United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q4 2017 Earnings Presentation
33 slides from United Community Banks's earnings presentation, Jan 23, 2018
Slide 1: 2017 Investor Presentation Fourth Quarter 2017
2017 INVESTOR PRESENTATION FOURTH QUARTER 2017 January 23, 2018
Slide 2: Disclosures
Disclosures CAUTIONARY STATEMENT This investor presentation may contain forward-looking statements, as defined by federal securities laws, including statements about United and its financial outlook and business environment. These statements are based on current expectations and are provided to assi
Slide 3: Who We Are: Snapshot of United Community Banks, Inc.
Who We Are Snapshot of United Community Banks, Inc. 81 Raleigh 4Q17 Overview Knoxville 40 85 Ticker UCBI (NASDAQ) Asheville NORTH Market Cap $2.4Bn Charlotte CAROLINA P/E (2018E) 13.5x Greenville P/TBV 223% Blairsville Assets $11.9Bn 77 Loans $7.7Bn Gainesville 26 Myrtle Beach Deposits $9.8Bn Columb
Slide 4: Focused on High-Growth MSAs in Southeast
Who We Are Focused on High-Growth MSAs in Southeast 2018-2023 2023 Proj. Strong Demographic Profile (2) Proj. Median Fastest Growing Population 2018 Household ’18 – ’23 Proj. Population Growth Southeast MSAs (1) Growth Population Income 5.1% 1. Myrtle Beach, SC 9.96% 470,010 $55,177 3.5% 2. Cape Cor
Slide 5: Full-Service Regional Bank with a Strong Culture
Who We Are Full-Service Regional Bank with a Strong Culture Rooted in Sound Credit Underwriting & Growth Cultural Pillars Customer Service Is at Our Foundation Underwriting conservatism and portfolio diversification High-Quality Top quartile credit quality performance Balance Prudent capital, liquid
Slide 6: The Bank That Service Built
Who We Are The Bank That Service Built Regional Bank with Community Bank–Level Service Recognized for Ranked #1 in Retail Banking Customer …Being a great place to work Satisfaction in the Southeast by J.D. Power United Community Bank Regional Bank 1 Regional Bank 2 Regional Bank 3 Regional Bank 4 Re
Slide 7: 4Q17 Highlights
4Q17 Highlights Operating diluted earnings per Earnings Per Share Return on Assets share of $0.42 compared with $0.40 $0.41 $0.42 1.10% 1.09% 1.10% GAAP diluted loss per share of $0.38 $0.38 1.03% 1.01% $.16 Tax reform resulted in $38.2 mm -$0.16 -.40% charge to remeasure the deferred tax asset at t
Slide 8: Net Interest Revenue / Margin
Net Interest Revenue / Margin (1) $ in millions $97.5 $89.8 Net interest revenue of $97.5 million increased $7.7 million (8.6%) vs. 3Q17 and $16.6 million $80.9 (20.5%) vs. 4Q16 Benefit of rising short-term interest rates Core growth up 10% annualized vs. 3Q17 excluding HCSB and Four Oaks 3.63% 3.54
Slide 9: Deposits
Deposits Low-Cost Deposit Base (1) Sufficient Liquidity to Support Future Growth Cost of Total Deposits (bps) Loans / Deposits (3) 93% 40 4Q15-3Q17 deposit beta equal to 8%, half the 16% industry average (2) 79% 30 35 bps 20 KRX Peer 22 bps 10 0 KRX Peer Note – Peer comparison banks comprise the KBW
Slide 10: Loans
Loans $ in billions $7.7 $7.2 $0.5 6.3% $6.7 7.2% 8.8% $0.5 $0.6 Excluding Four Oaks, annualized end of $1.9 24.4% period loan growth was 2% or 5% excluding $1.8 25.2% Indirect Auto runoff of $42 million 25.4% $1.7 $0.7 9.2% Strategically moved C&I (including owner- $0.6 8.1% 8.4% occupied CRE) to 4
Slide 11: Loan Growth Drivers
Loan Growth Drivers Greater expansion in our metro markets, including our new Myrtle Beach and Raleigh markets Expansion of our Commercial Banking Solutions (CBS) unit (i.e. deeper penetration and new verticals) We estimate the Navitas acquisition adds about 200 basis points to our growth rate over
