United Community Banks, Inc. Reports 16 Percent Gain in Diluted Earnings per Share for Fourth Quarter 2006
HIGHLIGHTS:
-- Record Fourth Quarter Earnings
Diluted Earnings per Share of 44 cents -- Up 16 Percent
Net Income of $18.4 Million -- Up 21 Percent
Return on Tangible Equity of 17.49 Percent
Total Assets Surpass $7 Billion
-- Strong Loan and Deposit Growth Drive Performance
-- Completed Acquisition of Southern National Bank
-- Banking Offices Surpass 100 -- De Novo Opportunities Continue
United Community Banks, Inc. (NASDAQ: UCBI), Georgia's third-largest bank holding company, today announced record financial results for the fourth quarter of 2006. Compared with the fourth quarter of 2005, the company achieved an 18 percent increase in total revenue, a 21 percent rise in net income and a 16 percent gain in diluted earnings per share.
For the fourth quarter of 2006, net income was $18.4 million compared with $15.2 million for 2005. Diluted earnings per share increased to 44 cents from 38 cents a year ago. Total revenue, on a taxable equivalent basis, was $72.1 million compared with $61.3 million for the fourth quarter of 2005. Return on tangible equity was 17.49 percent and return on assets was 1.10 percent, compared with 18.20 percent and 1.05 percent, respectively, a year ago.
For the year, net income increased $12.1 million to a record $68.8 million, up 21 percent from $56.7 million for 2005. Diluted earnings per share of $1.66 increased 23 cents, or 16 percent, from $1.43 for 2005. Total revenue, on a taxable equivalent basis, was $272.4 million, up 18 percent from $230.8 million a year ago. Return on tangible equity was 17.52 percent and return on assets was 1.09 percent, compared with 18.99 percent and 1.04 percent, respectively, a year ago.
"The fourth quarter of 2006 and year were outstanding by all measures for United Community Banks," said Jimmy Tallent, president and chief executive officer. "Loans increased $411 million during the fourth quarter, including $267 million in loans received through our recent acquisition of Southern National Bank. Excluding acquired loans, organic loan growth was 16 percent for the year and grew $144 million, or 12% on an annualized basis, from last quarter. The growth in loans was the key driver of the increase in net interest revenue this quarter along with a five basis point expansion in our net interest margin as compared to the fourth quarter of 2005. We continued to fund our loan growth with customer deposits, adding $213 million this quarter plus $286 million that was added through the Southern National acquisition. At December 31, 2006, total loans were $5.4 billion, up $978 million, or 22 percent, from a year ago. Our strong core loan growth and the acquisition pushed total assets to $7.1 billion, a 21 percent increase from a year ago."
"Organic growth, with an uncompromising focus on sound credit quality, is at the foundation of our balanced growth strategy. This is further supported by our focused de novo expansion and selective acquisitions," Tallent said. "We find the right people and build around them. During the fourth quarter, our de novo office expansion continued and we opened two banking offices in western North Carolina in Hendersonville and Blowing Rock. Also, we opened our 100th banking office in Commerce, Georgia, located along the heavily traveled Interstate 85 corridor. Those new locations follow four other banking offices that were opened earlier in 2006 in Oakwood, Cumming, Jasper and Savannah, Georgia as well as the formation of our 25th community bank in Cleveland, Tennessee," added Tallent. "We continue to look for opportunities to expand our franchise through de novo locations in both new and existing markets."
Tallent continued, "Our balanced growth strategy also includes selective acquisitions. In December, by completing the acquisition of Southern National Bank we added two new locations in Marietta and Canton, Georgia with approximately $370 million in assets. The Southern National acquisition significantly leverages our presence in northern metro Atlanta, especially Cherokee County, which is one of the fastest-growing large counties in the country," Tallent said. "United Community Bank - Cherokee became our 26th community bank with deposit market share in the county increasing from fifteenth to ninth. We have a great opportunity to significantly expand our franchise in this high-growth market. Also, with the addition of Southern National's Marietta office we gained a key location and increased our deposit market share from fourteenth to seventh in Cobb County. We now have five locations in Cobb County, the fourth largest by population of 28 counties the Atlanta MSA."
For the fourth quarter of 2006, net interest revenue of $62.6 million was up $9.1 million, or 17 percent, from the fourth quarter of 2005. Net interest margin for the fourth quarter was 3.99 percent, compared with 3.94 percent a year ago and 4.07 percent last quarter. "We benefited from rising rates over the past year, which expanded our margin by five basis points as compared to a year ago," stated Tallent. "The decline in the margin from the third quarter was due primarily to several programs focused at generating deposits in our new markets that concluded in the fourth quarter as well as higher costs of wholesale borrowings. During the fourth quarter of 2006, the company elected to reclassify loan origination fees previously included in net interest revenue with an offsetting amount of direct loan origination costs that had been included in salaries and employee benefits," added Tallent. "United's net interest revenue and operating expenses as well as net interest margin and operating efficiency ratio decreased as a result of those reclassifications for the fourth quarter and prior periods. However, the reclassifications had no impact on net income or equity in any of the reported periods."
