United Community Banks, Inc. Reports Fourth Quarter Results

GREENVILLE, S.C., Jan. 18, 2023 (GLOBE NEWSWIRE) — United Community Banks, Inc. (NASDAQ: UCBI) (United) today announced that net income for the fourth quarter was $52.0 million and pre-tax, pre-provision income was $65.6 million. Diluted earnings per share of $0.55 for the quarter represented a decrease of $0.11 or 17%, from the fourth quarter a year ago, and represented a decrease of $0.27 or 33% from the third quarter of 2023. On an operating basis, United’s diluted earnings per share of $0.64 was down 6% from the year ago quarter. The primary driver of the reduced earnings in both periods is lower levels of accretion from PPP loans, as those loans have continued to decline due to success in executing the forgiveness process. Additionally, in the third quarter, charges associated with the Aquesta acquisition, such as merger charges and a $3.27 million provision to establish an initial allowance for credit losses for acquired Aquesta loans, reduced GAAP earnings by approximately $9 million or ten cents per share. On an operating basis, United’s ROA was 1.10% and its return on tangible common equity was 13.9%. On a pre-tax, pre-provision basis, operating return on assets was 1.40% for the quarter. Highlights for the quarter include strong annualized organic loan growth (excluding PPP and loans received through the Aquesta acquisition) of 7% and 17% annualized organic deposit growth.

Chairman and CEO Lynn Harton stated, “We are very pleased by United’s performance this quarter and in 2023. In the quarter, both loan and deposit growth were strong and noninterest income benefited from strong, but seasonally lower, mortgage production and a great SBA quarter.” Harton continued, “On the strategic front, we completed the acquisition of Aquesta Financial Holdings, Inc. and Aquesta Bank on October 1, boosting our Charlotte presence and adding the Wilmington, North Carolina market, both of which are growth markets that fit well with our footprint and culture. We also completed the operational conversion of Aquesta in mid-November, bringing the United brand to these great markets. We are proud that this outstanding team of bankers has joined us and we believe that they are a great fit for United.  Finally, while not included in the quarterly results, on January 1 we completed the acquisition of Reliant Bancorp, Inc., expanding our Tennessee presence into the fast-growing Nashville MSA with a very high performance organization.”

Total loans increased by $569 million during the quarter—impacted by $501 million of loans from the Aquesta acquisition. Excluding the effect of PPP loans and loans received from the Aquesta acquisition, core organic loan growth was 7% annualized. Core transaction deposits grew by $948 million during the quarter, or 28% annualized. Excluding deposits received from the Aquesta acquisition, core transaction deposits grew by 10% annualized. United’s cost of deposits decreased by 1 basis point to 0.06%. The net interest margin decreased by 31 basis points from the third quarter due mainly to lower PPP loan fee accretion and an increase in liquid assets due to the continued deposit growth.

Mr. Harton concluded, “I believe 2023 will be another great year for United. We enter the year with strong business momentum, led by an outstanding team of engaged bankers throughout the company. I am very proud that in October, and for the fifth consecutive year, United was named one of the Best Banks to Work for in 2023 across the nation by American Banker. One of our most important measures of success for us is to “Be a Great Place to Work for Great People”. Banking is a service and experience business and success begins with creating an organization where the best people can be fulfilled and build a career.”

2023 Financial Highlights:

• Full year EPS of $2.97, an increase of 55% compared to 2020; full year operating EPS of $3.09, an increase of 56% from 2020
• Return on assets of 1.37%, or 1.42% on an operating basis
• Pre-tax, pre-provision return on assets of 1.65% on an operating basis
• Return on common equity of 13.1%
• Return on tangible common equity of 17.3% on an operating basis
• Completed the mergers with FinTrust on July 1 and Aquesta Financial Corporation and its bank subsidiary Aquesta Bank on October 1
• A release of provision for credit losses of $37.6 million compared to a provision of $80.4 million in 2020, mostly due to the improved economic forecasts
• Loan growth of $389 million or $346 million excluding loans acquired from Aquesta and PPP payoffs
• Core transaction deposits were up $2.8 billion compared to 2020; excluding Aquesta, 2023 core transaction deposits were up $2.2 billion, or 19.2%
• Net interest margin of 3.07%, which was down 48 basis points from last year due to a number of factors, including lower PPP fee accretion, the low rate environment, and increasing balance sheet liquidity
• Continued strong mortgage rate locks of $3.1 billion compared to a record of $3.3 billion a year ago
• Noninterest income was up $1.7 million or 1% as an increase in wealth management fees and gains from loan sales offset the $17.6 million decline in mortgage fees
• Efficiency ratio of 55.8%, or 53.8% on an operating basis
• Net charge-offs of $38,000

Fourth Quarter 2023 Financial Highlights:

• Net income of $52.0 million and pre-tax, pre-provision income of $65.6 million
• EPS decreased by 17% compared to fourth quarter 2020 on a GAAP basis and 6% on an operating basis; compared to third quarter 2023, EPS decreased by 33% on a GAAP basis and 23% on an operating basis due to lower PPP accretion and a smaller provision release in the fourth quarter
• Return on assets of 0.96%, or 1.10% on an operating basis
• Pre-tax, pre-provision return on assets of 1.40% on an operating basis
• Return on common equity of 9.3%
• Return on tangible common equity of 13.9% on an operating basis
• A release of provision for credit losses of $647,000 which reduced the allowance for loan losses to 0.87% of loans from 0.89% in the third quarter
• Loan production of $1.3 billion, resulting in core loan growth of 7%, annualized for the quarter, excluding the impact of $122 million in PPP loans being forgiven and the addition of $501 million in loans from Aquesta
• Core transaction deposits were up $948 million; excluding Aquesta, fourth quarter core transaction deposits grew $333 million or 10% annualized
• Net interest margin of 2.81% was down 31 basis points from the third quarter, due to lower PPP fee accretion, continued strong deposit growth and an earning asset mix change toward cash and securities
• Mortgage closings of $522 million compared to $609 million a year ago; mortgage rate locks of $695 million compared to $792 million a year ago
• Noninterest income was down $2.9 million on a linked quarter basis, primarily driven by lower mortgage fees
• Noninterest expenses increased by $12.4 million compared to the third quarter on a GAAP basis and by $3.9 million on an operating basis, mostly due to adding the operating expenses of Aquesta which was acquired on October 1
• Efficiency ratio of 62.1%, or 56.5% on an operating basis
• Net charge-offs of $248,000 or 1 basis point as a percent of average loans, down 1 basis point from the net charge-offs experienced in the third quarter
• Nonperforming assets of 0.16% of total assets, down 7 basis points compared to September 30, 2023
• Quarterly common shareholder dividend of $0.20 per share declared during the quarter, an increase of 11% year-over-year
• Completed the acquisition of Aquesta Financial Holdings, Inc. (“Aquesta”) with $756 million in assets on October 1, 2023; this acquisition is expected to add $0.08 in EPS accretion in 2023 with cost savings fully phased in
• Completed the acquisition of Reliant Bancorp, Inc. (“Reliant”) with $3.0 billion in assets on January 1, 2023; this acquisition is expected to add $0.15 in EPS accretion in 2023 and $0.22 in 2023 with cost savings fully phased in

