UNITED STATES
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2017
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ___________ to ___________
Commission file number 001-35095
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | ||||
FORM 10-Q | ||||
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the Quarterly Period Ended June 30, 2018 | ||||
OR | ||||
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the Transition Period from ___________ to ___________ | ||||
Commission file number 001-35095 | ||||
UNITED COMMUNITY BANKS, INC. | ||||
(Exact name of registrant as specified in its charter) |
Georgia | 58-1807304 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
125 Highway 515 East | ||
Blairsville, Georgia | 30512 | |
Address of Principal Executive Offices | (Zip Code) |
(706) 781-2265(Telephone Number)
(706) 781-2265 | ||
(Telephone Number) |
Large accelerated filer | Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company ¨ |
Emerging growth company¨ |
INDEX
Item 1. | Financial Statements. | ||
Consolidated Statement of Income(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (in thousands, except per share data) 2017 2016 2017 2016 Interest revenue: Loans, including fees $ 80,264 $ 69,440 $ 227,816 $ 196,888 Investment securities, including tax exempt of $671, $134, $1,307, and $449 17,875 15,418 53,365 48,039 Deposits in banks and short-term investments 700 581 1,782 2,315 Total interest revenue 98,839 85,439 282,963 247,242 Interest expense: Deposits: NOW 700 452 1,932 1,381 Money market 1,953 1,347 4,938 3,661 Savings 34 43 89 102 Time 1,870 667 4,257 2,052 Total deposit interest expense 4,557 2,509 11,216 7,196 Short-term borrowings 36 98 177 278 Federal Home Loan Bank advances 1,709 1,015 4,603 2,731 Long-term debt 2,762 2,828 8,490 8,178 Total interest expense 9,064 6,450 24,486 18,383 Net interest revenue 89,775 78,989 258,477 228,859 (Release of) provision for credit losses 1,000 (300 ) 2,600 (800 ) Net interest revenue after provision for credit losses 88,775 79,289 255,877 229,659 Fee revenue: Service charges and fees 8,220 10,819 29,525 31,460 Mortgage loan and other related fees 4,200 6,039 13,435 13,776 Brokerage fees 1,009 1,199 3,565 3,369 Gains from sales of SBA/USDA loans 2,806 2,479 7,391 6,517 Securities gains, net 188 261 190 922 Other 4,150 5,564 12,226 12,420 Total fee revenue 20,573 26,361 66,332 68,464 Total revenue 109,348 105,650 322,209 298,123 Operating expenses: Salaries and employee benefits 38,027 36,478 112,056 103,112 Communications and equipment 4,547 4,919 14,443 13,602 Occupancy 4,945 5,132 14,802 14,393 Advertising and public relations 1,026 1,088 3,347 3,275 Postage, printing and supplies 1,411 1,451 4,127 4,029 Professional fees 2,976 3,160 8,391 9,049 FDIC assessments and other regulatory charges 2,127 1,412 4,758 4,453 Amortization of intangibles 1,212 1,119 3,085 3,116 Merger-related and other charges 3,176 3,152 7,060 6,981 Other 6,227 6,112 19,660 17,958 Total operating expenses 65,674 64,023 191,729 179,968 Net income before income taxes 43,674 41,627 130,480 118,155 Income tax expense 15,728 15,753 50,743 44,720 Net income $ 27,946 $ 25,874 $ 79,737 $ 73,435 Net income available to common shareholders $ 27,719 $ 25,874 $ 79,078 $ 73,414 Earnings per common share: Basic $ .38 $ .36 $ 1.10 $ 1.02 Diluted .38 .36 1.10 1.02 Weighted average common shares outstanding: Basic 73,151 71,556 72,060 71,992 Diluted 73,162 71,561 72,071 71,996 Three Months Ended
June 30, Six Months Ended
June 30,(in thousands, except per share data) 2018 2017 2018 2017 Interest revenue: Loans, including fees $ 103,492 $ 74,825 $ 199,961 $ 147,552 Investment securities, including tax exempt of $1,025 and $357, and $1,997 and $636 18,254 17,778 36,549 35,490 Deposits in banks and short-term investments 469 563 995 1,082 Total interest revenue 122,215 93,166 237,505 184,124 Interest expense: Deposits: NOW 1,303 635 2,416 1,232 Money market 2,583 1,559 4,758 2,985 Savings 35 28 84 55 Time 4,198 1,379 7,154 2,387 Total deposit interest expense 8,119 3,601 14,412 6,659 Short-term borrowings 198 101 498 141 Federal Home Loan Bank advances 1,636 1,464 3,760 2,894 Long-term debt 3,786 2,852 7,074 5,728 Total interest expense 13,739 8,018 25,744 15,422 Net interest revenue 108,476 85,148 211,761 168,702 Provision for credit losses 1,800 800 5,600 1,600 Net interest revenue after provision for credit losses 106,676 84,348 206,161 167,102 Noninterest income: Service charges and fees 8,794 10,701 17,719 21,305 Mortgage loan and other related fees 5,307 4,811 10,666 9,235 Brokerage fees 1,201 1,146 2,073 2,556 Gains from sales of SBA/USDA loans 2,401 2,626 4,179 4,585 Securities (losses) gains, net (364 ) 4 (1,304 ) 2 Other 6,001 4,397 12,403 8,076 Total noninterest income 23,340 23,685 45,736 45,759 Total revenue 130,016 108,033 251,897 212,861 Noninterest expenses: Salaries and employee benefits 45,363 37,338 88,238 74,029 Communications and equipment 4,849 4,978 9,481 9,896 Occupancy 5,547 4,908 11,160 9,857 Advertising and public relations 1,384 1,260 2,899 2,321 Postage, printing and supplies 1,685 1,346 3,322 2,716 Professional fees 3,464 2,371 7,508 5,415 FDIC assessments and other regulatory charges 1,973 1,348 4,449 2,631 Amortization of intangibles 1,847 900 3,745 1,873 Merger-related and other charges 2,280 1,830 4,334 3,884 Other 8,458 6,950 15,189 13,433 Total noninterest expenses 76,850 63,229 150,325 126,055 Net income before income taxes 53,166 44,804 101,572 86,806 Income tax expense 13,532 16,537 24,280 35,015 Net income $ 39,634 $ 28,267 $ 77,292 $ 51,791 Net income available to common shareholders $ 39,359 $ 28,267 $ 76,740 $ 51,791 Earnings per common share: Basic $ 0.49 $ 0.39 $ 0.97 $ 0.72 Diluted 0.49 0.39 0.97 0.72 Weighted average common shares outstanding: Basic 79,745 71,810 79,477 71,798 Diluted 79,755 71,820 79,487 71,809 3
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
(in thousands) | Before-tax Amount | Tax (Expense) Benefit | Net of Tax Amount | Before-tax Amount | Tax (Expense) Benefit | Net of Tax Amount | ||||||||||||||||||
2017 | ||||||||||||||||||||||||
Net income | $ | 43,674 | $ | (15,728 | ) | $ | 27,946 | $ | 130,480 | $ | (50,743 | ) | $ | 79,737 | ||||||||||
Other comprehensive income: | ||||||||||||||||||||||||
Unrealized gains on available-for-sale securities: | ||||||||||||||||||||||||
Unrealized holding gains arising during period | 1,016 | (355 | ) | 661 | 18,644 | (7,036 | ) | 11,608 | ||||||||||||||||
Reclassification adjustment for gains included in net income | (188 | ) | 73 | (115 | ) | (190 | ) | 72 | (118 | ) | ||||||||||||||
Net unrealized gains | 828 | (282 | ) | 546 | 18,454 | (6,964 | ) | 11,490 | ||||||||||||||||
Amortization of losses included in net income on available-for-sale securities transferred to held-to-maturity | 278 | (105 | ) | 173 | 849 | (319 | ) | 530 | ||||||||||||||||
Amortization of losses included in net income on terminated derivative financial instruments that were previously accounted for as cash flow hedges | 150 | (58 | ) | 92 | 740 | (288 | ) | 452 | ||||||||||||||||
Reclassification of disproportionate tax effect related to terminated cash flow hedges | - | - | - | - | 3,400 | 3,400 | ||||||||||||||||||
Net cash flow hedge activity | 150 | (58 | ) | 92 | 740 | 3,112 | 3,852 | |||||||||||||||||
Net actuarial loss on defined benefit pension plan | - | - | - | (718 | ) | 280 | (438 | ) | ||||||||||||||||
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan | 200 | (78 | ) | 122 | 600 | (235 | ) | 365 | ||||||||||||||||
Net defined benefit pension plan activity | 200 | (78 | ) | 122 | (118 | ) | 45 | (73 | ) | |||||||||||||||
Total other comprehensive income | 1,456 | (523 | ) | 933 | 19,925 | (4,126 | ) | 15,799 | ||||||||||||||||
Comprehensive income | $ | 45,130 | $ | (16,251 | ) | $ | 28,879 | $ | 150,405 | $ | (54,869 | ) | $ | 95,536 | ||||||||||
2016 | ||||||||||||||||||||||||
Net income | $ | 41,627 | $ | (15,753 | ) | $ | 25,874 | $ | 118,155 | $ | (44,720 | ) | $ | 73,435 | ||||||||||
Other comprehensive income: | ||||||||||||||||||||||||
Unrealized gains on available-for-sale securities: | ||||||||||||||||||||||||
Unrealized holding gains arising during period | 4,927 | (1,927 | ) | 3,000 | 37,990 | (14,488 | ) | 23,502 | ||||||||||||||||
Reclassification adjustment for gains included in net income | (261 | ) | 101 | (160 | ) | (922 | ) | 348 | (574 | ) | ||||||||||||||
Net unrealized gains | 4,666 | (1,826 | ) | 2,840 | 37,068 | (14,140 | ) | 22,928 | ||||||||||||||||
Amortization of losses included in net income on available-for-sale securities transferred to held-to-maturity | 663 | (237 | ) | 426 | 1,601 | (596 | ) | 1,005 | ||||||||||||||||
Amortization of losses included in net income on terminated derivative financial instruments that were previously accounted for as cash flow hedges | 466 | (181 | ) | 285 | 1,426 | (555 | ) | 871 | ||||||||||||||||
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan | 167 | (65 | ) | 102 | 501 | (195 | ) | 306 | ||||||||||||||||
Total other comprehensive income | 5,962 | (2,309 | ) | 3,653 | 40,596 | (15,486 | ) | 25,110 | ||||||||||||||||
Comprehensive income | $ | 47,589 | $ | (18,062 | ) | $ | 29,527 | $ | 158,751 | $ | (60,206 | ) | $ | 98,545 |
UNITED COMMUNITY BANKS, INC. Consolidated Statements of Comprehensive Income (Unaudited) | ||||||||||||||||||||||||
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
Before-tax Amount | Tax (Expense) Benefit | Net of Tax Amount | Before-tax Amount | Tax (Expense) Benefit | Net of Tax Amount | |||||||||||||||||||
2018 | ||||||||||||||||||||||||
Net income | $ | 53,166 | $ | (13,532 | ) | $ | 39,634 | $ | 101,572 | $ | (24,280 | ) | $ | 77,292 | ||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||
Unrealized losses on available-for-sale securities: | ||||||||||||||||||||||||
Unrealized holding losses arising during period | (9,574 | ) | 2,310 | (7,264 | ) | (38,838 | ) | 9,464 | (29,374 | ) | ||||||||||||||
Reclassification adjustment for losses included in net income | 364 | (97 | ) | 267 | 1,304 | (317 | ) | 987 | ||||||||||||||||
Net unrealized losses | (9,210 | ) | 2,213 | (6,997 | ) | (37,534 | ) | 9,147 | (28,387 | ) | ||||||||||||||
Amortization of losses included in net income on available-for-sale securities transferred to held-to-maturity | 218 | (55 | ) | 163 | 439 | (109 | ) | 330 | ||||||||||||||||
Amortization of losses included in net income on terminated derivative financial instruments that were previously accounted for as cash flow hedges | 143 | (38 | ) | 105 | 290 | (76 | ) | 214 | ||||||||||||||||
Net actuarial loss on defined benefit pension plan | — | — | — | (5 | ) | 1 | (4 | ) | ||||||||||||||||
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan | 227 | (73 | ) | 154 | 454 | (131 | ) | 323 | ||||||||||||||||
Net defined benefit pension plan activity | 227 | (73 | ) | 154 | 449 | (130 | ) | 319 | ||||||||||||||||
Total other comprehensive loss | (8,622 | ) | 2,047 | (6,575 | ) | (36,356 | ) | 8,832 | (27,524 | ) | ||||||||||||||
Comprehensive income | $ | 44,544 | $ | (11,485 | ) | $ | 33,059 | $ | 65,216 | $ | (15,448 | ) | $ | 49,768 | ||||||||||
2017 | ||||||||||||||||||||||||
Net income | $ | 44,804 | $ | (16,537 | ) | $ | 28,267 | $ | 86,806 | $ | (35,015 | ) | $ | 51,791 | ||||||||||
Other comprehensive income: | ||||||||||||||||||||||||
Unrealized gains on available-for-sale securities: | ||||||||||||||||||||||||
Unrealized holding gains arising during period | 11,120 | (4,217 | ) | 6,903 | 17,628 | (6,681 | ) | 10,947 | ||||||||||||||||
Reclassification adjustment for gains included in net income | (4 | ) | — | (4 | ) | (2 | ) | (1 | ) | (3 | ) | |||||||||||||
Net unrealized gains | 11,116 | (4,217 | ) | 6,899 | 17,626 | (6,682 | ) | 10,944 | ||||||||||||||||
Amortization of losses included in net income on available-for-sale securities transferred to held-to-maturity | 261 | (98 | ) | 163 | 571 | (214 | ) | 357 | ||||||||||||||||
Amortization of losses included in net income on terminated derivative financial instruments that were previously accounted for as cash flow hedges | 177 | (69 | ) | 108 | 590 | (230 | ) | 360 | ||||||||||||||||
Reclassification of disproportionate tax effect related to terminated cash flow hedges | — | — | — | — | 3,400 | 3,400 | ||||||||||||||||||
Net cash flow hedge activity | 177 | (69 | ) | 108 | 590 | 3,170 | 3,760 | |||||||||||||||||
Net actuarial gain (loss) on defined benefit pension plan | 82 | (32 | ) | 50 | (718 | ) | 280 | (438 | ) | |||||||||||||||
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan | 200 | (78 | ) | 122 | 400 | (157 | ) | 243 | ||||||||||||||||
Net defined benefit pension plan activity | 282 | (110 | ) | 172 | (318 | ) | 123 | (195 | ) | |||||||||||||||
Total other comprehensive income | 11,836 | (4,494 | ) | 7,342 | 18,469 | (3,603 | ) | 14,866 | ||||||||||||||||
Comprehensive income | $ | 56,640 | $ | (21,031 | ) | $ | 35,609 | $ | 105,275 | $ | (38,618 | ) | $ | 66,657 |
September 30, | December 31, | |||||||
(in thousands, except share and per share data) | 2017 | 2016 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 98,396 | $ | 99,489 | ||||
Interest-bearing deposits in banks | 148,449 | 117,859 | ||||||
Cash and cash equivalents | 246,845 | 217,348 | ||||||
Securities available for sale | 2,540,470 | 2,432,438 | ||||||
Securities held to maturity (fair value $310,446 and $333,170) | 306,741 | 329,843 | ||||||
Mortgage loans held for sale (includes $30,093 and $27,891 at fair value) | 30,292 | 29,878 | ||||||
Loans, net of unearned income | 7,202,937 | 6,920,636 | ||||||
Less allowance for loan losses | (58,605 | ) | (61,422 | ) | ||||
Loans, net | 7,144,332 | 6,859,214 | ||||||
Premises and equipment, net | 193,915 | 189,938 | ||||||
Bank owned life insurance | 167,680 | 143,543 | ||||||
Accrued interest receivable | 29,573 | 28,018 | ||||||
Net deferred tax asset | 128,731 | 154,336 | ||||||
Derivative financial instruments | 20,972 | 23,688 | ||||||
Goodwill and other intangible assets | 182,716 | 156,222 | ||||||
Other assets | 136,760 | 144,189 | ||||||
Total assets | $ | 11,129,027 | $ | 10,708,655 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Liabilities: | ||||||||
Deposits: | ||||||||
Demand | $ | 2,889,125 | $ | 2,637,004 | ||||
NOW | 1,967,655 | 1,989,763 | ||||||
Money market | 1,934,169 | 1,846,440 | ||||||
Savings | 605,230 | 549,713 | ||||||
Time | 1,363,949 | 1,287,142 | ||||||
Brokered | 367,256 | 327,496 | ||||||
Total deposits | 9,127,384 | 8,637,558 | ||||||
Short-term borrowings | 16,005 | 5,000 | ||||||
Federal Home Loan Bank advances | 494,484 | 709,209 | ||||||
Long-term debt | 135,707 | 175,078 | ||||||
Derivative financial instruments | 22,926 | 27,648 | ||||||
Accrued expenses and other liabilities | 111,881 | 78,427 | ||||||
Total liabilities | 9,908,387 | 9,632,920 | ||||||
Shareholders' equity: | ||||||||
Common stock, $1 par value; 150,000,000 shares authorized; 73,403,453 and 70,899,114 shares issued and outstanding | 73,403 | 70,899 | ||||||
Common stock issuable; 588,445 and 519,874 shares | 8,703 | 7,327 | ||||||
Capital surplus | 1,341,346 | 1,275,849 | ||||||
Accumulated deficit | (192,128 | ) | (251,857 | ) | ||||
Accumulated other comprehensive loss | (10,684 | ) | (26,483 | ) | ||||
Total shareholders' equity | 1,220,640 | 1,075,735 | ||||||
Total liabilities and shareholders' equity | $ | 11,129,027 | $ | 10,708,655 |
UNITED COMMUNITY BANKS, INC. Consolidated Balance Sheets (Unaudited) | ||||||||
June 30, 2018 | December 31, 2017 | |||||||
(in thousands, except share data) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 125,013 | $ | 129,108 | ||||
Interest-bearing deposits in banks | 191,355 | 185,167 | ||||||
Cash and cash equivalents | 316,368 | 314,275 | ||||||
Securities available for sale | 2,536,294 | 2,615,850 | ||||||
Securities held to maturity (fair value $291,463 and $321,276) | 297,569 | 321,094 | ||||||
Loans held for sale (includes $34,813 and $26,252 at fair value) | 34,813 | 32,734 | ||||||
Loans and leases, net of unearned income | 8,220,271 | 7,735,572 | ||||||
Less allowance for loan and lease losses | (61,071 | ) | (58,914 | ) | ||||
Loans and leases, net | 8,159,200 | 7,676,658 | ||||||
Premises and equipment, net | 202,098 | 208,852 | ||||||
Bank owned life insurance | 190,649 | 188,970 | ||||||
Accrued interest receivable | 33,114 | 32,459 | ||||||
Net deferred tax asset | 77,274 | 88,049 | ||||||
Derivative financial instruments | 29,896 | 22,721 | ||||||
Goodwill and other intangible assets | 327,174 | 244,397 | ||||||
Other assets | 181,091 | 169,401 | ||||||
Total assets | $ | 12,385,540 | $ | 11,915,460 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Deposits: | ||||||||
Demand | $ | 3,245,701 | $ | 3,087,797 | ||||
NOW | 2,031,396 | 2,131,939 | ||||||
Money market | 2,036,588 | 2,016,748 | ||||||
Savings | 683,689 | 651,742 | ||||||
Time | 1,524,635 | 1,548,460 | ||||||
Brokered | 444,079 | 371,011 | ||||||
Total deposits | 9,966,088 | 9,807,697 | ||||||
Short-term borrowings | 9,325 | 50,000 | ||||||
Federal Home Loan Bank advances | 560,000 | 504,651 | ||||||
Long-term debt | 308,434 | 120,545 | ||||||
Derivative financial instruments | 37,261 | 25,376 | ||||||
Accrued expenses and other liabilities | 125,323 | 103,857 | ||||||
Total liabilities | 11,006,431 | 10,612,126 | ||||||
Shareholders' equity: | ||||||||
Common stock, $1 par value; 150,000,000 shares authorized; 79,137,810 and 77,579,561 shares issued and outstanding | 79,138 | 77,580 | ||||||
Common stock issuable; 616,549 and 607,869 shares | 9,509 | 9,083 | ||||||
Capital surplus | 1,497,517 | 1,451,814 | ||||||
Accumulated deficit | (154,290 | ) | (209,902 | ) | ||||
Accumulated other comprehensive loss | (52,765 | ) | (25,241 | ) | ||||
Total shareholders' equity | 1,379,109 | 1,303,334 | ||||||
Total liabilities and shareholders' equity | $ | 12,385,540 | $ | 11,915,460 |
Preferred | Accumulated | |||||||||||||||||||||||||||||||
Stock | Non-Voting | Common | Other | |||||||||||||||||||||||||||||
Series | Common | Common | Stock | Capital | Accumulated | Comprehensive | ||||||||||||||||||||||||||
(in thousands, except share and per share data) | H | Stock | Stock | Issuable | Surplus | Deficit | Income (Loss) | Total | ||||||||||||||||||||||||
Balance, December 31, 2015 | $ | 9,992 | $ | 66,198 | $ | 5,286 | $ | 6,779 | $ | 1,286,361 | $ | (330,879 | ) | $ | (25,452 | ) | $ | 1,018,285 | ||||||||||||||
Net income | 73,435 | 73,435 | ||||||||||||||||||||||||||||||
Other comprehensive income | 25,110 | 25,110 | ||||||||||||||||||||||||||||||
Redemption of Series H preferred stock (9,992 shares) | (9,992 | ) | (9,992 | ) | ||||||||||||||||||||||||||||
Common stock issued to dividend reinvestment plan and to employee benefit plans (15,844 shares) | 16 | 254 | 270 | |||||||||||||||||||||||||||||
Conversion of non-voting common stock to voting (5,285,516 shares) | 5,286 | (5,286 | ) | - | ||||||||||||||||||||||||||||
Amortization of stock option and restricted stock awards | 3,257 | 3,257 | ||||||||||||||||||||||||||||||
Vesting of restricted stock, net of shares surrendered to cover payroll taxes (79,430 shares issued, 94,497 shares deferred) | 79 | 1,384 | (2,428 | ) | (965 | ) | ||||||||||||||||||||||||||
Purchases of common stock (764,000 shares) | (764 | ) | (12,895 | ) | (13,659 | ) | ||||||||||||||||||||||||||
Deferred compensation plan, net, including dividend equivalents | 291 | 291 | ||||||||||||||||||||||||||||||
Shares issued from deferred compensation plan (45,758 shares) | 46 | (1,275 | ) | 1,229 | - | |||||||||||||||||||||||||||
Common stock dividends ($.22 per share) | (15,849 | ) | (15,849 | ) | ||||||||||||||||||||||||||||
Tax on restricted stock vesting | (869 | ) | (869 | ) | ||||||||||||||||||||||||||||
Series H preferred stock dividends | (21 | ) | (21 | ) | ||||||||||||||||||||||||||||
Balance, September 30, 2016 | $ | - | $ | 70,861 | $ | - | $ | 7,179 | $ | 1,274,909 | $ | (273,314 | ) | $ | (342 | ) | $ | 1,079,293 | ||||||||||||||
Balance, December 31, 2016 | $ | - | $ | 70,899 | $ | - | $ | 7,327 | $ | 1,275,849 | $ | (251,857 | ) | $ | (26,483 | ) | $ | 1,075,735 | ||||||||||||||
Net income | 79,737 | 79,737 | ||||||||||||||||||||||||||||||
Other comprehensive income | 15,799 | 15,799 | ||||||||||||||||||||||||||||||
Common stock issued to dividend reinvestment plan and to employee benefit plans (13,107 shares) | 13 | 315 | 328 | |||||||||||||||||||||||||||||
Common stock issued for acquisition (2,370,331 shares) | 2,370 | 63,430 | 65,800 | |||||||||||||||||||||||||||||
Amortization of stock option and restricted stock awards | 4,359 | 4,359 | ||||||||||||||||||||||||||||||
Vesting of restricted stock, net of shares surrendered to cover payroll taxes (88,622 shares issued, 94,165 shares deferred) | 89 | 1,454 | (2,836 | ) | (1,293 | ) | ||||||||||||||||||||||||||
Deferred compensation plan, net, including dividend equivalents | 290 | 290 | ||||||||||||||||||||||||||||||
Shares issued from deferred compensation plan (32,279 shares) | 32 | (368 | ) | 229 | (107 | ) | ||||||||||||||||||||||||||
Common stock dividends ($.28 per share) | (20,445 | ) | (20,445 | ) | ||||||||||||||||||||||||||||
Cumulative effect of change in accounting principle | 437 | 437 | ||||||||||||||||||||||||||||||
Balance, September 30, 2017 | $ | - | $ | 73,403 | $ | - | $ | 8,703 | $ | 1,341,346 | $ | (192,128 | ) | $ | (10,684 | ) | $ | 1,220,640 |
UNITED COMMUNITY BANKS, INC. Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) For the Six Months Ended June 30, | ||||||||||||||||||||||||
(in thousands, except share and per share data) | Common Stock | Common Stock Issuable | Capital Surplus | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||
Balance, December 31, 2016 | $ | 70,899 | $ | 7,327 | $ | 1,275,849 | $ | (251,857 | ) | $ | (26,483 | ) | $ | 1,075,735 | ||||||||||
Net income | 51,791 | 51,791 | ||||||||||||||||||||||
Other comprehensive income | 14,866 | 14,866 | ||||||||||||||||||||||
Common stock issued to dividend reinvestment plan and employee benefit plans (8,569 shares) | 9 | 207 | 216 | |||||||||||||||||||||
Amortization of stock option and restricted stock awards | 3,149 | 3,149 | ||||||||||||||||||||||
Vesting of restricted stock, net of shares surrendered to cover payroll taxes (40,954 shares issued, 58,784 shares deferred) | 41 | 887 | (1,612 | ) | (684 | ) | ||||||||||||||||||
Deferred compensation plan, net, including dividend equivalents | 216 | 216 | ||||||||||||||||||||||
Shares issued from deferred compensation plan, net of shares surrendered to cover payroll taxes (32,279 shares) | 32 | (368 | ) | 229 | (107 | ) | ||||||||||||||||||
Common stock dividends ($0.18 per share) | (12,978 | ) | (12,978 | ) | ||||||||||||||||||||
Cumulative effect of change in accounting principle | 437 | 437 | ||||||||||||||||||||||
Balance, June 30, 2017 | $ | 70,981 | $ | 8,062 | $ | 1,277,822 | $ | (212,607 | ) | $ | (11,617 | ) | $ | 1,132,641 | ||||||||||
Balance, December 31, 2017 | $ | 77,580 | $ | 9,083 | $ | 1,451,814 | $ | (209,902 | ) | $ | (25,241 | ) | $ | 1,303,334 | ||||||||||
Net income | 77,292 | 77,292 | ||||||||||||||||||||||
Other comprehensive loss | (27,524 | ) | (27,524 | ) | ||||||||||||||||||||
Exercise of stock options (12,000 shares) | 12 | 130 | 142 | |||||||||||||||||||||
Common stock issued to dividend reinvestment plan and employee benefit plans (9,853 shares) | 10 | 275 | 285 | |||||||||||||||||||||
Common stock issued for acquisition (1,443,987 shares) | 1,444 | 44,302 | 45,746 | |||||||||||||||||||||
Amortization of stock option and restricted stock awards | 2,276 | 2,276 | ||||||||||||||||||||||
Vesting of restricted stock, net of shares surrendered to cover payroll taxes (46,409 shares issued, 47,419 shares deferred) | 46 | 884 | (1,916 | ) | (986 | ) | ||||||||||||||||||
Deferred compensation plan, net, including dividend equivalents | 234 | 234 | ||||||||||||||||||||||
Shares issued from deferred compensation plan, net of shares surrendered to cover payroll taxes (46,000 shares) | 46 | (692 | ) | 636 | (10 | ) | ||||||||||||||||||
Common stock dividends ($0.27 per share) | (21,680 | ) | (21,680 | ) | ||||||||||||||||||||
Balance, June 30, 2018 | $ | 79,138 | $ | 9,509 | $ | 1,497,517 | $ | (154,290 | ) | $ | (52,765 | ) | $ | 1,379,109 |
Nine Months Ended | ||||||||
September 30, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Operating activities: | ||||||||
Net income | $ | 79,737 | $ | 73,435 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and accretion | 20,137 | 22,612 | ||||||
(Release of) provision for credit losses | 2,600 | (800 | ) | |||||
Stock based compensation | 4,359 | 3,257 | ||||||
Deferred income tax expense | 51,806 | 45,308 | ||||||
Securities gains, net | (190 | ) | (922 | ) | ||||
Gains from sales of SBA/USDA loans | (7,391 | ) | (6,517 | ) | ||||
Net losses (gains) and write downs on sales of other real estate owned | 667 | (59 | ) | |||||
Changes in assets and liabilities: | ||||||||
Other assets and accrued interest receivable | 4,106 | (42,267 | ) | |||||
Accrued expenses and other liabilities | (8,382 | ) | (1,788 | ) | ||||
Mortgage loans held for sale | (414 | ) | (6,441 | ) | ||||
Net cash provided by operating activities | 147,035 | 85,818 | ||||||
Investing activities: | ||||||||
Investment securities held to maturity: | ||||||||
Proceeds from maturities and calls of securities held to maturity | 44,896 | 49,968 | ||||||
Purchases of securities held to maturity | (21,638 | ) | (20,656 | ) | ||||
Investment securities available for sale: | ||||||||
Proceeds from sales of securities available for sale | 275,769 | 189,164 | ||||||
Proceeds from maturities and calls of securities available for sale | 465,817 | 292,200 | ||||||
Purchases of securities available for sale | (709,742 | ) | (308,800 | ) | ||||
Net increase in loans | (57,260 | ) | (453,541 | ) | ||||
Purchase of bank owned life insurance | (10,000 | ) | - | |||||
Proceeds from sales of premises and equipment | 2,229 | 5,038 | ||||||
Purchases of premises and equipment | (15,167 | ) | (13,716 | ) | ||||
Net cash received from acquisitions | 17,822 | 1,912 | ||||||
Proceeds from sale of other real estate | 7,076 | 9,370 | ||||||
Net cash used in investing activities | (198 | ) | (249,061 | ) | ||||
Financing activities: | ||||||||
Net change in deposits | 171,611 | 169,156 | ||||||
Net change in short-term borrowings | 9,864 | 8,360 | ||||||
Proceeds from FHLB advances | 3,370,000 | 7,080,000 | ||||||
Repayments of FHLB advances | (3,609,000 | ) | (7,074,000 | ) | ||||
Cash paid for shares withheld to cover payroll taxes upon vesting of restricted stock | (1,400 | ) | (965 | ) | ||||
Repayment of long-term debt | (40,000 | ) | - | |||||
Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans | 328 | 270 | ||||||
Retirement of preferred stock | - | (9,992 | ) | |||||
Purchase of common stock | - | (13,659 | ) | |||||
Cash dividends on common stock | (18,743 | ) | (10,085 | ) | ||||
Cash dividends on preferred stock | - | (46 | ) | |||||
Net cash (used in) provided by financing activities | (117,340 | ) | 149,039 | |||||
Net change in cash and cash equivalents | 29,497 | (14,204 | ) | |||||
Cash and cash equivalents at beginning of period | 217,348 | 240,363 | ||||||
Cash and cash equivalents at end of period | $ | 246,845 | $ | 226,159 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Interest paid | $ | 25,513 | $ | 25,815 | ||||
Income taxes paid | 5,705 | 3,431 | ||||||
Significant non-cash investing and financing transactions: | ||||||||
Unsettled securities purchases | 28,436 | 8,973 | ||||||
Unsettled government guaranteed loan sales | 21,517 | 22,355 | ||||||
Transfers of loans to foreclosed properties | 1,725 | 6,647 | ||||||
Acquisitions: | ||||||||
Assets acquired | 412,477 | 450,958 | ||||||
Liabilities assumed | 346,646 | 439,749 | ||||||
Net assets acquired | 65,831 | 11,209 | ||||||
Common stock issued in acquisitions | 65,800 | - |
UNITED COMMUNITY BANKS, INC. Consolidated Statements of Cash Flows (Unaudited) | ||||||||
Six Months Ended June 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Operating activities: | ||||||||
Net income | $ | 77,292 | $ | 51,791 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and accretion | 17,068 | 12,932 | ||||||
Provision for credit losses | 5,600 | 1,600 | ||||||
Stock based compensation | 2,276 | 3,149 | ||||||
Deferred income tax expense | 22,782 | 35,685 | ||||||
Securities losses (gains), net | 1,304 | (2 | ) | |||||
Gains from sales of SBA/USDA loans | (4,179 | ) | (4,585 | ) | ||||
Net losses and write downs on sales of other real estate owned | 260 | 471 | ||||||
Changes in assets and liabilities: | ||||||||
Other assets and accrued interest receivable | (18,799 | ) | (425 | ) | ||||
Accrued expenses and other liabilities | 12,273 | (7,191 | ) | |||||
Mortgage loans held for sale | 513 | 4,167 | ||||||
Net cash provided by operating activities | 116,390 | 97,592 | ||||||
Investing activities: | ||||||||
Investment securities held to maturity: | ||||||||
Proceeds from maturities and calls of securities held to maturity | 35,531 | 31,369 | ||||||
Purchases of securities held to maturity | (11,983 | ) | (13,433 | ) | ||||
Investment securities available for sale: | ||||||||
Proceeds from sales of securities available for sale | 140,296 | 94,650 | ||||||
Proceeds from maturities and calls of securities available for sale | 174,284 | 309,054 | ||||||
Purchases of securities available for sale | (280,241 | ) | (412,407 | ) | ||||
Net increase in loans | (117,492 | ) | (115,952 | ) | ||||
Purchase of bank owned life insurance | — | (10,000 | ) | |||||
Proceeds from sales of premises and equipment | 589 | 5 | ||||||
Purchases of premises and equipment | (9,959 | ) | (11,687 | ) | ||||
Net cash paid for acquisition | (56,800 | ) | — | |||||
Proceeds from sale of other real estate | 1,986 | 5,781 | ||||||
Net cash used in investing activities | (123,789 | ) | (122,620 | ) | ||||
Financing activities: | ||||||||
Net change in deposits | 159,015 | 98,694 | ||||||
Net change in short-term borrowings | (255,598 | ) | (5,000 | ) | ||||
Repayments of long-term debt | (30,023 | ) | — | |||||
Proceeds from FHLB advances | 1,375,000 | 2,710,000 | ||||||
Repayments of FHLB advances | (1,319,003 | ) | (2,750,000 | ) | ||||
Proceeds from issuance of subordinated debt, net of issuance costs | 98,188 | — | ||||||
Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans | 285 | 216 | ||||||
Proceeds from exercise of stock options | 142 | — | ||||||
Cash paid for shares withheld to cover payroll taxes upon vesting of restricted stock | (996 | ) | (791 | ) | ||||
Cash dividends on common stock | (17,518 | ) | (12,253 | ) | ||||
Net cash provided by financing activities | 9,492 | 40,866 | ||||||
Net change in cash and cash equivalents, including restricted cash | 2,093 | 15,838 | ||||||
Cash and cash equivalents, including restricted cash, at beginning of period | 314,275 | 217,348 | ||||||
Cash and cash equivalents, including restricted cash, at end of period | $ | 316,368 | $ | 233,186 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Interest paid | $ | 23,518 | $ | 15,346 | ||||
Income taxes paid | 4,345 | 4,651 | ||||||
Significant non-cash investing and financing transactions: | ||||||||
Unsettled securities purchases | — | 20,269 | ||||||
Unsettled government guaranteed loan sales | 18,800 | 26,107 | ||||||
Transfers of loans to foreclosed properties | 1,609 | 1,042 | ||||||
Acquisitions: | ||||||||
Assets acquired | 481 | — | ||||||
Liabilities assumed | 351 | — | ||||||
Net assets acquired | 130 | — |
Effective January 1, 2017, management elected to begin measuring residential mortgage servicing rights at fair value. The cumulative effect adjustment of this election to retained earnings, net of income tax effect, was $437,000.
