UNITED COMMUNITY BANKS INC Q3 FY2024 earnings call

• Sale of manufactured housing portfolio: Inherited in an acquisition, strategic decision to exit, resulting in a one-time loss of $0.18 per share, neutral to go-forward earnings.
• Hurricane Helene impact: Increased reserves on $383 million portfolio in western North Carolina counties to 3.5%, tracking and reporting on affected markets.
• Financial metrics: Return on assets over 1%, tangible common equity increased by $0.53 per share (11% annualized), loan growth 1.5% annualized, deposit growth 5% annualized, margin at 333 basis points, loan-to-deposit ratio 78%.
• Credit quality: Net charge-offs 52 basis points, with 24 basis points from manufactured housing transaction, 1 basis point from non-transaction manufactured housing losses, Navitas losses improved, Core Bank excluding certain segments had 15 basis points credit losses.
• Liquidity: Ample liquidity, no broker deposits, supporting growth.

The company had two main segments affected. The manufactured housing portfolio was sold, resulting in a one-time loss of $0.18 per share. Excluding the manufactured housing sale, loan growth was 1.5% annualized and customer deposits grew at a 5% annualized rate. The Core Bank, excluding Navitas and manufactured housing, had credit losses of 15 basis points, consistent with prior quarters. Navitas losses improved slightly during the quarter. The manufactured housing portfolio contributed to a one-time loss and affected net charge-offs. Revenue contribution: The manufactured housing sale was a separate segment that impacted fee income and charge-offs, while the Core Bank and Navitas were key operational segments.

• Expect strong finish to 2024 and strong 2025.
• Mid single-digit loan growth expected in Q4, rolling into 2025, with positive outlooks from state president calls and hiring.
• Securities purchases expected to continue, but potential shift to loan reinvestment as growth picks up.
• Margin guidance: Relatively flat, excluding mixed changes like public funds deposits and absence of manufactured housing loans.

• Impact of Hurricane Helene on loan portfolio in western North Carolina, with uncertainty around exact balance sheet impact.
• Continued monitoring of manufactured housing portfolio's residual effects on earnings and credit quality.

Q: Margin question, deposit/time deposit maturity schedule, down betas, indexed deposits A: Jefferson Harralson discussed CD rates (mid threes), down betas (38% currently, aiming to beat), and indexed deposits ($6 billion indexed, $3 billion promotional) Q: Loan growth drivers, CRE pickup, hiring A: Rich Bradshaw talked about mid single-digit Q4 loan growth expectations, CRE pickup, and recent hiring in Florida, Charlotte, and wealth management Q: MPLs related to manufactured housing portfolio, credit trends A: Rob Edwards discussed MPLs from smaller C&I borrowers rolling into non-accrual and stable credit outlook going forward Q: Mortgage production trends, pricing A: Jefferson Harralson and Rich Bradshaw mentioned mortgage growth up 11% from Q2, adjusted pricing towards more variable rate loans to boost growth Q: Margin outlook, loan yields, fixed rate repricing A: Jefferson Harralson discussed 44% of loans floating (primarily SOFR), $800-$900 million fixed rate loans repriceable in 12 months, and margin flatness excluding mixed changes Q: Manufactured housing proceeds reinvestment, securities portfolio, hurricane expenses A: Jefferson Harralson talked about reinvestment of proceeds into securities and loans, similar securities purchases expected in Q4, and minimal hurricane-related expenses Q: Hurricane Helene forbearance, deposit inflows A: Rob Edwards discussed 39 forbearance accounts in hardest hit areas, Lynn Harton expected deposit inflows similar to past storms Q: Navitas portfolio losses, deposit seasonality A: Rob Edwards talked about Navitas portfolio losses and expected resolution by mid-next year, Jefferson Harralson mentioned deposit seasonality flowing out in March/April next year