The fourth quarter provision for loan losses was $3.7 million, an increase of $200,000 from a year earlier and equal to the third quarter of 2006. Annualized net charge-offs to average loans was 15 basis points for the fourth quarter, compared with 16 basis points for the fourth quarter of 2005 and 11 basis points for the third quarter of 2006. At year-end, non-performing assets totaled $13.7 million, compared with $13.0 million a year ago and $9.3 million at the end of the third quarter of 2006. Non-performing assets as a percentage of total assets was 19 basis points at year-end, compared with 22 basis points at December 31, 2005 and 14 basis points at September 30, 2006. "We have been at historic low levels of non-performing assets through most of 2006. Even with the slight rise at year-end, we are still operating below our long-term range of 20 to 35 basis points and well below peer banks," Tallent stated. "Strong credit quality, rooted with our guiding principle of securing loans with hard assets, is essential to our balanced growth strategy and overall success."
Fee revenue of $13.2 million grew 1.8 million, or 16 percent, from $11.4 million for the fourth quarter of 2005. Service charges and fees on deposit accounts increased $448,000 to $7.1 million, primarily due to growth in transactions and new accounts resulting from core deposit programs and higher ATM and debit card usage fees. Mortgage fees rose $416,000 to $2.2 million due to higher volumes and pricing of mortgages sold -- mortgage loans closed during the fourth quarter were $103 million compared with $96 million for 2005. Consulting fees were up $430,000, or 26 percent, from a year ago reflecting strong growth in the risk management and advisory service practices.
Operating expenses increased $5.5 million to $42.5 million, a 15 percent increase from the fourth quarter of 2005. Of that increase, the Southern National acquisition added $670,000 in expenses, including $132,000 in non-recurring integration charges. Salaries and employee benefit costs of $26.5 million increased $4.4 million, or 20 percent, from the fourth quarter of 2005, due to the increase in staff to support our expansion activities and business growth as well as higher health care costs and expensing of stock options in 2006. Communications and equipment expenses increased $525,000 to $4.1 million due to further investments and upgrades in technology equipment to support business growth and additional banking offices. Occupancy expense increased $133,000 to $2.8 million reflecting the increase in cost to operate additional banking offices. Postage, printing and supplies expense rose $209,000 to $1.6 million primarily due to business growth and marketing campaigns. Professional fees increased $251,000 to $1.3 million reflecting the cost of various corporate initiatives.
"We had positive operating leverage of three percent this quarter," Tallent said. "Also, our operating efficiency ratio of 55.93 percent was below our long-term efficiency goal of 56 to 58 percent. This reflects the continued strength of our existing franchise, strong revenue growth and disciplined expense controls, which more than offset the cost of reinvesting for the future through our significant de novo expansion efforts."
"Our outlook for 2007 is for earnings per share growth within our long-term goal of 12 to 15 percent," Tallent said. "We anticipate core loan growth for 2007 to be within our normal range of 10 to 14 percent. For 2007, we expect our net interest margin to improve slightly from the current level due to the maturity of higher priced wholesale borrowings and swaps. This outlook assumes stable economic and rate environments and continued strong credit quality."
"We had outstanding performance for 2006, which reflected the hard work of our exceptional team of bankers who always put their customers first," Tallent concluded. "We are committed to excellent customer service, solid credit quality, and building shareholder value through consistent, sustained double-digit growth in earnings per share while expanding our franchise."
Conference Call
United Community Banks will hold a conference call on Tuesday, January 23, 2007, at 11 a.m. ET to discuss the contents of this news release, as well as business highlights for the quarter and the financial outlook for 2007. The telephone number for the conference call is (866) 510-0705 and the pass code is "UCBI." The conference call will also be available by web cast within the Investor Relations section of the company's web site at www.ucbi.com.
About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $7.1 billion and operates 26 community banks with 101 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the company's web site at www.ucbi.com.
Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward Looking Statements" on page 4 of United Community Banks, Inc.'s annual report filed on Form 10-K with the Securities and Exchange Commission.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
2006
-------------------------------------
(in thousands, except per share Fourth Third Second
data; taxable equivalent) Quarter Quarter Quarter
----------- ----------- -----------
INCOME SUMMARY
Interest revenue $ 123,463 $ 116,304 $ 107,890
Interest expense 60,912 55,431 49,407
----------- ----------- -----------
Net interest revenue 62,551 60,873 58,483
Provision for loan losses 3,700 3,700 3,700
Fee revenue 13,215 12,146 11,976
----------- ----------- -----------
Total revenue 72,066 69,319 66,759
Operating expenses 42,521 41,441 39,645
----------- ----------- -----------
Income before taxes 29,545 27,878 27,114
Income taxes 11,111 10,465 10,185
----------- ----------- -----------
Net income $ 18,434 $ 17,413 $ 16,929
=========== =========== ===========
PERFORMANCE MEASURES
Per common share:
Basic earnings $ .45 $ .43 $ .42
Diluted earnings .44 .42 .41
Cash dividends declared .08 .08 .08
Book value 14.37 13.07 12.34
Tangible book value (2) 10.57 10.16 9.50
Key performance ratios:
Return on tangible equity
(1)(2)(3) 17.49% 17.29% 17.68%
Return on equity (1)(3) 13.26 13.22 13.41
Return on assets (3) 1.10 1.09 1.10
Net interest margin (3) 3.99 4.07 4.07
Efficiency ratio 55.93 56.46 56.27
Dividend payout ratio 17.78 18.60 19.05
Equity to assets 8.21 8.04 7.95
Tangible equity to assets (2) 6.46 6.35 6.22
ASSET QUALITY
Allowance for loan losses $ 66,566 $ 60,901 $ 58,508
Non-performing assets 13,654 9,347 8,805
Net charge-offs 1,930 1,307 1,042
Allowance for loan losses to loans 1.24% 1.23% 1.22%
Non-performing assets to total
assets .19 .14 .14
Net charge-offs to average loans
(3) .15 .11 .09
AVERAGE BALANCES
Loans $ 5,134,721 $ 4,865,886 $ 4,690,196
Investment securities 1,059,125 1,029,981 1,039,707
Earning assets 6,225,943 5,942,710 5,758,697
Total assets 6,669,950 6,350,205 6,159,152
Deposits 5,517,696 5,085,168 4,842,389
Shareholders' equity 547,419 510,791 489,821
Common shares outstanding:
Basic 41,096 40,223 40,156
Diluted 42,311 41,460 41,328
AT PERIOD END
Loans $ 5,376,538 $ 4,965,365 $ 4,810,277
Investment securities 1,107,153 980,273 974,524
Earning assets 6,565,730 6,012,987 5,862,614
Total assets 7,101,249 6,455,290 6,331,136
Deposits 5,772,886 5,309,219 4,976,650
Shareholders' equity 616,767 526,734 496,297
Common shares outstanding 42,891 40,269 40,179
(1) Net income available to common shareholders, which excludes 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.
2006 2005 Fourth
----------- ----------- Quarter
(in thousands, except per share First Fourth 2006-2005
data; taxable equivalent) Quarter Quarter Change
----------- ----------- -----------
INCOME SUMMARY
Interest revenue $ 99,038 $ 91,997
Interest expense 43,065 38,576
----------- -----------
Net interest revenue 55,973 53,421 17%
Provision for loan losses 3,500 3,500
Fee revenue 11,758 11,373 16
----------- -----------
Total revenue 64,231 61,294 18
Operating expenses 38,463 37,052 15
----------- -----------
Income before taxes 25,768 24,242 22
Income taxes 9,729 9,012
----------- -----------
Net income $ 16,039 $ 15,230 21
=========== ===========
PERFORMANCE MEASURES
Per common share:
Basic earnings $ .40 $ .39 15
Diluted earnings .39 .38 16
Cash dividends declared .08 .07 14
Book value 12.09 11.80 22
Tangible book value (2) 9.25 8.94 18
Key performance ratios:
Return on tangible equity
(1)(2)(3) 17.66% 18.20%
Return on equity (1)(3) 13.25 13.30
Return on assets (3) 1.09 1.05
Net interest margin (3) 4.06 3.94
Efficiency ratio 56.79 56.61
Dividend payout ratio 20.00 17.95
Equity to assets 8.04 7.69
Tangible equity to assets (2) 6.24 5.82
ASSET QUALITY
Allowance for loan losses $ 55,850 $ 53,595
Non-performing assets 8,367 12,995
Net charge-offs 1,245 1,793
Allowance for loan losses to loans 1.22% 1.22%
Non-performing assets to total
assets .14 .22
Net charge-offs to average loans
(3) .11 .16
AVERAGE BALANCES
Loans $ 4,505,494 $ 4,328,613 19
Investment securities 1,038,683 1,004,966 5
Earning assets 5,574,712 5,383,096 16
Total assets 5,960,801 5,769,632 16
Deposits 4,613,810 4,354,275 27
Shareholders' equity 478,960 443,746 23
Common shares outstanding:
Basic 40,088 39,084
Diluted 41,190 40,379
AT PERIOD END
Loans $ 4,584,155 $ 4,398,286 22
Investment securities 983,846 990,687 12
Earning assets 5,633,381 5,470,718 20
Total assets 6,070,596 5,865,756 21
Deposits 4,748,438 4,477,600 29
Shareholders' equity 485,414 472,686 30
Common shares outstanding 40,119 40,020
(1) Net income available to common shareholders, which excludes 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.
