United Community Banks, Inc. Announces Strong Second Quarter Results

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United Community Banks, Inc. Announces Strong Second Quarter Results

Jul 24, 2018

Continued Margin Expansion, EPS up 26% year over year

BLAIRSVILLE, Ga., July 24, 2018 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ:UCBI) (“United”) showed strong second quarter results, with solid year-over-year loan and deposit growth, efficiency improvements and continued outstanding asset quality trends. Reported earnings per share were $0.49, up 26 percent from a year ago. Excluding merger-related and other charges, earnings per share were $0.53, up 29 percent from a year ago. United also enhanced profitability with increases in return on assets and return on tangible equity.

Notable highlights for the quarter included strong performance from United’s recently acquired equipment finance company, Navitas Credit Corporation, as well as meaningful margin expansion. United also saw increased production in its mortgage, SBA, and brokerage units. The quarter included a one-time increase in tax expense due to changes in the Georgia state tax law.

“I am pleased with our second quarter performance and am excited about the remainder of the year., said Lynn Harton, United’s Chief Executive Officer. “Our teams continue to deliver outstanding service to our clients, as evidenced by their recognition this quarter by J.D. Power as having the highest Retail Banking Satisfaction in the Southeast for the fifth consecutive year. Our new markets and investments are doing very well and have strong expectations for the balance of the year. We continue to make progress on our return on assets targets and are proud to have attained a 1.39% return on assets this quarter on an operating basis.”

Second Quarter 2018 Financial Highlights:

Return on assets of 1.30 percent, or 1.39 percent, excluding merger-related and other charges
Return on common equity was 11.2 percent. Excluding merger-related and other charges, return on tangible common equity was 15.8 percent
Loan growth, excluding planned runoff of the indirect portfolio, of 4% on an annualized basis
Record loan production of $812 million vs. $667 million in Q2 2017
Solid performance from Navitas with $42 million in Q2 loan and lease growth
Net interest margin of 3.90 percent, up 10 basis points from the first quarter of 2018 and up 43 basis points from a year ago
Efficiency ratio of 57.9 percent, or 55.8 percent, excluding merger-related and other charges
Net charge offs of seven basis points, compared with eight basis points last quarter
Nonperforming assets of 0.20 percent of total assets, compared with 0.24 percent at both March 31, 2018 and June 30, 2017.

Conference Call

United will hold a conference call, Wednesday, July 25, 2018, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 5575248. 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.


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information

																					Second				For the Six
		2018								2017											Quarter				Months Ended							YTD
		Second				First				Fourth				Third				Second			2018-2017				June 30,							2018-2017
(in thousands, except per share data)		Quarter				Quarter				Quarter				Quarter				Quarter			Change				2018				2017			Change
INCOME SUMMARY
Interest revenue	$	122,215			$	115,290			$	106,757			$	98,839			$	93,166						$	237,505			$	184,124
Interest expense		13,739				12,005				9,249				9,064				8,018							25,744				15,422
Net interest revenue		108,476				103,285				97,508				89,775				85,148			27		%		211,761				168,702			26		%
Provision for credit losses		1,800				3,800				1,200				1,000				800							5,600				1,600
Noninterest income		23,340				22,396				21,928				20,573				23,685			(1	)			45,736				45,759			-
Total revenue		130,016				121,881				118,236				109,348				108,033			20				251,897				212,861			18
Expenses		76,850				73,475				75,882				65,674				63,229			22				150,325				126,055			19
Income before income tax expense		53,166				48,406				42,354				43,674				44,804			19				101,572				86,806			17
Income tax expense		13,532				10,748				54,270				15,728				16,537			(18	)			24,280				35,015			(31	)
Net income		39,634				37,658				(11,916	)			27,946				28,267			40				77,292				51,791			49
Merger-related and other charges		2,873				2,646				7,358				3,420				1,830							5,519				3,884
Income tax benefit of merger-related and other charges		(121	)			(628	)			(1,165	)			(1,147	)			(675	)						(749	)			(1,433	)
Impact of remeasurement of deferred tax asset resulting from 2017 Tax Cuts and Jobs Act		-				-				38,199				-				-							-				-
Release of disproportionate tax effects lodged in OCI		-				-				-				-				-							-				3,400
Net income - operating ⁽¹⁾	$	42,386			$	39,676			$	32,476			$	30,219			$	29,422			44			$	82,062			$	57,642			42

PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP	$	0.49			$	0.47			$	(0.16	)		$	0.38			$	0.39			26			$	0.97			$	0.72			35
Diluted net income - operating ⁽¹⁾		0.53				0.50				0.42				0.41				0.41			29				1.03				0.80			29
Cash dividends declared		0.15				0.12				0.10				0.10				0.09			67				0.27				0.18			50
Book value		17.29				17.02				16.67				16.50				15.83			9				17.29				15.83			9
Tangible book value⁽³⁾		13.25				12.96				13.65				14.11				13.74			(4	)			13.25				13.74			(4	)

Key performance ratios:
Return on common equity - GAAP⁽²⁾⁽⁴⁾		11.20		%		11.11		%		(3.57	)	%		9.22		%		9.98		%					11.15		%		9.27		%
Return on common equity - operating^(1)(2)(4)		11.97				11.71				9.73				9.97				10.39							11.84				10.32
Return on tangible common equity - operating^(1)(2)(3)(4)		15.79				15.26				11.93				11.93				12.19							15.53				12.15
Return on assets - GAAP⁽⁴⁾		1.30				1.26				(0.40	)			1.01				1.06							1.28				0.98
Return on assets - operating⁽¹⁾⁽⁴⁾		1.39				1.33				1.10				1.09				1.10							1.36				1.09
Dividend payout ratio - GAAP		30.61				25.53				(62.50	)			26.32				23.08							27.84				25.00
Dividend payout ratio - operating ⁽¹⁾		28.30				24.00				23.81				24.39				21.95							26.21				22.50
Net interest margin (fully taxable equivalent)⁽⁴⁾		3.90				3.80				3.63				3.54				3.47							3.85				3.46
Efficiency ratio - GAAP		57.94				57.83				63.03				59.27				57.89							57.89				58.58
Efficiency ratio - operating ⁽¹⁾		55.77				55.75				56.92				56.18				56.21							55.76				56.77
Average equity to average assets		11.21				11.03				11.21				10.86				10.49							11.13				10.36
Average tangible equity to average assets⁽³⁾		8.83				8.82				9.52				9.45				9.23							8.82				9.09
Average tangible common equity to average assets⁽³⁾		8.83				8.82				9.52				9.45				9.23							8.82				9.09
Tangible common equity to risk-weighted assets⁽³⁾⁽⁵⁾		11.40				11.19				12.05				12.80				12.44							11.40				12.44
																									-
ASSET QUALITY
Nonperforming loans	$	21,817			$	26,240			$	23,658			$	22,921			$	23,095			(6	)		$	21,817			$	23,095			(6	)
Foreclosed properties		2,597				2,714				3,234				2,736				2,739			(5	)			2,597				2,739			(5	)
Total nonperforming assets (NPAs)		24,414				28,954				26,892				25,657				25,834			(5	)			24,414				25,834			(5	)
Allowance for loan losses		61,071				61,085				58,914				58,605				59,500			3				61,071				59,500			3
Net charge-offs		1,359				1,501				1,061				1,635				1,623			(16	)			2,860				3,302			(13	)
Allowance for loan losses to loans		0.74		%		0.75		%		0.76		%		0.81		%		0.85		%					0.74		%		0.85		%
Net charge-offs to average loans⁽⁴⁾		0.07				0.08				0.06				0.09				0.09							0.07				0.10
NPAs to loans and foreclosed properties		0.30				0.35				0.35				0.36				0.37							0.30				0.37
NPAs to total assets		0.20				0.24				0.23				0.23				0.24							0.20				0.24

AVERAGE BALANCES ($ in millions)
Loans	$	8,177			$	7,993			$	7,560			$	7,149			$	6,980			17			$	8,086			$	6,942			16
Investment securities		2,802				2,870				2,991				2,800				2,775			1				2,836				2,798			1
Earning assets		11,193				11,076				10,735				10,133				9,899			13				11,135				9,885			13
Total assets		12,213				12,111				11,687				10,980				10,704			14				12,163				10,691			14
Deposits		9,978				9,759				9,624				8,913				8,659			15				9,869				8,626			14
Shareholders’ equity		1,370				1,336				1,310				1,193				1,123			22				1,353				1,108			22
Common shares - basic (thousands)		79,753				79,205				76,768				73,151				71,810			11				79,477				71,798			11
Common shares - diluted (thousands)		79,755				79,215				76,768				73,162				71,820			11				79,487				71,809			11

