SOURCE: United Community Banks, Inc.

United Community Banks, Inc.

October 24, 2013 05:30 ET

United Community Banks, Inc. Reports Earnings of $15.5 Million for Third Quarter 2013

BLAIRSVILLE, GA--(Marketwired - Oct 24, 2013) - United Community Banks, Inc. (NASDAQ: UCBI)

  • Net income of $15.5 million, or 21 cents per share
  • Operating efficiency ratio improves to 58.6 percent reflecting lower expenses
  • Loans up $78 million, or 7 percent annualized
  • Core transaction deposits up $94 million, or 11 percent annualized
  • All capital ratios strengthened

United Community Banks, Inc. (NASDAQ: UCBI) today reported it continued to achieve substantial momentum in positioning itself to build the long-term value of its franchise. For the third quarter and nine months ended September 30, 2013 net income was $15.5 million, or 21 cents per share, and $257.2 million, or $4.24 per share, respectively. The year-to-date results include the impact of two significant events during the second quarter -- the reversal of the valuation allowance on United's net deferred tax asset and the higher provision for loan losses and foreclosed property costs from the accelerated sales of classified assets.

"I am very pleased with the important progress we are making in growing our business and improving operating efficiency," said Jimmy Tallent, president and chief executive officer. "We achieved good loan and deposit growth while at the same time lowering operating expenses. This is particularly demonstrated by the improvement in our efficiency ratio to 58.6 percent, the lowest level since 2007. This is a tribute to the great effort of our dedicated team of bankers."

The third quarter provision for loan losses was $3.0 million compared with $48.5 million in the second quarter and $15.5 million in the third quarter of 2012. The second quarter provision was elevated by higher charge-offs associated with the accelerated classified loan sales. The resulting reduction in classified loans led to lower net charge-offs in the third quarter and a lower provision. Third quarter net charge-offs were $4.47 million compared with $72.4 million in the second quarter and $20.6 million a year ago.

Nonperforming assets at quarter-end were $30.6 million, representing .42 percent of total assets, down from $31.8 million or .44 percent of assets at June 30, 2013, and from $142 million or 2.12 percent of assets a year ago. The classified asset ratio, which is the ratio of classified assets to Tier 1 regulatory capital plus the allowance for loan losses, declined to 26 percent from 27 percent at the end of second quarter and 55 percent a year ago.

Third quarter taxable equivalent net interest revenue totaled $54.3 million, down $224,000 from the second quarter and down $3.03 million from the third quarter of 2012. "The decrease generally reflects the ongoing lower yields on our loan and investment securities portfolios," said Tallent. "The lower loan portfolio yield reflects competitive pricing pressure on new and renewed commercial loans and on new retail loan offerings with low introductory rates. Introductory rates on $45 million of these retail loans rolled over to a market rate of prime-plus in the third quarter with another $40 million due to reset to market rates in the fourth quarter. The lower investment securities yield compared to a year ago is due to reinvestment of cash flows at record low rates. We continue to look for reinvestment opportunities to alleviate market and duration risk. Our focus has been on floating-rate securities, which at quarter-end accounted for 39 percent of the total investment securities portfolio, up one percent from last quarter."

The third quarter taxable equivalent net interest margin was 3.26 percent, down five basis points from the second quarter and 34 basis points from a year ago. "Our margin continues to reflect the unprecedented low interest rate environment," stated Tallent. "We could see further compression in the near term, though we believe at a slower pace. To offset the impact of a lower margin on net interest revenue, we are concentrating on growing the loan portfolio in the mid-single digit range by focusing on retail loans and continuing to add commercial lenders in key markets."

"Third quarter fee revenue of $14.1 million was down slightly compared to second quarter and up approximately $1.0 million from a year ago when certain non-core items are excluded," commented Tallent. Second quarter fee revenue of $16.3 million was elevated due to non-core items, which included a $1.37 million recovery on a bank-owned life insurance policy, a $468,000 gain from the sale of low-income housing tax credits, and $369,000 in hedge ineffectiveness gains. Similarly, year ago fee revenue of $13.8 million included hedge ineffectiveness gains of $608,000.

Service charges and fees on deposit accounts were up $484,000 from the second quarter and up $760,000 from a year ago reflecting strong growth in debit card interchange fees. Brokerage fees were up $211,000 from the second quarter and up $565,000 from a year ago, which shows a renewed focus on this line of business. Mortgage fees were down $449,000 from the second quarter and down $246,000 from a year ago reflecting slower mortgage refinancing activity resulting from rising long-term interest rates. Closed mortgage loans totaled $76.6 million in the third quarter compared with $95.2 million in the second quarter and $107.9 million in the third quarter of 2012.

Operating expenses, excluding foreclosed property costs, were $39.9 million for the third quarter compared to $43.7 million in the second quarter of 2013 and $41.1 million a year ago. The decrease from both periods reflects a reduction in loan workouts and collections costs as well as lower severance costs. Third quarter severance costs were $405,000 compared with $1.56 million and $401,000 for the second quarter of 2013 and the third quarter of 2012, respectively.

