United Community Banks (UCBI) Tops Q3 EPS by 19c, Revenues Miss

United Community Banks (NASDAQ: UCBI) reported Q3 EPS of $0.55, $0.19 better than the analyst estimate of $0.36. Revenue for the quarter came in at $155.34 million versus the consensus estimate of $167.93 million.

Third Quarter 2020 Financial Highlights:

• EPS decreased by 13% compared to last year on both a GAAP and operating basis; compared to second quarter, EPS increased by 63% on a GAAP basis and 72% on an operating basis
• Return on assets of 1.07%, or 1.14% excluding merger-related and other charges
• Pre-tax, pre-provision return on assets of 1.86%, or 1.93% excluding merger-related and other charges
• Return on common equity of 10.1%
• Return on tangible common equity of 13.5%, excluding merger-related and other charges
• A provision for credit losses of $21.8 million of which $10.7 million is attributable to establishing an allowance for credit losses for Seaside’s acquired loans
• Loan production of $1.0 billion and loan growth of $1.7 billion with $1.4 billion attributable to loans acquired from Seaside and core loan growth at an annualized rate of 8% for the quarter
• Core transaction deposits were up $1.7 billion with $1.3 billion attributable to Seaside and approximately $400 million in organic growth, which represents a 15% annualized growth rate for the quarter
• Net interest margin of 3.27% was down 15 basis points from the second quarter, reflecting the low rate environment, the Seaside acquisition, and increasing balance sheet liquidity
• Record mortgage rate locks of $910 million, which is $108 million or 13% higher than the previous record set in the second quarter; this compares to $508 million a year ago
• Noninterest income was up $7.7 million on a linked quarter basis, excluding net securities gains; Seaside contributed nearly $2.5 million of the increase and mortgage loan and related fees were up $1.5 million, primarily driven by record mortgage rate locks and production
• Efficiency ratio of 54.1%, or a record low 52.2% excluding merger-related and other charges
• Net charge-offs of $2.5 million, or 9 basis points as a percent of average loans, down 16 basis points from in the second quarter
• Nonperforming assets of 0.29% of total assets, which is down 3 basis points compared to June 30, 2020
• Total deferrals of $365 million or 3% of the total loan portfolio compared to $1.9 billion or 16% in the second quarter
• $500,000 of funding for the United Community Bank Foundation, adding to the initial $1 million contribution in the second quarter for charities and causes throughout the footprint

Chairman and CEO Lynn Harton stated, “While the future economic and operating environment remains uncertain, I am pleased with the financial strength and resilience of the company and the dedication of our employees who consistently provide outstanding customer service. Our markets continue to recover from the economic effects of the pandemic and I am pleased to report that loan payment deferrals have declined from a peak of $1.9 billion, or 15.9% of the total loan portfolio at June 30, 2020 to $365 million, or 3.1% of the total loan portfolio at September 30, 2020.”

Harton continued, “Our acquisition of Seaside, which closed on July 1st, positions us well in attractive Florida markets and we are pleased with the talent of the Seaside team and the deep relationships they have built with their clients. We plan to pilot Seaside’s high net worth offering of asset management and trust services in select markets of United’s footprint in the late fourth quarter. Additionally, we have made solid progress on the business integration and are already moving forward with additional products, including mortgage, middle market, commercial real estate, SBA, asset-based and non-profit lending, to compliment Seaside’s product offerings. We are proud to welcome Seaside to the United team.”

For earnings history and earnings-related data on United Community Banks (UCBI) click here.

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