United Community Banks
Annual Report 2023

Plain-text annual report

2023 United Community Annual Report T A B L E O F C O N T E N T S Letter to Shareholders ............................. 1 Executive Officers .................................... 7 Financial Statements ................................ 8 Financial Highlights ......................................... 8 Consolidated Balance Sheets ........................... 9 Consolidated Statements of Income ............ 10 Selected Data—Quarterly Summary ............. 11 Corporate Information ........................... 12 To our growing United community: At United Community, our goal is to achieve consistent performance through both good and uncertain times. We do that by focusing on the basics—building great teams, providing exceptional customer service, and taking a conservative approach to growth. 2023 proved to be a volatile year for the banking industry, but United performed well because of our attention to those core strategies. We accomplished many strategic goals during 2023. We began the year by completing the Progress Financial Corporation merger. This gave us entry into attractive markets in Alabama and the Florida Panhandle, and, more importantly, it brought us a great team of bankers to continue to propel our growth. In February, we announced a merger agreement with First National Bank of South Miami—a community bank with more than seven decades of experience serving that market, and an outstanding team ready to help us build our Florida market. With our desired Southeastern footprint largely settled, we felt 2023 was the opportune time to invest in our brand to build for the future. So, under the leadership of our new Chief Marketing Officer, we updated our logo and refreshed our brand, which was met with positive reviews. U N I T E D CO M M U N I T Y B A N K S , I N C . 2023 A N N UA L R E P O R T | 1 Our teams received several recognitions during the year, including being named one of America’s Most Trusted Companies by Newsweek and one of the Best Banks to Work For by American Banker. We added a new outstanding director to an already strong and experienced Board of Directors, and we continued to build our talent across the bank as we added or promoted individuals to key leadership positions, both in customer-facing and risk and control functions. As we look forward to 2024, economic conditions are still unsettled. The yield curve continues to be inverted— long a predictor of possible recession, and a condition that makes healthy risk-taking difficult, as investors are incented to invest short term rather than long term. Concerns about commercial real estate lending are elevated. Fiscal policy is unsustainably expansionary while monetary policy is highly restrictive. We will likely have one of the most contentious presidential elections in our lifetimes this year. For these reasons, we expect continuing market volatility in 2024. To perform well amid this volatile environment, our focus in 2024 is on what we believe “moves the needle.” First, our teams. We plan to continue hiring great people and investing in new training and development programs. Many of our competitors are either distracted by merger integrations or are liquidity-constrained, providing us with opportunities to attract great bankers. Secondly, customer service. Our internal customer service scores are at near record levels because our teams are exceptionally proactive in serving our clients. We believe that our service model is a key difference in our ability to compete and win. U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 2 U N I T E D CO M M U N I T Y B A N K S , I N C . 