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United Community Banks, Inc. Announces First Quarter Earnings

Diluted earnings per share up 6 percent, to 33 cents, from first quarter 2016
Excluding merger-related and other non-operating charges,
diluted operating EPS up 18 percent, to 39 cents

  • Net interest revenue of $83.6 million, up $8.6 million or 11 percent from year ago
  • Net interest margin of 3.45 percent, up 11 basis points from fourth quarter
  • Core transaction deposits up $189 million from the fourth quarter, or 13 percent annualized
  • Return on assets of .89 percent, or 1.07 percent excluding merger-related and other charges
  • Efficiency ratio of 59.3 percent, or 57.4 percent excluding merger-related and other charges

BLAIRSVILLE, Ga., April 26, 2017 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ:UCBI) (“United”) today announced strong first quarter results with solid margin improvement, effective expense management and sound credit quality. Net income was $23.5 million, or 33 cents per diluted share, compared with $22.3 million, or 31 cents per diluted share, for the first quarter of 2016.

On an operating basis, net income rose to $28.2 million for the first quarter of 2017 compared with $23.9 million for the first quarter of 2016. First quarter 2017 operating net income excludes pre-tax merger-related charges of $1.17 million and pre-tax charges related to branch closures of $831,000, net of the income tax benefit associated with the charges of $758,000. Also excluded is a non-cash tax charge of $3.4 million related to the cancellation of interest rate swaps that were designated as cash flow hedges. The non-cash tax charge was previously included in other comprehensive income until the swaps matured or were canceled.

First quarter 2016 operating net income excludes $2.65 million in pre-tax merger-related charges, net of the associated income tax benefit of $1.00 million. On a per diluted share basis, operating net income was 39 cents for the first quarter of 2017 compared with 33 cents for the first quarter of 2016.

At March 31, 2017, preliminary regulatory capital ratios were as follows. Tier 1 Risk-Based of 11.5 percent; Total Risk-Based of 12.3 percent; Common Equity Tier 1 Risk-Based of 11.4 percent, and Tier 1 Leverage of 8.6 percent.

“We began 2017 with a solid first quarter,” said Jimmy Tallent, chairman and chief executive officer. “Excluding merger-related and other non-operating charges, operating net income per share was up 18 percent from a year ago to 39 cents, driven by strong loan and fee revenue growth and expense management. Also excluding these charges, we held our operating efficiency ratio to 57.4 percent, the second best in a decade and surpassed only by the fourth quarter of 2016. Including those charges, the efficiency ratio was 59.3 percent.

“While linked-quarter operating net income was down slightly, our margin expansion and disciplined expense management offset most of the seasonal declines in mortgage and SBA lending, as well as some seasonal decrease in loan growth,” Tallent said. “Our bankers made steady progress improving financial performance by growing core transaction deposits a healthy 13 percent in the first quarter, all while holding deposit pricing steady.

“First quarter loan production was $615 million,” Tallent added. “Linked-quarter average loan growth was $89.8 million, or 5 percent annualized, reflecting a seasonal decrease from recent quarters. End of period loans grew by $44.4 million. Our community banks originated $423 million in loans, while our specialized lending area produced $151 million.” Specialized lending encompasses commercial real estate, middle market, SBA, asset-based lending, senior living and builder finance.

First quarter net interest revenue totaled $83.6 million, up $8.6 million from the first quarter of 2016 and up $2.6 million from the fourth quarter of 2016. The increases from both periods reflect net interest margin expansions of 4 basis points from a year ago and 11 basis points from the fourth quarter, driven by rising short-term interest rates. Loan growth and the acquisition of Tidelands Bank in July of 2016 were the primary drivers of the increase from a year ago.

The first quarter provision for credit losses was $800,000. This compares with a provision recovery of $200,000 in the first quarter of 2016 and no provision for the fourth quarter of 2016. First quarter net charge-offs totaled $1.7 million, compared with $2.1 million in the first quarter of 2016 and $1.5 million in the fourth quarter. Contributing to the low level of net charge-offs were continued strong recoveries of previously charged-off loans. Nonperforming assets were .23 percent of total assets at March 31, 2017, compared with .28 percent at both March 31, 2016 and December 31, 2016.

