Atlantic Union Bankshares Investor Day 2025. Please welcome Bill Cimino, Senior Vice President, Investor Relations.
Good morning, everyone. It's good to see so many of you in person, and welcome to those listening to us online today. Please note that today's slide presentation is available to download through the Investor website link, which can be easily found on our Investor website, investors.atlanticunionbank.com. To download today's presentation, if you're watching online, just scroll down and click the download button. And for those of you in the room, you can scan the QR code provided on the printed agenda. During today's presentation, we will make comments on our financial performance using both GAAP metrics and non-GAAP financial measures. Important information about these non-GAAP financial measures, including reconciliations to comparable GAAP measures, is included in the appendix to our presentation. I would like to remind everyone that we will make forward-looking statements today, which are not statements of historical fact and are subject to risks and uncertainties.
There can be no assurance that actual performance will not differ materially from any future expectations or results expressed or implied by these forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statement except as required by law. And please refer to the forward-looking statement slide in our presentation and our other SEC filings for further discussion of the company's risk factors and other important information regarding our forward-looking statements, including factors that could cause actual results to differ from those expressed or implied in a forward-looking statement. And all comments made during today's call are subject to the Safe Harbor Statement. Finally, before we begin, I'd like to cover a few housekeeping items. We've built in time at the end of the day for questions, so please hold off until then.
That'll help keep us on schedule as some of you have a plane to catch later today. And for our virtual attendees, to submit a question during the Q&A session, scroll down to the bottom of the screen and click the Q&A button. As you'll see from today's presentations, we have come a long way in our journey to become the Premier Mid-Atlantic Regional Bank. We've assembled a strong team. And even though we've accomplished a lot, we believe there's still opportunity for us to grow and evolve as a company. And now I'll turn it over to John Asbury. John?
Thank you, Bill. And good afternoon, everyone. First of all, let me say thank you so much for making the time to come here to New York, the New York Stock Exchange. We realize that many of you have actually traveled to be here for this. We are happy to be back to tell our story. The street is accustomed to hearing from myself, Chief Financial Officer Rob Gorman, and Head of Investor Relations Bill Cimino, but more important than us will be the other leaders that you'll hear from today. I also want to point out that, as Bill mentioned, once we get into Q&A later, nearly the entire executive leadership team is here. Almost all roles are represented. And so I'll do my very best to make sure that you hear from them to the extent that we can to any questions you may have.
So why don't we begin? And I'll start with a good visual of the Atlantic Union Bank franchise. This is the third Investor Day that I have been part of. I've been a part of the company for nine years now. And over the past nine years, AUB has been a story of transformation. We've evolved from a Virginia Community Bank into the regional bank of the lower Mid-Atlantic. Now, this has been a very intentional strategy. Many of you know us well, and you've been around for the journey. And we've achieved this through deliberate organic growth and four targeted mergers and acquisitions over a nine-year period. AUB runs a very traditional bank strategy. We've focused on building a dense, compact presence in core markets, and we do believe we have room for further densification in North Carolina.
We do leverage specialized commercial banking capabilities to better compete with the larger players and to provide supplemental growth opportunities beyond our three-state branch footprint. Dave Ring will share more on this in his presentation. Having said all of this, the main thrust and strength of our franchise does, in fact, remain our core footprint in the states of Maryland, Virginia, and North Carolina. It should be evident from looking at this slide. Now, as I often point out, we do recognize the scarcity value of our franchise. We built it. We recognize it. And we do not believe it to be replicable. My comments today are going to focus on our journey to reach this point and what to expect next from Atlantic Union Bank.
Following that, we'll get into other key executives who will dive into a greater level of detail on our operating strategies and our financial performance and objectives. Now, here's a timeline that provides a very good reminder of key milestones in our strategic journey going all the way back to 2018. And key things I will call out, and I'll only call out a few, would certainly be crossing the $10 billion asset threshold, acquiring quality banks that expanded our scale and our market reach, and securing our Virginia franchise and later entering North Carolina's Piedmont Triad and Raleigh markets, and extending the franchise to secure a similar footing in the contiguous Maryland markets and densifying Virginia's largest market, Northern Virginia. We've been disciplined, and at times we've been bold in doing what we did, knowing that this would be an ambitious undertaking.
This has been a deliberate and a disciplined transformation journey. Here's a very good view of the company's growth over time. We've been a combination of both organic growth and select acquisitions. I do want to point out that while many people perceive us as simply an acquirer, the nine-year compound annual growth rate for our company on an organic-only basis is 7%. That's a high single-digit number. That is a good number for a franchise like us. In green, you can see the four acquisitions that we've undertaken during my time here. I do want to point out there is a pattern that should be evident. The first two acquisitions were closed roughly one year apart in early 2018 and then early 2019. That accelerated our transformation and enabled the successful $10 billion crossing.
I believe not well remembered is the five-year gap between the closing of Access National Bank in February of 2019 and our acquisition of American National Bank in April of 2024. The gap period did, in fact, include the pandemic years. We needed this time to digest the first acquisitions, to field the right leadership team, to shore up the bank's infrastructure and risk management to more rigorous regional bank standards, and to improve financial performance in the face of numerous and unprecedented challenges. With our more recent two acquisitions, also completed one year apart, we have now secured our position as the leading regional bank of the lower Mid-Atlantic.
With that now accomplished, we believe the next chapter for us will very much be an organic strategy with the goal of proving out the potential and the earnings power of the franchise that we have built to demonstrate it's all been worthwhile. And here's a different way of visualizing the role of the planful and intentional acquisitions we've used to build our franchise. The slide to the left shows the franchise that I joined in late 2016. And to the right, the color coding represents the banks that we have acquired, each filling a missing piece of the puzzle that we were solving for.
Danville, Virginia-based American National Bank, based along the southern Virginia border and north-central North Carolina. It accomplished multiple objectives: densifying our presence in western Virginia, adding new markets in Southern Virginia where we did not operate, and importantly, providing a meaningful presence in the Piedmont Triad region of North Carolina and an entry point in Raleigh, which we viewed as a base that we could build from. I pointed all of this out when we acquired American National Bank, and I stated we would further invest in North Carolina as our most promising growth market, and we have. More recently, the Sandy Spring Bank acquisition also served a dual purpose of extending the footprint into Maryland and densifying our limited presence in Virginia's largest market, which is Northern Virginia.
Of note, the bank's compound annual growth rate for assets has been 20% over the course of these years, yet the branch footprint only grew at a 6% compound annual growth rate. That demonstrates how aggressively we have optimized the retail branch network for efficiency. I will call back this slide from seven years ago, standing here in New York, the 2018 Investor Day presentation, at which time we had completed our acquisition of Xenith Bank, and we announced the acquisition of Access National Bank. This was intended to respond to questions that I was receiving about future M&A intentions. I stood here and stated that we saw three options. Since that time, we have executed on all three. On the left, we did nothing for five years following the closing of Access National Bank in terms of bank M&A.
We then moved to further consolidate Virginia with the acquisition of American National Bank, which largely completed that strategy, and as mentioned, this also had the added benefit of providing a critical mass in North Carolina, which we viewed as a longer-term organic growth opportunity that we could build from, and finally, seven years ago, we clearly stated that we saw the potential to extend the franchise to the north and to secure AUB's footing as the regional bank of the lower Mid-Atlantic. We have done exactly what we said we would do, and here's a current version of a slide that you've seen from us for many years. We always have this in our investor presentations. It's important.
It highlights our position as the number one regional bank by depository market share in our home state of Virginia, and now in Maryland, and it demonstrates that we're still a small player in North Carolina. What should be obvious from this is the dominance of the larger banks in those markets and how we're positioned against them in Virginia and in Maryland. And this answers an important question. It reinforces why we sought to position AUB as both a challenger and an alternative to the larger players while still maintaining the flexibility to compete against the smaller players too. And you'll hear more on this from Maria Tedesco, David Ring, and Shawn O'Brien momentarily. And I also want to point out an important point. While many bank management teams will talk about their scarcity value, in our opinion, this is what scarcity value looks like.
And moving on to our markets, we've long believed that our markets in this three-state footprint represent among the most attractive in the country. All three states are top 20 by GDP and population. Maryland and Virginia are among the more affluent markets in the nation by median household income. In fact, Maryland, notably, is a close second to New Jersey as having the highest median household income of any state in America. And finally, all three states have among the lowest unemployment rates of any of the more populous states in the country. So bottom line, we do operate in large, affluent, and low unemployment states. We believe there's growth upside in all of these markets.
And again, this further explains why our strategy has remained focused on having a dense and a compact and a meaningful franchise in our region versus scattering our franchise across a much broader region. And over the course of our transformation journey, we have set out a number of key milestone objectives. And we've been disciplined in executing against them. In my opinion, among the most important has been elevating the bank's financial performance from good to top tier. That is the price of independence. And then on to the next chapter. I'll reiterate at this point what I've been saying for some time, and that's with the franchise that we have long desired and worked so hard to build, complete. Now is the time to demonstrate the organic earnings power of our company.
The focus of the recently approved three-year strategic plan is precisely as you see outlined here. One, demonstrate our organic growth capability. We believe we have the franchise. We believe we have the momentum to do so. Two, shift from capital investment and deployment to capital creation and top-tier financial performance on an organic basis. Three, maintain disciplined execution and demonstrate the earnings power of this franchise. This is exactly what we've been building for, and the presentations that you will now hear should give you insight into how we intend to accomplish this. Those will begin with President and Chief Operating Officer Maria Tedesco.
Thank you, John.
Seven-year veteran of the company.
Thank you. It's nice to be here with all of you. Good afternoon, because it is exactly noon, I think.
So let's take a moment to focus on our strategic priorities, which you will hear many of the details in the presentations that follow mine. These priorities are going to guide us as we move forward. Our most immediate focus is to fully integrate the Sandy Spring franchise. The goal is to realize the full potential of this acquisition operationally, culturally, and financially. We are continuing to invest in the infrastructure, into risk, workplace processes, and capabilities. These investments are designed to support the sustainable scaling over time. By doing so, it will allow us to efficiently manage growth and maintain high standards. On the heels of a successful integration, our number one priority is organic growth. And we're going to do that by leveraging this terrific core franchise that we have and deepen relationships and grow market share.
