UCBI - Earnings call transcript Q1 2018 | United Community Banks, Inc.

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Operator

Good morning and welcome to United Community Banks First Quarter 2018 Earnings Call. Hosting our call today are Chairman and Chief Executive Officer, Jimmy Tallent; President and Chief Operating Officer, Lynn Harton; Chief Financial Officer, Jefferson Harralson; and Chief Credit Officer, Rob Edwards. United’s presentation today includes references to operating earnings, pre-tax, pre-credit earnings and other non-GAAP financial information.

For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release, as well as at the end of the investor presentation. Both are included on the website at ucbi.com. will quarter’s on and SEC; the Form replay this first filed presentation and Company's the the of night in last X-K call website of at earnings section investor release were a Investor ucbi.com. Copies Relations available of be with the may be Please statements that representatives by this during made aware of forward-looking call, be United. other considered of information and uncertainties as Page X the Any in XXXX with risks well by its forward-looking website. described the included provided of as statements the Company SEC in light should on XX-K, Company’s be Form filings on its and And turn at the will Tallent. Jimmy to this I call time, over

Jimmy Tallent

thank earnings you and our joining call. morning first quarter Good for

in by Let saying that me our very start results first the once quarter. am again I pleased with

by out in the to measure. standout it is It fact, credit gates started a was results. our In who strong nearly every bankers producing quarter XXXX a

quarter quarter. share operating was benefits was last from tax our from the earnings and up per XX% reform included our from was new Our This in $X.XX which $X.XX. part expected special for partnership or seasonality which for provision due a increase months which quarter. These in was by results headwind were and Navitas with beginning Navitas for from operating the EPS achieved reduced despite two $X.XX

direction of ROTCE profitability quarter. result on and the operating moved Our the All goals to this ROA X.XX% to ago was out ROTCE per EPS a The putting of in moved and improvement XX% as year XXXX. X.X share assets remainder of positive a expect growth measurements us in for up momentum reach XXXX. to we $X.XX by continue XX% XX.X%, moved the operating operating right pace was in an and return from increase the to accomplished on an

provided margin Continued layoff and expense a driven a expansion wider by quarter. and core discipline the meaningful margin Navitas during

off run to although an rate a and deposit increase loan growth increasing strong pickup deposit down be our in growth environment. bit. an despite increased with contributed is ratio a core in intentionally quarter in has also highlighted low by deposit deposits the to indirect to This This continuing portfolio remaining will loan high betas

reduced also securities have portfolio. We our

result expansion continues our quartile Our profitability. and of our measured achieving in goals growth toward margin progress top

During are targets on strategic strategic way during completion very the On we the the Navitas, of quarter. the the their partnership first and full very our X, announced of on at last determined Navitas is and acquisition end of experiencing and we our The time quarter, small and Credit we're partnership commercial the $X.XX our assets were unit. we that acquisition also were accretion had to between is already Navitas year with progressing. In working ticket the busy first a the front. Corporation. achieving million equipment feet of solutions quarter all process. period performance focus mentioned we short We're banking our of the meeting $XXX EPS synergy well February in pleased

contrast. by Oaks Four of conversion operational the completed recently also We

positioned perform future. the name. are the And that shareholders share employees and in again now joined Community We're so our United in the grow, us All have gives same quarter. officially foreseeable the us. opportunity first customers, pleased to and welcome Bank This we said, all the compete to performance and solid with we systems the well once very

the Now, the I’ll ask of details Lynn quarter. to share first

Lynn Harton

Thanks Jimmy.

we're build moves of proud making this the our results strategic company. and are continuing our to both We quarter

up XX remainder of the note portfolio caused core you the XX with on a stability points linked XX and follow deck. a included. quarter If X, deposit added our Four full basis be ago. the loan from me, by Oaks our Slide influence start increase linked investor I'll with yields our driver of quarter On increasing points expansion. of you’ll of year increase a base a margin This to on basis of then quarter a along and margin want X the in remains Page significant basis There points

