United Community Banks, Inc. reports Third Quarter Results

Staff Report From South Carolina CEO

Wednesday, October 23rd, 2019

United Community Banks, Inc. reported strong third quarter financial results, including solid year-over-year loan and deposit growth, record operating efficiency and strong asset quality. Diluted earnings per share were $0.60, an increase of $0.06 or 11% from a year ago. Excluding merger-related and other charges, diluted operating earnings per share were $0.63, up 15% over last year. United’s return on assets (“ROA”) was 1.51% and its return on common equity was 12.2% for the quarter. On an operating basis, United’s ROA was 1.58% and its return on tangible common equity was 16.4%.

In the third quarter, loans grew at a 3% annualized rate, or at 4% annualized excluding the planned runoff of the discontinued indirect auto portfolio. With this loan growth and continued balance sheet remixing opportunities, United maintained its net interest margin during the quarter, despite declining interest rates. Core transaction deposits grew by $105 million, or 6% annualized, and total customer deposits increased by $197 million during the quarter. Finally, United’s combination of revenue growth and expense management resulted in a 55.64% efficiency ratio, or 53.90% on an operating basis, which represented a new Company best for the second consecutive quarter.

“We are pleased to report such a successful quarter, which is a testament to our team and their tireless dedication to providing outstanding customer service and to executing on our plans to deliver top quartile results,” said Lynn Harton, Chairman and CEO of United. “I am also tremendously proud that United was named one of the "Best Banks to Work For" by American Banker for the third year in a row.  This honor is achieved through the focus and energy of our bankers to build a company where great people can find fulfillment in helping others reach their financial goals."

Third Quarter 2019 Financial Highlights:

EPS growth of 11% over last year, or 15% on an operating basis

Return on assets of 1.51%, or 1.58% excluding merger-related and other charges

Return on common equity of 12.2%

Return on tangible common equity of 16.4% excluding merger-related and other charges

Loan production of $896 million compared to $778 million in Q3 2018

Loan growth, excluding planned runoff of the indirect portfolio of 4% for the quarter and 7% year-to-date on an annualized basis, excluding the acquisition of First Madison on May 1, 2019

Loan growth of $89 million, excluding planned run off of the indirect portfolio, was more than funded by core transaction deposit growth of $105 million

Mortgage locks of $508 million, a company high, compared to $298 million a year ago

Stable net interest margin of 4.12% was flat compared to the second quarter and up 17 basis points from a year ago

Efficiency ratio of 55.64%, or 53.90%, excluding merger-related and other charges

Net charge-offs of 12 basis points, up one basis point from last quarter and remaining at historically low levels

Nonperforming assets of 0.24% of total assets, compared with 0.21% at June 30, 2019 and 0.19% at September 30, 2018

Repurchased approximately 195,000 shares at an average price of $26.51 in the quarter