United Community Banks, Inc.
Oct 23, 2014

United Community Banks, Inc. Reports Earnings of $17.6 Million for Third Quarter 2014, up 38 Percent From a Year Ago

BLAIRSVILLE, GA -- (Marketwired) -- 10/23/14 -- United Community Banks, Inc. (NASDAQ: UCBI)

United Community Banks, Inc. (NASDAQ: UCBI) ("United") today reported net income of $17.6 million, or 29 cents per diluted share, for the third quarter of 2014. Earnings per share were up 7 percent from the second quarter, reflecting strong loan growth, a widening net interest margin, and growth in fee revenue. For the first nine months of 2014, United reported net income of $49.4 million, or 81 cents per diluted share.

"By all measures, we had an exceptional third quarter," said Jimmy Tallent, president and chief executive officer. "Strong loan growth and an expanding net interest margin increased net interest revenue by $2 million over the second quarter. Our return on assets rose to 95 basis points, seven basis points higher than the second quarter, and close to our goal of 1 percent. Also, our return on equity was 9.4 percent, up 200 basis points from a year ago.

"Third quarter net loan growth of $159 million was driven by strong production across all of our markets," stated Tallent. "Our strongest area, specialized lending, increased $132 million. This category includes health care, corporate, SBA, asset-based and commercial real estate lending. We also saw solid growth in our Coastal Georgia and Tennessee markets."

Third quarter taxable equivalent net interest revenue totaled $57.0 million, up $2.0 million from the second quarter and up $2.7 million from the third quarter of 2013. The taxable equivalent net interest margin was 3.32 percent, up 11 basis points from the second quarter and six basis points from a year ago.

"Preserving our net interest margin and growing net interest revenue, while minimizing exposure to changes in interest rates, have been top priorities for growing earnings per share," said Tallent. "Our third quarter results confirm that we are on the right path. We remain sharply focused on growing loans and core deposits to increase net interest revenue, while expanding products to grow fee revenue. Second quarter balance sheet management activities, which included restructuring the securities portfolio, interest rate hedges and wholesale borrowings, contributed to the widening net interest margin and growth in net interest revenue. We expect our margin to stabilize at the current level into the fourth quarter and 2015. We are seeing the results of these efforts positively impact our earnings growth."

The third quarter provision for credit losses was $2.0 million, down $200,000 from the second quarter and down $1.0 million from the third quarter of 2013. Third quarter net charge-offs were $3.16 million, compared with $4.18 million in the second quarter and $4.47 million a year ago. Nonperforming assets at quarter-end were $21.9 million, down 8 percent from the second quarter and 28 percent from a year ago. Nonperforming assets at quarter-end represented .29 percent of total assets, compared to .32 percent last quarter and .42 percent a year ago.

Third quarter fee revenue totaled $14.4 million, up $269,000 from the second quarter and $187,000 from the third quarter of 2013. Most of the increase from both prior periods resulted from our growing SBA lending business and related gains on the sales of SBA loans. In the third quarter of 2014, we generated gains on these sales of $945,000 compared with $744,000 in the second quarter. There were no gains from the sale of SBA loans in the third quarter of 2013.

Service charges and fees dipped slightly from both the second quarter and a year ago, mostly due to lower debit card interchange fees. Overdraft fees were also down from the third quarter of 2013. Mortgage fees were up $301,000 from the second quarter, but down $376,000 from a year ago, the decrease reflecting slower mortgage refinancing activity. Closed mortgage loans totaled $84.2 million in the third quarter compared with $68.5 million in the second quarter and $76.6 million in the third quarter of 2013.

Operating expenses were $41.4 million in the third quarter compared to $40.5 million in the second quarter and $40.1 million a year ago. The increase from both prior periods is mostly due to higher staff and incentive costs. Third quarter compensation expense reflects the full cost of additional personnel added through the acquisition of Business Carolina, Inc., which occurred late in the second quarter, as well as staff added for our new vertical SBA business. Occupancy expense was up from the second quarter and a year ago due to higher utilities and maintenance charges, including lease costs for new locations.

Offsetting these increases was a reduction in the deposit insurance assessment rate due to improvement in our credit measures. Additionally, advertising costs were down $245,000 due to one-time branding costs in the second quarter, and other expenses decreased $537,000 primarily due to $486,000 in branch closure and loss share asset costs that were written off last quarter.

"Our operating efficiency ratio improved to 57.96 percent in the third quarter, compared to 58.65 percent in the second quarter," Tallent said. "We continue to focus on growing revenue while controlling costs."

On September 30, 2014, capital ratios were as follows: Tier 1 Risk-Based of 12.1 percent; Total Risk-Based of 13.3 percent; Tier 1 Common Risk-Based of 11.0 percent; and Tier 1 Leverage of 8.7 percent.

"We are beginning to see meaningful improvement in our financial results, reflecting the successes of our strategic growth initiatives," Tallent said. "Our focus on expanding the net interest margin and growing loans, deposits and fee revenue is driving earnings growth. In the third quarter, we saw a return of strong loan growth and meaningful margin expansion despite the ongoing challenging economic environment. Strategic investments in people and new businesses are driving our growth. We will continue investing in our future by hiring top talent to grow our business. As our third quarter results demonstrate, we are on the right track."