For the Twelve
(in thousands, except per share Months Ended YTD
data; taxable equivalent) ------------------------ 2006-2005
2006 2005 Change
----------- ----------- -----------
(unaudited)
INCOME SUMMARY
Interest revenue $ 446,695 $ 324,225
Interest expense 208,815 127,426
----------- -----------
Net interest revenue 237,880 196,799 21%
Provision for loan losses 14,600 12,100
Fee revenue 49,095 46,148 6
----------- -----------
Total revenue 272,375 230,847 18
Operating expenses 162,070 140,808 15
----------- -----------
Income before taxes 110,305 90,039 23
Income taxes 41,490 33,297
----------- -----------
Net income $ 68,815 $ 56,742 21
=========== ===========
PERFORMANCE MEASURES
Per common share:
Basic earnings $ 1.70 $ 1.47 16
Diluted earnings 1.66 1.43 16
Cash dividends declared .32 .28 14
Book value 14.37 11.80 22
Tangible book value (2) 10.57 8.94 18
Key performance ratios:
Return on tangible equity
(1)(2)(3) 17.52% 18.99%
Return on equity (1)(3) 13.28 13.46
Return on assets (3) 1.09 1.04
Net interest margin (3) 4.05 3.85
Efficiency ratio 56.35 57.77
Dividend payout ratio 18.82 19.05
Equity to assets 8.06 7.63
Tangible equity to assets (2) 6.32 5.64
ASSET QUALITY
Allowance for loan losses $ 66,566 $ 53,595
Non-performing assets 13,654 12,995
Net charge-offs 5,524 5,701
Allowance for loan losses to loans 1.24% 1.22%
Non-performing assets to total
assets .19 .22
Net charge-offs to average loans
(3) .12 .14
AVERAGE BALANCES
Loans $ 4,800,981 $ 4,061,091 18
Investment securities 1,041,897 989,201 5
Earning assets 5,877,483 5,109,053 15
Total assets 6,287,148 5,472,200 15
Deposits 5,017,435 4,003,084 25
Shareholders' equity 506,946 417,309 21
Common shares outstanding:
Basic 40,393 38,477
Diluted 41,575 39,721
AT PERIOD END
Loans $ 5,376,538 $ 4,398,286 22
Investment securities 1,107,153 990,687 12
Earning assets 6,565,730 5,470,718 20
Total assets 7,101,249 5,865,756 21
Deposits 5,772,886 4,477,600 29
Shareholders' equity 616,767 472,686 30
Common shares outstanding 42,891 40,020
(1) Net income available to common shareholders, which excludes 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.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Years Ended December 31,
(in thousands, except per share
data; taxable equivalent) 2006 2005 2004
----------- ----------- ------------
(unaudited)
INCOME SUMMARY
Interest revenue $ 446,695 $ 324,225 $ 227,792
Interest expense 208,815 127,426 74,794
----------- ----------- ------------
Net interest revenue 237,880 196,799 152,998
Provision for loan losses 14,600 12,100 7,600
Fee revenue 49,095 46,148 39,539
----------- ----------- ------------
Total revenue 272,375 230,847 184,937
Operating expenses (1) 162,070 140,808 110,974
----------- ----------- ------------
Income before taxes 110,305 90,039 73,963
Income taxes 41,490 33,297 26,807
----------- ----------- ------------
Net operating income 68,815 56,742 47,156
Merger-related charges, net of tax - - 565
----------- ----------- ------------
Net income $ 68,815 $ 56,742 $ 46,591
=========== =========== ============
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic $ 1.70 $ 1.47 $ 1.31
Diluted 1.66 1.43 1.27
Return on tangible equity (2)(3) 17.52% 18.99% 19.74
Return on assets 1.09 1.04 1.07
Efficiency ratio 56.35 57.77 57.65
Dividend payout ratio 18.82 19.05 18.32
GAAP PERFORMANCE
Per common share:
Basic earnings $ 1.70 $ 1.47 $ 1.29
Diluted earnings 1.66 1.43 1.25
Cash dividends declared
(rounded) .32 .28 .24
Book value 14.37 11.80 10.39
Tangible book value (3) 10.57 8.94 7.34
Key performance ratios:
Return on equity (2) 13.28% 13.46% 14.39
Return on assets 1.09 1.04 1.05
Net interest margin 4.05 3.85 3.71
Dividend payout ratio 18.82 19.05 18.60
Equity to assets 8.06 7.63 7.45
Tangible equity to assets (3) 6.32 5.64 5.78
