United Community Banks, Inc. Reports Third Quarter Results

EPS of $0.82, Return on Assets of 1.48% and Return on Common Equity of 14.3%

Blairsville, Georgia, UNITED STATES


GREENVILLE, S.C., Oct. 19, 2021 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the third quarter was $73.8 million and pre-tax, pre-provision income was $84.4 million. Diluted earnings per share of $0.82 for the quarter represented an increase of $0.30 or 58%, from the third quarter a year ago, and represented an increase of $0.04 or 5% from the second quarter of 2021. On an operating basis, United’s diluted earnings per share of $0.83 was up 51% over the year ago quarter. United’s GAAP return on assets (ROA) was 1.48% and its return on common equity was 14.3% for the quarter. On an operating basis, United’s ROA was 1.50% and its return on tangible common equity was 18.2%. On a pre-tax, pre-provision basis, operating return on assets was 1.73% for the quarter. The quarter benefited from an allowance release of $11.0 million, reflecting continued improvement in economic conditions and forecasts.

Chairman and CEO Lynn Harton stated, “This has been another strong quarter for United as our economies continued to strengthen even in the face of the Delta variant, increasing prices on many goods, and supply chain delays. Both loan and deposit growth were strong and noninterest income benefited from both another excellent mortgage quarter as well as contributions from our expanded wealth management business.” Harton continued, “On the strategic front, on October 1, we completed the acquisition of Aquesta Financial Holdings, Inc. and Aquesta Bank, accelerating our expansion in Charlotte, and adding the Wilmington, North Carolina market, two of the strongest markets in the Southeast. We are proud that this outstanding team of bankers has joined us and we believe that they are a great fit for United. We also continued to strengthen our Board of Directors with the appointment of Jennifer Bazante, Chief Marketing Officer of Humana Inc. We believe that digital transformation is supported and enabled by strong branding and marketing and we specifically wanted to bring that experience and thought leadership to our board. We are excited to have Jennifer join United as we continue to grow and build the company.”

Total loans decreased by $200 million during the quarter—impacted by $322 million of Paycheck Protection Program (PPP) loan forgiveness. Excluding the effect of PPP loans, core organic loan growth was 4.5% annualized. Core transaction deposits grew by $490 million during the quarter, or 15.3% annualized, and United’s cost of deposits decreased by 2 basis points to 0.07%. The net interest margin decreased by 7 basis points from the second quarter due mainly to a change in the earning asset mix towards liquid assets.

Third Quarter 2021 Financial Highlights:

  • Net income of $73.8 million and pre-tax, pre-provision income of $84.4 million
  • EPS increased by 58% compared to third quarter 2020 on a GAAP basis and 51% on an operating basis; compared to second quarter 2021, EPS increased by 5% on both a GAAP and operating basis
  • Return on assets of 1.48%, or 1.50% on an operating basis
  • Pre-tax, pre-provision return on assets of 1.70%, or 1.73% on an operating basis
  • Return on common equity of 14.3%
  • Return on tangible common equity of 18.2% on an operating basis
  • A release of provision for credit losses of $11.0 million, which reduced the allowance for loan losses to 0.89% of loans from 0.98% in the second quarter
  • Loan production of $1.2 billion, resulting in core loan growth of 4.5%, annualized for the quarter, excluding the impact of $322 million in PPP loans being forgiven
  • Core transaction deposits were up $490 million, which represents a 15.3% annualized growth rate for the quarter
  • Net interest margin of 3.12% was down 7 basis points from the second quarter, due to continued strong deposit growth and an earning asset mix change toward securities
  • Mortgage closings of $568 million compared to $576 million a year ago; mortgage rate locks of $731 million compared to $910 million a year ago
  • Noninterest income was up $4.3 million on a linked quarter basis, primarily driven by strong mortgage volume and the lack of a significant MSR write-down; it also benefitted from $2.0 million in fees generated by our newly acquired FinTrust wealth manager that closed on July 6
  • Noninterest expenses increased by $1.2 million compared to the second quarter on a GAAP basis and by $850,000 on an operating basis; excluding the FinTrust transaction, operating noninterest expenses improved by $1 million compared to the second quarter
  • Efficiency ratio at historically low levels of 53.1%, or 52.3% on an operating basis
  • Net charge-offs of $551,000 or 2 basis points as a percent of average loans, up 4 basis points from the net recoveries experienced in the second quarter
  • Nonperforming assets of 0.23% of total assets, down 2 basis points compared to June 30, 2021
  • Total loan deferrals of $9 million or 0.1% of the total loan portfolio compared to $18 million or 0.2% in the second quarter
  • Quarterly common shareholder dividend of $0.20 per share declared during the quarter, an increase of 11% year-over-year
  • Completed the acquisition of FinTrust Capital Partners, LLC and its affiliates and subsidiaries with $2.1 billion in assets under management on July 6, 2021
  • Completed the acquisition of Aquesta Financial Holdings, Inc. (“Aquesta”) with $754 million in assets on October 1, 2021; this acquisition is expected to add $0.08 in EPS accretion in 2022 with cost savings fully phased in
  • Announced the proposed acquisition of Reliant Bancorp, Inc. (“Reliant”) with $3.1 billion in assets on July 14, 2021; this acquisition is expected to close in the first quarter of 2022 and add $0.15 in EPS accretion in 2022 and $0.22 in 2023 with cost savings fully phased in

