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United Community Banks, Inc. Reports Earnings of $11.8 Million for First Quarter 2013

Apr 25, 2013

BLAIRSVILLE, GA -- (Marketwired) -- 04/25/13 -- United Community Banks, Inc. (NASDAQ: UCBI)

  • Net income of $11.8 million, or 15 cents per share
  • Loans up $18.6 million from fourth quarter, or 2 percent annualized
  • Core transaction deposits up $81.2 million in first quarter, or 10 percent annualized
  • Solid improvement in key credit quality measures

United Community Banks, Inc. (NASDAQ: UCBI) today reported net income of $11.8 million, or 15 cents per share, for the first quarter of 2013. The first quarter results reflect modest loan growth, improved credit quality, strong core transaction deposit growth, and lower operating expenses compared with the same period a year ago.

"We are off to a good start to what we expect to be another productive year," said Jimmy Tallent, president and chief executive officer. "The first quarter continued our trend of meaningful improvement in every key measure of credit quality. We made particularly strong progress slowing nonperforming loan inflows which, at $9.67 million, were less than half the fourth quarter level. Nonperforming assets were $113 million and 1.65 percent of total assets at the end of the first quarter. That is down $15 million, or 12 percent, from the end of the fourth quarter, and down $49 million, or 30 percent, from a year ago. Additionally, core transaction deposits increased by $81 million, or 10 percent annualized."

Tallent continued, "We grew our loan portfolio by $19 million from the fourth quarter, for an annualized rate of 2 percent. Achieving quality loan growth remains a challenge in what continues to be a sluggish economy. We achieved this growth by bringing on new commercial lenders and by offering new retail loan products that are tailored to meet our customers' financing needs at competitive rates."

The first quarter provision for loan losses was $11 million, down $4 million from a year ago and $3 million from the fourth quarter. First quarter net charge-offs were $12.4 million compared to $14.5 million in the fourth quarter and $15.9 million a year ago.

"The inflow of nonperforming loans was the lowest quarterly total since the beginning of the economic cycle," Tallent said. "The benefit of this trend, which we expect to continue, was clearly evident in our lower net charge-offs and provisioning."

Taxable equivalent net interest revenue totaled $54.7 million, down $1.37 million from the fourth quarter and down $4.21 million from the first quarter a year ago. "The decrease primarily reflects lower yields on our loan and investment securities portfolios," said Tallent. "The lower loan portfolio yield reflects ongoing pricing pressure on new and renewed loans, and new retail product offerings with low introductory rates. The lower investment securities yield is due to reinvestment of cash flows at record low rates. We continue to look for reinvestment opportunities, with a focus on floating-rate securities, to alleviate market and duration risk. Floating-rate securities account for 34 percent of the investment securities portfolio, and improve our interest sensitivity position by reducing exposure to rising interest rates. We would like a higher yield but will not go out on the curve to chase one."

The taxable equivalent net interest margin was down six basis points from the fourth quarter, and 15 basis points from a year ago, to 3.38 percent. "Our net interest margin will remain under pressure as long as interest rates remain at this unprecedented low level," stated Tallent. "To offset the impact on net interest revenue, we remain sharply focused on growing our loan portfolio in the mid-single digit range by focusing on retail loans and by continuing to add commercial lenders in key markets."

First quarter fee revenue was $12.8 million, compared to $14.8 million in the fourth quarter and $15.4 million a year ago. The decrease from the preceding quarter was primarily due to a slow-down in mortgage refinancing activity, a lower overdraft fee total related to transaction and activity levels, and an incentive in the fourth quarter from our debit card network services provider. Closed mortgage loans totaled $69.8 million in the first quarter compared with $100 million in the fourth quarter and $81.7 million in the first quarter of 2012. The decrease in other fee revenue compared to a year earlier was primarily due to two non-core items in the first quarter of 2012: a federal tax refund of $1.1 million and $728,000 in gains from the sale of low income housing tax credits.