ASSET QUALITY
Allowance for loan losses $ 66,566 $ 53,595 $ 47,196
Non-performing assets 13,654 12,995 8,725
Net charge-offs 5,524 5,701 3,617
Allowance for loan losses to
loans 1.24% 1.22% 1.26
Non-performing assets to total
assets .19 .22 .17
Net charge-offs to average loans .12 .14 .11
AVERAGE BALANCES
Loans $ 4,800,981 $ 4,061,091 $ 3,322,916
Investment securities 1,041,897 989,201 734,577
Earning assets 5,877,483 5,109,053 4,119,327
Total assets 6,287,148 5,472,200 4,416,835
Deposits 5,017,435 4,003,084 3,247,612
Stockholders' equity 506,946 417,309 329,225
Common shares outstanding:
Basic 40,393 38,477 36,071
Diluted 41,575 39,721 37,273
AT PERIOD END
Loans $ 5,376,538 $ 4,398,286 $ 3,734,905
Investment securities 1,107,153 990,687 879,978
Earning assets 6,565,730 5,470,718 4,738,389
Total assets 7,101,249 5,865,756 5,087,702
Deposits 5,772,886 4,477,600 3,680,516
Stockholders' equity 616,767 472,686 397,088
Common shares outstanding 42,891 40,020 38,168
(1) Excludes pre-tax merger-related and restructuring charges totaling $.9
million, or $.02 per diluted common share, recorded in 2004 and $2.1
million, or $.04 per diluted common share, recorded in 2003.
(2) Net income available to common stockholders, which excludes 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) Compound annual growth rate.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Years Ended December 31,
(in thousands, except per share
data; taxable equivalent) 5 Year
2003 2002 CAGR (4)
----------- ----------- -----------
INCOME SUMMARY
Interest revenue $ 198,689 $ 185,498
Interest expense 70,600 76,357
----------- -----------
Net interest revenue 128,089 109,141 19%
Provision for loan losses 6,300 6,900
Fee revenue 38,184 30,734 14
----------- -----------
Total revenue 159,973 132,975 18
Operating expenses (1) 97,251 80,690 16
----------- -----------
Income before taxes 62,722 52,285 20
Income taxes 23,247 19,505
----------- -----------
Net operating income 39,475 32,780 19
Merger-related charges, net of
tax 1,357 -
----------- -----------
Net income $ 38,118 $ 32,780 20
=========== ===========
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic $ 1.15 $ 1.02 14
Diluted 1.12 .99 14
Return on tangible equity (2)(3) 19.24% 17.88%
Return on assets 1.06 1.11
Efficiency ratio 58.39 57.72
Dividend payout ratio 17.39 16.34
GAAP PERFORMANCE
Per common share:
Basic earnings $ 1.11 $ 1.02 15
Diluted earnings 1.08 .99 15
Cash dividends declared
(rounded) .20 .17 19
Book value 8.47 6.89 19
Tangible book value (3) 6.52 6.49 14
Key performance ratios:
Return on equity (2) 14.79% 16.54%
Return on assets 1.02 1.11
Net interest margin 3.68 3.95
Dividend payout ratio 18.02 16.34
Equity to assets 7.21 7.01
Tangible equity to assets (3) 6.02 6.60
ASSET QUALITY
Allowance for loan losses $ 38,655 $ 30,914
Non-performing assets 7,589 8,019
Net charge-offs 4,097 3,111
Allowance for loan losses to
loans 1.28% 1.30%
Non-performing assets to total
assets .19 .25
Net charge-offs to average
loans .15 .14
AVERAGE BALANCES
Loans $ 2,753,451 $ 2,239,875 21
Investment securities 667,211 464,468 16
Earning assets 3,476,030 2,761,265 19
Total assets 3,721,284 2,959,295 19
Deposits 2,743,087 2,311,717 20
Stockholders' equity 268,446 207,312 24
Common shares outstanding:
Basic 34,132 32,062
Diluted 35,252 33,241
AT PERIOD END
Loans $ 3,015,997 $ 2,381,798 22
Investment securities 659,891 559,390 19
Earning assets 3,796,332 3,029,409 21
Total assets 4,068,834 3,211,344 21
Deposits 2,857,449 2,385,239 22
Stockholders' equity 299,373 221,579 26
Common shares outstanding 35,289 31,895
(1) Excludes pre-tax merger-related and restructuring charges totaling $.9
million, or $.02 per diluted common share, recorded in 2004 and $2.1
million, or $.04 per diluted common share, recorded in 2003.
