SOURCE: United Community Banks, Inc.
October 23, 2007 08:00 ET
United Community Banks, Inc. Reports 10 Percent Gain in Diluted Earnings per Share for Third Quarter 2007
BLAIRSVILLE, GA--(Marketwire - October 23, 2007) - United Community Banks, Inc. (NASDAQ: UCBI)
HIGHLIGHTS:
-- Third Quarter Earnings
Diluted Earnings per Share of 46 Cents - Up 10 Percent
Net Income of $22.5 Million - Up 29 Percent
-- Loan and Fee Revenue Growth Drive Performance
-- Opened De Novo Office in Savannah
United Community Banks, Inc. (NASDAQ: UCBI) today announced diluted
earnings per share of 46 cents for the third quarter of 2007, a 10 percent
increase from 42 cents a year ago. Total revenue on a taxable equivalent
basis was $83.6 million for the quarter compared with $69.3 million for the
third quarter of 2006, a 21 percent increase. Net income for the third
quarter of 2007 was $22.5 million, compared with $17.4 million for the same
period of 2006, up 29 percent. Return on tangible equity was 17.54 percent
and return on assets was 1.11 percent for the third quarter, compared with
17.29 percent and 1.09 percent a year ago, respectively.
"We are pleased to report solid year-over-year performance, especially as
the slow down in the residential real estate market makes this a
challenging time for community banks," said Jimmy Tallent, president and
chief executive officer. "We will continue to face challenges in the
quarters to come; however, we are well-prepared to overcome obstacles that
may come our way."
For the first nine months, diluted operating earnings per share increased
11 percent to $1.36 compared with $1.22 for the first nine months of 2006.
Year-to-date taxable equivalent operating revenue increased 20 percent to
$240.2 million versus $200.3 million for 2006. Net operating income for
the first nine months of 2007 was $63.0 million, up 25 percent, compared
with $50.4 million for 2006. Earnings measures for the first nine months
of 2007 are presented on an operating basis that excludes a second quarter
$15 million special provision for loan losses relating to two failed
residential real estate developments near Spruce Pine, North Carolina.
Because this provision was the result of a fraud-related matter that is
considered an isolated and non-recurring event, management believes the
presentation of operating earnings is useful for understanding underlying
core earnings trends.
Loans increased by $987 million, or 20 percent, from a year ago. This
increase included $267 million from the Southern National Bank acquisition
in December 2006 and $534 million from the First Bank of the South
acquisition in June 2007. Excluding acquired loans, core loan growth was 4
percent for the past 12 months and down slightly from the second quarter.
"We have seen a softening in residential construction loans and the housing
markets, particularly in the Atlanta region," Tallent said. "Last quarter,
we targeted loan growth for the remainder of 2007 to be in the range of 4
to 8 percent annualized. Given the uncertainties and slow down in the
housing market, we expect that loan growth during the fourth quarter will
be below our targeted range."
Deposits increased $845 million, or 16 percent, from a year ago due to
acquisitions. "Total deposits, excluding acquired deposits, decreased by
less than $50 million from the prior year due to our banks intentionally
letting non-relationship time deposits run off as loan demand declined,"
commented Tallent. "Excluding these time deposits, our customer deposits
were up about $192 million from the prior year and down $41 million from
the second quarter. We believe this is temporary. The number of customer
relationships continue to increase and our customer satisfaction scores
remain above 90 percent and at historical highs."
United added its 111th banking office during the third quarter with the
opening of a third location in Savannah, Georgia. "We have slowed our
expansion efforts from previous levels as we monitor loan growth trends in
our markets," commented Tallent.
For the third quarter of 2007, taxable equivalent net interest revenue of
$71.7 million reflected an increase of $10.8 million, or 18 percent, from
the third quarter of 2006. The year-to-date increase was $29.4 million, or
17 percent, compared to the first nine months of 2006. Taxable equivalent
net interest margin was 3.89 percent for the third quarter, compared with
3.94 percent for the second quarter of 2007 and 4.07 percent for the third
quarter of 2006. "Consistent with the industry, our net interest margin
continues to be under pressure due to the inverted interest rate curve and
competitive pricing," stated Tallent. "The decrease over the past two
quarters was primarily due to the higher level of non-accrual loans and a
slight change in the mix of earning assets."
The third quarter provision for loan losses was $3.7 million. Net
charge-offs were $5.2 million compared with $2.1 million for the second
quarter and $1.3 million a year ago. Annualized net charge-offs to average
loans was 35 basis points for the third quarter compared to 15 basis points
for the second quarter and 11 basis points for the third quarter of 2006.
"Two thirds of the charge-offs this quarter related to two credits that we
actively worked to move out of the bank," Tallent said. "One of the
credits was sold prior to quarter-end and the other is under contract for
sale in the fourth quarter. We are adequately reserved to handle this
level of charge-offs and will continue to aggressively move non-performing
credits off of our balance sheet."
