United Community Banks, Inc. Reports Fourth Quarter

GREENVILLE, S.C., Jan. 18, 2022 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the fourth quarter was $52.0 million and pre-tax, pre-provision income was $65.6 million. Diluted earnings per share of $0.55 for the quarter represented a decrease of $0.11 or 17%, from the fourth quarter a year ago, and represented a decrease of $0.27 or 33% from the third quarter of 2021. On an operating basis, United’s diluted earnings per share of $0.64 was down 6% from the year ago quarter. The primary driver of the reduced earnings in both periods is lower levels of accretion from PPP loans, as those loans have continued to decline due to success in executing the forgiveness process. Additionally, in the third quarter, charges associated with the Aquesta acquisition, such as merger charges and a $3.27 million provision to establish an initial allowance for credit losses for acquired Aquesta loans, reduced GAAP earnings by approximately $9 million or ten cents per share. On an operating basis, United’s ROA was 1.10% and its return on tangible common equity was 13.9%. On a pre-tax, pre-provision basis, operating return on assets was 1.40% for the quarter. Highlights for the quarter include strong annualized organic loan growth (excluding PPP and loans received through the Aquesta acquisition) of 7% and 17% annualized organic deposit growth.

Chairman and CEO Lynn Harton stated, “We are very pleased by United’s performance this quarter and in 2021. In the quarter, both loan and deposit growth were strong and noninterest income benefited from strong, but seasonally lower, mortgage production and a great SBA quarter.” Harton continued, “On the strategic front, we completed the acquisition of Aquesta Financial Holdings, Inc. and Aquesta Bank on October 1, boosting our Charlotte presence and adding the Wilmington, North Carolina market, both of which are growth markets that fit well with our footprint and culture. We also completed the operational conversion of Aquesta in mid-November, bringing the United brand to these great markets. We are proud that this outstanding team of bankers has joined us and we believe that they are a great fit for United. Finally, while not included in the quarterly results, on January 1 we completed the acquisition of Reliant Bancorp, Inc., expanding our Tennessee presence into the fast-growing Nashville MSA with a very high performance organization.”

Total loans increased by $569 million during the quarter—impacted by $501 million of loans from the Aquesta acquisition. Excluding the effect of PPP loans and loans received from the Aquesta acquisition, core organic loan growth was 7% annualized. Core transaction deposits grew by $948 million during the quarter, or 28% annualized. Excluding deposits received from the Aquesta acquisition, core transaction deposits grew by 10% annualized. United’s cost of deposits decreased by 1 basis point to 0.06%. The net interest margin decreased by 31 basis points from the third quarter due mainly to lower PPP loan fee accretion and an increase in liquid assets due to the continued deposit growth.

Mr. Harton concluded, “I believe 2022 will be another great year for United. We enter the year with strong business momentum, led by an outstanding team of engaged bankers throughout the company. I am very proud that in October, and for the fifth consecutive year, United was named one of the Best Banks to Work for in 2021 across the nation by American Banker. One of our most important measures of success for us is to “Be a Great Place to Work for Great People”. Banking is a service and experience business and success begins with creating an organization where the best people can be fulfilled and build a career.”

2021 Financial Highlights:

Full year EPS of $2.97, an increase of 55% compared to 2020; full year operating EPS of $3.09, an increase of 56% from 2020
Return on assets of 1.37%, or 1.42% on an operating basis
Pre-tax, pre-provision return on assets of 1.65% on an operating basis
Return on common equity of 13.1%
Return on tangible common equity of 17.3% on an operating basis
Completed the mergers with FinTrust on July 1 and Aquesta Financial Corporation and its bank subsidiary Aquesta Bank on October 1
A release of provision for credit losses of $37.6 million compared to a provision of $80.4 million in 2020, mostly due to the improved economic forecasts
Loan growth of $389 million or $346 million excluding loans acquired from Aquesta and PPP payoffs
Core transaction deposits were up $2.8 billion compared to 2020; excluding Aquesta, 2021 core transaction deposits were up $2.2 billion, or 19.2%
Net interest margin of 3.07%, which was down 48 basis points from last year due to a number of factors, including lower PPP fee accretion, the low rate environment, and increasing balance sheet liquidity
Continued strong mortgage rate locks of $3.1 billion compared to a record of $3.3 billion a year ago
Noninterest income was up $1.7 million or 1% as an increase in wealth management fees and gains from loan sales offset the $17.6 million decline in mortgage fees
Efficiency ratio of 55.8%, or 53.8% on an operating basis
Net charge-offs of $38,000

Fourth Quarter 2021 Financial Highlights:

Net income of $52.0 million and pre-tax, pre-provision income of $65.6 million
EPS decreased by 17% compared to fourth quarter 2020 on a GAAP basis and 6% on an operating basis; compared to third quarter 2021, EPS decreased by 33% on a GAAP basis and 23% on an operating basis due to lower PPP accretion and a smaller provision release in the fourth quarter
Return on assets of 0.96%, or 1.10% on an operating basis
Pre-tax, pre-provision return on assets of 1.40% on an operating basis
Return on common equity of 9.3%
Return on tangible common equity of 13.9% on an operating basis
A release of provision for credit losses of $647,000 which reduced the allowance for loan losses to 0.87% of loans from 0.89% in the third quarter
Loan production of $1.3 billion, resulting in core loan growth of 7%, annualized for the quarter, excluding the impact of $122 million in PPP loans being forgiven and the addition of $501 million in loans from Aquesta
Core transaction deposits were up $948 million; excluding Aquesta, fourth quarter core transaction deposits grew $333 million or 10% annualized
Net interest margin of 2.81% was down 31 basis points from the third quarter, due to lower PPP fee accretion, continued strong deposit growth and an earning asset mix change toward cash and securities
Mortgage closings of $522 million compared to $609 million a year ago; mortgage rate locks of $695 million compared to $792 million a year ago
Noninterest income was down $2.9 million on a linked quarter basis, primarily driven by lower mortgage fees
Noninterest expenses increased by $12.4 million compared to the third quarter on a GAAP basis and by $3.9 million on an operating basis, mostly due to adding the operating expenses of Aquesta which was acquired on October 1
Efficiency ratio of 62.1%, or 56.5% on an operating basis
Net charge-offs of $248,000 or 1 basis point as a percent of average loans, down 1 basis point from the net charge-offs experienced in the third quarter
Nonperforming assets of 0.16% of total assets, down 7 basis points compared to September 30, 2021
Quarterly common shareholder dividend of $0.20 per share declared during the quarter, an increase of 11% year-over-year
Completed the acquisition of Aquesta Financial Holdings, Inc. (“Aquesta”) with $756 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
Completed the acquisition of Reliant Bancorp, Inc. (“Reliant”) with $3.0 billion in assets on January 1, 2022; this acquisition is expected to 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, January 19, 2022, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. Participants can pre-register for the conference call by navigating to https://dpregister.com/sreg/10162699/f0590f1c98. Those without internet access or unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and available for replay 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 (in thousands, except per share data)
	2021												2020			Fourth Quarter 2021- 2020 Change		For the Twelve Months Ended December 31,						YTD 2021- 2020 Change
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Fourth Quarter 2021- 2020 Change		2021			2020			YTD 2021- 2020 Change
INCOME SUMMARY
Interest revenue	$	143,768		$	147,675		$	145,809		$	141,542		$	156,071				$	578,794		$	557,996
Interest expense		6,213			6,636			7,433			9,478			10,676					29,760			56,237
Net interest revenue		137,555			141,039			138,376			132,064			145,395		(5	)%		549,034			501,759		9	%
(Release of) provision for credit losses		(647	)		(11,034	)		(13,588	)		(12,281	)		2,907					(37,550	)		80,434
Noninterest income		37,177			40,095			35,841			44,705			41,375		(10	)		157,818			156,109		1
Total revenue		175,379			192,168			187,805			189,050			183,863		(5	)		744,402			577,434		29
Expenses		109,156			96,749			95,540			95,194			106,490		3			396,639			367,989		8
Income before income tax expense		66,223			95,419			92,265			93,856			77,373					347,763			209,445
Income tax expense		14,204			21,603			22,005			20,150			17,871					77,962			45,356
Net income		52,019			73,816			70,260			73,706			59,502					269,801			164,089
Merger-related and other charges		9,912			1,437			1,078			1,543			2,452					13,970			7,018
Income tax benefit of merger-related and other charges		(2,265	)		(328	)		(246	)		(335	)		(552	)				(3,174	)		(1,340	)
Net income - operating⁽¹⁾	$	59,666		$	74,925		$	71,092		$	74,914		$	61,402		(3	)	$	280,597		$	169,767		65

Pre-tax pre-provision income ⁽⁵⁾	$	65,576		$	84,385		$	78,677		$	81,575		$	80,280		(18	)	$	310,213		$	289,879		7

PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP	$	0.55		$	0.82		$	0.78		$	0.82		$	0.66		(17	)	$	2.97		$	1.91		55
Diluted net income - operating ⁽¹⁾		0.64			0.83			0.79			0.83			0.68		(6	)		3.09			1.98		56
Common stock cash dividends declared		0.20			0.20			0.19			0.19			0.18		11			0.78			0.72		8
Book value		23.63			23.25			22.81			22.15			21.90		8			23.63			21.90		8
Tangible book value ⁽³⁾		18.42			18.68			18.49			17.83			17.56		5			18.42			17.56		5
Key performance ratios:
Return on common equity - GAAP ⁽²⁾⁽⁴⁾		9.32	%		14.26	%		14.08	%		15.37	%		12.36	%				13.14	%		9.25	%
Return on common equity - operating ^(1)(2)(4)		10.74			14.48			14.25			15.63			12.77					13.68			9.58
Return on tangible common equity - operating ^(1)(2)(3)(4)		13.93			18.23			17.81			19.68			16.23					17.33			12.24
Return on assets - GAAP ⁽⁴⁾		0.96			1.48			1.46			1.62			1.30					1.37			1.04
Return on assets - operating ⁽¹⁾⁽⁴⁾		1.10			1.50			1.48			1.65			1.34					1.42			1.07
Return on assets -pre-tax pre-provision⁽⁴⁾⁽⁵⁾		1.21			1.70			1.64			1.80			1.77					1.58			1.85
Return on assets -pre-tax pre-provision, excluding merger related and other charges^(1)(4)(5)		1.40			1.73			1.67			1.83			1.82					1.65			1.90
Net interest margin (fully taxable equivalent) ⁽⁴⁾		2.81			3.12			3.19			3.22			3.55					3.07			3.55
Efficiency ratio - GAAP		62.12			53.11			54.53			53.55			56.73					55.80			55.71
Efficiency ratio - operating ⁽¹⁾		56.48			52.33			53.92			52.68			55.42					53.83			54.64
Equity to total assets		10.61			10.89			11.04			10.95			11.29					10.61			11.29
Tangible common equity to tangible assets ⁽³⁾		8.09			8.53			8.71			8.57			8.81					8.09			8.81
ASSET QUALITY
Nonperforming loans	$	32,812		$	44,923		$	46,123		$	55,900		$	61,599		(47	)	$	32,812		$	61,599		(47	)
Foreclosed properties		43			412			224			596			647		(93	)		43			647		(93	)
Total nonperforming assets (“NPAs”)		32,855			45,335			46,347			56,496			62,246		(47	)		32,855			62,246		(47	)
Allowance for credit losses - loans and leases		102,532			99,620			111,616			126,866			137,010		(25	)		102,532			137,010		(25	)
Allowance for credit losses - total		113,524			110,875			122,460			135,592			147,568		(23	)		113,524			147,568		(23	)
Net charge-offs		248			551			(456	)		(305	)		1,515		(84	)		38			18,316		(100	)
Allowance for credit losses - loans and leases to loans		0.87	%		0.89	%		0.98	%		1.09	%		1.20	%				0.87	%		1.20	%
Allowance for credit losses - total to loans		0.97			0.99			1.08			1.16			1.30					0.97			1.30
Net charge-offs to average loans ⁽⁴⁾		0.01			0.02			(0.02	)		(0.01	)		0.05					—			0.17
NPAs to loans and foreclosed properties		0.28			0.41			0.41			0.48			0.55					0.28			0.55
NPAs to total assets		0.16			0.23			0.25			0.30			0.35					0.16			0.35
AVERAGE BALANCES ($ in millions)
Loans	$	11,689		$	11,205		$	11,617		$	11,433		$	11,595		1		$	11,486		$	10,467		10
Investment securities		5,544			5,122			4,631			3,991			3,326		67			4,830			2,752		76
Earning assets		19,542			18,078			17,540			16,782			16,394		19			17,996			14,226		27
Total assets		20,863			19,322			18,792			18,023			17,698		18			19,258			15,467		25
Deposits		18,037			16,637			16,132			15,366			15,057		20			16,550			13,135		26
Shareholders’ equity		2,223			2,119			2,060			2,025			1,994		11			2,107			1,821		16
Common shares - basic (thousands)		89,916			87,211			87,289			87,322			87,258		3			87,940			83,184		6
Common shares - diluted (thousands)		90,089			87,355			87,421			87,466			87,333		3			88,097			83,248		6
AT PERIOD END ($ in millions)
Loans	$	11,760		$	11,191		$	11,391		$	11,679		$	11,371		3		$	11,760		$	11,371		3
Investment securities		5,653			5,335			4,928			4,332			3,645		55			5,653			3,645		55
Total assets		20,947			19,481			18,896			18,557			17,794		18			20,947			17,794		18
Deposits		18,241			16,865			16,328			15,993			15,232		20			18,241			15,232		20
Shareholders’ equity		2,222			2,122			2,086			2,031			2,008		11			2,222			2,008		11
Common shares outstanding (thousands)		89,350			86,559			86,665			86,777			86,675		3			89,350			86,675		3

