Diluted earnings per share up 11 percent, to 39 cents, from second quarter 2016 Excluding merger-related and other non-operating charges, diluted operating EPS up 14 percent, to 41 cents
  • Net interest revenue of $85.1 million, up $10.2 million or 14 percent from year ago
  • Net interest margin of 3.47 percent, up two basis points from first quarter and up 12 basis points from year ago
  • Return on assets of 1.06 percent, or 1.10 percent excluding merger-related and other charges
  • Efficiency ratio of 57.9 percent, or 56.2 percent excluding merger-related and other charges
  • Announced two acquisitions during the quarter

BLAIRSVILLE, Ga., July 26, 2017 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ:UCBI) ("United") today announced strong second quarter results with disciplined expense management, sound credit quality and meaningful margin expansion.  Net income was $28.3 million, or 39 cents per diluted share, compared with $25.3 million, or 35 cents per diluted share, for the second quarter of 2016.

On an operating basis, net income rose to $29.4 million for the second quarter of 2017 compared with $26.0 million for the second quarter of 2016.  Second quarter 2017 operating net income excludes merger-related and executive retirement charges totaling $1.16 million, net of the associated income tax benefit.  Second quarter 2016 operating net income excludes $731,000 in merger-related charges, net of the associated income tax benefit.  On a per diluted share basis, operating net income was 41 cents for the second quarter of 2017 compared with 36 cents for the second quarter of 2016.

At June 30, 2017, preliminary regulatory capital ratios were as follows. Tier 1 Risk-Based of 11.9 percent; Total Risk-Based of 12.7 percent; Common Equity Tier 1 Risk-Based of 11.9 percent, and Tier 1 Leverage of 9.0 percent.

"From both financial and strategic perspectives, I am very pleased with our second quarter performance," said Jimmy Tallent, chairman and chief executive officer.  "It marks our twelfth consecutive quarter of double-digit growth in diluted operating earnings per share, which is a key driver of stock price appreciation.  We accomplished this by growing loans and deposits in a disciplined manner that slightly widened our net interest margin and maintained our outstanding credit quality.

"Excluding merger-related and other non-operating charges, our second quarter operating efficiency ratio improved to 56.2 percent, surpassing the fourth quarter record which was the best in more than a decade," Tallent continued.  "Including those charges, the efficiency ratio was 57.9 percent.  From a financial perspective, our bankers delivered solid performance by every measure."

Tallent said the second quarter was also remarkable from a strategic perspective.  "We announced two strategic partnerships during the quarter that will expand and enhance our footprint in dynamic, high-growth markets," he said.  "On April 20, we announced the Horry County State Bank acquisition which will close in the third quarter and significantly enhance our presence in the Myrtle Beach area along the South Carolina coast.  The acquisition of Horry County State Bank is part of our larger, ongoing expansion strategy in the high-growth South Carolina coastal markets.

"On June 27, we announced our planned acquisition of Four Oaks Bank & Trust Company, which should close in the fourth quarter and will extend our footprint farther east in North Carolina to the fast-growing Raleigh MSA.  We have long sought to enter this market and are delighted to find an exceptional partner in Four Oaks.  I could not be more pleased with these two partnerships and look forward to them becoming part of United.

"Second quarter loan production was $667 million," Tallent added.  "Linked-quarter loan growth was $76 million, or four percent annualized.  Our community banks originated $461 million in loans, while our recently renamed Commercial Banking Solutions group produced $166 million."

Commercial Banking Solutions, previously named Specialized Lending, encompasses commercial lending for income property, middle market, SBA, asset-based, senior care, builder finance and recently announced renewable energy.

Second quarter net interest revenue totaled $85.1 million, up $10.2 million from the second quarter of 2016 and up $1.6 million from the first quarter.  The increases from both periods reflect growth in loans and deposits and net interest margin expansions of 12 basis points from a year ago and two basis points from the first quarter, mostly driven by rising short-term interest rates.  The increase in net interest revenue from a year ago also reflects the acquisition of Tidelands Bank which was completed on July 1, 2016.  Tidelands Bank results are included in United's financial results from the acquisition date.

The second quarter provision for credit losses was $800,000, equal to the first quarter provision.  This compares with a provision recovery of $300,000 in the second quarter of 2016.  Second quarter net charge-offs totaled $1.6 million, compared with $1.7 million in both the second quarter of 2016 and the first quarter of 2017.  Contributing to the low level of net charge-offs were continued strong recoveries of previously charged-off loans.  Nonperforming assets were .24 percent of total assets at June 30, 2017, compared with .28 percent at June 30, 2016 and .23 percent at March 31, 2017.

"Our second quarter provision for loan losses reflects continued strong, steady credit quality and a low level of net charge-offs," Tallent commented.  "Our credit quality indicators remain favorable and our outlook is for that to continue.  We also expect our provision levels to gradually increase during the year due to loan growth, while our allowance and the related ratio to total loans will decline slightly."

Second quarter fee revenue totaled $23.7 million, up $188,000 from a year ago and up $1.61 million from the first quarter.  The increase from the first quarter was mostly in mortgage fees, gains from sales of SBA loans and other fee revenue.  The increase from a year ago was mostly in mortgage fees.  Mortgage fees were up $363,000 from a year ago, and $387,000 from the first quarter.  In the second quarter we closed 888 loans totaling $204 million compared with 697 loans totaling $151 million in the first quarter and 853 loans totaling $182 million in the second quarter of 2016.  Gains from sales of SBA loans were down $175,000 from a year ago but were up $667,000 from the first quarter following a seasonal first quarter decline.  Other fee revenue was up $718,000 from the first quarter mostly due to higher customer derivative fees and higher earnings from bank-owned life insurance assets.

