United Community Banks, Inc. Reports Third Quarter Results

Rhea-AI Summary

United Community Banks reported strong third-quarter results with a net income of $73.8 million, marking a 58% increase year-over-year. The diluted earnings per share (EPS) reached $0.82, up $0.30 from the previous year. Key metrics included a 1.48% return on assets and 14.3% return on common equity. The bank completed the acquisition of Aquesta Financial Holdings on October 1, boosting its presence in Charlotte and Wilmington. However, total loans decreased by $200 million, primarily due to $322 million in PPP loan forgiveness.

Positive

• Net income increased by $73.8 million, a 58% annual growth.
• Diluted EPS rose to $0.82, a $0.30 increase year-on-year.
• Return on assets (ROA) at 1.48% and return on common equity at 14.3%.
• Completed the acquisition of Aquesta Financial Holdings, enhancing market presence.
• Core transaction deposits grew by $490 million, a 15.3% annualized increase.

Negative

• Total loans decreased by $200 million due to $322 million in PPP loan forgiveness.
• Net interest margin decreased by 7 basis points to 3.12%.

EPS of $0.82, Return on Assets of 1.48% and Return on Common Equity of 14.3%

GREENVILLE, S.C., Oct. 19, 2021 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the third quarter was $73.8 million and pre-tax, pre-provision income was $84.4 million. Diluted earnings per share of $0.82 for the quarter represented an increase of $0.30 or 58%, from the third quarter a year ago, and represented an increase of $0.04 or 5% from the second quarter of 2021. On an operating basis, United’s diluted earnings per share of $0.83 was up 51% over the year ago quarter. United’s GAAP return on assets (ROA) was 1.48% and its return on common equity was 14.3% for the quarter. On an operating basis, United’s ROA was 1.50% and its return on tangible common equity was 18.2%. On a pre-tax, pre-provision basis, operating return on assets was 1.73% for the quarter. The quarter benefited from an allowance release of $11.0 million, reflecting continued improvement in economic conditions and forecasts.

Chairman and CEO Lynn Harton stated, “This has been another strong quarter for United as our economies continued to strengthen even in the face of the Delta variant, increasing prices on many goods, and supply chain delays. Both loan and deposit growth were strong and noninterest income benefited from both another excellent mortgage quarter as well as contributions from our expanded wealth management business.” Harton continued, “On the strategic front, on October 1, we completed the acquisition of Aquesta Financial Holdings, Inc. and Aquesta Bank, accelerating our expansion in Charlotte, and adding the Wilmington, North Carolina market, two of the strongest markets in the Southeast. We are proud that this outstanding team of bankers has joined us and we believe that they are a great fit for United. We also continued to strengthen our Board of Directors with the appointment of Jennifer Bazante, Chief Marketing Officer of Humana Inc. We believe that digital transformation is supported and enabled by strong branding and marketing and we specifically wanted to bring that experience and thought leadership to our board. We are excited to have Jennifer join United as we continue to grow and build the company.”

Total loans decreased by $200 million during the quarter—impacted by $322 million of Paycheck Protection Program (PPP) loan forgiveness. Excluding the effect of PPP loans, core organic loan growth was 4.5% annualized. Core transaction deposits grew by $490 million during the quarter, or 15.3% annualized, and United’s cost of deposits decreased by 2 basis points to 0.07%. The net interest margin decreased by 7 basis points from the second quarter due mainly to a change in the earning asset mix towards liquid assets.

Third Quarter 2021 Financial Highlights:

• Net income of $73.8 million and pre-tax, pre-provision income of $84.4 million
• EPS increased by 58% compared to third quarter 2020 on a GAAP basis and 51% on an operating basis; compared to second quarter 2021, EPS increased by 5% on both a GAAP and operating basis
• Return on assets of 1.48%, or 1.50% on an operating basis
• Pre-tax, pre-provision return on assets of 1.70%, or 1.73% on an operating basis
• Return on common equity of 14.3%
• Return on tangible common equity of 18.2% on an operating basis
• A release of provision for credit losses of $11.0 million, which reduced the allowance for loan losses to 0.89% of loans from 0.98% in the second quarter
• Loan production of $1.2 billion, resulting in core loan growth of 4.5%, annualized for the quarter, excluding the impact of $322 million in PPP loans being forgiven
• Core transaction deposits were up $490 million, which represents a 15.3% annualized growth rate for the quarter
• Net interest margin of 3.12% was down 7 basis points from the second quarter, due to continued strong deposit growth and an earning asset mix change toward securities
• Mortgage closings of $568 million compared to $576 million a year ago; mortgage rate locks of $731 million compared to $910 million a year ago
• Noninterest income was up $4.3 million on a linked quarter basis, primarily driven by strong mortgage volume and the lack of a significant MSR write-down; it also benefitted from $2.0 million in fees generated by our newly acquired FinTrust wealth manager that closed on July 6
• Noninterest expenses increased by $1.2 million compared to the second quarter on a GAAP basis and by $850,000 on an operating basis; excluding the FinTrust transaction, operating noninterest expenses improved by $1 million compared to the second quarter
• Efficiency ratio at historically low levels of 53.1%, or 52.3% on an operating basis
• Net charge-offs of $551,000 or 2 basis points as a percent of average loans, up 4 basis points from the net recoveries experienced in the second quarter
• Nonperforming assets of 0.23% of total assets, down 2 basis points compared to June 30, 2021
• Total loan deferrals of $9 million or 0.1% of the total loan portfolio compared to $18 million or 0.2% in the second quarter
• Quarterly common shareholder dividend of $0.20 per share declared during the quarter, an increase of 11% year-over-year
• Completed the acquisition of FinTrust Capital Partners, LLC and its affiliates and subsidiaries with $2.1 billion in assets under management on July 6, 2021
• Completed the acquisition of Aquesta Financial Holdings, Inc. (“Aquesta”) with $754 million in assets on October 1, 2021; this acquisition is expected to add $0.08 in EPS accretion in 2022 with cost savings fully phased in
• Announced the proposed acquisition of Reliant Bancorp, Inc. (“Reliant”) with $3.1 billion in assets on July 14, 2021; this acquisition is expected to close in the first quarter of 2022 and add $0.15 in EPS accretion in 2022 and $0.22 in 2023 with cost savings fully phased in
  

