United Community Banks, Inc. Reports Second Quarter Results

EPS of $0.78, Return on Assets of 1.46% and Return on Common Equity of 14.1%

Blairsville, Georgia, UNITED STATES


GREENVILLE, S.C., July 20, 2021 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the second quarter was $70.3 million and pre-tax, pre-provision income was $78.7 million. Diluted earnings per share of $0.78 for the quarter represented an increase of $0.46 or 144%, from the second quarter a year ago, and represented a decrease of $0.04 or 5% from the first quarter of 2021. On an operating basis, United’s diluted earnings per share of $0.79 was up 147% over the year ago quarter. United’s GAAP return on assets (ROA) was 1.46% and its return on common equity was 14.1% for the quarter. On an operating basis, United’s ROA was 1.48% and its return on tangible common equity was 17.8%. On a pre-tax, pre-provision basis, operating return on assets was 1.67% for the quarter. The quarter benefited from an allowance release of $13.6 million, reflecting continued improvement in economic conditions and forecasts in United’s markets.

Chairman and CEO Lynn Harton stated, “This has been an outstanding quarter for United. Our team once again was recognized by JD Power as having the Best Retail Customer Satisfaction in the Southeast. On July 6, we closed on the acquisition of FinTrust, accelerating our wealth management strategy. We announced expansion into two of the strongest markets in the Southeast, Charlotte and Nashville, via agreements to acquire outstanding community banks in those markets. In addition to these strategic accomplishments, our bankers continued to deliver strong performance results. Core loan growth, excluding PPP loans, was solid and we continue to be optimistic about the remainder of the year, given the momentum in our markets. Core deposit growth remains very strong. Credit results were excellent as well. I couldn’t be more proud of the United team and I congratulate them for delivering these tremendous results.”

Total loans decreased by $288 million during the quarter—impacted by $411 million of Paycheck Protection Program (PPP) loan forgiveness. Excluding the effect of PPP loans, core organic loan growth was 5% annualized. Core transaction deposits grew by $432 million during the quarter, or 14% annualized, and United’s cost of deposits decreased by 5 basis points to 0.09%. The net interest margin decreased by 3 basis points from the first quarter due mainly to a change in the earning asset mix.

Second Quarter 2021 Financial Highlights:

  • Net income of $70.3 million and pre-tax, pre-provision income of $78.7 million
  • EPS increased by 144% compared to second quarter 2020 on a GAAP basis and 147% on an operating basis; compared to first quarter 2021, EPS decreased by 5% on both a GAAP and operating basis
  • Return on assets of 1.46%, or 1.48% on an operating basis
  • Pre-tax, pre-provision return on assets of 1.64%, or 1.67% on an operating basis
  • Return on common equity of 14.1%
  • Return on tangible common equity of 17.8% on an operating basis
  • A release of provision for credit losses of $13.6 million, which reduced the allowance for loan losses to 0.98% of loans (1.02%, excluding PPP loans) from 1.09% in the first quarter
  • Loan production of $1.3 billion, resulting in core loan growth of 5%, annualized for the quarter, excluding the impact of $411 million in PPP loans being forgiven
  • Core transaction deposits were up $432 million, which represents a 14% annualized growth rate for the quarter
  • Net interest margin of 3.19% was down 3 basis points from the first quarter, due to continued strong deposit growth and an earning asset mix change toward securities
  • Record mortgage closings of $680 million compared to $563 million a year ago; mortgage rate locks of $702 million compared to $802 million a year ago
  • Noninterest income was down $8.9 million on a linked quarter basis, primarily driven by slowing mortgage rate lock activity
  • Noninterest expenses increased by $346,000 compared to the first quarter on a GAAP basis and by $811,000 on an operating basis mostly due to increased professional fees and mortgage commissions
  • Efficiency ratio of 54.5%, or 53.9% on an operating basis
  • Net recoveries of $456,000 or 2 basis points as a percent of average loans, down 1 basis point from the first quarter
  • Nonperforming assets of 0.25% of total assets, down 5 basis points compared to March 31, 2021
  • Total loan deferrals of $18 million or 0.2% of the total loan portfolio compared to $48 million or 0.4% in the first quarter
  • Quarterly common shareholder dividend of $0.19 per share declared during the quarter, an increase of 6% year-over-year
  • Announced the acquisition of FinTrust Capital Partners, LLC, a registered investment adviser, which closed on July 6, 2021; it added $2.1 billion in assets under management and is expected to add $0.02 in EPS accretion in 2022
  • Announced the acquisition of Aquesta Financial Holdings, Inc. with $752 million in assets on May 27; it is expected to close in the fourth quarter of 2021 and add $0.08 in EPS accretion in 2022 with cost savings fully phased in
  • Announced the acquisition of Reliant Bancorp, Inc. with $3.1 billion in assets on July 14; it 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, July 21, 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 9585551. 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 Second Quarter
 For the Six Months Ended
June 30,
 YTD 2021 -
(in thousands, except per share data) Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 Second
Quarter
 2021 - 2020
Change
 2021 2020 2020
Change
INCOME SUMMARY                  
Interest revenue $145,809   $141,542   $156,071   $141,773   $123,605     $287,351   $260,152    
Interest expense 7,433   9,478   10,676   13,319   14,301     16,911   32,242    
Net interest revenue 138,376   132,064   145,395   128,454   109,304   27 % 270,440   227,910   19 %
(Release of) provision for credit losses (13,588)  (12,281)  2,907   21,793   33,543     (25,869)  55,734    
Noninterest income 35,841   44,705   41,375   48,682   40,238   (11)  80,546   66,052   22  
Total revenue 187,805   189,050   183,863   155,343   115,999   62   376,855   238,228   58  
Expenses 95,540   95,194   106,490   95,981   83,980   14   190,734   165,518   15  
Income before income tax expense 92,265   93,856   77,373   59,362   32,019   188   186,121   72,710   156  
Income tax expense 22,005   20,150   17,871   11,755   6,923   218   42,155   15,730   168  
Net income 70,260   73,706   59,502   47,607   25,096   180   143,966   56,980   153  
Merger-related and other charges 1,078   1,543   2,452   3,361   397     2,621   1,205    
Income tax benefit of merger-related and other charges (246)  (335)  (552)  (519)  (87)    (581)  (269)   
Net income - operating (1) $71,092    $74,914    $61,402    $50,449    $25,406    180   $146,006    $57,916    152  
                   
Pre-tax pre-provision income (5) $78,677   $81,575   $80,280   $81,155   $65,562   20   $160,252   $128,444   25  
                   
PERFORMANCE MEASURES                  
Per common share:                  
Diluted net income - GAAP $0.78   $0.82   $0.66   $0.52   $0.32   144   $1.60   $0.71   125  
Diluted net income - operating (1) 0.79   0.83   0.68   0.55   0.32   147   1.62   0.73   122  
Cash dividends declared 0.19   0.19   0.18   0.18   0.18   6   0.38   0.36   6  
Book value 22.81   22.15   21.90   21.45   21.22   7   22.81   21.22   7  
Tangible book value (3) 18.49   17.83   17.56   17.09   16.95   9   18.49   16.95   9  
Key performance ratios:                  
Return on common equity - GAAP (2)(4) 14.08 % 15.37 % 12.36 % 10.06 % 6.17 %   14.71 % 7.01 %  
Return on common equity - operating (1)(2)(4) 14.25   15.63   12.77   10.69   6.25     14.92   7.13    
Return on tangible common equity - operating (1)(2)(3)(4) 17.81   19.68   16.23   13.52   8.09     18.72   9.20    
Return on assets - GAAP (4) 1.46   1.62   1.30   1.07   0.71     1.54   0.85    
Return on assets - operating (1)(4) 1.48   1.65   1.34   1.14   0.72     1.56   0.86    
Return on assets - pre-tax pre-provision (4)(5) 1.64   1.80   1.77   1.86   1.86     1.72   1.91    
Return on assets - pre-tax pre-provision, excluding
merger- related and other charges (1)(4)(5)
 1.67   1.83   1.82   1.93   1.87     1.75   1.92    
Net interest margin (fully taxable equivalent) (4) 3.19   3.22   3.55   3.27   3.42     3.20   3.73    
Efficiency ratio - GAAP 54.53   53.55   56.73   54.14   55.86     54.04   56.00    
Efficiency ratio - operating (1) 53.92   52.68   55.42   52.24   55.59     53.30   55.59    
Equity to total assets 11.04   10.95   11.29   11.47   11.81     11.04   11.81    
Tangible common equity to tangible assets (3) 8.71   8.57   8.81   8.89   9.12     8.71   9.12    
                   
