BLAIRSVILLE, GA
-- (MARKET WIRE)
-- 10/27/11
United Community Banks, Inc. (NASDAQ: UCBI)
- Special $25 million loan loss provision drove net loss
- Excluding this special provision, net income was $8.8 million, or 10 cents per share
- Net interest margin rose 14 basis points on lower deposit pricing
- Core transaction deposits up 16 percent on an annualized basis
United Community Banks, Inc. (NASDAQ: UCBI) today reported a net loss of $6.2 million, or 16 cents per share, for the third quarter of 2011. The third quarter net loss resulted from a special loan loss provision of $25 million, or 26 cents per share, recorded in connection with the nonaccrual classification of United's largest loan relationship, which was announced earlier. Excluding this special provision, net income was $8.8 million, or 10 cents per share.
The year-to-date net loss of $141 million primarily reflects significant credit costs in the first quarter incurred in connection with the Company's problem asset disposition plan. The plan was executed in conjunction with raising $380 million of new capital on March 30, 2011.
"We believe the loss was an isolated situation that does not reflect deterioration in the remainder of our loan portfolio," stated Jimmy Tallent, president and chief executive officer. "Aside from this one relationship, which we have been watching closely for several quarters, our credit quality continued to improve and stabilize in the third quarter."
Total loans were $4.1 billion at quarter-end, down $53 million from the end of the second quarter and down $650 million from a year earlier. "The $53 million decrease during the third quarter was up from the $31 million decrease during the second quarter, but still represents the second lowest quarterly decrease in loan balances since the first quarter of 2008," stated Tallent. "We remain confident that soon we can once again begin to grow our loan portfolio. We are encouraged to have $141 million of new loan commitments, with $88 million funded, during the third quarter. The majority were commercial loans."
The third quarter provision for loan losses was $36 million, up from $11 million in the second quarter, but down from $50.5 million a year ago. Included in the third quarter provision was the previously announced $25 million special provision for the Company's largest lending relationship. Net charge-offs for the third quarter were $17.5 million, compared to $16.4 million for the second quarter but down from $50.0 million a year ago. Second quarter net charge-offs included a $7.3 million recovery from an April 18 bulk loan sale transaction. Excluding that recovery, third quarter net charge-offs declined $6.2 million from last quarter.
Nonperforming assets increased $70 million to $189 million at quarter-end. The increase reflects placing the previously mentioned $76.6 million loan on nonaccrual.
Taxable equivalent net interest revenue of $59.3 million increased $335,000 from the second quarter. Compared with the third quarter of 2010, net interest revenue declined $733,000, primarily due to a $702 million reduction in average loan balances that was significantly offset by lower funding costs and deposit rates. Net interest margin was 3.55 percent for the third quarter of 2011, down two basis points from a year ago and up 14 basis points from the second quarter.
"Growing loans and deposits are key initiatives to further building core earnings," Tallent commented. "The weak economy has created a highly competitive environment for good, quality loans and we are working diligently to get our share. We have had tremendous success in gathering core transaction deposits -- increasing the balance $112 million from the second quarter, or 16 percent on an annualized basis. This was the eleventh consecutive quarter of growth in core transaction deposits, which now represents 48 percent of total deposits compared to 30 percent at the end of 2008."
Fee revenue was $11.5 million in the third quarter of 2011, compared to $12.9 million a year ago and $13.9 million last quarter. Service charges and fees were $7.5 million, down $114,000 from a year ago, due primarily to lower overdraft fees of $886,000 resulting from regulatory changes last year that required customers to provide consent before using overdraft services. Mostly offsetting this reduction in overdraft fees was an increase of $785,000 in ATM and debit card usage fees. Mortgage fees of $1.1 million were down $923,000 from a year ago and up $196,000 from last quarter. The decrease from last year was due to the lower level of refinancing activities. Other fee revenue of $2.0 million reflected a decrease of $173,000 from a year ago and $2.7 million from the second quarter. The decrease from the second quarter was primarily due to the accelerated recognition of deferred gains relating to the ineffectiveness of terminated cash flow hedges on certain prime-based loans. Hedge ineffectiveness gains recognized in the third quarter were $575,000 compared with $2.8 million in the second quarter of 2011 and $336,000 in the third quarter of 2010. Also contributing to the decrease in other fee revenue from the second quarter and a year ago was a change in the market value of deferred compensation plan assets which accounted for $393,000 and $657,000 of the decrease in other fee revenue from the second quarter of 2011 and the third quarter of 2010, respectively.
Excluding foreclosed property costs and the goodwill impairment charge in 2010, third quarter 2011 operating expenses were $43.7 million, down from both the second quarter of 2011 and third quarter of 2010 by $3.1 million and $1.4 million, respectively. The decreases were mostly in FDIC assessments and the other expense category. FDIC assessments and other regulatory charges of $2.6 million were down $1.0 million from the second quarter and $653,000 from a year ago primarily due to the new asset based formula and a lower assessment rate. The decrease in the other expense category was mostly due to lower collections costs. Salary and benefit costs totaled $25.3 million, a $371,000 increase from last year and a $1.2 million decrease from the second quarter due to staff reductions and related severance costs.
Foreclosed property costs for the third quarter of 2011 were $2.8 million as compared to $1.9 million last quarter and $19.8 million a year ago. The third quarter of 2011 included $1.8 million for maintenance of foreclosed properties and $1.0 million in net losses and write-downs on properties. For the second quarter of 2011, foreclosed property costs were almost entirely for maintenance costs. The third quarter of 2010 included $14.2 million of net write-downs and losses and $5.6 million of maintenance costs.
The effective tax rate for the third quarter of 2011 was 49 percent, up from the 40 percent effective tax rate for the first and second quarters of 2011. The tax benefit in the third quarter includes the release of approximately $1.1 million in reserves for uncertain tax positions relating to state tax returns whose limitations have expired. Excluding the reserve release, the third quarter effective tax rate would have been 40 percent. The effective tax rate is expected to return to a normal range of 35 to 36 percent with expected profitability for 2012.
As of September 30, 2011, the capital ratios for United were as follows: Tier 1 Risk-Based of 14.0 percent; Tier 1 Leverage of 9.0 percent; and Total Risk-Based of 15.8 percent. The quarterly average tangible equity-to-assets ratio was 11.8 percent, and the tangible common equity-to-assets ratio was 9.1 percent.
"Reporting a third quarter loss after achieving profitability last quarter is disappointing, but must be put into context," Tallent said. "Our objective is to deal aggressively and decisively with credit issues as they are identified. The large classification during the quarter was an isolated situation that we do not believe indicates a trend. Excluding this one item, our credit metrics continued to improve and we are on the right path to be profitable next quarter and into 2012."
Tallent added, "United has been working diligently with the SEC to resolve comments regarding our net deferred tax asset made during their review of two resale registration statements and related periodic reports. The SEC has inquired as to the necessity of an additional deferred tax asset valuation allowance. We continue to believe an additional valuation allowance is not required based on our expectation that, more likely than not, we will realize all of our net deferred tax assets many years prior to their expiration. However, considering the SEC's inquiry, it is possible we could be required to record a valuation allowance."
Conference Call
United Community Banks will hold a conference call today, Thursday, October 27, 2011, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 14298726. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of the company's website at www.ucbi.com.
About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $7.2 billion and operates 27 community banks with 105 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. The Company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the Company's web site at www.ucbi.com.
Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial United's outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
2011 2010
----------------------------- -------------------
(in thousands, except
per share data; Third Second First Fourth Third
taxable equivalent) Quarter Quarter Quarter Quarter Quarter
-------- -------- --------- -------- ---------
INCOME SUMMARY
Interest revenue $ 74,543 $ 76,931 $ 75,965 $ 81,215 $ 84,360
Interest expense 15,262 17,985 19,573 21,083 24,346
-------- -------- --------- -------- ---------
Net interest revenue 59,281 58,946 56,392 60,132 60,014
Operating provision for
loan losses (1) 36,000 11,000 190,000 47,750 50,500
Fee revenue (2) 11,498 13,905 11,838 12,442 12,861
-------- -------- --------- -------- ---------
Total operating
revenue (1)(2) 34,779 61,851 (121,770) 24,824 22,375
Operating expenses (3) 46,520 48,728 115,271 64,918 64,906
Loss on sale of
nonperforming assets - - - - -
-------- -------- --------- -------- ---------
Operating (loss)
income from
continuing
operations before
income taxes (11,741) 13,123 (237,041) (40,094) (42,531)
Operating income tax
(benefit) expense (5,539) 5,506 (94,555) (16,520) (16,706)
-------- -------- --------- -------- ---------
Net operating (loss)
income from
continuing
operations(1)(2)(3) (6,202) 7,617 (142,486) (23,574) (25,825)
Noncash goodwill
impairment charges - - - - (210,590)
Partial reversal of
fraud loss provision,
net of income tax - - - 7,179 -
Loss from discontinued
operations, net of
income tax - - - - -
Gain from sale of
subsidiary, net income
tax - - - - -
-------- -------- --------- -------- ---------
Net (loss) income (6,202) 7,617 (142,486) (16,395) (236,415)
Preferred dividends and
discount accretion 3,019 3,016 2,778 2,586 2,581
-------- -------- --------- -------- ---------
Net (loss) income
available to common
shareholders $ (9,221) $ 4,601 $(145,264) $(18,981) $(238,996)
======== ======== ========= ======== =========
PERFORMANCE MEASURES
Per common share:
Diluted operating
(loss) income from
continuing
operations
(1)(2)(3) $ (.16) $ .08 $ (7.87) $ (1.38) $ (1.50)
Diluted (loss)
income from
continuing
operations (.16) .08 (7.87) (1.00) (12.62)
Diluted (loss)
income (.16) .08 (7.87) (1.00) (12.62)
Book value 11.37 11.59 14.78 24.18 25.70
Tangible book value
(5) 11.26 11.47 14.44 23.78 25.26
Key performance
ratios:
Return on equity
(4)(6) (5.72)% 5.34% (147.11)% (17.16)% (148.04)%
Return on assets (6) (.34) .40 (7.61) (.89) (12.47)
Net interest margin
(6) 3.55 3.41 3.30 3.58 3.57
Operating efficiency
ratio from
continuing
operations (2)(3) 65.73 66.88 169.08 89.45 89.38
Equity to assets 11.83 11.21 8.82 8.85 11.37
Tangible equity to
assets (5) 11.76 11.13 8.73 8.75 9.19
Tangible common
equity to assets
(5) 9.09 4.79 5.51 6.35 6.78
Tangible common
equity to risk-
weighted assets (5) 14.41 14.26 6.40 9.05 9.60
ASSET QUALITY *
Non-performing loans $144,484 $ 71,065 $ 83,769 $179,094 $ 217,766
Foreclosed properties 44,263 47,584 54,378 142,208 129,964
-------- -------- --------- -------- ---------
Total non-performing
assets (NPAs) 188,747 118,649 138,147 321,302 347,730
Allowance for loan
losses 146,092 127,638 133,121 174,695 174,613
Operating net charge-
offs (1) 17,546 16,483 231,574 47,668 49,998
Allowance for loan
losses to loans 3.55% 3.07% 3.17% 3.79% 3.67%
Operating net charge-
offs to average
loans (1)(6) 1.68 1.58 20.71 4.03 4.12
NPAs to loans and
foreclosed
properties 4.54 2.82 3.25 6.77 7.11
NPAs to total assets 2.64 1.60 1.73 4.32 4.96
AVERAGE BALANCES($ in
millions)
Loans $ 4,194 $ 4,266 $ 4,599 $ 4,768 $ 4,896
Investment securities 2,150 2,074 1,625 1,354 1,411
Earning assets 6,630 6,924 6,902 6,680 6,676
Total assets 7,261 7,624 7,595 7,338 7,522
Deposits 6,061 6,372 6,560 6,294 6,257
Shareholders' equity 859 854 670 649 855
Common shares - basic
(thousands) 57,599 25,427 18,466 18,984 18,936
Common shares -
diluted (thousands) 57,599 57,543 18,466 18,984 18,936
AT PERIOD END($ in
millions)
Loans * $ 4,110 $ 4,163 $ 4,194 $ 4,604 $ 4,760
Investment securities 2,123 2,188 1,884 1,490 1,310
Total assets 7,159 7,410 7,974 7,443 7,013
Deposits 6,005 6,183 6,598 6,469 5,999
Shareholders' equity 848 860 850 636 662
Common shares
outstanding
(thousands) 57,510 57,469 20,903 18,937 18,887
(1) Excludes the partial reversal of a previously established provision
for fraud-related loan losses of $11.8 million, net of tax expense of
$4.6 million in the fourth quarter of 2010. Operating charge-offs also
exclude the $11.8 million related partial recovery of the previously
charged off amount. (2) Excludes revenue generated by discontinued
operations in the first quarter of 2010. (3) Excludes the goodwill
impairment charge of $211 million in the third quarter of 2010 and
expenses relating to discontinued operations in the first quarter of
2010. (4) Net loss available to common shareholders, which is net of
preferred stock dividends, divided by average realized common equity,
which excludes accumulated other comprehensive income (loss). (5)
Excludes effect of acquisition related intangibles and associated
amortization. (6) Annualized.
* Excludes loans and foreclosed properties covered by loss sharing
agreements with the FDIC.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
Third
(in thousands, Quarter For the Nine YTD
except per share Third Quarter 2011- Months Ended 2011-
data; taxable ------------------- 2010 -------------------- 2010
equivalent) 2011 2010 Change 2011 2010 Change
-------- --------- ----- --------- --------- -----
INCOME SUMMARY
Interest revenue $ 74,543 $ 84,360 $ 227,439 $ 261,908
Interest expense 15,262 24,346 52,820 78,988
-------- --------- --------- ---------
Net interest
revenue 59,281 60,014 (1)% 174,619 182,920 (5)%
Operating
provision for
loan losses (1) 36,000 50,500 237,000 187,000
Fee revenue (2) 11,498 12,861 (11) 37,241 36,106 3
-------- --------- --------- ---------
Total operating
revenue (1)(2) 34,779 22,375 (25,140) 32,026
Operating expenses
(3) 46,520 64,906 (28) 210,519 178,034 18
Loss on sale of
nonperforming
assets - - - 45,349
-------- --------- --------- ---------
Operating (loss)
income from
continuing
operations
before income
taxes (11,741) (42,531) (72) (235,659) (191,357) 23
Operating income
tax (benefit)
expense (5,539) (16,706) (94,588) (71,542)
-------- --------- --------- ---------
Net operating
(loss) income
from continuing
operations
(1)(2)(3) (6,202) (25,825) (76) (141,071) (119,815) 18
Noncash goodwill
impairment
charges - (210,590) - (210,590)
Partial reversal
of fraud loss
provision, net of
income tax - - - -
Loss from
discontinued
operations, net
of income tax - - - (101)
Gain from sale of
subsidiary, net
income tax - - - 1,266
-------- --------- --------- ---------
Net (loss)
income (6,202) (236,415) (97) (141,071) (329,240) (57)
Preferred
dividends and
discount
accretion 3,019 2,581 8,813 7,730
-------- --------- --------- ---------
Net (loss) income
available to
common
shareholders $ (9,221) $(238,996) $(149,884) $(336,970)
======== ========= ========= =========
PERFORMANCE
MEASURES
Per common share:
Diluted
operating
(loss) income
from continuing
operations
(1)(2)(3) $ (.16) $ (1.50) (89) $ (4.41) $ (6.75) (35)
Diluted (loss)
income from
continuing
operations (.16) (12.62) (99) (4.41) (17.89) (75)
Diluted (loss)
income (.16) (12.62) (99) (4.41) (17.82) (75)
Book value 11.37 25.70 (56) 11.37 25.70 (56)
Tangible book
value (5) 11.26 25.26 (55) 11.26 25.26 (55)
Key performance
ratios:
Return on equity
(4)(6) (5.72)% (148.04)% (43.31)% (65.69)%
Return on assets
(6) (.34) (12.47) (2.52) (5.70)
Net interest
margin (6) 3.55 3.57 3.42 3.56
Operating
efficiency
ratio from
continuing
operations
(2)(3) 65.73 89.38 99.39 102.14
Equity to assets 11.83 11.37 10.61 11.70
Tangible equity
to assets (5) 11.76 9.19 10.53 9.28
Tangible common
equity to
assets (5) 9.09 6.78 6.44 6.94
Tangible common
equity to risk-
weighted assets
(5) 14.41 9.60 14.41 9.60
ASSET QUALITY *
Non-performing
loans $144,484 $ 217,766 $ 144,484 $ 217,766
Foreclosed
properties 44,263 129,964 44,263 129,964
-------- --------- --------- ---------
Total non-
performing
assets (NPAs) 188,747 347,730 188,747 347,730
Allowance for
loan losses 146,092 174,613 146,092 174,613
Operating net
charge-offs (1) 17,546 49,998 265,603 167,989
Allowance for
loan losses to
loans 3.55% 3.67% 3.55% 3.67%
Operating net
charge-offs to
average loans
(1)(6) 1.68 4.12 8.28 4.54
NPAs to loans and
foreclosed
properties 4.54 7.11 4.54 7.11
NPAs to total
assets 2.64 4.96 2.64 4.96
AVERAGE BALANCES($
in millions)
Loans $ 4,194 $ 4,896 (14) $ 4,352 $ 5,026 (13)
Investment
securities 2,150 1,411 52 1,952 1,487 31
Earning assets 6,630 6,676 (1) 6,817 6,870 (1)
Total assets 7,261 7,522 (3) 7,492 7,723 (3)
Deposits 6,061 6,257 (3) 6,329 6,399 (1)
Shareholders'
equity 859 855 - 795 904 (12)
Common shares -
basic
(thousands) 57,599 18,936 33,973 18,905
Common shares -
diluted
(thousands) 57,599 18,936 33,973 18,905
AT PERIOD END($ in
millions)
Loans * $ 4,110 $ 4,760 (14) $ 4,110 $ 4,760 (14)
Investment
securities 2,123 1,310 62 2,123 1,310 62
Total assets 7,159 7,013 2 7,159 7,013 2
Deposits 6,005 5,999 - 6,005 5,999 -
Shareholders'
equity 848 662 28 848 662 28
Common shares
outstanding
(thousands) 57,510 18,887 57,510 18,887
(1) Excludes the partial reversal of a previously established provision
for fraud-related loan losses of $11.8 million, net of tax expense of
$4.6 million in the fourth quarter of 2010. Operating charge-offs also
exclude the $11.8 million related partial recovery of the previously
charged off amount. (2) Excludes revenue generated by discontinued
operations in the first quarter of 2010. (3) Excludes the goodwill
impairment charge of $211 million in the third quarter of 2010 and
expenses relating to discontinued operations in the first quarter of
2010. (4) Net loss available to common shareholders, which is net of
preferred stock dividends, divided by average realized common equity,
which excludes accumulated other comprehensive income (loss). (5)
Excludes effect of acquisition related intangibles and associated
amortization. (6) Annualized.