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


UNITED COMMUNITY BANKS, INC. Non-GAAP Performance Measures Reconciliation Selected Financial Information (in thousands, except per share data)
	2021												2020			Twelve Months Ended December 31,
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			2021			2020
Expense reconciliation
Expenses (GAAP)	$	109,156		$	96,749		$	95,540		$	95,194		$	106,490		$	396,639		$	367,989
Merger-related and other charges		(9,912	)		(1,437	)		(1,078	)		(1,543	)		(2,452	)		(13,970	)		(7,018	)
Expenses - operating	$	99,244		$	95,312		$	94,462		$	93,651		$	104,038		$	382,669		$	360,971

Net income to operating income reconciliation
Net income (GAAP)	$	52,019		$	73,816		$	70,260		$	73,706		$	59,502		$	269,801		$	164,089
Merger-related and other charges		9,912			1,437			1,078			1,543			2,452			13,970			7,018
Income tax benefit of merger-related and other charges		(2,265	)		(328	)		(246	)		(335	)		(552	)		(3,174	)		(1,340	)
Net income - operating	$	59,666		$	74,925		$	71,092		$	74,914		$	61,402		$	280,597		$	169,767

Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)	$	52,019		$	73,816		$	70,260		$	73,706		$	59,502		$	269,801		$	164,089
Income tax expense		14,204			21,603			22,005			20,150			17,871			77,962			45,356
(Release of) provision for credit losses		(647	)		(11,034	)		(13,588	)		(12,281	)		2,907			(37,550	)		80,434
Pre-tax pre-provision income	$	65,576		$	84,385		$	78,677		$	81,575		$	80,280		$	310,213		$	289,879

Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.55		$	0.82		$	0.78		$	0.82		$	0.66		$	2.97		$	1.91
Merger-related and other charges		0.09			0.01			0.01			0.01			0.02			0.12			0.07
Diluted income per common share - operating	$	0.64		$	0.83		$	0.79		$	0.83		$	0.68		$	3.09		$	1.98

Book value per common share reconciliation
Book value per common share (GAAP)	$	23.63		$	23.25		$	22.81		$	22.15		$	21.90		$	23.63		$	21.90
Effect of goodwill and other intangibles		(5.21	)		(4.57	)		(4.32	)		(4.32	)		(4.34	)		(5.21	)		(4.34	)
Tangible book value per common share	$	18.42		$	18.68		$	18.49		$	17.83		$	17.56		$	18.42		$	17.56

Return on tangible common equity reconciliation
Return on common equity (GAAP)		9.32	%		14.26	%		14.08	%		15.37	%		12.36	%		13.14	%		9.25	%
Merger-related and other charges		1.42			0.22			0.17			0.26			0.41			0.54			0.33
Return on common equity - operating		10.74			14.48			14.25			15.63			12.77			13.68			9.58
Effect of goodwill and other intangibles		3.19			3.75			3.56			4.05			3.46			3.65			2.66
Return on tangible common equity - operating		13.93	%		18.23	%		17.81	%		19.68	%		16.23	%		17.33	%		12.24	%

Return on assets reconciliation
Return on assets (GAAP)		0.96	%		1.48	%		1.46	%		1.62	%		1.30	%		1.37	%		1.04	%
Merger-related and other charges		0.14			0.02			0.02			0.03			0.04			0.05			0.03
Return on assets - operating		1.10	%		1.50	%		1.48	%		1.65	%		1.34	%		1.42	%		1.07	%

Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)		0.96	%		1.48	%		1.46	%		1.62	%		1.30	%		1.37	%		1.04	%
Income tax expense		0.26			0.45			0.47			0.46			0.40			0.40			0.29
(Release of) provision for credit losses		(0.01	)		(0.23	)		(0.29	)		(0.28	)		0.07			(0.19	)		0.52
Return on assets - pre-tax pre-provision		1.21			1.70			1.64			1.80			1.77			1.58			1.85
Merger-related and other charges		0.19			0.03			0.03			0.03			0.05			0.07			0.05
Return on assets - pre-tax pre-provision, excluding merger-related and other charges		1.40	%		1.73	%		1.67	%		1.83	%		1.82	%		1.65	%		1.90	%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)		62.12	%		53.11	%		54.53	%		53.55	%		56.73	%		55.80	%		55.71	%
Merger-related and other charges		(5.64	)		(0.78	)		(0.61	)		(0.87	)		(1.31	)		(1.97	)		(1.07	)
Efficiency ratio - operating		56.48	%		52.33	%		53.92	%		52.68	%		55.42	%		53.83	%		54.64	%

Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)		10.61	%		10.89	%		11.04	%		10.95	%		11.29	%		10.61	%		11.29	%
Effect of goodwill and other intangibles		(2.06	)		(1.87	)		(1.82	)		(1.86	)		(1.94	)		(2.06	)		(1.94	)
Effect of preferred equity		(0.46	)		(0.49	)		(0.51	)		(0.52	)		(0.54	)		(0.46	)		(0.54	)
Tangible common equity to tangible assets		8.09	%		8.53	%		8.71	%		8.57	%		8.81	%		8.09	%		8.81	%

Allowance for credit losses - loans to loans reconciliation
Allowance for credit losses - loans to loans (GAAP)		0.87	%		0.89	%		0.98	%		1.09	%		1.20	%		0.87	%		1.20	%
Effect of PPP loans		0.01			0.01			0.04			0.09			0.08			0.01			0.08
Allowance for credit losses - loans to loans, excluding PPP loans		0.88	%		0.90	%		1.02	%		1.18	%		1.28	%		0.88	%		1.28	%


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
(in millions)
	2021								2020		Linked Quarter Change			Year over Year Change
	Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Linked Quarter Change			Year over Year Change
LOANS BY CATEGORY
Owner occupied commercial RE	$	2,322	$	2,149	$	2,149	$	2,107	$	2,090	$	173		$	232
Income producing commercial RE		2,601		2,542		2,550		2,599		2,541		59			60
Commercial & industrial		1,822		1,729		1,762		1,760		1,853		93			(31	)
Paycheck protection program		88		150		472		883		646		(62	)		(558	)
Commercial construction		1,015		947		927		960		967		68			48
Equipment financing		1,083		1,017		969		913		864		66			219
Total commercial		8,931		8,534		8,829		9,222		8,961		397			(30	)
Residential mortgage		1,638		1,533		1,473		1,362		1,285		105			353
Home equity lines of credit		694		661		661		679		697		33			(3	)
Residential construction		359		321		289		272		281		38			78
Consumer		138		142		139		144		147		(4	)		(9	)
Total loans	$	11,760	$	11,191	$	11,391	$	11,679	$	11,371	$	569		$	389

LOANS BY MARKET ⁽¹⁾
North Georgia	$	944	$	961	$	962	$	982	$	955	$	(17	)	$	(11	)
Atlanta		2,030		1,930		1,938		1,953		1,889		100			141
North Carolina		1,895		1,427		1,374		1,326		1,281		468			614
Coastal Georgia		588		621		605		597		617		(33	)		(29	)
Gainesville		216		220		224		222		224		(4	)		(8	)
East Tennessee		373		383		394		398		415		(10	)		(42	)
South Carolina		2,235		2,145		2,107		1,997		1,947		90			288
Florida		1,148		1,113		1,141		1,160		1,435		35			(287	)
Commercial Banking Solutions		2,331		2,391		2,646		3,044		2,608		(60	)		(277	)
Total loans	$	11,760	$	11,191	$	11,391	$	11,679	$	11,371	$	569		$	389


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Year-End
(in millions)
	2021		2020		2019		2018		2017
LOANS BY CATEGORY
Owner occupied commercial RE	$	2,322	$	2,090	$	1,720	$	1,648	$	1,924
Income producing commercial RE		2,601		2,541		2,008		1,812		1,595
Commercial & industrial		1,822		1,853		1,221		1,278		1,131
Paycheck protection program		88		646		—		—		—
Commercial construction		1,015		967		976		796		712
Equipment financing		1,083		864		745		565		—
Total commercial		8,931		8,961		6,670		6,099		5,362
Residential mortgage		1,638		1,285		1,118		1,049		974
Home equity lines of credit		694		697		661		694		731
Residential construction		359		281		236		211		183
Consumer		138		147		128		330		486
Total loans	$	11,760	$	11,371	$	8,813	$	8,383	$	7,736

LOANS BY MARKET
North Georgia	$	944	$	955	$	967	$	981	$	1,019
Atlanta		2,030		1,889		1,762		1,507		1,510
North Carolina		1,895		1,281		1,156		1,072		1,049
Coastal Georgia		588		617		631		588		630
Gainesville		216		224		246		247		248
East Tennessee		373		415		421		477		475
South Carolina		2,235		1,947		1,708		1,645		1,486
Florida		1,148		1,435		—		—		—
Commercial Banking Solutions		2,331		2,608		1,922		1,658		961
Indirect auto		—		—		—		208		358
Total loans	$	11,760	$	11,371	$	8,813	$	8,383	$	7,736


