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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
January 27, 2004
United Community Banks, Inc.
(Exact name of registrant as specified in its charter)
| Georgia | No. 0-21656 | No. 58-180-7304 | ||
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| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
63 Highway 515, P.O. Box 398
Blairsville, Georgia 30512
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(706) 781-2265
Not applicable
(Former name or former address, if changed since last report)
| SIGNATURES | ||||||||
| EX-99.1 News Release dated January 27, 2004 | ||||||||
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| Item 7. | Exhibits | |
| 99.1 News Release issued by United Community Banks, Inc. dated January 27, 2004. | ||
| Item 12 | Results of Operations and Financial Condition | |
| The information, including exhibits hereto, in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing. | ||
| On January 27, 2004, United Community Banks, Inc. (the “Registrant”) issued a news release announcing its financial results for the fourth quarter ended December 31, 2003 (the “News Release”). The News Release, including financial schedules, is attached as Exhibit 99.1 to this report and is incorporated into this Item 12 by reference. In connection with issuing the News Release, on January 27, 2004 at 11:00 a.m. EST, the Registrant intends to hold a conference call/webcast to discuss the News Release. | ||
| The News Release contains a description of the Registrant’s earnings excluding merger-related expenses (referred to as “Operating Earnings”, “Net Operating Income”, “Diluted Operating Earnings Per Share”) related to the March 31, 2003 acquisition of First Central Bancshares, Inc., headquartered in Lenoir City, Tennessee, the May 1, 2003 acquisition of First Georgia Holding, Inc., headquartered in Brunswick, Georgia, and the October 24, 2003 and November 14, 2003 acquisitions of three branches in western North Carolina. Management believes that a presentation of the Registrant’s earnings excluding merger-related expenses as a financial measure provides useful information to investors because it provides information about the Registrant’s financial performance from its ongoing business operations. The merger-related expenses are principally related to equipment lease termination, legal and other professional fees and systems conversion costs. |
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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.
| January 27, 2004 |
/s/ Rex S. Schuette Rex S. Schuette Executive Vice President and Chief Financial Officer |
EXHIBIT 99.1 [UNITED COMMUNITY BANKS LOGO] For Immediate Release January 27, 2004 For more information: Rex S. Schuette Chief Financial Officer 706-781-2265 rex_schuette@ucbi.com UNITED COMMUNITY BANKS, INC. REPORTS 13% GAIN IN OPERATING EARNINGS PER SHARE FOR FOURTH QUARTER 2003 HIGHLIGHTS: - - Record 2003 Net Operating Earnings of $1.68 Per Share, Up 14% From a Year Ago - - Loan Demand, Disciplined Execution Helped Drive Growth for Quarter and Year - - Stable Net Interest Margin, Strong Credit Quality Provide Foundation for Performance - - Company Again Achieves Long-Term Financial Goals of Sustained Double-Digit EPS Growth and Return on Tangible Equity Above 16% BLAIRSVILLE, GA, January 27, 2004 - United Community Banks, Inc. (Nasdaq: UCBI), Georgia's third largest bank holding company, today announced fourth quarter results that included a 24% rise in net operating income, a 13% gain in net operating earnings per share, and a 21% increase in total revenue from the same period last year. For the fourth quarter of 2003, net operating income rose to a record $10.6 million from $8.6 million a year earlier. Diluted operating earnings per share of $.44 increased 13% from $.39 for the fourth quarter a year ago. Total revenue, on a taxable equivalent basis, was $44.1 million compared with $36.6 million for the fourth quarter of 2002. Also on an operating