* Excludes loans and foreclosed properties covered by loss sharing
agreements with the FDIC.
UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
Selected Financial Information
2011 2010
----------------------------- --------------------
(in thousands, except
per share data; Third Second First Fourth Third
taxable equivalent) Quarter Quarter Quarter Quarter Quarter
-------- -------- --------- --------- ---------
Interest revenue
reconciliation
Interest revenue -
taxable equivalent $ 74,543 $ 76,931 $ 75,965 $ 81,215 $ 84,360
Taxable equivalent
adjustment (420) (429) (435) (497) (511)
-------- -------- --------- --------- ---------
Interest revenue
(GAAP) $ 74,123 $ 76,502 $ 75,530 $ 80,718 $ 83,849
======== ======== ========= ========= =========
Net interest revenue
reconciliation
Net interest revenue -
taxable equivalent $ 59,281 $ 58,946 $ 56,392 $ 60,132 $ 60,014
Taxable equivalent
adjustment (420) (429) (435) (497) (511)
-------- -------- --------- --------- ---------
Net interest revenue
(GAAP) $ 58,861 $ 58,517 $ 55,957 $ 59,635 $ 59,503
======== ======== ========= ========= =========
Provision for loan
losses reconciliation
Operating provision for
loan losses $ 36,000 $ 11,000 $ 190,000 $ 47,750 $ 50,500
Partial reversal of
special fraud-related
provision for loan
loss - - - (11,750) -
-------- -------- --------- --------- ---------
Provision for loan
losses (GAAP) $ 36,000 $ 11,000 $ 190,000 $ 36,000 $ 50,500
======== ======== ========= ========= =========
Total revenue
reconciliation
Total operating revenue $ 34,779 $ 61,851 $(121,770) $ 24,824 $ 22,375
Taxable equivalent
adjustment (420) (429) (435) (497) (511)
Partial reversal of
special fraud-related
provision for loan
loss - - - 11,750 -
-------- -------- --------- --------- ---------
Total revenue (GAAP) $ 34,359 $ 61,422 $(122,205) $ 36,077 $ 21,864
======== ======== ========= ========= =========
Expense reconciliation
Operating expense $ 46,520 $ 48,728 $ 115,271 $ 64,918 $ 64,906
Noncash goodwill
impairment charge - - - - 210,590
-------- -------- --------- --------- ---------
Operating expense
(GAAP) $ 46,520 $ 48,728 $ 115,271 $ 64,918 $ 275,496
======== ======== ========= ========= =========
(Loss) income from
continuing operations
before taxes
reconciliation
Operating (loss) income
from continuing
operations before
taxes $(11,741) $ 13,123 $(237,041) $ (40,094) $ (42,531)
Taxable equivalent
adjustment (420) (429) (435) (497) (511)
Noncash goodwill
impairment charge - - - - (210,590)
Partial reversal of
special fraud-related
provision for loan
loss - - - 11,750 -
-------- -------- --------- --------- ---------
(Loss) income from
continuing
operations before
taxes (GAAP) $(12,161) $ 12,694 $(237,476) $ (28,841) $(253,632)
======== ======== ========= ========= =========
Income tax (benefit)
expense reconciliation
Operating income tax
(benefit) expense $ (5,539) $ 5,506 $ (94,555) $ (16,520) $ (16,706)
Taxable equivalent
adjustment (420) (429) (435) (497) (511)
Partial reversal of
special fraud-related
provision for loan
loss - - - 4,571 -
-------- -------- --------- --------- ---------
Income tax (benefit)
expense (GAAP) $ (5,959) $ 5,077 $ (94,990) $ (12,446) $ (17,217)
======== ======== ========= ========= =========
Diluted (loss) earnings from
continuing operations per
common share reconciliation
Diluted operating
(loss) earnings from
continuing operations
per common share $ (.16) $ .08 $ (7.87) $ (1.38) $ (1.50)
Noncash goodwill
impairment charge - - - - (11.12)
Partial reversal of
special fraud-related
provision for loan
loss - - - .38 -
-------- -------- --------- --------- ---------
Diluted (loss)
earnings from
continuing
operations per
common share (GAAP) $ (.16) $ .08 $ (7.87) $ (1.00) $ (12.62)
======== ======== ========= ========= =========
Book value per common
share reconciliation
Tangible book value per
common share $ 11.26 $ 11.47 $ 14.44 $ 23.78 $ 25.26
Effect of goodwill and
other intangibles .11 .12 .34 .40 .44
-------- -------- --------- --------- ---------
Book value per common
share (GAAP) $ 11.37 $ 11.59 $ 14.78 $ 24.18 $ 25.70
======== ======== ========= ========= =========
Efficiency ratio from
continuing operations
reconciliation
Operating efficiency
ratio from continuing
operations 65.73% 66.88% 169.08% 89.45% 89.38%
Noncash goodwill
impairment charge - - - - 290.00
-------- -------- --------- --------- ---------
Efficiency ratio from
continuing
operations (GAAP) 65.73% 66.88% 169.08% 89.45% 379.38%
======== ======== ========= ========= =========
Average equity to
assets reconciliation
Tangible common equity
to assets 9.09% 4.79% 5.51% 6.35% 6.78%
Effect of preferred
equity 2.67 6.34 3.22 2.40 2.41
-------- -------- --------- --------- ---------
Tangible equity to
assets 11.76 11.13 8.73 8.75 9.19
Effect of goodwill and
other intangibles .07 .08 .09 .10 2.18
-------- -------- --------- --------- ---------
Equity to assets
(GAAP) 11.83% 11.21% 8.82% 8.85% 11.37%
======== ======== ========= ========= =========
Actual tangible common
equity to risk-
weighted assets
reconciliation
Tangible common equity
to risk-weighted
assets 14.41% 14.26% 6.40% 9.05% 9.60%
Effect of other
comprehensive income (.58) (.65) (.58) (.62) (.81)
Effect of deferred tax
limitation (5.34) (5.04) (5.10) (3.34) (2.94)
Effect of trust
preferred 1.18 1.14 1.12 1.06 1.06
Effect of preferred
equity 4.30 4.17 5.97 3.52 3.51
-------- -------- --------- --------- ---------
Tier I capital ratio
(Regulatory) 13.97% 13.88% 7.81% 9.67% 10.42%
======== ======== ========= ========= =========
Net charge-offs
reconciliation
Operating net charge-
offs $ 17,546 $ 16,483 $ 231,574 $ 47,668 $ 49,998
Subsequent partial
recovery of fraud-
related charge-off - - - (11,750) -
-------- -------- --------- --------- ---------
Net charge-offs
(GAAP) $ 17,546 $ 16,483 $ 231,574 $ 35,918 $ 49,998
======== ======== ========= ========= =========
Net charge-offs to
average loans
reconciliation
Operating net charge-
offs to average loans 1.68% 1.58% 20.71% 4.03% 4.12%
Subsequent partial
recovery of fraud-
related charge-off - - - (1.00) -
-------- -------- --------- --------- ---------
Net charge-offs to
average loans (GAAP) 1.68% 1.58% 20.71% 3.03% 4.12%
======== ======== ========= ========= =========
Net (loss) income
reconciliation
Net income excluding
special provision $ 8,798
Effect of special
provision for loan
losses on largest
lending relationship (15,000)
--------
Net loss (GAAP) $ (6,202)
========
Net (loss) income per
diluted share
reconciliation
Net income per diluted
share excluding
special provision $ .10
Effect of special
provision for loan
losses on largest
lending relationship (.26)
--------
Net loss per diluted
share (GAAP) $ (.16)
========
UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
Selected Financial Information
(in thousands, except per share data; taxable For the Nine Months
equivalent) Ended
----------------------