AT PERIOD END ($ in millions)
Loans	$	8,220			$	8,184			$	7,736			$	7,203			$	7,041			17			$	8,220			$	7,041			17
Investment securities		2,834				2,731				2,937				2,847				2,787			2				2,834				2,787			2
Total assets		12,386				12,264				11,915				11,129				10,837			14				12,386				10,837			14
Deposits		9,966				9,993				9,808				9,127				8,736			14				9,966				8,736			14
Shareholders’ equity		1,379				1,357				1,303				1,221				1,133			22				1,379				1,133			22
Common shares outstanding (thousands)		79,138				79,123				77,580				73,403				70,981			11				79,138				70,981			11

⁽¹⁾ Excludes merger-related and other charges which includes amortization of certain executive change of control benefits, the fourth quarter 2017 impact of remeasurement of United's deferred tax assets following the passage of tax reform legislation and a first quarter 2017 release of disproportionate tax effects lodged in OCI. ⁽²⁾ Net income less 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⁾ Second quarter 2018 ratio is preliminary.


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


		2018								2017											For the Six Months Ended June 30,
	Second				First				Fourth				Third				Second				For the Six Months Ended June 30,
(in thousands, except per share data)	Quarter				Quarter				Quarter				Quarter				Quarter					2018				2017

Expense reconciliation
Expenses (GAAP)	$	76,850			$	73,475			$	75,882			$	65,674			$	63,229			$	150,325			$	126,055
Merger-related and other charges		(2,873	)			(2,646	)			(7,358	)			(3,420	)			(1,830	)			(5,519	)			(3,884	)
Expenses - operating	$	73,977			$	70,829			$	68,524			$	62,254			$	61,399			$	144,806			$	122,171

Net income reconciliation
Net income (GAAP)	$	39,634			$	37,658			$	(11,916	)		$	27,946			$	28,267			$	77,292			$	51,791
Merger-related and other charges		2,873				2,646				7,358				3,420				1,830				5,519				3,884
Income tax benefit of merger-related and other charges		(121	)			(628	)			(1,165	)			(1,147	)			(675	)			(749	)			(1,433	)
Impact of tax reform on remeasurement of deferred tax asset		-				-				38,199				-				-				-				-
Release of disproportionate tax effects lodged in OCI		-				-				-				-				-				-				3,400
Net income - operating	$	42,386			$	39,676			$	32,476			$	30,219			$	29,422			$	82,062			$	57,642
Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.49			$	0.47			$	(0.16	)		$	0.38			$	0.39			$	0.97			$	0.72
Merger-related and other charges		0.04				0.03				0.08				0.03				0.02				0.06				0.03
Impact of tax reform on remeasurement of deferred tax asset		-				-				0.50				-				-				-				-
Release of disproportionate tax effects lodged in OCI		-				-				-				-				-				-				0.05
Diluted income per common share - operating	$	0.53			$	0.50			$	0.42			$	0.41			$	0.41			$	1.03			$	0.80

Book value per common share reconciliation
Book value per common share (GAAP)	$	17.29			$	17.02			$	16.67			$	16.50			$	15.83			$	17.29			$	15.83
Effect of goodwill and other intangibles		(4.04	)			(4.06	)			(3.02	)			(2.39	)			(2.09	)			(4.04	)			(2.09	)
Tangible book value per common share	$	13.25			$	12.96			$	13.65			$	14.11			$	13.74			$	13.25			$	13.74

Return on tangible common equity reconciliation
Return on common equity (GAAP)		11.20		%		11.11		%		(3.57	)	%		9.22		%		9.98		%		11.15		%		9.27		%
Merger-related and other charges		0.77				0.60				1.86				0.75				0.41				0.69				0.44
Impact of tax reform on remeasurement of deferred tax asset		-				-				11.44				-				-				-				-
Release of disproportionate tax effects lodged in OCI		-				-				-				-				-				-				0.61
Return on common equity - operating		11.97				11.71				9.73				9.97				10.39				11.84				10.32
Effect of goodwill and other intangibles		3.82				3.55				2.20				1.96				1.80				3.69				1.83
Return on tangible common equity - operating		15.79		%		15.26		%		11.93		%		11.93		%		12.19		%		15.53		%		12.15		%

