Filed by United Community Banks, Inc.
Pursuant to Rule 425 under the Securities Act of 1933, as amended
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934, as amended
Subject Company: Progress Financial Corp.
Commission File No.: 001-35095
Date: July 19, 2022
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
Strong Core Profitability Driven by Net Interest Margin Expansion and Loan Growth of 6.3%
GREENVILLE, SC – July 19, 2022 - United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced net income for the second quarter of $66.8 million and pre-tax, pre-provision income of $91.6 million. Diluted earnings per share of $0.61 for the quarter represented an increase of $0.18 or 42% from the first quarter of 2022 and a decrease of $0.17 or 22%, from the second quarter of 2021. The year-over-year decrease is largely attributable to a $13.6 million provision release in the second quarter of 2021 compared to a $5.6 million provision expense in the second quarter of 2022. Quarter highlights include 6.3% annualized loan growth, 22 basis points of net interest margin expansion, a modest reserve build to 1.05% of loans and an improvement in the efficiency ratio to 56.6%, or 53.2% on an operating basis, which excludes the effect of merger-related and other charges.
United’s second quarter return on assets (ROA) was 1.08% and return on common equity was 9.31%. On an operating basis, United’s ROA was 1.17% and its return on tangible common equity was 14.20%. Excluding merger-related and other charges United’s pre-tax, pre-provision ROA was 1.60% for the quarter.
Total loans increased by $225 million during the quarter. Excluding the effect of PPP, core organic loan growth was 7.0% annualized. Deposits decreased by $183 million or 0.9%. United’s cost of deposits was up only 2 basis points to 0.08% while the average yield on interest-earning assets was up 24 basis points to 3.34%.
Chairman and CEO Lynn Harton stated, “We are pleased to report another quarter of strong core performance. We had solid organic loan growth, which was within our expected long-term range for growth. Asset quality remained exceptional.” Harton continued, “From a strategic perspective, we are excited about our merger agreement with Progress Financial Corporation. We are confident that Progress and United will be a great cultural fit. David Nast and his team have built an outstanding organization focused on dynamic growth markets in Alabama and the Florida Panhandle.”
He further stated, “Sadly, we also are grieving the passing of DeVan Ard. DeVan founded Reliant Bank in 2006, and due to his capable leadership and his team of talented bankers, Reliant received many accolades and was recognized as one of the top places to work and a top performing community bank. Those accomplishments, along with much more, are a tribute to an exceptional career and a life well lived. DeVan was an incredible partner and we were fortunate to have him as part of the United team. He put his all into making our partnership successful and we could not be more appreciative. We will miss him greatly. John Wilson, Reliant’s President, will now step into the role as our Tennessee State President. John has been instrumental during our integration process and will be an outstanding leader going forward.”
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Harton concluded, “We remain very positive about United’s performance during the second half of 2022. We continue to see strong pipelines for business growth across our markets. We also have a high-quality balance sheet and business mix that we believe will support strong performance regardless of future economic conditions.”
Second Quarter 2022 Financial Highlights:
| · | Net income of $66.8 million and pre-tax, pre-provision income of $91.6 million |
| · | EPS decreased by 22% compared to last year on a GAAP basis and 16% on an operating basis; compared to first quarter 2022, EPS increased 42% on a GAAP basis and 32% on an operating basis |
| · | Return on assets of 1.08%, or 1.17% on an operating basis |
| · | Pre-tax, pre-provision return on assets of 1.49%, or 1.60% when excluding merger-related and other charges |
| · | Return on common equity of 9.31% |
| · | Return on tangible common equity of 14.20% on an operating basis |
| · | A provision for credit losses of $5.6 million, which increased the allowance for credit losses to 1.05% of loans from 1.02% in the first quarter |
| · | Net recoveries of $1.1 million, or 0.03 basis points of average loans |
| · | Loan production of $1.5 billion, resulting in annualized core loan growth, excluding the impact of PPP, of 7.0%, for the quarter |
| · | Core transaction deposits were down $156.2 million or 0.9% for the quarter |
| · | Net interest income increased by $15.1 million, or 9.2%, on a linked quarter basis as solid loan growth and a positive mix change combined with a wider net interest margin |
| · | Net interest margin of 3.19% was up 22 basis points from the first quarter, mainly due to increasing interest rates |
| · | Mortgage closings of $498.5 million and mortgage rate locks of $597.3 million, compared to $679.9 million and $701.7 million, respectively, for the same quarter a year ago |
| · | Noninterest income was down $5.5 million on a linked quarter basis, primarily driven by a $4.3 million less of a positive MSR valuation in the second quarter as compared to the first; specifically, there was a $2.1 million increase in the MSR valuation in the second quarter compared with a $6.4 million increase in the first quarter |
| · | Noninterest expenses increased by $1.5 million compared to the first quarter, as compensation merit increases were partially offset by Reliant cost savings |
| · | Efficiency ratio of 56.6%, or 53.2% on an operating basis |
| · | Nonperforming assets of 0.14% of total assets, a decrease of 3 basis points from March 31, 2022 |
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| · | Quarterly common shareholder dividend of $0.21 per share declared during the quarter, an increase of 11% year-over-year |
Conference Call
United will hold a conference call on Wednesday, July 20, 2022, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. Participants can pre-register for the conference call by navigating to https://dpregister.com/sreg/10168643/f383a3dcd2. Those without internet access or who are unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and available for replay by selecting “Events and Presentations” under ”News and Events” within the Investor Relations section of United’s website at www.ucbi.com.
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UNITED COMMUNITY BANKS, INC.
