UCBI United Communty Banks Inc

United Community Banks, Inc. (NASDAQ: UCBI) (“United”) today announced net income for the second quarter of $63.3 million and pre-tax, pre-provision income of $104.3 million. Diluted earnings per share of $0.53 for the quarter represented an increase of $0.01 or 2% from the first quarter of 2023 and a decrease of $0.08 or 13%, from the second quarter of 2022. Industry-wide deposit price competition drove increased deposit costs, leading to an $11.2 million decrease in net interest revenue for the quarter. This was offset by a decline in quarterly noninterest expenses and an increase in noninterest income. On an operating basis, diluted earnings per share of $0.55 decreased $0.03 or 5% compared to last quarter mainly due to net interest margin compression despite lower noninterest expenses and noninterest income growth. Deposits grew by 4.5% annualized and loans grew at a 6.3% annualized rate during the quarter. Credit continues to perform well, with net charge offs of 20 basis points, up slightly from 17 basis points in the previous quarter.

For the quarter, United’s return on assets was 0.95%, or 1.00% on an operating basis. Return on common equity was 7.5% and return on tangible common equity was 11.4%. On a pre-tax, pre-provision basis, operating return on assets was 1.65% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.21%, up four basis points from the first quarter of 2023.

Chairman and CEO Lynn Harton stated, “We are pleased to continue to perform well despite a challenging interest rate environment. In the face of increased deposit pricing competition, we grew customer deposits and funded solid loan growth. This reflects the strength of our franchise and the loyalty of our customer base. Our loan growth was within our stated target range of mid to high single digits. Higher deposit costs due to mix and rate changes resulted in a lower net interest margin from the previous quarter, however, we still delivered strong returns and continued to strengthen our balance sheet.” Harton continued, “We also completed some important steps with our recent strategic expansions. We completed the operational conversion of Progress, which means they now officially operate under the United Community brand across their outstanding Alabama and Florida Panhandle markets. Just a few weeks ago, on July 1, we completed our merger with First Miami Bancorp and its bank subsidiary, First National Bank of South Miami. We continue to be excited and highly optimistic about what the future holds for these two great partnerships.”

United’s net interest margin decreased by 24 basis points to 3.37% from the first quarter. The average yield on United’s interest-earning assets was up 21 basis points to 4.97%, but its cost of deposits increased by 54 basis points to 1.64%, leading to the reduction in the net interest margin. Net charge-offs were $8.4 million or 0.20% of average loans during the quarter, up three basis points compared to the first quarter of 2023, and NPAs were 40 basis points relative to total assets, up 12 basis points from the previous quarter.

Mr. Harton concluded, “We continue to be pleased with the performance of our teams and our markets during this uncertain economic environment and interest rate driven headwinds. Our focus continues to be putting our clients and communities first and on prudently growing our business. We are very excited about our ability to strengthen our teams and recruit great bankers in the Southeast’s most attractive metropolitan markets and we look forward to continuing to build a great franchise.”  

Second Quarter 2023 Financial Highlights:

• Net income of $63.3 million and pre-tax, pre-provision income of $104.3 million
• EPS decreased by 13% compared to last year on a GAAP basis and 17% on an operating basis; compared to first quarter 2023, EPS increased 2% on a GAAP basis and decreased 5% on an operating basis
• Return on assets of 0.95%, or 1.00% on an operating basis
• Pre-tax, pre-provision return on assets of 1.59%, or 1.65% when excluding merger-related and other charges
• Return on common equity of 7.5%
• Return on tangible common equity of 11.4% on an operating basis
• Loan production of $1.5 billion, resulting in organic loan growth of 6.3% annualized for the quarter
• Customer deposits, excluding brokered deposits and public funds, were up $109 million or 2.3% annualized from last quarter
• Total deposits are estimated to be 77% insured or collateralized
• Net interest margin of 3.37% was down 24 basis points from the first quarter due to increased deposit costs
• Mortgage closings of $263 million compared to $498 million a year ago; mortgage rate locks of $305 million compared to $597 million a year ago
• Noninterest income was up $6.2 million on a linked quarter basis with increases across multiple categories including services charges and fees, mortgage loan gains and related fees, as well as a one-time gain from the sale of our corporate benefits business; additionally, there were no losses on the sale of securities in the second quarter compared to $1.6 million in the first quarter
• Noninterest expenses decreased by $7.4 million compared to the first quarter on a GAAP basis and by $2.4 million on an operating basis, mostly due to a decrease in salaries and employee benefits expenses and lower merger-related and other charges
• Efficiency ratio of 55.7%, or 54.2% on an operating basis
• Net charge-offs of $8.4 million, or 20 basis points as a percent of average loans, up three basis points from the net charge-offs level experienced in the first quarter
• Nonperforming assets of 0.40% of total assets, up 12 basis points compared to March 31, 2023
• Quarterly common shareholder dividend of $0.23 per share declared during the quarter, an increase of 10% year-over-year

