United Community Banks, Inc. Reports Third Quarter Results

Rhea-AI Summary

United Community Banks, Inc. (UCBI) reported a net income of $81.2 million for Q3 2022, with diluted earnings per share (EPS) of $0.74, marking a 21% increase from the previous quarter. Loan growth was robust at 9.4% annualized, alongside 38 basis points of net interest margin expansion. However, EPS decreased by 10% year-over-year, primarily due to a loss provision of $15.4 million. The efficiency ratio improved to 48.4% while the return on assets (ROA) stood at 1.32%. The company declared a quarterly dividend of $0.22 per share, reflecting a 10% increase year-over-year.

Positive

• Net income of $81.2 million for Q3 2022.
• Diluted EPS increased by 21% from Q2 2022.
• Loan growth of 9.4% on an annualized basis.
• Net interest margin expanded by 38 basis points.
• Efficiency ratio improved to 48.4%, indicating operational efficiency gains.
• Quarterly dividend increased by 10% year-over-year.

Negative

• EPS decreased by 10% compared to Q3 2021.
• A provision for credit losses of $15.4 million increased the allowance for loan losses to 1.12%.

Strong Core Profitability Driven by Loan Growth and Continued Margin Expansion

GREENVILLE, S.C., Oct. 18, 2022 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) announced today that net income for the third quarter was $81.2 million with pre-tax, pre-provision income of $118.9 million. Diluted earnings per share was $0.74 for the quarter, which represented an increase of $0.13 or 21% from the second quarter of 2022, and a decrease of $0.08 or 10% from the third quarter a year ago. The year-over-year decrease is largely attributable to an $11.0 million provision release in the third quarter of 2021 compared to a $15.4 million provision expense in this quarter. Other highlights of the quarter include 9.4% annualized loan growth, 38 basis points of net interest margin expansion, a reserve build to 1.12% of loans and an improvement in the efficiency ratio to 48.4%, or 47.7% on an operating basis, which excludes the effect of merger-related and other charges.

United’s third-quarter return on assets (ROA) was 1.32%, and return on common equity was 11.02%. On an operating basis, United’s ROA was 1.34%, and its return on tangible common equity was 15.60%. Also, on an operating basis, United’s pre-tax, pre-provision ROA was 1.97% for the quarter.

Total loans increased by $341 million during the quarter, resulting in loan growth of 9.4% on an annualized basis. Deposits decreased by $552 million or 11% annualized. A large portion of this decrease was driven by a seasonal decrease in public deposits, which were down by $278 million. United’s cost of deposits increased 11 basis points from the second quarter to 0.19% while the average yield on interest-earning assets was up 49 basis points to 3.83%.

Chairman and CEO Lynn Harton stated, “This was a great quarter on multiple fronts for United as our businesses and our markets continue to provide solid growth opportunities. Loan growth and an expanding net interest margin propelled our pre-tax, pre-provision ROA and our efficiency ratio to record levels for the company. Deposits fell as anticipated due to higher-yielding market alternatives provided by increasing interest rates, however our core deposit base continues to provide strong liquidity for the company.”

Harton continued, “From a strategic perspective, we continued to strengthen our Board of Directors with the appointment of George Bell, an experienced information technology executive who has more than 35 years in large financial institutions, with a specific emphasis on Customer Information Management. He brings an incredible depth of knowledge in leveraging technology to improve products and services, enhancing customer experience, and increasing organizational productivity. We are excited to have George join United as we continue to grow and expand our capabilities.”

Harton concluded, “Finally, our thoughts are with the people, communities and businesses in Florida who are recovering from the devastating impact of Hurricane Ian. We are fortunate to report that United sustained no loss of life or property.”