At quarter-end, non-performing assets totaled $63.3 million, including
$23.6 million of fraud-related loans associated with the Spruce Pine
developments. Excluding Spruce Pine loans, non-performing assets were
$39.8 million, compared with $20.0 million at June 30, 2007 and $9.3
million a year ago. Excluding the Spruce Pine loans, non-performing assets
as a percentage of total assets was 49 basis points at quarter-end compared
with 25 basis points at June 30, 2007 and 14 basis points at September 30,
2006. The Spruce Pine non-performing assets as a percentage of total
assets was 29 basis points. "We continued negotiations with borrowers
during the third quarter and have been in contact with all of the borrowers
or their counsel," commented Tallent. "We have not taken any charge-offs
on these loans; however, we expect to begin the foreclosure process in the
fourth quarter, as necessary, if ongoing negotiations fail to produce an
acceptable outcome. We continue to believe that the $15 million special
provision last quarter will be adequate."
"Non-performing assets, until recently, were at unsustainably low levels
and at the lower end of our historic 20 to 35 basis point range," Tallent
said. "During this quarter, excluding the Spruce Pine loans,
non-performing assets increased above this range to 49 basis points. Most
of the rise was construction-related due to softening in the market.
Overall, our credit quality this quarter is a reflection of the current
environment. Our markets are affected by the slow down in housing and
construction and we continue to see a buildup of lot inventory in the
Atlanta region and a standstill in new construction lending. Although we
don't know the length of this current cycle, it may be several quarters
before we return to our historical range of non-performing assets. Even
with the rise in non-performers, our credit quality ratios compare
favorably to our peers and we have an experienced team to handle these
issues."
Fee revenue of $15.6 million for the third quarter reflected an increase of
$3.5 million, or 29 percent, from $12.1 million for the third quarter of
2006. Service charges and fees on deposit accounts of $7.9 million
increased $941,000, or 14 percent, from the third quarter of 2006 due to
growth in transactions and new accounts and higher ATM and debit card
usage. Consulting fees increased $341,000 to $2.4 million, 17 percent from
a year ago and a record quarter, reflecting strong growth in the advisory
services practice. Other fee revenue of $2.1 million included $720,000 of
earnings from bank-owned life insurance that was added in the second
quarter of 2007.
Operating expenses of $48.2 million reflected an increase of $6.7 million,
or 16 percent, from the third quarter of 2006. Salaries and employee
benefit costs totaled $29.7 million, which was $3.6 million, or 14 percent,
higher than the third quarter of 2006. Acquisitions accounted for
approximately $2 million of the increase, with the rest primarily due to
staffing new banking office locations. Professional fees increased
$982,000 to $1.9 million, reflecting higher fees associated with corporate
initiatives, loan work-outs and foreclosures. Occupancy expense increased
$672,000 to $3.6 million attributable to the higher costs of operating
additional banking offices. Other expenses of $5.2 million were $1.4
million higher than a year ago; half of this increase was due to higher
FDIC insurance premiums beginning in the third quarter of 2007 and the
balance was primarily from acquisitions and new banking offices.
"Our operating efficiency ratio of 55.3 percent for the quarter was better
than our long-term efficiency target range of 56 to 58 percent," Tallent
said. "This ratio shows that despite the environmental difficulties, we
have been able to maintain disciplined expense controls."
"Last quarter, the Board of Directors increased the level of our stock
purchase program to 2 million shares," noted Tallent. "During the third
quarter, we purchased 1.3 million shares at an average cost of $24.43.
With our stock price at its current level and slower balance sheet growth,
we believe that purchasing our stock is an attractive use of capital.
Therefore, the Board has authorized an increase in the stock purchase
program to 3 million shares through December 2008. We will continue to
monitor our stock price and purchase shares to demonstrate our commitment
to enhancing shareholder value."
"We remain committed to building long-term shareholder value through our
ability to deliver strong growth in earnings per share, to expand the
franchise and to provide superior customer service," said Tallent. "With
the continued slower pace of loan growth, the outlook for the full year of
2007 is for operating earnings per share growth of 9 to 11 percent."
"Although these are very challenging times for financial institutions,
every economic cycle is temporary," stated Tallent. "At the same time, we
recognize that our outlook for 2008 will be tempered by the slower pace of
loan growth. We will provide an update to this outlook with our year-end
results during the January conference call. The current conditions in the
banking industry and our overall performance confirm that our operating
model works and will enable us to manage through this cycle. The
structure, principles and philosophies that brought us to where we are
today remain in place. We are always committed to the unparalleled service
that our customers have come to expect from us."
Conference Call
United Community Banks will hold a conference call on Tuesday, October 23,
2007, at 11 a.m. ET to discuss the contents of this news release, as well
as business highlights for the quarter and the financial outlook for 2007.