ASSET QUALITY                  
Nonperforming loans $46,123   $55,900   $61,599   $49,084   $48,021   (4)  $46,123   $48,021   (4) 
Foreclosed properties 224   596   647   953   477     224   477    
Total nonperforming assets ("NPAs") 46,347   56,496   62,246   50,037   48,498   (4)  46,347   48,498   (4) 
Allowance for credit losses - loans 111,616   126,866   137,010   134,256   103,669   8   111,616   103,669   8  
Net charge-offs (456)  (305)  1,515   2,538   6,149     (761)  14,263   (105) 
Allowance for credit losses - loans to loans 0.98 % 1.09 % 1.20 % 1.14 % 1.02 %   0.98 % 1.02 %  
Net charge-offs to average loans (4) (0.02)  (0.01)  0.05   0.09   0.25     (0.01)  0.31    
NPAs to loans and foreclosed properties 0.41   0.48   0.55   0.42   0.48     0.41   0.48    
NPAs to total assets 0.25   0.30   0.35   0.29   0.32     0.25   0.32    
                   
AVERAGE BALANCES ($ in millions)                  
Loans $11,617   $11,433   $11,595   $11,644   $9,773   19   $11,525   $9,301   24  
Investment securities 4,631   3,991   3,326   2,750   2,408   92   4,313   2,464   75  
Earning assets 17,540   16,782   16,394   15,715   12,958   35   17,163   12,378   39  
Total assets 18,792   18,023   17,698   17,013   14,173   33   18,410   13,558   36  
Deposits 16,132   15,366   15,057   14,460   12,071   34   15,751   11,493   37  
Shareholders’ equity 2,060   2,025   1,994   1,948   1,686   22   2,042   1,670   22  
Common shares - basic (thousands) 87,289   87,322   87,258   87,129   78,920   11   87,306   79,130   10  
Common shares - diluted (thousands) 87,421   87,466   87,333   87,205   78,924   11   87,443   79,186   10  
                   
AT PERIOD END ($ in millions)                  
Loans $11,391   $11,679   $11,371   $11,799   $10,133   12   $11,391   $10,133   12  
Investment securities 4,928   4,332   3,645   3,089   2,432   103   4,928   2,432   103  
Total assets 18,896   18,557   17,794   17,153   15,005   26   18,896   15,005   26  
Deposits 16,328   15,993   15,232   14,603   12,702   29   16,328   12,702   29  
Shareholders’ equity 2,086   2,031   2,008   1,967   1,772   18   2,086   1,772   18  
Common shares outstanding (thousands) 86,665   86,777   86,675   86,611   78,335   11   86,665   78,335   11  

(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 Six Months Ended June 30,
(in thousands, except per share data) Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 Second
Quarter
 2021 2020
               
Expense reconciliation              
Expenses (GAAP) $95,540   $95,194   $106,490   $95,981   $83,980   $190,734   $165,518  
Merger-related and other charges (1,078)  (1,543)  (2,452)  (3,361)  (397)  (2,621)  (1,205) 
Expenses - operating $94,462   $93,651   $104,038   $92,620   $83,583   $188,113   $164,313  
               
Net income reconciliation              
Net income (GAAP) $70,260   $73,706   $59,502   $47,607   $25,096   $143,966   $56,980  
Merger-related and other charges 1,078   1,543   2,452   3,361   397   2,621   1,205  
Income tax benefit of merger-related and other charges (246)  (335)  (552)  (519)  (87)  (581)  (269) 
Net income - operating $71,092   $74,914   $61,402   $50,449   $25,406   $146,006   $57,916  
               
Net income to pre-tax pre-provision income reconciliation              
Net income (GAAP) $70,260   $73,706   $59,502   $47,607   $25,096   $143,966   $56,980  
Income tax expense 22,005   20,150   17,871   11,755   6,923   42,155   15,730  
(Release of) provision for credit losses (13,588)  (12,281)  2,907   21,793   33,543   (25,869)  55,734  
Pre-tax pre-provision income $78,677   $81,575   $80,280   $81,155   $65,562   $160,252   $128,444  
               
Diluted income per common share reconciliation              
Diluted income per common share (GAAP) $0.78   $0.82   $0.66   $0.52   $0.32   $1.60   $0.71  
Merger-related and other charges, net of tax 0.01   0.01   0.02   0.03      0.02   0.02  
Diluted income per common share - operating $0.79   $0.83   $0.68   $0.55   $0.32   $1.62   $0.73  
               