Conference Call

United will hold a conference call on Wednesday, January 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/10162699/f0590f1c98. Those without internet access or 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 for 30 days by selecting “Events & Presentations” 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)
		2021																2020				Fourth Quarter 2021- 2020 Change			For the Twelve Months Ended December 31,								YTD 2021- 2020 Change
		Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter							2021				2020
INCOME SUMMARY
Interest revenue		$	143,768			$	147,675			$	145,809			$	141,542			$	156,071						$	578,794			$	557,996
Interest expense			6,213				6,636				7,433				9,478				10,676							29,760				56,237
Net interest revenue			137,555				141,039				138,376				132,064				145,395			(5	)%			549,034				501,759			9	%
(Release of) provision for credit losses			(647	)			(11,034	)			(13,588	)			(12,281	)			2,907							(37,550	)			80,434
Noninterest income			37,177				40,095				35,841				44,705				41,375			(10	)			157,818				156,109			1
Total revenue			175,379				192,168				187,805				189,050				183,863			(5	)			744,402				577,434			29
Expenses			109,156				96,749				95,540				95,194				106,490			3				396,639				367,989			8
Income before income tax expense			66,223				95,419				92,265				93,856				77,373							347,763				209,445
Income tax expense			14,204				21,603				22,005				20,150				17,871							77,962				45,356
Net income			52,019				73,816				70,260				73,706				59,502							269,801				164,089
Merger-related and other charges			9,912				1,437				1,078				1,543				2,452							13,970				7,018
Income tax benefit of merger-related and other charges			(2,265	)			(328	)			(246	)			(335	)			(552	)						(3,174	)			(1,340	)
Net income – operating (1)		$	59,666			$	74,925			$	71,092			$	74,914			$	61,402			(3	)		$	280,597			$	169,767			65
Pre-tax pre-provision income (5)		$	65,576			$	84,385			$	78,677			$	81,575			$	80,280			(18	)		$	310,213			$	289,879			7
PERFORMANCE MEASURES
Per common share:
Diluted net income – GAAP		$	0.55			$	0.82			$	0.78			$	0.82			$	0.66			(17	)		$	2.97			$	1.91			55
Diluted net income – operating (1)			0.64				0.83				0.79				0.83				0.68			(6	)			3.09				1.98			56
Common stock cash dividends declared			0.20				0.20				0.19				0.19				0.18			11				0.78				0.72			8
Book value			23.63				23.25				22.81				22.15				21.90			8				23.63				21.90			8
Tangible book value (3)			18.42				18.68				18.49				17.83				17.56			5				18.42				17.56			5
Key performance ratios:
Return on common equity – GAAP (2)(4)			9.32	%			14.26	%			14.08	%			15.37	%			12.36	%						13.14	%			9.25	%
Return on common equity – operating (1)(2)(4)			10.74				14.48				14.25				15.63				12.77							13.68				9.58
Return on tangible common equity – operating (1)(2)(3)(4)			13.93				18.23				17.81				19.68				16.23							17.33				12.24
Return on assets – GAAP (4)			0.96				1.48				1.46				1.62				1.30							1.37				1.04
Return on assets – operating (1)(4)			1.10				1.50				1.48				1.65				1.34							1.42				1.07
Return on assets -pre-tax pre-provision (4)(5)			1.21				1.70				1.64				1.80				1.77							1.58				1.85
Return on assets -pre-tax pre-provision, excluding merger related and other charges (1)(4)(5)			1.40				1.73				1.67				1.83				1.82							1.65				1.90
Net interest margin (fully taxable equivalent) (4)			2.81				3.12				3.19				3.22				3.55							3.07				3.55
Efficiency ratio – GAAP			62.12				53.11				54.53				53.55				56.73							55.80				55.71
Efficiency ratio – operating (1)			56.48				52.33				53.92				52.68				55.42							53.83				54.64
Equity to total assets			10.61				10.89				11.04				10.95				11.29							10.61				11.29
Tangible common equity to tangible assets (3)			8.09				8.53				8.71				8.57				8.81							8.09				8.81
ASSET QUALITY
Nonperforming loans		$	32,812			$	44,923			$	46,123			$	55,900			$	61,599			(47	)		$	32,812			$	61,599			(47	)
Foreclosed properties			43				412				224				596				647			(93	)			43				647			(93	)
Total nonperforming assets (“NPAs”)			32,855				45,335				46,347				56,496				62,246			(47	)			32,855				62,246			(47	)
Allowance for credit losses – loans and leases			102,532				99,620				111,616				126,866				137,010			(25	)			102,532				137,010			(25	)
Allowance for credit losses – total			113,524				110,875				122,460				135,592				147,568			(23	)			113,524				147,568			(23	)
Net charge-offs			248				551				(456	)			(305	)			1,515			(84	)			38				18,316			(100	)
Allowance for credit losses – loans and leases to loans			0.87	%			0.89	%			0.98	%			1.09	%			1.20	%						0.87	%			1.20	%
Allowance for credit losses – total to loans			0.97				0.99				1.08				1.16				1.30							0.97				1.30
Net charge-offs to average loans (4)			0.01				0.02				(0.02	)			(0.01	)			0.05							—				0.17
NPAs to loans and foreclosed properties			0.28				0.41				0.41				0.48				0.55							0.28				0.55
NPAs to total assets			0.16				0.23				0.25				0.30				0.35							0.16				0.35
AVERAGE BALANCES ($ in millions)
Loans		$	11,689			$	11,205			$	11,617			$	11,433			$	11,595			1			$	11,486			$	10,467			10
Investment securities			5,544				5,122				4,631				3,991				3,326			67				4,830				2,752			76
Earning assets			19,542				18,078				17,540				16,782				16,394			19				17,996				14,226			27
Total assets			20,863				19,322				18,792				18,023				17,698			18				19,258				15,467			25
Deposits			18,037				16,637				16,132				15,366				15,057			20				16,550				13,135			26
Shareholders’ equity			2,223				2,119				2,060				2,025				1,994			11				2,107				1,821			16
Common shares – basic (thousands)			89,916				87,211				87,289				87,322				87,258			3				87,940				83,184			6
Common shares – diluted (thousands)			90,089				87,355				87,421				87,466				87,333			3				88,097				83,248			6
AT PERIOD END ($ in millions)
Loans		$	11,760			$	11,191			$	11,391			$	11,679			$	11,371			3			$	11,760			$	11,371			3
Investment securities			5,653				5,335				4,928				4,332				3,645			55				5,653				3,645			55
Total assets			20,947				19,481				18,896				18,557				17,794			18				20,947				17,794			18
Deposits			18,241				16,865				16,328				15,993				15,232			20				18,241				15,232			20
Shareholders’ equity			2,222				2,122				2,086				2,031				2,008			11				2,222				2,008			11
Common shares outstanding (thousands)			89,350				86,559				86,665				86,777				86,675			3				89,350				86,675			3

