UCBI - Earnings call transcript Q1 2024 | United Community Banks, Inc.

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Operator

Good morning, and welcome to United Community Bank's First Quarter 2024 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, pretax, 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 morning in this X-K call website of at earnings section investor release were a Investor ucbi.com. Copies Relations available of be with the

X may Pages risks forward-looking by the be be statements other of website. Please statements considered that X and representatives XX-K by in as SEC its its this during included made aware of and uncertainties the filings should on described of and forward-looking light Form on well XXXX call, be United. in company's the company Any with as provided information

I this will turn time, Lynn At over call to the Harton.

Herbert Harton

for to per We're employment due call in all Well, $X.XX, to joining in our report quarter, higher performance earnings Operating good $X.XX pleased morning, share quarter. came down part seasonally this at today. thank last solid and from costs. you

assets points, Our was operating XX from return up XX points quarter. basis on last basis slightly

through to with to steady, on pleased naturally core environment, areas X rate of we've on net excluding one this continued off GAAP efforts a interest the holding and basis focus a changes basis, been those begin margin. basis see accretion basis in We points our to our interest the were margin X pay quarter has point As income. up work up loan

highest well. lower interest overall of strategies rates than deposit Credit during in core our to higher-rate X.X%. but essentially loan as also public our portfolio. pricing We will an construction, in as effects continues we and estate, improve rate rates, funds with perform outside real X perform portfolios at growth anticipated growth portfolio on for appear higher continue discuss, environment. We're Deposits Jefferson of deposit flat relatively growing the The quarter. and a to including commercial on growth to correlation to seeing we had our the loan flat came the higher solid level, were with mortgage C&I longer

came in coupon higher and for loss have points, that we portfolios have loss those higher portfolios compensate designed losses Navitas Total basis higher manufactured us that at housing. to also are rates XX Both have levels, X levels.

portfolios, losses XX those bank excluding were points. So core basis

slightly loans Nonperforming credit loans basis Overall, points X metrics X.X%. range increased and remain consistent a in XX underlying to strong points substandard to with conditions. decreased economic basis

of positive results impact but how the We to outlook. Fed a negatively performance, could continue economy and credit have mindful our with pleased to be slow efforts we're

a Our be continues XX% strong liquidity essentially to very wholesale with position and loan-to-deposit no ratio borrowings. of

I more to detail the quarter. call over for now turn Jefferson want the on to

Jefferson Harralson

going you, more deposits. into I'm and on good start and my Thank morning details Lynn, to X some Page go everyone. on comments to

As pricing match total and Lynn slower growth deposit in our was and to $XXX demand albeit in more pleased quarter. be to our retail flat funds. continued, essentially some and the deposits. Underlying were our spoke public shrinkage deposit flat shrinkage had our This result, to, quarter, this we in of deposit million saw first balances we in We to decrease with this public partly runoff the able to commercial not replace to certain in due due seasonality funds partly cases. solid strategy were than

of X.XX%. basis cost quarter X Our moved to deposits the in points up

than is median and are a XX%, a industry portfolio little X. loan annualized. to on above for our to year median some peers of originally turn to Page first betas X.X% which grew at expected. is in we We XXXX. ago, loans we We move by $XX were the in now the lighter quarter but back that below million, This the closer are get to hopeful deposit Our cycle industry the

due projects customers in to residential who our back and million, we Navitas area shrinkage in on high last We uncertainty. CRE in saw flat C&I, investor from but kept be similar as construction. at We seeing less saw $XX by was and are that in this to loan sales holding offset to We demand rate appear growth quarter. loans be relatively

lay On Page granular diversified that X, our less to more we real peers. loan also heavy and out as compared generally and is portfolio commercial estate

broker Turning with balance believe gives some good us our deposits. balance through highlight flexibility in no to very we is managing Page FHLB in a that of tough strengths X, borrowings the position environment. competitive rate some sheet our where of we and sheet, limited interest and This

increases ratios our remain our ratios we of we peers. above and X, at capital, in On and all regulatory TCE capital look had capital Page our

was Our in discount did QX, up as but last bought any not to XX year leverage a preferred points. back opportunistic remain We $X repurchase ratio at we million also we basis par.