Operating expenses, excluding foreclosed property costs and a $4 million fourth quarter charge for settlement of litigation, were $41.4 million in the first quarter of 2013 compared to $42.1 million for the fourth quarter of 2012 and $43.1 million a year ago. The decrease from both periods was due to management's efforts to reduce costs and operate more efficiently, primarily through reduction in staff levels and related costs.

Foreclosed property costs were $2.33 million in the first quarter of 2013, compared to $4.61 million in the fourth quarter of 2012 and $3.83 million a year ago. First quarter 2013 costs included $1.19 million for maintenance and $1.15 million in net losses and write-downs. For the fourth quarter of 2012, foreclosed property costs included $1.42 million in maintenance and $3.19 million in net losses and write-downs. First quarter 2012 foreclosed property costs included $1.62 million in maintenance and $2.20 million in net losses and write-downs.

As of March 31, 2013, capital ratios were as follows: Tier 1 Risk-Based of 14.3 percent; Tier 1 Leverage of 9.7 percent; Total Risk-Based of 15.9 percent; Tier 1 Common Risk-Based of 8.9 percent; and, Tangible Equity-to-Assets of 8.5 percent.

"We know that challenges remain as the economy continues to struggle and interest rates are at record lows," Tallent continued. "Our focus is on growing net interest revenue by growing loans in a prudent and balanced manner, and pursuing opportunities to grow mortgage and advisory services market share. The environment forces us to be more efficient and work smarter to achieve our goals, and this team is fully committed and up to the challenge. We do expect continued improvement in credit measures that will translate into lower charge-off and provisioning levels."

Tallent concluded, "We constantly look for ways to improve our financial performance by growing our business and improving operating efficiency, all while maintaining the best customer satisfaction scores in the industry. We remain firmly committed to improving our financial results while delivering the best banking experience and growing shareholder value."

Conference Call
United will hold a conference call today, Thursday, April 25, 2013, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 31826472. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of United's website at www.ucbi.com.

About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks, Inc. is the third-largest bank holding company in Georgia. United has assets of $6.8 billion and operates 103 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and northwest South Carolina. United specializes in providing personalized community banking services to individuals and small to mid-size businesses and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United's common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United's website at www.ucbi.com.

