United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q4 2013 Earnings Presentation
37 slides from United Community Banks's earnings presentation, Jan 23, 2014
Slide 1: Fourth Quarter 2013 Investor Presentation
Fourth Quarter 2013 Investor Presentation Jimmy C. Tallent President & Chief Executive Officer H. Lynn Harton Chief Operating Officer Rex S. Schuette Executive Vice President & Chief Financial Officer rex_schuette@ucbi.com (706) 781-2266 David P. Shearrow Executive Vice President & Chief Risk Office
Slide 2: Cautionary Statement and Non-GAAP Measures
Cautionary Statement This investor presentation may contain forward-looking statements, as defined by federal securities laws, including statements about United’s financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understa
Slide 3: United at a Glance
United at a Glance Founded in 1950 Third-largest bank holding company in Georgia Headquartered in Blairsville, Georgia with 102 locations throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina, western South Carolina, and east Tennessee 1,506 employees Deposit Marke
Slide 4: Business and Operating Model
Business and Operating Model Service is Point of Differentiation • #1 in Customer Satisfaction according to Customer Service Profiles • Nationally recognized customer service • Golden rule of banking – treating people the way we want to be treated • “The Bank that SERVICE Built” • Customer surveys c
Slide 5: Highlights Fourth Quarter
Highlights Fourth Quarter Improving Quarterly Results •Net income of $15.9 million, or $.22 per share, compared to $5.3 million, or $.04 per share a year ago •Return on assets of .86% vs. .31% a year ago •Return on common equity of 7.5% vs. 2.2% a year ago Solid Improvement in All Credit Quality Met
Slide 6: Highlights Fourth Quarter
Highlights Fourth Quarter Core Fee Revenue Challenges • Lower mortgage volume and fees • Offset partially by higher brokerage fees Loan Growth Returns to Mid-Single Digit Levels • Net loan growth this quarter of $62 million, or 6% annualized • Driven by commercial and home equity products Continued
Slide 7: 2014 Goals
2014 Goals Our Goal: Leverage Our Strengths •Strong local leadership •Funding advantage in our legacy markets •Consistent and attractive culture • Class leading customer satisfaction • Low employee turnover • Grow loans in the high-single digits • Increase core transaction deposits in the mid-single
Slide 8: 5 Quarters ROA With Actual EPS
5 Quarters ROA With Actual EPS Return on Assets Earnings Per Share Basis Points $.24 86 86 84 $.22 $.21 80 $.20 $.20 70 70 $.16 $.15 $.12 60 $.08 50 $.04 $.04 40 31 $.00 30 4Q12 1Q13 2Q13 3Q13 4Q13 Long-term goal of 1% ROA 8
Slide 9: Financial Review
United Community Banks, Inc. FINANCIAL REVIEW 9
Slide 10: Core Earnings & Core Fee Revenue
Core Earnings & Core Fee Revenue $ in $60 millions Core Earnings $56.1 $54.6 $54.9 $55.9 $27.9 Million $54.2 $50 Down $1.0 million from 3Q13 and down $1.3 million $40 $41.5 $40.9 $42.1 $41.2 from a year ago $39.3 $30 $29.2 $28.9 $26.3 $26.9 $27.9 Net Interest Revenue $20 Core Operating Expenses $14.