Conference Call

United will hold a conference call on Wednesday, October 20, 2021, 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 1388708. 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                  
  2021 2020 Third Quarter
2021 - 2020
Change
 For the Nine Months Ended September 30, YTD 2021 - 2020 Change
(in thousands, except per share data) Third
Quarter
 Second Quarter First
Quarter
 Fourth Quarter Third
Quarter
  20212020 
INCOME SUMMARY                  
Interest revenue $147,675  $145,809  $141,542  $156,071  $141,773    $435,026  $401,925   
Interest expense 6,636  7,433  9,478  10,676  13,319    23,547  45,561   
Net interest revenue 141,039  138,376  132,064  145,395  128,454  10% 411,479  356,364  15% 
(Release of) provision for credit losses (11,034) (13,588) (12,281) 2,907  21,793    (36,903) 77,527   
Noninterest income 40,095  35,841  44,705  41,375  48,682  (18) 120,641  114,734  5  
Total revenue 192,168  187,805  189,050  183,863  155,343  24  569,023  393,571  45  
Expenses 96,749  95,540  95,194  106,490  95,981  1  287,483  261,499  10  
Income before income tax expense 95,419  92,265  93,856  77,373  59,362  61  281,540  132,072  113  
Income tax expense 21,603  22,005  20,150  17,871  11,755  84  63,758  27,485  132  
Net income 73,816  70,260  73,706  59,502  47,607  55  217,782  104,587  108  
Merger-related and other charges 1,437  1,078  1,543  2,452  3,361    4,058  4,566   
Income tax benefit of merger-related and other charges (328) (246) (335) (552) (519)   (909) (788)  
Net income - operating (1) $74,925   $71,092   $74,914   $61,402   $50,449   49  $220,931   $108,365   104  
                   
Pre-tax pre-provision income (5) $84,385  $78,677  $81,575  $80,280  $81,155  4  $244,637  $209,599  17  
                   
PERFORMANCE MEASURES                  
Per common share:                  
Diluted net income - GAAP $0.82  $0.78  $0.82  $0.66  $0.52  58  $2.42  $1.25  94  
Diluted net income - operating (1) 0.83  0.79  0.83  0.68  0.55  51  2.45  1.29  90  
Cash dividends declared 0.20  0.19  0.19  0.18  0.18  11  0.58  0.54  7  
Book value 23.25  22.81  22.15  21.90  21.45  8  23.25  21.45  8  
Tangible book value (3) 18.68  18.49  17.83  17.56  17.09  9  18.68  17.09  9  
Key performance ratios:                  
Return on common equity - GAAP (2)(4) 14.26% 14.08% 15.37% 12.36% 10.06%   14.55% 8.11%  
Return on common equity - operating (1)(2)(4) 14.48  14.25  15.63  12.77  10.69    14.77  8.40   
Return on tangible common equity - operating (1)(2)(3)(4) 18.23  17.81  19.68  16.23  13.52    18.55  10.76   
Return on assets - GAAP (4) 1.48  1.46  1.62  1.30  1.07    1.52  0.93   
Return on assets - operating (1)(4) 1.50  1.48  1.65  1.34  1.14    1.54  0.97   
Return on assets - pre-tax pre-provision (4)(5) 1.70  1.64  1.80  1.77  1.86    1.71  1.89   
Return on assets - pre-tax pre-provision, excluding
merger- related and other charges (1)(4)(5)
 1.73  1.67  1.83  1.82  1.93    1.74  1.93   
Net interest margin (fully taxable equivalent) (4) 3.12  3.19  3.22  3.55  3.27    3.17  3.55   
Efficiency ratio - GAAP 53.11  54.53  53.55  56.73  54.14    53.72  55.30   
Efficiency ratio - operating (1) 52.33  53.92  52.68  55.42  52.24    52.97  54.34   
Equity to total assets 10.89  11.04  10.95  11.29  11.47    10.89  11.47   
Tangible common equity to tangible assets (3) 8.53  8.71  8.57  8.81  8.89    8.53  8.89   
                   
