United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q2 2022 Earnings Presentation
28 slides from United Community Banks's earnings presentation, Jul 20, 2022
Slide 1: 2Q22 Investor Presentation
2 Q22 Investor Presentation July 19, 2022
Slide 2: Important Information For Shareholders and Investors
Important Information For Shareholders and Investors 2 This presentation contains information related to a proposed merger of United Community Banks, Inc . ("United") with Progress Financial Corporation (“Progress") . In connection with the proposed merger, United has filed with the Securities and E
Slide 3: Disclosures: Cautionary Statement
Disclosures 3 CAUTIONARY STATEMENT This communication contains “forward - looking statements” within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . In general, forward - looking statements usually may be
Slide 4: Disclosures: Non-GAAP Measures
Disclosures NON - GAAP MEASURES This Investor Presentation includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”) . This financial information includes certain operating performance measures, which exclude merger - related
Slide 5: Premier Southeast Regional Bank
#2 Highest Net Promoter Score among all banks nationwide in 2021 – J.D. Power TOP 10 WORLD’S BEST BANKS and #3 in the United States - Forbes 195 BANKING OFFICES ACROSS THE SOUTHEAST #1 IN CUSTOMER SATISFACTION i n 2022 with Retail Banking in the Southeast – J.D. Power United Community Banks, Inc. $
Slide 6: 2Q22 Highlights
$22.81 $24.38 $23.96 $18.49 $17.08 $16.68 2Q21 1Q22 2Q22 Book Value Per Share GAAP Tangible $0.61 Diluted earnings per share - GAAP $0.66 Diluted earnings per share – operating (1) 1.08% Return on average assets - GAAP 1.17% Return on average assets - operating (1) 1.60% PTPP return on average asset
Slide 7: Long-Term Financial Performance & Shareholder Return
11.86% 12.02% 15.69% 15.81% 12.24% 17.33% 13.89% 14.20% 2016 2017 2018 2019 2020 2021 1Q22 2Q22 ROTCE - Operating UCBI KRX Long - Term Financial Performance & Shareholder Return 7 (1) See non - GAAP reconciliation table slides in the Appendix for a reconciliation of operating performance measures to
Slide 8: Footprint Focused on High-Growth MSAs in Southeast
4.9% 3.2% (1) Includes MSAs with a population of greater than 1,000,000 (2) Includes MSAs with a population between 200,000 and 1,000,000 (3) Market Rank and (%) of Total Deposits pro forma for pending acquisition of Progress Financial Corporation Footprint Focused on High - Growth MSAs in Southeast
Slide 9: Outstanding Deposit Franchise
39% 22% 24% 7% 8% DDA MMDA Savings Time NOW Outstanding Deposit Franchise 9 Note: Core transaction accounts include demand deposits, interest - bearing demand, money market and savings accounts, excluding public funds deposits x Total deposits were down $183 million from 1Q22 but up $4.5 billion YOY
Slide 10: Well-Diversified Loan Portfolio
42% 10% 23% 1% 14% 5% 3% 2% Residential Mortgage Manufactured Housing Well - Diversified Loan Portfolio 2 Q22 Total Loans $14.5 billion Note: C&I includes commercial and industrial loans, owner - occupied CRE loans and Navitas (equipment finance) loans Quarter Highlights x Loans increased $225 milli
Slide 11: Deposit Growth Creates Remix Opportunity
$10.9 $16.3 $11.0 $16.9 $11.8 $18.2 $14.3 $21.1 $14.5 $20.9 $0.5 $0.2 $0.1 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 Loans Deposits Loans Deposits Loans Deposits Loans Deposits Loans Deposits 2Q21 3Q21 4Q21 1Q22 2Q22 Loans excluding PPP PPP Loans 70% 66% 64% 68% 70% 47% 57% 67% 77% 87% 97% Deposit Growth Cr
Slide 12: Capital
12 x Quarterly dividend of $ 0.21 per share, an increase of 11% YOY x Net unrealized securities losses in AOCI increased by $90.9 million to $268 million in 2Q22 x There were no share repurchases during 2Q22 *2Q22 regulatory capital ratios are preliminary Capital Common Equity Tier 1 Capital 12.6 %
Slide 13: Net Interest Revenue / Margin
$138.4 $163.8 $178.9 2Q21 1Q22 2Q22 3.19% 2.97% 3.19% 2.81% 2.90% 3.13% Net Interest Revenue / Margin (1) $ in millions x Net interest margin increased 22 bps from 1Q22, primarily driven by increased interest rates x Core net interest margin of 3.13%, which excluded PPP fees and purchased loan accre
Slide 14: Historical Deposit Beta
Historical Deposit Beta 14 0.12% 0.11% 0.12% 0.12% 0.14% 0.14% 0.17% 0.20% 0.24% 0.26% 0.33% 0.44% 0.55% 0.62% 0.65% 0.16% 0.36% 0.37% 0.39% 0.45% 0.70% 0.95% 1.15% 1.20% 1.45% 1.73% 1.92% 2.22% 2.40% 2.40% 1.58% 1.37% 1.24% 1.12% 1.61% 1.94% 1.80% 1.81% 2.07% 2.53% 2.76% 2.80% 2.88% 2.47% 2.12% 0.0
Slide 15: Noninterest Income
Noninterest Income $ in millions $8.4 $9.4 $8.6 $9.1 $10.0 $8.4 $9.0 $7.8 $4.7 $6.7 $3.8 $5.5 $6.1 $5.9 $6.0 $11.1 $13.8 $10.9 $16.1 $7.0 $4.1 $2.4 $3.8 $3.2 $3.8 2Q21 3Q21 4Q21 1Q22 2Q22 Service Charges Other Brokerage / Wealth Mgmt Mortgage Loan sale gains $40.1 Linked Quarter x Fees were down $5.
