How might the redemption influence analyst coverage and earnings forecasts for United Community Banks?

The redemption wipes out the 6.875 % annual dividend on the Series I perpetual preferred shares, so United will no longer have to record that interest‑expense line in its income statement. For a bank that reported roughly $1.1 billion in pre‑tax earnings in 2024, the $88 million cash outlay represents a modest, one‑time hit (≈0.8 % of 2024 earnings) but it eliminates a recurring cost of about $6 million a year going forward. As a result, most sell‑side analysts will likely trim their 2025‑2026 earnings forecasts for the “cash‑impact” of the redemption and then raise the 2026‑2028 earnings per share (EPS) outlook to reflect the higher net‑interest margin and a cleaner capital structure. The net effect is usually a modest upward revision to the “adjusted EPS” and a modest boost to the return‑on‑equity (ROE) targets.

Because the preferred‑stock liquidation preference is removed, United’s Tier 1 capital ratio and leverage ratio improve immediately, giving the bank more headroom for future loan‑growth or dividend‑paying common‑stock repurchases. Analysts tend to increase coverage intensity on banks that demonstrate proactive capital‑management, so we can expect a modest bump in analyst coverage—both in the number of analysts issuing reports and in the depth of their “capital‑allocation” commentary. In practice, this often translates into a “buy” or “hold‑and‑upgrade” rating, a slight price‑target uplift (typically 3‑5 %), and a tighter earnings‑forecast range as the firm’s cost‑of‑capital profile becomes more predictable.

Trading implication: The redemption should be priced in over the next few weeks. If the market still values United at a discount to its peers despite the improved capital ratios, a short‑term “buy” on any pull‑back (e.g., a 2–3 % dip after the cash‑outflow) is justified, with the upside coming from analyst upgrades and the higher forward‑looking EPS forecasts. Conversely, if the stock already reflects the capital‑structure benefit, the move will be neutral and the price may simply trade around the $25‑$27 range on a volume‑light basis. Keep an eye on any post‑redemption earnings releases for the revised dividend‑expense line and for any analyst commentary that explicitly upgrades coverage or earnings estimates.