How does United Community Banks' capital structure after redemption compare to its peers in the regional banking sector?

Capital‑structure impact

By redeeming the 6.875 % Series I perpetual preferred (≈ $88 m of liquidation preference) United Community Banks will strip out a hybrid Tier 1 instrument that is traditionally counted as “preferred equity” rather than pure common equity. The cash outlay is funded from its existing cash balances, so the transaction does not increase leverage; instead it converts a non‑cumulative, perpetual claim into pure common equity on the balance sheet. Consequently United’s Common Equity Tier 1 (CET1) ratio will rise by roughly 0.5‑0.7 percentage points (≈ $88 m ÷ $15 bn RWA) and its leverage ratio will improve by a similar magnitude. In the regional‑bank peer set (e.g., Truist, Regions, Fifth Third, KeyCorp), most still carry notable preferred‑stock layers—often 1–2 % of total capital—so United’s post‑redemption equity cushion will be modestly higher than the sector average and its hybrid‑capital reliance will be below the mean.

Trading implications

The upgrade in CET1 and leverage ratios strengthens United’s balance‑sheet resilience, a factor that analysts and credit‑rating agencies weigh heavily after the 2023‑24 banking‑stress cycle. Market participants tend to reward banks that can demonstrate a “cleaner” capital mix with tighter spreads and modest price appreciation. Technically, UCB has been trading in a tight 20‑day range around $30‑$32; a breakout above $33 would confirm that the capital‑structure improvement is being priced in, while a failure to hold $30 could signal lingering concerns about earnings visibility. Relative to peers, UCB now offers a slightly better risk‑adjusted profile, making it a candidate for a modest long position or for inclusion in a regional‑bank overweight if you are targeting higher‑quality balance sheets in the sector. Keep an eye on the upcoming Q3 earnings release for confirmation that the redemption has not eroded earnings per share and that the bank is reinvesting the freed‑up capital into fee‑income or loan growth.