basis, return on tangible equity was 19.72% compared with 17.68% a year ago and return on assets was 1.06% compared with 1.08% a year ago. The fourth quarter performance helped the company gain 20% in net operating income for the full year. For the year 2003, net operating income totaled $39.5 million, compared with $32.8 million for 2002. Diluted operating earnings per share rose 14% to a record $1.68 from $1.48 a year earlier, as total revenue of $170.6 million increased $27.2 million, or 19%, from a year ago. Return on tangible equity for 2003 was 19.24% compared with 17.88% a year ago. At December 31, 2003, book value per common share was $12.70, up 23% from a year ago. "United Community Banks continued to execute according to plan during the fourth quarter of 2003," said Jimmy Tallent, president and chief executive officer. "Loan demand for the quarter remained strong across all our markets, providing an opportunity for our employees to deliver the highest level of customer service. This, in turn, provided us with a solid foundation to continue to build our business and expand our franchise." At December 31, 2003, assets totaled $4.1 billion - up 27% from last year-end. "This core growth was achieved in a disciplined, step-by-step process throughout the year, without compromising credit quality in a challenging economic environment," Tallent added. "For both the fourth quarter and full year, we again achieved our stated goals of sustained double-digit growth in operating earnings-per-share and a return on tangible equity, which excludes the effects of acquisition-related intangibles, above 16%," Tallent said. Net operating income for the fourth quarter and the full year of 2003 excludes merger-related charges. For the fourth quarter, merger-related charges were $580 thousand pre-tax, or $383 thousand after-tax, and $.02 per diluted share. For the full year, merger-related charges were $2.1 million pre-tax, or $1.4 million after-tax, and $.06 per diluted share. The merger-related charges were for legal, investment advisor and other professional fees, as well as the termination of equipment leases and conversion costs related to the acquisition of three branch offices in western North Carolina completed during the fourth quarter of 2003 and the mergers with First Georgia Holding, Inc. ("First Georgia Bank") completed on May 1, 2003, and First Central Bancshares, Inc. ("First Central Bank") completed on March 31, 2003. Including those merger-related charges, net income, diluted earnings per share, return on equity and return on assets for the quarter ended December 31, 2003 were $10.2 million, $.42, 14.19% and 1.02%, respectively. For the full year, net income, diluted earnings per share, return on equity and return on assets including the merger-related charges were $38.1 million, $1.62, 14.79%, and 1.02%, respectively. "Our ability to service the needs of our customers, combined with the strength of our markets relative to the national economy, helped increase loans by $313 million, or 13% internal core growth, from a year ago," Tallent said. "In addition, the acquisitions of First Central Bank, First Georgia Bank and three branch offices in western North Carolina contributed $321 million in new loans, bringing our total loan growth for the year to $634 million, or 27%. This exceptional core loan growth and our acquisitions pushed total assets to $4.1 billion at December 31, 2003 - more than double our size as compared to five years ago. And, over 70% of this growth was organic." Taxable equivalent net interest revenue for the fourth quarter rose $7.2 million, or 24%, to $36.8 million from the same period a year ago. Acquisitions during the year, contributed approximately $4.0 million of this increase, leaving the core growth rate at approximately 12%. "Even without the acquisitions and with the weak national economy, we still achieved solid growth in loans and new business," Tallent said. Taxable equivalent net interest margin for the fourth quarter was 3.96% versus 4.03% a year