Q3 2026 United Community Banks Inc Earnings Call

October 20, 2026

Operator 3: Good morning, and welcome to United Community Banks' Q3 2026 earnings call. Hosting our call today are Chairman and Chief Executive Officer, Lynn Harton, Chief Financial Officer, Tom Speir, Chief Banking Officer, Rich Bradshaw, and Chief Risk Officer, Rob Edwards. United's presentation today includes references to operating earnings, pre-tax, pre-credit earnings, and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release, as well as at the end of the investor presentation. Both are included on the website at ucbi.com. Copies of the Q3 earnings release and investor presentation were filed this morning on Form 8-K with the SEC, and a replay of this call will be available in the investor relations section of the company's website at ucbi.com.

Operator: Good morning, and welcome to United Community Banks' Q3 2026 earnings call. Hosting our call today are Chairman and Chief Executive Officer, Lynn Harton, Chief Financial Officer, Tom Speir, Chief Banking Officer, Rich Bradshaw, and Chief Risk Officer, Rob Edwards. United's presentation today includes references to operating earnings, pre-tax, pre-credit earnings, and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release, as well as at the end of the investor presentation. Both are included on the website at ucbi.com. Copies of the Q3 earnings release and investor presentation were filed this morning on Form 8-K with the SEC, and a replay of this call will be available in the investor relations section of the company's website at ucbi.com.

Speaker #1: Good morning, and welcome to United Community Banks' third quarter 2026 earnings call. Hosting our call today are Chairman and Chief Executive Officer Lynn Harton, Chief Financial Officer Tom Spear, Chief Banking Officer Rich Bradshaw, and Chief Risk Officer Rob Edwards.

Speaker #1: United's presentation today includes references to operating earnings, pre-tax, pre-credit earnings, and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release, as well as at the end of the investor presentation.

Speaker #1: Both are included on the website at ucbi.com. Copies of the third quarter's earnings release and investor presentation were filed this morning on Form 8-K with the SEC, and a replay of this call will be available in the Investor Relations section of the company's website at ucbi.com.

Operator 3: Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statements should be considered in light of risks and uncertainties described on pages 5 and 6 of the company's 2025 Form 10-K, as well as other information provided by the company in its filings with the SEC and included on its website. At this time, I will turn the call over to Lynn Harton.

Operator: Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statements should be considered in light of risks and uncertainties described on pages five and 6 of the company's 2025 Form 10-K, as well as other information provided by the company in its filings with the SEC and included on its website. At this time, I will turn the call over to Lynn Harton.

Speaker #1: Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statements should be considered in light of risks and uncertainties described on pages 5 and 6 of the company's 2025 Form 10-K, as well as other information provided by the company in its filings with the SEC and included on its website.

Speaker #1: At this time, I'll turn the call over to Lynn Harton.

Lynn Harton: Good morning, and thank you for joining us today. Many of you joined our call on 8 September, where we discussed the completion of several important initiatives that put United in a stronger financial position and made the franchise more resilient. Our goals were to de-risk the balance sheet, to enhance our profitability, and to position the company for future growth. We are glad to be able to give you details today on the preliminary results of those actions and let you see more clearly the improvements we anticipate as we head into Q4 in 2027. For the quarter, our operating earnings reached $0.77 a share, a significant improvement from the $0.71 recorded in Q2. One of the drivers included strong core loan growth of 10% annualized, of which nearly 40% was driven by our new hires discussed on 8 September.

Speaker #2: Good morning, and thank you for joining us today. Many of you joined our call on September 8th, where we discussed the completion of several important initiatives that put United in a stronger financial position and made the franchise more resilient.

Speaker #2: Our goals were to de-risk the balance sheet, enhance our profitability, and position the company for future growth. We're glad to be able to give you details today on the preliminary results of those actions and let you see more clearly the improvements we anticipate as we head into the fourth quarter of 2027.

Speaker #2: For the quarter, our operating earnings reached $0.77 per share, a significant improvement from $0.71 recorded in the second quarter. One of the drivers included strong core loan growth of 10% annualized, of which nearly 40% was driven by our new hires discussed on September 8th.

Lynn Harton: For comparison, our core loan growth, ex-Navitas, was 6% in Q2 and 4% for the year of 2025. We also had solid core deposit growth of 8% annualized. Non-interest-bearing deposits were stable as a percentage of the total, and deposit costs increased very modestly despite the upward rate environment. Even without Navitas in their higher-yielding loan portfolio for the last month of the quarter, our margin was stable at 3.68%, and net interest revenue increased by $10 million over Q2. Credit continues to be very strong, and net charge-offs were only nine basis points, consistent with the nine basis points in the core bank last quarter. The sale of Navitas significantly de-risked the company from a credit perspective. Looking forward, we are well positioned to grow our earnings and returns. Our loan-to-deposit ratio is 77%, providing liquidity to deploy into customer relationship lending opportunities.

Speaker #2: For comparison, our core loan growth, ex novitis, was 6% in the second quarter and 4% for the year of 2025. We also had solid core deposit growth of 8% annualized.

Speaker #2: Non-interest-bearing deposits were stable as a percentage of the total, and deposit costs increased very modestly despite the upward rate environment. Even without novitiates in their higher-yielding loan portfolio for the last month of the quarter, our margin was stable at 3.68%, and net interest revenue increased by $10 million over the second quarter.

Speaker #2: Credit continues to be very strong, and net charge-offs were only 9 basis points, consistent with the 9 basis points in the core bank last quarter.

Speaker #2: The sale of novitis significantly de-risked the company from a credit perspective. Looking forward, we're well positioned to grow our earnings and returns. Our loan-to-deposit ratio is 77%, providing liquidity to deploy into customer relationship lending opportunities.

Lynn Harton: Our capital ratios remain strong, giving us flexibility to support growth from new hires, as well as optionality to return capital to shareholders and welcome additional quality in-footprint banks into the company when appropriate and available. I would like to now turn it over to Tom Speir, our new CFO, for more detail on the quarter.

Speaker #2: Our capital ratios remain strong, giving us flexibility to support growth from new hires, as well as optionality to return capital to shareholders and welcome additional quality in-footprint banks into the company when appropriate and available.

Speaker #2: I'd now like to turn it over to Tom Spear, our new CFO, for more detail on the quarter.

Tom Speir: Thank you, Lynn. I am honored to have the opportunity to join this outstanding team at an important point in United's evolution. Q3 was an important one for United as the strategic actions that were executed over the past few months position us very well to generate sustainable and profitable growth moving forward. Starting with loan growth on page six, we were pleased this quarter with the strong core loan growth delivered by the bank. Excluding the sale of Navitas and the addition of Peach State, core loan growth was 10% annualized, the strongest we have seen since 2022. Production was robust, exceeding $1 billion for Q2, reflecting the continued benefits from our investments in hiring revenue producers. Production from new hires within the last year increased to approximately $170 million in Q3, contributing 40% of United's funded loan growth for the quarter.

Speaker #1: Thank you, Lynn. I'm honored to have the opportunity to join this outstanding team at an important point in United's evolution. The third quarter was an important one for United, as the strategic actions executed over the past few months have positioned us very well to generate sustainable and profitable growth moving forward.

Speaker #1: Starting with loan growth on page 6, we were pleased this quarter with the strong core loan growth delivered by the bank. Excluding the sale of Novitus and the addition of Peach State, core loan growth was 10% annualized, the strongest we've seen since 2022.

Speaker #1: Production was robust, exceeding $1 billion for the second quarter, reflecting the continued benefits from our investments in hiring revenue producers. Production from new hires within the last year increased to approximately $170 million in the third quarter, contributing 40% of United's funded loan growth for the quarter.

