SOURCE: United Community Banks, Inc.

UCBI; UNITED COMMUNITY BANKS, INC.; UNITED COMMUNITY BANK; BLAIRSVILLE, GA; UNITED;

October 23, 2014 05:30 ET

United Community Banks, Inc. Reports Earnings of $17.6 Million for Third Quarter 2014, up 38 Percent From a Year Ago

BLAIRSVILLE, GA--(Marketwired - October 23, 2014) - United Community Banks, Inc. (NASDAQ: UCBI)

  • Earnings are 29 cents per diluted share, up 7 percent from second quarter and 38 percent from a year ago
  • Loans up $159 million, or 14 percent annualized
  • Net interest margin increases 11 basis points from second quarter
  • Core transaction deposits up $90 million, or 10 percent annualized

United Community Banks, Inc. (NASDAQ: UCBI) ("United") today reported net income of $17.6 million, or 29 cents per diluted share, for the third quarter of 2014. Earnings per share were up 7 percent from the second quarter, reflecting strong loan growth, a widening net interest margin, and growth in fee revenue. For the first nine months of 2014, United reported net income of $49.4 million, or 81 cents per diluted share.

"By all measures, we had an exceptional third quarter," said Jimmy Tallent, president and chief executive officer. "Strong loan growth and an expanding net interest margin increased net interest revenue by $2 million over the second quarter. Our return on assets rose to 95 basis points, seven basis points higher than the second quarter, and close to our goal of 1 percent. Also, our return on equity was 9.4 percent, up 200 basis points from a year ago.

"Third quarter net loan growth of $159 million was driven by strong production across all of our markets," stated Tallent. "Our strongest area, specialized lending, increased $132 million. This category includes health care, corporate, SBA, asset-based and commercial real estate lending. We also saw solid growth in our Coastal Georgia and Tennessee markets."

Third quarter taxable equivalent net interest revenue totaled $57.0 million, up $2.0 million from the second quarter and up $2.7 million from the third quarter of 2013. The taxable equivalent net interest margin was 3.32 percent, up 11 basis points from the second quarter and six basis points from a year ago.

"Preserving our net interest margin and growing net interest revenue, while minimizing exposure to changes in interest rates, have been top priorities for growing earnings per share," said Tallent. "Our third quarter results confirm that we are on the right path. We remain sharply focused on growing loans and core deposits to increase net interest revenue, while expanding products to grow fee revenue. Second quarter balance sheet management activities, which included restructuring the securities portfolio, interest rate hedges and wholesale borrowings, contributed to the widening net interest margin and growth in net interest revenue. We expect our margin to stabilize at the current level into the fourth quarter and 2015. We are seeing the results of these efforts positively impact our earnings growth."

The third quarter provision for credit losses was $2.0 million, down $200,000 from the second quarter and down $1.0 million from the third quarter of 2013. Third quarter net charge-offs were $3.16 million, compared with $4.18 million in the second quarter and $4.47 million a year ago. Nonperforming assets at quarter-end were $21.9 million, down 8 percent from the second quarter and 28 percent from a year ago. Nonperforming assets at quarter-end represented .29 percent of total assets, compared to .32 percent last quarter and .42 percent a year ago.

Third quarter fee revenue totaled $14.4 million, up $269,000 from the second quarter and $187,000 from the third quarter of 2013. Most of the increase from both prior periods resulted from our growing SBA lending business and related gains on the sales of SBA loans. In the third quarter of 2014, we generated gains on these sales of $945,000 compared with $744,000 in the second quarter. There were no gains from the sale of SBA loans in the third quarter of 2013.

Service charges and fees dipped slightly from both the second quarter and a year ago, mostly due to lower debit card interchange fees. Overdraft fees were also down from the third quarter of 2013. Mortgage fees were up $301,000 from the second quarter, but down $376,000 from a year ago, the decrease reflecting slower mortgage refinancing activity. Closed mortgage loans totaled $84.2 million in the third quarter compared with $68.5 million in the second quarter and $76.6 million in the third quarter of 2013.

Operating expenses were $41.4 million in the third quarter compared to $40.5 million in the second quarter and $40.1 million a year ago. The increase from both prior periods is mostly due to higher staff and incentive costs. Third quarter compensation expense reflects the full cost of additional personnel added through the acquisition of Business Carolina, Inc., which occurred late in the second quarter, as well as staff added for our new vertical SBA business. Occupancy expense was up from the second quarter and a year ago due to higher utilities and maintenance charges, including lease costs for new locations.

Offsetting these increases was a reduction in the deposit insurance assessment rate due to improvement in our credit measures. Additionally, advertising costs were down $245,000 due to one-time branding costs in the second quarter, and other expenses decreased $537,000 primarily due to $486,000 in branch closure and loss share asset costs that were written off last quarter.

"Our operating efficiency ratio improved to 57.96 percent in the third quarter, compared to 58.65 percent in the second quarter," Tallent said. "We continue to focus on growing revenue while controlling costs."

On September 30, 2014, capital ratios were as follows: Tier 1 Risk-Based of 12.1 percent; Total Risk-Based of 13.3 percent; Tier 1 Common Risk-Based of 11.0 percent; and Tier 1 Leverage of 8.7 percent.

"We are beginning to see meaningful improvement in our financial results, reflecting the successes of our strategic growth initiatives," Tallent said. "Our focus on expanding the net interest margin and growing loans, deposits and fee revenue is driving earnings growth. In the third quarter, we saw a return of strong loan growth and meaningful margin expansion despite the ongoing challenging economic environment. Strategic investments in people and new businesses are driving our growth. We will continue investing in our future by hiring top talent to grow our business. As our third quarter results demonstrate, we are on the right track."

