United Community Banks, Inc. · NYSE:UCB
United Community Banks — Debt Investor Presentation (June 2020)
41 slides from United Community Banks's debt investor presentation, Jun 12, 2020
Slide 1: United Community Banks, Inc. Fixed Income Presentation June 2020
United Community Banks, Inc. Fixed Income Presentation June 2020 Member FDIC. © 2020 United Community Bank
Slide 2: Cautionary Note Regarding Forward Looking Statements
This presentation has been prepared by United Community Banks, Inc. (“United”) solely for informational purposes based on inf orm ation regarding its operations, as well as information from public sources. Cautionary Note Regarding Forward Looking Statements This presentation contains forward - look
Slide 3: Terms of Proposed Offering
Issuer United Community Banks, Inc. (NASDAQ: UCBI) Security [ Ɣ ]% Fixed - to - Floating Rate Senior Notes Principal Amount $ Rating BBB+ by Kroll Bond Rating Agency Term 10 years Use of Proceeds General corporate purposes Joint Bookrunning Managers US Bancorp, Morgan Stanley Terms of Proposed Offer
Slide 4: United Community Banks, Inc. at a glance
United Community Banks, Inc. $13.1 Billion in Assets $1.6 Billion Market Cap UCBI (NASDAQ) 0.28% NPAs / Assets 0.56% Cost of Deposits One of the lowest cost of deposit bases vs. peers (2) $11.0 Billion in Total Deposits 0.99% Return on average assets - GAAP 56.2% Efficiency ratio – GAAP 55.6% Effici
Slide 5: Who We Are: Cultural Pillars
Who We Are Cultural Pillars Customer Service Is at Our Foundation High - Quality Balance Sheet x Underwriting conservatism and portfolio diversification x Top quartile credit quality performance x Prudent capital, liquidity and interest - rate risk management x Focused on improving return to shareho
Slide 6: Awards and Recognition
6 CONFIDENTIAL Awards and Recognition 6 Our Expertise Our markets are led by local presidents with deep roots in their communities The United Difference The Bank That SERVICE Built ® x Always Personal x Always Convenient x Always Focused on You We help our customers live better lives by delivering h
Slide 7: Management Team
Rich Bradshaw Chief Banking Officer x Over 25 years in lending; joined the United team in 2014 x Oversees all branches and the bank’s diverse commercial lines of business x Former SBA head at TD Bank and Carolina First’s SBA programs; President of UPS Capital Business Credit x Highly decorated Comma
Slide 8: Company History
1950 • Union County Bank established in Blairsville, GA 1990 • UCBI makes first acquisition of Citizens Bank in Murphy, NC • Union Bancshares, Inc. name is changed to “United Community Banks, Inc.” 1997 • UCBI reached $1 billion in assets 2001 • All locations become “United Community Bank” making Un
Slide 9: Loan Portfolio Composition and Growth
108 67 12.1 12 9.9 7.3 5.8 3.3 C&I 48% C&D 4% CRE & Multifam. 28% 1 - 4 Family 17% Cons., HE & Other 3%
Slide 10: Key Investment Highlights
x One of the Southeast's largest full - service banks, operating 142 offices in Georgia, North Carolina, South Carolina and Tennessee, and diversified national footprint with Navitas and SBA businesses x Culture rooted in excellent customer service, sound credit underwriting and prudent growth x Str
Slide 11: Three Shores Acquisition Overview
Three Shores Acquisition Overview 11 Member FDIC. © 2020 United Community Bank
Slide 12: Three Shores Transaction Highlights
Three Shores Transaction Highlights Consistent With Our Strategy of Acquiring Franchise - Enhancing Companies Within Target Markets 12 Logical Expansion into Contiguous Florida Markets x Acquisition of attractive commercial banking franchise with 14 branches and $1.5 billion of deposits x Expands Un
Slide 13: Pro Forma Loan and Deposit Composition
13 C&I 25% Owner Occupied CRE 18% C&D 12% 1 - 4 Family 23% C&I 48% Non Owner Occupied CRE 13% C&D 4% 1 - 4 Family 17% C&I 21% Owner Occupied CRE 18% C&D 14% 1 - 4 Family 24% Non - Interest Bearing 30% Time Deposits 18% Interest Bearing Non Time 52% Non - Interest Bearing 19% Time Deposits 19% Intere
