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United Community Banks, Inc. reports Third Quarter Results

United Community Banks, Inc. reports Third Quarter Results

EPS of $0.60 and ROA of 1.51%; Operating ROA reaches 1.58%

GREENVILLE, S.C., Oct. 22, 2019 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (UCBI) (“United”) today reported strong third quarter financial results, including solid year-over-year loan and deposit growth, record operating efficiency and strong asset quality. Diluted earnings per share were $0.60, an increase of $0.06 or 11% from a year ago. Excluding merger-related and other charges, diluted operating earnings per share were $0.63, up 15% over last year. United’s return on assets (“ROA”) was 1.51% and its return on common equity was 12.2% for the quarter. On an operating basis, United’s ROA was 1.58% and its return on tangible common equity was 16.4%.

In the third quarter, loans grew at a 3% annualized rate, or at 4% annualized excluding the planned runoff of the discontinued indirect auto portfolio. With this loan growth and continued balance sheet remixing opportunities, United maintained its net interest margin during the quarter, despite declining interest rates. Core transaction deposits grew by $105 million, or 6% annualized, and total customer deposits increased by $197 million during the quarter. Finally, United’s combination of revenue growth and expense management resulted in a 55.64% efficiency ratio, or 53.90% on an operating basis, which represented a new Company best for the second consecutive quarter.

“We are pleased to report such a successful quarter, which is a testament to our team and their tireless dedication to providing outstanding customer service and to executing on our plans to deliver top quartile results,” said Lynn Harton, Chairman and CEO of United. “I am also tremendously proud that United was named one of the "Best Banks to Work For" by American Banker for the third year in a row.  This honor is achieved through the focus and energy of our bankers to build a company where great people can find fulfillment in helping others reach their financial goals."

Third Quarter 2019 Financial Highlights:

  • EPS growth of 11% over last year, or 15% on an operating basis
  • Return on assets of 1.51%, or 1.58% excluding merger-related and other charges
  • Return on common equity of 12.2%
  • Return on tangible common equity of 16.4% excluding merger-related and other charges
  • Loan production of $896 million compared to $778 million in Q3 2018
  • Loan growth, excluding planned runoff of the indirect portfolio of 4% for the quarter and 7% year-to-date on an annualized basis, excluding the acquisition of First Madison on May 1, 2019
  • Loan growth of $89 million, excluding planned run off of the indirect portfolio, was more than funded by core transaction deposit growth of $105 million
  • Mortgage locks of $508 million, a company high, compared to $298 million a year ago
  • Stable net interest margin of 4.12% was flat compared to the second quarter and up 17 basis points from a year ago
  • Efficiency ratio of 55.64%, or 53.90%, excluding merger-related and other charges
  • Net charge-offs of 12 basis points, up one basis point from last quarter and remaining at historically low levels
  • Nonperforming assets of 0.24% of total assets, compared with 0.21% at June 30, 2019 and 0.19% at September 30, 2018
  • Repurchased approximately 195,000 shares at an average price of $26.51 in the quarter

Conference Call
United will hold a conference call, Wednesday, October 23, 2019, 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 8899475. 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                                    
    2019   2018   Third Quarter 2019 - 2018 Change   For the Nine Months Ended September 30,   YTD 2019 - 2018 Change
(in thousands, except per share data)   Third Quarter   Second Quarter   First Quarter   Fourth Quarter   Third Quarter     2019   2018  
INCOME SUMMARY                                    
Interest revenue   $ 140,615     $ 139,156     $ 136,516     $ 133,854     $ 128,721         $ 416,287     $ 366,226      
Interest expense   21,277     21,372     20,882     18,975     16,611         63,531     42,355      
Net interest revenue   119,338     117,784     115,634     114,879     112,110     6 %   352,756     323,871     9 %
Provision for credit losses   3,100     3,250     3,300     2,100     1,800     72     9,650     7,400     30  
Noninterest income   29,031     24,531     20,968     23,045     24,180     20     74,530     69,916     7  
Total revenue   145,269     139,065     133,302     135,824     134,490     8     417,636     386,387     8  
Expenses   82,924     81,813     76,084     78,242     77,718     7     240,821     228,043     6  
Income before income tax expense   62,345     57,252     57,218     57,582     56,772     10     176,815     158,344     12  
Income tax expense   13,983     13,167     12,956     12,445     13,090     7     40,106     37,370     7  
Net income   48,362     44,085     44,262     45,137     43,682     11     136,709     120,974     13  
Merger-related and other charges   2,605     4,087     739     1,234     592         7,431     6,111      
Income tax benefit of merger-related and other charges   (600 )   (940 )   (172 )   (604 )   (141 )       (1,712 )   (890 )    
Net income - operating (1)   $ 50,367     $ 47,232     $ 44,829     $ 45,767     $ 44,133     14     $ 142,428     $ 126,195     13  
                                     
