United Community Banks, Inc. · NYSE:UCB

United Community Banks — Q4 2010 Earnings Presentation

59 slides from United Community Banks's earnings presentation, Jan 28, 2011

  1. Slide 1: United Community Banks, Inc. Investor Presentation Fourth Quarter 2010

    United Community Banks, Inc. Investor Presentation Fourth Quarter 2010 Jimmy C. Tallent President & CEO Rex S. Schuette EVP & CFO 1in Customer Satisfaction # As reported by Customer Service Profiles rex_schuette@ucbi.com (706) 781-2266 David P. Shearrow EVP & CRO

  2. Slide 2: Cautionary Statement

    Cautionary Statement 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 inv

  3. Slide 3: Non-GAAP Measures

    Non‐GAAP Measures 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 fee revenue, core operat

  4. Slide 4: Highlights Fourth Quarter

    Highlights Fourth Quarter Credit Loan and Deposit Growth Core Earnings Capital 4

  5. Slide 5: Loan Portfolio & Credit Quality

    LOAN PORTFOLIO & CREDIT QUALITY 5

  6. Slide 6: Proactively Addressing Credit Environment

    Proactively Addressing Credit Environment 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 We

  7. Slide 7: Loan Portfolio (total $4.60 billion)

    Loan Portfolio (total $4.60 billion) $.70B Geographic Diversity Residential .13B Construction Installment $ in millions 15% 3% Eastern $1.28 Tennessee Residential 6% $256 Mortgage 28% Gainesville MSA 7% $312 Coastal Georgia $2.50B 7% $335 Commercial 54% Western North Carolina 15% $702 Atlanta MSA 28

  8. Slide 8: Commercial Loans (total $2.50 billion)

    Commercial Loans (total $2.50 billion) $.30B Geographic Diversity Comm Const $ in millions $.44B 12% Eastern C& I Tennessee 18% $.98B 6% $148 Owner Occupied Gainesville MSA 39% 8% $188 $.78B Western North Income Carolina Producing 8% $207 31% Coastal Georgia 8% $209 North Georgia 31% $774 Atlanta MS

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

    Commercial Real Estate (by loan type) (in millions) December 31, 2010 Portfolio Characteristics Loan Type Amount Percent Office Buildings $ 406 23 % 56% owner-occupied Other Small Business 323 18 Retail 251 14 Typical owner-occupied: Small Warehouses/Storage 177 10 small business, doctors, Churches

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

    Commercial Construction (by loan type) (in millions) December 31, 2010 Portfolio Characteristics Loan Type Amount Percent Land Develop - Vacant (Improved) $ 108 37 % $650k Average loan size Raw Land - Vacant (Unimproved) 73 24 Commercial Land Development 59 20 Miscellaneous Construction 27 9 Office

  11. Slide 11: Residential Mortgage (total $1.28 billion)

    Residential Mortgage (total $1.28 billion) Geographic Diversity $.34B $ in millions Home Equity 26% Gainesville MSA Avg loan 6% $79 size: $45k Eastern Tennessee 6% $81 Coastal Georgia $.94B Mortgage Avg loan 7% $89 size: $96k 74% Atlanta MSA 14% $179 Western North Carolina 26% $331 North Georgia 41%

  12. Slide 12: Residential Construction (total $.70 billion)

    Residential Construction (total $.70 billion) Geographic Diversity La $.10B nd $ in millions $.17B Raw Developing 14% Eastern 25% Tennessee 3% $17 Coastal Georgia $.05B 4% $30 $.28B Developing Sold 7% Lot Gainesville MSA 40% 5% $36 $.10B Co Spec Atlanta MSA ns 14% 19% $133 tru c tio Western North n

  13. Slide 13: North Georgia MSA (residential construction)

    North Georgia MSA (residential construction) (in millions) Variance 4Q10 3Q10 4Q09 3Q10 4Q09 Acquisition & Development Developing Land $ 88 $ 98 $ 172 $ (10) $ (84) Raw Land 40 42 45 (2) (5) Lot Loans 159 168 197 (9) (38) Total 287 308 414 (21) (127) Construction Loans Spec 31 38 61 (7) (30) Sold 21

  14. Slide 14: Atlanta MSA (residential construction)

    Atlanta MSA (residential construction) (in millions) Variance 4Q10 3Q10 4Q09 3Q10 4Q09 Acquisition & Development Developing Land $ 30 $ 34 $ 76 $ (4) $ (46) Raw Land 23 27 43 (4) (20) Lot Loans 32 45 52 (13) (20) Total 85 106 171 (21) (86) Construction Loans Spec 38 42 68 (4) (30) Sold 10 11 16 (1)

