United Community Banks, Inc. Reports Second Quarter Results

Source: Nasdaq GlobeNewswire / 20 Jul 2021 16:30:01 America/New_York

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

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

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

Second Quarter 2021 Financial Highlights:

Net income of $70.3 million and pre-tax, pre-provision income of $78.7 million
EPS increased by 144% compared to second quarter 2020 on a GAAP basis and 147% on an operating basis; compared to first quarter 2021, EPS decreased by 5% on both a GAAP and operating basis
Return on assets of 1.46%, or 1.48% on an operating basis
Pre-tax, pre-provision return on assets of 1.64%, or 1.67% on an operating basis
Return on common equity of 14.1%
Return on tangible common equity of 17.8% on an operating basis
A release of provision for credit losses of $13.6 million, which reduced the allowance for loan losses to 0.98% of loans (1.02%, excluding PPP loans) from 1.09% in the first quarter
Loan production of $1.3 billion, resulting in core loan growth of 5%, annualized for the quarter, excluding the impact of $411 million in PPP loans being forgiven
Core transaction deposits were up $432 million, which represents a 14% annualized growth rate for the quarter
Net interest margin of 3.19% was down 3 basis points from the first quarter, due to continued strong deposit growth and an earning asset mix change toward securities
Record mortgage closings of $680 million compared to $563 million a year ago; mortgage rate locks of $702 million compared to $802 million a year ago
Noninterest income was down $8.9 million on a linked quarter basis, primarily driven by slowing mortgage rate lock activity
Noninterest expenses increased by $346,000 compared to the first quarter on a GAAP basis and by $811,000 on an operating basis mostly due to increased professional fees and mortgage commissions
Efficiency ratio of 54.5%, or 53.9% on an operating basis
Net recoveries of $456,000 or 2 basis points as a percent of average loans, down 1 basis point from the first quarter
Nonperforming assets of 0.25% of total assets, down 5 basis points compared to March 31, 2021
Total loan deferrals of $18 million or 0.2% of the total loan portfolio compared to $48 million or 0.4% in the first quarter
Quarterly common shareholder dividend of $0.19 per share declared during the quarter, an increase of 6% year-over-year
Announced the acquisition of FinTrust Capital Partners, LLC, a registered investment adviser, which closed on July 6, 2021; it added $2.1 billion in assets under management and is expected to add $0.02 in EPS accretion in 2022
Announced the acquisition of Aquesta Financial Holdings, Inc. with $752 million in assets on May 27; it is expected to close in the fourth quarter of 2021 and add $0.08 in EPS accretion in 2022 with cost savings fully phased in
Announced the acquisition of Reliant Bancorp, Inc. with $3.1 billion in assets on July 14; it is expected to close in the first quarter of 2022 and add $0.15 in EPS accretion in 2022 and $0.22 in 2023 with cost savings fully phased in

Conference Call

United will hold a conference call on Wednesday, July 21, 2021, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 9585551. The conference call also will be webcast and available for replay for 30 days by selecting “Events & Presentations” within the Investor Relations section of United’s website at www.ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
	2021								2020												Second Quarter			For the Six Months Ended June 30,								YTD 2021 -
*(in thousands, except per share data)*	Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter				2021 - 2020 Change			2021				2020				2020 Change
INCOME SUMMARY
Interest revenue	$	145,809			$	141,542			$	156,071			$	141,773			$	123,605						$	287,351			$	260,152
Interest expense	7,433				9,478				10,676				13,319				14,301							16,911				32,242
Net interest revenue	138,376				132,064				145,395				128,454				109,304				27		%	270,440				227,910				19		%
(Release of) provision for credit losses	(13,588		)		(12,281		)		2,907				21,793				33,543							(25,869		)		55,734
Noninterest income	35,841				44,705				41,375				48,682				40,238				(11	)		80,546				66,052				22
Total revenue	187,805				189,050				183,863				155,343				115,999				62			376,855				238,228				58
Expenses	95,540				95,194				106,490				95,981				83,980				14			190,734				165,518				15
Income before income tax expense	92,265				93,856				77,373				59,362				32,019				188			186,121				72,710				156
Income tax expense	22,005				20,150				17,871				11,755				6,923				218			42,155				15,730				168
Net income	70,260				73,706				59,502				47,607				25,096				180			143,966				56,980				153
Merger-related and other charges	1,078				1,543				2,452				3,361				397							2,621				1,205
Income tax benefit of merger-related and other charges	(246		)		(335		)		(552		)		(519		)		(87		)					(581		)		(269		)
Net income - operating⁽¹⁾	$	71,092			$	74,914			$	61,402			$	50,449			$	25,406			180			$	146,006			$	57,916			152

