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United Community Banks, Inc. Reports Net Operating Loss of $23.6 Million for Fourth Quarter 2010
United Community Banks, Inc. Reports Net Operating Loss of $23.6 Million for Fourth Quarter 2010
Jan 28, 2011
-- Net operating loss lowest since second quarter 2009
-- Credit measures continue to improve; nonperforming assets lowest since
2008
-- Allowance-to-loans ratio increases to 3.79 percent
-- Core transaction deposits up 12 percent annualized
For 2010 and 2009, United's net operating losses from continuing operations
were
In addition to excluding the fourth quarter partial recovery of the fraud
loss from western
The net operating loss from continuing operations for the full year 2009
excludes
"We are encouraged by the improving trends in our credit quality
indicators," said
Total loans were
Taxable equivalent net interest revenue of
"While remaining sharply focused on deposit and loan pricing, we've maintained liquidity significantly above historical levels in light of the uncertain times," Tallent said. "This excess liquidity lowered our margin by 30 basis points in the fourth quarter and 19 basis points in the third quarter."
"We grew core transaction deposits for the eighth consecutive quarter,"
Tallent continued. "The fourth quarter increase was
"We continue to see tremendous core deposit growth opportunities in our markets due to disruption in the banking environment," Tallent said. "We have launched a new core deposit marketing initiative that stresses our strong customer service culture, and is already showing great promise."
The fourth quarter 2010 operating provision for loan losses decreased from
Non-performing assets decreased to
Operating fee revenue was
Fourth quarter operating expenses were
The effective tax rate for the fourth quarter of 2010 was 43 percent, up slightly from the 40 percent in the third quarter due to the statute expiration of certain state tax returns and resulting release of related reserves. Absent the tax reserve adjustment, the effective tax rate would have been 40 percent, which is the expected effective rate for 2011.
As of
"The last three years have been difficult, to state the obvious," Tallent said. "We are seeing encouraging signs, however; our credit metrics are moving in the right direction with several approaching their lowest levels since the beginning of the credit cycle in 2008. Core customer deposit growth has been the strongest in our history and we've made great strides increasing the net interest margin with deference to the need to maintain higher-than-normal levels of liquidity. We've rebalanced our loan portfolio by shrinking residential construction loans to 15 percent of the portfolio from a high of 35 percent."
"As to capital, we exceed regulatory well-capitalized levels but continue to evaluate alternatives to further strengthen our position," Tallent said. "We believe this course is prudent in light of the operating and regulatory environment, and are very pleased that these efforts have advanced substantially. We expect to announce a capital plan by the end of the first quarter of 2011."
Conference Call
About
Headquartered in
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 some 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 3 of
UNITED COMMUNITY BANKS, INC. Financial Highlights Selected Financial Information (in thousands, except per 2010 2009 share data; ---------------------------------------------- --------- taxable Fourth Third Second First Fourth equivalent) Quarter Quarter Quarter Quarter Quarter --------- ---------- --------- --------- --------- INCOME SUMMARY Interest revenue $ 81,215 $ 84,360 $ 87,699 $ 89,849 $ 97,481 Interest expense 21,083 24,346 26,072 28,570 33,552 --------- ---------- --------- --------- --------- Net interest revenue 60,132 60,014 61,627 61,279 63,929 Operating provision for loan losses (1) 47,750 50,500 61,500 75,000 90,000 Operating fee revenue (2) 12,442 12,861 11,579 11,666 14,447 --------- ---------- --------- --------- --------- Total operating revenue (1)(2) 24,824 22,375 11,706 (2,055) (11,624) Operating expenses (3) 64,918 64,906 58,308 54,820 60,126 Loss on sale of nonperforming assets - - 45,349 - - --------- ---------- --------- --------- --------- Operating loss from continuing operations before taxes (40,094) (42,531) (91,951) (56,875) (71,750) Operating income tax benefit (16,520) (16,706) (32,419) (22,417) (31,687) --------- ---------- --------- --------- --------- Net operating loss from continuing operations (1)(2)(3) (23,574) (25,825) (59,532) (34,458) (40,063) Gain from acquisition, net of tax expense - - - - - Noncash goodwill impairment charges - (210,590) - - - Severance costs, net of tax benefit - - - - - Partial reversal of fraud loss provision, net of tax expense 7,179 - - - - (Loss) income from discontinued operations - - - (101) 228 Gain from sale of subsidiary, net of income taxes and selling costs - - - 1,266 - --------- ---------- --------- --------- --------- Net loss (16,395) (236,415) (59,532) (33,293) (39,835) Preferred dividends and discount accretion 2,586 2,581 2,577 2,572 2,567 --------- ---------- --------- --------- --------- Net loss available to common shareholders$ (18,981) $ (238,996) $ (62,109) $ (35,865) $ (42,402) ========= ========== ========= ========= ========= PERFORMANCE MEASURES Per common share: Diluted operating loss from continuing operations (1)(2)(3) $ (.28) $ (.30) $ (.66) $ (.39) $ (.45) Diluted loss from continuing operations (.20) (2.52) (.66) (.39) (.45) Diluted loss (.20) (2.52) (.66) (.38) (.45) Stock dividends declared (7) - - - - - Book value 4.84 5.14 7.71 7.95 8.36 Tangible book value (5) 4.76 5.05 5.39 5.62 6.02 Key performance ratios: Return on equity (4)(6) (17.16)% (148.04)% (35.89)% (20.10)% (22.08)% Return on assets (6) (.89) (12.47) (3.10) (1.70) (1.91) Net interest margin (6) 3.58 3.57 3.60 3.49 3.40 Operating efficiency ratio from continuing operations (2)(3) 89.45 89.38 141.60 75.22 78.74 Equity to assets 8.85 11.37 11.84 11.90 11.94 Tangible equity to assets (5) 8.75 9.19 9.26 9.39 9.53 Tangible common equity to assets (5) 6.35 6.78 6.91 7.13 7.37 Tangible common equity to risk- weighted assets (5) 9.05 9.60 9.97 10.03 10.39 ASSET QUALITY * Non- performing loans $ 179,094 $ 217,766 $ 224,335 $ 280,802 $ 264,092 Foreclosed properties 142,208 129,964 123,910 136,275 120,770 --------- ---------- --------- --------- --------- Total non- performing assets (NPAs) 321,302 347,730 348,245 417,077 384,862 Allowance for loan losses 174,695 174,613 174,111 173,934 155,602 Operating net charge-offs (1) 47,668 49,998 61,323 56,668 84,585 Allowance for loan losses to loans 3.79 % 3.67 % 3.57 % 3.48 % 3.02 % Operating net charge-offs to average loans (1)(6) 4.03 4.12 4.98 4.51 6.37 NPAs to loans and foreclosed properties 6.77 7.11 6.97 8.13 7.30 NPAs to total assets 4.32 4.96 4.55 5.32 4.81 AVERAGE BALANCES ($ in millions) Loans $ 4,768 $ 4,896 $ 5,011 $ 5,173 $ 5,357 Investment securities 1,354 1,411 1,532 1,518 1,529 Earning assets 6,680 6,676 6,854 7,085 7,487 Total assets 7,338 7,522 7,704 7,946 8,287 Deposits 6,294 6,257 6,375 6,570 6,835 Shareholders' equity 649 855 912 945 989 Common shares - basic (thousands) 94,918 94,679 94,524 94,390 94,219 Common shares - diluted (thousands) 94,918 94,679 94,524 94,390 94,219 AT PERIOD END ($ in millions) Loans * $ 4,604 $ 4,760 $ 4,873 $ 4,992 $ 5,151 Investment securities 1,490 1,310 1,488 1,527 1,530 Total assets 7,443 7,013 7,652 7,837 8,000 Deposits 6,469 5,999 6,330 6,488 6,628 Shareholders' equity 636 662 904 926 962 Common shares outstanding (thousands) 94,685 94,433 94,281 94,176 94,046 (1) Excludes the partial reversal of a previously established provision for fraud-related loan losses of$11.8 million , net of tax expense of$4.6 million in 2010. Operating charge-offs also exclude the$11.8 million related partial recovery of the previously charged off amount. (2) Excludes the gain from acquisition of$11.4 million , (income tax expense of$4.3 million ) in the second quarter of 2009 and revenue