Q1 2025 Atlantic Union Bankshares Corp Earnings Call

Unknown Executive: Good day and thank you for standing by.

Good day, and thank you for standing by walk them through the Atlantic Union Bankshares first quarter 2025 earnings conference call.

William Cimino: Welcome to the Atlantic Union Bank Shares First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.

William Cimino: To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To restore your question, please press star 1-1 again.

Bill: Ask a question during the session you'll need to press star one on your telephone you will then hear an automated message advisor. Your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like turn the conference over to Bill to meet them by excuse me senior Vice.

Unknown Executive: Please be advised that today's conference is being recorded.

William Cimino: I will now turn the conference over to Bill Cimino, Senior Vice President, Investor Relations. Please go ahead. Thank you, Lisa. And good morning, everyone.

Got it.

Relations. Please go ahead.

Bill: Thank you Lisa and good morning, everyone.

William Cimino: I have Atlantic Union Bank shares President and CEO John Asbury and Executive Vice President and CFO Rob Gorman with me today. We also have other members of our executive management team with us for the question and answer period.

Bill: Union Bankshares, President and CEO, John Asbury, and executive Vice President and CFO, Rob Gorman with me today.

Bill: We also have other members of our executive management team with us for the question and answer period.

William Cimino: Please note that today's earnings release and the accompanying slide presentation we are going through on this webcast are available to download on our investor website, investors.atlanticunionbank.com. During today's call, we will comment on our financial performance using both GAAP metrics and non GAAP financial Important information about these non-GAAP financial measures, including reconciliations to comparable GAAP measures, is included in the appendix for a slide. and in our earnings release for the first quarter of 2025.

Speaker Change: Please note that today's earnings release, any accompanying slide presentation theyre going around in this webcast are available to download on our website investors got Atlantic Union Bank Dot com.

Speaker Change: During today's call, we will comment on our financial performance using both GAAP metrics and non-GAAP financial measures.

Speaker Change: Important information about these non-GAAP financial measures, including reconciliations to comparable GAAP measures.

Speaker Change: For a slide presentation and in our earnings release for the first quarter of 'twenty five.

William Cimino: Since our acquisition of Sandy Spring Bank Corp. closed in the second quarter, our first quarter financial results do not include Sandy Spring. We have provided, however, certain pro forma and pro forward looking financial data for the company. Our pro-forma and pro-forma forward-looking financial data should not be relied on as being indicative of future results and are subject to risks and uncertainties.

Speaker Change: Since our acquisition of Sandy Spring Bancorp.

Speaker Change: Second quarter, our first quarter financial results do not include spring. We have provided however, certain finance certain pro forma and pro forward forward looking financial data for the combined company.

Speaker Change: Our pro forma and pro forma forward looking financial data should not be relied on as being indicative of future results and are subject to risks and uncertainties.

William Cimino: Please refer to slide 4 of our presentation issued today for additional information. We've also included, we've also updated our financial outlook for the full year to include the expected impact of our acquisition of Sandy Springs. In our remarks on today's call, we will also make forward-looking statements which are not statements of historical fact and are subject to risks and uncertainties. There can be no assurance that actual performance will not differ materially from any future 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.

Speaker Change: Please refer to slide four of our presentation issued today for additional information.

Speaker Change: We've also included we've also updated our financial outlook for the full year to include the expected impact of our acquisition of Sandy spring.

Speaker Change: Our remarks on today's call. We will also make forward looking statements, which are not statements of historical fact and are subject to risks and uncertainties.

Speaker Change: It would be no assurance that actual performance will not differ materially from any future expectation for 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.

William Cimino: Please refer to our earnings release and slide presentation issued today and our other SEC filings for further discussion of the company's risk factors and other important information regarding our foreign lifting statements, including factors that could cause actual results to differ from those expressed or implied in a foreign lifting statement. All comments made during today's call are subject to that Safe Harbor Statement.

Speaker Change: Please refer to our earnings release, and slide presentation issued today and our other SEC filings for further discussion of the Companys risk factors and other important information.

Speaker Change: Our forward looking statements.

Speaker Change: Factors that could cause actual results to differ from those expressed or implied in the forward looking statements.

Speaker Change: All comments made during today's call are subject to that safe Harbor statement.

William Cimino: And at the end of the call, we will take questions from the research analyst community.

Speaker Change: At the end of the call, we'll take questions from the research analyst community.

John Asbury: Now I'll turn the call over to John. Thank you, Bill. Good morning, everyone, and thank you for joining us today. It was an eventful and busy first quarter for AUB, with their acquisition of Sandy Spring having closed on April 1, a full quarter ahead of our original expectations due to our receipt of regulatory approval earlier than anticipated. It was also a quarter when the economic outlook became more uncertain, financial markets became more volatile, and government policies changed abruptly. Nevertheless, we believe we are well positioned to capitalize on the franchise's strength and potential. We have a lot to cover today, and Rob and I will begin by summarizing AUB's first quarter results, share perspective on our now expanded franchise, and finish by updating you on the financial logic of the Sandy Spring acquisition, which we believe remains very much intact.

Speaker Change: I'll turn the call over to John Thank you Bill and good morning, everyone and thank you for joining US today. It was an eventful and busy first quarter for <unk> with their acquisition of Sandy spring having closed on April one a full quarter ahead of our original expectations due to receipt of regulatory approval earlier than anticipated. It was also a quarter when the economic outlook became more.

Speaker Change: Uncertain financial markets became more volatile and government policies changed abruptly.

Speaker Change: Nevertheless, we believe we are well positioned to capitalize on the franchise the strength and potential we have a lot to cover today Robyn I will begin by summarizing Abb's first quarter results share perspective on our now expanded franchise and finish by updating you on our financial logic at Sandy Spring acquisition, which we believe remains very much intact.

John Asbury: Turning now to quarterly results, here are a few financial highlights from the first quarter. I'll begin with our 12-basis point net interest margin expansion and an 18-basis point reduction in cost of funds, consistent with the expectations we set in our comments last quarter. Average loan growth was approximately 1.3% annualized quarter over quarter in the typically seasonally slow first quarter, following the typically seasonally high fourth quarter. Loans held for investment into the quarter down 0.9% annualized from the end of the fourth quarter due to some late quarter payoffs and revolving credit paydowns. Production was good, the third highest of the past five quarters.

Speaker Change: Turning now to quarterly results here are a few financial highlights from the first quarter I'll begin with our 12 basis point net interest margin expansion and an 18 basis point reduction in cost of funds consistent with the expectations. We set in our comments last quarter.

Speaker Change: Loan growth was approximately one 3% annualized quarter over quarter and the typically seasonally slow first quarter. Following the typically seasonally high fourth quarter loans held for investment ended the quarter down 9% annualized from the end of the fourth quarter due to some late quarter payoffs and revolving credit pay downs production was good.

Speaker Change: The third highest of the past five quarters.

John Asbury: Deposit growth in the first quarter was approximately 2.1% annualized point to point, which includes the impact of reducing broker deposits by more than $100 million in the quarter. We were pleased to see non-interest bearing deposits increased by $194 million during the quarter. As a percentage of total deposits, non-interest bearing deposits represented 22% of total deposits, up from 21% at the end of the fourth quarter. Credit remained solid, with five basis points of annualized net charge-offs this quarter and otherwise mild credit trends. We booked a $17.6 million loan loss provision expense in the first quarter, mainly reflecting the impacts of increased uncertainty in the economic outlook and elevated risk of a national recession.

Speaker Change: Deposit growth in the first quarter was approximately two 1% annualized point to point, which includes the impact of reducing broker deposits by more than $100 million in the quarter.

Speaker Change: We were pleased to see non interest bearing deposits increased by $194 million during the quarter.

Speaker Change: As a percentage of total deposits noninterest bearing deposits represented 22% of total deposits up from 21% at the end of the fourth quarter.

Speaker Change: It remains solid with five basis points of annualized net charge offs this quarter and otherwise mild credit trends.

Speaker Change: We booked a $17 $6 million loan loss provision expense in the first quarter, mainly reflecting the impacts of increased uncertainty in the economic outlook and elevated risk of a national recession. This increased the allowance for loan losses as a percentage of loans held for investment to 1.0% to 5% and a total allowance for credit losses to one.

John Asbury: This increased the allowance for loan losses as a percentage of loans held for investment to 1.05%, and the total allowance for credit losses to 1.13% of loans held for investment. I would like to be clear that we remain quite confident in our asset quality and market strength. We currently expect our net charge-off ratio to be low, between 15 and 25 basis points for the full year 2025, and we are not forecasting a recession. However, we acknowledge the uncertainty in the economic forecast and the unquantifiable potential impacts of new trade policy on the economy. Consequently, we elected to use management judgment and prudently increase qualitative factor overlays consistent with the forward-looking CECL accounting methodology.

Speaker Change: One 3% of loans held for investment I would like to be clear that we remain quite confident in our asset quality and market strength. We currently expect our net charge off ratio to be low between 15, and 25 basis points for the full year of 2025, and we are not forecasting a recession. However, we acknowledge the uncertainty.

Speaker Change: The economic forecast any unquantifiable potential impacts of new trade policy on the economy. Consequently, we elected to use management judgment and prudently increase qualitative factor overlays consistent with the forward looking seasonal accounting methodology, we do see varying judgments in the industry on how to account.

John Asbury: We do see varying judgments in the industry on how to account for the economic ambiguity this quarter, but this is ours, consistent with our operating mantra of soundness, profitability, and growth in that order of priority. Here are three reminders for context.

Speaker Change: For the economic ambiguity this quarter, but this is hours consistent with our operating mantra of soundness profitability and growth in that order of priority tier.

Speaker Change: Here are three reminders for context first quarter's loan loss provision is pre sandy spring acquisitions since that did not close until April one.

John Asbury: First, the quarter's loan loss provision is pre-Sandy Spring acquisition, since that did not close until April 1. Second, about 12% of our total loan portfolio was marked to fair value last year in connection with the American National Acquisition, which included estimated credit losses. And third, despite the well-publicized federal government efficiency initiatives, we see little evidence of it impacting the majority of the AUD franchise at this point, nor do we currently expect it to. The qualitative factor overlay added to our allowance related to uncertainty is more about the increased possibility of a national recession and a potential for continued volatility and unintended consequences of trade policy than any impact we consider unique to us, be it from federal cutbacks or tariffs.

Speaker Change: Second about 12% of our total loan portfolio was marked to fair value last year in connection with the American National acquisition, which included estimated credit losses and third despite the well publicized federal government efficiency initiatives, we see little evidence of it impacting the majority of the AEP franchise at this point nor do we.

Speaker Change: Currently expect it to the qualitative factor overlay added to our allowance related to economic uncertainty is more about the increased possibility of a national recession and the potential for continued volatility and unintended consequences of trade policy. The any impact we consider unique to us yet from federal cutbacks or tariffs.

John Asbury: As for loan growth expectations, last quarter for AUB on a standalone basis, we indicated our expectation of mid-single-digit loan growth for the year. We have updated our loan and deposit outlook this quarter to show expected year-end loan and deposit balances, rather than a percentage growth estimate, that are inclusive of Sandy Spring for the next nine months and inclusive of the impacts of the expected $2 billion commercial real estate loan sale. This is our loan growth-based case, and we'll revisit it as the economic outlook clarifies over the next few quarters. We are encouraged that the standalone AUB pipeline has rebuilt nicely, following strong production over the past two quarters, and it is the second highest of the past seven quarters.

Speaker Change: As for our loan growth expectations last quarter for <unk> on a standalone basis, we indicated our expectation of mid single digit loan growth for the year, we have updated our loan and deposit outlook. This quarter to show expected year end loan and deposit balances rather than a percentage growth estimate that are inclusive of sandy spring for the next nine months.

Speaker Change: And inclusive of the impacts that we expected 2 billion dollar commercial real estate loan sales.

Speaker Change: This is our wound growth base case.

Speaker Change: We'll revisit it as the economic outlook clarifies over the next few quarters. We are encouraged that the Standalone AAV pipeline is rebuilt nicely following strong production over the past two quarters and it is the second highest of the past seven quarters, what remains to be seen though is poultry timing because we know from experience that <unk>.

John Asbury: What remains to be seen, though, is pull-through timing, as we know from experience that uncertainty can lead to hesitation in business investment decisions.

Rob Gorman: Certainly can lead to hesitation in business investment decisions Rob.

Robert Gorman: Rob will now take you through further detail on the quarter.

Speaker Change: Rob will now take you through further detail on the quarter and then I'll come back with additional perspective on the company at our markets.

Robert Gorman: And then I'll come back with additional perspective on the company and our markets. Well, thank you, John.

