UCB 8-K
United Community Banks Inc (UCB)
8-K
2020-01-21
For: 2020-01-21
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April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 21, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission file number) | (IRS Employer Identification No.) | ||
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(706 ) 781-2265
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 | Results of Operations and Financial Condition. |
On January 21, 2020, United Community Banks, Inc. (“United”) issued a press release announcing financial results for the fourth quarter of 2019. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. | |
Item 7.01 | Regulation FD Disclosure. |
On January 22, 2020, United will hold an earnings conference call and webcast at 11:00 a.m. (Eastern Time) to discuss financial results for the fourth quarter of 2019. The press release referenced above in Item 2.02 contains information about how to access the conference call and webcast. A copy of the slide presentation to be used during the earnings call and webcast is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The slide presentation also will be available on our website, www.ucbi.com, under the “Investor Relations – Events and Presentations” section. | |
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits | The following exhibit index lists the exhibits that are either filed or furnished with the Current Report on Form 8-K. |
EXHIBIT INDEX |
Exhibit No. | Description |
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITED COMMUNITY BANKS, INC. | ||
By: | /s/ Jefferson L. Harralson | |
Jefferson L. Harralson | ||
Executive Vice President and | ||
Chief Financial Officer | ||
Date: January 21, 2020 | ||
For Immediate Release
For more information:
Jefferson Harralson
Chief Financial Officer
(864) 240-6208
United Community Banks, Inc. Reports Fourth Quarter Results
EPS of $0.61, Return on Assets of 1.50% and Return on Equity of 12.07%
GREENVILLE, SC - January 21, 2020
United Community Banks, Inc. (NASDAQ: UCBI) (“United”) today announced its fourth quarter financial results, including strong year-over-year loan and deposit growth, operating efficiency and asset quality. Diluted earnings per share were $0.61, an increase of $0.05 or 9% from a year ago. Excluding a nominal amount of merger-related and other charges, diluted operating earnings per share were also $0.61, up 7% over last year. United’s return on assets was 1.50% and its return on common equity was 12.1% for the quarter. On an operating basis, United’s return on assets was also 1.50% and its return on tangible common equity was 15.5%.
During the quarter, the company sold its remaining investment in its indirect auto portfolio, completing its exit from that business. Excluding indirect auto, loans grew at a 2% annualized rate in the fourth quarter. United's net interest margin decreased as expected due to falling interest rates. Other items that impacted the net interest margin included seasonally higher average public deposits invested at lower yielding overnight rates and lower purchased loan accretion when compared to previous quarters. Core transaction deposits remained stable and total deposits grew by $140 million.
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For the full year of 2019, United's return on assets increased 11 basis points to 1.46% and EPS increased by 12%. Operating return on assets increased 11 basis points to 1.51% and operating EPS increased 11%, as the company continued to execute on its plans to deliver top quartile performance. 2019 saw strong operating leverage, resulting in a company best efficiency ratio of 55.8% and an operating efficiency ratio of 54.5%.
“Our fourth quarter caps off what has been an outstanding year for United. Our team continued delivering best in class customer service, which has led to the achievement of our top quartile performance goals,” said Lynn Harton, Chairman and CEO of United. “We are proud and honored that United was named one of the ‘Best Banks to Work For’ by American Banker for the third year in a row, as well as one of the ‘World’s Best Banks in 2019’ by Forbes. These accolades are totally due to the passion and caring of our 2,341 employees and their efforts to build a great company where they can develop fulfilling careers, reach ambitious financial goals and serve United's customers and communities at the highest level. We look forward to continued success in 2020.”
2019 Highlights:
• | 2019 earnings per diluted share were $2.31, a 12% increase over 2018 |
• | Excluding merger-related and other charges, operating earnings per diluted share for 2019 were $2.38 compared to $2.14 in 2018, an increase of 11% |
• | Return on assets was 1.46% in 2019, an increase of 11 basis points from 2018 |
• | Excluding merger-related and other charges, operating return on assets was 1.51%, an increase of 11 basis points from 2018 |
• | Efficiency ratio of 55.8% in 2019 improved 154 basis points as compared to 2018 |
• | Excluding merger-related and other charges, efficiency ratio of 54.5% improved 144 basis points as compared to 2018 |
• | End of period loans grew $430 million in 2019, up 5% over December 31, 2018 |
• | Common Equity Tier 1 ratio was 13.0% at December 31, 2019, compared to 12.2% at December 31, 2018 |
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• | Dividends of $0.68 per share were declared in 2019, up 17% over 2018 |
• | United completed the acquisition of First Madison Bank & Trust on May 1, 2019 |
• | Share repurchases of 500,495 shares were accomplished during the year at an average price of $26.01 |
Fourth Quarter 2019 Financial Highlights:
• | EPS of $0.61, representing growth of 9% over last year, or 7% on an operating basis |
• | Return on assets of 1.50% |
• | Return on common equity of 12.1% |
• | Operating return on tangible common equity of 15.5%, excluding merger-related and other charges |
• | End of period total loans fell by $90 million, but excluding indirect auto, end of period loans grew at a 2% annualized pace |
• | Loan production was strong at $854 million, but was offset by higher than usual paydowns |
• | Despite weaker seasonality, our mortgage business remained strong with loan locks of $411 million, compared to $251 million a year ago due to a favorable rate environment and the impact of new hires |
• | Net interest margin of 3.93% was down 19 basis points compared to the third quarter and down 4 basis points compared to a year ago |
• | Efficiency ratio of 54.9% |
• | Net charge-offs of 18 basis points, up six basis points from last quarter and remaining at historically low levels |
• | Nonperforming assets of 0.28% of total assets, compared with 0.24% at September 30, 2019 and 0.20% at December 31, 2018 |
• | Unusual items in the quarter netted to a slight gain, with a $1.6 million bank owned life insurance gain offset by $0.9 million in securities losses. Additionally, our indirect portfolio sales resulted in a $0.7 million loss offset by a $0.5 million indirect portfolio loan loss reserve release |
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Conference Call
United will hold a conference call, Wednesday, January 22, 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 7081477. 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.
