United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q1 2016 Earnings Presentation
39 slides from United Community Banks's earnings presentation, Apr 27, 2016
Slide 1: Investor Presentation First Quarter 2016
INVESTOR PRESENTATION First Quarter 2016 April 27, 2016 ucbi.com | 1
Slide 2: Disclosures
Disclosures CAUTIONARY STATEMENT This investor presentation may contain forward-looking operating efficiency ratio, operating dividend payout ratio, statements, as defined by federal securities laws, operating expenses, pre-tax, pre-credit earnings, tangible including statements about United’s finan
Slide 3: Snapshot of United Community Banks, Inc.
Snapshot of United Community Banks, Inc. Market Data Ticker UCBI Price (as of 4/22/16) $20.14 Market Cap $1.4B P/E (2016e) 14.3x P/TBV 166% Avg. Daily Vol. (LTM) 374,367 Institutional Ownership 78.0% Quarterly Dividend $0.07 First Quarter 2016 Assets $9.8B Loans $6.1B Deposits $8.0B EPS $0.33 Total
Slide 4: United Foundation – The Bank that SERVICE Built
United Foundation – The Bank that SERVICE Built ucbi.com | 4 ucbi.com | 4
Slide 5: First Quarter 2016 Highlights
First Quarter 2016 Highlights Operating Earnings Per Share Net Interest Revenue Fee Revenue EARNINGS (1) in millions in millions $74.0 $75.2 $22 $21.3 $0.34 $0.33 $0.33 $75 $0.33 $0.32 $20 $0.32 $70 $18.3 $18.6 $65.7 $18 $0.30 $65 $17.3 $0.29 $61.3 $15.7 $0.28 $60 $16 $57.6 $0.26 $55 $14 1Q15 2Q15 3
Slide 6: First Quarter 2016 Highlights
First Quarter 2016 Highlights 2015 2016 Variance - Incr / (Decr) taxable equivalent Q1 Q2 Q3 Q4 Q1 Q415 Q115 (2) (3) EARNINGS SUMMARY ($ in thousands) (1) Operating Net Income $17,670 $19,989 $21,726 $23,800 $23,944 $ 144 $ 6,274 Net Income 17,670 17,796 17,862 18,183 22,274 4,091 4,604 Net Interest
Slide 7: First Quarter 2016 Highlights
First Quarter 2016 Highlights (in millions) 1Q16 4Q15 1Q15 Net Income Operating(1) $ 23.9 $ 23.8 $ 17.7 ($ in millions) GAAP 22.3 18.2 17.7 EPS Operating(1) .33 .33 .29 GAAP .31 .25 .29 ROA Operating(1) 1.00 % .99% .94% GAAP .93 .76 .94 ROTCE Operating(1) 10.91 10.87 9.46 ROCE GAAP 8.57 7.02 9.34 Pr
Slide 8: First Quarter 2016 Highlights
First Quarter 2016 Highlights Increasing Profitability Taxable ► $75.2 Million - Loan And Investment Security Growth And Improved Net Interest Margin Yields Equivalent Positive Net Interest Revenue Results Net Interest ● Increased $1.2 million from 4Q15 and $17.6 million from 1Q15 Revenue ● Average
Slide 9: First Quarter 2016 Highlights
First Quarter 2016 Highlights Generating Growth ► Well-Diversified Loan Portfolio ● Increased $111 million from the fourth quarter 2015, or 7% annualized, and $439 million from Loan Growth the first quarter 2015, or 9%, excluding mergers and healthcare loan sale ● Strong loan production of $562 mill
Slide 10: Protecting High-Quality Balance Sheet: Credit Quality