2017.
Certain 2016 amounts have been reclassified to conform
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This ASU provides guidance on the recognition of revenue from contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and will be applied retrospectively either to each prior reporting period or with a cumulative effect recognized at the date of initial application. Because the guidance does not apply to revenue associated with financial instruments, including loans and securities, United does not expect the new revenue recognition guidance to have a material impact on the consolidated financial statements. United continues to evaluate the changes in disclosures required by the new guidance.
In March 2017, the FASB issued ASU No. 2017-08,Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This update shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. For securities held at a discount, the discount will continue to be amortized to maturity. For public entities, this update is effective for fiscal years beginning after December 15, 2018, with modified retrospective application. The adoption of this update is not expected to have a material impact on the consolidated financial statements.
In May 2017, the FASB issued ASU No. 2017-09,Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This update clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Specifically, modification accounting should be applied unless the fair value of the modified award is the same as the original award immediately before modification, the vesting conditions of the modified award are the same as the original award immediately before modification, and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before modification. For public entities, this update is effective for fiscal years beginning after December 15, 2017, with prospective application. The adoption of this update is not expected to have a material impact on the consolidated financial statements.
In August 2017, The FASB issued ASU No. 2017-12,Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This update also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. For public entities, this update is effective for fiscal years beginning after December 15, 2018. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings. The amended presentation and disclosure guidance is required prospectively. The adoption of this update is not expected to have a material impact on the consolidated financial statements.
Recently Adopted Standards
In March 2016, the FASB issued ASU No. 2016-09,Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update simplified several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. United adopted this standard effective January 1, 2017, with no material impact on the consolidated financial statements, although management expects more volatility in the effective tax rate as excess tax benefits and deficiencies on stock compensation transactions flow through income tax expense rather than capital surplus. United prospectively adopted the amendment requiring that excess tax benefits and deficiencies be recognized as income tax expense or benefit in the income statement and as an operating activity in the statement of cash flows. In addition, United elected to account for forfeitures as they occur, rather than estimate the number of awards expected to vest. United retrospectively implemented the clarification that cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity.
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NLFC Holdings Corp.
February 1, 2018.
As Recorded by HCSB | Fair Value Adjustments (1) | As Recorded by United | ||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 17,855 | $ | (2 | ) | $ | 17,853 | |||||
Securities | 101,462 | (142 | ) | 101,320 | ||||||||
Loans, net | 228,483 | (12,536 | ) | 215,947 | ||||||||
Premises and equipment, net | 14,030 | (6,113 | ) | 7,917 | ||||||||
Bank owned life insurance | 11,827 | - | 11,827 | |||||||||
Accrued interest receivable | 1,322 | (275 | ) | 1,047 | ||||||||
Net deferred tax asset | - | 25,389 | 25,389 | |||||||||
Intangibles | - | 5,716 | 5,716 | |||||||||
Other real estate owned | 1,177 | (372 | ) | 805 | ||||||||
Other assets | 1,950 | (32 | ) | 1,918 | ||||||||
Total assets acquired | $ | 378,106 | $ | 11,633 | $ | 389,739 | ||||||
Liabilities | ||||||||||||
Deposits | $ | 318,512 | $ | 430 | $ | 318,942 | ||||||
Repurchase agreements | 1,141 | - | 1,141 | |||||||||
Federal Home Loan Bank advances | 24,000 | 517 | 24,517 | |||||||||
Other liabilities | 1,955 | 91 | 2,046 | |||||||||
Total liabilities assumed | 345,608 | 1,038 | 346,646 | |||||||||
Excess of assets acquired over liabilities assumed | $ | 32,498 | ||||||||||
Aggregate fair value adjustments | $ | 10,595 | ||||||||||
Total identifiable net assets | $ | 43,093 | ||||||||||
Consideration transferred | ||||||||||||
Cash | 31 | |||||||||||
Common stock issued (2,370,331 shares) | 65,800 | |||||||||||
Total fair value of consideration transferred | 65,831 | |||||||||||
Equity interest in HCSB held before the business combination | 1,125 | |||||||||||
Goodwill | $ | 23,863 |
As Recorded by NLFC | Fair Value Adjustments (1) | As Recorded by United | |||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 27,700 | — | $ | 27,700 | ||||||
Loans and leases, net | 365,533 | (7,181 | ) | 358,352 | |||||||
Premises and equipment, net | 628 | (304 | ) | 324 | |||||||
Net deferred tax asset | — | 2,873 | 2,873 | ||||||||
Other assets | 5,117 | (1,066 | ) | 4,051 | |||||||
Total assets acquired | $ | 398,978 | $ | (5,678 | ) | $ | 393,300 | ||||
Liabilities | |||||||||||
Short-term borrowings | $ | 214,923 | $ | — | $ | 214,923 | |||||
Long-term debt | 119,402 | — | 119,402 | ||||||||
Other liabilities | 17,059 | (951 | ) | 16,108 | |||||||
Total liabilities assumed | 351,384 | (951 | ) | 350,433 | |||||||
Excess of assets acquired over liabilities assumed | $ | 47,594 | |||||||||
Aggregate fair value adjustments | $ | (4,727 | ) | ||||||||
Total identifiable net assets | $ | 42,867 | |||||||||
Consideration transferred | |||||||||||
Cash | 84,500 | ||||||||||
Common stock issued (1,443,987 shares) | 45,746 | ||||||||||
Total fair value of consideration transferred | 130,246 | ||||||||||
Goodwill | $ | 87,379 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes
July 31, 2017 | ||||
Accounted for pursuant to ASC 310-30: | ||||
Contractually required principal and interest | $ | 46,069 | ||
Non-accretable difference | 12,413 | |||
Cash flows expected to be collected | 33,656 | |||
Accretable yield | 3,410 | |||
Fair value | $ | 30,246 | ||
Excluded from ASC 310-30: | ||||
Fair value | $ | 185,701 | ||
Gross contractual amounts receivable | 212,780 | |||
Estimate of contractual cash flows not expected to be collected | 3,985 |
Acquisition
February 1, 2018 | |||
Accounted for pursuant to ASC 310-30: | |||
Contractually required principal and interest | $ | 24,711 | |
Non-accretable difference | 5,505 | ||
Cash flows expected to be collected | 19,206 | ||
Accretable yield | 1,977 | ||
Fair value | $ | 17,229 | |
Excluded from ASC 310-30: | |||
Fair value | $ | 341,123 | |
Gross contractual amounts receivable | 389,432 | ||
Estimate of contractual cash flows not expected to be collected | 8,624 |
On July 1, 2016, United completedits intention to acquire NLFC but prior to the completion of the acquisition, of Tidelands Bancshares, Inc. (“Tidelands”) and its wholly-owned bank subsidiary Tidelands Bank. Information relatedUnited purchased $19.9 million in loans from NLFC in a transaction separate from the business combination.
Consolidated Financial Statements
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Revenue | Net Income | Revenue | Net Income | |||||||||||||
2017 | ||||||||||||||||
Actual HCSB results included in statement of income since acquisition date | $ | 2,404 | $ | 627 | $ | 2,404 | $ | 627 | ||||||||
Supplemental consolidated pro forma as if HCSB had been acquired January 1, 2016 | 110,910 | 27,590 | 330,851 | 80,539 | ||||||||||||
2016 | ||||||||||||||||
Actual Tidelands results included in statement of income since acquisition date | $ | 3,988 | $ | 658 | $ | 3,988 | $ | 658 | ||||||||
Supplemental consolidated pro forma as if HCSB had been acquired January 1, 2016 and Tidelands had been acquired January 1, 2015 | 108,549 | 24,715 | 309,662 | 57,114 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Revenue | Net Income | Revenue | Net Income | |||||||||||||
2018 | ||||||||||||||||
Actual NLFC results included in statement of income since acquisition date | $ | 6,624 | $ | 2,686 | $ | 10,237 | $ | 3,496 | ||||||||
Supplemental consolidated pro forma as if NLFC had been acquired January 1, 2017 | 130,288 | 39,924 | 255,119 | 78,989 | ||||||||||||
2017 | ||||||||||||||||
Supplemental consolidated pro forma as if NLFC had been acquired January 1, 2017 | $ | 112,004 | $ | 28,715 | $ | 220,510 | $ | 49,595 |
Gross Amounts of | Gross Amounts Offset on the | Gross Amounts not Offset in the Balance Sheet | ||||||||||||||||||||||
September 30, 2017 | Recognized Assets | Balance Sheet | Net Asset Balance | Financial Instruments | Collateral Received | Net Amount | ||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 200,000 | $ | (200,000 | ) | $ | - | $ | - | $ | - | $ | - | |||||||||||
Derivatives | 20,972 | - | 20,972 | (2,232 | ) | (2,048 | ) | 16,692 | ||||||||||||||||
Total | $ | 220,972 | $ | (200,000 | ) | $ | 20,972 | $ | (2,232 | ) | $ | (2,048 | ) | $ | 16,692 | |||||||||
Weighted average interest rate of reverse repurchase agreements | 2.02 | % | ||||||||||||||||||||||
Gross Amounts of | Gross Amounts Offset on the | Gross Amounts not Offset in the Balance Sheet | ||||||||||||||||||||||
Recognized Liabilities | Balance Sheet | Net Liability Balance | Financial Instruments | Collateral Pledged | Net Amount | |||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 200,000 | $ | (200,000 | ) | $ | - | $ | - | $ | - | $ | - | |||||||||||
Derivatives | 22,926 | - | 22,926 | (2,232 | ) | (20,900 | ) | - | ||||||||||||||||
Total | $ | 222,926 | $ | (200,000 | ) | $ | 22,926 | $ | (2,232 | ) | $ | (20,900 | ) | $ | - | |||||||||
Weighted average interest rate of repurchase agreements | 1.20 | % | ||||||||||||||||||||||
Gross Amounts of | Gross Amounts Offset on the | Gross Amounts not Offset in the Balance Sheet | ||||||||||||||||||||||
December 31, 2016 | Recognized Assets | Balance Sheet | Net Asset Balance | Financial Instruments | Collateral Received | Net Amount | ||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 150,000 | $ | (150,000 | ) | $ | - | $ | - | $ | - | $ | - | |||||||||||
Derivatives | 23,688 | - | 23,688 | (3,485 | ) | (3,366 | ) | 16,837 | ||||||||||||||||
Total | $ | 173,688 | $ | (150,000 | ) | $ | 23,688 | $ | (3,485 | ) | $ | (3,366 | ) | $ | 16,837 | |||||||||
Weighted average interest rate of reverse repurchase agreements | 1.78 | % | ||||||||||||||||||||||
Gross Amounts of | Gross Amounts Offset on the | Gross Amounts not Offset in the Balance Sheet | ||||||||||||||||||||||
Recognized Liabilities | Balance Sheet | Net Liability Balance | Financial Instruments | Collateral Pledged | Net Amount | |||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 150,000 | $ | (150,000 | ) | $ | - | $ | - | $ | - | $ | - | |||||||||||
Derivatives | 27,648 | - | 27,648 | (3,485 | ) | (18,505 | ) | 5,658 | ||||||||||||||||
Total | $ | 177,648 | $ | (150,000 | ) | $ | 27,648 | $ | (3,485 | ) | $ | (18,505 | ) | $ | 5,658 | |||||||||
Weighted average interest rate of repurchase agreements | .88 | % |
Gross Amounts of Recognized Assets | Gross Amounts Offset on the Balance Sheet | Gross Amounts not Offset in the Balance Sheet | ||||||||||||||||||||||
June 30, 2018 | Net Asset Balance | Financial Instruments | Collateral Received | Net Amount | ||||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 50,000 | $ | (50,000 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Derivatives | 29,896 | — | 29,896 | (553 | ) | (13,799 | ) | 15,544 | ||||||||||||||||
Total | $ | 79,896 | $ | (50,000 | ) | $ | 29,896 | $ | (553 | ) | $ | (13,799 | ) | $ | 15,544 | |||||||||
Weighted average interest rate of reverse repurchase agreements | 2.70 | % | ||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset on the Balance Sheet | Net Liability Balance | Gross Amounts not Offset in the Balance Sheet | |||||||||||||||||||||
Financial Instruments | Collateral Pledged | Net Amount | ||||||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 50,000 | $ | (50,000 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Derivatives | 37,261 | — | 37,261 | (553 | ) | (18,438 | ) | 18,270 | ||||||||||||||||
Total | $ | 87,261 | $ | (50,000 | ) | $ | 37,261 | $ | (553 | ) | $ | (18,438 | ) | $ | 18,270 | |||||||||
Weighted average interest rate of repurchase agreements | 1.95 | % | ||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset on the Balance Sheet | Gross Amounts not Offset in the Balance Sheet | ||||||||||||||||||||||
December 31, 2017 | Net Asset Balance | Financial Instruments | Collateral Received | Net Amount | ||||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 100,000 | $ | (100,000 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Derivatives | 22,721 | — | 22,721 | (1,490 | ) | (6,369 | ) | 14,862 | ||||||||||||||||
Total | $ | 122,721 | $ | (100,000 | ) | $ | 22,721 | $ | (1,490 | ) | $ | (6,369 | ) | $ | 14,862 | |||||||||
Weighted average interest rate of reverse repurchase agreements | 1.95 | % | ||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset on the Balance Sheet | Net | Gross Amounts not Offset in the Balance Sheet | |||||||||||||||||||||
Liability Balance | Financial Instruments | Collateral Pledged | Net Amount | |||||||||||||||||||||
Repurchase agreements / reverse repurchase agreements | $ | 100,000 | $ | (100,000 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Derivatives | 25,376 | — | 25,376 | (1,490 | ) | (17,190 | ) | 6,696 | ||||||||||||||||
Total | $ | 125,376 | $ | (100,000 | ) | $ | 25,376 | $ | (1,490 | ) | $ | (17,190 | ) | $ | 6,696 | |||||||||
Weighted average interest rate of repurchase agreements | 1.20 | % |
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
As of September 30, 2017 | Overnight and Continuous | Up to 30 Days | 30 to 90 Days | 91 to 110 days | Total | |||||||||||||||
Mortgage-backed securities | $ | 1,005 | $ | 100,000 | $ | - | $ | 100,000 | $ | 201,005 | ||||||||||
Total | $ | 1,005 | $ | 100,000 | $ | - | $ | 100,000 | $ | 201,005 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements in offsetting disclosure | $ | 200,000 | ||||||||||||||||||
Amounts related to agreements not included in offsetting disclosure | $ | 1,005 | ||||||||||||||||||
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
As of December 31, 2016 | Overnight and Continuous | Up to 30 Days | 30 to 90 Days | 91 to 110 days | Total | |||||||||||||||
Mortgage-backed securities | $ | - | $ | - | $ | 50,000 | $ | 100,000 | $ | 150,000 | ||||||||||
Total | $ | - | $ | - | $ | 50,000 | $ | 100,000 | $ | 150,000 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements in offsetting disclosure | $ | 150,000 | ||||||||||||||||||
Amounts related to agreements not included in offsetting disclosure | $ | - |
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
Overnight and | ||||||||||||||||||||
As of June 30, 2018 | Continuous | Up to 30 Days | 30 to 90 Days | 91 to 110 days | Total | |||||||||||||||
Mortgage-backed securities | $ | — | $ | — | $ | — | $ | 50,000 | $ | 50,000 | ||||||||||
Total | $ | — | $ | — | $ | — | $ | 50,000 | $ | 50,000 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements in offsetting disclosure | $ | 50,000 | ||||||||||||||||||
Amounts related to agreements not included in offsetting disclosure | $ | — |
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
Overnight and | ||||||||||||||||||||
As of December 31, 2017 | Continuous | Up to 30 Days | 30 to 90 Days | 91 to 110 days | Total | |||||||||||||||
Mortgage-backed securities | $ | — | $ | — | $ | 100,000 | $ | — | $ | 100,000 | ||||||||||
Total | $ | — | $ | — | $ | 100,000 | $ | — | $ | 100,000 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements in offsetting disclosure | $ | 100,000 | ||||||||||||||||||
Amounts related to agreements not included in offsetting disclosure | $ | — |
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
As of September 30, 2017 | ||||||||||||||||
State and political subdivisions | $ | 58,917 | $ | 2,140 | $ | 156 | $ | 60,901 | ||||||||
Mortgage-backed securities(1) | 247,824 | 3,445 | 1,724 | 249,545 | ||||||||||||
Total | $ | 306,741 | $ | 5,585 | $ | 1,880 | $ | 310,446 | ||||||||
As of December 31, 2016 | ||||||||||||||||
State and political subdivisions | $ | 57,134 | $ | 2,197 | $ | 249 | $ | 59,082 | ||||||||
Mortgage-backed securities(1) | 272,709 | 4,035 | 2,656 | 274,088 | ||||||||||||
Total | $ | 329,843 | $ | 6,232 | $ | 2,905 | $ | 333,170 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
As of June 30, 2018 | |||||||||||||||
State and political subdivisions | $ | 71,125 | $ | 954 | $ | 1,238 | $ | 70,841 | |||||||
Mortgage-backed securities(1) | 226,444 | 987 | 6,809 | 220,622 | |||||||||||
Total | $ | 297,569 | $ | 1,941 | $ | 8,047 | $ | 291,463 | |||||||
As of December 31, 2017 | |||||||||||||||
State and political subdivisions | $ | 71,959 | $ | 1,574 | $ | 178 | $ | 73,355 | |||||||
Mortgage-backed securities(1) | 249,135 | 2,211 | 3,425 | 247,921 | |||||||||||
Total | $ | 321,094 | $ | 3,785 | $ | 3,603 | $ | 321,276 |
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
As of September 30, 2017 | ||||||||||||||||
U.S. Treasuries | $ | 74,434 | $ | 330 | $ | - | $ | 74,764 | ||||||||
U.S. Government agencies | 27,276 | 473 | 21 | 27,728 | ||||||||||||
State and political subdivisions | 171,372 | 1,402 | 385 | 172,389 | ||||||||||||
Mortgage-backed securities(1) | 1,644,741 | 11,365 | 7,410 | 1,648,696 | ||||||||||||
Corporate bonds | 305,559 | 3,108 | 296 | 308,371 | ||||||||||||
Asset-backed securities | 306,127 | 2,505 | 167 | 308,465 | ||||||||||||
Other | 57 | - | - | 57 | ||||||||||||
Total | $ | 2,529,566 | $ | 19,183 | $ | 8,279 | $ | 2,540,470 | ||||||||
As of December 31, 2016 | ||||||||||||||||
U.S. Treasuries | $ | 170,360 | $ | 20 | $ | 764 | $ | 169,616 | ||||||||
U.S. Government agencies | 21,053 | 6 | 239 | 20,820 | ||||||||||||
State and political subdivisions | 74,555 | 176 | 554 | 74,177 | ||||||||||||
Mortgage-backed securities(1) | 1,397,435 | 8,924 | 14,677 | 1,391,682 | ||||||||||||
Corporate bonds | 306,824 | 591 | 2,023 | 305,392 | ||||||||||||
Asset-backed securities | 468,742 | 2,798 | 1,971 | 469,569 | ||||||||||||
Other | 1,182 | - | - | 1,182 | ||||||||||||
Total | $ | 2,440,151 | $ | 12,515 | $ | 20,228 | $ | 2,432,438 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
As of June 30, 2018 | |||||||||||||||
U.S. Treasuries | $ | 122,290 | $ | — | $ | 3,251 | $ | 119,039 | |||||||
U.S. Government agencies | 25,778 | 240 | 440 | 25,578 | |||||||||||
State and political subdivisions | 200,486 | 123 | 2,978 | 197,631 | |||||||||||
Mortgage-backed securities(1) | 1,844,310 | 1,992 | 39,441 | 1,806,861 | |||||||||||
Corporate bonds | 199,303 | 793 | 1,931 | 198,165 | |||||||||||
Asset-backed securities | 189,067 | 610 | 714 | 188,963 | |||||||||||
Other | 57 | — | — | 57 | |||||||||||
Total | $ | 2,581,291 | $ | 3,758 | $ | 48,755 | $ | 2,536,294 | |||||||
As of December 31, 2017 | |||||||||||||||
U.S. Treasuries | $ | 122,025 | $ | — | $ | 912 | $ | 121,113 | |||||||
U.S. Government agencies | 26,129 | 269 | 26 | 26,372 | |||||||||||
State and political subdivisions | 195,663 | 2,019 | 396 | 197,286 | |||||||||||
Mortgage-backed securities(1) | 1,738,056 | 7,089 | 17,934 | 1,727,211 | |||||||||||
Corporate bonds | 305,265 | 1,513 | 425 | 306,353 | |||||||||||
Asset-backed securities | 236,533 | 1,078 | 153 | 237,458 | |||||||||||
Other | 57 | — | — | 57 | |||||||||||
Total | $ | 2,623,728 | $ | 11,968 | $ | 19,846 | $ | 2,615,850 |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
As of September 30, 2017 | ||||||||||||||||||||||||
State and political subdivisions | $ | 8,049 | $ | 156 | $ | - | $ | - | $ | 8,049 | $ | 156 | ||||||||||||
Mortgage-backed securities | 80,277 | 1,025 | 18,871 | 699 | 99,148 | 1,724 | ||||||||||||||||||
Total unrealized loss position | $ | 88,326 | $ | 1,181 | $ | 18,871 | $ | 699 | $ | 107,197 | $ | 1,880 | ||||||||||||
As of December 31, 2016 | ||||||||||||||||||||||||
State and political subdivisions | $ | 18,359 | $ | 249 | $ | - | $ | - | $ | 18,359 | $ | 249 | ||||||||||||
Mortgage-backed securities | 118,164 | 2,656 | - | - | 118,164 | 2,656 | ||||||||||||||||||
Total unrealized loss position | $ | 136,523 | $ | 2,905 | $ | - | $ | - | $ | 136,523 | $ | 2,905 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
As of June 30, 2018 | |||||||||||||||||||||||
State and political subdivisions | $ | 43,131 | $ | 1,238 | $ | — | $ | — | $ | 43,131 | $ | 1,238 | |||||||||||
Mortgage-backed securities | 82,473 | 2,856 | 79,198 | 3,953 | 161,671 | 6,809 | |||||||||||||||||
Total unrealized loss position | $ | 125,604 | $ | 4,094 | $ | 79,198 | $ | 3,953 | $ | 204,802 | $ | 8,047 | |||||||||||
As of December 31, 2017 | |||||||||||||||||||||||
State and political subdivisions | $ | 8,969 | $ | 178 | $ | — | $ | — | $ | 8,969 | $ | 178 | |||||||||||
Mortgage-backed securities | 95,353 | 1,448 | 65,868 | 1,977 | 161,221 | 3,425 | |||||||||||||||||
Total unrealized loss position | $ | 104,322 | $ | 1,626 | $ | 65,868 | $ | 1,977 | $ | 170,190 | $ | 3,603 |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
As of September 30, 2017 | ||||||||||||||||||||||||
U.S. Treasuries | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
U.S. Government agencies | 2,656 | 13 | 1,007 | 8 | 3,663 | 21 | ||||||||||||||||||
State and political subdivisions | 68,936 | 385 | - | - | 68,936 | 385 | ||||||||||||||||||
Mortgage-backed securities | 466,703 | 3,666 | 155,799 | 3,744 | 622,502 | 7,410 | ||||||||||||||||||
Corporate bonds | 31,113 | 106 | 810 | 190 | 31,923 | 296 | ||||||||||||||||||
Asset-backed securities | 64,580 | 135 | 5,027 | 32 | 69,607 | 167 | ||||||||||||||||||
Total unrealized loss position | $ | 633,988 | $ | 4,305 | $ | 162,643 | $ | 3,974 | $ | 796,631 | $ | 8,279 | ||||||||||||
As of December 31, 2016 | ||||||||||||||||||||||||
U.S. Treasuries | $ | 145,229 | $ | 764 | $ | - | $ | - | $ | 145,229 | $ | 764 | ||||||||||||
U.S. Government agencies | 19,685 | 239 | - | - | 19,685 | 239 | ||||||||||||||||||
State and political subdivisions | 61,782 | 554 | - | - | 61,782 | 554 | ||||||||||||||||||
Mortgage-backed securities | 810,686 | 13,952 | 26,279 | 725 | 836,965 | 14,677 | ||||||||||||||||||
Corporate bonds | 228,504 | 1,597 | 15,574 | 426 | 244,078 | 2,023 | ||||||||||||||||||
Asset-backed securities | 54,477 | 540 | 115,338 | 1,431 | 169,815 | 1,971 | ||||||||||||||||||
Total unrealized loss position | $ | 1,320,363 | $ | 17,646 | $ | 157,191 | $ | 2,582 | $ | 1,477,554 | $ | 20,228 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
As of June 30, 2018 | |||||||||||||||||||||||
U.S. Treasuries | $ | 119,039 | $ | 3,251 | $ | — | $ | — | $ | 119,039 | $ | 3,251 | |||||||||||
U.S. Government agencies | 19,790 | 413 | 1,624 | 27 | 21,414 | 440 | |||||||||||||||||
State and political subdivisions | 171,147 | 2,899 | 5,061 | 79 | 176,208 | 2,978 | |||||||||||||||||
Mortgage-backed securities | 1,212,603 | 24,160 | 339,456 | 15,281 | 1,552,059 | 39,441 | |||||||||||||||||
Corporate bonds | 116,563 | 1,921 | 990 | 10 | 117,553 | 1,931 | |||||||||||||||||
Asset-backed securities | 75,232 | 714 | — | — | 75,232 | 714 | |||||||||||||||||
Total unrealized loss position | $ | 1,714,374 | $ | 33,358 | $ | 347,131 | $ | 15,397 | $ | 2,061,505 | $ | 48,755 | |||||||||||
As of December 31, 2017 | |||||||||||||||||||||||
U.S. Treasuries | $ | 121,113 | $ | 912 | $ | — | $ | — | $ | 121,113 | $ | 912 | |||||||||||
U.S. Government agencies | 1,976 | 13 | 1,677 | 13 | 3,653 | 26 | |||||||||||||||||
State and political subdivisions | 61,494 | 365 | 5,131 | 31 | 66,625 | 396 | |||||||||||||||||
Mortgage-backed securities | 964,205 | 8,699 | 328,923 | 9,235 | 1,293,128 | 17,934 | |||||||||||||||||
Corporate bonds | 55,916 | 325 | 900 | 100 | 56,816 | 425 | |||||||||||||||||
Asset-backed securities | 28,695 | 126 | 5,031 | 27 | 33,726 | 153 | |||||||||||||||||
Total unrealized loss position | $ | 1,233,399 | $ | 10,440 | $ | 341,662 | $ | 9,406 | $ | 1,575,061 | $ | 19,846 |
rates.