Third Quarter 2022 Financial Highlights:

• Net income of $81.2 million and pre-tax, pre-provision income of $118.9 million
• EPS decreased by 10% compared to third quarter 2021 on a GAAP basis and on an operating basis; compared to second quarter of 2022, EPS increased by 21% on a GAAP basis and increased 14% on an operating basis
• Return on assets of 1.32%, or 1.34% on an operating basis
• Pre-tax, pre-provision return on assets of 1.94%, or 1.97% on an operating basis
• Return on common equity of 11.02%
• Return on tangible common equity of 15.60% on an operating basis
• A provision for credit losses of $15.4 million, which increased the allowance for loan losses to 1.12% of loans from 1.05% in the second quarter
• Loan production of $1.6 billion, resulting in loan growth of 9.4% annualized for the quarter
• Core transaction deposits were down $225 million, which represents a decline of 5% annualized for the quarter
• Net interest margin of 3.57% was up 38 basis points from the second quarter, due to the effect of higher interest rates
• Mortgage closings were $317 million compared to $568 million a year ago; mortgage rate locks were $456 million compared to $731 million a year ago
• Noninterest income was down $1.5 million on a linked quarter basis, primarily driven by lower lock volume driven by higher interest rates
• Noninterest expenses decreased by $8.0 million compared to the second quarter on a GAAP basis and by $2.6 million on an operating basis, primarily driven by lower merger-related charges as the second quarter included costs for the Reliant systems conversion
• Efficiency ratio improved to historically low levels of 48.4%, or 47.7% on an operating basis
• Net charge-offs were $1.1 million or 3 basis points as a percent of average loans, up 6 basis points from the net recoveries experienced in the second quarter
• Nonperforming assets were 0.15% of total assets, an increase of 1 basis point compared to June 30, 2022
• Quarterly common shareholder dividend was $0.22 per share declared during the quarter, an increase of 10% year-over-year
  

