UCBI - United Community Banks Inc. Reports Fourth Quarter Results

January, 21 2020 05:00 PM United Community Banks Inc.

EPS of $0.61, Return on Assets of 1.50% and Return on Equity of 12.07%

GREENVILLE, S.C., Jan. 21, 2020 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (“United”) today announced its fourth quarter financial results, including strong year-over-year loan and deposit growth, operating efficiency and asset quality. Diluted earnings per share were $0.61, an increase of $0.05 or 9% from a year ago. Excluding a nominal amount of merger-related and other charges, diluted operating earnings per share were also $0.61, up 7% over last year. United’s return on assets was 1.50% and its return on common equity was 12.1% for the quarter. On an operating basis, United’s return on assets was also 1.50% and its return on tangible common equity was 15.5%.

During the quarter, the company sold its remaining investment in its indirect auto portfolio, completing its exit from that business. Excluding indirect auto, loans grew at a 2% annualized rate in the fourth quarter. United's net interest margin decreased as expected due to falling interest rates. Other items that impacted the net interest margin included seasonally higher average public deposits invested at lower yielding overnight rates and lower purchased loan accretion when compared to previous quarters. Core transaction deposits remained stable and total deposits grew by $140 million.

For the full year of 2019, United's return on assets increased 11 basis points to 1.46% and EPS increased by 12%. Operating return on assets increased 11 basis points to 1.51% and operating EPS increased 11%, as the company continued to execute on its plans to deliver top quartile performance. 2019 saw strong operating leverage, resulting in a company best efficiency ratio of 55.8% and an operating efficiency ratio of 54.5%.

“Our fourth quarter caps off what has been an outstanding year for United. Our team continued delivering best in class customer service, which has led to the achievement of our top quartile performance goals,” said Lynn Harton, Chairman and CEO of United. “We are proud and honored that United was named one of the 'Best Banks to Work For' by American Banker for the third year in a row, as well as one of the 'World’s Best Banks in 2019' by Forbes. These accolades are totally due to the passion and caring of our 2,341 employees and their efforts to build a great company where they can develop fulfilling careers, reach ambitious financial goals and serve United's customers and communities at the highest level. We look forward to continued success in 2020.”

2019 Highlights:

2019 earnings per diluted share were $2.31, a 12% increase over 2018
-- Excluding merger-related and other charges, operating earnings per diluted share for 2019 were $2.38 compared to $2.14 in 2018, an increase of 11%
Return on assets was 1.46% in 2019, an increase of 11 basis points from 2018
-- Excluding merger-related and other charges, operating return on assets was 1.51%, an increase of 11 basis points from 2018
Efficiency ratio of 55.8% in 2019 improved 154 basis points as compared to 2018
-- Excluding merger-related and other charges, efficiency ratio of 54.5% improved 144 basis points as compared to 2018
End of period loans grew $430 million in 2019, up 5% over December 31, 2018
Common Equity Tier 1 ratio was 13.0% at December 31, 2019, compared to 12.2% at December 31, 2018
Dividends of $0.68 per share were declared in 2019, up 17% over 2018
United completed the acquisition of First Madison Bank & Trust on May 1, 2019
Share repurchases of 500,495 shares were accomplished during the year at an average price of $26.01

Fourth Quarter 2019 Financial Highlights:

EPS of $0.61, representing growth of 9% over last year, or 7% on an operating basis
Return on assets of 1.50%
Return on common equity of 12.1%
Operating return on tangible common equity of 15.5%, excluding merger-related and other charges
End of period total loans fell by $90 million, but excluding indirect auto, end of period loans grew at a 2% annualized pace
Loan production was strong at $854 million, but was offset by higher than usual paydowns
Despite weaker seasonality, our mortgage business remained strong with loan locks of $411 million, compared to $251 million a year ago due to a favorable rate environment and the impact of new hires
Net interest margin of 3.93% was down 19 basis points compared to the third quarter and down 4 basis points compared to a year ago
Efficiency ratio of 54.9%
Net charge-offs of 18 basis points, up six basis points from last quarter and remaining at historically low levels
Nonperforming assets of 0.28% of total assets, compared with 0.24% at September 30, 2019 and 0.20% at December 31, 2018
Unusual items in the quarter netted to a slight gain, with a $1.6 million bank owned life insurance gain offset by $0.9 million in securities losses. Additionally, our indirect portfolio sales resulted in a $0.7 million loss offset by a $0.5 million indirect portfolio loan loss reserve release

Conference Call
United will hold a conference call, Wednesday, January 22, 2020, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 7081477. 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.

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

UNITED COMMUNITY BANKS, INC.


















