United Community Banks, Inc. · NYSE:UCB

United Community Banks — Q1 2010 Earnings Presentation

57 slides from United Community Banks's earnings presentation, Apr 22, 2010

  1. Slide 1: United Community Banks, Inc. Investor Presentation First Quarter 2010

    United Community Banks, Inc. Investor Presentation First Quarter 2010 Jimmy C. Tallent President & CEO Rex S. Schuette Strong Bank. Strong Service. Strong Future. EVP & CFO rex_schuette@ucbi.com (706) 781-2266 David P. Shearrow EVP & CRO

  2. 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

  3. Slide 3: Non-GAAP Measures

    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 fee revenue, core operat

  4. Slide 4: Highlights First Quarter

    Highlights First Quarter Credit Sale of $100 Million NPAs Sale of Consulting Services Business Core Earnings Capital Strong Bank. Strong Service. Strong Future. 4

  5. Slide 5: Loan Portfolio & Credit Quality

    LOAN PORTFOLIO & CREDIT QUALITY Strong Bank. Strong Service. Strong Future. 5

  6. Slide 6: Proactively Addressing Credit Environment

    Proactively Addressing Credit Environment Structure ƒ Centralized underwriting and approval process ƒ Segregated work‐out teams ƒ Highly skilled ORE disposition group ƒ Seasoned regional credit professionals Process ƒ Continuous external loan review ƒ Intensive executive management involvement: o We

  7. Slide 7: Loan Portfolio (total $5.0 billion)

    Loan Portfolio (total $5.0 billion) Geographic Diversity $1B Residential .1B Eastern Construction Installment 19% 3% Tennessee 5% $1.4B Residential Gainesville Mortgage MSA 28% 8% Coastal $2.5B Georgia Commercial 8% 50% Western North Carolina 15% Atlanta MSA 28% North Georgia 36% 0% 5% 10% 15% 20% 2

  8. Slide 8: Commercial Loans (total $2.5 billion)

    Commercial Loans (total $2.5 billion) $.4B Geographic Diversity Comm Const $.4B 15% C& I Eastern 15% Tennessee 6% $1.0B Gainesville Owner MSA Occupied 9% $.8B 38% Income Coastal Producing Georgia 32% 9% Western North Carolina 9% North Georgia 30% Average Loan Size Atlanta MSA CRE: $444k 37% C&I: $71

  9. Slide 9: Commercial Real Estate (by loan type)

    Commercial Real Estate (by loan type) (in millions) Mar 31, 2010 % of Portfolio Characteristics Loan Type Amount Total Office Buildings $ 399 22% 54% owner-occupied Small Businesses 388 22 Typical owner-occupied: Single-Unit Retail/Strip Centers 221 12 small business, doctors, Small Warehouses/Stora

  10. Slide 10: Commercial Construction (by loan type)

    Commercial Construction (by loan type) Portfolio Characteristics (in millions) Mar 31, 2010 % of $684k Average loan size Loan Type Amount Total Land Development – Vacant (Improved) $ 114 32% Average LTVs (1) Raw Land – Vacant (Unimproved) 99 28 ƒ Land Dev-Improved: 45% Commercial Land Development 50

  11. Slide 11: Residential Mortgage (total $1.4 billion)

    Residential Mortgage (total $1.4 billion) $.4 B Geographic Diversity Home Equity 27% Eastern Tennessee Avg loan 6% size: $47k Gainesville MSA 7% Coastal Georgia $1.0B Avg loan 8% Mortgage size: $77k 73% Atlanta MSA 14% Western North Carolina 26% Origination Characteristics North Georgia No broker lo

  12. Slide 12: Residential Construction (total $960 million)

    Residential Construction (total $960 million) Geographic Diversity La $.1B nd $ in millions $.3B Raw Developing 12% Eastern 32% Tennessee 2% $24 Gainesville MSA 4% $42 Developing $.3B $.1B Coastal Lot Sold Georgia 32% 7% 6% $55 Western North $.2B Carolina Spec Co 16% $151 ns 17% tru c tio Atlanta MS