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 its 2012 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
First
2013 2012 Quarter
(in thousands, except per share data; taxable equivalent) First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter 2013-2012 Change
INCOME SUMMARY
Interest revenue $ 62,134 $ 64,450 $ 65,978 $ 66,780 $ 70,221
Interest expense 7,475 8,422 8,607 9,944 11,357
Net interest revenue 54,659 56,028 57,371 56,836 58,864 (7 )%
Provision for loan losses 11,000 14,000 15,500 18,000 15,000
Fee revenue 12,826 14,761 13,764 12,867 15,379 (17 )
Total revenue 56,485 56,789 55,635 51,703 59,243
Operating expenses 43,770 50,726 44,783 44,310 46,955 (7 )
Income before income taxes 12,715 6,063 10,852 7,393 12,288 3
Income tax expense 950 802 284 894 760
Net income 11,765 5,261 10,568 6,499 11,528 2
Preferred dividends and discount accretion 3,052 3,045 3,041 3,032 3,030
Net income available to common shareholders $ 8,713 $ 2,216 $ 7,527 $ 3,467 $ 8,498 3
PERFORMANCE MEASURES
Per common share:
Diluted income $ .15 $ .04 $ .13 $ .06 $ .15 -
Book value 6.85 6.67 6.75 6.61 6.68 3
Tangible book value (2) 6.76 6.57 6.64 6.48 6.54 3
Key performance ratios:
Return on equity (1)(3) 8.51 % 2.15 % 7.43 % 3.51 % 8.78 %
Return on assets (3) .70 .31 .63 .37 .66
Net interest margin (3) 3.38 3.44 3.60 3.43 3.53
Efficiency ratio 64.97 71.69 62.95 63.84 63.31
Equity to assets 8.60 8.63 8.75 8.33 8.19
Tangible equity to assets (2) 8.53 8.55 8.66 8.24 8.08
Tangible common equity to assets (2) 5.66 5.67 5.73 5.45 5.33
Tangible common equity to risk-weighted assets (2) 8.45 8.26 8.44 8.37 8.21
ASSET QUALITY *
Non-performing loans $ 96,006 $ 109,894 $ 115,001 $ 115,340 $ 129,704
Foreclosed properties 16,734 18,264 26,958 30,421 31,887
Total non-performing assets (NPAs) 112,740 128,158 141,959 145,761 161,591
Allowance for loan losses 105,753 107,137 107,642 112,705 113,601
Net charge-offs 12,384 14,505 20,563 18,896 15,867
Allowance for loan losses to loans 2.52 % 2.57 % 2.60 % 2.74 % 2.75 %
Net charge-offs to average loans (3) 1.21 1.39 1.99 1.85 1.55
NPAs to loans and foreclosed properties 2.68 3.06 3.41 3.51 3.88
NPAs to total assets 1.65 1.88 2.12 2.16 2.25
AVERAGE BALANCES($ in millions)
Loans $ 4,197 $ 4,191 $ 4,147 $ 4,156 $ 4,168 1
Investment securities 2,141 2,088 1,971 2,145 2,153 (1 )
Earning assets 6,547 6,482 6,346 6,665 6,700 (2 )
Total assets 6,834 6,778 6,648 6,993 7,045 (3 )
Deposits 5,946 5,873 5,789 5,853 6,028 (1 )
Shareholders' equity 588 585 582 583 577 2
Common shares - basic (thousands) 58,081 57,971 57,880 57,840 57,764
Common shares - diluted (thousands) 58,081 57,971 57,880 57,840 57,764
AT PERIOD END($ in millions)
Loans * $ 4,194 $ 4,175 $ 4,138 $ 4,119 $ 4,128 2
Investment securities 2,141 2,079 2,025 1,984 2,202 (3 )
Total assets 6,849 6,802 6,699 6,737 7,174 (5 )
Deposits 6,026 5,952 5,823 5,822 6,001 -
Shareholders' equity 592 581 585 576 580 2
Common shares outstanding (thousands) 57,767 57,741 57,710 57,641 57,603
(1) 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). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized.
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
2013 2012
