Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-39325
ATLANTIC UNION BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Virginia
54-1598552
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
4300 Cox Road
Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
(804) 633-5031
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, par value $1.33 per share
AUB
The New York Stock Exchange
Depositary Shares, Each Representing a 1/400th Interest in a Share of 6.875% Perpetual Non-Cumulative Preferred Stock, Series A
AUB.PRA
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares of common stock outstanding as of July 30, 2026 was 142,814,896.
INDEX
ITEM
PAGE
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025 (audited)
2
Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2026 and June 30, 2025
3
Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30, 2026 and June 30, 2025
4
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the six months ended June 30, 2026 and June 30, 2025
5
Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2026 and June 30, 2025
6
Notes to the Consolidated Financial Statements (unaudited)
8
Report of Independent Registered Public Accounting Firm
56
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
57
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
95
Item 4.
Controls and Procedures
98
PART II - OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
99
Item 5.
Other Information
Item 6.
Exhibits
100
Signatures
101
Glossary of Acronyms and Defined Terms
In this Quarterly Report on Form 10-Q, except as otherwise indicated or the context suggests otherwise, references to the “Company” refers to Atlantic Union Bankshares Corporation, a Virginia corporation, and the terms “we”, “us” and “our” refer to the Company and its direct and indirect subsidiaries, including Atlantic Union Bank, which we refer to as the “Bank.” The “Federal Reserve” refers to the Board of Governors of the Federal Reserve System, our primary federal regulator.
“Our common stock” refers to the Company’s common stock, par value $1.33 per share, and the term “depositary shares” means the Company’s depositary shares, each representing a 1/400th ownership interest in a share of the Company’s Series A preferred stock, with a liquidation preference of $10 thousand per share of Series A preferred stock (equivalent to $25 per depositary share). “Series A preferred stock” refers to the Company’s 6.875% Perpetual Non-Cumulative Preferred Stock, Series A, par value $10.00 per share.
“Sandy Spring” refers to Sandy Spring Bancorp, Inc., which we acquired on April 1, 2025, pursuant to the Agreement and Plan of Merger dated October 21, 2024, by and between the Company and Sandy Spring, which we refer to as the “Sandy Spring merger agreement.”
The “Forward Sale Agreements” refers to the forward sale agreements between the Company and Morgan Stanley & Co. LLC, as forward purchaser (the “Forward Purchaser”), each dated as of October 21, 2024, in connection with which the Forward Purchaser or its affiliate borrowed from third parties an aggregate of 11,338,028 shares of our common stock for sale in a registered public offering. On October 21, 2024, the Company entered into an underwriting agreement with the Forward Purchaser and Morgan Stanley & Co. LLC as forward seller (the “Forward Seller”), relating to the registered public offering.
2025 Form 10-K
–
Annual Report on Form 10-K for the year ended December 31, 2025
2029 Subordinated Notes
Subordinated debt of $168.0 million acquired in Sandy Spring acquisition on April 1, 2025, for
which a conditional notice of redemption has been issued, and which may be redeemed
using net proceeds from 2036 Subordinated Notes issuance
2036 Subordinated Notes
Subordinated debt of $250.0 million issued by the Company on July 30, 2026 due
August 1, 2036
ACL
Allowance for credit losses
AFS
Available for sale
ALLL
Allowance for loan and lease losses, a component of the ACL
AOCI
Accumulated other comprehensive income (loss)
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
Bearing Insurance
Bearing Insurance Group, LLC
BOLI
Bank owned life insurance
bps
Basis points
CDI
Core deposit intangible
CECL
Current expected credit losses
CFPB
Consumer Financial Protection Bureau
CRE
Commercial real estate
CSP
Cary Street Partners LLC
EPS
Earnings per common share
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
FDIC
Federal Deposit Insurance Corporation
FRB
Federal Reserve Bank of Richmond
FHLB
Federal Home Loan Bank of Atlanta
FOMC
Federal Open Market Committee
FTE
Fully taxable equivalent
GAAP
Accounting principles generally accepted in the United States
HTM
Held to maturity
LHFI
Loans held for investment, net of unearned income
LHFS
Loans held for sale
MBS
Mortgage-Backed Securities
NDFI
Non-depository financial institutions
NPA
Nonperforming assets
NYSE
New York Stock Exchange
PCD
Purchased credit deteriorated
Repurchase Program
The share repurchase program, approved on May 5, 2026 by the Company’s Board of Directors,
which authorized the repurchase of up to $250 million of the Company’s common stock
ROU
Right of Use
RUC
Reserve for unfunded commitments
SEC
U.S. Securities and Exchange Commission
SOFR
Secured Overnight Financing Rate
TLM
Troubled loan modification
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
ATLANTIC UNION BANKSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2026 AND DECEMBER 31, 2025
(Dollars in thousands, except share data)
June 30,
December 31,
2026
2025
ASSETS
(unaudited)
(audited)
Cash and cash equivalents:
Cash and due from banks
$
521,608
234,257
Interest-bearing deposits in other banks
452,419
706,014
Federal funds sold
16,270
26,191
Total cash and cash equivalents
990,297
966,462
Securities available for sale, at fair value
3,876,717
4,194,301
Securities held to maturity, at carrying value
860,906
884,216
Restricted stock, at cost
204,351
190,200
23,074
18,486
28,673,271
27,796,167
Less: allowance for loan and lease losses
298,756
295,108
Total loans held for investment, net
28,374,515
27,501,059
Premises and equipment, net
163,241
166,752
Goodwill
1,754,875
1,733,287
Amortizable intangibles, net
284,962
315,544
679,507
672,890
Other assets
887,423
942,557
Total assets
38,099,868
37,585,754
LIABILITIES
Noninterest-bearing demand deposits
6,727,738
6,844,629
Interest-bearing deposits
23,740,519
23,627,007
Total deposits
30,468,257
30,471,636
Securities sold under agreements to repurchase
155,659
75,432
Other short-term borrowings
950,000
650,000
Long-term borrowings
775,681
771,860
Other liabilities
596,857
610,428
Total liabilities
32,946,454
32,579,356
Commitments and contingencies (Note 7)
STOCKHOLDERS' EQUITY
Preferred stock, $10.00 par value
173
Common stock, $1.33 par value
188,759
188,563
Additional paid-in capital
3,885,085
3,888,841
Retained earnings
1,356,190
1,184,908
Accumulated other comprehensive loss
(276,793)
(256,087)
Total stockholders' equity
5,153,414
5,006,398
Total liabilities and stockholders' equity
Common shares issued and outstanding
141,924,165
141,776,886
Common shares authorized
200,000,000
Preferred shares issued and outstanding
17,250
Preferred shares authorized
500,000
See accompanying notes to consolidated financial statements.
-2-
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND JUNE 30, 2025
(Dollars in thousands, except share and per share data)
Three Months Ended
Six Months Ended
Interest and dividend income:
Interest and fees on loans
436,807
458,766
856,436
730,281
Interest on deposits in other banks
2,165
4,991
4,311
7,504
Interest and dividends on securities:
Taxable
38,973
38,260
79,980
61,908
Nontaxable
8,883
8,355
17,836
16,515
Total interest and dividend income
486,828
510,372
958,563
816,208
Interest expense:
Interest on deposits
146,438
171,343
288,217
286,929
Interest on short-term borrowings
5,327
4,147
10,554
5,056
Interest on long-term borrowings
9,945
13,511
22,301
18,687
Total interest expense
161,710
189,001
321,072
310,672
Net interest income
325,118
321,371
637,491
505,536
Provision for credit losses
11,737
105,707
14,475
123,345
Net interest income after provision for credit losses
313,381
215,664
623,016
382,191
Noninterest income:
Service charges on deposit accounts
12,259
12,220
24,374
21,905
Other service charges, commissions and fees
2,286
2,245
4,224
4,007
Interchange fees
3,750
3,779
7,076
6,727
Fiduciary and asset management fees
21,460
17,723
41,638
24,420
Mortgage banking income
2,656
2,821
4,682
3,794
Bank owned life insurance income
5,734
7,327
10,934
10,864
Loan-related interest rate swap fees
6,484
1,733
10,458
4,133
Other operating income
35,619
33,674
41,645
34,835
Total noninterest income
90,248
81,522
145,031
110,685
Noninterest expenses:
Salaries and benefits
112,309
109,942
225,722
185,357
Occupancy expenses
12,862
12,782
26,064
21,362
Furniture and equipment expenses
5,532
6,344
11,088
10,258
Technology and data processing
16,016
17,248
31,618
27,435
Professional services
6,154
7,808
11,922
12,494
Marketing and advertising expense
5,479
3,757
12,807
6,941
FDIC assessment premiums and other insurance
6,633
8,642
13,479
13,844
Franchise and other taxes
4,675
4,688
9,381
9,331
Loan-related expenses
2,723
1,278
5,574
2,527
Amortization of intangible assets
15,136
18,433
30,582
23,832
Merger-related costs
—
78,900
9,034
83,840
Other expenses
11,617
9,876
21,675
16,661
Total noninterest expenses
199,136
279,698
408,946
413,882
Income before income taxes
204,493
17,488
359,101
78,994
Income tax expense (benefit)
43,480
(2,303)
75,922
9,384
Net Income
161,013
19,791
283,179
69,610
Dividends on preferred stock
2,967
5,934
Net income available to common shareholders
158,046
16,824
277,245
63,676
Basic earnings per common share
1.11
0.12
1.95
0.55
Diluted earnings per common share
Dividends declared per common share
0.37
0.34
0.74
0.68
Basic weighted average number of common shares outstanding
142,099,251
141,680,472
142,000,975
115,596,296
Diluted weighted average number of common shares outstanding
142,320,806
141,738,325
142,301,002
116,056,670
-3-
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(Dollars in thousands)
Net income
Other comprehensive income:
Cash flow hedges:
Change in fair value of cash flow hedges (net of tax, $640 and $1,853 for the three months and $1,234 and $4,940 for the six months ended June 30, 2026 and June 30, 2025, respectively)
(2,128)
6,202
(4,110)
16,538
AFS securities:
Unrealized holding gains (losses) arising during period (net of tax, $874 and $2,075 for the three months and $4,959 and $6,780 for the six months ended June 30, 2026 and June 30, 2025, respectively)
4,010
6,946
(16,528)
22,702
Reclassification adjustment for (gains) losses included in net income (net of tax, $1 and $4 for the three months and $2 and $20 for the six months ended June 30, 2026 and June 30, 2025, respectively) (1)
(3)
(12)
(4)
67
Bank owned life insurance:
Unrealized holding gains (losses) arising during the period
33
356
(10)
Reclassification adjustment for gains included in net income (2)
(217)
(207)
(420)
(397)
Other comprehensive income (loss):
1,695
12,929
(20,706)
38,900
Comprehensive income
162,708
32,720
262,473
108,510
(1) The gross amounts reclassified into earnings are reported as "Other operating income" on the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense.
(2) Reclassifications into earnings are reported in "Salaries and benefits" expense on the Company’s Consolidated Statements of Income.
-4-
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2026 AND JUNE 30, 2025
(Dollars in thousands, except share and per share amounts)
Accumulated
Additional
Other
Common
Preferred
Paid-In
Retained
Comprehensive
Stock
Capital
Earnings
Income (Loss)
Total
Balance - December 31, 2025
122,165
Other comprehensive loss (net of taxes of $6,428)
(22,401)
Dividends on common stock ($0.37 per share)
(52,750)
Dividends on preferred stock ($171.88 per share)
(2,967)
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (283,610 shares)
377
(5,302)
(4,925)
Stock-based compensation expense
6,796
Balance - March 31, 2026
188,940
3,890,335
1,251,356
(278,488)
5,052,316
Other comprehensive income (net of taxes of $233)
(53,212)
Common stock purchased under share repurchase program (264,961 shares)
(352)
(9,653)
(10,005)
Excise tax on common stock repurchased (1)
(100)
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (128,630 shares)
171
(1,682)
(1,511)
6,185
Balance - June 30, 2026
(1) Represents the 1% excise tax related to the Repurchase Program based on the fair market value of common stock repurchased in the taxable year, reduced by the fair market value of any common stock issued during the same year, pursuant to the Inflation Reduction Act of 2022. The excise tax is recorded as part of the cost of certain treasury stock transactions.
Balance - December 31, 2024
118,519
2,280,547
1,103,326
(359,686)
3,142,879
49,818
Other comprehensive income (net of taxes of $6,957)
25,971
Dividends on common stock ($0.34 per share)
(30,542)
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (228,311 shares)
304
(3,698)
(3,394)
3,451
Balance - March 31, 2025
118,823
2,280,300
1,119,635
(333,715)
3,185,216
Other comprehensive income (net of taxes of $3,924)
Issuance of common stock in regard to acquisition (41,000,004 shares)
54,530
1,220,717
1,275,247
75
(48,492)
(48,417)
Issuance of common stock in regard to forward sale settlement (11,338,028 shares)
15,080
369,883
384,963
Issuance of common stock under Equity Compensation Plans, stock issuance for services rendered, and vesting of restricted stock, net of shares held for taxes (16,146 shares)
21
(2,252)
(2,231)
8,108
Balance - June 30, 2025
188,454
3,876,831
1,087,967
(320,786)
4,832,639
-5-
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of premises and equipment
9,913
7,785
Amortization, net
14,166
13,695
Accretion related to acquisitions, net
(42,839)
(34,438)
Gain on CRE loan sale
(15,720)
Gain on sale of equity interest in CSP
(14,300)
Gain on sale of equity interest in Bearing Insurance
(32,350)
BOLI income
(10,934)
(10,864)
Deferred tax expense
66,339
4,059
Loans held for sale:
Originations and purchases
(204,020)
(184,784)
Proceeds from sales
198,533
2,046,402
Changes in operating assets and liabilities:
Net decrease in other assets
1,539
1,892
Net decrease in other liabilities
(20,512)
(40,725)
Net cash provided by operating activities
277,489
1,965,957
Investing activities:
Securities AFS and restricted stock:
Purchases
(363,140)
(894,303)
209,582
629,911
Proceeds from maturities, calls and paydowns
442,815
214,160
Securities HTM:
(36,640)
20,821
10,956
Net change in other investments
31,042
29,227
Net increase in LHFI
(832,638)
(143,446)
Net purchases of premises and equipment
(13,413)
(486)
Proceeds from BOLI settlements
1,013
2,376
Proceeds from sales of foreclosed properties and former bank premises
1,992
5,435
Net cash received in acquisition
270,211
Net cash (used in) provided by investing activities
(501,926)
87,401
Financing activities:
Net increase (decrease) in:
Non-interest-bearing deposits
(116,891)
(24,946)
113,990
(626,472)
Short-term borrowings
380,227
(261,096)
Repayments of long-term debt
(200,000)
Common stock:
Repurchases
Forward sale common stock issuance
Dividends paid
(111,896)
(84,968)
Vesting of restricted stock, net of shares held for taxes
(7,153)
(6,265)
Net cash provided by (used in) financing activities
248,272
(818,784)
Increase in cash and cash equivalents
23,835
1,234,574
Cash, cash equivalents and restricted cash at beginning of the period
354,074
Cash, cash equivalents and restricted cash at end of the period
1,588,648
-6-
Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest
319,688
311,469
Income taxes
7,730
2,719
Supplemental schedule of noncash investing and financing activities
Transfers from bank premises to other real estate owned
6,235
Issuance of common stock in exchange for net assets in acquisitions
1,275,411
Transactions related to acquisitions
Assets acquired
12,988,972
Liabilities assumed
12,209,862
-7-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank (the “Bank”), which provides banking and related financial products and services to consumers and businesses. Except as otherwise indicated or the context suggests otherwise, references to the “Company” refers to Atlantic Union Bankshares Corporation and its subsidiaries.
Basis of Financial Information
The accounting policies and practices of Atlantic Union Bankshares Corporation and subsidiaries conform to accounting principles generally accepted in the United States (“GAAP”) and follow general practices within the banking industry. The consolidated financial statements include the accounts of the Company, which is a financial holding company and a bank holding company that owns all of the outstanding common stock of its banking subsidiary, Atlantic Union Bank, which owns Atlantic Union Equipment Finance, Inc., AUB Investments, Inc., and Atlantic Union Capital Markets, Inc.
The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan and lease losses (“ALLL”), the fair value of financial instruments, and valuation of deferred tax assets. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other period.
Effective January 1, 2026, the Company made certain changes to its allowance methodology as part of the continued enhancement of its credit modeling practices, resulting in more dynamic and precise modeling that allows for more granularity in the monitoring of our expected credit losses. As a result of this change, the Company moved from two loan portfolio segments (Commercial and Consumer) to three portfolio segments (Commercial Real Estate (“CRE”), Commercial and Industrial, and Consumer), by reorganizing the former Commercial segment into the CRE and Commercial and Industrial segments, with no changes made to the Consumer segment. These changes were accounted for prospectively as a change in accounting estimate in the first quarter of 2026, did not have a material impact on the Company’s consolidated financial statements, and resulted in no changes to previously reported values. For more information on the updated allowance for credit losses (“ACL”) methodology after the change referenced above, see the Company’s ACL and loans held for investment (“LHFI”) accounting policies described below. For information regarding the Company’s collectively assessed prior allowance methodology, as well as the Company’s reserve for unfunded commitments (“RUC”) and the allowance for credit losses on securities policies, see Note 1 “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of the Company’s 2025 Form 10-K.
Allowance for Credit Losses
The ACL primarily consists of the ALLL, RUC, and the allowance for credit losses on securities. The Company’s ACL is governed by the Company’s Allowance Committee, which reports to the Audit Committee and contains representatives from the Company’s finance, credit, and risk teams, and is responsible for approving the Company’s estimate of expected credit losses and resulting ACL. The Allowance Committee considers the quantitative model results and qualitative factors when approving the final ACL. The Company’s ACL model is subject to the Company’s model risk management program, which is overseen by the Operational Risk Committee that reports to the Company’s Executive Risk Committee and Board Risk Committee. The ALLL includes qualitative adjustments to capture the impact of factors or uncertainties not reflected in the quantitative model. These adjustments are comprised of relevant internal and external factors within the qualitative framework that adheres to the Interagency Policy Statement on Allowances for Credit Losses.
-8-
Allowance for Loan and Lease Losses: The ALLL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Changes in the ALLL are recorded as a provision for loan losses to bring the ALLL to an estimated balance that management considers appropriate to absorb expected credit losses over the expected contractual life of the loan portfolio. Loans are charged off against the ALLL when management believes the amount is no longer collectible based on an evaluation of the borrower’s financial condition, repayment capacity, collateral values, and other observable factors affecting collectability. Subsequent recoveries of previously charged off amounts are recorded as increases to the ALLL; however, expected recoveries are not to exceed the aggregate of amounts previously charged off.
Determining the Contractual Term – Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless the extensions or renewal options are included in the original or modified contract at the reporting date and are not unconditionally legally cancelable by the Company.
The Company’s ALLL measures the expected lifetime loss using both pooled and loan-level assumptions for financial assets that share common risk characteristics and evaluates an individual reserve in instances where the financial assets do not share the same risk characteristics.
Collectively Assessed Reserve Consideration – Loans that share common risk characteristics are considered collectively assessed. Loss estimates within the collectively assessed population are based on a combination of pooled assumptions and loan-level characteristics.
Effective January 1, 2026, the Company now uses either a loan-level probability of default/loss given default methodology or a segment level loss rate model for its loan portfolio. The ALLL is estimated using quantitative methods that consider a variety of factors from both internal and external sources at the loan, portfolio, and macroeconomic environment levels. The Company’s quantitative models consider various macroeconomic variables including the unemployment rate, gross domestic product, home price index, and others for a reasonable and supportable forecast period. The ALLL quantitative estimate is sensitive to changes in the macroeconomic variable forecasts during the reasonable and supportable period.
The estimated loan losses that are forecasted using the methodology described above are then adjusted for changes in qualitative factors not inherently considered in the quantitative analysis. The qualitative factors include, among others, credit concentrations of the loan portfolio, economic uncertainty, model imprecision, and factors related to credit administration.
Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the ALLL, could change significantly. In estimating the ALLL, the Company considers multiple forecast scenarios to address the uncertainty inherent in macroeconomic variable forecasts. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all loan types. Additionally, changes in factors and inputs may be directionally inconsistent, such that an improvement in one factor may offset deterioration in others.
Individually Assessed Reserve Consideration – Loans that do not share similar risk characteristics with any loan segments are evaluated on an individual basis. The individual reserve component relates to loans that have shown substantial credit deterioration as measured by nonaccrual status, risk rating, and/or delinquency status. In addition, the Company has elected the practical expedient that would include loans for individual assessment consideration if the repayment of the loan is expected substantially through the operation or sale of collateral because the borrower is experiencing financial difficulty. Where the expected source of repayment is from the sale of collateral, the ALLL is based on the fair value of the underlying collateral, less selling costs, compared to the amortized cost basis of the loan. If the ALLL is based on the operation of the collateral, the reserve is calculated based on the fair value of the collateral calculated as the present value of expected cash flows from the operation of the collateral, compared to the amortized cost basis. If the Company determines that the value of a collateral dependent loan is less than the recorded investment in the loan, the Company charges off the deficiency if it is determined that such amount is deemed uncollectible. Typically, a loss is confirmed when the Company is moving toward foreclosure or final disposition. The ALLL on loans individually assessed is updated, reviewed, and approved on a quarterly basis at or near the end of each reporting period.
