UCBI - Earnings call transcript Q2 2020 | United Community Banks, Inc.

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Operator

Good morning and welcome to United Community Banks Second Quarter 2020 Earnings Call. Hosting the call today are Chairman and Chief Executive Officer, Lynn Harton, Chief Financial Officer, Jefferson Harralson, Chief Banking Officer, Rich Bradshaw, and Chief Risk 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. Copies of the second quarter earnings release and investor presentation were filed last night on Form 8-K with the SEC, and a replay of this call will be available in the Investor Relations section of the company's website at ucbi.com. during of forward-looking United. that made may aware representatives by be this statements call, be Please of Form Any website. light information with uncertainties X the of statements provided risks company's forward-looking should in included and described be by the SEC on its as and as well XX-K, considered company in the other XXXX filings Page its on will At call Harton. the I Lynn turn this time, to over

Lynn Harton

you thank all for call. our and joining morning Good

effects customer balance acquisition to which by closed The acquisition and all our as strongly reactions sheet be of second program, over PPP the growth July driven X. COVID-XX would the by deposits of to Seaside mark, continues stimulus Significant heels on our of expect. $XX the of quarter drive new environment you have combined to influenced client the in billion economic the ahead funds,

Our of than of of EPS quarter as excluding in during below first loans came reserve more continued the $X.XX the we quarter, reaching $X.XX, the The million total the PPP below building, increased XXXX. reserve at $X.XX this loans. decline was quarter by second $XX primary quarter and X.XX% that driver

assets $X.X over XXXX. increases was in the second the margins pre-tax to significant the reserve investment basis low $X.X dropped on to Our XX the and quarter. building up our pre-provision our the actually of up million Due first income points million on return from quarter quarter for and portfolio, the

to size storm a on that on a financial takes From the succeed outlined us items that focus will on position also uncertainty the environment. in things whatever those we the Slide health more predicting credit us economy, enable put operating the have where clarity we our and X. once perspective, things in crisis those on Given the to materializes, will is withstand

KRX quarter. in capital is top the quartile and our the strong position in among peers Our reserve first ranking

is strong top XX% ROA our in also pre-provision KRX ranking the of Our pre-tax QX. peers in

and liquidity Southeast. lowest significant have best the deposit of core the cost We franchises driven in by one

So in COVID We're ends. we rebound the prepared. well and financially, perform the the faster during will in best which markets the once believe also we believe some will better we recession of both are country, also pandemic

our taken see is X, As Slide some doesn't you now And while in in very to can United Southeast. organizations fastest and helping our look is communities a to of have supplemented markets proud on growing we this shares have with strong the establishing show presence throughout But We're we by $X foundation United and real footprint. forward our our in strength ability to support by within Foundation of million that stable the a footprint. to it, serving quarter. the to steps growth slide support the funded also our XX MSAs rural Community team. We Bank the causes

level one to the you it couldn't those I that's to over welcomed they Rob listening, team, be for like they second be the they of than would quarter. During for by doing time and now details JD Southeast, you. highest more retail having proud for were on a in Jefferson They United. quarter, that the Power to recognized years while of satisfaction record be and more And six fortunate in working the of X,XXX fashion. couldn't turn production. nearly new loan fifth the here that in more this of I each I that, recognized are to the customer in last alongside were new and customers set

Rob Edwards

the going Page X. on call for and thank to start you being Lynn, comments Thank on my I'm today. you,

portfolio quarter, the loan by $X.X grew During billion. our

amounts to annualized that and loans PPP pace. Now was $X.X billion a loan million X% growth, $XXX normal in

our the XX% and still remains respectively. occupied While CRE very our ratio investor and XXX%/XXX% XXX%, low at came growth in owner categories,

quality on on Moving credit Slide X. to

by charge-offs already quarter the pre-COVID rated quarter These were driven this net credits year. credits. improved past Our from last been two struggling points. The and at had basis were substandard primarily were XX for losses

basis However, a the a over specific purpose business, had The credit charge-offs represents edge. small X, second national additional on of did loans in points. the dive loan show On the X.X% stress the loan purchasing normal We expansion from XX is making book. environment or Page of total equipment the the push for COVID quarter book amount improvement our Navitas the we the you deeper of a portfolio. them software businesses. for for of at Navitas and Navitas

