United Community Banks, Inc. Reports Second Quarter Results

Continued Strong Performance and Strengthening of its Balance Sheet


GREENVILLE, S.C., July 21, 2020 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today reported second quarter financial results, with record year-over-year loan and deposit growth. United delivered net income of $25.1 million and pre-tax pre-provision income of $65.6 million and built its allowance for credit losses with a $33.5 million provision for credit losses. Due largely to the continued reserve build anticipating potential future loan losses driven by COVID-19 effects on the economy, diluted earnings per share of $0.32 represented a decrease of $0.23 or 42%, from a year ago. Excluding merger-related and other charges, diluted operating earnings per share were also $0.32, also down 46% from last year. United’s return on assets (ROA) was 0.71% and its return on common equity was 6.2% for the quarter. On an operating basis, United’s ROA was 0.72% and its return on tangible common equity was 8.1%.

Chairman and CEO Lynn Harton stated, “As the nation continues to grapple with the uncertainties of the future economic environment, I am pleased with the financial strength of the company and the performance of our employees, who continue to deliver for our customers. In this new world of physical distancing, the investments we have made in our digital delivery channels are being put to the test and exceeding our expectations. Customer traffic patterns suggest that our customers have significantly increased their use of our digital platform to access our products and services, as well as to open and manage their accounts. Along with our enhanced mobile app, this platform has enabled us to maintain business volume, while keeping our employees and customers physically-distanced and safe while banking. We supported our small business clients by offering loan deferrals, as needed. Additionally, our SBA team, along with other United bankers across our markets, processed nearly 11,000 applications for the SBA’s Paycheck Protection Program (PPP) loans totaling $1.1 billion—providing funding for small businesses throughout our footprint. In addition to addressing the needs of our existing customers, we added approximately 4,000 new loan and deposit customers since the Program began, which has given us an even greater opportunity to serve our markets.”

This quarter saw record growth with total loans increasing by $1.2 billion—mainly from PPP loans—however, non-PPP loans also grew at a 5% annualized rate. Likewise, core transaction deposits were up a record $1.7 billion over first quarter with growth in noninterest bearing deposits of $1.1 billion being the primary driver. United’s cost of deposits decreased 18 bps to 0.38% as a result. Net interest margin decreased 65 bps from the first quarter. Of this decrease, 18 bps was due to lower purchased loan accretion, approximately 6 bps was due to lower-yielding PPP loans, and approximately 9 bps resulted from carrying an increased amount in low-yielding overnight investments due to the record amount of liquidity generated by bank deposit growth in the quarter.

Harton continued, “During the second quarter, we also completed a number of important strategic initiatives that position us well for the future. In June, we raised $200 million—$100 million in preferred stock with a 6.875% annual dividend rate and $100 million in senior notes with a 5.00% annual coupon. Our long-term goal is to continue to remain a top performer in our peer group, with top quartile results in key performance metrics including capital levels. These capital raises were done to provide us with substantial flexibility to be able to both focus on our customers’ current needs, and at the same time, be prepared to emerge from the health crisis in a very strong position. We believe that there will be meaningful strategic growth opportunities at that point.”

Immediately following quarter end, the bank announced the July 1st closing of the previously announced merger with Three Shores Bancorporation, Inc. and its bank subsidiary Seaside National Bank & Trust, which will now be branded Seaside Bank and Trust. Harton noted, “We are pleased to welcome Seaside’s talented team of bankers and believe that our combined banks are better together. Gideon Haymaker is now United’s president for the State of Florida and additionally will lead our expansion of Seaside’s wealth management offering across United’s footprint.”  

Mr. Harton concluded, “Giving back to our communities is at the core of who we are as a community bank. In keeping with that long-standing tradition, I am also pleased to announce that we recently formed the United Community Bank Foundation, a tax-exempt private foundation which will expand our charitable endeavors throughout our footprint. In the second quarter, we made a $1 million initial contribution to the foundation, which will allow us to further support our communities that have been critical to our success over the years.”

