United Community Banks, Inc. Reports Second Quarter Results - United Community Banks (NASDAQ:UCBI)

GREENVILLE, S.C., July 21, 2020 (GLOBE NEWSWIRE) -- United Community Banks, Inc. UCBI (United) today reported second quarter financial results, with record year-over-year loan and deposit growth. United delivered net income of $25.1 million and pre-tax pre-provision income of $65.6 million and built its allowance for credit losses with a $33.5 million provision for credit losses. Due largely to the continued reserve build anticipating potential future loan losses driven by COVID-19 effects on the economy, diluted earnings per share of $0.32 represented a decrease of $0.23 or 42%, from a year ago. Excluding merger-related and other charges, diluted operating earnings per share were also $0.32, also down 46% from last year. United's return on assets (ROA) was 0.71% and its return on common equity was 6.2% for the quarter. On an operating basis, United's ROA was 0.72% and its return on tangible common equity was 8.1%.

Chairman and CEO Lynn Harton stated, "As the nation continues to grapple with the uncertainties of the future economic environment, I am pleased with the financial strength of the company and the performance of our employees, who continue to deliver for our customers. In this new world of physical distancing, the investments we have made in our digital delivery channels are being put to the test and exceeding our expectations. Customer traffic patterns suggest that our customers have significantly increased their use of our digital platform to access our products and services, as well as to open and manage their accounts. Along with our enhanced mobile app, this platform has enabled us to maintain business volume, while keeping our employees and customers physically-distanced and safe while banking. We supported our small business clients by offering loan deferrals, as needed. Additionally, our SBA team, along with other United bankers across our markets, processed nearly 11,000 applications for the SBA's Paycheck Protection Program (PPP) loans totaling $1.1 billion—providing funding for small businesses throughout our footprint. In addition to addressing the needs of our existing customers, we added approximately 4,000 new loan and deposit customers since the Program began, which has given us an even greater opportunity to serve our markets."

This quarter saw record growth with total loans increasing by $1.2 billion—mainly from PPP loans—however, non-PPP loans also grew at a 5% annualized rate. Likewise, core transaction deposits were up a record $1.7 billion over first quarter with growth in noninterest bearing deposits of $1.1 billion being the primary driver. United's cost of deposits decreased 18 bps to 0.38% as a result. Net interest margin decreased 65 bps from the first quarter. Of this decrease, 18 bps was due to lower purchased loan accretion, approximately 6 bps was due to lower-yielding PPP loans, and approximately 9 bps resulted from carrying an increased amount in low-yielding overnight investments due to the record amount of liquidity generated by bank deposit growth in the quarter.

Harton continued, "During the second quarter, we also completed a number of important strategic initiatives that position us well for the future. In June, we raised $200 million—$100 million in preferred stock with a 6.875% annual dividend rate and $100 million in senior notes with a 5.00% annual coupon. Our long-term goal is to continue to remain a top performer in our peer group, with top quartile results in key performance metrics including capital levels. These capital raises were done to provide us with substantial flexibility to be able to both focus on our customers' current needs, and at the same time, be prepared to emerge from the health crisis in a very strong position. We believe that there will be meaningful strategic growth opportunities at that point."

Immediately following quarter end, the bank announced the July 1^st closing of the previously announced merger with Three Shores Bancorporation, Inc. and its bank subsidiary Seaside National Bank & Trust, which will now be branded Seaside Bank and Trust. Harton noted, "We are pleased to welcome Seaside's talented team of bankers and believe that our combined banks are better together. Gideon Haymaker is now United's president for the State of Florida and additionally will lead our expansion of Seaside's wealth management offering across United's footprint."

Mr. Harton concluded, "Giving back to our communities is at the core of who we are as a community bank. In keeping with that long-standing tradition, I am also pleased to announce that we recently formed the United Community Bank Foundation, a tax-exempt private foundation which will expand our charitable endeavors throughout our footprint. In the second quarter, we made a $1 million initial contribution to the foundation, which will allow us to further support our communities that have been critical to our success over the years."

