United Community Banks, Inc. Reports Third Quarter Results

Источник: Nasdaq GlobeNewswire / 18 окт 2023 07:00:01 America/New_York

GREENVILLE, S.C., Oct. 18, 2023 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (“United”) today announced net income for the third quarter of $47.9 million and pre-tax, pre-provision income of $90.1 million. Diluted earnings per share of $0.39 for the quarter represented a decrease of $0.14 or 26% from the second quarter of 2023 and a decrease of $0.35 or 47%, from the third quarter of 2022. On an operating basis, excluding merger-related and other charges, diluted earnings per share of $0.45 decreased $0.10 or 18% compared to last quarter. Customer deposits organically grew by 5.6% annualized and loans grew at a 5.4% annualized rate during the quarter. Net interest revenue increased $2.3 million as the addition of First National Bank of South Miami ("FNBSM") was partly offset by a contraction in the net interest margin, driven by continued deposit pricing competition. Noninterest income was down $4.4 million primarily due to the absence of the unusual second quarter gain on the sale of an insurance subsidiary and a one-time small business partnership investment gain. Noninterest expenses increased mainly due to closing the FNBSM acquisition.

For the quarter, United’s return on assets was 0.68%, or 0.79% on an operating basis. Return on common equity was 5.3% and return on tangible common equity was 9.0%. On a pre-tax, pre-provision basis, operating return on assets was 1.44% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.18%, down three basis points from the second quarter of 2023.

Chairman and CEO Lynn Harton stated, “We continue to be pleased with the strength of our customer deposit franchise, driven by our service model. In the third quarter our customer deposits grew by 5.6% annualized, allowing us to decrease high cost brokered deposits and fund solid loan growth within our stated target range of mid-to-high single digits. Our cost of deposits continued to increase, leading to a modest decline in our net interest margin for the quarter. Increases in credit costs are concentrated in specific sectors that are under stress or specific companies that have been poorly managed. This is not unexpected given the speed at which borrowing rates have increased. We continue to expect broader credit performance to remain strong, but are appropriately cautious in our portfolio management given the potential for ongoing changes in the economic environment.”

United’s net interest margin decreased by 13 basis points to 3.24% compared to the second quarter. The average yield on United’s interest-earning assets was up 20 basis points to 5.17%, but its cost of deposits increased by 39 basis points to 2.03%, leading to the reduction in the net interest margin. Net charge-offs were $26.6 million or 0.59% of average loans during the quarter, up 39 basis points compared to the second quarter of 2023, largely due to the $19 million charge-off from an 8.7% participation in a large, nationally syndicated credit disclosed during the quarter. NPAs were 34 basis points relative to total assets, down six basis points from the previous quarter.

Mr. Harton concluded, “We continue to focus on our key mission of building our communities by serving our customers. Our teams are executing on that promise across our footprint, which we believe is one of the strongest in the Southeast. We have been fortunate to attract new teams, adding both new talent and additional exposure to high-growth metropolitan markets within our franchise. This quarter, we are very glad to welcome FNBSM officially into the United team, boosting our growth opportunities in Miami. FNBSM brings a very talented team and we look forward to growing together.”

Third Quarter 2023 Financial Highlights:

Net income of $47.9 million and pre-tax, pre-provision income of $90.1 million
EPS decreased by 47% compared to last year on a GAAP basis and 40% on an operating basis; compared to second quarter 2023, EPS decreased 26% on a GAAP basis and decreased 18% on an operating basis
Return on assets of 0.68%, or 0.79% on an operating basis
Pre-tax, pre-provision return on assets of 1.31%, or 1.44% when excluding merger-related and other charges
Return on common equity of 5.3%
Return on tangible common equity of 9.0% on an operating basis
Loan production, excluding balances acquired from FNBSM, of $1.5 billion, resulting in organic loan growth of 5.4% annualized for the quarter
Customer deposits, excluding brokered deposits, acquired FNBSM balances, and those from the sale of two Tennessee branches that were sold during the quarter were up $314 million or 5.6% annualized from last quarter
Net interest margin of 3.24% was down 13 basis points from the second quarter due to increased deposit costs
Mortgage closings of $211 million compared to $317 million a year ago; mortgage rate locks of $304 million compared to $456 million a year ago
Noninterest income was down $4.4 million primarily due to the absence of unusual second quarter gain on the sale of an insurance subsidiary and a one-time small business partnership investment gain
Noninterest expenses increased $12.1 million compared to the second quarter on a GAAP basis and by $6.5 million on an operating basis, mostly due to increases in salaries and employee benefits expenses, occupancy, amortization of intangibles and higher merger-related and other charges related to closing the FNBSM acquisition
Efficiency ratio of 61.3%, or 57.4% on an operating basis, up from second quarter largely driven by net interest margin pressure
Net charge-offs of $26.6 million, or 59 basis points as a percent of average loans, up 39 basis points from the net charge-offs level experienced in the second quarter and mostly due to the $19 million charge-off from an 8.7% participation in a large, nationally syndicated credit disclosed during the quarter
Nonperforming assets of 0.34% of total assets, down six basis points compared to June 30, 2023
Quarterly common shareholder dividend of $0.23 per share declared during the quarter, an increase of 5% year-over-year

