• Operating Earnings Per Share: $0.52, a decrease of $0.01 from the previous quarter.
• Operating Return on Assets: 93 basis points, an increase from 92 basis points last quarter.
• Net Interest Margin: Held steady, up 1 basis point on a GAAP basis and up 2 basis points on a core basis.
• Loan Growth: Increased by 1.2%, with specific growth in C&I offset by shrinkage in investor CRE and residential construction.
• Deposit Growth: Essentially flat, with a notable $228 million shrinkage in public funds.
• Cost of Deposits: Increased by 8 basis points to 2.32%.
• Non-Performing Loans: Increased slightly to 58 basis points.
• Substandard Loans: Decreased by 3 basis points to 1.3%.
• Loan-to-Deposit Ratio: 79%, with no significant wholesale borrowings.
• Regulatory Capital Ratios: Increased, with leverage ratio up 21 basis points.
• Net Interest Income: Expected to increase by approximately 5 basis points in the next quarter.
• Non-Interest Income: Increased by $8.6 million to $37.2 million, driven by better mortgage fee income.
• Operating Expenses: $140.4 million, up $1.6 million due to increased FICA taxes and other factors.
• Net Charge-Offs: 28 basis points for the quarter.
• Allowance for Credit Losses: Set at $12.9 million, matching the net charge-offs for the quarter.

• Warning! GuruFocus has detected 3 Warning Signs with UCBI.

Release Date: April 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Can you discuss the expected loan growth for the rest of the year, especially if there are no rate cuts? A: (Richard Bradshaw, EVP, Chief Banking Officer) We anticipate low single-digit loan growth, greater than Q1, but significant growth is unlikely without a change from the Fed.

Q: How do you see deposit growth aligning with loan growth? Are there initiatives to grow deposits faster? A: (Jefferson Harralson, CFO) We're adjusting our deposit pricing strategy, particularly with public funds, to manage cost. While some price-sensitive customers may leave, we're seeing strong growth in retail and commercial deposits. Overall, we aim for positive growth in deposits for the year.

Q: What are the expectations for the net interest margin in the coming quarters? A: (Jefferson Harralson, CFO) We expect the net interest margin to increase by about 5 basis points in Q2, driven by adjustments in CD costs and loan yields. The margin's future movement will depend on deposit pricing and loan growth dynamics.

Q: Could you provide insights into the performance and expectations for the mortgage and SBA loan segments? A: (Richard Bradshaw, EVP, Chief Banking Officer) Mortgage production and fee revenue are expected to increase in Q2, though high interest rates may dampen seasonal growth. SBA loan sales were lower this quarter due to timing but should catch up in the second half of the year.

Q: How are you managing the challenges in the Navitas loan portfolio, particularly with high net charge-offs? A: (Lynn Harton, CEO) We're closely monitoring the portfolio and may adjust our strategy on loan sales versus growth. The high yields on new loans at 10.5% help offset the higher losses.

Q: What are the strategic priorities for United Community Banks looking ahead to 2025? A: (Lynn Harton, CEO) The focus is on organic growth, particularly in Tennessee and Florida, improving pricing strategies, and maintaining strong capital levels. We're also open to M&A opportunities as they arise.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.