United Community Banks, Inc. · NYSE:UCB

United Community Banks — Q4 2010 Earnings Presentation

59 slides from United Community Banks's earnings presentation, Jan 28, 2011

  1. Slide 1: United Community Banks, Inc. Investor Presentation Fourth Quarter 2010

    United Community Banks, Inc. Investor Presentation Fourth Quarter 2010 Jimmy C. Tallent President & CEO Rex S. Schuette EVP & CFO rex_schuette@ucbi.com (706) 781-2266 David P. Shearrow EVP & CRO # in Customer Satisfaction As reported by Customer Service Profiles 1

  2. 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

  3. Slide 3: 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 operating expense, core

  4. Slide 4: Highlights Fourth Quarter

    Highlights Fourth Quarter Credit Loan and Deposit Growth Core Earnings Capital 4

  5. Slide 5: Loan Portfolio & Credit Quality

    5 LOAN PORTFOLIO & CREDIT QUALITY

  6. Slide 6: 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 meetings Weekly NPA/ORE meetings Quarterly

  7. Slide 7: Geographic Diversity - Loan Portfolio

    North Georgia Atlanta MSA Western North Carolina Coastal Georgia Gainesville MSA Eastern Tennessee East 0.37 0.29 0.15 0.07 0.07 0.05 Geographic Diversity 7 Loan Portfolio (total $4.60 billion) $ in millions

  8. Slide 8: Commercial Loans

    Atlanta MSA North Georgia Coastal Georgia Western North Carolina Gainesville MSA Eastern Tennessee East 0.39 0.31 0.08 0.08 0.08 0.06 Commercial Construction Owner-Occupied Income Producing C & I East 12 39 31 18 Geographic Diversity Average Loan Size CRE: $447k C&I: $85k Comm. Constr. $650k 8 Comme

  9. Slide 9: Commercial Real Estate Portfolio Characteristics

    56% owner-occupied Typical owner-occupied: small business, doctors, dentists, attorneys, CPAs $12 million project limit $447K average loan size Portfolio Characteristics 9 Commercial Real Estate (by loan type)

  10. Slide 10: Commercial Construction Portfolio Characteristics

    $650k Average loan size Portfolio Characteristics 10 Commercial Construction (by loan type)

  11. Slide 11: Residential Mortgage

    North Georgia Western North Carolina Atlanta MSA Coastal Georgia Eastern Tennessee Gainesville MSA East 0.4 0.26 0.14 0.07 0.06 0.06 Mortgage Home Equity East 94 34 Geographic Diversity Avg loan size: $45k Avg loan size: $96k Origination Characteristics No broker loans No sub-prime / Alt-A Policy Ma

  12. Slide 12: Residential Construction

    North Georgia Western North Carolina Atlanta MSA Gainesville MSA Coastal Georgia Eastern Tennessee East 0.49 0.2 0.19 0.05 0.04 0.03 Geographic Diversity Developing Spec $241k Sold $147k Develop $650k Raw Land $257k Lot $111k Average Loan Size Lot Spec Sold Developing Raw East 0.4 0.14 0.07 0.25 0.1

  13. Slide 13: North Georgia MSA (residential construction)

    13 North Georgia MSA (residential construction)

  14. Slide 14: Atlanta MSA (residential construction)

    14 Atlanta MSA (residential construction)

  15. Slide 15: Credit Quality

    Credit Quality (in millions) 4Q10 3Q10 2Q10 1Q10 4Q 09 Operating Net Charge-offs(1) $ 47.7 $ 50.0 $ 61.3 $ 56.7 $ 84.6 as % of Average Loans(1) 4.03 % 4.12 % 4.98 % 4.51 % 6.37 % Allowance for Loan Losses $ 174.7 $ 174.6 $ 174.1 $ 173.9 $ 155.6 as % of Total Loans 3.79 % 3.67 % 3.57 % 3.48 % 3.02 %

  16. Slide 16: Net Charge-offs by Loan Category

    Excludes $11.75 million partial recovery of 2007 fraud loss. Based on simple average of the four quarters 16 Net Charge-offs by Loan Category

  17. Slide 17: Net Charge-offs by Market

    Based on simple average of the four quarters Excludes fraud loss recovery of $11.750M 17 Net Charge-offs by Market

  18. Slide 18: NPAs by Loan Category and Market

    18 NPAs by Loan Category and Market

  19. Slide 19: Financial Results

    19 FINANCIAL RESULTS

  20. Slide 20: Core Earnings

    4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 16.5 21.5 26.7 31.7 29.9 28.9 29.4 27.5 27.6 Core Earnings 20 In millions