points in on on the up Moving up basis The higher to slightly just margin XX. on basis. margin core and a point Page on X a came GAAP basis basis a

loan in points the X moved our in and basis points X quarter from compared renewed range went Our the to Loan as yield basis We quarter. accretion loan basis slightly QX. X.XX% up X the quarter had fourth to yield less accretion loan the with first. X.X% in new a point in for benefit the to

X in our X to be up Our estimation, moving basis net QX, by X points. should plus basis interest or margin minus points higher

more the continue change money loan cost. are near market changes CD seeing within our are costs we side, and near mix very CD and promotional still should be increasing should our accounts. cost of as savings pricing and said, and That top maturing yields with DDA On new now mix positive a towards CDs shrinking

would mentioned beta it's thinking we to our terminal XX%. quarter, XX%, are deposit closer I be but Last that now

Noninterest the $X.X an million up income Better was million to to of Page XX. mortgage on most million million Moving basis. $XX.X fee increase. of $X.X drove income $X.X operating

$X.XX a $X.X QX. in to swing $X.X the was gain under write-down had MSR This and to For million positive compared earnings of million quarter. million quarter, we the $X.X which an write-up, just added a last

MSR product fixed was was income of swing, million the rate a sell economics towards had that we $X.X we greater XX% more core and as volumes over the higher mortgage and fixed upfront. get mix change Aside rate

on loans driven and gain the gain other sale sale were was Our bit though better. in $XXX,XXX fewer QX on even a by loans percentages was of sold SBA down

Operating expenses on Page million, primary $XXX.X up came XX is for The in FICA increase increase million. in $X.X $X.X the at million taxes. reason a

our we fewer mortgages saw also defer more expenses up We ended as of to sold. being able were

rate business, came balance on deferred sheet. or had the also ended fewer costs the change towards So sale but $XXX,XXX because in to loans mix gains, mortgage loans we fewer fixed loan the more creating up about

credit XX quarter, points very just to were being quality. charge-offs in Net low points. at Moving the bank basis with basis XX the

NPAs up Our slightly. were

in are time. losses We trucking quarters XX. We out Our ago. on breakout $XX loans of Page had putting X as range. first $X.X million The book has million million over last the in were on excluding losses long-haul to long-haul million and Navitas broke losses, we $X.X QX on to are Navitas $XX that quarter. haul, XX.X% new shrunk loan compared from X.XX% long

our aside year-over-year. $XX.X the XX million on losses. in charge-offs ACL flat will up and allowance stayed set is We I credit back and million cover relatively quarter-to-quarter $XX.X for with to Page net finish

pass back to I'll With that, Lynn. it

Herbert Harton

Jefferson. you, Thank

winner Retail Power accomplishment we quarter. this Satisfaction a the recognized of Southeast Before to recognize as the J.D. survey the Community like At questions, our March, the United of for take in I'd teams great XXXX. Banking end for

this taking has announced were tenth received is This our publicly, time also customers. to we dedication in not United the #X of we that care in that While and know the of testament recognition, teams trust as rated the our Southeast. a

We throughout I us. also great forward am our a company, some and Excellence Small look XX to high fortunate new a teammates for I work with received to Business incredible with Greenwich XXXX Awards them. Banking, for

the we'd now questions. for like And to open floor

Operator

[Operator with from Instructions] question Mealor comes Catherine The first KBW.

Catherine Mealor

start on growth. to I want

origination slower You of clients don't growth quarter and little year, impact may in levels? pulling if you the and especially mentioned how cut are was that the thinking bit for growth more conservative that rest get a back. being about How we are rate this

Richard Bradshaw

Rich. button. this rates impacting kind Catherine, that have I'll certainly, take morning Well, also, and one. customers is that of pause Good the we have are interest hit

growth XXXX. a from growth significant Fed, expect than change forward the we see low So loan loan absent greater in do we QX, moving but don't single-digit

Catherine Mealor

And maybe even should still initiatives deposit that deposits grow growth, are there about match to pace a how more loan on faster growth? at Or that.

