United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q2 2014 Earnings Presentation
39 slides from United Community Banks's earnings presentation, Jul 24, 2014
Slide 1: Second Quarter 2014 Investor Presentation
Second Quarter 2014 Investor Presentation
Slide 2: Cautionary Statement
2 2 Cautionary Statement Cautionary Statement This investor presentation may contain forward -looking statements, as defined by federal securities laws, inclu ding statements about United ’s financial outlook and business environment. These statements a re based on current expectations and are provi
Slide 3: United at a Glance
3 3 United at a Glance United at a Glance Founded in 1950 Third-largest bank holding company headquartered in Georgia with 1,500 employees Key Statistics as of 6/30/14 Key Statistics as of 6/30/14 (in billions) Assets Assets Deposits Deposits Loans Loans $7.35 $6.16 $4.41 Deposit Market Share Deposi
Slide 4: Footprint
4 4 Footprint Footprint Savannah Nashville Greenville Asheville Atlanta Chattanooga Raleigh Charlotte Charleston Myrtle Beach Knoxville Current Footprint Blairsville Headquartered in Blairsville, Georgia with 103 locations in: Georgia; North Carolina; South Carolina; and Tennessee
Slide 5: Business and Operating Model
5 5 Business and Operating Model Business and Operating Model Service is Point of Differentiation #1 in Customer Satisfaction according to Customer Service Profiles #1 in Southeast and #2 in US in Customer Satisfaction by national research company Golden rule of banking –treating people the way we w
Slide 6: 2013 – Transformative Year
6 6 2013 2013 – – Transformative Year Transformative Year Strengthened structure, resources, and financial performance Several years of credit clean-up Final classified asset sales Diversified loan portfolio Recalibrated core expense base $31 million reduction past three years Efficiency ratio below
Slide 7: 2014 Goals
7 7 2014 Goals 2014 Goals Community bank service with large bank resources Strong local leadership and senior management Funding advantage in legacy markets Consistent and attractive culture Class leading customer satisfaction HOW? LEVERAGE OUR STRENGTHS Continue to invest in and improve commercial
Slide 8: Highlights Second Quarter 2014
8 8 Highlights Second Quarter 2014 Highlights Second Quarter 2014 IMPROVING QUARTERLY RESULTS 2Q14 2Q14 1Q14 1Q14 Net Income $16.4M $15.8M EPS $.27 $.25 ROA .88% .85% ROCE 8.99% 8.64% Solid Improvement in Credit Quality Provision of $2.2 million vs. $48.5 million 2Q13 (classified assets sales) Net c
Slide 9: Highlights Second Quarter 2014
9 9 Highlights Second Quarter 2014 Highlights Second Quarter 2014 Solid Capital Ratios and Cash Dividend to Shareholders Initiated quarterly cash dividend to shareholders in second quarter Tier I Common to Risk Weighted Assets of 10.7%; Tangible Common to RWAs of 13.9% Tier 1 Risk Based Capital of 1
Slide 10: Earnings Per Share
10 10 Earnings Per Share Earnings Per Share GOAL OF 1% ROA (1) (1) Excludes loss on classified asset sales and DTA recapture.
Slide 11: Financial Review
COMMUNITY BANKS, INGs FINANCIAL REVIEW
Slide 12: Core Earnings Trend and Core Fee Revenue
12 12 Core Earnings Trend and Core Fee Revenue Core Earnings Trend and Core Fee Revenue Core Earnings $28.8 Million Up $1.4 million from 1Q14 and up $1.8 from a year ago. $ in millions 2Q14 1Q14 2Q13 Net Interest Revenue 54,950$ 781$ 19$ Fee Revenue 13,938 2,008 (125) Gross Revenue 68,888 2,789 (106
Slide 13: Core Operating Expenses
13 13 Core Operating Expenses Core Operating Expenses (1) Includes foreclosed property costs, severance, and gains and losses on deferred compensation plan liabilities. $ in thousands 2Q14 1Q14 2Q13 Salaries & Employee Benefits 23,988$ (223)$ 859$ Communications & Equipment 3,037 (202) (431) Occupan
Slide 14: Key Drivers of Net Interest Revenue / Margin