  13. Slide 13: Atlanta MSA (residential construction)

    Atlanta MSA (residential construction) (in millions) Variance 1Q10 4Q09 1Q09 4Q09 1Q09 Acquisition & Development Developing Land $ 66 $ 76 $ 148 $ (10) $ (82) Raw Land 43 43 52 - (9) Lot Loans 47 52 98 (5) (51) Total 156 171 298 (15) (142) Construction Loans Spec 58 68 164 (10) (106) Sold 14 16 33 (

  14. Slide 14: North Georgia MSA (residential construction)

    North Georgia MSA (residential construction) (in millions) Variance 1Q10 4Q09 1Q09 4Q09 1Q09 Acquisition & Development Developing Land $ 43 $ 45 $ 59 $ (2) $ (16) Raw Land 148 172 184 (24) (36) Lot Loans 189 197 211 (8) (22) Total 380 414 454 (34) (74) Construction Loans Spec 54 61 85 (7) (31) Sold

  15. Slide 15: Credit Quality

    Credit Quality (in millions) 1Q10 4Q 09 3Q 09 2Q 09 1Q 09 Net Charge-offs $ 56.7 $ 84.6 $ 90.5 $ 58.3 $ 43.3 as % of Average Loans 4.51% 6.37% 6.57% 4.18% 3.09% Allowance for LL $ 173.9 $ 155.6 $ 150.2 $ 145.7 $ 144.0 as % of Total Loans 3.48% 3.02% 2.80% 2.64% 2.56% as % of NPLs 62 59 49 51 56 as %

  16. Slide 16: Net Charge-offs by Loan Category

    Net Charge‐offs by Loan Category (in thousands) 1Q10 % of Average Loans % of Avg NCOs Loans 4Q10 3Q09 2Q09 LTM(1) Commercial (sec. by RE) $ 1,964 .45 % .86 % 2.33 % 1.34 % 1.25 % Commercial Construction 2,206 2.48 5.03 4.55 .80 3.22 Commercial & Industrial 4,110 4.31 .15 1.76 3.16 2.35 Total Commerc

  17. Slide 17: Net Charge-offs by Market

    Net Charge‐offs by Market (in thousands) 1Q10 % of Average Loans % of Avg (1) NCOs Loans 4Q09 3Q09 2Q09 LTM MARKETS Atlanta MSA $ 15,545 4.32 % 12.07 % 12.61 % 8.96 % 9.49 % Gainesville MSA 1,675 1.92 2.49 1.60 4.38 2.60 North Georgia 29,747 6.51 3.57 4.74 2.52 4.34 Western North Carolina 3,695 1.96

  18. Slide 18: NPAs by Loan Category and Market

    NPAs by Loan Category and Market (in thousands) 1Q10 1Q10 NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY MARKETS Commercial (sec. by RE) $ 45,918 $ 21,597 $ 67,515 Atlanta MSA $ 81,914 $ 36,951 $ 118,865 Commercial Construction 23,556 14,285 37,841 Gainesville MSA 17,058 3,192 20,250 Commer

  19. Slide 19: Credit Quality – SCAP Analysis

    Credit Quality – SCAP Analysis Imputed Stress Test – Estimated Credit Losses Through December 2010 Balance as Management - Management - SCAP - SCAP - of 12/31/08 Base "SCAP" (1) Selected Banks (2) More Adverse (3) Loan Type $MM % % $MM % $MM % $MM % $MM Commercial & Industrial $353.7 6.2 4.6 $16.3 5

  20. Slide 20: Credit Quality – SCAP Analysis

    Credit Quality – SCAP Analysis Imputed Stress Test – Projected Capital Ratios Assumptions: Targeted LLR / Loans (12/31/10) (1) 2.00% Core Earnings in 2010 (2) $92,724 Effective Tax Rate 40% Aggregate TARP Preferred Dividend (3) $10,303 Stress Test Analysis: Projected as of December 31, 2010 (4) Mana

