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United Community Banks, Inc. Reports Earnings of $15.9 Million for Fourth Quarter 2013

Jan 23, 2014

BLAIRSVILLE, GA -- (Marketwired) -- 01/23/14 -- United Community Banks, Inc. (NASDAQ: UCBI)

  • Net income of $15.9 million, or 22 cents per share
  • Loans up $62 million, or 6 percent annualized
  • Redeemed $180 million of TARP preferred stock
  • All capital ratios remain strong

United Community Banks, Inc. (NASDAQ: UCBI) ("United") today reported substantial progress in growing the long-term value of its franchise. For the fourth quarter and year ended December 31, 2013, net income was $15.9 million, or 22 cents per share, and $273.1 million, or $4.44 per share, respectively. The year-to-date results include the impact of two significant events during the second quarter -- the reversal of the valuation allowance on United's net deferred tax asset and the higher provision for loan losses and foreclosed property costs from the accelerated sales of classified assets.

"I am very pleased with the important progress we made in the fourth quarter and continue to make as we enter 2014," said Jimmy Tallent, president and chief executive officer. "We achieved good loan and deposit growth, which allowed us to hold our net interest margin and grow net interest revenue. I'm especially pleased with the termination of the bank and holding company informal memorandums of understanding with the regulators and the redemption of all our outstanding preferred stock that was originally issued to the U.S. Treasury under the Troubled Asset Relief Program ("TARP") without issuing additional equity. We redeemed $75 million on December 27, 2013 and $105 million on January 10, 2014. These items will have a substantial impact on our future financial performance and our ability to execute our strategic plan."

The fourth quarter provision for credit losses was $3.0 million, the same as the third quarter provision but down substantially from the $14.0 million provision in the fourth quarter of 2012. For the year, our provision for credit losses was $65.5 million compared with $62.5 million in 2012. The 2013 provision was elevated by charge-offs associated with the accelerated classified loan sales in the second quarter. The resulting reduction in classified loans led to lower net charge-offs and lower provisions for the third and fourth quarters of 2013. Fourth quarter net charge-offs were $4.44 million compared with $4.47 million in the third quarter and $14.5 million a year ago. Nonperforming assets at year-end were $31.0 million, representing .42 percent of total assets, which is unchanged from third quarter and down from $128.2 million, or 1.88 percent of total assets, a year ago.

Fourth quarter taxable equivalent net interest revenue totaled $55.9 million, up $1.62 million from the third quarter and down $265,000 from the fourth quarter of 2012. The fourth quarter taxable equivalent net interest margin was 3.26 percent, equal to the third quarter and down 19 basis points from a year ago. "We were able to hold our margin at the third quarter level, which allowed our earning assets and deposit growth to increase net interest revenue," said Tallent. "Competitive loan pricing pressures continue, but we remain sharply focused on growing loans and deposits to offset the impact and grow net interest revenue. We also remain committed to prudent interest rate risk management. To that end, we have been purchasing floating-rate securities, which accounted for 42 percent of our total investment securities portfolio at year-end, up from 39 percent in the third quarter."

Fourth quarter fee revenue of $13.5 million was down $706,000 from third quarter and $1.13 million from a year ago primarily due to lower mortgage fees. Mortgage fees were down $841,000 from the third quarter and down $1.55 million from a year ago reflecting slower mortgage refinancing activity resulting from rising long-term interest rates. Closed mortgage loans totaled $55.5 million in the fourth quarter compared with $76.6 million in the third quarter and $100.5 million in the fourth quarter of 2012.

Operating expenses, excluding foreclosed property costs, were $41.4 million for the fourth quarter compared to $39.9 million in the third quarter of 2013 and $46.1 million a year ago. Fourth quarter 2012 operating expenses included a $4.0 million charge to establish a litigation reserve. The remainder of the decrease from a year ago reflects a lower FDIC deposit insurance assessment, lower professional fees and lower intangible amortization charges. The increase from third quarter was mostly in salaries and benefits expense, reflecting higher incentive compensation due to performance targets that were met.

Foreclosed property costs were $191,000 in the fourth quarter compared to $194,000 in the third quarter and $4.61 million a year ago. Foreclosed property costs remain low as the balance of foreclosed properties has stabilized following the accelerated sales of classified assets in the second quarter.

As of December 31, 2013, capital ratios were as follows: Tier 1 Risk-Based of 12.7 percent; Total Risk-Based of 14.0 percent; Tier 1 Common Risk-Based of 9.3 percent; and Tangible Equity-to-Assets of 11.6 percent. The Tier 1 Leverage ratio was 9.1 percent.

Tallent concluded, "The achievements of 2013 are the culmination of several years of hard work, diligence and dedication by our bankers. They have stood their ground during the most difficult economic environment any of us has ever faced, and played an integral role in our return to offense. The coming year will not be without challenges, but we look forward with confidence to the opportunities ahead."

Conference Call
United will hold a conference call today, Thursday, January 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 29377597. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of United's website at www.ucbi.com.