Conference Call
United will hold a conference call today, Thursday, October 23, 2014, 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 16941301. 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.
United Community Banks, Inc. (UCBI) is a bank holding company based in Blairsville, Georgia, with $7.5 billion in assets. The company's banking subsidiary, United Community Bank, is one of the Southeast's largest full-service banks, operating 103 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in personalized community banking services for individuals, small businesses and corporations. A full range of consumer and commercial banking services includes mortgage, advisory, treasury management and other products. National survey organizations consistently recognize United Community Bank for outstanding customer service. Additional information about the company and the bank's full range of products and services can be found 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 2013 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  
    2014     2013     Quarter  
(in thousands, except per share  data; taxable equivalent)   Third
Quarter
    Second
Quarter
    First
Quarter
    Fourth
Quarter
    Third
Quarter
    2014-2013
Change
 
 
INCOME SUMMARY                                              
Interest revenue   $ 63,338     $ 61,783     $ 60,495     $ 61,695     $ 61,426        
Interest expense     6,371       6,833       6,326       5,816       7,169        
  Net interest revenue     56,967       54,950       54,169       55,879       54,257     5 %
Provision for credit losses     2,000       2,200       2,500       3,000       3,000        
Fee revenue     14,412       14,143       12,176       13,519       14,225     1  
  Total revenue     69,379       66,893       63,845       66,398       65,482        
Operating expenses     41,364       40,532       39,050       41,614       40,097     3  
  Income before income taxes     28,015       26,361       24,795       24,784       25,385     10  
Income tax expense (benefit)     10,399       10,004       9,395       8,873       9,885        
  Net income     17,616       16,357       15,400       15,911       15,500     14  
Preferred dividends and discount accretion     -       -       439       2,912       3,059        
Net income available to common shareholders   $ 17,616     $ 16,357     $ 14,961     $ 12,999     $ 12,441     42  
                                               
PERFORMANCE MEASURES                                              
  Per common share:                                              
    Diluted income   $ .29     $ .27     $ .25     $ .22     $ .21     38  
    Book value     12.15       11.94       11.66       11.30       10.99     11  
    Tangible book value (2)     12.10       11.91       11.63       11.26       10.95     11  
                                                 
  Key performance ratios:                                              
    Return on common equity (1)(3)     9.41 %     8.99 %     8.64 %     7.52 %     7.38 %      
    Return on assets (3)     .95       .88       .85       .86       .86        
    Net interest margin (3)     3.32       3.21       3.21       3.26       3.26        
    Efficiency ratio     57.96       58.65       59.05       60.02       58.55        
    Equity to assets     9.85       9.61       9.52       11.62       11.80        
    Tangible equity to assets (2)     9.83       9.58       9.50       11.59       11.76        
    Tangible common equity to assets (2)     9.83       9.58       9.22       8.99       9.02        
    Tangible common equity to risk-weighted assets (2)     14.10       13.92       13.63       13.18       13.34        
                                               
ASSET QUALITY *                                              
  Non-performing loans   $ 18,745     $ 20,724     $ 25,250     $ 26,819     $ 26,088        
  Foreclosed properties     3,146       2,969       5,594       4,221       4,467        
    Total non-performing assets (NPAs)     21,891       23,693       30,844       31,040       30,555        
  Allowance for loan losses     71,928       73,248       75,223       76,762       80,372        
  Net charge-offs     3,155       4,175       4,039       4,445       4,473        
  Allowance for loan losses to loans     1.57 %     1.66 %     1.73 %     1.77 %     1.88 %      
  Net charge-offs to average loans (3)     .28       .38       .38       .41       .42        
  NPAs to loans and foreclosed properties     .48       .54       .71       .72       .72        
  NPAs to total assets     .29       .32       .42       .42       .42        
                                               
AVERAGE BALANCES  ($ in millions)                                              
  Loans   $ 4,446     $ 4,376     $ 4,356     $ 4,315     $ 4,250     5  
  Investment securities     2,231       2,326       2,320       2,280       2,178     2  
  Earning assets     6,820       6,861       6,827       6,823       6,615     3  
  Total assets     7,374       7,418       7,384       7,370       7,170     3  
  Deposits     6,143       6,187       6,197       6,190       5,987     3  
  Shareholders' equity     726       713       703       856       846     (14 )
  Common shares - basic (thousands)     60,776       60,712       60,059       59,923       59,100        
  Common shares - diluted (thousands)     60,779       60,714       60,061       59,925       59,202        
                                               
AT PERIOD END  ($ in millions)                                              
  Loans *   $ 4,569     $ 4,410     $ 4,356     $ 4,329     $ 4,267     7  
  Investment securities     2,222       2,190       2,302       2,312       2,169     2  
  Total assets     7,526       7,352       7,398       7,425       7,243     4  
  Deposits     6,241       6,164       6,248       6,202       6,113     2  
  Shareholders' equity     736       722       704       796       852     (14 )
  Common shares outstanding (thousands)     60,248       60,139       60,092       59,432       59,412        
 
(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.  
Financial Highlights  
Selected Financial Information  
   
    For the Nine
Months Ended
September 30,
    YTD
2014-2013
 
(in thousands, except per share data; taxable equivalent) 2014       2013      Change
INCOME SUMMARY                  
Interest revenue   $ 185,616     $ 185,628        
Interest expense     19,530       21,866        
    Net interest revenue     166,086       163,762     1 %
Provision for credit losses     6,700       62,500        
Fee revenue     40,731       43,079     (5 )
    Total revenue     200,117       144,341        
Operating expenses     120,946       132,690     (9 )
    Income before income taxes     79,171       11,651        
Income tax expense (benefit)     29,798       (245,578 )      
    Net income     49,373       257,229        
Preferred dividends and discount accretion     439       9,166        
Net income available to common shareholders   $ 48,934     $ 248,063        
                       
