United Community Banks signals 5.4% annualized loan growth while strengthening margin and deposit strategy

Earnings Call Insights: United Community Banks, Inc. (UCB) Q3 2025

MANAGEMENT VIEW

* CEO Herbert Harton opened the call highlighting revenue growth of more than $16 million compared to the second quarter, citing "an 8 basis point improvement in margin and 5.4% annualized loan growth." Harton noted a provision for credit losses that declined by approximately $4 million from the previous quarter and stated, "our tangible book value reached $21.59, a 10% year-over-year growth."
* Harton emphasized, "All of our states delivered positive loan growth this quarter." The CEO also announced the company increased its dividend and redeemed costly preferred stock as capital continued to grow.
* Harton said, "Credit losses were only 16 basis points for the quarter and only 5 basis points in the core bank, excluding Navitas. Other credit risk metrics such as past dues, nonaccruals and special mention, all remained in very good ranges."
* CFO Jefferson Harralson stated, "We were very pleased with our deposit performance in the third quarter. Excluding the seasonal public outflows, we grew deposits by $137 million or 2.6% annualized with DDA comprising a good portion of the growth."
* Harralson added, "We were also able to push down our cost of deposits in the quarter to 1.97%, to achieve a 37% total deposit beta so far... I now believe we can get to the 40% range."

OUTLOOK

* Harralson discussed expectations for the fourth quarter, noting, "we expect about $400 million of public funds deposit inflow that will serve to make our balance sheet larger as we plan to hold the funds in cash and short-term investments."
* Harralson expects further improvement in deposit costs, stating, "In September, we averaged a 1.92% cost of deposits. So we are expecting more improvement in the fourth quarter."
* Regarding net interest margin, Harralson said, "in the fourth quarter, I would expect our net interest margin to be flat to down 2 basis points."
* Management foresees "very similar type quarter, maybe slightly better" loan growth in Q4, with strong activity and pipelines confirmed by credit partners.

FINANCIAL RESULTS

* The company reported operating earnings per share of $0.75, reflecting a 32% year-over-year improvement, a return on assets of 1.33%, and a return on tangible common equity of 13.6%.
* Net interest margin increased 8 basis points to 3.58% compared to last quarter.
* Noninterest income reached $43.2 million, up $8.5 million from the previous quarter, including a $1.5 million BOLI gain and an $800,000 MSR write-up. Unrealized gains on equity investments swung up $2.1 million.
* Operating expenses increased by $4.3 million, primarily due to higher variable compensation. The efficiency ratio improved to 53.1%.
* The allowance for credit losses moved down slightly to 1.19%, with a $7.9 million provision, which included a $2.6 million release of the Hurricane Helene reserve.

Q&A

* Stephen Scouten, Piper Sandler: Asked about loan growth trends, senior care runoff, and HELOC performance. Richard Bradshaw responded that all geographies contributed to loan growth, with heavy emphasis on C&I, and described efforts to expand HELOCs and reorganize for greater retail impact. Bradshaw shared, "We feel very -- it would be a very similar type quarter, maybe slightly better."
* Scouten inquired about deposit beta guidance. Harralson answered, "A lot of it is really already been done... we've been able to cut rates by a little more than we thought."
* Scouten queried about new CD and loan yields. Harralson replied, "new loan yields would be in the 7% range, new CDs, 3%."
* Gary Tenner, D.A. Davidson, probed capital deployment and buybacks. Harralson said, "#1 is organic growth... #2 in priority is the dividend... M&A... Buyback is on the list. We have authorization. We'll be opportunistic..."
* Tenner asked about service charge income. Harralson stated there was "nothing unusual, just some better volume there."
* Michael Rose, Raymond James, questioned expenses and hiring. Harralson projected a "3% to 4% range" for expense growth and anticipated "flat" expenses for the fourth quarter. Bradshaw indicated ongoing opportunistic hiring.
* Rose followed up on M&A. Harton acknowledged, "we are seeing more people raise their hands today than 2 to 3 quarters ago."
* Russell Gunther, Stephens, asked about balance sheet growth and securities. Harralson expects the securities portfolio to be "flat to slightly down in the near term."
* Gunther inquired about restructuring the investment portfolio. Harralson said, "I don't see anything imminent there but it is a conversation that we've had over the last 6 months."
* Catherine Mealor, KBW, asked about credit trends and Navitas. Rob Edwards described NPA activity as "the normal cycle of movement of in and out" and said Navitas losses are "really right on track."
* Mealor asked about margin and operating leverage in 2026. Harralson responded, "we think we will continue to have operating leverage in 2026."
* Kyle Gierman, Hovde Group, asked about fee income. Harralson said, "if you take those 3 items out, you're at a pretty good fee income run rate."

SENTIMENT ANALYSIS

* Analysts focused on sustainability of growth, loan composition, deposit betas, capital deployment, M&A, credit trends, and operational leverage, with a neutral to slightly positive tone. Repeated questions on capital strategy and credit suggest careful scrutiny but not overt skepticism.
* Management displayed confidence in prepared remarks—Harton described performance as "strong" and highlighted balance and teamwork—while responses in Q&A were measured, transparent, and generally proactive.
* Compared to the previous quarter, analyst tone remains constructive but is more focused on forward-looking capital deployment and credit nuances. Management's tone shifted from optimism about growth to confidence in execution and strategic capital decisions.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language shifted toward higher confidence in achieving a 40% deposit beta, up from the "high 30% range" previously mentioned.
* The company moved from discussing stabilization and moderate optimism to emphasizing balanced loan growth across all geographies and strategic capital redeployment.
* Analysts in the current quarter focused more on capital priorities, M&A opportunities, and credit risk, while the previous quarter's focus was more on loan growth and margin expansion.
* Key metrics improved: EPS rose to $0.75 from $0.66, return on assets and return on tangible common equity increased, and the efficiency ratio improved to 53.1% from 54.8%.
* Management confidence appears stronger, with Harton and Harralson both indicating more aggressive deposit cost management and greater openness to M&A discussions.

RISKS AND CONCERNS

* Harton identified "announcements of a few cracks in the broader credit environment" but described these as "isolated events somewhat tied to private credit."
* The company maintains "very little exposure" to nondepository financial institutions and has been "very cautious and selective" in this area.
* Harralson noted the allowance coverage for credit losses "moved down slightly to 1.19%." Edwards described NPA movements as within "the normal cycle" and credited forecasting models at Navitas for stable loss expectations.
* Analysts raised questions about the increase in C&I NPLs and the Navitas portfolio, but management described trends as stable and in line with forecasts.

FINAL TAKEAWAY

United Community Banks delivered strong third quarter results marked by balanced loan growth, improved net interest margin, and disciplined deposit cost management. The company is signaling continued operational leverage and prudent capital deployment, while remaining cautious on credit risk—especially in the private credit sector—and open to selective M&A opportunities. Management’s tone reflects confidence in the bank’s trajectory for the remainder of 2025, supported by robust pipelines, stable credit quality, and a clear focus on shareholder value.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ucb/earnings/transcripts]

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* United Community Banks, Inc. (UCB) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4831903-united-community-banks-inc-ucb-q3-2025-earnings-call-transcript]
* United Community Banks: Offering Growth At A Reasonable Price [https://seekingalpha.com/article/4817243-united-community-banks-offering-growth-at-a-reasonable-price]
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