Conference Call

United will hold a conference call on Wednesday, October 18, 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/10183036/fa91904ab0. Those without internet access or who are unable to pre-register may dial in by calling 1-866-777-2509. Participants are encouraged to dial in 15 minutes prior to the call start time. The conference call also will be webcast and available for replay by selecting “Events and Presentations” under “News and Events” within the Investor Relations section of United’s website at ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
*(in thousands, except per share data)*
		2023									2022					Third Quarter 2023-		For the Nine Months Ended September 30,						YTD 2023-
	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			2022 Change			2023			2022		2022 Change
INCOME SUMMARY
Interest revenue	$	323,147		$	295,775		$	279,487		$	240,831		$	213,887				$	898,409		$	572,324
Interest expense		120,591			95,489			68,017			30,943			14,113					284,097			29,855
Net interest revenue		202,556			200,286			211,470			209,888			199,774		1	%		614,312			542,469		13	%
Provision for credit losses		30,268			22,753			21,783			19,831			15,392					74,804			44,082
Noninterest income		31,977			36,387			30,209			33,354			31,922		—			98,573			104,353		(6	)
Total revenue		204,265			213,920			219,896			223,411			216,304		(6	)		638,081			602,740		6
Noninterest expenses		144,474			132,407			139,805			117,329			112,755		28			416,686			352,820		18
Income before income tax expense		59,791			81,513			80,091			106,082			103,549		(42	)		221,395			249,920		(11	)
Income tax expense		11,925			18,225			17,791			24,632			22,388		(47	)		47,941			53,898		(11	)
Net income		47,866			63,288			62,300			81,450			81,161		(41	)		173,454			196,022		(12	)
Merger-related and other charges		9,168			3,645			8,631			1,470			1,746					21,444			17,905
Income tax benefit of merger-related and other charges		(2,000	)		(820	)		(1,955	)		(323	)		(385	)				(4,775	)		(3,923	)
Net income - operating⁽¹⁾	$	55,034		$	66,113		$	68,976		$	82,597		$	82,522		(33	)	$	190,123		$	210,004		(9	)
Pre-tax pre-provision income⁽⁵⁾	$	90,059		$	104,266		$	101,874		$	125,913		$	118,941		(24	)	$	296,199		$	294,002		1
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP	$	0.39		$	0.53		$	0.52		$	0.74		$	0.74		(47	)	$	1.44		$	1.78		(19	)
Diluted net income - operating⁽¹⁾		0.45			0.55			0.58			0.75			0.75		(40	)		1.58			1.91		(17	)
Cash dividends declared		0.23			0.23			0.23			0.22			0.22		5			0.69			0.64		8
Book value		25.87			25.98			25.76			24.38			23.78		9			25.87			23.78		9
Tangible book value⁽³⁾		17.70			17.83			17.59			17.13			16.52		7			17.70			16.52		7
Key performance ratios:
Return on common equity - GAAP⁽²⁾⁽⁴⁾		5.32	%		7.47	%		7.34	%		10.86	%		11.02	%				6.69	%		9.08	%
Return on common equity - operating^(1)(2)(4)		6.14			7.82			8.15			11.01			11.21					7.35			9.75
Return on tangible common equity - operating^(1)(2)(3)(4)		9.03			11.35			11.63			15.20			15.60					10.65			13.64
Return on assets - GAAP⁽⁴⁾		0.68			0.95			0.95			1.33			1.32					0.86			1.06
Return on assets - operating⁽¹⁾⁽⁴⁾		0.79			1.00			1.06			1.35			1.34					0.95			1.13
Return on assets - pre-tax pre-provision⁽⁴⁾⁽⁵⁾		1.31			1.59			1.58			2.07			1.94					1.49			1.60
Return on assets - pre-tax pre-provision, excluding merger- related and other charges^(1)(4)(5)		1.44			1.65			1.71			2.09			1.97					1.60			1.70
Net interest margin (fully taxable equivalent)⁽⁴⁾		3.24			3.37			3.61			3.76			3.57					3.41			3.25
Efficiency ratio - GAAP		61.32			55.71			57.20			47.95			48.41					58.06			53.94
Efficiency ratio - operating⁽¹⁾		57.43			54.17			53.67			47.35			47.66					55.07			51.20
Equity to total assets		11.85			11.89			11.90			11.25			11.12					11.85			11.12
Tangible common equity to tangible assets⁽³⁾		8.18			8.21			8.17			7.88			7.70					8.18			7.70
ASSET QUALITY
Nonperforming assets ("NPAs")	$	90,883		$	103,737		$	73,403		$	44,281		$	35,511		156		$	90,883		$	35,511		156
Allowance for credit losses - loans		201,557			190,705			176,534			159,357			148,502		36			201,557			148,502		36
Allowance for credit losses - total		219,624			212,277			197,923			180,520			167,300		31			219,624			167,300		31
Net charge-offs (recoveries)		26,638			8,399			7,084			6,611			1,134					42,121			3,043
Allowance for credit losses - loans to loans		1.11	%		1.10	%		1.03	%		1.04	%		1.00	%				1.11	%		1.00	%
Allowance for credit losses - total to loans		1.21			1.22			1.16			1.18			1.12					1.21			1.12
Net charge-offs to average loans⁽⁴⁾		0.59			0.20			0.17			0.17			0.03					0.32			0.03
NPAs to total assets		0.34			0.40			0.28			0.18			0.15					0.34			0.15
AT PERIOD END ($ in millions)
Loans	$	18,203		$	17,395		$	17,125		$	15,335		$	14,882		22		$	18,203		$	14,882		22
Investment securities		5,701			5,914			5,915			6,228			6,539		(13	)		5,701			6,539		(13	)
Total assets		26,869			26,120			25,872			24,009			23,688		13			26,869			23,688		13
Deposits		22,858			22,252			22,005			19,877			20,321		12			22,858			20,321		12
Shareholders’ equity		3,184			3,106			3,078			2,701			2,635		21			3,184			2,635		21
Common shares outstanding (thousands)		118,976			115,266			115,152			106,223			106,163		12			118,976			106,163		12

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

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
*(in thousands, except per share data)*
		2023									2022					For the Nine Months Ended September 30,
	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter				2023			2022

Noninterest expense reconciliation
Noninterest expenses (GAAP)	$	144,474		$	132,407		$	139,805		$	117,329		$	112,755		$	416,686		$	352,820
Merger-related and other charges		(9,168	)		(3,645	)		(8,631	)		(1,470	)		(1,746	)		(21,444	)		(17,905	)
Noninterest expenses - operating	$	135,306		$	128,762		$	131,174		$	115,859		$	111,009		$	395,242		$	334,915

