SOURCE: United Community Banks, Inc.

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

July 24, 2014 05:30 ET

United Community Banks, Inc. Reports Earnings of $16.4 Million for Second Quarter 2014

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

  • Earnings per diluted share of 27 cents, up 8 percent from first quarter
  • Loans up $54 million, or 5 percent annualized
  • Core transaction deposits up $52 million, or 6 percent annualized
  • SBA lending team added to expand business

United Community Banks, Inc. (NASDAQ: UCBI) ("United") today reported net income of $16.4 million, or 27 cents per diluted share, for the second quarter of 2014. Earnings per share were up 8 percent from the first quarter, reflecting growth in net interest revenue and fee revenue, a lower provision for loan losses and the elimination of preferred stock dividends. For the first six months, United reported net income of $31.8 million, or 52 cents per diluted share.

"I am very pleased with our second quarter progress in growing our business and earnings," said Jimmy Tallent, president and chief executive officer. "We have had four consecutive quarters of steady earnings per share growth since the classified asset sales a year ago and are focused on continuing that trend."

Second quarter taxable equivalent net interest revenue totaled $55.0 million, up $781,000 from the first quarter and the same as the second quarter of 2013. The taxable equivalent net interest margin was 3.21 percent, equal to the first quarter and down 12 basis points from a year ago.

"Preserving our net interest margin and growing net interest revenue while also managing our exposure to changes in interest rates are top priorities for continued growth in earnings per share," said Tallent. "We remain sharply focused on growing loans and core deposits to increase net interest revenue. During the second quarter we completed certain balance sheet restructuring activities that included the reduction/restructuring of the securities portfolio, interest rate hedges and wholesale borrowings. The consequential changes in our securities portfolio, wholesale borrowings and interest rate hedges allowed us to maintain our margin at 3.21 percent and prevent further margin decline in 2014, while maintaining our interest rate risk and sensitivity levels. We sold $237 million in investment securities at a gain of $4.4 million, which was offset by a similar charge from the repayment of $44 million in costly structured wholesale borrowings."

The second quarter provision for credit losses was $2.2 million, down $300,000 from the first quarter and down $46.3 million from the second quarter of 2013. Second quarter net charge-offs were $4.18 million, compared with $4.04 million in the first quarter and $72.4 million a year ago. Nonperforming assets at quarter-end were $23.7 million, down 23 percent from the first quarter and representing .32 percent of total assets. This compares to .42 percent at the end of the first quarter, and .44 percent at the end of the second quarter of 2013.

Second quarter fee revenue totaled $14.1 million, up $1.97 million from the first quarter with increases in every category. When compared to a year earlier, fee revenue was down $1.80 million primarily due to lower mortgage fees and a $1.37 million gain last year on a bank-owned life insurance policy. Service charges and fees were up approximately $600,000 from both the first quarter and a year ago due to strong debit card transaction volume and new service fees effective January 1. Mortgage fees were up $523,000 from the first quarter but down $1.13 million from a year ago, the decrease reflecting slower mortgage refinancing activity. Closed mortgage loans totaled $68.5 million in the second quarter, compared with $46.0 million in the first quarter and $95.2 million in the second quarter of 2013. Customer swap fees included in other fee revenue were up $357,000 from the first quarter due to an increase in commercial lending activities. Also included in other fee revenue were gains on the sale of SBA loans of $744,000. "Going forward, our new focus on growing our SBA business includes selling loans and taking the related gains, while retaining servicing on the loans sold," commented Tallent.

Operating expenses, excluding foreclosed property costs, were $40.4 million in the second quarter compared to $38.9 million in the first quarter and $43.7 million a year ago. Decreases in nearly every expense category from a year ago reflect successful efforts to control operating costs. The $1.48 million increase from the first quarter was mostly in advertising and public relations, professional fees and other expenses that included a number of non-core costs. The increase in advertising and public relations primarily reflects the cost for new products and updating brochures and other branded materials. The increase in professional fees is due to higher legal and consulting costs resulting from corporate initiatives. The increase in other expenses primarily reflects higher lending support costs and a $367,000 loss from the consolidation and sale of a branch facility.

Foreclosed property costs were $102,000 in the second quarter compared to $116,000 in the first quarter and $5.15 million a year ago. These costs were elevated in the second quarter of 2013 by the accelerated sales of classified assets.

On June 30, 2014, capital ratios were as follows: Tier 1 Risk-Based of 11.8 percent; Total Risk-Based of 13.0 percent; Tier 1 Common Risk-Based of 10.7 percent; Tier 1 Leverage of 8.3 percent; and Tangible Equity-to-Assets of 9.6 percent.