Foreclosed property costs were $194,000 in the third quarter compared to $5.15 million in the second quarter and $3.71 million a year ago. The higher second quarter costs reflect $4.31 million in net losses and write-downs related to the accelerated foreclosed property sales and $837,000 for maintenance. The third quarter 2012 foreclosed property costs included $2.74 million in net losses and write-downs and $962,000 for maintenance.

"The effective tax rate for the third quarter was elevated from 35 percent to 38 percent by a $.6 million net charge to tax expense," stated Tallent. "The net charge reflects a state income tax rate reduction in North Carolina that lowered the rate at which a portion of our net deferred tax asset will be recovered. The resulting charge was partially offset by the release of tax reserves for tax returns that had expired."

As of September 30, 2013, capital ratios were as follows: Tier 1 Risk-Based of 14.2 percent; Total Risk-Based of 15.5 percent; Tier 1 Common Risk-Based of 9.1 percent; and Tangible Equity-to-Assets of 9.0 percent. The Tier 1 Leverage ratio was 10.0 percent.

Tallent concluded, "Going forward, we are focused strategically on loan and fee-based service growth in existing and newer markets to provide United with further momentum in building its value to our shareholders. We are looking ahead with confidence driven by our progress, our business opportunities and the best customer satisfaction in our industry."

Conference Call

United will hold a conference call today, Thursday, October 24, 2013, 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 76304427. 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.
Headquartered in Blairsville, United Community Banks, Inc. is the third-largest bank holding company in Georgia. United has assets of $7.2 billion and operates 103 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and western South Carolina. United specializes in providing personalized community banking services to individuals and small to mid-size businesses and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United's common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United's website 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 2012 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the second quarter of 2013 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
                                     
                                     
    2013   2012        
(in thousands, except per share data; taxable equivalent)  
 
Third Quarter  
 
 
 
Second Quarter  
 
 
 
 
 
First Quarter  
 
Fourth
Quarter
 
 
 
 
Third
Quarter
 
 
 
 
Third
Quarter
2013-2012
Change
 
 
 
INCOME SUMMARY                                              
Interest revenue   $ 61,363     $ 61,693       $ 62,134   $ 64,450     $ 65,978        
Interest expense     7,025       7,131         7,475     8,422       8,607        
    Net interest revenue     54,338       54,562         54,659     56,028       57,371     (5 )%
Provision for loan losses     3,000       48,500         11,000     14,000       15,500        
Fee revenue     14,144       16,312         12,826     14,761       13,764     3  
  Total revenue     65,482       22,374         56,485     56,789       55,635        
Operating expenses     40,097       48,823         43,770     50,726       44,783     (10 )
    Income (loss) before income taxes     25,385       (26,449 )       12,715     6,063       10,852     134  
Income tax expense (benefit)     9,885       (256,413 )       950     802       284        
    Net income     15,500       229,964         11,765     5,261       10,568     47  
Preferred dividends and discount accretion     3,059       3,055         3,052     3,045       3,041        
Net income available to common shareholders   $ 12,441     $ 226,909       $ 8,713   $ 2,216     $ 7,527     65  
                                               
PERFORMANCE MEASURES                                              
  Per common share:                                              
    Diluted income   $ .21     $ 3.90       $ .15   $ .04     $ .13     62  
    Book value     10.99       10.90         6.85     6.67       6.75     63  
    Tangible book value (2)     10.95       10.82         6.76     6.57       6.64     65  
                                               
  Key performance ratios:                                              
    Return on equity (1)(3)     7.38 %     197.22 %       8.51 %   2.15 %     7.43 %      
    Return on assets (3)     .86       13.34         .70     .31       .63        
    Net interest margin (3)     3.26       3.31         3.38     3.44       3.60        
    Efficiency ratio     58.55       68.89         64.97     71.69       62.95        
    Equity to assets     11.80       11.57 (4)       8.60     8.63       8.75        
    Tangible equity to assets (2)     11.76       11.53 (4)       8.53     8.55       8.66        
    Tangible common equity to assets (2)     9.02       8.79 (4)       5.66     5.67       5.73        
    Tangible common equity to risk- weighted assets (2)     13.34       13.16         8.45     8.26       8.44        
                                               
ASSET QUALITY *                                              
  Non-performing loans   $ 26,088     $ 27,864       $ 96,006   $ 109,894     $ 115,001        
  Foreclosed properties     4,467       3,936         16,734     18,264       26,958        
    Total non-performing assets (NPAs)     30,555       31,800         112,740     128,158       141,959        
  Allowance for loan losses     80,372       81,845         105,753     107,137       107,642        
  Net charge-offs     4,473       72,408         12,384     14,505       20,563        
  Allowance for loan losses to loans     1.88 %     1.95 %       2.52 %   2.57 %     2.60 %      
  Net charge-offs to average loans (3)     .42       6.87         1.21     1.39       1.99        
  NPAs to loans and foreclosed properties     .72       .76         2.68     3.06       3.41        
  NPAs to total assets     .42       .44         1.65     1.88       2.12        
                                               