Our first was which increase cost linked only points point only was XX of basis deposits an quarter the in basis. of a basis one quarter on

or grow increasing funded during base quarter. deposit loan core growth our quarter. Our during annualized continue This X.X% to XXX fully million the the

largely quarter. points debt versus Our securitization their of also increased on funds raise during Navitas overall cost the due debt sub to last basis the XX quarter from and coming

loan annualized growth loans core on XX, to was X%. Page Turning our

quarter Our in last in billion QX. up year. X.X XX% Total billion reached loans period million over QX up XXX from X.X was the production loan the same in

it and were this from fee million, top XX% growth continues of the me same As challenging a is period , particularly continued the seasonally in which than ago the we income rate period same the of noted first year. metropolitan a year is now well growth more the strong weakest A do This with revenue down position environment. year item quality also goal the in continue from fee Navitas. United loan a ago, the strategically our XX, a the XX prospects. XXX,XXX to among business to to last year diversified ago commitments areas net have lost with SBA long-term Mortgage was on but nationally. notable my as essentially for Slide is XX we is uncertain this to now On revenue included and solid result interest higher and despite flat in confidence Durbin. at income fee give XXX,XXX continues period Slide generally quarter quarter $XX.X

XX% at $XXX million. up were originations year-over-year Our

is Turning the XX story expense great control to this quarter. Slide

in you expenses from $X.X While operating versus Navitas, $X.X million QX. were the expenses Four the total actually expenses were million of up impact additional Oaks exclude if and quarter, down

the Net strong to pay performance and relative came to loan XX.X% basis performance believe assets of Our with in from strong quarter the points I quarters. improved basis essentially four to charge-offs XX, XX operating Slide flat X continues very last with results. points On efficiency nonperforming ratio is basis our for portfolio improvement an consecutive the dividends peers. and at XX seventh a were marking of rebalancing which quarter last better points

see. this their instead impacted to in Our expense onetime by a provision premium quarter initial and $X.X discount a X.X% Navitas. yield was $X.X of million. marked we was portfolio to actually million provision credit equated Navitas strong premium for due The the normally This characteristics high

which our $X.XX to Navitas closed quarter. of great basis about EPS the on track of promises initial partnership. and points The toward XX up February on acquisition earlier. for X to EPS loans, to With $X.XX and million a X the the or accretion ROA in first added allowance aside Navitas points right which accounted $X.X approximately model this XX year us we basis be in in an We're announced reserve set Navitas to required loans

to deposits the in our including I’d announcement flawless of significant transaction, of growth closing a credit increase to performance in Both quality, in with dividend, So financial and a every efficiency, of review nearly the achieved Oaks margin, the improvement like first loans, conversion close the team Navitas quarter of our XXXX. and in what and solid or Bank core Four operating both a brand. United measure

to based The look today, highly I'm I of the high-performance remainder first forward the optimistic to United year, our the quarter strategies was a as continued in great about one on and for place our over and I’d execution our you. turn our to back day-in determined to it And high with of customer Jimmy, markets, industry-leading and growth service like plan the day-out. bankers that

Jimmy Tallent

X. in reducing was XXXX, to Chairman today April truly giving has Thanks CEO to time Lynn. the can lead the been one for since Last into in in excellent tax role make That's believe company, in for my this XX% is for transition, Lynn by success on the the my always totally the an sooner the bank his culture, the as this model more of that and direction believe we right I The company been we've accomplish most we July quarter those what expectations and able believe so future role our XXX our done to reform our our I'm company half shareholders, to for given We to we of this earnings United chapter. momentum, and where instrumental employees business next people. our board XXXX Executive what during to company results and XXXX. our CEO and I'm ROTCE it some we in we've and the I of become has the we about. successes. is serving capable the us new tremendous clarity is more. the is X, thriving ROA, the teams many that year looking will and this and that that of has of them It and of what to Navitas. been can XXXX. and today. proud believe truly United are grateful positioning He and one there and and industry. we to leadership is no a He forward provided a on mentioned have I this Bank you XXXX and On in second I'm a most together. is possibly dedicated important profitability capable company Lynn's achieve stand role. for achieve Board we in had today joining announced that I of is position continue absolutely our job that

answer to be we Now will questions. glad any

Operator

Rose [Operator Instructions] from Michael question first James. And from Raymond our comes

is open. line Your

Michael Rose

guys of around the on then could that move things And those it targets. maybe meeting Just the Jimmy what year. seem from It profitability? guys be just the to could color actually you most? some half the into contributors wanted Can - like about to we the does back as outlook biggest talk would or exceed to you comments, give profitability you your detract Thanks. the for that some exceeding you