  21. Slide 21: Financial Results

    FINANCIAL RESULTS Strong Bank. Strong Service. Strong Future. 21

  22. Slide 22: Core Earnings Summary – First Quarter 2010

    Core Earnings Summary – First Quarter 2010 (In Thousands) Variance 1Q10 4Q09 1Q09 Net Interest Revenue $ 61,279 $ (2,650) $ 3,867 Fee Revenue 11,605 (143) 85 Gross Revenue 72,884 (2,793) 3,952 Operating Expense (Excl OREO) 44,007 (1,728) (3,462) Core Earnings (Pre-Tax, Pre-Credit) $ 28,877 $ (1,065)

  23. Slide 23: Net Interest Margin

    Net Interest Margin Net Interest Margin NIM Characteristics 5.0% 4.04% 4.15% Margin improvement 3.97% 4.0% 3.80% 3.53% 9 bps vs. 4Q09 3.13% 41 bps vs. 1Q09 3.0% 3.49% 3.39% 3.40% Improved CD pricing 3.28% 2.0% 3.08% 2.70% Maintained loan pricing 1.0% 1Q Excess liquidity – lowered .0% Margin by 18 bp

  24. Slide 24: Margin – Credit Costs

    Margin – Credit Costs Credit Costs Impacting Margin Historically 8 to 12 bps .70% .66% .64% .58% Credit cycle – significant drag on .60% .20% margin and earnings .52% .20% .50% .16% .43% .45% Lost interest (avg. yield) on loans .19% charged off – Replace with new .40% .16% .20% .26% loans after cred

  25. Slide 25: Deposit Mix (total $6.5 billion)

    Deposit Mix (total $6.5 billion) Deposit Mix ($ in millions) Brokered Demand & NOW 1Q10 4Q09 1Q09 11% 23% Demand NOW $ 1,489 $ 1,465 $ 1,485 Public Funds MMDA & Savings 908 879 665 11% Core Transaction 2,397 2,344 2,150 9% Annualized Growth excluding SCB acquisition Time >$100k MMDA & Sav. 16% 14% T

  26. Slide 26: Core Transaction Deposits

    Core Transaction Deposits Geographic Diversity Core Transactions / Total Deposits (%) 1Q 09 1Q 10 1Q10 1Q09 $ in millions Atlanta MSA 45.7 % 40.4 % Eastern Tennessee $110 North Georgia 25.9 23.3 $120 Coastal Georgia Western NC 44.1 39.4 $131 $140 Gainesville MSA 45.7 38.4 Gainesville MSA $126 Coasta

  27. Slide 27: Net Operating Loss – First Quarter 2010

    Net Operating Loss – First Quarter 2010 (In Thousands) 1Q10 4Q09 1Q09 Core Earnings $ 28,877 $ 29,942 $ 21,463 Provision for Loan Loss (75,000) (90,000) (65,000) Foreclosed Property Costs: Write-downs (8,097) (9,576) (1,830) Maintenance, Taxes, Etc. (2,716) (4,815) (2,489) Sale of Low Income Tax Cre

  28. Slide 28: Net Loss – First Quarter 2010

    Net Loss – First Quarter 2010 (In Thousands) 1Q10 4Q09 1Q09 Net Operating Loss(1) $ (34,458) $ (40,063) $ (32,132) Discontinued Operations, Net (101) 228 156 Gain from Sale of Sub, Net 1,266 Goodwill Impairment Charge - - (70,000) Severance ($2,898, pre-tax) - - (1,797) Net Loss (33,293) (39,835) (1

  29. Slide 29: Capital Ratios (as percentages)

    Capital Ratios (as percentages) Well- Capitalized Guideline MAR '10 DEC '09 MAR '09 Tier 1 RBC 6% > 7% 11.7% 12.4% 10.9% Total RBC 10% > 11% 14.4 15.1 13.6 Leverage 5% >6% 8.1 8.5 7.9 Tangible Equity to Assets >6% 9.4 9.5 8.2 Tangible Common to Assets >5% 7.1 7.4 6.1 Strong Bank. Strong Service. Str