  21. Slide 21: Core Earnings Summary

    Core Earnings Summ (In Thousands) Variance 4a10 3Q10 409 Net Interest Revenue $ 60132 $ 118 $ (3,797) Fee Revenue 14,760 (843) 12 Gross Revenue 71,892 (725) (3,785) Operating Expense (Excl OREO) 44,316 (838) (1,419) Pre-Tax, Pre-Credit (Core) $ 27,576 $ 113, $ (2,366) Net Interest Margin 3.58 % 01 %

  22. Slide 22: Net Interest Margin

    4Q09 1Q10 2Q10 3Q10 4Q10 Net Interest Margin 0.034 0.0349 0.036 0.0357 0.0358 0.0064 0.0066 0.0064 0.0056 0.0047 Margin changes +1 bps vs. 3Q10 +18 bps vs. 4Q09 Maintained loan & CD pricing 4Q Excess liquidity - lowered Margin by 30 bps NIM Characteristics 4.04% 4.15% NIM NIM - Pre Credit (1) (1) Ex

  23. Slide 23: Credit Costs Impacting Margin

    4Q09 1Q10 2Q10 3Q10 4Q10 Lost Interest on C/Os 0.0017 0.002 0.002 0.002 0.0017 Nonaccrual/OREO 0.0027 0.0026 0.0025 0.0022 0.0019 Interest Reversals 0.002 0.002 0.0019 0.0014 0.0011 Historically 8 to 12 bps Credit cycle - significant drag on margin but improving Cost 4Q10 vs. Historical - 35 bps (an

  24. Slide 24: Deposit Mix

    Demand & NOW MMDA & Sav. Time <$100k Time >$100k Public Funds Brokered East 1573 1064 1490 940 725 677 24 Deposit Mix (total $6.5 billion)

  25. Slide 25: Net Operating Loss - From Continuing Operations

    Net Operating Loss - From Continuing Operations 25

  26. Slide 26: Net Operating Loss - From Continuing Operations

    (In Thousands) 4Q10 3Q10 4Q09 Net Operating Loss $ (23,574) $ (25,825) —$ (40,063) Earnings from Discontinued Operations - - 228 Partial Recovery of Fraud Loss (11,750 pre-tax) 7179 = : Goodwill Impairment Charge S (210,590) : Net Loss $ (16,395) $(236,415) $ (39,835) Preferred Stock Div (TARP) (2,5

  27. Slide 27: Capital Ratios

    Capital Ratios Well- Capitalized Guideline DEC 10 SEP 10 DEC ‘09 Tier 1 RBC 6% 9% 10.7% 11.4% 13.2% Total RBC 10 12.5 13.2 15.0 Leverage 5 7. 79 8.8 Tangible Common Equity to: Assets 6.4 6.8 La] Risk Weighted Assets 9.1 9.6 10.4 Tangible Equity to Assets 88 9.2 9.4 din Customer Satistaction pe

  28. Slide 28: Appendix

    28 APPENDIX

  29. Slide 29: United at a Glance

    Assets $7.4 Billion Deposits $6.5 Billion Banks 27 Offices 106 29 United at a Glance

  30. Slide 30: Experienced Proven Leadership

    30 Experienced Proven Leadership Joined Years in UCBI Banking Jimmy Tallent President & CEO 1984 36 Guy Freeman Chief Operating Officer 1992 52 Rex Schuette Chief Financial Officer 2001 33 David Shearrow Chief Risk Officer 2007 29 Glenn White President, Atlanta Region 2007 36 Craig Metz Marketing 20

  31. Slide 31: Business and Operating Model

    Business and Operating Model Twenty-seven "community banks" Local CEOs with deep roots in their communities Resources of $7.4 billion bank Service is point of differentiation Golden rule of banking "The Bank That SERVICE Built" Ongoing customer surveys 95+% satisfaction rate Strategic footprint with

  32. Slide 32: Robust Demographics (fast growing markets)

    32 Robust Demographics (fast growing markets)

  33. Slide 33: Market Share Opportunities

    1 FDIC deposit market share and rank as of 6/10 for markets where United takes deposits. Source: SNL and FDIC. 2 Based on current quarter. 33 Market Share Opportunities (excellent growth prospects)

