UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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| Item 2.02 | Results of Operations and Financial Condition. |
On July 21, 2020, United Community Banks, Inc. (“United”) issued a press release announcing financial results for the second quarter of 2020. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
| Item 7.01 | Regulation FD Disclosure. |
On July 22, 2020, United will hold an earnings conference call and webcast at 11:00 a.m. (Eastern Time) to discuss financial results for the second quarter of 2020. The press release referenced above in Item 2.02 contains information about how to access the conference call and webcast. A copy of the slide presentation to be used during the earnings call and webcast is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The slide presentation also will be available on our website, www.ucbi.com, under the “Investor Relations – Events and Presentations” section.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) Exhibits | The following exhibit index lists the exhibits that are either filed or furnished with the Current Report on Form 8-K. |
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | United Community Banks, Inc. Press Release, dated July 21, 2020. | |
| 99.2 | Slide Presentation. | |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
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.
| UNITED COMMUNITY BANKS, INC. | ||
| By: | /s/ Jefferson L. Harralson | |
| Jefferson L. Harralson | ||
| Executive Vice President and Chief Financial Officer | ||
Date: July 21, 2020
Exhibit 99.1
For Immediate Release
For more information:
Jefferson Harralson
Chief Financial Officer
(864) 240-6208
Jefferson_Harralson@ucbi.com
United Community Banks, Inc. Reports Second Quarter Results
Continued Strong Performance and Strengthening of its Balance Sheet
GREENVILLE, SC – July 21, 2020 - United Community Banks, Inc. (NASDAQ: UCBI) (United) today reported second quarter financial results, with record year-over-year loan and deposit growth. United delivered net income of $25.1 million and pre-tax pre-provision income of $65.6 million and built its allowance for credit losses with a $33.5 million provision for credit losses. Due largely to the continued reserve build anticipating potential future loan losses driven by COVID-19 effects on the economy, diluted earnings per share of $0.32 represented a decrease of $0.23 or 42%, from a year ago. Excluding merger-related and other charges, diluted operating earnings per share were also $0.32, also down 46% from last year. United’s return on assets (ROA) was 0.71% and its return on common equity was 6.2% for the quarter. On an operating basis, United’s ROA was 0.72% and its return on tangible common equity was 8.1%.
Chairman and CEO Lynn Harton stated, “As the nation continues to grapple with the uncertainties of the future economic environment, I am pleased with the financial strength of the company and the performance of our employees, who continue to deliver for our customers. In this new world of physical distancing, the investments we have made in our digital delivery channels are being put to the test and exceeding our expectations. Customer traffic patterns suggest that our customers have significantly increased their use of our digital platform to access our products and services, as well as to open and manage their accounts. Along with our enhanced mobile app, this platform has enabled us to maintain business volume, while keeping our employees and customers physically-distanced and safe while banking. We supported our small business clients by offering loan deferrals, as needed. Additionally, our SBA team, along with other United bankers across our markets, processed nearly 11,000 applications for the SBA’s Paycheck Protection Program (PPP) loans totaling $1.1 billion—providing funding for small businesses throughout our footprint. In addition to addressing the needs of our existing customers, we added approximately 4,000 new loan and deposit customers since the Program began, which has given us an even greater opportunity to serve our markets.”
This quarter saw record growth with total loans increasing by $1.2 billion—mainly from PPP loans—however, non-PPP loans also grew at a 5% annualized rate. Likewise, core transaction deposits were up a record $1.7 billion over first quarter with growth in noninterest bearing deposits of $1.1 billion being the primary driver. United’s cost of deposits decreased 18 bps to 0.38% as a result. Net interest margin decreased 65 bps from the first quarter. Of this decrease, 18 bps was due to lower purchased loan accretion, approximately 6 bps was due to lower-yielding PPP loans, and approximately 9 bps resulted from carrying an increased amount in low-yielding overnight investments due to the record amount of liquidity generated by bank deposit growth in the quarter.
Harton continued, “During the second quarter, we also completed a number of important strategic initiatives that position us well for the future. In June, we raised $200 million—$100 million in preferred stock with a 6.875% annual dividend rate and $100 million in senior notes with a 5.00% annual coupon. Our long-term goal is to continue to remain a top performer in our peer group, with top quartile results in key performance metrics including capital levels. These capital raises were done to provide us with substantial flexibility to be able to both focus on our customers’ current needs, and at the same time, be prepared to emerge from the health crisis in a very strong position. We believe that there will be meaningful strategic growth opportunities at that point.”
Immediately following quarter end, the bank announced the July 1st closing of the previously announced merger with Three Shores Bancorporation, Inc. and its bank subsidiary Seaside National Bank & Trust, which will now be branded Seaside Bank and Trust. Harton noted, “We are pleased to welcome Seaside’s talented team of bankers and believe that our combined banks are better together. Gideon Haymaker is now United’s president for the State of Florida and additionally will lead our expansion of Seaside’s wealth management offering across United’s footprint.”
Mr. Harton concluded, “Giving back to our communities is at the core of who we are as a community bank. In keeping with that long-standing tradition, I am also pleased to announce that we recently formed the United Community Bank Foundation, a tax-exempt private foundation which will expand our charitable endeavors throughout our footprint. In the second quarter, we made a $1 million initial contribution to the foundation, which will allow us to further support our communities that have been critical to our success over the years.”
Second Quarter 2020 Financial Highlights:
| • | EPS decreased by 42% compared to last year on a GAAP basis and 46% on an operating basis |
| • | Return on assets of 0.71%, or 0.72% excluding merger-related and other charges |
| • | Pre-tax, pre-provision return on assets of 1.86%, or 1.87% excluding merger-related and other charges |
| • | Return on common equity of 6.2% |
| • | Return on tangible common equity of 8.1%, excluding merger-related and other charges |
| • | United adopted the Current Expected Credit Losses (CECL) model for determining the allowance for credit losses last quarter; the continued uncertain economic outlook necessitated a provision for credit losses of $33.5 million |
| • | Record loan production of $2.0 billion, with $1.1 billion in PPP loans and $866 million in traditional (non-PPP) loans |
| • | Loan growth of $1.2 billion, including traditional loan growth at an annualized rate of 5% for the quarter |
| • | Core transaction deposits were up $1.7 billion or 22%, mainly driven by noninterest bearing demand deposit growth of $1.1 billion; a significant portion of United’s core transaction deposit growth was attributable to PPP-related deposits |
| • | Net interest margin of 3.42%, which was down 65 bps from first quarter, reflecting the effect of lower interest rates, lower purchased loan accretion, the impact of the lower yielding PPP loans and a much higher level of low-yielding, highly-liquid assets |
| • | Mortgage rate locks of $802 million, which is slightly higher than last quarter and again exceeds our previous quarterly record by 58%; this compares to $390 million a year ago |
| • | Noninterest income was up $14.4 million on a linked quarter basis, primarily due to a $15.3 million increase in mortgage income as a result of record mortgage rate locks and production, as well as an improved market environment |
| • | Efficiency ratio of 55.86%, or 55.59% excluding merger-related and other charges |