"We had a solid start in 2014 and continued to build momentum through the second quarter," Tallent said. "Stabilizing our net interest margin and growing loans, deposits and fee revenue will drive earnings growth. To that end, we continue to expand our business capabilities and have added senior people to our commercial and specialized lending groups. In the second quarter we completed the acquisition of a specialty SBA business in Columbia, South Carolina, and added a newly formed SBA national sales team led by Rich Bradshaw, who has a long record of success in SBA and other specialized lending areas. This team will significantly strengthen our SBA and USDA lending capabilities within and beyond our existing footprint. I am excited about the opportunities ahead and remain convinced 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, July 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 60193841. 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's largest full-service banks, operating 103 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in personalized community banking services for individuals, small businesses and corporations. A full range of consumer and commercial banking services includes mortgage, advisory, treasury management and other products. National survey organizations consistently recognize United Community Bank for outstanding customer service. Additional information about the company and the bank's full range of products and services can be found at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United's filings with the Securities and Exchange Commission including its 2013 Annual Report on Form 10-K under the sections entitled "Forward-Looking Statements" and "Risk Factors." Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
 
             Second
   2014    2013    Quarter
(in thousands, except per share  Second    First    Fourth    Third    Second    2014-2013
data; taxable equivalent)  Quarter    Quarter    Quarter    Quarter    Quarter    Change
INCOME SUMMARY                                    
Interest revenue  $61,783    $60,495    $61,695    $61,426    $62,088        
Interest expense   6,833     6,326     5,816     7,169     7,157        
  Net interest revenue   54,950     54,169     55,879     54,257     54,931     - %
Provision for credit losses   2,200     2,500     3,000     3,000     48,500        
Fee revenue   14,143     12,176     13,519     14,225     15,943     (11 )
  Total revenue   66,893     63,845     66,398     65,482     22,374        
Operating expenses   40,532     39,050     41,614     40,097     48,823     (17 )
 Income (loss) before income taxes   26,361     24,795     24,784     25,385     (26,449 )      
Income tax expense (benefit)   10,004     9,395     8,873     9,885     (256,413 )      
  Net income   16,357     15,400     15,911     15,500     229,964        
Preferred dividends and discount accretion   -     439     2,912     3,059     3,055        
Net income available to common shareholders  $16,357    $14,961    $12,999    $12,441    $226,909        
                                     
PERFORMANCE MEASURES                                    
 Per common share:                                    
  Diluted income  $.27    $.25    $.22    $.21    $3.90        
  Book value   11.94     11.66     11.30     10.99     10.90     10  
  Tangible book value (2)   11.91     11.63     11.26     10.95     10.82     10  
                                     
 Key performance ratios:                                    
  Return on common equity (1)(3)   8.99 %   8.64 %   7.52 %   7.38 %   197.22 %     
  Return on assets (3)   .88     .85     .86     .86     13.34        
  Net interest margin (3)   3.21     3.21     3.26     3.26     3.33        
  Efficiency ratio   58.65     59.05     60.02     58.55     68.89        
  Equity to assets   9.61     9.52     11.62     11.80     11.57   (4)    
  Tangible equity to assets (2)   9.58     9.50     11.59     11.76     11.53   (4)    
  Tangible common equity to assets (2)   9.58     9.22     8.99     9.02     8.79   (4)    
  Tangible common equity to risk- weighted assets (2)   13.92     13.63     13.18     13.34     13.16        
                                     
ASSET QUALITY *                                    
 Non-performing loans  $20,724    $25,250    $26,819    $26,088    $27,864        
 Foreclosed properties   2,969     5,594     4,221     4,467     3,936        
  Total non-performing assets (NPAs)   23,693     30,844     31,040     30,555     31,800        
 Allowance for loan losses   73,248     75,223     76,762     80,372     81,845        
 Net charge-offs   4,175     4,039     4,445     4,473     72,408        
 Allowance for loan losses to loans   1.66 %   1.73 %   1.77 %   1.88 %   1.95 %      
 Net charge-offs to average loans (3)   .38     .38     .41     .42     6.87        
 NPAs to loans and foreclosed properties   .54     .71     .72     .72     .76        
 NPAs to total assets   .32     .42     .42     .42     .44        
                                     
AVERAGE BALANCES($ in millions)                                    
 Loans  $4,376    $4,356    $4,315    $4,250    $4,253     3  
 Investment securities   2,326     2,320     2,280     2,178     2,161     8  
 Earning assets   6,861     6,827     6,823     6,615     6,608     4  
 Total assets   7,418     7,384     7,370     7,170     6,915     7  
 Deposits   6,187     6,197     6,190     5,987     5,983     3  
 Shareholders' equity   713     703     856     846     636     12  
 Common shares - basic (thousands)   60,712     60,059     59,923     59,100     58,141        
 Common shares - diluted (thousands)   60,714     60,061     59,925     59,202     58,141        
                                     