Slide 12: Fee Revenue
Fee Revenue in millions $25.2 Vs Last Year, fees down $3.3 mm to $21.9 mm $3.0 $2.7 mm lower interchange fees vs 4Q16 $20.6 due to Durbin Mortgage $1.6 mm lower vs. 4Q16 $3.1 despite similar $197 mm in originations in $2.8 both quarters $6.5 SBA production up 8% vs. 4Q16 to $59 mm and revenue up 3%
Slide 13: Expense Discipline
Expense Discipline $ in millions $75.9 $68.5 $65.7 Year over year, GAAP and operating expenses $62.3 grew 23.8% and 13.8%, respectively $61.3 Operating efficiency ratio increased slightly to $60.2 56.9% from 56.6% last year Linked quarter, GAAP and operating expenses grew 15.5% and 10.0%, respective
Slide 14: Credit Quality
Credit Quality Provision for Credit Losses Net Charge-Offs as % $ in millions of Average Loans $1.2 $1.0 0.09% 0.09% $0.0 0.06% 4Q16 3Q17 4Q17 4Q16 3Q17 4Q17 Allowance for Loan Losses Non-Performing Assets as % of Total Assets 0.89% 0.28% 0.81% 0.76% 0.23% 0.23% 4Q16 3Q17 4Q17 4Q16 3Q17 4Q17 ucbi.co
Slide 15: Key Strengths
Key Strengths Culture and business model that attracts both bankers and potential acquisition partners Positioned well in many of the South's fastest-growing markets Superior customer service helps drive great core deposit growth Well-developed credit model to drive consistent performance through cy
Slide 16: Capital Ratios
Capital Ratios Holding Company 4Q16 3Q17 4Q17 (1) Common Equity Tier I 11.2% 12.2% 12.0% Capital Tier I Risk-Based Capital 11.2 12.3 12.3 Total Risk-Based Capital 12.0 13.0 13.0 Leverage 8.5 9.3 9.4 Tangible Common Equity to 11.8 12.8 12.1 Risk-Weighted Assets Average Tangible Equity to 9.0 9.4 9.5
Slide 17: Acquisition of Navitas
Acquisition of Navitas Transaction Rationale Business Overview Acquisition of high-performing, scalable equipment finance Founded in September 2008, Navitas is a nationwide equipment platform with national reach and exceptional origination finance lender based in Ponte Vedra, FL capabilities — 124 e
Slide 18: Acquisition of Four Oaks Fincorp, Inc.
Acquisition of Four Oaks Fincorp, Inc. Transaction Overview • Closed November 1, 2017 • 90% stock (0.6178 shares of United) and 10% cash ($1.90) - $124 million transaction value (1) • 177% P / TBV • An excellent springboard to grow and attract top-quality bankers in the Raleigh market Four Oaks Comp
Slide 19: 2017 Investor Presentation Exhibits
2017 INVESTOR PRESENTATION Exhibits FOURTH QUARTER 2017 JANUARY 23, 2018
Slide 20: Earnings, Fee Revenue, and Expenses
Earnings, Fee Revenue, and Expenses $110 $100 $97.5 $90 $89.8 Net Interest Revenue $80 $80.9 Expenses - Operating (1) $70 Millions $68.5 $60 $60.2 $62.3 Pre-Tax, Pre-Credit $50 $48.1 $50.9 Earnings (1) $46.0 $40 Fee Revenue $30 $25.2 $21.9 $20 $20.6 $10 4Q16 3Q17 4Q17 Earnings Fee Revenue Expenses (
Slide 21: Core Transaction Deposit Growth and Deposit Mix
Deposit Mix $10.00 $9.44 Time & Public $8.31 Public Funds (customer) $8.00 $7.53 $5.78 $5.90 Time (customer) Billions $6.00 $4.00 Core Transaction Interest Bearing Core Transaction $2.00 Non-Interest Bearing Core - Transaction 2013 2014 2015 2016 2017 Core Transaction Deposit Growth Deposits by Cate
Slide 22: High-Quality, Low-Cost Core Deposit Base
High-Quality, Low-Cost Core Deposit Base 3Q17 Cost of Deposits 1.0% 0.9% 0.8% 0.7% 0.6% 0.5% 0.4% Median 0.3% 0.2% 0.1% 0.0% CFR FHN HBHC IBKC ISBC BKU FMBI UCBI MBFI UBSI WAL STL BRKL CVBF FCF UMBF BOKF TCF COLB ONB TRMK PB PFS WBS SNV FNB BPOP PNFP ASB STBA CATY SBNY VLY OZRK HOPE PACW WABC CBU CB
Slide 23: New Loans Funded and Advances
