United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q2 2009 Earnings Presentation
45 slides from United Community Banks's earnings presentation, Jul 24, 2009
Slide 1: Investor Presentation Second Quarter 2009
Investor Presentation Second Quarter 2009 United Community Banks, Inc. Jimmy C. Tallent President & CEO Rex S. Schuette David P. Shearrow Executive Vice President & CFO Executive Vice President & CRO rex_schuette@ucbi.com (706) 781-2266 The Bank That SERVICE Built. SM United Community Banks, Inc. |
Slide 2: Cautionary statement
Cautionary statement This presentation 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. Such performance inv
Slide 3: United at a glance
United at a glance Assets $8.4 Billion Banks 27 Deposits $6.8 Billion Offices 110 The Bank That SERVICE Built. SM 3 United Community Banks, Inc. | second quarter 2009
Slide 4: Core earnings improvement
Challenging environment Credit Core earnings improvement FDIC acquisition The Bank That SERVICE Built. SM 4 United Community Banks, Inc. | second quarter 2009
Slide 5: Loan portfolio composition
Loan portfolio (total - $5.5 billion as of June 30, 2009) Geographic Diversity $1.3B Residential .1B Construction Installment 24% 3% $1.5B Residential Tennessee Mortgage 5% 27% Gainesville MSA $2.6B 8% Commercial 46% Coastal Georgia 8% North Carolina 14% Atlanta MSA 29% Loan Composition North Georgi
Slide 6: Residential mortgage (total $1.5 billion)
Residential mortgage (total $1.5 billion) Geographic Diversity $.4 B Home Equity 26% Tennessee 6% Gainesville MSA 6% $1.1B Mortgage Coastal Georgia 74% 8% Atlanta MSA 15% North Carolina Loan Composition 26% North Georgia 39% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% The Bank That SERVICE Built. SM 6 Uni
Slide 7: Commercial loans (total $2.6 billion)
Commercial loans (total $2.6 billion) Geographic Diversity $.4B Comm Const $.4B 15% C& I 16% Tennessee 5% $1.0B Owner North Carolina $.8B Occupied 9% Income 40% Producing Gainesville MSA 29% 9% Coastal Georgia 10% North Georgia Loan Composition 30% Atlanta MSA 37% 0% 5% 10% 15% 20% 25% 30% 35% 40% T
Slide 8: Commercial construction (by loan type)
Commercial construction (by loan type) (in millions) June 30, 2009 % of Loan Type Amount Total Raw Land – Vacant (Unimproved) $ 167 44 Land Development – Vacant (Improved) 132 35 Office Buildings 32 8 Retail Buildings 21 6 Churches 6 2 Miscellaneous 20 5 Total Commercial Construction $ 379 The Bank
Slide 9: Commercial real estate (by loan type)
Commercial real estate (by loan type) (in millions) June 30, 2009 % of Loan Type Amount Total Office Buildings $ 405 23 Small Businesses 399 22 Single-Unit Retail/Strip Centers 234 13 Small Warehouses/Storage 166 9 Hotels/Motels 119 7 Churches 115 6 Franchise / Restaurants 84 5 Multi-Residential Pro
Slide 10: Residential construction (total $1.3 billion)
Residential construction (total $1.3 billion) Geographic Diversity $.4B Const 28% Tennessee 3% Gainesville MSA 5% $.9B Land Loans Coastal Georgia 72% 6% North Carolina 12% Atlanta MSA 32% Loan Composition North Georgia 42% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% The Bank That SERVICE Built. SM 10 Unit
Slide 11: Atlanta MSA (residential construction)
Atlanta MSA (residential construction) (in millions) Variance 2Q 09 4Q 08 2Q 08 4Q 08 2Q 08 Land Loans Developing Land $ 124 $ 167 $ 232 $ (43) $ (108) Raw Land 63 56 50 7 13 Lot Loans 81 86 117 (5) (36) Total 268 309 399 (41) (131) Construction Loans Spec 127 189 271 (62) (144) Sold 29 40 58 (11) (
Slide 12: Credit quality
Credit quality (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Net Charge-offs $ 58.3 $ 43.3 $ 74.0 $ 55.7 $ 14.3 as % of Average Loans 4.18% 3.09% 5.09% 3.77% .97% Allowance for LL $ 146.0 $ 144.0 $ 122.3 $ 111.3 $ 91.0 as % of Total Loans 2.64% 2.56% 2.14% 1.91% 1.53% as % of NPLs 51%* 56%* 64%* 80%*