Conference Call
United will hold a conference call today, Thursday, October 23, 2014, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 16941301. The conference call also will be webcast and can be accessed by selecting "Calendar of Events" within the Investor Relations section of United's website at www.ucbi.com.

About United Community Banks, Inc.
United Community Banks, Inc. (UCBI) is a bank holding company based in Blairsville, Georgia, with $7.5 billion in assets. The company's banking subsidiary, United Community Bank, is one of the Southeast's largest full-service banks, operating 103 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in personalized community banking services for individuals, small businesses and corporations. A full range of consumer and commercial banking services includes mortgage, advisory, treasury management and other products. National survey organizations consistently recognize United Community Bank for outstanding customer service. Additional information about the company and the bank's full range of products and services can be found at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. 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 2013 Annual Report on Form 10-K under the sections entitled "Forward-Looking Statements" and "Risk Factors." Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

  
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Selected Financial Information  
   
           Third  
   2014   2013   Quarter  
(in thousands, except per share data; taxable equivalent)  Third
Quarter
  Second
Quarter
  First
Quarter
  Fourth
Quarter
  Third
Quarter
  2014-2013
Change
 
 
INCOME SUMMARY                              
Interest revenue  $63,338   $61,783   $60,495   $61,695   $61,426      
Interest expense   6,371    6,833    6,326    5,816    7,169      
 Net interest revenue   56,967    54,950    54,169    55,879    54,257   5 %
Provision for credit losses   2,000    2,200    2,500    3,000    3,000      
Fee revenue   14,412    14,143    12,176    13,519    14,225   1  
 Total revenue   69,379    66,893    63,845    66,398    65,482      
Operating expenses   41,364    40,532    39,050    41,614    40,097   3  
 Income before income taxes   28,015    26,361    24,795    24,784    25,385   10  
Income tax expense (benefit)   10,399    10,004    9,395    8,873    9,885      
 Net income   17,616    16,357    15,400    15,911    15,500   14  
Preferred dividends and discount accretion   -    -    439    2,912    3,059      
Net income available to common shareholders  $17,616   $16,357   $14,961   $12,999   $12,441   42  
                        
PERFORMANCE MEASURES                              
 Per common share:                              
  Diluted income  $.29   $.27   $.25   $.22   $.21   38  
  Book value   12.15    11.94    11.66    11.30    10.99   11  
  Tangible book value (2)   12.10    11.91    11.63    11.26    10.95   11  
                         
 Key performance ratios:                              
  Return on common equity (1)(3)   9.41 %  8.99 %  8.64 %  7.52 %  7.38 %    
  Return on assets (3)   .95    .88    .85    .86    .86      
  Net interest margin (3)   3.32    3.21    3.21    3.26    3.26      
  Efficiency ratio   57.96    58.65    59.05    60.02    58.55      
  Equity to assets   9.85    9.61    9.52    11.62    11.80      
  Tangible equity to assets (2)   9.83    9.58    9.50    11.59    11.76      
  Tangible common equity to assets (2)   9.83    9.58    9.22    8.99    9.02      
  Tangible common equity to risk-weighted assets (2)   14.10    13.92    13.63    13.18    13.34      
                        
ASSET QUALITY *                              
 Non-performing loans  $18,745   $20,724   $25,250   $26,819   $26,088      
 Foreclosed properties   3,146    2,969    5,594    4,221    4,467      
  Total non-performing assets (NPAs)   21,891    23,693    30,844    31,040    30,555      
 Allowance for loan losses   71,928    73,248    75,223    76,762    80,372      
 Net charge-offs   3,155    4,175    4,039    4,445    4,473      
 Allowance for loan losses to loans   1.57 %  1.66 %  1.73 %  1.77 %  1.88 %    
 Net charge-offs to average loans (3)   .28    .38    .38    .41    .42      
 NPAs to loans and foreclosed properties   .48    .54    .71    .72    .72      
 NPAs to total assets   .29    .32    .42    .42    .42      
                        
AVERAGE BALANCES ($ in millions)                              
 Loans  $4,446   $4,376   $4,356   $4,315   $4,250   5  
 Investment securities   2,231    2,326    2,320    2,280    2,178   2  
 Earning assets   6,820    6,861    6,827    6,823    6,615   3  
 Total assets   7,374    7,418    7,384    7,370    7,170   3  
 Deposits   6,143    6,187    6,197    6,190    5,987   3  
 Shareholders' equity   726    713    703    856    846   (14 )
 Common shares - basic (thousands)   60,776    60,712    60,059    59,923    59,100      
 Common shares - diluted (thousands)   60,779    60,714    60,061    59,925    59,202      
                        
AT PERIOD END ($ in millions)                              
 Loans *  $4,569   $4,410   $4,356   $4,329   $4,267   7  
 Investment securities   2,222    2,190    2,302    2,312    2,169   2  
 Total assets   7,526    7,352    7,398    7,425    7,243   4  
 Deposits   6,241    6,164    6,248    6,202    6,113   2  
 Shareholders' equity   736    722    704    796    852   (14 )
 Common shares outstanding (thousands)   60,248    60,139    60,092    59,432    59,412      
 
(1) Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized.
 
