United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q3 2014 Earnings Presentation
36 slides from United Community Banks's earnings presentation, Oct 23, 2014
Slide 1: Third Quarter 2014 Investor Presentation
Third Quarter 2014 Investor Presentation
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: Highlights Third Quarter 2014
Highlights Third Quarter 2014 Net Interest Revenue of $57.0 Million vs. $55.0 Million in 2Q13 and $54.3 Million in 3Q13 IMPROVING QUARTERLY RESULTS Loan growth of $159 million in 3Q14, up $302 $ in millions million from 3Q13 Focus on specialized lending and commercial Margin of 3.32% vs. 3.21% in 2Q
Slide 4: Highlights Third Quarter 2014 - Credit Quality and Balance Sheet
Highlights Third Quarter 2014 Solid Improvement in Credit Quality Balance Sheet Provision of $2.0 million vs. $3.0 million 3Q13 Loan growth this quarter of $159 Net charge-offs decline to .28% of million, or 14% annualized total loans vs. .42% in 3Q13 NPAs declined to .29% of total C&I up $96 millio
Slide 5: Earnings Per Share / Return on Assets
Earnings Per Share / Return on Assets E EPS .95% ROA A R R E $.29 N T $.28 .88% .90% I U N .86% .86% $.27 R .85% G N S $.25 $.24 .80% O P N E $.22 R $.21 $.20 .70% A S S S H E A T R $.16 .60% S E 3Q13 4Q13 1Q14 2Q14 3Q14 GOAL OF 1% ROA 5
Slide 6: 2014 Goals
2014 Goals LEVERAGE OUR STRENGTHS Community bank service with large bank resources Strong local leadership and senior management Funding strength in legacy markets Consistent and attractive culture Class leading customer satisfaction HOW? Continue to invest in and improve commercial and retail capab
Slide 7: Core Earnings Trend and Core Fee Revenue
Core Earnings Trend and Core Fee Revenue $ in millions Core Earnings $60 $30.3 Million $55.9 $55.0 $57.0 $54.2 $54.2 $50 Up $1.5 million from 2Q14 and up $1.4 from a year ago. $40 $39.3 $41.2 $40.1 $41.1 $38.7 $30 $30.3 Net Interest Revenue $28.9 $27.9 $27.4 $28.8 Core Operating Expenses $20 Core Ea
Slide 8: Core Operating Expenses
Core Operating Expenses $ in thousands Variance - Increase / (Decrease) 3Q14 2Q14 3Q13 Salaries & Employee Benefits $ 25,684 $ 1,696 $ 3,172 Communications & Equipment 3,094 57 (211) Occupancy 3,425 163 46 FDIC Assessment 1,131 (294) (1,274) Advertising & Public Relations 894 (245) (68) Postage, Pri
Slide 9: Key Drivers of Net Interest Revenue / Margin
Key Drivers of Net Interest Revenue / Margin NET INTEREST REVENUE & MARGIN $ in millions Net Interest $57 $57.0 Revenue $55.9 3.50% $55.0 $54.3 $54.2 $53 3Q growth impacted 3.32% 3.26% 3.26% by: 3.21% 3.21% 3.25% Net loan growth $49 Higher securities yield $45 3.00% 3Q13 4Q13 1Q14 2Q14 3Q14 KEY DRIV
Slide 10: Net Income
Net Income $ in thousands NET OPERATING INCOME Variance - Increase / (Decrease) 3Q14 2Q14 3Q13 Quarterly Core Earnings (Pre-Tax, Pre-Credit) $ 30,289 $ 1,532 $ 1,391 Net Provision for Loan Loss 2,000 (200) (1,000) Income $ in millions NON-CORE FEE REVENUE: Securities Gains 11 (4,424) 11 Loss on Prep
Slide 11: Customer Deposit Mix & Core Growth
Customer Deposit Mix & Core Growth $ in thousands Deposits by % / Customer Mix Total Deposit Mix 3Q14 2Q14 3Q13 4Q08 3Q14 Demand / NOW $ 2,159 $ 2,106 $ 1,979 $ 1,457 MMDA / Savings 1,555 1,518 1,437 630 Public $5.8B Core Transaction 3,714 3,624 3,416 2,087 Funds 64%* Time 14% Significant Time < $10
Slide 12: Capital Ratios
Capital Ratios Well- Holding Company Cap 3Q14 2Q14 1Q14 4Q13 3Q13 Tier I Risk Based Capital ("RBC") 6 % 12.1 % 11.8 % 11.1 % 12.7 % 14.2 % Total RBC 10 13.3 13.0 12.4 14.0 15.5 Leverage 5 8.7 8.3 8.0 9.1 10.0 Tier 1 Common RBC 11.0 10.7 10.1 9.3 9.0 Tangible Common to Assets 9.8 9.6 9.2 9.0 9.0 Tang
Slide 13: Loan Portfolio
Loan Portfolio (total $4.57 billion) $ in billions By Loan Type Diversifying Portfolio Reduced 1Q11 concentrations 3Q14 $4.194 of A&D and $4.57 Commercial Investor RE 57% loans $2.59 Retail Retail C&I 37% 31% 34% $1.672 $1.308 $1.424 C&I Residential 39% Mortgage $1.804 29% $1.32 Inv RE 17% Inv RE $.