Slide 13: Net charge-offs by category
Net charge-offs by category (in thousands) 2Q 09 1Q 09 to Avg to Avg NCOs Loans NCOs Loans CATEGORY Commercial (sec. by RE) $ 5,986 1.34% $ 826 .20% Commercial Construction 756 .81 54 .05 Commercial & Industrial 3,107 3.20 873 .89 Total Commercial 9,849 1.56 1,753 .28 Residential Construction 44,240
Slide 14: Net charge-offs by market
Net charge-offs by market (in thousands) 2Q 09 1Q 09 to Avg to Avg NCOs Loans NCOs Loans MARKETS Atlanta MSA $ 37,472 8.87% $ 26,228 6.16% Gainesville MSA 4,125 4.36 1,105 1.18 North Georgia 12,571 2.52 8,208 1.64 Western North Carolina 1,016 .51 3,669 1.83 Coastal Georgia 969 .85 3,229 2.84 East Te
Slide 15: NPAs by category
NPAs by category (in thousands) 2Q 09 1Q 09 Total Total NPLs OREO NPAs NPLs OREO NPAs CATEGORY Commercial (Sec. by RE) $ 37,755 $ 5,395 $ 43,150 $ 18,188 $ 3,811 $ 21,999 Commercial Construction 15,717 5,847 21,564 6,449 2,948 9,397 Commercial & Industrial 11,378 -- 11,378 12,066 -- 12,066 Total Com
Slide 16: NPAs by market
NPAs by market (in thousands) 2Q 09 1Q 09 Total Total NPLs OREO NPAs NPLs OREO NPAs MARKETS Atlanta MSA $ 148,155 $ 50,450 $ 198,605 $ 131,020 $ 48,574 $ 179,594 Gainesville MSA 9,745 3,511 13,256 17,448 694 18,142 North Georgia 72,174 37,454 109,628 66,875 20,811 87,686 Western North Carolina 21,81
Slide 17: Core earnings summary – second quarter 2009
Core earnings summary – second quarter 2009 (in millions) Variance 2Q 09 1Q 09 4Q 08 2Q 08 1Q09 4Q 08 Net Interest Revenue $ 60.9 $ 57.4 $ 51.9 $ 61.8 $ 3.5 $ 9.0 Fee Revenue* 13.7 12.6 12.6 14.7 1.1 1.1 Gross Revenue 74.6 70.0 64.5 76.5 4.6 10.1 Operating Expense** 47.8 48.3 47.2 46.9 (.5) (.6) Cor
Slide 18: Net operating loss – second quarter 2009
Net operating loss – second quarter 2009 (in millions) Variance 2Q 09 1Q 09 4Q 08 2Q 08 1Q 09 4Q 08 Core Earnings $ 26.8 $ 21.7 $ 17.3 $ 29.6 $ 5.1 $ 9.5 Provision for Loan Loss (60.0) (65.0) (85.0) (15.5) 5.0 25.0 Foreclosed Property Expense (5.7) (4.3) (5.2) (2.9) (1.4) (.5) FDIC Special Assessmen
Slide 19: Net loss – second quarter 2009
Net loss – second quarter 2009 (in millions) 2Q 09 1Q 09 4Q 08 2Q 08 Net Operating (Loss) Income $ (23.1) $ (32.0) $ (46.7) $ 7.1 Gain on Acquisition ($11.4, pre-tax) 7.1 - - - Goodwill Impairment Charge - (70.0) - - Severance Costs ($2.9, pre-tax) - (1.8) - - Net (Loss) Income $ (16.0) $(103.8) $ (
Slide 20: Net interest margin
Net interest margin Net Interest Margin Second quarter Margin 4.0% 3.28% Improvement 20 Basis Points 3.0% 2.0% 3.08% Improved Loan & Deposit 3.17% Pricing 3.32% 2.70% 1.0% Replaced Higher Priced .0% CDs and Broker Deposits 2q08 3q08 4q08 1q09 2q09 The Bank That SERVICE Built. SM 20 United Community
Slide 21: Capital ratios
Capital ratios (as percentages) Well- Capitalized 2Q 09 4Q 08 2Q 08 Regulatory Capital Tier 1 Risk-Based 6% 10.6% 11.2% 9.2% Total Risk-Based 10 13.3 13.9 11.4 Leverage 5 7.8 8.3 7.0 Tangible Equity to Risk-Weighted Assets 10.5 11.2 8.5 Tangible Common Equity to Risk-Weighted Assets 7.5 8.3 8.5 Tang
Slide 22: Closing comments
Closing comments Southern Community Bank Credit Core earnings Capital The Bank That SERVICE Built. SM 22 United Community Banks, Inc. | second quarter 2009
Slide 23: Appendix
APPENDIX The Bank That SERVICE Built. SM 23 United Community Banks, Inc. | second quarter 2009
Slide 24: Experienced proven leadership
Experienced proven leadership Joined Years in UCBI Banking Jimmy Tallent President and CEO 1984 36 Guy Freeman Chief Operating Officer 1994 49 Rex Schuette Chief Financial Officer 2001 32 David Shearrow Chief Risk Officer 2007 28 Glenn White President, Atlanta Region 2007 35 Craig Metz Marketing 200