ago. "Despite this environment of historically low interest rates, United Community Banks has maintained a net interest margin near the 4% level for the past five quarters and we expect the margin to remain near this level for 2004," Tallent said. "With a stable margin at the 4% level, we are prepared to maintain our earnings momentum by achieving a strong base of core business growth combined with continued focus on expense controls." The fourth quarter provision for loan losses was $1.8 million, unchanged from a year earlier and up $300 thousand from the third quarter of 2003. Non-performing assets totaled $7.6 million and decreased $.4 million from a year ago, while loans outstanding increased $634 million. Non-performing assets as a percentage of total assets were .19% at December 31, 2003, compared with .25% at December 31, 2002. "Our excellent credit quality continues to be the foundation for superior financial performance," Tallent said. "Credit quality remains sound thanks to the tireless efforts of our exceptional team of bankers. Our strategy of securing loans with hard assets remains the key to our credit quality success." Fee revenue of $9.1 million for the fourth quarter increased $.3 million, or 3%, from $8.8 million a year ago. Mortgage loan and related fees were $1.8 million and down $.9 million from a year ago, due to the lower level of mortgage refinancing activity caused by a rise in long-term interest rates. Service charges and fees on deposit accounts were $5.0 million, up $1.4 million due to the recent acquisitions, increasing popularity of new products and services introduced last year, and growth in transactions and new accounts. Tallent commented, "As part of our balance sheet outlook and strategy during the fourth quarter of 2003, fee revenue was reduced by net charges of $150 thousand, this included $787 thousand of charges for the early prepayment of higher-rate Federal Home Loan Bank advances, which was partially offset by taking securities gains of $622 thousand--both part of the same overall balance sheet management strategy. A similar strategy and restructuring took place during the fourth quarter of 2002." Operating expenses were $27.6 million, up $4.6 million, or 20%, from the fourth quarter of 2002. Included in the fourth quarter of 2003 were operating expenses for the two banks merged earlier this year and the three branches purchased in the fourth quarter, which totaled $3.9 million, leaving the underlying core expense growth rate at 4%. Salaries and employee benefits of $17.4 million increased $2.4 million, or 16%, with approximately $2.0 million of this increase resulting from the recent acquisitions. The balance of the increase was due to normal merit increases for staff that was partially offset by lower incentive compensation associated with the slowdown in mortgage refinancing activities. Staff levels at December 31, 2003, excluding acquisitions, were up only five persons from a year ago. Communications and equipment expenses of $2.3 million increased $.4 million, or 24%, primarily resulting from recent acquisitions. Excluding the acquisitions, communications and equipment expenses increased 9%, due to depreciation and amortization costs for software, telecommunications, and technology equipment added over the last twelve months. Increases in all other operating expense categories were primarily due to the acquisitions and business growth. "We continue to diligently monitor and control expenses while growing our customer base and revenue," Tallent said. "Excluding acquisitions, total revenue for the quarter increased 7% while operating expenses rose 4%. This provided a positive operating leverage of 3%, which contributed to our 13% growth in diluted earnings per share for the fourth quarter. Our operating efficiency ratio was 59.81% compared with 59.94% a year ago. We are striving for a long-term efficiency ratio in the range of 58% to 60%, which we believe is reasonable given our service-oriented community banking model," Tallent added. "Looking