“Our first quarter provision for loan losses reflects continued strong, steady credit quality and a low level of net charge-offs,” Tallent commented. “Our credit quality indicators remain favorable and our outlook is for that to continue. We also expect our provision levels to gradually increase during the year due to loan growth, while our allowance and the related ratio to total loans will decline slightly.”

Fourth quarter fee revenue totaled $22.1 million, up $3.47 million from a year ago and a decrease of $3.16 million from the fourth quarter. Mortgage fees were up $1.14 million from a year ago, and down $2.09 million from the fourth quarter. Gains from sales of SBA loans were up $722,000 from a year ago due to continued growth in SBA lending, and were down $1.07 million from the fourth quarter. Partially offsetting the seasonal linked-quarter decreases in mortgage and SBA revenue was a $499,000 increase in brokerage fees. Other fee revenue was down $386,000 from the fourth quarter, mostly reflecting a lower volume of customer derivative business.

Operating expenses were $62.8 million for the first quarter, compared with $57.9 million for the first quarter of 2016 and $61.3 million for the fourth quarter. Included in operating expenses are merger-related and branch closure charges of $2.05 million in the first quarter, and merger-related charges of $2.65 million in the first quarter of 2016 and $1.14 million in the fourth quarter of 2016. Excluding these charges, first quarter operating expenses were $60.8 million compared with $55.2 million a year ago and $60.2 million for the fourth quarter.

The increase in operating expenses from the fourth quarter is primarily due to higher salaries and employee benefit costs, with most of the increase related to payroll taxes that start over at the beginning of each year. The increase from a year ago also reflects additional operating expenses following the acquisition of Tidelands Bank on July 1, 2016. United’s financial results begin including operating expenses of acquired companies on their respective acquisition dates.

Income tax expense for the first quarter totaled $18.5 million compared with $13.6 million a year ago and $17.6 million in the fourth quarter. Included in first quarter income tax expense was a $3.4 million non-cash charge to release income taxes on hedge instruments that were held in other comprehensive income during the time in which United had a full valuation allowance on its deferred tax asset. For accounting purposes, these disproportionate tax effects remained in other comprehensive income until the instruments that created them ceased to exist. In the first quarter of 2017, several related interest rate swaps matured while the balance of these hedge instruments were canceled thereby requiring a transfer from other comprehensive income to a non-cash tax expense charge. The charge had no effect on tangible book value, since there was no effect on total shareholders’ equity. Income tax expense in the fourth quarter of 2016 was elevated by a charge of $976,000 due to the impairment of a portion of the deferred tax asset as a result of cancelling nonqualified stock options.

Tallent concluded, “We are off to a good start toward another exceptional year for United Community Banks. Our bankers continue to execute our strategic plans and serve their customers with the enthusiasm, energy and passion that are the foundation of our success. I’m also excited about the Horry County State Bank acquisition that was announced last week and is expected to close in the third quarter. Not only is the bank in a market where we want to expand, it is also a solid cultural fit with the same emphasis on outstanding customer service for which United is known.”

Conference Call
United will hold a conference call today, Wednesday, April 26, 2017, at 11 a.m. ET to discuss the contents of this earnings release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 97149143. 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.

About United Community Banks, Inc.
United Community Banks, Inc. (NASDAQ:UCBI) is a registered bank holding company based in Blairsville, Georgia with $10.7 billion in assets. The company’s banking subsidiary, United Community Bank, is one of the southeast region’s largest full-service banks, operating 134 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in providing personalized community banking services to individuals, small businesses and middle-market companies. Services include a full range of consumer and commercial banking products including mortgage, advisory, and treasury management. Respected national research firms consistently recognize United Community Bank for outstanding customer service. In 2014, 2015 and 2016, J.D. Power ranked United Community Bank first in customer satisfaction in the Southeast. In 2017, for the fourth consecutive year, Forbes included United among their list of the top 100 Best Banks in America. Additional information about the company and the bank’s full range of products and services can be found at www.ucbi.com.

Non-GAAP Financial Measures
This News Release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “operating net income per diluted share,” “operating net income available to common shareholders,” “operating diluted income per common share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “operating dividend payout ratio,” “operating efficiency ratio,” “average tangible equity to average assets,” “average tangible common equity to average assets” and “tangible common equity to risk-weighted 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.