Selected Financial Information
(in thousands, except per share data)
| 2022 | 2021 | Second 2022 - | For the Six Months Ended June 30, | YTD 2022 - | ||||||||||||||||||||||||||||||||
Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | 2021 Change | 2022 | 2021 | 2021 Change | ||||||||||||||||||||||||||||
| INCOME SUMMARY | ||||||||||||||||||||||||||||||||||||
| Interest revenue | $ | 187,378 | $ | 171,059 | $ | 143,768 | $ | 147,675 | $ | 145,809 | $ | 358,437 | $ | 287,351 | ||||||||||||||||||||||
| Interest expense | 8,475 | 7,267 | 6,213 | 6,636 | 7,433 | 15,742 | 16,911 | |||||||||||||||||||||||||||||
| Net interest revenue | 178,903 | 163,792 | 137,555 | 141,039 | 138,376 | 29 | % | 342,695 | 270,440 | 27 | % | |||||||||||||||||||||||||
| Provision for (release of) credit losses | 5,604 | 23,086 | (647 | ) | (11,034 | ) | (13,588 | ) | 28,690 | (25,869 | ) | |||||||||||||||||||||||||
| Noninterest income | 33,458 | 38,973 | 37,177 | 40,095 | 35,841 | (7 | ) | 72,431 | 80,546 | (10 | ) | |||||||||||||||||||||||||
| Total revenue | 206,757 | 179,679 | 175,379 | 192,168 | 187,805 | 10 | 386,436 | 376,855 | 3 | |||||||||||||||||||||||||||
| Noninterest expenses | 120,790 | 119,275 | 109,156 | 96,749 | 95,540 | 26 | 240,065 | 190,734 | 26 | |||||||||||||||||||||||||||
| Income before income tax expense | 85,967 | 60,404 | 66,223 | 95,419 | 92,265 | (7 | ) | 146,371 | 186,121 | (21 | ) | |||||||||||||||||||||||||
| Income tax expense | 19,125 | 12,385 | 14,204 | 21,603 | 22,005 | (13 | ) | 31,510 | 42,155 | (25 | ) | |||||||||||||||||||||||||
| Net income | 66,842 | 48,019 | 52,019 | 73,816 | 70,260 | (5 | ) | 114,861 | 143,966 | (20 | ) | |||||||||||||||||||||||||
| Merger-related and other charges | 7,143 | 9,016 | 9,912 | 1,437 | 1,078 | 16,159 | 2,621 | |||||||||||||||||||||||||||||
| Income tax benefit of merger-related and other charges | (1,575 | ) | (1,963 | ) | (2,265 | ) | (328 | ) | (246 | ) | (3,538 | ) | (581 | ) | ||||||||||||||||||||||
| Net income - operating (1) | $ | 72,410 | $ | 55,072 | $ | 59,666 | $ | 74,925 | $ | 71,092 | 2 | $ | 127,482 | $ | 146,006 | (13 | ) | |||||||||||||||||||
| Pre-tax pre-provision income (5) | $ | 91,571 | $ | 83,490 | $ | 65,576 | $ | 84,385 | $ | 78,677 | 16 | $ | 175,061 | $ | 160,252 | 9 | ||||||||||||||||||||
| PERFORMANCE MEASURES | ||||||||||||||||||||||||||||||||||||
| Per common share: | ||||||||||||||||||||||||||||||||||||
| Diluted net income - GAAP | $ | 0.61 | $ | 0.43 | $ | 0.55 | $ | 0.82 | $ | 0.78 | (22 | ) | $ | 1.04 | $ | 1.60 | (35 | ) | ||||||||||||||||||
| Diluted net income - operating (1) | 0.66 | 0.50 | 0.64 | 0.83 | 0.79 | (16 | ) | 1.16 | 1.62 | (28 | ) | |||||||||||||||||||||||||
| Cash dividends declared | 0.21 | 0.21 | 0.20 | 0.20 | 0.19 | 11 | 0.42 | 0.38 | 11 | |||||||||||||||||||||||||||
| Book value | 23.96 | 24.38 | 23.63 | 23.25 | 22.81 | 5 | 23.96 | 22.81 | 5 | |||||||||||||||||||||||||||
| Tangible book value (3) | 16.68 | 17.08 | 18.42 | 18.68 | 18.49 | (10 | ) | 16.68 | 18.49 | (10 | ) | |||||||||||||||||||||||||
| Key performance ratios: | ||||||||||||||||||||||||||||||||||||
| Return on common equity - GAAP (2)(4) | 9.31 | % | 6.80 | % | 9.32 | % | 14.26 | % | 14.08 | % | 8.07 | % | 14.71 | % | ||||||||||||||||||||||
| Return on common equity - operating (1)(2)(4) | 10.10 | 7.83 | 10.74 | 14.48 | 14.25 | 8.98 | 14.92 | |||||||||||||||||||||||||||||
| Return on tangible common equity - operating (1)(2)(3)(4) | 14.20 | 11.00 | 13.93 | 18.23 | 17.81 | 12.62 | 18.72 | |||||||||||||||||||||||||||||
| Return on assets - GAAP (4) | 1.08 | 0.78 | 0.96 | 1.48 | 1.46 | 0.93 | 1.54 | |||||||||||||||||||||||||||||
| Return on assets - operating (1)(4) | 1.17 | 0.89 | 1.10 | 1.50 | 1.48 | 1.03 | 1.56 | |||||||||||||||||||||||||||||
| Return on assets - pre-tax pre-provision (4)(5) | 1.49 | 1.37 | 1.21 | 1.70 | 1.64 | 1.43 | 1.72 | |||||||||||||||||||||||||||||
| Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5) | 1.60 | 1.52 | 1.40 | 1.73 | 1.67 | 1.56 | 1.75 | |||||||||||||||||||||||||||||
| Net interest margin (fully taxable equivalent) (4) | 3.19 | 2.97 | 2.81 | 3.12 | 3.19 | 3.08 | 3.20 | |||||||||||||||||||||||||||||
| Efficiency ratio - GAAP | 56.58 | 57.43 | 62.12 | 53.11 | 54.53 | 57.00 | 54.04 | |||||||||||||||||||||||||||||
| Efficiency ratio - operating (1) | 53.23 | 53.09 | 56.48 | 52.33 | 53.92 | 53.16 | 53.30 | |||||||||||||||||||||||||||||
| Equity to total assets | 10.95 | 11.06 | 10.61 | 10.89 | 11.04 | 10.95 | 11.04 | |||||||||||||||||||||||||||||