forward to 2004, we believe United Community Banks remains on target to achieve earnings per share growth within our long-term goal of 12% to 15%," Tallent said. "We anticipate core loan growth in the range of 10% to 14% through 2004, and we expect our net interest margin to remain near the 4% level. Our outlook is based on flat short-term rates through 2004 and other assumptions that include a continued, stable economic environment in our markets combined with strong credit quality. We remain committed to providing superior customer service, improving our operating efficiency while maintaining solid credit quality and growing our franchise - both internally and through selective de novo offices and mergers." Other Items Under United Community Banks' stock purchase program, a total of 1.5 million shares may be purchased through December 31, 2004. No shares were purchased during the fourth quarter. As of December 31, 2003, a total of 874,000 shares had been purchased over the past three years with an average cost per share of $22.17. On January 19, 2004, the Board of Directors declared a regular first-quarter 2004 cash dividend of $.09 per common share, payable April 1, 2004, to shareholders of record as of the close of business on March 15, 2004. "This represents an annual cash dividend of $.36 per share and a $.06 per share, increase or 20% over the dividends paid for 2003," Tallent said. "This increase reflects our continued strong performance and commitment to deliver value to our shareholders. "United Community Banks' growth strategy is focused primarily on internal growth within our markets. Additionally, if we have the right people, we will expand through de novo offices and make selective acquisitions of bank and branch offices," Tallent said. As part of this growth strategy, United Community Banks completed the mergers of First Central Bank, headquartered in Lenoir City, Tennessee and First Georgia Bank, headquartered in Brunswick, Georgia during the first half of 2003. Combined, the mergers added 14 banking offices with approximately $310 million in loans, $410 million in deposits and $53 million in intangible assets. Further, during the fourth quarter, United Community Banks completed the purchase of three branches located in Avery, Mitchell, and Graham counties in western North Carolina from another financial institution. In aggregate, the branches had deposits of $70 million, loans of $10 million and intangible assets of $7 million. "As part of our de novo strategy, we found a team of four bankers with over fifty combined years of experience, primarily in Savannah, Georgia and opened a de novo bank in that market during the fourth quarter of 2003," Tallent said. "This new bank supports our strategy of finding the right bankers making it possible to expand our franchise in the attractive and affluent coastal Georgia market. This further complements our merger earlier this year with First Georgia Bank in Brunswick," Tallent commented. "Additionally, we recently opened two de novo bank offices in Mitchell and Yancey counties in western North Carolina. These new opportunities were the direct result of our recent acquisition of three branches earlier in the quarter in adjacent markets. In both markets we were able to hire staff with significant in - market experience. We now have 18 banking offices in western North Carolina and 72 banking offices throughout our franchise," Tallent added. "Looking ahead, we see excellent opportunities to expand and fill-in our markets through de novo offices. We first find the experienced bankers who know the market and share our community banking philosophy of providing the highest level of personal service available. Then, we build the bricks and mortar," Tallent said. "We will continue to grow and expand our markets to serve our customers and our shareholders, using an opportunistic strategy centered on both de novo offices and selective mergers." Conference Call United Community Banks will hold a conference call to discuss the contents of this news release, as well as business highlights and financial outlook for 2004, on Tuesday, January 27, 2004 at 11:00 a.m. ET. The telephone number for the conference call is (888) 266-1047. The conference call will also be available by web-cast within the Investor Relations section of the company's web site. About United Community Banks, Inc. Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $4.1 billion and operates 20 community banks with 72 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses in its markets. United Community Banks also offers the convenience of 24-hour access to its services through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq National Market under the symbol UCBI. Additional information may be found at the company's web site, ucbi.com. Safe Harbor This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward Looking Statements" on page 4 of United Community Banks, Inc. annual report filed on Form 10-K with the Securities and Exchange Commission. (Tables Follow) UNITED COMMUNITY BANKS, INC. SELECTED FINANCIAL INFORMATION FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2003 (1) Excludes pre-tax merger-related charges totaling $580,000 or $.02 per diluted common share, $668,000 or $.02 per diluted common share and $840,000 or $.02 per diluted common share recorded in the fourth, second and first quarters, respectively, of 2003. (2) Net income available to common stockholders divided by average realized common equity which excludes accumulated other comprehensive income. (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Excludes unrealized gains and losses on securities available for sale.
- ----------------------------------------------------------------------------------------------------------------------------------- 2003 2002 FOURTH --------------------------------------------- --------- QUARTER FOR THE TWELVE YTD (in thousands, except per share FOURTH THIRD SECOND FIRST FOURTH 2003-2002 MONTHS ENDED 2003-2002 data; taxable equivalent) QUARTER QUARTER QUARTER QUARTER QUARTER CHANGE 2003 2002 CHANGE - ------------------------------------------------------------------------------------------------------------------------------------ INCOME SUMMARY (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest revenue $ 53,943 $ 53,731 $ 53,261 $ 48,403 $ 48,579 $ 209,338 $ 195,932 Interest expense 17,098 17,446 18,467 17,589 18,964 70,600 76,357 ---------- ---------- --------- --------- --------- --------- --------- Net interest revenue 36,845 36,285 34,794 30,814 29,615 24% 138,738 119,575 16% Provision for loan losses 1,800 1,500 1,500 1,500 1,800 6,300 6,900 Total fee revenue 9,090 10,401 10,316 8,377 8,784 3 38,184 30,734 24 ---------- ---------- --------- --------- --------- --------- --------- TOTAL REVENUE 44,135 45,186 43,610 37,691 36,599 21 170,622 143,409 19 Operating expenses (1) 27,572 28,712 27,699 23,917 23,005 20 107,900 91,124 18 ---------- ---------- --------- --------- --------- --------- --------- Income before taxes 16,563 16,474 15,911 13,774 13,594 22 62,722 52,285 20 Income taxes 5,959 6,110 6,014 5,164 5,034 23,247 19,505 ---------- ---------- --------- --------- --------- --------- --------- NET OPERATING INCOME 10,604 10,364 9,897 8,610 8,560 24 39,475 32,780 20 Merger-related charges, net of tax 383 -- 428 546 -- 1,357 -- ---------- ---------- --------- --------- --------- --------- --------- NET INCOME $ 10,221 $ 10,364 $ 9,469 $ 8,064 $ 8,560 19 $ 38,118 $ 32,780 16 ========== ========== ========= ========= ========= ========= ========= OPERATING PERFORMANCE (1) Earnings per common share: Basic $ .45 $ .44 $ .43 $ .40 $ .40 13 $ 1.73 $ 1.53 13 Diluted .44 .43 .42 .39 .39 13 1.68 1.48 14 Return on equity (2) 14.73% 14.90% 15.43% 16.55% 16.42% 15.32% 16.54% Return on tangible equity (3) 19.72 19.94 19.54 17.79 17.68 19.24 17.88 Return on assets 1.06 1.06 1.06 1.07 1.08 1.06 1.11 Efficiency ratio 59.81 61.34 61.40 61.03 59.94 60.89 60.66 Dividend payout ratio 16.67 17.05 17.44 18.75 15.63 17.34 16.34 