  15. Slide 15: Credit Quality

    Credit Quality (in millions) 4Q10 3Q10 2Q10 1Q10 4Q 09 Operating Net Charge-offs(1) $ 47.7 $ 50.0 $ 61.3 $ 56.7 $ 84.6 as % of Average Loans(1) 4.03% 4.12% 4.98% 4.51% 6.37% Allowance for Loan Losses $ 174.7 $ 174.6 $ 174.1 $ 173.9 $ 155.6 as % of Total Loans 3.79% 3.67% 3.57% 3.48% 3.02% as % of NP

  16. Slide 16: Net Charge-offs by Loan Category

    Net Charge‐offs by Loan Category (in thousands) 4Q10(1) % of Average Loans (Annualized) % of Avg NCOs Loans 3Q10 2Q10 1Q10 LTM(2) Commercial (sec. by RE) $ 6,493 1.45 % 3.16 % 2.21 % .45 % 1.82 % Commercial Construction 3,924 5.12 2.40 1.67 2.48 2.92 Commercial & Industrial 2,891 2.54 1.07 .85 4.31

  17. Slide 17: Net Charge-offs by Market

    Net Charge‐offs by Market (in thousands) 4Q10 % of Average Loans (Annualized) % of Avg (1) NCOs Loans 3Q10 2Q10 1Q10 LTM MARKETS Atlanta MSA $ 15,222 4.48 % 3.97 % 4.85 % 4.32 % 4.41 % Gainesville MSA 3,434 4.37 1.40 3.01 1.92 2.68 North Georgia 18,537 4.26 5.92 6.19 6.51 5.73 (2) Western North Caro

  18. Slide 18: NPAs by Loan Category and Market

    NPAs by Loan Category and Market (in thousands) 4Q10 4Q10 NPLs OREO Total NPAs NPLs OREO Total NPAs LOAN CATEGORY MARKETS Commercial (sec. by RE) $ 44,927 $ 23,659 $ 68,586 Atlanta MSA $ 48,289 $ 41,154 $ 89,443 Commercial Construction 21,374 17,808 39,182 Gainesville MSA 5,171 9,273 14,444 Commerci

  19. Slide 19: Financial Results

    FINANCIAL RESULTS [WUnited dj in Customer Satisfoction ‘As reported by Customer Service Proties

  20. Slide 20: Core Earnings

    Core Earnings In millions $35.0 $32 $30 $30.0 $29 $29 $28 $28 $27 $25.0 $22 $20.0 $17 $15.0 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 20

  21. Slide 21: Core Earnings Summary

    Core Earnings Summary (In Thousands) Variance 4Q10 3Q10 4Q09 Net Interest Revenue $ 60,132 $ 118 $ (3,797) Fee Revenue 11,760 (843) 12 Gross Revenue 71,892 (725) (3,785) Operating Expense (Excl OREO) 44,316 (838) (1,419) Pre-Tax, Pre-Credit (Core) $ 27,576 $ 113 $ (2,366) Net Interest Margin 3.58 %

  22. Slide 22: Net Interest Margin

    Net Interest Margin NIM Characteristics 5.0% 4.15% 4.24% 4.04% 4.13% 4.05% Margin changes 4.0% +1 bps vs. 3Q10 +18 bps vs. 4Q09 3.0% 3.57% 3.58% 3.40% 3.49% 3.60% Maintained loan & CD pricing 2.0% 4Q Excess liquidity – lowered 1.0% Margin by 30 bps .0% 4Q09 1Q10 2Q10 3Q10 4Q10 NIM NIM - Pre Credit (

  23. Slide 23: Margin – Credit Costs

    Margin – Credit Costs Credit Costs .70% Impacting Margin .66% .64% .64% .60% .20% .56% Historically 8 to 12 bps .20% .19% .50% .47% .14% Credit cycle – significant drag on .40% .11% margin but improving .26% .25% .30% .27% .22% Cost 4Q10 vs. Historical – 35 bps .19% (annual earnings impact of $23 .2

  24. Slide 24: Deposit Mix (total $6.5 billion)

    Deposit Mix (total $6.5 billion) ($ in millions) 4Q10 3Q10 4Q09 Demand / NOW $ 1,573 $ 1,582 $ 1,465 MMDA / Savings 1,063 977 880 Brokered Demand & NOW Core Transaction 2,636 2,559 2,345 11% 24% +77 +291 Public Funds 12% Annualized Growth 11% Time < $100,000 1,491 1,492 1,740 Public Deposits 663 561