Pre-tax pre-provision income ⁽⁵⁾	$	78,677			$	81,575			$	80,280			$	81,155			$	65,562			20			$	160,252			$	128,444			25

PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP	$	0.78			$	0.82			$	0.66			$	0.52			$	0.32			144			$	1.60			$	0.71			125
Diluted net income - operating ⁽¹⁾	0.79				0.83				0.68				0.55				0.32				147			1.62				0.73				122
Cash dividends declared	0.19				0.19				0.18				0.18				0.18				6			0.38				0.36				6
Book value	22.81				22.15				21.90				21.45				21.22				7			22.81				21.22				7
Tangible book value⁽³⁾	18.49				17.83				17.56				17.09				16.95				9			18.49				16.95				9
Key performance ratios:
Return on common equity - GAAP ⁽²⁾⁽⁴⁾	14.08			%	15.37			%	12.36			%	10.06			%	6.17			%				14.71			%	7.01			%
Return on common equity - operating ^(1)(2)(4)	14.25				15.63				12.77				10.69				6.25							14.92				7.13
Return on tangible common equity - operating ^(1)(2)(3)(4)	17.81				19.68				16.23				13.52				8.09							18.72				9.20
Return on assets - GAAP ⁽⁴⁾	1.46				1.62				1.30				1.07				0.71							1.54				0.85
Return on assets - operating ⁽¹⁾⁽⁴⁾	1.48				1.65				1.34				1.14				0.72							1.56				0.86
Return on assets - pre-tax pre-provision ⁽⁴⁾⁽⁵⁾	1.64				1.80				1.77				1.86				1.86							1.72				1.91
Return on assets - pre-tax pre-provision, excluding merger- related and other charges ^(1)(4)(5)	1.67				1.83				1.82				1.93				1.87							1.75				1.92
Net interest margin (fully taxable equivalent) ⁽⁴⁾	3.19				3.22				3.55				3.27				3.42							3.20				3.73
Efficiency ratio - GAAP	54.53				53.55				56.73				54.14				55.86							54.04				56.00
Efficiency ratio - operating ⁽¹⁾	53.92				52.68				55.42				52.24				55.59							53.30				55.59
Equity to total assets	11.04				10.95				11.29				11.47				11.81							11.04				11.81
Tangible common equity to tangible assets ⁽³⁾	8.71				8.57				8.81				8.89				9.12							8.71				9.12

ASSET QUALITY
Nonperforming loans	$	46,123			$	55,900			$	61,599			$	49,084			$	48,021			(4	)		$	46,123			$	48,021			(4	)
Foreclosed properties	224				596				647				953				477							224				477
Total nonperforming assets ("NPAs")	46,347				56,496				62,246				50,037				48,498				(4	)		46,347				48,498				(4	)
Allowance for credit losses - loans	111,616				126,866				137,010				134,256				103,669				8			111,616				103,669				8
Net charge-offs	(456		)		(305		)		1,515				2,538				6,149							(761		)		14,263				(105	)
Allowance for credit losses - loans to loans	0.98			%	1.09			%	1.20			%	1.14			%	1.02			%				0.98			%	1.02			%
Net charge-offs to average loans ⁽⁴⁾	(0.02		)		(0.01		)		0.05				0.09				0.25							(0.01		)		0.31
NPAs to loans and foreclosed properties	0.41				0.48				0.55				0.42				0.48							0.41				0.48
NPAs to total assets	0.25				0.30				0.35				0.29				0.32							0.25				0.32