Operating expenses were $63.2 million for the second quarter, compared with $58.1 million for the second quarter of 2016 and $62.8 million for the first quarter.  Included in operating expenses are merger-related and executive retirement charges of $1.83 million in the second quarter, merger-related charges of $1.18 million in the second quarter of 2016, and merger-related and branch closure charges of $2.05 million in the first quarter of 2017.  Excluding these charges, second quarter operating expenses were $61.4 million compared with $56.9 million a year ago and $60.8 million for the first quarter.  The $627,000 increase from the first quarter, though partially offset by lower professional fees, was mostly due to an increase in salaries and employee benefit costs following annual staff compensation increases that went into effect on April 1.

The overall increase in other expenses resulted from higher travel-related costs, internet banking service provider charges, and higher lending support costs.  The decrease in professional fees was due to elevated costs in the first quarter to assist with model development for United's stress testing project.  The increase in operating expenses from a year ago reflects additional expense following the acquisition of Tidelands Bank on July 1, 2016.

Income tax expense for the second quarter totaled $16.5 million compared with $15.4 million a year ago and $18.5 million in the first quarter. The first quarter was elevated due to a $3.4 million non-cash charge to release income taxes on hedge instruments that were held in other comprehensive income during the time in which United had a full valuation allowance on our deferred tax asset.

Tallent concluded, "Our bankers continue to do what they do best and that is take care of their customers by delivering the highest level of courteous service.  Their passion and commitment drive our performance and are reflected in our second quarter financial results.  I look forward to the opportunities that lie ahead and am excited about completing the acquisitions of Horry County State Bank and Four Oaks Bank & Trust Company.  These two exceptional banks are outstanding strategic partners in key growth markets and share our passion for banking and our commitment to customer service.  I look forward to welcoming them aboard and for the opportunities that these acquisitions create to recruit other talented bankers from within these markets into the United family."

Conference Call

United will hold a conference call today, Wednesday, July 26, 2017, at 11 a.m. ET to discuss the contents of this earnings release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 47369140.  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.

About United Community Banks, Inc.United Community Banks, Inc. (NASDAQ:UCBI) is a bank holding company based in Blairsville, Georgia with $10.8 billion in assets.  The company's banking subsidiary, United Community Bank, is one of the southeast region's largest full-service banks, operating 134 offices in Georgia, North Carolina, South Carolina and Tennessee.  The bank specializes in personalized community banking services for individuals, small businesses and corporations.  Services include a full range of consumer and commercial banking products including mortgage, advisory, and treasury management.  Respected national research firms consistently recognize United Community Bank for outstanding customer service. In 2014, 2015 and 2016, J.D. Power ranked United Community Bank first in customer satisfaction in the Southeast.  In 2017, for the fourth consecutive year, Forbes magazine included United on its list of the 100 Best Banks in America.  Additional information about the company and the bank's full range of products and services can be found at www.ucbi.com.

Non-GAAP Financial MeasuresThis News 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," "operating net income per diluted share," "operating net income available to common shareholders," "operating diluted income per common share," "tangible book value per common share," "operating return on common equity," "operating return on tangible common equity," "operating return on assets," "operating dividend payout ratio," "operating efficiency ratio," "average tangible equity to average assets," "average tangible common equity to average assets" and "tangible common equity to risk-weighted 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.

Safe HarborThis News Release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment.  These statements are based on current expectations and are provided to assist in the understanding of future financial performance.  Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements.  For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United's filings with the Securities and Exchange Commission, including our 2016 Annual Report on Form 10-K under the sections entitled "Forward-Looking Statements" and "Risk Factors."  Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

 

                             
UNITED COMMUNITY BANKS, INC.                            
Financial Highlights                            
Selected Financial Information                            
                             
                      Second    
    2017       2016 Quarter    
    Second       First       Fourth       Third       Second     2017-2016    
(in thousands, except per share data) Quarter   Quarter   Quarter   Quarter   Quarter     Change    
INCOME SUMMARY                            
Interest revenue $ 93,166     $ 90,958     $ 87,778     $ 85,439     $ 81,082            
Interest expense   8,018       7,404       6,853       6,450       6,164            
Net interest revenue   85,148       83,554       80,925       78,989       74,918     14   %    
Provision for credit losses   800       800       -       (300 )     (300 )          
Fee revenue   23,685       22,074       25,233       26,361       23,497     1        
Total revenue   108,033       104,828       106,158       105,650       98,715     9        
Expenses   63,229       62,826       61,321       64,023       58,060     9        
Income before income tax expense   44,804       42,002       44,837       41,627       40,655     10        
Income tax expense   16,537       18,478       17,616       15,753       15,389     7        
Net income   28,267       23,524       27,221       25,874       25,266     12        
Preferred dividends   -       -       -       -       -            
Net income available to common shareholders $     28,267     $     23,524     $     27,221     $     25,874     $     25,266     12        
Merger-related and other charges   1,830       2,054       1,141       3,152       1,176            
Income tax benefit of merger-related and other charges   (675 )     (758 )     (432 )     (1,193 )     (445 )          
Impairment of deferred tax asset on canceled non-qualified stock options   -       -       976       -       -            
Release of disproportionate tax effects lodged in OCI   -       3,400       -       -       -            
Net income available to common  shareholders - operating (1) $     29,422     $     28,220     $     28,906     $     27,833     $     25,997     13        
                             
