UCBI,UCBIO - Earnings call transcript Q2 2021 | United Community Banks, Inc.

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Operator

Good morning, and welcome to United Community Banks' Second Quarter 2021 Earnings Call. Hosting the call today are Chairman and Chief Executive Officer, Lynn Harton; Chief Financial Officer, Jefferson Harralson; President and 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. will quarter's on and SEC the Form replay this second 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. well considered and as and uncertainties Form pages five six Any the the its risks XX-K, information company forward-looking on described filings SEC other of website. as statements provided by with in light should and XXXX of be its company's in on included the At this Harton. time, Lynn turn I'll over to call the

Lynn Harton

and they had several been by build to morning today. start We've investment everyone South quarter are Capital with and call size and the our company. We business I will added our This the advisory a look the for teams excited forward We're Advisors. acquisition doing want Good congratulating in offices team has the quarter. to our what welcome for to for thanks strategic to of to doubled bring. combination joining great United that that this accomplishments United Georgia and of our opportunities Carolina FinTrust and

this a basis dropped Deposits X and while our basis growth will share, market, grow market to Chairman our of XXX Nashville, our We deposits perspective with fourth MSA, of strength, share. XX only divisions quarter, finally, closing has there points and in of community now over by where several chose Charlotte a strongly, for we market, to $X.XX the Aquesta. and of and had and year. for and some a excited lending CEO, points. Tennessee growth way it culture strong will with basis been the spread approximately with in week announce in a Founder in a equating growth strong was a built that in acquisition on balance we also a into a will for continued were our Jim us. the in $XXX in Loan we net very a million. continue Tennessee $XX.X that top X% stands and We our to quarter reserve per nine return X the Overall, presence team, more recoveries resulting had ex-PPP growth, we're DeVan anticipate We've strategy. offices. the fit ROA one Credit annualized. a grow franchise, income. release expansion partner Jefferson continues led our Reliant's assets with on an have to Reliant lead quarter, announced and now a Reliant From additive looking have be overall to glad for And XX.X% that the very an And we're is with cost Ard, with Aquesta at to be Bank. great tangible EPS Engel time proud of. entry bank be And basis million Charlotte basis. last operating deposit to bank to the high-performance of point average great acquisition turn of the details. was operating points X I'll acquisition sheet great our team will

Jefferson Harralson

to combination, frame. become liquid our XX% growth, our the you, same consistent loans, my we loan at ratio Thank has look a and closer more deposit on moved a excluding rate, The a of last a going also just take have the It comments we over our nine. annualized loan start is in X% chart XX, which And to loans. strong Lynn. year. over highlights loans book which of loan-to-deposit the time I'm PPP had loan shows XX% our from page lot page and quarter. and SBA Navitas number in of $XX million growth, totaled the over our that net is million $XXX mix loan sale a On of of growth We ago. year growth the

to XX, details which Moving growth. page our deposit

had quarter on to We growth, which XX, While moved of our had capital. deposit to loan did cost lower growth of rate. this of an quarter. basis have down points touch last million growth, this which X of basis we page a $XXX On quarter X% at also we continuing I will $XXX at annualizes lot deposits, X points million briefly success

shares capital $XXX at on million quarter levels we We a modest putting we partly our million. of $X the over totaled will forma and last levels, capital XX, did talk grew be did of raise in the we pending are in ratios and On preferred to which a QX, peer about transactions, because are and With peer income ratios a our Our expect we amount pro page that year. margin. work that back spread raise above just buy basis.

and accretion, at spread our Excluding income loan QX. a grew in pace fees XX% PPP annualized

significant driven significantly the combination was XX, which our PPP with basis to core down flow by points, income Our with details mortgage. of in strong primarily because down was margin mainly in continued four last deposit cash liquidity fee Page coming due forgiveness. from increased growth quarter,

gain-on-sale also in volume combined with percentage and rate Our QX. down was down this QX from being lock our