Financial Highlights


















Selected Financial Information




















2019

2018

Fourth Quarter 2019 - 2018 Change

For the Twelve Months Ended December 31,

YTD 2019 - 2018 Change
*(in thousands, except per share data)*

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Fourth Quarter


2019

2018

INCOME SUMMARY


















Interest revenue

$
136,419


$
140,615


$
139,156


$
136,516


$
133,854




$
552,706


$
500,080



Interest expense

19,781


21,277


21,372


20,882


18,975




83,312


61,330



Net interest revenue

116,638


119,338


117,784


115,634


114,879


2
%

469,394


438,750


7
%
Provision for credit losses

3,500


3,100


3,250


3,300


2,100




13,150


9,500



Noninterest income

30,183


29,031


24,531


20,968


23,045


31


104,713


92,961


13

Total revenue

143,321


145,269


139,065


133,302


135,824


6


560,957


522,211


7

Expenses

81,424


82,924


81,813


76,084


78,242


4


322,245


306,285


5

Income before income tax expense

61,897


62,345


57,252


57,218


57,582




238,712


215,926



Income tax expense

12,885


13,983


13,167


12,956


12,445




52,991


49,815



Net income

49,012


48,362


44,085


44,262


45,137




185,721


166,111



Merger-related and other charges

(74
)

2,605


4,087


739


1,234




7,357


7,345



Income tax benefit of merger-related and other charges

17


(600
)

(940
)

(172
)

(604
)



(1,695
)

(1,494
)


Net income - operating⁽¹⁾

$
48,955


$
50,367


$
47,232


$
44,829


$
45,767


7


$
191,383


$
171,962


11




















PERFORMANCE MEASURES


















Per common share:


















Diluted net income - GAAP

$
0.61


$
0.60


$
0.55


$
0.55


$
0.56


9


$
2.31


$
2.07


12

Diluted net income - operating ⁽¹⁾

0.61


0.63


0.59


0.56


0.57


7


2.38


2.14


11

Cash dividends declared

0.18


0.17


0.17


0.16


0.16


13


0.68


0.58


17

Book value

20.53


20.16


19.65


18.93


18.24


13


20.53


18.24


13

Tangible book value ⁽³⁾

16.28


15.90


15.38


14.93


14.24


14


16.28


14.24


14

Key performance ratios:


















Return on common equity - GAAP ⁽²⁾⁽⁴⁾

12.07
%

12.16
%

11.45
%

11.85
%

12.08
%



11.89
%

11.60
%


Return on common equity - operating ^(1)(2)(4)

12.06


12.67


12.27


12.00


12.25




12.25


12.01



Return on tangible common equity - operating ^(1)(2)(3)(4)

15.49


16.38


15.88


15.46


15.88




15.81


15.69



Return on assets - GAAP ⁽⁴⁾

1.50


1.51


1.40


1.44


1.43




1.46


1.35



Return on assets - operating ⁽¹⁾⁽⁴⁾

1.50


1.58


1.50


1.45


1.45




1.51


1.40



Net interest margin (fully taxable equivalent) ⁽⁴⁾

3.93


4.12


4.12


4.10


3.97




4.07


3.91



Efficiency ratio - GAAP

54.87


55.64


57.28


55.32


56.73




55.77


57.31



Efficiency ratio - operating ⁽¹⁾

54.92


53.90


54.42


54.78


55.83




54.50


55.94



Equity to total assets

12.66


12.53


12.25


12.06


11.59




12.66


11.59



Tangible common equity to tangible assets ⁽³⁾

10.32


10.16


9.86


9.76


9.29




10.32


9.29






















ASSET QUALITY


















Nonperforming loans

$
35,341


$
30,832


$
26,597


$
23,624


$
23,778


49


$
35,341


$
23,778


49

Foreclosed properties

476


102


75


1,127


1,305


(64
)

476


1,305


(64
)
Total nonperforming assets ("NPAs")

35,817


30,934


26,672


24,751


25,083


43


35,817


25,083


43

Allowance for loan losses

62,089


62,514


62,204


61,642


61,203


1


62,089


61,203


1

Net charge-offs

3,925


2,723


2,438


3,130


1,787


120


12,216


6,113


100

Allowance for loan losses to loans

0.70
%

0.70
%

0.70
%

0.73
%

0.73
%



0.70
%

0.73
%


Net charge-offs to average loans ⁽⁴⁾

0.18


0.12


0.11


0.15


0.09




0.14


0.07



NPAs to loans and foreclosed properties

0.41


0.35


0.30


0.29


0.30




0.41


0.30



NPAs to total assets

0.28


0.24


0.21


0.20


0.20




0.28


0.20






















AVERAGE BALANCES ($ in millions)


















Loans

$
8,890


$
8,836


$
8,670


$
8,430


$
8,306


7


$
8,708


$
8,170


7

Investment securities

2,486


2,550


2,674


2,883


3,004


(17
)

2,647


2,899


(9
)
Earning assets

11,832


11,568


11,534


11,498


11,534


3


11,609


11,282


3

Total assets

12,946


12,681


12,608


12,509


12,505


4


12,687


12,284


3

Deposits

10,924


10,531


10,493


10,361


10,306


6


10,579


10,000


6

Shareholders’ equity

1,623


1,588


1,531


1,478


1,420


14


1,556


1,380


13

Common shares - basic (thousands)

79,659


79,663


79,673


79,807


79,884


—


79,700


79,662


—

Common shares - diluted (thousands)

79,669


79,667


79,678


79,813


79,890


—


79,708


79,671


—




















AT PERIOD END ($ in millions)


















