United Community Banks, Inc. Reports Third Quarter Results

Press Release Details

Oct 19, 2021

United Community Banks, Inc. Reports Third Quarter Results

EPS of $0.82, Return on Assets of 1.48% and Return on Common Equity of 14.3%

GREENVILLE, S.C., Oct. 19, 2021 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the third quarter was $73.8 million and pre-tax, pre-provision income was $84.4 million. Diluted earnings per share of $0.82 for the quarter represented an increase of $0.30 or 58%, from the third quarter a year ago, and represented an increase of $0.04 or 5% from the second quarter of 2021. On an operating basis, United’s diluted earnings per share of $0.83 was up 51% over the year ago quarter. United’s GAAP return on assets (ROA) was 1.48% and its return on common equity was 14.3% for the quarter. On an operating basis, United’s ROA was 1.50% and its return on tangible common equity was 18.2%. On a pre-tax, pre-provision basis, operating return on assets was 1.73% for the quarter. The quarter benefited from an allowance release of $11.0 million, reflecting continued improvement in economic conditions and forecasts.

Chairman and CEO Lynn Harton stated, “This has been another strong quarter for United as our economies continued to strengthen even in the face of the Delta variant, increasing prices on many goods, and supply chain delays. Both loan and deposit growth were strong and noninterest income benefited from both another excellent mortgage quarter as well as contributions from our expanded wealth management business.” Harton continued, “On the strategic front, on October 1, we completed the acquisition of Aquesta Financial Holdings, Inc. and Aquesta Bank, accelerating our expansion in Charlotte, and adding the Wilmington, North Carolina market, two of the strongest markets in the Southeast. We are proud that this outstanding team of bankers has joined us and we believe that they are a great fit for United. We also continued to strengthen our Board of Directors with the appointment of Jennifer Bazante, Chief Marketing Officer of Humana Inc. We believe that digital transformation is supported and enabled by strong branding and marketing and we specifically wanted to bring that experience and thought leadership to our board. We are excited to have Jennifer join United as we continue to grow and build the company.”

Total loans decreased by $200 million during the quarter—impacted by $322 million of Paycheck Protection Program (PPP) loan forgiveness. Excluding the effect of PPP loans, core organic loan growth was 4.5% annualized. Core transaction deposits grew by $490 million during the quarter, or 15.3% annualized, and United’s cost of deposits decreased by 2 basis points to 0.07%. The net interest margin decreased by 7 basis points from the second quarter due mainly to a change in the earning asset mix towards liquid assets.

Third Quarter 2021 Financial Highlights:

  • Net income of $73.8 million and pre-tax, pre-provision income of $84.4 million
  • EPS increased by 58% compared to third quarter 2020 on a GAAP basis and 51% on an operating basis; compared to second quarter 2021, EPS increased by 5% on both a GAAP and operating basis
  • Return on assets of 1.48%, or 1.50% on an operating basis
  • Pre-tax, pre-provision return on assets of 1.70%, or 1.73% on an operating basis
  • Return on common equity of 14.3%
  • Return on tangible common equity of 18.2% on an operating basis
  • A release of provision for credit losses of $11.0 million, which reduced the allowance for loan losses to 0.89% of loans from 0.98% in the second quarter
  • Loan production of $1.2 billion, resulting in core loan growth of 4.5%, annualized for the quarter, excluding the impact of $322 million in PPP loans being forgiven
  • Core transaction deposits were up $490 million, which represents a 15.3% annualized growth rate for the quarter
  • Net interest margin of 3.12% was down 7 basis points from the second quarter, due to continued strong deposit growth and an earning asset mix change toward securities
  • Mortgage closings of $568 million compared to $576 million a year ago; mortgage rate locks of $731 million compared to $910 million a year ago
  • Noninterest income was up $4.3 million on a linked quarter basis, primarily driven by strong mortgage volume and the lack of a significant MSR write-down; it also benefitted from $2.0 million in fees generated by our newly acquired FinTrust wealth manager that closed on July 6
  • Noninterest expenses increased by $1.2 million compared to the second quarter on a GAAP basis and by $850,000 on an operating basis; excluding the FinTrust transaction, operating noninterest expenses improved by $1 million compared to the second quarter
  • Efficiency ratio at historically low levels of 53.1%, or 52.3% on an operating basis
  • Net charge-offs of $551,000 or 2 basis points as a percent of average loans, up 4 basis points from the net recoveries experienced in the second quarter
  • Nonperforming assets of 0.23% of total assets, down 2 basis points compared to June 30, 2021
  • Total loan deferrals of $9 million or 0.1% of the total loan portfolio compared to $18 million or 0.2% in the second quarter
  • Quarterly common shareholder dividend of $0.20 per share declared during the quarter, an increase of 11% year-over-year
  • Completed the acquisition of FinTrust Capital Partners, LLC and its affiliates and subsidiaries with $2.1 billion in assets under management on July 6, 2021
  • Completed the acquisition of Aquesta Financial Holdings, Inc. (“Aquesta”) with $754 million in assets on October 1, 2021; this acquisition is expected to add $0.08 in EPS accretion in 2022 with cost savings fully phased in
  • Announced the proposed acquisition of Reliant Bancorp, Inc. (“Reliant”) with $3.1 billion in assets on July 14, 2021; this acquisition is expected to close in the first quarter of 2022 and add $0.15 in EPS accretion in 2022 and $0.22 in 2023 with cost savings fully phased in