About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks, Inc. is the third-largest bank holding company in Georgia. United has assets of $7.4 billion and operates 102 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and western South Carolina. United specializes in providing personalized community banking services to individuals and small to mid-size businesses and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United's common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United's website at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United's filings with the Securities and Exchange Commission including its 2012 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the first, second and third quarters of 2013 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

2013
2012
(in thousands, except per share data; taxable equivalent) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter Fourth Quarter 2013-2012 Change
INCOME SUMMARY
Interest revenue $ 61,695 $ 61,426 $ 62,088 $ 62,114 $ 64,450
Interest expense 5,816 7,169 7,157 7,540 8,306
Net interest revenue 55,879 54,257 54,931 54,574 56,144 - %
Provision for credit losses 3,000 3,000 48,500 11,000 14,000
Fee revenue 13,519 14,225 15,943 12,911 14,645 (8 )
Total revenue 66,398 65,482 22,374 56,485 56,789
Operating expenses 41,614 40,097 48,823 43,770 50,726 (18 )
Income (loss) before income taxes 24,784 25,385 (26,449 ) 12,715 6,063 309
Income tax expense (benefit) 8,873 9,885 (256,413 ) 950 802
Net income 15,911 15,500 229,964 11,765 5,261 202
Preferred dividends and discount accretion 2,912 3,059 3,055 3,052 3,045
Net income available to common shareholders $ 12,999 $ 12,441 $ 226,909 $ 8,713 $ 2,216 487
PERFORMANCE MEASURES
Per common share:
Diluted income $ .22 $ .21 $ 3.90 $ .15 $ .04 450
Book value 11.30 10.99 10.90 6.85 6.67 69
Tangible book value (2) 11.26 10.95 10.82 6.76 6.57 71
Key performance ratios:
Return on common equity (1)(3) 7.52 % 7.38 % 197.22 % 8.51 % 2.15 %
Return on assets (3) .86 .86 13.34 .70 .31
Net interest margin (3) 3.26 3.26 3.33 3.37 3.45
Efficiency ratio 60.02 58.55 68.89 64.97 71.69
Equity to assets 11.62 11.80 11.57(4 ) 8.60 8.63
Tangible equity to assets (2) 11.59 11.76 11.53(4 ) 8.53 8.55
Tangible common equity to assets (2) 8.99 9.02 8.79(4 ) 5.66 5.67
Tangible common equity to risk-weighted assets (2) 13.17 13.34 13.16 8.45 8.26
ASSET QUALITY *
Non-performing loans $ 26,819 $ 26,088 $ 27,864 $ 96,006 $ 109,894
Foreclosed properties 4,221 4,467 3,936 16,734 18,264
Total non-performing assets (NPAs) 31,040 30,555 31,800 112,740 128,158
Allowance for loan losses 76,762 80,372 81,845 105,753 107,137
Net charge-offs 4,445 4,473 72,408 12,384 14,505
Allowance for loan losses to loans 1.77 % 1.88 % 1.95 % 2.52 % 2.57 %
Net charge-offs to average loans (3) .41 .42 6.87 1.21 1.39
NPAs to loans and foreclosed properties .72 .72 .76 2.68 3.06
NPAs to total assets .42 .42 .44 1.65 1.88
AVERAGE BALANCES ($ in millions)
Loans $ 4,315 $ 4,250 $ 4,253 $ 4,197 $ 4,191 3
Investment securities 2,280 2,178 2,161 2,141 2,088 9
Earning assets 6,823 6,615 6,608 6,547 6,482 5
Total assets 7,370 7,170 6,915 6,834 6,778 9
Deposits 6,190 5,987 5,983 5,946 5,873 5
Shareholders' equity 856 846 636 588 585 46
Common shares - basic (thousands) 59,923 59,100 58,141 58,081 57,971
Common shares - diluted (thousands) 59,925 59,202 58,141 58,081 57,971
AT PERIOD END ($ in millions)
Loans * $ 4,329 $ 4,267 $ 4,189 $ 4,194 $ 4,175 4
Investment securities 2,312 2,169 2,152 2,141 2,079 11
Total assets 7,425 7,243 7,163 6,849 6,802 9
Deposits 6,202 6,113 6,012 6,026 5,952 4
Shareholders' equity 796 852 829 592 581 37
Common shares outstanding (thousands) 59,432 59,412 57,831 57,767 57,741
(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. (4) Calculated as of period-end.
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
For the Twelve
Months Ended
December 31,
(in thousands, except per share data; taxable equivalent) 2013 2012 YTD
2013-2012 Change