Jefferson Harralson

Yes.

pricing So is more -- overall we -- is it's most aggressive a our you'll expensive little see for Jeffrerson I what public depositors funds. the think in to So -- be take strategy

public not some funds. we're So pricing matching on

may you people see our the leave price-sensitive most bank. so of And some

areas. in getting We are and our growth retail commercial nice more core really

of bit little trying And a a mix so a bit. change we're to do

we're guiding a the having because up But if this deposit So to trying of I we change be mix ended for year, be wouldn't had it'd surprised where think I that negative if think positive I'm growth. growth I we do. whole quarter

Catherine Mealor

And driving Great. mix X expand points basis next change, the is belief that -- . what's that quarter? by your partially that is margin should that

Jefferson Harralson

That's a little bit more

Catherine Mealor

funding on the Coming side.

Jefferson Harralson

That's right.

some in the did promotional on we accounts. some pricing. of public of other quarter, lowered So market We our of the money our first we are match rates. lowered some We our funds

and even a we it just And versus optimize before our our and our mass cuts. targeted trying get on basis. a so more to a margin of We're funds doing of though we're rate basis, kind cost margin

a back little bit benefit margins. of fight to for trying we're So our

it. So CD of no too, headwind piece it, in longer big the book. some that's A of is

the rate We towards coming CDs anymore. you the on asset We come are side. on seeing at so the the continued off, about that that and mix they're don't change headwind have loans had pace about

higher our on continued. have loans putting where We're a loan than book is. yield at We

think that of now of really of not. piece a biggest one little pieces it's was but I So the lot CD things of things, a it headwind is the that's

Operator

Michael Rose question James. Raymond with from next The comes

Michael Rose

rebound see this quarter. to good So a in nice mortgage

of trends Just get a I to a -- pipelines the for sense some know then the lower. little and there, sale loan bit gains were wanted

process of couple of as look SBA of like kind Navitas paper, could there and quarters? get conceptualize fee kind what just market the thought to wanted Just income the for next in over your we

Richard Bradshaw

this Michael, again. Rich is

In greater we QX to do than terms of mortgage be expect production, QX.

We revenue also be greater well. fee expect to as

in address you what and or now, much as the In I'll in need as the However, certificate the of an you rates you occupancy expect. see interest world, have seasonality SBA of construction And the to don't be to we a -- sell. X.X% have we a of on have side. do SBA expect is at to with then would normally side historically order SBA lot uptick

So this timing a little year. bit

second off pipeline and the is the secondary could but quarter number where XX% what's of of in we loans particularly expect us market a optimism -- want up the sell, we is year. We in to we giving terms half of last is And year. bit that expect we to be, from this up XX% the little was catch it will this year, also about that to

feel good that. we So about

Jefferson Harralson

Yes.

So from do we Rich first is SBA, slowest said. the our seasonal increases like just quarter, quarter and expect

the Navitas first historically loan piece have very sold higher of flat $XX sold sale We what the of only grew we it, on On we for quarter. side the the on end Navitas million.

we're little little we on and into made of less growth but our SBA I they higher? a flat? don't because back to a line little So that is But know quarter, that sales are the higher bit. little a it's loan Or decision sell be keep where if bit loan a main a So driver item that pull gain. really we line as bit, has we do have second it possible go loan sales we've keep could and the book do I that reevaluate, that going

expect would line throughout year. I to that So item the increase

Michael Rose

very That's Jefferson. helpful,

about levels. being capital follow-up, very that. a as Just obviously talked dynamic have you M&A totally But guys guys you I XXXX a have know get likely strong

buyback it. attractive you out do uncertain a isn't we the it's nonetheless, wouldn't I buyback there. about earn it? that usage in back trading and still have it know as would more reason Any aggressively you just think the place. as be at Or of good very as maybe look you were You if but lower,

You maintain the high relatively capital don't of know rather the economy, so levels direction nearer you'd term. just