Conference Call

United will hold a conference call on Wednesday, October 20, 2021, 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 1388708. 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                                    
    2021   2020   Third Quarter
2021 - 2020
Change
  For the Nine Months Ended September 30,   YTD 2021 - 2020 Change
(in thousands, except per share data)   Third
Quarter
  Second Quarter   First
Quarter
  Fourth Quarter   Third
Quarter
    2021 2020  
INCOME SUMMARY                                    
Interest revenue   $ 147,675     $ 145,809     $ 141,542     $ 156,071     $ 141,773         $ 435,026     $ 401,925      
Interest expense   6,636     7,433     9,478     10,676     13,319         23,547     45,561      
Net interest revenue   141,039     138,376     132,064     145,395     128,454     10 %   411,479     356,364     15 %  
(Release of) provision for credit losses   (11,034 )   (13,588 )   (12,281 )   2,907     21,793         (36,903 )   77,527      
Noninterest income   40,095     35,841     44,705     41,375     48,682     (18 )   120,641     114,734     5    
Total revenue   192,168     187,805     189,050     183,863     155,343     24     569,023     393,571     45    
Expenses   96,749     95,540     95,194     106,490     95,981     1     287,483     261,499     10    
Income before income tax expense   95,419     92,265     93,856     77,373     59,362     61     281,540     132,072     113    
Income tax expense   21,603     22,005     20,150     17,871     11,755     84     63,758     27,485     132    
Net income   73,816     70,260     73,706     59,502     47,607     55     217,782     104,587     108    
Merger-related and other charges   1,437     1,078     1,543     2,452     3,361         4,058     4,566      
Income tax benefit of merger-related and other charges   (328 )   (246 )   (335 )   (552 )   (519 )       (909 )   (788 )    
Net income - operating (1)   $ 74,925      $ 71,092      $ 74,914      $ 61,402      $ 50,449      49     $ 220,931      $ 108,365      104    
                                     
Pre-tax pre-provision income (5)   $ 84,385     $ 78,677     $ 81,575     $ 80,280     $ 81,155     4     $ 244,637     $ 209,599     17    
                                     
PERFORMANCE MEASURES                                    
Per common share:                                    
Diluted net income - GAAP   $ 0.82     $ 0.78     $ 0.82     $ 0.66     $ 0.52     58     $ 2.42     $ 1.25     94    
Diluted net income - operating (1)   0.83     0.79     0.83     0.68     0.55     51     2.45     1.29     90    
Cash dividends declared   0.20     0.19     0.19     0.18     0.18     11     0.58     0.54     7    
Book value   23.25     22.81     22.15     21.90     21.45     8     23.25     21.45     8    
Tangible book value (3)   18.68     18.49     17.83     17.56     17.09     9     18.68     17.09     9    
Key performance ratios:                                    
Return on common equity - GAAP (2)(4)   14.26 %   14.08 %   15.37 %   12.36 %   10.06 %       14.55 %   8.11 %    
Return on common equity - operating (1)(2)(4)   14.48     14.25     15.63     12.77     10.69         14.77     8.40      
Return on tangible common equity - operating (1)(2)(3)(4)   18.23     17.81     19.68     16.23     13.52         18.55     10.76      
Return on assets - GAAP (4)   1.48     1.46     1.62     1.30     1.07         1.52     0.93      
Return on assets - operating (1)(4)   1.50     1.48     1.65     1.34     1.14         1.54     0.97      
Return on assets - pre-tax pre-provision (4)(5)   1.70     1.64     1.80     1.77     1.86         1.71     1.89      
Return on assets - pre-tax pre-provision, excluding
merger- related and other charges (1)(4)(5)
  1.73     1.67     1.83     1.82     1.93         1.74     1.93      
Net interest margin (fully taxable equivalent) (4)   3.12     3.19     3.22     3.55     3.27         3.17     3.55      
Efficiency ratio - GAAP   53.11     54.53     53.55     56.73     54.14         53.72     55.30      
Efficiency ratio - operating (1)   52.33     53.92     52.68     55.42     52.24         52.97     54.34      
Equity to total assets   10.89     11.04     10.95     11.29     11.47         10.89     11.47      
Tangible common equity to tangible assets (3)   8.53     8.71     8.57     8.81     8.89         8.53     8.89      
                                     