Robert Gorman: Good morning, everyone. I'll now take a few minutes to provide you with some details of Atlantic Union's financial results for the first quarter. As Bill mentioned, my comments today relate to Atlantic Union's first quarter financial results and do not include the financial results of Sandy Spring since the transaction closed on April 1st. Please note that for the most part, my commentary will focus on Atlantic Union's first quarter plan to result in a non-GAAP adjusted operating basis, which in the first quarter excludes $4.9 million in merger-related costs related to our acquisition of Sandy Springs. That said, in the first quarter, reported net income available to common shareholders was $46.9 million and diluted earnings per common share was $0.52.

Rob Gorman: Well, thank you John and good morning, everyone.

Rob Gorman: I'll now take a few minutes to provide you with some details of Atlantic Union's financial results for the first quarter.

Bill mentioned my comments today relate to Atlantic Union's first quarter financial results and do not include the financial results of Sandy spring since the transaction closed on April one.

Rob Gorman: Please note that for the most part my commentary will focus on Atlantic Union's first quarter financial results on a non-GAAP adjusted operating basis, which in the first quarter excludes $4 9 million in merger related costs related to our acquisition of Sandy spring.

Rob Gorman: That said in the first quarter reported net income available to common shareholders was $46 9 million and diluted earnings per common share were <unk> 52.

Robert Gorman: Adjusted operating earnings available to common shareholders were $51.6 million or $0.57 per diluted common share for the first quarter, resulting in an adjusted operating return on tangible common equity of 13.2%, an adjusted operating return on assets of 90 basis points, and an adjusted operating efficiency ratio of 57%. Turning to credit loss reserves at the end of the first quarter, the total allowance for credit losses was $209 million, which is an increase of approximately $15.3 million from the fourth quarter, primarily due to the increased uncertainty in the economic outlook, as John noted. As a result, the total allowance for credit losses as a percentage of total loans held for investment increased eight basis points to 1.13% at the end of the first quarter.

Rob Gorman: Adjusted operating earnings available to common shareholders were $51 $6 million or <unk> 57 per diluted common share for the first quarter, resulting in an adjusted operating return on tangible common equity of 13, 2% in.

Rob Gorman: And adjusted operating return on assets of 90 basis points and adjusted operating efficiency ratio of 57%.

Rob Gorman: Turning to credit loss reserves at the end of the first quarter. The total allowance for credit losses was $209 million, which is an increase of approximately $15 3 million from the fourth quarter, primarily due to the increased uncertainty in the economic outlook as John noted.

Rob Gorman: As a result, the total allowance for credit losses as a percentage of total loans held for investment increased eight basis points to one 3% at the end of the first quarter.

Robert Gorman: Provision for credit losses of $17.6 million in the first quarter was primarily driven by Moody's quarter to quarter economic forecast change and qualitative factor factor overlays given the increasing recession risk not captured in the March economic forecast published by Moody. Now charting the pre-tax, pre-provision components of the income statement for the first quarter, tax equivalent net interest income was $187.9 million, which is an increase of approximately $882,000 from the fourth quarter. The increase from the prior quarter is due primarily to the impact of lower deposit costs indirectly driven by the decrease in the Fed funds rate, reflecting the full quarter impact of the Federal Reserve lowering rates 100 basis points between September and December 2024.

Rob Gorman: Provision for credit losses of $17 6 billion in the first quarter was primarily driven by Moody's quarter to quarter economic forecast change and qualitative factor factor overlays given the increasing recession risk not captured in the March economic forecast published by Moody's.

Rob Gorman: Now turning to the pre tax pre provision components of vehicles statement for the first quarter tax equivalent net interest income was $187 $9 million, which is an increase of approximately eight $882000 from the fourth quarter. The increase from the prior quarter is due primarily to the impact of lower deposit costs indirectly driven by the decrease in the fed.

Rob Gorman: Funds rate, reflecting the full quarter impact of the fed federal reserve lowering rates 100 basis points between September and December 2020 for the.

Robert Gorman: The increase was partially offset by a decrease in interest income on loans held for investment due to lower yields, primarily driven by the impact of the Fed Fund's interest rate cuts on our variable rate loans, as well as the lower day count in the first quarter. As John noted, the first quarter's tax equivalent net interest margin was 3.45 percent, which is an increase of 12 basis points from the previous quarter due to an 18 basis point decrease in the cost of funds, which was primarily driven by the 23 basis point reduction in the cost of interest bearing deposits as well as short-term borrowing funding mix shifts.

Rob Gorman: The increase was partially offset by a decrease in interest income on loans held for investment due to lower yields primarily driven by the impact of the fed funds interest rate cuts on our variable rate loans as well as the lower day count in the first quarter.

Rob Gorman: As John noted the first quarter's tax equivalent net interest margin was 345%, which is an increase of 12 basis points from the previous quarter due to an 18 basis point decrease in the cost of funds, which was primarily driven by the 23 basis point reduction in the cost of interest bearing deposits as well as short term borrowings funding mix shifts.

Robert Gorman: Disfavorable impact was partially offset by a six basis point decline in earning asset yields, primarily driven by the 13 basis point decline in the loan portfolio yield, net of the positive impact from increased securities yields and earning asset mix changes in the first quarter. Non-interest income decreased $6 million to $29.2 million in the first quarter, primarily driven by a $2.7 million decline in loan-related interest rate swap fees due to lower transaction volumes in the seasonally slower first quarter, and a $2.5 million decrease in other operating income, primarily due to a decline in equity method investment income and lower gains on the sale of equipment, finance, lease equipment.

Rob Gorman: This favorable impact was partially offset by a six basis point decline in earning asset yields primarily driven by a 30 basis point decline in the loan portfolio yield net of the positive impact from increased securities yields and earning asset mix changes in the first quarter.

Rob Gorman: Noninterest income decreased $6 million to $29 2 million in the first quarter, primarily driven by a $2 7 million decline in loan related interest rate swap fees due to lower transaction volumes in the seasonally slower first quarter and a $2 $5 million decrease in other operating income primarily due to a decline in.

Rob Gorman: Equity method investment income and lower gains on the sale of equipment finance lease equipment.

Robert Gorman: Non-interest expense increased $4.5 million to $134.2 million for the first quarter from $129.7 million in the prior quarter. Adjusted operating non-interest expense, which excludes merger-related costs and amortization of intangible assets in both quarters, increased $6.8 million to $123.8 million for the quarter, up from $117 million in the prior quarter, primarily driven by a $4.1 million increase in salaries and benefits expense due to seasonal increases of $4.7 million in payroll taxes and 401k contribution expenses in the first quarter. In addition, a $1.3 million increase in other expenses was driven primarily by OREO-related gains recognized in the prior quarter.

Rob Gorman: Noninterest expense increased $4 5 million.

Rob Gorman: $34 2 million for the first quarter.

Rob Gorman: $129 7 million in the prior quarter.

Rob Gorman: Adjusted operating noninterest expense, which excludes merger related costs and amortization of intangible assets in both quarters.

Rob Gorman: <unk> $6 8 million to $123 8 million for the quarter up from $117 million in the prior quarter, primarily driven by a $4 $1 million increase in salaries and benefits expense due to seasonal increases of $4 $7 million in payroll taxes, and 401K contribution expenses in the first quarter.

Rob Gorman: An additional $1 $3 million increase in other expenses was driven primarily by Oreo related gains recognized in the prior quarter.

Robert Gorman: $1 million increase in franchise and other taxes and $805,000. Increase in technology and data processing expense primarily driven by expense related to an upgrade to the consumer online banking system in the first quarter. and a $616,000 increase in occupancy expenses primarily driven by seasonal, winter, weather-related expense. These increases were partially offset by a $666,000 decrease in professional fees. And by showing first loans help for investment net deferred fees and costs were 18.4 million, which is the decline of $42.9 million or 0.9 on an annualized basis from December 31st, primarily driven by declines in the construction and land development and commercial industrial loan portfolios, partially offset by increases in the multifamily real estate and non-owner occupied commercial real estate loan portfolio.

Rob Gorman: $1 million increase in franchise and other taxes.

Rob Gorman: $805 million.

Rob Gorman: $805000.

Rob Gorman: The increase in technology and data processing expense, primarily driven by expense related to an upgrade to the consumer online banking system in the first quarter.

Rob Gorman: $616000 increase in occupancy expenses, primarily driven by seasonal winter weather related expense. These.

Rob Gorman: These increases were partially offset by a $666000 decrease in professional fees.

Rob Gorman: At March 31st loans held for investment net of deferred fees and costs were $18 4 million, which is a decline of $42 9 million or 9% on an annualized basis from December 31, primarily driven by declines in the construction and land development and commercial and industrial loan portfolios, partially offset by increases in our Mueller.

Rob Gorman: Family real estate and non owner occupied commercial real estate loan portfolios.

Robert Gorman: The Decrease in Construction and Development Loans and Increases in Multifamily and Non-Owner-Occupied Commercial Real Estate Loans during the quarter were primarily driven by the completion of construction projects in the quarter and the conversion of the related construction loans into term loans in the multifamily and non-owner-occupied commercial real estate category. At March 31st, total deposits stood at $20.5 billion, which was an increase of $105.3 million, or 2.1% annualized from the prior quarter, primarily due to increases in demand deposits partially offset by declines in broker deposits. At the end of the first quarter, Atlantic Union Bank shares and Atlantic Union Bank's regulatory capital ratios were comfortably above well-capitalized levels.

Rob Gorman: The decrease in construction and development loans and increases in multifamily and non owner occupied commercial real estate loans. During the quarter were primarily driven by the completion of construction projects in the quarter and the conversion of the related construction loans into term loans in the multifamily and non owner occupied commercial real estate categories.

Rob Gorman: At March 31, total deposits stood at $25 billion, which was an increase of $105 3 million or two 1% annualized from the prior quarter, primarily due to increases in demand deposits, partially offset by declines in brokered deposits.

Rob Gorman: At the end of the first quarter Atlantic Union, Bankshares, and Atlantic Union Bank regulatory capital ratios were comfortably above well capitalized levels.

Robert Gorman: In addition, on an adjusted basis, we remained well-capitalized as of the end of the first quarter, if you include the negative impact of AOCI and held the maturity securities unrealized losses in the calculation of the regulatory capital ratio.

Rob Gorman: On an adjusted basis, we remain well capitalized as of the end of the first quarter. If you include the negative impact of ALC and held to maturity securities unrealized losses in the calculation of the regulatory capital ratios.

Robert Gorman: In summary, Atlantic Union delivered solid operating financial results despite the challenging banking operating environment we are effectively managing through. Driven by our operating mantra of soundness, profitability, and growth in that order of priority, we took prudent action to build the allowance for credit losses during the quarter to account for the current economic uncertainty and increasing risk of a recession. As a result, we believe we are well positioned to continue to generate sustainable, profitable growth and to build long term value for our shareholders in 2025 and beyond.

Rob Gorman: Summary, Atlantic Union delivered solid operating financial results. Despite the challenging banking operating environment, we are effectively managing through.

Rob Gorman: Driven by our operating mantra of soundness profitability and growth in that order of priority. We took prudent actions to build the allowance for credit losses during the quarter to account for the current economic uncertainty and increasing risk of a recession.

Rob Gorman: As a result, we believe we are well positioned to continue to generate sustainable profitable growth and to build long term value for our shareholders in 2025 and beyond.

John Asbury: With that, let me turn it back over to John. for some comments regarding the expanded franchise of Sandy Spring. Thank you, Rob. I'll now share some perspective on our expanded franchise post-Sandy Spring acquisition.

Rob Gorman: With that let me turn it back over to John.

John Asbury: I've heard some comments regarding that.

John Asbury: The standard franchise with Sandy spring. Thank you, Rob I'll now share some perspective on our expanded franchise post Sandy spring acquisition, let me begin by pointing out that post merger and assuming we complete our previously disclosed anticipated sale of approximately $2 billion of commercial real estate loans.

John Asbury: Let me begin by pointing out that post-merger, and assuming we complete our previously disclosed anticipated sale of approximately two billion dollars of commercial real estate, The Sandy Spring franchise would be about one-third of the combined company by asset size, meaning that AUD standalone assets would be two-thirds of the combined franchise on a pro forma basis as of March 31. Between our previous acquisition of American National Bank and now Sandy Spring, approximately 46% of our pro forma combined loan portfolio will have been marked for credit and interest rates, which we believe puts us in a position of strength in the face of economic uncertainty.

John Asbury: Sandy spring franchise, we may be about one third of the combined company by asset size, meaning the <unk> standalone assets would be two thirds of the combined franchise on a pro forma basis as of March 31.

John Asbury: Between our previous acquisition of American National Bank, and now Sandy spring approximately 46% of our pro forma combined loan portfolio will have been marked for credit and interest rates, which we believe puts us in a position of strength in the face of economic uncertainty.

