United Community Banks, Inc. · NYSE:UCB
United Community Banks — Investor Day (February 2018)
114 slides from United Community Banks's investor day presentation, Feb 22, 2018
Slide 1: 2018 Investor Day
2018 INVESTOR DAY February 22, 2018
Slide 2: Disclosures
DISCLOSURES Certain Statements in this presentation may constitute "forward - looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward - looking statements are statements that include projections, predictions, expectations, or beliefs about future event
Slide 3: Agenda
AGENDA Page Number 9:30am Opening Remarks & Introductions Jimmy Tallent 5 9:45am Strategic Transformation Sets Stage for Achieving Top Quartile Goals Lynn Harton 6 10:15am Community Banking: The Engine Expands Panel Discussion with Local Leadership Bill Gilbert 19 11:00am Commercial Banking Solution
Slide 4: Agenda
AGENDA Page Number 1:00pm Navitas: Our Newest Growth Engine Gary Shivers Rich Pfaltzgraff 73 1:30pm Information Technology Mark Terry 83 2:00pm Credit Business Model and Analysis Rob Edwards 91 2:30pm Finance Topics Jefferson Harralson 100 3:00pm Future Outlook & Closing Remarks Lynn Harton Jimmy Ta
Slide 5: Opening Remarks & Introductions
z Opening Remarks & Introductions Jimmy Tallent Chairman & CEO United Community Banks, Inc. 5
Slide 6: Strategic Transformation Sets Stage for Achieving Top Quartile Goals
z Strategic Transformation Sets Stage for Achieving Top Quartile Goals Lynn Harton Chief Executive Officer and President United Community Bank 6
Slide 7: Significant Progress Towards Top Quartile Targets
SIGNIFICANT PROGRESS TOWARDS TOP QUARTILE TARGETS 2017 ROA 1.1% ROTCE 11.9% 2018 Plan ROA 1.4% ROTCE 16% 7 2012 ROA .49% ROTCE 5.4%
Slide 8: Our Vision
OUR VISION To be a high performance community bank with the talent, risk management and product capabilities of a larger institution. 8 Premier Operator Thoughtful Consolidator
Slide 9: Top Quartile Balanced Performance
TOP QUARTILE BALANCED PERFORMANCE 9 Growth Profitability Quality
Slide 10: The Path Towards Top Quartile Performance
THE PATH TOWARDS TOP QUARTILE PERFORMANCE ROA - Top Quartile NIM Top Quartile Loan Revenue Top Quartile Securities Revenue Second Quartile Interest Expense Top Quartile Fee Revenue Peer Median Operating Expense Top Quartile Credit Costs Second Quartile Net Charge Offs Second Quartile Workout / NA Co
Slide 11: Why a Community Bank?
WHY A COMMUNITY BANK? United DELIVERA MAINTAIN & BUILD SERVICE A SATISFIED DIFFERENTIAL EMPLOYEE BASE
Slide 12: What Is the More?
WHAT IS THE “MORE?” United IN ti? SCALE TALENT fe) S PRODUCT SET
Slide 13: Our Model of Intention
OUR MODEL OF INTENTION Get the Infrastructure Right Invest in New Products Execute Growth Market Expansion 13
Slide 14: Infrastructure
INFRASTRUCTURE 2013 Loan Sale Commercial Credit Process redesign Centralized Consumer Credit Centralized Loan Ops Centralized Collections Marketing / Branding Consolidated Market Leadership New Outside Auditors DTA Recovery 2014 Repaid TARP MOU lifted Employee Communication Strategy Employee Rating
Slide 15: Products
PRODUCTS 2013 “Best” HELOC Health Care Income Property Middle Market Customer Derivatives 2014 Purchase of BCI Hiring of Rich Bradshaw New Mortgage Strategy – Mike Davies Merchant Joint Venture ABL 2015 Construction / Perm Mandatory Mortgage Delivery Mortgage Servicing 2016 Senior Housing New Online
Slide 16: Geography
GEOGRAPHY 16 2013 Greenville Corporate Greenville de novo Nashville Healthcare (exited 2015) 2014 Market SBA National SBA Verticals Income Property – ATL Builder Finance - CLT 2015 FNB (Money Tree) Palmetto Charleston de novo ATL inside the perimeter 2016 Tidelands (Charleston, Myrtle Beach) Middle
