United Community Banks, Inc. Reports Third Quarter Results

Rhea-AI Summary

United Community Banks reported strong third-quarter results, with net income of $47.6 million and diluted EPS of $0.52, down 13% year-over-year. Loan growth surged by $1.7 billion, primarily due to the acquisition of Seaside National Bank. The bank's efficiency ratio improved to a record low of 52.2%. Despite a decrease in net interest margin, core transaction deposits grew significantly. The company remains optimistic about future economic conditions, supported by increased business activity and a solid balance sheet.

Positive

• Net income of $47.6 million, demonstrating strong financial performance.
• Record operating efficiency with an efficiency ratio of 52.2%.
• Total loans increased by $1.7 billion, largely from the Seaside acquisition.
• Core transaction deposits grew by $1.7 billion, including $400 million in organic growth.
• Annualized core loan growth at 8% for the quarter.

Negative

• Diluted EPS decreased by 13% year-over-year, reflecting increased credit loss provisioning.
• Net interest margin decreased by 15 basis points, influenced by lower market rates.

Strong Financial Performance and Continued Business Expansion

GREENVILLE, S.C., Oct. 20, 2020 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today reported third quarter financial results, including solid year-over-year loan and deposit growth and record operating efficiency. United delivered net income of $47.6 million and pre-tax pre-provision income of $81.2 million. Diluted earnings per share of $0.52 for the quarter represented a decrease of $0.08 or 13%, from a year ago. This decline is largely due to an increase in credit loss provisioning associated with loan growth and the acquisition of Seaside National Bank & Trust (Seaside) along with net interest margin declines largely driven by declines in market interest rates. Compared to the second quarter, diluted earnings per share were up by $0.20 or 63%. Excluding merger-related and other charges, diluted operating earnings per share were $0.55, also down 13% from last year, but up $0.23 per share or 72% compared to second quarter. United’s GAAP return on assets (ROA) was 1.07% and its return on common equity was 10.1% for the quarter. On an operating basis, United’s ROA was 1.14% and its return on tangible common equity was 13.5%. On a pre-tax, pre-provision basis, and excluding merger-related and other charges, ROA was 1.93%.

Chairman and CEO Lynn Harton stated, “While the future economic and operating environment remains uncertain, I am pleased with the financial strength and resilience of the company and the dedication of our employees who consistently provide outstanding customer service. Our markets continue to recover from the economic effects of the pandemic and I am pleased to report that loan payment deferrals have declined from a peak of $1.9 billion, or 15.9% of the total loan portfolio at June 30, 2020 to $365 million, or 3.1% of the total loan portfolio at September 30, 2020.”

Harton continued, “Our acquisition of Seaside, which closed on July 1st, positions us well in attractive Florida markets and we are pleased with the talent of the Seaside team and the deep relationships they have built with their clients. We plan to pilot Seaside’s high net worth offering of asset management and trust services in select markets of United’s footprint in the late fourth quarter. Additionally, we have made solid progress on the business integration and are already moving forward with additional products, including mortgage, middle market, commercial real estate, SBA, asset-based and non-profit lending, to compliment Seaside’s product offerings. We are proud to welcome Seaside to the United team.”

Total loans increased by $1.7 billion during the quarter—primarily driven by the acquisition of Seaside. Excluding the effects of the acquisition, core organic loan growth was 8% annualized. Core transaction deposits grew by $1.7 billion during the quarter, with $1.3 billion resulting from the Seaside acquisition, supplemented by approximately $400 million in organic growth. United’s cost of deposits decreased by 13 basis points to 0.25%. The net interest margin decreased 15 basis points from the second quarter due to a combination of factors, including lower overall market rates.

Mr. Harton concluded, “We are focused on our long-term goal of remaining a top performer in our peer group. While this is a difficult environment in which to forecast future economic conditions, we are encouraged by increasing business activity in our markets and stable credit performance in our portfolio to date. Our strong balance sheet position gives us the ability to continue to support our customers and communities, and we believe we will be well positioned to be able to take advantage of expansion opportunities in the future.”