PERFORMANCE MEASURES                            
Per common share:                            
Diluted net income - GAAP  .39     $   .33     $   .38     $   .36     $   .35     11        
Diluted net income - operating  (1)   .41       .39       .40       .39       .36     14        
Cash dividends declared   .09       .09       .08       .08       .07            
Book value   15.83       15.40       15.06       15.12       14.80     7        
Tangible book value (3)   13.74       13.30       12.95       13.00       12.84     7        
                             
Key performance ratios:                            
Return on common equity - GAAP (2)(4)   9.98   %   8.54   %   9.89   %   9.61   %   9.54   %      
Return on common equity - operating (1)(2)(4)   10.39       10.25       10.51       10.34       9.81            
Return on tangible common equity - operating (1)(2)(3)(4)   12.19       12.10       12.47       12.45       11.56            
Return on assets - GAAP (4)   1.06       .89       1.03       1.00       1.04            
Return on assets - operating (1)(4)   1.10       1.07       1.10       1.08       1.07            
Dividend payout ratio - GAAP   23.08       27.27       21.05       22.22       20.00            
Dividend payout ratio - operating (1)   21.95       23.08       20.00       20.51       19.44            
Net interest margin (fully taxable equivalent) (4)   3.47       3.45       3.34       3.34       3.35            
Efficiency ratio - GAAP   57.89       59.29       57.65       60.78       59.02            
Efficiency ratio - operating  (1)   56.21       57.35       56.58       57.79       57.82            
Average equity to average assets   10.49       10.24       10.35       10.38       10.72            
Average tangible equity to average assets (3)   9.23       8.96       9.04       8.98       9.43            
Average tangible common equity to average assets (3)   9.23       8.96       9.04       8.98       9.43            
Tangible common equity to risk-weighted assets (3)(5)   12.44       12.07       11.84       12.22       12.87            
                             
ASSET QUALITY                            
Nonperforming loans $ 23,095     $ 19,812     $ 21,539     $ 21,572     $ 21,348     8        
Foreclosed properties   2,739       5,060       7,949       9,187       6,176     (56 )      
Total nonperforming assets (NPAs)   25,834       24,872       29,488       30,759       27,524     (6 )      
Allowance for loan losses   59,500       60,543       61,422       62,961       64,253     (7 )      
Net charge-offs   1,623       1,679       1,539       1,359       1,730     (6 )      
Allowance for loan losses to loans   .85   %   .87   %   .89   %   .94   %   1.02   %        
Net charge-offs to average loans (4)   .09       .10       .09       .08       .11            
NPAs to loans and foreclosed properties   .37       .36       .43       .46       .44            
NPAs to total assets   .24       .23       .28       .30       .28            
                             
AVERAGE BALANCES ($ in millions)                            
Loans $ 6,980     $ 6,904     $ 6,814     $ 6,675     $ 6,151     13        
Investment securities   2,775       2,822       2,690       2,610       2,747     1        
Earning assets   9,899       9,872       9,665       9,443       9,037     10        
Total assets   10,704       10,677       10,484       10,281       9,809     9        
Deposits   8,659       8,592       8,552       8,307       7,897     10        
Shareholders' equity   1,123       1,093       1,085       1,067       1,051     7        
Common shares - basic (thousands)   71,810       71,700       71,641       71,556       72,202     (1 )      
Common shares - diluted (thousands)   71,820       71,708       71,648       71,561       72,207     (1 )      
                             
AT PERIOD END ($ in millions)                            
Loans $ 7,041     $ 6,965     $ 6,921     $ 6,725     $ 6,287     12        
Investment securities   2,787       2,767       2,762       2,560       2,677     4        
Total assets   10,837       10,732       10,709       10,298       9,928     9        
Deposits   8,736       8,752       8,638       8,442       7,857     11        
Shareholders' equity   1,133       1,102       1,076       1,079       1,060     7        
Common shares outstanding (thousands)   70,981       70,973       70,899       70,861       71,122     -        
                             
(1)  Excludes merger-related and other charges, a first quarter 2017 release of disproportionate tax effects lodged in OCI and a fourth quarter 2016 deferred tax asset impairment charge related to cancelled non-qualified stock options.  (2)  Net income available to common shareholders, which is net of 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)  Second quarter 2017 ratio is preliminary.  
                             