INCOME SUMMARY
Interest revenue $ 247,323 $ 267,667
Interest expense 27,682 37,909
Net interest revenue 219,641 229,758 (4 )%
Provision for credit losses 65,500 62,500
Fee revenue 56,598 56,112 1
Total revenue 210,739 223,370
Operating expenses 174,304 186,774 (7 )
Income (loss) before income taxes 36,435 36,596 -
Income tax expense (benefit) (236,705 ) 2,740
Net income 273,140 33,856 707
Preferred dividends and discount accretion 12,078 12,148
Net income available to common shareholders $ 261,062 $ 21,708 1,103
PERFORMANCE MEASURES
Per common share:
Diluted income $ 4.44 $ .38 1,068
Book value 11.30 6.67 69
Tangible book value (2) 11.26 6.57 71
Key performance ratios:
Return on common equity (1)(3) 46.72 % 5.43 %
Return on assets (3) 3.86 .49
Net interest margin (3) 3.30 3.51
Efficiency ratio 63.14 65.43
Equity to assets 10.35 8.47
Tangible equity to assets (2) 10.31 8.38
Tangible common equity to assets (2) 7.55 5.54
Tangible common equity to risk-weighted assets (2) 13.17 8.26
ASSET QUALITY *
Non-performing loans $ 26,819 $ 109,894
Foreclosed properties 4,221 18,264
Total non-performing assets (NPAs) 31,040 128,158
Allowance for loan losses 76,762 107,137
Net charge-offs 93,710 69,831
Allowance for loan losses to loans 1.77 % 2.57 %
Net charge-offs to average loans (3) 2.22 1.69
NPAs to loans and foreclosed properties .72 3.06
NPAs to total assets .42 1.88
AVERAGE BALANCES ($ in millions)
Loans $ 4,254 $ 4,166 2
Investment securities 2,190 2,089 5
Earning assets 6,649 6,547 2
Total assets 7,074 6,865 3
Deposits 6,027 5,885 2
Shareholders' equity 732 582 26
Common shares - basic (thousands) 58,787 57,857
Common shares - diluted (thousands) 58,845 57,857
AT PERIOD END ($ in millions)
Loans * $ 4,329 $ 4,175 4
Investment securities 2,312 2,079 11
Total assets 7,425 6,802 9
Deposits 6,202 5,952 4
Shareholders' equity 796 581 37
Common shares outstanding (thousands) 59,432 57,741
(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. (4) Calculated as of period-end.
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Years Ended December 31,
(in thousands, except per share data; taxable equivalent) 2013 2012 2011 2010 2009
INCOME SUMMARY
Net interest revenue $ 219,641 $ 229,758 $ 238,670 $ 244,637 $ 244,834
Operating provision for credit losses (1) 65,500 62,500 251,000 234,750 310,000
Operating fee revenue (2) 56,598 56,112 44,907 46,963 51,357
Total operating revenue (1)(2) 210,739 223,370 32,577 56,850 (13,809 )
Operating expenses (3) 174,304 186,774 261,599 242,952 217,050
Loss on sale of nonperforming assets - - - 45,349 -
Operating income (loss) from continuing operations before taxes 36,435 36,596 (229,022 ) (231,451 ) (230,859 )
Operating income taxes (236,705 ) 2,740 (2,276 ) 73,218 (91,754 )
Net operating income (loss) from continuing operations 273,140 33,856 (226,746 ) (304,669 ) (139,105 )
Gain from acquisition, net of tax - - - - 7,062
Noncash goodwill impairment charges - - - (210,590 ) (95,000 )
Severance cost, net of tax benefit - - - - (1,797 )
Fraud loss provision and subsequent recovery, net of tax benefit - - - 11,750 -
Net income (loss) from discontinued operations - - - (101 ) 513
Gain from sale of subsidiary, net of income taxes and selling costs - - - 1,266 -
Net income (loss) 273,140 33,856 (226,746 ) (502,344 ) (228,327 )
Preferred dividends and discount accretion 12,078 12,148 11,838 10,316 10,242
Net income (loss) available to common shareholders $ 261,062 $ 21,708 $ (238,584 ) $ (512,660 ) $ (238,569 )
PERFORMANCE MEASURES
Per common share:
Diluted operating earnings (loss) from continuing operations (1)(2)(3) $ 4.44 $ .38 $ (5.97 ) $ (16.64 ) $ (12.37 )
Diluted earnings (loss) from continuing operations 4.44 .38 (5.97 ) (27.15 ) (19.80 )
Diluted earnings (loss) 4.44 .38 (5.97 ) (27.09 ) (19.76 )
Book value 11.30 6.67 6.62 15.40 41.78
Tangible book value (5) 11.26 6.57 6.47 14.80 30.09
Key performance ratios:
Return on common equity (4) 46.72 5.43 (93.57 )% (85.08 )% (34.40 )%
Return on assets 3.86 .49 (3.15 ) (6.61 ) (2.76 )