PERFORMANCE MEASURES                      
  Per common share:                      
    Diluted income   $ .81     $ 4.24        
    Book value     12.15       10.99     11  
    Tangible book value (2)     12.10       10.95     11  
                         
  Key performance ratios:                      
    Return on common equity (1)(3)     9.02 %     64.29 %      
    Return on assets (3)     .89       4.93        
    Net interest margin (3)     3.25       3.32        
    Efficiency ratio     58.54       64.19        
    Equity to assets     9.66       9.91        
    Tangible equity to assets (2)     9.64       9.85        
    Tangible common equity to assets (2)     9.55       7.04        
    Tangible common equity to risk-weighted assets (2)     14.10       13.34        
                       
ASSET QUALITY *                      
  Non-performing loans   $ 18,745     $ 26,088        
  Foreclosed properties     3,146       4,467        
    Total non-performing assets (NPAs)     21,891       30,555        
  Allowance for loan losses     71,928       80,372        
  Net charge-offs     11,369       89,265        
  Allowance for loan losses to loans     1.57 %     1.88 %      
  Net charge-offs to average loans (3)     .35       2.84        
  NPAs to loans and foreclosed properties     .48       .72        
  NPAs to total assets     .29       .42        
                       
AVERAGE BALANCES  ($ in millions)                      
  Loans   $ 4,393     $ 4,234     4  
  Investment securities     2,292       2,160     6  
  Earning assets     6,836       6,590     4  
  Total assets     7,392       6,974     6  
  Deposits     6,176       5,972     3  
  Shareholders' equity     714       691     3  
  Common shares - basic (thousands)     60,511       58,443        
  Common shares - diluted (thousands)     60,513       58,444        
                       
AT PERIOD END  ($ in millions)                      
  Loans *   $ 4,569     $ 4,267     7  
  Investment securities     2,222       2,169     2  
  Total assets     7,526       7,243     4  
  Deposits     6,241       6,113     2  
  Shareholders' equity     736       852     (14 )
  Common shares outstanding (thousands)     60,248       59,412        
                         
 
(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  
   
   
    2014     2013  
(in thousands, except per share  data; taxable equivalent)   Third
Quarter
    Second
Quarter
    First
Quarter
    Fourth
Quarter
    Third
Quarter
 
Interest revenue reconciliation                                        
Interest revenue - taxable equivalent   $ 63,338     $ 61,783     $ 60,495     $ 61,695     $ 61,426  
Taxable equivalent adjustment     (405 )     (377 )     (357 )     (380 )     (370 )
  Interest revenue (GAAP)   $ 62,933     $ 61,406     $ 60,138     $ 61,315     $ 61,056  
                                         
Net interest revenue reconciliation                                        
Net interest revenue - taxable equivalent   $ 56,967     $ 54,950     $ 54,169     $ 55,879     $ 54,257  
Taxable equivalent adjustment     (405 )     (377 )     (357 )     (380 )     (370 )
  Net interest revenue (GAAP)   $ 56,562     $ 54,573     $ 53,812     $ 55,499     $ 53,887  
                                         
Total revenue reconciliation                                        
Total operating revenue   $ 69,379     $ 66,893     $ 63,845     $ 66,398     $ 65,482  
Taxable equivalent adjustment     (405 )     (377 )     (357 )     (380 )     (370 )
  Total revenue (GAAP)   $ 68,974     $ 66,516     $ 63,488     $ 66,018     $ 65,112  
                                         
Income before taxes reconciliation                                        
Income before taxes   $ 28,015     $ 26,361     $ 24,795     $ 24,784     $ 25,385  
Taxable equivalent adjustment     (405 )     (377 )     (357 )     (380 )     (370 )
  Income before taxes (GAAP)   $ 27,610     $ 25,984     $ 24,438     $ 24,404     $ 25,015  
                                         
Income tax expense (benefit) reconciliation                                        
Income tax expense (benefit)   $ 10,399     $ 10,004     $ 9,395     $ 8,873     $ 9,885  
Taxable equivalent adjustment     (405 )     (377 )     (357 )     (380 )     (370 )
  Income tax expense (benefit) (GAAP)   $ 9,994     $ 9,627     $ 9,038     $ 8,493     $ 9,515  
                                         
Book value per common share reconciliation                                        
Tangible book value per common share   $ 12.10     $ 11.91     $ 11.63     $ 11.26     $ 10.95  
Effect of goodwill and other intangibles     .05       .03       .03       .04       .04  
  Book value per common share (GAAP)   $ 12.15     $ 11.94     $ 11.66     $ 11.30     $ 10.99  
                                         
Average equity to assets reconciliation                                        
Tangible common equity to assets     9.83 %     9.58 %     9.22 %     8.99 %     9.02 %
Effect of preferred equity     -       -       .28       2.60       2.74  
  Tangible equity to assets     9.83       9.58       9.50       11.59       11.76  
Effect of goodwill and other intangibles     .02       .03       .02       .03       .04  
  Equity to assets (GAAP)     9.85 %     9.61 %     9.52 %     11.62 %     11.80 %
                                         
Tangible common equity to risk-weighted assets reconciliation                                     
Tangible common equity to risk-weighted assets     14.10 %     13.92 %     13.63 %     13.18 %     13.34 %
Effect of other comprehensive income     .34       .53       .36       .39       .49  
Effect of deferred tax limitation     (3.39 )     (3.74 )     (3.92 )     (4.26 )     (4.72 )
Effect of trust preferred     1.02       1.04       1.03       1.04       1.09  
Effect of preferred equity     -       -       -       2.39       4.01  
  Tier I capital ratio (Regulatory)     12.07 %     11.75 %     11.10 %     12.74 %     14.21 %
   