Conference Call

United will hold a conference call on Wednesday, October 19, 2022, at 11:00 am EST 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/10171644/f49bf32028. Those without internet access or 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 can be accessed by selecting “Events and Presentations” under “News and Events” within the Investor Relations section of the company's website, www.ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
(in thousands, except per share data)
			2022												2021							Third Quarter 2022 - 2021 Change			For the Nine Months Ended September 30,								YTD 2022 - 2021 Change
		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter								2022				2021
INCOME SUMMARY
Interest revenue		$	213,887			$	187,378			$	171,059			$	143,768			$	147,675						$	572,324			$	435,026
Interest expense			14,113				8,475				7,267				6,213				6,636							29,855				23,547
Net interest revenue			199,774				178,903				163,792				137,555				141,039			42	%			542,469				411,479			32	%
Provision for (release of) credit losses			15,392				5,604				23,086				(647	)			(11,034	)						44,082				(36,903	)
Noninterest income			31,922				33,458				38,973				37,177				40,095			(20	)			104,353				120,641			(14	)
Total revenue			216,304				206,757				179,679				175,379				192,168			13				602,740				569,023			6
Noninterest expenses			112,755				120,790				119,275				109,156				96,749			17				352,820				287,483			23
Income before income tax expense			103,549				85,967				60,404				66,223				95,419			9				249,920				281,540			(11	)
Income tax expense			22,388				19,125				12,385				14,204				21,603			4				53,898				63,758			(15	)
Net income			81,161				66,842				48,019				52,019				73,816			10				196,022				217,782			(10	)
Merger-related and other charges			1,746				7,143				9,016				9,912				1,437							17,905				4,058
Income tax benefit of merger-related and other charges			(385	)			(1,575	)			(1,963	)			(2,265	)			(328	)						(3,923	)			(909	)
Net income - operating (1)		$	82,522			$	72,410			$	55,072			$	59,666			$	74,925			10			$	210,004			$	220,931			(5	)
Pre-tax pre-provision income (5)		$	118,941			$	91,571			$	83,490			$	65,576			$	84,385			41			$	294,002			$	244,637			20
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP		$	0.74			$	0.61			$	0.43			$	0.55			$	0.82			(10	)		$	1.78			$	2.42			(26	)
Diluted net income - operating (1)			0.75				0.66				0.50				0.64				0.83			(10	)			1.91				2.45			(22	)
Cash dividends declared			0.22				0.21				0.21				0.20				0.20			10				0.64				0.58			10
Book value			23.78				23.96				24.38				23.63				23.25			2				23.78				23.25			2
Tangible book value (3)			16.52				16.68				17.08				18.42				18.68			(12	)			16.52				18.68			(12	)
Key performance ratios:
Return on common equity - GAAP (2)(4)			11.02	%			9.31	%			6.80	%			9.32	%			14.26	%						9.08	%			14.55	%
Return on common equity - operating (1)(2)(4)			11.21				10.10				7.83				10.74				14.48							9.75				14.77
Return on tangible common equity - operating (1)(2)(3)(4)			15.60				14.20				11.00				13.93				18.23							13.64				18.55
Return on assets - GAAP (4)			1.32				1.08				0.78				0.96				1.48							1.06				1.52
Return on assets - operating (1)(4)			1.34				1.17				0.89				1.10				1.50							1.13				1.54
Return on assets - pre-tax pre-provision (4)(5)			1.94				1.49				1.37				1.21				1.70							1.60				1.71
Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5)			1.97				1.60				1.52				1.40				1.73							1.70				1.74
Net interest margin (fully taxable equivalent) (4)			3.57				3.19				2.97				2.81				3.12							3.25				3.17
Efficiency ratio - GAAP			48.41				56.58				57.43				62.12				53.11							53.94				53.72
Efficiency ratio - operating (1)			47.66				53.23				53.09				56.48				52.33							51.20				52.97
Equity to total assets			11.12				10.95				11.06				10.61				10.89							11.12				10.89
Tangible common equity to tangible assets (3)			7.70				7.59				7.72				8.09				8.53							7.70				8.53
ASSET QUALITY
Nonperforming assets ("NPAs")		$	35,511			$	34,428			$	40,816			$	32,855			$	45,335			(22	)		$	35,511			$	45,335			(22	)
Allowance for credit losses - loans			148,502				136,925				132,805				102,532				99,620			49				148,502				99,620			49
Allowance for credit losses - total			167,300				153,042				146,369				113,524				110,875							167,300				110,875
Net charge-offs (recoveries)			1,134				(1,069	)			2,978				248				551							3,043				(210	)
Allowance for credit losses - loans to loans			1.00	%			0.94	%			0.93	%			0.87	%			0.89	%						1.00	%			0.89	%
Allowance for credit losses - total to loans			1.12				1.05				1.02				0.97				0.99							1.12				0.99
Net charge-offs to average loans (4)			0.03				(0.03	)			0.08				0.01				0.02							0.03				—
NPAs to total assets			0.15				0.14				0.17				0.16				0.23							0.15				0.23
AT PERIOD END ($ in millions)
Loans		$	14,882			$	14,541			$	14,316			$	11,760			$	11,191			33			$	14,882			$	11,191			33
Investment securities			6,539				6,683				6,410				5,653				5,335			23				6,539				5,335			23
Total assets			23,688				24,213				24,374				20,947				19,481			22				23,688				19,481			22
Deposits			20,321				20,873				21,056				18,241				16,865			20				20,321				16,865			20
Shareholders’ equity			2,635				2,651				2,695				2,222				2,122			24				2,635				2,122			24
Common shares outstanding (thousands)			106,163				106,034				106,025				89,350				86,559			23				106,163				86,559			23

