United Community Banks, Inc. Reports Fourth Quarter Results

GREENVILLE, S.C., Jan. 24, 2024 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ:UCBI) ("United") today announced net income for the fourth quarter of $14.1 million and pre-tax, pre-provision income of $25.8 million. Diluted earnings per share of $0.11 for the quarter represented a decrease of $0.28 or 72% from the third quarter of 2023 and a decrease of $0.63 or 85%, from the fourth quarter of 2022.

On an operating basis, diluted earnings per share of $0.53 increased $0.08 or 18% compared to last quarter. Non-operating items included merger charges, losses for the previously reported bond portfolio restructuring transaction and an FDIC special assessment. Deposits grew by 8% annualized and loans grew at a 2.5% annualized rate during the quarter. Net interest revenue increased modestly during the quarter due to growth in interest bearing assets which offset the effect of a lower margin.

For the quarter, United's return on assets was 0.18% and 0.92% on an operating basis. Return on common equity was 1.44% and return on tangible common equity was 10.58% on an operating basis. On a pre-tax, pre-provision basis, operating return on assets was 1.33% for the quarter. At quarter-end, tangible common equity to tangible assets was 8.36%, up eighteen basis points from the third quarter of 2023.

Chairman and CEO Lynn Harton stated, "Our focus continues to be on both maintaining a strong balance sheet and investing in growth as we continue to build the company. This quarter, we entered into a bond portfolio restructuring transaction to reduce our exposure to interest rate volatility in this uncertain environment. This will have the additional advantage of increasing our earnings in 2024. In our core banking operations, we continue to be pleased with the ability of our teams to grow our book of business. In the fourth quarter, strong deposit growth allowed us to reduce high cost brokered deposits and more than fund loan growth. While the cost of deposits continued to drift upward, the pace of margin compression has slowed. Asset quality remained solid with net charge-offs for the bank, excluding Navitas, at low levels. Looking into 2024, we expect broader credit performance to remain strong, but are closely monitoring for potential changes in both the economic environment overall and specifically in our markets."

United's net interest margin decreased by 5 basis points to 3.19% compared to the third quarter. The average yield on United's interest-earning assets was up 14 basis points to 5.31%, but funding costs increased by 22 basis points, leading to the modest reduction in the net interest margin. Net charge-offs were $10.1 million, or 0.22%, of average loans during the quarter, down 37 basis points compared to the third quarter of 2023. Excluding Navitas, net charge-offs were 0.05% of average loans. Nonperforming assets were 34 basis points relative to total assets, which is in line with the prior quarter.

Mr. Harton concluded, "We are excited and optimistic about 2024. Economic conditions remain strong in our markets, though we continue to be cautious in our underwriting and portfolio management given the inherent uncertainty in the environment. Our teams continue to be focused on leading our markets in customer service, knowing that it is our connections with our customers and communities that drive our success. In 2023, including recently in the fourth quarter, we added a new member to our Board of Directors, and added new market leaders, new commercial bankers and new line-of-business leaders. We also expanded our market reach and service capabilities with new locations across our footprint. In November, United was named one of the "Best Banks to Work For" by American Banker for the seventh consecutive year, an accolade that underscores our belief that we are a great place to work for great people. We are in the final phases of refreshing our corporate logo and brand across our franchise. Our commitment to investing in our people, technology and customers' needs with a culture of caring will remain the same as we continue to grow."