AT PERIOD END($ in millions)                                    
 Loans *  $4,410    $4,356    $4,329    $4,267    $4,189     5  
 Investment securities   2,190     2,302     2,312     2,169     2,152     2  
 Total assets   7,352     7,398     7,425     7,243     7,163     3  
 Deposits   6,164     6,248     6,202     6,113     6,012     3  
 Shareholders' equity   722     704     796     852     829     (13 )
 Common shares outstanding (thousands)   60,139     60,092     59,432     59,412     57,831        
                                     
(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 Six    
  Months Ended   YTD
(in thousands, except per share June 30,   2014-2013
data; taxable equivalent) 2014   2013   Change
INCOME SUMMARY              
Interest revenue $122,278   $124,202      
Interest expense  13,159    14,697      
  Net interest revenue  109,119    109,505   - %
Provision for credit losses  4,700    59,500      
Fee revenue  26,319    28,854   (9 )
  Total revenue  130,738    78,859      
Operating expenses  79,582    92,593   (14 )
  Income (loss) before income taxes  51,156    (13,734 )    
Income tax expense (benefit)  19,399    (255,463 )    
  Net income  31,757    241,729      
Preferred dividends and discount accretion  439    6,107      
Net income available to common shareholders $31,318   $235,622      
               
PERFORMANCE MEASURES              
 Per common share:              
  Diluted income $.52   $4.05      
  Book value  11.94    10.90   10  
  Tangible book value (2)  11.91    10.82   10  
               
 Key performance ratios:              
  Return on common equity (1)(3)  8.82 %  108.34 %   
  Return on assets (3)  .87    7.09      
  Net interest margin (3)  3.21    3.35      
  Efficiency ratio  58.85    66.98      
  Equity to assets  9.56    8.90      
  Tangible equity to assets (2)  9.54    8.83      
  Tangible common equity to assets (2)  9.40    5.99      
  Tangible common equity to risk- weighted assets (2)  13.92    13.16      
               
ASSET QUALITY *              
 Non-performing loans $20,724   $27,864      
 Foreclosed properties  2,969    3,936      
  Total non-performing assets (NPAs)  23,693    31,800      
 Allowance for loan losses  73,248    81,845      
 Net charge-offs  8,214    84,792      
 Allowance for loan losses to loans  1.66 %  1.95 %    
 Net charge-offs to average loans (3)  .38    4.07      
 NPAs to loans and foreclosed properties  .54    .76      
 NPAs to total assets  .32    .44      
               
AVERAGE BALANCES($ in millions)              
 Loans $4,366   $4,225   3  
 Investment securities  2,323    2,151   8  
 Earning assets  6,844    6,578   4  
 Total assets  7,401    6,875   8  
 Deposits  6,192    5,964   4  
 Shareholders' equity  708    612   16  
 Common shares - basic (thousands)  60,386    58,111      
 Common shares - diluted (thousands)  60,388    58,111      
               
AT PERIOD END($ in millions)              
 Loans * $4,410   $4,189   5  
 Investment securities  2,190    2,152   2  
 Total assets  7,352    7,163   3  
 Deposits  6,164    6,012   3  
 Shareholders' equity  722    829   (13 )
 Common shares outstanding (thousands)  60,139    57,831      
               
(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 Second   First   Fourth   Third   Second  
data; taxable equivalent) Quarter   Quarter   Quarter   Quarter   Quarter  
                          
Interest revenue reconciliation                         
Interest revenue - taxable equivalent $61,783   $60,495   $61,695   $61,426   $62,088  
Taxable equivalent adjustment  (377 )  (357 )  (380 )  (370 )  (368 )
 Interest revenue (GAAP) $61,406   $60,138   $61,315   $61,056   $61,720  
                          
Net interest revenue reconciliation                         
Net interest revenue - taxable equivalent $54,950   $54,169   $55,879   $54,257   $54,931  
Taxable equivalent adjustment  (377 )  (357 )  (380 )  (370 )  (368 )
 Net interest revenue (GAAP) $54,573   $53,812   $55,499   $53,887   $54,563  
                          
Total revenue reconciliation                         
Total operating revenue $66,893   $63,845   $66,398   $65,482   $22,374  
Taxable equivalent adjustment  (377 )  (357 )  (380 )  (370 )  (368 )
 Total revenue (GAAP) $66,516   $63,488   $66,018   $65,112   $22,006  
                          
Income (loss) before taxes reconciliation                         
Income (loss) before taxes $26,361   $24,795   $24,784   $25,385   $(26,449 )
Taxable equivalent adjustment  (377 )  (357 )  (380 )  (370 )  (368 )
 Income (loss) before taxes (GAAP) $25,984   $24,438   $24,404   $25,015   $(26,817 )
                          
Income tax expense (benefit) reconciliation                         
Income tax expense (benefit) $10,004   $9,395   $8,873   $9,885   $(256,413 )
Taxable equivalent adjustment  (377 )  (357 )  (380 )  (370 )  (368 )
 Income tax expense (benefit) (GAAP) $9,627   $9,038   $8,493   $9,515   $(256,781 )
                          
