SOURCE: United Community Banks, Inc.

UCBI

April 24, 2014 05:30 ET

United Community Banks, Inc. Reports Earnings of $15.4 Million for First Quarter 2014

BLAIRSVILLE, GA--(Marketwired - April 24, 2014) -  United Community Banks, Inc. (NASDAQ: UCBI)

  • Earnings per diluted share of 25 cents, up 14 percent from fourth quarter
  • Loans up $27 million, or 2 percent annualized
  • Core transaction deposits up $135 million, or 16 percent annualized
  • All preferred stock redeemed
  • All capital ratios remain strong

United Community Banks, Inc. (NASDAQ: UCBI) ("United") today reported net income of $15.4 million, or 25 cents per diluted share, for the first quarter of 2014. Earnings per share were up 14 percent from the fourth quarter, and 67 percent from the first quarter of 2013, reflecting a reduction in preferred stock dividends, reduced operating costs and a lower provision for loan losses.

"I am pleased with our first quarter progress and our outlook for the balance of 2014," said Jimmy Tallent, president and chief executive officer. "We achieved steady loan growth and strong deposit growth, while controlling expenses.

"I am especially pleased that we redeemed the remaining $122 million in preferred stock, completing the final phase of our TARP and other preferred stock redemptions during the first quarter," Tallent continued. "In total we redeemed $197 million in preferred stock, including $75 million in the fourth quarter, without issuing common equity that would have been dilutive to shareholders.

"The elimination of expensive preferred stock dividends had a positive impact on first quarter per share results," Tallent added. "Longer-term, it will benefit our performance and the ability to execute our strategic plan."

The first quarter provision for credit losses was $2.5 million, down $500,000 from the fourth quarter and down $8.5 million from the first quarter of 2013. First quarter net charge-offs were $4.04 million, compared with $4.44 million in the fourth quarter and $12.4 million a year ago. Nonperforming assets at quarter-end were $30.8 million, representing .42 percent of total assets. This was down slightly from the fourth quarter and down significantly from $112.7 million, or 1.65 percent of total assets, in the first quarter of 2013.

First quarter taxable equivalent net interest revenue totaled $54.2 million, down $1.71 million from the fourth quarter and down $405,000 from the first quarter of 2013. The first quarter taxable equivalent net interest margin was 3.21 percent, down five basis points from the fourth quarter and down 16 basis points from a year ago.

"The decline in net interest revenue was related primarily to two fewer days of interest accruals in the first quarter," said Tallent. "Competitive loan pricing pressures continue, and we are sharply focused on growing loans and deposits to offset the impact and grow net interest revenue. We also remain committed to prudent interest rate risk management. To that end, 39 percent of our investment portfolio consists of floating-rate securities, compared with 41 percent at year-end 2013 and 34 percent in the first quarter of 2013."

First quarter fee revenue totaled $12.2 million, down $1.34 million from the fourth quarter and $735,000 from a year earlier, primarily due to lower mortgage fees and lower customer swap fees in other fee revenue. Additionally, fourth quarter fee revenue included the recognition of $300,000 in gains on mutual fund investments. First quarter mortgage fees were down $359,000 from the fourth quarter and down $1.3 million from a year ago, reflecting slower mortgage refinancing activity related to rising long-term interest rates. Closed mortgage loans totaled $46 million in the first quarter, compared with $55.5 million in the fourth quarter and $70 million in the first quarter of 2013.

Operating expenses, excluding foreclosed property costs, were $38.9 million in the first quarter compared to $41.4 million in the fourth quarter of 2013 and $41.4 million a year ago. Expenses decreased in every category from fourth quarter totals, reflecting successful efforts to control operating costs. The most significant quarter-to-quarter decreases were $675,000 in professional fees and $451,000 in FDIC assessments and other regulatory charges, reflecting United's improved credit quality. Salaries and employee benefits decreased $421,000, in part reflecting incentive compensation accrued in the fourth quarter for achievement of the 2013 performance targets.

Foreclosed property costs were $116,000 in the first quarter compared to $191,000 in the fourth quarter and $2.33 million a year ago. These costs have remained lower following the accelerated sales of classified assets in the second quarter of 2013.

