United Community Banks, Inc. Reports Third Quarter Results

GREENVILLE, S.C., Oct. 20, 2020 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ: UCBI) (United) today reported third quarter financial results, including solid year-over-year loan and deposit growth and record operating efficiency. United delivered net income of $47.6 million and pre-tax pre-provision income of $81.2 million. Diluted earnings per share of $0.52 for the quarter represented a decrease of $0.08 or 13%, from a year ago. This decline is largely due to an increase in credit loss provisioning associated with loan growth and the acquisition of Seaside National Bank & Trust (Seaside) along with net interest margin declines largely driven by declines in market interest rates. Compared to the second quarter, diluted earnings per share were up by $0.20 or 63%. Excluding merger-related and other charges, diluted operating earnings per share were $0.55, also down 13% from last year, but up $0.23 per share or 72% compared to second quarter. United’s GAAP return on assets (ROA) was 1.07% and its return on common equity was 10.1% for the quarter. On an operating basis, United’s ROA was 1.14% and its return on tangible common equity was 13.5%. On a pre-tax, pre-provision basis, and excluding merger-related and other charges, ROA was 1.93%.

Chairman and CEO Lynn Harton stated, “While the future economic and operating environment remains uncertain, I am pleased with the financial strength and resilience of the company and the dedication of our employees who consistently provide outstanding customer service. Our markets continue to recover from the economic effects of the pandemic and I am pleased to report that loan payment deferrals have declined from a peak of $1.9 billion, or 15.9% of the total loan portfolio at June 30, 2020 to $365 million, or 3.1% of the total loan portfolio at September 30, 2020.”

Harton continued, “Our acquisition of Seaside, which closed on July 1st, positions us well in attractive Florida markets and we are pleased with the talent of the Seaside team and the deep relationships they have built with their clients. We plan to pilot Seaside’s high net worth offering of asset management and trust services in select markets of United’s footprint in the late fourth quarter. Additionally, we have made solid progress on the business integration and are already moving forward with additional products, including mortgage, middle market, commercial real estate, SBA, asset-based and non-profit lending, to compliment Seaside’s product offerings. We are proud to welcome Seaside to the United team.”

Total loans increased by $1.7 billion during the quarter—primarily driven by the acquisition of Seaside. Excluding the effects of the acquisition, core organic loan growth was 8% annualized. Core transaction deposits grew by $1.7 billion during the quarter, with $1.3 billion resulting from the Seaside acquisition, supplemented by approximately $400 million in organic growth. United’s cost of deposits decreased by 13 basis points to 0.25%. The net interest margin decreased 15 basis points from the second quarter due to a combination of factors, including lower overall market rates.

Mr. Harton concluded, “We are focused on our long-term goal of remaining a top performer in our peer group. While this is a difficult environment in which to forecast future economic conditions, we are encouraged by increasing business activity in our markets and stable credit performance in our portfolio to date. Our strong balance sheet position gives us the ability to continue to support our customers and communities, and we believe we will be well positioned to be able to take advantage of expansion opportunities in the future.”

Third Quarter 2020 Financial Highlights:

EPS decreased by 13% compared to last year on both a GAAP and operating basis; compared to second quarter, EPS increased by 63% on a GAAP basis and 72% on an operating basis
Return on assets of 1.07%, or 1.14% excluding merger-related and other charges
Pre-tax, pre-provision return on assets of 1.86%, or 1.93% excluding merger-related and other charges
Return on common equity of 10.1%
Return on tangible common equity of 13.5%, excluding merger-related and other charges
A provision for credit losses of $21.8 million of which $10.7 million is attributable to establishing an allowance for credit losses for Seaside’s acquired loans
Loan production of $1.0 billion and loan growth of $1.7 billion with $1.4 billion attributable to loans acquired from Seaside and core loan growth at an annualized rate of 8% for the quarter
Core transaction deposits were up $1.7 billion with $1.3 billion attributable to Seaside and approximately $400 million in organic growth, which represents a 15% annualized growth rate for the quarter
Net interest margin of 3.27% was down 15 basis points from the second quarter, reflecting the low rate environment, the Seaside acquisition, and increasing balance sheet liquidity
Record mortgage rate locks of $910 million, which is $108 million or 13% higher than the previous record set in the second quarter; this compares to $508 million a year ago
Noninterest income was up $7.7 million on a linked quarter basis, excluding net securities gains; Seaside contributed nearly $2.5 million of the increase and mortgage loan and related fees were up $1.5 million, primarily driven by record mortgage rate locks and production
Efficiency ratio of 54.1%, or a record low 52.2% excluding merger-related and other charges
Net charge-offs of $2.5 million, or 9 basis points as a percent of average loans, down 16 basis points from in the second quarter
Nonperforming assets of 0.29% of total assets, which is down 3 basis points compared to June 30, 2020
Total deferrals of $365 million or 3% of the total loan portfolio compared to $1.9 billion or 16% in the second quarter
$500,000 of funding for the United Community Bank Foundation, adding to the initial $1 million contribution in the second quarter for charities and causes throughout the footprint

Conference Call

United will hold a conference call, Wednesday, October 21, 2020, at 11 a.m. ET to discuss the contents of this press release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 7466997. The conference call also will be webcast and available for replay for 30 days by selecting “Events & Presentations” within the Investor Relations section of United’s website at www.ucbi.com.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
	2020												2019								Third Quarter		For the Nine Months Ended September 30,
(in thousands, except per share data)	Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter				2020 - 2019 Change		2020			2019			YTD 2020 - 2019 Change
INCOME SUMMARY
Interest revenue	$	141,773			$	123,605			$	136,547			$	136,419			$	140,615					$	401,925		$	416,287
Interest expense	13,319				14,301				17,941				19,781				21,277						45,561			63,531
Net interest revenue	128,454				109,304				118,606				116,638				119,338				8	%	356,364			352,756			1	%
Provision for credit losses	21,793				33,543				22,191				3,500				3,100						77,527			9,650
Noninterest income	48,682				40,238				25,814				30,183				29,031				68		114,734			74,530			54
Total revenue	155,343				115,999				122,229				143,321				145,269				7		393,571			417,636			(6	)
Expenses	95,981				83,980				81,538				81,424				82,924				16		261,499			240,821			9
Income before income tax expense	59,362				32,019				40,691				61,897				62,345				(5	)	132,072			176,815			(25	)
Income tax expense	11,755				6,923				8,807				12,885				13,983				(16	)	27,485			40,106			(31	)
Net income	47,607				25,096				31,884				49,012				48,362				(2	)	104,587			136,709			(23	)
Merger-related and other charges	3,361				397				808				(74		)		2,605						4,566			7,431
Income tax benefit of merger-related and other charges	(519		)		(87		)		(182		)		17				(600		)				(788		)	(1,712		)
Net income - operating ⁽¹⁾	$	50,449			$	25,406			$	32,510			$	48,955			$	50,367			—		$	108,365		$	142,428		(24	)

Pre-tax pre-provision income ⁽⁵⁾	$	81,155			$	65,562			$	62,882			$	65,397			$	65,445			24		$	209,599		$	186,465		12

PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP	$	0.52			$	0.32			$	0.40			$	0.61			$	0.60			(13	)	$	1.25		$	1.70		(26	)
Diluted net income - operating ⁽¹⁾	0.55				0.32				0.41				0.61				0.63				(13	)	1.29			1.77			(27	)
Cash dividends declared	0.18				0.18				0.18				0.18				0.17				6		0.54			0.50			8
Book value	21.45				21.22				20.80				20.53				20.16				6		21.45			20.16			6
Tangible book value ⁽³⁾	17.09				16.95				16.52				16.28				15.90				7		17.09			15.90			7
Key performance ratios:
Return on common equity - GAAP ⁽²⁾⁽⁴⁾	10.06			%	6.17			%	7.85			%	12.07			%	12.16			%			8.11		%	11.83		%
Return on common equity - operating ^(1)(2)(4)	10.69				6.25				8.01				12.06				12.67						8.40			12.32
Return on tangible common equity - operating ^(1)(2)(3)(4)	13.52				8.09				10.57				15.49				16.38						10.76			15.92
Return on assets - GAAP ⁽⁴⁾	1.07				0.71				0.99				1.50				1.51						0.93			1.45
Return on assets - operating ⁽¹⁾⁽⁴⁾	1.14				0.72				1.01				1.50				1.58						0.97			1.51
Return on assets - pre-tax pre-provision ⁽⁴⁾⁽⁵⁾	1.86				1.86				1.95				2.00				2.05						1.89			1.98
Return on assets - pre-tax pre-provision, excluding merger-related and other charges ^(1)(4)(5)	1.93				1.87				1.98				2.00				2.13						1.93			2.06
Net interest margin (fully taxable equivalent) ⁽⁴⁾	3.27				3.42				4.07				3.93				4.12						3.55			4.11
Efficiency ratio - GAAP	54.14				55.86				56.15				54.87				55.64						55.30			56.09
Efficiency ratio - operating ⁽¹⁾	52.24				55.59				55.59				54.92				53.90						54.34			54.36
Equity to total assets	11.47				11.81				12.54				12.66				12.53						11.47			12.53
Tangible common equity to tangible assets ⁽³⁾	8.89				9.12				10.22				10.32				10.16						8.89			10.16

ASSET QUALITY
Nonperforming loans	$	49,084			$	48,021			$	36,208			$	35,341			$	30,832			59		$	49,084		$	30,832		59
Foreclosed properties	953				477				475				476				102						953			102
Total nonperforming assets ("NPAs")	50,037				48,498				36,683				35,817				30,934				62		50,037			30,934			62
Allowance for credit losses - loans	134,256				103,669				81,905				62,089				62,514				115		134,256			62,514			115
Net charge-offs	2,538				6,149				8,114				3,925				2,723				(7	)	16,801			8,291			103
Allowance for credit losses - loans to loans	1.14			%	1.02			%	0.92			%	0.70			%	0.70			%			1.14		%	0.70		%
Net charge-offs to average loans ⁽⁴⁾	0.09				0.25				0.37				0.18				0.12						0.22			0.13
NPAs to loans and foreclosed properties	0.42				0.48				0.41				0.41				0.35						0.42			0.35
NPAs to total assets	0.29				0.32				0.28				0.28				0.24						0.29			0.24

AVERAGE BALANCES ($ in millions)
Loans	$	11,644			$	9,773			$	8,829			$	8,890			$	8,836			32		$	10,088		$	8,647		17
Investment securities	2,750				2,408				2,520				2,486				2,550				8		2,560			2,701			(5	)
Earning assets	15,715				12,958				11,798				11,832				11,568				36		13,498			11,534			17
Total assets	17,013				14,173				12,944				12,946				12,681				34		14,718			12,600			17
Deposits	14,460				12,071				10,915				10,924				10,531				37		12,490			10,462			19
Shareholders’ equity	1,948				1,686				1,653				1,623				1,588				23		1,763			1,533			15
Common shares - basic (thousands)	87,129				78,920				79,340				79,659				79,663				9		81,815			79,714			3
Common shares - diluted (thousands)	87,205				78,924				79,446				79,669				79,667				9		81,876			79,718			3

AT PERIOD END ($ in millions)
Loans	$	11,799			$	10,133			$	8,935			$	8,813			$	8,903			33		$	11,799		$	8,903		33
Investment securities	3,089				2,432				2,540				2,559				2,515				23		3,089			2,515			23
Total assets	17,153				15,005				13,086				12,916				12,809				34		17,153			12,809			34
Deposits	14,603				12,702				11,035				10,897				10,757				36		14,603			10,757			36
Shareholders’ equity	1,967				1,772				1,641				1,636				1,605				23		1,967			1,605			23
Common shares outstanding (thousands)	86,611				78,335				78,284				79,014				78,974				10		86,611			78,974			10