Slide 17: Thinking Forward: 2018 & Beyond
THINKING FORWARD: 2018 & BEYOND 17 Infrastructure New Commercial RG & Origination System Mobile Mortgage Online Account Opening Digital Marketing Improved Branding Products Navitas Potential CBS Expansions Geography Potential Opportunities in our Footprint Potential Markets in North Florida and Alab
Slide 18: The United Foundation
THE UNITED FOUNDATION Community Involvement Distributed, Local Decision - making One Leader in Each Market Leader Serves as Point of Integration with Specialists One Team Small Bank Service, Large Bank Resources Small Enough to Know You, Large Enough to Serve You 18
Slide 19: Community Banking: The Engine Expands
z Community Banking: The Engine Expands Bill Gilbert President of Community Banking 19
Slide 20: Community Banking: Operating Model
COMMUNITY BANKING: OPERATING MODEL • The Community Banking Model is a group of 31 banks managed by local CEOs • Total of 154 offices across the four state footprint • Single brand with standardized products, consolidated operational support. Our focus is on serving the needs of these individual bank
Slide 21: Stability & Growth
STABILITY & GROWTH GROWTH MARKETS LEGACY MARKETS
Slide 22: Focus on High Growth MSAs
FOCUS ON HIGH GROWTH MSAs 22 Fastest Growing Southeast MSAs (1) 2018 - 2023 Projected Population Growth 2018 Population 2023 Projected Median Household Income 1. Myrtle Beach, SC 9.96% 470,010 $55,177 2. Cape Coral, FL 8.66% 740,553 $59,220 3. Charleston, SC 8.46% 785,518 $69,670 4. Orlando, FL 8.17
Slide 23: Community Banking Markets
COMMUNITY BANKING MARKETS LEGACY Region Loans ($ millions) Deposits ($ millions) # Branches Deposits/Branch North GA $521 $1,150 8 $144 Northeast GA $642 $1,219 14 $87 Northwest GA $225 $448 7 $64 Western NC $542 $1,028 19 $54 Legacy Totals: $1,930 $3,845 48 GROWTH Region Loans ($ millions) Deposits
Slide 24: Community Banking & CBS Partnership
COMMUNITY BANKING & CBS PARTNERSHIP $139 $433 $604 Dec-15 Dec-16 Dec-17 CBS Partnership Loans $81 $224 $407 Dec-15 Dec-16 Dec-17 Mortgage Partnership Loans $2.5 $3.9 $4.0 Dec-15 Dec-16 Dec-17 Partnership SBA Gains $ in millions 24
Slide 25: Community Banking Panel: South Carolina
z Community Banking Panel: South Carolina Dixon Woodward Regional President of South Carolina 25
Slide 26: Community Banking: South Carolina
COMMUNITY BANKING: SOUTH CAROLINA 26 39 Branches Loans $ 1.392B Deposits $1.607B As of January 31, 2018
Slide 27: Community Banking: Coastal South Carolina
COMMUNITY BANKING: COASTAL SOUTH CAROLINA 27 14 Branches Loans $765M Deposits $515M As of January 31, 2018
Slide 28: Community Banking: Coastal South Carolina
COMMUNITY BANKING: COASTAL SOUTH CAROLINA 28 - 50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000 450,000,000 4Q2015 4Q2016 4Q2017 Charleston Charleston Deposits Charleston Loans
Slide 29: How We Compete
HOW WE COMPETE • Experienced bankers (CRM average tenure of 23+ years in Charleston and Myrtle Beach) doing business in markets we know with people we know • Leveraging resources of a larger regional bank with the touch and care of a local community bank • Speed to market • Commercial Banking Soluti
Slide 30: Community Banking Panel: Upstate South Carolina
z Community Banking Panel: Upstate South Carolina Michelle Seaver President of Greenville County 30
Slide 31: Community Banking: Greenville & The Upstate
COMMUNITY BANKING: GREENVILLE & THE UPSTATE As of December 31, 2017. 31 25 Branches Loans $654.5M Deposits $1,145.7M
Slide 32: How We Compete