  30. Slide 30: Appendix

    APPENDIX Strong Bank. Strong Service. Strong Future. 30

  31. Slide 31: United at a Glance

    United at a Glance Assets $7.8 Billion Banks 27 Deposits $6.5 Billion Offices 107 Strong Bank. Strong Service. Strong Future. 31

  32. Slide 32: Experienced Proven Leadership

    Experienced Proven Leadership Joined Years in UCBI Banking Jimmy Tallent President & CEO 1984 37 Guy Freeman Chief Operating Officer 1994 50 Rex Schuette Chief Financial Officer 2001 33 David Shearrow Chief Risk Officer 2007 29 Glenn White President, Atlanta Region 2007 36 Craig Metz Marketing 2002

  33. Slide 33: Business and operating model

    Business and operating model “Community bank service, large bank resources” Twenty-seven “community banks” ƒ Local CEOs with deep roots in their communities ƒ Resources of $7.8 billion bank Service is point of differentiation ƒ Golden rule of banking 9 “The Bank That SERVICE Built” ƒ Ongoing custome

  34. Slide 34: Robust Demographics (fast growing markets)

    Robust Demographics (fast growing markets) Population Growth (%) Population Actual Projected Markets1 (in thousands) 2000 - 2009 2009 - 2014 North Georgia 396 24 10 Atlanta MSA 5,544 31 13 Gainesville MSA 187 34 15 Coastal Georgia 370 10 5 Western North Carolina 425 11 5 East Tennessee 850 13 6 Tota

  35. Slide 35: Market Share Opportunities

    Market Share Opportunities (excellent growth prospects) Market Deposits United Deposit Markets (in billions) (1) Deposits Banks Offices Share (1) Rank(1) North Georgia $ 8.5 $ 2.5 11 23 31 % 1 Atlanta MSA 55.2 2.0 10 39 4 7 Gainesville MSA 2.6 .3 1 6 13 4 Coastal Georgia 7.5 .4 2 9 5 8 Western North

  36. Slide 36: Leading Demographics

    Leading Demographics 2009 - 2014 Total Population (1) Rank Ticker Company State Assets ($ B) Growth (2) 1 WAL Western Alliance Bancorporation NV $ 5.8 11.25 % 2 WTNY Whitney Holding Corporation LA 11.9 9.75 3 UCBI United Community Banks, Inc. GA 7.8 9.65 4 CFR Cullen/Frost Bankers, Inc. TX 16.3 9.20

  37. Slide 37: Small Business Market Growth

    Small Business Market Growth Number of Businesses with 1 – 49 Employees Small Population Business Growth Growth 2000 - 2009 Markets 1 2000 2006 (%) (%) North Georgia 6,453 7,693 19 24 Atlanta MSA 70,893 126,200 78 31 Gainesville MSA 3,158 3,824 21 34 Coastal Georgia 9,441 10,210 8 10 Western North C

  38. Slide 38: Business Mix Loans (at quarter-end)

    Business Mix Loans (at quarter‐end) Year Over (in millions) 1Q10 4Q09 3Q09 2Q09 1Q09 Year LOANS BY CATEGORY Commercial (sec. by R/E) $ 1,765 $ 1,779 $ 1,787 $ 1,797 $ 1,779 (14) Commercial Construction 357 363 380 379 377 (20) Commercial & Industrial 381 390 403 399 387 (6) Total Commercial 2,503 2,

  39. Slide 39: Business Mix Loans (at year-end)

    Business Mix Loans (at year‐end) (in millions) 2009 2008 2007 2006 2005 LOANS BY CATEGORY Commercial (sec. by R/E) $ 1,779 $ 1,627 $ 1,476 $ 1,230 $ 1,055 Commercial Construction 363 500 527 469 359 Commercial & Industrial 390 410 418 296 237 Total Commercial 2,532 2,537 2,421 1,995 1,651 Residentia