Tom Speir: Following the Peach State acquisition, which was effective 1 August, and the Navitas sale, effective 1 September, we wanted to provide an update on the go-forward loan portfolio. The quarterly reported loan yield was 6.06%. That compares to a loan yield of 5.83% in September, which provides a good baseline heading into Q4. Approximately half of the loan portfolio is floating rate, including the impact of swaps. Higher short-term rates and the continued benefit from fixed asset repricing will serve to support loan yields. Turning to deposits, we generated deposit growth of $1.2 billion in the quarter, which includes the acquisition of Peach State. Excluding the impact of Peach State, deposit growth was solid at $473 million, or 8% annualized. Growth was particularly strong in money market, which was up to $366 million excluding acquired balances.

Speaker #1: Following the Peach Date acquisition, which was effective August 1st, and the novitis sale, effective September 1st, we wanted to provide an update on the go-forward loan portfolio.

Speaker #1: The quarterly reported loan yield was 6.06%. That compares to a loan yield of 5.83% in September, which provides a good baseline heading into the fourth quarter.

Speaker #1: Approximately half of the loan portfolio is floating rate, including the impact of swaps. Higher short-term rates and the continued benefit from fixed asset repricing will serve to support loan yields.

Speaker #1: Turning to deposits, we generated deposit growth of 1.2 billion in the quarter, which includes the acquisition of Peach Date, excluding the impact of Peach Date, deposit growth was solid at 473 million or 8% annualized.

Speaker #1: Growth was particularly strong in money market, which was up to $366 million, excluding acquired balances. Core DDA growth was solid as well, at $111 million, or 6.9% annualized.

Tom Speir: Core DDA growth was solid as well at $111 million, or 6.9% annualized. Time deposits remained relatively flat, with an increase of $13 million or 1.4% annualized. Public funds ended the quarter at $2.8 billion stable versus Q2. Public funds typically have seasonal inflows in Q4 of approximately $325 to $375 million, with meaningful outflows beginning late in Q1 and returning to normalized levels by the end of Q2. For the quarter, average total deposit costs were 1.69% and interest-bearing costs were 2.31%, up 3 and 4 basis points respectively. As of the end of September, total deposit costs were 1.71%. Approximately 15% of total deposits are indexed and have already realized the impact of the Fed rate hike in September.

Speaker #1: Time deposits remained relatively flat, with an increase of $13 million, or 1.4% annualized. Public funds ended the quarter at $2.8 billion, stable versus the second quarter.

Speaker #1: Public funds typically have seasonal inflows in the fourth quarter of approximately 325 to 375 million with meaningful outflows beginning late in the first quarter and returning to normalized levels by the end of the second quarter.

Speaker #1: For the quarter, average total deposit costs were 1.69%, and interest bearing costs were 2.31%, up 3 and 4 basis points respectively. As of the end of September, total deposit costs were 1.71%.

Speaker #1: Approximately 15% of total deposits are indexed and have already realized the impact of the Fed rate hike in September. United's quarter-end loan-to-core deposit ratio was 77%, which gives us strategic flexibility as we grow both sides of the balance sheet and allows us to be more deliberate with respect to deposit pricing in the current environment.

Tom Speir: United's quarter-end loan to core deposit ratio was 77%, which gives us strategic flexibility as we grow both sides of the balance sheet and allows us to be more deliberate with respect to deposit pricing in the current environment. Moving to the investment portfolio. Following the restructuring executed in Q3, we have added information related to our securities portfolio on slide 8. More details related to the Navitas sale and restructuring are available in the presentations published on 12 June and 8 September. As a reminder, last month, we reclassified $2.2 billion in held-to-maturity securities to available-for-sale designation. We then sold $2.5 billion of long-dated securities that were yielding approximately 2.2%. At that time, we were expecting to redeploy over $3 billion into securities yielding approximately 4.5% with a duration of around 2 years.

Speaker #1: Moving to the investment portfolio, following the restructuring executed in the third quarter, we have added information related to our securities portfolio in Slide 8.

Speaker #1: More details related to the Novitis sale and restructuring are available in the presentations published on June 12th and September 8th. As a reminder, last month we reclassified $2.2 billion in held-to-maturity securities to the available-for-sale designation.

Speaker #1: We then sold $2.5 billion of long-dated securities that were yielding approximately 2.2%. At that time, we were expecting to redeploy over $3 billion into securities yielding approximately 4.5%, with a duration of around 2 years.

Tom Speir: With the increase in rates in September, our average reinvestment rate was over 4.6%, with the same expected duration of approximately 2 years. The securities yield for the quarter was 3.34%, up 37 basis points from the prior quarter. At the end of the quarter, the portfolio was yielding approximately 4.2%, which represents a good launch point for forward projections. Our portfolio is highly liquid and well-positioned for a higher for longer rate environment. Quarterly cash flows are expected to average around $340 million in 2027, up more than 40% from pre-restructuring levels. Floating rate securities account for approximately 45% of the total portfolio. Moving to slide 9, net interest revenue increased $10.3 million from Q2, primarily driven by the Peach State acquisition, core growth, the net effect of the portfolio restructuring, higher interest rates, and day count, partially offset by the impact of the Navitas sale.

Speaker #1: With the increase in rates in September, our average reinvestment rate was over 4.6%, with the same expected duration of approximately two years. The securities yield for the quarter was 3.34%, up 37 basis points from the prior quarter.

Speaker #1: At the end of the quarter, the portfolio was yielding approximately 4.2%, which represents a good launch point for forward projections. Our portfolio is highly liquid and well positioned for a higher-for-longer rate environment.

Speaker #1: Quarterly cash flows are expected to average around $340 million in 2027, up more than 40% from pre-restructuring levels. And floating-rate securities account for approximately 45% of the total portfolio.

Speaker #1: Moving to slide 9, net interest revenue increased $10.3 million from the second quarter, primarily driven by the Peach State acquisition, core growth, the net effect of the portfolio restructuring, higher interest rates, and day count, partially offset by the impact of the Novitus sale.

Tom Speir: Our net interest margin of 3.68% was stable in Q3 as higher securities yields following the repositioning largely offset lower loan yields following the Navitas sale. 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. Additionally, repricing of our back book of fixed rate assets will continue to be a tailwind over time. Moving to page 10, GAAP non-interest income decreased by $302 million from Q2, reflecting the impact of both the gain on the sale of Navitas and the loss on the investment portfolio repositioning. On an operating basis, non-interest income was $40.7 million for the quarter, up slightly from prior quarters, primarily driven by higher BOLI gains and service charges.

Speaker #1: Our net interest margin of 3.68% was stable in the third quarter, as higher securities yields following the repositioning largely offset lower loan yields following the Novitas sale.

Speaker #1: Following the securities repositioning and novitis 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.

Speaker #1: Additionally, repricing of our back book of fixed-rate assets will continue to be a tailwind over time. Moving to page 10, GAAP non-interest income decreased by $302 million from the second quarter, reflecting the impact of both the gain on the sale of Novitis and the loss on the investment portfolio repositioning.

Speaker #1: On an operating basis, non-interest income was $40.7 million for the quarter, up slightly from prior quarters, primarily driven by higher BOLI gains and service charges.

Tom Speir: Mortgage fees increased largely driven by an increase in MSR valuation, which was mostly offset in the hedge included in the other non-interest income line item. On page 11, we highlight non-interest expense for the quarter. The quarter included 2 months of expense related to Peach State and 2 months of expense related to Navitas. Expenses in Q4 will include a full quarter with Peach State and without Navitas. We were pleased that the bank's operating efficiency ratio improved to 53.1% in the quarter and was stable year-over-year. Moving to page 12, credit quality for the quarter was very strong. Net charge-offs benefited from the sale of Navitas, which has historically contributed approximately half of the bank's net charge-offs. Net charge-offs for the quarter were $4 million or 9 basis points of average loans improved from $7.9 million in Q2.