⁽¹⁾ Excludes merger-related and other charges which includes termination of pension plan in the third quarter of 2019, executive retirement charges in the second quarter of 2019 and amortization of certain executive change of control benefits. ⁽²⁾ Net income 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
	2020												2019								For the Nine Months Ended September 30,
	Third				Second				First				Fourth				Third
(in thousands, except per share data)	Quarter				Quarter				Quarter				Quarter				Quarter				2020				2019

Expense reconciliation
Expenses (GAAP)	$	95,981			$	83,980			$	81,538			$	81,424			$	82,924			$	261,499			$	240,821
Merger-related and other charges	(3,361		)		(397		)		(808		)		74				(2,605		)		(4,566		)		(7,431		)
Expenses - operating	$	92,620			$	83,583			$	80,730			$	81,498			$	80,319			$	256,933			$	233,390

Net income to operating income reconciliation
Net income (GAAP)	$	47,607			$	25,096			$	31,884			$	49,012			$	48,362			$	104,587			$	136,709
Merger-related and other charges	3,361				397				808				(74		)		2,605				4,566				7,431
Income tax benefit of merger-related and other charges	(519		)		(87		)		(182		)		17				(600		)		(788		)		(1,712		)
Net income - operating	$	50,449			$	25,406			$	32,510			$	48,955			$	50,367			$	108,365			$	142,428

Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)	$	47,607			$	25,096			$	31,884			$	49,012			$	48,362			$	104,587			$	136,709
Income tax expense	11,755				6,923				8,807				12,885				13,983				27,485				40,106
Provision for credit losses	21,793				33,543				22,191				3,500				3,100				77,527				9,650
Pre-tax pre-provision income	$	81,155			$	65,562			$	62,882			$	65,397			$	65,445			$	209,599			$	186,465

Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.52			$	0.32			$	0.40			$	0.61			$	0.60			$	1.25			$	1.70
Merger-related and other charges, net of tax	0.03				—				0.01				—				0.03				0.04				0.07
Diluted income per common share - operating	$	0.55			$	0.32			$	0.41			$	0.61			$	0.63			$	1.29			$	1.77

Book value per common share reconciliation
Book value per common share (GAAP)	$	21.45			$	21.22			$	20.80			$	20.53			$	20.16			$	21.45			$	20.16
Effect of goodwill and other intangibles	(4.36		)		(4.27		)		(4.28		)		(4.25		)		(4.26		)		(4.36		)		(4.26		)
Tangible book value per common share	$	17.09			$	16.95			$	16.52			$	16.28			$	15.90			$	17.09			$	15.90

Return on tangible common equity reconciliation
Return on common equity (GAAP)	10.06			%	6.17			%	7.85			%	12.07			%	12.16			%	8.11			%	11.83			%
Merger-related and other charges, net of tax	0.63				0.08				0.16				(0.01		)		0.51				0.29				0.49
Return on common equity - operating	10.69				6.25				8.01				12.06				12.67				8.40				12.32
Effect of goodwill and other intangibles	2.83				1.84				2.56				3.43				3.71				2.36				3.60
Return on tangible common equity - operating	13.52			%	8.09			%	10.57			%	15.49			%	16.38			%	10.76			%	15.92			%

Return on assets reconciliation
Return on assets (GAAP)	1.07			%	0.71			%	0.99			%	1.50			%	1.51			%	0.93			%	1.45			%
Merger-related and other charges, net of tax	0.07				0.01				0.02				—				0.07				0.04				0.06
Return on assets - operating	1.14			%	0.72			%	1.01			%	1.50			%	1.58			%	0.97			%	1.51			%

Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)	1.07			%	0.71			%	0.99			%	1.50			%	1.51			%	0.93			%	1.45			%
Income tax expense	0.28				0.20				0.27				0.39				0.44				0.26				0.43
Provision for credit losses	0.51				0.95				0.69				0.11				0.10				0.70				0.10
Return on assets - pre-tax, pre-provision	1.86				1.86				1.95				2.00				2.05				1.89				1.98
Merger-related and other charges	0.07				0.01				0.03				—				0.08				0.04				0.08
Return on assets - pre-tax pre-provision, excluding merger-related and other charges	1.93			%	1.87			%	1.98			%	2.00			%	2.13			%	1.93			%	2.06			%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)	54.14			%	55.86			%	56.15			%	54.87			%	55.64			%	55.30			%	56.09			%
Merger-related and other charges	(1.90		)		(0.27		)		(0.56		)		0.05				(1.74		)		(0.96		)		(1.73		)
Efficiency ratio - operating	52.24			%	55.59			%	55.59			%	54.92			%	53.90			%	54.34			%	54.36			%

Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)	11.47			%	11.81			%	12.54			%	12.66			%	12.53			%	11.47			%	12.53			%
Effect of goodwill and other intangibles	(2.02		)		(2.05		)		(2.32		)		(2.34		)		(2.37		)		(2.02		)		(2.37		)
Effect of preferred equity	(0.56		)		(0.64		)		—				—				—				(0.56		)		—
Tangible common equity to tangible assets	8.89			%	9.12			%	10.22			%	10.32			%	10.16			%	8.89			%	10.16			%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End

	2020						2019				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	$	2,009	$	1,759	$	1,703	$	1,720	$	1,692	$	250		$	317
Income producing commercial RE	2,493		2,178		2,065		2,008		1,934		315			559
Commercial & industrial	1,788		1,219		1,310		1,221		1,271		569			517
Paycheck protection program	1,317		1,095		—		—		—		222			1,317
Commercial construction	987		946		959		976		1,001		41			(14		)
Equipment financing	823		779		761		745		729		44			94
Total commercial	9,417		7,976		6,798		6,670		6,627		1,441			2,790
Residential mortgage	1,270		1,152		1,128		1,118		1,121		118			149
Home equity lines of credit	707		654		668		661		669		53			38
Residential construction	257		230		216		236		229		27			28
Consumer	148		121		125		128		257		27			(109		)
Total loans	$	11,799	$	10,133	$	8,935	$	8,813	$	8,903	$	1,666		$	2,896

LOANS BY MARKET
North Georgia	$	945	$	951	$	958	$	967	$	1,002	$	(6	)	$	(57	)
Atlanta	1,853		1,852		1,820		1,762		1,740		1			113
North Carolina	1,246		1,171		1,124		1,156		1,117		75			129
Coastal Georgia	614		618		604		631		611		(4		)	3
Gainesville	229		233		235		246		246		(4		)	(17		)
East Tennessee	420		433		425		421		435		(13		)	(15		)
South Carolina	1,870		1,778		1,774		1,708		1,705		92			165
Florida	1,453		—		—		—		—		1,453			1,453
Commercial Banking Solutions	3,169		3,097		1,995		1,922		1,916		72			1,253
Indirect auto	—		—		—		—		131		—			(131		)
Total loans	$	11,799	$	10,133	$	8,935	$	8,813	$	8,903	$	1,666		$	2,896

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
	2020
(in thousands)	Third Quarter			Second Quarter				First Quarter
NONACCRUAL LOANS
Owner occupied RE	$	11,075		$	10,710			$	10,405
Income producing RE	12,230			11,274				2,235
Commercial & industrial	3,534			3,432				3,169
Commercial construction	1,863			2,290				1,724
Equipment financing	3,137			3,119				2,439
Total commercial	31,839			30,825				19,972
Residential mortgage	13,864			13,185				12,458
Home equity lines of credit	2,642			3,138				3,010
Residential construction	479			500				540
Consumer	260			373				228
Total	$	49,084		$	48,021			$	36,208

	2020
	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 BY CATEGORY
Owner occupied RE	$	(725	)	(0.14		)	%	$	(466	)	(0.11	)	%	$	(1,028	)	(0.24	)	%
Income producing RE	1,785			0.29				4,548			0.86			270			0.05
Commercial & industrial	(105		)	(0.01		)		(37		)	(0.01	)		7,185			2.30
Commercial construction	(171		)	(0.07		)		122			0.05			(141		)	(0.06	)
Equipment financing	1,993			0.93				1,665			0.87			1,507			0.81
Total commercial	2,777			0.12				5,832			0.31			7,793			0.47
Residential mortgage	(35		)	(0.01		)		(6		)	—			9			—
Home equity lines of credit	(125		)	(0.07		)		(98		)	(0.06	)		(83		)	(0.05	)
Residential construction	—			—				(5		)	(0.01	)		(12		)	(0.02	)
Consumer	(79		)	(0.22		)		426			1.39			407			1.30
Total	$	2,538		0.09				$	6,149		0.25			$	8,114		0.37

⁽¹⁾ Annualized.

