Financial Data and Key Metrics Changes - Revenue increased by over $16 million compared to the second quarter, driven by an 8 basis point improvement in margin and 5.4% annualized loan growth [4] - Provision for credit losses declined by approximately $4 million compared to the last quarter, supported by strong credit results and a release of $2.6 million from the Hurricane Helene Special Reserve [4] - Earnings per share on an operating basis reached $0.75, a 32% year-over-year improvement, with a return on assets of 1.33% and a return on tangible common equity of 13.6% [4] Business Line Data and Key Metrics Changes - All estates delivered positive loan growth, with significant contributions from C&I, Equipment Finance, and HELOC categories [5][8] - Deposits grew by $137 million, or 2.6% annualized, excluding seasonal public outflows, with DDA comprising a good portion of the growth [7] - Spread income grew by 14% annualized in the quarter, with net interest margin increasing by 8 basis points to 3.58% [10] Market Data and Key Metrics Changes - The loan portfolio grew at a 5.4% annualized pace, with a 6.2% growth rate excluding senior care runoff [8] - The cost of deposits was pushed down to 1.97%, achieving a 37% total deposit beta so far [7] - The CET1 ratio remained flat at 13.4%, indicating a strong capital position [9] Company Strategy and Development Direction - The company plans to focus on organic growth, increasing dividends, and exploring M&A opportunities, with buybacks being a lower priority [28] - Management emphasized a cautious and selective lending strategy, particularly towards non-depository financial institutions, maintaining limited exposure [6] - The company aims to improve operating leverage and profitability in 2026, driven by margin improvements and loan yield increases [54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the remainder of the year, supported by strong loan growth and positive credit quality metrics [13] - The company noted that recent credit environment challenges appear to be isolated events, with a strong balance sheet positioned to handle economic volatility [5][6] - Management anticipates continued strong performance in loan pipelines for the fourth quarter, with expectations for similar or slightly better loan growth [19] Other Important Information - The tangible book value reached $21.59, reflecting a 10% year-over-year growth [5] - Non-interest income was $43.2 million, up $8.5 million from the previous quarter, with strong increases across most fee categories [10][11] - The allowance for credit losses slightly decreased to 1.19%, with a loan loss provision of $7.9 million for the quarter [12] Q&A Session Summary Question: Loan growth trends and pipelines - Management noted strong loan growth across all geographies, with Florida leading, and expects similar activity in Q4 [19] Question: Deposit beta guidance - Management indicated confidence in reaching a 40% deposit beta due to successful rate cuts and CD growth despite lower rates [22] Question: Capital deployment priorities - The company prioritizes organic growth, dividends, and M&A opportunities, with buybacks being considered opportunistically [28] Question: Service charge income increase - Management attributed the increase in service charge income to better volume rather than any structural changes [29] Question: Expense increases related to hiring - Management expects a flat expense run rate for the fourth quarter, with a medium to long-term growth rate of 3%-4% [33] Question: Credit quality and Navitas book trends - Management reported normal fluctuations in non-performing assets and stable performance in the Navitas book, with expected losses around 1% in a normal environment [52] Question: Core fee income expectations - Management provided insights into core fee income, indicating variability due to certain non-recurring items but a solid underlying run rate [59]
United Community Banks, Inc.(UCB) - 2025 Q3 - Earnings Call Transcript