Exhibit 99.1
For Immediate Release
For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com
UNITED COMMUNITY BANKS, INC. REPORTS
NET LOSS OF $6.2 MILLION FOR THIRD QUARTER 2011
• | Special $25 million loan loss provision drove net loss |
• | Excluding this special provision, net income was $8.8 million, or 10 cents per share |
• | Net interest margin rose 14 basis points on lower deposit pricing |
• | Core transaction deposits up 16 percent on an annualized basis |
BLAIRSVILLE, GA – October 27, 2011 – United Community Banks, Inc. (NASDAQ: UCBI) today reported a net loss of $6.2 million, or 16 cents per share, for the third quarter of 2011. The third quarter net loss resulted from a special loan loss provision of $25 million, or 26 cents per share, recorded in connection with the nonaccrual classification of United’s largest loan relationship, which was announced earlier. Excluding this special provision, net income was $8.8 million, or 10 cents per share.
The year-to-date net loss of $141 million primarily reflects significant credit costs in the first quarter incurred in connection with the Company’s problem asset disposition plan. The plan was executed in conjunction with raising $380 million of new capital on March 30, 2011.
“We believe the loss was an isolated situation that does not reflect deterioration in the remainder of our loan portfolio,” stated Jimmy Tallent, president and chief executive officer. “Aside from this one relationship, which we have been watching closely for several quarters, our credit quality continued to improve and stabilize in the third quarter.”
1
Total loans were $4.1 billion at quarter-end, down $53 million from the end of the second quarter and down $650 million from a year earlier. “The $53 million decrease during the third quarter was up from the $31 million decrease during the second quarter, but still represents the second lowest quarterly decrease in loan balances since the first quarter of 2008,” stated Tallent. “We remain confident that soon we can once again begin to grow our loan portfolio. We are encouraged to have $141 million of new loan commitments, with $88 million funded, during the third quarter. The majority were commercial loans.”
The third quarter provision for loan losses was $36 million, up from $11 million in the second quarter, but down from $50.5 million a year ago. Included in the third quarter provision was the previously announced $25 million special provision for the Company’s largest lending relationship. Net charge-offs for the third quarter were $17.5 million, compared to $16.4 million for the second quarter but down from $50.0 million a year ago. Second quarter net charge-offs included a $7.3 million recovery from an April 18 bulk loan sale transaction. Excluding that recovery, third quarter net charge-offs declined $6.2 million from last quarter.
Nonperforming assets increased $70 million to $189 million at quarter-end. The increase reflects placing the previously mentioned $76.6 million loan on nonaccrual.
Taxable equivalent net interest revenue of $59.3 million increased $335,000 from the second quarter. Compared with the third quarter of 2010, net interest revenue declined $733,000, primarily due to a $702 million reduction in average loan balances that was significantly offset by lower funding costs and deposit rates. Net interest margin was 3.55 percent for the third quarter of 2011, down two basis points from a year ago and up 14 basis points from the second quarter.
“Growing loans and deposits are key initiatives to further building core earnings,” Tallent commented. “The weak economy has created a highly competitive environment for good, quality loans and we are working diligently to get our share. We have had tremendous success in gathering core transaction deposits – increasing the balance $112 million from the second quarter, or 16 percent on an annualized basis. This was the eleventh consecutive quarter of growth in core transaction deposits, which now represents 48 percent of total deposits compared to 30 percent at the end of 2008.”
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Fee revenue was $11.5 million in the third quarter of 2011, compared to $12.9 million a year ago and $13.9 million last quarter. Service charges and fees were $7.5 million, down $114,000 from a year ago, due primarily to lower overdraft fees of $886,000 resulting from regulatory changes last year that required customers to provide consent before using overdraft services. Mostly offsetting this reduction in overdraft fees was an increase of $785,000 in ATM and debit card usage fees. Mortgage fees of $1.1 million were down $923,000 from a year ago and up $196,000 from last quarter. The decrease from last year was due to the lower level of refinancing activities. Other fee revenue of $2.0 million reflected a decrease of $173,000 from a year ago and $2.7 million from the second quarter. The decrease from the second quarter was primarily due to the accelerated recognition of deferred gains relating to the ineffectiveness of terminated cash flow hedges on certain prime-based loans. Hedge ineffectiveness gains recognized in the third quarter were $575,000 compared with $2.8 million in the second quarter of 2011 and $336,000 in the third quarter of 2010. Also contributing to the decrease in other fee revenue from the second quarter and a year ago was a change in the market value of deferred compensation plan assets which accounted for $393,000 and $657,000 of the decrease in other fee revenue from the second quarter of 2011 and the third quarter of 2010, respectively.
Excluding foreclosed property costs and the goodwill impairment charge in 2010, third quarter 2011 operating expenses were $43.7 million, down from both the second quarter of 2011 and third quarter of 2010 by $3.1 million and $1.4 million, respectively. The decreases were mostly in FDIC assessments and the other expense category. FDIC assessments and other regulatory charges of $2.6 million were down $1.0 million from the second quarter and $653,000 from a year ago primarily due to the new asset based formula and a lower assessment rate. The decrease in the other expense category was mostly due to lower collections costs. Salary and benefit costs totaled $25.3 million, a $371,000 increase from last year and a $1.2 million decrease from the second quarter due to staff reductions and related severance costs.
3
Foreclosed property costs for the third quarter of 2011 were $2.8 million as compared to $1.9 million last quarter and $19.8 million a year ago. The third quarter of 2011 included $1.8 million for maintenance of foreclosed properties and $1.0 million in net losses and write-downs on properties. For the second quarter of 2011, foreclosed property costs were almost entirely for maintenance costs. The third quarter of 2010 included $14.2 million of net write-downs and losses and $5.6 million of maintenance costs.
The effective tax rate for the third quarter of 2011 was 49 percent, up from the 40 percent effective tax rate for the first and second quarters of 2011. The tax benefit in the third quarter includes the release of approximately $1.1 million in reserves for uncertain tax positions relating to state tax returns whose limitations have expired. Excluding the reserve release, the third quarter effective tax rate would have been 40 percent. The effective tax rate is expected to return to a normal range of 35 to 36 percent with expected profitability for 2012.
As of September 30, 2011, the capital ratios for United were as follows: Tier 1 Risk-Based of 14.0 percent; Tier 1 Leverage of 9.0 percent; and Total Risk-Based of 15.8 percent. The quarterly average tangible equity-to-assets ratio was 11.8 percent, and the tangible common equity-to-assets ratio was 9.1 percent.
“Reporting a third quarter loss after achieving profitability last quarter is disappointing, but must be put into context,” Tallent said. “Our objective is to deal aggressively and decisively with credit issues as they are identified. The large classification during the quarter was an isolated situation that we do not believe indicates a trend. Excluding this one item, our credit metrics continued to improve and we are on the right path to be profitable next quarter and into 2012.”
Tallent added, “United has been working diligently with the SEC to resolve comments regarding our net deferred tax asset made during their review of two resale registration statements and related periodic reports. The SEC has inquired as to the necessity of an additional deferred tax asset valuation allowance. We continue to believe an additional valuation allowance is not required based on our expectation that, more likely than not, we will realize all of our net deferred tax assets many years prior to their expiration. However, considering the SEC’s inquiry, it is possible we could be required to record a valuation allowance.”
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Conference Call
United Community Banks will hold a conference call today, Thursday, October 27, 2011, 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 14298726. The conference call also will be webcast and can be accessed by selecting ‘Calendar of Events’ within the Investor Relations section of the company’s website at www.ucbi.com.
About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $7.2 billion and operates 27 community banks with 105 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. The Company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the Company’s web site at www.ucbi.com.
Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial United’s outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled. “Risk Factors” of United Community Banks, Inc.’s 2010 annual report filed on Form 10-K and first and second quarter 2011 quarterly reports filed on Form 10-Q with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.