The telephone number for the conference call is (866) 202-3109 and the pass
code is "UCBI." The conference call will also be available by web cast
within the Investor Relations section of the company's web site 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 $8.2
billion and operates 27 community banks with 111 banking offices located
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 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 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 "Forward Looking Statements" on page 4 of United Community Banks,
Inc.'s annual report filed on Form 10-K with the Securities and Exchange
Commission.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
2007
-------------------------------------
(in thousands, except per share Third Second First
data; taxable equivalent) Quarter Quarter Quarter
----------- ----------- -----------
INCOME SUMMARY
Interest revenue $ 144,884 $ 136,237 $ 129,028
Interest expense 73,203 68,270 63,923
----------- ----------- -----------
Net interest revenue 71,681 67,967 65,105
Provision for loan losses (1) 3,700 3,700 3,700
Fee revenue 15,615 16,554 14,382
----------- ----------- -----------
Total operating revenue 83,596 80,821 75,787
Operating expenses 48,182 47,702 44,841
----------- ----------- -----------
Income before taxes 35,414 33,119 30,946
Income taxes 12,878 12,043 11,601
----------- ----------- -----------
Net operating income 22,536 21,076 19,345
Fraud loss provision, net of tax (1) - 9,165 -
----------- ----------- -----------
Net income $ 22,536 $ 11,911 $ 19,345
=========== =========== ===========
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic $ .47 $ .47 $ .45
Diluted .46 .46 .44
Return on tangible equity (2)(3)(4) 17.54% 17.52% 17.18%
Return on assets (4) 1.11 1.12 1.11
Dividend payout ratio 19.15 19.15 20.00
GAAP PERFORMANCE MEASURES
Per common share:
Basic earnings $ .47 $ .26 $ .45
Diluted earnings .46 .26 .44
Cash dividends declared .09 .09 .09
Book value 17.53 16.98 14.83
Tangible book value (3) 10.82 10.44 11.06
Key performance ratios:
Return on equity (2)(4) 10.66 7.05 12.47
Return on assets (4) 1.11 .64 1.11
Net interest margin (4) 3.89 3.94 3.99
Efficiency ratio 55.34 56.59 56.56
Dividend payout ratio 19.15 34.62 20.00
Equity to assets 10.32 8.94 8.80
Tangible equity to assets (3) 6.65 6.65 6.66
ASSET QUALITY (5)
Allowance for loan losses $ 90,935 $ 92,471 $ 68,804
Non-performing assets 63,337 43,601 14,290
Net charge-offs 5,235 2,124 1,462
Allowance for loan losses to loans 1.53% 1.54% 1.27%
Non-performing assets to total
assets .77 .54 .20
Net charge-offs to average loans (4) .35 .15 .11
AVERAGE BALANCES
Loans $ 5,966,933 $ 5,619,950 $ 5,402,860
Investment securities 1,308,192 1,242,448 1,153,208
Earning assets 7,332,492 6,915,134 6,599,035
Total assets 8,083,739 7,519,392 7,092,710
Deposits 6,246,319 5,945,633 5,764,426
Shareholders' equity 834,094 672,348 624,100
Common shares - basic 48,348 44,949 43,000
Common shares - diluted 48,977 45,761 43,912
AT PERIOD END
Loans $ 5,952,749 $ 5,999,093 $ 5,402,198
Investment securities 1,296,826 1,213,659 1,150,424
Total assets 8,180,600 8,087,667 7,186,602
Deposits 6,154,308 6,361,269 5,841,687
Shareholders' equity 833,761 828,731 638,456
Common shares outstanding 47,542 48,781 43,038
(1) Excludes effect of special $15 million fraud related provision for
loan losses recorded in the second quarter of 2007.