 
UNITED COMMUNITY BANKS, INC.              
Financial Highlights              
Selected Financial Information              
               
  For the Six      
  Months Ended   YTD  
  June 30,   2017-2016  
(in thousands, except per share data)   2017       2016       Change  
INCOME SUMMARY              
Interest revenue $ 184,124     $ 161,803          
Interest expense   15,422       11,933          
Net interest revenue   168,702       149,870     13   %  
Provision for credit losses   1,600       (500 )        
Fee revenue   45,759       42,103     9      
Total revenue   212,861       192,473     11      
Expenses   126,055       115,945     9      
Income before income tax expense   86,806       76,528     13      
Income tax expense   35,015       28,967     21      
Net income   51,791       47,561     9      
Preferred dividends   -       21          
Net income available to common shareholders $     51,791     $     47,540       9      
Merger-related and other charges   3,884       3,829          
Income tax benefit of merger-related and other charges   (1,433 )     (1,449 )        
Impairment of deferred tax asset on canceled   non-qualified stock options   -       -          
Release of disproportionate tax effects lodged in OCI     3,400         -           
Net income available to common   shareholders - operating (1) $     57,642     $     49,920       15      
               
PERFORMANCE MEASURES              
Per common share:              
Diluted net income - GAAP $ .72     $ .66     9      
Diluted net income - operating  (1)   .80       .69     16      
Cash dividends declared   .18       .14          
Book value   15.83       14.80     7      
Tangible book value (3)   13.74       12.84     7      
                       
Key performance ratios:                      
Return on common equity - GAAP (2)(4)   9.27   %   9.06   %    
Return on common equity - operating (1)(2)(4)   10.32       9.51          
Return on tangible common equity - operating (1)(2)(3)(4)   12.15       11.24          
Return on assets - GAAP (4)   .98       .98          
Return on assets - operating (1)(4)   1.09       1.03          
Dividend payout ratio - GAAP   25.00       21.21          
Dividend payout ratio - operating (1)   22.50       20.29          
Net interest margin (fully taxable equivalent) (4)   3.46       3.38          
Efficiency ratio - GAAP   58.58       60.44          
Efficiency ratio - operating  (1)   56.77       58.45          
Average equity to average assets   10.36       10.72          
Average tangible equity to average assets (3)   9.09       9.42          
Average tangible common equity to average assets (3)   9.09       9.38          
Tangible common equity to risk-weighted assets (3)(5)   12.44       12.87          
               
ASSET QUALITY              
Nonperforming loans $ 23,095     $ 21,348     8      
Foreclosed properties   2,739       6,176     (56 )    
Total nonperforming assets (NPAs)   25,834       27,524     (6 )    
Allowance for loan losses   59,500       64,253     (7 )    
Net charge-offs   3,302       3,868     (15 )    
Allowance for loan losses to loans   .85   %   1.02   %      
Net charge-offs to average loans (4)   .10       .13          
NPAs to loans and foreclosed properties   .37       .44          
NPAs to total assets   .24       .28          
               
AVERAGE BALANCES ($ in millions)              
Loans $ 6,942     $ 6,077     14      
Investment securities   2,798       2,733     2      
Earning assets   9,885       8,956     10      
Total assets   10,691       9,721     10      
Deposits   8,626       7,922     9      
Shareholders' equity   1,108       1,042     6      
Common shares - basic (thousands)   71,798       72,187     (1 )    
Common shares - diluted (thousands)   71,809       72,191     (1 )    
               
AT PERIOD END ($ in millions)              
Loans $   7,041     $   6,287       12      
Investment securities     2,787         2,677       4      
Total assets     10,837         9,928       9      
Deposits     8,736         7,857       11      
Shareholders' equity     1,133         1,060       7      
Common shares outstanding (thousands)     70,981         71,122       -       
               
(1)  Excludes merger-related and other charges, a first quarter 2017 release of disproportionate tax effects lodged in OCI and a fourth quarter 2016 deferred tax asset impairment charge related to cancelled non-qualified stock options.  (2)  Net income available to common shareholders, which is net of 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)  Second quarter 2017 ratio is preliminary.  
               

 
UNITED COMMUNITY BANKS, INC.                    
Non-GAAP Performance Measures Reconciliation                    
Selected Financial Information                    
                     
                     
    2017       2016
    Second       First       Fourth       Third       Second    
(in thousands, except per share data) Quarter   Quarter   Quarter   Quarter   Quarter  
                     
Expense reconciliation                    
Expenses (GAAP) $   63,229     $   62,826     $   61,321     $   64,023     $   58,060    
Merger-related and other charges     (1,830 )       (2,054 )       (1,141 )       (3,152 )       (1,176 )  
Expenses - operating $   61,399     $   60,772     $   60,180     $   60,871     $   56,884    
                     
Net income reconciliation                    
Net income (GAAP) $   28,267     $   23,524     $   27,221     $   25,874     $   25,266    
Merger-related and other charges     1,830         2,054         1,141         3,152         1,176    
Income tax benefit of merger-related and other charges     (675 )       (758 )       (432 )       (1,193 )       (445 )  
Impairment of deferred tax asset on canceled non-qualified stock options     -          -          976         -          -     
Release of disproportionate tax effects lodged in OCI     -          3,400         -          -          -     
Net income - operating $   29,422     $   28,220     $   28,906     $   27,833     $   25,997    
                     
Net income available to common shareholders reconciliation                    
Net income available to common shareholders (GAAP) $   28,267     $   23,524     $   27,221     $   25,874     $   25,266    
Merger-related and other charges     1,830         2,054         1,141         3,152         1,176    
Income tax benefit of merger-related and other charges     (675 )       (758 )       (432 )       (1,193 )       (445 )  
Impairment of deferred tax asset on canceled non-qualified stock options     -          -          976         -          -     
Release of disproportionate tax effects lodged in OCI     -          3,400         -          -          -     
Net income available to common shareholders - operating $   29,422     $   28,220     $   28,906     $   27,833     $   25,997    
                     
