United Community Banks, Inc. Reports Third Quarter Results

Rhea-AI Summary

United Community Banks, Inc. announces net income of $47.9 million for Q3 2023. Customer deposits grew by 5.6% annualized and loans grew at a 5.4% annualized rate. Net interest revenue increased $2.3 million.

Positive

• Customer deposits organically grew by 5.6% annualized
• Loans grew at a 5.4% annualized rate during the quarter
• Net interest revenue increased $2.3 million

Negative

• Diluted earnings per share decreased by $0.14 or 26% from Q2 2023
• Noninterest income was down $4.4 million
• Net interest margin decreased by 13 basis points to 3.24%

Strengthened Customer Deposit Base with 5.6% Annualized Growth; Loan Growth of 5.4% Annualized

GREENVILLE, S.C., Oct. 18, 2023 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (“United”) today announced net income for the third quarter of $47.9 million and pre-tax, pre-provision income of $90.1 million. Diluted earnings per share of $0.39 for the quarter represented a decrease of $0.14 or 26% from the second quarter of 2023 and a decrease of $0.35 or 47%, from the third quarter of 2022. On an operating basis, excluding merger-related and other charges, diluted earnings per share of $0.45 decreased $0.10 or 18% compared to last quarter. Customer deposits organically grew by 5.6% annualized and loans grew at a 5.4% annualized rate during the quarter. Net interest revenue increased $2.3 million as the addition of First National Bank of South Miami ("FNBSM") was partly offset by a contraction in the net interest margin, driven by continued deposit pricing competition. Noninterest income was down $4.4 million primarily due to the absence of the unusual second quarter gain on the sale of an insurance subsidiary and a one-time small business partnership investment gain. Noninterest expenses increased mainly due to closing the FNBSM acquisition.

For the quarter, United’s return on assets was 0.68%, or 0.79% on an operating basis. Return on common equity was 5.3% and return on tangible common equity was 9.0%. On a pre-tax, pre-provision basis, operating return on assets was 1.44% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.18%, down three basis points from the second quarter of 2023.

Chairman and CEO Lynn Harton stated, “We continue to be pleased with the strength of our customer deposit franchise, driven by our service model. In the third quarter our customer deposits grew by 5.6% annualized, allowing us to decrease high cost brokered deposits and fund solid loan growth within our stated target range of mid-to-high single digits. Our cost of deposits continued to increase, leading to a modest decline in our net interest margin for the quarter. Increases in credit costs are concentrated in specific sectors that are under stress or specific companies that have been poorly managed. This is not unexpected given the speed at which borrowing rates have increased. We continue to expect broader credit performance to remain strong, but are appropriately cautious in our portfolio management given the potential for ongoing changes in the economic environment.”

United’s net interest margin decreased by 13 basis points to 3.24% compared to the second quarter. The average yield on United’s interest-earning assets was up 20 basis points to 5.17%, but its cost of deposits increased by 39 basis points to 2.03%, leading to the reduction in the net interest margin. Net charge-offs were $26.6 million or 0.59% of average loans during the quarter, up 39 basis points compared to the second quarter of 2023, largely due to the $19 million charge-off from an 8.7% participation in a large, nationally syndicated credit disclosed during the quarter. NPAs were 34 basis points relative to total assets, down six basis points from the previous quarter.

Mr. Harton concluded, “We continue to focus on our key mission of building our communities by serving our customers. Our teams are executing on that promise across our footprint, which we believe is one of the strongest in the Southeast. We have been fortunate to attract new teams, adding both new talent and additional exposure to high-growth metropolitan markets within our franchise. This quarter, we are very glad to welcome FNBSM officially into the United team, boosting our growth opportunities in Miami. FNBSM brings a very talented team and we look forward to growing together.”