ASSET QUALITY                                    
Nonperforming loans   $ 44,923     $ 46,123     $ 55,900     $ 61,599     $ 49,084     (8 )   $ 44,923     $ 49,084     (8 )  
Foreclosed properties   412     224     596     647     953         412     953      
Total nonperforming assets ("NPAs")   45,335     46,347     56,496     62,246     50,037     (9 )   45,335     50,037     (9 )  
Allowance for credit losses - loans   99,620     111,616     126,866     137,010     134,256     (26 )   99,620     134,256     (26 )  
Net charge-offs   551     (456 )   (305 )   1,515     2,538         (210 )   16,801      
Allowance for credit losses - loans to loans   0.89 %   0.98 %   1.09 %   1.20 %   1.14 %       0.89 %   1.14 %    
Net charge-offs to average loans (4)   0.02     (0.02 )   (0.01 )   0.05     0.09             0.22      
NPAs to loans and foreclosed properties   0.41     0.41     0.48     0.55     0.42         0.41     0.42      
NPAs to total assets   0.23     0.25     0.30     0.35     0.29         0.23     0.29      
                                     
AVERAGE BALANCES ($ in millions)                                    
Loans   $ 11,205     $ 11,617     $ 11,433     $ 11,595     $ 11,644     (4 )   $ 11,417     $ 10,088     13    
Investment securities   5,122     4,631     3,991     3,326     2,750     86     4,587     2,560     79    
Earning assets   18,078     17,540     16,782     16,394     15,715     15     17,473     13,498     29    
Total assets   19,322     18,792     18,023     17,698     17,013     14     18,717     14,718     27    
Deposits   16,637     16,132     15,366     15,057     14,460     15     16,050     12,490     29    
Shareholders’ equity   2,119     2,060     2,025     1,994     1,948     9     2,068     1,763     17    
Common shares - basic (thousands)   87,211     87,289     87,322     87,258     87,129         87,274     81,815     7    
Common shares - diluted (thousands)   87,355     87,421     87,466     87,333     87,205         87,413     81,876     7    
                                     
AT PERIOD END ($ in millions)                                    
Loans   $ 11,191     $ 11,391     $ 11,679     $ 11,371     $ 11,799     (5 )   $ 11,191     $ 11,799     (5 )  
Investment securities   5,335     4,928     4,332     3,645     3,089     73     5,335     3,089     73    
Total assets   19,481     18,896     18,557     17,794     17,153     14     19,481     17,153     14    
Deposits   16,865     16,328     15,993     15,232     14,603     15     16,865     14,603     15    
Shareholders’ equity   2,122     2,086     2,031     2,008     1,967     8     2,122     1,967     8    
Common shares outstanding (thousands)   86,559     86,665     86,777     86,675     86,611         86,559     86,611        

(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                            
    2021   2020   For the Nine Months Ended September 30,
(in thousands, except per share data)   Third
Quarter
  Second Quarter   First
Quarter
  Fourth Quarter   Third
Quarter
  2021   2020
                             
Expense reconciliation                            
Expenses (GAAP)   $ 96,749     $ 95,540     $ 95,194     $ 106,490     $ 95,981     $ 287,483     $ 261,499  
Merger-related and other charges   (1,437 )   (1,078 )   (1,543 )   (2,452 )   (3,361 )   (4,058 )   (4,566 )
Expenses - operating   $ 95,312     $ 94,462     $ 93,651     $ 104,038     $ 92,620     $ 283,425     $ 256,933  
                             
Net income reconciliation                            
Net income (GAAP)   $ 73,816     $ 70,260     $ 73,706     $ 59,502     $ 47,607     $ 217,782     $ 104,587  
Merger-related and other charges   1,437     1,078     1,543     2,452     3,361     4,058     4,566  
Income tax benefit of merger-related and other charges   (328 )   (246 )   (335 )   (552 )   (519 )   (909 )   (788 )
Net income - operating   $ 74,925     $ 71,092     $ 74,914     $ 61,402     $ 50,449     $ 220,931     $ 108,365  
                             
Net income to pre-tax pre-provision income reconciliation                            
Net income (GAAP)   $ 73,816     $ 70,260     $ 73,706     $ 59,502     $ 47,607     $ 217,782     $ 104,587  
Income tax expense   21,603     22,005     20,150     17,871     11,755     63,758     27,485  
(Release of) provision for credit losses   (11,034 )   (13,588 )   (12,281 )   2,907     21,793     (36,903 )   77,527  
Pre-tax pre-provision income   $ 84,385     $ 78,677     $ 81,575     $ 80,280     $ 81,155     $ 244,637     $ 209,599  
                             
Diluted income per common share reconciliation                            
Diluted income per common share (GAAP)   $ 0.82     $ 0.78     $ 0.82     $ 0.66     $ 0.52     $ 2.42     $ 1.25  
Merger-related and other charges, net of tax   0.01     0.01     0.01     0.02     0.03     0.03     0.04  
Diluted income per common share - operating   $ 0.83     $ 0.79     $ 0.83     $ 0.68     $ 0.55     $ 2.45     $ 1.29  
                             