Safe Harbor
This News Release contains forward-looking statements, as defined by federal securities laws, including statements about United’s financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United’s filings with the Securities and Exchange Commission including its 2016 Annual Report on Form 10-K under the sections entitled “Forward-Looking Statements” and “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
First
2017 2016 Quarter
First Fourth Third Second First 2017-2016
(in thousands, except per share data)Quarter Quarter Quarter Quarter Quarter Change
INCOME SUMMARY
Interest revenue$90,958 $87,778 $85,439 $81,082 $80,721
Interest expense 7,404 6,853 6,450 6,164 5,769
Net interest revenue 83,554 80,925 78,989 74,918 74,952 11 %
Provision for credit losses 800 - (300) (300) (200)
Fee revenue 22,074 25,233 26,361 23,497 18,606 19
Total revenue 104,828 106,158 105,650 98,715 93,758 12
Expenses 62,826 61,321 64,023 58,060 57,885 9
Income before income tax expense 42,002 44,837 41,627 40,655 35,873 17
Income tax expense 18,478 17,616 15,753 15,389 13,578 36
Net income 23,524 27,221 25,874 25,266 22,295 6
Preferred dividends - - - - 21
Net income available to common shareholders$ 23,524 $ 27,221 $ 25,874 $ 25,266 $ 22,274 6
Merger-related and other charges 2,054 1,141 3,152 1,176 2,653
Income tax benefit of merger-related and other charges (758) (432) (1,193) (445) (1,004)
Impairment of deferred tax asset on canceled non-qualified stock
options
- 976 - - -
Release of disproportionate tax effects lodged in OCI 3,400 - - - -
Net income available to common shareholders - operating (1)$ 28,220 $ 28,906 $ 27,833 $ 25,997 $ 23,923 18
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP$.33 $.38 $.36 $.35 $31 6
Diluted net income - operating (1) .39 .40 .39 .36 .33 18
Cash dividends declared .09 .08 .08 .07 .07
Book value 15.40 15.06 15.12 14.80 14.35 7
Tangible book value (3) 13.30 12.95 13.00 12.84 12.40 7
Key performance ratios:
Return on common equity - GAAP (2)(4) 8.54 % 9.89 % 9.61 % 9.54 % 8.57 %
Return on common equity - operating (1)(2)(4) 10.25 10.51 10.34 9.81 9.20
Return on tangible common equity - operating (1)(2)(3)(4) 12.10 12.47 12.45 11.56 10.91
Return on assets - GAAP (4) .89 1.03 1.00 1.04 .93
Return on assets - operating (1)(4) 1.07 1.10 1.08 1.07 1.00
Dividend payout ratio - GAAP 27.27 21.05 22.22 20.00 22.58
Dividend payout ratio - operating (1) 23.08 20.00 20.51 19.44 21.21
Net interest margin (fully taxable equivalent) (4) 3.45 3.34 3.34 3.35 3.41
Efficiency ratio - GAAP 59.29 57.65 60.78 59.02 61.94
Efficiency ratio - operating (1) 57.35 56.58 57.79 57.82 59.10
Average equity to average assets 10.24 10.35 10.38 10.72 10.72
Average tangible equity to average assets (3) 8.96 9.04 8.98 9.43 9.41
Average tangible common equity to average assets (3) 8.96 9.04 8.98 9.43 9.32
Tangible common equity to risk-weighted assets (3)(5) 12.07 11.84 12.22 12.87 12.77
ASSET QUALITY
Nonperforming loans$19,812 $21,539 $21,572 $21,348 $22,419 (12)
Foreclosed properties 5,060 7,949 9,187 6,176 5,163 (2)
Total nonperforming assets (NPAs) 24,872 29,488 30,759 27,524 27,582 (10)
Allowance for loan losses 60,543 61,422 62,961 64,253 66,310 (9)
Net charge-offs 1,679 1,539 1,359 1,730 2,138 (21)
Allowance for loan losses to loans .87 % .89 % .94 % 1.02 % 1.09 %
Net charge-offs to average loans (4) .10 .09 .08 .11 .14
NPAs to loans and foreclosed properties .36 .43 .46 .44 .45
NPAs to total assets .23 .28 .30 .28 .28
AVERAGE BALANCES ($ in millions)
Loans$6,904 $6,814 $6,675 $6,151 $6,004 15
Investment securities 2,822 2,690 2,610 2,747 2,718 4
Earning assets 9,872 9,665 9,443 9,037 8,876 11
Total assets 10,677 10,484 10,281 9,809 9,634 11
Deposits 8,592 8,552 8,307 7,897 7,947 8
Shareholders’ equity 1,093 1,085 1,067 1,051 1,033 6
Common shares - basic (thousands) 71,700 71,641 71,556 72,202 72,162 (1)
Common shares - diluted (thousands) 71,708 71,648 71,561 72,207 72,166 (1)
AT PERIOD END ($ in millions)
Loans$6,965 $6,921 $6,725 $6,287 $6,106 14
Investment securities 2,767 2,762 2,560 2,677 2,757 -
Total assets 10,732 10,709 10,298 9,928 9,781 10
Deposits 8,752 8,638 8,442 7,857 7,960 10
Shareholders’ equity 1,102 1,076 1,079 1,060 1,034 7
Common shares outstanding (thousands) 70,973 70,899 70,861 71,122 71,544 (1)
(1) Excludes merger-related charges, a first quarter 2017 release of disproportionate tax effects lodged in OCI and a fourth quarter 2016 deferred tax asset impairment charge related to canceled non-qualified stock options. (2) Net income available to common shareholders, which is net of 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) First quarter 2017 ratio is preliminary.