Slide 25: Reasons to invest in United
Reasons to invest in United Footprint contains stable and growing markets Business model thrives on relationship-driven customer service backed by “big bank” resources Core franchise supports customer retention and strong presence in our markets Compelling stock price The Bank That SERVICE Built. SM
Slide 26: Business model
Business model Provides superior service and operating autonomy Community bank service, large bank resources Strategic footprint with substantial opportunities Contains many of the fastest growing markets in the U.S. Conservative growth strategy Mostly organic supported by de novos and selecti
Slide 27: Operating model (competitive difference)
Operating model (competitive difference) Twenty-seven community banks Local CEOs with deep roots in their communities Resources of $8.4 billion bank Service is point of differentiation Golden rule of banking • “The Bank That SERVICE Built” Ongoing customer surveys • +90% satisfaction rate Th
Slide 28: Robust demographics (fast growing markets)
Robust demographics (fast growing markets) Population Growth (%) Population Actual Projected Markets1 (in thousands) 2000 – 2008 2008 – 2013 North Georgia 424 27 14 Atlanta MSA 3,603 42 22 Gainesville MSA 182 31 16 Coastal Georgia 365 8 4 Western North Carolina 424 10 5 East Tennessee 594 11 7 Total
Slide 29: Market share opportunities
Market share opportunities (excellent growth prospects) Market United Deposit Deposits Deposits Share1 Markets1 (in billions) (in billions) Banks Offices (%) Rank1 North Georgia $ 9.1 $ 2.6 11 24 29 1 Atlanta MSA 59.8 2.1 10 40 3 8 Gainesville MSA 2.6 .3 1 7 12 4 Coastal Georgia 7.0 .4 2 9 6 6 Weste
Slide 30: Best demographics in the nation
Best demographics in the nation Population data as of June 30, 2008 1Q09 Assets 2008-2013 % Population Rank Company (in billions) Ticker State Growth 1 Western Alliance Bancorporation $ 5.3 WAL NV 16.84 2 United Community Banks, Inc. 8.1 UCBI GA 13.59 3 Cullen/Frost Bankers, Inc. 15.3 CFR TX 11.88 4
Slide 31: Small business market growth
Small business market growth (# of business with 1 – 49 employees) Small Population Business Growth Markets1 2000 2006 Growth 2000-2008 North Georgia 6,453 7,693 19% 27% Atlanta MSA 70,893 126,200 78% 42% Gainesville MSA 3,158 3,824 21% 31% Coastal Georgia 9,441 10,210 8% 8% Western North Carolina 1
Slide 32: Business mix - loans (at quarter-end)
Business mix - loans (at quarter-end) Year over Year (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Change LOANS BY CATEGORY % Commercial (sec. by RE) $1,797 $1,779 $1,627 $1,604 $1,584 13 Commercial construction 379 377 500 509 522 (27) Commercial & Industrial 399 387 410 425 417 (4) Total commercial
Slide 33: Business mix - loans (at year-end)
Business mix - loans (at year-end) (in millions) 2008 2007 2006 2005 2004 LOANS BY CATEGORY Commercial (sec. by RE) $1,627 $1,476 $1,230 $1,055 $ 961 Commercial construction 500 527 470 359 250 Commercial & Industrial 410 418 296 237 212 Total commercial 2,537 2,421 1,996 1,651 1,428 Residential con
Slide 34: Residential construction – total company
Residential construction – total company (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Land Loans Developing Land 412 $ 445 $ 484 $ 516 $ 566 Raw Land 159 155 153 142 138 Lot Loans 371 390 358 385 405 Total 942 990 995 1,043 1,109 Construction Loans Spec 267 317 347 393 447 Sold 106 123 137 160 189 To
Slide 35: Residential construction – Atlanta MSA
