United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q2 2017 Earnings Presentation
37 slides from United Community Banks's earnings presentation, Jul 26, 2017
Slide 1: 2017 Investor Presentation Second Quarter 2017
2017 INVESTOR PRESENTATION SECOND QUARTER 2017 JULY 26, 2017
Slide 2: Disclosures
ucbi.com | 2 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
Slide 3: Snapshot of United Community Banks, Inc.
ucbi.com | 3 Snapshot of United Community Banks, Inc . ucbi.com | 3 Established: 1950 Four State Regional Community Bank: GA , NC, SC, TN Headquarters : Blairsville, GA Regional Headquarters: Greenville, SC Employees: 1,966 LOCATION LEGEND United Community Bank 134 locations (includes 7 Loan Product
Slide 4: United Foundation: The Bank that Service Built
ucbi.com | 4 United Foundation The Bank that SERVICE Built ® ucbi.com | 4
Slide 5: Second Quarter 2017 Highlights
Second Quarter 2017 Highlights ucbi.com | 5 $23.5 $26.4 $25.2 $22.1 $23.7 $16 $20 $24 $28 $32 2Q16 3Q16 4Q16 1Q17 2Q17 Fee Revenue in millions 9.54% 9.61% 9.89% 8.54% 9.98% 11.56% 12.45% 12.47% 12.10% 12.19% 5.00% 7.00% 9.00% 11.00% 13.00% 2Q16 3Q16 4Q16 1Q17 2Q17 Return on (Tangible) Common Equity
Slide 6: Earnings Summary
(1) See non - GAAP reconciliation table slides at the end of the exhibits ( 2 ) Includes Tidelands as of the acquisition date of July 1, 2016 ucbi.com | 6 EARNINGS SUMMARY ($ in thousands) Net Income Available to Common Shareholders - GAAP 25,266$ 25,874$ 27,221$ 23,524$ 28,267$ 4,743$ 3,001$ Net In
Slide 7: Regulatory Capital Ratios
ucbi.com | 7 Holding Company 2Q17 1Q17 4Q16 3Q16 2Q16 Tier I Risk - Based Capital 11.9% 11.5% 11.3% 11.0% 11.4% Total Risk - Based Capital 12.7 12.3 12.1 11.9 12.4 Leverage 9.0 8.6 8.5 8.4 8.5 Tier I Common Risk - Based Capital 11.9 11.4 11.3 11.0 11.4 Tangible Common Equity to Risk - Weighted Asset
Slide 8: Pre-Tax, Pre-Credit Earnings and Expenses
$74.9 $79.0 $80.9 $83.6 $85.1 $56.9 $60.9 $60.2 $60.8 $61.4 $41.5 $44.5 $46.0 $44.9 $47.4 $23.5 $26.4 $25.2 $22.1 $23.7 $10 $20 $30 $40 $50 $60 $70 $80 $90 2Q16 3Q16 4Q16 1Q17 2Q17 Net Interest Revenue Expenses - Operating (1) Pre-Tax, Pre-Credit Earnings (1) Fee Revenue ucbi.com | 8 2Q17 1Q17 2Q16
Slide 9: Net Interest Revenue and Margin
$74.9 $79.0 $80.9 $83.6 $85.1 $40 $50 $60 $70 $80 $90 2Q16 3Q16 4Q16 1Q17 2Q17 4.15% 4.27% 4.30% 2.45% 2.51% 2.56% 0.18% 0.21% 0.24% 0% 1% 2% 3% 4% 5% 2Q16 3Q16 4Q16 1Q17 2Q17 0.23% 0.26% 0.36% 0.26% 0.28% 0.30% 0.10% 0.12% 0.13% .00% .10% .20% .30% .40% .50% 2Q16 3Q16 4Q16 1Q17 2Q17 3.35% 3.34% 3.3
