UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 2009
United Community Banks, Inc.
(Exact name of registrant as specified in its charter)
| Georgia | No. 0-21656 | No. 58-180-7304 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 63 Highway 515, P.O. Box 398 Blairsville, Georgia |
30512 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (706) 781-2265
| Not applicable |
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 2.02 | Results of Operation and Financial Condition | |
| On July 24, 2009, United Community Banks, Inc. (the “Registrant”)
issued a news release announcing its financial results for the
quarter ended June 30, 2009 (the “News Release”). The News Release,
including financial schedules, is attached as Exhibit 99.1 to this
report. In connection with issuing the News Release, on July 24,
2009 at 11:00 a.m. EST, the Registrant intends to hold a conference
call/webcast to discuss the News Release. In addition to the News
Release, during the conference call the Registrant intends to
discuss certain financial information contained in the Second
Quarter 2009 Investor Presentation (the “Investor
Presentation”) which will be posted to the
Registrant’s website. The Investor Presentation is attached as
Exhibit 99.2 to this report. The presentation of the Registrant’s financial results included operating performance measures and core earnings measures, which are measures of performance determined by methods other than in accordance with generally accepted accounting principles, or GAAP. Management included non-GAAP operating performance and core earnings measures because it believes it is useful for evaluating the Registrant’s operations and performance over periods of time, and uses operating performance and core earnings measures in managing and evaluating the Registrant’s business and intends to use it in discussions about the Registrant’s operations and performance. Operating performance measures for the second quarter of 2009 exclude the effects of a $11.4 million non-recurring gain from the acquisition of Southern Community Bank that resulted from a bargain purchase. Operating performance measures for the first six months of 2009 also exclude the effects of a $70 million non-cash goodwill impairment charge and $2.9 million in non-recurring severance charges related to a reduction in workforce because management feels that the two expense items are non-recurring in nature and do not reflect overall trends in the Registrant’s earnings. Additionally, core earnings measures exclude credit related costs such as the provision for loan losses and foreclosed property expense, securities gains and losses, income taxes and other items of a non-recurring nature. Core earnings are useful in evaluating the underlying earnings performance trends of the Registrant. Management believes these non-GAAP performance measures may provide users of the Registrant’s financial information with a meaningful measure for assessing the Registrant’s financial results and comparing those financial results to prior periods. Operating performance and core earnings measures should be viewed in addition to, and not as an alternative or substitute for, the Registrant’s performance measures determined in accordance with GAAP, and is not necessarily comparable to non-GAAP performance measures that may be presented by other companies. |
||
Item 9.01 |
Financial Statements and Exhibits |
|
| (a) Financial statements: None (b) Pro forma financial information: None (c) Exhibits: |
||
| 99.1 Press Release, dated July 24, 2009 99.2 Investor Presentation, Second Quarter 2009 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| /s/ Rex S. Schuette | ||
July 24, 2009 |
Rex S. Schuette Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
| Exhibit No. | Description | |
99.1
|
Press Release, dated July 24, 2009 | |
99.2
|
Investor Presentation, Second Quarter 2009 |
Exhibit 99.1
For Immediate Release
For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com
UNITED COMMUNITY BANKS, INC. REPORTS
NET OPERATING LOSS FOR SECOND QUARTER 2009
NET OPERATING LOSS FOR SECOND QUARTER 2009
| • | Provision for loan losses of $60 million exceeded charge-offs by $1.7 million |
| • | Allowance-to-loans ratio of 2.64 percent, up from 2.56 percent last quarter |
| • | Further margin improvement of 20 basis points this quarter to 3.28 percent |
| • | Acquisition of Southern Community Bank added $230 million of covered assets and
$200 million of customer deposits with a gain on acquisition of $11.4 million |
| • | Capital levels remain strong |
BLAIRSVILLE,
GA — July 24, 2009 — United Community Banks, Inc. (NASDAQ: UCBI) today reported a
net operating loss of $23.1 million, or 53 cents per diluted share, for the second quarter of 2009.
The net operating loss reflects elevated credit costs, including $60 million provision for loan
losses. Net operating loss does not reflect an acquisition gain of $11.4 million related to the
purchase of Southern Community Bank from the FDIC, which is considered a non-recurring item and
excluded from operating earnings. Including this non-recurring gain the net loss for the quarter
was $16.0 million, or 38 cents per diluted share.
United’s net operating loss for the first six months of 2009 was $55.0 million, or $1.24 per
diluted share. The net operating loss for the first six months does not reflect a $70 million
non-cash charge for impairment of goodwill and $2.9 million in severance costs relating to a
reduction in work force that were incurred during the first quarter and the $11.4 million gain on
acquisition in the second quarter, all of which are considered non-recurring items and are
therefore excluded from operating earnings. Including these non-recurring items the net loss for
the first six months was of 2009 $119.8 million, or $2.57 per diluted share.
“We continued our strategy of aggressively disposing of problem credits,” stated Jimmy Tallent,
president and chief executive officer. “At the same time, we are sharply focused on building core
earnings through stronger customer relationships and core deposits.”
“As part of that strategy, we acquired Southern Community Bank in an FDIC assisted transaction
which will allow us to deepen our market share in the south side of metro Atlanta,” added Tallent.
“Southern Community Bank brings $208 million in customer deposits, along with 60 experienced
employees in five offices. The acquisition of Southern Community Bank and its locations provided a
good fit into the existing United market. Four of the new offices fill a gap in the south side of
the Atlanta market. The other office will be closed and then we will merge one of our existing
offices into their superior location in the same market. Further, through our discounted bid and
the loss share agreement, we have substantially eliminated all credit related exposure associated
with the transaction. So, we have classified Southern’s loans, foreclosed properties and FDIC
receivable into one category and line on the balance sheet — ‘covered assets.’ These covered
assets are excluded from all credit quality disclosures and ratios. In addition, the transaction
provided United with capital through the after-tax gain of $7.1 million.”
Total loans were $5.5 billion at quarter-end, down $120 million from last quarter and $420 million
from a year ago, reflecting the company’s continued efforts to reduce exposure to the residential
construction market. At June 30, 2009, residential construction loans were $1.3 billion, or 24
percent of total loans, a decrease of $430 million from a year ago and $115 million from the first
quarter of 2009.
Taxable equivalent net interest revenue of $60.9 million reflected an increase of $3.5 million from
last quarter and a decrease of $871 thousand from a year ago. The taxable equivalent net interest
margin was 3.28 percent compared with 3.08 percent for the first quarter of 2009 and 3.32 percent
for the second quarter of 2008.
2
“The improvement in our net interest margin this quarter reflects a continuation of the program we
began in the latter part of 2008 to improve loan and deposit pricing,” stated Tallent. “We
maintained our loan pricing and credit spreads, decreased deposit interest rates and, with
sustained liquidity, we were able to let higher-cost time deposits and brokered deposits run off.
We will continue to actively pursue these strategies to improve our margin in 2009, while balancing
liquidity needs with our goal of maximizing pre-tax, pre-provision core earnings.”
“Excluding public funds and the acquisition, core deposits increased $129 million this quarter, or
12 percent on an annualized basis, reflective of the United Express program for customer referrals
and cross selling,” stated Tallent. “We added 13,884 new services this quarter and opened 6,575
net new deposit accounts year-to-date.”
The second quarter provision for loan losses was $60 million, compared with $65 million for the
first quarter of 2009. Net charge-offs for the second quarter were $58.3 million compared with
$43.3 million for the first quarter of 2009. At quarter-end, non-performing assets totaled $392.6
million compared with $334.5 million at March 31, 2009. The ratio of non-performing assets to
total assets at the end of the second and first quarters was 4.67 percent and 4.11 percent,
respectively. The allowance for loan losses to total loans was 2.64 percent and 2.56 percent,
respectively.
“Credit quality continues to be a primary area of focus for us, particularly within the Atlanta
residential construction portfolio,” Tallent said. “While we have seen some problem credits in
other loan categories and markets, our principal challenge remains in the residential construction
portfolio. We have seen a rise in all categories of non-performing assets, but the inflow is still
driven by the continued weakness in the housing and construction markets. We will continue to
aggressively work through our problem credits and pursue the best economic outcome for our company
in each instance.”
3
Operating fee revenue of $13.1 million was up $204 thousand from last quarter and down $2.1 million
from a year ago, excluding the $11.4 million gain from the acquisition of Southern Community Bank.
Service charges and fees on deposit accounts of $7.6 million reflected a $400 thousand decrease
from a year ago due to lower activity and fewer transaction charges. Consulting fees were down
$507 thousand from last year due to weakness in the market. However, consulting fees increased
$724 thousand from the first quarter, reflecting a shift back
to non-United projects. Mortgage loan fees of $2.8 million were up $623 thousand from a year ago
due to a high level of refinancing activity.
Operating expenses for the second quarter of 2009 were $55.3 million reflecting a $5.6 million
increase from last year. The increase was primarily due to higher foreclosed property costs of $2.9
million and an increase in FDIC insurance premiums of $5.5 million, including a $3.7 million
special assessment. Salaries and employee benefit costs of $28.1 million decreased $695 thousand
from a year ago. The decrease from last year and linked quarter was primarily due to the reduction
in work force, down 165 staff year-to-date and offset partially by higher mortgage commissions and
incentive program costs and the 60 staff added by the acquisition. Other expenses of $1.2 million
decreased $2.2 million from last year due to the $2.0 million expense recovery related to the
decision to reverse the surrender of bank owned life insurance policies in the second quarter.
The effective tax rate for the second quarter of 2009 was 47.5 percent, compared to 35.5 percent
for the second quarter of 2008. The tax rate was higher this quarter reflective of a $2.9 million
tax adjustment recorded in the second quarter due to reversing the surrender of bank owned life
insurance policies. The projected effective tax rate for the balance of 2009 is 38 percent.
At June 30, 2009, the company’s regulatory capital ratios were as follows: Tier I Risk-Based
Capital of 10.6 percent; Leverage of 7.8 percent; and, Total Risk-Based of 13.3 percent. Also, the
average tangible equity to assets ratio was 8.0 percent, the average tangible common equity to
assets ratio was 5.8 percent and the tangible common equity to risk weighted assets was 7.5
percent.
4
“Today, based on our stress models of the loan portfolio and ranges of losses through 2010, we
believe our capital position is sound,” stated Tallent. “Assuming we incur these losses, our
models still indicate all regulatory capital ratios will remain above well capitalized levels. But
if the credit cycle lengthens, if the economy worsens beyond what our models have assumed, or if
there would be compelling reasons to offensively add additional capital, we clearly will do what
is best for the long-term success of the company. Our absolute goal is financial soundness
balanced with creating and retaining shareholder value.”
Conference Call
United Community Banks will hold a conference call today, Friday, July 24, 2009, at 11 a.m. ET to
discuss the contents of this news release and to share business highlights for the quarter. To
access the call, dial (866) 431-5320 and use the password ‘UCBI.’ The conference call also will be
webcast and can be accessed by selecting ‘Calendar of Events’ within the Investor Relations section
of the company’s website at www.ucbi.com. The Investor Presentation for Second Quarter 2009 can be
accessed on the website by selecting ‘Presentations’ within the Investor Relations section.