AVERAGE BALANCES ($ in millions)
Loans	$	11,617			$	11,433			$	11,595			$	11,644			$	9,773			19			$	11,525			$	9,301			24
Investment securities	4,631				3,991				3,326				2,750				2,408				92			4,313				2,464				75
Earning assets	17,540				16,782				16,394				15,715				12,958				35			17,163				12,378				39
Total assets	18,792				18,023				17,698				17,013				14,173				33			18,410				13,558				36
Deposits	16,132				15,366				15,057				14,460				12,071				34			15,751				11,493				37
Shareholders’ equity	2,060				2,025				1,994				1,948				1,686				22			2,042				1,670				22
Common shares - basic (thousands)	87,289				87,322				87,258				87,129				78,920				11			87,306				79,130				10
Common shares - diluted (thousands)	87,421				87,466				87,333				87,205				78,924				11			87,443				79,186				10

AT PERIOD END ($ in millions)
Loans	$	11,391			$	11,679			$	11,371			$	11,799			$	10,133			12			$	11,391			$	10,133			12
Investment securities	4,928				4,332				3,645				3,089				2,432				103			4,928				2,432				103
Total assets	18,896				18,557				17,794				17,153				15,005				26			18,896				15,005				26
Deposits	16,328				15,993				15,232				14,603				12,702				29			16,328				12,702				29
Shareholders’ equity	2,086				2,031				2,008				1,967				1,772				18			2,086				1,772				18
Common shares outstanding (thousands)	86,665				86,777				86,675				86,611				78,335				11			86,665				78,335				11

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

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
	2021								2020												For the Six Months Ended June 30,
*(in thousands, except per share data)*	Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter				2021				2020

Expense reconciliation
Expenses (GAAP)	$	95,540			$	95,194			$	106,490			$	95,981			$	83,980			$	190,734			$	165,518
Merger-related and other charges	(1,078		)		(1,543		)		(2,452		)		(3,361		)		(397		)		(2,621		)		(1,205		)
Expenses - operating	$	94,462			$	93,651			$	104,038			$	92,620			$	83,583			$	188,113			$	164,313

Net income reconciliation
Net income (GAAP)	$	70,260			$	73,706			$	59,502			$	47,607			$	25,096			$	143,966			$	56,980
Merger-related and other charges	1,078				1,543				2,452				3,361				397				2,621				1,205
Income tax benefit of merger-related and other charges	(246		)		(335		)		(552		)		(519		)		(87		)		(581		)		(269		)
Net income - operating	$	71,092			$	74,914			$	61,402			$	50,449			$	25,406			$	146,006			$	57,916

Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)	$	70,260			$	73,706			$	59,502			$	47,607			$	25,096			$	143,966			$	56,980
Income tax expense	22,005				20,150				17,871				11,755				6,923				42,155				15,730
(Release of) provision for credit losses	(13,588		)		(12,281		)		2,907				21,793				33,543				(25,869		)		55,734
Pre-tax pre-provision income	$	78,677			$	81,575			$	80,280			$	81,155			$	65,562			$	160,252			$	128,444

Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.78			$	0.82			$	0.66			$	0.52			$	0.32			$	1.60			$	0.71
Merger-related and other charges, net of tax	0.01				0.01				0.02				0.03				—				0.02				0.02
Diluted income per common share - operating	$	0.79			$	0.83			$	0.68			$	0.55			$	0.32			$	1.62			$	0.73

