United Community Banks (UCB) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 was $71.4 million, up 14% year-over-year, with diluted EPS of $0.58 and operating EPS of $0.59, both improved year-over-year.

• Operating return on assets was 1.04%; net interest margin expanded to 3.36%, reflecting lower deposit costs.

• Loan and deposit growth were strong, with loans up $249M (5.6% annualized) and deposits up $309M (5.4% annualized) from Q4 2024.

• Operating expenses and noninterest expenses declined both sequentially and year-over-year, supporting improved efficiency.

• Announced acquisition of American National Bank (ANB), expected to close May 1, 2025, expanding the South Florida presence.

Financial highlights

• Net interest revenue rose to $212 million, up 6% year-over-year; total revenue increased 4% to $248 million.

• Deposit growth totaled $309 million (5.3% annualized), even after $85 million in seasonal public funds outflow.

• Cost of total deposits improved by 15 basis points, with a deposit beta of 30%; CDs totaling $1.4 billion were repriced from 4.14% to 3.49%.

• Noninterest income declined $4.8 million from last quarter, mainly due to lower mortgage loan gains and wealth management fees.

• Tangible book value per share increased 10% year-over-year to $20.58.

Outlook and guidance

• Margin expected to rise 5-10 basis points next quarter, driven by lower deposit costs and asset mix improvements.

• Management expects continued growth in loans and deposits, with stable credit quality and ongoing cost control.

• Operating expenses expected to grow 3%-4% for the year, with merit increases and ANB acquisition impacting Q2.

• Asset sensitivity means rate cuts will initially compress margin, but recovery expected within a quarter or two.

• Fee income, especially from SBA, anticipated to exceed 2024 levels.