Speaker #1: Mortgage fees increased largely driven by an increase in MSR valuation, which was mostly offset in the hedge included in the other non-interest income line item.

Speaker #1: On page 11, we highlight non-interest expense for the quarter. The quarter included two months of expense related to Peach State, and two months of expense related to Novitas.

Speaker #1: Expenses in the fourth quarter will include a full quarter with Peach Date and without novitis. We were pleased that the banks' operating efficiency ratio improved to 53.1% in the quarter and was stable year over year.

Speaker #1: Moving to page 12, credit quality for the quarter was very strong. Net charge-offs benefited from the sale of Novitas, which has historically contributed approximately half of the bank's net charge-offs.

Speaker #1: Net charge-offs for the quarter were $4 million, or 9 basis points of average loans, improved from $7.9 million in the second quarter. Non-performing assets and past dues were both down quarter over quarter and remained at benign levels.

Tom Speir: Non-performing assets and past dues were both down quarter-over-quarter and remained at benign levels. On slide 13, the allowance for credit losses increased to $200 million, up from $188 million in the prior quarter, primarily driven by robust loan growth in Q3. The provision also included approximately $800,000 to establish the Peach State initial unfunded reserve. The ACL coverage ratio inclusive of unfunded commitments was 1.05%. Moving to page 14, United's liquidity and capital positions remain robust following the strategic actions taken in Q3. Our solid CET1 and TCE ratios provide us with strategic flexibility moving forward. Our TCE ratio is 9% and our CET1 ratio is 13%, both down from Q2 primarily due to recent strategic actions, but remain strong relative to peers. Our relatively low loan-to-deposit ratio is also a continued source of strength, allowing capacity for future organic growth.

Speaker #1: On slide 13, the allowance for credit losses increased to 200 million up from 188 million in the prior quarter, primarily driven by robust loan growth in the third quarter.

Speaker #1: The provision also included approximately $800,000 to establish the Peach Date initial unfunded reserve. The ACL coverage ratio, inclusive of unfunded commitments, was 1.05%. Moving to page 14, United's liquidity and capital positions remain robust, following the strategic actions taken in the third quarter.

Speaker #1: Our solid CET-1 and TCE ratios provide us with strategic flexibility moving forward. Our TCE ratio is 9%, and our CET-1 ratio is 13%, both down from the second quarter, primarily due to recent strategic actions but remain strong relative to peers.

Speaker #1: Our relatively low loan-to-deposit ratio is also a continued source of strength, allowing capacity for future organic growth. On slide 15, we note the previously announced repurchase of approximately $50 million of common shares in the third quarter, which effectively converted the Peach Date deal into an all-cash transaction.

Tom Speir: On slide 15, we note the previously announced repurchase of approximately $50 million of common shares in Q3, which effectively converted the Peach State deal into an all-cash transaction. Additionally, in Q3, United's board authorized a $100 million increase to our existing share repurchase authorization through year end 2027, bringing the total outstanding authorization to $113 million. Also, in Q3, we increased our common dividend to $0.26 per share, a 4% increase year-over-year. Tangible book value came in largely as expected, reflecting the impacts of the various strategic actions taken in the quarter as well as higher interest rates. Moving to the outlook for Q4 on page 16. 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 Q3.

Speaker #1: Additionally, in the third quarter, United's board authorized a $100 million increase to our existing share repurchase authorization through year-end 2027, bringing the total outstanding authorization to $113 million.

Speaker #1: Also, in the third quarter, we increased our common dividend to $26 per share, a 4% increase year over year. Tangible book value came in largely as expected, reflecting the impacts of the various strategic actions taken in the quarter as well as higher interest rates.

Speaker #1: Moving to the outlook for the fourth quarter on page 16, 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 Speir: The completion of the strategic actions executed in Q3 will improve profitability and earnings in addition to de-risking the balance sheet. Earnings per share in Q4 are expected to increase to a range of $0.80 to $0.83 per share, driven by solid growth in pre-provision net revenue. Net interest revenue growth will be driven by continued growth in loans and deposits, along with a full quarter's benefit of the securities portfolio restructuring, Peach State Bank, and the benefits from higher interest rates on our asset-sensitive position. We expect net interest margin to expand to the mid-370s.

Speaker #1: The completion of the strategic actions executed in the third quarter will improve profitability and earnings, in addition to de-risking the balance sheet. Earnings per share in the fourth quarter are expected to increase to a range of $0.80 to $0.83 per share, driven by solid growth and pre-provision net revenue.

Speaker #1: Net interest revenue growth will be driven by continued growth in loans and deposits, along with a full quarter's benefit of the securities portfolio restructuring, Peach State Bank, and the benefits from higher interest rates on our asset-sensitive position.

Speaker #1: We expect net interest margin to expand to the mid-370s. Our effective tax rate is expected to normalize to the high 22% area in the fourth quarter, following an increase in the third quarter due to the specific tax rates applicable to the Novitis sale and the investment securities losses, as well as a higher core effective tax rate resulting from higher estimated pre-tax income and certain discrete items recognized in the quarter.

Tom Speir: Our effective tax rate is expected to normalize to the high 22% area in Q4, following an increase in Q3 due to the specific tax rates applicable to the Navitas sale and the investment securities losses, as well as a higher core effective tax rate resulting from higher estimated pre-tax income and certain discrete items recognized in the quarter. We are entering Q4 with strong fundamentals and momentum as we continue executing on our strategy as a simpler bank positioned for growth in some of the nation's best markets. Our asset sensitivity and strong capital liquidity position us well for the current environment. I'm very proud to have joined this outstanding team at an important inflection point for the company. I'll now turn the call back over to Lynn.

Speaker #1: We are entering the fourth quarter with strong fundamentals and momentum as we continue executing on our strategy as a simpler bank, positioned for growth in some of the nation's best markets.

Speaker #1: Our asset sensitivity and strong capital liquidity position us well for the current environment. I'm very proud to have joined this outstanding team at an important inflection point for the company.

Speaker #1: I'll now turn the call back over to Lynn.

Lynn Harton: Thank you, Tom. I'll end by repeating the core goals of the actions we completed last quarter. We've simplified the business and reduced credit risk by exiting Navitas. We're investing in the core franchise, strengthening organic growth, and remaining disciplined around tuck-in acquisitions and capital deployment. We've repositioned the balance sheet, reducing interest rate risk, and creating a more resilient capital and earnings profile. We're excited about our momentum and outlook as we head into the end of the year. I'll now open the floor for questions.

Speaker #2: Thank you, Tom. I'll end by repeating the core goals of the actions we completed last quarter. We've simplified the business and reduced credit risk by exiting Novitas.

Speaker #2: We're investing in the core franchise, strengthening organic growth, and remaining disciplined around tuck-in acquisitions and capital deployment. We've repositioned the balance sheet, reducing interest rate risk and creating a more resilient capital and earnings profile.

Speaker #2: We're excited about our momentum and outlook as we head into the end of the year. I'll now open the floor for questions.

Operator 2: At this time, we'll begin the question and answer session. To ask a question, you may press star and then 1 using a touch-tone telephone. To withdraw your questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the handset before pressing the keys to ensure the best sound quality. Again, that is star and then 1 to ask a question. Our first question today comes from Russell Gunther from Stephens. Please go ahead with your question.

Operator: At this time, we'll begin the question and answer session. To ask a question, you may press star and then 1 using a touch-tone telephone. To withdraw your questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the handset before pressing the keys to ensure the best sound quality. Again, that is star and then 1 to ask a question. Our first question today comes from Russell Gunther from Stephens. Please go ahead with your question.

