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United Community Banks, Inc. Reports Second Quarter Results

Jul 18, 2023
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Maintained Strong Balance Sheet, Liquidity and Capital Levels; Annualized Loan Growth of 6.3%

GREENVILLE, S.C., July 18, 2023 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (“United”) today announced net income for the second quarter of $63.3 million and pre-tax, pre-provision income of $104.3 million. Diluted earnings per share of $0.53 for the quarter represented an increase of $0.01 or 2% from the first quarter of 2023 and a decrease of $0.08 or 13%, from the second quarter of 2022. Industry-wide deposit price competition drove increased deposit costs, leading to an $11.2 million decrease in net interest revenue for the quarter. This was offset by a decline in quarterly noninterest expenses and an increase in noninterest income. On an operating basis, diluted earnings per share of $0.55 decreased $0.03 or 5% compared to last quarter mainly due to net interest margin compression despite lower noninterest expenses and noninterest income growth. Deposits grew by 4.5% annualized and loans grew at a 6.3% annualized rate during the quarter. Credit continues to perform well, with net charge offs of 20 basis points, up slightly from 17 basis points in the previous quarter.

For the quarter, United’s return on assets was 0.95%, or 1.00% on an operating basis. Return on common equity was 7.5% and return on tangible common equity was 11.4%. On a pre-tax, pre-provision basis, operating return on assets was 1.65% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.21%, up four basis points from the first quarter of 2023.

Chairman and CEO Lynn Harton stated, “We are pleased to continue to perform well despite a challenging interest rate environment. In the face of increased deposit pricing competition, we grew customer deposits and funded solid loan growth. This reflects the strength of our franchise and the loyalty of our customer base. Our loan growth was within our stated target range of mid to high single digits. Higher deposit costs due to mix and rate changes resulted in a lower net interest margin from the previous quarter, however, we still delivered strong returns and continued to strengthen our balance sheet.” Harton continued, “We also completed some important steps with our recent strategic expansions. We completed the operational conversion of Progress, which means they now officially operate under the United Community brand across their outstanding Alabama and Florida Panhandle markets. Just a few weeks ago, on July 1, we completed our merger with First Miami Bancorp and its bank subsidiary, First National Bank of South Miami. We continue to be excited and highly optimistic about what the future holds for these two great partnerships.”

United’s net interest margin decreased by 24 basis points to 3.37% from the first quarter. The average yield on United’s interest-earning assets was up 21 basis points to 4.97%, but its cost of deposits increased by 54 basis points to 1.64%, leading to the reduction in the net interest margin. Net charge-offs were $8.4 million or 0.20% of average loans during the quarter, up three basis points compared to the first quarter of 2023, and NPAs were 40 basis points relative to total assets, up 12 basis points from the previous quarter.

Mr. Harton concluded, “We continue to be pleased with the performance of our teams and our markets during this uncertain economic environment and interest rate driven headwinds. Our focus continues to be putting our clients and communities first and on prudently growing our business. We are very excited about our ability to strengthen our teams and recruit great bankers in the Southeast’s most attractive metropolitan markets and we look forward to continuing to build a great franchise.”  

Second Quarter 2023 Financial Highlights:

  • Net income of $63.3 million and pre-tax, pre-provision income of $104.3 million
  • EPS decreased by 13% compared to last year on a GAAP basis and 17% on an operating basis; compared to first quarter 2023, EPS increased 2% on a GAAP basis and decreased 5% on an operating basis
  • Return on assets of 0.95%, or 1.00% on an operating basis
  • Pre-tax, pre-provision return on assets of 1.59%, or 1.65% when excluding merger-related and other charges
  • Return on common equity of 7.5%
  • Return on tangible common equity of 11.4% on an operating basis
  • Loan production of $1.5 billion, resulting in organic loan growth of 6.3% annualized for the quarter
  • Customer deposits, excluding brokered deposits and public funds, were up $109 million or 2.3% annualized from last quarter
  • Total deposits are estimated to be 77% insured or collateralized
  • Net interest margin of 3.37% was down 24 basis points from the first quarter due to increased deposit costs
  • Mortgage closings of $263 million compared to $498 million a year ago; mortgage rate locks of $305 million compared to $597 million a year ago
  • Noninterest income was up $6.2 million on a linked quarter basis with increases across multiple categories including services charges and fees, mortgage loan gains and related fees, as well as a one-time gain from the sale of our corporate benefits business; additionally, there were no losses on the sale of securities in the second quarter compared to $1.6 million in the first quarter
  • Noninterest expenses decreased by $7.4 million compared to the first quarter on a GAAP basis and by $2.4 million on an operating basis, mostly due to a decrease in salaries and employee benefits expenses and lower merger-related and other charges
  • Efficiency ratio of 55.7%, or 54.2% on an operating basis
  • Net charge-offs of $8.4 million, or 20 basis points as a percent of average loans, up three basis points from the net charge-offs level experienced in the first quarter
  • Nonperforming assets of 0.40% of total assets, up 12 basis points compared to March 31, 2023
  • Quarterly common shareholder dividend of $0.23 per share declared during the quarter, an increase of 10% year-over-year

Conference Call

United will hold a conference call on Wednesday, July 19, 2023, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. Participants can pre-register for the conference call by navigating to https://dpregister.com/sreg/10180523/f9d90a99ea. Those without internet access or who are unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and available for replay by selecting “Events and Presentations” under “News and Events” within the Investor Relations section of United’s website at www.ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
(in thousands, except per share data)
   2023   2022  Second Quarter
2023 - 2022
Change
 For the Six Months Ended June 30, YTD 2023 - 2022 Change
  Second
Quarter		 First Quarter Fourth
Quarter		 Third Quarter Second
Quarter		   2023   2022  
INCOME SUMMARY                  
Interest revenue $295,775  $279,487  $240,831  $213,887  $187,378    $575,262  $358,437   
Interest expense  95,489   68,017   30,943   14,113   8,475     163,506   15,742   
Net interest revenue  200,286   211,470   209,888   199,774   178,903  12%  411,756   342,695  20%
Provision for credit losses  22,753   21,783   19,831   15,392   5,604     44,536   28,690   
Noninterest income  36,387   30,209   33,354   31,922   33,458  9   66,596   72,431  (8)
Total revenue  213,920   219,896   223,411   216,304   206,757  3   433,816   386,436  12 
Noninterest expenses  132,407   139,805   117,329   112,755   120,790  10   272,212   240,065  13 
Income before income tax expense  81,513   80,091   106,082   103,549   85,967  (5)  161,604   146,371  10 
