United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q4 2009 Earnings Presentation
52 slides from United Community Banks's earnings presentation, Jan 29, 2010
Slide 1: Investor Presentation Fourth Quarter 2009
Investor Presentation Fourth Quarter 2009 David P. Shearrow Executive Vice President & CRO Rex S. Schuette Executive Vice President & CFO rex_schuette@ucbi.com (706) 781-2266 Jimmy C. Tallent President & CEO United Community Banks, Inc.
Slide 2: 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 involves risks and uncer
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
Slide 4: United at a glance
United at a glance Assets $8.0 Billion Deposits $6.6 Billion Banks 27 Offices 107 4
Slide 5: Strengthened capital position
Strengthened capital position 5
Slide 6: Deposit mix (total $6.6 billion)
Deposit mix (total $6.6 billion) As of December 31, 2009 Demand & NOW MMDA & Sav. Time <$100k Time >$100k Public Funds Brokered East 1465 879 1740 1138 646 759 6
Slide 7: Core transaction deposits
Core transaction deposits $ in millions 4Q 08 4Q 09 Geographic Diversity 7 Core transaction deposits Atlanta MSA North Georgia Western North Carolina Gainesville MSA Coastal Georgia Eastern Tennessee 4Q09 874 634 435 148 128 125 4Q08 747 599 395 126 120 99 Atlanta MSA North Georgia Western North Car
Slide 8: Net interest margin
Net interest margin 4Q 08 1Q 09 2Q 09 3Q09 4Q09 Net Interest Margin 0.027 0.0308 0.0328 0.0339 0.034 0.0043 0.0045 0.0052 0.0058 0.0064 Net Interest Margin Margin improvement 1 bps QTD 70 bps YTD Improved loan and deposit pricing Replaced higher priced CDs and money market Q4 Excess liquidity costs
Slide 9: Loan portfolio and credit quality
LOAN PORTFOLIO AND CREDIT QUALITY 9
Slide 10: Proactively addressing credit environment
Proactively addressing credit environment Structure Centralized underwriting and approval process Segregated work-out teams Highly skilled ORE disposition group Seasoned regional credit professionals Process Continuous external loan review Intensive executive management involvement: Weekly past due
Slide 11: Loan portfolio (total $5.2 billion)
North Georgia Atlanta MSA Western North Carolina Coastal Georgia Gainesville MSA Eastern Tennessee East 0.36 0.28 0.15 0.08 0.08 0.05 Loan portfolio (total $5.2 billion) Geographic Diversity 11
Slide 12: Commercial loans (total $2.5 billion)
Atlanta MSA North Georgia Western North Carolina Coastal Georgia Gainesville MSA Eastern Tennessee East 0.35 0.31 0.1 0.09 0.09 0.06 Commercial Construction Owner-Occupied Income Producing C & I East 14 38 32 15 Commercial loans (total $2.5 billion) Geographic Diversity Average Loan Size CRE: $443k
Slide 13: Commercial real estate (by loan type)
Commercial real estate (by loan type) 54% owner-occupied 46% income producing(1) Typical owner-occupied: small business, doctors, dentists, attorneys, CPAs $12 million project limit 63% LTV (1) $443k average loan size Portfolio Characteristics (1) Loan balance as of Dec 31, 2009 / most recent apprai
Slide 14: Commercial construction (by loan type)
Commercial construction (by loan type) Note: Dollars in millions $672k Average loan size Average LTVs (1) Raw Land: 47% Land Dev.: 47% Total: 50% Portfolio Characteristics (1) Loan balance as of December 31, 2009 / most recent appraisal 14 (in millions) Dec 31, 2009 % of Loan Type Amount Total Land
Slide 15: Residential mortgage (total $1.4 billion)
North Georgia Western North Carolina Atlanta MSA Coastal Georgia Gainesville MSA Eastern Tennessee East 0.39 0.26 0.14 0.08 0.07 0.06 Mortgage Home Equity East 74 26 Residential mortgage (total $1.4 billion) Geographic Diversity Avg loan size: $48k Avg loan size: $98k 15 Origination Characteristics
Slide 16: Residential construction (total $1.0 billion)
North Georgia Atlanta MSA Western North Carolina Coastal Georgia Gainesville MSA Eastern Tennessee East 0.48 0.24 0.15 0.06 0.05 0.02 Residential construction (total $1.0 billion) Geographic Diversity Developing Spec: $241k Sold: $152k Develop.: $825k Raw: $325k Lot: $142k Average Loan Size 16 Lot S
Slide 17: Atlanta MSA (residential construction)
