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1. Company Snapshot

1.a. Company Description

United Community Banks, Inc.operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors.The company accepts various deposit products, including checking, savings, money market, and other deposit accounts.


It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans.In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs.Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations.


Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services.It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee.United Community Banks, Inc.


was founded in 1950 and is headquartered in Blairsville, Georgia.

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1.b. Last Insights on UCBI

Here is a 90-word analysis of the positive drivers behind the recent 3 months performance of United Community Banks, Inc.: United Community Banks' recent performance was driven by strong Q2 earnings and revenue beats, exceeding Wall Street estimates. The company's solid backlog and demand for infrastructural solutions contributed to its growth. Additionally, the transfer of its listing to the New York Stock Exchange (NYSE) and the announcement of a quarterly cash dividend of $0.23 per share on its common stock were positive events. The company's leadership overhaul and equity capital raise also bolstered its financial position.

1.c. Company Highlights

2. UCBI's Earnings Beat Expectations

United Community Bank's operating earnings per share grew 14% year-over-year to $0.66, driven by a 14-basis-point expansion of the net interest margin to 3.50%. This growth was fueled by a $205 million increase in deposits, with a 1.3% annualized growth in customer deposits, excluding merger activity. Loan growth was 4.2% annualized, with a strong pipeline heading into the third quarter. The efficiency ratio improved to 54.8%, and the CET1 ratio remained at 13.3%. The company repurchased 507,000 shares, or about $14 million, of UCBI stock.

Publication Date: Jul -25

📋 Highlights
  • Operating Earnings Growth: Operating EPS grew 14% YoY to $0.66, driven by a 14-basis-point NIM expansion to 3.50%.
  • Deposit Growth: Deposits increased by $205 million, with a 1.3% annualized growth rate excluding merger activity.
  • Loan Growth: Loans grew at a 4.2% annualized rate, supported by a strong pipeline entering Q3.
  • Credit Performance: Net charge-offs remained solid at 18 basis points, including the Navitas portfolio.
  • Capital Management: The company repurchased $14 million in shares and maintains $86 million in buyback authorization.

Financial Performance

The company's actual EPS came out at $0.58, relative to estimates at $0.51. The net interest margin expansion was a key driver of the earnings beat. According to management, the company expects continued margin expansion, targeting 5 basis points of expansion in the third quarter, driven by lower deposit costs and a mix shift towards loans.

Valuation and Capital Utilization

The stock trades at a Price-to-Tangible Book Value (P/TBV) of 1.07, a slight premium to its historical average. The Dividend Yield is 3.06%, which is relatively attractive compared to its peers. The company has $86 million left in its buyback authorization but is not currently active in the buyback at current price levels. As Robert Edwards noted, "we're always evaluating opportunities to utilize our excess capital, but at this point, we're not actively buying back stock."

Growth Outlook and Credit Performance

The company expects loan growth to continue, with a strong pipeline heading into the third quarter. Credit performance remained solid, with net charge-offs at 18 basis points, including the acquired Navitas portfolio. The company's loan sale platform, Navitas, had a strong quarter, with $14 million in loan sales, and management expects to maintain sales at this level or higher for the rest of the year.

Management's Commentary

Management remains focused on organic growth, M&A, dividends, and buybacks, but is evaluating all options for excess capital utilization. Richard Bradshaw and Herbert Harton addressed questions on hiring and M&A, highlighting the bank's focus on hiring top talent and building relationships with lenders.

Analyst Estimates and Valuation Metrics

Analysts estimate next year's revenue growth at 35.7%. The stock trades at a P/E Ratio of 13.93, a P/B Ratio of 1.05, and a P/S Ratio of 2.81. The EV/EBITDA multiple is 8.64, and the Free Cash Flow Yield is 8.45%. The ROIC is 5.62%, and the ROE is 7.83%. The Net Debt / EBITDA is -0.11, indicating a healthy balance sheet.

3. NewsRoom

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State Street (STT) Q1 2025 Earnings Call

Apr -22

Source: fool.com

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Should You Buy United Community Banks (UCBI) After Golden Cross?

