United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q2 2016 Earnings Presentation
39 slides from United Community Banks's earnings presentation, Jul 27, 2016
Slide 1: Investor Presentation Second Quarter 2016
ucbi.com | 1 INVESTOR PRESENTATION Second Quarter 2016 July 27, 2016
Slide 2: Disclosures and Cautionary Statement
ucbi.com | 2 ucbi.com | 2 Disclosures operating efficiency ratio, operating dividend payout ratio, operating expenses, pre - tax, pre - credit earnings, tangible common equity to tangible assets, tangible equity to tangible assets and tangible common equity to risk - weighted assets . The most compa
Slide 3: Snapshot of United Community Banks, Inc.
ucbi.com | 3 • Head quartered in Blairsville, GA • Regional Headquarters in Greenville, SC • Four state regional community bank: GA, NC, SC and TN • One of the largest community banks in the Southeast • Established in 1950 • 140 locations (pro forma including 7 Tidelands locations at July 1) • 1,984
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 2016 Highlights
ucbi.com | 5 Second Quarter 2016 Highlights ucbi.com | 5 $17.3 $18.3 $21.3 $18.6 $23.5 $16 $18 $20 $22 $24 2Q15 3Q15 4Q15 1Q16 2Q16 Fee Revenue in millions 8.83% 7.85% 7.02% 8.57% 9.54% 10.20% 10.29% 10.87% 10.91% 11.56% 6.00% 8.00% 10.00% 12.00% 2Q15 3Q15 4Q15 1Q16 2Q16 Return on (Tangible) Common
Slide 6: Second Quarter 2016 Highlights
ucbi.com | 6 (1) See non - GAAP reconciliation table slides at the end of the exhibits (2) Includes First National Bank as of the acquisition date of May 1 , 2015 (3) Includes Palmetto as of the acquisition date of September 1 , 2015 ucbi.com | 6 Second Quarter 2016 Highlights 1Q16 2Q15 EARNINGS SUM
Slide 7: Second Quarter 2016 Highlights
ucbi.com | 7 Second Quarter 2016 Highlights ucbi.com | 7 (in millions) 2Q16 1Q16 2Q15 Net Income ($ in millions) GAAP $ 25.3 $ 22.3 $ 17.8 Operating (1) 26.0 23.9 20.0 EPS GAAP .35 .31 .28 Operating (1) .36 .33 .32 ROA GAAP 1.04 .93 .89 Operating (1) 1.07 1.00 1.00 ROCE GAAP 9.54 8.57 8.83 ROTCE Ope
Slide 8: Second Quarter 2016 Highlights
ucbi.com | 8 Second Quarter 2016 Highlights ucbi.com | 8 Increasing Profitability Net Interest Revenue ► $74.9 Million – Unchanged from 1Q16 ● Decreased $34 thousand from 1Q16 and increased $13.9 million from 2Q15 ● Average loans increased to $6.15 billion in 2Q16 up from $6.00 billion in 1Q16 and $
Slide 9: Second Quarter 2016 Highlights
ucbi.com | 9 Second Quarter 2016 Highlights ucbi.com | 9 Generating Growth Loan Growth ► Well - Diversified Loan Portfolio ● Increased $181 million from 1Q16, or 12% annualized, and $233 million from 2Q15, or 5%, excluding mergers and healthcare portfolio loan sale ● Strong loan production of $662 m
Slide 10: Path to 1.10% ROA (Operating) by Q4 2016
ucbi.com | 10 ucbi.com | 10 Return on Assets - Operating (bps) Execute Strategies 100 107 110 90 95 100 105 110 1Q16 Actual 2Q16 Actual 3Q16 4Q16 Target 4Q16 Path to 1.10% ROA (Operating) by Q416
Slide 11: Protecting High-Quality Balance Sheet: Credit Quality
ucbi.com | 11 Protecting High - Quality Balance Sheet Credit Quality Net Charge-offs 1.0$ 1.4$ 1.3$ 2.1$ 1.7$ as % of Average Loans 0.08 % 0.10 % 0.09 % 0.14 % 0.11 % Allowance for Loan Losses 70.1$ 69.1$ 68.4$ 66.3$ 64.3$ as % of Total Loans 1.36 % 1.15 % 1.14 % 1.09 % 1.02 % as % of NPLs 373 344 3
