EX-99.1 2 tv477594_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 



For Immediate Release

 

For more information:

Jefferson Harralson

Chief Financial Officer

(706) 781-2265

Jefferson_Harralson@ucbi.com

 

UNITED COMMUNITY BANKS, INC.

ANNOUNCES THIRD QUARTER EARNINGS

Diluted earnings per share up six percent, to 38 cents, from third quarter 2016

Excluding merger-related and other non-operating charges,

diluted operating EPS up five percent, to 41 cents

 

Net interest revenue of $89.8 million, up $10.8 million or 14 percent from year ago
Net interest margin of 3.54 percent, up seven basis points from second quarter and up 20 basis points from year ago
Return on assets of 1.01 percent, or 1.09 percent excluding merger-related and other charges
Efficiency ratio of 59.3 percent, or 56.2 percent excluding merger-related and other charges
Completed the acquisition of Horry County State Bank during the quarter

 

BLAIRSVILLE, GA – October 25, 2017 – United Community Banks, Inc. (NASDAQ: UCBI) (“United”) today announced strong third quarter results with meaningful margin expansion, disciplined expense management and sound credit quality. Net income was $27.9 million, or 38 cents per diluted share, compared with $25.9 million, or 36 cents per diluted share, for the third quarter of 2016.

 

On an operating basis, net income rose to $30.2 million for the third quarter of 2017 compared with $27.8 million for the third quarter of 2016. Third quarter 2017 operating net income excludes merger-related and other non-operating charges totaling $2.27 million, net of the associated income tax benefit. Third quarter 2016 operating net income excludes $1.96 million in merger-related charges, net of the associated income tax benefit. On a per diluted share basis, operating net income was 41 cents for the third quarter of 2017 compared with 39 cents for the third quarter of 2016.

 

At September 30, 2017, preliminary regulatory capital ratios were as follows. Tier 1 Risk-Based of 12.3 percent; Total Risk-Based of 13.0 percent; Common Equity Tier 1 Risk-Based of 12.2 percent, and Tier 1 Leverage of 9.3 percent.

 

 

 

 

“Our third quarter results demonstrate United bankers’ ability to overcome challenges and produce solid financial results,” said Jimmy Tallent, chairman and chief executive officer. “In the third quarter, we became subject to the Durbin amendment of the Dodd Frank Wall Street Reform and Consumer Protection Act which places a cap on the amount banks can charge merchants for debit card interchange fees. We also became subject to the large bank deposit insurance assessment model. The combined effect of these two items reduced our pre-tax earnings by approximately $3.4 million, or three cents per share, in the third quarter. We had been actively preparing for this for two years and our bankers were able to completely offset the impact through a higher net interest margin and disciplined expense controls.

 

“Despite these challenges and excluding merger-related and other non-operating charges, our third quarter operating efficiency ratio held steady at 56.2 percent, our best in more than a decade,” Tallent stated. “Including merger and other non-operating charges, the efficiency ratio was 59.3 percent. Clearly our bankers delivered solid financial performance by every measure.”

 

Tallent continued, “We also completed the acquisition of Horry County State Bank on July 31st, significantly enhancing our presence in the Myrtle Beach area along the South Carolina coast. The acquisition of Horry County State Bank, which is part of our larger, ongoing expansion strategy in the high-growth South Carolina coast will accelerate our growth in this attractive market. We are all set for systems conversions in mid-November at which time we expect to achieve all of our cost savings.

 

“We are scheduled to complete our acquisition of Four Oaks Bank & Trust Company on November 1st which will extend our footprint farther east in North Carolina to the fast-growing Raleigh MSA. All regulatory and shareholder approvals for the transaction have been received. We have long sought to enter this market and are delighted to find an exceptional partner in Four Oaks. I could not be more pleased with these two partnerships and look forward to them becoming part of United.

 

 

 

 

“Third quarter loan production was $617 million with $434 million originating from our community banks and $183 million from our Commercial Banking Solutions group,” Tallent added. “Linked-quarter loans were up $162 million, mostly reflecting the $216 million in net loans received through our acquisition of Horry County State Bank. Our indirect auto loan portfolio was down $48.7 million from second quarter reflecting our decision to suspend indirect auto loan purchases. Excluding the reduction in indirect auto loans and the loans acquired through the Horry acquisition, loan growth was essentially flat from second quarter.”

 

Third quarter net interest revenue totaled $89.8 million, up $10.8 million from the third quarter of 2016 and up $4.6 million from the second quarter. The increases from both periods reflect business growth and net interest margin expansions of 20 basis points from a year ago and seven basis points from the second quarter, mostly driven by rising short-term interest rates as well as the acquisition of Horry County State Bank which was completed on July 31, 2017. Horry County State Bank results are included in United’s financial results from the acquisition date.

 

The third quarter provision for credit losses was $1 million, up from $800,000 for the second quarter. This compares with a provision recovery of $300,000 in the third quarter of 2016. Third quarter net charge-offs totaled $1.6 million, equal to the second quarter of 2017 but up slightly from $1.4 million in the third quarter of 2016. Contributing to the low level of net charge-offs were continued strong recoveries of previously charged-off loans. Nonperforming assets were .23 percent of total assets at September 30, 2017, compared with .30 percent at September 30, 2016 and .24 percent at June 30, 2017.