Second Quarter 2020 Financial Highlights:

EPS decreased by 42% compared to last year on a GAAP basis and 46% on an operating basis
Return on assets of 0.71%, or 0.72% excluding merger-related and other charges
Pre-tax, pre-provision return on assets of 1.86%, or 1.87% excluding merger-related and other charges
Return on common equity of 6.2%
Return on tangible common equity of 8.1%, excluding merger-related and other charges
United adopted the Current Expected Credit Losses (CECL) model for determining the allowance for credit losses last quarter; the continued uncertain economic outlook necessitated a provision for credit losses of $33.5 million
Record loan production of $2.0 billion, with $1.1 billion in PPP loans and $866 million in traditional (non-PPP) loans
Loan growth of $1.2 billion, including traditional loan growth at an annualized rate of 5% for the quarter
Core transaction deposits were up $1.7 billion or 22%, mainly driven by noninterest bearing demand deposit growth of $1.1 billion; a significant portion of United's core transaction deposit growth was attributable to PPP-related deposits
Net interest margin of 3.42%, which was down 65 bps from first quarter, reflecting the effect of lower interest rates, lower purchased loan accretion, the impact of the lower yielding PPP loans and a much higher level of low-yielding, highly-liquid assets
Mortgage rate locks of $802 million, which is slightly higher than last quarter and again exceeds our previous quarterly record by 58%; this compares to $390 million a year ago
Noninterest income was up $14.4 million on a linked quarter basis, primarily due to a $15.3 million increase in mortgage income as a result of record mortgage rate locks and production, as well as an improved market environment
Efficiency ratio of 55.86%, or 55.59% excluding merger-related and other charges
Net charge-offs of $6.1 million, or 25 basis points as a percent of average loans, down 12 basis points from last quarter and mainly attributable to two credits that have been substandard for more than a year
Nonperforming assets of 0.32% of total assets, which is up 4 basis points compared to March 31, 2020
Total deferrals of $1.8 billion or 17% of the total loan portfolio at June 30
Funded the United Community Bank Foundation with an initial $1 million contribution for charities and causes throughout the footprint
Completed a public offering of $100 million aggregate of 6.875% Non-Cumulative Perpetual Preferred Stock and $100 million aggregate principal amount of 5.000% Fixed-to-Floating Senior Notes due 2030
Effective July 1, 2020, United completed its merger with Three Shores Bancorporation, Inc. and its bank subsidiary, Seaside National Bank & Trust

Conference Call

United will hold a conference call, Wednesday, July 22, 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 4995436. 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												Second Quarter			For the Six Months Ended June 30,
*(in thousands, except per share data)*	Second Quarter				First Quarter				Fourth Quarter				Third Quarter				Second Quarter				2020 - 2019 Change			2020				2019				YTD 2020 - 2019 Change
INCOME SUMMARY
Interest revenue	$	123,605			$	136,547			$	136,419			$	140,615			$	139,156						$	260,152			$	275,672
Interest expense	14,301				17,941				19,781				21,277				21,372							32,242				42,254
Net interest revenue	109,304				118,606				116,638				119,338				117,784				(7	)	%	227,910				233,418				(2	)	%
Provision for credit losses	33,543				22,191				3,500				3,100				3,250							55,734				6,550				751
Noninterest income	40,238				25,814				30,183				29,031				24,531				64			66,052				45,499				45
Total revenue	115,999				122,229				143,321				145,269				139,065				(17	)		238,228				272,367				(13	)
Expenses	83,980				81,538				81,424				82,924				81,813				3			165,518				157,897				5
Income before income tax expense	32,019				40,691				61,897				62,345				57,252				(44	)		72,710				114,470				(36	)
Income tax expense	6,923				8,807				12,885				13,983				13,167				(47	)		15,730				26,123				(40	)
Net income	25,096				31,884				49,012				48,362				44,085				(43	)		56,980				88,347				(36	)
Merger-related and other charges	397				808				(74		)		2,605				4,087							1,205				4,826
Income tax benefit of merger-related and other charges	(87		)		(182		)		17				(600		)		(940		)					(269		)		(1,112		)
Net income - operating ⁽¹⁾	$	25,406			$	32,510			$	48,955			$	50,367			$	47,232			(46	)		$	57,916			$	92,061			(37	)