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UNITED COMMUNITY BANKS, INC. | ||||||||||||||||||||||||||||||||||
Financial Highlights | ||||||||||||||||||||||||||||||||||
Selected Financial Information | ||||||||||||||||||||||||||||||||||
2019 | 2018 | Fourth Quarter 2019 - 2018 Change | For the Twelve Months Ended December 31, | YTD 2019 - 2018 Change | ||||||||||||||||||||||||||||||
(in thousands, except per share data) | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Fourth Quarter | 2019 | 2018 | |||||||||||||||||||||||||||
INCOME SUMMARY | ||||||||||||||||||||||||||||||||||
Interest revenue | $ | 136,419 | $ | 140,615 | $ | 139,156 | $ | 136,516 | $ | 133,854 | $ | 552,706 | $ | 500,080 | ||||||||||||||||||||
Interest expense | 19,781 | 21,277 | 21,372 | 20,882 | 18,975 | 83,312 | 61,330 | |||||||||||||||||||||||||||
Net interest revenue | 116,638 | 119,338 | 117,784 | 115,634 | 114,879 | 2 | % | 469,394 | 438,750 | 7 | % | |||||||||||||||||||||||
Provision for credit losses | 3,500 | 3,100 | 3,250 | 3,300 | 2,100 | 13,150 | 9,500 | |||||||||||||||||||||||||||
Noninterest income | 30,183 | 29,031 | 24,531 | 20,968 | 23,045 | 31 | 104,713 | 92,961 | 13 | |||||||||||||||||||||||||
Total revenue | 143,321 | 145,269 | 139,065 | 133,302 | 135,824 | 6 | 560,957 | 522,211 | 7 | |||||||||||||||||||||||||
Expenses | 81,424 | 82,924 | 81,813 | 76,084 | 78,242 | 4 | 322,245 | 306,285 | 5 | |||||||||||||||||||||||||
Income before income tax expense | 61,897 | 62,345 | 57,252 | 57,218 | 57,582 | 238,712 | 215,926 | |||||||||||||||||||||||||||
Income tax expense | 12,885 | 13,983 | 13,167 | 12,956 | 12,445 | 52,991 | 49,815 | |||||||||||||||||||||||||||
Net income | 49,012 | 48,362 | 44,085 | 44,262 | 45,137 | 185,721 | 166,111 | |||||||||||||||||||||||||||
Merger-related and other charges | (74 | ) | 2,605 | 4,087 | 739 | 1,234 | 7,357 | 7,345 | ||||||||||||||||||||||||||
Income tax benefit of merger-related and other charges | 17 | (600 | ) | (940 | ) | (172 | ) | (604 | ) | (1,695 | ) | (1,494 | ) | |||||||||||||||||||||
Net income - operating (1) | $ | 48,955 | $ | 50,367 | $ | 47,232 | $ | 44,829 | $ | 45,767 | 7 | $ | 191,383 | $ | 171,962 | 11 | ||||||||||||||||||
PERFORMANCE MEASURES | ||||||||||||||||||||||||||||||||||
Per common share: | ||||||||||||||||||||||||||||||||||
Diluted net income - GAAP | $ | 0.61 | $ | 0.60 | $ | 0.55 | $ | 0.55 | $ | 0.56 | 9 | $ | 2.31 | $ | 2.07 | 12 | ||||||||||||||||||
Diluted net income - operating (1) | 0.61 | 0.63 | 0.59 | 0.56 | 0.57 | 7 | 2.38 | 2.14 | 11 | |||||||||||||||||||||||||
Cash dividends declared | 0.18 | 0.17 | 0.17 | 0.16 | 0.16 | 13 | 0.68 | 0.58 | 17 | |||||||||||||||||||||||||
Book value | 20.53 | 20.16 | 19.65 | 18.93 | 18.24 | 13 | 20.53 | 18.24 | 13 | |||||||||||||||||||||||||
Tangible book value (3) | 16.28 | 15.90 | 15.38 | 14.93 | 14.24 | 14 | 16.28 | 14.24 | 14 | |||||||||||||||||||||||||
Key performance ratios: | ||||||||||||||||||||||||||||||||||
Return on common equity - GAAP (2)(4) | 12.07 | % | 12.16 | % | 11.45 | % | 11.85 | % | 12.08 | % | 11.89 | % | 11.60 | % | ||||||||||||||||||||
Return on common equity - operating (1)(2)(4) | 12.06 | 12.67 | 12.27 | 12.00 | 12.25 | 12.25 | 12.01 | |||||||||||||||||||||||||||
Return on tangible common equity - operating (1)(2)(3)(4) | 15.49 | 16.38 | 15.88 | 15.46 | 15.88 | 15.81 | 15.69 | |||||||||||||||||||||||||||
Return on assets - GAAP (4) | 1.50 | 1.51 | 1.40 | 1.44 | 1.43 | 1.46 | 1.35 | |||||||||||||||||||||||||||
Return on assets - operating (1)(4) | 1.50 | 1.58 | 1.50 | 1.45 | 1.45 | 1.51 | 1.40 | |||||||||||||||||||||||||||
Net interest margin (fully taxable equivalent) (4) | 3.93 | 4.12 | 4.12 | 4.10 | 3.97 | 4.07 | 3.91 | |||||||||||||||||||||||||||
Efficiency ratio - GAAP | 54.87 | 55.64 | 57.28 | 55.32 | 56.73 | 55.77 | 57.31 | |||||||||||||||||||||||||||
Efficiency ratio - operating (1) | 54.92 | 53.90 | 54.42 | 54.78 | 55.83 | 54.50 | 55.94 | |||||||||||||||||||||||||||
Equity to total assets | 12.66 | 12.53 | 12.25 | 12.06 | 11.59 | 12.66 | 11.59 | |||||||||||||||||||||||||||
Tangible common equity to tangible assets (3) | 10.32 | 10.16 | 9.86 | 9.76 | 9.29 | 10.32 | 9.29 | |||||||||||||||||||||||||||
ASSET QUALITY | ||||||||||||||||||||||||||||||||||
Nonperforming loans | $ | 35,341 | $ | 30,832 | $ | 26,597 | $ | 23,624 | $ | 23,778 | 49 | $ | 35,341 | $ | 23,778 | 49 | ||||||||||||||||||
Foreclosed properties | 476 | 102 | 75 | 1,127 | 1,305 | (64 | ) | 476 | 1,305 | (64 | ) | |||||||||||||||||||||||
Total nonperforming assets (“NPAs”) | 35,817 | 30,934 | 26,672 | 24,751 | 25,083 | 43 | 35,817 | 25,083 | 43 | |||||||||||||||||||||||||
Allowance for loan losses | 62,089 | 62,514 | 62,204 | 61,642 | 61,203 | 1 | 62,089 | 61,203 | 1 | |||||||||||||||||||||||||
Net charge-offs | 3,925 | 2,723 | 2,438 | 3,130 | 1,787 | 120 | 12,216 | 6,113 | 100 | |||||||||||||||||||||||||
Allowance for loan losses to loans | 0.70 | % | 0.70 | % | 0.70 | % | 0.73 | % | 0.73 | % | 0.70 | % | 0.73 | % | ||||||||||||||||||||
Net charge-offs to average loans (4) | 0.18 | 0.12 | 0.11 | 0.15 | 0.09 | 0.14 | 0.07 | |||||||||||||||||||||||||||
NPAs to loans and foreclosed properties | 0.41 | 0.35 | 0.30 | 0.29 | 0.30 | 0.41 | 0.30 | |||||||||||||||||||||||||||
NPAs to total assets | 0.28 | 0.24 | 0.21 | 0.20 | 0.20 | 0.28 | 0.20 | |||||||||||||||||||||||||||
AVERAGE BALANCES ($ in millions) | ||||||||||||||||||||||||||||||||||
Loans | $ | 8,890 | $ | 8,836 | $ | 8,670 | $ | 8,430 | $ | 8,306 | 7 | $ | 8,708 | $ | 8,170 | 7 | ||||||||||||||||||
Investment securities | 2,486 | 2,550 | 2,674 | 2,883 | 3,004 | (17 | ) | 2,647 | 2,899 | (9 | ) | |||||||||||||||||||||||
Earning assets | 11,832 | 11,568 | 11,534 | 11,498 | 11,534 | 3 | 11,609 | 11,282 | 3 | |||||||||||||||||||||||||
Total assets | 12,946 | 12,681 | 12,608 | 12,509 | 12,505 | 4 | 12,687 | 12,284 | 3 | |||||||||||||||||||||||||
Deposits | 10,924 | 10,531 | 10,493 | 10,361 | 10,306 | 6 | 10,579 | 10,000 | 6 | |||||||||||||||||||||||||
Shareholders’ equity | 1,623 | 1,588 | 1,531 | 1,478 | 1,420 | 14 | 1,556 | 1,380 | 13 | |||||||||||||||||||||||||
Common shares - basic (thousands) | 79,659 | 79,663 | 79,673 | 79,807 | 79,884 | — | 79,700 | 79,662 | — | |||||||||||||||||||||||||
Common shares - diluted (thousands) | 79,669 | 79,667 | 79,678 | 79,813 | 79,890 | — | 79,708 | 79,671 | — | |||||||||||||||||||||||||
AT PERIOD END ($ in millions) | ||||||||||||||||||||||||||||||||||
Loans | $ | 8,813 | $ | 8,903 | $ | 8,838 | $ | 8,493 | $ | 8,383 | 5 | $ | 8,813 | $ | 8,383 | 5 | ||||||||||||||||||
Investment securities | 2,559 | 2,515 | 2,620 | 2,720 | 2,903 | (12 | ) | 2,559 | 2,903 | (12 | ) | |||||||||||||||||||||||
Total assets | 12,916 | 12,809 | 12,779 | 12,506 | 12,573 | 3 | 12,916 | 12,573 | 3 | |||||||||||||||||||||||||
Deposits | 10,897 | 10,757 | 10,591 | 10,534 | 10,535 | 3 | 10,897 | 10,535 | 3 | |||||||||||||||||||||||||
Shareholders’ equity | 1,636 | 1,605 | 1,566 | 1,508 | 1,458 | 12 | 1,636 | 1,458 | 12 | |||||||||||||||||||||||||
Common shares outstanding (thousands) | 79,014 | 78,974 | 79,075 | 79,035 | 79,234 | — | 79,014 | 79,234 | — | |||||||||||||||||||||||||
(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.