| • | Net charge-offs of $6.1 million, or 25 basis points as a percent of average loans, down 12 basis points from last quarter and mainly attributable to two credits that have been substandard for more than a year |
| • | Nonperforming assets of 0.32% of total assets, which is up 4 basis points compared to March 31, 2020 |
| • | Total deferrals of $1.8 billion or 17% of the total loan portfolio at June 30 |
| • | Funded the United Community Bank Foundation with an initial $1 million contribution for charities and causes throughout the footprint |
| • | Completed a public offering of $100 million aggregate of 6.875% Non-Cumulative Perpetual Preferred Stock and $100 million aggregate principal amount of 5.000% Fixed-to-Floating Senior Notes due 2030 |
| • | Effective July 1, 2020, United completed its merger with Three Shores Bancorporation, Inc. and its bank subsidiary, Seaside National Bank & Trust |
Conference Call
United will hold a conference call, Wednesday, July 22, 2020, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 4995436. The conference call also will be webcast and available for replay for 30 days by selecting “Events & Presentations” within the Investor Relations section of United’s website at www.ucbi.com.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
| 2020 | 2019 | Second Quarter | For
the Six Months Ended June 30, | YTD | ||||||||||||||||||||||||||||||||
| (in thousands, except per share data) | Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | 2020
- 2019 Change | 2020 | 2019 | 2020
- 2019 Change | |||||||||||||||||||||||||||
| INCOME SUMMARY | ||||||||||||||||||||||||||||||||||||
| Interest revenue | $ | 123,605 | $ | 136,547 | $ | 136,419 | $ | 140,615 | $ | 139,156 | $ | 260,152 | $ | 275,672 | ||||||||||||||||||||||
| Interest expense | 14,301 | 17,941 | 19,781 | 21,277 | 21,372 | 32,242 | 42,254 | |||||||||||||||||||||||||||||
| Net interest revenue | 109,304 | 118,606 | 116,638 | 119,338 | 117,784 | (7 | )% | 227,910 | 233,418 | (2 | )% | |||||||||||||||||||||||||
| Provision for credit losses | 33,543 | 22,191 | 3,500 | 3,100 | 3,250 | 55,734 | 6,550 | 751 | ||||||||||||||||||||||||||||
| Noninterest income | 40,238 | 25,814 | 30,183 | 29,031 | 24,531 | 64 | 66,052 | 45,499 | 45 | |||||||||||||||||||||||||||
| Total revenue | 115,999 | 122,229 | 143,321 | 145,269 | 139,065 | (17 | ) | 238,228 | 272,367 | (13 | ) | |||||||||||||||||||||||||
| Expenses | 83,980 | 81,538 | 81,424 | 82,924 | 81,813 | 3 | 165,518 | 157,897 | 5 | |||||||||||||||||||||||||||
| Income before income tax expense | 32,019 | 40,691 | 61,897 | 62,345 | 57,252 | (44 | ) | 72,710 | 114,470 | (36 | ) | |||||||||||||||||||||||||
| Income tax expense | 6,923 | 8,807 | 12,885 | 13,983 | 13,167 | (47 | ) | 15,730 | 26,123 | (40 | ) | |||||||||||||||||||||||||
| Net income | 25,096 | 31,884 | 49,012 | 48,362 | 44,085 | (43 | ) | 56,980 | 88,347 | (36 | ) | |||||||||||||||||||||||||
| Merger-related and other charges | 397 | 808 | (74 | ) | 2,605 | 4,087 | 1,205 | 4,826 | ||||||||||||||||||||||||||||
| Income tax benefit of merger-related and other charges | (87 | ) | (182 | ) | 17 | (600 | ) | (940 | ) | (269 | ) | (1,112 | ) | |||||||||||||||||||||||
| Net income - operating (1) | $ | 25,406 | $ | 32,510 | $ | 48,955 | $ | 50,367 | $ | 47,232 | (46 | ) | $ | 57,916 | $ | 92,061 | (37 | ) | ||||||||||||||||||
| Pre-tax pre-provision income (5) | $ | 65,562 | $ | 62,882 | $ | 65,397 | $ | 65,445 | $ | 60,502 | 8 | $ | 128,444 | $ | 121,020 | 6 | ||||||||||||||||||||
| PERFORMANCE MEASURES | ||||||||||||||||||||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||||||||||||
| Diluted net income - GAAP | $ | 0.32 | $ | 0.40 | $ | 0.61 | $ | 0.60 | $ | 0.55 | (42 | ) | $ | 0.71 | $ | 1.10 | (35 | ) | ||||||||||||||||||
| Diluted net income - operating (1) | 0.32 | 0.41 | 0.61 | 0.63 | 0.59 | (46 | ) | 0.73 | 1.15 | (37 | ) | |||||||||||||||||||||||||
| Cash dividends declared | 0.18 | 0.18 | 0.18 | 0.17 | 0.17 | 6 | 0.36 | 0.33 | 9 | |||||||||||||||||||||||||||
| Book value | 21.22 | 20.80 | 20.53 | 20.16 | 19.65 | 8 | 21.22 | 19.65 | 8 | |||||||||||||||||||||||||||
| Tangible book value (3) | 16.95 | 16.52 | 16.28 | 15.90 | 15.38 | 10 | 16.95 | 15.38 | 10 | |||||||||||||||||||||||||||
| Key performance ratios: | ||||||||||||||||||||||||||||||||||||
| Return on common equity - GAAP (2)(4) | 6.17 | % | 7.85 | % | 12.07 | % | 12.16 | % | 11.45 | % | 7.01 | % | 11.65 | % | ||||||||||||||||||||||
| Return on common equity - operating (1)(2)(4) | 6.25 | 8.01 | 12.06 | 12.67 | 12.27 | 7.13 | 12.14 | |||||||||||||||||||||||||||||
| Return on tangible common equity - operating (1)(2)(3)(4) | 8.09 | 10.57 | 15.49 | 16.38 | 15.88 | 9.20 | 15.67 | |||||||||||||||||||||||||||||
| Return on assets - GAAP (4) | 0.71 | 0.99 | 1.50 | 1.51 | 1.40 | 0.85 | 1.42 | |||||||||||||||||||||||||||||
| Return on assets - operating (1)(4) | 0.72 | 1.01 | 1.50 | 1.58 | 1.50 | 0.86 | 1.48 | |||||||||||||||||||||||||||||
| Return on assets - pre-tax pre-provision (4)(5) | 1.86 | 1.95 | 2.00 | 2.05 | 1.92 | 1.91 | 1.94 | |||||||||||||||||||||||||||||
| Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5) | 1.87 | 1.98 | 2.00 | 2.13 | 2.05 | 1.92 | 2.02 | |||||||||||||||||||||||||||||
| Net interest margin (fully taxable equivalent) (4) | 3.42 | 4.07 | 3.93 | 4.12 | 4.12 | 3.73 | 4.11 | |||||||||||||||||||||||||||||
| Efficiency ratio - GAAP | 55.86 | 56.15 | 54.87 | 55.64 | 57.28 | 56.00 | 56.32 | |||||||||||||||||||||||||||||
| Efficiency ratio - operating (1) | 55.59 | 55.59 | 54.92 | 53.90 | 54.42 | 55.59 | 54.60 | |||||||||||||||||||||||||||||
| Equity to total assets | 11.81 | 12.54 | 12.66 | 12.53 | 12.25 | 11.81 | 12.25 | |||||||||||||||||||||||||||||
| Tangible common equity to tangible assets (3) | 9.12 | 10.22 | 10.32 | 10.16 | 9.86 | 9.12 | 9.86 | |||||||||||||||||||||||||||||
| ASSET QUALITY | ||||||||||||||||||||||||||||||||||||
| Nonperforming loans | $ | 48,021 | $ | 36,208 | $ | 35,341 | $ | 30,832 | $ | 26,597 | 81 | $ | 48,021 | $ | 26,597 | 81 | ||||||||||||||||||||
| Foreclosed properties | 477 | 475 | 476 | 102 | 75 | 536 | 477 | 75 | 536 | |||||||||||||||||||||||||||
| Total nonperforming assets ("NPAs") | 48,498 | 36,683 | 35,817 | 30,934 | 26,672 | 82 | 48,498 | 26,672 | 82 | |||||||||||||||||||||||||||
| Allowance for credit losses - loans | 103,669 | 81,905 | 62,089 | 62,514 | 62,204 | 67 | 103,669 | 62,204 | 67 | |||||||||||||||||||||||||||
| Net charge-offs | 6,149 | 8,114 | 3,925 | 2,723 | 2,438 | 152 | 14,263 | 5,568 | 156 | |||||||||||||||||||||||||||
| Allowance for credit losses - loans to loans | 1.02 | % | 0.92 | % | 0.70 | % | 0.70 | % | 0.70 | % | 1.02 | 0.70 | % | |||||||||||||||||||||||
| Net charge-offs to average loans (4) | 0.25 | 0.37 | 0.18 | 0.12 | 0.11 | 0.31 | 0.13 | |||||||||||||||||||||||||||||
| NPAs to loans and foreclosed properties | 0.48 | 0.41 | 0.41 | 0.35 | 0.30 | 0.48 | 0.30 | |||||||||||||||||||||||||||||
| NPAs to total assets | 0.32 | 0.28 | 0.28 | 0.24 | 0.21 | 0.32 | 0.21 | |||||||||||||||||||||||||||||
| AVERAGE BALANCES ($ in millions) | ||||||||||||||||||||||||||||||||||||
| Loans | $ | 9,773 | $ | 8,829 | $ | 8,890 | $ | 8,836 | $ | 8,670 | 13 | $ | 9,301 | $ | 8,551 | 9 | ||||||||||||||||||||
| Investment securities | 2,408 | 2,520 | 2,486 | 2,550 | 2,674 | (10 | ) | 2,464 | 2,778 | (11 | ) | |||||||||||||||||||||||||
| Earning assets | 12,958 | 11,798 | 11,832 | 11,568 | 11,534 | 12 | 12,378 | 11,516 | 7 | |||||||||||||||||||||||||||
| Total assets | 14,173 | 12,944 | 12,946 | 12,681 | 12,608 | 12 | 13,558 | 12,559 | 8 | |||||||||||||||||||||||||||
| Deposits | 12,071 | 10,915 | 10,924 | 10,531 | 10,493 | 15 | 11,493 | 10,427 | 10 | |||||||||||||||||||||||||||
| Shareholders’ equity | 1,686 | 1,653 | 1,623 | 1,588 | 1,531 | 10 | 1,670 | 1,505 | 11 | |||||||||||||||||||||||||||
| Common shares - basic (thousands) | 78,920 | 79,340 | 79,659 | 79,663 | 79,673 | (1 | ) | 79,130 | 79,739 | (1 | ) | |||||||||||||||||||||||||
| Common shares - diluted (thousands) | 78,924 | 79,446 | 79,669 | 79,667 | 79,678 | (1 | ) | 79,186 | 79,745 | (1 | ) | |||||||||||||||||||||||||
| AT PERIOD END ($ in millions) | ||||||||||||||||||||||||||||||||||||
| Loans | $ | 10,133 | $ | 8,935 | $ | 8,813 | $ | 8,903 | $ | 8,838 | 15 | $ | 10,133 | $ | 8,838 | 15 | ||||||||||||||||||||
| Investment securities | 2,432 | 2,540 | 2,559 | 2,515 | 2,620 | (7 | ) | 2,432 | 2,620 | (7 | ) | |||||||||||||||||||||||||
| Total assets | 15,005 | 13,086 | 12,916 | 12,809 | 12,779 | 17 | 15,005 | 12,779 | 17 | |||||||||||||||||||||||||||
| Deposits | 12,702 | 11,035 | 10,897 | 10,757 | 10,591 | 20 | 12,702 | 10,591 | 20 | |||||||||||||||||||||||||||
| Shareholders’ equity | 1,772 | 1,641 | 1,636 | 1,605 | 1,566 | 13 | 1,772 | 1,566 | 13 | |||||||||||||||||||||||||||