John Asbury: As is evident from slide 15 in our supplemental presentation, pre-merger, we view Sandy Spring as well distributed across Maryland with a presence in Washington, D.C. and Northern Virginia. With a distinguished 156-year history, they were Maryland's bank, a state which ranks as the most affluent in the nation by median household income, is among the most well-educated, and has consistently maintained one of the lowest unemployment rates of any state in the country. There is a significant market focus on the implications of government efficiency-related impacts on the greater Washington, D.C. region. This is the sixth largest metropolitan statistical area in America, with a population of about 6.4 million people.

John Asbury: As is evident from slide 15 of our supplemental presentation pre merger, we view Sandy spring is well distributed across Maryland, with a presence in Washington D C and northern Virginia with a distinguished 156 year history. They were Maryland's bank, a state which ranks as the most affluent in the nation by medium household income is among the most well educated and has <unk>.

John Asbury: Insistently maintain one of the lowest unemployment rates of any state in the country.

John Asbury: There is a significant market focus on the applications of government efficiency related impacts on the greater Washington D. C region. This is the sixth largest metropolitan Statistical area in America with a population of about $6 4 million people. We view the region is resilient, it's been diversifying its economy for decades, and we believe this will continue.

John Asbury: We view the region as resilient. It's been diversifying its economy for decades, and we believe this will continue, if not accelerate, due to the changes underway in government policy. Today, the greater Washington region is not only the nation's capital. It is also the East Coast technology hub.

John Asbury: If not accelerate due to the changes underway in government policy today, the greater Washington region is not only the nation's capital. It is also the east coast technology hub, it's projected to be one of the biggest AI growth hubs in the U S has the world's largest number of data centers and has one of the nation's largest clusters defense technology and cyber security.

John Asbury: It's projected to be one of the biggest AI growth hubs in the U.S., has the world's largest number of data centers, and has one of the nation's largest clusters of defense technology and cybersecurity firms. Stepping back to look at the broader franchise, as you can see on slide 18, AEB operates in some of the nation's most affluent counties and in large metro areas with some of the lowest unemployment rates in the country based on the most currently available data. We recognize unemployment numbers in the greater Washington MSA are expected to rise, but the region enters this from a position of strength with a consistently low unemployment rate and historically tight labor market providing some capacity to absorb federal job cuts.

Speaker Change: Firms Sterne.

Speaker Change: Stepping back to look at the broader franchise as you can see on slide 18.

Speaker Change: Operates in some of the nation's most affluent counties.

Speaker Change: And in large metro areas with some of the lowest unemployment rates in the country based on the most currently available data we recognize unemployment numbers in the greater Washington, MSA are expected to rise, but the region enters this from a position of strength with a consistently low unemployment rate and historically tight labor market, providing some capacity to absorb federal job cuts.

John Asbury: As for the impact of possible reductions in the federal workforce across our franchise, according to research posted by the Federal Reserve Bank of Richmond using Bureau of Labor Statistics data, the share of state unemployment that is federal government is relatively low in North Carolina at 1%, Virginia at 3.5%, and Maryland at 5.3% of total state employment. These figures exclude active duty military personnel. 80% of federal government employment in Virginia, the largest component of our franchise, is national security or defense agency related, which we expect to be relatively insulated from government workforce downsizing. About 39% of federal employment in Maryland is national security or defense agency related, and compared to 29% of the District of Columbia, where our presence is limited.

Speaker Change: As for the impact of possible reductions in the federal workforce across our franchise. According to research posted by the Federal Reserve Bank of regimen using Bureau of Labor statistics data the share of state unemployment that is federal government is relatively low in North Carolina to add 1%, Virginia at three 5% in Maryland at five 3% of total state.

Speaker Change: These figures exclude active duty military personnel.

Speaker Change: 80% of federal government employment in Virginia, the largest component of our franchise is national security or defense agency related which we expect to be relatively insulated from government workforce downsizing.

About 39% of federal employment in Maryland, as National Security and Defense agency related and compared to 29% of the district of Columbia, where our presence is limited.

John Asbury: There is a highly educated workforce in the region and the population is projected to grow steadily over the next five years.

Speaker Change: There is a highly educated workforce in the region and the population is projected to grow steadily over the next five years.

John Asbury: On the next few slides, we'll take take March 31 data from both companies and combine them using AUB's methodology. Note these figures do not include the effects of acquisition accounting or our expected sale of $2 billion of commercial real estate loans. Regarding non-owner occupied office, neither Sandy Spring nor AUB finance large office buildings. And as you can see, the average non-owner occupied office building loan is a little under $2 million for the combined loan portfolio. Note the positive asset quality metrics and the lack of regional concentration in the portfolio. There's little exposure to U.S. government tenants.

Speaker Change: On the next few slides will take March 31 data from both companies and combined them using AAV is methodology that these figures do not include the effects of acquisition accounting or our expected sale of $2 billion of commercial real estate loans.

Speaker Change: Regarding non owner occupied office, neither Sandy spring, nor AED finance large office buildings and as you can see the average non owner occupied office building loan, it's a little under $2 million for the combined loan portfolio.

Speaker Change: Note the positive asset quality metrics and the lack of regional concentration in the portfolio. There is little exposure to U S government tenants.

John Asbury: The large, mostly obsolete properties the government wishes to liquidate or large buildings they may leave are not comparable to what we have financed. In the District of Columbia, we have limited exposure of $73 million of non-owner occupied office. We do not currently see offices of particular concern in our combined credit portfolio. Turning to the multifamily portfolio, you can see that there's a wide geographic dispersion and strong asset quality metrics. Worth noting is the fundamentals of housing of all types throughout the greater Washington region remain strong. Due to the scarcity of land and cost of development, new development of housing in the region has been constrained.

Speaker Change: Large mostly obsolete property as the government wishes to liquidate our large lease buildings. They may leave are not comparable to what we have financed and the district of Columbia, We have limited exposure of $73 million of non owner occupied office. We do not currently see office is of particular concern in our combined credit portfolio.

Speaker Change: Turning to the multifamily portfolio you can see that there is a wide geographic dispersion and strong asset quality metrics worth noting is the fundamentals of housing of all types throughout the greater Washington region remained strong due to the scarcity of land and cost of development New development of housing in the region has been constrained.

John Asbury: There's also a positive cross current underway due to return to office mandate tailwinds.

Speaker Change: There is also a positive cross current underway due to return to office mandate <unk>. We believe this will benefit the greater Washington economy by supporting local retail establishments Nir in housing demand in ridership on the Metro which has one of the most significant post patent epic ridership recoveries among major U S Transit systems.

John Asbury: We believe this will benefit the greater Washington economy by supporting local retail establishments, near end housing demand and ridership on the metro, which has one of the most significant post pandemic ridership recoveries among major US transit systems. Regarding government contract finance, again using pro forma data as if the merger closed on March 31, not including any acquisition accounting impacts and using AUB's methodology on a combined basis. AUB has about $770 million of government contract loans with about 80% of that coming from the AUB side. AUB has been in this business for over 15 years without a single charge off.

Speaker Change: Regarding government contract finance again, using pro forma data as if the merger closed on March 31, not including any acquisition accounting impacts and using <unk> methodology on a combined basis.

Speaker Change: <unk> has about $770 million of government contract loans with about 80% of that coming from the AEP side.

Speaker Change: <unk> has been in this business for over 15 years without a single charge off we principally focus on national security and defense related contractors and our clients. In this segment have yet to see any material impacts from contract terminations. The government's expected increases in national security and defense spending as evidenced by their proposed a.

John Asbury: We principally focus on national security and defense related contractors and our clients in this segment have yet to see any material impacts from contract terminations. The government's expected increases in national security and defense spending as evidenced by the proposed record $1 trillion defense budget and the spending prioritization of modern technologies such as in missile defense, drone warfare, unmanned vehicles, artificial intelligence and secure communications is expected to bode well for our client base and for the region.

Speaker Change: Record one trillion dollar defense budget and the spending prioritization of modern technologies, such as in missile defense drone warfare unmanned vehicles artificial intelligence and secure communications is expected to bode well for our client base and for the region.

John Asbury: All of this means we believe our franchise is well diversified across some of the most attractive markets in the country and is resilient. Moving outside of the greater Washington region, particularly in the rest of Virginia and in North Carolina, we expect the potential impact of changes in federal government policies to be little different from anywhere else in the country. AB's footprint is defined as Maryland to North Carolina, with Virginia as our largest market and the linchpin of the franchise. We have done what we set out to do by intentionally and carefully building a franchise that we believe has never existed before and cannot be replicated in our markets.

Speaker Change: All of this means we believe our franchise is well diversified across some of the most attractive markets in the country and is resilient moving outside of the greater Washington region, particularly in the rest of Virginia, and North Carolina, We expect the potential impact of changes in federal government policies to be little different from anywhere else in the country.

Speaker Change: Aep's footprint is defined as Maryland, North Carolina, with Virginia is our largest market and the linchpin of the franchise. We have done what we set out to do by intentionally carefully building a franchise that we believe has never existed before and cannot be replicated in our markets. The number one regional bank depository market share in the lower mid Atlantic States of Maryland.

John Asbury: The number one regional bank, a depository market share in the lower mid-Atlantic states of Maryland and Virginia. And we plan to continue to expand our presence in North Carolina over time. We are aware of our market power and scarcity value and will seek to leverage it. To serve our customers and communities while creating value for our shareholders.

Speaker Change: The Virginia, and we plan to continue to expand our presence in North Carolina over time, we are aware of our market power and scarcity value and will seek to leverage it to serve our customers and communities, while creating value for our shareholders and I want to make two last points about the Sandy spring acquisition before I turn back to Rob.

John Asbury: And I want to make two last points about the Sandy Spring acquisition before I turn back to Rob. First, we are an experienced acquirer. This is my fourth merger at Atlantic Union and the integration work is on track and going well. Aided by the two companies' similar cultures, histories, mutual familiarity, and adjacent.

Speaker Change: First we are an experienced acquire this is my fourth merger at Atlantic Union and the integration work is on track and going well aided by the two companies similar cultures histories mutual familiarity and adjacency.

John Asbury: Second, as we received earlier than planned approval and closed one quarter earlier than expected, we were able to move up our planned core systems conversion to October 2025 from February 2026, which we expect to accelerate our cost savings.

Speaker Change: Second as we received earlier than planned approval and closed one quarter earlier than expected we were able to move up our planned core systems conversion to October 2025 from February 2026, which we expect to accelerate our cost savings.

Robert Gorman: Given the change in rate environment since we announced the merger, we wanted to refresh some of the data about the acquisition.

Speaker Change: Given the changing rate environment since we announced the merger we wanted to refresh some of their data about the acquisition Rob will now take you through an update on the merger economics and take you through a comparison of the original merger assumptions to the current expectations as you will see the financial logic remains comparable to or in some cases better than what we presented at <unk>.

Robert Gorman: Rob will now take you through an update on the merger economics and take you through a comparison of the original merger assumptions to the current expectations. As you will see, the financial logic remains comparable to, or in some cases, better than what we presented in the announcement. Thanks, John.

Speaker Change: The outspend.

Robert Gorman: As John noted, I'll now provide you with an update on the Sandy Spring Acquisition, Economics, and Integration. to take you through a comparison of the original acquisition financial assumptions to our updated projections. In short, this acquisition checks all of our strategic and financial boxes for M&A, just as we said it would. As noted, due to the accelerated receipt of regulatory approvals, we closed the deal on April 1st ahead of schedule. In conjunction with the transaction closing, we physically settled the previously announced forward sale of common equity on April 1st by issuing 11.3 million common shares.

Speaker Change: Rob.

Rob Gorman: Thanks, John as John noted I will now provide you with an update on the Sandy spring acquisition economics and integration activities to date and take you through a comparison to the original acquisition financial assumptions to our updated projections in short list acquisition acquisition checks all.

Speaker Change: Our strategic and financial boxes for M&A, just as we said it would.

Speaker Change: As noted due to the accelerated receipt of regulatory approvals. We closed the deal on April one the ahead of schedule in conjunction with the transaction closing we physically settled the previously announced forward sale of common equity on April 1st by assuming 11 3 million common.

Robert Gorman: We received approximately $385 million in net proceeds before expenses in full settlement of the forward sale. Also on April 1, we launched a $2 billion commercial real estate loan sale process that we previously discussed on the transaction announcement date, and we intend to complete the loan sale by the end of the current quarter. More expedited closing date for the acquisition allowed us to move forward our core systems conversion to October 2025 from February 2026 or approximately four months earlier than initially scheduled. This is expected to accelerate the achievement of full transaction cost savings of 27% of Sandy Springs expense base in 2026 and provide an additional quarter of savings in 2025.

Speaker Change: Common shares.

Speaker Change: Approximately $385 million in net proceeds before expenses in full settlement of the forward sale.

