United Community Banks, Inc. Reports Second Quarter Results

Strong Core Profitability Driven by Net Interest Margin Expansion and Loan Growth of 6.3%


GREENVILLE, S.C., July 19, 2022 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced net income for the second quarter of $66.8 million and pre-tax, pre-provision income of $91.6 million. Diluted earnings per share of $0.61 for the quarter represented an increase of $0.18 or 42% from the first quarter of 2022 and a decrease of $0.17 or 22%, from the second quarter of 2021. The year-over-year decrease is largely attributable to a $13.6 million provision release in the second quarter of 2021 compared to a $5.6 million provision expense in the second quarter of 2022. Quarter highlights include 6.3% annualized loan growth, 22 basis points of net interest margin expansion, a modest reserve build to 1.05% of loans and an improvement in the efficiency ratio to 56.6%, or 53.2% on an operating basis, which excludes the effect of merger-related and other charges.

United’s second quarter return on assets (ROA) was 1.08% and return on common equity was 9.31%. On an operating basis, United’s ROA was 1.17% and its return on tangible common equity was 14.20%. Excluding merger-related and other charges United’s pre-tax, pre-provision ROA was 1.60% for the quarter.

Total loans increased by $225 million during the quarter. Excluding the effect of PPP, core organic loan growth was 7.0% annualized. Deposits decreased by $183 million or 0.9%. United’s cost of deposits was up only 2 basis points to 0.08% while the average yield on interest-earning assets was up 24 basis points to 3.34%.

Chairman and CEO Lynn Harton stated, “We are pleased to report another quarter of strong core performance. We had solid organic loan growth, which was within our expected long-term range for growth. Asset quality remained exceptional.” Harton continued, “From a strategic perspective, we are excited about our merger agreement with Progress Financial Corporation. We are confident that Progress and United will be a great cultural fit. David Nast and his team have built an outstanding organization focused on dynamic growth markets in Alabama and the Florida Panhandle.”

He further stated, “Sadly, we also are grieving the passing of DeVan Ard. DeVan founded Reliant Bank in 2006, and due to his capable leadership and his team of talented bankers, Reliant received many accolades and was recognized as one of the top places to work and a top performing community bank. Those accomplishments, along with much more, are a tribute to an exceptional career and a life well lived. DeVan was an incredible partner and we were fortunate to have him as part of the United team. He put his all into making our partnership successful and we could not be more appreciative. We will miss him greatly. John Wilson, Reliant’s President, will now step into the role as our Tennessee State President. John has been instrumental during our integration process and will be an outstanding leader going forward.”

Harton concluded, “We remain very positive about United’s performance during the second half of 2022. We continue to see strong pipelines for business growth across our markets. We also have a high-quality balance sheet and business mix that we believe will support strong performance regardless of future economic conditions.”

Second Quarter 2022 Financial Highlights:

  • Net income of $66.8 million and pre-tax, pre-provision income of $91.6 million
  • EPS decreased by 22% compared to last year on a GAAP basis and 16% on an operating basis; compared to first quarter 2022, EPS increased 42% on a GAAP basis and 32% on an operating basis
  • Return on assets of 1.08%, or 1.17% on an operating basis
  • Pre-tax, pre-provision return on assets of 1.49%, or 1.60% when excluding merger-related and other charges
  • Return on common equity of 9.31%
  • Return on tangible common equity of 14.20% on an operating basis
  • A provision for credit losses of $5.6 million, which increased the allowance for credit losses to 1.05% of loans from 1.02% in the first quarter
  • Net recoveries of $1.1 million, or 0.03 basis points of average loans
  • Loan production of $1.5 billion, resulting in annualized core loan growth, excluding the impact of PPP, of 7.0%, for the quarter
  • Core transaction deposits were down $156.2 million or 0.9% for the quarter
  • Net interest income increased by $15.1 million, or 9.2%, on a linked quarter basis as solid loan growth and a positive mix change combined with a wider net interest margin
  • Net interest margin of 3.19% was up 22 basis points from the first quarter, mainly due to increasing interest rates
  • Mortgage closings of $498.5 million and mortgage rate locks of $597.3 million, compared to $679.9 million and $701.7 million, respectively, for the same quarter a year ago
  • Noninterest income was down $5.5 million on a linked quarter basis, primarily driven by a $4.3 million less of a positive MSR valuation in the second quarter as compared to the first; specifically, there was a $2.1 million increase in the MSR valuation in the second quarter compared with a $6.4 million increase in the first quarter
  • Noninterest expenses increased by $1.5 million compared to the first quarter, as compensation merit increases were partially offset by Reliant cost savings
  • Efficiency ratio of 56.6%, or 53.2% on an operating basis
  • Nonperforming assets of 0.14% of total assets, a decrease of 3 basis points from March 31, 2022
  • Quarterly common shareholder dividend of $0.21 per share declared during the quarter, an increase of 11% year-over-year

Conference Call

United will hold a conference call on Wednesday, July 20, 2022, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. Participants can pre-register for the conference call by navigating to https://dpregister.com/sreg/10168643/f383a3dcd2. Those without internet access or who are unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and available for replay by selecting “Events and Presentations” under ”News and Events” within the Investor Relations section of United’s website at www.ucbi.com.