Third Quarter 2020 Financial Highlights:

• EPS decreased by 13% compared to last year on both a GAAP and operating basis; compared to second quarter, EPS increased by 63% on a GAAP basis and 72% on an operating basis
• Return on assets of 1.07%, or 1.14% excluding merger-related and other charges
• Pre-tax, pre-provision return on assets of 1.86%, or 1.93% excluding merger-related and other charges
• Return on common equity of 10.1%
• Return on tangible common equity of 13.5%, excluding merger-related and other charges
• A provision for credit losses of $21.8 million of which $10.7 million is attributable to establishing an allowance for credit losses for Seaside’s acquired loans
• Loan production of $1.0 billion and loan growth of $1.7 billion with $1.4 billion attributable to loans acquired from Seaside and core loan growth at an annualized rate of 8% for the quarter
• Core transaction deposits were up $1.7 billion with $1.3 billion attributable to Seaside and approximately $400 million in organic growth, which represents a 15% annualized growth rate for the quarter
• Net interest margin of 3.27% was down 15 basis points from the second quarter, reflecting the low rate environment, the Seaside acquisition, and increasing balance sheet liquidity
• Record mortgage rate locks of $910 million, which is $108 million or 13% higher than the previous record set in the second quarter; this compares to $508 million a year ago
• Noninterest income was up $7.7 million on a linked quarter basis, excluding net securities gains; Seaside contributed nearly $2.5 million of the increase and mortgage loan and related fees were up $1.5 million, primarily driven by record mortgage rate locks and production
• Efficiency ratio of 54.1%, or a record low 52.2% excluding merger-related and other charges
• Net charge-offs of $2.5 million, or 9 basis points as a percent of average loans, down 16 basis points from in the second quarter
• Nonperforming assets of 0.29% of total assets, which is down 3 basis points compared to June 30, 2020
• Total deferrals of $365 million or 3% of the total loan portfolio compared to $1.9 billion or 16% in the second quarter
• $500,000 of funding for the United Community Bank Foundation, adding to the initial $1 million contribution in the second quarter for charities and causes throughout the footprint