 

“We continue to experience strong, steady credit quality and a low level of net charge-offs which is reflected in our low provision for loan losses,” Tallent commented. “Our credit quality indicators show no indication of credit deterioration and our outlook is for that to continue. We also expect our provision levels to gradually increase during the year due to loan growth, while our allowance and the related ratio to total loans will decline slightly.”

 

 

 

 

Third quarter fee revenue totaled $20.6 million, down $5.79 million from a year ago and down $3.11 million from the second quarter. The decrease from both prior periods was mostly due to lower debit card interchange fees as a result of the Durbin amendment becoming effective for United on July 1st. The Durbin amendment, which places a cap on the amount of interchange banks can charge merchants for use of their debit cards, reduced United’s debit card interchange fees by approximately $2.7 million in the third quarter. Also contributing to the decrease from both prior periods were lower mortgage fees and lower customer derivative fees reflecting a less favorable interest rate environment.

 

Operating expenses were $65.7 million for the third quarter, compared with $64.0 million for the third quarter of 2016 and $63.2 million for the second quarter. Included in the third quarter’s operating expenses are $2.3 million in merger-related expenses and $1.1 million in surplus property impairment charges, totaling $3.4 million. We also had merger-related charges of $3.15 million in the third quarter of 2016, and merger-related and executive retirement charges totaling $1.83 million in the second quarter of 2017. Excluding these charges, third quarter operating expenses were $62.3 million compared with $61.4 million for the second quarter and $60.9 million a year ago. The $855,000 increase from the second quarter was mostly due to higher deposit insurance costs as a result of being assessed under the large bank deposit insurance assessment model effective July 1, and the operating expenses of Horry County State Bank acquired on July 31. These increases were partially offset by lower communications and equipment and advertising and public relations expense.

 

Tallent concluded, “Our bankers always meet every challenge with diligence and perseverance. That was certainly demonstrated with our third quarter financial results. Their passion and commitment drive our performance and ensure our success. Every day I become more encouraged about the opportunities that lie ahead knowing that our exceptional team of bankers will find success in everything they do. With Horry County State Bank and Four Oaks Bank & Trust Company, we have found two outstanding strategic partners in key growth markets that share our passion for banking and our commitment to customer service. I am excited about the opportunities that these acquisitions create to recruit other talented bankers from within these markets into the United family.”

 

 

 

 

Conference Call

United will hold a conference call today, Wednesday, October 25, 2017, at 11 a.m. ET to discuss the contents of this earnings release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 90798221. The conference call also will be webcast and available for replay for 30 days by selecting “Events & Presentations” within the Investor Relations section of United’s website at www.ucbi.com.

 

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQ: UCBI) is a bank holding company based in Blairsville, Georgia with $11.1 billion in assets. The company’s banking subsidiary, United Community Bank, is one of the southeast region’s largest full-service banks, operating 142 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in personalized community banking services for individuals, small businesses and corporations. Services include a full range of consumer and commercial banking products including mortgage, advisory, and treasury management. Respected national research firms consistently recognize United Community Bank for outstanding customer service. For the last four years, J.D. Power has ranked United Community Bank first in customer satisfaction in the Southeast. In 2017, for the fourth consecutive year, Forbes magazine included United on its list of the 100 Best Banks in America. Additional information about the company and the bank’s full range of products and services can be found at www.ucbi.com.

 

Non-GAAP Financial Measures

This News Release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “operating net income per diluted share,” “operating net income available to common shareholders,” “operating diluted income per common share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “operating dividend payout ratio,” “operating efficiency ratio,” “average tangible equity to average assets,” “average tangible common equity to average assets” and “tangible common equity to risk-weighted assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.

 

 

 

 

Safe Harbor

This News Release contains forward-looking statements, as defined by federal securities laws, including statements about United’s financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United’s filings with the Securities and Exchange Commission, including our 2016 Annual Report on Form 10-K under the sections entitled “Forward-Looking Statements” and “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

 

# # #

 

 

 

 

 

UNITED COMMUNITY BANKS, INC.                                      
Financial Highlights                                      
Selected Financial Information                                      
                                       

 

                       Third   For the Nine     
   2017   2016   Quarter   Months Ended   YTD 
   Third   Second   First   Fourth   Third   2017-2016   September 30,   2017-2016 
(in thousands, except per share data)  Quarter   Quarter   Quarter   Quarter   Quarter   Change   2017   2016   Change 
INCOME SUMMARY                                             
Interest revenue  $98,839   $93,166   $90,958   $87,778   $85,439        $282,963   $247,242      
Interest expense   9,064    8,018    7,404    6,853    6,450         24,486    18,383      
    Net interest revenue   89,775    85,148    83,554    80,925    78,989    14%   258,477    228,859    13%
Provision for credit losses   1,000    800    800    -    (300)        2,600    (800)     
Fee revenue   20,573    23,685    22,074    25,233    26,361    (22)   66,332    68,464    (3)
   Total revenue   109,348    108,033    104,828    106,158    105,650    4    322,209    298,123    8 
Expenses   65,674    63,229    62,826    61,321    64,023    3    191,729    179,968    7 
Income before income tax expense   43,674    44,804    42,002    44,837    41,627    5    130,480    118,155    10 
Income tax expense   15,728    16,537    18,478    17,616    15,753    -    50,743    44,720    13 
Net income   27,946    28,267    23,524    27,221    25,874    8    79,737    73,435    9 
Merger-related and other charges   3,420    1,830    2,054    1,141    3,152         7,304    6,981      
Income tax benefit of merger-related and other charges   (1,147)   (675)   (758)   (432)   (1,193)        (2,580)   (2,642)     
Impairment of deferred tax asset on canceled
     non-qualified stock options
   -    -    -    976    -         -    -      
Release of disproportionate tax effects lodged in OCI   -    -    3,400    -    -         3,400    -      
     Net income - operating (1)  $30,219   $29,422   $28,220   $28,906   $27,833    9   $87,861   $77,774    13 
                                              