Second Quarter 2020 Financial Highlights:

  • EPS decreased by 42% compared to last year on a GAAP basis and 46% on an operating basis
  • Return on assets of 0.71%, or 0.72% excluding merger-related and other charges
  • Pre-tax, pre-provision return on assets of 1.86%, or 1.87% excluding merger-related and other charges
  • Return on common equity of 6.2%
  • Return on tangible common equity of 8.1%, excluding merger-related and other charges
  • United adopted the Current Expected Credit Losses (CECL) model for determining the allowance for credit losses last quarter; the continued uncertain economic outlook necessitated a provision for credit losses of $33.5 million
  • Record loan production of $2.0 billion, with $1.1 billion in PPP loans and $866 million in traditional (non-PPP) loans
  • Loan growth of $1.2 billion, including traditional loan growth at an annualized rate of 5% for the quarter
  • Core transaction deposits were up $1.7 billion or 22%, mainly driven by noninterest bearing demand deposit growth of $1.1 billion; a significant portion of United’s core transaction deposit growth was attributable to PPP-related deposits
  • Net interest margin of 3.42%, which was down 65 bps from first quarter, reflecting the effect of lower interest rates, lower purchased loan accretion, the impact of the lower yielding PPP loans and a much higher level of low-yielding, highly-liquid assets
  • Mortgage rate locks of $802 million, which is slightly higher than last quarter and again exceeds our previous quarterly record by 58%; this compares to $390 million a year ago
  • Noninterest income was up $14.4 million on a linked quarter basis, primarily due to a $15.3 million increase in mortgage income as a result of record mortgage rate locks and production, as well as an improved market environment
  • Efficiency ratio of 55.86%, or 55.59% excluding merger-related and other charges
  • Net charge-offs of $6.1 million, or 25 basis points as a percent of average loans, down 12 basis points from last quarter and mainly attributable to two credits that have been substandard for more than a year
  • Nonperforming assets of 0.32% of total assets, which is up 4 basis points compared to March 31, 2020
  • Total deferrals of $1.8 billion or 17% of the total loan portfolio at June 30
  • Funded the United Community Bank Foundation with an initial $1 million contribution for charities and causes throughout the footprint
  • Completed a public offering of $100 million aggregate of 6.875% Non-Cumulative Perpetual Preferred Stock and $100 million aggregate principal amount of 5.000% Fixed-to-Floating Senior Notes due 2030
  • Effective July 1, 2020, United completed its merger with Three Shores Bancorporation, Inc. and its bank subsidiary, Seaside National Bank & Trust

Conference Call

United will hold a conference call, Wednesday, July 22, 2020, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 4995436. The conference call also will be webcast and available for replay for 30 days by selecting “Events & Presentations” within the Investor Relations section of United’s website at www.ucbi.com.

UNITED COMMUNITY BANKS, INC.                  
Selected Financial Information                  
  2020 2019 Second
Quarter 
 For the Six Months Ended June 30,  
(in thousands, except per share data) Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 Second
Quarter
 2020 -
2019
Change
 2020 2019 YTD 2020
 - 2019
Change
INCOME SUMMARY                  
Interest revenue $123,605   $136,547   $136,419   $140,615   $139,156     $260,152   $275,672    
Interest expense 14,301   17,941   19,781   21,277   21,372     32,242   42,254    
Net interest revenue 109,304   118,606   116,638   119,338   117,784   (7)% 227,910   233,418   (2)%
Provision for credit losses 33,543   22,191   3,500   3,100   3,250     55,734   6,550   751  
Noninterest income 40,238   25,814   30,183   29,031   24,531   64   66,052   45,499   45  
Total revenue 115,999   122,229   143,321   145,269   139,065   (17)  238,228   272,367   (13) 
Expenses 83,980   81,538   81,424   82,924   81,813   3   165,518   157,897   5  
Income before income tax expense 32,019   40,691   61,897   62,345   57,252   (44)  72,710   114,470   (36) 
Income tax expense 6,923   8,807   12,885   13,983   13,167   (47)  15,730   26,123   (40) 
Net income 25,096   31,884   49,012   48,362   44,085   (43)  56,980   88,347   (36) 
Merger-related and other charges 397   808   (74)  2,605   4,087     1,205   4,826    
Income tax benefit of merger-related and other charges (87)  (182)  17   (600)  (940)    (269)  (1,112)   
Net income - operating (1) $25,406   $32,510   $48,955   $50,367   $47,232   (46)  $57,916   $92,061   (37) 
                   