Loans

$
8,813


$
8,903


$
8,838


$
8,493


$
8,383


5


$
8,813


$
8,383


5

Investment securities

2,559


2,515


2,620


2,720


2,903


(12
)

2,559


2,903


(12
)
Total assets

12,916


12,809


12,779


12,506


12,573


3


12,916


12,573


3

Deposits

10,897


10,757


10,591


10,534


10,535


3


10,897


10,535


3

Shareholders’ equity

1,636


1,605


1,566


1,508


1,458


12


1,636


1,458


12

Common shares outstanding (thousands)

79,014


78,974


79,075


79,035


79,234


—


79,014


79,234


—

⁽¹⁾ Excludes merger-related and other charges which includes termination of pension plan in the third quarter of 2019, executive retirement charges in the second quarter of 2019 and amortization of certain executive change of control benefits.
⁽²⁾ Net income divided by average realized common equity, which excludes accumulated other comprehensive income (loss).
⁽³⁾ Excludes effect of acquisition related intangibles and associated amortization.
⁽⁴⁾Annualized.

UNITED COMMUNITY BANKS, INC.










Selected Financial Information










For the Years Ended December 31,










(in thousands, except per share data)

2019

2018

2017

2016

2015
INCOME SUMMARY










Interest revenue

$
552,706


$
500,080


$
389,720


$
335,020


$
278,532

Interest expense

83,312


61,330


33,735


25,236


21,109

Net interest revenue

469,394


438,750


355,985


309,784


257,423

Provision for credit losses

13,150


9,500


3,800


(800
)

3,700

Noninterest income

104,713


92,961


88,260


93,697


72,529

Total revenue

560,957


522,211


440,445


404,281


326,252

Expenses

322,245


306,285


267,611


241,289


211,238

Income before income tax expense

238,712


215,926


172,834


162,992


115,014

Income tax expense

52,991


49,815


105,013


62,336


43,436

Net income

185,721


166,111


67,821


100,656


71,578

Merger-related and other charges

7,357


7,345


14,662


8,122


17,995

Income tax benefit of merger-related and other charges

(1,695
)

(1,494
)

(3,745
)

(3,074
)

(6,388
)
Impact of remeasurement of deferred tax asset resulting from 2017 Tax Cuts and Jobs Act

—


—


38,199


—


—

Impairment of deferred tax asset on cancelled non-qualified stock options

—


—


—


976


—

Release of disproportionate tax effects lodged in OCI

—


—


3,400


—


—

Net income - operating⁽¹⁾

$
191,383


$
171,962


$
120,337


$
106,680


$
83,185

PERFORMANCE MEASURES










Per common share:










Diluted net income - GAAP

$
2.31


$
2.07


$
0.92


$
1.40


$
1.09

Diluted net income - operating ⁽¹⁾

2.38


2.14


1.63


1.48


1.27

Cash dividends declared

0.68


0.58


0.38


0.30


0.22

Book value

20.53


18.24


16.67


15.06


14.02

Tangible book value⁽³⁾

16.28


14.24


13.65


12.95


12.06

Key performance ratios:










Return on common equity - GAAP ⁽²⁾

11.89
%

11.60
%

5.67
%

9.41
%

8.15
%
Return on common equity - operating ⁽¹⁾⁽²⁾

12.25


12.01


10.07


9.98


9.48

Return on tangible common equity - operating ^(1)(2)(3)

15.81


15.69


12.02


11.86


10.24

Return on assets - GAAP

1.46


1.35


0.62


1.00


0.85

Return on assets - operating ⁽¹⁾

1.51


1.40


1.09


1.06


0.98

Net interest margin (fully taxable equivalent)

4.07


3.91


3.52


3.36


3.30

Efficiency ratio - GAAP

55.77


57.31


59.95


59.80


63.96

Efficiency ratio - operating⁽¹⁾

54.50


55.94


56.67


57.78


58.51

Equity to total assets

12.66


11.59


10.94


10.05


10.58

Tangible common equity to tangible assets ⁽³⁾

10.32


9.29


9.14


8.77


9.15












ASSET QUALITY










Nonperforming loans

$
35,341


$
23,778


$
23,658


$
21,539


$
22,653

Foreclosed properties

476


1,305


3,234


7,949


4,883

Total nonperforming assets (NPAs)

35,817


25,083


26,892


29,488


27,536

Allowance for loan losses

62,089


61,203


58,914


61,422


68,448

Net charge-offs

12,216


6,113


5,998


6,766


6,259

Allowance for loan losses to loans

0.70
%

0.73
%

0.76
%

0.89
%

1.14
%
Net charge-offs to average loans

0.14


0.07


0.08


0.11


0.12

NPAs to loans and foreclosed properties

0.41


0.30


0.35


0.43


0.46

NPAs to total assets

0.28


0.20


0.23


0.28


0.29

AVERAGE BALANCES ($ in millions)










