United Community Banks, Inc. · NYSE:UCB
United Community Banks — Q3 2013 Earnings Presentation
40 slides from United Community Banks's earnings presentation, Oct 24, 2013
Slide 1: Third Quarter 2013 Investor Presentation
Third Quarter 2013 Investor Presentation Jimmy C. Tallent President & Chief Executive Officer H. Lynn Harton Chief Operating Officer Rex S. Schuette Executive Vice President & Chief Financial Officer rex_schuette@ucbi.com (706) 781-2266 David P. Shearrow Executive Vice President & Chief Risk Officer
Slide 2: Cautionary Statement and Non-GAAP Measures
Cautionary Statement This investor presentation may contain forward-looking statements, as defined by federal securities laws, including statements about United’s financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understa
Slide 3: United at a Glance
United at a Glance q Founded in 1950 q Third-largest bank holding company in Georgia q Headquartered in Blairsville, Georgia with 103 locations throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina, western South Carolina, and east Tennessee q 1,496 employees (1) Deposit M
Slide 4: Business and Operating Model
Business and Operating Model Service is Point of Differentiation • #1 in Customer Satisfaction according to Customer Service Profiles • J.D. Power 2013 Retail Banking Satisfaction Study rates United among the top 2 banks in the southeast • Golden rule of banking – treating people the way we want to
Slide 5: Key Events & Background
United Community Banks, Inc. KEY EVENTS & BACKGROUND 5
Slide 6: Highlights Third Quarter
Highlights Third Quarter Improving Quarterly Results •Net income of $15.5 million, or $.21 per share •Core earnings (pre-tax, pre-credit) of $29.0 million, up $2.4 million from second quarter •Return on assets of .86% Solid Improvement in All Credit Quality Metrics • Credit metrics at pre-credit cri
Slide 7: Highlights Third Quarter
Highlights Third Quarter Core Fee Revenue Retains Strength • Up $1 million compared to last year and down slightly from 2Q13 • Higher service charges and brokerage fees • Offset slightly by lower mortgage volume and fees Loan Growth Returns to Mid-Single Digit Levels • Net loan growth of $78 million
Slide 8: Goals
United Community Banks, Inc. GOALS 8
Slide 9: Goals
Goals Our Goal: Leverage Our Strengths •Strong local leadership •Funding advantage in our legacy markets •Consistent and attractive culture • Class leading customer satisfaction • Low employee turnover To Grow Our Business The Right Way •Become better retail and small business bank • Grow sales: Bet
Slide 10: Goals: Grow Existing Fee Businesses; Mortgage Fee Revenue
Goals $ in millions Grow Existing Fee Businesses at Faster Pace • Mortgage First Priority • Performing well, but at 50% of peers • Focus on home purchase product as well as refinancings • Focus on lower performing markets • Invest in management, people and new markets • Advisory Services • Customer
