United Community Banks, Inc. Reports Second Quarter Results

Press Release Details

Jul 21, 2020

United Community Banks, Inc. Reports Second Quarter Results

Continued Strong Performance and Strengthening of its Balance Sheet

GREENVILLE, S.C., July 21, 2020 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today reported second quarter financial results, with record year-over-year loan and deposit growth. United delivered net income of $25.1 million and pre-tax pre-provision income of $65.6 million and built its allowance for credit losses with a $33.5 million provision for credit losses. Due largely to the continued reserve build anticipating potential future loan losses driven by COVID-19 effects on the economy, diluted earnings per share of $0.32 represented a decrease of $0.23 or 42%, from a year ago. Excluding merger-related and other charges, diluted operating earnings per share were also $0.32, also down 46% from last year. United’s return on assets (ROA) was 0.71% and its return on common equity was 6.2% for the quarter. On an operating basis, United’s ROA was 0.72% and its return on tangible common equity was 8.1%.

Chairman and CEO Lynn Harton stated, “As the nation continues to grapple with the uncertainties of the future economic environment, I am pleased with the financial strength of the company and the performance of our employees, who continue to deliver for our customers. In this new world of physical distancing, the investments we have made in our digital delivery channels are being put to the test and exceeding our expectations. Customer traffic patterns suggest that our customers have significantly increased their use of our digital platform to access our products and services, as well as to open and manage their accounts. Along with our enhanced mobile app, this platform has enabled us to maintain business volume, while keeping our employees and customers physically-distanced and safe while banking. We supported our small business clients by offering loan deferrals, as needed. Additionally, our SBA team, along with other United bankers across our markets, processed nearly 11,000 applications for the SBA’s Paycheck Protection Program (PPP) loans totaling $1.1 billion—providing funding for small businesses throughout our footprint. In addition to addressing the needs of our existing customers, we added approximately 4,000 new loan and deposit customers since the Program began, which has given us an even greater opportunity to serve our markets.”

This quarter saw record growth with total loans increasing by $1.2 billion—mainly from PPP loans—however, non-PPP loans also grew at a 5% annualized rate. Likewise, core transaction deposits were up a record $1.7 billion over first quarter with growth in noninterest bearing deposits of $1.1 billion being the primary driver. United’s cost of deposits decreased 18 bps to 0.38% as a result. Net interest margin decreased 65 bps from the first quarter. Of this decrease, 18 bps was due to lower purchased loan accretion, approximately 6 bps was due to lower-yielding PPP loans, and approximately 9 bps resulted from carrying an increased amount in low-yielding overnight investments due to the record amount of liquidity generated by bank deposit growth in the quarter.

Harton continued, “During the second quarter, we also completed a number of important strategic initiatives that position us well for the future. In June, we raised $200 million—$100 million in preferred stock with a 6.875% annual dividend rate and $100 million in senior notes with a 5.00% annual coupon. Our long-term goal is to continue to remain a top performer in our peer group, with top quartile results in key performance metrics including capital levels. These capital raises were done to provide us with substantial flexibility to be able to both focus on our customers’ current needs, and at the same time, be prepared to emerge from the health crisis in a very strong position. We believe that there will be meaningful strategic growth opportunities at that point.”

Immediately following quarter end, the bank announced the July 1st closing of the previously announced merger with Three Shores Bancorporation, Inc. and its bank subsidiary Seaside National Bank & Trust, which will now be branded Seaside Bank and Trust. Harton noted, “We are pleased to welcome Seaside’s talented team of bankers and believe that our combined banks are better together. Gideon Haymaker is now United’s president for the State of Florida and additionally will lead our expansion of Seaside’s wealth management offering across United’s footprint.”  

Mr. Harton concluded, “Giving back to our communities is at the core of who we are as a community bank. In keeping with that long-standing tradition, I am also pleased to announce that we recently formed the United Community Bank Foundation, a tax-exempt private foundation which will expand our charitable endeavors throughout our footprint. In the second quarter, we made a $1 million initial contribution to the foundation, which will allow us to further support our communities that have been critical to our success over the years.”