  40. Slide 40: Residential Construction – Total Company

    Residential Construction – Total Company (in millions) 1Q10 4Q09 3Q09 2Q09 1Q09 Land Loans Developing Land $ 290 $ 332 $ 380 $ 413 $ 445 Raw Land 124 127 159 159 155 Lot Loans 321 336 336 369 390 Total 735 795 875 941 990 Construction Loans Spec 153 178 218 268 317 Sold 72 77 92 106 123 Total $ 225

  41. Slide 41: Residential Construction – Atlanta MSA

    Residential Construction – Atlanta MSA (in millions) 1Q10 4Q09 3Q09 2Q09 1Q09 Land Loans Developing Land $ 66 $ 76 $ 100 $ 124 $ 148 Raw Land 43 43 61 63 52 Lot Loans 47 52 54 81 98 Total 156 171 215 268 298 Construction Loans Spec 58 68 91 127 164 Sold 14 16 22 29 33 Total $ 72 $ 84 $ 113 $ 156 $ 1

  42. Slide 42: Residential Construction – North Georgia

    Residential Construction – North Georgia (in millions) 1Q10 4Q09 3Q09 2Q09 1Q09 Land Loans Developing Land $ 43 $ 45 $ 56 $ 54 $ 59 Raw Land 148 172 179 180 184 Lot Loans 189 197 198 204 211 Total 380 414 433 438 454 Construction Loans Spec 54 61 71 81 85 Sold 26 27 30 36 37 Total $ 80 $ 88 $ 101 $

  43. Slide 43: Loans – Markets Served (at quarter-end)

    Loans – Markets Served (at quarter‐end) (in millions) 1Q10 4Q09 3Q09 2Q09 1Q09 LOANS BY MARKET Atlanta MSA $ 1,404 $ 1,435 $ 1,526 $ 1,605 $ 1,660 Gainesville MSA 372 390 402 413 422 North Georgia 1,814 1,884 1,942 1,978 2,014 Western North Carolina 756 772 786 794 808 Coastal Georgia 388 405 440 45

  44. Slide 44: Loans – Markets Served (at year-end)

    Loans – Markets Served (at year‐end) (in millions) 2009 2008 2007 2006 2005 LOANS BY MARKET Atlanta MSA $ 1,435 $ 1,706 $ 2,002 $ 1,651 $ 1,207 Gainesville MSA 390 420 400 354 249 North Georgia 1,884 2,040 2,060 2,034 1,790 Western North Carolina 772 810 806 773 668 Coastal Georgia 405 464 415 358 3

  45. Slide 45: Lending – Credit Summary (as of March 31, 2010)

    Lending – Credit Summary (as of March 31, 2010) (in millions) Legal lending limit $199 House lending limit 20 Top 25 relationships 387 ƒ 7.8% of total loans Regional credit review ƒ Standard Underwriting Strong Bank. Strong Service. Strong Future. 45

  46. Slide 46: NPAs by Loan Category, Market, and Activity

    NPAs by Loan Category, Market, and Activity UNITED COMMUNITY BANKS, INC. Financial Highlights Credit Quality (1) First Quarter 2010 Fourth Quarter 2009 Third Quarter 2009 Non-performing Foreclosed Total Non-performing Foreclosed Total Non-performing Foreclosed Total (in thousands) Loans Properties N

  47. Slide 47: Net Charge-offs by Category and Market

    Net Charge‐offs by Category and Market First Quarter 2010 Fourth Quarter 2009 Third Quarter 2009 Net Charge- Net Charge- Net Charge- Offs to Offs to Offs to Net Average Net Average Net Average (in thousands) Charge-Offs Loans (2) Charge-Offs Loans (2) Charge-Offs Loans (2) NET CHARGE-OFFS BY CATEGOR

  48. Slide 48: Liquidity – Loans / Deposits

    Liquidity – Loans / Deposits Variance 1Q 10 4Q 09 1Q 09 vs 4Q 09 vs 1Q 09 Loans $ 4,992 $ 5,151 $ 5,633 $ (159) $ (641) Core (DDA, MMDA, Savings) 2,397 2,344 2,150 $ 53 $ 247 Public Funds 685 646 560 $ 39 $ 125 CD's 2,695 2,879 3180 $ (184) $ (485) Total Deposits (excl Brokered) 5,777 5,869 5,890 (9

