Banking & Finance

Savannah Business Journal Staff Report

January 23, 2019 - United Community Banks, Inc. recently announced its fourth quarter financial results, which reflected solid year-over-year loan and deposit growth, improving operating efficiency and continued strong asset quality. For the quarter, diluted earnings per share was $0.56 compared with a net loss of $0.16 per diluted share a year ago due to the impact of tax reform. Operating diluted earnings per share, which exclude merger-related and other charges, was $0.57, an increase of 36% over the previous year. Profitability ratios continued to be strong – United ended the year with a 1.43% return on assets and a 12.08% return on common equity. On an operating basis, return on assets was 1.45% and return on tangible common equity was 15.88%.

Other key banking metrics were strong. The fourth quarter saw continued net interest margin expansion and 8% annualized loan growth, the strongest growth quarter in 2018. Deposit growth reflected the strength of United’s community banking franchise – total customer deposits increased $173 million for the fourth quarter and $414 million for the year. Mortgage production grew by nearly 4% compared to the fourth quarter last year and increased 20% for the full year compared to 2017. United’s SBA business also had a strong year, with production up 12% over 2017.

“The fourth quarter was a strong finish to an outstanding year,” said Lynn Harton, Chief Executive Officer. “Our full year return on assets was up 31 basis points on an operating basis and our operating earnings per share was up 31% over 2017. These impressive results do not come easily and are attributed to the hard work of our bankers, who continue to deliver the best service in the business. We are very pleased that their efforts are being recognized. Forbes included United on their list of the top 100 Best Banks in America for the fifth consecutive year. Additionally, for the fifth straight year, we earned the top ranking for overall customer satisfaction by JD Power; our service was ranked as highest in the Southeast. We were also honored by our recognition in the 'Best Banks to Work For' program by American Banker for the second year in a row. This is a measure of employee satisfaction for all banks in the country, and we could not be more pleased by our team’s show of support for United. The strength of our culture and the strong momentum we see in the business gives me confidence that we will continue our strong performance into 2019 and continue to build long-term shareholder value.”

2018 Highlights:

• 2018 earnings per diluted share was $2.07, a 125% increase over 2017, which included the impact of tax reform
• Excluding merger-related and other charges and the 2017 impact of tax reform, earnings per diluted share for 2018 was $2.14 compared to $1.63 in 2017, an increase of 31%
• Return on average assets was 1.35% in 2018, an increase of 73 basis points from 2017
• Excluding merger-related and other charges and the 2017 impact of tax reform, return on average assets was 1.40%, an increase of 31 basis points from 2017
• Efficiency ratio of 57.31% in 2018 improved 264 basis points as compared to 2017
• Excluding merger-related and other charges, efficiency ratio of 55.94% improved 73 basis points as compared to 2017
• End of period loans grew $647 million in 2018, up 8% over December 31, 2017
• Common Equity Tier 1 ratio was 12.2% at December 31, 2018, compared to 12.0% at December 31, 2017
• Declared $0.58 per share in common dividends in 2018, up 53% over 2017
• Completed the acquisition of Navitas Credit Corporation on February 1, 2018
• Issued $100 million in subordinated debt in the first quarter and redeemed $7.4 million in high rate Trust Preferred securities in the fourth quarter
• Completed our CEO transition plan, elevating H. Lynn Harton into the role as Jimmy Tallent retired into the Executive Chairman position
• Added two new Board members, Jennifer Mann and Lance F. Drummond, adding significant experience and expertise to our oversight function

Fourth Quarter 2018 Financial Highlights:

• Return on assets of 1.43%, or 1.45% excluding merger-related and other charges
• Return on common equity of 12.1% or return on tangible common equity of 15.9%, which excludes merger-related and other charges
• Loan growth, excluding planned runoff of the indirect portfolio, of 10% on an annualized basis
• Loan production of $868 million, as compared to $644 million in the fourth quarter of 2017
• Expansion of the net interest margin to 3.97%, up two basis points from the third quarter of 2018 and up 34 basis points from a year ago
• Efficiency ratio of 56.73%, or 55.83% excluding merger-related and other charges
• Net charge offs of nine basis points, consistent with last quarter’s result of seven basis points
• Nonperforming assets of 0.20% of total assets, compared to 0.19% at September 30, 2018 and 0.23% at December 31, 2017