Slide 11: Goals – Earnings per Share / Return on Assets
Goals – Earnings per Share / Return on Assets $.30 125 .26 .25 Earnings per Share (quarter) $.25 100 Return on Assets (bps) 100 .21 .21 .21 96 $.20 .20 89 86 87 84 75 $.15 50 $.10 $.05 25 2Q13 Actual 3Q13 Actual Expense Fee Revenue Loan Growth Debt/Equity Proforma Savings Initiatives $500 Million In
Slide 12: Financial Review
United Community Banks, Inc. FINANCIAL REVIEW 12
Slide 13: Core Earnings & Core Fee Revenue
Core Earnings & Core Fee Revenue $ in $60 millions Core Earnings $57.4 $56.0 $29 Million $54.7 $54.6 $54.3 $50 Up $2.4 million from 2Q13 and down $872 thousand $40 $40.5 $41.6 $40.9 $42.1 from a year ago $39.3 $30 $29.9 $29.1 $29.0 $26.4 $26.6 Net Interest Revenue $20 Core Operating Expenses $13.0 $
Slide 14: Core Operating Expenses
Core Operating Expenses $ in thousands Variance - Increase / (Decrease) 3Q13 2Q13 3Q12 Salaries & Employee Benefits $ 22,512 $ (617) $ 148 Communications & Equipment 3,305 (163) 51 Occupancy 3,379 (70) (160) FDIC Assessment 2,405 (100) (132) (1) Includes foreclosed property costs, Advertising & Publ
Slide 15: Key Drivers of Net Interest Revenue / Margin
Key Drivers of Net Interest Revenue / Margin $ in Net Interest Revenue & Margin millions Net Interest Revenue $61 • Offset margin compression by $57 $57.4 4.0% $56.0 growing loans $54.7 $54.6 $54.3 $53 3.60% • 3Q13 growth impacted by: 3.44% 3.5% 3.38% 3.31% ü Loan pricing competition $49 3.26% ü Off
Slide 16: Net Income
Net Income $ in thousands NET OPERATING INCOME Variance - Increase / (Decrease) 3Q13 2Q13 3Q12 Core Earnings (Pre-Tax, Pre-Credit) $ 28,979 $ 2,421 $ (872) Provision for Loan Loss 3,000 (45,500) (12,500) NON-CORE FEE REV ENUE: $ in Hedge Ineffectiveness Gains (Losses) (81) (450) (689) millions BOLI
Slide 17: Customer Deposit Mix & Core Growth
Customer Deposit Mix & Core Growth $ in millions Deposits by % / Customer Mix Total Deposit Mix 3Q13 2Q13 3Q12 4Q08 Demand / NOW $ 1,979 $ 1,916 $ 1,796 $ 1,457 3Q13 MMDA / Savings 1,437 1,406 1,342 630 $5.7B Core Transaction 3,416 3,322 3,138 2,087 60%* Significant Demand & NOW Time < $100,000 920
Slide 18: Capital Ratios
Capital Ratios 15.8% 15.7% 15.9% 15.5% 15% 15.2% 14.3% 14.2% 14.3% 14.2% 13.7% 10% 9.8% 9.6% 9.8% 10.0% 9.7% 8.8% 8.8% 8.9% 9.1% 8.5% 9.0% 8.80% at 6.3% period end 5.7% 5.7% 5.7% 5% 3Q12 4Q12 1Q13 2Q13 3Q13 Total RBC Tier 1 RBC Leverage Tier 1 Common RBC Tangible Common to Assets Well- Capitalized S
Slide 19: Loan Portfolio & Credit Quality
United Community Banks, Inc. LOAN PORTFOLIO & CREDIT QUALITY 19
Slide 20: Loan Portfolio
Loan Portfolio (total $4.27 billion) $ in billions By Loan Type Diversifying Portfolio Reduced 1Q11 concentrations 3Q13 $4.194 of A&D and $4.267 Commercial Investor RE 55% loans $2.34 Retail 38% Retail C&I $1.612 31% 34% $1.308 $1.424 C&I Residential 37% Mortgage $1.587 31% $1.31 Inv RE 17% Inv RE $
Slide 21: New Loans Funded and Advances