2017.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Proceeds from sales | $ | 181,119 | $ | 100,867 | $ | 275,769 | $ | 189,164 | ||||||||
Gross gains on sales | $ | 923 | $ | 607 | $ | 1,248 | $ | 1,565 | ||||||||
Gross losses on sales | (735 | ) | (346 | ) | (1,058 | ) | (643 | ) | ||||||||
Net gains on sales of securities | $ | 188 | $ | 261 | $ | 190 | $ | 922 | ||||||||
Income tax expense attributable to sales | $ | 73 | $ | 101 | $ | 72 | $ | 348 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Proceeds from sales | $ | 26,335 | $ | 70,453 | $ | 140,296 | $ | 94,650 | |||||||
Gross gains on sales | $ | 232 | $ | 227 | $ | 649 | $ | 325 | |||||||
Gross losses on sales | (596 | ) | (223 | ) | (1,953 | ) | (323 | ) | |||||||
Net (losses) gains on sales of securities | $ | (364 | ) | $ | 4 | $ | (1,304 | ) | $ | 2 | |||||
Income tax benefit attributable to sales | $ | (97 | ) | $ | — | $ | (317 | ) | $ | (1 | ) |
Available-for-Sale | Held-to-Maturity | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
US Treasuries: | ||||||||||||||||
1 to 5 years | $ | 44,523 | $ | 44,827 | $ | - | $ | - | ||||||||
5 to 10 years | 29,911 | 29,937 | - | - | ||||||||||||
74,434 | 74,764 | - | - | |||||||||||||
US Government agencies: | ||||||||||||||||
1 to 5 years | 2,103 | 2,117 | - | - | ||||||||||||
5 to 10 years | 19,757 | 19,913 | - | - | ||||||||||||
More than 10 years | 5,416 | 5,698 | - | - | ||||||||||||
27,276 | 27,728 | - | - | |||||||||||||
State and political subdivisions: | ||||||||||||||||
Within 1 year | 1,500 | 1,515 | 4,092 | 4,146 | ||||||||||||
1 to 5 years | 29,696 | 29,617 | 13,661 | 14,182 | ||||||||||||
5 to 10 years | 44,422 | 44,740 | 16,956 | 18,423 | ||||||||||||
More than 10 years | 95,754 | 96,517 | 24,208 | 24,150 | ||||||||||||
171,372 | 172,389 | 58,917 | 60,901 | |||||||||||||
Corporate bonds: | ||||||||||||||||
1 to 5 years | 258,158 | 260,793 | - | - | ||||||||||||
5 to 10 years | 46,401 | 46,768 | - | - | ||||||||||||
More than 10 years | 1,000 | 810 | - | - | ||||||||||||
305,559 | 308,371 | - | - | |||||||||||||
Asset-backed securities: | ||||||||||||||||
1 to 5 years | 6,951 | 7,121 | - | - | ||||||||||||
5 to 10 years | 113,881 | 114,465 | - | - | ||||||||||||
More than 10 years | 185,295 | 186,879 | - | - | ||||||||||||
306,127 | 308,465 | - | - | |||||||||||||
Other: | ||||||||||||||||
More than 10 years | 57 | 57 | - | - | ||||||||||||
57 | 57 | - | - | |||||||||||||
Total securities other than mortgage-backed securities: | ||||||||||||||||
Within 1 year | 1,500 | 1,515 | 4,092 | 4,146 | ||||||||||||
1 to 5 years | 341,431 | 344,475 | 13,661 | 14,182 | ||||||||||||
5 to 10 years | 254,372 | 255,823 | 16,956 | 18,423 | ||||||||||||
More than 10 years | 287,522 | 289,961 | 24,208 | 24,150 | ||||||||||||
Mortgage-backed securities | 1,644,741 | 1,648,696 | 247,824 | 249,545 | ||||||||||||
$ | 2,529,566 | $ | 2,540,470 | $ | 306,741 | $ | 310,446 |
Available-for-Sale | Held-to-Maturity | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
US Treasuries: | |||||||||||||||
1 to 5 years | $ | 74,525 | $ | 72,568 | $ | — | $ | — | |||||||
5 to 10 years | 47,765 | 46,471 | — | — | |||||||||||
122,290 | 119,039 | — | — | ||||||||||||
US Government agencies: | |||||||||||||||
1 to 5 years | 20,854 | 20,422 | — | — | |||||||||||
More than 10 years | 4,924 | 5,156 | — | — | |||||||||||
25,778 | 25,578 | — | — | ||||||||||||
State and political subdivisions: | |||||||||||||||
Within 1 year | 1,500 | 1,510 | 5,929 | 5,991 | |||||||||||
1 to 5 years | 44,769 | 44,024 | 10,670 | 10,960 | |||||||||||
5 to 10 years | 26,393 | 25,908 | 10,157 | 10,759 | |||||||||||
More than 10 years | 127,824 | 126,189 | 44,369 | 43,131 | |||||||||||
200,486 | 197,631 | 71,125 | 70,841 | ||||||||||||
Corporate bonds: | |||||||||||||||
1 to 5 years | 181,027 | 180,412 | — | — | |||||||||||
5 to 10 years | 17,276 | 16,763 | — | — | |||||||||||
More than 10 years | 1,000 | 990 | — | — | |||||||||||
199,303 | 198,165 | — | — | ||||||||||||
Asset-backed securities: | |||||||||||||||
1 to 5 years | 5,624 | 5,771 | — | — | |||||||||||
5 to 10 years | 31,025 | 31,105 | — | — | |||||||||||
More than 10 years | 152,418 | 152,087 | — | — | |||||||||||
189,067 | 188,963 | — | — | ||||||||||||
Other: | |||||||||||||||
More than 10 years | 57 | 57 | — | — | |||||||||||
57 | 57 | — | — | ||||||||||||
Total securities other than mortgage-backed securities: | |||||||||||||||
Within 1 year | 1,500 | 1,510 | 5,929 | 5,991 | |||||||||||
1 to 5 years | 326,799 | 323,197 | 10,670 | 10,960 | |||||||||||
5 to 10 years | 122,459 | 120,247 | 10,157 | 10,759 | |||||||||||
More than 10 years | 286,223 | 284,479 | 44,369 | 43,131 | |||||||||||
Mortgage-backed securities | 1,844,310 | 1,806,861 | 226,444 | 220,622 | |||||||||||
$ | 2,581,291 | $ | 2,536,294 | $ | 297,569 | $ | 291,463 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
Owner occupied commercial real estate | $ | 1,791,762 | $ | 1,650,360 | ||||
Income producing commercial real estate | 1,413,104 | 1,281,541 | ||||||
Commercial & industrial | 1,083,591 | 1,069,715 | ||||||
Commercial construction | 583,344 | 633,921 | ||||||
Total commercial | 4,871,801 | 4,635,537 | ||||||
Residential mortgage | 933,205 | 856,725 | ||||||
Home equity lines of credit | 688,875 | 655,410 | ||||||
Residential construction | 190,047 | 190,043 | ||||||
Consumer installment | 118,742 | 123,567 | ||||||
Indirect auto | 400,267 | 459,354 | ||||||
Total loans | 7,202,937 | 6,920,636 | ||||||
Less allowance for loan losses | (58,605 | ) | (61,422 | ) | ||||
Loans, net | $ | 7,144,332 | $ | 6,859,214 |
June 30, 2018 | December 31, 2017 | ||||||
Owner occupied commercial real estate | $ | 1,681,737 | $ | 1,923,993 | |||
Income producing commercial real estate | 1,821,384 | 1,595,174 | |||||
Commercial & industrial | 1,193,046 | 1,130,990 | |||||
Commercial construction | 735,575 | 711,936 | |||||
Equipment financing | 464,594 | — | |||||
Total commercial | 5,896,336 | 5,362,093 | |||||
Residential mortgage | 1,020,606 | 973,544 | |||||
Home equity lines of credit | 707,718 | 731,227 | |||||
Residential construction | 195,580 | 183,019 | |||||
Consumer direct | 122,756 | 127,504 | |||||
Indirect auto | 277,275 | 358,185 | |||||
Total loans | 8,220,271 | 7,735,572 | |||||
Less allowance for loan losses | (61,071 | ) | (58,914 | ) | |||
Loans, net | $ | 8,159,200 | $ | 7,676,658 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Balance at beginning of period | $ | 11,365 | $ | 5,337 | $ | 7,981 | $ | 4,279 | ||||||||
Additions due to acquisitions | 3,410 | 2,113 | 3,410 | 2,113 | ||||||||||||
Accretion | (2,075 | ) | (1,116 | ) | (5,177 | ) | (3,058 | ) | ||||||||
Reclassification from nonaccretable difference | 1,163 | 1,455 | 5,879 | 2,908 | ||||||||||||
Changes in expected cash flows that do not affect nonaccretable difference | 735 | 362 | 2,505 | 1,909 | ||||||||||||
Balance at end of period | $ | 14,598 | $ | 8,151 | $ | 14,598 | $ | 8,151 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance at beginning of period | $ | 18,036 | $ | 7,762 | $ | 17,686 | $ | 7,981 | |||||||
Additions due to acquisitions | 147 | — | 1,977 | — | |||||||||||
Accretion | (2,965 | ) | (1,412 | ) | (5,511 | ) | (3,102 | ) | |||||||
Reclassification from nonaccretable difference | 6,527 | 3,827 | 7,118 | 4,716 | |||||||||||
Changes in expected cash flows that do not affect nonaccretable difference | 1,661 | 1,188 | 2,136 | 1,770 | |||||||||||
Balance at end of period | $ | 23,406 | $ | 11,365 | $ | 23,406 | $ | 11,365 |
June 30, 2018 | |||
Minimum future lease payments receivable | $ | 26,396 | |
Estimated residual value of leased equipment | 3,314 | ||
Initial direct costs | 764 | ||
Security deposits | (1,192 | ) | |
Purchase accounting premium | 1,197 | ||
Unearned income | (4,930 | ) | |
Net investment in leases | $ | 25,549 |
Year | |||||
Remainder of 2018 | $ | 5,900 | |||
2019 | 9,325 | ||||
2020 | 6,396 | ||||
2021 | 3,185 | ||||
2022 | 1,373 | ||||
Thereafter | 217 | ||||
Total | $ | 26,396 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
2017 | 2016 | |||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Beginning Balance | Charge-Offs | Recoveries | (Release) Provision | Ending Balance | Beginning Balance | Charge- Offs | Recoveries | (Release) Provision | Ending Balance | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 15,422 | $ | (100 | ) | $ | 144 | $ | (624 | ) | $ | 14,842 | $ | 15,675 | $ | (461 | ) | $ | 415 | $ | (353 | ) | $ | 15,276 | ||||||||||||||||
Income producing commercial real estate | 9,354 | (1,235 | ) | 76 | 1,138 | 9,333 | 8,683 | (206 | ) | 136 | 1,477 | 10,090 | ||||||||||||||||||||||||||||
Commercial & industrial | 3,620 | (329 | ) | 529 | 690 | 4,510 | 3,202 | (850 | ) | 398 | 690 | 3,440 | ||||||||||||||||||||||||||||
Commercial construction | 11,038 | (206 | ) | 320 | (946 | ) | 10,206 | 13,097 | (30 | ) | 224 | (2,367 | ) | 10,924 | ||||||||||||||||||||||||||
Residential mortgage | 9,798 | (396 | ) | 83 | 145 | 9,630 | 11,329 | (63 | ) | 109 | 64 | 11,439 | ||||||||||||||||||||||||||||
Home equity lines of credit | 4,590 | (321 | ) | 265 | 187 | 4,721 | 5,247 | (321 | ) | 54 | 197 | 5,177 | ||||||||||||||||||||||||||||
Residential construction | 3,084 | (57 | ) | 21 | (92 | ) | 2,956 | 4,851 | (253 | ) | 10 | (267 | ) | 4,341 | ||||||||||||||||||||||||||
Consumer installment | 584 | (475 | ) | 314 | 292 | 715 | 723 | (426 | ) | 190 | 183 | 670 | ||||||||||||||||||||||||||||
Indirect auto | 2,010 | (333 | ) | 65 | (50 | ) | 1,692 | 1,446 | (354 | ) | 69 | 443 | 1,604 | |||||||||||||||||||||||||||
Total allowance for loan losses | 59,500 | (3,452 | ) | 1,817 | 740 | 58,605 | 64,253 | (2,964 | ) | 1,605 | 67 | 62,961 | ||||||||||||||||||||||||||||
Allowance for unfunded commitments | 2,222 | - | - | 260 | 2,482 | 2,369 | - | - | (367 | ) | 2,002 | |||||||||||||||||||||||||||||
Total allowance for credit losses | 61,722 | (3,452 | ) | 1,817 | 1,000 | 61,087 | $ | 66,622 | $ | (2,964 | ) | $ | 1,605 | $ | (300 | ) | $ | 64,963 |
Nine Months Ended September 30, | Beginning Balance | Charge-Offs | Recoveries | (Release) Provision | Ending Balance | Beginning Balance | Charge- Offs | Recoveries | (Release) Provision | Ending Balance | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 16,446 | $ | (283 | ) | $ | 501 | $ | (1,822 | ) | $ | 14,842 | $ | 18,016 | $ | (1,929 | ) | $ | 605 | $ | (1,416 | ) | $ | 15,276 | ||||||||||||||||
Income producing commercial real estate | 8,843 | (2,335 | ) | 123 | 2,702 | 9,333 | 11,548 | (788 | ) | 463 | (1,133 | ) | 10,090 | |||||||||||||||||||||||||||
Commercial & industrial | 3,810 | (1,143 | ) | 1,141 | 702 | 4,510 | 4,433 | (1,645 | ) | 1,302 | (650 | ) | 3,440 | |||||||||||||||||||||||||||
Commercial construction | 13,405 | (769 | ) | 912 | (3,342 | ) | 10,206 | 9,553 | (392 | ) | 617 | 1,146 | 10,924 | |||||||||||||||||||||||||||
Residential mortgage | 8,545 | (1,069 | ) | 200 | 1,954 | 9,630 | 12,719 | (776 | ) | 248 | (752 | ) | 11,439 | |||||||||||||||||||||||||||
Home equity lines of credit | 4,599 | (1,216 | ) | 485 | 853 | 4,721 | 5,956 | (1,513 | ) | 361 | 373 | 5,177 | ||||||||||||||||||||||||||||
Residential construction | 3,264 | (127 | ) | 153 | (334 | ) | 2,956 | 4,002 | (531 | ) | 61 | 809 | 4,341 | |||||||||||||||||||||||||||
Consumer installment | 708 | (1,374 | ) | 716 | 665 | 715 | 828 | (1,123 | ) | 625 | 340 | 670 | ||||||||||||||||||||||||||||
Indirect auto | 1,802 | (1,066 | ) | 214 | 742 | 1,692 | 1,393 | (953 | ) | 141 | 1,023 | 1,604 | ||||||||||||||||||||||||||||
Total allowance for loan losses | 61,422 | (9,382 | ) | 4,445 | 2,120 | 58,605 | 68,448 | (9,650 | ) | 4,423 | (260 | ) | 62,961 | |||||||||||||||||||||||||||
Allowance for unfunded commitments | 2,002 | - | - | 480 | 2,482 | 2,542 | - | - | (540 | ) | 2,002 | |||||||||||||||||||||||||||||
Total allowance for credit losses | $ | 63,424 | $ | (9,382 | ) | $ | 4,445 | $ | 2,600 | $ | 61,087 | $ | 70,990 | $ | (9,650 | ) | $ | 4,423 | $ | (800 | ) | $ | 64,963 |
2018 | 2017 | |||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Beginning Balance | Charge-Offs | Recoveries | (Release)Provision | Ending Balance | Beginning Balance | Charge-Offs | Recoveries | (Release) Provision | Ending Balance | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 14,561 | $ | (7 | ) | $ | 585 | $ | (2,230 | ) | $ | 12,909 | $ | 15,669 | $ | (158 | ) | $ | 120 | $ | (209 | ) | $ | 15,422 | ||||||||||||||||
Income producing commercial real estate | 9,776 | (1,653 | ) | 232 | 2,507 | 10,862 | 8,878 | (203 | ) | 20 | 659 | 9,354 | ||||||||||||||||||||||||||||
Commercial & industrial | 4,075 | (233 | ) | 217 | 146 | 4,205 | 3,725 | (598 | ) | 244 | 249 | 3,620 | ||||||||||||||||||||||||||||
Commercial construction | 10,034 | (53 | ) | 159 | (17 | ) | 10,123 | 12,790 | (361 | ) | 20 | (1,411 | ) | 11,038 | ||||||||||||||||||||||||||
Equipment financing | 2,291 | (23 | ) | 71 | 1,222 | 3,561 | — | — | — | — | — | |||||||||||||||||||||||||||||
Residential mortgage | 10,221 | (112 | ) | 101 | (365 | ) | 9,845 | 9,071 | (131 | ) | 105 | 753 | 9,798 | |||||||||||||||||||||||||||
Home equity lines of credit | 4,932 | (211 | ) | 190 | 32 | 4,943 | 4,530 | (424 | ) | 171 | 313 | 4,590 | ||||||||||||||||||||||||||||
Residential construction | 3,044 | (8 | ) | 67 | (513 | ) | 2,590 | 3,267 | (70 | ) | 123 | (236 | ) | 3,084 | ||||||||||||||||||||||||||
Consumer direct | 733 | (552 | ) | 195 | 389 | 765 | 609 | (457 | ) | 195 | 237 | 584 | ||||||||||||||||||||||||||||
Indirect auto | 1,418 | (379 | ) | 55 | 174 | 1,268 | 2,004 | (313 | ) | 94 | 225 | 2,010 | ||||||||||||||||||||||||||||
Total allowance for loan losses | 61,085 | (3,231 | ) | 1,872 | 1,345 | 61,071 | 60,543 | (2,715 | ) | 1,092 | 580 | 59,500 | ||||||||||||||||||||||||||||
Allowance for unfunded commitments | 2,440 | — | — | 455 | 2,895 | 2,002 | — | — | 220 | 2,222 | ||||||||||||||||||||||||||||||
Total allowance for credit losses | $ | 63,525 | $ | (3,231 | ) | $ | 1,872 | $ | 1,800 | $ | 63,966 | $ | 62,545 | $ | (2,715 | ) | $ | 1,092 | $ | 800 | $ | 61,722 |
2018 | 2017 | |||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, | Beginning Balance | Charge-Offs | Recoveries | (Release) Provision | Ending Balance | Beginning Balance | Charge-Offs | Recoveries | (Release) Provision | Ending Balance | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 14,776 | $ | (67 | ) | $ | 688 | $ | (2,488 | ) | $ | 12,909 | $ | 16,446 | $ | (183 | ) | $ | 357 | $ | (1,198 | ) | $ | 15,422 | ||||||||||||||||
Income producing commercial real estate | 9,381 | (2,310 | ) | 467 | 3,324 | 10,862 | 8,843 | (1,100 | ) | 47 | 1,564 | 9,354 | ||||||||||||||||||||||||||||
Commercial & industrial | 3,971 | (617 | ) | 606 | 245 | 4,205 | 3,810 | (814 | ) | 612 | 12 | 3,620 | ||||||||||||||||||||||||||||
Commercial construction | 10,523 | (416 | ) | 256 | (240 | ) | 10,123 | 13,405 | (563 | ) | 592 | (2,396 | ) | 11,038 | ||||||||||||||||||||||||||
Equipment financing | — | (162 | ) | 168 | 3,555 | 3,561 | — | — | — | — | — | |||||||||||||||||||||||||||||
Residential mortgage | 10,097 | (182 | ) | 224 | (294 | ) | 9,845 | 8,545 | (673 | ) | 117 | 1,809 | 9,798 | |||||||||||||||||||||||||||
Home equity lines of credit | 5,177 | (335 | ) | 225 | (124 | ) | 4,943 | 4,599 | (895 | ) | 220 | 666 | 4,590 | |||||||||||||||||||||||||||
Residential construction | 2,729 | (8 | ) | 131 | (262 | ) | 2,590 | 3,264 | (70 | ) | 132 | (242 | ) | 3,084 | ||||||||||||||||||||||||||
Consumer direct | 710 | (1,203 | ) | 355 | 903 | 765 | 708 | (899 | ) | 402 | 373 | 584 | ||||||||||||||||||||||||||||
Indirect auto | 1,550 | (815 | ) | 135 | 398 | 1,268 | 1,802 | (733 | ) | 149 | 792 | 2,010 | ||||||||||||||||||||||||||||
Total allowance for loan losses | 58,914 | (6,115 | ) | 3,255 | 5,017 | 61,071 | 61,422 | (5,930 | ) | 2,628 | 1,380 | 59,500 | ||||||||||||||||||||||||||||
Allowance for unfunded commitments | 2,312 | — | — | 583 | 2,895 | 2,002 | — | — | 220 | 2,222 | ||||||||||||||||||||||||||||||
Total allowance for credit losses | $ | 61,226 | $ | (6,115 | ) | $ | 3,255 | $ | 5,600 | $ | 63,966 | $ | 63,424 | $ | (5,930 | ) | $ | 2,628 | $ | 1,600 | $ | 61,722 |
Allowance for Loan Losses | ||||||||||||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | |||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 1,131 | $ | 13,711 | $ | - | $ | 14,842 | $ | 1,746 | $ | 14,700 | $ | - | $ | 16,446 | ||||||||||||||||
Income producing commercial real estate | 869 | 8,439 | 25 | 9,333 | 885 | 7,919 | 39 | 8,843 | ||||||||||||||||||||||||
Commercial & industrial | 1,040 | 3,470 | - | 4,510 | 58 | 3,752 | - | 3,810 | ||||||||||||||||||||||||
Commercial construction | 165 | 10,040 | 1 | 10,206 | 168 | 13,218 | 19 | 13,405 | ||||||||||||||||||||||||
Residential mortgage | 1,111 | 8,504 | 15 | 9,630 | 517 | 7,997 | 31 | 8,545 | ||||||||||||||||||||||||
Home equity lines of credit | - | 4,721 | - | 4,721 | 2 | 4,597 | - | 4,599 | ||||||||||||||||||||||||
Residential construction | 82 | 2,874 | - | 2,956 | 64 | 3,198 | 2 | 3,264 | ||||||||||||||||||||||||
Consumer installment | 8 | 705 | 2 | 715 | 12 | 696 | - | 708 | ||||||||||||||||||||||||
Indirect auto | 30 | 1,662 | - | 1,692 | - | 1,802 | - | 1,802 | ||||||||||||||||||||||||
Total allowance for loan losses | 4,436 | 54,126 | 43 | 58,605 | 3,452 | 57,879 | 91 | 61,422 | ||||||||||||||||||||||||
Allowance for unfunded commitments | - | 2,482 | - | 2,482 | - | 2,002 | - | 2,002 | ||||||||||||||||||||||||
Total allowance for credit losses | $ | 4,436 | $ | 56,608 | $ | 43 | $ | 61,087 | $ | 3,452 | $ | 59,881 | $ | 91 | $ | 63,424 | ||||||||||||||||
Loans Outstanding | ||||||||||||||||||||||||||||||||
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | |||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 29,429 | $ | 1,744,318 | $ | 18,015 | $ | 1,791,762 | $ | 31,421 | $ | 1,600,355 | $ | 18,584 | $ | 1,650,360 | ||||||||||||||||
Income producing commercial real estate | 26,061 | 1,361,914 | 25,129 | 1,413,104 | 30,459 | 1,225,763 | 25,319 | 1,281,541 | ||||||||||||||||||||||||
Commercial & industrial | 5,653 | 1,076,890 | 1,048 | 1,083,591 | 1,915 | 1,066,764 | 1,036 | 1,069,715 | ||||||||||||||||||||||||
Commercial construction | 4,728 | 569,841 | 8,775 | 583,344 | 5,050 | 620,543 | 8,328 | 633,921 | ||||||||||||||||||||||||
Residential mortgage | 14,352 | 906,287 | 12,566 | 933,205 | 13,706 | 836,624 | 6,395 | 856,725 | ||||||||||||||||||||||||
Home equity lines of credit | 204 | 687,228 | 1,443 | 688,875 | 63 | 653,337 | 2,010 | 655,410 | ||||||||||||||||||||||||
Residential construction | 1,544 | 188,054 | 449 | 190,047 | 1,594 | 187,516 | 933 | 190,043 | ||||||||||||||||||||||||
Consumer installment | 293 | 117,146 | 1,303 | 118,742 | 290 | 123,118 | 159 | 123,567 | ||||||||||||||||||||||||
Indirect auto | 1,312 | 398,955 | - | 400,267 | 1,165 | 458,189 | - | 459,354 | ||||||||||||||||||||||||
Total loans | $ | 83,576 | $ | 7,050,633 | $ | 68,728 | $ | 7,202,937 | $ | 85,663 | $ | 6,772,209 | $ | 62,764 | $ | 6,920,636 |
Allowance for Credit Losses | |||||||||||||||||||||||||||||||
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||
Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | ||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 985 | $ | 11,647 | $ | 277 | $ | 12,909 | $ | 1,255 | $ | 13,521 | $ | — | $ | 14,776 | |||||||||||||||
Income producing commercial real estate | 609 | 10,193 | 60 | 10,862 | 562 | 8,813 | 6 | 9,381 | |||||||||||||||||||||||
Commercial & industrial | 35 | 4,135 | 35 | 4,205 | 27 | 3,944 | — | 3,971 | |||||||||||||||||||||||
Commercial construction | 98 | 10,025 | — | 10,123 | 156 | 10,367 | — | 10,523 | |||||||||||||||||||||||
Equipment financing | — | 3,561 | — | 3,561 | — | — | — | — | |||||||||||||||||||||||
Residential mortgage | 1,007 | 8,838 | — | 9,845 | 1,174 | 8,919 | 4 | 10,097 | |||||||||||||||||||||||
Home equity lines of credit | — | 4,943 | — | 4,943 | — | 5,177 | — | 5,177 | |||||||||||||||||||||||
Residential construction | 52 | 2,538 | — | 2,590 | 75 | 2,654 | — | 2,729 | |||||||||||||||||||||||
Consumer direct | 6 | 758 | 1 | 765 | 7 | 700 | 3 | 710 | |||||||||||||||||||||||
Indirect auto | 29 | 1,239 | — | 1,268 | — | 1,550 | — | 1,550 | |||||||||||||||||||||||
Total allowance for loan losses | 2,821 | 57,877 | 373 | 61,071 | 3,256 | 55,645 | 13 | 58,914 | |||||||||||||||||||||||
Allowance for unfunded commitments | — | 2,895 | — | 2,895 | — | 2,312 | — | 2,312 | |||||||||||||||||||||||
Total allowance for credit losses | $ | 2,821 | $ | 60,772 | $ | 373 | $ | 63,966 | $ | 3,256 | $ | 57,957 | $ | 13 | $ | 61,226 |
Loans Outstanding | |||||||||||||||||||||||||||||||
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||
Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | Individually evaluated for impairment | Collectively evaluated for impairment | PCI | Ending Balance | ||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 18,932 | $ | 1,649,437 | $ | 13,368 | $ | 1,681,737 | $ | 21,823 | $ | 1,876,411 | $ | 25,759 | $ | 1,923,993 | |||||||||||||||
Income producing commercial real estate | 16,245 | 1,762,960 | 42,179 | 1,821,384 | 16,483 | 1,533,851 | 44,840 | 1,595,174 | |||||||||||||||||||||||
Commercial & industrial | 1,510 | 1,190,900 | 636 | 1,193,046 | 2,654 | 1,126,894 | 1,442 | 1,130,990 | |||||||||||||||||||||||
Commercial construction | 3,528 | 725,474 | 6,573 | 735,575 | 3,813 | 699,266 | 8,857 | 711,936 | |||||||||||||||||||||||
Equipment financing | — | 452,620 | 11,974 | 464,594 | — | — | — | — | |||||||||||||||||||||||
Residential mortgage | 14,012 | 995,072 | 11,522 | 1,020,606 | 14,193 | 946,210 | 13,141 | 973,544 | |||||||||||||||||||||||
Home equity lines of credit | 232 | 705,591 | 1,895 | 707,718 | 101 | 728,235 | 2,891 | 731,227 | |||||||||||||||||||||||
Residential construction | 1,498 | 193,156 | 926 | 195,580 | 1,577 | 180,978 | 464 | 183,019 | |||||||||||||||||||||||
Consumer direct | 249 | 121,737 | 770 | 122,756 | 270 | 126,114 | 1,120 | 127,504 | |||||||||||||||||||||||
Indirect auto | 1,215 | 276,060 | — | 277,275 | 1,396 | 356,789 | — | 358,185 | |||||||||||||||||||||||
Total loans | $ | 57,421 | $ | 8,073,007 | $ | 89,843 | $ | 8,220,271 | $ | 62,310 | $ | 7,574,748 | $ | 98,514 | $ | 7,735,572 |
Loans are evaluated for impairment quarterly and specific reserves are established in the allowance for loan losses for any measured impairment.
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Officers.
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Losses Allocated | Unpaid Principal Balance | Recorded Investment | Allowance for Loan Losses Allocated | |||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 8,958 | $ | 8,126 | $ | - | $ | 9,171 | $ | 8,477 | $ | - | ||||||||||||
Income producing commercial real estate | 14,739 | 14,739 | - | 16,864 | 16,864 | - | ||||||||||||||||||
Commercial & industrial | 2,387 | 2,100 | - | 421 | 334 | - | ||||||||||||||||||
Commercial construction | 981 | 776 | - | 845 | 841 | - | ||||||||||||||||||
Total commercial | 27,065 | 25,741 | - | 27,301 | 26,516 | - | ||||||||||||||||||
Residential mortgage | 2,980 | 2,885 | - | 630 | 628 | - | ||||||||||||||||||
Home equity lines of credit | 393 | 204 | - | - | - | - | ||||||||||||||||||
Residential construction | 239 | 164 | - | - | - | - | ||||||||||||||||||
Consumer installment | 30 | 30 | - | - | - | - | ||||||||||||||||||
Indirect auto | 134 | 134 | - | 1,165 | 1,165 | - | ||||||||||||||||||
Total with no related allowance recorded | 30,841 | 29,158 | - | 29,096 | 28,309 | - | ||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||
Owner occupied commercial real estate | 21,645 | 21,303 | 1,131 | 23,574 | 22,944 | 1,746 | ||||||||||||||||||
Income producing commercial real estate | 11,421 | 11,322 | 869 | 13,681 | 13,595 | 885 | ||||||||||||||||||
Commercial & industrial | 3,655 | 3,553 | 1,040 | 1,679 | 1,581 | 58 | ||||||||||||||||||
Commercial construction | 4,490 | 3,952 | 165 | 4,739 | 4,209 | 168 | ||||||||||||||||||
Total commercial | 41,211 | 40,130 | 3,205 | 43,673 | 42,329 | 2,857 | ||||||||||||||||||
Residential mortgage | 12,009 | 11,467 | 1,111 | 13,565 | 13,078 | 517 | ||||||||||||||||||
Home equity lines of credit | - | - | - | 63 | 63 | 2 | ||||||||||||||||||
Residential construction | 1,458 | 1,380 | 82 | 1,947 | 1,594 | 64 | ||||||||||||||||||
Consumer installment | 267 | 263 | 8 | 293 | 290 | 12 | ||||||||||||||||||
Indirect auto | 1,178 | 1,178 | 30 | - | - | - | ||||||||||||||||||
Total with an allowance recorded | 56,123 | 54,418 | 4,436 | 59,541 | 57,354 | 3,452 | ||||||||||||||||||
Total | $ | 86,964 | $ | 83,576 | $ | 4,436 | $ | 88,637 | $ | 85,663 | $ | 3,452 |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Allowance for Loan Losses Allocated | Unpaid Principal Balance | Recorded Investment | Allowance for Loan Losses Allocated | ||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Owner occupied commercial real estate | $ | 8,292 | $ | 6,763 | $ | — | $ | 1,238 | $ | 1,176 | $ | — | |||||||||||
Income producing commercial real estate | 7,568 | 7,496 | — | 2,177 | 2,165 | — | |||||||||||||||||
Commercial & industrial | 160 | 123 | — | 1,758 | 1,471 | — | |||||||||||||||||
Commercial construction | 564 | 558 | — | 134 | 134 | — | |||||||||||||||||
Equipment financing | — | — | — | — | — | — | |||||||||||||||||
Total commercial | 16,584 | 14,940 | — | 5,307 | 4,946 | — | |||||||||||||||||
Residential mortgage | 5,125 | 4,520 | — | 2,661 | 2,566 | — | |||||||||||||||||
Home equity lines of credit | 284 | 229 | — | 393 | 101 | — | |||||||||||||||||
Residential construction | 712 | 576 | — | 405 | 330 | — | |||||||||||||||||
Consumer direct | 49 | 49 | — | 29 | 29 | — | |||||||||||||||||
Indirect auto | 139 | 137 | — | 1,396 | 1,396 | — | |||||||||||||||||
Total with no related allowance recorded | 22,893 | 20,451 | — | 10,191 | 9,368 | — | |||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Owner occupied commercial real estate | 12,665 | 12,169 | 985 | 21,262 | 20,647 | 1,255 | |||||||||||||||||
Income producing commercial real estate | 9,017 | 8,749 | 609 | 14,419 | 14,318 | 562 | |||||||||||||||||
Commercial & industrial | 1,776 | 1,387 | 35 | 1,287 | 1,183 | 27 | |||||||||||||||||
Commercial construction | 3,216 | 2,970 | 98 | 3,917 | 3,679 | 156 | |||||||||||||||||
Equipment financing | — | — | — | — | — | — | |||||||||||||||||
Total commercial | 26,674 | 25,275 | 1,727 | 40,885 | 39,827 | 2,000 | |||||||||||||||||
Residential mortgage | 9,576 | 9,492 | 1,007 | 12,086 | 11,627 | 1,174 | |||||||||||||||||
Home equity lines of credit | 4 | 3 | — | — | — | — | |||||||||||||||||
Residential construction | 933 | 922 | 52 | 1,325 | 1,247 | 75 | |||||||||||||||||
Consumer direct | 207 | 200 | 6 | 244 | 241 | 7 | |||||||||||||||||
Indirect auto | 1,079 | 1,078 | 29 | — | — | — | |||||||||||||||||
Total with an allowance recorded | 38,473 | 36,970 | 2,821 | 54,540 | 52,942 | 3,256 | |||||||||||||||||
Total | $ | 61,366 | $ | 57,421 | $ | 2,821 | $ | 64,731 | $ | 62,310 | $ | 3,256 |
New TDRs | ||||||||||||||||||||||||||||||
Pre-modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment by Type of Modification | TDRs Modified Within the Previous Twelve Months That Have Subsequently Defaulted | ||||||||||||||||||||||||||||
Number of Contracts | Rate Reduction | Structure | Other | Total | Number of Contracts | Recorded Investment | ||||||||||||||||||||||||
Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 1 | $ | 282 | $ | — | $ | 282 | $ | — | $ | 282 | 1 | $ | 283 | ||||||||||||||||
Income producing commercial real estate | 1 | 106 | 106 | — | — | 106 | — | — | ||||||||||||||||||||||
Commercial & industrial | 1 | 27 | — | 27 | — | 27 | — | — | ||||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | 1 | 3 | ||||||||||||||||||||||
Equipment financing | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Total commercial | 3 | 415 | 106 | 309 | — | 415 | 2 | 286 | ||||||||||||||||||||||
Residential mortgage | 2 | 425 | — | 424 | — | 424 | 1 | 101 | ||||||||||||||||||||||
Home equity lines of credit | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Consumer direct | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Indirect auto | 17 | 236 | — | — | 236 | 236 | — | — | ||||||||||||||||||||||
Total loans | 22 | $ | 1,076 | $ | 106 | $ | 733 | $ | 236 | $ | 1,075 | 3 | $ | 387 | ||||||||||||||||
Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 4 | $ | 1,276 | $ | — | $ | 1,260 | $ | — | $ | 1,260 | 3 | $ | 1,869 | ||||||||||||||||
Income producing commercial real estate | 1 | 106 | 106 | — | — | 106 | — | — | ||||||||||||||||||||||
Commercial & industrial | 2 | 108 | — | 32 | — | 32 | — | — | ||||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | 1 | 3 | ||||||||||||||||||||||
Equipment financing | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Total commercial | 7 | 1,490 | 106 | 1,292 | — | 1,398 | 4 | 1,872 | ||||||||||||||||||||||
Residential mortgage | 4 | 765 | — | 764 | — | 764 | 1 | 101 | ||||||||||||||||||||||
Home equity lines of credit | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Consumer direct | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Indirect auto | 17 | 236 | — | — | 236 | 236 | — | — | ||||||||||||||||||||||
Total loans | 28 | $ | 2,491 | $ | 106 | $ | 2,056 | $ | 236 | $ | 2,398 | 5 | $ | 1,973 | ||||||||||||||||
Three Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 3 | $ | 1,860 | $ | — | $ | 1,860 | $ | — | $ | 1,860 | — | $ | — | ||||||||||||||||
Income producing commercial real estate | 1 | 226 | — | — | 226 | 226 | — | — | ||||||||||||||||||||||
Commercial & industrial | 1 | 28 | — | 28 | — | 28 | — | — | ||||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Equipment financing | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Total commercial | 5 | 2,114 | — | 1,888 | 226 | 2,114 | — | — | ||||||||||||||||||||||
Residential mortgage | 5 | 483 | — | 483 | — | 483 | — | — | ||||||||||||||||||||||
Home equity lines of credit | 1 | 296 | — | — | 176 | 176 | — | — | ||||||||||||||||||||||
Residential construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Consumer direct | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Indirect auto | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Total loans | 11 | $ | 2,893 | $ | — | $ | 2,371 | $ | 402 | $ | 2,773 | — | $ | — | ||||||||||||||||