generated by discontinued operations in all periods presented. (3) Excludes goodwill impairment charges of$211 million in the third quarter of 2010 and$25 million and$70 million in the third and first quarters of 2009, respectively, severance costs of$2.9 million , (income tax benefit of$1.1 million ) in the first quarter of 2009 and expenses relating to discontinued operations for all periods presented. (4) Net 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. (6) Annualized. (7) Number of new shares issued for shares currently held. * Excludes loans and foreclosed properties covered by loss sharing agreements with theFDIC .UNITED COMMUNITY BANKS, INC. Financial Highlights Selected Financial Information 2010 2009 Fourth --------- --------- Quarter (in thousands, except per share Fourth Fourth 2010-2009 data; taxable equivalent) Quarter Quarter Change --------- --------- --------- INCOME SUMMARY Interest revenue $ 81,215 $ 97,481 Interest expense 21,083 33,552 --------- --------- Net interest revenue 60,132 63,929 (6)% Operating provision for loan losses (1) 47,750 90,000 Operating fee revenue (2) 12,442 14,447 (14) --------- --------- Total operating revenue (1)(2) 24,824 (11,624) Operating expenses (3) 64,918 60,126 8 Loss on sale of nonperforming assets - - --------- --------- Operating loss from continuing operations before taxes (40,094) (71,750) 44 Operating income tax benefit (16,520) (31,687) --------- --------- Net operating loss from continuing operations (1)(2)(3) (23,574) (40,063) 41 Gain from acquisition, net of tax expense - - Noncash goodwill impairment charges - - Severance costs, net of tax benefit - - Partial reversal of fraud loss provision, net of tax expense 7,179 - (Loss) income from discontinued operations - 228 Gain from sale of subsidiary, net of income taxes and selling costs - - --------- --------- Net loss (16,395) (39,835) 59 Preferred dividends and discount accretion 2,586 2,567 --------- --------- Net loss available to common shareholders $ (18,981) $ (42,402) ========= ========= PERFORMANCE MEASURES Per common share: Diluted operating loss from continuing operations (1)(2)(3) $ (.28) $ (.45) 38 Diluted loss from continuing operations (.20) (.45) 56 Diluted loss (.20) (.45) 56 Stock dividends declared (7) - - Book value 4.84 8.36 (42) Tangible book value (5) 4.76 6.02 (21) Key performance ratios: Return on equity (4)(6) (17.16)% (22.08)% Return on assets (6) (.89) (1.91) Net interest margin (6) 3.58 3.40 Operating efficiency ratio from continuing operations (2)(3) 89.45 78.74 Equity to assets 8.85 11.94 Tangible equity to assets (5) 8.75 9.53 Tangible common equity to assets (5) 6.35 7.37 Tangible common equity to risk-weighted assets (5) 9.05 10.39 ASSET QUALITY * Non-performing loans $ 179,094 $ 264,092 Foreclosed properties 142,208 120,770 --------- --------- Total non-performing assets (NPAs) 321,302 384,862 Allowance for loan losses 174,695 155,602 Operating net charge-offs (1) 47,668 84,585 Allowance for loan losses to loans 3.79 % 3.02 % Operating net charge-offs to average loans (1)(6) 4.03 6.37 NPAs to loans and foreclosed properties 6.77 7.30 NPAs to total assets 4.32 4.81 AVERAGE BALANCES ($ in millions) Loans $ 4,768 $ 5,357 (11) Investment securities 1,354 1,529 (11) Earning assets 6,680 7,487 (11) Total assets 7,338 8,287 (11) Deposits 6,294 6,835 (8) Shareholders' equity 649 989 (34) Common shares - basic (thousands) 94,918 94,219 Common shares - diluted (thousands) 94,918 94,219 AT PERIOD END ($ in millions) Loans * $ 4,604 $ 5,151 (11) Investment securities 1,490 1,530 (3) Total assets 7,443 8,000 (7) Deposits 6,469 6,628 (2) Shareholders' equity 636 962 (34) Common shares outstanding (thousands) 94,685 94,046 (1) Excludes the partial reversal of a previously established provision for fraud-related loan losses of$11.8 million , net of tax expense of$4.6 million in 2010. Operating charge-offs also exclude the$11.8 million related partial recovery of the previously charged off amount. (2) Excludes the gain from acquisition of$11.4 million , (income tax expense of$4.3 million ) in the second quarter of 2009 and revenue generated by discontinued operations in all periods presented. (3) Excludes goodwill impairment charges of$211 million in the third quarter of 2010 and$25 million and$70 million in the third and first quarters of 2009, respectively, severance costs of$2.9 million , (income tax benefit of$1.1 million ) in the first quarter of 2009 and expenses relating to discontinued operations for all periods presented. (4) Net 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. (6) Annualized. (7) Number of new shares issued for shares currently held. * Excludes loans and foreclosed properties covered by loss sharing agreements with theFDIC .UNITED COMMUNITY BANKS, INC. Financial Highlights Selected Financial Information For the Twelve (in thousands, except per share Months Ended YTD --------------------- 2010-2009 data; taxable equivalent) 2010 2009 Change --------- --------- --------- INCOME SUMMARY Interest revenue $ 343,123 $ 404,961 Interest expense 100,071 159,734 --------- --------- Net interest revenue 243,052 245,227 (1)% Operating provision for loan losses (1) 234,750 310,000 Operating fee revenue (2) 48,548 50,964 (5) --------- --------- Total operating revenue (1)(2) 56,850 (13,809) Operating expenses (3) 242,952 217,050 12 Loss on sale of nonperforming assets 45,349 - --------- --------- Operating loss from continuing operations before taxes (231,451) (230,859) Operating income tax benefit (88,062) (91,754) --------- --------- Net operating loss from continuing operations (1)(2)(3) (143,389) (139,105) (3) Gain from acquisition, net of tax expense - 7,062 Noncash goodwill impairment charges (210,590) (95,000) Severance costs, net of tax benefit - (1,797) Partial reversal of fraud loss provision, net of tax expense 7,179 - (Loss) income from discontinued operations (101) 513 Gain from sale of subsidiary, net of income taxes and selling costs 1,266 - --------- --------- Net loss (345,635) (228,327) (51) Preferred dividends and discount accretion 10,316 10,242 --------- --------- Net loss available to common shareholders $(355,951) $(238,569) ========= ========= PERFORMANCE MEASURES Per common share: Diluted operating loss from continuing operations (1)(2)(3) $ (1.62) $ (2.47) 34 Diluted loss from continuing operations (3.77) (3.96) 5 Diluted loss (3.76) (3.95) 5 Stock dividends declared (7) - 3 for 130 Book value 4.84 8.36 (42) Tangible book value (5) 4.76 6.02 (21) Key performance ratios: Return on equity (4)(6) (57.08)% (34.40)% Return on assets (6) (4.53) (2.76) Net interest margin (6) 3.56 3.29 Operating efficiency ratio from continuing operations (2)(3) 98.98 73.97 Equity to assets 11.01 11.12 Tangible equity to assets (5) 9.15 8.33 Tangible common equity to assets (5) 6.80 6.15 Tangible common equity to risk-weighted assets (5) 9.05 10.39 ASSET QUALITY * Non-performing loans $ 179,094 $ 264,092 Foreclosed properties 142,208 120,770 --------- --------- Total non-performing assets (NPAs) 321,302 384,862 Allowance for loan losses 174,695 155,602 Operating net charge-offs (1) 215,657 276,669 Allowance for loan losses to loans 3.79 % 3.02 % Operating net charge-offs to average loans (1)(6) 4.42 5.03 NPAs to loans and foreclosed properties 6.77 7.30 NPAs to total assets 4.32 4.81 AVERAGE BALANCES ($ in millions) Loans $ 4,961 $ 5,548 (11) Investment securities 1,453 1,656 (12) Earning assets 6,822 7,465 (9) Total assets 7,626 8,269 (8) Deposits 6,373 6,713 (5) Shareholders' equity 840 920 (9) Common shares - basic (thousands) 94,624 60,374 Common shares - diluted (thousands) 94,624 60,374 AT PERIOD END ($ in millions) Loans * $ 4,604 $ 5,151 (11) Investment securities 1,490 1,530 (3) Total assets 7,443 8,000 (7) Deposits 6,469 6,628 (2) Shareholders' equity 636 962 (34) Common shares outstanding (thousands) 94,685 94,046 (1) Excludes the partial reversal of a previously established provision for fraud-related loan losses of$11.8 million , net of tax expense of$4.6 million in 2010. Operating charge-offs also exclude