ASSET QUALITY                  
Nonperforming loans $44,923  $46,123  $55,900  $61,599  $49,084  (8) $44,923  $49,084  (8) 
Foreclosed properties 412  224  596  647  953    412  953   
Total nonperforming assets ("NPAs") 45,335  46,347  56,496  62,246  50,037  (9) 45,335  50,037  (9) 
Allowance for credit losses - loans 99,620  111,616  126,866  137,010  134,256  (26) 99,620  134,256  (26) 
Net charge-offs 551  (456) (305) 1,515  2,538    (210) 16,801   
Allowance for credit losses - loans to loans 0.89% 0.98% 1.09% 1.20% 1.14%   0.89% 1.14%  
Net charge-offs to average loans (4) 0.02  (0.02) (0.01) 0.05  0.09      0.22   
NPAs to loans and foreclosed properties 0.41  0.41  0.48  0.55  0.42    0.41  0.42   
NPAs to total assets 0.23  0.25  0.30  0.35  0.29    0.23  0.29   
                   
AVERAGE BALANCES ($ in millions)                  
Loans $11,205  $11,617  $11,433  $11,595  $11,644  (4) $11,417  $10,088  13  
Investment securities 5,122  4,631  3,991  3,326  2,750  86  4,587  2,560  79  
Earning assets 18,078  17,540  16,782  16,394  15,715  15  17,473  13,498  29  
Total assets 19,322  18,792  18,023  17,698  17,013  14  18,717  14,718  27  
Deposits 16,637  16,132  15,366  15,057  14,460  15  16,050  12,490  29  
Shareholders’ equity 2,119  2,060  2,025  1,994  1,948  9  2,068  1,763  17  
Common shares - basic (thousands) 87,211  87,289  87,322  87,258  87,129    87,274  81,815  7  
Common shares - diluted (thousands) 87,355  87,421  87,466  87,333  87,205    87,413  81,876  7  
                   
AT PERIOD END ($ in millions)                  
Loans $11,191  $11,391  $11,679  $11,371  $11,799  (5) $11,191  $11,799  (5) 
Investment securities 5,335  4,928  4,332  3,645  3,089  73  5,335  3,089  73  
Total assets 19,481  18,896  18,557  17,794  17,153  14  19,481  17,153  14  
Deposits 16,865  16,328  15,993  15,232  14,603  15  16,865  14,603  15  
Shareholders’ equity 2,122  2,086  2,031  2,008  1,967  8  2,122  1,967  8  
Common shares outstanding (thousands) 86,559  86,665  86,777  86,675  86,611    86,559  86,611    

(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              
  2021 2020 For the Nine Months Ended September 30,
(in thousands, except per share data) Third
Quarter
 Second Quarter First
Quarter
 Fourth Quarter Third
Quarter
 2021 2020
               
Expense reconciliation              
Expenses (GAAP) $96,749  $95,540  $95,194  $106,490  $95,981  $287,483  $261,499 
Merger-related and other charges (1,437) (1,078) (1,543) (2,452) (3,361) (4,058) (4,566)
Expenses - operating $95,312  $94,462  $93,651  $104,038  $92,620  $283,425  $256,933 
               
Net income reconciliation              
Net income (GAAP) $73,816  $70,260  $73,706  $59,502  $47,607  $217,782  $104,587 
Merger-related and other charges 1,437  1,078  1,543  2,452  3,361  4,058  4,566 
Income tax benefit of merger-related and other charges (328) (246) (335) (552) (519) (909) (788)
Net income - operating $74,925  $71,092  $74,914  $61,402  $50,449  $220,931  $108,365 
               