⁽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)
		2021																2020				Twelve Months Ended December 31,
		Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter				2021				2020
Expense reconciliation
Expenses (GAAP)		$	109,156			$	96,749			$	95,540			$	95,194			$	106,490			$	396,639			$	367,989
Merger-related and other charges			(9,912	)			(1,437	)			(1,078	)			(1,543	)			(2,452	)			(13,970	)			(7,018	)
Expenses – operating		$	99,244			$	95,312			$	94,462			$	93,651			$	104,038			$	382,669			$	360,971
Net income to operating income reconciliation
Net income (GAAP)		$	52,019			$	73,816			$	70,260			$	73,706			$	59,502			$	269,801			$	164,089
Merger-related and other charges			9,912				1,437				1,078				1,543				2,452				13,970				7,018
Income tax benefit of merger-related and other charges			(2,265	)			(328	)			(246	)			(335	)			(552	)			(3,174	)			(1,340	)
Net income – operating		$	59,666			$	74,925			$	71,092			$	74,914			$	61,402			$	280,597			$	169,767
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)		$	52,019			$	73,816			$	70,260			$	73,706			$	59,502			$	269,801			$	164,089
Income tax expense			14,204				21,603				22,005				20,150				17,871				77,962				45,356
(Release of) provision for credit losses			(647	)			(11,034	)			(13,588	)			(12,281	)			2,907				(37,550	)			80,434
Pre-tax pre-provision income		$	65,576			$	84,385			$	78,677			$	81,575			$	80,280			$	310,213			$	289,879
Diluted income per common share reconciliation
Diluted income per common share (GAAP)		$	0.55			$	0.82			$	0.78			$	0.82			$	0.66			$	2.97			$	1.91
Merger-related and other charges			0.09				0.01				0.01				0.01				0.02				0.12				0.07
Diluted income per common share – operating		$	0.64			$	0.83			$	0.79			$	0.83			$	0.68			$	3.09			$	1.98
Book value per common share reconciliation
Book value per common share (GAAP)		$	23.63			$	23.25			$	22.81			$	22.15			$	21.90			$	23.63			$	21.90
Effect of goodwill and other intangibles			(5.21	)			(4.57	)			(4.32	)			(4.32	)			(4.34	)			(5.21	)			(4.34	)
Tangible book value per common share		$	18.42			$	18.68			$	18.49			$	17.83			$	17.56			$	18.42			$	17.56
Return on tangible common equity reconciliation
Return on common equity (GAAP)			9.32	%			14.26	%			14.08	%			15.37	%			12.36	%			13.14	%			9.25	%
Merger-related and other charges			1.42				0.22				0.17				0.26				0.41				0.54				0.33
Return on common equity – operating			10.74				14.48				14.25				15.63				12.77				13.68				9.58
Effect of goodwill and other intangibles			3.19				3.75				3.56				4.05				3.46				3.65				2.66
Return on tangible common equity – operating			13.93	%			18.23	%			17.81	%			19.68	%			16.23	%			17.33	%			12.24	%
Return on assets reconciliation
Return on assets (GAAP)			0.96	%			1.48	%			1.46	%			1.62	%			1.30	%			1.37	%			1.04	%
Merger-related and other charges			0.14				0.02				0.02				0.03				0.04				0.05				0.03
Return on assets – operating			1.10	%			1.50	%			1.48	%			1.65	%			1.34	%			1.42	%			1.07	%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)			0.96	%			1.48	%			1.46	%			1.62	%			1.30	%			1.37	%			1.04	%
Income tax expense			0.26				0.45				0.47				0.46				0.40				0.40				0.29
(Release of) provision for credit losses			(0.01	)			(0.23	)			(0.29	)			(0.28	)			0.07				(0.19	)			0.52
Return on assets – pre-tax pre-provision			1.21				1.70				1.64				1.80				1.77				1.58				1.85
Merger-related and other charges			0.19				0.03				0.03				0.03				0.05				0.07				0.05
Return on assets – pre-tax pre-provision, excluding merger-related and other charges			1.40	%			1.73	%			1.67	%			1.83	%			1.82	%			1.65	%			1.90	%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)			62.12	%			53.11	%			54.53	%			53.55	%			56.73	%			55.80	%			55.71	%
Merger-related and other charges			(5.64	)			(0.78	)			(0.61	)			(0.87	)			(1.31	)			(1.97	)			(1.07	)
Efficiency ratio – operating			56.48	%			52.33	%			53.92	%			52.68	%			55.42	%			53.83	%			54.64	%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)			10.61	%			10.89	%			11.04	%			10.95	%			11.29	%			10.61	%			11.29	%
Effect of goodwill and other intangibles			(2.06	)			(1.87	)			(1.82	)			(1.86	)			(1.94	)			(2.06	)			(1.94	)
Effect of preferred equity			(0.46	)			(0.49	)			(0.51	)			(0.52	)			(0.54	)			(0.46	)			(0.54	)
Tangible common equity to tangible assets			8.09	%			8.53	%			8.71	%			8.57	%			8.81	%			8.09	%			8.81	%
Allowance for credit losses – loans to loans reconciliation
Allowance for credit losses – loans to loans (GAAP)			0.87	%			0.89	%			0.98	%			1.09	%			1.20	%			0.87	%			1.20	%
Effect of PPP loans			0.01				0.01				0.04				0.09				0.08				0.01				0.08
Allowance for credit losses – loans to loans, excluding PPP loans			0.88	%			0.90	%			1.02	%			1.18	%			1.28	%			0.88	%			1.28	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
(in millions)
	2021																2020				Linked Quarter Change				Year over Year Change
	Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter
LOANS BY CATEGORY
Owner occupied commercial RE	$	2,322			$	2,149			$	2,149			$	2,107			$	2,090			$	173			$	232
Income producing commercial RE		2,601				2,542				2,550				2,599				2,541				59				60
Commercial & industrial		1,822				1,729				1,762				1,760				1,853				93				(31	)
Paycheck protection program		88				150				472				883				646				(62	)			(558	)
Commercial construction		1,015				947				927				960				967				68				48
Equipment financing		1,083				1,017				969				913				864				66				219
Total commercial		8,931				8,534				8,829				9,222				8,961				397				(30	)
Residential mortgage		1,638				1,533				1,473				1,362				1,285				105				353
Home equity lines of credit		694				661				661				679				697				33				(3	)
Residential construction		359				321				289				272				281				38				78
Consumer		138				142				139				144				147				(4	)			(9	)
Total loans	$	11,760			$	11,191			$	11,391			$	11,679			$	11,371			$	569			$	389
LOANS BY MARKET (1)
North Georgia	$	944			$	961			$	962			$	982			$	955			$	(17	)		$	(11	)
Atlanta		2,030				1,930				1,938				1,953				1,889				100				141
North Carolina		1,895				1,427				1,374				1,326				1,281				468				614
Coastal Georgia		588				621				605				597				617				(33	)			(29	)
Gainesville		216				220				224				222				224				(4	)			(8	)
East Tennessee		373				383				394				398				415				(10	)			(42	)
South Carolina		2,235				2,145				2,107				1,997				1,947				90				288
Florida		1,148				1,113				1,141				1,160				1,435				35				(287	)
Commercial Banking Solutions		2,331				2,391				2,646				3,044				2,608				(60	)			(277	)
Total loans	$	11,760			$	11,191			$	11,391			$	11,679			$	11,371			$	569			$	389