Book value per common share reconciliation                         
Tangible book value per common share $11.91   $11.63   $11.26   $10.95   $10.82  
Effect of goodwill and other intangibles  .03    .03    .04    .04    .08  
 Book value per common share (GAAP) $11.94   $11.66   $11.30   $10.99   $10.90  
                          
Average equity to assets reconciliation                         
Tangible common equity to assets  9.58 %  9.22 %  8.99 %  9.02 %  8.79 %
Effect of preferred equity  -    .28    2.60    2.74    2.74  
 Tangible equity to assets  9.58    9.50    11.59    11.76    11.53  
Effect of goodwill and other intangibles  .03    .02    .03    .04    .04  
 Equity to assets (GAAP)  9.61 %  9.52 %  11.62 %  11.80 %  11.57 %
                          
Tangible common equity to risk-weighted assets reconciliation                 
Tangible common equity to risk-weighted assets  13.92 %  13.63 %  13.18 %  13.34 %  13.16 %
Effect of other comprehensive income  .53    .36    .39    .49    .29  
Effect of deferred tax limitation  (3.74 )  (3.92 )  (4.26 )  (4.72 )  (4.99 )
Effect of trust preferred  1.04    1.03    1.04    1.09    1.11  
Effect of preferred equity  -    -    2.39    4.01    4.11  
 Tier I capital ratio (Regulatory)  11.75 %  11.10 %  12.74 %  14.21 %  13.68 %
 
 
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
 
 
  For the Six Months  
(in thousands, except per share Ended June 30,  
data; taxable equivalent) 2014   2013  
           
Interest revenue reconciliation          
Interest revenue - taxable equivalent $122,278   $124,202  
Taxable equivalent adjustment  (734 )  (733 )
 Interest revenue (GAAP) $121,544   $123,469  
           
Net interest revenue reconciliation          
Net interest revenue - taxable equivalent $109,119   $109,505  
Taxable equivalent adjustment  (734 )  (733 )
 Net interest revenue (GAAP) $108,385   $108,772  
           
Total revenue reconciliation          
Total operating revenue $130,738   $78,859  
Taxable equivalent adjustment  (734 )  (733 )
 Total revenue (GAAP) $130,004   $78,126  
           
Income (loss) before taxes reconciliation          
Income (loss) before taxes $51,156   $(13,734 )
Taxable equivalent adjustment  (734 )  (733 )
 Income (loss) before taxes (GAAP) $50,422   $(14,467 )
           
Income tax expense (benefit) reconciliation          
Income tax expense (benefit) $19,399   $(255,463 )
Taxable equivalent adjustment  (734 )  (733 )
 Income tax expense (benefit) (GAAP) $18,665   $(256,196 )
           
Book value per common share reconciliation          
Tangible book value per common share $11.91   $10.82  
Effect of goodwill and other intangibles  .03    .08  
 Book value per common share (GAAP) $11.94   $10.90  
           
Average equity to assets reconciliation          
Tangible common equity to assets  9.40 %  5.99 %
Effect of preferred equity  .14    2.84  
 Tangible equity to assets  9.54    8.83  
Effect of goodwill and other intangibles  .02    .07  
 Equity to assets (GAAP)  9.56 %  8.90 %
           
Tangible common equity to risk-weighted assets reconciliation  
Tangible common equity to risk-weighted assets  13.92 %  13.16 %
Effect of other comprehensive income  .53    .29  
Effect of deferred tax limitation  (3.74 )  (4.99 )
Effect of trust preferred  1.04    1.11  
Effect of preferred equity  -    4.11  
 Tier I capital ratio (Regulatory)  11.75 %  13.68 %
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
 
 
  2014   2013
  Second   First   Fourth   Third   Second
(in millions) Quarter   Quarter   Quarter   Quarter   Quarter
LOANS BY CATEGORY                       
Owner occupied commercial RE $1,163   $1,142   $1,134   $1,129   $1,119
Income producing commercial RE  598    624    623    614    629
Commercial & industrial  554    495    472    457    437
Commercial construction  160    148    149    137    133
  Total commercial  2,475    2,409    2,378    2,337    2,318
Residential mortgage  861    866    875    888    876
Home equity lines of credit  451    447    441    421    402
Residential construction  302    318    328    318    332
Consumer installment  321    316    307    303    261
  Total loans $4,410   $4,356   $4,329   $4,267   $4,189
                        
LOANS BY MARKET                       
North Georgia $1,175   $1,205   $1,240   $1,262   $1,265
Atlanta MSA  1,305    1,290    1,275    1,246    1,227
North Carolina  555    563    572    575    576
Coastal Georgia  426    425    423    421    397
Gainesville MSA  257    262    255    253    256
East Tennessee  270    272    280    277    282
South Carolina / Corporate  206    131    88    47    34
Other (2)  216    208    196    186    152
  Total loans $4,410   $4,356   $4,329   $4,267   $4,189
                        