Second Quarter 2020 Financial Highlights:

  • EPS decreased by 42% compared to last year on a GAAP basis and 46% on an operating basis
  • Return on assets of 0.71%, or 0.72% excluding merger-related and other charges
  • Pre-tax, pre-provision return on assets of 1.86%, or 1.87% excluding merger-related and other charges
  • Return on common equity of 6.2%
  • Return on tangible common equity of 8.1%, excluding merger-related and other charges
  • United adopted the Current Expected Credit Losses (CECL) model for determining the allowance for credit losses last quarter; the continued uncertain economic outlook necessitated a provision for credit losses of $33.5 million
  • Record loan production of $2.0 billion, with $1.1 billion in PPP loans and $866 million in traditional (non-PPP) loans
  • Loan growth of $1.2 billion, including traditional loan growth at an annualized rate of 5% for the quarter
  • Core transaction deposits were up $1.7 billion or 22%, mainly driven by noninterest bearing demand deposit growth of $1.1 billion; a significant portion of United’s core transaction deposit growth was attributable to PPP-related deposits
  • Net interest margin of 3.42%, which was down 65 bps from first quarter, reflecting the effect of lower interest rates, lower purchased loan accretion, the impact of the lower yielding PPP loans and a much higher level of low-yielding, highly-liquid assets
  • Mortgage rate locks of $802 million, which is slightly higher than last quarter and again exceeds our previous quarterly record by 58%; this compares to $390 million a year ago
  • Noninterest income was up $14.4 million on a linked quarter basis, primarily due to a $15.3 million increase in mortgage income as a result of record mortgage rate locks and production, as well as an improved market environment
  • Efficiency ratio of 55.86%, or 55.59% excluding merger-related and other charges
  • Net charge-offs of $6.1 million, or 25 basis points as a percent of average loans, down 12 basis points from last quarter and mainly attributable to two credits that have been substandard for more than a year
  • Nonperforming assets of 0.32% of total assets, which is up 4 basis points compared to March 31, 2020
  • Total deferrals of $1.8 billion or 17% of the total loan portfolio at June 30
  • Funded the United Community Bank Foundation with an initial $1 million contribution for charities and causes throughout the footprint
  • Completed a public offering of $100 million aggregate of 6.875% Non-Cumulative Perpetual Preferred Stock and $100 million aggregate principal amount of 5.000% Fixed-to-Floating Senior Notes due 2030
  • Effective July 1, 2020, United completed its merger with Three Shores Bancorporation, Inc. and its bank subsidiary, Seaside National Bank & Trust

Conference Call

United will hold a conference call, Wednesday, July 22, 2020, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 4995436. The conference call also will be webcast and available for replay for 30 days by selecting “Events & Presentations” within the Investor Relations section of United’s website at www.ucbi.com.

UNITED COMMUNITY BANKS, INC.                                    
Selected Financial Information                                    
    2020   2019   Second
Quarter 
  For the Six Months Ended June 30,    
(in thousands, except per share data)   Second
Quarter
  First
Quarter
  Fourth
Quarter
  Third
Quarter
  Second
Quarter
  2020 -
2019
Change
  2020   2019   YTD 2020
 - 2019
Change
INCOME SUMMARY                                    
Interest revenue   $ 123,605       $ 136,547       $ 136,419       $ 140,615       $ 139,156           $ 260,152       $ 275,672        
Interest expense   14,301       17,941       19,781       21,277       21,372           32,242       42,254        
Net interest revenue   109,304       118,606       116,638       119,338       117,784       (7 ) %   227,910       233,418       (2 ) %
Provision for credit losses   33,543       22,191       3,500       3,100       3,250           55,734       6,550       751    
Noninterest income   40,238       25,814       30,183       29,031       24,531       64       66,052       45,499       45    
Total revenue   115,999       122,229       143,321       145,269       139,065       (17 )     238,228       272,367       (13 )  
Expenses   83,980       81,538       81,424       82,924       81,813       3       165,518       157,897       5    
Income before income tax expense   32,019       40,691       61,897       62,345       57,252       (44 )     72,710       114,470       (36 )  
Income tax expense   6,923       8,807       12,885       13,983       13,167       (47 )     15,730       26,123       (40 )  
Net income   25,096       31,884       49,012       48,362       44,085       (43 )     56,980       88,347       (36 )  
Merger-related and other charges   397       808       (74 )     2,605       4,087           1,205       4,826        
Income tax benefit of merger-related and other charges   (87 )     (182 )     17       (600 )     (940 )         (269 )     (1,112 )      
Net income - operating (1)   $ 25,406       $ 32,510       $ 48,955       $ 50,367       $ 47,232       (46 )     $ 57,916       $ 92,061       (37 )  
                                     
Pre-tax pre-provision income (5)   $ 65,562       $ 62,882       $ 65,397       $ 65,445       $ 60,502       8       $ 128,444       $ 121,020       6    
                                     