| Common shares outstanding (thousands) | 78,335 | 78,284 | 79,014 | 78,974 | 79,075 | (1 | ) | 78,335 | 79,075 | (1 | ) | |||||||||||||||||||||||||
| (1) | Excludes merger-related and other charges which includes termination of pension plan in the third quarter of 2019, executive retirement charges in the second quarter of 2019 and amortization of certain executive change of control benefits. |
| (2) | Net income divided by average realized common equity, which excludes accumulated other comprehensive income (loss). |
| (3) | Excludes effect of acquisition related intangibles and associated amortization. |
| (4) | Annualized. |
| (5) | Excludes income tax expense and provision for credit losses. |
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
| 2020 | 2019 | For the Six Months Ended June 30, | ||||||||||||||||||||||||||
| (in thousands, except per share data) | Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | 2020 | 2019 | |||||||||||||||||||||
| Expense reconciliation | ||||||||||||||||||||||||||||
| Expenses (GAAP) | $ | 83,980 | $ | 81,538 | $ | 81,424 | $ | 82,924 | $ | 81,813 | $ | 165,518 | $ | 157,897 | ||||||||||||||
| Merger-related and other charges | (397 | ) | (808 | ) | 74 | (2,605 | ) | (4,087 | ) | (1,205 | ) | (4,826 | ) | |||||||||||||||
| Expenses - operating | $ | 83,583 | $ | 80,730 | $ | 81,498 | $ | 80,319 | $ | 77,726 | $ | 164,313 | $ | 153,071 | ||||||||||||||
| Net income to operating income reconciliation | ||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 25,096 | $ | 31,884 | $ | 49,012 | $ | 48,362 | $ | 44,085 | $ | 56,980 | $ | 88,347 | ||||||||||||||
| Merger-related and other charges | 397 | 808 | (74 | ) | 2,605 | 4,087 | 1,205 | 4,826 | ||||||||||||||||||||
| Income tax benefit of merger-related and other charges | (87 | ) | (182 | ) | 17 | (600 | ) | (940 | ) | (269 | ) | (1,112 | ) | |||||||||||||||
| Net income - operating | $ | 25,406 | $ | 32,510 | $ | 48,955 | $ | 50,367 | $ | 47,232 | $ | 57,916 | $ | 92,061 | ||||||||||||||
| Net income to pre-tax pre-provision income reconciliation | ||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 25,096 | $ | 31,884 | $ | 49,012 | $ | 48,362 | $ | 44,085 | $ | 56,980 | $ | 88,347 | ||||||||||||||
| Income tax expense | 6,923 | 8,807 | 12,885 | 13,983 | 13,167 | 15,730 | 26,123 | |||||||||||||||||||||
| Provision for credit losses | 33,543 | 22,191 | 3,500 | 3,100 | 3,250 | 55,734 | 6,550 | |||||||||||||||||||||
| Pre-tax pre-provision income | $ | 65,562 | $ | 62,882 | $ | 65,397 | $ | 65,445 | $ | 60,502 | $ | 128,444 | $ | 121,020 | ||||||||||||||
| Diluted income per common share reconciliation | ||||||||||||||||||||||||||||
| Diluted income per common share (GAAP) | $ | 0.32 | $ | 0.40 | $ | 0.61 | $ | 0.60 | $ | 0.55 | $ | 0.71 | $ | 1.10 | ||||||||||||||
| Merger-related and other charges, net of tax | — | 0.01 | — | 0.03 | 0.04 | 0.02 | 0.05 | |||||||||||||||||||||
| Diluted income per common share - operating | $ | 0.32 | $ | 0.41 | $ | 0.61 | $ | 0.63 | $ | 0.59 | $ | 0.73 | $ | 1.15 | ||||||||||||||
| Book value per common share reconciliation | ||||||||||||||||||||||||||||
| Book value per common share (GAAP) | $ | 21.22 | $ | 20.80 | $ | 20.53 | $ | 20.16 | $ | 19.65 | $ | 21.22 | $ | 19.65 | ||||||||||||||
| Effect of goodwill and other intangibles | (4.27 | ) | (4.28 | ) | (4.25 | ) | (4.26 | ) | (4.27 | ) | (4.27 | ) | (4.27 | ) | ||||||||||||||
| Tangible book value per common share | $ | 16.95 | $ | 16.52 | $ | 16.28 | $ | 15.90 | $ | 15.38 | $ | 16.95 | $ | 15.38 | ||||||||||||||
| Return on tangible common equity reconciliation | ||||||||||||||||||||||||||||
| Return on common equity (GAAP) | 6.17 | % | 7.85 | % | 12.07 | % | 12.16 | % | 11.45 | % | 7.01 | % | 11.65 | % | ||||||||||||||
| Merger-related and other charges, net of tax | 0.08 | 0.16 | (0.01 | ) | 0.51 | 0.82 | 0.12 | 0.49 | ||||||||||||||||||||
| Return on common equity - operating | 6.25 | 8.01 | 12.06 | 12.67 | 12.27 | 7.13 | 12.14 | |||||||||||||||||||||
| Effect of goodwill and other intangibles | 1.84 | 2.56 | 3.43 | 3.71 | 3.61 | 2.07 | 3.53 | |||||||||||||||||||||
| Return on tangible common equity - operating | 8.09 | % | 10.57 | % | 15.49 | % | 16.38 | % | 15.88 | % | 9.20 | % | 15.67 | % | ||||||||||||||
| Return on assets reconciliation | ||||||||||||||||||||||||||||
| Return on assets (GAAP) | 0.71 | % | 0.99 | % | 1.50 | % | 1.51 | % | 1.40 | % | 0.85 | % | 1.42 | % | ||||||||||||||
| Merger-related and other charges, net of tax | 0.01 | 0.02 | — | 0.07 | 0.10 | 0.01 | 0.06 | |||||||||||||||||||||
| Return on assets - operating | 0.72 | % | 1.01 | % | 1.50 | % | 1.58 | % | 1.50 | % | 0.86 | % | 1.48 | % | ||||||||||||||
| Return on assets to return on assets- pre-tax pre-provision reconciliation | ||||||||||||||||||||||||||||
| Return on assets (GAAP) | 0.71 | % | 0.99 | % | 1.50 | % | 1.51 | % | 1.40 | % | 0.85 | % | 1.42 | % | ||||||||||||||
| Income tax expense | 0.20 | 0.27 | 0.39 | 0.44 | 0.42 | 0.23 | 0.41 | |||||||||||||||||||||
| Provision for credit losses | 0.95 | 0.69 | 0.11 | 0.10 | 0.10 | 0.83 | 0.11 | |||||||||||||||||||||
| Return on assets - pre-tax, pre-provision | 1.86 | 1.95 | 2.00 | 2.05 | 1.92 | 1.91 | 1.94 | |||||||||||||||||||||
| Merger-related and other charges | 0.01 | 0.03 | — | 0.08 | 0.13 | 0.01 | 0.08 | |||||||||||||||||||||
| Return on assets - pre-tax pre-provision, excluding merger-related and other charges | 1.87 | % | 1.98 | % | 2.00 | % | 2.13 | % | 2.05 | % | 1.92 | % | 2.02 | % | ||||||||||||||
| Efficiency ratio reconciliation | ||||||||||||||||||||||||||||
| Efficiency ratio (GAAP) | 55.86 | % | 56.15 | % | 54.87 | % | 55.64 | % | 57.28 | % | 56.00 | % | 56.32 | % | ||||||||||||||
| Merger-related and other charges | (0.27 | ) | (0.56 | ) | 0.05 | (1.74 | ) | (2.86 | ) | (0.41 | ) | (1.72 | ) | |||||||||||||||
| Efficiency ratio - operating | 55.59 | % | 55.59 | % | 54.92 | % | 53.90 | % | 54.42 | % | 55.59 | % | 54.60 | % | ||||||||||||||
| Tangible common equity to tangible assets reconciliation | ||||||||||||||||||||||||||||
| Equity to total assets (GAAP) | 11.81 | % | 12.54 | % | 12.66 | % | 12.53 | % | 12.25 | % | 11.81 | % | 12.25 | % | ||||||||||||||
| Effect of goodwill and other intangibles | (2.05 | ) | (2.32 | ) | (2.34 | ) | (2.37 | ) | (2.39 | ) | (2.05 | ) | (2.39 | ) | ||||||||||||||
| Effect of preferred equity | (0.64 | ) | — | — | — | — | (0.64 | ) | — | |||||||||||||||||||
| Tangible common equity to tangible assets | 9.12 | % | 10.22 | % | 10.32 | % | 10.16 | % | 9.86 | % | 9.12 | % | 9.86 | % | ||||||||||||||
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
| 2020 | 2019 | Linked | Year over | |||||||||||||||||||||||||
| (in millions) | Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | Quarter Change | Year Change | |||||||||||||||||||||
| LOANS BY CATEGORY | ||||||||||||||||||||||||||||
| Owner occupied commercial RE | $ | 1,760 | $ | 1,703 | $ | 1,720 | $ | 1,692 | $ | 1,658 | $ | 57 | $ | 102 | ||||||||||||||
| Income producing commercial RE | 2,178 | 2,065 | 2,008 | 1,934 | 1,939 | 113 | 239 | |||||||||||||||||||||
| Commercial & industrial | 1,219 | 1,310 | 1,221 | 1,271 | 1,299 | (91 | ) | (80 | ) | |||||||||||||||||||
| Paycheck protection program | 1,095 | — | — | — | — | 1,095 | 1,095 | |||||||||||||||||||||
| Commercial construction | 946 | 959 | 976 | 1,001 | 983 | (13 | ) | (37 | ) | |||||||||||||||||||
| Equipment financing | 779 | 761 | 745 | 729 | 674 | 18 | 105 | |||||||||||||||||||||
| Total commercial | 7,976 | 6,798 | 6,670 | 6,627 | 6,553 | 1,178 | 1,423 | |||||||||||||||||||||
| Residential mortgage | 1,152 | 1,128 | 1,118 | 1,121 | 1,108 | 24 | 44 | |||||||||||||||||||||
| Home equity lines of credit | 654 | 668 | 661 | 669 | 675 | (14 | ) | (21 | ) | |||||||||||||||||||
| Residential construction | 230 | 216 | 236 | 229 | 219 | 14 | 11 | |||||||||||||||||||||
| Consumer | 121 | 125 | 128 | 257 | 283 | (4 | ) | (162 | ) | |||||||||||||||||||
| Total loans | $ | 10,133 | $ | 8,935 | $ | 8,813 | $ | 8,903 | $ | 8,838 | $ | 1,198 | $ | 1,295 | ||||||||||||||
| LOANS BY MARKET | ||||||||||||||||||||||||||||
| North Georgia | $ | 951 | $ | 958 | $ | 967 | $ | 1,002 | $ | 1,002 | (7 | ) | (51 | ) | ||||||||||||||
| Atlanta | 1,852 | 1,820 | 1,762 | 1,740 | 1,745 | 32 | 107 | |||||||||||||||||||||
| North Carolina | 1,171 | 1,124 | 1,156 | 1,117 | 1,084 | 47 | 87 | |||||||||||||||||||||
| Coastal Georgia | 618 | 604 | 631 | 611 | 604 | 14 | 14 | |||||||||||||||||||||
| Gainesville | 233 | 235 | 246 | 246 | 244 | (2 | ) | (11 | ) | |||||||||||||||||||
| East Tennessee | 433 | 425 | 421 | 435 | 446 | 8 | (13 | ) | ||||||||||||||||||||
| South Carolina | 1,778 | 1,774 | 1,708 | 1,705 | 1,674 | 4 | 104 | |||||||||||||||||||||