Book value per common share reconciliation
Book value per common share (GAAP)	$	22.81			$	22.15			$	21.90			$	21.45			$	21.22			$	22.81			$	21.22
Effect of goodwill and other intangibles	(4.32		)		(4.32		)		(4.34		)		(4.36		)		(4.27		)		(4.32		)		(4.27		)
Tangible book value per common share	$	18.49			$	17.83			$	17.56			$	17.09			$	16.95			$	18.49			$	16.95

Return on tangible common equity reconciliation
Return on common equity (GAAP)	14.08			%	15.37			%	12.36			%	10.06			%	6.17			%	14.71			%	7.01			%
Merger-related and other charges, net of tax	0.17				0.26				0.41				0.63				0.08				0.21				0.12
Return on common equity - operating	14.25				15.63				12.77				10.69				6.25				14.92				7.13
Effect of goodwill and other intangibles	3.56				4.05				3.46				2.83				1.84				3.80				2.07
Return on tangible common equity - operating	17.81			%	19.68			%	16.23			%	13.52			%	8.09			%	18.72			%	9.20			%

Return on assets reconciliation
Return on assets (GAAP)	1.46			%	1.62			%	1.30			%	1.07			%	0.71			%	1.54			%	0.85			%
Merger-related and other charges, net of tax	0.02				0.03				0.04				0.07				0.01				0.02				0.01
Return on assets - operating	1.48			%	1.65			%	1.34			%	1.14			%	0.72			%	1.56			%	0.86			%

Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)	1.46			%	1.62			%	1.30			%	1.07			%	0.71			%	1.54			%	0.85			%
Income tax expense	0.47				0.46				0.40				0.28				0.20				0.46				0.23
(Release of) provision for credit losses	(0.29		)		(0.28		)		0.07				0.51				0.95				(0.28		)		0.83
Return on assets - pre-tax, pre-provision	1.64				1.80				1.77				1.86				1.86				1.72				1.91
Merger-related and other charges	0.03				0.03				0.05				0.07				0.01				0.03				0.01
Return on assets - pre-tax pre-provision, excluding merger-related and other charges	1.67			%	1.83			%	1.82			%	1.93			%	1.87			%	1.75			%	1.92			%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)	54.53			%	53.55			%	56.73			%	54.14			%	55.86			%	54.04			%	56.00			%
Merger-related and other charges	(0.61		)		(0.87		)		(1.31		)		(1.90		)		(0.27		)		(0.74		)		(0.41		)
Efficiency ratio - operating	53.92			%	52.68			%	55.42			%	52.24			%	55.59			%	53.30			%	55.59			%

Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)	11.04			%	10.95			%	11.29			%	11.47			%	11.81			%	11.04			%	11.81			%
Effect of goodwill and other intangibles	(1.82		)		(1.86		)		(1.94		)		(2.02		)		(2.05		)		(1.82		)		(2.05		)
Effect of preferred equity	(0.51		)		(0.52		)		(0.54		)		(0.56		)		(0.64		)		(0.51		)		(0.64		)
Tangible common equity to tangible assets	8.71			%	8.57			%	8.81			%	8.89			%	9.12			%	8.71			%	9.12			%

Allowance for credit losses - loans to loans reconciliation
Allowance for credit losses - loans to loans (GAAP)	0.98			%	1.09			%	1.20			%	1.14			%	1.02			%	0.98			%	1.02			%
Effect of PPP loans	0.04				0.09				0.08				0.14				0.13				0.04				0.13
Allowance for credit losses - loans to loans, excluding PPP loans	1.02			%	1.18			%	1.28			%	1.28			%	1.15			%	1.02			%	1.15			%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
	2021				2020						Linked			Year over
(in millions)	Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter		Quarter Change			Year Change
LOANS BY CATEGORY
Owner occupied commercial RE	$	2,149	$	2,107	$	2,090	$	2,009	$	1,759	$	42		$	390
Income producing commercial RE	2,550		2,599		2,541		2,493		2,178		(49		)	372
Commercial & industrial	1,762		1,760		1,853		1,788		1,219		2			543
Paycheck protection program	472		883		646		1,317		1,095		(411		)	(623		)
Commercial construction	927		960		967		987		946		(33		)	(19		)
Equipment financing	969		913		864		823		779		56			190
Total commercial	8,829		9,222		8,961		9,417		7,976		(393		)	853
Residential mortgage	1,473		1,362		1,285		1,270		1,152		111			321
Home equity lines of credit	661		679		697		707		654		(18		)	7
Residential construction	289		272		281		257		230		17			59
Consumer	139		144		147		148		121		(5		)	18
Total loans	$	11,391	$	11,679	$	11,371	$	11,799	$	10,133	$	(288	)	$	1,258