Jefferson Harralson

have beginning since to do the we I still think We place, in move the that preferred price but it's a latter. closer buybacks little more of year. of par the saw the

increase to looking So We buying than because if higher this I actively like we we really at guess, at I in think par environment. that capital like still the equity having we're relative buyback, The less to lever. of peers of, tangible do.

strategy currently. but there, it. actively our at looking authorization So we're We always always looking we're have at that not

Operator

The comes Stephen Sandler. question next from Scouten Piper with

Stephen Scouten

I there the been sounds though higher remain guess it have that the spreads loans, obviously net XX.X% extremely charge-offs attractive. on the a even Navitas like yield,

the of less and drive would kind that little little more? a is holding So potentially that math sell a

Herbert Harton

stay And looking of have We are We kind at a that. Yes. do there. limit. self-imposed room below little we want to our

and continue we We really team the like is go forward. so to as like that there a the consideration business,

Stephen Scouten

Okay. crest quarters view be on -- balances. that on well? what in ahead the have given in trucking could looks guys have as that it of Do shown kind to book? manufactured to around over well you what And that losses higher long that, as housing manufactured think you've have pertains any -- out credit maybe begin like for maybe like seems It as housing I And kind least could of called time? Navitas at the that book you haul

Robert Edwards

Yes. Hey Edwards. Stephen, it's Rob

it our losses is view that now Navitas crest come On did the also down. have book, and

during down In long-haul we sector, come dramatically. in dues quarter saw the the past fact,

continued in quarter. quarter then down So the maybe that and and to third portfolio we're in in expecting come fourth the normalized improvement results second more

it on with manufactured of housing, a lot done has up, charge-offs portfolio. Mac and our should consistent would to results of XX say we've of expect manufactured housing As years results studies. but this relates Freddie I are what you are

a just and loss not higher, higher as did we're so I a it's last say, little seem but little will the modeled. originating But we would have you're And with may a loss year surprised rates in consistent time we than normal. have so what mind, And the stop performance. bit any book by keep credit be rates and expected you new runoff not originating

Stephen Scouten

you little as kind what's your positioning kind you in picture today. outperform environment operate the perspective, primarily stabilize? I'd question. here the then hopefully, in I And focus bank of and to know, things a look as And all a to me, helpful. more does that bit XXXX. it's Very environment But a about maybe for curious, you when big think strategic been pretty say, improve well last I'm for for just don't better thing priority from a today all peers -- a yourself difficult of

Herbert Harton

primary Tennessee Thanks. to opportunistically, on that continues starting focus is on teams, This Stephen. that's I turned and stabilized Lynn, organic when us hire What and past. in drag on our that the the really us. really would getting on Rich work going forward. around is through growth is believe been to say our exciting franchise organic really building is we We there, see a Florida really to work and

internal And focused so those growth things are on. what we're side on the

side, sheet price lot one-on-one mentioned, better, get around pricing of do just margin doing how a little the we a really balance elements On the kind so of structured how do better. we Jefferson

that we see So this lot frankly, hands. would to us be internally in But I ready raise do look more internal opportunities, a do those. to time those primary wouldn't a you We I that of of would say are their M&A it's at -- 'XX. to getting a surprised would focused. the number of lot is look continue that coming the is say continue But I sellers at would opportunity what for focus we in that think

Operator

question next Gunther Stephens. comes with The from Russell

Russell Elliott Gunther

the margin I wanted on up discussion. to follow

if expect behave? you the pattern are that you remainder how cuts, get the you continue So of And margin as would do quarter. rate gave cuts, kind year? to do how cuts? absent Or coming we of type commentary the Jefferson, we Would expect the then the I contemplating for appreciate to of get you

Jefferson Harralson

the for So question, thank you Russell.

to essentially are neutral right now. rate cuts We

neutral our lot rate flat need keep beta competitors a down deposit is going -- we how do are cutting margin, this XX% to flat. have think to cut we to get we a it total of to be in we comes. essentially to rate think before that what rates. upon We a determined much we But that it do, we But And can that. order have do

back So the talking of to going in we're see the half the about some year. I of that continue think you're is what trends

our to I the get would margin neutral I increase if it's margin, think it's So expect very the bank. whole to absent cuts. we cuts, good rate rate And but to

