United Community Banks, Inc. · NYSE:UCB

United Community Banks — Q1 2011 Earnings Presentation

57 slides from United Community Banks's earnings presentation, Apr 28, 2011

  1. Slide 1: United Community Banks, Inc. Investor Presentation First Quarter 2011

    United Community Banks, Inc. Investor Presentation First Quarter 2011 Jimmy C. Tallent Rex S. Schuette David P. Shearrow President & CEO EVP & CFO EVP & CRO rex_schuette@ucbi.com (706) 781-2266

  2. Slide 2: Cautionary Statement

    Cautionary Statement 2 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 i

  3. Slide 3: Non-GAAP Measures

    Non‐GAAP Measures 3 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 net interest margin, c

  4. Slide 4: Highlights First Quarter

    Highlights First Quarter 4 $380 Million Capital Raise Execution of Asset Disposition Plan Credit Trends Improving Profitability in 2011

  5. Slide 5: Loan Portfolio & Credit Quality

    5 LOAN PORTFOLIO & CREDIT QUALITY

  6. Slide 6: Proactively Addressing Credit Environment

    Proactively Addressing Credit Environment 6 Structure ƒ Centralized underwriting and approval process ƒ Segregated work‐out teams ƒ Highly skilled ORE disposition group ƒ Seasoned regional credit professionals Process ƒ Continuous external loan review ƒ Intensive executive management involvement: o

  7. Slide 7: Loan Portfolio (total $4.19 billion)

    Loan Portfolio (total $4.19 billion) 7 Geographic Diversity $.55B $ in millions Residential Construction Eastern $1.19B .11B 13% Tennessee Residential Installment 6% $250 Mortgage 3% 28% Gainesville MSA 7% $282 Coastal Georgia 7% $312 $2.34B Commercial Western North 56% Carolina 15% $640 Atlanta MSA

  8. Slide 8: Commercial Loans (total $2.34 billion)

    Commercial Loans (total $2.34 billion) 8 $.21B Geographic Diversity Comm $ in millions Const $.43B 9% Eastern Tennessee C& I 6% $146 18% $1.07B Owner Gainesville MSA Occupied 8% $178 45% $.63B Coastal Georgia Income 8% $195 Producing 28% Western North Carolina 9% $204 North Georgia 31% $732 Atlanta

  9. Slide 9: Commercial Real Estate (by loan type)

    Commercial Real Estate (by loan type) 9 (in millions) March 31, 2011 Loan Type Amount Percent Portfolio Characteristics Office Buildings $ 419 25 % Retail 261 15 Small Warehouses/Storage 181 11 60% owner-occupied Churches 145 9 Other Small Business 139 8 Typical owner-occupied: Hotels/Motels 89 5 Co

  10. Slide 10: Commercial Construction (by loan type)

    Commercial Construction (by loan type) 10 (in millions) 40,633 Loan Type Amount Percent Land Develop - Vacant (Improved) $ 77 36 % Portfolio Characteristics Raw Land - Vacant (Unimproved) 54 25 Commercial Land Development 36 17 Average loan size: $527k Miscellaneous Construction 22 10 Office Buildin

  11. Slide 11: Residential Mortgage (total $1.19 billion)

    Residential Mortgage (total $1.19 billion) 11 Geographic Diversity $.32B Home Equity $ in millions 27% Gainesville MSA Avg loan 6% $69 size: $44k Eastern $.87B Tennessee Mortgage Avg loan 7% $80 73% size: $94k Coastal Georgia 7% $83 Atlanta MSA 14% $165 Western North Carolina 26% $306 North Georgia

  12. Slide 12: Residential Construction (total $.55 billion)

    Residential Construction (total $.55 billion) 12 Geographic Diversity La $.10B nd $ in millions $.12B Raw Developing 14% Eastern 25% Tennessee 3% $15 Gainesville MSA $.05B 5% $26 $.23B Developing Sold 7% Lot Coastal Georgia 40% 5% $27 $.10B Western North Co Spec Carolina ns 14% 19% $106 tru c tio n

