United Community Banks, Inc. Reports Third Quarter Results

EPS of $0.82, Return on Assets of 1.48% and Return on Common Equity of 14.3%

GREENVILLE, S.C., Oct. 19, 2021 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the third quarter was $73.8 million and pre-tax, pre-provision income was $84.4 million. Diluted earnings per share of $0.82 for the quarter represented an increase of $0.30 or 58%, from the third quarter a year ago, and represented an increase of $0.04 or 5% from the second quarter of 2021. On an operating basis, United’s diluted earnings per share of $0.83 was up 51% over the year ago quarter. United’s GAAP return on assets (ROA) was 1.48% and its return on common equity was 14.3% for the quarter. On an operating basis, United’s ROA was 1.50% and its return on tangible common equity was 18.2%. On a pre-tax, pre-provision basis, operating return on assets was 1.73% for the quarter. The quarter benefited from an allowance release of $11.0 million, reflecting continued improvement in economic conditions and forecasts.

Chairman and CEO Lynn Harton stated, “This has been another strong quarter for United as our economies continued to strengthen even in the face of the Delta variant, increasing prices on many goods, and supply chain delays. Both loan and deposit growth were strong and noninterest income benefited from both another excellent mortgage quarter as well as contributions from our expanded wealth management business.” Harton continued, “On the strategic front, on October 1, we completed the acquisition of Aquesta Financial Holdings, Inc. and Aquesta Bank, accelerating our expansion in Charlotte, and adding the Wilmington, North Carolina market, two of the strongest markets in the Southeast. We are proud that this outstanding team of bankers has joined us and we believe that they are a great fit for United. We also continued to strengthen our Board of Directors with the appointment of Jennifer Bazante, Chief Marketing Officer of Humana Inc. We believe that digital transformation is supported and enabled by strong branding and marketing and we specifically wanted to bring that experience and thought leadership to our board. We are excited to have Jennifer join United as we continue to grow and build the company.”

Total loans decreased by $200 million during the quarter—impacted by $322 million of Paycheck Protection Program (PPP) loan forgiveness. Excluding the effect of PPP loans, core organic loan growth was 4.5% annualized. Core transaction deposits grew by $490 million during the quarter, or 15.3% annualized, and United’s cost of deposits decreased by 2 basis points to 0.07%. The net interest margin decreased by 7 basis points from the second quarter due mainly to a change in the earning asset mix towards liquid assets.

Third Quarter 2021 Financial Highlights:

• Net income of $73.8 million and pre-tax, pre-provision income of $84.4 million

• EPS increased by 58% compared to third quarter 2020 on a GAAP basis and 51% on an operating basis; compared to second quarter 2021, EPS increased by 5% on both a GAAP and operating basis

• Return on assets of 1.48%, or 1.50% on an operating basis

• Pre-tax, pre-provision return on assets of 1.70%, or 1.73% on an operating basis

• Return on common equity of 14.3%

• Return on tangible common equity of 18.2% on an operating basis

• A release of provision for credit losses of $11.0 million, which reduced the allowance for loan losses to 0.89% of loans from 0.98% in the second quarter

• Loan production of $1.2 billion, resulting in core loan growth of 4.5%, annualized for the quarter, excluding the impact of $322 million in PPP loans being forgiven

• Core transaction deposits were up $490 million, which represents a 15.3% annualized growth rate for the quarter

• Net interest margin of 3.12% was down 7 basis points from the second quarter, due to continued strong deposit growth and an earning asset mix change toward securities

• Mortgage closings of $568 million compared to $576 million a year ago; mortgage rate locks of $731 million compared to $910 million a year ago

• Noninterest income was up $4.3 million on a linked quarter basis, primarily driven by strong mortgage volume and the lack of a significant MSR write-down; it also benefitted from $2.0 million in fees generated by our newly acquired FinTrust wealth manager that closed on July 6

• Noninterest expenses increased by $1.2 million compared to the second quarter on a GAAP basis and by $850,000 on an operating basis; excluding the FinTrust transaction, operating noninterest expenses improved by $1 million compared to the second quarter

• Efficiency ratio at historically low levels of 53.1%, or 52.3% on an operating basis

• Net charge-offs of $551,000 or 2 basis points as a percent of average loans, up 4 basis points from the net recoveries experienced in the second quarter

• Nonperforming assets of 0.23% of total assets, down 2 basis points compared to June 30, 2021