-9-
The Company performs regular credit reviews of the loan portfolio to review the credit quality and adherence to its underwriting standards. The credit reviews include annual commercial loan reviews performed by the Company’s commercial bankers in accordance with the commercial loan policy, relationship reviews that accompany annual loan renewals, and independent reviews by its Credit Risk Review Group. Upon origination, each commercial loan is assigned an initial risk rating in accordance with the Company’s underwriting guidelines, which require newly originated loans to be rated between one and four, with ratings closer to one indicating lower credit risk. The Company’s full risk rating scale ranges from one to nine, and loans may migrate to higher risk ratings over time if their risk profile deteriorates. The risk rating scale is the Company’s primary credit quality indicator for commercial loans. Consumer loans are not risk rated unless past due status, bankruptcy, or other events result in the assignment of a Substandard or worse risk rating in accordance with the consumer loan policy. Delinquency status is the Company’s primary credit quality indicator for Consumer loans.
Refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2025 Form 10-K for additional information on the Company’s policies and for further information on the Company’s credit quality indicators.
Loans Held for Investment
Prior to January 1, 2026, the Company applied ALLL methodologies to two portfolio segments: Commercial and Consumer. As disclosed above, effective January 1, 2026, the Company made certain changes to its allowance methodology as part of the continued enhancement of its credit modeling practices, resulting in more dynamic and precise modeling that allows for more granularity in the monitoring of the Company’s expected credit losses. As a result of this change, the Company moved from two loan portfolio segments (Commercial and Consumer) to three portfolio segments (CRE, Commercial and Industrial, and Consumer), by reorganizing the former Commercial segment into the CRE and Commercial and Industrial segments, with no changes made to the Consumer segment. The Company defines the three loan portfolio segments as follows:
CRE:
Also included in this category are loans generally made to residential home builders to support their lot and home construction inventory needs. Repayment relies upon the sale of the underlying residential real estate project. This type of lending is generally viewed as carrying a higher level of risk as compared to other commercial lending. This class of lending manages risks related to residential real estate market conditions, a functioning primary and secondary market in which to finance the sale of residential properties, and the borrower’s ability to manage inventory and run projects. The Company manages this risk by lending to experienced builders and developers by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations with any particular customer or geographic region.
-10-
Commercial and Industrial:
Consumer:
The allowance methodology changes were accounted for prospectively as a change in accounting estimate in the first quarter of 2026, did not have a material impact on the Company’s consolidated financial statements, and resulted in no changes to
-11-
previously reported values. See “Critical Accounting Estimates” in Part I, Item 2 of this Quarterly Report for additional information on the change in methodology.
Adoption of New Accounting Standards – In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-10 Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This update established authoritative guidance on the accounting for government grants received by business entities. The amendments are effective for fiscal years beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company early adopted ASU 2025-10 effective January 1, 2026, on a modified prospective basis. ASU 2025-10 did not have a material impact on the Company’s consolidated financial statements.
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2. ACQUISITIONS
Sandy Spring Bancorp, Inc. Acquisition
On April 1, 2025, the Company completed its previously announced acquisition of Sandy Spring, the holding company for Sandy Spring Bank, headquartered in Olney, Maryland. Under the terms of the Sandy Spring merger agreement, at the effective time of the Sandy Spring acquisition, each outstanding share of Sandy Spring common stock was converted into the right to receive 0.900 shares of the Company’s common stock, with cash paid in lieu of fractional shares, resulting in 41.0 million additional shares issued, or an aggregate transaction value of approximately $1.3 billion, based on the closing price per share of the Company’s common stock as quoted on the New York Stock Exchange (“NYSE”) on March 31, 2025, which was the last trading day prior to the consummation of the acquisition. With the acquisition of Sandy Spring, the Company acquired more than 50 branches in Virginia, Maryland, and Washington, D.C., enhancing the Company’s presence in Northern Virginia and Maryland.
Goodwill associated with the Sandy Spring acquisition totaled $540.8 million at March 31, 2026, allocated between the Company’s Wholesale Banking ($431.7 million) and Consumer Banking ($109.1 million) reporting segments, which is not deductible for tax purposes. As of March 31, 2026, the purchase accounting was finalized and no longer subject to change.
The following table provides a summary of the consideration transferred and the fair value of the assets acquired and liabilities assumed as of the date of the Sandy Spring acquisition (dollars in thousands).
Purchase price consideration
1,275,969
Fair value of assets acquired:
Cash and cash equivalents
Securities available for sale ("AFS")
1,266,925
Restricted stock
68,310
Loans held for sale ("LHFS") - CRE
1,839,638
LHFS - Non-CRE
29,152
8,572,384
Premises and equipment
59,402
Core deposit intangible ("CDI") and other intangibles
290,650
Bank owned life insurance ("BOLI")
170,482
Lease right of use ("ROU") assets
40,808
Other assets (1)
337,509
12,945,471
Fair value of liabilities assumed:
Deposits
11,227,922
272,201
560,761
Lease liabilities
108,631
12,210,323
Fair value of net assets acquired
735,148
540,821
(1) Other assets include deferred tax assets, accrued interest receivable, accounts receivable, and other intangibles, as well as other miscellaneous assets acquired from Sandy Spring.
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The Company assessed the fair value for significant assets acquired and liabilities assumed based on the following methods:
-14-
Unaudited Pro forma Impact of the Acquisition
The following table presents for illustrative purposes certain unaudited pro forma information as if the Company had acquired Sandy Spring on January 1, 2025. These results combine the historical results of Sandy Spring in the Company's Consolidated Statements of Income and while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity. These results are not indicative of what would have occurred had the Sandy Spring acquisition taken place on January 1, 2025. No adjustments have been made to the pro forma results regarding possible revenue enhancements, provision for credit losses, or expense efficiencies. Pro forma adjustments below include the net impact of Sandy Spring’s accretion and the elimination of merger-related costs. Merger-related costs as disclosed in the Company’s Consolidated Statement of Income were related to the Sandy Spring acquisition and included costs associated with employee severance, other employee related costs, professional fees, information technology related costs, including system conversion, and lease and contract termination expenses. Merger-related costs have been expensed as incurred. The Company expects to achieve further operating cost savings and other business synergies, as a result of the Sandy Spring acquisitions, which are not reflected in the pro forma amounts below (dollars in thousands):
Pro forma
March 31,
2025 (2)
Total revenues (1)
360,315
Net income available to common shareholders (3)
70,582
(1) Includes net interest income and noninterest income.
(2) Includes the net impact of Sandy Spring’s acquisition-related accretion adjustments of $21.0 million during the three months ended March 31, 2025.
(3) Excludes merger-related costs of $4.6 million incurred during the three months ended March 31, 2025.
The Company’s operating results for the three and six months ended June 30, 2026 and June 30, 2025, include the operating results of the acquired assets and assumed liabilities of Sandy Spring subsequent to the acquisition on April 1, 2025. Revenues and earnings since the acquisition date of the former operations of Sandy Spring have not been disclosed due to the merging of certain processes and the conversion of Sandy Spring’s systems that occurred in the fourth quarter of 2025. As a result, separate financial information is not readily available.
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3. SECURITIES AND OTHER INVESTMENTS
Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of June 30, 2026 are as follows (dollars in thousands):
Amortized
Gross Unrealized
Estimated
Cost
Gains
(Losses)
Fair Value
U.S. government and agency securities
101,072
192
(152)
101,112
Obligations of states and political subdivisions
591,738
88
(100,555)
491,271
Corporate and other bonds (1)
196,797
537
(2,750)
194,584
Commercial MBS
Agency
334,878
508
(40,131)
295,255
Non-agency
128,202
79
(3,130)
125,151
Total commercial MBS
463,080
587
(43,261)
420,406
Residential MBS
2,711,777
4,651
(174,198)
2,542,230
127,359
682
(2,927)
125,114
Total residential MBS
2,839,136
5,333
(177,125)
2,667,344
Other securities
2,000
Total AFS securities
4,193,823
6,737
(323,843)
(1) Other bonds include asset-backed securities.
The amortized cost, gross unrealized gains and losses, and estimated fair values of AFS securities as of December 31, 2025 are as follows (dollars in thousands):
103,335
681
(14)
104,002
589,194
178
(101,487)
487,885
221,432
709
(4,207)
217,934
354,405
1,276
(39,806)
315,875
115,009
187
(1,905)
113,291
469,414
1,463
(41,711)
429,166
2,942,900
15,838
(165,524)
2,793,214
161,767
935
(2,558)
160,144
3,104,667
16,773
(168,082)
2,953,358
1,956
4,489,998
19,804
(315,501)
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The following table shows the gross unrealized losses and fair value of the Company’s AFS securities with unrealized losses, which are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position for the following periods ended (dollars in thousands).
Less than 12 months
More than 12 months
Fair
Unrealized
Value
Losses
Value (2)
June 30, 2026
33,795
(139)
893
(13)
34,688
7,827
(403)
466,964
(100,152)
474,791
31,720
(122)
89,745
(2,628)
121,465
73,165
(572)
144,318
(39,559)
217,483
69,811
(926)
33,846
(2,204)
103,657
142,976
(1,498)
178,164
(41,763)
321,140
993,857
(8,046)
817,802
(166,152)
1,811,659
67,344
(717)
22,420
(2,210)
89,764
1,061,201
(8,763)
840,222
(168,362)
1,901,423
1,277,519
(10,925)
1,575,988
(312,918)
2,853,507
December 31, 2025
6,689
(6)
737
(8)
7,426
25
473,201
473,226
37,988
(75)
98,125
(4,132)
136,113
44,536
(166)
161,001
(39,640)
205,537
39,171
(177)
22,429
(1,728)
61,600
83,707
(343)
183,430
(41,368)
267,137
359,095
(1,564)
886,626
(163,960)
1,245,721
48,559
(247)
24,868
(2,311)
73,427
407,654
(1,811)
911,494
(166,271)
1,319,148
536,063
(2,235)
1,666,987
(313,266)
2,203,050
(2) Comprised of 696 and 703 individual securities as of June 30, 2026 and December 31, 2025, respectively.
The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at June 30, 2026 and December 31, 2025 and concluded no impairment existed based on several factors which included: (1) the majority of these securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the cost basis of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis.
Additionally, the majority of the Company’s mortgage-backed securities (“MBS”) are issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association, and have minimal credit risk given the implicit and explicit government guarantees associated with these agencies. In addition, the non-agency mortgage-backed and asset-backed securities generally received a 20% simplified supervisory formula approach rating. The Company’s AFS investment portfolio is generally highly-rated or agency backed. At June 30, 2026 and December 31, 2025, all AFS securities were current with no securities past due or on non-accrual, and no ACL was held against the Company’s AFS securities portfolio.
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The following table presents the amortized cost and estimated fair value of AFS securities as of the periods ended, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Due in one year or less
96,625
96,790
63,692
63,993
Due after one year through five years
285,478
284,536
298,683
299,727
Due after five years through ten years
432,431
410,204
492,242
475,707
Due after ten years
3,379,289
3,085,187
3,635,381
3,354,874
Refer to Note 7 “Commitments and Contingencies” within this Item 1 of this Quarterly Report for information regarding the estimated fair value of AFS securities that were pledged to secure public deposits, repurchase agreements and for other purposes as permitted or required by law as of June 30, 2026 and December 31, 2025.
Accrued interest receivable on AFS securities totaled $14.1 million and $15.0 million at June 30, 2026 and December 31, 2025, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three and six months ended June 30, 2026 and June 30, 2025, there were no accrued interest receivable write-offs.
Held to Maturity
The Company reports held to maturity (“HTM”) securities on the Company’s Consolidated Balance Sheets at carrying value, which represents amortized cost. The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities as of June 30, 2026 are as follows (dollars in thousands):
Carrying
774,441
3,541
(21,677)
756,305
1,710
(29)
1,681
28,829
(5,755)
10,409
61
(491)
9,979
39,238
(6,246)
33,053
34,301
(4,604)
29,697
11,216
(188)
11,028
45,517
(4,792)
40,725
Total HTM securities
3,602
(32,744)
831,764
-18-
The carrying value, gross unrealized gains and losses, and estimated fair values of HTM securities as of December 31, 2025 are as follows (dollars in thousands):
793,162
4,139
(20,951)
776,350
2,255
(26)
2,229
29,074
(5,619)
23,455
11,703
103
(504)
11,302
40,777
(6,123)
34,757
35,793
(4,397)
31,396
12,229
(149)
12,080
48,022
(4,546)
43,476
4,242
(31,646)
856,812
The following table presents the amortized cost of HTM securities as of the periods ended, by security type and credit rating (dollars in thousands):
Obligations of states and political
Corporate and other
Mortgage-backed
Total HTM
subdivisions
bonds
securities
Credit Rating:
AAA/AA/A
763,759
1,573
765,332
BBB/BB/B
1,110
Not Rated – Agency (1)
63,130
Not Rated – Non-Agency (2)
9,572
20,052
31,334
84,755
782,453
1,702
784,155
1,122
64,867
9,587
22,230
34,072
88,799
(1) Generally considered not to have credit risk given the government guarantees associated with these agencies.
(2) Non-agency mortgage-backed and asset-backed securities have limited credit risk, supported by most receiving a 20% simplified supervisory formula approach rating.
-19-
The following table presents the amortized cost and estimated fair value of HTM securities as of the periods ended by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
10,793
10,828
507
503
25,892
26,307
18,813
19,150
256,544
248,372
222,284
216,095
567,677
546,257
642,612
621,064
Refer to Note 7 “Commitments and Contingencies” within this Item 1 of this Quarterly Report for information regarding the estimated fair value of HTM securities that were pledged to secure public deposits as permitted or required by law as of June 30, 2026 and December 31, 2025.Accrued interest receivable on HTM securities totaled $9.7 million and $9.9 million at June 30, 2026 and December 31, 2025, respectively, and is included in “Other assets” on the Company’s Consolidated Balance Sheets. For the three and six months ended June 30, 2026 and June 30, 2025, there were no accrued interest receivable write-offs. The Company’s HTM investment portfolio primarily consists of highly-rated municipal securities and agency MBS. At June 30, 2026 and December 31, 2025, the Company’s HTM securities were all current, with no securities past due or on non-accrual. The Company’s HTM securities ACL was immaterial at June 30, 2026 and December 31, 2025.
Restricted Stock, at cost
The FHLB required the Bank to maintain stock in an amount equal to 4.75% of outstanding borrowings and a specific percentage of the member’s total assets at June 30, 2026 and December 31, 2025. The Federal Reserve Bank of Richmond (“FRB”) requires the Company to maintain stock with a par value equal to 6% of its outstanding capital at June 30, 2026 and December 31, 2025. At June 30, 2026 and December 31, 2025, restricted stock consisted of FRB stock in the amount of $141.2 million and FHLB stock in the amount of $63.1 million and $49.0 million, respectively.
Realized Gains and Losses
The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three and six months ended June 30, (dollars in thousands):
Realized gains(1):
Gross realized gains
Net realized gains
Proceeds from sales of securities
129,442
Realized gains (losses) (1):
16
30
Gross realized losses
(117)
Net realized gains (losses)
(87)
588,546
(1) Includes gains (losses) on sales and calls of securities.
-20-
4. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES
The Company’s LHFI, net, are loans stated at their amortized cost, net of the ALLL and net of unearned income. The LHFI consisted of the following as of the periods ended (dollars in thousands):
Construction and Land Development
1,859,217
1,666,381
CRE – Owner Occupied
4,308,292
4,305,796
CRE – Non-Owner Occupied
7,303,555
7,178,515
Multifamily Real Estate
2,429,355
2,418,250
Commercial & Industrial
5,628,880
5,229,728
Residential 1-4 Family – Commercial
1,008,438
1,100,157
Residential 1-4 Family – Consumer
2,930,665
2,825,259
Residential 1-4 Family – Revolving
1,312,531
1,248,284
Auto
131,477
183,720
Consumer
110,909
121,488
Other Commercial
1,649,952
1,518,589
Total LHFI, net of unearned income (1)
Allowance for loan and lease losses
(298,756)
(295,108)
Total LHFI, net
(1) Total LHFI, net of unearned income included unamortized deferred fees and costs, as well as unamortized premiums and discounts totaling $721.0 million and $803.2 million as of June 30, 2026 and December 31, 2025, respectively.
Accrued interest receivable on LHFI totaled $103.1 million and $106.5 million at June 30, 2026 and December 31, 2025, respectively. Accrued interest receivable write-offs were not material to the Company’s consolidated financial statements for the three and six months ended June 30, 2026 and June 30, 2025.
-21-
The following table shows the aging of the Company’s LHFI portfolio by class at June 30, 2026 (dollars in thousands):
Greater than
30-59 Days
60-89 Days
90 Days and
Current
Past Due
still Accruing
Nonaccrual
Total Loans
1,851,642
593
2,210
331
4,441
4,281,911
9,636
2,112
7,503
7,130
7,282,135
474
871
7,597
12,478
2,400,358
1,325
732
23,399
5,590,865
2,512
1,830
2,250
31,423
1,002,710
2,140
1,111
362
2,115
2,892,052
1,557
6,985
5,954
24,117
1,297,200
4,297
1,732
4,319
4,983
128,566
1,853
465
219
374
110,230
310
320
1,644,319
2,516
1,051
1,616
450
Total LHFI, net of unearned income
28,481,988
27,213
19,419
33,725
110,926
% of total loans
99.33
%
0.09
0.07
0.39
100.00
The following table shows the aging of the Company’s LHFI portfolio by class at December 31, 2025 (dollars in thousands):
1,659,048
1,455
94
1,481
4,303
4,284,562
7,241
3,171
4,788
6,034
7,154,178
9,482
2,099
11,301
2,366,442
52
247
6,140
45,369
5,197,839
8,935
3,552
9,114
10,288
1,087,181
2,634
1,306
2,379
6,657
2,772,790
17,911
5,628
5,633
23,297
1,233,032
3,994
2,157
3,458
5,643
178,615
3,332
797
404
572
120,806
444
55
12
1,513,629
3,242
143
1,575
27,568,122
58,722
18,721
35,551
115,051
99.18
0.21
0.13
0.41
The following table shows the Company’s amortized cost basis of loans on nonaccrual status with no related ALLL as of the periods ended (dollars in thousands):
2,700
3,313
1,430
10,022
10,097
22,720
17,659
2,751
224
4,597
1,070
55,008
68,066
There was no interest income recognized on nonaccrual loans during the three and six months ended June 30, 2026 and June 30, 2025.
-22-
Troubled Loan Modifications (“TLMs”)
The following tables present the amortized cost basis of TLMs for the three and six months ended June 30, (dollars in thousands):
Amortized Cost
% of Total Class of Financing Receivable
Other-Than-Insignificant Payment Delay
Commercial and Industrial
1,840
0.03
Total Other-Than-Insignificant Payment Delay
Term Extension
NM
240
5,551
0.08
0.01
422
Total Term Extension
5,983
6,221
Interest Rate Reduction
338
Total Interest Rate Reduction
Combination – Other-Than-Insignificant Payment Delay and Term Extension
16,003
0.22
Total Combination – Other-Than-Insignificant Payment Delay and Term Extension
Combination – Term Extension and Interest Rate Reduction
409
263
717
0.02
78
Total Combination – Term Extension and Interest Rate Reduction
750
1,204
8,911
25,606
NM = Not Meaningful
-23-
7,584
0.15
3,780
0.05
11,364
1,244
1,546
0.04
4,586
4,918
0.43
196
395
6,026
6,859
478
701
1,531
0.06
18,091
20,232
-24-
The following tables describe the financial effects of TLMs on a weighted average basis for TLMs within that loan type for the three and six months ended June 30,:
Loan Type
Financial Effect
Added a weighted-average 0.5 years to the life of loans.
Added a weighted-average 1.1 years to the life of loans.
Added a weighted-average 0.8 years to the life of loans.
Added a weighted-average 1.6 years to the life of loans and reduced the weighted average contractual interest rate from 5.0% to 2.1%.
The Company considers a default of a TLM to occur when the borrower is 90 days past due following the modification or a foreclosure and repossession of the applicable collateral occurs. During the three and six months ended June 30, 2026 and June 30, 2025, the Company did not have any material loans that went into default that had been modified and designated as TLMs in the twelve-month period prior to the time of default.
The Company monitors the performance of TLMs to determine the effectiveness of the modifications. During the three and six months ended June 30, 2026 and June 30, 2025, the Company did not have any material loans that had been modified and designated as TLMs that were past due.
As of June 30, 2026 and December 31, 2025, there were no material unfunded commitments on loans modified and designated as TLMs.
-25-
The following table shows the ALLL activity by loan segment for the three and six months ended June 30, reflecting the changes made to the Company’s allowance methodology effective January 1, 2026 (dollars in thousands). See Note 1 “Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report for additional information on the change in methodology:
Balance at beginning of period
171,900
58,697
60,503
291,100
152,477
80,336
62,295
Loans charged-off (1)
(908)
(1,650)
(755)
(3,313)
(3,848)
(1,458)
(6,214)
Recoveries credited to allowance
344
534
449
1,327
711
1,075
848
Provision (release) charged to operations
2,425
2,911
4,306
9,642
21,481
(17,071)
2,818
7,228
Balance at end of period
173,761
60,492
64,503
(1) In accordance with GAAP, amounts for the six months ended June 30, 2026, excluded $39.5 million of net charge-offs related to certain purchased credit deteriorated (“PCD”) loans that met the Company’s charge-off policy at the time of the acquisition. The amounts excluded for the six months ended June 30, 2026, reflect measurement period adjustments recorded in the first quarter of 2026 related to the Sandy Spring acquisition based on additional information and evidence obtained by the Company relating to events or circumstances existing at the acquisition date. As of March 31, 2026, the purchase accounting was finalized and no longer subject to change.