⁽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)
			2022												2021							For the Nine Months Ended September 30,
		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter					2022				2021
Noninterest expense reconciliation
Noninterest expenses (GAAP)		$	112,755			$	120,790			$	119,275			$	109,156			$	96,749			$	352,820			$	287,483
Merger-related and other charges			(1,746	)			(7,143	)			(9,016	)			(9,912	)			(1,437	)			(17,905	)			(4,058	)
Noninterest expenses - operating		$	111,009			$	113,647			$	110,259			$	99,244			$	95,312			$	334,915			$	283,425
Net income reconciliation
Net income (GAAP)		$	81,161			$	66,842			$	48,019			$	52,019			$	73,816			$	196,022			$	217,782
Merger-related and other charges			1,746				7,143				9,016				9,912				1,437				17,905				4,058
Income tax benefit of merger-related and other charges			(385	)			(1,575	)			(1,963	)			(2,265	)			(328	)			(3,923	)			(909	)
Net income - operating		$	82,522			$	72,410			$	55,072			$	59,666			$	74,925			$	210,004			$	220,931
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)		$	81,161			$	66,842			$	48,019			$	52,019			$	73,816			$	196,022			$	217,782
Income tax expense			22,388				19,125				12,385				14,204				21,603				53,898				63,758
Provision for (release of) credit losses			15,392				5,604				23,086				(647	)			(11,034	)			44,082				(36,903	)
Pre-tax pre-provision income		$	118,941			$	91,571			$	83,490			$	65,576			$	84,385			$	294,002			$	244,637
Diluted income per common share reconciliation
Diluted income per common share (GAAP)		$	0.74			$	0.61			$	0.43			$	0.55			$	0.82			$	1.78			$	2.42
Merger-related and other charges, net of tax			0.01				0.05				0.07				0.09				0.01				0.13				0.03
Diluted income per common share - operating		$	0.75			$	0.66			$	0.50			$	0.64			$	0.83			$	1.91			$	2.45
Book value per common share reconciliation
Book value per common share (GAAP)		$	23.78			$	23.96			$	24.38			$	23.63			$	23.25			$	23.78			$	23.25
Effect of goodwill and other intangibles			(7.26	)			(7.28	)			(7.30	)			(5.21	)			(4.57	)			(7.26	)			(4.57	)
Tangible book value per common share		$	16.52			$	16.68			$	17.08			$	18.42			$	18.68			$	16.52			$	18.68
Return on tangible common equity reconciliation
Return on common equity (GAAP)			11.02	%			9.31	%			6.80	%			9.32	%			14.26	%			9.08	%			14.55	%
Merger-related and other charges, net of tax			0.19				0.79				1.03				1.42				0.22				0.67				0.22
Return on common equity - operating			11.21				10.10				7.83				10.74				14.48				9.75				14.77
Effect of goodwill and other intangibles			4.39				4.10				3.17				3.19				3.75				3.89				3.78
Return on tangible common equity - operating			15.60	%			14.20	%			11.00	%			13.93	%			18.23	%			13.64	%			18.55	%
Return on assets reconciliation
Return on assets (GAAP)			1.32	%			1.08	%			0.78	%			0.96	%			1.48	%			1.06	%			1.52	%
Merger-related and other charges, net of tax			0.02				0.09				0.11				0.14				0.02				0.07				0.02
Return on assets - operating			1.34	%			1.17	%			0.89	%			1.10	%			1.50	%			1.13	%			1.54	%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)			1.32	%			1.08	%			0.78	%			0.96	%			1.48	%			1.06	%			1.52	%
Income tax expense			0.37				0.32				0.20				0.26				0.45				0.30				0.45
(Release of) provision for credit losses			0.25				0.09				0.39				(0.01	)			(0.23	)			0.24				(0.26	)
Return on assets - pre-tax, pre-provision			1.94				1.49				1.37				1.21				1.70				1.60				1.71
Merger-related and other charges			0.03				0.11				0.15				0.19				0.03				0.10				0.03
Return on assets - pre-tax pre-provision, excluding merger-related and other charges			1.97	%			1.60	%			1.52	%			1.40	%			1.73	%			1.70	%			1.74	%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)			48.41	%			56.58	%			57.43	%			62.12	%			53.11	%			53.94	%			53.72	%
Merger-related and other charges			(0.75	)			(3.35	)			(4.34	)			(5.64	)			(0.78	)			(2.74	)			(0.75	)
Efficiency ratio - operating			47.66	%			53.23	%			53.09	%			56.48	%			52.33	%			51.20	%			52.97	%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)			11.12	%			10.95	%			11.06	%			10.61	%			10.89	%			11.12	%			10.89	%
Effect of goodwill and other intangibles			—				(2.96	)			(2.94	)			(2.06	)			(1.87	)			—				(1.87	)
Effect of preferred equity			(3.42	)			(0.40	)			(0.40	)			(0.46	)			(0.49	)			(3.42	)			(0.49	)
Tangible common equity to tangible assets			7.70	%			7.59	%			7.72	%			8.09	%			8.53	%			7.70	%			8.53	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
		2022									2021					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	$	2,700		$	2,681		$	2,638		$	2,322		$	2,149		$	19			$	551
Income producing commercial RE		3,299			3,273			3,328			2,601			2,542			26				757
Commercial & industrial		2,236			2,243			2,302			1,822			1,729			(7	)			507
Paycheck protection program		2			10			34			88			150			(8	)			(148	)
Commercial construction		1,514			1,514			1,482			1,015			947			—				567
Equipment financing		1,281			1,211			1,148			1,083			1,017			70				264
Total commercial		11,032			10,932			10,932			8,931			8,534			100				2,498
Residential mortgage		2,149			1,997			1,826			1,638			1,533			152				616
Home equity lines of credit		832			801			778			694			661			31				171
Residential construction		423			381			368			359			321			42				102
Manufactured housing		301			287			269			—			—			14				301
Consumer		145			143			143			138			142			2				3
Total loans	$	14,882		$	14,541		$	14,316		$	11,760		$	11,191		$	341			$	3,691
LOANS BY MARKET
Georgia	$	4,003		$	3,960		$	3,879		$	3,778		$	3,732		$	43			$	271
South Carolina		2,516			2,377			2,323			2,235			2,145			139				371
North Carolina		2,117			2,006			1,879			1,895			1,427			111				690
Tennessee		2,536			2,621			2,661			373			383			(85	)			2,153
Florida		1,259			1,235			1,208			1,148			1,113			24				146
Commercial Banking Solutions		2,451			2,342			2,366			2,331			2,391			109				60
Total loans	$	14,882		$	14,541		$	14,316		$	11,760		$	11,191		$	341			$	3,691