I risk loan I forecast some. cuts, Rich's rate credit think would think and we other And on if change change. think got our growth I things

So a may Rich, to we lot. think rate don't our changes better, bank a margin on want we're you stronger the ? add cuts, margin I with it industry and think but And specifically,

Richard Bradshaw

I Yes. to currently, the that trying rate interest is X.X%. was underwriting best our way think illustrate to

where some then projects you're down, So that out and a pencil rates these makes to sense. difficult a talking, sudden, deals more makes this it lot if go of for all of

So if see optimistic very some that's why rate we we're decreases.

Russell Elliott Gunther

helpful And really just one for That's then be on would me last expenses. it. appreciate guys. color, I

So you gave in dynamics direction the good some of terms this quarter.

'XX playing you that Just for do see remainder how the on noninterest side? out the of

Jefferson Harralson

Thank you. Good question.

so expense, some like we in of benefit it year probably had getting the eliminations Number looks started this the one, year. lay at what February. we out And to the end from that

X be April, branch that kind should closures May. of have We late early

So bank just us a new with more either across efficient efficient with we targeted people technology, or many trying making to have projects processes. or outcomes, be more the via

we is is have So more picture. the in the bigger The direct a merit. kind due about million increase of second that picture $X quarter, to

that a besides growth We that little from declining, offset normal, FICA bit of kind of I kind rate of low seasonal kind then single-digit of expenses have of expect that.

So bump then out of QX you the year. have flattens for in of rest the and bit little a a

Operator

comes question Tenner Davidson. with next from Gary The D.A.

Gary Tenner

question. NIM the of little a to a Had bit follow-up

a any X this had of XQ? amount at yield a you the we're quarter, have than similar the looking in Barring maybe outlook, to of points kind amendment rate suspect we pickup of bit little Or environment. to level less Do the yield you an expansion loan it fourth loan is quarter. As lower changes from expansion? XQ, side, basis the that growth

Jefferson Harralson

Yes.

maybe I little little the the I with it that target. little bit But bit. slowing down, that would in it plus replacement loans So slowing range down then can good in QX think see coming a the and a X on I QX, doesn't for slowing can because that -- see bit fourth up new down basis there. a a is point little and a growth X% the pick waning I off if like bit third from that quarter X.X%

Gary Tenner

as then, guide to then minus And or growth X it or would your relates basis for which points, deposit right is plus is a say you pricing X one of those that point now lever you? loan bigger that basis --

Jefferson Harralson

I good a our side would deposit is question. lever. bigger the more That's on say it's

deposit We over control have on but pricing it course. guess seems both has I say, I would and a -- and that, more that little more, affected of they yes, --

Operator

Marinac from question Janney The Scott next comes Christopher Montgomery with LLC.

Christopher Marinac

ask I special look assets from whether criticized outflows either or sort side. of it and at the the you Rich, inflows mention classified wanted this Rob or on just the to about quarter,

Just and wanted to get and more coming detail on and on what's off. the takes on going puts

Robert Edwards

Yes.

it's Chris, Rob. So

classified credit. the credit, one very on So we side, large substandard upgraded basically, C&I

there. And that a played so role

a reamortize do and upcoming the them, finished months and that problems payments in of rate other terms address QX risk trying to rate and In through loans we impact identify we at the look in of interest items, at go next maturing time. XX X the on just look at where we and process,

got had have and large credit project C&I we upgraded. that a got a we care did that downgraded, So senior

some just movement spaces. those of So types in

Christopher Marinac

of and is presume as that coverage they're service but that debt performing normal And things, agreed. Rob, also I some still just

Robert Edwards

That's correct. That's right. Yes.