Six Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 3 | $ | 1,860 | $ | — | $ | 1,860 | $ | — | $ | 1,860 | — | $ | — | ||||||||||||||||
Income producing commercial real estate | 1 | 226 | — | — | 226 | 226 | — | — | ||||||||||||||||||||||
Commercial & industrial | 2 | 53 | — | 53 | — | 53 | — | — | ||||||||||||||||||||||
Commercial construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Equipment financing | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Total commercial | 6 | 2,139 | — | 1,913 | 226 | 2,139 | — | — | ||||||||||||||||||||||
Residential mortgage | 12 | 836 | — | 836 | — | 836 | 2 | 655 | ||||||||||||||||||||||
Home equity lines of credit | 1 | 296 | — | — | 176 | 176 | — | — | ||||||||||||||||||||||
Residential construction | 1 | 40 | 40 | — | — | 40 | — | — | ||||||||||||||||||||||
Consumer direct | 1 | 6 | — | 6 | — | 6 | — | — | ||||||||||||||||||||||
Indirect auto | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Total loans | 21 | $ | 3,317 | $ | 40 | $ | 2,755 | $ | 402 | $ | 3,197 | 2 | $ | 655 |
New TDRs | ||||||||||||||||||||||||||||||||
Pre- Modification Outstanding | Post- Modification Outstanding Recorded Investment by Type of Modification | TDRs Modified Within the Previous Twelve Months That Have Subsequently Defaulted | ||||||||||||||||||||||||||||||
Number of Contracts | Recorded Investment | Rate Reduction | Structure | Other | Total | Number of Contracts | Recorded Investment | |||||||||||||||||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 3 | $ | 743 | $ | - | $ | 301 | $ | 108 | $ | 409 | - | $ | - | ||||||||||||||||||
Income producing commercial real estate | 1 | 31 | - | - | 26 | 26 | - | - | ||||||||||||||||||||||||
Commercial & industrial | 1 | 22 | - | 22 | - | 22 | - | - | ||||||||||||||||||||||||
Commercial construction | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total commercial | 5 | 796 | - | 323 | 134 | 457 | - | - | ||||||||||||||||||||||||
Residential mortgage | 9 | 773 | - | 773 | - | 773 | 1 | 160 | ||||||||||||||||||||||||
Home equity lines of credit | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Residential construction | 1 | 31 | - | 31 | - | 31 | - | - | ||||||||||||||||||||||||
Consumer installment | 1 | 10 | - | 10 | - | 10 | - | - | ||||||||||||||||||||||||
Indirect auto | 10 | 188 | - | - | 188 | 188 | - | - | ||||||||||||||||||||||||
Total loans | 26 | $ | 1,798 | $ | - | $ | 1,137 | $ | 322 | $ | 1,459 | 1 | $ | 160 | ||||||||||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 6 | $ | 2,603 | $ | - | $ | 2,161 | $ | 108 | $ | 2,269 | - | $ | - | ||||||||||||||||||
Income producing commercial real estate | 2 | 257 | - | - | 252 | 252 | - | - | ||||||||||||||||||||||||
Commercial & industrial | 3 | 75 | - | 75 | - | 75 | - | - | ||||||||||||||||||||||||
Commercial construction | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total commercial | 11 | 2,935 | - | 2,236 | 360 | 2,596 | - | - | ||||||||||||||||||||||||
Residential mortgage | 21 | 1,609 | - | 1,609 | - | 1,609 | 3 | 815 | ||||||||||||||||||||||||
Home equity lines of credit | 1 | 296 | - | - | 176 | 176 | - | - | ||||||||||||||||||||||||
Residential construction | 2 | 71 | 40 | 31 | - | 71 | - | - | ||||||||||||||||||||||||
Consumer installment | 2 | 16 | - | 16 | - | 16 | - | - | ||||||||||||||||||||||||
Indirect auto | 23 | 521 | - | - | 521 | 521 | - | - | ||||||||||||||||||||||||
Total loans | 60 | $ | 5,448 | $ | 40 | $ | 3,892 | $ | 1,057 | $ | 4,989 | 3 | $ | 815 | ||||||||||||||||||
Three Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 1 | $ | 1,007 | $ | - | $ | 1,007 | $ | - | $ | 1,007 | - | $ | - | ||||||||||||||||||
Income producing commercial real estate | 1 | 257 | - | 257 | - | 257 | - | - | ||||||||||||||||||||||||
Commercial & industrial | 2 | 66 | - | 66 | - | 66 | 2 | 34 | ||||||||||||||||||||||||
Commercial construction | 1 | 224 | - | 224 | - | 224 | - | - | ||||||||||||||||||||||||
Total commercial | 5 | 1,554 | - | 1,554 | - | 1,554 | 2 | 34 | ||||||||||||||||||||||||
Residential mortgage | 6 | 605 | - | 550 | - | 550 | - | - | ||||||||||||||||||||||||
Home equity lines of credit | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Residential construction | 1 | 48 | - | 48 | - | 48 | - | - | ||||||||||||||||||||||||
Consumer installment | 2 | 14 | - | 14 | - | 14 | - | - | ||||||||||||||||||||||||
Indirect auto | 8 | 226 | - | - | 226 | 226 | - | - | ||||||||||||||||||||||||
Total loans | 22 | $ | 2,447 | $ | - | $ | 2,166 | $ | 226 | $ | 2,392 | 2 | $ | 34 | ||||||||||||||||||
Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||
Owner occupied commercial real estate | 8 | $ | 2,699 | $ | - | $ | 2,699 | $ | - | $ | 2,699 | 1 | $ | 252 | ||||||||||||||||||
Income producing commercial real estate | 1 | 257 | - | 257 | - | 257 | - | - | ||||||||||||||||||||||||
Commercial & industrial | 5 | 1,012 | - | 1,012 | - | 1,012 | 2 | 34 | ||||||||||||||||||||||||
Commercial construction | 3 | 459 | - | 393 | 66 | 459 | - | - | ||||||||||||||||||||||||
Total commercial | 17 | 4,427 | - | 4,361 | 66 | 4,427 | 3 | 286 | ||||||||||||||||||||||||
Residential mortgage | 23 | 3,033 | 1,957 | 982 | - | 2,939 | 1 | 85 | ||||||||||||||||||||||||
Home equity lines of credit | 1 | 38 | 38 | - | - | 38 | - | - | ||||||||||||||||||||||||
Residential construction | 5 | 307 | 45 | 125 | 82 | 252 | - | - | ||||||||||||||||||||||||
Consumer installment | 3 | 34 | - | 34 | - | 34 | - | - | ||||||||||||||||||||||||
Indirect auto | 26 | 699 | - | - | 699 | 699 | - | - | ||||||||||||||||||||||||
Total loans | 75 | $ | 8,538 | $ | 2,040 | $ | 5,502 | $ | 847 | $ | 8,389 | 4 | $ | 371 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
2017 | 2016 | |||||||||||||||||||||||
Average Balance | Interest Revenue Recognized During Impairment | Cash Basis Interest Revenue Received | Average Balance | Interest Revenue Recognized During Impairment | Cash Basis Interest Revenue Received | |||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 29,764 | $ | 307 | $ | 331 | $ | 35,714 | $ | 434 | $ | 433 | ||||||||||||
Income producing commercial real estate | 26,203 | 329 | 331 | 31,753 | 416 | 380 | ||||||||||||||||||
Commercial & industrial | 5,492 | 53 | 65 | 2,553 | 33 | 33 | ||||||||||||||||||
Commercial construction | 4,863 | 51 | 48 | 5,984 | 66 | 69 | ||||||||||||||||||
Total commercial | 66,322 | 740 | 775 | 76,004 | 949 | 915 | ||||||||||||||||||
Residential mortgage | 14,448 | 139 | 139 | 14,060 | 140 | 140 | ||||||||||||||||||
Home equity lines of credit | 207 | 4 | 4 | 103 | 1 | 1 | ||||||||||||||||||
Residential construction | 1,561 | 24 | 24 | 1,542 | 19 | 17 | ||||||||||||||||||
Consumer installment | 300 | 6 | 5 | 291 | 5 | 6 | ||||||||||||||||||
Indirect auto | 1,339 | 18 | 18 | 959 | 11 | 11 | ||||||||||||||||||
Total | $ | 84,177 | $ | 931 | $ | 965 | $ | 92,959 | $ | 1,125 | $ | 1,090 | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 30,149 | $ | 1,023 | $ | 1,043 | $ | 33,997 | $ | 1,280 | $ | 1,307 | ||||||||||||
Income producing commercial real estate | 27,794 | 1,039 | 1,023 | 32,013 | 1,054 | 1,047 | ||||||||||||||||||
Commercial & industrial | 3,103 | 106 | 110 | 2,614 | 98 | 94 | ||||||||||||||||||
Commercial construction | 5,511 | 174 | 178 | 6,135 | 201 | 208 | ||||||||||||||||||
Total commercial | 66,557 | 2,342 | 2,354 | 74,759 | 2,633 | 2,656 | ||||||||||||||||||
Residential mortgage | 14,266 | 407 | 429 | 14,224 | 502 | 499 | ||||||||||||||||||
Home equity lines of credit | 274 | 7 | 9 | 103 | 3 | 3 | ||||||||||||||||||
Residential construction | 1,581 | 70 | 71 | 1,699 | 67 | 66 | ||||||||||||||||||
Consumer installment | 298 | 17 | 17 | 303 | 17 | 18 | ||||||||||||||||||
Indirect auto | 1,199 | 46 | 46 | 871 | 33 | 33 | ||||||||||||||||||
Total | $ | 84,175 | $ | 2,889 | $ | 2,926 | $ | 91,959 | $ | 3,255 | $ | 3,275 |
2018 | 2017 | |||||||||||||||||||||||
Three Months Ended June 30, | Average Balance | Interest Revenue Recognized During Impairment | Cash Basis Interest Revenue Received | Average Balance | Interest Revenue Recognized During Impairment | Cash Basis Interest Revenue Received | ||||||||||||||||||
Owner occupied commercial real estate | $ | 19,353 | $ | 235 | $ | 236 | $ | 30,825 | $ | 371 | $ | 376 | ||||||||||||
Income producing commercial real estate | 16,408 | 215 | 212 | 28,768 | 359 | 347 | ||||||||||||||||||
Commercial & industrial | 1,542 | 25 | 24 | 1,877 | 26 | 17 | ||||||||||||||||||
Commercial construction | 3,564 | 47 | 44 | 6,670 | 70 | 77 | ||||||||||||||||||
Equipment financing | — | — | — | — | — | — | ||||||||||||||||||
Total commercial | 40,867 | 522 | 516 | 68,140 | 826 | 817 | ||||||||||||||||||
Residential mortgage | 14,115 | 157 | 161 | 14,742 | 130 | 147 | ||||||||||||||||||
Home equity lines of credit | 235 | 5 | 4 | 552 | 2 | 4 | ||||||||||||||||||
Residential construction | 1,516 | 25 | 24 | 1,563 | 23 | 24 | ||||||||||||||||||
Consumer direct | 256 | 5 | 5 | 307 | 6 | 6 | ||||||||||||||||||
Indirect auto | 1,283 | 17 | 17 | 1,137 | 14 | 14 | ||||||||||||||||||
Total | $ | 58,272 | $ | 731 | $ | 727 | $ | 86,441 | $ | 1,001 | $ | 1,012 | ||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 22,006 | $ | 480 | $ | 516 | $ | 30,342 | $ | 716 | $ | 712 | ||||||||||||
Income producing commercial real estate | 16,421 | 425 | 447 | 28,589 | 710 | 692 | ||||||||||||||||||
Commercial & industrial | 2,069 | 65 | 66 | 1,908 | 53 | 45 | ||||||||||||||||||
Commercial construction | 3,750 | 98 | 96 | 5,836 | 123 | 130 | ||||||||||||||||||
Equipment financing | — | — | — | — | — | — | ||||||||||||||||||
Total commercial | 44,246 | 1,068 | 1,125 | 66,675 | 1,602 | 1,579 | ||||||||||||||||||
Residential mortgage | 14,554 | 306 | 311 | 14,175 | 268 | 290 | ||||||||||||||||||
Home equity lines of credit | 290 | 9 | 8 | 308 | 3 | 5 | ||||||||||||||||||
Residential construction | 1,553 | 49 | 48 | 1,591 | 46 | 47 | ||||||||||||||||||
Consumer direct | 274 | 10 | 10 | 297 | 11 | 12 | ||||||||||||||||||
Indirect auto | 1,301 | 34 | 34 | 1,130 | 28 | 28 | ||||||||||||||||||
Total | $ | 62,218 | $ | 1,476 | $ | 1,536 | $ | 84,176 | $ | 1,958 | $ | 1,961 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
Owner occupied commercial real estate | $ | 5,027 | $ | 7,373 | ||||
Income producing commercial real estate | 2,042 | 1,324 | ||||||
Commercial & industrial | 2,378 | 966 | ||||||
Commercial construction | 1,376 | 1,538 | ||||||
Total commercial | 10,823 | 11,201 | ||||||
Residential mortgage | 8,559 | 6,368 | ||||||
Home equity lines of credit | 1,898 | 1,831 | ||||||
Residential construction | 178 | 776 | ||||||
Consumer installment | 84 | 88 | ||||||
Indirect auto | 1,379 | 1,275 | ||||||
Total | $ | 22,921 | $ | 21,539 |
June 30, 2018 | December 31, 2017 | ||||||
Owner occupied commercial real estate | $ | 5,772 | $ | 4,923 | |||
Income producing commercial real estate | 991 | 3,208 | |||||
Commercial & industrial | 2,180 | 2,097 | |||||
Commercial construction | 613 | 758 | |||||
Equipment financing | 1,075 | — | |||||
Total commercial | 10,631 | 10,986 | |||||
Residential mortgage | 7,918 | 8,776 | |||||
Home equity lines of credit | 1,812 | 2,024 | |||||
Residential construction | 637 | 192 | |||||
Consumer direct | 68 | 43 | |||||
Indirect auto | 751 | 1,637 | |||||
Total | $ | 21,817 | $ | 23,658 |
Loans Past Due | Loans Not | |||||||||||||||||||||||||||
30 - 59 Days | 60 - 89 Days | > 90 Days | Total | Past Due | PCI Loans | Total | ||||||||||||||||||||||
As of September 30, 2017 | ||||||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 4,017 | $ | 1,236 | $ | 2,176 | $ | 7,429 | $ | 1,766,318 | $ | 18,015 | $ | 1,791,762 | ||||||||||||||
Income producing commercial real estate | 1,189 | 595 | 463 | 2,247 | 1,385,728 | 25,129 | 1,413,104 | |||||||||||||||||||||
Commercial & industrial | 3,088 | 1,008 | 1,006 | 5,102 | 1,077,441 | 1,048 | 1,083,591 | |||||||||||||||||||||
Commercial construction | 494 | 5 | 219 | 718 | 573,851 | 8,775 | 583,344 | |||||||||||||||||||||
Total commercial | 8,788 | 2,844 | 3,864 | 15,496 | 4,803,338 | 52,967 | 4,871,801 | |||||||||||||||||||||
Residential mortgage | 6,133 | 1,883 | 3,301 | 11,317 | 909,322 | 12,566 | 933,205 | |||||||||||||||||||||
Home equity lines of credit | 2,545 | 666 | 608 | 3,819 | 683,613 | 1,443 | 688,875 | |||||||||||||||||||||
Residential construction | 400 | 110 | 16 | 526 | 189,072 | 449 | 190,047 | |||||||||||||||||||||
Consumer installment | 544 | 39 | 28 | 611 | 116,828 | 1,303 | 118,742 | |||||||||||||||||||||
Indirect auto | 936 | 415 | 1,047 | 2,398 | 397,869 | - | 400,267 | |||||||||||||||||||||
Total loans | $ | 19,346 | $ | 5,957 | $ | 8,864 | $ | 34,167 | $ | 7,100,042 | $ | 68,728 | $ | 7,202,937 | ||||||||||||||
As of December 31, 2016 | ||||||||||||||||||||||||||||
Owner occupied commercial real estate | $ | 2,195 | $ | 1,664 | $ | 3,386 | $ | 7,245 | $ | 1,624,531 | $ | 18,584 | $ | 1,650,360 | ||||||||||||||
Income producing commercial real estate | 1,373 | 355 | 330 | 2,058 | 1,254,164 | 25,319 | 1,281,541 | |||||||||||||||||||||
Commercial & industrial | 943 | 241 | 178 | 1,362 | 1,067,317 | 1,036 | 1,069,715 | |||||||||||||||||||||
Commercial construction | 452 | 14 | 292 | 758 | 624,835 | 8,328 | 633,921 | |||||||||||||||||||||
Total commercial | 4,963 | 2,274 | 4,186 | 11,423 | 4,570,847 | 53,267 | 4,635,537 | |||||||||||||||||||||
Residential mortgage | 7,221 | 1,799 | 1,700 | 10,720 | 839,610 | 6,395 | 856,725 | |||||||||||||||||||||
Home equity lines of credit | 1,996 | 101 | 957 | 3,054 | 650,346 | 2,010 | 655,410 | |||||||||||||||||||||
Residential construction | 950 | 759 | 51 | 1,760 | 187,350 | 933 | 190,043 | |||||||||||||||||||||
Consumer installment | 633 | 117 | 35 | 785 | 122,623 | 159 | 123,567 | |||||||||||||||||||||
Indirect auto | 1,109 | 301 | 909 | 2,319 | 457,035 | - | 459,354 | |||||||||||||||||||||
Total loans | $ | 16,872 | $ | 5,351 | $ | 7,838 | $ | 30,061 | $ | 6,827,811 | $ | 62,764 | $ | 6,920,636 |
Loans Past Due | ||||||||||||||||||||||||||||
As of June 30, 2018 | 30 - 59 Days | 60 - 89 Days | > 90 Days | Total | Loans Not Past Due | PCI Loans | Total | |||||||||||||||||||||
Owner occupied commercial real estate | $ | 5,007 | $ | 822 | $ | 2,553 | $ | 8,382 | $ | 1,659,987 | $ | 13,368 | $ | 1,681,737 | ||||||||||||||
Income producing commercial real estate | 2,045 | 269 | 49 | 2,363 | 1,776,842 | 42,179 | 1,821,384 | |||||||||||||||||||||
Commercial & industrial | 2,450 | 576 | 714 | 3,740 | 1,188,670 | 636 | 1,193,046 | |||||||||||||||||||||
Commercial construction | 992 | 343 | 253 | 1,588 | 727,414 | 6,573 | 735,575 | |||||||||||||||||||||
Equipment financing | 346 | 465 | 1,075 | 1,886 | 450,734 | 11,974 | 464,594 | |||||||||||||||||||||
Total commercial | 10,840 | 2,475 | 4,644 | 17,959 | 5,803,647 | 74,730 | 5,896,336 | |||||||||||||||||||||
Residential mortgage | 6,470 | 2,284 | 2,684 | 11,438 | 997,646 | 11,522 | 1,020,606 | |||||||||||||||||||||
Home equity lines of credit | 2,113 | 797 | 500 | 3,410 | 702,413 | 1,895 | 707,718 | |||||||||||||||||||||
Residential construction | 757 | 92 | 493 | 1,342 | 193,312 | 926 | 195,580 | |||||||||||||||||||||
Consumer direct | 536 | 142 | 1 | 679 | 121,307 | 770 | 122,756 | |||||||||||||||||||||
Indirect auto | 731 | 132 | 601 | 1,464 | 275,811 | — | 277,275 | |||||||||||||||||||||
Total loans | $ | 21,447 | $ | 5,922 | $ | 8,923 | $ | 36,292 | $ | 8,094,136 | $ | 89,843 | $ | 8,220,271 |
Loans Past Due | ||||||||||||||||||||||||||||
As of December 31, 2017 | 30 - 59 Days | 60 - 89 Days | > 90 Days | Total | Loans Not Past Due | PCI Loans | Total | |||||||||||||||||||||
Owner occupied commercial real estate | $ | 3,810 | $ | 1,776 | $ | 1,530 | $ | 7,116 | $ | 1,891,118 | $ | 25,759 | $ | 1,923,993 | ||||||||||||||
Income producing commercial real estate | 1,754 | 353 | 1,939 | 4,046 | 1,546,288 | 44,840 | 1,595,174 | |||||||||||||||||||||
Commercial & industrial | 2,139 | 869 | 1,133 | 4,141 | 1,125,407 | 1,442 | 1,130,990 | |||||||||||||||||||||
Commercial construction | 568 | 132 | 158 | 858 | 702,221 | 8,857 | 711,936 | |||||||||||||||||||||
Equipment financing | — | — | — | — | — | — | — | |||||||||||||||||||||
Total commercial | 8,271 | 3,130 | 4,760 | 16,161 | 5,265,034 | 80,898 | 5,362,093 | |||||||||||||||||||||
Residential mortgage | 6,717 | 1,735 | 3,438 | 11,890 | 948,513 | 13,141 | 973,544 | |||||||||||||||||||||
Home equity lines of credit | 3,246 | 225 | 578 | 4,049 | 724,287 | 2,891 | 731,227 | |||||||||||||||||||||
Residential construction | 885 | 105 | 93 | 1,083 | 181,472 | 464 | 183,019 | |||||||||||||||||||||
Consumer direct | 739 | 133 | — | 872 | 125,512 | 1,120 | 127,504 | |||||||||||||||||||||
Indirect auto | 1,152 | 459 | 1,263 | 2,874 | 355,311 | — | 358,185 | |||||||||||||||||||||
Total loans | $ | 21,010 | $ | 5,787 | $ | 10,132 | $ | 36,929 | $ | 7,600,129 | $ | 98,514 | $ | 7,735,572 |
Doubtful / | ||||||||||||||||||||
Pass | Watch | Substandard | Loss | Total | ||||||||||||||||
As of September 30, 2017 | ||||||||||||||||||||
Owner occupied commercial real estate | $ | 1,708,659 | $ | 32,450 | $ | 32,638 | $ | - | $ | 1,773,747 | ||||||||||
Income producing commercial real estate | 1,337,358 | 30,584 | 20,033 | - | 1,387,975 | |||||||||||||||
Commercial & industrial | 1,054,999 | 14,645 | 12,899 | - | 1,082,543 | |||||||||||||||
Commercial construction | 563,616 | 5,006 | 5,947 | - | 574,569 | |||||||||||||||
Total commercial | 4,664,632 | 82,685 | 71,517 | - | 4,818,834 | |||||||||||||||
Residential mortgage | 899,000 | - | 21,639 | - | 920,639 | |||||||||||||||
Home equity lines of credit | 680,711 | - | 6,721 | - | 687,432 | |||||||||||||||
Residential construction | 187,684 | - | 1,914 | - | 189,598 | |||||||||||||||
Consumer installment | 116,877 | - | 562 | - | 117,439 | |||||||||||||||
Indirect auto | 397,203 | - | 3,064 | - | 400,267 | |||||||||||||||
Total loans, excluding PCI loans | $ | 6,946,107 | $ | 82,685 | $ | 105,417 | $ | - | $ | 7,134,209 | ||||||||||
Owner occupied commercial real estate | $ | 3,628 | $ | 4,851 | $ | 9,536 | $ | - | $ | 18,015 | ||||||||||
Income producing commercial real estate | 12,459 | 9,739 | 2,931 | - | 25,129 | |||||||||||||||
Commercial & industrial | 426 | 403 | 219 | - | 1,048 | |||||||||||||||
Commercial construction | 4,742 | 2,391 | 1,642 | - | 8,775 | |||||||||||||||
Total commercial | 21,255 | 17,384 | 14,328 | - | 52,967 | |||||||||||||||
Residential mortgage | 9,732 | - | 2,834 | - | 12,566 | |||||||||||||||
Home equity lines of credit | 663 | - | 780 | - | 1,443 | |||||||||||||||
Residential construction | 431 | - | 18 | - | 449 | |||||||||||||||
Consumer installment | 1,273 | - | 30 | - | 1,303 | |||||||||||||||
Indirect auto | - | - | - | - | - | |||||||||||||||
Total PCI loans | $ | 33,354 | $ | 17,384 | $ | 17,990 | $ | - | $ | 68,728 | ||||||||||
As of December 31, 2016 | ||||||||||||||||||||
Owner occupied commercial real estate | $ | 1,577,301 | $ | 18,029 | $ | 36,446 | $ | - | $ | 1,631,776 | ||||||||||
Income producing commercial real estate | 1,220,626 | 8,502 | 27,094 | - | 1,256,222 | |||||||||||||||
Commercial & industrial | 1,055,282 | 4,188 | 9,209 | - | 1,068,679 | |||||||||||||||
Commercial construction | 612,900 | 6,166 | 6,527 | - | 625,593 | |||||||||||||||
Total commercial | 4,466,109 | 36,885 | 79,276 | - | 4,582,270 | |||||||||||||||
Residential mortgage | 829,844 | - | 20,486 | - | 850,330 | |||||||||||||||
Home equity lines of credit | 647,425 | - | 5,975 | - | 653,400 | |||||||||||||||
Residential construction | 185,643 | - | 3,467 | - | 189,110 | |||||||||||||||
Consumer installment | 122,736 | - | 672 | - | 123,408 | |||||||||||||||
Indirect auto | 456,717 | - | 2,637 | - | 459,354 | |||||||||||||||
Total loans, excluding PCI loans | $ | 6,708,474 | $ | 36,885 | $ | 112,513 | $ | - | $ | 6,857,872 | ||||||||||
Owner occupied commercial real estate | $ | 2,044 | $ | 3,444 | $ | 13,096 | $ | - | $ | 18,584 | ||||||||||
Income producing commercial real estate | 13,236 | 8,474 | 3,609 | - | 25,319 | |||||||||||||||
Commercial & industrial | 216 | 160 | 660 | - | 1,036 | |||||||||||||||
Commercial construction | 3,212 | 1,265 | 3,851 | - | 8,328 | |||||||||||||||
Total commercial | 18,708 | 13,343 | 21,216 | - | 53,267 | |||||||||||||||
Residential mortgage | 5,189 | - | 1,206 | - | 6,395 | |||||||||||||||
Home equity lines of credit | 1,094 | - | 916 | - | 2,010 | |||||||||||||||
Residential construction | 898 | - | 35 | - | 933 | |||||||||||||||
Consumer installment | 159 | - | - | - | 159 | |||||||||||||||
Indirect auto | - | - | - | - | - | |||||||||||||||
Total PCI loans | $ | 26,048 | $ | 13,343 | $ | 23,373 | $ | - | $ | 62,764 |
Pass | Watch | Substandard | Doubtful / Loss | Total | ||||||||||||||||
As of June 30, 2018 | ||||||||||||||||||||
Owner occupied commercial real estate | $ | 1,607,152 | $ | 21,030 | $ | 40,187 | $ | — | $ | 1,668,369 | ||||||||||
Income producing commercial real estate | 1,738,757 | 19,989 | 20,459 | — | 1,779,205 | |||||||||||||||
Commercial & industrial | 1,158,458 | 14,103 | 19,849 | — | 1,192,410 | |||||||||||||||
Commercial construction | 696,187 | 24,575 | 8,240 | — | 729,002 | |||||||||||||||
Equipment financing | 451,545 | — | 1,075 | — | 452,620 | |||||||||||||||
Total commercial | 5,652,099 | 79,697 | 89,810 | — | 5,821,606 | |||||||||||||||
Residential mortgage | 989,403 | — | 19,681 | — | 1,009,084 | |||||||||||||||
Home equity lines of credit | 699,455 | — | 6,368 | — | 705,823 | |||||||||||||||
Residential construction | 192,656 | — | 1,998 | — | 194,654 | |||||||||||||||
Consumer direct | 121,493 | — | 493 | — | 121,986 | |||||||||||||||
Indirect auto | 275,233 | — | 2,042 | — | 277,275 | |||||||||||||||
Total loans, excluding PCI loans | $ | 7,930,339 | $ | 79,697 | $ | 120,392 | $ | — | $ | 8,130,428 | ||||||||||
Owner occupied commercial real estate | $ | 2,586 | $ | 3,027 | $ | 7,755 | $ | — | $ | 13,368 | ||||||||||
Income producing commercial real estate | 12,918 | 22,609 | 6,652 | — | 42,179 | |||||||||||||||
Commercial & industrial | 258 | 227 | 151 | — | 636 | |||||||||||||||
Commercial construction | 3,345 | 753 | 2,475 | — | 6,573 | |||||||||||||||
Equipment financing | 11,154 | — | 820 | — | 11,974 | |||||||||||||||
Total commercial | 30,261 | 26,616 | 17,853 | — | 74,730 | |||||||||||||||
Residential mortgage | 8,167 | 148 | 3,207 | — | 11,522 | |||||||||||||||
Home equity lines of credit | 1,334 | — | 561 | — | 1,895 | |||||||||||||||
Residential construction | 473 | 247 | 206 | — | 926 | |||||||||||||||
Consumer direct | 697 | — | 73 | — | 770 | |||||||||||||||
Indirect auto | — | — | — | — | — | |||||||||||||||
Total PCI loans | $ | 40,932 | $ | 27,011 | $ | 21,900 | $ | — | $ | 89,843 | ||||||||||
Total loan portfolio | $ | 7,971,271 | $ | 106,708 | $ | 142,292 | $ | — | $ | 8,220,271 | ||||||||||
As of December 31, 2017 | ||||||||||||||||||||
Owner occupied commercial real estate | $ | 1,833,469 | $ | 33,571 | $ | 31,194 | $ | — | $ | 1,898,234 | ||||||||||
Income producing commercial real estate | 1,495,805 | 30,780 | 23,749 | — | 1,550,334 | |||||||||||||||
Commercial & industrial | 1,097,907 | 18,052 | 13,589 | — | 1,129,548 | |||||||||||||||
Commercial construction | 693,873 | 2,947 | 6,259 | — | 703,079 | |||||||||||||||
Equipment financing | — | — | — | — | — | |||||||||||||||
Total commercial | 5,121,054 | 85,350 | 74,791 | — | 5,281,195 | |||||||||||||||
Residential mortgage | 939,706 | — | 20,697 | — | 960,403 | |||||||||||||||
Home equity lines of credit | 721,142 | — | 7,194 | — | 728,336 | |||||||||||||||
Residential construction | 180,567 | — | 1,988 | — | 182,555 | |||||||||||||||
Consumer direct | 125,860 | — | 524 | — | 126,384 | |||||||||||||||
Indirect auto | 354,788 | — | 3,397 | — | 358,185 | |||||||||||||||
Total loans, excluding PCI loans | $ | 7,443,117 | $ | 85,350 | $ | 108,591 | $ | — | $ | 7,637,058 | ||||||||||
Owner occupied commercial real estate | $ | 2,400 | $ | 8,163 | $ | 15,196 | $ | — | $ | 25,759 | ||||||||||
Income producing commercial real estate | 13,392 | 21,928 | 9,520 | — | 44,840 | |||||||||||||||
Commercial & industrial | 383 | 672 | 387 | — | 1,442 | |||||||||||||||
Commercial construction | 3,866 | 2,228 | 2,763 | — | 8,857 | |||||||||||||||
Equipment financing | — | — | — | — | — | |||||||||||||||
Total commercial | 20,041 | 32,991 | 27,866 | — | 80,898 | |||||||||||||||
Residential mortgage | 9,566 | 173 | 3,402 | — | 13,141 | |||||||||||||||
Home equity lines of credit | 1,579 | 427 | 885 | — | 2,891 | |||||||||||||||
Residential construction | 423 | — | 41 | — | 464 | |||||||||||||||
Consumer direct | 1,076 | 10 | 34 | — | 1,120 | |||||||||||||||
Indirect auto | — | — | — | — | — | |||||||||||||||
Total PCI loans | $ | 32,685 | $ | 33,601 | $ | 32,228 | $ | — | $ | 98,514 | ||||||||||
Total loan portfolio | $ | 7,475,802 | $ | 118,951 | $ | 140,819 | $ | — | $ | 7,735,572 |
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||||||||||||||||
Details about Accumulated Other | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | Affected Line Item in the Statement | |||||||||||||||
Comprehensive Income Components | 2017 | 2016 | 2017 | 2016 | Where Net Income is Presented | |||||||||||||
Realized gains on available-for-sale securities: | ||||||||||||||||||
$ | 188 | $ | 261 | $ | 190 | $ | 922 | Securities gains, net | ||||||||||
(73 | ) | (101 | ) | (72 | ) | (348 | ) | Tax expense | ||||||||||
$ | 115 | $ | 160 | $ | 118 | $ | 574 | Net of tax | ||||||||||
Amortization of losses included in net income on available-for-sale securities transferred to held to maturity: | ||||||||||||||||||
$ | (278 | ) | $ | (663 | ) | $ | (849 | ) | $ | (1,601 | ) | Investment securities interest revenue | ||||||
105 | 237 | 319 | 596 | Tax benefit | ||||||||||||||
$ | (173 | ) | $ | (426 | ) | $ | (530 | ) | $ | (1,005 | ) | Net of tax | ||||||
Gains included in net income on derivative financial instruments accounted for as cash flow hedges: | ||||||||||||||||||
Amortization of losses on de-designated positions | $ | - | $ | - | $ | - | $ | (7 | ) | Deposits in banks and short-term investments interest revenue | ||||||||
Amortization of losses on de-designated positions | (150 | ) | (153 | ) | (448 | ) | (495 | ) | Money market deposit interest expense | |||||||||
Amortization of losses on de-designated positions | - | (313 | ) | (292 | ) | (924 | ) | Federal Home Loan Bank advances interest expense | ||||||||||
(150 | ) | (466 | ) | (740 | ) | (1,426 | ) | Total before tax | ||||||||||
58 | 181 | 288 | 555 | Tax benefit | ||||||||||||||
$ | (92 | ) | $ | (285 | ) | $ | (452 | ) | $ | (871 | ) | Net of tax | ||||||
Reclassification of disproportionate tax effect related to terminated cash flow hedges: | ||||||||||||||||||
$ | - | $ | - | $ | (3,400 | ) | $ | - | Income tax expense | |||||||||
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan: | ||||||||||||||||||
Prior service cost | $ | (140 | ) | $ | (125 | ) | $ | (420 | ) | $ | (375 | ) | Salaries and employee benefits expense | |||||
Actuarial losses | (60 | ) | (42 | ) | (180 | ) | (126 | ) | Salaries and employee benefits expense | |||||||||
(200 | ) | (167 | ) | (600 | ) | (501 | ) | Total before tax | ||||||||||
78 | 65 | 235 | 195 | Tax benefit | ||||||||||||||
$ | (122 | ) | $ | (102 | ) | $ | (365 | ) | $ | (306 | ) | Net of tax | ||||||
Total reclassifications for the period | $ | (272 | ) | $ | (653 | ) | $ | (4,629 | ) | $ | (1,608 | ) | Net of tax |
Amounts Reclassified from Accumulated Other Comprehensive Income | ||||||||||||||||||
Details about Accumulated Other Comprehensive Income Components | Three Months Ended June 30, | Six Months Ended June 30, | Affected Line Item in the Statement Where Net Income is Presented | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Realized (losses) gains on available-for-sale securities: | ||||||||||||||||||
$ | (364 | ) | $ | 4 | $ | (1,304 | ) | $ | 2 | Securities (losses) gains, net | ||||||||
97 | — | 317 | 1 | Income tax benefit | ||||||||||||||
$ | (267 | ) | $ | 4 | $ | (987 | ) | $ | 3 | Net of tax | ||||||||
Amortization of losses included in net income on available-for-sale securities transferred to held-to-maturity: | ||||||||||||||||||
$ | (218 | ) | $ | (261 | ) | $ | (439 | ) | $ | (571 | ) | Investment securities interest revenue | ||||||
55 | 98 | 109 | 214 | Income tax benefit | ||||||||||||||
$ | (163 | ) | $ | (163 | ) | $ | (330 | ) | $ | (357 | ) | Net of tax | ||||||
Amortization of losses included in net income on derivative financial instruments accounted for as cash flow hedges: | ||||||||||||||||||
Amortization of losses on de-designated positions | $ | (143 | ) | $ | (149 | ) | $ | (290 | ) | $ | (298 | ) | Money market deposit interest expense | |||||
Amortization of losses on de-designated positions | — | (28 | ) | — | (292 | ) | Federal Home Loan Bank advances interest expense | |||||||||||
(143 | ) | (177 | ) | (290 | ) | (590 | ) | Total before tax | ||||||||||
38 | 69 | 76 | 230 | Income tax benefit | ||||||||||||||
$ | (105 | ) | $ | (108 | ) | $ | (214 | ) | $ | (360 | ) | Net of tax | ||||||
Reclassification of disproportionate tax effect related to terminated cash flow hedges: | ||||||||||||||||||
$ | — | $ | — | $ | — | $ | (3,400 | ) | Income tax expense | |||||||||
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan: | ||||||||||||||||||
Prior service cost | $ | (167 | ) | $ | (140 | ) | $ | (334 | ) | $ | (280 | ) | Salaries and employee benefits expense | |||||
Actuarial losses | (60 | ) | — | (120 | ) | — | Other expense | |||||||||||
Actuarial losses | — | (60 | ) | — | (120 | ) | Salaries and employee benefits expense | |||||||||||
(227 | ) | (200 | ) | (454 | ) | (400 | ) | Total before tax | ||||||||||
73 | 78 | 131 | 157 | Income tax benefit | ||||||||||||||
$ | (154 | ) | $ | (122 | ) | $ | (323 | ) | $ | (243 | ) | Net of tax | ||||||
Total reclassifications for the period | $ | (689 | ) | $ | (389 | ) | $ | (1,854 | ) | $ | (4,357 | ) | Net of tax |
United is required to report on the face of the consolidated statement of income, earnings per common share with and without the dilutive effects of potential common stock issuances from instruments such as options, convertible securities and warrants. Basic earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share.