HOW WE COMPETE • Leverage Partnerships with Commercial Banking Solutions • Leverage leadership presence in market • Passionate bankers focused on the customer experience 32
Slide 33: Community Banking Panel: Metro Atlanta
z Community Banking Panel: Metro Atlanta C.B. Fair Regional President of West Atlanta 33
Slide 34: Community Banking: Metro Atlanta
COMMUNITY BANKING: METRO ATLANTA 34 30 Branches Loans $1.345B Deposits $2.303B As of January 31, 2018
Slide 35: Community Banking: Metro Atlanta
COMMUNITY BANKING: METRO ATLANTA 35 - 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 4Q2014 4Q2015 4Q2016 4Q2017 Metro Atlanta Metro Atlanta Loans Metro Atlanta Deposits
Slide 36: How We Compete
HOW WE COMPETE • Focused calling efforts within our areas of expertise • Calling efforts driven by experienced lenders working with current relationships, referrals and prospects • Meaningful partnership with our Commercial Banking Solutions team • Strong, productive relationship with proactive, exp
Slide 37: Community Banking Panel: Raleigh
z Community Banking Panel: Raleigh Jim Rose Regional President of Raleigh and the Coastal Plain 37
Slide 38: Community Banking: Raleigh & The Coastal Plain
COMMUNITY BANKING: RALEIGH & THE COASTAL PLAIN 38 12 Locations + Raleigh LPO Loan Pipeline $135M $518M Loan Book 8.6% Deposit Growth
Slide 39: Community Banking: Raleigh & Coastal Plain
COMMUNITY BANKING: RALEIGH & COASTAL PLAIN 39 Todd Simpson Regions Bank (30+ years ) Bruce Corn Park Sterling / BB&T (15 years) John Lowe Park Sterling / Wachovia (30+ years) Nikki Waller BB&T, Yadkin Bank (15 years) Ryan Clayton RBC / Pac West (10+ years ) Jason Woodard Suntrust / Yadkin Bank (20+
Slide 40: How We Compete
HOW WE COMPETE • Retain and expand legacy Four Oaks Bank clients and markets • Grow loan balances and client relationships and identify branch opportunities • Leverage that we are small enough to know you and large enough to serve you • Improve Efficiency Ratio • Attract top local talent • Leverage
Slide 41: Proactive Approach Loca | Lea ders h i p
Proactive Approach Loca | Lea ders h i p Tailored Solutions Collaboration Familiar Markets Personal Approach Speed to Market Experience Large Bank Resources Local Focus Expertise Strategy Community Bank Care PersOnal Service "Best in Class" Customer Experience Commercial Banking Solutions Passionate
Slide 42: Commercial Banking Solutions: Product Expertise
z Commercial Banking Solutions: Product Expertise Rich Bradshaw President of Commercial Banking Solutions 42
Slide 43: Commercial Banking Solutions: Lines of Business
COMMERCIAL BANKING SOLUTIONS: LINES OF BUSINESS SBA Asset Based Lending Middle Market Commercial Real Estate (CRE) Builder Finance Senior Care Renewable Energy Navitas Credit Corp. 43
Slide 44: Mission
MISSION • CBS lines of business partner with and grow the community bank • Each line of business is fully - staffed with loan officers, underwriters and credit professionals who have an extraordinary level of expertise in their respective fields • Depth of knowledge that allows United to compete for
Slide 45: Summary
SUMMARY $ in thousands 45 0% 5% 10% 15% 20% 25% 30% 35% 40% $0 $500 $1,000 $1,500 $2,000 $2,500 2014 2015 2016 2017 Commercial Banking Solutions Outstanding Commitment Referral % CBS 2017 Loan Production CBS Generated Partner Generated
Slide 46: Newest CBS Business Lines
NEWEST CBS BUSINESS LINES • Effective lift out of the Senior Care Team of Bank of the Ozarks – Jennifer Lawley, Senior Living Team Leader will provide an overview; Since inception (July 2016), they have grown to $355M in commitments • Launched Renewable Energy product – $100M production forecasted i
Slide 47: What's the Secret Sauce?