New Loans Funded and Advances(1) $ in millions CATEGORY MARKET 3Q13 3Q12 3Q13 3Q12 Commercial C & I $ 64.5 $ 47.4 Atlanta $ 116.6 $ 92.4 Owner Occupied CRE 58.2 39.5 (1) Represents new Coastal Georgia 40.5 29.8 loans funded Income Producing CRE 28.1 30.9 N. Georgia 71.5 77.3 and net loan Commercial
Slide 22: Commercial Loans
Commercial Loans (total $2.34 billion) $ in billions By Loan Type Geographic Diversity Atlanta MSA $.933 North Georgia 36% $ .573 Western North Carolina Coastal Georgia 24% East Tennessee $ .304 Gainesville MSA $ .171 South Carolina Owner $ .136 $ .175 Occupied $ .045 48% 12% Income $1.13B 40% 13% 2
Slide 23: Retail Loans
Retail (total $1.61 billion) $ in millions By Loan Type Geographic Diversity(1) North Georgia Western North Carolina $ .541 $ .333 Home Equity 36% LOC 26% $.42B Atlanta MSA $ .253 24% East Tennessee Coastal Georgia Avg loan size $ .130 Gainesville MSA South Carolina $ .099 $74 thousand $ .001 $.069
Slide 24: Residential Construction
Residential Construction (total $318 million) $ in millions By Loan Type Geographic Diversity North Georgia $ 147 Western North Carolina 48% $ 71 36% Atlanta MSA $ 61 Lot Georgia East Tennessee MSA 24% 53% 3% Gainesville 6% Coastal$ 18 $ 12 $167 $9 12% 19% 22% 46% 4% 0% Raw 11% $35 3Q13 vs. 3Q13 2Q1
Slide 25: Credit Quality
Credit Quality $ in millions 3Q13 2Q13 1Q13 4Q12 3Q12 Net Charge-offs $ 4.5 $ 72.4 $ 12.4 $ 14.5 $ 20.6 as % of Average Loans 0.42 % 6.87 % 1.21 % 1.39 % 1.99 % Allowance for Loan Losses $ 80.4 $ 81.8 $ 105.8 $ 107.1 $ 107.6 as % of Total Loans 1.88 % 1.95 % 2.52 % 2.57 % 2.60 % as % of NPLs 308 294
Slide 26: Non-Performing Loans (NPLs) Inflow Trends
Non-Performing Loans (NPLs) Inflow Trends $ in millions Quarterly NPL Inflows $30.5 $30 $20.2 $20 $13.2 $10 $9.7 $10.0 $0 3Q12 4Q12 1Q13 2Q13 3Q13 Resi Constr Comm Constr Resi Mtg Comm RE Comm Consumer $ in millions Total NPLs $120 $115.0 $109.9 $96.0 $90 $60 $27.9 $26.1 $30 $0 3Q12 4Q12 1Q13 2Q13 3
Slide 27: Performing Classified Loans
Performing Classified Loans $ in millions $320 $282.5 $271.7 $270 $261.9 $220 $170 $176.3 $173.6 3Q12 4Q12 1Q13 2Q13 3Q13 BY CATEGORY 3Q12 4Q12 1Q13 2Q13 3Q13 Commercial: Commercial & Industrial $ 19 $ 18 $ 20 $ 11 $ 10 Owner Occupied 77 65 71 43 40 Total C & I 96 83 91 54 50 Income Producing CRE 49
Slide 28: TDRs
TDRs $ in millions LOAN TYPE Accruing(1) Non-Accruing Total TDRs 3Q13 vs. 3Q12 3Q13 vs. 3Q12 3Q13 vs. 2Q12 Commercial (Sec by RE) $ 40.7 $ 72.0 $ 2.5 $ 8.5 $ 43.2 $ 80.6 Commercial & Industrial 2.9 7.0 - .2 2.9 7.2 Commercial Construction 12.8 24.0 - 11.9 12.8 35.9 Total Commercial 56.4 103.0 2.5 20
Slide 29: Net Charge-offs by Category & Market
Net Charge-offs by Category & Market $ in thousands NET CHARGE-OFFS BY CATEGORY 3Q13 % of Average Loans (Annualized) % of Avg Total Loans 2Q13 1Q13 4Q12 3Q12 Commercial (Sec. by RE): Ow ner Occupied $ 1,641 .58 % 5.85 % .69 % 1.76 % 3.56 % Income Producing 216 .14 5.45 1.99 .67 .70 Total Comm (Sec.