During the nine months ended September 30, 2016, United accrued dividends of $21,000 on its Series H preferred stock. The Series H preferred stock was redeemed in the first quarter of 2016; accordingly, United did not accrue any dividends in 2017 or the third quarter of 2016.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income | $ | 27,946 | $ | 25,874 | $ | 79,737 | $ | 73,435 | ||||||||
Dividends and undistributed earnings allocated to unvested shares | (227 | ) | - | (659 | ) | - | ||||||||||
Preferred dividends | - | - | - | (21 | ) | |||||||||||
Net income available to common shareholders | $ | 27,719 | $ | 25,874 | $ | 79,078 | $ | 73,414 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 73,151 | 71,556 | 72,060 | 71,992 | ||||||||||||
Effect of dilutive securities | ||||||||||||||||
Stock options | 11 | 5 | 11 | 4 | ||||||||||||
Diluted | 73,162 | 71,561 | 72,071 | 71,996 | ||||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | .38 | $ | .36 | $ | 1.10 | $ | 1.02 | ||||||||
Diluted | $ | .38 | $ | .36 | $ | 1.10 | $ | 1.02 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 39,634 | $ | 28,267 | $ | 77,292 | $ | 51,791 | |||||||
Dividends and undistributed earnings allocated to unvested shares | (275 | ) | — | (552 | ) | — | |||||||||
Net income available to common shareholders | $ | 39,359 | $ | 28,267 | $ | 76,740 | $ | 51,791 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 79,745 | 71,810 | 79,477 | 71,798 | |||||||||||
Effect of dilutive securities | |||||||||||||||
Stock options | 10 | 10 | 10 | 11 | |||||||||||
Diluted | 79,755 | 71,820 | 79,487 | 71,809 | |||||||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.49 | $ | 0.39 | $ | 0.97 | $ | 0.72 | |||||||
Diluted | $ | 0.49 | $ | 0.39 | $ | 0.97 | $ | 0.72 |
At September 30, 2016, United had the following potentially dilutive stock options and warrants outstanding: a warrant to purchase 219,909 shares of common stock at $61.40 per share; 185,688 shares of common stock issuable upon exercise of stock options granted to employees with a weighted average exercise price of $77.63; and 674,862 shares of common stock issuable upon the vesting of restricted stock unit awards.
Derivatives designated as hedging instruments under ASC 815 | ||||||||||
Fair Value | ||||||||||
Interest Rate Products | Balance Sheet Location | September 30, 2017 | December 31, 2016 | |||||||
Fair value hedge of corporate bonds | Derivative assets | $ | 67 | $ | 265 | |||||
$ | 67 | $ | 265 | |||||||
Fair value hedge of brokered CDs | Derivative liabilities | $ | 1,816 | $ | 1,980 | |||||
$ | 1,816 | $ | 1,980 |
Derivatives not designated as hedging instruments under ASC 815 | ||||||||||
Fair Value | ||||||||||
Interest Rate Products | Balance Sheet Location | September 30, 2017 | December 31, 2016 | |||||||
Customer derivative positions | Derivative assets | $ | 4,804 | $ | 5,266 | |||||
Dealer offsets to customer derivative positions | Derivative assets | 4,424 | 3,869 | |||||||
Mortgage banking - loan commitment | Derivative assets | 1,193 | 1,552 | |||||||
Mortgage banking - forward sales commitment | Derivative assets | 149 | 534 | |||||||
Bifurcated embedded derivatives | Derivative assets | 9,925 | 10,225 | |||||||
Interest rate caps | Derivative assets | 410 | - | |||||||
Offsetting positions for de-designated hedges | Derivative assets | - | 1,977 | |||||||
$ | 20,905 | $ | 23,423 | |||||||
Customer derivative positions | Derivative liabilities | $ | 4,524 | $ | 3,897 | |||||
Dealer offsets to customer derivative positions | Derivative liabilities | 3,054 | 5,328 | |||||||
Risk participations | Derivative liabilities | 22 | 26 | |||||||
Mortgage banking - forward sales commitment | Derivative liabilities | 3 | 96 | |||||||
Dealer offsets to bifurcated embedded derivatives | Derivative liabilities | 13,210 | 14,341 | |||||||
De-designated hedges | Derivative liabilities | 297 | 1,980 | |||||||
$ | 21,110 | $ | 25,668 |
Interest Rate Products | Balance Sheet Location | June 30, 2018 | December 31, 2017 | |||||||
Fair value hedge of corporate bonds | Derivative assets | $ | — | $ | 336 | |||||
$ | — | $ | 336 | |||||||
Fair value hedge of brokered CDs | Derivative liabilities | $ | 2,425 | $ | 2,053 | |||||
$ | 2,425 | $ | 2,053 |
Fair Value | ||||||||||
Interest Rate Products | Balance Sheet Location | June 30, 2018 | December 31, 2017 | |||||||
Customer derivative positions | Derivative assets | $ | 951 | $ | 2,659 | |||||
Dealer offsets to customer derivative positions | Derivative assets | 14,433 | 6,867 | |||||||
Mortgage banking - loan commitment | Derivative assets | 1,764 | 1,150 | |||||||
Mortgage banking - forward sales commitment | Derivative assets | 2 | 13 | |||||||
Bifurcated embedded derivatives | Derivative assets | 12,746 | 11,057 | |||||||
Interest rate caps | Derivative assets | — | 639 | |||||||
$ | 29,896 | $ | 22,385 | |||||||
Customer derivative positions | Derivative liabilities | $ | 18,489 | $ | 7,032 | |||||
Dealer offsets to customer derivative positions | Derivative liabilities | 217 | 1,551 | |||||||
Risk participations | Derivative liabilities | 8 | 20 | |||||||
Mortgage banking - forward sales commitment | Derivative liabilities | 189 | 49 | |||||||
Dealer offsets to bifurcated embedded derivatives | Derivative liabilities | 15,471 | 14,279 | |||||||
De-designated hedges | Derivative liabilities | 462 | 392 | |||||||
$ | 34,836 | $ | 23,323 |
In the second quarter of 2017, United purchased interest rate caps with a notional amount of $200 million to serve as an economic macro hedge of exposure to rising interest rates.
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion) | Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) | Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) | ||||||||||||||||||||||||||
2017 | 2016 | Location | 2017 | 2016 | Location | 2017 | 2016 | |||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||||||
Interest rate swaps | $ | - | $ | - | Interest expense | $ | (150 | ) | $ | (466 | ) | Interest expense | $ | - | $ | - | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||||||
Interest rate swaps | $ | - | $ | - | Interest expense | $ | (740 | ) | $ | (1,426 | ) | Interest expense | $ | - | $ | - |
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) | |||||||||
Location | 2018 | 2017 | |||||||
Three Months Ended June 30, | |||||||||
Interest rate swaps | Interest expense | $ | (143 | ) | $ | (177 | ) | ||
Six Months Ended June 30, | |||||||||
Interest rate swaps | Interest expense | $ | (290 | ) | $ | (590 | ) |
Location of Gain | Amount of Gain (Loss) | Amount of Gain (Loss) | ||||||||||||||||
(Loss) Recognized | Recognized in Income | Recognized in Income | ||||||||||||||||
in Income on | on Derivative | on Hedged Item | ||||||||||||||||
Derivative | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||
Fair value hedges of brokered CDs | Interest expense | $ | (217 | ) | $ | (389 | ) | $ | 95 | $ | 1,945 | |||||||
Fair value hedges of corporate bonds | Interest revenue | 20 | 262 | (58 | ) | (307 | ) | |||||||||||
$ | (197 | ) | $ | (127 | ) | $ | 37 | $ | 1,638 | |||||||||
Nine Months Ended September 30, | ||||||||||||||||||
Fair value hedges of brokered CDs | Interest expense | $ | (418 | ) | $ | 2,882 | $ | (60 | ) | $ | (268 | ) | ||||||
Fair value hedges of corporate bonds | Interest revenue | (197 | ) | (2,145 | ) | 63 | 1,896 | |||||||||||
$ | (615 | ) | $ | 737 | $ | 3 | $ | 1,628 |
Location of Gain (Loss) Recognized in Income on Derivative | Amount of Gain (Loss) Recognized in Income on Derivative | Amount of Gain (Loss) Recognized in Income on Hedged Item | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||
Fair value hedges of brokered CDs | Interest expense | $ | (144 | ) | $ | 73 | $ | 25 | $ | (344 | ) | |||||||
Fair value hedges of corporate bonds | Interest revenue | — | (323 | ) | — | 267 | ||||||||||||
$ | (144 | ) | $ | (250 | ) | $ | 25 | $ | (77 | ) | ||||||||
Six Months Ended June 30, | ||||||||||||||||||
Fair value hedges of brokered CDs | Interest expense | $ | (837 | ) | $ | (201 | ) | $ | 569 | $ | (155 | ) | ||||||
Fair value hedges of corporate bonds | Interest revenue | (336 | ) | (217 | ) | 405 | 121 | |||||||||||
$ | (1,173 | ) | $ | (418 | ) | $ | 974 | $ | (34 | ) |
Amount of Gain (Loss) Recognized in Income on | ||||||||||||||||||
Location of Gain | Derivative | |||||||||||||||||
(Loss) Recognized in Income on | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Derivative | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
Customer derivatives and dealer offsets | Other fee revenue | $ | 554 | $ | 1,115 | $ | 1,804 | $ | 2,952 | |||||||||
Bifurcated embedded derivatives and dealer offsets | Other fee revenue | 225 | 291 | 431 | (125 | ) | ||||||||||||
Interest rate caps | Other fee revenue | (67 | ) | - | 23 | - | ||||||||||||
De-designated hedges | Other fee revenue | 30 | - | 34 | - | |||||||||||||
Mortgage banking derivatives | Mortgage loan revenue | 303 | 884 | (573 | ) | 884 | ||||||||||||
Risk participations | Other fee revenue | (1 | ) | 331 | 4 | 331 | ||||||||||||
$ | 1,044 | $ | 2,621 | $ | 1,723 | $ | 4,042 |
Location of Gain (Loss) Recognized in Income on Derivative | Amount of Gain (Loss) Recognized in Income on Derivative | |||||||||
2018 | 2017 | |||||||||
Three Months Ended June 30, | ||||||||||
Customer derivatives and dealer offsets | Other noninterest income | $ | 643 | $ | 775 | |||||
Bifurcated embedded derivatives and dealer offsets | Other noninterest income | 12 | 119 | |||||||
Interest rate caps | Other noninterest income | — | 90 | |||||||
De-designated hedges | Other noninterest income | (17 | ) | 28 | ||||||
Mortgage banking derivatives | Mortgage loan revenue | 156 | (1,000 | ) | ||||||
Risk participations | Other noninterest income | 15 | 1 | |||||||
$ | 809 | $ | 13 | |||||||
Six Months Ended June 30, | ||||||||||
Customer derivatives and dealer offsets | Other noninterest income | $ | 1,417 | $ | 1,250 | |||||
Bifurcated embedded derivatives and dealer offsets | Other noninterest income | 381 | 206 | |||||||
Interest rate caps | Other noninterest income | 276 | 90 | |||||||
De-designated hedges | Other noninterest income | (83 | ) | 4 | ||||||
Mortgage banking derivatives | Mortgage loan revenue | 1,420 | (876 | ) | ||||||
Risk participations | Other noninterest income | 12 | 5 | |||||||
$ | 3,423 | $ | 679 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Options | Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinisic Value ($000) | ||||||||||||
Outstanding at December 31, 2016 | 72,665 | $ | 34.34 | |||||||||||||
Expired | (1,538 | ) | 147.60 | |||||||||||||
Cancelled | (10,638 | ) | 75.91 | |||||||||||||
Outstanding at September 30, 2017 | 60,489 | 24.15 | 3.3 | $ | 365 | |||||||||||
Exercisable at September 30, 2017 | 55,489 | 24.82 | 3.0 | 306 |
2018.
Options | Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value ($000) | |||||||||
Outstanding at December 31, 2017 | 60,287 | $ | 24.12 | ||||||||||
Exercised | (12,000 | ) | 11.85 | ||||||||||
Cancelled/forfeited | (181 | ) | 31.50 | ||||||||||
Outstanding at June 30, 2018 | 48,106 | 27.16 | 2.4 | $ | 169 | ||||||||
Exercisable at June 30, 2018 | 45,606 | 27.73 | 2.1 | 134 |
United’s stock option exercise patterns were significantly impacted by the past economic downturn, which rendered most of United’s outstanding options worthless to the grantee. Therefore, historical exercise patterns do not provide a reasonable basis for determining the expected life of new option grants. United therefore uses the formula provided in ASC 718-10-S99 to determine the expected life of options.
2017.
Restricted Stock Unit Awards | Shares | Weighted- Average Grant- Date Fair Value | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinisic Value ($000) | ||||||||||||
Outstanding at December 31, 2016 | 690,970 | $ | 18.60 | |||||||||||||
Granted | 259,220 | 26.48 | ||||||||||||||
Vested | (230,080 | ) | 17.09 | $ | 6,326 | |||||||||||
Cancelled | (9,965 | ) | 19.99 | |||||||||||||
Outstanding at September 30, 2017 | 710,145 | 22.06 | 3.2 | 20,268 |
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Restricted Stock Unit Awards | Shares | Weighted- Average Grant- Date Fair Value | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value ($000) | |||||||||
Outstanding at December 31, 2017 | 663,817 | $ | 22.40 | ||||||||||
Granted | 206,123 | 31.07 | |||||||||||
Vested | (124,551 | ) | 18.53 | $ | 3,998 | ||||||||
Cancelled | (13,665 | ) | 21.95 | ||||||||||
Outstanding at June 30, 2018 | 731,724 | 25.51 | 5.4 | 22,442 |
for that period.
United evaluated the need for a valuation allowance at September 30, 2017. Based on the assessment of all the positive and negative evidence, management concluded that it is more likely than not that nearly all of its net deferred tax asset will be realized based upon future taxable income. The remaining valuation allowance of $4.20 million is related to specific state income tax credits that have short carryforward periods and are expected to expire unused.
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
2017. calls that has not been reflected in the consolidated balance sheet. dates. 2017. 2017. first quarter. 52. 2017. FOFN. period, which has contributed to margin expansion and an increase in net interest revenue. Additionally, United was able to improve its overall yield on interest-earning assets through growth in the loan portfolio, which had a positive impact on the composition of interest-earning assets. 2017. interchange fees charged on debit card transactions. second quarter 2017. Acquisitions. expanded branch network resulting from the Acquisitions. Professional fees for the Acquisitions. creditor. 2017. bankruptcy. downgrade of two commercial relationships. 2017. 2017. 2017. 2017. 2017. 2017.Beginning in the third quarter of 2016, mortgage loans held for sale. United elected the fair value option for its portfolio of mortgage loans held for sale in order to reduce certain timing differences and better match changes in fair values of the loans with changes in the value of derivative instruments used to economically hedge them. The fair value of mortgage loans held for sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).loancredit losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment based on the present value of expected future cash flows discounted at the loan'sloan’s effective interest rate, except that as a practical expedient, a creditor may measure impairment based on a loan'sloan’s observable market price, or the fair value of the collateral if repayment of the loan is dependent upon the sale of the underlying collateral. as of September 30, 2017, management had assessed the significance of the effect of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. Derivatives classified as Level 3 included structured derivatives for which broker quotes, used as a key valuation input, were not observable consistent with a Level 2 disclosure. The fair value of risk participations incorporates Level 3 inputs to evaluate the likelihood of customer default. The fair value of interest rate lock commitments, which is related to mortgage loan commitments, is categorized as Level 3 based on unobservable inputs for commitments that United does not expect to fund.Small Business Administration and United States Department of Agriculture (“SBA/USDA”)USDA loans sold with servicing retained. Management has elected to carry this asset at fair value. Given the nature of the asset, the key valuation inputs are unobservable and management classifies this asset as Level 3. has elected to carry this asset at fair value. Given the nature of the asset, the key valuation inputs are unobservable and management classifies this asset as Level 3. The cumulative effect adjustment of this election to retained earnings, net of income tax effect, was $437,000.34UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements2016.September 30, 2017 Level 1 Level 2 Level 3 Total Assets: Securities available for sale: U.S. Treasuries $ 74,764 $ - $ - $ 74,764 U.S. Government agencies - 27,728 - 27,728 State and political subdivisions - 172,389 - 172,389 Mortgage-backed securities - 1,648,696 - 1,648,696 Corporate bonds - 307,561 810 308,371 Asset-backed securities - 308,465 - 308,465 Other - 57 - 57 Mortgage loans held for sale - 30,093 - 30,093 Deferred compensation plan assets 5,368 - - 5,368 Servicing rights for SBA/USDA loans - - 7,067 7,067 Residential mortgage servicing rights - - 6,926 6,926 Derivative financial instruments - 9,854 11,118 20,972 Total assets $ 80,132 $ 2,504,843 $ 25,921 $ 2,610,896 Liabilities: Deferred compensation plan liability $ 5,368 $ - $ - $ 5,368 Derivative financial instruments - 7,581 15,345 22,926 Total liabilities $ 5,368 $ 7,581 $ 15,345 $ 28,294 December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Securities available for sale U.S. Treasuries $ 169,616 $ - $ - $ 169,616 U.S. Agencies - 20,820 - 20,820 State and political subdivisions - 74,177 - 74,177 Mortgage-backed securities - 1,391,682 - 1,391,682 Corporate bonds - 304,717 675 305,392 Asset-backed securities - 469,569 - 469,569 Other - 1,182 - 1,182 Mortgage loans held for sale - 27,891 - 27,891 Deferred compensation plan assets 4,161 - - 4,161 Servicing rights for SBA/USDA loans - - 5,752 5,752 Derivative financial instruments - 11,911 11,777 23,688 Total assets $ 173,777 $ 2,301,949 $ 18,204 $ 2,493,930 Liabilities: Deferred compensation plan liability $ 4,161 $ - $ - $ 4,161 Derivative financial instruments - 11,301 16,347 27,648 Total liabilities $ 4,161 $ 11,301 $ 16,347 $ 31,809 35June 30, 2018 Level 1 Level 2 Level 3 Total Assets: Securities available for sale: U.S. Treasuries $ 119,039 $ — $ — $ 119,039 U.S. Agencies — 25,578 — 25,578 State and political subdivisions — 197,631 — 197,631 Mortgage-backed securities — 1,806,861 — 1,806,861 Corporate bonds — 197,175 990 198,165 Asset-backed securities — 188,963 — 188,963 Other — 57 — 57 Mortgage loans held for sale — 34,813 — 34,813 Deferred compensation plan assets 6,199 — — 6,199 Servicing rights for SBA/USDA loans — — 7,509 7,509 Residential mortgage servicing rights — — 10,801 10,801 Derivative financial instruments — 15,386 14,510 29,896 Total assets $ 125,238 $ 2,466,464 $ 33,810 $ 2,625,512 Liabilities: Deferred compensation plan liability $ 6,199 $ — $ — $ 6,199 Derivative financial instruments — 18,895 18,366 37,261 Total liabilities $ 6,199 $ 18,895 $ 18,366 $ 43,460 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: Securities available for sale U.S. Treasuries $ 121,113 $ — $ — $ 121,113 U.S. Agencies — 26,372 — 26,372 State and political subdivisions — 197,286 — 197,286 Mortgage-backed securities — 1,727,211 — 1,727,211 Corporate bonds — 305,453 900 306,353 Asset-backed securities — 237,458 — 237,458 Other — 57 — 57 Mortgage loans held for sale — 26,252 — 26,252 Deferred compensation plan assets 5,716 — — 5,716 Servicing rights for SBA/USDA loans — — 7,740 7,740 Residential mortgage servicing rights — — 8,262 8,262 Derivative financial instruments — 10,514 12,207 22,721 Total assets $ 126,829 $ 2,530,603 $ 29,109 $ 2,686,541 Liabilities: Deferred compensation plan liability $ 5,716 $ — $ — $ 5,716 Derivative financial instruments — 8,632 16,744 25,376 Total liabilities $ 5,716 $ 8,632 $ 16,744 $ 31,092 2017 2016 Derivative
Asset Derivative
Liability Servicing
rights for
SBA/USDA
loans Residential
mortgage
servicing
rights Securities
Available-
for-Sale Derivative
Asset Derivative
Liability Servicing
rights for
SBA/USDA
loans Securities
Available-
for-Sale Three Months Ended September 30, Balance at beginning of period $ 11,856 $ 16,091 $ 6,640 $ 6,499 $ 810 $ 2,657 $ 7,531 $ 4,615 $ 500 Additions - - 770 846 - - 16 752 - Sales and settlements (658 ) (909 ) (209 ) (118 ) - (204 ) (483 ) (126 ) - Other comprehensive income - - - - - - - - - Amounts included in earnings -
fair value adjustments (80 ) 163 (134 ) (301 ) - 2,412 2,529 (141 ) - Transfers between valuation levels, net - - - - - - 22 - - Balance at end of period $ 11,118 $ 15,345 $ 7,067 $ 6,926 $ 810 $ 4,865 $ 9,615 $ 5,100 $ 500 Nine Months Ended September 30, Balance at beginning of period $ 11,777 $ 16,347 $ 5,752 $ - $ 675 $ 9,418 $ 15,794 $ 3,712 $ 750 Transfer from amortization
method to fair value - - - 5,070 - - - - - Additions - - 1,991 2,659 - - 16 1,852 - Sales and settlements (1,744 ) (2,423 ) (508 ) (232 ) - (204 ) (483 ) (297 ) - Other comprehensive income - - - - 135 - - - (250 ) Amounts included in earnings -
fair value adjustments 1,085 1,421 (168 ) (571 ) - (4,349 ) (5,734 ) (167 ) - Transfers between valuation levels, net - - - - - - 22 - - Balance at end of period $ 11,118 $ 15,345 $ 7,067 $ 6,926 $ 810 $ 4,865 $ 9,615 $ 5,100 $ 500 2018 2017 Derivative
Asset Derivative
Liability Servicing
rights for
SBA/USDA
loans Residential
mortgage
servicing
rights Securities
Available-
for-SaleThree Months Ended June 30, Balance at beginning of period $ 13,877 $ 17,788 $ 7,470 $ 9,718 $ 900 $ 12,649 $ 16,580 $ 5,997 $ 5,971 $ 675 Additions — — 613 1,182 — — — 668 947 — Sales and settlements — — (316 ) (126 ) — (702 ) (964 ) (36 ) (74 ) — Other comprehensive income — — — — 90 — — — — 135 Amounts included in earnings - fair value adjustments 633 578 (258 ) 27 — (91 ) 475 11 (345 ) — Balance at end of period $ 14,510 $ 18,366 $ 7,509 $ 10,801 $ 990 $ 11,856 $ 16,091 $ 6,640 $ 6,499 $ 810 Six Months Ended June 30, Balance at beginning of period $ 12,207 $ 16,744 $ 7,740 $ 8,262 $ 900 $ 11,777 $ 16,347 $ 5,752 $ — $ 675 Business combinations — — (354 ) — — — — — — — Transfer from amortization method to fair value — — — — — — — — 5,070 — Additions — — 1,092 2,108 — — — 1,221 1,813 — Sales and settlements (1,029 ) (1,347 ) (407 ) (206 ) — (1,086 ) (1,514 ) (299 ) (114 ) — Other comprehensive income — — — — 90 — — — — 135 Amounts included in earnings - fair value adjustments 3,332 2,969 (562 ) 637 — 1,165 1,258 (34 ) (270 ) — Balance at end of period $ 14,510 $ 18,366 $ 7,509 $ 10,801 $ 990 $ 11,856 $ 16,091 $ 6,640 $ 6,499 $ 810 Fair Value Weighted Average Level 3 Assets September 30,
2017 December 31,
2016 Valuation
Technique Unobservable Inputs September 30,
2017 December 31,
2016 Servicing rights for $ 7,067 $ 5,752 Discounted Discount rate 12.3 % 11.0 % SBA/USDA loans cash flow Prepayment rate 7.85 % 7.12 % Residential mortgage 6,926 - Discounted Discount rate 10.0 % N/A servicing rights cash flow Prepayment rate 10.8 % N/A Corporate bonds 810 675 Indicative bid provided by a broker Multiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the company N/A N/A Derivative assets - mortgage 1,193 1,552 Internal model Pull through rate 80 % 80 % Derivative assets - other 9,925 10,225 Dealer priced Dealer priced N/A N/A Derivative liabilities - risk 22 26 Internal model Probable exposure rate .34 % .35 % participations Probability of default rate 1.80 % 1.80 % Derivative liabilities - other 15,323 16,321 Dealer priced Dealer priced N/A N/A Fair Value Weighted Average Level 3 Assets and Liabilities June 30, 2018 December 31, 2017 Valuation Technique June 30, 2018 December 31, 2017 Unobservable Inputs Servicing rights for SBA/USDA loans $ 7,509 $ 7,740 Discounted cash flow Discount rate 12.7 % 12.5 % Prepayment rate 10.1 8.3 Residential mortgage servicing rights 10,801 8,262 Discounted cash flow Discount rate 10.0 10.0 Prepayment rate 8.6 9.5 Corporate bonds 990 900 Indicative bid provided by a broker Multiple factors, including but not limited to, current operations, financial condition, cash flows, and recently executed financing transactions related to the company N/A N/A Derivative assets - mortgage 1,764 1,150 Internal model Pull through rate 81.1 80.0 Derivative assets - other 12,746 11,057 Dealer priced Dealer priced N/A N/A Derivative liabilities - risk participations 8 20 Internal model Probable exposure rate 0.5 0.4 Probability of default rate 1.8 1.8 Derivative liabilities - other 18,358 16,724 Dealer priced Dealer priced N/A N/A SeptemberJune 30, 2018, mortgage loans held for sale for which the fair value option was elected had an aggregate fair value and outstanding principal balance of $34.8 million and $33.7 million, respectively. At December 31, 2017, mortgage loans held for sale for which the fair value option was elected had an aggregate fair value and outstanding principal balance of $30.1$26.3 million and $29.1 million, respectively. At December 31, 2016, mortgage loans held for sale for which the fair value option was elected had an aggregate fair value and outstanding principal balance of $27.9 million and $27.6$25.4 million, respectively. Interest income on these loans is calculated based on the note rate of the loan and is recorded in interest revenue. During the three and ninesix months ended SeptemberJune 30, 2017, net gains resulting from2018, changes in fair value of these loans resulted in net gains of $264,000$326,000 and $708,000,$254,000, respectively. During the three and six months ended June 30, 2017, changes in fair value of these loans resulted in net gains of $192,000 and $444,000, respectively, which were recorded in mortgage loan and other related fees. These changes in fair value were mostly offset by hedging activities. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk. During the three and nine months ended September 30, 2016, net gains resulting from changes in fair value of these loans of $11,000 were recorded in mortgage loan and other related fees.36UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIESNotes to Consolidated Financial StatementsSeptemberJune 30, 20172018 and December 31, 2016,2017, for which a nonrecurring fair value adjustment was recorded during the year-to-date periods presented(in thousands). Level 1 Level 2 Level 3 Total September 30, 2017 Loans $ - $ - $ 8,843 $ 8,843 December 31, 2016 Loans $ - $ - $ 7,179 $ 7,179 Level 1 Level 2 Level 3 Total June 30, 2018 Loans $ — $ — $ 6,570 $ 6,570 December 31, 2017 Loans $ — $ — $ 6,905 $ 6,905 37UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements Carrying Fair Value Level Amount Level 1 Level 2 Level 3 Total September 30, 2017 Assets: Securities held to maturity $ 306,741 $ - $ 310,446 $ - $ 310,446 Loans, net 7,144,332 - - 7,051,886 7,051,886 Mortgage loans held for sale 199 - 205 - 205 Liabilities: Deposits 9,127,384 - 9,128,990 - 9,128,990 Federal Home Loan Bank advances 494,484 - 494,411 - 494,411 Long-term debt 135,707 - - 136,824 136,824 December 31, 2016 Assets: Securities held to maturity $ 329,843 $ - $ 333,170 $ - $ 333,170 Loans, net 6,859,214 - - 6,824,229 6,824,229 Mortgage loans held for sale 1,987 - 2,018 - 2,018 Residential mortgage servicing rights 4,372 - - 5,175 5,175 Liabilities: Deposits 8,637,558 - 8,635,811 - 8,635,811 Federal Home Loan Bank advances 709,209 - 709,174 - 709,174 Long-term debt 175,078 - - 175,750 175,750 Carrying Fair Value Level Amount Level 1 Level 2 Level 3 Total June 30, 2018 Assets: Securities held to maturity $ 297,569 $ — $ 291,463 $ — $ 291,463 Loans and leases, net 8,159,200 — — 8,132,734 8,132,734 Liabilities: Deposits 9,966,088 — 9,958,439 — 9,958,439 Federal Home Loan Bank advances 560,000 — 559,979 — 559,979 Long-term debt 308,434 — — 321,424 321,424 December 31, 2017 Assets: Securities held to maturity $ 321,094 $ — $ 321,276 $ — $ 321,276 Loans, net 7,676,658 — — 7,674,460 7,674,460 Loans held for sale 6,482 — 6,514 — 6,514 Liabilities: Deposits 9,807,697 — 9,809,264 — 9,809,264 Federal Home Loan Bank advances 504,651 — 504,460 — 504,460 Long-term debt 120,545 — — 123,844 123,844 manymost cases, collateral or other security is required to support financial instruments with credit risk. September 30, December 31, 2017 2016 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 1,793,538 $ 1,542,186 Letters of credit 26,763 26,862 June 30, 2018 December 31, 2017 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 2,047,081 $ 1,910,777 Letters of credit 26,396 28,075 SeptemberJune 30, 2017,2018, the Bank had invested $4.13 million in these limited partnerships and had committed to fund an additional $5.37$9.16 million related to future capital calls.38UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements September 30, December 31, 2017 2016 Core deposit intangible $ 54,822 $ 51,342 Less: accumulated amortization (39,986 ) (37,145 ) Net core deposit intangible 14,836 14,197 Noncompete agreement 2,236 - Less: accumulated amortization (244 ) - Net noncompete agreement 1,992 - Total intangibles subject to amortization, net 16,828 14,197 Goodwill 165,888 142,025 Total goodwill and other intangible assets, net $ 182,716 $ 156,222 June 30, 2018 December 31, 2017 Core deposit intangible $ 62,652 $ 62,652 Less: accumulated amortization (43,786 ) (41,229 ) Net core deposit intangible 18,866 21,423 Noncompete agreements 3,144 3,144 Less: accumulated amortization (1,948 ) (761 ) Net noncompete agreements 1,196 2,383 Total intangibles subject to amortization, net 20,062 23,806 Goodwill 307,112 220,591 Total goodwill and other intangible assets, net $ 327,174 $ 244,397 For the Three Months Ended September 30, For the Nine Months Ended September 30, Goodwill, net of Goodwill, net of Accumulated Accumulated Accumulated Accumulated Impairment Impairment Impairment Impairment Goodwill Losses Losses Goodwill Losses Losses 2017 Balance, beginning of period $ 447,615 $ (305,590 ) $ 142,025 $ 447,615 $ (305,590 ) $ 142,025 Acquisition of HCSB 23,863 - 23,863 23,863 - 23,863 Balance, end of period $ 471,478 $ (305,590 ) $ 165,888 $ 471,478 $ (305,590 ) $ 165,888 2016 Balance, beginning of period $ 436,902 $ (305,590 ) $ 131,312 $ 436,202 $ (305,590 ) $ 130,612 Acquisition of Tidelands 10,713 - 10,713 10,713 - 10,713 Measurement period adjustments - - - 700 - 700 Balance, end of period $ 447,615 $ (305,590 ) $ 142,025 $ 447,615 $ (305,590 ) $ 142,025 For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 Goodwill Accumulated Impairment Losses Goodwill, net of Accumulated Impairment Losses Goodwill Accumulated Impairment Losses Goodwill, net of Accumulated Impairment Losses Balance, beginning of period $ 612,009 $ (305,590 ) $ 306,419 $ 526,181 $ (305,590 ) $ 220,591 Acquisition of NLFC 390 — 390 87,379 — 87,379 Measurement period adjustments- FOFN and HCSB 303 — 303 (858 ) — (858 ) Balance, end of period $ 612,702 $ (305,590 ) $ 307,112 $ 612,702 $ (305,590 ) $ 307,112 2017 Balance, beginning of period $ 447,615 $ (305,590 ) $ 142,025 $ 447,615 $ (305,590 ) $ 142,025 Balance, end of period $ 447,615 $ (305,590 ) $ 142,025 $ 447,615 $ (305,590 ) $ 142,025 Year Remainder of 2017 $ 1,384 2018 4,810 2019 3,391 2020 2,272 2021 1,631 Thereafter 3,340 Total $ 16,828 39 Year Remainder of 2018 $ 3,102 2019 4,551 2020 3,315 2021 2,557 2022 1,982 Thereafter 4,555 Total $ 20,062 June 30, 2018 December 31, 2017 Interest Rate Obligations of the Bank and its Subsidiaries: NER 15-1 Class C notes $ 7,025 $ — 2015 2019 n/a 4.500% NER 15-1 Class D notes 3,421 — 2015 2021 n/a 5.750% NER 16-1 Class A-2 notes 43,912 — 2016 2021 n/a 2.200% NER 16-1 Class B notes 25,489 — 2016 2021 n/a 3.220% NER 16-1 Class C notes 6,319 — 2016 2021 n/a 5.050% NER 16-1 Class D notes 3,213 — 2016 2023 n/a 7.870% Total securitized notes payable 89,379 — Obligations of the Holding Company: 2022 senior debentures 50,000 50,000 2015 2022 2020 5.000% through August 13, 2020, 3-month LIBOR plus 3.814% thereafter 2027 senior debentures 35,000 35,000 2015 2027 2025 5.500% through August 13, 2025 3-month LIBOR plus 3.71% thereafter Total senior debentures 85,000 85,000 2028 subordinated debentures 100,000 — 2018 2028 2023 4.500% through January 30, 2023, 3-month LIBOR plus 2.12% thereafter 2025 subordinated debentures 11,500 11,500 2015 2025 2020 6.250% Total subordinated debentures 111,500 11,500 Southern Bancorp Capital Trust I 4,382 4,382 2004 2034 2009 Prime + 1.00% United Community Statutory Trust III 1,238 1,238 2008 2038 2013 Prime + 3.00% Tidelands Statutory Trust I 8,248 8,248 2006 2036 2011 3-month LIBOR plus 1.38% Tidelands Statutory Trust II 6,186 6,186 2008 2038 2013 3-month LIBOR plus 5.075% Four Oaks Statutory Trust I 12,372 12,372 2006 2036 2011 3-month LIBOR plus 1.35% Total trust preferred securities 32,426 32,426 Less discount (9,871 ) (8,381 ) Total long-term debt $ 308,434 $ 120,545 16 –17 - Subsequent EventsOctober 15, 2017, United paid off $35 million of maturing long-term debt that had an interest rate of 9%. On November 3, 2017, United'sAugust 1, 2018, United’s Board of Directors approved a regular quarterly cash dividend of ten cents$0.15 per common share. The dividend is payable JanuaryOctober 5, 2018, to shareholders of record on DecemberSeptember 15, 2017.Four Oaks Fincorp, Inc.On November 1, 2017, United completed its previously announced acquisition of Four Oaks Fincorp, Inc. (“FOFN”) and its wholly-owned bank subsidiary, Four Oaks Bank & Trust Company. As of June 30, 2017, FOFN had total assets of $740 million, loans of $498 million and deposits of $560 million. Four Oaks Bank & Trust Company, which operated 14 banking offices in the Raleigh, North Carolina metropolitan statistical area, will operate under the Four Oaks Bank & Trust Company brand until the system conversions are completed in the second quarter of 2018, at which time it will begin to operate as United Community Bank.Under the terms of the merger agreement, FOFN shareholders received .6178 shares of United common stock and $1.90 for each share of FOFN common stock, or an aggregate of approximately $128 million based on United’s closing price of $27.42 on October 31, 2017.The acquisition will be accounted for as a business combination, subject to the provisions of ASC 805-10-50,Business Combinations. Due to the timing of the acquisition, United is currently in the process of completing the purchase accounting and has not made all of the remaining disclosures required by ASC 805-10-50, such as the fair value of assets acquired and supplemental pro forma information, which will be disclosed in subsequent filings.