Net income to pre-tax pre-provision income reconciliation              
Net income (GAAP) $73,816  $70,260  $73,706  $59,502  $47,607  $217,782  $104,587 
Income tax expense 21,603  22,005  20,150  17,871  11,755  63,758  27,485 
(Release of) provision for credit losses (11,034) (13,588) (12,281) 2,907  21,793  (36,903) 77,527 
Pre-tax pre-provision income $84,385  $78,677  $81,575  $80,280  $81,155  $244,637  $209,599 
               
Diluted income per common share reconciliation              
Diluted income per common share (GAAP) $0.82  $0.78  $0.82  $0.66  $0.52  $2.42  $1.25 
Merger-related and other charges, net of tax 0.01  0.01  0.01  0.02  0.03  0.03  0.04 
Diluted income per common share - operating $0.83  $0.79  $0.83  $0.68  $0.55  $2.45  $1.29 
               
Book value per common share reconciliation              
Book value per common share (GAAP) $23.25  $22.81  $22.15  $21.90  $21.45  $23.25  $21.45 
Effect of goodwill and other intangibles (4.57) (4.32) (4.32) (4.34) (4.36) (4.57) (4.36)
Tangible book value per common share $18.68  $18.49  $17.83  $17.56  $17.09  $18.68  $17.09 
               
Return on tangible common equity reconciliation              
Return on common equity (GAAP) 14.26% 14.08% 15.37% 12.36% 10.06% 14.55% 8.11%
Merger-related and other charges, net of tax 0.22  0.17  0.26  0.41  0.63  0.22  0.29 
Return on common equity - operating 14.48  14.25  15.63  12.77  10.69  14.77  8.40 
Effect of goodwill and other intangibles 3.75  3.56  4.05  3.46  2.83  3.78  2.36 
Return on tangible common equity - operating 18.23% 17.81% 19.68% 16.23% 13.52% 18.55% 10.76%
               
Return on assets reconciliation              
Return on assets (GAAP) 1.48% 1.46% 1.62% 1.30% 1.07% 1.52% 0.93%
Merger-related and other charges, net of tax 0.02  0.02  0.03  0.04  0.07  0.02  0.04 
Return on assets - operating 1.50% 1.48% 1.65% 1.34% 1.14% 1.54% 0.97%
               
Return on assets to return on assets- pre-tax pre-provision reconciliation              
Return on assets (GAAP) 1.48% 1.46% 1.62% 1.30% 1.07% 1.52% 0.93%
Income tax expense 0.45  0.47  0.46  0.40  0.28  0.45  0.26 
(Release of) provision for credit losses (0.23) (0.29) (0.28) 0.07  0.51  (0.26) 0.70 
Return on assets - pre-tax, pre-provision 1.70  1.64  1.80  1.77  1.86  1.71  1.89 
Merger-related and other charges 0.03  0.03  0.03  0.05  0.07  0.03  0.04 
Return on assets - pre-tax pre-provision, excluding merger-related and other charges 1.73% 1.67% 1.83% 1.82% 1.93% 1.74% 1.93%
               
Efficiency ratio reconciliation              
Efficiency ratio (GAAP) 53.11% 54.53% 53.55% 56.73% 54.14% 53.72% 55.30%
Merger-related and other charges (0.78) (0.61) (0.87) (1.31) (1.90) (0.75) (0.96)
Efficiency ratio - operating 52.33% 53.92% 52.68% 55.42% 52.24% 52.97% 54.34%
               
Tangible common equity to tangible assets reconciliation              
Equity to total assets (GAAP) 10.89% 11.04% 10.95% 11.29% 11.47% 10.89% 11.47%
Effect of goodwill and other intangibles (1.87) (1.82) (1.86) (1.94) (2.02) (1.87) (2.02)
Effect of preferred equity (0.49) (0.51) (0.52) (0.54) (0.56) (0.49) (0.56)
Tangible common equity to tangible assets 8.53% 8.71% 8.57% 8.81% 8.89% 8.53% 8.89%
               
Allowance for credit losses - loans to loans reconciliation              
Allowance for credit losses - loans to loans (GAAP) 0.89% 0.98% 1.09% 1.20% 1.14% 0.89% 1.14%
Effect of PPP loans 0.01  0.04  0.09  0.08  0.14  0.01  0.14 
Allowance for credit losses - loans to loans, excluding PPP loans 0.90% 1.02% 1.18% 1.28% 1.28% 0.90% 1.28%