Conference Call

United will hold a conference call, Wednesday, October 21, 2020, 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 7466997. 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
		2020															2019										Third Quarter			For the Nine Months Ended September 30,
(in thousands, except per share data)		Third Quarter					Second Quarter					First Quarter					Fourth Quarter					Third Quarter					2020 - 2019 Change			2020				2019				YTD 2020 - 2019 Change
INCOME SUMMARY
Interest revenue		$	141,773				$	123,605				$	136,547				$	136,419				$	140,615							$	401,925			$	416,287
Interest expense		13,319					14,301					17,941					19,781					21,277								45,561				63,531
Net interest revenue		128,454					109,304					118,606					116,638					119,338					8	%		356,364				352,756				1	%
Provision for credit losses		21,793					33,543					22,191					3,500					3,100								77,527				9,650
Noninterest income		48,682					40,238					25,814					30,183					29,031					68			114,734				74,530				54
Total revenue		155,343					115,999					122,229					143,321					145,269					7			393,571				417,636				(6	)
Expenses		95,981					83,980					81,538					81,424					82,924					16			261,499				240,821				9
Income before income tax expense		59,362					32,019					40,691					61,897					62,345					(5	)		132,072				176,815				(25	)
Income tax expense		11,755					6,923					8,807					12,885					13,983					(16	)		27,485				40,106				(31	)
Net income		47,607					25,096					31,884					49,012					48,362					(2	)		104,587				136,709				(23	)
Merger-related and other charges		3,361					397					808					(74		)			2,605								4,566				7,431
Income tax benefit of merger-related and other charges		(519		)			(87		)			(182		)			17					(600		)						(788		)		(1,712		)
Net income - operating (1)		$	50,449				$	25,406				$	32,510				$	48,955				$	50,367				—			$	108,365			$	142,428			(24	)
Pre-tax pre-provision income (5)		$	81,155				$	65,562				$	62,882				$	65,397				$	65,445				24			$	209,599			$	186,465			12
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP		$	0.52				$	0.32				$	0.40				$	0.61				$	0.60				(13	)		$	1.25			$	1.70			(26	)
Diluted net income - operating (1)		0.55					0.32					0.41					0.61					0.63					(13	)		1.29				1.77				(27	)
Cash dividends declared		0.18					0.18					0.18					0.18					0.17					6			0.54				0.50				8
Book value		21.45					21.22					20.80					20.53					20.16					6			21.45				20.16				6
Tangible book value (3)		17.09					16.95					16.52					16.28					15.90					7			17.09				15.90				7
Key performance ratios:
Return on common equity - GAAP (2)(4)		10.06			%		6.17			%		7.85			%		12.07			%		12.16			%					8.11		%		11.83		%
Return on common equity - operating (1)(2)(4)		10.69					6.25					8.01					12.06					12.67								8.40				12.32
Return on tangible common equity - operating (1)(2)(3)(4)		13.52					8.09					10.57					15.49					16.38								10.76				15.92
Return on assets - GAAP (4)		1.07					0.71					0.99					1.50					1.51								0.93				1.45
Return on assets - operating (1)(4)		1.14					0.72					1.01					1.50					1.58								0.97				1.51
Return on assets - pre-tax pre-provision (4)(5)		1.86					1.86					1.95					2.00					2.05								1.89				1.98
Return on assets - pre-tax pre-provision, excluding merger-related and other charges (1)(4)(5)		1.93					1.87					1.98					2.00					2.13								1.93				2.06
Net interest margin (fully taxable equivalent) (4)		3.27					3.42					4.07					3.93					4.12								3.55				4.11
Efficiency ratio - GAAP		54.14					55.86					56.15					54.87					55.64								55.30				56.09
Efficiency ratio - operating (1)		52.24					55.59					55.59					54.92					53.90								54.34				54.36
Equity to total assets		11.47					11.81					12.54					12.66					12.53								11.47				12.53
Tangible common equity to tangible assets (3)		8.89					9.12					10.22					10.32					10.16								8.89				10.16
ASSET QUALITY
Nonperforming loans		$	49,084				$	48,021				$	36,208				$	35,341				$	30,832				59			$	49,084			$	30,832			59
Foreclosed properties		953					477					475					476					102								953				102
Total nonperforming assets ("NPAs")		50,037					48,498					36,683					35,817					30,934					62			50,037				30,934				62
Allowance for credit losses - loans		134,256					103,669					81,905					62,089					62,514					115			134,256				62,514				115
Net charge-offs		2,538					6,149					8,114					3,925					2,723					(7	)		16,801				8,291				103
Allowance for credit losses - loans to loans		1.14			%		1.02			%		0.92			%		0.70			%		0.70			%					1.14		%		0.70		%
Net charge-offs to average loans (4)		0.09					0.25					0.37					0.18					0.12								0.22				0.13
NPAs to loans and foreclosed properties		0.42					0.48					0.41					0.41					0.35								0.42				0.35
NPAs to total assets		0.29					0.32					0.28					0.28					0.24								0.29				0.24
AVERAGE BALANCES ($ in millions)
Loans		$	11,644				$	9,773				$	8,829				$	8,890				$	8,836				32			$	10,088			$	8,647			17
Investment securities		2,750					2,408					2,520					2,486					2,550					8			2,560				2,701				(5	)
Earning assets		15,715					12,958					11,798					11,832					11,568					36			13,498				11,534				17
Total assets		17,013					14,173					12,944					12,946					12,681					34			14,718				12,600				17
Deposits		14,460					12,071					10,915					10,924					10,531					37			12,490				10,462				19
Shareholders’ equity		1,948					1,686					1,653					1,623					1,588					23			1,763				1,533				15
Common shares - basic (thousands)		87,129					78,920					79,340					79,659					79,663					9			81,815				79,714				3
Common shares - diluted (thousands)		87,205					78,924					79,446					79,669					79,667					9			81,876				79,718				3
AT PERIOD END ($ in millions)
Loans		$	11,799				$	10,133				$	8,935				$	8,813				$	8,903				33			$	11,799			$	8,903			33
Investment securities		3,089					2,432					2,540					2,559					2,515					23			3,089				2,515				23
Total assets		17,153					15,005					13,086					12,916					12,809					34			17,153				12,809				34
Deposits		14,603					12,702					11,035					10,897					10,757					36			14,603				10,757				36
Shareholders’ equity		1,967					1,772					1,641					1,636					1,605					23			1,967				1,605				23
Common shares outstanding (thousands)		86,611					78,335					78,284					79,014					78,974					10			86,611				78,974				10
(1) Excludes merger-related and other charges which includes termination of pension plan in the third quarter of 2019, executive retirement charges in the second quarter of 2019 and amortization of certain executive change of control benefits. (2) Net income 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