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
	2021
	Fourth Quarter		Third Quarter		Second Quarter
NONACCRUAL LOANS
Owner occupied RE	$	2,714	$	4,945	$	6,128
Income producing RE		7,588		13,462		13,100
Commercial & industrial		5,429		8,507		8,563
Commercial construction		343		1,202		1,229
Equipment financing		1,741		1,845		1,771
Total commercial		17,815		29,961		30,791
Residential mortgage		13,313		13,222		13,485
Home equity lines of credit		1,212		1,364		1,433
Residential construction		420		260		307
Consumer		52		116		107
Total	$	32,812	$	44,923	$	46,123

	2021
	Fourth Quarter					Third Quarter					Second 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	$	(255	)	(0.04	)%	$	(93	)	(0.02	)%	$	(103	)	(0.02	)%
Income producing RE		(98	)	(0.01	)		45		0.01			(213	)	(0.03	)
Commercial & industrial		339		0.07			(91	)	(0.02	)		60		0.01
Commercial construction		(354	)	(0.14	)		(123	)	(0.05	)		(293	)	(0.12	)
Equipment financing		781		0.29			512		0.21			301		0.13
Total commercial		413		0.02			250		0.01			(248	)	(0.01	)
Residential mortgage		(169	)	(0.04	)		51		0.01			(194	)	(0.05	)
Home equity lines of credit		(118	)	(0.07	)		(102	)	(0.06	)		(112	)	(0.07	)
Residential construction		(17	)	(0.02	)		(37	)	(0.05	)		(33	)	(0.05	)
Consumer		139		0.39			389		1.11			131		0.37
Total	$	248		0.01		$	551		0.02		$	(456	)	(0.02	)

⁽¹⁾ Annualized.

UNITED COMMUNITY BANKS, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)

	December 31, 2021			December 31, 2020
ASSETS
Cash and due from banks	$	144,244		$	148,896
Interest-bearing deposits in banks		2,147,266			1,459,723
Federal funds and other short-term investments		27,000			—
Cash and cash equivalents		2,318,510			1,608,619
Debt securities available-for-sale		4,496,824			3,224,721
Debt securities held-to-maturity (fair value $1,148,804 and $437,193, respectively)		1,156,098			420,361
Loans held for sale at fair value		44,109			105,433
Loans and leases held for investment		11,760,346			11,370,815
Less allowance for credit losses - loans and leases		(102,532	)		(137,010	)
Loans and leases, net		11,657,814			11,233,805
Premises and equipment, net		245,296			218,489
Bank owned life insurance		217,713			201,969
Accrued interest receivable		42,999			47,672
Net deferred tax asset		41,322			38,411
Derivative financial instruments		42,480			86,666
Goodwill and other intangible assets, net		472,407			381,823
Other assets		211,199			226,405
Total assets	$	20,946,771		$	17,794,374
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	6,956,981		$	5,390,291
NOW and interest-bearing demand		4,252,209			3,346,490
Money market		4,183,354			3,550,335
Savings		1,215,779			950,854
Time		1,442,498			1,704,290
Brokered		190,358			290,098
Total deposits		18,241,179			15,232,358
Long-term debt		247,360			326,956
Derivative financial instruments		25,145			29,003
Accrued expenses and other liabilities		210,842			198,527
Total liabilities		18,724,526			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; 89,349,826 and 86,675,279 shares issued and outstanding, respectively		89,350			86,675
Common stock issuable; 595,705 and 600,834 shares, respectively		11,288			10,855
Capital surplus		1,721,007			1,638,999
Retained earnings		330,654			136,869
Accumulated other comprehensive (loss) income		(26,476	)		37,710
Total shareholders’ equity		2,222,245			2,007,530
Total liabilities and shareholders’ equity	$	20,946,771		$	17,794,374

UNITED COMMUNITY BANKS, INC.