 
UNITED COMMUNITY BANKS, INC.                  
Selected Financial Information                  
(in thousands, except per share data)                  
   2022   2021  Second Quarter
2022 - 2021
Change
 For the Six Months Ended June 30, YTD 2022 - 2021 Change
  Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 Second
Quarter
   2022   2021  
INCOME SUMMARY                  
Interest revenue $187,378  $171,059  $143,768  $147,675  $145,809    $358,437  $287,351   
Interest expense  8,475   7,267   6,213   6,636   7,433     15,742   16,911   
Net interest revenue  178,903   163,792   137,555   141,039   138,376  29%  342,695   270,440  27%
Provision for (release of) credit losses  5,604   23,086   (647)  (11,034)  (13,588)    28,690   (25,869)  
Noninterest income  33,458   38,973   37,177   40,095   35,841  (7)  72,431   80,546  (10)
Total revenue  206,757   179,679   175,379   192,168   187,805  10   386,436   376,855  3 
Noninterest expenses  120,790   119,275   109,156   96,749   95,540  26   240,065   190,734  26 
Income before income tax expense  85,967   60,404   66,223   95,419   92,265  (7)  146,371   186,121  (21)
Income tax expense  19,125   12,385   14,204   21,603   22,005  (13)  31,510   42,155  (25)
Net income  66,842   48,019   52,019   73,816   70,260  (5)  114,861   143,966  (20)
Merger-related and other charges  7,143   9,016   9,912   1,437   1,078     16,159   2,621   
Income tax benefit of merger-related and other charges  (1,575)  (1,963)  (2,265)  (328)  (246)    (3,538)  (581)  
Net income - operating (1) $72,410  $55,072  $59,666  $74,925  $71,092  2  $127,482  $146,006  (13)
Pre-tax pre-provision income (5) $91,571  $83,490  $65,576  $84,385  $78,677  16  $175,061  $160,252  9 
PERFORMANCE MEASURES                  
Per common share:                  
Diluted net income - GAAP $0.61  $0.43  $0.55  $0.82  $0.78  (22) $1.04  $1.60  (35)
Diluted net income - operating (1)  0.66   0.50   0.64   0.83   0.79  (16)  1.16   1.62  (28)
Cash dividends declared  0.21   0.21   0.20   0.20   0.19  11   0.42   0.38  11 
Book value  23.96   24.38   23.63   23.25   22.81  5   23.96   22.81  5 
Tangible book value (3)  16.68   17.08   18.42   18.68   18.49  (10)  16.68   18.49  (10)
Key performance ratios:                  
Return on common equity - GAAP (2)(4)  9.31%  6.80%  9.32%  14.26%  14.08%    8.07%  14.71%  
Return on common equity - operating (1)(2)(4)  10.10   7.83   10.74   14.48   14.25     8.98   14.92   
Return on tangible common equity - operating (1)(2)(3)(4)  14.20   11.00   13.93   18.23   17.81     12.62   18.72   
Return on assets - GAAP (4)  1.08   0.78   0.96   1.48   1.46     0.93   1.54   
Return on assets - operating (1)(4)  1.17   0.89   1.10   1.50   1.48     1.03   1.56   
Return on assets - pre-tax pre-provision (4)(5)  1.49   1.37   1.21   1.70   1.64     1.43   1.72   
Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5)  1.60   1.52   1.40   1.73   1.67     1.56   1.75   
Net interest margin (fully taxable equivalent) (4)  3.19   2.97   2.81   3.12   3.19     3.08   3.20   
Efficiency ratio - GAAP  56.58   57.43   62.12   53.11   54.53     57.00   54.04   
Efficiency ratio - operating (1)  53.23   53.09   56.48   52.33   53.92     53.16   53.30   
Equity to total assets  10.95   11.06   10.61   10.89   11.04     10.95   11.04   
Tangible common equity to tangible assets (3)  7.59   7.72   8.09   8.53   8.71     7.59   8.71   
ASSET QUALITY                  
Nonperforming assets ("NPAs") $34,428  $40,816  $32,855  $45,335  $46,347  (26) $34,428  $46,347  (26)
Allowance for credit losses - loans  136,925   132,805   102,532   99,620   111,616  23   136,925   111,616  23 
Allowance for credit losses - total  153,042   146,369   113,524   110,875   122,460     153,042   122,460   
Net charge-offs (recoveries)  (1,069)  2,978   248   551   (456)    1,909   (761)  
Allowance for credit losses - loans to loans  0.94%  0.93%  0.87%  0.89%  0.98%    0.94%  0.98%  
Allowance for credit losses - total to loans  1.05   1.02   0.97   0.99   1.08     1.05   1.08   
Net charge-offs to average loans (4)  (0.03)  0.08   0.01   0.02   (0.02)    0.03   (0.01)  
NPAs to total assets  0.14   0.17   0.16   0.23   0.25     0.14   0.25   
AT PERIOD END ($ in millions)                  
Loans $14,541  $14,316  $11,760  $11,191  $11,391  28  $14,541  $11,391  28 
Investment securities  6,683   6,410   5,653   5,335   4,928  36   6,683   4,928  36 
Total assets  24,213   24,374   20,947   19,481   18,896  28   24,213   18,896  28 
Deposits  20,873   21,056   18,241   16,865   16,328  28   20,873   16,328  28 
Shareholders’ equity  2,651   2,695   2,222   2,122   2,086  27   2,651   2,086  27 
Common shares outstanding (thousands)  106,034   106,025   89,350   86,559   86,665  22   106,034   86,665  22 