		2020															2019										For the Nine Months Ended September 30,
		Third					Second					First					Fourth					Third
(in thousands, except per share data)		Quarter					Quarter					Quarter					Quarter					Quarter					2020					2019
Expense reconciliation
Expenses (GAAP)		$	95,981				$	83,980				$	81,538				$	81,424				$	82,924				$	261,499				$	240,821
Merger-related and other charges		(3,361		)			(397		)			(808		)			74					(2,605		)			(4,566		)			(7,431		)
Expenses - operating		$	92,620				$	83,583				$	80,730				$	81,498				$	80,319				$	256,933				$	233,390
Net income to operating income reconciliation
Net income (GAAP)		$	47,607				$	25,096				$	31,884				$	49,012				$	48,362				$	104,587				$	136,709
Merger-related and other charges		3,361					397					808					(74		)			2,605					4,566					7,431
Income tax benefit of merger-related and other charges		(519		)			(87		)			(182		)			17					(600		)			(788		)			(1,712		)
Net income - operating		$	50,449				$	25,406				$	32,510				$	48,955				$	50,367				$	108,365				$	142,428
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)		$	47,607				$	25,096				$	31,884				$	49,012				$	48,362				$	104,587				$	136,709
Income tax expense		11,755					6,923					8,807					12,885					13,983					27,485					40,106
Provision for credit losses		21,793					33,543					22,191					3,500					3,100					77,527					9,650
Pre-tax pre-provision income		$	81,155				$	65,562				$	62,882				$	65,397				$	65,445				$	209,599				$	186,465
Diluted income per common share reconciliation
Diluted income per common share (GAAP)		$	0.52				$	0.32				$	0.40				$	0.61				$	0.60				$	1.25				$	1.70
Merger-related and other charges, net of tax		0.03					—					0.01					—					0.03					0.04					0.07
Diluted income per common share - operating		$	0.55				$	0.32				$	0.41				$	0.61				$	0.63				$	1.29				$	1.77
Book value per common share reconciliation
Book value per common share (GAAP)		$	21.45				$	21.22				$	20.80				$	20.53				$	20.16				$	21.45				$	20.16
Effect of goodwill and other intangibles		(4.36		)			(4.27		)			(4.28		)			(4.25		)			(4.26		)			(4.36		)			(4.26		)
Tangible book value per common share		$	17.09				$	16.95				$	16.52				$	16.28				$	15.90				$	17.09				$	15.90
Return on tangible common equity reconciliation
Return on common equity (GAAP)		10.06			%		6.17			%		7.85			%		12.07			%		12.16			%		8.11			%		11.83			%
Merger-related and other charges, net of tax		0.63					0.08					0.16					(0.01		)			0.51					0.29					0.49
Return on common equity - operating		10.69					6.25					8.01					12.06					12.67					8.40					12.32
Effect of goodwill and other intangibles		2.83					1.84					2.56					3.43					3.71					2.36					3.60
Return on tangible common equity - operating		13.52			%		8.09			%		10.57			%		15.49			%		16.38			%		10.76			%		15.92			%
Return on assets reconciliation
Return on assets (GAAP)		1.07			%		0.71			%		0.99			%		1.50			%		1.51			%		0.93			%		1.45			%
Merger-related and other charges, net of tax		0.07					0.01					0.02					—					0.07					0.04					0.06
Return on assets - operating		1.14			%		0.72			%		1.01			%		1.50			%		1.58			%		0.97			%		1.51			%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)		1.07			%		0.71			%		0.99			%		1.50			%		1.51			%		0.93			%		1.45			%
Income tax expense		0.28					0.20					0.27					0.39					0.44					0.26					0.43
Provision for credit losses		0.51					0.95					0.69					0.11					0.10					0.70					0.10
Return on assets - pre-tax, pre-provision		1.86					1.86					1.95					2.00					2.05					1.89					1.98
Merger-related and other charges		0.07					0.01					0.03					—					0.08					0.04					0.08
Return on assets - pre-tax pre-provision, excluding merger-related and other charges		1.93			%		1.87			%		1.98			%		2.00			%		2.13			%		1.93			%		2.06			%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)		54.14			%		55.86			%		56.15			%		54.87			%		55.64			%		55.30			%		56.09			%
Merger-related and other charges		(1.90		)			(0.27		)			(0.56		)			0.05					(1.74		)			(0.96		)			(1.73		)
Efficiency ratio - operating		52.24			%		55.59			%		55.59			%		54.92			%		53.90			%		54.34			%		54.36			%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)		11.47			%		11.81			%		12.54			%		12.66			%		12.53			%		11.47			%		12.53			%
Effect of goodwill and other intangibles		(2.02		)			(2.05		)			(2.32		)			(2.34		)			(2.37		)			(2.02		)			(2.37		)
Effect of preferred equity		(0.56		)			(0.64		)			—					—					—					(0.56		)			—
Tangible common equity to tangible assets		8.89			%		9.12			%		10.22			%		10.32			%		10.16			%		8.89			%		10.16			%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
	2020												2019								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	$	2,009			$	1,759			$	1,703			$	1,720			$	1,692			$	250				$	317
Income producing commercial RE	2,493				2,178				2,065				2,008				1,934				315					559
Commercial & industrial	1,788				1,219				1,310				1,221				1,271				569					517
Paycheck protection program	1,317				1,095				—				—				—				222					1,317
Commercial construction	987				946				959				976				1,001				41					(14		)
Equipment financing	823				779				761				745				729				44					94
Total commercial	9,417				7,976				6,798				6,670				6,627				1,441					2,790
Residential mortgage	1,270				1,152				1,128				1,118				1,121				118					149
Home equity lines of credit	707				654				668				661				669				53					38
Residential construction	257				230				216				236				229				27					28
Consumer	148				121				125				128				257				27					(109		)
Total loans	$	11,799			$	10,133			$	8,935			$	8,813			$	8,903			$	1,666				$	2,896
LOANS BY MARKET
North Georgia	$	945			$	951			$	958			$	967			$	1,002			$	(6	)			$	(57	)
Atlanta	1,853				1,852				1,820				1,762				1,740				1					113
North Carolina	1,246				1,171				1,124				1,156				1,117				75					129
Coastal Georgia	614				618				604				631				611				(4		)			3
Gainesville	229				233				235				246				246				(4		)			(17		)
East Tennessee	420				433				425				421				435				(13		)			(15		)
South Carolina	1,870				1,778				1,774				1,708				1,705				92					165
Florida	1,453				—				—				—				—				1,453					1,453
Commercial Banking Solutions	3,169				3,097				1,995				1,922				1,916				72					1,253
Indirect auto	—				—				—				—				131				—					(131		)
Total loans	$	11,799			$	10,133			$	8,935			$	8,813			$	8,903			$	1,666				$	2,896