Net income reconciliation
Net income (GAAP)	$	47,866		$	63,288		$	62,300		$	81,450		$	81,161		$	173,454		$	196,022
Merger-related and other charges		9,168			3,645			8,631			1,470			1,746			21,444			17,905
Income tax benefit of merger-related and other charges		(2,000	)		(820	)		(1,955	)		(323	)		(385	)		(4,775	)		(3,923	)
Net income - operating	$	55,034		$	66,113		$	68,976		$	82,597		$	82,522		$	190,123		$	210,004

Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)	$	47,866		$	63,288		$	62,300		$	81,450		$	81,161		$	173,454		$	196,022
Income tax expense		11,925			18,225			17,791			24,632			22,388			47,941			53,898
Provision for credit losses		30,268			22,753			21,783			19,831			15,392			74,804			44,082
Pre-tax pre-provision income	$	90,059		$	104,266		$	101,874		$	125,913		$	118,941		$	296,199		$	294,002

Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.39		$	0.53		$	0.52		$	0.74		$	0.74		$	1.44		$	1.78
Merger-related and other charges, net of tax		0.06			0.02			0.06			0.01			0.01			0.14			0.13
Diluted income per common share - operating	$	0.45		$	0.55		$	0.58		$	0.75		$	0.75		$	1.58		$	1.91

Book value per common share reconciliation
Book value per common share (GAAP)	$	25.87		$	25.98		$	25.76		$	24.38		$	23.78		$	25.87		$	23.78
Effect of goodwill and other intangibles		(8.17	)		(8.15	)		(8.17	)		(7.25	)		(7.26	)		(8.17	)		(7.26	)
Tangible book value per common share	$	17.70		$	17.83		$	17.59		$	17.13		$	16.52		$	17.70		$	16.52

Return on tangible common equity reconciliation
Return on common equity (GAAP)		5.32	%		7.47	%		7.34	%		10.86	%		11.02	%		6.69	%		9.08	%
Merger-related and other charges, net of tax		0.82			0.35			0.81			0.15			0.19			0.66			0.67
Return on common equity - operating		6.14			7.82			8.15			11.01			11.21			7.35			9.75
Effect of goodwill and other intangibles		2.89			3.53			3.48			4.19			4.39			3.30			3.89
Return on tangible common equity - operating		9.03	%		11.35	%		11.63	%		15.20	%		15.60	%		10.65	%		13.64	%

Return on assets reconciliation
Return on assets (GAAP)		0.68	%		0.95	%		0.95	%		1.33	%		1.32	%		0.86	%		1.06	%
Merger-related and other charges, net of tax		0.11			0.05			0.11			0.02			0.02			0.09			0.07
Return on assets - operating		0.79	%		1.00	%		1.06	%		1.35	%		1.34	%		0.95	%		1.13	%

Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)		0.68	%		0.95	%		0.95	%		1.33	%		1.32	%		0.86	%		1.06	%
Income tax expense		0.18			0.29			0.29			0.41			0.37			0.25			0.30
Provision for credit losses		0.45			0.35			0.34			0.33			0.25			0.38			0.24
Return on assets - pre-tax, pre-provision		1.31			1.59			1.58			2.07			1.94			1.49			1.60
Merger-related and other charges		0.13			0.06			0.13			0.02			0.03			0.11			0.10
Return on assets - pre-tax pre-provision, excluding merger-related and other charges		1.44	%		1.65	%		1.71	%		2.09	%		1.97	%		1.60	%		1.70	%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)		61.32	%		55.71	%		57.20	%		47.95	%		48.41	%		58.06	%		53.94	%
Merger-related and other charges		(3.89	)		(1.54	)		(3.53	)		(0.60	)		(0.75	)		(2.99	)		(2.74	)
Efficiency ratio - operating		57.43	%		54.17	%		53.67	%		47.35	%		47.66	%		55.07	%		51.20	%

Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)		11.85	%		11.89	%		11.90	%		11.25	%		11.12	%		11.85	%		11.12	%
Effect of goodwill and other intangibles		(3.33	)		(3.31	)		(3.36	)		(2.97	)		(3.01	)		(3.33	)		(3.01	)
Effect of preferred equity		(0.34	)		(0.37	)		(0.37	)		(0.40	)		(0.41	)		(0.34	)		(0.41	)
Tangible common equity to tangible assets		8.18	%		8.21	%		8.17	%		7.88	%		7.70	%		8.18	%		7.70	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
		2023						2022			Linked			Year over
(in millions)	Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Quarter Change			Year Change
LOANS BY CATEGORY
Owner occupied commercial RE	$	3,279	$	3,111	$	3,141	$	2,735	$	2,700	$	168		$	579
Income producing commercial RE		4,130		3,670		3,611		3,262		3,299		460			831
Commercial & industrial		2,504		2,550		2,442		2,252		2,238		(46	)		266
Commercial construction		1,850		1,739		1,806		1,598		1,514		111			336
Equipment financing		1,534		1,510		1,447		1,374		1,281		24			253
Total commercial		13,297		12,580		12,447		11,221		11,032		717			2,265
Residential mortgage		3,043		2,905		2,756		2,355		2,149		138			894
Home equity lines of credit		941		927		930		850		832		14			109
Residential construction		399		463		492		443		423		(64	)		(24	)
Manufactured housing		343		340		326		317		301		3			42
Consumer		180		180		174		149		145		—			35
Total loans	$	18,203	$	17,395	$	17,125	$	15,335	$	14,882	$	808		$	3,321

LOANS BY MARKET
Georgia	$	4,321	$	4,281	$	4,177	$	4,051	$	4,003	$	40		$	318
South Carolina		2,801		2,750		2,672		2,587		2,516		51			285
North Carolina		2,445		2,355		2,257		2,186		2,117		90			328
Tennessee		2,314		2,387		2,458		2,507		2,536		(73	)		(222	)
Florida		2,318		1,708		1,745		1,308		1,259		610			1,059
Alabama		1,070		1,062		1,029		—		—		8			1,070
Commercial Banking Solutions		2,934		2,852		2,787		2,696		2,451		82			483
Total loans	$	18,203	$	17,395	$	17,125	$	15,335	$	14,882	$	808		$	3,321

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
		2023
	Third Quarter		Second Quarter		First Quarter
NONACCRUAL LOANS
Owner occupied RE	$	5,134	$	3,471	$	1,000
Income producing RE		30,255		32,542		10,603
Commercial & industrial		13,382		30,823		33,276
Commercial construction		1,065		115		475
Equipment financing		9,206		8,989		5,044
Total commercial		59,042		75,940		50,398
Residential mortgage		11,893		11,419		11,280
Home equity lines of credit		4,009		2,777		2,377
Residential construction		2,074		1,682		143
Manufactured housing		12,711		10,782		8,542
Consumer		89		19		55
Total nonaccrual loans		89,818		102,619		72,795
OREO and repossessed assets		1,065		1,118		608
Total NPAs	$	90,883	$	103,737	$	73,403

		2023
	Third Quarter					Second Quarter					First Quarter
(in thousands)	Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾		Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾		Net Charge- Offs			Net Charge- Offs to Average Loans⁽¹⁾
NET CHARGE-OFFS (RECOVERIES) BY CATEGORY
Owner occupied RE	$	582		0.07	%	$	(205	)	(0.03)%		$	90		0.01	%
Income producing RE		3,011		0.30			1,184		0.13			2,306		0.26
Commercial & industrial		17,542		2.71			2,746		0.44			225		0.04
Commercial construction		(49	)	(0.01	)		(105	)	(0.02	)		(37	)	(0.01	)
Equipment financing		6,325		1.62			2,537		0.69			3,375		0.93
Total commercial		27,411		0.83			6,157		0.20			5,959		0.20
Residential mortgage		(129	)	(0.02	)		(43	)	(0.01	)		(87	)	(0.01	)
Home equity lines of credit		(2,784	)	(1.17	)		(59	)	(0.03	)		33		0.01
Residential construction		341		0.31			623		0.53			(15	)	(0.01	)
Manufactured housing		1,168		1.34			620		0.75			628		0.76
Consumer		631		1.37			1,101		2.51			566		1.37
Total	$	26,638		0.59		$	8,399		0.20		$	7,084		0.17

⁽¹⁾Annualized.