Book value per common share reconciliation                            
Book value per common share (GAAP)   $ 23.25     $ 22.81     $ 22.15     $ 21.90     $ 21.45     $ 23.25     $ 21.45  
Effect of goodwill and other intangibles   (4.57 )   (4.32 )   (4.32 )   (4.34 )   (4.36 )   (4.57 )   (4.36 )
Tangible book value per common share   $ 18.68     $ 18.49     $ 17.83     $ 17.56     $ 17.09     $ 18.68     $ 17.09  
                             
Return on tangible common equity reconciliation                            
Return on common equity (GAAP)   14.26 %   14.08 %   15.37 %   12.36 %   10.06 %   14.55 %   8.11 %
Merger-related and other charges, net of tax   0.22     0.17     0.26     0.41     0.63     0.22     0.29  
Return on common equity - operating   14.48     14.25     15.63     12.77     10.69     14.77     8.40  
Effect of goodwill and other intangibles   3.75     3.56     4.05     3.46     2.83     3.78     2.36  
Return on tangible common equity - operating   18.23 %   17.81 %   19.68 %   16.23 %   13.52 %   18.55 %   10.76 %
                             
Return on assets reconciliation                            
Return on assets (GAAP)   1.48 %   1.46 %   1.62 %   1.30 %   1.07 %   1.52 %   0.93 %
Merger-related and other charges, net of tax   0.02     0.02     0.03     0.04     0.07     0.02     0.04  
Return on assets - operating   1.50 %   1.48 %   1.65 %   1.34 %   1.14 %   1.54 %   0.97 %
                             
Return on assets to return on assets- pre-tax pre-provision reconciliation                            
Return on assets (GAAP)   1.48 %   1.46 %   1.62 %   1.30 %   1.07 %   1.52 %   0.93 %
Income tax expense   0.45     0.47     0.46     0.40     0.28     0.45     0.26  
(Release of) provision for credit losses   (0.23 )   (0.29 )   (0.28 )   0.07     0.51     (0.26 )   0.70  
Return on assets - pre-tax, pre-provision   1.70     1.64     1.80     1.77     1.86     1.71     1.89  
Merger-related and other charges   0.03     0.03     0.03     0.05     0.07     0.03     0.04  
Return on assets - pre-tax pre-provision, excluding merger-related and other charges   1.73 %   1.67 %   1.83 %   1.82 %   1.93 %   1.74 %   1.93 %
                             
Efficiency ratio reconciliation                            
Efficiency ratio (GAAP)   53.11 %   54.53 %   53.55 %   56.73 %   54.14 %   53.72 %   55.30 %
Merger-related and other charges   (0.78 )   (0.61 )   (0.87 )   (1.31 )   (1.90 )   (0.75 )   (0.96 )
Efficiency ratio - operating   52.33 %   53.92 %   52.68 %   55.42 %   52.24 %   52.97 %   54.34 %
                             
Tangible common equity to tangible assets reconciliation                            
Equity to total assets (GAAP)   10.89 %   11.04 %   10.95 %   11.29 %   11.47 %   10.89 %   11.47 %
Effect of goodwill and other intangibles   (1.87 )   (1.82 )   (1.86 )   (1.94 )   (2.02 )   (1.87 )   (2.02 )
Effect of preferred equity   (0.49 )   (0.51 )   (0.52 )   (0.54 )   (0.56 )   (0.49 )   (0.56 )
Tangible common equity to tangible assets   8.53 %   8.71 %   8.57 %   8.81 %   8.89 %   8.53 %   8.89 %
                             
Allowance for credit losses - loans to loans reconciliation                            
Allowance for credit losses - loans to loans (GAAP)   0.89 %   0.98 %   1.09 %   1.20 %   1.14 %   0.89 %   1.14 %
Effect of PPP loans   0.01     0.04     0.09     0.08     0.14     0.01     0.14  
Allowance for credit losses - loans to loans, excluding PPP loans   0.90 %   1.02 %   1.18 %   1.28 %   1.28 %   0.90 %   1.28 %


                         
UNITED COMMUNITY BANKS, INC.                        
Financial Highlights                        
Loan Portfolio Composition at Period-End                        
  2021   2020   Linked Quarter Change   Year over Year Change
(in millions) Third Quarter   Second Quarter   First Quarter   Fourth Quarter   Third Quarter    
LOANS BY CATEGORY                          
Owner occupied commercial RE $ 2,149     $ 2,149     $ 2,107     $ 2,090     $ 2,009     $       $ 140    
Income producing commercial RE 2,542     2,550     2,599     2,541     2,493     (8 )     49    
Commercial & industrial 1,729     1,762     1,760     1,853     1,788     (33 )     (59 )  
Paycheck protection program 150     472     883     646     1,317     (322 )     (1,167 )  
Commercial construction 947     927     960     967     987     20       (40 )  
Equipment financing 1,017     969     913     864     823     48       194    
Total commercial 8,534     8,829     9,222     8,961     9,417     (295 )     (883 )  
Residential mortgage 1,533     1,473     1,362     1,285     1,270     60       263    
Home equity lines of credit 661     661     679     697     707           (46 )  
Residential construction 321     289     272     281     257     32       64    
Consumer 142     139     144     147     148     3       (6 )  
Total loans $ 11,191     $ 11,391     $ 11,679     $ 11,371     $ 11,799     $ (200 )     $ (608 )  
                           