  25. Slide 25: Net Operating Loss – From Continuing Operations

    Net Operating Loss – From Continuing Operations (In Thousands) 4Q10 3Q10 4Q09 Pre-Tax, Pre-Credit (Core) $ 27,576 $ 27,463 $ 29,942 Provision for Loan Loss (47,750) (50,500) (90,000) Foreclosed Property Costs: Write-downs (15,849) (14,188) (9,576) Maintenance, Taxes, Etc. (4,753) (5,564) (4,815) Sec

  26. Slide 26: Net Loss

    Net Loss (In Thousands) 4Q10 3Q10 4Q09 Net Operating Loss $ (23,574) $ (25,825) $ (40,063) Earnings from Discontinued Operations - - 228 Partial Recovery of Fraud Loss (11,750 pre-tax) 7,179 - - Goodwill Impairment Charge - (210,590) - Net Loss $ (16,395) $ (236,415) $ (39,835) Preferred Stock Div (

  27. Slide 27: Capital Ratios

    Capital Ratios Well- Capitalized Guideline DEC '10 SEP '10 DEC '09 Bank Tier 1 RBC 6 % >9 % 10.7 % 11.4 % 13.2 % Total RBC 10 > 11 12.5 13.2 15.0 Leverage 5 >8 7.5 7.9 8.8 Holding Company Tangible Common Equity to: Assets 6.4 6.8 7.1 Risk Weighted Assets 9.1 9.6 10.4 Tangible Equity to Assets 8.8 9.

  28. Slide 28: Appendix

    APPENDIX “United Communily Banks. 0 tomer son As reported by Customer Service Profites

  29. Slide 29: United at a Glance

    United at a Glance Assets $7.4 Billion Banks 27 Deposits $6.5 Billion Offices 106 29

  30. Slide 30: Experienced Proven Leadership

    Experienced Proven Leadership Joined Years in UCBI Banking Jimmy Tallent President & CEO 1984 36 Guy Freeman Chief Operating Officer 1992 52 Rex Schuette Chief Financial Officer 2001 33 David Shearrow Chief Risk Officer 2007 29 Glenn White President, Atlanta Region 2007 36 Craig Metz Marketing 2002

  31. Slide 31: Business and Operating Model

    Business and Operating Model “Community bank service, large bank resources” Twenty-seven “community banks” ƒ Local CEOs with deep roots in their communities ƒ Resources of $7.4 billion bank Service is point of differentiation ƒ Golden rule of banking 9 “The Bank That SERVICE Built” ƒ Ongoing custome

  32. Slide 32: Robust Demographics (fast growing markets)

    Robust Demographics (fast growing markets) 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 To

  33. Slide 33: Market Share Opportunities

    Market Share Opportunities (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 2.0 10 38 4 7 Gainesville MSA 2.5 .3 1 6 13 3 Coastal Georgia 7.3 .4 2 9 5 8 Western N

  34. Slide 34: Leading Demographics

    Leading Demographics Total 2010 - 2015 Assets Population Rank Ticker Company(1) State ($ B) Growth (2) 1 CFR Cullen/Frost Bankers, Inc. TX $17.7 9.05 % 2 WAL Western Alliance Bancorporation AZ 6.2 7.85 3 PRSP Prosperity Bancshares, Inc. TX 9.5 7.35 4 GBCI Glacier Bancorp, Inc. MT 6.3 7.25 5 FCNCA Fi

  35. Slide 35: Small Business Market Growth

    Small Business Market Growth Number of Businesses with 1 – 49 Employees Small Population Business Growth Growth 2000 - 2010 Markets 1 2000 2006 (%) (%) North Georgia 6,453 7,693 19 23 Atlanta MSA 70,893 126,200 78 32 Gainesville MSA 3,158 3,824 21 37 Coastal Georgia 9,441 10,210 8 11 Western North C

  36. Slide 36: Performing Classified Loans

    Performing Classified Loans (in millions) 4Q10 3Q10 2Q10 1Q10 4Q09 LOANS BY CATEGORY Commercial (Sec. by RE) $ 157 $ 157 $ 141 $ 152 $ 124 Commercial Construction 90 103 78 75 51 Commercial & Industrial 17 22 22 35 34 TOTAL COMMERCIAL 264 282 241 262 209 Consumer / Installment 3 4 4 4 4 Residential