2011 2010
---------- ----------
Interest revenue reconciliation
Interest revenue - taxable equivalent $ 227,439 $ 261,908
Taxable equivalent adjustment (1,284) (1,504)
---------- ----------
Interest revenue (GAAP) $ 226,155 $ 260,404
========== ==========
Net interest revenue reconciliation
Net interest revenue - taxable equivalent $ 174,619 $ 182,920
Taxable equivalent adjustment (1,284) (1,504)
---------- ----------
Net interest revenue (GAAP) $ 173,335 $ 181,416
========== ==========
Provision for loan losses reconciliation
Operating provision for loan losses $ 237,000 $ 187,000
Partial reversal of special fraud-related provision
for loan loss - -
---------- ----------
Provision for loan losses (GAAP) $ 237,000 $ 187,000
========== ==========
Total revenue reconciliation
Total operating revenue $ (25,140) $ 32,026
Taxable equivalent adjustment (1,284) (1,504)
Partial reversal of special fraud-related provision
for loan loss - -
---------- ----------
Total revenue (GAAP) $ (26,424) $ 30,522
========== ==========
Expense reconciliation
Operating expense $ 210,519 $ 223,383
Noncash goodwill impairment charge - 210,590
---------- ----------
Operating expense (GAAP) $ 210,519 $ 433,973
========== ==========
(Loss) income from continuing operations before
taxes reconciliation
Operating (loss) income from continuing operations
before taxes $ (235,659) $ (191,357)
Taxable equivalent adjustment (1,284) (1,504)
Noncash goodwill impairment charge - (210,590)
Partial reversal of special fraud-related provision
for loan loss - -
---------- ----------
(Loss) income from continuing operations before
taxes (GAAP) $ (236,943) $ (403,451)
========== ==========
Income tax (benefit) expense reconciliation
Operating income tax (benefit) expense $ (94,588) $ (71,542)
Taxable equivalent adjustment (1,284) (1,504)
Partial reversal of special fraud-related provision
for loan loss - -
---------- ----------
Income tax (benefit) expense (GAAP) $ (95,872) $ (73,046)
========== ==========
Diluted (loss) earnings from continuing operations per common
share reconciliation
Diluted operating (loss) earnings from continuing
operations per common share $ (4.41) $ (6.75)
Noncash goodwill impairment charge - (11.14)
Partial reversal of special fraud-related provision
for loan loss - -
---------- ----------
Diluted (loss) earnings from continuing operations
per common share (GAAP) $ (4.41) $ (17.89)
========== ==========
Book value per common share reconciliation
Tangible book value per common share $ 11.26 $ 25.26
Effect of goodwill and other intangibles .11 .44
---------- ----------
Book value per common share (GAAP) $ 11.37 $ 25.70
========== ==========
Efficiency ratio from continuing operations
reconciliation
Operating efficiency ratio from continuing
operations 99.39% 102.14%
Noncash goodwill impairment charge - 96.29
---------- ----------
Efficiency ratio from continuing operations (GAAP) 99.39% 198.43%
========== ==========
Average equity to assets reconciliation
Tangible common equity to assets 6.44% 6.94%
Effect of preferred equity 4.09 2.34
---------- ----------
Tangible equity to assets 10.53 9.28
Effect of goodwill and other intangibles .08 2.42
---------- ----------
Equity to assets (GAAP) 10.61% 11.70%
========== ==========
Actual tangible common equity to risk-weighted
assets reconciliation
Tangible common equity to risk-weighted assets 14.41% 9.60%
Effect of other comprehensive income (.58) (.81)
Effect of deferred tax limitation (5.34) (2.94)
Effect of trust preferred 1.18 1.06
Effect of preferred equity 4.30 3.51
---------- ----------
Tier I capital ratio (Regulatory) 13.97% 10.42%
========== ==========
Net charge-offs reconciliation
Operating net charge-offs $ 265,603 $ 167,989
Subsequent partial recovery of fraud-related charge-
off - -
---------- ----------
Net charge-offs (GAAP) $ 265,603 $ 167,989
========== ==========
Net charge-offs to average loans reconciliation
Operating net charge-offs to average loans 8.28% 4.54%
Subsequent partial recovery of fraud-related charge-
off - -
---------- ----------
Net charge-offs to average loans (GAAP) 8.28% 4.54%
========== ==========
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
2011 2010
-------------------------- -----------------
Third Second First Fourth Third
(in millions) Quarter Quarter Quarter Quarter Quarter
-------- -------- -------- -------- --------
LOANS BY CATEGORY
Commercial (sec.by RE) $ 1,771 $ 1,742 $ 1,692 $ 1,761 $ 1,781
Commercial construction 169 195 213 297 310
Commercial & industrial 429 428 431 441 456
-------- -------- -------- -------- --------
Total commercial 2,369 2,365 2,336 2,499 2,547
Residential construction 474 502 550 695 764
Residential mortgage 1,150 1,177 1,187 1,279 1,316
Consumer / installment 117 119 121 131 133
-------- -------- -------- -------- --------
Total loans $ 4,110 $ 4,163 $ 4,194 $ 4,604 $ 4,760
======== ======== ======== ======== ========
LOANS BY MARKET
Atlanta MSA $ 1,192 $ 1,188 $ 1,179 $ 1,310 $ 1,365
Gainesville MSA 272 275 282 312 316
North Georgia 1,478 1,500 1,531 1,689 1,755
Western North Carolina 607 626 640 702 719
Coastal Georgia 316 325 312 335 345
East Tennessee 245 249 250 256 260
-------- -------- -------- -------- --------
Total loans $ 4,110 $ 4,163 $ 4,194 $ 4,604 $ 4,760
======== ======== ======== ======== ========
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 97 $ 105 $ 116 $ 174 $ 190
Land loans 60 62 69 99 104
Lot loans 216 218 228 275 303
-------- -------- -------- -------- --------
Total 373 385 413 548 597
-------- -------- -------- -------- --------
House loans
Spec 64 74 88 97 109
Sold 37 43 49 50 58
-------- -------- -------- -------- --------
Total 101 117 137 147 167
-------- -------- -------- -------- --------
Total residential construction $ 474 $ 502 $ 550 $ 695 $ 764
======== ======== ======== ======== ========
RESIDENTIAL CONSTRUCTION - ATLANTA MSA
Dirt loans
Acquisition & development $ 19 $ 20 $ 22 $ 30 $ 34
Land loans 15 16 19 23 27
Lot loans 22 22 24 32 45
-------- -------- -------- -------- --------
Total 56 58 65 85 106
-------- -------- -------- -------- --------
House loans
Spec 28 30 34 38 42
Sold 8 9 11 10 11
-------- -------- -------- -------- --------
Total 36 39 45 48 53
-------- -------- -------- -------- --------
Total residential construction $ 92 $ 97 $ 110 $ 133 $ 159
======== ======== ======== ======== ========
(1) Excludes total loans of $57.8 million, $70.8 million, $63.3 million,
$68.2 million and $75.2 million as of September 30, 2011, June 30, 2011,
March 31, 2011, December 31, 2010 and September 30, 2010, respectively,
that are covered by the loss-sharing agreement with the FDIC, related to
the acquisition of Southern Community Bank.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
2011 2010
----------------- --------
Linked Year over
Third Second Third Quarter Year
(in millions) Quarter Quarter Quarter Change Change