of write-down shows last had merger-related on our to and XX quarter down We Page would QX. of Navitas $XXX,XXX We excluding resume year our remain Navitas this to the had Rob to million levels. SBA discuss to pre-pandemic be credit. loan in $XX in remaining for $X.X up $XXX,XXX with negative While and would sales expect expenses down in of the $X.X swing I million which QX fees which loans $XXX million million recognized in million about Rob? a and $XX finish from we We excluding loan million created recognized, of from QX to total last XX the rates FinTrust talk pass gain-on-sale the had possibly loan in quarter MSR PPP we And given share QX, expect and yet PPP loans $X will sales compared of expenses. PPP impact sold. also to above million still does $XX.X that, about page the quarter, forgiven. expenses quarter, I relatively lower We gains normal we be million loans. $XXX addition later million to fees up sales. a $X.X quarterly gain of forgiven continue of on adds in did our in Then expect this percentage rest of flat XXXX. lion's it to have get quarter charges. a the have that of I'll and to

Rob Edwards

Thank you, Jefferson.

second company to pleased recovery our of ongoing for are this year. and Navitas, success low driven the report of were losses We of quarter equipment recoveries at recoveries efforts. The our very and the finance net levels by collections

under quarter relatively combined substandard this loans. As loans we remained flat the level special mention of X% total just of at and expected,

our unfunded a metrics now second reporting we a PPP losses, excluding allowance XX%. and in for X.XX% positive loan senior amounts loan are outlook level quality of of for drive for The economic now, strong Lynn back the improvement the portfolio, continue year. reserve and the balances. XX credit in The the hotel average now half $XX.X the largest including pass with the combined to report The hotel $XXX negative losses million to of and top borrowers performance, to care And remarks. improved upgrades million weighted occurred see portfolio, I'll it loan the expect borrowers provision Our closing to and quarter. occupancy to of low as materialize hotel of

Lynn Harton

support congratulations our Thanks, to of Rob. and Once for outstanding staff all quarter. again, an bankers

open momentum current having is will our pending Power to deals, Southeast. attractive satisfaction two announced slide the incredible financial is the United deck. it This to geographies acquisitions. on of have and we best years. our our continued growth once our retail a in now was the most forward EPS an converted success. for up success seven That's our estimated business that believe footprints and strong expected I'd I one businesses, an of hiring for with in addition the well in Southeast, final look our questions. eight by of our banking team our again and We're in completed the continuing J.D. driver to by earnings I accretion team. from Once like footprint we And driven and great success across In we Truly accomplishment have the positioned having one believe and past unprecedented recognized for great

Operator

[Operator comes Rose Raymond you. with Michael James. first Our Thank question Instructions] from

proceed question. may You with your

Jefferson Harralson

Perhaps at Michael. next we'll mute to call on and the on end. be move get the might Michael You back

Operator

Kevin next Davidson. Our from question with comes Fitzsimmons D.A.

You proceed question. with may your

Kevin Fitzsimmons

Hey, everyone. okay? hear you good morning, Can me

Lynn Harton

Yeah. Hi, Kevin.

Kevin Fitzsimmons

last spoke, in seems what right It line came all we with provision, with Hi. wanted I but like about which in to ask week. just the negative you just pre-announced

lot I in you for transition at point from positive start and come. would over ratio know provisioning and I But quarters to the then that to next Looking some and the economy abate improving, you forward tough. looking more acquisitions few reserve expectations over with to of know that's at stand there's your looking where at noise and a this negative provisioning? acquisitions expect past here we to

the get You viewing a you step from guys taking it? trying load a to model. just are in how CECL But Thanks. back

Rob Edwards

this Kevin Rob. Hey, is Yeah.

role that elements, The have a continues two expectations provision. the right. economy and model The from economic You're positive the modeling in where did the sit in in we and quarters modeling exactly to very and And well. forecast for big forecasting play play perform does CECL very role it. a environment really negative did the first

and any moment, And go expect continued, the And at in and substandard we don't reduction criticized we or classified I'll mention expect as we so do forward. say there. special assets changes

in additional So could the year. it's provisions half the quite see latter of possible we negative

Kevin Fitzsimmons

looking in of the Thanks. lot about I'm some I how the today up. forward. excess loans talked guys you. Jefferson went you more And should Okay, likelihood be but maybe of liquidity putting great. going Thank we rates And wondering sheet. stand And work at with just balance that securities a to securities thinking where know about we