(in thousands, except per share data; taxable equivalent) First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter
Interest revenue reconciliation
Interest revenue - taxable equivalent $ 62,134 $ 64,450 $ 65,978 $ 66,780 $ 70,221
Taxable equivalent adjustment (365 ) (381 ) (419 ) (444 ) (446 )
Interest revenue (GAAP) $ 61,769 $ 64,069 $ 65,559 $ 66,336 $ 69,775
Net interest revenue reconciliation
Net interest revenue - taxable equivalent $ 54,659 $ 56,028 $ 57,371 $ 56,836 $ 58,864
Taxable equivalent adjustment (365 ) (381 ) (419 ) (444 ) (446 )
Net interest revenue (GAAP) $ 54,294 $ 55,647 $ 56,952 $ 56,392 $ 58,418
Total revenue reconciliation
Total operating revenue $ 56,485 $ 56,789 $ 55,635 $ 51,703 $ 59,243
Taxable equivalent adjustment (365 ) (381 ) (419 ) (444 ) (446 )
Total revenue (GAAP) $ 56,120 $ 56,408 $ 55,216 $ 51,259 $ 58,797
Income before taxes reconciliation
Income before taxes $ 12,715 $ 6,063 $ 10,852 $ 7,393 $ 12,288
Taxable equivalent adjustment (365 ) (381 ) (419 ) (444 ) (446 )
Income before taxes (GAAP) $ 12,350 $ 5,682 $ 10,433 $ 6,949 $ 11,842
Income tax expense reconciliation
Income tax expense $ 950 $ 802 $ 284 $ 894 $ 760
Taxable equivalent adjustment (365 ) (381 ) (419 ) (444 ) (446 )
Income tax expense (GAAP) $ 585 $ 421 $ (135 ) $ 450 $ 314
Book value per common share reconciliation
Tangible book value per common share $ 6.76 $ 6.57 $ 6.64 $ 6.48 $ 6.54
Effect of goodwill and other intangibles .09 .10 .11 .13 .14
Book value per common share (GAAP) $ 6.85 $ 6.67 $ 6.75 $ 6.61 $ 6.68
Average equity to assets reconciliation
Tangible common equity to assets 5.66 % 5.67 % 5.73 % 5.45 % 5.33 %
Effect of preferred equity 2.87 2.88 2.93 2.79 2.75
Tangible equity to assets 8.53 8.55 8.66 8.24 8.08
Effect of goodwill and other intangibles .07 .08 .09 .09 .11
Equity to assets (GAAP) 8.60 % 8.63 % 8.75 % 8.33 % 8.19 %
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets 8.45 % 8.26 % 8.44 % 8.37 % 8.21 %
Effect of other comprehensive income .49 .51 .36 .28 .10
Effect of trust preferred 1.15 1.15 1.17 1.19 1.15
Effect of preferred equity 4.22 4.24 4.29 4.35 4.23
Tier I capital ratio (Regulatory) 14.31 % 14.16 % 14.26 % 14.19 % 13.69 %
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
2013 2012
(in millions) First Quarter Fourth Quarter Linked Quarter Change
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,130 $ 1,131 $ (1 )
Income producing commercial RE 674 682 (8 )
Commercial & industrial 454 458 (4 )
Commercial construction 152 155 (3 )
Total commercial 2,410 2,426 (16 )
Residential mortgage 850 829 21
Home equity lines of credit 396 385 11
Residential construction 372 382 (10 )
Consumer installment 166 153 13
Total loans $ 4,194 $ 4,175 19
LOANS BY MARKET
North Georgia $ 1,363 $ 1,364 (1 )
Atlanta MSA 1,317 1,288 29
North Carolina 575 579 (4 )
Coastal Georgia 398 400 (2 )
Gainesville MSA 259 261 (2 )
East Tennessee 282 283 (1 )
Total loans $ 4,194 $ 4,175 19
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 57 $ 62 (5 )
Land loans 42 46 (4 )
Lot loans 188 193 (5 )
Total 287 301 (14 )
House loans
Spec 40 41 (1 )
Sold 45 40 5
Total 85 81 4
Total residential construction $ 372 $ 382 (10 )