  49. Slide 49: Liquidity – Wholesale Borrowings

    Liquidity – Wholesale Borrowings Unused Variance (in millions) Capacity 1Q10 4Q09 1Q09 vs 4Q 09 vs 1Q 09 Brokered Deposits $ 1,248 $ 711 $ 759 $ 727 $ (48) $ (16) FHLB 791 114 115 260 (1) (146) Fed Funds 100 - - 58 - (58) Other Wholesale 328 102 101 101 1 1 Total $ 2,467 $ 927 $ 975 $ 1,146 $ (48) $

  50. Slide 50: Business Mix – Deposits (at quarter-end)

    Business Mix – Deposits (at quarter‐end) (in millions) DEPOSITS BY CATEGORY 1Q10 4Q09 3Q09 2Q09 1Q09 Demand & Now $ 1,489 $ 1,465 $ 1,481 $ 1,523 $ 1,485 MMDA & Savings 908 879 858 744 665 Core Transaction Deposits 2,397 2,344 2,339 2,267 2,150 Time < $100,000 1,637 1,740 1,848 1,985 1,904 Public De

  51. Slide 51: Analyst Coverage

    Analyst Coverage FBR Capital Sandler O’Neill & Partners (Market Perform – Nov 19, 2009) (Hold – Apr 5, 2010) FIG Partners Soleil (Tenner Investment Research) (Market Perform – Jan 29, 2010) (Hold – Apr 13, 2010) Keefe, Bruyette & Woods Stephens, Inc. (Market Perform – Apr 5, 2010) (Equal Weight – Fe

  52. Slide 52: Southern Community Bank

    Southern Community Bank ($ in millions) Purchased – June 19, 2009 Nine years old – Enhances presence in southside metro Atlanta markets Four banking offices in southside metro Atlanta MSA – Fayetteville, Coweta and Henry counties 54 employees (Reduced by 17 after conversion in September 2009) $208 i

  53. Slide 53: Discontinued Operations – Restated Income Statement

    Discontinued Operations – Restated Income Statement Page 1 of 2 Revised for Discontinued Operations (in thousands, except per share data) 1Q10 4Q09 3Q09 2Q09 1Q09 Interest revenue: Loans, including fees $ 72,215 $ 78,064 $ 80,874 $ 81,691 $ 81,880 Investment securities, including tax exempt 16,203 1

  54. Slide 54: Discontinued Operations – Restated Income Statement

    Discontinued Operations – Restated Income Statement Page 2 of 2 Revised for Discontinued Operations (in thousands, except per share data) 1Q10 4Q09 3Q09 2Q09 1Q09 Operating expenses: Salaries and employee benefits 24,360 24,061 23,889 26,305 27,313 Communications and equipment 3,273 3,819 3,640 3,57

  55. Slide 55: Non-GAAP Reconciliation Tables

    Non‐GAAP Reconciliation Tables (in millions, except EPS) Operating Earnings to GAAP Earnings Reconciliation 1Q 10 4Q 09 1Q09 Core fee revenue reconciliation (1) Core fee revenue $ 11.6 $ 11.7 $ 11.5 Securities gains (losses), net .1 2.0 .3 Gain from sale of low incoming housing tax credits - .7 - Fe

  56. Slide 56: Non-GAAP Reconciliation Tables

    Non‐GAAP Reconciliation Tables Operating Earnings to GAAP Earnings Reconciliation 4Q09 4Q09 1Q09 Net interest margin - pre credit reconciliation Net interest margin - pre credit 4.15 % 4.04 % 3.53 % Effect of interest reversals, lost interest, and carry costs of NPAs (.66) (.64) (.45) Net interest m

  57. Slide 57: United Community Banks, Inc.

    United Community Banks, Inc. Investor Presentation First Quarter 2010 Copyright 2010 United Community Banks, Inc. All rights reserved.

United Community Banks — Q1 2010 Earnings Presentation on 6ix