PERFORMANCE MEASURES                                             
  Per common share:                                             
    Diluted net income - GAAP  $.38   $.39   $.33   $.38   $.36    6   $1.10   $1.02    8 
    Diluted net income - operating  (1)   .41    .41    .39    .40    .39    5    1.21    1.08    12 
    Cash dividends declared   .10    .09    .09    .08    .08         .28    .22      
    Book value   16.50    15.83    15.40    15.06    15.12    9    16.50    15.12    9 
    Tangible book value (3)   14.11    13.74    13.30    12.95    13.00    9    14.11    13.00    9 
                                              
  Key performance ratios:                                             
    Return on common equity - GAAP (2)(4)   9.22%   9.98%   8.54%   9.89%   9.61%        9.26%   9.25%     
    Return on common equity - operating (1)(2)(4)   9.97    10.39    10.25    10.51    10.34         10.20    9.79      
    Return on tangible common equity - operating (1)(2)(3)(4)   11.93    12.19    12.10    12.47    12.45         12.07    11.64      
    Return on assets - GAAP (4)   1.01    1.06    .89    1.03    1.00         .99    .99      
    Return on assets - operating (1)(4)   1.09    1.10    1.07    1.10    1.08         1.09    1.05      
    Dividend payout ratio - GAAP   26.32    23.08    27.27    21.05    22.22         25.45    21.57      
    Dividend payout ratio - operating (1)   24.39    21.95    23.08    20.00    20.51         23.14    20.37      
    Net interest margin (fully taxable equivalent) (4)   3.54    3.47    3.45    3.34    3.34         3.49    3.36      
    Efficiency ratio - GAAP   59.27    57.89    59.29    57.65    60.78         58.81    60.56      
    Efficiency ratio - operating  (1)   56.18    56.21    57.35    56.58    57.79         56.57    58.21      
    Average equity to average assets   10.86    10.49    10.24    10.35    10.38         10.54    10.60      
    Average tangible equity to average assets (3)   9.45    9.23    8.96    9.04    8.98         9.21    9.27      
    Average tangible common equity to average assets (3)   9.45    9.23    8.96    9.04    8.98         9.21    9.24      
    Tangible common equity to risk-weighted assets (3)(5)   12.81    12.44    12.07    11.84    12.22         12.81    12.22      
                                              
ASSET QUALITY                                             
  Nonperforming loans  $22,921   $23,095   $19,812   $21,539   $21,572    6   $22,921   $21,572    6 
  Foreclosed properties   2,736    2,739    5,060    7,949    9,187    (70)   2,736    9,187    (70)
    Total nonperforming assets (NPAs)   25,657    25,834    24,872    29,488    30,759    (17)   25,657    30,759    (17)
  Allowance for loan losses   58,605    59,500    60,543    61,422    62,961    (7)   58,605    62,961    (7)
  Net charge-offs   1,635    1,623    1,679    1,539    1,359    20    4,937    5,227    (6)
  Allowance for loan losses to loans   .81%   .85%   .87%   .89%   .94%        .81%   .94%     
  Net charge-offs to average loans (4)   .09    .09    .10    .09    .08         .09    .11      
  NPAs to loans and foreclosed properties   .36    .37    .36    .43    .46         .36    .46      
  NPAs to total assets   .23    .24    .23    .28    .30         .23    .30      
                                              
AVERAGE BALANCES ($ in millions)                                             
  Loans  $7,149   $6,980   $6,904   $6,814   $6,675    7   $7,012   $6,278    12 
  Investment securities   2,800    2,775    2,822    2,690    2,610    7    2,799    2,692    4 
  Earning assets   10,133    9,899    9,872    9,665    9,443    7    9,969    9,120    9 
  Total assets   10,980    10,704    10,677    10,484    10,281    7    10,788    9,909    9 
  Deposits   8,913    8,659    8,592    8,552    8,307    7    8,723    8,051    8 
  Shareholders’ equity   1,193    1,123    1,093    1,085    1,067    12    1,137    1,051    8 
  Common shares - basic (thousands)   73,151    71,810    71,700    71,641    71,556    2    72,060    71,992    - 
  Common shares - diluted (thousands)   73,162    71,820    71,708    71,648    71,561    2    72,071    71,996    - 
                                              
AT PERIOD END ($ in millions)                                             
  Loans  $7,203   $7,041   $6,965   $6,921   $6,725    7   $7,203   $6,725    7 
  Investment securities   2,847    2,787    2,767    2,762    2,560    11    2,847    2,560    11 
  Total assets   11,129    10,837    10,732    10,709    10,298    8    11,129    10,298    8 
  Deposits   9,127    8,736    8,752    8,638    8,442    8    9,127    8,442    8 
  Shareholders’ equity   1,221    1,133    1,102    1,076    1,079    13    1,221    1,079    13 
  Common shares outstanding (thousands)   73,403    70,981    70,973    70,899    70,861    4    73,403    70,861    4 

 

(1)Excludes merger-related and other charges which includes amortization of certain executive change of control benefits, a first quarter 2017 release of disproportionate tax effects lodged in OCI and a fourth quarter 2016 deferred tax asset impairment charge related to cancelled non-qualified stock options.
(2)Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss).
(3)Excludes effect of acquisition related intangibles and associated amortization.
(4)Annualized.
(5)Third quarter 2017 ratio is preliminary.