RESIDENTIAL CONSTRUCTION                    
Dirt loans                       
 Acquisition & development $34   $37   $39   $40   $42
 Land loans  36    37    38    35    36
 Lot loans  151    159    166    167    173
  Total  221    233    243    242    251
                        
House loans                       
 Spec  19    19    23    30    34
 Sold  62    66    62    46    47
  Total  81    85    85    76    81
Total residential construction $302   $318   $328   $318   $332
                        
(1) Excludes total loans of $3.1 million, $19.3 million, $20.3 million, $23.3 million and $25.7 million as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
 
 
  2014   2013   Linked
Quarter
Change
  Year over
Year
Change
  Second   First   Second    
(in millions) Quarter   Quarter   Quarter    
LOANS BY CATEGORY                          
Owner occupied commercial RE $1,163   $1,142   $1,119   $21    $44  
Income producing commercial RE  598    624    629    (26 )   (31 )
Commercial & industrial  554    495    437    59     117  
Commercial construction  160    148    133    12     27  
  Total commercial  2,475    2,409    2,318    66     157  
Residential mortgage  861    866    876    (5 )   (15 )
Home equity lines of credit  451    447    402    4     49  
Residential construction  302    318    332    (16 )   (30 )
Consumer installment  321    316    261    5     60  
  Total loans $4,410   $4,356   $4,189    54     221  
                           
LOANS BY MARKET                          
North Georgia $1,175   $1,205   $1,265    (30 )   (90 )
Atlanta MSA  1,305    1,290    1,227    15     78  
North Carolina  555    563    576    (8 )   (21 )
Coastal Georgia  426    425    397    1     29  
Gainesville MSA  257    262    256    (5 )   1  
East Tennessee  270    272    282    (2 )   (12 )
South Carolina / Corporate  206    131    34    75     172  
Other (2)  216    208    152    8     64  
  Total loans $4,410   $4,356   $4,189    54     221  
                           
RESIDENTIAL CONSTRUCTION                       
Dirt loans                          
 Acquisition & development $34   $37   $42    (3 )   (8 )
 Land loans  36    37    36    (1 )   -  
 Lot loans  151    159    173    (8 )   (22 )
  Total  221    233    251    (12 )   (30 )
                           
House loans                          
 Spec  19    19    34    -     (15 )
 Sold  62    66    47    (4 )   15  
  Total  81    85    81    (4 )   -  
Total residential construction $302   $318   $332    (16 )   (30 )
                           
(1) Excludes total loans of $3.1 million, $19.3 million, $20.3 million, $23.3 million and $25.7 million as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.  
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
 
 
    Second Quarter 2014
    Non-performing   Foreclosed   Total
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY      
Owner occupied CRE   $2,975    $653    $3,628  
Income producing CRE    1,032     242     1,274  
Commercial & industrial    1,102     -     1,102  
Commercial construction    95     -     95  
 Total commercial    5,204     895     6,099  
Residential mortgage    10,201     1,426     11,627  
Home equity lines of credit    510     128     638  
Residential construction    4,248     520     4,768  
Consumer installment    561     -     561  
 Total NPAs   $20,724    $2,969    $23,693  
 Balance as a % of                   
  Unpaid Principal    66.5 %   50.4 %   63.9 %
                    
NONPERFORMING ASSETS BY MARKET              
North Georgia   $8,216    $1,392    $9,608  
Atlanta MSA    3,883     510     4,393  
North Carolina    5,314     615     5,929  
Coastal Georgia    782     80     862  
Gainesville MSA    921     49     970  
East Tennessee    1,218     323     1,541  
South Carolina / Corporate    -     -     -  
Other (3)    390     -     390  
 Total NPAs   $20,724    $2,969    $23,693  
                    
                    
NONPERFORMING ASSETS ACTIVITY              
Beginning Balance   $25,250    $5,594    $30,844  
Loans placed on non-accrual    9,529     -     9,529  
Payments received    (4,027 )   -     (4,027 )
Loan charge-offs    (8,341 )   -     (8,341 )
Foreclosures    (1,687 )   1,687     -  
Capitalized costs    -     -     -  
Property sales    -     (4,430 )   (4,430 )
Write downs    -     (305 )   (305 )
Net gains (losses) on sales    -     423     423  
 Ending Balance   $20,724    $2,969    $23,693  
                    
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.  
(2) Annualized.  
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.  
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
 
 
    First Quarter 2014
    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
    Non-performing   Foreclosed   Total
(in thousands)   Loans   Properties   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   $26,088    $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)
 