   
   
UNITED COMMUNITY BANKS, INC.  
Non-GAAP Performance Measures Reconciliation  
Selected Financial Information  
   
   
    For the Nine Months  
    Ended September 30,  
(in thousands, except per share data; taxable equivalent)   2014     2013  
Interest revenue reconciliation                
Interest revenue - taxable equivalent   $ 185,616     $ 185,628  
Taxable equivalent adjustment     (1,139 )     (1,103 )
  Interest revenue (GAAP)   $ 184,477     $ 184,525  
                 
Net interest revenue reconciliation                
Net interest revenue - taxable equivalent   $ 166,086     $ 163,762  
Taxable equivalent adjustment     (1,139 )     (1,103 )
  Net interest revenue (GAAP)   $ 164,947     $ 162,659  
                 
Total revenue reconciliation                
Total operating revenue   $ 200,117     $ 144,341  
Taxable equivalent adjustment     (1,139 )     (1,103 )
  Total revenue (GAAP)   $ 198,978     $ 143,238  
                 
Income before taxes reconciliation                
Income before taxes   $ 79,171     $ 11,651  
Taxable equivalent adjustment     (1,139 )     (1,103 )
  Income before taxes (GAAP)   $ 78,032     $ 10,548  
                 
Income tax expense (benefit) reconciliation                
Income tax expense (benefit)   $ 29,798     $ (245,578 )
Taxable equivalent adjustment     (1,139 )     (1,103 )
  Income tax expense (benefit) (GAAP)   $ 28,659     $ (246,681 )
                 
Book value per common share reconciliation                
Tangible book value per common share   $ 12.10     $ 10.95  
Effect of goodwill and other intangibles     .05       .04  
  Book value per common share (GAAP)   $ 12.15     $ 10.99  
                 
Average equity to assets reconciliation                
Tangible common equity to assets     9.55 %     7.04 %
Effect of preferred equity     .09       2.81  
  Tangible equity to assets     9.64       9.85  
Effect of goodwill and other intangibles     .02       .06  
  Equity to assets (GAAP)     9.66 %     9.91 %
                 
Tangible common equity to risk-weighted assets reconciliation             
Tangible common equity to risk-weighted assets     14.10 %     13.34 %
Effect of other comprehensive income     .34       .49  
Effect of deferred tax limitation     (3.39 )     (4.72 )
Effect of trust preferred     1.02       1.09  
Effect of preferred equity     -       4.01  
  Tier I capital ratio (Regulatory)     12.07 %     14.21 %
 
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
 
 
    2014   2013

(in millions)
  Third
Quarter
  Second
Quarter
  First
Quarter
  Fourth
Quarter
  Third
Quarter
LOANS BY CATEGORY                              
Owner occupied commercial RE   $ 1,153   $ 1,163   $ 1,142   $ 1,134   $ 1,129
Income producing commercial RE     605     598     624     623     614
Commercial & industrial     650     554     495     472     457
Commercial construction     181     160     148     149     137
    Total commercial     2,589     2,475     2,409     2,378     2,337
Residential mortgage     866     861     866     875     888
Home equity lines of credit     459     451     447     441     421
Residential construction     307     302     318     328     318
Consumer installment     348     321     316     307     303
    Total loans   $ 4,569   $ 4,410   $ 4,356   $ 4,329   $ 4,267
                               
LOANS BY MARKET                              
North Georgia   $ 1,168   $ 1,175   $ 1,205   $ 1,240   $ 1,262
Atlanta MSA     1,289     1,305     1,290     1,275     1,246
North Carolina     553     555     563     572     575
Coastal Georgia     444     426     425     423     421
Gainesville MSA     254     257     262     255     253
East Tennessee     281     270     272     280     277
South Carolina / Corporate     337     206     131     88     47
Other (2)     243     216     208     196     186
    Total loans   $ 4,569   $ 4,410   $ 4,356   $ 4,329   $ 4,267
                               
RESIDENTIAL CONSTRUCTION                           
Dirt loans                              
  Acquisition & development   $ 36   $ 34   $ 37   $ 39   $ 40
  Land loans     35     36     37     38     35
  Lot loans     146     151     159     166     167
    Total     217     221     233     243     242
                               
House loans                              
  Spec     18     19     19     23     30
  Sold     72     62     66     62     46
    Total     90     81     85     85     76
Total residential construction   $ 307   $ 302   $ 318   $ 328   $ 318
 
(1) Excludes total loans of $2.8 million, $3.1 million, $19.3 million, $20.3 million and $23.3 million as of September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.
 