Slide 16: Disciplined Expense Management
$95.5 $96.7 $109.2 $119.3 $120.8 $94.5 $95.3 $99.2 $110.3 $113.6 2Q21 3Q21 4Q21 1Q22 2Q22 54.5% 53.1% 62.1% 57.4% 56.6% 53.9% 52.3% 56.5% 53.1% 53.2% Efficiency Ratio Expenses Disciplined Expense Management $ in millions Linked Quarter x GAAP and operating expenses increased 1.3% and 3.1%, respectiv
Slide 17: Credit Quality
Credit Quality x 2 Q22 net recoveries of $1.07 million, or 0.03% of average loans, annualized Net Charge - Offs as % of Average Loans Provision for Credit Losses & NCOs ($ in millions) 17 0.05% - 0.01% - 0.02% 0.02% 0.01% 0.08% - 0.03% -0.05% 0.00% 0.05% 0.10% 0.15% 0.20% 4Q20 1Q21 2Q21 3Q21 4Q21 1Q
Slide 18: Higher-Risk Loan Trends
x Special mention loans improved by 0.12% (from $298 million in 1Q22 to $285 million in 2Q22, an improvement of $13 million) x Substandard accruing loans remained flat at 1.2% quarter - over - quarter as a % of total loans Higher - Risk Loan Trends Special Mention & Substandard Accruing Loans as a %
Slide 19: Allowance for Credit Losses
Allowance for Credit Losses ACL Walk Forward Allowance for Credit Losses 19 x Built reserve in consecutive quarters with the Reliant acquisition in 1Q22, a weaker economic forecast and loan growth in 2Q22 $74 $88 $116 $146 $148 $136 $123 $111 $114 $146 $153 0.84% 0.99% 1.14% 1.39% 1.38% 1.26% 1.12%
Slide 20: 2Q22 Exhibits
2 Q22 INVESTOR PRESENTATION Exhibits
Slide 21: Blended Cash and Securities Yield
Blended Cash and Securities Yield Cash and Securities 21 $ in billions $2.4 $3.1 $3.6 $4.3 $4.9 $5.3 $5.7 $6.4 $6.7 $1.2 $0.9 $1.5 $1.2 $1.3 $1.7 $2.2 $1.7 $1.2 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 Investments ($) Fed Funds & Interest Earning Cash
Slide 22: Interest Rate Sensitivity
Interest Rate Sensitivity 22 x 4.81% asset sensitivity in +100 bps ramp x One 25 bps Fed rate hike is worth approximately 5 bps to net interest margin x 22% Beta assumed for discretionary non - maturity deposits x Other relevant data points x Approximately $6.9 billion or 48% of loans are floating r
Slide 23: Navitas Performance
x Navitas 8% of total loans x Navitas 2Q22 NCOs of 0.31%, or $0.9 million x Average quarterly losses since 2Q20 of $1.1 million x Navitas ACL - Loans equated to 1.52% as of 2Q22 x Economic recovery and government intervention driving historically low loss rates Navitas Performance $ in millions 23 $
Slide 24: Mortgage Activity Shift to Purchase & Adjustable Rate Loans
Mortgage Activity Shift to Purchase & Adjustable Rate Loans x Gain on sale % remained relatively flat in 2Q22 x Purchase / Refi mix shifted from 60% / 40% in 2Q21 to 79% / 21% in 2Q22 x 79% of locked loans were adjustable rate mortgages in 2Q22, up from 69% in 1Q22 x Sold $160 million of mortgage lo
Slide 25: Selected Segments – Senior Care
25 x Senior Care lending team are dedicated specialists with significant experience in the space x Senior Care portfolio outstanding totaled $465 million as of 2 Q22, or 3.2% of total loans x As of June 30, $6.6 million of Senior Care loans were in nonaccrual x As of June 30, $135 million of Senior
Slide 26: Non-GAAP Reconciliation Tables
Non - GAAP Reconciliation Tables $ in thousands, except per share data 26 2Q21 3Q21 4Q21 1Q22 2Q22 Expenses Expenses - GAAP 95,540$ 96,749$ 109,156$ 119,275$ 120,790$ Merger-related and other charges (1,078) (1,437) (9,912) (9,016) (7,143) Expenses - Operating 94,462$ 95,312$ 99,244$ 110,259$ 113,64
Slide 27: Non-GAAP Reconciliation Tables
Non - GAAP Reconciliation Tables $ in thousands, except per share data 27 2Q21 3Q21 4Q21 1Q22 2Q22 Return on Assets to return on assets- pre-tax pre-provision Return on assets - GAAP 1.46 % 1.48 % 0.96 % 0.78 % 1.08 % Income tax expense 0.47 0.45 0.26 0.20 0.32 (Release of) provision for credit loss
Slide 28: Glossary
Glossary 28 ACL – Allowance for Credit Losses MLO – Mortgage Loan Officer ALLL – Allowance for Loan Losses MTM – Marked-to-market AUA – Assets Under Administration MSA – Metropolitan Statistical Area BPS – Basis Points MSR – Mortgage Servicing Rights Asset C&I – Commercial and Industrial NCO – Net C
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