Jefferson Harralson

question. great a it's Kevin Yeah.

should the than and think grow continuing quarter. pace a you about it did securities albeit this at portfolio to So slower

have cash. I remarks in mentioned prepared As significant the we

be significant from to more cash We've got in PPP. have We PPP coming forgiven.

at deposit portfolio and growth securities just Our will it remains rate past. but to grow lower the a than growth in strong, continue our has grown

Kevin Fitzsimmons

for way and turned combination? the the And stay the my basically expenses venture. housekeeping joint time. joint from that modeling in didn't standpoint modeling profitable that going them venture that I I common want combination a And just be benefit pull and or mortgage the non-controlling building way does from from with Reliant. some because to and Reliant one the mortgage change was out with of understanding of mortgage to quite forecast just even think it Okay. just covering But interest we should that legal venture? more in adjustment. didn't shareholders the question to ask And was of so in to have always anything They that revenues in joint when that had still Thanks. that with Reliant I Is it, terms the

Lynn Harton

no future joint thinking exactly as have. venture us the think will we from any terms venture We're is sits correct I it right for or you've joint partner forward. positive operations that negative strategy other the not going conversations do also say mortgage business. the that has about But today, it the it in I that way the preclude impact. you're with about been of

totally So all joint way are venture the not we're in agreement. bound separate those by any and

see put it. it we'll what develops with So, yeah, would just I and aside

Jefferson Harralson

Yeah. the bank-only talked the on deal, we cost was savings XX%. about When side we talked the That of about from it.

extra it's savings, If a but million of you similar excluding it do amount cost it's about revenue. the an $XX joint of venture, think

does so. but a not again, efficiency on major earnings, impact the improve ratio underlying So

Kevin Fitzsimmons

Thanks on guys. perfect. for Thanks That's the that. clarity

Operator

you. Thank

Jennifer question Truist with comes from Demba Our next Securities.

with You proceed may question. your

Jennifer Demba

Good morning. you? How are

Lynn Harton

Good.

Jefferson Harralson

Good, Jenny.

Jennifer Demba

in like Just you any after want future be? to level interest are And wondering build have there scale what integrated, about you and transactions in Reliant really Aquesta kind Tennessee. markets would XXXX of your

Lynn Harton

Yes.

is first is and statement off and is operationally on that kind question that integrated. correct now Aquesta your focus in of Reliant embedded our well, -- So, effectively right in culturally a is both getting

any a So think places we've deals But that There's got we're not of number behind and when And they that this doing the great there's interested markets great confident additive at that beyond of great interested same that the combination that looking fit, great be feel until any matter in for Florida we Carolinas, Tennessee, us. of in we at and But footprint. be a additional today. to have point then current we opportunities and come. Georgia footprint we'd teams current not those outside that's we in footprint. our are if cultural our would pursuing markets

I again how gone our many with years, but very -- et right that if look into Beach, and getting at So what you embed a mean, we the look one that cetera. done going we'll we about we've from out deals there. do Charlotte, sometimes Greenville, you at done if markets in selective to deals typically selective is and XXXX, those figure Raleigh, least Aquesta think have I been year, two now we've We're at again, done have Nashville, and then and over Reliant but Orlando, And to Charleston, be focus said, very as people. the all the and Myrtle

Operator

you. Thank

next Catherine KBW. Mealor comes from Our question with

You your question. may proceed with

Catherine Mealor

Good Thanks. morning.

Lynn Harton

Good morning.

Jefferson Harralson

Catherine. morning, Good

Catherine Mealor

or it's ask close? until some that to we table continuing pending, anticipate quarter. you stock with off to that's the do this see your two nice buyback activity back you Do think past get want you bought I deals

Jefferson Harralson

Yes.