Protecting High-Quality Balance Sheet Credit Quality $ in millions 1Q15 2Q15 3Q15 4Q15 1Q16 Net Charge-offs $ 2.6 $ 1.0 $ 1.4 $ 1.3 $ 2.1 as % of Average Loans 0.22 % 0.08 % 0.10 % 0.09 % 0.14 % Allowance for Loan Losses $ 70.0 $ 70.1 $ 69.1 $ 68.4 $ 66.3 as % of Total Loans 1.46 % 1.36 % 1.15 % 1.1
Slide 11: Prudent Capital Management
Protecting High-Quality Balance Sheet Prudent Capital Management Holding Company Target 1Q16 4Q15 3Q15 2Q15 1Q15 Tier I Risk-Based Capital 11 – 12% 11.3% 11.5% 11.4% 11.9% 11.5% Total Risk-Based Capital 12 – 13 12.3 12.5 12.5 13.1 12.8 Leverage 8.5 – 9.5 8.4 8.3 9.1 9.1 8.7 Tier I Common Risk-Based
Slide 12: Earnings, Fee Revenue, and Operating Expenses
Increasing Profitability Earnings, Fee Revenue, and Operating Expenses $80 $74.0 $75.2 $70 Net Interest Revenue $65.7 $60 $61.3 $57.6 $56.4 $55.2 Operating Expenses Millions $50 $48.5 $43.1 $45.2 $40 Pre-Tax, Pre-Credit $38.9 $38.6 Earnings $33.3 $35.5 $30 $30.2 Fee Revenue $20 $21.3 $17.3 $18.3 $18
Slide 13: Key Drivers of Net Interest Revenue / Margin
Increasing Profitability Key Drivers of Net Interest Revenue / Margin Net Interest Revenue & Margin 1Q16 Impacted By $80 $74.0 $75.2 NET INTEREST REVENUE $70 $65.7 ►Strong loan and $61.3 3.50% core deposit $60 3.41% Millions $57.6 3.34% growth 3.31% 3.30% 3.26% $50 3.25% ►Current rising $40 interest
Slide 14: Fee Revenue
Increasing Profitability Fee Revenue Driving Fee Revenue through Core Banking Infrastructure Fee Revenue SBA Fees (Gains) and SBA in millions Production (1) ► 1Q16 Sales $32 million in millions $25 $3 ► 2015 Sales $71 million $62 $60 ► Target market: small $2 businesses with revenue $21.3 $51 betwee
Slide 15: New Loans Funded and Advances
Generating Growth New Loans Funded and Advances(1) $ in millions New Loans Funded and Advances New Loans Funded and Advances by Region $590.0 Variance-Incr(Decr) $600 1Q16 4Q15 1Q15 4Q15 1Q15 $526.1 $562.3 $550 Atlanta $ 89.0 $ 94.7 $ 83.3 $ (5.7) $ 5.7 Coastal Georgia 39.2 59.2 43.4 (20.0) (4.2) $5
Slide 16: Loan Mix
Generating Growth Loan Mix $6.00 $6.11 Commercial construction $6.00 Commercial Income producing commercial real estate $5.00 $4.67 Owner occupied $4.18 $4.33 commercial real estate Commercial & industrial Billions $4.00 Indirect auto $3.00 Residential HELOC Retail $2.00 Residential mortgage $1.00 R
Slide 17: Customer Deposit Mix
Generating Growth Customer Deposit Mix $8.00 $7.53 $7.52 Time & Public Public funds $7.00 $6.00 $5.71 $5.78 $5.90 $5.00 Time (customer) Billions $4.00 Core Transaction $3.00 Interest bearing core transaction $2.00 $1.00 Non-interest bearing core transaction - 2012 2013 2014 2015 1Q16 Deposits Core T
Slide 18: Customer Deposit Mix: Low-Cost Core Deposit Base
Generating Growth Customer Deposit Mix High-Quality, Low-Cost Core Transaction Deposit Base $6.00 $5.25 $5.36 $5.00 $2.09 $2.20 Non-interest bearing in billions $4.00 $3.69 $3.44 core transaction $3.21 $3.00 $1.47 $1.31 $1.19 Interest bearing core $2.00 transaction $3.16 $3.16 $1.00 $2.02 $2.13 $2.2
Slide 19: Acquisition of Tidelands Bancshares, Inc.
