What United Community Banks (UCB) Said on Its Q3 Earnings Call

Key Points

• Core growth accelerated: United Community Banks reported Q3 operating earnings of $0.77 per share, while core loans grew 10% annualized and deposits increased $473 million excluding the Peach State acquisition. Newly hired lenders generated about $170 million, or roughly 40%, of funded loan growth.
• Balance sheet repositioning improved rate sensitivity: The company exited Navitas, sold $2.5 billion of long-duration securities and redeployed funds into higher-yielding assets. Management expects net interest margin to rise into the mid-3.70% range in Q4 and forecast EPS of $0.80 to $0.83.
• Credit remained strong and shareholder returns increased: Net charge-offs fell to 9 basis points, while the company repurchased approximately $50 million of stock and raised its dividend 4% year over year to $0.26 per share.

United Community Banks NYSE: UCB reported third-quarter operating earnings of $0.77 per share, up from $0.71 in the second quarter, as core loan and deposit growth accelerated and the company completed actions intended to simplify its business, reduce credit risk and reposition its securities portfolio.

Chairman and Chief Executive Officer Lynn Harton said the company’s strategic priorities included exiting Navitas, strengthening the core franchise through hiring, and reducing interest-rate risk. “We have simplified the business and reduced credit risk by exiting Navitas,” Harton said during the company’s third-quarter 2026 earnings call.

The company said core loan growth, excluding the Navitas sale and the Peach State acquisition, was 10% annualized during the quarter. That marked the strongest growth rate since 2022, according to Chief Financial Officer Tom Speir. Loan production exceeded $1 billion for the second consecutive quarter.

Newly hired lenders were a significant contributor to growth. Speir said employees hired during the past year generated approximately $170 million in production during the quarter, representing about 40% of funded loan growth. Chief Banking Officer Rich Bradshaw said new hires represented 38% of total production and that the company intends to continue expanding its sales force.

Deposit Growth and Margin Stability

Total deposits grew by $1.2 billion during the quarter, including balances acquired through Peach State. Excluding Peach State, deposits rose $473 million, or 8% annualized. Money market deposits increased by $366 million excluding acquired balances, while core demand deposit accounts grew $111 million, or 6.9% annualized.

Time deposits were nearly flat, rising $13 million, while public-fund deposits ended the quarter at $2.8 billion, stable compared with the prior quarter. Speir said public funds historically see seasonal inflows of roughly $325 million to $375 million in the fourth quarter, followed by outflows beginning late in the first quarter.

Average total deposit costs were 1.69% during the third quarter, up 3 basis points from the prior quarter, while interest-bearing deposit costs rose 4 basis points to 2.31%. At the end of September, total deposit costs were 1.71%. Approximately 15% of deposits are indexed and had already reflected the Federal Reserve’s September rate increase, Speir said.

United’s net interest margin was stable at 3.68%, as higher securities yields following the company’s portfolio repositioning offset lower loan yields after the Navitas sale. Net interest revenue increased $10.3 million sequentially, supported by the Peach State acquisition, core growth, the portfolio restructuring, higher interest rates and the calendar-day effect.

The company reported a 77% loan-to-core-deposit ratio at quarter-end. Management said that ratio provides capacity to support loan growth while allowing United to remain deliberate on deposit pricing.

Securities Repositioning and Fourth-Quarter Outlook

During the quarter, United reclassified $2.2 billion of held-to-maturity securities as available for sale and sold $2.5 billion of long-dated securities that had been yielding about 2.2%. The company had expected to redeploy more than $3 billion into securities yielding roughly 4.5% with an expected duration of about two years.

Speir said September rate increases lifted the average reinvestment rate to more than 4.6%. The securities portfolio yielded 3.34% during the quarter, up 37 basis points from the prior quarter, and yielded approximately 4.2% at quarter-end. About 45% of the portfolio is in floating-rate securities, while quarterly cash flows are expected to average about $340 million in 2027, more than 40% above pre-restructuring levels.

The company said it has become more asset-sensitive following the Navitas sale and securities repositioning, with about half of loans and securities tied to floating rates. Speir said the repricing of fixed-rate loans and securities should also provide a tailwind over time.

For the fourth quarter, United expects earnings per share of $0.80 to $0.83, driven by growth in pre-provision net revenue. Management expects net interest margin to expand into the mid-3.70% range, assuming a 25-basis-point rate increase in December. Speir said historical interest-bearing deposit beta has been in the high-50% range, though management expects deposit costs to perform better than that in the near term.

Credit, Capital and Shareholder Returns

Credit quality remained favorable, with net charge-offs of $4 million, or 9 basis points of average loans, down from $7.9 million in the second quarter. Nonperforming assets and past-due loans both declined sequentially. Speir said the Navitas sale benefited charge-offs because the business had historically accounted for approximately half of the bank’s net charge-offs.

The allowance for credit losses increased to $200 million from $188 million, primarily because of loan growth. The provision also included approximately $800,000 to establish Peach State’s initial unfunded reserve. The allowance coverage ratio, including unfunded commitments, was 1.05%.

Chief Risk Officer Rob Edwards said criticized and classified loans were within a normal range, noting that the company has generally operated in a 3% to 3.5% range since the COVID-19 period. He said the company’s economic outlook and Moody’s commercial real estate price index assumptions were stable to positive.

United ended the quarter with a tangible common equity ratio of 9% and a common equity tier 1 ratio of 13%. Both ratios declined from the second quarter due to the strategic actions but remained strong relative to peers, management said.

The company repurchased about $50 million of common stock in the third quarter and increased its remaining repurchase authorization by $100 million through year-end 2027, bringing total authorization to $113 million. United also increased its common dividend 4% year over year to $0.26 per share.

Management said fourth-quarter operating expenses are expected to fall into the low-$150 million range, reflecting a full quarter without Navitas and with Peach State. Speir estimated purchase accounting accretion at roughly $5 million per quarter on a run-rate basis.

About United Community Banks (NYSE:UCB)

United Community Banks, Inc is a bank holding company headquartered in Blairsville, Georgia. Through its principal subsidiary, United Community Bank, the company provides banking and financial services to consumers, businesses and communities primarily across the Southeastern United States.

United Community Bank offers deposit accounts, consumer and commercial lending, residential mortgages, credit cards, online and mobile banking, treasury management and other financial services. Its lending activities include commercial real estate, business, construction, residential and consumer loans.

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