2023 Financial Highlights:

• Completed a successful year with strong, high-quality loan and deposit growth and completed acquisitions in high-growth markets in Alabama, the Florida panhandle and Miami, which were all strategic priorities
• The fourth quarter bond portfolio restructuring transaction resulted in a pre-tax loss of $52 million and the FDIC special assessment was $10 million, which reduced GAAP and operating EPS by approximately $0.39
• Full-year EPS of $1.54, a decrease of 39% compared to 2022; full year operating EPS of $2.11, a decrease of 21% from 2022
• Return on assets of 0.68%, or 0.94%, on an operating basis
• Pre-tax, pre-provision return on assets of 1.53% on an operating basis
• Return on common equity of 5.34%, or 7.33%, on an operating basis
• Return on tangible common equity of 10.6% on an operating basis
• A provision for credit losses of $89.4 million compared to a provision for credit losses of $63.9 million in 2022, with both periods including a provision establishing an initial allowance for acquired banks
• Strong loan growth of $3.0 billion or $972 million, excluding loans acquired from acquired banks
• Core transaction deposits were up $796 million compared to 2022; excluding acquired banks, 2023 core transaction deposits were down $984 million, or 6%
• Net interest margin of 3.35% was down 3 basis points from last year primarily due to increased deposit costs
• Noninterest income was down $62.2 million primarily due to the bond portfolio restructuring transaction
• Excluding the bond portfolio restructuring transaction, noninterest income was down $4.8 million primarily due to a decline in mortgage fees, as higher rates led to lower demand and business volume
• The efficiency ratio of 60.1%, or 56.2% on an operating basis, increased, primarily driven by higher deposit rates and a compressing NIM
• Net charge-offs of $52.2 million, or 0.30% of average total loans, were up from the $9.65 million of net charge-offs in 2022
  
  

Fourth Quarter 2023 Financial Highlights:

• Net income of $14.1 million and pre-tax, pre-provision income of $25.8 million; operating net income of $64.8 million
• EPS decreased by 85% compared to last year on a GAAP basis and 29% on an operating basis; compared to third quarter 2023, EPS decreased 72% on a GAAP basis and increased 18% on an operating basis
• The bond portfolio restructuring transaction and the FDIC special assessment reduced GAAP and operating EPS by approximately $0.38
• Return on assets of 0.18%, and 0.92% on an operating basis
• Pre-tax, pre-provision return on assets of 1.33% excluding non-operating items
• Return on common equity of 1.4%, or 7.3% when excluding non-operating items
• Return on tangible common equity of 10.6% on an operating basis
• Loan production of $1.4 billion, resulting in loan growth of 2.5% annualized for the quarter
• Total deposits, excluding brokered deposits, were up $504 million, or 8.9% annualized, from last quarter, driven by seasonal increases in public funds
• Net interest margin of 3.19% was down 5 basis points from the third quarter due to increased deposit costs
• Mortgage closings of $204 million compared to $253 million a year ago; mortgage rate locks of $223 million compared to $364 million a year ago
• Noninterest income was down $55.1 million, primarily due to the pre-tax loss of $51.7 million resulting from the bond portfolio restructuring transaction
• Excluding the bond portfolio restructuring transaction, noninterest income was down $3.4 million from third quarter primarily due to a seasonal decline in mortgage fees
• Noninterest expenses increased $10.1 million compared to the third quarter mostly due to the FDIC special assessment of $10.0 million
• Efficiency ratio of 66.3%, or 59.6% on an operating basis, up from third quarter largely driven by increased group medical insurance costs
• Net charge-offs of $10.1 million, or 0.22% of average loans, down 37 basis points from the net charge-offs level experienced in the third quarter, which included a $19 million charge-off from an 8.7% participation in a large, nationally syndicated credit
• Nonperforming assets of 0.34% of total assets, are in line with September 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, January 24, 2024, 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/10185556/fb5d089df4. 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				Fourth Quarter 2023-2022 Change			For the Twelve Months Ended December 31,								YTD 2023-2022 Change
		Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter								2023				2022
INCOME SUMMARY
Interest revenue		$	338,698			$	323,147			$	295,775			$	279,487			$	240,831						$	1,237,107			$	813,155
Interest expense			135,245				120,591				95,489				68,017				30,943							419,342				60,798
Net interest revenue			203,453				202,556				200,286				211,470				209,888			(3	)%			817,765				752,357			9	%
Provision for credit losses			14,626				30,268				22,753				21,783				19,831			(26	)			89,430				63,913			40
Noninterest income			(23,090	)			31,977				36,387				30,209				33,354							75,483				137,707			(45	)
Total revenue			165,737				204,265				213,920				219,896				223,411			(26	)			803,818				826,151			(3	)
Noninterest expenses			154,587				144,474				132,407				139,805				117,329			32				571,273				470,149			22
Income before income tax expense			11,150				59,791				81,513				80,091				106,082							232,545				356,002
Income tax (benefit) expense			(2,940	)			11,925				18,225				17,791				24,632							45,001				78,530
Net income			14,090				47,866				63,288				62,300				81,450							187,544				277,472
Non-operating items			67,450				9,168				3,645				8,631				1,470							88,894				19,375
Income tax benefit of non-operating items			(16,714	)			(2,000	)			(820	)			(1,955	)			(323	)						(21,489	)			(4,246	)
Net income - operating(1)		$	64,826			$	55,034			$	66,113			$	68,976			$	82,597			(22	)		$	254,949			$	292,601			(13	)
Pre-tax pre-provision income(5)		$	25,776			$	90,059			$	104,266			$	101,874			$	125,913			(80	)		$	321,975			$	419,915			(23	)
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP		$	0.11			$	0.39			$	0.53			$	0.52			$	0.74			(85	)		$	1.54			$	2.52			(39	)
Diluted net income - operating(1)			0.53				0.45				0.55				0.58				0.75			(29	)			2.11				2.66			(21	)
Common stock cash dividends declared			0.23				0.23				0.23				0.23				0.22			5				0.92				0.86			7
Book value			26.52				25.87				25.98				25.76				24.38			9				26.52				24.38			9
Tangible book value(3)			18.39				17.70				17.83				17.59				17.13			7				18.39				17.13			7
Key performance ratios:
Return on common equity - GAAP(2)(4)			1.44	%			5.32	%			7.47	%			7.34	%			10.86	%						5.34	%			9.54	%
Return on common equity - operating(1)(2)(4)			7.27				6.14				7.82				8.15				11.01							7.33				10.07
Return on tangible common equity - operating(1)(2)(3)(4)			10.58				9.03				11.35				11.63				15.20							10.63				14.04
Return on assets - GAAP(4)			0.18				0.68				0.95				0.95				1.33							0.68				1.13
Return on assets - operating(1)(4)			0.92				0.79				1.00				1.06				1.35							0.94				1.19
Return on assets -pre-tax pre-provision, excluding non-operating items(1)(4)(5)			1.33				1.44				1.65				1.71				2.09							1.53				1.80
Net interest margin (fully taxable equivalent)(4)			3.19				3.24				3.37				3.61				3.76							3.35				3.38
Efficiency ratio - GAAP			66.33				61.32				55.71				57.20				47.95							60.09				52.31
Efficiency ratio - operating(1)			59.57				57.43				54.17				53.67				47.35							56.17				50.16
Equity to total assets			11.95				11.85				11.89				11.90				11.25							11.95				11.25
Tangible common equity to tangible assets(3)			8.36				8.18				8.21				8.17				7.88							8.36				7.88
ASSET QUALITY
Nonperforming assets ("NPAs")		$	92,877			$	90,883			$	103,737			$	73,403			$	44,281			110			$	92,877			$	44,281			110
Allowance for credit losses - loans			208,071				201,557				190,705				176,534				159,357			31				208,071				159,357			31
Allowance for credit losses - total			224,128				219,624				212,277				197,923				180,520			24				224,128				180,520			24
Net charge-offs (recoveries)			10,122				26,638				8,399				7,084				6,611							52,243				9,654
Allowance for credit losses - loans to loans			1.14	%			1.11	%			1.10	%			1.03	%			1.04	%						1.14	%			1.04	%
Allowance for credit losses - total to loans			1.22				1.21				1.22				1.16				1.18							1.22				1.18
Net charge-offs to average loans(4)			0.22				0.59				0.20				0.17				0.17							0.30				0.07
NPAs to total assets			0.34				0.34				0.40				0.28				0.18							0.34				0.18
AT PERIOD END ($ in millions)
Loans		$	18,319			$	18,203			$	17,395			$	17,125			$	15,335			19			$	18,319			$	15,335			19
Investment securities			5,822				5,701				5,914				5,915				6,228			(7	)			5,822				6,228			(7	)
Total assets			27,297				26,869				26,120				25,872				24,009			14				27,297				24,009			14
Deposits			23,311				22,858				22,252				22,005				19,877			17				23,311				19,877			17
Shareholders' equity			3,262				3,184				3,106				3,078				2,701			21				3,262				2,701			21
Common shares outstanding (thousands)			119,010				118,976				115,266				115,152				106,223			12				119,010				106,223			12