PERFORMANCE MEASURES                                    
Per common share:                                    
Diluted net income - GAAP   $ 0.32       $ 0.40       $ 0.61       $ 0.60       $ 0.55       (42 )     $ 0.71       $ 1.10       (35 )  
Diluted net income - operating (1)   0.32       0.41       0.61       0.63       0.59       (46 )     0.73       1.15       (37 )  
Cash dividends declared   0.18       0.18       0.18       0.17       0.17       6       0.36       0.33       9    
Book value   21.22       20.80       20.53       20.16       19.65       8       21.22       19.65       8    
Tangible book value (3)   16.95       16.52       16.28       15.90       15.38       10       16.95       15.38       10    
Key performance ratios:                                    
Return on common equity - GAAP (2)(4)   6.17   %   7.85   %   12.07   %   12.16   %   11.45   %       7.01   %   11.65   %    
Return on common equity - operating (1)(2)(4)   6.25       8.01       12.06       12.67       12.27           7.13       12.14        
Return on tangible common equity - operating (1)(2)(3)(4)   8.09       10.57       15.49       16.38       15.88           9.20       15.67        
Return on assets - GAAP (4)   0.71       0.99       1.50       1.51       1.40           0.85       1.42        
Return on assets - operating (1)(4)   0.72       1.01       1.50       1.58       1.50           0.86       1.48        
Return on assets - pre-tax pre-provision (4)(5)   1.86       1.95       2.00       2.05       1.92           1.91       1.94        
Return on assets - pre-tax pre-provision, excluding merger-  related and other charges (1)(4)(5)   1.87       1.98       2.00       2.13       2.05           1.92       2.02        
Net interest margin (fully taxable equivalent) (4)   3.42       4.07       3.93       4.12       4.12           3.73       4.11        
Efficiency ratio - GAAP   55.86       56.15       54.87       55.64       57.28           56.00       56.32        
Efficiency ratio - operating (1)   55.59       55.59       54.92       53.90       54.42           55.59       54.60        
Equity to total assets   11.81       12.54       12.66       12.53       12.25           11.81       12.25        
Tangible common equity to tangible assets (3)   9.12       10.22       10.32       10.16       9.86           9.12       9.86        
                                     
ASSET QUALITY                                    
Nonperforming loans   $ 48,021       $ 36,208       $ 35,341       $ 30,832       $ 26,597       81       $ 48,021       $ 26,597       81    
Foreclosed properties   477       475       476       102       75       536       477       75       536    
Total nonperforming assets ("NPAs")   48,498       36,683       35,817       30,934       26,672       82       48,498       26,672       82    
Allowance for credit losses - loans   103,669       81,905       62,089       62,514       62,204       67       103,669       62,204       67    
Net charge-offs   6,149       8,114       3,925       2,723       2,438       152       14,263       5,568       156    
Allowance for credit losses - loans to loans   1.02   %   0.92   %   0.70   %   0.70   %   0.70   %       1.02       0.70   %    
Net charge-offs to average loans (4)   0.25       0.37       0.18       0.12       0.11           0.31       0.13        
NPAs to loans and foreclosed properties   0.48       0.41       0.41       0.35       0.30           0.48       0.30        
NPAs to total assets   0.32       0.28       0.28       0.24       0.21           0.32       0.21        
                                     
AVERAGE BALANCES ($ in millions)                                    
Loans   $ 9,773       $ 8,829       $ 8,890       $ 8,836       $ 8,670       13       $ 9,301       $ 8,551       9    
Investment securities   2,408       2,520       2,486       2,550       2,674       (10 )     2,464       2,778       (11 )  
Earning assets   12,958       11,798       11,832       11,568       11,534       12       12,378       11,516       7    
Total assets   14,173       12,944       12,946       12,681       12,608       12       13,558       12,559       8    
Deposits   12,071       10,915       10,924       10,531       10,493       15       11,493       10,427       10    
Shareholders’ equity   1,686       1,653       1,623       1,588       1,531       10       1,670       1,505       11    
Common shares - basic (thousands)   78,920       79,340       79,659       79,663       79,673       (1 )     79,130       79,739       (1 )  
Common shares - diluted (thousands)   78,924       79,446       79,669       79,667       79,678       (1 )     79,186       79,745       (1 )  
                                     
AT PERIOD END ($ in millions)                                    
Loans   $ 10,133       $ 8,935       $ 8,813       $ 8,903       $ 8,838       15       $ 10,133       $ 8,838       15    
Investment securities   2,432       2,540       2,559       2,515       2,620       (7 )     2,432       2,620       (7 )  
Total assets   15,005       13,086       12,916       12,809       12,779       17       15,005       12,779       17    
Deposits   12,702       11,035       10,897       10,757       10,591       20       12,702       10,591       20    
Shareholders’ equity   1,772       1,641       1,636       1,605       1,566       13       1,772       1,566       13    
Common shares outstanding (thousands)   78,335       78,284       79,014       78,974       79,075       (1 )     78,335       79,075       (1 )  

(1) Excludes merger-related and other charges which includes termination of pension plan in the third quarter of 2019, executive retirement charges in the second quarter of 2019 and amortization of certain executive change of control benefits. (2) Net income divided by average realized common equity, which excludes accumulated other comprehensive income (loss).         (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized. (5) Excludes income tax expense and provision for credit losses.