About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in
Georgia. United Community Banks has assets of $8.4 billion and operates 27 community banks with 110
banking offices located throughout north Georgia, the Atlanta region, coastal Georgia, western
North Carolina and east Tennessee. The company specializes in providing personalized community
banking services to individuals and small to mid-size businesses. United Community Banks also
offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking.
United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol
UCBI. Additional information may be found at the company’s web site at www.ucbi.com.
5
Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws,
including statements about financial outlook and business environment. These statements are
provided to assist in the understanding of future financial performance and such performance
involves risks and uncertainties that may cause actual results to differ materially from those in
such statements. Any such statements are based on current expectations and involve a number of
risks and uncertainties. For a discussion of some factors that may cause such forward-looking
statements to differ materially from actual results, please refer to the section entitled “Forward-
Looking Statements” on page 3 of United Community Banks, Inc.’s annual report filed on Form 10-K
with the Securities and Exchange Commission.
# # #
6
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
Financial Highlights
Selected Financial Information
| Second | ||||||||||||||||||||||||||||||||||||
| 2009 | 2008 | Quarter | For the Six | YTD | ||||||||||||||||||||||||||||||||
| (in thousands, except per share | Second | First | Fourth | Third | Second | 2009-2008 | Months Ended | 2009-2008 | ||||||||||||||||||||||||||||
| data; taxable equivalent) | Quarter | Quarter | Quarter | Quarter | Quarter | Change | 2009 | 2008 | Change | |||||||||||||||||||||||||||
INCOME SUMMARY |
||||||||||||||||||||||||||||||||||||
Interest revenue |
$ | 102,737 | $ | 103,562 | $ | 108,434 | $ | 112,510 | $ | 116,984 | $ | 206,299 | $ | 246,025 | ||||||||||||||||||||||
Interest expense |
41,855 | 46,150 | 56,561 | 53,719 | 55,231 | 88,005 | 117,985 | |||||||||||||||||||||||||||||
Net interest revenue |
60,882 | 57,412 | 51,873 | 58,791 | 61,753 | (1) | % | 118,294 | 128,040 | (8) | % | |||||||||||||||||||||||||
Provision for loan losses |
60,000 | 65,000 | 85,000 | 76,000 | 15,500 | 125,000 | 23,000 | |||||||||||||||||||||||||||||
Operating fee revenue (1) |
13,050 | 12,846 | 10,718 | 13,121 | 15,105 | (14 | ) | 25,896 | 29,302 | (12 | ) | |||||||||||||||||||||||||
Total operating revenue |
13,932 | 5,258 | (22,409 | ) | (4,088 | ) | 61,358 | NM | 19,190 | 134,342 | NM | |||||||||||||||||||||||||
Operating expenses (2) |
55,348 | 52,569 | 52,439 | 56,970 | 49,761 | 11 | 107,917 | 97,290 | 11 | |||||||||||||||||||||||||||
Operating (loss) income before taxes |
(41,416 | ) | (47,311 | ) | (74,848 | ) | (61,058 | ) | 11,597 | NM | (88,727 | ) | 37,052 | NM | ||||||||||||||||||||||
Income tax (benefit) expense |
(18,353 | ) | (15,335 | ) | (28,101 | ) | (21,184 | ) | 4,504 | (33,688 | ) | 13,881 | ||||||||||||||||||||||||
Net operating (loss) income (1)(2) |
(23,063 | ) | (31,976 | ) | (46,747 | ) | (39,874 | ) | 7,093 | NM | (55,039 | ) | 23,171 | NM | ||||||||||||||||||||||
Gain from acquisition, net of tax benefit |
7,062 | — | — | — | — | 7,062 | — | |||||||||||||||||||||||||||||
Noncash goodwill impairment charge |
— | (70,000 | ) | — | — | — | (70,000 | ) | — | |||||||||||||||||||||||||||
Severance costs, net of tax benefit |
— | (1,797 | ) | — | — | — | (1,797 | ) | — | |||||||||||||||||||||||||||
Net (loss) income |
(16,001 | ) | (103,773 | ) | (46,747 | ) | (39,874 | ) | 7,093 | NM | (119,774 | ) | 23,171 | NM | ||||||||||||||||||||||
Preferred dividends and discount accretion |
2,559 | 2,554 | 712 | 4 | 4 | 5,113 | 8 | |||||||||||||||||||||||||||||
Net (loss) income available to common
shareholders |
$ | (18,560 | ) | $ | (106,327 | ) | $ | (47,459 | ) | $ | (39,878 | ) | $ | 7,089 | NM | $ | (124,887 | ) | $ | 23,163 | NM | |||||||||||||||
PERFORMANCE MEASURES |
||||||||||||||||||||||||||||||||||||
Per common share: |
||||||||||||||||||||||||||||||||||||
Diluted operating (loss) earnings (1)(2) |
$ | (.53 | ) | $ | (.71 | ) | $ | (.99 | ) | $ | (.84 | ) | $ | .15 | NM | $ | (1.24 | ) | $ | .49 | NM | |||||||||||||||
Diluted (loss) earnings |
(.38 | ) | (2.20 | ) | (.99 | ) | (.84 | ) | .15 | NM | (2.57 | ) | .49 | NM | ||||||||||||||||||||||
Cash dividends declared |
— | — | — | — | .09 | — | .18 | |||||||||||||||||||||||||||||
Stock dividends declared (6) |
1 for 130 | 1 for 130 | 1 for 130 | 1 for 130 | — | 2 for 130 | — | |||||||||||||||||||||||||||||
Book value |
13.87 | 14.70 | 16.95 | 17.12 | 17.75 | (22 | ) | 13.87 | 17.75 | (22 | ) | |||||||||||||||||||||||||
Tangible book value (4) |
8.85 | 9.65 | 10.39 | 10.48 | 11.03 | (20 | ) | 8.85 | 11.03 | (20 | ) | |||||||||||||||||||||||||
Key performance ratios: |
||||||||||||||||||||||||||||||||||||
Return on equity (3)(5) |
(11.42) | % | (58.28) | % | (23.83) | % | (19.07) | % | 3.41 | % | (36.20) | % | 5.61 | % | ||||||||||||||||||||||
Return on assets (5) |
(.79 | ) | (5.06 | ) | (2.20 | ) | (1.95 | ) | .34 | (2.93 | ) | .56 | ||||||||||||||||||||||||
Net interest margin (5) |
3.28 | 3.08 | 2.70 | 3.17 | 3.32 | 3.18 | 3.43 | |||||||||||||||||||||||||||||
Operating efficiency ratio (1)(2)(4) |
74.15 | 75.15 | 81.34 | 79.35 | 65.05 | 74.63 | 61.97 | |||||||||||||||||||||||||||||
Equity to assets |
10.76 | 11.64 | 10.08 | 10.28 | 10.33 | 11.20 | 10.31 | |||||||||||||||||||||||||||||
Tangible equity to assets (4) |
8.00 | 8.30 | 6.59 | 6.65 | 6.77 | 8.15 | 6.75 | |||||||||||||||||||||||||||||
Tangible common equity to assets (4) |
5.81 | 6.13 | 6.23 | 6.65 | 6.77 | 5.97 | 6.75 | |||||||||||||||||||||||||||||
Tangible common equity to risk-weighted assets
(4) |
7.48 | 8.03 | 8.34 | 8.26 | 8.51 | 7.48 | 8.51 | |||||||||||||||||||||||||||||
ASSET QUALITY * |
||||||||||||||||||||||||||||||||||||
Non-performing loans (NPLs) |
$ | 287,848 | $ | 259,155 | $ | 190,723 | $ | 139,266 | $ | 123,786 | $ | 287,848 | $ | 123,786 | ||||||||||||||||||||||
Foreclosed properties |
104,754 | 75,383 | 59,768 | 38,438 | 28,378 | 104,754 | 28,378 | |||||||||||||||||||||||||||||
Total non-performing assets (NPAs) |
392,602 | 334,538 | 250,491 | 177,704 | 152,164 | 392,602 | 152,164 | |||||||||||||||||||||||||||||
Allowance for loan losses |
145,678 | 143,990 | 122,271 | 111,299 | 91,035 | 145,678 | 91,035 | |||||||||||||||||||||||||||||
Net charge-offs |
58,312 | 43,281 | 74,028 | 55,736 | 14,313 | 101,593 | 21,388 | |||||||||||||||||||||||||||||
Allowance for loan losses to loans |
2.64 | % | 2.56 | % | 2.14 | % | 1.91 | % | 1.53 | % | 2.64 | % | 1.53 | % | ||||||||||||||||||||||
Net charge-offs to average loans (5) |
4.18 | 3.09 | 5.09 | 3.77 | .97 | 3.64 | .72 | |||||||||||||||||||||||||||||
NPAs to loans and foreclosed properties |
6.99 | 5.86 | 4.35 | 3.03 | 2.55 | 6.99 | 2.55 | |||||||||||||||||||||||||||||
NPAs to total assets |
4.67 | 4.11 | 2.94 | 2.20 | 1.84 | 4.67 | 1.84 | |||||||||||||||||||||||||||||
AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||
Loans |
$ | 5,597,259 | $ | 5,675,054 | $ | 5,784,139 | $ | 5,889,168 | $ | 5,933,143 | (6 | ) | $ | 5,635,942 | $ | 5,945,720 | (5 | ) | ||||||||||||||||||
Investment securities |
1,771,482 | 1,712,654 | 1,508,808 | 1,454,740 | 1,507,240 | 18 | 1,742,231 | 1,496,377 | 16 | |||||||||||||||||||||||||||
Earning assets |
7,442,178 | 7,530,230 | 7,662,536 | 7,384,287 | 7,478,018 | — | 7,485,961 | 7,484,749 | — | |||||||||||||||||||||||||||
Total assets |
8,168,147 | 8,312,648 | 8,449,097 | 8,146,880 | 8,295,748 | (2 | ) | 8,239,997 | 8,300,686 | (1 | ) | |||||||||||||||||||||||||
Deposits |
6,544,537 | 6,780,531 | 6,982,229 | 6,597,339 | 6,461,361 | 1 | 6,661,881 | 6,256,217 | 6 | |||||||||||||||||||||||||||
Shareholders’ equity |
879,210 | 967,505 | 851,956 | 837,487 | 856,727 | 3 | 923,114 | 856,193 | 8 | |||||||||||||||||||||||||||
Common shares — basic |
48,794 | 48,324 | 47,844 | 47,417 | 47,158 | 48,560 | 47,105 | |||||||||||||||||||||||||||||
Common shares — diluted |
48,794 | 48,324 | 47,844 | 47,417 | 47,249 | 48,560 | 47,260 | |||||||||||||||||||||||||||||
AT PERIOD END |
||||||||||||||||||||||||||||||||||||
Loans |