• Total loan deferrals of $9 million or 0.1% of the total loan portfolio compared to $18 million or 0.2% in the second quarter

• Quarterly common shareholder dividend of $0.20 per share declared during the quarter, an increase of 11% year-over-year

• Completed the acquisition of FinTrust Capital Partners, LLC and its affiliates and subsidiaries with $2.1 billion in assets under management on July 6, 2021

• Completed the acquisition of Aquesta Financial Holdings, Inc. (“Aquesta”) with $754 million in assets on October 1, 2021; this acquisition is expected to add $0.08 in EPS accretion in 2022 with cost savings fully phased in

• Announced the proposed acquisition of Reliant Bancorp, Inc. (“Reliant”) with $3.1 billion in assets on July 14, 2021; this acquisition 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, October 20, 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 1388708. 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								Third Quarter 2021 - 2020 Change		For the Nine Months Ended September 30,									YTD 2021 - 2020 Change
(in thousands, except per share data)		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter						2021				2020
INCOME SUMMARY
Interest revenue		$	147,675			$	145,809			$	141,542			$	156,071			$	141,773						$	435,026			$	401,925
Interest expense		6,636				7,433				9,478				10,676				13,319							23,547				45,561
Net interest revenue		141,039				138,376				132,064				145,395				128,454				10	%		411,479				356,364				15	%
(Release of) provision for credit losses		(11,034		)		(13,588		)		(12,281		)		2,907				21,793							(36,903		)		77,527
Noninterest income		40,095				35,841				44,705				41,375				48,682				(18	)		120,641				114,734				5
Total revenue		192,168				187,805				189,050				183,863				155,343				24			569,023				393,571				45
Expenses		96,749				95,540				95,194				106,490				95,981				1			287,483				261,499				10
Income before income tax expense		95,419				92,265				93,856				77,373				59,362				61			281,540				132,072				113
Income tax expense		21,603				22,005				20,150				17,871				11,755				84			63,758				27,485				132
Net income		73,816				70,260				73,706				59,502				47,607				55			217,782				104,587				108
Merger-related and other charges		1,437				1,078				1,543				2,452				3,361							4,058				4,566
Income tax benefit of merger-related and other charges		(328		)		(246		)		(335		)		(552		)		(519		)					(909		)		(788		)
Net income - operating (1)		$	74,925			$	71,092			$	74,914			$	61,402			$	50,449			49			$	220,931			$	108,365			104
Pre-tax pre-provision income (5)		$	84,385			$	78,677			$	81,575			$	80,280			$	81,155			4			$	244,637			$	209,599			17
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP		$	0.82			$	0.78			$	0.82			$	0.66			$	0.52			58			$	2.42			$	1.25			94
Diluted net income - operating (1)		0.83				0.79				0.83				0.68				0.55				51			2.45				1.29				90
Cash dividends declared		0.20				0.19				0.19				0.18				0.18				11			0.58				0.54				7
Book value		23.25				22.81				22.15				21.90				21.45				8			23.25				21.45				8
Tangible book value (3)		18.68				18.49				17.83				17.56				17.09				9			18.68				17.09				9
Key performance ratios:
Return on common equity - GAAP (2)(4)		14.26		%		14.08		%		15.37		%		12.36		%		10.06		%					14.55		%		8.11		%
Return on common equity - operating (1)(2)(4)		14.48				14.25				15.63				12.77				10.69							14.77				8.40