(1) Excludes merger-related and other charges. (2) Net income less preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized. (5) Excludes income tax expense and provision for credit losses.

     
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information  
(in thousands, except per share data)  
   2022   2021  For the Six Months Ended
June 30,
  Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 Second
Quarter
  2022   2021 
               
Noninterest expense reconciliation              
Noninterest expenses (GAAP) $120,790  $119,275  $109,156  $96,749  $95,540  $240,065  $190,734 
Merger-related and other charges  (7,143)  (9,016)  (9,912)  (1,437)  (1,078)  (16,159)  (2,621)
Noninterest expenses - operating $113,647  $110,259  $99,244  $95,312  $94,462  $223,906  $188,113 
               
Net income reconciliation              
Net income (GAAP) $66,842  $48,019  $52,019  $73,816  $70,260  $114,861  $143,966 
Merger-related and other charges  7,143   9,016   9,912   1,437   1,078   16,159   2,621 
Income tax benefit of merger-related and other charges  (1,575)  (1,963)  (2,265)  (328)  (246)  (3,538)  (581)
Net income - operating $72,410  $55,072  $59,666  $74,925  $71,092  $127,482  $146,006 
               
Net income to pre-tax pre-provision income reconciliation              
Net income (GAAP) $66,842  $48,019  $52,019  $73,816  $70,260  $114,861  $143,966 
Income tax expense  19,125   12,385   14,204   21,603   22,005   31,510   42,155 
Provision for (release of) credit losses  5,604   23,086   (647)  (11,034)  (13,588)  28,690   (25,869)
Pre-tax pre-provision income $91,571  $83,490  $65,576  $84,385  $78,677  $175,061  $160,252 
               
Diluted income per common share reconciliation              
Diluted income per common share (GAAP) $0.61  $0.43  $0.55  $0.82  $0.78  $1.04  $1.60 
Merger-related and other charges, net of tax  0.05   0.07   0.09   0.01   0.01   0.12   0.02 
Diluted income per common share - operating $0.66  $0.50  $0.64  $0.83  $0.79  $1.16  $1.62 
               
Book value per common share reconciliation              
Book value per common share (GAAP) $23.96  $24.38  $23.63  $23.25  $22.81  $23.96  $22.81 
Effect of goodwill and other intangibles  (7.28)  (7.30)  (5.21)  (4.57)  (4.32)  (7.28)  (4.32)
Tangible book value per common share $16.68  $17.08  $18.42  $18.68  $18.49  $16.68  $18.49 
               
Return on tangible common equity reconciliation              
Return on common equity (GAAP)  9.31%  6.80%  9.32%  14.26%  14.08%  8.07%  14.71%
Merger-related and other charges, net of tax  0.79   1.03   1.42   0.22   0.17   0.91   0.21 
Return on common equity - operating  10.10   7.83   10.74   14.48   14.25   8.98   14.92 
Effect of goodwill and other intangibles  4.10   3.17   3.19   3.75   3.56   3.64   3.80 
Return on tangible common equity - operating  14.20%  11.00%  13.93%  18.23%  17.81%  12.62%  18.72%
               