UNITED COMMUNITY BANKS, INC.                            
Non-GAAP Performance Measures Reconciliation
Selected Financial Information                            
    2020   2019   For the Six Months Ended June 30,
    Second
  First
  Fourth 
  Third 
  Second 
       
(in thousands, except per share data)   Quarter   Quarter   Quarter   Quarter   Quarter   2020   2019
                             
Expense reconciliation                            
Expenses (GAAP)   $ 83,980       $ 81,538       $ 81,424       $ 82,924       $ 81,813       $ 165,518       $ 157,897    
Merger-related and other charges   (397 )     (808 )     74       (2,605 )     (4,087 )     (1,205 )     (4,826 )  
Expenses - operating   $ 83,583       $ 80,730       $ 81,498       $ 80,319       $ 77,726       $ 164,313       $ 153,071    
                             
Net income to operating income reconciliation                            
Net income (GAAP)   $ 25,096       $ 31,884       $ 49,012       $ 48,362       $ 44,085       $ 56,980       $ 88,347    
Merger-related and other charges   397       808       (74 )     2,605       4,087       1,205       4,826    
Income tax benefit of merger-related and other charges   (87 )     (182 )     17       (600 )     (940 )     (269 )     (1,112 )  
Net income - operating   $ 25,406       $ 32,510       $ 48,955       $ 50,367       $ 47,232       $ 57,916       $ 92,061    
                             
Net income to pre-tax pre-provision income reconciliation                            
Net income (GAAP)   $ 25,096       $ 31,884       $ 49,012       $ 48,362       $ 44,085       $ 56,980       $ 88,347    
Income tax expense   6,923       8,807       12,885       13,983       13,167       15,730       26,123    
Provision for credit losses   33,543       22,191       3,500       3,100       3,250       55,734       6,550    
Pre-tax pre-provision income   $ 65,562       $ 62,882       $ 65,397       $ 65,445       $ 60,502       $ 128,444       $ 121,020    
                             
Diluted income per common share reconciliation                            
Diluted income per common share (GAAP)   $ 0.32       $ 0.40       $ 0.61       $ 0.60       $ 0.55       $ 0.71       $ 1.10    
Merger-related and other charges, net of tax         0.01             0.03       0.04       0.02       0.05    
Diluted income per common share - operating   $ 0.32       $ 0.41       $ 0.61       $ 0.63       $ 0.59       $ 0.73       $ 1.15    
                             
Book value per common share reconciliation                            
Book value per common share (GAAP)   $ 21.22       $ 20.80       $ 20.53       $ 20.16       $ 19.65       $ 21.22       $ 19.65    
Effect of goodwill and other intangibles   (4.27 )     (4.28 )     (4.25 )     (4.26 )     (4.27 )     (4.27 )     (4.27 )  
Tangible book value per common share   $ 16.95       $ 16.52       $ 16.28       $ 15.90       $ 15.38       $ 16.95       $ 15.38    
                             
Return on tangible common equity reconciliation                            
Return on common equity (GAAP)   6.17   %   7.85   %   12.07   %   12.16   %   11.45   %   7.01   %   11.65   %
Merger-related and other charges, net of tax   0.08       0.16       (0.01 )     0.51       0.82       0.12       0.49    
Return on common equity - operating   6.25       8.01       12.06       12.67       12.27       7.13       12.14    
Effect of goodwill and other intangibles   1.84       2.56       3.43       3.71       3.61       2.07       3.53    
Return on tangible common equity - operating   8.09   %   10.57   %   15.49   %   16.38   %   15.88   %   9.20   %   15.67   %
                             
Return on assets reconciliation                            
Return on assets (GAAP)   0.71   %   0.99   %   1.50   %   1.51   %   1.40   %   0.85   %   1.42   %
Merger-related and other charges, net of tax   0.01       0.02             0.07       0.10       0.01       0.06    
Return on assets - operating   0.72   %   1.01   %   1.50   %   1.58   %   1.50   %   0.86   %   1.48   %
                             
Return on assets to return on assets- pre-tax pre-provision reconciliation                            
Return on assets (GAAP)   0.71   %   0.99   %   1.50   %   1.51   %   1.40   %   0.85   %   1.42   %
Income tax expense   0.20       0.27       0.39       0.44       0.42       0.23       0.41    
Provision for credit losses   0.95       0.69       0.11       0.10       0.10       0.83       0.11    
Return on assets - pre-tax, pre-provision   1.86       1.95       2.00       2.05       1.92       1.91       1.94    
Merger-related and other charges   0.01       0.03             0.08       0.13       0.01       0.08    
Return on assets - pre-tax pre-provision, excluding merger-related and other charges   1.87   %   1.98   %   2.00   %   2.13   %   2.05   %   1.92   %   2.02   %
                             