On March 31, 2014, capital ratios were as follows: Tier 1 Risk-Based of 11.1 percent; Total Risk-Based of 12.3 percent; Tier 1 Common Risk-Based of 10.0 percent; Tier 1 Leverage of 8.0 percent; and Tangible Equity-to-Assets of 9.5 percent.

"We made good progress in the first quarter," Tallent said. "A year ago our focus was resolving legacy credit-related problems, a major undertaking that has been completed. Other challenges have remained with regard to interest rates and the economic environment. But our team has kept expenses down and strengthened the business pipeline, and we have strategically added people and initiatives to drive revenue growth. Of particular note are the additions of senior talent to lead our Tennessee region, our specialized lending group, and our structured finance area. I believe we are on track to achieve our business targets and financial goals for the year."

Conference Call
United will hold a conference call today, Thursday, April 24, 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 24926399. 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 $7.4 billion in assets. The company's banking subsidiary, United Community Bank, is one of the Southeast region's largest full-service banks, operating 102 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in providing personalized community banking services to individuals, small businesses and corporations. Services include a full range of consumer and commercial banking services including mortgage, advisory and treasury management products. United Community Bank is consistently recognized for its outstanding customer service by national survey organizations. 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  
   
                         
  2014   2013      
(in thousands, except per share data; taxable equivalent) First Quarter   Fourth Quarter   Third Quarter   Second Quarter   First 
Quarter
   First Quarter 2014-2013 Change  
INCOME SUMMARY                             
Interest revenue $60,495   $61,695   $61,426   $62,088   $62,114      
Interest expense  6,326    5,816    7,169    7,157    7,540      
   Net interest revenue  54,169    55,879    54,257    54,931    54,574   (1) %
Provision for credit losses  2,500    3,000    3,000    48,500    11,000      
Fee revenue  12,176    13,519    14,225    15,943    12,911   (6 )
   Total revenue  63,845    66,398    65,482    22,374    56,485      
Operating expenses  39,050    41,614    40,097    48,823    43,770   (11 )
   Income (loss) before income taxes  24,795    24,784    25,385    (26,449 )  12,715   95  
Income tax expense (benefit)  9,395    8,873    9,885    (256,413 )  950      
  Net income  15,400    15,911    15,500    229,964    11,765   31  
Preferred dividends and discount accretion  439    2,912    3,059    3,055    3,052      
Net income available to common shareholders $14,961   $12,999   $12,441   $226,909   $8,713   72  
                              
PERFORMANCE MEASURES                             
  Per common share:                             
   Diluted income $.25   $.22   $.21   $3.90   $.15   67  
   Book value  11.66    11.30    10.99    10.90    6.85   70  
   Tangible book value (2)  11.63    11.26    10.95    10.82    6.76   72  
                                
  Key performance ratios:                             
   Return on common equity (1)(3)  8.64 %  7.52 %  7.38 %  197.22 %  8.51 %    
   Return on assets (3)  .85    .86    .86    13.34    .70      
   Net interest margin (3)  3.21    3.26    3.26    3.33    3.37      
   Efficiency ratio  59.05    60.02    58.55    68.89    64.97      
   Equity to assets  9.52    11.62    11.80    11.57 (4 )  8.60      
   Tangible equity to assets (2)  9.50    11.59    11.76    11.53 (4 )  8.53      
   Tangible common equity to assets (2)  9.22    8.99    9.02    8.79 (4 )  5.66      
   Tangible common equity to risk- weighted assets (2)  13.57    13.17    13.34    13.16    8.45      
                              
ASSET QUALITY *                             
  Non-performing loans $25,250   $26,819   $26,088   $27,864   $96,006      
  Foreclosed properties  5,594    4,221    4,467    3,936    16,734      
   Total non-performing assets (NPAs)  30,844    31,040    30,555    31,800    112,740      
  Allowance for loan losses  75,223    76,762    80,372    81,845    105,753      
  Net charge-offs  4,039    4,445    4,473    72,408    12,384      
  Allowance for loan losses to loans  1.73 %  1.77 %  1.88 %  1.95 %  2.52 %    
  Net charge-offs to average loans (3)  .38    .41    .42    6.87    1.21      
  NPAs to loans and foreclosed properties  .71    .72    .72    .76    2.68      
  NPAs to total assets  .42    .42    .42    .44    1.65      
                              