 

 

 

 

UNITED COMMUNITY BANKS, INC.                            
Non-GAAP Performance Measures Reconciliation                            
Selected Financial Information                            
                             

 

   2017   2016   For the Nine
Months Ended
 
   Third   Second   First   Fourth   Third   June 30, 
(in thousands, except per share data)  Quarter   Quarter   Quarter   Quarter   Quarter   2017   2016 
                             
Expense reconciliation                                   
Expenses (GAAP)  $65,674   $63,229   $62,826   $61,321   $64,023   $191,729   $179,968 
Merger-related and other charges   (3,420)   (1,830)   (2,054)   (1,141)   (3,152)   (7,304)   (6,981)
    Expenses - operating  $62,254   $61,399   $60,772   $60,180   $60,871   $184,425   $172,987 
                                    
Net income reconciliation                                   
Net income (GAAP)  $27,946   $28,267   $23,524   $27,221   $25,874   $79,737   $73,435 
Merger-related and other charges   3,420    1,830    2,054    1,141    3,152    7,304    6,981 
Income tax benefit of merger-related and other charges   (1,147)   (675)   (758)   (432)   (1,193)   (2,580)   (2,642)
Impairment of deferred tax asset on canceled non-qualified stock options   -    -    -    976    -    -    - 
Release of disproportionate tax effects lodged in OCI   -    -    3,400    -    -    3,400    - 
    Net income - operating  $30,219   $29,422   $28,220   $28,906   $27,833   $87,861   $77,774 
Diluted income per common share reconciliation                                   
Diluted income per common share (GAAP)  $.38   $.39   $.33   $.38   $.36   $1.10   $1.02 
Merger-related and other charges   .03    .02    .01    .01    .03    .06    - 
Impairment of deferred tax asset on canceled non-qualified stock options   -    -    -    .01    -    -    - 
Release of disproportionate tax effects lodged in OCI   -    -    .05    -    -    .05    - 
    Diluted income per common share - operating  $.41   $.41   $.39   $.40   $.39   $1.21   $1.02 
                                    
Book value per common share reconciliation                                   
Book value per common share (GAAP)  $16.50   $15.83   $15.40   $15.06   $15.12   $16.50   $15.12 
Effect of goodwill and other intangibles   (2.39)   (2.09)   (2.10)   (2.11)   (2.12)   (2.39)   (2.12)
   Tangible book value per common share  $14.11   $13.74   $13.30   $12.95   $13.00   $14.11   $13.00 
                                    
Return on tangible common equity reconciliation                                   
Return on common equity (GAAP)   9.22%   9.98%   8.54%   9.89%   9.61%   9.26%   9.25%
Merger-related and other charges   .75    .41    .47    .26    .73    .55    .54 
Impairment of deferred tax asset on canceled non-qualified stock options   -    -    -    .36    -    -    - 
Release of disproportionate tax effects lodged in OCI   -    -    1.24    -    -    .39    - 
Return on common equity - operating   9.97    10.39    10.25    10.51    10.34    10.20    9.79 
Effect of goodwill and other intangibles   1.96    1.80    1.85    1.96    2.11    1.87    1.85 
    Return on tangible common equity - operating   11.93%   12.19%   12.10%   12.47%   12.45%   12.07%   11.64%
                                    
Return on assets reconciliation                                   
Return on assets (GAAP)   1.01%   1.06%   .89%   1.03%   1.00%   .99%   .99%
Merger-related and other charges   .08    .04    .05    .03    .08    .06    .06 
Impairment of deferred tax asset on canceled non-qualified stock options   -    -    -    .04    -    -    - 
Release of disproportionate tax effects lodged in OCI   -    -    .13    -    -    .04    - 
    Return on assets - operating   1.09%   1.10%   1.07%   1.10%   1.08%   1.09%   1.05%
                                    
Dividend payout ratio reconciliation                                   
Dividend payout ratio (GAAP)   26.32%   23.08%   27.27%   21.05%   22.22%   25.45%   21.57%
Merger-related and other charges   (1.93)   (1.13)   (.98)   (.54)   (1.71)   (1.31)   (1.20)
Impairment of deferred tax asset on canceled non-qualified stock options   -    -    -    (.51)   -    -    - 
Release of disproportionate tax effects lodged in OCI   -    -    (3.21)   -    -    (1.00)   - 
    Dividend payout ratio - operating   24.39%   21.95%   23.08%   20.00%   20.51%   23.14%   20.37%
                                    