Book value per common share reconciliation              
Book value per common share (GAAP) $22.81   $22.15   $21.90   $21.45   $21.22   $22.81   $21.22  
Effect of goodwill and other intangibles (4.32)  (4.32)  (4.34)  (4.36)  (4.27)  (4.32)  (4.27) 
Tangible book value per common share $18.49   $17.83   $17.56   $17.09   $16.95   $18.49   $16.95  
               
Return on tangible common equity reconciliation              
Return on common equity (GAAP) 14.08 % 15.37 % 12.36 % 10.06 % 6.17 % 14.71 % 7.01 %
Merger-related and other charges, net of tax 0.17   0.26   0.41   0.63   0.08   0.21   0.12  
Return on common equity - operating 14.25   15.63   12.77   10.69   6.25   14.92   7.13  
Effect of goodwill and other intangibles 3.56   4.05   3.46   2.83   1.84   3.80   2.07  
Return on tangible common equity - operating 17.81 % 19.68 % 16.23 % 13.52 % 8.09 % 18.72 % 9.20 %
               
Return on assets reconciliation              
Return on assets (GAAP) 1.46 % 1.62 % 1.30 % 1.07 % 0.71 % 1.54 % 0.85 %
Merger-related and other charges, net of tax 0.02   0.03   0.04   0.07   0.01   0.02   0.01  
Return on assets - operating 1.48 % 1.65 % 1.34 % 1.14 % 0.72 % 1.56 % 0.86 %
               
Return on assets to return on assets- pre-tax pre-provision reconciliation              
Return on assets (GAAP) 1.46 % 1.62 % 1.30 % 1.07 % 0.71 % 1.54 % 0.85 %
Income tax expense 0.47   0.46   0.40   0.28   0.20   0.46   0.23  
(Release of) provision for credit losses (0.29)  (0.28)  0.07   0.51   0.95   (0.28)  0.83  
Return on assets - pre-tax, pre-provision 1.64   1.80   1.77   1.86   1.86   1.72   1.91  
Merger-related and other charges 0.03   0.03   0.05   0.07   0.01   0.03   0.01  
Return on assets - pre-tax pre-provision, excluding merger-related and other charges 1.67 % 1.83 % 1.82 % 1.93 % 1.87 % 1.75 % 1.92 %
               
Efficiency ratio reconciliation              
Efficiency ratio (GAAP) 54.53 % 53.55 % 56.73 % 54.14 % 55.86 % 54.04 % 56.00 %
Merger-related and other charges (0.61)  (0.87)  (1.31)  (1.90)  (0.27)  (0.74)  (0.41) 
Efficiency ratio - operating 53.92 % 52.68 % 55.42 % 52.24 % 55.59 % 53.30 % 55.59 %
               
Tangible common equity to tangible assets reconciliation              
Equity to total assets (GAAP) 11.04 % 10.95 % 11.29 % 11.47 % 11.81 % 11.04 % 11.81 %
Effect of goodwill and other intangibles (1.82)  (1.86)  (1.94)  (2.02)  (2.05)  (1.82)  (2.05) 
Effect of preferred equity (0.51)  (0.52)  (0.54)  (0.56)  (0.64)  (0.51)  (0.64) 
Tangible common equity to tangible assets 8.71 % 8.57 % 8.81 % 8.89 % 9.12 % 8.71 % 9.12 %
               
Allowance for credit losses - loans to loans reconciliation              
Allowance for credit losses - loans to loans (GAAP) 0.98 % 1.09 % 1.20 % 1.14 % 1.02 % 0.98 % 1.02 %
Effect of PPP loans 0.04   0.09   0.08   0.14   0.13   0.04   0.13  
Allowance for credit losses - loans to loans, excluding PPP loans 1.02 % 1.18 % 1.28 % 1.28 % 1.15 % 1.02 % 1.15 %
                             