Speaker #3: And at this time, we'll begin the question and answer session. To ask a question, you may press star, then 1, using a touch-tone telephone.

Speaker #3: To withdraw your question, you may press star and 2. If you are using a speakerphone, we ask that you please pick up the handset before pressing the keys to ensure the best sound quality.

Speaker #3: Once again, that is star, and then 1 to ask a question. Our first question today comes from Russell Gunther from Stephens. Please go ahead with your question.

Russell Gunther: Hey, good morning, guys.

Speaker #4: Hey, good morning, guys.

Lynn Harton: Morning.

Tom Speir: Morning.

Speaker #2: Good morning.

Speaker #4: Morning.

Russell Gunther: I wanted to start on the strong organic growth results this quarter. It would be helpful to get a sense for what type of contribution the new commercial lenders are putting up so far. With the recent backup in rates, the likelihood we get some additional Fed hikes, is there an absolute level in rates where you would expect to see some pipeline fallout that puts your kind of high single-digit organic growth rate at risk?

Speaker #2: I wanted to start on the strong organic growth results this quarter. It would be helpful to get a sense for what type of contribution the new commercial lenders are putting up so far.

Speaker #2: And then with the recent backup in rates and the likelihood we get some additional Fed hikes, is there an absolute level in rates where you would expect to see some pipeline fallout that puts your kind of high single-digit organic growth rate at risk?

Rich Bradshaw: Russell, good morning. This is Rich Bradshaw. I will tackle that one. Our new hires represented 38% of the production in Q3. Also wanted to point out because I am very proud, that was our second quarter in a row of $1 billion of production. I feel like the machine is working. In terms of interest rate hikes and where you see that kind of over-under, I would say it is probably about 100 basis points, and the first place you are going to see that is CRE. You would expect that construction loans will slow down. Yesterday I happened to meet with Alicia Shelnutt, who is our player-coach in charge of CRE, and she said they were as busy as they have ever been. I was actually a tiny bit surprised by that. I found that encouraging.

Speaker #4: Russell, good morning. This is Rich Bradshaw. I'll tackle that one. So our new hires represented 38% of the production in Q3. I also wanted to point out, because I'm very proud that was our second quarter in a row of a billion dollars of production.

Speaker #4: So I feel like the machine is working. In terms of interest rate hikes and where you see that kind of over/under, I'd say it's probably about 100 basis points, and the first place you're going to see that is Cree.

Speaker #4: So you would expect that construction loans will slow down. Yesterday, I happened to meet with Lisa Shelnut, who's our player coach in charge of Cree, and she said they were as busy as they've ever been.

Speaker #4: So I was actually a tiny bit surprised by that. So I found that encouraging. But again, if there's 100 basis points, the math starts not working as well in terms of the deals penciling out.

Rich Bradshaw: Again, if there is 100 basis points, the math starts not working as well in terms of the deals penciling out. We do have a lot of construction loans that we did, so we would have the continuing draws from that. Because of a possible raising rate environment, our customers are starting to ask about our mini-perm program because capital markets slow down. I do expect that we will see some pickup in the mini-perm, and those will be two or three-year loans as the owners are waiting for the capital markets to get a little bit better for their end.

Speaker #4: But we do have a lot of construction loans that we did, so we'd have the continuing draws from that. And then, because of a possible rising rate environment, our customers are starting to ask about our mini-PERM program, because capital markets slow down.

Speaker #4: So, I do expect that we will see some pickup in the mini-PERM, and those will be two- or three-year loans, as the owners are waiting for the capital markets to get a little bit better for their end.

Russell Gunther: Got it. Okay. Very helpful. Thank you. My second question is on the margin. Appreciate all the color in terms of where we are going to jump off next quarter. As you fleshed out the increased asset sensitivity here, it would be helpful to get a sense for how you think about incremental rate hikes and what that means to the NIM, and particularly what deposit beta assumptions underpin that.

Speaker #2: Got it. Okay, very helpful. Thank you. And then my second question is on the margin. I appreciate all the color in terms of where we're going to jump off next quarter.

Speaker #2: As you fleshed out the increased asset sensitivity here, it would be helpful to get a sense for how you think about incremental rate hikes and what that means to the NIM, and particularly what deposit beta assumptions underpin that.

Tom Speir: Yeah, Russell, hey, it is Tom Speir. Good morning. So yeah, good question. Our guidance gives you the outlook with the 25 basis point rate hike in December. We will benefit from, obviously, rates continuing to move higher. So that mid-370s is a good place to be. When you think about our securities portfolio repositioning and the yield increases that will come along with that, along with our floating rate nature of our portfolio. We have also got our fixed rate asset repricing on loans and securities, which will be a continued tailwind. I think as we move forward from there, if we see continued rate hikes, there is opportunity for the margin to continue to expand. The beta assumptions within that. So historically, our interest-bearing beta was in the high 50s, I think 59%. I think that is a good place to anchor.

Speaker #4: Yeah, Russell, hey, it's Tom Spear. Good morning. So, yeah, good question. Our guidance gives you the outlook as with the 25 basis point rate hike, end of December.

Speaker #4: So we will benefit from, obviously, rates continuing to move higher. So that mid-370s is a good place to be. When you think about our securities portfolio repositioning and the yield increases that will come along with that, along with our floating-rate nature of our portfolio.

Speaker #4: We've also got our fixed-rate asset repricing on loans and securities, which will be a continued tailwind. I think as we move forward from there, if we see continued rate hikes, there's opportunity for the margin to continue to expand.

Speaker #4: The beta assumptions within that—so historically, our interest-bearing beta was in the high 50s; I think 59%. I think that's a good place to anchor.

Tom Speir: However, in the near term, we think we will see deposit costs perform better than that as you did this quarter. So an opportunity to be lower and then move up over time depending on the speed of this rate cycle and the level of competition.

Speaker #4: However, in the near term, we think we'll see deposit costs perform better than that, as you did this quarter. So, an opportunity to be lower and then move up over time depending on the speed of this rate cycle and the level of—

Speaker #5: ...of competition. Okay, awesome. Thanks, Tom. I appreciate it, guys. Thanks for taking my question.

Russell Gunther: Okay, awesome. Thanks, Tom. I appreciate it, guys. Thanks for taking my question.

Operator 2: Our next question comes from Gary Tenner from D.A. Davidson. Please go ahead with your question.

Operator: Our next question comes from Gary Tenner from D.A. Davidson. Please go ahead with your question.

Speaker #6: Our next question comes from Gary Tenner from DA Davidson. Please go ahead with your question. Thanks. Good morning. I just wanted to ask a follow-up on that new producer question that Russell asked.

Gary Tenner: Thanks. Good morning. I just wanted to ask a follow-up on that new producer question that Russell asked. I am kind of curious if you could size the impact that that group had on the deposit side. Just curious what kind of success they are driving on the other side of the balance sheet.

Speaker #6: I'm kind of curious if you could size the impact that that group had on the deposit side. I'm just curious, kind of, what kind of success they're driving on the other side of the balance sheet.

Rich Bradshaw: Great question, Gary. We have brought over some private bankers, and they have certainly had an impact. But in terms of managing that, reporting that on the deposit side, I do not have that in front of me, but we can get back to you on that.

Speaker #6: Great question, Gary. We have brought over some private bankers, and they've certainly had an impact. In terms of managing and reporting that on the deposit side, I don't have that information in front of me, but we can get back to you on that.

Gary Tenner: Okay, great. I just wanted to clarify on the securities portfolio, is there any additional build to come, or is that 6.5 or so billion

Speaker #6: Okay, great. And I just wanted to clarify on the securities portfolio—is there any additional build to come, or is that $6.5 billion or so kind of right-sized as you see it today?