Conference Call

United will hold a conference call on Wednesday, October 20, 2021, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 1388708. The conference call also will be webcast and available for replay for 30 days by selecting “Events & Presentations” within the Investor Relations section of United’s website at www.ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
		2021												2020								Third Quarter 2021 - 2020 Change		For the Nine Months Ended September 30,									YTD 2021 - 2020 Change
(in thousands, except per share data)		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter						2021				2020
INCOME SUMMARY
Interest revenue		$	147,675			$	145,809			$	141,542			$	156,071			$	141,773						$	435,026			$	401,925
Interest expense		6,636				7,433				9,478				10,676				13,319							23,547				45,561
Net interest revenue		141,039				138,376				132,064				145,395				128,454				10	%		411,479				356,364				15	%
(Release of) provision for credit losses		(11,034		)		(13,588		)		(12,281		)		2,907				21,793							(36,903		)		77,527
Noninterest income		40,095				35,841				44,705				41,375				48,682				(18	)		120,641				114,734				5
Total revenue		192,168				187,805				189,050				183,863				155,343				24			569,023				393,571				45
Expenses		96,749				95,540				95,194				106,490				95,981				1			287,483				261,499				10
Income before income tax expense		95,419				92,265				93,856				77,373				59,362				61			281,540				132,072				113
Income tax expense		21,603				22,005				20,150				17,871				11,755				84			63,758				27,485				132
Net income		73,816				70,260				73,706				59,502				47,607				55			217,782				104,587				108
Merger-related and other charges		1,437				1,078				1,543				2,452				3,361							4,058				4,566
Income tax benefit of merger-related and other charges		(328		)		(246		)		(335		)		(552		)		(519		)					(909		)		(788		)
Net income - operating (1)		$	74,925			$	71,092			$	74,914			$	61,402			$	50,449			49			$	220,931			$	108,365			104
Pre-tax pre-provision income (5)		$	84,385			$	78,677			$	81,575			$	80,280			$	81,155			4			$	244,637			$	209,599			17
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP		$	0.82			$	0.78			$	0.82			$	0.66			$	0.52			58			$	2.42			$	1.25			94
Diluted net income - operating (1)		0.83				0.79				0.83				0.68				0.55				51			2.45				1.29				90
Cash dividends declared		0.20				0.19				0.19				0.18				0.18				11			0.58				0.54				7
Book value		23.25				22.81				22.15				21.90				21.45				8			23.25				21.45				8
Tangible book value (3)		18.68				18.49				17.83				17.56				17.09				9			18.68				17.09				9
Key performance ratios:
Return on common equity - GAAP (2)(4)		14.26		%		14.08		%		15.37		%		12.36		%		10.06		%					14.55		%		8.11		%
Return on common equity - operating (1)(2)(4)		14.48				14.25				15.63				12.77				10.69							14.77				8.40
Return on tangible common equity - operating (1)(2)(3)(4)		18.23				17.81				19.68				16.23				13.52							18.55				10.76
Return on assets - GAAP (4)		1.48				1.46				1.62				1.30				1.07							1.52				0.93
Return on assets - operating (1)(4)		1.50				1.48				1.65				1.34				1.14							1.54				0.97
Return on assets - pre-tax pre-provision (4)(5)		1.70				1.64				1.80				1.77				1.86							1.71				1.89
Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5)		1.73				1.67				1.83				1.82				1.93							1.74				1.93
Net interest margin (fully taxable equivalent) (4)		3.12				3.19				3.22				3.55				3.27							3.17				3.55
Efficiency ratio - GAAP		53.11				54.53				53.55				56.73				54.14							53.72				55.30
Efficiency ratio - operating (1)		52.33				53.92				52.68				55.42				52.24							52.97				54.34
Equity to total assets		10.89				11.04				10.95				11.29				11.47							10.89				11.47
Tangible common equity to tangible assets (3)		8.53				8.71				8.57				8.81				8.89							8.53				8.89
ASSET QUALITY
Nonperforming loans		$	44,923			$	46,123			$	55,900			$	61,599			$	49,084			(8	)		$	44,923			$	49,084			(8	)
Foreclosed properties		412				224				596				647				953							412				953
Total nonperforming assets ("NPAs")		45,335				46,347				56,496				62,246				50,037				(9	)		45,335				50,037				(9	)
Allowance for credit losses - loans		99,620				111,616				126,866				137,010				134,256				(26	)		99,620				134,256				(26	)
Net charge-offs		551				(456		)		(305		)		1,515				2,538							(210		)		16,801
Allowance for credit losses - loans to loans		0.89		%		0.98		%		1.09		%		1.20		%		1.14		%					0.89		%		1.14		%
Net charge-offs to average loans (4)		0.02				(0.02		)		(0.01		)		0.05				0.09							—				0.22
NPAs to loans and foreclosed properties		0.41				0.41				0.48				0.55				0.42							0.41				0.42
NPAs to total assets		0.23				0.25				0.30				0.35				0.29							0.23				0.29
AVERAGE BALANCES ($ in millions)
Loans		$	11,205			$	11,617			$	11,433			$	11,595			$	11,644			(4	)		$	11,417			$	10,088			13
Investment securities		5,122				4,631				3,991				3,326				2,750				86			4,587				2,560				79
Earning assets		18,078				17,540				16,782				16,394				15,715				15			17,473				13,498				29
Total assets		19,322				18,792				18,023				17,698				17,013				14			18,717				14,718				27
Deposits		16,637				16,132				15,366				15,057				14,460				15			16,050				12,490				29
Shareholders’ equity		2,119				2,060				2,025				1,994				1,948				9			2,068				1,763				17
Common shares - basic (thousands)		87,211				87,289				87,322				87,258				87,129				—			87,274				81,815				7
Common shares - diluted (thousands)		87,355				87,421				87,466				87,333				87,205				—			87,413				81,876				7
AT PERIOD END ($ in millions)
Loans		$	11,191			$	11,391			$	11,679			$	11,371			$	11,799			(5	)		$	11,191			$	11,799			(5	)
Investment securities		5,335				4,928				4,332				3,645				3,089				73			5,335				3,089				73
Total assets		19,481				18,896				18,557				17,794				17,153				14			19,481				17,153				14
Deposits		16,865				16,328				15,993				15,232				14,603				15			16,865				14,603				15
Shareholders’ equity		2,122				2,086				2,031				2,008				1,967				8			2,122				1,967				8
Common shares outstanding (thousands)		86,559				86,665				86,777				86,675				86,611				—			86,559				86,611				—

⁽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.