  13. Slide 13: Residential Construction – Total Company

    Residential Construction – Total Company 13 1Q11 vs. (in millions) 1Q11 4Q10 3Q10 2Q10 1Q10 1Q10 Land Loans Developing Land $ 116 $ 174 $ 190 $ 214 $ 290 $ (174) Raw Land 69 99 104 110 124 (55) Lot Loans 228 275 303 311 321 (93) Total 413 548 597 635 735 (322) Construction Loans Spec 88 97 109 125 1

  14. Slide 14: Residential Construction – North Georgia

    Residential Construction – North Georgia 14 1Q11 vs. (in millions) 1Q11 4Q10 3Q10 2Q10 1Q10 1Q10 Land Loans Developing Land $ 62 $ 88 $ 98 $ 113 $ 148 $ (86) Raw Land 27 40 42 45 43 (16) Lot Loans 131 159 168 182 189 (58) Total 220 287 308 340 380 (160) Construction Loans Spec 25 31 38 44 54 (29) So

  15. Slide 15: Residential Construction – Atlanta MSA

    Residential Construction – Atlanta MSA 15 1Q11 vs. (in millions) 1Q11 4Q10 3Q10 2Q10 1Q10 1Q10 Land Loans Developing Land $ 22 $ 30 $ 34 $ 40 $ 66 $ (44) Raw Land 19 23 27 32 43 (24) Lot Loans 24 32 45 39 47 (23) Total 65 85 106 111 156 (91) Construction Loans Spec 34 38 42 48 58 (24) Sold 11 10 11

  16. Slide 16: Credit Quality

    Credit Quality 16 (in millions) 1Q11 4Q10 3Q10 2Q10 1Q10 (1) Operating Net Charge-offs $ 231.6 $ 47.7 $ 50.0 $ 61.3 $ 56.7 as % of Average Loans (1) 20.70 % 4.03 % 4.12 % 4.98 % 4.51 % Allowance for Loan Losses $ 133.1 $ 174.7 $ 174.6 $ 174.1 $ 173.9 as % of Total Loans 3.17 % 3.79 % 3.67 % 3.57 % 3

  17. Slide 17: NPL Inflow Trends / Quarterly Default Rate

    NPL Inflow Trends 17 Quarterly NPL Inflows and Default Rates Since 2009 71.7% Quarterly Default Rate Decline NPL Inflows ($mm) $193.3 $200.0 from Peak 4.0% $174.8 $177.7 $174.9 $155.0 3.5% $150.0 $139.0 3.0% $119.8 2.5% $100.0 $81.0 2.0% 1.5% $54.7 $50.0 1.0% 0.5% $0.0 0.0% Q1 '09 Q2 '09 Q3 '09 Q4 '

  18. Slide 18: Net Charge-offs by Loan Category

    Net Charge‐offs by Loan Category 18 (in thousands) 1Q11 % of Average Loans (Annualized) Net Charge-Offs Asset Disposition % of Avg Total Plan Other Loans (1) 4Q10(2) 3Q10 2Q10 Commercial (sec. by RE) $ 48,607 $ 45,765 $ 2,842 .65 % 1.45 % 3.16 % 2.21 % Commercial Construction 49,715 48,569 1,146 1.7

  19. Slide 19: Net Charge-offs by Market

    Net Charge‐offs by Market 19 (in thousands) 1Q11 % of Average Loans (Annualized) Net Charge-Offs Asset Disposition % of Avg Total Plan Other Loans (1) 4Q10(2) 3Q10 2Q10 Atlanta MSA $ 56,489 $ 53,193 $ 3,296 1.04 % 4.48 % 3.97 % 4.85 % Gainesville MSA 8,616 7,662 954 1.32 4.37 1.40 3.01 North Georgia

  20. Slide 20: NPAs by Loan Category and Market

    NPAs by Loan Category and Market 20 (in thousands) 1Q11 1Q11 NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY MARKETS Commercial (sec. by RE) $ 20,648 $ 7,886 $ 28,534 Atlanta MSA $ 21,501 $ 16,913 $ 38,414 Commercial Construction 3,701 11,568 15,269 Gainesville MSA 4,332 2,157 6,489 Commerci

