A Bank Sells Part of Itself for a Big Payday

United Community Banks just agreed to sell its equipment finance division for $1. 9 billion in cash. The two subsidiaries being sold—Navitas Credit Corp. and NLFC Reinsurance Corp. —have been a headache for the bank lately. They make up only 10% of the loans but have caused half of the bank’s losses over the past year. By letting them go, the bank clears a big risk from its books.The deal brings in cash that will help United strengthen its core business in the Southeast. It also boosts the bank’s cash reserves and capital levels, making it safer in the long run. After the sale, United plans to park some of that cash in short-term, low-risk investments that pay around 4% to 4. 5%. The rest could be used for growing the business, buying back shares, or making smart purchases in its local markets. Analysts are cheering the move. They expect United’s earnings per share to jump from 66 cents to 73 cents by next year. The stock is trading at a price-to-earnings ratio of 12. 6, which suggests it might be undervalued compared to similar banks. Most analysts still rate the stock a "Buy, " with some even raising their price targets above $38.