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
   
   
   
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Selected Financial Information  
   
   For the Nine
Months Ended
September 30,
  YTD
2014-2013
 
(in thousands, except per share data; taxable equivalent)2014    2013   Change
INCOME SUMMARY             
Interest revenue  $185,616   $185,628      
Interest expense   19,530    21,866      
  Net interest revenue   166,086    163,762   1 %
Provision for credit losses   6,700    62,500      
Fee revenue   40,731    43,079   (5 )
  Total revenue   200,117    144,341      
Operating expenses   120,946    132,690   (9 )
  Income before income taxes   79,171    11,651      
Income tax expense (benefit)   29,798    (245,578 )    
  Net income   49,373    257,229      
Preferred dividends and discount accretion   439    9,166      
Net income available to common shareholders  $48,934   $248,063      
            
PERFORMANCE MEASURES               
 Per common share:               
  Diluted income  $.81   $4.24      
  Book value   12.15    10.99   11  
  Tangible book value (2)   12.10    10.95   11  
             
 Key performance ratios:               
  Return on common equity (1)(3)   9.02 %  64.29 %    
  Return on assets (3)   .89    4.93      
  Net interest margin (3)   3.25    3.32      
  Efficiency ratio   58.54    64.19      
  Equity to assets   9.66    9.91      
  Tangible equity to assets (2)   9.64    9.85      
  Tangible common equity to assets (2)   9.55    7.04      
  Tangible common equity to risk-weighted assets (2)   14.10    13.34      
            
ASSET QUALITY *               
 Non-performing loans  $18,745   $26,088      
 Foreclosed properties   3,146    4,467      
  Total non-performing assets (NPAs)   21,891    30,555      
 Allowance for loan losses   71,928    80,372      
 Net charge-offs   11,369    89,265      
 Allowance for loan losses to loans   1.57 %  1.88 %    
 Net charge-offs to average loans (3)   .35    2.84      
 NPAs to loans and foreclosed properties   .48    .72      
 NPAs to total assets   .29    .42      
            
AVERAGE BALANCES ($ in millions)               
 Loans  $4,393   $4,234   4  
 Investment securities   2,292    2,160   6  
 Earning assets   6,836    6,590   4  
 Total assets   7,392    6,974   6  
 Deposits   6,176    5,972   3  
 Shareholders' equity   714    691   3  
 Common shares - basic (thousands)   60,511    58,443      
 Common shares - diluted (thousands)   60,513    58,444      
            
AT PERIOD END ($ in millions)               
 Loans *  $4,569   $4,267   7  
 Investment securities   2,222    2,169   2  
 Total assets   7,526    7,243   4  
 Deposits   6,241    6,113   2  
 Shareholders' equity   736    852   (14 )
 Common shares outstanding (thousands)   60,248    59,412      
             
 
(1) Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized.
 
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
  
  
  
UNITED COMMUNITY BANKS, INC.  
Non-GAAP Performance Measures Reconciliation  
Selected Financial Information  
   
   
   2014   2013  
(in thousands, except per share data; taxable equivalent)  Third
Quarter
  Second
Quarter
  First
Quarter
  Fourth
Quarter
  Third
Quarter
 
Interest revenue reconciliation                          
Interest revenue - taxable equivalent  $63,338   $61,783   $60,495   $61,695   $61,426  
Taxable equivalent adjustment   (405 )  (377 )  (357 )  (380 )  (370 )
 Interest revenue (GAAP)  $62,933   $61,406   $60,138   $61,315   $61,056  
                     
Net interest revenue reconciliation                          
Net interest revenue - taxable equivalent  $56,967   $54,950   $54,169   $55,879   $54,257  
Taxable equivalent adjustment   (405 )  (377 )  (357 )  (380 )  (370 )
 Net interest revenue (GAAP)  $56,562   $54,573   $53,812   $55,499   $53,887  
                           
Total revenue reconciliation                          
Total operating revenue  $69,379   $66,893   $63,845   $66,398   $65,482  
Taxable equivalent adjustment   (405 )  (377 )  (357 )  (380 )  (370 )
 Total revenue (GAAP)  $68,974   $66,516   $63,488   $66,018   $65,112  
                           
Income before taxes reconciliation                          
Income before taxes  $28,015   $26,361   $24,795   $24,784   $25,385  
Taxable equivalent adjustment   (405 )  (377 )  (357 )  (380 )  (370 )
 Income before taxes (GAAP)  $27,610   $25,984   $24,438   $24,404   $25,015  
                           
Income tax expense (benefit) reconciliation                          
Income tax expense (benefit)  $10,399   $10,004   $9,395   $8,873   $9,885  
Taxable equivalent adjustment   (405 )  (377 )  (357 )  (380 )  (370 )
 Income tax expense (benefit) (GAAP)  $9,994   $9,627   $9,038   $8,493   $9,515  
                           
Book value per common share reconciliation                          
Tangible book value per common share  $12.10   $11.91   $11.63   $11.26   $10.95  
Effect of goodwill and other intangibles   .05    .03    .03    .04    .04  
 Book value per common share (GAAP)  $12.15   $11.94   $11.66   $11.30   $10.99  
                           
Average equity to assets reconciliation                          
Tangible common equity to assets   9.83 %  9.58 %  9.22 %  8.99 %  9.02 %
Effect of preferred equity   -    -    .28    2.60    2.74  
 Tangible equity to assets   9.83    9.58    9.50    11.59    11.76  
Effect of goodwill and other intangibles   .02    .03    .02    .03    .04  
 Equity to assets (GAAP)   9.85 %  9.61 %  9.52 %  11.62 %  11.80 %
                           