Return on assets reconciliation              
Return on assets (GAAP)  1.08%  0.78%  0.96%  1.48%  1.46%  0.93%  1.54%
Merger-related and other charges, net of tax  0.09   0.11   0.14   0.02   0.02   0.10   0.02 
Return on assets - operating  1.17%  0.89%  1.10%  1.50%  1.48%  1.03%  1.56%
               
Return on assets to return on assets- pre-tax pre-provision reconciliation              
Return on assets (GAAP)  1.08%  0.78%  0.96%  1.48%  1.46%  0.93%  1.54%
Income tax expense  0.32   0.20   0.26   0.45   0.47   0.26   0.46 
(Release of) provision for credit losses  0.09   0.39   (0.01)  (0.23)  (0.29)  0.24   (0.28)
Return on assets - pre-tax, pre-provision  1.49   1.37   1.21   1.70   1.64   1.43   1.72 
Merger-related and other charges  0.11   0.15   0.19   0.03   0.03   0.13   0.03 
Return on assets - pre-tax pre-provision, excluding merger-related and other charges  1.60%  1.52%  1.40%  1.73%  1.67%  1.56%  1.75%
               
Efficiency ratio reconciliation              
Efficiency ratio (GAAP)  56.58%  57.43%  62.12%  53.11%  54.53%  57.00%  54.04%
Merger-related and other charges  (3.35)  (4.34)  (5.64)  (0.78)  (0.61)  (3.84)  (0.74)
Efficiency ratio - operating  53.23%  53.09%  56.48%  52.33%  53.92%  53.16%  53.30%
               
Tangible common equity to tangible assets reconciliation              
Equity to total assets (GAAP)  10.95%  11.06%  10.61%  10.89%  11.04%  10.95%  11.04%
Effect of goodwill and other intangibles  (2.96)  (2.94)  (2.06)  (1.87)  (1.82)  (2.96)  (1.82)
Effect of preferred equity  (0.40)  (0.40)  (0.46)  (0.49)  (0.51)  (0.40)  (0.51)
Tangible common equity to tangible assets  7.59%  7.72%  8.09%  8.53%  8.71%  7.59%  8.71%
               
Allowance for credit losses - total to loans reconciliation              
Allowance for credit losses - total to loans (GAAP)  1.05%  1.02%  0.97%  0.99%  1.08%  1.05%  1.08%
Effect of PPP loans           0.01   0.04      0.04 
Allowance for credit losses - total to loans, excluding PPP loans  1.05%  1.02%  0.97%  1.00%  1.12%  1.05%  1.12%


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
  2022  2021 Linked
Quarter
Change

 Year over
Year
Change

(in millions)Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 Second
Quarter
  
LOANS BY CATEGORY             
Owner occupied commercial RE$2,681 $2,638 $2,322 $2,149 $2,149 $43  $532 
Income producing commercial RE 3,273  3,328  2,601  2,542  2,550  (55)  723 
Commercial & industrial 2,243  2,302  1,822  1,729  1,762  (59)  481 
Paycheck protection program 10  34  88  150  472  (24)  (462)
Commercial construction 1,514  1,482  1,015  947  927  32   587 
Equipment financing 1,211  1,148  1,083  1,017  969  63   242 
Total commercial 10,932  10,932  8,931  8,534  8,829     2,103 
Residential mortgage 1,997  1,826  1,638  1,533  1,473  171   524 
Home equity lines of credit 801  778  694  661  661  23   140 
Residential construction 381  368  359  321  289  13   92 
Manufactured housing 287  269        18   287 
Consumer 143  143  138  142  139     4 
Total loans$14,541 $14,316 $11,760 $11,191 $11,391 $225  $3,150 
              
LOANS BY MARKET             
Georgia$3,960 $3,879 $3,778 $3,732 $3,729 $81  $231 
South Carolina 2,377  2,323  2,235  2,145  2,107  54   270 
North Carolina 2,006  1,879  1,895  1,427  1,374  127   632 
Tennessee 2,621  2,661  373  383  394  (40)  2,227 
Florida 1,235  1,208  1,148  1,113  1,141  27   94 
Commercial Banking Solutions 2,342  2,366  2,331  2,391  2,646  (24)  (304)
Total loans$14,541 $14,316 $11,760 $11,191 $11,391 $225  $3,150 