WHAT’S THE SECRET SAUCE? • Partnership with the Community Bank • Communication, Communication, Communication • Joint incentive program and partnership reporting are key to driving the results 47
Slide 48: Ongoing Additions Planned
ONGOING ADDITIONS PLANNED ? SBA Asset Based Lending Middle Market Commercial Real Estate (CRE) Builder Finance Senior Care Renewable Energy Navitas Credit Corp. 48
Slide 49: Commercial Banking Solutions: Senior Care Lending
COMMERCIAL BANKING SOLUTIONS SENIOR CARE LENDING 49 Jennifer Lawley Senior Living Team Leader
Slide 50: Senior Care Lending Overview
SENIOR CARE LENDING OVERVIEW • Senior Care includes Independent Living, Assisted Living, Memory Care and Skilled Nursing Facilities • Focus on construction of new facilities as well as refinance and acquisition of existing facilities • Target market is the southeast 50
Slide 51: Senior Care Lending Strategy
SENIOR CARE LENDING STRATEGY • Underwriting Strategy – Target owner - occupied projects and underwriting the operating business – Target average minimum project equity of 30% – Emphasis on private pay facilities • Origination Strategy – Source deals through Senior Care Team’s industry contacts and a
Slide 52: Senior Care Lending Overview
SENIOR CARE LENDING OVERVIEW $0 $50 $100 $150 $200 $250 $300 $350 $400 2015 2016 2017 Outstanding Commitments 2015 2016 2017 Past Due Loans 0% 0% 0% Non - accruals 0% 0% 0% Charge - Offs 0% 0% 0% $ in millions 52
Slide 53: Commercial Banking Solutions: Commercial Real Estate (CRE)
COMMERCIAL BUSINESS SOLUTIONS: COMMERCIAL REAL ESTATE (CRE) 53 Lisa Shelnutt Commercial Real Estate Relationship Manager
Slide 54: Commercial Real Estate (CRE)
COMMERCIAL REAL ESTATE (CRE) • Target Market - Experienced, well - capitalized developers in our footprint who develop institutional grade properties • Products – Retail, industrial, office, multifamily and hospitality (very selective on the last two) – Construction, mini perm and very limited perma
Slide 55: Commercial Real Estate (CRE) Overview
COMMERCIAL REAL ESTATE (CRE) OVERVIEW $0 $100 $200 $300 $400 $500 $600 $700 2015 2016 2017 Outstanding Commitments 2015 2016 2017 Past Due Loans 0% 0% 0% Non - accruals 0% 0% 0% Charge - Offs 0% 0% 0% $ in millions 55
Slide 56: Commercial Banking Solutions: Middle Market
COMMERCIAL BANKING SOLUTIONS: MIDDLE MARKET 56 Charles Chamberlain Director of Corporate Banking
Slide 57: Middle Market & Asset Based Lending Strategy
MIDDLE MARKET & ASSET BASED LENDING STRATEGY • Loan Characteristics: – Revenue >$50M – EBITDA > $5M – Professional management – Cash flow structure with maintenance covenants • Geographic Focus: – Companies headquartered in market as defined by Bank policy (footprint + adjacent states) – Major opera
Slide 58: Middle Market & Asset Based Overview
MIDDLE MARKET & ASSET BASED OVERVIEW $0 $100 $200 $300 $400 $500 $600 $700 $800 2015 2016 2017 Outstanding Commitments 2015 2016 2017 Past Due Loans 0% 0% 0% Non - accruals 0% 0% 0% Charge - Offs 0% 0% 0% $ in millions 58
Slide 59: Investor Day 2018 Lunch
[ United COMMUNITY BANKS, INC. INVESTOR DAY 2018 LUNCH
Slide 60: Growth Successes Panel: SBA Lending
z Growth Successes Panel: SBA Lending Annemarie Murphy Chief Operating Officer of SBA 60
Slide 61: SBA Overview
SBA OVERVIEW • Ranked top 15 nationally in SBA approved loan volume in Q4 2017 0 50 100 150 200 250 300 350 400 450 2013 2014 2015 2016 2017 Outstanding Commitments 61 $ in millions
Slide 62: How We Compete
HOW WE COMPETE • United has 2 channels - Footprint and National Industry Groups – Footprint: 4 SBA loan officers cover the four states and they partner with the community bank to find opportunities – National Industry Groups: 17 SBA loan officers and sales specialists cover the industry groups on a
Slide 63: Growth Successes Panel: Mortgage Services