Navitas XX, June XX% of of deferred loans there were status. about in As

nearly side the business call right page, categories. you for deferrals, largest at ACH we the from And amount of or to see can be deferred mind payment the a loans. payment. we keep draft. is of the important we process and all deferral standard an Navitas our loan a payments these touch or for of modest within on On getting In what payments monthly are least Navitas the ask It's categories five touch those the at each in to XX% that automated

of and many June payments. period we since their to So XX-day XX, full of starting are deferrals these deferral off make seeing coming

formerly now deferred July is XX payment in million a loans $XX due. full where the cycle Specifically, billing has

have basis, of have July now with on We payment formerly a received loans due full Or the those on made deferred deferred XX% on payments. of XX, payments percentage full a million loans. $XX

to deferrals of as of prior is a talked include the payment with return payments. going will encouraged Page full to if by deferral the about we were be While we and amount majority XX, making from closely The On does the deferrals last the in customers that of this are of billion economic working quarter's deferrals just $X.X the environment trend in bank if XX. warranted. June and we impact the do expiring not full we possibly loan total know customers or This back to the Navitas continue, will July, assess Navitas page. second are the

XX, significantly and is as at a reopening on and last will our the excluding book, some the in process. we loans. United optimism communities uncertainty down the hotel same included there through be Page portfolio We did that On loan Navitas businesses of we of exposures. quarter at and lot as X% the Each restaurant go but deferrals the information QX, have remains about PPP

XX% on Specifically portfolio, top of $XXX about commitments. million studied have we the in hotels, the

yields typically underwriting occupancy. breakeven a Our XX% at

XX, The in of of million $XX have XX%. committed properties. We operating weighted under the was occupancy that construction, and properties, as $XXX June average million are operating

that reserve and double of We portfolio. PPP are closely that, quarter. the July result loans, the XX% and in and rates is We the to On that X.XX% climbing, did over during provision dip the Seaside loans, do year-end excluding we Jefferson. we quarter to at dollars. on by losses and as now it the acquisition the $XX of continuing million build expect a up I'll With X. do been that occupancy XX, from told to The allowance on reserve we building from at pass have Page increased look the to next plan allowance monitor occurred this credit

Jefferson Harralson

growth in I'm on of X my can going $XXX the see XX raised and the the to because capital. ratio you in Rob. and preferred comments quarter, Page is million We start it. Tier you, equity Thank of

debt $XXX also liquidity enhanced We holding raised company. million that the further in at senior our

now Our at industry. for quartile for are capital in levels historic company remain and the the highs top the

income planning we TruPS and $XX We on an QX we due are QX, we depending million to million Page that was had year lower And as in eye senior could environment. accretion, which high in was capital debt have XX of on the we $X economy. hold to the the The million call net interest for from unusually now, accretion keep this $X on QX. to down as

basis we of the margin, in compression in unusually XX high which quarter, On the the accretion of basis QX. from came points XX the of points absence had

had remaining of of the liquidity in $X.X pressure, points the growth basis points of in of of the loans. form from surge core margin combined addition the XX from XX For headwind basis and we PPP deposit a billion

think in to of are parts For margin moving QX, a there lot the about.

Seaside coming than we margin a in currently lower have. at First, is

Second, to been as have improve other we mature, funds of our lowering we and CDs well. cost deposit expect rates as

our have also excludes in impact QX. Seaside we basis a from point fees become Third, we as we debt headwind both putting from and PPP rate to any should Fourth, from versus raise, any liquid we marks, cash a into moved which the QX impact. all July have work planning on This more and have three have positive impact average. are

pleased well billion, million result core up right quarter, PPP. deposit $XX.X also our quarter. impact at We the our versus from the up side driver business, $X.X quarter. increase the million over quarter, tremendous of On mentioned main it fee growth with and income I last were very mortgage of last the the is $XX.X of was The in beyond slide, this