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
  2022
 2021
  Second
Quarter
 First
Quarter
 Fourth
Quarter
NONACCRUAL LOANS      
Owner occupied RE $1,876 $4,590 $2,714
Income producing RE  7,074  7,220  7,588
Commercial & industrial  4,548  6,227  5,429
Commercial construction  208  401  343
Equipment financing  3,249  2,540  1,741
Total commercial  16,955  20,978  17,815
Residential mortgage  12,228  13,024  13,313
Home equity lines of credit  933  1,183  1,212
Residential construction  198  212  420
Manufactured housing  2,804  2,507  
Consumer  25  40  52
Total nonaccrual loans held for investment  33,143  37,944  32,812
Nonaccrual loans held for sale  317  2,033  
OREO and repossessed assets  968  839  43
Total NPAs $34,428 $40,816 $32,855


   2022   2021 
  Second Quarter First Quarter Fourth Quarter
(in thousands) Net Charge-
Offs
 Net Charge-
Offs to
Average
Loans
(1)
 Net Charge-
Offs
 Net Charge-
Offs to
Average
Loans
(1)
 Net Charge-
Offs
 Net Charge-
Offs to
Average
Loans
(1)
NET CHARGE-OFFS BY CATEGORY            
Owner occupied RE $(1,496) (0.23)% $(45)   (0.01)% $(255) (0.04)%
Income producing RE  (116) (0.01)  (290) (0.04)  (98) (0.01)
Commercial & industrial  (302) (0.05)  2,929  0.51   339  0.07 
Commercial construction  (144) (0.04)  (373) (0.10)  (354) (0.14)
Equipment financing  907  0.31   267  0.10   781  0.29 
Total commercial  (1,151) (0.04)  2,488  0.09   413  0.02 
Residential mortgage  (51) (0.01)  (97) (0.02)  (169) (0.04)
Home equity lines of credit  (346) (0.18)  (81) (0.04)  (118) (0.07)
Residential construction  (76) (0.08)  (23) (0.03)  (17) (0.02)
Manufactured housing  135  0.20   164  0.25      
Consumer  420  1.18   527  1.48   139  0.39 
Total $(1,069) (0.03) $2,978  0.08  $248  0.01 
             
(1)Annualized.            


UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets
(Unaudited)

(in thousands, except share and per share data) June 30,
2022
 December 31,
2021
ASSETS    
Cash and due from banks $238,310  $144,244 
Interest-bearing deposits in banks  977,397   2,147,266 
Federal funds and other short-term investments     27,000 
Cash and cash equivalents  1,215,707   2,318,510 
Debt securities available-for-sale  3,960,285   4,496,824 
Debt securities held-to-maturity (fair value $2,431,138 and $1,148,804, respectively)  2,722,475   1,156,098 
Loans held for sale  40,678   44,109 
Loans and leases held for investment  14,541,230   11,760,346 
Less allowance for credit losses - loans and leases  (136,925)  (102,532)
Loans and leases, net  14,404,305   11,657,814 
Premises and equipment, net  286,248   245,296 
Bank owned life insurance  299,104   217,713 
Goodwill and other intangible assets, net  782,544   472,407 
Other assets  501,662   338,000 
Total assets $24,213,008  $20,946,771 
LIABILITIES AND SHAREHOLDERS' EQUITY    
Liabilities:    
Deposits:    
Noninterest-bearing demand $8,155,494  $6,956,981 
NOW and interest-bearing demand  4,543,722   4,252,209 
Money market  4,839,565   4,183,354 
Savings  1,513,656   1,215,779 
Time  1,654,704   1,442,498 
Brokered  165,942   190,358 
Total deposits  20,873,083   18,241,179 
Long-term debt  324,371   247,360 
Accrued expenses and other liabilities  364,266   235,987 
Total liabilities  21,561,720   18,724,526 
Shareholders' equity:    
Preferred stock; $1 par value; 10,000,000 shares authorized;
  4,000 shares Series I issued and outstanding, $25,000 per share
  liquidation preference
  96,422   96,422 
Common stock, $1 par value; 200,000,000 shares authorized,
 106,033,960 and 89,349,826 shares issued and outstanding,
  respectively
  106,034   89,350 
Common stock issuable; 578,251 and 595,705 shares, respectively  11,448   11,288 
Capital surplus  2,304,608   1,721,007 
Retained earnings  396,970   330,654 
Accumulated other comprehensive loss  (264,194)  (26,476)
Total shareholders' equity  2,651,288   2,222,245 
Total liabilities and shareholders' equity $24,213,008  $20,946,771 


UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Income
(Unaudited)

  Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands, except per share data)  2022  2021   2022   2021 
Interest revenue:        
Loans, including fees $155,266 $128,058  $302,007  $253,784 
Investment securities, including tax exempt of $2,539, $2,255, $5,194 and $4,405,
respectively
  30,425  17,542   54,090   32,990 
Deposits in banks and short-term investments  1,687  209   2,340   577 
Total interest revenue  187,378  145,809   358,437   287,351 
         