Efficiency ratio reconciliation                                   
Efficiency ratio (GAAP)   59.27%   57.89%   59.29%   57.65%   60.78%   58.81%   60.56%
Merger-related and other charges   (3.09)   (1.68)   (1.94)   (1.07)   (2.99)   (2.24)   (2.35)
    Efficiency ratio - operating   56.18%   56.21%   57.35%   56.58%   57.79%   56.57%   58.21%
                                    
Average equity to assets reconciliation                                   
Equity to assets (GAAP)   10.86%   10.49%   10.24%   10.35%   10.38%   10.54%   10.60%
Effect of goodwill and other intangibles   (1.41)   (1.26)   (1.28)   (1.31)   (1.40)   (1.33)   (1.33)
    Tangible equity to assets   9.45    9.23    8.96    9.04    8.98    9.21    9.27 
Effect of preferred equity   -    -    -    -    -    -    (.03)
    Tangible common equity to assets   9.45%   9.23%   8.96%   9.04%   8.98%   9.21%   9.24%
                                    
Tangible common equity to risk-weighted assets reconciliation (1)                                   
Tier 1 capital ratio (Regulatory)   12.27%   11.91%   11.46%   11.23%   11.04%   12.27%   11.04%
Effect of other comprehensive income   (.13)   (.15)   (.24)   (.34)   -    (.13)   - 
Effect of deferred tax limitation   .94    .95    1.13    1.26    1.50    .94    1.50 
Effect of trust preferred   (.24)   (.25)   (.25)   (.25)   (.26)   (.24)   (.26)
Basel III intangibles transition adjustment   (.03)   (.02)   (.03)   (.06)   (.06)   (.03)   (.06)
    Tangible common equity to risk-weighted assets   12.81%   12.44%   12.07%   11.84%   12.22%   12.81%   12.22%

 

(1)Third quarter 2017 ratios are preliminary.

 

 

 

 

UNITED COMMUNITY BANKS, INC.                    
Financial Highlights                            
Loan Portfolio Composition at Period-End                    
                             

 

   2017   2016   Linked   Year over 
   Third   Second   First   Fourth   Third   Quarter   Year 
(in millions)  Quarter   Quarter   Quarter   Quarter   Quarter   Change   Change 
LOANS BY CATEGORY                                   
Owner occupied commercial RE  $1,792   $1,723   $1,633   $1,650   $1,587   $69   $205 
Income producing commercial RE   1,413    1,342    1,297    1,282    1,277    71    136 
Commercial & industrial   1,084    1,088    1,080    1,070    994    (4)   90 
Commercial construction   583    587    667    634    567    (4)   16 
     Total commercial   4,872    4,740    4,677    4,636    4,425    132    447 
Residential mortgage   933    881    860    857    814    52    119 
Home equity lines of credit   689    665    659    655    693    24    (4)
Residential construction   190    193    197    190    200    (3)   (10)
Consumer installment   519    562    572    583    593    (43)   (74)
     Total loans  $7,203   $7,041   $6,965   $6,921   $6,725    162    478 
                                    
LOANS BY MARKET                                   
North Georgia  $1,047   $1,065   $1,076   $1,097   $1,110    (18)   (63)
Atlanta MSA   1,477    1,445    1,408    1,399    1,332    32    145 
North Carolina   542    541    541    545    548    1    (6)
Coastal Georgia   634    623    591    581    565    11    69 
Gainesville MSA   242    246    252    248    236    (4)   6 
East Tennessee   471    486    483    504    506    (15)   (35)
South Carolina   1,470    1,260    1,243    1,233    1,199    210    271 
Commercial Banking Solutions   920    926    911    855    763    (6)   157 
Indirect auto   400    449    460    459    466    (49)   (66)
     Total loans  $7,203   $7,041   $6,965   $6,921   $6,725    162    478 

 

 

 

 

UNITED COMMUNITY BANKS, INC.                                                  
Financial Highlights                                                      
Credit Quality                                                      
                                                       

 

   Third Quarter 2017   Second Quarter 2017   First Quarter 2017 
   Nonperforming   Foreclosed   Total   Nonperforming   Foreclosed   Total   Nonperforming   Foreclosed   Total 
(in thousands)  Loans   Properties   NPAs   Loans   Properties   NPAs   Loans   Properties   NPAs 
NONPERFORMING ASSETS BY CATEGORY                                             
Owner occupied CRE  $5,027   $764   $5,791   $5,248   $580   $5,828   $6,135   $1,238   $7,373 
Income producing CRE   2,042    121    2,163    2,587    -    2,587    1,540    21    1,561 
Commercial & industrial   2,378    -    2,378    1,010    -    1,010    929    -    929 
Commercial construction   1,376    923    2,299    2,530    611    3,141    1,069    2,825    3,894 
     Total commercial   10,823    1,808    12,631    11,375    1,191    12,566    9,673    4,084    13,757 
Residential mortgage   8,559    392    8,951    7,886    457    8,343    6,455    660    7,115 
Home equity lines of credit   1,898    195    2,093    2,152    201    2,353    1,848    261    2,109 
Residential construction   178    341    519    287    890    1,177    417    55    472 
Consumer installment   1,463    -    1,463    1,395    -    1,395    1,419    -    1,419 
     Total NPAs  $22,921   $2,736   $25,657   $23,095   $2,739   $25,834   $19,812   $5,060   $24,872 
                                              