| Commercial Banking Solutions | 3,097 | 1,995 | 1,922 | 1,916 | 1,884 | 1,102 | 1,213 | |||||||||||||||||||||
| Indirect auto | — | — | — | 131 | 155 | — | (155 | ) | ||||||||||||||||||||
| Total loans | $ | 10,133 | $ | 8,935 | $ | 8,813 | $ | 8,903 | $ | 8,838 | $ | 1,198 | $ | 1,295 | ||||||||||||||
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
| 2020 | 2019 | |||||||||||||||||||||||
| (in thousands) | Second Quarter | First Quarter | Fourth Quarter | |||||||||||||||||||||
| NONACCRUAL LOANS | ||||||||||||||||||||||||
| Owner occupied RE | $ | 10,710 | $ | 10,405 | $ | 10,544 | ||||||||||||||||||
| Income producing RE | 11,274 | 2,235 | 1,996 | |||||||||||||||||||||
| Commercial & industrial | 3,432 | 3,169 | 2,545 | |||||||||||||||||||||
| Commercial construction | 2,290 | 1,724 | 2,277 | |||||||||||||||||||||
| Equipment financing | 3,119 | 2,439 | 3,141 | |||||||||||||||||||||
| Total commercial | 30,825 | 19,972 | 20,503 | |||||||||||||||||||||
| Residential mortgage | 13,185 | 12,458 | 10,567 | |||||||||||||||||||||
| Home equity lines of credit | 3,138 | 3,010 | 3,173 | |||||||||||||||||||||
| Residential construction | 500 | 540 | 939 | |||||||||||||||||||||
| Consumer | 373 | 228 | 159 | |||||||||||||||||||||
| Total | $ | 48,021 | $ | 36,208 | $ | 35,341 | ||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||||||
| Second Quarter | First Quarter | Fourth Quarter | ||||||||||||||||||||||
| (in thousands) | Net Charge- Offs | Net Charge-Offs to Average Loans (1) | Net Charge- Offs | Net Charge-Offs to Average Loans (1) | Net Charge- Offs | Net Charge-Offs to Average Loans (1) | ||||||||||||||||||
| NET CHARGE-OFFS BY CATEGORY | ||||||||||||||||||||||||
| Owner occupied RE | $ | (466 | ) | $ | (0.11 | )% | $ | (1,028 | ) | (0.24 | )% | $ | (208 | ) | (0.05 | )% | ||||||||
| Income producing RE | 4,548 | 0.86 | 270 | 0.05 | 95 | 0.02 | ||||||||||||||||||
| Commercial & industrial | (37 | ) | (0.01 | ) | 7,185 | 2.30 | 1,809 | 0.58 | ||||||||||||||||
| Commercial construction | 122 | 0.05 | (141 | ) | (0.06 | ) | (140 | ) | (0.06 | ) | ||||||||||||||
| Equipment financing | 1,665 | 0.87 | 1,507 | 0.81 | 1,550 | 0.84 | ||||||||||||||||||
| Total commercial | 5,832 | 0.31 | 7,793 | 0.47 | 3,106 | 0.19 | ||||||||||||||||||
| Residential mortgage | (6 | ) | — | 9 | — | 89 | 0.03 | |||||||||||||||||
| Home equity lines of credit | (98 | ) | (0.06 | ) | (83 | ) | (0.05 | ) | 198 | 0.12 | ||||||||||||||
| Residential construction | (5 | ) | (0.01 | ) | (12 | ) | (0.02 | ) | (24 | ) | (0.04 | ) | ||||||||||||
| Consumer | 426 | 1.39 | 407 | 1.30 | 556 | 0.90 | ||||||||||||||||||
| Total | $ | 6,149 | 0.25 | $ | 8,114 | 0.37 | $ | 3,925 | 0.18 | |||||||||||||||
| (1) | Annualized. |
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
| (in thousands, except share and per share data) | June 30, 2020 | December 31, 2019 | ||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 125,255 | $ | 125,844 | ||||
| Interest-bearing deposits in banks | 1,203,706 | 389,362 | ||||||
| Cash and cash equivalents | 1,328,961 | 515,206 | ||||||
| Debt securities available-for-sale | 2,125,209 | 2,274,581 | ||||||
| Debt securities held-to-maturity (fair value $320,253 and $287,904) | 306,638 | 283,533 | ||||||
| Loans held for sale at fair value | 99,477 | 58,484 | ||||||
| Loans and leases held for investment | 10,132,510 | 8,812,553 | ||||||
| Less allowance for credit losses - loans and leases | (103,669 | ) | (62,089 | ) | ||||
| Loans and leases, net | 10,028,841 | 8,750,464 | ||||||
| Premises and equipment, net | 211,972 | 215,976 | ||||||
| Bank owned life insurance | 200,699 | 202,664 | ||||||
| Accrued interest receivable | 37,774 | 32,660 | ||||||
| Net deferred tax asset | 27,362 | 34,059 | ||||||
| Derivative financial instruments | 94,434 | 35,007 | ||||||
| Goodwill and other intangible assets, net | 340,220 | 342,247 | ||||||
| Other assets | 203,300 | 171,135 | ||||||
| Total assets | $ | 15,004,887 | $ | 12,916,016 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing demand | $ | 4,689,545 | $ | 3,477,979 | ||||
| NOW and interest-bearing demand | 2,582,831 | 2,461,895 | ||||||
| Money market | 2,621,158 | 2,230,628 | ||||||
| Savings | 832,529 | 706,467 | ||||||
| Time | 1,751,091 | 1,859,574 | ||||||
| Brokered | 224,931 | 160,701 | ||||||
| Total deposits | 12,702,085 | 10,897,244 | ||||||
| Long-term debt | 311,631 | 212,664 | ||||||
| Derivative financial instruments | 24,685 | 15,516 | ||||||
| Accrued expenses and other liabilities | 194,841 | 154,900 | ||||||
| Total liabilities | 13,233,242 | 11,280,324 | ||||||
| Shareholders' equity: | ||||||||
| Preferred stock; $1 par value; 10,000,000 shares authorized; Series I, $25,000 per share liquidation preference; 4,000 shares issued and outstanding | 96,660 | — | ||||||
| Common stock, $1 par value; 150,000,000 shares authorized; 78,335,127 and 79,013,729 shares issued and outstanding | 78,335 | 79,014 | ||||||
| Common stock issuable; 596,785 and 664,640 shares | 10,646 | 11,491 | ||||||
| Capital surplus | 1,480,464 | 1,496,641 | ||||||
| Retained earnings | 64,990 | 40,152 | ||||||
| Accumulated other comprehensive income | 40,550 | 8,394 | ||||||
| Total shareholders' equity | 1,771,645 | 1,635,692 | ||||||
| Total liabilities and shareholders' equity | $ | 15,004,887 | $ | 12,916,016 | ||||
UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Income (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (in thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Interest revenue: | ||||||||||||||||
| Loans, including fees | $ | 107,862 | $ | 119,671 | $ | 225,925 | $ | 234,930 | ||||||||
| Investment securities, including tax exempt of $1,570, $1,122, $3,093 and $2,291 | 15,615 | 19,076 | 33,009 | 39,894 | ||||||||||||
| Deposits in banks and short-term investments | 128 | 409 | 1,218 | 848 | ||||||||||||
| Total interest revenue | 123,605 | 139,156 | 260,152 | 275,672 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits: | ||||||||||||||||
| NOW and interest-bearing demand | 1,628 | 3,460 | 4,606 | 7,069 | ||||||||||||
| Money market | 3,421 | 4,842 | 7,952 | 8,974 | ||||||||||||
| Savings | 39 | 42 | 74 | 74 | ||||||||||||
| Time | 6,183 | 8,771 | 13,714 | 16,955 | ||||||||||||
| Deposits | 11,271 | 17,115 | 26,346 | 33,072 | ||||||||||||
| Short-term borrowings | — | 248 | 1 | 409 | ||||||||||||
| Federal Home Loan Bank advances | — | 752 | 1 | 2,174 | ||||||||||||
| Long-term debt | 3,030 | 3,257 | 5,894 | 6,599 | ||||||||||||
| Total interest expense | 14,301 | 21,372 | 32,242 | 42,254 | ||||||||||||
| Net interest revenue | 109,304 | 117,784 | 227,910 | 233,418 | ||||||||||||
| Provision for credit losses | 33,543 | 3,250 | 55,734 | 6,550 | ||||||||||||
| Net interest revenue after provision for credit losses | 75,761 | 114,534 | 172,176 | 226,868 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges and fees | 6,995 | 9,060 | 15,633 | 17,513 | ||||||||||||
| Mortgage loan gains and other related fees | 23,659 | 5,344 | 31,969 | 9,092 | ||||||||||||
| Brokerage fees | 1,324 | 1,588 | 2,964 | 2,925 | ||||||||||||
| Gains from sales of other loans, net | 1,040 | 1,470 | 2,714 | 2,773 | ||||||||||||
| Securities gains (losses), net | — | 149 | — | (118 | ) | |||||||||||
| Other | 7,220 | 6,920 | 12,772 | 13,314 | ||||||||||||
| Total noninterest income | 40,238 | 24,531 | 66,052 | 45,499 | ||||||||||||
| Total revenue | 115,999 | 139,065 | 238,228 | 272,367 | ||||||||||||
| Noninterest expenses: | ||||||||||||||||
| Salaries and employee benefits | 51,811 | 48,157 | 103,169 | 95,660 | ||||||||||||
| Communications and equipment | 6,556 | 6,222 | 12,502 | 12,010 | ||||||||||||
| Occupancy | 5,945 | 5,919 | 11,659 | 11,503 | ||||||||||||
| Advertising and public relations | 2,260 | 1,596 | 3,534 | 2,882 | ||||||||||||
| Postage, printing and supplies | 1,613 | 1,529 | 3,283 | 3,115 | ||||||||||||
| Professional fees | 4,823 | 4,054 | 8,920 | 7,215 | ||||||||||||
| Lending and loan servicing expense | 3,189 | 2,619 | 5,482 | 4,953 | ||||||||||||
| Outside services - electronic banking | 1,796 | 1,558 | 3,628 | 3,167 | ||||||||||||
| FDIC assessments and other regulatory charges | 1,558 | 1,547 | 3,042 | 3,257 | ||||||||||||
| Amortization of intangibles | 987 | 1,342 | 2,027 | 2,635 | ||||||||||||
| Merger-related and other charges | 397 | 3,894 | 1,205 | 4,440 | ||||||||||||
| Other | 3,045 | 3,376 | 7,067 | 7,060 | ||||||||||||
| Total noninterest expenses | 83,980 | 81,813 | 165,518 | 157,897 | ||||||||||||
| Net income before income taxes | 32,019 | 57,252 | 72,710 | 114,470 | ||||||||||||
| Income tax expense | 6,923 | 13,167 | 15,730 | 26,123 | ||||||||||||
| Net income | $ | 25,096 | $ | 44,085 | $ | 56,980 | $ | 88,347 | ||||||||