  37. Slide 37: Business Mix Loans (at quarter-end)

    Business Mix Loans (at quarter‐end) 4Q10 vs. (in millions) 4Q10 3Q10 2Q10 1Q10 4Q09 4Q09 LOANS BY CATEGORY Commercial (sec. by R/E) $ 1,761 $ 1,781 $ 1,780 $ 1,765 $ 1,779 $ (18) Commercial Construction 297 310 342 357 363 (66) Commercial & Industrial 441 456 441 381 390 51 Total Commercial 2,499 2,

  38. Slide 38: Loans – Markets Served (at quarter-end)

    Loans – Markets Served (at quarter‐end) 4Q10 vs. (in millions) 4Q10 3Q10 2Q10 1Q10 4Q09 4Q09 LOANS BY MARKET Atlanta MSA $ 1,310 $ 1,365 $ 1,373 $ 1,404 $ 1,435 $ (125) Gainesville MSA 312 316 343 372 390 (78) North Georgia 1,689 1,755 1,808 1,814 1,884 (195) Western North Carolina 702 719 738 756 7

  39. Slide 39: Residential Construction – Total Company

    Residential Construction – Total Company 4Q10 vs. (in millions) 4Q10 3Q10 2Q10 1Q10 4Q09 4Q09 Land Loans Developing Land $ 174 $ 190 $ 214 $ 290 $ 332 $ (158) Raw Land 99 104 110 124 127 (28) Lot Loans 275 303 311 321 336 (61) Total 548 597 635 735 795 (247) Construction Loans Spec 97 109 125 153 17

  40. Slide 40: Residential Construction – Atlanta MSA

    Residential Construction – Atlanta MSA 4Q10 vs. (in millions) 4Q10 3Q10 2Q10 1Q10 4Q09 4Q09 Land Loans Developing Land $ 30 $ 34 $ 40 $ 66 $ 76 $ (46) Raw Land 23 27 32 43 43 (20) Lot Loans 32 45 39 47 52 (20) Total 85 106 111 156 171 (86) Construction Loans Spec 38 42 48 58 68 (30) Sold 10 11 10 14

  41. Slide 41: Residential Construction – North Georgia

    Residential Construction – North Georgia 4Q10 vs. (in millions) 4Q10 3Q10 2Q10 1Q10 4Q09 4Q09 Land Loans Developing Land $ 88 $ 98 $ 113 $ 148 $ 173 $ (85) Raw Land 40 42 45 43 45 (5) Lot Loans 159 168 182 189 197 (38) Total 287 308 340 380 415 (128) Construction Loans Spec 31 38 44 54 61 (30) Sold

  42. Slide 42: Business Mix Loans (at year-end)

    Business Mix Loans (at year‐end) (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 Residentia

  43. Slide 43: Loans – Markets Served (at year-end)

    Loans – Markets Served (at year‐end) (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 335 405 464 416 3

  44. Slide 44: Lending – Credit Summary

    Lending – Credit Summary (in millions) Legal lending limit $182 House lending limit 20 ƒProject lending limit 12 Top 25 relationships 441 ƒ9.6% of total loans Regional credit review – Standard underwriting 44

  45. Slide 45: NPAs by Loan Category, Market, and Activity

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

  46. Slide 46: NPAs by Loan Category, Market, and Activity (Cont'd.)

    NPAs by Loan Category, Market, and Activity (Cont’d.) Credit Quality (1) First Quarter 2010 Fourth Quarter 2009 Non-performing Foreclosed Total Non-performing Foreclosed Total (in thousands) Loans Properties NPAs Loans Properties NPAs NPAs BY CATEGORY Commercial (sec. by RE) $ 45,918 $ 21,597 $ 67,5

  47. Slide 47: Net Charge-offs by Category and Market

    Net Charge‐offs by Category and Market Credit Quality (1) Fourth Quarter 2010 (3) Third Quarter 2010 Second 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 (2) Charge-Offs Loans (2) Charge-Offs Loans (2) NE

  48. Slide 48: Net Charge-offs by Category and Market (Cont'd.)

    Net Charge‐offs by Category and Market (Cont’d.) Credit Quality (1) First Quarter 2010 Fourth Quarter 2009 Net Charge- Net Charge- Offs to Offs to Net Average Net Average (in thousands) Charge-Offs Loans (2) Charge-Offs Loans (2) NET CHARGE-OFFS BY CATEGORY Commercial (sec. by RE) $ 1,964 .45 % $ 3,