Generating Growth Acquisition of Tidelands Bancshares, Inc. Transaction Summary Company Overview • $11.2 million aggregate transaction value; 100% cash consideration Headquarters Mt. Pleasant, SC ‒ $2.2 million value to common, or $0.52 per common share Established 2003 ‒ $9.0 million to redeem TARP
Slide 20: Exhibits
EXHIBITS ucbi.com | 20 ucbi.com | 20
Slide 21: United Community Banks, Inc. Who We Are
United Community Banks, Inc. Who We Are ► Underwriting conservatism and portfolio diversification ► Top quartile credit quality performance Protecting High- Quality Balance Sheet ► Prudent capital, liquidity and interest-rate risk management ► Focused on improving return to shareholders with increas
Slide 22: Disciplined Credit Processes
Protecting High-Quality Balance Sheet Disciplined Credit Processes Granular Portfolio – Exposure and Industry Limits •Legal Lending Limit $ 241M Concentration limits set •House Lending Limit 28M for all segments of the •Project Lending Limit 17M portfolio •Top 25 Relationships 332M Consistent Underw
Slide 23: Loan Portfolio Transformation and Diversification
Protecting High-Quality Balance Sheet Loan Portfolio Transformation and Diversification Portfolio as of 12/31/2008 Portfolio as of 3/31/2016 3% 7% 10% 14% 9% 27% 6% 12% 27% 14% 16% 6% 26% 23% Commercial (C&l) Commercial (C&I) Commercial Construction Commercial Construction CRE Income Producing CRE I
Slide 24: Excellent Credit Performance and Management
Protecting High-Quality Balance Sheet Excellent Credit Performance and Management 4Q15 NPA Ratio 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% Median 0.4% 0.2% 0.0% FMBI MBFI SIVB UCBI FMER BOKF ISBC WBS FNB ASB FCF BXS HBHC FHN TCB CVBF UBSI CBSH SBNY COLB BRKL NPBC WABC PFS PACW PNFP FFIN CATY TCBI WAFD UMPQ
Slide 25: Performing Classified Loans
Protecting High-Quality Balance Sheet Performing Classified Loans $ in millions $150 $136 $128 $130 $116 $113 $122 $110 1Q15 2Q15 3Q15 4Q15 1Q16 By Category 1Q15 2Q15 3Q15 4Q15 1Q16 Commercial & Industrial $ 7 $ 6 $ 6 $ 6 $ 8 Ow ner-Occupied CRE 44 40 42 40 32 Total Commercial & Industrial 51 46 48
Slide 26: TDRs
Protecting High-Quality Balance Sheet TDRs $ in millions LOAN TYPE Accruing Non-Accruing Total TDRs (1) 1Q16 4Q15 1Q15 1Q16 4Q15 1Q15 1Q16 4Q15 1Q15 Commercial & Industrial $ 2.2 $ 2.8 $ 2.8 $ - $ 0.1 $ 0.1 $ 2.2 $ 2.9 $ 2.9 Ow ner-Occupied CRE 24.7 30.8 28.2 2.6 1.3 1.0 27.3 32.1 29.2 Income-Produc
Slide 27: Commercial Real Estate Diversification
Protecting High-Quality Balance Sheet Commercial Real Estate Diversification Commercial Construction Commercial Real Estate – Income Producing in millions in millions Committed Outstanding Committed Outstanding Multi-Residential $ 173 28.7 % $ 84 23.7 % Retail Building $ 250 27.2 % $ 240 27.3 % Reta
Slide 28: Liquidity
Protecting High-Quality Balance Sheet Liquidity $ in millions Capacity 1Q16 4Q15 1Q15 vs 4Q15 vs 1Q15 WHOLESALE BORROWINGS Brokered Deposits (1) $ 978 $ 447 $ 347 $ 498 $ 100 $ (51) FHLB 1,028 510 430 270 80 240 Wholesale Holding Company LOC 50 - - - - - Fed Funds 645 - - - - - Borrowings Other Whol
Slide 29: Path to 1.10% Operating ROA by Q416
Increasing Profitability Path to 1.10% Operating ROA by Q416 110 +2 110 +2 105 +2 Return on Assets (bps) +4 100 100 95 90 1Q16 Actual Palmetto Fee Loan Operating Target Cost Revenue Growth Efficiency Savings Initiatives Initiatives Ongoing ucbi.com | 29 ucbi.com | 29
Slide 30: Operating Expense Discipline
Increasing Profitability Operating Expense Discipline Operating Efficiency Ratio (1) 70.00% ► Efficiency improvements are 65.43% attributable to 65.00% various expense 63.14% reduction initiatives while maintaining high business growth ► Declining trend 60.00% 59.41% 59.15% 59.10% sustained with 58.