Pre-tax pre-provision income ⁽⁵⁾	$	65,562			$	62,882			$	65,397			$	65,445			$	60,502			8			$	128,444			$	121,020			6

PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP	$	0.32			$	0.40			$	0.61			$	0.60			$	0.55			(42	)		$	0.71			$	1.10			(35	)
Diluted net income - operating ⁽¹⁾	0.32				0.41				0.61				0.63				0.59				(46	)		0.73				1.15				(37	)
Cash dividends declared	0.18				0.18				0.18				0.17				0.17				6			0.36				0.33				9
Book value	21.22				20.80				20.53				20.16				19.65				8			21.22				19.65				8
Tangible book value ⁽³⁾	16.95				16.52				16.28				15.90				15.38				10			16.95				15.38				10
Key performance ratios:
Return on common equity - GAAP ⁽²⁾⁽⁴⁾	6.17			%	7.85			%	12.07			%	12.16			%	11.45			%				7.01			%	11.65			%
Return on common equity - operating ^(1)(2)(4)	6.25				8.01				12.06				12.67				12.27							7.13				12.14
Return on tangible common equity - operating ^(1)(2)(3)(4)	8.09				10.57				15.49				16.38				15.88							9.20				15.67
Return on assets - GAAP ⁽⁴⁾	0.71				0.99				1.50				1.51				1.40							0.85				1.42
Return on assets - operating ⁽¹⁾⁽⁴⁾	0.72				1.01				1.50				1.58				1.50							0.86				1.48
Return on assets - pre-tax pre-provision ⁽⁴⁾⁽⁵⁾	1.86				1.95				2.00				2.05				1.92							1.91				1.94
Return on assets - pre-tax pre-provision, excluding merger- related and other charges ^(1)(4)(5)	1.87				1.98				2.00				2.13				2.05							1.92				2.02
Net interest margin (fully taxable equivalent) ⁽⁴⁾	3.42				4.07				3.93				4.12				4.12							3.73				4.11
Efficiency ratio - GAAP	55.86				56.15				54.87				55.64				57.28							56.00				56.32
Efficiency ratio - operating ⁽¹⁾	55.59				55.59				54.92				53.90				54.42							55.59				54.60
Equity to total assets	11.81				12.54				12.66				12.53				12.25							11.81				12.25
Tangible common equity to tangible assets ⁽³⁾	9.12				10.22				10.32				10.16				9.86							9.12				9.86

ASSET QUALITY
Nonperforming loans	$	48,021			$	36,208			$	35,341			$	30,832			$	26,597			81			$	48,021			$	26,597			81
Foreclosed properties	477				475				476				102				75				536			477				75				536
Total nonperforming assets ("NPAs")	48,498				36,683				35,817				30,934				26,672				82			48,498				26,672				82
Allowance for credit losses - loans	103,669				81,905				62,089				62,514				62,204				67			103,669				62,204				67
Net charge-offs	6,149				8,114				3,925				2,723				2,438				152			14,263				5,568				156
Allowance for credit losses - loans to loans	1.02			%	0.92			%	0.70			%	0.70			%	0.70			%				1.02				0.70			%
Net charge-offs to average loans ⁽⁴⁾	0.25				0.37				0.18				0.12				0.11							0.31				0.13
NPAs to loans and foreclosed properties	0.48				0.41				0.41				0.35				0.30							0.48				0.30
NPAs to total assets	0.32				0.28				0.28				0.24				0.21							0.32				0.21