AVERAGE BALANCES ($ in millions)                                              
  Loans   $ 4,250     $ 4,253       $ 4,197   $ 4,191     $ 4,147     2  
  Investment securities     2,178       2,161         2,141     2,088       1,971     11  
  Earning assets     6,615       6,608         6,547     6,482       6,346     4  
  Total assets     7,170       6,915         6,834     6,778       6,648     8  
  Deposits     5,987       5,983         5,946     5,873       5,789     3  
  Shareholders' equity     846       636         588     585       582     45  
  Common shares - basic (thousands)     59,100       58,141         58,081     57,971       57,880        
  Common shares - diluted (thousands)     59,202       58,141         58,081     57,971       57,880        
                                               
AT PERIOD END ($ in millions)                                              
  Loans *   $ 4,267     $ 4,189       $ 4,194   $ 4,175     $ 4,138     3  
  Investment securities     2,169       2,152         2,141     2,079       2,025     7  
  Total assets     7,243       7,163         6,849     6,802       6,699     8  
  Deposits     6,113       6,012         6,026     5,952       5,823     5  
  Shareholders' equity     852       829         592     581       585     46  
  Common shares outstanding (thousands)     59,412       57,831         57,767     57,741       57,710        
 
(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.  
Financial Highlights  
Selected Financial Information  
                   
    For the Nine
Months Ended
September 30,
       
(in thousands, except per share data; taxable equivalent) 2013     2012     YTD
2013-2012
Change
 
INCOME SUMMARY                      
Interest revenue   $ 185,190     $ 202,979        
Interest expense     21,631       29,908        
    Net interest revenue     163,559       173,071     (5 )%
Provision for loan losses     62,500       48,500        
Fee revenue     43,282       42,010     3  
  Total revenue     144,341       166,581        
Operating expenses     132,690       136,048     (2 )
    Income (loss) before income taxes     11,651       30,533     (62 )
Income tax expense (benefit)     (245,578 )     1,938        
    Net income     257,229       28,595     800  
Preferred dividends and discount accretion     9,166       9,103        
Net income available to commonshareholders   $ 248,063     $ 19,492     1,173  
                       
PERFORMANCE MEASURES                      
  Per common share:                      
    Diluted income   $ 4.24     $ .34     1,147  
    Book value     10.99       6.75     63  
    Tangible book value (2)     10.95       6.64     65  
                       
  Key performance ratios:                      
    Return on equity (1)(3)     64.29 %     6.57 %      
    Return on assets (3)     4.93       .53        
    Net interest margin (3)     3.32       3.52        
    Efficiency ratio     64.19       63.36        
    Equity to assets     9.91       8.42        
    Tangible equity to assets (2)     9.85       8.32        
    Tangible common equity to assets (2)     7.04       5.50        
    Tangible common equity to risk-weighted assets (2)     13.34       8.44        
                       
ASSET QUALITY *                      
  Non-performing loans   $ 26,088     $ 115,001        
  Foreclosed properties     4,467       26,958        
    Total non-performing assets (NPAs)     30,555       141,959        
  Allowance for loan losses     80,372       107,642        
  Net charge-offs     89,265       55,326        
  Allowance for loan losses to loans     1.88 %     2.60 %      
  Net charge-offs to average loans (3)     2.84       1.80        
  NPAs to loans and foreclosed properties     .72       3.41        
  NPAs to total assets     .42       2.12        
                       
AVERAGE BALANCES ($ in millions)                      
  Loans   $ 4,234     $ 4,157     2  
  Investment securities     2,160       2,089     3  
  Earning assets     6,590       6,569     -  
  Total assets     6,974       6,894     1  
  Deposits     5,972       5,890     1  
  Shareholders' equity     691       580     19  
  Common shares - basic (thousands)     58,443       57,826        
  Common shares - diluted (thousands)     58,444       57,826        
                       
AT PERIOD END ($ in millions)                      
  Loans *   $ 4,267     $ 4,138     3  
  Investment securities     2,169       2,025     7  
  Total assets     7,243       6,699     8  
  Deposits     6,113       5,823     5  
  Shareholders' equity     852       585     46  
  Common shares outstanding (thousands)     59,412       57,710        
 
(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  
                               
                               
    2013     2012  
(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   $ 61,363     $ 61,693     $ 62,134     $ 64,450     $ 65,978  
Taxable equivalent adjustment     (370 )     (368 )     (365 )     (381 )     (419 )
Interest revenue (GAAP)   $ 60,993     $ 61,325     $ 61,769     $ 64,069     $ 65,559  
                                         
Net interest revenue reconciliation                                        
Net interest revenue - taxable equivalent   $ 54,338     $ 54,562     $ 54,659     $ 56,028     $ 57,371  
Taxable equivalent adjustment     (370 )     (368 )     (365 )     (381 )     (419 )
Net interest revenue (GAAP)   $ 53,968     $ 54,194     $ 54,294     $ 55,647     $ 56,952  
                                         