| Net income available to common shareholders | $ | 24,913 | $ | 43,769 | $ | 56,554 | $ | 87,716 | ||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | 0.32 | $ | 0.55 | $ | 0.71 | $ | 1.10 | ||||||||
| Diluted | 0.32 | 0.55 | 0.71 | 1.10 | ||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 78,920 | 79,673 | 79,130 | 79,739 | ||||||||||||
| Diluted | 78,924 | 79,678 | 79,186 | 79,745 | ||||||||||||
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
| 2020 | 2019 | |||||||||||||||||||||||
| (dollars in thousands, fully taxable equivalent (FTE)) | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Loans, net of unearned income (FTE) (1)(2) | $ | 9,772,703 | $ | 107,398 | 4.42 | % | $ | 8,669,847 | $ | 119,668 | 5.54 | % | ||||||||||||
| Taxable securities (3) | 2,229,371 | 14,045 | 2.52 | 2,506,942 | 17,954 | 2.86 | ||||||||||||||||||
| Tax-exempt securities (FTE) (1)(3) | 178,903 | 2,110 | 4.72 | 166,628 | 1,507 | 3.62 | ||||||||||||||||||
| Federal funds sold and other interest-earning assets | 776,776 | 857 | 0.44 | 190,678 | 679 | 1.42 | ||||||||||||||||||
| Total interest-earning assets (FTE) | 12,957,753 | 124,410 | 3.86 | 11,534,095 | 139,808 | 4.86 | ||||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Allowance for credit losses | (89,992 | ) | (62,716 | ) | ||||||||||||||||||||
| Cash and due from banks | 138,842 | 125,021 | ||||||||||||||||||||||
| Premises and equipment | 217,096 | 224,018 | ||||||||||||||||||||||
| Other assets (3) | 949,201 | 787,859 | ||||||||||||||||||||||
| Total assets | $ | 14,172,900 | $ | 12,608,277 | ||||||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| NOW and interest-bearing demand | $ | 2,444,895 | 1,628 | 0.27 | $ | 2,190,080 | 3,460 | 0.63 | ||||||||||||||||
| Money market | 2,541,805 | 3,421 | 0.54 | 2,186,282 | 4,842 | 0.89 | ||||||||||||||||||
| Savings | 788,247 | 39 | 0.02 | 687,753 | 42 | 0.02 | ||||||||||||||||||
| Time | 1,805,671 | 6,058 | 1.35 | 1,773,968 | 6,949 | 1.57 | ||||||||||||||||||
| Brokered time deposits | 130,556 | 125 | 0.39 | 298,553 | 1,822 | 2.45 | ||||||||||||||||||
| Total interest-bearing deposits | 7,711,174 | 11,271 | 0.59 | 7,136,636 | 17,115 | 0.96 | ||||||||||||||||||
| Federal funds purchased and other borrowings | 1 | — | — | 38,838 | 248 | 2.56 | ||||||||||||||||||
| Federal Home Loan Bank advances | — | — | — | 117,912 | 752 | 2.56 | ||||||||||||||||||
| Long-term debt | 228,096 | 3,030 | 5.34 | 252,351 | 3,257 | 5.18 | ||||||||||||||||||
| Total borrowed funds | 228,097 | 3,030 | 5.34 | 409,101 | 4,257 | 4.17 | ||||||||||||||||||
| Total interest-bearing liabilities | 7,939,271 | 14,301 | 0.72 | 7,545,737 | 21,372 | 1.14 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 4,360,095 | 3,355,930 | ||||||||||||||||||||||
| Other liabilities | 187,375 | 175,806 | ||||||||||||||||||||||
| Total liabilities | 12,486,741 | 11,077,473 | ||||||||||||||||||||||
| Shareholders' equity | 1,686,159 | 1,530,804 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 14,172,900 | 12,608,277 | |||||||||||||||||||||
| Net interest revenue (FTE) | $ | 110,109 | $ | 118,436 | ||||||||||||||||||||
| Net interest-rate spread (FTE) | 3.14 | % | 3.72 | % | ||||||||||||||||||||
| Net interest margin (FTE) (4) | 3.42 | % | 4.12 | % | ||||||||||||||||||||
| (1) | Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate. |
| (2) | Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale. |
| (3) | Securities available for sale are shown at amortized cost. Pretax unrealized gains of $66.3 million in 2020 and unrealized gains of $5.00 million in 2019 are included in other assets for purposes of this presentation. |
| (4) | Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets. |
Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
| 2020 | 2019 | |||||||||||||||||||||||
| (dollars in thousands, fully taxable equivalent (FTE)) | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Loans, net of unearned income (FTE) (1)(2) | $ | 9,300,792 | $ | 225,194 | 4.87 | % | $ | 8,550,574 | $ | 235,015 | 5.54 | % | ||||||||||||
| Taxable securities (3) | 2,293,502 | 29,916 | 2.61 | 2,609,400 | 37,603 | 2.88 | ||||||||||||||||||
| Tax-exempt securities (FTE) (1)(3) | 170,578 | 4,155 | 4.87 | 168,156 | 3,077 | 3.66 | ||||||||||||||||||
| Federal funds sold and other interest-earning assets | 612,776 | 2,489 | 0.81 | 188,165 | 1,297 | 1.38 | ||||||||||||||||||
| Total interest-earning assets (FTE) | 12,377,648 | 261,754 | 4.25 | 11,516,295 | 276,992 | 4.84 | ||||||||||||||||||
| Non-interest-earning assets: | ||||||||||||||||||||||||
| Allowance for loan losses | (79,885 | ) | (62,253 | ) | ||||||||||||||||||||
| Cash and due from banks | 133,548 | 124,414 | ||||||||||||||||||||||
| Premises and equipment | 218,170 | 220,335 | ||||||||||||||||||||||
| Other assets (3) | 908,828 | 759,899 | ||||||||||||||||||||||
| Total assets | $ | 13,558,309 | $ | 12,558,690 | ||||||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| NOW and interest-bearing demand | $ | 2,428,815 | 4,606 | 0.38 | $ | 2,238,083 | 7,069 | 0.64 | ||||||||||||||||
| Money market | 2,441,264 | 7,952 | 0.66 | 2,142,411 | 8,974 | 0.84 | ||||||||||||||||||
| Savings | 750,179 | 74 | 0.02 | 680,018 | 74 | 0.02 | ||||||||||||||||||
| Time | 1,823,612 | 13,308 | 1.47 | 1,701,181 | 12,285 | 1.46 | ||||||||||||||||||
| Brokered time deposits | 105,689 | 406 | 0.77 | 389,794 | 4,670 | 2.42 | ||||||||||||||||||
| Total interest-bearing deposits | 7,549,559 | 26,346 | 0.70 | 7,151,487 | 33,072 | 0.93 | ||||||||||||||||||
| Federal funds purchased and other borrowings | 199 | 1 | 1.01 | 30,241 | 409 | 2.73 | ||||||||||||||||||
| Federal Home Loan Bank advances | 83 | 1 | 2.42 | 170,636 | 2,174 | 2.57 | ||||||||||||||||||
| Long-term debt | 220,429 | 5,894 | 5.38 | 257,134 | 6,599 | 5.18 | ||||||||||||||||||
| Total borrowed funds | 220,711 | 5,896 | 5.37 | 458,011 | 9,182 | 4.04 | ||||||||||||||||||
| Total interest-bearing liabilities | 7,770,270 | 32,242 | 0.83 | 7,609,498 | 42,254 | 1.12 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 3,943,740 | 3,275,612 | ||||||||||||||||||||||
| Other liabilities | 174,781 | 169,048 | ||||||||||||||||||||||
| Total liabilities | 11,888,791 | 11,054,158 | ||||||||||||||||||||||
| Shareholders' equity | 1,669,518 | 1,504,532 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 13,558,309 | $ | 12,558,690 | ||||||||||||||||||||
| Net interest revenue (FTE) | $ | 229,512 | $ | 234,738 | ||||||||||||||||||||
| Net interest-rate spread (FTE) | 3.42 | % | 3.72 | % | ||||||||||||||||||||
| Net interest margin (FTE) (4) | 3.73 | % | 4.11 | % | ||||||||||||||||||||
| (1) | Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate. |
| (2) | Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale. |
| (3) | Securities available for sale are shown at amortized cost. Pretax unrealized gains of $59.6 million in 2020 and unrealized losses of $10.4 million in 2019 are included in other assets for purposes of this presentation. |
| (4) | Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets. |
About United Community Banks, Inc.
United Community Banks, Inc. (NASDAQ: UCBI) (United) is a bank holding company headquartered in Blairsville, Georgia, with executive offices in Greenville, South Carolina. United is one of the largest full-service financial institutions in the Southeast, with $15.0 billion in assets, and 149 offices in Georgia, North Carolina, South Carolina and Tennessee at June 30, 2020. Through its July 1st acquisition of Three Shores Bancorporation and its wholly-owned banking subsidiary, Seaside National Bank & Trust, United added approximately $2.1 billion in assets and 14 banking offices in key metropolitan markets throughout Florida. United Community Bank, United’s wholly-owned bank subsidiary, specializes in personalized community banking services for individuals, small businesses and companies throughout its geographic footprint, now including Florida under the brand Seaside Bank and Trust. Services include a full range of consumer and commercial banking products, including mortgage, advisory, treasury management, and now wealth management. Respected national research firms consistently recognize United for outstanding customer service. In 2020, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking six out of the last seven years United earned the coveted award. Forbes included United in its inaugural list of the World’s Best Banks in 2019 and again in 2020. Forbes also recognized United on its 2020 list of the 100 Best Banks in America for the seventh consecutive year. United also received five Greenwich Excellence Awards in 2019 for excellence in Small Business Banking and Middle Market Banking, including a national award for Overall Satisfaction in Small Business Banking. Additional information about United can be found at www.ucbi.com.