LOANS BY MARKET⁽¹⁾
North Georgia	$	962	$	982	$	955	$	945	$	951	$	(20	)	$	11
Atlanta	1,938		1,953		1,889		1,853		1,852		(15		)	86
North Carolina	1,374		1,326		1,281		1,246		1,171		48			203
Coastal Georgia	605		597		617		614		618		8			(13		)
Gainesville	224		222		224		229		233		2			(9		)
East Tennessee	394		398		415		420		433		(4		)	(39		)
South Carolina	2,107		1,997		1,947		1,870		1,778		110			329
Florida	1,141		1,160		1,435		1,453		—		(19		)	1,141
Commercial Banking Solutions	2,646		3,044		2,608		3,169		3,097		(398		)	(451		)
Total loans	$	11,391	$	11,679	$	11,371	$	11,799	$	10,133	$	(288	)	$	1,258

⁽¹⁾ Certain loans previously included in the Florida geographic market were reclassified to Commercial Banking Solutions following Seaside’s core systems conversion in the first quarter of 2021.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
	2021				2020
(in thousands)	Second Quarter		First Quarter		Fourth Quarter
NONACCRUAL LOANS
Owner occupied RE	$	6,128	$	7,908	$	8,582
Income producing RE	13,100		13,740		15,149
Commercial & industrial	8,563		13,864		16,634
Commercial construction	1,229		1,984		1,745
Equipment financing	1,771		2,171		3,405
Total commercial	30,791		39,667		45,515
Residential mortgage	13,485		14,050		12,858
Home equity lines of credit	1,433		1,707		2,487
Residential construction	307		322		514
Consumer	107		154		225
Total	$	46,123	$	55,900	$	61,599

	2021												2020
	Second Quarter						First Quarter						Fourth Quarter
(in thousands)	Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾			Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾			Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾
NET CHARGE-OFFS BY CATEGORY
Owner occupied RE	$	(155	)	(0.03	)	%	$	(240	)	(0.05	)	%	$	(277	)	(0.05	)	%
Income producing RE	(161		)	(0.02	)		991			0.16			(1,718		)	(0.27	)
Commercial & industrial	60			0.01			(2,753		)	(0.44	)		2,294			0.33
Commercial construction	(293		)	(0.12	)		22			0.01			(129		)	(0.05	)
Equipment financing	301			0.13			1,511			0.70			1,595			0.75
Total commercial	(248		)	(0.01	)		(469		)	(0.02	)		1,765			0.08
Residential mortgage	(194		)	(0.05	)		92			0.03			(25		)	(0.01	)
Home equity lines of credit	(112		)	(0.07	)		(73		)	(0.04	)		(151		)	(0.09	)
Residential construction	(33		)	(0.05	)		(60		)	(0.09	)		(47		)	(0.07	)
Consumer	131			0.37			205			0.58			(27		)	(0.07	)
Total	$	(456	)	(0.02	)		$	(305	)	(0.01	)		$	1,515		0.05

⁽¹⁾ Annualized.