Tangible common equity to risk-weighted assets reconciliation                        
Tangible common equity to risk-weighted assets   14.10 %  13.92 %  13.63 %  13.18 %  13.34 %
Effect of other comprehensive income   .34    .53    .36    .39    .49  
Effect of deferred tax limitation   (3.39 )  (3.74 )  (3.92 )  (4.26 )  (4.72 )
Effect of trust preferred   1.02    1.04    1.03    1.04    1.09  
Effect of preferred equity   -    -    -    2.39    4.01  
 Tier I capital ratio (Regulatory)   12.07 %  11.75 %  11.10 %  12.74 %  14.21 %
  
  
  
UNITED COMMUNITY BANKS, INC.  
Non-GAAP Performance Measures Reconciliation  
Selected Financial Information  
   
   
   For the Nine Months  
   Ended September 30,  
(in thousands, except per share data; taxable equivalent)  2014   2013  
Interest revenue reconciliation           
Interest revenue - taxable equivalent  $185,616   $185,628  
Taxable equivalent adjustment   (1,139 )  (1,103 )
 Interest revenue (GAAP)  $184,477   $184,525  
            
Net interest revenue reconciliation           
Net interest revenue - taxable equivalent  $166,086   $163,762  
Taxable equivalent adjustment   (1,139 )  (1,103 )
 Net interest revenue (GAAP)  $164,947   $162,659  
            
Total revenue reconciliation           
Total operating revenue  $200,117   $144,341  
Taxable equivalent adjustment   (1,139 )  (1,103 )
 Total revenue (GAAP)  $198,978   $143,238  
            
Income before taxes reconciliation           
Income before taxes  $79,171   $11,651  
Taxable equivalent adjustment   (1,139 )  (1,103 )
 Income before taxes (GAAP)  $78,032   $10,548  
            
Income tax expense (benefit) reconciliation           
Income tax expense (benefit)  $29,798   $(245,578 )
Taxable equivalent adjustment   (1,139 )  (1,103 )
 Income tax expense (benefit) (GAAP)  $28,659   $(246,681 )
            
Book value per common share reconciliation           
Tangible book value per common share  $12.10   $10.95  
Effect of goodwill and other intangibles   .05    .04  
 Book value per common share (GAAP)  $12.15   $10.99  
            
Average equity to assets reconciliation           
Tangible common equity to assets   9.55 %  7.04 %
Effect of preferred equity   .09    2.81  
 Tangible equity to assets   9.64    9.85  
Effect of goodwill and other intangibles   .02    .06  
 Equity to assets (GAAP)   9.66 %  9.91 %
            
Tangible common equity to risk-weighted assets reconciliation         
Tangible common equity to risk-weighted assets   14.10 %  13.34 %
Effect of other comprehensive income   .34    .49  
Effect of deferred tax limitation   (3.39 )  (4.72 )
Effect of trust preferred   1.02    1.09  
Effect of preferred equity   -    4.01  
 Tier I capital ratio (Regulatory)   12.07 %  14.21 %
 
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
 
 
   2014  2013

(in millions)
 Third
Quarter
 Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
LOANS BY CATEGORY                    
Owner occupied commercial RE  $1,153  $1,163  $1,142  $1,134  $1,129
Income producing commercial RE   605   598   624   623   614
Commercial & industrial   650   554   495   472   457
Commercial construction   181   160   148   149   137
  Total commercial   2,589   2,475   2,409   2,378   2,337
Residential mortgage   866   861   866   875   888
Home equity lines of credit   459   451   447   441   421
Residential construction   307   302   318   328   318
Consumer installment   348   321   316   307   303
  Total loans  $4,569  $4,410  $4,356  $4,329  $4,267
                     
LOANS BY MARKET                    
North Georgia  $1,168  $1,175  $1,205  $1,240  $1,262
Atlanta MSA   1,289   1,305   1,290   1,275   1,246
North Carolina   553   555   563   572   575
Coastal Georgia   444   426   425   423   421
Gainesville MSA   254   257   262   255   253
East Tennessee   281   270   272   280   277
South Carolina / Corporate   337   206   131   88   47
Other (2)   243   216   208   196   186
  Total loans  $4,569  $4,410  $4,356  $4,329  $4,267
                     
RESIDENTIAL CONSTRUCTION                   
Dirt loans                    
 Acquisition & development  $36  $34  $37  $39  $40
 Land loans   35   36   37   38   35
 Lot loans   146   151   159   166   167
  Total   217   221   233   243   242
                     
House loans                    
 Spec   18   19   19   23   30
 Sold   72   62   66   62   46
  Total   90   81   85   85   76
Total residential construction  $307  $302  $318  $328  $318
 
(1) Excludes total loans of $2.8 million, $3.1 million, $19.3 million, $20.3 million and $23.3 million as of September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.
 