PERFORMANCE MEASURES                                    
Per common share:                                    
Diluted net income - GAAP   $ 0.60     $ 0.55     $ 0.55     $ 0.56     $ 0.54     11     $ 1.70     $ 1.51     13  
Diluted net income - operating (1)   0.63     0.59     0.56     0.57     0.55     15     1.77     1.57     13  
Cash dividends declared   0.17     0.17     0.16     0.16     0.15     13     0.50     0.42     19  
Book value   20.16     19.65     18.93     18.24     17.56     15     20.16     17.56     15  
Tangible book value (3)   15.90     15.38     14.93     14.24     13.54     17     15.90     13.54     17  
Key performance ratios:                                    
Return on common equity - GAAP (2)(4)   12.16 %   11.45 %   11.85 %   12.08 %   11.96 %       11.83 %   11.43 %    
Return on common equity - operating (1)(2)(4)   12.67     12.27     12.00     12.25     12.09         12.32     11.93      
Return on tangible common equity - operating (1)(2)(3)(4)   16.38     15.88     15.46     15.88     15.81         15.92     15.62      
Return on assets - GAAP (4)   1.51     1.40     1.44     1.43     1.41         1.45     1.32      
Return on assets - operating (1)(4)   1.58     1.50     1.45     1.45     1.42         1.51     1.38      
Net interest margin (fully taxable equivalent) (4)   4.12     4.12     4.10     3.97     3.95         4.11     3.88      
Efficiency ratio - GAAP   55.64     57.28     55.32     56.73     56.82         56.09     57.52      
Efficiency ratio - operating (1)   53.90     54.42     54.78     55.83     56.39         54.36     55.98      
Equity to total assets   12.53     12.25     12.06     11.60     11.30         12.53     11.30      
Tangible common equity to tangible assets (3)   10.16     9.86     9.76     9.29     8.95         10.16     8.95      
                                     
ASSET QUALITY                                    
Nonperforming loans   $ 30,832     $ 26,597     $ 23,624     $ 23,778     $ 22,530     37     $ 30,832     $ 22,530     37  
Foreclosed properties   102     75     1,127     1,305     1,336     (92 )   102     1,336     (92 )
Total nonperforming assets ("NPAs")   30,934     26,672     24,751     25,083     23,866     30     30,934     23,866     30  
Allowance for loan losses   62,514     62,204     61,642     61,203     60,940     3     62,514     60,940     3  
Net charge-offs   2,723     2,438     3,130     1,787     1,466     86     8,291     4,326     92  
Allowance for loan losses to loans   0.70 %   0.70 %   0.73 %   0.73 %   0.74 %       0.70 %   0.74 %    
Net charge-offs to average loans (4)   0.12     0.11     0.15     0.09     0.07         0.13     0.07      
NPAs to loans and foreclosed properties   0.35     0.30     0.29     0.30     0.29         0.35     0.29      
NPAs to total assets   0.24     0.21     0.20     0.20     0.19         0.24     0.19      
                                     