Diluted income per common share reconciliation                    
Diluted income per common share (GAAP) $ .39     $ .33     $ .38     $ .36     $ .35    
Merger-related and other charges   .02       .01       .01       .03       .01    
Impairment of deferred tax asset on canceled non-qualified stock options   -       -       .01       -       -    
Release of disproportionate tax effects lodged in OCI   -       .05       -       -       -    
Diluted income per common share - operating $ .41     $ .39     $ .40     $ .39     $ .36    
                     
Book value per common share reconciliation                    
Book value per common share (GAAP) $   15.83     $   15.40     $   15.06     $   15.12     $   14.80    
Effect of goodwill and other intangibles     (2.09 )       (2.10 )       (2.11 )       (2.12 )       (1.96 )  
Tangible book value per common share $   13.74     $   13.30     $   12.95     $   13.00     $   12.84    
                     
Return on tangible common equity reconciliation                    
Return on common equity (GAAP)     9.98   %     8.54   %     9.89   %     9.61   %     9.54   %
Merger-related and other charges   .41       .47       .26       .73        .27    
Impairment of deferred tax asset on canceled non-qualified stock options     -          -        .36         -          -     
Release of disproportionate tax effects lodged in OCI     -          1.24         -          -          -     
Return on common equity - operating     10.39         10.25         10.51         10.34         9.81    
Effect of goodwill and other intangibles     1.80         1.85         1.96         2.11         1.75    
Return on tangible common equity - operating     12.19   %     12.10   %     12.47   %     12.45   %     11.56   %
                     
Return on assets reconciliation                    
Return on assets (GAAP)     1.06   %   .89   %     1.03   %     1.00   %     1.04   %
Merger-related and other charges   .04       .05       .03       .08       .03    
Impairment of deferred tax asset on canceled non-qualified stock options     -          -        .04         -          -     
Release of disproportionate tax effects lodged in OCI     -        .13         -          -          -     
Return on assets - operating     1.10   %     1.07   %     1.10   %     1.08   %     1.07   %
                     
Dividend payout ratio reconciliation                    
Dividend payout ratio (GAAP)     23.08   %     27.27   %     21.05   %     22.22   %     20.00   %
Merger-related and other charges     (1.13 )     (.98 )      (.54 )       (1.71 )      (.56 )  
Impairment of deferred tax asset on canceled non-qualified stock options     -          -         (.51 )       -          -     
Release of disproportionate tax effects lodged in OCI     -          (3.21 )       -          -          -     
Dividend payout ratio - operating     21.95   %     23.08   %     20.00   %     20.51   %     19.44   %
                     
Efficiency ratio reconciliation                    
Efficiency ratio (GAAP)     57.89   %     59.29   %     57.65   %     60.78   %     59.02   %
Merger-related and other charges     (1.68 )       (1.94 )       (1.07 )       (2.99 )       (1.20 )  
Efficiency ratio - operating     56.21   %     57.35   %     56.58   %     57.79   %     57.82   %
                     
Average equity to assets reconciliation                    
Equity to assets (GAAP)     10.49   %     10.24   %     10.35   %     10.38   %     10.72   %
Effect of goodwill and other intangibles     (1.26 )       (1.28 )       (1.31 )       (1.40 )       (1.29 )  
Tangible equity to assets     9.23         8.96         9.04         8.98         9.43    
Effect of preferred equity     -          -          -          -          -     
Tangible common equity to assets     9.23   %     8.96   %     9.04   %     8.98   %     9.43   %
                     
Tangible common equity to risk-weighted assets reconciliation (1)                    
Tier 1 capital ratio (Regulatory)     11.92   %     11.46   %     11.23   %     11.04   %     11.44   %
Effect of other comprehensive income   (.15 )     (.24 )     (.34 )       -         (.06 )  
Effect of deferred tax limitation   .94         1.13         1.26         1.50         1.63    
Effect of trust preferred   (.25 )     (.25 )     (.25 )     (.26 )      (.08 )  
Effect of preferred equity     -          -          -          -          -     
Basel III intangibles transition adjustment   (.02 )      (.03 )      (.06 )     (.06 )      (.06 )  
Basel III disallowed investments     -          -          -          -          -     
Tangible common equity to risk-weighted assets     12.44   %     12.07   %     11.84   %     12.22   %     12.87   %
                     
(1)  Second quarter 2017 ratios are preliminary.                    
                     

 
UNITED COMMUNITY BANKS, INC.          
Non-GAAP Performance Measures Reconciliation          
Selected Financial Information          
           
           
    For the Six Months Ended June 30,    
   
(in thousands, except per share data)   2017       2016      
           
Expense reconciliation          
Expenses (GAAP) $   126,055     $   115,945      
Merger-related and other charges     (3,884 )       (3,829 )    
  Expenses - operating $   122,171     $   112,116      
           
Net income reconciliation          
Net income (GAAP) $   51,791     $   47,561      
Merger-related and other charges     3,884         3,829      
Income tax benefit of merger-related and other charges     (1,433 )       (1,449 )    
Impairment of deferred tax asset on canceled non-qualified stock options     -          -       
Release of disproportionate tax effects lodged in OCI     3,400         -       
  Net income - operating $   57,642     $   49,941      
           