Jefferson Harralson

the heading us that the do biggest on I loan that getting factor to think communities I the this that think ROA. the I quarter We towards us not. biggest meeting or good route is quarter. swing good demand will in growth think growth. We're through good credit a had loan be very but driver was XXX seeing this

achieve goals. than So we I think progress we've to good set are those made

Michael Rose

to change There's of flurry opportunities bit little you'd potential a Atlanta at your gears in the in other M&A. where be switching market areas How just be does some appetite maybe point? the there market few activity this weeks. a quite the in footprint past focused at might the then more Atlanta for some and And that

Jimmy Tallent

mind, integration, in the of all. could achieve states, that our operate could new Michael, that The growth four within at within shape the past the doesn't take of course the cost certainly an overlap, it desires and But saves we there are activity been market. Atlanta in and forma state in, total it markets and an it take have a our really, indicated those a have disciplined or sheet which is which could a change we're But affluent, So to is of shape certainly balance strategy to entirely very a four market the then shape still in able has lot. pro we have the it a pricing lot four basis. areas of identifying of or MSA. the of top we of XX% We that there's lot we confidence that Atlanta. entire of in includes strong remain on at we the take region going Atlanta like the

remain So do will an discipline, do we make we that we history think actually that proven our has acquisition and what keep. I we say when

Michael Rose

more one from just me. maybe And

You ratio. guys rightfully and you're to highlight have continued to loan deposit deposit base so and lower

low quarter are book, had deposit think that your contained. for a Can very you and costs few this mix betas well and I were shifts you of expectations and us rate obviously Thanks. strategies guys companies recently loan the as you're we give one here you've or would peers? positive focused into those the place forward actually maybe with more move would put than what lower keep hikes on and that deposit other deposit ratio betas to keep what future on

Jefferson Harralson

than more We excited DDA almost funded this growth were quarter. with about growth by really this quarter loan our double

the we're think growth things the would to that. our deposit this of bank some a that to the strengthening bit. about be, million fund securities do mix, outstanding. going to we're of to is or - So the year was balance month it sheet on so. help portfolio going be We're $XX a going call top a With I

that's a quarter. portfolio $XX indirect the reaching have million We about

good and growth. is really competitive a out We that deposit We forward as can't more on more have going pricing there. had really count getting the

our produced to that think other combination think pick we then can up and getting, think on pieces of balance our here. the loan I compete of have from So And we there. the marketplace growth of will sheet by been combination some we the with liquidity continue we growth

Specifically modestly will rate on rate that betas occurs asset the increase the reach still beta, with I believe hike here. from do I hikes think from are that to here. we do sensitive each

Operator

question comes next from our And Jennifer SunTrust. from Demba

Your line is open.

Unidentified Analyst

is actually Jenny. Steve on This for

First question on for do of looking the that can guys kind is any as from portfolio do well Navitas. growth you or here? remixing kind What have just kind of you year of for to grow

Jefferson Harralson

$XX a $XX million Navitas to about million month in We're growth. expecting

still for first that at month a as $XX that we This two about. to per XX we to number XX quarter think but than little good obtained were million months higher the number

for to that find upstream the And move that There growth no think we time put will million the We time for their an remix books. might have even there over $XX maybe opportunity nine to $XX and remaining meaningful rate what is increase you do the they on niches. year. be over rest million months at so new of of as

Unidentified Analyst

And then bank up of the kind kind off? financing is have there, guys is just to to there you more of roll any the to speed financing change or have securitizations cum that way Navitas

Jefferson Harralson

loans debt naturally Navitas those prepay. just or That off paydown securitization will roll as are

can to we accelerate that that. do nothing there's So

Unidentified Analyst

that guys you roll how off? expect to on timing Any

Jefferson Harralson

we it’s a a small relatively is able think a we a from be is to smaller securitizations as loan do call year. next at natural rolling have origination there, go one to June the mean left so have predictable off one or July into two natural four-year pace. I and then There they’re on just cleanup will securitization. order left will getting And by