AVERAGE BALANCES($ in millions)                             
  Loans $4,356   $4,315   $4,250   $4,253   $4,197   4  
  Investment securities  2,320    2,280    2,178    2,161    2,141   8  
  Earning assets  6,827    6,823    6,615    6,608    6,547   4  
  Total assets  7,384    7,370    7,170    6,915    6,834   8  
  Deposits  6,197    6,190    5,987    5,983    5,946   4  
  Shareholders' equity  703    856    846    636    588   20  
  Common shares - basic (thousands)  60,059    59,923    59,100    58,141    58,081      
  Common shares - diluted (thousands)  60,061    59,925    59,202    58,141    58,081      
                              
AT PERIOD END($ in millions)                             
  Loans * $4,356   $4,329   $4,267   $4,189   $4,194   4  
  Investment securities  2,302    2,312    2,169    2,152    2,141   8  
  Total assets  7,398    7,425    7,243    7,163    6,849   8  
  Deposits  6,248    6,202    6,113    6,012    6,026   4  
  Shareholders' equity  704    796    852    829    592   19  
  Common shares outstanding (thousands)  60,092    59,432    59,412    57,831    57,767      
                              
(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. (4) Calculated as of period-end.  
                              
* 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  First   Fourth   Third   Second   First  
data; taxable equivalent)  Quarter   Quarter   Quarter   Quarter   Quarter  
                           
Interest revenue reconciliation                          
Interest revenue - taxable equivalent  $60,495   $61,695   $61,426   $62,088   $62,114  
Taxable equivalent adjustment   (357 )  (380 )  (370 )  (368 )  (365 )
  Interest revenue (GAAP)  $60,138   $61,315   $61,056   $61,720   $61,749  
                           
Net interest revenue reconciliation                          
Net interest revenue - taxable equivalent  $54,169   $55,879   $54,257   $54,931   $54,574  
Taxable equivalent adjustment   (357 )  (380 )  (370 )  (368 )  (365 )
  Net interest revenue (GAAP)  $53,812   $55,499   $53,887   $54,563   $54,209  
                           
Total revenue reconciliation                          
Total operating revenue  $63,845   $66,398   $65,482   $22,374   $56,485  
Taxable equivalent adjustment   (357 )  (380 )  (370 )  (368 )  (365 )
  Total revenue (GAAP)  $63,488   $66,018   $65,112   $22,006   $56,120  
                           
Income (loss) before taxes reconciliation                          
Income (loss) before taxes  $24,795   $24,784   $25,385   $(26,449 ) $12,715  
Taxable equivalent adjustment   (357 )  (380 )  (370 )  (368 )  (365 )
  Income (loss) before taxes (GAAP)  $24,438   $24,404   $25,015   $(26,817 ) $12,350  
                           
Income tax expense (benefit) reconciliation                          
Income tax expense (benefit)  $9,395   $8,873   $9,885   $(256,413 ) $950  
Taxable equivalent adjustment   (357 )  (380 )  (370 )  (368 )  (365 )
  Income tax expense (benefit) (GAAP)  $9,038   $8,493   $9,515   $(256,781 ) $585  
                           
Book value per common share reconciliation                          
Tangible book value per common share  $11.63   $11.26   $10.95   $10.82   $6.76  
Effect of goodwill and other intangibles   .03    .04    .04    .08    .09  
  Book value per common share (GAAP)  $11.66   $11.30   $10.99   $10.90   $6.85  
                           
Average equity to assets reconciliation                          
Tangible common equity to assets   9.22 %  8.99 %  9.02 %  8.79 %  5.66 %
Effect of preferred equity   .28    2.60    2.74    2.74    2.87  
  Tangible equity to assets   9.50    11.59    11.76    11.53    8.53  
Effect of goodwill and other intangibles   .02    .03    .04    .04    .07  
  Equity to assets (GAAP)   9.52 %  11.62 %  11.80 %  11.57 %  8.60 %
                           
Tangible common equity to risk-weighted assets reconciliation                          
Tangible common equity to risk-weighted assets   13.57 %  13.17 %  13.34 %  13.16 %  8.45
Effect of other comprehensive income   .36    .39    .49    .29    .49  
Effect of deferred tax limitation   (3.91 )  (4.25 )  (4.72 )  (4.99 )  -  
Effect of trust preferred   1.03    1.04    1.09    1.11    1.15  
Effect of preferred equity   -    2.38    4.01    4.11    4.22  
  Tier I capital ratio (Regulatory)   11.05 %  12.73 %  14.21 %  13.68 %  14.31 %
 