New Loans Funded and Advances(1) $ in millions New Loans Funded and Advances New Loans Funded and Advances by Region Variance-Incr(Decr) $747.3 4Q17 3Q17 4Q16 3Q17 4Q16 Atlanta $ 144.3 $ 151.5 $ 143.6 $ (7.2) 0.7 Coastal Georgia 29.5 41.1 34.4 (11.6) (5.0) $644.1 North Georgia 55.9 63.8 74.4 (7.9) (
Slide 24: Loan Mix
Loan Mix Loans Loans by Region by Category in millions in millions 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 North Georgia $ 1,240 $ 1,163 $ 1,125 $ 1,097 $ 1,019 Commercial & Industrial $ 471 $ 710 $ 785 $ 1,070 $ 1,131 Atlanta MSA 1,235 1,243 1,259 1,399 1,510 Ow ner-Occupied CRE 1,238 1,2
Slide 25: Commercial Real Estate Diversification
Commercial Real Estate Diversification Commercial Construction Commercial Real Estate – Income Producing in millions in millions Committed Outstanding Committed Outstanding Residential CIP : SPEC $ 163 13.3 % $ 107 15.1 % Office Buildings $ 429 25.4 % $ 392 24.6 % Retail Building 89 7.3 75 10.5 Reta
Slide 26: Disciplined Credit Processes
Disciplined Credit Processes Granular Portfolio – Exposure and Industry Limits •Legal Lending Limit $ 293M •House Lending Limit 30M •Project Lending Limit 18M •Top 25 Relationships 572M Concentration limits set for all segments of the portfolio • Centralized underwriting and approval process for con
Slide 27: Credit Quality
Credit Quality $ in millions 4Q16 1Q17 2Q17 3Q17 4Q17 Net Charge-offs $ 1.5 $ 1.7 $ 1.6 $ 1.6 $ 1.1 as % of Average Loans 0.09 % 0.10 % 0.09 % 0.09 % 0.06 % Allowance for Loan Losses $ 61.4 $ 60.5 $ 59.5 $ 58.6 $ 58.9 as % of Total Loans 0.89 % 0.87 % 0.85 % 0.81 % 0.76 % as % of NPLs 285 306 258 25
Slide 28: Excellent Credit Performance & Management
Excellent Credit Performance & Management 3Q17 NPA Ratio 2.0% 1.5% 1.0% 0.5% Median 0.0% CFR FHN ISBC IBKC BKU HBHC UCBI MBFI FMBI UBSI WAL STL BRKL CVBF UMBF FCF TCF BOKF PB OZRK VLY PNFP FNB STBA SNV PFS COLB CATY WBS ASB TRMK ONB SBNY BPOP PACW CBSH BOH WABC BPFH CBU FFIN EWBC WTFC WAFD UMPQ TCBI
Slide 29: Market Share Growth Opportunities
Market Share Growth Opportunities $ in billions United Community Banks, Inc. Total Market Community Deposit Deposits Deposits Banks Offices Share Rank (1) (2) (2) (2) (1) (1) North Georgia $ 7.6 $ 2.5 9 19 33 % 1 Atlanta, Georgia 70.4 2.7 10 34 4 7 Gainesville, Georgia 3.5 0.4 1 5 11 4 Coastal Georg
Slide 30: Acquisition of HCSB Financial Corporation
Acquisition of HCSB Financial Corporation Transaction Overview • Closed July 31, 2017 • 100% stock (fixed exchange ratio 0.0050x shares) − $66 million transaction value (1) • 132% adjusted P / TBV (2) • United recovered DTA and related tax benefits totaling approximately $15.5 million Company Snapsh
Slide 31: Experienced Proven Leadership
Experienced Proven Leadership • Over 40 years in banking • Over 30 years in banking • Over 25 years in financial • Led company from $42 • Responsible for overall services million in assets in 1989 to banking, credit and • Responsible for finance and $11.9 billion today operations reporting, accounti
Slide 32: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables $ in thousands, except per share data 4Q16 1Q17 2Q17 3Q17 4Q17 (1) (1) Net Income Net income - GAAP $ 27,221 $ 23,524 $ 28,267 $ 27,946 $ (11,916) Merger-related and other charges 1,141 2,054 1,830 3,420 7,358 Tax benefit on merger-related and other charges (432) (758)
Slide 33: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables $ in thousands, except per share data 4Q16 1Q17 2Q17 3Q17 4Q17 (1) (1) Return on Tangible Common Equity Return on common equity - GAAP 9.89 % 8.54 % 9.98 % 9.22 % (3.57) % Effect of merger-related and other charges 0.26 0.47 0.41 0.75 1.86 Impairment of deferred tax as
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