Interest expense:        
Deposits:        
NOW and interest-bearing demand  2,163  1,382   3,632   2,868 
Money market  1,515  1,355   2,527   3,159 
Savings  87  53   159   102 
Time  537  830   1,115   2,710 
Deposits  4,302  3,620   7,433   8,839 
Short-term borrowings          2 
Long-term debt  4,173  3,813   8,309   8,070 
Total interest expense  8,475  7,433   15,742   16,911 
Net interest revenue  178,903  138,376   342,695   270,440 
Provision for (release of) credit losses  5,604  (13,588)  28,690   (25,869)
Net interest revenue after provision for credit losses  173,299  151,964   314,005   296,309 
         
Noninterest income:        
Service charges and fees  10,005  8,335   19,075   15,905 
Mortgage loan gains and other related fees  6,971  11,136   23,123   33,708 
Wealth management fees  5,985  3,822   11,880   7,327 
Gains from sales of other loans, net  3,800  4,123   6,998   5,153 
Lending and loan servicing fees  1,586  2,085   4,572   4,245 
Securities gains (losses), net  46  41   (3,688)  41 
Other  5,065  6,299   10,471   14,167 
Total noninterest income  33,458  35,841   72,431   80,546 
Total revenue  206,757  187,805   386,436   376,855 
         
Noninterest expenses:        
Salaries and employee benefits  69,233  59,414   140,239   119,999 
Communications and equipment  9,675  7,408   18,923   14,611 
Occupancy  8,865  7,078   18,243   14,034 
Advertising and public relations  2,300  1,493   3,788   2,692 
Postage, printing and supplies  1,999  1,618   4,118   3,440 
Professional fees  5,402  4,928   9,849   9,162 
Lending and loan servicing expense  3,047  3,181   5,413   6,058 
Outside services - electronic banking  2,947  2,285   5,470   4,503 
FDIC assessments and other regulatory charges  2,267  1,901   4,440   3,797 
Amortization of intangibles  1,736  929   3,529   1,914 
Merger-related and other charges  7,143  1,078   16,159   2,621 
Other  6,176  4,227   9,894   7,903 
Total noninterest expenses  120,790  95,540   240,065   190,734 
Income before income taxes  85,967  92,265   146,371   186,121 
Income tax expense  19,125  22,005   31,510   42,155 
Net income  66,842  70,260   114,861   143,966 
Preferred stock dividends  1,719  1,719   3,438   3,438 
Earnings allocated to participating securities  362  432   596   894 
Net income available to common shareholders $64,761 $68,109  $110,827  $139,634 
         
Net income per common share:        
Basic $0.61 $0.78  $1.04  $1.60 
Diluted  0.61  0.78   1.04   1.60 
Weighted average common shares outstanding:        
Basic  106,610  87,289   106,580   87,306 
Diluted  106,716  87,421   106,697   87,443 
                


Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
 
   2022   2021 
(dollars in thousands, fully taxable equivalent (FTE)) Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
Assets:            
Interest-earning assets:            
Loans, net of unearned income (FTE)(1)(2) $14,382,324  $155,184 4.33% $11,616,802  $127,458  4.40%
Taxable securities(3)  6,436,992   27,886 1.73   4,242,297   15,287  1.44 
Tax-exempt securities (FTE)(1)(3)  490,659   3,410 2.78   388,609   3,030  3.12 
Federal funds sold and other interest-earning assets  1,302,935   2,066 0.64   1,292,026   1,055  0.33 
Total interest-earning assets (FTE)  22,612,910   188,546 3.34   17,539,734   146,830  3.36 
             
Noninterest-earning assets:            
Allowance for credit losses  (135,392)      (128,073)    
Cash and due from banks  203,291       152,443     
Premises and equipment  286,417       225,017     
Other assets(3)  1,286,107       1,002,634     
Total assets $24,253,333      $18,791,755     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $4,561,162   2,163 0.19  $3,428,009   1,382  0.16 
Money market  5,019,420   1,515 0.12   3,814,960   1,355  0.14 
Savings  1,496,414   87 0.02   1,080,267   53  0.02 
Time  1,671,632   491 0.12   1,548,487   899  0.23 
Brokered time deposits  65,081   46 0.28   64,332   (69) (0.43)
  Total interest-bearing deposits  12,813,709   4,302 0.13   9,936,055   3,620  0.15 
Federal funds purchased and other borrowings  66       111      
Federal Home Loan Bank advances               
Long-term debt  324,301   4,173 5.16   285,389   3,813  5.36 
Total borrowed funds  324,367   4,173 5.16   285,500   3,813  5.36 
Total interest-bearing liabilities  13,138,076   8,475 0.26   10,221,555   7,433  0.29 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits  8,025,947       6,196,045     
Other liabilities  397,890       314,130     
Total liabilities  21,561,913       16,731,730     
Shareholders' equity  2,691,420       2,060,025     
Total liabilities and shareholders' equity $24,253,333      $18,791,755     
             