Loans

$
8,708


$
8,170


$
7,150


$
6,413


$
5,298

Investment securities

2,647


2,899


2,847


2,691


2,368

Earning assets

11,609


11,282


10,162


9,257


7,834

Total assets

12,687


12,284


11,015


10,054


8,462

Deposits

10,579


10,000


8,950


8,177


7,055

Shareholders’ equity

1,556


1,380


1,180


1,059


869

Common shares - basic (thousands)

79,700


79,662


73,247


71,910


65,488

Common shares - diluted (thousands)

79,708


79,671


73,259


71,915


65,492

AT PERIOD END ($ in millions)










Loans

$
8,813


$
8,383


$
7,736


$
6,921


$
5,995

Investment securities

2,559


2,903


2,937


2,762


2,656

Total assets

12,916


12,573


11,915


10,709


9,616

Deposits

10,897


10,535


9,808


8,638


7,873

Shareholders’ equity

1,636


1,458


1,303


1,076


1,018

Common shares outstanding (thousands)

79,014


79,234


77,580


70,899


71,484

⁽¹⁾Excludes merger-related and other charges which includes amortization of certain executive change of control benefits, the 2017 impact of remeasurement of United’s deferred tax assets following the passage of tax reform legislation, a 2017 release of disproportionate tax effects lodged in OCI, a 2016 deferred tax asset impairment charge related to cancelled non-qualified stock options and 2015 impairment losses on surplus bank property.
⁽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.

UNITED COMMUNITY BANKS, INC.










Non-GAAP Performance Measures Reconciliation










Selected Financial Information- Quarterly












2019

2018
*(in thousands, except per share data)*

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Fourth Quarter











Expense reconciliation










Expenses (GAAP)

$
81,424


$
82,924


$
81,813


$
76,084


$
78,242

Merger-related and other charges

74


(2,605
)

(4,087
)

(739
)

(1,234
)
Expenses - operating

$
81,498


$
80,319


$
77,726


$
75,345


$
77,008












Net income reconciliation










Net income (GAAP)

$
49,012


$
48,362


$
44,085


$
44,262


$
45,137

Merger-related and other charges

(74
)

2,605


4,087


739


1,234

Income tax benefit of merger-related and other charges

17


(600
)

(940
)

(172
)

(604
)
Net income - operating

$
48,955


$
50,367


$
47,232


$
44,829


$
45,767












Diluted income per common share reconciliation










Diluted income per common share (GAAP)

$
0.61


$
0.60


$
0.55


$
0.55


$
0.56

Merger-related and other charges

—


0.03


0.04


0.01


0.01

Diluted income per common share - operating

$
0.61


$
0.63


$
0.59


$
0.56


$
0.57












Book value per common share reconciliation










Book value per common share (GAAP)

$
20.53


$
20.16


$
19.65


$
18.93


$
18.24

Effect of goodwill and other intangibles

(4.25
)

(4.26
)

(4.27
)

(4.00
)

(4.00
)
Tangible book value per common share

$
16.28


$
15.90


$
15.38


$
14.93


$
14.24












Return on tangible common equity reconciliation










Return on common equity (GAAP)

12.07
%

12.16
%

11.45
%

11.85
%

12.08
%
Merger-related and other charges

(0.01
)

0.51


0.82


0.15


0.17

Return on common equity - operating

12.06


12.67


12.27


12.00


12.25

Effect of goodwill and other intangibles

3.43


3.71


3.61


3.46


3.63

Return on tangible common equity - operating

15.49
%

16.38
%

15.88
%

15.46
%

15.88
%











Return on assets reconciliation










Return on assets (GAAP)

1.50
%

1.51
%

1.40
%

1.44
%

1.43
%
Merger-related and other charges

—


0.07


0.10


0.01


0.02

Return on assets - operating

1.50
%

1.58
%

1.50
%

1.45
%

1.45
%











Efficiency ratio reconciliation










Efficiency ratio (GAAP)

54.87
%

55.64
%

57.28
%

55.32
%

56.73
%
Merger-related and other charges

0.05


(1.74
)

(2.86
)

(0.54
)

(0.90
)
Efficiency ratio - operating

54.92
%

53.90
%

54.42
%

54.78
%

55.83
%











Tangible common equity to tangible assets reconciliation










Equity to total assets (GAAP)

12.66
%

12.53
%

12.25
%

12.06
%

11.59
%
Effect of goodwill and other intangibles

(2.34
)

(2.37
)

(2.39
)

(2.30
)

(2.30
)
Tangible common equity to tangible assets

10.32
%

10.16
%

9.86
%

9.76
%

9.29
%

UNITED COMMUNITY BANKS, INC.