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
2017 2016
First Fourth Third Second First
(in thousands, except per share data)Quarter Quarter Quarter Quarter Quarter
Expense reconciliation
Expenses (GAAP)$62,826 $61,321 $64,023 $58,060 $57,885
Merger-related and other charges (2,054) (1,141) (3,152) (1,176) (2,653)
Expenses - operating$60,772 $60,180 $60,871 $56,884 $55,232
Net income reconciliation
Net income (GAAP)$23,524 $27,221 $25,874 $25,266 $22,295
Merger-related and other charges 2,054 1,141 3,152 1,176 2,653
Income tax benefit of merger-related and other charges (758) (432) (1,193) (445) (1,004)
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$28,220 $28,906 $27,833 $25,997 $23,944
Net income available to common shareholders reconciliation
Net income available to common shareholders (GAAP)$23,524 $27,221 $25,874 $25,266 $22,274
Merger-related and other charges 2,054 1,141 3,152 1,176 2,653
Income tax benefit of merger-related and other charges (758) (432) (1,193) (445) (1,004)
Impairment of deferred tax asset on canceled non-qualified stock options - 976 - - -
Release of disproportionate tax effects lodged in OCI 3,400 - - - -
Net income available to common shareholders - operating$28,220 $28,906 $27,833 $25,997 $23,923
Diluted income per common share reconciliation
Diluted income per common share (GAAP)$.33 $.38 $.36 $.35 $.31
Merger-related and other charges .01 .01 .03 .01 .02
Impairment of deferred tax asset on canceled non-qualified stock options - .01 - - -
Release of disproportionate tax effects lodged in OCI .05 - - - -
Diluted income per common share - operating$.39 $.40 $.39 $.36 $.33
Book value per common share reconciliation
Book value per common share (GAAP)$15.40 $15.06 $15.12 $14.80 $14.35
Effect of goodwill and other intangibles (2.10) (2.11) (2.12) (1.96) (1.95)
Tangible book value per common share$13.30 $12.95 $13.00 $12.84 $12.40
Return on tangible common equity reconciliation
Return on common equity (GAAP) 8.54 % 9.89 % 9.61 % 9.54 % 8.57 %
Merger-related and other charges .47 .26 .73 .27 .63
Impairment of deferred tax asset on canceled non-qualified stock options - .36 - - -
Release of disproportionate tax effects lodged in OCI 1.24 - - - -
Return on common equity - operating 10.25 10.51 10.34 9.81 9.20
Effect of goodwill and other intangibles 1.85 1.96 2.11 1.75 1.71
Return on tangible common equity - operating 12.10 % 12.47 % 12.45 % 11.56 % 10.91 %
Return on assets reconciliation
Return on assets (GAAP) .89 % 1.03 % 1.00 % 1.04 % .93 %
Merger-related and other charges .05 .03 .08 .03 .07
Impairment of deferred tax asset on canceled non-qualified stock options - .04 - - -
Release of disproportionate tax effects lodged in OCI .13 - - - -
Return on assets - operating 1.07 % 1.10 % 1.08 % 1.07 % 1.00 %
Dividend payout ratio reconciliation
Dividend payout ratio (GAAP) 27.27 % 21.05 % 22.22 % 20.00 % 22.58 %
Merger-related and other charges (.98) (.54) (1.71) (.56) (1.37)
Impairment of deferred tax asset on canceled non-qualified stock options - (.51) - - -
Release of disproportionate tax effects lodged in OCI (3.21) - - - -
Dividend payout ratio - operating 23.08 % 20.00 % 20.51 % 19.44 % 21.21 %
Efficiency ratio reconciliation
Efficiency ratio (GAAP) 59.29 % 57.65 % 60.78 % 59.02 % 61.94 %
Merger-related and other charges (1.94) (1.07) (2.99) (1.20) (2.84)
Efficiency ratio - operating 57.35 % 56.58 % 57.79 % 57.82 % 59.10 %
Average equity to assets reconciliation
Equity to assets (GAAP) 10.24 % 10.35 % 10.38 % 10.72 % 10.72 %
Effect of goodwill and other intangibles (1.28) (1.31) (1.40) (1.29) (1.31)
Tangible equity to assets 8.96 9.04 8.98 9.43 9.41
Effect of preferred equity - - - - (.09)
Tangible common equity to assets 8.96 % 9.04 % 8.98 % 9.43 % 9.32 %
Tangible common equity to risk-weighted assets reconciliation (1)
Tier 1 capital ratio (Regulatory) 11.46 % 11.23 % 11.04 % 11.44 % 11.32 %
Effect of other comprehensive income (.24) (.34) - (.06) (.25)
Effect of deferred tax limitation 1.13 1.26 1.50 1.63 1.85
Effect of trust preferred (.25) (.25) (.26) (.08) (.08)
Basel III intangibles transition adjustment (.03) (.06) (.06) (.06) (.07)
Tangible common equity to risk-weighted assets 12.07 % 11.84 % 12.22 % 12.87 % 12.77 %
(1) First quarter 2017 ratios are preliminary.