Return on assets reconciliation
Return on assets (GAAP)		1.30		%		1.26		%		(0.40	)	%		1.01		%		1.06		%		1.28		%		0.98		%
Merger-related and other charges		0.09				0.07				0.20				0.08				0.04				0.08				0.05
Impact of tax reform on remeasurement of deferred tax asset		-				-				1.30				-				-				-				-
Release of disproportionate tax effects lodged in OCI		-				-				-				-				-				-				0.06
Return on assets - operating		1.39		%		1.33		%		1.10		%		1.09		%		1.10		%		1.36		%		1.09		%

Dividend payout ratio reconciliation
Dividend payout ratio (GAAP)		30.61		%		25.53		%		(62.50	)	%		26.32		%		23.08		%		27.84		%		25.00		%
Merger-related and other charges		(2.31	)			(1.53	)			12.04				(1.93	)			(1.13	)			(1.63	)			(1.00	)
Impact of tax reform on remeasurement of deferred tax asset		-				-				74.27				-				-				-				-
Release of disproportionate tax effects lodged in OCI		-				-				-				-				-				-				(1.50	)
Dividend payout ratio - operating		28.30		%		24.00		%		23.81		%		24.39		%		21.95		%		26.21		%		22.50		%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)		57.94		%		57.83		%		63.03		%		59.27		%		57.89		%		57.89		%		58.58		%
Merger-related and other charges		(2.17	)			(2.08	)			(6.11	)			(3.09	)			(1.68	)			(2.13	)			(1.81	)
Efficiency ratio - operating		55.77		%		55.75		%		56.92		%		56.18		%		56.21		%		55.76		%		56.77		%

Average equity to assets reconciliation
Equity to assets (GAAP)		11.21		%		11.03		%		11.21		%		10.86		%		10.49		%		11.13		%		10.36		%
Effect of goodwill and other intangibles		(2.38	)			(2.21	)			(1.69	)			(1.41	)			(1.26	)			(2.31	)			(1.27	)
Tangible equity to assets		8.83				8.82				9.52				9.45				9.23				8.82				9.09
Effect of preferred equity		-				-				-				-				-				-				-
Tangible common equity to assets		8.83		%		8.82		%		9.52		%		9.45		%		9.23		%		8.82		%		9.09		%

Tangible common equity to risk-weighted assets reconciliation ⁽¹⁾
Tier 1 capital ratio (Regulatory)		11.97		%		11.61		%		12.24		%		12.27		%		11.91		%		11.97		%		11.91		%
Effect of other comprehensive income		(0.57	)			(0.50	)			(0.29	)			(0.13	)			(0.15	)			(0.57	)			(0.15	)
Effect of deferred tax limitation		0.34				0.42				0.51				0.94				0.95				0.34				0.95
Effect of trust preferred		(0.34	)			(0.34	)			(0.36	)			(0.24	)			(0.25	)			(0.34	)			(0.25	)
Basel III intangibles transition adjustment		-				-				(0.05	)			(0.04	)			(0.02	)			-				(0.02	)
Tangible common equity to risk-weighted assets		11.40		%		11.19		%		12.05		%		12.80		%		12.44		%		11.40		%		12.44		%

⁽¹⁾ Second quarter 2018 ratios are preliminary.


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


		2018				2017					Linked Quarter Change			Year over Year Change
	Second		First		Fourth		Third		Second
(in millions)	Quarter		Quarter		Quarter		Quarter		Quarter
LOANS BY CATEGORY
Owner occupied commercial RE	$	1,682	$	1,898	$	1,924	$	1,792	$	1,723	$	(216	)	$	(41	)
Income producing commercial RE		1,821		1,677		1,595		1,413		1,342		144			479
Commercial & industrial		1,193		1,142		1,131		1,084		1,088		51			105
Commercial construction		735		691		712		583		587		44			148
Equipment financing		465		423		-		-		-		42			465
Total commercial		5,896		5,831		5,362		4,872		4,740		65			1,156
Residential mortgage		1,021		992		974		933		881		29			140
Home equity lines of credit		708		712		731		689		665		(4	)		43
Residential construction		195		190		183		190		193		5			2
Consumer		400		459		486		519		562		(59	)		(162	)
Total loans	$	8,220	$	8,184	$	7,736	$	7,203	$	7,041		36			1,179