Conference Call

United will hold a conference call on Wednesday, July 19, 2023, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. Participants can pre-register for the conference call by navigating to https://dpregister.com/sreg/10180523/f9d90a99ea. Those without internet access or who are unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and available for replay by selecting “Events and Presentations” under “News and Events” within the Investor Relations section of United’s website at www.ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
(in thousands, except per share data)
			2023								2022											Second Quarter 2023 - 2022 Change			For the Six Months Ended June 30,								YTD 2023 - 2022 Change
		Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter								2023				2022
INCOME SUMMARY
Interest revenue		$	295,775			$	279,487			$	240,831			$	213,887			$	187,378						$	575,262			$	358,437
Interest expense			95,489				68,017				30,943				14,113				8,475							163,506				15,742
Net interest revenue			200,286				211,470				209,888				199,774				178,903			12	%			411,756				342,695			20	%
Provision for credit losses			22,753				21,783				19,831				15,392				5,604							44,536				28,690
Noninterest income			36,387				30,209				33,354				31,922				33,458			9				66,596				72,431			(8	)
Total revenue			213,920				219,896				223,411				216,304				206,757			3				433,816				386,436			12
Noninterest expenses			132,407				139,805				117,329				112,755				120,790			10				272,212				240,065			13
Income before income tax expense			81,513				80,091				106,082				103,549				85,967			(5	)			161,604				146,371			10
Income tax expense			18,225				17,791				24,632				22,388				19,125			(5	)			36,016				31,510			14
Net income			63,288				62,300				81,450				81,161				66,842			(5	)			125,588				114,861			9
Merger-related and other charges			3,645				8,631				1,470				1,746				7,143							12,276				16,159
Income tax benefit of merger-related and other charges			(820	)			(1,955	)			(323	)			(385	)			(1,575	)						(2,775	)			(3,538	)
Net income - operating (1)		$	66,113			$	68,976			$	82,597			$	82,522			$	72,410			(9	)		$	135,089			$	127,482			6
Pre-tax pre-provision income (5)		$	104,266			$	101,874			$	125,913			$	118,941			$	91,571			14			$	206,140			$	175,061			18
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP		$	0.53			$	0.52			$	0.74			$	0.74			$	0.61			(13	)		$	1.05			$	1.04			1
Diluted net income - operating (1)			0.55				0.58				0.75				0.75				0.66			(17	)			1.13				1.16			(3	)
Cash dividends declared			0.23				0.23				0.22				0.22				0.21			10				0.46				0.42			10
Book value			25.98				25.76				24.38				23.78				23.96			8				25.98				23.96			8
Tangible book value (3)			17.83				17.59				17.13				16.52				16.68			7				17.83				16.68			7
Key performance ratios:
Return on common equity - GAAP (2)(4)			7.47	%			7.34	%			10.86	%			11.02	%			9.31	%						7.41	%			8.07	%
Return on common equity - operating (1)(2)(4)			7.82				8.15				11.01				11.21				10.10							7.98				8.98
Return on tangible common equity - operating (1)(2)(3)(4)			11.35				11.63				15.20				15.60				14.20							11.49				12.62
Return on assets - GAAP (4)			0.95				0.95				1.33				1.32				1.08							0.95				0.93
Return on assets - operating (1)(4)			1.00				1.06				1.35				1.34				1.17							1.03				1.03
Return on assets - pre-tax pre-provision (4)(5)			1.59				1.58				2.07				1.94				1.49							1.58				1.43
Return on assets - pre-tax pre-provision, excluding merger- related and other charges (1)(4)(5)			1.65				1.71				2.09				1.97				1.60							1.68				1.56
Net interest margin (fully taxable equivalent) (4)			3.37				3.61				3.76				3.57				3.19							3.49				3.08
Efficiency ratio - GAAP			55.71				57.20				47.95				48.41				56.58							56.46				57.00
Efficiency ratio - operating (1)			54.17				53.67				47.35				47.66				53.23							53.92				53.16
Equity to total assets			11.89				11.90				11.25				11.12				10.95							11.89				10.95
Tangible common equity to tangible assets (3)			8.21				8.17				7.88				7.70				7.59							8.21				7.59
ASSET QUALITY
Nonperforming assets ("NPAs")		$	103,737			$	73,403			$	44,281			$	35,511			$	34,428			201			$	103,737			$	34,428			201
Allowance for credit losses - loans			190,705				176,534				159,357				148,502				136,925			39				190,705				136,925			39
Allowance for credit losses - total			212,277				197,923				180,520				167,300				153,042			39				212,277				153,042			39
Net charge-offs (recoveries)			8,399				7,084				6,611				1,134				(1,069	)						15,483				1,909
Allowance for credit losses - loans to loans			1.10	%			1.03	%			1.04	%			1.00	%			0.94	%						1.10	%			0.94	%
Allowance for credit losses - total to loans			1.22				1.16				1.18				1.12				1.05							1.22				1.05
Net charge-offs to average loans (4)			0.20				0.17				0.17				0.03				(0.03	)						0.18				0.03
NPAs to total assets			0.40				0.28				0.18				0.15				0.14							0.40				0.14
AT PERIOD END ($ in millions)
Loans		$	17,395			$	17,125			$	15,335			$	14,882			$	14,541			20			$	17,395			$	14,541			20
Investment securities			5,914				5,915				6,228				6,539				6,683			(12	)			5,914				6,683			(12	)
Total assets			26,120				25,872				24,009				23,688				24,213			8				26,120				24,213			8
Deposits			22,252				22,005				19,877				20,321				20,873			7				22,252				20,873			7
Shareholders’ equity			3,106				3,078				2,701				2,635				2,651			17				3,106				2,651			17
Common shares outstanding (thousands)			115,266				115,152				106,223				106,163				106,034			9				115,266				106,034			9