Speaker Change: Also on April 1st we launched the $2 billion commercial real estate loan sale process that we previously discussed on the transaction announcement date, and we intend to complete the loan sale by the end of the current quarter.

Speaker Change: More expedited closing date for the acquisition allowed us to move forward. Our core systems conversion to October 25 October 2025 from February 2026 were approximately four months earlier than initially scheduled.

Speaker Change: This is expected to accelerate the achievement of full transaction cost savings of 27% of Sandy Springs expense base in 2026 and provide an additional quarter of savings in 2025.

Robert Gorman: As previously noted, as part of the transaction planning, we chose to take proactive actions related to the capital raise and commercial real estate loan sale to better position and de-risk the combined company's balance sheet so that we are poised for future growth with substantial capital liquidity and without any commercial real estate concentration constraint.

Speaker Change: As previously noted as part of the transaction planning, we chose them take proactive actions related to the capital raise and commercial real estate loan sale to better position and de risked the combined company's balance sheet. So that we are poised for future growth with substantial capital liquidity and without any commercial real estate concentration constraints.

Robert Gorman: Now here's a quick snapshot of the combined franchise, which represents a pro forma look at the key measures as if the deal closed on March 31st instead of April 1st, and before any acquisition accounting adjustments, and before the proposed sale of CRE loans. On a pro forma basis, the combined company has approximately $38 billion of total assets, $30 billion of loans, $32 billion of deposits, and $13.5 billion in assets under management, as well as 183 branches across the footprint. Given the accelerated closing timeline and current macroeconomic environment, we have outlined the updated key transaction metrics on slide 26.

Speaker Change: Now here's a quick snapshot of the combined franchise, which represents a pro forma look at the key measures.

Speaker Change: If the deal closed on March 31, instead of April 1st and before any acquisition accounting adjustments and before the proposed sale of CRE loans.

Speaker Change: On a pro forma basis. The combined company has approximately $38 billion of total assets $30 billion of loans.

Speaker Change: $32 billion of deposits and $13 $5 billion in assets under management as well as 183 branches across the footprint.

Speaker Change: Given the accelerated closing timeline of current macroeconomic environment, we have outlined the updated key transaction metrics on slide 26.

Robert Gorman: The post-financial impacts noted here are substantially aligned with the key metrics at the announcement date and stack up well against our shareholder value proposition elements. We have created the largest regional bank in the Mid-Atlantic, continue to be well-capitalized, believe we will benefit from significant future capital generation, and expect to produce top quartile profitability metrics on a sustainable basis. Turning to slide 27, you can see the full comparison of the key metrics that close relative to the transaction announcement date. With the closing occurring earlier than originally announced, we are projecting to realize that this additional quarter's worth of financial benefits from the acquisition in 2025.

Speaker Change: Most financial impacts noted here are substantially in line with the key metrics at the announcement date.

Speaker Change: Stack up well against our shareholder value proposition elements.

Speaker Change: We have created the largest regional bank in the mid Atlantic continue to be well capitalized believes we will benefit from significant future capital generation and expect to produce top quartile profitability metrics on a sustainable basis.

Speaker Change: Turning to slide 27, you can see the full comparison of key metrics at close relative to the transaction announcement date with a closing occurring earlier than originally announced we are projected to realize an additional quarters were final.

Speaker Change: Financial benefits from the acquisition in 2025 inch.

Robert Gorman: Interest rates were a bit higher at closing than expected at announcement, which resulted in comparatively, comparatively greater interest rate related fair market value adjustments, leading to slightly greater tangible book value per share dilution, but greater earnings per share accretion, which results in a relatively unchanged earnback period of 2.1 years. We've already hit a number of key transaction milestones. In addition to our April 1st closing items, we also repositioned the Sandy Springs securities portfolio, which allows us to be to better position our pro forma asset liability and interest rate risk management objectives on a combined basis.

Speaker Change: Interest rates were a bit higher at closing and expected at announcement, which resulted in comparatively comparatively greater interest rate related fair market value adjustments, leading to slightly greater tangible book value per share dilution, but greater earnings per share accretion, which results in a relatively unchanged earn back period of two one years.

Speaker Change: <unk>.

Speaker Change: We've already hit a number of key transaction milestones. In addition to our April 1st closing items. We also repositioned the Sandy spring securities portfolio, which allowed us to be to better position, our pro forma asset liability and interest rate risk management objectives on a combined basis.

Robert Gorman: Regarding the commercial real estate loan sale, since the process is ongoing, we can't provide much specific commentary, but it is moving along well, and we intend to complete the transaction by the end of the current quarter. The targeted amount of the commercial real estate loans being sold remains at $2 billion and the sale perimeter is expected to align with our expectations from the acquisition announcement date.

Speaker Change: Regarding the commercial real estate loan sale since the process is ongoing we can't provide much specific commentary, but it is moving along well and we intend to complete the transaction by the end of the current quarter.

Speaker Change: Targeted amount of commercial real estate loans being so remains at $2 billion.

Speaker Change: And our sale perimeter is expected to align with our expectations from the acquisition announcement date.

Robert Gorman: We have added slide 29 to help illustrate our projected pro forma earnings composition and the conversion of acquisition related loan interest rate market creation into core cash earnings over time. As can be seen, core cash earnings will represent the majority of overall projected earnings in 2025, while acquisition-related loan interest rate accretion will represent a smaller component of total projected 2025 GAAP earnings. We distinguish accretion income arising from the acquired loans. Interest rate mark from increasing income arising from the acquired loans credit mark and view the loan interest rate mark as a built in scheduled accounting tailwind to our gap earning.

Speaker Change: We've added slide 29 to help illustrate our projected pro forma earnings composition and the conversion of acquisition related loan interest rate Mark accretion into core cash earnings over time.

Speaker Change: As can be seen forecast earnings will represent the majority of overall projected earnings in 2025, while acquisition related loan interest rate accretion will represent a smaller component of total projected 2025 GAAP earnings.

Speaker Change: We distinguish accretion income arising from the acquired loans.

Speaker Change: Interest rate Mark from accretion income arising from the acquired loans credit Mark If you have the loan interest rate Mark is a built in scheduled accounting tailwind to our GAAP earnings.

Robert Gorman: Interest rate marks are fundamentally different than credit marks. And as you can see from this slide, our expected accretion income is nearly all generated from loan interest rate accretion rather than from the credit mark accretion. In addition, we expect the loan fair value, mark value adjustment, accretion composition to decline as a percentage of total gap earnings on an accelerated basis over time, as loans mature in a renewed at market interest rate. In short, accretion income related to the acquired loan interest rate marks will convert to cash income at market interest rates over time. Therefore, we believe that accretion income related to the loan interest rate marks is sustainable to the earnings power of the post-acquisition combined company.

Speaker Change: Interest rate marks are fundamentally different in credit marks and as you can see from this slide our expected accretion income is nearly all generated from loan interest rate accretion rather than from the credit Mark accretion in.

Speaker Change: In addition, we expect the loan fair value Mark value adjustment accretion composition to decline as a percentage of total GAAP earnings on an accelerated basis over time as loans mature and are renewed at market interest rates.

Speaker Change: In short accretion income related to the acquired loan interest rate marks will convert to cash income at market interest rates over time.

Speaker Change: Therefore, we believe that accretion income related to loan interest rate marks is sustainable to the earnings power of the post acquisition the combined company.

Robert Gorman: Since the Sandy Spring transaction closed on April 1st, the impacts of the acquisition were not in the first quarter's reported capital metrics, but for illustrative purposes, we have projected our pro forma capital metrics as of March 31st as if the fully combined, as if fully combined for the acquisition close, the full settlement of the forward sale of common equity, and the commercial real estate loan sale. At a pro forma basis, our CET1 ratio would have been approximately 9.75% at March 31st. In addition, we expect that our CET1 ratio at the end of the current quarter, including all of the pro forma impacts noted, will be approximately 10%.

Speaker Change: Since the Sandy spring transaction closed on April one the impacts of the acquisition were not in the first quarters reported capital metrics, but for illustrative purposes, we have projected our pro forma capital metrics as of March 31 is if the fully combined is it fully combined for the acquisition close the full settlement of the forward sale of common equity.

Speaker Change: The commercial real estate loan sale at a pro forma basis, our CET one ratio would have been approximately 975% at March 31. In addition, we expect that our CET one ratio at the end of the current quarter, including all of the pro forma impacts noted will be approximately 10%.

Robert Gorman: As noted on slide 31, we've updated our full year 2025 financial outlook for AEB to include the estimated post-closed impact of the Sandy Spring acquisition beginning in April, and assuming that the proposed commercial real estate loan sale closes by June 30. Please note that the 2025 financial outlook includes preliminary estimates of purchase accounting adjustments that are subject to change. With that, we expect loan balances at the end of the year to be between $28 and $29 billion, while year-end deposit balances are projected to be within the $31 to $32 billion. We expect our allowance for credit losses to loans to fall between 1.2% and 1.3% and a full year net charge off ratio to fall between 15 and 25 basis points.

Speaker Change: As noted on slide 31, we've updated our full year 2025 financial outlook for AAV to include the estimated post close the impact of the Sandy Spring acquisition, beginning in April and assuming that the proposed commercial real estate loan sale closes by June 30. Please.

Speaker Change: Please note that the 2025 financial outlook includes preliminary estimates of purchase accounting adjustments that are subject to change.

Speaker Change: With that we expect loan balances at the end of the year to be between 28 and $29 billion, while year end deposit balances are projected to be within the 31% to $32 billion range.

Speaker Change: We expect our allowance for credit losses to loans to fall between one 2% and one 3% and our full year net charge off ratio to fall between 15% and 25 basis points.

Robert Gorman: Fully taxable equivalent net interest income for the full year is projected to come in between $1.15 billion and $1.25 billion. As a result, we are projecting that the full-year fully tax-equivalent net interest margin will fall in the range between 3.75% and 4% for the full year, driven by our baseline assumption that the Federal Reserve Bank will cut the Fed funds rate three times in 2025, beginning in June. We're also assuming that GDP growth was slow, but we are not forecasting a recession in 2025. In addition, we expect that the unemployment rate will rise in our markets, but remain below the national unemployment rate in 2025.

Speaker Change: Fully taxable equivalent net interest income for the full year is projected to come in between 115 billion and $1 two 5 billion.

Speaker Change: As a result, we are projecting that the full year fully tax equivalent net interest margin.

Speaker Change: Will fall in a range between 375% and 4% for the full year driven by our baseline assumptions at the Federal Reserve Bank will cut the fed funds rate three times in 2025 beginning in June.

Speaker Change: We are also assuming that GDP growth was slow, but we are not forecasting a recession in 2025.

Speaker Change: In addition, we expect that the unemployment rate will rise in our markets, but remained below the national unemployment rate in 2025. In addition to fully tax equivalent net interest margin projection and target ranges include the impact of our preliminary estimate of net accretion income from the series brink transaction, which is subject to change once purchase accounting adjustments are for.

Robert Gorman: In addition, the fully tax equivalent, net interest margin projection and target ranges include the impact of our preliminary estimate of net increase in income from the CME Spring transaction, which is subject to change once purchase accounting adjustments are finalized. and which can be evolved to a quarter to quarter. On a full year basis, adjusted operating non-interest income expected to fall between $165 million and $185 million. just at operating and underage expenses, which excludes the amortization of intangible assets expense of approximately $55 million for the full year are estimated to fall in the range of $665 million to $685 million.

Speaker Change: Finalized.

Speaker Change: And which can be volatile quarter to quarter.

Speaker Change: On a full year basis, adjusted non operating noninterest income is expected to fall between $165 million and $185 million.

Speaker Change: Operating and <unk> expenses, which excludes amortization of intangible assets expense of approximately $55 million for the full year are estimated to fall in the range of 665 million to $685 million.

Robert Gorman: Based on these projections, we expect to produce financial returns that will place us within the top quartile of our peer group and meet our objective of delivering top tier financial performance for our shareholders.

Speaker Change: Based on these projections, we expect to produce financial returns that will place us within the top quartile of our peer group and meet our objective of delivering top tier financial performance for our shareholders.

William Cimino: I'll now turn the call over to Bill to see if there are any questions for our research analyst community. I don't problem. And Lisa, we're ready for our first caller. Lisa, we're ready for our first caller. All right, let's see if we can message her. All right, Lisa, we see you messaging us that you're speaking, but we're not hearing you. I wonder if you're able to just release the first caller. Catherine, can you hear us? Oh yeah, can you hear me? Yeah, great. Thank you. All right. Way to improvise there. That was great.

Speaker Change: I'll now turn the call over to Bill to see if there are any questions from our research analyst community.

Speaker Change: And Lisa we're ready for our first caller please.

Speaker Change: Lisa we're ready for our first caller.

Speaker Change: Alright, let's see if we can message her.

Speaker Change: Alright listen we see your messaging is that Youre speaking, but were not hearing you.

