United Community Banks, Inc. Reports Third Quarter Results
GREENVILLE, S.C. , Oct. 23, 2024 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NYSE:UCB) (United) today announced net income for the 2024 third quarter of $47.3 million and pre-tax, pre-provision income of $74.2 million. The result included the previously announced strategic decision to sell $318 million in manufactured housing loans, which negatively impacted the quarter by $21.4 million after-tax, or $0.18 per share. Diluted earnings per share of $0.38 for the quarter represented a decrease of $0.01, or 3%, from the third quarter a year ago and a decrease of $0.16, or 30%, from the second quarter of 2024.
On an operating basis, United's diluted earnings per share of $0.57 was up 27% from the year-ago quarter. The primary drivers of the increased earnings per share year-over-year were higher net interest income and a lower provision for credit losses. The $0.57 result includes a $9.9 million Hurricane Helene related loan loss provision to increase the reserve on $383 million of loans in nine North Carolina counties impacted by the hurricane to 3.5% of loans.
United's return on assets was 0.67%, or 1.01% on an operating basis. Return on common equity was 5.20% and return on tangible common equity on an operating basis was 11.17%. On a pre-tax, pre-provision basis, operating return on assets was 1.50% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.93%, up 15 basis points from the second quarter of 2024.
Chairman and CEO Lynn Harton stated, "We continue to focus on growth and the third quarter saw the return of modest loan and strong deposit growth. Excluding the sale of our manufactured housing portfolio, announced in early September, loan balances were up 1.5% annualized. Customer deposits, which exclude brokered deposits, were up $262 million, or 5% annualized. Our balance sheet remains highly liquid and our internal capital generation rate is running well in excess of our current capital needs. We maintained robust capital ratios with our preliminary CET1 moving to 13.1% and we opportunistically redeemed $8 million of relatively expensive Trust Preferred securities. The increase in liquidity and capital place us in a great position to take advantage of growth opportunities as we move into 2025."
Mr. Harton continued, "We elected to sell our manufactured housing loan book, a business that was part of our Reliant Bancorp, Inc. acquisition in January of 2022, as a natural conclusion of our exit from the business, as we ceased originating loans in the third quarter of 2023. The transaction reduces our risk profile and allows us to allocate capital to other growth opportunities."
United's net interest margin decreased four basis points to 3.33% from the second quarter. The average yield on United's interest-earning assets was down four basis points to 5.55%, while its cost of interest-bearing liabilities decreased two basis points, leading to the four-basis point reduction in net interest margin. Net charge-offs were $23.7 million, or 0.52% of average loans, during the quarter, up 26 basis points compared to the second quarter of 2024 due to transaction-related losses resulting from the sale of our manufactured housing portfolio. NPAs were 42 basis points relative to total assets, down one basis point from the second quarter.
Mr. Harton concluded, "We are pleased with our operating performance this quarter, but we were also reminded this quarter of the importance of community. Many of our employees, customers, and communities have been impacted by the recent hurricanes. We are actively involved in the recovery process through volunteer hours and financial support and will be ready to lead the rebuilding process, when and as needed. Many thanks to our employees throughout the company that have responded, in sometimes heroic ways, to support each other and our customers."
Third Quarter 2024 Financial Highlights:
Net income of $47.3 million and pre-tax, pre-provision income of $74.2 million
EPS down 3% compared to third quarter 2023 on a GAAP basis and up 27% on an operating basis; compared to second quarter 2024, EPS down 30% on a GAAP basis and down 2% on an operating basis
The GAAP results were impacted by the decision to sell the manufactured housing loan book at a $21.4 million after-tax loss, or $0.18, approximately one year after making the strategic decision to cease originations
Return on assets of 0.67%, or 1.01% on an operating basis
Pre-tax, pre-provision return on assets of 1.50% on an operating basis
Return on common equity of 5.20%
Return on tangible common equity of 11.17% on an operating basis
A provision for credit losses of $14.4 million, which includes $9.9 million to establish a special reserve for expected credit losses from Hurricane Helene
Net charge-offs of $23.7 million, or 52 basis points as a percent of average loans, which included $11.0 million, or 24 basis points, of transaction-related losses from the sale of our manufactured housing portfolio
Nonperforming assets of 0.42% of total assets, down one basis point compared to June 30, 2024
Loan production of $1.2 billion
Customer deposits were up $262 million from the second quarter, with most of the growth in NOW and money market deposits
Net interest margin of 3.33% decreased by four basis points from the second quarter mostly due to lower purchased loan accretion, the sale of our manufactured housing portfolio, and changing composition of our earning assets and interest-bearing liabilities
Mortgage closings of $239 million compared to $211 million a year ago; mortgage rate locks of $306 million compared to $304 million a year ago
Noninterest income was down $28.5 million on a linked quarter basis with $27.2 million due to losses from the sale of manufactured housing loans. The remaining decrease was primarily driven by the mark on our mortgage servicing rights asset.