-26-
The following table shows the ALLL activity by loan segment for the three and six months ended June 30, reflecting the Company’s previous allowance methodology. See Note 1 “Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report for additional information (dollars in thousands):
Commercial
162,908
30,888
193,796
148,887
29,757
178,644
Initial allowance - PCD loans (1)
21,255
7,010
28,265
(1,534)
(1,045)
(2,579)
(3,382)
(2,082)
(5,464)
1,545
368
1,913
1,775
745
2,520
Initial provision - non-PCD loans
64,740
24,798
89,538
8,489
4,641
24,128
(2,057)
22,071
257,403
58,171
315,574
(1) In accordance with GAAP, amounts for the three and six months ended June 30, 2025, excluded $34.5 million of net charge-offs related to certain PCD loans that met the Company’s charge-off policy at the time of the acquisition. The amounts excluded for the three and six months ended June 30, 2025, reflect measurement period adjustments recorded in the second quarter of 2025 related to the Sandy Spring acquisition based on additional information and evidence obtained by the Company relating to events or circumstances existing at the acquisition date.
Credit Quality Indicators
Credit quality indicators are used to help estimate the collectability of each loan class within the loan portfolio segments. For classes of loans within the CRE and Commercial and Industrial segments, the primary credit quality indicator used for evaluating credit quality and estimating the ALLL is risk rating categories of Pass (including Pass-Watch), Special Mention, Substandard, and Doubtful. For classes of loans within the Consumer segment, the primary credit quality indicator used for evaluating credit quality and estimating the ALLL is delinquency bands of current, 30-59, 60-89, 90+, and nonaccrual. While other credit quality indicators are evaluated and analyzed as part of the Company’s credit risk management activities, these indicators are primarily used in estimating the ALLL. The Company evaluates the credit risk of its loan portfolio on at least a quarterly basis.
CRE and Commercial and Industrial Loans
The Company uses a risk rating system as the primary credit quality indicator for classes of loans within the CRE and Commercial and Industrial segments. The Company defines pass loans as risk rated 1-5 and criticized loans as risk rated 6-9. See Note 4 “Loans and Allowance For Loan and Lease Losses” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of the Company’s 2025 Form 10-K for information on the Company’s risk rating system.
-27-
The table below details the amortized cost and gross write-offs of the classes of loans within the CRE segment by risk level and year of origination as of June 30, reflecting the changes made to the Company’s allowance methodology effective January 1, 2026 (dollars in thousands):
Term Loans Amortized Cost Basis by Origination Year
Revolving
2024
2023
2022
Prior
Loans
Pass
255,246
561,920
326,600
247,635
79,482
87,927
222,156
1,780,966
Watch
405
2,497
13,724
4,438
2,083
12,775
35,922
Special Mention
307
927
4,045
26,239
31,518
Substandard
1,152
2,432
598
5,304
10,811
Total Construction and Land Development
255,651
563,379
331,529
263,611
84,518
99,359
261,170
Current period gross write-off
247,990
418,944
275,978
288,096
475,101
2,156,954
48,255
3,911,318
966
8,688
17,334
29,851
22,732
102,922
1,178
183,671
6,833
2,254
11,483
8,696
76,965
3,724
109,955
23,465
15,536
7,347
56,610
390
103,348
Total CRE – Owner Occupied
248,956
434,465
319,031
344,966
513,876
2,393,451
53,547
(202)
553,933
872,475
519,528
716,656
948,816
3,058,818
103,343
6,773,569
12,806
27,347
4,191
21,213
53,474
131,978
251,109
1,429
20,679
52,666
103,384
178,158
1,891
5,540
3,138
90,150
100,719
Total CRE – Non-Owner Occupied
566,739
901,713
525,148
764,088
1,058,094
3,384,330
103,443
(142)
(489)
(631)
242,680
217,192
99,592
233,412
278,979
714,552
57,862
1,844,269
560
50,754
3,155
50,343
64,346
109,323
279,806
669
21,582
92,411
38,754
153,416
3,547
59,131
88,454
151,864
Total Multifamily Real Estate
243,240
267,946
104,148
308,884
494,867
951,083
59,187
49,596
56,981
49,509
71,277
169,283
518,183
5,673
920,502
25,277
2,169
1,262
6,180
15,461
3,263
53,612
1,662
1,205
387
16,728
19,982
813
2,628
1,442
9,206
253
14,342
Total Residential 1-4 Family – Commercial
84,733
55,511
72,539
177,292
559,578
9,189
Other Commercial (Farmland)
2,563
234
694
3,337
22,676
29,978
585
233
165
1,376
2,359
66
7,317
1,883
9,266
818
18
836
Total Other Commercial (Farmland)
1,285
760
3,502
31,387
2,357
42,439
Total CRE
1,349,445
2,130,075
1,271,441
1,557,770
1,954,998
6,559,110
437,763
15,260,602
15,322
112,066
29,579
116,393
151,335
363,143
18,641
806,479
8,802
5,557
54,737
154,160
247,193
31,846
502,295
3,856
30,075
25,948
71,656
249,742
643
381,920
1,364,767
2,254,799
1,336,652
1,754,848
2,332,149
7,419,188
488,893
16,951,296
Total current period gross write-off
(277)
-28-
The table below details the amortized cost and gross write-offs of the classes of loans within the Commercial and Industrial segment by risk level and year of origination as of June 30, reflecting the changes made to the Company’s allowance methodology effective January 1, 2026 (dollars in thousands):
781,649
1,043,792
578,123
312,908
385,264
472,697
1,475,374
5,049,807
5,620
28,772
39,281
58,302
28,831
7,833
130,240
298,879
4,820
20,166
5,487
17,165
25,448
69,873
142,959
6,331
13,345
30,833
19,812
15,750
51,164
137,235
Total Commercial & Industrial
787,269
1,083,715
650,915
407,530
451,072
521,728
1,726,651
(398)
(562)
(172)
(1)
(362)
(1,495)
Other Commercial (Other)
189,957
273,555
215,760
144,679
130,480
308,027
260,202
1,522,660
10,339
15,545
8,578
10,491
24,613
687
70,253
496
530
3,559
3,133
718
6,164
14,104
Total Other Commercial (Other)
200,296
289,630
224,338
158,729
158,226
309,432
266,862
1,607,513
(2,353)
971,606
1,317,347
793,883
457,587
515,744
780,724
1,735,576
6,572,467
15,959
44,317
47,859
68,793
53,444
8,520
369,132
70,369
143,455
6,861
34,392
22,945
16,468
57,328
151,339
987,565
1,373,345
875,253
566,259
609,298
831,160
1,993,513
7,236,393
(2,354)
-29-
The table below details the amortized cost and gross write-offs of the classes of loans within the Commercial segment by risk level and year of origination as of December 31, reflecting the Company’s previous allowance methodology (dollars in thousands):
2021
557,083
381,768
233,793
84,396
39,055
58,001
242,753
1,596,849
10,712
136
51
671
989
3,260
7,759
23,578
542
2,092
2,980
463
793
4,845
26,145
37,860
319
547
74
135
2,519
4,500
8,094
568,656
384,543
236,898
85,665
43,356
70,606
276,657
(40)
(43)
442,571
305,006
298,355
497,750
500,885
1,823,826
53,556
3,921,949
4,532
14,892
31,258
17,474
12,006
77,890
2,121
160,173
6,962
7,435
6,210
10,907
6,604
77,134
1,275
116,527
6,644
16,427
7,014
27,267
49,520
140
107,012
Doubtful
454,065
333,977
352,250
533,145
546,762
2,028,505
57,092
(147)
905,007
486,703
811,972
1,060,691
741,739
2,628,053
78,676
6,712,841
556
39,149
17,010
23,926
59,738
140,575
505
1,434
2,600
23,267
76,411
68,195
172,412
6,264
38,108
1,138
107,153
24
152,687
905,512
488,693
859,985
1,139,076
843,214
2,863,139
78,896
1,125,728
730,095
446,849
487,440
251,752
351,402
1,344,042
4,737,308
16,322
35,316
13,751
39,156
8,963
21,615
121,435
256,558
6,978
16,326
5,861
8,117
4,029
5,914
60,923
108,148
2,785
12,444
33,386
21,588
10,563
5,663
41,285
127,714
1,151,813
794,181
499,847
556,301
275,307
384,594
1,567,685
(1,605)
(69)
(2,483)
(197)
(34,451)
(38,815)
192,761
123,570
289,889
441,536
247,973
592,615
49,203
1,937,547
14,029
25,464
98,973
3,850
1,317
143,633
21,572
62,470
18,533
103,246
2,372
729
71,278
37,422
74,668
47,355
233,824
195,133
124,970
325,490
600,748
384,368
689,666
97,875
(47)
93,538
70,435
82,732
198,071
172,024
408,213
4,255
1,029,268
2,975
2,533
1,558
6,193
3,887
11,349
2,431
30,926
2,404
1,277
1,209
860
17,009
22,759
248
206
4,843
11,654
17,204
98,917
74,493
84,290
205,679
181,614
448,225
6,939
(185)
270,356
246,933
172,163
157,255
168,474
179,392
276,970
1,471,543
113
20,631
746
5,873
27,363
184
6,944
2,688
9,891
4,519
3,040
1,552
35
90
9,792
Total Other Commercial
270,912
176,870
180,926
170,956
192,244
279,748
(140)
(2,617)
(3,514)
(6,271)
Total Commercial
3,587,044
2,344,510
2,335,753
2,927,139
2,121,902
6,041,502
2,049,455
21,407,305
34,541
53,433
99,909
126,599
149,490
183,575
135,259
782,806
17,391
29,235
39,298
106,433
88,881
198,574
91,031
570,843
6,032
20,612
60,670
141,369
85,304
253,193
89,147
656,327
3,645,008
2,447,790
2,535,630
3,301,540
2,445,577
6,676,979
2,364,892
23,417,416
(209)
(5,100)
(50)
(4,584)
(45,999)
-30-
Consumer Loans
For Consumer loans, the Company evaluates credit quality based on the delinquency status of the loan. The following table details the amortized cost and gross write-offs of the classes of loans within the Consumer segment based on their delinquency status and year of origination as of June 30, (dollars in thousands):
234,295
326,422
184,385
189,915
665,877
1,276,551
14,607
30-59 Days Past Due
36
540
164
778
39
60-89 Days Past Due
2,834
90+ Days Past Due
281
1,169
589
511
3,143
261
462
647
1,109
5,973
15,621
305
Total Residential 1-4 Family – Consumer
327,165
186,249
192,153
675,359
1,300,232
15,212
(96)
(24)
(133)
9,238
15,944
9,754
20,010
34,042
11,848
1,196,364
32
93
4,148
19
44
148
14
1,507
9
150
3,991
123
4,726
Total Residential 1-4 Family – Revolving
16,073
9,782
20,304
34,512
11,886
1,210,736
(65)
1,326
1,653
1,264
27,601
65,342
31,380
10
282
1,008
553
7
50
126
131
53
29
86
Total Auto
1,699
28,054
66,928
32,206
(25)
(192)
(284)
(214)
(715)
8,312
11,040
5,819
3,510
3,734
27,092
50,723
64
82
91
26
217
22
Total Consumer
8,333
11,162
5,869
3,544
3,784
27,391
50,826
(103)
(60)
(16)
(56)
(545)
253,171
355,059
201,222
241,036
768,995
1,346,871
1,261,694
4,428,048
48
879
1,283
1,437
4,278
8,017
43
3,289
4,496
1,516
9,502
724
795
3,196
10,525
546
659
1,318
15,715
5,031
29,490
253,192
356,099
203,164
244,055
780,583
1,371,715
1,276,774
4,485,582
(128)
(301)
(300)
(522)
(134)
-31-
The following table details the amortized cost and gross write-offs of the classes of loans within the Consumer segment based on their delinquency status and year of origination as of December 31, (dollars in thousands):
334,528
195,624
203,804
688,989
596,987
736,230
16,628
393
77
2,773
2,865
1,600
10,029
174
525
700
124
2,186
336
1,757
452
309
376
937
3,503
180
1,146
5,233
3,501
12,690
335,446
197,033
208,156
699,649
603,361
764,209
17,405
(53)
(175)
19,309
12,011
23,625
37,365
8,604
4,873
1,127,245
110
104
3,716
11
47
1,976
273
3,167
59
129
37
19,368
12,043
24,184
37,683
4,971
1,141,431
(375)
1,987
1,770
36,214
88,117
36,540
13,987
635
1,624
284
431
166
87
221
122
257
147
46
2,039
37,141
90,650
37,664
14,456
(146)
(886)
(246)
(181)
(1,743)
14,244
8,307
4,691
5,986
4,856
25,883
56,839
28
1
69
14,292
8,378
4,722
6,061
4,861
26,269
56,905
(248)
(262)
(37)
(786)
(179)
(1,572)
370,068
217,712
268,334
820,457
646,987
780,973
1,200,712
4,305,243
459
3,529
4,623
2,339
10,665
3,940
25,681
555
736
303
2,761
1,982
8,753
468
640
613
1,011
3,581
3,233
9,550
182
1,397
5,589
3,650
12,773
5,874
29,524
371,145
219,224
274,203
834,043
654,490
809,905
1,215,741
4,378,751
(156)
(546)
(1,058)
(283)
(1,020)
(554)
(3,865)
As of June 30, 2026 and December 31, 2025, the Company did not have any material revolving loans convert to term.
-32-
5. LEASES
Lessor Arrangements
The Company’s lessor arrangements consist of sales-type and direct financing leases for equipment, including vehicles and machinery, with original terms ranging from 17 months to 122 months. At June 30, 2026 and December 31, 2025, the carrying value of residual assets covered by residual value guarantees and residual value insurance was $120.1 million and $122.4 million, respectively.
Total net investment in sales-type and direct financing leases are included in “Loans held for investment, net of unearned income” on the Company’s Consolidated Balance Sheets and consisted of the following as of the periods ended (dollars in thousands):
June 30,2026
December 31,2025
Sales-type and direct financing leases:
Lease receivables, net of unearned income and deferred selling profit
693,152
614,543
Unguaranteed residual values, net of unearned income and deferred selling profit
42,482
41,570
Total net investment in sales-type and direct financing leases
735,634
656,113
Lessee Arrangements
The Company’s lessee arrangements consist of operating and finance leases; however, the majority of the leases have been classified as non-cancellable operating leases and are for real estate leases with remaining lease terms of up to 15 years.
The tables below provide information about the Company’s lessee lease portfolio and other supplemental lease information as of and for the following periods ended (dollars in thousands):
Operating
Finance
ROU assets
97,446
10,341
98,073
9,191
117,302
12,082
118,915
10,895
Lease Term and Discount Rate of Operating leases:
Weighted-average remaining lease term (years)
7.96
10.75
8.22
10.35
Weighted-average discount rate (1)
5.72
3.94
5.69
3.63
(1) A lease implicit rate or an incremental borrowing rate is used based on information available at commencement date of lease or at remeasurement date.
-33-
Six months ended June 30,
Cash paid for amounts included in measurement of lease liabilities:
Operating Cash Flows from Finance Leases
31
Operating Cash Flows from Operating Leases
12,588
10,198
Financing Cash Flows from Finance Leases
642
660
ROU assets obtained in exchange for lease obligations:
Operating leases
8,506
11,107
Finance leases
1,828
Three months ended June 30,
Net Operating Lease Cost
5,372
5,860
11,718
9,348
Finance Lease Cost:
Amortization of right-of-use assets
345
230
678
Interest on lease liabilities
97
15
188
Total Lease Cost
5,814
6,105
12,584
9,838
The maturities of lessor and lessee arrangements outstanding as of June 30, 2026 are presented in the table below for the years ending (dollars in thousands):
Lessor
Lessee
Sales-type and Direct Financing
For the remaining six months of 2026
91,937
13,285
1,000
2027
192,513
24,600
2,159
2028
161,163
21,933
2,249
2029
131,196
17,631
882
2030
103,582
14,246
759
Thereafter
114,693
60,525
8,524
Total undiscounted cash flows
795,084
152,220
15,573
Less: Adjustments (1)
101,932
34,918
3,491
Total (2)
(1) Lessor – unearned income and unearned guaranteed residual value; Lessee – imputed interest.
(2) Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements.
-34-
6. BORROWINGS
Short-term BorrowingsThe Company classifies borrowings with original maturities of one year or less as short-term. Short-term borrowings consist primarily of securities sold under repurchase agreements, which are secured customer transactions that generally mature on the following business day, and advances from the FHLB. The Company can also utilize federal funds purchased (secured overnight borrowings from other financial institutions) and other lines of credit, as needed.
Total short-term borrowings consisted of the following as of the periods ended (dollars in thousands):
FHLB advances
Total short-term borrowings
1,105,659
725,432
Average outstanding balance during the period
587,065
175,929
Average interest rate during the period
3.44
Average interest rate at end of period
3.74
3.15
Short-term borrowings are used to manage normal liquidity and support the Company’s asset and liability management strategies and can fluctuate depending on funding needs. The Company’s available unused short-term borrowings consisted of the following as of the periods ended (dollars in thousands):
Federal funds lines with correspondent banks
1,392,000
1,410,000
Alternative line of credit with correspondent bank
25,000
FHLB secured line of credit (1)
4,987,545
5,277,231
Federal Reserve Discount Window (2)
1,653,410
2,573,492
Other secondary sources (3)
5,248,460
4,960,331
Total available unused short-term borrowings
13,306,415
14,246,054
(1) The Company’s total credit capacity with FHLB was $11.2 billion and $11.1 billion at June 30, 2026 and December 31, 2025, respectively. Based on the amount of collateral pledged, the secured line of credit capacity was $5.9 billion at June 30, 2026 and December 31, 2025.
(2) The Company’s Federal Reserve Discount Window borrowing capacity was $1.7 billion and $2.6 billion, none of which were used at June 30, 2026 and December 31, 2025, respectively.
(3) Includes unpledged AFS securities, brokered deposits, and unrestricted cash and cash equivalents.
Refer to Note 7 “Commitments and Contingencies” within this Item 1 of this Quarterly Report for additional information on the Company’s pledged collateral. The Company has certain restrictive covenants related to certain asset quality, capital, and profitability metrics associated with these lines and was in compliance with these covenants as of June 30, 2026 and December 31, 2025.
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Long-term Borrowings
During the third quarter of 2026 the Company issued a notice of redemption for its outstanding $168.0 million fixed-to-floating rate subordinated notes (“2029 Subordinated Notes”) that were due to mature in 2029. The Company expects the redemption to occur; however, the redemption remains subject to customary conditions, and the Company reserves the right to withdraw, delay, or revoke the notice if such conditions are not satisfied or market circumstances warrant. See Note 14 “Subsequent Events” for additional information.
Total long-term borrowings consisted of the following as of June 30, 2026 (dollars in thousands):
Spread to
Principal
3-Month SOFR
Rate (3)
Maturity
Investment (4)
Trust Preferred Capital Securities (5)
Trust Preferred Capital Note – Statutory Trust I
22,500
2.75
% (1)
6.75
6/17/2034
696
Trust Preferred Capital Note – Statutory Trust II
36,000
1.40
5.40
6/15/2036
1,114
VFG Limited Liability Trust I Indenture
20,000
2.73
6.73
3/18/2034
619
FNB Statutory Trust II Indenture
12,000
3.10
7.10
6/26/2033
372
Gateway Capital Statutory Trust I
8,000
9/17/2033
Gateway Capital Statutory Trust II
7,000
2.65
6.65
Gateway Capital Statutory Trust III
15,000
1.50
5.50
5/30/2036
464
Gateway Capital Statutory Trust IV
1.55
5.55
7/30/2037
774
MFC Capital Trust II
5,000
2.85
6.85
1/23/2034
155
AMNB Statutory Trust I
1.35
5.35
6/30/2036
MidCarolina Trust I
3.45
% (2)
7.18
11/7/2032
MidCarolina Trust II
3,500
2.95
6.68
1/7/2034
109
Total Trust Preferred Capital Securities
179,000
5,542
Subordinated Debt (5)
2031 Subordinated Notes (6)
250,000
2.88
12/15/2031
2032 Subordinated Notes (7)
190,000
3.88
3/30/2032
2029 Subordinated Notes (8)
168,000
2.62
6.62
11/15/2029
Total Subordinated Debt
608,000
Fair Value Discount (9)
(16,861)
Investment in Trust Preferred Capital Securities
Total Long-term Borrowings
(1) Three-Month Chicago Mercantile Exchange Secured Overnight Financing Rate (“SOFR”) + 0.262%.
(2) Three-Month Chicago Mercantile Exchange SOFR.
(3) Rate as of June 30, 2026. Calculated using non-rounded numbers.
(4) Represents the junior subordinated debentures owned by the Company in trust and is reported in “Other assets” on the Company’s Consolidated Balance Sheets.
(5) Trust Preferred Capital Securities and Subordinated notes qualify as Tier 2 capital for the Company for regulatory purposes.
(6) Fixed-to-floating rate notes. On December 15, 2026, the interest rate changes to a floating rate of the then current Three-Month Term SOFR plus a spread of 186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.
(7) Fixed-to-floating rate notes acquired in the Sandy Spring acquisition. On March 30, 2027, the interest rate changes to a floating rate equal to the then current Three-Month Term SOFR plus a spread of 196.5 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after March 30, 2027.
(8) Fixed-to-floating rate notes acquired in the Sandy Spring acquisition. On November 15, 2024, the interest rate changed to a floating rate equal to the then current Three-Month Term SOFR plus a spread of 262 bps and a 26 bps spread adjustment through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after November 15, 2024. During the third quarter of 2026, the Company issued a notice of redemption for the 2029 Subordinated Notes. See Note 14 “Subsequent Events” for additional information.
(9) Remaining discounts of $12.3 million and $4.6 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.