Speaker Change: Okay.

Speaker Change: I Wonder if you are able to just released the first column.

Speaker Change: Okay.

Speaker Change: Kathryn can you hear us.

Kathryn: Oh, Yes can you hear me, yes, great. Thank you.

Speaker Change: All right.

Speaker Change: And provided there that's great.

Catherine Mealor: I wanted to maybe start just on the marks from the Sasser deal. Is there any way you can... I'd appreciate the kind of updated... It looks like the interest rate marks are coming up just a little bit, just given kind of your note, Rob, with a little bit more tangible book value dilution, but higher accretion. And just curious if you can update us on maybe what that low mark looks like. Yeah, so the loan mark as of 3.31 rates, as you know, interest rates went up a bit. Since the announcement date, we're looking at about a 7% of loans mark, which is about $800 million, which is higher than what we originally had projected, which is in the think about the $600 million range at the announcement date.

Speaker Change: One maybe just on the on the Mark from the SaaS or deal is there any way you can appreciate the kind of updated it looks like it looks like the interest rate marks are coming up just a little bit just given kind of your.

Speaker Change: Rob with a little bit more tangible book value dilution that higher accretion and just curious if you can update us on.

Speaker Change: What that low mark looks like.

Speaker Change: Yes so.

Speaker Change: The loan Mark as of $3 31 rates as you know interest rates.

Speaker Change: Went up a bit.

Mark: Since the announcement date, we're looking at about a 7% of loans, Mark which is about $800 million, which is higher than what we originally had projected which is in the think about the $600 million range at the announcement date. So.

Robert Gorman: So that interest rate fair value adjustment will, you know, through income over we're saying a seven year sum of the year digits, increasing income flow. Great. And then you are using some of your digits with that as a way to forecast kind of what your NIM forecast would look like. Exactly. Yeah, that's right. And within that, is there an assumption that you'll see kind of accelerated paydowns? Yeah, you know, the nature of the sum of the year digits would call for, you know, more paydowns earlier than what the maturity schedule might say. But so there's some, there's some of that in, in the projections that we have in there.

Speaker Change: Interest rate fair value adjustment will accrete through income over.

Speaker Change: We're saying is it's a seven year some of the year digits accretion income flow.

Speaker Change: Okay, Great and then you are using some of your digits with that as a way to forecast kind of what you are.

Speaker Change: Yes, forecasted look like exactly Yep, that's right.

Speaker Change: And within that is there an assumption that you'll see kind of accelerated paydowns.

Speaker Change: Yes, the nature of the some of the year digits would call for more paydowns earlier than what the maturity schedule might say, but so there is some.

Speaker Change: Theres some of that in the projections that we have in that so.

Robert Gorman: And maybe, Chair, because we've got a couple cuts coming the next few years, maybe that's... Yeah, exactly. It could be, it could be faster. It's kind of unpredictable. It can be volatile quarter to quarter, as you know, depending on what rate, where rates are, where the, where the loan yields are.

Speaker Change: And maybe share because <unk> got a couple of cuts coming in the next few years, maybe that's yes.

Speaker Change: Could be it could be faster.

Speaker Change: It's kind of unpredictable it can be volatile quarter to quarter as you know.

Speaker Change: Depending on what rates where rates are where they are with alone.

Speaker Change: Yields are.

Speaker Change: Okay great.

Robert Gorman: And then was there any change to the credit mark with Sasser? Actually, the credit mark came in a bit better than what we had projected at the announcement date. It's about a 1.3% mark on that entire portfolio versus what we had originally projected to be a bit higher, I think in the came in a little better.

Speaker Change: And then was there any change to the credit Mark.

Speaker Change: SaaS Sir actually.

Speaker Change: Actually the credit Mark came at a bit better than.

Speaker Change: What we had projected.

To date.

Speaker Change: So about a one 3% mark.

Speaker Change: That entire portfolio.

Speaker Change: Versus what we had originally projected to be a bit higher I think in the one 5%. So it came in a little better.

Speaker Change: Okay great.

Robert Gorman: And I know you can't, I know you're just in the midst of the CRE loan sale, but is there any, just given the volatility and the rates, is there any risk, do you think that that sale could come at a steeper discount, or do you, I think when you announced the deal was, you already had about a 10% discount to those loans, and just kind of curious how you're thinking about the risk of that being a little bit higher as you get towards the close. Yeah, you're right in terms of the projected discount. You know, obviously, with all the market turmoil rates this way and that just the general market turmoil up there, we're monitoring it very closely.

Speaker Change: And now you can I know you are just in the midst of the CRE loan sale, but is there any just given the volatility in the rates is there any.

Speaker Change: Risks do you think that that sale could come at a steeper discount or do you think I think when you announced the deal with you already had about a 10% discount to those lines and just kind of curious how youre thinking about.

Speaker Change: The risk of that being a little bit higher as you get towards the highest.

Speaker Change: Youre right in terms of the projected.

Speaker Change: Projected discount.

Speaker Change: Obviously with all the market turmoil rates this way of that.

Speaker Change: Just a general market turmoil out there we're monitoring it very closely.

Robert Gorman: Really can't talk too much specifically on that. But this point in time, we don't see there's any major negative to what we were projecting from at the close. Great. And just as kind of an update, most of the type of credit that you have in that loan sale are multifamily, retail. Can you just remind us kind of a composition of what's in that book? Yeah, the majority of it is retail and multifamily to your point. And those are the big things. I think there's some other miscellaneous things, but those are the big categories. And that hasn't changed since when we discussed it at the announcement date.

Speaker Change: I really can't talk too much specific on that but at this point in time, we don't see there's any major.

Speaker Change: The negative to what we were projecting.

Speaker Change: At the close.

Speaker Change: Okay, great and just as a kind of an update most of the type of credit that you have in that loan sale. Our multifamily retail can you just remind us kind of a composition of what's in that book.

Speaker Change: Yes, the majority of its retail and multifamily to your point.

Speaker Change: And those are the big things I think there is some other general Atlantic previous things, but those are the those.

Speaker Change: Those are big categories and that Hasnt changed.

Speaker Change: Since.

Speaker Change: When we discussed at the announcement date, Catherine one thing to point out. This is a relatively short duration portfolio would you comment on that Rob.

Robert Gorman: Catherine, one thing to point out, this is a relatively short duration portfolio. Would you comment on that, Rob? Yeah, the portfolio is probably the duration of maturity of those loans is probably in the three to four year range at this point. These are good loans. Obviously, these are not distressed loans at all. So the interest rate environment does affect that pricing. But again, we feel comfortable in the range that we talked about. But we'll see more to come on that.

Speaker Change: Yes, the portfolio is probably.

Rob Gorman: The duration of your maturity level maturity of those loans is probably in the 3% to 44 year range at this point so.

Rob Gorman: These are good good loans, obviously these are not distressed loans at all so.

Rob Gorman: The interest rate.

Rob Gorman: Environment does effect.

Rob Gorman: That pricing, but again, we feel comfortable in the range that we've talked about but we will see.

Catherine Mealor: I can't talk too much more specifics because we're in the middle of that. Yeah, the process is going well. The reason why I comment on the duration is don't go look at what was the 10-year treasury on October 12. are four. And what you're going to find is that it's comparable to or actually a little bit lower than upon announcement. So it's been up, it's been down, it's been all over. Yes, it's moved around quite a bit, but we're close. Okay, very helpful. I'll step out of the queue. Thank you. Okay. Thanks, Chaffer.

Rob Gorman: More to come on that I can't talk too much more specifics it because we're in the middle of that process is going well. The reason why I comment on the duration is don't go look at what was the 10 year Treasury on October 21, and what it is today you need to look at like the three year Treasury rate.

Rob Gorman: Four in which youre going to find is that it is comparable to or actually a little bit lower that by announcements. So it's been up it's been down it's been Oliver yes, it's moved around quite a bit but we're closely monitoring.

Rob Gorman: Yes.

Speaker Change: Okay very helpful. I'll step out. Thank you. Thank you.

William Cimino: And, Melissa, let's try this again for our next caller, please. Thank you. And the next question.

Speaker Change: Alright, thanks, Katherine and blending so much private again for our next caller. Please thank you.

Speaker Change: And the next question.

David Bishop: will be coming from the line of David Bishop of Holbein Group. Please go ahead. Hi, David. I think she said, I think she said my name. Hey, how you doing, John? Yes, we know it's you. Hey, just curious, you know, obviously, Sandy Spring is freshly in their rearview mirror, so to speak. But as you integrate the bank and you look at, you know, obviously a lot of noise with the tariff situation, but on a poor loan growth perspective, where do you think the that shakes out from a longer term perspective? Is it mid single digit, mid to high single digits?

Speaker Change: It will be coming from the line.

David Bishop: David Bishop of Halloween Group. Please go ahead hi.

Speaker Change: David.

Steve: I think Steve that I.

John Asbury: I think she said my name Hey, How're you doing John Yes.

Steve: If we can go with your question.

Steve: Just curious.

Steve: Obviously, sandy spring, especially in there.

Steve: Rearview mirror, so to speak but as you integrate the bank and you look at.

Steve: Obviously, a lot of noise with the tariff situation, but on a core loan growth perspective, where do you think.

Steve: That shakes out from a longer term perspective is it mid single digit mid to high single digits, where do you see that trending out over the longer term.

John Asbury: Where do you see that trending out over the longer? Unknown Speaker Yeah, over the longer term, I would say David that we're, we're looking at, you know, as we said before, striving for that upper single digit loan growth, I think in the medium term, that might be a bit lower, more in the mid single digit. But over the longer term, in a more normalized environment, we think upper single digits would be the way to go, or the projections we would have. There's a lot of opportunity up in the Sandy Springs footprint. And of course, the broader franchise is also upside down.

Steve: Yes.

David Bishop: I would say David that we're looking at.

David Bishop: As we said before subscriber towards that upper single digit loan growth I think in the.

David Bishop: The medium term that might be a bit lower in the more in the mid single digit.

David Bishop: Over the longer term and more normalized environment, we think upper single digits would be the way to go.

David Bishop: The projections, we would have.

David Bishop: There's a lot of opportunity up in the Sandy spring footprint and of course, the broader franchise is also upside down.

John Asbury: And North Carolina, not to say that Virginia doesn't have good growth, but those would allow us to, to grow a little faster than we have been. Correct.

David Bishop: North Carolina.

David Bishop: Virginia has had good growth, but those would allow us to.

David Bishop: To grow a little faster than we have correct. So some of the key points about sandy we acknowledged the disruption that is going on it will pass and so on the other side of this you still have extremely attractive markets. There is no franchise like us.

John Asbury: So some of the key points about Sandy, we acknowledge the disruption that is going on, it will pass. And so on the other side of this, you still have, you know, extremely attractive markets, there is no franchise like us. We, you know, fully release the Sandy Springs team to go do business, there are no constraints, or we, you know, we've set the thing up so that we can grow it without being concerned about CRE, concentration limits, liquidity ratio, loan to deposit ratio, and some of the things that they've had to deal with in the past.

David Bishop: We fully release the Sandy spring.

David Bishop: Our former Sandy spring team.

David Bishop: To go do business there are no constraints here.

David Bishop: So we've set the thing up so that we can grow it without being concerned about CRE concentration limits liquidity ratio loan to deposit ratio and some of the things that they've had to deal with in the past. We also bring more capital and capacity to the table we have some additional tools.

John Asbury: We also bring not just more capital and capacity to the table, we have some additional tools, too, in terms of commercial industrial banking capabilities in particular. you know, on the other side of the current disruption. Got it.

David Bishop: Two in terms of commercial industrial banking capabilities in particular, and so we are nothing has changed in terms of the strategic logic, and we see opportunity to gain market share and really grow the franchise there on the other side of the current disruption.

Robert Gorman: And then, turning to credit, it looked like there was a little blip on the C&I side. There was one, I think, about a $9 million credit that led it to not accrual. Just curious, in the loan loss provision this quarter, I assume most of it, the overlay was due to the economic overlay. I was curious if there was any sort of specific accruals or reserves for that C&I credit. Maybe walk through the provision this quarter. Yeah, for the most part, the increase in the reserve that you saw this quarter, $15 million increase, was primarily driven by the uncertainty in the market, this qualitative overlay.

David Bishop: Got it and then turned.

David Bishop: Turning to credit it looks like there was a little little blip on the CNI side. There was one I think about a $9 million credit by blended to non accrual just curious in the loan loss provision this quarter I assume most of it the overlay was due to the economic overlay is a curious if theres any sort of specific accruals our reserves for that C&I credit maybe walk through.

Speaker Change: The perfect desk chatter.

David Bishop: Part B.

David Bishop: The increase in the reserve that you saw this quarter $15 million increase was primarily driven by the <unk>.

