Atlantic Union Bankshares (AUB) Q3 2026 earnings review
Atlantic Union's loans grow fast, but its deposits cost more
Atlantic Union is lending faster than it gathers deposits, and the gap is costing it money. Loans grew about 9% on an annualized basis, led by business borrowers, while deposits from its own customers slipped and brokered deposits filled the hole. Chief executive John Asbury called it a solid quarter, but the margin narrowed to 3.88% and profit per share excluding one-offs reached $0.96.
| Net interest income, tax-equivalent | $333.1M +1.0% from last quarter, +2.9% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.96 $0.84 a year ago |
| Loans | $29.3B +8.6% annualized from June |
| Full-year net interest income outlook | Unchanged, $1.32–1.33B company now points to the low end |
⚖️ Verdict: 🔴 Bearish
The story got worse because the funding problem that already forced two reductions this year has not stopped. Deposit costs rose again, net interest income came in below what the July plan implied by our math, and management now points to the bottom of every range in its full-year outlook. The good news: credit losses stay near zero and the bank raised its buyback to $62.5 million.
The question now is whether loan growth can outrun rising deposit costs once income from the acquired loans fades. One answer is that older fixed-rate loans repricing higher lift the underlying margin; the other is that each new loan costs more to fund than the last. Fourth-quarter net interest income, which the plan has at about $340 million, will tell.
🐂 Bull Case
Business Lending Lifted Loans 9% Annualized
Atlantic Union, the largest regional bank based in Virginia, Maryland and the lower Mid-Atlantic, has finished buying rivals and now needs loan growth to earn its keep. Chief executive John C. Asbury said the quarter showed "healthy loan growth, strong credit quality and continued progress in expanding our earnings capacity", and the loan numbers back the first part.
Loans reached $29.3 billion at the end of September, and businesses borrowed most of the new money. The company attributed the increase to "higher balances in the commercial and industrial, other commercial, and construction and land development loan portfolios".
- Loans: up 8.6% annualized from June and 7.1% from a year ago
- Business loans (commercial and industrial): up 18% from a year ago, to $5.9 billion
- Other commercial loans, which include lending to private-credit funds: up 26% from a year ago
- Investor-owned commercial real estate: down 1.5% annualized from June
This matters because management now says loans will end the year at the low end of high-single-digit growth, which by our math is about $29.7 billion. Loans are already close, so the question has moved from demand to cost, because the quarter's growth was funded with brokered deposits rather than customer money.
What to watch: year-end loans against the $29.0–30.0 billion range in January. A figure near $29.7 billion would show the lending engine working as planned, and the deposit side will decide how much of it reaches profit.
Loan Losses Stayed Near Zero
Write-offs were $2.3 million, or 0.03% of average loans on an annual basis, for a second straight quarter. Nonperforming assets, loans no longer paying interest plus seized property, fell to 0.37% of loans from 0.49% a year ago. The bank set aside $5.7 million for future losses, half the previous quarter's charge, because loans grew more slowly and the reserve ratio eased slightly.
This matters because management lowered its full-year write-off outlook to under 0.05% of loans from a range of 0.05–0.10%, so credit costs will not eat the lending growth this year. Asbury ranks "soundness, profitability and growth—in that order", and the write-off line supports the first word.
What to watch: fourth-quarter write-offs against the under-0.05% full-year outlook in January. A reading at that level would carry a clean credit year into the 2027 outlook.
Buybacks Rose Sixfold to $62.5 Million
Atlantic Union began buying its own shares in May after its common equity tier 1 ratio, the main regulatory capital measure, passed the level management wanted. In the third quarter it spent $62.5 million on about 1.5 million shares at an average of $41.38, against $10 million in the second quarter.
That removed about 1.1% of the share count by our math, and the ratio still ended at 10.39%, little changed from June. The outlook "Assumes continued repurchases of common stock in Q4 2026", with $177.5 million of the $250 million programme left, so the pace can continue. The dividend also rose 8.8% from a year ago, to 37 cents.
What to watch: the fourth-quarter repurchase amount and the capital ratio beside it. A similar sum with the ratio holding above 10% would confirm the bank can lend and return capital at the same time.
Positives this quarter didn't test
Three standing positives got numbers this quarter, but none has yet shown up where it would change the funding story: in deposits gathered or in the cost of money.