Third Quarter 2023 Financial Highlights:

• Net income of $47.9 million and pre-tax, pre-provision income of $90.1 million
• EPS decreased by 47% compared to last year on a GAAP basis and 40% on an operating basis; compared to second quarter 2023, EPS decreased 26% on a GAAP basis and decreased 18% on an operating basis
• Return on assets of 0.68%, or 0.79% on an operating basis
• Pre-tax, pre-provision return on assets of 1.31%, or 1.44% when excluding merger-related and other charges
• Return on common equity of 5.3%
• Return on tangible common equity of 9.0% on an operating basis
• Loan production, excluding balances acquired from FNBSM, of $1.5 billion, resulting in organic loan growth of 5.4% annualized for the quarter
• Customer deposits, excluding brokered deposits, acquired FNBSM balances, and those from the sale of two Tennessee branches that were sold during the quarter were up $314 million or 5.6% annualized from last quarter
• Net interest margin of 3.24% was down 13 basis points from the second quarter due to increased deposit costs
• Mortgage closings of $211 million compared to $317 million a year ago; mortgage rate locks of $304 million compared to $456 million a year ago
• Noninterest income was down $4.4 million primarily due to the absence of unusual second quarter gain on the sale of an insurance subsidiary and a one-time small business partnership investment gain
• Noninterest expenses increased $12.1 million compared to the second quarter on a GAAP basis and by $6.5 million on an operating basis, mostly due to increases in salaries and employee benefits expenses, occupancy, amortization of intangibles and higher merger-related and other charges related to closing the FNBSM acquisition
• Efficiency ratio of 61.3%, or 57.4% on an operating basis, up from second quarter largely driven by net interest margin pressure
• Net charge-offs of $26.6 million, or 59 basis points as a percent of average loans, up 39 basis points from the net charge-offs level experienced in the second quarter and mostly due to the $19 million charge-off from an 8.7% participation in a large, nationally syndicated credit disclosed during the quarter
• Nonperforming assets of 0.34% of total assets, down six basis points compared to June 30, 2023
• Quarterly common shareholder dividend of $0.23 per share declared during the quarter, an increase of 5% year-over-year