(1) Excludes merger-related and other charges. (2) Net income less preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized. (5) Excludes income tax expense and provision for credit losses.

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
(in thousands, except per share data)
			2023								2022											For the Six Months Ended June 30,
		SecondQuarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter					2023				2022
Noninterest expense reconciliation
Noninterest expenses (GAAP)		$	132,407			$	139,805			$	117,329			$	112,755			$	120,790			$	272,212			$	240,065
Merger-related and other charges			(3,645	)			(8,631	)			(1,470	)			(1,746	)			(7,143	)			(12,276	)			(16,159	)
Noninterest expenses - operating		$	128,762			$	131,174			$	115,859			$	111,009			$	113,647			$	259,936			$	223,906
Net income reconciliation
Net income (GAAP)		$	63,288			$	62,300			$	81,450			$	81,161			$	66,842			$	125,588			$	114,861
Merger-related and other charges			3,645				8,631				1,470				1,746				7,143				12,276				16,159
Income tax benefit of merger-related and other charges			(820	)			(1,955	)			(323	)			(385	)			(1,575	)			(2,775	)			(3,538	)
Net income - operating		$	66,113			$	68,976			$	82,597			$	82,522			$	72,410			$	135,089			$	127,482
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)		$	63,288			$	62,300			$	81,450			$	81,161			$	66,842			$	125,588			$	114,861
Income tax expense			18,225				17,791				24,632				22,388				19,125				36,016				31,510
Provision for credit losses			22,753				21,783				19,831				15,392				5,604				44,536				28,690
Pre-tax pre-provision income		$	104,266			$	101,874			$	125,913			$	118,941			$	91,571			$	206,140			$	175,061
Diluted income per common share reconciliation
Diluted income per common share (GAAP)		$	0.53			$	0.52			$	0.74			$	0.74			$	0.61			$	1.05			$	1.04
Merger-related and other charges, net of tax			0.02				0.06				0.01				0.01				0.05				0.08				0.12
Diluted income per common share - operating		$	0.55			$	0.58			$	0.75			$	0.75			$	0.66			$	1.13			$	1.16
Book value per common share reconciliation
Book value per common share (GAAP)		$	25.98			$	25.76			$	24.38			$	23.78			$	23.96			$	25.98			$	23.96
Effect of goodwill and other intangibles			(8.15	)			(8.17	)			(7.25	)			(7.26	)			(7.28	)			(8.15	)			(7.28	)
Tangible book value per common share		$	17.83			$	17.59			$	17.13			$	16.52			$	16.68			$	17.83			$	16.68
Return on tangible common equity reconciliation
Return on common equity (GAAP)			7.47	%			7.34	%			10.86	%			11.02	%			9.31	%			7.41	%			8.07	%
Merger-related and other charges, net of tax			0.35				0.81				0.15				0.19				0.79				0.57				0.91
Return on common equity - operating			7.82				8.15				11.01				11.21				10.10				7.98				8.98
Effect of goodwill and other intangibles			3.53				3.48				4.19				4.39				4.10				3.51				3.64
Return on tangible common equity - operating			11.35	%			11.63	%			15.20	%			15.60	%			14.20	%			11.49	%			12.62	%
Return on assets reconciliation
Return on assets (GAAP)			0.95	%			0.95	%			1.33	%			1.32	%			1.08	%			0.95	%			0.93	%
Merger-related and other charges, net of tax			0.05				0.11				0.02				0.02				0.09				0.08				0.10