-------- -------- -------- --------- ---------
LOANS BY CATEGORY
Commercial (sec.by RE) $ 1,771 $ 1,742 $ 1,781 $ 29 $ (10)
Commercial construction 169 195 310 (26) (141)
Commercial & industrial 429 428 456 1 (27)
-------- -------- --------
Total commercial 2,369 2,365 2,547 4 (178)
Residential construction 474 502 764 (28) (290)
Residential mortgage 1,150 1,177 1,316 (27) (166)
Consumer / installment 117 119 133 (2) (16)
-------- -------- --------
Total loans $ 4,110 $ 4,163 $ 4,760 (53) (650)
======== ======== ========
LOANS BY MARKET
Atlanta MSA $ 1,192 $ 1,188 $ 1,365 4 (173)
Gainesville MSA 272 275 316 (3) (44)
North Georgia 1,478 1,500 1,755 (22) (277)
Western North Carolina 607 626 719 (19) (112)
Coastal Georgia 316 325 345 (9) (29)
East Tennessee 245 249 260 (4) (15)
-------- -------- --------
Total loans $ 4,110 $ 4,163 $ 4,760 (53) (650)
======== ======== ========
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 97 $ 105 $ 190 (8) (93)
Land loans 60 62 104 (2) (44)
Lot loans 216 218 303 (2) (87)
-------- -------- --------
Total 373 385 597 (12) (224)
-------- -------- --------
House loans
Spec 64 74 109 (10) (45)
Sold 37 43 58 (6) (21)
-------- -------- --------
Total 101 117 167 (16) (66)
-------- -------- --------
Total residential
construction $ 474 $ 502 $ 764 (28) (290)
======== ======== ========
RESIDENTIAL CONSTRUCTION - ATLANTA MSA
Dirt loans
Acquisition & development $ 19 $ 20 $ 34 (1) (15)
Land loans 15 16 27 (1) (12)
Lot loans 22 22 45 - (23)
-------- -------- --------
Total 56 58 106 (2) (50)
-------- -------- --------
House loans
Spec 28 30 42 (2) (14)
Sold 8 9 11 (1) (3)
-------- -------- --------
Total 36 39 53 (3) (17)
-------- -------- --------
Total residential
construction $ 92 $ 97 $ 159 (5) (67)
======== ======== ========
(1) Excludes total loans of $57.8 million, $70.8 million, $63.3 million,
$68.2 million and $75.2 million as of September 30, 2011, June 30, 2011,
March 31, 2011, December 31, 2010 and September 30, 2010, respectively,
that are covered by the loss-sharing agreement with the FDIC, related to
the acquisition of Southern Community Bank.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
Third Quarter 2011
----------------------------------------
Non-
performing Foreclosed Total
(in thousands) Loans Properties NPAs
------------ ------------ ------------
NPAs BY CATEGORY
Commercial (sec.by RE) $ 21,998 $ 8,880 $ 30,878
Commercial construction 11,370 5,862 17,232
Commercial & industrial 53,009 - 53,009
------------ ------------ ------------
Total commercial 86,377 14,742 101,119
Residential construction 34,472 21,561 56,033
Residential mortgage 22,671 7,960 30,631
Consumer / installment 964 - 964
------------ ------------ ------------
Total NPAs $ 144,484 $ 44,263 $ 188,747
============ ============ ============
Balance as a % of Unpaid
Principal 77.8% 33.4% 59.3%
NPAs BY MARKET
Atlanta MSA $ 13,350 $ 12,971 $ 26,321
Gainesville MSA 5,311 2,495 7,806
North Georgia 105,078 17,467 122,545
Western North Carolina 13,243 7,941 21,184
Coastal Georgia 5,600 2,354 7,954
East Tennessee 1,902 1,035 2,937
------------ ------------ ------------
Total NPAs $ 144,484 $ 44,263 $ 188,747
============ ============ ============
NPA ACTIVITY
Beginning Balance $ 71,065 $ 47,584 $ 118,649
Loans placed on non-accrual 103,365 - 103,365
Payments received (3,995) - (3,995)
Loan charge-offs (15,335) - (15,335)
Foreclosures (10,616) 10,616 -
Capitalized costs - 818 818
Note / property sales - (13,787) (13,787)
Loans held for sale - - -
Write downs - (1,772) (1,772)
Net gains (losses) on sales - 804 804
------------ ------------ ------------
Ending Balance $ 144,484 $ 44,263 $ 188,747
============ ============ ============
(1) Excludes non-performing loans and foreclosed properties covered by the
loss-sharing agreement with the FDIC, related to the acquisition of
Southern Community Bank.
(2) The NPA activity shown for the first quarter of 2011 is presented with
all activity related to loans transferred to the loans held for sale
classification on one line as if those loans were transferred to held for
sale at the beginning of the period.
(3) Includes charge-offs on loans related to United's previously announced
asset disposition plan. Such charge-offs severely distorted charge off
rates for the first and second quarters of 2011. A separate schedule has
been included in this earnings release presenting the components of net
charge-offs by loan category and geographic market for the first and
second quarters of 2011.
(4) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
Second Quarter 2011
----------------------------------------
Non-
performing Foreclosed Total
(in thousands) Loans Properties NPAs
------------ ------------ ------------
NPAs BY CATEGORY
Commercial (sec.by RE) $ 17,764 $ 6,796 $ 24,560
Commercial construction 2,782 6,764 9,546
Commercial & industrial 1,998 - 1,998
------------ ------------ ------------
Total commercial 22,544 13,560 36,104
Residential construction 22,643 24,968 47,611
Residential mortgage 24,809 9,056 33,865
Consumer / installment 1,069 - 1,069
------------ ------------ ------------
Total NPAs $ 71,065 $ 47,584 $ 118,649
============ ============ ============
Balance as a % of Unpaid
Principal 64.5% 32.6% 46.3%
NPAs BY MARKET
Atlanta MSA $ 14,700 $ 11,239 $ 25,939
Gainesville MSA 4,505 3,174 7,679
North Georgia 28,117 21,278 49,395
Western North Carolina 15,153 8,953 24,106
Coastal Georgia 5,357 2,564 7,921
East Tennessee 3,233 376 3,609
------------ ------------ ------------
Total NPAs $ 71,065 $ 47,584 $ 118,649
============ ============ ============
NPA ACTIVITY
Beginning Balance $ 83,769 $ 54,378 $ 138,147
Loans placed on non-accrual 35,911 - 35,911
Payments received (7,702) - (7,702)
Loan charge-offs (18,888) - (18,888)
Foreclosures (22,025) 22,025 -
Capitalized costs - 20 20
Note / property sales - (28,939) (28,939)
Loans held for sale - - -
Write downs - (3,118) (3,118)
Net gains (losses) on sales - 3,218 3,218
------------ ------------ ------------
Ending Balance $ 71,065 $ 47,584 $ 118,649
============ ============ ============
(1) Excludes non-performing loans and foreclosed properties covered by the
loss-sharing agreement with the FDIC, related to the acquisition of
Southern Community Bank.
(2) The NPA activity shown for the first quarter of 2011 is presented with
all activity related to loans transferred to the loans held for sale
classification on one line as if those loans were transferred to held for
sale at the beginning of the period.
(3) Includes charge-offs on loans related to United's previously announced
asset disposition plan. Such charge-offs severely distorted charge off
rates for the first and second quarters of 2011. A separate schedule has
been included in this earnings release presenting the components of net
charge-offs by loan category and geographic market for the first and
second quarters of 2011.