GAAP PERFORMANCE PER COMMON SHARE Basic earnings $ .43 $.44 $ .41 $ .38 $ .40 8 $ 1.67 $ 1.53 9 Diluted earnings .42 .43 .40 .37 .39 8 1.62 1.48 9 Cash dividends declared .075 .075 .075 .075 .0625 20 .30 .25 20 Book value 12.70 12.31 12.22 11.09 10.34 23 12.70 10.34 23 Tangible book value (3) 9.77 9.66 9.55 9.59 9.74 9.77 9.74 KEY PERFORMANCE RATIOS Return on equity (2) 14.19% 14.90% 14.76% 15.50% 16.42% 14.79% 16.54% Return on assets 1.02 1.06 1.01 1.00 1.08 1.02 1.11 Efficency ratio 61.07 61.34 62.88 63.17 59.94 62.07 60.66 Net interest margin 3.96 3.97 3.99 4.05 4.03 3.99 4.33 Dividend payout ratio 17.44 17.05 18.29 19.74 15.63 17.96 16.34 Equity to assets 7.41 7.35 7.19 6.84 6.92 7.21 7.01 Equity to assets (tangible) (3) 5.82 5.85 6.03 6.47 6.53 6.02 6.60 ASSET QUALITY Allowance for loan losses $ 38,655 $ 37,773 $ 37,353 $ 33,022 $ 30,914 $ 38,655 $ 30,914 Non-performing assets 7,589 7,998 8,232 7,745 8,019 7,589 8,019 Net charge-offs 918 1,080 1,069 1,030 1,186 4,097 3,111 Allowance for loan losses to loans 1.28% 1.29% 1.31% 1.30% 1.30% 1.28% 1.30% Non-performing assets to total assets .19 .20 .21 .22 .25 .19 .25 Net charge-offs to average loans .12 .15 .16 .17 .20 .15 .14 AVERAGE BALANCES Loans $2,959,626 $2,881,375 $2,742,952 $2,422,542 $2,358,021 26 $2,753,451 $2,239,875 23 Earning assets (4) 3,695,197 3,629,819 3,497,851 3,072,719 2,919,613 27 3,476,030 2,761,265 26 Total assets 3,961,384 3,888,141 3,756,689 3,269,481 3,138,747 26 3,721,284 2,959,295 26 Deposits 2,843,600 2,826,900 2,829,986 2,466,801 2,408,773 18 2,743,087 2,311,717 19 Stockholders' equity 293,464 285,790 269,972 223,599 217,051 35 268,446 207,312 29 Common shares outstanding: Basic 23,506 23,408 22,853 21,218 21,293 22,754 21,375 Diluted 24,260 24,123 23,592 21,957 22,078 23,501 22,161 AT PERIOD END Loans $3,015,997 $2,918,412 $2,861,481 $2,546,001 $2,381,798 27 $3,015,997 $2,381,798 27 Earning assets 3,796,332 3,676,018 3,642,545 3,304,232 3,029,409 25 3,796,332 3,029,409 25 Total assets 4,068,834 3,942,139 3,905,929 3,579,004 3,211,344 27 4,068,834 3,211,344 27 Deposits 2,857,449 2,790,331 2,870,926 2,723,574 2,385,239 20 2,857,449 2,385,239 20 Stockholders' equity 299,373 289,713 285,500 245,699 221,579 35 299,373 221,579 35 Common shares outstanding 23,526 23,488 23,311 22,037 21,263 11 23,526 21,263 11 UNITED COMMUNITY BANKS, INC. SELECTED FINANCIAL INFORMATION FOR THE YEARS ENDED DECEMBER 31, (1) Excludes pre-tax merger-related and restructuring charges totaling $2.1 million, or $.06 per diluted common share, recorded in 2003; $1.6 million, or $.05 per diluted common share, recorded in 2001; $10.6 million, or $.34 per diluted common share, recorded in 2000; and $1.8 million, or $.06 per diluted common share, recorded in 1999. (2) Net income available to common stockholders divided by average realized common equity which excludes accumulated other comprehensive income. (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Excludes unrealized gains and losses on securities available for sale.
- ------------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS, EXCEPT PER SHARE 5 YEAR DATA; TAXABLE EQUIVALENT) 2003 2002 2001 2000 1999 1998 CAGR - ------------------------------------------------------------------------------------------------------------------------------------ INCOME SUMMARY Interest revenue $ 209,338 $ 195,932 $ 210,036 $ 213,115 $ 171,211 $ 135,706 Interest expense 70,600 76,357 100,874 116,591 90,242 67,664 ---------- ---------- ---------- ---------- ---------- ---------- Net interest revenue 138,738 119,575 109,162 96,524 80,969 68,042 15% Provision for loan losses 6,300 6,900 6,000 7,264 5,966 3,014 Total fee revenue 38,184 30,734 25,267 18,867 15,693 12,979 24 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL REVENUE 170,622 143,409 128,429 108,127 90,696 78,007 17 Operating expenses (1) 107,900 91,124 83,906 74,043 63,505 53,104 15 ---------- ---------- ---------- ---------- ---------- ---------- Income before taxes 62,722 52,285 44,523 34,084 27,191 24,903 20 Income taxes 