Non-GAAP Financial Measures
This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “pre-tax pre-provision income,” “operating net income per diluted common share,” “operating earnings per share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “return on assets - pre-tax pre-provision, excluding merger-related and other charges,” “return on assets – pre-tax pre-provision,” “operating efficiency ratio,” and “tangible common equity to tangible assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.
# # #
Exhibit 99.2
2 Q INVESTOR PRESENTATION July 21, 2020
Disclosures CAUTIONARY STATEMENT This Investor Presentation contains forward - looking statements about United Community Banks, Inc . (“United”), as defined in federal securities laws . Statements that are not historical or current facts, including statements about beliefs and expectations, are forward - looking statements and are based on information available to, and assumptions and estimates made by, management as of the date hereof . Because forward - looking statements involve inherent risks and uncertainties, our actual results may differ materially from those expressed or implied in any such statements . The COVID - 19 pandemic is adversely impacting United, its employees, customers , vendors, counterparties, and the communities that it serves . The ultimate extent of the impact of COVID — 19 on United’s financial position, results of operations, liquidity, and prospects is highly uncertain . United’s results could be adversely affected by, among other things, volatility in financial markets, continued deterioration of economic and business conditions, further increases in unemployment rates, deterioration in the credit quality of United’s loan portfolio, deterioration in the value of United’s investment securities, and changes in statutes, regulations, and regulatory policies or practices . For a discussion of these and other risks that may cause such forward - looking statements to differ materially from actual results, please refer to United’s filings with the Securities and Exchange Commission, including its 2019 Annual Report on Form 10 - K and Form 10 - Q for the quarter ended March 31 , 2020 under the sections entitled “Cautionary Note Regarding Forward - Looking Statements” and “Risk Factors . ” Forward - looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward - looking statements . NON - GAAP MEASURES This Investor Presentation includes financial information determined by methods other than in accordance with generally accepted accounting principles (“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 measures include : “Earnings per share – operating,” “Diluted earnings per share – operating,” “Tangible book value per share,” “Return on common equity – operating,” “Return on tangible common equity – operating,” “Return on assets – operating ,” “Return on assets – pre - tax pre - provision, excluding merger - related and other charges,” “ Efficiency ratio – operating,” “Expenses – operating,” and “Tangible common equity to tangible assets . ” Management has included these non - GAAP measures because it believes these measures may provide useful supplemental information for evaluating United’s underlying performance trends . Further, management uses these measures in managing and evaluating United’s business and intends to refer to them in discussions about our operations and performance . Operating performance 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 GAAP measures can be found in the ‘Non - GAAP Reconciliation Tables’ included in the exhibits to this Presentation . 2
156 BANKING OFFICES ACROSS THE SOUTHEAST, INCLUDING SEASIDE #1 IN CUSTOMER SATISFACTION with Retail Banking in the Southeast – J.D. Power United Community Banks, Inc. $ 15.0 BILLION IN ASSETS $2.3 BILLION IN AUA (1) $ 12.7 BILLION IN TOTAL DEPOSITS WORLD’S BEST BANKS in 2019 & 2020 - Forbes 2020 TOP WORKPLACES In S.C. & Atlanta – Greenville Business Magazine & Atlanta Journal Constitution BEST IN CLASS CUSTOMER SATISFACTION - Customer Service Profiles $0.18 QUARTERLY DIVIDEND UP 6% YOY 3 Branches United Community Seaside Bank and Trust – acquisition closed July 1st Regional Full Service Branch Network National Navitas and SBA Markets Premier Southeast Regional Bank x Metro - focused branch network with locations in the fastest growing MSAs in the Southeast x 156 branches, 7 loan production sites, and 5 mortgage loan offices across five SE states x Recent expansion into key Florida markets with Seaside acquisition x Top 10 market share in GA and SC x Proven ability to integrate bank transactions – 8 transactions over the past 10 years ONE OF THE LARGEST REGIONAL BANKS IN THE U.S. BY ASSETS Committed to Service Since 1950 Extended Navitas and SBA Markets $10.1 BILLION IN TOTAL LOANS Company Overview 14.1% TIER 1 RBC 100 BEST BANKS IN AMERICA f or the seventh consecutive year - Forbes x Offered in 48 states across the continental U.S. x SBA business has both in - footprint and national business (4 specific verticals) x Navitas subsidiary is a small ticket essential use commercial equipment lease provider (1) Assets Under Administration
$19.65 $20.80 $21.22 $15.38 $16.52 $16.95 2Q19 1Q20 2Q20 Book Value Per Share GAAP Operating (1) $ 0.32 Diluted earnings per share – GAAP and operating 0.71% Return on average assets - GAAP 0.72% Return on average assets - operating 1.87% PTPP ROA 0.38% Cost of Deposits One of the lowest cost of deposit bases vs. peers (2) 6.2% Return on common equity - GAAP 8.1% Return on tangible common equity - operating 8% YOY growth in Book value per share 10% YOY growth in Tangible book value per share Annualized 2Q EOP loan growth of 5 % or $ 103 mm, e xcluding PPP loans o f $1.1 billion 37% DDA / Total Deposits 2 Q20 Highlights (1) See non - GAAP reconciliation table slides in the Appendix for a reconciliation of operating performance measures to GAAP performance (2) Peers defined as members in KBW Regional Banking Index (KRX ) $0.55 $0.40 $0.32 $0.59 $0.41 $0.32 2Q19 1Q20 2Q20 Earnings Per Share GAAP Operating (1) 1.40% 0.99% 0 .71% 1.50% 1.01% 0.72% 2Q19 1Q20 2Q20 Return on Assets GAAP Operating (1) $0.17 $0.18 $0.18 2Q19 1Q20 2Q20 Dividends Per Share Dividends per share (1) (1) (1) 4
High Quality Balance Sheet / Earnings Strength 5 Capital x 1Q20 TCE + reserves is substantially higher compared to peers; providing greater stability and protection against losses x UCBI ranks 12 th highest among the 50 KRX peers (1) Pre - tax pre - provision Operating ROA calculated as ROA excluding the effect of income tax expense, provision expense and merg er charges Source: S&P Global Markets Profitability x 1Q20 PTPP ROA is 25% higher compared to peers x UCBI is among the top 10 for peers in the KRX Liquidity x Significantly lower 1Q20 loan to deposit ratio compared to peers x Only nine banks among the KRX peers have a lower loans/deposits ratio compared to UCBI Funding x Funding base comprised mostly of core deposits; 1Q20 funding costs well below peers x UCBI ranks 15 th best among the 50 KRX peers 1.98% 1.58% UCBI KRX Median PTPP ROA (1) 0.56% 0.66% UCBI KRX Median Cost of Deposits 81% 93% UCBI KRX Median Loans / Deposits % 15.20% 13.40% UCBI KRX Median TCE + ALLL / Total Loans
$59.7 $66.0 12.0% 9.9% 6.0% 3.3% (1) Includes MSAs with a population of greater than 300,000 (2) Data by MSA shown on a weighted average basis by deposits Located in Most of the Top 20 Markets in the Region United / Seaside MSA Presence (Branch and or LPO) Projected Population Growth (2 ) 2020 – 2025 (%) Projected Household Income Growth (2) 2020 – 2025 (%) Median Household Income (2) ($ in thousands) High - Growth MSAs in the Southeast UCBI Focused on High - Growth MSAs in Southeast National Avg. National Avg. National Avg. Fastest Growing ‘20 – ’25 Proj. ’20 ‘25 Proj. Median Southeast MSAs (1) Pop. Growth % Population Household Income 1.Myrtle Beach, SC 9.17 502,515 $59,235 2.Cape Coral, FL 8.12 770,874 $67,430 3.Orlando, FL 7.88 2,655,278 $68,956 4.Raleigh, NC 7.75 1,394,356 $90,366 5.Charleston, SC 7.65 809,100 $75,912 6.Naples, FL 7.61 388,069 $82,927 7.Lakeland, FL 7.56 724,485 $59,017 8.Sarasota, FL 7.41 842,503 $70,762 9.Wilmington, NC 7.06 302,140 $65,901 10.Charlotte, NC 6.99 2,658,337 $75,204 11.Spartanburg, SC 6.95 321,550 $62,690 12.Jacksonville, FL 6.81 1,579,191 $70,264 13.Tampa, FL 6.66 3,219,587 $64,132 14.Port St. Lucie-Stuart, FL 6.65 489,085 $66,378 15.Fayetteville, AR 6.54 542,180 $70,774 16.Daytona Beach, FL 6.39 672,670 $59,730 17.Nashville, TN 6.37 1,954,627 $82,681 18.Miami-Ft. Lauderdale, FL 6.34 6,324,937 $67,104 19.Durham-Chapel Hill, NC 6.21 646,708 $74,663 20.Atlanta, GA 6.12 6,073,585 $81,378 6
37% 9% 22% 1% 11% 7% 2% 11% Residential Mortgage Loans 2Q20 Total Loans $10.1 billion (1) C&I includes commercial and industrial loans, owner - occupied CRE loans and Navitas (equipment finance) loans x Loans increased $1.2 billion in 2Q20, with $1.1 billion coming from PPP loans x Other loan growth of $103 million, or 5% annualized x Record loan production of $2.0 billion with $1.1 billion in PPP loans and $866 million in traditional loans 7 C&I Commercial Construction CRE Other Consumer PPP Home Equity Residential Construction (1)
Credit Quality — UCBI 8 x 2Q20 NCOs of $6.1 million, or 0.25% annualized • Primarily driven by two credits that had been substandard for greater than 12 months x NPAs increase primarily driven by the same two credits above x The provision for credit losses was $33.5 million and increased the allowance for credit losses by 31 % since last quarter 0.11% 0.37% 0.25% 2Q19 1Q20 2Q20 $3.3 $22.2 $33.5 2Q19 1Q20 2Q20 0.21% 0.28% 0.32% 2Q19 1Q20 2Q20 Net Charge - Offs as % of Average Loans Provision for Credit Losses $ in millions Non - Performing Assets as % of Total Assets