Net income available to common shareholders reconciliation          
Net income available to common shareholders (GAAP) $   51,791     $   47,540      
Merger-related and other charges     3,884         3,829      
Income tax benefit of merger-related and other charges     (1,433 )       (1,449 )    
Impairment of deferred tax asset on canceled non-qualified stock options     -          -       
Release of disproportionate tax effects lodged in OCI     3,400         -       
  Net income available to common shareholders - operating $   57,642     $   49,920      
           
Diluted income per common share reconciliation          
Diluted income per common share (GAAP) $ .72     $ .66      
Merger-related and other charges   .03       .03      
Impairment of deferred tax asset on canceled non-qualified stock options   -       -      
Release of disproportionate tax effects lodged in OCI   .05       -      
  Diluted income per common share - operating $ .80     $ .69      
           
Book value per common share reconciliation          
Book value per common share (GAAP) $   15.83     $   14.80      
Effect of goodwill and other intangibles     (2.09 )       (1.96 )    
  Tangible book value per common share $   13.74     $   12.84      
           
Return on tangible common equity reconciliation          
Return on common equity (GAAP)     9.27   %     9.06   %  
Merger-related and other charges   .44       .45      
Impairment of deferred tax asset on canceled non-qualified stock options     -          -       
Release of disproportionate tax effects lodged in OCI   .61         -       
Return on common equity - operating     10.32         9.51      
Effect of goodwill and other intangibles     1.83         1.73      
  Return on tangible common equity - operating     12.15   %     11.24   %  
           
Return on assets reconciliation          
Return on assets (GAAP)    .98   %   .98   %  
Merger-related and other charges   .05       .05      
Impairment of deferred tax asset on canceled non-qualified stock options     -          -       
Release of disproportionate tax effects lodged in OCI   .06         -       
  Return on assets - operating     1.09   %     1.03   %  
           
Dividend payout ratio reconciliation          
Dividend payout ratio (GAAP)     25.00   %     21.21   %  
Merger-related and other charges     (1.00 )     (.92 )    
Impairment of deferred tax asset on canceled non-qualified stock options     -          -       
Release of disproportionate tax effects lodged in OCI     (1.50 )       -       
  Dividend payout ratio - operating     22.50   %     20.29   %  
           
Efficiency ratio reconciliation          
Efficiency ratio (GAAP)     58.58   %     60.44   %  
Merger-related and other charges     (1.81 )       (1.99 )    
  Efficiency ratio - operating     56.77   %     58.45   %  
           
Average equity to assets reconciliation          
Equity to assets (GAAP)   10.36   %   10.72   %  
Effect of goodwill and other intangibles     (1.27 )       (1.30 )    
  Tangible equity to assets     9.09         9.42      
Effect of preferred equity     -        (.04 )    
  Tangible common equity to assets     9.09   %     9.38   %  
           
Tangible common equity to risk-weighted assets reconciliation (1)          
Tier 1 capital ratio (Regulatory)     11.92   %     11.44   %  
Effect of other comprehensive income    (.15 )     (.06 )    
Effect of deferred tax limitation   .94         1.63      
Effect of trust preferred   (.25 )       (.08 )    
Effect of preferred equity     -          -       
Basel III intangibles transition adjustment   (.02 )     (.06 )    
Basel III disallowed investments     -          -       
  Tangible common equity to risk-weighted assets     12.44   %     12.87   %  
           
(1)  Second quarter 2017 ratios are preliminary.          
           

 
UNITED COMMUNITY BANKS, INC.              
Financial Highlights                      
Loan Portfolio Composition at Period-End              
                       
                       
      2017     2016
      Second       First       Fourth       Third       Second    
(in millions)   Quarter   Quarter   Quarter   Quarter   Quarter  
LOANS BY CATEGORY                      
Owner occupied commercial RE   $   1,723   $   1,633   $   1,650   $   1,587   $   1,527  
Income producing commercial RE       1,342       1,297       1,282       1,277       1,101  
Commercial & industrial       1,088       1,080       1,070       994       925  
Commercial construction       587       667       634       567       565  
  Total commercial       4,740       4,677       4,636       4,425       4,118  
Residential mortgage       881       860       857       814       784  
Home equity lines of credit       665       659       655       693       616  
Residential construction       193       197       190       200       170  
Consumer installment       562       572       583       593       599  
  Total loans   $   7,041   $   6,965   $   6,921   $   6,725   $   6,287  
                       
LOANS BY MARKET                      
North Georgia   $   1,065   $   1,076   $   1,097   $   1,110   $   1,097  
Atlanta MSA       1,445       1,408       1,399       1,332       1,314  
North Carolina       541       541       545       548       543  
Coastal Georgia       623       591       581       565       541  
Gainesville MSA       246       252       248       236       240  
East Tennessee       486       483       504       506       509  
South Carolina       1,260       1,243       1,233       1,199       862  
Commercial Banking Solutions       926       911       855       763       706  
Indirect auto       449       460       459       466       475  
  Total loans   $   7,041   $   6,965   $   6,921   $   6,725   $   6,287  
                       

 
UNITED COMMUNITY BANKS, INC.            
Financial Highlights                    
Loan Portfolio Composition at Period-End            
                     