  21. Slide 21: Financial Review: Financial Results

    Financial Review FINANCIAL RESULTS 21

  22. Slide 22: Core Earnings Summary

    Core Earnings Summary 22 (In Thousands) Variance - Fav (Unfav) 1Q11 4Q10 1Q10 Net Interest Revenue $ 58,406 $ (1,726) $ (2,873) Fee Revenue 11,655 107 150 Gross Revenue 70,061 (1,619) (2,723) Operating Expense (Excl OREO) 46,644 (2,540) (2,737) Pre-Tax, Pre-Credit (Core) $ 23,417 $ (4,159) $ (5,460)

  23. Slide 23: Net Interest Margin

    Net Interest Margin 23 4.35% 4.37% NIM Characteristics 4.5% 4.24% 4.15% 4.13% 4.05% 3.87% Core margin changes ‐17 bps vs. 4Q10 3.60% 3.57% 3.58% 3.49% 3.41% 3.0% ‐8 bps vs. 1Q10 Maintained loan pricing; 1.5% Lowered core & CD pricing .0% 1Q10 2Q10 3Q10 4Q10 1Q11 1Q Excess liquidity – NIM lowered Mar

  24. Slide 24: Margin – Credit Costs

    Margin – Credit Costs 24 Credit Costs Impacting Margin .70% .66% Historically 8 to 12 bps .60% .20% .19% Credit cycle – significant drag; .50% .14% .47% .46% but improving .40% .11% .11% Cost 1Q11 vs. Historical – 34 bps .26% .25% .30% .22% (annual earnings impact of $23.5 .19% .16% million) .20% 1

  25. Slide 25: Deposit Mix (total $6.6 billion)

    Deposit Mix (total $6.6 billion) 25 ($ in millions) 1Q11 $6.6B 1Q11 4Q10 1Q10 4Q08 Brokered Demand & NOW 10% 24% Demand / NOW $ 1,576 $ 1,573 $ 1,489 $ 1,457 Public Funds MMDA / Savings 1,149 1,063 908 630 10% Core Transaction 2,725 2,636 2,397 2,087 +89 +328 Time >$100k 14% MMDA & Sav. 13.7% Growth

  26. Slide 26: Fee Revenue - Core

    Fee Revenue ‐ Core 26 (In Thousands) Over (Under) 1Q11 4Q10 1Q10 NSF & Bounce Safe Fees $ 3,510 $ (322) $ (806) ATM Fees 2,530 (5) 177 Other Service Charges 680 8 (98) Mortgage Loan & Related Fees 1,494 (374) 15 Brokerage Fees 677 (101) 110 Other 2,892 817 780 $ 11,783 $ 23 $ 178 Excludes Securities

  27. Slide 27: Operating Expenses - Core

    Operating Expenses ‐ Core 27 (In Thousands) Over (Under) 1Q11 4Q10 1Q10 Salaries & Employee Benefits $ 24,924 $ 1,147 564 Communications & Equipment 3,344 (33) 71 Occupancy 4,074 50 260 FDIC Assessment 5,413 2,114 1,787 Advertising & Public Relations 978 (124) (65) Postage, Printing & Supplies 1,118

  28. Slide 28: Net Operating Loss – From Continuing Operations

    Net Operating Loss – From 28 Continuing Operations (In Thousands) 1Q11 4Q10 1Q10 Pre-Tax, Pre-Credit (Core) $ 23,417 $ 27,576 $ 28,877 Provision for Loan Loss (190,000) (47,750) (75,000) Foreclosed Property Costs: Write-downs (48,585) (8,031) (4,579) Losses on Sales (12,020) (7,818) (3,518) Maintena

  29. Slide 29: Net Loss

    Net Loss 29 (In Thousands) 1Q11 4Q10 1Q10 Net Operating Loss $ (142,486) $ (23,574) $ (34,458) Loss from Discontinued Operations - - (101) Gain from Sale of Brintech - - 1,266 Partial Recovery of Fraud Loss (11,750 pre-tax) - 7,179 - Net Loss $ (142,486) $ (16,395) $ (33,293) Preferred Stock Div (TA