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
2017 2016
First Fourth Third Second First
(in millions) Quarter Quarter Quarter Quarter Quarter
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,633 $ 1,650 $ 1,587 $ 1,527 $ 1,509
Income producing commercial RE 1,297 1,282 1,277 1,101 1,071
Commercial & industrial 1,080 1,070 994 925 854
Commercial construction 667 634 567 565 535
Total commercial 4,677 4,636 4,425 4,118 3,969
Residential mortgage 860 857 814 784 774
Home equity lines of credit 659 655 693 616 597
Residential construction 197 190 200 170 167
Consumer installment 572 583 593 599 599
Total loans $ 6,965 $ 6,921 $ 6,725 $ 6,287 $ 6,106
LOANS BY MARKET
North Georgia $ 1,076 $ 1,097 $ 1,110 $ 1,097 $ 1,097
Atlanta MSA 1,408 1,399 1,332 1,314 1,257
North Carolina 541 545 548 543 543
Coastal Georgia 591 581 565 541 543
Gainesville MSA 252 248 236 240 248
East Tennessee 483 504 506 509 495
South Carolina 1,243 1,233 1,199 862 821
Specialized Lending 911 855 763 706 628
Indirect auto 460 459 466 475 474
Total loans $ 6,965 $ 6,921 $ 6,725 $ 6,287 $ 6,106


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
2017 2016
Linked
Quarter
Change
Year over
Year
Change
First Fourth First
(in millions) Quarter Quarter Quarter
LOANS BY CATEGORY
Owner occupied commercial RE $1,633 $1,650 $1,509 $(17) $124
Income producing commercial RE 1,297 1,282 1,071 15 226
Commercial & industrial 1,080 1,070 854 10 226
Commercial construction 667 634 535 33 132
Total commercial 4,677 4,636 3,969 41 708
Residential mortgage 860 857 774 3 86
Home equity lines of credit 659 655 597 4 62
Residential construction 197 190 167 7 30
Consumer installment 572 583 599 (11) (27)
Total loans $6,965 $6,921 $6,106 44 859
LOANS BY MARKET
North Georgia $1,076 $1,097 $1,097 (21) (21)
Atlanta MSA 1,408 1,399 1,257 9 151
North Carolina 541 545 543 (4) (2)
Coastal Georgia 591 581 543 10 48
Gainesville MSA 252 248 248 4 4
East Tennessee 483 504 495 (21) (12)
South Carolina 1,243 1,233 821 10 422
Specialized Lending 911 855 628 56 283
Indirect auto 460 459 474 1 (14)
Total loans $6,965 $6,921 $6,106 44 859