(4) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
First Quarter 2011 (2)
----------------------------------------
Non-
performing Foreclosed Total
(in thousands) Loans Properties NPAs
------------ ------------ ------------
NPAs BY CATEGORY
Commercial (sec.by RE) $ 20,648 $ 7,886 $ 28,534
Commercial construction 3,701 11,568 15,269
Commercial & industrial 2,198 - 2,198
------------ ------------ ------------
Total commercial 26,547 19,454 46,001
Residential construction 32,038 25,807 57,845
Residential mortgage 23,711 9,117 32,828
Consumer / installment 1,473 - 1,473
------------ ------------ ------------
Total NPAs $ 83,769 $ 54,378 $ 138,147
============ ============ ============
Balance as a % of Unpaid
Principal 57.3% 30.3% 42.4%
NPAs BY MARKET
Atlanta MSA $ 21,501 $ 16,913 $ 38,414
Gainesville MSA 4,332 2,157 6,489
North Georgia 30,214 23,094 53,308
Western North Carolina 18,849 7,802 26,651
Coastal Georgia 5,847 3,781 9,628
East Tennessee 3,026 631 3,657
------------ ------------ ------------
Total NPAs $ 83,769 $ 54,378 $ 138,147
============ ============ ============
NPA ACTIVITY
Beginning Balance $ 179,094 $ 142,208 $ 321,302
Loans placed on non-accrual 54,730 - 54,730
Payments received (3,550) - (3,550)
Loan charge-offs (43,969) - (43,969)
Foreclosures (17,052) 17,052 -
Capitalized costs - 270 270
Note / property sales (11,400) (44,547) (55,947)
Loans held for sale (74,084) - (74,084)
Write downs - (48,585) (48,585)
Net gains (losses) on sales - (12,020) (12,020)
------------ ------------ ------------
Ending Balance $ 83,769 $ 54,378 $ 138,147
============ ============ ============
(1) Excludes non-performing loans and foreclosed properties covered by the
loss-sharing agreement with the FDIC, related to the acquisition of
Southern Community Bank.
(2) The NPA activity shown for the first quarter of 2011 is presented with
all activity related to loans transferred to the loans held for sale
classification on one line as if those loans were transferred to held for
sale at the beginning of the period.
(3) Includes charge-offs on loans related to United's previously announced
asset disposition plan. Such charge-offs severely distorted charge off
rates for the first and second quarters of 2011. A separate schedule has
been included in this earnings release presenting the components of net
charge-offs by loan category and geographic market for the first and
second quarters of 2011.
(4) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
Third Quarter Second Quarter First Quarter
2011 2011(3) 2011(3)
---------------- ----------------- -----------------
Net Net Net
Charge- Charge- Charge-
Net Offs to Net Offs to Net Offs to
Charge- Average Charge- Average Charge- Average
(in thousands) Offs Loans(4) Offs Loans(4) Offs Loans(4)
------- -------- -------- -------- -------- --------
NET CHARGE-OFFS BY CATEGORY
Commercial (sec.by
RE) $ 2,192 .50% $ 3,259 .76% $ 48,607 11.07%
Commercial
construction 1,625 3.54 869 1.70 49,715 76.95
Commercial &
industrial 420 .39 523 .49 4,040 3.64
------- -------- --------
Total commercial 4,237 .71 4,651 .79 102,362 16.66
Residential
construction 6,381 5.19 6,629 5.04 92,138 58.20
Residential mortgage 6,110 2.09 4,589 1.55 36,383 11.62
Consumer /
installment 818 2.75 614 2.04 691 2.16
------- -------- --------
Total $17,546 1.68 $ 16,483 1.58 $231,574 20.71
======= ======== ========
NET CHARGE-OFFS BY
MARKET
Atlanta MSA $ 2,813 .94% $ 2,920 .99% $ 56,489 17.86%
Gainesville MSA 1,804 2.64 2,318 3.36 8,616 11.93
North Georgia 8,124 2.16 6,575 1.72 123,305 29.66
Western North
Carolina 3,608 2.31 3,522 2.21 26,447 15.61
Coastal Georgia 709 .88 815 1.02 12,003 14.80
East Tennessee 488 .78 333 .54 4,714 7.47
------- -------- --------
Total $17,546 1.68 $ 16,483 1.58 $231,574 20.71
======= ======== ========
(1) Excludes non-performing loans and foreclosed properties covered by the
loss-sharing agreement with the FDIC, related to the acquisition of
Southern Community Bank.
(2) The NPA activity shown for the first quarter of 2011 is presented with
all activity related to loans transferred to the loans held for sale
classification on one line as if those loans were transferred to held for
sale at the beginning of the period.
(3) Includes charge-offs on loans related to United's previously announced
asset disposition plan. Such charge-offs severely distorted charge off
rates for the first and second quarters of 2011. A separate schedule has
been included in this earnings release presenting the components of net
charge-offs by loan category and geographic market for the first and
second quarters of 2011.
(4) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Net Charge-Off Summary(1)
Second Quarter 2011
-----------------------------------------
Problem
Asset
Disposition
(in thousands) Other Plan Total
------------- ------------ -------------
BY CATEGORY
Commercial (sec. by RE) $ 4,972 $ (1,713) $ 3,259
Commercial construction 2,201 (1,332) 869
Commercial & industrial 639 (116) 523
------------- ------------ -------------
Total commercial 7,812 (3,161) 4,651
Residential construction 9,471 (2,842) 6,629
Residential mortgage 5,844 (1,255) 4,589
Consumer / installment 625 (11) 614
------------- ------------ -------------
Total $ 23,752 $ (7,269) $ 16,483
============= ============ =============
BY MARKET
Atlanta MSA $ 4,875 $ (1,955) $ 2,920
Gainesville MSA 2,576 (258) 2,318
North Georgia 10,360 (3,785) 6,575
Western North Carolina 4,263 (741) 3,522
Coastal Georgia 1,206 (391) 815
East Tennessee 472 (139) 333
------------- ------------ -------------
Total $ 23,752 $ (7,269) $ 16,483
============= ============ =============
(1) This schedule presents net charge-offs by loan type and geographic
market separated between those charge offs related to United's first
quarter 2011 Problem Asset Disposition Plan including losses on loans sold
in the bulk loan sale transaction that closed on April 18, 2011 and all
other charge-offs. The charge-offs on the bulk loan sale recognized in the
first quarter were estimated based on indicative bids from prospective
buyers. Actual losses were less than estimated resulting in an adjustment
to the loss in the second quarter.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Net Charge-Off Summary(1)
First Quarter 2011
-----------------------------------------
Problem Asset
Disposition
(in thousands) Other Plan Total
------------- ------------- -------------
BY CATEGORY
Commercial (sec. by RE) $ 2,842 $ 45,765 $ 48,607
Commercial construction 1,146 48,569 49,715
Commercial & industrial 513 3,527 4,040
------------- ------------- -------------
Total commercial 4,501 97,861 102,362
Residential construction 10,643 81,495 92,138
Residential mortgage 4,989 31,394 36,383
Consumer / installment 383 308 691
------------- ------------- -------------
Total $ 20,516 $ 211,058 $ 231,574
============= ============= =============
BY MARKET
Atlanta MSA $ 3,296 $ 53,193 $ 56,489
Gainesville MSA 954 7,662 8,616
North Georgia 8,544 114,761 123,305
Western North Carolina 6,749 19,698 26,447
Coastal Georgia 341 11,662 12,003
East Tennessee 632 4,082 4,714
------------- ------------- -------------
Total $ 20,516 $ 211,058 $ 231,574
============= ============= =============
(1) This schedule presents net charge-offs by loan type and geographic
market separated between those charge offs related to United's first
quarter 2011 Problem Asset Disposition Plan including losses on loans sold
in the bulk loan sale transaction that closed on April 18, 2011 and all
other charge-offs. The charge-offs on the bulk loan sale recognized in the
first quarter were estimated based on indicative bids from prospective
buyers. Actual losses were less than estimated resulting in an adjustment
to the loss in the second quarter.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Net Charge-Off Summary(1)
First Six Months 2011
-----------------------------------------
Problem Asset
Disposition
(in thousands) Other Plan Total
------------- ------------- -------------
BY CATEGORY
Commercial (sec. by RE) $ 7,814 $ 44,052 $ 51,866
Commercial construction 3,347 47,237 50,584
Commercial & industrial 1,152 3,411 4,563
------------- ------------- -------------
Total commercial 12,313 94,700 107,013
Residential construction 20,114 78,653 98,767
Residential mortgage 10,833 30,139 40,972
Consumer / installment 1,008 297 1,305
------------- ------------- -------------
Total $ 44,268 $ 203,789 $ 248,057
============= ============= =============
BY MARKET
Atlanta MSA $ 8,171 $ 51,238 $ 59,409
Gainesville MSA 3,530 7,404 10,934
North Georgia 18,904 110,976 129,880
Western North Carolina 11,012 18,957 29,969
Coastal Georgia 1,547 11,271 12,818
East Tennessee 1,104 3,943 5,047
------------- ------------- -------------
Total $ 44,268 $ 203,789 $ 248,057
============= ============= =============
(1) This schedule presents net charge-offs by loan type and geographic
market separated between those charge offs related to United's first
quarter 2011 Problem Asset Disposition Plan including losses on loans sold
in the bulk loan sale transaction that closed on April 18, 2011 and all
other charge-offs. The charge-offs on the bulk loan sale recognized in the
first quarter were estimated based on indicative bids from prospective
buyers. Actual losses were less than estimated resulting in an adjustment
to the loss in the second quarter.