23,247 19,505 16,208 12,337 9,938 9,253 ---------- ---------- ---------- ---------- ---------- ---------- NET OPERATING INCOME 39,475 32,780 28,315 21,747 17,253 15,650 20 Merger-related charges, net of tax 1,357 -- 1,084 7,230 1,155 -- ---------- ---------- ---------- ---------- ---------- ---------- NET INCOME $ 38,118 $ 32,780 $ 27,231 $ 14,517 $ 16,098 $ 15,650 19 ========== ========== ========== ========== ========== ========== OPERATING PERFORMANCE (1) Earnings per common share: Basic $ 1.73 $ 1.53 $ 1.33 $ 1.05 $ .86 $ .78 17 Diluted 1.68 1.48 1.30 1.03 .84 .77 17 Return on equity (2) 15.32% 16.54% 16.73% 15.06% 14.42% 14.91% Return on tangible equity (3) 19.24 17.88 18.19 16.74 16.37 16.59 Return on assets 1.06 1.11 1.10 .89 .81 1.00 Efficiency ratio 60.89 60.66 62.52 64.15 66.07 66.20 Dividend payout ratio 17.34 16.34 15.04 14.24 11.68 9.55 GAAP PERFORMANCE PER COMMON SHARE Basic earnings $ 1.67 $ 1.53 $ 1.28 $ .70 $ .80 $ .78 16 Diluted earnings 1.62 1.48 1.25 .69 .78 .77 16 Cash dividends declared .30 .25 .20 .15 .10 .075 32 Book value 12.70 10.34 8.97 7.40 5.91 5.86 17 Tangible book value (3) 9.77 9.74 8.10 6.74 5.89 5.40 13 KEY PERFORMANCE RATIOS Return on equity (2) 14.79% 16.54% 16.08% 10.04% 13.46% 14.91% Return on assets 1.02 1.11 1.05 .59 .75 1.00 Efficiency ratio 62.07 60.66 63.72 69.15 67.99 66.20 Net interest margin 3.99 4.33 4.51 4.16 4.07 4.69 Dividend payout ratio 17.96 16.34 15.63 21.28 12.50 9.55 Equity to assets 7.21 7.01 6.81 5.58 5.47 6.78 Equity to assets (tangible) (3) 6.02 6.60 6.18 5.49 5.19 6.27 ASSET QUALITY Allowance for loan losses $ 38,655 $ 30,914 $ 27,124 $ 24,698 $ 20,043 $ 14,402 Non-performing assets 7,589 8,019 9,670 6,716 3,652 2,274 Net charge-offs 4,097 3,111 4,578 2,976 2,147 1,016 Allowance for loan losses to loans 1.28% 1.30% 1.35% 1.38% 1.28% 1.20% Non-performing assets to total assets .19 .25 .35 .27 .15 .13 Net charge-offs to average loans .15 .14 .25 .18 .15 .09 AVERAGE BALANCES Loans $2,753,451 $2,239,875 $1,854,968 $1,683,403 $1,391,858 $1,089,792 20 Earning assets (4) 3,476,030 2,761,265 2,419,080 2,319,389 1,987,825 1,452,740 19 Total assets 3,721,284 2,959,295 2,585,290 2,453,250 2,139,594 1,565,315 19 Deposits 2,743,087 2,311,717 2,010,105 1,941,496 1,659,534 1,328,843 16 Stockholders' equity 268,446 207,312 176,144 136,810 117,064 106,096 20 Common shares outstanding: Basic 22,754 21,375 21,127 20,600 20,158 19,998 Diluted 23,501 22,161 21,749 21,194 20,842 20,610 AT PERIOD END Loans $3,015,997 $2,381,798 $2,007,990 $1,792,055 $1,564,148 $1,203,495 20 Earning assets 3,796,332 3,029,409 2,554,530 2,352,475 2,195,712 1,678,016 18 Total assets 4,068,834 3,211,344 2,749,257 2,528,879 2,384,678 1,813,004 18 Deposits 2,857,449 2,385,239 2,116,499 1,995,865 1,869,379 1,432,224 15 Stockholders' equity 299,373 221,579 194,665 158,388 119,312 115,364 21 Common shares outstanding 23,526 21,263 21,511 21,028 20,189 19,672 UNITED COMMUNITY BANKS, INC. CONSOLIDATED STATEMENT OF INCOME FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2003 AND 2002
- ---------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, DECEMBER 31, --------------------------------- -------------------------------- (in thousands, except per share data) 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------------------------------------- INTEREST REVENUE: (Unaudited) (Unaudited) (Audited) (Audited) Interest and fees on loans $ 46,574 $ 42,025 $ 180,035 $ 168,192 Interest on federal funds sold and deposits in banks 84 149 391 576 Interest on investment securities: Taxable 6,141 5,050 23,944 21,578 Tax-exempt 655 772 2,819 3,207 --------- --------- --------- --------- Total interest revenue 53,454 47,996 207,189 193,553 --------- --------- --------- --------- INTEREST EXPENSE: Interest on deposits: Demand 1,712 3,046 7,831 11,515 Savings 82 110 369 508 Time 9,079 10,851 39,752 45,206 Other borrowings 6,225 4,957 22,648 19,128 --------- --------- --------- --------- Total interest expense 17,098 18,964 70,600 76,357 --------- --------- --------- --------- Net