Income tax expense  18,225   17,791   24,632   22,388   19,125  (5)  36,016   31,510  14 
Net income  63,288   62,300   81,450   81,161   66,842  (5)  125,588   114,861  9 
Merger-related and other charges  3,645   8,631   1,470   1,746   7,143     12,276   16,159   
Income tax benefit of merger-related and other charges  (820)  (1,955)  (323)  (385)  (1,575)    (2,775)  (3,538)  
Net income - operating (1) $66,113  $68,976  $82,597  $82,522  $72,410  (9) $135,089  $127,482  6 
Pre-tax pre-provision income (5) $104,266  $101,874  $125,913  $118,941  $91,571  14  $206,140  $175,061  18 
PERFORMANCE MEASURES                  
Per common share:                  
Diluted net income - GAAP $0.53  $0.52  $0.74  $0.74  $0.61  (13) $1.05  $1.04  1 
Diluted net income - operating (1)  0.55   0.58   0.75   0.75   0.66  (17)  1.13   1.16  (3)
Cash dividends declared  0.23   0.23   0.22   0.22   0.21  10   0.46   0.42  10 
Book value  25.98   25.76   24.38   23.78   23.96  8   25.98   23.96  8 
Tangible book value (3)  17.83   17.59   17.13   16.52   16.68  7   17.83   16.68  7 
Key performance ratios:                  
Return on common equity - GAAP (2)(4)  7.47%  7.34%  10.86%  11.02%  9.31%    7.41%  8.07%  
Return on common equity - operating (1)(2)(4)  7.82   8.15   11.01   11.21   10.10     7.98   8.98   
Return on tangible common equity - operating (1)(2)(3)(4)  11.35   11.63   15.20   15.60   14.20     11.49   12.62   
Return on assets - GAAP (4)  0.95   0.95   1.33   1.32   1.08     0.95   0.93   
Return on assets - operating (1)(4)  1.00   1.06   1.35   1.34   1.17     1.03   1.03   
Return on assets - pre-tax pre-provision (4)(5)  1.59   1.58   2.07   1.94   1.49     1.58   1.43   
Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5)  1.65   1.71   2.09   1.97   1.60     1.68   1.56   
Net interest margin (fully taxable equivalent) (4)  3.37   3.61   3.76   3.57   3.19     3.49   3.08   
Efficiency ratio - GAAP  55.71   57.20   47.95   48.41   56.58     56.46   57.00   
Efficiency ratio - operating (1)  54.17   53.67   47.35   47.66   53.23     53.92   53.16   
Equity to total assets  11.89   11.90   11.25   11.12   10.95     11.89   10.95   
Tangible common equity to tangible assets (3)  8.21   8.17   7.88   7.70   7.59     8.21   7.59   
ASSET QUALITY                  
Nonperforming assets ("NPAs") $103,737  $73,403  $44,281  $35,511  $34,428  201  $103,737  $34,428  201 
Allowance for credit losses - loans  190,705   176,534   159,357   148,502   136,925  39   190,705   136,925  39 
Allowance for credit losses - total  212,277   197,923   180,520   167,300   153,042  39   212,277   153,042  39 
Net charge-offs (recoveries)  8,399   7,084   6,611   1,134   (1,069)    15,483   1,909   
Allowance for credit losses - loans to loans  1.10%  1.03%  1.04%  1.00%  0.94%    1.10%  0.94%  
Allowance for credit losses - total to loans  1.22   1.16   1.18   1.12   1.05     1.22   1.05   
Net charge-offs to average loans (4)  0.20   0.17   0.17   0.03   (0.03)    0.18   0.03   
NPAs to total assets  0.40   0.28   0.18   0.15   0.14     0.40   0.14   
AT PERIOD END ($ in millions)                  
Loans $17,395  $17,125  $15,335  $14,882  $14,541  20  $17,395  $14,541  20 
Investment securities  5,914   5,915   6,228   6,539   6,683  (12)  5,914   6,683  (12)
Total assets  26,120   25,872   24,009   23,688   24,213  8   26,120   24,213  8 
Deposits  22,252   22,005   19,877   20,321   20,873  7   22,252   20,873  7 
Shareholders’ equity  3,106   3,078   2,701   2,635   2,651  17   3,106   2,651  17 
Common shares outstanding (thousands)  115,266   115,152   106,223   106,163   106,034  9   115,266   106,034  9 
                                   

