Atlantic Union Bankshares Corporation (AUB)

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1. Executive Summary

  • Company / Ticker: Atlantic Union Bankshares Corporation (AUB)
  • Sector: Regional Banking
  • Investment Opinion: Moderate Buy / Hold — Improving net interest margins and solid balance sheet with 16–27% upside potential based on analyst targets.

2. Company Overview

  • Business Model: Regional bank holding across Virginia, Maryland, and North Carolina, offering loans, deposits, auto, real estate, and commercial banking through ~109 branches  .
  • Market Position: Mid-sized regional lender with ~$24.6B assets and strong deposit & loan growth in recent years  .

3. Financial Analysis

  • Net Interest Income / Margin:
    • Q1 2025 net interest income: ~$184M (+$0.9M QoQ); NIM (FTE): 3.45% (+12 bps QoQ)  .
    • Cost of funds declined ~18 bps to 2.23%; earning asset yields ~5.68%  .
  • Asset Quality & Credit Losses:
    • Net charge-offs remain low (~0.05% annualized). Nonperforming assets stable (~0.32% LHFI)  .
    • Loan loss provisions rose to ~$17.6M in Q1 .
  • Profitability Metrics:
    • ROA ~0.9%, ROE declined YoY (~23%), ROS dropped ~13% YoY  .
  • Liquidity & Capital:
    • Working capital improved, current ratio healthy .
    • Asset-to-equity ratio strong (~24.6B/$3.2B)  .

4. Stock Performance

  • Current Price: $30.75 (–0.76 recently) .
  • Volatility: Weekly moves ~6.7%, in line with banking peers .
  • YTD & 1-Year Returns: Slightly negative YTD, underperformed both banking sector and broader market in the past year .

5. Valuation Analysis

  • Ratios: P/E ~14.6x, P/B ~0.91x, P/S ~3.6x, EV/EBITDA ~16.9x  . These suggest a slight discount to historical norms while maintaining reasonable earnings multiples.
  • Dividend Yield: DPS $1.34, ~4.2% yield, payout ratio ~60.6%  .

6. Analyst Sentiment & Price Targets

  • Consensus: Moderate Buy — 4 Buys, 2 Holds, 0 Sells .
  • Price Targets (12-month):
    • TipRanks: ~35.75 (+16%) 
    • MarketBeat: ~39.00 (+27%) 
    • MarketScreener / Zacks / AlphaSpread: ~38–39 range (+24–27%)  .

7. Industry & Peer Outlook

  • Regional Bank Sector: Benefiting from stable net interest margins post-rate cuts; asset quality holding steady.
  • Peer Comparison: AUB underperformed peers YTD, but similar fundamentals and valuation suggest mean reversion potential  .

8. Risks

  • Interest Rate Risk: Future Fed moves may compress margins further.
  • Credit Risk: Economic slowdown could elevate loan losses.
  • Execution: Merger integration (e.g., Sandy Spring acquisition) and efficiency management will influence results  .

9. Growth Catalysts

  • Margin Expansion: Continued reduction in funding costs supports NIM.
  • Loan & Deposit Growth: Assets, loans, deposits trending upward; more branches add to scale.
  • M&A Opportunities: Ongoing integration of Sandy Spring may unlock synergies and efficiencies.

10. Conclusion

Atlantic Union Bankshares presents a solid Hold to Moderate Buy case. It offers stable profitability, attractive dividend yield, improving net interest margins, and sturdy credit metrics. With analyst targets suggesting 16–27% upside, it may be worthwhile to maintain or consider new positions at current levels, particularly if the bank can sustain margin and asset growth without increasing credit deterioration.

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