LOANS BY MARKET (1)                          
North Georgia $ 961     $ 962     $ 982     $ 955     $ 945     $ (1 )     $ 16    
Atlanta 1,930     1,938     1,953     1,889     1,853     (8 )     77    
North Carolina 1,427     1,374     1,326     1,281     1,246     53       181    
Coastal Georgia 621     605     597     617     614     16       7    
Gainesville 220     224     222     224     229     (4 )     (9 )  
East Tennessee 383     394     398     415     420     (11 )     (37 )  
South Carolina 2,145     2,107     1,997     1,947     1,870     38       275    
Florida 1,113     1,141     1,160     1,435     1,453     (28 )     (340 )  
Commercial Banking Solutions 2,391     2,646     3,044     2,608     3,169     (255 )     (778 )  
Total loans $ 11,191     $ 11,391     $ 11,679     $ 11,371     $ 11,799     $ (200 )     $ (608 )  

(1) Certain loans previously included in the Florida geographic market were reclassified to Commercial Banking Solutions following Seaside’s core systems conversion in the first quarter of 2021.


UNITED COMMUNITY BANKS, INC.                        
Financial Highlights                        
Credit Quality                        
    2021            
(in thousands)   Third
Quarter
  Second
Quarter
  First
Quarter
           
NONACCRUAL LOANS                        
Owner occupied RE   $ 4,945     $ 6,128     $ 7,908              
Income producing RE   13,462     13,100     13,740              
Commercial & industrial   8,507     8,563     13,864              
Commercial construction   1,202     1,229     1,984              
Equipment financing   1,845     1,771     2,171              
Total commercial   29,961     30,791     39,667              
Residential mortgage   13,222     13,485     14,050              
Home equity lines of credit   1,364     1,433     1,707              
Residential construction   260     307     322              
Consumer   116     107     154              
Total   $ 44,923     $ 46,123     $ 55,900              



    2021
    Third Quarter   Second Quarter   First 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   $ (93 )   (0.02 )%   $ (103 )   (0.02 )%   $ 767      0.15  %
Income producing RE   45      0.01      (213 )   (0.03 )   37      0.01   
Commercial & industrial   (91 )   (0.02 )   60      0.01      (2,806 )   (0.45 )
Commercial construction   (123 )   (0.05 )   (293 )   (0.12 )   22      0.01   
Equipment financing   512      0.21      301      0.13      1,511      0.70   
Total commercial   250      0.01      (248 )   (0.01 )   (469 )   (0.02 )
Residential mortgage   51      0.01      (194 )   (0.05 )   92      0.03   
Home equity lines of credit   (102 )   (0.06 )   (112 )   (0.07 )   (73 )   (0.04 )
Residential construction   (37 )   (0.05 )   (33 )   (0.05 )   (60 )   (0.09 )
Consumer   389      1.11      131      0.37      205      0.58   
Total   $ 551      0.02      $ (456 )   (0.02 )   $ (305 )   (0.01 )
                         
(1) Annualized.                        



UNITED COMMUNITY BANKS, INC.        
Consolidated Balance Sheets (Unaudited)        
(in thousands, except share and per share data)   September 302021   December 31, 2020
ASSETS        
Cash and due from banks   $ 131,785     $ 148,896  
Interest-bearing deposits in banks   1,686,008     1,459,723  
Cash and cash equivalents   1,817,793     1,608,619  
Debt securities available-for-sale   4,251,436     3,224,721  
Debt securities held-to-maturity (fair value $1,079,925 and $437,193)   1,083,324     420,361  
Loans held for sale at fair value   68,424     105,433  
Loans and leases held for investment   11,191,037     11,370,815  
Less allowance for credit losses - loans and leases   (99,620 )   (137,010 )
Loans and leases, net   11,091,417     11,233,805  
Premises and equipment, net   225,350     218,489  
Bank owned life insurance   204,282     201,969  
Accrued interest receivable   41,561     47,672  
Net deferred tax asset   37,617     38,411  
Derivative financial instruments   53,296     86,666  
Goodwill and other intangible assets, net   400,994     381,823  
Other assets   205,663     226,405  
Total assets   $ 19,481,157     $ 17,794,374  
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities:        
Deposits:        
Noninterest-bearing demand   $ 6,492,519     $ 5,390,291  
NOW and interest-bearing demand   3,699,951     3,346,490  
Money market   3,904,927     3,550,335  
Savings   1,144,065     950,854  
Time   1,440,160     1,704,290  
Brokered   183,795     290,098  
Total deposits   16,865,417     15,232,358  
Long-term debt   247,139     326,956  
Derivative financial instruments   26,065     29,003  
Accrued expenses and other liabilities   220,178     198,527  
Total liabilities   17,358,799     15,786,844  
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   96,422     96,422  
Common stock, $1 par value; 200,000,000 and 150,000,000 shares authorized, respectively; 86,558,647 and 86,675,279 shares issued and outstanding, respectively   86,559     86,675  
Common stock issuable; 588,258 and 600,834 shares   11,098     10,855  
Capital surplus   1,631,709     1,638,999  
Retained earnings   298,503     136,869  
Accumulated other comprehensive (loss) income   (1,933 )   37,710  
Total shareholders' equity   2,122,358     2,007,530  
Total liabilities and shareholders' equity   $ 19,481,157     $ 17,794,374  