Slide 14: Key Transaction Assumptions and Results
Key Transaction Assumptions and Results 14 • Deal value of ~$180 million inclusive of value to options and follow - on rights (1) • ~7x Three Shores 2019 earnings (2) with cost savings (3) • ~1.1x Three Shores’ stated tangible book value (3) • Core deposit premium of 1.3% (4) • 0.3300 shares of Unit
Slide 15: Acquisition Summary & COVID-19 Update
Seaside has limited exposure in selected segments: • Restaurants: $10 million primarily to one well - known, strong operator • Hotels: $22 million in low Loan - to - Value (LTV) loans to reputable flags • Senior Care: $30 million with strong financial guarantors 15 Note: 1. COVID response statistics
Slide 16: COVID-19 Update
COVID - 19 Update 16 Member FDIC. © 2020 United Community Bank
Slide 17: Loan Portfolio Composition
C&I 48% C&D 4% CRE & Multifam. 28% 1 - 4 Family 17% Cons., HE & Other 3%
Slide 18: Supporting Our Employees, Customers, and Managing Our Risk
Customers Supporting Our Employees, Customers, and Managing Our Risk 18 Employees Risk ! x Created rotations to ensure significant space between employees x Enhanced cleaning products used to comply with CDC guidelines x Increased hand sanitizer in all locations x Flexible deferral options where nee
Slide 19: Supporting Our Employees and Customers: Digital and PPP
Supporting our Employees: Communications Supporting our Customers: Service 140,000 145,000 150,000 155,000 160,000 165,000 170,000 December January February March April Active Digital Customers Supporting Our Customers: Digital United PPP Loan Process (As of May 18) 10,852 Loans Funded $1.13 Billion
Slide 20: Financial Results
Financial Results 20 Member FDIC. © 2020 United Community Bank
Slide 21: 1Q20 Highlights
$18.93 $20.53 $20.80 $14.93 $16.28 $16.52 1Q19 4Q19 1Q20 Book Value Per Share GAAP Operating (1) $0.40 Diluted earnings per share - GAAP $0.41 Diluted earnings per share - operating, down 27% YOY 0.99% Return on assets - GAAP 1.01% Return on assets - operating $0.18 Quarterly Dividend, up 13% YOY 1Q
Slide 22: Focused on Increasing Profitability
Source: S&P Global Markets and Company Materials Data for the twelve months ended 12/31 for each respective year, Q1 2020 data for the three months ended 3/31/20 Net interest margin is calculated on a fully - taxable equivalent basis (1) See non - GAAP reconciliation table slides in the Appendix for
Slide 23: Loan Portfolio Composition
C&I 48% C&D 4% CRE & Multifam. 28% 1 - 4 Family 17% Cons., HE & Other 3%
Slide 24: Attractive Markets – UCBI Deposits
Attractive Markets – UCBI Deposits RALEIGH GREENVILLE / SPARTANBURG $0.5 bn $1.0 bn $0.5 bn Density of United Branch Locations KNOXVILLE $0.5 bn CHARLESTON / MYRTLE BEACH ATLANTA $2.9 bn Source: S&P Global Market Intelligence UCBI deposits as of 12/31/2019 24
Slide 25: Measured Loan Growth
Measured Loan Growth 42% 11% 23% 1% 13% 8% 2% C&I Commercial Construction CRE Other Consumer Residential Mortgage Home Equity Residential Construction (1) (1) C&I includes commercial and industrial loans, owner - occupied CRE loans and equipment finance loans (2) Excludes loans and foreclosed proper
Slide 26: Commercial Real Estate Overview
Commercial Real Estate Overview 26 x Commercial Real Estate (CRE) portfolio consists of income producing CRE and commercial construction x Outstanding loans of $3.0bn, or 34% of total loans x Well - diversified across multiple segments and well balanced exposures vs. broader loan concentration mix x
Slide 27: Commercial & Industrial Portfolio
27 x C&I includes commercial & industrial loans, owner - occupied CRE loans and equipment finance loans x Outstanding loans of $3.8bn, or 42% of total loans x Diversified well - balanced portfolio across multiple segments x Top 10 commitments totaled $249mm x Average loan size of $417K 1Q20 Highligh
Slide 28: Selected Segments – Restaurants & Hotels