AVERAGE BALANCES ($ in millions)                                    
Loans   $ 8,836     $ 8,670     $ 8,430     $ 8,306     $ 8,200     8     $ 8,647     $ 8,124     6  
Investment securities   2,550     2,674     2,883     3,004     2,916     (13 )   2,701     2,863     (6 )
Earning assets   11,568     11,534     11,498     11,534     11,320     2     11,534     11,197     3  
Total assets   12,681     12,608     12,509     12,505     12,302     3     12,600     12,209     3  
Deposits   10,531     10,493     10,361     10,306     9,950     6     10,462     9,896     6  
Shareholders’ equity   1,588     1,531     1,478     1,420     1,394     14     1,533     1,367     12  
Common shares - basic (thousands)   79,663     79,673     79,807     79,884     79,806         79,714     79,588      
Common shares - diluted (thousands)   79,667     79,678     79,813     79,890     79,818         79,718     79,598      
                                     
AT PERIOD END ($ in millions)                                    
Loans   $ 8,903     $ 8,838     $ 8,493     $ 8,383     $ 8,226     8     $ 8,903     $ 8,226     8  
Investment securities   2,515     2,620     2,720     2,903     2,873     (12 )   2,515     2,873     (12 )
Total assets   12,809     12,779     12,506     12,573     12,405     3     12,809     12,405     3  
Deposits   10,757     10,591     10,534     10,535     10,229     5     10,757     10,229     5  
Shareholders’ equity   1,605     1,566     1,508     1,458     1,402     14     1,605     1,402     14  
Common shares outstanding (thousands)   78,974     79,075     79,035     79,234     79,202         78,974     79,202      
                                                       

(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.                            
Non-GAAP Performance Measures Reconciliation
Selected Financial Information                            
    2019   2018   For the Nine Months Ended September 30,
(in thousands, except per share data)   Third Quarter   Second Quarter   First Quarter   Fourth Quarter   Third Quarter   2019   2018
                             
Expense reconciliation                            
Expenses (GAAP)   $ 82,924     $ 81,813     $ 76,084     $ 78,242     $ 77,718     $ 240,821     $ 228,043  
Merger-related and other charges   (2,605 )   (4,087 )   (739 )   (1,234 )   (592 )   (7,431 )   (6,111 )
Expenses - operating   $ 80,319     $ 77,726     $ 75,345     $ 77,008     $ 77,126     $ 233,390     $ 221,932  
                             
Net income reconciliation                            
Net income (GAAP)   $ 48,362     $ 44,085     $ 44,262     $ 45,137     $ 43,682     $ 136,709     $ 120,974  
Merger-related and other charges   2,605     4,087     739     1,234     592     7,431     6,111  
Income tax benefit of merger-related and other charges   (600 )   (940 )   (172 )   (604 )   (141 )   (1,712 )   (890 )
Net income - operating   $ 50,367     $ 47,232     $ 44,829     $ 45,767     $ 44,133     $ 142,428     $ 126,195  
                             
Diluted income per common share reconciliation                            
Diluted income per common share (GAAP)   $ 0.60     $ 0.55     $ 0.55     $ 0.56     $ 0.54     $ 1.70     $ 1.51  
Merger-related and other charges   0.03     0.04     0.01     0.01     0.01     0.07     0.06  
Diluted income per common share - operating   $ 0.63     $ 0.59     $ 0.56     $ 0.57     $ 0.55     $ 1.77     $ 1.57  
                             
Book value per common share reconciliation                            
Book value per common share (GAAP)   $ 20.16     $ 19.65     $ 18.93     $ 18.24     $ 17.56     $ 20.16     $ 17.56  
Effect of goodwill and other intangibles   (4.26 )   (4.27 )   (4.00 )   (4.00 )   (4.02 )   (4.26 )   (4.02 )
Tangible book value per common share   $ 15.90     $ 15.38     $ 14.93     $ 14.24     $ 13.54     $ 15.90     $ 13.54  
                             