z Growth Successes Panel: Mortgage Services Mike Davies President of United Community Mortgage Services 63
Slide 64: Mortgage Business Overview
MORTGAGE BUSINESS OVERVIEW • Growth Strategy – Applying the blueprint of legacy market success into major metro areas in the United footprint with specific emphasis on Metro Atlanta, Coastal GA, Coastal SC, and Raleigh • Loan Products – Conforming and Jumbo Fixed and Adjustable Rate Mortgages – Cons
Slide 65: Mortgage Production Has Tripled Since '14: How We Did It
MORTGAGE PRODUCTION HAS TRIPLED SINCE ’14: HOW WE DID IT 65 • October 2013 – Mike Davies Named President of UCMS – Inherited a Blairsville, GA centralized mortgage group – 34 MLOs concentrated mainly in UCB legacy markets • 2014 – Migrated to a more robust Loan Origination System – Developed and Imp
Slide 66: Mortgage Production Has Tripled Since 2014
MORTGAGE PRODUCTION HAS TRIPLED SINCE 2014 $- $500 $1,000 $1,500 $2,000 $2,500 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2013 2014 2015 2016 2017 Proj. 2018 Mortgage Industry Production Billions UCMS Mortgage Production Millions Legacy Metro Mortgage Industry 66
Slide 67: Production Per MLO Has Increased
PRODUCTION PER MLO HAS INCREASED 67 $- $500 $1,000 $1,500 $2,000 $2,500 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2013 2014 2015 2016 2017 Proj. 2018 Mortgage Industry Production UCMS Mortgage Production Producton Per MLO Mortgage Industry $ in billions
Slide 68: Servicing Business Has Increased
SERVICING BUSINESS HAS INCREASED $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 CORE Servicing Servicing for Others 68 $ in thousands
Slide 69: Where to Next
WHERE TO NEXT Digital Mortgage • Enhance Customer Experience • Online Outreach • Fast, Easy, Simple Outsourced Servicing • Expand Geographic Footprint • Scalable Additional Channels • Consumer Direct • Third Party Originations 69
Slide 70: Meet the Board
Meet the Board United
Slide 71: Tom Richlovsky
z TOM RICHLOVSKY Mr. Richlovsky retired from PNC Financial Services Group, Inc. Mr. Richlovsky has extensive experience in the financial services industry, having served in senior executive positions in finance, accounting and treasury at major banking organizations. Mr. Richlovsky’s expertise and e
Slide 72: Ken Daniels
z KEN DANIELS Mr. Daniels retired from BB&T in 2014. His 38 years as a banking leader and risk professional with extensive experience in loan portfolio management, regulatory requirements, policy development and data integrity provides the Board with a depth of banking and risk expertise and offers
Slide 73: Navitas: Our Newest Growth Engine
z Navitas: Our Newest Growth Engine Gary Shivers President and CEO of Navitas Credit Corp Richard Pfaltzgraff SVP and CFO of Navitas Credit Corp 73
Slide 74: Navitas Overview
NAVITAS OVERVIEW 74 Net Loans and Leases Key Industries Portfolio Statistics (1) Net Investment Loans & Leases ($MM) $377 Total Managed Portfolio ($MM) $446 Average Equipment Cost $40,609 Weighted Average Term (Months) 51 Weighted Average FICO 731 No. of Contracts 18,000+ No. of Customers 15,600+
Slide 75: Experienced Leadership Team
EXPERIENCED LEADERSHIP TEAM Senior management averages over 25 years of financial services experience with various equipment finance companies and other firms Gary Shivers CEO & President Richard Pfaltzgraff SVP & Chief Financial Officer Michael Bruman SVP & Chief Credit Officer Debbie Jones SVP Acc
Slide 76: Unparalleled SMB Equipment Finance Platform
UNPARALLELED SMB EQUIPMENT FINANCE PLATFORM 76 Scalable Platform Exceptional Origination Capabilities Proven Management Team Low Annual Losses Proven Business Model Drives Controlled Portfolio and Strong Earnings Growth Customized Equipment Finance SMB Solutions… …Delivered to a Massive Market… …Thr
Slide 77: Transaction Characteristics