$ | 5,513,087 | $ | 5,632,705 | $ | 5,704,861 | $ | 5,829,937 | $ | 5,933,141 | (7 | ) | $ | 5,513,087 | $ | 5,933,141 | (7 | ) | ||||||||||||||||||
Investment securities |
1,816,787 | 1,719,033 | 1,617,187 | 1,400,827 | 1,430,588 | 27 | 1,816,787 | 1,430,588 | 27 | |||||||||||||||||||||||||||
Total assets |
8,403,046 | 8,140,909 | 8,520,765 | 8,072,543 | 8,264,051 | 2 | 8,403,046 | 8,264,051 | 2 | |||||||||||||||||||||||||||
Deposits |
6,848,760 | 6,616,488 | 7,003,624 | 6,689,335 | 6,696,456 | 2 | 6,848,760 | 6,696,456 | 2 | |||||||||||||||||||||||||||
Shareholders’ equity |
855,272 | 888,853 | 989,382 | 816,880 | 837,890 | 2 | 855,272 | 837,890 | 2 | |||||||||||||||||||||||||||
Common shares outstanding |
48,933 | 48,487 | 48,009 | 47,596 | 47,096 | 48,933 | 47,096 | |||||||||||||||||||||||||||||
| (1) | Excludes the gain from acquisition of $11.4 million, net of income tax expense of $4.3 million in the second quarter of 2009. |
|
| (2) | Excludes the non-recurring goodwill impairment charge of $70 million and severance costs of $2.9 million, net of income tax benefit of $1.1 million in the first quarter of 2009. |
|
| (3) | Net income available to common shareholders, which excludes preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). |
|
| (4) | Excludes effect of acquisition related intangibles and associated amortization. |
|
| (5) | Annualized. |
|
| (6) | Number of new shares issued for shares currently held. |
|
| NM | — Not meaningful. |
|
| * | Excludes covered loans and covered NPAs |
7
UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
Selected Financial Information
Operating Earnings to GAAP Earnings Reconciliation
Selected Financial Information
| 2009 | 2008 | For the Six | ||||||||||||||||||||||||||
| (in thousands, except per share | Second | First | Fourth | Third | Second | Months Ended | ||||||||||||||||||||||
| data; taxable equivalent) | Quarter | Quarter | Quarter | Quarter | Quarter | 2009 | 2008 | |||||||||||||||||||||
Interest revenue reconciliation |
||||||||||||||||||||||||||||
Interest revenue — taxable equivalent |
$ | 102,737 | $ | 103,562 | $ | 108,434 | $ | 112,510 | $ | 116,984 | $ | 206,299 | $ | 246,025 | ||||||||||||||
Taxable equivalent adjustment |
(463 | ) | (488 | ) | (553 | ) | (571 | ) | (606 | ) | (951 | ) | (1,137 | ) | ||||||||||||||
Interest revenue (GAAP) |
$ | 102,274 | $ | 103,074 | $ | 107,881 | $ | 111,939 | $ | 116,378 | $ | 205,348 | $ | 244,888 | ||||||||||||||
Net interest revenue reconciliation |
||||||||||||||||||||||||||||
Net interest revenue — taxable equivalent |
$ | 60,882 | $ | 57,412 | $ | 51,873 | $ | 58,791 | $ | 61,753 | $ | 118,294 | $ | 128,040 | ||||||||||||||
Taxable equivalent adjustment |
(463 | ) | (488 | ) | (553 | ) | (571 | ) | (606 | ) | (951 | ) | (1,137 | ) | ||||||||||||||
Net interest revenue (GAAP) |
$ | 60,419 | $ | 56,924 | $ | 51,320 | $ | 58,220 | $ | 61,147 | $ | 117,343 | $ | 126,903 | ||||||||||||||
Fee revenue reconciliation |
||||||||||||||||||||||||||||
Operating fee revenue |
$ | 13,050 | $ | 12,846 | $ | 10,718 | $ | 13,121 | $ | 15,105 | $ | 25,896 | $ | 29,302 | ||||||||||||||
Gain from acquisition |
11,390 | — | — | — | — | 11,390 | — | |||||||||||||||||||||
Fee revenue (GAAP) |
$ | 24,440 | $ | 12,846 | $ | 10,718 | $ | 13,121 | $ | 15,105 | $ | 37,286 | $ | 29,302 | ||||||||||||||
Total revenue reconciliation |
||||||||||||||||||||||||||||
Total operating revenue |
$ | 13,932 | $ | 5,258 | $ | (22,409 | ) | $ | (4,088 | ) | $ | 61,358 | $ | 19,190 | $ | 134,342 | ||||||||||||
Taxable equivalent adjustment |
(463 | ) | (488 | ) | (553 | ) | (571 | ) | (606 | ) | (951 | ) | (1,137 | ) | ||||||||||||||
Gain from acquisition |
11,390 | — | — | — | — | 11,390 | — | |||||||||||||||||||||
Total revenue (GAAP) |
$ | 24,859 | $ | 4,770 | $ | (22,962 | ) | $ | (4,659 | ) | $ | 60,752 | $ | 29,629 | $ | 133,205 | ||||||||||||
Expense reconciliation |
||||||||||||||||||||||||||||
Operating expense |
$ | 55,348 | $ | 52,569 | $ | 52,439 | $ | 56,970 | $ | 49,761 | $ | 107,917 | $ | 97,290 | ||||||||||||||
Noncash goodwill impairment charge |
— | 70,000 | — | — | — | 70,000 | — | |||||||||||||||||||||
Severance costs |
— | 2,898 | — | — | — | 2,898 | — | |||||||||||||||||||||
Operating expense (GAAP) |
$ | 55,348 | $ | 125,467 | $ | 52,439 | $ | 56,970 | $ | 49,761 | $ | 180,815 | $ | 97,290 | ||||||||||||||
(Loss) income before taxes reconciliation |
||||||||||||||||||||||||||||
Operating (loss) income before taxes |
$ | (41,416 | ) | $ | (47,311 | ) | $ | (74,848 | ) | $ | (61,058 | ) | $ | 11,597 | $ | (88,727 | ) | $ | 37,052 | |||||||||
Taxable equivalent adjustment |
(463 | ) | (488 | ) | (553 | ) | (571 | ) | (606 | ) | (951 | ) | (1,137 | ) | ||||||||||||||
Gain from acquisition |
11,390 | — | — | — | — | 11,390 | — | |||||||||||||||||||||
Noncash goodwill impairment charge |
— | (70,000 | ) | — | — | — | (70,000 | ) | — | |||||||||||||||||||
Severance costs |
— | (2,898 | ) | — | — | — | (2,898 | ) | — | |||||||||||||||||||
(Loss) income before taxes (GAAP) |
$ | (30,489 | ) | $ | (120,697 | ) | $ | (75,401 | ) | $ | (61,629 | ) | $ | 10,991 | $ | (151,186 | ) | $ | 35,915 | |||||||||
Income tax (benefit) expense reconciliation |
||||||||||||||||||||||||||||
Operating income tax (benefit) expense |
$ | (18,353 | ) | $ | (15,335 | ) | $ | (28,101 | ) | $ | (21,184 | ) | $ | 4,504 | $ | (33,688 | ) | $ | 13,881 | |||||||||
Taxable equivalent adjustment |
(463 | ) | (488 | ) | (553 | ) | (571 | ) | (606 | ) | (951 | ) | (1,137 | ) | ||||||||||||||
Gain from acquisition, tax expense |
4,328 | — | — | — | — | 4,328 | — | |||||||||||||||||||||
Severance costs, tax benefit |
— | (1,101 | ) | — | — | — | (1,101 | ) | — | |||||||||||||||||||
Income tax (benefit) expense (GAAP) |
$ | (14,488 | ) | $ | (16,924 | ) | $ | (28,654 | ) | $ | (21,755 | ) | $ | 3,898 | $ | (31,412 | ) | $ | 12,744 | |||||||||
(Loss) earnings per common share reconciliation |
||||||||||||||||||||||||||||
Operating (loss) earnings per common share |
$ | (0.53 | ) | $ | (0.71 | ) | $ | (0.99 | ) | $ | (0.84 | ) | $ | 0.15 | $ | (1.24 | ) | $ | 0.49 | |||||||||
Gain from acquisition |
0.15 | — | — | — | — | 0.15 | — | |||||||||||||||||||||
Noncash goodwill impairment charge |
— | (1.45 | ) | — | — | — | (1.44 | ) | — | |||||||||||||||||||
Severance costs |
— | (0.04 | ) | — | — | — | (0.04 | ) | — | |||||||||||||||||||
(Loss) earnings per common share (GAAP) |
$ | (0.38 | ) | $ | (2.20 | ) | $ | (0.99 | ) | $ | (0.84 | ) | $ | 0.15 | $ | (2.57 | ) | $ | 0.49 | |||||||||
Book value reconciliation |
||||||||||||||||||||||||||||
Tangible book value |
$ | 8.85 | $ | 9.65 | $ | 10.39 | $ | 10.48 | $ | 11.03 | $ | 8.85 | $ | 11.03 | ||||||||||||||
Effect of goodwill and other intangibles |
5.02 | 5.05 | 6.56 | 6.64 | 6.72 | 5.02 | 6.72 | |||||||||||||||||||||
Book value (GAAP) |
$ | 13.87 | $ | 14.70 | $ | 16.95 | $ | 17.12 | $ | 17.75 | $ | 13.87 | $ | 17.75 | ||||||||||||||
Efficiency ratio reconciliation |
||||||||||||||||||||||||||||
Operating efficiency ratio |
74.15 | % | 75.15 | % | 81.34 | % | 79.35 | % | 65.05 | % | 74.63 | % | 61.97 | % | ||||||||||||||
Gain from acquisition |
(9.82 | ) | — | — | — | — | (9.12 | ) | — | |||||||||||||||||||
Noncash goodwill impairment charge |
— | 100.06 | — | — | — | 48.41 | — | |||||||||||||||||||||
Severance costs |
— | 4.14 | — | — | — | 2.00 | — | |||||||||||||||||||||
Efficiency ratio (GAAP) |
64.33 | % | 179.35 | % | 81.34 | % | 79.35 | % | 65.05 | % | 115.92 | % | 61.97 | % | ||||||||||||||
Average equity to assets reconciliation |
||||||||||||||||||||||||||||
Tangible common equity to assets |
5.81 | % | 6.13 | % | 6.23 | % | 6.65 | % | 6.77 | % | 5.97 | % | 6.75 | % | ||||||||||||||
Effect of preferred equity |
2.19 | 2.17 | .36 | — | — | 2.18 | — | |||||||||||||||||||||
Tangible equity to assets |
8.00 | 8.30 | 6.59 | 6.65 | 6.77 | 8.15 | 6.75 | |||||||||||||||||||||
Effect of goodwill and other intangibles |
2.76 | 3.34 | 3.49 | 3.63 | 3.56 | 3.05 | 3.56 | |||||||||||||||||||||
Equity to assets (GAAP) |
10.76 | % | 11.64 | % | 10.08 | % | 10.28 | % | 10.33 | % | 11.20 | % | 10.31 | % | ||||||||||||||
Actual tangible common equity to risk-weighted
assets reconciliation |
||||||||||||||||||||||||||||
Tangible common equity to risk-weighted assets |
7.48 | % | 8.03 | % | 8.34 | % | 8.26 | % | 8.51 | % | 7.48 | % | 8.51 | % | ||||||||||||||
Effect of other comprehensive income |