LOANS BY MARKET
North Georgia	$	1,001	$	1,004	$	1,019	$	1,047	$	1,065		(3	)		(64	)
Atlanta MSA		1,533		1,513		1,510		1,477		1,445		20			88
North Carolina		1,067		1,037		1,049		542		541		30			526
Coastal Georgia		623		635		630		634		623		(12	)		-
Gainesville MSA		230		231		248		242		246		(1	)		(16	)
East Tennessee		474		473		475		471		486		1			(12	)
South Carolina		1,571		1,537		1,486		1,470		1,260		34			311
Commercial Banking Solutions		1,444		1,438		961		920		926		6			518
Indirect auto		277		316		358		400		449		(39	)		(172	)
Total loans	$	8,220	$	8,184	$	7,736	$	7,203	$	7,041		36			1,179

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality


	Second Quarter 2018										First Quarter 2018											Fourth 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	$	5,772		$	812			$	6,584		$	6,757			$	1,121		$	7,878			$	4,923		$	1,955		$	6,878
Income producing CRE		991			455				1,446			3,942				368			4,310				3,208			244			3,452
Commercial & industrial		2,180			-				2,180			1,917				-			1,917				2,097			-			2,097
Commercial construction		613			576				1,189			574				658			1,232				758			884			1,642
Equipment financing		1,075			-				1,075			428				-			428				-			-			-
Total commercial		10,631			1,843				12,474			13,618				2,147			15,765				10,986			3,083			14,069
Residential mortgage		7,918			184				8,102			8,724				232			8,956				8,776			136			8,912
Home equity lines of credit		1,812			550				2,362			2,149				335			2,484				2,024			15			2,039
Residential construction		637			20				657			378				-			378				192			-			192
Consumer		819			-				819			1,371				-			1,371				1,680			-			1,680
Total NPAs	$	21,817		$	2,597			$	24,414		$	26,240			$	2,714		$	28,954			$	23,658		$	3,234		$	26,892

NONPERFORMING ASSETS BY MARKET
North Georgia	$	7,583		$	640			$	8,223		$	8,519			$	85		$	8,604			$	7,310		$	94		$	7,404
Atlanta MSA		1,928			132				2,060			1,138				132			1,270				1,395			279			1,674
North Carolina		3,029			750				3,779			5,006				1,271			6,277				4,543			1,213			5,756
Coastal Georgia		943			-				943			1,887				-			1,887				2,044			20			2,064
Gainesville MSA		186			-				186			574				163			737				739			-			739
East Tennessee		1,473			143				1,616			1,511				10			1,521				1,462			-			1,462
South Carolina		3,093			362				3,455			3,443				483			3,926				3,433			1,059			4,492
Commercial Banking Solutions		2,831			570				3,401			2,937				570			3,507				1,095			569			1,664
Indirect auto		751			-				751			1,225				-			1,225				1,637			-			1,637
Total NPAs	$	21,817		$	2,597			$	24,414		$	26,240			$	2,714		$	28,954			$	23,658		$	3,234		$	26,892

NONPERFORMING ASSETS ACTIVITY
Beginning Balance	$	26,240		$	2,714			$	28,954		$	23,658			$	3,234		$	26,892			$	22,921		$	2,736		$	25,657
Acquisitions		-			-				-			428				-			428				-			659			659
Loans placed on non-accrual		3,612			-				3,612			7,463				-			7,463				9,375			-			9,375
Payments received		(5,314	)		-				(5,314	)		(3,534		)		-			(3,534		)		(5,495	)		-			(5,495	)
Loan charge-offs		(2,065	)		-				(2,065	)		(1,150		)		-			(1,150		)		(1,747	)		-			(1,747	)
Foreclosures		(656	)		984				328			(625		)		625			-				(1,396	)		2,421			1,025
Property sales		-			(1,029		)		(1,029	)		-				(957	)		(957		)		-			(2,458	)		(2,458	)
Write downs		-			(106		)		(106	)		-				(72	)		(72		)		-			(117	)		(117	)
Net gains (losses) on sales		-			34				34			-				(116	)		(116		)		-			(7	)		(7	)
Ending Balance	$	21,817		$	2,597			$	24,414		$	26,240			$	2,714		$	28,954			$	23,658		$	3,234		$	26,892