  49. Slide 49: Loans / Deposits – Liquidity

    Loans / Deposits – Liquidity (in millions) Variance 4Q 10 3Q 10 4Q 09 vs 3Q 10 vs 4Q 09 Loans $ 4,604 $ 4,760 $ 5,151 $ (156) $ (547) Core (DDA, MMDA, Savings) $ 2,636 $ 2,559 $ 2,345 $ 77 $ 291 Public Funds 725 623 646 102 79 CD's 2,431 2,463 2,878 (32) (447) Total Deposits (excl Brokered) $ 5,792

  50. Slide 50: Wholesale Borrowings - Liquidity

    Wholesale Borrowings ‐ Liquidity (in millions) Unused Variance Capacity 4Q10 3Q10 4Q09 vs 4Q 10 vs 4Q 09 Wholesale Borrowings Brokered Deposits $ 1,184 $ 677 $ 354 $ 759 $ 323 $ (82) FHLB 804 55 55 115 - (60) Fed Funds 50 - - - - - Other Wholesale 233 101 104 101 (3) - Total $ 2,271 $ 833 $ 513 $ 97

  51. Slide 51: Business Mix – Deposits (at quarter-end)

    Business Mix – Deposits (at quarter‐end) (in millions) 4Q10 vs. DEPOSITS BY CATEGORY 4Q10 3Q10 2Q10 1Q10 4Q09 4Q09 Demand & Now $ 1,573 $ 1,582 $ 1,561 $ 1,489 $ 1,465 $ 108 MMDA & Savings 1,063 977 930 908 880 183 Core Transaction Deposits 2,636 2,559 2,491 2,397 2,345 291 Time < $100,000 1,491 1,4

  52. Slide 52: Core Transaction Deposits

    Core Transaction Deposits Geographic Diversity Core Transactions / Total Deposits (%) 4Q 09 4Q 10 4Q10 4Q09 $ in millions Eastern Tennessee Atlanta MSA 50.3 % 42.5 % $125 $144 North Georgia 39.5 36.8 Coastal Georgia $128 Western NC 48.2 40.7 $152 Gainesville MSA 51.2 45.0 Gainesville MSA $148 Coasta

  53. Slide 53: NPA Sale in 2Q

    NPA Sale in 2Q 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 13.5

  54. Slide 54: NPA Sale – Fair Value Accounting

    NPA Sale – Fair Value Accounting 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 millions

  55. Slide 55: Southern Community Bank

    Southern Community Bank ($ in millions) Purchased – June 19, 2009 Nine years old – Enhances presence in southside metro Atlanta markets Four banking offices in southside metro Atlanta MSA – Fayetteville, Coweta and Henry counties 54 employees (Reduced by 17 after conversion in September 2009) $208 i

  56. Slide 56: Non-GAAP Reconciliation Tables

    Non‐GAAP Reconciliation Tables (in thousands except EPS) Operating Earnings to GAAP Earnings Reconciliation 4Q 10 3Q 10 4Q09 Core fee revenue reconciliation (1) Core fee revenue $ 11,760 $ 12,603 $ 11,748 Securities gains (losses), net - 2,491 2,015 Loss on prepayment of FHLB advances - (2,233) - Ga

  57. Slide 57: Non-GAAP Reconciliation Tables

    Non‐GAAP Reconciliation Tables Operating Earnings to GAAP Earnings Reconciliation 4Q 10 3Q 10 4Q 09 Net interest margin - pre credit reconciliation Net interest margin - pre credit 4.05 % 4.13 % 4.04 % Effect of interest reversals, lost interest, and carry costs of NPAs (.47) (.56) (.64) Net interes

  58. Slide 58: Analyst Coverage

    Analyst Coverage FBR Capital Raymond James & Assoc. (Market Perform ‐ Oct 28, 2010) (Market Perform ‐ Nov 1, 2010) FIG Partners Sandler O'Neill & Partners (Outperform ‐ Jan 3, 2011) (Hold ‐ Jan 3, 2011) Guggenheim Securities, LLC Stephens, Inc. (Neutral ‐ Jan 4, 2011) (Equal Weight ‐ Nov 1, 2010) Ke

  59. Slide 59: United Community Banks, Inc.

    United Community Banks, Inc. Investor Presentation Fourth Quarter 2010 Copyright 2010 United Community Banks, Inc. All rights reserved.

United Community Banks — Q4 2010 Earnings Presentation on 6ix