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Financial Highlights
Selected Financial Information
Third | ||||||||||||||||||||||||||||||||||||
2011 | 2010 | Quarter | For the Nine | YTD | ||||||||||||||||||||||||||||||||
(in thousands, except per share | Third | Second | First | Fourth | Third | 2011-2010 | Months Ended | 2011-2010 | ||||||||||||||||||||||||||||
data; taxable equivalent) | Quarter | Quarter | Quarter | Quarter | Quarter | Change | 2011 | 2010 | Change | |||||||||||||||||||||||||||
INCOME SUMMARY | ||||||||||||||||||||||||||||||||||||
Interest revenue | $ | 74,543 | $ | 76,931 | $ | 75,965 | $ | 81,215 | $ | 84,360 | $ | 227,439 | $ | 261,908 | ||||||||||||||||||||||
Interest expense | 15,262 | 17,985 | 19,573 | 21,083 | 24,346 | 52,820 | 78,988 | |||||||||||||||||||||||||||||
Net interest revenue | 59,281 | 58,946 | 56,392 | 60,132 | 60,014 | (1 | )% | 174,619 | 182,920 | (5 | )% | |||||||||||||||||||||||||
Operating provision for loan losses(1) | 36,000 | 11,000 | 190,000 | 47,750 | 50,500 | 237,000 | 187,000 | |||||||||||||||||||||||||||||
Fee revenue (2) | 11,498 | 13,905 | 11,838 | 12,442 | 12,861 | (11 | ) | 37,241 | 36,106 | 3 | ||||||||||||||||||||||||||
Total operating revenue(1)(2) | 34,779 | 61,851 | (121,770 | ) | 24,824 | 22,375 | (25,140 | ) | 32,026 | |||||||||||||||||||||||||||
Operating expenses (3) | 46,520 | 48,728 | 115,271 | 64,918 | 64,906 | (28 | ) | 210,519 | 178,034 | 18 | ||||||||||||||||||||||||||
Loss on sale of nonperforming assets | — | — | — | — | — | — | 45,349 | |||||||||||||||||||||||||||||
Operating (loss) income from continuing operations before income taxes | (11,741 | ) | 13,123 | (237,041 | ) | (40,094 | ) | (42,531 | ) | (72 | ) | (235,659 | ) | (191,357 | ) | 23 | ||||||||||||||||||||
Operating income tax (benefit) expense | (5,539 | ) | 5,506 | (94,555 | ) | (16,520 | ) | (16,706 | ) | (94,588 | ) | (71,542 | ) | |||||||||||||||||||||||
Net operating (loss) income from continuing operations (1)(2)(3) | (6,202 | ) | 7,617 | (142,486 | ) | (23,574 | ) | (25,825 | ) | (76 | ) | (141,071 | ) | (119,815 | ) | 18 | ||||||||||||||||||||
Noncash goodwill impairment charges | — | — | — | — | (210,590 | ) | — | (210,590 | ) | |||||||||||||||||||||||||||
Partial reversal of fraud loss provision, net of income tax | — | — | — | 7,179 | — | — | — | |||||||||||||||||||||||||||||
Loss from discontinued operations, net of income tax | — | — | — | — | — | — | (101 | ) | ||||||||||||||||||||||||||||
Gain from sale of subsidiary, net income tax | — | — | — | — | — | — | 1,266 | |||||||||||||||||||||||||||||
Net (loss) income | (6,202 | ) | 7,617 | (142,486 | ) | (16,395 | ) | (236,415 | ) | (97 | ) | (141,071 | ) | (329,240 | ) | (57 | ) | |||||||||||||||||||
Preferred dividends and discount accretion | 3,019 | 3,016 | 2,778 | 2,586 | 2,581 | 8,813 | 7,730 | |||||||||||||||||||||||||||||
Net (loss) income available to common shareholders | $ | (9,221 | ) | $ | 4,601 | $ | (145,264 | ) | $ | (18,981 | ) | $ | (238,996 | ) | $ | (149,884 | ) | $ | (336,970 | ) | ||||||||||||||||
PERFORMANCE MEASURES | ||||||||||||||||||||||||||||||||||||
Per common share: | ||||||||||||||||||||||||||||||||||||
Diluted operating (loss) income from continuing operations (1)(2)(3) | $ | (.16 | ) | $ | .08 | $ | (7.87 | ) | $ | (1.38 | ) | $ | (1.50 | ) | (89 | ) | $ | (4.41 | ) | $ | (6.75 | ) | (35 | ) | ||||||||||||
Diluted (loss) income from continuing operations | (.16 | ) | .08 | (7.87 | ) | (1.00 | ) | (12.62 | ) | (99 | ) | (4.41 | ) | (17.89 | ) | (75 | ) | |||||||||||||||||||
Diluted (loss) income | (.16 | ) | .08 | (7.87 | ) | (1.00 | ) | (12.62 | ) | (99 | ) | (4.41 | ) | (17.82 | ) | (75 | ) | |||||||||||||||||||
Book value | 11.37 | 11.59 | 14.78 | 24.18 | 25.70 | (56 | ) | 11.37 | 25.70 | (56 | ) | |||||||||||||||||||||||||
Tangible book value (5) | 11.26 | 11.47 | 14.44 | 23.78 | 25.26 | (55 | ) | 11.26 | 25.26 | (55 | ) | |||||||||||||||||||||||||
Key performance ratios: | ||||||||||||||||||||||||||||||||||||
Return on equity (4)(6) | (5.72 | )% | 5.34 | % | (147.11 | )% | (17.16 | )% | (148.04 | )% | (43.31 | )% | (65.69 | )% | ||||||||||||||||||||||
Return on assets (6) | (.34 | ) | .40 | (7.61 | ) | (.89 | ) | (12.47 | ) | (2.52 | ) | (5.70 | ) | |||||||||||||||||||||||
Net interest margin (6) | 3.55 | 3.41 | 3.30 | 3.58 | 3.57 | 3.42 | 3.56 | |||||||||||||||||||||||||||||
Operating efficiency ratio from continuing operations (2)(3) | 65.73 | 66.88 | 169.08 | 89.45 | 89.38 | 99.39 | 102.14 | |||||||||||||||||||||||||||||
Equity to assets | 11.83 | 11.21 | 8.82 | 8.85 | 11.37 | 10.61 | 11.70 | |||||||||||||||||||||||||||||
Tangible equity to assets (5) | 11.76 | 11.13 | 8.73 | 8.75 | 9.19 | 10.53 | 9.28 | |||||||||||||||||||||||||||||
Tangible common equity to assets (5) | 9.09 | 4.79 | 5.51 | 6.35 | 6.78 | 6.44 | 6.94 | |||||||||||||||||||||||||||||
Tangible common equity to risk-weighted assets (5) | 14.41 | 14.26 | 6.40 | 9.05 | 9.60 | 14.41 | 9.60 | |||||||||||||||||||||||||||||
ASSET QUALITY * | ||||||||||||||||||||||||||||||||||||
Non-performing loans | $ | 144,484 | $ | 71,065 | $ | 83,769 | $ | 179,094 | $ | 217,766 | $ | 144,484 | $ | 217,766 | ||||||||||||||||||||||
Foreclosed properties | 44,263 | 47,584 | 54,378 | 142,208 | 129,964 | 44,263 | 129,964 | |||||||||||||||||||||||||||||
Total non-performing assets (NPAs) | 188,747 | 118,649 | 138,147 | 321,302 | 347,730 | 188,747 | 347,730 | |||||||||||||||||||||||||||||
Allowance for loan losses | 146,092 | 127,638 | 133,121 | 174,695 | 174,613 | 146,092 | 174,613 | |||||||||||||||||||||||||||||
Operating net charge-offs(1) | 17,546 | 16,483 | 231,574 | 47,668 | 49,998 | 265,603 | 167,989 | |||||||||||||||||||||||||||||
Allowance for loan losses to loans | 3.55 | % | 3.07 | % | 3.17 | % | 3.79 | % | 3.67 | % | 3.55 | % | 3.67 | % | ||||||||||||||||||||||
Operating net charge-offs to average loans (1)(6) | 1.68 | 1.58 | 20.71 | 4.03 | 4.12 | 8.28 | 4.54 | |||||||||||||||||||||||||||||
NPAs to loans and foreclosed properties | 4.54 | 2.82 | 3.25 | 6.77 | 7.11 | 4.54 | 7.11 | |||||||||||||||||||||||||||||
NPAs to total assets | 2.64 | 1.60 | 1.73 | 4.32 | 4.96 | 2.64 | 4.96 | |||||||||||||||||||||||||||||
AVERAGE BALANCES($ in millions) | ||||||||||||||||||||||||||||||||||||
Loans | $ | 4,194 | $ | 4,266 | $ | 4,599 | $ | 4,768 | $ | 4,896 | (14 | ) | $ | 4,352 | $ | 5,026 | (13 | ) | ||||||||||||||||||
Investment securities | 2,150 | 2,074 | 1,625 | 1,354 | 1,411 | 52 | 1,952 | 1,487 | 31 | |||||||||||||||||||||||||||
Earning assets | 6,630 | 6,924 | 6,902 | 6,680 | 6,676 | (1 | ) | 6,817 | 6,870 | (1 | ) | |||||||||||||||||||||||||