Return on assets - operating			1.00	%			1.06	%			1.35	%			1.34	%			1.17	%			1.03	%			1.03	%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)			0.95	%			0.95	%			1.33	%			1.32	%			1.08	%			0.95	%			0.93	%
Income tax expense			0.29				0.29				0.41				0.37				0.32				0.28				0.26
Provision for credit losses			0.35				0.34				0.33				0.25				0.09				0.35				0.24
Return on assets - pre-tax, pre-provision			1.59				1.58				2.07				1.94				1.49				1.58				1.43
Merger-related and other charges			0.06				0.13				0.02				0.03				0.11				0.10				0.13
Return on assets - pre-tax pre-provision, excluding merger-related and other charges			1.65	%			1.71	%			2.09	%			1.97	%			1.60	%			1.68	%			1.56	%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)			55.71	%			57.20	%			47.95	%			48.41	%			56.58	%			56.46	%			57.00	%
Merger-related and other charges			(1.54	)			(3.53	)			(0.60	)			(0.75	)			(3.35	)			(2.54	)			(3.84	)
Efficiency ratio - operating			54.17	%			53.67	%			47.35	%			47.66	%			53.23	%			53.92	%			53.16	%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)			11.89	%			11.90	%			11.25	%			11.12	%			10.95	%			11.89	%			10.95	%
Effect of goodwill and other intangibles			(3.31	)			(3.36	)			(2.97	)			(3.01	)			(2.96	)			(3.31	)			(2.96	)
Effect of preferred equity			(0.37	)			(0.37	)			(0.40	)			(0.41	)			(0.40	)			(0.37	)			(0.40	)
Tangible common equity to tangible assets			8.21	%			8.17	%			7.88	%			7.70	%			7.59	%			8.21	%			7.59	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
		2023								2022											Linked Quarter Change				Year over Year Change
(in millions)	Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter
LOANS BY CATEGORY
Owner occupied commercial RE	$	3,111			$	3,141			$	2,735			$	2,700			$	2,681			$	(30	)		$	430
Income producing commercial RE		3,670				3,611				3,262				3,299				3,273				59				397
Commercial & industrial		2,550				2,442				2,252				2,238				2,253				108				297
Commercial construction		1,739				1,806				1,598				1,514				1,514				(67	)			225
Equipment financing		1,510				1,447				1,374				1,281				1,211				63				299
Total commercial		12,580				12,447				11,221				11,032				10,932				133				1,648
Residential mortgage		2,905				2,756				2,355				2,149				1,997				149				908
Home equity lines of credit		927				930				850				832				801				(3	)			126
Residential construction		463				492				443				423				381				(29	)			82
Manufactured housing		340				326				317				301				287				14				53
Consumer		180				174				149				145				143				6				37
Total loans	$	17,395			$	17,125			$	15,335			$	14,882			$	14,541			$	270			$	2,854
LOANS BY MARKET
Georgia	$	4,281			$	4,177			$	4,051			$	4,003			$	3,960			$	104			$	321
South Carolina		2,750				2,672				2,587				2,516				2,377				78				373
North Carolina		2,355				2,257				2,186				2,117				2,006				98				349
Tennessee		2,387				2,458				2,507				2,536				2,621				(71	)			(234	)
Florida		1,708				1,745				1,308				1,259				1,235				(37	)			473
Alabama		1,062				1,029				—				—				—				33				1,062
Commercial Banking Solutions		2,852				2,787				2,696				2,451				2,342				65				510
Total loans	$	17,395			$	17,125			$	15,335			$	14,882			$	14,541			$	270			$	2,854