(.72 | ) | (1.00 | ) | (.91 | ) | (.28 | ) | (.01 | ) | (.72 | ) | (.01 | ) | ||||||||||||||
Effect of trust preferred |
.89 | .89 | .88 | .68 | .67 | .89 | .67 | |||||||||||||||||||||
Effect of preferred equity |
3.00 | 2.96 | 2.90 | — | — | 3.00 | — | |||||||||||||||||||||
Tier I capital ratio (Regulatory) |
10.65 | % | 10.88 | % | 11.21 | % | 8.66 | % | 9.17 | % | 10.65 | % | 9.17 | % | ||||||||||||||
8
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
Financial Highlights
Loan Portfolio Composition at Period-End
| Linked | Year over | |||||||||||||||||||||||||||
| 2009 | 2008 | Quarter | Year | |||||||||||||||||||||||||
| Second | First | Fourth | Third | Second | Change(2) | Change | ||||||||||||||||||||||
| (in millions) | Quarter(1) | Quarter | Quarter | Quarter | Quarter | Actual | Actual | |||||||||||||||||||||
LOANS BY CATEGORY |
||||||||||||||||||||||||||||
Commercial (sec. by RE) |
$ | 1,797 | $ | 1,779 | $ | 1,627 | $ | 1,604 | $ | 1,584 | 4 | % | 13 | % | ||||||||||||||
Commercial construction |
379 | 377 | 500 | 509 | 522 | 2 | (27 | ) | ||||||||||||||||||||
Commercial & industrial |
399 | 387 | 410 | 425 | 417 | 12 | (4 | ) | ||||||||||||||||||||
Total commercial |
2,575 | 2,543 | 2,537 | 2,538 | 2,523 | 5 | 2 | |||||||||||||||||||||
Residential construction |
1,315 | 1,430 | 1,479 | 1,596 | 1,745 | (32 | ) | (25 | ) | |||||||||||||||||||
Residential mortgage |
1,470 | 1,504 | 1,526 | 1,528 | 1,494 | (9 | ) | (2 | ) | |||||||||||||||||||
Consumer / installment |
153 | 156 | 163 | 168 | 171 | (8 | ) | (11 | ) | |||||||||||||||||||
Total loans |
$ | 5,513 | $ | 5,633 | $ | 5,705 | $ | 5,830 | $ | 5,933 | (9 | ) | (7 | ) | ||||||||||||||
LOANS BY MARKET |
||||||||||||||||||||||||||||
Atlanta MSA |
$ | 1,605 | $ | 1,660 | $ | 1,706 | $ | 1,800 | $ | 1,934 | (13) | % | (17) | % | ||||||||||||||
Gainesville MSA |
413 | 422 | 420 | 426 | 422 | (9 | ) | (2 | ) | |||||||||||||||||||
North Georgia |
1,978 | 2,014 | 2,040 | 2,066 | 2,065 | (7 | ) | (4 | ) | |||||||||||||||||||
Western North Carolina |
794 | 808 | 810 | 815 | 819 | (7 | ) | (3 | ) | |||||||||||||||||||
Coastal Georgia |
455 | 460 | 464 | 458 | 436 | (4 | ) | 4 | ||||||||||||||||||||
East Tennessee |
268 | 269 | 265 | 265 | 257 | (1 | ) | 4 | ||||||||||||||||||||
Total loans |
$ | 5,513 | $ | 5,633 | $ | 5,705 | $ | 5,830 | $ | 5,933 | (9 | ) | (7 | ) | ||||||||||||||
RESIDENTIAL CONSTRUCTION |
||||||||||||||||||||||||||||
Dirt loans |
||||||||||||||||||||||||||||
Acquisition & development |
$ | 413 | $ | 445 | $ | 484 | $ | 516 | $ | 569 | (29) | % | (27) | % | ||||||||||||||
Land loans |
159 | 155 | 153 | 142 | 139 | 10 | 14 | |||||||||||||||||||||
Lot loans |
369 | 390 | 358 | 385 | 401 | (22 | ) | (8 | ) | |||||||||||||||||||
Total |
941 | 990 | 995 | 1,043 | 1,109 | (20 | ) | (15 | ) | |||||||||||||||||||
House loans |
||||||||||||||||||||||||||||
Spec |
268 | 317 | 347 | 393 | 450 | (62) | % | (40) | % | |||||||||||||||||||
Sold |
106 | 123 | 137 | 160 | 186 | (55 | ) | (43 | ) | |||||||||||||||||||
Total |
374 | 440 | 484 | 553 | 636 | (60 | ) | (41 | ) | |||||||||||||||||||
Total residential construction |
$ | 1,315 | $ | 1,430 | $ | 1,479 | $ | 1,596 | $ | 1,745 | (32 | ) | (25 | ) | ||||||||||||||
RESIDENTIAL CONSTRUCTION — ATLANTA MSA |
||||||||||||||||||||||||||||
Dirt loans |
||||||||||||||||||||||||||||
Acquisition & development |
$ | 124 | $ | 148 | $ | 167 | $ | 185 | $ | 232 | (65) | % | (47) | % | ||||||||||||||
Land loans |
63 | 52 | 56 | 47 | 50 | 85 | 26 | |||||||||||||||||||||
Lot loans |
81 | 98 | 86 | 103 | 117 | (69 | ) | (31 | ) | |||||||||||||||||||
Total |
268 | 298 | 309 | 335 | 399 | (40 | ) | (33 | ) | |||||||||||||||||||
House loans |
||||||||||||||||||||||||||||
Spec |
127 | 164 | 189 | 227 | 271 | (90) | % | (53) | % | |||||||||||||||||||
Sold |
29 | 33 | 40 | 49 | 58 | (48 | ) | (50 | ) | |||||||||||||||||||
Total |
156 | 197 | 229 | 276 | 329 | (83 | ) | (53 | ) | |||||||||||||||||||
Total residential construction |
$ | 424 | $ | 495 | $ | 538 | $ | 611 | $ | 728 | (57 | ) | (42 | ) | ||||||||||||||
| (1) | Excludes total loans of $109.9 million as of June 30 that are covered by
the loss-sharing agreement with the FDIC, related to the acquisition of
Southern Community Bank. |
|
| (2) | Annualized. |
9
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
Financial Highlights
Credit Quality (1)
| Second Quarter 2009 | First Quarter 2009 | Fourth Quarter 2008 | ||||||||||||||||||||||||||||||||||
| Non-performing | Foreclosed | Total | Non-performing | Foreclosed | Total | Non-performing | Foreclosed | Total | ||||||||||||||||||||||||||||
| (in thousands) | Loans | Properties | NPAs | Loans | Properties | NPAs | Loans | Properties | NPAs | |||||||||||||||||||||||||||
NPAs BY CATEGORY |
||||||||||||||||||||||||||||||||||||
Commercial (sec. by RE) |
$ | 37,755 | $ | 5,395 | $ | 43,150 | $ | 18,188 | $ | 3,811 | $ | 21,999 | $ | 15,188 | $ | 2,427 | $ | 17,615 | ||||||||||||||||||
Commercial construction |
15,717 | 5,847 | 21,564 | 6,449 | 2,948 | 9,397 | 1,513 | 2,333 | 3,846 | |||||||||||||||||||||||||||
Commercial & industrial |
11,378 | — | 11,378 | 12,066 | — | 12,066 | 1,920 | — | 1,920 | |||||||||||||||||||||||||||
Total commercial |
64,850 | 11,242 | 76,092 | 36,703 | 6,759 | 43,462 | 18,621 | 4,760 | 23,381 | |||||||||||||||||||||||||||
Residential construction |
176,400 | 81,648 | 258,048 | 187,656 | 58,327 | 245,983 | 144,836 | 48,572 | 193,408 | |||||||||||||||||||||||||||
Residential mortgage |
44,256 | 11,864 | 56,120 | 33,148 | 10,297 | 43,445 | 25,574 | 6,436 | 32,010 | |||||||||||||||||||||||||||
Consumer / installment |
2,342 | — | 2,342 | 1,648 | — | 1,648 | 1,692 | — | 1,692 | |||||||||||||||||||||||||||
Total NPAs |
$ | 287,848 | $ | 104,754 | $ | 392,602 | $ | 259,155 | $ | 75,383 | $ | 334,538 | $ | 190,723 | $ | 59,768 | $ | 250,491 | ||||||||||||||||||
NPAs BY MARKET |
||||||||||||||||||||||||||||||||||||
Atlanta MSA |
$ | 148,155 | $ | 50,450 | $ | 198,605 | $ | 131,020 | $ | 48,574 | $ | 179,594 | $ | 105,476 | $ | 42,336 | $ | 147,812 | ||||||||||||||||||
Gainesville MSA |
9,745 | 3,511 | 13,256 | 17,448 | 694 | 18,142 | 16,208 | 1,110 | 17,318 | |||||||||||||||||||||||||||
North Georgia |
72,174 | 37,454 | 109,628 | 66,875 | 20,811 | 87,686 | 31,631 | 12,785 | 44,416 | |||||||||||||||||||||||||||
Western North Carolina |
21,814 | 7,245 | 29,059 | 21,240 | 3,067 | 24,307 | 18,509 | 2,986 | 21,495 | |||||||||||||||||||||||||||
Coastal Georgia |
30,311 | 3,904 | 34,215 | 15,699 | 1,286 | 16,985 | 11,863 | 138 | 12,001 | |||||||||||||||||||||||||||
East Tennessee |
5,649 | 2,190 | 7,839 | 6,873 | 951 | 7,824 | 7,036 | 413 | 7,449 | |||||||||||||||||||||||||||
Total NPAs |
$ | 287,848 | $ | 104,754 | $ | 392,602 | $ | 259,155 | $ | 75,383 | $ | 334,538 | $ | 190,723 | $ | 59,768 | $ | 250,491 | ||||||||||||||||||
| Second Quarter 2009 | First Quarter 2009 | Fourth Quarter 2008 | ||||||||||||||||||||||
| Net Charge- | Net Charge- | Net Charge- | ||||||||||||||||||||||
| Offs to | Offs to | Offs to | ||||||||||||||||||||||
| Net | Average | Net | Average | Net | Average | |||||||||||||||||||
| (in thousands) | Charge-Offs | Loans (2) | Charge-Offs | Loans (2) | Charge-Offs | Loans (2) | ||||||||||||||||||
NET CHARGE-OFFS BY CATEGORY |
||||||||||||||||||||||||
Commercial (sec. by RE) |
$ | 5,986 | 1.34 | % | $ | 826 | .20 | % | $ | 4,460 | 1.10 | % | ||||||||||||
Commercial construction |
756 | .80 | 54 | .05 | 1,442 | 1.14 | ||||||||||||||||||
Commercial & industrial |
3,107 | 3.16 | 873 | .89 | 3,416 | 3.24 | ||||||||||||||||||
Total commercial |
9,849 | 1.54 | 1,753 | .28 | 9,318 | 1.46 | ||||||||||||||||||
Residential construction |
44,240 | 12.90 | 37,762 | 10.52 | 57,882 | 14.93 | ||||||||||||||||||
Residential mortgage |
3,526 | .95 | 2,984 | .80 | 5,852 | 1.52 | ||||||||||||||||||
Consumer / installment |
697 | 1.80 | 782 | 1.99 | 976 | 2.34 | ||||||||||||||||||
Total |
$ | 58,312 | 4.18 | $ | 43,281 | 3.09 | $ | 74,028 | 5.09 | |||||||||||||||
NET CHARGE-OFFS BY MARKET |
||||||||||||||||||||||||
Atlanta MSA |
$ | 37,473 | 8.89 | % | $ | 26,228 | 6.16 | % | $ | 49,309 | 10.80 | % | ||||||||||||
Gainesville MSA |
4,125 | 4.38 | 1,105 | 1.18 | 7,994 | 8.60 | ||||||||||||||||||
North Georgia |
12,571 | 2.52 | 8,208 | 1.64 | 9,872 | 1.91 | ||||||||||||||||||
Western North Carolina |
1,015 | .51 | 3,669 | 1.83 | 2,371 | 1.16 | ||||||||||||||||||
Coastal Georgia |
969 | .85 | 3,229 | 2.84 | 3,150 | 2.70 | ||||||||||||||||||