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Total long-term borrowings consisted of the following as of December 31, 2025 (dollars in thousands):
6.66
5.31
6.64
7.01
6.56
5.41
5.46
6.76
5.26
6.60
6.53
(20,682)
(1) Three-Month Chicago Mercantile Exchange SOFR + 0.262%.
(3) Rate as of December 31, 2025. Calculated using non-rounded numbers.
(6) Fixed-to-floating rate notes. On December 15, 2026, the interest changes to a floating rate of the then current Three-Month Term SOFR plus a spread of 186 bps through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after December 15, 2026.
(8) Fixed-to-floating rate notes acquired in the Sandy Spring acquisition. On November 15, 2024, the interest rate changed to a floating rate equal to the then current Three-Month Term SOFR plus a spread of 262 bps and a 26 bps spread adjustment through its maturity date or earlier redemption. The notes may be redeemed before maturity on any interest payment date occurring on or after November 15, 2024.
(9) Remaining discounts of $12.9 million and $7.8 million on Trust Preferred Capital Securities and Subordinated Debt, respectively.
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As of June 30, 2026, the scheduled maturities of long-term debt are as follows for the years ending (dollars in thousands):
Trust
Subordinated
Long-term
Notes
Debt
Discount (1)
Borrowings
(1,344)
(2,485)
(2,309)
(2,198)
165,802
(1,641)
184,542
440,000
(6,884)
617,658
Total long-term borrowings
(1) Includes discount on Trust Preferred Capital Securities and Subordinated Debt.
7. COMMITMENTS AND CONTINGENCIES
Litigation and Regulatory Matters
In the ordinary course of its operations, the Company and its subsidiaries are subject to loss contingencies related to legal and regulatory proceedings. The Company establishes accruals for those matters when a loss contingency is considered probable and the related amount is reasonably estimable. When applicable, the Company estimates loss contingencies and whether there is an accruable probable loss. When the Company is able to estimate such losses and when it is reasonably possible that the Company could incur losses in excess of the amounts accrued, the Company discloses the aggregate estimation of such possible losses.
Financial Instruments with Off-Balance Sheet Risk
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amount recognized on the Company’s Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of the Company’s involvement in particular classes of financial instruments.
The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless noted otherwise, the Company does not require collateral or other security to support off-balance sheet instruments with credit risk. The Company considers credit losses related to off-balance sheet commitments by undergoing a similar process in evaluating losses for loans that are carried on the balance sheet. The Company considers historical loss and funding information, current economic conditions, and reasonable and supportable forecasted economic conditions, among other factors in the consideration of expected credit losses in the Company’s off-balance sheet commitments to extend credit.
At June 30, 2026 and December 31, 2025, the Company’s RUC totaled $32.2 million and $26.2 million, respectively. The Company also records an indemnification reserve based on historical statistics and loss rates related to mortgage loans previously sold, which totaled $499 thousand and $506 thousand, respectively, at June 30, 2026 and December 31, 2025. The RUC and indemnification reserve are included in “Other Liabilities” on the Company’s Consolidated Balance Sheets.
Commitments to extend credit are agreements to lend to customers as long as there are no violations of any conditions established in the contracts. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Letters of credit are conditional commitments issued by the Company to guarantee the performance of customers to third parties. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.
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The following table presents the balances of commitments and contingencies as of the periods ended (dollars in thousands):
Commitments with off-balance sheet risk:
Commitments to extend credit (1)
9,965,594
9,733,175
Letters of credit
194,996
224,068
Total commitments with off-balance sheet risk
10,160,590
9,957,243
(1) Includes unfunded overdraft protection.
As of June 30, 2026 and December 31, 2025, the Company held $214.5 million and $169.5 million, respectively, in deposits in other financial institutions including $140.4 million and $124.7 million at each date, respectively, pledged as collateral for cash flow, fair value and loan swap derivatives. Uninsured deposits in other financial institutions totaled $71.1 million and $41.9 million at June 30, 2026 and December 31, 2025, respectively. The Company’s management evaluates the loss risk of its uninsured deposits in other financial institutions at least annually.
For asset/liability management purposes, the Company uses interest rate contracts to hedge various exposures or to modify the interest rate characteristics of various balance sheet accounts. For the over-the-counter derivatives cleared with the central clearinghouses, the variation margin is treated as a settlement of the related derivatives fair values. Refer to Note 8 “Derivatives” within this Item 1 for additional information.
As part of the Company’s liquidity management strategy, the Company pledges collateral to secure various financing and other activities that occur during the normal course of business. The Company maintains robust borrowing capacity at the FHLB and FRB since secured borrowing facilities provide the most reliable sources of funding, especially during times of market turbulence and financial distress. The following tables present the types of collateral pledged as of the periods ended (dollars in thousands):
Pledged Assets as of June 30, 2026
Cash
Securities (1)
Public deposits
1,240,053
576,065
1,816,118
Repurchase agreements
211,584
FHLB advances (2)
479,753
9,300
8,816,031
9,305,084
Derivatives
140,400
64,405
204,805
Federal Reserve Discount Window (3)
2,184,423
Other purposes
86,570
Total pledged assets
2,082,365
585,365
11,000,454
13,808,584
(1) Balance represents market value.
(2) The loan balance pledged to FHLB represents unpaid principal balance.
(3) The loan balance pledged to Federal Reserve Discount Window represents unpaid principal balance.
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Pledged Assets as of December 31, 2025
1,249,969
607,061
1,857,030
203,404
518,895
9,486
8,832,269
9,360,650
120,697
64,037
184,734
3,363,761
63,924
2,100,229
616,547
12,196,030
15,033,503
8. DERIVATIVES
The Company has cash flow and fair value hedges that are derivatives designated as accounting hedges. The Company also has derivatives not designated as accounting hedges that include foreign exchange contracts, interest rate contracts, and Risk Participation Agreements. The Company’s mortgage banking derivatives do not have a material impact to the Company and are not included within the derivatives disclosures noted below.
The following table summarizes key elements of the Company’s derivative instruments as of the periods ended, segregated by derivatives that are considered accounting hedges and those that are not (dollars in thousands):
Derivative (2)
Notional or
Contractual
Amount (1)
Assets
Liabilities
Derivatives designated as accounting hedges:
Interest rate contracts: (3)
Cash flow hedges
900,000
2,862
1,444
Fair value hedges:
61,443
Securities
50,000
215
294
Derivatives not designated as accounting hedges:
Interest rate contracts (3)(4)
11,931,128
91,751
148,959
10,530,098
110,311
165,860
Foreign exchange contracts
21,276
292
272
6,266
Cash collateral (received)/pledged (5)
(21,423)
4,170
(21,297)
3,970
(1) Notional amounts are not recorded on the Company’s Consolidated Balance Sheets and are generally used only as a basis on which interest and other payments are determined.
(2) Balances represent fair value of derivative financial instruments.
(3) The Company’s cleared derivatives are classified as a single-unit of accounting, resulting in the fair value of the designated swap being reduced by the variation margin, which is treated as settlement of the related derivatives fair value for accounting purposes and is reported on a net basis.
(4) Includes Risk Participation Agreements.
(5) The fair value of derivative assets and liabilities is presented on a gross basis. The Company has not applied collateral netting; as such the amounts of cash collateral received or pledged are not offset against the derivative assets and derivative liabilities in the Consolidated Balance Sheets. Cash collateral received and pledged are included in “Interest-bearing deposits in other banks” on the Company’s Consolidated Balance Sheets.
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The following table summarizes the carrying value of the Company’s hedged assets in fair value hedges and the associated cumulative basis adjustments included in those carrying values as of the periods ended (dollars in thousands):
Cumulative
Amount of Basis
Adjustments
Included in the
Carrying Amount
of Hedged
Amount of the
Assets/(Liabilities)
Hedged
Line items on the Consolidated Balance Sheets in which the hedged item is included:
Securities available-for-sale (1) (2)
62,894
66,763
(292)
Loans (3)
(8,091)
(7,908)
(1) These amounts include the amortized cost basis of the investment securities designated in hedging relationships for which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. The amount of the designated hedged item at June 30, 2026 and December 31, 2025 totaled $50 million.
(2) Carrying value represents amortized cost.
(3) The fair value of the swaps associated with the derivative related to hedged items at June 30, 2026 and December 31, 2025 was $8.2 million and $8.0 million, respectively.
9. STOCKHOLDERS’ EQUITY
Forward Sale Agreements
On October 21, 2024, in connection with the execution of the Sandy Spring merger agreement, the Company entered into an initial forward sale agreement with Morgan Stanley & Co. LLC (the “Forward Purchaser”) relating to an aggregate of 9,859,155 shares of the Company’s common stock. On October 21, 2024, the Company priced the public offering of shares of the Company’s common stock in connection with such forward sale agreement and entered into an underwriting agreement with Morgan Stanley & Co. LLC, as representative for the underwriters named therein, the Forward Purchaser and Morgan Stanley & Co. LLC as forward seller (the “Forward Seller”), relating to the registered public offering and sale of 9,859,155 shares of the Company’s common stock at a public offering price of $35.50 per share (before underwriting discounts and commissions). The underwriters were granted a 30-day option to purchase up to an additional 1,478,873 shares of the Company’s common stock. On October 21, 2024, the underwriters exercised in full their option to purchase the additional 1,478,873 shares of the Company’s common stock pursuant to the underwriting agreement and, in connection therewith, the Company entered into an additional forward sale agreement with the Forward Purchaser relating to 1,478,873 shares of the Company’s common stock, on terms substantially similar to those contained in the initial forward sale agreement (such additional forward sale agreement together with the initial forward sale agreement, the “Forward Sale Agreements”).
On April 1, 2025, the Company physically settled in full the Forward Sale Agreements by delivering 11,338,028 shares of the Company’s common stock to the Forward Purchaser. The Company received net proceeds from such sale of shares of the Company’s common stock and full physical settlement of the Forward Sale Agreements, before expenses, of approximately $385.0 million.
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Share Repurchase Program
Share repurchase activity is evaluated based on the Company’s capital deployment priorities and is subject to market, economic, and regulatory considerations. Share repurchases may be executed through either open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended. On May 5, 2026, the Company’s Board of Directors authorized a share repurchase program (the “Repurchase Program”) to purchase up to $250.0 million of the Company’s common stock through May 5, 2027.
The cost of treasury stock repurchases include applicable federal excise tax imposed on certain stock repurchases under the Inflation Reduction Act of 2022. The excise tax is recognized as an additional cost of repurchased shares and recorded as a reduction of stockholders’ equity.
Under the Repurchase Program, the Company repurchased approximately 265 thousand shares of common stock for $10.0 million at an average purchase price of $37.76 during the three and six months ended June 30, 2026. As of June 30, 2026, approximately $240.0 million remained available for purchase under the Repurchase Program. The Company did not have an active share repurchase program during 2025.
Series A Preferred Stock
The Company has 6,900,000 depositary shares outstanding, each representing a 1/400th ownership interest in a share of its Series A preferred stock, with a liquidation preference of $10 thousand per share of Series A preferred stock (equivalent to $25 per depositary share), including 900 thousand depositary shares pursuant to the exercise in full by the underwriters of their option to purchase additional depositary shares. Series A preferred stock dividends, if declared by the Board or a fully authorized committee of the Board, are paid by the Company in arrears on the first business day of March, June, September, and December of each year at a rate of 6.875% per annum.
Accumulated Other Comprehensive Income (Loss)
The change in AOCI for the three and six months ended June 30, 2026 is summarized as follows, net of tax (dollars in thousands):
Gains (Losses)
Change in Fair
on AFS
Value of Cash
(Losses) on
Flow Hedge
AOCI (loss) – March 31, 2026
(255,241)
(23,147)
Other comprehensive (loss) income:
Other comprehensive (loss) income before reclassification
1,915
Amounts reclassified from AOCI into earnings
(220)
Net current period other comprehensive (loss) income
(184)
AOCI (loss) – June 30, 2026
(251,234)
(25,275)
AOCI (loss) – December 31, 2025
(234,702)
(21,165)
Other comprehensive income (loss) before reclassification
(20,282)
(424)
Net current period other comprehensive income (loss)
(16,532)
(64)
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The change in AOCI for the three and six months ended June 30, 2025 is summarized as follows, net of tax (dollars in thousands):
on BOLI
AOCI (loss) – March 31, 2025
(301,307)
(32,742)
334
Other comprehensive income before reclassification
13,148
(219)
6,934
AOCI (loss) – June 30, 2025
(294,373)
(26,540)
127
AOCI (loss) – December 31, 2024
(317,142)
(43,078)
39,230
(330)
Net current period other comprehensive income (loss )
22,769
(407)
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10. FAIR VALUE MEASUREMENTS
The Company follows ASC 820, Fair Value Measurement, to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. ASC 820 clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants.
ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy under ASC 820 based on these two types of inputs are as follows:
Level 1 Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2 Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the markets.
Level 3 Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. These unobservable inputs reflect the Company’s assumptions about what market participants would use and information that is reasonably available under the circumstances without undue cost and effort.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements.
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The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis as of the periods ended (dollars in thousands):
Fair Value Measurements at June 30, 2026 using
Significant
Quoted Prices in
Active Markets for
Observable
Unobservable
Identical Assets
Inputs
Level 1
Level 2
Level 3
Balance
89,077
12,035
3,087,750
Financial Derivatives (2)
92,957
152,093
(2) Includes hedged and non-hedged derivatives.
Fair Value Measurements at December 31, 2025 using
88,946
15,056
3,382,524
112,686
166,690
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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets are measured at fair value on a nonrecurring basis in accordance with GAAP, only when there is evidence of impairment or other triggering events and typically include LHFS, foreclosed properties, impaired long lived assets including bank premises, collateral dependent loans that are individually assessed for credit purposes, and impaired other intangibles. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets after they are evaluated for impairment. When the asset is secured by real estate, the Company measures the fair value utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser using observable market data. Management may discount the value from the appraisal in determining the fair value if, based on its understanding of the market conditions, the collateral had been impaired below the appraised value (Level 3). The nonrecurring valuation adjustments for these assets did not have a significant impact on the Company’s consolidated financial statements.
The following tables summarize the Company’s financial assets that were measured on a nonrecurring basis as of the periods ended (dollars in thousands):
Individually assessed loans (1)
5,376
(1) Net of reserves of $858 thousand related to collateral dependent loans as of June 30, 2026.
1,330
(1) Net of reserves of $203 thousand related to collateral dependent loans as of December 31, 2025.
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Fair Value of Financial Instruments
ASC 825, Financial Instruments, requires disclosure about fair value of financial instruments for interim periods and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
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The carrying values and estimated fair values of the Company’s financial instruments as of the periods ended are as follows (dollars in thousands):
Quoted Prices
in Active
Markets for
Total Fair
AFS securities
3,787,640
HTM securities
830,883
881
LHFI, net of unearned income
28,419,826
Financial Derivatives (1)
Accrued interest receivable
127,556
30,453,081
1,881,340
1,857,026
Accrued interest payable
17,454
(1) Includes hedged and non-hedged derivatives.
4,105,355
855,906
906
27,517,137
131,741
30,467,372
1,497,292
1,435,699
19,412
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The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. Borrowers with fixed rate obligations, however, are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.
11. INCOME TAXES
The Company’s effective tax rate was 21.3% for the quarter ended June 30, 2026, compared to (13.2%) for the quarter ended June 30, 2025. For the six months ended June 30, 2026 and June 30, 2025, the effective tax rates were 21.1% and 11.9%, respectively. The increase in the effective tax rate during the 2026 periods was primarily driven by an $8.0 million income tax benefit recognized in the second quarter of 2025 related to the re-evaluation of the Company’s state net deferred tax asset following the Sandy Spring acquisition.
As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact the Company’s view regarding the future realization of deferred tax assets. The Company’s valuation allowance was $5.8 million and $7.8 million as of June 30, 2026 and December 31, 2025, respectively. The decrease in the valuation allowance was from an assessment of the Company’s ability to realize certain state tax attributes, through an increase in state taxable income.
The Company analyzed the tax positions taken or expected to be taken on its tax returns for the periods ending December 31, 2025, 2024, and 2023, and concluded the Company had no material liability related to uncertain tax positions.
12. EARNINGS PER SHARE
Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, including the effect of dilutive potential common shares outstanding attributable to stock awards and incremental shares related to the Forward Sale Agreements, while excluding any anti-dilutive weighted shares outstanding. Refer to Note 9 “Stockholders’ Equity” within this Item 1 of this Quarterly Report for more information on the Forward Sale Agreements.
The following table presents basic and diluted EPS calculations for the three and six months ended June 30, (dollars in thousands except per share data):
Less: Preferred stock dividends
Weighted average shares outstanding, basic
142,099
141,680
142,001
115,596
Dilutive effect of stock awards and Forward Sale Agreements
222
58
300
461
Weighted average shares outstanding, diluted
142,321
141,738
142,301
116,057
Earnings per common share, basic
Earnings per common share, diluted
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13. SEGMENT REPORTING AND REVENUE
Operating Segments
The Company has two reportable operating segments, Wholesale Banking and Consumer Banking, with corporate support functions and intercompany eliminations being presented within Corporate Other.
Segment Results
The following table presents and reconciles income before income taxes compared to the Consolidated Statements of Income. Income before income taxes totaled $204.5 million and $17.5 million for the three months ended June 30, 2026 and June 30, 2025. The information is disaggregated by major source and reportable operating segment for the three months ended June 30, (dollars in thousands):
Three Months Ended:
Wholesale Banking
Consumer Banking
Corporate Other
Interest and dividend income (expense) (1)
441,685
236,853
(191,710)
Interest expense (income) (1)
278,650
127,728
(244,668)
163,035
109,125
52,958
5,381
5,690
666
157,654
103,435
52,292
Noninterest income
32,866
19,093
38,289
Noninterest expenses
90,954
105,635
2,547
99,566
16,893
88,034
443,315
248,482
(181,425)
284,936
135,631
(231,566)
158,379
112,851
50,141
80,022
25,685
78,357
87,166
23,652
19,661
38,209
84,593
98,515
96,590
Income (loss) before income taxes
17,416
(8,240)
(1) The Company uses a funds transfer pricing methodology for net interest income which utilizes the matched funding approach to allocate the cost of funds used or credit for funds provided to all operating loans and deposits, resulting in interest and dividend expense and interest income for the Corporate Other segment.
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The following table presents and reconciles income before income taxes compared to the Consolidated Statements of Income. Income before income taxes totaled $359.1 million and $79.0 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The information is disaggregated by major source and reportable operating segment for the six months ended June 30, (dollars in thousands):
Six Months Ended:
867,804
468,085
(377,326)
543,892
249,811
(472,631)
323,912
218,274
95,305
5,660
7,698
1,117
318,252
210,576
94,188
61,810
37,445
45,776
184,744
210,631
13,571
195,318
37,390
126,393
740,302
404,624
(328,718)
482,583
215,990
(387,901)
257,719
188,634
59,183
95,067
28,278
162,652
160,356
35,451
34,295
40,939
139,805
166,082
107,995
58,298
28,569
(7,873)
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The following table presents the Company’s operating segment results for key balance sheet metrics as of the periods ended (dollars in thousands):
Corporate Other (1)
23,837,961
5,452,570
(617,260)
Goodwill (2)
1,281,726
473,149
Deposits (3)
12,025,991
17,697,300
744,966
23,179,687
5,317,949
(701,469)
1,254,979
478,308
11,339,236
17,820,026
1,312,374
(1) Corporate Other includes acquisition accounting fair value adjustments.
(2) During the first quarter of 2026, goodwill was reallocated among reporting units as a result of measurement period adjustments associated with the Sandy Spring acquisition, resulting in a $26.7 million increase in Wholesale Banking and a $5.2 million decrease in Consumer Banking. As of March 31, 2026, the purchase accounting was finalized and no longer subject to change.
(3) Corporate Other primarily includes brokered deposits.
Revenue
Noninterest income disaggregated by major source for the three and six months ended June 30, consisted of the following (dollars in thousands):
Service charges on deposit accounts (1):
Overdraft fees
5,907
6,063
11,943
11,640
Maintenance fees & other
6,352
6,157
12,431
10,265
Other service charges, commissions, and fees (1)
Interchange fees (1)
Fiduciary and asset management fees (1):
Trust asset management fees
7,987
21,915
11,811
Registered advisor management fees
7,852
6,902
15,232
6,904
Brokerage management fees
2,306
4,491
5,705
Other operating income (2)(3)
(1) Income within scope of ASC 606, Revenue from Contracts with Customers.
(2) Includes a $32.3 million pre-tax gain on sale of equity interest in Bearing Insurance Group, LLC (“Bearing Insurance”) for the three and six months ended June 30, 2026.
(3) Includes a $15.7 million pre-tax gain on CRE loan sale and a $14.3 million pre-tax gain on sale of equity interest in Cary Street Partners LLC (“CSP”) for the three and six months ended June 30, 2025.
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The following tables present noninterest income disaggregated by reportable operating segment for the three and six months ended June 30, (dollars in thousands):
Corporate Other (1)(2)
4,684
7,575
649
1,637
19,021
2,439
Other income
8,512
4,786
51,587
4,271
7,949
1,623
114
15,758
1,965
3,115
5,303
38,095
46,513
9,095
15,279
1,084
3,140
36,901
4,737
14,730
9,607
70,113
7,281
14,624
904
2,988
115
20,529
3,891
8,998
40,824
56,559
(1) For the three and six months ended June 30, 2026, other income primarily includes a $32.3 million pre-tax gain on sale of equity interest in Bearing Insurance and income from BOLI.