(1) Excludes merger-related and other charges. (2) Net income less preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized. (5) Excludes income tax expense and provision for credit losses.

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
(in thousands, except per share data)
   2023   2022  For the Six Months Ended June 30,
  Second
Quarter		 First
Quarter		 Fourth
Quarter		 Third
Quarter		 Second
Quarter		  2023   2022 
               
Noninterest expense reconciliation              
Noninterest expenses (GAAP) $132,407  $139,805  $117,329  $112,755  $120,790  $272,212  $240,065 
Merger-related and other charges  (3,645)  (8,631)  (1,470)  (1,746)  (7,143)  (12,276)  (16,159)
Noninterest expenses - operating $128,762  $131,174  $115,859  $111,009  $113,647  $259,936  $223,906 
               
Net income reconciliation              
Net income (GAAP) $63,288  $62,300  $81,450  $81,161  $66,842  $125,588  $114,861 
Merger-related and other charges  3,645   8,631   1,470   1,746   7,143   12,276   16,159 
Income tax benefit of merger-related and other charges  (820)  (1,955)  (323)  (385)  (1,575)  (2,775)  (3,538)
Net income - operating $66,113  $68,976  $82,597  $82,522  $72,410  $135,089  $127,482 
               
Net income to pre-tax pre-provision income reconciliation              
Net income (GAAP) $63,288  $62,300  $81,450  $81,161  $66,842  $125,588  $114,861 
Income tax expense  18,225   17,791   24,632   22,388   19,125   36,016   31,510 
Provision for credit losses  22,753   21,783   19,831   15,392   5,604   44,536   28,690 
Pre-tax pre-provision income $104,266  $101,874  $125,913  $118,941  $91,571  $206,140  $175,061 
               
Diluted income per common share reconciliation              
Diluted income per common share (GAAP) $0.53  $0.52  $0.74  $0.74  $0.61  $1.05  $1.04 
Merger-related and other charges, net of tax  0.02   0.06   0.01   0.01   0.05   0.08   0.12 
Diluted income per common share - operating $0.55  $0.58  $0.75  $0.75  $0.66  $1.13  $1.16 
               
Book value per common share reconciliation              
Book value per common share (GAAP) $25.98  $25.76  $24.38  $23.78  $23.96  $25.98  $23.96 
Effect of goodwill and other intangibles  (8.15)  (8.17)  (7.25)  (7.26)  (7.28)  (8.15)  (7.28)
Tangible book value per common share $17.83  $17.59  $17.13  $16.52  $16.68  $17.83  $16.68 
               
Return on tangible common equity reconciliation              
Return on common equity (GAAP)  7.47%  7.34%  10.86%  11.02%  9.31%  7.41%  8.07%
Merger-related and other charges, net of tax  0.35   0.81   0.15   0.19   0.79   0.57   0.91 
Return on common equity - operating  7.82   8.15   11.01   11.21   10.10   7.98   8.98 
Effect of goodwill and other intangibles  3.53   3.48   4.19   4.39   4.10   3.51   3.64 
Return on tangible common equity - operating  11.35%  11.63%  15.20%  15.60%  14.20%  11.49%  12.62%
               
Return on assets reconciliation              
Return on assets (GAAP)  0.95%  0.95%  1.33%  1.32%  1.08%  0.95%  0.93%
Merger-related and other charges, net of tax  0.05   0.11   0.02   0.02   0.09   0.08   0.10 
Return on assets - operating  1.00%  1.06%  1.35%  1.34%  1.17%  1.03%  1.03%
               
Return on assets to return on assets- pre-tax pre-provision reconciliation              
Return on assets (GAAP)  0.95%  0.95%  1.33%  1.32%  1.08%  0.95%  0.93%
Income tax expense  0.29   0.29   0.41   0.37   0.32   0.28   0.26 
Provision for credit losses  0.35   0.34   0.33   0.25   0.09   0.35   0.24 
Return on assets - pre-tax, pre-provision  1.59   1.58   2.07   1.94   1.49   1.58   1.43 
Merger-related and other charges  0.06   0.13   0.02   0.03   0.11   0.10   0.13 
Return on assets - pre-tax pre-provision, excluding merger-related and other charges  1.65%  1.71%  2.09%  1.97%  1.60%  1.68%  1.56%
               
Efficiency ratio reconciliation              
Efficiency ratio (GAAP)  55.71%  57.20%  47.95%  48.41%  56.58%  56.46%  57.00%
Merger-related and other charges  (1.54)  (3.53)  (0.60)  (0.75)  (3.35)  (2.54)  (3.84)
Efficiency ratio - operating  54.17%  53.67%  47.35%  47.66%  53.23%  53.92%  53.16%
               
Tangible common equity to tangible assets reconciliation              
Equity to total assets (GAAP)  11.89%  11.90%  11.25%  11.12%  10.95%  11.89%  10.95%
Effect of goodwill and other intangibles  (3.31)  (3.36)  (2.97)  (3.01)  (2.96)  (3.31)  (2.96)
Effect of preferred equity  (0.37)  (0.37)  (0.40)  (0.41)  (0.40)  (0.37)  (0.40)
Tangible common equity to tangible assets  8.21%  8.17%  7.88%  7.70%  7.59%  8.21%  7.59%
               


