Atlantic Union Bankshares Corporation 2026 Q3 Earnings Call

You may begin. Thank you, Tawanda, and good morning, everyone.

I have Atlantic Union Bankshares President and CEO, John Asbury, and Executive Vice President and CFO, Alex Dodd, with me today. We also have other members of our executive management team with us for the question and answer period. Please note that today's earnings release and the accompanying slide presentation we are going through on this webcast are available to download on our investor website, investors.atlanticunionbank.com. During today's call, we will comment on our financial performance using both GAAP metrics and non-GAAP financial measures. Important information about these non-GAAP financial measures, including reconciliation to comparable GAAP measures, are in the appendix to our slide presentation and in our earnings release for the third quarter of 2026.

We will also make forward-looking statements which are not statements of historical fact and are subject to risks and uncertainties. There can be no assurance that actual performance will not differ materially from any future expectation or result expressed or implied by these forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statement except as required by law. Please refer to our earnings release and slide presentation issued today and our other SEC filings for further discussion of the company's risk factors and other important information regarding our forward-looking statements, including factors that could cause actual results to differ from those expressed or implied. All comments made during today's call are subject to that safe harbor statement. At the end of the call, we will take questions from the research analyst community. I now turn the call over to John.

Thank you, Bill. Good morning, everyone. This was a solid quarter with healthy loan growth, strong credit quality, and a modest increase in adjusted operating earnings. Higher net interest income and lower credit costs supported the result while funding costs increased and fee income moderated. I will briefly cover the quarter's highlights and share some market perspective before Alex reviews the financial results. Our third quarter results reflect disciplined execution and sound underlying performance despite a more challenging funding environment. With merger-related items behind us, the only significant adjustment this quarter was a loss on debt extinguishment related to our subordinated debt refinancing. Over the past several years, we have deployed capital deliberately to strengthen the franchise and support long-term growth.

This quarter provides further evidence that our investments in supporting earnings capacity and organic growth while our earnings and capital generation continue to provide flexibility to invest in the franchise and return capital to shareholders. As always, we remain focused on soundness, profitability, and growth in that order. Our North Carolina expansion is underway. We began with one branch in the Raleigh region and plan to add seven new branches there, bringing us to eight across the region when complete. One new location is already open and two more are scheduled to open by early November. Beginning next year, we also expect to add three branches in the Wilmington area. In parallel, we are expanding our commercial banking teams in North Carolina. Together, these investments are designed to build full-service relationships, support long-term deposit gathering and commercial banking growth, and generate attractive risk-adjusted returns over time.

We believe our model translates well to these markets. We combine local market knowledge, local decision-making, and responsiveness with the capabilities and balance sheet strength of a larger regional bank. That is the value proposition we are bringing to North Carolina, and it is the value proposition that we have executed well across the rest of the franchise. I will briefly cover our third quarter highlights and share some market perspective before Alex Dodd reviews the financial results. The operating environment does remain uncertain, shaped by geopolitical tensions, energy price volatility, persistent inflation, and an evolving interest rate outlook. Within our customer base, activity remains constructive and loan pipelines are healthy. Customers are becoming more selective as financing and project costs remain elevated, but overall activity level remains supportive of profitable growth. Against that backdrop, client activity and disciplined execution produced healthy loan growth during a traditionally seasonally slower quarter.

We remain focused on profitable growth supported by relationship-based funding, appropriate pricing, and attractive risk-adjusted returns. With that context, here are the key highlights from the third quarter. Average loans were $28.9 billion, increasing approximately 9.6% annualized during the quarter. Period-end loans reached $29.3 billion, up approximately 8.6% annualized from June 30. Growth was well distributed across the franchise, led by commercial and industrial lending and construction lending, and line utilization increased modestly. Year to date, annualized loan growth was 7.2%. Based on current pipelines and expected fourth quarter activity, we now expect full-year loan growth toward the lower end of the high single-digit range. Average deposits increased 1.5% annualized during the quarter, while period-end deposits increased 6.5% annualized to $31.0 billion. Year to date deposit growth was approximately 2.2%, consistent with our low single-digit outlook.

Several larger customer outflows reduced quarter-end deposit balances and period-end deposit growth reflected increased brokered funding, which represented 3.5% of total deposits at quarter end. Importantly, most of those funds returned early in the fourth quarter, and as of October 19, our loan-to-deposit ratio had improved to 93.7%, compared with 94.6% at September 30. Broker deposits were relatively flat year over year. Our focus remains on growing relationship-based deposits, expanding share of wallet, and maintaining disciplined funding. Reported FTE net interest margin declined six basis points to 3.88% as funding costs increased, but FTE net interest income rose $3.4 million as loan growth and accretion income more than offset those pressures. Q3 received no material benefit from the September rate increase because most SOFR-based loans reset in early October. Q4 should reflect a full quarter of that benefit on the variable rate loan portfolio.

Alex will provide additional details in his comments. Overall asset quality remained strong and trends were favorable across most key metrics. Quarter-over-quarter, non-performing assets declined to 37 basis points of loans held for investment from 39 basis points. Classified assets decreased to 4.0% from 4.4%, and net charge-offs remained at three basis points annualized. Accruing past dues increased six basis points to 34 basis points, but remain low in absolute terms. Given favorable credit trends and our current loss expectations, we are lowering our full year net charge-off guidance, which Alex will discuss later in the call. The most recent state unemployment data available for this presentation are for August, showing unemployment rates in Virginia and North Carolina remain below the national average, while Maryland's was in line with it.

Labor market conditions across our footprint continue to compare favorably with the national picture, supporting our confidence in the resilience and long-term attractiveness of our markets. This quarter's results reflect continued progress in our organic growth initiatives. We are operating as one team across the combined franchise. We also continue to build our North Carolina commercial banking teams, where we see meaningful opportunities to deepen relationships and contribute incremental growth over time. Conditions across our markets remain resilient, although we expect certain aspects of the operating environment to become more challenging over time. Higher rates may weigh on mortgage banking activity and interest rate swap income, while competition for deposits may increase pressure on funding costs. In commercial real estate, higher financing and project costs are likely to slow new construction and delay some projects.

Even so, at this time, we believe that healthy pipelines and continued customer activity support our expectations for profitable growth despite the uncertain environment. Additionally, we have not observed any broad-based deterioration in our loan portfolios. We have a long track record of adapting to changing conditions, and we will continue to respond as the environment evolves. While we remain mindful of the headwinds I just discussed, we believe that our focus on soundness, profitability and growth, in that order, positions us well to continue creating long-term value. Our priorities remain clear: protect balance sheet strength, generate profitable growth, and allocate capital where we see attractive risk-adjusted returns. Healthy loan demand, strong credit performance, and continued earnings and capital generation provide the flexibility to invest in the franchise, return capital to shareholders, and create long-term shareholder value.

With that, I'll turn the call over to our Chief Financial Officer, Alex Dodd, for a detailed review of our quarterly financial results.

Alex? Thank you, John, and good morning, everyone.