David Bishop: Uncertainty in the market as qualitative overlay, we did have a bit of a specific reserve that we added for that particular credit.

Robert Gorman: We did have a bit of a specific reserve that we added for that particular credit, but that wasn't the material driver of the increase in the reserve. The reason why the reserve looks higher than what you would normally expect is because of the use of management judgment in the overlays. Otherwise, it would look pretty normal. Pardon me, I meant to say the provision is specifically. Got it. That's part of the question, John, you know, obviously. You noted the disruption, we're all aware of that. Usually where there's disruption, there's also, you know, some opportunities as well.

David Bishop: But that wasn't the driver of the material driver of the increase in the reserve, yes. It was related.

David Bishop: The reason why the reserve looks higher than what you would normally expect is because of the use of management judgment and the overlays otherwise it would look pretty normal.

David Bishop: Pardon me I meant to say the provision is.

David Bishop: Typically.

John Asbury: Got it and then final question John obviously.

Speaker Change: You noted the disruption we're all aware that usually where there's disruption. There's also some opportunities as well any early reads, where there could be some opportunities that are sort of like Yale unforeseen benefit from the term loan.

John Asbury: Any, any early reads where there could be some opportunities that are sort of like, you know, unforeseen benefits, you know, from all the turmoil?

David Ring: David Ring is here, our head of all of our commercial businesses. I'll ask David to comment, but I'll kind of headline it with this. Their pipeline looks pretty good. So Dave, what do you, we've all been up there quite a bit. What do you, what do you see? Yeah, I mean, there's kind of disruption everywhere. But you know, up there, you know, what we've done is we've kept The overwhelming majority. So there's a lot of continuity there to take advantage of what the market has to offer. And right now that disruption is. pipeline since the last time I looked at it about three weeks ago, doubled.

Speaker Change: David Ring is here, our head of all of our commercial businesses I'll ask David to comment, but I'll kind of headline it with this their pipeline looks pretty good so Dave what do we have all been up there quite a bit.

Speaker Change: What are you what are you safe.

Speaker Change: Yes, I mean, there is disruption everywhere, but up there.

Speaker Change: We've done is we've kept.

Speaker Change: The overwhelming majority of producers and.

Speaker Change: And leadership and so Theres a lot of continuity there to take advantage of what the market has to offer and right now that disruption is helping us pipeline since the last time I looked at it about three weeks ago doubled.

William Cimino: and they are definitely. Transactions up there and be very successful. Great, appreciate the color. Thank you, David. Thanks, and Lisa, we'll be back for our next caller. Thank you. One moment for the next.

Speaker Change: They are definitely motivated to do business. So we think we're going to find some good transactions up there can be various.

Speaker Change: Great appreciate the color.

David Bishop: Thank you David.

Speaker Change: Our next caller. Please thank you one moment for the next question is.

Brian Wojcicki: The next question will be coming from Brian Wojcicki of Morgan Stanley. Your line is open, Brian. Hello and welcome. We have picked up coverage on. It's my pleasure, and thank you for taking the question.

Speaker Change: The next question will be coming from Brian <unk> of Morgan Stanley. Your line is open.

Brian: Brian Hello, and welcome good morning picked up coverage is.

Brian: It's my pleasure and thank you for taking the question wanted to just start off on the net interest income guidance can you just walk us through what could get you to the low end of that range versus the high end of course, a lot of certainty in the environment from a gross perspective and also interest rates, but just wondering.

Robert Gorman: Why don't you just start off on the net interest income guidance. Can you just walk us through what could get you to the low end of that range versus the high end? Of course, a lot of certainty in the environment, both from a growth perspective and also interest rates, but just wondering how you're thinking about the high end versus the low end there. Yeah, in terms of the low end, I think You know, if we see significant, we're assuming three cuts from the Fed, if we, if we see multiple more, that'll be a fairly large, or be an impact on our variable rate loan book, which could drive, which would impact that projection negatively.

Brian: How youre thinking about the high end versus a while out there.

Brian: Yes in terms of.

Brian: The low end I think.

Brian: If we see significant.

Brian: We're assuming three cuts from the fed if we if we see multiple war there'll be a fairly large will be an impact on our variable rate loan book, which could drive.

Brian: Which would impact that projected negatively.

Robert Gorman: In addition, if term rates came down significantly as well, part of the NIM, the, on the core side, part of the NIM expansion we're expecting relates to fixed rate loans repricing higher than what's on the books. We could see that that could shrink. At this point in time, our fixed rate loan book is, our portfolio is about five, a little over 5%, and we're repricing, renewing loans at about a six and a quarter, based on the current term rates. So that could, could affect it as well. And then, of course, just Net Loan Growth. We're not calling for a ton of loan growth this year.

Brian: In addition, if term rates came down significantly as well part of the.

Brian: NIM.

Brian: On the core side part of the NIM.

Brian: Expansion, we're expecting relates to fixed rate loans repricing higher than what's on the books, we could see that that could shriek at this point in time, our fixed rate loan book is portfolios.

Brian: Portfolio is about five little over 5% and we're repricing.

Brian: <unk> loans at about a six and a quarter based.

Brian: Based on the current term rates, so that could could effective as well and then of course just.

Brian: Net.

Brian: Loan growth.

Brian: We're not calling for a ton of loan growth this year.

Robert Gorman: But if we if we see runoff in the loan portfolio, that could affect that as well. And then the other side of that is, you know, if rates spike, then we could see an impact on the ability to lower deposit costs going forward too. So all that will come into play on the lower end. In terms of the high end, and not to mention, Brian, there is volatility in our assumption regarding the accretion income that's going to be coming through. That can be volatile, that could come in lower than our expectations, based on what we just talked about in terms of how we expect that to flow in over, you know, the seven year period.

Brian: Got it.

Brian: If we see runoff in the loan portfolio that could affect that as well.

Brian: Then the other side of that is if rates Spike then we could see.

Brian: The impact on the ability to lower deposit costs going forward to so Paulo that will come into play.

Brian: On the lower end.

Brian: In terms of.

Brian: Hi, Ann.

Brian: Not to mention Brian.

Brian: There is volatility in our assumption regarding the accretion income that's going to be coming through.

Brian: That can be volatile that could come in lower than our expectations based on what we just talked about in terms of.

Brian: How do we expect that to flow in.

Brian: Over the seven year period.

Robert Gorman: This year, based on the accelerated seven year, some of the year digit, you can get your quarter to quarter volatility on that. Yeah. That's a great cover. Thank you.

Brian: This year.

Brian: Just on that.

Brian: Accelerated 70 year somebody year digitally you can get to a quarter to quarter volatility on that yes.

Brian: That's great color. Thank you and then for my follow up on the reserve build this quarter I understand that the the main driver was just a more uncertain economic outlook and the overlays that you gave for the quarter, but I was just wondering if youre seeing any weakness in the portfolio.

Brian Wojcicki: And then for my follow up on the reserve bill to this quarter, I understand that the the main driver was just a more uncertain economic outlook, and the overlays that you gave for the quarter. But I was just wondering if you're seeing any weakness and the portfolio today, any signs that things could be deteriorating in either their portfolio or in the geographic footprint in general, anything standing out from client, client conversations, since the tariffs were announced, which is wondering if you had any color there. Thanks.

Brian: Today, any signs that things could be deteriorating and as is our portfolio or in the geographic footprint in general anything standing out from a client.

Brian: Alright conversations.

Brian: Since the tariffs were announced with just wondering if you had any color there. Thanks.

Douglas Woolley: Let's start with Doug Woolley, Chief Credit Officer. Sort of macro perspective on overall health of portfolio. Yeah, Brian. On tariffs, that's the big uncertainty. No one knows. No one knows what will go on, we'll spend the next couple of months. I'm diving into the client base to see what they think is the Primary, Secondary, and with the tail of that... There's nothing known right now about Paris. There's nothing known about, you know, pockets of credit quality issues or anything like that. Like any other bank, we're constantly surveilling the landscape to try to figure out what any given indicator might mean to anything, and there's just nothing that...

Brian: Let's start with Doug Woolley, Chief Credit officer sort of macro perspective on overall health of our portfolio, Yes, Brian on <unk>.

Brian: On tariffs that.

Brian: The big uncertainty no one knows what's going on.

Brian: One knows what will go on we will spend the next several months.

Brian: Diving into the client base to see what they think is the impact.

Brian: Primary secondary.

Brian: And with the tail of that impact is but there is nothing known right now of that tariffs, there's nothing known about.

Brian: Pockets of credit quality issues or anything like that.

Brian: Like any other bank, we're constantly surveilling the landscape.

Brian: To try to figure out what any given indicator might mean to anything and Theres just nothing that we see right now, yes, obviously, it's great uncertainty everywhere correct. Hence the specific reserve from that specific reserve correct correct correction that the use of management judgment to use the.

Douglas Woolley: That's obviously it's great uncertainty everywhere. Correct. Hence the specific reserve, not specific reserve, correct, correction, the use of management judgment to use the Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host Global Investment Services. But the tariff policies are ultimately creating a higher risk or elevated risk of a recession, and that's our point. And it's very difficult to know how this thing plays out, so it's creating a lot of uncertainty. As Dave mentioned, Dave Ring, Pipelines look good. They've been building. We question the pull through. So we do think that uncertainty can often create hesitancy.

Brian: Yes.

Brian: Increase the overlay slide 33 of the earnings supplement is a really good slide and this is put out by the Federal Reserve Bank of Richmond minutes their assessment of the tariff impact.

Brian: About the uncertainty that we're looking at and what we are addressing are attempting to address with the increase in the provision to deal with uncertainty.

Brian: The root cause of it is the tariffs it's not dead.

Brian: Our trade policy, it's not that we think that our portfolio. Our region is somehow disproportionately impacted by tariffs, it's not and we are in the federal Reserve's cap as you can see on slide 33, where no more impacted in this region by tariffs maybe last in many areas.

Brian: But the tariff policies are ultimately create.

Brian: Creating.

Brian: A higher risk of elevated risk of a recession and thats, our point and it's very difficult to know how this thing plays out so it's creating a lot of uncertainty.

Dave: Dave mentioned, Dave ring.

Dave: Pipelines look good they've been building we question the pull through so we do think that uncertainty can often create hesitancy, we know that from experience, but it's difficult to point to any particular segment and say this one and see how unduly impacted versus that one regionally I would say.

Douglas Woolley: We know that from experience. But it's difficult to point to any particular segment and say this one's, you know, unduly impacted versus that one.

Douglas Woolley: Regionally, I would say that certainly the greater Washington region, just because of, you know, concern about the various Fed cutbacks, federal cutbacks that are going on there in the workforce is creating an awful lot of angst. and is creating some slowdown in consumer spending and that sort of thing. It doesn't show up in the data yet. Go look at initial and continuing unemployment claims as we do, as recently as last week for Washington DC, for Maryland and Virginia. If you look at a couple of year trend line, there's an imperceptible difference. Nothing has really moved yet.

Dave: Certainly the greater Washington region, just because of concern about the various fed cut backs federal cutbacks that are going on out there in the workforce is creating an awful lot of angst.

Dave: And is creating some slowdown in consumer spending and that sort of thing it doesn't show up in the data yet.

Dave: Go look at initial and continuing unemployment claims as we do as recently as last week for a Washington D. C for Maryland, and Virginia. If you look at a couple of year trend line. There is an imperceptible difference nothing has really moved yet Maryland's unemployment rate is still the lowest.

Douglas Woolley: Maryland's unemployment rate is still the lowest 3.8%. There's no more popular state in America with a lower unemployment rate than Maryland and didn't change in March. It's 3.0. The next most popular state with the lowest unemployment rate is Virginia, which ticked up slightly at 3.2. So these are, you know, fundamentally we view these as pretty good economies. There's just a lot of concern and angst, but we think that as things clarify, the opportunities are going to be there. Greater Washington is a special case. We're going to have to get through whatever the disruption is and let that work.

Dave: Three 8% there is no more populous state in America with a lower unemployment rate in Maryland and didn't change in March was three point out. The next most populous state with the lowest unemployment rate is Virginia, which ticked up slightly at $3. Two. So these are fundamentally we view these as pretty good economies.

Dave: Is this just a lot of concern and angst, but we think that as things clarify the opportunities youre going to be there greater Washington is a special case theyre going to have to get through whatever the disruption is and let that work its way through.

Brian Wojcicki: That's really helpful. Thank you for taking my question. Thanks everyone.

Speaker Change: That's really helpful. Thank you for taking my questions.

William Cimino: And Lisa, we're ready for our next caller. Thank you.

Speaker Change: Thank you, Brian and Lisa we're ready for our next caller. Please thank you.

Steve Moss: And the next question will be coming from the line of Steve Moss. of Raymond James. Your line is open. I see. Hey, John. Good morning, everyone.