Pre-tax pre-provision income (5) $65,562   $62,882   $65,397   $65,445   $60,502   8   $128,444   $121,020   6  
                   
PERFORMANCE MEASURES                  
Per common share:                  
Diluted net income - GAAP $0.32   $0.40   $0.61   $0.60   $0.55   (42)  $0.71   $1.10   (35) 
Diluted net income - operating (1) 0.32   0.41   0.61   0.63   0.59   (46)  0.73   1.15   (37) 
Cash dividends declared 0.18   0.18   0.18   0.17   0.17   6   0.36   0.33   9  
Book value 21.22   20.80   20.53   20.16   19.65   8   21.22   19.65   8  
Tangible book value (3) 16.95   16.52   16.28   15.90   15.38   10   16.95   15.38   10  
Key performance ratios:                  
Return on common equity - GAAP (2)(4) 6.17 % 7.85 % 12.07 % 12.16 % 11.45 %   7.01 % 11.65 %  
Return on common equity - operating (1)(2)(4) 6.25   8.01   12.06   12.67   12.27     7.13   12.14    
Return on tangible common equity - operating (1)(2)(3)(4) 8.09   10.57   15.49   16.38   15.88     9.20   15.67    
Return on assets - GAAP (4) 0.71   0.99   1.50   1.51   1.40     0.85   1.42    
Return on assets - operating (1)(4) 0.72   1.01   1.50   1.58   1.50     0.86   1.48    
Return on assets - pre-tax pre-provision (4)(5) 1.86   1.95   2.00   2.05   1.92     1.91   1.94    
Return on assets - pre-tax pre-provision, excluding merger-  related and other charges (1)(4)(5) 1.87   1.98   2.00   2.13   2.05     1.92   2.02    
Net interest margin (fully taxable equivalent) (4) 3.42   4.07   3.93   4.12   4.12     3.73   4.11    
Efficiency ratio - GAAP 55.86   56.15   54.87   55.64   57.28     56.00   56.32    
Efficiency ratio - operating (1) 55.59   55.59   54.92   53.90   54.42     55.59   54.60    
Equity to total assets 11.81   12.54   12.66   12.53   12.25     11.81   12.25    
Tangible common equity to tangible assets (3) 9.12   10.22   10.32   10.16   9.86     9.12   9.86    
                   
ASSET QUALITY                  
Nonperforming loans $48,021   $36,208   $35,341   $30,832   $26,597   81   $48,021   $26,597   81  
Foreclosed properties 477   475   476   102   75   536   477   75   536  
Total nonperforming assets ("NPAs") 48,498   36,683   35,817   30,934   26,672   82   48,498   26,672   82  
Allowance for credit losses - loans 103,669   81,905   62,089   62,514   62,204   67   103,669   62,204   67  
Net charge-offs 6,149   8,114   3,925   2,723   2,438   152   14,263   5,568   156  
Allowance for credit losses - loans to loans 1.02 % 0.92 % 0.70 % 0.70 % 0.70 %   1.02   0.70 %  
Net charge-offs to average loans (4) 0.25   0.37   0.18   0.12   0.11     0.31   0.13    
NPAs to loans and foreclosed properties 0.48   0.41   0.41   0.35   0.30     0.48   0.30    
NPAs to total assets 0.32   0.28   0.28   0.24   0.21     0.32   0.21    
                   
AVERAGE BALANCES ($ in millions)                  
Loans $9,773   $8,829   $8,890   $8,836   $8,670   13   $9,301   $8,551   9  
Investment securities 2,408   2,520   2,486   2,550   2,674   (10)  2,464   2,778   (11) 
Earning assets 12,958   11,798   11,832   11,568   11,534   12   12,378   11,516   7  
Total assets 14,173   12,944   12,946   12,681   12,608   12   13,558   12,559   8  
Deposits 12,071   10,915   10,924   10,531   10,493   15   11,493   10,427   10  
Shareholders’ equity 1,686   1,653   1,623   1,588   1,531   10   1,670   1,505   11  
Common shares - basic (thousands) 78,920   79,340   79,659   79,663   79,673   (1)  79,130   79,739   (1) 
Common shares - diluted (thousands) 78,924   79,446   79,669   79,667   79,678   (1)  79,186   79,745   (1) 
                   