(2) Net income available to common stockholders, which excludes 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) Compound annual growth rate.
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
(in thousands, except per
share data) 2006 2005 2006 2005
--------- --------- --------- ---------
(unaudited)
Interest revenue:
Loans, including fees $ 109,869 $ 80,138 $ 394,907 $ 279,396
Investment securities:
Taxable 12,488 10,651 47,149 40,195
Tax exempt 472 514 1,969 2,087
Federal funds sold and
deposits in banks 117 249 802 911
--------- --------- --------- ---------
Total interest revenue 122,946 91,552 444,827 322,589
--------- --------- --------- ---------
Interest expense:
Deposits:
NOW 9,120 5,228 30,549 16,390
Money market 2,527 873 7,496 2,804
Savings 248 226 928 791
Time 40,645 21,288 130,324 66,968
--------- --------- --------- ---------
Total deposit interest
expense 52,540 27,615 169,297 86,953
Federal funds purchased,
repurchase agreements, &
other short-term borrowings 1,505 1,581 7,319 5,304
Federal Home Loan Bank
advances 4,677 7,230 23,514 26,633
Long-term debt 2,190 2,150 8,685 8,536
--------- --------- --------- ---------
Total interest expense 60,912 38,576 208,815 127,426
--------- --------- --------- ---------
Net interest revenue 62,034 52,976 236,012 195,163
Provision for loan losses 3,700 3,500 14,600 12,100
--------- --------- --------- ---------
Net interest revenue after
provision for loan losses 58,334 49,476 221,412 183,063
--------- --------- --------- ---------
Fee revenue:
Service charges and fees 7,064 6,616 27,159 25,137
Mortgage loan and other
related fees 2,154 1,738 7,303 7,330
Consulting fees 2,095 1,665 7,291 6,609
Brokerage fees 653 789 3,083 2,570
Securities losses, net (258) (654) (643) (809)
Other 1,507 1,219 4,902 5,311
--------- --------- --------- ---------
Total fee revenue 13,215 11,373 49,095 46,148
--------- --------- --------- ---------
Total revenue 71,549 60,849 270,507 229,211
--------- --------- --------- ---------
Operating expenses:
Salaries and employee benefits 26,524 22,136 100,964 84,854
Communications and equipment 4,101 3,576 15,071 13,157
Occupancy 2,839 2,706 11,632 10,835
Advertising and public
relations 1,905 1,988 7,623 6,733
Postage, printing and supplies 1,564 1,355 5,748 5,501
Professional fees 1,274 1,023 4,442 4,306
Amortization of intangibles 523 503 2,032 2,012
Other 3,791 3,765 14,558 13,410
--------- --------- --------- ---------
Total operating expenses 42,521 37,052 162,070 140,808
--------- --------- --------- ---------
Income before income taxes 29,028 23,797 108,437 88,403
Income taxes 10,594 8,567 39,622 31,661
--------- --------- --------- ---------
Net income $ 18,434 $ 15,230 $ 68,815 $ 56,742
========= ========= ========= =========
Net income available to
common shareholders $ 18,430 $ 15,225 $ 68,796 $ 56,719
========= ========= ========= =========
Earnings per common share:
Basic $ 0.45 $ 0.39 $ 1.70 $ 1.47
Diluted 0.44 0.38 1.66 1.43
Dividends per common share 0.08 0.07 0.32 0.28
Weighted average common shares
outstanding:
Basic 41,096 39,084 40,393 38,477
Diluted 42,311 40,379 41,575 39,721
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
December 31, December 31,
(in thousands, except share and 2006 2005
per share data) --------------- ---------------
(unaudited)
ASSETS
Cash and due from banks $ 158,348 $ 121,963
Interest-bearing deposits in
banks 12,936 20,607
--------------- ---------------
Cash and cash equivalents 171,284 142,570
Securities available for sale 1,107,153 990,687
Mortgage loans held for sale 35,325 22,335
Loans, net of unearned income 5,376,538 4,398,286
Less allowance for loan
losses 66,566 53,595
--------------- ---------------
Loans, net 5,309,972 4,344,691
Premises and equipment, net 139,716 112,887
Accrued interest receivable 58,291 37,197
Goodwill and other intangible
assets 167,058 118,651
Other assets 112,450 96,738
--------------- ---------------
Total assets $ 7,101,249 $ 5,865,756
=============== ===============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Deposits:
Demand $ 659,892 $ 602,525
NOW 1,307,654 1,113,827
Money market 255,862 151,120
Savings 175,631 175,453
Time:
Less than $100,000 1,650,906 1,218,277
Greater than $100,000 1,397,245 895,466
Brokered 325,696 320,932
--------------- ---------------
Total deposits 5,772,886 4,477,600
Federal funds purchased,
repurchase agreements, & other
short-term borrowings 65,884 122,881
Federal Home Loan Bank advances 489,084 635,616
Long-term debt 113,151 111,869
Accrued expenses and other
liabilities 43,477 45,104
--------------- ---------------
Total liabilities 6,484,482 5,393,070
--------------- ---------------
Shareholders' equity:
Preferred stock, $1 par value;
$10 stated value; 10,000,000
shares authorized; 32,200 and
32,200 shares issued
and outstanding 322 322
Common stock, $1 par value;
100,000,000 shares
authorized; 42,890,863 and
40,019,853 shares issued
and outstanding 42,891 40,020
Common stock issuable; 29,821
and 9,948 shares 862 271
Capital surplus 270,383 193,355
Retained earnings 306,261 250,563
Accumulated other
comprehensive loss (3,952) (11,845)
--------------- ---------------
Total shareholders' equity 616,767 472,686
Total liabilities and --------------- ---------------
shareholders' equity $ 7,101,249 $ 5,865,756
=============== ===============
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended December 31,
2006
-------------------------------
Average Avg.