14 14 Key Drivers of Net Interest Revenue / Margin Key Drivers of Net Interest Revenue / Margin Net Interest Revenue 2Q growth impacted by: Net loan growth Higher securities yield Offset partially by pricing competition $ in millions KEY DRIVERS OF NIR NET INTEREST REVENUE & MARGIN Loan / Securities
Slide 15: Net Income
15 15 Net Income Net Income $ in thousands NET OPERATING INCOME 2Q14 1Q14 2Q13 Core Earnings (Pre-Tax, Pre-Credit) 28,757$ 1,407$ 1,830$ Provision for Loan Loss 2,200 (300) (46,300) NON-CORE FEE REVENUE: Securities Gains 4,435 4,218 4,435 Loss on Prepayment of Borrowings (4,446) (4,446) (4,446) Sale
Slide 16: Customer Deposit Mix & Core Growth
16 16 Customer Deposit Mix & Core Growth Customer Deposit Mix & Core Growth $ in thousands Time >$100M 9% Demand & NOW 37% Deposits by % / Customer Mix Public Funds 14% Time <$100M 14% MMDA & Sav 26% Time >$100M 22% Demand & NOW 23% Public Funds 14% Time <$100M 31% MMDA & Sav 10% 2Q14 $5.7B 63%* 2Q0
Slide 17: Capital Ratios
17 17 Capital Ratios Capital Ratios Holding Company Well- Cap 2Q14 1Q14 4Q13 3Q13 2Q13 Tier I RBC 6 % 11.8 % 11.1 % 12.7 % 14.2 % 13.7 % Total RBC 10 13.0 12.4 14.0 15.5 15.2 Leverage 5 8.3 8.0 9.1 10.0 9.8 Tier 1 Common RBC 10.7 10.1 9.3 9.0 8.5 Tangible Common to Assets 9.6 9.2 9.0 9.0 6.3 Tangibl
Slide 18: Loan Portfolio & Credit Quality
LOAN PORTFOLIO & CREDIT QUALITY
Slide 19: Loan Portfolio
19 19 Loan Portfolio Loan Portfolio (total $4.41 billion) (total $4.41 billion) Diversifying Portfolio Geographic Diversity Residential Mortgage 30% $1.31 Resi Constr 7% $.30 Consumer 7% $.32 By Loan Type 1Q11 $4.194 2Q14 $4.410 Constr 8% $.350 A&D 10% $.413 Constr 5% $.241 A&D 5% $.221 Reduced conc
Slide 20: New Loans Funded and Advances
20 20 New Loans Funded and Advances New Loans Funded and Advances (1) (1) $ in millions CATEGORY 2Q14 1Q14 2Q13 2Q14 1Q14 2Q13 Commercial C & I 115.4$ 74.7$ 58.3$ Atlanta 91.0$ 86.1$ 94.2$ Owner Occupied CRE 65.6 48.9 50.7 Coastal Georgia 28.5 31.1 26.7 Income Producing CRE 40.8 41.1 30.4 N. Georgia
Slide 21: Commercial Loans
21 21 Commercial Loans Commercial Loans (total $2.47 billion) (total $2.47 billion) $ in billions Geographic Diversity Income Producing 24% $.60B C & I 22% $.55B Comm Constr 7% $.16B Average Loan Size By Loan Type
Slide 22: Retail
22 22 Retail Retail (total $1.63 billion) (total $1.63 billion) Geographic Diversity Home Equity LOC 28% $.451B Avg loan size $48 thousand By Loan Type Mortgage 53% $.861B Avg loan size $101 thousand $ in billions Consumer 6% $.105B Indirect Auto 13% $.216B Success with new portfolio products and HE
Slide 23: Residential Construction
23 23 Residential Construction Residential Construction (total $302 million) (total $302 million) $ in millions Geographic Diversity Raw 12% $36 Lot 50% $151 By Loan Type Developing 11% $34 Sold 21% $62 Spec 6% $19 2Q14 1Q14 4Q13 3Q13 2Q13 2Q14 vs. 2Q13 TOTAL COMPANY Land Loans Developing 34$ 37$ 39
Slide 24: Credit Quality
24 24 Credit Quality Credit Quality $ in millions 2Q14 1Q14 4Q13 3Q13 2Q13 Net Charge-offs 4.2$ 4.0$ 4.4$ 4.5$ 72.4$ as % of Average Loans .38 % .38 % .41 % .42 % 6.87 % Allowance for Loan Losses 73.2$ 75.2$ 76.8$ 80.4$ 81.8$ as % of Total Loans 1.66 % 1.73 % 1.77 % 1.88 % 1.95 % as % of NPLs 353 29
Slide 25: Non-Performing Loans (NPLs) Inflow Trends
25 25 Non Non - - Performing Loans (NPLs) Inflow Trends Performing Loans (NPLs) Inflow Trends $ in millions Quarterly NPL Inflows Total NPLs
Slide 26: Performing Classified Loans
26 26 Performing Classified Loans Performing Classified Loans $ in millions 2Q13 3Q13 4Q13 1Q14 2Q14 Commercial: Commercial & Industrial 11$ 10$ 9$ 8$ 6$ Owner Occupied 43 40 43 48 48 Total C & I 54 50 52 56 54 Income Producing CRE 36 36 34 37 25 Commercial Construction 16 17 17 5 4 Total Commercial
Slide 27: TDRs
27 27 TDRs TDRs $ in millions LOAN TYPE 2Q14 vs. 2Q13 2Q14 vs. 2Q13 2Q14 vs. 2Q13 Commercial (Sec by RE) 43.8$ 40.4$ 1.9$ 2.0$ 45.7$ 42.4$ Commercial & Industrial 2.9 2.9 - .1 2.9 3.0 Commercial Construction 11.1 12.9 .1 .1 11.2 13.0 Total Commercial 57.8 56.2 2.0 2.2 59.8 58.4 Residential Mortgage