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
	2023									2022
	Second Quarter				First Quarter				Fourth Quarter
NONACCRUAL LOANS
Owner occupied RE	$	3,471			$	1,000			$	523
Income producing RE		32,542				10,603				3,885
Commercial & industrial		30,823				33,276				14,470
Commercial construction		115				475				133
Equipment financing		8,989				5,044				5,438
Total commercial		75,940				50,398				24,449
Residential mortgage		11,419				11,280				10,919
Home equity lines of credit		2,777				2,377				1,888
Residential construction		1,682				143				405
Manufactured housing		10,782				8,542				6,518
Consumer		19				55				53
Total nonaccrual loans		102,619				72,795				44,232
OREO and repossessed assets		1,118				608				49
Total NPAs	$	103,737			$	73,403			$	44,281

			2023														2022
		Second Quarter							First Quarter							Fourth Quarter
(in thousands)		Net Charge-Offs				Net Charge-Offs to Average Loans (1)			Net Charge-Offs				Net Charge-Offs to Average Loans (1)			Net Charge-Offs				Net Charge-Offs to Average Loans (1)
NET CHARGE-OFFS (RECOVERIES) BY CATEGORY
Owner occupied RE		$	(205	)		(0.03	)%		$	90			0.01	%		$	(130	)		(0.02	)%
Income producing RE			1,184			0.13				2,306			0.26				(113	)		(0.01	)
Commercial & industrial			2,746			0.44				225			0.04				4,577			0.81
Commercial construction			(105	)		(0.02	)			(37	)		(0.01	)			(77	)		(0.02	)
Equipment financing			2,537			0.69				3,375			0.93				1,658			0.50
Total commercial			6,157			0.20				5,959			0.20				5,915			0.21
Residential mortgage			(43	)		(0.01	)			(87	)		(0.01	)			(33	)		(0.01	)
Home equity lines of credit			(59	)		(0.03	)			33			0.01				(89	)		(0.04	)
Residential construction			623			0.53				(15	)		(0.01	)			(23	)		(0.02	)
Manufactured housing			620			0.75				628			0.76				246			0.32
Consumer			1,101			2.51				566			1.37				595			1.61
Total		$	8,399			0.20			$	7,084			0.17			$	6,611			0.17

(1) Annualized.

 

UNITED COMMUNITY BANKS, INC.Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)		June 30,2023				December 31,2022
ASSETS
Cash and due from banks		$	267,075			$	195,771
Interest-bearing deposits in banks			443,661				316,082
Federal funds and other short-term investments			—				135,000
Cash and cash equivalents			710,736				646,853
Debt securities available-for-sale			3,359,989				3,614,333
Debt securities held-to-maturity (fair value $2,132,396 and $2,191,073, respectively)			2,553,835				2,613,648
Loans held for sale			27,104				13,600
Loans and leases held for investment			17,394,845				15,334,627
Less allowance for credit losses - loans and leases			(190,705	)			(159,357	)
Loans and leases, net			17,204,140				15,175,270
Premises and equipment, net			353,317				298,456
Bank owned life insurance			342,966				299,297
Goodwill and other intangible assets, net			957,823				779,248
Other assets			610,287				568,179
Total assets		$	26,120,197			$	24,008,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	6,970,668			$	7,643,081
NOW and interest-bearing demand			5,076,371				4,350,878
Money market			5,036,665				4,510,680
Savings			1,261,138				1,456,337
Time			3,265,230				1,781,482
Brokered			641,916				134,049
Total deposits			22,251,988				19,876,507
Short-term borrowings			—				158,933
Federal Home Loan Bank advances			—				550,000
Long-term debt			324,754				324,663
Accrued expenses and other liabilities			437,864				398,107
Total liabilities			23,014,606				21,308,210
Shareholders' equity:
Preferred stock; $1 par value; 10,000,000 shares authorized; 3,989 and 4,000 shares Series I issued and outstanding, respectively, $25,000 per share liquidation preference			96,165				96,422
Common stock, $1 par value; 200,000,000 shares authorized,    115,265,912 and 106,222,758 shares issued and outstanding, respectively			115,266				106,223
Common stock issuable; 587,775 and 607,128 shares, respectively			12,228				12,307
Capital surplus			2,610,523				2,306,366
Retained earnings			577,316				508,844
Accumulated other comprehensive loss			(305,907	)			(329,488	)
Total shareholders' equity			3,105,591				2,700,674
Total liabilities and shareholders' equity		$	26,120,197			$	24,008,884