- Profitability targets: return on tangible common equity excluding one-offs of 19.85% sits inside the 19–20% target, and the efficiency ratio of 48.14% sits just above the 46–48% target; a fourth quarter inside both would show the targets hold at a lower margin.
- New long-term debt: $250 million of 6.25% notes replaced $168 million of notes that cost 6.53% at redemption, at a one-off cost of $2.7 million; fourth-quarter borrowing cost will show the saving once both issues stop overlapping.
- North Carolina: the branch count rose to 180 from 177 in June, with seven more planned in Raleigh and Wilmington; any disclosed deposit figure for the new branches would be the first evidence they pay for themselves.
🐻 Bear Case
Brokered Money Supplied All the Deposit Growth
Atlantic Union's hardest problem since it bought Sandy Spring Bancorp has been paying for its loans. Customers have moved cash out of free checking accounts into accounts that pay interest, and that migration was the reason management cut its full-year interest-income plan in April and again in July.
The bank reported deposits up 6.5% annualized in the quarter. Brokered deposits, which banks buy through outside brokers at market rates, explain all of it: they rose $528 million, to $1.1 billion. Deposits from the bank's own customers fell $31 million by our math, because the company itself cited "increases in brokered and demand deposits, partially offset by a decrease in interest-bearing customer deposits".
- Cost of deposits: 2.00%, up from 1.93% last quarter
- Free checking accounts' share of deposits: 21.8%, down from 23.2% a year ago
- Loans as a share of deposits: 94.6%, up from 94.1%
- Cost of all interest-bearing funding: 2.68%, up from 2.59%
That is why the margin shrank even though loans grew: each new loan earned less over what it cost to fund. Management says "Lending pipelines remain healthy", so the loan side will keep asking the deposit side for money it is not producing on its own.
What to watch: customer deposits excluding brokered balances at year-end. If they are still flat while loans keep growing, the funding problem behind this year's two reductions carries straight into the 2027 plan.
Every Line of the Plan Now Points Low
Management kept every full-year range but labelled net interest income, margin, fee income and expenses "Low end of Range". Net interest income, the bank's main revenue, came in at $333 million. By our math the July plan implied $337–342 million for this quarter, so the bank fell short of its own arithmetic.
Why it matters: the low end of $1.32 billion still needs about $340 million in the fourth quarter, a 2% rise from this quarter, while the margin has just narrowed for a second quarter. The year's record runs one way: a reduction in April, another in July, and now a steer to the bottom of the range.
What to watch: fourth-quarter net interest income in January against $340 million. A shortfall would be the third downward move in a year and would set the 2027 starting point lower.
Acquired-Loan Income Is Doing More of the Work
When Atlantic Union bought Sandy Spring, it booked the acquired loans below face value, and the difference flows back into interest income as "accretion" over the loans' lives. That income reached $40.9 million this quarter and rises whenever borrowers repay early, so it is lumpy and will run out.
- Accretion: $40.9 million, 12% of net interest income by our math
- Margin excluding accretion: 3.40%, down from 3.46% last quarter
- Full-year accretion range management gave in July: $140–150 million
- Fourth-quarter accretion that range leaves, by our math: $26–36 million
This matters because the plan's fourth-quarter net interest income of about $340 million needs the underlying bank to earn more, not the accounting. If accretion drops into its implied range, the loans and deposits must add roughly $5–15 million of income in one quarter, more than they managed in any quarter this year.
What to watch: the fourth-quarter accretion figure in January. A number above $36 million would mean early payoffs are still carrying the margin, and the margin excluding accretion would show how little the core bank earned.
Late Payments Rose in Commercial Loans
Credit losses are low, but the early warning signs moved the other way. Loans that are behind on payments but still counted as performing rose to $98.9 million, and the company said the increase came "primarily within commercial real estate – non-owner occupied, commercial and industrial, and commercial real estate – owner occupied loan portfolios".
- Past-due loans still accruing interest: 0.34% of loans, up from 0.28% in June
- Business loans no longer paying interest: $30.4 million, up from $9.2 million a year ago
- Government-contracting loans flagged as weak by the bank: 10.9% of that $710 million book, up from 6.5% in December
- Unemployment in Washington, D.C.: 5.7% in August, the highest of any state or district
This matters because the bank's loans are concentrated around Washington, where federal spending drives business, and the reserve for unfunded construction commitments rose this quarter. The loan-loss reserve covers 1.14% of loans, so a few larger problem credits would move the provision quickly.