Total assets | 7,261 | 7,624 | 7,595 | 7,338 | 7,522 | (3 | ) | 7,492 | 7,723 | (3 | ) | |||||||||||||||||||||||||
Deposits | 6,061 | 6,372 | 6,560 | 6,294 | 6,257 | (3 | ) | 6,329 | 6,399 | (1 | ) | |||||||||||||||||||||||||
Shareholders’ equity | 859 | 854 | 670 | 649 | 855 | — | 795 | 904 | (12 | ) | ||||||||||||||||||||||||||
Common shares — basic(thousands) | 57,599 | 25,427 | 18,466 | 18,984 | 18,936 | 33,973 | 18,905 | |||||||||||||||||||||||||||||
Common shares — diluted(thousands) | 57,599 | 57,543 | 18,466 | 18,984 | 18,936 | 33,973 | 18,905 | |||||||||||||||||||||||||||||
AT PERIOD END($ in millions) | ||||||||||||||||||||||||||||||||||||
Loans * | $ | 4,110 | $ | 4,163 | $ | 4,194 | $ | 4,604 | $ | 4,760 | (14 | ) | $ | 4,110 | $ | 4,760 | (14 | ) | ||||||||||||||||||
Investment securities | 2,123 | 2,188 | 1,884 | 1,490 | 1,310 | 62 | 2,123 | 1,310 | 62 | |||||||||||||||||||||||||||
Total assets | 7,159 | 7,410 | 7,974 | 7,443 | 7,013 | 2 | 7,159 | 7,013 | 2 | |||||||||||||||||||||||||||
Deposits | 6,005 | 6,183 | 6,598 | 6,469 | 5,999 | — | 6,005 | 5,999 | — | |||||||||||||||||||||||||||
Shareholders’ equity | 848 | 860 | 850 | 636 | 662 | 28 | 848 | 662 | 28 | |||||||||||||||||||||||||||
Common shares outstanding(thousands) | 57,510 | 57,469 | 20,903 | 18,937 | 18,887 | 57,510 | 18,887 |
(1) | Excludes the partial reversal of a previously established provision for fraud-related loan losses of $11.8 million, net of tax expense of $4.6 million in the fourth quarter of 2010. Operating charge-offs also exclude the $11.8 million related partial recovery of the previously charged off amount. | |
(2) | Excludes revenue generated by discontinued operations in the first quarter of 2010. | |
(3) | Excludes the goodwill impairment charge of $211 million in the third quarter of 2010 and expenses relating to discontinued operations in the first quarter of 2010. | |
(4) | Net loss available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). | |
(5) | Excludes effect of acquisition related intangibles and associated amortization. | |
(6) | Annualized. | |
* | Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC. |
Operating Earnings to GAAP Earnings Reconciliation
Selected Financial Information
�� | ||||||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||||||
(in thousands, except per share | Third | Second | First | Fourth | Third | For the Nine Months Ended | ||||||||||||||||||||||
data; taxable equivalent) | Quarter | Quarter | Quarter | Quarter | Quarter | 2011 | 2010 | |||||||||||||||||||||
Interest revenue reconciliation | ||||||||||||||||||||||||||||
Interest revenue — taxable equivalent | $ | 74,543 | $ | 76,931 | $ | 75,965 | $ | 81,215 | $ | 84,360 | $ | 227,439 | $ | 261,908 | ||||||||||||||
Taxable equivalent adjustment | (420 | ) | (429 | ) | (435 | ) | (497 | ) | (511 | ) | (1,284 | ) | (1,504 | ) | ||||||||||||||
Interest revenue (GAAP) | $ | 74,123 | $ | 76,502 | $ | 75,530 | $ | 80,718 | $ | 83,849 | $ | 226,155 | $ | 260,404 | ||||||||||||||
Net interest revenue reconciliation | ||||||||||||||||||||||||||||
Net interest revenue — taxable equivalent | $ | 59,281 | $ | 58,946 | $ | 56,392 | $ | 60,132 | $ | 60,014 | $ | 174,619 | $ | 182,920 | ||||||||||||||
Taxable equivalent adjustment | (420 | ) | (429 | ) | (435 | ) | (497 | ) | (511 | ) | (1,284 | ) | (1,504 | ) | ||||||||||||||
Net interest revenue (GAAP) | $ | 58,861 | $ | 58,517 | $ | 55,957 | $ | 59,635 | $ | 59,503 | $ | 173,335 | $ | 181,416 | ||||||||||||||
Provision for loan losses reconciliation | ||||||||||||||||||||||||||||
Operating provision for loan losses | $ | 36,000 | $ | 11,000 | $ | 190,000 | $ | 47,750 | $ | 50,500 | $ | 237,000 | $ | 187,000 | ||||||||||||||
Partial reversal of special fraud-related provision for loan loss | — | — | — | (11,750 | ) | — | — | — | ||||||||||||||||||||
Provision for loan losses (GAAP) | $ | 36,000 | $ | 11,000 | $ | 190,000 | $ | 36,000 | $ | 50,500 | $ | 237,000 | $ | 187,000 | ||||||||||||||
Total revenue reconciliation | ||||||||||||||||||||||||||||
Total operating revenue | $ | 34,779 | $ | 61,851 | $ | (121,770 | ) | $ | 24,824 | $ | 22,375 | $ | (25,140 | ) | $ | 32,026 | ||||||||||||
Taxable equivalent adjustment | (420 | ) | (429 | ) | (435 | ) | (497 | ) | (511 | ) | (1,284 | ) | (1,504 | ) | ||||||||||||||
Partial reversal of special fraud-related provision for loan loss | — | — | — | 11,750 | — | — | — | |||||||||||||||||||||
Total revenue (GAAP) | $ | 34,359 | $ | 61,422 | $ | (122,205 | ) | $ | 36,077 | $ | 21,864 | $ | (26,424 | ) | $ | 30,522 | ||||||||||||
Expense reconciliation | ||||||||||||||||||||||||||||
Operating expense | $ | 46,520 | $ | 48,728 | $ | 115,271 | $ | 64,918 | $ | 64,906 | $ | 210,519 | $ | 223,383 | ||||||||||||||
Noncash goodwill impairment charge | — | — | — | — | 210,590 | — | 210,590 | |||||||||||||||||||||
Operating expense (GAAP) | $ | 46,520 | $ | 48,728 | $ | 115,271 | $ | 64,918 | $ | 275,496 | $ | 210,519 | $ | 433,973 | ||||||||||||||
(Loss) income from continuing operations before taxes reconciliation | ||||||||||||||||||||||||||||
Operating (loss) income from continuing operations before taxes | $ | (11,741 | ) | $ | 13,123 | $ | (237,041 | ) | $ | (40,094 | ) | $ | (42,531 | ) | $ | (235,659 | ) | $ | (191,357 | ) | ||||||||
Taxable equivalent adjustment | (420 | ) | (429 | ) | (435 | ) | (497 | ) | (511 | ) | (1,284 | ) | (1,504 | ) | ||||||||||||||
Noncash goodwill impairment charge | — | — | — | — | (210,590 | ) | — | (210,590 | ) | |||||||||||||||||||
Partial reversal of special fraud-related provision for loan loss | — | — | — | 11,750 | — | — | — | |||||||||||||||||||||
(Loss) income from continuing operations before taxes (GAAP) | $ | (12,161 | ) | $ | 12,694 | $ | (237,476 | ) | $ | (28,841 | ) | $ | (253,632 | ) | $ | (236,943 | ) | $ | (403,451 | ) | ||||||||
Income tax (benefit) expense reconciliation | ||||||||||||||||||||||||||||
Operating income tax (benefit) expense | $ | (5,539 | ) | $ | 5,506 | $ | (94,555 | ) | $ | (16,520 | ) | $ | (16,706 | ) | $ | (94,588 | ) | $ | (71,542 | ) | ||||||||
Taxable equivalent adjustment | (420 | ) | (429 | ) | (435 | ) | (497 | ) | (511 | ) | (1,284 | ) | (1,504 | ) | ||||||||||||||
Partial reversal of special fraud-related provision for loan loss | — | — | — | 4,571 | — | — | — | |||||||||||||||||||||
Income tax (benefit) expense (GAAP) | $ | (5,959 | ) | $ | 5,077 | $ | (94,990 | ) | $ | (12,446 | ) | $ | (17,217 | ) | $ | (95,872 | ) | $ | (73,046 | ) | ||||||||
Diluted (loss) earnings from continuing operations per common share reconciliation | ||||||||||||||||||||||||||||
