Regional banking company Atlantic Union Bankshares (NYSE: AUB) missed Wall Street’s revenue expectations in Q1 CY2026, but sales rose 71.1% year on year to $371.7 million. Its non-GAAP profit of $0.89 per share was 2.2% above analysts’ consensus estimates.

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StockStory’s Take

Atlantic Union Bankshares’ first quarter saw the market respond negatively, as revenue missed Wall Street expectations despite notable year-on-year growth. Management attributed the quarter’s results to continued loan growth, a successful integration of Sandy Spring Bank, and disciplined expense management. CEO John Asbury pointed to record fundings from the equipment finance group and strong production from the North Carolina commercial real estate team as bright spots, but also acknowledged elevated loan payoffs late in the quarter, particularly in commercial real estate, which offset some of the loan growth momentum.

Looking forward, management’s outlook centers on achieving loan growth within targeted ranges, maintaining expense discipline, and capitalizing on opportunities in attractive markets such as North Carolina. Executives highlighted robust loan pipelines and the expectation that higher interest rates will keep lending activity stable. CFO Alex Dodd emphasized the strategic focus on core deposit growth and indicated that the completion of merger integration would allow results to better reflect underlying operational performance. Asbury noted, “Our primary focus is on growing customer deposits and expanding our share of wallet.”

Key Insights from Management’s Remarks

Management cited loan growth, expense control, and the integration of Sandy Spring Bank as key influences on the quarter, while calling out late-quarter commercial real estate payoffs and deposit mix shifts as areas of focus.

• Loan growth momentum: The quarter saw strong loan production, including record levels from Atlantic Union Equipment Finance and the North Carolina commercial real estate group. However, higher-than-typical payoffs in commercial real estate, driven by property sales, reduced net loan growth in the final weeks of the quarter.

• Deposit mix management: Management emphasized reducing high-cost brokered deposits and growing core customer deposits. Brokered deposits now represent only 2% of total deposits, and executives noted that the franchise’s core deposit base is a critical differentiator and central to funding strategy.

• Credit quality stability: Asset quality indicators continued to improve, with very low net charge-offs and declining nonperforming assets. The company also updated its credit loss reserve methodology, enhancing granularity and aligning with portfolio mix changes, which management believes should provide more precise monitoring of credit risk going forward.

• Expense discipline post-merger: Noninterest expenses decreased, mainly due to the end of merger-related costs and lower professional services and technology expenses. Management expects expense levels to remain well controlled, with some expected increases tied to North Carolina expansion later in the year.

• Integration and strategic refocus: The quarter marked the conclusion of Sandy Spring Bank integration, and with no new acquisitions planned in the near term, management is shifting focus to demonstrating earnings power and capital generation from the expanded footprint. Leadership views this as a pivotal transition for the company’s strategic plan.

Drivers of Future Performance

Management expects loan pipeline conversion, deposit growth, and operational efficiency to be the main themes shaping performance for the remainder of the year.

• North Carolina expansion: The company is investing in new branch openings in the Raleigh and Wilmington areas, aiming to build on strong commercial loan momentum in the Carolinas. Management expects these markets to be key growth drivers due to favorable demographics and employment trends.

• Deposit cost pressures: Executives acknowledged heightened competition for deposits, especially in the Metro D.C. and North Carolina markets. The company is offering higher rates on CDs and money market accounts to attract new funds, which is expected to cause a modest increase in deposit costs throughout the year.

• Credit and margin management: The updated credit reserve model is designed to provide more granular risk management as the loan portfolio grows. While management projects net charge-off ratios to remain low, they cautioned that unforeseen one-off events could cause volatility. The outlook for net interest margin remains stable to slightly higher, supported by repricing of maturing fixed-rate loans at higher yields.

Catalysts in Upcoming Quarters

Looking ahead, analysts will monitor (1) loan growth conversion rates, especially in the Carolinas, (2) the pace and cost of new deposit inflows amid rising competition, and (3) the impact of North Carolina branch expansion on both loan and deposit growth. Developments in credit quality and margin management, as well as the company’s ability to control expenses post-integration, will also be important markers of execution.

Atlantic Union Bankshares currently trades at $37.56, down from $38.73 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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