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
		2022
		Third Quarter			Second Quarter			First Quarter
NONACCRUAL LOANS
Owner occupied RE		$	877		$	1,876		$	4,590
Income producing RE			2,663			7,074			7,220
Commercial & industrial			11,108			4,548			6,227
Commercial construction			150			208			401
Equipment financing			3,198			3,249			2,540
Total commercial			17,996			16,955			20,978
Residential mortgage			10,424			12,228			13,024
Home equity lines of credit			1,151			933			1,183
Residential construction			104			198			212
Manufactured housing			4,187			2,804			2,507
Consumer			17			25			40
Total nonaccrual loans held for investment			33,879			33,143			37,944
Nonaccrual loans held for sale			316			317			2,033
OREO and repossessed assets			1,316			968			839
Total NPAs		$	35,511		$	34,428		$	40,816

			2022
		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		$	(90	)		(0.01	)%		$	(1,496	)		(0.23	)%		$	(45	)		(0.01	)%
Income producing RE			176			0.02				(116	)		(0.01	)			(290	)		(0.04	)
Commercial & industrial			(744	)		(0.13	)			(302	)		(0.05	)			2,929			0.51
Commercial construction			10			—				(144	)		(0.04	)			(373	)		(0.10	)
Equipment financing			1,121			0.36				907			0.31				267			0.10
Total commercial			473			0.02				(1,151	)		(0.04	)			2,488			0.09
Residential mortgage			(66	)		(0.01	)			(51	)		(0.01	)			(97	)		(0.02	)
Home equity lines of credit			(102	)		(0.05	)			(346	)		(0.18	)			(81	)		(0.04	)
Residential construction			(109	)		(0.11	)			(76	)		(0.08	)			(23	)		(0.03	)
Manufactured housing			220			0.30				135			0.20				164			0.25
Consumer			718			1.98				420			1.18				527			1.48
Total		$	1,134			0.03			$	(1,069	)		(0.03	)		$	2,978			0.08
(1) Annualized.