Slide 14: New Loans Funded and Advances
New Loans Funded and Advances(1) $ in millions CATEGORY MARKET 3Q14 2Q14 3Q13 3Q14 2Q14 3Q13 Commercial C & I $ 150.0 $ 115.4 $ 64.5 Atlanta $ 96.7 $ 91.0 $ 116.6 Owner Occupied CRE 48.1 65.6 58.2 Coastal Georgia 38.4 28.5 40.5 Income Producing CRE 62.1 40.8 28.1 N. Georgia 61.5 69.0 71.5 Commercial
Slide 15: Commercial Loans
Commercial Loans (total $2.59 billion) $ in billions By Loan Type Geographic Diversity Atlanta MSA $.952 36% North Georgia $ .515 South Carolina Western North Carolina Coastal Georgia $ .330 24% $ .325 CRE MSA $ .155 5%East Tennessee Owner $ .177 7% Gainesville CRE $ .133 Occupied 12% Income Produci
Slide 16: Retail Loans
Retail (total $1.67 billion) $ in billions By Loan Type Geographic Diversity Western North Carolina North Georgia $ .521 $ .333 Home Equity 36% LOC 27% $.459B Atlanta MSA 24% $ .264 Indirect Auto Coastal Georgia East Tennessee $.243 Carolina Avg loan size MSA $ .101 $ .135 $48 thousand 1% South$ .00
Slide 17: Residential Construction
Residential Construction (total $307 million) $ in millions By Loan Type Geographic Diversity North Georgia $ 131 48% Western North Carolina Atlanta MSA $ 65 36% Lot $ 72 48% 24% Georgia $146 East Tennessee MSA 3% Gainesville 6% Coastal$ 18 $ 12 $9 12% 21% 23% 43% 4% Raw 0% 11% $35 3Q14 vs. 3Q14 2Q1
Slide 18: Credit Quality
Credit Quality $ in millions 3Q14 2Q14 1Q14 4Q13 3Q13 Net Charge-offs $ 3.2 $ 4.2 $ 4.0 $ 4.4 $ 4.5 as % of Average Loans .28 % .38 % .38 % .41 % .42 % Allowance for Loan Losses $ 71.9 $ 73.2 $ 75.2 $ 76.8 $ 80.4 as % of Total Loans 1.57 % 1.66 % 1.73 % 1.77 % 1.88 % as % of NPLs 384 353 299 286 308
Slide 19: Non-Performing Loans (NPLs) Inflow Trends
Non-Performing Loans (NPLs) Inflow Trends $ in millions Quarterly NPL Inflows $15 $11.0 $10.0 $9.3 $9.5 $10 $7.7 $5 $0 3Q13 4Q13 1Q14 2Q14 3Q14 Resi Constr Comm Constr Resi Mtg Comm RE Comm Consumer Total NPLs 26.1 26.8 25.2 $24 20.7 18.7 $18 $12 $6 $0 3Q13 4Q13 1Q14 2Q14 3Q14 19
Slide 20: Performing Classified Loans
Performing Classified Loans $ in millions $180 $173.6 $172.7 $164.9 $160 $147.5 $149.0 $140 3Q13 4Q13 1Q14 2Q14 3Q14 By Category 3Q13 4Q13 1Q14 2Q14 3Q14 Commercial: Commercial & Industrial $ 10 $ 9 $ 8 $ 6 $ 7 Owner Occupied 40 43 48 48 50 Total C & I 50 52 56 54 57 Income Producing CRE 36 34 37 25
Slide 21: TDRs
TDRs $ in thousands LOAN TYPE Accruing Non-Accruing Total TDRs 3Q14(1) 3Q13 3Q14 3Q13 3Q14 3Q13 Commercial (Sec by RE) $ 42,820 $ 40,733 $ 2,532 $ 2,431 $ 45,352 $ 43,164 Commercial & Industrial 2,927 2,854 13 65 2,941 2,919 Commercial Construction 11,065 12,824 19 ‐ 11,084 12,824 Total Commercial 5
Slide 22: Net Charge-offs by Category & Market
Net Charge-offs by Category & Market $ in thousands NET CHARGE-OFFS BY CATEGORY 3Q14 % of Average Loans (Annualized) % of Avg Total Loans 2Q14 1Q14 4Q13 3Q13 Commercial (Sec. by RE): Ow ner Occupied $ 746 .26 % (.64) % .10 % .57 % .58 % Income Producing 104 .07 .29 .13 .21 .14 Total Comm (Sec. by RE
Slide 23: NPAs by Loan Category & Market
NPAs by Loan Category & Market $ in thousands 3Q14 3Q13 NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY LOAN CATEGORY Commercial (sec. by RE): Commercial (sec. by RE): Owner Occupied $ 2,156 $ 1,024 $ 3,180 Owner Occupied $ 6,358 $ 591 $ 6,949 Income Producing 1,742 42 1,784 Income Producing
Slide 24: Appendix
COMMUNITY BANKS, INC. APPENDIX
Slide 25: Footprint
Footprint Nashville Knoxville Raleigh Asheville Charlotte Chattanooga Blairsville Greenville Atlanta Myrtle Beach Current Footprint Charleston Savannah Headquartered in Blairsville, Georgia with 103 locations in: Georgia; North Carolina; South Carolina; and Tennessee 25