Operator

Brad And our Sandler O'Neill. from next Milsaps from question comes

Your line open. is

Unidentified Analyst

and for to but questions trajectory on it with see obviously - answered, impacts expense closings of Peter other going expenses actually little touch is that? of or not. noisy is the kind systems of What just you maybe do on This the million here, that a of low to kind and quarter considering kind been deal what what of range what the here from closer my the from wanted you conversion Brad. most of a XX the know conversion all are I have bit

Jefferson Harralson

it in I’ll could mortgage seasonal a we an we with roll - core to put base And as that rate on this which increase would also stronger the there mind growth of so Navitas debt. or with natural we But the quarter in number you expenses start for full and it. expenses of have base think a I out million one weakest $XX expect of keep extra our the and the is at I quarter SBA had possibly that reported that had until this QX top would to Navitas as we from base. of Then million next quarter going it QX two quarter. XX

Unidentified Analyst

your just on commentary guess I seems growth. more loan incrementally And optimistic

you are But you seeing So obviously does year-over-year And single-digit like at some you in growth and drivers seem is closer like this are can opportunities. know accelerate I positive that your optimistic are long-term a making that, see this kind maybe a really more Navitas - behind there what high the point? specific markets of to pace. that you getting are anything

Lynn Harton

and very So and was low quarter, are February on typically enter weak, for strong. as first March even is seasonally very we growth January us the quarter loan

that the a was in strongest time. March we've seen in activity pipeline long in committee Our

on horizon the we really loan feel about growth. certainly good near-term So

it's markets of - and is that broader In question the of goes. new getting kind Navitas energy County Raleigh, how the terms Horry is are same individual a only well, living senior very, doing kind And economy then pieces, strong, traction. of story is very up. is, our renewable some very picking

things some are the that those we’re So of seeing.

Operator

you. Thank

from next Our KBW. comes Catherine question from Mealor

open. line Your is

Catherine Mealor

came bit, I would core quarter with I almost Navitas. it we your talk guess full to about where I margin be little like thought it of almost thought modeled a margin the As up the

And a into we still to of think so help next margin I we got the as Navitas month quarter. move

update of the can us So give Thanks. you outlook of an just your of kind through where you the see for back margin year? going half core the

Jefferson Harralson

equal two quarter, So continue to Navitas points was and again that was that with a we next XX of basis impact X you given the Navitas for XX of margin impact the and the do increase be bank. things All our should up this would, core will basis quarter us. We quarter itself. months by margin think points piece of similarly Navitas roughly three impact tell an that have five the

do there this helping loans we competitive ratio remix. a that shrinking pricing have growing and deposit do overtime. Now have a should is within do loan have securities deposit We be very We to environment. increasing loans us. remixing We think as some

remix a as securitization have the from We well. Navitas slowly away

So for next would but our there, guys it's up that I I I quarter the out margin tough guess environment will XXX. be a from say think

Catherine Mealor

quarter quarter, than X side. Navitas a bit bps hike Navitas So little just every then maybe saw of from you X one here given less - you competition bps for rate and the this past on got full from the

Jefferson Harralson

the did in from X It I even whole point also include maybe being a quarter. Oaks Yes, hikes. Four had expansion slight rate core benefit some would basis say from the for

half I'd rate the for of it less future that for rate hikes. X say than hikes, So

Catherine Mealor

or run quarter? Oaks this in Four to And further savings that the do any we back the rate is expenses, from cost then have fully

Jefferson Harralson

rate expense did XX% just Four think in conversion had to we April. now. run do and Oaks the of We XX% the the savings So we about

rest should now after those we start through So or seeing May and the come of

Operator

Our Stephens. Stafford next question from Tyler from comes

Your open. line is

Unidentified Analyst

morning. wanted there with, talk is release slightly around and I I was wondering think I This actually start some And to around if growth? was for just this levels of specifically the for you're for the around [indiscernible] Navitas charge Tyler in from expecting reserve kind ratio provisioning the expectation. offs what the could here. just you commentary dynamics this declining

Jimmy Tallent

I'm four In terms Navitas of about of us. offs charge terms a that add in of basis point thinking to

basis year sort XX gets top of the range. for sort we kind XX to a on to then X and point point of the of year if that off So XX a charge XX it's - number, XX, budget maybe the me for of basis

terms quality. In asset combination how and allowance really we of the you a the of run know model, things three it's

So a offs too And quality to continue core and expect as including mix the so component. would a cover you component our did play on then offs as charge to we asset growth role we is that and the in course, see third - continue would a component would cover charge bank to the Navitas then of is portfolio loan it.