| Tangible common equity to tangible assets (3) | 7.59 | 7.72 | 8.09 | 8.53 | 8.71 | 7.59 | 8.71 | |||||||||||||||||||||||||||||
| ASSET QUALITY | ||||||||||||||||||||||||||||||||||||
| Nonperforming assets ("NPAs") | $ | 34,428 | $ | 40,816 | $ | 32,855 | $ | 45,335 | $ | 46,347 | (26 | ) | $ | 34,428 | $ | 46,347 | (26 | ) | ||||||||||||||||||
| Allowance for credit losses - loans | 136,925 | 132,805 | 102,532 | 99,620 | 111,616 | 23 | 136,925 | 111,616 | 23 | |||||||||||||||||||||||||||
| Allowance for credit losses - total | 153,042 | 146,369 | 113,524 | 110,875 | 122,460 | 153,042 | 122,460 | |||||||||||||||||||||||||||||
| Net charge-offs (recoveries) | (1,069 | ) | 2,978 | 248 | 551 | (456 | ) | 1,909 | (761 | ) | ||||||||||||||||||||||||||
| Allowance for credit losses - loans to loans | 0.94 | % | 0.93 | % | 0.87 | % | 0.89 | % | 0.98 | % | 0.94 | % | 0.98 | % | ||||||||||||||||||||||
| Allowance for credit losses - total to loans | 1.05 | 1.02 | 0.97 | 0.99 | 1.08 | 1.05 | 1.08 | |||||||||||||||||||||||||||||
| Net charge-offs to average loans (4) | (0.03 | ) | 0.08 | 0.01 | 0.02 | (0.02 | ) | 0.03 | (0.01 | ) | ||||||||||||||||||||||||||
| NPAs to total assets | 0.14 | 0.17 | 0.16 | 0.23 | 0.25 | 0.14 | 0.25 | |||||||||||||||||||||||||||||
| AT PERIOD END ($ in millions) | ||||||||||||||||||||||||||||||||||||
| Loans | $ | 14,541 | $ | 14,316 | $ | 11,760 | $ | 11,191 | $ | 11,391 | 28 | $ | 14,541 | $ | 11,391 | 28 | ||||||||||||||||||||
| Investment securities | 6,683 | 6,410 | 5,653 | 5,335 | 4,928 | 36 | 6,683 | 4,928 | 36 | |||||||||||||||||||||||||||
| Total assets | 24,213 | 24,374 | 20,947 | 19,481 | 18,896 | 28 | 24,213 | 18,896 | 28 | |||||||||||||||||||||||||||
| Deposits | 20,873 | 21,056 | 18,241 | 16,865 | 16,328 | 28 | 20,873 | 16,328 | 28 | |||||||||||||||||||||||||||
| Shareholders’ equity | 2,651 | 2,695 | 2,222 | 2,122 | 2,086 | 27 | 2,651 | 2,086 | 27 | |||||||||||||||||||||||||||
| Common shares outstanding (thousands) | 106,034 | 106,025 | 89,350 | 86,559 | 86,665 | 22 | 106,034 | 86,665 | 22 | |||||||||||||||||||||||||||
(1) Excludes merger-related and other charges. (2) Net income less preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized. (5) Excludes income tax expense and provision for credit losses.
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| UNITED COMMUNITY BANKS, INC. | ||||||||||||||||||||||||||||
| Non-GAAP Performance Measures Reconciliation | ||||||||||||||||||||||||||||
| Selected Financial Information | ||||||||||||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||||||||||
| 2022 | 2021 | For the
Six Months Ended June 30, | ||||||||||||||||||||||||||
Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | 2022 | 2021 | ||||||||||||||||||||||
| Noninterest expense reconciliation | ||||||||||||||||||||||||||||
| Noninterest expenses (GAAP) | $ | 120,790 | $ | 119,275 | $ | 109,156 | $ | 96,749 | $ | 95,540 | $ | 240,065 | $ | 190,734 | ||||||||||||||
| Merger-related and other charges | (7,143 | ) | (9,016 | ) | (9,912 | ) | (1,437 | ) | (1,078 | ) | (16,159 | ) | (2,621 | ) | ||||||||||||||
| Noninterest expenses - operating | $ | 113,647 | $ | 110,259 | $ | 99,244 | $ | 95,312 | $ | 94,462 | $ | 223,906 | $ | 188,113 | ||||||||||||||
| Net income reconciliation | ||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 66,842 | $ | 48,019 | $ | 52,019 | $ | 73,816 | $ | 70,260 | $ | 114,861 | $ | 143,966 | ||||||||||||||
| Merger-related and other charges | 7,143 | 9,016 | 9,912 | 1,437 | 1,078 | 16,159 | 2,621 | |||||||||||||||||||||
| Income tax benefit of merger-related and other charges | (1,575 | ) | (1,963 | ) | (2,265 | ) | (328 | ) | (246 | ) | (3,538 | ) | (581 | ) | ||||||||||||||
| Net income - operating | $ | 72,410 | $ | 55,072 | $ | 59,666 | $ | 74,925 | $ | 71,092 | $ | 127,482 | $ | 146,006 | ||||||||||||||
| Net income to pre-tax pre-provision income reconciliation | ||||||||||||||||||||||||||||
| Net income (GAAP) | $ | 66,842 | $ | 48,019 | $ | 52,019 | $ | 73,816 | $ | 70,260 | $ | 114,861 | $ | 143,966 | ||||||||||||||
| Income tax expense | 19,125 | 12,385 | 14,204 | 21,603 | 22,005 | 31,510 | 42,155 | |||||||||||||||||||||
| Provision for (release of) credit losses | 5,604 | 23,086 | (647 | ) | (11,034 | ) | (13,588 | ) | 28,690 | (25,869 | ) | |||||||||||||||||
| Pre-tax pre-provision income | $ | 91,571 | $ | 83,490 | $ | 65,576 | $ | 84,385 | $ | 78,677 | $ | 175,061 | $ | 160,252 | ||||||||||||||
| Diluted income per common share reconciliation | ||||||||||||||||||||||||||||
| Diluted income per common share (GAAP) | $ | 0.61 | $ | 0.43 | $ | 0.55 | $ | 0.82 | $ | 0.78 | $ | 1.04 | $ | 1.60 | ||||||||||||||