We're going to remain focused on relationship-driven expansion and, of course, new customer acquisition. Today, you're going to hear from Shawn O'Brien, Head of Consumer and Business Banking, and Dave Ring, Head of Wholesale Banking, on their plans for organic growth. You'll also hear from Matt Linderman, our Chief Information Officer, on technology strategy. But I'm going to provide a very high-level insight into this important topic, our technology strategy. We're capitalizing on technology to enhance organic growth and efficiency to exceed our customers' expectations. We want to deliver enhanced services coupled with smoother experiences for them. Innovation is central to that strategy, whether it's digital payments or process improvements, because there is a plethora of options out there for us, and particularly around the changing payment environment that we're going to really need to stay on top of and watch what's happening.
As we navigate a crowded landscape of technology options, our fintech partnerships are key in helping us make sense of this increasingly complex marketplace. With so many emerging technologies and vendors, having these trusted partners is absolutely essential to separating sort of the real value from the noise that's out there. So through firms like Mendon, Canopy, FINTOP, Bank Tech Ventures, we're tapping into deep market intelligence. Their ongoing research and deal flow and trend analysis gives us visibility into what's coming and where should we actually be paying attention. They keep us plugged into the heart of the fintech ecosystem and helps keep us informed of those changes that could impact our business as well as our clients. Ultimately, these relationships help us innovate more confidently, and it reduces risk in accelerating our valuations.
Driving meaningful operational efficiency by leveraging fintech partnerships has enabled us to introduce digital capabilities that streamline operations, reduce manual work, and enhance both our teammate and our customers' experiences. For example, we implemented nCino's platform a couple of years ago, and it's been a major step forward for our commercial lending operations. It's provided digital end-to-end, paperless process, and an automated workflow. What does that do? It makes our teammates work faster and with greater accuracy while the customers experience a smoother, more transparent process. Another example is Built. It's a real game changer for the CRA and our construction lending space. That platform accelerates the draw and spending processes by eliminating what you normally see are these siloed systems and reducing manual error-prone work.
With great transparency, faster turnaround times, and improved collaboration across internal teams and external partners, we're really delivering a much better customer experience, real value while reducing operational risk. These capabilities represent transformative shifts in how we operate our business today, and by curating the right fintech partners, we are creating a more agile and modern banking experience for both our teams and our clients. To that end, we are looking ahead to the changing payment landscape and considering our strategies. As many of you know, the GENIUS Act establishes a clear regulatory framework for emerging digital asset capabilities, and it creates those sort of guide rails that banks need in order to safely and responsibly participate in the new payment rails, tokenized deposits, or stablecoin transactions. It opens the door for secure innovation while maintaining strong compliance.
AUB is actively reviewing which of these digital asset capabilities really make sense for us, including one or two tokenized deposit options that we have and the ability, obviously, to send and receive stablecoin payments. It's going to be critical for us in the future. As our customer value proposition is at really the heart of our success, at the end of the day, our job is to create easier, better experiences for our clients so that they're choosing us all the time over the competition. And we believe the winning formula is about being authentically human but having a digital-enabled experience. So what do we mean by that? It means bringing human touch to the relationship and making it genuine and knowledgeable bankers that care about their clients each and every day. But it's also about arming our customers with the right digital tools in this fast-paced world.
It's not lost on us that some of the people choose community banks because they provide that lovely human element. And then others choose the bigger banks because they believe, "Well, I can get more technology and products if I get serviced by the larger banks." Well, we proudly sit right between these two. We're fully capable of providing those great digital experiences and specialized product solutions. But without sacrificing the people side, you can talk to a human and the individuals you know that you can count on at AUB. The enabler behind the value proposition is our culture. I've been in banking for a few years, but I can sincerely say that AUB is very unique, and we do have a special culture. At the center of that is our core values: caring, courageous, committed.
Caring comes alive every day with our teammates who demonstrate true caring for our customers and each other and going that extra mile if we need it. Courageous is really about owning the opportunities, and we will never be perfect. We know that. We strive every day to be better and better and better, but we must be humble enough to own any mistakes that we make, learn from them, and seek improvements and efficiencies in all that we do. And then there's committed. None of the stuff that we're talking about matters if we don't bring the necessary drive and the accountability in doing what's right for all of our stakeholders, including you, our investors. And finally, we're proud to be recognized repeatedly as a great place to work and for the great work we do for our clients every single day.
On the last point, delivering against our value proposition requires relentless focus on the client experience. This is really at the heart of where we find our success. And we're still maturing in that regard. We're shifting from a more sort of reactive approach to being proactive and thinking ahead. What is it going to take to make sure our delivery of a service or product is seamless? We're designing new experiences by anticipating resolving customer friction points even before they occur versus waiting for them to happen and then try to fix it. And for our existing experiences, we're leaning into insights that our own teammates bring us and tell us ways we can improve. And we're going to leverage data in new ways to help us identify and drive prioritization of those things that really are going to matter the most.
At the end of the day, making banking easier for our customers will lead to the behaviors we're all looking for: greater retention, advocacy that leads to even more business through deeper relationships and referrals. And as we dive a bit into the strategies of our business units, I want to just provide a little context. We are largely organized around two primary lines of business, surrounded by each of our back office functions largely structured to enable their success. They are our priority. The core of our wholesale division is our commercial banking team with additional specialty business lines that include capital markets and wealth management. And our Consumer and Business Banking team is built around more than 170 retail branches, and it includes our retail business, home loans, business banking, and our Raymond James brokerage business.
So with that, I'll ask our next speaker, David Ring, to come up and talk about wholesale banking and wealth. Thank you, Dave.
Thank you, Maria. It's great to see so many familiar faces here. And thank you for the opportunity to provide an overview and outlook for the wholesale and wealth groups. I'm David Ring, and I joined Atlantic Union Bank just over eight years ago when we were a smaller bank mainly serving the local markets in Central Virginia and Western Virginia. Over the years, we've invested in the business to generate more diverse revenue streams and to seize opportunities as the market expanded across multiple states. We've continued to operate as a local bank while positioning ourselves as the alternative to the largest banks in our region. You can see on the slide here how diversified we have become and how we've segmented.
We've assembled a strong team of commercial industrial bankers and commercial real estate bankers with specialty teams that support and independently drive business as well. Our business and the wholesale organization are continually evolving. For example, this slide looks a lot different than it did seven years ago. Seven years ago, we had seven regions in Virginia with generalist bankers managing everything, making scaling very difficult and processes in each area very inconsistent. We've since segmented the group, centralized some of the functions, and added a lot of support. Our teams help companies manage their working capital, reduce interest expenses, provide valuable ideas, valuable insights, capital, and help clients meet their business and personal goals. You see wealth in the far end there. It's very connected to the wholesale bank.
We prospect about 8,750 companies across our enterprise, with new clients making up 30%-40% of production each quarter. We supplement the bankers' calling efforts with a cold-calling team, so we have continuous market presence. Bankers follow a relationship planning model, forming tailored teams that adapt as client needs change. Basic teams include an RM, credit partner, and treasury management officer, while transitioning or growing firms get a specialized larger team assigned to them. We believe this approach is a thoughtful process and a differentiator in our market. This is reinforced by a recent Greenwich, now they're called Coalition Greenwich, survey that said three-quarters of our clients in the $10 million-$500 million revenue segment gave our bankers a rating of five out of five, which is significantly higher than the four major national banks that participate in our market.
And 91% of our clients in the survey gave us either above average or excellent ratings in overall satisfaction. I'd normally want to drop the mic right there because I'm so proud of the team. But the major drivers of this rating are responses to the following dimensions: likelihood to recommend, ease of doing business, quality of customer service, a bank you could trust, and a bank that values long-term relationships. And that's who we are. Another area where we're keenly focused is to take advantage of the recent Sandy Spring Bank acquisition. We believe we've set ourselves up well to be successful there. We've maintained continuity, retaining the commercial leadership team and most of the RMs. They have a deep knowledge of the market, strong local relationships, and give us a large commercial presence we never had before.
If you competed with us in that market, you could see we had gaps and weaknesses, and this really cements our participation in the market up there. This helps us avoid, though, disruption and customer attrition. All team members have already been trained on our processes, risk appetite, and our procedures and are building significant pipelines. We've had early success bringing our working capital management capabilities, insights, including providing a larger treasury management platform, expanded capital markets offerings, and specialty subject matter expertise. The vast majority of Sandy Spring clients would have fallen within our core commercial segment and at the lower end of the middle market. As we move up market, we anticipate considerable untapped opportunities for loans and fee income generation. In addition to Maryland, North Carolina is an emerging market for us as well.
You may be aware, we have had a presence in North Carolina for about nine years with a very successful Charlotte real estate office. Plus, we have bankers covering the Triad, Triangle markets since our acquisition of American National Bank 19 months ago. And we've added a Wilmington office serving the fast-growing markets in Pender, New Hanover, and Brunswick counties. While we have 20 producing bankers already executing and winning in North Carolina, we plan to fill in some gaps by hiring several middle market bankers and a Wealth Management staff to complement the existing teammates that are already there. As most of you know, we have had three main markets, and Virginia is where we've had the strongest presence and have successfully competed for business against local banks and large banks for several years.
If you were to look at our book of business and how it's grown, it's the model for what we're going to do in our newer markets, leveraging our people, products, and strong brand. We continue to have opportunities to acquire new relationships in Virginia across all segments. We cover local and smaller companies, and we cover large companies too. And we've had opportunities to add a number of lead bank relationships across Virginia. We have a designated commercial, middle market, and corporate banking teams that are having success, taking away clients from large banks and small banks, again, leveraging our people, our brand, and our strong collection of products and services. Sometimes it starts with traditional loans, but more and more, we're leading with our treasury management platform, equipment finance capabilities, and sometimes we even get in the company's foreign exchange rotation to start a relationship.
Local real estate lending remains a fundamental strength for Atlantic Union Bank, rooted in our deep history as a community bank. This expertise extends to the community banks we have acquired, reinforcing a consistent approach to real estate lending across our organization. In recent years, we have broadened our reach beyond traditional community lending. Our team has established robust partnerships with larger institutional developers who bring significant financial resources and liquidity to the table. These relationships have enabled us to partner in larger, more complex transactions, further diversifying and strengthening our real estate lending portfolio. Certainty of execution and a consistent market approach is a differentiator in this space. As our Chief Credit Officer says, we never go pencils down, and we don't run hot and cold in all the product types. Plus, our in-house construction management team is often cited as a tiebreaker in winning deals.