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
First Quarter 2017
Nonperforming Foreclosed Total
(in thousands) Loans Properties NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $6,135 $1,238 $7,373
Income producing CRE 1,540 21 1,561
Commercial & industrial 929 - 929
Commercial construction 1,069 2,825 3,894
Total commercial 9,673 4,084 13,757
Residential mortgage 6,455 660 7,115
Home equity lines of credit 1,848 261 2,109
Residential construction 417 55 472
Consumer installment 1,419 - 1,419
Total NPAs $19,812 $5,060 $24,872
NONPERFORMING ASSETS BY MARKET
North Georgia $5,344 $570 $5,914
Atlanta MSA 715 645 1,360
North Carolina 4,897 355 5,252
Coastal Georgia 942 - 942
Gainesville MSA 728 - 728
East Tennessee 2,112 633 2,745
South Carolina 1,725 2,857 4,582
Specialized Lending 2,032 - 2,032
Indirect auto 1,317 - 1,317
Total NPAs $19,812 $5,060 $24,872
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $21,539 $7,949 $29,488
Acquisitions - - -
Loans placed on non-accrual 3,172 - 3,172
Payments received (3,046) - (3,046)
Loan charge-offs (1,292) - (1,292)
Foreclosures (561) 561 -
Capitalized costs - - -
Property sales - (3,077) (3,077)
Write downs - (480) (480)
Net gains (losses) on sales - 107 107
Ending Balance $19,812 $5,060 $24,872


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
Fourth Quarter 2016
Nonperforming Foreclosed Total
(in thousands) Loans Properties NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $7,373 $3,145 $10,518
Income producing CRE 1,324 36 1,360
Commercial & industrial 966 - 966
Commercial construction 1,538 2,977 4,515
Total commercial 11,201 6,158 17,359
Residential mortgage 6,368 1,260 7,628
Home equity lines of credit 1,831 531 2,362
Residential construction 776 - 776
Consumer installment 1,363 - 1,363
Total NPAs $21,539 $7,949 $29,488
NONPERFORMING ASSETS BY MARKET
North Georgia $5,278 $856 $6,134
Atlanta MSA 1,259 716 1,975
North Carolina 4,750 632 5,382
Coastal Georgia 1,778 - 1,778
Gainesville MSA 279 - 279
East Tennessee 2,354 675 3,029
South Carolina 2,494 5,070 7,564
Specialized Lending 2,072 - 2,072
Indirect auto 1,275 - 1,275
Total NPAs $21,539 $7,949 $29,488
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $21,572 $9,187 $30,759
Acquisitions - - -
Loans placed on non-accrual 6,346 - 6,346
Payments received (3,832) - (3,832)
Loan charge-offs (1,293) - (1,293)
Foreclosures (1,254) 1,530 276
Capitalized costs - 26 26
Property sales - (2,737) (2,737)
Write downs - (254) (254)
Net gains (losses) on sales - 197 197
Ending Balance $21,539 $7,949 $29,488



UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
Third Quarter 2016
Nonperforming Foreclosed Total
(in thousands) Loans Properties NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $7,693 $3,188 $10,881
Income producing CRE 2,422 765 3,187
Commercial & industrial 1,079 - 1,079
Commercial construction 1,977 1,274 3,251
Total commercial 13,171 5,227 18,398
Residential mortgage 5,440 1,211 6,651
Home equity lines of credit 1,194 514 1,708
Residential construction 369 2,235 2,604
Consumer installment 1,398 - 1,398
Total NPAs $21,572 $9,187 $30,759
NONPERFORMING ASSETS BY MARKET
North Georgia $5,356 $653 $6,009
Atlanta MSA 979 1,530 2,509
North Carolina 5,216 543 5,759
Coastal Georgia 1,606 47 1,653
Gainesville MSA 222 - 222
East Tennessee 3,281 160 3,441
South Carolina 2,015 6,254 8,269
Specialized Lending 1,597 - 1,597
Indirect auto 1,300 - 1,300
Total NPAs $21,572 $9,187 $30,759
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $21,348 $6,176 $27,524
Acquisitions - 7,495 7,495
Loans placed on non-accrual 6,680 - 6,680
Payments received (3,938) - (3,938)
Loan charge-offs (1,236) - (1,236)
Foreclosures (1,282) 2,335 1,053
Capitalized costs - 3 3
Property sales - (6,553) (6,553)
Write downs - (53) (53)
Net gains (losses) on sales - (216) (216)
Ending Balance $21,572 $9,187 $30,759