(dollars in thousands, taxable Balance Interest Rate
equivalent) ----------- ------------ -----
Assets:
Interest-earning assets:
Loans, net of unearned
income (1)(2) $ 5,134,721 $ 109,756 8.48 %
Taxable securities (3) 1,014,959 12,488 4.92
Tax-exempt securities (1)
(3) 44,166 777 7.03
Federal funds sold and other
interest-earning assets 32,097 442 5.51
----------- ------------
Total interest-earning
assets 6,225,943 123,463 7.87
----------- ------------
Non-interest-earning assets:
Allowance for loan losses (64,301)
Cash and due from banks 121,276
Premises and equipment 133,364
Other assets (3) 253,668
-----------
Total assets $ 6,669,950
===========
Liabilities and Shareholders'
Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,181,578 9,120 3.06
Money market 248,530 2,527 4.03
Savings 170,079 248 .58
Time deposits less than
$100,000 1,578,369 19,072 4.79
Time deposits greater than
$100,000 1,330,375 17,366 5.18
Brokered deposits 353,133 4,207 4.73
----------- ------------
Total interest-bearing
deposits 4,862,457 52,540 4.29
----------- ------------
Federal funds purchased &
other borrowings 105,650 1,505 5.65
Federal Home Loan Bank
advances 334,217 4,677 5.55
Long-term debt 112,923 2,190 7.69
----------- ------------
Total borrowed funds 552,790 8,372 6.01
----------- ------------
Total interest-bearing
liabilities 5,415,247 60,912 4.46
------------
Non-interest-bearing
liabilities:
Non-interest-bearing
deposits 655,239
Other liabilities 52,045
-----------
Total liabilities 6,122,531
Shareholders' equity 547,419
-----------
Total liabilities
and shareholders'
equity $ 6,669,950
===========
Net interest revenue $ 62,551
============
Net interest-rate spread 3.41 %
====
Net interest margin (4) 3.99 %
====
(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 tax rate and
the federal tax adjusted state tax rate.
(2) Included in the average balance of loans outstanding are loans where
the accrual of interest has been discontinued.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $12.7 million and $10.5 million in 2006 and 2005,
respectively, 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 Three Months Ended December 31,
2005
----------- ------------ ------
Average Avg.
(dollars in thousands, taxable equivalent) Balance Interest Rate
----------- ------------ -------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,328,613 $ 79,904 7.32%
Taxable securities (3) 957,389 10,651 4.45
Tax-exempt securities (1) (3) 47,577 845 7.10
Federal funds sold and other
interest-earning assets 49,517 597 4.82
----------- ------------
Total interest-earning assets 5,383,096 91,997 6.79
----------- ------------
Non-interest-earning assets:
Allowance for loan losses (53,763)
Cash and due from banks 125,882
Premises and equipment 109,449
Other assets (3) 204,968
-----------
Total assets $ 5,769,632
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,057,157 $ 5,228 1.96
Money market 155,908 873 2.22
Savings 176,672 226 .51
Time deposits less than $100,000 1,169,382 10,126 3.44
Time deposits greater than $100,000 839,624 8,420 3.98
Brokered deposits 311,493 2,742 3.49
----------- ------------
Total interest-bearing deposits 3,710,236 27,615 2.95
----------- ------------
Federal funds purchased & other
borrowings 153,839 1,581 4.08
Federal Home Loan Bank advances 668,022 7,230 4.29
Long-term debt 111,869 2,150 7.62
----------- ------------
Total borrowed funds 933,730 10,961 4.66
----------- ------------
Total interest-bearing liabilities 4,643,966 38,576 3.30
------------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 644,039
Other liabilities 37,881
-----------
Total liabilities 5,325,886
Shareholders' equity 443,746
-----------
Total liabilities
and shareholders' equity $ 5,769,632
===========
Net interest revenue $ 53,421
============
Net interest-rate spread 3.49%
=======
Net interest margin (4) 3.94%
=======
(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 tax rate and
the federal tax adjusted state tax rate.