(1) Excludes total loans of $28.3 million, $33.4 million, $37.0 million, $41.5 million and $47.2 million as of March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
2013 2012
(in millions) First Quarter First Quarter Year over Year Change
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,130 $ 1,137 $ (7 )
Income producing commercial RE 674 706 (32 )
Commercial & industrial 454 440 14
Commercial construction 152 167 (15 )
Total commercial 2,410 2,450 (40 )
Residential mortgage 850 836 14
Home equity lines of credit 396 295 101
Residential construction 372 436 (64 )
Consumer installment 166 111 55
Total loans $ 4,194 $ 4,128 66
LOANS BY MARKET
North Georgia $ 1,363 $ 1,408 (45 )
Atlanta MSA 1,317 1,239 78
North Carolina 575 588 (13 )
Coastal Georgia 398 366 32
Gainesville MSA 259 262 (3 )
East Tennessee 282 265 17
Total loans $ 4,194 $ 4,128 66
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 57 $ 86 (29 )
Land loans 42 57 (15 )
Lot loans 188 204 (16 )
Total 287 347 (60 )
House loans
Spec 40 57 (17 )
Sold 45 32 13
Total 85 89 (4 )
Total residential construction $ 372 $ 436 (64 )
(1) Excludes total loans of $28.3 million, $33.4 million, $37.0 million, $41.5 million and $47.2 million as of March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
2013 2012
First Fourth Third Second First
(in millions) Quarter Quarter Quarter Quarter Quarter
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,130 $ 1,131 $ 1,126 $ 1,140 $ 1,137
Income producing commercial RE 674 682 693 697 706
Commercial & industrial 454 458 460 450 440
Commercial construction 152 155 161 169 167
Total commercial 2,410 2,426 2,440 2,456 2,450
Residential mortgage 850 829 833 834 836
Home equity lines of credit 396 385 341 294 295
Residential construction 372 382 389 409 436
Consumer installment 166 153 135 126 111
Total loans $ 4,194 $ 4,175 $ 4,138 $ 4,119 $ 4,128
LOANS BY MARKET
North Georgia $ 1,363 $ 1,364 $ 1,383 $ 1,387 $ 1,408
Atlanta MSA 1,317 1,288 1,257 1,252 1,239
North Carolina 575 579 579 576 588
Coastal Georgia 398 400 380 369 366
Gainesville MSA 259 261 256 259 262
East Tennessee 282 283 283 276 265
Total loans $ 4,194 $ 4,175 $ 4,138 $ 4,119 $ 4,128
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 57 $ 62 $ 71 $ 78 $ 86
Land loans 42 46 41 45 57
Lot loans 188 193 196 203 204
Total 287 301 308 326 347
House loans
Spec 40 41 44 49 57
Sold 45 40 37 34 32
Total 85 81 81 83 89
Total residential construction $ 372 $ 382 $ 389 $ 409 $ 436
(1) Excludes total loans of $28.3 million, $33.4 million, $37.0 million, $41.5 million and $47.2 million as of March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
First Quarter 2013
Non-performing Foreclosed Total
(in thousands) Loans Properties NPAs
NPAs BY CATEGORY
Owner occupied CRE $ 8,142 $ 4,750 $ 12,892
Income producing CRE 9,162 834 9,996
Commercial & industrial 29,545 - 29,545
Commercial construction 22,359 3,027 25,386
Total commercial 69,208 8,611 77,819
Residential mortgage 10,901 3,463 14,364
Home equity lines of credit 916 - 916
Residential construction 14,592 4,660 19,252
Consumer installment 389 - 389
Total NPAs $ 96,006 $ 16,734 $ 112,740
Balance as a % of Unpaid Principal 66.3 % 45.0 % 62.0 %
NPAs BY MARKET
North Georgia $ 63,210 $ 6,616 $ 69,826
Atlanta MSA 17,380 3,524 20,904