Efficiency ratio reconciliation                            
Efficiency ratio (GAAP)   55.86   %   56.15   %   54.87   %   55.64   %   57.28   %   56.00   %   56.32   %
Merger-related and other charges   (0.27 )     (0.56 )     0.05       (1.74 )     (2.86 )     (0.41 )     (1.72 )  
Efficiency ratio - operating   55.59   %   55.59   %   54.92   %   53.90   %   54.42   %   55.59   %   54.60   %
                             
Tangible common equity to tangible assets reconciliation                            
Equity to total assets (GAAP)   11.81   %   12.54   %   12.66   %   12.53   %   12.25   %   11.81   %   12.25   %
Effect of goodwill and other intangibles   (2.05 )     (2.32 )     (2.34 )     (2.37 )     (2.39 )     (2.05 )     (2.39 )  
Effect of preferred equity   (0.64 )                             (0.64 )        
Tangible common equity to tangible assets   9.12   %   10.22   %   10.32   %   10.16   %   9.86   %   9.12   %   9.86   %
                                                         


UNITED COMMUNITY BANKS, INC.                        
Financial Highlights                        
Loan Portfolio Composition at Period-End                        
                           
  2020   2019   Linked 
  Year over 
(in millions) Second
Quarter
  First
Quarter
  Fourth
Quarter
  Third
Quarter
  Second
Quarter
  Quarter
Change
  Year
Change
LOANS BY CATEGORY                          
Owner occupied commercial RE $ 1,760     $ 1,703     $ 1,720     $ 1,692     $ 1,658     $ 57     $ 102  
Income producing commercial RE 2,178     2,065     2,008     1,934     1,939     113     239  
Commercial & industrial 1,219     1,310     1,221     1,271     1,299     (91 )   (80 )
Paycheck protection program 1,095                     1,095     1,095  
Commercial construction 946     959     976     1,001     983     (13 )   (37 )
Equipment financing 779     761     745     729     674     18     105  
Total commercial 7,976     6,798     6,670     6,627     6,553     1,178     1,423  
Residential mortgage 1,152     1,128     1,118     1,121     1,108     24     44  
Home equity lines of credit 654     668     661     669     675     (14 )   (21 )
Residential construction 230     216     236     229     219     14     11  
Consumer 121     125     128     257     283     (4 )   (162 )
Total loans $ 10,133     $ 8,935     $ 8,813     $ 8,903     $ 8,838     $ 1,198     $ 1,295  
                           
LOANS BY MARKET                          
North Georgia $ 951     $ 958     $ 967     $ 1,002     $ 1,002     (7 )   (51 )
Atlanta 1,852     1,820     1,762     1,740     1,745     32     107  
North Carolina 1,171     1,124     1,156     1,117     1,084     47     87  
Coastal Georgia 618     604     631     611     604     14     14  
Gainesville 233     235     246     246     244     (2 )   (11 )
East Tennessee 433     425     421     435     446     8     (13 )
South Carolina 1,778     1,774     1,708     1,705     1,674     4     104  
Commercial Banking Solutions 3,097     1,995     1,922     1,916     1,884     1,102     1,213  
Indirect auto             131     155         (155 )
Total loans $ 10,133     $ 8,935     $ 8,813     $ 8,903     $ 8,838     $ 1,198     $ 1,295  
                                                       


UNITED COMMUNITY BANKS, INC.                        
Financial Highlights                        
Credit Quality                        
    2020   2019            
(in thousands)   Second
Quarter
  First
Quarter
  Fourth
Quarter
           
NONACCRUAL LOANS                        
Owner occupied RE   $ 10,710     $ 10,405     $ 10,544              
Income producing RE   11,274     2,235     1,996              
Commercial & industrial   3,432     3,169     2,545              
Commercial construction   2,290     1,724     2,277              
Equipment financing   3,119     2,439     3,141              
Total commercial   30,825     19,972     20,503              
Residential mortgage   13,185     12,458     10,567              
Home equity lines of credit   3,138     3,010     3,173              
Residential construction   500     540     939              
Consumer   373     228     159              
Total   $ 48,021     $ 36,208     $ 35,341              