                     
      2017     2016   Linked Quarter Change   Year over Year Change
      Second       First       Second      
(in millions)   Quarter   Quarter   Quarter    
LOANS BY CATEGORY                    
Owner occupied commercial RE   $   1,723   $   1,633   $   1,527   $   90     $   196  
Income producing commercial RE       1,342       1,297       1,101       45         241  
Commercial & industrial       1,088       1,080       925       8         163  
Commercial construction       587       667       565       (80 )       22  
  Total commercial       4,740       4,677       4,118       63         622  
Residential mortgage       881       860       784       21         97  
Home equity lines of credit       665       659       616       6         49  
Residential construction       193       197       170       (4 )       23  
Consumer installment       562       572       599       (10 )       (37 )
  Total loans   $   7,041   $   6,965   $   6,287       76         754  
                     
LOANS BY MARKET                    
North Georgia   $   1,065   $   1,076   $   1,097       (11 )       (32 )
Atlanta MSA       1,445       1,408       1,314       37         131  
North Carolina       541       541       543       -          (2 )
Coastal Georgia       623       591       541       32         82  
Gainesville MSA       246       252       240       (6 )       6  
East Tennessee       486       483       509       3         (23 )
South Carolina       1,260       1,243       862       17         398  
Commercial Banking Solutions       926       911       706       15         220  
Indirect auto       449       460       475       (11 )       (26 )
  Total loans   $   7,041   $   6,965   $   6,287       76         754  
                     

 
UNITED COMMUNITY BANKS, INC.              
Financial Highlights                  
Credit Quality                  
                   
                   
    Second Quarter 2017
      Nonperforming       Foreclosed       Total  
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY              
Owner occupied CRE   $   5,248     $   580     $   5,828  
Income producing CRE       2,587         -          2,587  
Commercial & industrial       1,010         -          1,010  
Commercial construction       2,530         611         3,141  
  Total commercial       11,375         1,191         12,566  
Residential mortgage       7,886         457         8,343  
Home equity lines of credit       2,152         201         2,353  
Residential construction       287         890         1,177  
Consumer installment       1,395         -          1,395  
  Total NPAs   $   23,095     $   2,739     $   25,834  
                   
NONPERFORMING ASSETS BY MARKET              
North Georgia   $   5,449     $   225     $   5,674  
Atlanta MSA       906         423         1,329  
North Carolina       4,700         472         5,172  
Coastal Georgia       2,542         -          2,542  
Gainesville MSA       622         -          622  
East Tennessee       2,216         103         2,319  
South Carolina       3,472         1,516         4,988  
Commercial Banking Solutions       1,914         -          1,914  
Indirect auto       1,274         -          1,274  
  Total NPAs   $   23,095     $   2,739     $   25,834  
                   
NONPERFORMING ASSETS ACTIVITY              
Beginning Balance   $   19,812     $   5,060     $   24,872  
Acquisitions       -          -          -   
Loans placed on non-accrual       8,110         -          8,110  
Payments received       (2,955 )       -          (2,955 )
Loan charge-offs       (1,564 )       -          (1,564 )
Foreclosures       (308 )       481         173  
Capitalized costs       -          -          -   
Property sales       -          (2,704 )       (2,704 )
Write downs       -          (294 )       (294 )
Net gains (losses) on sales       -          196         196  
  Ending Balance   $   23,095     $   2,739     $   25,834  
                   

 
UNITED COMMUNITY BANKS, INC.              
Financial Highlights                  
Credit Quality                  
                   
                   
    First Quarter 2017
      Nonperforming       Foreclosed       Total  
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY              
Owner occupied CRE   $   6,135     $   1,238     $   7,373  
Income producing CRE       1,540         21         1,561  
Commercial & industrial       929         -          929  
Commercial construction       1,069         2,825         3,894  
  Total commercial       9,673         4,084         13,757  
Residential mortgage       6,455         660         7,115  
Home equity lines of credit       1,848         261         2,109  
Residential construction       417         55         472  
Consumer installment       1,419         -          1,419  
  Total NPAs   $   19,812     $   5,060     $   24,872  
                   
NONPERFORMING ASSETS BY MARKET              
North Georgia   $   5,344     $   570     $   5,914  
Atlanta MSA       715         645         1,360  
North Carolina       4,897         355         5,252  
Coastal Georgia       942         -          942  
Gainesville MSA       728         -          728  
East Tennessee       2,112         633         2,745  
South Carolina       1,725         2,857         4,582  
Commercial Banking Solutions       2,032         -          2,032  
Indirect auto       1,317         -          1,317  
  Total NPAs   $   19,812     $   5,060     $   24,872  
                   
NONPERFORMING ASSETS ACTIVITY              
Beginning Balance   $   21,539     $   7,949     $   29,488  
Acquisitions       -          -          -   
Loans placed on non-accrual       3,172         -          3,172  
Payments received       (3,046 )       -          (3,046 )
Loan charge-offs       (1,292 )       -          (1,292 )
Foreclosures       (561 )       561         -   
Capitalized costs       -          -          -   
Property sales       -          (3,077 )       (3,077 )
Write downs       -          (480 )       (480 )
Net gains (losses) on sales       -          107         107  
  Ending Balance   $   19,812     $   5,060     $   24,872  
                   

 
UNITED COMMUNITY BANKS, INC.              
Financial Highlights                  
Credit Quality                  
                   
                   
    Fourth Quarter 2016
      Nonperforming       Foreclosed       Total  
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY              
Owner occupied CRE   $   7,373     $   3,145     $   10,518  
Income producing CRE       1,324         36         1,360  
Commercial & industrial       966         -          966  
Commercial construction       1,538         2,977         4,515  
  Total commercial       11,201         6,158         17,359  
Residential mortgage       6,368         1,260         7,628  
Home equity lines of credit       1,831         531         2,362  
Residential construction       776         -          776  
Consumer installment       1,363         -          1,363  
  Total NPAs   $   21,539     $   7,949     $   29,488  
                   