 
    Second Quarter 2014   First Quarter 2014   Fourth Quarter 2013
      Net Charge-     Net Charge-     Net Charge-
        Offs to       Offs to       Offs to
    Net   Average   Net   Average   Net   Average
(in thousands)   Charge-Offs   Loans(2)   Charge-Offs   Loans(2)   Charge-Offs   Loans(2)
NET CHARGE-OFFS BY CATEGORY                          
Owner occupied CRE   $(1,836 )  (.64 )%   $278   .10 %   $1,638    .57 %
Income producing CRE    435    .29      205   .13      320    .21  
Commercial & industrial    662    .52      421   .35      (149 )  (.13 )
Commercial construction    131    .34      -   -      (9 )  (.02 )
 Total commercial    (608 )  (.10 )    904   .15      1,800    .30  
Residential mortgage    2,509    1.17      1,515   .71      1,426    .64  
Home equity lines of credit    466    .42      993   .90      417    .38  
Residential construction    1,671    2.13      212   .27      327    .40  
Consumer installment    137    .18      415   .54      475    .62  
 Total   $4,175    .38     $4,039   .38     $4,445    .41  
                                    
                                    
NET CHARGE-OFFS BY MARKET                              
North Georgia   $(741 )  (.25 )%   $1,272   .42 %   $1,603    .51 %
Atlanta MSA    1,481    .46      1,232   .39      636    .20  
North Carolina    2,161    1.55      577   .41      1,104    .76  
Coastal Georgia    116    .11      512   .49      345    .33  
Gainesville MSA    797    1.23      141   .22      346    .54  
East Tennessee    288    .42      239   .35      323    .46  
South Carolina / Corporate    -    -      -   -      -    -  
Other (3)    73    .14      66   .14      88    .20  
 Total   $4,175    .38     $4,039   .38     $4,445    .41  
                                    
(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   Six Months Ended
    June 30,   June 30,
(in thousands, except per share data)   2014   2013   2014   2013
                          
Interest revenue:                         
 Loans, including fees   $48,261    $50,730    $95,949    $101,665  
 Investment securities, including tax exempt of $193, $210, $381 and $422    12,165     10,074     23,772     20,018  
 Deposits in banks and short-term investments    980     916     1,823     1,786  
  Total interest revenue    61,406     61,720     121,544     123,469  
                          
Interest expense:                         
 Deposits:                         
 NOW    411     419     851     873  
 Money market    757     534     1,320     1,096  
 Savings    21     36     41     72  
 Time    2,018     2,950     3,789     6,241  
  Total deposit interest expense    3,207     3,939     6,001     8,282  
 Short-term borrowings    908     522     1,748     1,038  
 Federal Home Loan Bank advances    80     30     138     49  
 Long-term debt    2,638     2,666     5,272     5,328  
  Total interest expense    6,833     7,157     13,159     14,697  
  Net interest revenue    54,573     54,563     108,385     108,772  
 Provision for credit losses    2,200     48,500     4,700     59,500  
  Net interest revenue after provision for credit losses    52,373     6,063     103,685     49,272  
                          
Fee revenue:                         
 Service charges and fees    8,527     7,972     16,425     15,375  
 Mortgage loan and other related fees    1,877     3,003     3,231     5,658  
 Brokerage fees    1,245     1,063     2,422     1,830  
 Securities gains, net    4,435     -     4,652     116  
 Loss from prepayment of debt    (4,446 )   -     (4,446 )   -  
 Other    2,505     3,905     4,035     5,875  
  Total fee revenue    14,143     15,943     26,319     28,854  
  Total revenue    66,516     22,006     130,004     78,126  
                          
Operating expenses:                         
 Salaries and employee benefits    24,287     24,734     48,683     48,326  
 Communications and equipment    3,037     3,468     6,276     6,514  
 Occupancy    3,262     3,449     6,640     6,816  
 Advertising and public relations    1,139     1,037     1,765     1,975  
 Postage, printing and supplies    804     894     1,580     1,757  
 Professional fees    2,172     2,499     3,599     4,865  
 Foreclosed property    102     5,151     218     7,484  
 FDIC assessments and other regulatory charges    1,425     2,505     2,778     5,010  
 Amortization of intangibles    361     491     748     1,196  
 Other    3,943     4,595     7,295     8,650  
  Total operating expenses    40,532     48,823     79,582     92,593  
  Net income (loss) before income taxes    25,984     (26,817 )   50,422     (14,467 )
 Income tax expense (benefit)    9,627     (256,781 )   18,665     (256,196 )
  Net income    16,357     229,964     31,757     241,729  
 Preferred stock dividends and discount accretion    -     3,055     439     6,107  
  Net income available to common shareholders   $16,357    $226,909    $31,318    $235,622  
                          