Total revenue reconciliation                                        
Total operating revenue   $ 65,482     $ 22,374     $ 56,485     $ 56,789     $ 55,635  
Taxable equivalent adjustment     (370 )     (368 )     (365 )     (381 )     (419 )
Total revenue (GAAP)   $ 65,112     $ 22,006     $ 56,120     $ 56,408     $ 55,216  
                                         
Income (loss) before taxes reconciliation                                        
Income (loss) before taxes   $ 25,385     $ (26,449 )   $ 12,715     $ 6,063     $ 10,852  
Taxable equivalent adjustment     (370 )     (368 )     (365 )     (381 )     (419 )
Income (loss) before taxes (GAAP)   $ 25,015     $ (26,817 )   $ 12,350     $ 5,682     $ 10,433  
                                         
Income tax expense (benefit) reconciliation                                        
Income tax expense (benefit)   $ 9,885     $ (256,413 )   $ 950     $ 802     $ 284  
Taxable equivalent adjustment     (370 )     (368 )     (365 )     (381 )     (419 )
Income tax expense (benefit) (GAAP)   $ 9,515     $ (256,781 )   $ 585     $ 421     $ (135 )
                                         
Book value per common share reconciliation                                        
Tangible book value per common share   $ 10.95     $ 10.82     $ 6.76     $ 6.57     $ 6.64  
Effect of goodwill and other intangibles     .04       .08       .09       .10       .11  
Book value per common share (GAAP)   $ 10.99     $ 10.90     $ 6.85     $ 6.67     $ 6.75  
                                         
Average equity to assets reconciliation                                        
Tangible common equity to assets     9.02 %     8.79 %     5.66 %     5.67 %     5.73 %
Effect of preferred equity     2.74       2.74       2.87       2.88       2.93  
Tangible equity to assets     11.76       11.53       8.53       8.55       8.66  
Effect of goodwill and other intangibles     .04       .04       .07       .08       .09  
Equity to assets (GAAP)     11.80 %     11.57 %     8.60 %     8.63 %     8.75 %
                                         
Tangible common equity to risk-weighted assets reconciliation                          
Tangible common equity to risk-weighted assets     13.34 %     13.16 %     8.45 %     8.26 %     8.44 %
Effect of other comprehensive income     .49       .29       .49       .51       .36  
Effect of deferred tax limitation     (4.72 )     (4.99 )     -       -       -  
Effect of trust preferred     1.09       1.11       1.15       1.15       1.17  
Effect of preferred equity     4.01       4.11       4.22       4.24       4.29  
Tier I capital ratio (Regulatory)     14.21 %     13.68 %     14.31 %     14.16 %     14.26 %
         
         
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)   2013     2012  
                 
Interest revenue reconciliation                
Interest revenue - taxable equivalent   $ 185,190     $ 202,979  
Taxable equivalent adjustment     (1,103 )     (1,309 )
  Interest revenue (GAAP)   $ 184,087     $ 201,670  
                 
Net interest revenue reconciliation                
Net interest revenue - taxable equivalent   $ 163,559     $ 173,071  
Taxable equivalent adjustment     (1,103 )     (1,309 )
  Net interest revenue (GAAP)   $ 162,456     $ 171,762  
                 
Total revenue reconciliation                
Total operating revenue   $ 144,341     $ 166,581  
Taxable equivalent adjustment     (1,103 )     (1,309 )
  Total revenue (GAAP)   $ 143,238     $ 165,272  
                 
Income (loss) before taxes reconciliation                
Income (loss) before taxes   $ 11,651     $ 30,533  
Taxable equivalent adjustment     (1,103 )     (1,309 )
  Income (loss) before taxes (GAAP)   $ 10,548     $ 29,224  
                 
Income tax expense (benefit) reconciliation                
Income tax expense (benefit)   $ (245,578 )   $ 1,938  
Taxable equivalent adjustment     (1,103 )     (1,309 )
  Income tax expense (benefit) (GAAP)   $ (246,681 )   $ 629  
                 
Book value per common share reconciliation                
Tangible book value per common share   $ 10.95     $ 6.64  
Effect of goodwill and other intangibles     .04       .11  
  Book value per common share (GAAP)   $ 10.99     $ 6.75  
                 
Average equity to assets reconciliation                
Tangible common equity to assets     7.04 %     5.50 %
Effect of preferred equity     2.81       2.82  
  Tangible equity to assets     9.85       8.32  
Effect of goodwill and other intangibles     .06       .10  
  Equity to assets (GAAP)     9.91 %     8.42 %
                 
Tangible common equity to risk-weighted assets reconciliation  
Tangible common equity to risk-weighted assets     13.34 %     8.44 %
Effect of other comprehensive income     .49       .36  
Effect of deferred tax limitation     (4.72 )     -  
Effect of trust preferred     1.09       1.17  
Effect of preferred equity     4.01       4.29  
  Tier I capital ratio (Regulatory)     14.21 %     14.26 %
                 
