United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q1 2013 Earnings Presentation
40 slides from United Community Banks's earnings presentation, Apr 25, 2013
Slide 1: First Quarter 2013 Investor Presentation
First 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 Officer
Slide 2: Cautionary Statement
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 103 locations throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina, western South Carolina, and east Tennessee Deposit Market Share (1) Key Statisti
Slide 4: Business and Operating Model
Business and Operating Model Service is Point of Differentiation • #1 in Customer Satisfaction according to Customer Service Profiles • J.D. Power 2013 Retail Banking Satisfaction Study rates United among the top 2 banks in the southeast • Golden rule of banking – treating people the way we want to
Slide 5: Performance - Trends
United Community Banks, Inc. PERFORMANCE - TRENDS 5
Slide 6: First Quarter Highlights
Highlights First Quarter Improving Quarterly Results •Net income of $11.8 million, or 15 cents per share •Seventh quarterly profit in past eight quarters •Core earnings (pre-tax, pre-credit) of $26.4 million Modest Loan Growth, Both Linked Quarter and Year Ago • Increased commercial and retail lendi
Slide 7: Net Income
Net Income $ in millions $15 $ 11.5 $11.8 $10.6 $10 $ 6.5 $5.3 $5 - 1Q12 2Q12 3Q12 4Q12 1Q13 7
Slide 8: Key Drivers of Net Interest Revenue / Margin
Key Drivers of Net Interest Revenue / Margin $ in Net Interest Revenue & Margin millions $61 $ 58.9 Net Interest Revenue $ 57.4 4.0% • Offset margin compression by growing $57 $56.8 $56.0 loans $ 54.7 • 1Q13 growth impacted by: • Two fewer days in quarter $53 3.53% 3.60% • New / renewed loan reprici
Slide 9: Non-Performing Loans (NPLs) Inflow Trends
Non-Performing Loans (NPLs) Inflow Trends $ in Quarterly NPL Inflows millions $ 32.4 $ 30 $29.4 $30.5 $ 20 $20.2 $ 10 $9.7 $ 0 Q112 Q212 Q312 Q412 Q113 Resi Constr Comm Constr Resi Mtg Comm RE Comm Consumer $ in Total NPLs millions $ 129.7 $ 120 $115.4 $115.0 $ 109.9 $ 99.0 $ 90 $ 60 $ 30 $ 0 Q112 Q
Slide 10: Outlook
United Community Banks, Inc. OUTLOOK 10
Slide 11: Outlook: Leverage Our Strengths
Outlook 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 To Grow Our Business The Right Way •Become better retail and small business bank • Grow sales: B
Slide 12: Outlook: Grow Existing Fee Businesses at Faster Pace
Outlook $ in millions Grow Existing Fee Businesses at Faster Pace •Mortgage first priority • Performing well, but at 50% of peers • Focus on home purchase product as well as refinancings • Focus on lower performing markets • Invest in management, people and new markets • Advisory Services • Customer
Slide 13: Outlook Summary
Outlook Summary •Focus on core earnings growth – fee revenue, expenses, efficiencies • Offsetting margin headwinds through loan growth and improving deposit mix • Goal loan growth in 2013 – mid-single digit range • Expecting quarterly margin compression in 2013 – 2 to 4 basis points • Steady progres
Slide 14: Financial Review
United Community Banks, Inc. FINANCIAL REVIEW 14
Slide 15: Core Earnings & Core Fee Revenue
Core Earnings & Core Fee Revenue Core Earnings -$26.4 $ in Million $ 60 millions $ 58.9 $56.9 $57.4 $56.0 •Down $2.7 million from $ 54.7 4Q12 and $2.9 million from $ 50 a year ago •NIR impacted by fewer days $ 42.7 and margin $ 40 $41.3 $40.5 $41.6 $40.9 •Fee revenue decline due to seasonal impact a
Slide 16: Core Operating Expenses
Core Operating Expenses $ in thousands Variance - Increase / (Decrease) 1Q13 4Q12 1Q12 Salaries & Employee Benefits $ 23,055 $ 95 $ (1,710) Communications & Equipment 3,046 (274) (109) Occupancy 3,367 (88) (404) FDIC Assessment 2,505 - (5) (1) Includes foreclosed property costs, Advertising & Public
Slide 17: Net Income