2023 A N N UA L R E P O R T | 3 We believe that great people providing great service leads to great long-term financial results. During 2023, during a period of uncertainty in the industry regarding deposit stability, our teams grew deposits by $1.4 billion, or 8.4%— an outstanding achievement. Loans, excluding acquisitions, grew by $972 million, or 6.3%—also a strong performance. Our capital ratios remain above peer averages, and our balance sheet liquidity remains exceptional, allowing us the financial strength to continue to grow and serve our customers and markets. In 2024, we expect to continue to grow responsibly in both loans and deposits. We also are focused on increasing our net interest margin, with more attention to how we price loans, and growing low-cost deposits. We are confident in our loan underwriting and believe that we will perform well on a relative basis on credit costs in 2024. A successful bank does more than provide strong financial returns—a great bank also builds communities. We do that for two reasons. First, a bank naturally reflects the economic vitality of the markets it serves. The more economically successful a community is, the more successful we will be. Equally important, we have an innate human need to make a difference and impact those around us. During 2023, our teams donated 6,786 hours to serve our communities, and our foundation supported that work with more than $580,000 in donations to deserving nonprofits. Despite the unsettled markets of 2023, your company performed well and is in position to grow and thrive in 2024. The culture we have carefully crafted over the years has created an environment to attract and grow great people—the secret to any strong business. I am looking forward to a very successful 2024 because of the strength of the people of United. Thank you for your support! H. Lynn Harton Chairman, CEO, and President United Community Banks, Inc. U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 4 U N I T E D CO M M U N I T Y B A N K S , I N C . 2023 A N N UA L R E P O R T | 5 E X E C U T I V E O F F I C E R S H. Lynn Harton Chairman, CEO, and President, UCBI Richard W. Bradshaw Chief Banking Officer Jefferson Harralson Chief Financial Officer Robert A. Edwards Chief Risk Officer Melinda Davis Lux General Counsel and Corporate Secretary Holly Berry Chief Human Resources Officer Mark Terry Chief Information Officer Abraham A. Cox Chief Marketing Officer U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 6 U N I T E D CO M M U N I T Y B A N K S , I N C . 2023 A N N UA L R E P O R T | 7 F I N A N C I A L H I G H L I G H T S C O N S O L I D A T E D B A L A N C E S H E E T S ($ in millions, except per share data) Earnings Summary Net interest revenue Provision for credit losses Noninterest income Noninterest expense Income tax expense Net income—GAAP Merger-related and non-operating charges, net of tax benefit Net income—operating1 Pre-tax pre-provision income 2 Per Common Share Diluted earnings—GAAP Diluted earnings—operating1 Cash dividends declared Book value Tangible book value3 Performance Measures Net interest margin Allowance for loan losses to loans Return on assets—GAAP Return on assets—operating1 Return on common equity—GAAP4 Return on tangible common equity—operating1, 3, 4 Equity to total assets Tangible common equity to tangible assets3 Tier 1 risk-based capital ratio As of Year-End Loans Investment securities Total assets Deposits Shareholders’ equity Common shares outstanding (thousands) Employees Banking offices 2023 2022 $ 817.7 $ 752.4 (89.4) 75.5 (571.3) (45.0) 187.5 67.4 (63.9) 137.7 (470.2) (78.5) 277.5 15.1 $ 254.9 $ 292.6 $322.0 $ 322.0 $ 419.9 $419.9 $ 1.54 2.11 $ 2.52 2.66 0.92 26.52 18.39 0.86 24.38 17.13 3.35 % 3.38 % 1.14 0.68 0.94 5.34 10.63 11.95 8.36 12.60 1.04 1.13 1.19 9.54 14.04 11.25 7.88 12.81 $ 18,319 $ 15,335 5,822 27,297 23,311 3,262 6,228 24,009 19,877 2,701 119,010 106,223 3,151 207 2,873 192 1 Excludes the eff ect of merger-related and other non-operating charges of $88.9 million and $19.4 million, respectively, in 2023 and 2022. 2 Excludes income taxes and provision for credit losses. 3 Excludes the eff ect of acquisition-related intangible assets. 