  30. Slide 30: Capital Ratios

    Capital Ratios 30 Well- Pro Forma Capitalized Guideline Mar '11(1) MAR '11 DEC '10 SEP '10 Bank Tier 1 RBC 6% > 9% 13.0% 10.8% 11.4% Total RBC 10% > 11% 14.7 12.6 13.2 Tier I Leverage 5% > 8% 8.3 7.5 7.9 Holding Company Tier I RBC 13.2 7.8 9.7 12.5 Total RBC 15.7 15.6 12.1 14.4 Tier I Leverage 8.5 5

  31. Slide 31: Appendix

    —~F United niteo] Community Banks.

  32. Slide 32: United at a Glance

    United at a Glance 32 Assets $8.0 Billion Banks 27 Deposits $6.6 Billion Offices 106

  33. Slide 33: Experienced Proven Leadership

    Experienced Proven Leadership 33 Joined Years in UCBI Banking Jimmy Tallent President & CEO 1984 37 Guy Freeman Chief Operating Officer 1992 53 Rex Schuette Chief Financial Officer 2001 34 David Shearrow Chief Risk Officer 2007 30 Glenn White President, Atlanta Region 2007 37 Craig Metz Marketing 20

  34. Slide 34: Business and Operating Model

    Business and Operating Model 34 “Community bank service, large bank resources” Twenty-seven “community banks” ƒ Local CEOs with deep roots in their communities ƒ Resources of $8.0 billion bank Service is point of differentiation ƒ #1 in Customer Satisfaction ƒ Golden rule of banking 9 “The Bank That

  35. Slide 35: Robust Demographics (fast growing markets)

    Robust Demographics (fast growing markets) 35 Population Growth (%) Population Actual Projected Markets1 (in thousands) 2000 - 2010 2010 - 2015 North Georgia 394 23 % 7% Atlanta MSA 5,611 32 10 Gainesville MSA 191 37 13 Coastal Georgia 373 11 5 Western North Carolina 429 12 4 East Tennessee 860 14 6

  36. Slide 36: Market Share Opportunities

    Market Share Opportunities 36 (excellent growth prospects) Market Deposits United Deposit Markets (in billions) (1) Deposits (2) Banks Offices Share (1) Rank(1) North Georgia $ 7.7 $ 2.5 11 23 31 % 1 Atlanta MSA 50.0 2.1 10 38 4 7 Gainesville MSA 2.5 .3 1 6 13 3 Coastal Georgia 7.3 .4 2 9 5 8 Wester

  37. Slide 37: Leading Demographics

    Leading Demographics 37 Total 2010 - 2015 Assets Population Rank Ticker Company(1) State ($ B) Growth (2) 1 CFR Cullen/Frost Bankers, Inc. TX $17.6 9.05 % 2 WAL Western Alliance Bancorporation AZ 6.2 7.85 3 PRSP Prosperity Bancshares, Inc. TX 9.7 7.35 4 GBCI Glacier Bancorp, Inc. MT 6.8 7.25 5 FCNCA

  38. Slide 38: Performing Classified Loans

    Performing Classified Loans 38 (in millions) 1Q11 4Q10 3Q10 2Q10 1Q10 LOANS BY CATEGORY Commercial (Sec. by RE) $ 120 $ 157 $ 157 $ 141 $ 152 Commercial Construction 35 90 103 78 75 Commercial & Industrial 16 17 22 22 35 TOTAL COMMERCIAL 171 264 282 241 262 Consumer / Installment 2 3 4 4 4 Residenti

  39. Slide 39: Business Mix Loans (at quarter-end)

    Business Mix Loans (at quarter‐end) 39 1Q11 vs. (in millions) 1Q11 4Q10 3Q10 2Q10 1Q10 1Q10 LOANS BY CATEGORY Commercial (sec. by R/E) $ 1,692 $ 1,761 $ 1,781 $ 1,780 $ 1,765 $ (73) Commercial Construction 213 297 310 342 357 (144) Commercial & Industrial 431 441 456 441 381 50 Total Commercial 2,33

