United Community Banks (UCB) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income was $47.3 million, with diluted EPS of $0.38 and operating EPS of $0.57; results were impacted by a $21.4 million after-tax loss from the sale of the $318 million manufactured housing loan portfolio.

• Return on assets exceeded 1% on an operating basis, with tangible common equity per share up $0.53, or 11% annualized.

• Total assets reached $27.4 billion, deposits $23.3 billion, and loans $18.0 billion, with 202 banking offices across the Southeast.

• Strong customer deposit growth, with deposits up $262 million (5% annualized) from Q2 2024; excluding the loan sale, loan balances increased 1.5% annualized.

• Increased reserves by $9.9 million for Hurricane Helene-related losses in Western North Carolina.

Financial highlights

• Net interest margin for Q3 2024 was 3.33%, with net interest revenue rising to $209 million; deposit costs were flat at 2.35%.

• Net charge-offs were $23.7 million (0.52% of loans), including $11 million from the manufactured housing sale; core bank credit losses (excluding Navitas and manufactured housing) remained stable at 15 basis points.

• Noninterest income declined by $28.5 million sequentially, mainly due to the manufactured housing loan sale and a $2.7 million MSR write-down.

• Operating expenses were $140.9 million, with a GAAP efficiency ratio of 65.5% and an operating efficiency ratio of 57.4%.

• Allowance for credit losses at $215.5 million, or 1.20% of loans.

Outlook and guidance

• Management expects mid-single digit loan growth in Q4 and into 2025, supported by strong pipelines and recent hiring.

• Margin guidance is for a relatively flat to slightly down margin in Q4, with mix changes from public fund deposits and the absence of manufactured housing loans impacting margin but not earnings.

• Capital generation exceeds current needs, supporting potential expansion into 2025.

• No specific 2025 margin guidance yet, but cost of funds is expected to decline as deposit rates are cut.

• Interest rate environment and deposit pricing remain key factors for future net interest margin and revenue.