 
 
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Loan Portfolio Composition at Period-End (1)  
  
   
   2014  2013  Linked   Year over  
   Third  Second  Third  Quarter  Year 
(in millions)  Quarter  Quarter  Quarter  Change  Change 
LOANS BY CATEGORY                       
Owner occupied commercial RE  $1,153  $1,163  $1,129  $(10 ) $24  
Income producing commercial RE   605   598   614   7    (9 )
Commercial & industrial  650  554  457  96   193 
Commercial construction   181   160   137   21    44  
  Total commercial   2,589   2,475   2,337   114    252  
Residential mortgage   866   861   888   5    (22 )
Home equity lines of credit   459   451   421   8    38  
Residential construction   307   302   318   5    (11 )
Consumer installment   348   321   303   27    45  
  Total loans  $4,569  $4,410  $4,267   159    302  
                        
LOANS BY MARKET                       
North Georgia  $1,168  $1,175  $1,262   (7 )  (94 )
Atlanta MSA   1,289   1,305   1,246   (16 )  43  
North Carolina   553   555   575   (2 )  (22 )
Coastal Georgia   444   426   421   18    23  
Gainesville MSA   254   257   253   (3 )  1  
East Tennessee   281   270   277   11    4  
South Carolina / Corporate   337   206   47   131    290  
Other (2)   243   216   186   27    57  
  Total loans  $4,569  $4,410  $4,267   159    302  
                        
RESIDENTIAL CONSTRUCTION                      
Dirt loans                       
 Acquisition & development
 36 $34 $40  2   (4)
 Land loans   35   36   35   (1 )  -  
 Lot loans   146   151   167   (5 )  (21 )
  Total   217   221   242   (4 )  (25 )
                        
House loans                       
 Spec   18   19   30   (1 )  (12 )
 Sold   72   62   46   10    26  
  Total   90   81   76   9    14  
Total residential construction  $307  $302  $318   5    (11 )
 
(1) Excludes total loans of $2.8 million, $3.1 million, $19.3 million, $20.3 million and $23.3 million as of September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.
  
  
  
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality(1)  
   
           
   Third Quarter 2014 
(in thousands)  Non-performing Loans  Foreclosed Properties  Total NPAs 
NONPERFORMING ASSETS BY CATEGORY          
Owner occupied CRE  $2,156  $1,024  $3,180 
Income producing CRE   1,742   42   1,784 
Commercial & industrial   1,593   -   1,593 
Commercial construction   148   -   148 
 Total commercial   5,639   1,066   6,705 
Residential mortgage   8,350   1,769   10,119 
Home equity lines of credit   720   90   810 
Residential construction   3,543   221   3,764 
Consumer installment   493   -   493 
 Total NPAs  $18,745  $3,146  $21,891 
 Balance as a % of Unpaid Principal   68.6%  54.5%  66.1%
              
NONPERFORMING ASSETS BY MARKET          
North Georgia  $7,392  $1,717  $9,109 
Atlanta MSA   1,724   364   2,088 
North Carolina   4,919   398   5,317 
Coastal Georgia   781   160   941 
Gainesville MSA   1,403   85   1,488 
East Tennessee   1,227   245   1,472 
South Carolina / Corporate   945   177   1,122 
Other (3)   354   -   354 
 Total NPAs  $18,745  $3,146  $21,891 
              
              
NONPERFORMING ASSETS ACTIVITY          
Beginning Balance  $20,724  $2,969  $23,693 
Loans placed on non-accrual   7,665   -   7,665 
Payments received   (3,129)  -   (3,129)
Loan charge-offs   (4,353)  -   (4,353)
Foreclosures   (2,162)  2,162   - 
Capitalized costs   -   209   209 
Property sales   -   (2,350)  (2,350)
Write downs   -   (108)  (108)
Net gains (losses) on sales   -   264   264 
 Ending Balance  $18,745  $3,146  $21,891 
   
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.
  
  
  
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality(1)  
   
   
   Second Quarter 2014 
(in thousands)  Non-performing Loans  Foreclosed Properties  Total NPAs 
NONPERFORMING ASSETS BY CATEGORY        
Owner occupied CRE  $2,975  $653  $3,628 
Income producing CRE   1,032   242   1,274 
Commercial & industrial   1,102   -   1,102 
Commercial construction   95   -   95 
 Total commercial   5,204   895   6,099 
Residential mortgage   10,201   1,426   11,627 
Home equity lines of credit   510   128   638 
Residential construction   4,248   520   4,768 
Consumer installment   561   -   561 
 Total NPAs  $20,724  $2,969  $23,693 
 Balance as a % of Unpaid Principal   66.5%  .4%  3.9%
              
NONPERFORMING ASSETS BY MARKET          
North Georgia  $8,216  $1,392  $9,608 
Atlanta MSA   3,883   510   4,393 
North Carolina   5,314   615   5,929 
Coastal Georgia   782   80   862 
Gainesville MSA   921   49   970 
East Tennessee   1,218   323   1,541 
South Carolina / Corporate   -   -   - 
Other (3)   390   -   390 
 Total NPAs  $20,724  $2,969  $23,693 
              
              
NONPERFORMING ASSETS ACTIVITY          
Beginning Balance  $25,250  $5,594  $30,844 
Loans placed on non-accrual   9,529   -   9,529 
Payments received   (4,027)  -   (4,027)
Loan charge-offs   (8,341)  -   (8,341)
Foreclosures   (1,687)  1,687   - 
Capitalized costs   -   -   - 
Property sales   -   (4,430)  (4,430)
Write downs   -   (305)  (305)
Net gains (losses) on sales   -   423   423 
 Ending Balance  $20,724  $2,969  $23,693 
   
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.
  