AT PERIOD END ($ in millions)                  
Loans $10,133   $8,935   $8,813   $8,903   $8,838   15   $10,133   $8,838   15  
Investment securities 2,432   2,540   2,559   2,515   2,620   (7)  2,432   2,620   (7) 
Total assets 15,005   13,086   12,916   12,809   12,779   17   15,005   12,779   17  
Deposits 12,702   11,035   10,897   10,757   10,591   20   12,702   10,591   20  
Shareholders’ equity 1,772   1,641   1,636   1,605   1,566   13   1,772   1,566   13  
Common shares outstanding (thousands) 78,335   78,284   79,014   78,974   79,075   (1)  78,335   79,075   (1) 

(1) Excludes merger-related and other charges which includes termination of pension plan in the third quarter of 2019, executive retirement charges in the second quarter of 2019 and amortization of certain executive change of control benefits. (2) Net income 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              
  2020 2019 For the Six Months Ended June 30,
  Second
 First
 Fourth 
 Third 
 Second 
    
(in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter 2020 2019
               
Expense reconciliation              
Expenses (GAAP) $83,980   $81,538   $81,424   $82,924   $81,813   $165,518   $157,897  
Merger-related and other charges (397)  (808)  74   (2,605)  (4,087)  (1,205)  (4,826) 
Expenses - operating $83,583   $80,730   $81,498   $80,319   $77,726   $164,313   $153,071  
               
Net income to operating income reconciliation              
Net income (GAAP) $25,096   $31,884   $49,012   $48,362   $44,085   $56,980   $88,347  
Merger-related and other charges 397   808   (74)  2,605   4,087   1,205   4,826  
Income tax benefit of merger-related and other charges (87)  (182)  17   (600)  (940)  (269)  (1,112) 
Net income - operating $25,406   $32,510   $48,955   $50,367   $47,232   $57,916   $92,061  
               
Net income to pre-tax pre-provision income reconciliation              
Net income (GAAP) $25,096   $31,884   $49,012   $48,362   $44,085   $56,980   $88,347  
Income tax expense 6,923   8,807   12,885   13,983   13,167   15,730   26,123  
Provision for credit losses 33,543   22,191   3,500   3,100   3,250   55,734   6,550  
Pre-tax pre-provision income $65,562   $62,882   $65,397   $65,445   $60,502   $128,444   $121,020  
               
Diluted income per common share reconciliation              
Diluted income per common share (GAAP) $0.32   $0.40   $0.61   $0.60   $0.55   $0.71   $1.10  
Merger-related and other charges, net of tax    0.01      0.03   0.04   0.02   0.05  
Diluted income per common share - operating $0.32   $0.41   $0.61   $0.63   $0.59   $0.73   $1.15  
               
Book value per common share reconciliation              
Book value per common share (GAAP) $21.22   $20.80   $20.53   $20.16   $19.65   $21.22   $19.65  
Effect of goodwill and other intangibles (4.27)  (4.28)  (4.25)  (4.26)  (4.27)  (4.27)  (4.27) 
Tangible book value per common share $16.95   $16.52   $16.28   $15.90   $15.38   $16.95   $15.38  
               
Return on tangible common equity reconciliation              
Return on common equity (GAAP) 6.17 % 7.85 % 12.07 % 12.16 % 11.45 % 7.01 % 11.65 %
Merger-related and other charges, net of tax 0.08   0.16   (0.01)  0.51   0.82   0.12   0.49  
Return on common equity - operating 6.25   8.01   12.06   12.67   12.27   7.13   12.14  
Effect of goodwill and other intangibles 1.84   2.56   3.43   3.71   3.61   2.07   3.53  
Return on tangible common equity - operating 8.09 % 10.57 % 15.49 % 16.38 % 15.88 % 9.20 % 15.67 %
               
Return on assets reconciliation              
Return on assets (GAAP) 0.71 % 0.99 % 1.50 % 1.51 % 1.40 % 0.85 % 1.42 %
Merger-related and other charges, net of tax 0.01   0.02      0.07   0.10   0.01   0.06  
Return on assets - operating 0.72 % 1.01 % 1.50 % 1.58 % 1.50 % 0.86 % 1.48 %
               