  40. Slide 40: Loans – Markets Served (at quarter-end)

    Loans – Markets Served (at quarter‐end) 40 1Q11 vs. (in millions) 1Q11 4Q10 3Q10 2Q10 1Q10 1Q10 LOANS BY MARKET Atlanta MSA $ 1,179 $ 1,310 $ 1,365 $ 1,373 $ 1,404 $ (225) Gainesville MSA 282 312 316 343 372 (90) North Georgia 1,531 1,689 1,755 1,808 1,814 (283) Western North Carolina 640 702 719 73

  41. Slide 41: Business Mix Loans (at year-end)

    Business Mix Loans (at year‐end) 41 (in millions) 2010 2009 2008 2007 2006 LOANS BY CATEGORY Commercial (sec. by R/E) $ 1,761 $ 1,779 $ 1,627 $ 1,476 $ 1,230 Commercial Construction 297 363 500 527 469 Commercial & Industrial 441 390 410 418 296 Total Commercial 2,499 2,532 2,537 2,421 1,995 Residen

  42. Slide 42: Loans – Markets Served (at year-end)

    Loans – Markets Served (at year‐end) 42 (in millions) 2010 2009 2008 2007 2006 LOANS BY MARKET Atlanta MSA $ 1,310 $ 1,435 $ 1,706 $ 2,002 $ 1,651 Gainesville MSA 312 390 420 399 354 North Georgia 1,689 1,884 2,040 2,060 2,034 Western North Carolina 702 772 810 806 773 Coastal Georgia 335 405 464 41

  43. Slide 43: Lending – Credit Summary

    Lending – Credit Summary 43 (in millions) Legal lending limit $219 House lending limit 20 9Project lending limit 12 Top 25 relationships 420 910.0% of total loans Regional credit review – Standard underwriting 43

  44. Slide 44: NPAs by Loan Category, Market, and Activity

    NPAs by Loan Category, Market, and Activity 44 Credit Quality (1) First Quarter 2011 (2) Fourth Quarter 2010 Third Quarter 2010 Non-performing Foreclosed Total Non-performing Foreclosed Total Non-performing Foreclosed Total (in thousands) Loans Properties NPAs Loans Properties NPAs Loans Properties

  45. Slide 45: Net Charge-offs by Category and Market

    Net Charge‐offs by Category and Market 45 Credit Quality (1) First Quarter 2011 (3) Fourth Quarter 2010 (4) Third Quarter 2010 Net Charge- Net Charge- Net Charge- Offs to Offs to Offs to Net Average Net Average Net Average (in thousands) Charge-Offs Loans (5) Charge-Offs Loans (5) Charge-Offs Loans

  46. Slide 46: Net Charge-offs by Category and Market Asset Disposition Plan

    Net Charge‐offs by Category and Market 46 Asset Disposition Plan Credit Quality - Net Charge-Offs First Quarter 2011 (1) Asset Disposition Plan Bulk Loan Sale (2) First Quarter Performing Nonperforming Other Bulk Loan Foreclosure Other Net 2011 Net Charge- (in thousands) Loans Loans Sales (3) Charge

  47. Slide 47: Credit Quality – Bulk Loan Sale Summary

    47 Credit Quality – Bulk Loan Sale Summary Credit Quality - Bulk Loan Sale Summary (1) Performing Loans Nonperforming Loans Total Loans Carrying Charge- Loans Held Carrying Charge- Loans Held Carrying Charge- Loans Held (in thousands) Amount (2) Offs (3) for Sale (4) Amount (2) Offs (3) for Sale (4)

  48. Slide 48: Loans / Deposits – Liquidity

    Loans / Deposits – Liquidity 48 (in millions) Variance 1Q11 4Q10 1Q10 vs 4Q10 vs 1Q10 Loans $ 4,194 $ 4,604 $ 4,992 $ (410) $ (798) Core (DDA, MMDA, Savings) $ 2,725 $ 2,636 $ 2,397 $ 89 $ 328 Public Funds 672 725 685 (53) (13) CD's 2,516 2,431 2,695 85 (179) Total Deposits (excl Brokered) $ 5,913 $