AVERAGE BALANCES ($ in millions)
Loans	$	9,773			$	8,829			$	8,890			$	8,836			$	8,670			13			$	9,301			$	8,551			9
Investment securities	2,408				2,520				2,486				2,550				2,674				(10	)		2,464				2,778				(11	)
Earning assets	12,958				11,798				11,832				11,568				11,534				12			12,378				11,516				7
Total assets	14,173				12,944				12,946				12,681				12,608				12			13,558				12,559				8
Deposits	12,071				10,915				10,924				10,531				10,493				15			11,493				10,427				10
Shareholders' equity	1,686				1,653				1,623				1,588				1,531				10			1,670				1,505				11
Common shares - basic (thousands)	78,920				79,340				79,659				79,663				79,673				(1	)		79,130				79,739				(1	)
Common shares - diluted (thousands)	78,924				79,446				79,669				79,667				79,678				(1	)		79,186				79,745				(1	)

AT PERIOD END ($ in millions)
Loans	$	10,133			$	8,935			$	8,813			$	8,903			$	8,838			15			$	10,133			$	8,838			15
Investment securities	2,432				2,540				2,559				2,515				2,620				(7	)		2,432				2,620				(7	)
Total assets	15,005				13,086				12,916				12,809				12,779				17			15,005				12,779				17
Deposits	12,702				11,035				10,897				10,757				10,591				20			12,702				10,591				20
Shareholders' equity	1,772				1,641				1,636				1,605				1,566				13			1,772				1,566				13
Common shares outstanding (thousands)	78,335				78,284				79,014				78,974				79,075				(1	)		78,335				79,075				(1	)

⁽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 Six Months Ended June 30,
	Second				First				Fourth				Third				Second
*(in thousands, except per share data)*	Quarter				Quarter				Quarter				Quarter				Quarter				2020				2019

Expense reconciliation
Expenses (GAAP)	$	83,980			$	81,538			$	81,424			$	82,924			$	81,813			$	165,518			$	157,897
Merger-related and other charges	(397		)		(808		)		74				(2,605		)		(4,087		)		(1,205		)		(4,826		)
Expenses - operating	$	83,583			$	80,730			$	81,498			$	80,319			$	77,726			$	164,313			$	153,071

Net income to operating income reconciliation
Net income (GAAP)	$	25,096			$	31,884			$	49,012			$	48,362			$	44,085			$	56,980			$	88,347
Merger-related and other charges	397				808				(74		)		2,605				4,087				1,205				4,826
Income tax benefit of merger-related and other charges	(87		)		(182		)		17				(600		)		(940		)		(269		)		(1,112		)
Net income - operating	$	25,406			$	32,510			$	48,955			$	50,367			$	47,232			$	57,916			$	92,061

Net income to pre-tax pre-provision income reconciliation
Net income (GAAP)	$	25,096			$	31,884			$	49,012			$	48,362			$	44,085			$	56,980			$	88,347
Income tax expense	6,923				8,807				12,885				13,983				13,167				15,730				26,123
Provision for credit losses	33,543				22,191				3,500				3,100				3,250				55,734				6,550
Pre-tax pre-provision income	$	65,562			$	62,882			$	65,397			$	65,445			$	60,502			$	128,444			$	121,020

Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.32			$	0.40			$	0.61			$	0.60			$	0.55			$	0.71			$	1.10
Merger-related and other charges, net of tax	—				0.01				—				0.03				0.04				0.02				0.05
Diluted income per common share - operating	$	0.32			$	0.41			$	0.61			$	0.63			$	0.59			$	0.73			$	1.15

Book value per common share reconciliation
Book value per common share (GAAP)	$	21.22			$	20.80			$	20.53			$	20.16			$	19.65			$	21.22			$	19.65
Effect of goodwill and other intangibles	(4.27		)		(4.28		)		(4.25		)		(4.26		)		(4.27		)		(4.27		)		(4.27		)
Tangible book value per common share	$	16.95			$	16.52			$	16.28			$	15.90			$	15.38			$	16.95			$	15.38