NONPERFORMING ASSETS BY MARKET                                             
North Georgia  $6,707   $404   $7,111   $5,449   $225   $5,674   $5,344   $570   $5,914 
Atlanta MSA   1,098    338    1,436    906    423    1,329    715    645    1,360 
North Carolina   4,376    318    4,694    4,700    472    5,172    4,897    355    5,252 
Coastal Georgia   2,532    -    2,532    2,542    -    2,542    942    -    942 
Gainesville MSA   763    -    763    622    -    622    728    -    728 
East Tennessee   1,734    67    1,801    2,216    103    2,319    2,112    633    2,745 
South Carolina   1,903    1,609    3,512    3,472    1,516    4,988    1,725    2,857    4,582 
Commercial Banking Solutions   2,429    -    2,429    1,914    -    1,914    2,032    -    2,032 
Indirect auto   1,379    -    1,379    1,274    -    1,274    1,317    -    1,317 
     Total NPAs  $22,921   $2,736   $25,657   $23,095   $2,739   $25,834   $19,812   $5,060   $24,872 
                                              
NONPERFORMING ASSETS ACTIVITY                                             
Beginning Balance  $23,095   $2,739   $25,834   $19,812   $5,060   $24,872   $21,539   $7,949   $29,488 
Acquisitions   20    805    825    -    -    -    -    -    - 
Loans placed on non-accrual   7,964    -    7,964    8,110    -    8,110    3,172    -    3,172 
Payments received   (5,192)   -    (5,192)   (2,955)   -    (2,955)   (3,046)   -    (3,046)
Loan charge-offs   (2,159)   -    (2,159)   (1,564)   -    (1,564)   (1,292)   -    (1,292)
Foreclosures   (807)   683    (124)   (308)   481    173    (561)   561    - 
Property sales   -    (1,295)   (1,295)   -    (2,704)   (2,704)   -    (3,077)   (3,077)
Write downs   -    (236)   (236)   -    (294)   (294)   -    (480)   (480)
Net gains (losses) on sales   -    40    40    -    196    196    -    107    107 
     Ending Balance  $22,921   $2,736   $25,657   $23,095   $2,739   $25,834   $19,812   $5,060   $24,872 

 

   Third Quarter 2017   Second Quarter 2017   First Quarter 2017 
       Net Charge-       Net Charge-       Net Charge- 
       Offs to       Offs to       Offs to 
   Net   Average   Net   Average   Net   Average 
(in thousands)  Charge-Offs   Loans (1)   Charge-Offs   Loans (1)   Charge-Offs   Loans (1) 
NET CHARGE-OFFS BY CATEGORY                              
Owner occupied CRE  $(44)   (.01)%  $37    .01%  $(212)   (.05)%
Income producing CRE   1,159    .33    184    .06    870    .28 
Commercial & industrial   (200)   (.08)   354    .13    (152)   (.06)
Commercial construction   (114)   (.07)   341    .22    (370)   (.23)
     Total commercial   801    .07    916    .08    136    .01 
Residential mortgage   313    .14    26    .01    530    .25 
Home equity lines of credit   56    .03    253    .15    422    .26 
Residential construction   36    .07    (53)   (.11)   (9)   (.02)
Consumer installment   429    .31    481    .34    600    .42 
     Total  $1,635    .09   $1,623    .09   $1,679    .10 
                               
NET CHARGE-OFFS BY MARKET                              
North Georgia  $516    .19%  $681    .26%  $15    .01%
Atlanta MSA   150    .04    (10)   -    (46)   (.01)
North Carolina   221    .16    131    .10    601    .45 
Coastal Georgia   (39)   (.02)   120    .08    (223)   (.15)
Gainesville MSA   (50)   (.08)   (54)   (.09)   358    .58 
East Tennessee   55    .05    27    .02    55    .05 
South Carolina   528    .15    526    .17    425    .14 
Commercial Banking Solutions   (7)   -    (17)   (.01)   195    .09 
Indirect auto   261    .24    219    .19    299    .27 
     Total  $1,635    .09   $1,623    .09   $1,679    .10 

 

(1)Annualized.

 

 

 

 

UNITED COMMUNITY BANKS, INC.                
Consolidated Statement of Income (Unaudited)                
                 

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
(in thousands, except per share data)  2017   2016   2017   2016 
                 
Interest revenue:                    
Loans, including fees  $80,264   $69,440   $227,816   $196,888 
Investment securities, including tax exempt of $671, $134, $1,307, and $449   17,875    15,418    53,365    48,039 
Deposits in banks and short-term investments   700    581    1,782    2,315 
Total interest revenue   98,839    85,439    282,963    247,242 
                     
Interest expense:                    
Deposits:                    
NOW   700    452    1,932    1,381 
Money market   1,953    1,347    4,938    3,661 
Savings   34    43    89    102 
Time   1,870    667    4,257    2,052 
Total deposit interest expense   4,557    2,509    11,216    7,196 
Short-term borrowings   36    98    177    278 
Federal Home Loan Bank advances   1,709    1,015    4,603    2,731 
Long-term debt   2,762    2,828    8,490    8,178 
Total interest expense   9,064    6,450    24,486    18,383 
Net interest revenue   89,775    78,989    258,477    228,859 
(Release of) provision for credit losses   1,000    (300)   2,600    (800)
Net interest revenue after provision for credit losses   88,775    79,289    255,877    229,659 
                     