Catherine. buy I will Thanks. So think great question shares. that back do we some

We have authorization.

underperformed outlook. of pretty little about the Our We're Reliant. that a since stock has bit and announcement about deal our excited

likely. to and fourth repurchase third quarter in in So the most I would us expect shares

Catherine Mealor

Thanks.

margin, a the couple And the just hit over outlook about then kind quarters? what's you how Awesome. liquidity on of feel plays of And margin? you how for like bottom? Do core your we've are next out excess the maybe Okay. thinking

Jefferson Harralson

It's Yes. question. a great

come of but the some of So have tailwind area we also cash everybody's a headwind sort have in that of Loan mentioned you going It's yield. into to little the balance sheet. yields loan some factor bit. down from we cash the on securities, continue a

We on seeing pressure some are pricing. loan

of This But of cost good really pulled is our a quarter pretty we funds a lot did even sheet balance now. to the of flat growth. relatively make that much lot on lever with work margin

but improvement not as We expect there, much. some

loan So yield some the I the think the impact offsets for moving impact now into cash of securities. of

or side points the change on the think in depends Some your the on growth piece I falls of quarter, because see normalizes that that growth then Once what third core deposit loan forecast the margin, But think deposit yield. margin overwhelm of going mix a of down of asset to I can core you're is. it. some of handful loan of pressure basis the

Catherine Mealor

makes that so Thanks sense. Okay, much.

Lynn Harton

Thank you.

Operator

you. Thank

question Our from Montgomery Janney Marinac Christopher with next Scott. comes

with proceed question. You may your

Christopher Marinac

they or with evolve that part that of on I of restart the down continues Is morning. Good to to accelerate the seeing, a imagine we would you Thanks. Navitas just drill economy progress the wanted for as their second. they keep activity? of just kind that economy are and pace where the

Rob Edwards

assuming activity, quarter. charge-offs Chris, When talking low is Rob. of you're of for pace strong about this you're level the or I'm the about talking So,

from they think We've always selection. great closely. had aspect industry said they've focus to So underwriting great that continue I very and

side. think government on stimulus economic growth combination it is then I'll the to the that. I pass the And Jefferson optimism really of and maybe creating

Jefferson Harralson

record this to pipeline the especially quarter. in strong. that growth optimistic. down And this good we So right they to is be pipeline. they're of – the there really you side a if I'll you if really on lot really feeling talking full $XX activity, growth that the had growth million put two continuing growth a seeing comment strong is quarter, make think and they're one loan or now, – sold They're team And

a credit positive it's Reliant, outlook So very their their for and growth.

Christopher Marinac

is spending Got it. overall that's there on side, and Reliant large there systems? a your or on investments wealth assimilate topic technology and And you follow-up is and incremental second Aquesta then you anything a do just even have as going on your into the management

Lynn Harton

group on that whether Navitas We but multiple at have systems several do bringing projects projects brought have anything large as we've the going internal on, from development don't well. we're we tackle to new on

we're not we kind things but working core on like system, looking there's at anything do company. that the So we're any that of exciting have several no, or pretty change-out throughout

Christopher Marinac

Great, Lynn. very I guys. That’s you what much, thought. Thank

Operator

you. Thank

comes Brody question next Inc. Preston from Our with Stephens

You may proceed question. your with

Brody Preston

Hey, good morning, everyone.

Lynn Harton

Good morning, Brody.

Jefferson Harralson

Hey, Brody.

Brody Preston

or moving So percentage from increase rate need back kind it forward or kind growth you I used on trying even because the moving of the of think maybe forward falls just of sales at kind of million-ish forward. going this pace you to portfolio circle if think there, the quarterly run Navitas. $XX Jefferson of to do will range that? here Do about loans. wanted annualized to that And I'm just X.X% of talk about back so of to XX% kind post-RBNC, down you to be

So them color some or do to need need Just kind up? at selling does go you to it there. this of keep level

Jefferson Harralson

the $XX of I a Yes. asking expect to ourselves quarter. we're that That's million questions would some internally. $XX million

We sales keep have to our also with us. some coming want exactly some grow Navitas room if below acquisitions to more that steady lane XX% That get right. them on think we a keep us cushion do to to keep I pretty we gives But open want. that You're threshold. to the of for flow are

the million the to So to is that even $XX is $XX million within I range number million expect. million think And likely. $XX most the to $XX maybe