4 Net income less preferred dividends divided by average realized common equity, which excludes accumulated other comprehensive income (loss). ($ in thousands, except per share data) Assets Cash and due from banks Interest-bearing deposits in banks Federal funds and other short-term investments Cash and cash equivalents Debt securities available-for-sale Debt securities held-to-maturity (fair value $2,095,630 and $2,191,073) Loans held for sale, at fair value Loans, net of unearned income Less allowance for loan losses Loans, net Premises and equipment, net Bank owned life insurance Accrued interest receivable Net deferred tax asset Derivative financial instruments Goodwill and other intangible assets, net Other assets Total assets Liabilities and Shareholders’ Equity Liabilities: Deposits: Noninterest-bearing demand Interest-bearing deposits Total deposits Short-term borrowings Federal Home Loan Bank advances Long-term debt Derivative financial instruments Accrued expenses and other liabilities Total liabilities Commitments and contingencies 2023 2022 $ 200,781 $ 195,771 803,094 - 1,003,875 3,331,084 2,490,848 33,008 18,318,755 (208,071) 18,110,684 378,421 345,371 87,782 113,214 50,352 990,087 362,525 $ 27,297,251 316,082 135,000 646,853 3,614,333 2,613,648 13,600 15,334,627 (159,357) 15,175,270 298,456 299,297 72,807 129,313 50,636 779,248 315,423 $ 24,008,884 $ 6,534,307 16,776,304 23,310,611 $ 7,643,081 12,233,426 19,876,507 - - 324,823 84,811 315,481 158,933 550,000 324,663 99,543 298,564 24,035,726 21,308,210 Shareholders’ equity: Preferred stock, $1 par value; 10,000,000 shares authorized; Series I, $25,000 per share liquidation preference; 3,662 and 4,000 shares. Series I issued and outstanding, respectively Common stock, $1 par value; 200,000,000 shares authorized; 119,010,319 and 106,222,758 shares issued and outstanding, respectively Common stock issuable; 620,108 and 607,128 shares, respectively Capital surplus Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Total liabilities and shareholders’ equity 88,266 96,422 119,010 13,110 2,699,112 581,219 (239,192) 3,261,525 $ 27,297,251 106,223 12,307 2,306,366 508,844 (329,488) 2,700,674 $ 24,008,884 U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 8 U N I T E D CO M M U N I T Y B A N K S , I N C . 2023 A N N UA L R E P O R T | 9 C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E S E L E C T E D D A T A — Q U A R T E R L Y S U M M A R Y ($ in thousands, except per share data) Interest Revenue Loans, including fees Investment securities: Taxable Tax exempt Deposits in banks and short-term investments Total interest revenue Interest Expense Deposits Short-term borrowings Federal Home Loan Bank advances Long-term debt Total interest expense Net interest revenue Provision for credit losses Net interest revenue after provision for credit losses Noninterest Income Service charges and fees Mortgage loan gains and other related fees Brokerage and wealth management fees Gains from other loan sales Other lending and loan servicing fees Securities (losses) gains, net Other Total noninterest income Total revenue Noninterest Expenses Salaries and employee benefits Occupancy Communications and equipment Professional fees Lending and loan servicing expense Outside services - electronic banking Postage, printing and supplies Advertising and public relations FDIC assessments and other regulatory charges Amortization of intangibles Merger-related and other charges Other Total noninterest expenses Income before income taxes Income tax expense Net income Preferred stock dividends, net of discount repurchases Undistributed earnings allocated to unvested shares Net income available to common shareholders Income per common share: Basic Diluted Weighted average common shares outstanding: Basic Diluted 2023 2023 2022 2021 $ 1,042,605 $ 1,042,605 $ 673,402 $ 505,734 162,505 162,505 7,295 7,295 