Diluted operating (loss) earnings from continuing operations per common share | $ | (.16 | ) | $ | .08 | $ | (7.87 | ) | $ | (1.38 | ) | $ | (1.50 | ) | $ | (4.41 | ) | $ | (6.75 | ) | ||||||||
Noncash goodwill impairment charge | — | — | — | — | (11.12 | ) | — | (11.14 | ) | |||||||||||||||||||
Partial reversal of special fraud-related provision for loan loss | — | — | — | .38 | — | — | — | |||||||||||||||||||||
Diluted (loss) earnings from continuing operations per common share (GAAP) | $ | (.16 | ) | $ | .08 | $ | (7.87 | ) | $ | (1.00 | ) | $ | (12.62 | ) | $ | (4.41 | ) | $ | (17.89 | ) | ||||||||
Book value per common share reconciliation | ||||||||||||||||||||||||||||
Tangible book value per common share | $ | 11.26 | $ | 11.47 | $ | 14.44 | $ | 23.78 | $ | 25.26 | $ | 11.26 | $ | 25.26 | ||||||||||||||
Effect of goodwill and other intangibles | .11 | .12 | .34 | .40 | .44 | .11 | .44 | |||||||||||||||||||||
Book value per common share (GAAP) | $ | 11.37 | $ | 11.59 | $ | 14.78 | $ | 24.18 | $ | 25.70 | $ | 11.37 | $ | 25.70 | ||||||||||||||
Efficiency ratio from continuing operations reconciliation | ||||||||||||||||||||||||||||
Operating efficiency ratio from continuing operations | 65.73 | % | 66.88 | % | 169.08 | % | 89.45 | % | 89.38 | % | 99.39 | % | 102.14 | % | ||||||||||||||
Noncash goodwill impairment charge | — | — | — | — | 290.00 | — | 96.29 | |||||||||||||||||||||
Efficiency ratio from continuing operations (GAAP) | 65.73 | % | 66.88 | % | 169.08 | % | 89.45 | % | 379.38 | % | 99.39 | % | 198.43 | % | ||||||||||||||
Average equity to assets reconciliation | ||||||||||||||||||||||||||||
Tangible common equity to assets | 9.09 | % | 4.79 | % | 5.51 | % | 6.35 | % | 6.78 | % | 6.44 | % | 6.94 | % | ||||||||||||||
Effect of preferred equity | 2.67 | 6.34 | 3.22 | 2.40 | 2.41 | 4.09 | 2.34 | |||||||||||||||||||||
Tangible equity to assets | 11.76 | 11.13 | 8.73 | 8.75 | 9.19 | 10.53 | 9.28 | |||||||||||||||||||||
Effect of goodwill and other intangibles | .07 | .08 | .09 | .10 | 2.18 | .08 | 2.42 | |||||||||||||||||||||
Equity to assets (GAAP) | 11.83 | % | 11.21 | % | 8.82 | % | 8.85 | % | 11.37 | % | 10.61 | % | 11.70 | % | ||||||||||||||
Actual tangible common equity to risk-weighted assets reconciliation | ||||||||||||||||||||||||||||
Tangible common equity to risk-weighted assets | 14.41 | % | 14.26 | % | 6.40 | % | 9.05 | % | 9.60 | % | 14.41 | % | 9.60 | % | ||||||||||||||
Effect of other comprehensive income | (.58 | ) | (.65 | ) | (.58 | ) | (.62 | ) | (.81 | ) | (.58 | ) | (.81 | ) | ||||||||||||||
Effect of deferred tax limitation | (5.34 | ) | (5.04 | ) | (5.10 | ) | (3.34 | ) | (2.94 | ) | (5.34 | ) | (2.94 | ) | ||||||||||||||
Effect of trust preferred | 1.18 | 1.14 | 1.12 | 1.06 | 1.06 | 1.18 | 1.06 | |||||||||||||||||||||
Effect of preferred equity | 4.30 | 4.17 | 5.97 | 3.52 | 3.51 | 4.30 | 3.51 | |||||||||||||||||||||
Tier I capital ratio (Regulatory) | 13.97 | % | 13.88 | % | 7.81 | % | 9.67 | % | 10.42 | % | 13.97 | % | 10.42 | % | ||||||||||||||
Net charge-offs reconciliation | ||||||||||||||||||||||||||||
Operating net charge-offs | $ | 17,546 | $ | 16,483 | $ | 231,574 | $ | 47,668 | $ | 49,998 | $ | 265,603 | $ | 167,989 | ||||||||||||||
Subsequent partial recovery of fraud-related charge-off | — | — | — | (11,750 | ) | — | — | — | ||||||||||||||||||||
Net charge-offs (GAAP) | $ | 17,546 | $ | 16,483 | $ | 231,574 | $ | 35,918 | $ | 49,998 | $ | 265,603 | $ | 167,989 | ||||||||||||||
Net charge-offs to average loans reconciliation | ||||||||||||||||||||||||||||
Operating net charge-offs to average loans | 1.68 | % | 1.58 | % | 20.71 | % | 4.03 | % | 4.12 | % | 8.28 | % | 4.54 | % | ||||||||||||||
Subsequent partial recovery of fraud-related charge-off | — | — | — | (1.00 | ) | — | — | — | ||||||||||||||||||||
Net charge-offs to average loans (GAAP) | 1.68 | % | 1.58 | % | 20.71 | % | 3.03 | % | 4.12 | % | 8.28 | % | 4.54 | % | ||||||||||||||
Net (loss) income reconciliation | ||||||||||||||||||||||||||||
Net income excluding special provision | $ | 8,798 | ||||||||||||||||||||||||||
Effect of special provision for loan losses on largest lending relationship | (15,000 | ) | ||||||||||||||||||||||||||
Net loss (GAAP) | $ | (6,202 | ) | |||||||||||||||||||||||||
Net (loss) income per diluted share reconciliation | ||||||||||||||||||||||||||||
Net income per diluted share excluding special provision | $ | .10 | ||||||||||||||||||||||||||
Effect of special provision for loan losses on largest lending relationship | (.26 | ) | ||||||||||||||||||||||||||
Net loss per diluted share (GAAP) | $ | (.16 | ) | |||||||||||||||||||||||||
Financial Highlights
Loan Portfolio Composition at Period-End(1)
2011 | 2010 | Linked | Year over | |||||||||||||||||||||||||
Third | Second | First | Fourth | Third | Quarter | Year | ||||||||||||||||||||||
(in millions) | Quarter | Quarter | Quarter | Quarter | Quarter | Change | Change | |||||||||||||||||||||
LOANS BY CATEGORY | ||||||||||||||||||||||||||||
Commercial (sec.by RE) | $ | 1,771 | $ | 1,742 | $ | 1,692 | $ | 1,761 | $ | 1,781 | $ | 29 | $ | (10 | ) | |||||||||||||
Commercial construction | 169 | 195 | 213 | 297 | 310 | (26 | ) | (141 | ) | |||||||||||||||||||
Commercial & industrial | 429 | 428 | 431 | 441 | 456 | 1 | (27 | ) | ||||||||||||||||||||
Total commercial | 2,369 | 2,365 | 2,336 | 2,499 | 2,547 | 4 | (178 | ) | ||||||||||||||||||||
Residential construction | 474 | 502 | 550 | 695 | 764 | (28 | ) | (290 | ) | |||||||||||||||||||
Residential mortgage | 1,150 | 1,177 | 1,187 | 1,279 | 1,316 | (27 | ) | (166 | ) | |||||||||||||||||||
Consumer / installment | 117 | 119 | 121 | 131 | 133 | (2 | ) | (16 | ) | |||||||||||||||||||
Total loans | $ | 4,110 | $ | 4,163 | $ | 4,194 | $ | 4,604 | $ | 4,760 | (53 | ) | (650 | ) | ||||||||||||||
LOANS BY MARKET | ||||||||||||||||||||||||||||
Atlanta MSA | $ | 1,192 | $ | 1,188 | $ | 1,179 | $ | 1,310 | $ | 1,365 | 4 | (173 | ) | |||||||||||||||
Gainesville MSA | 272 | 275 | 282 | 312 | 316 | (3 | ) | (44 | ) | |||||||||||||||||||
North Georgia | 1,478 | 1,500 | 1,531 | 1,689 | 1,755 | (22 | ) | (277 | ) | |||||||||||||||||||
Western North Carolina | 607 | 626 | 640 | 702 | 719 | (19 | ) | (112 | ) | |||||||||||||||||||
Coastal Georgia | 316 | 325 | 312 | 335 | 345 | (9 | ) | (29 | ) | |||||||||||||||||||
East Tennessee | 245 | 249 | 250 | 256 | 260 | (4 | ) | (15 | ) | |||||||||||||||||||
Total loans | $ | 4,110 | $ | 4,163 | $ | 4,194 | $ | 4,604 | $ | 4,760 | (53 | ) | (650 | ) | ||||||||||||||
RESIDENTIAL CONSTRUCTION | ||||||||||||||||||||||||||||