Conference Call

United will hold a conference call on Wednesday, October 18, 2023, 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/10183036/fa91904ab0. 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 ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
(in thousands, except per share data)
			2023												2022							Third  Quarter 2023-			For the Nine Months Ended September 30,								YTD  2023-
		Third Quarter				Second  Quarter				First Quarter				Fourth  Quarter				Third Quarter				2022 Change				2023				2022			2022  Change
INCOME SUMMARY
Interest revenue		$	323,147			$	295,775			$	279,487			$	240,831			$	213,887						$	898,409			$	572,324
Interest expense			120,591				95,489				68,017				30,943				14,113							284,097				29,855
Net interest revenue			202,556				200,286				211,470				209,888				199,774			1	%			614,312				542,469			13	%
Provision for credit losses			30,268				22,753				21,783				19,831				15,392							74,804				44,082
Noninterest income			31,977				36,387				30,209				33,354				31,922			—				98,573				104,353			(6	)
Total revenue			204,265				213,920				219,896				223,411				216,304			(6	)			638,081				602,740			6
Noninterest expenses			144,474				132,407				139,805				117,329				112,755			28				416,686				352,820			18
Income before income tax expense			59,791				81,513				80,091				106,082				103,549			(42	)			221,395				249,920			(11	)
Income tax expense			11,925				18,225				17,791				24,632				22,388			(47	)			47,941				53,898			(11	)
Net income			47,866				63,288				62,300				81,450				81,161			(41	)			173,454				196,022			(12	)
Merger-related and other charges			9,168				3,645				8,631				1,470				1,746							21,444				17,905
Income tax benefit of merger-related and other charges			(2,000	)			(820	)			(1,955	)			(323	)			(385	)						(4,775	)			(3,923	)
Net income - operating (1)		$	55,034			$	66,113			$	68,976			$	82,597			$	82,522			(33	)		$	190,123			$	210,004			(9	)
Pre-tax pre-provision income(5)		$	90,059			$	104,266			$	101,874			$	125,913			$	118,941			(24	)		$	296,199			$	294,002			1
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP		$	0.39			$	0.53			$	0.52			$	0.74			$	0.74			(47	)		$	1.44			$	1.78			(19	)
Diluted net income - operating(1)			0.45				0.55				0.58				0.75				0.75			(40	)			1.58				1.91			(17	)
Cash dividends declared			0.23				0.23				0.23				0.22				0.22			5				0.69				0.64			8
Book value			25.87				25.98				25.76				24.38				23.78			9				25.87				23.78			9
Tangible book value(3)			17.70				17.83				17.59				17.13				16.52			7				17.70				16.52			7
Key performance ratios:
Return on common equity - GAAP(2)(4)			5.32	%			7.47	%			7.34	%			10.86	%			11.02	%						6.69	%			9.08	%
Return on common equity - operating(1)(2)(4)			6.14				7.82				8.15				11.01				11.21							7.35				9.75
Return on tangible common equity - operating(1)(2)(3)(4)			9.03				11.35				11.63				15.20				15.60							10.65				13.64
Return on assets - GAAP(4)			0.68				0.95				0.95				1.33				1.32							0.86				1.06
Return on assets - operating(1)(4)			0.79				1.00				1.06				1.35				1.34							0.95				1.13
Return on assets - pre-tax pre-provision(4)(5)			1.31				1.59				1.58				2.07				1.94							1.49				1.60
Return on assets - pre-tax pre-provision, excluding merger- related and other charges(1)(4)(5)			1.44				1.65				1.71				2.09				1.97							1.60				1.70
Net interest margin (fully taxable equivalent)(4)			3.24				3.37				3.61				3.76				3.57							3.41				3.25
Efficiency ratio - GAAP			61.32				55.71				57.20				47.95				48.41							58.06				53.94
Efficiency ratio - operating(1)			57.43				54.17				53.67				47.35				47.66							55.07				51.20
Equity to total assets			11.85				11.89				11.90				11.25				11.12							11.85				11.12
Tangible common equity to tangible assets(3)			8.18				8.21				8.17				7.88				7.70							8.18				7.70
ASSET QUALITY
Nonperforming assets ("NPAs")		$	90,883			$	103,737			$	73,403			$	44,281			$	35,511			156			$	90,883			$	35,511			156
Allowance for credit losses - loans			201,557				190,705				176,534				159,357				148,502			36				201,557				148,502			36
Allowance for credit losses - total			219,624				212,277				197,923				180,520				167,300			31				219,624				167,300			31
Net charge-offs (recoveries)			26,638				8,399				7,084				6,611				1,134							42,121				3,043
Allowance for credit losses - loans to loans			1.11	%			1.10	%			1.03	%			1.04	%			1.00	%						1.11	%			1.00	%
Allowance for credit losses - total to loans			1.21				1.22				1.16				1.18				1.12							1.21				1.12
Net charge-offs to average loans(4)			0.59				0.20				0.17				0.17				0.03							0.32				0.03
NPAs to total assets			0.34				0.40				0.28				0.18				0.15							0.34				0.15
AT PERIOD END ($ in millions)
Loans		$	18,203			$	17,395			$	17,125			$	15,335			$	14,882			22			$	18,203			$	14,882			22
Investment securities			5,701				5,914				5,915				6,228				6,539			(13	)			5,701				6,539			(13	)
Total assets			26,869				26,120				25,872				24,009				23,688			13				26,869				23,688			13
Deposits			22,858				22,252				22,005				19,877				20,321			12				22,858				20,321			12
Shareholders’ equity			3,184				3,106				3,078				2,701				2,635			21				3,184				2,635			21
Common shares outstanding (thousands)			118,976				115,266				115,152				106,223				106,163			12				118,976				106,163			12