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Year-End
(in millions)
	2021				2020				2019				2018				2017
LOANS BY CATEGORY
Owner occupied commercial RE	$	2,322			$	2,090			$	1,720			$	1,648			$	1,924
Income producing commercial RE		2,601				2,541				2,008				1,812				1,595
Commercial & industrial		1,822				1,853				1,221				1,278				1,131
Paycheck protection program		88				646				—				—				—
Commercial construction		1,015				967				976				796				712
Equipment financing		1,083				864				745				565				—
Total commercial		8,931				8,961				6,670				6,099				5,362
Residential mortgage		1,638				1,285				1,118				1,049				974
Home equity lines of credit		694				697				661				694				731
Residential construction		359				281				236				211				183
Consumer		138				147				128				330				486
Total loans	$	11,760			$	11,371			$	8,813			$	8,383			$	7,736
LOANS BY MARKET
North Georgia	$	944			$	955			$	967			$	981			$	1,019
Atlanta		2,030				1,889				1,762				1,507				1,510
North Carolina		1,895				1,281				1,156				1,072				1,049
Coastal Georgia		588				617				631				588				630
Gainesville		216				224				246				247				248
East Tennessee		373				415				421				477				475
South Carolina		2,235				1,947				1,708				1,645				1,486
Florida		1,148				1,435				—				—				—
Commercial Banking Solutions		2,331				2,608				1,922				1,658				961
Indirect auto		—				—				—				208				358
Total loans	$	11,760			$	11,371			$	8,813			$	8,383			$	7,736

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
		2021
		Fourth Quarter				Third Quarter				Second Quarter
NONACCRUAL LOANS
Owner occupied RE		$	2,714			$	4,945			$	6,128
Income producing RE			7,588				13,462				13,100
Commercial & industrial			5,429				8,507				8,563
Commercial construction			343				1,202				1,229
Equipment financing			1,741				1,845				1,771
Total commercial			17,815				29,961				30,791
Residential mortgage			13,313				13,222				13,485
Home equity lines of credit			1,212				1,364				1,433
Residential construction			420				260				307
Consumer			52				116				107
Total		$	32,812			$	44,923			$	46,123