Slide 12: Prudent Capital Management
ucbi.com | 12 Protecting High - Quality Balance Sheet Prudent Capital Management ucbi.com | 12 Holding Company 2Q16 1Q16 4Q15 3Q15 2Q15 Tier I Risk - Based Capital 11.4% 11.3% 11.5% 11.4% 11.9% Total Risk - Based Capital 12.4 12.3 12.5 12.5 13.1 Leverage 8.5 8.4 8.3 9.1 9.1 Tier I Common Risk - Base
Slide 13: Earnings, Fee Revenue, and Expenses
ucbi.com | 13 $61.0 $65.4 $73.8 $75.0 $74.9 $45.2 $48.5 $56.4 $55.2 $56.9 $33.0 $35.2 $38.6 $38.3 $41.5 $17.3 $18.3 $21.3 $18.6 $23.5 $10 $20 $30 $40 $50 $60 $70 $80 2Q15 3Q15 4Q15 1Q16 2Q16 Net Interest Revenue Expenses - Operating (1) Pre-Tax, Pre-Credit Earnings (1) Fee Revenue Increasing Profita
Slide 14: Expense Discipline
ucbi.com | 14 Increasing Profitability ucbi.com | 14 Expense Discipline ► Efficiency improvements are attributable to various expense reduction initiatives while maintaining high business growth ► Declining trend sustained with substantial investments in growth and infrastructure 2012 2013 2014 1Q15
Slide 15: Key Drivers of Net Interest Revenue / Margin
ucbi.com | 15 $61.0 $65.4 $73.8 $75.0 $74.9 $30 $40 $50 $60 $70 $80 2Q15 3Q15 4Q15 1Q16 2Q16 4.24% 4.29% 4.15% 2.12% 2.32% 2.45% 0.17% 0.16% 0.18% 0% 1% 2% 3% 4% 5% 2Q15 3Q15 4Q15 1Q16 2Q16 0.16% 0.17% 0.17% 0.20% 0.24% 0.26% 0.10% 0.10% 0.10% .00% .05% .10% .15% .20% .25% .30% 2Q15 3Q15 4Q15 1Q16 2
Slide 16: Fee Revenue
ucbi.com | 16 Increasing Profitability Fee Revenue ucbi.com | 16 Driving Fee Revenue Through Core Banking Infrastructure 8.4 9.3 11.5 10.1 10.5 2.5 2.3 3.4 2.9 4.6 1.2 1.2 1.1 1.1 1.1 3.7 3.8 3.3 3.3 4.5 1.5 1.7 2.0 1.2 2.8 $0 $5 $10 $15 $20 $25 2Q15 3Q15 4Q15 1Q16 2Q16 Fee Revenue in millions Servi
Slide 17: New Loans Funded and Advances
ucbi.com | 17 Generating Growth New Loans Funded and Advances (1) $ in millions ucbi.com | 17 2Q16 1Q16 2Q15 1Q16 2Q15 Commercial & Industrial 168.4$ 133.9$ 143.1$ 34.5$ 25.3$ Owner-Occupied CRE 80.9 74.3 79.3 6.6 1.6 Income-Producing CRE 132.3 86.3 73.5 46.0 58.8 Commercial Constr. 11.0 11.0 4.6 -
Slide 18: Loan Mix
ucbi.com | 18 2012 2013 2014 2015 2Q16 North Georgia 1,364$ 1,240$ 1,163$ 1,125$ 1,097$ Atlanta MSA 1,204 1,235 1,243 1,259 1,314 North Carolina 579 572 553 549 543 Coastal Georgia 400 423 456 537 541 Gainesville MSA 261 255 257 254 240 East Tennessee (1) 283 280 280 504 509 South Carolina (2) - 4 3
Slide 19: Customer Deposit Mix and Growth
ucbi.com | 19 2012 2013 2014 2015 2Q16 2012 2013 2014 2015 2Q16 Non-Interest Bearing Core Demand Deposit 232$ 123$ 161$ 618$ 142$ Demand Deposit 1,188$ 1,311$ 1,471$ 2,089$ 2,231$ NOW (65) 4 9 441 (43) MMDA 115 73 41 325 42 Interest Bearing Core Savings 29 24 41 177 31 Total CommercialNOW 654 659 66
Slide 20: High-Quality, Low-Cost Core Transaction Deposit Base
ucbi.com | 20 $ 2.02 $ 2.13 $2.22 $3.16 $3.19 $1.19 $1.31 $1.47 $2.09 $2.23 - $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2012 2013 2014 2015 2Q16 in billions Non-Interest Bearing Core Transaction Interest Bearing Core Transaction $3.21 $3.44 $3.69 $5.25 $5.42 ucbi.com | 20 High - Quality, Low - Cost Core T
Slide 21: Acquisition of Tidelands Bancshares, Inc.