| Merger-related and other charges, net of tax | 0.05 | 0.07 | 0.09 | 0.01 | 0.01 | 0.12 | 0.02 | |||||||||||||||||||||
| Diluted income per common share - operating | $ | 0.66 | $ | 0.50 | $ | 0.64 | $ | 0.83 | $ | 0.79 | $ | 1.16 | $ | 1.62 | ||||||||||||||
| Book value per common share reconciliation | ||||||||||||||||||||||||||||
| Book value per common share (GAAP) | $ | 23.96 | $ | 24.38 | $ | 23.63 | $ | 23.25 | $ | 22.81 | $ | 23.96 | $ | 22.81 | ||||||||||||||
| Effect of goodwill and other intangibles | (7.28 | ) | (7.30 | ) | (5.21 | ) | (4.57 | ) | (4.32 | ) | (7.28 | ) | (4.32 | ) | ||||||||||||||
| Tangible book value per common share | $ | 16.68 | $ | 17.08 | $ | 18.42 | $ | 18.68 | $ | 18.49 | $ | 16.68 | $ | 18.49 | ||||||||||||||
| Return on tangible common equity reconciliation | ||||||||||||||||||||||||||||
| Return on common equity (GAAP) | 9.31 | % | 6.80 | % | 9.32 | % | 14.26 | % | 14.08 | % | 8.07 | % | 14.71 | % | ||||||||||||||
| Merger-related and other charges, net of tax | 0.79 | 1.03 | 1.42 | 0.22 | 0.17 | 0.91 | 0.21 | |||||||||||||||||||||
| Return on common equity - operating | 10.10 | 7.83 | 10.74 | 14.48 | 14.25 | 8.98 | 14.92 | |||||||||||||||||||||
| Effect of goodwill and other intangibles | 4.10 | 3.17 | 3.19 | 3.75 | 3.56 | 3.64 | 3.80 | |||||||||||||||||||||
| Return on tangible common equity - operating | 14.20 | % | 11.00 | % | 13.93 | % | 18.23 | % | 17.81 | % | 12.62 | % | 18.72 | % | ||||||||||||||
| Return on assets reconciliation | ||||||||||||||||||||||||||||
| Return on assets (GAAP) | 1.08 | % | 0.78 | % | 0.96 | % | 1.48 | % | 1.46 | % | 0.93 | % | 1.54 | % | ||||||||||||||
| Merger-related and other charges, net of tax | 0.09 | 0.11 | 0.14 | 0.02 | 0.02 | 0.10 | 0.02 | |||||||||||||||||||||
| Return on assets - operating | 1.17 | % | 0.89 | % | 1.10 | % | 1.50 | % | 1.48 | % | 1.03 | % | 1.56 | % | ||||||||||||||
| Return on assets to return on assets- pre-tax pre-provision reconciliation | ||||||||||||||||||||||||||||
| Return on assets (GAAP) | 1.08 | % | 0.78 | % | 0.96 | % | 1.48 | % | 1.46 | % | 0.93 | % | 1.54 | % | ||||||||||||||
| Income tax expense | 0.32 | 0.20 | 0.26 | 0.45 | 0.47 | 0.26 | 0.46 | |||||||||||||||||||||
| (Release of) provision for credit losses | 0.09 | 0.39 | (0.01 | ) | (0.23 | ) | (0.29 | ) | 0.24 | (0.28 | ) | |||||||||||||||||
| Return on assets - pre-tax, pre-provision | 1.49 | 1.37 | 1.21 | 1.70 | 1.64 | 1.43 | 1.72 | |||||||||||||||||||||
| Merger-related and other charges | 0.11 | 0.15 | 0.19 | 0.03 | 0.03 | 0.13 | 0.03 | |||||||||||||||||||||
| Return on assets - pre-tax pre-provision, excluding merger-related and other charges | 1.60 | % | 1.52 | % | 1.40 | % | 1.73 | % | 1.67 | % | 1.56 | % | 1.75 | % | ||||||||||||||
| Efficiency ratio reconciliation | ||||||||||||||||||||||||||||
| Efficiency ratio (GAAP) | 56.58 | % | 57.43 | % | 62.12 | % | 53.11 | % | 54.53 | % | 57.00 | % | 54.04 | % | ||||||||||||||
| Merger-related and other charges | (3.35 | ) | (4.34 | ) | (5.64 | ) | (0.78 | ) | (0.61 | ) | (3.84 | ) | (0.74 | ) | ||||||||||||||
| Efficiency ratio - operating | 53.23 | % | 53.09 | % | 56.48 | % | 52.33 | % | 53.92 | % | 53.16 | % | 53.30 | % | ||||||||||||||
| Tangible common equity to tangible assets reconciliation | ||||||||||||||||||||||||||||
| Equity to total assets (GAAP) | 10.95 | % | 11.06 | % | 10.61 | % | 10.89 | % | 11.04 | % | 10.95 | % | 11.04 | % | ||||||||||||||
| Effect of goodwill and other intangibles | (2.96 | ) | (2.94 | ) | (2.06 | ) | (1.87 | ) | (1.82 | ) | (2.96 | ) | (1.82 | ) | ||||||||||||||
| Effect of preferred equity | (0.40 | ) | (0.40 | ) | (0.46 | ) | (0.49 | ) | (0.51 | ) | (0.40 | ) | (0.51 | ) | ||||||||||||||
| Tangible common equity to tangible assets | 7.59 | % | 7.72 | % | 8.09 | % | 8.53 | % | 8.71 | % | 7.59 | % | 8.71 | % | ||||||||||||||
| Allowance for credit losses - total to loans reconciliation | ||||||||||||||||||||||||||||
| Allowance for credit losses - total to loans (GAAP) | 1.05 | % | 1.02 | % | 0.97 | % | 0.99 | % | 1.08 | % | 1.05 | % | 1.08 | % | ||||||||||||||
| Effect of PPP loans | — | — | — | 0.01 | 0.04 | — | 0.04 | |||||||||||||||||||||
| Allowance for credit losses - total to loans, excluding PPP loans | 1.05 | % | 1.02 | % | 0.97 | % | 1.00 | % | 1.12 | % | 1.05 | % | 1.12 | % | ||||||||||||||
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| UNITED COMMUNITY BANKS, INC. | ||||||||||||||||||||||||||||
| Financial Highlights | ||||||||||||||||||||||||||||
