Atlantic Union Q3 Adjusted Earnings Rise as Loan Growth Offsets Margin Pressure

Atlantic Union Bankshares Corporation reported lower third-quarter GAAP profit as the prior period benefited from a sizable asset-sale gain, while adjusted operating earnings edged higher on a smaller provision for credit losses. Loan growth remained strong, but higher funding costs compressed net interest margin and contributed to management’s expectation that several full-year metrics will finish near the low end of their forecast ranges.

The Richmond, Virginia-based bank holding company reported third-quarter 2026 net income available to common shareholders of $133.7 million, down 15.4% from $158.0 million in the second quarter. Diluted GAAP earnings per share fell to $0.94 from $1.11.

The sequential decline largely reflected the absence of a $32.3 million pre-tax gain from the second-quarter sale of Atlantic Union’s equity interest in Bearing Insurance Group. Third-quarter results also included a $2.7 million pre-tax loss on debt extinguishment.

Excluding those items and securities gains, adjusted operating earnings available to common shareholders increased 1.2% to $135.6 million. Adjusted operating diluted EPS rose to $0.96 from $0.94. The improvement primarily reflected a 51.2% decline in the provision for credit losses to $5.7 million, partly offset by lower adjusted fee income.

Adjusted operating return on tangible common equity was 19.85%, compared with 20.11% in the previous quarter, while adjusted operating return on assets was 1.45%, versus 1.47%. The adjusted operating efficiency ratio on a fully taxable-equivalent basis increased to 48.14% from 47.47%.

Loan growth remains concentrated in commercial categories

Loans held for investment reached $29.3 billion at September 30, increasing $623.3 million from the end of the second quarter, or 8.6% on an annualized basis. Average loans grew at an annualized rate of about 9.6% during the quarter.

Commercial and industrial loans increased by $222.0 million to $5.85 billion, while other commercial loans rose by $215.6 million to $1.87 billion. Construction and land development balances increased by $166.2 million to $2.03 billion. Those gains were partly offset by declines in non-owner-occupied commercial real estate, multifamily and commercial residential loans.

Total commercial real estate loans stood at approximately $17.06 billion, representing 58.2% of the loan portfolio. The bank’s CRE concentration ratio was 267% of total capital. Within the portfolio, non-owner-occupied office loans totaled $1.46 billion, with nonperforming loans equal to 0.26% of office balances and criticized loans at 8.84%. Multifamily loans totaled $2.38 billion, with nonperforming and criticized ratios of 0.86% and 12.14%, respectively.

Asset-quality measures remained contained during the quarter. Annualized net charge-offs were 3 basis points of average loans held for investment, while nonperforming assets were 0.37% of loans. The allowance for credit losses increased by $3.3 million to $334.2 million but declined as a percentage of loans to 1.14% from 1.15%. The increase in reserves reflected loan growth and higher reserves for unfunded construction and land development commitments.

Deposit costs weigh on margin

Deposits increased by $497.3 million to $31.0 billion, equivalent to annualized quarter-end growth of 6.5%. The increase came from brokered and demand deposits, partly offset by lower interest-bearing customer deposits. Brokered deposits rose to $1.09 billion from $557.8 million, while total interest-bearing customer deposits declined 1.1% on an annualized basis.

Noninterest-bearing demand deposits remained 22% of total deposits, and core deposits accounted for 90% of the deposit base. The loan-to-deposit ratio increased to 94.6% from 94.1%.

The average cost of deposits rose 7 basis points to 2.00%, reflecting higher costs on interest-bearing customer deposits and brokered funding. Net interest margin on a fully taxable-equivalent basis narrowed to 3.88% from 3.94%, while core FTE net interest margin declined to 3.40% from 3.46%. Net interest income nevertheless increased 1% to $328.4 million as average earning assets expanded.

Noninterest income fell 39.3% to $54.8 million, primarily because the Bearing Insurance gain occurred in the prior quarter. Adjusted operating noninterest income declined 5.4% to $54.8 million, reflecting lower loan-related interest-rate swap fees, mortgage banking income, and fiduciary and asset-management fees.

Noninterest expense rose 2.6% to $204.3 million. Excluding intangible-asset amortization and the debt-extinguishment loss, adjusted operating expense increased 1.5% to $186.7 million. The increase included higher marketing spending, employee costs associated partly with the company’s North Carolina expansion, and continued investment in technology and software maintenance.

Full-year outlook points to low ends of several ranges

Atlantic Union expects year-end loans of $29.0 billion to $30.0 billion, representing growth at the low end of the high-single-digit range, and deposits of $31.0 billion to $32.0 billion, reflecting low-single-digit growth.

Management expects full-year FTE net interest income and FTE net interest margin near the low ends of their respective ranges of $1.32 billion to $1.33 billion and 3.90% to 3.95%. Adjusted operating noninterest income is also expected near the low end of a $220 million to $230 million range, while adjusted operating noninterest expense is projected near the low end of $742 million to $752 million, excluding about $60 million of intangible-asset amortization.

The company reduced its expected full-year net charge-off ratio to less than 5 basis points from a previous range of 5 to 10 basis points. It expects the allowance for credit losses to be near the low end of 115 to 120 basis points of loans.

The outlook assumes a 25-basis-point Federal Reserve rate increase in December 2026, stable term rates, moderate GDP growth and a stable economy across Atlantic Union’s branch footprint. It also assumes continued common-stock repurchases in the fourth quarter. The company repurchased $62.5 million of shares during the third quarter and paid a common dividend of $0.37 per share.

Atlantic Union’s estimated common equity Tier 1 ratio was 10.4% at quarter-end, above the regulatory well-capitalized minimum. Liquidity sources totaled $12.2 billion, equal to about 124% of uninsured and uncollateralized deposits. Risks identified by the company include interest-rate and deposit volatility, commercial real estate concentration, economic and trade-policy uncertainty, execution of its North Carolina expansion, technology and cybersecurity threats, and unrealized securities losses. Its $4.6 billion securities portfolio carried net unrealized losses of $558.1 million at September 30, and management said accumulated other comprehensive income volatility was clouding the tangible book value outlook.