the$11.8 million related partial recovery of the previously charged off amount. (2) Excludes the gain from acquisition of$11.4 million , (income tax expense of$4.3 million ) in the second quarter of 2009 and revenue generated by discontinued operations in all periods presented. (3) Excludes goodwill impairment charges of$211 million in the third quarter of 2010 and$25 million and$70 million in the third and first quarters of 2009, respectively, severance costs of$2.9 million , (income tax benefit of$1.1 million ) in the first quarter of 2009 and expenses relating to discontinued operations for all periods presented. (4) Net 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. (6) Annualized. (7) Number of new shares issued for shares currently held. * Excludes loans and foreclosed properties covered by loss sharing agreements with theFDIC .UNITED COMMUNITY BANKS, INC. Selected Financial Information For the Years Ended December 31, (in thousands, ------------------------------------------------------ except per share data; taxable equivalent) 2010 2009 2008 2007 2006 --------- --------- --------- -------- -------- INCOME SUMMARY Net interest revenue $ 243,052 $ 245,227 $ 238,704 $274,483 $237,880 Operating provision for loan losses (1) 234,750 310,000 184,000 37,600 14,600 Operating fee revenue (2) 48,548 50,964 46,081 53,701 41,671 --------- --------- --------- -------- -------- Total operating revenue (1)(2) 56,850 (13,809) 100,785 290,584 264,951 Operating expenses (3) 242,952 217,050 200,335 181,730 155,306 Loss on sale of nonperforming assets 45,349 - - - - --------- --------- --------- -------- -------- Operating (loss) income from continuing operations before taxes (231,451) (230,859) (99,550) 108,854 109,645 Operating income taxes (88,062) (91,754) (35,651) 40,266 41,249 --------- --------- --------- -------- -------- Net operating (loss) income from continuing operations (143,389) (139,105) (63,899) 68,588 68,396 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 7,179 - - (10,998) - Net (loss) income from discontinued operations (101) 513 449 403 419 Gain from sale of subsidiary, net of income taxes and selling costs 1,266 - - - - --------- --------- --------- -------- -------- Net (loss) income (345,635) (228,327) (63,450) 57,993 68,815 Preferred dividends and discount accretion 10,316 10,242 724 18 19 --------- --------- --------- -------- -------- Net (loss) income available to common shareholders $(355,951) $(238,569) $ (64,174) $ 57,975 $ 68,796 ========= ========= ========= ======== ======== PERFORMANCE MEASURES Per common share: Diluted operating (loss) earnings from continuing operations (1)(2)(3) $ (1.62) $ (2.47) $ (1.36) $ 1.47 $ 1.65 Diluted (loss) earnings from continuing operations (3.77) (3.96) (1.36) 1.24 1.65 Diluted (loss) earnings (3.76) (3.95) (1.35) 1.24 1.66 Cash dividends declared (rounded) - - .18 .36 .32 Stock dividends declared (6) - 3 for 130 2 for 130 - - Book value 4.84 8.36 16.95 17.73 14.37 Tangible book value (5) 4.76 6.02 10.39 10.94 10.57 Key performance ratios: Return on equity (4) (57.08)% (34.40)% (7.82)% 7.79% 13.28% Return on assets (4.53) (2.76) (.76) .75 1.09 Net interest margin 3.56 3.29 3.18 3.88 4.05 Operating efficiency ratio from continuing operations (2)(3) 98.98 73.97 70.00 55.53 55.30 Equity to assets 11.01 11.12 10.22 9.61 8.06 Tangible equity to assets (5) 9.15 8.33 6.67 6.63 6.32 Tangible common equity to assets (5) 6.80 6.15 6.57 6.63 6.32 Tangible common equity to risk-weighted assets (5) 9.05 10.39 8.34 8.21 8.09 ASSET QUALITY * Non-performing loans $ 179,094 $ 264,092 $ 190,723 $ 28,219 $ 12,458 Foreclosed properties 142,208 120,770 59,768 18,039 1,196 --------- --------- --------- -------- -------- Total non-performing assets(NPAs) 321,302 384,862 250,491 46,258 13,654 Allowance for loan losses 174,695 155,602 122,271 89,423 66,566 Operating net charge-offs (1) 215,657 276,669 151,152 21,834 5,524 Allowance for loan losses to loans 3.79 % 3.02 % 2.14 % 1.51% 1.24% Operating net charge-offs to average loans (1) 4.42 5.03 2.57 .38 .12 NPAs to loans and foreclosed properties 6.77 7.30 4.35 .78 .25 NPAs to total assets 4.32 4.81 2.92 .56 .19 AVERAGE BALANCES ($ in millions) Loans $ 4,961 $ 5,548 $ 5,891 $ 5,735 $ 4,801 Investment securities 1,453 1,656 1,489 1,278 1,042 Earning assets 6,822 7,465 7,504 7,071 5,877 Total assets 7,626 8,269 8,319 7,731 6,287 Deposits 6,373 6,713 6,524 6,029 5,017 Shareholders' equity 840 920 850 743 507 Common shares - Basic (thousands) 94,624 60,374 47,369 45,948 40,413 Common shares - Diluted (thousands) 94,624 60,374 47,369 46,593 41,575 AT YEAR END ($ in millions) Loans * $ 4,604 $ 5,151 $ 5,705 $ 5,929 $ 5,377 Investment securities 1,490 1,530 1,617 1,357 1,107 Total assets 7,443 8,000 8,592 8,207 7,101 Deposits 6,469 6,628 7,004 6,076 5,773 Shareholders' equity 636 962 989 832 617 Common shares outstanding (thousands) 94,685 94,046 48,009 46,903 42,891 (1) Excludes pre-tax provision for fraud-related loan losses and related charge-offs of$18 million , net of income tax benefit of$7 million in 2007 and subsequent recovery of$11.8 million , net of tax expense of$4.6 million 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 the 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 (loss) 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). (5) Excludes effect of acquisition related intangibles and associated amortization. (6) Number of new shares issued for shares currently held. * Excludes loans and foreclosed properties covered by loss sharing agreements with theFDIC .UNITED COMMUNITY BANKS, INC. Operating Earnings to GAAP Earnings Reconciliation Selected Financial Information 2010 2009 ------------------------------------------- --------- (in thousands, except per share data; taxable Fourth Third Second First Fourth equivalent) Quarter Quarter Quarter Quarter Quarter --------- ---------- --------- --------- --------- Interest revenue reconciliation Interest revenue - taxable equivalent $ 81,215 $ 84,360 $ 87,699 $ 89,849 $ 97,481 Taxable equivalent adjustment (497) (511) (500) (493) (601) --------- ---------- --------- --------- --------- Interest revenue (GAAP) $ 80,718 $ 83,849 $ 87,199 $ 89,356 $ 96,880 ========= ========== ========= ========= ========= Net interest revenue reconciliation Net interest revenue - taxable equivalent $ 60,132 $ 60,014 $ 61,627 $ 61,279 $ 63,929 Taxable equivalent adjustment (497) (511) (500) (493) (601) --------- ---------- --------- --------- --------- Net interest revenue (GAAP) $ 59,635 $ 59,503 $ 61,127 $ 60,786 $ 63,328 ========= ========== ========= ========= ========= Provision for loan losses reconciliation Operating provision for loan losses $ 47,750 $ 50,500 $ 61,500 $ 75,000 $ 90,000 Provision for special fraud-related loan loss and partial recovery (11,750) - - - - --------- ---------- --------- --------- --------- Provision for loan losses (GAAP) $ 36,000 $ 50,500 $ 61,500 $ 75,000 $ 90,000 ========= ========== ========= ========= ========= Fee revenue reconciliation Operating fee revenue $ 12,442 $ 12,861 $ 11,579 $ 11,666 $ 14,447 Gain from acquisition - - - - - --------- ---------- --------- --------- --------- Fee revenue (GAAP) $ 12,442 $ 12,861 $ 11,579 $ 11,666 $ 14,447 ========= ========== ========= ========= ========= Total revenue reconciliation Total operating revenue $ 24,824 $ 22,375 $ 11,706 $ (2,055) $ (11,624) Taxable equivalent adjustment (497) (511) (500) (493) (601) Gain from acquisition - - - - - Provision for special fraud-related loan loss and partial recovery 11,750 - - - - --------- ---------- --------- --------- --------- Total revenue (GAAP) $ 36,077 $ 21,864 $ 11,206 $ (2,548) $ (12,225) ========= ========== ========= ========= ========= Expense reconciliation Operating expense $ 64,918 $ 64,906 $ 103,657 $ 54,820 $ 60,126 Noncash goodwill impairment charge - 210,590 - - - Severance costs - - - - - --------- ---------- --------- --------- --------- Operating expense (GAAP) $ 64,918 $ 275,496 $ 103,657 $ 54,820 $ 60,126 ========= ========== ========= ========= ========= (Loss) income from