East Tennessee |
2,159 | 3.21 | 842 | 1.28 | 1,332 | 2.02 | ||||||||||||||||||
Total |
$ | 58,312 | 4.18 | $ | 43,281 | 3.09 | $ | 74,028 | 5.09 | |||||||||||||||
| Second | First | Fourth | ||||||||||
| (in thousands) | Quarter 2009 | Quarter 2009 | Quarter 2008 | |||||||||
FORECLOSED PROPERTIES |
||||||||||||
Beginning balance |
$ | 75,383 | $ | 59,768 | $ | 38,438 | ||||||
Foreclosures transferred in |
64,417 | 38,742 | 50,678 | |||||||||
Capital costs added |
1,324 | 1,452 | 1,059 | |||||||||
Write downs |
(2,738 | ) | (2,151 | ) | (2,714 | ) | ||||||
Proceeds from sales |
(33,632 | ) | (22,428 | ) | (27,693 | ) | ||||||
Total |
$ | 104,754 | $ | 75,383 | $ | 59,768 | ||||||
| (1) | Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement
with the FDIC, related to the acquisition of Southern Community Bank. |
|
| (2) | Annualized. |
10
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (Unaudited)
Consolidated Statement of Income (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands, except per share data) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Interest revenue: |
||||||||||||||||
Loans, including fees |
$ | 81,691 | $ | 97,051 | $ | 163,571 | $ | 206,317 | ||||||||
Investment securities, including tax exempt of $309, $398, $628 and $792 |
20,485 | 19,277 | 41,237 | 38,299 | ||||||||||||
Federal funds sold, commercial paper and deposits in banks |
98 | 50 | 540 | 272 | ||||||||||||
Total interest revenue |
102,274 | 116,378 | 205,348 | 244,888 | ||||||||||||
Interest expense: |
||||||||||||||||
Deposits: |
||||||||||||||||
NOW |
2,843 | 7,216 | 6,180 | 15,803 | ||||||||||||
Money market |
2,269 | 2,310 | 4,506 | 5,223 | ||||||||||||
Savings |
121 | 180 | 248 | 407 | ||||||||||||
Time |
32,064 | 38,828 | 68,117 | 77,712 | ||||||||||||
Total deposit interest expense |
37,297 | 48,534 | 79,051 | 99,145 | ||||||||||||
Federal funds purchased, repurchase agreements and other short-term borrowings |
595 | 1,820 | 1,148 | 6,138 | ||||||||||||
Federal Home Loan Bank advances |
1,203 | 2,818 | 2,277 | 8,563 | ||||||||||||
Long-term debt |
2,760 | 2,059 | 5,529 | 4,139 | ||||||||||||
Total interest expense |
41,855 | 55,231 | 88,005 | 117,985 | ||||||||||||
Net interest revenue |
60,419 | 61,147 | 117,343 | 126,903 | ||||||||||||
Provision for loan losses |
60,000 | 15,500 | 125,000 | 23,000 | ||||||||||||
Net interest revenue after provision for loan losses |
419 | 45,647 | (7,657 | ) | 103,903 | |||||||||||
Fee revenue: |
||||||||||||||||
Service charges and fees |
7,557 | 7,957 | 14,591 | 15,770 | ||||||||||||
Mortgage loan and other related fees |
2,825 | 2,202 | 5,476 | 4,165 | ||||||||||||
Consulting fees |
1,745 | 2,252 | 2,766 | 4,059 | ||||||||||||
Brokerage fees |
497 | 814 | 1,186 | 1,907 | ||||||||||||
Securities (losses) gains, net |
(711 | ) | 357 | (408 | ) | 357 | ||||||||||
Gain from acquisition |
11,390 | — | 11,390 | — | ||||||||||||
Other |
1,137 | 1,523 | 2,285 | 3,044 | ||||||||||||
Total fee revenue |
24,440 | 15,105 | 37,286 | 29,302 | ||||||||||||
Total revenue |
24,859 | 60,752 | 29,629 | 133,205 | ||||||||||||
Operating expenses: |
||||||||||||||||
Salaries and employee benefits |
28,058 | 28,753 | 56,897 | 57,507 | ||||||||||||
Communications and equipment |
3,645 | 3,852 | 7,374 | 7,684 | ||||||||||||
Occupancy |
3,853 | 3,704 | 7,660 | 7,420 | ||||||||||||
Advertising and public relations |
1,191 | 2,009 | 2,300 | 3,360 | ||||||||||||
Postage, printing and supplies |
1,294 | 1,448 | 2,476 | 3,040 | ||||||||||||
Professional fees |
2,806 | 1,679 | 5,099 | 3,600 | ||||||||||||
Foreclosed property |
5,737 | 2,852 | 10,056 | 3,763 | ||||||||||||
FDIC assessments and other regulatory charges |
6,810 | 1,265 | 9,492 | 2,531 | ||||||||||||
Amortization of intangibles |
739 | 745 | 1,478 | 1,512 | ||||||||||||
Other |
1,215 | 3,454 | 5,085 | 6,873 | ||||||||||||
Goodwill impairment |
— | — | 70,000 | — | ||||||||||||
Severance costs |
— | — | 2,898 | — | ||||||||||||
Total operating expenses |
55,348 | 49,761 | 180,815 | 97,290 | ||||||||||||
(Loss) income before income taxes |
(30,489 | ) | 10,991 | (151,186 | ) | 35,915 | ||||||||||
Income tax (benefit) expense |
(14,488 | ) | 3,898 | (31,412 | ) | 12,744 | ||||||||||
Net (loss) income |
(16,001 | ) | 7,093 | (119,774 | ) | 23,171 | ||||||||||
Preferred stock dividends and discount accretion |
2,559 | 4 | 5,113 | 8 | ||||||||||||
Net (loss) income available to common shareholders |
$ | (18,560 | ) | $ | 7,089 | $ | (124,887 | ) | $ | 23,163 | ||||||
(Loss) earnings per common share: |
||||||||||||||||
Basic |
$ | (.38 | ) | $ | .15 | $ | (2.57 | ) | $ | .49 | ||||||
Diluted |
(.38 | ) | .15 | (2.57 | ) | .49 | ||||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
48,794 | 47,158 | 48,560 | 47,105 | ||||||||||||
Diluted |
48,794 | 47,249 | 48,560 | 47,260 | ||||||||||||
11
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
Consolidated Balance Sheet
| June 30, | December 31, | June 30, | ||||||||||
| (in thousands, except share and per share data) | 2009 | 2008 | 2008 | |||||||||
| (unaudited) | (audited) | (unaudited) | ||||||||||
ASSETS |
||||||||||||
Cash and due from banks |
$ | 110,943 | $ | 116,395 | $ | 176,240 | ||||||
Interest-bearing deposits in banks |
70,474 | 8,417 | 12,455 | |||||||||
Federal funds sold, commercial paper and short-term investments |
— | 368,609 | — | |||||||||
Cash and cash equivalents |
181,417 | 493,421 | 188,695 | |||||||||
Securities available for sale |
1,816,787 | 1,617,187 | 1,430,588 | |||||||||
Mortgage loans held for sale |
42,185 | 20,334 | 27,094 | |||||||||
Loans, net of unearned income |
5,513,087 | 5,704,861 | 5,933,141 | |||||||||
Less allowance for loan losses |
145,678 | 122,271 | 91,035 | |||||||||
Loans, net |
5,367,409 | 5,582,590 | 5,842,106 | |||||||||
Covered assets |
230,125 | — | — | |||||||||
Premises and equipment, net |
178,983 | 179,160 | 181,395 | |||||||||
Accrued interest receivable |
41,405 | 46,088 | 50,399 | |||||||||
Goodwill and other intangible assets |
251,821 | 321,798 | 323,296 | |||||||||
Other assets |
292,914 | 260,187 | 220,478 | |||||||||
Total assets |
$ | 8,403,046 | $ | 8,520,765 | $ | 8,264,051 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
Liabilities: |
||||||||||||
Deposits: |
||||||||||||
Demand |
$ | 714,630 | $ | 654,036 | $ | 696,575 | ||||||
NOW |
1,273,368 | 1,543,385 | 1,541,609 | |||||||||
Money market |
573,463 | 466,750 | 418,935 | |||||||||
Savings |
180,368 | 170,275 | 187,088 | |||||||||
Time: |
||||||||||||
Less than $100,000 |
1,992,056 | 1,953,235 | 1,747,763 | |||||||||
Greater than $100,000 |
1,351,527 | 1,422,974 | 1,573,078 | |||||||||
Brokered |
763,348 | 792,969 | 531,408 | |||||||||
Total deposits |
6,848,760 | 7,003,624 | 6,696,456 | |||||||||
Federal funds purchased, repurchase agreements, and other short-term
borrowings |
252,493 | 108,411 | 288,650 | |||||||||
Federal Home Loan Bank advances |
283,292 | 235,321 | 285,807 | |||||||||
Long-term debt |
150,026 | 150,986 | 107,996 | |||||||||
Accrued expenses and other liabilities |
13,203 | 33,041 | 47,252 | |||||||||
Total liabilities |
7,547,774 | 7,531,383 | 7,426,161 | |||||||||
Shareholders’ equity: |
||||||||||||
Preferred stock, $1 par value; 10,000,000 shares authorized; |
||||||||||||
Series A; $10 stated value; 21,700, 25,800 and 25,800 shares issued
and outstanding |
217 | 258 | 258 | |||||||||
Series B; $1,000 stated value; 180,000 shares issued and outstanding |
173,785 | 173,180 | — | |||||||||
Common stock, $1 par value; 100,000,000 shares authorized; |
||||||||||||
48,933,383, 48,809,301 and 48,809,301 shares issued |
48,933 | 48,809 | 48,809 | |||||||||
Common stock issuable; 182,041, 129,304 and 105,579 shares |
3,383 | 2,908 | 2,696 | |||||||||
Capital surplus |
450,514 | 460,708 | 462,939 | |||||||||
Retained earnings |
136,624 | 265,405 | 362,089 | |||||||||
Treasury stock; 799,892 and 1,713,310 shares, at cost |
— | (16,465 | ) | (39,222 | ) | |||||||
Accumulated other comprehensive income |
41,816 | 54,579 | 321 | |||||||||
Total shareholders’ equity |
855,272 | 989,382 | 837,890 | |||||||||
Total liabilities and shareholders’ equity |
$ | 8,403,046 | $ | 8,520,765 | $ | 8,264,051 | ||||||
12
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
| 2009 | 2008 | |||||||||||||||||||||||
| Average | Avg. | Average | Avg. | |||||||||||||||||||||