Gary Tenner: Kind of right-sized as you see it today.

Tom Speir: Yeah. We ended the quarter around $6.8 billion. I think that $6.8 billion to $7 billion is a good level for us. It is really going to be dependent on loan growth. Obviously, this quarter, loans outperformed quite a bit. We were a little slower to deploy into the securities portfolio. That will be the dynamic. I think we are relatively close to that level, and we will just see how the balance sheet performs and we will go from there.

Speaker #6: Yeah, so we ended the quarter around $6.8 billion. I think, you know, that $6.8 to $7 billion is a good level for us. You know, it's really going to be dependent on loan growth.

Speaker #6: Obviously, this quarter loans outperformed quite a bit. So we were, you know, a little slower to deploy into the securities portfolio. So that'll be the dynamic.

Speaker #6: I think we're relatively close to that level. And so we'll just see how the balance sheet performs, and, uh, you know, we'll go from there.

Gary Tenner: I got it. Thank you.

Speaker #6: I got it. Thank you. Gary, I wanted to get back to you; I don't have the answer, but I do have part of the answer.

Rich Bradshaw: Gary, I wanted to get back to you. Yeah. I do not have the answer, but I do have part of the answer. We do not make loans without depository relationships. They definitely have contributed. I just do not have the dollar amount. Okay, thank you.

Speaker #6: We do not make loans without depository relationships. So just to— they all— they definitely have contributed. I just don't have the dollar amount. Okay, thank you.

Gary Tenner: Okay, thank you.

Operator 2: Our next question comes from Will Jones from KBW. Please go ahead with your question.

Operator: Our next question comes from Will Jones from KBW. Please go ahead with your question.

Speaker #6: Our next question comes from Will Jones from KBW. Please go ahead with your question. Yeah, hey, great, guys. Uh, good morning. Morning. Good morning.

Will Jones: Yeah. Hey, great, guys. Good morning.

Tom Speir: Morning. Good morning.

Rich Bradshaw: Morning.

Tom Speir: Good morning.

Will Jones: It is kind of nice to see the balance sheet come together. I know there was quite a few moving pieces this quarter, but just this newfound optionality you have with a lower loan-to-deposit, high levels of cash, and obviously strong momentum in the loan portfolio. You pointed out close to 10% organic growth this quarter. I mean, is that the way we should start to think about your growth rate moving forward? Just kind of knowing the optionality you now have with the balance sheet. Should we start to think of UCB as more of a high single-digit grower as we look across the balance of this year and into 2027?

Speaker #7: So it was kind of nice to see the balance sheet come together. I know there were quite a few moving pieces this quarter, but just this newfound optionality you have with a lower loan-to-deposit ratio and high levels of cash.

Speaker #7: And obviously, strong momentum in the loan portfolio. You pointed out close to 10% organic growth this quarter. Is that the way we should start to think about your growth rate moving forward, just knowing the optionality you now have with the balance sheet?

Speaker #7: Should we start to think of UCB as more of a high single-digit grower as we look across the balance of this year and into 2027?

Speaker #7: This is— I mean, Will, this is Lynn. Yeah, that's our goal. Again, we think we're in fantastic markets. We've been focused on hiring now for about 15 months.

Lynn Harton: Will, this is Lynn. Yes, that is our goal. Again, we think we are in fantastic markets. We have been focused on hiring now for about 15 months. We plan on continuing that, and Rich may want to add some color to that. But yes, that would be my view and my goal. As add a little more color to that, when we made the strategic decision to exit Navitas, we looked at an organic growth initiative and a 5-year plan. Roughly, that was growing the amount of salespeople by 10% each year, and that is roughly 20 people per year. We are ahead this year, and we certainly expect to hit that number next year. We really feel that culture drives a lot of this too. The last thing I would say is it is not just headcount. We are hiring, I think, very good people.

Speaker #7: We plan on continuing that, and Rich may want to add some color to that. But yes, that would be my view and my goal.

Speaker #6: And as, to add a little more color to that, when we made the strategic decision to exit Navitas, we looked at an organic growth initiative and a five-year plan.

Speaker #6: And, roughly, that was growing the amount of salespeople by 10% each year, and that's roughly 20 people per year. And so we're ahead this year.

Speaker #6: And we certainly expect to hit that number next year. And we really feel that culture drives a lot of this too. So if you— and the last thing I would say is It's not just headcount.

Speaker #6: We're hiring, I think, very good people. They all have more than 20 years' experience. None are coming from headhunters, and they're all known by people at United Community.

Tom Speir: They all have more than 20 years experience. None are coming from headhunters, and they are all known by people at United Community. Will, I just want to jump in. This is Tom, to add in and emphasize a couple of points you made around our optionality. I think that is a key point. Our 77% loan-to-deposit ratio gives us a lot of flexibility to continue to grow our balance sheet and do so profitably and be thoughtful with respect to how we fund that on the deposit side. I think we are really differentiated with respect to our outlook relative to others and feel good about our future path.

Lynn Harton: They all have more than 20 years experience. None are coming from headhunters, and they are all known by people at United Community.

Tom Speir: Will, I just want to jump in. This is Tom, to add in and emphasize a couple of points you made around our optionality. I think that is a key point. Our 77% loan-to-deposit ratio gives us a lot of flexibility to continue to grow our balance sheet and do so profitably and be thoughtful with respect to how we fund that on the deposit side. I think we are really differentiated with respect to our outlook relative to others and feel good about our future path.

Speaker #6: Well, I just want to jump in—this is Tom—to add in and emphasize a couple of the points you made around our optionality.

Speaker #6: I think that's a key point. You know, our 77% loan-to-deposit ratio gives us a lot of flexibility to continue to grow our balance sheet and do so profitably, and be thoughtful with respect to how we fund that on the deposit side.

Speaker #6: So I think, you know, we're, we're really differentiated with respect to our outlook relative to others and feel good about our future path.

Will Jones: Yes, that is great. Tom, maybe just to stay on that point there. If you look out over the next 12 to 18 months, have you guys thought about what you would like to see this balance sheet composition look like and how quickly? Have you placed a timeline on how quickly we could see some of this liquidity get deployed?

Speaker #7: Yeah, that's great. And Tom, maybe just to stay on that point there, have you guys kind of, you know, if you look out over the next 12 to 18 months, have you guys thought about what you would like to see this balance sheet composition look like, and how quickly?

Speaker #7: Have you placed a timeline on how kind of quickly we could see some of this liquidity get deployed?

Tom Speir: Great question. I would just say that we do not forecast the loan-to-deposit ratio per se. I think we have got quite a bit of runway to deploy into that. We want to continue, as Rich alluded to grow deposits alongside loans. We would be totally fine if loan-to-deposit ratios stayed in this context. But we do have good flexibility for it to inch up over time, and I think that runway is into the foreseeable future.

Speaker #6: Great question. You know, I would just say that we don't, you know, forecast the loan-to-deposit ratio per se. I think we've got quite a bit of runway to deploy into that.

Speaker #6: You know, we want to continue, as Rich alluded to, to grow deposits alongside loans. So, you know, we would be totally fine if loan-to-deposit ratios stayed in this context, but we do have good flexibility for it to inch up over time. But I think that runway is into the foreseeable future.

Will Jones: Yeah. Okay. That is helpful. I appreciate that. And maybe lastly for me, Lynn, just more high level, big picture. We talked on our call a month or so ago about just thinking about updated capital targets and where a longer-term ROE could trend for UCB. I know you guys had talked about getting to the drawing board and maybe fine-pointing what capital ratio targets could look like longer term. Are we any closer to talking about those targets today? Just what kind of update do you have on the capital front?