Our real estate syndication capability serves as a significant strength within our organization. This approach allows us to support larger transactions by collaborating with other banks, effectively distributing exposure and minimizing our overall risk. As a result, we're able to continue growing these relationships while maintaining prudent risk management across our portfolio. Through syndication, we reinforce our ability to serve clients with complex financial needs, ensuring sustained partnerships and business expansion. We are well positioned to continue increasing syndication revenue, particularly in the Greater Washington, Maryland region. Our recent expansion into this area is strengthened by the fact that Sandy Spring did not previously offer syndication capabilities. However, the bankers who joined us from Sandy Spring bring with them a wealth of established client relationships. These relationships are primed to benefit from our syndication offering, creating new opportunities for growth and further solidifying our presence in this market.
This is true for our interest rate management capabilities as well. Other opportunities for us include some perimeter expansion, bridge to agency deals, some student housing, I'm looking at Mike Clarke right there because we do some with him, and low-income housing tax credits. Specialization has a positive impact on client acquisition and relationship management, and it remains a significant strategic focus for us. Our experience clearly demonstrates that focusing on specialized industry segments significantly increases our success in winning new clients. By concentrating our efforts and resources, we're able to streamline the sales process, making it more efficient and effective. This targeted approach also strengthens our ability to retain key relationships, ensuring long-term partnerships and sustained growth. Specialty bankers play a critical role in this strategy by offering deep industry knowledge, providing valuable insights during client engagements.
Their expertise enables us to better understand client needs, tailor solutions, and deliver superior service across various markets. We remain dedicated to investing further in established specialty lines, such as asset-based lending and equipment finance, which are already in place. These areas have already demonstrated considerable success for us and continue to present significant opportunities for growth. At the same time, we're actively developing new specialty areas guided by trends within our own portfolio and evolving market opportunities. The specialties listed on this slide here represent those currently in development as well as sectors where we believe there is substantial potential for future expansion and value creation. We currently operate four specialty banking businesses: government contractor banking, asset-based lending, equipment finance, and a small corporate banking group. Among these, equipment finance has shown remarkable growth.
Launched just before the onset of COVID six years ago, it has progressed to become the 29th largest bank-owned equipment finance company in the United States. In addition to these specialty lines, our teams benefit from the guidance of in-house subject matter experts who help us focus on specific market segments. These segments include medical and veterinary and legal practices, shipbuilding and repair, as well as cash-centric businesses such as title companies. By leveraging deep expertise in these areas, we have seen a notable increase in client win rates and, in some cases, a reduction in the sales cycle. Looking ahead, our strategy involves adding more specialty lines. Typically, we begin by starting small, developing some expertise, and then expanding over time.
Areas such as senior living, dealer finance, financial sponsor coverage, and debt capital markets have reached a level in-house where we believe we've accumulated significant experience and have achieved the necessary scale to support a specialist approach. With this foundation, we plan to formalize our strategy and incorporate these sectors into a list of specialty businesses. You could see right towards the bottom. Additionally, we're committed to a cross-enterprise initiative aimed at building a competitive payments platform. This platform is designed to meet the demands for faster payments and provide access to new payment rails, enhancing our ability to serve the evolving client need. Our capital markets business has positively influenced our financial results by increasing fee-based revenue. The close alignment and delivery to the client of our capital market services and treasury management distinguishes us from other banks.
These groups maintain close collaboration by relationship planning with bankers and actively reviewing banker pipelines and prospect lists to identify new business potential. In other words, the relationship manager doesn't have to do it all themselves. They have these specialties huddled around clients to make sure we're servicing their needs. Our capital markets business is comprised of interest rate derivatives, foreign exchange, and loan syndications. It's built to expand our fee capabilities that allow us to serve more sophisticated clients, improve returns, and reduce balance sheet dependency. We already have had early success generating new capital markets income from both markets in Maryland and North Carolina. We have two initiatives to enhance our services. The first, nearly complete, is an enhanced full-service foreign exchange platform where clients will be able to easily purchase foreign exchange on their own, or they'll be able to speak to somebody.
The other initiative is to set up an intermediary that will place real estate debt with third parties, such as insurance companies and pension funds, for a fee. We've partnered with a third party to provide this service for several years now, again, that toe-in-the-water approach, and we believe we can improve our execution and profitability by taking this in-house at this point. We've invested significantly in treasury management through new products, staff, and a specialized call center. Our TM platform is an important component for building a strong commercial and industrial business and has delivered annual growth of over 20% in recent years. Our plan calls for continued focus on modernizing and monetizing our payments platform by offering legacy and new payment rails to meet the changing demand of the client base. The new rails will be based on speed, security, and digital money movement.
Additionally, we provide advanced solutions designed to streamline and automate our clients' back office workflows and payment operations. These include integrated payables and integrated receivables, as well as an effort to provide API-based services. Over the next five years, experts expect API-driven banking will unlock revenue streams, enhance client engagement, and position banks as solution providers versus service providers. We want clients to be able to operate our solutions within their own systems versus toggling into ours and going back to theirs. Banks not focused on doing this may be left behind. We're preparing to launch real-time payments and FedNow at this point and are spending more time looking at other payment methodologies such as stablecoin and tokenized deposits. Okay. So this is a first slide of two wealth slides. This is how our wealth group is set up. What's interesting about wealth is it's aligned with wholesale banking.
It's unusual to do that, but we found that the wholesale bank is a great feeder source into the wealth business, and putting them at the same table, they're our brothers and sisters. They're not our cousins and their third uncle down the line, so we put them all together, and it works so much better as they're orchestrating the client relationship plan, so it's comprised of an asset management group, very sophisticated trust and estate services, wealth banking, which would be loans and deposits to wealthy people, as we called certified rich people, CRPs, and we have registered investment advisors, two firms. If you remember, we had a couple of registered investment advisors. These were part of Sandy Spring, and we are very happy that they're part of our team today, and they are used to working in a bank structure, which is fantastic.
One of the two actually has been in a bank structure for 18 years. So they're very used to being managed and working within a bank structure, which is terrific. The Wealth Management group has become a really substantial source of fee income for us now. This progress is supported by an integration of talented professionals. So as we've been building the group, we've had folks from Sandy Spring and American National Wealth Groups join us, as well as developing a whole bunch of new products within the wealth group. Collectively, these efforts are strengthening our position and driving continued growth in our wealth segment. We've successfully converted Atlantic Union Bank and American National Bank clients into a new, highly sophisticated Wealth Management platform. This upgrade offers a very sophisticated client portal, enhancing the client experience while simultaneously increasing our operating efficiency in our back office.
The transition process was executed smoothly in October, and we are planning to convert the Sandy Spring clients to this platform in 2026. In the past few years, we have broadened our range of services by introducing new business lines and products within wealth. These include institutional and municipal services, a capability to offer 401(k) plans, and a short-term money management product we call Virginia Mint, which allows municipalities to invest excess cash flows with us instead of the local government funds. All these offerings have been well received, and our clients are already contributing to the growth of fee income in 2025. Now, this concludes my comments today. I hope you can see we have evolved into a full-service commercial bank, and we've developed a meaningful, growing wealth business. We're excited about the next few years and what we can do to continue to add value.
I think this differentiates our bank from the competition and further enhances our client offerings. So looking ahead, we remain committed to operational excellence and expanding our capabilities to meet the evolving client needs. By investing in technology, recruiting top talent, and refining our product suite, we're confident in our ability to deliver superior service and maintain our competitive edge in this marketplace. Thank you for your interest, as well as listening to us and how we're pursuing new opportunities, driving lasting growth for you, our shareholders, our investors, and our clients. Thank you very much and let me turn this over to Shawn O'Brien, Head of Consumer and Business Banking.
All right, well, thank you so much, Dave. Just so you know, in the run-through this morning, Dave asked what I did here.
So he's really being nice now, but we've worked together for seven years now at the bank, Dave and I. We have had a great partnership running the two lines of business. As he said, I run Consumer and Business Banking. And I want to walk you through a little bit what that looks like because it is a big, diverse group that handles a lot of different areas of the bank. So we have business banking in our world, which is handling any businesses with up to $10 million in annual revenue. We have the Consumer Lending Group. And so that is mortgage. That's things like home equity, all our auto lending, and our unsecured lending is in the Consumer Lending Group. And then we have our Wealth Management team that is a partnership with Raymond James.
And so that is financial advisors for primarily our branches, our mass affluent customers in our branches. And that is a growing business. And then we have a lot of support teams. We have Community Impact, which is our CRA team. We have our call center for the bank, which handles pretty much all of the incoming customer calls except for the new call center Dave has opened up. We have Consumer Administration, which is operations, things like our Regional Operations Manager. Also, we have a call center for our teammates within that group. And then we have Consumer Banking Solutions and Sales. That's things like product management, digital strategy, a lot of our training for the organization. ATM and cards sits there as well, as well as our sales and service process. And so a large group, as you can see, really all around the branch network.
And you heard Maria talk a little bit about focusing on the customer, making sure that it's always about the human touch. And that is what we believe in my line of business as well. So everything really centers on our branch network. And today, that's three regions. It's 13 markets. We have 178 branches and 327 ATMs. And so about half of those ATMs sit at our branches. The other half are through a partnership with NCR primarily, where it is branded in large retailers and kind of expands our presence in many of our markets. We have 1,400 teammates, so a rapidly growing team. And at the end of the day, the whole group, primarily the role here is to make sure that we provide low-cost, high-quality deposits for the bank. And you can see that reflected in the balance sheet, $18 billion in deposit balances.
We have $5.3 billion in loans. That's mortgages, home equity, business banking loans primarily make up that $5.3 billion. We have now 581,000 customers, so that number is growing a lot in my time here, and we have $54 million in fee income through the third quarter, so a large fee income generator as well. Raymond James has $2.8 billion, that Raymond James partnership, $2.8 billion in assets under management. I want to walk you through a little bit of our strategy, both some of the things we've accomplished and the things that we are currently working on. Clearly, the focus here for the last couple of years for us has been the acquisitions, right, so when you think about American National and Sandy Spring, that has been a big part of our time, whether that's training, process, and procedure work, the culture piece of bringing people on board.
That has been the primary focus for my organization, but at the same time, we've also done a lot of development for our process procedures tools. One of those is Q2. That is our new online and mobile banking tool. We've replaced our entire online and mobile banking suite of products. We did have a system for commercial and business, and we had a system for consumer banking. We combined those two under Q2. It's a great modern platform, has a great mobile app, and it's a great foundation for growth for us. We've also done a lot in the CRM space. We've started using Salesforce here in the last several years. Salesforce as a tool started out as things like referrals, things like customer needs analysis, and now we've added a lot of functionality there.
