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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H. Lynn Harton

by the performance of our client base during this time. Both non-performing loans and net charge-offs declined from last quarter and continue to be consistent with pre-COVID levels. Our allowance for credit losses now stands at 1.39% of total loans excluding PPP loans. So given the environment this was a strong quarter for the company and reflects great efforts by our team throughout the bank to maintain focus and continue to take care of our customers.

I know you'd like to hear more details on the quarter, specifically credit and I'd like to turn it over to Rob for that now, so Rob.

Robert A. Edwards

Thank you, Lynn and thank you for being on the call today. I'm going to start my comments on page 7. Our loan portfolio grew by $1.7 billion this quarter with $1.4 billion coming from Seaside and $227 million coming on a core basis. Excluding Seaside, our loans grew at an 8% annualized pace. Our loan growth picked up a bit in the quarter, as we've been successful in market share takeaway from our lender hires in '19 and early 2020 and we've also had success in turning many of our new PPP customers into full relationships. Moving on to the allowance for credit losses on page 8, on this slide we provide the initial credit marks and interest rate marks for Seaside. In total, there are $46 million in loan marks for the quarter. In addition to the $46 million, we also set aside a $21.8 million provision in the quarter, which included a $10.7 million CECL provision for Seaside's non-PCD loans commonly called the double-dip.

In total, our allowance for credit losses increased by about $30 million and our allowance for credit losses to loans ratio increased to 1.39%, which we view as healthy. On page 9, we look at credit quality, which was stable in the quarter. Our net charge-offs were improved from last quarter to 9 basis points, which included the benefit of strong recoveries. On page 10, we give you a deeper look at our deferrals which improved significantly from June 30 and now just represent 3% of our total loans. Through our ongoing review of the top 50 stabilized hotel properties, we have seen an increase in weighted average occupancy to 50% in the third quarter.

While we've seen improvement in our hotel and restaurant deferrals, the deferral rate within these two loan books remains higher than other portfolios and amounts to 70% of the total remaining deferrals. I'm also pleased to note that our Navitas deferrals improved to just 2.4% of total Navitas loans. There is additional detail on our Navitas portfolio, our restaurant and hotel books, as well as retail CRE in the Appendix and we're glad to discuss during Q&A if you have any questions.

With that, I'll pass it over to Jefferson on capital.

Jefferson Harralson

Thank you, Rob. I'm going to start my comments on page 11. I'll talk briefly on capital. Our capital ratios came in as