Return on tangible common equity reconciliation                            
Return on common equity (GAAP)   12.16 %   11.45 %   11.85 %   12.08 %   11.96 %   11.83 %   11.43 %
Merger-related and other charges   0.51     0.82     0.15     0.17     0.13     0.49     0.50  
Return on common equity - operating   12.67     12.27     12.00     12.25     12.09     12.32     11.93  
Effect of goodwill and other intangibles   3.71     3.61     3.46     3.63     3.72     3.60     3.69  
Return on tangible common equity - operating   16.38 %   15.88 %   15.46 %   15.88 %   15.81 %   15.92 %   15.62 %
                             
Return on assets reconciliation                            
Return on assets (GAAP)   1.51 %   1.40 %   1.44 %   1.43 %   1.41 %   1.45 %   1.32 %
Merger-related and other charges   0.07     0.10     0.01     0.02     0.01     0.06     0.06  
Return on assets - operating   1.58 %   1.50 %   1.45 %   1.45 %   1.42 %   1.51 %   1.38 %
                             
Efficiency ratio reconciliation                            
Efficiency ratio (GAAP)   55.64 %   57.28 %   55.32 %   56.73 %   56.82 %   56.09 %   57.52 %
Merger-related and other charges   (1.74 )   (2.86 )   (0.54 )   (0.90 )   (0.43 )   (1.73 )   (1.54 )
Efficiency ratio - operating   53.90 %   54.42 %   54.78 %   55.83 %   56.39 %   54.36 %   55.98 %
                             
Tangible common equity to tangible assets reconciliation                            
Equity to total assets (GAAP)   12.53 %   12.25 %   12.06 %   11.60 %   11.30 %   12.53 %   11.30 %
Effect of goodwill and other intangibles   (2.37 )   (2.39 )   (2.30 )   (2.31 )   (2.35 )   (2.37 )   (2.35 )
Tangible common equity to tangible assets   10.16 %   9.86 %   9.76 %   9.29 %   8.95 %   10.16 %   8.95 %
                                           


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UNITED COMMUNITY BANKS, INC.                        
Financial Highlights                        
Loan Portfolio Composition at Period-End                        
                           
  2019   2018   Linked Quarter Change   Year over Year Change
(in millions) Third Quarter   Second Quarter   First Quarter   Fourth Quarter   Third Quarter    
LOANS BY CATEGORY                          
Owner occupied commercial RE $ 1,692     $ 1,658     $ 1,620     $ 1,648     $ 1,673     $ 34     $ 19  
Income producing commercial RE 1,934     1,939     1,867     1,812     1,788     (5 )   146  
Commercial & industrial 1,271     1,299     1,284     1,278     1,194     (28 )   77  
Commercial construction 1,001     983     866     796     761     18     240  
Equipment financing 729     674     606     565     509     55     220  
Total commercial 6,627     6,553     6,243     6,099     5,925     74     702  
Residential mortgage 1,121     1,108     1,064     1,049     1,035     13     86  
Home equity lines of credit 669     675     684     694     702     (6 )   (33 )
Residential construction 229     219     200     211     198     10     31  
Consumer 257     283     302     330     366     (26 )   (109 )
Total loans $ 8,903     $ 8,838     $ 8,493     $ 8,383     $ 8,226     $ 65     $ 677  
                           
LOANS BY MARKET                          
North Georgia $ 1,002     $ 1,002     $ 970     $ 981     $ 992         10  
Atlanta 1,740     1,745     1,524     1,507     1,493     (5 )   247  
North Carolina 1,117     1,084     1,074     1,072     1,078     33     39  
Coastal Georgia 611     604     603     588     610     7     1  
Gainesville 246     244     243     247     235     2     11  
East Tennessee 435     446     458     477     460     (11 )   (25 )
South Carolina 1,705     1,674     1,674     1,645     1,586     31     119  
Commercial Banking Solutions 1,916     1,884     1,766     1,658     1,530     32     386  
Indirect auto 131     155     181     208     242     (24 )   (111 )
Total loans $