Return on tangible common equity reconciliation
Return on common equity (GAAP)	6.17			%	7.85			%	12.07			%	12.16			%	11.45			%	7.01			%	11.65			%
Merger-related and other charges, net of tax	0.08				0.16				(0.01		)		0.51				0.82				0.12				0.49
Return on common equity - operating	6.25				8.01				12.06				12.67				12.27				7.13				12.14
Effect of goodwill and other intangibles	1.84				2.56				3.43				3.71				3.61				2.07				3.53
Return on tangible common equity - operating	8.09			%	10.57			%	15.49			%	16.38			%	15.88			%	9.20			%	15.67			%

Return on assets reconciliation
Return on assets (GAAP)	0.71			%	0.99			%	1.50			%	1.51			%	1.40			%	0.85			%	1.42			%
Merger-related and other charges, net of tax	0.01				0.02				—				0.07				0.10				0.01				0.06
Return on assets - operating	0.72			%	1.01			%	1.50			%	1.58			%	1.50			%	0.86			%	1.48			%

Return on assets to return on assets- pre-tax pre-provision reconciliation
Return on assets (GAAP)	0.71			%	0.99			%	1.50			%	1.51			%	1.40			%	0.85			%	1.42			%
Income tax expense	0.20				0.27				0.39				0.44				0.42				0.23				0.41
Provision for credit losses	0.95				0.69				0.11				0.10				0.10				0.83				0.11
Return on assets - pre-tax, pre-provision	1.86				1.95				2.00				2.05				1.92				1.91				1.94
Merger-related and other charges	0.01				0.03				—				0.08				0.13				0.01				0.08
Return on assets - pre-tax pre-provision, excluding merger-related and other charges	1.87			%	1.98			%	2.00			%	2.13			%	2.05			%	1.92			%	2.02			%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)	55.86			%	56.15			%	54.87			%	55.64			%	57.28			%	56.00			%	56.32			%
Merger-related and other charges	(0.27		)		(0.56		)		0.05				(1.74		)		(2.86		)		(0.41		)		(1.72		)
Efficiency ratio - operating	55.59			%	55.59			%	54.92			%	53.90			%	54.42			%	55.59			%	54.60			%

Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)	11.81			%	12.54			%	12.66			%	12.53			%	12.25			%	11.81			%	12.25			%
Effect of goodwill and other intangibles	(2.05		)		(2.32		)		(2.34		)		(2.37		)		(2.39		)		(2.05		)		(2.39		)
Effect of preferred equity	(0.64		)		—				—				—				—				(0.64		)		—
Tangible common equity to tangible assets	9.12			%	10.22			%	10.32			%	10.16			%	9.86			%	9.12			%	9.86			%

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

	2020				2019						Linked			Year over
(in millions)	Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter		Quarter Change			Year Change
LOANS BY CATEGORY
Owner occupied commercial RE	$	1,760	$	1,703	$	1,720	$	1,692	$	1,658	$	57		$	102
Income producing commercial RE	2,178		2,065		2,008		1,934		1,939		113			239
Commercial & industrial	1,219		1,310		1,221		1,271		1,299		(91		)	(80		)
Paycheck protection program	1,095		—		—		—		—		1,095			1,095
Commercial construction	946		959		976		1,001		983		(13		)	(37		)
Equipment financing	779		761		745		729		674		18			105
Total commercial	7,976		6,798		6,670		6,627		6,553		1,178			1,423
Residential mortgage	1,152		1,128		1,118		1,121		1,108		24			44
Home equity lines of credit	654		668		661		669		675		(14		)	(21		)
Residential construction	230		216		236		229		219		14			11
Consumer	121		125		128		257		283		(4		)	(162		)
Total loans	$	10,133	$	8,935	$	8,813	$	8,903	$	8,838	$	1,198		$	1,295

LOANS BY MARKET
North Georgia	$	951	$	958	$	967	$	1,002	$	1,002	(7		)	(51		)
Atlanta	1,852		1,820		1,762		1,740		1,745		32			107
North Carolina	1,171		1,124		1,156		1,117		1,084		47			87
Coastal Georgia	618		604		631		611		604		14			14
Gainesville	233		235		246		246		244		(2		)	(11		)
East Tennessee	433		425		421		435		446		8			(13		)
South Carolina	1,778		1,774		1,708		1,705		1,674		4			104
Commercial Banking Solutions	3,097		1,995		1,922		1,916		1,884		1,102			1,213
Indirect auto	—		—		—		131		155		—			(155		)
Total loans	$	10,133	$	8,935	$	8,813	$	8,903	$	8,838	$	1,198		$	1,295