It has become kind of the primary place for case management as well for the organization, and so that means if you're a frontline banker and you cannot do something yourself, you can't fix something or service something yourself, you do the case through Salesforce, and it has a really nice capability of sending things to operations, fraud, risk, and telling you where it is in the process, so it's a big step forward for us as far as automation, and we continue to add functions and features to what our customers see, so we've added RoundUp Savings, that is something that American National have, and that's growing very quickly. We have a treasury management bundled product now for our business customers, for our smaller businesses, and we're relying on things like Refer a Friend and Solutions Banking, which is our Bank at Work program, to organically grow customers.
Then you can see we have plans for the future, lots of plans, actually. I'll talk more about them here in a minute. But for one, for sure that we are focusing on is business banking, small dollar lending. So when you look at nCino, which is a tool that a lot of our RMs use today, we are working on adding a suite of products to that that allow very fast, efficient, and easy lending to small businesses. And so that will really expand both the businesses we go after and the bankers who can do that lending. We also are going to replace our online origination, that's account opening, and our in-branch origination account opening. That's what we're looking to do. We're looking at the right vendor for that. But that will do a lot of things.
It'll speed up both the work that a banker does and allow us to do more online origination. I want to talk more about the North Carolina expansion, but I'll do that here in a minute, and then, as Maria has mentioned, customer experience, customer focus is kind of how you drive business in our market today in my line of business, and having Q2 as a foundation really helps us with that, and so to give you a feel for that, there's a marketplace in Q2 and an accelerator where they partner with fintechs, and you can use those fintechs to do anything from a tool for the youth market. You could add services around card activation and chargebacks. You can do charitable giving. You can do goal-based savings. There's lots of functionality that we can add.
So I think that allows us to move into new segments and also keep up with some of the fintech banks that are out there today. All right. So this slide really tells the story kind of of the two things that have remained a priority for me and my line of business since I joined the bank. One is efficiency. And so for sure, we have worked really hard to make sure that our branch network is efficient. In 2019, early in my tenure, we had 155 branches, and those branches had $79 million in customer deposits per branch. We worked to bring that number down. We optimized the branch network. We looked at places that were underperforming or that didn't have a lot of transactions. And you can see we grew that over time.
And then you add in a couple of acquisitions where we were fortunate enough to have overlap. So branches sometimes were right across the street from each other. And we continued to grow that average balance per branch. So we're up to $167 million in customer deposits per branch and 178 branches. We're very happy with that. That looks a lot like a large bank organization. And so at the same time, we do have a little bit of growth planned here. And I'll talk about that in a minute. We are going to add a few branches in North Carolina, but we will continue to focus on efficiency here. That is kind of a primary goal. But the other side of that is making sure that we continue to be known for our customer service.
And that is something that we've had a long history of, and we certainly didn't want to lose it as we became more efficient. And I think we can say we have not. I think we have done a really good job in that space. Our customer attrition percentage is some of the lowest of any of our peer group. So we can continue to keep our customers for longer than most other banks. And when it comes to things like J.D. Power, we've won that several times for best retail bank. We're almost always in the top three each year from a J.D. Power perspective. And so I think we've balanced that pretty well. All right. Talking about our strategic objectives, organic growth, you've heard a lot about that today. Core deposits, that will always be a primary goal for us.
We always have to maintain strong deposits for the bank. Lending and lending growth, making sure that we have a good source of fee income and continue to be a fee income driver, building for scale and customer engagement. But the three that I want to kind of highlight for all of you today are organic customer growth. And a big part of that is the acquisition we just completed and the integration we just completed and how do we really leverage that? And then new-to-bank customers, how do we bring in more new-to-bank customers in my line of business? On the lending side, I talked about a new tool for business lending that will help us grow. HELOC has been a good business, and that is something that we should continue to grow.
And then SBA lending is something we're relatively new at, but we see a lot of promise with. And then on the customer journey side, when we get to the point where we've upgraded online origination, in-branch origination, and continued to expand our mobile and banking capabilities, we will be in a very good space. All right. So how do we do it? How do we deliver on the great opportunity we got with Sandy Spring? We have an excellent teammate base in that market, and we have got fantastic customers. There's tons of prospects in the market. And so what we bring is kind of a clear separation of operation and sales and service. And so we have what we call ROMs, Regional Operations Managers. For each market, there is a ROM who handles all of the operational and regulatory issues a branch may have.
And then the market leader, their role is all about sales and service. And so they are there to make sure that our service is excellent, that our service playbook is being followed, and that we see really good sales. And when we say sales, that means deepening customer relationships. That means organic growth of new customers. That will really be the goal there. And we'll know we've been successful there when those metrics for those branches we've acquired start to look like the metrics that we see in the rest of our legacy footprint. So that's what we'll be looking for, is that our model has driven those increases in metrics. And we can't just grow in the Sandy Spring footprint. We have to also grow in our legacy footprint as well.
And so we have been very, very focused as an organization on deposit growth, as most banks have been. And so we are also going to make sure that we don't fully pivot, but pivot a little bit to a focus on operating accounts, on checking account origination, new customer origination. And so that's something that we'll do with promotional offers. We'll double down on the Refer a Friend piece that we're using. Our Solutions Banking team will work really hard to bring in more business. And then online origination is something that we can expand and we can expect to grow. I've talked a little about lending. To really see success there in my world, we will add to our mortgage team. We're going to add originators, both in-footprint and out-of-footprint, to continue to grow that business.
For those of you who don't know, we inherited a very nice mortgage business from Sandy Spring. And so combined with our legacy business, that is a real growth opportunity for us. But that won't be the primary driver, obviously, of loans for our organization, but it's still a good business. And then we will have a good chance to grow home equity, both online and in-branch, just because there is so much opportunity right now in home equity lending. And then on the business side, I think the biggest opportunity for us, the one that I guess I would take away from this, is when we bring in new tools that allow us to originate small business loans easily, quickly, get really, really fast approvals and fast closings, that means we now have 178 branch managers who essentially become business lenders.
And so it takes a relatively small team of business bankers and expands them three or four times and gives us the chance to much more quickly grow our business banking portfolio. I've already talked a lot about technology. You can tell that we spend a lot of time on it with the mobile and online banking, with Salesforce. We've also completely replaced our call center technology. So 8x8 has been something we've had in place for a couple of years. That's all the telephony that is used in the call center. That is something that has already been completed. And then I've talked about the fact that we're going to add a new origination tool. We're going to add new lending capabilities. And then AI. So AI in my space is largely right now around call center opportunities.
And so if you think of things like quality control, think of things like training of new agents, and you think of things like chat, those are all very much in the AI space. We haven't made any decisions there yet, but that is certainly something we're looking at about what we can do to become more efficient and add value in the call center space. You've heard a little about North Carolina today. It is a big opportunity for us. I'd say it's still not as big as making sure that our integrations are all complete and that we've grown there the way we want to, but it's something we are focused on.
To tell you kind of where we came from, where we're headed, we had some legacy branches here on the coast of North Carolina, and then we've also had some in the Piedmont Triad that we've gotten recently through a recent acquisition, and so we have 11 branches today in North Carolina, and those are kind of spread out. You can see, geographically, we're on the coast, and we're on the Piedmont Triad. There's really nothing in the middle, and so this gives us the opportunity. Raleigh is one of the fastest-growing markets in the country. Wilmington is the same. It helps us kind of start to fill in the state a little bit, and we were very careful as we looked at this to make sure that as we went through it, we thought we would get enough scale in these markets.
That's why we picked two, is because we thought we'd get enough scale in these markets to compete. And so we are adding 10 branches. We are in some form of contract or some form of negotiation on all 10 of those branches. Some are new build, some are existing buildings. But over the next three years, we will build those out. We will have 86 ATMs here relatively shortly with a partnership with NCR. And so that, again, will add to our brand there. It's in major retailers throughout North Carolina. And then we have the support of wholesale bankers, mortgage bankers, business bankers, both sides of the wealth teams, the financial advisors, and the trust folks all will be supporting these teams. So we think there's a really good plan for growth in these markets. I'm not going to talk a lot about SBA.
SBA is something that was relatively new to Atlantic Union, and it was also relatively new to Sandy Spring, but our program had been, the legacy program, I should say, had been mostly focused just in footprint, whereas Sandy Spring was working on a program that was multi-state, so we've combined those two capabilities, and so now we have an SBA program that is both in-footprint and multi-state. It's a great opportunity for fee income. It's a great opportunity for growth, but it is something that is still a work in progress. I'm not going to talk too much about Atlantic Union Financial Consultants, the financial consultant business, other than to say that the opportunity is up in Maryland, and so today, there are no financial advisors supporting those branches.
And so we will add capacity and capability up there, both for fee income and for kind of depth of wallet of our customers in those markets. And last but not least, we are working a lot in building for scale. We've spent a lot of time and energy thinking about our technology stack. Matt's going to talk a lot more about that. But we really want to make sure, first and foremost, that we consolidate systems. I think that's a really important thing for my teams. Generally, my teams don't have super long tenures, and so they need to learn the systems quickly. Our customers need to be able to understand the systems very quickly. So making sure that we have as few systems as possible that do as many things is kind of the goal.
And that's why things like Q2, where we take one business banking system and one consumer system and combine them, or Salesforce, which has now started to take a lot of different systems roles, that is the goal here so that we have as few systems as possible to interact with, as little to train on as possible. And I think we're making a lot of progress on that. So that's a little bit about my line of business. I will next invite Matt Linderman to join us. And maybe I'll even change it for him. And Chief Information Officer for, yeah, of course, for Atlantic Union Bank.
Thanks, Shawn. Appreciate it. Yeah, of course. Thanks, Shawn. Good afternoon. Thank you for the opportunity to talk a little bit about the technology portion of our corporate strategy. Move over here. I joined Atlantic Union Bank approximately three years ago, it'll be three years ago in February. I'm extremely proud of a lot of the accomplishments we've made. I would say I'm equally excited about the agenda ahead, which is really what we're here to talk about today. We know that technology is critical to the business. We aim to be the trusted choice to deliver that technology to our business partners and ultimately to our customers. So since we last talked, we have made some changes. So we've evolved the technology organization. We've brought together what was a digital organization and an information technology organization into a single organization.
I'm really getting the efficiency and synergy of bringing all of technology together. On this slide, you'll see a representation of the key areas that are in the scope of that technology organization. We've also focused on a really clear vision. I touched on it a bit ago, but it's really about this vision of we want to be the trusted choice internally to bring solutions to the business that meet or exceed their expectations and our customers' expectations. And you see the word delight there. We aim that very intentionally. That is our goal. In the last roadmap, we laid out a number of areas, goals, and objectives that we were aiming for. And I'm happy to report we've made really good progress on those. I'll highlight a couple of, I would say, the most notable successes on those.