UNITED COMMUNITY BANKS, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)	September 30, 2023			December 31, 2022
ASSETS
Cash and due from banks	$	192,726		$	195,771
Interest-bearing deposits in banks		566,779			316,082
Federal funds and other short-term investments		—			135,000
Cash and cash equivalents		759,505			646,853
Debt securities available-for-sale		3,182,112			3,614,333
Debt securities held-to-maturity (fair value $1,992,364 and $2,191,073, respectively)		2,518,773			2,613,648
Loans held for sale		37,110			13,600
Loans and leases held for investment		18,202,807			15,334,627
Less allowance for credit losses - loans and leases		(201,557	)		(159,357	)
Loans and leases, net		18,001,250			15,175,270
Premises and equipment, net		371,435			298,456
Bank owned life insurance		344,647			299,297
Goodwill and other intangible assets, net		994,142			779,248
Other assets		660,233			568,179
Total assets	$	26,869,207		$	24,008,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	6,782,031		$	7,643,081
NOW and interest-bearing demand		5,349,335			4,350,878
Money market		5,691,480			4,510,680
Savings		1,265,548			1,456,337
Time		3,554,619			1,781,482
Brokered		214,855			134,049
Total deposits		22,857,868			19,876,507
Short-term borrowings		37,348			158,933
Federal Home Loan Bank advances		—			550,000
Long-term debt		324,786			324,663
Accrued expenses and other liabilities		465,381			398,107
Total liabilities		23,685,383			21,308,210
Shareholders' equity:
Preferred stock; $1 par value; 10,000,000 shares authorized; 3,745 and 4,000 shares Series I issued and outstanding, respectively, $25,000 per share liquidation preference		90,283			96,422
Common stock, $1 par value; 200,000,000 shares authorized, 118,975,652 and 106,222,758 shares issued and outstanding, respectively		118,976			106,223
Common stock issuable; 608,646 and 607,128 shares, respectively		12,782			12,307
Capital surplus		2,697,671			2,306,366
Retained earnings		596,617			508,844
Accumulated other comprehensive loss		(332,505	)		(329,488	)
Total shareholders' equity		3,183,824			2,700,674
Total liabilities and shareholders' equity	$	26,869,207		$	24,008,884

UNITED COMMUNITY BANKS, INC.

Consolidated Statements of Income (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)		2023		2022		2023			2022
Interest revenue:
Loans, including fees	$	273,781	$	174,065	$	760,696		$	476,072
Investment securities, including tax exempt of $1,722, $2,568, $5,563 and $7,762, respectively		44,729		36,953		125,775			91,043
Deposits in banks and short-term investments		4,637		2,869		11,938			5,209
Total interest revenue		323,147		213,887		898,409			572,324

Interest expense:
Deposits:
NOW and interest-bearing demand		35,613		3,992		80,809			7,624
Money market		46,884		4,503		105,430			7,030
Savings		868		178		2,108			337
Time		33,368		1,207		75,464			2,322
Deposits		116,733		9,880		263,811			17,313
Short-term borrowings		189		27		3,186			27
Federal Home Loan Bank advances		—		—		5,761			—
Long-term debt		3,669		4,206		11,339			12,515
Total interest expense		120,591		14,113		284,097			29,855
Net interest revenue		202,556		199,774		614,312			542,469
Provision for credit losses		30,268		15,392		74,804			44,082
Net interest revenue after provision for credit losses		172,288		184,382		539,508			498,387

Noninterest income:
Service charges and fees		10,315		9,569		28,791			28,644
Mortgage loan gains and other related fees		6,159		6,297		17,264			29,420
Wealth management fees		6,451		5,879		17,775			17,759
Gains from sales of other loans, net		2,688		2,228		6,909			9,226
Lending and loan servicing fees		2,985		2,946		9,979			7,518
Securities losses, net		—		—		(1,644	)		(3,688	)
Other		3,379		5,003		19,499			15,474
Total noninterest income		31,977		31,922		98,573			104,353
Total revenue		204,265		216,304		638,081			602,740