x Navitas 2Q20 NCOs = 0.87% x Navitas had a >4% 2Q20 pretax ROA and could withstand ~4.5% in annualized credit losses before reporting a net loss x Navitas ’ cumulative net loss rates have approximated 2 % for the last 10 years x Navitas ACL - Loans equated to 2.61% as of 2Q20 x Rating agencies have historically assigned Navitas originations with expected through - the - cycle loss rates of 3.1% to 3.8 % Credit Quality — Navitas 9 0.58% 0.81% 0.87% 2Q19 1Q20 2Q20 Net Charge - Offs as % of Average Loans x As of June 30 th , $231 million of Navitas loans were deferred, which equated to approximately 30% of the total Navitas loan portfolio x Top 5 loan categories by industry type account for 35% of total portfolio (eating places 11%, physician offices 7%, fitness facilities 7%, salons 6%, local trucking 4%) x Nearly all (98%) deferrals made at least a modest payment in June 31% 28% 77% 75% 29% Eating Places Physician Offices Fitness Facilities Salons Local Trucking Navitas Deferral % for Top 5 Categories 2Q20
Loan Deferrals 10 x Deferrals totaled $1.8 billion or 17% of the entire portfolio • Commercial deferrals totaled $1.4 billion, (20% of Commercial portfolio) • Consumer deferrals totaled $45 million (4.5% of Consumer portfolio) • Mortgage deferrals totaled $105 million (9.4% of Mortgage portfolio) x UCBI deferred borrowers DDA balances increased by $37.8 million in 2Q20 x Seaside deferrals of $204 million through June 30 th , or 14% of total loans $1.4 $1.5 $1.6 $1.7 $1.7 $1.7 $1.7 $1.8 $1.8 $1.8 Deferrals Over Time $ in billions 49% 23% 13% 6% 6% 3% 2Q20 Deferrals Mix OO RE Navitas (equipment finance) C&I Consumer Residential Mortgage CRE
Selected Segments – Restaurants & Hotels 11 x Restaurant exposure totaled $325.4 million as of 2Q20, or 3% of total loans x Top 10 commitments totaled $48 million x As of June 30 th , $128 million of restaurant loans were deferred, which equated to approximately 39% of the total restaurant portfolio outstanding x Navitas (equipment finance) lends on various essential - use restaurant equipment with an average loan size of $20K x Hotel exposure totaled $305.3 million as of 2Q20, or 3% of total loans x Loan to value low at 53% on average x Top Tier brands represent approximately 6 1% of total outstanding exposure x Over 50% of hotel exposure is located within Atlanta, Columbia, Myrtle Beach, Greenville, Savannah and Florence x Top 10 commitments totaled $ 135 million x As of June 30 th , $221 million of hotel loans were deferred, which equated to approximately 72% of the total hotel portfolio outstanding (1) Excluding PPP loans ($ millions) # of Loans Total Commitment Total Outstanding Owner Occupied RE 181 117.4$ 110.1$ Construction 16 23.6$ 16.9$ C&I 258 83.3$ 55.4$ SBA 200 51.4$ 45.3$ Navitas (equipment finance) 4,863 97.7$ 97.7$ Total 5,518 373.4$ 325.4$ Restaurants by Product (1) ($ millions) # of Loans Total Commitment Total Outstanding CRE 95 261.6$ 232.2$ Construction 10 75.4$ 59.3$ SBA 7 7.9$ 7.9$ Navitas (equipment finance) 181 5.9$ 5.9$ Total 293 350.8$ 305.3$ Hotels by Product (1)
12 x The allowance for credit losses increased $27 million in 2Q20 and $50 million from year - end x The ACL ratio moved to 1.14%, or 1.28% excluding PPP loans x We reviewed multiple scenarios and examined and stressed our inputs x The current environment is inherently unpredictable due to the impact of COVID - 19. We continuously review multiple economic scenarios and the potential mitigants of government action x Separately, all things equal, our ACL will increase another 25 bps – 40 bps in 3Q20 due to the expected PCD loan marks and the expected non - PCD double dip provision associated with the Seaside acquisition Allowance for Credit Losses (ACL) $ in millions ACL - Loans 62,089$ 68,969$ 81,905$ 103,669$ ACL - Unfunded Commitments 3,458$ 5,329$ 6,470$ 12,100$ ACL - Allowance for Credit Losses 65,547$ 0.74% 74,298$ 88,375$ 0.99% 115,769$ 1.14% 4Q19 Day 1 CECL 1/1/2020 1Q20 2Q20
Capital Ratios 2Q20 Highlights CET1 Ratio (%) Tier 1 Ratio (%) Total Capital Ratio (%) Holding Company 2Q19 1Q20 2Q20 (1) Common Equity Tier 1 Capital 12.1 % 12.9 % 12.9 % Tier 1 Risk - Based Capital 12.4 13.1 14.1 Total Risk - Based Capital 14.2 14.9 16.1 Leverage 10.0 10.4 10.3 Tangible Common Equity to Tangible Assets 9.9 10.2 9.1 (1) 2Q20 capital ratios are preliminary 12.0% 12.2% 13.0% 12.9% 12.9% 4Q17 4Q18 4Q19 1Q20 2Q20 12.2% 12.4% 13.2% 13.1% 14.1% 4Q17 4Q18 4Q19 1Q20 2Q20 13.1% 14.3% 15.0% 14.9% 16.1% 4Q17 4Q18 4Q19 1Q20 2Q20 x Capital ratios near industry highs and 2Q20 also reflects the $100 million preferred equity raise on June 3 rd x Raised $100 million of senior notes at the holding company providing flexibility; pre - funded $61.3 million in callable securities with an ultimate maturity of 1Q22 x Our Seaside acquisition closed July 1 st , 2020, and all things equal, is expected to lower 3Q20 capital ratios by 75 bps – 105 bps x Excluding the impact of PPP loans, 2Q20 TCE of 9.9% x Quarterly dividend of $0.18 per share x Temporarily suspending buyback activity given the environment 13 (1) (1) (1)
$117.8 $118.6 $109.3 2Q19 1Q20 2Q20 Net Interest Revenue / Margin (1) $ in millions x Net interest revenue decreased $9 million ( - 8%) vs. 1Q20 x Net interest margin decreased 65 bps from 1Q20, with 18 bps of the decline due to lower purchased loan accretion • Loan accretion contributed $2.6 million or 8 bps vs . $7.6 million or 26 bps in 1Q20 • PPP balances at a 2.86% yield — including fees — decreased NIM by 6 bps • Average overnight investments increased $300 million in 2Q20 to $690 million, lowering the NIM by 9 bps 4.12% 4.07% 3.42% Net Interest Revenue Net Interest Margin (1) Net interest margin is calculated on a fully - taxable equivalent basis (2) Transaction accounts include demand deposits, interest - bearing demand, money market and savings accounts, excluding public funds deposits (1) $7.4 $7.7 $9.4 2Q19 1Q20 2Q20 Core Transaction Deposits 14 x Core transaction deposits were up $1.7 billion, or 22% from 1Q20 and up $2.0 billion, or 27% YOY x Core noninterest bearing deposit growth of $1.1 billion, or 31% from 1Q20 and growth of $1.3 billion, or 38% YOY drove the majority of core transaction growth • 37% of total deposits are noninterest bearing deposits • UCBI cost of deposits improved 18 bps to 0.38 % x Approximately $800 million of core transaction deposit growth came from PPP customers (2)
Noninterest Income $ in millions $9.1 $8.6 $7.0 $7.0 $5.6 $7.2 $1.6 $1.6 $1.3 $5.3 $8.3 $23.7 $1.5 $1.7 $1.0 2Q19 1Q20 2Q20 Service Charges Other Brokerage Mortgage Loan sale gains $ 24.5 $25.8 $40.2 Linked Quarter x Fees up $14.4 million • Service charges down $1.6 million as debit card and NSF activity slowed, but did show some recovery in June as businesses reopened • Mortgage fees up $ 15.3 million from 1Q20; • Rate locks and production volume were at record levels – with $802 million in 2Q20 rate locks versus $801 million in 1Q20 • 2Q20 mortgage production purchase/refi mix was 56%/44% • 2Q20 mortgage results included a $1.8 million MSR write - down vs a $4.6 million write - down in 1Q20 • Loan sale gains of $1.0 million on $13.8 million in sales of SBA loans • 2Q20 other income includes a $1.1 million BOLI gain and is offset by a $1.6 million Credit Valuation Adjustment (CVA) to reflect credit risk in our customer derivatives business Year - over - Year x Fees up $15.7 million • Rate locks up 106% compared to last year ($802 million in 2Q20 vs. $390 million in 2Q19) 15
Mortgage x We have been consistently investing in our mortgage business x The total number originators were relatively flat in 2019 and 2020, however we have been continually upgrading talent over the past few quarters, including the lift out of a 15 person team in Raleigh in 3Q19 x Mortgage production per originator per quarter increased to $6.8 million in 2Q20, or 119% above 2Q19 x Purchase / Refi mix has shifted from 81% / 19% in 2Q19 to 56% / 44% in 2Q20 x Technology investments have also paid off as we have been able to market to our existing customers and also have enabled us to cut processing costs and process times x We continue to hire mortgage originators and are optimistic about the opportunity to overlay the business on the Seaside franchise 298 251 312 390 508 411 801 802 12 10 9 13 15 15 17 25 5 10 15 20 25 30 100 300 500 700 900 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Funded Locks / MLO Mortgage Locks ($) Mortgage Locks Mortgage Locks ($ millions) Funded Locks / MLO 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Loans Sold ($ millions) $237 $203 $180 $261 $329 $331 $388 $564 Gain on Sale % 3.2% 2.6% 2.7% 3.7% 3.4% 3.7% 2.9% 4.5% 16
Seaside Brings Wealth Management Expertise 17 x $ 1.3 billion Assets Under Management (AUM) x Traditional retail investment management using LPL Financial for all securities and advisory services x Retail brokers that cover the UCBI footprint using reps supervised by LPL x Client investment portfolios are typically less than $2 million x Customized portfolio management provided by our team of fully licensed financial advisors through the Bank’s footprint x Product set includes personal insurance lines x $963 million Assets Under Administration (AUA) x Customized portfolio management with open architecture and a higher net worth focus (portfolios typically greater than $2 million) x 85% of managed assets are discretionary where Seaside acts as fiduciary x Works with clients to update investment policy statements annually x Seaside also brings United into the trust, 401k and custody/safekeeping businesses Combined UCBI Asset Management Business x $ 2.3 billion in AUA x Featuring both a retail and high net worth offering 17 Gideon Haymaker, CEO x 35 years in banking and asset management businesses x Founded Seaside in 2005 x Former SunTrust executive that headed Private Client Services in Florida and also served as Director of Retail Banking x Now serving as United’s President for the State of Florida and leading the expansion of Seaside’s wealth management offering in the United footprint