2018.40Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations20162017 as well as the following factors:·the condition of the general business and economic environment;·the results of our internal credit stress tests may not accurately predict the impact on our financial condition if the economy were to deteriorate;·our ability to maintain profitability;·our ability to fully realize the balance of our net deferred tax asset, including net operating loss carryforwards;·the impact of lower federal income tax rates on the carrying amount of our deferred tax asset;·the risk that we may be required to increase the valuation allowance on our net deferred tax asset in future periods;·the condition of the banking system and financial markets;·our ability to raise capital;·our ability to maintain liquidity or access other sources of funding;·changes in the cost and availability of funding;·the success of the local economies in which we operate;·our lack of geographic diversification;·our concentrations of residential and commercial construction and development loans and commercial real estate loans are subject to unique risks that could adversely affect our earnings;·changes in prevailing interest rates may negatively affect our net income and the value of our assets and other interest rate risks;·our accounting and reporting policies;·if our allowance for loan losses is not sufficient to cover actual loan losses;·losses due to fraudulent and negligent conduct of our loan customers, third party service providers or employees;·risks related to our communications and information systems, including risks with respect to cybersecurity breaches;·our reliance on third parties to provide key components of our business infrastructure and services required to operate our business;·competition from financial institutions and other financial service providers;·risks with respect to our ability to successfully expand and complete acquisitions and integrate businesses and operations that are acquired;·if the conditions in the stock market, the public debt market and other capital markets deteriorate;·the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and related regulations;·changes in laws and regulations or failures to comply with such laws and regulations;·changes in regulatory capital and other requirements;·the costs and effects of litigation, examinations, investigations, or similar matters, or adverse facts and developments related thereto;·regulatory or judicial proceedings, board resolutions, informal memorandums of understanding or formal enforcement actions imposed by regulators that may occur;·changes in tax laws, regulations and interpretations or challenges to our income tax provision; and·our ability to maintain effective internal controls over financial reporting and disclosure controls and procedures.41theUnited’s consolidated financial statements and accompanying notes.SeptemberJune 30, 2017,2018, United had total consolidated assets of $11.1$12.4 billion, total loans of $7.20$8.22 billion, total deposits of $9.13$9.97 billion, and shareholders’ equity of $1.22$1.38 billion. Georgia bank subsidiary, United Community Bank (the “Bank”), which as of SeptemberJune 30, 2017,2018, operated at 142150 locations throughout the Atlanta-Sandy Springs-Roswell,markets in Georgia, and Gainesville, Georgia metropolitan statistical areas, upstate and coastal South Carolina, north and coastal Georgia, western North Carolina, and east Tennessee, as well as a commercial loan office in Charlotte, North Carolina.On July 1, 2016,Tennessee.its previously announced acquisition of Tidelands Bancshares, Inc. (“Tidelands”the following acquisitions (the “Acquisitions”) and its wholly-owned bank subsidiary, Tidelands Bank. Tidelands’:Entity Date Acquired NLFC Holdings Corp. (“NLFC”) February 1, 2018 Four Oaks Fincorp, Inc. (“FOFN”) November 1, 2017 HCSB Financial Corporation (“HCSB”) July 31, 2017 date.On July 31, 2017, United completed its previously announced acquisition of HCSB Financial Corporation (“HCSB”) and its wholly-owned bank subsidiary, Horry County State Bank. HCSB’s results are included in United’s consolidated results beginning on the acquisition date.$27.9$39.6 million, or $.38$0.49 per diluted share, for the thirdsecond quarter of 2017,2018, compared to net income of $25.9$28.3 million, or $.36$0.39 per diluted share, for the thirdsecond quarter of 2016.2017. For the ninesix months ended SeptemberJune 30, 2017,2018, United reported net income of $79.7$77.3 million, or $1.10$0.97 per diluted share, compared to $73.4$51.8 million, or $1.02$0.72 per diluted share for the first ninesix months of 2016. The increase in earnings per share resulted from an increase in net interest revenue, partially offset by a decrease in fee revenue and an increase in operating expenses.$89.8$108 million for the thirdsecond quarter of 2017,2018, compared to $79.0$85.1 million for the thirdsecond quarter of 2016,2017, primarily due to higher loan volume, much of which resulted from the acquisition of HCSB.Acquisitions. Net interest margin increased to 3.54%3.90% for the three months ended SeptemberJune 30, 20172018 from 3.34%3.47% for the same period in 2016 mostly2017 due to the effect of rising interest rates on floating rate loans and investment securities. Growth in the loan portfolio also led tosecurities and a more favorable earning asset mix.mix due to the Acquisitions. For the ninesix months ended SeptemberJune 30, 2017,2018, net interest revenue was $258$212 million and the net interest margin was 3.49%3.85% compared to net interest revenue of $229$169 million and net interest margin of 3.36%3.46% for the same period in 2016.$1.00$1.80 million for the thirdsecond quarter of 2017,2018, compared to a release of provision of $300,000$800,000 for the thirdsecond quarter of 2016.2017. For the ninesix months ended SeptemberJune 30, 2017,2018, the provision for credit losses was $2.60$5.60 million, compared to a release of provision of $800,000$1.60 million for the same period in 2016.2017. Net charge-offs for the thirdsecond quarter of 20172018 were $1.64$1.36 million, compared to $1.36$1.62 million for the thirdsecond quarter of 2016.As of September 30, 2017,2017. Since credit quality remained stable, the increase in the provision reflects growth in the loan and lease portfolio (collectively referred to as the “loan portfolio” or “loans”), including a $2.29 million increase resulting from including NLFC’s loans in the allowance for loan losses model in the first quarter of 2018. Because NLFC’s loans were recorded at a premium, the allowance for loan losses model required us to establish an allowance for loan losses sufficient to cover estimated credit losses inherent in the NLFC loan portfolio.$58.6$61.1 million, or .81%0.74% of loans, compared to $61.4$58.9 million, or .89%0.76% of loans, at December 31, 20162017 reflecting continuedstable asset quality improvement and the effect of loans acquired through a business combination which are recorded at fair value with credit losses reflected in the value rather than in the allowance for loan losses.quality. Nonperforming assets of $25.7$24.4 million were .23%0.20% of total assets at SeptemberJune 30, 2017,2018, down from .28%0.23% at December 31, 2016 primarily due to sales of foreclosed properties.2017. During the thirdsecond quarter of 2017, $7.962018, $3.61 million in loans were placed on nonaccrual compared with $6.68$8.11 million in the thirdsecond quarter of 2016.Fee revenue2017.$20.6$23.3 million for the thirdsecond quarter of 20172018 was down $5.79,$345,000, or 22%1%, from the thirdsecond quarter of 2016.2017. Service charges and fees decreased 24%18% compared to thirdthe second quarter of 20162017 due mainly to the effect of the Durbin Amendment of the Dodd-Frank Act (the “Durbin Amendment”), which took effect for United in the third quarter of 2017 and limited the amount of interchange fees United could earncharged on debit card transactions. Decreases in service charges and fees were offset by increases in other noninterest income comprising of volume driven increases in miscellaneous banking fees, fee revenues from the equipment finance business, which came through acquisition of NLFC, and gains on extinguishment of debt. Mortgage fees of $5.31 million for the second quarter of 2018 increased from $4.81 million in the second quarter of 2017. The increase was due to United’s emphasis on growing its mortgage business by recruiting lenders in metropolitan markets. For the first ninesix months of 2017, fee revenue of $66.3 million decreased $2.13 million, or 3%, from2018, total noninterest income remained relatively consistent compared to the same period in 2016, primarilyof 2017 due to the same factors that affecteddecrease in service charges and fees and increase in securities losses being offset by increases in mortgage fees and other noninterest income, including gains on derivative cancellations recognized in the quarterly results.thirdsecond quarter and first nine months of 2017, operating2018, noninterest expenses of $65.7$76.9 million and $192 million, respectively, were up $1.65 million and $11.8increased $13.6 million from the same periodssecond quarter of 2016,2017, primarily due to the addition of HCSB and (fornoninterest expenses related to the year to date period) Tidelands operating expenses since acquisition.Acquisitions. Salaries and benefits expense increased $1.55$8.03 million from thirdsecond quarter 2016 and $8.94$14.2 million from the first nine monthshalf of 2016, also2017, mostly due to the addition of HCSBAcquisitions and Tidelandsinvestment in additional staff and new teams to expand the Commercial Banking Solutions area as well as higher incentives and commissionsincentive compensation in connection with increased lending activities and improvement in earnings performance.42Recent DevelopmentsOn November 1, 2017, United completed its previously announced acquisition of Four Oaks Fincorp, Inc. (“FOFN”) and its wholly-owned bank subsidiary, Four Oaks Bank & Trust Company. As of June 30, 2017, FOFN had total assets of $740 million, loans of $498 million and deposits of $560 million. Four Oaks Bank & Trust Company, which operated 14 banking offices in the Raleigh, North Carolina metropolitan statistical area, will operate under the Four Oaks Bank & Trust Company brand until the system conversions are completed in the second quarter of 2018, at which time it will begin to operate as United Community Bank.Under the terms of the merger agreement, FOFN shareholders received .6178 shares of United common stock and $1.90 for each share of FOFN common stock, or an aggregate of approximately $128 million based on United’s closing price of $27.42 on October 31, 2017. assets,” “tangible equity to assets,” “average tangible common equity to average assets,” “tangible common equity to assets” and “tangible common equity to risk-weighted assets.” In addition, management presents non-GAAP operating performance measures, which exclude merger-related and other items that are not part of United’s ongoing business operations. Operating performance measures include “expenses – operating,” “net income – operating,” “net income available to common shareholders – operating,” “diluted net income per common share – operating,” “return on common equity – operating,” “return on tangible common equity – operating,” “return on assets – operating,” “dividend payout ratio – operating” and “efficiency ratio – operating.” Management has developed internal processespolicies and procedures to accurately capture and account for merger-related and other charges and those charges are reviewed with the audit committee of United’s Board of Directors each quarter. Management uses these non-GAAP measures because it believes they may provide useful supplemental information for evaluating United’s operations and performance over periods of time, as well as in managing and evaluating United’s business and in discussions about United’s operations and performance. Management believes these non-GAAP measures may also provide users of United’s financial information with a meaningful measure for assessing United’s financial results and credit trends, as well as a comparison to financial results for prior periods. These non-GAAP measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP and are not necessarily comparable to other similarly titled measures used by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included in the table on page 45.$27.9$77.3 million for the third quarter of 2017. This compared to net income of $25.9$51.8 million for the same period in 2016. For the third quarter of 2017, diluted earnings per common share were $.38 compared to $.36 for the third quarter of 2016. For the nine months ended September 30, 2017, United reported net income of $79.7 million compared to net income of $73.4 million for the same period in 2016.$30.2$42.4 million and $87.9$82.1 million, respectively, for the thirdsecond quarter and first nine monthshalf of 2017,2018, compared to $27.8$29.4 million and $77.8$57.6 million, respectively, for the same periods in 2016.2017. For the thirdsecond quarter and first half of 2018, operating net income excludes merger-related and branch closure charges and a deferred tax asset impairment charge resulting from Georgia lowering its corporate income tax rate, which net of tax, totaled $2.75 million and $4.77 million, respectively. For the second quarter of 2017, operating net income excludes merger-related charges and impairmentexecutive retirement charges, on surplus bank properties, which, net of the associated income tax benefit, totaled $2.27of $1.16 million. For the first nine monthshalf of 2017, operating net income excludes merger-related charges, impairment charges on surplus bank properties,and executive retirement charges and the release from accumulated other comprehensive income of the disproportionate tax effect related to cash flow hedges, which, net of tax, totaled $8.12 million. For the third quarter and first nine months of 2016, operating net income excludes merger-related charges, which, net of tax, totaled $1.96$2.45 million and $4.34$3.40 million, respectively.43UNITED COMMUNITY BANKS, INC.Table 1 - Financial HighlightsSelected Financial Information Third For the Nine 2017 2016 Quarter Months Ended YTD Third Second First Fourth Third 2017-2016 September 30, 2017-2016 (in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter Change 2017 2016 Change INCOME SUMMARY Interest revenue $ 98,839 $ 93,166 $ 90,958 $ 87,778 $ 85,439 $ 282,963 $ 247,242 Interest expense 9,064 8,018 7,404 6,853 6,450 24,486 18,383 Net interest revenue 89,775 85,148 83,554 80,925 78,989 14 % 258,477 228,859 13 % Provision for credit losses 1,000 800 800 - (300 ) 2,600 (800 ) Fee revenue 20,573 23,685 22,074 25,233 26,361 (22 ) 66,332 68,464 (3 ) Total revenue 109,348 108,033 104,828 106,158 105,650 4 322,209 298,123 8 Expenses 65,674 63,229 62,826 61,321 64,023 3 191,729 179,968 7 Income before income tax expense 43,674 44,804 42,002 44,837 41,627 5 130,480 118,155 10 Income tax expense 15,728 16,537 18,478 17,616 15,753 - 50,743 44,720 13 Net income 27,946 28,267 23,524 27,221 25,874 8 79,737 73,435 9 Merger-related and other charges 3,420 1,830 2,054 1,141 3,152 7,304 6,981 Income tax benefit of merger-related and other charges (1,147 ) (675 ) (758 ) (432 ) (1,193 ) (2,580 ) (2,642 ) Impairment of deferred tax asset on canceled non-qualified stock options - - - 976 - - - Release of disproportionate tax effects lodged in OCI - - 3,400 - - 3,400 - Net income - operating(1) $ 30,219 $ 29,422 $ 28,220 $ 28,906 $ 27,833 9 $ 87,861 $ 77,774 13 PERFORMANCE MEASURES Per common share: Diluted net income - GAAP $ .38 $ .39 $ .33 $ .38 $ .36 6 $ 1.10 $ 1.02 8 Diluted net income - operating (1) .41 .41 .39 .40 .39 5 1.21 1.08 12 Cash dividends declared .10 .09 .09 .08 .08 .28 .22 Book value 16.50 15.83 15.40 15.06 15.12 9 16.50 15.12 9 Tangible book value(3) 14.11 13.74 13.30 12.95 13.00 9 14.11 13.00 9 Key performance ratios: Return on common equity - GAAP(2)(4) 9.22 % 9.98 % 8.54 % 9.89 % 9.61 % 9.26 % 9.25 % Return on common equity - operating(1)(2)(4) 9.97 10.39 10.25 10.51 10.34 10.20 9.79 Return on tangible common equity - operating(1)(2)(3)(4) 11.93 12.19 12.10 12.47 12.45 12.07 11.64 Return on assets - GAAP(4) 1.01 1.06 .89 1.03 1.00 .99 .99 Return on assets - operating(1)(4) 1.09 1.10 1.07 1.10 1.08 1.09 1.05 Dividend payout ratio - GAAP 26.32 23.08 27.27 21.05 22.22 25.45 21.57 Dividend payout ratio - operating(1) 24.39 21.95 23.08 20.00 20.51 23.14 20.37 Net interest margin (fully taxable equivalent)(4) 3.54 3.47 3.45 3.34 3.34 3.49 3.36 Efficiency ratio - GAAP 59.27 57.89 59.29 57.65 60.78 58.81 60.56 Efficiency ratio - operating (1) 56.18 56.21 57.35 56.58 57.79 56.57 58.21 Average equity to average assets 10.86 10.49 10.24 10.35 10.38 10.54 10.60 Average tangible equity to average assets(3) 9.45 9.23 8.96 9.04 8.98 9.21 9.27 Average tangible common equity to average assets(3) 9.45 9.23 8.96 9.04 8.98 9.21 9.24 Tangible common equity to risk-weighted assets(3) 12.80 12.44 12.07 11.84 12.22 12.80 12.22 ASSET QUALITY Nonperforming loans $ 22,921 $ 23,095 $ 19,812 $ 21,539 $ 21,572 6 $ 22,921 $ 21,572 6 Foreclosed properties 2,736 2,739 5,060 7,949 9,187 (70 ) 2,736 9,187 (70 ) Total nonperforming assets (NPAs) 25,657 25,834 24,872 29,488 30,759 (17 ) 25,657 30,759 (17 ) Allowance for loan losses 58,605 59,500 60,543 61,422 62,961 (7 ) 58,605 62,961 (7 ) Net charge-offs 1,635 1,623 1,679 1,539 1,359 20 4,937 5,227 (6 ) Allowance for loan losses to loans .81 % .85 % .87 % .89 % .94 % .81 % .94 % Net charge-offs to average loans(4) .09 .09 .10 .09 .08 .09 .11 NPAs to loans and foreclosed properties .36 .37 .36 .43 .46 .36 .46 NPAs to total assets .23 .24 .23 .28 .30 .23 .30 AVERAGE BALANCES($ in millions) Loans $ 7,149 $ 6,980 $ 6,904 $ 6,814 $ 6,675 7 $ 7,012 $ 6,278 12 Investment securities 2,800 2,775 2,822 2,690 2,610 7 2,799 2,692 4 Earning assets 10,133 9,899 9,872 9,665 9,443 7 9,969 9,120 9 Total assets 10,980 10,704 10,677 10,484 10,281 7 10,788 9,909 9 Deposits 8,913 8,659 8,592 8,552 8,307 7 8,723 8,051 8 Shareholders’ equity 1,193 1,123 1,093 1,085 1,067 12 1,137 1,051 8 Common shares - basic(thousands) 73,151 71,810 71,700 71,641 71,556 2 72,060 71,992 - Common shares - diluted(thousands) 73,162 71,820 71,708 71,648 71,561 2 72,071 71,996 - AT PERIOD END($ in millions) Loans $ 7,203 $ 7,041 $ 6,965 $ 6,921 $ 6,725 7 $ 7,203 $ 6,725 7 Investment securities 2,847 2,787 2,767 2,762 2,560 11 2,847 2,560 11 Total assets 11,129 10,837 10,732 10,709 10,298 8 11,129 10,298 8 Deposits 9,127 8,736 8,752 8,638 8,442 8 9,127 8,442 8 Shareholders’ equity 1,221 1,133 1,102 1,076 1,079 13 1,221 1,079 13 Common shares outstanding(thousands) 73,403 70,981 70,973 70,899 70,861 4 73,403 70,861 4 UNITED COMMUNITY BANKS, INC. Table 1 - Financial Highlights Selected Financial Information 2018 2017 Second Quarter 2018 - 2017 Change For the Six Months Ended June 30, YTD 2018 - 2017 Change (in thousands, except per share data) Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter 2018 2017 INCOME SUMMARY Interest revenue $ 122,215 $ 115,290 $ 106,757 $ 98,839 $ 93,166 $ 237,505 $ 184,124 Interest expense 13,739 12,005 9,249 9,064 8,018 25,744 15,422 Net interest revenue 108,476 103,285 97,508 89,775 85,148 27 % 211,761 168,702 26 % Provision for credit losses 1,800 3,800 1,200 1,000 800 5,600 1,600 Noninterest income 23,340 22,396 21,928 20,573 23,685 (1 ) 45,736 45,759 — Total revenue 130,016 121,881 118,236 109,348 108,033 20 251,897 212,861 18 Expenses 76,850 73,475 75,882 65,674 63,229 22 150,325 126,055 19 Income before income tax expense 53,166 48,406 42,354 43,674 44,804 19 101,572 86,806 17 Income tax expense 13,532 10,748 54,270 15,728 16,537 (18 ) 24,280 35,015 (31 ) Net income (loss) 39,634 37,658 (11,916 ) 27,946 28,267 40 77,292 51,791 49 Merger-related and other charges 2,873 2,646 7,358 3,420 1,830 5,519 3,884 Income tax benefit of merger-related and other charges (121 ) (628 ) (1,165 ) (1,147 ) (675 ) (749 ) (1,433 ) Impact of remeasurement of deferred tax asset resulting from 2017 Tax Cuts and Jobs Act — — 38,199 — — — — Release of disproportionate tax effects lodged in OCI — — — — — — 3,400 $ 42,386 $ 39,676 $ 32,476 $ 30,219 $ 29,422 44 $ 82,062 $ 57,642 42 PERFORMANCE MEASURES Per common share: Diluted net income (loss) - GAAP $ 0.49 $ 0.47 $ (0.16 ) $ 0.38 $ 0.39 26 $ 0.97 $ 0.72 35 0.53 0.50 0.42 0.41 0.41 29 1.03 0.80 29 Cash dividends declared 0.15 0.12 0.10 0.10 0.09 67 0.27 0.18 50 Book value 17.29 17.02 16.67 16.50 15.83 9 17.29 15.83 9 13.25 12.96 13.65 14.11 13.74 (4 ) 13.25 13.74 (4 ) Key performance ratios: 11.20 % 11.11 % (3.57 )% 9.22 % 9.98 % 11.15 % 9.27 % 11.97 11.71 9.73 9.97 10.39 11.84 10.32 15.79 15.26 11.93 11.93 12.19 15.53 12.15 1.30 1.26 (0.40 ) 1.01 1.06 1.28 0.98 1.39 1.33 1.10 1.09 1.10 1.36 1.09 Dividend payout ratio - GAAP 30.61 25.53 (62.50 ) 26.32 23.08 27.84 25.00 28.30 24.00 23.81 24.39 21.95 26.21 22.50 3.90 3.80 3.63 3.54 3.47 3.85 3.46 Efficiency ratio - GAAP 57.94 57.83 63.03 59.27 57.89 57.89 58.58 55.77 55.75 56.92 56.18 56.21 55.76 56.77 Average equity to average assets 11.21 11.03 11.21 10.86 10.49 11.13 10.36 8.83 8.82 9.52 9.45 9.23 8.82 9.09 8.83 8.82 9.52 9.45 9.23 8.82 9.09 11.36 11.19 12.05 12.80 12.44 11.36 12.44 ASSET QUALITY Nonperforming loans $ 21,817 $ 26,240 $ 23,658 $ 22,921 $ 23,095 (6 ) $ 21,817 $ 23,095 (6 ) Foreclosed properties 2,597 2,714 3,234 2,736 2,739 (5 ) 2,597 2,739 (5 ) Total nonperforming assets (NPAs) 24,414 28,954 26,892 25,657 25,834 (5 ) 24,414 25,834 (5 ) Allowance for loan losses 61,071 61,085 58,914 58,605 59,500 3 61,071 59,500 3 Net charge-offs 1,359 1,501 1,061 1,635 1,623 (16 ) 2,860 3,302 (13 ) Allowance for loan losses to loans 0.74 % 0.75 % 0.76 % 0.81 % 0.85 % 0.74 % 0.85 % 0.07 0.08 0.06 0.09 0.09 0.07 0.10 NPAs to loans and foreclosed properties 0.30 0.35 0.35 0.36 0.37 0.30 0.37 NPAs to total assets 0.20 0.24 0.23 0.23 0.24 0.20 0.24 Loans $ 8,177 $ 7,993 $ 7,560 $ 7,149 $ 6,980 17 $ 8,086 $ 6,942 16 Investment securities 2,802 2,870 2,991 2,800 2,775 1 2,836 2,798 1 Earning assets 11,193 11,076 10,735 10,133 9,899 13 11,135 9,885 13 Total assets 12,213 12,111 11,687 10,980 10,704 14 12,163 10,691 14 Deposits 9,978 9,759 9,624 8,913 8,659 15 9,869 8,626 14 Shareholders’ equity 1,370 1,336 1,310 1,193 1,123 22 1,353 1,108 22 Common shares - basic (thousands) 79,753 79,205 76,768 73,151 71,810 11 79,477 71,798 11 Common shares - diluted (thousands) 79,755 79,215 76,768 73,162 71,820 11 79,487 71,809 11 Loans $ 8,220 $ 8,184 $ 7,736 $ 7,203 $ 7,041 17 $ 8,220 $ 7,041 17 Investment securities 2,834 2,731 2,937 2,847 2,787 2 2,834 2,787 2 Total assets 12,386 12,264 11,915 11,129 10,837 14 12,386 10,837 14 Deposits 9,966 9,993 9,808 9,127 8,736 14 9,966 8,736 14 Shareholders’ equity 1,379 1,357 1,303 1,221 1,133 22 1,379 1,133 22 Common shares outstanding (thousands) 79,138 79,123 77,580 73,403 70,981 11 79,138 70,981 11 OCI and a fourth quarter 2016 deferred tax asset impairment charge related to cancelled non-qualified stock options.OCI. (2) Net income available to common shareholders, which is net ofless preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss).(3) Excludes effect of acquisition related intangibles and associated amortization.(4) Annualized.44UNITED COMMUNITY BANKS, INC.Table 1 (Continued) Non-GAAP Performance Measures ReconciliationSelected Financial Information 2017 2016 For the Nine Months Ended
June 30, Third Second First Fourth Third (in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter 2017 2016 \ \ \ Expense reconciliation Expenses (GAAP) $ 65,674 $ 63,229 $ 62,826 $ 61,321 $ 64,023 $ 191,729 $ 179,968 Merger-related and other charges (3,420 ) (1,830 ) (2,054 ) (1,141 ) (3,152 ) (7,304 ) (6,981 ) Expenses – operating $ 62,254 $ 61,399 $ 60,772 $ 60,180 $ 60,871 $ 184,425 $ 172,987 Net income reconciliation Net income (GAAP) $ 27,946 $ 28,267 $ 23,524 $ 27,221 $ 25,874 $ 79,737 $ 73,435 Merger-related and other charges 3,420 1,830 2,054 1,141 3,152 7,304 6,981 Income tax benefit of merger-related and other charges (1,147 ) (675 ) (758 ) (432 ) (1,193 ) (2,580 ) (2,642 ) Impairment of deferred tax asset on canceled non-qualified stock options - - - 976 - - - Release of disproportionate tax effects lodged in OCI - - 3,400 - - 3,400 - Net income - operating $ 30,219 $ 29,422 $ 28,220 $ 28,906 $ 27,833 $ 87,861 $ 77,774 Diluted income per common share reconciliation Diluted income per common share (GAAP) $ .38 $ .39 $ .33 $ .38 $ .36 $ 1.10 $ 1.02 Merger-related and other charges .03 .02 .01 .01 .03 .06 - Impairment of deferred tax asset on canceled non-qualified stock options - - - .01 - - - Release of disproportionate tax effects lodged in OCI - - .05 - - .05 - Diluted income per common share - operating $ .41 $ .41 $ .39 $ .40 $ .39 $ 1.21 $ 1.02 Book value per common share reconciliation Book value per common share (GAAP) $ 16.50 $ 15.83 $ 15.40 $ 15.06 $ 15.12 $ 16.50 $ 15.12 Effect of goodwill and other intangibles (2.39 ) (2.09 ) (2.10 ) (2.11 ) (2.12 ) (2.39 ) (2.12 ) Tangible book value per common share $ 14.11 $ 13.74 $ 13.30 $ 12.95 $ 13.00 $ 14.11 $ 13.00 Return on tangible common equity reconciliation Return on common equity (GAAP) 9.22 % 9.98 % 8.54 % 9.89 % 9.61 % 9.26 % 9.25 % Merger-related and other charges .75 .41 .47 .26 .73 .55 .54 Impairment of deferred tax asset on canceled non-qualified stock options - - - .36 - - - Release of disproportionate tax effects lodged in OCI - - 1.24 - - .39 - Return on common equity - operating 9.97 10.39 10.25 10.51 10.34 10.20 9.79 Effect of goodwill and other intangibles 1.96 1.80 1.85 1.96 2.11 1.87 1.85 Return on tangible common equity - operating 11.93 % 12.19 % 12.10 % 12.47 % 12.45 % 12.07 % 11.64 % Return on assets reconciliation Return on assets (GAAP) 1.01 % 1.06 % .89 % 1.03 % 1.00 % .99 % .99 % Merger-related and other charges .08 .04 .05 .03 .08 .06 .06 Impairment of deferred tax asset on canceled non-qualified stock options - - - .04 - - - Release of disproportionate tax effects lodged in OCI - - .13 - - .04 - Return on assets - operating 1.09 % 1.10 % 1.07 % 1.10 % 1.08 % 1.09 % 1.05 % Dividend payout ratio reconciliation Dividend payout ratio (GAAP) 26.32 % 23.08 % 27.27 % 21.05 % 22.22 % 25.45 % 21.57 % Merger-related and other charges (1.93 ) (1.13 ) (.98 ) (.54 ) (1.71 ) (1.31 ) (1.20 ) Impairment of deferred tax asset on canceled non-qualified stock options - - - (.51 ) - - - Release of disproportionate tax effects lodged in OCI - - (3.21 ) - - (1.00 ) - Dividend payout ratio - operating 24.39 % 21.95 % 23.08 % 20.00 % 20.51 % 23.14 % 20.37 % Efficiency ratio reconciliation Efficiency ratio (GAAP) 59.27 % 57.89 % 59.29 % 57.65 % 60.78 % 58.81 % 60.56 % Merger-related and other charges (3.09 ) (1.68 ) (1.94 ) (1.07 ) (2.99 ) (2.24 ) (2.35 ) Efficiency ratio - operating 56.18 % 56.21 % 57.35 % 56.58 % 57.79 % 56.57 % 58.21 % Average equity to assets reconciliation Equity to assets (GAAP) 10.86 % 10.49 % 10.24 % 10.35 % 10.38 % 10.54 % 10.60 % Effect of goodwill and other intangibles (1.41 ) (1.26 ) (1.28 ) (1.31 ) (1.40 ) (1.33 ) (1.33 ) Tangible equity to assets 9.45 9.23 8.96 9.04 8.98 9.21 9.27 Effect of preferred equity - - - - - - (.03 ) Tangible common equity to assets 9.45 % 9.23 % 8.96 % 9.04 % 8.98 % 9.21 % 9.24 % Tangible common equity to risk-weighted assets reconciliation Tier 1 capital ratio (Regulatory) 12.27 % 11.91 % 11.46 % 11.23 % 11.04 % 12.27 % 11.04 % Effect of other comprehensive income (.13 ) (.15 ) (.24 ) (.34 ) - (.13 ) - Effect of deferred tax limitation .94 .95 1.13 1.26 1.50 .94 1.50 Effect of trust preferred (.24 ) (.25 ) (.25 ) (.25 ) (.26 ) (.24 ) (.26 ) Basel III intangibles transition adjustment (.04 ) (.02 ) (.03 ) (.06 ) (.06 ) (.03 ) (.06 ) Tangible common equity to risk-weighted assets 12.80 % 12.44 % 12.07 % 11.84 % 12.22 % 12.81 % 12.22 % 45UNITED COMMUNITY BANKS, INC. Table 1 (Continued) - Non-GAAP Performance Measures Reconciliation Selected Financial Information 2018 2017 For the Six Months Ended June 30, Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter 2018 2017 (in thousands, except per share data) Expense reconciliation Expenses (GAAP) $ 76,850 $ 73,475 $ 75,882 $ 65,674 $ 63,229 $ 150,325 $ 126,055 Merger-related and other charges (2,873 ) (2,646 ) (7,358 ) (3,420 ) (1,830 ) (5,519 ) (3,884 ) Expenses - operating $ 73,977 $ 70,829 $ 68,524 $ 62,254 $ 61,399 $ 144,806 $ 122,171 Net income (loss) reconciliation Net income (loss) (GAAP) $ 39,634 $ 37,658 $ (11,916 ) $ 27,946 $ 28,267 $ 77,292 $ 51,791 Merger-related and other charges 2,873 2,646 7,358 3,420 1,830 5,519 3,884 Income tax benefit of merger-related and other charges (121 ) (628 ) (1,165 ) (1,147 ) (675 ) (749 ) (1,433 ) Impact of tax reform on remeasurement of deferred tax asset — — 38,199 — — — — Release of disproportionate tax effects lodged in OCI — — — — — — 3,400 Net income - operating $ 42,386 $ 39,676 $ 32,476 $ 30,219 $ 29,422 $ 82,062 $ 57,642 Diluted income (loss) per common share reconciliation Diluted income (loss) per common share (GAAP) $ 0.49 $ 0.47 $ (0.16 ) $ 0.38 $ 0.39 $ 0.97 $ 0.72 Merger-related and other charges 0.04 0.03 0.08 0.03 0.02 0.06 0.03 Impact of tax reform on remeasurement of deferred tax asset — — 0.50 — — — — Release of disproportionate tax effects lodged in OCI — — — — — — 0.05 Diluted income per common share - operating $ 0.53 $ 0.50 $ 0.42 $ 0.41 $ 0.41 $ 1.03 $ 0.80 Book value per common share reconciliation Book value per common share (GAAP) $ 17.29 $ 17.02 $ 16.67 $ 16.50 $ 15.83 $ 17.29 $ 15.83 Effect of goodwill and other intangibles (4.04 ) (4.06 ) (3.02 ) (2.39 ) (2.09 ) (4.04 ) (2.09 ) Tangible book value per common share $ 13.25 $ 12.96 $ 13.65 $ 14.11 $ 13.74 $ 13.25 $ 13.74 Return on tangible common equity reconciliation Return on common equity (GAAP) 11.20 % 11.11 % (3.57 )% 9.22 % 9.98 % 11.15 % 9.27 % Merger-related and other charges 0.77 0.60 1.86 0.75 0.41 0.69 0.44 Impact of tax reform on remeasurement of deferred tax asset — — 11.44 — — — — Release of disproportionate tax effects lodged in OCI — — — — — — 0.61 Return on common equity - operating 11.97 11.71 9.73 9.97 10.39 11.84 10.32 Effect of goodwill and other intangibles 3.82 3.55 2.20 1.96 1.80 3.69 1.83 Return on tangible common equity - operating 15.79 % 15.26 % 11.93 % 11.93 % 12.19 % 15.53 % 12.15 % Return on assets reconciliation Return on assets (GAAP) 1.30 % 1.26 % (0.40 )% 1.01 % 1.06 % 1.28 % 0.98 % Merger-related and other charges 0.09 0.07 0.20 0.08 0.04 0.08 0.05 Impact of tax reform on remeasurement of deferred tax asset — — 1.30 — — — — Release of disproportionate tax effects lodged in OCI — — — — — — 0.06 Return on assets - operating 1.39 % 1.33 % 1.10 % 1.09 % 1.10 % 1.36 % 1.09 % Dividend payout ratio reconciliation Dividend payout ratio (GAAP) 30.61 % 25.53 % (62.50 )% 26.32 % 23.08 % 27.84 % 25.00 % Merger-related and other charges (2.31 ) (1.53 ) 12.04 (1.93 ) (1.13 ) (1.63 ) (1.00 ) Impact of tax reform on remeasurement of deferred tax asset — — 74.27 — — — — Release of disproportionate tax effects lodged in OCI — — — — — — (1.50 ) Dividend payout ratio - operating 28.30 % 24.00 % 23.81 % 24.39 % 21.95 % 26.21 % 22.50 % Efficiency ratio reconciliation Efficiency ratio (GAAP) 57.94 % 57.83 % 63.03 % 59.27 % 57.89 % 57.89 % 58.58 % Merger-related and other charges (2.17 ) (2.08 ) (6.11 ) (3.09 ) (1.68 ) (2.13 ) (1.81 ) Efficiency ratio - operating 55.77 % 55.75 % 56.92 % 56.18 % 56.21 % 55.76 % 56.77 % Average equity to assets reconciliation Equity to assets (GAAP) 11.21 % 11.03 % 11.21 % 10.86 % 10.49 % 11.13 % 10.36 % Effect of goodwill and other intangibles (2.38 ) (2.21 ) (1.69 ) (1.41 ) (1.26 ) (2.31 ) (1.27 ) Tangible common equity to assets 8.83 % 8.82 % 9.52 % 9.45 % 9.23 % 8.82 % 9.09 % Tangible common equity to risk-weighted assets reconciliation Tier 1 capital ratio (Regulatory) 11.94 % 11.61 % 12.24 % 12.27 % 11.91 % 11.94 % 11.91 % Effect of other comprehensive income (0.57 ) (0.50 ) (0.29 ) (0.13 ) (0.15 ) (0.57 ) (0.15 ) Effect of deferred tax limitation 0.33 0.42 0.51 0.94 0.95 0.33 0.95 Effect of trust preferred (0.34 ) (0.34 ) (0.36 ) (0.24 ) (0.25 ) (0.34 ) (0.25 ) Basel III intangibles transition adjustment — — (0.05 ) (0.04 ) (0.02 ) — (0.02 ) Tangible common equity to risk-weighted assets 11.36 % 11.19 % 12.05 % 12.80 % 12.44 % 11.36 % 12.44 % thirdsecond quarter of 20172018 was $89.8 million.$108 million, compared to $85.1 million for the second quarter of 2017. Taxable equivalent net interest revenue for the thirdsecond quarter of 20172018 was $90.4$109 million, which represents an increase of $11.2$23.4 million from the same period in 2016.2017. The combination of the larger earning asset base from the acquisition of HCSB andAcquisitions, growth in the loan portfolio and a wider net interest margin were responsible for the increase in net interest revenue.$474 million,$1.20 billion, or 7%17%, from the thirdsecond quarter of last year, whilewhich includes the effect of the Acquisitions. The yield on loans increased 3277 basis points, reflecting the effect of rising interest rates on the floating rate loans in the portfolio.Average interest-earning assets for the third quarter of 2017 increased $689 million, or 7%, from the third quarter of 2016, which was due primarily to the increase in loans, includingportfolio and the acquisition of HCSB loans. Average investment securities for the third quarter of 2017 increased $190 millionhigher yielding loans from a year ago, partially due to the HCSB acquisition. The average yield on the taxable investment portfolio increased 19 basis points from a year ago, primarily due to the impact of higher short-term interest rates on the floating rate portion of the securities portfolio as well as accelerated discount accretion on called asset-backed securitiesNLFC and a higher reinvestment rate on maturing fixed rate investments.$6.82$7.49 billion for the thirdsecond quarter of 20172018 increased $196$751 million from the thirdsecond quarter of 2016.2017. Average non-interest-bearing deposits increased $347$458 million from the thirdsecond quarter of 20162017 to $2.84$3.19 billion for the thirdsecond quarter of 2017.2018. The average cost of interest-bearing liabilities for the thirdsecond quarter of 20172018 was .53%0.74% compared to .39%0.48% for the same period in 2016,2017, reflecting higher average rates on money market deposits, NOW deposits, timeinterest-bearing deposits and brokeredshort-term borrowings. Although the fed funds rate has increased 75 basis points since June 30, 2017, United’s cost of interest-bearing deposits has increased only 24 basis points over that same time deposits.net interest rate spread eliminates the effect of non-interest-bearing deposits and gives a direct perspective on the effect of market interest rate movements. The net interest margin is an indication of the profitability of a company’s balance sheet, and is defined as net interest revenue as a percent of average total interest-earning assets, which includes the positive effect of funding a portion of interest-earning assets with non-interest-bearing deposits and stockholders’ equity.thirdsecond quarters of 20172018 and 2016,2017, the net interest spread was 3.37%3.65% and 3.22%3.31%, respectively, while the net interest margin was 3.54%3.90% and 3.34%3.47%, respectively. The increase in the net interest margin reflects the impact of higher short-term interest rates on floating-rate loans and securities which exceededwhile the increase in deposit and other funds pricing on interest-bearing liabilities increased slightly from the prior year.ninesix months of 2017,2018, net interest revenue was $258$212 million, an increase of $29.6$43.1 million, or 13%26%, from the first ninesix months2016.2017. Similarly, fully taxable equivalent net interest revenue for the first ninesix months of 20172018 was $260$213 million, an increase of $30.2$43.2 million, or 13%26%, from the first ninesix months of 2016.2017. Average earning assets increased 9%13% to $9.97$11.1 billion during the first ninesix months of 20172018 compared to the same period a year ago, primarily due to the increase in loans, including the acquisition of HCSB and Tidelands loans.Acquisitions. The yield on earning assets increased 1855 basis points to 3.81%4.31% in the first ninesix months of 20172018 primarily due to higher loan and securities yields. The higher loan portfolio yield reflects the effect of rising interest rates onand changes in portfolio composition, primarily due to the floating rate loans in the portfolio. InvestmentNLFC acquisition. Taxable investment yield increased 163 basis points for the first ninesix months of 20172018 compared to the same period in 2016,2017, which further improved the net interest margin. The rate on interest-bearing liabilities over the same period increased 1023 basis points. The higher yield on interest-earning assets more than offset the higher cost of interest-bearing liabilities and resulted in a 13an 39 basis point increase in the net interest margin from the first nine monthshalf of 20162017 to the first nine monthshalf of 2017.