(2) Net income available to common shareholders, which excludes 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) Asset Quality measures for the third quarter, second quarter and
first nine months of 2007 include $23.6 million in nonperforming
loans that relate to two real estate developments. Additionally,
in the second quarter of 2007, United recorded a $15 million
special provision for loan losses for expected losses related to
this matter. This fraud-related matter was isolated and considered
to be non-recurring. Excluding the non-recurring amounts, the
allowance for loan losses would be $75,935 and $77,471, the
allowance for loan losses to loans ratio would be 1.28% and 1.29%,
non-performing assets would be $39,749 and $19,968, and the ratio
of non-performing assets to total assets would be .49% and .25% at
September 30, 2007 and June 30, 2007, respectively.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
Third
2006 Quarter
------------------------ 2007-
(in thousands, except per share Fourth Third 2006
data; taxable equivalent) Quarter Quarter Change
----------- ----------- -------
INCOME SUMMARY
Interest revenue $ 123,463 $ 116,304
Interest expense 60,912 55,431
----------- -----------
Net interest revenue 62,551 60,873 18%
Provision for loan losses (1) 3,700 3,700
Fee revenue 13,215 12,146 29
----------- -----------
Total operating revenue 72,066 69,319 21
Operating expenses 42,521 41,441 16
----------- -----------
Income before taxes 29,545 27,878 27
Income taxes 11,111 10,465
----------- -----------
Net operating income 18,434 17,413 29
Fraud loss provision, net of tax (1) - -
----------- -----------
Net income $ 18,434 $ 17,413 29
=========== ===========
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic $ .45 $ .43 9
Diluted .44 .42 10
Return on tangible equity (2)(3)(4) 17.49% 17.29%
Return on assets (4) 1.10 1.09
Dividend payout ratio 17.78 18.60
GAAP PERFORMANCE MEASURES
Per common share:
Basic earnings $ .45 $ .43 9
Diluted earnings .44 .42 10
Cash dividends declared .08 .08 13
Book value 14.37 13.07 34
Tangible book value (3) 10.57 10.16 6
Key performance ratios:
Return on equity (2)(4) 13.26 13.22
Return on assets (4) 1.10 1.09
Net interest margin (4) 3.99 4.07
Efficiency ratio 55.93 56.19
Dividend payout ratio 17.78 18.60
Equity to assets 8.21 8.04
Tangible equity to assets (3) 6.46 6.35
ASSET QUALITY (5)
Allowance for loan losses $ 66,566 $ 60,901
Non-performing assets 13,654 9,347
Net charge-offs 1,930 1,307
Allowance for loan losses to loans 1.24% 1.23%
Non-performing assets to total assets .19 .14
Net charge-offs to average loans (4) .15 .11
AVERAGE BALANCES
Loans $ 5,134,721 $ 4,865,886 23
Investment securities 1,059,125 1,029,981 27
Earning assets 6,225,943 5,942,710 23
Total assets 6,669,950 6,350,205 27
Deposits 5,517,696 5,085,168 23
Shareholders' equity 547,419 510,791 63
Common shares - basic 41,096 40,223
Common shares - diluted 42,311 41,460
AT PERIOD END
Loans $ 5,376,538 $ 4,965,365 20
Investment securities 1,107,153 980,273 32
Total assets 7,101,249 6,455,290 27
Deposits 5,772,886 5,309,219 16
Shareholders' equity 616,767 526,734 58
Common shares outstanding 42,891 40,269
(1) Excludes effect of special $15 million fraud related provision for
loan losses recorded in the second quarter of 2007.
(2) Net income available to common shareholders, which excludes 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) Asset Quality measures for the third quarter, second quarter and first
nine months of 2007 include $23.6 million in nonperforming loans that
relate to two real estate developments. Additionally, in the second
quarter of 2007, United recorded a $15 million special provision for loan
losses for expected losses related to this matter. This fraud-related
matter was isolated and considered to be non-recurring. Excluding the
non-recurring amounts, the allowance for loan losses would be $75,935 and
$77,471, the allowance for loan losses to loans ratio would be 1.28% and
1.29%, non-performing assets would be $39,749 and $19,968, and the ratio of
non-performing assets to total assets would be .49% and .25% at September
30, 2007 and June 30, 2007, respectively.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
For the Nine YTD
Months Ended 2007-
(in thousands, except per share ------------------------ 2006
data; taxable equivalent) 2007 2006 Change
----------- ----------- -------
INCOME SUMMARY
Interest revenue $ 410,150 $ 323,232
Interest expense 205,396 147,903
----------- -----------
Net interest revenue 204,754 175,329 17%
Provision for loan losses (1) 11,100 10,900
Fee revenue 46,551 35,880 30
----------- -----------
Total operating revenue 240,205 200,309 20
Operating expenses 140,725 119,549 18
----------- -----------
Income before taxes 99,480 80,760 23
Income taxes 36,523 30,379
----------- -----------
Net operating income 62,957 50,381 25
Fraud loss provision, net of tax (1) 9,165 -
----------- -----------
Net income $ 53,792 $ 50,381 7
=========== ===========
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic $ 1.38 $ 1.25 10
Diluted 1.36 1.22 11
Return on tangible equity (2)(3)(4) 17.42% 17.54%
Return on assets (4) 1.11 1.09
Dividend payout ratio 19.57 19.20
GAAP PERFORMANCE MEASURES
Per common share:
Basic earnings $ 1.18 $ 1.25 (6)
Diluted earnings 1.16 1.22 (5)
Cash dividends declared .27 .24 13
Book value 17.53 13.07 34
Tangible book value (3) 10.77 10.16 6
Key performance ratios:
Return on equity (2)(4) 10.04 13.29
Return on assets (4) .95 1.09
Net interest margin (4) 3.94 4.07
Efficiency ratio 56.14 56.33
Dividend payout ratio 22.88 19.20
Equity to assets 9.39 8.01
Tangible equity to assets (3) 6.65 6.27
ASSET QUALITY (5)
Allowance for loan losses $ 90,935 $ 60,901
Non-performing assets 63,337 9,347
Net charge-offs 8,821 3,594
Allowance for loan losses to loans 1.53% 1.23%
Non-performing assets to total assets .77 .14
Net charge-offs to average loans (4) .21 .10
AVERAGE BALANCES
Loans $ 5,665,314 $ 4,688,512 21
Investment securities 1,235,183 1,036,092 19
Earning assets 6,951,573 5,760,055 21
Total assets 7,568,910 6,158,147 23
Deposits 5,987,225 4,848,848 23
Shareholders' equity 710,950 493,307 44
Common shares - basic 45,452 40,156
Common shares - diluted 46,235 41,327
AT PERIOD END
Loans $ 5,952,749 $ 4,965,365 20
Investment securities 1,296,826 980,273 32
Total assets 8,180,600 6,455,290 27
Deposits 6,154,308 5,309,219 16
Shareholders' equity 833,761 526,734 58
Common shares outstanding 47,542 40,269
(1) Excludes effect of special $15 million fraud related provision for
loan losses recorded in the second quarter of 2007.