Net interest margin 3.30 3.51 3.52 3.59 3.29
Operating efficiency ratio from continuing operations (2)(3) 63.14 65.43 92.27 98.98 73.97
Equity to assets 10.35 8.47 7.75 10.77 11.12
Tangible equity to assets (5) 10.31 8.38 7.62 8.88 8.33
Tangible common equity to assets (5) 7.55 5.54 3.74 6.52 6.15
Tangible common equity to risk-weighted assets (5) 13.17 8.26 8.25 5.64 10.39
ASSET QUALITY *
Non-performing loans $ 26,819 $ 109,894 $ 127,479 $ 179,094 $ 264,092
Foreclosed properties 4,221 18,264 32,859 142,208 120,770
Total non-performing assets (NPAs) 31,040 128,158 160,338 321,302 384,862
Allowance for loan losses 76,762 107,137 114,468 174,695 155,602
Operating net charge-offs (1) 93,710 69,831 311,227 215,657 276,669
Allowance for loan losses to loans 1.77 2.57 % 2.79 % 3.79 % 3.02 %
Operating net charge-offs to average loans (1) 2.22 1.69 7.33 4.42 5.03
NPAs to loans and foreclosed properties .72 3.06 3.87 6.77 7.30
NPAs to total assets .42 1.88 2.30 4.42 4.81
AVERAGE BALANCES ($ in millions)
Loans $ 4,254 $ 4,166 $ 4,307 $ 4,961 $ 5,548
Investment securities 2,190 2,089 1,999 1,453 1,656
Earning assets 6,649 6,547 6,785 6,822 7,465
Total assets 7,074 6,865 7,189 7,605 8,269
Deposits 6,027 5,885 6,275 6,373 6,713
Shareholders' equity 732 582 557 819 920
Common shares - Basic (thousands) 58,787 57,857 39,943 18,925 12,075
Common shares - Diluted (thousands) 58,845 57,857 39,943 18,925 12,075
AT YEAR END ($ in millions)
Loans * $ 4,329 $ 4,175 $ 4,110 $ 4,604 $ 5,151
Investment securities 2,312 2,079 2,120 1,490 1,530
Total assets 7,425 6,802 6,983 7,276 8,000
Deposits 6,202 5,952 6,098 6,469 6,628
Shareholders' equity 796 581 575 469 962
Common shares outstanding (thousands) 59,432 57,741 57,561 18,937 18,809
(1) Excludes the subsequent recovery of $11.8 million in previously recognized fraud related loan losses in 2010. (2) Excludes the gain from acquisition of $11.4 million, net of income tax expense of $4.3 million in 2009. (3) Excludes goodwill impairment charges of $211 million and $95 million in 2010 and 2009, respectively, and severance costs of $2.9 million, net of income tax benefit of $1.1 million in 2009. (4) Net income (loss) available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (5) Excludes effect of acquisition related intangibles and associated amortization.
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
2013 2012
(in thousands, except per share data; taxable equivalent) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter
Interest revenue reconciliation
Interest revenue - taxable equivalent $ 61,695 $ 61,426 $ 62,088 $ 62,114 $ 64,450
Taxable equivalent adjustment (380 ) (370 ) (368 ) (365 ) (381 )
Interest revenue (GAAP) $ 61,315 $ 61,056 $ 61,720 $ 61,749 $ 64,069
Net interest revenue reconciliation
Net interest revenue - taxable equivalent $ 55,879 $ 54,257 $ 54,931 $ 54,574 $ 56,144
Taxable equivalent adjustment (380 ) (370 ) (368 ) (365 ) (381 )
Net interest revenue (GAAP) $ 55,499 $ 53,887 $ 54,563 $ 54,209 $ 55,763
Provision for credit losses reconciliation
Operating provision for credit losses $ 3,000 $ 3,000 $ 48,500 $ 11,000 $ 14,000
Partial recovery of special fraud-related loan loss - - - - -
Provision for credit losses (GAAP) $ 3,000 $ 3,000 $ 48,500 $ 11,000 $ 14,000
Fee revenue reconciliation
Operating fee revenue $ 13,519 $ 14,225 $ 15,943 $ 12,911 $ 14,645
Gain from acquisition - - - - -
Fee revenue (GAAP) $ 13,519 $ 14,225 $ 15,943 $ 12,911 $ 14,645
Total revenue reconciliation
Total operating revenue $ 66,398 $ 65,482 $ 22,374 $ 56,485 $ 56,789
Taxable equivalent adjustment (380 ) (370 ) (368 ) (365 ) (381 )
Gain from acquisition - - - - -
Partial recovery of special fraud-related loan loss - - - - -
Total revenue (GAAP) $ 66,018 $ 65,112 $ 22,006 $ 56,120 $ 56,408
Expense reconciliation
Operating expense $ 41,614 $ 40,097 $ 48,823 $ 43,770 $ 50,726
Noncash goodwill impairment charge - - - - -
Severance costs - - - - -
Operating expense (GAAP) $ 41,614 $ 40,097 $ 48,823 $ 43,770 $ 50,726