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UNITED COMMUNITY BANKS, INC. | ||||||||||||||||||||
Selected Financial Information | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
(in thousands, except per share data) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
INCOME SUMMARY | ||||||||||||||||||||
Interest revenue | $ | 552,706 | $ | 500,080 | $ | 389,720 | $ | 335,020 | $ | 278,532 | ||||||||||
Interest expense | 83,312 | 61,330 | 33,735 | 25,236 | 21,109 | |||||||||||||||
Net interest revenue | 469,394 | 438,750 | 355,985 | 309,784 | 257,423 | |||||||||||||||
Provision for credit losses | 13,150 | 9,500 | 3,800 | (800 | ) | 3,700 | ||||||||||||||
Noninterest income | 104,713 | 92,961 | 88,260 | 93,697 | 72,529 | |||||||||||||||
Total revenue | 560,957 | 522,211 | 440,445 | 404,281 | 326,252 | |||||||||||||||
Expenses | 322,245 | 306,285 | 267,611 | 241,289 | 211,238 | |||||||||||||||
Income before income tax expense | 238,712 | 215,926 | 172,834 | 162,992 | 115,014 | |||||||||||||||
Income tax expense | 52,991 | 49,815 | 105,013 | 62,336 | 43,436 | |||||||||||||||
Net income | 185,721 | 166,111 | 67,821 | 100,656 | 71,578 | |||||||||||||||
Merger-related and other charges | 7,357 | 7,345 | 14,662 | 8,122 | 17,995 | |||||||||||||||
Income tax benefit of merger-related and other charges | (1,695 | ) | (1,494 | ) | (3,745 | ) | (3,074 | ) | (6,388 | ) | ||||||||||
Impact of remeasurement of deferred tax asset resulting from 2017 Tax Cuts and Jobs Act | — | — | 38,199 | — | — | |||||||||||||||
Impairment of deferred tax asset on cancelled non-qualified stock options | — | — | — | 976 | — | |||||||||||||||
Release of disproportionate tax effects lodged in OCI | — | — | 3,400 | — | — | |||||||||||||||
Net income - operating (1) | $ | 191,383 | $ | 171,962 | $ | 120,337 | $ | 106,680 | $ | 83,185 | ||||||||||
PERFORMANCE MEASURES | ||||||||||||||||||||
Per common share: | ||||||||||||||||||||
Diluted net income - GAAP | $ | 2.31 | $ | 2.07 | $ | 0.92 | $ | 1.40 | $ | 1.09 | ||||||||||
Diluted net income - operating (1) | 2.38 | 2.14 | 1.63 | 1.48 | 1.27 | |||||||||||||||
Cash dividends declared | 0.68 | 0.58 | 0.38 | 0.30 | 0.22 | |||||||||||||||
Book value | 20.53 | 18.24 | 16.67 | 15.06 | 14.02 | |||||||||||||||
Tangible book value (3) | 16.28 | 14.24 | 13.65 | 12.95 | 12.06 | |||||||||||||||
Key performance ratios: | ||||||||||||||||||||
Return on common equity - GAAP (2) | 11.89 | % | 11.60 | % | 5.67 | % | 9.41 | % | 8.15 | % | ||||||||||
Return on common equity - operating (1)(2) | 12.25 | 12.01 | 10.07 | 9.98 | 9.48 | |||||||||||||||
Return on tangible common equity - operating (1)(2)(3) | 15.81 | 15.69 | 12.02 | 11.86 | 10.24 | |||||||||||||||
Return on assets - GAAP | 1.46 | 1.35 | 0.62 | 1.00 | 0.85 | |||||||||||||||
Return on assets - operating (1) | 1.51 | 1.40 | 1.09 | 1.06 | 0.98 | |||||||||||||||
Net interest margin (fully taxable equivalent) | 4.07 | 3.91 | 3.52 | 3.36 | 3.30 | |||||||||||||||
Efficiency ratio - GAAP | 55.77 | 57.31 | 59.95 | 59.80 | 63.96 | |||||||||||||||
Efficiency ratio - operating (1) | 54.50 | 55.94 | 56.67 | 57.78 | 58.51 | |||||||||||||||
Equity to total assets | 12.66 | 11.59 | 10.94 | 10.05 | 10.58 | |||||||||||||||
Tangible common equity to tangible assets (3) | 10.32 | 9.29 | 9.14 | 8.77 | 9.15 | |||||||||||||||
ASSET QUALITY | ||||||||||||||||||||
Nonperforming loans | $ | 35,341 | $ | 23,778 | $ | 23,658 | $ | 21,539 | $ | 22,653 | ||||||||||
Foreclosed properties | 476 | 1,305 | 3,234 | 7,949 | 4,883 | |||||||||||||||
Total nonperforming assets (NPAs) | 35,817 | 25,083 | 26,892 | 29,488 | 27,536 | |||||||||||||||
Allowance for loan losses | 62,089 | 61,203 | 58,914 | 61,422 | 68,448 | |||||||||||||||
Net charge-offs | 12,216 | 6,113 | 5,998 | 6,766 | 6,259 | |||||||||||||||
Allowance for loan losses to loans | 0.70 | % | 0.73 | % | 0.76 | % | 0.89 | % | 1.14 | % | ||||||||||
Net charge-offs to average loans | 0.14 | 0.07 | 0.08 | 0.11 | 0.12 | |||||||||||||||
NPAs to loans and foreclosed properties | 0.41 | 0.30 | 0.35 | 0.43 | 0.46 | |||||||||||||||
NPAs to total assets | 0.28 | 0.20 | 0.23 | 0.28 | 0.29 | |||||||||||||||
AVERAGE BALANCES ($ in millions) | ||||||||||||||||||||
Loans | $ | 8,708 | $ | 8,170 | $ | 7,150 | $ | 6,413 | $ | 5,298 | ||||||||||
Investment securities | 2,647 | 2,899 | 2,847 | 2,691 | 2,368 | |||||||||||||||
Earning assets | 11,609 | 11,282 | 10,162 | 9,257 | 7,834 | |||||||||||||||
Total assets | 12,687 | 12,284 | 11,015 | 10,054 | 8,462 | |||||||||||||||
Deposits | 10,579 | 10,000 | 8,950 | 8,177 | 7,055 | |||||||||||||||
Shareholders’ equity | 1,556 | 1,380 | 1,180 | 1,059 | 869 | |||||||||||||||
Common shares - basic (thousands) | 79,700 | 79,662 | 73,247 | 71,910 | 65,488 | |||||||||||||||
Common shares - diluted (thousands) | 79,708 | 79,671 | 73,259 | 71,915 | 65,492 | |||||||||||||||
AT PERIOD END ($ in millions) | ||||||||||||||||||||
Loans | $ | 8,813 | $ | 8,383 | $ | 7,736 | $ | 6,921 | $ | 5,995 | ||||||||||
Investment securities | 2,559 | 2,903 | 2,937 | 2,762 | 2,656 | |||||||||||||||
Total assets | 12,916 | 12,573 | 11,915 | 10,709 | 9,616 | |||||||||||||||
Deposits | 10,897 | 10,535 | 9,808 | 8,638 | 7,873 | |||||||||||||||
Shareholders’ equity | 1,636 | 1,458 | 1,303 | 1,076 | 1,018 | |||||||||||||||
Common shares outstanding (thousands) | 79,014 | 79,234 | 77,580 | 70,899 | 71,484 | |||||||||||||||
(1) Excludes merger-related and other charges which includes amortization of certain executive change of control benefits, the 2017 impact of remeasurement of United’s deferred tax assets following the passage of tax reform legislation, a 2017 release of disproportionate tax effects lodged in OCI, a 2016 deferred tax asset impairment charge related to cancelled non-qualified stock options and 2015 impairment losses on surplus bank property. (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.
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UNITED COMMUNITY BANKS, INC. | ||||||||||||||||||||
Non-GAAP Performance Measures Reconciliation | ||||||||||||||||||||
Selected Financial Information- Quarterly | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
(in thousands, except per share data) | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Fourth Quarter | |||||||||||||||
Expense reconciliation | ||||||||||||||||||||
Expenses (GAAP) | $ | 81,424 | $ | 82,924 | $ | 81,813 | $ | 76,084 | $ | 78,242 | ||||||||||
Merger-related and other charges | 74 | (2,605 | ) | (4,087 | ) | (739 | ) | (1,234 | ) | |||||||||||
Expenses - operating | $ | 81,498 | $ | 80,319 | $ | 77,726 | $ | 75,345 | $ | 77,008 | ||||||||||
Net income reconciliation | ||||||||||||||||||||
Net income (GAAP) | $ | 49,012 | $ | 48,362 | $ | 44,085 | $ | 44,262 | $ | 45,137 | ||||||||||
Merger-related and other charges | (74 | ) | 2,605 | 4,087 | 739 | 1,234 | ||||||||||||||
Income tax benefit of merger-related and other charges | 17 | (600 | ) | (940 | ) | (172 | ) | (604 | ) | |||||||||||
Net income - operating | $ | 48,955 | $ | 50,367 | $ | 47,232 | $ | 44,829 | $ | 45,767 | ||||||||||
Diluted income per common share reconciliation | ||||||||||||||||||||
Diluted income per common share (GAAP) | $ | 0.61 | $ | 0.60 | $ | 0.55 | $ | 0.55 | $ | 0.56 | ||||||||||
Merger-related and other charges | — | 0.03 | 0.04 | 0.01 | 0.01 | |||||||||||||||
Diluted income per common share - operating | $ | 0.61 | $ | 0.63 | $ | 0.59 | $ | 0.56 | $ | 0.57 | ||||||||||
Book value per common share reconciliation | ||||||||||||||||||||
Book value per common share (GAAP) | $ | 20.53 | $ | 20.16 | $ | 19.65 | $ | 18.93 | $ | 18.24 | ||||||||||
Effect of goodwill and other intangibles | (4.25 | ) | (4.26 | ) | (4.27 | ) | (4.00 | ) | (4.00 | ) | ||||||||||
Tangible book value per common share | $ | 16.28 | $ | 15.90 | $ | 15.38 | $ | 14.93 | $ | 14.24 | ||||||||||