24,702 24,702 1,237,107 1,237,107 395,574 395,574 3,195 3,195 5,761 5,761 14,812 14,812 419,342 419,342 817,765 817,765 89,430 89,430 728,335 728,335 38,412 38,412 19,220 19,220 23,740 23,740 9,146 9,146 13,973 13,973 (53,333) (53,333) 24,325 24,325 75,483 75,483 803,818 803,818 318,464 318,464 42,640 42,640 43,264 43,264 26,732 26,732 9,722 9,722 11,577 11,577 9,467 9,467 9,473 9,473 27,449 27,449 15,175 15,175 27,210 27,210 30,100 30,100 571,273 571,273 232,545 232,545 45,001 45,001 $ 187,544 $ 187,544 5,665 5,665 1,032 1,032 121,501 10,323 7,929 813,155 42,099 507 1,424 16,768 60,798 752,357 63,913 688,444 38,163 32,524 23,594 10,730 10,005 (3,872) 26,563 137,707 826,151 61,994 8,978 2,088 578,794 14,845 - 3 14,912 29,760 549,034 (37,550) 586,584 33,868 58,446 18,998 11,267 9,427 83 25,729 157,818 744,402 276,205 36,247 38,234 20,166 9,350 12,583 8,749 8,384 9,894 6,826 19,375 24,136 470,149 356,002 78,530 $ 277,472 6,875 1,462 241,443 28,619 29,829 20,589 10,859 9,481 7,110 5,910 7,398 4,045 13,970 17,386 396,639 347,763 77,962 $ 269,801 6,875 1,657 $ 180,847 $ 180,847 $ 269,135 $ 261,269 $ 1.54 $ 1.54 1.54 1.54 $ 2.52 2.52 $ 2.97 2.97 117,603 117,603 117,745 117,745 106,661 106,778 87,940 88,097 ($ in millions, except per share data) Earnings Summary Net interest revenue Provision for credit losses Noninterest income Noninterest expense Income tax benefit (expense) Net income—GAAP Merger-related & non-operating charges, net of tax benefi t Net income—operating1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 Q1 2023 2023 $ 203.5 $ 203.5 (14.6) (14.6) (14.6) (23.1) (23.1) (154.6) (154.6) 2.9 2.9 14.1 14.1 50.7 50.7 $ 64.8 $ 64.8 $ 202.6 $ 202.6 (30.3) (30.3) 32.0 32.0 (144.5) (144.5) (11.9) (11.9) 47.9 47.9 7.1 7.1 $ 55.0 $ 55.0 $ 200.2 $ 200.2 (22.7) (22.7) 36.4 36.4 (132.4) (132.4) (18.2) (18.2) 63.3 63.3 2.8 2.8 $ 66.1 $ 66.1 $ 211.4 $ 211.4 (21.8) (21.8) 30.2 30.2 (139.8) (139.8) (17.8) (17.8) 62.2 62.2 6.8 6.8 $ 69.0 $ 69.0 2022 Q4 $ 209.9 (19.8) 33.3 (117.3) (24.6) 81. 5 1.1 $ 82.6 Pre-tax pre-provision income5 $ 25.8 $ 25.8 $ 90.0 $ 90.0 $ 104.3 $ 104.3 $ 101.9 $ 101.9 $ 125.9 Performance Measures Per common share: Diluted net income—GAAP Diluted net income—operating1 Cash dividends declared Book value Tangible book value2 Key performance ratios: Net interest margin (fully taxable equivalent)3 Return on assets —GAAP3 Return on assets—operating1, 3 Return on common equity—GAAP3, 4 Return on common equity—operating1, 3, 4 Return on tangible common equity—operating1, 2, 3, 4 Equity to total assets Tangible common equity to tangible assets2 Asset Quality Non-performing assets (NPAs) Allowance for credit losses—loans and leases Allowance for credit losses—total Net charge-offs $ 0.11 $ 0.11 0.53 0.53 0.23 0.23 26.52 26.52 18.39 18.39 $ 0.39 $ 0.39 0.45 0.45 0.23 0.23 25.87 25.87 17.70 17.70 $ 0.53 $ 0.53 0.55 0.55 0.23 0.23 25.98 25.98 17.83 17.83 $ 0.52 $ 0.52 0.58 0.58 0.23 0.23 25.76 25.76 17.59 17.59 $ 0.74 0.75 0.22 24.38 17.13 3.19 % 3.19 % 0.18 0.18 0.92 0.92 1.44 1.44 7.27 7.27 10.58 10.58 11.95 11.95 8.36 8.36 3.24 % 3.24 % 0.68 0.68 0.79 0.79 5.32 5.32 6.14 6.14 9.03 9.03 11.85 11.85 8.18 8.18 3.37 % 3.37 % 0.95 0.95 1.00 1.00 7.47 7.47 7.82 7.82 11.35 11.35 11.89 11.89 8.21 8.21 % % 3.61 3.61 0.95 0.95 1.06 1.06 7.34 7.34 8.15 8.15 11.63 11.63 11.90 11.90 8.17 8.17 3.76 % 1.33 1.35 10.86 11.01 15.20 11.25 7.88 $ 92.9 $ 92.9 208.1 208.1 224.1 224.1 10.1 10.1 $ 90.9 $ 90.9 201.6 201.6 219.6 219.6 26.6 26.6 $ 103.7 $ 103.7 190.7 190.7 212.3 212.3 8.4 8.4 $ 73.4 $ 73.4 176.5 176.5 197.9 197.9 7.1 7.1 $ 44.3 159.4 180.5 6.6 Allowance for credit losses—loans and leases to loans Net charge-offs to average loans3 NPAs to total assets 1.14 % 1.14 % 0.22 0.22 0.34 0.34 1.11 % 1.11 % 0.59 0.59 0.34 0.34 1.10 % 1.10 % 0.20 0.20 0.40 0.40 1.03 % 1.03 % 0.17 0.17 0.28 0.28 1.04 % 0.17 0.18 At Period End Loans Investment securities Total assets Deposits Shareholders’ equity Common shares outstanding (thousands) $ 18,319 $ 18,319 5,822 5,822 27,297 27,297 23,311 23,311 3,262 3,262 119,010 119,010 $ 18,203 $ 18,203 5,701 5,701 26,869 26,869 22,858 22,858 3,184 3,184 118,976 118,976 $ 17,395 $ 17,395 5,914 5,914 26,120 26,120 22,252 22,252 3,106 3,106 115,266 115,266 $ 17,125 $ 17,125 5,915 5,915 25,872 25,872 22,005 22,005 3,078 3,078 115,152 115,152 $ 15,335 6,228 24,009 19,877 2,701 106,223 1 Excludes merger-related and other non-operating charges. 