 

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
		2020
(in thousands)		Third Quarter					Second Quarter					First Quarter
NONACCRUAL LOANS
Owner occupied RE		$	11,075				$	10,710				$	10,405
Income producing RE		12,230					11,274					2,235
Commercial & industrial		3,534					3,432					3,169
Commercial construction		1,863					2,290					1,724
Equipment financing		3,137					3,119					2,439
Total commercial		31,839					30,825					19,972
Residential mortgage		13,864					13,185					12,458
Home equity lines of credit		2,642					3,138					3,010
Residential construction		479					500					540
Consumer		260					373					228
Total		$	49,084				$	48,021				$	36,208
		2020
		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		$	(725	)			(0.14		)	%		$	(466		)					(0.11	)	%				$	(1,028	)					(0.24	)	%
Income producing RE		1,785					0.29					4,548								0.86						270							0.05
Commercial & industrial		(105		)			(0.01		)			(37			)					(0.01	)					7,185							2.30
Commercial construction		(171		)			(0.07		)			122								0.05						(141		)					(0.06	)
Equipment financing		1,993					0.93					1,665								0.87						1,507							0.81
Total commercial		2,777					0.12					5,832								0.31						7,793							0.47
Residential mortgage		(35		)			(0.01		)			(6			)					—						9							—
Home equity lines of credit		(125		)			(0.07		)			(98			)					(0.06	)					(83		)					(0.05	)
Residential construction		—					—					(5			)					(0.01	)					(12		)					(0.02	)
Consumer		(79		)			(0.22		)			426								1.39						407							1.30
Total		$	2,538				0.09					$	6,149							0.25						$	8,114						0.37
(1)  Annualized.