Slide 11: Core Operating Expenses
$ in Core Operating Expenses thousands Variance - Increase / (Decrease) 4Q13 3Q13 4Q12 Salaries & Employee Benefits $ 24,587 $ 2,075 $ 1,627 Communications & Equipment 3,414 109 94 Occupancy 3,735 356 280 FDIC Assessment 1,804 (601) (701) Advertising & Public Relations 781 (181) (206) (1) Includes f
Slide 12: Key Drivers of Net Interest Revenue / Margin
Key Drivers of Net Interest Revenue / Margin $ in Net Interest Revenue & Margin millions $57 $56.0 $55.9 Net Interest Revenue $54.7 $54.6 $54.3 3.50% • 4Q13 growth impacted by: 3.44% $53 3.38% Net loan growth 3.31% 3.26% 3.26% 3.25% Higher securities yield $49 Offset partially by loan Net Inte
Slide 13: Net Income
$ in Net Income thousands NET OPERATING INCOME Variance - Increase / (Decrease) 4Q13 3Q13 4Q12 Core Earnings (Pre-Tax, Pre-Credit) $ 27,905 $ (993) $ (1,301) Provision for Loan Loss 3,000 - (11,000) NON-CORE FEE REVENUE: Securities Gains (Losses) 70 70 39 $ in BOLI Death Benefit Gain - (86) - millio
Slide 14: Customer Deposit Mix & Core Growth
$ in Customer Deposit Mix & Core Growth millions Deposits by % / Customer Mix Total Deposit Mix 4Q13 3Q13 4Q12 4Q08 4Q13 Demand / NOW $ 1,969 $ 1,979 $ 1,841 $ 1,457 MMDA / Savings 1,468 1,437 1,372 630 $5.8B Core Transaction 3,437 3,416 3,213 2,087 60%* Significant Demand & NOW Time < $100,000 888
Slide 15: Capital Ratios
Capital Ratios Well- Holding Company Cap 4Q13 3Q13 2Q13 1Q13 4Q12 Tier I RBC 6 % 12.7 % 14.2 % 13.7 % 14.3 % 14.2 % Total RBC 10 14.0 15.5 15.2 15.9 15.7 Leverage 5 9.1 10.0 9.8 9.7 9.6 Tier 1 Common RBC 9.3 9.0 8.5 8.9 8.8 Tangible Common to Assets 9.0 9.0 6.3 5.7 5.7 Tangible Equity to Assets 11.6
Slide 16: Loan Portfolio & Credit Quality
United Community Banks, Inc. LOAN PORTFOLIO & CREDIT QUALITY 16
Slide 17: Loan Portfolio
$ in Loan Portfolio (total $4.33 billion) billions By Loan Type Diversifying Portfolio Reduced 1Q11 concentrations 4Q13 $4.194 of A&D and $4.329 Commercial Investor RE 55% loans $2.38 Retail 38% Retail C&I $1.623 31% 34% $1.308 $1.424 C&I Residential 37% Mortgage $1.605 30% $1.31 Inv RE 17% Inv RE $
Slide 18: New Loans Funded and Advances
New Loans Funded and Advances(1) $ in millions CATEGORY MARKET 4Q13 3Q13 4Q13 3Q13 Commercial C & I $ 58.7 $ 64.5 Atlanta $ 111.1 $ 116.6 Owner Occupied CRE 54.1 58.2 (1) Represents new Coastal Georgia 30.3 40.5 loans funded Income Producing CRE 44.9 28.1 N. Georgia 51.1 71.5 and net loan Commercial
Slide 19: Commercial Loans
$ in Commercial Loans (total $2.38 billion) billions By Loan Type Geographic Diversity Atlanta MSA $.946 North Georgia 36% $ .566 Coastal Georgia Western North Carolina 24% $ .299 Gainesville MSA $ .169 East Tennessee Owner Carolina $ .177 Occupied $ .136 4% South$ .085 48% 12% Income $1.13B 40% 13%
Slide 20: Retail Loans