North Carolina 8,519 2,533 11,052
Coastal Georgia 3,523 1,449 4,972
Gainesville MSA 911 370 1,281
East Tennessee 2,463 2,242 4,705
Total NPAs $ 96,006 $ 16,734 $ 112,740
NPA ACTIVITY
Beginning Balance $ 109,894 $ 18,264 $ 128,158
Loans placed on non-accrual 9,665 - 9,665
Payments received (6,809 ) - (6,809 )
Loan charge-offs (10,456 ) - (10,456 )
Foreclosures (6,288 ) 6,288 -
Capitalized costs - 54 54
Note / property sales - (6,726 ) (6,726 )
Write downs - (1,041 ) (1,041 )
Net losses on sales - (105 ) (105 )
Ending Balance $ 96,006 $ 16,734 $ 112,740
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
Fourth Quarter 2012
Non-performing Foreclosed Total
(in thousands) Loans Properties NPAs
NPAs BY CATEGORY
Owner occupied CRE $ 12,599 $ 4,989 $ 17,588
Income producing CRE 9,549 490 10,039
Commercial & industrial 31,817 - 31,817
Commercial construction 23,843 2,204 26,047
Total commercial 77,808 7,683 85,491
Residential mortgage 11,151 4,753 15,904
Home equity lines of credit 1,438 - 1,438
Residential construction 18,702 5,828 24,530
Consumer installment 795 - 795
Total NPAs $ 109,894 $ 18,264 $ 128,158
Balance as a% of Unpaid Principal 69.5 % 39.7 % 62.8 %
NPAs BY MARKET
North Georgia $ 69,950 $ 8,219 $ 78,169
Atlanta MSA 18,556 3,442 21,998
North Carolina 11,014 2,579 13,593
Coastal Georgia 3,810 1,609 5,419
Gainesville MSA 903 556 1,459
East Tennessee 5,661 1,859 7,520
Total NPAs $ 109,894 $ 18,264 $ 128,158
NPA ACTIVITY
Beginning Balance $ 115,001 $ 26,958 $ 141,959
Loans placed on non-accrual 20,211 - 20,211
Payments received (6,458 ) - (6,458 )
Loan charge-offs (11,722 ) - (11,722 )
Foreclosures (7,138 ) 7,138 -
Capitalized costs - 201 201
Note / property sales - (12,845 ) (12,845 )
Write downs - (1,438 ) (1,438 )
Net losses on sales - (1,750 ) (1,750 )
Ending Balance $ 109,894 $ 18,264 $ 128,158
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
Third Quarter 2012
Non-performing Foreclosed Total
(in thousands) Loans Properties NPAs
NPAs BY CATEGORY
Owner occupied CRE $ 14,140 $ 7,170 $ 21,310
Income producing CRE 11,756 1,597 13,353
Commercial & industrial 32,678 - 32,678
Commercial construction 18,590 3,121 21,711
Total commercial 77,164 11,888 89,052
Residential mortgage 12,629 6,031 18,660
Home equity lines of credit 1,367 - 1,367
Residential construction 22,935 9,039 31,974
Consumer installment 906 - 906
Total NPAs $ 115,001 $ 26,958 $ 141,959
Balance as a % of Unpaid Principal 68.8 % 36.4 % 58.8 %
NPAs BY MARKET
North Georgia $ 72,211 $ 14,582 $ 86,793
Atlanta MSA 21,349 5,926 27,275
North Carolina 9,622 2,771 12,393
Coastal Georgia 6,822 864 7,686
Gainesville MSA 840 1,328 2,168
East Tennessee 4,157 1,487 5,644
Total NPAs $ 115,001 $ 26,958 $ 141,959
NPA ACTIVITY
Beginning Balance $ 115,340 $ 30,421 $ 145,761
Loans placed on non-accrual 30,535 - 30,535
Payments received (3,646 ) - (3,646 )
Loan charge-offs (19,227 ) - (19,227 )
Foreclosures (8,001 ) 8,001 -
Capitalized costs - 102 102
Note / property sales - (8,822 ) (8,822 )
Write downs - (2,394 ) (2,394 )
Net losses on sales - (350 ) (350 )
Ending Balance $ 115,001 $ 26,958 $ 141,959
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
First Quarter 2013 Fourth Quarter 2012 Third Quarter 2012