(1)	Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on next page.
(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			Twelve Months Ended December 31,
	Fourth Quarter				Third Quarter				Second Quarter				First Quarter				Fourth Quarter				2023				2022
Net income to operating income reconciliation
Net income (GAAP)	$	14,090			$	47,866			$	63,288			$	62,300			$	81,450			$	187,544			$	277,472
Bond portfolio restructuring loss		51,689				—				—				—				—				51,689				—
FDIC special assessment		9,995				—				—				—				—				9,995				—
Merger-related and other charges		5,766				9,168				3,645				8,631				1,470				27,210				19,375
Income tax benefit of non-operating items		(16,714	)			(2,000	)			(820	)			(1,955	)			(323	)			(21,489	)			(4,246	)
Net income - operating	$	64,826			$	55,034			$	66,113			$	68,976			$	82,597			$	254,949			$	292,601
Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)	$	14,090			$	47,866			$	63,288			$	62,300			$	81,450			$	187,544			$	277,472
Income tax (benefit) expense		(2,940	)			11,925				18,225				17,791				24,632				45,001				78,530
Provision for credit losses		14,626				30,268				22,753				21,783				19,831				89,430				63,913
Pre-tax pre-provision income	$	25,776			$	90,059			$	104,266			$	101,874			$	125,913			$	321,975			$	419,915
Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.11			$	0.39			$	0.53			$	0.52			$	0.74			$	1.54			$	2.52
Bond portfolio restructuring loss		0.32				—				—				—				—				0.33				—
FDIC special assessment		0.06				—				—				—				—				0.06				—
Merger-related and other charges		0.04				0.06				0.02				0.06				0.01				0.18				0.14
Diluted income per common share - operating	$	0.53			$	0.45			$	0.55			$	0.58			$	0.75			$	2.11			$	2.66
Book value per common share reconciliation
Book value per common share (GAAP)	$	26.52			$	25.87			$	25.98			$	25.76			$	24.38			$	26.52			$	24.38
Effect of goodwill and other intangibles		(8.13	)			(8.17	)			(8.15	)			(8.17	)			(7.25	)			(8.13	)			(7.25	)
Tangible book value per common share	$	18.39			$	17.70			$	17.83			$	17.59			$	17.13			$	18.39			$	17.13
Return on tangible common equity reconciliation
Return on common equity (GAAP)		1.44	%			5.32	%			7.47	%			7.34	%			10.86	%			5.34	%			9.54	%
Bond portfolio restructuring loss		4.47				—				—				—				—				1.15				—
FDIC special assessment		0.86				—				—				—				—				0.22				—
Merger-related and other charges		0.50				0.82				0.35				0.81				0.15				0.62				0.53
Return on common equity - operating		7.27				6.14				7.82				8.15				11.01				7.33				10.07
Effect of goodwill and other intangibles		3.31				2.89				3.53				3.48				4.19				3.30				3.97
Return on tangible common equity - operating		10.58	%			9.03	%			11.35	%			11.63	%			15.20	%			10.63	%			14.04	%
Return on assets reconciliation
Return on assets (GAAP)		0.18	%			0.68	%			0.95	%			0.95	%			1.33	%			0.68	%			1.13	%
Bond portfolio restructuring loss		0.57				—				—				—				—				0.15				—
FDIC special assessment		0.11				—				—				—				—				0.03				—
Merger-related and other charges		0.06				0.11				0.05				0.11				0.02				0.08				0.06
Return on assets - operating		0.92	%			0.79	%			1.00	%			1.06	%			1.35	%			0.94	%			1.19	%
Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)		0.18	%			0.68	%			0.95	%			0.95	%			1.33	%			0.68	%			1.13	%
Income tax (benefit) expense		(0.04	)			0.18				0.29				0.29				0.41				0.17				0.32
Provision for credit losses		0.21				0.45				0.35				0.34				0.33				0.34				0.27
Bond portfolio restructuring loss		0.75				—				—				—				—				0.20				—
FDIC special assessment		0.15				—				—				—				—				0.04				—
Merger-related and other charges		0.08				0.13				0.06				0.13				0.02				0.10				0.08
Return on assets - pre-tax pre-provision, excluding non-operating items		1.33	%			1.44	%			1.65	%			1.71	%			2.09	%			1.53	%			1.80	%
Efficiency ratio reconciliation
Efficiency ratio (GAAP)		66.33	%			61.32	%			55.71	%			57.20	%			47.95	%			60.09	%			52.31	%
FDIC special assessment		(4.29	)			—				—				—				—				(1.05	)			—
Merger-related and other charges		(2.47	)			(3.89	)			(1.54	)			(3.53	)			(0.60	)			(2.87	)			(2.15	)
Efficiency ratio - operating		59.57	%			57.43	%			54.17	%			53.67	%			47.35	%			56.17	%			50.16	%
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)		11.95	%			11.85	%			11.89	%			11.90	%			11.25	%			11.95	%			11.25	%
Effect of goodwill and other intangibles		(3.27	)			(3.33	)			(3.31	)			(3.36	)			(2.97	)			(3.27	)			(2.97	)
Effect of preferred equity		(0.32	)			(0.34	)			(0.37	)			(0.37	)			(0.40	)			(0.32	)			(0.40	)
Tangible common equity to tangible assets		8.36	%			8.18	%			8.21	%			8.17	%			7.88	%			8.36	%			7.88	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
(in millions)
		2023												2022		Linked Quarter Change				Year over Year Change
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter
LOANS BY CATEGORY
Owner occupied commercial RE	$	3,264		$	3,279		$	3,111		$	3,141		$	2,735		$	(15	)		$	529
Income producing commercial RE		4,264			4,130			3,670			3,611			3,262			134				1002
Commercial & industrial		2,411			2,504			2,550			2,442			2,252			(93	)			159
Commercial construction		1,860			1,850			1,739			1,806			1,598			10				262
Equipment financing		1,543			1,534			1,510			1,447			1,374			9				169
Total commercial		13,342			13,297			12,580			12,447			11,221			45				2,121
Residential mortgage		3,199			3,043			2,905			2,756			2,355			156				844
Home equity lines of credit		959			941			927			930			850			18				109
Residential construction		302			399			463			492			443			(97	)			(141	)
Manufactured housing		336			343			340			326			317			(7	)			19
Consumer		181			180			180			174			149			1				32
Total loans	$	18,319		$	18,203		$	17,395		$	17,125		$	15,335		$	116			$	2,984
LOANS BY STATE
Georgia	$	4,357		$	4,321		$	4,281		$	4,177		$	4,051		$	36			$	306
South Carolina		2,780			2,801			2,750			2,672			2,587			(21	)			193
North Carolina		2,492			2,445			2,355			2,257			2,186			47				306
Tennessee		2,244			2,314			2,387			2,458			2,507			(70	)			(263	)
Florida		2,442			2,318			1,708			1,745			1,308			124				1,134
Alabama		1,082			1,070			1,062			1,029			—			12				1,082
Commercial Banking Solutions		2,922			2,934			2,852			2,787			2,696			(12	)			226
Total loans	$	18,319		$	18,203		$	17,395		$	17,125		$	15,335		$	116			$	2,984