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)	September 30, 2020			December 31, 2019
ASSETS
Cash and due from banks	$	122,048		$	125,844
Interest-bearing deposits in banks	923,591			389,362
Cash and cash equivalents	1,045,639			515,206
Debt securities available-for-sale	2,690,448			2,274,581
Debt securities held-to-maturity (fair value $413,820 and $287,904)	398,373			283,533
Loans held for sale at fair value	128,587			58,484
Loans and leases held for investment	11,798,910			8,812,553
Less allowance for credit losses - loans and leases	(134,256		)	(62,089		)
Loans and leases, net	11,664,654			8,750,464
Premises and equipment, net	211,885			215,976
Bank owned life insurance	201,515			202,664
Accrued interest receivable	48,091			32,660
Net deferred tax asset	39,818			34,059
Derivative financial instruments	103,388			35,007
Goodwill and other intangible assets, net	384,074			342,247
Other assets	236,405			171,135
Total assets	$	17,152,877		$	12,916,016
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	5,227,170		$	3,477,979
NOW and interest-bearing demand	2,989,455			2,461,895
Money market	3,399,793			2,230,628
Savings	891,147			706,467
Time	1,819,586			1,859,574
Brokered	276,225			160,701
Total deposits	14,603,376			10,897,244
Long-term debt	326,703			212,664
Derivative financial instruments	33,519			15,516
Accrued expenses and other liabilities	222,024			154,900
Total liabilities	15,185,622			11,280,324
Shareholders' equity:
Preferred stock; $1 par value; 10,000,000 shares authorized; Series I, $25,000 per share liquidation preference; 4,000 shares issued and outstanding	96,422			—
Common stock, $1 par value; 150,000,000 shares authorized; 86,611,114 and 79,013,729 shares issued and outstanding	86,611			79,014
Common stock issuable; 590,521 and 664,640 shares	10,632			11,491
Capital surplus	1,637,467			1,496,641
Retained earnings	94,938			40,152
Accumulated other comprehensive income	41,185			8,394
Total shareholders' equity	1,967,255			1,635,692
Total liabilities and shareholders' equity	$	17,152,877		$	12,916,016

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)	2020		2019		2020		2019
Interest revenue:
Loans, including fees	$	126,936	$	122,645	$	352,861	$	357,575
Investment securities, including tax exempt of $1,895, $1,118, $4,988 and $3,409	14,558		17,744		47,567		57,638
Deposits in banks and short-term investments	279		226		1,497		1,074
Total interest revenue	141,773		140,615		401,925		416,287

Interest expense:
Deposits:
NOW and interest-bearing demand	1,634		3,214		6,240		10,283
Money market	3,017		5,126		10,969		14,100
Savings	47		41		121		115
Time	4,300		8,732		18,014		25,687
Deposits	8,998		17,113		35,344		50,185
Short-term borrowings	2		429		3		838
Federal Home Loan Bank advances	27		521		28		2,695
Long-term debt	4,292		3,214		10,186		9,813
Total interest expense	13,319		21,277		45,561		63,531
Net interest revenue	128,454		119,338		356,364		352,756
Provision for credit losses	21,793		3,100		77,527		9,650
Net interest revenue after provision for credit losses	106,661		116,238		278,837		343,106

Noninterest income:
Service charges and fees	8,260		9,916		23,893		27,429
Mortgage loan gains and other related fees	25,144		8,658		57,113		17,750
Brokerage and wealth management fees	3,055		1,699		6,019		4,624
Gains from sales of other loans, net	1,175		1,639		3,889		4,412
Securities gains (losses), net	746		—		746		(118		)
Other	10,302		7,119		23,074		20,433
Total noninterest income	48,682		29,031		114,734		74,530
Total revenue	155,343		145,269		393,571		417,636