Speaker #7: Yeah, okay, that's helpful. I appreciate that, Colin. Maybe lastly for me, Lynn, just more high-level, big picture—we talked on our call a month or so ago about just thinking about updated capital targets and where a longer-term ROE could trend for UCB.

Speaker #7: I know you guys had talked about getting to the drawing board and maybe fine-tuning what capital ratio targets could look like longer term. Are we any closer to talking about those targets today?

Speaker #7: Just what kind of update do you have on the capital front?

Lynn Harton: Yeah. We are still debating the actual targets for capital levels. We are very comfortable where we are. We feel like the level that we have today gives us flexibility to if another Peach State kind of opportunity came around, that we would be able to flex and do that. Gives us the opportunity to do stock buybacks. So we clearly have room at this level to take some capital actions. And we are set on getting to that 15% plus ROTCE regardless of where the capital levels are. We do not tend to take capital down to get there. We tend to take earnings up to get there. So we are still debating the actual target level, but we feel like we have got some room where we sit today.

Speaker #8: Yeah, we are still debating the actual targets for capital levels. We're very comfortable with where we are. We feel like the level we have today gives us flexibility.

Speaker #8: So, you know, if another Peach State kind of opportunity came around, we would be able to flex and do that. It gives us the opportunity to do stock buybacks.

Speaker #8: So we clearly have room at this level to take some capital actions, and we are set on getting to that 15%+ ROE target.

Speaker #8: ROCE regardless of where the capital levels are. We, you know, and we, we don't intend to take capital down to get there. So we tend to take earnings up to get there.

Speaker #8: So we're still debating the actual, you know, target level, but we feel like we've got some room where we sit today.

Will Jones: Yeah. Okay. That is fair enough. Well, thanks for the color, guys, and nice quarter.

Speaker #7: Yeah, okay. That's fair enough. Well, thanks for the color, guys, and nice quarter. Thank you.

Tom Speir: Thank you.

Operator 2: Our next question comes from Michael Rose from Raymond James. Please go ahead with your question.

Operator: Our next question comes from Michael Rose from Raymond James. Please go ahead with your question.

Speaker #9: Our next question comes from Michael Rose from Raymond James. Please go ahead with your question.

Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Just wanted to step back to the deposit side. It was good to see the NIB mix hold steady here at 27%. As we think about kind of the intermediate to long-term impacts of agentic AI and what that could do, can you just talk to us about maybe what you guys are working on there and what you would optimally like that mix to Where you think you can hold that mix as we think about just maybe a higher level of loan growth organically as we move forward, just given some of the hiring momentum that you guys have had. Thanks.

Speaker #10: Hey, good morning, guys. Thanks for taking my questions. I just wanted to step back to the deposit side. It was good to see the NIB mix held steady here at 27%.

Speaker #10: Just as we think about kind of the intermediate to long-term impacts of agentic AI and, you know, what that could do, you know, can you just talk to us about, you know, maybe what you guys are working on there and, you know, what you would optimally like that mix to, you know, where you think you can hold that mix, you know, kind of as we think about, you know, just maybe a higher level of loan growth organically as we move forward, just given some of the the hiring momentum that you guys have had.

Speaker #10: Thanks.

Lynn Harton: Yeah, sure. So in terms of the level, it's been fairly stable at this 27% level for some time. As we look into the near to intermediate term, I feel very comfortable with that. In terms of the agentic deposit activity, personally, we're very cognizant of that. We're thinking about that. I personally think it'll be slower than some people have said. Because if you think about our large depositors, they already have multiple options, including with us, whether it's sweeps, whether it's ICS, whether it's index deposits. They've certainly got money market accounts. These are large depositors or sophisticated people. They're within the bounds of their comfort. You want to be very comfortable that your money is safe. They're already optimizing their deposits.

Speaker #8: Yeah, sure. So in terms of the level, you know, it's been fairly stable at this 27% level for some time. So as we look into the near to intermediate term, I feel very comfortable with that.

Speaker #8: In terms of the agentic deposit activity, we're very cognizant of that. We're thinking about it. I personally think it will be slower than some people have said.

Speaker #8: Because, you know, if you think about our large depositors, they already have multiple options, including with us, whether it's sweeps, whether it's ICS, or whether it's indexed deposits.

Speaker #8: They've certainly got money market accounts. And, you know, these are large depositors or sophisticated people. They're within the bounds of their comfort, and, you know, you want to be very comfortable that your money is safe. They were already optimizing their deposits.

Lynn Harton: On the small end, your typical consumer DDAs, I really don't see the return relative to the risk for them turning over their passwords, et cetera, today, at least to an agent. So I personally think it's going to be slower. I know Tom's done some work and thought on this as well. You may have some color to add.

Speaker #8: And so—and then on the small end, you know, your typical consumer DDAs, I really don't see the return relative to the risk for them turning over their passwords, et cetera, today, at least to an agent.

Speaker #6: I personally think it's going to be slower. I know Tom's done some work and thought on this as well; you may have some color to add.

Tom Speir: Lynn, I think you summarized that really well. We are not dismissing this as a threat longer term to deposits. But in the near term, we really don't see that playing out. Again, I think the competitive advantage for us is our deposits, particularly on the retail side, are going to be smaller, more granular. Those are operating accounts. So we see less need for folks to rate seek out there. And we do pay fair rates on our money market and CDs. So just less of a need for us to, or for customers to seek that out elsewhere. Again, something we're paying attention to, but not seeing that as a threat at the moment.

Speaker #6: Lynn, I think you summarized that really well. We think, you know, we are not dismissing this as a threat longer term to deposits, but in the near term, we really don't see that playing out.

Speaker #6: You know, again, I think our— you know, the competitive advantage for us is our deposits, particularly on the retail side, are going to be smaller and more granular.

Speaker #6: Those are operating accounts. So we see less need for folks to rate seek out there. And, you know, we do pay fair rates on our money market and CDs.

Speaker #6: So just less of a need for us to— or for customers to seek that out elsewhere. So again, something we're paying attention to, but not seeing that as a threat.

Speaker #6: at the moment.

Speaker #10: That's very helpful. And then, maybe just as a follow-up, it was good to see the mortgage gain on sale margin held steady at 2.6%.

Michael Rose: That's very helpful. Then maybe just as a follow-up, was good to see the mortgage gain on sale margin held steady at the 2.6%, but obviously we're in what appears to be a higher for longer rate environment. Just talk to us about the mortgage business and then if you could also touch on kind of expectations at least near term for SBA loan sale gains. Thanks.

Speaker #10: But obviously we're in a what appears to be a higher-for-longer rate environment. Just kind of talk to us about the mortgage business. And then if you could also touch on, you know, kind of expectations, at least near term, for for us, for SBA loan sale gains.

Speaker #10: Thanks.

Rich Bradshaw: Hi, this is Rich. How are you doing? In terms of the mortgage forecast, we're certainly with interest rates where they are and where they may be heading, we're forecasting that down like the whole industry. So that's going to be in the 10% to 20% down depending on the quarter and the year. With regards to SBA, probably sales are flat on that in terms of premium, in terms of the return you get. It's flat right now. So I don't see it trending up or down.

Speaker #11: Hi, this is Rich. How are you doing? In terms of the mortgage forecast, we're certainly—with interest rates where they are and where they may be heading, we're forecasting that down, like the whole industry.

Speaker #11: So that's going to be in the 10% to 20% down, depending on the quarter and the year. And with regards to SBA, probably sales are flat on that in terms of premium, in terms of return you get.

Speaker #11: It's flat right now. So I don't see it trending up or down.

Michael Rose: Thanks, Rich. I appreciate it. If I could just slip one more in just on credit. Everything obviously looks good, but we did see a little bit of an uptick in substandard classifieds. Anything in there of note or is just normal course of action?