(2) Net income available to common shareholders, which excludes 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) Asset Quality measures for the third quarter, second quarter and first
nine months of 2007 include $23.6 million in nonperforming loans that
relate to two real estate developments. Additionally, in the second
quarter of 2007, United recorded a $15 million special provision for loan
losses for expected losses related to this matter. This fraud-related
matter was isolated and considered to be non-recurring. Excluding the
non-recurring amounts, the allowance for loan losses would be $75,935 and
$77,471, the allowance for loan losses to loans ratio would be 1.28% and
1.29%, non-performing assets would be $39,749 and $19,968, and the ratio of
non-performing assets to total assets would be .49% and .25% at September
30, 2007 and June 30, 2007, respectively.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
2007 2006
----------------------- ---------------
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
(in millions) (1) (2)
------- ------- ------- ------- -------
LOANS BY CATEGORY
Commercial (sec. by RE) $ 1,441 $ 1,461 $ 1,227 $ 1,230 $ 1,158
Commercial & industrial 408 421 315 296 272
------- ------- ------- ------- -------
Total commercial 1,849 1,882 1,542 1,526 1,430
Construction & land dev 2,466 2,522 2,336 2,334 2,065
Residential mortgage 1,459 1,413 1,353 1,338 1,300
Consumer / installment 179 182 171 179 170
------- ------- ------- ------- -------
Total loans $ 5,953 $ 5,999 $ 5,402 $ 5,377 $ 4,965
======= ======= ======= ======= =======
LOANS BY MARKET
Atlanta Region $ 2,451 $ 2,518 $ 2,015 $ 2,005 $ 1,696
North Georgia 2,026 2,032 2,010 2,034 1,984
Coastal Georgia 402 396 372 358 343
Western North Carolina 834 816 782 773 752
East Tennessee 240 237 223 207 190
------- ------- ------- ------- -------
Total loans $ 5,953 $ 5,999 $ 5,402 $ 5,377 $ 4,965
======= ======= ======= ======= =======
(1) Acquired Gwinnett Commercial Group on June 1, 2007 with total loans of
$534 million in the Atlanta Region:
commercial (secured by RE) of $219 million; commercial & industrial of
$91 million; construction & land development of $193 million;
residential mortgage of $27 million and consumer / installment of $4
million.
(2) Acquired Southern Bancorp on December 1, 2006 with total loans of $267
million in the Atlanta Region:
commercial (secured by RE) of $38 million; commercial & industrial of
$6 million; construction & land development of $192 million;
residential mortgage of $25 million and consumer / installment of $7
million.
(3) Annualized.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
Linked
Quarter
Change(3) Year over Year Change
---------- ------------------------
Excluding
(in millions) Actual Actual Acquired
---------- ----------- ----------
LOANS BY CATEGORY
Commercial (sec. by RE) (5)% 24 % 2 %
Commercial & industrial (12) 50 14
Total commercial (7) 29 5
Construction & land dev (9) 19 1
Residential mortgage 13 12 8
Consumer / installment (7) 5 (1)
Total loans (3) 20 4
LOANS BY MARKET
Atlanta Region (11)% 45 % (3)%
North Georgia (1) 2 2
Coastal Georgia 6 17 17
Western North Carolina 9 11 11
East Tennessee 5 26 26
Total loans (3) 20 4
(1) Acquired Gwinnett Commercial Group on June 1, 2007 with total loans of
$534 million in the Atlanta Region:
commercial (secured by RE) of $219 million; commercial & industrial of
$91 million; construction & land development of $193 million;
residential mortgage of $27 million and consumer / installment of $4
million.
(2) Acquired Southern Bancorp on December 1, 2006 with total loans of $267
million in the Atlanta Region:
commercial (secured by RE) of $38 million; commercial & industrial of
$6 million; construction & land development of $192 million;
residential mortgage of $25 million and consumer / installment of $7
million.
(3) Annualized.
UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
(in thousands, except per share data)
Nine Months
Second Ended
Quarter September 30,
2007 2007
-------------- --------------
Special provision for fraud related loan
losses $ 15,000 $ 15,000
Income tax effect of special provision 5,835 5,835
-------------- --------------
After-tax effect of special
provision $ 9,165 $ 9,165
============== ==============
Net Income Reconciliation
Operating net income $ 21,076 $ 62,956
After-tax effect of special provision (9,165) (9,165)
-------------- --------------
Net income (GAAP) $ 11,911 $ 53,791
============== ==============
Basic Earnings Per Share Reconciliation
Basic operating earnings per share $ .47 $ 1.38
Per share effect of special provision (.21) (.20)
-------------- --------------
Basic earnings per share (GAAP) $ .26 $ 1.18
============== ==============
Diluted Earnings Per Share Reconciliation
Diluted operating earnings per share $ .46 $ 1.36
Per share effect of special provision (.20) (.20)
-------------- --------------
Diluted earnings per share (GAAP) $ .26 $ 1.16
============== ==============
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except per share --------------------- --------------------
data) 2007 2006 2007 2006
---------- --------- --------- ---------
Interest revenue:
Loans, including fees $ 127,213 $ 103,190 $ 361,085 $ 285,038
Investment securities:
Taxable 16,637 11,822 46,081 34,661
Tax exempt 428 474 1,313 1,497
Federal funds sold and
deposits in banks 134 365 272 685
---------- --------- --------- ---------
Total interest revenue 144,412 115,851 408,751 321,881
---------- --------- --------- ---------
Interest expense:
Deposits:
NOW 12,046 8,100 34,143 21,429
Money market 5,002 2,155 11,082 4,969
Savings 553 226 1,236 680
Time 42,863 34,694 126,467 89,679
---------- --------- --------- ---------
Total deposit interest
expense 60,464 45,175 172,928 116,757
Federal funds purchased,
repurchase agreements & other
short-term borrowings 4,738 2,254 10,226 5,814
Federal Home Loan Bank
advances 5,902 5,828 15,738 18,837
Long-term debt 2,100 2,174 6,505 6,495
---------- --------- --------- ---------
Total interest expense 73,204 55,431 205,397 147,903
---------- --------- --------- ---------
Net interest revenue 71,208 60,420 203,354 173,978
Provision for loan losses 3,700 3,700 26,100 10,900
---------- --------- --------- ---------
Net interest revenue after
provision for loan losses 67,508 56,720 177,254 163,078
---------- --------- --------- ---------
Fee revenue:
Service charges and fees 7,855 6,914 23,083 20,095
Mortgage loan and other
related fees 2,118 1,928 6,817 5,149
Consulting fees 2,381 2,040 6,369 5,196
Brokerage fees 895 784 3,031 2,430
Securities gains (losses), net 225 (382) 1,818 (385)
Losses on prepayment of
borrowings - (346) (1,164) (636)
Other 2,141 1,208 6,597 4,031
---------- --------- --------- ---------
Total fee revenue 15,615 12,146 46,551 35,880
---------- --------- --------- ---------
Total revenue 83,124 68,866 223,805 198,958
---------- --------- --------- ---------
Operating expenses:
Salaries and employee benefits 29,698 26,087 88,037 74,440
Communications and equipment 3,936 3,863 11,593 10,970
Occupancy 3,617 2,945 10,124 8,793
Advertising and public
relations 1,537 1,882 5,651 5,718
Postage, printing and supplies 1,479 1,379 4,819 4,184
Professional fees 1,920 938 5,409 3,168
Amortization of intangibles 771 503 1,968 1,509
Other 5,224 3,844 13,124 10,767
---------- --------- --------- ---------
Total operating expenses 48,182 41,441 140,725 119,549
---------- --------- --------- ---------
Income before income taxes 34,942 27,425 83,080 79,409
Income taxes 12,406 10,012 29,289 29,028
---------- --------- --------- ---------
Net income $ 22,536 $ 17,413 $ 53,791 $ 50,381
========== ========= ========= =========
Net income available to
common shareholders $ 22,532 $ 17,408 $ 53,777 $ 50,366
========== ========= ========= =========
Earnings per common share:
Basic $ .47 $ .43 $ 1.18 $ 1.25
Diluted .46 .42 1.16 1.22
Dividends per common share .09 .08 .27 .24
Weighted average common shares
outstanding:
Basic 48,348 40,223 45,452 40,156
Diluted 48,977 41,460 46,235 41,327
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
(in thousands, except share and September 30, December 31, September 30,
per share data) 2007 2006 2006
------------ ------------ ------------
(unaudited) (audited) (unaudited)
ASSETS
Cash and due from banks $ 162,710 $ 158,348 $ 130,038
Interest-bearing deposits in