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
 
                
   2014  2013
   First  Fourth  Third  Second  First
(in millions)  Quarter  Quarter  Quarter  Quarter  Quarter
LOANS BY CATEGORY                    
Owner occupied commercial RE  $1,142  $1,134  $1,129  $1,119  $1,130
Income producing commercial RE   624   623   614   629   674
Commercial & industrial   495   472   457   437   454
Commercial construction   148   149   137   133   152
  Total commercial   2,409   2,378   2,337   2,318   2,410
Residential mortgage   866   875   888   876   850
Home equity lines of credit   447   441   421   402   396
Residential construction   318   328   318   332   372
Consumer installment   316   307   303   261   166
  Total loans  $4,356  $4,329  $4,267  $4,189  $4,194
                     
LOANS BY MARKET                    
North Georgia  $1,205  $1,240  $1,262  $1,265  $1,363
Atlanta MSA   1,290   1,275   1,246   1,227   1,262
North Carolina   563   572   575   576   575
Coastal Georgia   425   423   421   397   398
Gainesville MSA   262   255   253   256   259
East Tennessee   272   280   277   282   282
South Carolina / Corporate   131   88   47   34   -
Other (2)   208   196   186   152   55
  Total loans  $4,356  $4,329  $4,267  $4,189  $4,194
                     
RESIDENTIAL CONSTRUCTION                
Dirt loans                    
  Acquisition & development  $37  $39  $40  $42  $57
  Land loans   37   38   35   36   42
  Lot loans   159   166   167   173   188
   Total   233   243   242   251   287
                     
House loans                    
  Spec   19   23   30   34   40
  Sold   66   62   46   47   45
   Total   85   85   76   81   85
Total residential construction  $318  $328  $318  $332  $372
                     
(1) Excludes total loans of $19.3 million, $20.3 million, $23.3 million, $25.7 million and $28.3 million as of March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 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         
   First  Fourth  First  Linked Quarter   Year over Year  
(in millions)  Quarter  Quarter  Quarter  Change   Change  
LOANS BY CATEGORY                       
Owner occupied commercial RE  $1,142  $1,134  $1,130  $8   $12  
Income producing commercial RE   624   623   674   1    (50 )
Commercial & industrial   495   472   454   23    41  
Commercial construction   148   149   152   (1 )  (4 )
  Total commercial   2,409   2,378   2,410   31    (1 )
Residential mortgage   866   875   850   (9 )  16  
Home equity lines of credit   447   441   396   6    51  
Residential construction   318   328   372   (10 )  (54 )
Consumer installment   316   307   166   9    150  
  Total loans  $4,356  $4,329  $4,194   27    162  
                        
LOANS BY MARKET                       
North Georgia  $1,205  $1,240  $1,363   (35 )  (158 )
Atlanta MSA   1,290   1,275   1,262   15    28  
North Carolina   563   572   575   (9 )  (12 )
Coastal Georgia   425   423   398   2    27  
Gainesville MSA   262   255   259   7    3  
East Tennessee   272   280   282   (8 )  (10 )
South Carolina / Corporate   131   88   -   43    131  
Other (2)   208   196   55   12    153  
  Total loans  $4,356  $4,329  $4,194   27    162  
                        
RESIDENTIAL CONSTRUCTION                   
Dirt loans                       
  Acquisition & development  $37  $39  $57   (2 )  (20 )
  Land loans   37   38   42   (1 )  (5 )
  Lot loans   159   166   188   (7 )  (29 )
   Total   233   243   287   (10 )  (54 )
                        
House loans                       
  Spec   19   23   40   (4 )  (21 )
  Sold   66   62   45   4    21  
   Total   85   85   85   -    -  
Total residential construction  $318  $328  $372   (10 )  (54 )
                        
(1) Excludes total loans of $19.3 million, $20.3 million, $23.3 million, $25.7 million and $28.3 million as of March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 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)  
   
   First Quarter 2014  
   Non-performing   Foreclosed   Total  
(in thousands)  Loans   Properties   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)  
   