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)		September 30, 2020				December 31, 2019
ASSETS
Cash and due from banks		$	122,048			$	125,844
Interest-bearing deposits in banks		923,591				389,362
Cash and cash equivalents		1,045,639				515,206
Debt securities available-for-sale		2,690,448				2,274,581
Debt securities held-to-maturity (fair value $413,820 and $287,904)		398,373				283,533
Loans held for sale at fair value		128,587				58,484
Loans and leases held for investment		11,798,910				8,812,553
Less allowance for credit losses - loans and leases		(134,256		)		(62,089		)
Loans and leases, net		11,664,654				8,750,464
Premises and equipment, net		211,885				215,976
Bank owned life insurance		201,515				202,664
Accrued interest receivable		48,091				32,660
Net deferred tax asset		39,818				34,059
Derivative financial instruments		103,388				35,007
Goodwill and other intangible assets, net		384,074				342,247
Other assets		236,405				171,135
Total assets		$	17,152,877			$	12,916,016
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	5,227,170			$	3,477,979
NOW and interest-bearing demand		2,989,455				2,461,895
Money market		3,399,793				2,230,628
Savings		891,147				706,467
Time		1,819,586				1,859,574
Brokered		276,225				160,701
Total deposits		14,603,376				10,897,244
Long-term debt		326,703				212,664
Derivative financial instruments		33,519				15,516
Accrued expenses and other liabilities		222,024				154,900
Total liabilities		15,185,622				11,280,324
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				—
Common stock, $1 par value; 150,000,000 shares authorized;   86,611,114 and 79,013,729 shares issued and outstanding		86,611				79,014
Common stock issuable; 590,521 and 664,640 shares		10,632				11,491
Capital surplus		1,637,467				1,496,641
Retained earnings		94,938				40,152
Accumulated other comprehensive income		41,185				8,394
Total shareholders' equity		1,967,255				1,635,692
Total liabilities and shareholders' equity		$	17,152,877			$	12,916,016