Dirt loans | ||||||||||||||||||||||||||||
Acquisition & development | $ | 97 | $ | 105 | $ | 116 | $ | 174 | $ | 190 | (8 | ) | (93 | ) | ||||||||||||||
Land loans | 60 | 62 | 69 | 99 | 104 | (2 | ) | (44 | ) | |||||||||||||||||||
Lot loans | 216 | 218 | 228 | 275 | 303 | (2 | ) | (87 | ) | |||||||||||||||||||
Total | 373 | 385 | 413 | 548 | 597 | (12 | ) | (224 | ) | |||||||||||||||||||
House loans | ||||||||||||||||||||||||||||
Spec | 64 | 74 | 88 | 97 | 109 | (10 | ) | (45 | ) | |||||||||||||||||||
Sold | 37 | 43 | 49 | 50 | 58 | (6 | ) | (21 | ) | |||||||||||||||||||
Total | 101 | 117 | 137 | 147 | 167 | (16 | ) | (66 | ) | |||||||||||||||||||
Total residential construction | $ | 474 | $ | 502 | $ | 550 | $ | 695 | $ | 764 | (28 | ) | (290 | ) | ||||||||||||||
RESIDENTIAL CONSTRUCTION — ATLANTA MSA | ||||||||||||||||||||||||||||
Dirt loans | ||||||||||||||||||||||||||||
Acquisition & development | $ | 19 | $ | 20 | $ | 22 | $ | 30 | $ | 34 | (1 | ) | (15 | ) | ||||||||||||||
Land loans | 15 | 16 | 19 | 23 | 27 | (1 | ) | (12 | ) | |||||||||||||||||||
Lot loans | 22 | 22 | 24 | 32 | 45 | — | (23 | ) | ||||||||||||||||||||
Total | 56 | 58 | 65 | 85 | 106 | (2 | ) | (50 | ) | |||||||||||||||||||
House loans | ||||||||||||||||||||||||||||
Spec | 28 | 30 | 34 | 38 | 42 | (2 | ) | (14 | ) | |||||||||||||||||||
Sold | 8 | 9 | 11 | 10 | 11 | (1 | ) | (3 | ) | |||||||||||||||||||
Total | 36 | 39 | 45 | 48 | 53 | (3 | ) | (17 | ) | |||||||||||||||||||
Total residential construction | $ | 92 | $ | 97 | $ | 110 | $ | 133 | $ | 159 | (5 | ) | (67 | ) | ||||||||||||||
(1) | Excludes total loans of $57.8 million, $70.8 million, $63.3 million, $68.2 million and $75.2 million as of September 30, 2011, June 30, 2011, March 31, 2011, December 31, 2010 and September 30, 2010, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. |
Financial Highlights
Credit Quality(1)
Third Quarter 2011 | Second Quarter 2011 | First Quarter 2011 (2) | ||||||||||||||||||||||||||||||||||
Non-performing | Foreclosed | Total | Non-performing | Foreclosed | Total | Non-performing | Foreclosed | Total | ||||||||||||||||||||||||||||
(in thousands) | Loans | Properties | NPAs | Loans | Properties | NPAs | Loans | Properties | NPAs | |||||||||||||||||||||||||||
NPAs BY CATEGORY | ||||||||||||||||||||||||||||||||||||
Commercial (sec.by RE) | $ | 21,998 | $ | 8,880 | $ | 30,878 | $ | 17,764 | $ | 6,796 | $ | 24,560 | $ | 20,648 | $ | 7,886 | $ | 28,534 | ||||||||||||||||||
Commercial construction | 11,370 | 5,862 | 17,232 | 2,782 | 6,764 | 9,546 | 3,701 | 11,568 | 15,269 | |||||||||||||||||||||||||||
Commercial & industrial | 53,009 | — | 53,009 | 1,998 | — | 1,998 | 2,198 | — | 2,198 | |||||||||||||||||||||||||||
Total commercial | 86,377 | 14,742 | 101,119 | 22,544 | 13,560 | 36,104 | 26,547 | 19,454 | 46,001 | |||||||||||||||||||||||||||
Residential construction | 34,472 | 21,561 | 56,033 | 22,643 | 24,968 | 47,611 | 32,038 | 25,807 | 57,845 | |||||||||||||||||||||||||||
Residential mortgage | 22,671 | 7,960 | 30,631 | 24,809 | 9,056 | 33,865 | 23,711 | 9,117 | 32,828 | |||||||||||||||||||||||||||
Consumer / installment | 964 | — | 964 | 1,069 | — | 1,069 | 1,473 | — | 1,473 | |||||||||||||||||||||||||||
Total NPAs | $ | 144,484 | $ | 44,263 | $ | 188,747 | $ | 71,065 | $ | 47,584 | $ | 118,649 | $ | 83,769 | $ | 54,378 | $ | 138,147 | ||||||||||||||||||
Balance as a % of Unpaid Principal | 77.8 | % | 33.4 | % | 59.3 | % | 64.5 | % | 32.6 | % | 46.3 | % | 57.3 | % | 30.3 | % | 42.4 | % | ||||||||||||||||||
NPAs BY MARKET | ||||||||||||||||||||||||||||||||||||
Atlanta MSA | $ | 13,350 | $ | 12,971 | $ | 26,321 | $ | 14,700 | $ | 11,239 | $ | 25,939 | $ | 21,501 | $ | 16,913 | $ | 38,414 | ||||||||||||||||||
Gainesville MSA | 5,311 | 2,495 | 7,806 | 4,505 | 3,174 | 7,679 | 4,332 | 2,157 | 6,489 | |||||||||||||||||||||||||||
North Georgia | 105,078 | 17,467 | 122,545 | 28,117 | 21,278 | 49,395 | 30,214 | 23,094 | 53,308 | |||||||||||||||||||||||||||
Western North Carolina | 13,243 | 7,941 | 21,184 | 15,153 | 8,953 | 24,106 | 18,849 | 7,802 | 26,651 | |||||||||||||||||||||||||||
Coastal Georgia | 5,600 | 2,354 | 7,954 | 5,357 | 2,564 | 7,921 | 5,847 | 3,781 | 9,628 | |||||||||||||||||||||||||||
East Tennessee | 1,902 | 1,035 | 2,937 | 3,233 | 376 | 3,609 | 3,026 | 631 | 3,657 | |||||||||||||||||||||||||||
Total NPAs | $ | 144,484 | $ | 44,263 | $ | 188,747 | $ | 71,065 | $ | 47,584 | $ | 118,649 | $ | 83,769 | $ | 54,378 | $ | 138,147 | ||||||||||||||||||
NPA ACTIVITY | ||||||||||||||||||||||||||||||||||||
Beginning Balance | $ | 71,065 | $ | 47,584 | $ | 118,649 | $ | 83,769 | $ | 54,378 | $ | 138,147 | $ | 179,094 | $ | 142,208 | $ | 321,302 | ||||||||||||||||||
Loans placed on non-accrual | 103,365 | — | 103,365 | 35,911 | — | 35,911 | 54,730 | — | 54,730 | |||||||||||||||||||||||||||
Payments received | (3,995 | ) | — | (3,995 | ) | (7,702 | ) | — | (7,702 | ) | (3,550 | ) | — | (3,550 | ) | |||||||||||||||||||||
Loan charge-offs | (15,335 | ) | — | (15,335 | ) | (18,888 | ) | — | (18,888 | ) | (43,969 | ) | — | (43,969 | ) | |||||||||||||||||||||
Foreclosures | (10,616 | ) | 10,616 | — | (22,025 | ) | 22,025 | — | (17,052 | ) | 17,052 | — | ||||||||||||||||||||||||
Capitalized costs | — | 818 | 818 | — | 20 | 20 | — | 270 | 270 | |||||||||||||||||||||||||||
Note / property sales | — | (13,787 | ) | (13,787 | ) | — | (28,939 | ) | (28,939 | ) | (11,400 | ) | (44,547 | ) | (55,947 | ) | ||||||||||||||||||||
Loans held for sale | — | — | — | — | — | — | (74,084 | ) | — | (74,084 | ) | |||||||||||||||||||||||||
Write downs | — | (1,772 | ) | (1,772 | ) | — | (3,118 | ) | (3,118 | ) | — | (48,585 | ) | (48,585 | ) | |||||||||||||||||||||
Net gains (losses) on sales | — | 804 | 804 | — | 3,218 | 3,218 | — | (12,020 | ) | (12,020 | ) | |||||||||||||||||||||||||
Ending Balance | $ | 144,484 | $ | 44,263 | $ | 188,747 | $ | 71,065 | $ | 47,584 | $ | 118,649 | $ | 83,769 | $ | 54,378 | $ | 138,147 | ||||||||||||||||||
Third Quarter 2011 | Second Quarter 2011 (3) | First Quarter 2011(3) | ||||||||||||||||||||||
Net Charge- | Net Charge- | Net Charge- | ||||||||||||||||||||||
Offs to | Offs to | Offs to | ||||||||||||||||||||||
Net | Average | Net | Average | Net | Average | |||||||||||||||||||
(in thousands) | Charge-Offs | Loans (4) | Charge-Offs | Loans (4) | Charge-Offs | Loans (4) | ||||||||||||||||||
NET CHARGE-OFFS BY CATEGORY | ||||||||||||||||||||||||
Commercial (sec.by RE) | $ | 2,192 | .50 | % | $ | 3,259 | .76 | % | $ | 48,607 | 11.07 | % | ||||||||||||
Commercial construction | 1,625 | 3.54 | 869 | 1.70 | 49,715 | 76.95 | ||||||||||||||||||
