Atlantic Union Bankshares Corporation

Good day. Thank you for standing by. Welcome to Atlantic Union Bankshares' second quarter 2026 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker host, Bill Cimino. Senior Vice President of Investillations. Please go ahead.

Thank you, Livia, 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're 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 reconciliations to comparable GAAP measures, is included in the appendix to our slide presentation and in our earnings release for the second 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 in a forward-looking statement. All comments made during today's call are subject to that safe harbor statement. At the end of the call, we'll take questions from the research analyst community. I'll now turn the call over to John. Thank you, Bill. Good morning, everyone. Thank you so much for joining us today. Atlantic Union Bankshares reported strong second quarter financial results reflecting disciplined execution and providing an encouraging indication of the earnings power of the franchise we have been building. For the first time in two years, we did not incur any merger related costs. We were also pleased to realize a $32.3 million pre-tax gain from the sale of our equity interest and bearing insurance. Adjusted operating performance excluding the gain from the equity interest sale was notable for solid loan growth Margin improvement on both a core and reported basis, disciplined expense management, and solid credit performance, along with continued capital generation. Over the past two years, we have deployed capital intentionally to strengthen and expand our franchise. We believe our second quarter results are an encouraging early indication that those investments are beginning to translate into stronger earnings capacity, capital generation, and long-term shareholder value. We remain focused on building on this progress through disciplined execution, organic growth, and continued attention to soundness, profitability, and growth, in that order. Our commitment to creating shareholder value remains unwavering. We believe Atlantic Union is well positioned to deliver sustainable growth, top-tier financial performance, and long-term value for our shareholders. We believe that our continued organic growth opportunities due to our robust presence in attractive markets reinforce our status as the premier regional bank headquartered in the Lower Mid-Atlantic. I'll briefly cover our Q2 26 highlights and share market insights before Alex presents the financial review. Before reviewing this quarter's results, I would note that the second quarter was marked by continued uncertainty, particularly around geopolitical developments and the conflict involving Iran. Despite that backdrop, Customer competence remained resilient and economic activity across our footprint held up well. We delivered record loan production during the quarter, exceeding our 2025 fourth quarter production level, which is traditionally our strongest quarter, by roughly 8%. While the second quarter is typically one of our seasonally stronger periods, and we expect some moderation in the third quarter due to the normal summer slowdown, our pipelines remain healthy. Overall, we believe that our underlying credit activity and pipeline depth support our full-year outlook, and we currently expect loan growth to finish toward the higher end of our mid-single-digit range. Importantly, this growth reflects strong client activity across our markets, the value of the customer relationships we have built, and disciplined execution by our team. With that context, here are the key highlights from the second quarter. Average loans were $28.2 billion and grew approximately 6% annualized during the second quarter, while period end loans increased approximately 10.4% annualized from Q1 to Q2, ending the quarter at approximately $28.7 billion. Growth was well distributed across the franchise, led by strong client activity in commercial lending, construction lending, multifamily, and select consumer categories. Line of credit utilization decreased slightly from the first quarter, but was up slightly year over year. Year-to-date annualized loan growth was 6.4%. As I mentioned, loan pipelines are healthy and support our expectation that full-year loan growth is tracking toward the higher end of our mid-single-digit outlook. Average deposits increased 2.4% annualized during the quarter, and total deposits increased approximately 1% annualized from the end of Q1 to the end of Q2, all consistent with our low single-digit 2026 outlook. GRYTH was concentrated in interest-bearing deposits. We also reduced broker deposits by approximately $53 million during the quarter and roughly $571 million year-to-date. Broker deposits represented only 2% of total deposits at quarter-end, giving us flexibility to use them selectively going forward if needed. Our core customer deposit base remains a defining strength of the franchise, and our focus remains on relationship-based deposit growth, expanding share of wallet, and maintaining funding discipline. Core net interest margin, which excludes the purchase accounting adjustments, improved by one basis point quarter over quarter. Reported FTE net interest margin increased nine basis points to 3.94%, driven primarily by higher accretion income compared with first quarter. Alex will provide more detail on the factors influencing NEM performance