Atlanta MSA (residential construction) 17
Slide 18: Credit quality
Credit quality (in millions) 4Q 09 3Q 09 2Q 09 1Q 09 4Q 08 Net Charge-offs $ 84.6 $ 90.5 $ 58.3 $ 43.3 $ 74.0 as % of Average Loans 6.37 % 6.57 % 4.18 % 3.09 % 5.09 % Allowance for LL $ 155.6 $ 150.2 $ 145.7 $ 144.0 $ 122.3 as % of Total Loans 3.02 % 2.80 % 2.64 % 2.56 % 2.14 % as % of NPLs 59 49 51
Slide 19: Net charge-offs by loan category
Net charge-offs by loan category (1) Based on simple average of the four quarters 19
Slide 20: Net charge-offs by market
Net charge-offs by market Note: Dollars in thousands (1) Based on simple average of the four quarters 20
Slide 21: NPAs by loan category and market
NPAs by loan category and market 21
Slide 22: Key trends - loan portfolio and credit quality
Key trends - loan portfolio and credit quality Majority of credit challenges in 2009 centered in residential construction, primarily in Atlanta; this portfolio continues to decline rapidly which should lead to a reduction in credit losses going forward While some deterioration has occurred, the comm
Slide 23: Imputed Stress Test - Estimated Credit Losses Through December 2010
Imputed Stress Test - Estimated Credit Losses Through December 2010 (1) Represents the SCAP - Selected Banks Scenario modified to reflect the characteristics of United Community Banks existing loan portfolio. (2) Based on average projected losses per loan category (More Adverse Scenario) for BB&T Co
Slide 24: Imputed Stress Test - Projected Capital Ratios
Imputed Stress Test - Projected Capital Ratios Credit quality - SCAP analysis 24
Slide 25: Financial results
NCIAL RESULTS SERVICE
Slide 26: Core earnings summary - Fourth Quarter 2009
Core earnings summary - Fourth Quarter 2009 (1) Excludes gain on sale of low income housing tax credits, FHLB prepayment charge, securities (losses) / gains, and gain on SCB acquisition (2) Excludes BOLI expense recovery, special FDIC assessment, foreclosed property costs, severance costs and goodwi
Slide 27: Net operating loss - Fourth Quarter 2009
Net operating loss - Fourth Quarter 2009 27
Slide 28: Net loss - Fourth Quarter 2009
Net loss - Fourth Quarter 2009 28
Slide 29: Capital ratios
Capital ratios (as percentages) Well- Capitalized 4Q 09 3Q 09 4Q 08 Regulatory Capital Tier 1 Risk-Based 6 % 12.4% 13.2% 11.2 % Total Risk-Based 10 15.1 15.8 13.9 Leverage 5 8.5 9.5 8.3 Tangible Equity to Risk-Weighted Assets 13.6 13.7 11.2 Tangible Common Equity to Risk-Weighted Assets 10.4 10.7 8.
Slide 30: The Bank That SERVICE Built
iat SERVICE Built
Slide 31: Experienced proven leadership
Joined UCBI Years in Banking Jimmy Tallent President and CEO 1984 36 Guy Freeman Chief Operating Officer 1994 49 Rex Schuette Chief Financial Officer 2001 32 David Shearrow Chief Risk Officer 2007 28 Glenn White President, Atlanta Region 2007 35 Craig Metz Marketing 2002 17 Bill Gilbert Retail Banki
Slide 32: Business and operating model
Business and operating model Twenty-seven "community banks" Local CEOs with deep roots in their communities Resources of $8.0 billion bank Service is point of differentiation Golden rule of banking "The Bank That SERVICE Built" Ongoing customer surveys +90% satisfaction rate Strategic footprint with
Slide 33: Robust demographics (fast growing markets)
Population Growth (%) Population Growth (%) Markets1 Population (in thousands) Actual 2000 - 2009 Projected 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 Total Markets Georgia 9,9
Slide 34: Market share opportunities
1 FDIC deposit market share and rank as of 6/09 for markets where United takes deposits. Source: SNL and FDIC Market share opportunities (excellent growth prospects) 34
Slide 35: Leading demographics
Leading demographics Rank Ticker 14 18 1Boc PRSP SFG cBci cveF TeBI cec SNV BOKF 2009 - 2014 Total Assets Population Company” State ($8) Growth? Westem Alliance Bancorporation 11.25 %| Whitney Holding Corporation LAs itz 9.75 United Community Banks, In GA 8 65 Cullen/Frost Bankers, Inc. % 16.2 9.20
Slide 36: Small business market growth