$ in Retail (total $1.62 billion) millions By Loan Type Geographic Diversity North Georgia Western North Carolina $ .525 Home Equity 36% $ .332 LOC 27% $.441B Atlanta MSA Indirect Auto $ .261 24% East Tennessee Coastal Georgia $.196 Avg loan size MSA Carolina $ .131 $ .105 $48 thousand 5% Gainesvill
Slide 21: Residential Construction
$ in Residential Construction (total $328 million) millions By Loan Type Geographic Diversity North Georgia $ 149 Western North Carolina 48% $ 72 36% Atlanta MSA $ 68 Lot 24% East Tennessee MSA Georgia 51% $166 3% Gainesville $ 12 6% Coastal$ 18 $9 12% 19% 22% 46% 4% 0% Raw 12% $38 4Q13 vs. 4Q13 3Q1
Slide 22: Credit Quality
$ in Credit Quality millions 4Q13 3Q13 2Q13 1Q13 4Q12 Net Charge-offs $ 4.4 $ 4.5 $ 72.4 $ 12.4 $ 14.5 as % of Average Loans 0.41 % .42 % 6.87 % 1.21 % 1.39 % Allowance for Loan Losses $ 76.8 $ 80.4 $ 81.8 $ 105.8 $ 107.1 as % of Total Loans 1.77 % 1.88 % 1.95 % 2.52 % 2.57 % as % of NPLs 286 308 29
Slide 23: Non-Performing Loans Inflow Trends
Non-Performing Loans (NPLs) Inflow Trends $ in millions Quarterly NPL Inflows $30 $20 $20.2 $13.2 $10 $9.7 $10.0 $11.0 $0 4Q12 1Q13 2Q13 3Q13 4Q13 Resi Constr Comm Constr Resi Mtg Comm RE Comm Consumer $ in millions Total NPLs $120 $109.9 $96.0 $90 $60 $30 $27.9 $26.1 $26.8 $0 4Q12 1Q13 2Q13 3Q13 4Q
Slide 24: Performing Classified Loans
$ in Performing Classified Loans millions $320 $270 $261.9 $271.7 $220 $170 $176.3 $173.6 $172.7 4Q12 1Q13 2Q13 3Q13 4Q13 BY CATEGORY 4Q12 1Q13 2Q13 3Q13 4Q13 Commercial: Commercial & Industrial $ 18 $ 20 $ 11 $ 10 $ 9 Owner Occupied 65 71 43 40 43 Total C & I 83 91 54 50 52 Income Producing CRE 53
Slide 25: TDRs
$ in TDRs millions LOAN TYPE Accruing(1) Non-Accruing Total TDRs 4Q13 vs. 4Q12 4Q13 vs. 4Q12 4Q13 vs. 4Q12 Commercial (Sec by RE) $ 38.0 $ 64.0 $ 2.7 $ 12.2 $ 40.7 $ 76.2 Commercial & Industrial 3.1 7.0 .1 .2 3.2 7.2 Commercial Construction 13.0 16.4 - 17.5 13.0 33.9 Total Commercial 54.1 87.4 2.8 2
Slide 26: Net Charge-offs by Category & Market
$ in Net Charge-offs by Category & Market thousands NET CHARGE-OFFS BY CATEGORY 4Q13 % of Average Loans (Annualized) % of Avg Total Loans 3Q13 2Q13 1Q13 4Q12 Commercial (Sec. by RE): Ow ner Occupied $ 1,638 .57 % .58 % 5.85 % .69 % 1.76 % Income Producing 320 .21 .14 5.45 1.99 .67 Total Comm (Sec. b
Slide 27: NPAs by Loan Category & Market
$ in NPAs by Loan Category & Market thousands 4Q13 4Q12 NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY LOAN CATEGORY Commercial (sec. by RE): Commercial (sec. by RE): Owner Occupied $ 5,822 $ 832 $ 6,654 Owner Occupied $ 12,599 $ 4,989 $ 17,588 Income Producing 2,518 - 2,518 Income Producin
Slide 28: Appendix
United Community Banks, Inc. APPENDIX 28
Slide 29: Experienced Proven Leadership
Experienced Proven Leadership • Over 39 years in banking • Over 30 years in banking • Over 35 years in banking • Led company from $42 • Responsible for overall • Responsible for million in assets in 1989 to operations accounting, finance and $7.4 billion today • Former Consultant and reporting activ