Return on tangible common equity - operating (1)(2)(3)(4)		18.23				17.81				19.68				16.23				13.52							18.55				10.76
Return on assets - GAAP (4)		1.48				1.46				1.62				1.30				1.07							1.52				0.93
Return on assets - operating (1)(4)		1.50				1.48				1.65				1.34				1.14							1.54				0.97
Return on assets - pre-tax pre-provision (4)(5)		1.70				1.64				1.80				1.77				1.86							1.71				1.89
Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5)		1.73				1.67				1.83				1.82				1.93							1.74				1.93
Net interest margin (fully taxable equivalent) (4)		3.12				3.19				3.22				3.55				3.27							3.17				3.55
Efficiency ratio - GAAP		53.11				54.53				53.55				56.73				54.14							53.72				55.30
Efficiency ratio - operating (1)		52.33				53.92				52.68				55.42				52.24							52.97				54.34
Equity to total assets		10.89				11.04				10.95				11.29				11.47							10.89				11.47
Tangible common equity to tangible assets (3)		8.53				8.71				8.57				8.81				8.89							8.53				8.89
ASSET QUALITY
Nonperforming loans		$	44,923			$	46,123			$	55,900			$	61,599			$	49,084			(8	)		$	44,923			$	49,084			(8	)
Foreclosed properties		412				224				596				647				953							412				953
Total nonperforming assets ("NPAs")		45,335				46,347				56,496				62,246				50,037				(9	)		45,335				50,037				(9	)
Allowance for credit losses - loans		99,620				111,616				126,866				137,010				134,256				(26	)		99,620				134,256				(26	)
Net charge-offs		551				(456		)		(305		)		1,515				2,538							(210		)		16,801
Allowance for credit losses - loans to loans		0.89		%		0.98		%		1.09		%		1.20		%		1.14		%					0.89		%		1.14		%
Net charge-offs to average loans (4)		0.02				(0.02		)		(0.01		)		0.05				0.09							—				0.22
NPAs to loans and foreclosed properties		0.41				0.41				0.48				0.55				0.42							0.41				0.42
NPAs to total assets		0.23				0.25				0.30				0.35				0.29							0.23				0.29
AVERAGE BALANCES ($ in millions)
Loans		$	11,205			$	11,617			$	11,433			$	11,595			$	11,644			(4	)		$	11,417			$	10,088			13
Investment securities		5,122				4,631				3,991				3,326				2,750				86			4,587				2,560				79
Earning assets		18,078				17,540				16,782				16,394				15,715				15			17,473				13,498				29
Total assets		19,322				18,792				18,023				17,698				17,013				14			18,717				14,718				27
Deposits		16,637				16,132				15,366				15,057				14,460				15			16,050				12,490				29
Shareholders’ equity		2,119				2,060				2,025				1,994				1,948				9			2,068				1,763				17
Common shares - basic (thousands)		87,211				87,289				87,322				87,258				87,129				—			87,274				81,815				7
Common shares - diluted (thousands)		87,355				87,421				87,466				87,333				87,205				—			87,413				81,876				7
AT PERIOD END ($ in millions)
Loans		$	11,191			$	11,391			$	11,679			$	11,371			$	11,799			(5	)		$	11,191			$	11,799			(5	)
Investment securities		5,335				4,928				4,332				3,645				3,089				73			5,335				3,089				73
Total assets		19,481				18,896				18,557				17,794				17,153				14			19,481				17,153				14
Deposits		16,865				16,328				15,993				15,232				14,603				15			16,865				14,603				15
Shareholders’ equity		2,122				2,086				2,031				2,008				1,967				8			2,122				1,967				8
Common shares outstanding (thousands)		86,559				86,665				86,777				86,675				86,611				—			86,559				86,611				—