Return on tangible common equity reconciliation | ||||||||||||||||||||
Return on common equity (GAAP) | 12.07 | % | 12.16 | % | 11.45 | % | 11.85 | % | 12.08 | % | ||||||||||
Merger-related and other charges | (0.01 | ) | 0.51 | 0.82 | 0.15 | 0.17 | ||||||||||||||
Return on common equity - operating | 12.06 | 12.67 | 12.27 | 12.00 | 12.25 | |||||||||||||||
Effect of goodwill and other intangibles | 3.43 | 3.71 | 3.61 | 3.46 | 3.63 | |||||||||||||||
Return on tangible common equity - operating | 15.49 | % | 16.38 | % | 15.88 | % | 15.46 | % | 15.88 | % | ||||||||||
Return on assets reconciliation | ||||||||||||||||||||
Return on assets (GAAP) | 1.50 | % | 1.51 | % | 1.40 | % | 1.44 | % | 1.43 | % | ||||||||||
Merger-related and other charges | — | 0.07 | 0.10 | 0.01 | 0.02 | |||||||||||||||
Return on assets - operating | 1.50 | % | 1.58 | % | 1.50 | % | 1.45 | % | 1.45 | % | ||||||||||
Efficiency ratio reconciliation | ||||||||||||||||||||
Efficiency ratio (GAAP) | 54.87 | % | 55.64 | % | 57.28 | % | 55.32 | % | 56.73 | % | ||||||||||
Merger-related and other charges | 0.05 | (1.74 | ) | (2.86 | ) | (0.54 | ) | (0.90 | ) | |||||||||||
Efficiency ratio - operating | 54.92 | % | 53.90 | % | 54.42 | % | 54.78 | % | 55.83 | % | ||||||||||
Tangible common equity to tangible assets reconciliation | ||||||||||||||||||||
Equity to total assets (GAAP) | 12.66 | % | 12.53 | % | 12.25 | % | 12.06 | % | 11.59 | % | ||||||||||
Effect of goodwill and other intangibles | (2.34 | ) | (2.37 | ) | (2.39 | ) | (2.30 | ) | (2.30 | ) | ||||||||||
Tangible common equity to tangible assets | 10.32 | % | 10.16 | % | 9.86 | % | 9.76 | % | 9.29 | % | ||||||||||
7
UNITED COMMUNITY BANKS, INC. | ||||||||||||||||||||
Non-GAAP Performance Measures Reconciliation | ||||||||||||||||||||
Selected Financial Information- Annual | ||||||||||||||||||||
For the Twelve Months Ended December 31, | ||||||||||||||||||||
(in thousands, except per share data) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Expense reconciliation | ||||||||||||||||||||
Expenses (GAAP) | $ | 322,245 | $ | 306,285 | $ | 267,611 | $ | 241,289 | $ | 211,238 | ||||||||||
Merger-related and other charges | (7,357 | ) | (7,345 | ) | (14,662 | ) | (8,122 | ) | (17,995 | ) | ||||||||||
Expenses - operating | $ | 314,888 | $ | 298,940 | $ | 252,949 | $ | 233,167 | $ | 193,243 | ||||||||||
Net income reconciliation | ||||||||||||||||||||
Net income (GAAP) | $ | 185,721 | $ | 166,111 | $ | 67,821 | $ | 100,656 | $ | 71,578 | ||||||||||
Merger-related and other charges | 7,357 | 7,345 | 14,662 | 8,122 | 17,995 | |||||||||||||||
Income tax benefit of merger-related and other charges | (1,695 | ) | (1,494 | ) | (3,745 | ) | (3,074 | ) | (6,388 | ) | ||||||||||
Impact of tax reform on remeasurement of deferred tax asset | — | — | 38,199 | — | — | |||||||||||||||
Impairment of deferred tax asset on canceled non-qualified stock options | — | — | — | 976 | — | |||||||||||||||
Release of disproportionate tax effects lodged in OCI | — | — | 3,400 | — | — | |||||||||||||||
Net income - operating | $ | 191,383 | $ | 171,962 | $ | 120,337 | $ | 106,680 | $ | 83,185 | ||||||||||
Diluted income per common share reconciliation | ||||||||||||||||||||
Diluted income per common share (GAAP) | $ | 2.31 | $ | 2.07 | $ | 0.92 | $ | 1.40 | $ | 1.09 | ||||||||||
Merger-related and other charges | 0.07 | 0.07 | 0.14 | 0.07 | 0.18 | |||||||||||||||
Impact of tax reform on remeasurement of deferred tax asset | — | — | 0.52 | — | — | |||||||||||||||
Impairment of deferred tax asset on canceled non-qualified stock options | — | — | — | 0.01 | — | |||||||||||||||
Release of disproportionate tax effects lodged in OCI | — | — | 0.05 | — | — | |||||||||||||||
Diluted income per common share - operating | $ | 2.38 | $ | 2.14 | $ | 1.63 | $ | 1.48 | $ | 1.27 | ||||||||||
Book value per common share reconciliation | ||||||||||||||||||||
Book value per common share (GAAP) | $ | 20.53 | $ | 18.24 | $ | 16.67 | $ | 15.06 | $ | 14.02 | ||||||||||
Effect of goodwill and other intangibles | (4.25 | ) | (4.00 | ) | (3.02 | ) | (2.11 | ) | (1.96 | ) | ||||||||||
Tangible book value per common share | $ | 16.28 | $ | 14.24 | $ | 13.65 | $ | 12.95 | $ | 12.06 | ||||||||||
Return on tangible common equity reconciliation | ||||||||||||||||||||
Return on common equity (GAAP) | 11.89 | % | 11.60 | % | 5.67 | % | 9.41 | % | 8.15 | % | ||||||||||
Merger-related and other charges | 0.36 | 0.41 | 0.92 | 0.48 | 1.33 | |||||||||||||||
Impact of tax reform on remeasurement of deferred tax asset | — | — | 3.20 | — | — | |||||||||||||||
Impairment of deferred tax asset on canceled non-qualified stock options | — | — | — | 0.09 | — | |||||||||||||||
Release of disproportionate tax effects lodged in OCI | — | — | 0.28 | — | — | |||||||||||||||
Return on common equity - operating | 12.25 | 12.01 | 10.07 | 9.98 | 9.48 | |||||||||||||||
Effect of goodwill and other intangibles | 3.56 | 3.68 | 1.95 | 1.88 | 0.76 | |||||||||||||||
Return on tangible common equity - operating | 15.81 | % | 15.69 | % | 12.02 | % | 11.86 | % | 10.24 | % | ||||||||||
Return on assets reconciliation | ||||||||||||||||||||
Return on assets (GAAP) | 1.46 | % | 1.35 | % | 0.62 | % | 1.00 | % | 0.85 | % | ||||||||||
Merger-related and other charges | 0.05 | 0.05 | 0.09 | 0.05 | 0.13 | |||||||||||||||
Impact of tax reform on remeasurement of deferred tax asset | — | — | 0.35 | — | — | |||||||||||||||
Impairment of deferred tax asset on canceled non-qualified stock options | — | — | — | 0.01 | — | |||||||||||||||
Release of disproportionate tax effects lodged in OCI | — | — | 0.03 | — | — | |||||||||||||||
Return on assets - operating | 1.51 | % | 1.40 | % | 1.09 | % | 1.06 | % | 0.98 | % | ||||||||||
Efficiency ratio reconciliation | ||||||||||||||||||||
Efficiency ratio (GAAP) | 55.77 | % | 57.31 | % | 59.95 | % | 59.80 | % | 63.96 | % | ||||||||||
Merger-related and other charges | (1.27 | ) | (1.37 | ) | (3.28 | ) | (2.02 | ) | (5.45 | ) | ||||||||||
Efficiency ratio - operating | 54.50 | % | 55.94 | % | 56.67 | % | 57.78 | % | 58.51 | % | ||||||||||
Tangible common equity to tangible assets reconciliation | ||||||||||||||||||||
Equity to total assets (GAAP) | 12.66 | % | 11.59 | % | 10.94 | % | 10.05 | % | 10.58 | % | ||||||||||
Effect of goodwill and other intangibles | (2.34 | ) | (2.30 | ) | (1.80 | ) | (1.28 | ) | (1.33 | ) | ||||||||||
Effect of preferred equity | — | — | — | — | (0.10 | ) | ||||||||||||||
Tangible common equity to tangible assets | 10.32 | % | 9.29 | % | 9.14 | % | 8.77 | % | 9.15 | % | ||||||||||
8
UNITED COMMUNITY BANKS, INC. | |||||||||||||||||||||||||||
Financial Highlights | |||||||||||||||||||||||||||
Loan Portfolio Composition at Period-End | |||||||||||||||||||||||||||
2019 | 2018 | Linked Quarter Change | Year over Year Change | ||||||||||||||||||||||||
(in millions) | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Fourth Quarter | ||||||||||||||||||||||
LOANS BY CATEGORY | |||||||||||||||||||||||||||
Owner occupied commercial RE | $ | 1,720 | $ | 1,692 | $ | 1,658 | $ | 1,620 | $ | 1,648 | $ | 28 | $ | 72 | |||||||||||||
Income producing commercial RE | 2,008 | 1,934 | 1,939 | 1,867 | 1,812 | 74 | 196 | ||||||||||||||||||||
Commercial & industrial | 1,221 | 1,271 | 1,299 | 1,284 | 1,278 | (50 | ) | (57 | ) | ||||||||||||||||||
Commercial construction | 976 | 1,001 | 983 | 866 | 796 | (25 | ) | 180 | |||||||||||||||||||
Equipment financing | 745 | 729 | 674 | 606 | 565 | 16 | 180 | ||||||||||||||||||||
Total commercial | 6,670 | 6,627 | 6,553 | 6,243 | 6,099 | 43 | 571 | ||||||||||||||||||||
Residential mortgage | 1,118 | 1,121 | 1,108 | 1,064 | 1,049 | (3 | ) | 69 | |||||||||||||||||||
Home equity lines of credit | 661 | 669 | 675 | 684 | 694 | (8 | ) | (33 | ) | ||||||||||||||||||