 
 
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Loan Portfolio Composition at Period-End (1)  
   
   
    2014   2013   Linked     Year over  
    Third   Second   Third   Quarter     Year  
(in millions)   Quarter   Quarter   Quarter   Change     Change  
LOANS BY CATEGORY                                  
Owner occupied commercial RE   $ 1,153   $ 1,163   $ 1,129   $ (10 )   $ 24  
Income producing commercial RE     605     598     614     7       (9 )
Commercial & industrial     650     554     457     96       193  
Commercial construction     181     160     137     21       44  
    Total commercial     2,589     2,475     2,337     114       252  
Residential mortgage     866     861     888     5       (22 )
Home equity lines of credit     459     451     421     8       38  
Residential construction     307     302     318     5       (11 )
Consumer installment     348     321     303     27       45  
    Total loans   $ 4,569   $ 4,410   $ 4,267     159       302  
                                   
LOANS BY MARKET                                  
North Georgia   $ 1,168   $ 1,175   $ 1,262     (7 )     (94 )
Atlanta MSA     1,289     1,305     1,246     (16 )     43  
North Carolina     553     555     575     (2 )     (22 )
Coastal Georgia     444     426     421     18       23  
Gainesville MSA     254     257     253     (3 )     1  
East Tennessee     281     270     277     11       4  
South Carolina / Corporate     337     206     47     131       290  
Other (2)     243     216     186     27       57  
    Total loans   $ 4,569   $ 4,410   $ 4,267     159       302  
                                   
RESIDENTIAL CONSTRUCTION                               
Dirt loans                                  
  Acquisition & development
  36   $ 34   $ 40     2       (4 )
  Land loans     35     36     35     (1 )     -  
  Lot loans     146     151     167     (5 )     (21 )
    Total     217     221     242     (4 )     (25 )
                                   
House loans                                  
  Spec     18     19     30     (1 )     (12 )
  Sold     72     62     46     10       26  
    Total     90     81     76     9       14  
Total residential construction   $ 307   $ 302   $ 318     5       (11 )
 
(1) Excludes total loans of $2.8 million, $3.1 million, $19.3 million, $20.3 million and $23.3 million as of September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.
   
   
   
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality (1)  
   
                   
    Third Quarter 2014  
(in thousands)   Non-performing Loans     Foreclosed Properties     Total NPAs  
NONPERFORMING ASSETS BY CATEGORY                  
Owner occupied CRE   $ 2,156     $ 1,024     $ 3,180  
Income producing CRE     1,742       42       1,784  
Commercial & industrial     1,593       -       1,593  
Commercial construction     148       -       148  
  Total commercial     5,639       1,066       6,705  
Residential mortgage     8,350       1,769       10,119  
Home equity lines of credit     720       90       810  
Residential construction     3,543       221       3,764  
Consumer installment     493       -       493  
  Total NPAs   $ 18,745     $ 3,146     $ 21,891  
  Balance as a % of  Unpaid Principal     68.6 %     54.5 %     66.1 %
                         
NONPERFORMING ASSETS BY MARKET                  
North Georgia   $ 7,392     $ 1,717     $ 9,109  
Atlanta MSA     1,724       364       2,088  
North Carolina     4,919       398       5,317  
Coastal Georgia     781       160       941  
Gainesville MSA     1,403       85       1,488  
East Tennessee     1,227       245       1,472  
South Carolina / Corporate     945       177       1,122  
Other (3)     354       -       354  
  Total NPAs   $ 18,745     $ 3,146     $ 21,891  
                         
                         
NONPERFORMING ASSETS ACTIVITY                  
Beginning Balance   $ 20,724     $ 2,969     $ 23,693  
Loans placed on non-accrual     7,665       -       7,665  
Payments received     (3,129 )     -       (3,129 )
Loan charge-offs     (4,353 )     -       (4,353 )
Foreclosures     (2,162 )     2,162       -  
Capitalized costs     -       209       209  
Property sales     -       (2,350 )     (2,350 )
Write downs     -       (108 )     (108 )
Net gains (losses) on sales     -       264       264  
  Ending Balance   $ 18,745     $ 3,146     $ 21,891  
     
(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.
(3)   Includes purchased indirect auto loans that are not assigned to a geographic region.
   
   
   
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality (1)  
   
   
    Second Quarter 2014  
(in thousands)   Non-performing Loans     Foreclosed Properties     Total NPAs  
NONPERFORMING ASSETS BY CATEGORY              
Owner occupied CRE   $ 2,975     $ 653     $ 3,628  
Income producing CRE     1,032       242       1,274  
Commercial & industrial     1,102       -       1,102  
Commercial construction     95       -       95  
  Total commercial     5,204       895       6,099  
Residential mortgage     10,201       1,426       11,627  
Home equity lines of credit     510       128       638  
Residential construction     4,248       520       4,768  
Consumer installment     561       -       561  
  Total NPAs   $ 20,724     $ 2,969     $ 23,693  
  Balance as a % of  Unpaid Principal     66.5 %     .4 %     3.9 %
                         
NONPERFORMING ASSETS BY MARKET                  
North Georgia   $ 8,216     $ 1,392     $ 9,608  
Atlanta MSA     3,883       510       4,393  
North Carolina     5,314       615       5,929  
Coastal Georgia     782       80       862  
Gainesville MSA     921       49       970  
East Tennessee     1,218       323       1,541  
South Carolina / Corporate     -       -       -  
Other (3)     390       -       390  
  Total NPAs   $ 20,724     $ 2,969     $ 23,693  
                         
                         
NONPERFORMING ASSETS ACTIVITY                  
Beginning Balance   $ 25,250     $ 5,594     $ 30,844  
Loans placed on non-accrual     9,529       -       9,529  
Payments received     (4,027 )     -       (4,027 )
Loan charge-offs     (8,341 )     -       (8,341 )
Foreclosures     (1,687 )     1,687       -  
Capitalized costs     -       -       -  
Property sales     -       (4,430 )     (4,430 )
Write downs     -       (305 )     (305 )
Net gains (losses) on sales     -       423       423  
  Ending Balance   $ 20,724     $ 2,969     $ 23,693  
     
(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.
(3)   Includes purchased indirect auto loans that are not assigned to a geographic region.
   