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
		2021												2020								For the Nine Months Ended September 30,
(in thousands, except per share data)		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2021				2020
Expense reconciliation
Expenses (GAAP)		$	96,749			$	95,540			$	95,194			$	106,490			$	95,981			$	287,483			$	261,499
Merger-related and other charges		(1,437		)		(1,078		)		(1,543		)		(2,452		)		(3,361		)		(4,058		)		(4,566		)
Expenses - operating		$	95,312			$	94,462			$	93,651			$	104,038			$	92,620			$	283,425			$	256,933
Net income reconciliation
Net income (GAAP)		$	73,816			$	70,260			$	73,706			$	59,502			$	47,607			$	217,782			$	104,587
Merger-related and other charges		1,437				1,078				1,543				2,452				3,361				4,058				4,566
Income tax benefit of merger-related and other charges		(328		)		(246		)		(335		)		(552		)		(519		)		(909		)		(788		)
Net income - operating		$	74,925			$	71,092			$	74,914			$	61,402			$	50,449			$	220,931			$	108,365
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)		$	73,816			$	70,260			$	73,706			$	59,502			$	47,607			$	217,782			$	104,587
Income tax expense		21,603				22,005				20,150				17,871				11,755				63,758				27,485
(Release of) provision for credit losses		(11,034		)		(13,588		)		(12,281		)		2,907				21,793				(36,903		)		77,527
Pre-tax pre-provision income		$	84,385			$	78,677			$	81,575			$	80,280			$	81,155			$	244,637			$	209,599
Diluted income per common share reconciliation
Diluted income per common share (GAAP)		$	0.82			$	0.78			$	0.82			$	0.66			$	0.52			$	2.42			$	1.25
Merger-related and other charges, net of tax		0.01				0.01				0.01				0.02				0.03				0.03				0.04
Diluted income per common share - operating		$	0.83			$	0.79			$	0.83			$	0.68			$	0.55			$	2.45			$	1.29
Book value per common share reconciliation
Book value per common share (GAAP)		$	23.25			$	22.81			$	22.15			$	21.90			$	21.45			$	23.25			$	21.45
Effect of goodwill and other intangibles		(4.57		)		(4.32		)		(4.32		)		(4.34		)		(4.36		)		(4.57		)		(4.36		)
Tangible book value per common share		$	18.68			$	18.49			$	17.83			$	17.56			$	17.09			$	18.68			$	17.09
Return on tangible common equity reconciliation
Return on common equity (GAAP)		14.26		%		14.08		%		15.37		%		12.36		%		10.06		%		14.55		%		8.11		%
Merger-related and other charges, net of tax		0.22				0.17				0.26				0.41				0.63				0.22				0.29
Return on common equity - operating		14.48				14.25				15.63				12.77				10.69				14.77				8.40
Effect of goodwill and other intangibles		3.75				3.56				4.05				3.46				2.83				3.78				2.36
Return on tangible common equity - operating		18.23		%		17.81		%		19.68		%		16.23		%		13.52		%		18.55		%		10.76		%
Return on assets reconciliation
Return on assets (GAAP)		1.48		%		1.46		%		1.62		%		1.30		%		1.07		%		1.52		%		0.93		%
Merger-related and other charges, net of tax		0.02				0.02				0.03				0.04				0.07				0.02				0.04
Return on assets - operating		1.50		%		1.48		%		1.65		%		1.34		%		1.14		%		1.54		%		0.97		%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)		1.48		%		1.46		%		1.62		%		1.30		%		1.07		%		1.52		%		0.93		%
Income tax expense		0.45				0.47				0.46				0.40				0.28				0.45				0.26
(Release of) provision for credit losses		(0.23		)		(0.29		)		(0.28		)		0.07				0.51				(0.26		)		0.70
Return on assets - pre-tax, pre-provision		1.70				1.64				1.80				1.77				1.86				1.71				1.89
Merger-related and other charges		0.03				0.03				0.03				0.05				0.07				0.03				0.04
Return on assets - pre-tax pre-provision, excluding merger-related and other charges		1.73		%		1.67		%		1.83		%		1.82		%		1.93		%		1.74		%		1.93		%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)		53.11		%		54.53		%		53.55		%		56.73		%		54.14		%		53.72		%		55.30		%
Merger-related and other charges		(0.78		)		(0.61		)		(0.87		)		(1.31		)		(1.90		)		(0.75		)		(0.96		)
Efficiency ratio - operating		52.33		%		53.92		%		52.68		%		55.42		%		52.24		%		52.97		%		54.34		%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)		10.89		%		11.04		%		10.95		%		11.29		%		11.47		%		10.89		%		11.47		%
Effect of goodwill and other intangibles		(1.87		)		(1.82		)		(1.86		)		(1.94		)		(2.02		)		(1.87		)		(2.02		)
Effect of preferred equity		(0.49		)		(0.51		)		(0.52		)		(0.54		)		(0.56		)		(0.49		)		(0.56		)
Tangible common equity to tangible assets		8.53		%		8.71		%		8.57		%		8.81		%		8.89		%		8.53		%		8.89		%
Allowance for credit losses - loans to loans reconciliation
Allowance for credit losses - loans to loans (GAAP)		0.89		%		0.98		%		1.09		%		1.20		%		1.14		%		0.89		%		1.14		%
Effect of PPP loans		0.01				0.04				0.09				0.08				0.14				0.01				0.14
Allowance for credit losses - loans to loans, excluding PPP loans		0.90		%		1.02		%		1.18		%		1.28		%		1.28		%		0.90		%		1.28		%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
	2021												2020								Linked Quarter Change					Year over Year Change
(in millions)	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter
LOANS BY CATEGORY
Owner occupied commercial RE	$	2,149			$	2,149			$	2,107			$	2,090			$	2,009			$	—				$	140
Income producing commercial RE	2,542				2,550				2,599				2,541				2,493				(8		)			49
Commercial & industrial	1,729				1,762				1,760				1,853				1,788				(33		)			(59		)
Paycheck protection program	150				472				883				646				1,317				(322		)			(1,167		)
Commercial construction	947				927				960				967				987				20					(40		)
Equipment financing	1,017				969				913				864				823				48					194
Total commercial	8,534				8,829				9,222				8,961				9,417				(295		)			(883		)
Residential mortgage	1,533				1,473				1,362				1,285				1,270				60					263
Home equity lines of credit	661				661				679				697				707				—					(46		)
Residential construction	321				289				272				281				257				32					64
Consumer	142				139				144				147				148				3					(6		)
Total loans	$	11,191			$	11,391			$	11,679			$	11,371			$	11,799			$	(200	)			$	(608	)
LOANS BY MARKET (1)
North Georgia	$	961			$	962			$	982			$	955			$	945			$	(1	)			$	16
Atlanta	1,930				1,938				1,953				1,889				1,853				(8		)			77
North Carolina	1,427				1,374				1,326				1,281				1,246				53					181
Coastal Georgia	621				605				597				617				614				16					7
Gainesville	220				224				222				224				229				(4		)			(9		)
East Tennessee	383				394				398				415				420				(11		)			(37		)
South Carolina	2,145				2,107				1,997				1,947				1,870				38					275
Florida	1,113				1,141				1,160				1,435				1,453				(28		)			(340		)
Commercial Banking Solutions	2,391				2,646				3,044				2,608				3,169				(255		)			(778		)
Total loans	$	11,191			$	11,391			$	11,679			$	11,371			$	11,799			$	(200	)			$	(608	)

