United Community Banks, Inc. (NASDAQ:UCBI) Q3 2020 Earnings Conference Call - Final Transcript
Oct 21, 2020 • 11:00 am ET
Thank you. [Operator Instructions] Our first question comes from the line of Brad Milsaps with Piper Sandler. Your line is now open.
Hey, good morning.
H. Lynn Harton
Good morning, Brad.
Maybe just wanted to start on asset quality and you guys have seen some nice improvement in deferrals. I know a lot of moving parts with the reserve this quarter, but it looks like if I add back the marks -- the existing marks you have like the reserve gets in around $140 million, $145 million of loans ex-PPP. Maybe still a touch lower than peers but just kind of curious how you guys are thinking about the reserve and provisioning going forward based on the improvement you've seen on the deferral side of the equation?
Robert A. Edwards
Hey, Brad, it's Rob. As far as the provision goes, it would really be made up of three things as we go forward, three primary components. Of course, loan growth would continue to play a role in the provisioning. And then also charge-offs, future charge-offs. And then also, I think personally that we'll see -- we've not had a lot in specific reserves and you could see an increase in the specific reserves on some problem loans in the future and that could also of course drive the need for additional provision. As it relates to the allowance rate itself, the economic assumptions are, what is -- the primary driver there, and if the -- while the environment is very difficult to predict, high degree of uncertainty. If though it does play out like our current assumptions are modeled, we would expect the rate itself to remain pretty close to where it is.
Were there any big changes in the criticized or classified -- from the second quarter?
Robert A. Edwards
So we did add in about $15 million of hotel exposures and we did add in some -- about $20 million of senior care exposure. Overall, the criticized and classified increased by $15 million. So we've been successful -- continue to experience success in moving credits out of criticized and classified through refinance and pay-offs and so I was actually really pleased with how much movement we had out of the criticized and classified bucket to make room for some of the stuff coming in.
Great. And then just maybe one follow-up for Jefferson away from credit. Appreciate you including slide 23 on mortgage. I know last quarter you benefited from, I think it was a $5 million or $6 million mark on the pipeline at the end of the quarter. Was there also a mark this quarter? And I guess if I look at the table, some of the difference between the number -- that the gain on loan sale multiplied by the number of loans sold sort of -- is the plug number kind of what the mark would be? Just kind of curious kind of how to think about kind of that mortgage line going forward?
So I'll start briefly. It is a good way to