Residential construction – Atlanta MSA (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Land Loans Developing Land 124 $ 148 $ 167 $ 185 $ 232 Raw Land 63 52 56 47 50 Lot Loans 81 98 86 103 117 Total 268 298 309 335 399 Construction Loans Spec 127 164 189 227 271 Sold 29 33 40 49 58 Total 156 197 229 276
Slide 36: Loans – markets served (at quarter-end)
Loans – markets served (at quarter-end) (in millions) 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 LOANS BY MARKET Atlanta MSA $1,605 $1,660 $1,706 $1,800 $1,934 Gainesville MSA 413 422 420 426 422 North Georgia 1,978 2,014 2,040 2,066 2,065 Western North Carolina 794 808 810 815 819 Coastal Georgia 455 460 464 45
Slide 37: Loans – markets served (at year-end)
Loans – markets served (at year-end) (in millions) 2008 2007 2006 2005 2004 LOANS BY MARKET Atlanta MSA $ 1,706 $ 2,002 $ 1,654 $ 1,207 $ 1,061 Gainesville MSA 420 400 354 249 -- North Georgia 2,040 2,060 2,033 1,790 1,627 Western North Carolina 810 806 773 668 633 Coastal Georgia 464 415 358 306 27
Slide 38: Top 25 relationships
Lending – credit summary (as of December 31, 2008, in millions) Legal lending limit $182 House lending limit 20 Top 25 relationships 430 7.8% of total loans Regional credit review Standard underwriting The Bank That SERVICE Built. SM 38 United Community Banks, Inc. | second quarter 2009
Slide 39: Liquidity – loans / deposits
Liquidity – loans / deposits (in millions) Variance 2Q 09 4Q 08 2Q 08 vs 4Q 08 vs 2Q 08 Loans $ 5,513 $ 5,705 $ 5,933 $ (192) $ (420) Core (DDA, MMDA, Savings) $ 2,269 $ 2,088 $ 2,278 $ 181 $ (9) Public Funds 539 842 678 (303) (139) CD’s 3,277 3,281 3,209 (4) 68 Total Deposits (excl Brokered) 6,085
Slide 40: Liquidity – wholesale borrowings
Liquidity – wholesale borrowings (in millions) Unused Variance Capacity 2Q 09 4Q 08 2Q 08 vs 4Q 08 vs 2Q 08 Brokered Deposits $ 1,337 $ 763 $ 793 $ 432 $ (30) $ 331 FHLB 1,101 283 235 615 48 (332) Fed Funds 150 - 8 230 (8) (230) Other Wholesale 377 252 100 303 152 (51) Total Wholesale $ 2,965 $ 1,29
Slide 41: Business mix – deposits (at quarter-end)
Business mix – deposits (at quarter-end) (in millions) DEPOSITS BY CATEGORY 2Q 09 1Q 09 4Q 08 3Q 08 2Q 08 Demand & NOW $ 1,525 $ 1,485 $ 1,457 $ 1,591 $ 1,681 MMDA & Savings 744 665 630 565 598 Core Transaction Deposits 2,269 2,150 2,087 2,156 2,279 Time < $100,000 1,985 1,904 1,945 1,807 1,736 Publ
Slide 42: Analyst coverage
Analyst coverage FIG Partners Soleil (Tenner Investment Research) (Market Perform – Apr 24, 2009) (Hold – Jul 8, 2009) Fox-Pitt Kelton Cochran Stephens, Inc. (In Line – Jun 22, 2009) (Equal-Weight – Apr 24, 2009) Keefe, Bruyette & Woods Sterne Agee & Leach, Inc. (Market Perform – Jun 22, 2009) (Sell
Slide 43: Balanced growth strategy (early partnerships)
Balanced growth strategy (early partnerships) Asset Size at Asset Size (in millions) Acquisition Date Acquisition 2Q 09 North Carolina Mar-90 $55 $1,307 Blue Ridge Feb-92 52 467 Towns Oct-92 20 227 White Aug-95 71 256 Habersham Sep-96 33 244 Rabun Sep-97 72 110 Gilmer Jan-98 23 215 The Bank That SER
Slide 44: Balanced growth strategy (recent partnerships)
Balanced growth strategy (recent partnerships) Asset Size at Asset Size (in millions) Acquisition Date Acquisition 2Q 09 Adairsville Aug-99 $41 $84 Rome Aug-99 108 305 Dawson Jul-00 119 217 Metro Jul-00 153 484 West GA Nov-01 85 135 East TN Mar-03 195 407 Coastal GA May-03 300 587 Fairburn Jun-04 10
Slide 45: Southern Community Bank
Southern Community Bank Purchased – June 19, 2008 ($ in millions) Nine years old – Enhances presence in southside metro Atlanta markets Five banking offices in southside metro Atlanta MSA – Fayetteville, Coweta and Henry counties 60 employees $208 in customer deposits, including $50 core deposits FD
United Community Banks — Q2 2009 Earnings Presentation on 6ix