United Community Banks, Inc. Reports Second Quarter Results

Source: Nasdaq GlobeNewswire / 18 Jul 2023 16:30:01 America/New_York

GREENVILLE, S.C., July 18, 2023 (GLOBE NEWSWIRE) -- 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			Second Quarter 2023 - 2022 Change			2023			2022		YTD 2023 - 2022 Change
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,
	Second Quarter			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		Linked Quarter Change			Year over Year Change
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 Ended June 30,				Six Months Ended June 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 Analysis
For 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 Analysis
For 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 Harralson
Chief Financial Officer
(864) 240-6208
Jefferson_Harralson@ucbi.com

United Community Banks, Inc. Reports Second Quarter Results

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