Net Income $ in thousands NET OPERATING INCOME Variance - Increase / (Decrease) 1Q13 4Q12 1Q12 Core Earnings (Pre-Tax, Pre-Credit) $ 26,377 $ (2,713) $ (2,908) Provision for Loan Loss (11,000) (3,000) (4,000) NON-CORE FEE REVENUE: Hedge Ineffectiveness Gains (Losses) (85) (201) (200) Securites Gains
Slide 18: Customer Deposit Mix & Core Growth
Customer Deposit Mix & Core Growth $ in millions Deposits by % / Customer Mix Total Deposit Mix 1Q13 4Q12 1Q12 4Q08 Demand / NOW $ 1,894 $ 1,841 $ 1,722 $ 1,457 1Q13 MMDA / Savings 1,401 1,372 1,331 630 $5.7B Core Transaction 3,295 3,213 3,053 2,087 58% Significant Demand & NOW Time < $100,000 1,014
Slide 19: Capital Ratios
Capital Ratios 15% 14.30% 14.30% 14.20% 14.30% 13.70% 10% 8.80% 8.80% 8.80% 8.90% 8.30% 5.50% 5.70% 5.70% 5.70% 5% 5.30% 1Q12 2Q12 3Q12 4Q12 1Q13 Total RBC Tier 1 RBC Leverage Tier 1 Common RBC Tangible Common to Assets* *DTA Allowance of $271 million, when reversed, adds 3.6% to 1Q13 Tangible Commo
Slide 20: Loan Portfolio & Credit Quality
United Community Banks, Inc. LOAN PORTFOLIO & CREDIT QUALITY 20
Slide 21: Loan Portfolio
Loan Portfolio (total $4.19 billion) $ in billions By Loan Type Diversifying Portfolio Reduced 1Q11 concentrations 1Q13 Commercial $4.194 of A&D and $4.194 57% Investor RE $2.41 loans Retail Retail C&I 34% Install 4% $.16 31% 34% $1.411 $1.308 $1.424 C&I 38% Residential $1.584 Mortgage 30% $1.25 Inv
Slide 22: New Loans Funded and Advances
New Loans Funded and Advances (1) $ in millions CATEGORY MARKET (1)Represents 1Q13 1Q12 new loans 1Q13 1Q12 Commercial C & I $ 39.9 $ 49.5 funded and net Atlanta $ 86.5 $ 90.6 loan advances Owner Occupied CRE 58.0 72.6 (net of Coastal Georgia (2) 37.7 32.0 Income Producing CRE 14.5 19.6 payments on
Slide 23: Commercial Loans
Commercial Loans (total $2.41 billion) $ in billions By Loan Type Geographic Diversity Office Bldg $ .968 26% Atlanta MSA 36% North Georgia $ .655 Other 41% 24% $ .181 $ .282 $ .146 $ .178 Coastal Georgia 12% East Tennessee Gainesville MSA Western North Carolina 6% 7% 8% 12% 27% 40% Owner 0% Occupie
Slide 24: Retail Loans
Retail (total $1.41 billion) $ in millions By Loan Type Geographic Diversity (1) $ .532 Home Equity 36% $ .312 North Georgia LOC 28% $.40B Western North Carolina 24% $ .229 Avg loan size $48,000 $ .124 Atlanta MSA $ .067 $ .094 Consumer 12% Coastal Georgia East Tennessee 8% Gainesville MSA $.11B 5%
Slide 25: Residential Construction
Residential Construction (total $372 million) $ in millions Geographic Diversity North Georgia $ 175 $ 81 Atlanta MSA $ 67 Western North Carolina $ 23 East Tennessee $ 11 Gainesville MSA $ 15 Coastal Georgia 0% 3% 4% 6% 18% 22% 47% 1Q13 vs. 1Q13 4Q12 3Q12 2Q12 1Q12 1Q12 TOTAL COMPANY Land Loans Deve
Slide 26: Credit Quality
Credit Quality $ in millions 1Q13 4Q12 3Q12 2Q12 1Q12 Net Charge-offs $ 12.4 $ 14.5 $ 20.6 $ 18.9 $ 15.9 as % of Average Loans 1.21 % 1.39 % 1.99 % 1.85 % 1.55 % Allowance for Loan Losses $ 105.8 $ 107.1 $ 107.6 $ 112.7 $ 113.6 as % of Total Loans 2.52 % 2.57 % 2.60 % 2.74 % 2.75 % as % of NPLs 110
Slide 27: Performing Classified Loans
Performing Classified Loans $ in millions $350 $320 $323.6 $ 316.9 $290 $271.7 $260 $261.9 1Q12 2Q12 3Q12 4Q12 1Q13 BY CATEGORY 1Q12 2Q12 3Q12 4Q12 1Q13 Commercial: Commercial & Industrial $ 17 $ 16 $ 19 $ 18 $ 20 Owner Occupied 78 54 77 65 71 Total C & I 95 70 96 83 91 Income Producing CRE 56 94 49
Slide 28: TDRs
TDRs $ in millions LOAN TYPE Accruing (1) Non-Accruing Total TDRs 1Q13 vs. 1Q12 1Q13 vs. 1Q12 1Q13 vs. 1Q12 Commercial (Sec by RE) $ 65.7 $ 70.3 $ 9.0 $ 9.5 $ 74.7 $ 79.8 Commercial & Industrial 8.6 3.3 .2 .2 8.8 3.5 Commercial Construction 15.8 17.9 16.8 16.2 32.6 34.1 Total Commercial 90.1 91.5 26
Slide 29: Net Charge-offs by Category & Market
Net Charge-offs by Category & Market $ in thousands NET CHARGE-OFFS BY CATEGORY 1Q13 % of Average Loans (Annualized) % of Avg Total Loans 4Q12 3Q12 2Q12 1Q12 Commercial (Sec. by RE): Ow ner Occupied $ 1,922 .69 % 1.76 % 3.56 % .46 % .87 % Income Producing 3,321 1.99 .67 .70 1.75 .70 Total Comm (Sec.