Income (loss) before taxes reconciliation
Income (loss) before taxes $ 24,784 $ 25,385 $ (26,449 ) $ 12,715 $ 6,063
Taxable equivalent adjustment (380 ) (370 ) (368 ) (365 ) (381 )
Gain from acquisition - - - - -
Noncash goodwill impairment charge - - - - -
Severance costs - - - - -
Partial recovery of special fraud-related loan loss - - - - -
Income (loss) before taxes (GAAP) $ 24,404 $ 25,015 $ (26,817 ) $ 12,350 $ 5,682
Income tax expense (benefit) reconciliation
Income tax expense (benefit) $ 8,873 $ 9,885 $ (256,413 ) $ 950 $ 802
Taxable equivalent adjustment (380 ) (370 ) (368 ) (365 ) (381 )
Gain from acquisition, tax expense - - - - -
Severance costs, tax benefit - - - - -
Income tax expense (benefit) (GAAP) $ 8,493 $ 9,515 $ (256,781 ) $ 585 $ 421
Diluted earnings (loss) from continuing operations per common share reconciliation
Diluted operating earnings (loss) from continuing operations per common share $ .22 $ .21 $ 3.90 $ .15 $ .04
Gain from acquisition - - - - -
Noncash goodwill impairment charge - - - - -
Severance costs - - - - -
Partial recovery of special fraud-related loan loss - - - - -
Diluted earnings (loss) from continuing operations per common share (GAAP) $ .22 $ .21 $ 3.90 $ .15 $ .04
Book value per common share reconciliation
Tangible book value per common share $ 11.26 $ 10.95 $ 10.82 $ 6.76 $ 6.57
Effect of goodwill and other intangibles .04 .04 .08 .09 .10
Book value per common share (GAAP) $ 11.30 $ 10.99 $ 10.90 $ 6.85 $ 6.67
Efficiency ratio from continuing operations reconciliation
Operating efficiency ratio from continuing operations 60.02 % 58.55 % 68.89 % 64.97 % 71.69
Gain from acquisition - - - - -
Noncash goodwill impairment charge - - - - -
Severance costs - - - - -
Efficiency ratio from continuing operations (GAAP) 60.02 % 58.55 % 68.89 % 64.97 % 71.69
Average equity to assets reconciliation
Tangible common equity to assets 8.99 % 9.02 % 8.79 % 5.66 % 5.67
Effect of preferred equity 2.60 2.74 2.74 2.87 2.88
Tangible equity to assets 11.59 11.76 11.53 8.53 8.55
Effect of goodwill and other intangibles .03 .04 .04 .07 .08
Equity to assets (GAAP) 11.62 % 11.80 % 11.57 % 8.60 % 8.63
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets 13.17 % 13.34 % 13.16 % 8.45 % 8.26
Effect of other comprehensive income .39 .49 .29 .49 .51
Effect of deferred tax limitation (4.25 ) (4.72 ) (4.99 ) - -
Effect of trust preferred 1.04 1.09 1.11 1.15 1.15
Effect of preferred equity 2.38 4.01 4.11 4.22 4.24
Tier I capital ratio (Regulatory) 12.73 % 14.21 % 13.68 % 14.31 % 14.16
Net charge-offs reconciliation
Operating net charge-offs $ 4,445 $ 4,473 $ 72,408 $ 12,384 $ 14,505
Subsequent partial recovery of fraud-related charge-off - - - - -
Net charge-offs (GAAP) $ 4,445 $ 4,473 $ 72,408 $ 12,384 $ 14,505
Net charge-offs to average loans reconciliation
Operating net charge-offs to average loans .41 % .42 % 6.87 % 1.21 % 1.39
Subsequent partial recovery of fraud-related charge-off - - - - -
Net charge-offs to average loans (GAAP) .41 % .42 % 6.87 % 1.21 % 1.39
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
For the Twelve Months
Ended December 31,
(in thousands, except per share data; taxable equivalent) 2013 2012 2011 2010 2009
Interest revenue reconciliation
Interest revenue - taxable equivalent $ 247,323 $ 267,667 $ 304,308 $ 344,493 $ 404,961
Taxable equivalent adjustment (1,483 ) (1,690 ) (1,707 ) (2,001 ) (2,132 )
Interest revenue (GAAP) $ 245,840 $ 265,977 $ 302,601 $ 342,492 $ 402,829
Net interest revenue reconciliation
Net interest revenue - taxable equivalent $ 219,641 $ 229,758 $ 238,670 $ 244,637 $ 244,834
Taxable equivalent adjustment (1,483 ) (1,690 ) (1,707 ) (2,001 ) (2,132 )
Net interest revenue (GAAP) $ 218,158 $ 228,068 $ 236,963 $ 242,636 $ 242,702
Provision for credit losses reconciliation
Operating provision for credit losses $ 65,500 $ 62,500 $ 251,000 $ 234,750 $ 310,000
Partial recovery of special fraud-related loan loss - - - (11,750 ) -