| (dollars in thousands, taxable equivalent) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Loans, net of unearned income (1)(2) |
$ | 5,597,259 | $ | 81,567 | 5.85 | % | $ | 5,933,143 | $ | 97,080 | 6.58 | % | ||||||||||||
Taxable securities (3) |
1,742,620 | 20,176 | 4.63 | 1,471,958 | 18,879 | 5.13 | ||||||||||||||||||
Tax-exempt securities (1)(3) |
28,862 | 506 | 7.01 | 35,282 | 655 | 7.43 | ||||||||||||||||||
Federal funds sold and other interest-earning assets |
73,437 | 488 | 2.66 | 37,635 | 370 | 3.93 | ||||||||||||||||||
Total interest-earning assets |
7,442,178 | 102,737 | 5.53 | 7,478,018 | 116,984 | 6.29 | ||||||||||||||||||
Non-interest-earning assets: |
||||||||||||||||||||||||
Allowance for loan losses |
(147,691 | ) | (93,776 | ) | ||||||||||||||||||||
Cash and due from banks |
101,830 | 144,589 | ||||||||||||||||||||||
Premises and equipment |
179,446 | 181,454 | ||||||||||||||||||||||
Other assets (3) |
592,384 | 585,463 | ||||||||||||||||||||||
Total assets |
$ | 8,168,147 | $ | 8,295,748 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity: |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Interest-bearing deposits: |
||||||||||||||||||||||||
NOW |
$ | 1,258,134 | $ | 2,843 | .91 | $ | 1,505,280 | $ | 7,216 | 1.93 | ||||||||||||||
Money market |
521,989 | 2,269 | 1.74 | 422,419 | 2,310 | 2.20 | ||||||||||||||||||
Savings |
178,435 | 121 | .27 | 186,826 | 180 | .39 | ||||||||||||||||||
Time less than $100,000 |
1,894,071 | 15,342 | 3.25 | 1,643,740 | 17,285 | 4.23 | ||||||||||||||||||
Time greater than $100,000 |
1,325,757 | 11,513 | 3.48 | 1,484,032 | 16,135 | 4.37 | ||||||||||||||||||
Brokered |
686,070 | 5,209 | 3.05 | 534,835 | 5,408 | 4.06 | ||||||||||||||||||
Total interest-bearing deposits |
5,864,456 | 37,297 | 2.55 | 5,777,132 | 48,534 | 3.38 | ||||||||||||||||||
Federal funds purchased and other borrowings |
220,376 | 595 | 1.08 | 383,378 | 1,820 | 1.91 | ||||||||||||||||||
Federal Home Loan Bank advances |
309,962 | 1,203 | 1.56 | 412,268 | 2,818 | 2.75 | ||||||||||||||||||
Long-term debt |
151,019 | 2,760 | 7.33 | 107,996 | 2,059 | 7.67 | ||||||||||||||||||
Total borrowed funds |
681,357 | 4,558 | 2.68 | 903,642 | 6,697 | 2.98 | ||||||||||||||||||
Total interest-bearing liabilities |
6,545,813 | 41,855 | 2.56 | 6,680,774 | 55,231 | 3.33 | ||||||||||||||||||
Non-interest-bearing liabilities: |
||||||||||||||||||||||||
Non-interest-bearing deposits |
680,081 | 684,229 | ||||||||||||||||||||||
Other liabilities |
63,043 | 74,018 | ||||||||||||||||||||||
Total liabilities |
7,288,937 | 7,439,021 | ||||||||||||||||||||||
Shareholders’ equity |
879,210 | 856,727 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 8,168,147 | $ | 8,295,748 | ||||||||||||||||||||
Net interest revenue |
$ | 60,882 | $ | 61,753 | ||||||||||||||||||||
Net interest-rate spread |
2.97 | % | 2.96 | % | ||||||||||||||||||||
Net interest margin (4) |
3.28 | % | 3.32 | % | ||||||||||||||||||||
| (1) | Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate
used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate. |
|
| (2) | Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued. |
|
| (3) | Securities available for sale are shown at amortized cost. Pretax unrealized gains of $14.7 million in 2009 and $13.0 million in 2008 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. |
13
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
| 2009 | 2008 | |||||||||||||||||||||||
| Average | Avg. | Average | Avg. | |||||||||||||||||||||
| (dollars in thousands, taxable equivalent) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Loans, net of unearned income (1)(2) |
$ | 5,635,942 | $ | 163,316 | 5.84 | % | $ | 5,945,720 | $ | 206,332 | 6.98 | % | ||||||||||||
Taxable securities (3) |
1,712,778 | 40,609 | 4.74 | 1,460,090 | 37,507 | 5.14 | ||||||||||||||||||
Tax-exempt securities (1)(3) |
29,453 | 1,028 | 6.98 | 36,287 | 1,303 | 7.18 | ||||||||||||||||||
Federal funds sold and other interest-earning assets |
107,788 | 1,346 | 2.50 | 42,652 | 883 | 4.14 | ||||||||||||||||||
Total interest-earning assets |
7,485,961 | 206,299 | 5.55 | 7,484,749 | 246,025 | 6.60 | ||||||||||||||||||
Non-interest-earning assets: |
||||||||||||||||||||||||
Allowance for loan losses |
(138,297 | ) | (92,901 | ) | ||||||||||||||||||||
Cash and due from banks |
103,113 | 149,648 | ||||||||||||||||||||||
Premises and equipment |
179,470 | 181,405 | ||||||||||||||||||||||
Other assets (3) |
609,750 | 577,785 | ||||||||||||||||||||||
Total assets |
$ | 8,239,997 | $ | 8,300,686 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity: |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Interest-bearing deposits: |
||||||||||||||||||||||||
NOW |
$ | 1,307,865 | $ | 6,180 | .95 | $ | 1,483,699 | $ | 15,803 | 2.14 | ||||||||||||||
Money market |
499,780 | 4,506 | 1.82 | 430,734 | 5,223 | 2.44 | ||||||||||||||||||
Savings |
175,587 | 248 | .28 | 185,819 | 407 | .44 | ||||||||||||||||||
Time less than $100,000 |
1,918,349 | 32,559 | 3.42 | 1,598,526 | 35,508 | 4.47 | ||||||||||||||||||
Time greater than $100,000 |
1,359,286 | 24,338 | 3.61 | 1,424,670 | 32,505 | 4.59 | ||||||||||||||||||
Brokered |
735,844 | 11,220 | 3.07 | 454,619 | 9,699 | 4.29 | ||||||||||||||||||
Total interest-bearing deposits |
5,996,711 | 79,051 | 2.66 | 5,578,067 | 99,145 | 3.57 | ||||||||||||||||||
Federal funds purchased and other borrowings |
185,639 | 1,148 | 1.25 | 467,596 | 6,138 | 2.64 | ||||||||||||||||||
Federal Home Loan Bank advances |
257,742 | 2,277 | 1.78 | 536,883 | 8,563 | 3.21 | ||||||||||||||||||
Long-term debt |
151,009 | 5,529 | 7.38 | 107,995 | 4,139 | 7.71 | ||||||||||||||||||
Total borrowed funds |
594,390 | 8,954 | 3.04 | 1,112,474 | 18,840 | 3.41 | ||||||||||||||||||
Total interest-bearing liabilities |
6,591,101 | 88,005 | 2.69 | 6,690,541 | 117,985 | 3.55 | ||||||||||||||||||
Non-interest-bearing liabilities: |
||||||||||||||||||||||||
Non-interest-bearing deposits |
665,170 | 678,150 | ||||||||||||||||||||||
Other liabilities |
60,612 | 75,802 | ||||||||||||||||||||||
Total liabilities |
7,316,883 | 7,444,493 | ||||||||||||||||||||||
Shareholders’ equity |
923,114 | 856,193 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 8,239,997 | $ | 8,300,686 | ||||||||||||||||||||
Net interest revenue |
$ | 118,294 | $ | 128,040 | ||||||||||||||||||||
Net interest-rate spread |
2.86 | % | 3.05 | % | ||||||||||||||||||||
Net interest margin (4) |
3.18 | % | 3.43 | % | ||||||||||||||||||||
| (1) | Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate
used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate. |
|
| (2) | Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued. |
|
| (3) | Securities available for sale are shown at amortized cost. Pretax unrealized gains of $12.7 million in 2009 and $14.5 million in 2008 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. |
14
Exhibit 99.2
| Investor Presentation Second Quarter 2009 David P. Shearrow Executive Vice President & CRO Rex S. Schuette Executive Vice President & CFO rex_schuette@ucbi.com (706) 781-2266 Jimmy C. Tallent President & CEO United Community Banks, Inc. |
| This presentation contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to United Community Banks, Inc. Annual Report filed on Form 10-K with the Securities and Exchange Commission. This presentation also contains non-GAAP financial measures, as defined by the Federal Securities Laws. For a presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of the differences between those measures and the non-GAAP financial measures, please refer to "Selected Financial Data" in the United Community Banks, Inc. Annual Report filed on Form 10-K with the Securities Exchange Commission, which may be found on the company's Web site, www.ucbi.com. Cautionary statement 2 |
| United at a glance Assets $8.4 Billion Deposits $6.8 Billion Banks 27 Offices 110 3 |
| Credit Core earnings improvement FDIC acquisition Challenging environment 4 |
| North Georgia 36% Loan portfolio (total - $5.5 billion as of June 30, 2009) Atlanta MSA 29% North Carolina 14% Coastal Georgia 8% Gainesville MSA 8% Tennessee 5% Geographic Diversity Loan Composition 5 |
| Residential mortgage (total $1.5 billion) Mortgage Home Equity East 74 26 North Georgia 39% North Carolina 26% Atlanta MSA 15% Coastal Georgia 8% Gainesville MSA 6% Tennessee 6% Geographic Diversity Loan Composition 6 |