2018.46Table 2 - Average Consolidated Balance Sheets and Net Interest Analysis For the Three Months Ended SeptemberJune 30, 2017 2016 (dollars in thousands, Average Avg. Average Avg. fully taxable equivalent (FTE)) Balance Interest Rate Balance Interest Rate Assets: Interest-earning assets: Loans, net of unearned income (FTE)(1)(2) $ 7,149,348 $ 80,301 4.46 % $ 6,675,328 $ 69,427 4.14 % Taxable securities(3) 2,695,162 17,204 2.55 2,588,037 15,284 2.36 Tax-exempt securities (FTE)(1)(3) 105,151 1,098 4.18 22,113 219 3.96 Federal funds sold and other interest-earning assets 183,170 883 1.93 157,972 754 1.91 Total interest-earning assets (FTE) 10,132,831 99,486 3.90 9,443,450 85,684 3.61 Non-interest-earning assets: Allowance for loan losses (60,098 ) (63,874 ) Cash and due from banks 103,477 100,775 Premises and equipment 203,579 198,234 Other assets(3) 599,725 602,690 Total assets $ 10,979,514 $ 10,281,275 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $ 1,863,160 700 .15 $ 1,744,473 452 .10 Money market 2,170,148 1,953 .36 1,997,165 1,347 .27 Savings 593,823 34 .02 537,447 43 .03 Time 1,338,786 1,548 .46 1,375,706 833 .24 Brokered time deposits 109,811 322 1.16 162,255 (166 ) (.41 ) Total interest-bearing deposits 6,075,728 4,557 .30 5,817,046 2,509 .17 Federal funds purchased and other borrowings 11,313 36 1.26 42,234 98 .92 Federal Home Loan Bank advances 574,404 1,709 1.18 583,312 1,015 .69 Long-term debt 154,616 2,762 7.09 177,333 2,828 6.34 Total borrowed funds 740,333 4,507 2.42 802,879 3,941 1.95 Total interest-bearing liabilities 6,816,061 9,064 .53 6,619,925 6,450 .39 Non-interest-bearing liabilities: Non-interest-bearing deposits 2,837,378 2,490,019 Other liabilities 133,212 103,859 Total liabilities 9,786,651 9,213,803 Shareholders' equity 1,192,863 1,067,472 Total liabilities and shareholders' equity $ 10,979,514 $ 10,281,275 Net interest revenue (FTE) $ 90,422 $ 79,234 Net interest-rate spread (FTE) 3.37 % 3.22 % Net interest margin (FTE)(4) 3.54 % 3.34 % 2018 2017 (dollars in thousands, fully taxable equivalent (FTE)) Average Balance Interest Average Rate Average Balance Interest Average Rate Assets: Interest-earning assets: $ 8,177,343 $ 103,395 5.07 % $ 6,979,980 $ 74,811 4.30 % 2,651,816 17,229 2.60 2,719,390 17,421 2.56 150,503 1,380 3.67 55,992 584 4.17 Federal funds sold and other interest-earning assets 212,849 674 1.27 143,143 743 2.08 Total interest-earning assets (FTE) 11,192,511 122,678 4.39 9,898,505 93,559 3.79 Non-interest-earning assets: Allowance for loan losses (62,275 ) (61,163 ) Cash and due from banks 133,060 104,812 Premises and equipment 218,517 192,906 731,514 569,435 Total assets $ 12,213,327 $ 10,704,495 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $ 2,071,289 1,303 0.25 $ 1,901,890 635 0.13 Money market 2,214,077 2,583 0.47 2,064,143 1,559 0.30 Savings 678,988 35 0.02 575,960 28 0.02 Time 1,524,124 2,696 0.71 1,274,009 1,136 0.36 Brokered time deposits 300,389 1,502 2.01 111,983 243 0.87 Total interest-bearing deposits 6,788,867 8,119 0.48 5,927,985 3,601 0.24 Federal funds purchased and other borrowings 45,241 198 1.76 37,317 101 1.09 Federal Home Loan Bank advances 335,521 1,636 1.96 594,815 1,464 0.99 Long-term debt 316,812 3,786 4.79 175,281 2,852 6.53 Total borrowed funds 697,574 5,620 3.23 807,413 4,417 2.19 Total interest-bearing liabilities 7,486,441 13,739 0.74 6,735,398 8,018 0.48 Non-interest-bearing liabilities: Non-interest-bearing deposits 3,188,847 2,731,217 Other liabilities 168,417 114,873 Total liabilities 10,843,705 9,581,488 Shareholders' equity 1,369,622 1,123,007 Total liabilities and shareholders' equity $ 12,213,327 $ 10,704,495 Net interest revenue (FTE) $ 108,939 $ 85,541 Net interest-rate spread (FTE) 3.65 % 3.31 % 3.90 % 3.47 % (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 26% in 2018 and 39% , in 2017, 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 gainslosses of $12.6$42.9 million in 20172018 and $30.4$6.58 million in 20162017 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. 47Table 3 - Average Consolidated Balance Sheets and Net Interest Analysis For the NineSix Months Ended SeptemberJune 30, 2017 2016 Average Avg. Average Avg. (dollars in thousands, fully taxable equivalent (FTE)) Balance Interest Rate Balance Interest Rate Assets: Interest-earning assets: Loans, net of unearned income (FTE)(1)(2) $ 7,011,962 $ 227,853 4.34 % $ 6,277,972 $ 196,956 4.19 % Taxable securities(3) 2,731,081 52,058 2.54 2,665,272 47,590 2.38 Tax-exempt securities (FTE)(1)(3) 68,005 2,139 4.19 26,415 735 3.71 Federal funds sold and other interest-earning assets 157,582 2,290 1.94 150,146 2,719 2.41 Total interest-earning assets (FTE) 9,968,630 284,340 3.81 9,119,805 248,000 3.63 Non-interest-earning assets: Allowance for loan losses (60,971 ) (66,142 ) Cash and due from banks 102,529 93,802 Premises and equipment 195,576 187,019 Other assets(3) 582,194 574,870 Total assets $ 10,787,958 $ 9,909,354 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $ 1,907,889 1,932 .14 $ 1,795,372 1,381 .10 Money market 2,100,296 4,938 .31 1,901,903 3,661 .26 Savings 576,927 89 .02 505,337 102 .03 Time 1,292,521 3,499 .36 1,280,503 2,325 .24 Brokered time deposits 106,753 758 .95 194,199 (273 ) (.19 ) Total interest-bearing deposits 5,984,386 11,216 .25 5,677,314 7,196 .17 Federal funds purchased and other borrowings 22,525 177 1.05 29,427 278 1.26 Federal Home Loan Bank advances 616,388 4,603 1.00 506,524 2,731 .72 Long-term debt 168,271 8,490 6.75 168,955 8,178 6.47 Total borrowed funds 807,184 13,270 2.20 704,906 11,187 2.12 Total interest-bearing liabilities 6,791,570 24,486 .48 6,382,220 18,383 .38 Non-interest-bearing liabilities: Non-interest-bearing deposits 2,738,118 2,374,076 Other liabilities 121,672 102,421 Total liabilities 9,651,360 8,858,717 Shareholders' equity 1,136,598 1,050,637 Total liabilities and shareholders' equity $ 10,787,958 $ 9,909,354 Net interest revenue (FTE) $ 259,854 $ 229,617 Net interest-rate spread (FTE) 3.33 % 3.25 % Net interest margin (FTE)(4) 3.49 % 3.36 % 2018 2017 (dollars in thousands, fully taxable equivalent (FTE)) Average Balance Interest Average Rate Average Balance Interest Average Rate Assets: Interest-earning assets: $ 8,085,849 $ 199,784 4.98 % $ 6,942,130 $ 147,552 4.29 % 2,687,200 34,552 2.57 2,749,339 34,854 2.54 148,528 2,689 3.62 49,125 1,041 4.24 Federal funds sold and other interest-earning assets 212,951 1,372 1.29 144,577 1,407 1.95 Total interest-earning assets (FTE) 11,134,528 238,397 4.31 9,885,171 184,854 3.76 Non-interest-earning assets: Allowance for loan losses (60,718 ) (61,414 ) Cash and due from banks 146,697 102,048 Premises and equipment 217,625 191,509 724,488 573,281 Total assets $ 12,162,620 $ 10,690,595 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW $ 2,077,461 2,416 0.23 $ 1,930,624 1,232 0.13 Money market 2,222,304 4,758 0.43 2,064,792 2,985 0.29 Savings 667,431 84 0.03 568,339 55 0.02 Time 1,529,639 4,937 0.65 1,269,005 1,951 0.31 Brokered time deposits 229,766 2,217 1.95 105,199 436 0.84 Total interest-bearing deposits 6,726,601 14,412 0.43 5,937,959 6,659 0.23 Federal funds purchased and other borrowings 61,894 498 1.62 28,225 141 1.01 Federal Home Loan Bank advances 423,137 3,760 1.79 637,728 2,894 0.92 Long-term debt 295,763 7,074 4.82 175,212 5,728 6.59 Total borrowed funds 780,794 11,332 2.93 841,165 8,763 2.10 Total interest-bearing liabilities 7,507,395 25,744 0.69 6,779,124 15,422 0.46 Non-interest-bearing liabilities: Non-interest-bearing deposits 3,142,384 2,687,665 Other liabilities 159,734 115,808 Total liabilities 10,809,513 9,582,597 Shareholders' equity 1,353,107 1,107,998 Total liabilities and shareholders' equity $ 12,162,620 $ 10,690,595 Net interest revenue (FTE) $ 212,653 $ 169,432 Net interest-rate spread (FTE) 3.62 % 3.30 % 3.85 % 3.46 % (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 26% in 2018 and 39% , in 2017, 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 gainslosses of $4.67$35.6 million in 20172018 and $15.1 million$638 thousand in 20162017 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. 48Table 4 - Change in Interest Revenue and Expense on a Taxable Equivalent Basis (in thousands) Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Compared to 2016 Compared to 2016 Increase (decrease) Increase (decrease) Due to Changes in Due to Changes in Volume Rate Total Volume Rate Total Interest-earning assets: Loans (FTE) $ 5,115 $ 5,759 $ 10,874 $ 23,658 $ 7,239 $ 30,897 Taxable securities 650 1,270 1,920 1,196 3,272 4,468 Tax-exempt securities (FTE) 866 13 879 1,297 107 1,404 Federal funds sold and other interest-earning assets 121 8 129 129 (558 ) (429 ) Total interest-earning assets (FTE) 6,752 7,050 13,802 26,280 10,060 36,340 Interest-bearing liabilities: NOW accounts 33 215 248 91 460 551 Money market accounts 125 481 606 409 868 1,277 Savings deposits 4 (13 ) (9 ) 13 (26 ) (13 ) Time deposits (23 ) 738 715 22 1,152 1,174 Brokered deposits 38 450 488 71 960 1,031 Total interest-bearing deposits 177 1,871 2,048 606 3,414 4,020 Federal funds purchased & other borrowings (89 ) 27 (62 ) (59 ) (42 ) (101 ) Federal Home Loan Bank advances (16 ) 710 694 675 1,197 1,872 Long-term debt (385 ) 319 (66 ) (33 ) 345 312 Total borrowed funds (490 ) 1,056 566 583 1,500 2,083 Total interest-bearing liabilities (313 ) 2,927 2,614 1,189 4,914 6,103 Increase in net interest revenue (FTE) $ 7,065 $ 4,123 $ 11,188 $ 25,091 $ 5,146 $ 30,237 Three Months Ended
June 30, 2018 Six Months Ended
June 30, 2018 Compared to 2017 Increase (decrease) Due to Changes in Volume Rate Total Volume Rate Total Interest-earning assets: Loans (FTE) $ 13,960 $ 14,624 $ 28,584 $ 26,298 $ 25,934 $ 52,232 Taxable securities (437 ) 245 (192 ) (795 ) 493 (302 ) Tax-exempt securities (FTE) 875 (79 ) 796 1,820 (172 ) 1,648 Federal funds sold and other interest-earning assets 283 (352 ) (69 ) 534 (569 ) (35 ) Total interest-earning assets (FTE) 14,681 14,438 29,119 27,857 25,686 53,543 Interest-bearing liabilities: NOW accounts 61 607 668 100 1,084 1,184 Money market accounts 120 904 1,024 243 1,530 1,773 Savings deposits 5 2 7 11 18 29 Time deposits 260 1,300 1,560 470 2,516 2,986 Brokered deposits 709 550 1,259 839 942 1,781 Total interest-bearing deposits 1,155 3,363 4,518 1,663 6,090 7,753 Federal funds purchased & other borrowings 25 72 97 236 121 357 Federal Home Loan Bank advances (831 ) 1,003 172 (1,216 ) 2,082 866 Long-term debt 1,843 (909 ) 934 3,180 (1,834 ) 1,346 Total borrowed funds 1,037 166 1,203 2,200 369 2,569 Total interest-bearing liabilities 2,192 3,529 5,721 3,863 6,459 10,322 Increase in net interest revenue (FTE) $ 12,489 $ 10,909 $ 23,398 $ 23,994 $ 19,227 $ 43,221 $1.00$1.8 million and $5.6 million for the third quarter of 2017,three and six months ended June 30, 2018, compared to a release of provision of $300,000 in the third quarter of 2016. The provision for credit losses$800,000 and $1.6 million for the nine months ended September 30, 2017 and 2016 was provision expense of $2.60 million and a release of provision expense of $800,000, respectively.same periods in 2017. The amount of provision recorded in each period was the amount required such that the total allowance for loan losses reflected the appropriate balance, in the estimation of management, sufficient to cover incurred losses in the loan portfolio. In accordance with the accounting guidance for business combinations, there was no allowance for loan losses brought forward on loans acquired from NLFC on February 1, 2018. At June 30, 2018, United included the performing non-impaired loans acquired from NLFC in its general allowance calculation in order to reflect the necessary allowance for incurred losses, which accounted for a majority of the increase in the provision expense. For the threesix months ended SeptemberJune 30, 2017,2018, net loan charge-offs as an annualized percentage of average outstanding loans were .09%0.07% compared to .08%0.10% for the same period in 2016.report on page 54.
report.49Fee Revenuethree and nine months ended September 30, 2017second quarter of 2018 was $20.6$23.3 million, and $66.3 million, respectively, a decrease of $5.79 million,$345,000, or 22%1%, compared to the thirdsecond quarter of 2016 and a decrease of $2.132017. For the six months ended June 30, 2018, noninterest income totaled $45.7 million, or 3%,flat compared to the first nine monthssame period of 2016.2017. The following table presents the components of fee revenuenoninterest income for the periods indicated.Table 5 - Fee RevenueNoninterest Income(in thousands) Three Months Ended Nine Months Ended September 30, Change September 30, Change 2017 2016 Amount Percent 2017 2016 Amount Percent Overdraft fees $ 3,555 $ 3,648 $ (93 ) (3 ) $ 10,273 $ 10,338 $ (65 ) (1 ) ATM and debit card fees 2,810 5,283 (2,473 ) (47 ) 13,734 15,589 (1,855 ) (12 ) Other service charges and fees 1,855 1,888 (33 ) (2 ) 5,518 5,533 (15 ) - Service charges and fees 8,220 10,819 (2,599 ) (24 ) 29,525 31,460 (1,935 ) (6 ) Mortgage loan and related fees 4,200 6,039 (1,839 ) (30 ) 13,435 13,776 (341 ) (2 ) Brokerage fees 1,009 1,199 (190 ) (16 ) 3,565 3,369 196 6 Gains on sales of SBA/USDA loans 2,806 2,479 327 13 7,391 6,517 874 13 Customer derivatives 554 1,446 (892 ) (62 ) 1,808 3,283 (1,475 ) (45 ) Securities gains, net 188 261 (73 ) (28 ) 190 922 (732 ) (79 ) Other 3,596 4,118 (522 ) (13 ) 10,418 9,137 1,281 14 Total fee revenue $ 20,573 $ 26,361 $ (5,788 ) (22 ) $ 66,332 $ 68,464 $ (2,132 ) (3 ) Three Months Ended
June 30, Change Six Months Ended
June 30, Change 2018 2017 Amount Percent 2018 2017 Amount Percent Overdraft fees $ 3,480 $ 3,321 $ 159 5 % $ 7,132 $ 6,718 $ 414 6 % ATM and debit card fees 3,071 5,536 (2,465 ) (45 ) 6,342 10,924 (4,582 ) (42 ) Other service charges and fees 2,243 1,844 399 22 4,245 3,663 582 16 Service charges and fees 8,794 10,701 (1,907 ) (18 ) 17,719 21,305 (3,586 ) (17 ) Mortgage loan and related fees 5,307 4,811 496 10 10,666 9,235 1,431 15 Brokerage fees 1,201 1,146 55 5 2,073 2,556 (483 ) (19 ) Gains on sales of SBA/USDA loans 2,401 2,626 (225 ) (9 ) 4,179 4,585 (406 ) (9 ) Customer derivatives 657 776 (119 ) (15 ) 1,430 1,254 176 14 Securities losses, net (364 ) 4 (368 ) (1,304 ) 2 (1,306 ) Other 5,344 3,621 1,723 48 10,973 6,822 4,151 61 Total noninterest income $ 23,340 $ 23,685 $ (345 ) (1 ) $ 45,736 $ 45,759 $ (23 ) — $8.22 million and $29.5$8.79 million for the thirdsecond quarter and first nine months of 2017 were down $2.602018 decreased $1.91 million, or 24%18%, from the thirdsecond quarter of 20162017. Service charges and $1.94fees for the six months ended June 30, 2018 decreased $3.59 million, or 6%, from17% compared to the first nine monthssame period of 2016.2017. The decrease in both periods wasis primarily due to the impacteffect of the Durbin Amendment, to the Dodd Frank Act which became effectivetook effect for United on July 1, 2017 and reduced United’s debit card interchange fees in the third quarter of 2017 by approximately $2.7 million compared toand limited the second quarteramount of 2017 and $2.47 million compared to the third quarter of 2016.thirdsecond quarter of 2018 increased $496,000, or 10%, from the second quarter of 2017. For the six months ended June 30, 2018 mortgage loan and first nine months of 2017 were down $1.84related fees increased $1.43 million or 30%, and $341,000, or 2%, respectively, from the same periodsperiod of 2017. The increase reflects United’s focus on growing the mortgage business by recruiting new mortgage lenders in 2016. The decrease reflectskey metropolitan markets and an increase in purchase and refinancing activity. In the impact of moving to mandatory delivery of loans to the secondary market from best efforts in late 2016, which accelerated revenue recognition to the time of the rate lock. Also, in the thirdsecond quarter of 2017, the fair value mark on the mortgage servicing asset was a decrease in value of $419,000. United elected to carry its mortgage servicing asset at fair value effective January 1, 2017. In the third quarter of 2017,2018, United closed 8481,077 loans totaling $193$259 million compared with 904888 loans totaling $194$204 million in the thirdsecond quarter of 2016.2017. Year-to-date mortgage production in 20172018 amounted to 2,4331,876 loans totaling $548$450 million, compared to 2,4071,585 loans totaling $522$355 million for the same period in 2016.2017. United had $117$151 million and $351$254 million respectively, in home purchase mortgage originations in the thirdsecond quarter and first nine monthshalf of 2017,2018, which accounted for 59% and 58% of production volume, respectively, compared with $99.7$141 million and $292$234 million, or 69% and 66%, respectively, of production volume for the same periods a year ago. The volume of home purchase mortgages relative to total mortgages (both purchases and refinances) in the third quarter of 2017 was 60% compared with 51% in the third quarter of 2016.infor the third quarterfirst six months of 20172018 decreased 16%19%, compared to the same period of 2016, primarily due to the United States Department of Labor’s new fiduciary rules, effective in June 2017, which implemented a level compensation requirement throughout the industry. Brokerage feesreflecting downtime in the first nine monthsquarter of 20172018 associated with transitioning to a new third-party broker dealer. Brokerage fees for the second quarter of 2018 increased 6%5% compared to the same period in 2016, reflecting the addition of several new financial advisors since early 2016.thirdsecond quarter and first ninesix months of 2017,2018, United realized $2.81$2.40 million and $7.39$4.18 million, respectively, in gains from the sales of the guaranteed portion of SBA/USDASmall Business Administration (“SBA”) and United States Department of Agriculture (“USDA”) loans, compared to $2.48$2.63 million and $6.52$4.59 million respectively, in the same periods of 2016.2017. United’s SBA/USDA lending strategy includes selling a portion of the loan production each quarter. United retains the servicing rights on the sold loans and earns a fee for servicing the loans. In the thirdsecond quarter and first ninesix months of 2017,2018, United sold the guaranteed portion of loans in the amount of $29.9$28.5 million and $83.6$50.7 million, respectively, compared to $32.2$30.3 million and $78.6$53.7 million, respectively, for the same periods a year ago.Customer derivative fees were down $892,000 and $1.48 million fromthirdsecond quarter and first ninesix months of 20162018 was up $1.72 million and $4.15 million, respectively, from the same periods of 2017. Much of the increase in both periods is due to lower demandthe Acquisitions. Noninterest income from NLFC added approximately $1.06 million and $1.85 million, respectively, to fee revenue for this productthe second quarter and first six months of 2018. Second quarter 2018 other noninterest income also includes $533,000 in gains from the prepayment of fixed rate FHLB advances. In addition tocurrent rate environment.Other fee revenue was down $522,000, or 13%, for the thirdsecond quarter of 2017 due to a number of small gains on disposition of assets in 2016. For theand first ninesix months of 2017, other fee revenue was up $1.28 million, or 14%, primarily due to volume driven increases in earnings on bank owned life insurance, increases in miscellaneous banking fees, decreases in losses attributable to hedge ineffectiveness, and increases2018, respectively, were part of the same balance sheet management activities described above that resulted in the valuegains from prepayment of equity investments held by United.
FHLB advances and cancellation of the derivative instruments. The gains from those activities and the securities losses are mostly offsetting.50Operatingoperatingnoninterest expenses for the periods indicated.Table 6 - OperatingNoninterest Expenses(in thousands) Three Months Ended Nine Months Ended September 30, Change September 30, Change 2017 2016 Amount Percent 2017 2016 Amount Percent Salaries and employee benefits $ 38,027 $ 36,478 $ 1,549 4 $ 112,056 $ 103,112 $ 8,944 9 Communications and equipment 4,547 4,919 (372 ) (8 ) 14,443 13,602 841 6 Occupancy 4,945 5,132 (187 ) (4 ) 14,802 14,393 409 3 Advertising and public relations 1,026 1,088 (62 ) (6 ) 3,347 3,275 72 2 Postage, printing and supplies 1,411 1,451 (40 ) (3 ) 4,127 4,029 98 2 Professional fees 2,976 3,160 (184 ) (6 ) 8,391 9,049 (658 ) (7 ) FDIC assessments and other regulatory charges 2,127 1,412 715 51 4,758 4,453 305 7 Amortization of core deposit intangibles 968 1,119 (151 ) (13 ) 2,841 3,116 (275 ) (9 ) Other 6,227 6,112 115 2 19,660 17,958 1,702 9 Total excluding merger-related and other charges 62,254 60,871 1,383 2 184,425 172,987 11,438 7 Merger-related and other charges 3,176 3,152 24 1 7,060 6,981 79 1 Amortization of noncompete agreements 244 - 244 244 - 244 Total operating expenses $ 65,674 $ 64,023 $ 1,651 3 $ 191,729 $ 179,968 $ 11,761 7 Operating Three Months Ended
June 30, Change Six Months Ended
June 30, Change 2018 2017 Amount Percent 2018 2017 Amount Percent Salaries and employee benefits $ 45,363 $ 37,338 $ 8,025 21 % $ 88,238 $ 74,029 $ 14,209 19 % Communications and equipment 4,849 4,978 (129 ) (3 ) 9,481 9,896 (415 ) (4 ) Occupancy 5,547 4,908 639 13 11,160 9,857 1,303 13 Advertising and public relations 1,384 1,260 124 10 2,899 2,321 578 25 Postage, printing and supplies 1,685 1,346 339 25 3,322 2,716 606 22 Professional fees 3,464 2,371 1,093 46 7,508 5,415 2,093 39 FDIC assessments and other regulatory charges 1,973 1,348 625 46 4,449 2,631 1,818 69 Amortization of intangibles 1,847 900 947 105 3,745 1,873 1,872 100 Other 8,458 6,950 1,508 22 15,189 13,433 1,756 13 Total excluding merger-related and other charges 74,570 61,399 13,171 21 145,991 122,171 23,820 19 Merger-related and other charges 2,280 1,830 450 4,334 3,884 450 Total noninterest expenses $ 76,850 $ 63,229 $ 13,621 22 $ 150,325 $ 126,055 $ 24,270 19 thirdsecond quarter and first six months of 20172018 totaled $65.7$76.9 million and $150 million, respectively, up $1.65$13.6 million or 3%, from the third quarter of 2016, primarily due to the inclusion of operating expenses of HCSB. For the nine months ended September 30, 2017, operating expenses totaled $192 million, an increase of $11.822% and $24.3 million, or 7%,19% from the same period in 2016.periods of 2017. The increase year over year reflects the inclusion of the operating expenses of both the Tidelands and the HCSB acquisitions.thirdsecond quarter of 20172018 were $38.0$45.4 million, up $1.55$8.03 million, or 4%21%, from the thirdsecond quarter of 2016.2017. For the first six months of 2018, salaries and employee benefits were $88.2 million, up $14.2 million, or 19% from the same period of 2017. The increase was due to a number of factors including investments in additional staff and new teams to expand Commercial Banking Solutions and other key areas, additional staff resulting from the HCSB acquisitionAcquisitions, and higher incentives and commissions. Forannual merit based salary increases awarded in the first nine months of 2017, salaries and employee benefits of $112 million were up $8.94 million, or 9%, from the same period in 2016.second quarter. Full time equivalent headcount totaled 2,0202,289 at SeptemberJune 30, 2017,2018, up from 1,9391,928 at SeptemberJune 30, 2016, reflecting the addition of HCSB personnel.Communications and equipment and occupancy expenses decreased in third quarter 2017 relative to the same period in 2016 primarily due to lower telephone charges and service contract charges and lower building maintenance and rental charges. For the first nine months of 2017, communications and equipment and occupancy2017.Tidelands acquisition.thirdsecond quarter of 2018 of $3.46 million were up $1.09 million or 46%, from the second quarter of 2017. For the first six months of 2018, professional fees increased $2.09 million, or 39% from the same period of 2017. The increase was due primarily to the Acquisitions and increased legal fees associated with loan growth.ninesix months of 2017 were down 6% and 7%, respectively, from2018 increased relative to the same periods in 20162017 due primarily to lower fees related to outsourcing functions.Amortization of intangibles in the third quarter and first nine months of 2017 decreased from the same periods in 2016 due to the accelerated method used to amortize core deposit intangibles, which more than offset the additional amortization resulting from intangibles related to the HCSB acquisition.thirdsecond quarter and first six months of 2018, merger-related and other charges of $2.28 million and $4.33 million, respectively, consisted primarily of severance, conversion costs, branch closure costs, and legal and professional fees. In the second quarter of 2017, merger-related and other charges of $3.18$1.83 million consisted primarily of merger costs of $2.04 million and impairment charges on surplus properties of $1.14 million.associated with executive retirements. In the first nine monthshalf of$7.06$3.88 million included theseexecutive retirement costs as well as executive retirement costs, severance, branch closure costs and technology equipment write offs. In the third quarter and first nine months of 2016, merger-related charges of $3.15 million and $6.98 million, respectively, consisted primarily of severance, conversion costs, and legal and professional fees.Other expense of $6.23 million for the third quarter of 2017 increased $115,000, or 2%, from the third quarter of 2016. Year-to-date, other expenses of $19.7 million increased $1.70 million, or 9%, from the first nine months of 2016. The increase was primarily due to writedowns on foreclosed property and higher lending support costs resulting from higher production volume in the Commercial Banking areas.ninesix months ended SeptemberJune 30, 20172018 was $15.7$13.5 million and $50.7$24.3 million, respectively, as compared with $15.8 millionwhich represents an effective tax rate of 25.5% and $44.7 million,23.9% respectively, for the same periods in 2016.each period. The income tax provision for the three and six months ended June 30, 2017 was $16.5 million and $35.0 million, respectively, which represents an effective tax ratesrate of 36.0%36.9% and 38.9%40.3%, respectively, for each period. The effective tax rate for the thirdsecond quarter and first ninesix months of 2018 reflects the lower federal income tax rate enacted following the passage of the Tax Act in the fourth quarter of 2017. The income tax provision for the second quarter of 2018 also included $509,000 of additional tax expense caused by the partial impairment of United’s net deferred tax asset as a result of the announcement that Georgia has elected to lower its corporate income tax rate from 6.00% to 5.75% effective January 1, 2019. The effective tax rate in the first six months of 2017 compared to 37.8% for both periodswas affected by the release of 2016. Upon reversal of United’s former full deferred tax valuation allowance in 2013, certain disproportionate tax effects were retained in accumulated other comprehensive income (loss). During the first quarter of 2017, with the maturity and termination of certain dedesignated cash flow hedges, the disproportionate tax effect associated with these hedges was reversed and recorded as a tax expense of $3.40 million, which was the primary reason for the increase in the effective tax rate compared to the first nine months of 2016.