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
	2020				2019
(in thousands)	Second Quarter		First Quarter		Fourth Quarter
NONACCRUAL LOANS
Owner occupied RE	$	10,710	$	10,405	$	10,544
Income producing RE	11,274		2,235		1,996
Commercial & industrial	3,432		3,169		2,545
Commercial construction	2,290		1,724		2,277
Equipment financing	3,119		2,439		3,141
Total commercial	30,825		19,972		20,503
Residential mortgage	13,185		12,458		10,567
Home equity lines of credit	3,138		3,010		3,173
Residential construction	500		540		939
Consumer	373		228		159
Total	$	48,021	$	36,208	$	35,341

	2020												2019
	Second Quarter						First Quarter						Fourth 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	$	(466	)	(0.11	)	%	$	(1,028	)	(0.24	)	%	$	(208	)	(0.05	)	%
Income producing RE	4,548			0.86			270			0.05			95			0.02
Commercial & industrial	(37		)	(0.01	)		7,185			2.30			1,809			0.58
Commercial construction	122			0.05			(141		)	(0.06	)		(140		)	(0.06	)
Equipment financing	1,665			0.87			1,507			0.81			1,550			0.84
Total commercial	5,832			0.31			7,793			0.47			3,106			0.19
Residential mortgage	(6		)	—			9			—			89			0.03
Home equity lines of credit	(98		)	(0.06	)		(83		)	(0.05	)		198			0.12
Residential construction	(5		)	(0.01	)		(12		)	(0.02	)		(24		)	(0.04	)
Consumer	426			1.39			407			1.30			556			0.90
Total	$	6,149		0.25			$	8,114		0.37			$	3,925		0.18

⁽¹⁾ Annualized.

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)	June 30, 2020			December 31, 2019
ASSETS
Cash and due from banks	$	125,255		$	125,844
Interest-bearing deposits in banks	1,203,706			389,362
Cash and cash equivalents	1,328,961			515,206
Debt securities available-for-sale	2,125,209			2,274,581
Debt securities held-to-maturity (fair value $320,253 and $287,904)	306,638			283,533
Loans held for sale at fair value	99,477			58,484
Loans and leases held for investment	10,132,510			8,812,553
Less allowance for credit losses - loans and leases	(103,669		)	(62,089		)
Loans and leases, net	10,028,841			8,750,464
Premises and equipment, net	211,972			215,976
Bank owned life insurance	200,699			202,664
Accrued interest receivable	37,774			32,660
Net deferred tax asset	27,362			34,059
Derivative financial instruments	94,434			35,007
Goodwill and other intangible assets, net	340,220			342,247
Other assets	203,300			171,135
Total assets	$	15,004,887		$	12,916,016
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand	$	4,689,545		$	3,477,979
NOW and interest-bearing demand	2,582,831			2,461,895
Money market	2,621,158			2,230,628
Savings	832,529			706,467
Time	1,751,091			1,859,574
Brokered	224,931			160,701
Total deposits	12,702,085			10,897,244
Long-term debt	311,631			212,664
Derivative financial instruments	24,685			15,516
Accrued expenses and other liabilities	194,841			154,900
Total liabilities	13,233,242			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	96,660			—
Common stock, $1 par value; 150,000,000 shares authorized; 78,335,127 and 79,013,729 shares issued and outstanding	78,335			79,014
Common stock issuable; 596,785 and 664,640 shares	10,646			11,491
Capital surplus	1,480,464			1,496,641
Retained earnings	64,990			40,152
Accumulated other comprehensive income	40,550			8,394
Total shareholders' equity	1,771,645			1,635,692
Total liabilities and shareholders' equity	$	15,004,887		$	12,916,016

UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Income (Unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2020		2019		2020		2019
Interest revenue:
Loans, including fees	$	107,862	$	119,671	$	225,925	$	234,930
Investment securities, including tax exempt of $1,570, $1,122, $3,093 and $2,291	15,615		19,076		33,009		39,894
Deposits in banks and short-term investments	128		409		1,218		848
Total interest revenue	123,605		139,156		260,152		275,672

Interest expense:
Deposits:
NOW and interest-bearing demand	1,628		3,460		4,606		7,069
Money market	3,421		4,842		7,952		8,974
Savings	39		42		74		74
Time	6,183		8,771		13,714		16,955
Deposits	11,271		17,115		26,346		33,072
Short-term borrowings	—		248		1		409
Federal Home Loan Bank advances	—		752		1		2,174
Long-term debt	3,030		3,257		5,894		6,599
Total interest expense	14,301		21,372		32,242		42,254
Net interest revenue	109,304		117,784		227,910		233,418
Provision for credit losses	33,543		3,250		55,734		6,550
Net interest revenue after provision for credit losses	75,761		114,534		172,176		226,868

Noninterest income:
Service charges and fees	6,995		9,060		15,633		17,513
Mortgage loan gains and other related fees	23,659		5,344		31,969		9,092
Brokerage fees	1,324		1,588		2,964		2,925
Gains from sales of other loans, net	1,040		1,470		2,714		2,773
Securities gains (losses), net	—		149		—		(118		)
Other	7,220		6,920		12,772		13,314
Total noninterest income	40,238		24,531		66,052		45,499
Total revenue	115,999		139,065		238,228		272,367

Noninterest expenses:
Salaries and employee benefits	51,811		48,157		103,169		95,660
Communications and equipment	6,556		6,222		12,502		12,010
Occupancy	5,945		5,919		11,659		11,503
Advertising and public relations	2,260		1,596		3,534		2,882
Postage, printing and supplies	1,613		1,529		3,283		3,115
Professional fees	4,823		4,054		8,920		7,215
Lending and loan servicing expense	3,189		2,619		5,482		4,953
Outside services - electronic banking	1,796		1,558		3,628		3,167
FDIC assessments and other regulatory charges	1,558		1,547		3,042		3,257
Amortization of intangibles	987		1,342		2,027		2,635
Merger-related and other charges	397		3,894		1,205		4,440
Other	3,045		3,376		7,067		7,060
Total noninterest expenses	83,980		81,813		165,518		157,897
Net income before income taxes	32,019		57,252		72,710		114,470
Income tax expense	6,923		13,167		15,730		26,123
Net income	$	25,096	$	44,085	$	56,980	$	88,347

Net income available to common shareholders	$	24,913	$	43,769	$	56,554	$	87,716

Net income per common share:
Basic	$	0.32	$	0.55	$	0.71	$	1.10
Diluted	0.32		0.55		0.71		1.10
Weighted average common shares outstanding:
Basic	78,920		79,673		79,130		79,739
Diluted	78,924		79,678		79,186		79,745

Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 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⁾	$	9,772,703		$	107,398	4.42	%	$	8,669,847		$	119,668	5.54	%
Taxable securities⁽³⁾	2,229,371			14,045		2.52		2,506,942			17,954		2.86
Tax-exempt securities (FTE) ⁽¹⁾⁽³⁾	178,903			2,110		4.72		166,628			1,507		3.62
Federal funds sold and other interest-earning assets	776,776			857		0.44		190,678			679		1.42
Total interest-earning assets (FTE)	12,957,753			124,410		3.86		11,534,095			139,808		4.86

Noninterest-earning assets:
Allowance for credit losses	(89,992		)					(62,716		)
Cash and due from banks	138,842							125,021
Premises and equipment	217,096							224,018
Other assets ⁽³⁾	949,201							787,859
Total assets	$	14,172,900						$	12,608,277