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Year-End
(in millions)
		2023				2022				2021				2020				2019
LOANS BY CATEGORY
Owner occupied commercial RE	$	3,264			$	2,735			$	2,322			$	2,090			$	1,720
Income producing commercial RE		4,264				3,262				2,601				2,541				2,008
Commercial & industrial		2,411				2,252				1,910				2,499				1,221
Commercial construction		1,860				1,598				1,015				967				976
Equipment financing		1,543				1,374				1,083				864				745
Total commercial		13,342				11,221				8,931				8,961				6,670
Residential mortgage		3,199				2,355				1,638				1,285				1,118
Home equity		959				850				694				697				661
Residential construction		302				443				359				281				236
Manufactured housing		336				317				—				—				—
Consumer		181				149				138				147				128
Total loans	$	18,319			$	15,335			$	11,760			$	11,371			$	8,813
LOANS BY STATE
Georgia	$	4,357			$	4,051			$	3,778			$	3,685			$	3,606
South Carolina		2,780				2,587				2,235				1,947				1,708
North Carolina		2,492				2,186				1,895				1,281				1,156
Tennessee		2,244				2,507				373				415				421
Florida		2,442				1,308				1,148				1,435				—
Alabama		1,082				—				—				—				—
Commercial Banking Solutions		2,922				2,696				2,331				2,608				1,922
Total loans	$	18,319			$	15,335			$	11,760			$	11,371			$	8,813

