United Community Banks reports drop in 4Q earnings following acquisition

Aquesta Bank is now United Community Bank. /Doug Coats

GREENVILLE, S.C. – The company that acquired Aquesta Bank reported a fourth-quarter decrease in diluted earnings per share but a huge jump in loans from the Cornelius bank’s acquisition.

United Community Banks Inc.’s net income for the fourth quarter was $52 million and pre-tax, pre-provision income was $65.6 million. Diluted earnings per share of 55 cents for the quarter represented a decrease of 11 cents or 17 precent, from the fourth quarter a year ago, and represented a decrease of 27 cents or 33 percent from the third quarter of 2021.

Greenville-based United closed on Aquesta on Oct. 1, 2021, the first day of Q4, and completed the operational conversion in mid-November. Aquesta came with $754 million in assets and was expected to add 8 cents in EPS accretion in 2022 with cost savings fully phased in.

On an operating basis, United’s diluted earnings per share of 64 cents was down 6 precent from the year-ago quarter. The bank reported the primary driver of the reduced earnings in both periods is lower levels of accretion from Personal Paycheck Protection loans, as those loans have continued to decline due to success in executing the forgiveness process.

Additionally, in the third quarter, charges associated with the Aquesta acquisition, such as merger charges and a $3.27 million provision to establish an initial allowance for credit losses for acquired Aquesta loans, reduced GAAP earnings by approximately $9 million or 10 cents per share.

“We are very pleased by United’s performance this quarter and in 2021,” United Chairman and CEO Lynn Harton said in the earnings report. “On the strategic front, we completed the acquisition of Aquesta Financial Holdings Inc. and Aquesta Bank on October 1, boosting our Charlotte presence and adding the Wilmington, North Carolina market, both of which are growth markets that fit well with our footprint and culture.”

Total loans increased by $569 million during the quarter—impacted by $501 million of loans from the Aquesta acquisition. Excluding the effect of PPP loans and loans received from the Aquesta acquisition, core organic loan growth was 7 percent annualized.

Leave a Reply

Your email address will not be published. Required fields are marked *