| Loan Portfolio Composition at Period-End | ||||||||||||||||||||||||||||
| 2022 | 2021 | 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 | $ | 2,681 | $ | 2,638 | $ | 2,322 | $ | 2,149 | $ | 2,149 | $ | 43 | $ | 532 | ||||||||||||||
| Income producing commercial RE | 3,273 | 3,328 | 2,601 | 2,542 | 2,550 | (55 | ) | 723 | ||||||||||||||||||||
| Commercial & industrial | 2,243 | 2,302 | 1,822 | 1,729 | 1,762 | (59 | ) | 481 | ||||||||||||||||||||
| Paycheck protection program | 10 | 34 | 88 | 150 | 472 | (24 | ) | (462 | ) | |||||||||||||||||||
| Commercial construction | 1,514 | 1,482 | 1,015 | 947 | 927 | 32 | 587 | |||||||||||||||||||||
| Equipment financing | 1,211 | 1,148 | 1,083 | 1,017 | 969 | 63 | 242 | |||||||||||||||||||||
| Total commercial | 10,932 | 10,932 | 8,931 | 8,534 | 8,829 | — | 2,103 | |||||||||||||||||||||
| Residential mortgage | 1,997 | 1,826 | 1,638 | 1,533 | 1,473 | 171 | 524 | |||||||||||||||||||||
| Home equity lines of credit | 801 | 778 | 694 | 661 | 661 | 23 | 140 | |||||||||||||||||||||
| Residential construction | 381 | 368 | 359 | 321 | 289 | 13 | 92 | |||||||||||||||||||||
| Manufactured housing | 287 | 269 | — | — | — | 18 | 287 | |||||||||||||||||||||
| Consumer | 143 | 143 | 138 | 142 | 139 | — | 4 | |||||||||||||||||||||
| Total loans | $ | 14,541 | $ | 14,316 | $ | 11,760 | $ | 11,191 | $ | 11,391 | $ | 225 | $ | 3,150 | ||||||||||||||
| LOANS BY MARKET | ||||||||||||||||||||||||||||
| Georgia | $ | 3,960 | $ | 3,879 | $ | 3,778 | $ | 3,732 | $ | 3,729 | $ | 81 | $ | 231 | ||||||||||||||
| South Carolina | 2,377 | 2,323 | 2,235 | 2,145 | 2,107 | 54 | 270 | |||||||||||||||||||||
| North Carolina | 2,006 | 1,879 | 1,895 | 1,427 | 1,374 | 127 | 632 | |||||||||||||||||||||
| Tennessee | 2,621 | 2,661 | 373 | 383 | 394 | (40 | ) | 2,227 | ||||||||||||||||||||
| Florida | 1,235 | 1,208 | 1,148 | 1,113 | 1,141 | 27 | 94 | |||||||||||||||||||||
| Commercial Banking Solutions | 2,342 | 2,366 | 2,331 | 2,391 | 2,646 | (24 | ) | (304 | ) | |||||||||||||||||||
| Total loans | $ | 14,541 | $ | 14,316 | $ | 11,760 | $ | 11,191 | $ | 11,391 | $ | 225 | $ | 3,150 | ||||||||||||||
6
| UNITED COMMUNITY BANKS, INC. | |||||||||||||
| Financial Highlights | |||||||||||||
| Credit Quality | |||||||||||||
| (in thousands) | |||||||||||||
| 2022 | 2021 | ||||||||||||
Second Quarter | First Quarter | Fourth Quarter |
|||||||||||
| NONACCRUAL LOANS | |||||||||||||
| Owner occupied RE | $ | 1,876 | $ | 4,590 | $ | 2,714 | |||||||
| Income producing RE | 7,074 | 7,220 | 7,588 | ||||||||||
| Commercial & industrial | 4,548 | 6,227 | 5,429 | ||||||||||
| Commercial construction | 208 | 401 | 343 | ||||||||||
| Equipment financing | 3,249 | 2,540 | 1,741 | ||||||||||
| Total commercial | 16,955 | 20,978 | 17,815 | ||||||||||
| Residential mortgage | 12,228 | 13,024 | 13,313 | ||||||||||
| Home equity lines of credit | 933 | 1,183 | 1,212 | ||||||||||
| Residential construction | 198 | 212 | 420 | ||||||||||
| Manufactured housing | 2,804 | 2,507 | — | ||||||||||
| Consumer | 25 | 40 | 52 | ||||||||||
| Total nonaccrual loans held for investment | 33,143 | 37,944 | 32,812 | ||||||||||
| Nonaccrual loans held for sale | 317 | 2,033 | — | ||||||||||
| OREO and repossessed assets | 968 | 839 | 43 | ||||||||||
| Total NPAs | $ | 34,428 | $ | 40,816 | $ | 32,855 | |||||||
| 2022 | 2021 | |||||||||||||||||||||||
| 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 | $ | (1,496 | ) | (0.23 | )% | $ | (45 | ) | (0.01 | )% | $ | (255 | ) | (0.04 | )% | |||||||||
| Income producing RE | (116 | ) | (0.01 | ) | (290 | ) | (0.04 | ) | (98 | ) | (0.01 | ) | ||||||||||||
| Commercial & industrial | (302 | ) | (0.05 | ) | 2,929 | 0.51 | 339 | 0.07 | ||||||||||||||||
| Commercial construction | (144 | ) | (0.04 | ) | (373 | ) | (0.10 | ) | (354 | ) | (0.14 | ) | ||||||||||||
| Equipment financing | 907 | 0.31 | 267 | 0.10 | 781 | 0.29 | ||||||||||||||||||
| Total commercial | (1,151 | ) | (0.04 | ) | 2,488 | 0.09 | 413 | 0.02 | ||||||||||||||||
| Residential mortgage | (51 | ) | (0.01 | ) | (97 | ) | (0.02 | ) | (169 | ) | (0.04 | ) | ||||||||||||
| Home equity lines of credit | (346 | ) | (0.18 | ) | (81 | ) | (0.04 | ) | (118 | ) | (0.07 | ) | ||||||||||||
| Residential construction | (76 | ) | (0.08 | ) | (23 | ) | (0.03 | ) | (17 | ) | (0.02 | ) | ||||||||||||
| Manufactured housing | 135 | 0.20 | 164 | 0.25 | — | — | ||||||||||||||||||
| Consumer | 420 | 1.18 | 527 | 1.48 | 139 | 0.39 | ||||||||||||||||||
| Total | $ | (1,069 | ) | (0.03 | ) | $ | 2,978 | 0.08 | $ | 248 | 0.01 | |||||||||||||
(1) Annualized.