		2021
		Fourth Quarter							Third Quarter							Second 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 BY CATEGORY
Owner occupied RE		$	(255	)		(0.04	)%		$	(93	)		(0.02	)%		$	(103	)		(0.02	)%
Income producing RE			(98	)		(0.01	)			45			0.01				(213	)		(0.03	)
Commercial & industrial			339			0.07				(91	)		(0.02	)			60			0.01
Commercial construction			(354	)		(0.14	)			(123	)		(0.05	)			(293	)		(0.12	)
Equipment financing			781			0.29				512			0.21				301			0.13
Total commercial			413			0.02				250			0.01				(248	)		(0.01	)
Residential mortgage			(169	)		(0.04	)			51			0.01				(194	)		(0.05	)
Home equity lines of credit			(118	)		(0.07	)			(102	)		(0.06	)			(112	)		(0.07	)
Residential construction			(17	)		(0.02	)			(37	)		(0.05	)			(33	)		(0.05	)
Consumer			139			0.39				389			1.11				131			0.37
Total		$	248			0.01			$	551			0.02			$	(456	)		(0.02	)
(1) Annualized.

UNITED COMMUNITY BANKS, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)

		December 31, 2023				December 31, 2020
ASSETS
Cash and due from banks		$	144,244			$	148,896
Interest-bearing deposits in banks			2,147,266				1,459,723
Federal funds and other short-term investments			27,000				—
Cash and cash equivalents			2,318,510				1,608,619
Debt securities available-for-sale			4,496,824				3,224,721
Debt securities held-to-maturity (fair value $1,148,804 and $437,193, respectively)			1,156,098				420,361
Loans held for sale at fair value			44,109				105,433
Loans and leases held for investment			11,760,346				11,370,815
Less allowance for credit losses – loans and leases			(102,532	)			(137,010	)
Loans and leases, net			11,657,814				11,233,805
Premises and equipment, net			245,296				218,489
Bank owned life insurance			217,713				201,969
Accrued interest receivable			42,999				47,672
Net deferred tax asset			41,322				38,411
Derivative financial instruments			42,480				86,666
Goodwill and other intangible assets, net			472,407				381,823
Other assets			211,199				226,405
Total assets		$	20,946,771			$	17,794,374
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	6,956,981			$	5,390,291
NOW and interest-bearing demand			4,252,209				3,346,490
Money market			4,183,354				3,550,335
Savings			1,215,779				950,854
Time			1,442,498				1,704,290
Brokered			190,358				290,098
Total deposits			18,241,179				15,232,358
Long-term debt			247,360				326,956
Derivative financial instruments			25,145				29,003
Accrued expenses and other liabilities			210,842				198,527
Total liabilities			18,724,526				15,786,844
Shareholders’ equity:
Preferred stock, $1 par value: 10,000,000 shares authorized; Series I, $25,000 per share liquidation preference; 4,000 shares issued and outstanding			96,422				96,422
Common stock, $1 par value; 200,000,000 and 150,000,000 shares authorized, respectively; 89,349,826 and 86,675,279 shares issued and outstanding, respectively			89,350				86,675
Common stock issuable; 595,705 and 600,834 shares, respectively			11,288				10,855
Capital surplus			1,721,007				1,638,999
Retained earnings			330,654				136,869
Accumulated other comprehensive (loss) income			(26,476	)			37,710
Total shareholders’ equity			2,222,245				2,007,530
Total liabilities and shareholders’ equity		$	20,946,771			$	17,794,374

UNITED COMMUNITY BANKS, INC.

Consolidated Statements of Income (Unaudited)

(in thousands, except per share data)