| Commercial Construction Owner-Occupied Income Producing C & I East 15 40 29 16 Commercial loans (total $2.6 billion) North Georgia 30% North Carolina 9% Atlanta MSA 37% Coastal Georgia 10% Gainesville MSA 9% Tennessee 5% Geographic Diversity Loan Composition 7 |
| Commercial construction (by loan type) (in millions) June 30, 2009 % of Loan Type Amount Total Raw Land - Vacant (Unimproved) $ 167 44 Land Development - Vacant (Improved) 132 35 Office Buildings 32 8 Retail Buildings 21 6 Churches 6 2 Miscellaneous 20 5 Total Commercial Construction $ 379 8 |
| Commercial real estate (by loan type) (in millions) June 30, 2009 % of Loan Type Amount Total Office Buildings $ 405 23 Small Businesses 399 22 Single-Unit Retail/Strip Centers 234 13 Small Warehouses/Storage 166 9 Hotels/Motels 119 7 Churches 115 6 Franchise / Restaurants 84 5 Multi-Residential Properties 79 4 Convenience Stores 69 4 Farmland 53 3 Multi-Unit Retail 41 2 Miscellaneous 33 2 Total Commercial Real Estate 1,797 9 |
| Residential construction (total $1.3 billion) North Georgia 42% North Carolina 12% Atlanta MSA 32% Coastal Georgia 6% Gainesville MSA 5% Tennessee 3% Construction Loans Land Loans East 0.28 0.72 Geographic Diversity Loan Composition 10 |
| Atlanta MSA (residential construction) (in millions) Variance 2Q 09 4Q 08 2Q 08 4Q 08 2Q 08 Land Loans Developing Land $ 124 $ 167 $ 232 $ (43 ) $ (108 ) Raw Land 63 56 50 7 13 Lot Loans 81 86 117 (5 ) (36 ) Total 268 309 399 (41 ) (131 ) Construction Loans Spec 127 189 271 (62 ) (144 ) Sold 29 40 58 (11 ) (29 ) Total 156 229 329 (73 ) (173 ) Total Res Construction $ 424 $ 538 $ 728 $ (114 ) $ (304 ) 11 |
| Credit quality (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Net Charge-offs $ 58.3 $ 43.3 $ 74.0 $ 55.7 $ 14.3 as % of Average Loans 4.18 % 3.09 % 5.09 % 3.77 % .97 % Allowance for LL $ 146.0 $ 144.0 $ 122.3 $ 111.3 $ 91.0 as % of Total Loans 2.64 % 2.56 % 2.14 % 1.91 % 1.53 % as % of NPLs 51 %* 56 %* 64 %* 80 %* 74 % Past Due Loans (30 - 90 Days) 1.61 % 1.67 % 2.33 % 1.39 % 1.10 % Non-Performing Loans $ 287.8 $ 259.2 $ 190.7 $ 139.3 $ 123.8 OREO 104.8 75.4 59.8 38.4 28.4 Total NPAs $ 392.6 $ 334.6 $ 250.5 $ 177.7 $ 152.2 as % of Total Assets 4.67 % 4.11 % 2.94 % 2.20 % 1.84 % as % of Loans & OREO 6.99 % 5.86 % 4.35 % 3.03 % 2.55 % *Excluding loans with no allocated reserve, the coverage ratio was 82% at 2Q09; 117% at 1Q 09; 125% at 4Q 08; and 93% at 3Q 08. 12 |
| Net charge-offs by category (in thousands) 2Q 09 1Q 09 to Avg to Avg NCOs Loans NCOs Loans CATEGORY Commercial (sec. by RE) $ 5,986 1.34 % $ 826 .20 % Commercial Construction 756 .81 54 .05 Commercial & Industrial 3,107 3.20 873 .89 Total Commercial 9,849 1.56 1,753 .28 Residential Construction 44,240 13.04 37,762 10.52 Residential Mortgage 3,526 .96 2,984 .80 Consumer / Installment 697 1.82 782 1.99 Total Net Charge-offs $ 58,312 4.18 $ 43,281 3.09 13 |
| Net charge-offs by market (in thousands) 2Q 09 1Q 09 to Avg to Avg NCOs Loans NCOs Loans MARKETS Atlanta MSA $ 37,472 8.87 % $ 26,228 6.16 % Gainesville MSA 4,125 4.36 1,105 1.18 North Georgia 12,571 2.52 8,208 1.64 Western North Carolina 1,016 .51 3,669 1.83 Coastal Georgia 969 .85 3,229 2.84 East Tennessee 2,159 3.20 842 1.28 Total Net Charge-offs $ 58,312 4.18 $ 43,281 3.09 14 |
| NPAs by category (in thousands) 2Q 09 1Q 09 Total Total NPLs OREO NPAs NPLs OREO NPAs CATEGORY Commercial (Sec. by RE) $ 37,755 $ 5,395 $ 43,150 $ 18,188 $ 3,811 $ 21,999 Commercial Construction 15,717 5,847 21,564 6,449 2,948 9,397 Commercial & Industrial 11,378 -- 11,378 12,066 -- 12,066 Total Commercial 64,850 11,242 76,092 36,703 6,759 43,462 Residential Construction 176,400 81,647 258,047 187,656 58,327 245,983 Residential Mortgage 44,256 11,865 56,121 33,148 10,297 43,445 Consumer / Installment 2,342 -- 2,342 1,648 -- 1,648 Total NPAs $ 287,848 $ 104,754 $ 392,602 $ 259,155 $ 75,383 $ 334,538 15 |
| NPAs by market (in thousands) 2Q 09 1Q 09 Total Total NPLs OREO NPAs NPLs OREO NPAs MARKETS Atlanta MSA $ 148,155 $ 50,450 $ 198,605 $ 131,020 $ 48,574 $ 179,594 Gainesville MSA 9,745 3,511 13,256 17,448 694 18,142 North Georgia 72,174 37,454 109,628 66,875 20,811 87,686 Western North Carolina 21,814 7,245 29,059 21,240 3,067 24,307 Coastal Georgia 30,311 3,904 34,215 15,699 1,286 16,985 East Tennessee 5,649 2,190 7,839 6,873 951 7,824 Total NPAs $ 287,848 $ 104,754 $ 392,602 $ 259,155 $ 75,383 $ 334,538 16 |
| Core earnings summary - second quarter 2009 (in millions) Variance 2Q 09 1Q 09 4Q 08 2Q 08 1Q09 4Q 08 Net Interest Revenue $ 60.9 $ 57.4 $ 51.9 $ 61.8 $ 3.5 $ 9.0 Fee Revenue* 13.7 12.6 12.6 14.7 1.1 1.1 Gross Revenue 74.6 70.0 64.5 76.5 4.6 10.1 Operating Expense** 47.8 48.3 47.2 46.9 (.5 ) (.6) Core Earnings (Pre-Tax/Credit) $ 26.8 $ 21.7 $ 17.3 $ 29.6 $ 5.1 $ 9.5 Net Interest Margin 3.28 % 3.08 % 2.70 % 3.32 % .20 % .58 % *Excludes BOLI expense recovery, special FDIC assessment, and foreclosed property costs **Excludes FHLB prepayment charge and securities (losses) gains, net 17 |
| Net operating loss - second quarter 2009 (in millions) Variance 2Q 09 1Q 09 4Q 08 2Q 08 1Q 09 4Q 08 Core Earnings $ 26.8 $ 21.7 $ 17.3 $ 29.6 $ 5.1 $ 9.5 Provision for Loan Loss (60.0 ) (65.0 ) (85.0 ) (15.5 ) 5.0 25.0 Foreclosed Property Expense (5.7 ) (4.3 ) (5.2 ) (2.9 ) (1.4 ) (.5 ) FDIC Special Assessment (3.8 ) - - - (3.8 ) (3.8 ) BOLI Expense Recovery 2.0 - - - 2.0 2.0 FHLB Prepayment Charge and Secur (Losses) Gains, net (.7 ) .3 (1.9 ) .4 (1.0 ) 1.2 Income Tax Benefit (Exp) 18.3 15.3 28.1 (4.5 ) 3.0 (9.8 ) Net Oper (Loss) Income $ (23.1 ) $ (32.0 ) $ (46.7 ) $ 7.1 $ 8.9 $ 23.6 Net Operating EPS $ (.53 ) ($ .71 ) $ (.99) $ .15 $ .18 $ .46 18 |
| Net loss - second quarter 2009 (in millions) 2Q 09 1Q 09 4Q 08 2Q 08 Net Operating (Loss) Income $ (23.1 ) $ (32.0 ) $ (46.7 ) $ 7.1 Gain on Acquisition ($11.4, pre-tax) 7.1 - - - Goodwill Impairment Charge - (70.0 ) - - Severance Costs ($2.9, pre-tax) - (1.8 ) - - Net (Loss) Income $ (16.0 ) $ (103.8 ) $ (46.7 ) $ 7.1 Earnings (Loss) Per Share $ (.38 ) $ (2.20 ) $ (.99) $ .15 19 |
| Net interest margin 2q08 3q08 4q08 1q09 2q09 Net Interest Margin 0.0332 0.0317 0.027 0.0308 0.0328 Second quarter Margin Improvement 20 Basis Points Improved Loan & Deposit Pricing Replaced Higher Priced CDs and Broker Deposits Net Interest Margin 20 |
| Capital ratios (as percentages) Well- Capitalized 2Q 09 4Q 08 2Q 08 Regulatory Capital Tier 1 Risk-Based 6 % 10.6% 11.2% 9.2% Total Risk-Based 10 13.3 13.9 11.4 Leverage 5 7.8 8.3 7.0 Tangible Equity to Risk-Weighted Assets 10.5 11.2 8.5 Tangible Common Equity to Risk-Weighted Assets 7.5 8.3 8.5 Tangible Equity to Assets 8.0 6.6 6.8 Tangible Common Equity to Assets 5.8 6.2 6.8 21 |
| Closing comments 22 Southern Community Bank Credit Core earnings Capital |
| APPENDIX 23 |
| Joined UCBI Years in Banking Jimmy Tallent President and CEO 1984 36 Guy Freeman Chief Operating Officer 1994 49 Rex Schuette Chief Financial Officer 2001 32 David Shearrow Chief Risk Officer 2007 28 Glenn White President, Atlanta Region 2007 35 Craig Metz Marketing 2002 17 Bill Gilbert Retail Banking 2000 33 Experienced proven leadership 24 |
| Footprint contains stable and growing markets Business model thrives on relationship-driven customer service backed by "big bank" resources Core franchise supports customer retention and strong presence in our markets Compelling stock price Reasons to invest in United 25 |
| Provides superior service and operating autonomy Community bank service, large bank resources Strategic footprint with substantial opportunities Contains many of the fastest growing markets in the U.S. Conservative growth strategy Mostly organic supported by de novos and selective acquisitions Business model 26 |
| Twenty-seven community banks Local CEOs with deep roots in their communities Resources of $8.4 billion bank Service is point of differentiation Golden rule of banking "The Bank That SERVICE Built" Ongoing customer surveys +90% satisfaction rate Operating model (competitive difference) 27 |
| Population Growth (%) Population Growth (%) Markets1 Population (in thousands) Actual 2000 - 2008 Projected 2008 - 2013 North Georgia 424 27 14 Atlanta MSA 3,603 42 22 Gainesville MSA 182 31 16 Coastal Georgia 365 8 4 Western North Carolina 424 10 5 East Tennessee 594 11 7 Total Markets Georgia 9,863 20 12 North Carolina 9,231 15 9 Tennessee 6,244 9 6 United States 309,299 10 6 1 Population data is for 2008 and includes those markets where United takes deposits. Source: SNL Robust demographics (fast growing markets) 28 |