   
   
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality (1)  
   
   
    First Quarter 2014  
(in thousands)   Non-performing Loans     Foreclosed Properties     Total NPAs  
NONPERFORMING ASSETS BY CATEGORY              
Owner occupied CRE   $ 3,868     $ 1,167     $ 5,035  
Income producing CRE     1,278       1,645       2,923  
Commercial & industrial     822       -       822  
Commercial construction     479       -       479  
  Total commercial     6,447       2,812       9,259  
Residential mortgage     13,307       2,146       15,453  
Home equity lines of credit     1,106       362       1,468  
Residential construction     3,805       274       4,079  
Consumer installment     585       -       585  
  Total NPAs   $ 25,250     $ 5,594     $ 30,844  
  Balance as a % of U npaid Principal     65.8 %     53.9 %     63.2 %
                         
NONPERFORMING ASSETS BY MARKET                  
North Georgia   $ 12,166     $ 2,058     $ 14,224  
Atlanta MSA     2,916       904       3,820  
North Carolina     6,501       866       7,367  
Coastal Georgia     800       1,607       2,407  
Gainesville MSA     1,145       -       1,145  
East Tennessee     1,428       159       1,587  
South Carolina / Corporate     -       -       -  
Other (3)     294       -       294  
  Total NPAs   $ 25,250     $ 5,594     $ 30,844  
                         
                         
NONPERFORMING ASSETS ACTIVITY                  
Beginning Balance   $ 26,819     $ 4,221     $ 31,040  
Loans placed on non-accrual     9,303       -       9,303  
Payments received     (1,666 )     -       (1,666 )
Loan charge-offs     (4,839 )     -       (4,839 )
Foreclosures     (4,367 )     4,367       -  
Capitalized costs     -       -       -  
Property sales     -       (3,238 )     (3,238 )
Write downs     -       (277 )     (277 )
Net gains (losses) on sales     -       521       521  
  Ending Balance   $ 25,250     $ 5,594     $ 30,844  
                         
(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.
(3)   Includes purchased indirect auto loans that are not assigned to a geographic region.
   
   
   
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality (1)  
   
   
    Third Quarter 2014     Second Quarter 2014     First Quarter 2014  



(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   $ 746     .26 %   $ (1,836 )   (.64) %   $ 278   .10 %
Income producing CRE     104     .07       435     .29       205   .13  
Commercial & industrial     (341 )   (.23 )     662     .52       421   .35  
Commercial construction     103     .24       131     .34       -   -  
  Total commercial     612     .10       (608 )   (.10 )     904   .15  
Residential mortgage     1,116     .52       2,509     1.17       1,515   .71  
Home equity lines of credit     356     .31       466     .42       993   .90  
Residential construction     712     .94       1,671     2.13       212   .27  
Consumer installment     359     .43       137     .18       415   .54  
  Total   $ 3,155     .28     $ 4,175     .38     $ 4,039   .38  
                                         
                                         
NET CHARGE-OFFS BY MARKET                                  
North Georgia   $ 1,861     .63 %   $ (741 )   (.25) %   $ 1,272   .42 %
Atlanta MSA     (250 )   (.08 )     1,481     .46       1,232   .39  
North Carolina     656     .47       2,161     1.55       577   .41  
Coastal Georgia     228     .21       116     .11       512   .49  
Gainesville MSA     259     .40       797     1.23       141   .22  
East Tennessee     230     .33       288     .42       239   .35  
South Carolina / Corporate     5     .01       -     -       -   -  
Other (3)     166     .31       73     .14       66   .14  
  Total   $ 3,155     .28     $ 4,175     .38     $ 4,039   .38  
     
(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.
(3)   Includes purchased indirect auto loans that are not assigned to a geographic region.
   
   
   
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)   2014   2013   2014     2013  
Interest revenue:                            
  Loans, including fees   $ 49,653   $ 50,162   $ 145,602     $ 151,827  
  Investment securities, including tax exempt of $177, $202, $558 and $624     12,346     9,887     36,118       29,905  
  Deposits in banks and short-term investments     934     1,007     2,757       2,793  
      Total interest revenue     62,933     61,056     184,477       184,525  
                             
Interest expense:                            
  Deposits:                            
    NOW     365     413     1,216       1,286  
    Money market     872     545     2,192       1,641  
    Savings     20     37     61       109  
    Time     1,721     2,630     5,510       8,871  
      Total deposit interest expense     2,978     3,625     8,979       11,907  
  Short-term borrowings     316     525     2,064       1,563  
  Federal Home Loan Bank advances     435     16     573       65  
  Long-term debt     2,642     3,003     7,914       8,331  
    Total interest expense     6,371     7,169     19,530       21,866  
    Net interest revenue     56,562     53,887     164,947       162,659  
  Provision for credit losses     2,000     3,000     6,700       62,500  
    Net interest revenue after provision for credit losses     54,562     50,887     158,247       100,159  
                             
Fee revenue:                            
  Service charges and fees     8,202     8,456     24,627       23,831  
  Mortgage loan and other related fees     2,178     2,554     5,409       8,212  
  Brokerage fees     1,209     1,274     3,631       3,104  
  Securities gains, net     11     -     4,663       116  
  Loss from prepayment of debt     -     -     (4,446 )     -  
  Other     2,812     1,941     6,847       7,816  
    Total fee revenue     14,412     14,225     40,731       43,079  
    Total revenue     68,974     65,112     198,978       143,238  
                             