TRANSACTION CHARACTERISTICS Key Characteristic Value Typical Transaction Size Range $1,000 to $1,000,000 Avg. Transaction Size Approximately $40,000 Original Term Range 12 to 84 Months Avg. Original Term 50 Months Conditional Sale or Equipment Finance Contracts 90%+ Triple Net / Hell or High Water C
Slide 78: Credit Underwriting Overview: Credit Dynamics
CREDIT UNDERWRITING OVERVIEW: CREDIT DYNAMICS • Consistent underwriting process and policy across the Company • Intersection of consumer and commercial credit • Condensed decision - making time frame (typically within 4 hours) • Credit applications are reviewed and approved by a credit analyst based
Slide 79: Credit Underwriting Overview: Credit Decision Process
CREDIT UNDERWRITING OVERVIEW: CREDIT DECISION PROCESS • Evaluation of the Vendor and Broker prior to accepting applications • Credit decision matrix based on corporate - only or personal guarantee • Due diligence of business existence, time in business, ownership, location, industry and existing Nav
Slide 80: Credit Underwriting Overview: Credit Enhancement Tools
CREDIT UNDERWRITING OVERVIEW: CREDIT ENHANCEMENT TOOLS • Risk Based Pricing • Third Party Guaranties (Cross Corporate and/or Personal Guaranty) • Site Inspections • 15 Day ACH Payment Addendum • ACH Required • Maximum End User Exposure • Down Payments • Advance Payments / Security Deposits • Manufac
Slide 81: Static Net Loss Curves by Year of Origination
STATIC NET LOSS CURVES BY YEAR OF ORIGINATION *As of December 31, 2017. 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 Q21 Q22 Q23 Q24 2010 2011 2012 2013 2014 2015 2016 2017 81
Slide 82: Navitas / UCBI Growth Opportunities & Synergies
NAVITAS / UCBI GROWTH OPPORTUNTIES & SYNERGIES 82 Growth Opportunities • Larger middle market transactions • Large vendor programs • Growth in targeted markets – Franchise, Healthcare, Construction and Yellow Iron • Direct Marketing Opportunities Synergies • Provide equipment finance products to ban
Slide 83: Information Technology
z Information Technology Mark Terry Chief Information Officer 83
Slide 84: Technology Profile
TECHNOLOGY PROFILE • Technology program able to support a Bank growing in both size and complexity • Technology program and leaders that are business focused • An early adopter of proven technologies • Technology products and services provided by best in class vendors • Development activities limite
Slide 85: Foundational Components of IT Systems & Processes
FOUNDATIONAL COMPONENTS OF IT SYSTEMS & PROCESSES Quality Experience Adaptability Scalability Reliability Security Ability to provide an ever improving quality experience for customers and employees Ability to quickly take advantage of future business opportunities or new technologies Ability to gro
Slide 86: Strategic Areas of Focus
STRATEGIC AREAS OF FOCUS 86 Infrastructure & Security Business Applications Data & Analytics IT Personnel & Organization
Slide 87: Infrastructure & Security
INFRASTRUCTURE & SECURITY 2016 2017 2018 2019 Mainfram e Replacement Phone Systems, Video Conferencing and Communications Equipment Upgrades Infrastructure Hardware and Software Upgrades Wireless and Remote Access Upgrades Network Redundancy Upgrades Datacenter Relocations and Redundancy Upgrades Cl
Slide 88: Business Applications
BUSINESS APPLICATIONS 2016 2017 2018 2019 Online & Mobile Banking System Replacement General Ledger System Replacement Teller System Replacement Mortgage Servicing System Upgrades Business Process Automation for Deposits Business Process Automation for Loans Online & Mobile Channel Integrations and
Slide 89: Data & Analytics
DATA & ANALYTICS 2016 2017 2018 2019 Standardized Credit Reporting Dashboard and Data Visualization Enhancements DFAST Program Management and Statistical Modeling Upgrade Reporting and Database Infrastructure Piloting Data Cloud based and AI Technologies Self Service Data Platform CECL Program Devel