  
  
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality(1)  
   
   
   First Quarter 2014 
(in thousands)  Non-performing Loans  Foreclosed Properties  Total NPAs 
NONPERFORMING ASSETS BY CATEGORY        
Owner occupied CRE  $3,868  $1,167  $5,035 
Income producing CRE   1,278   1,645   2,923 
Commercial & industrial   822   -   822 
Commercial construction   479   -   479 
 Total commercial   6,447   2,812   9,259 
Residential mortgage   13,307   2,146   15,453 
Home equity lines of credit   1,106   362   1,468 
Residential construction   3,805   274   4,079 
Consumer installment   585   -   585 
 Total NPAs  $25,250  $5,594  $30,844 
 Balance as a % of Unpaid Principal   65.8%  53.9%  63.2%
              
NONPERFORMING ASSETS BY MARKET          
North Georgia  $12,166  $2,058  $14,224 
Atlanta MSA   2,916   904   3,820 
North Carolina   6,501   866   7,367 
Coastal Georgia   800   1,607   2,407 
Gainesville MSA   1,145   -   1,145 
East Tennessee   1,428   159   1,587 
South Carolina / Corporate   -   -   - 
Other (3)   294   -   294 
 Total NPAs  $25,250  $5,594  $30,844 
              
              
NONPERFORMING ASSETS ACTIVITY          
Beginning Balance  $26,819  $4,221  $31,040 
Loans placed on non-accrual   9,303   -   9,303 
Payments received   (1,666)  -   (1,666)
Loan charge-offs   (4,839)  -   (4,839)
Foreclosures   (4,367)  4,367   - 
Capitalized costs   -   -   - 
Property sales   -   (3,238)  (3,238)
Write downs   -   (277)  (277)
Net gains (losses) on sales   -   521   521 
 Ending Balance  $25,250  $5,594  $30,844 
              
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.
  
  
  
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality(1)  
   
   
   Third Quarter 2014   Second Quarter 2014   First Quarter 2014  



(in thousands)
 

Net
Charge-Offs
  Net Charge-
Offs to
Average
Loans(2)
  

Net
Charge-Offs
  Net Charge-
Offs to
Average
Loans(2)
  

Net
Charge-Offs
 Net Charge-
Offs to
Average
Loans(2)
 
NET CHARGE-OFFS BY CATEGORY                     
Owner occupied CRE  $746   .26 % $(1,836 ) (.64) % $278  .10 %
Income producing CRE   104   .07    435   .29    205  .13  
Commercial & industrial   (341 ) (.23 )  662   .52    421  .35  
Commercial construction   103   .24    131   .34    -  -  
 Total commercial   612   .10    (608 ) (.10 )  904  .15  
Residential mortgage   1,116   .52    2,509   1.17    1,515  .71  
Home equity lines of credit   356   .31    466   .42    993  .90  
Residential construction   712   .94    1,671   2.13    212  .27  
Consumer installment   359   .43    137   .18    415  .54  
 Total  $3,155   .28   $4,175   .38   $4,039  .38  
                            
                            
NET CHARGE-OFFS BY MARKET                       
North Georgia  $1,861   .63 % $(741 ) (.25) % $1,272  .42 %
Atlanta MSA   (250 ) (.08 )  1,481   .46    1,232  .39  
North Carolina   656   .47    2,161   1.55    577  .41  
Coastal Georgia   228   .21    116   .11    512  .49  
Gainesville MSA   259   .40    797   1.23    141  .22  
East Tennessee   230   .33    288   .42    239  .35  
South Carolina / Corporate   5   .01    -   -    -  -  
Other (3)   166   .31    73   .14    66  .14  
 Total  $3,155   .28   $4,175   .38   $4,039  .38  
   
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.
  
  
  
UNITED COMMUNITY BANKS, INC.  
Consolidated Statement of Income(Unaudited)  
   
   Three Months Ended  Nine Months Ended  
   September 30,  September 30,  
(in thousands, except per share data)  2014  2013  2014   2013  
Interest revenue:                   
 Loans, including fees  $49,653  $50,162  $145,602   $151,827  
 Investment securities, including tax exempt of $177, $202, $558 and $624   12,346   9,887   36,118    29,905  
 Deposits in banks and short-term investments   934   1,007   2,757    2,793  
   Total interest revenue   62,933   61,056   184,477    184,525  
                    
Interest expense:                   
 Deposits:                   
  NOW   365   413   1,216    1,286  
  Money market   872   545   2,192    1,641  
  Savings   20   37   61    109  
  Time   1,721   2,630   5,510    8,871  
   Total deposit interest expense   2,978   3,625   8,979    11,907  
 Short-term borrowings   316   525   2,064    1,563  
 Federal Home Loan Bank advances   435   16   573    65  
 Long-term debt   2,642   3,003   7,914    8,331  
  Total interest expense   6,371   7,169   19,530    21,866  
  Net interest revenue   56,562   53,887   164,947    162,659  
 Provision for credit losses   2,000   3,000   6,700    62,500  
  Net interest revenue after provision for credit losses   54,562   50,887   158,247    100,159  
                    
Fee revenue:                   
 Service charges and fees   8,202   8,456   24,627    23,831  
 Mortgage loan and other related fees   2,178   2,554   5,409    8,212  
 Brokerage fees   1,209   1,274   3,631    3,104  
 Securities gains, net   11   -   4,663    116  
 Loss from prepayment of debt   -   -   (4,446 )  -  
 Other   2,812   1,941   6,847    7,816  
  Total fee revenue   14,412   14,225   40,731    43,079  
  Total revenue   68,974   65,112   198,978    143,238  
                    