We of land adding we're historically is a in. reserve other which the maybe has products reduce higher and continue to some

also a role. so that plays And course

Jefferson Harralson

going aside loss loss at specific losses So set absorption combination of in PCI % set million loans $X.X of we start to is for $X.X the Navitas we which in million that's of did the rate. loans the which forward a current mark provision, years is aside X.X of in that came have of up $X.X that million X onetime about capability about addition that loans

Jimmy Tallent

track keep there's credit of $XX additional $XX looking allowance this - but at in end, an million just to all shy hard it's marks. you XX at know of quarter if of So million the you're

number fairly X.X just mentioned. the which Jefferson a So large includes that

Unidentified Analyst

job line servicing over think jumping Oaks think Navitas of a fee that be seem you're some decently fees, into? but Four from that from I then in sized is the where to to carryover the there was I is And other putting

Jefferson Harralson

That's correct.

fees this solely quarter other So we that of line in $XXX,XXX almost had Navitas increase that item. was

quarter quarter. next will increase full increase number that should again a impact - So with

Unidentified Analyst

the Can you then just growth servicing that on aspect their growth talk that with around fee portfolio? commensurate and that should

Jefferson Harralson

part the small. servicing loans fees charge of there that While be I others everyday piece very they it. fee most with fee fees of in on But that may would of add be business. fees in modest - fees primary normal The income guess to a of generally charge is they piece very those would The servicing this want SBA their there. the

Operator

our Partners. comes Christopher FIG question And from Marinac next from

Your line is open.

Christopher Marinac

Tiers. a bit may you outside is at ratio have Are particularly is where discomfort in when or what the deposit going comfortable drill level to future and above the it’s Tier just and on see what down growth? you to the an or in the to and between transaction you Wanted Navitas GAAP loan back a whether as area be in you looking looking start at XX possible and is

Lynn Harton

with run can one. I that

bit we we possibly Navitas. So we XX it’s about think we a currently a can question deposit talk a loan we’re great like could over an so targeting there acquisition to this Chris when towards quite XX% XX help and ratio us move time slowly move

I was we or to XX% last This XX% - going when ratio quarter talking equal. all were the about to things on the XX% quarter XX% call

a quarter did going make XX progress strong. but This the was into very deposit we growth some

felt up, So moving to ratio XX%. in that towards comfortable there is that components loan moving but several deposit we

lot a this peers. be we over I going think comfortable would towards talked haven't XX% We internally, more that

on interim to goals make we ratio deposit that progress setting to and loan this year. We’re hope

Jimmy Tallent

that too $XXX would And that about just square Chris additional be XX% to million loans. of

Christopher Marinac

teams things the a think the it’s ground doing I presence map separate Is X there? when of because having incrementally additional Page in at the doing deeper up, organically to on and deck. Florida of And it but interest without follow the into on there sort do we perhaps bunch just of a just look getting acquisitions of a current just slide

Lynn Harton

brand. like where do be time, at We very in would difficult in would it’s to a market certainly Florida we to this the don't on ground LPO we not have

focus we been but opportunity not we wouldn’t had I point. probably our stay this not from but right if it’s away and down at turn this our again at the so that strategy point, it And

Operator

am And for you. the to Thank I I turn to Tallent further conference closing like now remarks. over phone would questions no from any showing Jimmy our lines. back

Jimmy Tallent

Thank follow-up you in interest operator, teammates of hesitate questions this our with to being call. any We quarter. call the thank are to mean that appreciate thank don't of on our morning. day. Any company. to once great and your out I just and a sincerely on all you this additional congratulations another hope you have that say us you And and again great on all reach

Operator

Ladies and gentlemen, thank you you for wonderful participating conclude in today's disconnect. program have a the Everyone conference. all This day. and does may

United Community Banks (UCB) 25 Apr 182018 Q1 Earnings call transcript