	Second Quarter 2018							First Quarter 2018							Fourth 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	$	(578	)	(.13)		%		$	(43	)	(.01)		%		$	(357	)	(.08)		%
Income producing CRE		1,421		.33					422		.10					595		.16
Commercial & industrial		16		.01					(3	)		-				(242	)	(.09)
Commercial construction		(107	)	(.06)					266		.15					148		.09
Equipment financing		(49	)	(.04)					40		.08					-			-
Total commercial		703		.05					682		.05					144		.01
Residential mortgage		11			-				(52	)	(.02)					290		.12
Home equity lines of credit		21		.01					89		.05					137		.08
Residential construction		(58	)	(.12)					(64	)	(.14)					(23	)	(.05)
Consumer		682		.64					846		.72					513		.40
Total	$	1,359		.07				$	1,501		.08				$	1,061		.06

NET CHARGE-OFFS BY MARKET
North Georgia	$	246		.10		%		$	772		.31		%		$	64		.02		%
Atlanta MSA		103		.03					(109	)	(.03)					26		.01
North Carolina		1,268		.48					144		.06					127		.06
Coastal Georgia		19		.01					137		.09					174		.11
Gainesville MSA		(2	)		-				(18	)	(.03)					154		.25
East Tennessee		76		.06					31		.03					61		.05
South Carolina		(1,057	)	(.27)					12			-				95		.03
Commercial Banking Solutions		381		.11					176		.06					75		.03
Indirect auto		325		.44					356		.41					285		.30
Total	$	1,359		.07				$	1,501		.08				$	1,061		.06

⁽¹⁾ Annualized.


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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(in thousands, except per share data)		2018			2017		2018			2017

Interest revenue:
Loans, including fees	$	103,492		$	74,825	$	199,961		$	147,552
Investment securities, including tax exempt of $1,025, $357, $1,997, and $636		18,254			17,778		36,549			35,490
Deposits in banks and short-term investments		469			563		995			1,082
Total interest revenue		122,215			93,166		237,505			184,124

Interest expense:
Deposits:
NOW		1,303			635		2,416			1,232
Money market		2,583			1,559		4,758			2,985
Savings		35			28		84			55
Time		4,198			1,379		7,154			2,387
Total deposit interest expense		8,119			3,601		14,412			6,659
Short-term borrowings		198			101		498			141
Federal Home Loan Bank advances		1,636			1,464		3,760			2,894
Long-term debt		3,786			2,852		7,074			5,728
Total interest expense		13,739			8,018		25,744			15,422
Net interest revenue		108,476			85,148		211,761			168,702
Provision for credit losses		1,800			800		5,600			1,600
Net interest revenue after provision for credit losses		106,676			84,348		206,161			167,102

Noninterest income:
Service charges and fees		8,794			10,701		17,719			21,305
Mortgage loan and other related fees		5,307			4,811		10,666			9,235
Brokerage fees		1,201			1,146		2,073			2,556
Gains from sales of SBA/USDA loans		2,401			2,626		4,179			4,585
Securities gains (losses), net		(364	)		4		(1,304	)		2
Other		6,001			4,397		12,403			8,076
Total noninterest income		23,340			23,685		45,736			45,759
Total revenue		130,016			108,033		251,897			212,861

Noninterest expenses:
Salaries and employee benefits		45,363			37,338		88,238			74,029
Communications and equipment		4,849			4,978		9,481			9,896
Occupancy		5,547			4,908		11,160			9,857
Advertising and public relations		1,384			1,260		2,899			2,321
Postage, printing and supplies		1,685			1,346		3,322			2,716
Professional fees		3,464			2,371		7,508			5,415
FDIC assessments and other regulatory charges		1,973			1,348		4,449			2,631
Amortization of intangibles		1,847			900		3,745			1,873
Merger-related and other charges		2,280			1,830		4,334			3,884
Other		8,458			6,950		15,189			13,433
Total noninterest expenses		76,850			63,229		150,325			126,055
Net income before income taxes		53,166			44,804		101,572			86,806
Income tax expense		13,532			16,537		24,280			35,015
Net income	$	39,634		$	28,267	$	77,292		$	51,791

Net income available to common shareholders	$	39,359		$	28,267	$	76,740		$	51,791