 
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
                     
    2013   2012
(in millions)   Third Quarter   Second Quarter   First Quarter   Fourth Quarter   Third Quarter
LOANS BY CATEGORY                              
Owner occupied commercial RE   $ 1,129   $ 1,119   $ 1,130   $ 1,131   $ 1,126
Income producing commercial RE     614     629     674     682     693
Commercial & industrial     457     437     454     458     460
Commercial construction     137     133     152     155     161
    Total commercial     2,337     2,318     2,410     2,426     2,440
Residential mortgage     888     876     850     829     833
Home equity lines of credit     421     402     396     385     341
Residential construction     318     332     372     382     389
Consumer installment     303     261     166     153     135
    Total loans   $ 4,267   $ 4,189   $ 4,194   $ 4,175   $ 4,138
                               
LOANS BY MARKET                              
North Georgia   $ 1,262   $ 1,265   $ 1,363   $ 1,364   $ 1,383
Atlanta MSA     1,246     1,227     1,262     1,250     1,238
North Carolina     575     576     575     579     579
Coastal Georgia     421     397     398     400     380
Gainesville MSA     253     256     259     261     256
East Tennessee     277     282     282     283     283
South Carolina     47     34     -     -     -
Other (2)     186     152     55     38     19
    Total loans   $ 4,267   $ 4,189   $ 4,194   $ 4,175   $ 4,138
                               
RESIDENTIAL CONSTRUCTION                              
Dirt loans                              
  Acquisition & development   $ 40   $ 42   $ 57   $ 62   $ 71
  Land loans     35     36     42     46     41
  Lot loans     167     173     188     193     196
    Total     242     251     287     301     308
                               
House loans                              
  Spec     30     34     40     41     44
  Sold     46     47     45     40     37
    Total     76     81     85     81     81
Total residential construction   $ 318   $ 332   $ 372   $ 382   $ 389
 
(1) Excludes total loans of $23.3 million, $25.7 million, $28.3 million, $33.4 million and $37.0 million as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, 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)  
   
                         
    2013   2012            

(in millions)
  Third
Quarter
  Second
Quarter
  Third
Quarter
  Linked Quarter Change     Year over Year Change  
LOANS BY CATEGORY                                  
Owner occupied commercial RE   $ 1,129   $ 1,119   $ 1,126   $ 10     $ 3  
Income producing commercial RE     614     629     693     (15 )     (79 )
Commercial & industrial     457     437     460     20       (3 )
Commercial construction     137     133     161     4       (24 )
    Total commercial     2,337     2,318     2,440     19       (103 )
Residential mortgage     888     876     833     12       55  
Home equity lines of credit     421     402     341     19       80  
Residential construction     318     332     389     (14 )     (71 )
Consumer installment     303     261     135     42       168  
    Total loans   $ 4,267   $ 4,189   $ 4,138     78       129  
                                   
LOANS BY MARKET                                  
North Georgia   $ 1,262   $ 1,265   $ 1,383     (3 )     (121 )
Atlanta MSA     1,246     1,227     1,238     19       8  
North Carolina     575     576     579     (1 )     (4 )
Coastal Georgia     421     397     380     24       41  
Gainesville MSA     253     256     256     (3 )     (3 )
East Tennessee     277     282     283     (5 )     (6 )
South Carolina     47     34     -     13       47  
Other (2)     186     152     19     34       167  
    Total loans   $ 4,267   $ 4,189   $ 4,138     78       129  
                                   
RESIDENTIAL CONSTRUCTION                                  
  Dirt loans                                  
  Acquisition & development   $ 40   $ 42   $ 71     (2 )     (31 )
  Land loans     35     36     41     (1 )     (6 )
  Lot loans     167     173     196     (6 )     (29 )
    Total     242     251     308     (9 )     (66 )
                                   
House loans                                  
  Spec     30     34     44     (4 )     (14 )
  Sold     46     47     37     (1 )     9  
    Total     76     81     81     (5 )     (5 )
Total residential construction   $ 318   $ 332   $ 389     (14 )     (71 )
 
(1) Excludes total loans of $23.3 million, $25.7 million, $28.3 million, $33.4 million and $37.0 million as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, 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 2013  
    Non-performing     Foreclosed     Total  
(in thousands)   Loans     Properties     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     $ 30,555  
  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     -       -       -  
Other (3)     -       -       -  
  Total NPAs   $ 26,088     $ 4,467     $ 30,555  
                         
                         
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)  
                   
                   
    Second Quarter 2013  
    Non-performing     Foreclosed     Total  
(in thousands)   Loans     Properties     NPAs  
NONPERFORMING ASSETS BY CATEGORY                        
Owner occupied CRE   $ 5,283     $ 547     $ 5,830  
Income producing CRE     1,954       -       1,954  
Commercial & industrial     548       -       548  
Commercial construction     504       376       880  
  Total commercial     8,289       923       9,212  
Residential mortgage     12,847       1,303       14,150  
Home equity lines of credit     1,491       140       1,631  
Residential construction     4,838       1,570       6,408  
Consumer installment     399       -       399  
  Total NPAs   $ 27,864     $ 3,936     $ 31,800  
  Balance as a % of Unpaid Principal     62.6 %     31.6 %     55.8 %
                         
