UNITED COMMUNITY BANKS INC (UCBI)·Q1 2024 Earnings Summary

Executive Summary

• Solid quarter with GAAP EPS $0.51 and operating EPS $0.52; total revenue $225.8M; NIM stabilized at 3.20%; pre‑tax, pre‑provision ROA 1.40% .
• Year-over-year GAAP EPS down 2% and operating EPS down 10%; sequential GAAP EPS up versus Q4 (impact from prior quarter bond restructuring and FDIC assessment); noninterest income rebounded absent Q4 restructuring losses .
• Loans grew 1.2% annualized to $18.38B; core deposits up ~5% annualized; cost of deposits rose to 2.32%; cumulative deposit beta ~44% this cycle, with management aiming to moderate in 2024 .
• Credit costs elevated but manageable: net charge‑offs $12.9M (0.28% of average loans), NPAs 0.39% of assets; allowance coverage steady (ACL to loans 1.22%) .
• Stock reaction catalysts: margin stabilization, deposit franchise strength, MSR write‑up support; watch credit normalization (Navitas equipment finance losses) and deposit pricing pressures .

What Went Well and What Went Wrong

What Went Well

• Strong pre‑tax, pre‑provision earnings ($93.7M) with stable margin; CEO: “strong pre‑tax, pre‑provision earnings, a stable margin, and good credit performance. Loan growth slowed as expected while core deposit growth was stronger than we anticipated.” .
• Deposit franchise resilience: core deposits up ~4.8–5.0% annualized ex‑brokered/public funds; cost of deposits manageable at 2.32% with DDA at 27% .
• Mortgage/MSR tailwind: $1.4M MSR write‑up; management noted it added “just under a penny to earnings,” with core mortgage income +$1.8M on volumes and shift to fixed-rate products .

What Went Wrong

• Funding cost pressure: cost of interest‑bearing liabilities up 7 bps and cost of deposits to 2.32%; cumulative deposit beta now ~44% (above peers), indicating higher pass‑through of rate cycle .
• Credit normalization: net charge‑offs increased to 0.28% of average loans (from 0.22% in Q4), NPAs up 5 bps quarter‑over‑quarter to 0.39% of assets .
• Loan growth lighter than expected: loans +$56M (1.2% annualized); management acknowledged “a little lighter than we originally expected” given underwriting discipline and rate environment .

Financial Results

Guidance Changes

Management did not issue formal numeric guidance ranges; commentary emphasized conservative positioning amid uncertainties and deposit franchise strength .

Earnings Call Themes & Trends

Management Commentary

• “We reported solid results in the first quarter, with strong pre‑tax, pre‑provision earnings, a stable margin, and good credit performance. Loan growth slowed as expected while core deposit growth was stronger than we anticipated.” — Lynn Harton, Chairman & CEO .
• “Operating earnings per share came in at $0.52, down $0.01 from last quarter, in part due to seasonally higher employment costs.” — Lynn Harton .
• “Our cost of deposits moved up 8 basis points in the quarter to 2.32%. Our deposit betas… are above the industry median now at 44%, and we are hopeful to move closer to peers to get some of that back in 2024.” — Management on funding costs .
• “For the quarter, we had $1.4 million of an MSR write‑up… added just under a penny to earnings in Q1… Over 90% was fixed rate that we sell and get more of the economics upfront.” — Management on mortgage/MSR .

Q&A Highlights

• Rate outlook and underwriting: Management highlighted an 8.5% underwriting rate; lower rates would improve project feasibility, supporting optimism for volume if cuts materialize .
• Deposit betas and pricing discipline: Acknowledged cumulative beta at ~44% and intent to move closer to peers; selective pricing discipline impacted deposit growth seasonality and margin .
• Mortgage/fee income drivers: MSR mark positive swing vs Q4 write‑down; mix shift to fixed‑rate secondary execution lifted gain‑on‑sale .
• Clarifications: Operating expenses rose largely due to FICA; gain on sale for SBA down on volume though percentage improved .

Estimates Context

• We attempted to retrieve S&P Global consensus (Primary EPS Consensus Mean, Revenue Consensus Mean) for Q1 2024 but the CIQ mapping for UCBI was unavailable in our dataset; therefore, S&P Global estimates could not be sourced for this recap [GetEstimates error].
• Third‑party coverage indicated beats: EPS $0.52 vs consensus ~$0.49; revenue ~$238.7M vs ~$232.0M estimates (definitions may differ from company’s “Total revenue”) .
• Given S&P Global unavailability, use company metrics for comparisons and treat external estimate beats as directional context; we note potential differences in revenue definitions between sources and issuer financial reporting .

Key Takeaways for Investors

• Margin stabilization and strong PTPP earnings underpin near‑term support; monitor deposit cost trajectory and cumulative beta as key margin drivers .
• Deposit franchise remains an advantage (granular, diversified, DDA 27%); selective pricing may temper growth but protect NIM—constructive if rates ease in 2H24 .
• Credit normalization ongoing with manageable NCOs; watch pockets (Navitas trucking, Senior Care) and NPAs trend; coverage ratios steady at 1.22% of loans .
• Fee income improvement from mortgage/MSR is a positive lever; sustainability depends on rate path and housing activity .
• Capital and liquidity robust (TCE 8.49%, CET1 strong); supports dividend continuity ($0.23/qtr) and optionality through cycle .
• Near‑term trading: constructive on signs of deposit cost plateau and NIM drift higher; cautious on credit headlines and CRE exposures. Medium‑term thesis: high‑quality Southeast footprint, disciplined risk appetite, and improving noninterest trends position UCBI well for a gradual rate normalization .

Source Documents (Q1 2024)

• Form 8‑K (Items 2.02/7.01) with Exhibit 99.1 press release and Exhibit 99.2 investor presentation .
• Earnings call transcript excerpts (full transcript available via third‑party sites) .
• Press releases: Earnings results and call date .