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(in thousands)
	2023
	Fourth Quarter				Third Quarter				Second Quarter
NONACCRUAL LOANS
Owner occupied RE	$	3,094			$	5,134			$	3,471
Income producing RE		30,128				30,255				32,542
Commercial & industrial		13,467				13,382				30,823
Commercial construction		1,878				1,065				115
Equipment financing		8,505				9,206				8,989
Total commercial		57,072				59,042				75,940
Residential mortgage		13,944				11,893				11,419
Home equity		3,772				4,009				2,777
Residential construction		944				2,074				1,682
Manufactured housing		15,861				12,711				10,782
Consumer		94				89				19
Total nonaccrual loans held for investment		91,687				89,818				102,619
OREO and repossessed assets		1,190				1,065				1,118
Total NPAs	$	92,877			$	90,883			$	103,737
	2023
	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	$	35				—	%		$	582			0.07	%		$	(205	)		(0.03	)%
Income producing RE		(562	)			(0.05	)			3,011			0.30				1,184			0.13
Commercial & industrial		547				0.09				17,542			2.71				2,746			0.44
Commercial construction		33				0.01				(49	)		(0.01	)			(105	)		(0.02	)
Equipment financing		7,926				2.05				6,325			1.62				2,537			0.69
Total commercial		7,979				0.24				27,411			0.83				6,157			0.20
Residential mortgage		12				—				(129	)		(0.02	)			(43	)		(0.01	)
Home equity		(68	)			(0.03	)			(2,784	)		(1.17	)			(59	)		(0.03	)
Residential construction		(13	)			(0.01	)			341			0.31				623			0.53
Manufactured housing		1,444				1.69				1,168			1.34				620			0.75
Consumer		768				1.70				631			1.37				1,101			2.51
Total	$	10,122				0.22			$	26,638			0.59			$	8,399			0.20
(1) Annualized.

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
		December 31, 2023				December 31, 2022
ASSETS
Cash and due from banks		$	200,781			$	195,771
Interest-bearing deposits in banks			803,094				316,082
Federal funds and other short-term investments			—				135,000
Cash and cash equivalents			1,003,875				646,853
Debt securities available-for-sale			3,331,084				3,614,333
Debt securities held-to-maturity (fair value $2,095,620 and $2,191,073, respectively)			2,490,848				2,613,648
Loans held for sale at fair value			33,008				13,600
Loans and leases held for investment			18,318,755				15,334,627
Less allowance for credit losses - loans and leases			(208,071	)			(159,357	)
Loans and leases, net			18,110,684				15,175,270
Premises and equipment, net			378,421				298,456
Bank owned life insurance			345,371				299,297
Accrued interest receivable			87,782				72,807
Net deferred tax asset			113,214				129,313
Derivative financial instruments			50,352				50,636
Goodwill and other intangible assets, net			990,087				779,248
Other assets			362,525				315,423
Total assets		$	27,297,251			$	24,008,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand		$	6,534,307			$	7,643,081
NOW and interest-bearing demand			6,155,193				4,350,878
Money market			5,600,587				4,510,680
Savings			1,207,807				1,456,337
Time			3,649,498				1,781,482
Brokered			163,219				134,049
Total deposits			23,310,611				19,876,507
Short-term borrowings			—				158,933
Federal Home Loan Bank advances			—				550,000
Long-term debt			324,823				324,663
Derivative financial instruments			84,811				99,543
Accrued expenses and other liabilities			315,481				298,564
Total liabilities			24,035,726				21,308,210
Shareholders' equity:
Preferred stock, $1 par value: 10,000,000 shares authorized; 3,662 and 4,000 shares Series I issued and outstanding, respectively; $25,000 per share liquidation preference			88,266				96,422
Common stock, $1 par value; 200,000,000 shares authorized; 119,010,319 and 106,222,758 shares issued and outstanding, respectively			119,010				106,223
Common stock issuable; 620,108 and 607,128 shares, respectively			13,110				12,307
Capital surplus			2,699,112				2,306,366
Retained earnings			581,219				508,844
Accumulated other comprehensive loss			(239,192	)			(329,488	)
Total shareholders' equity			3,261,525				2,700,674
Total liabilities and shareholders' equity		$	27,297,251			$	24,008,884