Operating expenses:                   
 Salaries and employee benefits   25,666   23,090   74,349    71,416  
 Communications and equipment   3,094   3,305   9,370    9,819  
 Occupancy   3,425   3,379   10,065    10,195  
 Advertising and public relations   894   962   2,659    2,937  
 Postage, printing and supplies   876   644   2,456    2,401  
 Professional fees   2,274   2,650   5,873    7,515  
 Foreclosed property   285   194   503    7,678  
 FDIC assessments and other regulatory charges   1,131   2,405   3,909    7,415  
 Amortization of intangibles   313   427   1,061    1,623  
 Other   3,406   3,041   10,701    11,691  
  Total operating expenses   41,364   40,097   120,946    132,690  
  Net income before income taxes   27,610   25,015   78,032    10,548  
 Income tax expense (benefit)   9,994   9,515   28,659    (246,681 )
  Net income   17,616   15,500   49,373    257,229  
 Preferred stock dividends and discount accretion   -   3,059   439    9,166  
  Net income available to common shareholders  $17,616  $12,441  $48,934   $248,063  
                    
Earnings per common share:                   
 Basic  $.29  $.21  $.81   $4.24  
 Diluted   .29   .21   .81    4.24  
Weighted average common shares outstanding:                   
 Basic   60,776   59,100   60,511    58,443  
 Diluted   60,779   59,202   60,513    58,444  
          
          
          
UNITED COMMUNITY BANKS, INC.         
Consolidated Balance Sheet (Unaudited)         
          
 
(in thousands, except share and per share data)
 
 
September 30,
2014
 
 
 
 
December 31,
2013
 
 
 
 
September 30,
2013
 
 
ASSETS                
 Cash and due from banks  $75,268   $71,230   $70,986  
 Interest-bearing deposits in banks   117,399    119,669    131,147  
 Short-term investments   23,397    37,999    62,000  
  Cash and cash equivalents   216,064    228,898    264,133  
 Securities available for sale   1,789,667    1,832,217    1,963,424  
 Securities held to maturity (fair value $440,311, $485,585 and $214,651)   432,418    479,742    205,613  
 Mortgage loans held for sale   20,004    10,319    11,987  
 Loans, net of unearned income   4,568,886    4,329,266    4,267,067  
  Less allowance for loan losses   (71,928 )  (76,762 )  (80,372 )
   Loans, net   4,496,958    4,252,504    4,186,695  
 Assets covered by loss sharing agreements with the FDIC   3,253    22,882    31,207  
 Premises and equipment, net   160,454    163,589    165,993  
 Bank owned life insurance   81,101    80,670    80,537  
 Accrued interest receivable   19,908    19,598    18,199  
 Goodwill and other intangible assets   3,910    3,480    3,888  
 Foreclosed property   3,146    4,221    4,467  
 Net deferred tax asset   224,734    258,518    269,784  
 Derivative financial instruments   22,221    23,833    8,092  
 Other assets   52,051    44,948    29,274  
  Total assets  $7,525,889   $7,425,419   $7,243,293  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Liabilities:                
  Deposits:                
   Demand  $1,561,020   $1,388,512   $1,418,782  
   NOW   1,399,449    1,427,939    1,279,134  
   Money market   1,281,526    1,227,575    1,197,495  
   Savings   287,797    251,125    249,044  
   Time:                
    Less than $100,000   774,201    892,961    925,089  
    Greater than $100,000   531,428    588,689    624,019  
  Brokered   405,308    424,704    419,344  
     Total deposits   6,240,729    6,201,505    6,112,907  
 Short-term borrowings   6,001    53,241    53,769  
 Federal Home Loan Bank advances   330,125    120,125    125  
 Long-term debt   129,865    129,865    129,865  
 Derivative financial instruments   36,171    46,232    37,269  
 Unsettled securities purchases   -    29,562    11,610  
 Accrued expenses and other liabilities   46,573    49,174    45,531  
  Total liabilities   6,789,464    6,629,704    6,391,076  
Shareholders' equity:                
 Preferred stock, $1 par value; 10,000,000 shares authorized;                
  Series A; $10 stated value; 0, 0 and 21,700 shares issued and outstanding   -    -    217  
  Series B; $1,000 stated value; 0, 105,000 and 180,000 shares issued and outstanding   -    105,000    179,714  
  Series D; $1,000 stated value; 0, 16,613 and 16,613 shares issued and outstanding   -    16,613    16,613  
 Common stock, $1 par value; 100,000,000 shares authorized; 50,167,191, 46,243,345 and 45,222,839 shares issued and outstanding   
50,167
   
46,243
   
45,223
 
 Common stock, non-voting, $1 par value; 26,000,000 shares authorized; 10,080,787, 13,188,206 and 14,189,006 shares issued and outstanding   
10,081
   
13,188
   
14,189
 
 Common stock issuable; 354,961, 241,832 and 242,262 shares   5,116    3,930    3,979  
 Capital surplus   1,091,555    1,078,676    1,077,536  
 Accumulated deficit   (402,773 )  (448,091 )  (461,090 )
 Accumulated other comprehensive loss   (17,721 )  (19,844 )  (24,164 )
  Total shareholders' equity   736,425    795,715    852,217  
  Total liabilities and shareholders' equity  $7,525,889   $7,425,419   $7,243,293  
   
   
   
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Three Months Ended September 30,  
   