⁽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
(in thousands, except per share data)
			2023												2022							For the Nine Months Ended September 30,
		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter					2023				2022
Noninterest expense reconciliation
Noninterest expenses (GAAP)		$	144,474			$	132,407			$	139,805			$	117,329			$	112,755			$	416,686			$	352,820
Merger-related and other charges			(9,168	)			(3,645	)			(8,631	)			(1,470	)			(1,746	)			(21,444	)			(17,905	)
Noninterest expenses - operating		$	135,306			$	128,762			$	131,174			$	115,859			$	111,009			$	395,242			$	334,915
Net income reconciliation
Net income (GAAP)		$	47,866			$	63,288			$	62,300			$	81,450			$	81,161			$	173,454			$	196,022
Merger-related and other charges			9,168				3,645				8,631				1,470				1,746				21,444				17,905
Income tax benefit of merger-related and other charges			(2,000	)			(820	)			(1,955	)			(323	)			(385	)			(4,775	)			(3,923	)
Net income - operating		$	55,034			$	66,113			$	68,976			$	82,597			$	82,522			$	190,123			$	210,004
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)		$	47,866			$	63,288			$	62,300			$	81,450			$	81,161			$	173,454			$	196,022
Income tax expense			11,925				18,225				17,791				24,632				22,388				47,941				53,898
Provision for credit losses			30,268				22,753				21,783				19,831				15,392				74,804				44,082
Pre-tax pre-provision income		$	90,059			$	104,266			$	101,874			$	125,913			$	118,941			$	296,199			$	294,002
Diluted income per common share reconciliation
Diluted income per common share (GAAP)		$	0.39			$	0.53			$	0.52			$	0.74			$	0.74			$	1.44			$	1.78
Merger-related and other charges, net of tax			0.06				0.02				0.06				0.01				0.01				0.14				0.13
Diluted income per common share - operating		$	0.45			$	0.55			$	0.58			$	0.75			$	0.75			$	1.58			$	1.91
Book value per common share reconciliation
Book value per common share (GAAP)		$	25.87			$	25.98			$	25.76			$	24.38			$	23.78			$	25.87			$	23.78
Effect of goodwill and other intangibles			(8.17	)			(8.15	)			(8.17	)			(7.25	)			(7.26	)			(8.17	)			(7.26	)
Tangible book value per common share		$	17.70			$	17.83			$	17.59			$	17.13			$	16.52			$	17.70			$	16.52
Return on tangible common equity reconciliation
Return on common equity (GAAP)			5.32	%			7.47	%			7.34	%			10.86	%			11.02	%			6.69	%			9.08	%
Merger-related and other charges, net of tax			0.82				0.35				0.81				0.15				0.19				0.66				0.67
Return on common equity - operating			6.14				7.82				8.15				11.01				11.21				7.35				9.75
Effect of goodwill and other intangibles			2.89				3.53				3.48				4.19				4.39				3.30				3.89
Return on tangible common equity - operating			9.03	%			11.35	%			11.63	%			15.20	%			15.60	%			10.65	%			13.64	%
Return on assets reconciliation
Return on assets (GAAP)			0.68	%			0.95	%			0.95	%			1.33	%			1.32	%			0.86	%			1.06	%
Merger-related and other charges, net of tax			0.11				0.05				0.11				0.02				0.02				0.09				0.07
Return on assets - operating			0.79	%			1.00	%			1.06	%			1.35	%			1.34	%			0.95	%			1.13	%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)			0.68	%			0.95	%			0.95	%			1.33	%			1.32	%			0.86	%			1.06	%
Income tax expense			0.18				0.29				0.29				0.41				0.37				0.25				0.30
Provision for credit losses			0.45				0.35				0.34				0.33				0.25				0.38				0.24
Return on assets - pre-tax, pre-provision			1.31				1.59				1.58				2.07				1.94				1.49				1.60
Merger-related and other charges			0.13				0.06				0.13				0.02				0.03				0.11				0.10
Return on assets - pre-tax pre-provision, excluding merger-related and other charges			1.44	%			1.65	%			1.71	%			2.09	%			1.97	%			1.60	%			1.70	%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)			61.32	%			55.71	%			57.20	%			47.95	%			48.41	%			58.06	%			53.94	%
Merger-related and other charges			(3.89	)			(1.54	)			(3.53	)			(0.60	)			(0.75	)			(2.99	)			(2.74	)
Efficiency ratio - operating			57.43	%			54.17	%			53.67	%			47.35	%			47.66	%			55.07	%			51.20	%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)			11.85	%			11.89	%			11.90	%			11.25	%			11.12	%			11.85	%			11.12	%
Effect of goodwill and other intangibles			(3.33	)			(3.31	)			(3.36	)			(2.97	)			(3.01	)			(3.33	)			(3.01	)
Effect of preferred equity			(0.34	)			(0.37	)			(0.37	)			(0.40	)			(0.41	)			(0.34	)			(0.41	)
Tangible common equity to tangible assets			8.18	%			8.21	%			8.17	%			7.88	%			7.70	%			8.18	%			7.70	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
		2023									2022					Linked				Year over
(in millions)	Third  Quarter			Second  Quarter			First  Quarter			Fourth  Quarter			Third  Quarter			Quarter Change				Year Change
LOANS BY CATEGORY
Owner occupied commercial RE	$	3,279		$	3,111		$	3,141		$	2,735		$	2,700		$	168			$	579
Income producing commercial RE		4,130			3,670			3,611			3,262			3,299			460				831
Commercial & industrial		2,504			2,550			2,442			2,252			2,238			(46	)			266
Commercial construction		1,850			1,739			1,806			1,598			1,514			111				336
Equipment financing		1,534			1,510			1,447			1,374			1,281			24				253
Total commercial		13,297			12,580			12,447			11,221			11,032			717				2,265
Residential mortgage		3,043			2,905			2,756			2,355			2,149			138				894
Home equity lines of credit		941			927			930			850			832			14				109
Residential construction		399			463			492			443			423			(64	)			(24	)
Manufactured housing		343			340			326			317			301			3				42
Consumer		180			180			174			149			145			—				35
Total loans	$	18,203		$	17,395		$	17,125		$	15,335		$	14,882		$	808			$	3,321
LOANS BY MARKET
Georgia	$	4,321		$	4,281		$	4,177		$	4,051		$	4,003		$	40			$	318
South Carolina		2,801			2,750			2,672			2,587			2,516			51				285
North Carolina		2,445			2,355			2,257			2,186			2,117			90				328
Tennessee		2,314			2,387			2,458			2,507			2,536			(73	)			(222	)
Florida		2,318			1,708			1,745			1,308			1,259			610				1,059
Alabama		1,070			1,062			1,029			—			—			8				1,070
Commercial Banking Solutions		2,934			2,852			2,787			2,696			2,451			82				483
Total loans	$	18,203		$	17,395		$	17,125		$	15,335		$	14,882		$	808			$	3,321

