United Community Banks, Inc. Reports Earnings of $15.4 Million for First Quarter 2014

BLAIRSVILLE, GA--(Marketwired - April 24, 2014) -  United Community Banks, Inc. (NASDAQ: UCBI)

• Earnings per diluted share of 25 cents, up 14 percent from fourth quarter
• Loans up $27 million, or 2 percent annualized
• Core transaction deposits up $135 million, or 16 percent annualized
• All preferred stock redeemed
• All capital ratios remain strong

United Community Banks, Inc. (NASDAQ: UCBI) ("United") today reported net income of $15.4 million, or 25 cents per diluted share, for the first quarter of 2014. Earnings per share were up 14 percent from the fourth quarter, and 67 percent from the first quarter of 2013, reflecting a reduction in preferred stock dividends, reduced operating costs and a lower provision for loan losses.

"I am pleased with our first quarter progress and our outlook for the balance of 2014," said Jimmy Tallent, president and chief executive officer. "We achieved steady loan growth and strong deposit growth, while controlling expenses.

"I am especially pleased that we redeemed the remaining $122 million in preferred stock, completing the final phase of our TARP and other preferred stock redemptions during the first quarter," Tallent continued. "In total we redeemed $197 million in preferred stock, including $75 million in the fourth quarter, without issuing common equity that would have been dilutive to shareholders.

"The elimination of expensive preferred stock dividends had a positive impact on first quarter per share results," Tallent added. "Longer-term, it will benefit our performance and the ability to execute our strategic plan."

The first quarter provision for credit losses was $2.5 million, down $500,000 from the fourth quarter and down $8.5 million from the first quarter of 2013. First quarter net charge-offs were $4.04 million, compared with $4.44 million in the fourth quarter and $12.4 million a year ago. Nonperforming assets at quarter-end were $30.8 million, representing .42 percent of total assets. This was down slightly from the fourth quarter and down significantly from $112.7 million, or 1.65 percent of total assets, in the first quarter of 2013.

First quarter taxable equivalent net interest revenue totaled $54.2 million, down $1.71 million from the fourth quarter and down $405,000 from the first quarter of 2013. The first quarter taxable equivalent net interest margin was 3.21 percent, down five basis points from the fourth quarter and down 16 basis points from a year ago.

"The decline in net interest revenue was related primarily to two fewer days of interest accruals in the first quarter," said Tallent. "Competitive loan pricing pressures continue, and we are sharply focused on growing loans and deposits to offset the impact and grow net interest revenue. We also remain committed to prudent interest rate risk management. To that end, 39 percent of our investment portfolio consists of floating-rate securities, compared with 41 percent at year-end 2013 and 34 percent in the first quarter of 2013."

First quarter fee revenue totaled $12.2 million, down $1.34 million from the fourth quarter and $735,000 from a year earlier, primarily due to lower mortgage fees and lower customer swap fees in other fee revenue. Additionally, fourth quarter fee revenue included the recognition of $300,000 in gains on mutual fund investments. First quarter mortgage fees were down $359,000 from the fourth quarter and down $1.3 million from a year ago, reflecting slower mortgage refinancing activity related to rising long-term interest rates. Closed mortgage loans totaled $46 million in the first quarter, compared with $55.5 million in the fourth quarter and $70 million in the first quarter of 2013.

Operating expenses, excluding foreclosed property costs, were $38.9 million in the first quarter compared to $41.4 million in the fourth quarter of 2013 and $41.4 million a year ago. Expenses decreased in every category from fourth quarter totals, reflecting successful efforts to control operating costs. The most significant quarter-to-quarter decreases were $675,000 in professional fees and $451,000 in FDIC assessments and other regulatory charges, reflecting United's improved credit quality. Salaries and employee benefits decreased $421,000, in part reflecting incentive compensation accrued in the fourth quarter for achievement of the 2013 performance targets.

Foreclosed property costs were $116,000 in the first quarter compared to $191,000 in the fourth quarter and $2.33 million a year ago. These costs have remained lower following the accelerated sales of classified assets in the second quarter of 2013.

On March 31, 2014, capital ratios were as follows: Tier 1 Risk-Based of 11.1 percent; Total Risk-Based of 12.3 percent; Tier 1 Common Risk-Based of 10.0 percent; Tier 1 Leverage of 8.0 percent; and Tangible Equity-to-Assets of 9.5 percent.

"We made good progress in the first quarter," Tallent said. "A year ago our focus was resolving legacy credit-related problems, a major undertaking that has been completed. Other challenges have remained with regard to interest rates and the economic environment. But our team has kept expenses down and strengthened the business pipeline, and we have strategically added people and initiatives to drive revenue growth. Of particular note are the additions of senior talent to lead our Tennessee region, our specialized lending group, and our structured finance area. I believe we are on track to achieve our business targets and financial goals for the year."

Conference Call
United will hold a conference call today, Thursday, April 24, 2014, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 24926399. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of United's website at www.ucbi.com.

About United Community Banks, Inc.
United Community Banks, Inc. (UCBI) is a bank holding company based in Blairsville, Georgia, with $7.4 billion in assets. The company's banking subsidiary, United Community Bank, is one of the Southeast region's largest full-service banks, operating 102 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in providing personalized community banking services to individuals, small businesses and corporations. Services include a full range of consumer and commercial banking services including mortgage, advisory and treasury management products. United Community Bank is consistently recognized for its outstanding customer service by national survey organizations. Additional information about the company and the bank's full range of products and services can be found at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United's filings with the Securities and Exchange Commission including its 2013 Annual Report on Form 10-K under the sections entitled "Forward-Looking Statements" and "Risk Factors." Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.