Residential construction | 236 | 229 | 219 | 200 | 211 | 7 | 25 | ||||||||||||||||||||
Consumer | 128 | 257 | 283 | 302 | 330 | (129 | ) | (202 | ) | ||||||||||||||||||
Total loans | $ | 8,813 | $ | 8,903 | $ | 8,838 | $ | 8,493 | $ | 8,383 | $ | (90 | ) | $ | 430 | ||||||||||||
LOANS BY MARKET | |||||||||||||||||||||||||||
North Georgia | $ | 967 | $ | 1,002 | $ | 1,002 | $ | 970 | $ | 981 | $ | (35 | ) | $ | (14 | ) | |||||||||||
Atlanta | 1,762 | 1,740 | 1,745 | 1,524 | 1,507 | 22 | 255 | ||||||||||||||||||||
North Carolina | 1,156 | 1,117 | 1,084 | 1,074 | 1,072 | 39 | 84 | ||||||||||||||||||||
Coastal Georgia | 631 | 611 | 604 | 603 | 588 | 20 | 43 | ||||||||||||||||||||
Gainesville | 246 | 246 | 244 | 243 | 247 | — | (1 | ) | |||||||||||||||||||
East Tennessee | 421 | 435 | 446 | 458 | 477 | (14 | ) | (56 | ) | ||||||||||||||||||
South Carolina | 1,708 | 1,705 | 1,674 | 1,674 | 1,645 | 3 | 63 | ||||||||||||||||||||
Commercial Banking Solutions | 1,922 | 1,916 | 1,884 | 1,766 | 1,658 | 6 | 264 | ||||||||||||||||||||
Indirect auto | — | 131 | 155 | 181 | 208 | (131 | ) | (208 | ) | ||||||||||||||||||
Total loans | $ | 8,813 | $ | 8,903 | $ | 8,838 | $ | 8,493 | $ | 8,383 | $ | (90 | ) | $ | 430 | ||||||||||||
9
UNITED COMMUNITY BANKS, INC. | |||||||||||||||||||
Financial Highlights | |||||||||||||||||||
Loan Portfolio Composition at Year-End | |||||||||||||||||||
(in millions) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||
LOANS BY CATEGORY | |||||||||||||||||||
Owner occupied commercial RE | $ | 1,720 | $ | 1,648 | $ | 1,924 | $ | 1,650 | $ | 1,571 | |||||||||
Income producing commercial RE | 2,008 | 1,812 | 1,595 | 1,282 | 1,021 | ||||||||||||||
Commercial & industrial | 1,221 | 1,278 | 1,131 | 1,070 | 785 | ||||||||||||||
Commercial construction | 976 | 796 | 712 | 634 | 518 | ||||||||||||||
Equipment financing | 745 | 565 | — | — | — | ||||||||||||||
Total commercial | 6,670 | 6,099 | 5,362 | 4,636 | 3,895 | ||||||||||||||
Residential mortgage | 1,118 | 1,049 | 974 | 857 | 764 | ||||||||||||||
Home equity lines of credit | 661 | 694 | 731 | 655 | 589 | ||||||||||||||
Residential construction | 236 | 211 | 183 | 190 | 176 | ||||||||||||||
Consumer | 128 | 330 | 486 | 583 | 571 | ||||||||||||||
Total loans | $ | 8,813 | $ | 8,383 | $ | 7,736 | $ | 6,921 | $ | 5,995 | |||||||||
LOANS BY MARKET | |||||||||||||||||||
North Georgia | $ | 967 | $ | 981 | $ | 1,019 | $ | 1,097 | $ | 1,125 | |||||||||
Atlanta | 1,762 | 1,507 | 1,510 | 1,399 | 1,259 | ||||||||||||||
North Carolina | 1,156 | 1,072 | 1,049 | 545 | 549 | ||||||||||||||
Coastal Georgia | 631 | 588 | 630 | 581 | 537 | ||||||||||||||
Gainesville | 246 | 247 | 248 | 248 | 254 | ||||||||||||||
East Tennessee | 421 | 477 | 475 | 504 | 504 | ||||||||||||||
South Carolina | 1,708 | 1,645 | 1,486 | 1,233 | 819 | ||||||||||||||
Commercial Banking Solutions | 1,922 | 1,658 | 961 | 855 | 492 | ||||||||||||||
Indirect auto | — | 208 | 358 | 459 | 456 | ||||||||||||||
Total loans | $ | 8,813 | $ | 8,383 | $ | 7,736 | $ | 6,921 | $ | 5,995 | |||||||||
10
UNITED COMMUNITY BANKS, INC. | ||||||||||||
Financial Highlights | ||||||||||||
Credit Quality | ||||||||||||
2019 | ||||||||||||
(in thousands) | Fourth Quarter | Third Quarter | Second Quarter | |||||||||
NONACCRUAL LOANS | ||||||||||||
Owner occupied RE | $ | 10,544 | $ | 8,430 | $ | 8,177 | ||||||
Income producing RE | 1,996 | 2,030 | 1,331 | |||||||||
Commercial & industrial | 2,545 | 2,625 | 2,366 | |||||||||
Commercial construction | 2,277 | 1,894 | 1,650 | |||||||||
Equipment financing | 3,141 | 1,974 | 2,047 | |||||||||
Total commercial | 20,503 | 16,953 | 15,571 | |||||||||
Residential mortgage | 10,567 | 9,475 | 8,012 | |||||||||
Home equity lines of credit | 3,173 | 3,065 | 1,978 | |||||||||
Residential construction | 939 | 597 | 494 | |||||||||
Consumer | 159 | 742 | 542 | |||||||||
Total | $ | 35,341 | $ | 30,832 | $ | 26,597 | ||||||
2019 | |||||||||||||||||||||
Fourth Quarter | Third Quarter | Second 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 | $ | (208 | ) | (0.05 | )% | $ | (39 | ) | (0.01 | )% | $ | (58 | ) | (0.01 | )% | ||||||
Income producing RE | 95 | 0.02 | 431 | 0.09 | 241 | 0.05 | |||||||||||||||
Commercial & industrial | 1,809 | 0.58 | 691 | 0.21 | 1,141 | 0.35 | |||||||||||||||
Commercial construction | (140 | ) | (0.06 | ) | (247 | ) | (0.10 | ) | (162 | ) | (0.07 | ) | |||||||||
Equipment financing | 1,550 | 0.84 | 1,174 | 0.67 | 890 | 0.56 | |||||||||||||||
Total commercial | 3,106 | 0.19 | 2,010 | 0.12 | 2,052 | 0.13 | |||||||||||||||
Residential mortgage | 89 | 0.03 | 158 | 0.06 | (125 | ) | (0.05 | ) | |||||||||||||
Home equity lines of credit | 198 | 0.12 | 83 | 0.05 | (111 | ) | (0.07 | ) | |||||||||||||
Residential construction | (24 | ) | (0.04 | ) | (5 | ) | (0.01 | ) | 199 | 0.38 | |||||||||||
Consumer | 556 | 0.90 | 477 | 0.70 | 423 | 0.58 | |||||||||||||||
Total | $ | 3,925 | 0.18 | $ | 2,723 | 0.12 | $ | 2,438 | 0.11 | ||||||||||||
(1) Annualized. | |||||||||||||||||||||
11
UNITED COMMUNITY BANKS, INC. Consolidated Balance Sheets (Unaudited) | ||||||||
(in thousands, except share and per share data) | December 31, 2019 | December 31, 2018 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 125,844 | $ | 126,083 | ||||
Interest-bearing deposits in banks | 389,362 | 201,182 | ||||||
Cash and cash equivalents | 515,206 | 327,265 | ||||||
Debt securities available-for-sale | 2,274,581 | 2,628,467 | ||||||
Debt securities held-to-maturity (fair value $287,904 and $268,803) | 283,533 | 274,407 | ||||||
Loans held for sale, at fair value | 58,484 | 18,935 | ||||||
Loans, net of unearned income | 8,812,553 | 8,383,401 | ||||||
Less allowance for loan losses | (62,089 | ) | (61,203 | ) | ||||
Loans, net | 8,750,464 | 8,322,198 | ||||||
Premises and equipment, net | 215,976 | 206,140 | ||||||
Bank owned life insurance | 202,664 | 192,616 | ||||||
Accrued interest receivable | 32,660 | 35,413 | ||||||
Net deferred tax asset | 34,059 | 64,224 | ||||||
Derivative financial instruments | 35,007 | 24,705 | ||||||
Goodwill and other intangible assets | 342,247 | 324,072 | ||||||
Other assets | 171,135 | 154,750 | ||||||
Total assets | $ | 12,916,016 | $ | 12,573,192 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Deposits: | ||||||||
Noninterest-bearing demand | $ | 3,477,979 | $ | 3,210,220 | ||||
NOW and interest-bearing demand | 2,461,895 | 2,369,631 | ||||||
Money market | 2,230,628 | 2,002,670 | ||||||
Savings | 706,467 | 669,886 | ||||||
Time | 1,859,574 | 1,598,391 | ||||||
Brokered | 160,701 | 683,715 | ||||||
Total deposits | 10,897,244 | 10,534,513 | ||||||
Federal Home Loan Bank advances | — | 160,000 | ||||||
Long-term debt | 212,664 | 267,189 | ||||||
Derivative financial instruments | 15,516 | 26,433 | ||||||
Accrued expenses and other liabilities | 154,900 | 127,503 | ||||||
Total liabilities | 11,280,324 | 11,115,638 | ||||||
Shareholders' equity: | ||||||||
Common stock, $1 par value; 150,000,000 shares authorized; 79,013,729 and 79,234,077 shares issued and outstanding | 79,014 | 79,234 | ||||||
Common stock issuable; 664,640 and 674,499 shares | 11,491 | 10,744 | ||||||
Capital surplus | 1,496,641 | 1,499,584 | ||||||
Retained earnings (accumulated deficit) | 40,152 | (90,419 | ) | |||||
Accumulated other comprehensive income (loss) | 8,394 | (41,589 | ) | |||||
Total shareholders’ equity | 1,635,692 | 1,457,554 | ||||||
Total liabilities and shareholders’ equity | $ | 12,916,016 | $ | 12,573,192 | ||||
12
UNITED COMMUNITY BANKS, INC. Consolidated Statements of Income (Unaudited) | ||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
(in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest revenue: | ||||||||||||||||
Loans, including fees | $ | 118,464 | $ | 112,087 | $ | 476,039 | $ | 420,383 | ||||||||