Provision for credit losses (GAAP) $ 65,500 $ 62,500 $ 251,000 $ 223,000 $ 310,000
Fee revenue reconciliation
Operating fee revenue $ 56,598 $ 56,112 $ 44,907 $ 46,963 $ 51,357
Gain from acquisition - - - - 11,390
Fee revenue (GAAP) $ 56,598 $ 56,112 $ 44,907 $ 46,963 $ 62,747
Total revenue reconciliation
Total operating revenue $ 210,739 $ 223,370 $ 32,577 $ 56,850 $ (13,809 )
Taxable equivalent adjustment (1,483 ) (1,690 ) (1,707 ) (2,001 ) (2,132 )
Gain from acquisition - - - - 11,390
Partial recovery of special fraud-related loan loss - - - 11,750 -
Total revenue (GAAP) $ 209,256 $ 221,680 $ 30,870 $ 66,599 $ (4,551 )
Expense reconciliation
Operating expense $ 174,304 $ 186,774 $ 261,599 $ 288,301 $ 217,050
Noncash goodwill impairment charge - - - 210,590 95,000
Severance costs - - - - 2,898
Operating expense (GAAP) $ 174,304 $ 186,774 $ 261,599 $ 498,891 $ 314,948
Income (loss) before taxes reconciliation
Income (loss) before taxes $ 36,435 $ 36,596 $ (229,022 ) $ (231,451 ) $ (230,859 )
Taxable equivalent adjustment (1,483 ) (1,690 ) (1,707 ) (2,001 ) (2,132 )
Gain from acquisition - - - - 11,390
Noncash goodwill impairment charge - - - (210,590 ) (95,000 )
Severance costs - - - - (2,898 )
Partial recovery of special fraud-related loan loss - - - 11,750 -
Income (loss) before taxes (GAAP) $ 34,952 $ 34,906 $ (230,729 ) $ (432,292 ) $ (319,499 )
Income tax expense (benefit) reconciliation
Income tax expense (benefit) $ (236,705 ) $ 2,740 $ (2,276 ) $ 73,218 $ (91,754 )
Taxable equivalent adjustment (1,483 ) (1,690 ) (1,707 ) (2,001 ) (2,132 )
Gain from acquisition, tax expense - - - - 4,328
Severance costs, tax benefit - - - - (1,101 )
Income tax expense (benefit) (GAAP) $ (238,188 ) $ 1,050 $ (3,983 ) $ 71,217 $ (90,659 )
Diluted earnings (loss) from continuing operations per common share reconciliation
Diluted operating earnings (loss) from continuing operations per common share $ 4.44 $ .38 $ (5.97 ) $ (16.64 ) $ (12.37 )
Gain from acquisition - - - - .58
Noncash goodwill impairment charge - - - (11.13 ) (7.86 )
Severance costs - - - - (.15 )
Partial recovery of special fraud-related loan loss - - - .62 -
Diluted earnings (loss) from continuing operations per common share (GAAP) $ 4.44 $ .38 $ (5.97 ) $ (27.15 ) $ (19.80 )
Book value per common share reconciliation
Tangible book value per common share $ 11.26 $ 6.57 $ 6.47 $ 14.80 $ 30.09
Effect of goodwill and other intangibles .04 .10 .15 .60 11.69
Book value per common share (GAAP) $ 11.30 $ 6.67 $ 6.62 $ 15.40 $ 41.78
Efficiency ratio from continuing operations reconciliation
Operating efficiency ratio from continuing operations 63.14 % 65.43 % 92.27 % 98.98 % 73.97 %
Gain from acquisition - - - - (2.77 )
Noncash goodwill impairment charge - - - 72.29 31.17
Severance costs - - - - .95
Efficiency ratio from continuing operations (GAAP) 63.14 % 65.43 % 92.27 % 171.27 % 103.32 %
Average equity to assets reconciliation
Tangible common equity to assets 7.55 % 5.54 % 3.74 % 6.52 % 6.15 %
Effect of preferred equity 2.76 2.84 3.88 2.36 2.18
Tangible equity to assets 10.31 8.38 7.62 8.88 8.33
Effect of goodwill and other intangibles .04 .09 .13 1.89 2.79
Equity to assets (GAAP) 10.35 % 8.47 % 7.75 % 10.77 % 11.12 %
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets 13.17 % 8.26 % 8.25 % 5.64 % 10.39 %
Effect of other comprehensive income .39 .51 (.03 ) (.42 ) (.87 )
Effect of deferred tax limitation (4.25 ) - - - (1.27 )
Effect of trust preferred 1.04 1.15 1.18 1.06 .97
Effect of preferred equity 2.38 4.24 4.29 3.53 3.19
Tier I capital ratio (Regulatory) 12.73 % 14.16 % 13.69 % 9.81 % 12.41 %
Net charge-offs reconciliation
Operating net charge-offs $ 93,710 $ 69,831 $ 311,227 $ 215,657 $ 276,669
Subsequent partial recovery of fraud-related charge-off - - - (11,750 ) -
Net charge-offs (GAAP) $ 93,710 $ 69,831 $ 311,227 $ 203,907 $ 276,669
Net charge-offs to average loans reconciliation
Operating net charge-offs to average loans 2.22 % 1.69 % 7.33 % 4.42 % 5.03 %
Subsequent partial recovery of fraud-related charge-off - - - (.25 ) -
