United Community Sold Its Credit Problem and Bought a Rate Hike
After three quarters of dismantling, UCB is a 77% loan-to-deposit, asset-sensitive growth story — and for the first time in years it is guiding into higher rates instead of waiting out cuts.
UCB · Earnings Call · 2026-10-20
A simpler bank, and the first real guide in years
Most banks spend their earnings call explaining why the quarter was messy. United Community Banks spent this one explaining why the mess was the point. Navitas is sold, Peach State is in, $2.5B of long-dated securities yielding roughly 2.2% were dumped and redeployed above 4.6%, and the loan book is now funded by a deposit ratio of 77% instead of the high-80s. Operating EPS of $0.77 beat the $0.71 of the second quarter, and — unusually — management volunteered explicit forward numbers: $0.80 to $0.83 in Q4, a net interest margin into the mid-3.70s, and a tax rate back to the high-22% area. “While United does not typically provide detailed forward guidance, we felt that it was important to help provide some clarity on key metrics given all the movement in the third quarter.” — Tom H. Speir, Chief Financial Officer · 2026-10-20 That is a company asking to be re-underwritten. The keyword record tells the same story in reverse: for four straight quarters, the top of United's keyword list was dominated by the thing it is now leaving behind — Ex Navitas ranked first as recently as last quarter, with the Navitas sale and its loan book a fixture for over a year. This quarter the top slots are strategic actions, rate hike and new hires. The credit repair job is no longer the topic. That matters because Navitas was roughly half of the bank's net charge-offs. Stripping it out took Q3 net charge-offs to 9 basis points, and the provision line had already swung to a $30M release in the June quarter before the sale closed. Chief Risk Officer Robert Edwards was explicit that criticized credits running at 2.5% last quarter was the anomaly, not the new normal, and that 3% to 5% is home.The regime flipped, and management is not hiding it
Here is the tell that separates this call from the last six. For two years United's language was built around falling or static rates. In January 2026 the words rate cut and absent rate cuts were load-bearing concepts; deposit costs were guided "relatively flat" because CD maturities were repricing down. By July 2025 the CFO framed the whole margin discussion defensively: “So even if we get a rate cut in September, we're a little bit asset-sensitive. I do think we'll have about 5 basis points of margin expansion.” — Jefferson Harralson, Chief Financial Officer · 2025-07-23 That is not this call. This call has the Fed hiking in September, and the bank cheering.The plumbing of that claim is credible: floating rate securities are now about 45% of the portfolio, the securities book yields roughly 4.2% at quarter-end versus 3.34% for the quarter average, and roughly 15% of deposits are indexed and had already repriced after the September hike. The offsetting risk sits on the liability side, where beta assumptions are the whole ballgame. Tom Speir, on his first call as CFO, anchored to a 59% interest-bearing beta while arguing near-term performance would be better — deposit costs rose just 4 basis points on interest-bearing balances in a quarter that contained a hike. “Historically our interest bearing beta was in the high 50s, I think 59% that is a good place to anchor. However, in the near term, we think we will see deposit costs perform better than that.” — Tom H. Speir, Chief Financial Officer · 2026-10-20 This is not a United-only story — regional banks across the tape are fighting the same retail deposits battle, with Webster and Zions both leading on cost of deposits and Fifth Third touting retail deposit campaigns. But United is one of the few that has deliberately pushed its own asset sensitivity up mid-cycle rather than hedging it down.Following the securities repositioning and Navitas sale, United's asset sensitivity has meaningfully increased. We are well positioned for a higher for longer rate environment as approximately half of our loans and securities are floating rate.
New hires, mini-perms, and a 77% runway
The growth engine is not the balance-sheet shuffle; it is payroll. Core loan growth of 10% annualized ex-Navitas and ex-Peach State was the strongest since Q2 2022, and production topped $1B for a second straight quarter. The striking number is the concentration of that production in people hired in the last twelve months: “So our new hires represented nearly 40% of the production in Q3. I also wanted to point out because I am very proud that was our second quarter in a row of $1 billion of production.” — Richard William Bradshaw, Chief Banking Officer · 2026-10-20 Management has been telegraphing this since the July call — "upper single digit next year" was already the language — and the plan is ~20 lenders a year, roughly 10% annual growth in producers, all referrals rather than headhunters. What is genuinely new is where the demand is coming from if rates keep climbing. Richard Bradshaw flagged customers asking about the bank's mini perm program as capital markets slow, and admitted the CRE math breaks after "a couple of hundred basis points" of further hikes. That is the honest boundary condition on the whole growth story, and it is a reversal of the 2025 framing where CRE was a stability question, not a volume opportunity. A stable-to-positive CRE price index in the Moody's forecast is doing quiet work underneath those construction draws.Capital, price, and the thing nobody wants to talk about
The stock sits within about 4% of its July high and has returned 4.4% over ninety days, so this is not a broken name being fixed — it is a name already being paid for the fix. At 1.1x book and 11x earnings, the market is pricing a normalizing bank, not a transformed one. The $50M of buybacks done at $35.81 and the new $113M authorization are the clearest statement of management's own view: “We are set on getting to that 15%+ ROTCE, regardless of where capital levels are. We tend to take capital down to get there.” — Herbert Lynn Harton, Chairman and Chief Executive Officer · 2026-10-20 Three quarters ago the same management team was framing excess capital as a future board discussion:That was July. The board meeting happened: $100M of new authorization, an actual $50M executed, and a 4% dividend raise. Rare follow-through. The loose thread is deposits. The franchise's deposit base was still down about 1% year over year at the June quarter — the very reason a 77% loan-to-deposit ratio is strategically valuable and also a reminder that funding growth is not free. CEO Lynn Harton fielded the question the industry is starting to get about Agentic AI redirecting deposits and was refreshingly unafraid of it: “I personally think it will be slower than some people have said... you want to be very comfortable that your money is safe, they were already optimizing their deposits.” — Herbert Lynn Harton, Chairman and Chief Executive Officer · 2026-10-20 With spread income still roughly 63% of total revenue, that non-answer matters less than the beta. The story to watch into Q4 is simple: a cleaner, more asset-sensitive bank has told you exactly what it expects. If the beta holds near the high 50s and the Fed delivers the December hike the guide assumes, the mid-3.70s margin is a floor, not a ceiling. If competition for deposits bites first, the same 77% ratio that looks like optionality today becomes the thing that has to be funded at a worse price.If you think about just getting back to the 13% range, that is about $300 million of excess capital. So I think that is something that we will be talking about in board meetings over the next year.