What to watch: the past-due and criticized-loan figures in January. A second quarterly rise in past dues would turn a watch item into a provision question for 2027.
👓 Other Themes
Higher Long-Term Rates Cut Book Value
The 10-year Treasury yield rose to 5.28% from 4.47% during the quarter, so the bank's bond portfolio lost value and tangible book value per share fell to $20.36 from $20.77. Unrealised securities losses reached $558 million. The outlook now assumes the Fed raises rates again in December, and the earlier target of about 12% book-value growth no longer appears, with the slide citing "AOCI volatility clouding TBV outlook".
💲 Other KPIs
Down 5.4% from last quarter and 3.1% from a year ago. Fees from interest-rate swaps sold to borrowers fell to $4.5 million from $6.5 million, and mortgage income dropped by $1.1 million. The full-year range of $220–230 million now points to its low end, which by our math means about $52.5 million in the fourth quarter.
Down $259 million from June, because the bank repaid Federal Home Loan Bank advances with the brokered deposits it raised. Borrowings are still up 89% from a year ago. The new $250 million of subordinated notes sits inside the total, so long-term debt rose while short-term debt fell.
Down from 274% in June and from about 284% when the Sandy Spring deal closed. The ratio measures commercial real estate loans against regulatory capital, and regulators watch levels above 300%. Investor-owned property loans shrank slightly in the quarter while business loans grew, so the mix keeps moving away from real estate.
🔮 Guidance
Unchanged, with management now saying growth will land at the low end of high single digits. By our math that is about $29.7 billion, which needs about 6% annualized growth in the fourth quarter, slower than the 8.6% just reported. Loans are already $29.3 billion, so the range is within easy reach.
Unchanged. Deposits already stand at $31.0 billion, so the low end needs almost no growth in the fourth quarter. The range was lowered in April from $31.5–32.5 billion, and this quarter's growth came from brokered deposits, so the figure says little about customer money.
Unchanged, but now expected at the low end. By our math that leaves about $340 million for the fourth quarter, a 2% rise from this quarter. Each move this year has gone the same way: the middle of the range fell $17.5 million in April and $20 million in July, and now sits at the bottom.
Unchanged, now pointed to the low end. The margin was 3.89% for the first nine months, so hitting 3.90% needs about 3.93% in the fourth quarter by our math, above this quarter's 3.88%. That requires accretion income to hold up or deposit costs to stop rising; the outlook assumes a Fed rate rise in December.
Unchanged, low end expected. By our math the low end leaves about $52.5 million for the fourth quarter, below this quarter's $54.8 million, because swap and mortgage fees have fallen with transaction volumes.
Unchanged, low end expected. By our math that leaves about $186 million for the fourth quarter, level with this quarter's $186.7 million, even as new North Carolina branches add staff. The range was lowered in April from $750–760 million.
Lowered, in the good direction: write-offs are now expected below 0.05% of loans, after running at 0.03% through September. This is the second reduction this year, from 10–15 basis points in January.
Unchanged, low end expected. The reserve stood at 1.14% of loans in September, just below the range, so a small reserve build in the fourth quarter is implied.
Unchanged. By our math about $14.5 million remains for the fourth quarter, continuing the declining schedule.
❓ Key Questions
Is the 12% book value growth target withdrawn?
The outlook slide dropped the tangible book value line and cited AOCI volatility. Investors need to know whether the target is gone or merely paused.
What will accretion income be in the fourth quarter?
The July range of $140–150 million implies $26–36 million, far below this quarter's $40.9 million, yet the plan needs higher net interest income.
How much of year-end deposits will be brokered?
Brokered balances doubled this quarter to $1.1 billion. The deposit range is met already, but the cost depends on who supplies the money.
What deposits have the new North Carolina branches gathered?
Three branches have opened and staff costs are rising, but no deposit figure for the new branches appears in the materials.
Why did criticized government-contracting loans jump?
Weak-rated loans in that $710 million book rose to 10.9% from 6.5% in December, while Washington unemployment reached 5.7%.