Slide 10: New Loans Funded and Advances
ucbi.com | 10 2Q17 1Q17 2Q16 1Q17 2Q16 Commercial & Industrial 161.8$ 106.8$ 168.4$ 55.0$ (6.6)$ Owner-Occupied CRE 114.0 79.5 88.8 34.5 25.2 Income-Producing CRE 41.6 102.2 138.1 (60.6) (96.5) Commercial Constr. 121.8 116.3 49.0 5.5 72.8 Total Commercial 439.2 404.8 444.3 34.4 (5.1) Residential Mor
Slide 11: Loan Growth by Region and Category
2013 2014 2015 2016 2Q17 North Georgia 1,240$ 1,163$ 1,125$ 1,097$ 1,065$ Atlanta MSA 1,235 1,243 1,259 1,399 1,445 North Carolina 572 553 549 545 541 Coastal Georgia 423 456 537 581 623 Gainesville MSA 255 257 254 248 246 East Tennessee (1) 280 280 504 504 486 South Carolina (2) 4 30 819 1,233 1,26
Slide 12: Deposit Growth by Category and Region
2013 2014 2015 2016 2Q17 2013 2014 2015 2016 2Q17 Demand Deposit 123$ 161$ 618$ 334$ 239$ Non-Interest Bearing Core NOW 4 9 441 5 17 Demand Deposit 1,311$ 1,471$ 2,089$ 2,423$ 2,662$ MMDA 73 41 325 246 (44) Savings 24 41 177 79 31 Interest Bearing Core Growth by Category 224$ 252$ 1,561$ 664$ 243$ T
Slide 13: High-Quality, Low-Cost Core Transaction Deposit Base
$ 2.02 $ 2.13 $3.16 $3.49 $3.50 $1.19 $1.47 $2.09 $2.42 $2.66 $3.44 $3.69 $5.25 $5.91 $6.16 - $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2013 2014 2015 2016 2Q17 Billions Non-Interest Bearing Core Transaction Interest Bearing Core Transaction ucbi.com | 13 High - Quality, Low - Cost Core Transaction Deposi
Slide 14: Credit Quality
Net Charge-offs 1.7$ 1.4$ 1.5$ 1.7$ 1.6$ as % of Average Loans 0.11 % 0.08 % 0.09 % 0.10 % 0.09 % Allowance for Loan Losses 64.3$ 63.0$ 61.4$ 60.5$ 59.5$ as % of Total Loans 1.02 % 0.94 % 0.89 % 0.87 % 0.85 % as % of NPLs 301 292 285 306 258 Past Due Loans (30 - 89 Days) 0.22 % 0.33 % 0.25 % 0.23 %
Slide 15: Fee Revenue, Mortgage and SBA
ucbi.com | 15 10.5 10.8 10.7 10.6 10.7 4.6 5.8 4.1 3.7 4.4 1.1 1.2 0.9 1.4 1.2 4.5 6.1 6.5 4.4 4.8 2.8 2.5 3.0 2.0 2.6 $23.5 $26.4 $25.2 $22.1 $23.7 $0 $5 $10 $15 $20 $25 $30 2Q16 3Q16 4Q16 1Q17 2Q17 Fee Revenue in millions Service Charges Other Brokerage Mortgage SBA $4.5 $6.1 $6.5 $4.4 $4.8 $0 $1
Slide 16: Expense Discipline and Efficiency Ratio
ucbi.com | 16 ► Efficiency improvements are attributable to various expense reduction initiatives while maintaining high business growth ► Declining trend sustained while making substantial investments in growth and infrastructure 2012 2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 TGT
Slide 17: Acquisition of Four Oaks Fincorp, Inc.