UNITED COMMUNITY BANKS, INC.        
Consolidated Statements of Income (Unaudited)        
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
(in thousands, except per share data)   2021   2020   2021   2020
Interest revenue:                
Loans, including fees   $ 128,477     $ 126,936     $ 382,261     $ 352,861  
Investment securities, including tax exempt of $2,280 and $1,895 and $6,685 and $4,988, respectively   18,540     14,558     51,530     47,567  
Deposits in banks and short-term investments   658     279     1,235     1,497  
Total interest revenue   147,675     141,773     435,026     401,925  
                 
Interest expense:                
Deposits:                
NOW and interest-bearing demand   1,290     1,634     4,158     6,240  
Money market   1,119     3,017     4,278     10,969  
Savings   55     47     157     121  
Time   678     4,300     3,388     18,014  
Deposits   3,142     8,998     11,981     35,344  
Short-term borrowings       29     2     31  
Long-term debt   3,494     4,292     11,564     10,186  
Total interest expense   6,636     13,319     23,547     45,561  
Net interest revenue   141,039     128,454     411,479     356,364  
(Release of) provision for credit losses   (11,034 )   21,793     (36,903 )   77,527  
Net interest revenue after provision for credit losses   152,073     106,661     448,382     278,837  
                 
Noninterest income:                
Service charges and fees   9,350     8,260     25,255     23,893  
Mortgage loan gains and other related fees   13,828     25,144     47,536     57,113  
Wealth management fees   5,554     3,055     12,881     6,019  
Gains from sales of other loans, net   2,353     1,175     7,506     3,889  
Securities gains, net       746     41     746  
Other   9,010     10,302     27,422     23,074  
Total noninterest income   40,095     48,682     120,641     114,734  
Total revenue   192,168     155,343     569,023     393,571  
                 
Noninterest expenses:                
Salaries and employee benefits   60,458     59,067     180,457     162,236  
Communications and equipment   7,368     6,960     21,979     19,462  
Occupancy   7,096     7,050     21,130     18,709  
Advertising and public relations   1,458     1,778     4,150     5,312  
Postage, printing and supplies   1,731     1,703     5,171     4,986  
Professional fees   5,347     5,083     14,509     14,003  
Lending and loan servicing expense   2,450     3,043     8,508     8,525  
Outside services - electronic banking   2,308     1,888     6,811     5,516  
FDIC assessments and other regulatory charges   1,723     1,346     5,520     4,388  
Amortization of intangibles   1,028     1,099     2,942     3,126  
Merger-related and other charges   1,437     3,361     4,058     4,566  
Other   4,345     3,603     12,248     10,670  
Total noninterest expenses   96,749     95,981     287,483     261,499  
Income before income taxes   95,419     59,362     281,540     132,072  
Income tax expense   21,603     11,755     63,758     27,485  
Net income   73,816     47,607     217,782     104,587  
Preferred stock dividends   1,719     1,814     5,157     1,814  
Undistributed earnings allocated to participating securities   448     356     1,342     779  
Net income available to common shareholders   $ 71,649     $ 45,437     $ 211,283     $ 101,994  
                 
Net income per common share:                
Basic   $ 0.82     $ 0.52     $ 2.42     $ 1.25  
Diluted   0.82     0.52     2.42     1.25  
Weighted average common shares outstanding:                
Basic   87,211     87,129     87,274     81,815  
Diluted   87,355     87,205     87,413     81,876  



Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
    2021   2020
(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)   $ 11,204,653     $ 128,185     4.54 %   $ 11,644,202     $ 126,342     4.32 %
Taxable securities (3)   4,738,860     16,260     1.37     2,499,649     12,663     2.03  
Tax-exempt securities (FTE) (1)(3)   383,196     3,061     3.20     249,959     2,544     4.07  
Federal funds sold and other interest-earning assets   1,751,222     1,185     0.27     1,321,445     1,132     0.34  
Total interest-earning assets (FTE)   18,077,931     148,691     3.27     15,715,255     142,681     3.61  
                         