Speaker #10: Thanks, Rich. I appreciate it. If I could just slip one more in, just on credit. Everything obviously looks good, but we did see a little bit of an uptick in substandard classifieds. Anything in there of note, or is it just normal course of action?

Rob Edwards: Yeah. Hey, Mike, it's Rob. I would exactly call it normal course of action. In fact, I went back and looked and really, since COVID, we've been right in this 3% to 3.5% range. You would think in normal times it would actually be a little bit higher. So the 2.5% was really the outlier last quarter. We feel like we're kind of where we've been historically and just the normal course of business.

Speaker #8: Yeah. Hey, Mike, it's Rob. I would, I would exactly call it normal course of action. In fact, I went back and looked and really we've been since COVID, we've been right in this 3 to 3.5 percent range, and you would think in normal times it would actually be a little bit higher.

Speaker #8: So the 2.5% was really the outlier last quarter. We feel like we're kind of where we've been historically and just the normal course of business.

Michael Rose: Perfect. Thanks for taking my questions. Welcome to the team, Tom.

Speaker #8: Perfect. Thanks for taking my questions. Welcome to the team, Tom. Thank you.

Tom Speir: Thank you.

Operator 2: Our next question comes from Christopher Marinac from Brean Capital. Please go ahead with your question.

Operator: Our next question comes from Christopher Marinac from Brean Capital. Please go ahead with your question.

Speaker #9: Our next question comes from Christopher Marinac from Breen Capital. Please go ahead with your question.

Christopher Marinac: Thanks. Good morning. Wanted to ask about the CECL metrics from S&P this quarter, Rob, and has there been any movement up or down on CRE? Does that portend any different to how you reserve in the future?

Speaker #12: Thanks. Good morning. Wanted to ask about the CECL metrics from S&P this quarter, Rob. Has there been any movement up or down on CRE, and does that portend any difference in how you reserve in the future?

Rob Edwards: The CECL metrics in accordance with S&P, was that the question, Christopher?

Speaker #8: The CECL metrics in accordance with S&P—was that the question, Christopher?

Christopher Marinac: Yeah, exactly. Just kind of what the guidance from the outside sources are.

Speaker #12: Yeah, exactly. Just to kind of get what the guidance from the outsourcers is.

Rob Edwards: Well, we're really forecasting a stable economic environment in our forecast. We're not seeing a lot of movement there. You may recall, we did establish back in 2024 a hurricane reserve, and that fell off at the end of 2025. So the numbers may look a little bit different there because of that hurricane reserve going away.

Speaker #8: So we're really forecasting a stable economic environment in our forecast. So we're not seeing a lot of movement there. You may recall we did establish back in '24 a hurricane reserve, and that fell off at the end of 2025.

Speaker #8: So the numbers may look a little bit different there because of that hurricane reserve going away. But maybe we use Moody's, and Moody's does have a CRE price index.

Lynn Harton: We use Moody's, and Moody's does have a CRE price index.

Rob Edwards: We use Moody's, and Moody's does have a CRE price index.

Lynn Harton: Oh, yeah. Right.

Tom Speir: Yes.

Lynn Harton: Yeah, absolutely. So there is a CRE price index, and it is forecasting stable prices if that's the CRE price index. Really, it's a stable to positive economic outlook.

Rob Edwards: Yeah, absolutely. So there is a CRE price index, and it is forecasting stable prices if that's the CRE price index. Really, it's a stable to positive economic outlook.

Speaker #8: Oh yeah, right. Yeah, absolutely. So there is a CRE price index, and it is forecasting stable. Prices, if that's the CRE price index. Really, it's a, it's a stable to positive economic outlook.

Christopher Marinac: Great. Thanks for catching that, Lynn. I meant to say Moody's instead of S&P. Then I know you answered on the prior question about sort of the level of criticized being kind of stable, which is right. But is there any indication that those would sort of bounce around to go back in the next quarter? Or is it sort of just normal flow?

Speaker #12: Great. Thanks for catching that, Lynn. I meant to say Moody's instead of S&P. And then I know you answered on the prior question about sort of the level of criticized being kind of stable, which which is right.

Speaker #12: Is there any indication that those would sort of bounce around, to go back in the next quarter? Or is it sort of just normal flow?

Rob Edwards: Yeah. I would expect it to bounce around. I will say the 2.5% seemed unusually low. I am not anticipating us going back to 2.5%. You can look back here on the chart on page 12, and it kind of just seems to run in the 3% to 3.5% range. Quite honestly, if you look back, you know, longer history, those are very good numbers. I would not expect it to get back down to that level. To me, that is not a long-term run rate for criticized and classified.

Speaker #8: Yeah, I don't— I do— I would expect it to bounce around. I will say the 2.5% seemed unusually low. So I'd I'm not anticipating us going back to 2.5%.

Speaker #8: And, you know, you can look back here on the chart on page 12, and it kind of just seems to run in the 3% to 3.5% range.

Speaker #8: And Quite honestly, if you look back, you know, longer history, those are very good numbers. And so I, I wouldn't expect it to get back down to that level.

Speaker #8: That's To me, that's not a long-term run rate for criticized and classified.

Christopher Marinac: Great. Then last question related is just as you continue to grow the loan portfolio, will the average life be kind of around that three to three and a half years? Again, just trying to relate charge-offs and reserves in the long term.

Speaker #12: Great. Then last question related is just as you continue to grow the loan portfolio, will the average life be kind of around that 3 to 3.5 years?

Speaker #12: Again, just trying to relate charge-offs and reserves in the long term.

Rob Edwards: Yes, absolutely. That would be a good number to use for average life.

Speaker #8: Yes, absolutely. Yeah, that would be the, uh, a good number to use for average life.

Christopher Marinac: Great, Rob. Thank you very much for taking our questions this morning.

Speaker #12: Great, Rob. Thank you very much for taking our questions this morning.

Operator 2: Our next question comes from David Bishop from Hovde Group. Please go ahead with your question.

Operator: Our next question comes from David Bishop from Hovde Group. Please go ahead with your question.

Speaker #9: Our next question comes from David Bishop from Hopde Group. Please go ahead with your question.

Emily Graves: Good morning, everyone. This is Emily Graves stepping in for Dave this morning. My first question is what do you view as a reasonable core operating expense run rate going into the next quarter?

Speaker #7: Good morning, everyone. This is Emily Graves stepping in for Dave this morning. So my first question is, what do you view as a reasonable core operating expense run rate

Speaker #13: going into the next quarter?

Tom Speir: Hey, Emily, good morning. This is Tom. As you saw this quarter, we delivered in the mid-150s, and that was down from last quarter, primarily driven by the Navitas licensing settlement that happened in Q2. As we look forward, again, recall that we had two months of Navitas in our expenses, and then we also had two months of Peach State. Navitas on a run rate basis was $9 million. Peach State is five. We picked up a little bit of that net benefit this quarter, and you'll see the rest of that flow into Q4 on a full run rate basis. That'll put us in the, call it, low 150s area. From there, you'll see a typical growth for us at 3.5% range along with other investments that we'll make. That low 150s is a good level to use.

Speaker #6: Hey, Emily. Good morning. This is Tom. So yeah, so we, as you saw this quarter, you know, we delivered, you know, in the mid-$150s, and that was down from last quarter, primarily driven by the Navitas licensing settlement that happened in the second quarter.

Speaker #6: As we look forward, you know, again, recall that we had 2 months of Navitas in our expenses, and then we also had 2 months of PeachState.

Speaker #6: And so Navitas, on a run rate basis, was $9 million. PeachState is $5 million. So we picked up a little bit of that net benefit this quarter, and you'll see the rest of that flow into the fourth quarter on a full run rate basis.