Investment securities, including tax exempt of $1,155 and $1,140, and $4,564 and $4,189 | 16,846 | 21,237 | 74,484 | 77,685 | ||||||||||||
Deposits in banks and short-term investments | 1,109 | 530 | 2,183 | 2,012 | ||||||||||||
Total interest revenue | 136,419 | 133,854 | 552,706 | 500,080 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits: | ||||||||||||||||
NOW and interest-bearing demand | 3,382 | 3,166 | 13,665 | 7,649 | ||||||||||||
Money market | 4,883 | 3,985 | 18,983 | 11,838 | ||||||||||||
Savings | 34 | 33 | 149 | 150 | ||||||||||||
Time | 8,372 | 7,006 | 34,059 | 19,906 | ||||||||||||
Deposits | 16,671 | 14,190 | 66,856 | 39,543 | ||||||||||||
Short-term borrowings | — | 340 | 838 | 1,112 | ||||||||||||
Federal Home Loan Bank advances | 2 | 794 | 2,697 | 6,345 | ||||||||||||
Long-term debt | 3,108 | 3,651 | 12,921 | 14,330 | ||||||||||||
Total interest expense | 19,781 | 18,975 | 83,312 | 61,330 | ||||||||||||
Net interest revenue | 116,638 | 114,879 | 469,394 | 438,750 | ||||||||||||
Provision for credit losses | 3,500 | 2,100 | 13,150 | 9,500 | ||||||||||||
Net interest revenue after provision for credit losses | 113,138 | 112,779 | 456,244 | 429,250 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges and fees | 9,368 | 9,166 | 36,797 | 35,997 | ||||||||||||
Mortgage loan gains and related fees | 9,395 | 3,082 | 27,145 | 19,010 | ||||||||||||
Brokerage fees | 1,526 | 1,593 | 6,150 | 5,191 | ||||||||||||
Gains from other loan sales, net | 2,455 | 2,493 | 6,867 | 9,277 | ||||||||||||
Securities (losses) gains, net | (903 | ) | 646 | (1,021 | ) | (656 | ) | |||||||||
Other | 8,342 | 6,065 | 28,775 | 24,142 | ||||||||||||
Total noninterest income | 30,183 | 23,045 | 104,713 | 92,961 | ||||||||||||
Total revenue | 143,321 | 135,824 | 560,957 | 522,211 | ||||||||||||
Noninterest expenses: | ||||||||||||||||
Salaries and employee benefits | 50,279 | 45,631 | 196,440 | 181,015 | ||||||||||||
Occupancy | 5,926 | 5,842 | 23,350 | 22,781 | ||||||||||||
Communications and equipment | 6,380 | 6,206 | 24,613 | 21,277 | ||||||||||||
FDIC assessments and other regulatory charges | 1,330 | 1,814 | 4,901 | 8,491 | ||||||||||||
Professional fees | 5,098 | 4,105 | 17,028 | 15,540 | ||||||||||||
Postage, printing and supplies | 1,637 | 1,520 | 6,370 | 6,416 | ||||||||||||
Advertising and public relations | 1,914 | 1,650 | 6,170 | 5,991 | ||||||||||||
Amortization of intangibles | 1,093 | 1,420 | 4,938 | 6,846 | ||||||||||||
Merger-related and other charges | (74 | ) | 965 | 6,907 | 5,414 | |||||||||||
Other | 7,841 | 9,089 | 31,528 | 32,514 | ||||||||||||
Total noninterest expenses | 81,424 | 78,242 | 322,245 | 306,285 | ||||||||||||
Net income before income taxes | 61,897 | 57,582 | 238,712 | 215,926 | ||||||||||||
Income tax expense | 12,885 | 12,445 | 52,991 | 49,815 | ||||||||||||
Net income | $ | 49,012 | $ | 45,137 | $ | 185,721 | $ | 166,111 | ||||||||
Net income available to common shareholders | $ | 48,617 | $ | 44,801 | $ | 184,346 | $ | 164,927 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.61 | $ | 0.56 | $ | 2.31 | $ | 2.07 | ||||||||
Diluted | 0.61 | 0.56 | 2.31 | 2.07 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 79,659 | 79,884 | 79,700 | 79,662 | ||||||||||||
Diluted | 79,669 | 79,890 | 79,708 | 79,671 | ||||||||||||
13
Average Consolidated Balance Sheets and Net Interest Analysis |
For the Three Months Ended December 31, |
2019 | 2018 | |||||||||||||||||||||
(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) | $ | 8,890,272 | $ | 118,262 | 5.28 | % | $ | 8,306,270 | $ | 112,020 | 5.35 | % | ||||||||||
Taxable securities (3) | 2,306,065 | 15,691 | 2.72 | 2,843,085 | 20,097 | 2.83 | ||||||||||||||||
Tax-exempt securities (FTE) (1)(3) | 179,744 | 1,551 | 3.45 | 161,284 | 1,535 | 3.81 | ||||||||||||||||
Federal funds sold and other interest-earning assets | 456,055 | 1,586 | 1.39 | 222,931 | 845 | 1.52 | ||||||||||||||||
Total interest-earning assets (FTE) | 11,832,136 | 137,090 | 4.60 | 11,533,570 | 134,497 | 4.63 | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||
Allowance for loan losses | (63,601 | ) | (61,992 | ) | ||||||||||||||||||
Cash and due from banks | 120,936 | 125,066 | ||||||||||||||||||||
Premises and equipment | 219,487 | 214,590 | ||||||||||||||||||||
Other assets (3) | 836,586 | 694,215 | ||||||||||||||||||||
Total assets | $ | 12,945,544 | $ | 12,505,449 | ||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
NOW and interest-bearing demand | $ | 2,398,396 | 3,382 | 0.56 | $ | 2,134,828 | 3,166 | 0.59 | ||||||||||||||
Money market | 2,321,352 | 4,883 | 0.83 | 2,126,840 | 3,985 | 0.74 | ||||||||||||||||
Savings | 704,454 | 34 | 0.02 | 675,265 | 33 | 0.02 | ||||||||||||||||
Time | 1,880,174 | 7,975 | 1.68 | 1,584,011 | 4,297 | 1.08 | ||||||||||||||||
Brokered time deposits | 85,781 | 397 | 1.84 | 490,748 | 2,709 | 2.19 | ||||||||||||||||
Total interest-bearing deposits | 7,390,157 | 16,671 | 0.89 | 7,011,692 | 14,190 | 0.80 | ||||||||||||||||
Federal funds purchased and other borrowings | — | — | — | 55,095 | 340 | 2.45 | ||||||||||||||||
Federal Home Loan Bank advances | 435 | 2 | 1.82 | 140,869 | 794 | 2.24 | ||||||||||||||||
Long-term debt | 232,726 | 3,108 | 5.30 | 272,313 | 3,651 | 5.32 | ||||||||||||||||
Total borrowed funds | 233,161 | 3,110 | 5.29 | 468,277 | 4,785 | 4.05 | ||||||||||||||||
Total interest-bearing liabilities | 7,623,318 | 19,781 | 1.03 | 7,479,969 | 18,975 | 1.01 | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||
Noninterest-bearing deposits | 3,533,746 | 3,294,385 | ||||||||||||||||||||
Other liabilities | 165,148 | 311,461 | ||||||||||||||||||||
Total liabilities | 11,322,212 | 11,085,815 | ||||||||||||||||||||
Shareholders’ equity | 1,623,332 | 1,419,634 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 12,945,544 | $ | 12,505,449 | ||||||||||||||||||
Net interest revenue (FTE) | $ | 117,309 | $ | 115,522 | ||||||||||||||||||
Net interest-rate spread (FTE) | 3.57 | % | 3.62 | % | ||||||||||||||||||
Net interest margin (FTE) (4) | 3.93 | % | 3.97 | % | ||||||||||||||||||
(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 $36.0 million in 2019 and unrealized losses of $59.5 million in 2018 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. |
14
Average Consolidated Balance Sheets and Net Interest Analysis |
For the Twelve Months Ended December 31, |
2019 | 2018 | |||||||||||||||||||||
(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) | $ | 8,708,035 | $ | 475,803 | 5.46 | % | $ | 8,170,143 | $ | 420,001 | 5.14 | % | ||||||||||
Taxable securities (3) | 2,475,102 | 69,920 | 2.82 | 2,745,715 | 73,496 | 2.68 | ||||||||||||||||
Tax-exempt securities (FTE) (1)(3) | 171,549 | 6,130 | 3.57 | 152,855 | 5,641 | 3.69 | ||||||||||||||||
Federal funds sold and other interest-earning assets | 254,370 | 3,499 | 1.38 | 213,137 | 2,968 | 1.39 | ||||||||||||||||
Total interest-earning assets (FTE) | 11,609,056 | 555,352 | 4.78 | 11,281,850 | 502,106 | 4.45 | ||||||||||||||||
Non-interest-earning assets: | ||||||||||||||||||||||
Allowance for loan losses | (62,900 | ) | (61,443 | ) | ||||||||||||||||||
Cash and due from banks | 121,649 | 135,345 | ||||||||||||||||||||
Premises and equipment | 220,523 | 216,646 | ||||||||||||||||||||
Other assets (3) | 798,649 | 711,671 | ||||||||||||||||||||
Total assets | $ | 12,686,977 | $ | 12,284,069 | ||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
NOW and interest-bearing demand | $ | 2,249,713 | 13,665 | 0.61 | $ | 2,107,831 | 7,649 | 0.36 | ||||||||||||||
Money market | 2,221,478 | 18,983 | 0.85 | 2,117,216 | 11,838 | 0.56 | ||||||||||||||||
Savings | 690,028 | 149 | 0.02 | 672,735 | 150 | 0.02 | ||||||||||||||||
Time | 1,791,319 | 28,313 | 1.58 | 1,547,221 | 12,585 | 0.81 | ||||||||||||||||
Brokered time deposits | 240,646 | 5,746 | 2.39 | 347,072 | 7,321 | 2.11 | ||||||||||||||||