| 1 FDIC deposit market share and rank as of 6/08 for markets where United takes deposits. Source: SNL and FDIC Markets1 Market Deposits (in billions) United Deposits (in billions) Banks Offices Deposit Share1 (%) Rank1 North Georgia $ 9.1 $ 2.6 11 24 29 1 Atlanta MSA 59.8 2.1 10 40 3 8 Gainesville MSA 2.6 .3 1 7 12 4 Coastal Georgia 7.0 .4 2 9 6 6 Western North Carolina 7.1 1.0 1 20 14 3 East Tennessee 13.1 .4 2 10 3 7 Total Markets $98.7 $ 6.8 27 110 Market share opportunities (excellent growth prospects) 29 |
| Best demographics in the nation Population data as of June 30, 2008 Population data as of June 30, 2008 1Q09 Assets 2008-2013 Rank Company (in billions) Ticker State % Population Growth 1 Western Alliance Bancorporation $ 5.3 WAL NV 16.84 2 United Community Banks, Inc. 8.1 UCBI GA 13.59 3 Cullen/Frost Bankers, Inc. 15.3 CFR TX 11.88 4 International Bancshares Corporation 12.1 IBOC TX 11.22 5 Prosperity Bancshares, Inc. 8.8 PRSP TX 10.61 6 Colonial BancGroup, Inc. 26.4 CNB AL 10.30 7 South Financial Group, Inc. 13.3 TSFG SC 9.53 8 First Citizens BancShares, Inc. 17.2 FCNCA NC 9.29 9 CVB Financial Corp. 6.4 CVBF CA 9.04 10 Glacier Bancorp, Inc. 5.6 GBCI MT 8.73 11 Capitol Bancorp Ltd. 5.8 CBC MI 8.45 12 Synovus Financial Corp. 34.5 SNV GA 8.15 13 Umpqua Holdings Corporation 8.8 UMPQ OR 8.14 14 First Midwest Bancorp, Inc. 8.3 FMBI IL 7.84 15 Hancock Holding Company 7.1 HBHC MS 7.06 Source: SNL - Includes publicly traded companies with assets between $5 - 50 billion as of 9/30/08. Population growth weighted by county as of 6/30/08. 30 |
| Small business market growth 2000 2006 Small Business Growth Population Growth 2000-2008 North Georgia 6,453 7,693 19% 27% Atlanta MSA 70,893 126,200 78% 42% Gainesville MSA 3,158 3,824 21% 31% Coastal Georgia 9,441 10,210 8% 8% Western North Carolina 10,274 11,544 12% 10% East Tennessee 16,273 17,839 10% 11% 1 Population data is for 2008, SNL; Business demographics, U.S. Census Statistics of U.S. Businesses, 2000 & 2006; County Business Patterns 2000-2006 The Atlanta MSA is seeing small business growth at nearly double its already significantly increasing population growth. Markets1 (# of business with 1 - 49 employees) 31 |
| (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Year over Year Change LOANS BY CATEGORY % Commercial (sec. by RE) $1,797 $1,779 $1,627 $1,604 $1,584 13 Commercial construction 379 377 500 509 522 (27) Commercial & Industrial 399 387 410 425 417 (4) Total commercial 2,575 2,543 2,537 2,538 2,523 2 Residential construction 1,315 1,430 1,479 1,596 1,745 (25) Residential mortgage 1,470 1,504 1,526 1,528 1,494 (2) Consumer/installment 153 156 163 168 171 (11) TOTAL LOANS $5,513 $5,633 $5,705 $5,830 $5,933 (7) Business mix - loans (at quarter-end) 32 |
| (in millions) 2008 2007 2006 2005 2004 LOANS BY CATEGORY Commercial (sec. by RE) $1,627 $1,476 $1,230 $1,055 $ 961 Commercial construction 500 527 470 359 250 Commercial & Industrial 410 418 296 237 212 Total commercial 2,537 2,421 1,996 1,651 1,428 Residential construction 1,479 1,829 1,864 1,380 1,055 Residential mortgage 1,526 1,502 1,338 1,206 1,102 Consumer/installment 163 177 179 161 150 TOTAL LOANS $5,705 $5,929 $5,377 $4,398 $3,735 Business mix - loans (at year-end) 33 |
| (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Land Loans Developing Land 412 $ 445 $ 484 $ 516 $ 566 Raw Land 159 155 153 142 138 Lot Loans 371 390 358 385 405 Total 942 990 995 1,043 1,109 Construction Loans Spec 267 317 347 393 447 Sold 106 123 137 160 189 Total 373 440 484 553 636 Total Res Construction 1,315 $1,430 $1,479 $1,596 $1,745 Residential construction - total company 34 |
| (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Land Loans Developing Land 124 $ 148 $ 167 $ 185 $ 232 Raw Land 63 52 56 47 50 Lot Loans 81 98 86 103 117 Total 268 298 309 335 399 Construction Loans Spec 127 164 189 227 271 Sold 29 33 40 49 58 Total 156 197 229 276 329 Total Res Construction 424 $ 495 $ 538 $ 611 $ 728 Residential construction - Atlanta MSA 35 |
| (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 LOANS BY MARKET Atlanta MSA $1,605 $1,660 $1,706 $1,800 $1,934 Gainesville MSA 413 422 420 426 422 North Georgia 1,978 2,014 2,040 2,066 2,065 Western North Carolina 794 808 810 815 819 Coastal Georgia 455 460 464 458 436 East Tennessee 268 269 265 265 257 Total loans $5,513 $5,633 $5,705 $5,830 $5,933 Loans - markets served (at quarter-end) 36 |
| (in millions) 2008 2007 2006 2005 2004 LOANS BY MARKET Atlanta MSA $ 1,706 $ 2,002 $ 1,654 $ 1,207 $ 1,061 Gainesville MSA 420 400 354 249 -- North Georgia 2,040 2,060 2,033 1,790 1,627 Western North Carolina 810 806 773 668 633 Coastal Georgia 464 415 358 306 274 East Tennessee 265 246 205 178 140 Total loans $ 5,705 $ 5,929 $ 5,377 $ 4,398 $ 3,735 Loans - markets served (at year-end) 37 |
| Legal lending limit $182 House lending limit 20 Top 25 relationships 7.8% of total loans 430 Regional credit review Standard underwriting Lending - credit summary (as of December 31, 2008, in millions) 38 |
| Liquidity - loans / deposits (in millions) Variance 2Q 09 4Q 08 2Q 08 vs 4Q 08 vs 2Q 08 Loans $ 5,513 $ 5,705 $ 5,933 $ (192 ) $ (420 ) Core (DDA, MMDA, Savings) $ 2,269 $ 2,088 $ 2,278 $ 181 $ (9) Public Funds 539 842 678 (303 ) (139) CD's 3,277 3,281 3,209 (4 ) 68 Total Deposits (excl Brokered) 6,085 6,211 6,165 (126 ) (80 ) Loan to Deposit Ratio 91 % 92 % 96% Investment Securities $ 1,817 $ 1,617 $ 1,431 $ 200 $ 386 Percent of Assets 22 % 19 % 17 % Commercial Paper Sold $ - $ 369 $ - $ (369 ) $ - 39 |
| Liquidity - wholesale borrowings (in millions) Unused Variance Capacity 2Q 09 4Q 08 2Q 08 vs 4Q 08 vs 2Q 08 Brokered Deposits $ 1,337 $ 763 $ 793 $ 432 $ (30 ) $ 331 FHLB 1,101 283 235 615 48 (332 ) Fed Funds 150 - 8 230 (8 ) (230 ) Other Wholesale 377 252 100 303 152 (51 ) Total Wholesale $ 2,965 $ 1,298 $ 1,136 $ 1,580 $ 162 $ (282 ) Sub-Debt $ 96 $ 97 $ 67 $ (1 ) $ 29 Trust Preferred Securities 54 54 41 - 13 Total Long-Term Debt $ 150 $ 151 $ 108 $ (1 ) $ 42 40 |
| Business mix - deposits (at quarter-end) (in millions) DEPOSITS BY CATEGORY 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Demand & NOW $ 1,525 $ 1,485 $ 1,457 $ 1,591 $ 1,681 MMDA & Savings 744 665 630 565 598 Core Transaction Deposits 2,269 2,150 2,087 2,156 2,279 Time < $100,000 1,985 1,904 1,945 1,807 1,736 Public Deposits 480 485 755 499 573 Total Core Deposits 4,734 4,539 4,787 4,462 4,588 Time > $100,000 1,293 1,275 1,336 1,379 1,468 Public Deposits 59 75 87 103 105 Total Customer Deposits 6,086 5,889 6,210 6,035 6,161 Brokered Deposits ___763 727 793 745 535 Total Deposits 6,849 6,616 7,003 6,689 6,696 41 |
| FIG Partners (Market Perform - Apr 24, 2009) Soleil (Tenner Investment Research) (Hold - Jul 8, 2009) Fox-Pitt Kelton Cochran (In Line - Jun 22, 2009) Stephens, Inc. (Equal-Weight - Apr 24, 2009) Keefe, Bruyette & Woods (Market Perform - Jun 22, 2009) Sterne Agee & Leach, Inc. (Sell - Apr 23, 2009) Raymond James & Associates (Market Perform 3 - Jun 22, 2009) SunTrust Robinson Humphrey (Neutral - Jun 22, 2009) Sandler O'Neill & Partners (Hold - Jun 22, 2009) Analyst coverage 42 |
| (in millions) Acquisition Date Asset Size at Acquisition Asset Size 2Q 09 North Carolina Mar-90 $55 $1,307 Blue Ridge Feb-92 52 467 Towns Oct-92 20 227 White Aug-95 71 256 Habersham Sep-96 33 244 Rabun Sep-97 72 110 Gilmer Jan-98 23 215 Balanced growth strategy (early partnerships) 43 |
| (in millions) Acquisition Date Asset Size at Acquisition Asset Size 2Q 09 Adairsville Aug-99 $41 $84 Rome Aug-99 108 305 Dawson Jul-00 119 217 Metro Jul-00 153 484 West GA Nov-01 85 135 East TN Mar-03 195 407 Coastal GA May-03 300 587 Fairburn Jun-04 104 237 Henry Nov-04 80 93 Rockdale/Newton Dec-04 200 225 Balanced growth strategy (recent partnerships) 44 |
| Southern Community Bank Purchased - June 19, 2008 ($ in millions) Nine years old - Enhances presence in southside metro Atlanta markets Five banking offices in southside metro Atlanta MSA - Fayetteville, Coweta and Henry counties 60 employees $208 in customer deposits, including $50 core deposits FDIC assisted transaction - 80% guarantee on $109 loss threshold and 95% guarantee above Fully discounted bid with no credit exposure Accounted for credit related items (at FMV) as covered assets on balance sheet Loans $110 OREO $25 FDIC receivable $95 Total Covered Assets $230 Gain on acquisition of $11.4 Slightly accretive to earnings per share in 2009 45 |