(2) For the three and six months ended June 30, 2025, other income primarily includes a $15.7 million pre-tax gain on CRE loan sale, a $14.3 million pre-tax gain on sale of equity interest in CSP, and income from BOLI.
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The following tables present noninterest expense disaggregated by reportable operating segment for the three and six months ended June 30, (dollars in thousands):
31,514
27,515
53,280
392
8,339
4,131
1,864
403
13,749
81
1,677
3,774
567
1,650
506
Other expenses (1)
56,536
66,051
(72,893)
49,694
Total noninterest expense
32,923
29,838
47,181
410
7,534
4,838
1,342
15,514
1,296
4,984
(253)
1,060
471
50,107
58,395
23,602
132,104
67,034
55,685
103,003
767
16,725
8,572
3,622
677
27,319
3,270
7,653
1,396
2,904
1,274
111,760
131,370
(134,250)
108,880
53,607
49,774
81,976
646
12,700
8,016
2,227
571
24,637
2,289
7,842
1,835
832
83,338
98,913
(15,308)
166,943
(1) Includes allocated expenses
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14. SUBSEQUENT EVENTS
Dividends
On July 23, 2026, the Company’s Board of Directors declared a quarterly dividend on the outstanding shares of its Series A preferred stock. The Series A preferred stock is represented by depositary shares, each representing a 1/400th ownership interest in a share of Series A preferred stock. The dividend of $171.88 per share (equivalent to $0.43 per outstanding depositary share) is payable on September 1, 2026 to preferred shareholders of record as of August 17, 2026.
The Company’s Board of Directors also declared a quarterly dividend of $0.37 per share of common stock. The common stock dividend is payable on August 21, 2026 to common shareholders of record as of August 7, 2026.
Share Repurchase Program
As discussed in Note 9 “Stockholders’ Equity”, the Company has an active Repurchase Program. Subsequent to the quarter ended June 30, 2026, as part of the Repurchase Program, approximately 132 thousand shares (or $5.6 million) were repurchased between July 1, 2026 and August 6, 2026. As of August 6, 2026, the Company is authorized under the Repurchase Program to repurchase approximately $234.4 million of additional shares of the Company’s common stock.
Subordinated Debt
On July 30, 2026, the Company issued $250.0 million of subordinated notes (“2036 Subordinated Notes”) due August 1, 2036 with a fixed-to-floating rate of 6.25%. The 2036 Subordinated Notes converts to a floating rate based on three-month SOFR, plus 213 bps on August 1, 2031.
Net proceeds from the issuance, after underwriting discounts and offering expenses, were approximately $246.9 million and are expected to be used to repay the 2029 Subordinated Notes, acquired as part of the Sandy Spring acquisition, plus accrued interest, and for general corporate purposes. The Company issued a notice of redemption during the third quarter of 2026 to redeem the 2029 Subordinated Notes with an aggregate principal amount of $168.0 million. The Company expects the redemption to occur; however, the redemption remains subject to customary conditions, and the Company reserves the right to withdraw, delay, or revoke the notice if such conditions are not satisfied or market conditions warrant.
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To the Shareholders and the Board of Directors of Atlantic Union Bankshares Corporation
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated balance sheet of Atlantic Union Bankshares Corporation and subsidiaries (the Company) as of June 30, 2026, the related consolidated statements of income, comprehensive income (loss), and changes in stockholders’ equity for the three and six-month periods ended June 30, 2026 and 2025, the consolidated statements of cash flows for the six-month periods ended June 30, 2026 and 2025, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2025, the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated February 26, 2026, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2025, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ Ernst & Young LLP
Richmond, Virginia
August 6, 2026
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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information about the major components of our results of operations, financial condition, liquidity, and capital resources. This discussion and analysis should be read in conjunction with our “Consolidated Financial Statements,” our “Notes to the Consolidated Financial Statements,” and the other financial data included in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section therein. Our results of operations for the interim periods are not necessarily indicative of results that may be expected for the full year or for any other period. Amounts are rounded for presentation purposes; however, some of the percentages presented are computed based on unrounded amounts.
In the following discussion and analysis, we provide certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which we use to prepare our financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. We use the non-GAAP financial measures discussed herein in our analysis of our performance. Management believes that these non-GAAP financial measures provide additional understanding of our ongoing operations, enhance the comparability of our results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance. Non-GAAP financial measures may be identified with the symbol (+) and may be labeled as adjusted. Refer to the “Non-GAAP Financial Measures” section within this Item 2 for more information about these non-GAAP financial measures, including a reconciliation of these measures to the most directly comparable GAAP financial measures.
FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, statements regarding our strategic expansion into North Carolina; statements regarding our future ability to recognize the benefits of certain tax assets; business, financial and operating results, including our deposit base and funding; the impact of changes in economic conditions, the interest rate environment, economic, fiscal or trade policy and the potential related impacts on our business and loan demand; management’s beliefs regarding our liquidity, capital resources, asset quality, CRE loan portfolio and our customer relationships; and statements that include other projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “seek to,” “potential,” “continue,” “confidence,” or words of similar meaning or other statements concerning opinions or judgment of the Company and our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in
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More information on factors that could affect our forward-looking statements is discussed throughout Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2025 Form 10-K and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All risk factors and uncertainties described herein and therein should be considered in evaluating
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forward-looking statements, and all of the forward-looking statements made in this Quarterly Report are expressly qualified by the cautionary statements contained or referred to herein and therein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the Company or our businesses or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this Quarterly Report. Forward-looking statements speak only as of the date they are made. We do not intend or assume any obligation to update, revise or clarify any forward-looking statements that may be made from time to time by or on behalf of the Company, whether as a result of new information, future events or otherwise, except as required by law.
CRITICAL ACCOUNTING ESTIMATES
We prepare our consolidated financial statements based on the application of accounting and reporting policies in accordance with GAAP and general practices within the banking industry. Our financial position and results of operations are affected by management’s application of accounting policies, which require the use of estimates, assumptions, and judgments, which may prove inaccurate or are subject to variations. Changes in underlying factors, estimates, assumptions or judgements could result in material changes in our consolidated financial position and/or results of operations.
Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the allowance for loan and lease losses, fair value measurements, and valuation of deferred tax assets as accounting policies that require the most difficult, subjective or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances change. Therefore, we evaluate these accounting policies and related critical accounting estimates on an ongoing basis and update them as needed. Management has discussed these accounting policies and the critical accounting estimates summarized below with the Audit Committee of the Board of Directors.
We provide additional information about our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2025 Form 10-K.
Our significant accounting policies are discussed in Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of our 2025 Form 10-K.
Effective January 1, 2026, the Company made certain changes to its allowance methodology as part of the continued enhancement of its credit modeling practices, resulting in more dynamic and precise modeling that allow for more granularity in the monitoring of our expected credit losses. As a result of this change, the Company moved from two loan portfolio segments (Commercial and Consumer) to three portfolio segments (CRE, Commercial and Industrial, and Consumer), by reorganizing the former Commercial segment into the CRE and Commercial and Industrial segments, with no changes made to the Consumer segment. The Company also updated its modeling approach to use either a loan-level probability of default/loss given default methodology or a segment level loss rate model for its loan portfolio. The ALLL is estimated using quantitative methods that consider a variety of factors from both internal and external sources at the loan, portfolio, and macroeconomic environment levels. These changes were accounted for prospectively as a change in accounting estimate in the first quarter of 2026, did not have a material impact on the Company’s consolidated financial statements, and resulted in no changes to previously reported values. For more information on these changes, see Note 1 “Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report.
For information regarding our prior allowance methodology, see Note 1 “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of our 2025 Form 10-K.
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RECENT ACCOUNTING PRONOUNCEMENTS (ISSUED BUT NOT FULLY ADOPTED)
In November 2024, the FASB issued ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. This guidance requires enhanced disclosure of income statement expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. ASU No. 2024-03 is not expected to have an impact on our financial condition or results of operations but could change certain disclosures in our SEC filings.
In September 2025, the FASB issued ASU No. 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which outlined targeted improvements to Subtopic 350-40 to increase the operability of the recognition guidance considering different methods of software development. The amendments are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. ASU No. 2025-06 is not expected to have a material impact on our consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-07 Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The update to Topic 815 outlined the addition of derivative scope exceptions with underlyings that are based on the operations or activities of one of the parties to the contract. The update to Topic 606 clarified the applicability of Topic 606 and its interaction with other Topics. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. ASU No. 2025-07 is not expected to have an impact on our consolidated financial statements.
In November 2025, the FASB issued ASU No. 2025-08 Financial Instruments – Credit Losses (Topic 326): Purchased Loans. This update expanded the population of acquired financial assets subject to the gross-up approach in Topic 326. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. ASU No. 2025-08 is not expected to have a material impact on our consolidated financial statements at adoption; however, the amendments in this update will be applied prospectively to loans that are acquired on or after the adoption date.
In November 2025, the FASB issued ASU No. 2025-09 Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. This update clarified certain aspects of the guidance on hedge accounting. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. ASU No. 2025-09 is not expected to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-11 Interim Reporting (Topic 270): Narrow Scope Improvements. This update improved the navigability of the required interim disclosures and clarified when that guidance is applicable. The amendments are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. ASU No. 2025-11 is not expected to have an impact on our consolidated financial statements but could have an impact on interim disclosures.
ABOUT ATLANTIC UNION BANKSHARES CORPORATION
Headquartered in Richmond, Virginia, Atlantic Union Bankshares Corporation (NYSE: AUB) is the holding company for Atlantic Union Bank. Atlantic Union Bank has branches and ATMs located in Virginia, Maryland, North Carolina and Washington, D.C. Certain non-bank financial services affiliates of Atlantic Union Bank include: Atlantic Union Equipment Finance, Inc., which provides equipment financing; AUB Investments, Inc., which provides investment services; and Atlantic Union Capital Markets, Inc., which provides capital market services.Shares of our common stock are traded on the New York Stock Exchange under the symbol “AUB”. Additional information is available on our website at https://investors.atlanticunionbank.com. The information contained on our website is not a part of or incorporated into this Quarterly Report.
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RESULTS OF OPERATIONS
Strategic Actions
Bearing Insurance Sale
We completed the sale of our equity interest (held by our indirect subsidiary, Union Insurance Group, LLC) in Bearing Insurance to an unaffiliated third party, effective May 1, 2026, resulting in a pre-tax gain of approximately $32.3 million during the second quarter of 2026.
During the second quarter of 2026, our Board of Directors authorized the Repurchase Program to purchase up to $250.0 million of our common stock through May 5, 2027 in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As part of the Repurchase Program, approximately 265 thousand common shares (or $10.0 million) were repurchased during the second quarter of 2026 at an average purchase price of $37.76. At June 30, 2026, approximately $240.0 million of share repurchases remained available under the Repurchase Program.
Subordinated Notes Issuance
In July 2026, we issued $250.0 million in aggregate principal amount of 2036 Subordinated Notes due 2036 at public offering price equal to 100% of the aggregate principal amount of the 2036 Subordinated Notes. The 2036 Subordinated Notes qualify for Tier 2 capital treatment. The proceeds of this issuance will be used to redeem $168.0 million of our 2029 Subordinated Notes during the third quarter of 2026 and for general business purposes.
Economic Environment and Industry Events
We are continually monitoring the impact of various global and national events on our results of operations and financial condition, including changes in economic conditions, such as inflation and recessionary conditions, changes in the unemployment rate, changes in market interest rates, geopolitical conflicts, deposit competition, liquidity strains, changes in government policy, including changes in, or the imposition of, tariffs and/or trade barriers, and changes in legislative or regulatory requirements. The timing and impact of such events on our results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.
In the first half of 2026, financial markets experienced increased and prolonged economic uncertainty arising from international conflicts, including those in the Middle East, and changes in the unemployment rate. These factors could adversely affect the U.S. and global economies and financial markets, including by increasing inflation and leading to a slowdown of future economic growth and ultimately recessionary conditions.
In June 2026, the FOMC maintained the target range for the Federal Funds rate at 3.50% to 3.75%. The FOMC noted that economic activity is expanding at a solid pace despite elevated uncertainty due in part to ongoing geopolitical conflicts including those in the Middle East, as well as uncertainties stemming from changes in trade policy. In light of this continued uncertainty and elevated inflation, it is difficult to predict how the Federal Reserve will balance possible inflationary pressure with the potential of slower economic growth and rising risks in employment.
We will continue to deploy various asset liability management strategies to seek to manage our risk related to interest rate fluctuations and monitor balance sheet trends, deposit flows, and liquidity needs to enable us to meet the needs of our customers and maintain financial flexibility. Refer to “Liquidity” within this Item 2 for additional information about our liquidity and “Quantitative and Qualitative Disclosures about Market Risk” in Part I, Item 3 of this Quarterly Report for additional information about our interest rate sensitivity.
Our regulatory capital ratios continued to exceed the standards to be considered well-capitalized under regulatory requirements. See “Capital Resources” within this Item 2 for additional information about our regulatory capital.
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SUMMARY OF FINANCIAL RESULTS
Executive Overview
Second Quarter Net Income & Performance Metrics
First Six Months Net Income & Performance Metrics
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Balance Sheet
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NET INTEREST INCOME
Net interest income, which represents our principal source of revenue, is the amount by which interest income exceeds interest expense. Our net interest margin represents net interest income expressed as a percentage of average earning assets. Changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on our net interest income, net interest margin, and net income. In addition, our net interest income includes the accretion of discounts on our acquired loans, as well as amortization of deposits and borrowings, which will also affect our net interest income and net interest margin.
We seek to fund increased loan volumes by growing our core deposits, but, subject to internal policy limits on the amount of wholesale funding, we may use other wholesale funding sources to fund shortfalls, if any, or provide additional liquidity.
The following tables show interest and dividend income on earning assets and related average yields, as well as interest expense on interest-bearing liabilities and related average rates paid for the three months ended June 30, (dollars in thousands):
For the Three Months Ended
Change
Average interest-earning assets
33,544,840
34,121,715
(576,875)
Interest and dividend income
(23,544)
Interest and dividend income (FTE) (+)
491,389
514,734
(23,345)
Yield on interest-earning assets
5.82
6.00
(18)
Yield on interest-earning assets (FTE) (+)
5.88
6.05
(17)
Average interest-bearing liabilities
25,025,195
25,482,013
(456,818)
Interest expense
(27,291)
Cost of interest-bearing liabilities
2.59
2.97
(38)
Cost of funds
1.94
2.22
(28)
3,747
Net interest income (FTE) (+)
329,679
325,733
3,946
Net interest margin
3.89
3.78
Net interest margin (FTE) (+)
3.83
For the second quarter of 2026, our net interest income was $325.1 million, an increase of $3.7 million from the second quarter of 2025, and our net interest income (FTE)(+) was $329.7 million, an increase of $4.0 million from the second quarter of 2025. The increases were primarily the result of lower cost of funds, primarily due to lower deposit costs, partially offset by lower earning asset yields, primarily driven by a decrease in loan yields and lower accretion income. The lower deposit costs reflect the impact of the Federal Reserve lowering the Federal Funds rates 75 bps between September and December 2025, as well as reduced brokered deposits, while the decline in earning asset yields was primarily driven by the lower rate environment.
In the second quarter of 2026, our net interest margin increased 11 bps to 3.89% from 3.78% in the second quarter of 2025, and our net interest margin (FTE)(+) increased 11 bps to 3.94% in the second quarter of 2026 from 3.83% for the same period of 2025. The increases in net interest margin and net interest margin (FTE)(+) were primarily driven by lower cost of funds, partially offset by lower earning asset yields. Our cost of funds decreased 28 bps to 1.94% from 2.22% in the second quarter of 2025, due to lower cost of deposits, primarily due to the Federal Funds rate cuts discussed above, as well as reduced brokered deposits. Our earning asset yield decreased 18 bps to 5.82% for the second quarter of 2026 from 6.00% in the second quarter of 2025, due primarily to lower loan yields and lower accretion income.
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The following tables show interest and dividend income on earning assets and related average yields, as well as interest expense on interest-bearing liabilities and related average rates paid for the six months ended June 30, (dollars in thousands):
For the Six Months Ended
33,461,778
28,148,353
5,313,425
142,355
967,673
824,328
143,345
5.78
5.85
(7)
5.83
5.91
24,927,257
21,059,757
3,867,500
10,400
2.60
1.93
2.23
(30)
131,955
646,601
513,656
132,945
3.84
3.62
3.90
3.68
For the first six months of 2026 net interest income was $637.5 million, an increase of $132.0 million from the same period of 2025, and our net interest income (FTE)(+) was $646.6 million, an increase of $132.9 million from the same period of 2025. The increases in both net interest income and net interest income (FTE)(+) were primarily the result of a $5.3 billion increase in average interest earning assets and higher net accretion income, partially offset by a $3.9 billion increase in average interest-bearing liabilities, primarily related to the acquisition of Sandy Spring.
For the first six months of 2026, our net interest margin and net interest margin (FTE)(+) both increased 22 bps to 3.84% and 3.90%, respectively, compared to the first six months of 2025. The increases were primarily driven by lower cost of funds, as well as lower yield on interest-earning assets. Our cost of funds decreased 30 bps to 1.93% from 2.23% in the same period of 2025, due primarily to lower cost of deposits, reflecting the impact of the Federal Reserve lowering the Federal Funds rates 75 bps between September and December 2025, as well as reduced brokered deposits. Our earning asset yield decreased 7 bps to 5.78% for the first six months of 2026 from 5.85% in the same period of 2025, due primarily to lower loan yields, partially offset by accretion income related to the Sandy Spring acquisition.
Our net interest margin and net interest margin (FTE)(+) includes the impact of acquisition accounting fair value adjustments. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):
Deposit
Loan
Accretion
(Amortization)
Amortization
For the quarter ended March 31, 2025
13,286
(415)
(287)
For the quarter ended June 30, 2025
45,744
1,884
(2,256)
45,372
For the quarter ended March 31, 2026
35,602
366
(3,044)
32,924
For the quarter ended June 30, 2026
40,449
111
(621)
39,939
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The following table shows interest income on earning assets and related average yields as well as interest expense on interest-bearing liabilities and related average rates paid for the three and six months ended June 30, (dollars in thousands):
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
Average
Income /
Yield /
Expense (1)
Rate (1)(2)
Assets:
Securities:
3,659,723
4.27
3,441,963
4.46
Tax-exempt
1,316,804
11,245
3.43
1,279,773
10,576
3.31
Total securities
4,976,527
50,218
4.05
4,721,736
48,836
4.15
LHFI, net of unearned income (3)(4)
28,243,611
438,508
6.23
27,094,551
437,819
6.48
Other earning assets
324,702
2,663
3.29
2,305,428
28,079
4.89
Total earning assets
(293,455)
(349,131)
Total non-earning assets
4,182,588
4,166,648
37,433,973
37,939,232
Liabilities and Stockholders' Equity:
Interest-bearing deposits:
Transaction and money market accounts
14,949,644
83,153
14,748,786
95,719
Regular savings
2,617,569
10,762
1.65
2,848,416
13,818
Time deposits(5)
6,086,936
52,523
3.46
6,553,018
61,806
Total interest-bearing deposits
23,654,149
2.48
24,150,220
Other borrowings(6)
1,371,046
15,272
4.47
1,331,793
17,658
5.32
Total interest-bearing liabilities
Noninterest-bearing liabilities:
Demand deposits
6,736,570
7,093,163
546,713
602,426
32,308,478
33,177,602
Stockholders' equity
5,125,495
4,761,630
Net interest income (FTE)(+)
Interest rate spread
3.08
Net interest margin (FTE)(+)
(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.
(2) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.
(3) Nonaccrual loans are included in average loans outstanding.
(4) Interest income on loans includes accretion of the fair market value adjustments related to acquisitions, as disclosed above.
(5) Interest expense on time deposits includes accretion (amortization) of the fair market value adjustments related to acquisitions, as disclosed above.
(6) Interest expense on borrowings includes amortization of the fair market value adjustments related to acquisitions, as disclosed above.
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3,768,250
4.28
2,790,530
1,323,127
22,577
1,267,837
20,906
3.33
5,091,377
102,557
4.06
4,058,367
82,814
4.11
LHFI, net of deferred fees and costs (3)(4)
28,037,967
859,807
6.18
22,785,570
710,723
6.29
332,434
5,309
3.22
1,304,416
30,791
4.76
(295,116)
(264,834)
4,178,248
3,462,216
37,344,910
31,345,735
14,826,253
162,487
2.21
12,545,113
162,405
2.61
2,665,188
21,655
1.64
1,944,169
14,319
1.49
Time deposits (5)
6,063,487
104,075
5,639,409
110,205
23,554,928
2.47
20,128,691
2.87
Other borrowings (6)
1,372,329
32,855
4.83
931,066
23,743
5.14
6,746,098
5,755,814
574,615
553,066
32,247,970
27,368,637
5,096,940
3,977,098
3.23
2.94
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The Volume Rate Analysis table below presents changes in our net interest income (FTE)(+) and interest expense and distinguishes between the changes related to increases or decreases in our average outstanding balances of interest-earning assets and interest-bearing liabilities (volume), and the changes related to increases or decreases in average interest rates on such assets and liabilities (rate). Changes attributable to both volume and rate have been allocated proportionally. Results, on a taxable equivalent basis, are as follows for the three and six months ended June 30, (dollars in thousands):
2026 vs. 2025
Increase (Decrease) Due to Change in:
Volume
Rate
Earning Assets:
(1,646)
713
20,855
(2,783)
18,072
311
358
929
742
1,671
2,670
(1,288)
1,382
21,784
(2,041)
19,743
Loans, net(1)
18,189
(17,500)
689
161,257
(12,173)
149,084
(18,417)
(6,999)
(25,416)
(17,768)
(7,714)
(25,482)
2,442
(25,787)
165,273
(21,928)
Interest-Bearing Liabilities:
1,287
(13,853)
(12,566)
27,075
(26,993)
(1,061)
(1,995)
(3,056)
5,739
1,597
7,336
Time deposits(2)
(4,225)
(5,058)
(9,283)
7,901
(14,031)
(6,130)
(3,999)
(20,906)
(24,905)
40,715
(39,427)
1,288
Other borrowings(3)
(2,893)
(2,386)
10,643
(1,531)
9,112
(3,492)
(23,799)
51,358
(40,958)
Change in net interest income (FTE)(+)
(1,988)
113,915
19,030
(1) The rate-related changes in interest income on loans includes the impact of higher accretion of the acquisition-related fair market value adjustments, as disclosed above.