NONPERFORMING ASSETS BY MARKET                        
North Georgia   $ 12,830     $ 1,617     $ 14,447  
Atlanta MSA     3,803       1,197       5,000  
North Carolina     6,512       295       6,807  
Coastal Georgia     2,588       627       3,215  
Gainesville MSA     1,008       -       1,008  
East Tennessee     1,123       200       1,323  
South Carolina     -       -       -  
Other (3)     -       -       -  
  Total NPAs   $ 27,864     $ 3,936     $ 31,800  
                         
                         
NONPERFORMING ASSETS ACTIVITY                        
Beginning Balance   $ 96,006     $ 16,734     $ 112,740  
Loans placed on non-accrual     13,200       -       13,200  
Payments received     (47,937 )     -       (47,937 )
Loan charge-offs     (23,972 )     -       (23,972 )
Foreclosures     (9,433 )     9,433       -  
Capitalized costs     -       55       55  
Property sales     -       (17,972 )     (17,972 )
Write downs     -       (1,369 )     (1,369 )
Net gains (losses) on sales     -       (2,945 )     (2,945 )
  Ending Balance   $ 27,864     $ 3,936     $ 31,800  
                         
(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 2013  
    Non-performing     Foreclosed     Total  
(in thousands)   Loans     Properties     NPAs  
NONPERFORMING ASSETS BY CATEGORY                        
Owner occupied CRE   $ 8,142     $ 4,750     $ 12,892  
Income producing CRE     9,162       834       9,996  
Commercial & industrial     29,545       -       29,545  
Commercial construction     22,359       3,027       25,386  
  Total commercial     69,208       8,611       77,819  
Residential mortgage     10,901       3,463       14,364  
Home equity lines of credit     916       -       916  
Residential construction     14,592       4,660       19,252  
Consumer installment     389       -       389  
  Total NPAs   $ 96,006     $ 16,734     $ 112,740  
  Balance as a % of Unpaid Principal     66.3 %     45.0 %     62.0 %
                         
NONPERFORMING ASSETS BY MARKET                        
North Georgia   $ 63,210     $ 6,616     $ 69,826  
Atlanta MSA     17,380       3,524       20,904  
North Carolina     8,519       2,533       11,052  
Coastal Georgia     3,523       1,449       4,972  
Gainesville MSA     911       370       1,281  
East Tennessee     2,463       2,242       4,705  
South Carolina     -       -       -  
Other (3)     -       -       -  
  Total NPAs   $ 96,006     $ 16,734     $ 112,740  
                         
                         
NONPERFORMING ASSETS ACTIVITY                        
Beginning Balance   $ 109,894     $ 18,264     $ 128,158  
Loans placed on non-accrual     9,665       -       9,665  
Payments received     (6,809 )     -       (6,809 )
Loan charge-offs     (10,456 )     -       (10,456 )
Foreclosures     (6,288 )     6,288       -  
Capitalized costs     -       54       54  
Property sales     -       (6,726 )     (6,726 )
Write downs     -       (1,041 )     (1,041 )
Net gains (losses) on sales     -       (105 )     (105 )
  Ending Balance   $ 96,006     $ 16,734     $ 112,740  
                         
(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     Second Quarter 2013     First 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   $ 1,641   .58 %   $ 16,545   5.85 %   $ 1,922     .69 %
Income producing CRE     216   .14       8,921   5.45       3,321     1.99  
Commercial & industrial     136   .12       15,576   13.91       1,501     1.34  
Commercial construction     133   .39       6,295   17.53       (4 )   (.01 )
  Total commercial     2,126   .36       47,337   7.96       6,740     1.14  
Residential mortgage     693   .31       5,469   2.52       1,635     .79  
Home equity lines of credit     382   .37       1,040   1.04       512     .53  
Residential construction     1,072   1.31       18,506   20.91       2,973     3.22  
Consumer installment     200   .28       56   .10       524     1.35  
  Total   $ 4,473   .42     $ 72,408   6.87     $ 12,384     1.21  
                                       
                                       
NET CHARGE-OFFS BY MARKET                                
North Georgia   $ 2,090   .66 %   $ 59,102   17.20 %   $ 4,868     1.45 %
Atlanta MSA     1,013   .33       9,986   3.21       3,295     1.07  
North Carolina     704   .49       1,952   1.36       2,249     1.59  
Coastal Georgia     139   .14       480   .49       821     .85  
Gainesville MSA     97   .15       123   .19       430     .67  
East Tennessee     359   .51       711   1.01       679     .98  
South Carolina     -   -       -   -       -     -  
Other (3)     71   .17       54   .24       42     .39  
  Total   $ 4,473   .42     $ 72,408   6.87     $ 12,384     1.21  
                                       
(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)   2013   2012     2013     2012  
                               