Slide 90: IT Personnel & Organization
IT PERSONNEL & ORGANIZATION 2016 2017 2018 2019 Outsourcing of Specialty & High Maintenance Systems Enhancements in Acquisition Integration Processes Loan Application Support Leader Chief Data Officer Digital Banking Director Targeted Third Party Project Engagements Project Management Organization E
Slide 91: Credit Business Model & Analysis
z Credit Business Model & Analysis Rob Edwards Chief Credit Officer 91
Slide 92: Credit Team
CREDIT TEAM Rob Edwards Chief Credit Officer Chuck Valerio Chief Retail Credit Officer Centralized Consumer U/W Small Bus U/W Portfolio Oversight Retail Policy Mortgage Credit Joined - 2013 Mark Pinion Commercial Senior Credit Officer Middle Market ABL Gainesville, GA East Atlanta South Carolina Ral
Slide 93: Commercial Credit Approval
COMMERCIAL CREDIT APPROVAL • Committee Members include Chief Credit Officer (Chair), Commercial Business President, Regional Banking President, and respective Senior Credit Officer. • This committee meets no less than weekly with an emphasis on quick turnaround. Senior Credit Committee Up to House L
Slide 94: Portfolio Monitoring Process
PORTFOLIO MONITORING PROCESS • Monthly meeting to review commercial portfolio performance with Commercial Credit team. • Discuss Top 15 OLEM, Substandard, Non accrual and OREO. Commercial Asset Quality Committee • Every Region has a quarterly meeting to review problem loan reports greater than $300,
Slide 95: Navitas Portfolio Monitoring Process
NAVITAS PORTFOLIO MONTORING PROCESS 95 • Chief Credit Officer of Navitas chairs the committee • Attended by CEO, CFO, and Business Unit Heads • Primary duties are to approve credits up to $1 million and policy changes. Senior Credit Committee • Monthly meeting to review all 30+ days past dues. • Rev
Slide 96: Total Bank Portfolio Strategy
TOTAL BANK PORTFOLIO STRATEGY • Portfolio limits are established based on the component percentage of the portfolio and also as a percentage of Capital. • Portfolio limits and strategies are Board approved and reviewed monthly in Senior Credit Committee. • The portfolio strategy is set at the top of
Slide 97: Total Bank Portfolio Strategy
TOTAL BANK PORTFOLIO STRATEGY • Additional limits are established at a more granular level for the Commercial Portfolio: – CRE – Includes specific limits by property type including Multi - Family, Office, Retail, Residential ADC, Hotel and Warehouse – C&I is established by the industry sector. • Str
Slide 98: Result: Diversified Portfolio
RESULT: DIVERSIFIED PORTFOLIO • Excluding Four Oaks, annualized end of period loan growth was 2% or 5% excluding Indirect Auto runoff of $42 million • Strategically moved C&I (including owner - occupied CRE) to 40% of loans versus 38% a year ago and 23% pre crisis • Investor CRE loans moved to 21% f
Slide 99: Credit Quality Trends
CREDIT QUALITY TRENDS • Three years of losses less than $7 million • Continued stability in Classified Assets • Only 24 properties in OREO at 2017 year end Net Charge-offs 1.5$ 1.7$ 1.6$ 1.6$ 1.1$ as % of Average Loans 0.09 % 0.10 % 0.09 % 0.09 % 0.06 % Allowance for Loan Losses 61.4$ 60.5$ 59.5$ 58
Slide 100: Finance Topics
z Finance Topics Jefferson Harralson Chief Financial Officer 100
Slide 101: UCBI Has Significant Earnings Drivers
UCBI HAS SIGNIFICANT EARNINGS DRIVERS • Loan growth accelerates with Partnership Model, investment in higher growth markets and Navitas • Balance Sheet flexibility allows for higher profitability over time and is well situated for higher rates • Capital Management should be additive to return • Navi
Slide 102: Q4 and 2017 Show Strong Results