2 Excludes the eff ect of acquisition related intangible assets. 3 Annualized. 4 Net income less preferred dividends divided by average realized common equity, which excludes accumulated other comprehensive loss. 5 Excludes income taxes and provision for credit losses. U N I T E D CO M M U N I T Y B A N K S , I N C . 202 3 A N N UA L R E P O R T | 10 U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 11 C O R P O R A T E I N F O R M A T I O N Financial Information Analysts and investors seeking financial information should contact: Jefferson L. Harralson, Chief Financial Officer 864-240-6208 jefferson_harralson@ucbi.com This Annual Report contains Stock Price forward-looking statements that involve risk and 2022 uncertainty, and actual results 2023 could differ materially from the anticipated results or other expectations expressed in the forward-looking statements. A discussion of factors that could cause actual results to differ materially from those expressed in the forward- looking statements is included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission. High 39.50 Low 32.09 Close 33.80 $35.25 $25.13 $28.12 28.45 30.18 30.75 20.37 24.29 21.63 24.99 25.41 29.26 Average Daily Volume 566,908 714,381 658,145 553,643 642,068 4th 1st 2nd 3rd 4th that were prepared on a basis non-recurring revenue and different from accounting expense items and therefore principles generally accepted provide a meaningful basis in the United States (“GAAP”). for analyzing financial References to operating trends. A reconciliation of performance measures these measures to financial are non-GAAP financial measures determined using measures. Management GAAP is included in the has included such non- Annual Report on Form 10-K GAAP financial measures filed with the Securities and This Annual Report also because such non-GAAP Exchange Commission. contains financial measures measures exclude certain BOARD OF DIRECTORS EXECUTIVE OFFICERS John James Retired SVP - Americas Legal Entity Controller Executive Bank of America H. Lynn Harton Chairman, Chief Executive Officer, and President Thomas A. Richlovsky Lead Director, Retired Chief Financial Officer and Treasurer National City Corporation Jennifer M. Bazante Chief Marketing Officer Humana George Bell Former Executive Vice President Truist H. Lynn Harton Chairman, Chief Executive Officer, and President Jennifer Mann Executive Vice President Chief Human Resources Officer SAS Institute, Inc. James P. Clements, Ph.D. President Clemson University David C. Shaver Chief Executive Officer Cost Segregation Advisors, LLC Kenneth L. Daniels Retired Chief Credit Risk and Policy Officer BB&T Corporation Tim R. Wallis Owner and President Wallis Printing Company Lance F. Drummond Retired Executive Vice President Operations and Technology TD Canada Trust David H. Wilkins Partner Nelson, Mullins, Riley & Scarborough, LLP Richard W. Bradshaw Chief Banking Officer Abraham A. Cox Chief Marketing Officer Holly Berry Chief Human Resources Officer Robert A. Edwards Chief Risk Officer Jefferson L. Harralson Chief Financial Officer Melinda Davis Lux General Counsel and Corporate Secretary Mark Terry Chief Information Officer U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 12 U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 13 U N I T E D CO M M U N I T Y B A N K S , I N C . 2 023 A N N UA L R E P O R T | 14 

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