continuing operations before taxes reconciliation Operating (loss) income from continuing operations before taxes $ (40,094) $ (42,531) $ (91,951) $ (56,875) $ (71,750) Taxable equivalent adjustment (497) (511) (500) (493) (601) Gain from acquisition - - - - - Noncash goodwill impairment charge - (210,590) - - - Severance costs - - - - - Provision for special fraud-related loan loss and partial recovery 11,750 - - - - --------- ---------- --------- --------- --------- (Loss) income from continuing operations before taxes (GAAP) $ (28,841) $ (253,632) $ (92,451) $ (57,368) $ (72,351) ========= ========== ========= ========= ========= Income tax (benefit) expense reconciliation Operating income tax (benefit) expense $ (16,520) $ (16,706) $ (32,419) $ (22,417) $ (31,687) Taxable equivalent adjustment (497) (511) (500) (493) (601) Gain from acquisition, tax expense - - - - - Severance costs, tax benefit - - - - - Provision for special fraud-related loan loss and partial recovery, tax 4,571 - - - - --------- ---------- --------- --------- --------- Income tax (benefit) expense (GAAP)$ (12,446) $ (17,217) $ (32,919) $ (22,910) $ (32,288) ========= ========== ========= ========= ========= Diluted (loss) income from continuing operations per common share reconciliation Diluted operating (loss) income from continuing operations per common share $ (.28) $ (.30) $ (.66) $ (.39) $ (.45) Gain from acquisition - - - - - Noncash goodwill impairment charge - (2.22) - - - Severance costs - - - - - Provision for special fraud-related loan loss and partial recovery .08 - - - - --------- ---------- --------- --------- --------- Diluted (loss) income from continuing operations per common share (GAAP) $ (.20) $ (2.52) $ (.66) $ (.39) $ (.45) ========= ========== ========= ========= ========= Book value per common share reconciliation Tangible book value per common share $ 4.76 $ 5.05 $ 5.39 $ 5.62 $ 6.02 Effect of goodwill and other intangibles .08 .09 2.32 2.33 2.34 --------- ---------- --------- --------- --------- Book value per common share (GAAP) $ 4.84 $ 5.14 $ 7.71 $ 7.95 $ 8.36 ========= ========== ========= ========= ========= Efficiency ratio from continuing operations reconciliation Operating efficiency ratio from continuing operations 89.45% 89.38% 141.60% 75.22% 78.74% Gain from acquisition - - - - - Noncash goodwill impairment charge - 290.00 - - - Severance costs - - - - - --------- ---------- --------- --------- --------- Efficiency ratio from continuing operations (GAAP) 89.45% 379.38% 141.60% 75.22% 78.74% ========= ========== ========= ========= ========= Average equity to assets reconciliation Tangible common equity to assets 6.35% 6.78% 6.91% 7.13% 7.37% Effect of preferred equity 2.40 2.41 2.35 2.26 2.16 --------- ---------- --------- --------- --------- Tangible equity to assets 8.75 9.19 9.26 9.39 9.53 Effect of goodwill and other intangibles .10 2.18 2.58 2.51 2.41 --------- ---------- --------- --------- --------- Equity to assets (GAAP) 8.85% 11.37% 11.84% 11.90% 11.94% ========= ========== ========= ========= ========= Actual tangible common equity to risk-weighted assets reconciliation Tangible common equity to risk-weighted assets 9.05% 9.60% 9.97% 10.03% 10.39% Effect of other comprehensive income (.62) (.81) (.87) (.85) (.87) Effect of deferred tax limitation (3.34) (2.94) (2.47) (1.75) (1.27) Effect of trust preferred 1.06 1.06 1.03 1.00 .97 Effect of preferred equity 3.52 3.51 3.41 3.29 3.19 --------- ---------- --------- --------- --------- Tier I capital ratio(Regulatory) 9.67% 10.42% 11.07% 11.72% 12.41% ========= ========== ========= ========= ========= Net charge-offs reconciliation Operating net charge-offs $ 47,668 $ 49,998 $ 61,323 $ 56,668 $ 84,585 Fraud related charge-offs and subsequent partial recovery (11,750) - - - - --------- ---------- --------- --------- --------- Net charge-offs (GAAP) $ 35,918 $ 49,998 $ 61,323 $ 56,668 $ 84,585 ========= ========== ========= ========= ========= Net charge-offs to average loans reconciliation Operating net charge-offs to average loans 4.03% 4.12% 4.98% 4.51% 6.37% Effect of fraud related charge offs and subsequent partial recovery (1.00) - - - - --------- ---------- --------- --------- --------- Net charge-offs to average loans (GAAP) 3.03% 4.12% 4.98% 4.51% 6.37% ========= ========== ========= ========= =========UNITED COMMUNITY BANKS, INC. Operating Earnings to GAAP Earnings Reconciliation Selected Financial Information (in thousands, except per share For the Twelve Months Ended ------------------------------------------------------ data; taxable equivalent) 2010 2009 2008 2007 2006 ---------- ---------- ---------- -------- -------- Interest revenue reconciliation Interest revenue - taxable equivalent $ 343,123 $ 404,961 $ 466,969 $550,917 $446,695 Taxable equivalent adjustment (2,001) (2,132) (2,261) (1,881) (1,868) ---------- ---------- ---------- -------- -------- Interest revenue (GAAP) $ 341,122 $ 402,829 $ 464,708 $549,036 $444,827 ========== ========== ========== ======== ======== Net interest revenue reconciliation Net interest revenue - taxable equivalent $ 243,052 $ 245,227 $ 238,704 $274,483 $237,880 Taxable equivalent adjustment (2,001) (2,132) (2,261) (1,881) (1,868) ---------- ---------- ---------- -------- -------- Net interest revenue (GAAP) $ 241,051 $ 243,095 $ 236,443 $272,602 $236,012 ========== ========== ========== ======== ======== Provision for loan losses reconciliation Operating provision for loan losses $ 234,750 $ 310,000 $ 184,000 $ 37,600 $ 14,600 Provision for special fraud-related loan loss and partial recovery (11,750) - - 18,000 - ---------- ---------- ---------- -------- -------- Provision for loan losses (GAAP) $ 223,000 $ 310,000 $ 184,000 $ 55,600 $ 14,600 ========== ========== ========== ======== ======== Fee revenue reconciliation Operating fee revenue $ 48,548 $ 50,964 $ 46,081 $ 53,701 $ 41,671 Gain from acquisition - 11,390 - - - ---------- ---------- ---------- -------- -------- Fee revenue (GAAP) $ 48,548 $ 62,354 $ 46,081 $ 53,701 $ 41,671 ========== ========== ========== ======== ======== Total revenue reconciliation Total operating revenue $ 56,850 $ (13,809) $ 100,785 $290,584 $264,951 Taxable equivalent adjustment (2,001) (2,132) (2,261) (1,881) (1,868) Gain from acquisition - 11,390 - - - Provision for special fraud- related loan loss and partial recovery 11,750 - - (18,000) - ---------- ---------- ---------- -------- -------- Total revenue (GAAP) $ 66,599 $ (4,551) $ 98,524 $270,703 $263,083 ========== ========== ========== ======== ======== Expense reconciliation Operating expense $ 288,301 $ 217,050 $ 200,335 $181,730 $155,306 Noncash goodwill impairment charge 210,590 95,000 - - - Severance costs - 2,898 - - - ---------- ---------- ---------- -------- -------- Operating expense (GAAP) $ 498,891 $ 314,948 $ 200,335 $181,730 $155,306 ========== ========== ========== ======== ======== (Loss) income from continuing operations before taxes reconciliation Operating (loss) income from continuing operations before taxes $ (231,451) $ (230,859) $ (99,550) $108,854 $109,645 Taxable equivalent adjustment (2,001) (2,132) (2,261) (1,881) (1,868) Gain from acquisition - 11,390 - - - Noncash goodwill impairment charge (210,590) (95,000) - - - Severance costs - (2,898) - - - Provision for special fraud-related loan loss and partial recovery 11,750 - - (18,000) - ---------- ---------- ---------- -------- -------- (Loss) income from continuing operations before taxes (GAAP) $ (432,292) $ (319,499) $ (101,811) $ 88,973 $107,777 ========== ========== ========== ======== ======== Income tax (benefit) expense reconciliation Operating income tax (benefit) expense $ (88,062) $ (91,754) $ (35,651) $ 40,266 $ 41,249 Taxable equivalent adjustment (2,001) (2,132) (2,261) (1,881) (1,868) Gain from acquisition, tax expense - 4,328 - - - Severance costs, tax benefit - (1,101) - - - Provision for special fraud-related loan loss and partial recovery, tax 4,571 - - (7,002) - ---------- ---------- ---------- -------- -------- Income tax (benefit) expense (GAAP) $ (85,492) $ (90,659) $ (37,912) $ 31,383 $ 39,381 ========== ========== ========== ======== ======== Diluted (loss) income from continuing operations per common share reconciliation Diluted operating (loss) income from continuing operations per common share $ (1.62) $ (2.47) $ (1.36) $ 1.47 $ 1.65 Gain from acquisition - .12 - - - Noncash goodwill impairment charge (2.23) (1.58) - - - Severance costs - (.03) - - - Provision for special fraud-related loan loss and partial recovery .08 - - (.23) - ---------- ---------- ---------- -------- -------- Diluted (loss) income from continuing operations per common share (GAAP) $ (3.77) $ (3.96) $ (1.36) $ 1.24 $ 1.65 ========== ========== ========== ======== ======== Book value per common share reconciliation Tangible book value per common share $ 4.76 $ 6.02 $ 10.39 $ 10.94 $ 10.57 Effect of goodwill and other intangibles .08 2.34 6.56 6.79 3.80 ---------- ---------- ---------- -------- -------- Book value per common share (GAAP) $ 4.84 $ 8.36 $ 16.95 $ 17.73 $ 14.37 ========== ========== ========== ======== ======== Efficiency ratio from continuing operations reconciliation Operating efficiency ratio from continuing operations 98.98% 73.97% 70.00% 55.53% 55.30% Gain from acquisition - (2.77) - - - Noncash goodwill impairment charge 72.29 31.17 - - - Severance costs - .95 - - - ---------- ---------- ---------- -------- -------- Efficiency ratio from continuing operations (GAAP) 171.27% 103.32% 70.00% 55.53% 55.30% ========== ========== ========== ======== ======== Average equity to assets reconciliation Tangible common equity to assets 6.80% 6.15% 6.57% 6.63% 6.32% Effect of preferred equity 2.35 2.18 .10 - - ---------- ---------- ---------- -------- -------- Tangible equity to assets 9.15 8.33 6.67 6.63 6.32 Effect of goodwill and other intangibles 1.86 2.79 3.55 2.98 1.74 ---------- ---------- ---------- -------- -------- Equity to assets (GAAP) 11.01% 11.12% 10.22% 9.61% 8.06% ========== ========== ========== ======== ======== Actual tangible common equity to risk-weighted assets reconciliation Tangible common equity to risk-weighted assets 9.05% 10.39% 8.34% 8.21% 8.09% Effect of other comprehensive income (.62) (.87) (.91) (.23) .07 Effect of deferred tax limitation (3.34) (1.27) - - - Effect of trust preferred 1.06 .97 .88 .65 .81 Effect of preferred equity 3.52 3.19 2.90 - .01 ---------- ---------- ---------- -------- -------- Tier I capital ratio (Regulatory) 9.67% 12.41% 11.21% 8.63% 8.98% ========== ========== ========== ======== ======== Net charge-offs reconciliation Operating net charge-offs $ 215,657 $ 276,669 $ 151,152 $ 21,834 $ 5,524 Fraud related charge-offs and subsequent partial recovery (11,750) - - 18,000 - ---------- ---------- ---------- -------- -------- Net charge-offs (GAAP) $ 203,907 $ 276,669 $ 151,152 $ 39,834 $ 5,524 ========== ========== ========== ======== ======== Net charge-offs to average loans reconciliation Operating net charge-offs to average loans 4.42% 5.03% 2.57% .38% .12% Effect of fraud related charge offs and subsequent partial recovery (.25) - - .31 - ---------- ---------- ---------- -------- -------- Net charge-offs to average loans (GAAP) 4.17% 5.03% 2.57% .69% .12% ========== ========== ========== ======== ========UNITED COMMUNITY BANKS, INC. Financial Highlights Loan Portfolio Composition at Period-End (1) 2010 2009 ----------------------------------- -------- Fourth Third Second First Fourth (in millions) Quarter Quarter Quarter Quarter Quarter -------- -------- -------- -------- -------- LOANS BY CATEGORY Commercial (sec. by RE) $ 1,761 $ 1,781 $ 1,780 $ 1,765 $ 1,779 Commercial construction 297 310 342 357 363 Commercial & industrial 441 456 441 381 390 -------- -------- -------- -------- -------- Total commercial 2,499 2,547 2,563 2,503 2,532 Residential construction 695 764 820 960 1,050 Residential mortgage 1,279 1,316 1,356 1,390 1,427 Consumer / installment 131 133 134 139 142 -------- -------- -------- -------- -------- Total loans $ 4,604 $ 4,760 $ 4,873 $ 4,992 $ 5,151 ======== ======== ======== ======== ======== LOANS BY MARKET Atlanta MSA $ 1,310 $ 1,365 $ 1,373 $ 1,404 $ 1,435 Gainesville MSA 312 316 343 372 390 North Georgia 1,689 1,755 1,808 1,814 1,884 Western North Carolina 702 719 738 756 772 Coastal Georgia 335 345 356 388 405 East Tennessee 256 260 255 258 265 -------- -------- -------- -------- -------- Total loans $ 4,604 $ 4,760 $ 4,873 $ 4,992 $ 5,151 ======== ======== ======== ======== ======== RESIDENTIAL CONSTRUCTION Dirt loans Acquisition & development $ 174 $ 190 $ 214 $ 290 $ 332 Land loans 99 104 110 124 127 Lot loans 275 303 311 321 336 -------- -------- -------- -------- -------- Total 548 597 635 735 795 -------- -------- -------- -------- -------- House loans Spec 97 109 125 153 178 Sold 50 58 60 72 77 -------- -------- -------- -------- -------- Total 147 167 185 225 255 -------- -------- -------- -------- -------- Total residential construction $ 695 $ 764 $ 820 $ 960 $ 1,050 ======== ======== ======== ======== ======== RESIDENTIAL CONSTRUCTION - ATLANTA MSA Dirt loans Acquisition & development $ 30 $ 34 $ 40 $ 66 $ 76 Land loans 23 27 32 43 43 Lot loans 32 45 39 47 52 -------- -------- -------- -------- -------- Total 85 106 111 156 171 -------- -------- -------- -------- -------- House loans Spec 38 42 48 58 68 Sold 10 11 10 14 16 -------- -------- -------- -------- -------- Total 48 53 58 72 84 -------- -------- -------- -------- -------- Total residential construction $ 133 $ 159 $ 169 $ 228 $ 255 ======== ======== ======== ======== ======== (1) Excludes total loans of$68.2 million ,$75.2 million ,$80.8 million ,$79.5 million and$85.1 million as ofDecember 31, 2010 ,September 30, 2010 ,June 30, 2010 ,March 31, 2010 andDecember 31, 2009 , respectively, that are covered by the loss-sharing agreement with theFDIC , related to the acquisition ofSouthern Community Bank .UNITED COMMUNITY BANKS, INC. Financial Highlights Loan Portfolio Composition at Period-End (1) 2010 2009 Year ----------------- -------- Linked over Fourth Third Fourth Quarter Year (in millions) Quarter Quarter Quarter Change Change -------- -------- -------- ------- ------- LOANS BY CATEGORY Commercial (sec. by RE) $ 1,761 $ 1,781 $ 1,779 $ (20) $ (18) Commercial construction 297 310 363 (13) (66) Commercial & industrial 441 456 390 (15) 51 -------- -------- -------- Total commercial 2,499 2,547 2,532 (48) (33) Residential construction 695 764 1,050 (69) (355) Residential mortgage 1,279 1,316 1,427 (37) (148) Consumer / installment 131 133 142 (2) (11) -------- -------- -------- Total loans $ 4,604 $ 4,760 $ 5,151 (156) (547) ======== ======== ======== LOANS BY MARKET Atlanta MSA $ 1,310 $ 1,365 $ 1,435 (55) (125) Gainesville MSA 312 316 390 (4) (78) North Georgia 1,689 1,755 1,884 (66) (195) Western North Carolina 702 719 772 (17) (70) Coastal Georgia 335 345 405 (10) (70) East Tennessee 256 260 265 (4) (9) -------- -------- -------- Total loans $ 4,604 $ 4,760 $ 5,151 (156) (547) ======== ======== ======== RESIDENTIAL CONSTRUCTION Dirt loans Acquisition & development $ 174 $ 190 $ 332 (16) (158) Land loans 99 104 127 (5) (28) Lot loans 275 303 336 (28) (61) -------- -------- -------- Total 548 597 795 (49) (247) -------- -------- -------- House loans Spec 97 109 178 (12) (81) Sold 50 58 77 (8) (27) -------- -------- -------- Total 147 167 255 (20) (108) -------- -------- -------- Total residential construction $ 695 $ 764 $ 1,050 (69) (355) ======== ======== ======== RESIDENTIAL CONSTRUCTION - ATLANTA MSA Dirt loans Acquisition & development $ 30 $ 34 $ 76 (4) (46) Land loans 23 27 43 (4) (20) Lot loans 32 45 52 (13) (20) -------- -------- -------- Total 85 106 171 (21) (86) -------- -------- -------- House loans Spec 38 42 68 (4) (30) Sold 10 11 16 (1) (6) -------- -------- -------- Total 48 53 84 (5) (36) -------- -------- -------- Total residential construction $ 133 $ 159 $ 255 (26) (122) ======== ======== ======== (1) Excludes total loans of$68.2 million ,$75.2 million ,$80.8 million ,$79.5 million and$85.1 million as ofDecember 31, 2010 ,September 30, 2010 ,June 30, 2010 ,March 31, 2010 andDecember 