ucbi.com | 21 Generating Growth Acquisition of Tidelands Bancshares, Inc. ucbi.com | 21 Combined Branch Map INTERSTATE 26 INTERSTATE 95 Myrtle Beach Garden City Beach North Charleston Summerville Charleston Hilton Head Island Savannah United Community Banks, Inc. (134) Tidelands Bancshares, Inc . (7
Slide 22: Exhibits
ucbi.com | 22 ucbi.com | 22 EXHIBITS
Slide 23: Who We Are
ucbi.com | 23 United Community Banks, Inc. ucbi.com | 23 Who We Are 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 retu
Slide 24: Granular Portfolio – Exposure and Industry Limits
ucbi.com | 24 Protecting High - Quality Balance Sheet ucbi.com | 24 Granular Portfolio – Exposure and Industry Limits • Legal Lending Limit $ 251M • House Lending Limit 28M • Project Lending Limit 17M • Top 25 Relationships 378M STRUCTURE • Centralized underwriting and approval process for consumer
Slide 25: Loan Portfolio Transformation and Diversification
ucbi.com | 25 Protecting High - Quality Balance Sheet ucbi.com | 25 Loan Portfolio Transformation and Diversification 7% 9% 12% 16% 26% 27% 3% Portfolio as of 12/31/2008 Commercial (C&l) Commercial Construction CRE Income Producing CRE Owner-Occupied Residential Construction Residential Mortgage Ins
Slide 26: Excellent Credit Performance and Management
ucbi.com | 26 Note: Peer comparison banks comprise the KBW Regional Bank Index (ticker: KRX) Source: SNL Financial LC Protecting High - Quality Balance Sheet Excellent Credit Performance and Management ucbi.com | 26 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% CBSH BOH UMPQ PB SIVB UCBI UMBF CB
Slide 27: Performing Classified Loans
ucbi.com | 27 Protecting High - Quality Balance Sheet Performing Classified Loans ucbi.com | 27 By Category $ in millions 2Q15 3Q15 4Q15 1Q16 2Q16 Commercial & Industrial 6$ 6$ 6$ 9$ 9$ Owner-Occupied CRE 40 42 40 33 33 Total Commercial & Industrial 46 48 46 42 42 Income-Producing CRE 19 30 30 30 28
Slide 28: TDRs
ucbi.com | 28 $86.1 $84.6 $83.0 $72.8 $73.3 $70 $75 $80 $85 $90 2Q15 3Q15 4Q15 1Q16 2Q16 Protecting High - Quality Balance Sheet TDRs ucbi.com | 28 $ in millions LOAN TYPE 2Q16(1) 1Q16 2Q15 2Q16(1) 1Q16 2Q15 2Q16(1) 1Q16 2Q15 Commercial & Industrial 2.1$ 2.2$ 3.6$ -$ -$ -$ 2.1$ 2.2$ 3.6$ Owner-Occup
Slide 29: Commercial Real Estate Diversification
ucbi.com | 29 Protecting High - Quality Balance Sheet Commercial Real Estate Diversification ucbi.com | 29 Multi-Residential 155$ 22.9 % 83$ 21.6 % Retail Building 108 16.0 59 15.4 Other Properties 68 10.0 38 9.9 Land Develop - Vacant (Improved) 60 8.9 50 13.0 Office Buildings 51 7.5 19 5.0 Commerci
Slide 30: Liquidity