Operating expenses:                            
  Salaries and employee benefits     25,666     23,090     74,349       71,416  
  Communications and equipment     3,094     3,305     9,370       9,819  
  Occupancy     3,425     3,379     10,065       10,195  
  Advertising and public relations     894     962     2,659       2,937  
  Postage, printing and supplies     876     644     2,456       2,401  
  Professional fees     2,274     2,650     5,873       7,515  
  Foreclosed property     285     194     503       7,678  
  FDIC assessments and other regulatory charges     1,131     2,405     3,909       7,415  
  Amortization of intangibles     313     427     1,061       1,623  
  Other     3,406     3,041     10,701       11,691  
    Total operating expenses     41,364     40,097     120,946       132,690  
    Net income before income taxes     27,610     25,015     78,032       10,548  
  Income tax expense (benefit)     9,994     9,515     28,659       (246,681 )
    Net income     17,616     15,500     49,373       257,229  
  Preferred stock dividends and discount accretion     -     3,059     439       9,166  
    Net income available to common shareholders   $ 17,616   $ 12,441   $ 48,934     $ 248,063  
                             
Earnings per common share:                            
  Basic   $ .29   $ .21   $ .81     $ 4.24  
  Diluted     .29     .21     .81       4.24  
Weighted average common shares outstanding:                            
  Basic     60,776     59,100     60,511       58,443  
  Diluted     60,779     59,202     60,513       58,444  
          
          
          
UNITED COMMUNITY BANKS, INC.         
Consolidated Balance Sheet (Unaudited)         
          
 
(in thousands, except share and per share data)
 
 
September 30,
2014
 
 
 
 
December 31,
2013
 
 
 
 
September 30,
2013
 
 
ASSETS                        
  Cash and due from banks   $ 75,268     $ 71,230     $ 70,986  
  Interest-bearing deposits in banks     117,399       119,669       131,147  
  Short-term investments     23,397       37,999       62,000  
    Cash and cash equivalents     216,064       228,898       264,133  
  Securities available for sale     1,789,667       1,832,217       1,963,424  
  Securities held to maturity (fair value $440,311, $485,585 and $214,651)     432,418       479,742       205,613  
  Mortgage loans held for sale     20,004       10,319       11,987  
  Loans, net of unearned income     4,568,886       4,329,266       4,267,067  
    Less allowance for loan losses     (71,928 )     (76,762 )     (80,372 )
      Loans, net     4,496,958       4,252,504       4,186,695  
  Assets covered by loss sharing agreements with the FDIC     3,253       22,882       31,207  
  Premises and equipment, net     160,454       163,589       165,993  
  Bank owned life insurance     81,101       80,670       80,537  
  Accrued interest receivable     19,908       19,598       18,199  
  Goodwill and other intangible assets     3,910       3,480       3,888  
  Foreclosed property     3,146       4,221       4,467  
  Net deferred tax asset     224,734       258,518       269,784  
  Derivative financial instruments     22,221       23,833       8,092  
  Other assets     52,051       44,948       29,274  
    Total assets   $ 7,525,889     $ 7,425,419     $ 7,243,293  
LIABILITIES AND SHAREHOLDERS' EQUITY                        
Liabilities:                        
    Deposits:                        
      Demand   $ 1,561,020     $ 1,388,512     $ 1,418,782  
      NOW     1,399,449       1,427,939       1,279,134  
      Money market     1,281,526       1,227,575       1,197,495  
      Savings     287,797       251,125       249,044  
      Time:                        
        Less than $100,000     774,201       892,961       925,089  
        Greater than $100,000     531,428       588,689       624,019  
    Brokered     405,308       424,704       419,344  
          Total deposits     6,240,729       6,201,505       6,112,907  
  Short-term borrowings     6,001       53,241       53,769  
  Federal Home Loan Bank advances     330,125       120,125       125  
  Long-term debt     129,865       129,865       129,865  
  Derivative financial instruments     36,171       46,232       37,269  
  Unsettled securities purchases     -       29,562       11,610  
  Accrued expenses and other liabilities     46,573       49,174       45,531  
    Total liabilities     6,789,464       6,629,704       6,391,076  
Shareholders' equity:                        
  Preferred stock, $1 par value; 10,000,000 shares authorized;                        
    Series A; $10 stated value; 0, 0 and 21,700 shares issued and outstanding     -       -       217  
    Series B; $1,000 stated value; 0, 105,000 and 180,000 shares issued and outstanding     -       105,000       179,714  
    Series D; $1,000 stated value; 0, 16,613 and 16,613 shares issued and outstanding     -       16,613       16,613  
  Common stock, $1 par value; 100,000,000 shares authorized; 50,167,191, 46,243,345 and 45,222,839 shares issued and outstanding    
50,167
     
46,243
     
45,223
 
  Common stock, non-voting, $1 par value; 26,000,000 shares authorized; 10,080,787, 13,188,206 and 14,189,006 shares issued and outstanding    
10,081
     
13,188
     
14,189
 
  Common stock issuable; 354,961, 241,832 and 242,262 shares     5,116       3,930       3,979  
  Capital surplus     1,091,555       1,078,676       1,077,536  
  Accumulated deficit     (402,773 )     (448,091 )     (461,090 )
  Accumulated other comprehensive loss     (17,721 )     (19,844 )     (24,164 )
    Total shareholders' equity     736,425       795,715       852,217  
    Total liabilities and shareholders' equity   $ 7,525,889     $ 7,425,419     $ 7,243,293  
   