Commercial & industrial | 420 | .39 | 523 | .49 | 4,040 | 3.64 | ||||||||||||||||||
Total commercial | 4,237 | .71 | 4,651 | .79 | 102,362 | 16.66 | ||||||||||||||||||
Residential construction | 6,381 | 5.19 | 6,629 | 5.04 | 92,138 | 58.20 | ||||||||||||||||||
Residential mortgage | 6,110 | 2.09 | 4,589 | 1.55 | 36,383 | 11.62 | ||||||||||||||||||
Consumer / installment | 818 | 2.75 | 614 | 2.04 | 691 | 2.16 | ||||||||||||||||||
Total | $ | 17,546 | 1.68 | $ | 16,483 | 1.58 | $ | 231,574 | 20.71 | |||||||||||||||
NET CHARGE-OFFS BY MARKET | ||||||||||||||||||||||||
Atlanta MSA | $ | 2,813 | .94 | % | $ | 2,920 | .99 | % | $ | 56,489 | 17.86 | % | ||||||||||||
Gainesville MSA | 1,804 | 2.64 | 2,318 | 3.36 | 8,616 | 11.93 | ||||||||||||||||||
North Georgia | 8,124 | 2.16 | 6,575 | 1.72 | 123,305 | 29.66 | ||||||||||||||||||
Western North Carolina | 3,608 | 2.31 | 3,522 | 2.21 | 26,447 | 15.61 | ||||||||||||||||||
Coastal Georgia | 709 | .88 | 815 | 1.02 | 12,003 | 14.80 | ||||||||||||||||||
East Tennessee | 488 | .78 | 333 | .54 | 4,714 | 7.47 | ||||||||||||||||||
Total | $ | 17,546 | 1.68 | $ | 16,483 | 1.58 | $ | 231,574 | 20.71 | |||||||||||||||
(1) | Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. | |
(2) | The NPA activity shown for the first quarter of 2011 is presented with all activity related to loans transferred to the loans held for sale classification on one line as if those loans were transferred to held for sale at the beginning of the period. | |
(3) | Includes charge-offs on loans related to United’s previously announced asset disposition plan. Such charge-offs severely distorted charge off rates for the first and second quarters of 2011. A separate schedule has been included in this earnings release presenting the components of net charge-offs by loan category and geographic market for the first and second quarters of 2011. | |
(4) | Annualized. |
Financial Highlights
Net Charge-Off Summary(1)
Second Quarter 2011 | First Quarter 2011 | First Six Months 2011 | ||||||||||||||||||||||||||||||||||
Problem | Problem | Problem | ||||||||||||||||||||||||||||||||||
Asset | Asset | Asset | ||||||||||||||||||||||||||||||||||
Disposition | Disposition | Disposition | ||||||||||||||||||||||||||||||||||
(in thousands) | Other | Plan | Total | Other | Plan | Total | Other | Plan | Total | |||||||||||||||||||||||||||
BY CATEGORY | ||||||||||||||||||||||||||||||||||||
Commercial (sec. by RE) | $ | 4,972 | $ | (1,713 | ) | $ | 3,259 | $ | 2,842 | $ | 45,765 | $ | 48,607 | $ | 7,814 | $ | 44,052 | $ | 51,866 | |||||||||||||||||
Commercial construction | 2,201 | (1,332 | ) | 869 | 1,146 | 48,569 | 49,715 | 3,347 | 47,237 | 50,584 | ||||||||||||||||||||||||||
Commercial & industrial | 639 | (116 | ) | 523 | 513 | 3,527 | 4,040 | 1,152 | 3,411 | 4,563 | ||||||||||||||||||||||||||
Total commercial | 7,812 | (3,161 | ) | 4,651 | 4,501 | 97,861 | 102,362 | 12,313 | 94,700 | 107,013 | ||||||||||||||||||||||||||
Residential construction | 9,471 | (2,842 | ) | 6,629 | 10,643 | 81,495 | 92,138 | 20,114 | 78,653 | 98,767 | ||||||||||||||||||||||||||
Residential mortgage | 5,844 | (1,255 | ) | 4,589 | 4,989 | 31,394 | 36,383 | 10,833 | 30,139 | 40,972 | ||||||||||||||||||||||||||
Consumer / installment | 625 | (11 | ) | 614 | 383 | 308 | 691 | 1,008 | 297 | 1,305 | ||||||||||||||||||||||||||
Total | $ | 23,752 | $ | (7,269 | ) | $ | 16,483 | $ | 20,516 | $ | 211,058 | $ | 231,574 | $ | 44,268 | $ | 203,789 | $ | 248,057 | |||||||||||||||||
BY MARKET | ||||||||||||||||||||||||||||||||||||
Atlanta MSA | $ | 4,875 | $ | (1,955 | ) | $ | 2,920 | $ | 3,296 | $ | 53,193 | $ | 56,489 | $ | 8,171 | $ | 51,238 | $ | 59,409 | |||||||||||||||||
Gainesville MSA | 2,576 | (258 | ) | 2,318 | 954 | 7,662 | 8,616 | 3,530 | 7,404 | 10,934 | ||||||||||||||||||||||||||
North Georgia | 10,360 | (3,785 | ) | 6,575 | 8,544 | 114,761 | 123,305 | 18,904 | 110,976 | 129,880 | ||||||||||||||||||||||||||
Western North Carolina | 4,263 | (741 | ) | 3,522 | 6,749 | 19,698 | 26,447 | 11,012 | 18,957 | 29,969 | ||||||||||||||||||||||||||
Coastal Georgia | 1,206 | (391 | ) | 815 | 341 | 11,662 | 12,003 | 1,547 | 11,271 | 12,818 | ||||||||||||||||||||||||||
East Tennessee | 472 | (139 | ) | 333 | 632 | 4,082 | 4,714 | 1,104 | 3,943 | 5,047 | ||||||||||||||||||||||||||
Total | $ | 23,752 | $ | (7,269 | ) | $ | 16,483 | $ | 20,516 | $ | 211,058 | $ | 231,574 | $ | 44,268 | $ | 203,789 | $ | 248,057 | |||||||||||||||||
(1) | This schedule presents net charge-offs by loan type and geographic market separated between those charge offs related to United’s first quarter 2011 Problem Asset Disposition Plan including losses on loans sold in the bulk loan sale transaction that closed on April 18, 2011 and all other charge-offs. The charge-offs on the bulk loan sale recognized in the first quarter were estimated based on indicative bids from prospective buyers. Actual losses were less than estimated resulting in an adjustment to the loss in the second quarter. |
Consolidated Statement of Operations(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands, except per share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Interest revenue: | ||||||||||||||||
Loans, including fees | $ | 59,294 | $ | 68,419 | $ | 181,359 | $ | 211,245 | ||||||||
Investment securities, including tax exempt of $244, $279, $754 and $886 | 14,568 | 14,711 | 42,964 | 46,743 | ||||||||||||
Federal funds sold, commercial paper and deposits in banks | 261 | 719 | 1,832 | 2,416 | ||||||||||||
Total interest revenue | 74,123 | 83,849 | 226,155 | 260,404 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits: | ||||||||||||||||
NOW | 831 | 1,705 | 3,191 | 5,304 | ||||||||||||
Money market | 1,129 | 1,930 | 4,656 | 5,516 | ||||||||||||
Savings | 52 | 83 | 193 | 250 | ||||||||||||
Time | 9,086 | 16,099 | 31,813 | 54,015 | ||||||||||||
Total deposit interest expense | 11,098 | 19,817 | 39,853 | 65,085 | ||||||||||||
Federal funds purchased, repurchase agreements and other short-term borrowings | 1,081 | 1,068 | 3,197 | 3,162 | ||||||||||||
Federal Home Loan Bank advances | 441 | 796 | 1,601 | 2,747 | ||||||||||||
Long-term debt | 2,642 | 2,665 | 8,169 | 7,994 | ||||||||||||
Total interest expense | 15,262 | 24,346 | 52,820 | 78,988 | ||||||||||||
Net interest revenue | 58,861 | 59,503 | 173,335 | 181,416 | ||||||||||||
Provision for loan losses | 36,000 | 50,500 | 237,000 | 187,000 | ||||||||||||
Net interest revenue after provision for loan losses | 22,861 | 9,003 | (63,665 | ) | (5,584 | ) | ||||||||||
Fee revenue: | ||||||||||||||||
