Summary
- United Community Banks' new preferred stock, UCBIO, is trading 2.6% below its par value.
- United Community Banks is very low leveraged.
- UCBIO has the highest current yield in the sector.
- I compare the new IPO with all the other fixed-rate preferred stocks, issued by a bank.
- I do much more than just articles at Trade With Beta: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »
Introduction
It must have become perhaps banal, a preferred stock issued by a bank. Since the beginning of May, when the fixed-income initial offerings resumed after a two-month pause, a total of 11 preferred stocks are issued, 8 of which by a bank. The three exceptions are made by a life insurer (Brighthouse Financial (NASDAQ:BHF)), a credit services company (Farmer Mar), and an investment brokerage (Stifel Financial). Still, we have nothing left but to present the newest Preferred Stock IPO issued by United Community Banks, Inc. (UCBI).
The New Issue
Before we submerge into our brief analysis, here is a link to the 424B5 Filing by United Community Banks, Inc. - the prospectus.
Source: SEC.gov
For a total of 4M shares issued, the total gross proceeds to the company are $100M. You can find some relevant information about the new preferred stock in the table below:
Source: Author's spreadsheet
United Community Banks, Inc. 6.875% Non-Cumulative Preferred Stock, Series I (UCBIO) pays a qualified fixed dividend at a rate of 6.875%. The new preferred stock has no Standard & Poor's rating and is callable as of 09/15/2025. UCBIO is currently trading below its par value at a price of $24.33. This translates into a 7.60% Current Yield and a YTC of 7.50%.
Here's how the stock's YTC curve looks right now:
Source: Author's spreadsheet
The Company
United Community Banks, Inc, a $13.1 billion asset bank holding company, operates 149 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina, east Tennessee and South Carolina, all branded as United Community Bank.
Formed in 1950 as Union County Bank, we have operated on the philosophy of providing exceptional banking service while caring deeply for the communities we serve. This philosophy has fueled our growth from a $40 million bank a little more than three decades ago.
Our success comes from our strong, talented and experienced management team, as well as the dynamic growth markets we serve. Our local bank presidents have an average of 20 years in community banking experience, 90% of which has been in their local markets. The markets we serve represent some of the top growth areas in the U.S. in terms of population and income.
We are proud of this success, but even more proud of the tradition upon which our company was built - treating customers the way we want to be treated. We are committed to helping individuals, families, schools, businesses and communities grow strong and prosperous.
Source: Company's website | Investor Relations