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
			2023
		Third Quarter			Second Quarter			First Quarter
NONACCRUAL LOANS
Owner occupied RE		$	5,134		$	3,471		$	1,000
Income producing RE			30,255			32,542			10,603
Commercial & industrial			13,382			30,823			33,276
Commercial construction			1,065			115			475
Equipment financing			9,206			8,989			5,044
Total commercial			59,042			75,940			50,398
Residential mortgage			11,893			11,419			11,280
Home equity lines of credit			4,009			2,777			2,377
Residential construction			2,074			1,682			143
Manufactured housing			12,711			10,782			8,542
Consumer			89			19			55
Total nonaccrual loans			89,818			102,619			72,795
OREO and repossessed assets			1,065			1,118			608
Total NPAs		$	90,883		$	103,737		$	73,403

			2023
		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 (RECOVERIES) BY CATEGORY
Owner occupied RE		$	582			0.07	%		$	(205	)		(0.03)%			$	90			0.01	%
Income producing RE			3,011			0.30				1,184			0.13				2,306			0.26
Commercial & industrial			17,542			2.71				2,746			0.44				225			0.04
Commercial construction			(49	)		(0.01	)			(105	)		(0.02	)			(37	)		(0.01	)
Equipment financing			6,325			1.62				2,537			0.69				3,375			0.93
Total commercial			27,411			0.83				6,157			0.20				5,959			0.20
Residential mortgage			(129	)		(0.02	)			(43	)		(0.01	)			(87	)		(0.01	)
Home equity lines of credit			(2,784	)		(1.17	)			(59	)		(0.03	)			33			0.01
Residential construction			341			0.31				623			0.53				(15	)		(0.01	)
Manufactured housing			1,168			1.34				620			0.75				628			0.76
Consumer			631			1.37				1,101			2.51				566			1.37
Total		$	26,638			0.59			$	8,399			0.20			$	7,084			0.17
(1)Annualized.

