Will the redemption of the Series I preferred shares lead to a change in the company's dividend policy for common shareholders?

Answer

The redemption of United Community Banks’ 6.875 % Series I non‑cumulative perpetual preferred shares simply eliminates the $88 million liquidation preference and the associated preferred‑dividend obligation. Because the preferred stock is non‑cumulative, no missed dividend accrues, and once the shares are cancelled United will no longer have to pay the 6.875 % cash dividend on that capital. In practice, this frees up cash flow that the board can redeploy, but the announcement does not contain any explicit guidance that the freed‑up funds will be redirected to the common‑share dividend. Historically, UCB has used preferred‑stock redemptions to improve capital ratios rather than to raise the common dividend, so a near‑term change to the common dividend policy is not implied.

From a trading perspective the market will likely price the news as a modestly positive signal—capital structure is being optimized and leverage is reduced—so we may see a short‑run uptick in UCB’s equity price (the stock is currently trading near its 50‑day moving average with modest upside momentum). However, unless the company issues a dividend‑increase announcement or signals a new share‑repurchase plan, the dividend yield for common shareholders should remain unchanged. Traders should monitor the next earnings release or a formal capital‑allocation update; if management signals a higher payout ratio, a long position could be justified, but otherwise a neutral‑to‑slightly‑bullish stance (e.g., buying on dips with a stop near recent support) is the prudent approach.