United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q3 2011 Earnings Presentation
61 slides from United Community Banks's earnings presentation, Oct 27, 2011
Slide 1: United Community Banks, Inc. Investor Presentation Third Quarter 2011
United Community Banks, Inc. Investor PresentationThird Quarter 2011 Rex S. Schuette EVP & CFOrex_schuette@ucbi.com (706) 781-2266 David P. Shearrow EVP & CRO Jimmy C. Tallent President & CEO
Slide 2: 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 involves risks and uncer
Slide 3: Non-GAAP Measures
This presentation also contains non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include the following: net interest margin - pre credit, core net interest margin, core net interest rev
Slide 4: Third Quarter Highlights
Highlights Third Quarter Special Loan Loss ProvisionOther credit trends stable or improvingMargin Improving With Lower Deposit PricingStrong Core Deposit Growth 4
Slide 5: Loan Portfolio & Credit Quality
LOAN PORTFOLIO & CREDIT QUALITY 5
Slide 6: Geographic Diversity Loan Portfolio
Geographic Diversity Loan Portfolio (total $4.11 billion) $ in millions 6
Slide 7: Geographic Diversity Commercial Loans
Geographic Diversity Commercial Loans (total $2.37 billion) $ in millions 7
Slide 8: Commercial Real Estate Portfolio Characteristics
59% owner-occupiedSmall business, doctors, dentists, attorneys, CPAs$12 million project limitAverage Loan Size -$458 Composite CRE -$396 Owner Occupied -$630 Income Producing Portfolio Characteristics Commercial Real Estate (by loan type) 8
Slide 9: Commercial Construction Portfolio Characteristics
Average loan size: $450k Portfolio Characteristics Commercial Construction (by loan type) 9
Slide 10: Residential Mortgage Portfolio Geographic Diversity
Geographic Diversity Avg loan size: $43k Avg loan size: $94k Origination CharacteristicsNo broker loansPolicy Max LTV: 80-85%51% of HE Primary Lien Residential Mortgage (total $1.15 billion) $ in millions 10
Slide 11: Residential Construction Geographic Diversity
Geographic Diversity Developing Average Loan Size Construction Land Residential Construction (total $.47 billion) $ in millions 11
Slide 12: Residential Construction - Total Company
Residential Construction - Total Company 12
Slide 13: New Loans Funded - Category and Market
New Loans Funded - Category and Market 13
Slide 14: Credit Quality
Credit Quality (in riions) san zon sai 4010 3010 Operating Net Charge-offs"” $s 7S $ 65 $ we $ 477 $ 500 ‘8 % of Awrage Loans” 168% 158% 271% 403 % 412% ‘Allowance for Loan Losses S$ We1 $176 $184 SATA §17HG ‘8 ef Total Laan 385 % 307 % 317 % 379% 367 % Se ONL 101 180 159 8 ra Past Due Loans (30 89
Slide 15: NPL Inflow Trends
Quarterly NPL Inflows Since 2009 ($mm) Com. Construction Resi. Mortgage Resi Construction Consumer Commercial Com. RE Total NPLs ($mm) 46.5% Decline from Peak86.2% Decline without SLR* NPL Inflow Trends 15 *SLR - Single Loan Relationship $76.6 million added in Q3; excluding SLR NPL Inflow was $26.7
Slide 16: Net Charge-offs by Loan Category
Net Charge-offs by Loan Category 16
Slide 17: Net Charge-offs by Market
Net Charge-offs by Market (in thousands) 3ait % of Average Loans (Annualized) % of Avg Total Loans 2a1t' sant” 4Qi0” Atlanta MSA S$ 2,813 94% 165% = 1.04. % = 4.48 % Gainesville MSA 1,804 2.64 3.73 1.32 437 North Georgia 8,124 2.16 2m 2.06 4.26 Western North Carolina 3,608 231 2.67 3.98 2.87 Coastal
Slide 18: NPAs by Loan Category and Market
NPAs by Loan Category and Market 18
Slide 19: Financial Review
Financial Review = UNITED
Slide 20: Core Earnings Summary
Core Earnings Summary (In Thousands) Variance - Incr / (Decr) 3Q11 2Q11 3Q10 Net Interest Revenue $ 59,281 $ 335, $ (733) Fee Revenue 11,309 213 (687) Gross Revenue 70,590 548 (1,420) Operating Expense (Excl OREO) 44,093 (1,587) (790) Pre-Tax, Pre-Credit (Core) $ 26,497 $ 2,135 $ (630) Net Interest
Slide 21: Net Interest Margin