UNITED COMMUNITY BANKS, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)		September 30, 2023				December 31, 2022
ASSETS
Cash and due from banks		$	192,726			$	195,771
Interest-bearing deposits in banks			566,779				316,082
Federal funds and other short-term investments			—				135,000
Cash and cash equivalents			759,505				646,853
Debt securities available-for-sale			3,182,112				3,614,333
Debt securities held-to-maturity (fair value $1,992,364 and $2,191,073, respectively)			2,518,773				2,613,648
Loans held for sale			37,110				13,600
Loans and leases held for investment			18,202,807				15,334,627
Less allowance for credit losses - loans and leases			(201,557	)			(159,357	)
Loans and leases, net			18,001,250				15,175,270
Premises and equipment, net			371,435				298,456
Bank owned life insurance			344,647				299,297
Goodwill and other intangible assets, net			994,142				779,248
Other assets			660,233				568,179
Total assets		$	26,869,207			$	24,008,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	6,782,031			$	7,643,081
NOW and interest-bearing demand			5,349,335				4,350,878
Money market			5,691,480				4,510,680
Savings			1,265,548				1,456,337
Time			3,554,619				1,781,482
Brokered			214,855				134,049
Total deposits			22,857,868				19,876,507
Short-term borrowings			37,348				158,933
Federal Home Loan Bank advances			—				550,000
Long-term debt			324,786				324,663
Accrued expenses and other liabilities			465,381				398,107
Total liabilities			23,685,383				21,308,210
Shareholders' equity:
Preferred stock; $1 par value; 10,000,000 shares authorized; 3,745 and 4,000 shares Series I issued and outstanding, respectively, $25,000 per share liquidation preference			90,283				96,422
Common stock, $1 par value; 200,000,000 shares authorized, 118,975,652 and 106,222,758 shares issued and outstanding, respectively			118,976				106,223
Common stock issuable; 608,646 and 607,128 shares, respectively			12,782				12,307
Capital surplus			2,697,671				2,306,366
Retained earnings			596,617				508,844
Accumulated other comprehensive loss			(332,505	)			(329,488	)
Total shareholders' equity			3,183,824				2,700,674
Total liabilities and shareholders' equity		$	26,869,207			$	24,008,884

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)			2023			2022			2023				2022
Interest revenue:
Loans, including fees		$	273,781		$	174,065		$	760,696			$	476,072
Investment securities, including tax exempt of $1,722, $2,568, $5,563 and $7,762, respectively			44,729			36,953			125,775				91,043
Deposits in banks and short-term investments			4,637			2,869			11,938				5,209
Total interest revenue			323,147			213,887			898,409				572,324
Interest expense:
Deposits:
NOW and interest-bearing demand			35,613			3,992			80,809				7,624
Money market			46,884			4,503			105,430				7,030
Savings			868			178			2,108				337
Time			33,368			1,207			75,464				2,322
Deposits			116,733			9,880			263,811				17,313
Short-term borrowings			189			27			3,186				27
Federal Home Loan Bank advances			—			—			5,761				—
Long-term debt			3,669			4,206			11,339				12,515
Total interest expense			120,591			14,113			284,097				29,855
Net interest revenue			202,556			199,774			614,312				542,469
Provision for credit losses			30,268			15,392			74,804				44,082
Net interest revenue after provision for credit losses			172,288			184,382			539,508				498,387
Noninterest income:
Service charges and fees			10,315			9,569			28,791				28,644
Mortgage loan gains and other related fees			6,159			6,297			17,264				29,420
Wealth management fees			6,451			5,879			17,775				17,759
Gains from sales of other loans, net			2,688			2,228			6,909				9,226
Lending and loan servicing fees			2,985			2,946			9,979				7,518
Securities losses, net			—			—			(1,644	)			(3,688	)
Other			3,379			5,003			19,499				15,474
Total noninterest income			31,977			31,922			98,573				104,353
Total revenue			204,265			216,304			638,081				602,740
Noninterest expenses:
Salaries and employee benefits			81,173			67,823			236,121				208,062
Communications and equipment			10,902			8,795			31,654				27,718
Occupancy			10,941			9,138			31,024				27,381
Advertising and public relations			2,251			2,544			6,914				6,332
Postage, printing and supplies			2,386			2,190			7,305				6,308
Professional fees			7,006			4,821			19,670				14,670
Lending and loan servicing expense			2,697			2,333			7,546				7,746
Outside services - electronic banking			2,561			3,159			8,646				8,629
FDIC assessments and other regulatory charges			4,314			2,356			12,457				6,796
Amortization of intangibles			4,171			1,678			11,120				5,207
Merger-related and other charges			9,168			1,746			21,444				17,905
Other			6,904			6,172			22,785				16,066
Total noninterest expenses			144,474			112,755			416,686				352,820
Income before income taxes			59,791			103,549			221,395				249,920
Income tax expense			11,925			22,388			47,941				53,898
Net income			47,866			81,161			173,454				196,022
Preferred stock dividends, net of discount on repurchases			832			1,719			4,270				5,157
Earnings allocated to participating securities			259			407			939				1,007
Net income available to common shareholders		$	46,775		$	79,035		$	168,245			$	189,858
Net income per common share:
Basic		$	0.39		$	0.74		$	1.44			$	1.78
Diluted			0.39			0.74			1.44				1.78
Weighted average common shares outstanding:
Basic			119,506			106,687			116,925				106,616
Diluted			119,624			106,800			117,084				106,732