in his section. Before turning to credit, I do want to highlight the progress we are making in bringing our capital markets capabilities to our expanded footprint. In the second quarter, former Sandy Spring Bank teams generated approximately 27% of our interest rate swap transactions and 32% of our foreign exchange revenue. We believe these key products should continue to provide opportunities for additional revenue synergies over time. Credit quality remained strong in the quarter, with annualized net charge-offs of just three basis points for both the second quarter and year to date. Based on our first half performance, current loss expectations, and favorable asset quality trends, we are lowering our full year net charge-off guidance, which Alex will discuss later in the call. Key asset quality indicators remained encouraging. Non-performing assets increased modestly from the prior quarter, but remained low at 39 basis points of loans held for investment, while past dues declined considerably and criticized and classified assets improved to 4.4% of total loans down from 4.5% in the prior quarter. With Bureau of Labor Statistics scheduled to release June unemployment data shortly, this chart will soon be updated. For now, I'll simply note that Virginia and North Carolina's May unemployment rates remain below the national average while Maryland's was just slightly above it. We continue to expect unemployment levels in Virginia, Maryland, and North Carolina to remain manageable and generally comparable to or below the national average consistent with Moody's current state level forecast. We remain confident in the resilience and long-term attractiveness of our markets. As I approach my 10th anniversary with Atlantic Union at the end of this quarter, what is clear to me is how far we've come as an organization. We've stayed focused, adapted as conditions changed and consistently executed the strategy we set out and clearly communicated while remaining grounded in the community bank values and local relationships that have always defined Atlantic Union. This quarter's results reflect that continued momentum and most importantly, the dedication of our teammates whose hard work makes it all possible. With that foundation in place and no additional acquisitions currently planned during this phase of our strategic plan, Our focus is squarely on continuing to demonstrate the sustained performance and capital generation capability of the company we have built. Performance that enables us to better serve our customers and communities, invest in our teammates, and create long-term value for our shareholders. With that, I'll turn the call over to our CFO, Alex Dodd, for a detailed review of our quarterly financial results. Before I do... I'd like to note that Alex has now been with the company for nearly four months following a deliberate and smooth transition with former CFO Rob Gorman, who will retire at the end of September. Since this is our last earnings call before Rob's retirement, I want to again thank him for all he's contributed over his 14 years with Atlantic Union. Rob leaves behind a strong legacy and will be missed, but he is ably succeeded by Alex. With that, I'll turn the call over to Alex for his inaugural quarterly earnings comments.

Alex? Thank you, John, and good morning, everyone. Before I begin, I want to thank Rob as well for making this a smooth transition for me. I'll now take a few minutes to provide you with some details on the results. My commentary today will primarily address Atlantic Union's second quarter financial results presented on a non-GAAP adjusted operating basis, which for the second quarter principally excludes the $32.3 million pre-tax gain associated with the sale of our equity interest and bearing insurance. In the second quarter, reported net income available to common shareholders was $158 million and earnings per common share of $1.11. The adjusted operating earnings available to common shareholders were $134 million or $0.94 for common share for the second quarter resulting in an adjusted operating return on tangible common equity of 20.11% and adjusted operating return on assets of 1.47% and an adjusted operating efficiency ratio of 47.47%. Here's a look at the GAAP year-to-date metrics and trends over the last few years. Looking at the year-to-date adjusted operating numbers at the end of the second quarter, we have already reached the target for ROA and ROTCE medium-term financial targets. We remain confident that we will achieve all three of these targets over the medium term, which we define as this year and next. Turning to the credit loss reserves, at the end of the second quarter, the total allowance for credit losses was $331 million, an increase of $9.1 million, primarily driven by loan growth during the quarter. The total allowance for credit losses as the percentage of total loans held for investment remained flat at 115 basis points at the end of the second quarter. As John mentioned, net charge-offs were $2 million, or three basis points annualized in the quarter. Now turning to the pre-tax, pre-provision components of the income statement for the second quarter. Tax equivalent net interest income was $329.7 million, an increase of $12.8 million from the first quarter primarily driven by an increase in loan volumes, higher loan yields, and increased loan accretion income. The increase in loan-related interest income was partially offset by