Christopher Marinac

as the mean are also lends expand do kind you follow-up comfortable Do of my mean to with on has then quarter, of lines. a I returns. part I even question rates with it's think of to longer? And various broader for itself business it risk-adjusted may those you're slide what Navitas stay every the kind getting just high but across question. you

Jefferson Harralson

start great a That's that. question. I'll with

being it's it today. a would So is we're a say very but on where company, than lot used Navitas, profitable to profitable more it I

So we we to between looking are losses the get and those to QX up to profitability like. forward normalizing that that really now back

Herbert Harton

that our off at of rate look yield, or you but these our to of some speak yield loans. deposit marginal matter marginal we've If loan because fixed it's maybe burn a old and got really cost to

Jefferson Harralson

Yes. right. That's

coming if loan those incremental our on think a coming low new the nice on really that's margin. wide yield, along our So and lines, new our X.X% deposits you at about loans Xs, in new

not pressures Lynn as into half easy it's both our sheet. of hurting But time. fixed environment. just are optimism the you're go out the sides over seeing loans that into saying, pricing go balance Now because these like an it's It's as back 'XX we profitability -- burn on we older rate is

And having so and increase X%. that time seeing. you're our friend these below ROA ROAs like to We is ROEs don't

and budget Our moving our over that over forecast have time. us

We be time. there expect to over

businesses over ROAs any we having time. talk we good more over businesses, be want if our more our about bank increase about you're specific profitable but talking ROEs to talk targeting individual are their and can about we to we feel so -- I don't in too, a can well. And business. about time as and and specific that, improvements And

Richard Bradshaw

and and new little been part emphasis months Jeff, those that's CRE this. that about model, on pricing benefits a in lot results X now, and We're time a on I pricing monthly been and probably of going -- by now are. we've ago we're a strategy would and how what place, we that's and add, a geography see been all but C&I on spent a the versus measuring of basis more to big

Unknown Executive

strong you ability your as on strong all certainly new very a still million is their credit, illustration that $XXX Thank that mean paying so contributions the repay helpful. it's there. interesting good. borrower for I coverage Great. an to That's super comes

Operator

with next The question Bishop Group. comes David Hovde from

David Bishop

funding and flow per going about growth I of securities that's this question follow-up balance How should on flows a think loan quarter assume into we to I cash think the year. Jeff, some sheet.

should work? those dynamics Just curious balance how sheet

Jefferson Harralson

That's right.

$XXX were the quarter, a $XXX So you million million flow from quarter portfolio. to hundred cash it, couple dollars getting of call securities coming a million of

Our has lighter than that. growth loan been

So you've expecting are securities throughout grow portfolio. to that more and seen to lot you're see a year reason the into reinvestment seeing And securities we investing new securities. that to because of that is a we're the yield

So a of we'll lot our the that question, from growth. answer deposit expected see comes

with growth we've securities talking portfolio, strategy Deposit the our stay reinvestment growth a that to the then to you're as been going in see more loan about lot going flat, and that can fund well.

is question So funds asking relatively upon this the that Take don't my that flat base the see securities I bigger and how a plan of funds maybe the loans, see you loans flow sheet know. grow balance deposits. cash what think for do. deposits much from But we year, it maybe in flat bit, but little think the be will relatively depending is, all I you're all

David Bishop

final And one guidance. that question. appreciate then I

to down there. desire allowing what [indiscernible] rates to dialing on seeing down? seeing from any how your move or market specials money tap Are CD you to the start they a competitive or backdrop? you're stabilized your competitors you You mentioned ratio of back potentially Just curious market

Jefferson Harralson

Rich. start but and I'll limited pass say, I little we're quick would a very real [indiscernible] bit and to Maybe scattered,

Richard Bradshaw

a in and lot. still, a has rational while I would and in once one, down it's a come there's calmed -- every lot. It down but a agree certainly

Operator

turn remarks. any to over Harton like to Mr. conference would I back session. closing question-and-answer our the Lynn concludes for This

Herbert Harton

call. look joining forward thank to additional Great. the We for all questions. you Well,

And If you soon. reach to have forward Thank you directly. them, we please look out so much. talking

Operator

you for presentation. The conference today's attending concluded. has now Thank

You may now disconnect.

United Community Banks (UCB) 24 Apr 242024 Q1 Earnings call transcript