Speaker Change: And the next question will be coming from the line of Steve Moss.

Speaker Change: Of Raymond James Your line is open.

Speaker Change: Good.

Speaker Change: Hey, John Good morning, everyone, maybe just.

John Asbury: Maybe we're just maybe this will take a tacky but just curious with regard to the commercial real estate loan sale. The phrasing in this quarter's deck is at least $2 billion versus before it's kind of up to $2 billion. Just wondering, are you guys thinking about upsizing the sale? No, not at this point. We are Steve where $2 billion is basically the number that we are looking at targeting and feel good about that. We wouldn't be upsizing that. for any reason at this point in time, or for that matter, downsizing it at all, if we feel comfortable with that number.

Speaker Change: Maybe this will take a taxi, but just curious with regard to the commercial real estate loan sale.

Speaker Change: The phrasing in this quarter's deck is at least $2 billion.

Speaker Change: Before is kind of up to $2 billion. Just wondering are you guys thinking about upsizing.

Speaker Change: The sale.

Speaker Change: No not at this point.

Speaker Change: Steve.

Steve: $2 billion is basically the number that we are looking at targeting and feel good about that we wouldn't be upsizing that.

Speaker Change: Yes.

Speaker Change: We're ready for any reason at this point in time or for that matter a downsizing in at all.

Speaker Change: So we feel comfortable with that number that's.

John Asbury: That's the plan. got yet.

Speaker Change: That's the plan.

James Rattling Leaf: And then in terms of, you know, the load mix here this quarter, quite the pullback in construction, just wondering, you know, is that a trend you expect to continue? Or do you expect to kind of refill that bucket here over time? James Rattling Leaf, Construction Loan Balancers. Steve, just a nuance on that. A lot of that decline you see was basically construction loans completing, construction completing and going into any term loans in the real estate buckets that you saw grow. At the talk about what we're seeing in the go forward. In general, the construction book and pipeline is down.

Speaker Change: Got you and then in terms of.

Speaker Change: The loan mix here this quarter quite the pullback in construction just wondering.

Speaker Change: Is that a trend you expect to continue or do you expect to kind of refill that bucket here overtime.

Speaker Change: The pipeline.

Speaker Change: Loan balances.

Speaker Change: Steve just just a nuance on that a lot of that decline you see was basically construction loans completing.

Speaker Change: Construction, completing or going into any firm.

Speaker Change: Term loans in the real estate buckets that you saw grow.

Dave: I'll, let Dave.

Speaker Change: Doug.

Speaker Change: Talk about what we are seeing in the go forward in general the construction book and pipeline is down.

Speaker Change: If you think about what customers have to do to make that project makes sense.

John Asbury: to make the project make sense. University of Michigan. Thank you. components of their decision. natural for it to slow down a little bit. What we are seeing is now an increase. and our overall. So it's kind of going to get offset by some of the other aspects. or some of the other parts. We have active conversations going on with construction. Projects. I'll give you one example. We just met with a with a developer who has put five projects on pause. simply waiting for the right thing. We have that kind of building pipeline behind this. I just want to underscore something Rob said earlier, which is that almost always when you see loans leave construction, what's happening is they're moving into permanent mortgage, what we call mini-perm.

Speaker Change: Triste rates the way they are and other things.

Speaker Change: Other components of their decision making.

Speaker Change: It's a natural for it to slow down a little bit, but what we are seeing now an increase in our in our overall real estate pipeline. So it's kind of going to get offset by some of the other.

Speaker Change: Asset classes or some of the other parts of the pipeline that marketing as well.

Speaker Change: We have active conversations going on with construction.

Speaker Change: Projects I'll give you. One example, we just met with the with a developer who has five projects on pause simply.

Simply waiting for the right time to start them up again, so we have that kind of building pipelines behind us we just arent seeing it.

Speaker Change: Yet materialize.

Rob Gorman: And I just wanted to underscore something Rob said earlier, which is that almost always when you see loans to leave construction, what's happening is they're moving into permanent mortgage what we call mini perm. So once they get this difficult of occupancy we re code.

John Asbury: So once they get the certificate of occupancy, we recode as no longer a construction loan. It's what we call permanent mortgage. And so it simply rolls to that other category. And so refilling the bucket of construction is sort of the goal there.

Speaker Change: As no longer construction line.

Rob Gorman: We would call permanent mortgage.

Rob Gorman: And so it's simply roles to that other category and say refilling the bucket of construction.

John Asbury: Interestingly, we just held a fairly large event with real estate developer clients and centers of influence here in central Virginia. And in talking to them, they were more optimistic than I would have expected. I worked the room, as I'm prone to do. I conducted my survey. What are you seeing? How are you feeling? Are you seeing any tariff impacts? And to Dave's point, some of them are sort of pausing, but they see opportunity. Only one said that they have actually experienced a cost increase at this moment. due to tariffs, but they all said it's coming.

Rob Gorman: The goal there interestingly, we just held a fairly large of that with.

Rob Gorman: Real estate delap develop our clients and centers of influence here in central Virginia and in talking to them.

Rob Gorman: We're more optimistic than I would've expected I work the room as I'm prone to do.

Rob Gorman: I conducted my survey what are you seeing how are you feeling or seeing any tariff impacts and today's point, yes. Some of them are sort of pausing, but they see opportunity only one said that they are actually experienced a cost increase at this moment on a project due to tariffs, but they all said it's coming.

John Asbury: The materials aren't in the country right now. Obviously, prices are going to go up. So we still see the fundamentals are good. It's going to be a timing issue. That's why we question the pull through on the hope that makes sense. Yes, it does.

Rob Gorman: Materials that arent in the country right now.

Rob Gorman: Obviously prices are going to go up so we still see the fundamentals are good it's going to be a timing issue. That's why we question the pull through on our pipeline.

Rob Gorman: Hope that makes sense.

Robert Gorman: And then just with regard to credit and more the reserve bill here, you know, on the guide 120 to 130 ACL, you know, rough calculation here looks like that implies, you know, further, further result, qualitative reserve billing over time. Just curious, you know, how, how much do you think is, you know, just as you put the overlays here, you know, if tariffs moderate, do we expect the, the ACL guide to come down? Or are there areas that you guys are just saying, too much uncertainty, we're going to probably build further? Yeah, I think it's, you know, from the tariff and the probabilities of recession decline, as you know, they've increased.

Rob Gorman: Yes, It does and then just with regard to.

Rob Gorman: Credit and more of the reserve build here on the guide 120 to 130 ACL.

Rob Gorman: Rough calculation here it looks like that implies further further.

Rob Gorman: Qualitative reserve building over time just curious.

Rob Gorman: <unk>.

Rob Gorman: How how much do you think.

Rob Gorman: Just as you put the overlays here.

Rob Gorman: If tariffs moderate can you expect the ACL guide to come down.

Rob Gorman: Or are there areas that you guys are just saying too much uncertainty youre going to.

Rob Gorman: Probably built furnace.

Rob Gorman: Sure.

Rob Gorman: Yes, I think if.

Rob Gorman: From the tariff and the probabilities of recession decline as you know they've increased.

Robert Gorman: which is part of the reason we put the qualitative overlays on it. You know, we could see that that 120 to 130 could be a bit lower. At this point in time, that 120 to 130 also includes sand and spring and the, you know, CSO double count and the PCB allowance impact, so it's really related to that. And applying what we did at Atlantic Union with qualitative overlays has also found its way into those estimates. So to your point, it could be better than that, but really depends on how this current tariff situation plays out from, you know, the impacts on the economic environment.

Rob Gorman: Which is part of it.

Rob Gorman: The reason, we put the qualitative overlays on it.

Rob Gorman: We could see that that 120 to 130.

Rob Gorman: It could be a bit lower.

Rob Gorman: At this point in time that 120 to 130.

Rob Gorman: Also includes sandy spring and the.

Rob Gorman: Seasonal double count.

Rob Gorman: In the PCB allowance impacts so it is really related to that and.

Rob Gorman: Apply what we did at Atlantic Union with qualitative overlays has also.

Rob Gorman: Found its way into those estimates so.

Rob Gorman: To your point.

Rob Gorman: It could be it could be better than that.

Rob Gorman: But really depends on how the Hello.

Rob Gorman: The current tariff situation plays out from the impacts on the economic environment and Rob for absolute clarity just to break this down what we're reporting today is AED.

Robert Gorman: And Rob, for absolute clarity, just to break this down, what we're reporting today is AUB only, pre-merger, because. So at this point, yeah, so what you saw today was AUB only, which was 1.13%. And we lay on sand and spring. And so we deal with that. You'll see that come through this quarter. But just what I'm, the point I'm trying to make is for AUB, the reserve you're looking at. Now, end of Q1 is the right reserve in our assessment. Correct. That's a 330. Correct. And then we will take during Q2, we'll go through the work to set the reserve or set the allowance, I should say, for Sandy Spring.

Rob Gorman: Only pre merger because right. So at this point, yes. So what you saw today was <unk>, which was one 3% and we believe and we lay on Sandy spring and so we deal with that Youll see that come through this quarter, but just what the point I'm trying to make is for AAV The reserve.

Rob Gorman: Youre looking at.

Rob Gorman: Now end of Q1 is the right reserved in our assessment.

Rob Gorman: For Atlantic Union, correct $3 30, we'll go at it.

Rob Gorman: And then we will take during Q2.

Rob Gorman: We will go through the work to set the reserves are set the allowance I should say for for Sandy spring. So when we come out and released at the end of Q2.

Robert Gorman: So when we come out and when we release at the end of Q2, Our opinion is that is the right reserve based on everything that we know for the combined company. That is different from saying, and we still have work to do to continue to build it up, so on and so forth. So it's our opinion at that point in time. Yeah, it's really, yeah. And it also, you know, will be combined organization as of June 30, when we report results and the allowances that you know, a lot of this relates to what's the economic forecast.

Rob Gorman: Our opinion is that is the right reserve based on everything that we know for the combined company that is different from saying and we still have work to do to continue to build it up so on and so forth. So it's our opinion as at that point in time, yes.

Rob Gorman: And it also will be combined organization as of June 30 will be.

Rob Gorman: <unk> report results in the allowances.

Rob Gorman: There are a lot of this relates to what's the economic forecast, we use Moody's and we have a weighted.

Robert Gorman: We use movies and we have a weighted movie scenarios. So if that were to change significantly one way or the other, you know, we might see those numbers. Yeah, Rob, one other thing. There's a reason why we keep commenting that 46% of the entire loan portfolio that's different from the allowance. You have to acknowledge that that's a good. Yeah, the 46% includes a credit component. And a lot, a lot of that relates to the interest rate, rate mark, due to where we are in the rate cycle. That's right. Right. Okay.

Rob Gorman: These scenarios so if that were to change significantly one way or the other we might see those numbers shift a little.

Rob Gorman: One other thing Theres, a reason why we keep commenting that 46% of the entire loan portfolio has been marked that's different from the allowance that you have to acknowledge that that's a good thing.

Rob Gorman: Okay.

Rob Gorman: Yes, that's a 46% includes a credit component.

Rob Gorman: A lot of that relates to the interest rate Great Park due to where we are in the rate cycle.

Rob Gorman: That's right.

Steve Moss: I appreciate all the callers. Thank you very much, guys. Thank you, Steve.

Speaker Change: Right. Okay. I appreciate all the color. Thank you very much guys. Okay. Okay. Thank you, Steve and Lisa we're ready for our next caller. Please thank you.

William Cimino: And Lisa Rority for our next caller, please. Thank you.

Stephen Scouten: And the next question will be coming from the line of Stephen Scouten. of Piper Sandler. Your line is open. Hi, Stephen. Good morning. Good morning, Stephen. Morning, everyone. Thanks for the time. covered a lot of things in good detail already.

Stephen Scouten: And the next question will be coming from the line of Stephen Scouten.

Speaker Change: Piper Sandler your line is open.

Speaker Change: Morning, Stephen.

Stephen Scouten: Hey, good morning, everyone. Thanks for the time.

Speaker Change: You've covered a lot of things in good detail already but I guess one of the things obviously that I think has been weighing on the stock as you mentioned tariffs, but it's also <unk>.

Douglas Woolley: But I guess one of the things obviously that I think has been weighing on the stock is, you know, you mentioned tariffs, but it's also Doge ideology here and fear and I guess, around the government contracting business, which you identified is really pretty small. It hasn't had any net charge-offs over the last four quarters. If one of those loans, let's say, were to go bad, how do you think about loss given default rates on a loan like that, and how do you think about, you know, theoretical loss content if there was? Well, this is secured lending.

Stephen Scouten: Ideology here in fear.

Stephen Scouten: I guess around the government contracting business, which you identified as it's really pretty small and Hasnt had any net charge offs over the last four quarters, if one of those loans.