UNITED COMMUNITY BANKS, INC.            
Financial Highlights            
Loan Portfolio Composition at Period-End            
 2021 2020 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$2,149  $2,107  $2,090  $2,009  $1,759  $42  $390 
Income producing commercial RE2,550  2,599  2,541  2,493  2,178  (49) 372 
Commercial & industrial1,762  1,760  1,853  1,788  1,219  2  543 
Paycheck protection program472  883  646  1,317  1,095  (411) (623)
Commercial construction927  960  967  987  946  (33) (19)
Equipment financing969  913  864  823  779  56  190 
Total commercial8,829  9,222  8,961  9,417  7,976  (393) 853 
Residential mortgage1,473  1,362  1,285  1,270  1,152  111  321 
Home equity lines of credit661  679  697  707  654  (18) 7 
Residential construction289  272  281  257  230  17  59 
Consumer139  144  147  148  121  (5) 18 
Total loans$11,391  $11,679  $11,371  $11,799  $10,133  $(288) $1,258 
              
LOANS BY MARKET (1)             
North Georgia$962  $982  $955  $945  $951  $(20) $11 
Atlanta1,938  1,953  1,889  1,853  1,852  (15) 86 
North Carolina1,374  1,326  1,281  1,246  1,171  48  203 
Coastal Georgia605  597  617  614  618  8  (13)
Gainesville224  222  224  229  233  2  (9)
East Tennessee394  398  415  420  433  (4) (39)
South Carolina2,107  1,997  1,947  1,870  1,778  110  329 
Florida1,141  1,160  1,435  1,453    (19) 1,141 
Commercial Banking Solutions2,646  3,044  2,608  3,169  3,097  (398) (451)
Total loans$11,391  $11,679  $11,371  $11,799  $10,133  $(288) $1,258 
                            

(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 2020      
(in thousands) Second
Quarter
 First
Quarter
 Fourth
Quarter
      
NONACCRUAL LOANS            
Owner occupied RE $6,128  $7,908  $8,582       
Income producing RE 13,100  13,740  15,149       
Commercial & industrial 8,563  13,864  16,634       
Commercial construction 1,229  1,984  1,745       
Equipment financing 1,771  2,171  3,405       
Total commercial 30,791  39,667  45,515       
Residential mortgage 13,485  14,050  12,858       
Home equity lines of credit 1,433  1,707  2,487       
Residential construction 307  322  514       
Consumer 107  154  225       
Total $46,123  $55,900  $61,599       


  2021 2020
  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 $(155) (0.03)% $(240) (0.05)% $(277) (0.05)%
Income producing RE (161) (0.02)  991  0.16   (1,718) (0.27) 
Commercial & industrial 60  0.01   (2,753) (0.44)  2,294  0.33  
Commercial construction (293) (0.12)  22  0.01   (129) (0.05) 
Equipment financing 301  0.13   1,511  0.70   1,595  0.75  
Total commercial (248) (0.01)  (469) (0.02)  1,765  0.08  
Residential mortgage (194) (0.05)  92  0.03   (25) (0.01) 
Home equity lines of credit (112) (0.07)  (73) (0.04)  (151) (0.09) 
Residential construction (33) (0.05)  (60) (0.09)  (47) (0.07) 
Consumer 131  0.37   205  0.58   (27) (0.07) 
Total $(456) (0.02)  $(305) (0.01)  $1,515  0.05  
             
(1) Annualized.            


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


(in thousands, except share and per share data) June 30,
2021
 December 31,
2020
ASSETS    
Cash and due from banks $121,589  $148,896 
Interest-bearing deposits in banks 1,297,808  1,459,723 
Cash and cash equivalents 1,419,397  1,608,619 
Debt securities available-for-sale 4,075,781  3,224,721 
Debt securities held-to-maturity (fair value $861,488 and $437,193) 852,404  420,361 
Loans held for sale at fair value 98,194  105,433 
Loans and leases held for investment 11,390,746  11,370,815 
Less allowance for credit losses - loans and leases (111,616) (137,010)
Loans and leases, net 11,279,130  11,233,805 
Premises and equipment, net 224,980  218,489 
Bank owned life insurance 203,449  201,969 
Accrued interest receivable 43,521  47,672 
Net deferred tax asset 32,918  38,411 
Derivative financial instruments 58,489  86,666 
Goodwill and other intangible assets, net 379,909  381,823 
Other assets 227,551  226,405 
Total assets $18,895,723  $17,794,374 
LIABILITIES AND SHAREHOLDERS' EQUITY    
Liabilities:    
Deposits:    
Noninterest-bearing demand $6,260,756  $5,390,291 
NOW and interest-bearing demand 3,518,686  3,346,490 
Money market 3,766,645  3,550,335 
Savings 1,097,663  950,854 
Time 1,500,049  1,704,290 
Brokered 183,968  290,098 
Total deposits 16,327,767  15,232,358 
Long-term debt 261,919  326,956 
Derivative financial instruments 27,089  29,003 
Accrued expenses and other liabilities 192,662  198,527 
Total liabilities 16,809,437  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 shares authorized;
86,664,894 and 86,675,279 shares issued and outstanding
 86,665  86,675 
Common stock issuable; 571,580 and 600,834 shares 10,650  10,855 
Capital surplus 1,636,875  1,638,999 
Retained earnings 244,006  136,869 
Accumulated other comprehensive income 11,668  37,710 
Total shareholders' equity 2,086,286  2,007,530 
Total liabilities and shareholders' equity $18,895,723  $17,794,374 
         