(2) The rate-related changes in interest expense on deposits includes the impact of higher accretion (amortization) of the acquisition-related fair market value adjustments, as disclosed above.
(3) The rate-related changes in interest expense on other borrowings include the impact of higher amortization of the acquisition-related fair market value adjustments, as disclosed above.
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NONINTEREST INCOME
Three Months Ended June 30, 2026 and June 30, 2025
0.3
41
1.8
(0.8)
3,737
21.1
(165)
(5.8)
(1,593)
(21.7)
4,751
1,945
5.8
8,726
10.7
Our noninterest income increased $8.7 million or 10.7% to $90.2 million for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. The increase was primarily driven by a $4.8 million increase in loan-related interest rate swap fees due to an increase in transaction volumes associated with loan growth in the period, a $3.7 million increase in fiduciary and asset management fees, reflecting an increase in assets under management, and a $1.9 million increase in other operating income. Other operating income in the second quarter of 2026 included a $32.3 million pre-tax gain on the sale of our equity interest in Bearing Insurance, while the second quarter of 2025 included a $15.7 million pre-tax gain on CRE loan sale and a $14.3 million pre-tax gain on the sale of our equity interest in CSP.
Our adjusted operating noninterest income,(+) which excludes the pre-tax gain on sale of equity interest in Bearing Insurance ($32.3 million in the second quarter of 2026), the pre-tax gain on CRE loan sale ($15.7 million in the second quarter of 2025), the pre-tax gain on sale of equity interest in CSP ($14.3 million in the second quarter of 2025), and the pre-tax gains on sale of securities ($4 thousand in the second quarter of 2026 and $16 thousand in the second quarter of 2025), increased $6.4 million or 12.4% to $57.9 million for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. The increase in adjusted operating noninterest income(+) was primarily driven by a $4.8 million increase in loan-related interest rate swap fees and a $3.7 million increase in fiduciary and asset management fees, both discussed above. These increases were partially offset by a $1.6 million decrease in BOLI income, reflecting lower death benefit proceeds received compared to the same period in the prior year.
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Six Months Ended June 30, 2026 and June 30, 2025
2,469
11.3
Other service charges, commissions, and fees
5.4
349
5.2
17,218
70.5
888
23.4
70
0.6
6,325
153.0
6,810
19.5
34,346
31.0
Our noninterest income increased $34.3 million or 31.0% to $145.0 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the full period impact of the Sandy Spring acquisition, which drove the majority of the $17.2 million increase in fiduciary and asset management fees and the $2.5 million increase in service charges on deposit accounts. In addition to the acquisition impacts, other operating income increased $6.8 million driven by a $32.3 million pre-tax gain on the sale of our equity interest in Bearing Insurance in the second quarter of 2026 and an increase in equity method investment income, partially offset by a $15.7 million pre-tax gain on CRE loan sale and a $14.3 million pre-tax gain on sale of our equity interest in CSP, both of which occurred in the second quarter of 2025. Additionally, loan-related interest rate swap fees increased $6.3 million due to an increase in transaction volumes associated with loan growth in the period.
Our adjusted operating noninterest income,(+) which excludes the pre-tax gain on sale of equity interest in Bearing Insurance ($32.3 million in 2026), the pre-tax gain on CRE loan sale ($15.7 million in 2025), the pre-tax gain on sale of equity interest in CSP ($14.3 million in 2025), and the pre-tax gains and losses on sale of securities (gains of $6 thousand in 2026 and losses of $87 thousand in 2025), increased $31.9 million or 39.5% to $112.7 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase in adjusted operating noninterest income(+) was primarily due to the full period impact of the Sandy Spring acquisition and a $6.3 million increase in loan-related interest rate swap fees, as discussed above, as well a $4.5 million increase in other operating income, primarily due to an increase in equity method investment income.
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NONINTEREST EXPENSE
Noninterest expense:
2,367
2.2
80
(812)
(12.8)
(1,232)
(7.1)
(1,654)
(21.2)
1,722
45.8
(2,009)
(23.2)
(0.3)
1,445
113.1
(3,297)
(17.9)
(78,900)
(100.0)
1,741
17.6
(80,562)
(28.8)
Our noninterest expense decreased $80.6 million or 28.8% to $199.1 million for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025, primarily driven by a $78.9 million decrease in pre-tax merger-related costs.
Our adjusted operating noninterest expense(+), which excludes merger-related costs ($78.9 million in the second quarter of 2025) and amortization of intangible assets ($15.1 million in the second quarter of 2026 and $18.4 million in the second quarter of 2025) increased $1.6 million or 0.9% to $184.0 million for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. The increase in adjusted operating noninterest expense(+) was primarily due to a $2.4 million increase in salaries and benefits expense, primarily due to an increase in variable incentive compensation, a $1.7 million increase in other expenses, a $1.7 million increase in marketing and advertising expense, and a $1.4 million increase in loan-related expenses. These increases were partially offset by a $2.0 million decrease in FDIC assessment premiums and other insurance due to a lower assessment in the second quarter of 2026, a $1.7 million decrease in professional services related to strategic projects that occurred in the prior year, and a $1.2 million decrease in technology and data processing expense primarily due to a decrease in online banking expenses, reflecting cost synergies realized from the Sandy Spring acquisition.
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40,365
21.8
4,702
22.0
830
8.1
4,183
15.2
(4.6)
5,866
84.5
(365)
(2.6)
0.5
3,047
120.6
6,750
28.3
(74,806)
(89.2)
5,014
30.1
(4,936)
(1.2)
Our noninterest expense decreased $4.9 million or 1.2% to $408.9 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by a $74.8 million decrease in pre-tax merger-related costs, partially offset by a $40.4 million increase in salaries and benefits expense, as well as other increases in noninterest expense categories discussed below, primarily due to the full period impact of the Sandy Spring acquisition.
Our adjusted operating noninterest expense(+), which excludes merger-related costs ($9.0 million in 2026 and $83.8 million in 2025) and amortization of intangible assets ($30.6 million in 2026 and $23.8 million in 2025) increased $63.1 million or 20.6% to $369.3 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase in adjusted operating noninterest expense(+) was primarily due to the full period impact of the Sandy Spring acquisition, which drove the majority of the $40.4 million increase in salaries and benefits expense, the $5.9 million increase in marketing and advertising expense, the $5.0 million increase in other expenses, the $4.7 million increase in occupancy expenses, the $4.2 million increase in technology and data processing expense, and the $3.0 million increase in loan-related expenses.
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SEGMENT RESULTS
The Company has two reportable operating segments, Wholesale Banking and Consumer Banking, with corporate support functions and intercompany eliminations being presented within Corporate Other. For more information about our operating segments, see Note 13, “Segment Reporting and Revenue” in Part I, Item 1 of this Quarterly Report.
Our Wholesale Banking segment provides loan, leasing, deposit, treasury management, and capital market services to wholesale customers primarily throughout Virginia, Maryland, Washington, D.C., North Carolina, and South Carolina. These customers include CRE and commercial and industrial customers. This segment also includes our equipment finance subsidiary, which has nationwide exposure. The wealth management business also resides in the Wholesale Banking segment which provides a wide variety of financial planning, wealth management and trust services to individuals and corporations.
The following table presents operating results for the three and six months ended June 30, for the Wholesale Banking segment (dollars in thousands):
Noninterest expense
Wholesale Banking income before income taxes increased by $82.2 million and $137.0 million, respectively, for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025. The increases were primarily due to decreases in the provision for credit losses, primarily driven by the Day 1 initial provision expense recorded in the prior year on non-PCD loans and unfunded commitments, each acquired from Sandy Spring. Wholesale Banking net interest income also increased for the three and six months ended June 30, 2026, compared to the same periods in the prior year. The increase for the three months ended June 30, 2026 was primarily the result of lower cost of funds, driven by lower deposit costs. The increase for the six months ended June 30, 2026 was primarily the result of an increase in average interest earning assets and higher net accretion income, primarily related to the acquisition of Sandy Spring. In addition, Wholesale Banking noninterest income increased for the three and six months ended June 30, 2026 compared to the same periods in the prior year, primarily due to increases in fiduciary and asset management fees, reflecting an increase in assets under management and the full period impact of the Sandy Spring acquisition, and increases in loan-related interest rate swap fees due to an increase in transaction volumes associated with loan growth in the periods.
The increases in income before income taxes were partially offset by increases in noninterest expense, primarily due to increases in salaries and benefits expense, resulting from an increase in variable incentive compensation for the three months ended June 30, 2026 and the full period impact of the Sandy Spring acquisition for the six months ended June 30, 2026.
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The following table presents the key balance sheet metrics as of the periods ended for the Wholesale Banking segment (dollars in thousands):
At June 30, 2026, LHFI for the Wholesale Banking segment increased $658.3 million to $23.8 billion, compared to December 31, 2025, primarily due to increases in the commercial and industrial and construction and land development loan portfolios.
At June 30, 2026, Wholesale Banking deposits increased $686.8 million to $12.0 billion, compared to December 31, 2025, primarily due to an increase in interest-bearing customer deposits.
Our Consumer Banking segment provides loan and deposit services and retail brokerage services to consumers and small businesses throughout Virginia, Maryland, Washington, D.C., and North Carolina. Consumer Banking includes the home loan division and investment management and advisory services businesses.
The following table presents operating results for the three and six months ended June 30, for the Consumer Banking segment (dollars in thousands):
Consumer Banking income before income taxes increased $8.6 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase was primarily due to a decrease in the provision for credit losses, primarily driven by the Day 1 initial provision expense recorded in the prior year on non-PCD loans and unfunded commitments, each acquired from Sandy Spring.
The increase in income before income taxes for the three months ended June 30, 2026 was partially offset by an increase in noninterest expense, primarily due to an increase in salaries and benefits expense, resulting from an increase in variable incentive compensation, and a decrease in net interest income driven by an unfavorable funding credit on deposits.
Consumer Banking income before income taxes increased $8.8 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily due to an increase in net interest income, driven by an increase in average interest earning assets and higher net accretion income, primarily related to the acquisition of Sandy Spring. In addition, the Consumer Banking provision for credit losses decreased compared to the same period in the prior year, primarily driven by the Day 1 initial provision expense recorded in the prior year on non-PCD loans and unfunded commitments, each acquired from Sandy Spring. Consumer Banking noninterest income also increased compared to the same period in the prior year, primarily due to the Sandy Spring acquisition, which drove the majority of the increase in fiduciary and asset management fees and service charges on deposit accounts.
The increases in income before income taxes for the six months ended June 30, 2026 were partially offset by an increase in noninterest expense, primarily due to an increase in salaries and benefits expense, resulting from the full period impact of the Sandy Spring acquisition.
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The following table presents the key balance sheet metrics as of the periods ended for the Consumer Banking segment (dollars in thousands):
At June 30, 2026, LHFI for the Consumer Banking segment increased $134.6 million to $5.5 billion, compared to December 31, 2025, primarily due to increases in the residential 1-4 family – consumer and residential 1-4 family – revolving loan portfolios.
At June 30, 2026, Consumer Banking deposits decreased $122.7 million to $17.7 billion, compared to December 31, 2025, primarily due to decreases in savings accounts, demand deposits, and money market accounts, partially offset by an increase in time deposits.
Our Corporate Other segment includes the corporate support functions, such as corporate treasury functions, which include management of the investment securities portfolio, long-term debt, short-term liquidity and funding activities, as well as intercompany eliminations.
The following table presents operating results for the three and six months ended June 30, for the Corporate Other segment (dollars in thousands):
(1) We use a funds transfer pricing methodology for our net interest income which utilizes the matched funding approach to allocate the cost of funds used or credit for funds provided to all operating loans and deposits, resulting in interest and dividend expense and interest income for our Corporate Other segment.
Corporate Other income before income taxes increased by $96.3 million and $134.3 million, respectively, for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, primarily due to decreases in noninterest expense, primarily driven by decreases in pre-tax merger-related costs. In addition, Corporate Other net interest income for the six months ended June 30, 2026 increased compared to the same period in the prior year, primarily driven by an increase in average interest earning assets and higher accretion income, primarily related to the acquisition of Sandy Spring.
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INCOME TAXES
Our provision for income taxes is based on our results of operations, adjusted for the effect of certain tax-exempt income and non-deductible expenses. In addition, we report certain items of income and expense in different periods for financial reporting and tax return purposes. We recognize the tax effects of these temporary differences in the deferred income tax provision or benefit. Deferred tax assets or liabilities are computed based on the difference between the financial statements and income tax bases of assets and liabilities using the applicable enacted marginal tax rate. As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view regarding our future realization of deferred tax assets.
Our effective tax rate was 21.3% for the quarter ended June 30, 2026, compared with (13.2%) for the quarter ended June 30, 2025. For the six months ended June 30, 2026 and June 30, 2025, our effective tax rates were 21.1% and 11.9%, respectively. The increase in the effective tax rate during the 2026 periods was primarily driven by an $8.0 million income tax benefit recognized in the second quarter of 2025 related to the re-evaluation of our state net deferred tax asset following the Sandy Spring acquisition.
As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view regarding our future realization of deferred tax assets. The decrease in the valuation allowance was from an assessment of our ability to realize certain state tax attributes, through an increase in state taxable income.
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DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
At June 30, 2026, we had total assets of $38.1 billion, an increase of $514.1 million or 2.8% (annualized) from December 31, 2025. The increase in total assets was primarily due to increases in LHFI, partially offset by decreases in securities as maturity and paydown cash flows were used to fund higher loan balances instead of being reinvested in the securities portfolio.
LHFI totaled $28.7 billion at June 30, 2026, an increase of $877.1 million or 6.4% (annualized) from December 31, 2025, primarily due to increases in the commercial and industrial and construction and land development loan portfolios. Refer to "Loan Portfolio" within this Item 2 and Note 4 "Loans and Allowance for Loan and Lease Losses" in Part I, Item 1 of this Quarterly Report for additional information on our loan activity.
Total securities at June 30, 2026 were $4.9 billion, a decrease of $326.7 million or 12.5% (annualized) from December 31, 2025, primarily due to principal repayments and maturities of AFS mortgage-back securities. AFS securities totaled $3.9 billion at June 30, 2026, compared to $4.2 billion at December 31, 2025, with net unrealized losses of $317.1 million and $295.7 million, respectively. HTM securities totaled $860.9 million at June 30, 2026, compared to $884.2 million at December 31, 2025, with net unrealized losses of $29.1 million and $27.4 million, respectively.
Liabilities and Stockholders’ Equity
At June 30, 2026, we had total liabilities of $32.9 billion, an increase of $367.1 million or 2.3% (annualized) from December 31, 2025, primarily due to an increase in short-term borrowings, partially offset by a decrease in total deposits.
Total borrowings at June 30, 2026 were $1.9 billion, an increase of $384.0 million or 51.7% (annualized) from December 31, 2025, primarily driven by increases in FHLB advances, included within other short-term borrowings, which were used primarily to fund loan originations. Refer to Note 6 “Borrowings” in Part I, Item 1 of this Quarterly Report for additional information on our borrowing activity.
Total deposits at June 30, 2026 were $30.5 billion, a decrease of $3.4 million or 0.02% (annualized) from December 31, 2025, which was primarily due to decline in brokered and demand deposits, partially offset by an increase in interest-bearing customer deposit balances. Refer to “Deposits” within this Item 2 for additional information on this topic.
At June 30, 2026, our stockholders’ equity was $5.2 billion, an increase of $147.0 million from December 31, 2025, primarily due to an increase in retained earnings, partially offset by an increase in accumulated other comprehensive losses. Our consolidated regulatory capital ratios continue to exceed the minimum capital requirements and are considered “well-capitalized” for regulatory purposes. Refer to “Capital Resources” within this Item 2, as well as Note 9 "Stockholders’ Equity" in Part I, Item 1 of this Quarterly Report for additional information on our capital resources and the Forward Sale Agreements.
For information related to the Company’s stock repurchase activity and the Repurchase Program, refer to Note 9 “Stockholders’ Equity” and Note 14 “Subsequent Events” in Part I, Item 1, as well as “Unregistered Sales of Equity Securities and Use of Proceeds” in Part II, Item 2 of this Quarterly Report.
During the second quarter of 2026, we declared and paid a quarterly dividend on our outstanding shares of Series A Preferred Stock of $171.88 per share (equivalent to $0.43 per outstanding depositary share), consistent with the first quarter of 2026 and the second quarter of 2025. During the second quarter of 2026, we also declared and paid cash dividends of $0.37 per common share, consistent with the first quarter of 2026 and an increase of $0.03 per share or 8.8% from the second quarter of 2025.
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SECURITIES
At June 30, 2026, we had total securities of $4.9 billion or 13.0% of total assets, compared to $5.3 billion or 14.0% of total assets at December 31, 2025. This decrease was primarily due to principal repayments and maturities of AFS mortgage-backed securities. We seek to diversify our investment portfolio to minimize risk, and we focus on purchasing MBS for cash flow and reinvestment opportunities and securities issued by states and political subdivisions due to the tax benefits and the higher tax-equivalent yield offered from these securities. The majority of our MBS are agency-backed securities, which have a government guarantee. For information regarding the hedge transaction related to AFS securities, see Note 8 “Derivatives” in Part I, Item 1 of this Quarterly Report.
The table below sets forth a summary of total securities as of the periods ended (dollars in thousands):
Available for Sale:
Corporate and other bonds
Residential
Total MBS
Total AFS securities, at fair value
Held to Maturity:
Total held to maturity securities, at carrying value
Restricted Stock:
FRB stock
141,225
FHLB stock
63,126
48,975
Total restricted stock, at cost
4,941,974
5,268,717
The following table summarizes the weighted average yields(1) for AFS securities by contractual maturity date of the underlying securities as of June 30, 2026:
1 Year
After 1 Year
After 5 Years
Over 10
or Less
through 5 Years
through 10 Years
Years
4.39
4.33
2.96
2.02
2.26
Corporate bonds and other securities
3.81
4.92
3.70
4.60
4.40
MBS:
5.71
5.73
3.25
3.41
3.91
4.56
5.12
4.43
3.75
4.82
5.47
4.30
3.71
5.09
3.61
3.53
3.66
(1) Yields on tax-exempt securities have been computed on an estimated tax-equivalent basis.
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The following table summarizes the weighted average yields(1) for HTM securities by contractual maturity date of the underlying securities as of June 30, 2026:
4.02
3.98
3.37
3.87
4.24
6.86
3.02
3.05
3.40
3.24
3.38
3.77
3.67
Weighted average yield is calculated as the tax-equivalent yield on a pro rata basis for each security based on its relative amortized cost.
As of June 30, 2026, we maintained a diversified municipal bond portfolio with approximately 64% of our holdings in general obligation issues and the remainder primarily backed by revenue bonds. Issuances within the State of Texas represented 20% of the total municipal portfolio; no other state had a concentration above 10%. Substantially all of our municipal holdings are considered investment grade. When purchasing municipal securities, we focus on strong underlying ratings for general obligation issuers or bonds backed by essential service revenues.
LIQUIDITY
Liquidity represents an institution’s ability to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Our largest source of liquidity on a consolidated basis is our customer deposit base generated by our wholesale and consumer businesses. These deposits provide relatively stable and low-cost funding. Total deposits at June 30, 2026 were $30.5 billion, a decrease of $3.4 million or 0.02% (annualized) from December 31, 2025, primarily due to a decline in brokered and demand deposits, partially offset by an increase in interest-bearing customer deposits. Refer to “Deposits” within this Item 2 for additional information on this topic.
We actively manage the composition and timing of our liquidity resources based on expected cash flows, market conditions, funding costs, and balance-sheet objectives. During the first six months of 2026, we utilized liquidity generated from the securities portfolio and increased short-term borrowings to support near-term funding needs. These actions resulted in a lower securities portfolio balance and higher short-term borrowings at June 30, 2026. Management continues to evaluate the duration and cost of these borrowings, the availability of collateral, and the remaining borrowing capacity.
We also closely monitor changes in the industry and market conditions that may impact our liquidity and will use other borrowing means or other liquidity and funding strategies sources to fund our liquidity needs as needed. We also closely track the potential impacts on our liquidity from declines in the fair value of our securities portfolio due to changing market interest rates and developments in the banking industry that may change the availability of traditional sources of liquidity or market expectations with respect to available sources and amounts of additional liquidity.
We consider our liquid assets to include cash, interest-bearing deposits with banks, money market investments, federal funds sold, LHFS, and securities and loans maturing or re-pricing within one year. As of June 30, 2026, our liquid assets totaled $13.3 billion or 35.0% of total assets, and liquid earning assets totaled $12.8 billion or 37.6% of total earning assets. We also provide asset liquidity by managing loan and securities maturities and cash flows. As of June 30, 2026, loan payments of approximately $11.6 billion or 40.5% of total LHFI are expected within one year based on contractual terms, adjusted for expected prepayments, and approximately $706.1 million or 14.3% of total investments as of June 30, 2026 are scheduled to be paid down within one year based on contractual terms, adjusted for expected prepayments.