Slide 31: High-Quality, Low-Cost Core Deposit Base
Increasing Profitability High-Quality, Low-Cost Core Deposit Base 4Q15 Cost of Deposits 0.6% 0.5% 0.4% 0.3% Median 0.2% 0.1% 0.0% WBS BOKF MBFI ISBC IBKC TCB FNB BXS FMER SIVB FCF HBHC ASB FMBI UCBI BRKL SBNY FHN PACW UBSI NPBC PFS EWBC CVBF COLB CATY PNFP CBSH ONB TCBI WABC WAFD VLY UMPQ FFIN PVTB
Slide 32: Steady Loan Growth
Generating Growth Steady Loan Growth Total Loans in billions $6.11 $6.00 $6.00 $1.04 $1.04 $5.00 $4.68 $5.07 $0.16 $4.96 $4.33 9% $4.18 Annualized $4.52 10% Growth $4.00 Growth $3.00 2012 2013 2014 2015 Q1 2016 Organic Acquired Healthcare ucbi.com | 32 ucbi.com | 32
Slide 33: Market Share Opportunities
Generating Growth Market Share Opportunities $ in billions Excellent Growth Opportunities Market Deposit Deposits United Deposits Banks Offices Share Rank (1) (2) (3) (1) (1) North Georgia $ 6.6 $ 2.3 9 22 37 % 1 Atlanta, Georgia 60.8 2.4 10 36 4 6 Gainesville, Georgia 3.0 .3 1 5 12 4 Coastal Georgi
Slide 34: Market Share Demographics
Generating Growth Market Share Demographics Key MSA Growth Markets Projected Change 2016 - 2021 Savannah, GA 6.91% Gainesville, GA 6.49% Atlanta, GA 6.38% Greenville, SC 5.70% Asheville, NC 4.96% Cleveland, TN 4.23% Knoxville, TN 3.35% 0% 1% 2% 3% 4% 5% 6% 7% 8% State Population Growth Projected Cha
Slide 35: Mergers & Acquisitions Strategy
Generating Growth Mergers & Acquisitions Strategy ► M&A accelerates our growth strategy in new and existing markets and can be accomplished more efficiently than with a de novo plan; we seek to pair M&A with organic growth opportunities, including adding teams of local bankers to quickly increase gr
Slide 36: 2015 Acquisitions
Generating Growth 2015 Acquisitions MoneyTree Corp./FNB The Palmetto Bank UCBI UCBI MoneyTree Palmetto • Closed on May 1 with successful operational conversion on July 18- • Closed on September 1 with successful operational conversion on 19; business has remained stable February 21-22 • Added a $425
Slide 37: $10 Billion and Beyond
United Community Banks, Inc. $10 Billion and Beyond ► Durbin Amendment under the Dodd-Frank Act (“DFA”) (debit card interchange revenue) – EPS impact of $.02 per quarter Primary Regulatory ► FDIC insurance premiums Implications ► Stress testing ► Oversight by Consumer Financial Protection Bureau (CF
Slide 38: Experienced Proven Leadership
Experienced Proven Leadership • Over 40 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 banking, credit and accounting, finance and $9.8 billion today operations reporting activitie
Slide 39: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables $ in thousands, except per share data 1Q15 2Q15 3Q15 4Q15 1Q16 Net Income Operating net income $ 17,670 $ 19,989 $ 21,726 $ 23,800 $ 23,944 Merger-related and other charges - (3,173) (5,744) (9,078) (2,653) Tax benefit on merger-related and other charges - 997 1,905 3,
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