    Fourth Quarter 2013  
                   
(in thousands) Non-performing Loans Foreclosed Properties Total NPAs
NONPERFORMING ASSETS BY CATEGORY                
Owner occupied CRE  $5,822   $832   $6,654  
Income producing CRE     2,518       -       2,518  
Commercial & industrial     427       -       427  
Commercial construction     361       -       361  
  Total commercial     9,128       832       9,960  
Residential mortgage     11,730       2,684       14,414  
Home equity lines of credit   1,448    389    1,837  
Residential construction     4,264       316       4,580  
Consumer installment     249       -       249  
  Total NPAs   $ 26,819     $ 4,221     $ 31,040  
  Balance as a % of  Unpaid Principal     65.3 %     44.5 %     61.4 %
                         
NONPERFORMING ASSETS BY MARKET                        
North Georgia   $ 12,352     $ 2,494     $ 14,846  
Atlanta MSA     2,830       684       3,514  
North Carolina     6,567       683       7,250  
Coastal Georgia     2,342       173       2,515  
Gainesville MSA     928       -       928  
East Tennessee     1,800       187       1,987  
South Carolina / Corporate     -       -       -  
Other (3)     -       -       -  
  Total NPAs   $ 26,819     $ 4,221     $ 31,040  
                         
NONPERFORMING ASSETS ACTIVITY                        
Beginning Balance   $ 28,088     $ 4,467     $ 30,555  
Loans placed on non-accrual     11,043       -       11,043  
Payments received     (1,688 )     -       (1,688 )
Loan charge-offs     (4,621 )     -       (4,621 )
Foreclosures     (4,003 )     4,003       -  
Capitalized costs     -       -       -  
Property sales     -       (4,684 )     (4,684 )
Write downs     -       (326 )     (326 )
Net gains (losses) on sales     -       761       761  
  Ending Balance   $ 26,819     $ 4,221     $ 31,040  
                         
(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 2013  
                   
(in thousands)   Non-performing Loans     Foreclosed Properties     Total NPAs  
NONPERFORMING ASSETS BY CATEGORY                
Owner occupied CRE  $6,358   $591   $6,949  
Income producing CRE     1,657       139       1,796  
Commercial & industrial     609       -       609  
Commercial construction     343       376       719  
  Total commercial     8,967       1,106       10,073  
Residential mortgage     11,335       1,679       13,014  
Home equity lines of credit   1,169    475    1,644  
Residential construction     4,097       1,207       5,304  
Consumer installment     520       -       520  
  Total NPAs   $ 26,088     $ 4,467     $ 30,055  
  Balance as a % of  Unpaid Principal     61.6 %     41.5 %     57.6 %
                         
NONPERFORMING ASSETS BY MARKET                        
North Georgia   $ 13,652     $ 1,726     $ 15,378  
Atlanta MSA     3,096       1,026       4,122  
North Carolina     5,680       762       6,442  
Coastal Georgia     995       928       1,923  
Gainesville MSA     1,036       -       1,036  
East Tennessee     1,629       25       1,654  
South Carolina / Corporate     -       -       -  
Other (3)     -       -       -  
  Total NPAs   $ 26,088     $ 4,467     $ 30,055  
                         
NONPERFORMING ASSETS ACTIVITY                        
Beginning Balance   $ 27,864     $ 3,936     $ 31,800  
Loans placed on non-accrual     9,959       -       9,959  
Payments received     (3,601 )     -       (3,601 )
Loan charge-offs     (5,395 )     -       (5,395 )
Foreclosures     (2,739 )     2,739       -  
Capitalized costs     -       7       7  
Property sales     -       (2,534 )     (2,534 )
Write downs     -       (329 )     (329 )
Net gains (losses) on sales     -       648       648  
  Ending Balance   $ 26,088     $ 4,467     $ 30,555  
                         
(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   Fourth Quarter 2013   Third Quarter 2013  
(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 $278  .10 % $1,638   .57 % $1,641  .58 %
Income producing CRE  205  .13    320   .21    216  .14  
Commercial & industrial  421  .35    (149 ) (.13 )  136  .12  
Commercial construction  -  -    (9 ) (.02 )  133  .39  
  Total commercial  904  .15    1,800   .30    2,126  .36  
Residential mortgage  1,515  .71    1,426   .64    693  .31  
Home equity lines of credit  993  .90    417   .38    382  .37  
Residential construction  212  .27    327   .40    1,072  1.31  
Consumer installment  415  .54    475   .62    200  .28  
  Total $4,039  .38   $4,445   .41   $4,473  .42  
                          