UNITED COMMUNITY BANKS, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)	June 30, 2021			December 31, 2020
ASSETS
Cash and due from banks	$	121,589		$	148,896
Interest-bearing deposits in banks	1,297,808			1,459,723
Cash and cash equivalents	1,419,397			1,608,619
Debt securities available-for-sale	4,075,781			3,224,721
Debt securities held-to-maturity (fair value $861,488 and $437,193)	852,404			420,361
Loans held for sale at fair value	98,194			105,433
Loans and leases held for investment	11,390,746			11,370,815
Less allowance for credit losses - loans and leases	(111,616		)	(137,010		)
Loans and leases, net	11,279,130			11,233,805
Premises and equipment, net	224,980			218,489
Bank owned life insurance	203,449			201,969
Accrued interest receivable	43,521			47,672
Net deferred tax asset	32,918			38,411
Derivative financial instruments	58,489			86,666
Goodwill and other intangible assets, net	379,909			381,823
Other assets	227,551			226,405
Total assets	$	18,895,723		$	17,794,374
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	6,260,756		$	5,390,291
NOW and interest-bearing demand	3,518,686			3,346,490
Money market	3,766,645			3,550,335
Savings	1,097,663			950,854
Time	1,500,049			1,704,290
Brokered	183,968			290,098
Total deposits	16,327,767			15,232,358
Long-term debt	261,919			326,956
Derivative financial instruments	27,089			29,003
Accrued expenses and other liabilities	192,662			198,527
Total liabilities	16,809,437			15,786,844
Shareholders' equity:
Preferred stock; $1 par value; 10,000,000 shares authorized; Series I, $25,000 per share liquidation preference; 4,000 shares issued and outstanding	96,422			96,422
Common stock, $1 par value; 200,000,000 shares authorized; 86,664,894 and 86,675,279 shares issued and outstanding	86,665			86,675
Common stock issuable; 571,580 and 600,834 shares	10,650			10,855
Capital surplus	1,636,875			1,638,999
Retained earnings	244,006			136,869
Accumulated other comprehensive income	11,668			37,710
Total shareholders' equity	2,086,286			2,007,530
Total liabilities and shareholders' equity	$	18,895,723		$	17,794,374

UNITED COMMUNITY BANKS, INC.

Consolidated Statements of Income (Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands, except per share data)	2021			2020		2021			2020
Interest revenue:
Loans, including fees	$	128,058		$	107,862	$	253,784		$	225,925
Investment securities, including tax exempt of $2,255 and $1,570 and $4,405 and $3,093, respectively	17,542			15,615		32,990			33,009
Deposits in banks and short-term investments	209			128		577			1,218
Total interest revenue	145,809			123,605		287,351			260,152

Interest expense:
Deposits:
NOW and interest-bearing demand	1,382			1,628		2,868			4,606
Money market	1,355			3,421		3,159			7,952
Savings	53			39		102			74
Time	830			6,183		2,710			13,714
Deposits	3,620			11,271		8,839			26,346
Short-term borrowings	—			—		—			1
Federal Home Loan Bank advances	—			—		2			1
Long-term debt	3,813			3,030		8,070			5,894
Total interest expense	7,433			14,301		16,911			32,242
Net interest revenue	138,376			109,304		270,440			227,910
(Release of) provision for credit losses	(13,588		)	33,543		(25,869		)	55,734
Net interest revenue after provision for credit losses	151,964			75,761		296,309			172,176

Noninterest income:
Service charges and fees	8,335			6,995		15,905			15,633
Mortgage loan gains and other related fees	11,136			23,659		33,708			31,969
Wealth management fees	3,822			1,324		7,327			2,964
Gains from sales of other loans, net	4,123			1,040		5,153			2,714
Securities gains, net	41			—		41			—
Other	8,384			7,220		18,412			12,772
Total noninterest income	35,841			40,238		80,546			66,052
Total revenue	187,805			115,999		376,855			238,228