Total interest-bearing deposits | 7,193,184 | 66,856 | 0.93 | 6,792,075 | 39,543 | 0.58 | ||||||||||||||||
Federal funds purchased and other borrowings | 33,504 | 838 | 2.50 | 57,376 | 1,112 | 1.94 | ||||||||||||||||
Federal Home Loan Bank advances | 106,973 | 2,697 | 2.52 | 328,871 | 6,345 | 1.93 | ||||||||||||||||
Long-term debt | 247,732 | 12,921 | 5.22 | 290,004 | 14,330 | 4.94 | ||||||||||||||||
Total borrowed funds | 388,209 | 16,456 | 4.24 | 676,251 | 21,787 | 3.22 | ||||||||||||||||
Total interest-bearing liabilities | 7,581,393 | 83,312 | 1.10 | 7,468,326 | 61,330 | 0.82 | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||
Noninterest-bearing deposits | 3,385,431 | 3,207,625 | ||||||||||||||||||||
Other liabilities | 164,550 | 227,980 | ||||||||||||||||||||
Total liabilities | 11,131,374 | 10,903,931 | ||||||||||||||||||||
Shareholders’ equity | 1,555,603 | 1,380,138 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 12,686,977 | $ | 12,284,069 | ||||||||||||||||||
Net interest revenue (FTE) | $ | 472,040 | $ | 440,776 | ||||||||||||||||||
Net interest-rate spread (FTE) | 3.68 | % | 3.63 | % | ||||||||||||||||||
Net interest margin (FTE) (4) | 4.07 | % | 3.91 | % | ||||||||||||||||||
(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 $12.8 million in 2019 and unrealized losses of $45.2 million in 2018 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. |
15
About United Community Banks, Inc.
United Community Banks, Inc. (NASDAQ: UCBI) is a bank holding company headquartered in Blairsville, Georgia, with executive offices in Greenville, South Carolina. United is one of the southeast region’s largest full-service financial institutions with $12.9 billion in assets, and 149 offices in Georgia, North Carolina, South Carolina and Tennessee. It operates principally through United Community Bank, its bank subsidiary, which specializes in personalized community banking services for individuals, small businesses and companies. Services include a full range of consumer and commercial banking products, including mortgage, advisory, and treasury management. Respected national research firms consistently recognize United Community Bank for outstanding customer service. For five of the past six years, J.D. Power has ranked United Community Bank first in customer satisfaction in the Southeast. In 2019, for the sixth consecutive year, Forbes magazine included United on its list of the 100 Best Banks in America, and for the first time included United on its list of The World’s Best Banks. Additional information about UCBI and the Bank 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,” “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,” “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.
# # #
16
4Q INVESTOR PRESENTATION January 21, 2020 Member FDIC. © 2020 United Community Bank
Disclosures CAUTIONARY STATEMENT This Investor Presentation contains forward-looking statements, as defined by federal securities laws, including statements about United Community Banks, Inc. (“United”) and its financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of our operations and future financial performance. Our operations and such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward- looking statements to differ materially from actual results, please refer to United’s filings with the Securities and Exchange Commission, including its 2018 Annual Report on Form 10-K under the section entitled “Forward-Looking Statements.” Forward- looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements. NON-GAAP MEASURES This Investor Presentation includes financial information determined by methods other than in accordance with generally accepted accounting principles (“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 measures include: “Earnings per share – operating,” “Diluted earnings per share – operating,” “Tangible book value per share,” “Return on common equity – operating,” “Return on tangible common equity – operating,” “Return on assets – operating,” “Efficiency ratio – operating,” “Expenses – operating,” and “Tangible common equity to tangible assets.” Management has included these non-GAAP measures because it believes these measures may provide useful supplemental information for evaluating United’s underlying performance trends. Further, management uses these measures in managing and evaluating United’s business and intends to refer to them in discussions about our operations and performance. Operating performance 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 GAAP measures can be found in the ‘Non-GAAP Reconciliation Tables’ included in the exhibits to this Presentation. 2
United Community Banks, Inc. $12.9 $8.8 Committed to Service Since 1950 Billion in Assets Billion in Total Loans $2.4 $10.9 Billion in Total Deposits Billion Market Cap 186% Price / TBV 1.50% Return on average assets - 13.2x operating(1) Price / EPS (2020E) Full Service Branch Network Extended Navitas and SBA Markets 54.9% 13.0% Efficiency ratio - GAAP Metro-focused branch network with Offered in 48 states across the CET1 locations in the fastest growing MSAs in continental U.S. the Southeast Our SBA business has $132.3 million in 54.9% Top 10 market share in GA and SC 2019 originations and includes both an Efficiency ratio – operating(1) 142 branch locations, 7 loan production in-footprint business and a national offices, and 5 mortgage loan offices business with 11 specific verticals across GA, NC, SC and TN Our Navitas subsidiary lends on essential use commercial equipment and makes up 8.5% of loans 0.61% 0.28% Cost of Deposits One of the lowest cost of NPAs / Assets deposit bases in the Market data as of January 17, 2020 (1) See non-GAAP reconciliation table slides at the end of the exhibits for a reconciliation of Southeast operating performance measures to GAAP performance measures 3
12.1% Return on common equity - $0.61 GAAP Earnings per share - 15.5% 4Q19 Highlights GAAP Return on tangible common equity - operating (1) Earnings Per Share Return on Assets $0.63 1.58% $0.60 $0.61 $0.61 $0.61 13% $0.56 $0.57 1.51% 1.50%1.50% Earnings per share - YOY growth in (1) 1.45% operating, up 7% YOY Book value per share 1.43% 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 GAAP Operating (1) GAAP Operating (1) 1.50% 14% YOY growth in Tangible Return on assets - GAAP book value per share Book Value Per Share Dividends Per Share $20.16 $20.53 $0.68 $18.24 $0.58 $15.90 $16.28 Annualized 4Q EOP $14.24 $0.38 1.50% loan growth of Return on assets - operating (1) 2%, excluding indirect auto of $131 mm 4Q18 3Q19 4Q19 2017 2018 2019 GAAP Operating (1) Dividends per share Annualized 4Q EOP $0.18 deposit growth of Quarterly Dividend, 5% or $140 mm up 13% YOY (1) See non-GAAP reconciliation table slides at the end of the exhibits for a 4 reconciliation of operating performance measures to GAAP performance
Net Interest Revenue / Margin(1) $ in millions $119.3 $116.6 $114.9 Net interest revenue decreased $2.7 mm (2%) vs. 3Q19 and increased $1.7 mm (2%) vs. 4Q18 Net interest margin decreased 19 bps from 3Q19 and decreased 4 bps YoY Approximately 10 bps of the decline in margin from 3Q19 was due to the September and October 2019 Fed rate cuts Accretable yield contributed $3.4 mm or 11 bps to 4Q19 NIM vs. 15 bps in 3Q19 4.12% 4Q19 had an increase of $242 mm in average public 3.97% 3.93% deposit balances vs. 3Q19, which were invested in overnight accounts at narrow spreads that hurt margin by approximately 5 bps Benefited from organic loan growth, a mix change away from wholesale funding, and strong low cost deposit growth 4Q18 3Q19 4Q19 Net Interest Revenue Net Interest Margin (1) (1) Net interest margin is calculated on a fully-taxable equivalent basis 5