Return on assets to return on assets- pre-tax pre-provision reconciliation              
Return on assets (GAAP) 0.71 % 0.99 % 1.50 % 1.51 % 1.40 % 0.85 % 1.42 %
Income tax expense 0.20   0.27   0.39   0.44   0.42   0.23   0.41  
Provision for credit losses 0.95   0.69   0.11   0.10   0.10   0.83   0.11  
Return on assets - pre-tax, pre-provision 1.86   1.95   2.00   2.05   1.92   1.91   1.94  
Merger-related and other charges 0.01   0.03      0.08   0.13   0.01   0.08  
Return on assets - pre-tax pre-provision, excluding merger-related and other charges 1.87 % 1.98 % 2.00 % 2.13 % 2.05 % 1.92 % 2.02 %
               
Efficiency ratio reconciliation              
Efficiency ratio (GAAP) 55.86 % 56.15 % 54.87 % 55.64 % 57.28 % 56.00 % 56.32 %
Merger-related and other charges (0.27)  (0.56)  0.05   (1.74)  (2.86)  (0.41)  (1.72) 
Efficiency ratio - operating 55.59 % 55.59 % 54.92 % 53.90 % 54.42 % 55.59 % 54.60 %
               
Tangible common equity to tangible assets reconciliation              
Equity to total assets (GAAP) 11.81 % 12.54 % 12.66 % 12.53 % 12.25 % 11.81 % 12.25 %
Effect of goodwill and other intangibles (2.05)  (2.32)  (2.34)  (2.37)  (2.39)  (2.05)  (2.39) 
Effect of preferred equity (0.64)              (0.64)    
Tangible common equity to tangible assets 9.12 % 10.22 % 10.32 % 10.16 % 9.86 % 9.12 % 9.86 %
                             


UNITED COMMUNITY BANKS, INC.            
Financial Highlights            
Loan Portfolio Composition at Period-End            
              
 2020 2019 Linked 
 Year over 
(in millions)Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 Second
Quarter
 Quarter
Change
 Year
Change
LOANS BY CATEGORY             
Owner occupied commercial RE$1,760  $1,703  $1,720  $1,692  $1,658  $57  $102 
Income producing commercial RE2,178  2,065  2,008  1,934  1,939  113  239 
Commercial & industrial1,219  1,310  1,221  1,271  1,299  (91) (80)
Paycheck protection program1,095          1,095  1,095 
Commercial construction946  959  976  1,001  983  (13) (37)
Equipment financing779  761  745  729  674  18  105 
Total commercial7,976  6,798  6,670  6,627  6,553  1,178  1,423 
Residential mortgage1,152  1,128  1,118  1,121  1,108  24  44 
Home equity lines of credit654  668  661  669  675  (14) (21)
Residential construction230  216  236  229  219  14  11 
Consumer121  125  128  257  283  (4) (162)
Total loans$10,133  $8,935  $8,813  $8,903  $8,838  $1,198  $1,295 
              
LOANS BY MARKET             
North Georgia$951  $958  $967  $1,002  $1,002  (7) (51)
Atlanta1,852  1,820  1,762  1,740  1,745  32  107 
North Carolina1,171  1,124  1,156  1,117  1,084  47  87 
Coastal Georgia618  604  631  611  604  14  14 
Gainesville233  235  246  246  244  (2) (11)
East Tennessee433  425  421  435  446  8  (13)
South Carolina1,778  1,774  1,708  1,705  1,674  4  104 
Commercial Banking Solutions3,097  1,995  1,922  1,916  1,884  1,102  1,213 
Indirect auto      131  155    (155)
Total loans$10,133  $8,935  $8,813  $8,903  $8,838  $1,198  $1,295 
                            


UNITED COMMUNITY BANKS, INC.            
Financial Highlights            
Credit Quality            
  2020 2019      
(in thousands) Second
Quarter
 First
Quarter
 Fourth
Quarter
      
NONACCRUAL LOANS            
Owner occupied RE $10,710  $10,405  $10,544       
Income producing RE 11,274  2,235  1,996       
Commercial & industrial 3,432  3,169  2,545       
Commercial construction 2,290  1,724  2,277       
Equipment financing 3,119  2,439  3,141       
Total commercial 30,825  19,972  20,503       
Residential mortgage 13,185  12,458  10,567       
Home equity lines of credit 3,138  3,010  3,173       
Residential construction 500  540  939       
Consumer 373  228  159       
Total $48,021  $36,208  $35,341       