  34. Slide 34: Population Growth and Peer Banks

    Total 2010-2015 ‘Assets Population Company" ($8) Cullen/Frost Bankers, Inc. Westem Alliance Bancorporation PRSP Prosperity Bancshares, Ine. 9s 7.38 GBC Glacier Bancorp, nc. 63 7.28 First Citizens Bancshares, Inc. Intemational Bancshares Corporation United Community Banks, Inc. TCBI Texas Capital Ban

  35. Slide 35: Small Business Market Growth

    35 Small Business Market Growth Number of Businesses with 1 - 49 Employees

  36. Slide 36: Performing Classified Loans

    36 Performing Classified Loans

  37. Slide 37: Business Mix Loans (at quarter-end)

    37 Business Mix Loans (at quarter-end)

  38. Slide 38: Loans - Markets Served (at quarter-end)

    38 Loans - Markets Served (at quarter-end)

  39. Slide 39: Residential Construction - Total Company

    39 Residential Construction - Total Company

  40. Slide 40: Residential Construction - Atlanta MSA

    40 Residential Construction - Atlanta MSA

  41. Slide 41: Residential Construction - North Georgia

    41 Residential Construction - North Georgia

  42. Slide 42: Business Mix Loans (at year-end)

    42 Business Mix Loans (at year-end)

  43. Slide 43: Loans - Markets Served (at year-end)

    43 Loans - Markets Served (at year-end)

  44. Slide 44: Lending - Credit Summary

    (in millions) 44 Lending - Credit Summary Legal lending limit $182 House lending limit 20 Project lending limit 12 Top 25 relationships 441 9.6% of total loans Regional credit review - Standard underwriting

  45. Slide 45: NPAs by Loan Category, Market, and Activity

    45 NPAs by Loan Category, Market, and Activity

  46. Slide 46: NPAs by Loan Category, Market, and Activity (Cont'd.)

    NPAs by Loan Category, Market, and Activity (Cont'd.)

  47. Slide 47: Net Charge-offs by Category and Market

    47 Net Charge-offs by Category and Market

  48. Slide 48: Net Charge-offs by Category and Market (Cont'd.)

    Net Charge-offs by Category and Market (Cont'd.)

  49. Slide 49: Loans / Deposits - Liquidity

    49 Loans / Deposits - Liquidity

  50. Slide 50: Wholesale Borrowings - Liquidity

    50 Wholesale Borrowings - Liquidity

  51. Slide 51: Business Mix - Deposits (at quarter-end)

    51 Business Mix - Deposits (at quarter-end)

  52. Slide 52: Core Transaction Deposits

    $ in millions 4Q 09 4Q 10 Geographic Diversity Atlanta MSA North Georgia Western North Carolina Gainesville MSA Coastal Georgia Eastern Tennessee 4Q10 981 727 461 171 152 144 4Q09 874 653 416 148 128 125 Atlanta MSA North Georgia Western North Carolina Gainesville MSA Coastal Georgia Eastern Tenness

  53. Slide 53: NPA Sale in 2Q

    NPA Sale in 2Q Sold $103 Million NPA's - With a $65 Million Capital Option and Warrant Completed sale on April 30, 2010 Accelerates disposition of the more illiquid assets 53

  54. Slide 54: NPA Sale - Fair Value Accounting

    NPA Sale - Fair Value Accounting Fair Value Accounting - Warrant / Option to Purchase Equity Increase to Capital Surplus - $39.8 million Pre-tax expense charge - $45.3 million; after-tax cost - $30.0 million GAAP Capital +$9.8million - Slight Negative to "Regulatory Capital" (DTA) 54

  55. Slide 55: Southern Community Bank

    Southern Community Bank ($ in millions) Purchased - June 19, 2009 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 (Reduced by 17 after conversion in September 2009) $208 i

  56. Slide 56: Non-GAAP Reconciliation Tables

    56 Non-GAAP Reconciliation Tables

  57. Slide 57: Non-GAAP Reconciliation Tables

    57 Non-GAAP Reconciliation Tables

  58. Slide 58: Analyst Coverage

    Analyst Coverage @ FBR Capital (Market Perform - Oct 28, 2020) @ FIG Partners (Outperform - Jan 3, 2022) | Guggenheim Securities, LLC (Neutral - Jan 4, 2022) | Keefe, Bruyette & Woods (Market Perform - Oct 29, 2010) | Macquarie Capital (USA) (Neutral - Jan 3, 2022) M Raymond James & Assoc. (Market P

  59. Slide 59: United Community Banks, Inc. Fourth Quarter 2010

    United Community Banks, Inc. Investor Presentation Fourth Quarter 2010 Copyright 2010 United Community Banks, Inc. All rights reserved.

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