United Community Banks Earnings 2019-06-30

UCBI 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2019



	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the Transition Period from ___________ to ___________

Commission file number 001-35095

UNITED COMMUNITY BANKS, INC.

(Exact name of registrant as specified in its charter)



Georgia		58-1807304
(State of incorporation)		(I.R.S. Employer Identification No.)



125 Highway 515 East
Blairsville	,	Georgia	30512
(Address of principal executive offices)			(Zip code)

(706) 781-2265

(Registrant’s telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, par value $1 per share	UCBI	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Common stock, par value $1 per share 79,079,126 shares outstanding as of July 31, 2019.

INDEX



PART I - Financial Information

	Item 1.	Financial Statements.

		Consolidated Statements of Income (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	4

		Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	5

		Consolidated Balance Sheets (unaudited) at June 30, 2019 and December 31, 2018	6

		Consolidated Statements of Changes in Shareholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	7

		Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2019 and 2018	8

		Notes to Consolidated Financial Statements	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	43

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	63

	Item 4.	Controls and Procedures.	63

PART II - Other Information

	Item 1.	Legal Proceedings.	64
	Item 1A.	Risk Factors.	64
	Item 6.	Exhibits.	64

Forward-looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Forward-looking statements are not statements of historical fact and generally can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “projects”, “plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”, “seeks”, “intends”, or “anticipates”, or the negative thereof or comparable terminology. Forward-looking statements include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of various transactions or events, and statements about the future performance, operations, products and services of United Community Banks, Inc. (the “Holding Company”) and its subsidiaries (collectively referred to in this report as “United”).

Forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict as to timing, extent, likelihood and degree of occurrence, which could cause actual results to differ materially from anticipated results. Such risks, uncertainties and assumptions include, but are not limited to the following factors:


•	the condition of the general business, political, and economic environment, banking system and financial markets and corresponding changes in loan underwriting, credit review or loss policies associated with changes in these and other conditions;


•	strategic, market, operational, liquidity and interest rate risks associated with our business;


•	changes in the interest rate environment, including interest rate changes made by the Federal Reserve, the discontinuation of London Interbank Offered Rate (“LIBOR”) as an interest rate benchmark, as well as cash flow reassessments may reduce net interest margin and/or the volumes and values of loans made or held as well as the value of other financial assets;


•	our lack of geographic diversification and the success of the local economies in which we operate;


•	the risks of expansion into new geographic or product markets;


•	risks with respect to our ability to successfully expand and complete acquisitions and integrate businesses and operations that are acquired;


•	our ability to attract and retain key employees;


•	competition from financial institutions and other financial service providers including financial technology providers and our ability to attract customers from other financial institutions;


•	losses due to fraudulent and negligent conduct of our customers, third party service providers or employees;


•	cybersecurity risks and the vulnerability of United’s network and online banking portals, and the systems of parties with whom United contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches that could adversely affect our business and financial performance or reputation;


•	our reliance on third parties to provide key components of our business infrastructure and services required to operate our business;


•	the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services market;


•	the availability of and access to capital;


•	legislative, regulatory or accounting changes that may adversely affect us;


•	changes in the allowance for loan losses resulting from the adoption and implementation of the new Current Expected Credit Loss (“CECL”) methodology;


•	the costs, effects and outcomes of litigation, regulatory proceedings, examinations, investigations, or similar matters, or adverse facts and developments related thereto;


•	deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses that exceed our current allowance for loan losses; and


•	limitations on the ability of United Community Bank (the “Bank”) to pay dividends to the Holding Company, which could affect Holding Company liquidity, including the ability to pay dividends to shareholders or take other capital actions.

United cautions readers that the foregoing list of factors is not exclusive, is not necessarily in order of importance and not to place undue reliance on forward-looking statements. Additional factors that may cause actual results to differ materially from those contemplated by any forward-looking statements also may be found in United’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) and available at the SEC’s website at http://www.sec.gov. United does not intend to and hereby disclaims any obligation to update or revise any forward-looking statement contained in this Form 10-Q, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise. The financial statements and information contained herein have not been reviewed, or confirmed for accuracy or relevance, by the Federal Deposit Insurance Corporation (the “FDIC”) or any other regulator.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

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)	2019		2018		2019		2018
Interest revenue:
Loans, including fees	$	119,671	$	103,492	$	234,930	$	199,961
Investment securities, including tax exempt of $1,122 and $1,025, and $2,291 and $1,997	19,076		18,254		39,894		36,549
Deposits in banks and short-term investments	409		469		848		995
Total interest revenue	139,156		122,215		275,672		237,505

Interest expense:
Deposits:
NOW and interest-bearing demand	3,377		1,303		6,913		2,416
Money market	4,925		2,583		9,130		4,758
Savings	42		35		74		84
Time	8,771		4,198		16,955		7,154
Total deposit interest expense	17,115		8,119		33,072		14,412
Short-term borrowings	248		198		409		498
Federal Home Loan Bank advances	752		1,636		2,174		3,760
Long-term debt	3,257		3,786		6,599		7,074
Total interest expense	21,372		13,739		42,254		25,744
Net interest revenue	117,784		108,476		233,418		211,761
Provision for credit losses	3,250		1,800		6,550		5,600
Net interest revenue after provision for credit losses	114,534		106,676		226,868		206,161

Noninterest income:
Service charges and fees	9,060		8,794		17,513		17,719
Mortgage loan and other related fees	5,344		5,307		9,092		10,666
Brokerage fees	1,588		1,201		2,925

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$27.92	79	$2,210

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-07-23
8-K	2019-05-08	Shareholder Vote
8-K	2019-04-23	Earnings, Exhibits
8-K	2019-01-22	Earnings
8-K	2018-11-08	Other Events, Exhibits
8-K	2018-10-23
8-K	2018-09-27	Officers, Exhibits
8-K	2018-07-24
8-K	2018-06-20	Officers, Exhibits
8-K	2018-05-09	Shareholder Vote
8-K	2018-04-24	Exhibits
8-K	2018-04-02	Officers, Exhibits
8-K	2018-02-22	Exhibits
8-K	2018-02-01	Exhibits
8-K	2018-01-23	Earnings, Exhibits
8-K	2018-01-10	Enter Agreement, Other Events, Exhibits
8-K	2018-01-08	Enter Agreement, Other Events, Exhibits

LGIH	LGI Homes	1,590
EHTH	Ehealth	1,410
OEC	Orion Engineered Carbons	1,190
CTRA	Contura Energy	1,140
FDEF	First Defiance Financial	593
RDI	Reading	342
ADMA	ADMA Biologics	240
RGCO	RGC Resources	211
LZD	Lazard Group	0
APXR	Apex Resources	0

EX-31.1	ucbi630201910-qexhibit311.htm
EX-31.2	ucbi630201910-qexhibit312.htm
EX-32	ucbi630201910-qexhibit32.htm