Fee revenue:                    
Service charges and fees   8,220    10,819    29,525    31,460 
Mortgage loan and other related fees   4,200    6,039    13,435    13,776 
Brokerage fees   1,009    1,199    3,565    3,369 
Gains from sales of SBA/USDA loans   2,806    2,479    7,391    6,517 
Securities gains, net   188    261    190    922 
Other   4,150    5,564    12,226    12,420 
Total fee revenue   20,573    26,361    66,332    68,464 
Total revenue   109,348    105,650    322,209    298,123 
                     
Operating expenses:                    
Salaries and employee benefits   38,027    36,478    112,056    103,112 
Communications and equipment   4,547    4,919    14,443    13,602 
Occupancy   4,945    5,132    14,802    14,393 
Advertising and public relations   1,026    1,088    3,347    3,275 
Postage, printing and supplies   1,411    1,451    4,127    4,029 
Professional fees   2,976    3,160    8,391    9,049 
FDIC assessments and other regulatory charges   2,127    1,412    4,758    4,453 
Amortization of intangibles   1,212    1,119    3,085    3,116 
Merger-related and other charges   3,176    3,152    7,060    6,981 
Other   6,227    6,112    19,660    17,958 
Total operating expenses   65,674    64,023    191,729    179,968 
    Net income before income taxes   43,674    41,627    130,480    118,155 
Income tax expense   15,728    15,753    50,743    44,720 
Net income  $27,946   $25,874   $79,737   $73,435 
                     
Net income available to common shareholders  $27,719   $25,874   $79,078   $73,414 
                     
Earnings per common share:                    
     Basic  $.38   $.36   $1.10   $1.02 
     Diluted   .38    .36    1.10    1.02 
Weighted average common shares outstanding:                    
     Basic   73,151    71,556    72,060    71,992 
     Diluted   73,162    71,561    72,071    71,996 

 

 

 

 

UNITED COMMUNITY BANKS, INC.        
Consolidated Balance Sheet (Unaudited)        
         

 

   September 30,   December 31, 
(in thousands, except share and per share data)  2017   2016 
           
ASSETS          
  Cash and due from banks  $98,396   $99,489 
  Interest-bearing deposits in banks   148,449    117,859 
      Cash and cash equivalents   246,845    217,348 
  Securities available for sale   2,540,470    2,432,438 
  Securities held to maturity (fair value $310,446 and $333,170)   306,741    329,843 
  Mortgage loans held for sale (includes $30,093 and $27,891 at fair value)   30,292    29,878 
  Loans, net of unearned income   7,202,937    6,920,636 
       Less allowance for loan losses   (58,605)   (61,422)
              Loans, net   7,144,332    6,859,214 
  Premises and equipment, net   193,915    189,938 
  Bank owned life insurance   167,680    143,543 
  Accrued interest receivable   29,573    28,018 
  Net deferred tax asset   128,731    154,336 
  Derivative financial instruments   20,972    23,688 
  Goodwill and other intangible assets   182,716    156,222 
  Other assets   136,760    144,189 
      Total assets  $11,129,027   $10,708,655 
LIABILITIES AND SHAREHOLDERS' EQUITY          
Liabilities:          
  Deposits:          
       Demand  $2,918,428   $2,637,004 
       NOW   1,938,352    1,989,763 
       Money market   1,934,169    1,846,440 
       Savings   605,230    549,713 
       Time   1,363,949    1,287,142 
       Brokered   367,256    327,496 
                     Total deposits   9,127,384    8,637,558 
   Short-term borrowings   16,005    5,000 
   Federal Home Loan Bank advances   494,484    709,209 
   Long-term debt   135,707    175,078 
   Derivative financial instruments   22,926    27,648 
   Accrued expenses and other liabilities   111,881    78,427 
        Total liabilities   9,908,387    9,632,920 
Shareholders' equity:          
    Common stock, $1 par value; 150,000,000 shares authorized;          
        73,403,453 and 70,899,114 shares issued and outstanding   73,403    70,899 
    Common stock issuable; 588,445 and 519,874 shares   8,703    7,327 
    Capital surplus   1,341,346    1,275,849 
    Accumulated deficit   (192,128)   (251,857)
    Accumulated other comprehensive loss   (10,684)   (26,483)
        Total shareholders' equity   1,220,640    1,075,735 
        Total liabilities and shareholders' equity  $11,129,027   $10,708,655 

 

 

 

 

UNITED COMMUNITY BANKS, INC.                      
Average Consolidated Balance Sheets and Net Interest Analysis                
For the Three Months Ended September 30,                       
                       

 

   2017   2016 
   Average       Avg.   Average       Avg. 
(dollars in thousands, fully taxable equivalent (FTE))  Balance   Interest   Rate   Balance   Interest   Rate 
Assets:                              
Interest-earning assets:                              
  Loans, net of unearned income (FTE) (1)(2)  $7,149,348   $80,301    4.46%  $6,675,328   $69,427    4.14%
  Taxable securities (3)   2,695,162    17,204    2.55    2,588,037    15,284    2.36 
  Tax-exempt securities (FTE) (1)(3)   105,151    1,098    4.18    22,113    219    3.96 
  Federal funds sold and other interest-earning assets   183,170    883    1.93    157,972    754    1.91 
                               