Additional sources of liquidity available to us include our capacity to borrow additional funds when necessary through federal funds lines with several correspondent banks, a line of credit with the FHLB, the Federal Reserve Discount Window, the purchase of brokered certificates of deposit, a corporate line of credit with a large correspondent bank, and debt and capital
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issuances. We also maintain secured borrowing capacity with the FHLB and FRB since secured borrowing facilities provide the most reliable sources of funding, especially during times of market turbulence and financial distress. Management believes our overall liquidity to be sufficient to satisfy our depositors’ requirements and to meet our customers’ credit needs.
For additional information and the available balances on various lines of credit, please refer to Note 6 “Borrowings” in Part I, Item 1 of this Quarterly Report. In addition to lines of credit, we may also borrow additional funds by purchasing certificates of deposit through a nationally recognized network of financial institutions.
Cash Requirements
Our cash requirements, outside of lending transactions, consist primarily of borrowings, leases, debt and capital instruments, which are used as part of our overall liquidity and capital management strategy. We expect that the cash required to repay these obligations will be sourced from our general liquidity sources and future debt and capital issuances and from other general liquidity sources as described above.
The following table presents our contractual obligations related to our major cash requirements and the scheduled payments due at the various intervals over the next year and beyond as of June 30, 2026 (dollars in thousands):
Less than
More than
1 year
Subordinated debt (1)
Trust preferred capital notes (1)
Leases (2)
138,935
Total contractual obligations
1,100,421
168,944
931,477
(1) Excludes related unamortized premium/discount and interest payments.
(2) Represents lease payments due on non-cancellable operating leases at June 30, 2026. Excluded from these tables are variable lease payments or renewals.
For more information pertaining to the previous table, reference Note 5 “Leases” and Note 6 “Borrowings” in Part I, Item 1 of this Quarterly Report.
Off-Balance Sheet Obligations
In the normal course of business, we are party to financial instruments with off-balance sheet risk to meet the financing needs of our customers and to reduce our own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amount recognized in our Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of our involvement in particular classes of financial instruments.
Our exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit is represented by the contractual amount of these instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. Unless noted otherwise, we do not require collateral or other security to support off-balance sheet financial instruments with credit risk.
For a summary of our total commitments with off-balance sheet risk see Note 7 “Commitments and Contingencies” in Part I, Item 1 of this Quarterly Report.
We are also a lessor in sales-type and direct financing leases for equipment, as noted in Note 5 “Leases” in Part I, Item 1 of this Quarterly Report. Our future commitments related to the aforementioned leases totaled $795.1 million and $712.8 million, respectively, at June 30, 2026 and December 31, 2025.
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Impact of Inflation and Changing Prices
Our financial statements included in Item I “Financial Statements” of this Quarterly Report have been prepared in accordance with GAAP, which requires the financial position and operating results to be measured principally in terms of historic dollars without considering the change in the relative purchasing power of money over time due to inflation. Inflation affects our results of operations mainly through increased operating costs, but since nearly all of our assets and liabilities are monetary in nature, changes in interest rates generally affect our financial condition to a greater degree than changes in the rate of inflation. Inflation also leads to increased costs for our customers, which may make it difficult for them to repay their loans, potentially leading to increased delinquencies, increased volume of loan modifications, financial losses, and increased credit risk for us. Although interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. Management reviews pricing of our products and services, in light of current and expected costs due to inflation, to seek to mitigate the inflationary impact on our financial performance.
LOAN PORTFOLIO
LHFI totaled $28.7 billion and $27.8 billion as of June 30, 2026 and December 31, 2025, respectively. CRE loans represented our largest loan portfolio segment at both June 30, 2026 and December 31, 2025. We remain committed to originating soundly underwritten loans to qualifying borrowers within our markets.
The following table presents the remaining maturities, based on contractual maturity, by loan type, and by rate type (variable or fixed), net of unearned income, as of June 30, 2026 (dollars in thousands):
Variable Rate
Fixed Rate
Less than 1
Maturities
year
1-5 years
5-15 years
15 years
699,623
945,289
821,479
113,623
10,187
214,305
130,192
13,188
70,925
359,688
1,310,055
568,652
728,549
12,854
2,638,549
1,600,484
1,025,124
12,941
1,512,149
3,395,548
2,494,662
883,204
17,682
2,395,858
1,939,479
456,379
735,433
1,245,503
965,743
278,662
1,098
448,419
328,815
119,604
1,157,924
2,386,212
2,049,438
281,832
54,942
2,084,744
1,417,166
578,647
88,931
260,165
189,505
124,979
61,841
2,685
558,768
484,487
69,424
4,857
1,149
1,433,818
1,994
42,471
1,389,353
1,495,698
28,460
188,531
1,278,707
46,773
1,163,114
57,284
91,410
1,014,420
102,644
4,346
37,194
61,104
5,573
125,904
125,119
785
10,996
42,683
22,251
2,787
17,645
57,230
33,262
19,250
4,718
90,003
418,906
229,071
151,938
37,897
1,141,043
598,331
402,738
139,974
4,879,476
12,530,633
7,335,553
2,636,317
2,558,763
11,263,162
6,690,141
2,910,864
1,662,157
Our highest concentration of credit by loan type is in CRE. CRE loans consist of term loans secured by a mortgage lien on the real property and include both non-owner occupied and owner occupied CRE loans, as well as construction and land development, multifamily real estate, residential 1-4 family – commercial, and other commercial (farmland) loans. CRE loans are generally viewed as having more risk of default than residential real estate loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt. The borrower’s cash flows may be affected significantly by general economic conditions, a downturn in the local economy, or in occupancy rates in the market where the property is located, any of which could increase the likelihood of default.
We perform risk assessments to identify the CRE concentration ratio based on the two-tiered guidelines issued by the federal banking regulators. The loan balances used to determine the CRE concentration ratio are as defined in the Call Report instructions, which is comprised of loans secured by 1-4 family residential construction loans, loans secured by other construction loans and all land development and other land loans, loans secured by multi-family residential properties, loans secured by other nonfarm non-residential properties, and loans to finance CRE, construction, and land development activities, and do not necessarily match the balances displayed in Note 4 “Loans and Allowance for Loan and Lease Losses” in Part I, Item 1 of this Quarterly Report.
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The two-tiered guidelines include (i) total reported loans for construction, land development, and other land represent 100 percent or more of the institution's total capital; or (ii) total CRE loans represent 300 percent or more of the institution's total capital, and the outstanding balance of the institution's CRE loan portfolio has increased by 50 percent or more during the prior 36 months.
As of June 30, 2026 and December 31, 2025, our construction and land development concentration as a percentage of capital totaled 42.4% and 39.2%, respectively, and our CRE concentration as a percentage of capital totaled 273.9% and 275.3%, respectively. Total CRE exposure increased 92.7% for the 36-month period ended June 30, 2026, primarily due to the Sandy Spring acquisition.
We seek to mitigate risks attributable to our most highly concentrated portfolios and our portfolios that pose unique risks to our balance sheet through our credit underwriting and monitoring processes, including oversight by a centralized credit administration function, approval process, credit policy, and risk management committee, as well as through our seasoned bankers that focus on lending to borrowers with proven track records in markets that we are familiar with. All construction lending risk is controlled by a centralized construction loan servicing department that independently reviews and approves each draw request, including assessing on-going budget adequacy, and monitors project completion milestones. When underwriting CRE loans, we require collateral values in excess of the loan amounts, cash flows in excess of expected debt service requirements, and equity investment in the project. As part of the CRE loan origination process, we also stress test loan interest rates and occupancy rates to determine the impact of different economic conditions on the borrower’s ability to maintain appropriate debt service.
We manage our CRE exposure through product type limits, individual loan-size limits for CRE product types, client relationship limits, and transactional risk acceptance criteria, as well as other techniques, including but not limited to, loan syndications/participations, collateral, guarantees, structure, covenants, and other risk reduction techniques. Our CRE loan policies are specific to individual product types and underwriting parameters vary depending on the risk profile of each asset class. We evaluate risk concentrations regularly in our CRE portfolio on both an aggregate portfolio level and on an individual client basis and regularly review and adjust as appropriate our lending strategies and CRE product-specific approach to underwriting in light of market conditions and our overall corporate strategy and initiatives.
The average loan size in our CRE portfolio was $1.3 million and $1.2 million as of June 30, 2026 and December 31, 2025, respectively, and the median loan size in our CRE portfolio was $317 thousand and $311 thousand as of June 30, 2026 and December 31, 2025, respectively.
The following table presents the composition of our CRE loan categories, including the industry classification for CRE non-owner occupied loans, and CRE loans as a percentage of total loans for the periods ended (dollars in thousands):
Hotel/Motel B&B
1,229,568
4.29
1,261,397
4.54
Industrial/Warehouse
1,290,298
4.50
1,352,848
4.87
Office
1,478,240
5.16
1,482,419
5.33
Retail
1,843,726
6.43
1,683,838
Self Storage
714,873
2.49
676,920
2.44
Senior Living
120,282
0.42
120,933
0.44
626,568
2.19
600,160
2.16
25.48
25.83
15.03
15.49
8.47
8.70
3.52
3.96
42,632
Total CRE LHFI
59.13
16,711,731
60.13
All other loan types
11,721,975
40.87
11,084,436
39.87
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Because payments on loans secured by commercial and multifamily properties are often dependent on the successful operation or management of the properties, repayment of these loans may be subject to adverse conditions in the real estate market or the economy. In particular, the repayment of loans secured by non-owner occupied commercial properties depend primarily on the tenant’s continuing ability to pay rent to the property owner, who is our borrower, or, if the property owner is unable to find a tenant, the property owner’s ability to repay the loan without the benefit of a rental income stream. If the cash flow from the project is reduced, or if leases are not obtained or renewed, the borrower’s ability to repay the loan may be impaired. Due to these risks, we proactively monitor our non-owner occupied CRE and multifamily real estate exposures and evaluate these portfolios against our established lending policies, and we believe this monitoring and evaluation helps ensure that these portfolios are geographically diverse and granular. We do not currently monitor owner-occupied CRE loans based on geographical markets as the primary source of repayment for these loans is predicated on the cash flow from the underlying operating entity, which is generally less dependent on conditions in the relevant CRE market. These loans are generally located within our geographical footprint and are generally distributed across industries.
The following table presents the distribution of our CRE non-owner occupied, multifamily real estate, and office portfolio loans by market location based on the underlying loan collateral for the periods ended (dollars in thousands):
CRE Non-Owner Occupied
Office Portfolio (1)
MultifamilyReal Estate
Carolinas
1,562,782
325,963
767,519
1,562,931
297,195
742,070
DC Metro
1,370,590
436,053
367,704
1,314,704
431,197
430,826
Western VA
983,158
154,069
255,252
998,717
157,491
272,839
Fredericksburg Area
713,087
162,828
86,904
727,918
164,866
82,413
Baltimore
735,265
126,612
132,995
670,663
131,921
161,607
Central VA
570,844
99,555
290,664
585,415
101,446
302,045
Coastal VA/NC
480,513
60,735
219,703
521,236
64,110
210,832
Other Maryland
334,381
49,893
10,993
303,323
53,787
9,742
356,837
36,258
258,871
311,824
45,622
128,444
Eastern VA
196,098
26,274
38,750
181,784
34,784
77,432
(1) The office portfolio is a subset of our CRE non-owner occupied loans included in the column to the left.
We continue to monitor our exposure to office space, within our non-owner occupied CRE portfolio. We do not currently finance large, high-rise, or major metropolitan central business district office buildings, and the office portfolio is generally in suburban markets with stronger occupancy levels than downtown office markets. The average loan size in our office portfolio was $2.2 million and $2.1 million as of June 30, 2026 and December 31, 2025, respectively, and the median loan size in our office portfolio was $744 thousand and $720 thousand as of June 30, 2026 and December 31, 2025, respectively. The average loan size in our multifamily real estate portfolio was $3.7 million and $3.6 million as of June 30, 2026 and December 31, 2025, respectively, and the median loan size in our multifamily real estate portfolio was $888 thousand and $843 thousand as of June 30, 2026 and December 31, 2025, respectively.
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We also continue to monitor the broader commercial lending environment, including developments affecting non-depository financial institutions (“NDFI”). Our exposures to NDFIs represent a limited portion of our other commercial (other) loans. This small portfolio of loans to NDFIs is comprised almost entirely of facilities that help fund private equity group lending to businesses. Our exposure consists of granular downstream credits held as collateral with each facility controlled with specific conservative advance rates and concentration percentages and low maximum loan amounts per credit.
The following table presents the composition of our NDFI loan exposures for the period ended (dollars in thousands):
Loans to mortgage credit intermediaries
20,675
25,382
Loans to business credit intermediaries
154,249
167,565
Other loans to non-depository financial institutions
78,317
75,007
Loans to consumer credit intermediaries
1,576
Total NDFI LHFI
253,241
269,530
NDFI loans loss reserve to total NDFI LHFI
0.86
0.46
NDFI loans to total LHFI
0.88
0.97
Average NDFI loan size
2,183
2,265
ASSET QUALITY
Overview
At June 30, 2026, NPAs as a percentage of LHFI totaled 0.39%, a decrease of 3 basis points from December 31, 2025. Accruing past due loans as a percentage of total LHFI totaled 0.28% at June 30, 2026, a decrease of 13 basis points from December 31, 2025. Net charge-offs were $3.6 million for the six months ended June 30, 2026, compared to net charge-offs of $2.9 million for the same period in the prior year.
Our ACL at June 30, 2026 increased $9.7 million to $331.0 million from December 31, 2025, comprised of an ALLL of $298.8 million and RUC of $32.2 million.
We continue to refrain from originating or purchasing loans from foreign entities, and we selectively originate loans to higher risk borrowers. Our loan portfolio generally does not include exposure to option adjustable-rate mortgage products, high loan-to-value ratio mortgages, interest only mortgage loans, subprime mortgage loans, or mortgage loans with initial teaser rates, which are all considered higher risk instruments.
Nonperforming Assets
At June 30, 2026 and December 31, 2025, NPAs totaled $112.7 million and $116.9 million, respectively, representing a decrease of $4.2 million. Our NPAs as a percentage of total LHFI at June 30, 2026 and December 31, 2025 were 0.39% and 0.42%, respectively. The decrease in NPAs was primarily due to the resolutions of certain Sandy Spring acquired PCD loans, which resulted in measurement period adjustments being recorded during the first quarter of 2026 associated with the Sandy Spring acquisition, based on additional information and evidence obtained by the Company relating to events or circumstances existing at the acquisition date. This decrease in NPAs was partially offset by certain previously delinquent loans within the commercial and industrial loan portfolio that were placed on nonaccrual status during the six months ended June 30, 2026.
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The following table shows a summary of asset quality balances and related ratios as of the periods ended (dollars in thousands):
Nonaccrual LHFI
Foreclosed properties
1,756
1,826
Total NPAs
112,682
116,877
LHFI past due 90 days and accruing interest
Total NPAs and LHFI past due 90 days and accruing interest
146,407
152,428
Balances
330,983
321,269
Average LHFI, net of unearned income
25,116,692
Ratios
Nonaccrual LHFI to total LHFI
NPAs to total LHFI
NPAs & LHFI 90 days past due and accruing interest to total LHFI
0.51
NPAs to total LHFI & foreclosed property
NPAs & LHFI 90 days past due and accruing interest to total LHFI & foreclosed property
ALLL to nonaccrual LHFI
269.33
256.50
ALLL to nonaccrual LHFI & LHFI 90 days past due and accruing interest
206.54
195.95
ACL to nonaccrual LHFI
298.38
279.24
NPAs include nonaccrual LHFI, which totaled $110.9 million and $115.1 million at June 30, 2026 and December 31, 2025, respectively. The following table shows the year-to-date activity in nonaccrual LHFI for the six months ended June 30, (dollars in thousands):
Beginning Balance
Net customer payments and other activity (1)
(43,264)
Additions
41,962
Charge-offs
(2,764)
Transfers to foreclosed property
(59)
Ending Balance
(1) Other activity represents measurement period adjustments related to the fair values of certain Sandy Spring acquired loans, which impacted the nonaccrual activity for the three months ended March 31, 2026, and were finalized upon conclusion of the measurement period on March 31, 2026.
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The following table presents the composition of nonaccrual LHFI and the coverage ratio, which is the ALLL expressed as a percentage of nonaccrual LHFI, as of the periods ended (dollars in thousands):
CRE - Owner Occupied
CRE - Non-owner Occupied
Residential 1-4 Family - Commercial
Residential 1-4 Family - Consumer
Residential 1-4 Family - Revolving
Coverage Ratio (ALLL to nonaccrual LHFI)
Past Due Loans
At June 30, 2026, past due LHFI still accruing interest totaled $80.4 million or 0.28% of total LHFI, compared to $113.0 million or 0.41% of total LHFI at December 31, 2025. The decrease in past due LHFI of $32.6 million was primarily within the commercial and industrial and residential 1-4 family - consumer loan portfolios. Of the total past due LHFI still accruing interest, $33.7 million or 0.12% of total LHFI were loans past due 90 days or more at June 30, 2026, compared to $35.6 million or 0.13% of total LHFI at December 31, 2025.
Troubled Loan Modifications
We had TLMs with an amortized cost basis of $8.9 million and $18.1 million for the three months ended June 30, 2026 and June 30, 2025, respectively, and $25.6 million and $20.2 million for the six months ended June 30, 2026 and June 30, 2025, respectively. As of June 30, 2026 and December 31, 2025, there were no material unfunded commitments on loans modified and designated as TLMs.
Net Charge-offs
For the three months ended June 30, 2026, net charge-offs were $2.0 million or 0.03% (annualized) of total average LHFI, compared to net charge-offs of $666 thousand or 0.01% (annualized) for the three months ended June 30, 2025. For the six months ended June 30, 2026, net charge-offs were $3.6 million or 0.03% (annualized) of total average LHFI, compared to net charge-offs of $2.9 million or 0.03% (annualized) for the six months ended June 30, 2025.
Provision for Credit Losses
We recorded a provision for credit losses of $11.7 million for the three months ended June 30, 2026, a decrease of $94.0 million compared to $105.7 million recorded during the three months ended June 30, 2025. For the six months ended June 30, 2026, we recorded a provision for credit losses of $14.5 million, a decrease of $108.8 million compared to $123.3 million recorded during the six months ended June 30, 2025. Included in the provision for credit losses for the three and six months ended June 30, 2025 was $89.5 million of Day 1 initial provision expense on non-PCD loans and $11.4 million on unfunded commitments, each acquired from Sandy Spring.
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Effective January 1, 2026, we made certain changes to our allowance methodology as part of the continued enhancement of our credit modeling practices, resulting in more dynamic and precise modeling that allows for more granularity in the monitoring of our expected credit losses. As a result of this change, we moved from two loan portfolio segments (Commercial and Consumer) to three portfolio segments (CRE, Commercial and Industrial, and Consumer), by reorganizing the former Commercial segment into the CRE and Commercial and Industrial segments, with no changes made to the Consumer segment. The allowance methodology changes were accounted for prospectively as a change in accounting estimate in the first quarter of 2026, did not have a material impact on our consolidated financial statements, and resulted in no changes to previously reported values. Prior year tables do not reflect the change in methodology effective January 1, 2026. See Note 1 “Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report for additional information on the change in methodology.
At June 30, 2026, the ACL was $331.0 million and included an ALLL of $298.8 million and a RUC of $32.2 million. The ACL at June 30, 2026 increased $9.7 million from December 31, 2025, primarily reflecting the reserve build associated with the loan portfolio growth during the second quarter of 2026.
At June 30, 2026, the ACL as a percentage of total LHFI remained relatively consistent at 1.15%, compared to 1.16% at December 31, 2025. The ALLL as a percentage of total LHFI decreased by 2 basis points, from 1.06% at December 31, 2025 to 1.04% at June 30, 2026. The RUC coverage ratio increased 1 basis point from December 31, 2025 to 0.11% at June 30, 2026.
The following table summarizes the ACL as of the periods ended (dollars in thousands):
Total ALLL
Total RUC
32,227
26,161
Total ACL
ALLL to total LHFI
1.04
1.06
ACL to total LHFI
1.15
1.16
The following table summarizes net charge-off activity by loan segment for the three and six months ended June 30, reflecting the changes made to the Company’s allowance methodology effective January 1, 2026 (dollars in thousands):
Loans charged-off
Recoveries
Net charge-offs
(564)
(1,116)
(306)
(1,986)
(2,773)
(610)
(3,580)
Net charge-offs to average loans (1)
0.00
(1) Net charge-off rates are annualized and calculated by dividing net charge-offs by average LHFI for the period for each loan category.
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The following table summarizes net charge-off activity by loan segment for the three and six months ended June 30, reflecting the Company’s previous allowance methodology (dollars in thousands):
(677)
(666)
(1,607)
(1,337)
(2,944)
The following table summarizes the ALLL activity by loan segment and the percentage of the loan portfolio that the related ALLL covers as of the period ended June 30, reflecting the changes made to the Company’s allowance methodology effective January 1, 2026 (dollars in thousands):
Loan % (1)
59.2
25.2
15.6
100.0
ALLL to total LHFI (2)
1.03
0.84
1.44
(1) The percentage represents the loan balance divided by total LHFI.
(2) The percentage represents ALLL divided by the total LHFI for each loan category.