UCBI Funds Foundation with $1 Million United Community Bank Foundation Mission : We exist to make good things happen for good people in our communities. United established the United Community Bank Foundation in February 2020 and initially funded the foundation with $1 million. The foundation looks forward to putting it to work with deserving charities and causes throughout the footprint. 18
19 x UCBI funded 10,994 PPP loans totaling $1.1 billion with an average loan size of $106 thousand x Seaside funded 789 PPP loans totaling $220 million with an average loan size of $278 thousand x PPP loan borrowers already had $1.2 billion on deposit with UCBI on 3/31 and the deposit levels increased to $ 2.0 billion as PPP funded x New customers added 2,040 deposit accounts during 2Q20, of which $31 million were non - PPP related x We have a focused marketing campaign directed to PPP customers that are new to the bank PPP Update $0.2 $1.1 $- $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 PPP Totals $ billions
$81.8 $81.5 $84.0 $77.7 $80.7 $83.6 2Q19 1Q20 2Q20 57.3% 56.2% 55.9% 54.4% 55.6% 55.6% GAAP Operating (1) Efficiency Ratio Expenses Expense Discipline $ in millions Linked Quarter x GAAP and operating expenses increased 3% and 4%, respectively • Mortgage commissions up $1.4 million primarily due to the increase in mortgage production volume • $1.0 million expense from creation of n ew foundation Year - over - Year x GAAP and operating expenses increased 3% and 8%, respectively Operating (1) GAAP (1) See non - GAAP reconciliation table slides at the end of the exhibits for a reconciliation of operating performance measures to GAAP p erformance measures 20
Looking Forward 21 Continue investing in digital solutions to drive revenue and greater efficiencies while improving the customer experience x Expand digital sales with online account opening for business deposit products ( Bottomline Technologies) x Deliver one - to - one messaging at scale and persona - based dynamic content through a marketing automation platform (Cheetah Digital) x Enhance the m obile b anking app to increase adoption and usability (Q2) x Online appointment scheduling system allows customers to interact with branches more efficiently and avoid wait times (Kronos) x Engage customers with improved financial resource tools and content to generate higher conversion rates, increased brand loyalty and share of wallet ( Leadfusion )
Seaside Acquisition – Closed on July 1, 2020 (1) Estimates updated from our original 3/9/20 investor presentation that we expect will change further depending on market c ond itions • 8.1 million UCBI common shares issued • $25 million of options and follow - on rights cashed out • 91% United / 9% Three Shores • 24% of Three Shores’ estimated non - interest expense ($9 million pre - tax) • Estimated Credit Mark • Estimated Rate Mark • Additional estimated $12 million loan loss provision in Q3 to establish the initial Non - PCD allowance Consideration Pro Forma Ownership Cost Savings Credit Mark (1) Financial Impacts and Returns (1) • Expected to be $ 0.14 - $ 0.18 accretive to EPS on a fully phased in basis • Manageable book value dilution and earnback within stated threshold • Expected to improve ROTCE and Efficiency Ratio by 100+ bps each • Pre - tax one - time expenses of $15 million Merger Expenses 22 PCD Loans Non PCD Loans $32.4 $13.2 $7.1 $10.3
Member FDIC. © 2020 United Community Bank 2 Q INVESTOR PRESENTATION Exhibits
37% 20% 21% 7% 15% DDA MMDA Savings Time NOW x Total deposits up $ 1.7 billion, or 15%, from1Q20; demand deposits drove the increase – up $ 1.1 billion in 2Q20 x 37 % of deposits are noninterest bearing deposits; up 4% from 1Q20 x UCBI cost of deposits down 18 bps to 0.38% in 2Q20 UCBI Valuable Deposit Mix 2 Q20 Total Deposits $ 12.7 billion 2 Q20 Highlights Deposit Growth Over Time, Supported by Significant Low - Cost Core Deposit Base 24 4Q17 4Q18 4Q19 1Q20 2Q20 Total Deposits Trend $ in billions DDA NOW MMDA Savings Time $9.8 $10.5 $10.9 $11.0 $12.7
x Continuous review and enhancements to credit policy x Quarterly reviews of portfolio limits and concentrations x Centralized underwriting and approval process for consumer credit x Distributed Regional Credit Officers (reporting to Credit) for commercial x Dedicated Special Assets team x Eight of the top twelve credit leaders recruited post - crisis Strong Credit Culture & Disciplined Credit Processes x In 2014, centralized and streamlined consumer underwriting and related functions x Significantly strengthened commercial process for approvals and monitoring x CEO with deep knowledge and experience in credit x 2015 Rob Edwards brought in to lead team (BB&T, TD Bank) x Senior credit risk team includes seasoned banking veterans with significant large bank credit risk experience, through multiple cycles x Granular portfolio, with concentration limits set for all segments of the portfolio x Five state franchise with mix of metro and rural markets x Recent expansion into Florida market with Three Shores acquisition x Diversification with national Navitas and SBA business x Construction & CRE ratio as a percentage of Total RBC = 72%/197% x C&D > 30% in cycle, now 12.6% x Land in C&D $198 million x Navitas 7.7% of loans x Granular product concentration limits Process Change Add Significant Talent Concentration Management: Size Concentration Management: Product Concentration Management: Geography 1 2 3 4 5 Structure Policy Exposure & Industry Limits $ in millions House Lending Limit Relationship Limit Legal Lending Limit Top 25 Relationships (7% total loans) $ 373 20 35 665 SNC’s outstanding 142 SNC’s committed 216 x Weekly Senior Credit Committee; approval required for all relationship exposure > $ 8.5 million x Continuous external loan review x Monthly commercial asset quality review x Monthly retail asset quality review meetings Process BUILT TO OUTPERFORM IN THE NEXT CYCLE 25
Non - GAAP Reconciliation Tables $ in thousands, except per share data 26 ( 1) Merger - related and other charges for 3Q19 and 2Q19 include $ 64 thousand and $193 thousand, respectively, of intangible amortization resulting from payments made to executives under their change of control agreements. The resulting intangible assets were being amortized over 12 to 24 months. 2Q19 3Q19 4Q19 1Q20 2Q20 (1) (1) Expenses Expenses - GAAP 81,813$ 82,924$ 81,424$ 81,538$ 83,980$ Merger-related and other charges (4,087) (2,605) 74 (808) (397) Expenses - Operating 77,726$ 80,319$ 81,498$ 80,730$ 83,583$ Diluted Earnings per share Diluted earnings per share - GAAP 0.55$ 0.60$ 0.61$ 0.40$ 0.32$ Merger-related and other charges 0.04 0.03 - 0.01 - Diluted earnings per share - Operating 0.59 0.63 0.61 0.41 0.32 Book Value per share Book Value per share - GAAP 19.65$ 20.16$ 20.53$ 20.80$ 21.22$ Effect of goodwill and other intangibles (4.27) (4.26) (4.25) (4.28) (4.27) Tangible book value per share 15.38$ 15.90$ 16.28$ 16.52$ 16.95$ Return on Tangible Common Equity Return on common equity - GAAP 11.45 % 12.16 % 12.07 % 7.85 % 6.17 % Effect of merger-related and other charges 0.82 0.51 (0.01) 0.16 0.08 Return on common equity - Operating 12.27 12.67 12.06 8.01 6.25 Effect of goodwill and intangibles 3.61 3.71 3.43 2.56 1.84 Return on tangible common equity - Operating 15.88 % 16.38 % 15.49 % 10.57 % 8.09 %
Non - GAAP Reconciliation Tables $ in thousands, except per share data (1) Merger - related and other charges for 3Q19 and 2Q19 include $ 64 thousand and $193 thousand, respectively, of intangible amortization resulting from payments made to executives under their change of control agreements. The resulting intangible assets were being amortized over 12 to 24 months. 27 2Q19 3Q19 4Q19 1Q20 2Q20 (1) (1) Return on Assets Return on assets - GAAP 1.40 % 1.51 % 1.50 % 0.99 % 0.71 % Merger-related and other charges 0.10 0.07 - 0.02 0.01 Return on assets - Operating 1.50 % 1.58 % 1.50 % 1.01 % 0.72 % Return on Assets to return on assets- pre-tax pre-provision Return on assets - GAAP 1.40 % 1.51 % 1.50 % 0.99 % 0.71 % Income tax expense 0.42 0.44 0.39 0.27 0.20 Provision for credit losses 0.10 0.10 0.11 0.69 0.95 Return on assets - pre-tax, pre-provision 1.92 2.05 2.00 1.95 1.86 Merger-related and other charges 0.13 0.08 - 0.03 0.01 Return on assets - pre-tax, pre-provision, excluding merger-related and other charges 2.05 % 2.13 % 2.00 % 1.98 % 1.87 % Efficiency Ratio Efficiency Ratio - GAAP 57.28 % 55.64 % 54.87 % 56.15 % 55.86 % Merger-related and other charges (2.86) (1.74) 0.05 (0.56) (0.27) Efficiency Ratio - Operating 54.42 % 53.90 % 54.92 % 55.59 % 55.59 % Tangible common equity to tangible assets Common Equity to assets ratio - GAAP 12.25 % 12.53 % 12.66 % 12.54 % 11.81 % Effect of goodwill and other intangibles (2.39) (2.37) (2.34) (2.32) (2.05) Effect of preferred equity - - - - (0.64) Tangible common equity to tangible assets ratio 9.86 % 10.16 % 10.32 % 10.22 % 9.12 %