31, 2009 , respectively, that are covered by the loss-sharingUNITED COMMUNITY BANKS, INC. Financial Highlights Loan Portfolio Composition at Year-End (1) (in millions) 2010 2009 2008 2007 2006 -------- -------- -------- -------- -------- LOANS BY CATEGORY Commercial (sec. by RE) $ 1,761 $ 1,779 $ 1,627 $ 1,476 $ 1,230 Commercial construction 297 363 500 527 469 Commercial & industrial 441 390 410 418 296 -------- -------- -------- -------- -------- Total commercial 2,499 2,532 2,537 2,421 1,995 Residential construction 695 1,050 1,479 1,829 1,864 Residential mortgage 1,279 1,427 1,526 1,502 1,338 Consumer / installment 131 142 163 177 180 -------- -------- -------- -------- -------- Total loans $ 4,604 $ 5,151 $ 5,705 $ 5,929 $ 5,377 ======== ======== ======== ======== ======== LOANS BY MARKET Atlanta MSA $ 1,310 $ 1,435 $ 1,706 $ 2,002 $ 1,651 Gainesville MSA 312 390 420 399 354 North Georgia 1,689 1,884 2,040 2,060 2,034 Western North Carolina 702 772 810 806 773 Coastal Georgia 335 405 464 416 358 East Tennessee 256 265 265 246 207 -------- -------- -------- -------- -------- Total loans $ 4,604 $ 5,151 $ 5,705 $ 5,929 $ 5,377 ======== ======== ======== ======== ======== (1) Excludes total loans of$68.2 million and$85.1 million as ofDecember 31, 2010 and 2009, respectively, that are covered by the loss-sharing agreement with theFDIC , related to the acquisition ofSouthern Community Bank .UNITED COMMUNITY BANKS, INC. Financial Highlights Credit Quality (1) Fourth Quarter 2010 --------------------------------------- Non- performing Foreclosed Total (in thousands) Loans Properties NPAs ------------- ----------- ----------- NPAs BY CATEGORY Commercial (sec. by RE) $ 44,927 $ 23,659 $ 68,586 Commercial construction 21,374 17,808 39,182 Commercial & industrial 5,611 - 5,611 ------------- ----------- ----------- Total commercial 71,912 41,467 113,379 Residential construction 54,505 78,231 132,736 Residential mortgage 51,083 22,510 73,593 Consumer / installment 1,594 - 1,594 ------------- ----------- ----------- Total NPAs $ 179,094 $ 142,208 $ 321,302 ============= =========== =========== Balance as a % of Unpaid Principal 67.2% 64.4% 65.9% NPAs BY MARKET Atlanta MSA $ 48,289 $ 41,154 $ 89,443 Gainesville MSA 5,171 9,273 14,444 North Georgia 83,551 66,211 149,762 Western North Carolina 25,832 11,553 37,385 Coastal Georgia 11,145 11,901 23,046 East Tennessee 5,106 2,116 7,222 ------------- ----------- ----------- Total NPAs $ 179,094 $ 142,208 $ 321,302 ============= =========== =========== NPA ACTIVITY Beginning Balance $ 217,766 $ 129,964 $ 347,730 Loans placed on non-accrual 81,023 - 81,023 Payments received (7,250) - (7,250) Loan charge-offs (47,913) - (47,913) Foreclosures (61,432) 61,432 - Capitalized costs - 170 170 Note / property sales (3,100) (33,509) (36,609) Write downs - (8,031) (8,031) Net losses on sales - (7,818) (7,818) ------------- ----------- ----------- Ending Balance $ 179,094 $ 142,208 $ 321,302 ============= =========== =========== (1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with theFDIC , related to the acquisition ofSouthern Community Bank .UNITED COMMUNITY BANKS, INC. Financial Highlights Credit Quality (1) Third Quarter 2010 ---------------------------------- Non- performing Foreclosed Total (in thousands) Loans Properties NPAs ---------- ---------- ---------- NPAs BY CATEGORY Commercial (sec. by RE) $ 53,646 $ 14,838 $ 68,484 Commercial construction 17,279 15,125 32,404 Commercial & industrial 7,670 - 7,670 ---------- ---------- ---------- Total commercial 78,595 29,963 108,558 Residential construction 79,321 73,206 152,527 Residential mortgage 58,107 26,795 84,902 Consumer / installment 1,743 - 1,743 ---------- ---------- ---------- Total NPAs $ 217,766 $ 129,964 $ 347,730 ========== ========== ========== Balance as a % of Unpaid Principal 70.0% 65.9% 68.4% NPAs BY MARKET Atlanta MSA $ 65,304 $ 32,785 $ 98,089 Gainesville MSA 11,905 5,685 17,590 North Georgia 92,295 67,439 159,734 Western North Carolina 31,545 11,559 43,104 Coastal Georgia 10,611 10,951 21,562 East Tennessee 6,106 1,545 7,651 ---------- ---------- ---------- Total NPAs $ 217,766 $ 129,964 $ 347,730 ========== ========== ========== NPA ACTIVITY Beginning Balance $ 224,335 $ 123,910 $ 348,245 Loans placed on non-accrual 119,783 - 119,783 Payments received (11,469) - (11,469) Loan charge-offs (52,647) - (52,647) Foreclosures (59,844) 59,844 - Capitalized costs - 601 601 Note / property sales (2,392) (40,203) (42,595) Write downs - (7,051) (7,051) Net losses on sales - (7,137) (7,137) ---------- ---------- ---------- Ending Balance $ 217,766 $ 129,964 $ 347,730 ========== ========== ========== (1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with theFDIC , related to the acquisition ofSouthern Community Bank .UNITED COMMUNITY BANKS, INC. Financial Highlights Credit Quality (1) Second Quarter 2010 ---------------------------------- Non- performing Foreclosed Total (in thousands) Loans Properties NPAs ---------- ---------- ---------- NPAs BY CATEGORY Commercial (sec. by RE) $ 56,013 $ 13,297 $ 69,310 Commercial construction 17,872 11,339 29,211 Commercial & industrial 7,245 - 7,245 ---------- ---------- ---------- Total commercial 81,130 24,636 105,766 Residential construction 88,375 74,444 162,819 Residential mortgage 53,175 24,830 78,005 Consumer / installment 1,655 - 1,655 ---------- ---------- ---------- Total NPAs $ 224,335 $ 123,910 $ 348,245 ========== ========== ========== Balance as a % of Unpaid Principal 69.4% 71.9% 70.3% NPAs BY MARKET Atlanta MSA $ 74,031 $ 30,605 $ 104,636 Gainesville MSA 10,730 2,750 13,480 North Georgia 102,198 60,597 162,795 Western North Carolina 22,776 11,473 34,249 Coastal Georgia 8,341 16,548 24,889 East Tennessee 6,259 1,937 8,196 ---------- ---------- ---------- Total NPAs $ 224,335 $ 123,910 $ 348,245 ========== ========== ========== NPA ACTIVITY Beginning Balance $ 280,802 $ 136,275 $ 417,077 Loans placed on non-accrual 155,007 - 155,007 Payments received (12,189) - (12,189) Loan charge-offs (62,693) - (62,693) Foreclosures (66,994) 66,994 - Capitalized costs - 305 305 Note / property sales (69,598) (68,472) (138,070) Write downs - (6,094) (6,094) Net losses on sales - (5,098) (5,098) ---------- ---------- ---------- Ending Balance $ 224,335 $ 123,910 $ 348,245 ========== ========== ========== (1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with theFDIC , related to the acquisition ofSouthern Community Bank .UNITED COMMUNITY BANKS, INC. Financial Highlights Credit Quality (1) Fourth Quarter Third Quarter Second Quarter 2010 (3) 2010 2010 ----------------- ----------------- ----------------- Net Net Net Charge- Charge- Charge- Offs to Offs to Offs to Net Average Net Average Net Average Charge- Loans Charge- Loans Charge- Loans (in thousands) Offs (2) Offs (2) Offs (2) -------- ------- -------- ------- -------- ------- NET CHARGE-OFFS BY CATEGORY Commercial (sec. by RE) $ 6,493 1.45% $ 14,212 3.16% $ 9,757 2.21% Commercial construction 3,924 5.12 1,972 2.40 1,460 1.67 Commercial & industrial 2,891 2.54 1,207 1.07 867 .85 -------- -------- -------- Total commercial 13,308 2.09 17,391 2.70 12,084 1.91 Residential construction 24,497 13.28 23,934 11.99 41,515 18.71 Residential mortgage 9,176 2.80 7,695 2.29 6,517 1.90 Consumer / installment 687 2.06 978 2.90 1,207 3.53 -------- -------- -------- Total $ 47,668 4.03 $ 49,998 4.12 $ 61,323 4.98 ======== ======== ======== NET CHARGE-OFFS BY MARKET Atlanta MSA $ 15,222 4.48% $ 13,753 3.97% $ 16,926 4.85% Gainesville MSA 3,434 4.37 1,143 1.40 2,547 3.01 North Georgia 18,537 4.26 26,554 5.92 28,100 6.19 Western North Carolina 5,154 2.87 5,509 2.99 7,194 3.86 Coastal Georgia 3,670 4.27 2,702 3.05 5,581 6.07 East Tennessee 1,651 2.53 337 .52 975 1.53 -------- -------- -------- Total $ 47,668 4.03 $ 49,998 4.12 $ 61,323 4.98 ======== ======== ======== (1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with theFDIC , related to the acquisition ofSouthern Community Bank . (2) Annualized. (3)North Carolina residential construction net charge offs for the fourth quarter of 2010 exclude