Slide 26: United at a Glance
United at a Glance Founded in 1950 Third-largest bank holding company headquartered in Georgia with 1,515 employees Deposit Market Share(1) Deposit Market Offices Market Rank Share North Georgia 22 35% 1 Atlanta 36 4 6 Gainesville 5 12 4 Coastal Georgia 8 5 7 Key Statistics as of 9/30/14 W. North Ca
Slide 27: 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 want to be treated “The Bank that
Slide 28: Experienced Proven Leadership
Experienced Proven Leadership • Over 40 years in banking • Over 31 years in banking • Over 36 years in banking • Led company from $42 • Responsible for overall • Responsible for million in assets in 1989 to operations accounting, finance and $7.5 billion today • Former Consultant and reporting activ
Slide 29: Market Share Opportunities & Demographics
Market Share Opportunities & Demographics EXCELLENT GROWTH OPPORTUNITIES Market Deposits Deposits (in Deposit Markets (in billions) (1) billions) (2,3) Banks Offices(3) Share (1) Rank(1) North Georgia $ 6.3 $ 2.2 11 22 35 % 1 Western North Carolina 11.3 .9 1 19 8 3 Gainesville, Georgia 2.8 .3 1 5 12
Slide 30: Liquidity
Liquidity $ in millions Unused Variance Capacity 3Q14 2Q14 3Q13 vs 2Q14 vs 3Q13 Wholesale Borrowings (1) Brokered Deposits $ 313 $ 405 $ 424 $ 419 $ (19) $ (14) FHLB 516 330 175 - 155 330 Holding Company LOC 50 - 40 - (40) - Fed Funds 350 - 25 - (25) - Other Wholesale - 6 11 54 (5) (48) WHOLESALE To
Slide 31: Business Mix – Deposits (at quarter-end)
Business Mix – Deposits (at quarter-end) $ in millions 3Q14 vs. DEPOSITS BY CATEGORY 3Q14 2Q14 1Q14 4Q13 3Q13 3Q13 Demand & Now $ 2,159 $ 2,106 $ 2,073 $ 1,969 $ 1,979 $ 180 MMDA & Savings 1,555 1,518 1,499 1,468 1,437 118 Core Transaction Deposits 3,714 3,624 3,572 3,437 3,416 298 Time < $100,000 7
Slide 32: Core Transaction Deposits
Core Transaction Deposits $ in millions South Carolina $24 $23 Core Transactions / Total Deposits 3Q14 2Q14 $181 East Tennessee South Carolina 99.0 % 99.0 % $180 2Q14 Gainesville MSA 73.3 72.4 3Q14 Coastal Georgia $228 Coastal GA 71.5 70.6 $233 East TN 68.7 66.2 $234 North Carolina 66.7 66.0 Gainesv
Slide 33: Lending & Credit Environment
Lending & Credit Environment $ in millions Regional Credit Review – Standard Underwriting •Legal Lending Limit $ 197 •House Lending Limit 25 •Project Lending Limit 15 •Top 25 Relationships 385 PROACTIVELY ADDRESSING CREDIT ENVIRONMENT • Centralized underwriting and approval process • Segregated work
Slide 34: Commercial Construction & Real Estate
Commercial Construction & Real Estate $ in millions COMMERCIAL CONSTRUCTION COMMERCIAL REAL ESTATE 30‐Sep‐14 30‐Sep‐14 Amount Percent Owner Income Land Develop ‐ Vacant (Improved) $ 51 28 % Occupied Producing Total Percent Raw Land ‐ Vacant (Unimproved) 24 13 Office Buildings $ 315 $ 148 $ 463 26.3
Slide 35: Loans by Business Mix and Region
Loans by Business Mix and Region $ in millions 3Q14 vs. 3Q14 2Q14 1Q14 4Q13 3Q13 3Q13 2013 2012 2011 2010 2009 QUARTERLY LOANS ‐ BUSINESS MIX BY CATEGORY ANNUAL LOANS ‐ BUSINESS MIX BY CATEGORY Commercial: Commercial: Comm & Indus $ 650 $ 554 $ 495 $ 472 $ 457 $ 193 Comm & Indus $ 472 $ 458 $ 428 $
Slide 36: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables $ in millions Operating Earnings to GAAP Earnings Reconciliation 3Q14 2Q14 1Q14 4Q13 3Q13 CORE FEE REVENUE Core fee revenue $ 14,419 $ 13,938 $ 11,930 $ 13,219 $ 13,966 Securities gains, net 11 4,435 217 70 - Losses on prepayment of borrowings - (4,446) BOLI death bene
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