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)		2020				2019				2020				2019
Interest revenue:
Loans, including fees		$	126,936			$	122,645			$	352,861			$	357,575
Investment securities, including tax exempt of $1,895, $1,118, $4,988 and $3,409		14,558				17,744				47,567				57,638
Deposits in banks and short-term investments		279				226				1,497				1,074
Total interest revenue		141,773				140,615				401,925				416,287
Interest expense:
Deposits:
NOW and interest-bearing demand		1,634				3,214				6,240				10,283
Money market		3,017				5,126				10,969				14,100
Savings		47				41				121				115
Time		4,300				8,732				18,014				25,687
Deposits		8,998				17,113				35,344				50,185
Short-term borrowings		2				429				3				838
Federal Home Loan Bank advances		27				521				28				2,695
Long-term debt		4,292				3,214				10,186				9,813
Total interest expense		13,319				21,277				45,561				63,531
Net interest revenue		128,454				119,338				356,364				352,756
Provision for credit losses		21,793				3,100				77,527				9,650
Net interest revenue after provision for credit losses		106,661				116,238				278,837				343,106
Noninterest income:
Service charges and fees		8,260				9,916				23,893				27,429
Mortgage loan gains and other related fees		25,144				8,658				57,113				17,750
Brokerage and wealth management fees		3,055				1,699				6,019				4,624
Gains from sales of other loans, net		1,175				1,639				3,889				4,412
Securities gains (losses), net		746				—				746				(118		)
Other		10,302				7,119				23,074				20,433
Total noninterest income		48,682				29,031				114,734				74,530
Total revenue		155,343				145,269				393,571				417,636
Noninterest expenses:
Salaries and employee benefits		59,067				50,501				162,236				146,161
Communications and equipment		6,960				6,223				19,462				18,233
Occupancy		7,050				5,921				18,709				17,424
Advertising and public relations		1,778				1,374				5,312				4,256
Postage, printing and supplies		1,703				1,618				4,986				4,733
Professional fees		5,083				4,715				14,003				11,930
Lending and loan servicing expense		3,043				2,556				8,525				7,509
Outside services - electronic banking		1,888				1,934				5,516				5,101
FDIC assessments and other regulatory charges		1,346				314				4,388				3,571
Amortization of intangibles		1,099				1,210				3,126				3,845
Merger-related and other charges		3,361				2,541				4,566				6,981
Other		3,603				4,017				10,670				11,077
Total noninterest expenses		95,981				82,924				261,499				240,821
Net income before income taxes		59,362				62,345				132,072				176,815
Income tax expense		11,755				13,983				27,485				40,106
Net income		47,607				48,362				104,587				136,709
Preferred stock dividends		1,814				—				1,814				—
Dividends and undistributed earnings allocated to unvested shares		356				351				779				982
Net income available to common shareholders		$	45,437			$	48,011			$	101,994			$	135,727
Net income per common share:
Basic		$	0.52			$	0.60			$	1.25			$	1.70
Diluted		0.52				0.60				1.25				1.70
Weighted average common shares outstanding:
Basic		87,129				79,663				81,815				79,714
Diluted		87,205				79,667				81,876				79,718

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
		2020											2019
(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)		$	11,644,202			$	126,342			4.32	%		$	8,835,585			$	122,526			5.50	%
Taxable securities (3)		2,499,649				12,663				2.03			2,379,927				16,626				2.79
Tax-exempt securities (FTE) (1)(3)		249,959				2,544				4.07			170,027				1,502				3.53
Federal funds sold and other interest-earning assets		1,321,445				1,132				0.34			182,935				616				1.35
Total interest-earning assets (FTE)		15,715,255				142,681				3.61			11,568,474				141,270				4.85
Noninterest-earning assets:
Allowance for credit losses		(128,581		)									(63,474		)
Cash and due from banks		135,949											116,922
Premises and equipment		216,326											221,930
Other assets (3)		1,074,529											836,951
Total assets		$	17,013,478										$	12,680,803
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	2,890,735			1,634				0.22			$	2,123,910			3,214				0.60
Money market		3,501,781				3,017				0.34			2,277,162				5,126				0.89
Savings		864,849				47				0.02			695,297				41				0.02
Time		1,933,764				4,127				0.85			1,879,801				8,053				1.70
Brokered time deposits		96,198				173				0.72			102,078				679				2.64
Total interest-bearing deposits		9,287,327				8,998				0.39			7,078,248				17,113				0.96
Federal funds purchased and other borrowings		4,405				2				0.18			73,733				429				2.31
Federal Home Loan Bank advances		2,818				27				3.81			88,261				521				2.34
Long-term debt		327,017				4,292				5.22			243,935				3,214				5.23
Total borrowed funds		334,240				4,321				5.14			405,929				4,164				4.07
Total interest-bearing liabilities		9,621,567				13,319				0.55			7,484,177				21,277				1.13
Noninterest-bearing liabilities:
Noninterest-bearing deposits		5,172,999											3,453,174
Other liabilities		270,451											155,107
Total liabilities		15,065,017											11,092,458
Shareholders' equity		1,948,461											1,588,345
Total liabilities and shareholders' equity		$	17,013,478										$	12,680,803
Net interest revenue (FTE)						$	129,362										$	119,993
Net interest-rate spread (FTE)										3.06	%										3.72	%
Net interest margin (FTE) (4)										3.27	%										4.12	%