a$11.8 million partial recovery of a 2007 fraud-related charge-off.UNITED COMMUNITY BANKS, INC. Consolidated Statement of Income (Unaudited) Three Months Ended December 31, --------------------- (in thousands, except per share data) 2010 2009 --------- --------- Interest revenue: Loans, including fees $ 66,659 $ 78,064 Investment securities, including tax exempt of $251 and $336 13,215 17,313 Federal funds sold, commercial paper and deposits in banks 844 1,503 --------- --------- Total interest revenue 80,718 96,880 --------- --------- Interest expense: Deposits: NOW 1,662 2,315 Money market 2,036 2,328 Savings 81 105 Time 12,868 24,026 --------- --------- Total deposit interest expense 16,647 28,774 Federal funds purchased, repurchase agreements and other short-term borrowings 1,073 1,081 Federal Home Loan Bank advances 608 1,045 Long-term debt 2,755 2,652 --------- --------- Total interest expense 21,083 33,552 --------- --------- Net interest revenue 59,635 63,328 Provision for loan losses 36,000 90,000 --------- --------- Net interest revenue after provision for loan losses 23,635 (26,672) --------- --------- Fee revenue: Service charges and fees 7,039 8,257 Mortgage loan and other related fees 1,868 1,651 Brokerage fees 778 443 Securities gains, net - 2,015 Gain from acquisition - - Losses from prepayment of borrowings - - Other 2,757 2,081 --------- --------- Total fee revenue 12,442 14,447 --------- --------- Total revenue 36,077 (12,225) --------- --------- Operating expenses: Salaries and employee benefits 23,777 24,061 Communications and equipment 3,377 3,819 Occupancy 4,024 4,003 Advertising and public relations 1,102 958 Postage, printing and supplies 1,063 1,307 Professional fees 3,016 2,646 Foreclosed property 20,602 14,391 FDIC assessments and other regulatory charges 3,299 3,711 Amortization of intangibles 771 813 Other 3,887 4,417 Loss on sale of nonperforming assets - - Goodwill impairment - - Severance costs - - --------- --------- Total operating expenses 64,918 60,126 --------- --------- Loss from continuing operations before income taxes (28,841) (72,351) Income tax benefit (12,446) (32,288) --------- --------- Net loss from continuing operations (16,395) (40,063) (Loss) income from discontinued operations, net of income taxes - 228 Gain from sale of subsidiary, net of income taxes and selling costs - - --------- --------- Net loss (16,395) (39,835) Preferred stock dividends and discount accretion 2,586 2,567 --------- --------- Net loss available to common shareholders $ (18,981) $ (42,402) ========= ========= Loss from continuing operations per common share - Basic / Diluted $ (.20) $ (.45) Loss per common share - Basic / Diluted (.20) (.45) Weighted average common shares outstanding - Basic / Diluted 94,918 94,219UNITED COMMUNITY BANKS, INC. Consolidated Statement of Income (Unaudited) Twelve Months Ended December 31, ----------------------- (in thousands, except per share data) 2010 2009 ---------- ---------- Interest revenue: Loans, including fees $ 277,904 $ 322,509 Investment securities, including tax exempt of $1,137 and $1,322 59,958 77,370 Federal funds sold, commercial paper and deposits in banks 3,260 2,950 ---------- ---------- Total interest revenue 341,122 402,829 ---------- ---------- Interest expense: Deposits: NOW 6,966 11,023 Money market 7,552 9,545 Savings 331 483 Time 66,883 120,326 ---------- ---------- Total deposit interest expense 81,732 141,377 Federal funds purchased, repurchase agreements and other short-term borrowings 4,235 2,842 Federal Home Loan Bank advances 3,355 4,622 Long-term debt 10,749 10,893 ---------- ---------- Total interest expense 100,071 159,734 ---------- ---------- Net interest revenue 241,051 243,095 Provision for loan losses 223,000 310,000 ---------- ---------- Net interest revenue after provision for loan losses 18,051 (66,905) ---------- ---------- Fee revenue: Service charges and fees 30,127 30,986 Mortgage loan and other related fees 7,019 8,959 Brokerage fees 2,662 2,085 Securities gains, net 2,552 2,756 Gain from acquisition - 11,390 Losses from prepayment of borrowings (2,233) - Other 8,421 6,178 ---------- ---------- Total fee revenue 48,548 62,354 ---------- ---------- Total revenue 66,599 (4,551) ---------- ---------- Operating expenses: Salaries and employee benefits 96,618 101,568 Communications and equipment 13,781 14,676 Occupancy 15,394 15,653 Advertising and public relations 4,625 3,950 Postage, printing and supplies 4,072 5,040 Professional fees 9,254 11,480 Foreclosed property 65,707 32,365 FDIC assessments and other regulatory charges 13,747 16,004 Amortization of intangibles 3,160 3,104 Other 16,594 13,210 Loss on sale of nonperforming assets 45,349 - Goodwill impairment 210,590 95,000 Severance costs - 2,898 ---------- ---------- Total operating expenses 498,891 314,948 ---------- ---------- Loss from continuing operations before income taxes (432,292) (319,499) Income tax benefit (85,492) (90,659) ---------- ---------- Net loss from continuing operations (346,800) (228,840) (Loss) income from discontinued operations, net of income taxes (101) 513 Gain from sale of subsidiary, net of income taxes and selling costs 1,266 - ---------- ---------- Net loss (345,635) (228,327) Preferred stock dividends and discount accretion 10,316 10,242 ---------- ---------- Net loss available to common shareholders $ (355,951) $ (238,569) ========== ========== Loss from continuing operations per common share - Basic / Diluted $ (3.77) $ (3.96) Loss per common share - Basic / Diluted (3.76) (3.95) Weighted average common shares outstanding - Basic / Diluted 94,624 60,374UNITED COMMUNITY BANKS, INC. Consolidated Balance Sheet (in thousands, except share and per share December 31, December 31, data) 2010 2009 ------------ ------------- (unaudited) (unaudited) ASSETS Cash and due from banks $ 95,994 $ 126,265 Interest-bearing deposits in banks 111,901 120,382 Federal funds sold, commercial paper and short-term investments 441,562 129,720 ------------ ------------- Cash and cash equivalents 649,457 376,367 Securities available for sale 1,224,417 1,530,047 Securities held to maturity (fair value $267,988) 265,807 - Mortgage loans held for sale 35,908 30,226 Loans, net of unearned income 4,604,126 5,151,476 Less allowance for loan losses 174,695 155,602 ------------ ------------- Loans, net 4,429,431 4,995,874 Assets covered by loss sharing agreements with the FDIC 131,887 185,938 Premises and equipment, net 178,239 182,038 Accrued interest receivable 24,299 33,867 Goodwill and other intangible assets 11,446 225,196 Foreclosed property 142,208 120,770 Other assets 350,097 319,591 ------------ ------------- Total assets $ 7,443,196 $ 7,999,914 ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits: Demand $ 793,414 $ 707,826 NOW 1,424,781 1,335,790 Money market 891,252 713,901 Savings 183,894 177,427 Time: Less than $100,000 1,496,700 1,746,511 Greater than $100,000 1,002,359 1,187,499 Brokered 676,772 758,880 ------------ ------------- Total deposits 6,469,172 6,627,834 Federal funds purchased, repurchase agreements, and other short-term borrowings 101,067 101,389 Federal Home Loan Bank advances 55,125 114,501 Long-term debt 150,146 150,066 Accrued expenses and other liabilities 32,171 43,803 ------------ ------------- Total liabilities 6,807,681 7,037,593 ------------ ------------- Shareholders' equity: Preferred stock,$1 par value; 10,000,000 shares authorized; Series A;$10 stated value; 21,700 shares issued and outstanding 217 217 Series B;$1,000 stated value; 180,000 shares issued and outstanding 175,711 174,408 Common stock,$1 par value; 200,000,000 shares authorized; 94,685,003 and 94,045,603 shares issued and outstanding 94,685 94,046 Common stock issuable; 336,437 and 221,906 shares 3,894 3,597 Capital surplus 665,496 622,034 (Accumulated deficit) retained earnings (335,567) 20,384 Accumulated other comprehensive income 31,079 47,635 ------------ ------------- Total shareholders' equity 635,515 962,321 ------------ ------------- Total liabilities and shareholders' equity $ 7,443,196 $ 7,999,914 ============ =============UNITED COMMUNITY BANKS, INC. Average Consolidated Balance Sheets and Net Interest Analysis For the Three Months Ended December 31, 2010 ------------------------------------- Average Avg. (dollars in thousands, taxable Balance Interest Rate equivalent) ----------- ------------ ----------- Assets: Interest-earning assets: Loans, net of unearned income (1)(2) $ 4,768,120 $ 66,750 5.55% Taxable securities (3) 1,327,999 12,964 3.90 Tax-exempt securities (1)(3) 25,917 410 6.33 Federal funds sold and other interest-earning assets 558,143 1,091 .78 ----------- ------------ Total interest-earning assets 6,680,179 81,215 4.83 ----------- ------------ Non-interest-earning assets: Allowance for loan losses (185,300) Cash and due from banks 112,923 Premises and equipment 178,729 Other assets (3) 551,340 ----------- Total assets $ 7,337,871 =========== Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $ 1,436,976 $ 1,662 .46 Money market 870,884 2,036 .93 Savings 184,651 81 .17 Time less than $100,000 1,489,933 6,292 1.68 Time greater than $100,000 1,010,104 4,736 1.86 Brokered 491,477 1,840 1.49 ----------- ------------ Total interest-bearing deposits 5,484,025 16,647 1.20 ----------- ------------ Federal funds purchased and other borrowings 102,830 1,073 4.14 Federal Home Loan Bank advances 58,712 608 4.11 Long-term debt 150,137 2,755 7.28 ----------- ------------ Total borrowed funds 311,679 4,436 5.65 ----------- ------------ Total interest-bearing liabilities 5,795,704 21,083 1.44 ------------ Non-interest-bearing liabilities: Non-interest-bearing deposits 809,604 Other liabilities 83,452 ----------- Total liabilities 6,688,760 Shareholders' equity 649,111 ----------- Total liabilities and shareholders' equity $ 7,337,871 =========== Net interest revenue $ 60,132 ============ Net interest-rate spread 3.39% =========== Net interest margin (4) 3.58% =========== (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. (3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of$40.8 million in 2010 and$22.1 million in 2009 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, 2009 ----------------------------- Average Avg. (dollars in thousands, taxable equivalent) Balance Interest Rate ---------- ----------- ----- Assets: Interest-earning assets: Loans, net of unearned income (1)(2) $5,357,150 $ 78,088 5.78% Taxable securities (3) 1,496,251 16,947 4.53 Tax-exempt securities (1)(3) 32,554 599 7.36 Federal funds sold and other interest-earning assets 600,835 1,847 1.23 ---------- ----------- Total interest-earning assets 7,486,790 97,481 5.17 ---------- ----------- Non-interest-earning assets: Allowance for loan losses (162,203) Cash and due from banks 107,153 Premises and equipment 182,790 Other assets (3) 672,014 ---------- Total assets $8,286,544 ========== Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $1,334,578 $ 2,315 .69 Money market 726,680 2,328 1.27 Savings 178,191 105 .23 Time less than $100,000 1,812,823 10,952 2.40 Time greater than $100,000 1,215,579 8,074 2.64 Brokered 844,462 5,000 2.35 ---------- ----------- Total interest-bearing deposits 6,112,313 28,774 1.87 ---------- ----------- Federal funds purchased and other borrowings 105,130 1,081 4.08 Federal Home Loan Bank advances 156,979 1,045 2.64 Long-term debt 150,060 2,652 7.01 ---------- ----------- Total borrowed funds 412,169 4,778 4.60 ---------- ----------- Total interest-bearing liabilities 6,524,482 33,552 2.04 ----------- Non-interest-bearing liabilities: Non-interest-bearing deposits 722,739 Other liabilities 50,044 ---------- Total liabilities 7,297,265 Shareholders' equity 989,279 ---------- Total liabilities and shareholders' equity $8,286,544 ========== Net interest revenue $ 63,929 =========== Net interest-rate spread 3.13% ===== Net interest margin (4) 3.40% ===== (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. (3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of$40.8 million in 2010 and$22.1 million in 2009 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, 2010 ----------------------------- Average Avg. (dollars in thousands, taxable equivalent) Balance Interest Rate ---------- ----------- ----- Assets: Interest-earning assets: Loans, net of unearned income (1)(2) $4,960,805 $ 278,149 5.61% Taxable securities (3) 1,425,322 58,821 4.13 Tax-exempt securities (1)(3) 27,827 1,860 6.68 Federal funds sold and other interest-earning assets 408,359 4,293 1.05 ---------- ----------- Total interest-earning assets 6,822,313 343,123 5.03 ---------- ----------- Non-interest-earning assets: Allowance for loan losses (190,227) Cash and due from banks 106,582 Premises and equipment 180,379 Other assets (3) 706,586 ---------- Total assets $7,625,633 ========== Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $1,360,729 $ 6,966 .51 Money market 780,982 7,552 .97 Savings 184,479 331 .18 Time less than $100,000 1,581,750 30,260 1.91 Time greater than $100,000 1,084,967 23,114 2.13 Brokered 610,483 13,509 2.21 ---------- ----------- Total interest-bearing deposits 5,603,390 81,732 1.46 ---------- ----------- Federal funds purchased and other borrowings 103,479 4,235 4.09 Federal Home Loan Bank advances 90,137 3,355 3.72 Long-term debt 150,107 10,749 7.16 ---------- ----------- Total borrowed funds 343,723 18,339 5.34 ---------- ----------- Total interest-bearing liabilities 5,947,113 100,071 1.68 ----------- Non-interest-bearing liabilities: Non-interest-bearing deposits 769,395 Other liabilities 69,367 ---------- Total liabilities 6,785,875 Shareholders' equity 839,758 ---------- Total liabilities and shareholders' equity $7,625,633 ========== Net interest revenue $ 243,052 =========== Net interest-rate spread 3.35% ===== Net interest margin (4) 3.56% ===== (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. (3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of$43.2 million in 2010 and$15.3 million in 2009 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, 2009 ----------------------------- Average Avg. (dollars in thousands, taxable equivalent) Balance Interest Rate ---------- ----------- ----- Assets: Interest-earning assets: Loans, net of unearned income (1)(2) $5,547,915 $ 322,284 5.81% Taxable securities (3) 1,626,032 76,048 4.68 Tax-exempt securities (1)(3) 30,460 2,164 7.10 Federal funds sold and other interest-earning assets 260,232 4,465 1.72 ---------- ----------- Total interest-earning assets 7,464,639 404,961 5.43 ---------- ----------- Non-interest-earning assets: Allowance for loan losses (146,535) Cash and due from banks 105,127 Premises and equipment 180,381 Other assets (3) 665,775 ---------- Total assets $8,269,387 ========== Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $1,297,139 $ 11,023 .85 Money market 589,389 9,545 1.62 Savings 177,410 483 .27 Time less than $100,000 1,891,774 56,811 3.00 Time greater than $100,000 1,306,302 42,518 3.25 Brokered 756,122 20,997 2.78 ---------- ----------- Total interest-bearing deposits 6,018,136 141,377 2.35 ---------- ----------- Federal funds purchased and other borrowings 177,589 2,842 1.60 Federal Home Loan Bank advances 220,468 4,622 2.10 Long-term debt 150,604 10,893 7.23 ---------- ----------- Total borrowed funds 548,661 18,357 3.35 ---------- ----------- Total interest-bearing liabilities 6,566,797 159,734 2.43 ----------- Non-interest-bearing liabilities: Non-interest-bearing deposits 694,469 Other liabilities 88,490 ---------- Total liabilities 7,349,756 Shareholders' equity 919,631 ---------- Total liabilities and shareholders' equity $8,269,387 ========== Net interest revenue $ 245,227 =========== Net interest-rate spread 3.00% ===== Net interest margin (4) 3.29% ===== (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. (3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of$43.2 million in 2010 and$15.3 million in 2009 are included in other assets for purposes of this presentation. (4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.
For more information:Rex S. Schuette Chief Financial Officer (706) 781-2266 Email Contact
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