                          
NET CHARGE-OFFS BY MARKET                      
North Georgia $1,272  .42 % $1,603   .51 % $2,090  .66 %
Atlanta MSA  1,232  .39    636   .20    1,013  .33  
North Carolina  577  .41    1,104   .76    704  .49  
Coastal Georgia  512  .49    345   .33    139  .14  
Gainesville MSA  141  .22    346   .54    97  .15  
East Tennessee  239  .35    323   .46    359  .51  
South Carolina / Corporate  -  -    -   -    -  -  
Other (3)  66  .14    88   .20    71  .17  
  Total $4,039  .38   $4,445   .41   $4,473  .42  
                          
(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
   March 31,
(in thousands, except per share data)  2014  2013
         
Interest revenue:        
  Loans, including fees  $47,688  $50,935
  Investment securities, including tax exempt of $188 and $212   11,607   9,944
  Deposits in banks and short-term investments   843   870
    Total interest revenue   60,138   61,749
         
Interest expense:        
  Deposits:        
   NOW   440   454
   Money market   563   562
   Savings   20   36
   Time   1,771   3,291
    Total deposit interest expense   2,794   4,343
  Short-term borrowings   840   516
  Federal Home Loan Bank advances   58   19
  Long-term debt   2,634   2,662
    Total interest expense   6,326   7,540
    Net interest revenue   53,812   54,209
  Provision for credit losses   2,500   11,000
    Net interest revenue after provision for credit losses   51,312   43,209
         
Fee revenue:        
  Service charges and fees   7,898   7,403
  Mortgage loan and other related fees   1,354   2,655
  Brokerage fees   1,177   767
  Securities gains, net   217   116
  Other   1,530   1,970
   Total fee revenue   12,176   12,911
   Total revenue   63,488   56,120
         
Operating expenses:        
  Salaries and employee benefits   24,396   23,592
  Communications and equipment   3,239   3,046
  Occupancy   3,378   3,367
  Advertising and public relations   626   938
  Postage, printing and supplies   776   863
  Professional fees   1,427   2,366
  Foreclosed property   116   2,333
  FDIC assessments and other regulatory charges   1,353   2,505
  Amortization of intangibles   387   705
  Other   3,352   4,055
   Total operating expenses   39,050   43,770
   Net income before income taxes   24,438   12,350
  Income tax expense   9,038   585
   Net income   15,400   11,765
  Preferred stock dividends and discount accretion   439   3,052
   Net income available to common shareholders  $14,961  $8,713
         
Earnings per common share        
  Basic  $.25  $.15
  Diluted   .25   .15
Weighted average common shares outstanding        
  Basic   60,059   58,081
  Diluted   60,061   58,081
               
               
               
UNITED COMMUNITY BANKS, INC.  
Consolidated Balance Sheet (Unaudited)  
   
(in thousands, except share and per share data)  March 31, 2014   December 31, 2013   March 31, 2013  
                 