     Total interest-earning assets (FTE)   10,132,831    99,486    3.90    9,443,450    85,684    3.61 
Non-interest-earning assets:                              
  Allowance for loan losses   (60,098)             (63,874)          
  Cash and due from banks   103,477              100,775           
  Premises and equipment   203,579              198,234           
  Other assets (3)   599,725              602,690           
     Total assets  $10,979,514             $10,281,275           
                               
Liabilities and Shareholders' Equity:                              
Interest-bearing liabilities:                              
  Interest-bearing deposits:                              
NOW  $1,863,160    700    .15   $1,744,473    452    .10 
Money market   2,170,148    1,953    .36    1,997,165    1,347    .27 
Savings   593,823    34    .02    537,447    43    .03 
Time   1,338,786    1,548    .46    1,375,706    833    .24 
Brokered time deposits   109,811    322    1.16    162,255    (166)   (.41)
       Total interest-bearing deposits   6,075,728    4,557    .30    5,817,046    2,509    .17 
                               
Federal funds purchased and other borrowings   11,313    36    1.26    42,234    98    .92 
Federal Home Loan Bank advances   574,404    1,709    1.18    583,312    1,015    .69 
Long-term debt   154,616    2,762    7.09    177,333    2,828    6.34 
      Total borrowed funds   740,333    4,507    2.42    802,879    3,941    1.95 
                               
      Total interest-bearing liabilities   6,816,061    9,064    .53    6,619,925    6,450    .39 
Non-interest-bearing liabilities:                              
  Non-interest-bearing deposits   2,837,378              2,490,019           
  Other liabilities   133,212              103,859           
     Total liabilities   9,786,651              9,213,803           
Shareholders' equity   1,192,863              1,067,472           
     Total liabilities and shareholders' equity  $10,979,514             $10,281,275           
                               
Net interest revenue (FTE)       $90,422             $79,234      
Net interest-rate spread (FTE)             3.37%             3.22%
                               
Net interest margin (FTE) (4)             3.54%             3.34%

 

(1)Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans.  The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3)Securities available for sale are shown at amortized cost.  Pretax unrealized gains of $12.6 million in 2017 and $30.4 million in 2016 are included in other assets for purposes of this presentation.
(4)Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

 

 

 

 

UNITED COMMUNITY BANKS, INC.                      
Average Consolidated Balance Sheets and Net Interest Analysis                
For the Nine Months Ended September 30,                      
                       

 

   2017   2016 
   Average       Avg.   Average       Avg. 
(dollars in thousands, fully taxable equivalent (FTE))  Balance   Interest   Rate   Balance   Interest   Rate 
Assets:                        
Interest-earning assets:                              
  Loans, net of unearned income (FTE) (1)(2)  $7,011,962   $227,853    4.34%  $6,277,972   $196,956    4.19%
  Taxable securities (3)   2,731,081    52,058    2.54    2,665,272    47,590    2.38 
  Tax-exempt securities (FTE) (1)(3)   68,005    2,139    4.19    26,415    735    3.71 
  Federal funds sold and other interest-earning assets   157,582    2,290    1.94    150,146    2,719    2.41 
                               
     Total interest-earning assets (FTE)   9,968,630    284,340    3.81    9,119,805    248,000    3.63 
Non-interest-earning assets:                              
  Allowance for loan losses   (60,971)             (66,142)          
  Cash and due from banks   102,529              93,802           
  Premises and equipment   195,576              187,019           
  Other assets (3)   582,194              574,870           
     Total assets  $10,787,958             $9,909,354           
                               
Liabilities and Shareholders' Equity:                              
Interest-bearing liabilities:                              
  Interest-bearing deposits:                              
NOW  $1,907,889    1,932    .14   $1,795,372    1,381    .10 
Money market   2,100,296    4,938    .31    1,901,903    3,661    .26 
Savings   576,927    89    .02    505,337    102    .03 
Time   1,292,521    3,499    .36    1,280,503    2,325    .24 
Brokered time deposits   106,753    758    .95    194,199    (273)   (.19)
       Total interest-bearing deposits   5,984,386    11,216    .25    5,677,314    7,196    .17 
                               
Federal funds purchased and other borrowings   22,525    177    1.05    29,427    278    1.26 
Federal Home Loan Bank advances   616,388    4,603    1.00    506,524    2,731    .72 
Long-term debt   168,271    8,490    6.75    168,955    8,178    6.47 
      Total borrowed funds   807,184    13,270    2.20    704,906    11,187    2.12 
                               
      Total interest-bearing liabilities   6,791,570    24,486    .48    6,382,220    18,383    .38 
Non-interest-bearing liabilities:                              
  Non-interest-bearing deposits   2,738,118              2,374,076           
  Other liabilities   121,672              102,421           
     Total liabilities   9,651,360              8,858,717           
Shareholders' equity   1,136,598              1,050,637           
     Total liabilities and shareholders' equity  $10,787,958             $9,909,354           
                               
Net interest revenue (FTE)       $259,854             $229,617      
Net interest-rate spread (FTE)             3.33%             3.25%
                               
Net interest margin (FTE) (4)             3.49%             3.36%

 

(1)Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans.  The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3)Securities available for sale are shown at amortized cost.  Pretax unrealized gains of $4.67 million in 2017 and $15.1 million in 2016 are included in other assets for purposes of this presentation.
(4)Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.