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United Community Banks, Inc. Reports First Quarter Results

  • Posted on April 24, 2024

Greenville, SC -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the first quarter was $62.6 million and pre-tax, pre-provision income was $93.7 million. Diluted earnings per share of $0.51 for the quarter represented a decrease of $0.01 or 2%, from the first quarter a year ago and an increase of $0.40 from the fourth quarter of 2023, during which merger charges, losses from a bond portfolio restructuring, and an FDIC special assessment had a significant negative impact on earnings.

On an operating basis, diluted earnings per share of $0.52 were slightly lower compared to last quarter, with the primary drivers of the decrease being a seasonal increase in certain operating expenses and a higher effective tax rate, as well as a lower day count. These were offset by a favorable MSR asset write-up and lower provision expense. Core deposits, excluding brokered deposits and public funds, grew by 5% annualized and loans grew at a 1.2% annualized rate during the quarter. Net interest revenue was lower by 2% during the quarter despite an increase in average loan balances, as lower average interest-earning assets and a lower day count offset the effect of a higher margin.

For the first quarter, United’s return on assets was 0.90% and 0.93% on an operating basis. Return on equity was 7.14% and return on tangible common equity was 10.68%. On a pre-tax, pre-provision basis, operating return on assets was 1.40% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.49%, up 13 basis points from the fourth quarter of 2023.

Chairman and CEO Lynn Harton stated, “We reported solid results in the first quarter, with strong pre-tax, pre-provision earnings, a stable margin, and good credit performance. Loan growth slowed as expected while core deposit growth was stronger than we anticipated.” Harton continued “Economic conditions in our markets continue to be very positive. However, we are mindful of the uncertainties in the environment, such as continuing inflation, the tension between a very tight monetary policy and a very loose fiscal policy, and ongoing global conflicts. Given those uncertainties, we continue to manage conservatively so that we can remain a source of strength for our communities and customers.”

United’s net interest margin increased by 1 basis point to 3.20% from the fourth quarter. Interest-earning assets were modestly lower and the average yield on United’s interest-earning assets was up 8 basis points to 5.39%, and its cost of interest-bearing liabilities increased by 7 basis points to 3.23%, contributing to the increase in the net interest margin. Cost of deposits, including non-interest-bearing deposits was 2.32%. Net charge-offs were $12.9 million or 0.28% of average loans during the quarter, up 6 basis points compared to the fourth quarter of 2023, and NPAs were 39 basis points relative to total assets, up 5 basis points from the previous quarter.

Mr. Harton concluded, “We approach 2024 with continued optimism given the strength of our company, driven by an outstanding team of employees. In the first quarter, we became a 10-time winner of the JD Power Award for Best Retail Banking Satisfaction in the Southeast. We also received 15 Greenwich Excellence Awards for Small Business Banking. These awards reflect the passion and skill that our teams exhibit every day in the quest to serve our customers in the best way possible.”

First Quarter 2024 Financial Highlights:

  • Net income of $62.6 million and pre-tax, pre-provision income of $93.7 million
  • EPS decreased by 2% compared to first quarter 2023 on a GAAP basis and 10% on an operating basis; compared to fourth quarter 2023, EPS increased 364% on a GAAP basis and decreased 2% on an operating basis
  • Return on assets of 0.90%, or 0.93% on an operating basis
  • Pre-tax, pre-provision return on assets of 1.40% on an operating basis
  • Return on common equity of 7.14%
  • Return on tangible common equity of 10.68% on an operating basis
  • A provision for credit losses of $12.9 million, which increased the allowance for loan losses to 1.15% of loans from 1.14% in the fourth quarter
  • Loan production of $881 million, resulting in loan growth of 1.2% annualized for the quarter
  • Core deposits, excluding brokered deposits and public funds, grew by 5% annualized
  • Net interest margin of 3.20% increased by 1 basis point from the fourth quarter
  • Mortgage closings of $171 million compared to $225 million a year ago; mortgage rate locks of $260 million compared to $335 million a year ago
  • Noninterest income was up $62.7 million on a linked quarter basis, primarily driven by the $51.7 million bond portfolio restructuring charge in the fourth quarter. Mortgage Loan and Related Fees were $7.5 million, which was $5.6 million higher compared to the fourth quarter, largely attributable to a favorable mortgage servicing rights asset write-up compared to a write-down last quarter
  • Noninterest expenses decreased by $9.6 million compared to the fourth quarter due to lower non-operating charges including merger-related charges and the FDIC special assessment
  • Efficiency ratio of 60.5%, or 59.2% on an operating basis
  • Net charge-offs of $12.9 million, or 28 basis points as a percent of average loans, up 6 basis points from the net charge-offs level experienced in the fourth quarter
  • Nonperforming assets of 0.39% of total assets, up 5 basis points compared to December 31, 2023
  • Quarterly common shareholder dividend of $0.23 per share declared during the quarter, which was flat year-over-year

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