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,
										2023						2022								2023								2022
Interest revenue:
Loans, including fees									$	281,909					$	197,330							$	1,042,605							$	673,402
Investment securities, including tax exempt of $1,732, 2,561, $7,295 and $10,323										44,025						40,781								169,800								131,824
Deposits in banks and short-term investments										12,764						2,720								24,702								7,929
Total interest revenue										338,698						240,831								1,237,107								813,155
Interest expense:
Deposits:
NOW and interest-bearing demand										44,527						9,688								125,336								17,312
Money market										50,967						11,244								156,397								18,274
Savings										758						356								2,866								693
Time										35,511						3,498								110,975								5,820
Deposits										131,763						24,786								395,574								42,099
Short-term borrowings										9						480								3,195								507
Federal Home Loan Bank advances										—						1,424								5,761								1,424
Long-term debt										3,473						4,253								14,812								16,768
Total interest expense										135,245						30,943								419,342								60,798
Net interest revenue										203,453						209,888								817,765								752,357
Provision for credit losses										14,626						19,831								89,430								63,913
Net interest revenue after provision for credit losses										188,827						190,057								728,335								688,444
Noninterest income:
Service charges and fees										9,621						9,519								38,412								38,163
Mortgage loan gains and related fees										1,956						3,104								19,220								32,524
Wealth management fees										5,965						5,835								23,740								23,594
Gains from other loan sales										2,237						1,504								9,146								10,730
Other lending and loan servicing fees										3,994						2,487								13,973								10,005
Securities losses, net										(51,689			)			(184				)				(53,333				)				(3,872						)
Other										4,826						11,089								24,325								26,563
Total noninterest income										(23,090			)			33,354								75,483								137,707
Total revenue										165,737						223,411								803,818								826,151
Noninterest expenses:
Salaries and employee benefits										82,343						68,143								318,464								276,205
Occupancy										11,616						8,866								42,640								36,247
Communications and equipment										11,610						10,516								43,264								38,234
FDIC assessments and other regulatory charges										14,992						3,098								27,449								9,894
Professional fees										7,062						5,496								26,732								20,166
Lending and loan servicing expense										2,176						1,604								9,722								9,350
Outside services - electronic banking										2,931						3,954								11,577								12,583
Postage, printing and supplies										2,162						2,441								9,467								8,749
Advertising and public relations										2,559						2,052								9,473								8,384
Amortization of intangibles										4,055						1,619								15,175								6,826
Merger-related and other charges										5,766						1,470								27,210								19,375
Other										7,315						8,070								30,100								24,136
Total noninterest expenses										154,587						117,329								571,273								470,149
Net income before income taxes										11,150						106,082								232,545								356,002
Income tax (benefit) expense										(2,940			)			24,632								45,001								78,530
Net income									$	14,090					$	81,450							$	187,544							$	277,472
Preferred stock dividends, net of discount on repurchases										1,395						1,718								5,665								6,875
Earnings allocated to participating securities										77						461								1,032								1,462
Net income available to common shareholders									$	12,618					$	79,271							$	180,847							$	269,135
Net income per common share:
Basic									$	0.11					$	0.74							$	1.54							$	2.52
Diluted										0.11						0.74								1.54								2.52
Weighted average common shares outstanding:
Basic										119,612						106,795								117,603								106,661
Diluted										119,713						106,916								117,745								106,778