Net charge-offs to average loans (GAAP) 2.22 % 1.69 % 7.33 % 4.17 % 5.03 %
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
2013 2012
(in millions) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,134 $ 1,129 $ 1,119 $ 1,130 $ 1,131
Income producing commercial RE 623 614 629 674 682
Commercial & industrial 472 457 437 454 458
Commercial construction 149 137 133 152 155
Total commercial 2,378 2,337 2,318 2,410 2,426
Residential mortgage 875 888 876 850 829
Home equity lines of credit 441 421 402 396 385
Residential construction 328 318 332 372 382
Consumer installment 307 303 261 166 153
Total loans $ 4,329 $ 4,267 $ 4,189 $ 4,194 $ 4,175
LOANS BY MARKET
North Georgia $ 1,240 $ 1,262 $ 1,265 $ 1,363 $ 1,364
Atlanta MSA 1,275 1,246 1,227 1,262 1,250
North Carolina 572 575 576 575 579
Coastal Georgia 423 421 397 398 400
Gainesville MSA 255 253 256 259 261
East Tennessee 280 277 282 282 283
South Carolina 88 47 34 - -
Other (2) 196 186 152 55 38
Total loans $ 4,329 $ 4,267 $ 4,189 $ 4,194 $ 4,175
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 39 $ 40 $ 42 $ 57 $ 62
Land loans 38 35 36 42 46
Lot loans 166 167 173 188 193
Total 243 242 251 287 301
House loans
Spec 23 30 34 40 41
Sold 62 46 47 45 40
Total 85 76 81 85 81
Total residential construction $ 328 $ 318 $ 332 $ 372 $ 382
(1) Excludes total loans of $20.3 million, $23.3 million, $25.7 million, $28.3 million and $33.4 million as of December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, 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)
2013 2012
(in millions) Fourth Quarter Third Quarter Fourth Quarter Linked Quarter Change Year over Year Change
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,134 $ 1,129 $ 1,131 $ 5 $ 3
Income producing commercial RE 623 614 682 9 (59 )
Commercial & industrial 472 457 458 15 14
Commercial construction 149 137 155 12 (6 )
Total commercial 2,378 2,337 2,426 41 (48 )
Residential mortgage 875 888 829 (13 ) 46
Home equity lines of credit 441 421 385 20 56
Residential construction 328 318 382 10 (54 )
Consumer installment 307 303 153 4 154
Total loans $ 4,329 $ 4,267 $ 4,175 62 154
LOANS BY MARKET
North Georgia $ 1,240 $ 1,262 $ 1,364 (22 ) (124 )
Atlanta MSA 1,275 1,246 1,250 29 25
North Carolina 572 575 579 (3 ) (7 )
Coastal Georgia 423 421 400 2 23
Gainesville MSA 255 253 261 2 (6 )
East Tennessee 280 277 283 3 (3 )
South Carolina 88 47 - 41 88
Other (2) 196 186 38 10 158
Total loans $ 4,329 $ 4,267 $ 4,175 62 154
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 39 $ 40 $ 62 (1 ) (23 )
Land loans 38 35 46 3 (8 )
Lot loans 166 167 193 (1 ) (27 )
Total 243 242 301 1 (58 )
House loans
Spec 23 30 41 (7 ) (18 )
Sold 62 46 40 16 22
Total 85 76 81 9 4
Total residential construction $ 328 $ 318 $ 382 10 (54 )
(1) Excludes total loans of $20.3 million, $23.3 million, $25.7 million, $28.3 million and $33.4 million as of December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, 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 Year-End (1)
(in millions) 2013 2012 2011 2010 2009
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,134 $ 1,131 $ 1,112 $ 980 $ 963
Income producing commercial RE 623 682 710 781 816
Commercial & industrial 472 458 428 441 390
Commercial construction 149 155 164 297 363
Total commercial 2,378 2,426 2,414 2,499 2,532
Residential mortgage 875 829 835 944 1,052
Home equity lines of credit 441 385 300 335 375
Residential construction 328 382 448 695 1,050
Consumer / installment 307 153 113 131 142
Total loans $ 4,329 $ 4,175 $ 4,110 $ 4,604 $ 5,151
LOANS BY MARKET
North Georgia $ 1,240 $ 1,364 $ 1,426 $ 1,689 $ 1,884
Atlanta MSA 1,275 1,250 1,220 1,310 1,435
North Carolina 572 579 597 702 772
Coastal Georgia 423 400 346 335 405
Gainesville MSA 255 261 265 312 390
East Tennessee 280 283 256 256 265
South Carolina 88 - - - -
Other (2) 196 38 - - -
Total loans $ 4,329 $ 4,175 $ 4,110 $ 4,604 $ 5,151