  2020 2019
  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 $(466) (0.11)% $(1,028) (0.24)% $(208) (0.05)%
Income producing RE 4,548  0.86   270  0.05   95  0.02  
Commercial & industrial (37) (0.01)  7,185  2.30   1,809  0.58  
Commercial construction 122  0.05   (141) (0.06)  (140) (0.06) 
Equipment financing 1,665  0.87   1,507  0.81   1,550  0.84  
Total commercial 5,832  0.31   7,793  0.47   3,106  0.19  
Residential mortgage (6)    9     89  0.03  
Home equity lines of credit (98) (0.06)  (83) (0.05)  198  0.12  
Residential construction (5) (0.01)  (12) (0.02)  (24) (0.04) 
Consumer 426  1.39   407  1.30   556  0.90  
  Total $6,149  0.25   $8,114  0.37   $3,925  0.18  
             
(1)  Annualized.            


UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data) June 30,
2020
 December 31,
2019
 
ASSETS     
Cash and due from banks $125,255  $125,844  
Interest-bearing deposits in banks 1,203,706  389,362  
Cash and cash equivalents 1,328,961  515,206  
Debt securities available-for-sale 2,125,209  2,274,581  
Debt securities held-to-maturity (fair value $320,253 and $287,904) 306,638  283,533  
Loans held for sale at fair value 99,477  58,484  
Loans and leases held for investment 10,132,510  8,812,553  
Less allowance for credit losses - loans and leases (103,669) (62,089) 
Loans and leases, net 10,028,841  8,750,464  
Premises and equipment, net 211,972  215,976  
Bank owned life insurance 200,699  202,664  
Accrued interest receivable 37,774  32,660  
Net deferred tax asset 27,362  34,059  
Derivative financial instruments 94,434  35,007  
Goodwill and other intangible assets, net 340,220  342,247  
Other assets 203,300  171,135  
Total assets $15,004,887  $12,916,016  
LIABILITIES AND SHAREHOLDERS' EQUITY     
Liabilities:     
Deposits:     
Noninterest-bearing demand $4,689,545  $3,477,979  
NOW and interest-bearing demand 2,582,831  2,461,895  
Money market 2,621,158  2,230,628  
Savings 832,529  706,467  
Time 1,751,091  1,859,574  
Brokered 224,931  160,701  
Total deposits 12,702,085  10,897,244  
Long-term debt 311,631  212,664  
Derivative financial instruments 24,685  15,516  
Accrued expenses and other liabilities 194,841  154,900  
Total liabilities 13,233,242  11,280,324  
Shareholders' equity:     
Preferred stock; $1 par value; 10,000,000 shares authorized;
  Series I, $25,000 per share liquidation preference; 4,000 shares issued and outstanding
 96,660    
Common stock, $1 par value; 150,000,000 shares authorized;
  78,335,127 and 79,013,729 shares issued and outstanding
 78,335  79,014  
Common stock issuable; 596,785 and 664,640 shares 10,646  11,491  
Capital surplus 1,480,464  1,496,641  
Retained earnings 64,990  40,152  
Accumulated other comprehensive income 40,550  8,394  
Total shareholders' equity 1,771,645  1,635,692  
Total liabilities and shareholders' equity $15,004,887  $12,916,016  
          


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) 2020 2019 2020 2019 
Interest revenue:         
Loans, including fees $107,862  $119,671  $225,925  $234,930  
Investment securities, including tax exempt of $1,570, $1,122, $3,093 and $2,291 15,615  19,076  33,009  39,894  
Deposits in banks and short-term investments 128  409  1,218  848  
Total interest revenue 123,605  139,156  260,152  275,672  
          
Interest expense:         
Deposits:         
NOW and interest-bearing demand 1,628  3,460  4,606  7,069  
Money market 3,421  4,842  7,952  8,974  
Savings 39  42  74  74  
Time 6,183  8,771  13,714  16,955  
Deposits 11,271  17,115  26,346  33,072  
Short-term borrowings   248  1  409  
Federal Home Loan Bank advances   752  1  2,174  
Long-term debt 3,030  3,257  5,894  6,599  
Total interest expense 14,301  21,372  32,242  42,254  
Net interest revenue 109,304  117,784  227,910  233,418  
Provision for credit losses 33,543  3,250  55,734  6,550  
Net interest revenue after provision for credit losses 75,761  114,534  172,176  226,868  
          