Number one, we did a very robust industry evaluation and selection, which led to the implementation of what we've heard as Q2, replacing all of our online and mobile digital channels. We've created a much more modern and seamless experience, particularly for consumers that spread that line between consumer and commercial. As you've heard in both and all of Maria and Dave and Shawn's presentations, we've delivered on a number of modernization initiatives. You've heard about Salesforce. You've heard about nCino. There's multiple other examples of that where we've moved to a much more modernized technology platform. Finally, over this period, we had two of the major acquisitions, as you're well aware of, and the system conversions of those went very, very well.
A great indication I use of that is after the Sandy Spring conversion, we were back to BAU business-as-usual call volumes in our care centers within six business days. So very, very good system conversions in both of those. As I look forward, we've refreshed those objectives, and you'll see those here. In no particular order, I'll touch base on those very quickly. So first is leading with data. So we continue to focus on leveraging high-quality data internal to our organization. We know that that's a competitive differentiator. We actually know that that's going to become increasingly important as we think about the rise of artificial intelligence. The data underneath that's critically important. Soundness. So we continue to be stewards of data security and data quality internal to the company. We know that's critical. That will always be a priority for us. Build or buy.
So as we grow, we expect that we're going to see some shift from where we're at today, where we primarily buy vendor solutions. We will see a shift to where we start to build some of those solutions where it's competitive. And what I mean by that would be if we find that the vendor product doesn't offer the capability that we think is competitive, or if we think there's a time to market play, we may choose to build some of that capability versus buy it. Leveraging and elevating customer experience. With the new modernized platforms you've heard about today, we want to continue to leverage those now to bring up the customer experience. So if you think about Q2, we moved to that platform now to about how do we continue to leverage that?
On the modernized front, you heard a lot today from Maria, from Shawn, from Dave. There are still a number of capability opportunities that we know tech needs to be brought to bear on. I think we're very well aligned on those, and it is our goal to continue to drive modernization into those areas. Lastly, the topic of AI, so it's everywhere. We see and embrace the power and importance of AI here at Atlantic Union Bank. I continue to say we're going to pursue it aggressively, but not recklessly. I think that's very intentional and important. We'll talk more about that shortly, but now I'll dive a little deeper into a few of those areas. We'll start with leading with data. As I mentioned, we continue to see data as a competitive differentiator for us.
We have spent a lot of time and energy really building our data environment. We will continue to do that to aim to be a very strong data-driven organization, really putting data into the facets of all of our business areas. Our goal is to ensure that the business has the data they need with high quality when and how they need it, and we'll continue to do that. As I mentioned, as we continue to see AI rise, the data underneath it, the quality of that data is critically important. So we are continuing to focus on bolstering our data governance and data quality programs and processes to make sure that we're ready for that journey. When we look at AI, we're taking a phased approach to AI. We've started by really looking internally and defining the right governance structures and processes around AI.
We know it's a powerful technology. We have to make sure we have the right policy and probably more importantly, education and fluency across our teammates of how to use AI and how to not use AI. We're really in what I consider a test and learn phase now around AI, where we are pursuing AI use cases that I will call lower risk. These are typically going to be internally facing teammate productivity use cases. Examples I would give are how do we put AI in the hands of our teammates for daily activities to improve their productivity? It might be drafting emails. It might be summarizing documents. We're leveraging Microsoft Copilot to provide that capability out to our teammates in a controlled and governed manner. We're also looking at things like code development.
So we leverage a product called Claude Code that we are now starting to use in our development communities. We're seeing roughly a 10x increase in productivity around coding exercise. We've actually sort of piloted against an application that was previously built without it and then leveraged Claude Code. And we saw about a 10x increase, which is excellent. As we gain more learning in these safer use cases, we're going to start to expand that out and think about more business and customer use cases. Probably one of the front ones that's top of mind is exactly what Shawn mentioned around the care center. We think there's some really good application of AI into the care center, and that'll be one of our fast followers we expect. I think it's worth noting we are treating deployments of AI much similar to as we think about deployment of other technology.
There's this notion of what's the value, what's the cost, what's the risk. So we are taking a measured approach to make sure that we are getting the value out of our AI deployments, which I think is important. On this slide, you'll see a reflection of, as I mentioned, we're focused on operational efficiency. There are multiple categories that I fully expect us to examine from an AI standpoint. I know that those will happen over time, but I think it was worth calling out. There are a number of areas that we know will become important as we think about AI, and we expect to likely dabble into all of those as we move forward. I talked a little bit about the progression of AI.
What you'll see here is reflective of pretty much what I said, which is we're really in this near term, intermediate term, which is a lot of the building the internal readiness for AI. It's about deploying those lower risk use cases, preparing for that longer term where we see some of those potentially more customer-facing type use cases to follow. Okay. As I mentioned, we're formalizing that governance and building fluency. I think you'll continue to see more and more of these targeted AI solutions as we move forward. I'm going to talk a little bit about elevate customer experience. As we heard in Shawn's presentation, we did spend the last year migrating over from multiple digital solutions to our target state platform of Q2. Very excited about that. Now it's about how do we continue to build on that platform, leveraging the marketplace, which you heard from Shawn.
How do we continue to build the customer experience and set of capabilities now that we're onto that target state platform? So I think you'll continue to see us increase our focus on that, building that out as we move, starting to look at things like adoption and utilization, which we fully expect to increase as we build out more and more capabilities there. The other piece I wanted to call out around customer experience is this notion of availability and quality. It's really critical that we ensure that the solutions we put out there are up and available when our customers need them. To that end, we are increasing our focus on how we ensure the availability of those systems. It's our goal to ensure that we always know first if there is a technology issue that's impacting our customers.
We want to be that early warning and that system whereby we can react quickly to mitigate any customer impact around availability or quality. To do that, we're building capabilities that really blend technology and teammates to have a really strong early warning system and first line of defense where we're tracking that customer experience. We know when it starts to degrade or there are issues, and we react very quickly. The last topic for today for me is around cybersecurity. Certainly not because it's not important. It is always a top priority to ensure that we remain sound and safe. We continue to put strong focus on cybersecurity. We all know the cybersecurity environment is one of rapid change and increasing risk. We are ready to rise to meet that threat.
We are ensuring we have the right people, process, and technology to allow us to remain well-positioned against this changing landscape. One thing worth calling out, we are doing what I call shifting left when we think about our security. And what I mean by that is we are trying to be very intentional about making sure that security is part of how we do all of technology from the start. So as businesses develop ideas and start to move into thinking about building technology solutions, we need security engaged then so that we're building things right from the start with security as a birthright within it. So we will continue to do that. We believe that's going to yield great dividends from a security standpoint.
Lastly, security is one that we need to continue to prove and be able to demonstrate our capability and then demonstrate that we're doing the right thing. So we're spending a lot of time thinking about how do we improve how we measure and prove out our security posture. We think that's going to ultimately allow us to not only have that posture, but to be able to communicate that and really measure that and ensure we're hitting the right mark and protecting our stakeholders, our customers, all of the above. So in closing, we're coming off what I would consider some really great wins for the technology organization here. We are leveraging that momentum going forward. As you heard, we've got a lot of exciting things lined up with our business partners to leverage technology.
I'm incredibly excited about the role the technology organization is going to play in that. And with that, I will now hand off to Rob Gorman, our Chief Financial Officer.
Well, thank you, Matt. And thanks for everybody being here today. We really appreciate that and those on the line as well. So as Matt said, I'm Rob Gorman, the company's Chief Financial Officer, a position that I've had the pleasure of holding since Atlantic Union for almost 14 years when it was known then as Union Bank and Trust. As I can tell you, the bank has been transformed, and you've heard that today significantly since then.
Let me start off my comments by noting that what I hope you heard throughout the presentations today is that we believe that Atlantic Union is built to differentiate itself from the competition in our markets and is well-positioned to generate above-average returns for our shareholders. As noted throughout the day, we believe we have a dense, uniquely valuable presence across several attractive markets with significant organic growth potential. Combined with a strong balance sheet, a conservative credit mindset, and ample capital to support our organic growth objectives, we believe that Atlantic Union is primed to generate top-tier financial performance and long-term shareholder value. As Shawn noted, over the past eight years, AUB has transformed significantly, evolving from Virginia community bank into the number one regional bank headquartered in the lower Mid-Atlantic based on deposit market share.
This was an intentional strategy that was achieved through deliberate organic growth and four targeted acquisitions over the past eight years. With that now accomplished, we are laser-focused on demonstrating our organic growth capability, shifting away from the deployment of capital for bank acquisitions to capital creation and tangible book value for share growth with the goal of proving out the potential and earnings power of the franchise we have built. We have created a banking franchise that we believe can't be replicated with strong scarcity value underlining the company's valuation. That said, our executive leadership team understands that we must earn the company's independence by consistently delivering top-tier financial performance and creating shareholder value. We think Atlantic Union has been a successful growth story. When I started with the Union Bank and Trust, as I said, in 2012, we were a $4 billion organization.
Fast forward 13 years, we are now approximately 10 times that size in terms of assets, loans, and deposits. More recently, since 2017, we have grown loans at a compound annual growth rate of 19%, while deposits have grown at a 21% annual clip through the third quarter of 2025. Of course, part of that balance sheet growth was driven by the acquisitions of Xenith and Access in 2018 and 2019, respectively, and American National and Sandy Spring in 2024 and 2025, respectively. Excluding the impact of these acquisitions on an organic basis, we estimate that loans and deposits each have grown a respectable 7% annually since 2017.
One of the themes that we hope came through today is that now that we are a mid-sized bank with $37 billion in assets, we believe we have the scale to make the necessary investments to further grow our business lines and to invest in next-generation technology that will allow us to remain competitive, and as you all know, scale is critically important. It will allow us to invest in the numerous opportunities to grow our business lines by expanding the products and services that our clients and customers want and to enhance our omnichannel capabilities through further investments in digital technology and fintech solutions. We also have the scale that will allow us to invest in AI and other tools that will make our teammates' jobs easier and make them more effective and efficient as they serve our clients across the franchise.
As we've said many times in the past, we are committed to generating top-tier financial performance results on a sustainable basis versus our proxy peer group, peer banks, as measured by adjusted operating return on tangible common equity, adjusted operating return on assets, and adjusted operating efficiency ratio. As you can see on this slide, the company has made significant improvements on each of these metrics since 2022, and we are pleased to note that our adjusted operating return on tangible common equity ratio and our adjusted operating efficiency ratio metrics placed us firmly in the top quartile of our proxy peer group's financial results in 2024 and through the third quarter of 2025. From a shareholder stewardship and capital management perspective, we remain committed to managing the company's capital resources prudently as the deployment of capital for the enhancement of long-term shareholder value remains one of our highest priorities.