Noninterest expenses decreased by $4.0 million compared to the second quarter on a GAAP basis and were up $0.3 million on an operating basis
Efficiency ratio of 65.5%, or 57.4% on an operating basis
Maintained robust capital ratios with preliminary CET1 increasing to 13.1% and opportunistically redeemed $8 million of relatively expensive Trust Preferred securities
Quarterly common dividend of $0.24 per share declared during the quarter, up 4% year-over-year
Conference Call United will hold a conference call on Wednesday, October 23, 2024 at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. Participants can pre-register for the conference call by navigating to https://dpregister.com/sreg/10193157/fd9f74293a. Those without internet access or unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and can be accessed by selecting "Events and Presentations" under "News and Events" within the Investor Relations section of the company's website, www.ucbi.com.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
(In thousands, except per share data)
2024
2023
ThirdQuarter2024-2023Change
For the Nine MonthsEnded September 30,
YTD2024-2023Change
ThirdQuarter
SecondQuarter
FirstQuarter
FourthQuarter
ThirdQuarter
2024
2023
INCOME SUMMARY
Interest revenue
$
349,086
$
346,965
$
336,728
$
338,698
$
323,147
$
1,032,779
$
898,409
Interest expense
139,900
138,265
137,579
135,245
120,591
415,744
284,097
Net interest revenue
209,186
208,700
199,149
203,453
202,556
3
%
617,035
614,312
—
%
Provision for credit losses
14,428
12,235
12,899
14,626
30,268
39,562
74,804
Noninterest income
8,091
36,556
39,587
(23,090
)
31,977
(75
)
84,234
98,573
(15
)
Total revenue
202,849
233,021
225,837
165,737
204,265
(1
)
661,707
638,081
4
Noninterest expenses
143,065
147,044
145,002
154,587
144,474
(1
)
435,111
416,686
4
Income before income tax expense
59,784
85,977
80,835
11,150
59,791
—
226,596
221,395
2
Income tax expense
12,437
19,362
18,204
(2,940
)
11,925
4
50,003
47,941
4
Net income
47,347
66,615
62,631
14,090
47,866
(1
)
176,593
173,454
2
Non-operating items
29,385
6,493
2,187
67,450
9,168
38,065
21,444
Income tax benefit of non-operating items
(6,276
)
(1,462
)
(493
)
(16,714
)
(2,000
)
(8,231
)
(4,775
)
Net income - operating(1)
$
70,456
$
71,646
$
64,325
$
64,826
$
55,034
28
$
206,427
$
190,123
9
Pre-tax pre-provision income(5)
$
74,212
$
98,212
$
93,734
$
25,776
$
90,059
(18
)
$
266,158
$
296,199
(10
)
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP
$
0.38
$
0.54
$
0.51
$
0.11
$
0.39
(3
)
$
1.43
$
1.44
(1
)
Diluted net income - operating(1)
0.57
0.58
0.52
0.53
0.45
27
1.67
1.58
6
Cash dividends declared
0.24
0.23
0.23
0.23
0.23
4
0.70
0.69
1
Book value
27.68
27.18
26.83
26.52
25.87
7
27.68
25.87
7
Tangible book value(3)
19.66
19.13
18.71
18.39
17.70
11
19.66
17.70
11
Key performance ratios:
Return on common equity - GAAP(2)(4)
5.20
%
7.53
%
7.14
%
1.44
%
5.32
%
6.61
%
6.69
%
Return on common equity - operating(1)(2)(4)
7.82
8.12
7.34
7.27
6.14
7.76
7.35
Return on tangible common equity - operating(1)(2)(3)(4)
11.17
11.68
10.68
10.58
9.03
11.18
10.65
Return on assets - GAAP(4)
0.67
0.97
0.90
0.18
0.68
0.85
0.86
Return on assets - operating(1)(4)
1.01
1.04
0.93
0.92
0.79
0.99
0.95
Return on assets - pre-tax pre-provision - operating(1)(4)(5)
1.50
1.54
1.40
1.33
1.44
1.48
1.60
Net interest margin (fully taxable equivalent)(4)
3.33
3.37
3.20
3.19
3.24
3.30
3.41
Efficiency ratio - GAAP
65.51
59.70
60.47
66.33
61.32
61.76
58.06
Efficiency ratio - operating(1)
57.37
57.06
59.15
59.57
57.43
57.84
55.07
Equity to total assets
12.45
12.35
12.06
11.95
11.85
12.45
11.85
Tangible common equity to tangible assets(3)
8.93
8.78
8.49
8.36
8.18
8.93
8.18
ASSET QUALITY
Nonperforming assets ("NPAs")
$
114,960
$
116,722
$
107,230
$
92,877
$
90,883
26
$
114,960
$
90,883
26
Allowance for credit losses - loans
205,290
213,022
210,934
208,071
201,557
2
205,290
201,557
2
Allowance for credit losses - total
215,517
224,740
224,119
224,128
219,624
(2
)
215,517
219,624
(2
)
Net charge-offs
23,651
11,614
12,908
10,122
26,638
48,173
42,121
Allowance for credit losses - loans to loans
1.14
%
1.17
%
1.15
%
1.14
%
1.11
%
1.14
%
1.11
%
Allowance for credit losses - total to loans
1.20
1.23
1.22
1.22
1.21
1.20
1.21
Net charge-offs to average loans(4)
0.52
0.26
0.28
0.22
0.59
0.35
0.32
NPAs to total assets
0.42
0.43
0.39
0.34
0.34
0.42
0.34
AT PERIOD END ($ in millions)
Loans
$
17,964
$
18,211
$
18,375
$
18,319
$
18,203
(1
)
$
17,964
$
18,203
(1
)
Investment securities
6,425
6,038
5,859
5,822
5,701
13
6,425
5,701
13
Total assets
27,373
27,057
27,365
27,297
26,869
2
27,373
26,869
2
Deposits
23,253
22,982
23,332
23,311
22,858
2
23,253
22,858
2
Shareholders' equity
3,407
3,343
3,300
3,262
3,184
7
3,407
3,184
7
Common shares outstanding (thousands)
119,283
119,175
119,137
119,010
118,976
—
119,283
118,976
—
(1) Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on next page. (2) Net income less preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized. (5) Excludes income tax expense and provision for credit losses.
