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    UCB
    Earnings call· Mar 2026(Q1 FY26)

    UNITED COMMUNITY BANKS Q1 FY26 earnings call UCB

    Apr 21, 2026 Source

    Executive summary

    United Community Banks Q1 FY26 — Strong Loan Growth and Margin Expansion, Announces Acquisition

    United Community Banks delivered a strong first quarter, characterized by robust loan growth and continued net interest margin expansion, alongside effective capital management including share repurchases and a strategic in-market acquisition. The company remains focused on organic growth and opportunistic M&A, while navigating a competitive deposit environment and maintaining sound credit quality. AI investments are primarily through vendors, yielding significant fraud loss reductions and operational efficiencies.

    Highlights

    5

    • Reported net income of over $84 million, with operating EPS of $0.70, representing a 19% increase from Q1 2025.

    • Achieved annualized loan growth of 4.5% for the quarter, primarily in HELOC and C&I categories.

    • Net interest margin expanded 3 basis points QoQ to 3.65%, marking the fifth consecutive quarter of expansion.

    • Operating return on assets improved by 18 basis points YoY to 122 basis points, and operating return on tangible common equity was 13.1%.

    • Customer deposits grew by $237 million or 4% annualized, with cost of deposits decreasing 9 basis points to 1.67%.

    Concerns

    5

    • Spread income was down in Q1 mainly due to having two fewer days in the quarter.

    • Loan growth guidance of 5% to 6% is contingent on no unusual global events.

    • Management expects only a modest growth rate in fee income, despite investments in wealth and mortgage.

    • The company noted ongoing competition in the deposit market, though it has slowed compared to prior quarters.

    • A slight uptick in nonperforming assets was observed, though attributed to standard portfolio movement rather than specific credit issues.

    Guidance & targets

    6
    CategoryTargetConfidence
    Net interest margin expansion
    up between 3 and 5 basis points
    high materiality
    High
    Expense growth
    3.5% range
    medium materiality
    Medium
    Loan growth
    5% to 6% range
    high materiality
    Medium
    Peach State Bank share repurchase
    $50 million
    medium materiality
    High
    Fee income growth
    modest growth rate
    medium materiality
    Medium
    Revenue producers annual growth
    10%
    medium materiality
    High

    Operational metrics

    24
    Operating EPS
    $0.70up 19% YoY
    Q1 FY26

    Reported on an operating basis.

    Operating return on assets
    122 bpsup 18 bps YoY
    Q1 FY26

    Reported on an operating basis.

    Operating return on tangible common equity
    13.1%
    Q1 FY26

    Reported on an operating basis.

    Quarterly dividend per share
    $0.25
    Q1 FY26

    Part of capital return to shareholders.

    Common stock repurchased
    $37 million
    Q1 FY26

    Part of capital return to shareholders.

    Subordinated debt redemption
    $100 million
    Q2 FY26

    Intention to redeem remaining sub debt.

    Tangible book value per share growth
    nearly 6%10% YoY
    Q1 FY26

    Despite dilution from repurchase activity.

    Customer deposits growth
    $237 millionup 4% annualized
    Q1 FY26

    End-of-period basis.

    Cost of deposits
    1.67%down 9 bps QoQ
    Q1 FY26

    Reflects deposit repricing trends.

    Cumulative total deposit beta
    39%
    Q1 FY26

    In the current down cycle, exceeded goal.

    Loan growth
    4.5%annualized pace
    Q1 FY26

    Primary growth areas.

    Loan-to-deposit ratio
    82%unchanged QoQ
    Q1 FY26

    Remained low, indicating strong liquidity.

    TCE ratio
    9.92%flat QoQ
    Q1 FY26

    Tangible Common Equity ratio.

    Assets paying down
    $1.4 billion
    next year

    Maturities contributing to margin tailwind.

    Noninterest income
    $43.7 million
    Q1 FY26

    Includes a $5.2 million gain on an interest rate cap.

    Gain on interest rate cap
    $5.2 million
    Q1 FY26

    Hedging a sub debt issuance intended for redemption.

    Navitas loans sold
    $8.3 millionvs $41.6 million last quarter
    Q1 FY26

    Opted to sell less than usual.

    GAAP expenses
    $157.3 million
    Q1 FY26

    Total GAAP expenses.

    Operating expenses
    $151.6 millionrelatively flat QoQ
    Q1 FY26

    Excluding merger charges and unusual nonoperating expenses.

    FDIC special assessment release
    $1.9 million
    Q1 FY26

    Nonoperating gain from the FDIC refilling its bond faster than expected.

    Excess capital generated per quarter
    $30 million
    per quarter

    Amount available for potential repurchases.

    Remaining buyback authorization
    $63 million
    current

    Available for future share repurchases.

    Revenue producers net increase
    10
    Q1 FY26

    Net increase in revenue-generating employees.

    AI fraud loss reduction
    50%
    last 2 years

    Benefit from AI investments, primarily through vendors.