on of significantly MSR second value rate driven $X.X very On $X fee pandemic improved quarter. early million strong service in to $X.X locks a of sale were and CVA a be QX, not charges $X.X included unusual sell the quarter, gain in derivatives of the give million a business. quarter. QX from we million were swing was market million XX, a that a loans or as a lack million higher detail on gain than QX, by you from writedown, QX, at XX% the for positive mortgage our BOLI in million swing both also loan so we more had our losses items We amount QX our swing swing and the our customer and quarter pipeline. fees volumes will the in looked reserve there Page said, in especially million notable but and $X.X in mortgage million believe down $X quarters. early was the sale last positive gain $X.X income and had our some in an on business. there. repeated had this While had actually in million economic a and quarter, $XXX the There big activity, of Other similar possible $X.X to We writedown, That quarter-to-quarter

share now, in are business. market Of we course, the the but believe right is taking environment we good very

number seeing have finish one million. and contribution with pool, Our up on million over from higher total from is increase combination. why million $X.X XX, we stayed in in at $X.X increase than $XX.X has you're commissions about we update of expenses to to flat our originator in main higher relatively also the Seaside. XX originations Skipping came will months, quarter are drivers the our talent they foundation. per last an The our been where and mortgage ahead new main Page originators figure. in upgrading on such on of which originator reminder but is million for XX We the quick Page the last good feel I a reasons $X very the

think you comments. it continue we our marks land. updated and expectations some have conditions information our the expectations that, give March We higher the back rates. on where we marks they based on than I'll Lynn original might I'll more closing announced. on that X to for and change to given pass market are you With when caveat The

Lynn Harton

you, Jefferson. Thank

with locations of We XX I'm businesses, of in are approximately Seaside, as Seaside's which wealth President new Florida legal also closing top Gideon footprint. of for footprint. of the completed markets $X.X the state will growth management have United to adds remain leader insurance Founder with United Haymaker, offering to partnership five-state of the Seaside, management Florida's the both billion very assets in thrilled wealth our excited the now and expansion throughout and our

Seaside adding Our new partnering by is based better, that into products, performer. making us talented be just question, are to and the determined by cultural values. M&A us will moving to or bigger. a We not together. to our place a we a know team commitment and aligned banks on commitment with new the banks to shared commitment strategy combined service, make us Seaside work, without success has is that on be great and the of markets bankers better And tremendously top are

take open to family. with welcome questions. the to the team, your line that, like all So to Seaside I'd the And

Operator

Rose [Operator Michael Instructions] the comes of question Your of James. Raymond first line from

is line now open. Your

Michael Rose

wanted an start this quarter, Just on obviously, quarter. to mortgage exceptional

pipelines where seems have expect margin. most see stood like wanted banks the Just gain and degradation it that some would to reported on now, in other sale

next mortgage Just wanted how over are to two? we the move Thanks. guys thinking see quarter you about or as

Rich Bradshaw

Rich. is from and looks pretty start And down. XX% this then data, production similar. on to be industry We're QX, QX like But I'll on similar start at QX, pipeline. kind a looking might it I'll - standpoint, be of QX. the from pretty should QX

Lynn Harton

on Yes. sales gain The remain strong.

remarks. Just of from in of was the unusually our the of Gain QX valuation sale high because the prepared on pipeline. reversal

besides So you the a at very in But repeat. that, that have QX. mortgage won't is strong business pace continuing

Michael Rose

And as core a paying guys loan move excluding Not some I but revolvers move Obviously, down think bit and pay huge have some you core are the the we that borrowers loans, we balances. of couple past should but forward? near be addition Seaside the little about growth term on expect PPP some expect may there, some how the as How that over a about down. you would we people be be there'd of growth we out I that in should brought of loan guys think forward? would quarters, headwind, stronger

Rich Bradshaw

This the feel is good pipelines. again. current I Rich, about

tailwind. enjoying to important customers X,XXX had We that are - we some PPP had PPP non-customers. note, We it's were roughly

have target than the I sweet pulled aggressively have now $XX - overall certain market after that of segments have overall our regional expected. lastly, of so to owner higher loan deposit business. been that down, from $X.X Business size banks spot. certainly would And loan but And confidence, is million kind going away million and are then large and we

the monitor about so impact. we'll good we're COVID and pretty And continue feeling it, in to

