United Community Banks, Inc.

Reported figures: operating EPS was $0.71, up 8% year over year; GAAP EPS was $0.95, including a $0.25 per share benefit from the Navitas reserve release. Total revenue was up 7% year over year. Net interest margin was 3.68%, up 18 bps year over year and 3 bps sequentially. Loan growth was 6.8% annualized, or 6.4% excluding Navitas. Total net charge-offs were 16 bps, and bank-only net charge-offs were 9 bps; past dues were 11 bps. Noninterest income was $38.4 million and operating expenses were $159.9 million. Guidance: management said Q3 is hard to model because it depends on the timing of the Navitas sale, but Jefferson Harralson said the underlying margin should keep widening, with Q4 potentially down 20 to 25 bps from current levels on a staged basis before improving. For loans, Rich Bradshaw said Q3 ex-Navitas is expected in the 7% range and next year could be upper single-digit growth. On expenses, Jefferson said the run-rate base is about $154 million, with Q4 likely around $150 million after Navitas exits, subject to additional lender hiring. Management also said deposit costs likely drift slightly higher in the back half and that the loan yield should rise over time despite a roughly 30 bps headwind from Navitas going away.

Lynn Harton framed the quarter as strong execution on the core franchise, emphasizing that the company has refocused hiring and growth efforts after deciding to sell Navitas. He highlighted 17% net growth in producers since beginning that plan, said Peach State remains on track to close early in Q3, and stressed that capital levels are high. His tone was upbeat and strategic, with repeated emphasis on disciplined growth, ongoing M&A interest in small banks, and flexibility around capital deployment.

Jefferson Harralson said GAAP EPS included a $0.25 per share benefit from releasing the Navitas loan loss reserve, while a $4.5 million California lender-license settlement was a one-time operating expense that negatively impacted Q2 by about $0.035 after tax. He noted customer deposits fell $295 million end-of-period, but average customer deposits excluding public funds grew $169 million, and the cost of deposits was essentially flat, improving 1 bp. He also pointed to 6.8% annualized loan growth, a 3 bps sequential rise in NIM to 3.68%, operating expenses of $159.9 million, an efficiency ratio around 55% excluding the license issue, CET1 of 13.5%, and TCE just under 10%. On capital, he said $63 million of buyback authorization remains, and after Navitas the CET1 ratio could be around 14.5%, implying roughly $300 million of excess capital versus a 13% target concept.

Analysts focused on whether margin expansion can continue, how deposit costs may behave, what loan growth can look like after the hiring push and Navitas sale, and how the company plans to use capital. Management said the underlying margin should continue widening even though the Navitas sale creates a near-term 20 to 30 bps headwind, and they expect deposit costs to drift slightly higher as CDs reprice and competition stiffens. On loans, Rich Bradshaw said Q3 ex-Navitas should be in the 7% range and next year upper single-digit growth is achievable, while on capital Jefferson said buybacks remain planned but management is also weighing small-bank M&A and other balance-sheet uses. Analysts also asked about the new CFO search, and management said it expects to name one around September or October.