⁽¹⁾ Certain loans previously included in the Florida geographic market were reclassified to Commercial Banking Solutions following Seaside’s core systems conversion in the first quarter of 2021.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
		2021
(in thousands)		Third Quarter				Second Quarter				First Quarter
NONACCRUAL LOANS
Owner occupied RE		$	4,945			$	6,128			$	7,908
Income producing RE		13,462				13,100				13,740
Commercial & industrial		8,507				8,563				13,864
Commercial construction		1,202				1,229				1,984
Equipment financing		1,845				1,771				2,171
Total commercial		29,961				30,791				39,667
Residential mortgage		13,222				13,485				14,050
Home equity lines of credit		1,364				1,433				1,707
Residential construction		260				307				322
Consumer		116				107				154
Total		$	44,923			$	46,123			$	55,900

		2021
		Third Quarter							Second Quarter							First 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		$	(93	)		(0.02	)%		$	(103	)		(0.02	)%		$	767			0.15	%
Income producing RE		45				0.01			(213		)		(0.03	)		37				0.01
Commercial & industrial		(91		)		(0.02	)		60				0.01			(2,806		)		(0.45	)
Commercial construction		(123		)		(0.05	)		(293		)		(0.12	)		22				0.01
Equipment financing		512				0.21			301				0.13			1,511				0.70
Total commercial		250				0.01			(248		)		(0.01	)		(469		)		(0.02	)
Residential mortgage		51				0.01			(194		)		(0.05	)		92				0.03
Home equity lines of credit		(102		)		(0.06	)		(112		)		(0.07	)		(73		)		(0.04	)
Residential construction		(37		)		(0.05	)		(33		)		(0.05	)		(60		)		(0.09	)
Consumer		389				1.11			131				0.37			205				0.58
Total		$	551			0.02			$	(456	)		(0.02	)		$	(305	)		(0.01	)
(1) Annualized.