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended December 31,
(dollars in thousands, fully taxable equivalent (FTE))
			2023											2022
		Average Balance				Interest				Average Rate			Average Balance				Interest				Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)		$	18,167,572			$	281,776			6.15	%		$	15,002,836			$	197,502			5.22	%
Taxable securities (3)			5,772,630				42,293			2.93				6,325,165				38,220			2.42
Tax-exempt securities (FTE) (1)(3)			367,585				2,326			2.53				490,838				3,440			2.80
Federal funds sold and other interest-earning assets			1,092,939				13,294			4.83				453,090				2,912			2.55
Total interest-earning assets (FTE)			25,400,726				339,689			5.31				22,271,929				242,074			4.32
Noninterest-earning assets:
Allowance for loan losses			(204,631	)										(152,551	)
Cash and due from banks			210,383											217,873
Premises and equipment			377,765											297,523
Other assets (3)			1,516,268											1,166,424
Total assets		$	27,300,511										$	23,801,198
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand		$	5,961,835				44,527			2.96			$	4,385,916				9,688			0.88
Money market			5,799,213				50,967			3.49				4,628,585				11,244			0.96
Savings			1,227,708				758			0.24				1,480,908				356			0.10
Time			3,611,790				35,117			3.86				1,708,311				3,143			0.73
Brokered time deposits			60,583				394			2.58				51,258				355			2.75
Total interest-bearing deposits			16,661,129				131,763			3.14				12,254,978				24,786			0.80
Federal funds purchased and other borrowings			7,958				9			0.45				47,487				480			4.01
Federal Home Loan Bank advances			—				—			—				135,000				1,424			4.18
Long-term debt			324,801				3,473			4.24				324,590				4,253			5.20
Total borrowed funds			332,759				3,482			4.15				507,077				6,157			4.82
Total interest-bearing liabilities			16,993,888				135,245			3.16				12,762,055				30,943			0.96
Noninterest-bearing liabilities:
Noninterest-bearing deposits			6,690,251											7,993,816
Other liabilities			410,067											383,270
Total liabilities			24,094,206											21,139,141
Shareholders' equity			3,206,305											2,662,057
Total liabilities and shareholders' equity		$	27,300,511										$	23,801,198
Net interest revenue (FTE)						$	204,444										$	211,131
Net interest-rate spread (FTE)										2.15	%										3.36	%
Net interest margin (FTE) (4)										3.19	%										3.76	%

(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 AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $458 million in 2023 and $454 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 Twelve Months Ended December 31,
(dollars in thousands, fully taxable equivalent (FTE))
				2023											2022
			Average Balance				Interest				Average Rate			Average Balance				Interest				Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)			$	17,576,424			$	1,042,578			5.93	%		$	14,571,746			$	673,491			4.62	%
Taxable securities (3)				5,929,687				162,505			2.74				6,284,603				121,501			1.93
Tax-exempt securities (FTE) (1)(3)				381,731				9,796			2.57				496,327				13,865			2.79
Federal funds sold and other interest-earning assets				642,499				26,397			4.11				1,065,057				9,104			0.85
Total interest-earning assets (FTE)				24,530,341				1,241,276			5.06				22,417,733				817,961			3.65
Non-interest-earning assets:
Allowance for loan losses				(191,016	)										(135,144	)
Cash and due from banks				239,574											204,852
Premises and equipment				355,139											288,044
Other assets (3)				1,517,940											1,275,263
Total assets			$	26,451,978										$	24,050,748
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand			$	5,161,071				125,336			2.43			$	4,486,263				17,312			0.39
Money market				5,462,677				156,397			2.86				4,900,667				18,274			0.37
Savings				1,312,469				2,866			0.22				1,482,599				693			0.05
Time				3,106,989				100,973			3.25				1,693,307				5,152			0.30
Brokered time deposits				224,914				10,002			4.45				61,636				668			1.08
Total interest-bearing deposits				15,268,120				395,574			2.59				12,624,472				42,099			0.33
Federal funds purchased and other borrowings				75,965				3,195			4.21				13,004				507			3.90
Federal Home Loan Bank advances				124,425				5,761			4.63				34,027				1,424			4.18
Long-term debt				324,753				14,812			4.56				323,102				16,768			5.19
Total borrowed funds				525,143				23,768			4.53				370,133				18,699			5.05
Total interest-bearing liabilities				15,793,263				419,342			2.66				12,994,605				60,798			0.47
Noninterest-bearing liabilities:
Noninterest-bearing deposits				7,091,034											7,967,321
Other liabilities				397,337											377,221
Total liabilities				23,281,634											21,339,147
Shareholders' equity				3,170,344											2,711,601
Total liabilities and shareholders' equity			$	26,451,978										$	24,050,748
Net interest revenue (FTE)							$	821,934										$	757,163
Net interest-rate spread (FTE)											2.40	%										3.18	%
Net interest margin (FTE) (4)											3.35	%										3.38	%

 

(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 AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $424 million in 2023 and $277 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 December 31, 2023, United Community has $27.2 billion in assets and 207 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 2023 for the seventh 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 non-operating items," "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. Further, United's management uses these measures in managing and evaluating United's business and intends to refer to them in discussions about United's operations and performance. 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 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 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 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

[email protected]