7
| UNITED COMMUNITY BANKS, INC. |
| Consolidated Balance Sheets (Unaudited) |
| (in thousands, except share and per share data) | June 30, 2022 | December 31, 2021 | ||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 238,310 | $ | 144,244 | ||||
| Interest-bearing deposits in banks | 977,397 | 2,147,266 | ||||||
| Federal funds and other short-term investments | — | 27,000 | ||||||
| Cash and cash equivalents | 1,215,707 | 2,318,510 | ||||||
| Debt securities available-for-sale | 3,960,285 | 4,496,824 | ||||||
| Debt securities held-to-maturity (fair value $2,431,138 and $1,148,804, respectively) | 2,722,475 | 1,156,098 | ||||||
| Loans held for sale | 40,678 | 44,109 | ||||||
| Loans and leases held for investment | 14,541,230 | 11,760,346 | ||||||
| Less allowance for credit losses - loans and leases | (136,925 | ) | (102,532 | ) | ||||
| Loans and leases, net | 14,404,305 | 11,657,814 | ||||||
| Premises and equipment, net | 286,248 | 245,296 | ||||||
| Bank owned life insurance | 299,104 | 217,713 | ||||||
| Goodwill and other intangible assets, net | 782,544 | 472,407 | ||||||
| Other assets | 501,662 | 338,000 | ||||||
| Total assets | $ | 24,213,008 | $ | 20,946,771 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing demand | $ | 8,155,494 | $ | 6,956,981 | ||||
| NOW and interest-bearing demand | 4,543,722 | 4,252,209 | ||||||
| Money market | 4,839,565 | 4,183,354 | ||||||
| Savings | 1,513,656 | 1,215,779 | ||||||
| Time | 1,654,704 | 1,442,498 | ||||||
| Brokered | 165,942 | 190,358 | ||||||
| Total deposits | 20,873,083 | 18,241,179 | ||||||
| Long-term debt | 324,371 | 247,360 | ||||||
| Accrued expenses and other liabilities | 364,266 | 235,987 | ||||||
| Total liabilities | 21,561,720 | 18,724,526 | ||||||
| Shareholders' equity: | ||||||||
| Preferred stock; $1 par value; 10,000,000 shares authorized; 4,000 shares Series I issued and outstanding, $25,000 per share liquidation preference | 96,422 | 96,422 | ||||||
| Common stock, $1 par value; 200,000,000 shares authorized, 106,033,960 and 89,349,826 shares issued and outstanding, respectively | 106,034 | 89,350 | ||||||
| Common stock issuable; 578,251 and 595,705 shares, respectively | 11,448 | 11,288 | ||||||
| Capital surplus | 2,304,608 | 1,721,007 | ||||||
| Retained earnings | 396,970 | 330,654 | ||||||
| Accumulated other comprehensive loss | (264,194 | ) | (26,476 | ) | ||||
| Total shareholders' equity | 2,651,288 | 2,222,245 | ||||||
| Total liabilities and shareholders' equity | $ | 24,213,008 | $ | 20,946,771 | ||||
8
| 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) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Interest revenue: | ||||||||||||||||
| Loans, including fees | $ | 155,266 | $ | 128,058 | $ | 302,007 | $ | 253,784 | ||||||||
| Investment securities, including tax exempt of $2,539, $2,255, $5,194 and $4,405, respectively | 30,425 | 17,542 | 54,090 | 32,990 | ||||||||||||
| Deposits in banks and short-term investments | 1,687 | 209 | 2,340 | 577 | ||||||||||||
| Total interest revenue | 187,378 | 145,809 | 358,437 | 287,351 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits: | ||||||||||||||||
| NOW and interest-bearing demand | 2,163 | 1,382 | 3,632 | 2,868 | ||||||||||||
| Money market | 1,515 | 1,355 | 2,527 | 3,159 | ||||||||||||
| Savings | 87 | 53 | 159 | 102 | ||||||||||||
| Time | 537 | 830 | 1,115 | 2,710 | ||||||||||||
| Deposits | 4,302 | 3,620 | 7,433 | 8,839 | ||||||||||||
| Short-term borrowings | — | — | — | 2 | ||||||||||||
| Long-term debt | 4,173 | 3,813 | 8,309 | 8,070 | ||||||||||||
| Total interest expense | 8,475 | 7,433 | 15,742 | 16,911 | ||||||||||||
| Net interest revenue | 178,903 | 138,376 | 342,695 | 270,440 | ||||||||||||
| Provision for (release of) credit losses | 5,604 | (13,588 | ) | 28,690 | (25,869 | ) | ||||||||||
| Net interest revenue after provision for credit losses | 173,299 | 151,964 | 314,005 | 296,309 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges and fees | 10,005 | 8,335 | 19,075 | 15,905 | ||||||||||||
| Mortgage loan gains and other related fees | 6,971 | 11,136 | 23,123 | 33,708 | ||||||||||||
| Wealth management fees | 5,985 | 3,822 | 11,880 | 7,327 | ||||||||||||
| Gains from sales of other loans, net | 3,800 | 4,123 | 6,998 | 5,153 | ||||||||||||
| Lending and loan servicing fees | 1,586 | 2,085 | 4,572 | 4,245 | ||||||||||||
| Securities gains (losses), net | 46 | 41 | (3,688 | ) | 41 | |||||||||||
| Other | 5,065 | 6,299 | 10,471 | 14,167 | ||||||||||||
| Total noninterest income | 33,458 | 35,841 | 72,431 | 80,546 | ||||||||||||
| Total revenue | 206,757 | 187,805 | 386,436 | 376,855 | ||||||||||||
| Noninterest expenses: | ||||||||||||||||
| Salaries and employee benefits | 69,233 | 59,414 | 140,239 | 119,999 | ||||||||||||
| Communications and equipment | 9,675 | 7,408 | 18,923 | 14,611 | ||||||||||||
| Occupancy | 8,865 | 7,078 | 18,243 | 14,034 | ||||||||||||
| Advertising and public relations | 2,300 | 1,493 | 3,788 | 2,692 | ||||||||||||
| Postage, printing and supplies | 1,999 | 1,618 | 4,118 | 3,440 | ||||||||||||
| Professional fees | 5,402 | 4,928 | 9,849 | 9,162 | ||||||||||||
| Lending and loan servicing expense | 3,047 | 3,181 | 5,413 | 6,058 | ||||||||||||
| Outside services - electronic banking | 2,947 | 2,285 | 5,470 | 4,503 | ||||||||||||
| FDIC assessments and other regulatory charges | 2,267 | 1,901 | 4,440 | 3,797 | ||||||||||||
| Amortization of intangibles | 1,736 | 929 | 3,529 | 1,914 | ||||||||||||
| Merger-related and other charges | 7,143 | 1,078 | 16,159 | 2,621 | ||||||||||||
| Other | 6,176 | 4,227 | 9,894 | 7,903 | ||||||||||||
| Total noninterest expenses | 120,790 | 95,540 | 240,065 | 190,734 | ||||||||||||
| Income before income taxes | 85,967 | 92,265 | 146,371 | 186,121 | ||||||||||||
| Income tax expense | 19,125 | 22,005 | 31,510 | 42,155 | ||||||||||||
| Net income | 66,842 | 70,260 | 114,861 | 143,966 | ||||||||||||
| Preferred stock dividends | 1,719 | 1,719 | 3,438 | 3,438 | ||||||||||||
| Earnings allocated to participating securities | 362 | 432 | 596 | 894 | ||||||||||||
| Net income available to common shareholders | $ | 64,761 | $ | 68,109 | $ | 110,827 | $ | 139,634 | ||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | 0.61 | $ | 0.78 | $ | 1.04 | $ | 1.60 | ||||||||
| Diluted | 0.61 | 0.78 | 1.04 | 1.60 | ||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 106,610 | 87,289 | 106,580 | 87,306 | ||||||||||||
| Diluted | 106,716 | 87,421 | 106,697 | 87,443 | ||||||||||||