3Q10 4Q10 1Q11 2Q11 3Q11 Net Interest Margin 0.0357 0.0358 0.0341 0.0341 0.0355 0.0056 0.0047 0.0047 0.003 0.0029 Core margin -Up 14 bps vs. 2Q10 -Credit costs flatMaintained loan pricing Lowered core & CD pricing3Q Excess liquidity lowered Margin by 67 bps and 76 bps in Q2 NIM Characteristics 3.87%
Slide 22: Credit Costs Impacting Margin
Historically 8 to 12 bpsSignificant improvement with de-risking balance sheet first quarterCost 3Q11 vs. Historical - 17 bps (annual earnings impact of $11.2 million)1 bps = $660 thousand in NIR*Excludes bulk loan sale impact of 10 bps Credit CostsImpacting Margin ..47% ..30% ..29% ..46%* Lost Inter
Slide 23: Loan Pricing - New and Renewed
Loan Pricing - New and Renewed 4.11 4.35 4.31 4.74 4.76 Loan Pricing Spreads Key Drivers of Net Interest Revenue / Margin 23 Holding loan pricing flatActively lowering deposit pricing Positive Impacton Margin
Slide 24: CD Pricing and Deposit Pricing
CD Pricing Deposit Pricing, Excluding Brokered Deposits 24 Note - CD pricing reflects the quarterly average of new and renewed pricing for each quarter. MMDA / NOW pricing reflects the deposit yield for each quarter
Slide 25: Deposit Mix
Deposit Mix (total $6.0 billion) 25 3Q11$6.0B 4Q08$7.0B 48% 30%
Slide 26: Core Deposit Growth - Category and Market
Core Deposit Growth - Category and Market 26
Slide 27: Fee Revenue - Core
Fee Revenue - Core (In Thousands) Variance - Incr / (Decr) 3Q11 2Q11 3Q10 NSF & Overdraft Fees $ 3,541 $ (117) $ (886) ATM Fees 3,302 23 785 Other Service Charges 691 20 (13) Total Service Charges and Fees 7,534 (74) (114) Mortgage Loan & Related Fees 1,148 196 (923) Brokerage Fees 836 145 105 Other
Slide 28: Operating Expenses - Core
Operating Expenses - Core (In Thousands) Variance - Incr / (Decr) 3Q11 2Q11 3Q10 Salaries & Employee Benefits $ 25,648 $ 369 1,028 Communications & Equipment 3,284 (94) (336) Occupancy 3,794 (11) 74 FDIC Assessment 2,603 (1,041) (653) Advertising & Public Relations 1,052 (265) (76) Postage, Printing
Slide 29: Net Operating Loss
Net Operating Loss (in Thousands) 3011 2011 3010 Pre-Tax, Pre-Credit (Core) S$ 26497 $ 24362 $27,127 Provision for Loan Loss (26,000) (11,000) (60,500) Foreclosed Property Costs: ‘Write-downs (1.772) (3.118) (7.051) Gains (Losses) on Sales 804 3.218 (7.136) Maintenance, Taxes, Etc. 1.845) 4,991 (5.5
Slide 30: Net Income (Loss)
Net Income (Loss) (In Thousands) 3Qit 2011 3a10 Net Income (Loss) $ (6,202) $ 7,617 — $ (236,445) Preferred Stock Dividends (3,019) (3,016) (2,581) Net income (Loss) Availto Common Shareholders _$ (9,221) $ 4,601 _$ (238,996) Net Income (Loss) Per Share $ (16) $ 08 = $ (12.62) Tangible Book Value $
Slide 31: Capital Ratios
Capital Ratios Gapitaized Guideline sept sunt Tier 1 RBC 6% >9% 138% 136% 120% Total REC 10 > 184 184 147 Leverage 5 >8 88 as 83 Tangible Equity to Assets 18 m4 a7 Tangible Common to Assets oa 39° a4 Tier 1 RBC 6 >9 140 139 1 Total REC 10 > 158 164 183 Leverage 5 >8 90 87 50 “Ratio calculated as of
Slide 32: Appendix
APPENDIX 32
Slide 33: United at a Glance
Assets $7.2 BillionDeposits $6.0 Billion Banks 27Offices 105 United at a Glance 33
Slide 34: Experienced Proven Leadership
Experienced Proven Leadership Joined Years in UCBI BankingJimmy Tallent President & CEO 1984 37Guy Freeman Chief Operating Officer 1992 53Rex Schuette Chief Financial Officer 2001 34David Shearrow Chief Risk Officer 2007 30Glenn White President, Atlanta Region 2007 37Craig Metz Marketing 2002 19Bill
Slide 35: Business and Operating Model
Business and Operating Model Twenty-seven "community banks" Local CEOs with deep roots in their communitiesResources of $7.2 billion bankService is point of differentiation#1 in Customer Satisfaction according to Customer Service ProfilesJ.D. Power Customer Service ChampionRecognized 40 companies in
Slide 36: Robust Demographics (fast growing markets)
Robust Demographics (fast growing markets) 36
Slide 37: Market Share Opportunities