UNITED COMMUNITY BANKS, INC.            
Financial Highlights            
Loan Portfolio Composition at Period-End            
  2023  2022 Linked Quarter Change
 Year over Year Change
(in millions)Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter  
LOANS BY CATEGORY             
Owner occupied commercial RE$3,111  $3,141  $2,735  $2,700  $2,681  $(30) $430 
Income producing commercial RE 3,670   3,611   3,262   3,299   3,273   59   397 
Commercial & industrial 2,550   2,442   2,252   2,238   2,253   108   297 
Commercial construction 1,739   1,806   1,598   1,514   1,514   (67)  225 
Equipment financing 1,510   1,447   1,374   1,281   1,211   63   299 
Total commercial 12,580   12,447   11,221   11,032   10,932   133   1,648 
Residential mortgage 2,905   2,756   2,355   2,149   1,997   149   908 
Home equity lines of credit 927   930   850   832   801   (3)  126 
Residential construction 463   492   443   423   381   (29)  82 
Manufactured housing 340   326   317   301   287   14   53 
Consumer 180   174   149   145   143   6   37 
Total loans$17,395  $17,125  $15,335  $14,882  $14,541  $270  $2,854 
              
LOANS BY MARKET             
Georgia$4,281  $4,177  $4,051  $4,003  $3,960  $104  $321 
South Carolina 2,750   2,672   2,587   2,516   2,377   78   373 
North Carolina 2,355   2,257   2,186   2,117   2,006   98   349 
Tennessee 2,387   2,458   2,507   2,536   2,621   (71)  (234)
Florida 1,708   1,745   1,308   1,259   1,235   (37)  473 
Alabama 1,062   1,029   —   —   —   33   1,062 
Commercial Banking Solutions 2,852   2,787   2,696   2,451   2,342   65   510 
Total loans$17,395  $17,125  $15,335  $14,882  $14,541  $270  $2,854 
                            


UNITED COMMUNITY BANKS, INC.     
Financial Highlights     
Credit Quality     
(in thousands)     
 2023
  2022 
 Second
Quarter		 First
Quarter		 Fourth
Quarter
NONACCRUAL LOANS     
Owner occupied RE$3,471  $1,000  $523 
Income producing RE 32,542   10,603   3,885 
Commercial & industrial 30,823   33,276   14,470 
Commercial construction 115   475   133 
Equipment financing 8,989   5,044   5,438 
Total commercial 75,940   50,398   24,449 
Residential mortgage 11,419   11,280   10,919 
Home equity lines of credit 2,777   2,377   1,888 
Residential construction 1,682   143   405 
Manufactured housing 10,782   8,542   6,518 
Consumer 19   55   53 
Total nonaccrual loans 102,619   72,795   44,232 
OREO and repossessed assets 1,118   608   49 
Total NPAs$103,737  $73,403  $44,281 
            


   2023   2022 
  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 (RECOVERIES) BY CATEGORY            
Owner occupied RE $(205) (0.03)% $90  0.01% $(130) (0.02)%
Income producing RE  1,184  0.13   2,306  0.26   (113) (0.01)
Commercial & industrial  2,746  0.44   225  0.04   4,577  0.81 
Commercial construction  (105) (0.02)  (37) (0.01)  (77) (0.02)
Equipment financing  2,537  0.69   3,375  0.93   1,658  0.50 
Total commercial  6,157  0.20   5,959  0.20   5,915  0.21 
Residential mortgage  (43) (0.01)  (87) (0.01)  (33) (0.01)
Home equity lines of credit  (59) (0.03)  33  0.01   (89) (0.04)
Residential construction  623  0.53   (15) (0.01)  (23) (0.02)
Manufactured housing  620  0.75   628  0.76   246  0.32 
Consumer  1,101  2.51   566  1.37   595  1.61 
Total $8,399  0.20  $7,084  0.17  $6,611  0.17 
             

(1) Annualized.