an increase in deposit interest expense, primarily from growth in interest-bearing deposit balances and modestly higher deposit costs. As John noted, the second quarter's tax equivalent net interest margin increased nine basis points from the prior quarter to 3.94%. primarily due to higher earning asset yields partially offset by modestly higher cost of deposits. Earning asset yields increased nine basis points from the prior quarter to 5.88% primarily due to higher loan accretion income of 5 million and higher loan yields. Cost of funds was flat from the prior quarter as a three basis point increase in the cost of deposits was offset by lower borrowing amortization costs related to past acquisitions. of note, excluding the impact of accretion income, our core net interest margin increased by one basis point to 3.46%. Non-interest income increased 35.5 million to 90.2 million per quarter, primarily driven by the gain on sale of our equity interest in bearing insurance, excluding the one-time gain, adjusted operating non-interest income increased 3.1 million to 57.9 million driven by higher loan related interest rate swap fees associated with higher loan originations and increased fiduciary and asset management fees which are partially offset by lower other income. Non-interest expense decreased 10.7 million to 199.1 million for the second quarter driven by a $9 million decline in merger related costs. Adjusted operating Non-interest expense, which excludes merger-related costs in the first quarter, and amortization of intangible assets in both quarters, decreased $1.3 million to $184 million for the second quarter, primarily due to lower marketing costs, along with a decrease in salaries and benefits primarily related to seasonally higher payroll taxes and 401k contribution expenses in the prior quarter. At June 30th, Loans held for investment net of unearned income were $28.7 billion, an increase of $727 million, or 10.4% annualized from the prior quarter. Our average loan growth for the quarter was approximately 6%. At June 30th, total deposits were $30.5 billion, an increase of $77 million, or approximately 1% annualized from the prior quarter, while average deposits decreased 2.4% for the quarter. Our loan-to-deposit ratio ended the quarter at 94.1% within our preferred range of 90 to 95%. At the end of the second quarter, Atlantic Union Bank shares and Atlantic Union Bank's regulatory capital ratios were comfortably above well-capitalized levels. In addition, we remained well-capitalized on an adjusted basis if you include the negative impact of AOCI and unrealized losses for held maturity securities in the calculation of the regulatory capital ratios. On a late quarter basis, tangible book value per common share increased 84 cents or 4.2% to $20.77 per share at the end of the second quarter. Since Q2 of 2025, tangible book value per share has grown $2.39 or 13% year over year. The CT1 ratio was 10.41% for the second quarter and within our preferred range of 10 to 10.5%. During the second quarter, the company repurchased approximately 10 million of its common shares at an average price of $37.76, leaving approximately 240 million remaining under our share repurchase authorization. Before turning to the financial outlook, I would emphasize that our second quarter results represented strong operating performance and an encouraging indication of the earnings capacity and capital generation capability of the franchise. At the same time, we believe our updated outlook reflects a disciplined and prudent view of second half funding competition and deposit mix. We continue to expect loan balances to end the year between $29 and $30 billion. while year end deposit balances continue to be projected between 31 and 32 billion. On the credit front, the allowance for credit losses is projected to remain in the 115 to 120 basis point range and we are reducing the range for our projected net charge off ratio to be between five and 10 basis points in 2026. Fully tax equivalent net interest income for the full year is now projected to come in between 1.32 billion and 1.33 billion inclusive of accretion income. The updated range reflects our expectation of higher interest bearing deposit mix as well as greater loan and deposit competition in the second half of the year. We are tightening the range for our 2026 fully tax equivalent net interest margin to between 3.90% and 3.95%. This outlook is supported by our baseline assumption that the Federal Reserve increases rates by 25 basis points in September and that term rates remain stable at current levels. On a full year basis, non-interest income is expected to be between $220 and $230 million, while adjusted operating non-interest expense is estimated to fall in between the range of $742 to $752 million, including the expense impact of our North Carolina investment and our other 2026 strategic initiatives. Based on these projections, including our expected stock repurchase activity, we expect to generate annual growth in tangible book value per share of approximately 12% in 2026 and produce financial returns that will place us within the top quartile of our proxy peer group. In summary, Atlantic Union delivered strong operating financial results in the second quarter and had a solid first half. We remain focused on generating sustainable, profitable growth and to build long-term value for our shareholders in 2026 and beyond. I'll now turn the call over to Bill.