Average Consolidated Balance Sheets and Net Interest Analysis

For the Three Months Ended September 30,

			2023										2022
(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)		$	18,055,402			$	273,800		6.02	%		$	14,658,397			$	174,168		4.71	%
Taxable securities(3)			5,933,708				43,007		2.90				6,539,615				34,385		2.10
Tax-exempt securities (FTE)(1)(3)			368,148				2,313		2.51				493,115				3,449		2.80
Federal funds sold and other interest-earning assets			538,039				5,093		3.76				614,755				3,106		2.00
Total interest-earning assets (FTE)			24,895,297				324,213		5.17				22,305,882				215,108		3.83
Noninterest-earning assets:
Allowance for credit losses			(209,472	)									(138,907	)
Cash and due from banks			225,831										231,376
Premises and equipment			367,217										290,768
Other assets(3)			1,568,824										1,261,236
Total assets		$	26,847,697									$	23,950,355
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	5,285,513				35,613		2.67			$	4,335,619				3,992		0.37
Money market			5,622,355				46,884		3.31				4,849,705				4,503		0.37
Savings			1,301,047				868		0.26				1,515,350				178		0.05
Time			3,473,191				31,072		3.55				1,635,580				984		0.24
Brokered time deposits			209,119				2,296		4.36				51,530				223		1.72
Total interest-bearing deposits			15,891,225				116,733		2.91				12,387,784				9,880		0.32
Federal funds purchased and other borrowings			44,164				189		1.70				3,442				27		3.11
Long-term debt			324,770				3,669		4.48				324,444				4,206		5.14
Total borrowed funds			368,934				3,858		4.15				327,886				4,233		5.12
Total interest-bearing liabilities			16,260,159				120,591		2.94				12,715,670				14,113		0.44
Noninterest-bearing liabilities:
Noninterest-bearing deposits			6,916,272										8,176,987
Other liabilities			435,592										349,647
Total liabilities			23,612,023										21,242,304
Shareholders' equity			3,235,674										2,708,051
Total liabilities and shareholders' equity		$	26,847,697									$	23,950,355
Net interest revenue (FTE)						$	203,622									$	200,995
Net interest-rate spread (FTE)									2.23	%									3.39	%
Net interest margin (FTE)(4)									3.24	%									3.57	%

⁽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 $430 million in 2023 and $318 million in 2022 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,