Regarding the company's capital management strategy, capital ratio targets are set to maintain the company's designation as a well-capitalized financial institution and ensure that capital levels are commensurate with the company's risk profile, capital stress test projections, and strategic plan growth objectives. At the end of the third quarter of 2025, Atlantic Union Bank shares and Atlantic Union Bank's regulatory capital ratios were comfortably above well-capitalized levels. In addition, on an adjusted basis, we remain well-capitalized as of the end of the third quarter if you include the negative impact of AOCI and held-to-maturity securities' unrealized losses in the calculation of those regulatory capital ratios. As noted earlier, our current capital levels, coupled with our expected ongoing capacity to generate significant levels of internal capital, provides us with confidence that we have ample capital available to support our organic growth objectives that we've discussed today.
As noted on this slide, our capital management priorities are first to support organic growth and second to seek to maintain a competitive and sustainable common share dividend payout ratio target of between 35% and 45%. In addition, we may deploy excess capital that is generated to repurchase common shares if we believe such capital deployment will create shareholder value. We define excess capital as Common Equity Tier 1 capital ratio at the holding company level that is greater than 10.5%, which is expected to be achieved in the second quarter of 2026. Since 2017, the company has returned just under $1.1 billion, or 55% of total operating earnings, to common shareholders while maintaining strong capital ratio levels, both through common dividend payments totaling approximately $753 million, which has increased at a compound annual growth rate of approximately 7% since 2017.
And we also repurchased shares amounting to $303 million from 2019 through 2022. Atlantic Union is committed to achieving top-tier financial performance and providing our shareholders with above-average returns on their investment, regardless of the operating environment. And as such, we have set our medium-term financial targets to the following: return on tangible common equity within the range of 19%-20%, a return on assets in the range of 1.4%-1.5%, and an efficiency ratio of between 46% and 48%. Our financial performance targets are dynamic and are set to be consistently in the top quartile among our proxy peer group, regardless of the operating environment. As such, we reset these targets periodically to ensure they are reflective of the financial metrics required to achieve top-tier financial performance versus our proxy peer banks in the prevailing economic environment.
As noted on this slide, we are maintaining our full year 2025 financial outlook and our financial outlook for the fourth quarter discussed during our third quarter earnings call. At this time, we believe we are on track to meet these near-term expectations. As noted on the next slide, we've provided our full year 2026 financial outlook for AUB. We currently expect loan balances to end the year between $29-$30 billion, while year-end deposit balances are projected to be between $31.5-$32.5 billion. On the credit front, the allowance for credit losses to loan balances is projected to remain at current levels in the 115-120 basis point range, and that net charge-off ratio is expected to fall between 10 and 15 basis points in 2026.
Fully taxable-equivalent net interest income for the full year is projected to come in between $1.35 billion and $1.375 billion. And as a reminder, we consider accretion income resulting from acquired loan interest rate marks as a built-in scheduled accounting tailwind to our GAAP earnings. And net interest margin, as the accretion income related to the loan interest rate mark is expected to gradually transition to core cash earnings over time as the loans obtained through acquisitions either mature or get renewed at current market rates. As a result, we are projecting that the full-year fully taxable-equivalent net interest margin will fall in a range between 3.90% and 4% based on the assumption that the Federal Reserve Bank will cut Fed funds rates by 25 basis points in March and June, and that term rates will remain stable at current levels.
On a full year basis, non-interest income is expected to be between $220-$230 million, while our adjusted operating non-interest expenses are estimated to fall in the range of $750-$760 million, including the expense impact of our North Carolina investment and other 2026 strategic initiatives, many of which were highlighted today. Based on these projections, we expect to generate growth in tangible book value per share of between 12% and 15%, produce financial returns that will achieve the medium-term financial targets I just outlined in 2026, which would place us within the top quartile of our proxy peer group and meet our objective of delivering top-tier financial performance for our shareholders. In summary, we have created the largest regional bank headquartered in the lower Mid-Atlantic, operating in what we believe are some of the most attractive markets in the country.
We are well-capitalized with a strong balance sheet and conservative credit culture, and we expect to benefit from the significant future capital generation, which will support our organic growth and strategic objectives. And we are committed to achieving top-tier financial metrics on a medium-term basis. In closing, our executive management team remains focused on leveraging the valuable Atlantic Union Bank franchise to generate sustainable profitable growth and is firmly committed to building long-term value for our shareholders. With that, let me turn the stage back over to John for his closing comments. Thank you, John.
Okay, Rob, thank you very much. I'll make this quick, and then we'll handle questions. It should be evident by now that Atlantic Union Bank has, in fact, been a story of transformation. We have done exactly what we said we would do.
We have evolved into what is effectively a small regional bank that still maintains the heart and the soul and the characteristics of a community bank, but it is far more capable. We are built to be an alternative and a challenger to the larger banks who dominate these markets while still being flexible enough and responsible enough and as flexible, responsible, and knowledgeable to compete with the community banks too. Now, this is coming off of a three-year strategic plan. That is the basis of what you've seen today. What will Atlantic Union Bank look like in three more years? Recall, we've been very clear, very transparent in terms of what we intend to do. It's a pretty simple story.
In 2028, our vision is to maintain a dense and contiguous franchise, expand and diversify our business lines, differentiate the customer value proposition through personal and digital delivery, optimize, digitize, automate operations, soundly manage enterprise risk, and preserve the trust, which is strong, that we have with our regulatory partners, acquire, retain, equip, and empower our talent, optimize the operating leverage, and consistently deliver top-tier financial performance. We may supplement organic growth through strategic opportunities. Traditionally, this has meant whole bank acquisition, but there's been a lot more to it than that: financial technology investments that we've made in various funds, the RIAs that we invested in and, in fact, later divested because they were subscale. So there are other initiatives that we may look into that are not whole bank acquisition that could make sense from a strategic standpoint that can help us meet our accomplishments.
Said differently, we're still going to look like us. We should have been able to demonstrate reasonable organic growth and put up top-tier financial performance. That's what you should expect to see from Atlantic Union Bank. I hope what you've heard today gives you a degree of confidence that we do have a plan, and we do have the momentum, and we have really reached a critical mass in the company where we can do this. And we are excited for the new year. I acknowledge that we have had two years that have had merger-related expenses in our financials, and I think what you will begin to see in 2026 will be much cleaner numbers demonstrating top-tier financial performance. At that point, we are ready. Rob, I'll ask you to join me. I suspect that you may get a few questions.
Bill, do you want to give guidance for us in terms of fielding questions?
Yeah. Yeah, we'll do questions. I know people do have a timeline to try to get out of here, so we'll try to do one question at least per person. I know there's a lot of people who want to ask questions, so we'll go as long as we can, but let's just try to.
Thank you. And I will point out, as I mentioned before, essentially the whole executive leadership team is here in the room. And so depending upon the nature of your question, I may call on some of the leaders who you did not hear from today, but everything is fair game.
So if you have a question, maybe the best way to do it, given the construct of the room, if you'll simply raise your hand, we'll bring a mic over, remembering that we are being recorded so that it's important that we use the microphone so those who are watching on the recording, be it live or later, can hear you. What can we answer for you? David? Oh, sorry. We'll come back to you.
Brian Wilczynski from Morgan Stanley. Thank you for all the great presentations today.
John, when you think about the organic growth outlook, clearly a lot of great work going on at AUB, what are the maybe two or three areas that you're really most excited about, where you're seeing the most momentum today that you think will really show through over the next 12-18 months, especially when you think about the 2026 outlook that Rob delivered before?
I think, Dave Ring, I'll ask you to come join in on this one. The wholesale business, which wholesale, by the way, means the commercial businesses. We call it wholesale banking because if I said to you commercial banking, that is but one of many related businesses that are business to business. That has really been arguably the fastest growing part of the company. And things like the equipment finance division have been a tremendous success for us.
I think about the additional capabilities that we bring to the table for the former Sandy Spring franchise. We bring more tools. We're not constrained by liquidity, by capital. What are your thoughts in terms of where do you see the most excitement and opportunity, Dave?
Well, it's hard to answer that like where's the most. So when we look at organic growth opportunities, Virginia is still our market share in Virginia is still relatively low, especially when you move upmarket. So upmarket capabilities and upmarket opportunities in Virginia. In Maryland, we do have a great team there, over 40 bankers there now. That's leverage we never had before in Maryland. And then when you look in North Carolina, there are very few banks that play the way we play in a state.
And so we feel like we're very differentiated, even though there are a lot of banks like in Charlotte. There are 48 banks competing, for instance. We feel like we have a place there that we could take share where we don't have any share at all. So there's a lot of open opportunities where we have very low share. We could move up to the middle market, but then we have the specialty businesses, which we are expanding. And those businesses typically grow faster, shorter sales cycle, less you don't have to wait six years to get an opportunity. So we feel like those are very good too. And then the last thing is the fee opportunities we have. We've been growing our fee businesses fast, and we always like to look at fees as a complementary income stream to net interest income. So we're really focused on that.
We see great opportunities there too.
And Brian, one thing I would add from my perspective, I'm going to quote Dave Ring. You said something which made an impact on me a while back. You've been here eight years. Dave, if you didn't know this, joined us from Huntington, where he ran middle market. Dave used to be the regional head for Wachovia from Virginia up to Massachusetts. We go way back. You were commenting on the number of levers we have to pull in the company today versus what we saw when you and I got here. You came a year after me.
That's why it's hard to answer that question.
So we don't want to say, "Here's the one thing we're going to do, and it's going to make it all work." That is not us. This is a diversified company with a diversified set of businesses.
Base hits are okay. It's a good thing, so Brian, I think what you'll see is we got a pretty diverse set of opportunities. No one is going to be just a knock it out of the park kind of thing, but we should be able to grow pretty much all these businesses. We are big enough now to where we do have diversification across the markets, across the business lines, and Shawn, I don't want to put him on the spot too much, but small business lending, we can do better at that, and the tools that are coming online that should unlock the retail branch network to be more productive there will be helpful too. No one big thing. David, I think was next.
Thank you, John. Dave Sokol with Teton Capital. As you know, we've been a long-term shareholder and a supportive shareholder, I think.
Thank you.