  49. Slide 49: Wholesale Borrowings - Liquidity

    Wholesale Borrowings ‐ Liquidity 49 (in millions) Unused Variance Capacity 1Q11 4Q10 1Q10 vs 4Q10 vs 1Q10 Wholesale Borrowings Brokered Deposits $ 1,309 $ 684 $ 677 $ 711 $ 7 $ (27) FHLB 979 55 55 114 - (59) Fed Funds 50 - - - - - Other Wholesale 149 102 101 102 1 - Total $ 2,487 $ 841 $ 833 $ 927 $

  50. Slide 50: Business Mix – Deposits (at quarter-end)

    Business Mix – Deposits (at quarter‐end) 50 (in millions) 1Q11 vs. DEPOSITS BY CATEGORY 1Q11 4Q10 3Q10 2Q10 1Q10 1Q10 Demand & Now $ 1,576 $ 1,573 $ 1,582 $ 1,561 $ 1,489 $ 87 MMDA & Savings 1,149 1,063 977 930 908 183 Core Transaction Deposits 2,725 2,636 2,559 2,491 2,397 270 Time < $100,000 1,570

  51. Slide 51: Core Transaction Deposits

    Core Transaction Deposits 51 Geographic Diversity 1Q 10 1Q 11 Core Transactions / Total Deposits (%) $ in millions 1Q11 1Q10 Eastern Tennessee $120 Atlanta MSA 49.8 % 45.7 % $149 North Georgia 40.7 37.4 Coastal Georgia $140 Western NC 48.3 43.2 $165 Gainesville MSA 50.7 45.7 Gainesville MSA $150 Coa

  52. Slide 52: NPA Sale in 2Q10

    NPA Sale in 2Q10 52 Sold $103 Million NPA’s – With a $65 Million Capital Option and Warrant ƒ Completed sale on April 30, 2010 ƒ Accelerates disposition of the more illiquid assets CATEGORY (in millions) MARKETS (in millions) Commercial $ 29.4 Atlanta $ 10.7 Commercial Construction 11.3 Gainesville

  53. Slide 53: NPA Sale – Fair Value Accounting 2Q10

    NPA Sale – Fair Value Accounting 2Q10 53 Fair Value Accounting – Warrant / Option to Purchase Equity ƒ Increase to Capital Surplus ‐ $39.8 million ƒ Pre‐tax expense charge ‐ $45.3 million; after‐tax cost ‐ $30.0 million ƒ GAAP Capital +$9.8million – Slight Negative to “Regulatory Capital” (DTA) (in

  54. Slide 54: Non-GAAP Reconciliation Tables

    Non‐GAAP Reconciliation Tables 54 (in thousands except EPS) Operating Earnings to GAAP Earnings Reconciliation 1Q11 4Q10 1Q10 Core net interest revenue reconciliation (1) Core net interest revenue $ 58,406 $ 60,132 $ 61,279 Interest reversals on performing loans transferred to held for sale (2,014)

  55. Slide 55: Non-GAAP Reconciliation Tables

    Non‐GAAP Reconciliation Tables 55 Operating Earnings to GAAP Earnings Reconciliation 1Q11 4Q10 1Q10 Net interest margin - pre credit reconciliation Net interest margin - pre credit 3.87 % 4.05 % 4.15 % Effect of interest reversals, lost interest, and carry costs of NPAs (.46) (.47) (.66) Core net in

  56. Slide 56: Analyst Coverage

    Analyst Coverage 56 FBR Capital Raymond James & Assoc. (Market Perform ‐ Mar 17, 2011) (Market Perform ‐ Nov 1, 2010) FIG Partners Sandler O'Neill & Partners (Market Perform ‐ Mar 18, 2011) (Hold ‐ Feb 24, 2011) Guggenheim Securities, LLC Stephens, Inc. (Neutral ‐ Jan 4, 2011) (Equal Weight ‐ Feb 1,

  57. Slide 57: United Community Banks, Inc.

    57 United Community Banks, Inc. Investor Presentation First Quarter 2011 Copyright 2011 United Community Banks, Inc. All rights reserved.

United Community Banks — Q1 2011 Earnings Presentation on 6ix