UNITED COMMUNITY BANKS, INC.Consolidated Statements of Income (Unaudited)

		Three Months EndedJune 30,								Six Months EndedJune 30,
(in thousands, except per share data)			2023				2022				2023				2022
Interest revenue:
Loans, including fees		$	250,484			$	155,266			$	486,915			$	302,007
Investment securities, including tax exempt of $1,731, $2,539, $3,841 and $5,194, respectively			41,060				30,425				81,046				54,090
Deposits in banks and short-term investments			4,231				1,687				7,301				2,340
Total interest revenue			295,775				187,378				575,262				358,437
Interest expense:
Deposits:
NOW and interest-bearing demand			27,597				2,163				45,196				3,632
Money market			33,480				1,515				58,546				2,527
Savings			702				87				1,240				159
Time			27,438				537				42,096				1,115
Deposits			89,217				4,302				147,078				7,433
Short-term borrowings			1,849				—				2,997				—
Federal Home Loan Bank advances			649				—				5,761				—
Long-term debt			3,774				4,173				7,670				8,309
Total interest expense			95,489				8,475				163,506				15,742
Net interest revenue			200,286				178,903				411,756				342,695
Provision for credit losses			22,753				5,604				44,536				28,690
Net interest revenue after provision for credit losses			177,533				173,299				367,220				314,005
Noninterest income:
Service charges and fees			9,777				10,005				18,476				19,075
Mortgage loan gains and other related fees			6,584				6,971				11,105				23,123
Wealth management fees			5,600				5,985				11,324				11,880
Gains from sales of other loans, net			2,305				3,800				4,221				6,998
Lending and loan servicing fees			2,978				1,586				6,994				4,572
Securities losses, net			—				46				(1,644	)			(3,688	)
Other			9,143				5,065				16,120				10,471
Total noninterest income			36,387				33,458				66,596				72,431
Total revenue			213,920				206,757				433,816				386,436
Noninterest expenses:
Salaries and employee benefits			76,250				69,233				154,948				140,239
Communications and equipment			10,744				9,675				20,752				18,923
Occupancy			10,194				8,865				20,083				18,243
Advertising and public relations			2,314				2,300				4,663				3,788
Postage, printing and supplies			2,382				1,999				4,919				4,118
Professional fees			6,592				5,402				12,664				9,849
Lending and loan servicing expense			2,530				3,047				4,849				5,413
Outside services - electronic banking			2,660				2,947				6,085				5,470
FDIC assessments and other regulatory charges			4,142				2,267				8,143				4,440
Amortization of intangibles			3,421				1,736				6,949				3,529
Merger-related and other charges			3,645				7,143				12,276				16,159
Other			7,533				6,176				15,881				9,894
Total noninterest expenses			132,407				120,790				272,212				240,065
Income before income taxes			81,513				85,967				161,604				146,371
Income tax expense			18,225				19,125				36,016				31,510
Net income			63,288				66,842				125,588				114,861
Preferred stock dividends			1,719				1,719				3,438				3,438
Earnings allocated to participating securities			342				362				680				596
Net income available to common shareholders		$	61,227			$	64,761			$	121,470			$	110,827
Net income per common share:
Basic		$	0.53			$	0.61			$	1.05			$	1.04
Diluted			0.53				0.61				1.05				1.04
Weighted average common shares outstanding:
Basic			115,774				106,610				115,614				106,580
Diluted			115,869				106,716				115,795				106,697