Transaction Overview • 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 Company Snapshot • Assets: $737 million • Loans: $513 million • Deposits: $5
Slide 18: Acquisition of HCSB Financial Corporation
19.3% 8.1% 7.8% HCSB UCBI South Carolina Rank Bank Branches Deposits ($MM) Mkt. Share (%) 1. BB&T 27 1,829 24.1 2. CNB Corp. 14 813 10.7 3. Wells Fargo 10 704 9.3 4. Bank of America 9 601 7.9 5. UCBI Pro Forma 10 452 5.9 Strong Demographics Myrtle Beach is the fastest growing MSA in the state Compel
Slide 19: 2017 Exhibits
2017 INVESTOR PRESENTATION Exhibits SECOND QUARTER 2017 JULY 26, 2017
Slide 20: Protecting Balance Sheet, Increasing Profitability, Generating Growth
ucbi.com | 20 Protecting High - Quality Balance Sheet ► Underwriting conservatism and portfolio diversification ► Top quartile credit quality performance ► Prudent capital, liquidity and interest - rate risk management ► Focused on improving return to shareholders with increasing return on tangible
Slide 21: Disciplined Credit Processes
ucbi.com | 21 Granular Portfolio – Exposure and Industry Limits • Legal Lending Limit $ 269M • House Lending Limit 28M • Project Lending Limit 17M • Top 25 Relationships 404M Concentration limits set for all segments of the portfolio Protecting High - Quality Balance Sheet Disciplined Credit Process
Slide 22: Loan Portfolio Diversification
ucbi.com | 22 11% 19% 28% 3% 8% 24% 7% $7.0 Billion Loan Portfolio as of 6/30/2017 Commercial (C&I) CRE Income Producing CRE Owner-Occupied Residential Construction Commercial Construction Residential Mortgage & HELOC Installment ► Commercial Banking Solutions, which began in 2013, had loans totalin
Slide 23: Excellent Credit Performance and Management
Note: Peer comparison banks comprise the KBW Regional Bank Index (ticker: KRX) Protecting High - Quality Balance Sheet ucbi.com | 23 0.0% 0.5% 1.0% 1.5% 2.0% CBSH BOH UMPQ WABC CVBF PB VLY UCBI OZRK CBU BPFH PNFP UMBF COLB MBFI ISBC CFR EWBC FFIN WTFC FNB WAL BKU PFS CATY WAFD FHN BXS STL FMBI SNV F
Slide 24: Performing Classified Loans
ucbi.com | 24 By Category 2Q16 3Q16 4Q16 1Q17 2Q17 Commercial & Industrial 9$ 10$ 9$ 10$ 7$ Owner-Occupied CRE 38 42 42 41 34 Total Commercial & Industrial 47 52 51 51 41 Income-Producing CRE 35 32 29 24 23 Commercial Construction 6 9 9 9 5 Total Commercial 88 93 89 84 69 Residential Mortgage 20 18
Slide 25: Troubled Debt Restructurings
$73.3 $70.1 $67.8 $64.9 $64.7 $60 $70 $80 $90 2Q16 3Q16 4Q16 1Q17 2Q17 ucbi.com | 25 LOAN TYPE 2Q17(1) 1Q17 2Q16 2Q17(1) 1Q17 2Q16 2Q17(1) 1Q17 2Q16 Commercial & Industrial 1.2$ 1.3$ 2.1$ -$ -$ -$ 1.2$ 1.3$ 2.1$ Owner-Occupied CRE 23.2 23.9 26.2 0.4 0.6 1.5 23.6 24.5 27.7 Income-Producing CRE 21.8 2
Slide 26: Commercial Real Estate Diversification
Protecting High - Quality Balance Sheet Commercial Real Estate Diversification ucbi.com | 26 Retail Building 148$ 14.4 % 106$ 18.1 % Assisted Living/Nursing Home/Rehab 169 16.4 18 3.1 Multi-Residential 95 9.2 65 11.1 Office Buildings 112 10.9 48 8.2 Commercial Residential CIP: Spec 81 7.9 55 9.4 Lan
Slide 27: Liquidity and Funding Capacity
ucbi.com | 27 Capacity 2Q17 1Q17 2Q16 vs 1Q17 vs 2Q16 WHOLESALE BORROWINGS Brokered Deposits (1) 1,084$ 379$ 364$ 412$ 15$ (33)$ FHLB 1,391 669 569 735 100 (66) Holding Company LOC 50 - - - - - Fed Funds 630 - - - - - Other Wholesale 1,468 - - - - - Total 4,623$ 1,048$ 933$ 1,147$ 115$ (99)$ LONG-TE