Interest revenue:                              
  Loans, including fees   $ 50,114   $ 53,868     $ 151,776     $ 163,805  
  Investment securities, including tax exempt of $202, $225, $624 and $737     9,872     10,706       29,518       34,772  
  Deposits in banks and short-term investments     1,007     985       2,793       3,093  
    Total interest revenue     60,993     65,559       184,087       201,670  
                               
Interest expense:                              
  Deposits:                              
    NOW     413     447       1,286       1,587  
    Money market     545     599       1,641       1,901  
    Savings     37     37       109       112  
    Time     2,486     4,612       8,636       15,844  
      Total deposit interest expense     3,481     5,695       11,672       19,444  
  Short-term borrowings     525     514       1,563       2,463  
  Federal Home Loan Bank advances     16     26       65       882  
  Long-term debt     3,003     2,372       8,331       7,119  
    Total interest expense     7,025     8,607       21,631       29,908  
    Net interest revenue     53,968     56,952       162,456       171,762  
  Provision for loan losses     3,000     15,500       62,500       48,500  
    Net interest revenue after provision for loan losses     50,968     41,452       99,956       123,262  
                               
Fee revenue:                              
  Service charges and fees     8,456     7,696       23,831       23,295  
  Mortgage loan and other related fees     2,554     2,800       8,212       7,221  
  Brokerage fees     1,274     709       3,104       2,331  
  Securities gains, net     -     -       116       7,047  
  Loss from prepayment of debt     -     -       -       (6,681 )
  Other     1,860     2,559       8,019       8,797  
    Total fee revenue     14,144     13,764       43,282       42,010  
    Total revenue     65,112     55,216       143,238       165,272  
                               
Operating expenses:                              
  Salaries and employee benefits     23,090     22,918       71,416       72,440  
  Communications and equipment     3,305     3,254       9,819       9,620  
  Occupancy     3,379     3,539       10,195       10,849  
  Advertising and public relations     962     934       2,937       2,868  
  Postage, printing and supplies     644     954       2,401       2,849  
  Professional fees     2,650     2,180       7,515       6,107  
  Foreclosed property     194     3,706       7,678       9,382  
  FDIC assessments and other regulatory charges     2,405     2,537       7,415       7,592  
  Amortization of intangibles     427     728       1,623       2,190  
  Other     3,041     4,033       11,691       12,151  
    Total operating expenses     40,097     44,783       132,690       136,048  
    Net income before income taxes     25,015     10,433       10,548       29,224  
  Income tax expense (benefit)     9,515     (135 )     (246,681 )     629  
    Net income     15,500     10,568       257,229       28,595  
  Preferred stock dividends and discount accretion     3,059     3,041       9,166       9,103  
    Net income available to common shareholders   $ 12,441   $ 7,527     $ 248,063     $ 19,492  
                               
Earnings per common share                              
  Basic   $ .21   $ .13     $ 4.24     $ .34  
  Diluted     .21     .13       4.24       .34  
Weighted average common shares outstanding                              
  Basic     59,100     57,880       58,443       57,826  
  Diluted     59,202     57,880       58,444       57,826  
                               
                               
                   
                   
UNITED COMMUNITY BANKS, INC.  
Consolidated Balance Sheet  
                   
 
(in thousands, except share and per share data)
 
 
September 30,
2013
 
 
 
 
December 31,
2012
 
 
 
 
September 30,
2012
 
 
    (unaudited)     (audited)     (audited)  
ASSETS                        
  Cash and due from banks   $ 70,986     $ 66,536     $ 57,270  
  Interest-bearing deposits in banks     131,147       124,613       119,355  
  Short-term investments     62,000       60,000       45,000  
    Cash and cash equivalents     264,133       251,149       221,625  
  Securities available for sale     1,963,424       1,834,593       1,761,994  
  Securities held to maturity (fair value $214,651, $261,131 and $281,336)     205,613       244,184       262,648  
  Mortgage loans held for sale     11,987       28,821       30,571  
  Loans, net of unearned income     4,267,067       4,175,008       4,137,845  
    Less allowance for loan losses     (80,372 )     (107,137 )     (107,642 )
      Loans, net     4,186,695       4,067,871       4,030,203  
  Assets covered by loss sharing agreements with the FDIC     31,207       47,467       53,070  
  Premises and equipment, net     165,993       168,920       170,532  
  Bank owned life insurance     80,537       81,867       81,574  
  Accrued interest receivable     18,199       18,659       19,133  
  Goodwill and other intangible assets     3,888       5,510       6,237  
  Foreclosed property     4,467       18,264       26,958  
  Net deferred tax asset     269,784       -       -  
  Other assets     37,366       34,954       34,690  
    Total assets   $ 7,243,293     $ 6,802,259     $ 6,699,235  
LIABILITIES AND SHAREHOLDERS' EQUITY                        
Liabilities:                        
  Deposits:                        
    Demand   $ 1,418,782     $ 1,252,605     $ 1,210,703  
    NOW     1,279,134       1,316,453       1,184,341  
    Money market     1,197,495       1,149,912       1,126,312  
    Savings     249,044       227,308       222,431  
    Time:                        
      Less than $100,000     925,089       1,055,271       1,123,672  
      Greater than $100,000     624,019       705,558       731,766  
    Brokered     419,344       245,033       223,474  
        Total deposits     6,112,907       5,952,140       5,822,699  
  Short-term borrowings     53,769       52,574       53,243  
  Federal Home Loan Bank advances     125       40,125       50,125  
  Long-term debt     129,865       124,805       120,285  
  Unsettled securities purchases     11,610       -       24,319  
  Accrued expenses and other liabilities     82,800       51,210       43,309  
    Total liabilities     6,391,076       6,220,854       6,113,980  
Shareholders' equity:                        
  Preferred stock, $1 par value; 10,000,000 shares authorized;                        
    Series A; $10 stated value; 21,700 shares issued and outstanding     217       217       217  
    Series B; $1,000 stated value; 180,000 shares issued and outstanding     179,714       178,557       178,183  
    Series D; $1,000 stated value; 16,613 shares issued and outstanding     16,613       16,613       16,613  
  Common stock, $1 par value; 100,000,000 shares authorized; 45,222,839, 42,423,870 and 42,393,319 shares issued and outstanding     45,223       42,424       42,393  
  Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 14,189,006, 15,316,794 and 15,316,794 shares issued and outstanding     14,189       15,317       15,317  
  Common stock issuable; 242,262, 133,238 and 129,270 shares     3,979       3,119       3,247  
  Capital surplus     1,077,536       1,057,951       1,056,998  
  Accumulated deficit     (461,090 )     (709,153 )     (711,369 )
  Accumulated other comprehensive loss     (24,164 )     (23,640 )     (16,344 )
    Total shareholders' equity     852,217       581,405       585,255  
    Total liabilities and shareholders' equity   $ 7,243,293     $ 6,802,259     $ 6,699,235  
                         