 

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data) June 30,
2023		 December 31,
2022
ASSETS    
Cash and due from banks $267,075  $195,771 
Interest-bearing deposits in banks  443,661   316,082 
Federal funds and other short-term investments  —   135,000 
Cash and cash equivalents  710,736   646,853 
Debt securities available-for-sale  3,359,989   3,614,333 
Debt securities held-to-maturity (fair value $2,132,396 and $2,191,073, respectively)  2,553,835   2,613,648 
Loans held for sale  27,104   13,600 
Loans and leases held for investment  17,394,845   15,334,627 
Less allowance for credit losses - loans and leases  (190,705)  (159,357)
Loans and leases, net  17,204,140   15,175,270 
Premises and equipment, net  353,317   298,456 
Bank owned life insurance  342,966   299,297 
Goodwill and other intangible assets, net  957,823   779,248 
Other assets  610,287   568,179 
Total assets $26,120,197  $24,008,884 
LIABILITIES AND SHAREHOLDERS' EQUITY    
Liabilities:    
Deposits:    
Noninterest-bearing demand $6,970,668  $7,643,081 
NOW and interest-bearing demand  5,076,371   4,350,878 
Money market  5,036,665   4,510,680 
Savings  1,261,138   1,456,337 
Time  3,265,230   1,781,482 
Brokered  641,916   134,049 
Total deposits  22,251,988   19,876,507 
Short-term borrowings  —   158,933 
Federal Home Loan Bank advances  —   550,000 
Long-term debt  324,754   324,663 
Accrued expenses and other liabilities  437,864   398,107 
Total liabilities  23,014,606   21,308,210 
Shareholders' equity:    
Preferred stock; $1 par value; 10,000,000 shares authorized; 3,989 and 4,000 shares Series I issued and outstanding, respectively, $25,000 per share liquidation preference  96,165   96,422 
Common stock, $1 par value; 200,000,000 shares authorized,    115,265,912 and 106,222,758 shares issued and outstanding, respectively  115,266   106,223 
Common stock issuable; 587,775 and 607,128 shares, respectively  12,228   12,307 
Capital surplus  2,610,523   2,306,366 
Retained earnings  577,316   508,844 
Accumulated other comprehensive loss  (305,907)  (329,488)
Total shareholders' equity  3,105,591   2,700,674 
Total liabilities and shareholders' equity $26,120,197  $24,008,884 
         

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)  2023   2022   2023   2022 
Interest revenue:        
Loans, including fees $250,484  $155,266  $486,915  $302,007 
Investment securities, including tax exempt of $1,731, $2,539, $3,841 and $5,194, respectively  41,060   30,425   81,046   54,090 
Deposits in banks and short-term investments  4,231   1,687   7,301   2,340 
Total interest revenue  295,775   187,378   575,262   358,437 
         
Interest expense:        
Deposits:        
NOW and interest-bearing demand  27,597   2,163   45,196   3,632 
Money market  33,480   1,515   58,546   2,527 
Savings  702   87   1,240   159 
Time  27,438   537   42,096   1,115 
Deposits  89,217   4,302   147,078   7,433 
Short-term borrowings  1,849   —   2,997   — 
Federal Home Loan Bank advances  649   —   5,761   — 
Long-term debt  3,774   4,173   7,670   8,309 
Total interest expense  95,489   8,475   163,506   15,742 
Net interest revenue  200,286   178,903   411,756   342,695 
Provision for credit losses  22,753   5,604   44,536   28,690 
Net interest revenue after provision for credit losses  177,533   173,299   367,220   314,005 
         
Noninterest income:        
Service charges and fees  9,777   10,005   18,476   19,075 
Mortgage loan gains and other related fees  6,584   6,971   11,105   23,123 
Wealth management fees  5,600   5,985   11,324   11,880 
Gains from sales of other loans, net  2,305   3,800   4,221   6,998 
Lending and loan servicing fees  2,978   1,586   6,994   4,572 
Securities losses, net  —   46   (1,644)  (3,688)
Other  9,143   5,065   16,120   10,471 
Total noninterest income  36,387   33,458   66,596   72,431 
Total revenue  213,920   206,757   433,816   386,436 
         