Noninterest-earning assets:                        
Allowance for credit losses   (111,952 )           (128,581 )        
Cash and due from banks   124,360             135,949          
Premises and equipment   228,556             216,326          
Other assets (3)   1,002,810             1,074,529          
Total assets   $ 19,321,705             $ 17,013,478          
                         
Liabilities and Shareholders' Equity:                        
Interest-bearing liabilities:                        
Interest-bearing deposits:                        
NOW and interest-bearing demand   $ 3,594,670     1,290     0.14     $ 2,890,735     1,634     0.22  
Money market   4,010,720     1,119     0.11     3,501,781     3,017     0.34  
Savings   1,120,843     55     0.02     864,849     47     0.02  
Time   1,466,821     609     0.16     1,933,764     4,127     0.85  
Brokered time deposits   63,917     69     0.43     96,198     173     0.72  
Total interest-bearing deposits   10,256,971     3,142     0.12     9,287,327     8,998     0.39  
Federal funds purchased and other borrowings               4,405     2     0.18  
Federal Home Loan Bank advances   54             2,818     27     3.81  
Long-term debt   257,139     3,494     5.39     327,017     4,292     5.22  
Total borrowed funds   257,193     3,494     5.39     334,240     4,321     5.14  
Total interest-bearing liabilities   10,514,164     6,636     0.25     9,621,567     13,319     0.55  
                         
Noninterest-bearing liabilities:                        
Noninterest-bearing deposits   6,379,969             5,172,999          
Other liabilities   308,551             270,451          
Total liabilities   17,202,684             15,065,017          
Shareholders' equity   2,119,021             1,948,461          
Total liabilities and shareholders' equity   $ 19,321,705             $ 17,013,478          
                         
Net interest revenue (FTE)       $ 142,055             $ 129,362      
Net interest-rate spread (FTE)           3.02 %           3.06 %
Net interest margin (FTE) (4)           3.12 %           3.27 %

(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 $39.6 million and $77.0 million in 2021 and 2020, 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.



Average Consolidated Balance Sheets and Net Interest Analysis        
For the Nine Months Ended September 30,        
    2021   2020
(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)   $ 11,417,285     $ 380,765     4.46 %   $ 10,087,630     $ 351,536     4.65 %
Taxable securities (3)   4,206,099     44,845     1.42     2,362,674     42,579     2.40  
Tax-exempt securities (FTE) (1)(3)   381,323     8,979     3.14     197,231     6,699     4.53  
Federal funds sold and other interest-earning assets   1,468,487     3,462     0.31     850,722     3,621     0.57  
Total interest-earning assets (FTE)   17,473,194     438,051     3.35     13,498,257     404,435     4.00  
                         
Non-interest-earning assets:                        
Allowance for loan losses   (127,793 )           (96,235 )        
Cash and due from banks   138,973             134,354          
Premises and equipment   225,021             217,551          
Other assets (3)   1,007,669             964,511          
Total assets   $ 18,717,064             $ 14,718,438          
                         
Liabilities and Shareholders' Equity:                        
Interest-bearing liabilities:                        
Interest-bearing deposits:                        
NOW and interest-bearing demand   $ 3,452,206     4,158     0.16     $ 2,583,911     6,240     0.32  
Money market   3,853,907     4,278     0.15     2,797,350     10,969     0.52  
Savings   1,064,045     157     0.02     788,681     121     0.02  
Time   1,551,934     3,096     0.27     1,860,597     17,435     1.25  
Brokered time deposits   67,794     292     0.58     102,502     579     0.75  
Total interest-bearing deposits   9,989,886     11,981     0.16     8,133,041     35,344     0.58  
Federal funds purchased and other borrowings   41             1,611     3     0.25  
Federal Home Loan Bank advances   1,117     2     0.24     1,001     28     3.74  
Long-term debt   286,347     11,564     5.40     256,218     10,186     5.31  
Total borrowed funds   287,505     11,566     5.38     258,830     10,217     5.27  
Total interest-bearing liabilities   10,277,391     23,547     0.31     8,391,871     45,561     0.73  
                         
Noninterest-bearing liabilities:                        
Noninterest-bearing deposits   6,059,680             4,356,484          
Other liabilities   311,749             206,904          
Total liabilities   16,648,820             12,955,259          
Shareholders' equity   2,068,244             1,763,179          
Total liabilities and shareholders' equity   $ 18,717,064             $ 14,718,438          
                         
Net interest revenue (FTE)       $ 414,504             $ 358,874      
Net interest-rate spread (FTE)           3.04 %           3.27 %
Net interest margin (FTE) (4)           3.17 %           3.55 %
                         