Consolidated Statements of Income (Unaudited)

(in thousands, except per share data)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2021			2020		2021			2020
Interest revenue:
Loans, including fees	$	123,473		$	141,351	$	505,734		$	494,212
Investment securities, including tax exempt of $2,293, $2,055, $8,978 and $7,043		19,442			14,507		70,972			62,074
Deposits in banks and short-term investments		853			213		2,088			1,710
Total interest revenue		143,768			156,071		578,794			557,996
Interest expense:
Deposits:
NOW and interest-bearing demand		1,310			1,495		5,468			7,735
Money market		1,102			2,196		5,380			13,165
Savings		60			48		217			169
Time		392			2,689		3,780			20,703
Deposits		2,864			6,428		14,845			41,772
Short-term borrowings		—			—		—			3
Federal Home Loan Bank advances		1			—		3			28
Long-term debt		3,348			4,248		14,912			14,434
Total interest expense		6,213			10,676		29,760			56,237
Net interest revenue		137,555			145,395		549,034			501,759
Provision for credit losses		(647	)		2,907		(37,550	)		80,434
Net interest revenue after provision for credit losses		138,202			142,488		586,584			421,325
Noninterest income:
Service charges and fees		8,613			8,508		33,868			32,401
Mortgage loan gains and related fees		10,910			18,974		58,446			76,087
Wealth management fees		6,117			3,221		18,998			9,240
Gains from other loan sales, net		3,761			1,531		11,267			5,420
Securities gains, net		42			2		83			748
Other		7,734			9,139		35,156			32,213
Total noninterest income		37,177			41,375		157,818			156,109
Total revenue		175,379			183,863		744,402			577,434
Noninterest expenses:
Salaries and employee benefits		60,986			61,824		241,443			224,060
Occupancy		7,489			7,082		28,619			25,791
Communications and equipment		7,850			7,687		29,829			27,149
FDIC assessments and other regulatory charges		1,878			1,594		7,398			5,982
Professional fees		6,080			4,029		20,589			18,032
Lending and loan servicing expense		2,351			2,468		10,859			10,993
Outside services - electronic banking		2,670			1,997		9,481			7,513
Postage, printing and supplies		1,939			1,793		7,110			6,779
Advertising and public relations		1,760			9,891		5,910			15,203
Amortization of intangibles		1,103			1,042		4,045			4,168
Merger-related and other charges		9,912			2,452		13,970			7,018
Other		5,138			4,631		17,386			15,301
Total noninterest expenses		109,156			106,490		396,639			367,989
Net income before income taxes		66,223			77,373		347,763			209,445
Income tax expense		14,204			17,871		77,962			45,356
Net income	$	52,019		$	59,502	$	269,801		$	164,089
Preferred stock dividends		1,718			1,719		6,875			3,533
Earnings allocated to participating securities		317			532		1,657			1,287
Net income available to common shareholders	$	49,984		$	57,251	$	261,269		$	159,269

Net income per common share:
Basic	$	0.56		$	0.66	$	2.97		$	1.91
Diluted		0.55			0.66		2.97			1.91
Weighted average common shares outstanding:
Basic		89,916			87,258		87,940			83,184
Diluted		90,089			87,333		88,097			83,248

UNITED COMMUNITY BANKS, INC.

Average Consolidated Balance Sheets and Net Interest Analysis

For the Three Months Ended December 31,

(dollars in thousands, fully taxable equivalent (FTE))

	2021								2020
	Average Balance			Interest			Average Rate		Average Balance			Interest			Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) ⁽¹⁾⁽²⁾	$	11,689,412		$	123,250		4.18	%	$	11,595,484		$	140,687		4.83	%
Taxable securities⁽³⁾		5,156,563			17,149		1.33			3,039,275			12,452		1.64
Tax-exempt securities (FTE) ⁽¹⁾⁽³⁾		387,638			3,080		3.18			286,490			2,759		3.85
Federal funds sold and other interest-earning assets		2,308,241			1,322		0.23			1,472,668			1,132		0.31
Total interest-earning assets (FTE)		19,541,854			144,801		2.94			16,393,917			157,030		3.81

Noninterest-earning assets:
Allowance for loan losses		(103,167	)							(138,313	)
Cash and due from banks		141,967								143,694
Premises and equipment		245,869								218,349
Other assets ⁽³⁾		1,036,760								1,080,180
Total assets	$	20,863,283							$	17,697,827

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	4,080,621			1,310		0.13		$	3,281,984			1,495		0.18
Money market		4,323,851			1,102		0.10			3,698,734			2,196		0.24
Savings		1,187,134			60		0.02			918,623			48		0.02
Time		1,461,231			567		0.15			1,748,099			2,711		0.62
Brokered time deposits		65,556			(175	)	(1.06	)		83,750			(22	)	(0.10	)
Total interest-bearing deposits		11,118,393			2,864		0.10			9,731,190			6,428		0.26
Federal funds purchased and other borrowings		51			—		—			54			—		—
Federal Home Loan Bank advances		1,426			1		0.28			—			—		—
Long-term debt		247,251			3,348		5.37			327,236			4,248		5.16
Total borrowed funds		248,728			3,349		5.34			327,290			4,248		5.16
Total interest-bearing liabilities		11,367,121			6,213		0.22			10,058,480			10,676		0.42

