United Community Banks, Inc. (NASDAQ:UCBI) Q3 2020 Earnings Conference Call - Final Transcript

Oct 21, 2020 • 11:00 am ET


United Community Banks, Inc. (NASDAQ:UCBI) Q3 2020 Earnings Conference Call - Final Transcript


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Good morning, and welcome to United Community Banks' Third Quarter 2020 Earnings Call. Hosting the call today are Chairman and Chief Executive Officer, Lynn Harton; Chief Financial Officer, Jefferson Harralson; Chief Banking Officer, Rich Bradshaw; and Chief Risk 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 third 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 statement should be considered in light of risks and uncertainties described on page 3 of the company's 2019 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 Lynn Harton.

H. Lynn Harton

Good morning, and thank all of you for joining our call. This was certainly a busy quarter for the company. We closed the acquisition of Seaside National Bank in Florida, and the combination of their earnings and the continued growth of our business led to a record level of pre-tax, pre-provision income for the quarter at slightly over $81 million. Our earnings per share for the quarter came in at $0.52 on a GAAP basis, $0.55 on an operating basis, which represents a decline from the same period last year, but a significant improvement from last quarter. Our return on assets of 1.07% drove a return on common equity that exceeded 10%. And on an operating basis, our return on assets was 1.14% and we reached 13.5% in our return on tangible common equity.

Our bankers continued to deliver outstanding service and we were rewarded with 8% annualized loan growth and 15% annualized deposit growth due to their efforts. At the same time, given the low rate environment, we continue to work to drive down our overall cost of deposits to partially offset the decline that we and the rest of the industry are experiencing in loan and investment securities yields. Our net interest margin fell by 15 basis points during the quarter as a result of the low rate environment. Even with this margin decline though, our efficiency ratio on an operating basis reached a record for the company at 52%. Credit continues to perform well, as our markets rebound from the effects of the COVID-19 shutdown.

Loan payment deferrals declined from nearly 16% last quarter to just above 3% at September 30. It continues to be difficult to predict the future path of credit results but we're certainly encouraged