   
   
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Three Months Ended September 30,  
   
    2014     2013  

(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)   $ 4,445,947     $ 49,853   4.45 %   $ 4,249,892     $ 50,265   4.69 %
  Taxable securities (3)     2,212,116       12,169   2.20       2,157,448       9,685   1.80  
  Tax-exempt securities (1)(3)     18,794       290   6.17       20,913       331   6.32  
  Federal funds sold and other interest-earning assets     143,169       1,026   2.87       186,544       1,145   2.46  
    Total interest-earning assets     6,820,026       63,338   3.69       6,614,797       61,426   3.69  
Non-interest-earning assets:                                        
  Allowance for loan losses     (74,146 )                 (83,408 )            
  Cash and due from banks     71,224                   63,890              
  Premises and equipment     161,315                   166,906              
  Other assets (3)     395,184                   407,912              
    Total assets   $ 7,373,603                 $ 7,170,097              
Liabilities and Shareholders' Equity:                                        
Interest-bearing liabilities:                                        
  Interest-bearing deposits:                                        
    NOW   $ 1,331,806       365   .11     $ 1,222,334       413   .13  
    Money market     1,387,042       872   .25       1,328,661       545   .16  
    Savings     282,746       20   .03       248,937       37   .06  
    Time less than $100,000     791,289       876   .44       952,320       1,369   .57  
    Time greater than $100,000     542,216       827   .61       644,264       1,229   .76  
    Brokered time deposits     278,330       18   .03       233,842       32   .05  
      Total interest-bearing deposits     4,613,429       2,978   .26       4,630,358       3,625   .31  
    Federal funds purchased and other borrowings     53,713       316   2.33       67,292       525   3.10  
    Federal Home Loan Bank advances     227,190       435   .76       32,082       16   .20  
    Long-term debt     129,865       2,642   8.07       144,601       3,003   8.24  
      Total borrowed funds     410,768       3,393   3.28       243,975       3,544   5.76  
      Total interest-bearing liabilities     5,024,197       6,371   .50       4,874,333       7,169   .58  
Non-interest-bearing liabilities:                                        
  Non-interest-bearing deposits     1,530,011                   1,356,792              
  Other liabilities     92,986                   93,247              
      Total liabilities     6,647,194                   6,324,372              
Shareholders' equity     726,409                   845,725              
      Total liabilities and shareholders' equity   $ 7,373,603                 $ 7,170,097              
Net interest revenue           $ 56,967                 $ 54,257      
Net interest-rate spread                 3.19 %                 3.11 %
Net interest margin (4)                 3.32 %                 3.26 %
     
(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 $7.42 million in 2014 and pretax unrealized losses of $10.6 million in 2013 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,  
   
    2014     2013  

(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)   $ 4,392,895     $ 146,156   4.45 %   $ 4,233,531     $ 152,073   4.80 %
  Taxable securities (3)     2,272,639       35,560   2.09       2,138,725       29,281   1.83  
  Tax-exempt securities (1)(3)     19,515       914   6.24       21,411       1,022   6.36  
  Federal funds sold and other interest-earning assets     150,782       2,986   2.64       196,445       3,252   2.21  
    Total interest-earning assets     6,835,831       185,616   3.63       6,590,112       185,628   3.76  
Non-interest-earning assets:                                        
  Allowance for loan losses     (76,148 )                 (100,154 )            
  Cash and due from banks     65,744                   63,879              
  Premises and equipment     161,843                   168,144              
  Other assets (3)     404,654                   252,275              
    Total assets   $ 7,391,924                 $ 6,974,256              
Liabilities and Shareholders' Equity:                                        
Interest-bearing liabilities:                                        
  Interest-bearing deposits:                                        
    NOW   $ 1,367,713       1,216   .12     $ 1,256,684       1,286   .14  
    Money market     1,375,064       2,192   .21       1,297,792       1,641   .17  
    Savings     272,696       61   .03       242,807       109   .06  
    Time less than $100,000     828,694       2,822   .46       997,193       4,686   .63  
    Time greater than $100,000     561,167       2,610   .62       670,821       4,086   .81  
    Brokered time deposits     300,374       78   .03       201,599       99   .07  
      Total interest-bearing deposits     4,705,708       8,979   .26       4,666,896       11,907   .34  
    Federal funds purchased and other borrowings     91,320       2,064   3.02       70,512       1,563   2.96  
    Federal Home Loan Bank advances     169,392       573   .45       41,352       65   .21  
    Long-term debt     129,865       7,914   8.15       131,491       8,331   8.47  
      Total borrowed funds     390,577       10,551   3.61       243,355       9,959   5.47  
      Total interest-bearing liabilities     5,096,285       19,530   .51       4,910,251       21,866   .60  
Non-interest-bearing liabilities:                                        
  Non-interest-bearing deposits     1,469,967                   1,305,133              
  Other liabilities     111,522                   68,312              
      Total liabilities     6,677,774                   6,283,696              
Shareholders' equity     714,150                   690,560              
      Total liabilities and shareholders' equity   $ 7,391,924                 $ 6,974,256              
Net interest revenue           $ 166,086                 $ 163,762      
Net interest-rate spread                 3.12 %                 3.16 %
Net interest margin (4)                 3.25 %                 3.32 %
     
(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 $1.59 million in 2014 and pretax unrealized gains of $7.96 million in 2013 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
Rex_Schuette@ucbi.com

Source: United Community Banks, Inc.

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