    Industry KPIs

    12
    MetricValueDetails
    Loans4.5%%
    Deposits$237 millionUSD
    Rotce ROE13.1%%
    Cet1 ratio13.4%%
    Capital returns$37 millionUSD
    Fee income lines$43.7 millionUSD
    Allowance reserves1.15%%
    Net interest incomedown in Q1%
    Net interest margin3.65%%
    Net charge offs npls22 bpsbps
    Total operating expenses$151.6 millionUSD
    Provision for credit losses$10.9 millionUSD

    Deals & partnerships

    1
    Peach State BankAcquisition of Peach State Bank, headquartered in Gainesville, Georgia. This is an in-market transaction in Hall County, Georgia, where United already has a significant presence. Peach State was founded in 2005 and has $788 million in assets and $713 million in deposits as of Q1 FY26.$100 million

    The deal is structured as a 50-50 cash and stock mix. The combined bank will have the #1 deposit share in Hall County. United plans to repurchase the $50 million in shares issued by year-end. The acquisition aligns with United's strategy for in-market, manageable size deals with strong performance and upside potential.

    Risks & headwinds

    5
    Spread income decline due to fewer daysQ1 FY26

    down in Q1

    Mitigation: Expected margin expansion in Q2 due to back book repricing and mix shift.

    Geopolitical instability impacting loan growthGoing forward

    Loan growth of 5% to 6% range, providing nothing else goes on unusual in Iran.

    Mitigation: None stated, external factor.

    Modest fee income growthGoing forward

    modest growth rate

    Mitigation: Investments in wealth, mortgage, Navitas, and SBA are expected to drive growth, especially in seasonally stronger quarters.

    Deposit competitionCurrent

    seeing competition out there

    Mitigation: Focus on deposit growth; competition has slowed down compared to prior quarters.

    Slight uptick in nonperforming assetsQ1 FY26

    slight uptick in NPAs this quarter

    Mitigation: Anticipate asset quality to be stable, attributed to standard movement rather than specific credit issues.

    What to watch in Q2 FY26

    5

    Peach State Bank share repurchase

    by year-end FY26
    Current$37 million repurchased in Q1
    Target$50 million by year-end

    Why it matters

    This will offset the dilution from the stock portion of the Peach State acquisition and demonstrates effective capital management.

    I do think we will buy back the $50 million by year-end.

    Q&A highlights

    6

    How will deposit costs trend in a flat interest rate environment, both standalone and with Peach State? What is the spot cost of deposits and where is competition most aggressive?

    Deposit costs are expected to be relatively flat due to tailwinds from CD maturities offset by competition and the desire for deposit growth. The Peach State deal, being small, won't meaningfully change these trends. Spot costs are close to the quarterly average. Competition has normalized and is not overly aggressive across products or specific competitors.

    “I would expect our deposit cost to be relatively flat. We have some tailwind from CD maturities, but we are seeing competition out there, and we do want to grow our deposits this year.”

    asked by Jake Morton · answered by Jefferson Harralson

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    United Community Banks reported strong first-quarter results for 2026, with net income exceeding $84 million and operating EPS reaching $0.70, a 19% increase year-over-year. The bank achieved an annualized loan growth of 4.5% and expanded its net interest margin by 3 basis points, contributing to its fifth consecutive quarter of margin expansion. Credit quality remained robust, with total charge-offs at 22 basis points (10 basis points excluding Navitas) and nonperforming assets declining year-over-year.

    02

    Deposit and Loan Dynamics

    Customer deposits grew by $237 million, an annualized rate of 4%, primarily driven by DDA growth. The cost of deposits decreased by 9 basis points to 1.67%, with a cumulative total deposit beta of 39%. Loan growth was led by HELOC and C&I categories, which are key focus areas. The loan-to-deposit ratio remained stable at 82%, reflecting a strong liquidity position. Management expects continued loan growth in the 5-6% range, contingent on a stable economic environment.

    03

    Capital Management and Shareholder Returns

    The bank maintained a strong capital position with a CET1 ratio of 13.4% and a TCE ratio of 9.92%. United continued its capital return strategy, repurchasing $37 million of common stock (1.1 million shares) and paying a $0.25 quarterly dividend. The company also announced its intention to redeem $100 million in sub debt in Q2. Tangible book value per share grew nearly 6% annualized for the quarter and 10% year-over-year, demonstrating effective capital deployment.

    04

    Peach State Bank Acquisition Rationale

    United announced the acquisition of Peach State Bank, an in-market transaction valued at approximately $100 million, split 50-50 cash and stock. Peach State, with $788 million in assets and $713 million in deposits, operates in Hall County, Georgia, where United already has a significant presence. The combined entity will hold the number one deposit share in the rapidly growing county. The deal is expected to be $0.09 accretive to EPS in 2027, increasing to $0.12 accretive with planned share repurchases, and is seen as a model for future M&A activity.

    05

    Credit Quality and Outlook

    Credit quality remained strong, with net charge-offs at 22 basis points, flat year-over-year and improved from the prior quarter. Nonperforming assets as a percentage of loans were 50 basis points, down 1 basis point from Q1 2025, and special mention and substandard loans decreased to 2.9% of total loans. The allowance coverage for credit losses was 1.15%, slightly down due to loan growth. Management anticipates stable asset quality going forward⏳, with minor fluctuations in NPAs.

    06

    AI Adoption and Expense Management

    The company's AI investments, primarily through vendors, have yielded positive results, including a 50% reduction in fraud losses over the past two years. AI-enabled tools in the contact center and programming have increased efficiency without requiring additional headcount. While no significant AI-driven expense build is currently planned, the company is exploring Agentic AI for more mundane processes, expecting any future investments to generate realized savings.

    AI-generated summary of the company’s earnings call. Not investment advice.