NONPERFORMING ASSETS BY MARKET              
North Georgia   $   5,278     $   856     $   6,134  
Atlanta MSA       1,259         716         1,975  
North Carolina       4,750         632         5,382  
Coastal Georgia       1,778         -          1,778  
Gainesville MSA       279         -          279  
East Tennessee       2,354         675         3,029  
South Carolina       2,494         5,070         7,564  
Commercial Banking Solutions       2,072         -          2,072  
Indirect auto       1,275         -          1,275  
  Total NPAs   $   21,539     $   7,949     $   29,488  
                   
NONPERFORMING ASSETS ACTIVITY              
Beginning Balance   $   21,572     $   9,187     $   30,759  
Acquisitions       -          -          -   
Loans placed on non-accrual       6,346         -          6,346  
Payments received       (3,832 )       -          (3,832 )
Loan charge-offs       (1,293 )       -          (1,293 )
Foreclosures       (1,254 )       1,530         276  
Capitalized costs       -          26         26  
Property sales       -          (2,737 )       (2,737 )
Write downs       -          (254 )       (254 )
Net gains (losses) on sales       -          197         197  
  Ending Balance   $   21,539     $   7,949     $   29,488  
                   

 
UNITED COMMUNITY BANKS, INC.                                
Financial Highlights                                    
Credit Quality                                    
                                     
                                     
    Second Quarter 2017   First Quarter 2017   Fourth Quarter 2016
            Net Charge-             Net Charge-             Net Charge-  
            Offs to             Offs to             Offs to  
      Net       Average       Net       Average       Net       Average  
(in thousands)   Charge-Offs   Loans (1)   Charge-Offs   Loans (1)   Charge-Offs   Loans (1)
NET CHARGE-OFFS BY CATEGORY                                  
Owner occupied CRE   $   37       .01  %    $   (212 )     (.05)  %    $   1       -   % 
Income producing CRE       184       .06         870       .28         527       .16  
Commercial & industrial       354       .13         (152 )     (.06)         (201 )     (.08)  
Commercial construction       341       .22         (370 )     (.23)         241       .16  
  Total commercial       916       .08         136       .01         568       .05  
Residential mortgage       26       .01         530       .25         322       .15  
Home equity lines of credit       253       .15         422       .26         151       .09  
Residential construction       (53 )     (.11)         (9 )     (.02)         (16 )     (.03)  
Consumer installment       481       .34         600       .42         514       .35  
  Total   $   1,623       .09     $   1,679       .10     $   1,539       .09  
                                     
NET CHARGE-OFFS BY MARKET                                    
North Georgia   $   681       .26  %    $   15       .01  %    $   575       .21  % 
Atlanta MSA       (10 )     -          (46 )     (.01)         12       -   
North Carolina       131       .10         601       .45         714       .52  
Coastal Georgia       120       .08         (223 )     (.15)         118       .08  
Gainesville MSA       (54 )     (.09)         358       .58         (32 )     (.05)  
East Tennessee       27       .02         55       .05         (139 )     (.11)  
South Carolina       526       .17         425       .14         (2 )     -   
Commercial Banking Solutions       (17 )     (.01)         195       .09         (21 )     (.01)  
Indirect auto       219       .19         299       .27         314       .27  
  Total   $   1,623       .09     $   1,679       .10     $   1,539       .09  
                                   
(1)  Annualized. 

 
UNITED COMMUNITY BANKS, INC.                  
Consolidated Statement of Income (Unaudited)                  
                   
    Three Months Ended   Six Months Ended  
    June 30,   June 30,  
(in thousands, except per share data)     2017     2016       2017     2016    
                   
Interest revenue:                  
Loans, including fees   $   74,825   $   63,472     $   147,552   $   127,448    
Investment securities, including tax exempt of $357, $149, $636, and $315       17,778       16,833         35,490       32,621    
Deposits in banks and short-term investments       563       777         1,082       1,734    
Total interest revenue       93,166       81,082         184,124       161,803    
                   
Interest expense:                  
Deposits:                  
NOW       635       444         1,232       929    
Money market       1,559       1,206         2,985       2,314    
Savings       28       30         55       59    
Time       1,379       743         2,387       1,385    
Total deposit interest expense       3,601       2,423         6,659       4,687    
Short-term borrowings       101       93         141       180    
Federal Home Loan Bank advances       1,464       983         2,894       1,716    
Long-term debt       2,852       2,665         5,728       5,350    
Total interest expense       8,018       6,164         15,422       11,933    
Net interest revenue       85,148       74,918         168,702       149,870    
(Release of) provision for credit losses       800       (300 )       1,600       (500 )  
Net interest revenue after provision for credit losses       84,348       75,218         167,102       150,370    
                   
Fee revenue:                  
Service charges and fees       10,701       10,515         21,305       20,641    
Mortgage loan and other related fees       4,811       4,448         9,235       7,737    
Brokerage fees       1,146       1,117         2,556       2,170    
Gains from sales of government guaranteed loans       2,626       2,801         4,585       4,038    
Securities gains, net       4       282         2