UNITED COMMUNITY BANKS, INC.  
Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)		September 30, 2022				December 31, 2021
ASSETS
Cash and due from banks		$	222,524			$	144,244
Interest-bearing deposits in banks			216,496				2,147,266
Federal funds and other short-term investments			45,000				27,000
Cash and cash equivalents			484,020				2,318,510
Debt securities available-for-sale			3,862,886				4,496,824
Debt securities held-to-maturity (fair value $2,241,160 and $1,148,804, respectively)			2,676,405				1,156,098
Loans held for sale			21,967				44,109
Loans and leases held for investment			14,882,484				11,760,346
Less allowance for credit losses - loans and leases			(148,502	)			(102,532	)
Loans and leases, net			14,733,982				11,657,814
Premises and equipment, net			288,597				245,296
Bank owned life insurance			300,365				217,713
Goodwill and other intangible assets, net			780,868				472,407
Other assets			538,765				338,000
Total assets		$	23,687,855			$	20,946,771
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	8,198,129			$	6,956,981
NOW and interest-bearing demand			4,208,731				4,252,209
Money market			4,638,509				4,183,354
Savings			1,508,557				1,215,779
Time			1,622,608				1,442,498
Brokered			144,608				190,358
Total deposits			20,321,142				18,241,179
Long-term debt			324,515				247,360
Accrued expenses and other liabilities			407,488				235,987
Total liabilities			21,053,145				18,724,526
Shareholders' equity:
Preferred stock; $1 par value; 10,000,000 shares authorized;     4,000 shares Series I issued and outstanding, $25,000 per share liquidation preference			96,422				96,422
Common stock, $1 par value; 200,000,000 shares authorized,    106,162,861 and 89,349,826 shares issued and outstanding, respectively			106,163				89,350
Common stock issuable; 596,365 and 595,705 shares, respectively			11,966				11,288
Capital surplus			2,304,514				1,721,007
Retained earnings			452,788				330,654
Accumulated other comprehensive loss			(337,143	)			(26,476	)
Total shareholders' equity			2,634,710				2,222,245
Total liabilities and shareholders' equity		$	23,687,855			$	20,946,771

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)			2022			2021				2022				2021
Interest revenue:
Loans, including fees		$	174,065		$	128,477			$	476,072			$	382,261
Investment securities, including tax exempt of $2,568, $2,280, $7,762 and $6,685, respectively			36,953			18,540				91,043				51,530
Deposits in banks and short-term investments			2,869			658				5,209				1,235
Total interest revenue			213,887			147,675				572,324				435,026
Interest expense:
Deposits:
NOW and interest-bearing demand			3,992			1,290				7,624				4,158
Money market			4,503			1,119				7,030				4,278
Savings			178			55				337				157
Time			1,207			678				2,322				3,388
Deposits			9,880			3,142				17,313				11,981
Short-term borrowings			27			—				27				2
Long-term debt			4,206			3,494				12,515				11,564
Total interest expense			14,113			6,636				29,855				23,547
Net interest revenue			199,774			141,039				542,469				411,479
Provision for (release of) credit losses			15,392			(11,034	)			44,082				(36,903	)
Net interest revenue after provision for credit losses			184,382			152,073				498,387				448,382
Noninterest income:
Service charges and fees			9,569			9,350				28,644				25,255
Mortgage loan gains and other related fees			6,297			13,828				29,420				47,536
Wealth management fees			5,879			5,554				17,759				12,881
Gains from sales of other loans, net			2,228			2,353				9,226				7,506
Lending and loan servicing fees			2,946			2,825				7,518				7,070
Securities gains (losses), net			—			—				(3,688	)			41
Other			5,003			6,185				15,474				20,352
Total noninterest income			31,922			40,095				104,353				120,641
Total revenue			216,304			192,168				602,740				569,023
Noninterest expenses:
Salaries and employee benefits			67,823			60,458				208,062				180,457
Communications and equipment			8,795			7,368				27,718				21,979
Occupancy			9,138			7,096				27,381				21,130
Advertising and public relations			2,544			1,458				6,332				4,150
Postage, printing and supplies			2,190			1,731				6,308				5,171
Professional fees			4,821			5,347				14,670				14,509
Lending and loan servicing expense			2,333			2,450				7,746				8,508
Outside services - electronic banking			3,159			2,308				8,629				6,811
FDIC assessments and other regulatory charges			2,356			1,723				6,796				5,520
Amortization of intangibles			1,678			1,028				5,207				2,942
Merger-related and other charges			1,746			1,437				17,905				4,058
Other			6,172			4,345				16,066				12,248
Total noninterest expenses			112,755			96,749				352,820				287,483
Income before income taxes			103,549			95,419				249,920				281,540
Income tax expense			22,388			21,603				53,898				63,758
Net income			81,161			73,816				196,022				217,782
Preferred stock dividends			1,719			1,719				5,157				5,157
Earnings allocated to participating securities			407			448				1,007				1,342
Net income available to common shareholders		$	79,035		$	71,649			$	189,858			$	211,283
Net income per common share:
Basic		$	0.74		$	0.82			$	1.78			$	2.42
Diluted			0.74			0.82				1.78				2.42
Weighted average common shares outstanding:
Basic			106,687			87,211				106,616				87,274
Diluted			106,800			87,355				106,732				87,413