⁽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⁾ Securities available for sale are shown at amortized cost. Pretax unrealized gains of $77.0 million in 2020 and unrealized gains of $35.1 million in 2019 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,
		2020											2019
(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)		$	10,087,630			$	351,536			4.65	%		$	8,646,622			$	357,541			5.53	%
Taxable securities (3)		2,362,674				42,579				2.40			2,532,070				54,229				2.86
Tax-exempt securities (FTE) (1)(3)		197,231				6,699				4.53			168,787				4,579				3.62
Federal funds sold and other interest-earning assets		850,722				3,621				0.57			186,402				1,913				1.37
Total interest-earning assets (FTE)		13,498,257				404,435				4.00			11,533,881				418,262				4.85
Non-interest-earning assets:
Allowance for loan losses		(96,235		)									(62,664		)
Cash and due from banks		134,354											121,889
Premises and equipment		217,551											220,872
Other assets (3)		964,511											785,862
Total assets		$	14,718,438										$	12,599,840
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	2,583,911			6,240				0.32			$	2,199,607			10,283				0.63
Money market		2,797,350				10,969				0.52			2,187,822				14,100				0.86
Savings		788,681				121				0.02			685,167				115				0.02
Time		1,860,597				17,435				1.25			1,761,374				20,338				1.54
Brokered time deposits		102,502				579				0.75			292,835				5,349				2.44
Total interest-bearing deposits		8,133,041				35,344				0.58			7,126,805				50,185				0.94
Federal funds purchased and other borrowings		1,611				3				0.25			44,898				838				2.50
Federal Home Loan Bank advances		1,001				28				3.74			142,876				2,695				2.52
Long-term debt		256,218				10,186				5.31			252,686				9,813				5.19
Total borrowed funds		258,830				10,217				5.27			440,460				13,346				4.05
Total interest-bearing liabilities		8,391,871				45,561				0.73			7,567,265				63,531				1.12
Noninterest-bearing liabilities:
Noninterest-bearing deposits		4,356,484											3,335,450
Other liabilities		206,904											164,350
Total liabilities		12,955,259											11,067,065
Shareholders' equity		1,763,179											1,532,775
Total liabilities and shareholders' equity		$	14,718,438										$	12,599,840
Net interest revenue (FTE)						$	358,874										$	354,731
Net interest-rate spread (FTE)										3.27	%										3.73	%
Net interest margin (FTE) (4)										3.55	%										4.11	%

⁽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 $65.5 million in 2020 and unrealized gains of $4.94 million in 2019 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) (United) is a bank holding company headquartered in Blairsville, Georgia, with executive offices in Greenville, South Carolina. United is one of the largest full-service financial institutions in the Southeast, with $17.2 billion in assets, and 163 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee. United Community Bank, United’s wholly-owned bank subsidiary, specializes in personalized community banking services for individuals, small businesses and companies throughout its geographic footprint, including Florida under the brand Seaside Bank and Trust. Services include a full range of consumer and commercial banking products, including mortgage, advisory, treasury management, and wealth management. Respected national research firms consistently recognize United for outstanding customer service. In 2020, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking six out of the last seven years United earned the coveted award. 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 2020 list of the 100 Best Banks in America for the seventh consecutive year. United also received five Greenwich Excellence Awards in 2019 for excellence in Small Business Banking and Middle Market Banking, including a national award for Overall Satisfaction in Small Business Banking. 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.

For more information:

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

FAQ

What are the Q3 2020 financial results for UCBI?

United Community Banks reported a net income of $47.6 million and diluted EPS of $0.52 for Q3 2020.

How did the acquisition of Seaside National Bank affect UCBI's loans?

The acquisition contributed $1.4 billion to UCBI's total loan growth of $1.7 billion in Q3 2020.

What is the current efficiency ratio for United Community Banks?

UCBI achieved a record low efficiency ratio of 52.2% in Q3 2020.

How much did UCBI's diluted EPS change compared to last year?

UCBI's diluted EPS decreased by $0.08, or 13%, compared to the same quarter last year.

What is the trend in UCBI's credit loss provisioning?

UCBI reported a provision for credit losses of $21.8 million, reflecting increased provisioning due to loan growth.