Slide 30: NPAs by Loan Category & Market
NPAs by Loan Category & Market $ in thousands 1Q13 1Q12 NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY LOAN CATEGORY Commercial (sec. by RE): Commercial (sec. by RE): Owner Occupied $ 8,142 $ 4,750 $ 12,892 Owner Occupied $ 12,830 $ 7,892 $ 20,722 Income Producing 9,162 834 9,996 Income Pro
Slide 31: Appendix
United Community Banks, Inc. APPENDIX 31
Slide 32: 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 $6.8 billion today • Former Consultant and reporting activ
Slide 33: 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 (3) Offices Share (1) Rank (1) Markets 1 (in thousands) 2010 - 2012 201
Slide 34: Liquidity
Liquidity $ in millions Unused Variance Capacity 1Q13 4Q12 1Q12 vs 4Q12 vs 1Q12 Wholesale Borrowings (1) Brokered Deposits $ 1,394 $ 332 $ 245 $ 168 $ 87 $ 164 FHLB 1,351 - 40 215 (40) (215) Fed Funds 130 - - - - -Other Wholesale - 52 53 102 (1) (50) Total $ 2,875 $ 384 $ 338 $ 485 $ 46 $ (101) WHOL
Slide 35: Business Mix – Deposits at quarter-end
Business Mix – Deposits at quarter-end $ in millions 1Q13 vs. DEPOSITS BY CATEGORY 1Q13 4Q12 3Q12 2Q12 1Q12 1Q12 Demand & Now $ 1,894 $ 1,841 $ 1,796 $ 1,735 $ 1,722 $ 172 MMDA & Savings 1,401 1,372 1,342 1,330 1,331 70 Core Transaction Deposits 3,295 3,213 3,138 3,065 3,053 242 Time < $100,000 1,01
Slide 36: Core Transaction Deposits
Core Transaction Deposits $ in millions $174 East Tennessee Core Transactions / Total $176 4Q12 1Q13 4Q12 $209 Coastal Georgia 1Q13 Coastal GA 68.0 % 67.8 % $212 Gainesville MSA 65.0 63.7 $202 North Carolina 60.1 58.9 Gainesville MSA $205 Atlanta MSA 61.9 59.9 East TN 60.2 57.9 $535 North Carolina N
Slide 37: Lending & Credit Environment
Lending & Credit Environment Regional Credit Review – Standard Underwriting •Legal Lending Limit $166 •House Lending Limit 20 •Project Lending Limit 12 •Top 25 Relationships 372 PROACTIVELY ADDRESSING CREDIT ENVIRONMENT • Centralized underwriting and approval process • Segregated work-out teams • Hi
Slide 38: Commercial Construction & Real Estate
Commercial Construction & Real Estate $ in millions COMMERCIAL CONSTRUCTION COMMERCIAL REAL ESTATE 31-Mar-13 31-Mar-13 Amount Percent Land Develop - Vacant (Improved) $ 64.2 42 % Raw Land - Vacant (Unimproved) 42.6 28 Owner Income Commercial Land Development 20.7 14 Occupied Producing Total Percent
Slide 39: Loans by Business Mix and Region
Loans by Business Mix and Region $ in millions 1Q13 vs. 1Q13 4Q12 3Q12 2Q12 1Q12 1Q12 2012 2011 2010 2009 2008 QUARTERLY LOANS - BUSINESS MIX BY CATEGORY ANNUAL LOANS - BUSINESS MIX BY CATEGORY Commercial: Commercial: Comm & Indus $ 454 $ 458 $ 460 $ 450 $ 440 $ 14 Comm & Indus $ 458 $ 428 $ 441 $ 3
Slide 40: Non GAAP Reconciliation Tables
Non GAAP Reconciliation Tables $ in thousands Operating Earnings to GAAP Earnings Reconciliation 1Q13 4Q12 3Q12 2Q12 1Q12 CORE FEE REVENUE Core fee revenue $ 12,618 $ 14,551 $ 13,003 $ 12,764 $ 13,091 Securities gains, net 116 31 - 6,490 557 Loss on prepayment of borrowings - - - (6,199) (482) Gains
United Community Banks — Q1 2013 Earnings Presentation on 6ix