⁽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 Nine Months Ended September 30,
(in thousands, except per share data)		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2021				2020
Expense reconciliation
Expenses (GAAP)		$	96,749			$	95,540			$	95,194			$	106,490			$	95,981			$	287,483			$	261,499
Merger-related and other charges		(1,437		)		(1,078		)		(1,543		)		(2,452		)		(3,361		)		(4,058		)		(4,566		)
Expenses - operating		$	95,312			$	94,462			$	93,651			$	104,038			$	92,620			$	283,425			$	256,933
Net income reconciliation
Net income (GAAP)		$	73,816			$	70,260			$	73,706			$	59,502			$	47,607			$	217,782			$	104,587
Merger-related and other charges		1,437				1,078				1,543				2,452				3,361				4,058				4,566
Income tax benefit of merger-related and other charges		(328		)		(246		)		(335		)		(552		)		(519		)		(909		)		(788		)
Net income - operating		$	74,925			$	71,092			$	74,914			$	61,402			$	50,449			$	220,931			$	108,365
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)		$	73,816			$	70,260			$	73,706			$	59,502			$	47,607			$	217,782			$	104,587
Income tax expense		21,603				22,005				20,150				17,871				11,755				63,758				27,485
(Release of) provision for credit losses		(11,034		)		(13,588		)		(12,281		)		2,907				21,793				(36,903		)		77,527
Pre-tax pre-provision income		$	84,385			$	78,677			$	81,575			$	80,280			$	81,155			$	244,637			$	209,599
Diluted income per common share reconciliation
Diluted income per common share (GAAP)		$	0.82			$	0.78			$	0.82			$	0.66			$	0.52			$	2.42			$	1.25
Merger-related and other charges, net of tax		0.01				0.01				0.01				0.02				0.03				0.03				0.04
Diluted income per common share - operating		$	0.83			$	0.79			$	0.83			$	0.68			$	0.55			$	2.45			$	1.29
Book value per common share reconciliation
Book value per common share (GAAP)		$	23.25			$	22.81			$	22.15			$	21.90			$	21.45			$	23.25			$	21.45
Effect of goodwill and other intangibles		(4.57		)		(4.32		)		(4.32		)		(4.34		)		(4.36		)		(4.57		)		(4.36		)
Tangible book value per common share		$	18.68			$	18.49			$	17.83			$	17.56			$	17.09			$	18.68			$	17.09
Return on tangible common equity reconciliation
Return on common equity (GAAP)		14.26		%		14.08		%		15.37		%		12.36		%		10.06		%		14.55		%		8.11		%
Merger-related and other charges, net of tax		0.22				0.17				0.26				0.41				0.63				0.22				0.29
Return on common equity - operating		14.48				14.25				15.63				12.77				10.69				14.77				8.40
Effect of goodwill and other intangibles		3.75				3.56				4.05				3.46				2.83				3.78				2.36
Return on tangible common equity - operating		18.23		%		17.81		%		19.68		%		16.23		%		13.52		%		18.55		%		10.76		%
Return on assets reconciliation
Return on assets (GAAP)		1.48		%		1.46		%		1.62		%		1.30		%		1.07		%		1.52		%		0.93		%
Merger-related and other charges, net of tax		0.02				0.02				0.03				0.04				0.07				0.02				0.04
Return on assets - operating		1.50		%		1.48		%		1.65		%		1.34		%		1.14		%		1.54		%		0.97		%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)		1.48		%		1.46		%		1.62		%		1.30		%		1.07		%		1.52		%		0.93		%
Income tax expense		0.45				0.47				0.46				0.40				0.28				0.45				0.26
(Release of) provision for credit losses		(0.23		)		(0.29		)		(0.28		)		0.07				0.51				(0.26		)		0.70
Return on assets - pre-tax, pre-provision		1.70				1.64				1.80				1.77				1.86				1.71				1.89
Merger-related and other charges		0.03				0.03				0.03				0.05				0.07				0.03				0.04
Return on assets - pre-tax pre-provision, excluding merger-related and other charges		1.73		%		1.67		%		1.83		%		1.82		%		1.93		%		1.74		%		1.93		%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)		53.11		%		54.53		%		53.55		%		56.73		%		54.14		%		53.72		%		55.30		%
Merger-related and other charges		(0.78		)		(0.61		)		(0.87		)		(1.31		)		(1.90		)		(0.75		)		(0.96		)
Efficiency ratio - operating		52.33		%		53.92		%		52.68		%		55.42		%		52.24		%		52.97		%		54.34		%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)		10.89		%		11.04		%		10.95		%		11.29		%		11.47		%		10.89		%		11.47		%
Effect of goodwill and other intangibles		(1.87		)		(1.82		)		(1.86		)		(1.94		)		(2.02		)		(1.87		)		(2.02		)
Effect of preferred equity		(0.49		)		(0.51		)		(0.52		)		(0.54		)		(0.56		)		(0.49		)		(0.56		)
Tangible common equity to tangible assets		8.53		%		8.71		%		8.57		%		8.81		%		8.89		%		8.53		%		8.89		%
Allowance for credit losses - loans to loans reconciliation
Allowance for credit losses - loans to loans (GAAP)		0.89		%		0.98		%		1.09		%		1.20		%		1.14		%		0.89		%		1.14		%
Effect of PPP loans		0.01				0.04				0.09				0.08				0.14				0.01				0.14
Allowance for credit losses - loans to loans, excluding PPP loans		0.90		%		1.02		%		1.18		%		1.28		%		1.28		%		0.90		%		1.28		%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
	2021												2020								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	$	2,149			$	2,149			$	2,107			$	2,090			$	2,009			$	—				$	140
Income producing commercial RE	2,542				2,550				2,599				2,541				2,493				(8		)			49
Commercial & industrial	1,729				1,762				1,760				1,853				1,788				(33		)			(59		)
Paycheck protection program	150				472				883				646				1,317