Net interest revenue (FTE)   $180,071     $139,397   
Net interest-rate spread (FTE)     3.08%     3.07%
Net interest margin (FTE)(4)     3.19%     3.19%

(1)   Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)   Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3)   Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $271 million in 2022 and pretax unrealized gains of $28.6 million in 2021 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.

 
Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
 
   2022   2021 
(dollars in thousands, fully taxable equivalent (FTE)) Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
Assets:            
Interest-earning assets:            
Loans, net of unearned income (FTE)(1)(2) $14,308,585  $301,821 4.25% $11,525,363  $252,580 4.42%
Taxable securities(3)  6,142,723   48,896 1.59   3,932,545   28,585 1.45 
Tax-exempt securities (FTE)(1)(3)  500,750   6,976 2.79   380,370   5,918 3.11 
Federal funds sold and other interest-earning assets  1,604,995   3,086 0.39   1,324,776   2,277 0.34 
Total interest-earning assets (FTE)  22,557,053   360,779 3.22   17,163,054   289,360 3.40 
             
Non-interest-earning assets:            
Allowance for loan losses  (124,384)      (135,845)    
Cash and due from banks  184,751       146,401     
Premises and equipment  281,842       223,224     
Other assets(3)  1,329,359       1,012,896     
Total assets $24,228,621      $18,409,730     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $4,613,838   3,632 0.16  $3,379,794   2,868 0.17 
Money market  5,064,866   2,527 0.10   3,774,201   3,159 0.17 
Savings  1,466,812   159 0.02   1,035,176   102 0.02 
Time  1,715,022   1,025 0.12   1,595,196   2,487 0.31 
Brokered time deposits  72,048   90 0.25   69,765   223 0.64 
  Total interest-bearing deposits  12,932,586   7,433 0.12   9,854,132   8,839 0.18 
Federal funds purchased and other borrowings  337       62     
Federal Home Loan Bank advances         1,657   2 0.24 
Long-term debt  321,663   8,309 5.21   301,193   8,070 5.40 
Total borrowed funds  322,000   8,309 5.20   302,912   8,072 5.37 
Total interest-bearing liabilities  13,254,586   15,742 0.24   10,157,044   16,911 0.34 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits  7,847,284       5,896,882     
Other liabilities  388,162       313,374     
Total liabilities  21,490,032       16,367,300     
Shareholders' equity  2,738,589       2,042,430     
Total liabilities and shareholders' equity $24,228,621      $18,409,730     
             
Net interest revenue (FTE)   $345,037     $272,449  
Net interest-rate spread (FTE)     2.98%     3.06%
Net interest margin (FTE)(4)     3.08%     3.20%
             

(1)   Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)   Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3)   Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $175 million in 2022 and pretax unrealized gains of $43.4 million in 2021, respectively, 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.

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQGS: UCBI) provides a full range of banking, wealth management and mortgage services for relationship-oriented consumers and business owners. As of June 30, 2022, United had $24.2 billion in assets and 195 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee, along with a national SBA lending franchise and a national equipment lending subsidiary. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. In 2022, J.D. Power ranked United highest in customer satisfaction with consumer banking in the Southeast, marking eight out of the last nine years United earned the coveted award. Forbes recognized United as one of the top ten World’s Best Banks in 2022. Forbes also included United on its 2022 list of the 100 Best Banks in America for the ninth consecutive year. United also received ten Greenwich Excellence Awards in 2021 for excellence in Small Business Banking and Middle Market Banking, including national awards for Overall Satisfaction and Likelihood to Recommend. United was also named one of the "Best Banks to Work For" by American Banker in 2021 for the fifth consecutive year based on employee satisfaction. Additional information about United can be found at www.ucbi.com.

Non-GAAP Financial Measures

This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “pre-tax, pre-provision income,” “operating net income per diluted common share,” “operating earnings per share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “return on assets - pre-tax, pre-provision, excluding merger-related and other charges,” “return on assets - pre-tax, pre-provision,” “operating efficiency ratio,” and “tangible common equity to tangible assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.