             
UNITED COMMUNITY BANKS, INC.            
Financial Highlights            
Loan Portfolio Composition at Period-End            
 2021 2020 Linked Quarter Change Year over Year Change
(in millions)Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter  
LOANS BY CATEGORY             
Owner occupied commercial RE$2,149  $2,149  $2,107  $2,090  $2,009  $   $140  
Income producing commercial RE2,542  2,550  2,599  2,541  2,493  (8)  49  
Commercial & industrial1,729  1,762  1,760  1,853  1,788  (33)  (59) 
Paycheck protection program150  472  883  646  1,317  (322)  (1,167) 
Commercial construction947  927  960  967  987  20   (40) 
Equipment financing1,017  969  913  864  823  48   194  
Total commercial8,534  8,829  9,222  8,961  9,417  (295)  (883) 
Residential mortgage1,533  1,473  1,362  1,285  1,270  60   263  
Home equity lines of credit661  661  679  697  707     (46) 
Residential construction321  289  272  281  257  32   64  
Consumer142  139  144  147  148  3   (6) 
Total loans$11,191  $11,391  $11,679  $11,371  $11,799  $(200)  $(608) 
              
LOANS BY MARKET (1)             
North Georgia$961  $962  $982  $955  $945  $(1)  $16  
Atlanta1,930  1,938  1,953  1,889  1,853  (8)  77  
North Carolina1,427  1,374  1,326  1,281  1,246  53   181  
Coastal Georgia621  605  597  617  614  16   7  
Gainesville220  224  222  224  229  (4)  (9) 
East Tennessee383  394  398  415  420  (11)  (37) 
South Carolina2,145  2,107  1,997  1,947  1,870  38   275  
Florida1,113  1,141  1,160  1,435  1,453  (28)  (340) 
Commercial Banking Solutions2,391  2,646  3,044  2,608  3,169  (255)  (778) 
Total loans$11,191  $11,391  $11,679  $11,371  $11,799  $(200)  $(608) 

(1) Certain loans previously included in the Florida geographic market were reclassified to Commercial Banking Solutions following Seaside’s core systems conversion in the first quarter of 2021.


UNITED COMMUNITY BANKS, INC.            
Financial Highlights            
Credit Quality            
  2021      
(in thousands) Third
Quarter
 Second
Quarter
 First
Quarter
      
NONACCRUAL LOANS            
Owner occupied RE $4,945  $6,128  $7,908       
Income producing RE 13,462  13,100  13,740       
Commercial & industrial 8,507  8,563  13,864       
Commercial construction 1,202  1,229  1,984       
Equipment financing 1,845  1,771  2,171       
Total commercial 29,961  30,791  39,667       
Residential mortgage 13,222  13,485  14,050       
Home equity lines of credit 1,364  1,433  1,707       
Residential construction 260  307  322       
Consumer 116  107  154       
Total $44,923  $46,123  $55,900       



  2021
  Third Quarter Second Quarter First 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 $(93) (0.02)% $(103) (0.02)% $767   0.15 %
Income producing RE 45   0.01   (213) (0.03) 37   0.01  
Commercial & industrial (91) (0.02) 60   0.01   (2,806) (0.45)
Commercial construction (123) (0.05) (293) (0.12) 22   0.01  
Equipment financing 512   0.21   301   0.13   1,511   0.70  
Total commercial 250   0.01   (248) (0.01) (469) (0.02)
Residential mortgage 51   0.01   (194) (0.05) 92   0.03  
Home equity lines of credit (102) (0.06) (112) (0.07) (73) (0.04)
Residential construction (37) (0.05) (33) (0.05) (60) (0.09)
Consumer 389   1.11   131   0.37   205   0.58  
Total $551   0.02   $(456) (0.02) $(305) (0.01)
             
(1) Annualized.            