    2020   2019
    Second Quarter   First Quarter   Fourth Quarter
(in thousands)   Net Charge-
Offs
  Net Charge-
Offs to
Average Loans
(1)
  Net Charge-
Offs
  Net Charge-
Offs to
Average Loans
(1)
  Net Charge-
Offs
  Net Charge-
Offs to
Average Loans
(1)
NET CHARGE-OFFS BY CATEGORY                        
Owner occupied RE   $ (466 )   (0.11 ) %   $ (1,028 )   (0.24 ) %   $ (208 )   (0.05 ) %
Income producing RE   4,548     0.86       270     0.05       95     0.02    
Commercial & industrial   (37 )   (0.01 )     7,185     2.30       1,809     0.58    
Commercial construction   122     0.05       (141 )   (0.06 )     (140 )   (0.06 )  
Equipment financing   1,665     0.87       1,507     0.81       1,550     0.84    
Total commercial   5,832     0.31       7,793     0.47       3,106     0.19    
Residential mortgage   (6 )         9           89     0.03    
Home equity lines of credit   (98 )   (0.06 )     (83 )   (0.05 )     198     0.12    
Residential construction   (5 )   (0.01 )     (12 )   (0.02 )     (24 )   (0.04 )  
Consumer   426     1.39       407     1.30       556     0.90    
  Total   $ 6,149     0.25       $ 8,114     0.37       $ 3,925     0.18    
                         
(1)  Annualized.                        


UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)   June 30,
2020
  December 31,
2019
 
ASSETS          
Cash and due from banks   $ 125,255     $ 125,844    
Interest-bearing deposits in banks   1,203,706     389,362    
Cash and cash equivalents   1,328,961     515,206    
Debt securities available-for-sale   2,125,209     2,274,581    
Debt securities held-to-maturity (fair value $320,253 and $287,904)   306,638     283,533    
Loans held for sale at fair value   99,477     58,484    
Loans and leases held for investment   10,132,510     8,812,553    
Less allowance for credit losses - loans and leases   (103,669 )   (62,089 )  
Loans and leases, net   10,028,841     8,750,464    
Premises and equipment, net   211,972     215,976    
Bank owned life insurance   200,699     202,664    
Accrued interest receivable   37,774     32,660    
Net deferred tax asset   27,362     34,059    
Derivative financial instruments   94,434     35,007    
Goodwill and other intangible assets, net   340,220     342,247    
Other assets   203,300     171,135    
Total assets   $ 15,004,887     $ 12,916,016    
LIABILITIES AND SHAREHOLDERS' EQUITY          
Liabilities:          
Deposits:          
Noninterest-bearing demand   $ 4,689,545     $ 3,477,979    
NOW and interest-bearing demand   2,582,831     2,461,895    
Money market   2,621,158     2,230,628    
Savings   832,529     706,467    
Time   1,751,091     1,859,574    
Brokered   224,931     160,701    
Total deposits   12,702,085     10,897,244    
Long-term debt   311,631     212,664    
Derivative financial instruments   24,685     15,516    
Accrued expenses and other liabilities   194,841     154,900    
Total liabilities   13,233,242     11,280,324    
Shareholders' equity:          
Preferred stock; $1 par value; 10,000,000 shares authorized;
  Series I, $25,000 per share liquidation preference; 4,000 shares issued and outstanding
  96,660        
Common stock, $1 par value; 150,000,000 shares authorized;
  78,335,127 and 79,013,729 shares issued and outstanding
  78,335     79,014    
Common stock issuable; 596,785 and 664,640 shares   10,646     11,491    
Capital surplus   1,480,464     1,496,641    
Retained earnings   64,990     40,152    
Accumulated other comprehensive income   40,550     8,394    
Total shareholders' equity   1,771,645     1,635,692    
Total liabilities and shareholders' equity   $ 15,004,887     $ 12,916,016    
                   


UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Income (Unaudited)
    Three Months Ended
June 30,
  Six Months Ended
June 30,
 
(in thousands, except per share data)   2020   2019   2020   2019  
Interest revenue:                  
Loans, including fees   $ 107,862     $ 119,671     $ 225,925     $ 234,930    
Investment securities, including tax exempt of $1,570, $1,122, $3,093 and $2,291   15,615     19,076     33,009     39,894    
Deposits in banks and short-term investments   128     409     1,218     848    
Total interest revenue   123,605     139,156     260,152     275,672    
                   
Interest expense:                  
Deposits:                  
NOW and interest-bearing demand   1,628     3,460     4,606     7,069    
Money market   3,421     4,842     7,952     8,974    
Savings   39     42     74     74    
Time   6,183     8,771     13,714     16,955    
Deposits   11,271     17,115     26,346     33,072    
Short-term borrowings       248     1     409    
Federal Home Loan Bank advances       752     1     2,174    
Long-term debt   3,030     3,257     5,894     6,599    
Total interest expense   14,301     21,372     32,242     42,254    
Net interest revenue   109,304     117,784     227,910     233,418    
Provision for credit losses   33,543     3,250     55,734     6,550    
Net interest revenue after provision for credit losses   75,761     114,534     172,176     226,868    
                   