Non-GAAP Performance Measures Reconciliation










Selected Financial Information- Annual












For the Twelve Months Ended December 31,
(in thousands, except per share data)

2019

2018

2017

2016

2015
Expense reconciliation










Expenses (GAAP)

$
322,245


$
306,285


$
267,611


$
241,289


$
211,238

Merger-related and other charges

(7,357
)

(7,345
)

(14,662
)

(8,122
)

(17,995
)
Expenses - operating

$
314,888


$
298,940


$
252,949


$
233,167


$
193,243












Net income reconciliation










Net income (GAAP)

$
185,721


$
166,111


$
67,821


$
100,656


$
71,578

Merger-related and other charges

7,357


7,345


14,662


8,122


17,995

Income tax benefit of merger-related and other charges

(1,695
)

(1,494
)

(3,745
)

(3,074
)

(6,388
)
Impact of tax reform on remeasurement of deferred tax asset

—


—


38,199


—


—

Impairment of deferred tax asset on canceled non-qualified stock options

—


—


—


976


—

Release of disproportionate tax effects lodged in OCI

—


—


3,400


—


—

Net income - operating

$
191,383


$
171,962


$
120,337


$
106,680


$
83,185












Diluted income per common share reconciliation










Diluted income per common share (GAAP)

$
2.31


$
2.07


$
0.92


$
1.40


$
1.09

Merger-related and other charges

0.07


0.07


0.14


0.07


0.18

Impact of tax reform on remeasurement of deferred tax asset

—


—


0.52


—


—

Impairment of deferred tax asset on canceled non-qualified stock options

—


—


—


0.01


—

Release of disproportionate tax effects lodged in OCI

—


—


0.05


—


—

Diluted income per common share - operating

$
2.38


$
2.14


$
1.63


$
1.48


$
1.27












Book value per common share reconciliation










Book value per common share (GAAP)

$
20.53


$
18.24


$
16.67


$
15.06


$
14.02

Effect of goodwill and other intangibles

(4.25
)

(4.00
)

(3.02
)

(2.11
)

(1.96
)
Tangible book value per common share

$
16.28


$
14.24


$
13.65


$
12.95


$
12.06












Return on tangible common equity reconciliation










Return on common equity (GAAP)

11.89
%

11.60
%

5.67
%

9.41
%

8.15
%
Merger-related and other charges

0.36


0.41


0.92


0.48


1.33

Impact of tax reform on remeasurement of deferred tax asset

—


—


3.20


—


—

Impairment of deferred tax asset on canceled non-qualified stock options

—


—


—


0.09


—

Release of disproportionate tax effects lodged in OCI

—


—


0.28


—


—

Return on common equity - operating

12.25


12.01


10.07


9.98


9.48

Effect of goodwill and other intangibles

3.56


3.68


1.95


1.88


0.76

Return on tangible common equity - operating

15.81
%

15.69
%

12.02
%

11.86
%

10.24
%











Return on assets reconciliation










Return on assets (GAAP)

1.46
%

1.35
%

0.62
%

1.00
%

0.85
%
Merger-related and other charges

0.05


0.05


0.09


0.05


0.13

Impact of tax reform on remeasurement of deferred tax asset

—


—


0.35


—


—

Impairment of deferred tax asset on canceled non-qualified stock options

—


—


—


0.01


—

Release of disproportionate tax effects lodged in OCI

—


—


0.03


—


—

Return on assets - operating

1.51
%

1.40
%

1.09
%

1.06
%

0.98
%











Efficiency ratio reconciliation










Efficiency ratio (GAAP)

55.77
%

57.31
%

59.95
%

59.80
%

63.96
%
Merger-related and other charges

(1.27
)

(1.37
)

(3.28
)

(2.02
)

(5.45
)
Efficiency ratio - operating

54.50
%

55.94
%

56.67
%

57.78
%

58.51
%











Tangible common equity to tangible assets reconciliation










Equity to total assets (GAAP)

12.66
%

11.59
%

10.94
%

10.05
%

10.58
%
Effect of goodwill and other intangibles

(2.34
)

(2.30
)

(1.80
)

(1.28
)

(1.33
)
Effect of preferred equity

—


—


—


—


(0.10
)
Tangible common equity to tangible assets

10.32
%

9.29
%

9.14
%

8.77
%

9.15
%

UNITED COMMUNITY BANKS, INC.












Financial Highlights












Loan Portfolio Composition at Period-End













2019

2018

Linked Quarter Change

Year over Year Change
(in millions)
Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Fourth Quarter


LOANS BY CATEGORY













Owner occupied commercial RE
$
1,720


$
1,692


$
1,658


$
1,620


$
1,648


$
28


$
72

Income producing commercial RE
2,008


1,934


1,939


1,867


1,812


74


196

Commercial & industrial
1,221


1,271


1,299


1,284


1,278


(50
)

(57
)
Commercial construction
976


1,001


983


866


796


(25
)

180

Equipment financing
745


729


674


606


565


16


180

Total commercial
6,670


6,627


6,553


6,243


6,099


43


571

Residential mortgage
1,118


1,121


1,108


1,064


1,049


(3
)

69

Home equity lines of credit
661


669


675


684


694


(8
)

(33
)
Residential construction
236


229


219


200


211


7


25

Consumer
128


257


283


302


330


(129
)

(202
)
Total loans
$
8,813


$
8,903


$
8,838


$
8,493


$
8,383


$
(90
)

$
430















LOANS BY MARKET













North Georgia
$
967


$
1,002


$
1,002


$
970


$
981


$
(35
)

$
(14
)
Atlanta
1,762


1,740


1,745


1,524


1,507


22


255

North Carolina
1,156


1,117


1,084


1,074


1,072


39


84

Coastal Georgia
631


611


604


603


588


20


43

Gainesville
246


246


244


243


247


—


(1
)
East Tennessee
421


435


446


458


477


(14
)

(56
)
South Carolina
1,708


1,705


1,674


1,674


1,645


3


63

Commercial Banking Solutions
1,922


1,916


1,884


1,766


1,658


6


264

Indirect auto
—


131


155


181


208


(131
)

(208
)
Total loans
$
8,813


$
8,903


$
8,838


$
8,493


$
8,383


$
(90
)

$
430

UNITED COMMUNITY BANKS, INC.