Caution About Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In general, forward-looking statements usually may be identified through use of words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, and include statements related to potential benefits of the Progress merger, and the strength of our pipelines and their ability to support for business growth across our markets and our belief that our high-quality balance sheet and business mix will support strong performance regardless of future economic conditions. Forward-looking statements are not historical facts and represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but are not limited to (1) the risk that the cost savings and any revenue synergies from the Progress acquisition may not be realized or take longer than anticipated to be realized, (2) disruption of customer, supplier, employee or other business partner relationships as a result of the Progress acquisition, (3) the occurrence of any event, change or other circumstances that could give rise to a delay in closing the Progress acquisition or the termination of the merger agreement, (4) the failure to obtain the necessary approval by the shareholders of Progress, (5) the possibility that the costs, fees, expenses and charges related to the acquisition of Progress may be greater than anticipated, (6) the ability of United to obtain required governmental approvals of the Progress acquisition, (7) reputational risk and the reaction of the companies’ customers, suppliers, employees or other business partners to the acquisition of Progress, (8) the failure of the closing conditions in the Progress merger agreement to be satisfied, or any unexpected delay in closing the acquisition, (9) the risks relating to the integration of Progress’ operations into the operations of United, including the risk that such integration will be materially delayed or will be more costly or difficult than expected, (10) the risk of potential litigation or regulatory action related to the acquisition of Progress, (11) the risks associated with United’s pursuit of future acquisitions, (12) the risk of expansion into new geographic or product markets, (13) the dilution caused by United’s issuance of additional shares of its common stock in the acquisition of Progress, and (14) general competitive, economic, political and market conditions. Further information regarding additional factors which could affect the forward-looking statements contained in this press release can be found in the cautionary language included under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in United’s Annual Report on Form 10-K for the year ended December 31, 2021, and other documents subsequently filed by United with the United States Securities and Exchange Commission (“SEC”).

Many of these factors are beyond United’s (and in the case of the prospective acquisition of Progress, Progress’) ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this communication, and United undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for United or Progress to predict their occurrence or how they will affect United or Progress.

United qualifies all forward-looking statements by these cautionary statements.

Important Information for Shareholders and Investors

In connection with the prospective acquisition of Progress, United has filed with the SEC a registration statement on Form S-4 that includes a proxy statement of Progress to be sent to Progress’ shareholders seeking their approval of the merger agreement and merger with United. The registration statement also contains the prospectus of United to register the shares of United common stock to be issued in connection with the Progress acquisition. INVESTORS AND SHAREHOLDERS OF PROGRESS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE PROXY STATEMENT/PROSPECTUS IS A PART OF THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED BY UNITED OR PROGRESS WITH THE SEC, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE REGISTRATION STATEMENT AND THOSE OTHER DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT UNITED, PROGRESS AND THE MERGER OF PROGRESS AND UNITED.

The registration statement and other documents filed with the SEC may be obtained for free at the SEC’s website (www.sec.gov). You will also be able to obtain these documents, free of charge, from United at the “Investor Relations” section of United’s website at www.ucbi.com or from Progress at the “Investor Relations” section of Progress’ website at www.myprogressbank.com. Copies of the definitive proxy statement/prospectus will also be made available, free of charge, by contacting United Community Banks, Inc., P.O. Box 398, Blairsville, GA 30514, Attn: Jefferson Harralson, Telephone: (864) 240-6208, or Progress Financial Corp., 201 Williams Avenue, Huntsville, AL 35801, Attn: Dabsey Maxwell, Telephone: (256) 319-3641.

This communication is for informational purposes only and does not constitute an offer to sell, the solicitation of an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. This communication is also not a solicitation of any vote or approval with respect to the proposed merger of Progress with United or otherwise.

Participants in the Transaction

United and Progress, and certain of their respective directors and executive officers, under the rules of the SEC may be deemed to be participants in the solicitation of proxies from Progress’ shareholders in favor of the approval of the merger agreement and the merger of Progress and United. Information about the directors and officers of United and their ownership of United common stock can be found in United’s definitive proxy statement in connection with its 2022 annual meeting of shareholders, as filed with the SEC on April 6, 2022, and other documents subsequently filed by United with the SEC. Information about the directors and executive officers of Progress and their ownership of Progress’ capital stock, as well as information regarding the interests of other persons who may be deemed participants in the transaction, may be obtained by reading the proxy statement/prospectus regarding the Merger with. Additional information regarding the interests of these participants will also be included in the proxy statement/prospectus pertaining to the Merger. Free copies of this document may be obtained as described above.

For more information:

Jefferson Harralson
Chief Financial Officer
(864) 240-6208
Jefferson_Harralson@ucbi.com