UCB — United Community Banks, Inc.

UCB Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Earnings Per Share (EPS): Operating EPS of $0.71, up 8% year-over-year; GAAP EPS of $0.95, boosted by a $0.25 nonoperating item from the Navitas reserve release.
• Total Revenue: Increased by 7% compared to the prior year.
• Net Interest Margin (NIM): Reached 3.68%, up 18 basis points year-over-year and 3 basis points from the previous quarter.
• Loan Growth: Annualized loan growth of 6.8% for the quarter; organic loan growth (excluding Navitas) at 6.4%, significantly higher than 4.3% in 2025 and 3.9% in Q1 2026.
• Credit Quality: Net charge-offs at 16 basis points, with bank-only charge-offs at 9 basis points. Past dues at 11 basis points, and special mention/substandard loans at 2.5%.

2. Strategic Updates and Business Highlights:

• UCB is focusing on core franchise growth after the decision to sell Navitas, leading to a 17% net increase in revenue producers since Q3 2025.
• The acquisition of Peach State is on track to close in early Q3, expected to enhance market share in a fast-growing region.
• The bank's capital levels remain robust, with a Common Equity Tier 1 (CET1) ratio at 13.5%.

3. Forward Guidance and Outlook:

• UCB anticipates continued loan growth in the 6-7% range for the second half of 2026, driven by hiring initiatives and the integration of Peach State.
• The bank expects to maintain NIM expansion, although the sale of Navitas may initially reduce margins by approximately 20-30 basis points.
• Plans to repurchase shares remain, with $50 million of the $100 million allocated for the Peach State acquisition expected to be executed post-sale.

4. Challenges and Points of Concern:

• Customer deposits declined by $295 million due to seasonal outflows, although average deposits grew by 3.3% excluding public funds.
• The bank faces competitive pressures in the deposit market, which may lead to slightly higher costs in the latter half of the year.
• The notable $4.5 million expense related to settling with California's DFPI for a lender's license may impact future operating expenses.

5. Notable Q&A Insights:

• Management expressed confidence in achieving mid-to-high single-digit loan growth moving forward, bolstered by recent hiring and strategic focus.
• Discussions around potential M&A opportunities in the smaller bank sector are active, with expectations for increased activity post-Peach State acquisition.
• The bank's approach to managing deposit costs and reinvestment strategies post-Navitas sale was highlighted, indicating a cautious yet optimistic outlook on loan yields and margins.

Overall, UCB reported solid financial performance in Q2 2026, with strategic initiatives aimed at enhancing growth and profitability, despite facing some challenges in deposit management and competitive pressures.