Earnings per common share:
Basic	$	0.49		$	0.39	$	0.97		$	0.72
Diluted		0.49			0.39		0.97			0.72
Weighted average common shares outstanding:
Basic		79,745			71,810		79,477			71,798
Diluted		79,755			71,820		79,487			71,809


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

	June 30,			December 31,
(in thousands, except share and per share data)		2018			2017

ASSETS
Cash and due from banks	$	125,013		$	129,108
Interest-bearing deposits in banks		191,355			185,167
Cash and cash equivalents		316,368			314,275
Securities available for sale		2,536,294			2,615,850
Securities held to maturity (fair value $291,463 and $321,276)		297,569			321,094
Loans held for sale (includes $34,813 and $26,252 at fair value)		34,813			32,734
Loans and leases, net of unearned income		8,220,271			7,735,572
Less allowance for loan and lease losses		(61,071	)		(58,914	)
Loans, net		8,159,200			7,676,658
Premises and equipment, net		202,098			208,852
Bank owned life insurance		190,649			188,970
Accrued interest receivable		33,114			32,459
Net deferred tax asset		77,274			88,049
Derivative financial instruments		29,896			22,721
Goodwill and other intangible assets		327,174			244,397
Other assets		181,091			169,401
Total assets	$	12,385,540		$	11,915,460
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand	$	3,245,701		$	3,087,797
NOW		2,031,396			2,131,939
Money market		2,036,588			2,016,748
Savings		683,689			651,742
Time		1,524,635			1,548,460
Brokered		444,079			371,011
Total deposits		9,966,088			9,807,697
Short-term borrowings		9,325			50,000
Federal Home Loan Bank advances		560,000			504,651
Long-term debt		308,434			120,545
Derivative financial instruments		37,261			25,376
Accrued expenses and other liabilities		125,323			103,857
Total liabilities		11,006,431			10,612,126
Shareholders' equity:
Common stock, $1 par value; 150,000,000 shares authorized;
79,137,810 and 77,579,561 shares issued and outstanding		79,138			77,580
Common stock issuable; 616,549 and 607,869 shares		9,509			9,083
Capital surplus		1,497,517			1,451,814
Accumulated deficit		(154,290	)		(209,902	)
Accumulated other comprehensive loss		(52,765	)		(25,241	)
Total shareholders' equity		1,379,109			1,303,334
Total liabilities and shareholders' equity	$	12,385,540		$	11,915,460


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

	2018								2017
	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⁾	$	8,177,343			$	103,395	5.07	%	$	6,979,980			$	74,811	4.30	%
Taxable securities ⁽³⁾		2,651,816				17,229	2.60			2,719,390				17,421	2.56
Tax-exempt securities (FTE) ⁽¹⁾⁽³⁾		150,503				1,380	3.67			55,992				584	4.17
Federal funds sold and other interest-earning assets		212,849				674	1.27			143,143				743	2.08

Total interest-earning assets (FTE)		11,192,511				122,678	4.39			9,898,505				93,559	3.79
Non-interest-earning assets:
Allowance for loan losses		(62,275	)							(61,163	)
Cash and due from banks		133,060								104,812
Premises and equipment		218,517								192,906
Other assets ⁽³⁾		731,514								569,435
Total assets	$	12,213,327							$	10,704,495

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	2,071,289				1,303	0.25		$	1,901,890				635	0.13
Money market		2,214,077				2,583	0.47			2,064,143				1,559	0.30
Savings		678,988				35	0.02			575,960				28	0.02
Time		1,524,124				2,696	0.71			1,274,009				1,136	0.36
Brokered time deposits		300,389				1,502	2.01			111,983				243	0.87
Total interest-bearing deposits		6,788,867		-		8,119	0.48			5,927,985		-		3,601	0.24

Federal funds purchased and other borrowings		45,241				198	1.76			37,317				101	1.09
Federal Home Loan Bank advances		335,521				1,636	1.96			594,815				1,464	0.99
Long-term debt		316,812				3,786	4.79			175,281				2,852	6.53
Total borrowed funds		697,574				5,620	3.23			807,413				4,417	2.19

Total interest-bearing liabilities		7,486,441				13,739	0.74			6,735,398				8,018	0.48
Non-interest-bearing liabilities:
Non-interest-bearing deposits		3,188,847								2,731,217
Other liabilities		168,417								114,873
Total liabilities		10,843,705								9,581,488
Shareholders' equity		1,369,622								1,123,007
Total liabilities and shareholders' equity	$	12,213,327							$	10,704,495