Earnings per common share:                         
 Basic   $.27    $3.90    $.52    $4.05  
 Diluted    .27     3.90     .52     4.05  
Weighted average common shares outstanding:                         
 Basic    60,712     58,141     60,386     58,111  
 Diluted    60,714     58,141     60,388     58,111  
 
 
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet (Unaudited)
 
    June 30,   December 31,   June 30,
(in thousands, except share and per share data)   2014   2013   2013
                    
ASSETS                   
 Cash and due from banks   $91,791    $71,230    $62,564  
 Interest-bearing deposits in banks    100,270     119,669     141,016  
 Short-term investments    47,999     37,999     57,000  
  Cash and cash equivalents    240,060     228,898     260,580  
 Securities available for sale    1,741,268     1,832,217     1,937,264  
 Securities held to maturity (fair value $458,864, $485,585 and $226,695)    448,752     479,742     214,947  
 Mortgage loans held for sale    14,918     10,319     19,150  
 Loans, net of unearned income    4,410,285     4,329,266     4,189,368  
  Less allowance for loan losses    (73,248 )   (76,762 )   (81,845 )
   Loans, net    4,337,037     4,252,504     4,107,523  
 Assets covered by loss sharing agreements with the FDIC    3,595     22,882     35,675  
 Premises and equipment, net    161,614     163,589     167,197  
 Bank owned life insurance    80,922     80,670     82,276  
 Accrued interest receivable    19,141     19,598     19,279  
 Intangible assets    2,731     3,480     4,315  
 Foreclosed property    2,969     4,221     3,936  
 Net deferred tax asset    233,149     258,518     272,287  
 Derivative financial instruments    22,024     23,833     9,017  
 Other assets    43,886     44,948     29,189  
  Total assets   $7,352,066    $7,425,419    $7,162,635  
LIABILITIES AND SHAREHOLDERS' EQUITY                   
Liabilities:                   
 Deposits:                   
  Demand   $1,519,635    $1,388,512    $1,349,804  
  NOW    1,334,883     1,427,939     1,225,664  
  Money market    1,245,912     1,227,575     1,167,889  
  Savings    279,203     251,125     247,821  
  Time:                   
   Less than $100,000    805,289     892,961     982,009  
   Greater than $100,000    554,310     588,689     664,112  
  Brokered    424,313     424,704     374,530  
   Total deposits    6,163,545     6,201,505     6,011,829  
 Short-term borrowings    76,256     53,241     54,163  
 Federal Home Loan Bank advances    175,125     120,125     70,125  
 Long-term debt    129,865     129,865     124,845  
 Derivative financial instruments    36,545     46,232     29,330  
 Unsettled securities purchases    7,264     29,562     1,582  
 Accrued expenses and other liabilities    41,497     49,174     41,458  
  Total liabilities    6,630,097     6,629,704     6,333,332  
Shareholders' equity:                   
 Preferred stock, $1 par value; 10,000,000 shares authorized;                   
  Series A; $10 stated value; 0, 0 and 21,700 shares issued and outstanding    -     -     217  
  Series B; $1,000 stated value; 0, 105,000 and 180,000 shares issued and outstanding    -     105,000     179,323  
  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;                   
  50,058,295, 46,243,345 and 43,356,492 shares issued and outstanding    50,058     46,243     43,356  
 Common stock, non-voting, $1 par value; 26,000,000 shares authorized;                   
  10,080,787, 13,188,206 and 14,474,810 shares issued and outstanding    10,081     13,188     14,475  
 Common stock issuable; 314,039, 241,832 and 271,215 shares    4,649     3,930     4,705  
 Capital surplus    1,091,780     1,078,676     1,057,931  
 Accumulated deficit    (418,583 )   (448,091 )   (473,531 )
 Accumulated other comprehensive loss    (16,016 )   (19,844 )   (13,786 )
  Total shareholders' equity    721,969     795,715     829,303  
  Total liabilities and shareholders' equity   $7,352,066    $7,425,419    $7,162,635  
  
  
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Three Months Ended June 30,  
                       
  2014  2013
(dollars in thousands, taxable equivalent) Average
Balance
  Interest  Avg.
Rate
  Average
Balance
  Interest  Avg.
Rate
 
Assets:                          
Interest-earning assets:                          
 Loans, net of unearned income (1)(2) $4,376,174   $48,435  4.44 % $4,253,361   $50,808  4.79 %
 Taxable securities (3)  2,306,457    11,972  2.08    2,139,221    9,864  1.84  
 Tax-exempt securities (1)(3)  19,592    316  6.45    21,597    344  6.37  
 Federal funds sold and other interest-earning assets  158,418    1,060  2.68    193,370    1,072  2.22  
                           
  Total interest-earning assets  6,860,641    61,783  3.61    6,607,549    62,088  3.77  
Non-interest-earning assets:                          
 Allowance for loan losses  (76,843 )          (106,417 )        
 Cash and due from banks  63,853            63,457          
 Premises and equipment  161,443            168,272          
 Other assets (3)  408,768            181,987          
  Total assets $7,417,862           $6,914,848          
                           