UNITED COMMUNITY BANKS, INC.    
Consolidated Balance Sheets (Unaudited)    
(in thousands, except share and per share data) September 30, 2021 December 31, 2020
ASSETS    
Cash and due from banks $131,785  $148,896 
Interest-bearing deposits in banks 1,686,008  1,459,723 
Cash and cash equivalents 1,817,793  1,608,619 
Debt securities available-for-sale 4,251,436  3,224,721 
Debt securities held-to-maturity (fair value $1,079,925 and $437,193) 1,083,324  420,361 
Loans held for sale at fair value 68,424  105,433 
Loans and leases held for investment 11,191,037  11,370,815 
Less allowance for credit losses - loans and leases (99,620) (137,010)
Loans and leases, net 11,091,417  11,233,805 
Premises and equipment, net 225,350  218,489 
Bank owned life insurance 204,282  201,969 
Accrued interest receivable 41,561  47,672 
Net deferred tax asset 37,617  38,411 
Derivative financial instruments 53,296  86,666 
Goodwill and other intangible assets, net 400,994  381,823 
Other assets 205,663  226,405 
Total assets $19,481,157  $17,794,374 
LIABILITIES AND SHAREHOLDERS' EQUITY    
Liabilities:    
Deposits:    
Noninterest-bearing demand $6,492,519  $5,390,291 
NOW and interest-bearing demand 3,699,951  3,346,490 
Money market 3,904,927  3,550,335 
Savings 1,144,065  950,854 
Time 1,440,160  1,704,290 
Brokered 183,795  290,098 
Total deposits 16,865,417  15,232,358 
Long-term debt 247,139  326,956 
Derivative financial instruments 26,065  29,003 
Accrued expenses and other liabilities 220,178  198,527 
Total liabilities 17,358,799  15,786,844 
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 96,422  96,422 
Common stock, $1 par value; 200,000,000 and 150,000,000 shares authorized, respectively; 86,558,647 and 86,675,279 shares issued and outstanding, respectively 86,559  86,675 
Common stock issuable; 588,258 and 600,834 shares 11,098  10,855 
Capital surplus 1,631,709  1,638,999 
Retained earnings 298,503  136,869 
Accumulated other comprehensive (loss) income (1,933) 37,710 
Total shareholders' equity 2,122,358  2,007,530 
Total liabilities and shareholders' equity $19,481,157  $17,794,374 



UNITED COMMUNITY BANKS, INC.    
Consolidated Statements of Income (Unaudited)    
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
(in thousands, except per share data) 2021 2020 2021 2020
Interest revenue:        
Loans, including fees $128,477  $126,936  $382,261  $352,861 
Investment securities, including tax exempt of $2,280 and $1,895 and $6,685 and $4,988, respectively 18,540  14,558  51,530  47,567 
Deposits in banks and short-term investments 658  279  1,235  1,497 
Total interest revenue 147,675  141,773  435,026  401,925 
         
Interest expense:        
Deposits:        
NOW and interest-bearing demand 1,290  1,634  4,158  6,240 
Money market 1,119  3,017  4,278  10,969 
Savings 55  47  157  121 
Time 678  4,300  3,388  18,014 
Deposits 3,142  8,998  11,981  35,344 
Short-term borrowings   29  2  31 
Long-term debt 3,494  4,292  11,564  10,186 
Total interest expense 6,636  13,319  23,547  45,561 
Net interest revenue 141,039  128,454  411,479  356,364 
(Release of) provision for credit losses (11,034) 21,793  (36,903) 77,527 
Net interest revenue after provision for credit losses 152,073  106,661  448,382  278,837 
         
Noninterest income:        
Service charges and fees 9,350  8,260  25,255  23,893 
Mortgage loan gains and other related fees 13,828  25,144  47,536  57,113 
Wealth management fees 5,554  3,055  12,881  6,019 
Gains from sales of other loans, net 2,353  1,175  7,506  3,889 
Securities gains, net   746  41  746 
Other 9,010  10,302  27,422  23,074 
Total noninterest income 40,095  48,682  120,641  114,734 
Total revenue 192,168  155,343  569,023  393,571 
         
Noninterest expenses:        
Salaries and employee benefits 60,458  59,067  180,457  162,236 
Communications and equipment 7,368  6,960  21,979  19,462 
Occupancy 7,096  7,050  21,130  18,709 
Advertising and public relations 1,458  1,778  4,150  5,312 
Postage, printing and supplies 1,731  1,703  5,171  4,986 
Professional fees 5,347  5,083  14,509  14,003 
Lending and loan servicing expense 2,450  3,043  8,508  8,525 
Outside services - electronic banking 2,308  1,888  6,811  5,516 
FDIC assessments and other regulatory charges 1,723  1,346  5,520  4,388 
Amortization of intangibles 1,028  1,099  2,942  3,126 
Merger-related and other charges 1,437  3,361  4,058  4,566 
Other 4,345  3,603  12,248  10,670 
Total noninterest expenses 96,749  95,981  287,483  261,499 
Income before income taxes 95,419  59,362  281,540  132,072 
Income tax expense 21,603  11,755  63,758  27,485 
Net income 73,816  47,607  217,782  104,587 
Preferred stock dividends 1,719  1,814  5,157  1,814 
Undistributed earnings allocated to participating securities 448  356  1,342  779 
Net income available to common shareholders $71,649  $45,437  $211,283  $101,994 
         