Slide 28: High-Quality, Low-Cost Core Deposit Base vs Peers
Note: Peer comparison banks comprise the KBW Regional Bank Index (ticker: KRX) ucbi.com | 28 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% CFR COLB WABC CVBF CBU BOH FFIN FMBI CBSH UCBI FCF UMBF TRMK ONB BOKF UMPQ PACW MBFI WAL BXS PB GBCI HBHC WBS PFS SNV FNB FHN BPFH WTFC TCBI ASB UBSI FULT EWBC TC
Slide 29: Steady Loan Growth
Generating Growth Steady Loan Growth ucbi.com | 29 $4.51 $4.96 $6.61 $1.04 $0.31 $0.16 $4.33 $4.67 $6.00 $6.92 $7.04 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 2013 2014 2015 2016 2Q17 Millions Total Loans in billions Organic Acquired Healthcare (sold 4Q15) ucbi.com | 29
Slide 30: Market Share Growth Opportunities
ucbi.com | 30 (1) (2) (2) (2) (1) (1) North Georgia $ 6.5 $ 2.4 9 19 36% 1 Atlanta, Georgia 66.2 2.5 10 34 4 7 Gainesville, Georgia 3.2 0.4 1 5 11 4 Coastal Georgia 8.7 0.4 2 7 4 8 Western North Carolina 11.9 1.0 1 19 8 3 East Tennessee 17.4 0.6 2 11 3 6 Upstate South Carolina 23.2 1.1 4 25 5 7 Coas
Slide 31: Market Share Demographics
ucbi.com | 31 3.32% 4.38% 5.21% 6.10% 6.61% 6.69% 7.10% 8.20% 8.66% 9.80% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% Knoxville, TN Cleveland, TN Asheville, NC Greenville, SC Gainesville, GA Atlanta, GA Savannah, GA Raleigh, NC Charleston, SC Myrtle Beach, SC Key MSA Growth Ma
Slide 32: M&A 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 growth . ► We are interested in pursuing transactio
Slide 33: Tidelands Acquisition Summary
ucbi.com | 33 INTERSTATE 26 INTERSTATE 95 Myrtle Beach Garden City Beach North Charleston Summerville Charleston Hilton Head Island Savannah Transaction Summary Headquarters Mt. Pleasant, SC Established 2003 Branches (7) Charleston (4) Myrtle Beach (2) Hilton Head (1) Assets ($MM) $451 Total Gross L
Slide 34: MoneyTree and Merchants Acquisitions
UCBI MoneyTree • Closed on May 1 with successful operational conversion on July 18 - 19; business has remained stable • Added a $425 million, 107 year old community bank • Doubled UCBI’s East TN presence in key markets – Knoxville, Lenoir City and Cleveland • Consolidated six branches – three UCBI a
Slide 35: Executive Management Team
Jimmy C. Tallent Chairman & CEO Joined 1984 H. Lynn Harton Board, President & COO Joined 2012 Bill M. Gilbert President, Community Banking Joined 2000 Bradley J. Miller EVP, CRO & General Counsel Joined 2007 • Over 40 years in banking • Led company from $42 million in assets in 1989 to $10.8 billion
Slide 36: Non-GAAP Reconciliation: Net Income, EPS, ROA
2Q16 3Q16 4Q16 1Q17 2Q17 Net Income Net income - GAAP 25,266$ 25,874$ 27,221$ 23,524$ 28,267$ Merger-related and other charges 1,176 3,152 1,141 2,054 1,830 Tax benefit on merger-related and other charges (445) (1,193) (432) (758) (675) Impairment of deferred tax asset on canceled nonqualified stock
Slide 37: Non-GAAP Reconciliation: ROTCE, Expenses, Pre-Tax Earnings
2Q16 3Q16 4Q16 1Q17 2Q17 Return on Tangible Common Equity Return on common equity - GAAP 9.54 % 9.61 % 9.89 % 8.54 % 9.98 % Effect of merger-related and other charges 0.27 0.73 0.26 0.47 0.41 Impairment of deferred tax asset on canceled nonqualified stock options - - 0.36 - - Release of disproportio
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