a more efficient cost structure. CEO John Asbury pointed to “disciplined execution and successful integration of the Sandy Springs acquisition” as a key driver, noting that merger-related charges continued to affect reported results. The quarter also benefited from record loan production, a rebound in commercial lending pipelines, and deposit cost reductions that helped expand net interest margin. Management acknowledged ongoing macroeconomic uncertainty but emphasized that underlying operating performance was strong, supported by resilient credit quality and steady asset growth.

Looking to the year ahead, management expects further benefit from the completed Sandy Spring integration, citing a focus on organic loan growth and expansion into North Carolina as strategic priorities. CFO Rob Gorman said the company is “maintaining our full year 2026 financial outlook,” pointing to anticipated loan growth, stable credit quality, and continued efficiency improvements. Management highlighted expectations that merger-related expenses will subside, allowing core profitability to become more visible. They also stressed the importance of deposit growth and cost management in a competitive environment, while investments in new markets and specialty lending are expected to support revenue momentum.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to the combination of integration benefits from Sandy Spring, higher loan production, margin improvement, and steady asset quality trends.

• Sandy Spring integration progress: The completed core system conversion and cost savings initiatives related to the Sandy Spring acquisition were major contributors, with most merger-related expenses now behind the company. Management expects that future quarters will show a clearer view of underlying earnings power.
• Record loan production: Quarterly loan growth was fueled by increased commercial activity and renewed confidence among clients, with the loan pipeline ending higher than at the start of the quarter. This broad-based momentum spanned the legacy Atlantic Union, Sandy Spring, and specialty business lines.
• Deposit cost management: Deposit costs were reduced, which, combined with steady loan yields, drove a 13 basis point improvement in net interest margin. Management noted that aggressive repricing of $12–$13 billion in deposits helped offset impacts from lower interest rates on variable loans.
• Fee income drivers: Noninterest income was supported by growth in loan-related interest rate swap fees and fiduciary and asset management fees, both enhanced by the Sandy Spring acquisition. Management cautioned that swap fee income may fluctuate quarter to quarter due to client activity.
• Credit quality resilience: Asset quality remained strong, with net charge-offs at very low levels and nonperforming assets declining. Management cited conservative underwriting and client selectivity as ongoing strengths inherited from both the Sandy Spring and American National franchises.

Drivers of Future Performance

Management’s guidance for the coming year is driven by expectations of moderate loan and deposit growth, ongoing cost discipline, and stable credit quality.

• Organic loan and deposit growth: The company is targeting mid-single-digit loan growth and 3–4% deposit growth, supported by expanded commercial teams and new branches—especially in North Carolina and recently acquired markets. Management believes treasury management opportunities and specialty lending will further bolster growth.
• Efficiency improvements post-integration: With most merger-related costs behind them, management expects the efficiency ratio to remain below 50% and core expenses to stabilize. Cost savings from the Sandy Spring integration are expected to be fully realized by the second quarter, with further benefit from operational streamlining and reduced duplication.
• Credit and margin outlook: Management projects that credit quality will remain strong, with allowances for credit losses steady as a percentage of loans. Net interest margin is expected to be supported by ongoing efforts to manage deposit costs, but is sensitive to changes in Federal Reserve policy and competitive rate pressures.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the pace of loan and deposit growth, especially in North Carolina and Sandy Spring markets, (2) core margin resilience as the company manages deposit costs amid rate changes, and (3) realization of full cost savings from the Sandy Spring integration. Execution on specialty lending and branch expansion, as well as progress toward share buybacks, will also serve as important milestones.

Atlantic Union Bankshares currently trades at $39.67, in line with $39.99 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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