Noninterest income:         
Service charges and fees 6,995  9,060  15,633  17,513  
Mortgage loan gains and other related fees 23,659  5,344  31,969  9,092  
Brokerage fees 1,324  1,588  2,964  2,925  
Gains from sales of other loans, net 1,040  1,470  2,714  2,773  
Securities gains (losses), net   149    (118) 
Other 7,220  6,920  12,772  13,314  
Total noninterest income 40,238  24,531  66,052  45,499  
Total revenue 115,999  139,065  238,228  272,367  
          
Noninterest expenses:         
Salaries and employee benefits 51,811  48,157  103,169  95,660  
Communications and equipment 6,556  6,222  12,502  12,010  
Occupancy 5,945  5,919  11,659  11,503  
Advertising and public relations 2,260  1,596  3,534  2,882  
Postage, printing and supplies 1,613  1,529  3,283  3,115  
Professional fees 4,823  4,054  8,920  7,215  
Lending and loan servicing expense 3,189  2,619  5,482  4,953  
Outside services - electronic banking 1,796  1,558  3,628  3,167  
FDIC assessments and other regulatory charges 1,558  1,547  3,042  3,257  
Amortization of intangibles 987  1,342  2,027  2,635  
Merger-related and other charges 397  3,894  1,205  4,440  
Other 3,045  3,376  7,067  7,060  
Total noninterest expenses 83,980  81,813  165,518  157,897  
Net income before income taxes 32,019  57,252  72,710  114,470  
Income tax expense 6,923  13,167  15,730  26,123  
Net income $25,096  $44,085  $56,980  $88,347  
          
Net income available to common shareholders $24,913  $43,769  $56,554  $87,716  
          
Net income per common share:         
Basic $0.32  $0.55  $0.71  $1.10  
Diluted 0.32  0.55  0.71  1.10  
Weighted average common shares outstanding:         
Basic 78,920  79,673  79,130  79,739  
Diluted 78,924  79,678  79,186  79,745  
             


Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
  2020 2019 
(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) $9,772,703  $107,398  4.42% $8,669,847  $119,668  5.54% 
Taxable securities (3) 2,229,371  14,045  2.52  2,506,942  17,954  2.86  
Tax-exempt securities (FTE) (1)(3) 178,903  2,110  4.72  166,628  1,507  3.62  
Federal funds sold and other interest-earning assets 776,776  857  0.44  190,678  679  1.42  
Total interest-earning assets (FTE) 12,957,753  124,410  3.86  11,534,095  139,808  4.86  
              
Noninterest-earning assets:             
Allowance for credit losses (89,992)     (62,716)     
Cash and due from banks 138,842      125,021      
Premises and equipment 217,096      224,018      
Other assets (3) 949,201      787,859      
Total assets $14,172,900      $12,608,277      
              
Liabilities and Shareholders' Equity:             
Interest-bearing liabilities:             
Interest-bearing deposits:             
NOW and interest-bearing demand $2,444,895  1,628  0.27  $2,190,080  3,460  0.63  
Money market 2,541,805  3,421  0.54  2,186,282  4,842  0.89  
Savings 788,247  39  0.02  687,753  42  0.02  
Time 1,805,671  6,058  1.35  1,773,968  6,949  1.57  
Brokered time deposits 130,556  125  0.39  298,553  1,822  2.45  
Total interest-bearing deposits 7,711,174  11,271  0.59  7,136,636  17,115  0.96  
Federal funds purchased and other borrowings 1      38,838  248  2.56  
Federal Home Loan Bank advances       117,912  752  2.56  
Long-term debt 228,096  3,030  5.34  252,351  3,257  5.18  
Total borrowed funds 228,097  3,030  5.34  409,101  4,257  4.17  
Total interest-bearing liabilities 7,939,271  14,301  0.72  7,545,737  21,372  1.14  
              
Noninterest-bearing liabilities:             
Noninterest-bearing deposits 4,360,095      3,355,930      
Other liabilities 187,375      175,806      
Total liabilities 12,486,741      11,077,473      
Shareholders' equity 1,686,159      1,530,804      
Total liabilities and shareholders' equity $14,172,900      $12,608,277      
              