9
| Average Consolidated Balance Sheets and Net Interest Analysis |
| For the Three Months Ended June 30, |
| 2022 | 2021 | |||||||||||||||||||||||
| (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) | $ | 14,382,324 | $ | 155,184 | 4.33 | % | $ | 11,616,802 | $ | 127,458 | 4.40 | % | ||||||||||||
| Taxable securities (3) | 6,436,992 | 27,886 | 1.73 | 4,242,297 | 15,287 | 1.44 | ||||||||||||||||||
| Tax-exempt securities (FTE) (1)(3) | 490,659 | 3,410 | 2.78 | 388,609 | 3,030 | 3.12 | ||||||||||||||||||
| Federal funds sold and other interest-earning assets | 1,302,935 | 2,066 | 0.64 | 1,292,026 | 1,055 | 0.33 | ||||||||||||||||||
| Total interest-earning assets (FTE) | 22,612,910 | 188,546 | 3.34 | 17,539,734 | 146,830 | 3.36 | ||||||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Allowance for credit losses | (135,392 | ) | (128,073 | ) | ||||||||||||||||||||
| Cash and due from banks | 203,291 | 152,443 | ||||||||||||||||||||||
| Premises and equipment | 286,417 | 225,017 | ||||||||||||||||||||||
| Other assets (3) | 1,286,107 | 1,002,634 | ||||||||||||||||||||||
| Total assets | $ | 24,253,333 | $ | 18,791,755 | ||||||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| NOW and interest-bearing demand | $ | 4,561,162 | 2,163 | 0.19 | $ | 3,428,009 | 1,382 | 0.16 | ||||||||||||||||
| Money market | 5,019,420 | 1,515 | 0.12 | 3,814,960 | 1,355 | 0.14 | ||||||||||||||||||
| Savings | 1,496,414 | 87 | 0.02 | 1,080,267 | 53 | 0.02 | ||||||||||||||||||
| Time | 1,671,632 | 491 | 0.12 | 1,548,487 | 899 | 0.23 | ||||||||||||||||||
| Brokered time deposits | 65,081 | 46 | 0.28 | 64,332 | (69 | ) | (0.43 | ) | ||||||||||||||||
| Total interest-bearing deposits | 12,813,709 | 4,302 | 0.13 | 9,936,055 | 3,620 | 0.15 | ||||||||||||||||||
| Federal funds purchased and other borrowings | 66 | — | — | 111 | — | — | ||||||||||||||||||
| Federal Home Loan Bank advances | — | — | — | — | — | — | ||||||||||||||||||
| Long-term debt | 324,301 | 4,173 | 5.16 | 285,389 | 3,813 | 5.36 | ||||||||||||||||||
| Total borrowed funds | 324,367 | 4,173 | 5.16 | 285,500 | 3,813 | 5.36 | ||||||||||||||||||
| Total interest-bearing liabilities | 13,138,076 | 8,475 | 0.26 | 10,221,555 | 7,433 | 0.29 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 8,025,947 | 6,196,045 | ||||||||||||||||||||||
| Other liabilities | 397,890 | 314,130 | ||||||||||||||||||||||
| Total liabilities | 21,561,913 | 16,731,730 | ||||||||||||||||||||||
| Shareholders' equity | 2,691,420 | 2,060,025 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 24,253,333 | $ | 18,791,755 | ||||||||||||||||||||
| Net interest revenue (FTE) | $ | 180,071 | $ | 139,397 | ||||||||||||||||||||
| Net interest-rate spread (FTE) | 3.08 | % | 3.07 | % | ||||||||||||||||||||
| Net interest margin (FTE) (4) | 3.19 | % | 3.19 | % | ||||||||||||||||||||
| (1) | Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate. |
| (2) | Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale. |
| (3) | Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $271 million in 2022 and pretax unrealized gains of $28.6 million in 2021 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. |
10
| Average Consolidated Balance Sheets and Net Interest Analysis |
| For the Six Months Ended June 30, |
| 2022 | 2021 | |||||||||||||||||||||||
| (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) | $ | 14,308,585 | $ | 301,821 | 4.25 | % | $ | 11,525,363 | $ | 252,580 | 4.42 | % | ||||||||||||
| Taxable securities (3) | 6,142,723 | 48,896 | 1.59 | 3,932,545 | 28,585 | 1.45 | ||||||||||||||||||
| Tax-exempt securities (FTE) (1)(3) | 500,750 | 6,976 | 2.79 | 380,370 | 5,918 | 3.11 | ||||||||||||||||||
| Federal funds sold and other interest-earning assets | 1,604,995 | 3,086 | 0.39 | 1,324,776 | 2,277 | 0.34 | ||||||||||||||||||
| Total interest-earning assets (FTE) | 22,557,053 | 360,779 | 3.22 | 17,163,054 | 289,360 | 3.40 | ||||||||||||||||||
| Non-interest-earning assets: | ||||||||||||||||||||||||
| Allowance for loan losses | (124,384 | ) | (135,845 | ) | ||||||||||||||||||||
| Cash and due from banks | 184,751 | 146,401 | ||||||||||||||||||||||
| Premises and equipment | 281,842 | 223,224 | ||||||||||||||||||||||
| Other assets (3) | 1,329,359 | 1,012,896 | ||||||||||||||||||||||
| Total assets | $ | 24,228,621 | $ | 18,409,730 | ||||||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||||
| NOW and interest-bearing demand | $ | 4,613,838 | 3,632 | 0.16 | $ | 3,379,794 | 2,868 | 0.17 | ||||||||||||||||
| Money market | 5,064,866 | 2,527 | 0.10 | 3,774,201 | 3,159 | 0.17 | ||||||||||||||||||
| Savings | 1,466,812 | 159 | 0.02 | 1,035,176 | 102 | 0.02 | ||||||||||||||||||
| Time | 1,715,022 | 1,025 | 0.12 | 1,595,196 | 2,487 | 0.31 | ||||||||||||||||||
| Brokered time deposits | 72,048 | 90 | 0.25 | 69,765 | 223 | 0.64 | ||||||||||||||||||
| Total interest-bearing deposits | 12,932,586 | 7,433 | 0.12 | 9,854,132 | 8,839 | 0.18 | ||||||||||||||||||
| Federal funds purchased and other borrowings | 337 | — | — | 62 | — | — | ||||||||||||||||||
| Federal Home Loan Bank advances | — | — | — | 1,657 | 2 | 0.24 | ||||||||||||||||||
| Long-term debt | 321,663 | 8,309 | 5.21 | 301,193 | 8,070 | 5.40 | ||||||||||||||||||
| Total borrowed funds | 322,000 | 8,309 | 5.20 | 302,912 | 8,072 | 5.37 | ||||||||||||||||||
| Total interest-bearing liabilities | 13,254,586 | 15,742 | 0.24 | 10,157,044 | 16,911 | 0.34 | ||||||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 7,847,284 | 5,896,882 | ||||||||||||||||||||||
| Other liabilities | 388,162 | 313,374 | ||||||||||||||||||||||
| Total liabilities | 21,490,032 | 16,367,300 | ||||||||||||||||||||||
| Shareholders' equity | 2,738,589 | 2,042,430 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 24,228,621 | $ | 18,409,730 | ||||||||||||||||||||
| Net interest revenue (FTE) | $ | 345,037 | $ | 272,449 | ||||||||||||||||||||
| Net interest-rate spread (FTE) | 2.98 | % | 3.06 | % | ||||||||||||||||||||
| Net interest margin (FTE) (4) | 3.08 | % | 3.20 | % | ||||||||||||||||||||
| (1) | Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate. |
| (2) | Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale. |
| (3) | Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $175 million in 2022 and pretax unrealized gains of $43.4 million in 2021, respectively, are included in other assets for purposes of this presentation. |
| (4) | Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets. |
11
About United Community Banks, Inc.