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)		September 30, 2021				December 31, 2020
ASSETS
Cash and due from banks		$	131,785			$	148,896
Interest-bearing deposits in banks		1,686,008				1,459,723
Cash and cash equivalents		1,817,793				1,608,619
Debt securities available-for-sale		4,251,436				3,224,721
Debt securities held-to-maturity (fair value $1,079,925 and $437,193)		1,083,324				420,361
Loans held for sale at fair value		68,424				105,433
Loans and leases held for investment		11,191,037				11,370,815
Less allowance for credit losses - loans and leases		(99,620		)		(137,010		)
Loans and leases, net		11,091,417				11,233,805
Premises and equipment, net		225,350				218,489
Bank owned life insurance		204,282				201,969
Accrued interest receivable		41,561				47,672
Net deferred tax asset		37,617				38,411
Derivative financial instruments		53,296				86,666
Goodwill and other intangible assets, net		400,994				381,823
Other assets		205,663				226,405
Total assets		$	19,481,157			$	17,794,374
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	6,492,519			$	5,390,291
NOW and interest-bearing demand		3,699,951				3,346,490
Money market		3,904,927				3,550,335
Savings		1,144,065				950,854
Time		1,440,160				1,704,290
Brokered		183,795				290,098
Total deposits		16,865,417				15,232,358
Long-term debt		247,139				326,956
Derivative financial instruments		26,065				29,003
Accrued expenses and other liabilities		220,178				198,527
Total liabilities		17,358,799				15,786,844
Shareholders' equity:
Preferred stock; $1 par value; 10,000,000 shares authorized; Series I, $25,000 per share liquidation preference; 4,000 shares issued and outstanding		96,422				96,422
Common stock, $1 par value; 200,000,000 and 150,000,000 shares authorized, respectively; 86,558,647 and 86,675,279 shares issued and outstanding, respectively		86,559				86,675
Common stock issuable; 588,258 and 600,834 shares		11,098				10,855
Capital surplus		1,631,709				1,638,999
Retained earnings		298,503				136,869
Accumulated other comprehensive (loss) income		(1,933		)		37,710
Total shareholders' equity		2,122,358				2,007,530
Total liabilities and shareholders' equity		$	19,481,157			$	17,794,374

UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Income (Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except per share data)		2021				2020				2021				2020
Interest revenue:
Loans, including fees		$	128,477			$	126,936			$	382,261			$	352,861
Investment securities, including tax exempt of $2,280 and $1,895 and $6,685 and $4,988, respectively		18,540				14,558				51,530				47,567
Deposits in banks and short-term investments		658				279				1,235				1,497
Total interest revenue		147,675				141,773				435,026				401,925
Interest expense:
Deposits:
NOW and interest-bearing demand		1,290				1,634				4,158				6,240
Money market		1,119				3,017				4,278				10,969
Savings		55				47				157				121
Time		678				4,300				3,388				18,014
Deposits		3,142				8,998				11,981				35,344
Short-term borrowings		—				29				2				31
Long-term debt		3,494				4,292				11,564				10,186
Total interest expense		6,636				13,319				23,547				45,561
Net interest revenue		141,039				128,454				411,479				356,364
(Release of) provision for credit losses		(11,034		)		21,793				(36,903		)		77,527
Net interest revenue after provision for credit losses		152,073				106,661				448,382				278,837
Noninterest income:
Service charges and fees		9,350				8,260				25,255				23,893
Mortgage loan gains and other related fees		13,828				25,144				47,536				57,113
Wealth management fees		5,554				3,055				12,881				6,019
Gains from sales of other loans, net		2,353				1,175				7,506				3,889
Securities gains, net		—				746				41				746
Other		9,010				10,302				27,422				23,074
Total noninterest income		40,095				48,682				120,641				114,734
Total revenue		192,168				155,343				569,023				393,571
Noninterest expenses:
Salaries and employee benefits		60,458				59,067				180,457				162,236
Communications and equipment		7,368				6,960				21,979				19,462
Occupancy		7,096				7,050				21,130				18,709
Advertising and public relations		1,458				1,778				4,150				5,312
Postage, printing and supplies		1,731				1,703				5,171				4,986
Professional fees		5,347				5,083				14,509				14,003
Lending and loan servicing expense		2,450				3,043				8,508				8,525
Outside services - electronic banking		2,308				1,888				6,811				5,516
FDIC assessments and other regulatory charges		1,723				1,346				5,520				4,388
Amortization of intangibles		1,028				1,099				2,942				3,126
Merger-related and other charges		1,437				3,361				4,058				4,566
Other		4,345				3,603				12,248				10,670
Total noninterest expenses		96,749				95,981				287,483				261,499
Income before income taxes		95,419				59,362				281,540				132,072
Income tax expense		21,603				11,755				63,758				27,485
Net income		73,816				47,607				217,782				104,587
Preferred stock dividends		1,719				1,814				5,157				1,814
Undistributed earnings allocated to participating securities		448				356				1,342				779
Net income available to common shareholders		$	71,649			$	45,437			$	211,283			$	101,994
Net income per common share:
Basic		$	0.82			$	0.52			$	2.42			$	1.25
Diluted		0.82				0.52				2.42				1.25
Weighted average common shares outstanding:
Basic		87,211				87,129				87,274				81,815
Diluted		87,355				87,205				87,413				81,876