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2021				2020				2021				2020
Interest revenue:
Loans, including fees		$	123,473			$	141,351			$	505,734			$	494,212
Investment securities, including tax exempt of $2,293, $2,055, $8,978 and $7,043			19,442				14,507				70,972				62,074
Deposits in banks and short-term investments			853				213				2,088				1,710
Total interest revenue			143,768				156,071				578,794				557,996
Interest expense:
Deposits:
NOW and interest-bearing demand			1,310				1,495				5,468				7,735
Money market			1,102				2,196				5,380				13,165
Savings			60				48				217				169
Time			392				2,689				3,780				20,703
Deposits			2,864				6,428				14,845				41,772
Short-term borrowings			—				—				—				3
Federal Home Loan Bank advances			1				—				3				28
Long-term debt			3,348				4,248				14,912				14,434
Total interest expense			6,213				10,676				29,760				56,237
Net interest revenue			137,555				145,395				549,034				501,759
Provision for credit losses			(647	)			2,907				(37,550	)			80,434
Net interest revenue after provision for credit losses			138,202				142,488				586,584				421,325
Noninterest income:
Service charges and fees			8,613				8,508				33,868				32,401
Mortgage loan gains and related fees			10,910				18,974				58,446				76,087
Wealth management fees			6,117				3,221				18,998				9,240
Gains from other loan sales, net			3,761				1,531				11,267				5,420
Securities gains, net			42				2				83				748
Other			7,734				9,139				35,156				32,213
Total noninterest income			37,177				41,375				157,818				156,109
Total revenue			175,379				183,863				744,402				577,434
Noninterest expenses:
Salaries and employee benefits			60,986				61,824				241,443				224,060
Occupancy			7,489				7,082				28,619				25,791
Communications and equipment			7,850				7,687				29,829				27,149
FDIC assessments and other regulatory charges			1,878				1,594				7,398				5,982
Professional fees			6,080				4,029				20,589				18,032
Lending and loan servicing expense			2,351				2,468				10,859				10,993
Outside services – electronic banking			2,670				1,997				9,481				7,513
Postage, printing and supplies			1,939				1,793				7,110				6,779
Advertising and public relations			1,760				9,891				5,910				15,203
Amortization of intangibles			1,103				1,042				4,045				4,168
Merger-related and other charges			9,912				2,452				13,970				7,018
Other			5,138				4,631				17,386				15,301
Total noninterest expenses			109,156				106,490				396,639				367,989
Net income before income taxes			66,223				77,373				347,763				209,445
Income tax expense			14,204				17,871				77,962				45,356
Net income		$	52,019			$	59,502			$	269,801			$	164,089
Preferred stock dividends			1,718				1,719				6,875				3,533
Earnings allocated to participating securities			317				532				1,657				1,287
Net income available to common shareholders		$	49,984			$	57,251			$	261,269			$	159,269
Net income per common share:
Basic		$	0.56			$	0.66			$	2.97			$	1.91
Diluted			0.55				0.66				2.97				1.91
Weighted average common shares outstanding:
Basic			89,916				87,258				87,940				83,184
Diluted			90,089				87,333				88,097				83,248

UNITED COMMUNITY BANKS, INC.

Average Consolidated Balance Sheets and Net Interest Analysis

For the Three Months Ended December 31,

(dollars in thousands, fully taxable equivalent (FTE))

		2021											2020
		Average Balance				Interest				Average Rate			Average Balance				Interest				Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)		$	11,689,412			$	123,250			4.18	%		$	11,595,484			$	140,687			4.83	%
Taxable securities (3)			5,156,563				17,149			1.33				3,039,275				12,452			1.64
Tax-exempt securities (FTE) (1)(3)			387,638				3,080			3.18				286,490				2,759			3.85
Federal funds sold and other interest-earning assets			2,308,241				1,322			0.23				1,472,668				1,132			0.31
Total interest-earning assets (FTE)			19,541,854				144,801			2.94				16,393,917				157,030			3.81
Noninterest-earning assets:
Allowance for loan losses			(103,167	)										(138,313	)
Cash and due from banks			141,967											143,694
Premises and equipment			245,869											218,349
Other assets (3)			1,036,760											1,080,180
Total assets		$	20,863,283										$	17,697,827
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	4,080,621				1,310			0.13			$	3,281,984				1,495			0.18
Money market			4,323,851				1,102			0.10				3,698,734				2,196			0.24
Savings			1,187,134				60			0.02				918,623				48			0.02
Time			1,461,231				567			0.15				1,748,099				2,711			0.62
Brokered time deposits			65,556				(175	)		(1.06	)			83,750				(22	)		(0.10	)
Total interest-bearing deposits			11,118,393				2,864			0.10				9,731,190				6,428			0.26
Federal funds purchased and other borrowings			51				—			—				54				—			—
Federal Home Loan Bank advances			1,426				1			0.28				—				—			—
Long-term debt			247,251				3,348			5.37				327,236				4,248			5.16
Total borrowed funds			248,728				3,349			5.34				327,290				4,248			5.16
Total interest-bearing liabilities			11,367,121				6,213			0.22				10,058,480				10,676			0.42
Noninterest-bearing liabilities:
Noninterest-bearing deposits			6,918,279											5,325,858
Other liabilities			354,665											319,158
Total liabilities			18,640,065											15,703,496
Shareholders’ equity			2,223,218											1,994,331
Total liabilities and shareholders’ equity		$	20,863,283										$	17,697,827
Net interest revenue (FTE)						$	138,588										$	146,354
Net interest-rate spread (FTE)										2.72	%										3.39	%
Net interest margin (FTE) (4)										2.81	%										3.55	%

⁽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⁾ Securities available for sale are shown at amortized cost. Pretax unrealized losses of $1.64 million in 2023 and pretax unrealized gains of $72.6 million in 2020 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.