banks 75,745 12,936 16,032
------------ ------------ ------------
Cash and cash equivalents 238,455 171,284 146,070
Securities available for sale 1,296,826 1,107,153 980,273
Mortgage loans held for sale 23,717 35,325 21,522
Loans, net of unearned income 5,952,749 5,376,538 4,965,365
Less allowance for loan
losses 90,935 66,566 60,901
------------ ------------ ------------
Loans, net 5,861,814 5,309,972 4,904,464
Premises and equipment, net 174,918 139,716 129,217
Accrued interest receivable 67,385 58,291 47,336
Goodwill and other intangible
assets 326,080 167,058 120,430
Other assets 191,405 112,450 105,978
------------ ------------ ------------
Total assets $ 8,180,600 $ 7,101,249 $ 6,455,290
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 737,357 $ 659,892 $ 666,891
NOW 1,464,956 1,307,654 1,104,516
Money market 495,092 255,862 236,469
Savings 195,132 175,631 167,531
Time:
Less than $100,000 1,595,278 1,650,906 1,523,843
Greater than $100,000 1,358,302 1,397,245 1,248,738
Brokered 308,191 325,696 361,231
------------ ------------ ------------
Total deposits 6,154,308 5,772,886 5,309,219
Federal funds purchased,
repurchase agreements & other
short-term borrowings 502,081 65,884 56,026
Federal Home Loan Bank
advances 519,381 489,084 412,572
Long-term debt 107,996 113,151 111,869
Accrued expenses and other
liabilities 63,073 43,477 38,870
------------ ------------ ------------
Total liabilities 7,346,839 6,484,482 5,928,556
------------ ------------ ------------
Shareholders' equity:
Preferred stock, $1 par value;
$10 stated value; 10,000,000
shares authorized; 25,800,
32,200 and 32,200 shares issued
and outstanding 258 322 322
Common stock, $1 par value;
100,000,000 shares authorized;
48,809,301, 42,890,863 and
40,268,604 shares issued and
outstanding 48,809 42,891 40,269
Common stock issuable; 66,366,
29,821 and 22,741 shares 1,954 862 638
Capital surplus 462,499 270,383 199,773
Retained earnings 347,478 306,261 291,281
Treasury stock; 1,266,935
shares as of September 30,
2007, at cost (30,969) - -
Accumulated other
comprehensive loss 3,732 (3,952) (5,549)
------------ ------------ ------------
Total shareholders'
equity 833,761 616,767 526,734
------------ ------------ ------------
Total liabilities and
shareholders' equity $ 8,180,600 $ 7,101,249 $ 6,455,290
============ ============ ============
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
2007
--------------------------------
(dollars in thousands, taxable Average Avg.
equivalent) Balance Interest Rate
----------- ------------ ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 5,966,933 $ 126,992 8.44%
Taxable securities (3) 1,266,609 16,637 5.25
Tax-exempt securities (1)(3) 41,583 704 6.77
Federal funds sold and other
interest-earning assets 57,367 551 3.84
----------- ------------
Total interest-earning assets 7,332,492 144,884 7.85
----------- ------------
Non-interest-earning assets:
Allowance for loan losses (93,832)
Cash and due from banks 141,536
Premises and equipment 173,605
Other assets (3) 529,938
-----------
Total assets $ 8,083,739
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,431,168 $ 12,046 3.34
Money market 496,005 5,002 4.00
Savings 201,031 553 1.09
Time less than $100,000 1,624,698 20,151 4.92
Time greater than $100,000 1,391,139 18,193 5.19
Brokered 358,614 4,519 5.00
----------- ------------
Total interest-bearing deposits 5,502,655 60,464 4.36
----------- ------------
Federal funds purchased and other
borrowings 348,472 4,738 5.39
Federal Home Loan Bank advances 474,555 5,902 4.93
Long-term debt 119,596 2,100 6.97
----------- ------------
Total borrowed funds 942,623 12,740 5.36
----------- ------------
Total interest-bearing liabilities 6,445,278 73,204 4.51
------------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 743,664
Other liabilities 60,703
-----------
Total liabilities 7,249,645
Shareholders' equity 834,094
-----------
Total liabilities and shareholders'
equity $ 8,083,739
===========
Net interest revenue $ 71,681
============
Net interest-rate spread 3.34%
======
Net interest margin (4) 3.89%
======
(1) Interest revenue on tax-exempt securities and loans has been increased
to reflect comparable interest on taxable securities and loans. The
rateused 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.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $13.3 million in 2007 and $21.6 million in 2006
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,
2006
--------------------------------
(dollars in thousands, taxable Average Avg.