Noninterest expenses:        
Salaries and employee benefits  76,250   69,233   154,948   140,239 
Communications and equipment  10,744   9,675   20,752   18,923 
Occupancy  10,194   8,865   20,083   18,243 
Advertising and public relations  2,314   2,300   4,663   3,788 
Postage, printing and supplies  2,382   1,999   4,919   4,118 
Professional fees  6,592   5,402   12,664   9,849 
Lending and loan servicing expense  2,530   3,047   4,849   5,413 
Outside services - electronic banking  2,660   2,947   6,085   5,470 
FDIC assessments and other regulatory charges  4,142   2,267   8,143   4,440 
Amortization of intangibles  3,421   1,736   6,949   3,529 
Merger-related and other charges  3,645   7,143   12,276   16,159 
Other  7,533   6,176   15,881   9,894 
Total noninterest expenses  132,407   120,790   272,212   240,065 
Income before income taxes  81,513   85,967   161,604   146,371 
Income tax expense  18,225   19,125   36,016   31,510 
Net income  63,288   66,842   125,588   114,861 
Preferred stock dividends  1,719   1,719   3,438   3,438 
Earnings allocated to participating securities  342   362   680   596 
Net income available to common shareholders $61,227  $64,761  $121,470  $110,827 
         
Net income per common share:        
Basic $0.53  $0.61  $1.05  $1.04 
Diluted  0.53   0.61   1.05   1.04 
Weighted average common shares outstanding:        
Basic  115,774   106,610   115,614   106,580 
Diluted  115,869   106,716   115,795   106,697 
                 

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,

         
   2023   2022 
(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) $17,166,129  $250,472   5.85% $14,382,324  $155,184   4.33%
Taxable securities (3)  5,956,193   39,329   2.64   6,436,992   27,886   1.73 
Tax-exempt securities (FTE) (1)(3)  369,364   2,323   2.52   490,659   3,410   2.78 
Federal funds sold and other interest-earning assets  461,022   4,658   4.05   1,302,935   2,066   0.64 
Total interest-earning assets (FTE)  23,952,708   296,782   4.97   22,612,910   188,546   3.34 
             
Noninterest-earning assets:            
Allowance for credit losses  (181,769)      (135,392)    
Cash and due from banks  251,691       203,291     
Premises and equipment  345,771       286,417     
Other assets (3)  1,500,827       1,286,107     
Total assets $25,869,228      $24,253,333     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $4,879,591   27,597   2.27  $4,561,162   2,163   0.19 
Money market  5,197,789   33,480   2.58   5,019,420   1,515   0.12 
Savings  1,306,394   702   0.22   1,496,414   87   0.02 
Time  2,976,482   22,471   3.03   1,671,632   491   0.12 
Brokered time deposits  423,536   4,967   4.70   65,081   46   0.28 
Total interest-bearing deposits  14,783,792   89,217   2.42   12,813,709   4,302   0.13 
Federal funds purchased and other borrowings  145,233   1,849   5.11   66   —   — 
Federal Home Loan Bank advances  50,989   649   5.11   —   —   — 
Long-term debt  324,740   3,774   4.66   324,301   4,173   5.16 
Total borrowed funds  520,962   6,272   4.83   324,367   4,173   5.16 
Total interest-bearing liabilities  15,304,754   95,489   2.50   13,138,076   8,475   0.26 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits  7,072,760       8,025,947     
Other liabilities  385,324       397,890     
Total liabilities  22,762,838       21,561,913     
Shareholders' equity  3,106,390       2,691,420     
Total liabilities and shareholders' equity $25,869,228      $24,253,333     
             
Net interest revenue (FTE)   $201,293      $180,071   
Net interest-rate spread (FTE)      2.47%      3.08%
Net interest margin (FTE) (4)      3.37%      3.19%
                 

(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) Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $389 million in 2023 and pretax unrealized losses of $271 million in 2022 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,

         
   2023   2022 
(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) $17,032,493  $487,002   5.77% $14,308,585  $301,821   4.25%
Taxable securities (3)  6,007,471   77,205   2.57   6,142,723   48,896   1.59 
Tax-exempt securities (FTE) (1)(3)  395,827   5,157   2.61   500,750   6,976   2.79 
Federal funds sold and other interest-earning assets  466,642   8,010   3.46   1,604,995   3,086   0.39 
Total interest-earning assets (FTE)  23,902,433   577,374   4.87   22,557,053   360,779   3.22 
             
