U.S. Markets closed

United Community Banks, Inc. Reports Fourth Quarter Results

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. (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 %