Stephen Scouten: Let's say were to go back how do you think about loss given default rates on a loan like that and how do you think about theoretical loss content. If there was weakness there.

Douglas Woolley: Doug, you want to take that one? Secured lending. The, uh, a lot of the facilities are margin. Contracts, Billings rather, and these are normally highly desirable contracts, so the contracts themselves are not going to be the issue. run. This is a highly private equity group driven market with ownership. And there would be there will be a lot of players going after a Spum on the little. So we would think, we would think loss given the fall would be very low. Yeah, we've actually seen that before. One thing I'll point out, you look at the criticized percentage, and you may say that's high.

Stephen Scouten: Well this is secured lending.

Stephen Scouten: Doug do you want to take that one had secured lending.

Stephen Scouten: The.

Stephen Scouten: A lot of the facilities are margins against contracts.

Stephen Scouten: That.

Stephen Scouten: Billings rather.

Stephen Scouten: And these are normally highly desirable contracts. So the contracts themselves are not going to be the issue it could be how the company is run.

Stephen Scouten: This is a highly private equity driven market with ownership.

Stephen Scouten: And there would be.

There will be a lot of players going after.

Stephen Scouten: Alcon client it was it was bundling a little bit.

Stephen Scouten: So we didn't think we would think loss given default would be very low yes, we've actually seen that before one thing I will point out you look at the criticized percentage and you may say that's high that's not new it's looks like that for years.

Douglas Woolley: That's not new. It's looked like that for years. It's kind of the nature of the beast. It's a complex business. The government is slow to approve contracts. When contracts are awarded, there are often disputes. But it is a good business. There's a reason why we have principally focused on national security and defense. There's a reason why I'm not aware of a single contract termination or stop work in the national security or defense-related contract portfolio. We have some that are not, but that's the minority. And it's also important to understand that in many cases, the personnel have to have security clearances, which is exceptionally valuable and rare.

Stephen Scouten: Kind of the nature of the Beast.

Stephen Scouten: It's a complex business. The government is slow to approve contracts when contracts are awarded they're often disputes.

Stephen Scouten: But it is a good business. There is a reason why we are principally focused on national security and defense. There's a reason why we havent seen I don't.

Stephen Scouten: I'm not aware of a single contract termination or stop work and the national security or defense related contract portfolio. We have some that are not but that's the minority.

Stephen Scouten: And it's also important to understand that in many cases the personnel have to have security clearances, which is exceptionally valuable.

Douglas Woolley: So this is a really interesting space. It's kind of a We've, in 15 years, we have never had a charge-off. I am not saying we will never have. And I'm simply saying that our experience has been really good. And Stephen, it's a very high variable cost business. So the companies can flex up and down if they lose contracts. And again, their employees are highly desirable. So if they happen to lose a contract... As often as not, those employees go over to whoever won the contest. So because of that, it's very easy to flex.

Stephen Scouten: In rare. So this is a really interesting space, it's kind of a niche.

Stephen Scouten: And we've been in 15 years, we have never had a charge off I am not saying, we will never have a charge offs I'm simply saying that our experience has been really good and Steven it's a very high variable cost business.

Stephen Scouten: So the companies can flex up and down a bit lose contracts.

Stephen Scouten: Again, there their employees are highly desirable.

Stephen Scouten: So if they happen to lose the contract.

Stephen Scouten: As often as not those employees go over to whoever won the contract.

Stephen Scouten: So because of that it's very easy to flex the expenses.

Douglas Woolley: It's really great color. Thanks. Everything else I had has basically been covered. Appreciate the time this morning. Okay, Stephen, we're waiting for our last caller, please. Thank you. And the next question will be coming from the line of Russell Gunther of Stephens. Your line is open. Hi, Russell. Hey, good morning, guys. Hey, morning, John. Appreciate the incremental disclosure this quarter.

Speaker Change: That's really great color. Thanks, everything else I had has basically been kind of appreciate the Thomson one okay, David Amy we're ready for our last caller. Please.

Speaker Change: And the next question will be coming from the line of Russell Gunther of Stephens. Your line is open.

Russell Gunther: Hi, Russell Hey, good morning, guys, Hey, good morning, John.

Russell Gunther: Appreciate the incremental disclosure this quarter just wanted to get a sense for how you guys are thinking about the qualitative reserve build relative to the direct and indirect exposure to does really just qualitatively trying to get a sense to the extent for which you think you've ring fence. This overhang for AEP.

Russell Gunther: Just wanted to get a sense for how you guys are thinking about the qualitative reserve build, relative to the direct and indirect exposure to DOJ. Really just qualitatively trying to get a sense to the extent for which you think you've ring-fenced this overhang for AUB. Yeah, I would say, Russell, that, you know, some component of Doge in there, but it's not the big driver of the qualitative factor. The real, the real impact is is related to potential recession, probabilities of recession going up as a result of tariffs and, you know, the the issues related to that, that could impact the economic environment going forward negatively.

Russell Gunther: Yes, I would say.

Russell Gunther: Russell that.

Russell Gunther: There is some component of <unk> in there, but it's not the big driver of the qualitative factor.

Russell Gunther: The real.

Russell Gunther: Impact is related to a potential recession probabilities of recession going up as a result of tariffs.

Russell Gunther: No.

Russell Gunther: <unk>.

Russell Gunther: Issues related to that that could impact the economic environment going forward negatively so little little impact from a <unk> perspective, we don't really think there is.

Russell Gunther: So little, little impact from a DOGE perspective, we don't really think there's much Doug can comment on this, a real big impact from a credit perspective. From DOGE, we think there may be a potential growth, you know, issue with that in the northern part of, yeah, right, not in our franchise. in Northern Virginia, DC areas. So, so again, not a not a big factor at all in that overlay.

Speaker Change: Much Doug can comment on this a real big impact from a credit perspective.

Russell Gunther: From dose, we think there may be a potential growth issue with that and the northern point of view.

Russell Gunther: Right.

Russell Gunther: Franchise, but.

Russell Gunther: In the northern Virginia and DC.

Russell Gunther: Areas so.

Russell Gunther: So again not a big factor at all in the overlay so.

John Asbury: So, again, as we've said, the overlay that you saw was for the AUD pre merger. where we're pretty limited in terms of greater Washington region. And the government contract portfolio would be the one that would, I guess you would say, be most exposed. And you've seen our arguments that we're actually in a really good spot. And with what could be a trillion dollar record defense budget, we actually think that those contractors are going to grow and are going to have opportunity, and there's more capital going into that space. To paint a picture kind of a window into our world, in Virginia, if you leave northern Virginia, and you head south, and you talk to any business person, It is unlikely anyone's going to mention DOJ.

Russell Gunther: Again.

Russell Gunther: We've said that.

Russell Gunther: <unk> that you saw was for the AED pre merger franchise.

Russell Gunther: And we're we're pretty limited in terms of greater Washington region, and the government contract portfolio. It would be the ones that would I guess, you would say be most exposed and you've seen our arguments that were actually in a really good spot.

Russell Gunther: What could be a trillion dollars record defense budget, we actually think that.

Russell Gunther: Those contractors are going to grow and they're going to have opportunity and there is more capital going into that space.

Russell Gunther: To paint a picture of kind of a window into our world and Virginia, If you will.

Russell Gunther: In Northern Virginia, and you head South and you talked to any business person.

Russell Gunther: It is unlikely anyone's going to mentioned dose.

John Asbury: It's not a big deal south of the greater Washington region. They will talk about tariffs, they will talk about economic uncertainty. So the government, you know, cost reduction issues are more regionalized in that greater Washington region. Where they show up in Virginia or in North Carolina is no different, in my opinion, than anywhere else in the United States. And it would be in the context of university research cuts, maybe some municipal grants, but there's nothing that's really unique as it relates to that elsewhere in Virginia. Once you really get out of that greater Washington region, move over to Hampton Roads, where there's another large population of federal employees, that's all about defense.

Russell Gunther: Not a big deal south of the greater Washington region. They will talk about tariffs they will talk about economic uncertainty.

Russell Gunther: So the government cost reduction.

Russell Gunther: Issues are more regionalized and that greater Washington region, where they show up in Virginia or in North Carolina is no different in my opinion than anywhere else in the United States.

Russell Gunther: B in the context of University research pads, maybe some municipal grants, but theres nothing thats really unique.

Russell Gunther: As it relates to that elsewhere in Virginia, once you really get out of that greater Washington region move over to Hampton roads, where theres. Another large population of federal employees, that's all about defense.

John Asbury: And with the president's executive order to increase American shipbuilding, a big winner is likely going to be Hampton Roads and Newport News Shipbuilding and the largest naval base in the world. So it's, it's very important just to understand that this franchise is very diversified, and you do see regional differences. Hope that helped. does quite a bit. I appreciate the color.

Russell Gunther: And with the.

Russell Gunther: The President's executive order to increase American Shipbuilding, a big winter is likely going to be Hampton roads, and Newport News shipbuilding in the largest naval base in the world So on and so forth. So.

Russell Gunther: It's really important just to understand that this franchise is very diversified.

Russell Gunther: And you do see regional differences I hope that helps.

Speaker Change: It does quite a bit I appreciate the color and then just last one for me we've touched on NII guide in.

Robert Gorman: And then just last one for me, you know, we've touched on NII guides. the range of the pro forma NIM, but it would be helpful to get a sense prior to layering all that in. You know, the margin this quarter came in better than guide. Just how are you thinking about legacy AUB and 2Q prior to folding in Sandy Spring? Thank you. Yeah, Russell. So in terms of just AUB, we do expect some continued expansion of the margin in Q2. As we, if you look back at what we got it to, for the full year AUB standalone in January, we said 345 to 360, we think we'll be heading higher than, you know, that low end.

Speaker Change: The range of the pro forma NIM, but it would be helpful to get a sense prior to layering all that in the margin. This quarter came in better than guide just how are you thinking about legacy <unk> and QQ prior to folding in Sandy spring. Thank you.

Speaker Change: Yes. So in terms of just B, we do expect some continued expanse.

Speaker Change: Expansion of the margin.

Speaker Change: In Q2.

Speaker Change: As we if you look back at what we guided to.

Speaker Change: For the full year <unk> Standalone in January we said $3 45 to 360, we think will be.

Speaker Change: Heading higher then.

Robert Gorman: Obviously, we're at 345 this quarter. That expansion is on the back of continuing deposit costs coming down. We have about 800 million per quarter over the next few quarters of CDs, repricing, I think the cost of those, that CD portfolio is about 4.3% now, and we're repricing those in the 375 to 4% range. So that will continue to help. And then we are seeing fixed rate loans reprice higher, as I mentioned earlier, you know, from a portfolio of fixed rate loan yield of about a little over 5%, repricing in the six and a quarter range, give or take.

Speaker Change: That low and obviously, we're a $3 45 this quarter.

Speaker Change: That expansion is on the back of it.

Speaker Change: Continuing deposit costs coming down we have about $800 million.

Speaker Change: Per quarter over the next few quarters of Cds re pricing I think.

Speaker Change: Cost of those CD portfolios above four 3% now.

Speaker Change: And we are repricing those into 375% to 4% range. So that will continue to help and then we.

Speaker Change: We are seeing fixed rate loans reprice higher as I mentioned earlier from a.

Speaker Change: Portfolio of fixed rate loan yield of over.

Speaker Change: Little over 5%.

Speaker Change: Repricing and a 6% quarter range give or take.

Robert Gorman: So those are helpful, and that will continue as we go into this quarter and third and fourth quarters.

Speaker Change: So those are helpful and that will continue as we do.

Speaker Change: This quarter in the third and fourth quarters.

William Cimino: Beyond that, we think, you know, Sandy Spring. just for color, have seen their their margin expanded nine basis points this quarter, primarily on the backs of lower on the back of lower deposit costs. And we expect that that will will continue to adjust their deposit rates down as well. So that's a nice tailwind for us going forward. I appreciate it, guys. Great color. Thank you. Thanks, Russ. Thanks, everybody, for joining us today. We look forward to talking with you and our next quarterly update. Have a good day. Thank you all for joining today's conference call.

Speaker Change: Okay.

Speaker Change: Beyond that we have.

Speaker Change: Thank you Sandy.

Speaker Change: Sandy spring.

Speaker Change: Just for color have seen their margin expanded nine basis points. This quarter, primarily on the backs of lower on the back of lower deposit costs and we expect that that will we will continue to adjust.

Speaker Change: Their deposit rates down as well so.

Speaker Change: That's a nice tailwind for us.

Speaker Change: Going forward.

Speaker Change: I appreciate it guys great color. Thank you.

Speaker Change: Thanks, Ron Thanks, Ross and thanks, everybody for joining US today, we look forward to talking with you in our next quarterly update I have a good day.

Speaker Change: Thank you all for joining today's conference call you may now disconnect.

Unknown Executive: You may now disconnect.

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