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
		2021											2020
(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)		$	11,204,653			$	128,185			4.54	%		$	11,644,202			$	126,342			4.32	%
Taxable securities (3)		4,738,860				16,260				1.37			2,499,649				12,663				2.03
Tax-exempt securities (FTE) (1)(3)		383,196				3,061				3.20			249,959				2,544				4.07
Federal funds sold and other interest-earning assets		1,751,222				1,185				0.27			1,321,445				1,132				0.34
Total interest-earning assets (FTE)		18,077,931				148,691				3.27			15,715,255				142,681				3.61
Noninterest-earning assets:
Allowance for credit losses		(111,952		)									(128,581		)
Cash and due from banks		124,360											135,949
Premises and equipment		228,556											216,326
Other assets (3)		1,002,810											1,074,529
Total assets		$	19,321,705										$	17,013,478
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	3,594,670			1,290				0.14			$	2,890,735			1,634				0.22
Money market		4,010,720				1,119				0.11			3,501,781				3,017				0.34
Savings		1,120,843				55				0.02			864,849				47				0.02
Time		1,466,821				609				0.16			1,933,764				4,127				0.85
Brokered time deposits		63,917				69				0.43			96,198				173				0.72
Total interest-bearing deposits		10,256,971				3,142				0.12			9,287,327				8,998				0.39
Federal funds purchased and other borrowings		—				—				—			4,405				2				0.18
Federal Home Loan Bank advances		54				—				—			2,818				27				3.81
Long-term debt		257,139				3,494				5.39			327,017				4,292				5.22
Total borrowed funds		257,193				3,494				5.39			334,240				4,321				5.14
Total interest-bearing liabilities		10,514,164				6,636				0.25			9,621,567				13,319				0.55
Noninterest-bearing liabilities:
Noninterest-bearing deposits		6,379,969											5,172,999
Other liabilities		308,551											270,451
Total liabilities		17,202,684											15,065,017
Shareholders' equity		2,119,021											1,948,461
Total liabilities and shareholders' equity		$	19,321,705										$	17,013,478
Net interest revenue (FTE)						$	142,055										$	129,362
Net interest-rate spread (FTE)										3.02	%										3.06	%
Net interest margin (FTE) (4)										3.12	%										3.27	%

(1)   Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)   Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3)   Securities available for sale are shown at amortized cost. Pretax unrealized gains of $39.6 million and $77.0 million in 2021 and 2020, 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.

Average Consolidated Balance Sheets and Net Interest Analysis
For the Nine Months Ended September 30,
		2021											2020
(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)		$	11,417,285			$	380,765			4.46	%		$	10,087,630			$	351,536			4.65	%
Taxable securities (3)		4,206,099				44,845				1.42			2,362,674				42,579				2.40
Tax-exempt securities (FTE) (1)(3)		381,323				8,979				3.14			197,231				6,699				4.53
Federal funds sold and other interest-earning assets		1,468,487				3,462				0.31			850,722				3,621				0.57
Total interest-earning assets (FTE)		17,473,194				438,051				3.35			13,498,257				404,435				4.00
Non-interest-earning assets:
Allowance for loan losses		(127,793		)									(96,235		)
Cash and due from banks		138,973											134,354
Premises and equipment		225,021											217,551
Other assets (3)		1,007,669											964,511
Total assets		$	18,717,064										$	14,718,438
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	3,452,206			4,158				0.16			$	2,583,911			6,240				0.32
Money market		3,853,907				4,278				0.15			2,797,350				10,969				0.52
Savings		1,064,045				157				0.02			788,681				121				0.02
Time		1,551,934				3,096				0.27			1,860,597				17,435				1.25
Brokered time deposits		67,794				292				0.58			102,502				579				0.75
Total interest-bearing deposits		9,989,886				11,981				0.16			8,133,041				35,344				0.58
Federal funds purchased and other borrowings		41				—				—			1,611				3				0.25
Federal Home Loan Bank advances		1,117				2				0.24			1,001				28				3.74
Long-term debt		286,347				11,564				5.40			256,218				10,186				5.31
Total borrowed funds		287,505				11,566				5.38			258,830				10,217				5.27
Total interest-bearing liabilities		10,277,391				23,547				0.31			8,391,871				45,561				0.73
Noninterest-bearing liabilities:
Noninterest-bearing deposits		6,059,680											4,356,484
Other liabilities		311,749											206,904
Total liabilities		16,648,820											12,955,259
Shareholders' equity		2,068,244											1,763,179
Total liabilities and shareholders' equity		$	18,717,064										$	14,718,438
Net interest revenue (FTE)						$	414,504										$	358,874
Net interest-rate spread (FTE)										3.04	%										3.27	%
Net interest margin (FTE) (4)										3.17	%										3.55	%

(1)   Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)   Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3)   Securities available for sale are shown at amortized cost. Pretax unrealized gains of $40.3 million and $65.5 million in 2021 and 2020, 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.