Slide 30: Market Share Opportunities & Demographics
Market Share Opportunities & Demographics EXCELLENT GROWTH OPPORTUNITIES FAST GROWING MARKETS Market Deposits Population Growth (%) Deposits (in Deposit Population Actual Projected Markets (in billions) (1) billions) (2,3) Banks Offices(3) Share (1) Rank(1) Markets1 (in thousands) 2010 - 2012 2012 -
Slide 31: Liquidity
$ in Liquidity millions Unused Variance Capacity 4Q13 3Q13 4Q12 vs 3Q13 vs 4Q12 Wholesale Borrowings (1) Brokered Deposits $ 1,372 $ 412 $ 419 $ 245 $ (7) $ 167 FHLB 1,110 120 - 40 120 80 Fed Funds 598 - - - - - WHOLESALE Other Wholesale - 53 54 53 (1) - Total $ 3,080 $ 585 $ 473 $ 338 $ 112 $ 247 B
Slide 32: Business Mix – Deposits at quarter-end
$ in Business Mix – Deposits at quarter-end millions 4Q13 vs. DEPOSITS BY CATEGORY 4Q13 3Q13 2Q13 1Q13 4Q12 4Q12 Demand & Now $ 1,969 $ 1,979 $ 1,916 $ 1,894 $ 1,841 $ 128 MMDA & Savings 1,468 1,437 1,406 1,401 1,372 96 Core Transaction Deposits 3,437 3,416 3,322 3,295 3,213 224 Time < $100,000 888
Slide 33: Core Transaction Deposits
$ in Core Transaction Deposits millions $6 South Carolina $21 Core Transactions / Total Deposits $174 3Q13 % 4Q13 3Q13 East Tennessee $177 South Carolina 99.0 % 96.4 % 4Q13 Gainesville MSA 70.2 68.8 $214 Coastal Georgia Coastal GA 67.9 68.1 $212 East TN 63.6 63.8 $217 North Carolina 63.5 63.0 Gaines
Slide 34: Lending & Credit Environment
$ in Lending & Credit Environment millions Regional Credit Review – Standard Underwriting •House Lending Limit $25 •Project Lending Limit 15 •Top 25 Relationships 349.2 PROACTIVELY ADDRESSING CREDIT ENVIRONMENT • Centralized underwriting and approval process • Segregated work-out teams • Highly skil
Slide 35: Commercial Construction & Real Estate
$ in Commercial Construction & Real Estate millions COMMERCIAL REAL ESTATE COMMERCIAL CONSTRUCTION 31-Dec-13 31-Dec-13 Owner Income Amount Percent Occupied Producing Total Percent Land Develop - Vacant (Improved) $ 58 40.3 % Office Buildings $ 310.4 $ 163.7 $ 474.1 26.91 % Raw Land - Vacant (Unimpro
Slide 36: Loans by Business Mix and Region
$ in Loans by Business Mix and Region millions 4Q13 vs. 4Q13 3Q13 2Q13 1Q13 4Q12 4Q12 2013 2012 2011 2010 2009 QUARTERLY LOANS - BUSINESS MIX BY CATEGORY ANNUAL LOANS - BUSINESS MIX BY CATEGORY Commercial: Commercial: Comm & Indus $ 472 $ 457 $ 437 $ 454 $ 458 $ 14 Comm & Indus $ 472 $ 458 $ 428 $ 4
Slide 37: Non GAAP Reconciliation Tables
$ in Non GAAP Reconciliation Tables thousands Operating Earnings to GAAP Earnings Reconciliation 4Q13 3Q13 2Q13 1Q13 4Q12 CORE FEE REVENUE Core fee revenue $ 13,219 $ 13,966 $ 14,063 $ 12,618 $ 14,551 Securities gains, net 70 - - 116 31 Gains from sales of low income housing tax credits - - 468 - -
United Community Banks — Q4 2013 Earnings Presentation on 6ix