Net interest revenue (FTE)   $110,109      $118,436    
Net interest-rate spread (FTE)     3.14%     3.72% 
Net interest margin (FTE) (4)     3.42%     4.12% 
                

(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) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $66.3 million in 2020 and unrealized gains of $5.00 million in 2019 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,
  2020 2019 
(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) $9,300,792  $225,194  4.87% $8,550,574  $235,015  5.54% 
Taxable securities (3) 2,293,502  29,916  2.61  2,609,400  37,603  2.88  
Tax-exempt securities (FTE) (1)(3) 170,578  4,155  4.87  168,156  3,077  3.66  
Federal funds sold and other interest-earning assets 612,776  2,489  0.81  188,165  1,297  1.38  
Total interest-earning assets (FTE) 12,377,648  261,754  4.25  11,516,295  276,992  4.84  
              
Non-interest-earning assets:             
Allowance for loan losses (79,885)     (62,253)     
Cash and due from banks 133,548      124,414      
Premises and equipment 218,170      220,335      
Other assets (3) 908,828      759,899      
Total assets $13,558,309      $12,558,690      
              
Liabilities and Shareholders' Equity:             
Interest-bearing liabilities:             
Interest-bearing deposits:             
NOW and interest-bearing demand $2,428,815  4,606  0.38  $2,238,083  7,069  0.64  
Money market 2,441,264  7,952  0.66  2,142,411  8,974  0.84  
Savings 750,179  74  0.02  680,018  74  0.02  
Time 1,823,612  13,308  1.47  1,701,181  12,285  1.46  
Brokered time deposits 105,689  406  0.77  389,794  4,670  2.42  
Total interest-bearing deposits 7,549,559  26,346  0.70  7,151,487  33,072  0.93  
Federal funds purchased and other borrowings 199  1  1.01  30,241  409  2.73  
Federal Home Loan Bank advances 83  1  2.42  170,636  2,174  2.57  
Long-term debt 220,429  5,894  5.38  257,134  6,599  5.18  
Total borrowed funds 220,711  5,896  5.37  458,011  9,182  4.04  
Total interest-bearing liabilities 7,770,270  32,242  0.83  7,609,498  42,254  1.12  
              
Noninterest-bearing liabilities:             
Noninterest-bearing deposits 3,943,740      3,275,612      
Other liabilities 174,781      169,048      
Total liabilities 11,888,791      11,054,158      
Shareholders' equity 1,669,518      1,504,532      
Total liabilities and shareholders' equity $13,558,309      $12,558,690      
              
Net interest revenue (FTE)   $229,512      $234,738    
Net interest-rate spread (FTE)     3.42%     3.72% 
Net interest margin (FTE) (4)     3.73%     4.11% 
                

(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) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $59.6 million in 2020 and unrealized losses of $10.4 million in 2019 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. (NASDAQ: UCBI) (United) is a bank holding company headquartered in Blairsville, Georgia, with executive offices in Greenville, South Carolina. United is one of the largest full-service financial institutions in the Southeast, with $15.0 billion in assets, and 149 offices in Georgia, North Carolina, South Carolina and Tennessee at June 30, 2020. Through its July 1st acquisition of Three Shores Bancorporation and its wholly-owned banking subsidiary, Seaside National Bank & Trust, United added approximately $2.1 billion in assets and 14 banking offices in key metropolitan markets throughout Florida.  United Community Bank, United’s wholly-owned bank subsidiary, specializes in personalized community banking services for individuals, small businesses and companies throughout its geographic footprint, now including Florida under the brand Seaside Bank and Trust. Services include a full range of consumer and commercial banking products, including mortgage, advisory, treasury management, and now wealth management. Respected national research firms consistently recognize United for outstanding customer service. In 2020, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking six out of the last seven years United earned the coveted award.  Forbes included United in its inaugural list of the World’s Best Banks in 2019 and again in 2020. Forbes also recognized United on its 2020 list of the 100 Best Banks in America for the seventh consecutive year.  United also received five Greenwich Excellence Awards in 2019 for excellence in Small Business Banking and Middle Market Banking, including a national award for Overall Satisfaction in Small Business Banking. 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.

For more information:

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