United Community Banks Sells $2.6 Billion of Securities, Expects $300 Million Pretax Hit

United Community Banks has sold about $2.6 billion of lower-yielding investment securities in a balance-sheet reset that is expected to produce an estimated $300 million pretax loss, net of a gain from the recently completed sale of its Navitas equipment-finance business. The bank also moved $2.2 billion of held-to-maturity securities into the available-for-sale category before completing the securities sale.

The securities that were sold carried a weighted-average yield of 2.20%, an average duration of about 5.5 years and a weighted-average life of about 6.5 years. United said it is initially putting proceeds from the securities repositioning and the Navitas sale mainly into cash and shorter-duration securities yielding about 4.5%, with an average duration of roughly two years. Over time, management intends to move part of that liquidity into higher-yielding organic loan growth.

United disclosed the completed actions in a September 8 announcement, saying the expected loss will cause a net loss for the third quarter of 2026 even though the company still expects positive net income for the nine months ending September 30. The estimated $300 million pretax loss is stated after the partially offsetting benefit of an estimated $64 million pretax gain from the Navitas sale, so it should not be read as the gross loss on the securities alone.

A low-yield portfolio is being replaced with shorter-duration assets

The accounting reclassification and subsequent sale are related but not identical amounts. United reclassified $2.2 billion of held-to-maturity securities to available-for-sale status, while the $2.6 billion sold portfolio included both securities that had already been available for sale and securities that had previously been classified as held to maturity. The change gave the bank more flexibility to alter the composition and duration of its investment portfolio.

Management’s stated goal is to reduce exposure to interest-rate risk while improving future earnings from the asset side of the balance sheet. The sold portfolio’s 2.20% book yield was well below the roughly 4.5% average yield United expects on the cash and shorter-duration securities receiving much of the proceeds initially. The bank also said the repositioning leaves it asset-sensitive, meaning changes in market rates can still affect future spread income.

The investor presentation furnished to the Securities and Exchange Commission puts the initial allocation in broader terms. United says the Navitas sale and securities repositioning generated about $4.2 billion of proceeds in total. It plans to redeploy about $3.2 billion primarily into cash and short-duration securities and has used another $1.0 billion to pay down borrowings carrying a rate of about 3.80%.

United estimates that reinvestment tied to the portfolio restructuring will add about $0.24 to earnings per share in 2027. That is a management projection rather than a realized result, and the company cautioned that actual reinvestment yields, market rates and the mix of assets purchased or originated could differ from the assumptions used in its estimates. The earnings benefit also arrives after a large near-term accounting charge from selling securities whose market values were below their carrying values.

The reset follows a period in which margin expansion was already helping the bank’s core results. In the second quarter, United reported a fully taxable-equivalent net interest margin of 3.68%, up 18 basis points from a year earlier and the sixth consecutive quarterly increase. Average taxable securities in that quarter were about $5.98 billion and yielded 2.99%, while loans averaged about $19.72 billion and yielded 6.03%. Those figures help explain the economic logic behind shifting capital away from a lower-yielding securities pool and, over time, toward loans.

Navitas sale supplies liquidity and changes the risk mix

The balance-sheet reset comes immediately after United completed the sale of Navitas Credit Corp. and NLFC Reinsurance Corp. on September 1 for about $2.0 billion in cash. The bank said the price represented a 7% premium to the par value of the Navitas loan portfolio. United had already recorded a $38.5 million pretax release of the allowance for credit losses on Navitas loans in the second quarter after classifying those loans as held for sale.

Management has framed the divestiture as a way to concentrate resources on its Southeastern relationship-banking franchise. In the September 8 presentation, United said Navitas had reached an internal concentration limit equal to 10% of the loan portfolio. It also said the business accounted for roughly half of the bank’s net charge-offs from January 2025 through August 2026. Selling it therefore changed both liquidity and credit-risk exposure, rather than serving only as a source of cash for the securities reset.

United is pairing that shift with a larger push into organic lending. The company said it has added 42 net new revenue producers since the third quarter of 2025, an 18% increase excluding people added through the Peach State Bancshares acquisition. Management expects funded volume from recent hires to replace projected Navitas growth in 2027 and is targeting high-single-digit loan growth next year.

The strategy is consistent with recent operating trends. United reported 6.8% annualized loan growth in the second quarter, and 6.4% annualized growth excluding Navitas. At June 30, the company had $29.1 billion of assets and operated 200 offices across Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee. The bank is effectively using the Navitas exit and securities sale to simplify the balance sheet while preserving liquidity for that regional lending franchise.

Capital remains above 13% as United expands its buyback

The large securities loss will reduce reported third-quarter earnings and tangible book value, but United says its regulatory capital position remains strong enough to absorb the reset. After the Navitas sale, the company’s pro forma common equity tier 1 ratio was about 14.5%. Giving effect to the securities repositioning, the recently completed Peach State acquisition and the Navitas sale, United projects its third-quarter CET1 ratio will remain above 13%.

Capital deployment is also extending to share repurchases. On September 1, the executive committee of United’s board authorized a $100 million increase to the repurchase program through December 31, 2027. With $13 million remaining under the prior authorization, the increase brought available capacity to $113 million. United has repurchased $87 million of common shares in 2026, including $50 million in the third quarter to date.

The bank said the third-quarter repurchases offset the share-count dilution from its acquisition of Peach State Bancshares, which closed August 1. Its presentation estimates Peach State will add about $0.12 to 2027 EPS, while the company continues to describe small, in-market acquisitions as one of several uses for excess capital alongside organic growth and buybacks.

The September 8 filing makes the timing of the earnings impact clear. United expects the securities sale to push third-quarter 2026 results to a net loss, but it expects positive net income for the first nine months of the year. The quarter will therefore capture both sides of the reset: the immediate cost of recognizing losses on lower-yielding securities and the beginning of a new asset mix that management expects to produce higher income in 2027.