Slide 30: NPAs by Loan Category & Market
NPAs by Loan Category & Market $ in thousands 3Q13 3Q12 NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY LOAN CATEGORY Commercial (sec. by RE): Commercial (sec. by RE): Owner Occupied $ 6,358 $ 591 $ 6,949 Owner Occupied $ 14,140 $ 7,170 $ 21,310 Income Producing 1,657 139 1,796 Income Produc
Slide 31: Appendix
United Community Banks, Inc. APPENDIX 31
Slide 32: Experienced Proven Leadership
Experienced Proven Leadership • Over 39 years in banking • Over 30 years in banking • Over 35 years in banking • Led company from $42 • Responsible for overall • Responsible for million in assets in 1989 to operations accounting, finance and $7.2 billion today • Former Consultant and reporting activ
Slide 33: Market Share Opportunities & Demographics
Market Share Opportunities & Demographics EXCELLENT GROWTH OPPORTUNITIES FAST GROWING MARKETS Market Deposits Population Growth (%) Deposits (in Deposit Population Actual Projected Markets (in billions) (1) billions) (2,3) Banks Offices(3) Share (1) Rank(1) Markets1 (in thousands) 2010 - 2012 2012 -
Slide 34: Liquidity
Liquidity $ in millions Unused Variance Capacity 3Q13 2Q13 3Q12 vs 2Q13 vs 3Q12 Wholesale Borrowings (1) Brokered Deposits $ 1,372 $ 419 $ 375 $ 223 $ 44 $ 196 FHLB 1,110 - 70 50 (70) (50) Fed Funds 598 - - - - - Other Wholesale - 54 54 53 - 1 Total $ 3,080 $ 473 $ 499 $ 326 $ (26) $ 147 WHOLESALE B
Slide 35: Business Mix – Deposits at quarter-end
Business Mix – Deposits at quarter-end $ in millions 3Q13 vs. DEPOSITS BY CATEGORY 3Q13 2Q13 1Q13 4Q12 3Q12 3Q12 Demand & Now $ 1,979 $ 1,916 $ 1,894 $ 1,841 $ 1,796 $ 183 MMDA & Savings 1,437 1,406 1,401 1,372 1,342 95 Core Transaction Deposits 3,416 3,322 3,295 3,213 3,138 278 Time < $100,000 920
Slide 36: Core Transaction Deposits
Core Transaction Deposits $ in millions $175 East Tennessee $174 Core Transactions / Total Deposits 2Q13 % 3Q13 2Q13 $211 Coastal Georgia Coastal GA 68.1 % 67.6 % $214 3Q13 Gainesville MSA 68.8 67.0 $212 North Carolina 63.0 62.6 Gainesville MSA $217 Atlanta MSA 62.2 62.1 East TN 63.8 61.5 $567 North
Slide 37: Lending & Credit Environment
Lending & Credit Environment $ in millions Regional Credit Review – Standard Underwriting •House Lending Limit 25 •Project Lending Limit 15 •Top 25 Relationships 351 PROACTIVELY ADDRESSING CREDIT ENVIRONMENT • Centralized underwriting and approval process • Segregated work-out teams • Highly skilled
Slide 38: Commercial Construction & Real Estate
Commercial Construction & Real Estate $ in millions COMMERCIAL REAL ESTATE COMMERCIAL CONSTRUCTION 30-Sep-13 30-Sep-13 Owner Income Amount Percent Occupied Producing Total Percent Land Develop - Vacant (Improved) $ 56.0 41 % Office Buildings $ 301.9 $ 167.7 $ 469.6 26.95 % Raw Land - Vacant (Unimpro
Slide 39: Loans by Business Mix and Region
Loans by Business Mix and Region $ in millions 3Q13 vs. 3Q13 2Q13 1Q13 4Q12 3Q12 3Q12 2012 2011 2010 2009 2008 QUARTERLY LOANS - BUSINESS MIX BY CATEGORY ANNUAL LOANS - BUSINESS MIX BY CATEGORY Commercial: Commercial: Comm & Indus $ 457 $ 437 $ 454 $ 458 $ 460 $ (3) Comm & Indus $ 458 $ 428 $ 441 $
Slide 40: Non GAAP Reconciliation Tables
Non GAAP Reconciliation Tables $ in thousands Operating Earnings to GAAP Earnings Reconciliation 3Q13 2Q13 1Q13 4Q12 3Q12 CORE FEE REVENUE Core fee revenue $ 13,966 $ 14,063 $ 12,618 $ 14,551 $ 13,003 Securities gains, net - - 116 31 - Gains from sales of low income housing tax credits - 468 - - - H
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