United Community Banks, Inc. Reports Fourth Quarter Results

Rhea-AI Summary

United Community Banks (NASDAQ: UCBI) reported solid fourth quarter results with a net income of $59.5 million, leading to diluted EPS of $0.66, an 8% increase year-over-year. The return on assets (ROA) was 1.30%, while return on common equity reached 12.36%. Core loans decreased by $428 million, mainly due to forgiven SBA PPP loans; however, excluding these, organic loan growth was 8% annualized. Core deposits grew by $369 million or 13% annualized. The financial highlight of 2020 noted a full-year EPS of $1.91, a 17% decrease compared to the previous year.

Positive

• Fourth quarter EPS increased by 8% year-over-year and 27% quarter-over-quarter.
• Core transaction deposits grew by 13% annualized during the fourth quarter.
• Return on common equity was robust at 12.4% for the fourth quarter.

Negative

• Net income for the full year decreased, resulting in a 17% decline in EPS.
• Total loans decreased by $428 million due to forgiveness of PPP loans.
• Noninterest expenses rose due to $8.5 million funding for the United Community Bank Foundation.

EPS of $0.66, Return on Assets of 1.30% and Return on Common Equity of 12.36%

GREENVILLE, S.C., Jan. 19, 2021 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today reported fourth quarter financial results, including solid year-over-year loan and core deposit growth and strong profitability. For the quarter, United’s net income was $59.5 million and pre-tax pre-provision income was $80.3 million. Diluted earnings per share of $0.66 for the quarter represented an increase of $0.05 or 8%, from a year ago. Compared to the third quarter, diluted earnings per share were up by $0.14 or 27%. On an operating basis, which excludes merger-related and other charges, diluted earnings per share were $0.68, up $0.07 or 11% from last year and $0.13 per share or 24% compared to the third quarter. United’s GAAP return on assets (ROA) was 1.30% and its return on common equity was 12.4% for the quarter. On an operating basis, United’s ROA was 1.34% and its return on tangible common equity was 16.2%. On a pre-tax, pre-provision basis, and excluding merger-related and other charges, ROA was 1.82%.  

Included in the quarter’s results was a discretionary $8.5 million contribution to the United Community Bank Foundation. This contribution lowered operating EPS by $0.07 and operating ROA by 15 basis points.

Chairman and CEO Lynn Harton stated, “While our markets continue to be impacted by the pandemic, I am proud of the ongoing commitment to service by our employees and am encouraged by the resilience of our customers. The strength of our balance sheet and the diversity of our business model enabled us to continue to post solid financial results in a challenging environment. Most importantly, our teams continued to exhibit outstanding leadership. During the year, we have been able to add new teams of bankers, expand our footprint into new, fast-growing markets, and increase our product offerings. Focused efforts by our teams have led to meaningful high-quality growth in loans, deposits, and fee income despite economic headwinds.”

Total loans decreased by $428 million during the quarter—primarily driven by the forgiveness of $671 million in SBA Paycheck Protection Program (PPP) loans. Excluding the effect of PPP loans, core organic loan growth was 8% annualized. Core transaction deposits grew by $369 million during the quarter, or 13% annualized, and United’s cost of deposits decreased by 8 basis points to 0.17%. The net interest margin increased 28 basis points from the third quarter due mainly to the accelerated recognition of PPP fees, as well as purchased loan accretion. Excluding these items, the net interest margin decreased by approximately 10 basis points from the third quarter due to a combination of factors, including lower overall market rates and increased liquidity.

Mr. Harton concluded, “I am pleased by our performance both this quarter and this past year despite the challenging circumstances. I am optimistic going into 2021 knowing that we are well positioned to take advantage of new business opportunities. In October, and for the fourth consecutive year, United was again named one of the Best Banks to Work for in 2020 by American Banker. This honor demonstrates our commitment to employee development and to fostering a strong culture. Our employees continue to lead in supporting our customers and communities, which is directly reflected in our performance and success.”