Michael Rose

the just you timing of guys or about payoffs How in And you guys are PPP kind loans terms what guys this are forgiven and thinking will point made? last you one forgiveness of of from the loans of for at the percentage thinking then me. that maybe be

Lynn Harton

Rich, do you to... want

Rich Bradshaw

Sure. about I'll talk that.

mentioned that under to of one forgiveness land loans Secretary in Treasury, be two topics he Excuse forgiven. is for me, that So of has recent the today of the for in hearings is debt PPP hot $XXX,XXX. Mnuchin, pushing

senators two in we Congress QX that loans. us, that in bill. We early I But we'll our the recess. because movement have have And forgiven. see that's $XXX,XXX under seen anticipating for much XX% and a of they're in haven't or introduced are QX,

and of in the expecting year, remainder, in So XX% following debt probably, we're forgiveness - year. this the then the calendar

Michael Rose

for taking Thanks birthday, my Jefferson. And Okay. questions. happy

Lynn Harton

And it's Rob's tomorrow. birthday

So we've got double birthdays here.

Jefferson Harralson

Next him. year, you offer can

Operator

Piper Sandler. the of from Brad Your next question Milsaps line comes from

Your open. line is now

Brad Milsaps

as all Rob Lynn, and Jefferson appreciate and I the color, well.

build Just on some occur reserve of of the to it about commentary the in reserve got additional that a has provisioning? sort a in kind going half kind of ball, quarter. second and more Can with Nobody could will and moving back half kind wanted appreciate of kind but just kind in reserve you've know the around curious see peers. get where parts. coming the on the the up a end little year? of just what there's of pipe reserve of you acquisition. talk in terms the provisioning see did down lower kind crystal end I I the of But versus maybe the your the you lot there still of bit of you seems

Rob Edwards

It's ones Yes, the aware. we used where were to so I that than Rob, economic so, going was in than we at the just you're role are predict probably think historically, future. worse is point, in the used economic really would go is the they hard, QX assumptions way And play say, assumptions to it QX, reserve build assumptions greater. the this this to in And CECL as best a the about in did the stronger Brad.

how to we'll a that have deferral loans about of And course, of the of off or So course, could be a from being it's year. think rolling And performance, up down play difficult lot of status in latter build in reserve closely. also say the the at here. it's looked and going to that of the half we role

Brad Milsaps

curious contribution to quarter, of average gears loans of actual Jefferson, And quarter? the the in if I from the was PPP. PPP dollar and for then maybe switching had the you PPP then amount amount

Jefferson Harralson

the PPP million that quarter, fees was left we $XXX in in of $X.X of of to roll through. through the and million, we and quarter the loans had $XX fees so average rolled million Yes, balance have

Brad Milsaps

did the XX any origination any - have of in of did impacted quarter related cost that FAS you the deferred Were expenses program? kind that to

Jefferson Harralson

Yes, so [indiscernible]. we

we So million. had that originations FAS the very expenses about by XX quarter, - significant had with helped $X.X the we in the

Brad Milsaps

net show mortgage as is that commissions, guys just you revenue right? then that's And So your incorrect? a a reminder, number? net of Or

Jefferson Harralson

No.

fees did the you expense the million. through those and if this commissions - numbers, come about look mortgage line out affect line Because commissions at Our line. about go our by the quarter through expense negatively $X.X those

Operator

line from Demba question next SunTrust. Your of comes the Jennifer from

line now Your open. is

Jennifer Demba

talent us and hiring, is update the Thank three the on could give just you the quarters what wondering next you on bias you. during quarter On right if now? or an two added the second hiring over your

Rich Bradshaw

first the is end Atlanta part the and Truist, total Hi, people of the a six quarter, lift feel about a of hired pipelines. was out from Rich. this at good that of why that's reason We very in we and

seeing We are that tailwind.