Liabilities and Shareholders' Equity:                          
Interest-bearing liabilities:                          
 Interest-bearing deposits:                          
 NOW $1,356,141    411  .12   $1,245,301    419  .13  
 Money market  1,361,045    757  .22    1,306,522    534  .16  
 Savings  275,540    21  .03    245,211    36  .06  
 Time less than $100,000  818,048    933  .46    1,000,511    1,568  .63  
 Time greater than $100,000  563,489    865  .62    674,200    1,380  .82  
 Brokered time deposits  334,919    220  .26    195,182    2  .00  
  Total interest-bearing deposits  4,709,182    3,207  .27    4,666,927    3,939  .34  
                           
Federal funds purchased and other borrowings  108,311    908  3.36    72,139    522  2.90  
Federal Home Loan Bank advances  154,795    80  .21    58,916    30  .20  
Long-term debt  129,865    2,638  8.15    124,838    2,666  8.57  
  Total borrowed funds  392,971    3,626  3.70    255,893    3,218  5.04  
                           
  Total interest-bearing liabilities  5,102,153    6,833  .54    4,922,820    7,157  .58  
Non-interest-bearing liabilities:                          
 Non-interest-bearing deposits  1,477,849            1,315,812          
 Other liabilities  125,173            40,603          
  Total liabilities  6,705,175            6,279,235          
 Shareholders' equity  712,687            635,613          
  Total liabilities and shareholders' equity $7,417,862           $6,914,848          
                           
Net interest revenue      $54,950           $54,931     
Net interest-rate spread          3.07 %          3.19 %
                           
Net interest margin(4)          3.21 %          3.33 %
                           
(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate
used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.  
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $1.86 million in 2014 and pretax unrealized gains of $17.7 million
in 2013 are included in other assets for purposes of this presentation.     
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.   
  
  
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Six Months Ended June 30,  
   
  2014  2013
(dollars in thousands, taxable equivalent) Average
Balance
  Interest  Avg.
Rate
  Average
Balance
  Interest  Avg.
Rate
 
Assets:                          
Interest-earning assets:                          
 Loans, net of unearned income (1)(2) $4,365,930   $96,303  4.45 % $4,225,215   $101,808  4.86 %
 Taxable securities (3)  2,303,404    23,391  2.03    2,129,208    19,596  1.84  
 Tax-exempt securities (1)(3)  19,881    624  6.28    21,665    691  6.38  
 Federal funds sold and other interest-earning assets  154,651    1,960  2.53    201,478    2,107  2.09  
                           
  Total interest-earning assets  6,843,866    122,278  3.60    6,577,566    124,202  3.80  
Non-interest-earning assets:                          
 Allowance for loan losses  (77,165 )          (108,667 )        
 Cash and due from banks  62,958            63,873          
 Premises and equipment  162,112            168,773          
 Other assets (3)  409,466            173,168          
  Total assets $7,401,237           $6,874,713          
                           
Liabilities and Shareholders' Equity:                          
Interest-bearing liabilities:                          
 Interest-bearing deposits:                          
 NOW $1,385,964    851  .12   $1,274,144    873  .14  
 Money market  1,368,975    1,320  .19    1,282,101    1,096  .17  
 Savings  267,588    41  .03    239,691    72  .06  
 Time less than $100,000  847,707    1,946  .46    1,020,000    3,317  .66  
 Time greater than $100,000  570,799    1,783  .63    684,320    2,857  .84  
 Brokered time deposits  311,579    60  .04    185,210    67  .07  
  Total interest-bearing deposits  4,752,612    6,001  .25    4,685,466    8,282  .36  
                           
 Federal funds purchased and other borrowings  110,436    1,748  3.19    72,148    1,038  2.90  
 Federal Home Loan Bank advances  140,014    138  .20    46,064    49  .21  
 Long-term debt  129,865    5,272  8.19    124,827    5,328  8.61  
  Total borrowed funds  380,315    7,158  3.80    243,039    6,415  5.32  
                           
  Total interest-bearing liabilities  5,132,927    13,159  .52    4,928,505    14,697  .60  
Non-interest-bearing liabilities:                          
 Non-interest-bearing deposits  1,439,447            1,278,875          
 Other liabilities  120,943            55,639          
  Total liabilities  6,693,317            6,263,019          
Shareholders' equity  707,920            611,694          
  Total liabilities and shareholders' equity $7,401,237           $6,874,713          
                           
Net interest revenue      $109,119           $109,505     
Net interest-rate spread          3.08 %          3.20 %
                           
Net interest margin(4)          3.21 %          3.35 %
                           
(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 $1.37 million in 2014 and pretax unrealized gains of $17.4 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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