Service charges and fees | 7,534 | 7,648 | 21,862 | 23,088 | ||||||||||||
Mortgage loan and other related fees | 1,148 | 2,071 | 3,594 | 5,151 | ||||||||||||
Brokerage fees | 836 | 731 | 2,204 | 1,884 | ||||||||||||
Securities gains, net | — | 2,491 | 838 | 2,552 | ||||||||||||
Loss from prepayment of debt | — | (2,233 | ) | (791 | ) | (2,233 | ) | |||||||||
Other | 1,980 | 2,153 | 9,534 | 5,664 | ||||||||||||
Total fee revenue | 11,498 | 12,861 | 37,241 | 36,106 | ||||||||||||
Total revenue | 34,359 | 21,864 | (26,424 | ) | 30,522 | |||||||||||
Operating expenses: | ||||||||||||||||
Salaries and employee benefits | 25,262 | 24,891 | 76,622 | 72,841 | ||||||||||||
Communications and equipment | 3,284 | 3,620 | 10,006 | 10,404 | ||||||||||||
Occupancy | 3,794 | 3,720 | 11,673 | 11,370 | ||||||||||||
Advertising and public relations | 1,052 | 1,128 | 3,347 | 3,523 | ||||||||||||
Postage, printing and supplies | 1,036 | 1,019 | 3,239 | 3,009 | ||||||||||||
Professional fees | 2,051 | 2,117 | 7,731 | 6,238 | ||||||||||||
Foreclosed property | 2,813 | 19,752 | 69,603 | 45,105 | ||||||||||||
FDIC assessments and other regulatory charges | 2,603 | 3,256 | 11,660 | 10,448 | ||||||||||||
Amortization of intangibles | 748 | 793 | 2,270 | 2,389 | ||||||||||||
Other | 3,877 | 4,610 | 14,368 | 12,707 | ||||||||||||
Goodwill impairment | — | 210,590 | — | 210,590 | ||||||||||||
Loss on sale of nonperforming assets | — | — | — | 45,349 | ||||||||||||
Total operating expenses | 46,520 | 275,496 | 210,519 | 433,973 | ||||||||||||
Loss from continuing operations before income taxes | (12,161 | ) | (253,632 | ) | (236,943 | ) | (403,451 | ) | ||||||||
Income tax benefit | (5,959 | ) | (17,217 | ) | (95,872 | ) | (73,046 | ) | ||||||||
Net loss from continuing operations | (6,202 | ) | (236,415 | ) | (141,071 | ) | (330,405 | ) | ||||||||
Loss from discontinued operations, net of income taxes | — | — | — | (101 | ) | |||||||||||
Gain from sale of subsidiary, net of income taxes and selling costs | — | — | — | 1,266 | ||||||||||||
Net loss | (6,202 | ) | (236,415 | ) | (141,071 | ) | (329,240 | ) | ||||||||
Preferred stock dividends and discount accretion | 3,019 | 2,581 | 8,813 | 7,730 | ||||||||||||
Net loss available to common shareholders | $ | (9,221 | ) | $ | (238,996 | ) | $ | (149,884 | ) | $ | (336,970 | ) | ||||
Loss from continuing operations per common share — Basic | $ | (.16 | ) | $ | (12.62 | ) | $ | (4.41 | ) | $ | (17.89 | ) | ||||
Loss from continuing operations per common share — Diluted | (.16 | ) | (12.62 | ) | (4.41 | ) | (17.89 | ) | ||||||||
Loss per common share — Basic | (.16 | ) | (12.62 | ) | (4.41 | ) | (17.82 | ) | ||||||||
Loss per common share — Diluted | (.16 | ) | (12.62 | ) | (4.41 | ) | (17.82 | ) | ||||||||
Weighted average common shares outstanding — Basic | 57,599 | 18,936 | 33,973 | 18,905 | ||||||||||||
Weighted average common shares outstanding — Diluted | 57,599 | 18,936 | 33,973 | 18,905 |
Consolidated Balance Sheet
September 30, | December 31, | September 30, | ||||||||||
(in thousands, except share and per share data) | 2011 | 2010 | 2010 | |||||||||
(unaudited) | (audited) | (unaudited) | ||||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 57,780 | $ | 95,994 | $ | 104,033 | ||||||
Interest-bearing deposits in banks | 241,440 | 111,901 | 64,408 | |||||||||
Federal funds sold, commercial paper and short-term investments | — | 441,562 | 108,579 | |||||||||
Cash and cash equivalents | 299,220 | 649,457 | 277,020 | |||||||||
Securities available for sale | 1,769,083 | 1,224,417 | 1,053,518 | |||||||||
Securities held to maturity (fair value $369,020, $267,988 and $263,012) | 353,739 | 265,807 | 256,694 | |||||||||
Mortgage loans held for sale | 22,050 | 35,908 | 20,630 | |||||||||
Loans, net of unearned income | 4,109,875 | 4,604,126 | 4,759,504 | |||||||||
Less allowance for loan losses | 146,092 | 174,695 | 174,613 | |||||||||
Loans, net | 3,963,783 | 4,429,431 | 4,584,891 | |||||||||
Assets covered by loss sharing agreements with the FDIC | 83,623 | 131,887 | 144,581 | |||||||||
Premises and equipment, net | 176,839 | 178,239 | 178,842 | |||||||||
Accrued interest receivable | 19,744 | 24,299 | 24,672 | |||||||||
Goodwill and other intangible assets | 9,175 | 11,446 | 12,217 | |||||||||
Foreclosed property | 44,263 | 142,208 | 129,964 | |||||||||
Net deferred tax asset | 264,275 | 166,937 | 146,831 | |||||||||
Other assets | 153,329 | 183,160 | 183,189 | |||||||||
Total assets | $ | 7,159,123 | $ | 7,443,196 | $ | 7,013,049 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Liabilities: | ||||||||||||
Deposits: | ||||||||||||
Demand | $ | 966,452 | $ | 793,414 | $ | 783,251 | ||||||
NOW | 1,299,512 | 1,424,781 | 1,338,371 | |||||||||
Money market | 1,030,370 | 891,252 | 804,644 | |||||||||
Savings | 200,231 | 183,894 | 186,617 | |||||||||
Time: | ||||||||||||
Less than $100,000 | 1,393,559 | 1,496,700 | 1,498,379 | |||||||||
Greater than $100,000 | 905,183 | 1,002,359 | 1,033,132 | |||||||||
Brokered | 209,998 | 676,772 | 354,243 | |||||||||
Total deposits | 6,005,305 | 6,469,172 | 5,998,637 | |||||||||
Federal funds purchased, repurchase agreements, and other short-term borrowings | 102,883 | 101,067 | 103,780 | |||||||||
Federal Home Loan Bank advances | 40,625 | 55,125 | 55,125 | |||||||||
Long-term debt | 120,206 | 150,146 | 150,126 | |||||||||
Unsettled securities purchases | 10,585 | — | — | |||||||||
Accrued expenses and other liabilities | 31,302 | 32,171 | 42,906 | |||||||||
Total liabilities | 6,310,906 | 6,807,681 | 6,350,574 | |||||||||
Shareholders’ equity: | ||||||||||||
Preferred stock, $1 par value; 10,000,000 shares authorized; | ||||||||||||
Series A; $10 stated value; 21,700 shares issued and outstanding | 217 | 217 | 217 | |||||||||
Series B; $1,000 stated value; 180,000 shares issued and outstanding | 176,739 | 175,711 | 175,378 | |||||||||
Series D; $1,000 stated value; 16,613 shares issued and outstanding | 16,613 | — | — | |||||||||
Common stock, $1 par value; 100,000,000 shares authorized; 41,595,692, 18,937,001 and 18,886,660 shares issued and outstanding | 41,596 | 18,937 | 18,887 | |||||||||
Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 15,914,209 shares issued and outstanding | 15,914 | — | — | |||||||||
Common stock issuable; 88,501, 67,287 and 61,119 shares | 3,590 | 3,894 | 3,961 | |||||||||
Capital surplus | 1,052,690 | 741,244 | 740,151 | |||||||||
Accumulated deficit | (485,451 | ) | (335,567 | ) | (316,587 | ) | ||||||
Accumulated other comprehensive income | 26,309 | 31,079 | 40,468 | |||||||||
Total shareholders’ equity | 848,217 | 635,515 | 662,475 | |||||||||