Noninterest expenses:
Salaries and employee benefits	59,414			51,811		119,999			103,169
Communications and equipment	7,408			6,556		14,611			12,502
Occupancy	7,078			5,945		14,034			11,659
Advertising and public relations	1,493			2,260		2,692			3,534
Postage, printing and supplies	1,618			1,613		3,440			3,283
Professional fees	4,928			4,823		9,162			8,920
Lending and loan servicing expense	3,181			3,189		6,058			5,482
Outside services - electronic banking	2,285			1,796		4,503			3,628
FDIC assessments and other regulatory charges	1,901			1,558		3,797			3,042
Amortization of intangibles	929			987		1,914			2,027
Merger-related and other charges	1,078			397		2,621			1,205
Other	4,227			3,045		7,903			7,067
Total noninterest expenses	95,540			83,980		190,734			165,518
Net income before income taxes	92,265			32,019		186,121			72,710
Income tax expense	22,005			6,923		42,155			15,730
Net income	70,260			25,096		143,966			56,980
Preferred stock dividends	1,719			—		3,438			—
Undistributed earnings allocated to participating securities	432			183		894			426
Net income available to common shareholders	$	68,109		$	24,913	$	139,634		$	56,554

Net income per common share:
Basic	$	0.78		$	0.32	$	1.60		$	0.71
Diluted	0.78			0.32		1.60			0.71
Weighted average common shares outstanding:
Basic	87,289			78,920		87,306			79,130
Diluted	87,421			78,924		87,443			79,186

Average Consolidated Balance Sheets and Net Interest Analysis

For the Three Months Ended June 30,

	2021									2020
*(dollars in thousands, fully taxable equivalent (FTE))*	Average Balance			Interest			Average Rate			Average Balance			Interest		Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) ⁽¹⁾⁽²⁾	$	11,616,802		$	127,458		4.40		%	$	9,772,703		$	107,398	4.42	%
Taxable securities⁽³⁾	4,242,297			15,287			1.44			2,229,371			14,045		2.52
Tax-exempt securities (FTE) ⁽¹⁾⁽³⁾	388,609			3,030			3.12			178,903			2,110		4.72
Federal funds sold and other interest-earning assets	1,292,026			1,055			0.33			776,776			857		0.44
Total interest-earning assets (FTE)	17,539,734			146,830			3.36			12,957,753			124,410		3.86

Noninterest-earning assets:
Allowance for credit losses	(128,073		)							(89,992		)
Cash and due from banks	152,443									138,842
Premises and equipment	225,017									217,096
Other assets ⁽³⁾	1,002,634									949,201
Total assets	$	18,791,755								$	14,172,900

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	3,428,009		1,382			0.16			$	2,444,895		1,628		0.27
Money market	3,814,960			1,355			0.14			2,541,805			3,421		0.54
Savings	1,080,267			53			0.02			788,247			39		0.02
Time	1,548,487			899			0.23			1,805,671			6,058		1.35
Brokered time deposits	64,332			(69		)	(0.43	)		130,556			125		0.39
Total interest-bearing deposits	9,936,055			3,620			0.15			7,711,174			11,271		0.59
Federal funds purchased and other borrowings	111			—			—			1			—		—
Federal Home Loan Bank advances	—			—			—			—			—		—
Long-term debt	285,389			3,813			5.36			228,096			3,030		5.34
Total borrowed funds	285,500			3,813			5.36			228,097			3,030		5.34
Total interest-bearing liabilities	10,221,555			7,433			0.29			7,939,271			14,301		0.72

Noninterest-bearing liabilities:
Noninterest-bearing deposits	6,196,045									4,360,095
Other liabilities	314,130									187,375
Total liabilities	16,731,730									12,486,741
Shareholders' equity	2,060,025									1,686,159
Total liabilities and shareholders' equity	$	18,791,755								$	14,172,900

Net interest revenue (FTE)				$	139,397								$	110,109
Net interest-rate spread (FTE)							3.07		%						3.14	%
Net interest margin (FTE) ⁽⁴⁾							3.19		%						3.42	%

(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $28.6 million and $66.3 million in 2021 and 2020, respectively, are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets.