Seaside. Seaside, investing of we terms in In are

so there and a CRE we We We an because are opportunity a SBA they see really see there looking We the a opportunity opportunity hired mortgage see there. MLOs. lot at CRE opportunity of do there. C&I,

questions then we're cautious but the we what we where you lot people is are presently. on have particularly, before more, a have we invest at deferrals. continuing little out COVID in same existing a are we replacing to the we're end and conversations, United where are that it's up in footprint, figure And trying to on looking So the we in and

Jennifer Demba

question more One for helpful. credit on very Rob. That's

break-even an to for have most you as around about having the XX%. occupancy kind today of is do of of And talked average portfolio what a loans best your range your hotel You occupancy worst? hotel of rate and

Rob Edwards

at So construction. $XXX in $XX pretty of are those $XXX - million or million think I a million the of in said, we've looked I Six study. close

XX million, there. on So the the no look $XXX occupancy XX% million, so properties average there's those. is weighted at studied We did occupancy of we that $XXX

Operator

Catherine the KBW. question from Mealor of Your next line comes of

now is line open. Your

Catherine Mealor

you or kind Navitas One of deferrals. If you give think around the are about us follow-up trend color any is helpful. we on outside deferral the And the really of gauge of far think can through of seeing gave modification? you much kind Rob, how thoughts deferrals for July? just deferrals so of Thanks. anecdotes Navitas, ask you're the second to will on month XX-day what these do a

Rob Edwards

customers we with are at where the point sets looking my will, billing to deferrals challenge so it Navitas, days you bank cycles. go to if a are, a back few maturing. that of fit deferrals just - their of The if four one of lot comments up Navitas you within Yes, into call all basically on at

the the the So it's XXth, either the first, XXth XXth. or

so in billing comments, And look my - can July about talked look XX I at cycle. we the you -

So of group large people to enough in kind a pretty segment that that sense. actually - a there's get of

we And so was that what about. talked

made. it's On days XX I guess, where of, payment could be probably the of actually XX days, bank a side, one -

to you're a that And into pool so you don't study. of behavior able have aggregation that

are kind making are payment So I it through percentage are payment us you, the give pretty to July. are indication. like seeing of into full as a number single it we did into that dramatically. increase I pool tracking will go I'm customers seeing any Navitas we that's of we But increase to of of bit there be the sort payments. enough put And month, isn't because just with - why we that reluctant the a little tell XXth difficult. a gets those But to

Catherine Mealor

still kind Okay. out it I If Jefferson, from helpful. directionally, just highlighted And makes remarks. just as there a think, think of are take a on know it outside starts and still follow-up loan before your Yes, could parts then Or there an lower question in liquidity impact yields that and do of about the you push PPP, just of that PPP that's we bottom It rebound? here? a moving core to margin of sense. the margin. still lower at you're just ton you is

Jefferson Harralson

think - few Yes, is lower give and I so a here's things let me number, as you the why. to the

larger average all, than sheet ending balance First our our sheet. about of balance was $XXX million

we in haven't So that that balance of into fully average - sheet the deposits surge that yet. gotten came

So just sort that's impact an of forward, XX of that down. rolling basis points

balance larger million $XXX sheet. a have you Now

So it's net on NII. positive a

You debt, of have the the negative points. which about basis X is impact

aggressive On deposits. the been on pretty deposit pricing, we've

or on CDs. million have at $XXX point the highest range. We basis there CD price coming And million out due so is $XXX in our XX

the Seaside X the Seaside - points Then XXX margin negative we is but coming had last basis quarter points positive enhancement basis So deposit margin a layering from get in about the you points XXX to quarter, margin last should of pricing. them margin. range EPS, XX and basis in. points have just it's basis piece to accretive

liquidity. So points the get over then XX as excess you invest we back basis time

We which have that PPP from then the help well. and should accretion we as it, will coming in enhance fees Seaside, have

Operator

the Your comes next D.A. Kevin Davidson. question of Fitzsimmons of line from

is Your now line open.