Valuable Deposit Mix 4Q19 Total Deposits $10.9 billion 32% of deposits are Noninterest bearing Time deposits 18% DDA UCBI cost of deposits down 2 bps to 0.61% 32% in 4Q19 UCBI cost of deposits significantly lower than Savings 6% KRX peer levels (0.63% in 3Q19 vs. KRX peers at 0.85%) Total deposits up $140 mm from 3Q19; public deposits drove the increase – up $273 mm in 4Q19, offset by lower Demand and Brokered 21% deposits MMDA 23% NOW Note: Peer comparison banks comprise the KBW Regional Bank Index (ticker: KRX) 6 Source: S&P Global Market Intelligence
Strong Core Transaction Deposit Growth $ in billions $7.503 $7.464 $7.399 Noninterest bearing deposits increased $266 mm from 4Q18, which drove the majority of core transaction growth While core transaction deposits were down $39 mm from 3Q19, total core deposits increased $207 mm from 3Q19 to $10.4 bn and increased $784 mm YOY Total brokered deposits down $62 mm from 3Q19 and down $523 mm from 4Q18 as our need for wholesale funding sources continues to decline 2Q19 3Q19 4Q19 Note: Transaction accounts include demand deposits, NOW, money market and savings accounts 7
Loans 4Q19 Total Loans $8.8 billion Linked-quarter loan growth was $41 mm, or 2% annualized, excluding indirect auto of $131 mm Residential Construction Home Equity 3% Full year EOP loan growth excluding indirect 7% auto runoff and sale and the addition of First Residential Madison was 6% Mortgage (1) 13% C&I 4Q19 included $20 mm of Navitas loan sales 42% at a 6.5% gain Other 1% Consumer Sold $103 mm of the indirect auto loan portfolio at year-end Diversified portfolio, weighted towards C&I 23% CRE Well within regulatory guidance on construction and CRE levels The 100%/300% ratios stand at 83% and 210% of 11% Tier 1 risk-based capital, respectively Commercial Construction (1) C&I includes commercial and industrial loans, owner-occupied CRE loans and equipment finance loans 8
Noninterest Income $ in millions $30.2 $29.0 $2.5 $1.6 Linked Quarter Fees up $1.2 mm $23.0 Mortgage fees up $0.7 mm from 3Q19 as originations and $8.7 $9.4 loan sales continued at Q3’s pace despite weaker $2.5 seasonality and also benefitted from a $1.2 mm positive mark on the MSR asset $3.1 SBA fees up $0.20 mm or 12% from 3Q19 to $1.8 mm $1.7 $1.5 Sold $20.0 mm of equipment finance loans at a 6.5% gain $1.6 during 4Q19, which contributed $1.3 mm to noninterest income $7.1 $6.6 $7.4 4Q19 included three non-recurring items including a $1.6 mm BOLI gain, $0.9 mm of security losses and $0.7 mm loss on the sale of the indirect auto portfolio Year-over-Year $9.2 $9.9 $9.4 Fees up $7.2 mm Rate locks up 64% compared to last year ($411 mm in 4Q19 vs. $251 mm in 4Q18) 4Q19 SBA loan sales of $25.9 mm, down 25% from $34.7 4Q18 3Q19 4Q19 mm in 4Q18 due to strategic change to hold more production Service Charges Other Brokerage Mortgage SBA, USDA, Navitas 9
Expense Discipline $ in millions $82.9 $81.4 $81.5 $80.3 $78.2 Linked Quarter $77.0 GAAP expenses decreased 1.8% while operating expenses increased 1.5% Year-over-Year Market expansions and acquisitions drove GAAP 56.7% and operating expenses higher by 4.1% and 5.8%, respectively 55.6% Continued cost control efforts help drive GAAP and operating efficiency ratio improvement of 186 bps and 91 55.8% 54.9% bps, respectively 54.9% 53.9% 4Q18 3Q19 4Q19 Expenses Efficiency Ratio GAAP GAAP (1) Operating (1) Operating (1) See non-GAAP reconciliation table slides at the end of the exhibits for a reconciliation of operating performance 10 measures to GAAP performance measures
Credit Quality Provision for Credit Losses Net Charge-Offs as % $ in millions of Average Loans $3.10 $3.50 $2.10 0.18% 0.12% 0.09% 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 Allowance for Loan Losses Non-Performing Assets as % of Total Assets 0.73% 0.70% 0.70% 0.28% 0.24% 0.20% 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 11
Current Expected Credit Losses (CECL) On January 1st, CECL replaces the current incurred loss methodology with a life-of-loan loss concept We expect that the day one impact of adopting the new standard will increase our allowance for credit losses by approximately 13% to about $74 mm The main drivers for the increase are equipment finance loans and in the reserve for unfunded commitments Our model uses a one year forecast and a two year reversion period We expect a modest impact to equity with CECL adoption Expected Impact of CECL Projected Impact of CECL (DAY 1) ACL increase $8.5 mm +/- 10% Reclass from discount $4.3 mm Adjust to equity (net of tax)* $3.2 mm *Subject to refinement in our 1Q20 10Q filing 12
Capital Ratios Holding Company 4Q18 3Q19 4Q19* Common Equity Tier 1 Capital 12.2 % 12.4 % 13.0 % Tier 1 Risk-Based Capital 12.4 12.7 13.2 Total Risk-Based Capital 14.3 14.5 15.0 Leverage 9.6 10.2 10.3 Tangible Common Equity to 9.3 10.2 10.3 Tangible Assets All regulatory capital ratios significantly above “well-capitalized” Quarterly dividend of $0.18 per share (up 13% YoY) No share repurchases in 4Q19; repurchased a total of 500,495 shares during 2019 at an average price of $26.01 for a total of $13.0 mm *4Q19 regulatory capital ratios are preliminary 13
4Q INVESTOR PRESENTATION Exhibits Member FDIC. © 2020 United Community Bank
Non-GAAP Reconciliation Tables $ in thousands, except per share data 4Q18 1Q19 2Q19 3Q19 4Q19 (1) (1) (1) (1) (1) Expenses Expenses - GAAP $ 78,242 $ 76,084 $ 81,813 $ 82,924 $ 81,424 Merger-related and other charges (1,234) (739) (4,087) (2,605) 74 Expenses - Operating $ 77,008 $ 75,345 $ 77,726 $ 80,319 $ 81,498 Diluted Earnings per share Diluted earnings per share - GAAP $ 0.56 $ 0.55 $ 0.55 $ 0.60 $ 0.61 Merger-related and other charges 0.01 0.01 0.04 0.03 - Diluted earnings per share - Operating 0.57 0.56 0.59 0.63 0.61 Book Value per share Book Value per share - GAAP $ 18.24 $ 18.93 $ 19.65 $ 20.16 $ 20.53 Effect of goodwill and other intangibles (4.00) (4.00) (4.27) (4.26) (4.25) Tangible book value per share $ 14.24 $ 14.93 $ 15.38 $ 15.90 $ 16.28 Return on Tangible Common Equity Return on common equity - GAAP 12.08 % 11.85 % 11.45 % 12.16 % 12.07 % Effect of merger-related and other charges 0.17 0.15 0.82 0.51 (0.01) Return on common equity - Operating 12.25 12.00 12.27 12.67 12.06 Effect of goodwill and intangibles 3.63 3.46 3.61 3.71 3.43 Return on tangible common equity - Operating 15.88 % 15.46 % 15.88 % 16.38 % 15.49 % (1) Merger-related and other charges for 3Q19, 2Q19, 1Q19 and 4Q18 include $64 thousand, $193 thousand, $193 thousand and $269 thousand, respectively, of intangible amortization resulting from payments made to executives under their change of control agreements. The resulting intangible 15 assets were being amortized over 12 to 24 months. No charges in 4Q19.
Non-GAAP Reconciliation Tables $ in thousands, except per share data 4Q18 1Q19 2Q19 3Q19 4Q19 (1) (1) (1) (1) (1) Return on Assets Return on assets - GAAP 1.43 % 1.44 % 1.40 % 1.51 % 1.50 % Merger-related and other charges 0.02 0.01 0.10 0.07 - Return on assets - Operating 1.45 % 1.45 % 1.50 % 1.58 % 1.50 % Efficiency Ratio Efficiency Ratio - GAAP 56.73 % 55.32 % 57.28 % 55.64 % 54.87 % Merger-related and other charges (0.90) (0.54) (2.86) (1.74) 0.05 Efficiency Ratio - Operating 55.83 % 54.78 % 54.42 % 53.90 % 54.92 % Tangible common equity to tangible assets Common Equity to assets ratio - GAAP 11.59 % 12.06 % 12.26 % 12.53 % 12.66 % Effect of goodwill and intangibles (2.30) (2.30) (2.40) (2.37) (2.34) Tangible common equity to tangible assets ratio 9.29 % 9.76 % 9.86 % 10.16 % 10.32 % (1) Merger-related and other charges for 3Q19, 2Q19, 1Q19 and 4Q18 include $64 thousand, $193 thousand, $193 thousand and $269 thousand, respectively, of intangible amortization resulting from payments made to executives under their change of control agreements. The resulting intangible 16 assets were being amortized over 12 to 24 months. No charges in 4Q19.