Noninterest expenses:
Salaries and employee benefits		81,173		67,823		236,121			208,062
Communications and equipment		10,902		8,795		31,654			27,718
Occupancy		10,941		9,138		31,024			27,381
Advertising and public relations		2,251		2,544		6,914			6,332
Postage, printing and supplies		2,386		2,190		7,305			6,308
Professional fees		7,006		4,821		19,670			14,670
Lending and loan servicing expense		2,697		2,333		7,546			7,746
Outside services - electronic banking		2,561		3,159		8,646			8,629
FDIC assessments and other regulatory charges		4,314		2,356		12,457			6,796
Amortization of intangibles		4,171		1,678		11,120			5,207
Merger-related and other charges		9,168		1,746		21,444			17,905
Other		6,904		6,172		22,785			16,066
Total noninterest expenses		144,474		112,755		416,686			352,820
Income before income taxes		59,791		103,549		221,395			249,920
Income tax expense		11,925		22,388		47,941			53,898
Net income		47,866		81,161		173,454			196,022
Preferred stock dividends, net of discount on repurchases		832		1,719		4,270			5,157
Earnings allocated to participating securities		259		407		939			1,007
Net income available to common shareholders	$	46,775	$	79,035	$	168,245		$	189,858

Net income per common share:
Basic	$	0.39	$	0.74	$	1.44		$	1.78
Diluted		0.39		0.74		1.44			1.78
Weighted average common shares outstanding:
Basic		119,506		106,687		116,925			106,616
Diluted		119,624		106,800		117,084			106,732

Average Consolidated Balance Sheets and Net Interest Analysis

For the Three Months Ended September 30,

		2023							2022
*(dollars in thousands, fully taxable equivalent (FTE))*	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE)⁽¹⁾⁽²⁾	$	18,055,402		$	273,800	6.02	%	$	14,658,397		$	174,168	4.71	%
Taxable securities⁽³⁾		5,933,708			43,007	2.90			6,539,615			34,385	2.10
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾		368,148			2,313	2.51			493,115			3,449	2.80
Federal funds sold and other interest-earning assets		538,039			5,093	3.76			614,755			3,106	2.00
Total interest-earning assets (FTE)		24,895,297			324,213	5.17			22,305,882			215,108	3.83

Noninterest-earning assets:
Allowance for credit losses		(209,472	)						(138,907	)
Cash and due from banks		225,831							231,376
Premises and equipment		367,217							290,768
Other assets⁽³⁾		1,568,824							1,261,236
Total assets	$	26,847,697						$	23,950,355

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	5,285,513			35,613	2.67		$	4,335,619			3,992	0.37
Money market		5,622,355			46,884	3.31			4,849,705			4,503	0.37
Savings		1,301,047			868	0.26			1,515,350			178	0.05
Time		3,473,191			31,072	3.55			1,635,580			984	0.24
Brokered time deposits		209,119			2,296	4.36			51,530			223	1.72
Total interest-bearing deposits		15,891,225			116,733	2.91			12,387,784			9,880	0.32
Federal funds purchased and other borrowings		44,164			189	1.70			3,442			27	3.11
Long-term debt		324,770			3,669	4.48			324,444			4,206	5.14
Total borrowed funds		368,934			3,858	4.15			327,886			4,233	5.12
Total interest-bearing liabilities		16,260,159			120,591	2.94			12,715,670			14,113	0.44

Noninterest-bearing liabilities:
Noninterest-bearing deposits		6,916,272							8,176,987
Other liabilities		435,592							349,647
Total liabilities		23,612,023							21,242,304
Shareholders' equity		3,235,674							2,708,051
Total liabilities and shareholders' equity	$	26,847,697						$	23,950,355

Net interest revenue (FTE)				$	203,622						$	200,995
Net interest-rate spread (FTE)						2.23	%						3.39	%
Net interest margin (FTE)⁽⁴⁾						3.24	%						3.57	%

⁽¹⁾Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
⁽²⁾Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
⁽³⁾Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $430 million in 2023 and $318 million in 2022 are included in other assets for purposes of this presentation.
⁽⁴⁾Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets.