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. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. At September 30, 2021, United had $19.5 billion in assets and 171 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee along with a national SBA lending franchise and a national equipment lending subsidiary. Through its October 1, 2021 acquisition of Aquesta and its wholly-owned banking subsidiary, Aquesta Bank, United added $754 million in assets and nine banking offices in high growth markets in North Carolina. In 2021, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking seven out of the last eight years United earned the coveted award. United was also named one of the "Best Banks to Work For" by American Banker in 2020 for the fourth year in a row based on employee satisfaction. Forbes included United in its inaugural list of the World’s Best Banks in 2019 and again in 2020. Forbes also recognized United on its 2021 list of the 100 Best Banks in America for the eighth consecutive year. United also received five Greenwich Excellence Awards in 2020 for excellence in Small Business Banking, including a national award for Overall 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 the expected completion date of the Reliant acquisition and the accretive value of each of the Aquesta and Reliant acquisitions to United’s earnings. 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.
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 Aquesta and Reliant acquisitions 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 Aquesta and Reliant acquisitions, (3) the occurrence of any event, change or other circumstances that could give rise to a delay in closing the Reliant acquisition or the termination of the merger agreement, (4) the failure to obtain the necessary approval by the shareholders of Reliant, (5) the possibility that the costs, fees, expenses and charges related to the acquisitions of Aquesta and Reliant may be greater than anticipated, (6) the ability of United to obtain required governmental approvals of the Reliant acquisition, (7) reputational risk and the reaction of the companies’ customers, suppliers, employees or other business partners to the acquisitions of Aquesta and Reliant, (8) the failure of the closing conditions in the Reliant merger agreement to be satisfied, or any unexpected delay in closing the acquisition, (9) the risks relating to the integration of Aquesta’s and Reliant’s 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 acquisitions of Aquesta and Reliant, (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 acquisitions of Aquesta and Reliant, 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, 2020, 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 Reliant, Reliant’s) 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 Reliant to predict their occurrence or how they will affect United or Reliant.

United qualifies all forward-looking statements by these cautionary statements.

IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORS

In connection with the prospective acquisition of Reliant, United has filed with the SEC a registration statement on Form S-4 that includes a proxy statement of Reliant to be sent to Reliant’s shareholders seeking their approval of the merger agreement and merger with United. The registration statement also will contain the prospectus of United to register the shares of United common stock to be issued in connection with the Reliant acquisition. INVESTORS AND SHAREHOLDERS OF RELIANT ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE PROXY STATEMENT/PROSPECTUS THAT WILL BE A PART OF THE REGISTRATION STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY UNITED OR RELIANT WITH THE SEC, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE REGISTRATION STATEMENT AND THOSE OTHER DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT UNITED, RELIANT AND THE MERGER OF RELIANT AND UNITED.

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 Reliant at the “Investor Relations” section of Reliant’s website at www.reliantbank.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 Reliant Bancorp, Inc., 6100 Tower Circle, Suite 120, Franklin, TN 37067, Attn: Jerry Cooksey, Telephone: (615) 221-2020.

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 Reliant with United or otherwise.

PARTICIPANTS IN THE TRANSACTION

United and Reliant, 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 Reliant’s shareholders in favor of the approval of the merger agreement and the merger of Reliant 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 2021 annual meeting of shareholders, as filed with the SEC on March 30, 2021, and other documents subsequently filed by United with the SEC. Information about the directors and executive officers of Reliant and their ownership of Reliant’s common stock can be found in Reliant’s definitive proxy statement for its 2021 annual meeting of shareholders, filed with the SEC on April 8, 2021, and other documents subsequently filed by Reliant with the SEC. Additional information regarding the interests of these participants also will be included in the proxy statement/prospectus pertaining to the transaction that is described above. Free copies of this document may be obtained as described above.

For more information:

Jefferson Harralson
Chief Financial Officer
(864) 240-6208
Jefferson_Harralson@ucbi.com

 

FAQ

What were the financial highlights for UCBI in Q3 2021?

In Q3 2021, UCBI reported a net income of $73.8 million, diluted EPS of $0.82, and a return on assets of 1.48%.

What is the CEO's statement regarding UCBI's performance?

Lynn Harton, CEO, stated it was a strong quarter despite economic challenges, highlighting loan and deposit growth.

What acquisitions did UCBI complete recently?

UCBI completed the acquisition of Aquesta Financial Holdings on October 1, 2021.

How did UCBI's loan portfolio change in Q3 2021?

UCBI's total loans decreased by $200 million, primarily due to the forgiveness of $322 million in PPP loans.

What factors contributed to UCBI's net income growth?

The net income growth was driven by strong loan and deposit growth and an allowance release of $11 million.