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	2,444,895		1,628		0.27		$	2,190,080		3,460		0.63
Money market	2,541,805			3,421		0.54		2,186,282			4,842		0.89
Savings	788,247			39		0.02		687,753			42		0.02
Time	1,805,671			6,058		1.35		1,773,968			6,949		1.57
Brokered time deposits	130,556			125		0.39		298,553			1,822		2.45
Total interest-bearing deposits	7,711,174			11,271		0.59		7,136,636			17,115		0.96
Federal funds purchased and other borrowings	1			—		—		38,838			248		2.56
Federal Home Loan Bank advances	—			—		—		117,912			752		2.56
Long-term debt	228,096			3,030		5.34		252,351			3,257		5.18
Total borrowed funds	228,097			3,030		5.34		409,101			4,257		4.17
Total interest-bearing liabilities	7,939,271			14,301		0.72		7,545,737			21,372		1.14

Noninterest-bearing liabilities:
Noninterest-bearing deposits	4,360,095							3,355,930
Other liabilities	187,375							175,806
Total liabilities	12,486,741							11,077,473
Shareholders' equity	1,686,159							1,530,804
Total liabilities and shareholders' equity	$	14,172,900						$	12,608,277

Net interest revenue (FTE)				$	110,109						$	118,436
Net interest-rate spread (FTE)						3.14	%						3.72	%
Net interest margin (FTE) ⁽⁴⁾						3.42	%						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 $66.3 million in 2020 and unrealized gains of $5.00 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 Six Months Ended June 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⁾	$	9,300,792		$	225,194	4.87	%	$	8,550,574		$	235,015	5.54	%
Taxable securities ⁽³⁾	2,293,502			29,916		2.61		2,609,400			37,603		2.88
Tax-exempt securities (FTE)⁽¹⁾⁽³⁾	170,578			4,155		4.87		168,156			3,077		3.66
Federal funds sold and other interest-earning assets	612,776			2,489		0.81		188,165			1,297		1.38
Total interest-earning assets (FTE)	12,377,648			261,754		4.25		11,516,295			276,992		4.84

Non-interest-earning assets:
Allowance for loan losses	(79,885		)					(62,253		)
Cash and due from banks	133,548							124,414
Premises and equipment	218,170							220,335
Other assets ⁽³⁾	908,828							759,899
Total assets	$	13,558,309						$	12,558,690

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand	$	2,428,815		4,606		0.38		$	2,238,083		7,069		0.64
Money market	2,441,264			7,952		0.66		2,142,411			8,974		0.84
Savings	750,179			74		0.02		680,018			74		0.02
Time	1,823,612			13,308		1.47		1,701,181			12,285		1.46
Brokered time deposits	105,689			406		0.77		389,794			4,670		2.42
Total interest-bearing deposits	7,549,559			26,346		0.70		7,151,487			33,072		0.93
Federal funds purchased and other borrowings	199			1		1.01		30,241			409		2.73
Federal Home Loan Bank advances	83			1		2.42		170,636			2,174		2.57
Long-term debt	220,429			5,894		5.38		257,134			6,599		5.18
Total borrowed funds	220,711			5,896		5.37		458,011			9,182		4.04
Total interest-bearing liabilities	7,770,270			32,242		0.83		7,609,498			42,254		1.12

Noninterest-bearing liabilities:
Noninterest-bearing deposits	3,943,740							3,275,612
Other liabilities	174,781							169,048
Total liabilities	11,888,791							11,054,158
Shareholders' equity	1,669,518							1,504,532
Total liabilities and shareholders' equity	$	13,558,309						$	12,558,690

Net interest revenue (FTE)				$	229,512						$	234,738
Net interest-rate spread (FTE)						3.42	%						3.72	%
Net interest margin (FTE) ⁽⁴⁾						3.73	%						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 $59.6 million in 2020 and unrealized losses of $10.4 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. 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 $15.0 billion in assets, and 149 offices in Georgia, North Carolina, South Carolina and Tennessee at June 30, 2020. Through its July 1^st acquisition of Three Shores Bancorporation and its wholly-owned banking subsidiary, Seaside National Bank & Trust, United added approximately $2.1 billion in assets and 14 banking offices in key metropolitan markets throughout Florida. 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, now 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 now 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

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