equivalent) Balance Interest Rate
----------- ------------ ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,865,886 $ 103,061 8.40%
Taxable securities (3) 984,189 11,822 4.80
Tax-exempt securities (1)(3) 45,792 780 6.81
Federal funds sold and other
interest-earning assets 46,843 641 5.47
----------- ------------
Total interest-earning assets 5,942,710 116,304 7.77
----------- ------------
Non-interest-earning assets:
Allowance for loan losses (60,606)
Cash and due from banks 116,004
Premises and equipment 125,423
Other assets (3) 226,674
-----------
Total assets $ 6,350,205
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,094,911 $ 8,100 2.94
Money market 216,131 2,155 3.96
Savings 170,079 226 .53
Time less than $100,000 1,446,388 16,503 4.53
Time greater than $100,000 1,162,207 14,382 4.91
Brokered 340,301 3,809 4.44
----------- ------------
Total interest-bearing deposits 4,430,017 45,175 4.05
----------- ------------
Federal funds purchased and other
borrowings 162,372 2,254 5.51
Federal Home Loan Bank advances 438,875 5,828 5.27
Long-term debt 111,869 2,174 7.71
----------- ------------
Total borrowed funds 713,116 10,256 5.71
----------- ------------
Total interest-bearing liabilities 5,143,133 55,431 4.28
------------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 655,151
Other liabilities 41,130
-----------
Total liabilities 5,839,414
Shareholders' equity 510,791
-----------
Total liabilities and shareholders'
equity $ 6,350,205
===========
Net interest revenue $ 60,873
============
Net interest-rate spread 3.49%
======
Net interest margin (4) 4.07%
======
(1) Interest revenue on tax-exempt securities and loans has been increased
to reflect comparable interest on taxable securities and loans. The
rateused 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.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $13.3 million in 2007 and $21.6 million in 2006
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,
2007
--------------------------------
(dollars in thousands, taxable Average Avg.
equivalent) Balance Interest Rate
----------- ------------ ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 5,665,314 $ 360,429 8.51%
Taxable securities (3) 1,192,815 46,081 5.15
Tax-exempt securities (1)(3) 42,368 2,160 6.80
Federal funds sold and other
interest-earning assets 51,076 1,479 3.86
----------- ------------
Total interest-earning assets 6,951,573 410,150 7.89
----------- ------------
Non-interest-earning assets:
Allowance for loan losses (78,541)
Cash and due from banks 130,816
Premises and equipment 159,674
Other assets (3) 405,388
-----------
Total assets $ 7,568,910
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,378,200 $ 34,143 3.31
Money market 371,716 11,082 3.99
Savings 187,693 1,236 .88
Time less than $100,000 1,631,243 59,925 4.91
Time greater than $100,000 1,383,004 54,000 5.22
Brokered 342,162 12,541 4.90
----------- ------------
Total interest-bearing deposits 5,294,018 172,927 4.37
----------- ------------
Federal funds purchased and other
borrowings 255,115 10,226 5.36
Federal Home Loan Bank advances 430,151 15,738 4.89
Long-term debt 115,390 6,505 7.54
----------- ------------
Total borrowed funds 800,656 32,469 5.42
----------- ------------
Total interest-bearing liabilities 6,094,674 205,396 4.51
------------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 693,207
Other liabilities 70,079
-----------
Total liabilities 6,857,960
Shareholders' equity 710,950
-----------
Total liabilities and shareholders'
equity $ 7,568,910
===========
Net interest revenue $ 204,753
============
Net interest-rate spread 3.38%
======
Net interest margin (4) 3.94%
======
(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.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $10.4 million in 2007 and $19.1 million in 2006
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,
2006
--------------------------------
(dollars in thousands, taxable Average Avg.
equivalent) Balance Interest Rate
----------- ------------ ------
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2) $ 4,688,512 $ 284,683 8.12%
Taxable securities (3) 988,504 34,661 4.68
Tax-exempt securities (1)(3) 47,588 2,463 6.90
Federal funds sold and other
interest-earning assets 35,451 1,425 5.36
----------- ------------
Total interest-earning assets 5,760,055 323,232 7.50
----------- ------------
Non-interest-earning assets:
Allowance for loan losses (57,716)
Cash and due from banks 122,603
Premises and equipment 120,664
Other assets (3) 212,541
-----------
Total assets $ 6,158,147
===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,093,145 $ 21,429 2.62
Money market 186,957 4,969 3.55
Savings 173,448 680 .52
Time less than $100,000 1,354,421 42,604 4.21
Time greater than $100,000 1,068,376 36,938 4.62
Brokered 327,877 10,137 4.13
----------- ------------
Total interest-bearing deposits 4,204,224 116,757 3.71
----------- ------------
Federal funds purchased and other
borrowings 152,303 5,814 5.10
Federal Home Loan Bank advances 510,168 18,837 4.94
Long-term debt 111,868 6,495 7.76
----------- ------------
Total borrowed funds 774,339 31,146 5.38
----------- ------------
Total interest-bearing liabilities 4,978,563 147,903 3.97
------------
Non-interest-bearing liabilities:
Non-interest-bearing deposits 644,626
Other liabilities 41,651
-----------
Total liabilities 5,664,840
Shareholders' equity 493,307
-----------
Total liabilities and shareholders'
equity $ 6,158,147
===========
Net interest revenue $ 175,329
============
Net interest-rate spread 3.53%
======
Net interest margin (4) 4.07%
======
(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.
(3) Securities available for sale are shown at amortized cost. Pretax
unrealized losses of $10.4 million in 2007 and $19.1 million in 2006
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.