Q4 AND 2017 SHOW STRONG RESULTS • Operating diluted earnings per share of $0.42 compared with GAAP diluted loss per share of $.16 – Tax reform resulted in $38.2 mm charge to remeasure the deferred tax asset at the new Federal tax rate and $6.2 mm merger and other charges, net of tax • Dividend $.10
Slide 103: Loan Growth Drivers
LOAN GROWTH DRIVERS 103 Mid to Upper Single Digit Loan Growth Indirect Portfolio $300M running off at ~$45M per quarter at 2.50% yield Community Banks New Markets: Raleigh, Coastal Carolina CBS Products: Senior Living, Middle Mkt, ABL, Navitas et al Navitas Expe ct ~$25 - 30M growth per quarter at ~
Slide 104: Partner Loan Growth - A Key Driver
PARTNER LOAN GROWTH - A KEY DRIVER • 2017 Total loan growth with acquisitions 1 = $815M • 2017 Organic loan growth 2 = 3% 104 - 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 2Q14 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017
Slide 105: NIM – Well Positioned for Rising Rates
NIM – WELL POSITIONED FOR RISING RATES • Navitas adds about 15bps to NIM, all things equal • Mix change towards loans from securities over time • Our ALCO model shows UCBI as rate neutral, but lower than expected deposit betas have been benefitting NIM • Accretable yield only 7 basis points of the N
Slide 106: Low Loan to Deposit Ratio Adds to Flexibility
LOW LOAN TO DEPOSIT RATIO ADDS TO FLEXIBILITY 106 79% 83% 93% UCBI 12/31/2017 Pro Forma Navitas Peers 1 Note: Peer comparison banks comprise the KBW Regional Bank Index (ticker: KRX)
Slide 107: Core Deposit Base Is a Strength
CORE DEPOSIT BASE IS A STRENGTH • Our fourth quarter 2017 total cost of deposits was 22 bps, which compared favorably to peers with a Q3 median of 35 bps • Core deposits (excludes Jumbo CDs / Brokered) comprised approximately 98.7% of our total customer deposits at December 31, 2017 107 Source: SNL
Slide 108: Deposit Betas Have Remained Low
DEPOSIT BETAS HAVE REMAINED LOW 108 Note – Peer comparison banks comprise the KBW Regional Bank Index (ticker: KRX) Source: SNL Financial LC Raymond James report 11/29/17 United results as of 4Q17; KRX results as of 3Q17 (Source: SNL Financial LC) 0 10 20 30 40 4Q15 - 3Q17 deposit beta equal to 8%,
Slide 109: Regulatory Capital Ratios
REGULATORY CAPITAL RATIOS 109 Q1 includes Navitas , Sub debt raise, Q1 Earnings 11.23% 11.98% 12.04% 13.06% 10.00% 10.50% 11.00% 11.50% 12.00% 12.50% 13.00% 13.50% 4Q16 4Q17 1Q18 CET1 Tier 1 Total RBC 0.81% 2.13% Note: 4Q16 CET1 and Tier 1 both equate to 11.23% 12.24%
Slide 110: Cash Dividends Have Moved Higher
CASH DIVIDENDS HAVE MOVED HIGHER 110 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Dec-14 Dec-15 Dec-16 Dec-17 Bank Dividends vs 10 Year U.S. Treasury Weighted Avg PG UCBI 10-Year UST 0.0 0.0 0.9 1.3 1.5 1.6 1.6 1.8 1.8 1.8 1.9 2.0 2.4 2.8 2.9 3.8 - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.0 20.7 24.3 30.2 31.2 3
Slide 111: ROA & ROTCE Are Expected to Move Higher
ROA & ROTCE ARE EXPECTED TO MOVE HIGHER 111 12.0% 16.0% Q42017 2018 Plan Navitas Core Bank 1.1% 1.4% Q42017 2018 Plan Navitas Core Bank Tax Reform ROA ROTCE Tax Reform
Slide 112: Navitas Offers Attractive Economics
NAVITAS OFFERS ATTRACTIVE ECONOMICS • $130M / 65% Cash • 6% Lower TBV / 3 year earn back • $0.20 EPS Accretion in First Year • +200 bps in Loan Growth • +200 bps ROTCE • Raised $100M of sub debt to finance cash portion • On Feb 1, paid down ~$200M of Navitas ’ 3.5% lines of credit • Sold $100M of se
Slide 113: Future Outlook & Closing Remarks
z Future Outlook & Closing Remarks Lynn Harton & Jimmy Tallent 113
Slide 114: Why United?
WHY UNITED? • Exposure to main street small business in strong SE markets • Low cost and unlevered deposit base is positioned to outperform • Unique partnership model drives incremental revenue growth • Conservative and diversified credit book led by bankers with large bank experience • Proven abili
United Community Banks — Investor Day (February 2018) on 6ix