(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 $40.3 million and $65.5 million in 2021 and 2020, 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. (NASDAQGS: UCBI) provides a full range of banking, wealth management and mortgage services for relationship-oriented consumers and business owners. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. At September 30, 2021, United had $19.5 billion in assets and 171 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee along with a national SBA lending franchise and a national equipment lending subsidiary. Through its October 1, 2021 acquisition of Aquesta and its wholly-owned banking subsidiary, Aquesta Bank, United added $754 million in assets and nine banking offices in high growth markets in North Carolina. In 2021, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking seven out of the last eight years United earned the coveted award. United was also named one of the "Best Banks to Work For" by American Banker in 2020 for the fourth year in a row based on employee satisfaction. 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 2021 list of the 100 Best Banks in America for the eighth consecutive year. United also received five Greenwich Excellence Awards in 2020 for excellence in Small Business Banking, including a national award for Overall Satisfaction. 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 the expected completion date of the Reliant acquisition and the accretive value of each of the Aquesta and Reliant acquisitions to United’s earnings. 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 Aquesta and Reliant acquisitions 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 Aquesta and Reliant acquisitions, (3) the occurrence of any event, change or other circumstances that could give rise to a delay in closing the Reliant acquisition or the termination of the merger agreement, (4) the failure to obtain the necessary approval by the shareholders of Reliant, (5) the possibility that the costs, fees, expenses and charges related to the acquisitions of Aquesta and Reliant may be greater than anticipated, (6) the ability of United to obtain required governmental approvals of the Reliant acquisition, (7) reputational risk and the reaction of the companies’ customers, suppliers, employees or other business partners to the acquisitions of Aquesta and Reliant, (8) the failure of the closing conditions in the Reliant merger agreement to be satisfied, or any unexpected delay in closing the acquisition, (9) the risks relating to the integration of Aquesta’s and Reliant’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, (10) the risk of potential litigation or regulatory action related to the acquisitions of Aquesta and Reliant, (11) the risks associated with United’s pursuit of future acquisitions, (12) the risk of expansion into new geographic or product markets, (13) the dilution caused by United’s issuance of additional shares of its common stock in the acquisitions of Aquesta and Reliant, and (14) 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, 2020, and other documents subsequently filed by United with the United States Securities and Exchange Commission (“SEC”).

Many of these factors are beyond United’s (and in the case of the prospective acquisition of Reliant, Reliant’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 or Reliant to predict their occurrence or how they will affect United or Reliant.

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

IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORS

In connection with the prospective acquisition of Reliant, United has filed with the SEC a registration statement on Form S-4 that includes a proxy statement of Reliant to be sent to Reliant’s shareholders seeking their approval of the merger agreement and merger with United. The registration statement also will contain the prospectus of United to register the shares of United common stock to be issued in connection with the Reliant acquisition. INVESTORS AND SHAREHOLDERS OF RELIANT ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE PROXY STATEMENT/PROSPECTUS THAT WILL BE A PART OF THE REGISTRATION STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY UNITED OR RELIANT WITH THE SEC, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE REGISTRATION STATEMENT AND THOSE OTHER DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT UNITED, RELIANT AND THE MERGER OF RELIANT AND UNITED.

The registration statement and other documents filed with the SEC may be obtained for free at the SEC’s website (www.sec.gov). You will also be able to obtain these documents, free of charge, from United at the “Investor Relations” section of United’s website at www.ucbi.com or from Reliant at the “Investor Relations” section of Reliant’s website at www.reliantbank.com. Copies of the definitive proxy statement/prospectus will also be made available, free of charge, by contacting United Community Banks, Inc., P.O. Box 398, Blairsville, GA 30514, Attn: Jefferson Harralson, Telephone: (864) 240-6208, or Reliant Bancorp, Inc., 6100 Tower Circle, Suite 120, Franklin, TN 37067, Attn: Jerry Cooksey, Telephone: (615) 221-2020.

This communication is for informational purposes only and does not constitute an offer to sell, the solicitation of an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. This communication is also not a solicitation of any vote or approval with respect to the proposed merger of Reliant with United or otherwise.

PARTICIPANTS IN THE TRANSACTION

United and Reliant, and certain of their respective directors and executive officers, under the rules of the SEC may be deemed to be participants in the solicitation of proxies from Reliant’s shareholders in favor of the approval of the merger agreement and the merger of Reliant and United. Information about the directors and officers of United and their ownership of United common stock can be found in United’s definitive proxy statement in connection with its 2021 annual meeting of shareholders, as filed with the SEC on March 30, 2021, and other documents subsequently filed by United with the SEC. Information about the directors and executive officers of Reliant and their ownership of Reliant’s common stock can be found in Reliant’s definitive proxy statement for its 2021 annual meeting of shareholders, filed with the SEC on April 8, 2021, and other documents subsequently filed by Reliant with the SEC. Additional information regarding the interests of these participants also will be included in the proxy statement/prospectus pertaining to the transaction that is described above. Free copies of this document may be obtained as described above.

For more information:

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

 


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