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Operations (Unaudited)
Three Months Ended
September 30,
--------------------
(in thousands, except per share data) 2011 2010
--------- ---------
Interest revenue:
Loans, including fees $ 59,294 $ 68,419
Investment securities, including tax exempt of $244,
$279, $754 and $886 14,568 14,711
Federal funds sold, commercial paper and deposits in
banks 261 719
--------- ---------
Total interest revenue 74,123 83,849
--------- ---------
Interest expense:
Deposits:
NOW 831 1,705
Money market 1,129 1,930
Savings 52 83
Time 9,086 16,099
--------- ---------
Total deposit interest expense 11,098 19,817
Federal funds purchased, repurchase agreements and
other short-term borrowings 1,081 1,068
Federal Home Loan Bank advances 441 796
Long-term debt 2,642 2,665
--------- ---------
Total interest expense 15,262 24,346
--------- ---------
Net interest revenue 58,861 59,503
Provision for loan losses 36,000 50,500
--------- ---------
Net interest revenue after provision for loan
losses 22,861 9,003
--------- ---------
Fee revenue:
Service charges and fees 7,534 7,648
Mortgage loan and other related fees 1,148 2,071
Brokerage fees 836 731
Securities gains, net - 2,491
Loss from prepayment of debt - (2,233)
Other 1,980 2,153
--------- ---------
Total fee revenue 11,498 12,861
--------- ---------
Total revenue 34,359 21,864
--------- ---------
Operating expenses:
Salaries and employee benefits 25,262 24,891
Communications and equipment 3,284 3,620
Occupancy 3,794 3,720
Advertising and public relations 1,052 1,128
Postage, printing and supplies 1,036 1,019
Professional fees 2,051 2,117
Foreclosed property 2,813 19,752
FDIC assessments and other regulatory charges 2,603 3,256
Amortization of intangibles 748 793
Other 3,877 4,610
Goodwill impairment - 210,590
Loss on sale of nonperforming assets - -
--------- ---------
Total operating expenses 46,520 275,496
--------- ---------
Loss from continuing operations before income taxes (12,161) (253,632)
Income tax benefit (5,959) (17,217)
--------- ---------
Net loss from continuing operations (6,202) (236,415)
Loss from discontinued operations, net of income
taxes - -
Gain from sale of subsidiary, net of income taxes
and selling costs - -
--------- ---------
Net loss (6,202) (236,415)
Preferred stock dividends and discount accretion 3,019 2,581
--------- ---------
Net loss available to common shareholders $ (9,221) $(238,996)
========= =========
Loss from continuing operations per common share -
Basic $ (.16) $ (12.62)
Loss from continuing operations per common share -
Diluted (.16) (12.62)
Loss per common share - Basic (.16) (12.62)
Loss per common share - Diluted (.16) (12.62)
Weighted average common shares outstanding - Basic 57,599 18,936
Weighted average common shares outstanding - Diluted 57,599 18,936
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Operations (Unaudited)
Nine Months Ended
September 30,
----------------------
(in thousands, except per share data) 2011 2010
---------- ----------
Interest revenue:
Loans, including fees $ 181,359 $ 211,245
Investment securities, including tax exempt of
$244, $279, $754 and $886 42,964 46,743
Federal funds sold, commercial paper and deposits
in banks 1,832 2,416
---------- ----------
Total interest revenue 226,155 260,404
---------- ----------
Interest expense:
Deposits:
NOW 3,191 5,304
Money market 4,656 5,516
Savings 193 250
Time 31,813 54,015
---------- ----------
Total deposit interest expense 39,853 65,085
Federal funds purchased, repurchase agreements and
other short-term borrowings 3,197 3,162
Federal Home Loan Bank advances 1,601 2,747
Long-term debt 8,169 7,994
---------- ----------
Total interest expense 52,820 78,988
---------- ----------
Net interest revenue 173,335 181,416
Provision for loan losses 237,000 187,000
---------- ----------
Net interest revenue after provision for loan
losses (63,665) (5,584)
---------- ----------
Fee revenue:
Service charges and fees 21,862 23,088
Mortgage loan and other related fees 3,594 5,151
Brokerage fees 2,204 1,884
Securities gains, net 838 2,552
Loss from prepayment of debt (791) (2,233)
Other 9,534 5,664
---------- ----------
Total fee revenue 37,241 36,106
---------- ----------
Total revenue (26,424) 30,522
---------- ----------
Operating expenses:
Salaries and employee benefits 76,622 72,841
Communications and equipment 10,006 10,404
Occupancy 11,673 11,370
Advertising and public relations 3,347 3,523
Postage, printing and supplies 3,239 3,009
Professional fees 7,731 6,238
Foreclosed property 69,603 45,105
FDIC assessments and other regulatory charges 11,660 10,448
Amortization of intangibles 2,270 2,389
Other 14,368 12,707
Goodwill impairment - 210,590
Loss on sale of nonperforming assets - 45,349
---------- ----------
Total operating expenses 210,519 433,973
---------- ----------
Loss from continuing operations before income
taxes (236,943) (403,451)
Income tax benefit (95,872) (73,046)
---------- ----------
Net loss from continuing operations (141,071) (330,405)
Loss from discontinued operations, net of income
taxes - (101)
Gain from sale of subsidiary, net of income taxes
and selling costs - 1,266
---------- ----------
Net loss (141,071) (329,240)
Preferred stock dividends and discount accretion 8,813 7,730
---------- ----------
Net loss available to common shareholders $ (149,884) $ (336,970)
========== ==========
Loss from continuing operations per common share -
Basic $ (4.41) $ (17.89)
Loss from continuing operations per common share -
Diluted (4.41) (17.89)
Loss per common share - Basic (4.41) (17.82)
Loss per common share - Diluted (4.41) (17.82)
Weighted average common shares outstanding - Basic 33,973 18,905
Weighted average common shares outstanding - Diluted 33,973 18,905
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
(in thousands, except share and September 30, December 31, September 30,
per share data) 2011 2010 2010
------------- ------------ -------------
(unaudited) (audited) (unaudited)
ASSETS
Cash and due from banks $ 57,780 $ 95,994 $ 104,033
Interest-bearing deposits in
banks 241,440 111,901 64,408
Federal funds sold, commercial
paper and short-term
investments - 441,562 108,579
------------- ------------ -------------
Cash and cash equivalents 299,220 649,457 277,020
Securities available for sale 1,769,083 1,224,417 1,053,518
Securities held to maturity
(fair value $369,020, $267,988
and $263,012) 353,739 265,807 256,694
Mortgage loans held for sale 22,050 35,908 20,630
Loans, net of unearned income 4,109,875 4,604,126 4,759,504
Less allowance for loan losses 146,092 174,695 174,613
------------- ------------ -------------
Loans, net 3,963,783 4,429,431 4,584,891
Assets covered by loss sharing
agreements with the FDIC 83,623 131,887 144,581
Premises and equipment, net 176,839 178,239 178,842
Accrued interest receivable 19,744 24,299 24,672
Goodwill and other intangible
assets 9,175 11,446 12,217
Foreclosed property 44,263 142,208 129,964
Net deferred tax asset 264,275 166,937 146,831
Other assets 153,329 183,160 183,189
------------- ------------ -------------
Total assets $ 7,159,123 $ 7,443,196 $ 7,013,049
============= ============ =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Deposits:
Demand $ 966,452 $ 793,414 $ 783,251
NOW 1,299,512 1,424,781 1,338,371
Money market 1,030,370 891,252 804,644
Savings 200,231 183,894 186,617
Time:
Less than $100,000 1,393,559 1,496,700 1,498,379
Greater than $100,000 905,183 1,002,359 1,033,132
Brokered 209,998 676,772 354,243
------------- ------------ -------------
Total deposits 6,005,305 6,469,172 5,998,637
Federal funds purchased,
repurchase agreements, and
other short-term borrowings 102,883 101,067 103,780
Federal Home Loan Bank advances 40,625 55,125 55,125
Long-term debt 120,206 150,146 150,126
Unsettled securities purchases 10,585 - -
Accrued expenses and other
liabilities 31,302 32,171 42,906
------------- ------------ -------------
Total liabilities 6,310,906 6,807,681 6,350,574
------------- ------------ -------------
Shareholders' equity:
Preferred stock, $1 par value;
10,000,000 shares authorized;
Series A; $10 stated value;
21,700 shares issued and
outstanding 217 217 217
Series B; $1,000 stated
value; 180,000 shares
issued and outstanding 176,739 175,711 175,378
Series D; $1,000 stated
value; 16,613 shares issued
and outstanding 16,613 - -
Common stock, $1 par value;
100,000,000 shares
authorized; 41,595,692,
18,937,001 and 18,886,660
shares issued and outstanding 41,596 18,937 18,887
Common stock, non-voting, $1
par value; 30,000,000 shares
authorized; 15,914,209 shares
issued and outstanding 15,914 - -
Common stock issuable; 88,501,
67,287 and 61,119 shares 3,590 3,894 3,961
Capital surplus 1,052,690 741,244 740,151
Accumulated deficit (485,451) (335,567) (316,587)
Accumulated other
comprehensive income 26,309 31,079 40,468
------------- ------------ -------------
Total shareholders' equity 848,217 635,515 662,475
------------- ------------ -------------
Total liabilities and
shareholders' equity $ 7,159,123 $ 7,443,196 $ 7,013,049
============= ============ =============
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
2011
------------------------------
Average Avg.