Average Consolidated Balance Sheets and Net Interest Analysis

For the Nine Months Ended September 30,

		2023							2022
*(dollars in thousands, fully taxable equivalent (FTE))*	Average Balance			Interest		Average Rate		Average Balance			Interest		Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE)⁽¹⁾⁽²⁾	$	17,377,210		$	760,802	5.85	%	$	14,426,470		$	475,989	4.41	%
Taxable securities⁽³⁾		5,982,615			120,212	2.68			6,274,230			83,281	1.77
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾		386,499			7,470	2.58			498,177			10,425	2.79
Federal funds sold and other interest-earning assets		490,703			13,103	3.57			1,271,287			6,192	0.65
Total interest-earning assets (FTE)		24,237,027			901,587	4.97			22,470,164			575,887	3.43

Non-interest-earning assets:
Allowance for loan losses		(186,428	)						(129,278	)
Cash and due from banks		249,411							200,463
Premises and equipment		347,514							284,850
Other assets⁽³⁾		1,518,503							1,308,647
Total assets	$	26,166,027						$	24,134,846

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	4,891,214			80,809	2.21		$	4,520,079			7,624	0.23
Money market		5,349,265			105,430	2.64			4,992,357			7,030	0.19
Savings		1,341,033			2,108	0.21			1,483,169			337	0.03
Time		2,936,873			65,856	3.00			1,688,250			2,009	0.16
Brokered time deposits		280,293			9,608	4.58			65,133			313	0.64
Total interest-bearing deposits		14,798,678			263,811	2.38			12,748,988			17,313	0.18
Federal funds purchased and other borrowings		98,884			3,186	4.31			1,383			27	2.61
Federal Home Loan Bank advances		166,355			5,761	4.63			—			—	—
Long-term debt		324,737			11,339	4.67			322,600			12,515	5.19
Total borrowed funds		589,976			20,286	4.60			323,983			12,542	5.18
Total interest-bearing liabilities		15,388,654			284,097	2.47			13,072,971			29,855	0.31

Noninterest-bearing liabilities:
Noninterest-bearing deposits		7,226,096							7,958,392
Other liabilities		393,048							375,182
Total liabilities		23,007,798							21,406,545
Shareholders' equity		3,158,229							2,728,301
Total liabilities and shareholders' equity	$	26,166,027						$	24,134,846

Net interest revenue (FTE)				$	617,490						$	546,032
Net interest-rate spread (FTE)						2.50	%						3.12	%
Net interest margin (FTE)⁽⁴⁾						3.41	%						3.25	%

⁽¹⁾Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
⁽²⁾Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
⁽³⁾Unrealized gains and losses on securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $413 million in 2023 and $221 million in 2022 are included in other assets for purposes of this presentation.
⁽⁴⁾Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

About United Community Banks, Inc.
United Community Banks, Inc. (NASDAQ: UCBI) is the financial holding company for United Community, a top 100 US financial institution that is committed to improving the financial health and well-being of its customers and ultimately the communities it serves. United Community provides a full range of banking, wealth management, and mortgage services. As of September 30, 2023, United Community has $26.9 billion in assets and 205 offices across Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee, as well as a national SBA lending franchise and a national equipment financing subsidiary. United Community has been recognized nationally as a leader in customer service, financial performance, and workplace environment. Among the accolades, United Community is a nine-time winner of the J.D. Power award that ranked the bank #1 in customer satisfaction with consumer banking in the Southeast and was recognized in 2023 by Forbes as one of the World’s Best Banks and one of America’s Best Banks. United Community was also recognized by Newsweek in 2023 as one of the Most Trusted Companies in America, is a multi-award recipient of the Greenwich Excellence Awards and was named by American Banker as one of the "Best Banks to Work For" in 2022 for the sixth consecutive year. Additional information about United Community can be found at ucbi.com.

Non-GAAP Financial Measures

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

Caution About Forward-Looking Statements

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

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

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

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

For more information:

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

United Community Banks, Inc. Reports Third Quarter Results

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