interest revenue 36,356 29,032 136,589 117,196 Provision for loan losses 1,800 1,800 6,300 6,900 --------- --------- --------- --------- Net interest revenue after provision for loan losses 34,556 27,232 130,289 110,296 --------- --------- --------- --------- FEE REVENUE: Service charges and fees 5,018 3,664 18,288 13,465 Mortgage loan and related fees 1,753 2,664 10,515 7,751 Consulting fees 1,033 1,231 4,399 4,612 Brokerage fees 606 419 1,921 1,875 Securities gains, net 622 573 497 637 Loss on prepayments of borrowings (787) (552) (787) (552) Other 845 785 3,351 2,946 --------- --------- --------- --------- Total fee revenue 9,090 8,784 38,184 30,734 --------- --------- --------- --------- TOTAL REVENUE 43,646 36,016 168,473 141,030 --------- --------- --------- --------- OPERATING EXPENSES: Salaries and employee benefits 17,379 14,949 68,044 57,735 Occupancy 2,143 2,038 8,783 8,261 Communications and equipment 2,287 1,847 8,601 6,555 Postage, printing and supplies 1,085 895 4,439 3,731 Professional fees 903 747 3,910 3,368 Advertising and public relations 629 636 3,068 2,994 Amortization of intangibles 359 85 1,065 340 Merger-related charges 580 -- 2,088 -- Other 2,787 1,808 9,990 8,140 --------- --------- --------- --------- Total operating expenses 28,152 23,005 109,988 91,124 --------- --------- --------- --------- Income before income taxes 15,494 13,011 58,485 49,906 Income taxes 5,273 4,451 20,367 17,126 --------- --------- --------- --------- NET INCOME $ 10,221 $ 8,560 $ 38,118 $ 32,780 ========= ========= ========= ========= Net income available to common stockholders $ 10,212 $ 8,534 $ 38,052 $ 32,676 ========= ========= ========= ========= Earnings per common share: Basic $ .43 $ .40 $ 1.67 $ 1.53 Diluted .42 .39 1.62 1.48 Average common shares outstanding: Basic 23,506 21,293 22,754 21,375 Diluted 24,260 22,078 23,501 22,161 UNITED COMMUNITY BANKS, INC. CONSOLIDATED BALANCE SHEET FOR THE PERIOD ENDED
- ------------------------------------------------------------------------------------------------------------------- DECEMBER 31, DECEMBER 31, ($ in thousands) 2003 2002 - ------------------------------------------------------------------------------------------------------------------- ASSETS (Audited) (Audited) Cash and due from banks $ 91,819 $ 75,027 Interest-bearing deposits in banks 68,374 31,318 Federal funds sold -- -- ----------- ----------- Cash and cash equivalents 160,193 106,345 Securities available for sale 659,891 559,390 Mortgage loans held for sale 10,756 24,080 Loans, net of unearned income 3,015,997 2,381,798 Less - allowance for loan losses 38,655 30,914 ----------- ----------- Loans, net 2,977,342 2,350,884 Premises and equipment, net 87,439 70,748 Accrued interest receivable 20,962 20,275 Intangible assets 72,213 12,767 Other assets 80,038 66,855 ----------- ----------- TOTAL ASSETS $ 4,068,834 $ 3,211,344 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Demand $ 412,309 $ 297,613 Interest-bearing demand 846,022 734,494 Savings 140,619 100,523 Time 1,458,499 1,252,609 ----------- ----------- Total deposits 2,857,449 2,385,239 Accrued expenses and other liabilities 21,147 17,222 Federal funds purchased and repurchase agreements 102,849 20,263 Federal Home Loan Bank advances 635,420 492,130 Long-term debt and other borrowings 152,596 74,911 ----------- ----------- TOTAL LIABILITIES 3,769,461 2,989,765 ----------- ----------- Stockholders' equity: Preferred stock, $1 par value; $10 stated value; 10,000,000 shares authorized; 55,900 and 172,600 shares issued and outstanding 559 1,726 Common stock, $1 par value; 50,000,000 shares authorized; 23,804,382 and 21,805,924 shares issued 23,804 21,806 Capital surplus 107,854 62,495 Retained earnings 166,887 135,709 Treasury stock; 278,350 and 542,652 shares, at cost (7,120) (11,432) Accumulated other comprehensive income 7,389 11,275 ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 299,373 221,579 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,068,834 $ 3,211,344 =========== ===========