Net income per common share:        
Basic $0.82  $0.52  $2.42  $1.25 
Diluted 0.82  0.52  2.42  1.25 
Weighted average common shares outstanding:        
Basic 87,211  87,129  87,274  81,815 
Diluted 87,355  87,205  87,413  81,876 



Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
  2021 2020
(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) $11,204,653  $128,185  4.54% $11,644,202  $126,342  4.32%
Taxable securities (3) 4,738,860  16,260  1.37  2,499,649  12,663  2.03 
Tax-exempt securities (FTE) (1)(3) 383,196  3,061  3.20  249,959  2,544  4.07 
Federal funds sold and other interest-earning assets 1,751,222  1,185  0.27  1,321,445  1,132  0.34 
Total interest-earning assets (FTE) 18,077,931  148,691  3.27  15,715,255  142,681  3.61 
             
Noninterest-earning assets:            
Allowance for credit losses (111,952)     (128,581)    
Cash and due from banks 124,360      135,949     
Premises and equipment 228,556      216,326     
Other assets (3) 1,002,810      1,074,529     
Total assets $19,321,705      $17,013,478     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $3,594,670  1,290  0.14  $2,890,735  1,634  0.22 
Money market 4,010,720  1,119  0.11  3,501,781  3,017  0.34 
Savings 1,120,843  55  0.02  864,849  47  0.02 
Time 1,466,821  609  0.16  1,933,764  4,127  0.85 
Brokered time deposits 63,917  69  0.43  96,198  173  0.72 
Total interest-bearing deposits 10,256,971  3,142  0.12  9,287,327  8,998  0.39 
Federal funds purchased and other borrowings       4,405  2  0.18 
Federal Home Loan Bank advances 54      2,818  27  3.81 
Long-term debt 257,139  3,494  5.39  327,017  4,292  5.22 
Total borrowed funds 257,193  3,494  5.39  334,240  4,321  5.14 
Total interest-bearing liabilities 10,514,164  6,636  0.25  9,621,567  13,319  0.55 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits 6,379,969      5,172,999     
Other liabilities 308,551      270,451     
Total liabilities 17,202,684      15,065,017     
Shareholders' equity 2,119,021      1,948,461     
Total liabilities and shareholders' equity $19,321,705      $17,013,478     
             
Net interest revenue (FTE)   $142,055      $129,362   
Net interest-rate spread (FTE)     3.02%     3.06%
Net interest margin (FTE) (4)     3.12%     3.27%

(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 $39.6 million and $77.0 million in 2021 and 2020, 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.



Average Consolidated Balance Sheets and Net Interest Analysis    
For the Nine Months Ended September 30,    
  2021 2020
(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) $11,417,285  $380,765  4.46% $10,087,630  $351,536  4.65%
Taxable securities (3) 4,206,099  44,845  1.42  2,362,674  42,579  2.40 
Tax-exempt securities (FTE) (1)(3) 381,323  8,979  3.14  197,231  6,699  4.53 
Federal funds sold and other interest-earning assets 1,468,487  3,462  0.31  850,722  3,621  0.57 
Total interest-earning assets (FTE) 17,473,194  438,051  3.35  13,498,257  404,435  4.00 
             
Non-interest-earning assets:            
Allowance for loan losses (127,793)     (96,235)    
Cash and due from banks 138,973      134,354     
Premises and equipment 225,021      217,551     
Other assets (3) 1,007,669      964,511     
Total assets $18,717,064      $14,718,438     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $3,452,206  4,158  0.16  $2,583,911  6,240  0.32 
Money market 3,853,907  4,278  0.15  2,797,350  10,969  0.52 
Savings 1,064,045  157  0.02  788,681  121  0.02 
Time 1,551,934  3,096  0.27  1,860,597  17,435  1.25 
Brokered time deposits 67,794  292  0.58  102,502  579  0.75 
Total interest-bearing deposits 9,989,886  11,981  0.16  8,133,041  35,344  0.58 
Federal funds purchased and other borrowings 41      1,611  3  0.25 
Federal Home Loan Bank advances 1,117  2  0.24  1,001  28  3.74 
Long-term debt 286,347  11,564  5.40  256,218  10,186  5.31 
Total borrowed funds 287,505  11,566  5.38  258,830  10,217  5.27 
Total interest-bearing liabilities 10,277,391  23,547  0.31  8,391,871  45,561  0.73 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits 6,059,680      4,356,484     
Other liabilities 311,749      206,904     
Total liabilities 16,648,820      12,955,259     
Shareholders' equity 2,068,244      1,763,179     
Total liabilities and shareholders' equity $18,717,064      $14,718,438     
             