Kevin Fitzsimmons

was of the it lot want deferred, month you bank Can way is and of the you're the I Navitas miss and is June I well, I XX% able of didn't Seaside mid-July? as a entire - whole give is know discussion so changing as is understand lot assuming there's deferred been ratios the would know sure about in this, that those I July. what to And make deferrals. XX% as include to. that I of a bank in XX. just are same But I if

Rob Edwards

non-deferred the full have made for you. this mid-July and or number deferred Yes, - so payment now a having I We're Rob. previously is don't not

not be too billion. able the I Catherine's you, can that back though, is on of to kind early Seaside Sort the that of is give in from million comments, just tell $XXX information. it $X.X to deferred

Navitas XX, of, you if And of you've So deferrals. you've billion it, June million $X.X United about $XXX million call deferrals, as got got think of the then Bank deferral. - $XXX so

that's the So June number, that's bringing comes billion numbers. XX the from. then the billion where something it's And numbers or we'll but are not - I is Seaside number that $X.X over think our $X.XX in the - where be

Kevin Fitzsimmons

on about in know loans, PPP. that But you for reserve And an terms just past be what there have taking question made discounts comment version - of? one thinking on of into I guys a of the adjusted adjusting or or version of is higher - the have reserve. acquisitions and you those about way account ratio we should

Jefferson Harralson

with I be can So that. back didn't on bring number that circle marks from that I me. in around any surviving might

Lynn Harton

some be transition that would There when interest to the from marks marks, but change. still, rate credit CECL, survive they you that

Kevin Fitzsimmons

with question Seaside's general a lot recently you're about Florida sure are of been markets and how holding there's curious, just just obviously those very looking I'm and press And COVID-XX. at a closely And - up.

level top any observations Just you've had?

Lynn Harton

No.

built were see change. to concern the can terms and client I you the business C&I And significant focused. Carolina. in that those markets very we're committee, resources Gideon the of there's that is have still but seeing and client management been advisors very of customers credits been in very team Seaside they the Georgia forever. you you have, of think are focused company, that significant in to the of a primarily any wealth similar come got activity, before And had thought three has a And in it's and quality pressed flare-up South already only primarily We've been too, themselves. selection. experienced, not what remember, not the would customer the with through We've base impressed. that their credit also whole

flare-up view in on continue the the really different and don't the beforehand of recent any to did than coming Seaside kind side terms kind good operation. of southeast we we have in So of that's about feel

Operator

comes Your Montgomery Christopher next Scott. from of of Marinac line question the Janney

Your line now is open.

Christopher Marinac

this angle. of strange from manage there and sound to it's if a wanted point sticks about you might need it know as that manage ask high the too Jefferson, the liquidity to. deposits curious pandemic, Is another around but future? you too in level that's liquidity much at I what just just to

Jefferson Harralson

too Fed. growth if a at overnight know the $X.X at core We $X $XX million billion having ever right quarter. that sure right much have We're we lot you don't million to we've now. billion but of I had have Yes. target the liquidity, now, deposit $XXX this given to

$XXX million debt of quarter. this raised also and equity We

of some a there's use lot where that of million we had pay cash down lot either cash or and definitely right purchased we their We have in a we - So have $XXX there. debt. wholesale of will when Seaside, away that

X watch and it come for to But we're as to earn more some out here, keep put points of from deposits see XX work liquidity going of time, same Now the have these there's extra at us. we than basis a we have have to reversal a COVID play we and if also, that in. to plan liquidity this

I our is we know enhance and don't So margin but nice time. a it earnings have a opportunity glad there our we're for us max, present to if does it. over

Christopher Marinac

new through the us hire, any call whether mentioned What's walking the other Atlanta. that. within it's or pipeline in in the for Lynn, the of you outset the about city at that, And Atlanta team the you footprint? really for Thank then,

Lynn Harton

ahead, Go Rich.

Rich Bradshaw

This hi. Yes, Rich. is

So yes, we're really happy team with in the Atlanta.

As terms we have really presently, the to of our and get in COVID-XX we we're when but impact. of and the earlier, then mortgage, And other are feel in and And invest opportunistic looking having again, continue being SBA there, past, discussions MLOs, we CRE. discussions markets. I Seaside's opportunities, looking at to mentioned we're

Operator

are questions There no from participants online. may you continue. Sir,

Lynn Harton

joining directly. additional hope you to Thanks. And if have follow-up very all great. the the thank us All I appreciate any And call. with much Well, that, have you right. a feel Well, great day. for We questions. free you ones, with

Operator

This call. does Thank participating. for conclude today’s you conference

disconnect. now may You

United Community Banks (UCB) 22 Jul 202020 Q2 Earnings call transcript