Financial Highlights








Loan Portfolio Composition at Year-End








(in millions)
2019

2018

2017

2016

2015
LOANS BY CATEGORY









Owner occupied commercial RE
$
1,720


$
1,648


$
1,924


$
1,650


$
1,571

Income producing commercial RE
2,008


1,812


1,595


1,282


1,021

Commercial & industrial
1,221


1,278


1,131


1,070


785

Commercial construction
976


796


712


634


518

Equipment financing
745


565


—


—


—

Total commercial
6,670


6,099


5,362


4,636


3,895

Residential mortgage
1,118


1,049


974


857


764

Home equity lines of credit
661


694


731


655


589

Residential construction
236


211


183


190


176

Consumer
128


330


486


583


571

Total loans
$
8,813


$
8,383


$
7,736


$
6,921


$
5,995











LOANS BY MARKET









North Georgia
$
967


$
981


$
1,019


$
1,097


$
1,125

Atlanta
1,762


1,507


1,510


1,399


1,259

North Carolina
1,156


1,072


1,049


545


549

Coastal Georgia
631


588


630


581


537

Gainesville
246


247


248


248


254

East Tennessee
421


477


475


504


504

South Carolina
1,708


1,645


1,486


1,233


819

Commercial Banking Solutions
1,922


1,658


961


855


492

Indirect auto
—


208


358


459


456

Total loans
$
8,813


$
8,383


$
7,736


$
6,921


$
5,995

UNITED COMMUNITY BANKS, INC.






Financial Highlights






Credit Quality








2019
(in thousands)

Fourth Quarter

Third Quarter

Second Quarter
NONACCRUAL LOANS






Owner occupied RE

$
10,544


$
8,430


$
8,177

Income producing RE

1,996


2,030


1,331

Commercial & industrial

2,545


2,625


2,366

Commercial construction

2,277


1,894


1,650

Equipment financing

3,141


1,974


2,047

Total commercial

20,503


16,953


15,571

Residential mortgage

10,567


9,475


8,012

Home equity lines of credit

3,173


3,065


1,978

Residential construction

939


597


494

Consumer

159


742


542

Total

$
35,341


$
30,832


$
26,597



2019


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

$
(208
)

(0.05
)%

$
(39
)

(0.01
)%

$
(58
)

(0.01
)%
Income producing RE

95


0.02


431


0.09


241


0.05

Commercial & industrial

1,809


0.58


691


0.21


1,141


0.35

Commercial construction

(140
)

(0.06
)

(247
)

(0.10
)

(162
)

(0.07
)
Equipment financing

1,550


0.84


1,174


0.67


890


0.56

Total commercial

3,106


0.19


2,010


0.12


2,052


0.13

Residential mortgage

89


0.03


158


0.06


(125
)

(0.05
)
Home equity lines of credit

198


0.12


83


0.05


(111
)

(0.07
)
Residential construction

(24
)

(0.04
)

(5
)

(0.01
)

199


0.38

Consumer

556


0.90


477


0.70


423


0.58

Total

$
3,925


0.18


$
2,723


0.12


$
2,438


0.11














⁽¹⁾ Annualized.

UNITED COMMUNITY BANKS, INC. Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)

December 31, 2019

December 31, 2018
ASSETS




Cash and due from banks

$
125,844


$
126,083

Interest-bearing deposits in banks

389,362


201,182

Cash and cash equivalents

515,206


327,265

Debt securities available-for-sale

2,274,581


2,628,467

Debt securities held-to-maturity (fair value $287,904 and $268,803)

283,533


274,407

Loans held for sale, at fair value

58,484


18,935

Loans, net of unearned income

8,812,553


8,383,401

Less allowance for loan losses

(62,089
)

(61,203
)
Loans, net

8,750,464


8,322,198

Premises and equipment, net

215,976


206,140

Bank owned life insurance

202,664


192,616

Accrued interest receivable

32,660


35,413

Net deferred tax asset

34,059


64,224

Derivative financial instruments

35,007


24,705

Goodwill and other intangible assets

342,247


324,072

Other assets

171,135


154,750

Total assets

$
12,916,016


$
12,573,192

LIABILITIES AND SHAREHOLDERS' EQUITY




Liabilities:




Deposits:




Noninterest-bearing demand

$
3,477,979


$
3,210,220

NOW and interest-bearing demand

2,461,895


2,369,631

Money market

2,230,628


2,002,670

Savings

706,467


669,886

Time

1,859,574


1,598,391

Brokered

160,701


683,715

Total deposits

10,897,244


10,534,513

Federal Home Loan Bank advances

—


160,000

Long-term debt

212,664


267,189

Derivative financial instruments

15,516


26,433

Accrued expenses and other liabilities

154,900


127,503

Total liabilities

11,280,324


11,115,638

Shareholders' equity:




Common stock, $1 par value; 150,000,000 shares authorized; 79,013,729 and 79,234,077 shares issued and outstanding

79,014


79,234

Common stock issuable; 664,640 and 674,499 shares

11,491


10,744

Capital surplus

1,496,641


1,499,584

Retained earnings (accumulated deficit)

40,152


(90,419
)
Accumulated other comprehensive income (loss)

8,394


(41,589
)
Total shareholders' equity

1,635,692


1,457,554

Total liabilities and shareholders' equity

$
12,916,016


$
12,573,192

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


Three Months Ended December 31,

Twelve Months Ended December 31,
(in thousands, except per share data)

2019

2018

2019

2018
Interest revenue:








Loans, including fees

$
118,464


$
112,087


$
476,039


$
420,383

Investment securities, including tax exempt of $1,155 and $1,140, and $4,564 and $4,189

16,846


21,237


74,484


77,685

Deposits in banks and short-term investments

1,109


530


2,183


2,012

Total interest revenue

136,419


133,854


552,706


500,080










Interest expense:








Deposits:








NOW and interest-bearing demand

3,382


3,166


13,665


7,649

Money market

4,883


3,985


18,983


11,838

Savings

34


33


149


150

Time

8,372


7,006


34,059


19,906

Deposits

16,671


14,190


66,856


39,543

Short-term borrowings

—


340


838


1,112

Federal Home Loan Bank advances

2


794


2,697


6,345

Long-term debt

3,108


3,651


12,921


14,330

Total interest expense

19,781


18,975


83,312


61,330

Net interest revenue

116,638


114,879


469,394


438,750

Provision for credit losses

3,500


2,100


13,150


9,500

Net interest revenue after provision for credit losses

113,138


112,779


456,244


429,250










Noninterest income:








Service charges and fees

9,368


9,166


36,797


35,997

Mortgage loan gains and related fees

9,395


3,082


27,145


19,010

Brokerage fees

1,526


1,593


6,150


5,191

Gains from other loan sales, net

2,455


2,493


6,867


9,277

Securities (losses) gains, net

(903
)

646


(1,021
)

(656
)
Other

8,342


6,065


28,775


24,142

Total noninterest income

30,183


23,045


104,713


92,961

Total revenue

143,321


135,824


560,957


522,211










Noninterest expenses:








Salaries and employee benefits

50,279


45,631


196,440


181,015

Occupancy

5,926


5,842


23,350


22,781

Communications and equipment

6,380


6,206


24,613


21,277

FDIC assessments and other regulatory charges

1,330


1,814


4,901


8,491

Professional fees

5,098


4,105


17,028


15,540

Postage, printing and supplies

1,637


1,520


6,370


6,416

Advertising and public relations

1,914


1,650


6,170


5,991

Amortization of intangibles

1,093


1,420


4,938


6,846

Merger-related and other charges

(74
)

965


6,907


5,414

Other

7,841


9,089


31,528


32,514

Total noninterest expenses

81,424


78,242


322,245


306,285

Net income before income taxes

61,897


57,582


238,712


215,926

Income tax expense

12,885


12,445


52,991


49,815

Net income

$
49,012


$
45,137


$
185,721


$
166,111










Net income available to common shareholders

$
48,617


$
44,801


$
184,346


$
164,927










Net income per common share:








Basic

$
0.61


$
0.56


$
2.31


$
2.07

Diluted

0.61


0.56


2.31


2.07

Weighted average common shares outstanding:








Basic

79,659


79,884


79,700


79,662

Diluted

79,669


79,890


79,708


79,671

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended December 31,



2019

2018
*(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⁾

$
8,890,272


$
118,262


5.28
%

$
8,306,270


$
112,020


5.35
%
Taxable securities⁽³⁾

2,306,065


15,691


2.72


2,843,085


20,097


2.83

Tax-exempt securities (FTE) ⁽¹⁾⁽³⁾

179,744


1,551


3.45


161,284


1,535


3.81

Federal funds sold and other interest-earning assets

456,055


1,586


1.39


222,931


845


1.52

Total interest-earning assets (FTE)

11,832,136


137,090


4.60


11,533,570


134,497


4.63














Noninterest-earning assets:












Allowance for loan losses

(63,601
)





(61,992
)




Cash and due from banks

120,936






125,066





Premises and equipment

219,487






214,590





Other assets ⁽³⁾

836,586






694,215





Total assets

$
12,945,544






$
12,505,449


















Liabilities and Shareholders' Equity:












Interest-bearing liabilities:












Interest-bearing deposits:












NOW and interest-bearing demand

$
2,398,396


3,382


0.56


$
2,134,828


3,166


0.59

Money market

2,321,352


4,883


0.83


2,126,840


3,985


0.74

Savings

704,454


34


0.02


675,265


33


0.02

Time

1,880,174


7,975


1.68


1,584,011


4,297


1.08

Brokered time deposits

85,781


397


1.84


490,748


2,709


2.19

Total interest-bearing deposits

7,390,157


16,671


0.89


7,011,692


14,190


0.80

Federal funds purchased and other borrowings

—


—


—


55,095


340


2.45

Federal Home Loan Bank advances

435


2


1.82


140,869


794


2.24

Long-term debt

232,726


3,108


5.30


272,313


3,651


5.32

Total borrowed funds

233,161


3,110


5.29


468,277


4,785


4.05

Total interest-bearing liabilities

7,623,318


19,781


1.03


7,479,969


18,975


1.01














Noninterest-bearing liabilities:












Noninterest-bearing deposits

3,533,746






3,294,385





Other liabilities

165,148






311,461





Total liabilities

11,322,212






11,085,815





Shareholders' equity

1,623,332






1,419,634





Total liabilities and shareholders' equity

$
12,945,544






$
12,505,449


















Net interest revenue (FTE)



$
117,309






$
115,522



Net interest-rate spread (FTE)





3.57
%





3.62
%
Net interest margin (FTE) ⁽⁴⁾





3.93
%





3.97
%

⁽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 $36.0 million in 2019 and unrealized losses of $59.5 million in 2018 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 Twelve Months Ended December 31,







2019

2018
*(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⁾

$
8,708,035


$
475,803


5.46
%

$
8,170,143


$
420,001


5.14
%
Taxable securities ⁽³⁾

2,475,102


69,920


2.82


2,745,715


73,496


2.68

Tax-exempt securities (FTE)⁽¹⁾⁽³⁾

171,549


6,130


3.57


152,855


5,641


3.69

Federal funds sold and other interest-earning assets

254,370


3,499


1.38


213,137


2,968


1.39

Total interest-earning assets (FTE)

11,609,056


555,352


4.78


11,281,850


502,106


4.45














Non-interest-earning assets:












Allowance for loan losses

(62,900
)





(61,443
)




Cash and due from banks

121,649






135,345





Premises and equipment

220,523






216,646





Other assets ⁽³⁾

798,649






711,671





Total assets

$
12,686,977






$
12,284,069


















Liabilities and Shareholders' Equity:












Interest-bearing liabilities:












Interest-bearing deposits:












NOW and interest-bearing demand

$
2,249,713


13,665


0.61


$
2,107,831


7,649


0.36

Money market

2,221,478


18,983


0.85


2,117,216


11,838


0.56

Savings

690,028


149


0.02


672,735


150


0.02

Time

1,791,319


28,313


1.58


1,547,221


12,585


0.81

Brokered time deposits

240,646


5,746


2.39


347,072


7,321


2.11

Total interest-bearing deposits

7,193,184


66,856


0.93


6,792,075


39,543


0.58

Federal funds purchased and other borrowings

33,504


838


2.50


57,376


1,112


1.94

Federal Home Loan Bank advances

106,973


2,697


2.52


328,871


6,345


1.93

Long-term debt

247,732


12,921


5.22


290,004


14,330


4.94

Total borrowed funds

388,209


16,456


4.24


676,251


21,787


3.22

Total interest-bearing liabilities

7,581,393


83,312


1.10


7,468,326


61,330


0.82














Noninterest-bearing liabilities:












Noninterest-bearing deposits

3,385,431






3,207,625





Other liabilities

164,550






227,980





Total liabilities

11,131,374






10,903,931





Shareholders' equity

1,555,603






1,380,138





Total liabilities and shareholders' equity

$
12,686,977






$
12,284,069


















Net interest revenue (FTE)



$
472,040






$
440,776



Net interest-rate spread (FTE)





3.68
%





3.63
%
Net interest margin (FTE) ⁽⁴⁾





4.07
%





3.91
%

⁽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 $12.8 million in 2019 and unrealized losses of $45.2 million in 2018 are included in other assets for purposes of this presentation.
⁽⁴⁾Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.
United Community Banks, Inc. (NASDAQ: UCBI) is a bank holding company headquartered in Blairsville, Georgia, with executive offices in Greenville, South Carolina. United is one of the southeast region’s largest full-service financial institutions with $12.9 billion in assets, and 149 offices in Georgia, North Carolina, South Carolina and Tennessee. It operates principally through United Community Bank, its bank subsidiary, which specializes in personalized community banking services for individuals, small businesses and companies. Services include a full range of consumer and commercial banking products, including mortgage, advisory, and treasury management. Respected national research firms consistently recognize United Community Bank for outstanding customer service. For five of the past six years, J.D. Power has ranked United Community Bank first in customer satisfaction in the Southeast. In 2019, for the sixth consecutive year, Forbes magazine included United on its list of the 100 Best Banks in America, and for the first time included United on its list of The World’s Best Banks. Additional information about UCBI and the Bank 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,” “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,” “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.

Company Name:	United Community Banks Inc.
Stock Symbol:	UCBI
Market:	NASDAQ
Website:	ucbi.com

Twitter