Average Consolidated Balance Sheets and Net Interest Analysis

For the Six Months Ended June 30,

	2021							2020
*(dollars in thousands, fully taxable equivalent (FTE))*	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) ⁽¹⁾⁽²⁾	$	11,525,363		$	252,580	4.42	%	$	9,300,792		$	225,194	4.87	%
Taxable securities ⁽³⁾	3,932,545			28,585		1.45		2,293,502			29,916		2.61
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾	380,370			5,918		3.11		170,578			4,155		4.87
Federal funds sold and other interest-earning assets	1,324,776			2,277		0.34		612,776			2,489		0.81
Total interest-earning assets (FTE)	17,163,054			289,360		3.40		12,377,648			261,754		4.25

Non-interest-earning assets:
Allowance for loan losses	(135,845		)					(79,885		)
Cash and due from banks	146,401							133,548
Premises and equipment	223,224							218,170
Other assets ⁽³⁾	1,012,896							908,828
Total assets	$	18,409,730						$	13,558,309

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	3,379,794		2,868		0.17		$	2,428,815		4,606		0.38
Money market	3,774,201			3,159		0.17		2,441,264			7,952		0.66
Savings	1,035,176			102		0.02		750,179			74		0.02
Time	1,595,196			2,487		0.31		1,823,612			13,308		1.47
Brokered time deposits	69,765			223		0.64		105,689			406		0.77
Total interest-bearing deposits	9,854,132			8,839		0.18		7,549,559			26,346		0.70
Federal funds purchased and other borrowings	62			—		—		199			1		1.01
Federal Home Loan Bank advances	1,657			2		0.24		83			1		2.42
Long-term debt	301,193			8,070		5.40		220,429			5,894		5.38
Total borrowed funds	302,912			8,072		5.37		220,711			5,896		5.37
Total interest-bearing liabilities	10,157,044			16,911		0.34		7,770,270			32,242		0.83

Noninterest-bearing liabilities:
Noninterest-bearing deposits	5,896,882							3,943,740
Other liabilities	313,374							174,781
Total liabilities	16,367,300							11,888,791
Shareholders' equity	2,042,430							1,669,518
Total liabilities and shareholders' equity	$	18,409,730						$	13,558,309

Net interest revenue (FTE)				$	272,449						$	229,512
Net interest-rate spread (FTE)						3.06	%						3.42	%
Net interest margin (FTE) ⁽⁴⁾						3.20	%						3.73	%

(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $43.4 million and $59.6 million in 2021 and 2020, respectively, are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQGS: UCBI) provides a full range of banking, wealth management and mortgage services for relationship-oriented consumers and business owners. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. United has $18.9 billion in assets and 162 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee along with a national SBA lending franchise and a national equipment lending subsidiary. In 2021, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking seven out of the last eight years United earned the coveted award. United was also named one of the "Best Banks to Work For" by American Banker in 2020 for the fourth year in a row based on employee satisfaction. Forbes included United in its inaugural list of the World’s Best Banks in 2019 and again in 2020. Forbes also recognized United on its 2021 list of the 100 Best Banks in America for the eighth consecutive year. United also received five Greenwich Excellence Awards in 2020 for excellence in Small Business Banking, including a national award for Overall Satisfaction. Additional information about United can be found at www.ucbi.com.

Non-GAAP Financial Measures

This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “pre-tax, pre-provision income,” “operating net income per diluted common share,” “operating earnings per share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “return on assets - pre-tax, pre-provision, excluding merger-related and other charges,” “return on assets - pre-tax, pre-provision,” “operating efficiency ratio,” and “tangible common equity to tangible assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.

For more information:

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

United Community Banks, Inc. Reports Second Quarter Results

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