Non-interest-earning assets:            
Allowance for loan losses  (174,716)      (124,384)    
Cash and due from banks  261,397       184,751     
Premises and equipment  337,499       281,842     
Other assets (3)  1,492,926       1,329,359     
Total assets $25,819,539      $24,228,621     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $4,690,798   45,196   1.94  $4,613,838   3,632   0.16 
Money market  5,210,457   58,546   2.27   5,064,866   2,527   0.10 
Savings  1,361,357   1,240   0.18   1,466,812   159   0.02 
Time  2,664,269   34,784   2.63   1,715,022   1,025   0.12 
Brokered time deposits  316,470   7,312   4.66   72,048   90   0.25 
Total interest-bearing deposits  14,243,351   147,078   2.08   12,932,586   7,433   0.12 
Federal funds purchased and other borrowings  126,697   2,997   4.77   337   —   — 
Federal Home Loan Bank advances  250,912   5,761   4.63   —   —   — 
Long-term debt  324,721   7,670   4.76   321,663   8,309   5.21 
Total borrowed funds  702,330   16,428   4.72   322,000   8,309   5.20 
Total interest-bearing liabilities  14,945,681   163,506   2.21   13,254,586   15,742   0.24 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits  7,383,575       7,847,284     
Other liabilities  371,422       388,162     
Total liabilities  22,700,678       21,490,032     
Shareholders' equity  3,118,861       2,738,589     
Total liabilities and shareholders' equity $25,819,539      $24,228,621     
             
Net interest revenue (FTE)   $413,868      $345,037   
Net interest-rate spread (FTE)      2.66%      2.98%
Net interest margin (FTE) (4)      3.49%      3.08%
             

(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) Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $404 million in 2023 and pretax unrealized losses of $175 million in 2022, respectively, are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQ: UCBI) is a top 100 U.S. financial institution with $26.1 billion in assets as of June 30, 2023, and through its subsidiaries, provides a full range of banking, wealth management and mortgage services. United Community Banks, Inc. is the financial holding company for United Community Bank (“United Community”) which has 212 offices across Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee, as well as a national SBA lending franchise and a national equipment financing subsidiary. United Community is committed to improving the financial health and well-being of its customers and ultimately the communities it serves. Among other awards, United Community is a nine-time winner of the J.D. Power award that ranked the bank #1 in customer satisfaction with consumer banking in the Southeast and was recognized in 2023 by Forbes as one of the World’s Best Banks and one of America’s Best Banks. The bank is also a multi-award recipient of the Greenwich Excellence Awards, including the 2022 awards for Small Business Banking-Likelihood to Recommend (South) and Overall Satisfaction (South), and was named one of the "Best Banks to Work For" by American Banker in 2022 for the sixth consecutive year. 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.

Caution About Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In general, forward-looking statements usually may be identified through use of words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, and include statements related to potential benefits of the First Miami merger, and the strength of our pipelines and their ability to support business growth across our markets and our belief that our high-quality balance sheet and business mix will support strong performance regardless of future economic conditions. Forward-looking statements are not historical facts and represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but are not limited to (1) the risk that the cost savings and any revenue synergies from the merger may not be realized or take longer than anticipated to be realized, (2) disruption of customer, supplier, employee or other business partner relationships as a result of the merger, (3) reputational risk and the reaction of each of the companies’ customers, suppliers, employees or other business partners to the merger, (4) the risks relating to the integration of First Miami’s operations into the operations of United, including the risk that such integration will be materially delayed or will be more costly or difficult than expected, (5) the risks associated with United’s pursuit of future acquisitions, (6) the risk associated with expansion into new geographic or product markets, (7) the dilution caused by United’s issuance of additional shares of its common stock in the merger, and (8) general competitive, economic, political and market conditions. Further information regarding additional factors which could affect the forward-looking statements contained in this press release can be found in the cautionary language included under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in United’s Annual Report on Form 10-K for the year ended December 31, 2022, and other documents subsequently filed by United with the United States Securities and Exchange Commission (“SEC”).

Many of these factors are beyond United’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this communication, and United undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for United to predict their occurrence or how they will affect United.

United qualifies all forward-looking statements by these cautionary statements.

For more information:

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