Net interest revenue (FTE)   $414,504      $358,874   
Net interest-rate spread (FTE)     3.04%     3.27%
Net interest margin (FTE) (4)     3.17%     3.55%
             

(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 $40.3 million and $65.5 million in 2021 and 2020, 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. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. At September 30, 2021, United had $19.5 billion in assets and 171 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee along with a national SBA lending franchise and a national equipment lending subsidiary. Through its October 1, 2021 acquisition of Aquesta and its wholly-owned banking subsidiary, Aquesta Bank, United added $754 million in assets and nine banking offices in high growth markets in North Carolina. In 2021, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking seven out of the last eight years United earned the coveted award. United was also named one of the "Best Banks to Work For" by American Banker in 2020 for the fourth year in a row based on employee satisfaction. 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 2021 list of the 100 Best Banks in America for the eighth consecutive year. United also received five Greenwich Excellence Awards in 2020 for excellence in Small Business Banking, including a national award for Overall 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 the expected completion date of the Reliant acquisition and the accretive value of each of the Aquesta and Reliant acquisitions to United’s earnings. 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 Aquesta and Reliant acquisitions 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 Aquesta and Reliant acquisitions, (3) the occurrence of any event, change or other circumstances that could give rise to a delay in closing the Reliant acquisition or the termination of the merger agreement, (4) the failure to obtain the necessary approval by the shareholders of Reliant, (5) the possibility that the costs, fees, expenses and charges related to the acquisitions of Aquesta and Reliant may be greater than anticipated, (6) the ability of United to obtain required governmental approvals of the Reliant acquisition, (7) reputational risk and the reaction of the companies’ customers, suppliers, employees or other business partners to the acquisitions of Aquesta and Reliant, (8) the failure of the closing conditions in the Reliant merger agreement to be satisfied, or any unexpected delay in closing the acquisition, (9) the risks relating to the integration of Aquesta’s and Reliant’s 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 acquisitions of Aquesta and Reliant, (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 acquisitions of Aquesta and Reliant, 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, 2020, 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 Reliant, Reliant’s) 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 Reliant to predict their occurrence or how they will affect United or Reliant.

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

IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORS

In connection with the prospective acquisition of Reliant, United has filed with the SEC a registration statement on Form S-4 that includes a proxy statement of Reliant to be sent to Reliant’s shareholders seeking their approval of the merger agreement and merger with United. The registration statement also will contain the prospectus of United to register the shares of United common stock to be issued in connection with the Reliant acquisition. INVESTORS AND SHAREHOLDERS OF RELIANT ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE PROXY STATEMENT/PROSPECTUS THAT WILL BE A PART OF THE REGISTRATION STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY UNITED OR RELIANT WITH THE SEC, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE REGISTRATION STATEMENT AND THOSE OTHER DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT UNITED, RELIANT AND THE MERGER OF RELIANT 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 Reliant at the “Investor Relations” section of Reliant’s website at www.reliantbank.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 Reliant Bancorp, Inc., 6100 Tower Circle, Suite 120, Franklin, TN 37067, Attn: Jerry Cooksey, Telephone: (615) 221-2020.

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 Reliant with United or otherwise.

PARTICIPANTS IN THE TRANSACTION

United and Reliant, 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 Reliant’s shareholders in favor of the approval of the merger agreement and the merger of Reliant 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 2021 annual meeting of shareholders, as filed with the SEC on March 30, 2021, and other documents subsequently filed by United with the SEC. Information about the directors and executive officers of Reliant and their ownership of Reliant’s common stock can be found in Reliant’s definitive proxy statement for its 2021 annual meeting of shareholders, filed with the SEC on April 8, 2021, and other documents subsequently filed by Reliant with the SEC. Additional information regarding the interests of these participants also will be included in the proxy statement/prospectus pertaining to the transaction that is described above. 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