			2023										2022
(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)		$	17,377,210			$	760,802		5.85	%		$	14,426,470			$	475,989		4.41	%
Taxable securities(3)			5,982,615				120,212		2.68				6,274,230				83,281		1.77
Tax-exempt securities (FTE)(1)(3)			386,499				7,470		2.58				498,177				10,425		2.79
Federal funds sold and other interest-earning assets			490,703				13,103		3.57				1,271,287				6,192		0.65
Total interest-earning assets (FTE)			24,237,027				901,587		4.97				22,470,164				575,887		3.43
Non-interest-earning assets:
Allowance for loan losses			(186,428	)									(129,278	)
Cash and due from banks			249,411										200,463
Premises and equipment			347,514										284,850
Other assets(3)			1,518,503										1,308,647
Total assets		$	26,166,027									$	24,134,846
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	4,891,214				80,809		2.21			$	4,520,079				7,624		0.23
Money market			5,349,265				105,430		2.64				4,992,357				7,030		0.19
Savings			1,341,033				2,108		0.21				1,483,169				337		0.03
Time			2,936,873				65,856		3.00				1,688,250				2,009		0.16
Brokered time deposits			280,293				9,608		4.58				65,133				313		0.64
Total interest-bearing deposits			14,798,678				263,811		2.38				12,748,988				17,313		0.18
Federal funds purchased and other borrowings			98,884				3,186		4.31				1,383				27		2.61
Federal Home Loan Bank advances			166,355				5,761		4.63				—				—		—
Long-term debt			324,737				11,339		4.67				322,600				12,515		5.19
Total borrowed funds			589,976				20,286		4.60				323,983				12,542		5.18
Total interest-bearing liabilities			15,388,654				284,097		2.47				13,072,971				29,855		0.31
Noninterest-bearing liabilities:
Noninterest-bearing deposits			7,226,096										7,958,392
Other liabilities			393,048										375,182
Total liabilities			23,007,798										21,406,545
Shareholders' equity			3,158,229										2,728,301
Total liabilities and shareholders' equity		$	26,166,027									$	24,134,846
Net interest revenue (FTE)						$	617,490									$	546,032
Net interest-rate spread (FTE)									2.50	%									3.12	%
Net interest margin (FTE)(4)									3.41	%									3.25	%

⁽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 $413 million in 2023 and $221 million in 2022 are included in other assets for purposes of this presentation.
⁽⁴⁾ Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.
United Community Banks, Inc. (NASDAQ: UCBI) is the financial holding company for United Community, a top 100 US financial institution that is committed to improving the financial health and well-being of its customers and ultimately the communities it serves. United Community provides a full range of banking, wealth management, and mortgage services. As of September 30, 2023, United Community has $26.9 billion in assets and 205 offices across Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee, as well as a national SBA lending franchise and a national equipment financing subsidiary. United Community has been recognized nationally as a leader in customer service, financial performance, and workplace environment. Among the accolades, United Community is a nine-time winner of the J.D. Power award that ranked the bank #1 in customer satisfaction with consumer banking in the Southeast and was recognized in 2023 by Forbes as one of the World’s Best Banks and one of America’s Best Banks. United Community was also recognized by Newsweek in 2023 as one of the Most Trusted Companies in America, is a multi-award recipient of the Greenwich Excellence Awards and was named by American Banker as one of the "Best Banks to Work For" in 2022 for the sixth consecutive year. Additional information about United Community can be found at 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 First National Bank of South Miami merger, and the strength of our pipelines and their ability to support 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.

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 First National Bank of South Miami acquisition and other 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 these acquisitions, (3) reputational risk and the reaction of each of the companies’ customers, suppliers, employees or other business partners to these acquisitions, (4) the risks relating to the integration of First National Bank of South Miami’s and other acquired banks’ 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, (5) the risks associated with United’s pursuit of future acquisitions, (6) the risk associated with expansion into new geographic or product markets, and (7) general competitive, economic, political, regulatory 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, 2022, and other documents subsequently filed by United with the United States Securities and Exchange Commission (“SEC”).

Many of these factors are beyond United’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 to predict their occurrence or how they will affect United.

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

For more information:

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

FAQ

What was the growth rate of customer deposits in Q3 2023?

Customer deposits grew by 5.6% annualized.

What was the growth rate of loans in Q3 2023?

Loans grew at a 5.4% annualized rate during the quarter.

How much did net interest revenue increase in Q3 2023?

Net interest revenue increased by $2.3 million.

How much did diluted earnings per share decrease in Q3 2023?

Diluted earnings per share decreased by $0.14 or 26% from Q2 2023.

What was the net interest margin in Q3 2023?

The net interest margin decreased by 13 basis points to 3.24%.