Average Consolidated Balance Sheets and Net Interest AnalysisFor the Three Months Ended June 30,

			2023												2022
(dollars in thousands, fully taxable equivalent (FTE))		Average Balance				Interest				Average Rate				Average Balance				Interest				Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)		$	17,166,129			$	250,472				5.85	%		$	14,382,324			$	155,184				4.33	%
Taxable securities (3)			5,956,193				39,329				2.64				6,436,992				27,886				1.73
Tax-exempt securities (FTE) (1)(3)			369,364				2,323				2.52				490,659				3,410				2.78
Federal funds sold and other interest-earning assets			461,022				4,658				4.05				1,302,935				2,066				0.64
Total interest-earning assets (FTE)			23,952,708				296,782				4.97				22,612,910				188,546				3.34
Noninterest-earning assets:
Allowance for credit losses			(181,769	)											(135,392	)
Cash and due from banks			251,691												203,291
Premises and equipment			345,771												286,417
Other assets (3)			1,500,827												1,286,107
Total assets		$	25,869,228											$	24,253,333
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	4,879,591				27,597				2.27			$	4,561,162				2,163				0.19
Money market			5,197,789				33,480				2.58				5,019,420				1,515				0.12
Savings			1,306,394				702				0.22				1,496,414				87				0.02
Time			2,976,482				22,471				3.03				1,671,632				491				0.12
Brokered time deposits			423,536				4,967				4.70				65,081				46				0.28
Total interest-bearing deposits			14,783,792				89,217				2.42				12,813,709				4,302				0.13
Federal funds purchased and other borrowings			145,233				1,849				5.11				66				—				—
Federal Home Loan Bank advances			50,989				649				5.11				—				—				—
Long-term debt			324,740				3,774				4.66				324,301				4,173				5.16
Total borrowed funds			520,962				6,272				4.83				324,367				4,173				5.16
Total interest-bearing liabilities			15,304,754				95,489				2.50				13,138,076				8,475				0.26
Noninterest-bearing liabilities:
Noninterest-bearing deposits			7,072,760												8,025,947
Other liabilities			385,324												397,890
Total liabilities			22,762,838												21,561,913
Shareholders' equity			3,106,390												2,691,420
Total liabilities and shareholders' equity		$	25,869,228											$	24,253,333
Net interest revenue (FTE)						$	201,293											$	180,071
Net interest-rate spread (FTE)											2.47	%											3.08	%
Net interest margin (FTE) (4)											3.37	%											3.19	%

(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.(2) Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.(3) Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $389 million in 2023 and pretax unrealized losses of $271 million in 2022 are included in other assets for purposes of this presentation.(4) Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets.

 

Average Consolidated Balance Sheets and Net Interest AnalysisFor the Six Months Ended June 30,

			2023												2022
(dollars in thousands, fully taxable equivalent (FTE))		Average Balance				Interest				Average Rate				Average Balance				Interest				Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)		$	17,032,493			$	487,002				5.77	%		$	14,308,585			$	301,821				4.25	%
Taxable securities (3)			6,007,471				77,205				2.57				6,142,723				48,896				1.59
Tax-exempt securities (FTE) (1)(3)			395,827				5,157				2.61				500,750				6,976				2.79
Federal funds sold and other interest-earning assets			466,642				8,010				3.46				1,604,995				3,086				0.39
Total interest-earning assets (FTE)			23,902,433				577,374				4.87				22,557,053				360,779				3.22
Non-interest-earning assets:
Allowance for loan losses			(174,716	)											(124,384	)
Cash and due from banks			261,397												184,751
Premises and equipment			337,499												281,842
Other assets (3)			1,492,926												1,329,359
Total assets		$	25,819,539											$	24,228,621
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	4,690,798				45,196				1.94			$	4,613,838				3,632				0.16
Money market			5,210,457				58,546				2.27				5,064,866				2,527				0.10
Savings			1,361,357				1,240				0.18				1,466,812				159				0.02
Time			2,664,269				34,784				2.63				1,715,022				1,025				0.12
Brokered time deposits			316,470				7,312				4.66				72,048				90				0.25
Total interest-bearing deposits			14,243,351				147,078				2.08				12,932,586				7,433				0.12
Federal funds purchased and other borrowings			126,697				2,997				4.77				337				—				—
Federal Home Loan Bank advances			250,912				5,761				4.63				—				—				—
Long-term debt			324,721				7,670				4.76				321,663				8,309				5.21
Total borrowed funds			702,330				16,428				4.72				322,000				8,309				5.20
Total interest-bearing liabilities			14,945,681				163,506				2.21				13,254,586				15,742				0.24
Noninterest-bearing liabilities:
Noninterest-bearing deposits			7,383,575												7,847,284
Other liabilities			371,422												388,162
Total liabilities			22,700,678												21,490,032
Shareholders' equity			3,118,861												2,738,589
Total liabilities and shareholders' equity		$	25,819,539											$	24,228,621
Net interest revenue (FTE)						$	413,868											$	345,037
Net interest-rate spread (FTE)											2.66	%											2.98	%
Net interest margin (FTE) (4)											3.49	%											3.08	%