(1) Excludes total loans of $20.3 million, $33.4 million, $54.5 million, $68.2 million and $85.1 million as of December 31, 2013, 2012, 2011, 2010 and 2009, respectively, that are covered by loss-sharing agreements 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)
Fourth Quarter 2013
Non-performing Foreclosed Total
(in thousands) Loans Properties NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $ 5,822 $ 832 $ 6,654
Income producing CRE 2,518 - 2,518
Commercial & industrial 427 - 427
Commercial construction 361 - 361
Total commercial 9,128 832 9,960
Residential mortgage 11,730 2,684 14,414
Home equity lines of credit 1,448 389 1,837
Residential construction 4,264 316 4,580
Consumer installment 249 - 249
Total NPAs $ 26,819 $ 4,221 $ 31,040
Balance as a % of Unpaid Principal 65.3 % 44.5 % 61.4 %
NONPERFORMING ASSETS BY MARKET
North Georgia $ 12,352 $ 2,494 $ 14,846
Atlanta MSA 2,830 684 3,514
North Carolina 6,567 683 7,250
Coastal Georgia 2,342 173 2,515
Gainesville MSA 928 - 928
East Tennessee 1,800 187 1,987
South Carolina - - -
Other (3) - - -
Total NPAs $ 26,819 $ 4,221 $ 31,040
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $ 26,088 $ 4,467 $ 30,555
Loans placed on non-accrual 11,043 - 11,043
Payments received (1,688 ) - (1,688 )
Loan charge-offs (4,621 ) - (4,621 )
Foreclosures (4,003 ) 4,003 -
Capitalized costs - - -
Property sales - (4,684 ) (4,684 )
Write downs - (326 ) (326 )
Net gains (losses) on sales - 761 761
Ending Balance $ 26,819 $ 4,221 $ 31,040
(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 2013
Non-performing Foreclosed Total
(in thousands) Loans Properties NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $ 6,358 $ 591 $ 6,949
Income producing CRE 1,657 139 1,796
Commercial & industrial 609 - 609
Commercial construction 343 376 719
Total commercial 8,967 1,106 10,073
Residential mortgage 11,335 1,679 13,014
Home equity lines of credit 1,169 475 1,644
Residential construction 4,097 1,207 5,304
Consumer installment 520 - 520
Total NPAs $ 26,088 $ 4,467 $ 30,555
Balance as a % of Unpaid Principal 61.6 % 41.5 % 57.6 %
NONPERFORMING ASSETS BY MARKET
North Georgia $ 13,652 $ 1,726 $ 15,378
Atlanta MSA 3,096 1,026 4,122
North Carolina 5,680 762 6,442
Coastal Georgia 995 928 1,923
Gainesville MSA 1,036 - 1,036
East Tennessee 1,629 25 1,654
South Carolina - - -
Other (3) - - -
Total NPAs $ 26,088 $ 4,467 $ 30,555
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $ 27,864 $ 3,936 $ 31,800
Loans placed on non-accrual 9,959 - 9,959
Payments received (3,601 ) - (3,601 )
Loan charge-offs (5,395 ) - (5,395 )
Foreclosures (2,739 ) 2,739 -
Capitalized costs - 7 7
Property sales - (2,534 ) (2,534 )
Write downs - (329 ) (329 )
Net gains (losses) on sales - 648 648
Ending Balance $ 26,088 $ 4,467 $ 30,555
(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 2013
Non-performing Foreclosed Total
(in thousands) Loans Properties NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $ 5,283 $ 547 $ 5,830
Income producing CRE 1,954 - 1,954
Commercial & industrial 548 - 548
Commercial construction 504 376 880
Total commercial 8,289 923 9,212
Residential mortgage 12,847 1,303 14,150
Home equity lines of credit 1,491 140 1,631
Residential construction 4,838 1,570 6,408
Consumer installment 399 - 399
Total NPAs $ 27,864 $ 3,936 $ 31,800
Balance as a % of Unpaid Principal 62.6 % 31.6 % 55.8 %
NONPERFORMING ASSETS BY MARKET
North Georgia $ 12,830 $ 1,617 $ 14,447
Atlanta MSA 3,803 1,197 5,000
North Carolina 6,512 295 6,807
Coastal Georgia 2,588 627 3,215
Gainesville MSA 1,008 - 1,008
East Tennessee 1,123 200 1,323
South Carolina - - -
Other (3) - - -
Total NPAs $ 27,864 $ 3,936 $ 31,800
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $ 96,006 $ 16,734 $ 112,740
Loans placed on non-accrual 13,200 - 13,200
Payments received (47,937 ) - (47,937 )
Loan charge-offs (23,972 ) - (23,972 )
Foreclosures (9,433 ) 9,433 -
Capitalized costs - 55 55
Property sales - (17,972 ) (17,972 )
Write downs - (1,369 ) (1,369 )
Net gains (losses) on sales - (2,945 ) (2,945 )
Ending Balance $ 27,864 $ 3,936