Selected Segments – Restaurants & Hotels x Restaurant exposure totaled $298.7mm as of 1Q20, or 3% of total loans x Top 10 commitments totaled $59mm x As of April 16 th , $61mm of restaurant loans were deferred, which equated to approximately 21% of the total restaurant portfolio outstanding x Averag
Slide 29: Loan Portfolio Composition
C&I 48% C&D 4% CRE & Multifam. 28% 1 - 4 Family 17% Cons., HE & Other 3%
Slide 30: Managing Our Risk
Managing Our Risk We strive to be a bank that knows our risks, manages and monitors what really matters and makes risk adjusted decisions in line with our Risk Appetite at all levels of the organization. We strive to be a bank where our risk framework provides a competitive advantage over our peers,
Slide 31: Strong Credit Culture & Disciplined Credit Processes
x Continuous review and enhancements to credit policy x Quarterly reviews of portfolio limits and concentrations x Centralized underwriting and approval process for consumer credit x Distributed Regional Credit Officers (reporting to Credit) for commercial x Dedicated Special Assets team x Eight of
Slide 32: Entering Crisis with Strength and Momentum
Entering Crisis with Strength and Momentum x UCBI coming into the cycle with greater regulatory capital and tangible common equity compared to peers (1) Pre - tax pre - provision Operating ROA calculated as ROA excluding the effect of income tax expense, provision expense and merger charges (2) Reli
Slide 33: Loan Portfolio Composition
C&I 48% C&D 4% CRE & Multifam. 28% 1 - 4 Family 17% Cons., HE & Other 3%
Slide 34: Strong Credit Quality — UCBI
- $0.8 $3.8 $9.5 $13.2 $32.0 2016 2017 2018 2019 1Q20 LTM Provision for Credit Losses Strong Credit Quality — UCBI 34 x NCOs elevated at $8.1mm primarily due to a $6.4mm loss on a single C&I loan • Medical testing company with significant P/E failed • Not COVID related • Remaining leveraged loan boo
Slide 35: Strong Credit Quality — Navitas
x Navitas 1Q20 NCOs = 0.81% x Navitas had a >4% 1Q20 pretax ROA and could withstand ~4.5% in annualized losses before reporting a loss x Navitas’ cumulative net loss rates have approximated 2% for the last 10 years x Rating agencies have historically assigned Navitas originations with expected throu
Slide 36: Capital Ratios
Capital Ratios Holding Company 1Q19 4Q19 1Q20 Common Equity Tier 1 Capital 12.4 % 13.0 % 12.9 % Tier 1 Risk-Based Capital 12.7 13.2 13.1 Total Risk-Based Capital 14.6 15.0 14.9 Leverage 9.9 10.3 10.4 Tangible Common Equity to Tangible Assets 9.8 10.3 10.2 x Capital ratios significantly above “well c
Slide 37: Funding & Liquidity: Summary
Funding & Liquidity: Summary 37 x Strong liquidity profile with the objective to assure sufficient funds are available to meet credit demands, cash flow needs and deposit withdrawals, while also contributing, in conjunction with United’s capital position, to safety and soundness in times of stress.
Slide 38: Core Investment Portfolio
Core Investment Portfolio 38 x We manage our investment portfolio for liquidity, interest rate risk management, and earnings in that priority x Target a conservative investment portfolio with all core investments either government / agency related or rated A or better x Over the last two years we ha
Slide 39: Appendix
Appendix 39 Member FDIC. © 2020 United Community Bank
Slide 40: Non-GAAP Reconciliation Tables
Non - GAAP Reconciliation Tables $ in thousands, except per share data (1) Merger - related and other charges for 2017, 2018 and 2019 include $761 thousand, $1,931 thousand and $449 thousand, respectiv ely, of intangible amortization resulting from payments made to executives under their change of c
Slide 41: Non-GAAP Reconciliation Tables
Non - GAAP Reconciliation Tables 41 (1) Merger - related and other charges for 2017, 2018 and 2019 include $761 thousand, $1,931 thousand and $449 thousand, respectiv ely, of intangible amortization resulting from payments made to executives under their change of control agreements. The resulting in
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