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
First Quarter 2017 Fourth Quarter 2016 Third Quarter 2016
Net Charge- Net Charge- Net Charge-
Offs to Offs to Offs to
Net Average Net Average Net Average
(in thousands) Charge-Offs Loans (1) Charge-Offs Loans (1) Charge-Offs Loans (1)
NET CHARGE-OFFS BY CATEGORY
Owner occupied CRE $(212) (.05)% $1 -% $46 .01%
Income producing CRE 870 .28 527 .16 70 .02
Commercial & industrial (152) (.06) (201) (.08) 453 .18
Commercial construction (370) (.23) 241 .16 (194) (.13)
Total commercial 136 .01 568 .05 375 .03
Residential mortgage 530 .25 322 .15 (47) (.02)
Home equity lines of credit 422 .26 151 .09 267 .16
Residential construction (9) (.02) (16) (.03) 242 .51
Consumer installment 600 .42 514 .35 522 .34
Total $1,679 .10 $1,539 .09 $1,359 .08
NET CHARGE-OFFS BY MARKET
North Georgia $15 .01% $575 .21% $68 .02%
Atlanta MSA (46) (.01) 12 - 398 .12
North Carolina 601 .45 714 .52 329 .24
Coastal Georgia (223) (.15) 118 .08 432 .31
Gainesville MSA 358 .58 (32) (.05) 15 .03
East Tennessee 55 .05 (139) (.11) (69) (.05)
South Carolina 425 .14 (2) - (66) (.02)
Specialized Lending 195 .09 (21) (.01) 69 .04
Indirect auto 299 .27 314 .27 183 .15
Total $1,679 .10 $1,539 .09 $1,359 .08
(1) Annualized.


UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (Unaudited)
Three Months Ended
March 31,
(in thousands, except per share data) 2017 2016
Interest revenue:
Loans, including fees $72,727 $63,976
Investment securities, including tax exempt of $279 and $166 17,712 15,788
Deposits in banks and short-term investments 519 957
Total interest revenue 90,958 80,721
Interest expense:
Deposits:
NOW 597 485
Money market 1,426 1,108
Savings 27 29
Time 1,008 642
Total deposit interest expense 3,058 2,264
Short-term borrowings 40 87
Federal Home Loan Bank advances 1,430 733
Long-term debt 2,876 2,685
Total interest expense 7,404 5,769
Net interest revenue 83,554 74,952
Release of (provision for) credit losses 800 (200)
Net interest revenue after provision for credit losses 82,754 75,152
Fee revenue:
Service charges and fees 10,604 10,126
Mortgage loan and other related fees 4,424 3,289
Brokerage fees 1,410 1,053
Gains from sales of government guaranteed loans 1,959 1,237
Securities gains, net (2) 379
Other 3,679 2,522
Total fee revenue 22,074 18,606
Total revenue 104,828 93,758
Operating expenses:
Salaries and employee benefits 36,691 33,062
Communications and equipment 4,918 4,290
Occupancy 4,949 4,723
Advertising and public relations 1,061 864
Postage, printing and supplies 1,370 1,280
Professional fees 3,044 2,700
FDIC assessments and other regulatory charges 1,283 1,524
Amortization of intangibles 973 1,010
Merger-related and other charges 2,054 2,653
Other 6,483 5,779
Total operating expenses 62,826 57,885
Net income before income taxes 42,002 35,873
Income tax expense 18,478 13,578
Net income 23,524 22,295
Preferred stock dividends and discount accretion - 21
Net income available to common shareholders $23,524 $22,274
Earnings per common share:
Basic $.33 $.31
Diluted .33 .31
Weighted average common shares outstanding:
Basic 71,700 72,162
Diluted 71,708 72,166


UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet (Unaudited)
March 31, December 31,
(in thousands, except share and per share data) 2017 2016
ASSETS
Cash and due from banks $90,151 $99,489
Interest-bearing deposits in banks 140,822 117,859
Cash and cash equivalents 230,973 217,348
Securities available for sale 2,436,591 2,432,438
Securities held to maturity (fair value $333,032 and $333,170) 329,992 329,843
Mortgage loans held for sale (includes $15,845 and $27,891 at fair value) 16,491 29,878
Loans, net of unearned income 6,964,990 6,920,636
Less allowance for loan losses (60,543) (61,422)
Loans, net 6,904,447 6,859,214
Premises and equipment, net 189,437 189,938
Bank owned life insurance 154,150 143,543
Accrued interest receivable 27,020 28,018
Net deferred tax asset 139,383 154,336
Derivative financial instruments 22,131 23,688
Goodwill and other intangible assets 155,250 156,222
Other assets 125,938 144,189
Total assets $10,731,803 $10,708,655
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $2,752,361 $2,637,004
NOW 1,968,493 1,989,763
Money market 1,831,145 1,846,440
Savings 574,805 549,713
Time 1,261,232 1,287,142
Brokered 364,056 327,496
Total deposits 8,752,092 8,637,558
Short-term borrowings - 5,000
Federal Home Loan Bank advances 569,138 709,209
Long-term debt 175,238 175,078
Derivative financial instruments 26,425 27,648
Accrued expenses and other liabilities 107,367 78,427
Total liabilities 9,630,260 9,632,920
Shareholders' equity:
Preferred stock, $1 par value; 10,000,000 shares authorized;
0 shares issued and outstanding - -
Common stock, $1 par value; 150,000,000 shares authorized;
70,972,753 and 70,899,114 shares issued and outstanding 70,973 70,899
Common stock, non-voting, $1 par value; 26,000,000 shares authorized;
0 shares issued and outstanding - -
Common stock issuable; 546,511 and 519,874 shares 7,959 7,327
Capital surplus 1,275,954 1,275,849
Accumulated deficit (234,384) (251,857)
Accumulated other comprehensive loss (18,959) (26,483)
Total shareholders' equity 1,101,543 1,075,735
Total liabilities and shareholders' equity $10,731,803 $10,708,655


UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended March 31,
2017 2016
Average Avg. Average Avg.
(dollars in thousands, fully taxable equivalent (FTE)) Balance Interest Rate Balance Interest Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)$6,903,860 $72,7414.27% $6,003,568 $64,044 4.29%
Taxable securities (3) 2,779,625 17,4332.51 2,688,564 15,622 2.32
Tax-exempt securities (FTE) (1)(3) 42,180 4574.33 29,744 272 3.66
Federal funds sold and other interest-earning assets 146,027 6641.82 153,759 1,053 2.74
Total interest-earning assets (FTE) 9,871,692 91,2953.74 8,875,635 80,991 3.67
Non-interest-earning assets:
Allowance for loan losses (61,668) (68,473)
Cash and due from banks 99,253 85,635
Premises and equipment 190,096 180,090
Other assets (3) 577,168 561,261
Total assets$10,676,541 $9,634,148
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW$1,959,678 597.12 $1,886,472 485 .10
Money market 2,065,449 1,426.28 1,840,584 1,108 .24
Savings 560,634 27.02 480,238 29 .02
Time 1,263,946 815.26 1,259,689 817 .26
Brokered time deposits 98,340 193.80 233,213 (175)(.30)
Total interest-bearing deposits 5,948,047 - 3,058.21 5,700,196 - 2,264 .16
Federal funds purchased and other borrowings 19,031 40.85 34,906 87 1.00
Federal Home Loan Bank advances 681,117 1,430.85 346,169 733 .85
Long-term debt 175,142 2,8766.66 165,419 2,685 6.53
Total borrowed funds 875,290 4,3462.01 546,494 3,505 2.58
Total interest-bearing liabilities 6,823,337 7,404.44 6,246,690 5,769 .37
Non-interest-bearing liabilities:
Non-interest-bearing deposits 2,643,630 2,247,041
Other liabilities 116,752 107,320
Total liabilities 9,583,719 8,601,051
Shareholders' equity 1,092,822 1,033,097
Total liabilities and shareholders' equity$10,676,541 $9,634,148
Net interest revenue (FTE) $83,891 $75,222
Net interest-rate spread (FTE) 3.30% 3.30%
Net interest margin (FTE) (4) 3.45% 3.41%
(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 39%, 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 where 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 losses of $5.38 million in 2017 and pretax unrealized gains of
$2.20 million in 2016 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.


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

Source:United Community Banks, Inc.