Average Consolidated Balance Sheets and Net Interest Analysis  
For the Three Months Ended September 30,

			2022										2021
(dollars in thousands, fully taxable equivalent (FTE))		Average Balance				Interest			Average Rate			Average Balance				Interest			Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)		$	14,658,397			$	174,168		4.71	%		$	11,204,653			$	128,185		4.54	%
Taxable securities (3)			6,539,615				34,385		2.10				4,738,860				16,260		1.37
Tax-exempt securities (FTE) (1)(3)			493,115				3,449		2.80				383,196				3,061		3.20
Federal funds sold and other interest-earning assets			614,755				3,106		2.00				1,751,222				1,185		0.27
Total interest-earning assets (FTE)			22,305,882				215,108		3.83				18,077,931				148,691		3.27
Noninterest-earning assets:
Allowance for credit losses			(138,907	)									(111,952	)
Cash and due from banks			231,376										124,360
Premises and equipment			290,768										228,556
Other assets (3)			1,261,236										1,002,810
Total assets		$	23,950,355									$	19,321,705
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	4,335,619				3,992		0.37			$	3,594,670				1,290		0.14
Money market			4,849,705				4,503		0.37				4,010,720				1,119		0.11
Savings			1,515,350				178		0.05				1,120,843				55		0.02
Time			1,635,580				984		0.24				1,466,821				609		0.16
Brokered time deposits			51,530				223		1.72				63,917				69		0.43
Total interest-bearing deposits			12,387,784				9,880		0.32				10,256,971				3,142		0.12
Federal funds purchased and other borrowings			3,442				27		3.11				—				—		—
Federal Home Loan Bank advances			—				—		—				54				—		—
Long-term debt			324,444				4,206		5.14				257,139				3,494		5.39
Total borrowed funds			327,886				4,233		5.12				257,193				3,494		5.39
Total interest-bearing liabilities			12,715,670				14,113		0.44				10,514,164				6,636		0.25
Noninterest-bearing liabilities:
Noninterest-bearing deposits			8,176,987										6,379,969
Other liabilities			349,647										308,551
Total liabilities			21,242,304										17,202,684
Shareholders' equity			2,708,051										2,119,021
Total liabilities and shareholders' equity		$	23,950,355									$	19,321,705
Net interest revenue (FTE)						$	200,995									$	142,055
Net interest-rate spread (FTE)									3.39	%									3.02	%
Net interest margin (FTE) (4)									3.57	%									3.12	%

(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 $318 million in 2022 and pretax unrealized gains of $39.6 million in 2021 are included in other assets for purposes of this presentation.
(4)	Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets.