In fact, we've purchased shares over the last several months significantly. An observation and then a recommendation. The observation is the presentation is great. You've got a great market. You're well-positioned in that market. You've got a good team, I believe. But the slide that's missing is shareholder return. And if you go that same 2017 till today, even with today's move in the market and your stock, we've underperformed any index out there, banking, S&P, Dow, you name it. And basically, the return has been the dividend, which over that period's averaged a little under 3%. But without that, it would be a negative return for that period. I think one of the reasons for that is your board is focusing you all on the wrong metrics. Top-tier performance, to be honest, in the companies I've run, I would never be satisfied being top-tier.
Being the best would be the target. And the problem with top-tier is it moves all over the place. And if you look at last year, by your numbers, you all made the top-tier, even though that index substantially outperformed AUB. And yet bonuses were enhanced based on "meeting top-tier." I think you've got to start getting down to the same digital level of management that you're doing elsewhere in the bank on what you commit to with your shareholders. I think it's correct that you have 34-some elements to caveat any projections you give. You can't control the world. We get that. But with that, there's no reason at all not to be giving a range of 2026 earnings per share numbers that we can get our mind around and that we can measure management against.
Recognizing, let's say, $4-$4.25 a share coming into that, the economy will play a role, unemployment will play a role. We get that. But it gives us something to measure against versus today, the numbers, we can't, frankly, make head nor tails out of them, given that there's a lot of accounting adjustments for the mergers that will continue for another period. So I would really urge that the board move away from this top-tier. I mean, I think it's useful, but as an example, tangible book value return, when your tangible book value hasn't moved in seven or eight years, is kind of a phony metric. Because if you keep reducing your tangible book, the return on it probably goes up, but that doesn't mean it's good for shareholders.
So I'm just suggesting that more analytics available and transparency, I think, will because, frankly, the stock should be in the mid-40s if this slide presentation is what I think it is, which it can reflect the future. But you've got to chase those earnings per share numbers as hard as the customer numbers and all of that.
Okay. There's a lot in there. I appreciate that. I agree with you that, wow, that's one long question. Let's try to break it apart into pieces. Let me start by saying I absolutely agree that the stock value should be higher than it is, and we've been disappointed about that. We have seen underperformance in the share price since the Sandy Spring merger was announced. That is a fact. Specifically, we saw it gap out, not so much at the announcement.
It began with a lot of the Washington job cut noise, which has really not been an impact to us, certainly not been a credit event, and then it further materially gapped out on the Liberation Day tariff announcement, which has been curious to me because we've not had any meaningful tariff impacts, probably less so than most markets, but nevertheless, David, we are a show-me story. Your point that you're making about taking today's share price and benchmarking back in time, that is a different analysis from a time series of what has the stock done year after year after year over, say, the last 10 years or so. That will paint a different story, so I think we're a show-me story right now. We do think that we have the fundamentals, which we expect to deliver on, that hopefully the market will respond to.
I'll start with that point. Rob, anything?
Yeah. Yeah, certainly on the guidance that we talked about, we give a lot of line item type things that kind of get you to you have to do the work to get to the EPS. We'll certainly consider that. I think it's a good point, David, that we'll take a look at whether we provide a range, to your point, about EPS expectations in 2026 and in 2027 alongside those top-tier returns that we're talking about. It's a good thought.
Yeah. Yeah. And also, regarding the understanding your point as well on growth and tangible capital, remember, this bank has returned just under $1.1 billion of capital to shareholders, 75% of which was done through dividends since 2017, 30% of which was done through share buybacks, which I think some forget that we did a few years ago.
If we had a much lower dividend or no dividend and did no share buybacks, we would have more capital for sure. I think what you're really pointing to, though, is we have invested capital over the last two years, tangible capital in the acquisitions that we've made. That is true. I clearly pointed out we have invested capital and we have deployed capital to build this franchise. This franchise would not be as powerful from a market and economic standpoint or as profitable had we not done that. We now move, as I clearly said, from capital investment and capital deployment into capital generation. We've been very clear on that point. And so I think what you will see now is we'll demonstrate the power of the franchise, make the case that it was worth the investment. So I agree with you on that point.
I hope that point is clear.
And I would say I have a separate topic, but my comment I wanted to say is I really was encouraged that you added tangible book value per share growth to your list of targets because that's new. This is the third investor day I've been with you, and that's a new line, which shows your commitment to book value growth with a clear history.
Exactly what that means. Right. Back now to capital generation versus capital deployment, so thank you.
Thank you for that, but my question is just if you could take a step back on the Sandy Spring acquisition. There are a couple of dynamics there that I think that we've been waiting to see, so one is that was a very CRE heavy bank.
And there's a little bit of a story that there's more of a C&I growth opportunity in the Maryland, not DC, the Maryland market.
Thank you. Very good. Thank you.
And so have you hired more C&I lenders? What does that look like? And so can you just talk about kind of the talent shift in that market? And then separately, it's kind of along the same lines, but I'm just going to put in one question. Is down in North Carolina, if we think about hiring efforts down in North Carolina, so Pinnacle, Synovus is on a spree to hire 225-250 revenue producers a year, right? And it's across a bigger geography, but North Carolina and DC are in that geography. You've also got other, but you've got TowneBank, Dogwood, you've got other banks kind of in those markets, and they're aggressively hiring and building talent.
So how do you think about growing those markets and adding new talent, and what do you bring versus some of those other peers that are being just as aggressive? And within that, does the cost of new revenue producing, does that cost become higher as you have to bring on really good talent?
So Dave, I'm going to ask you to start. Jay O'Brien is here in the room too. So Jay, it might be good to have you weigh in. Jay was Chief Banking Officer at Sandy Spring, is now a member of our executive leadership team, and Jay leads the Maryland and Greater Washington markets, which mean Northern Virginia as well. So think of that as the former Sandy Spring franchise. From my perspective, we'll start with Maryland, then we'll move south. Sandy had very good skill.
We do bring more capabilities and products to the table, be it foreign exchange, equipment finance, ABL, you name it. Jay, what's your perspective in terms of the outlook for C&I and the former Sandy Spring franchise?
Yeah. I mean, I would say overall, the merger integration work has gone really, really well. We focused on banker retention as a means for client retention. It's easier to maintain clients when you don't disrupt relationships. And that's gone really, really well. Obviously, we're through a successful conversion. Everything's gone very well. Inconveniences with clients are in the dozens, not thousands. So it allows you to get back to more business as usual.
We've had very good success, as Dave mentioned earlier, bringing the fullness and capabilities of the bank to this new client base, particularly in the Maryland markets in the form of capital markets and treasury services, and just having more scale to lend. Some of the strategies that Sandy Spring had employed pre-merger in the C&I growth have continued on and are showing good progress as well. So we're quite bullish. I'm very encouraged as I travel around the footprint and talking with our market presidents and group leaders. There's not one that doesn't think we can be the dominant player in each of their market areas with a real focus on the commercial side of the house. So we're excited about it.
Sandy was not just a community bank. Sandy was not a small community bank that mostly did real estate.
So they had good skill and capability in there.
I'll just add they segmented the business between real estate and C&I before we acquired the bank. So they already were moving in the same direction we've been moving. So the assimilation to the way we do business and all that stuff was easier to kind of overlay on that group of people. So it's made the adoption very much better and much faster. So that's why we think that's going to be very helpful in that space.
And then, Dave, on to the Carolinas. There's strong demand for commercial bankers everywhere. But yes, you specifically referenced Pinnacle. We would mostly see them in the Carolinas in our footprint.
It's an expensive place to hire right now. But we had a good number of people in place already.
So we feel like we have kind of that, call it 1 million to 75 million size company covered with the names we already have, with the number of people we already have. We want to get that higher layer, the people that go at the higher layer. We've already added a couple. And we're fighting all those other banks that have made announcements for the same people. But what they like about our model is really our bank culture. It's a different place to work. And so that's where we're able to attract talent when they start meeting our people, learning about the culture. And we just hired somebody that started yesterday that took less money to come here because of the culture, because of the opportunity they thought they had.
So we're playing the culture game and the rest of the stuff that everybody wants, pay and all that kind of thing. But not necessary. Plus, since we don't have these established prospects over a certain dollar amount, these bankers can bring names into the equation that they already bank, and it's going to be very helpful to us.
Okay. We're going to do Dave Bishop and then Stephen Scouten.
Okay. John, and maybe a question for Dave as well. I appreciate the guidance. It looks like you're holding the expectations for fee income around that 14% level in 2026. Just curious where you introduce some of these new products on the Sandy Spring platform in North Carolina, where you maybe could take that target to. Could it get to the mid- to upper teens eventually?
Do you want to handle that? Yeah.
So in terms of the fee income growth, we really talk about asset management and capital markets income. So we think there's a lot of opportunity there, especially on the capital market side within the Sandy Spring footprint, where they didn't really have a lot of capital market activity. So I think that's where we'd be looking for the growth. In terms of the 14%, that's kind of off of, you only had three quarters of Sandy Spring in there. So that might be a little elevated. I think we're a bit lower than that on an apples-to-apples basis, Dave.
Yeah. Thanks. Stephen Scouten with Piper Sandler. So, John, you talked about making the case it was worth the investment, right?
Yes.
And I think as we look back, it would help me if you could reconcile kind of what was laid out in the initial slide deck with Sandy Spring versus the guidance here, presuming that was kind of apples-to-apples. It looks like we're either at a little bit lower point, maybe from efficiency ratio, ROA, and so forth, or maybe we're just behind schedule. I'm not sure. If you could speak to maybe what's caused that delta, if it is just a timing issue, not a realization issue. That being like, I think it was 44% efficiency ratio in the deck. Now it's 46%-48%. ROA was 150. Now we're 140-150. So not by large numbers, but kind of if you could speak to that and then kind of how you'd use data to create the catalyst to maybe get to those initially disclosed.
So your question is clear to me. You're asking what is different between today's expectations and what was announced in October of 2024.
Yeah. So, Stephen, to that point, that we are a bit lower than what we said at announcement where we'd be in 2026. And it's really on the back of loan growth. We saw lower loan growth coming out of the 2025. So that's kind of put a damper on average balances as you go into 2026 and 2027. So there's that element of it. The interest rate environment's changed a bit too because we had, at the time of the announcement, I believe we had four to five cuts from the Fed from the fourth quarter of 2024 into 2025. And we only saw two so far late in the year. So how that impacts, that's an interest income issue.
