KBRA Affirms Ratings for Atlantic Union Bankshares Corporation

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, the preferred shares rating of BBB-, and the short-term debt rating of K2 for Richmond, Virginia based Atlantic Union Bankshares Corporation (NASDAQ: AUB) (“the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for the lead subsidiary, Atlantic Union Bank. The Outlook for the long-term ratings is Stable.

Key Credit Considerations

The ratings reflect AUB's growth into a leading Mid-Atlantic regional banking franchise, and more specifically, in Virginia and now Maryland with the acquisition of Sandy Spring Bancorp, Inc. (SASR) in 2Q25. We view the company’s core deposit franchise, which includes a 9% market share in VA predominately developed through organic means and its 6% market share in MD as entrenched and durable, along with expansion opportunities into NC, to provide a strong funding base for the growth profile of the company. AUB’s consistent and proven track record of solid financial performance across various economic cycles reflective of a core five-year average ROA of 1.2% are supportive of the ratings. A core component of the solid earnings performance has been a relatively stable NIM despite intense interest rate volatility. NIM has ranged between 3.15% in 2021 to 3.8% in 3Q25 over the last five years, which benefits from the strong core deposit base mentioned previously and ~35% C&I loans which tend to have variable rate structures. KBRA expects the NIM to continue to stabilize over the short-term as the company benefits from lower funding cost pressures and the restructuring of the combined balance sheet following the SASR acquisition. Prior to the SASR acquisition in 2Q25, the company’s asset quality has been strong in recent periods, in part benefitting from favorable credit conditions in the U.S. broadly, but also attributable to its strong and consistent underwriting standards and a comparatively granular, well diversified loan portfolio. Following the closing of the SASR acquisition, AUB has experienced a slight uptick in NPAs and credit costs, but they are primarily related to PCD loans that were identified and marked appropriately during the due diligence process. KBRA views AUB’s capital profile, which includes a CET1 ratio that has averaged ~10% in recent years, although it has dipped to 9.8% and 9.5% for its two most recent acquisitions, as adequate for the current rating category. We acknowledge that the company’s capital metrics (3Q25 CET1 ratio of 9.9%) are currently below both the median of its rating peer group as well as the broader KBRA rated bank universe. However, KBRA expects management to rebuild capital ratios over the near-term driven by solid capital accretion reflective of the earnings power of the combined AUB/SASR balance sheet as well as AUB’s ability to generate the expected cost saves to leverage operating revenue.

Rating Sensitivities

A rating upgrade is unlikely over the medium term, though over the longer-term, continued market expansion, including stronger contribution from fee income and the maintenance of a solid earnings profile along with conservative credit policies and a more conservative stance regarding AUB’s capital ratios would be viewed favorably. While not expected, greater than peer asset quality deterioration, including material loss content that impacts earnings, could lead to negative rating action. Additionally, more aggressive capital management would be viewed negatively.

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