Noninterest income:                  
Service charges and fees   6,995     9,060     15,633     17,513    
Mortgage loan gains and other related fees   23,659     5,344     31,969     9,092    
Brokerage fees   1,324     1,588     2,964     2,925    
Gains from sales of other loans, net   1,040     1,470     2,714     2,773    
Securities gains (losses), net       149         (118 )  
Other   7,220     6,920     12,772     13,314    
Total noninterest income   40,238     24,531     66,052     45,499    
Total revenue   115,999     139,065     238,228     272,367    
                   
Noninterest expenses:                  
Salaries and employee benefits   51,811     48,157     103,169     95,660    
Communications and equipment   6,556     6,222     12,502     12,010    
Occupancy   5,945     5,919     11,659     11,503    
Advertising and public relations   2,260     1,596     3,534     2,882    
Postage, printing and supplies   1,613     1,529     3,283     3,115    
Professional fees   4,823     4,054     8,920     7,215    
Lending and loan servicing expense   3,189     2,619     5,482     4,953    
Outside services - electronic banking   1,796     1,558     3,628     3,167    
FDIC assessments and other regulatory charges   1,558     1,547     3,042     3,257    
Amortization of intangibles   987     1,342     2,027     2,635    
Merger-related and other charges   397     3,894     1,205     4,440    
Other   3,045     3,376     7,067     7,060    
Total noninterest expenses   83,980     81,813     165,518     157,897    
Net income before income taxes   32,019     57,252     72,710     114,470    
Income tax expense   6,923     13,167     15,730     26,123    
Net income   $ 25,096     $ 44,085     $ 56,980     $ 88,347    
                   
Net income available to common shareholders   $ 24,913     $ 43,769     $ 56,554     $ 87,716    
                   
Net income per common share:                  
Basic   $ 0.32     $ 0.55     $ 0.71     $ 1.10    
Diluted   0.32     0.55     0.71     1.10    
Weighted average common shares outstanding:                  
Basic   78,920     79,673     79,130     79,739    
Diluted   78,924     79,678     79,186     79,745    
                         


Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
    2020   2019  
(dollars in thousands, fully taxable equivalent (FTE))   Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
 
Assets:                          
Interest-earning assets:                          
Loans, net of unearned income (FTE) (1)(2)   $ 9,772,703     $ 107,398     4.42 %   $ 8,669,847     $ 119,668     5.54 %  
Taxable securities (3)   2,229,371     14,045     2.52     2,506,942     17,954     2.86    
Tax-exempt securities (FTE) (1)(3)   178,903     2,110     4.72     166,628     1,507     3.62    
Federal funds sold and other interest-earning assets   776,776     857     0.44     190,678     679     1.42    
Total interest-earning assets (FTE)   12,957,753     124,410     3.86     11,534,095     139,808     4.86    
                           
Noninterest-earning assets:                          
Allowance for credit losses   (89,992 )           (62,716 )          
Cash and due from banks   138,842             125,021            
Premises and equipment   217,096             224,018            
Other assets (3)   949,201             787,859            
Total assets   $ 14,172,900             $ 12,608,277            
                           
Liabilities and Shareholders' Equity:                          
Interest-bearing liabilities:                          
Interest-bearing deposits:                          
NOW and interest-bearing demand   $ 2,444,895     1,628     0.27     $ 2,190,080     3,460     0.63    
Money market   2,541,805     3,421     0.54     2,186,282     4,842     0.89    
Savings   788,247     39     0.02     687,753     42     0.02    
Time   1,805,671     6,058     1.35     1,773,968     6,949     1.57    
Brokered time deposits   130,556     125     0.39     298,553     1,822     2.45    
Total interest-bearing deposits   7,711,174     11,271     0.59     7,136,636     17,115     0.96    
Federal funds purchased and other borrowings   1             38,838     248     2.56    
Federal Home Loan Bank advances               117,912     752     2.56    
Long-term debt   228,096     3,030     5.34     252,351     3,257     5.18    
Total borrowed funds   228,097     3,030     5.34     409,101     4,257     4.17    
Total interest-bearing liabilities   7,939,271     14,301     0.72     7,545,737     21,372     1.14    
                           
Noninterest-bearing liabilities:                          
Noninterest-bearing deposits   4,360,095             3,355,930            
Other liabilities   187,375             175,806            
Total liabilities   12,486,741             11,077,473            
Shareholders' equity   1,686,159             1,530,804            
Total liabilities and shareholders' equity   $ 14,172,900             $ 12,608,277            
                           
Net interest revenue (FTE)       $ 110,109             $ 118,436        
Net interest-rate spread (FTE)           3.14 %           3.72 %  
Net interest margin (FTE) (4)           3.42 %           4.12 %  
                               

(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 26%, 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 on which the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $66.3 million in 2020 and unrealized gains of $5.00 million in 2019 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.


Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
    2020   2019  
(dollars in thousands, fully taxable equivalent (FTE))   Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
 
Assets:                          
Interest-earning assets:                          
Loans, net of unearned income (FTE) (1)(2)   $ 9,300,792     $ 225,194     4.87 %   $ 8,550,574     $ 235,015     5.54 %  
Taxable securities (3)   2,293,502     29,916     2.61     2,609,400     37,603     2.88    
Tax-exempt securities (FTE) (1)(3)   170,578     4,155     4.87     168,156     3,077     3.66    
Federal funds sold and other interest-earning assets   612,776     2,489     0.81     188,165     1,297     1.38    
Total interest-earning assets (FTE)   12,377,648     261,754     4.25     11,516,295     276,992     4.84    
                           
Non-interest-earning assets:                          
Allowance for loan losses   (79,885 )           (62,253 )          
Cash and due from banks   133,548             124,414            
Premises and equipment   218,170             220,335            
Other assets (3)   908,828             759,899            
Total assets   $ 13,558,309             $ 12,558,690            
                           
Liabilities and Shareholders' Equity:                          
Interest-bearing liabilities:                          
Interest-bearing deposits:                          
NOW and interest-bearing demand   $ 2,428,815     4,606     0.38     $ 2,238,083     7,069     0.64    
Money market   2,441,264     7,952     0.66     2,142,411     8,974     0.84    
Savings   750,179     74     0.02     680,018     74     0.02    
Time   1,823,612     13,308     1.47     1,701,181     12,285     1.46    
Brokered time deposits   105,689     406     0.77     389,794     4,670     2.42    
Total interest-bearing deposits   7,549,559     26,346     0.70     7,151,487     33,072     0.93    
Federal funds purchased and other borrowings   199     1     1.01     30,241     409     2.73    
Federal Home Loan Bank advances   83     1     2.42     170,636     2,174     2.57    
Long-term debt   220,429     5,894     5.38     257,134     6,599     5.18    
Total borrowed funds   220,711     5,896     5.37     458,011     9,182     4.04    
Total interest-bearing liabilities   7,770,270     32,242     0.83     7,609,498     42,254     1.12    
                           
Noninterest-bearing liabilities:                          
Noninterest-bearing deposits   3,943,740             3,275,612            
Other liabilities   174,781             169,048            
Total liabilities   11,888,791             11,054,158            
Shareholders' equity   1,669,518             1,504,532            
Total liabilities and shareholders' equity   $ 13,558,309             $ 12,558,690            
                           
Net interest revenue (FTE)       $ 229,512             $ 234,738        
Net interest-rate spread (FTE)           3.42 %           3.72 %  
Net interest margin (FTE) (4)           3.73 %           4.11 %  
                               

(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 26%, 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 on which the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $59.6 million in 2020 and unrealized losses of $10.4 million in 2019 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.

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQ: UCBI) (United) is a bank holding company headquartered in Blairsville, Georgia, with executive offices in Greenville, South Carolina. United is one of the largest full-service financial institutions in the Southeast, with $15.0 billion in assets, and 149 offices in Georgia, North Carolina, South Carolina and Tennessee at June 30, 2020. Through its July 1st acquisition of Three Shores Bancorporation and its wholly-owned banking subsidiary, Seaside National Bank & Trust, United added approximately $2.1 billion in assets and 14 banking offices in key metropolitan markets throughout Florida.  United Community Bank, United’s wholly-owned bank subsidiary, specializes in personalized community banking services for individuals, small businesses and companies throughout its geographic footprint, now including Florida under the brand Seaside Bank and Trust. Services include a full range of consumer and commercial banking products, including mortgage, advisory, treasury management, and now wealth management. Respected national research firms consistently recognize United for outstanding customer service. In 2020, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking six out of the last seven years United earned the coveted award.  Forbes included United in its inaugural list of the World’s Best Banks in 2019 and again in 2020. Forbes also recognized United on its 2020 list of the 100 Best Banks in America for the seventh consecutive year.  United also received five Greenwich Excellence Awards in 2019 for excellence in Small Business Banking and Middle Market Banking, including a national award for Overall Satisfaction in Small Business Banking. Additional information about United can be found at www.ucbi.com.

Non-GAAP Financial Measures

This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “pre-tax pre-provision income,” “operating net income per diluted common share,” “operating earnings per share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “return on assets - pre-tax pre-provision, excluding merger-related and other charges,” “return on assets – pre-tax pre-provision,” “operating efficiency ratio,” and “tangible common equity to tangible assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.

For more information:

Jefferson Harralson
Chief Financial Officer
(864) 240-6208
Jefferson_Harralson@ucbi.com


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