Noninterest-bearing liabilities:
Noninterest-bearing deposits		6,918,279								5,325,858
Other liabilities		354,665								319,158
Total liabilities		18,640,065								15,703,496
Shareholders’ equity		2,223,218								1,994,331
Total liabilities and shareholders’ equity	$	20,863,283							$	17,697,827

Net interest revenue (FTE)				$	138,588							$	146,354
Net interest-rate spread (FTE)							2.72	%							3.39	%
Net interest margin (FTE) ⁽⁴⁾							2.81	%							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 losses of $1.64 million in 2021 and pretax unrealized gains of $72.6 million in 2020 are included in other assets for purposes of this presentation.
⁽⁴⁾Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets.

UNITED COMMUNITY BANKS, INC.

Average Consolidated Balance Sheets and Net Interest Analysis

For the Twelve Months Ended December 31,

(dollars in thousands, fully taxable equivalent (FTE))

	2021							2020
	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) ⁽¹⁾⁽²⁾	$	11,485,876		$	504,015	4.39	%	$	10,466,653		$	492,223	4.70	%
Taxable securities ⁽³⁾		4,446,712			61,994	1.39			2,532,750			55,031	2.17
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾		382,915			12,059	3.15			219,668			9,458	4.31
Federal funds sold and other interest-earning assets		1,680,151			4,784	0.28			1,007,059			4,753	0.47
Total interest-earning assets (FTE)		17,995,654			582,852	3.24			14,226,130			561,465	3.95

Non-interest-earning assets:
Allowance for loan losses		(121,586	)						(106,812	)
Cash and due from banks		139,728							136,702
Premises and equipment		230,276							217,751
Other assets ⁽³⁾		1,013,956							993,584
Total assets	$	19,258,028						$	15,467,355

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	3,610,601			5,468	0.15		$	2,759,383			7,735	0.28
Money market		3,972,358			5,380	0.14			3,023,928			13,165	0.44
Savings		1,095,071			217	0.02			821,344			169	0.02
Time		1,529,072			3,663	0.24			1,832,319			20,146	1.10
Brokered time deposits		67,230			117	0.17			97,788			557	0.57
Total interest-bearing deposits		10,274,332			14,845	0.14			8,534,762			41,772	0.49
Federal funds purchased and other borrowings		44			—	—			1,220			3	0.25
Federal Home Loan Bank advances		1,195			3	0.25			749			28	3.74
Long-term debt		276,492			14,912	5.39			274,069			14,434	5.27
Total borrowed funds		277,731			14,915	5.37			276,038			14,465	5.24
Total interest-bearing liabilities		10,552,063			29,760	0.28			8,810,800			56,237	0.64

Noninterest-bearing liabilities:
Noninterest-bearing deposits		6,276,094							4,600,152
Other liabilities		322,566							235,120
Total liabilities		17,150,723							13,646,072
Shareholders’ equity		2,107,305							1,821,283
Total liabilities and shareholders’ equity	$	19,258,028						$	15,467,355

Net interest revenue (FTE)				$	553,092						$	505,228
Net interest-rate spread (FTE)						2.96	%						3.31	%
Net interest margin (FTE) ⁽⁴⁾						3.07	%						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 $28.7 million in 2021 and $67.3 million in 2020 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 December 31, 2021, United had $20.9 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 January 1, 2022 acquisition of Reliant Bancorp and its wholly-owned banking subsidiary, Reliant Bank, United added $3 billion in assets and 25 banking offices in high growth markets in Tennessee. 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 2021 for the fifth consecutive year 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 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 possibility that the costs, fees, expenses and charges related to the acquisition of Reliant may be greater than anticipated, (4) reputational risk and the reaction of the companies’ customers, suppliers, employees or other business partners to the acquisitions of Aquesta and Reliant, (5) the risks relating to the integration of 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, (6) the risk of potential litigation or regulatory action related to the acquisitions of Aquesta and Reliant, (7) the risks associated with United’s pursuit of future acquisitions, (8) the risk of expansion into new geographic or product markets, (9) the dilution caused by United’s issuance of additional shares of its common stock in the acquisitions of Aquesta and Reliant, and (10) 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 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 to predict their occurrence or how they will affect United or Reliant.

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

For more information:

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

United Community Banks, Inc. Reports Fourth Quarter Results

GAAP EPS of $0.55, Return on Assets of 0.96% and Return on Common Equity of 9.3%

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