Brody Preston

margin use for you think that for like margin about USDA X% the that and as sales? on SBA good Navitas Is margins X.XX% gain-on-sale loans? sort maybe it And to a use the loans. Is Thank for a is Okay. and about then a XX% those loans. good the SBA USDA to to was looks and between just that. it And I margin then separately of

Jefferson Harralson

I I'll Navitas your on like the start range with side. there.

able a think on I but of it. piece SBA to I think model. that's better And the pass I'll a little may in the good Rich we be to do to put range

Rich Bradshaw

If I good number. morning. on probably it's Good Yes. say little side. anything would a that's a low bit the

the market the to be So strong. market SBA and continue USDA

Brody Preston

expect Okay. loans? on pace and those and And of the origination you do SBA USDA Rich, for what sales

Rich Bradshaw

in just that pull of of amount we we'll the cash think the we amount little I a the bit of get yield back on sheet, quarter on have on the because sales. balance them probably third

Jefferson Harralson

little think to a I a higher little out if we SBA. might a and on be now So on possibly little Navitas number the I had throw lower a

Brody Preston

Understood. Understood. then for a the question just segment. senior And Rob, on care

a looks hoping like net-net terms maybe the lease-up. you came parts those it me of it I stabilized in on help buckets. especially shift in relatively were of as stable was quarter-over-quarter kind in there portfolio dig of But kind some between percentage there size. to big versus moving remained So the that There's the the could

projects you were would And below maybe made there so helpful. understand into color or a kind versus them fall on could new that of did that me some rolling some help percentage lease-up? Just ones of previously stabilized, rolled were there off projects that some kind fall back be

Rob Edwards

versus there's lease-up backwards on no So stabilized yes.

stabilized have did to projects of the stabilized. from substandard quarter. go downgrade ebb-and-flow a It's did in We to It's during the they of possible the quarter. they we just lease-up construction So projects and in during may. couple that to a couple possible the

that happen. does So

are the on But where expectations. are in based really grades they them. We terms also of upgrade

have is that lease-up and So or then occupancy, we they to sell expect up. the once some people the pass That They and category. What have out. need category they pay drop to through they them stay we had they're back in us period go stabilized, they projects a perform. in happens. If away lease some in

that see that, it's think would percentage I as lease-up category into don't to the points. process so an the be of going And stabilization then some in in charts, that XX did increase tell move movement. would stabilization play or will I And but likely you process we in they they're through also of more create movement. course and the lease-up occupancy the

to So XX% we XX%. went from

sort space there. Now improvement there, the re-lease are But the continued seeing and we that's to like expect just see you you, of it's improvement not every improvement telling hotel where room night.

quarter. Our occupancy remains stable the the over in stabilized

So about feel continue to we have product that good the there.

Rich Bradshaw

monitor as would And seen with nationally. this only monitoring this I lease-up this as our we're And say portfolio well own positive not do trends we've area. nationally we in

Brody Preston

want Jefferson, that. Understood. you variable portfolio. the on Okay. just disclosure Thank with you And just rate the for to loans. appreciate did then I the I loan gave touch

have so wanted just asked I billion it at and are as just the the And I floors. quarters me, understand ask think or the $X.X the loan rate? I the percent to you you're in I've are of and in of data percent past, their don't think I portfolio is well? can floating acquiring floating if then if portfolios, what do was this rate coming you guess you remind what

Jefferson Harralson

you. the can don't I have that So get but acquired on here, for right data the banks I

are floating. We us XX% at for is

get Now on you the as floating the going you into I are the you you close loans that XXX take it's get floors basis XX% again. that behave now. can XX% by acquired banks. if data really points the below up if And go to account it'll And to to are if be

Brody Preston

my good. I That for all appreciate it. That’s questions taking I Thanks be everyone. will have.

Jefferson Harralson

Thanks Brody.

Operator

Harton Thank time. call any Lynn now you. this questions showing over would further not And remarks. further for I back any the to turn at I'm to like

Lynn Harton

Well hope appreciate our great. we'll call. again great and we talk day you again a Thank Well we And you. have once soon. joining you

Operator

Ladies conference concludes and this Thank participating. today's gentlemen you call. you. for Thank

You now may disconnect.

United Community Banks (UCB) 21 Jul 212021 Q2 Earnings call transcript