United Community Banks, Inc. (NASDAQ:UCBI) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 25, 2018 • 11:00 am ET


United Community Banks, Inc. (NASDAQ:UCBI) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Good morning and welcome to United Community Banks First Quarter 2018 Earnings Call. Hosting our call today are Chairman and Chief Executive Officer, Jimmy Tallent; President and Chief Operating Officer, Lynn Harton; Chief Financial Officer, Jefferson Harralson; and Chief Credit Officer, Rob Edwards. United's presentation today includes references to operating earnings, pre-tax, pre-credit earnings and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release, as well as at the end of the investor presentation. Both are included on the website at ucbi.com. Copies of the first quarter's earnings release and investor presentation were filed last night on Form 8-K with the SEC; and a replay of this call will be available in the Investor Relations section of the Company's website at ucbi.com.

Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statements should be considered in light of risks and uncertainties described on Page 4 of the Company's 2017 Form 10-K, as well as other information provided by the Company in its filings with the SEC and included on its website.

At this time, I will turn the call over to Jimmy Tallent.

Jimmy Tallent

Good morning and thank you for joining our first quarter earnings call. Let me start by saying that I am once again very pleased with our results in the first quarter. In fact, it was a standout quarter by nearly every measure. It is a credit to our bankers who started out the gates in 2018 producing strong results. Our operating earnings per share for the quarter was $0.50 which was up $0.08 or 19% from last quarter. This increase was due in part from tax reform benefits and from our new partnership with Navitas which was included for two months in the quarter.

These results were achieved despite headwind from expected seasonality and a special beginning provision for Navitas which reduced our operating EPS by $0.02. Our operating result of $0.50 per share was an increase of 28% from a year ago quarter. The EPS growth was accomplished by an improvement in profitability as the operating return on assets moved to 1.33% and the operating ROTCE moved up to 15.3%, putting us on pace to reach out 1.4 ROA and a 16% ROTCE goals in 2018. All measurements moved in the right direction and we expect this positive momentum to continue for the remainder of 2018. Continued expense discipline and a wider margin driven by Navitas and core margin expansion provided a meaningful layoff during the quarter.

This quarter is also highlighted by pickup in loan growth despite continuing to intentionally run off our indirect portfolio and an increase in core deposits with deposit betas remaining low in an increasing rate environment. This has contributed to a high loan to deposit ratio although the strong deposit growth will be increased down a bit. We have also reduced our