Total liabilities and shareholders’ equity | $ | 7,159,123 | $ | 7,443,196 | $ | 7,013,049 | ||||||
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
2011 | 2010 | |||||||||||||||||||||||
Average | Avg. | Average | Avg. | |||||||||||||||||||||
(dollars in thousands, taxable equivalent) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans, net of unearned income (1)(2) | $ | 4,193,951 | $ | 59,394 | 5.62 | % | $ | 4,896,471 | $ | 68,540 | 5.55 | % | ||||||||||||
Taxable securities(3) | 2,125,154 | 14,324 | 2.70 | 1,384,682 | 14,431 | 4.17 | ||||||||||||||||||
Tax-exempt securities(1)(3) | 24,675 | 399 | 6.47 | 26,481 | 459 | 6.93 | ||||||||||||||||||
Federal funds sold and other interest-earning assets | 286,194 | 426 | .60 | 368,108 | 930 | 1.01 | ||||||||||||||||||
Total interest-earning assets | 6,629,974 | 74,543 | 4.47 | 6,675,742 | 84,360 | 5.02 | ||||||||||||||||||
Non-interest-earning assets: | ||||||||||||||||||||||||
Allowance for loan losses | (128,654 | ) | (194,300 | ) | ||||||||||||||||||||
Cash and due from banks | 53,500 | 107,825 | ||||||||||||||||||||||
Premises and equipment | 177,798 | 179,839 | ||||||||||||||||||||||
Other assets(3) | 528,461 | 752,780 | ||||||||||||||||||||||
Total assets | $ | 7,261,079 | $ | 7,521,886 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||
NOW | $ | 1,258,929 | 831 | .26 | $ | 1,318,779 | 1,705 | .51 | ||||||||||||||||
Money market | 1,024,559 | 1,129 | .44 | 781,903 | 1,930 | .98 | ||||||||||||||||||
Savings | 199,793 | 52 | .10 | 186,123 | 83 | .18 | ||||||||||||||||||
Time less than $100,000 | 1,448,024 | 4,539 | 1.24 | 1,541,772 | 7,190 | 1.85 | ||||||||||||||||||
Time greater than $100,000 | 940,864 | 3,456 | 1.46 | 1,065,789 | 5,506 | 2.05 | ||||||||||||||||||
Brokered | 260,423 | 1,091 | 1.66 | 573,606 | 3,403 | 2.35 | ||||||||||||||||||
Total interest-bearing deposits | 5,132,592 | 11,098 | .86 | 5,467,972 | 19,817 | 1.44 | ||||||||||||||||||
Federal funds purchased and other borrowings | 103,850 | 1,081 | 4.13 | 104,370 | 1,068 | 4.06 | ||||||||||||||||||
Federal Home Loan Bank advances | 40,625 | 441 | 4.31 | 80,220 | 796 | 3.94 | ||||||||||||||||||
Long-term debt | 138,457 | 2,642 | 7.57 | 150,119 | 2,665 | 7.04 | ||||||||||||||||||
Total borrowed funds | 282,932 | 4,164 | 5.84 | 334,709 | 4,529 | 5.37 | ||||||||||||||||||
Total interest-bearing liabilities | 5,415,524 | 15,262 | 1.12 | 5,802,681 | 24,346 | 1.66 | ||||||||||||||||||
Non-interest-bearing liabilities: | ||||||||||||||||||||||||
Non-interest-bearing deposits | 928,788 | 789,231 | ||||||||||||||||||||||
Other liabilities | 57,427 | 74,482 | ||||||||||||||||||||||
Total liabilities | 6,401,739 | 6,666,394 | ||||||||||||||||||||||
Shareholders’ equity | 859,340 | 855,492 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 7,261,079 | $ | 7,521,886 | ||||||||||||||||||||
Net interest revenue | $ | 59,281 | $ | 60,014 | ||||||||||||||||||||
Net interest-rate spread | 3.35 | % | 3.36 | % | ||||||||||||||||||||
Net interest margin(4) | 3.55 | % | 3.57 | % | ||||||||||||||||||||
(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 39%, 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 where 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 $37.9 million in 2011 and $45.4 million in 2010 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 Nine Months Ended September 30,
2011 | 2010 | |||||||||||||||||||||||
Average | Avg. | Average | Avg. | |||||||||||||||||||||
(dollars in thousands, taxable equivalent) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans, net of unearned income(1)(2) | $ | 4,351,524 | $ | 181,422 | 5.57 | % | $ | 5,025,739 | $ | 211,399 | 5.62 | % | ||||||||||||
Taxable securities(3) | 1,926,365 | 42,210 | 2.92 | 1,458,120 | 45,857 | 4.19 | ||||||||||||||||||
Tax-exempt securities(1)(3) | 25,178 | 1,234 | 6.53 | 28,470 | 1,450 | 6.79 | ||||||||||||||||||
Federal funds sold and other interest-earning assets | 514,392 | 2,573 | .67 | 357,881 | 3,202 | 1.19 | ||||||||||||||||||
Total interest-earning assets | 6,817,459 | 227,439 | 4.46 | 6,870,210 | 261,908 | 5.09 | ||||||||||||||||||
Non-interest-earning assets: | ||||||||||||||||||||||||
Allowance for loan losses | (145,689 | ) | (191,888 | ) | ||||||||||||||||||||
Cash and due from banks | 102,251 | 104,446 | ||||||||||||||||||||||
Premises and equipment | 178,694 | 180,936 | ||||||||||||||||||||||
Other assets(3) | 539,177 | 758,903 | ||||||||||||||||||||||
Total assets | $ | 7,491,892 | $ | 7,722,607 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||
NOW | $ | 1,313,752 | 3,191 | .32 | $ | 1,335,034 | 5,304 | .53 | ||||||||||||||||
Money market | 977,863 | 4,656 | .64 | 750,685 | 5,516 | .98 | ||||||||||||||||||
Savings | 194,433 | 193 | .13 | 184,420 | 250 | .18 | ||||||||||||||||||
Time less than $100,000 | 1,509,753 | 14,980 | 1.33 | 1,612,691 | 23,968 | 1.99 | ||||||||||||||||||
Time greater than $100,000 | 973,335 | 11,480 | 1.58 | 1,110,195 | 18,378 | 2.21 | ||||||||||||||||||
Brokered | 475,687 | 5,353 | 1.50 | 650,588 | 11,669 | 2.40 | ||||||||||||||||||
Total interest-bearing deposits | 5,444,823 | 39,853 | .98 | 5,643,613 | 65,085 | 1.54 | ||||||||||||||||||
�� | ||||||||||||||||||||||||
Federal funds purchased and other borrowings | 102,711 | 3,197 | 4.16 | 103,697 | 3,162 | 4.08 | ||||||||||||||||||
Federal Home Loan Bank advances | 49,442 | 1,601 | 4.33 | 100,727 | 2,747 | 3.65 | ||||||||||||||||||
Long-term debt | 146,221 | 8,169 | 7.47 | 150,098 | 7,994 | 7.12 | ||||||||||||||||||
Total borrowed funds | 298,374 | 12,967 | 5.81 | 354,522 | 13,903 | 5.24 | ||||||||||||||||||
Total interest-bearing liabilities | 5,743,197 | 52,820 | 1.23 | 5,998,135 | 78,988 | 1.76 | ||||||||||||||||||
Non-interest-bearing liabilities: | ||||||||||||||||||||||||
Non-interest-bearing deposits | 884,417 | 755,845 | ||||||||||||||||||||||
Other liabilities | 69,131 | 64,622 | ||||||||||||||||||||||
Total liabilities | 6,696,745 | 6,818,602 | ||||||||||||||||||||||
Shareholders’ equity | 795,147 | 904,005 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 7,491,892 | $ | 7,722,607 | ||||||||||||||||||||
Net interest revenue | $ | 174,619 | $ | 182,920 | ||||||||||||||||||||
Net interest-rate spread | 3.23 | % | 3.33 | % | ||||||||||||||||||||
Net interest margin(4) | 3.42 | % | 3.56 | % | ||||||||||||||||||||
(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 39%, 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 where 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 $32.4 million in 2011 and $44.1 million in 2010 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. |