(dollars in thousands, taxable equivalent) Balance Interest Rate
----------- ---------- ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,193,951 $ 59,394 5.62%
Taxable securities (3) 2,125,154 14,324 2.70
Tax-exempt securities (1)(3) 24,675 399 6.47
Federal funds sold and other interest-
earning assets 286,194 426 .60
----------- ----------
Total interest-earning assets 6,629,974 74,543 4.47
----------- ----------
Non-interest-earning assets:
Allowance for loan losses (128,654)
Cash and due from banks 53,500
Premises and equipment 177,798
Other assets (3) 528,461
-----------
Total assets $ 7,261,079
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,258,929 831 .26
Money market 1,024,559 1,129 .44
Savings 199,793 52 .10
Time less than $100,000 1,448,024 4,539 1.24
Time greater than $100,000 940,864 3,456 1.46
Brokered 260,423 1,091 1.66
----------- ----------
Total interest-bearing deposits 5,132,592 11,098 .86
----------- ----------
Federal funds purchased and other
borrowings 103,850 1,081 4.13
Federal Home Loan Bank advances 40,625 441 4.31
Long-term debt 138,457 2,642 7.57
----------- ----------
Total borrowed funds 282,932 4,164 5.84
----------- ----------
Total interest-bearing liabilities 5,415,524 15,262 1.12
----------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 928,788
Other liabilities 57,427
-----------
Total liabilities 6,401,739
Shareholders' equity 859,340
-----------
Total liabilities and shareholders'
equity $ 7,261,079
===========
Net interest revenue $ 59,281
==========
Net interest-rate spread 3.35%
======
Net interest margin (4) 3.55%
======
(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 gains of $37.9 million in 2011 and $45.4 million in 2010 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.
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
2010
------------------------------
Average Avg.
(dollars in thousands, taxable equivalent) Balance Interest Rate
----------- ---------- ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,896,471 $ 68,540 5.55%
Taxable securities (3) 1,384,682 14,431 4.17
Tax-exempt securities (1)(3) 26,481 459 6.93
Federal funds sold and other interest-
earning assets 368,108 930 1.01
----------- ----------
Total interest-earning assets 6,675,742 84,360 5.02
----------- ----------
Non-interest-earning assets:
Allowance for loan losses (194,300)
Cash and due from banks 107,825
Premises and equipment 179,839
Other assets (3) 752,780
-----------
Total assets $ 7,521,886
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,318,779 1,705 .51
Money market 781,903 1,930 .98
Savings 186,123 83 .18
Time less than $100,000 1,541,772 7,190 1.85
Time greater than $100,000 1,065,789 5,506 2.05
Brokered 573,606 3,403 2.35
----------- ----------
Total interest-bearing deposits 5,467,972 19,817 1.44
----------- ----------
Federal funds purchased and other
borrowings 104,370 1,068 4.06
Federal Home Loan Bank advances 80,220 796 3.94
Long-term debt 150,119 2,665 7.04
----------- ----------
Total borrowed funds 334,709 4,529 5.37
----------- ----------
Total interest-bearing liabilities 5,802,681 24,346 1.66
----------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 789,231
Other liabilities 74,482
-----------
Total liabilities 6,666,394
Shareholders' equity 855,492
-----------
Total liabilities and shareholders'
equity $ 7,521,886
===========
Net interest revenuea $ 60,014
==========
Net interest-rate spread 3.36%
======
Net interest margin (4) 3.57%
======
(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 gains of $37.9 million in 2011 and $45.4 million in 2010 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.
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Nine Months Ended September 30,
2011
------------------------------
Average Avg.
(dollars in thousands, taxable equivalent) Balance Interest Rate
----------- ---------- ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,351,524 $ 181,422 5.57%
Taxable securities (3) 1,926,365 42,210 2.92
Tax-exempt securities (1)(3) 25,178 1,234 6.53
Federal funds sold and other interest-
earning assets 514,392 2,573 .67
----------- ----------
Total interest-earning assets 6,817,459 227,439 4.46
----------- ----------
Non-interest-earning assets:
Allowance for loan losses (145,689)
Cash and due from banks 102,251
Premises and equipment 178,694
Other assets (3) 539,177
-----------
Total assets $ 7,491,892
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,313,752 3,191 .32
Money market 977,863 4,656 .64
Savings 194,433 193 .13
Time less than $100,000 1,509,753 14,980 1.33
Time greater than $100,000 973,335 11,480 1.58
Brokered 475,687 5,353 1.50
----------- ----------
Total interest-bearing deposits 5,444,823 39,853 .98
----------- ----------
Federal funds purchased and other
borrowings 102,711 3,197 4.16
Federal Home Loan Bank advances 49,442 1,601 4.33
Long-term debt 146,221 8,169 7.47
----------- ----------
Total borrowed funds 298,374 12,967 5.81
----------- ----------
Total interest-bearing liabilities 5,743,197 52,820 1.23
----------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 884,417
Other liabilities 69,131
-----------
Total liabilities 6,696,745
Shareholders' equity 795,147
-----------
Total liabilities and shareholders'
equity $ 7,491,892
===========
Net interest revenue $ 174,619
==========
Net interest-rate spread 3.23%
======
Net interest margin (4) 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 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 gains of $32.4 million in 2011 and $44.1 million in 2010 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.
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Nine Months Ended September 30,
2010
------------------------------
Average Avg.
(dollars in thousands, taxable equivalent) Balance Interest Rate
----------- ---------- ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 5,025,739 $ 211,399 5.62%
Taxable securities (3) 1,458,120 45,857 4.19
Tax-exempt securities (1)(3) 28,470 1,450 6.79
Federal funds sold and other interest-
earning assets 357,881 3,202 1.19
----------- ----------
Total interest-earning assets 6,870,210 261,908 5.09
----------- ----------
Non-interest-earning assets:
Allowance for loan losses (191,888)
Cash and due from banks 104,446
Premises and equipment 180,936
Other assets (3) 758,903
-----------
Total assets $ 7,722,607
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,335,034 5,304 .53
Money market 750,685 5,516 .98
Savings 184,420 250 .18
Time less than $100,000 1,612,691 23,968 1.99
Time greater than $100,000 1,110,195 18,378 2.21
Brokered 650,588 11,669 2.40
----------- ----------
Total interest-bearing deposits 5,643,613 65,085 1.54
----------- ----------
Federal funds purchased and other
borrowings 103,697 3,162 4.08
Federal Home Loan Bank advances 100,727 2,747 3.65
Long-term debt 150,098 7,994 7.12
----------- ----------
Total borrowed funds 354,522 13,903 5.24
----------- ----------
Total interest-bearing liabilities 5,998,135 78,988 1.76
----------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 755,845
Other liabilities 64,622
-----------
Total liabilities 6,818,602
Shareholders' equity 904,005
-----------
Total liabilities and shareholders'
equity $ 7,722,607
===========
Net interest revenue $ 182,920
==========
Net interest-rate spread 3.33%
======
Net interest margin (4) 3.56%
======
(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 gains of $32.4 million in 2011 and $44.1 million in 2010 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:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Email Contact
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