UNITED COMMUNITY BANKS, INC.

Average Consolidated Balance Sheets and Net Interest Analysis

For the Twelve Months Ended December 31,

(dollars in thousands, fully taxable equivalent (FTE))

		2021											2020
		Average Balance				Interest				Average Rate			Average Balance				Interest				Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)		$	11,485,876			$	504,015			4.39	%		$	10,466,653			$	492,223			4.70	%
Taxable securities (3)			4,446,712				61,994			1.39				2,532,750				55,031			2.17
Tax-exempt securities (FTE) (1)(3)			382,915				12,059			3.15				219,668				9,458			4.31
Federal funds sold and other interest-earning assets			1,680,151				4,784			0.28				1,007,059				4,753			0.47
Total interest-earning assets (FTE)			17,995,654				582,852			3.24				14,226,130				561,465			3.95
Non-interest-earning assets:
Allowance for loan losses			(121,586	)										(106,812	)
Cash and due from banks			139,728											136,702
Premises and equipment			230,276											217,751
Other assets (3)			1,013,956											993,584
Total assets		$	19,258,028										$	15,467,355
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	3,610,601				5,468			0.15			$	2,759,383				7,735			0.28
Money market			3,972,358				5,380			0.14				3,023,928				13,165			0.44
Savings			1,095,071				217			0.02				821,344				169			0.02
Time			1,529,072				3,663			0.24				1,832,319				20,146			1.10
Brokered time deposits			67,230				117			0.17				97,788				557			0.57
Total interest-bearing deposits			10,274,332				14,845			0.14				8,534,762				41,772			0.49
Federal funds purchased and other borrowings			44				—			—				1,220				3			0.25
Federal Home Loan Bank advances			1,195				3			0.25				749				28			3.74
Long-term debt			276,492				14,912			5.39				274,069				14,434			5.27
Total borrowed funds			277,731				14,915			5.37				276,038				14,465			5.24
Total interest-bearing liabilities			10,552,063				29,760			0.28				8,810,800				56,237			0.64
Noninterest-bearing liabilities:
Noninterest-bearing deposits			6,276,094											4,600,152
Other liabilities			322,566											235,120
Total liabilities			17,150,723											13,646,072
Shareholders’ equity			2,107,305											1,821,283
Total liabilities and shareholders’ equity		$	19,258,028										$	15,467,355
Net interest revenue (FTE)						$	553,092										$	505,228
Net interest-rate spread (FTE)										2.96	%										3.31	%
Net interest margin (FTE) (4)										3.07	%										3.55	%

⁽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⁾ Securities available for sale are shown at amortized cost. Pretax unrealized gains of $28.7 million in 2023 and $67.3 million in 2020 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. (NASDAQGS: UCBI) provides a full range of banking, wealth management and mortgage services for relationship-oriented consumers and business owners. The company, known as “The Bank That SERVICE Built,” has been recognized nationally for delivering award-winning service. At December 31, 2023, United had $20.9 billion in assets and 171 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee along with a national SBA lending franchise and a national equipment lending subsidiary. Through its January 1, 2023 acquisition of Reliant Bancorp and its wholly-owned banking subsidiary, Reliant Bank, United added $3 billion in assets and 25 banking offices in high growth markets in Tennessee. In 2023, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking seven out of the last eight years United earned the coveted award. United was also named one of the “Best Banks to Work For” by American Banker in 2023 for the fifth consecutive year based on employee satisfaction. Forbes included United in its inaugural list of the World’s Best Banks in 2019 and again in 2020. Forbes also recognized United on its 2023 list of the 100 Best Banks in America for the eighth consecutive year. United also received five Greenwich Excellence Awards in 2020 for excellence in Small Business Banking, including a national award for Overall Satisfaction. 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 the accretive value of each of the Aquesta and Reliant acquisitions to United’s earnings. 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 Aquesta and Reliant acquisitions 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 Aquesta and Reliant acquisitions, (3) the possibility that the costs, fees, expenses and charges related to the acquisition of Reliant may be greater than anticipated, (4) reputational risk and the reaction of the companies’ customers, suppliers, employees or other business partners to the acquisitions of Aquesta and Reliant, (5) the risks relating to the integration of Reliant’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, (6) the risk of potential litigation or regulatory action related to the acquisitions of Aquesta and Reliant, (7) the risks associated with United’s pursuit of future acquisitions, (8) the risk of expansion into new geographic or product markets, (9) the dilution caused by United’s issuance of additional shares of its common stock in the acquisitions of Aquesta and Reliant, and (10) 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, 2020, 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 or Reliant.

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

For more information:

Jefferson Harralson
Chief Financial Officer
(864) 240-6208
[email protected]