ucbi.com | 30 Protecting High - Quality Balance Sheet Liquidity ucbi.com | 30 Capacity 2Q16 1Q16 2Q15 vs 1Q16 vs 2Q15 WHOLESALE BORROWINGS Brokered Deposits (1) 993$ 412$ 440$ 530$ (28)$ (118)$ FHLB 1,062 735 510 385 225 350 Holding Company LOC 50 - - - - - Fed Funds 675 - - 25 - (25) Other Wholesal
Slide 31: High-Quality, Low-Cost Core Deposit Base
ucbi.com | 31 Note: Peer comparison banks comprise the KBW Regional Bank Index (ticker: KRX) Source: SNL Financial LC Increasing Profitability High - Quality, Low - Cost Core Deposit Base ucbi.com | 31 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% CFR COLB WABC FFIN BOH CVBF UCBI CBU UMBF UCBI CBSH FMBI T
Slide 32: Steady Loan Growth
ucbi.com | 32 Generating Growth ucbi.com | 32 Steady Loan Growth $4.18 $4.33 $4.52 $4.96 $1.04 $3.00 $4.00 $5.00 $6.00 2012 2013 2014 2015 2Q16 Total Loans in billions Organic Acquired Healthcare (sold 4Q15) $6.00 $0.16 $4.68 $6.29 10% Annualized Growth 10% Growth
Slide 33: Market Share Opportunities
ucbi.com | 33 Generating Growth Market Share Opportunities ucbi.com | 33 (1) FDIC deposit market share and rank as of June 30, 2015 for markets where United takes deposits. Data Source: FDIC. (2) Based on current quarter. (3) Excludes seven loan production offices $ in billions (1) (2) (3) (1) (1) N
Slide 34: Market Share Demographics
ucbi.com | 34 Generating Growth Market Share Demographics ucbi.com | 34 3.35% 4.23% 4.96% 5.70% 6.38% 6.49% 6.91% 8.47% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Knoxville, TN Cleveland, TN Asheville, NC Greenville, SC Atlanta, GA Gainesville, GA Savannah, GA Charleston, SC Key MSA Growth Markets Projected Chan
Slide 35: Mergers & Acquisitions Strategy
ucbi.com | 35 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 growth
Slide 36: UCBI MoneyTree and Palmetto Acquisitions
ucbi.com | 36 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
Slide 37: $10 Billion and Beyond
ucbi.com | 37 United Community Banks, Inc. ucbi.com | 37 $10 Billion and Beyond Primary Regulatory Implications ► Durbin Amendment under the Dodd - Frank Act (“DFA”) (debit card interchange revenue) – EPS impact of $.02 per quarter ► FDIC insurance premiums ► Stress testing ► Oversight by Consumer F
Slide 38: Experienced Proven Leadership
ucbi.com | 38 Experienced Proven Leadership 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 $4
Slide 39: Non-GAAP Reconciliation Tables
ucbi.com | 39 2Q15 3Q15 4Q15 1Q16 2Q16 Net Income Net income - GAAP 17,813$ 17,887$ 18,208$ 22,295$ 25,266$ Merger-related and other charges 3,173 5,744 9,078 2,653 1,176 Tax benefit on merger-related and other charges (997) (1,905) (3,486) (1,004) (445) Net income - Operating 19,989$ 21,726$ 23,800
United Community Banks — Q2 2016 Earnings Presentation on 6ix