Speaker #6: And that'll be— that'll put us in the call it low $150s area. You know, from there you'll see us, you know, typical growth for us, a 3.5% range along with other investments that we'll make.

Speaker #6: So that low $150s is a good level to use.

Emily Graves: Great. Thank you. My second question I have is what is a reasonable expectation for purchase accounting accretion, and how should we think about that going forward?

Speaker #13: Great, thank you. And then the second question I have is, what is a reasonable expectation for purchase accounting accretion, and how should we think about that going forward?

Tom Speir: Yeah. I think purchase accounting accretion, I would put that in the kind of the $5 million context run rate a quarter.

Speaker #6: Yeah, so I think purchase accounting accretion, you know, I'd put that in the kind of $5 million context, run rate a quarter.

Emily Graves: Great. Thank you for the color.

Speaker #8: Great. Thank you for the color.

Operator 2: Once again, if you would like to ask a question, please press star and then 1. To withdraw your questions, you may press star and 2. Our next question comes from Stephen Scouten from Piper Sandler. Please go ahead with your question.

Operator: Once again, if you would like to ask a question, please press star and then 1. To withdraw your questions, you may press star and 2. Our next question comes from Stephen Scouten from Piper Sandler. Please go ahead with your question.

Speaker #9: Once again, if you would like to ask a question, please press star and then 1. To withdraw your questions, you may press star and 2.

Speaker #9: Our next question comes from Steven Scouten from Piper Sandler. Please go ahead with your question.

Stephen Scouten: Yeah. Good morning. Thanks, guys. Nice to have you here with us, Tom. I guess first question would be maybe. I know you gave, Tom, and I may have missed it, but some commentary on expected betas. But how do you think about if you were to quantify upside to the NIM from if we get these 2 more hikes that are expected in the forward curve? What do you think we will see with each 25 basis point hike to the NIM?

Speaker #12: Yeah, good morning. Thanks, guys. Nice to have you here with us, Tom. I guess the first question would be—maybe, I know you gave, Tom, and I may have missed it—but some commentary on unexpected betas.

Speaker #12: But how do you think about if you were to quantify upside to the NIM from if we get you know, these 2 more hikes that are expected in the forward curve?

Speaker #12: Like, what do you think we'll see with each 25 basis point hike to the NIM?

Tom Speir: Yeah, Stephen, it's a good question. So again, if you step back and look at our balance sheet, we have roughly half of our loan and securities are floating rate. When you look at the deposit side, I mentioned that historically our beta was in the high 50s. We obviously just saw deposit costs, interest bearing go up 4 basis points. So we're outperforming that. We'd expect to be lower than that high 50s here in the near term. With those dynamics along with the fixed rate asset repricing on loans and securities, I mean, we've got good tailwinds on the margin. So that mid-370s for the Q4, that's a good kind of launching off point, and I think there's opportunity for continued expansion thereafter given those dynamics.

Speaker #6: Yeah, Steven, it's a good question. So again, you know, if you step back and look at, you know, our balance sheet, we have roughly half of our loan and securities are floating rate.

Speaker #6: And, you know, when you look at the deposit side, we've— I mentioned that historically our beta was in the high 50s. We obviously just saw deposit costs, interest-bearing, go up 4 basis points.

Speaker #6: So we're outperforming that. We'd expect to be lower than the high 50s here in the near term. And so with that, those dynamics along with the fixed rate asset repricing on loans and securities, I mean, we've got good tailwinds on the margin.

Speaker #6: So that mid-370s for the 4th quarter, you know, that's a good kind of launching off point. And I think there's opportunity for continued expansion thereafter given those dynamics.

Stephen Scouten: Okay, makes sense. I think you gave September loan yields around like 583 ex Navitas. What are you guys seeing in terms of new loan yields and maybe new deposits costs coming on average? Are spreads largely holding? Are they getting compressed with competition? Can you give us a feel for kind of what those dynamics look like?

Speaker #12: Okay, makes sense. And I think you gave September loan yields around like 5.83x Navitas. What are you guys seeing in terms of new loan yields and maybe new deposit costs coming on on average?

Speaker #12: And are spreads largely holding? Are they getting compressed with competition? Can you give us a feel for kind of what those dynamics look like?

Rich Bradshaw: Hi, this is Rich. I'll cover the loan side. So we have seen, call it the last 6 months, we've seen pricing compress a little bit. That's kind of flattened out on our side. So we feel like right now we don't see that going further.

Speaker #11: Hi, this is Rich. I'll cover the loan side. So, we have seen—in the last six months—we've seen pricing compress a little bit.

Speaker #11: That's kind of flattened out on our side. So we feel like right now we don't see that going further.

Tom Speir: Yeah, with respect to deposit pricing, I think all in our deposit pricing has been really in that kind of mid to high 2% area as we put on kind of all-in new deposits. So obviously as rates move up and we've got CD maturities going on, those levels continue to tick up. I would think about that in the context of that beta that I mentioned.

Speaker #6: Yeah, with respect to deposit pricing, I think all-in our deposit pricing has been really in that kind of mid to high 2% area as we put on all-in new deposits.

Speaker #6: And so, obviously, as rates move up and we've got CD maturities going on, those levels continue to tick up. But I would think about that in the context of that beta that I mentioned.

Rich Bradshaw: The new loans are going on and-

Speaker #6: And the new loans are going on and the new loans are going on, call it in the 6.25% kind of area. Is a good level to think about.

Rich Bradshaw: The new loans are going on, call it in the 6.25 kind of area is a good level to think about.

Stephen Scouten: Okay. Very helpful. Then just lastly for me, obviously the share repurchase I think was done at $35.81 a share this quarter and the whole industry traded down a bit. Did that lead you to you guys could be more aggressive with the remaining authorization or should we expect that to be maybe somewhat ratable through year-end 2027? How does the movement in the share price dictate that?

Speaker #12: Okay, very helpful. And then just lastly for me, you know, obviously the share repurchase I think was done at $35.81 a share this quarter and the whole industry's trading down a bit.

Speaker #12: Did that lead you to— you guys could be more aggressive with the remaining authorization, or should we expect that to be maybe somewhat ratable through year-end 2027?

Speaker #12: How does, how does the movement in the share price dictate that?

Lynn Harton: Yeah. So it definitely impacts it. We think it is very attractive at these rates and we certainly expect to be active. I would say though probably more throughout the year, but certainly you will see us be active at these current prices for sure.

Speaker #8: Yeah, so it definitely impacts it. We think it's very attractive at these rates, and we certainly expect to be active. I would say, though, probably more throughout the year, but certainly you'll see us be active at these current prices for sure.

Stephen Scouten: Okay, great. Thanks for all the color and congrats on all the hard work and progress here over the last quarter. It is impressive.

Speaker #12: Okay, great. Thanks for all the color and congrats on all the, all the hard work and progress here over the last quarter. It's impressive.

Lynn Harton: Thank you.

Tom Speir: Thank you.

Speaker #12: Thank you. Thank you.

Operator 2: With that, we will be concluding today's question and answer session. I would like to turn the floor back over to Lynn Harton for closing comments.

Operator: With that, we will be concluding today's question and answer session. I would like to turn the floor back over to Lynn Harton for closing comments.

Speaker #9: And with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Lynn Harton for closing comments.

Lynn Harton: Great. Well, thank you all for joining. We really appreciate the questions. As always, if you have any follow-ups or any additional information you need, don't hesitate to reach out to us and we'll look forward to seeing you again soon. Thank you. Have a great day.

Speaker #8: Great. Well, thank you all for joining. We really appreciate the questions. As always, if you have any follow-ups or need any additional information, don't hesitate to reach out to us. We'll look forward to seeing you again soon.

Speaker #8: Thank you. Have a great day.

Operator 2: That concludes today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

Operator: That concludes today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.