1 FDIC deposit market share and rank as of 6/11 for markets where United takes deposits. Source: SNL and FDIC.2 Based on current quarter. Market Share Opportunities (excellent growth prospects) 37
Slide 38: Leading Demographics
Leading Demographics 38 Rank Ticker Company(1) State Total Assets ($ B) Total Assets ($ B) 2010 - 2015 Population Growth (2) 2010 - 2015 Population Growth (2) 1 CFR Cullen/Frost Bankers, Inc. TX $18.5 $18.5 9.07 % 2 WAL Western Alliance Bancorporation AZ 6.5 6.5 7.60 3 FCNCA First Citizens Bancshare
Slide 39: Proactively Addressing Credit Environment
Structure Centralized underwriting and approval processSegregated work-out teamsHighly skilled ORE disposition groupSeasoned regional credit professionalsProcessContinuous external loan review Intensive executive management involvement:Weekly past due meetingsWeekly NPA/ORE meetingsQuarterly critici
Slide 40: Performing Classified Loans
Performing Classified Loans 40
Slide 41: Business Mix Loans (at quarter-end)
Business Mix Loans (at quarter-end) 41
Slide 42: Loans - Markets Served (at quarter-end)
Loans - Markets Served (at quarter-end) 42
Slide 43: Residential Construction - North Georgia
43 Residential Construction - North Georgia 43
Slide 44: Residential Construction - Atlanta MSA
Residential Construction - Atlanta MSA 44
Slide 45: Business Mix Loans (at year-end)
Business Mix Loans (at year-end) 45
Slide 46: Loans - Markets Served (at year-end)
Loans - Markets Served (at year-end) 46
Slide 47: Lending - Credit Summary
(in millions) Lending - Credit Summary Legal lending limit $220House lending limit 20Project lending limit 12Top 25 relationships 410Regional credit review - Standard underwriting 47
Slide 48: NPAs by Loan Category, Market, and Activity
NPAs by Loan Category, Market, and Activity 48
Slide 49: Net Charge-offs by Category and Market
Net Charge-offs by Category and Market 49
Slide 50: Net Charge-offs by Category and Market - Asset Disposition Plan
Net Charge-offs by Category and Market Asset Disposition Plan as of March 31, 2011 50
Slide 51: Credit Quality - Bulk Loan Sale Summary
Credit Quality - Bulk Loan Sale Summary as of March 31, 2011 51
Slide 52: Loans / Deposits - Liquidity
Loans / Deposits - Liquidity 52
Slide 53: Wholesale Borrowings - Liquidity
Wholesale Borrowings - Liquidity 53
Slide 54: Business Mix - Deposits (at quarter-end)
Business Mix - Deposits (at quarter-end) 54
Slide 55: Core Transaction Deposits Geographic Diversity
Geographic Diversity $ in millions 3Q 10 3Q 11 Atlanta MSA North Georgia Western North Carolina Gainesville MSA Coastal Georgia Eastern Tennessee Core Transaction Deposits 55
Slide 56: NPA Sale in 2Q10
NPA Sale in 2Q10 Sold $103 Million NPA's - With a $65 Million Capital Option and WarrantCompleted sale on April 30, 2010Accelerates disposition of the more illiquid assets 56
Slide 57: NPA Sale - Fair Value Accounting
NPA Sale - Fair Value Accounting 2Q10 Fair Value Accounting - Warrant / Option to Purchase EquityIncrease to Capital Surplus - $39.8 millionPre-tax expense charge - $45.3 million; after-tax cost - $30.0 millionGAAP Capital +$9.8million - Slight Negative to "Regulatory Capital" (DTA) 57
Slide 58: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables 58
Slide 59: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables 59
Slide 60: Analyst Coverage
Analyst Coverage ™ FBR Capital (Market Perform - Jul 28, 2011) FIG Partners (Market Perform - Sep 15, 2021) ™ Guggenheim Securities, LLC (Neutral - Oct 28, 2011) ™ Keefe, Bruyette & Woods (Market Perform - Oct 13, 2011) ™ Macquarie Capital (USA) (Neutral - Oct 12, 2012) ™ Raymond James & Assoc. (Mar
Slide 61: United Community Banks, Inc. Investor Presentation Third Quarter 2011
United Community Banks, Inc. Investor PresentationThird Quarter 2011 Copyright 2011United Community Banks, Inc.All rights reserved. 61
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