Aug -01

Source: zacks.com

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United Community Banks, Inc. Announces Transfer of Listing of Common Stock and Depositary Shares to NYSE

Jul -26

Source: globenewswire.com

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United Community Banks (UCBI) Q2 Earnings: How Key Metrics Compare to Wall Street Estimates

Jul -24

Source: zacks.com

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United Community Banks (UCBI) Beats Q2 Earnings and Revenue Estimates

Jul -24

Source: zacks.com

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United Community Banks, Inc. Announces Date for Second Quarter 2024 Earnings Release and Conference Call

Jun -28

Source: globenewswire.com

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Is New York Community Bancorp Stock a Buy?

May -20

Source: https://finance.yahoo.com

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United Community Banks, Inc. Announces Quarterly Cash Dividends on Common and Preferred Stock

May -16

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.00%)

6. Segments

Banking and Related Activities

Expected Growth: 12.0%

United Community Banks, Inc.'s 12.0% growth in Banking and Related Activities is driven by strategic acquisitions, expansion of commercial lending, and increased deposit growth. Additionally, the company's focus on digital transformation, cost savings initiatives, and a favorable interest rate environment have contributed to its growth momentum.

7. Detailed Products

Commercial Banking

United Community Banks, Inc. offers a range of commercial banking services, including cash management, treasury management, and commercial lending solutions to businesses of all sizes.

Consumer Banking

The company provides consumer banking services, including checking and savings accounts, credit cards, personal loans, and mortgages to individuals and families.

Mortgage Banking

United Community Banks, Inc. offers mortgage banking services, including residential mortgage lending, construction lending, and mortgage servicing.

Wealth Management

The company provides wealth management services, including investment management, trust services, and financial planning to individuals, families, and institutions.

Small Business Administration (SBA) Lending

United Community Banks, Inc. offers SBA lending services, providing financing solutions to small businesses and entrepreneurs.

8. United Community Banks, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

United Community Banks, Inc. operates in a highly competitive industry, but the threat of substitutes is mitigated by the company's strong brand recognition and customer loyalty.

Bargaining Power Of Customers

United Community Banks, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong relationships with its customers reduce the likelihood of customers switching to competitors.

Bargaining Power Of Suppliers

United Community Banks, Inc. relies on a few large suppliers for its operations, which gives them some bargaining power. However, the company's strong financial position and long-term relationships with suppliers mitigate this risk.

Threat Of New Entrants

The banking industry has high barriers to entry, including regulatory hurdles and capital requirements, which reduces the threat of new entrants. Additionally, United Community Banks, Inc.'s strong brand recognition and established customer base make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. United Community Banks, Inc. faces intense competition from larger banks and fintech companies, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 9.35%
Debt Cost 8.57%
Equity Weight 90.65%
Equity Cost 8.57%
WACC 8.57%
Leverage 10.31%

11. Quality Control: United Community Banks, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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United Bankshares

A-Score: 6.8/10

Value: 6.8

Growth: 5.0

Quality: 7.6

Yield: 8.0

Momentum: 5.0

Volatility: 8.7

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Home Bancshares

A-Score: 6.6/10

Value: 5.4

Growth: 5.6

Quality: 7.8

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

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Cullen Frost Bankers

A-Score: 6.3/10

Value: 4.2

Growth: 6.9

Quality: 6.9

Yield: 6.0

Momentum: 6.0

Volatility: 8.0

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Columbia Banking System

A-Score: 6.3/10

Value: 6.7

Growth: 7.1

Quality: 6.4

Yield: 8.0

Momentum: 4.0

Volatility: 5.7

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Huntington Bancshares

A-Score: 6.1/10

Value: 6.5

Growth: 4.8

Quality: 5.7

Yield: 8.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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United Community Banks

A-Score: 5.3/10

Value: 6.6

Growth: 5.0

Quality: 7.5

Yield: 5.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.83$

Current Price

27.83$

Potential

-0.00%

Expected Cash-Flows