(in thousands)




Net
Charge-Offs





Net Charge-
Offs to
Average
Loans
(2)







Net
Charge-Offs


Net Charge-
Offs to
Average
Loans
(2)







Net
Charge-Offs





Net Charge-
Offs to
Average
Loans (2)


NET CHARGE-OFFS BY CATEGORY
Owner occupied CRE $ 1,922 .69 % $ 4,997 1.76 % $ 6,192 3.56 %
Income producing CRE 3,321 1.99 1,153 .67 1,982 .70
Commercial & industrial 1,501 1.34 135 .12 (259 ) (.23 )
Commercial construction (4 ) (.01 ) 1,688 4.25 3,190 7.74
Total commercial 6,740 1.14 7,973 1.30 11,105 1.81
Residential mortgage 1,635 .79 3,254 1.55 2,846 1.40
Home equity lines of credit 512 .53 445 .49 681 .80
Residential construction 2,973 3.22 2,435 2.52 5,676 5.69
Consumer installment 524 1.35 398 1.10 255 .78
Total $ 12,384 1.21 $ 14,505 1.39 $ 20,563 1.99
NET CHARGE-OFFS BY MARKET
North Georgia $ 4,910 1.42 % $ 4,474 1.26 % $ 6,451 1.84 %
Atlanta MSA 3,295 1.07 3,977 1.27 9,344 3.02
North Carolina 2,249 1.59 2,032 1.39 1,674 1.15
Coastal Georgia 821 .85 574 .60 2,486 2.67
Gainesville MSA 430 .67 1,331 2.04 294 .45
East Tennessee 679 .98 2,117 2.98 314 .45
Total $ 12,384 1.21 $ 14,505 1.39 $ 20,563 1.99
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Operations (Unaudited)
Three Months Ended
March 31,
(in thousands, except per share data) 2013 2012
Interest revenue:
Loans, including fees $ 50,934 $ 55,759
Investment securities, including tax exempt of $212 and $250 9,965 13,004
Deposits in banks and short-term investments 870 1,012
Total interest revenue 61,769 69,775
Interest expense:
Deposits:
NOW 454 637
Money market 562 641
Savings 36 37
Time 3,226 6,159
Total deposit interest expense 4,278 7,474
Short-term borrowings 516 1,045
Federal Home Loan Bank advances 19 466
Long-term debt 2,662 2,372
Total interest expense 7,475 11,357
Net interest revenue 54,294 58,418
Provision for loan losses 11,000 15,000
Net interest revenue after provision for loan losses 43,294 43,418
Fee revenue:
Service charges and fees 7,403 7,783
Mortgage loan and other related fees 2,655 2,099
Brokerage fees 767 813
Securities gains, net 116 557
Loss from prepayment of debt - (482 )
Other 1,885 4,609
Total fee revenue 12,826 15,379
Total revenue 56,120 58,797
Operating expenses:
Salaries and employee benefits 23,592 25,225
Communications and equipment 3,046 3,155
Occupancy 3,367 3,771
Advertising and public relations 938 846
Postage, printing and supplies 863 979
Professional fees 2,366 1,975
Foreclosed property 2,333 3,825
FDIC assessments and other regulatory charges 2,505 2,510
Amortization of intangibles 705 732
Other 4,055 3,937
Total operating expenses 43,770 46,955
Net income before income taxes 12,350 11,842
Income tax expense 585 314
Net income 11,765 11,528
Preferred stock dividends and discount accretion 3,052 3,030
Net income available to common shareholders $ 8,713 $ 8,498
Earnings per common share - basic / diluted $ .15 $ .15
Weighted average common shares outstanding - basic / diluted 58,081 57,764
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
(in thousands, except share and per share data) March 31, 2013 December 31, 2012 March 31, 2012
(unaudited) (audited) (audited)
ASSETS
Cash and due from banks $ 57,638 $ 66,536 $ 53,147
Interest-bearing deposits in banks 107,390 124,613 139,439
Short-term investments 82,000 60,000 235,000
Cash and cash equivalents 247,028 251,149 427,586
Securities available for sale 1,909,426 1,834,593 1,898,815
Securities held to maturity (fair value $247,087, $261,131 and $318,490) 231,087 244,184 303,636
Mortgage loans held for sale 18,290 28,821 24,809
Loans, net of unearned income 4,193,560 4,175,008 4,127,566
Less allowance for loan losses (105,753 ) (107,137 ) (113,601 )
Loans, net 4,087,807 4,067,871 4,013,965
Assets covered by loss sharing agreements with the FDIC 42,096 47,467 72,854
Premises and equipment, net 168,036 168,920 174,419
Bank owned life insurance 82,114 81,867 80,956
Accrued interest receivable 18,302 18,659 20,292
Goodwill and other intangible assets 4,805 5,510 7,695
Foreclosed property 16,734 18,264 31,887