(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.(2) Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.(3) Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $404 million in 2023 and pretax unrealized losses of $175 million in 2022, respectively, are included in other assets for purposes of this presentation.(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.

United Community Banks, Inc. (NASDAQ: UCBI) is a top 100 U.S. financial institution with $26.1 billion in assets as of June 30, 2023, and through its subsidiaries, provides a full range of banking, wealth management and mortgage services. United Community Banks, Inc. is the financial holding company for United Community Bank (“United Community”) which has 212 offices across Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee, as well as a national SBA lending franchise and a national equipment financing subsidiary. United Community is committed to improving the financial health and well-being of its customers and ultimately the communities it serves. Among other awards, United Community is a nine-time winner of the J.D. Power award that ranked the bank #1 in customer satisfaction with consumer banking in the Southeast and was recognized in 2023 by Forbes as one of the World’s Best Banks and one of America’s Best Banks. The bank is also a multi-award recipient of the Greenwich Excellence Awards, including the 2022 awards for Small Business Banking-Likelihood to Recommend (South) and Overall Satisfaction (South), and was named one of the "Best Banks to Work For" by American Banker in 2022 for the sixth consecutive year. Additional information about United can be found at www.ucbi.com.

Non-GAAP Financial Measures

This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as “operating net income,” “pre-tax, pre-provision income,” “operating net income per diluted common share,” “operating earnings per share,” “tangible book value per common share,” “operating return on common equity,” “operating return on tangible common equity,” “operating return on assets,” “return on assets - pre-tax, pre-provision, excluding merger-related and other charges,” “return on assets - pre-tax, pre-provision,” “operating efficiency ratio,” and “tangible common equity to tangible assets.” These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United’s underlying performance trends. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.

Caution About Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In general, forward-looking statements usually may be identified through use of words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, and include statements related to potential benefits of the First Miami merger, and the strength of our pipelines and their ability to support business growth across our markets and our belief that our high-quality balance sheet and business mix will support strong performance regardless of future economic conditions. Forward-looking statements are not historical facts and represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but are not limited to (1) the risk that the cost savings and any revenue synergies from the merger may not be realized or take longer than anticipated to be realized, (2) disruption of customer, supplier, employee or other business partner relationships as a result of the merger, (3) reputational risk and the reaction of each of the companies’ customers, suppliers, employees or other business partners to the merger, (4) the risks relating to the integration of First Miami’s operations into the operations of United, including the risk that such integration will be materially delayed or will be more costly or difficult than expected, (5) the risks associated with United’s pursuit of future acquisitions, (6) the risk associated with expansion into new geographic or product markets, (7) the dilution caused by United’s issuance of additional shares of its common stock in the merger, and (8) general competitive, economic, political and market conditions. Further information regarding additional factors which could affect the forward-looking statements contained in this press release can be found in the cautionary language included under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in United’s Annual Report on Form 10-K for the year ended December 31, 2022, and other documents subsequently filed by United with the United States Securities and Exchange Commission (“SEC”).

Many of these factors are beyond United’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this communication, and United undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for United to predict their occurrence or how they will affect United.

United qualifies all forward-looking statements by these cautionary statements.

For more information:

Jefferson HarralsonChief Financial Officer(864) 240-6208Jefferson_Harralson@ucbi.com