Noninterest expenses:
Salaries and employee benefits	59,067		50,501		162,236		146,161
Communications and equipment	6,960		6,223		19,462		18,233
Occupancy	7,050		5,921		18,709		17,424
Advertising and public relations	1,778		1,374		5,312		4,256
Postage, printing and supplies	1,703		1,618		4,986		4,733
Professional fees	5,083		4,715		14,003		11,930
Lending and loan servicing expense	3,043		2,556		8,525		7,509
Outside services - electronic banking	1,888		1,934		5,516		5,101
FDIC assessments and other regulatory charges	1,346		314		4,388		3,571
Amortization of intangibles	1,099		1,210		3,126		3,845
Merger-related and other charges	3,361		2,541		4,566		6,981
Other	3,603		4,017		10,670		11,077
Total noninterest expenses	95,981		82,924		261,499		240,821
Net income before income taxes	59,362		62,345		132,072		176,815
Income tax expense	11,755		13,983		27,485		40,106
Net income	47,607		48,362		104,587		136,709
Preferred stock dividends	1,814		—		1,814		—
Dividends and undistributed earnings allocated to unvested shares	356		351		779		982
Net income available to common shareholders	$	45,437	$	48,011	$	101,994	$	135,727

Net income per common share:
Basic	$	0.52	$	0.60	$	1.25	$	1.70
Diluted	0.52		0.60		1.25		1.70
Weighted average common shares outstanding:
Basic	87,129		79,663		81,815		79,714
Diluted	87,205		79,667		81,876		79,718

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
	2020							2019
*(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⁾	$	11,644,202		$	126,342	4.32	%	$	8,835,585		$	122,526	5.50	%
Taxable securities⁽³⁾	2,499,649			12,663		2.03		2,379,927			16,626		2.79
Tax-exempt securities (FTE) ⁽¹⁾⁽³⁾	249,959			2,544		4.07		170,027			1,502		3.53
Federal funds sold and other interest-earning assets	1,321,445			1,132		0.34		182,935			616		1.35
Total interest-earning assets (FTE)	15,715,255			142,681		3.61		11,568,474			141,270		4.85

Noninterest-earning assets:
Allowance for credit losses	(128,581		)					(63,474		)
Cash and due from banks	135,949							116,922
Premises and equipment	216,326							221,930
Other assets ⁽³⁾	1,074,529							836,951
Total assets	$	17,013,478						$	12,680,803

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	2,890,735		1,634		0.22		$	2,123,910		3,214		0.60
Money market	3,501,781			3,017		0.34		2,277,162			5,126		0.89
Savings	864,849			47		0.02		695,297			41		0.02
Time	1,933,764			4,127		0.85		1,879,801			8,053		1.70
Brokered time deposits	96,198			173		0.72		102,078			679		2.64
Total interest-bearing deposits	9,287,327			8,998		0.39		7,078,248			17,113		0.96
Federal funds purchased and other borrowings	4,405			2		0.18		73,733			429		2.31
Federal Home Loan Bank advances	2,818			27		3.81		88,261			521		2.34
Long-term debt	327,017			4,292		5.22		243,935			3,214		5.23
Total borrowed funds	334,240			4,321		5.14		405,929			4,164		4.07
Total interest-bearing liabilities	9,621,567			13,319		0.55		7,484,177			21,277		1.13

Noninterest-bearing liabilities:
Noninterest-bearing deposits	5,172,999							3,453,174
Other liabilities	270,451							155,107
Total liabilities	15,065,017							11,092,458
Shareholders' equity	1,948,461							1,588,345
Total liabilities and shareholders' equity	$	17,013,478						$	12,680,803

Net interest revenue (FTE)				$	129,362						$	119,993
Net interest-rate spread (FTE)						3.06	%						3.72	%
Net interest margin (FTE) ⁽⁴⁾						3.27	%						4.12	%