Unsettled securities sales - 5,763 43,527
Other assets 23,643 29,191 73,252
Total assets $ 6,849,368 $ 6,802,259 $ 7,173,693
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 1,298,425 $ 1,252,605 $ 1,101,757
NOW 1,281,454 1,316,453 1,389,016
Money market 1,165,836 1,149,912 1,123,734
Savings 243,347 227,308 214,150
Time:
Less than $100,000 1,019,396 1,055,271 1,207,479
Greater than $100,000 685,174 705,558 796,882
Brokered 332,220 245,033 167,521
Total deposits 6,025,852 5,952,140 6,000,539
Short-term borrowings 51,999 52,574 101,925
Federal Home Loan Bank advances 125 40,125 215,125
Long-term debt 124,825 124,805 120,245
Unsettled securities purchases - - 119,565
Accrued expenses and other liabilities 54,349 51,210 36,755
Total liabilities 6,257,150 6,220,854 6,594,154
Shareholders' equity:
Preferred stock, $1 par value; 10,000,000 shares authorized;
Series A; $10 stated value; 21,700 shares issued and outstanding 217 217 217
Series B; $1,000 stated value; 180,000 shares issued and outstanding 178,937 178,557 177,451
Series D; $1,000 stated value; 16,613 shares issued and outstanding 16,613 16,613 16,613
Common stock, $1 par value; 100,000,000 shares authorized; 43,063,761, 42,423,870 and 41,688,647 shares issued and outstanding 43,064 42,424 41,689
Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 14,703,636, 15,316,794 and 15,914,209 shares issued and outstanding 14,704 15,317 15,914
Common stock issuable; 133,469, 133,238 and 90,126 shares 2,726 3,119 2,948
Capital surplus 1,059,222 1,057,951 1,056,135
Accumulated deficit (700,440 ) (709,153 ) (722,363 )
Accumulated other comprehensive loss (22,825 ) (23,640 ) (9,065 )
Total shareholders' equity 592,218 581,405 579,539
Total liabilities and shareholders' equity $ 6,849,368 $ 6,802,259 $ 7,173,693
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended March 31,
2013 2012
(dollars in thousands, taxable equivalent) Average Balance Interest Avg. Rate Average Balance Interest Avg. Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,196,757 $ 50,999 4.93 % $ 4,168,440 $ 55,842 5.39 %
Taxable securities (3) 2,119,085 9,753 1.84 2,127,794 12,754 2.40
Tax-exempt securities (1)(3) 21,733 347 6.39 25,438 410 6.45
Federal funds sold and other interest-earning assets 209,674 1,035 1.97 377,988 1,215 1.29
Total interest-earning assets 6,547,249 62,134 3.84 6,699,660 70,221 4.21
Non-interest-earning assets:
Allowance for loan losses (110,941 ) (117,803 )
Cash and due from banks 64,294 54,664
Premises and equipment 169,280 174,849
Other assets (3) 164,250 233,676
Total assets $ 6,834,132 $ 7,045,046
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,303,308 454 .14 $ 1,458,112 637 .18
Money market 1,257,409 562 .18 1,069,658 641 .24
Savings 234,110 36 .06 205,402 37 .07
Time less than $100,000 1,039,707 1,749 .68 1,271,351 3,026 .96
Time greater than $100,000 694,553 1,477 .86 821,164 2,415 1.18
Brokered time deposits 175,128 - .00 161,335 718 1.79
Total interest-bearing deposits 4,704,215 4,278 .37 4,987,022 7,474 .60
Federal funds purchased and other borrowings 72,157 516 2.90 102,258 1,045 4.11
Federal Home Loan Bank advances 33,069 19 .23 138,372 466 1.35
Long-term debt 124,816 2,662 8.65 120,237 2,372 7.93
Total borrowed funds 230,042 3,197 5.64 360,867 3,883 4.33
Total interest-bearing liabilities 4,934,257 7,475 .61 5,347,889 11,357 .85
Non-interest-bearing liabilities:
Non-interest-bearing deposits 1,241,527 1,040,587
Other liabilities 70,839 79,612
Total liabilities 6,246,623 6,468,088
Shareholders' equity 587,509 576,958
Total liabilities and shareholders' equity $ 6,834,132 $ 7,045,046
Net interest revenue $ 54,659 $ 58,864
Net interest-rate spread 3.23 % 3.36 %
Net interest margin (4) 3.38 % 3.53 %
(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 $17.1 million in 2013 and $23.6 million in 2012 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.

For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Email Contact

Source: United Community Banks, Inc.

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