(2) Included in the average balance of loans outstanding are loans where
the accrual of interest has been discontinued.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $12.7 million and $10.5 million in 2006 and 2005,
respectively, 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 Twelve Months Ended December 31,
2006
----------- ---------- -----
Average Avg.
(dollars in thousands, taxable equivalent) Balance Interest Rate
----------- ---------- -----
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,800,981 $ 394,439 8.22%
Taxable securities (3) 995,172 47,149 4.74
Tax-exempt securities (1) (3) 46,725 3,240 6.93
Federal funds sold and other
interest-earning assets 34,605 1,867 5.40
----------- ----------
Total interest-earning assets 5,877,483 446,695 7.60
----------- ----------
Non-interest-earning assets:
Allowance for loan losses (59,376)
Cash and due from banks 122,268
Premises and equipment 123,865
Other assets (3) 222,908
-----------
Total assets $ 6,287,148
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,115,434 $ 30,549 2.74
Money market 202,477 7,496 3.70
Savings 172,698 928 .54
Time deposits less than $100,000 1,410,869 61,676 4.37
Time deposits greater than $100,000 1,134,414 54,304 4.79
Brokered deposits 334,243 14,344 4.29
----------- ----------
Total interest-bearing deposits 4,370,135 169,297 3.87
----------- ----------
Federal funds purchased & other
borrowings 140,544 7,319 5.21
Federal Home Loan Bank advances 465,820 23,514 5.05
Long-term debt 112,135 8,685 7.75
----------- ----------
Total borrowed funds 718,499 39,518 5.50
----------- ----------
Total interest-bearing liabilities 5,088,634 208,815 4.10
----------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 647,300
Other liabilities 44,268
-----------
Total liabilities 5,780,202
Shareholders' equity 506,946
-----------
Total liabilities
and shareholders' equity $ 6,287,148
===========
Net interest revenue $ 237,880
==========
Net interest-rate spread 3.50%
=====
Net interest margin (4) 4.05%
=====
(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 tax rate and
the federal tax adjusted state tax rate.
(2) Included in the average balance of loans outstanding are loans where
the accrual of interest has been discontinued.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $17.5 million in 2006 and $2.7 million in 2005
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 Twelve Ended December 31,
2005
----------- ---------- -----
Average Avg.
(dollars in thousands, taxable equivalent) Balance Interest Rate
----------- ---------- -----
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,061,091 $ 278,158 6.85%
Taxable securities (3) 940,411 40,195 4.27
Tax-exempt securities (1) (3) 48,790 3,433 7.04
Federal funds sold and other
interest-earning assets 58,761 2,439 4.15
----------- ----------
Total interest-earning assets 5,109,053 324,225 6.35
----------- ----------
Non-interest-earning assets:
Allowance for loan losses (50,710)
Cash and due from banks 105,488
Premises and equipment 105,433
Other assets (3) 202,936
-----------
Total assets $ 5,472,200
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 978,046 $ 16,390 1.68
Money market 162,848 2,804 1.72
Savings deposits 175,648 791 .45
Time deposits less than $100,000 1,066,734 32,334 3.03
Time deposits greater than $100,000 708,081 25,083 3.54
Brokered deposits 319,372 9,551 2.99
----------- ----------
Total interest-bearing deposits 3,410,729 86,953 2.55
----------- ----------
Federal funds purchased & other
borrowings 157,137 5,304 3.38
Federal Home Loan Bank advances 750,841 26,633 3.55
Long-term debt 111,869 8,536 7.63
----------- ----------
Total borrowed funds 1,019,847 40,473 3.97
----------- ----------
Total interest-bearing liabilities 4,430,576 127,426 2.88
----------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 492,355
Other liabilities 31,960
-----------
Total liabilities 5,054,891
Shareholders' equity 417,309
-----------
Total liabilities
and shareholders' equity $ 5,472,200
===========
Net interest revenue $ 196,799
==========
Net interest-rate spread 3.47%
=====
Net interest margin (4) 3.85%
=====
(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 tax rate and
the federal tax adjusted state tax rate.
(2) Included in the average balance of loans outstanding are loans where
the accrual of interest has been discontinued.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $17.5 million in 2006 and $2.7 million in 2005
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) 781-2265 Contact via http://www.marketwire.com/mw/emailprcntct?id=73A155D4700A0872
SOURCE: United Community Banks, Inc.