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
(in thousands, except per share data)
2024
2023
For the Nine Months EndedSeptember 30,
ThirdQuarter
SecondQuarter
FirstQuarter
FourthQuarter
ThirdQuarter
2024
2023
Noninterest income reconciliation
Noninterest income (GAAP)
$
8,091
$
36,556
$
39,587
$
(23,090
)
$
31,977
$
84,234
$
98,573
Loss on sale of manufactured housing loans
27,209
—
—
—
—
27,209
—
Gain on lease termination
—
—
(2,400
)
—
—
(2,400
)
—
Bond portfolio restructuring loss
—
—
—
51,689
—
—
—
Noninterest income - operating
$
35,300
$
36,556
$
37,187
$
28,599
$
31,977
$
109,043
$
98,573
Noninterest expense reconciliation
Noninterest expenses (GAAP)
$
143,065
$
147,044
$
145,002
$
154,587
$
144,474
$
435,111
$
416,686
Loss on FinTrust (goodwill impairment)
—
(5,100
)
—
—
—
(5,100
)
—
FDIC special assessment
—
764
(2,500
)
(9,995
)
—
(1,736
)
—
Merger-related and other charges
(2,176
)
(2,157
)
(2,087
)
(5,766
)
(9,168
)
(6,420
)
(21,444
)
Noninterest expenses - operating
$
140,889
$
140,551
$
140,415
$
138,826
$
135,306
$
421,855
$
395,242
Net income to operating income reconciliation
Net income (GAAP)
$
47,347
$
66,615
$
62,631
$
14,090
$
47,866
$
176,593
$
173,454
Loss on sale of manufactured housing loans
27,209
—
—
—
—
27,209
—
Bond portfolio restructuring loss
—
—
—
51,689
—
—
—
Gain on lease termination
—
—
(2,400
)
—
—
(2,400
)
—
Loss on FinTrust (goodwill impairment)
—
5,100
—
—
—
5,100
—
FDIC special assessment
—
(764
)
2,500
9,995
—
1,736
—
Merger-related and other charges
2,176
2,157
2,087
5,766
9,168
6,420
21,444
Income tax benefit of non-operating items
(6,276
)
(1,462
)
(493
)
(16,714
)
(2,000
)
(8,231
)
(4,775
)
Net income - operating
$
70,456
$
71,646
$
64,325
$
64,826
$
55,034
$
206,427
$
190,123
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)
$
47,347
$
66,615
$
62,631
$
14,090
$
47,866
$
176,593
$
173,454
Income tax expense
12,437
19,362
18,204
(2,940
)
11,925
50,003
47,941
Provision for credit losses
14,428
12,235
12,899
14,626
30,268
39,562
74,804
Pre-tax pre-provision income
$
74,212
$
98,212
$
93,734
$
25,776
$
90,059
$
266,158
$
296,199
Diluted income per common share reconciliation
Diluted income per common share (GAAP)
$
0.38
$
0.54
$
0.51
$
0.11
$
0.39
$
1.43
$
1.44
Loss on sale of manufactured housing loans
0.18
—
—
—
—
0.18
—
Bond portfolio restructuring loss
—
—
—
0.32
—
—
—
Gain on lease termination
—
—
(0.02
)
—
—
(0.02
)
—
Loss on FinTrust (goodwill impairment)
—
0.03
—
—
—
0.03
—
FDIC special assessment
—
—
0.02
0.06
—
0.01
—
Merger-related and other charges
0.01
0.01
0.01
0.04
0.06
0.04
0.14
Diluted income per common share - operating
$
0.57
$
0.58
$
0.52
$
0.53
$
0.45
$
1.67
$
1.58
Book value per common share reconciliation
Book value per common share (GAAP)
$
27.68
$
27.18
$
26.83
$
26.52
$
25.87
$
27.68
$
25.87
Effect of goodwill and other intangibles
(8.02
)
(8.05
)
(8.12
)
(8.13
)
(8.17
)
(8.02
)
(8.17
)
Tangible book value per common share
$
19.66
$
19.13
$
18.71
$
18.39
$
17.70
$
19.66