Net interest revenue (FTE)					$	108,939							$	85,541
Net interest-rate spread (FTE)							3.65	%							3.31	%

Net interest margin (FTE) ⁽⁴⁾							3.90	%							3.47	%

⁽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 26%
in 2018 and 39% in 2017, 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 losses of $42.9 million in 2018 and pretax unrealized gains of $6.58 million in 2017
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 Six Months Ended June 30,

	2018							2017
	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⁾	$	8,085,849		$	199,784	4.98	%	$	6,942,130		$	147,552	4.29	%
Taxable securities ⁽³⁾		2,687,200			34,552	2.57			2,749,339			34,854	2.54
Tax-exempt securities (FTE) ⁽¹⁾⁽³⁾		148,528			2,689	3.62			49,125			1,041	4.24
Federal funds sold and other interest-earning assets		212,951			1,372	1.29			144,577			1,407	1.95

Total interest-earning assets (FTE)		11,134,528			238,397	4.31			9,885,171			184,854	3.76
Non-interest-earning assets:
Allowance for loan losses		(60,718	)						(61,414	)
Cash and due from banks		146,697							102,048
Premises and equipment		217,625							191,509
Other assets ⁽³⁾		724,488							573,281
Total assets	$	12,162,620						$	10,690,595

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	2,077,461			2,416	0.23		$	1,930,624			1,232	0.13
Money market		2,222,304			4,758	0.43			2,064,792			2,985	0.29
Savings		667,431			84	0.03			568,339			55	0.02
Time		1,529,639			4,937	0.65			1,269,005			1,951	0.31
Brokered time deposits		229,766			2,217	1.95			105,199			436	0.84
Total interest-bearing deposits		6,726,601			14,412	0.43			5,937,959			6,659	0.23

Federal funds purchased and other borrowings		61,894			498	1.62			28,225			141	1.01
Federal Home Loan Bank advances		423,137			3,760	1.79			637,728			2,894	0.92
Long-term debt		295,763			7,074	4.82			175,212			5,728	6.59
Total borrowed funds		780,794			11,332	2.93			841,165			8,763	2.10

Total interest-bearing liabilities		7,507,395			25,744	0.69			6,779,124			15,422	0.46
Non-interest-bearing liabilities:
Non-interest-bearing deposits		3,142,384							2,687,665
Other liabilities		159,734							115,808
Total liabilities		10,809,513							9,582,597
Shareholders' equity		1,353,107							1,107,998
Total liabilities and shareholders' equity	$	12,162,620						$	10,690,595

Net interest revenue (FTE)				$	212,653						$	169,432
Net interest-rate spread (FTE)						3.62	%						3.30	%

Net interest margin (FTE) ⁽⁴⁾						3.85	%						3.46	%

⁽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 26%
in 2018 and 39% in 2017, 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 losses of $35.6 million in 2018 and pretax unrealized gains of $638 thousand in
2017 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.

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQ:UCBI) is a bank holding company based in Blairsville, Georgia with $12.4 billion in assets. The company’s banking subsidiary, United Community Bank, is one of the southeast region’s largest full-service banks, operating 150 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 five years, J.D. Power has ranked United Community Bank first in customer satisfaction in the Southeast. In 2018, for the fifth 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 press 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 common share,” “operating earnings per 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.

Caution About Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise and are not statements of historical fact. Such statements are often characterized by the use of qualified words (and their derivatives) such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or words of similar meaning or other statements concerning opinions or judgments of United and its management about future events. Although United believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of United will not differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements; such statements are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements. Actual future results and trends may differ materially from historical results and or those anticipated depending on a variety of factors, including, but not limited to the factors and risk influences contained in the cautionary language included under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in United’s Form 10-K for the year ended December 31, 2017 and other periodic reports subsequently filed by United with the SEC, available on the SEC website, www.sec.gov. For any forward-looking statements made in this press release, United claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

For more information:
Jefferson Harralson
Chief Financial Officer
(864) 240-6208
Jefferson_Harralson@ucbi.com

Source: United Community Banks, Inc.

Press Release Details

United Community Banks, Inc. Announces Strong Second Quarter Results