ASSETS                
  Cash and due from banks  $52,813   $71,230   $57,638  
  Interest-bearing deposits in banks   110,529    119,669    107,390  
  Short-term investments   49,999    37,999    82,000  
   Cash and cash equivalents   213,341    228,898    247,028  
  Securities available for sale   1,837,676    1,832,217    1,909,426  
  Securities held to maturity (fair value $473,136, $485,585 and $247,087)   464,697    479,742    231,087  
  Mortgage loans held for sale   10,933    10,319    18,290  
  Loans, net of unearned income   4,355,708    4,329,266    4,193,560  
   Less allowance for loan losses   (75,223 )  (76,762 )  (105,753 )
    Loans, net   4,280,485    4,252,504    4,087,807  
  Assets covered by loss sharing agreements with the FDIC   21,353    22,882    42,096  
  Premises and equipment, net   161,540    163,589    168,036  
  Bank owned life insurance   80,790    80,670    82,114  
  Accrued interest receivable   18,572    19,598    18,302  
  Intangible assets   3,093    3,480    4,805  
  Foreclosed property   5,594    4,221    16,734  
  Net deferred tax asset   243,683    258,518    -  
  Derivative financial instruments   21,563    23,833    601  
  Other assets   34,917    44,948    23,042  
   Total assets  $7,398,237   $7,425,419   $6,849,368  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Liabilities:                
  Deposits:                
   Demand  $1,471,781   $1,388,512   $1,298,425  
   NOW   1,392,863    1,427,939    1,281,454  
   Money market   1,235,429    1,227,575    1,165,836  
   Savings   270,910    251,125    243,347  
   Time:                
    Less than $100,000   833,188    892,961    1,019,396  
    Greater than $100,000   572,889    588,689    685,174  
   Brokered   470,481    424,704    332,220  
     Total deposits   6,247,541    6,201,505    6,025,852  
  Short-term borrowings   123,075    53,241    51,999  
  Federal Home Loan Bank advances   50,125    120,125    125  
  Long-term debt   129,865    129,865    124,825  
  Derivative financial instruments   42,309    46,232    14,556  
  Unsettled securities purchases   63,999    29,562    -  
  Accrued expenses and other liabilities   37,593    49,174    39,793  
   Total liabilities   6,694,507    6,629,704    6,257,150  
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    178,937  
   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; 50,011,094, 46,243,345 and 43,063,761 shares issued and outstanding   50,011    46,243    43,064  
  Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 10,080,787, 13,188,206 and 14,703,636 shares issued and outstanding   10,081    13,188    14,704  
  Common stock issuable; 237,763, 241,832 and 133,469 shares   3,840    3,930    2,726  
  Capital surplus   1,091,696    1,078,676    1,059,222  
  Accumulated deficit   (433,130 )  (448,091 )  (700,440 )
  Accumulated other comprehensive loss   (18,768 )  (19,844 )  (22,825 )
   Total shareholders' equity   703,730    795,715    592,218  
   Total liabilities and shareholders' equity  $7,398,237   $7,425,419   $6,849,368  
                             
                             
                             
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Three Months Ended March 31,  
                        
  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) $4,355,572   $47,868   4.46 % $4,196,757   $51,000  4.93 %
  Taxable securities (3)  2,300,316    11,419   1.99    2,119,085    9,732  1.84  
  Tax-exempt securities (1)(3)  20,173    308   6.11    21,733    347  6.39  
  Federal funds sold and other interest-earning assets  150,841    900   2.39    209,674    1,035  1.97  
   Total interest-earning assets  6,826,902    60,495   3.58    6,547,249    62,114  3.84  
Non-interest-earning assets:                           
  Allowance for loan losses  (77,491 )           (110,941 )        
  Cash and due from banks  62,054             64,294          
  Premises and equipment  162,788             169,280          
  Other assets (3)  410,175             164,250          
   Total assets $7,384,428            $6,834,132          
                            
Liabilities and Shareholders' Equity:                           
Interest-bearing liabilities:                           
  Interest-bearing deposits:                           
   NOW $1,416,119    440   .13   $1,303,308    454  .14  
   Money market  1,376,993    563   .17    1,257,409    562  .18  
   Savings  259,548    20   .03    234,110    36  .06  
   Time less than $100,000  877,695    1,013   .47    1,039,707    1,749  .68  
   Time greater than $100,000  578,190    918   .64    694,553    1,477  .86  
   Brokered time deposits  287,979    (160 ) (.23 )  175,128    65  .15  
    Total interest-bearing deposits  4,796,524    2,794   .24    4,704,215    4,343  .37  
                            
   Federal funds purchased and other borrowings  112,583    840   3.03    72,157    516  2.90  
   Federal Home Loan Bank advances  125,069    58   .19    33,069    19  .23  
   Long-term debt  129,865    2,634   8.23    124,816    2,662  8.65  
    Total borrowed funds  367,517    3,532   3.90    230,042    3,197  5.64  
                            
Total interest-bearing liabilities  5,164,041    6,326   .50    4,934,257    7,540  .62  
  Non-interest-bearing liabilities:                           
  Non-interest-bearing deposits  1,400,619             1,241,527          
  Other liabilities  116,667             70,839          
    Total liabilities  6,681,327             6,246,623          
Shareholders' equity  703,101             587,509          
    Total liabilities and shareholders' equity $7,384,428            $6,834,132          
                            
Net interest revenue      $54,169            $54,574     
Net interest-rate spread           3.08 %          3.22 %
                            
Net interest margin (4)           3.21 %          3.37 %
                            
(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 losses of $4.6 million in 2014 and pretax unrealized gains of $17.1 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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