⁽¹⁾Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
⁽²⁾Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
⁽³⁾Securities available for sale are shown at amortized cost. Pretax unrealized gains of $77.0 million in 2020 and unrealized gains of $35.1 million in 2019 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,
	2020							2019
*(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⁾	$	10,087,630		$	351,536	4.65	%	$	8,646,622		$	357,541	5.53	%
Taxable securities ⁽³⁾	2,362,674			42,579		2.40		2,532,070			54,229		2.86
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾	197,231			6,699		4.53		168,787			4,579		3.62
Federal funds sold and other interest-earning assets	850,722			3,621		0.57		186,402			1,913		1.37
Total interest-earning assets (FTE)	13,498,257			404,435		4.00		11,533,881			418,262		4.85

Non-interest-earning assets:
Allowance for loan losses	(96,235		)					(62,664		)
Cash and due from banks	134,354							121,889
Premises and equipment	217,551							220,872
Other assets ⁽³⁾	964,511							785,862
Total assets	$	14,718,438						$	12,599,840

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	2,583,911		6,240		0.32		$	2,199,607		10,283		0.63
Money market	2,797,350			10,969		0.52		2,187,822			14,100		0.86
Savings	788,681			121		0.02		685,167			115		0.02
Time	1,860,597			17,435		1.25		1,761,374			20,338		1.54
Brokered time deposits	102,502			579		0.75		292,835			5,349		2.44
Total interest-bearing deposits	8,133,041			35,344		0.58		7,126,805			50,185		0.94
Federal funds purchased and other borrowings	1,611			3		0.25		44,898			838		2.50
Federal Home Loan Bank advances	1,001			28		3.74		142,876			2,695		2.52
Long-term debt	256,218			10,186		5.31		252,686			9,813		5.19
Total borrowed funds	258,830			10,217		5.27		440,460			13,346		4.05
Total interest-bearing liabilities	8,391,871			45,561		0.73		7,567,265			63,531		1.12

Noninterest-bearing liabilities:
Noninterest-bearing deposits	4,356,484							3,335,450
Other liabilities	206,904							164,350
Total liabilities	12,955,259							11,067,065
Shareholders' equity	1,763,179							1,532,775
Total liabilities and shareholders' equity	$	14,718,438						$	12,599,840

Net interest revenue (FTE)				$	358,874						$	354,731
Net interest-rate spread (FTE)						3.27	%						3.73	%
Net interest margin (FTE) ⁽⁴⁾						3.55	%						4.11	%

⁽¹⁾Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
⁽²⁾Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
⁽³⁾Securities available for sale are shown at amortized cost. Pretax unrealized gains of $65.5 million in 2020 and unrealized gains of $4.94 million in 2019 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) (United) is a bank holding company headquartered in Blairsville, Georgia, with executive offices in Greenville, South Carolina. United is one of the largest full-service financial institutions in the Southeast, with $17.2 billion in assets, and 163 offices in Florida, Georgia, North Carolina, South Carolina and Tennessee. United Community Bank, United’s wholly-owned bank subsidiary, specializes in personalized community banking services for individuals, small businesses and companies throughout its geographic footprint, including Florida under the brand Seaside Bank and Trust. Services include a full range of consumer and commercial banking products, including mortgage, advisory, treasury management, and wealth management. Respected national research firms consistently recognize United for outstanding customer service. In 2020, J.D. Power ranked United highest in customer satisfaction with retail banking in the Southeast, marking six out of the last seven years United earned the coveted award. Forbes included United in its inaugural list of the World’s Best Banks in 2019 and again in 2020. Forbes also recognized United on its 2020 list of the 100 Best Banks in America for the seventh consecutive year. United also received five Greenwich Excellence Awards in 2019 for excellence in Small Business Banking and Middle Market Banking, including a national award for Overall Satisfaction in Small Business Banking. Additional information about United can be found at www.ucbi.com.

Non-GAAP Financial Measures

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

For more information:

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

United Community Banks, Inc. Reports Third Quarter Results

Strong Financial Performance and Continued Business Expansion

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