Small business market growth 2000 2006 Small Business Growth Population Growth 2000-2009 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 Carolina 10,274 11,544 12% 11% East Tennessee 16,273 17,
Slide 37: Business mix - loans (at quarter-end)
(in millions) 4Q 09 3Q 09 2Q 09 1Q 09 4Q 08 Year over Year % Change LOANS BY CATEGORY Commercial (sec. by RE) $1,779 $1,787 $1,797 $1,779 $1,627 9 Commercial construction 363 380 379 377 500 (27) Commercial & Industrial 390 403 399 387 410 (5) Total commercial 2,532 2,570 2,575 2,543 2,537 0 Residen
Slide 38: Business mix - loans (at year-end)
(in millions) 2009 2008 2007 2006 2005 LOANS BY CATEGORY Commercial (sec. by RE) $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 Residential construction 1,050 1,479 1,829 1,864
Slide 39: Residential construction - total company
(in millions) 4Q 09 3Q 09 2Q 09 1Q 09 4Q 08 Land Loans Developing Land $ 332 $ 380 $ 413 $ 445 $ 484 Raw Land 127 159 159 155 153 Lot Loans 336 336 369 390 358 Total 795 875 941 990 995 Construction Loans Spec 178 218 268 317 347 Sold 77 92 106 123 137 Total 255 310 374 440 484 Total Res Constructio
Slide 40: Residential construction - Atlanta MSA
(in millions) 4Q 09 3Q 09 2Q 09 1Q 09 4Q 08 Land Loans Developing Land $ 76 $ 100 $ 124 $ 148 $ 167 Raw Land 43 61 63 52 56 Lot Loans 52 54 81 98 86 Total 171 215 268 298 309 Construction Loans Spec 68 91 127 164 189 Sold 16 22 29 33 40 Total 84 113 156 197 229 Total Res Construction $ 255 $ 328 $ 4
Slide 41: Loans - markets served (at quarter-end)
(in millions) 4Q 09 3Q 09 2Q 09 1Q 09 4Q 08 LOANS BY MARKET Atlanta MSA $1,435 $1,526 $1,605 $1,660 $1,706 Gainesville MSA 390 402 413 422 420 North Georgia 1,884 1,942 1,978 2,014 2,040 Western North Carolina 772 786 794 808 810 Coastal Georgia 405 440 455 460 464 East Tennessee 265 267 268 269 265
Slide 42: 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 405 464 415 358 306 East Tennessee 265 265 246 207 178
Slide 43: Lending - credit summary
Legal lending limit $208 House lending limit 20 Top 25 relationships 7.9% of total loans 408 Regional credit review Standard underwriting Lending - credit summary (as of December 31, 2009) 43 (in millions)
Slide 44: NPAs by loan category, market, and activity
NPAs by loan category, market, and activity 44
Slide 45: Net charge-offs by category and market
Net charge-offs by category and market 45
Slide 46: Liquidity - loans / deposits
Liquidity - loans / deposits (in millions) Variance 4Q 09 3Q 09 4Q 08 vs 3Q 09 vs 4Q 08 Loans $ 5,151 $ 5,363 $ 5,705 $ (212 ) $ (554 ) Core (DDA, MMDA, Savings) $ 2,344 $ 2,340 $ 2,087 $ 4 $ 257 Public Funds 646 607 843 39 (197 ) CD's 2,879 3,035 3,281 (156 ) (402 ) Total Deposits (excl Brokered) $
Slide 47: Liquidity - wholesale borrowings
Liquidity - wholesale borrowings (in millions) Unused Variance Capacity 4Q 09 3Q 09 4Q 08 vs 3Q 09 vs 4Q 08 Brokered Deposits $ 1,241 $ 759 $ 839 $ 793 $ (80 ) $ (34 ) FHLB 798 115 315 235 (200 ) (120 ) Fed Funds 100 - - 8 - (8 ) Other Wholesale 330 101 102 100 (1 ) 1 Total Wholesale $ 2,469 $ 975 $
Slide 48: Business mix - deposits (at quarter-end)
Business mix - deposits (at quarter-end) (in millions) DEPOSITS BY CATEGORY 4Q 09 3Q 09 2Q 09 1Q 09 4Q 08 Demand & NOW $ 1,465 $ 1,481 $ 1,523 $ 1,485 $ 1,457 MMDA & Savings 879 858 744 665 630 Core Transaction Deposits 2,344 2,339 2,267 2,150 2,087 Time < $100,000 1,740 1,848 1,985 1,904 1,945 Publ
Slide 49: Analyst coverage
Analyst coverage 49 FBR Capital (Market Perform - Nov 20, 2009) Sandler O'Neill & Partners (Hold - Jan 5, 2010) FIG Partners (Outperform - Nov 9, 2009) Soleil (Tenner Investment Research) (Hold - Oct 23, 2009) Keefe, Bruyette & Woods (Market Perform - Oct 26, 2009) Stephens, Inc. (Equal-Weight - Oct
Slide 50: Southern Community Bank
Southern Community Bank Purchased - June 19, 2009 ($ in millions) 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 $208 in customer deposits, including $53 core deposits FD
Slide 51: Non-GAAP reconciliation tables
Non-GAAP reconciliation tables 51
Slide 52: Non-GAAP reconciliation tables
Non-GAAP reconciliation tables 52
United Community Banks — Q4 2009 Earnings Presentation on 6ix