The following table summarizes the ALLL activity by loan segment and the percentage of the loan portfolio that the related ALLL covers as of the period ended December 31, reflecting the Company’s previous allowance methodology (dollars in thousands):
232,813
84.2
15.8
0.99
1.42
The ALLL for the combined CRE and Commercial and Industrial segments as of June 30, 2026 increased by $1.4 million as compared to Commercial segment from December 31, 2025. The ALLL for the Consumer segment as of June 30, 2026 increased by $2.2 million as compared to the ALLL from December 31, 2025. The increases were primarily due to the reserve build associated with the loan portfolio growth during the second quarter of 2026.
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DEPOSITS
As of June 30, 2026, our total deposits were $30.5 billion, a decrease of $3.4 million or 0.02% (annualized) from December 31, 2025, primarily due to lower brokered and demand deposits, partially offset by an increase in interest-bearing customer deposits. Total interest-bearing deposits consisted of interest checking accounts, money market accounts, savings accounts, time deposits, and brokered deposits. Our total time deposit balances with customers totaled $6.0 billion and accounted for 25.8% of total interest-bearing customer deposits at June 30, 2026, compared to $5.7 billion and 25.3%, respectively, at December 31, 2025. We seek to fund increased loan volumes by growing core deposits, but, subject to internal policy limits on the amount of wholesale funding we may maintain, we may use wholesale funding sources to fund shortfalls, if any, or provide additional liquidity. We use brokered deposits purchased through nationally recognized networks as part of our overall liquidity management strategy on an as needed basis. As of June 30, 2026, brokered deposits totaled $557.8 million, down from $1.1 billion at December 31, 2025.
The following table presents the deposit balances, including brokered deposits, by major category as of the periods ended (dollars in thousands):
% of total
Deposits:
Amount
deposits
Interest checking accounts
7,812,504
25.6
7,193,204
23.6
Money market accounts
6,821,997
22.4
6,863,981
22.5
Savings accounts
2,567,073
8.4
2,747,622
9.0
Customer time deposits of more than $250,000
1,876,425
6.2
1,737,345
5.7
Customer time deposits of $250,000 or less
4,104,769
13.5
3,956,571
13.0
Time deposits
5,981,194
19.7
5,693,916
18.7
Total interest-bearing customer deposits
23,182,768
76.1
22,498,723
73.8
Brokered deposits
557,751
1,128,284
3.7
77.9
77.5
22.1
Total deposits (1)
(1) Includes uninsured deposits of $11.1 billion and $10.8 billion as of June 30, 2026 and December 31, 2025, respectively, and collateralized deposits of $1.2 billion as of June 30, 2026 and December 31, 2025. Amounts are based on estimated amounts of uninsured deposits as of the reported period.
Maturities of time deposits in excess of FDIC insurance limits were as follows as of the periods ended (dollars in thousands):
3 Months or Less
376,152
409,080
Over 3 Months through 6 Months
271,737
192,388
Over 6 Months through 12 Months
212,170
142,197
Over 12 Months
63,366
101,930
923,425
845,595
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CAPITAL RESOURCES
Capital resources represent funds, earned or obtained, over which financial institutions can exercise greater or longer control in comparison with deposits and borrowed funds. Our management reviews our capital adequacy on an ongoing basis with reference to size, composition, and quality of our resources and consistency with regulatory requirements and industry standards. We seek to maintain a capital structure that will assure an appropriate level of capital to support anticipated asset growth and to absorb potential losses, while allowing us to effectively leverage our capital to maximize return to shareholders.
On May 5, 2026, we announced that our Board of Directors authorized the Repurchase Program to purchase up to $250.0 million of the Company’s common stock through May 5, 2027 in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Exchange Act. For information about the Company’s stock repurchase activity and the Repurchase Program, please refer to Note 9 “Stockholders’ Equity” in Part I, Item 1 and Part II, Item 2 of this Quarterly Report.
On July 23, 2026, we announced that our Board of Directors declared a quarterly dividend on our outstanding shares of our Series A preferred stock. The dividend of $171.88 per share (equivalent to $0.43 per outstanding depositary share) is payable on September 1, 2026 to preferred shareholders of record as of August 17, 2026. Our Board of Directors also declared a quarterly dividend of $0.37 per share of common stock, which is payable on August 21, 2026 to common shareholders of record as of August 7, 2026.
Under the Basel III capital rules, we must comply with the following minimum capital ratios: (i) a common equity Tier 1 capital ratio of 7.0% of risk-weighted assets; (ii) a Tier 1 capital ratio of 8.5% of risk-weighted assets; (iii) a total capital ratio of 10.5% of risk-weighted assets; and (iv) a leverage ratio of 4.0% of total assets. These ratios, with the exception of the leverage ratio, include a 2.5% capital conservation buffer, which is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. In March 2026, the Federal Reserve, Office of the Comptroller of the Currency and FDIC issued three proposals that would implement the Basel Committee on Banking Supervision’s 2017 revisions to the Basel III capital rules (the “Basel III endgame”). These proposals are intended to streamline capital requirements and better align regulatory capital with risk while maintaining the safety and soundness of the banking system, and if finalized as proposed, would primarily affect the largest banking organizations. The Company has reviewed these proposed rules and, if these rules are adopted as proposed, the Company estimates that its regulatory capital ratios would improve compared to current levels.
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The following table summarizes our regulatory capital and related ratios as of the periods ended (2) (dollars in thousands):
Common equity Tier 1 capital
$ 3,271,375
$ 3,074,066
$ 2,966,425
Tier 1 capital
3,437,731
3,240,422
3,132,781
Tier 2 capital
1,008,037
992,099
1,036,445
Total risk-based capital
4,445,769
4,232,521
4,169,226
Risk-weighted assets
31,420,871
30,449,199
30,349,828
Capital ratios:
Common equity Tier 1 capital ratio
10.41%
10.10%
9.77%
Tier 1 capital ratio
10.94%
10.64%
10.32%
Total capital ratio
14.15%
13.90%
13.74%
Leverage ratio (Tier 1 capital to average assets)
9.62%
9.10%
8.65%
Capital conservation buffer ratio (1)
4.94%
4.64%
4.32%
Common equity to total assets
13.09%
12.88%
12.51%
Tangible common equity to tangible assets (+)
8.17%
7.85%
7.39%
(1) Calculated by subtracting the regulatory minimum capital ratio requirements from the Company’s actual ratio results for Common equity, Tier 1, and Total risk-based capital. The lowest of the three measures represents the Company’s capital conservation buffer ratio.
(2) All ratios and amounts at June 30, 2026 are estimates and subject to change pending the filing of our FR Y-9C. All other periods are presented as filed.
(+) Refer to “Non-GAAP Financial Measures” within this Item 2 for more information about this non-GAAP financial measure, including a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with GAAP.
For more information about our off-balance sheet obligations and cash requirements, refer to “Liquidity” within this Item 2.
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NON-GAAP FINANCIAL MEASURES
In this Quarterly Report, we have provided supplemental performance measures determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare our financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. We use the non-GAAP financial measures discussed herein in our analysis of our performance. Management believes that these non-GAAP financial measures provide additional understanding of ongoing operations, enhance the comparability of our results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance.
We believe interest and dividend income (FTE), which is used in computing yield on interest-earning assets (FTE), provides valuable additional insight into the yield on interest-earning assets (FTE) by adjusting for differences in the tax treatment of interest income sources. We believe net interest income (FTE) and total revenue (FTE), which are used in computing net interest margin (FTE), provide valuable additional insight into the net interest margin by adjusting for differences in the tax treatment of interest income sources. The entire FTE adjustment is attributable to interest income on earning assets, which is used in computing the yield on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the FTE components.
The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for the three and six months ended June 30, (dollars in thousands):
Interest Income (FTE)
Interest and dividend income (GAAP)
FTE adjustment
4,561
4,362
9,110
8,120
Interest and dividend income (FTE) (non-GAAP)
Average earning assets
Yield on interest-earning assets (GAAP)
Yield on interest-earning assets (FTE) (non-GAAP)
Net Interest Income (FTE)
Net interest income (GAAP)
Net interest income (FTE) (non-GAAP)
Noninterest income (GAAP)
Total revenue (FTE) (non-GAAP)
419,927
407,255
791,632
624,341
Net interest margin (GAAP)
Net interest margin (FTE) (non-GAAP)
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Tangible assets and tangible common equity are used in the calculation of certain profitability, capital, and per share ratios. We believe tangible assets, tangible common equity and the related ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which we believe will assist investors in assessing our capital and our ability to absorb potential losses. We believe tangible common equity is an important indication of our ability to grow organically and through business combinations as well as our ability to pay dividends and to engage in various capital management strategies.
The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for each of the periods presented (dollars in thousands):
Tangible Assets
Ending Assets (GAAP)
37,289,371
Less: Ending goodwill
1,710,912
Less: Ending amortizable intangibles
351,381
Ending tangible assets (non-GAAP)
36,060,031
35,536,923
35,227,078
Tangible Common Equity
Ending Equity (GAAP)
Less: Perpetual preferred stock
166,357
Ending tangible common equity (non-GAAP)
2,947,220
2,791,210
2,603,989
Common equity to total assets (GAAP)
13.09
12.88
12.51
Tangible common equity to tangible assets (non-GAAP)
8.17
7.85
7.39
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Adjusted operating measures exclude, as applicable, merger-related costs, CECL Day 1 non-PCD loans and RUC provision expense, gain on sale of equity interest in CSP, gain on CRE loan sale, gain on sale of equity interest in Bearing Insurance, and gain (loss) on sale of securities. We believe these non-GAAP adjusted measures provide investors with important information about the continuing economic results of our operations. The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for the three and six months ended June 30, (dollars in thousands, except per share amounts):
Adjusted Operating Earnings & EPS
Net income (GAAP)
Plus: Merger-related costs, net of tax
63,349
6,956
67,992
Plus: CECL Day 1 non-PCD loans and RUC provision expense, net of tax
77,742
Less: Gain on sale of equity interest in CSP, net of tax
10,654
Less: Gain on CRE loan sale, net of tax
12,104
Less: Gain on sale of equity interest in Bearing Insurance, net of tax
24,023
Less: Gain (loss) on sale of securities, net of tax
(67)
Adjusted operating earnings (non-GAAP)
136,987
138,112
266,107
192,653
Less: Dividends on preferred stock
Adjusted operating earnings available to common shareholders (non-GAAP)
134,020
135,145
260,173
186,719
Weighted average common shares outstanding, diluted
Earnings per common share, diluted (GAAP)
Adjusted operating earnings per common share, diluted (non-GAAP)
0.94
0.95
1.83
1.61
Adjusted operating noninterest expense excludes, as applicable, the amortization of intangible assets and merger-related costs. Adjusted operating noninterest income excludes, as applicable, gain on sale of equity interest in CSP, gain on CRE loan sale, gain on sale of equity interest in Bearing Insurance, and gain (loss) on sale of securities. These measures are similar to the measures we use when analyzing corporate performance and are also similar to the measures used for incentive compensation. We believe the adjusted measures provides investors with important information about the continuing economic results of our operations. The following table reconciles non-GAAP financial measures from the most directly comparable GAAP financial measures for the three and six months ended June 30, (dollars in thousands):
Adjusted Operating Noninterest Expense & Noninterest Income
Noninterest expense (GAAP)
Less: Amortization of intangible assets
Less: Merger-related costs
Adjusted operating noninterest expense (non-GAAP)
184,000
182,365
369,330
306,210
Less: Gain on sale of equity interest in CSP
14,300
Less: Gain on CRE loan sale
15,720
Less: Gain on sale of equity interest in Bearing Insurance
32,350
Less: Gain (loss) on sale of securities
Adjusted operating noninterest income (non-GAAP)
57,894
51,486
112,675
80,752
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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Sensitivity
Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, and equity prices. Our market risk is composed primarily of interest rate risk. Our asset liability management committee is responsible for reviewing our interest rate sensitivity position and establishing policies to monitor and limit exposure to this risk. Our Board of Directors reviews and approves the policies established by our asset liability management committee.
We monitor interest rate risk using three complementary modeling tools: static gap analysis, earnings simulation modeling, and economic value simulation (net present value estimation). Each of these models measures changes in a variety of interest rate scenarios. While each of the interest rate risk models has limitations, taken together, they represent a reasonably comprehensive view of the magnitude of our interest rate risk, the distribution of risk along the yield curve, the level of risk through time, and the amount of exposure to changes in certain interest rate relationships. We use the static gap analysis, which measures aggregate re-pricing values, less often because it does not effectively consider the optionality embedded into many assets and liabilities and, therefore, we do not address it here. We use earnings simulation and economic value simulation models on a regular basis, which more effectively measure the cash flow and optionality impacts, and these models are discussed below.
We determine the overall magnitude of interest sensitivity risk and then we create policies and practices governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments. These policies and practices are based on management’s expectations regarding future interest rate movements, the states of the national, regional and local economies, and other financial and business risk factors. We use simulation modeling to measure and monitor the effect of various interest rate scenarios and business strategies on our net interest income. This modeling reflects interest rate changes and the related impact on net interest income and net income over specified time horizons.
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Earnings Simulation Modeling
Management uses earnings simulation modeling to measure the sensitivity of our net interest income to changes in interest rates. The model calculates an earnings estimate based on current and projected balances and rates. This method is subject to the accuracy of the assumptions that underlie the process, but we believe it provides a better analysis of the sensitivity of earnings to changes in interest rates than other analyses, such as the static gap analysis noted above.
We derive the assumptions used in the model from historical trends and management’s outlook, including expected loan growth, loan prepayment rates, projected loan origination spreads, deposit growth rates, changes to deposit product betas and non-maturity deposit decay rates, and projected yields and rates. These assumptions may not be realized and unanticipated events and circumstances may also occur that cause the assumptions to be inaccurate. The model also does not take into account any future actions of management to mitigate the impact of interest rate changes. Our asset liability management committee monitors the assumptions at least quarterly and periodically adjusts them as it deems appropriate. In the modeling, we assume that all maturities, calls, and prepayments in the securities portfolio are reinvested in like instruments, and we base the MBS prepayment assumptions on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning. We also use different interest rate scenarios and yield curves to measure the sensitivity of earnings to changing interest rates. Interest rates on different asset and liability accounts move differently when the short-term market rate changes and these differences are reflected in the different rate scenarios. We adjust deposit betas, decay rates and loan prepayment speeds periodically in our models for non-maturity deposits and loans.
We use our earnings simulation model to estimate earnings in rate environments where rates are instantaneously shocked up or down around a “most likely” rate scenario, based on implied forward rates and futures curves. The analysis assesses the impact on net interest income over a 12-month period after an immediate increase or “shock” in rates, of 100 bps up to 300 bps. The model, under all scenarios, does not drop the index below zero.
The following table represents the interest rate sensitivity on our net interest income across the rate paths modeled for the balances as of the periods ended:
Change In Net Interest Income
Change in Yield Curve:
+300 bps
4.96
7.44
5.49
+200 bps
3.59
5.28
4.03
+100 bps
2.79
Most likely rate scenario
-100 bps
(1.90)
(2.53)
(1.53)
-200 bps
(4.30)
(4.97)
(2.82)
-300 bps
(6.15)
(5.77)
(3.07)
If an institution is asset sensitive its assets reprice more quickly than its liabilities and net interest income would be expected to increase in a rising interest rate environment and decrease in a falling interest rate environment. If an institution is liability sensitive its liabilities reprice more quickly than its assets and net interest income would be expected to decrease in a rising interest rate environment and increase in a falling interest rate environment.
From a net interest income perspective, we were generally less asset sensitive as of June 30, 2026, compared to our positions as of December 31, 2025 and June 30, 2025. This shift is due, in part, to the changing market characteristics of certain loan and deposit products. We expect net interest income to increase with an immediate increase or shock in market rates. In a decreasing interest rate environment, we expect a decline in net interest income as interest-earning assets re-price more quickly than interest-bearing deposits.
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Economic Value Simulation Modeling
We use economic value simulation modeling to calculate the estimated fair value of assets and liabilities over different interest rate environments. We calculate the economic values based on discounted cash flow analysis. The net economic value of equity is the economic value of all assets minus the economic value of all liabilities. The change in net economic value over different rate environments is an indication of the longer-term earnings capability of the balance sheet. We use the same assumptions in the economic value simulation model as in the earnings simulation model. The economic value simulation model uses instantaneous rate shocks to the balance sheet.
The following table reflects the estimated change in net economic value over different rate environments using economic value simulation for the balances as of the periods ended:
Change In Economic Value of Equity
(6.45)
(4.70)
(9.75)
(4.01)
(2.78)
(6.40)
(1.79)
(1.19)
(3.18)
0.66
(0.03)
2.40
(0.92)
(2.19)
(3.37)
(5.34)
2.13
As of June 30, 2026, our economic value of equity was more liability sensitive in a rising interest rate environment compared to our position as of December 31, 2025. This shift is primarily due to the composition of our Consolidated Balance Sheets and also due to the pricing characteristics and assumptions of certain deposits and loans. We were less liability sensitive in a rising rate environment compared to our position as of June 30, 2025, primarily due to the composition of our Consolidated Balance Sheets and also due to the pricing characteristics and assumptions of certain deposits and loans.
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ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2026. The term “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Exchange Act, means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded as of June 30, 2026, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
In designing and evaluating the Company’s disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control Over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as such term is defined Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2026 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 1 – LEGAL PROCEEDINGS
In the ordinary course of our operations, we are party to various legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, in the aggregate, will not have a material adverse effect on our business, financial condition, or results of operations.
ITEM 1A – RISK FACTORS
During the quarter ended June 30, 2026, there have been no material changes from the risk factors previously disclosed under Part I, Item 1A. “Risk Factors” in our 2025 Form 10-K.
An investment in our securities involves risks. In addition to the other information set forth in this Quarterly Report, including the information addressed under “Forward-Looking Statements,” investors in our securities should carefully consider the risk factors discussed in our 2025 Form 10-K. These factors could materially and adversely affect our business, financial condition, liquidity, results of operations, and capital position and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report, in which case the trading price of our securities could decline.
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ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Sales of Unregistered Securities – None
(b) Use of Proceeds – Not Applicable
(c) Issuer Purchases of Securities
Stock Repurchase Program; Other Repurchases
On May 5, 2026, the Company’s Board of Directors authorized a share repurchase program to purchase up to $250 million of the Company’s common stock in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The authorization permits management to repurchase shares of the Company’s common stock from time to time at management’s discretion. The actual means and timing of any shares purchased under the Repurchase Program will depend on a variety of factors, including the market price of the Company’s common stock, share issuances under Company equity plans, general market and economic conditions, applicable legal and regulatory requirements, and other factors. The Repurchase Program is authorized through May 5, 2027, although it may be modified or terminated by the Board at any time, and does not obligate the Company to purchase any particular number of shares.
The following information describes our common stock repurchases for the three months ended June 30, 2026 (dollars in thousands, except share and per share data):
Period
Total number of shares purchased (1)
Average price paid per share ($) (2)
Total number of shares purchased as part of publicly announced plans or programs
Approximate dollar value of shares that may yet be purchased under the plans or programs ($) (2)
April 1 - April 30, 2026
10,197
36.01
May 1 - May 31, 2026
37.14
June 1 - June 30, 2026 (3)
274,467
37.76
264,961
239,995
286,547
37.69
_________________________________________
(1) For the three months ended June 30, 2026, 21,586 shares were withheld upon vesting of restricted shares granted to our employees in order to satisfy tax withholding obligations.
(2) These amounts include fees and commissions associated with the shares repurchased.
(3) The Company began repurchasing shares under the Repurchase Program in June 2026.
ITEM 5 – OTHER INFORMATION
Trading Arrangements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption or termination of any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).
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ITEM 6 – EXHIBITS
The following exhibits are filed as part of this Quarterly Report and this list includes the Exhibit Index:
Exhibit No.
Description
2.1
Agreement and Plan of Merger, dated as of October 21, 2024, between Atlantic Union Bankshares Corporation and Sandy Spring Bancorp, Inc. (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on October 21, 2024).*
3.1
Amended and Restated Articles of Incorporation of Atlantic Union Bankshares Corporation, effective May 6, 2026 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on May 6, 2026).
3.2
Amended and Restated Bylaws of Atlantic Union Bankshares Corporation, effective as of October 30, 2025 (incorporated by reference to Exhibit 3.2 to Quarterly Report on Form 10-Q filed on November 4, 2025).
4.1
Third Supplemental Indenture, dated as of July 30, 2026, between Atlantic Union Bankshares Corporation and U.S. Bank Trust Company, National Association, as Trustee (including the form of Note attached as an exhibit thereto) (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed on July 30, 2026).
4.2
Form of 6.25% Fixed-to-Floating Subordinated Note due 2036 (incorporated by reference to Exhibit A in Exhibit 4.2 to Current Report on Form 8-K filed on July 30, 2026).
15.1
Letter regarding unaudited interim financial information.
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Interactive data files formatted in Inline eXtensible Business Reporting Language for the quarter ended June 30, 2026 pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (unaudited), (iii) the Consolidated Statements of Comprehensive Income (Loss) (unaudited), (iv) the Consolidated Statements of Changes in Stockholders’ Equity (unaudited), (v) the Consolidated Statements of Cash Flows (unaudited) and (vi) the Notes to Consolidated Financial Statements (unaudited).
The cover page from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline eXtensible Business Reporting Language (included with Exhibit 101).
*
Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the SEC upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Atlantic Union Bankshares Corporation
(Registrant)
Date: August 6, 2026
By:
/s/ John C. Asbury
John C. Asbury,
President and Chief Executive Officer
(principal executive officer)
/s/ Alexander D. Dodd
Alexander D. Dodd,
Executive Vice President and Chief Financial Officer
(principal financial and accounting officer)
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