   2014   2013  

(dollars in thousands, taxable equivalent)
 Average
Balance
  
Interest
 Avg.
Rate
  Average
Balance
  
Interest
 Avg.
Rate
 
Assets:                           
Interest-earning assets:                           
 Loans, net of unearned income (1)(2)  $4,445,947   $49,853  4.45 % $4,249,892   $50,265  4.69 %
 Taxable securities (3)   2,212,116    12,169  2.20    2,157,448    9,685  1.80  
 Tax-exempt securities (1)(3)   18,794    290  6.17    20,913    331  6.32  
 Federal funds sold and other interest-earning assets   143,169    1,026  2.87    186,544    1,145  2.46  
  Total interest-earning assets   6,820,026    63,338  3.69    6,614,797    61,426  3.69  
Non-interest-earning assets:                           
 Allowance for loan losses   (74,146 )          (83,408 )        
 Cash and due from banks   71,224            63,890          
 Premises and equipment   161,315            166,906          
 Other assets (3)   395,184            407,912          
  Total assets  $7,373,603           $7,170,097          
Liabilities and Shareholders' Equity:                           
Interest-bearing liabilities:                           
 Interest-bearing deposits:                           
  NOW  $1,331,806    365  .11   $1,222,334    413  .13  
  Money market   1,387,042    872  .25    1,328,661    545  .16  
  Savings   282,746    20  .03    248,937    37  .06  
  Time less than $100,000   791,289    876  .44    952,320    1,369  .57  
  Time greater than $100,000   542,216    827  .61    644,264    1,229  .76  
  Brokered time deposits   278,330    18  .03    233,842    32  .05  
   Total interest-bearing deposits   4,613,429    2,978  .26    4,630,358    3,625  .31  
  Federal funds purchased and other borrowings   53,713    316  2.33    67,292    525  3.10  
  Federal Home Loan Bank advances   227,190    435  .76    32,082    16  .20  
  Long-term debt   129,865    2,642  8.07    144,601    3,003  8.24  
   Total borrowed funds   410,768    3,393  3.28    243,975    3,544  5.76  
   Total interest-bearing liabilities   5,024,197    6,371  .50    4,874,333    7,169  .58  
Non-interest-bearing liabilities:                           
 Non-interest-bearing deposits   1,530,011            1,356,792          
 Other liabilities   92,986            93,247          
   Total liabilities   6,647,194            6,324,372          
Shareholders' equity   726,409            845,725          
   Total liabilities and shareholders' equity  $7,373,603           $7,170,097          
Net interest revenue       $56,967           $54,257     
Net interest-rate spread           3.19 %          3.11 %
Net interest margin (4)           3.32 %          3.26 %
   
(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 39%, 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 where 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 $7.42 million in 2014 and pretax unrealized losses of $10.6 million in 2013 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.
   
   
   
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Nine Months Ended September 30,  
   
   2014   2013  

(dollars in thousands, taxable equivalent)
 Average
Balance
  
Interest
 Avg.
Rate
  Average
Balance
  
Interest
 Avg.
Rate
 
Assets:                           
Interest-earning assets:                           
 Loans, net of unearned income (1)(2)  $4,392,895   $146,156  4.45 % $4,233,531   $152,073  4.80 %
 Taxable securities (3)   2,272,639    35,560  2.09    2,138,725    29,281  1.83  
 Tax-exempt securities (1)(3)   19,515    914  6.24    21,411    1,022  6.36  
 Federal funds sold and other interest-earning assets   150,782    2,986  2.64    196,445    3,252  2.21  
  Total interest-earning assets   6,835,831    185,616  3.63    6,590,112    185,628  3.76  
Non-interest-earning assets:                           
 Allowance for loan losses   (76,148 )          (100,154 )        
 Cash and due from banks   65,744            63,879          
 Premises and equipment   161,843            168,144          
 Other assets (3)   404,654            252,275          
  Total assets  $7,391,924           $6,974,256          
Liabilities and Shareholders' Equity:                           
Interest-bearing liabilities:                           
 Interest-bearing deposits:                           
  NOW  $1,367,713    1,216  .12   $1,256,684    1,286  .14  
  Money market   1,375,064    2,192  .21    1,297,792    1,641  .17  
  Savings   272,696    61  .03    242,807    109  .06  
  Time less than $100,000   828,694    2,822  .46    997,193    4,686  .63  
  Time greater than $100,000   561,167    2,610  .62    670,821    4,086  .81  
  Brokered time deposits   300,374    78  .03    201,599    99  .07  
   Total interest-bearing deposits   4,705,708    8,979  .26    4,666,896    11,907  .34  
  Federal funds purchased and other borrowings   91,320    2,064  3.02    70,512    1,563  2.96  
  Federal Home Loan Bank advances   169,392    573  .45    41,352    65  .21  
  Long-term debt   129,865    7,914  8.15    131,491    8,331  8.47  
   Total borrowed funds   390,577    10,551  3.61    243,355    9,959  5.47  
   Total interest-bearing liabilities   5,096,285    19,530  .51    4,910,251    21,866  .60  
Non-interest-bearing liabilities:                           
 Non-interest-bearing deposits   1,469,967            1,305,133          
 Other liabilities   111,522            68,312          
   Total liabilities   6,677,774            6,283,696          
Shareholders' equity   714,150            690,560          
   Total liabilities and shareholders' equity  $7,391,924           $6,974,256          
Net interest revenue       $166,086           $163,762     
Net interest-rate spread           3.12 %          3.16 %
Net interest margin (4)           3.25 %          3.32 %
   
(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 39%, 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 where 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 $1.59 million in 2014 and pretax unrealized gains of $7.96 million in 2013 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.

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