United Community Banks, Inc. (NASDAQGS: UCBI) provides a full range of banking, wealth management and mortgage services for relationship-oriented consumers and business owners. As of June 30, 2022, United had $24.2 billion in assets and 195 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee, along with a national SBA lending franchise and a national equipment lending subsidiary. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. In 2022, J.D. Power ranked United highest in customer satisfaction with consumer banking in the Southeast, marking eight out of the last nine years United earned the coveted award. Forbes recognized United as one of the top ten World’s Best Banks in 2022. Forbes also included United on its 2022 list of the 100 Best Banks in America for the ninth consecutive year. United also received ten Greenwich Excellence Awards in 2021 for excellence in Small Business Banking and Middle Market Banking, including national awards for Overall Satisfaction and Likelihood to Recommend. United was also named one of the "Best Banks to Work For" by American Banker in 2021 for the fifth consecutive year based on employee satisfaction. Additional information about United can be found at www.ucbi.com.
Non-GAAP Financial Measures
This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “pre-tax, pre-provision income,” “operating net income per diluted common share,” “operating earnings per share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “return on assets - pre-tax, pre-provision, excluding merger-related and other charges,” “return on assets - pre-tax, pre-provision,” “operating efficiency ratio,” and “tangible common equity to tangible assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.
Caution About Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In general, forward-looking statements usually may be identified through use of words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, and include statements related to potential benefits of the Progress merger, and the strength of our pipelines and their ability to support for business growth across our markets and our belief that our high-quality balance sheet and business mix will support strong performance regardless of future economic conditions. Forward-looking statements are not historical facts and represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements.
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Factors that could cause or contribute to such differences include, but are not limited to (1) the risk that the cost savings and any revenue synergies from the Progress acquisition may not be realized or take longer than anticipated to be realized, (2) disruption of customer, supplier, employee or other business partner relationships as a result of the Progress acquisition, (3) the occurrence of any event, change or other circumstances that could give rise to a delay in closing the Progress acquisition or the termination of the merger agreement, (4) the failure to obtain the necessary approval by the shareholders of Progress, (5) the possibility that the costs, fees, expenses and charges related to the acquisition of Progress may be greater than anticipated, (6) the ability of United to obtain required governmental approvals of the Progress acquisition, (7) reputational risk and the reaction of the companies’ customers, suppliers, employees or other business partners to the acquisition of Progress, (8) the failure of the closing conditions in the Progress merger agreement to be satisfied, or any unexpected delay in closing the acquisition, (9) the risks relating to the integration of Progress’ operations into the operations of United, including the risk that such integration will be materially delayed or will be more costly or difficult than expected, (10) the risk of potential litigation or regulatory action related to the acquisition of Progress, (11) the risks associated with United’s pursuit of future acquisitions, (12) the risk of expansion into new geographic or product markets, (13) the dilution caused by United’s issuance of additional shares of its common stock in the acquisition of Progress, and (14) general competitive, economic, political and market conditions. Further information regarding additional factors which could affect the forward-looking statements contained in this press release can be found in the cautionary language included under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in United’s Annual Report on Form 10-K for the year ended December 31, 2021, and other documents subsequently filed by United with the United States Securities and Exchange Commission (“SEC”).
Many of these factors are beyond United’s (and in the case of the prospective acquisition of Progress, Progress’) ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this communication, and United undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for United or Progress to predict their occurrence or how they will affect United or Progress.
United qualifies all forward-looking statements by these cautionary statements.
Important Information for Shareholders and Investors
In connection with the prospective acquisition of Progress, United has filed with the SEC a registration statement on Form S-4 that includes a proxy statement of Progress to be sent to Progress’ shareholders seeking their approval of the merger agreement and merger with United. The registration statement also contains the prospectus of United to register the shares of United common stock to be issued in connection with the Progress acquisition. INVESTORS AND SHAREHOLDERS OF PROGRESS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE PROXY STATEMENT/PROSPECTUS IS A PART OF THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED BY UNITED OR PROGRESS WITH THE SEC, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE REGISTRATION STATEMENT AND THOSE OTHER DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT UNITED, PROGRESS AND THE MERGER OF PROGRESS AND UNITED.
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The registration statement and other documents filed with the SEC may be obtained for free at the SEC’s website (www.sec.gov). You will also be able to obtain these documents, free of charge, from United at the “Investor Relations” section of United’s website at www.ucbi.com or from Progress at the “Investor Relations” section of Progress’ website at www.myprogressbank.com. Copies of the definitive proxy statement/prospectus will also be made available, free of charge, by contacting United Community Banks, Inc., P.O. Box 398, Blairsville, GA 30514, Attn: Jefferson Harralson, Telephone: (864) 240-6208, or Progress Financial Corp., 201 Williams Avenue, Huntsville, AL 35801, Attn: Dabsey Maxwell, Telephone: (256) 319-3641.
This communication is for informational purposes only and does not constitute an offer to sell, the solicitation of an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. This communication is also not a solicitation of any vote or approval with respect to the proposed merger of Progress with United or otherwise.
Participants in the Transaction
United and Progress, and certain of their respective directors and executive officers, under the rules of the SEC may be deemed to be participants in the solicitation of proxies from Progress’ shareholders in favor of the approval of the merger agreement and the merger of Progress and United. Information about the directors and officers of United and their ownership of United common stock can be found in United’s definitive proxy statement in connection with its 2022 annual meeting of shareholders, as filed with the SEC on April 6, 2022, and other documents subsequently filed by United with the SEC. Information about the directors and executive officers of Progress and their ownership of Progress’ capital stock, as well as information regarding the interests of other persons who may be deemed participants in the transaction, may be obtained by reading the proxy statement/prospectus regarding the Merger with. Additional information regarding the interests of these participants will also be included in the proxy statement/prospectus pertaining to the Merger. Free copies of this document may be obtained as described above.
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