Average Consolidated Balance Sheets and Net Interest Analysis 
For the Nine Months Ended September 30,

			2022										2021
(dollars in thousands, fully taxable equivalent (FTE))		Average Balance				Interest			Average Rate			Average Balance				Interest			Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)		$	14,426,470			$	475,989		4.41	%		$	11,417,285			$	380,765		4.46	%
Taxable securities (3)			6,274,230				83,281		1.77				4,206,099				44,845		1.42
Tax-exempt securities (FTE) (1)(3)			498,177				10,425		2.79				381,323				8,979		3.14
Federal funds sold and other interest-earning assets			1,271,287				6,192		0.65				1,468,487				3,462		0.31
Total interest-earning assets (FTE)			22,470,164				575,887		3.43				17,473,194				438,051		3.35
Non-interest-earning assets:
Allowance for loan losses			(129,278	)									(127,793	)
Cash and due from banks			200,463										138,973
Premises and equipment			284,850										225,021
Other assets (3)			1,308,647										1,007,669
Total assets		$	24,134,846									$	18,717,064
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	4,520,079				7,624		0.23			$	3,452,206				4,158		0.16
Money market			4,992,357				7,030		0.19				3,853,907				4,278		0.15
Savings			1,483,169				337		0.03				1,064,045				157		0.02
Time			1,688,250				2,009		0.16				1,551,934				3,096		0.27
Brokered time deposits			65,133				313		0.64				67,794				292		0.58
Total interest-bearing deposits			12,748,988				17,313		0.18				9,989,886				11,981		0.16
Federal funds purchased and other borrowings			1,383				27		2.61				41				—		—
Federal Home Loan Bank advances			—				—		—				1,117				2		0.24
Long-term debt			322,600				12,515		5.19				286,347				11,564		5.40
Total borrowed funds			323,983				12,542		5.18				287,505				11,566		5.38
Total interest-bearing liabilities			13,072,971				29,855		0.31				10,277,391				23,547		0.31
Noninterest-bearing liabilities:
Noninterest-bearing deposits			7,958,392										6,059,680
Other liabilities			375,182										311,749
Total liabilities			21,406,545										16,648,820
Shareholders' equity			2,728,301										2,068,244
Total liabilities and shareholders' equity		$	24,134,846									$	18,717,064
Net interest revenue (FTE)						$	546,032									$	414,504
Net interest-rate spread (FTE)									3.12	%									3.04	%
Net interest margin (FTE) (4)									3.25	%									3.17	%

(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 $221 million in 2022 and pretax unrealized gains of $40.3 million in 2021, respectively, are included in other assets for purposes of this presentation.
(4)	Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQGS: UCBI) provides a full range of banking, wealth management and mortgage services for relationship-oriented consumers and business owners. As of September 30, 2022, United had $23.7 billion in assets and 193 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee, along with a national SBA lending franchise and a national equipment lending subsidiary. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. In 2022, J.D. Power ranked United highest in customer satisfaction with consumer banking in the Southeast, marking eight out of the last nine years United earned the coveted award. Forbes recognized United as one of the top ten World’s Best Banks in 2022. Forbes also included United on its 2022 list of the 100 Best Banks in America for the ninth consecutive year. United also received ten Greenwich Excellence Awards in 2021 for excellence in Small Business Banking and Middle Market Banking, including national awards for Overall Satisfaction and Likelihood to Recommend. United was also named one of the "Best Banks to Work For" by American Banker in 2021 for the fifth consecutive year based on employee satisfaction. Additional information about United can be found at www.ucbi.com.

Non-GAAP Financial Measures

This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information, which excludes merger-related and other charges that are not considered part of recurring operations, includes performance measures 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.

For more information:

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

FAQ

What were United Community Banks, Inc.'s earnings for Q3 2022?

United Community Banks reported net income of $81.2 million for Q3 2022.

How did UCBI's EPS perform in Q3 2022 compared to the previous quarter?

The diluted earnings per share (EPS) for UCBI increased by 21% from Q2 2022.

What was the loan growth rate for UCBI in Q3 2022?

United Community Banks experienced a loan growth rate of 9.4% on an annualized basis.

What is the net interest margin for UCBI in Q3 2022?

UCBI reported a net interest margin of 3.57% for Q3 2022.

Did UCBI declare a dividend in Q3 2022?

Yes, UCBI declared a quarterly dividend of $0.22 per share, a 10% increase year-over-year.