UCBI
#Sure.
So it is primarily construction, so construction and stabilization of new projects with very strong developers, very strong underwriting characteristics, typically 30% to 35% equity at a minimum, developers that have been in the business a long time ---+ developers, frankly, that our team have banked four years as well, all in the Southeast either in our markets or in contiguous states, for the most part.
There may be one or two from a customer perspective that we would consider going out of market, but right now that's what we are doing.
There are occasionally ---+ so we have approved some, if you look at the production you see not much production in the sense of advances.
And that's because they are construction loans and funding up, so our commitments are much larger.
We also have approved several existing refinances.
The typical project size is $5 million to $15 million.
So it's ---+ and we would expect easily to do ---+ once up and going we would expect $75 million to $100 million a year in production out of the group pretty easily.
Well, thank you for the question, <UNK>.
I guess it would be kind of steady as we go.
Obviously, we are in the middle of our budgeting process now for 2017.
Assuming we achieve the 110 Q4 of this year, which we are highly optimistic, that would put us at a 106 ROA for 2016.
Next year, of course, there will be some provisioning in our allowance.
But with our loan growth, our growth in the fee revenue ---+ because we have made significant investments in both of these categories ---+ coupled with very tight expense management, we would expect that we would continue in a similar range, maybe a little bit above.
But we are very optimistic as we continue to move forward, certainly, given over the past 2 to 3 years cost reductions reinvest in revenue generation, coupled with the infrastructure passing the $10 billion.
So we feel good about where we are.
So the $10 billion ---+ if we go back and visit that in and of itself, we have been making investments in people and processes and model validations and systems and so forth, really for two or three years.
So the compliance ---+ we've doubled the staff in the BSA and CRA and so forth.
And we feel good about where we are, relative to compliance.
So there's no big investments there to come.
And then, of course, the ERM area along with the DFAST ---+ same story there.
It could be a little more incremental cost but there's no large investment to be made in the ERM or the DFAST.
So, for the most part, we believe that that cost is already in our run rate.
When you look at that aspect of it along ---+ again, as a reminder, the investments that we've made in our lending teams and certainly in our fee revenue investments over the past few quarters.
So we feel like we've got the structure or the infrastructure in place.
Certainly, we believe in the revenue generation in place as well.
So now we're at $10 billion.
So what's next.
Well, the costs are pretty well baked into the run rate.
If we just look at organically, this time next year just on a pure organic basis, <UNK>, we should be, let's say, $11 billion.
That tracks our growth over the past couple of years.
So we will continue to see that organic engine kick in.
And then, of course, the last piece of that is the acquisition piece, where we, I think, have demonstrated over the last couple of years the three acquisitions that were very accretive, hit in the markets that we had designated.
So, we believe we will probably be in a position to continue that, assuming the right opportunity comes along.
And really, if you take that another step forward, so the infrastructure, and cost, run rates basically in place, we believe we've got the revenue engine fine-tuned.
So then, if you take ---+ in my simple math, if you take just $1 billion of acquisitions, whether that's one bank, two banks, three banks, and if you look at that again hitting all of our thresholds ---+ EPS accretion, tangible book, earn back, risk, all of those kind of things ---+ generally speaking, those banks have an efficiency ratio of 65% or greater.
As we have acquired banks, we basically take somewhere between 35% to 45% costs out.
So that bank then becomes ---+ has an efficiency maybe in the high 30s up to maybe 40%.
Therefore, that produces very nice positive operating leverage.
That's the way we look at that.
That's what we would expect would occur throughout 2017.
Well, <UNK>, I think certainly scale is important, because at the $10 billion level you have already built in a sizable cost and infrastructure from the enterprise risk management and compliance.
And my point in response to <UNK> was that if we look at it on just an organic basis, we would be adding $800 million-$1 billion a year in that fashion.
The second would be in the acquisition, assuming those opportunities do come along.
So yes, scale is important.
Honestly, I don't know that the magic number is $15 billion or $20 billion.
I do know that we continue to add incrementally as we execute our plan.
I would say that at least our view is that one large transaction is not necessarily the answer to crossing the $10 billion.
Early on it was viewed as that was the way to do that.
We take a little bit different view of that.
We think that the risk in doing the $500 million, the $2 billion deals are much lower and you can drive execution without disrupting the culture, which is really the bedrock of any company and particularly ours.
So that would be some of my thoughts.
Well, obviously Atlanta is a very big market.
And it really goes back to the basics about people.
Okay.
And you have to have the right bankers in those markets that will attract that customer base, that will draw that to ---+ to United.
So the answer is yes, we would like to continue to grow.
Matter of fact, 30% of the Company's footprint is in the Atlanta MSA today.
We have stated a number of times that, particularly on the north side, which so much of that growth is centered, we would like more density there.
And I think, too, Atlanta probably took a little longer in coming back from the recession than possibly was viewed earlier on.
Maybe that is what has opened up the interest in coming to Atlanta.
But our advantage that we believe is that we can continue to attract really good bankers, and we've done that for decades; opportunities to have other banks to join up with us; and our business model really bodes very well for the bankers and the customers.
Treating our customers the way we want to be treated with large bank resources ---+ that's a pretty strong competitive advantage.
<UNK>.
Yes.
Well, <UNK>, we do not have any plans to build de novo branches.
We are looking at branch rationalization as part of a normal process and we would likely do some of that.
But we are still ---+ we are like most people; we think there are too many branches in the world and the best way to do it is through acquisitions and bringing those into the fold.
We are in the process of rolling out ---+ we already had a great mobile and digital platform, but we are rolling out a new, improved one as we speak.
So the branches are a key part of who we are.
But we don't see, really, adding de novo builds at this point.
And <UNK>, maybe just a little add-on to what <UNK> said ---+ I think if you look at our acquisition in Tennessee a couple years ago, when he's talking about rationalization of branches, which was just spot-on, obviously there was duplication in those markets with United as well as the acquired bank.
And in essence, we took 10 and consolidated.
So that produced a very effective cost savings, but it also positioned us, we believe, in markets or certainly in traffic areas that were superior than where we were previously.
Thank you, operator.
And thank all of you for being on the call and your interest in United Community Banks.
Certainly, any additional questions, don't hesitate to reach out to any of us for those.
And also, too, I want to take just a moment to once again recognize our teammates throughout this Company and thanking them for their continued effort of taking our Company and maintaining the brand of customer service but also capturing the financial results our shareholders deserve.
Thank all of you and have a great day.
