Financial Data and Key Metrics Changes - Operating earnings were reported at $0.59 per share, with an operating return on assets of 1.04%, showing solid improvements from the previous year [5] - Loans grew at an annualized pace of just over 5%, while deposits also grew at an annualized rate of 5% [6] - The net interest margin increased by 10 basis points over the fourth quarter, driven by lower deposit costs [6][19] Business Line Data and Key Metrics Changes - The loan portfolio saw a 7% annualized growth in Commercial and Industrial (C&I) loans, including owner-occupied commercial real estate, and a 15% annualized growth in the Navitas book [15] - Home Equity Line of Credit (HELOC) loans experienced a 13% annualized growth [15] - Non-interest income decreased by $4.8 million from the previous quarter, but the run rate of fee income remained flat, excluding notable items from the last quarter [20] Market Data and Key Metrics Changes - Deposit growth was $309 million, or 5.3% annualized, despite approximately $85 million in seasonal public funds outflow [12] - The cost of total deposits improved by 15 basis points during the quarter [13] Company Strategy and Development Direction - The company is focused on organic growth first, with a preference for share buybacks over M&A at current stock prices [56][80] - The balance sheet is positioned well for economic volatility, with no wholesale borrowings and a low loan-to-deposit ratio of 78% [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties, noting that consumer spending and employment in their markets remain strong [10] - The company is closely monitoring the economic environment but sees no immediate cause for concern [11] Other Important Information - The company announced the acquisition of American National Bank, set to close on May 1st, which is expected to enhance its South Florida franchise [23] Q&A Session Summary Question: Margin expectations going forward - Management expects margin to increase by 5 to 10 basis points next quarter, driven by lower deposit costs and a shift in the mix between loans and securities [29] Question: Changes in borrower behavior - The company has not seen a negative impact on loan pipelines, with Q2 expected to be similar to Q1 [48] Question: SBA and fee income challenges - The company is a preferred lender for SBA loans and did not experience significant delays in approvals [50] Question: Operating expenses outlook - Operating expenses are expected to grow in the low single-digit range, with some seasonal increases anticipated [52] Question: Capital deployment priorities - Organic growth is prioritized, but share buybacks are currently viewed as more attractive than M&A due to market conditions [56][80] Question: Loan loss reserve management - The company uses Moody's scenarios for loan loss reserves and is cautious about blindly following forecasts [64] Question: Deposit growth drivers - Strong deposit growth was attributed to general market conditions rather than specific campaigns [71] Question: M&A environment outlook - Conversations regarding M&A continue, but significant activity is not expected in the next 12 to 18 months due to current market conditions [80]
United Community Banks, Inc.(UCB) - 2025 Q1 - Earnings Call Transcript