Atlantic Union Bankshares Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : Oh yeah, can you hear me?

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : All right. Way to improvise there. That's great. Wanted to maybe start just on the marks from the faster deal. Is there any way you can, I appreciate the kind of updated, looks like the looks like the interest rate marks are coming up just a little bit just given kind of your your your note, Rob with a little bit more tangible book value dilution but higher accretion and just curious if you can update us on on maybe what that low mark looks like.

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : Okay great! And then you are using some of your digits with that as a way to forecast kind of what your name forecast would look like.

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : And within that, is there an assumption that you'll see kind of accelerated pay downs?

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : And maybe because we've got a couple cuts coming the next few years, maybe that's. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 1:00PM, AUB.N - Q1 2025 Atlantic Union Bankshares Corp Earnings Call

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : Okay, great! And then was there any change to the credit mark with faster?

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : Okay, great. And and I know you can, I know you're just in the midst of the CRE loan sale, but is there any, just given the volatility and the rates, is there any risks do you think that sale could come at a steeper discount or do you, I think when you announced the deal was you already had about a 10% discount to those loans and just kind of curious how you're thinking about the risk of that being a little bit higher as you as you get towards the close.

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : Okay great and just as kind of an update most of of the type of credit that you have in that loan sale or multi-family retail, can you just remind us kind of a composition of of what's in that book?

Question: Catherine Mealer - Keefe Bruyette & Woods Inc - Analyst : Okay, very helpful. I'll set by the key. Thank you.

Question: David Bishop - Hovde Group - Analyst : I think she said my name, hey, how you doing John?

Question: David Bishop - Hovde Group - Analyst : Hey, just curious, obviously Sandy Spring is freshly in the rearview mirror, so to speak, but as you integrate the bank and you look at, obviously a lot of noise with the tariff situation, but on account a poor loan growth perspective, where do you think that that shakes out from a longer-term perspective is it.

Question: David Bishop - Hovde Group - Analyst : Got it. And then turned into credit looked like there was a little blip on the CNI side. There was one, I think about a $9 million dollar credit that led to no accrual. Just curious in the loan loss provision this quarter, I assume most of it, the overlay was due to the economic overlay. I was curious if there's any sort of specific accruals or reserves for that CNI credit, maybe walk through the provisions, yeah.

Question: David Bishop - Hovde Group - Analyst : Got it. That's a final question, John, obviously. But you noted the disruption we're all aware that usually where there's disruption, there's also, some opportunities as well. Any early reads where there could be some opportunities that are sort of like, unforeseen benefits, from all the turmoil.

Question: Brian Wilczynski - Morgan Stanley - Analyst : Hi, good morning.

Question: Brian Wilczynski - Morgan Stanley - Analyst : It's my pleasure and thank you for taking the question. Why don't you just start off on the net interest income guidance. Can you just walk us through what could get you to the low end of that range versus the high end? Of course, a lot of certainty in the environment, both from a growth perspective and also interest rates, but just wondering how you're thinking about the high end versus the low end there. Unidentified Representative - Atlantic Union BankShares Corp Yeah, in terms of the low end, I think, if we see significant, we're assuming 3 cuts from the Fed. If we see multiple more, that would be a fairly large be an impact on our variable rate loan book which could drive which would impact that projection negatively. In addition, if term rates came down significantly as well, part of the NIM on the core side, part of the NIM expansion we're expecting relates to fixed rate loans repricing higher than REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 1:00PM, AUB.N - Q1 2025 Atlantic Union Bankshares Corp Earnings Call what's on the books. We could see that that could shrink at this point in time. Our fixed rate loan book portfolio is about 5, a little over 5%, and we're repricing, renewing loans at about 6.25% based on the current term rates, so that could affect it as well. And then of course just net loan growth. We're not calling for a ton of loan growth this year, but if we see a runoff in the loan portfolio that could affect that as well. And then the other side of that is, if rates spike, then we could see an impact on the ability to lower deposit costs going forward too. So, all that will come into play on the lower end. In terms of the high-end and not to mention Brian, there is volatility in our assumption regarding the increasing income that's going to be coming through that can be volatile, that could come in lower than our expectations based on what we just talked about in terms of how we expect that to flow in over the seven-year period. This year, based on the accelerated seven-year digit, you can get your

Question: Brian Wilczynski - Morgan Stanley - Analyst : That's great. Thank you. And then for my follow up on the reserve built this quarter, I understand that the main driver was just a more uncertain economic outlook and the overlays that you gave for the quarter, but I was just wondering if you're seeing any weakness in the portfolio today? Any signs that things could be deteriorating in either their portfolio or in the geographic footprint in general. Anything standing out from client conversations since the tariffs were announced, I was just wondering if you had any color there. Thanks.

Question: Brian Wilczynski - Morgan Stanley - Analyst : That's really helpful. Thank you for taking my questions.

Question: Steve Moss - Raymond James - Analyst : I see. Hey John, good morning, everyone. Maybe we're just, maybe just a little ticky tacky, but just curious with regard to the commercial real estate loan sale. The phrasing in this quarter's deck is at least $2 billion, versus before kind of up to $2 billion. Just wondering, are you guys thinking about upsizing the sale?

Question: Steve Moss - Raymond James - Analyst : Got you. And then in terms of, the load mix here this quarter, quite the pullback in construction, just wondering, is that a trend you expect to continue, or do you expect to kind of refill that bucket here over time?

Question: Steve Moss - Raymond James - Analyst : Yes, it does. And then, just with regard to credit and more the reserve build here, on the guide 120 to 130 ACL, rough calculation here looks like that implies, further reserve qualitative reserve building over time. Just curious, how much do you think is, just as you put the overlays here. If tariffs are moderate, do we expect the ACL guide to come down, or are there areas that you guys are just saying too much uncertainty we're going to probably build further?

Question: Steve Moss - Raymond James - Analyst : And Rob, for absolute clarity just to break this down, what we're reporting today is AUB.

Question: Steve Moss - Raymond James - Analyst : Right, okay, I appreciate all that part. Thank you very much, guys.

Question: Stephen Scouten - Piper Sandler - Analyst : Good morning, everyone. Thanks for the time. We've covered a lot of things in in good detail already, but I guess one of the things obviously that I think has been weighing on the stock is, you mentioned tariffs, but it's also doge ideology here and fear and I guess around the government contracting business which you identified, it's really pretty small and hasn't had any net charge offs over the last four quarters. If one of those loans, let's say, were to go bad, how do you think about loss given default rates on a loan like that? How do you think about, theoretical loss content if there was weakness there?

Question: Stephen Scouten - Piper Sandler - Analyst : It's really great color. Thanks! Everything else had basically been covered. Appreciate the time this one.

Question: Russell Gunther - Stephens - Analyst : Hey, good morning, guys. Hey, morning, John. Appreciate the incremental disclosure this quarter. Just wanted to get a sense for how you guys are thinking about, the qualitative reserve-build relative to the direct and indirect exposure to DOGE, really just qualitatively trying to get a sense to the extent for which you think you've ring fenced this overhang for AUB.

Question: Russell Gunther - Stephens - Analyst : It does quite a bit. I appreciate the color. And then just last one for me, we've touched on NII guide and the range of the proforma NIM, but it would be helpful to get a sense prior to layering all that in, the margin this quarter came in better than guide. Just how are you thinking about legacy AUB and quarter two prior to folding in Sandy Spring? Thank you.

Question: Russell Gunther - Stephens - Analyst : I appreciate it guys. Great call. Thank you.