How that plays out is that we weren't able to lower our deposit costs as quickly as we had expected. Now we're in the process of doing that. So there's some element, to your point, timing here. The loan growth is going to come, and we'll get back on track. And we expect that the Fed will, as I mentioned a couple of times, well, I don't know what happens today. Is it two yet? We assume there's cuts today and then two more in 2026. So we'll get back on track from that point of view. The other point that wasn't contemplated at the time of the announcement was our investment in Carolinas. So there's some additional expenses related to that, which kind of impacts the efficiency ratio a bit as we build that out. So those are kind of the moving parts there.
We still think, if we look at those ranges, we still think there's potential to get to the top of those ranges, which would pretty much be in line with what we're thinking when we announced the deal.
The payback is very good, incomparable. The metrics are excellent. It is true. I agree with Rob. Three things that are different from a year and roughly a quarter ago. It is true that the rate environment has behaved differently than expected. I agree with this point on loan growth. A lot has changed in our environment. All of the drama around tariff strategies, et cetera, the uncertainty, with or without that transaction, we would still be seeing the same dynamic. Weaker loan growth than we would have expected prior to all of that, and I think we appropriately made the decision to do some additional investment in the company.
Not just North Carolina. There's some technology investment as well. Everything you heard the leaders talk about earlier is baked into this forecast. And if something changes, if we have some sort of adverse outcome or something is not meeting expectations, we'll simply reduce spend. We've done it before, and we'll do it again. So it is modestly off. I acknowledge that, and that's why.
Yeah. We're going to do Steve Moss, and then we'll do Janet. Okay. Steve.
Thanks, John. First question here for Dave. In terms of the specialty banking evolution here, you have asset-based lending, senior living, dealer finance, and other verticals that you're looking to grow, I guess, from, it sounds like, incubation, if you will, to a bigger place.
Could you maybe size those up in terms of what you see for how big those lines could get and what the lending side is and maybe the deposit side as well?
Well, to be determined. But sure, you can speculate. So a few years ago, we hired the head of formerly SunTrust Dealer Finance Group. He's been in place, and we have been nurturing relationships ever since. So we do real estate. We do treasury management for car dealerships and all that stuff. The big push now is we'll be developing floor planning, so the full range of services for that. So that will be a nice lift in lending because floor planning goes pretty fast. We are working with our vendors now to make sure we have the right systems in place for that business. But we have the people in place here.
We're not going to add anybody to that. We're ready to go. So that move to the top of the heap, along with senior living, the person that I was referring to just started the other day is going to be our head of senior living. And his practice is very well known. When you hear the name, you might know him in the space. He will be leading a charge that also goes contiguous to our footprint, so outside of the bank's footprint. So we could toggle that up and down as much as we feel like the environment for lending into that space makes sense. So again, that's another one that we can toggle up, toggle down, depending upon the environment. And what was the other one that you mentioned? Sorry.
I think he was just asking about loans and deposits.
Yeah. I mean, we just like it.
We like to look at all this stuff as levers to pull when we need to.
Walk before you run.
Yeah, and we just like to stay consistent in the space with our clients to make sure they're supported, and then we can toggle things up and down based on the environment, and so I can't really tell you. I mean, we have internal projections on how it's going to work, but I don't think it's appropriate to disclose that.
We'll go into that, but we do have a history. As we've tried extensions of our business lines, generally filling gaps, go way back. Go back and look at our investor day, the very first one we did all those years ago.
You will clearly see us talk about, "We will continue to fill gaps vis-à-vis super regional and large national banks into the middle market because we're the alternative to them, and we've done that." And so, Steve, these are just essentially additional gaps that we see as we go to market. Walk before you run.
Steven. One more quick. Just in terms of just one question on the margin guidance here, Rob, what are you thinking for loan origination yields in 2026, just as you think about that?
Yeah. So we're putting on new loans in the, call it 615-625. That's really what we're projecting. We're not looking for that kind of on the fixed-rate loan portfolio. That's probably about right. We'll see. Variable rate loan notes will come down as the Fed boosts. And that's about 50% of our portfolio.
So call it 6.25-6.50 on the fixed rate. And then I think we're, give or take, 5.75 or so on the variable rate book that we're booking as those reprice. So blended, call it about 6% and a little over 6%.
Janet.
Hi. Janet Lee from TD Cowen. I'm just following up on David's. David? A question earlier. I think actually the three most important metrics that actually matter most for bank stock performance are reported EPS growth, tangible book value growth, and revenue growth. And if I look at 2020 and those metrics have been suppressed for many years. I believe some of that has to do with tariff and other external situation, but a lot of that has to do with merger disruptions. And if I look at 2026, those metrics look to be inflecting, assuming things are going the way you're describing.
So if I were to look at 2026, are you pledging that you're not going to? I think you made your point clear in your slides, but you're pledging that you're not going to do any mergers over the next few years, and also, are you seeing that much of the disruptions that you saw from the mergers in the past few years? Is that in the eighth inning, or is there some more to go? How should we think about the impact of that merger disruptions going away?
Let me take the last question first. We still see plenty of opportunity. We think we have a durable business model in terms of our ability to compete against larger players.
And it's not as dramatic as what you would see on the heels of two super regionals doing a merger of equals, but we still see plenty of opportunity there. And if anything, we've only gained in brand and power and capability. And a point I made earlier, which is that we are the alternative. It's important to understand we are more than a community bank that just mostly finances real estate. Yes, we do that, and we're good at it. But we're really built to be the alternative and a challenger to the larger institutions. And so I think we're very well positioned to do that. Now, your interesting question about pledges and that sort of thing, I've been here nine years.
In nine years, I would challenge anyone to give me an example of where I said we're going to do one thing and then turned around and did something else. We have never done that. I was very clear that we are at a phase in the company's life cycle where we will be focused on organic performance and really demonstrating that the investment has been worth it. I think Maria said it pretty clearly that we do not contemplate whole bank acquisition in this strategic planning period. And I did not say never, ever, but that should be a clear statement. Yeah.
I think we have time for one more question.
Thank you. Maybe just circling back to the net interest income outlook. You spoke about NIM a moment ago, but maybe just taking NIM and loan growth, loan growth guidance implies about 6% end-of-period growth.
If you could just talk about how quickly does that ramp over the course of the year? And then maybe just a broader discussion on NIM rates coming down. Your guidance implies NIM moving higher. What are the puts and takes there, key drivers?
Yeah. So in terms of the cadence of that coming in on loan growth you're talking about, yeah. It's probably a slower period in first quarter typically, and then it starts to ramp up. But we've kind of just have it kind of gradually going up through the first quarter and getting to that 6% over a period of time, on average, over the full year. In terms of the net interest margin guidance, yeah. So there's a couple of things. As we said, we expect the Fed to continue to cut rates.
That's a headwind on our net interest, on our loan yields on the variable rate note, which tied to one-month SOFR and prime. So that'll be a headwind. Offsetting that is we've got a bunch, a lot of deposits that we're repricing really quickly. We've got about $5 billion or so of indexed Fed fund index deposits that reprice very quickly. And a number of what we call negotiated rates, exception rates for large commercial clients that also come down fairly quickly. So for instance, in the first cut and second cut, we've actually on those balances seen an 85% beta on, call it, $12-$13 billion of deposits. That offsets the impact of the variable rate loan book. Potential expansion, the way we're looking at that is we don't think term rates are moving down.
We're kind of leaving those kind of where they are today, stable. And we've got a fixed-rate book of loans in the portfolio yields about 5.10%. We're repricing those, as I mentioned a little while ago, 6.25%. So we're picking up 50% of our loan book. I should say 50% of the legacy AUB book because we've marked Sandy Spring. We've marked American National. And that's about $1 billion a quarter that's repricing at that level. So that's why we think there could potentially, if you say we're neutral on the short end, asset-sensitive on the long end with this repricing, we could see some expansion. That's how we look at it. Oh, come on.
Catherine. The only equity research analyst who was here when I arrived nine years ago. We will go into overtime for you. Thank you for still being here.
You're welcome.
You're welcome. It's just a capital question. So if you look at your ROA target, it's 1.4%-1.5% in both years for 2026, 2027. And so your ROTCE is also in that 19% range. But, I mean, as we've seen, you're building capital at, call it, 20 basis points a quarter because of that higher level. And so for me to keep my ROA at 1.4%, let's even say, but for me to get my ROTCE to also stay in that same range, I've got to really push the buyback starting mid-year once you hit 10.5% CET1. So are you also committing to being really kind of active in the buyback in the back half of this year and really through 2027? And how sensitive to your price are you as you do that?
Well, I want to say we're.
I wouldn't say we're committed.
Committed to it.
We will consider.
The board of directors approves that. We would recommend something like that and that the board approved that. But yeah, plans are, as you mentioned, excess capital will be defined as anything over 10.5% CET1, Common Equity Tier 1 ratio. We expect that to be in the second quarter. We would anticipate that we would have, hopefully, the board would approve a repurchase program, and then we would be in the market. In the market means, depending on the share price. We look at it as a return on investment, a 15% return. So we have and we run an intrinsic valuation model like you guys do, and internally, with our internal projections, say, we think the company's valuation is this on a per-share basis. So we would look at that and say, "Okay, we're not going to buy less than 14%.
I mean, 15%. We'll buy if we can get that return. The lower the price, we'll buy a lot more, obviously. The higher the price, we may not buy any. So we do look at it that way. It's not a put a $200 million repurchase and we're going to buy every share no matter what the price is.
Yeah. So Catherine, I think back to your point, we have been a good generator of capital because we've run a good, profitable company. We have returned capital, $1.1 billion since 2017 through dividend. We pay an above-average dividend. We have done share buybacks in the past. And yes, we've done investment through deployment through M&A. I think to your very good point, we do think we'll be accreting capital on a quarterly basis at the level that you're pointing to.
You can clearly see that in the guidance that we're providing. The question becomes, how high do capital levels really need to be for a bank with a risk profile like ours and for one who is not contemplating additional M&A at this point in our life cycle? So I do think it clearly sets up the opportunity to look at share buybacks, and it's exactly as Rob said.
Of course, it all depends. If we have excess or a larger growth in the loan book, we want to put it to that.
That's the first use of capital.
Lowering rates for repurchases.
Okay. Bill is letting me know that we are now over time. So I do want to say thank you all very much for being here. I'm very proud of the people of Atlantic Union Bank.
I'm very proud of our customers who have supported us through this transformation. There have been plenty of stories of transformation of community banks into something more across the industry, but I do think we're a very good example of that. We matter to the communities that we serve. We help people. We help businesses. We help our communities. We have a responsibility to deliver for our shareholders, and we are confident that we will do that. So we appreciate your support. We'll be around for a few minutes as we're done. If you have any further questions that we're able to answer, and thank you for being here. Thank you for your support.
Thank you.