                         
                                   
                                   
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Three Months Ended September 30,  
                                   
       2013           2012    
 
(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)   $ 4,249,892     $ 50,217     4.69 %   $ 4,147,220     $ 53,963   5.18 %
  Taxable securities (3)     2,157,448       9,670     1.79       1,947,780       10,481   2.15  
  Tax-exempt securities (1)(3)     20,913       331     6.32       22,895       368   6.43  
  Federal funds sold and other interest-earning assets     186,544       1,145     2.46       227,950       1,166   2.05  
                                           
    Total interest-earning assets     6,614,797       61,363     3.69       6,345,845       65,978   4.14  
Non-interest-earning assets:                                          
  Allowance for loan losses     (83,408 )                   (112,034 )            
  Cash and due from banks     63,890                     51,705              
  Premises and equipment     166,906                     171,608              
  Other assets (3)     407,912                     190,439              
    Total assets   $ 7,170,097                   $ 6,647,563              
                                           
Liabilities and Shareholders' Equity:                                          
Interest-bearing liabilities:                                          
  Interest-bearing deposits:                                          
    NOW   $ 1,222,334       413     .13     $ 1,176,087       447   .15  
    Money market     1,328,661       545     .16       1,157,655       599   .21  
    Savings     248,937       37     .06       221,186       37   .07  
    Time less than $100,000     952,320       1,369     .57       1,144,103       2,260   .79  
    Time greater than $100,000     644,264       1,229     .76       750,828       1,876   .99  
    Brokered time deposits     233,842       (112 )   (.19 )     176,114       476   1.08  
      Total interest-bearing deposits     4,630,358       3,481     .30       4,625,973       5,695   .49  
                                           
    Federal funds purchased and other borrowings     67,292       525     3.10       55,994       514   3.65  
    Federal Home Loan Bank advances     32,082       16     .20       44,473       26   .23  
    Long-term debt     144,601       3,003     8.24       120,276       2,372   7.85  
      Total borrowed funds     243,975       3,544     5.76       220,743       2,912   5.25  
                                           
      Total interest-bearing liabilities     4,874,333       7,025     .57       4,846,716       8,607   .71  
Non-interest-bearing liabilities:                                          
  Non-interest-bearing deposits     1,356,792                     1,163,471              
  Other liabilities     93,247                     55,607              
    Total liabilities     6,324,372                     6,065,794              
Shareholders' equity     845,725                     581,769              
    Total liabilities and shareholders' equity   $ 7,170,097                   $ 6,647,563              
                                           
Net interest revenue           $ 54,338                   $ 57,371      
Net interest-rate spread                   3.12 %                 3.43 %
                                           
Net interest margin (4)                   3.26 %                 3.60 %
                                           
(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 $10.6 million in 2013 and pretax unrealized gains of $22.9 million in 2012 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,  
                                   
       2013           2012    
 
(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)   $ 4,233,531     $ 152,022     4.80 %   $ 4,157,057     $ 164,101   5.27 %
  Taxable securities (3)     2,138,725       28,894     1.80       2,065,112       34,035   2.20  
  Tax-exempt securities (1)(3)     21,411       1,022     6.36       24,187       1,207   6.65  
  Federal funds sold and other interest-earning assets     196,445       3,252     2.21       322,998       3,636   1.50