Slide 28: Net Charge-offs by Category & Market
28 28 Net Charge Net Charge - - offs by Category & Market offs by Category & Market $ in thousands NET CHARGE-OFFS BY CATEGORY Total % of Avg Loans 1Q14 4Q13 3Q13 2Q13 Commercial (Sec. by RE): Owner Occupied (1,836)$ (.64) % .10 % .57 % .58 % 5.85 % Income Producing 435 .29 .13 .21 .14 5.45 Total Co
Slide 29: NPAs by Loan Category & Market
29 29 NPAs by Loan Category & Market NPAs by Loan Category & Market $ in thousands NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY LOAN CATEGORY Commercial (sec. by RE): Commercial (sec. by RE): Owner Occupied 2,975$ 653$ 3,628$ Owner Occupied 5,283$ 547$ 5,830$ Income Producing 1,032 242 1,
Slide 30: Appendix
COMMUNITY BANKS, ING; APPENDIX
Slide 31: Experienced Proven Leadership
31 31 Experienced Proven Leadership Experienced Proven Leadership • Over 40 years in banking • Led company from $42 million in assets in 1989 to $7.3 billion today • Trustee of Young Harris College • Georgia Power Company Board Member • GA Economic Developers Association Spirit of Georgia Award reci
Slide 32: Market Share Opportunities & Demographics
32 32 Market Share Opportunities & Demographics Market Share Opportunities & Demographics North Georgia $ 6.4 $ 2.2 11 22 34% 1 Western North Carolina 10.9 .9 1 19 8 3 Gainesville MSA 2.7 .3 1 5 12 4 Atlanta MSA 54.4 2.2 10 36 4 7 Coastal Georgia 7.0 .3 2 8 4 7 East Tennessee 15.6 .3 2 8 2 8 Total M
Slide 33: Liquidity
33 33 Liquidity Liquidity 2Q14 1Q14 2Q13 vs 2Q13 Loans 4,410$ 4,356$ 4,189$ 54$ 221$ Core (DDA, MMDA, Savings) 3,624$ 3,572$ 3,322$ 52$ 302$ Public Funds 793 838 707 (45) 86 CD's 1,322 1,367 1,608 (45) (286) Total Deposits (excl Brokered) 5,739$ 5,777$ 5,637$ (38)$ 102$ Loan to Deposit Ratio 77% 75%
Slide 34: Business Mix – Deposits
34 34 Business Mix Business Mix – – Deposits Deposits (at quarter (at quarter - - end) end) 2Q14 vs. DEPOSITS BY CATEGORY 2Q14 1Q14 4Q13 3Q13 2Q13 2Q13 Demand & Now 2,106$ 2,073$ 1,969$ 1,979$ 1,916$ 190$ MMDA & Savings 1,518 1,499 1,468 1,437 1,406 112 Core Transaction Deposits 3,624 3,572 3,437 3,
Slide 35: Core Transaction Deposits
35 35 Core Transaction Deposits Core Transaction Deposits 1Q14 South Carolina 99.0 % 99.0 % Gainesville MSA 72.4 71.0 Coastal GA 70.6 69.6 East TN 66.2 65.9 North Carolina 66.0 64.2 Atlanta MSA 65.9 65.0 North Georgia 54.2 52.7 Total 63.1 % 61.8 % 2Q14 Core Transactions / Total Deposits $ in million
Slide 36: Lending & Credit Environment
36 36 Lending & Credit Environment Lending & Credit Environment PROACTIVELY ADDRESSING CREDIT ENVIRONMENT • Centralized underwriting and approval process • Segregated work-out teams • Highly skilled ORE disposition group • Seasoned regional credit professionals x Weekly past due meetings x Weekly NP
Slide 37: Commercial Construction & Real Estate
37 37 Commercial Construction & Real Estate Commercial Construction & Real Estate Amount Percent Land Develop - Vacant (Improved) 53$ 34 % Raw Land - Vacant (Unimproved) 26 16 Multi-Residential 25 16 Commercial Land Development 16 10 Office Buildings 11 7 Other Properties 10 6 Churches 7 4 Hotels /
Slide 38: Loans by Business Mix and Region
38 38 Loans by Business Mix and Region Loans by Business Mix and Region 2Q14 1Q14 4Q13 3Q13 2Q13 2Q14 vs. 2Q13 QUARTERLY LOANS - BUSINESS MIX BY CATEGORY Commercial: Comm & Indus 554$ 495$ 472$ 457$ 437$ 117$ Owner Occ'd 1,163 1,142 1,134 1,129 1,119 44 Total C & I 1,717 1,637 1,606 1,586 1,556 161
Slide 39: Non-GAAP Reconciliation Tables
39 39 Non Non - - GAAP Reconciliation Tables GAAP Reconciliation Tables 2Q14 1Q14 4Q13 3Q13 2Q13 CORE FEE REVENUE Core fee revenue 13,938$ 11,930$ 13,219$ 13,966$ 14,063$ Securities gains, net 4,435 217 70 - - Losses on prepayment of borrowings (4,446) Gains from sales of low income housing tax cred
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