2020 Financial Highlights:

• Full year EPS of $1.91, a decrease of 17% compared to last year on both a GAAP and operating basis
• Return on assets of 1.04%, or 1.07% on an operating basis
• Pre-tax, pre-provision return on assets of 1.85%, or 1.90% on an operating basis
• Return on common equity of 9.3%
• Return on tangible common equity of 12.2% on an operating basis
• Completed the merger with Three Shores Bancorporation and its bank subsidiary Seaside National Bank & Trust (Seaside) on July 1
• A provision for credit losses of $80.4 million compared to $13.2 million in 2019, partly due to the adoption of the Current Expected Credit Losses (CECL) model in the first quarter
• Processed nearly 11,000 PPP applications, totaling $1.3 billion in new loans
• Loan growth of $2.6 billion with $1.4 billion attributable to loans acquired from Seaside and core loan growth (excluding PPP loans) of 8% for the year
• Core transaction deposits were up $4.0 billion with $1.3 billion attributable to Seaside and remainder in organic growth, which represents a 36% core growth rate for the year
• Net interest margin of 3.55%, which was down 52 basis points from last year due to a number of factors, including the low rate environment, the Seaside acquisition, and increasing balance sheet liquidity
• Record mortgage rate locks of $3.3 billion compared to $1.6 billion a year ago
• Noninterest income was up $49.6 million or 47%, excluding net securities gains; Seaside contributed nearly $4.7 million of the increase and mortgage loan gains and related fees were up $48.9 million, primarily driven by record mortgage rate locks and production
• Efficiency ratio of 55.7%, or 54.6% on an operating basis
• Net charge-offs of $18.3 million, or 17 basis points as a percent of average loans, up 3 basis points from 2019
• 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

• Established the United Community Bank Foundation with $10.0 million

Fourth Quarter 2020 Financial Highlights:

• Net income of $59.5 million and pre-tax pre-provision income of $80.3 million
• EPS increased by 8% compared to last year on a GAAP basis and 11% on an operating basis; compared to third quarter, EPS increased by 27% on a GAAP basis and 24% on an operating basis
• Return on assets of 1.30%, or 1.34% on an operating basis
• Pre-tax, pre-provision return on assets of 1.77%, or 1.82% on an operating basis
• Return on common equity of 12.4%
• Return on tangible common equity of 16.2% on an operating basis
• A provision for credit losses of $2.9 million, which increased the allowance for loan losses to 1.20% (1.28%, excluding PPP loans) from 1.14% in the third quarter
• Loan production of $1.1 billion, resulting in core loan growth of 8%, annualized for the quarter, excluding the impact of $671 million in PPP loans being forgiven
• Core transaction deposits were up $369 million, which represents a 13% annualized growth rate for the quarter
• Net interest margin of 3.55% was up 28 basis points from the third quarter, mainly due to the impact of accelerated PPP fees during the quarter
• Record mortgage closings of $609 million and mortgage rate locks of $792 million, compared to $333 million and $411 million, respectively, a year ago
• Noninterest income was down $6.6 million on a linked quarter basis, excluding net securities gains, primarily driven by lower mortgage loan gains and related fees
• Noninterest expenses increased by $10.5 million compared to the third quarter mostly due to funding for the United Community Bank Foundation of $8.5 million
• Efficiency ratio of 56.7%, or 55.4% on an operating basis
• Net charge-offs of $1.5 million, or 5 basis points as a percent of average loans, down 4 basis points from the third quarter
• Nonperforming assets of 0.35% of total assets, up 6 basis points compared to September 30, 2020
• Total loan deferrals of $71 million or 0.6% of the total loan portfolio compared to $365 million or 3% in the third quarter
• $8.5 million of funding for the United Community Bank Foundation for charities and causes throughout the footprint, adding to a $0.5 million contribution in the third quarter
• Plan for operational c

FAQ

What were United Community Banks' EPS results for the fourth quarter of 2020?

United Community Banks reported diluted EPS of $0.66 for the fourth quarter of 2020.

What is the return on assets for United Community Banks as of Q4 2020?

The return on assets for United Community Banks was 1.30% in the fourth quarter of 2020.

How much did core transaction deposits grow in Q4 2020 for UCBI?

Core transaction deposits rose by $369 million, or 13% annualized, during the fourth quarter of 2020.

What was the total net income reported by UCBI for the fourth quarter of 2020?

United Community Banks reported a net income of $59.5 million for the fourth quarter of 2020.

What challenges did United Community Banks face in 2020?

United Community Banks faced challenges such as total loan decreases primarily due to forgiven PPP loans and increased noninterest expenses due to community support funding.