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) 2021 2020 2021 2020
Interest revenue:        
Loans, including fees $128,058  $107,862  $253,784  $225,925 
Investment securities, including tax exempt of $2,255 and $1,570 and $4,405 and $3,093, respectively 17,542  15,615  32,990  33,009 
Deposits in banks and short-term investments 209  128  577  1,218 
Total interest revenue 145,809  123,605  287,351  260,152 
         
Interest expense:        
Deposits:        
NOW and interest-bearing demand 1,382  1,628  2,868  4,606 
Money market 1,355  3,421  3,159  7,952 
Savings 53  39  102  74 
Time 830  6,183  2,710  13,714 
Deposits 3,620  11,271  8,839  26,346 
Short-term borrowings       1 
Federal Home Loan Bank advances     2  1 
Long-term debt 3,813  3,030  8,070  5,894 
Total interest expense 7,433  14,301  16,911  32,242 
Net interest revenue 138,376  109,304  270,440  227,910 
(Release of) provision for credit losses (13,588) 33,543  (25,869) 55,734 
Net interest revenue after provision for credit losses 151,964  75,761  296,309  172,176 
         
Noninterest income:        
Service charges and fees 8,335  6,995  15,905  15,633 
Mortgage loan gains and other related fees 11,136  23,659  33,708  31,969 
Wealth management fees 3,822  1,324  7,327  2,964 
Gains from sales of other loans, net 4,123  1,040  5,153  2,714 
Securities gains, net 41    41   
Other 8,384  7,220  18,412  12,772 
Total noninterest income 35,841  40,238  80,546  66,052 
Total revenue 187,805  115,999  376,855  238,228 
         
Noninterest expenses:        
Salaries and employee benefits 59,414  51,811  119,999  103,169 
Communications and equipment 7,408  6,556  14,611  12,502 
Occupancy 7,078  5,945  14,034  11,659 
Advertising and public relations 1,493  2,260  2,692  3,534 
Postage, printing and supplies 1,618  1,613  3,440  3,283 
Professional fees 4,928  4,823  9,162  8,920 
Lending and loan servicing expense 3,181  3,189  6,058  5,482 
Outside services - electronic banking 2,285  1,796  4,503  3,628 
FDIC assessments and other regulatory charges 1,901  1,558  3,797  3,042 
Amortization of intangibles 929  987  1,914  2,027 
Merger-related and other charges 1,078  397  2,621  1,205 
Other 4,227  3,045  7,903  7,067 
Total noninterest expenses 95,540  83,980  190,734  165,518 
Net income before income taxes 92,265  32,019  186,121  72,710 
Income tax expense 22,005  6,923  42,155  15,730 
Net income 70,260  25,096  143,966  56,980 
Preferred stock dividends 1,719    3,438   
Undistributed earnings allocated to participating securities 432  183  894  426 
Net income available to common shareholders $68,109  $24,913  $139,634  $56,554 
         
Net income per common share:        
Basic $0.78  $0.32  $1.60  $0.71 
Diluted 0.78  0.32  1.60  0.71 
Weighted average common shares outstanding:        
Basic 87,289  78,920  87,306  79,130 
Diluted 87,421  78,924  87,443  79,186 


Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 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) $11,616,802  $127,458  4.40 % $9,772,703  $107,398  4.42%
Taxable securities (3) 4,242,297  15,287  1.44   2,229,371  14,045  2.52 
Tax-exempt securities (FTE) (1)(3) 388,609  3,030  3.12   178,903  2,110  4.72 
Federal funds sold and other interest-earning assets 1,292,026  1,055  0.33   776,776  857  0.44 
Total interest-earning assets (FTE) 17,539,734  146,830  3.36   12,957,753  124,410  3.86 
             
Noninterest-earning assets:            
Allowance for credit losses (128,073)     (89,992)    
Cash and due from banks 152,443      138,842     
Premises and equipment 225,017      217,096     
Other assets (3) 1,002,634      949,201     
Total assets $18,791,755      $14,172,900     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $3,428,009  1,382  0.16   $2,444,895  1,628  0.27 
Money market 3,814,960  1,355  0.14   2,541,805  3,421  0.54 
Savings 1,080,267  53  0.02   788,247  39  0.02 
Time 1,548,487  899  0.23   1,805,671  6,058  1.35 
Brokered time deposits 64,332  (69) (0.43)  130,556  125  0.39 
Total interest-bearing deposits 9,936,055  3,620  0.15   7,711,174  11,271  0.59 
Federal funds purchased and other borrowings 111       1     
Federal Home Loan Bank advances             
Long-term debt 285,389  3,813  5.36   228,096  3,030  5.34 
Total borrowed funds 285,500  3,813  5.36   228,097  3,030  5.34 
Total interest-bearing liabilities 10,221,555  7,433  0.29   7,939,271  14,301  0.72 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits 6,196,045      4,360,095     
Other liabilities 314,130      187,375     
Total liabilities 16,731,730      12,486,741     
Shareholders' equity 2,060,025      1,686,159     
Total liabilities and shareholders' equity $18,791,755      $14,172,900     
             
Net interest revenue (FTE)   $139,397      $110,109   
Net interest-rate spread (FTE)     3.07 %     3.14%
Net interest margin (FTE) (4)     3.19 %     3.42%
                

(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 $28.6 million and $66.3 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 Six Months Ended June 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) $11,525,363  $252,580  4.42% $9,300,792  $225,194  4.87%
Taxable securities (3) 3,932,545  28,585  1.45  2,293,502  29,916  2.61 
Tax-exempt securities (FTE) (1)(3) 380,370  5,918  3.11  170,578  4,155  4.87 
Federal funds sold and other interest-earning assets 1,324,776  2,277  0.34  612,776  2,489  0.81 
Total interest-earning assets (FTE) 17,163,054  289,360  3.40  12,377,648  261,754  4.25 
             
Non-interest-earning assets:            
Allowance for loan losses (135,845)     (79,885)    
Cash and due from banks 146,401      133,548     
Premises and equipment 223,224      218,170     
Other assets (3) 1,012,896      908,828     
Total assets $18,409,730      $13,558,309     
             
Liabilities and Shareholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing deposits:            
NOW and interest-bearing demand $3,379,794  2,868  0.17  $2,428,815  4,606  0.38 
Money market 3,774,201  3,159  0.17  2,441,264  7,952  0.66 
Savings 1,035,176  102  0.02  750,179  74  0.02 
Time 1,595,196  2,487  0.31  1,823,612  13,308  1.47 
Brokered time deposits 69,765  223  0.64  105,689  406  0.77 
Total interest-bearing deposits 9,854,132  8,839  0.18  7,549,559  26,346  0.70 
Federal funds purchased and other borrowings 62      199  1  1.01 
Federal Home Loan Bank advances 1,657  2  0.24  83  1  2.42 
Long-term debt 301,193  8,070  5.40  220,429  5,894  5.38 
Total borrowed funds 302,912  8,072  5.37  220,711  5,896  5.37 
Total interest-bearing liabilities 10,157,044  16,911  0.34  7,770,270  32,242  0.83 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits 5,896,882      3,943,740     
Other liabilities 313,374      174,781     
Total liabilities 16,367,300      11,888,791     
Shareholders' equity 2,042,430      1,669,518     
Total liabilities and shareholders' equity $18,409,730      $13,558,309     
             
Net interest revenue (FTE)   $272,449      $229,512   
Net interest-rate spread (FTE)     3.06%     3.42%
Net interest margin (FTE) (4)     3.20%     3.73%
             

(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 $43.4 million and $59.6 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. United has $18.9 billion in assets and 162 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee along with a national SBA lending franchise and a national equipment lending subsidiary. 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.

For more information:

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