2017.51SeptemberJune 30, 20172018 and December 31, 2016,2017, United maintained a valuation allowance on its net deferred tax asset of $4.20$4.71 million and $3.88$4.41 million, respectively. Management assesses the valuation allowance recorded against its net deferred tax asset at each reporting period. The determination of whether a valuation allowance for its net deferred tax asset is appropriate is subject to considerable judgment and requires an evaluation of all the positive and negative evidence.United evaluated the need for a valuation allowance at September 30, 2017. Based on the assessment of all the positive and negative evidence, management concluded that it is more likely than not that nearly all of its net deferred tax asset will be realized based upon future taxable income. The remaining valuation allowance of $4.20 million is related to specific state income tax credits that have short carryforward periods and are expected to expire unused.Management'sManagement’s conclusion at SeptemberJune 30, 20172018 that it was more likely than not that the net deferred tax asset of $129$77.3 million will be realized is based upon management’s estimate of future taxable income. Management’s estimate of future taxable income is based on internal forecasts that consider historical performance, various internal estimates and assumptions, as well as certain external data all of which management believes to be reasonable although inherently subject to significant judgment. If actual results differ significantly from the current estimates of future taxable income, the valuation allowance may need to be increased for some or all of its net deferred tax asset. Such an increase to the net deferred tax asset valuation allowance could have a material adverse effect on United’s financial condition and results of operations.2016.
2017.52SeptemberJune 30, 20172018 and December 31, 20162017 were $11.1$12.4 billion and $10.7$11.9 billion, respectively. Average total assets for both the thirdsecond quarter and first nine monthshalf of 20172018 were $11.0$12.2 billion, and $10.8 billion, respectively, up from $10.3$10.7 billion and $9.91 billion, respectively, in both the thirdsecond quarter and first nine monthshalf of 2016.2017.Table 7 - Loans Outstanding(in thousands) September 30, December 31, 2017 2016 By Loan Type Owner occupied commercial real estate $ 1,791,762 $ 1,650,360 Income producing commercial real estate 1,413,104 1,281,541 Commercial & industrial 1,083,591 1,069,715 Commercial construction 583,344 633,921 Total commercial 4,871,801 4,635,537 Residential mortgage 933,205 856,725 Home equity lines of credit 688,875 655,410 Residential construction 190,047 190,043 Consumer installment 118,742 123,567 Indirect auto 400,267 459,354 Total loans $ 7,202,937 $ 6,920,636 As a percentage of total loans: Owner occupied commercial real estate 25 % 24 % Income producing commercial real estate 20 19 Commercial & industrial 15 15 Commercial construction 8 9 Total commercial 68 67 Residential mortgage 13 12 Home equity lines of credit 9 9 Residential construction 3 3 Consumer installment 2 2 Indirect auto 5 7 Total 100 % 100 % By Geographic Location North Georgia $ 1,047,254 $ 1,096,974 Atlanta MSA 1,476,624 1,398,657 North Carolina 542,069 544,792 Coastal Georgia 634,048 581,138 Gainesville MSA 242,128 247,410 East Tennessee 470,407 503,843 South Carolina 1,470,392 1,233,185 Commercial Banking Solutions 919,748 855,283 Indirect Auto 400,267 459,354 Total loans $ 7,202,937 $ 6,920,636 Table 7 - Loans Outstanding (in thousands) June 30, 2018 December 31, 2017 By Loan Type Owner occupied commercial real estate $ 1,681,737 $ 1,923,993 Income producing commercial real estate 1,821,384 1,595,174 Commercial & industrial 1,193,046 1,130,990 Commercial construction 735,575 711,936 Equipment financing 464,594 — Total commercial 5,896,336 5,362,093 Residential mortgage 1,020,606 973,544 Home equity lines of credit 707,718 731,227 Residential construction 195,580 183,019 Consumer direct 122,756 127,504 Indirect auto 277,275 358,185 Total loans $ 8,220,271 $ 7,735,572 As a percentage of total loans: Owner occupied commercial real estate 20 % 25 % Income producing commercial real estate 22 21 Commercial & industrial 15 15 Commercial construction 9 9 Equipment financing 6 — Total commercial 72 70 Residential mortgage 12 13 Home equity lines of credit 9 9 Residential construction 2 2 Consumer direct 2 2 Indirect auto 3 4 Total 100 % 100 % By Geographic Location North Georgia $ 1,000,943 $ 1,018,945 Atlanta MSA 1,533,064 1,510,067 North Carolina 1,067,356 1,049,592 Coastal Georgia 622,845 629,919 Gainesville MSA 229,431 248,060 East Tennessee 474,196 474,515 South Carolina 1,571,171 1,485,632 Commercial Banking Solutions 1,443,979 960,657 Indirect auto 277,286 358,185 Total loans $ 8,220,271 $ 7,735,572 United’sthe Commercial Banking Solutions division (formerly referred to as Specialized Lending) that focuses on specific commercial loan businesses, such as SBA and franchise lending. More than 77%Approximately 75% of theUnited’s loans wereare secured by real estate. Total loans averaged $7.15$8.18 billion in the thirdsecond quarter of 2018, compared with $6.98 billion in the second quarter of 2017, compared with $6.68 billion in the third quarter of 2016, an increase of 7% which includes17% due in part to the acquisition of HCSB.Acquisitions. At SeptemberJune 30, 2017,2018, total loans were $7.20$8.22 billion, an increase of $282$485 million from December 31, 2016.
2017, of which $359 million came through the acquisition of NLFC.53SeptemberJune 30, 20172018 and December 31, 2016,2017, the funded portion of home equity lines totaled $689$708 million and $655$731 million, respectively. Approximately 3% of the home equity lines at SeptemberJune 30, 20172018 were amortizing. Of the $689$708 million in balances outstanding at SeptemberJune 30, 2017, $4032018, $428 million, or 58%60%, were secured by first liens. At SeptemberJune 30, 2017, 55%2018, 53% of the total available home equity lines were drawn upon.holder, in order to potentially limit losses on the second lien.2016.“fail”“substandard” when the loan is in bankruptcy or voluntary repossession.Table 8 - Performing Classified Loans(in thousands) September 30, June 30, March 31, December 31, September 30, 2017 2017 2017 2016 2016 By Category Owner occupied commercial real estate $ 37,147 $ 34,427 $ 41,536 $ 42,169 $ 42,025 Income producing commercial real estate 20,922 22,457 24,143 29,379 31,627 Commercial & industrial 10,740 7,247 10,372 8,903 10,047 Commercial construction 6,213 4,808 8,564 8,840 8,788 Total commercial 75,022 68,939 84,615 89,291 92,487 Residential mortgage 15,914 12,929 14,632 15,324 18,303 Home equity 5,603 5,733 5,789 5,060 4,930 Residential construction 1,754 1,822 1,858 2,726 3,628 Consumer installment 508 627 657 584 662 Indirect auto 1,685 1,697 1,288 1,362 1,616 Total $ 100,486 $ 91,747 $ 108,839 $ 114,347 $ 121,626 By Market North Georgia $ 30,049 $ 34,638 $ 38,092 $ 39,438 $ 40,231 Atlanta MSA 9,936 10,384 14,258 17,954 19,040 North Carolina 11,341 11,916 10,022 11,089 12,179 Coastal Georgia 2,791 3,062 6,957 4,516 5,247 Gainesville MSA 456 475 698 713 540 East Tennessee 10,620 7,089 6,781 7,485 9,383 South Carolina 31,123 21,763 30,612 31,623 33,218 Commercial Banking Solutions 2,485 723 131 167 172 Indirect auto 1,685 1,697 1,288 1,362 1,616 Total loans $ 100,486 $ 91,747 $ 108,839 $ 114,347 $ 121,626 Table 8 - Performing Classified Loans (in thousands) June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 By Category Owner occupied commercial real estate $ 42,169 $ 42,096 $ 41,467 $ 37,147 $ 34,427 Income producing commercial real estate 26,120 24,984 30,061 20,922 22,457 Commercial & industrial 17,820 11,003 11,879 10,740 7,247 Commercial construction 10,102 8,422 8,264 6,213 4,808 Equipment financing 820 414 — — — Total commercial 97,031 86,919 91,671 75,022 68,939 Residential mortgage 14,970 14,824 15,323 15,914 12,929 Home equity 5,117 5,491 6,055 5,603 5,733 Residential construction 1,567 1,506 1,837 1,754 1,822 Consumer direct 498 1,142 515 508 627 Indirect auto 1,291 1,498 1,760 1,685 1,697 Total $ 120,474 $ 111,380 $ 117,161 $ 100,486 $ 91,747 By Market North Georgia $ 25,417 $ 26,243 $ 30,952 $ 30,049 $ 34,638 Atlanta MSA 13,640 12,145 9,358 9,936 10,384 North Carolina 24,886 27,186 30,670 11,341 11,916 Coastal Georgia 3,550 3,075 3,322 2,791 3,062 Gainesville MSA 966 662 750 456 475 East Tennessee 12,737 12,402 10,953 10,620 7,089 South Carolina 22,841 26,800 27,212 31,123 21,763 Commercial Banking Solutions 15,146 �� 1,369 2,184 2,485 723 Indirect auto 1,291 1,498 1,760 1,685 1,697 Total loans $ 120,474 $ 111,380 $ 117,161 $ 100,486 $ 91,747 SeptemberJune 30, 2017,2018, performing classified loans totaled $100$120 million and increased $8.74$9.09 million from the prior quarter-end and decreased $21.1 million from a year ago. Performing classified loans reflect a general downward trend, offset by acquisition activity. The increase in performing classified loans in South Carolina in the third quarter of 2017 was attributableprimarily due to the HCSB acquisition.54Table 9 - Allowance for Credit Losses(in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Allowance for loan losses at beginning of period $ 59,500 $ 64,253 $ 61,422 $ 68,448 Charge-offs: Owner occupied commercial real estate 100 461 283 1,929 Income producing commercial real estate 1,235 206 2,335 788 Commercial & industrial 329 850 1,143 1,645 Commercial construction 206 30 769 392 Residential mortgage 396 63 1,069 776 Home equity lines of credit 321 321 1,216 1,513 Residential construction 57 253 127 531 Consumer installment 475 426 1,374 1,123 Indirect auto 333 354 1,066 953 Total loans charged-off 3,452 2,964 9,382 9,650 Recoveries: Owner occupied commercial real estate 144 415 501 605 Income producing commercial real estate 76 136 123 463 Commercial & industrial 529 398 1,141 1,302 Commercial construction 320 224 912 617 Residential mortgage 83 109 200 248 Home equity lines of credit 265 54 485 361 Residential construction 21 10 153 61 Consumer installment 314 190 716 625 Indirect auto 65 69 214 141 Total recoveries 1,817 1,605 4,445 4,423 Net charge-offs 1,635 1,359 4,937 5,227 (Release of) provision for loan losses 740 67 2,120 (260 ) Allowance for loan losses at end of period $ 58,605 $ 62,961 $ 58,605 $ 62,961 Allowance for unfunded commitments at beginning of period $ 2,222 $ 2,369 $ 2,002 $ 2,542 (Release of) provision for losses on unfunded commitments 260 (367 ) 480 (540 ) Allowance for unfunded commitments at end of period 2,482 2,002 2,482 2,002 Allowance for credit losses $ 61,087 $ 64,963 $ 61,087 $ 64,963 Total loans: At period-end $ 7,202,937 $ 6,725,110 $ 7,202,937 $ 6,725,110 Average 7,149,348 6,675,328 7,011,962 6,277,972 Allowance for loan losses as a percentage of period-end loans .81 % .94 % .81 % .94 % As a percentage of average loans (annualized): Net charge-offs .09 .08 .09 .11 (Release of) provision for loan losses .04 .00 .04 (.01 ) Table 9 - Allowance for Credit Losses (in thousands) Three Months Ended
June 30, Six Months Ended
June 30, 2018 2017 2018 2017 Allowance for loan and lease losses at beginning of period $ 61,085 $ 60,543 $ 58,914 $ 61,422 Charge-offs: Owner occupied commercial real estate 7 158 67 183 Income producing commercial real estate 1,653 203 2,310 1,100 Commercial & industrial 233 598 617 814 Commercial construction 53 361 416 563 Equipment financing 23 — 162 — Residential mortgage 112 131 182 673 Home equity lines of credit 211 424 335 895 Residential construction 8 70 8 70 Consumer direct 552 457 1,203 899 Indirect auto 379 313 815 733 Total loans charged-off 3,231 2,715 6,115 5,930 Recoveries: Owner occupied commercial real estate 585 120 688 357 Income producing commercial real estate 232 20 467 47 Commercial & industrial 217 244 606 612 Commercial construction 159 20 256 592 Equipment financing 71 — 168 — Residential mortgage 101 105 224 117 Home equity lines of credit 190 171 225 220 Residential construction 67 123 131 132 Consumer direct 195 195 355 402 Indirect auto 55 94 135 149 Total recoveries 1,872 1,092 3,255 2,628 Net charge-offs 1,359 1,623 2,860 3,302 Provision for loan and lease losses 1,345 580 5,017 1,380 Allowance for loan and lease losses at end of period 61,071 59,500 61,071 59,500 Allowance for unfunded commitments at beginning of period 2,440 2,002 2,312 2,002 Provision for losses on unfunded commitments 455 220 583 220 Allowance for unfunded commitments at end of period 2,895 2,222 2,895 2,222 Allowance for credit losses $ 63,966 $ 61,722 $ 63,966 $ 61,722 Total loans and leases: At period-end $ 8,220,271 $ 7,040,932 $ 8,220,271 $ 7,040,932 Average 8,177,343 6,979,980 8,085,849 6,942,130 Allowance for loan and lease losses as a percentage of period-end loans and leases 0.74 % 0.85 % 0.74 % 0.85 % As a percentage of average loans (annualized): Net charge-offs 0.07 0.09 0.07 0.10 Provision for loan and lease losses 0.07 0.03 0.13 0.04 $61.1$64.0 million at SeptemberJune 30, 2017,2018, compared with $63.4$61.2 million at December 31, 2016.2017. At SeptemberJune 30, 2017,2018, the allowance for loan losses was $58.6$61.1 million, or .81%0.74% of loans, compared with $61.4$58.9 million, or .89%0.76% of total loans, at December 31, 2016.SeptemberJune 30, 20172018 reflects the probable incurred losses in the loan portfolio and unfunded loan commitments. This assessment involves uncertainty and judgment and is subject to change in future periods. The amount of any changes could be significant if management’s assessment of loan quality or collateral values change substantially with respect to one or more loan relationships or portfolios. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require adjustments to the provision for credit losses in future periods if, in their opinion, the results of their review warrant such additions. See the “Critical Accounting Policies” section for additional information on the allowance for loan losses.55Table 10 - Nonperforming Assets (in thousands) September 30, December 31, 2017 2016 Nonperforming loans $ 22,921 $ 21,539 Foreclosed properties (OREO) 2,736 7,949 Total nonperforming assets $ 25,657 $ 29,488 Nonperforming loans as a percentage of total loans .32 % .31 % Nonperforming assets as a percentage of total loans and OREO .36 .43 Nonperforming assets as a percentage of total assets .23 .28 June 30, 2018 December 31, 2017 Nonperforming loans $ 21,817 $ 23,658 Foreclosed properties/other real estate owned (OREO) 2,597 3,234 Total nonperforming assets $ 24,414 $ 26,892 Nonperforming loans as a percentage of total loans and leases 0.27 % 0.31 % Nonperforming assets as a percentage of total loans and OREO 0.30 0.35 Nonperforming assets as a percentage of total assets 0.20 0.23 SeptemberJune 30, 2017,2018, nonperforming loans were $22.9$21.8 million compared to $21.5$23.7 million at December 31, 2016.2017. Nonperforming assets, which include nonperforming loans and foreclosed real estate, totaled $25.7$24.4 million at SeptemberJune 30, 20172018 and $29.5$26.9 million at December 31, 2016.SeptemberJune 30, 20172018 or December 31, 20162017 as the carrying value of the respective loan or pool of loans cash flows were considered estimable and probable of collection. Therefore, interest revenue, through accretion of the difference between the carrying value of the loans and the expected cash flows, is being recognized on all PCI loans.56Table 11 - Nonperforming Assets by Category and Market (in thousands) September 30, 2017 December 31, 2016 Nonaccrual Foreclosed Total Nonaccrual Foreclosed Total Loans Properties NPAs Loans Properties NPAs BY CATEGORY Owner occupied commercial real estate $ 5,027 $ 764 $ 5,791 $ 7,373 $ 3,145 $ 10,518 Income producing commercial real estate 2,042 121 2,163 1,324 36 1,360 Commercial & industrial 2,378 - 2,378 966 - 966 Commercial construction 1,376 923 2,299 1,538 2,977 4,515 Total commercial 10,823 1,808 12,631 11,201 6,158 17,359 Residential mortgage 8,559 392 8,951 6,368 1,260 7,628 Home equity lines of credit 1,898 195 2,093 1,831 531 2,362 Residential construction 178 341 519 776 - 776 Consumer installment 84 - 84 88 - 88 Indirect auto 1,379 - 1,379 1,275 - 1,275 Total NPAs $ 22,921 $ 2,736 $ 25,657 $ 21,539 $ 7,949 $ 29,488 BY MARKET North Georgia $ 6,707 $ 404 $ 7,111 $ 5,278 $ 856 $ 6,134 Atlanta MSA 1,098 338 1,436 1,259 716 1,975 North Carolina 4,376 318 4,694 4,750 632 5,382 Coastal Georgia 2,532 - 2,532 1,778 - 1,778 Gainesville MSA 763 - 763 279 - 279 East Tennessee 1,734 67 1,801 2,354 675 3,029 South Carolina 1,903 1,609 3,512 2,494 5,070 7,564 Commercial Banking Solutions 2,429 - 2,429 2,072 - 2,072 Indirect auto 1,379 - 1,379 1,275 - 1,275 Total NPAs $ 22,921 $ 2,736 $ 25,657 $ 21,539 $ 7,949 $ 29,488 June 30, 2018 December 31, 2017 BY CATEGORY Owner occupied commercial real estate $ 5,772 $ 812 $ 6,584 $ 4,923 $ 1,955 $ 6,878 Income producing commercial real estate 991 455 1,446 3,208 244 3,452 Commercial & industrial 2,180 — 2,180 2,097 — 2,097 Commercial construction 613 576 1,189 758 884 1,642 Equipment financing 1,075 — 1,075 — — — Total commercial 10,631 1,843 12,474 10,986 3,083 14,069 Residential mortgage 7,918 184 8,102 8,776 136 8,912 Home equity lines of credit 1,812 550 2,362 2,024 15 2,039 Residential construction 637 20 657 192 — 192 Consumer direct 68 — 68 43 — 43 Indirect auto 751 — 751 1,637 — 1,637 Total NPAs $ 21,817 $ 2,597 $ 24,414 $ 23,658 $ 3,234 $ 26,892 BY MARKET North Georgia $ 7,583 $ 640 $ 8,223 $ 7,310 $ 94 $ 7,404 Atlanta MSA 1,928 132 2,060 1,395 279 1,674 North Carolina 3,029 750 3,779 4,543 1,213 5,756 Coastal Georgia 943 — 943 2,044 20 2,064 Gainesville MSA 186 — 186 739 — 739 East Tennessee 1,473 143 1,616 1,462 — 1,462 South Carolina 3,093 362 3,455 3,433 1,059 4,492 Commercial Banking Solutions 2,831 570 3,401 1,095 569 1,664 Indirect auto 751 — 751 1,637 — 1,637 Total NPAs $ 21,817 $ 2,597 $ 24,414 $ 23,658 $ 3,234 $ 26,892 57Table 12 - Activity in Nonperforming Assets (in thousands) Table 12 - Activity in Nonperforming Assets(in thousands) Third Quarter 2017 Third Quarter 2016 Nonaccrual Foreclosed Total Nonaccrual Foreclosed Total Loans Properties NPAs Loans Properties NPAs Beginning Balance $ 23,095 $ 2,739 $ 25,834 $ 21,348 $ 6,176 $ 27,524 Acquisitions 20 805 825 - 7,495 7,495 Loans placed on non-accrual 7,964 - 7,964 6,680 - 6,680 Payments received (5,192 ) - (5,192 ) (3,938 ) - (3,938 ) Loan charge-offs (2,159 ) - (2,159 ) (1,236 ) - (1,236 ) Foreclosures (807 ) 683 (124 ) (1,282 ) 2,335 1,053 Capitalized costs - - - - 3 3 Property sales - (1,295 ) (1,295 ) - (6,553 ) (6,553 ) Write downs - (236 ) (236 ) - (53 ) (53 ) Net gains on sales - 40 40 - (216 ) (216 ) Ending Balance $ 22,921 $ 2,736 $ 25,657 $ 21,572 $ 9,187 $ 30,759 First Nine Months of 2017 First Nine Months 2016 Nonaccrual Foreclosed Total Nonaccrual Foreclosed Total Loans Properties NPAs Loans Properties NPAs Beginning Balance $ 21,539 $ 7,949 $ 29,488 $ 22,653 $ 4,883 $ 27,536 Acquisitions 20 805 825 - 6,998 6,998 Loans placed on non-accrual 19,246 - 19,246 18,237 - 18,237 Payments received (11,193 ) - (11,193 ) (9,951 ) - (9,951 ) Loan charge-offs (5,015 ) - (5,015 ) (4,718 ) - (4,718 ) Foreclosures (1,676 ) 1,725 49 (4,649 ) 6,647 1,998 Capitalized costs - - - - 101 101 Note / property sales - (7,076 ) (7,076 ) - (9,501 ) (9,501 ) Write downs - (1,010 ) (1,010 ) - (133 ) (133 ) Net gains on sales - 343 343 - 192 192 Ending Balance $ 22,921 $ 2,736 $ 25,657 $ 21,572 $ 9,187 $ 30,759 Second Quarter 2018 Second Quarter 2017 Beginning Balance $ 26,240 $ 2,714 $ 28,954 $ 19,812 $ 5,060 $ 24,872 Loans placed on non-accrual 3,612 — 3,612 8,110 — 8,110 Payments received (5,314 ) — (5,314 ) (2,955 ) — (2,955 ) Loan charge-offs (2,065 ) — (2,065 ) (1,564 ) — (1,564 ) Foreclosures (656 ) 984 328 (308 ) 481 173 Property sales — (1,029 ) (1,029 ) — (2,704 ) (2,704 ) Write downs — (106 ) (106 ) — (294 ) (294 ) Net gains (losses) on sales — 34 34 — 196 196 Ending Balance $ 21,817 $ 2,597 $ 24,414 $ 23,095 $ 2,739 $ 25,834 First Six Months of 2018 First Six Months of 2017 Beginning Balance $ 23,658 $ 3,234 $ 26,892 $ 21,539 $ 7,949 $ 29,488 Acquisitions 428 — 428 — — — Loans placed on non-accrual 11,075 — 11,075 11,282 — 11,282 Payments received (8,848 ) — (8,848 ) (6,001 ) — (6,001 ) Loan charge-offs (3,215 ) — (3,215 ) (2,856 ) — (2,856 ) Foreclosures (1,281 ) 1,609 328 (869 ) 1,042 173 Property sales — (1,986 ) (1,986 ) — (5,781 ) (5,781 ) Write downs — (178 ) (178 ) — (774 ) (774 ) Net gains (losses) on sales — (82 ) (82 ) — 303 303 Ending Balance $ 21,817 $ 2,597 $ 24,414 $ 23,095 $ 2,739 $ 25,834 FinancedDuring the second quarter of 2018, United transferred $984,000 of loans into foreclosed property through foreclosures. During the same period, proceeds from sales of foreclosed property are accounted for in accordance with ASC 360-20,Real Estate Sales.Impaired LoansAt September 30, 2017 and December 31, 2016, United had $65.2 million and $73.2 million, respectively, in loans with terms that have been modified in TDRs. Included therein were $5.65 million and $5.35 million, respectively, of TDRs that were classified as nonaccrual and were included in nonperforming loans. The remaining TDRs with an aggregate balance of $59.6 million and $67.8 million, respectively, were performing according to their modified terms and are therefore not considered to be nonperforming assets.At September 30, 2017 and December 31, 2016, there were $83.6 million and $85.7 million, respectively, of loans classified as impaired under the definition outlined in the Accounting Standards Codification, including TDRs which are by definition considered impaired. Included in impaired loans at September 30, 2017 and December 31, 2016 was $29.2 million and $28.3 million, respectively, that did not require specific reserves or had previously been charged down to net realizable value. The balance of impaired loans at September 30, 2017 and December 31, 2016 of $54.4 million and $57.4 million, respectively, had specific reserves that totaled $4.44 million and $3.45 million, respectively. The average recorded investment in impaired loans for the third quarters of 2017 and 2016 was $84.2 million and $93.0 million, respectively. For the nine months ended September 30, 2017 and 2016, the average recorded investment in impaired loans was $84.2 million and $92.0 million, respectively. For the three and nine months ended September 30, 2017, United recognized $931,000 and $2.89 million in interest revenue on impaired loans compared to $1.13 million and $3.26 million, respectively, for the same periods of the prior year.
$1.03 million.58SeptemberJune 30, 20172018 and December 31, 2016,2017, United had securities held-to-maturity with a carrying amount of $307$298 million and $330$321 million, respectively, and securities available-for-sale totaling $2.54 billion and $2.43$2.62 billion, respectively. At SeptemberJune 30, 20172018 and December 31, 2016,2017, the securities portfolio represented approximately 26%23% and 25%, respectively, of total assets.SeptemberJune 30, 20172018 primarily reflect the effect of changes in interest rates. United did not recognize any other than temporary impairment losses on its investment securities during the third quarter of 2017three and six months ended June 30, 2018 or 2016.SeptemberJune 30, 20172018 and December 31, 2016, 16%2017, 12% and 22%15%, respectively, of the securities portfolio was invested in floating-rate securities or fixed-rate securities that were swapped to floating rates in order to manage exposure to rising interest rates.SeptemberJune 30, 20172018 were $8.76$9.52 billion, compared to $8.31$9.44 billion at December 31, 2016.2017. Total core transaction deposits (demand, NOW, money market and savings deposits, excluding public funds deposits) of $6.45$6.94 billion at SeptemberJune 30, 20172018 increased $532$175 million since December 31, 2016, partly due to the HCSB acquisition.2017. United’s high level of service, as evidenced by its strong customer satisfaction scores, has been instrumental in attracting and retaining core transaction deposit accounts.$494$560 million and $709$505 million, respectively, as of SeptemberJune 30, 20172018 and December 31, 2016.2017. United anticipates continued use of this short and long-term source of funds. Additional information regarding FHLB advances is provided in Note 13 to the consolidated financial statements included in United’s Annual Report on Form 10-K for the year ended December 31, 2016.2016.59profitability.profitability, primarily in United’s core community banking activities of extending loans and accepting deposits. The objective of interest rate risk management is to identify and manage the sensitivity of net interest revenue to changing interest rates, consistent with United’s overall financial goals. Based on economic conditions, asset quality and various other considerations, management establishes tolerance ranges for interest rate sensitivity and manages within these ranges.United’s net its financial instruments are influenced by changes in the level of interest rates. United limits its exposure to fluctuations in interest rates through policies developed by the Asset/Liability Management Committee (“ALCO”) and approved by the Board of Directors. ALCO meets periodically and has responsibility for formulating and recommending asset/liability management policies to the Board of Directors, formulating and implementing strategies to improve balance sheet positioning and/or earnings, and reviewing interest rate sensitivity.twelve monthtwelve-month time frame, longer time horizons are also modeled.Historically low rates on September 30, 2016 made use of the down scenarios irrelevant. The following table presents United’sthe interest sensitivity position at the dates indicated. Increase (Decrease) in Net Interest Revenue from Base Scenario at
September 30, 2017 2016 Change in Rates Shock Ramp Shock Ramp 100 basis point increase 0.6 % 0.0 % 0.6 % 0.0 % 100 basis point decrease (8.7 ) (6.7 ) n/a n/a Increase (Decrease) in Net Interest Revenue from Base Scenario at June 30, 2018 December 31, 2017 Change in Rates Shock Ramp Shock Ramp 100 basis point increase (0.26 )% (0.76 )% 0.11 % (0.33 )% 100 basis point decrease (5.58 ) (4.03 ) (7.37 ) (6.24 ) 60Managementinstruments to assist in the management of interest rate sensitivity.instruments. Derivative financial instruments can be a cost-effective and capital-effective means of modifying the re-pricing characteristics of on-balance sheet assets and liabilities. These contracts generally consist of interest rate swaps under which United pays a variable rate (or fixed rate, as the case may be) and receives a fixed rate (or variable rate, as the case may be), interest rate caps that fix the maximum amount of interest paid on a variable rate borrowing and interest rate floors that fix the minimum amount of interest received for floating rate loans.. In addition to derivative instruments, management uses a variety of balance sheet instruments to manage interest rate risk such as investment securities, wholesale funding, and bank-issued deposits.$545,000$361,000 will be reclassified as an increase to interest expense from other comprehensive income over the next twelve months related to these terminated cash flow hedges.SeptemberJune 30, 2017,2018, United had cash and cash equivalent balances of $247$316 million and had sufficient qualifying collateral to increase FHLB advances by $834$774 million and Federal Reserve discount window borrowing capacity of $1.17$1.40 billion. United also has the ability to raise substantial funds through brokered deposits. In addition to these wholesale sources, United has the ability to attract retail deposits by competing more aggressively on pricing.61$147$116 million for the ninesix months ended SeptemberJune 30, 2017.2018. Net income of $79.7$77.3 million for the ninesix month period included non-cash expenses for the following: deferred income tax expense of $51.8$22.8 million, and non-cash expenses for the following: depreciation, amortization and accretion of $20.1$17.1 million, provision expense of $5.60 million and stock-based compensation expense of $4.36$2.28 million. Other sources of cash from operating activities included a decreasean increase in accrued expenses and other liabilities of $12.3 million, offset by an increase in other assets and accrued interest receivable of $4.11 million. These sources of cash from operating activities were offset by a decrease in accrued expenses and other liabilities of $8.38$18.8 million. Net cash used in investing activities of $198,000$124 million consisted primarily of $280 million in purchases of securities of available for sale, cash paid for acquisitions of $56.8 million and a $57.3 million net increase in loans purchases of investment securities available-for-sale totaling $710 million and purchases of investment securities held-to-maturity of $21.6$117 million. These uses of cash were partially offset by $44.9 million in proceeds from maturities and calls of investment securities held-to-maturity, $276 million inand proceeds from the sale of investment securities available-for-saleavailable for sale of $174 million and $466$140 million, in proceeds from maturities and calls of investment securities available-for-sale.respectively. Net cash used inprovided by financing activities of $117$9.49 million consisted primarily of a net decreaseincrease in deposits of $159 million, issuance of subordinated debt of $98.2 million and a net increase in FHLB advances of $239 million, repayment$56.0 million. These sources of long-term debt of $40.0 million, and $18.7 million in dividends to common shareholders,cash were partially offset by a net increasedecrease in depositsshort-term borrowings of $172$256 million, cash dividends of $17.5 million and repayments of long-term debt of $30.0 million. In the opinion of management, United’s liquidity position at SeptemberJune 30, 2017,2018, was sufficient to meet its expected cash flow requirements.SeptemberJune 30, 20172018 was $1.22$1.38 billion, an increase of $145$75.8 million from December 31, 20162017 due to shares issued for the NLFC acquisition plus year-to-date earnings less dividends declared stock issued for the HCSB acquisition, an increaseand a decrease in the value of available-for-sale securities and the release of the disproportionate tax effect related to terminated cash flow hedges.securities. Accumulated other comprehensive loss, which includes unrealized gains and losses on securities available-for-sale, the unrealized gains and losses on derivatives qualifying as cash flow hedges and unamortized prior service cost and actuarial gains and losses on United’s modified retirement plan, is excluded in the calculation of regulatory capital adequacy ratios.SeptemberJune 30, 20172018 and December 31, 2016.2017. As of SeptemberJune 30, 2017,2018, capital levels remained characterized as “well-capitalized” under the Basel III Capital Rules in effect at the time.-– Capital Ratios Basel III Guidelines United Community Banks, Inc.
(Consolidated) United Community Bank Well September 30, December 31, September 30, December 31, Minimum Capitalized 2017 2016 2017 2016 Risk-based ratios: Common equity tier 1 capital 4.5 % 6.5 % 12.22 % 11.23 % 12.67 % 12.66 % Tier I capital 6.0 8.0 12.27 11.23 12.67 12.66 Total capital 8.0 10.0 13.02 12.04 13.43 13.48 Leverage ratio 4.0 5.0 9.30 8.54 9.61 9.63 Common equity tier 1 capital $ 993,706 $ 874,452 $ 1,028,893 $ 984,529 Tier I capital 997,883 874,452 1,028,893 984,529 Total capital 1,058,970 937,876 1,089,980 1,047,953 Risk-weighted assets 8,134,417 7,789,089 8,118,459 7,775,352 Average total assets 10,726,624 10,236,868 10,710,987 10,221,318 Basel III Guidelines United Community Bank Minimum June 30, 2018 December 31, 2017 June 30, 2018 December 31, 2017 Risk-based ratios: Common equity tier 1 capital 4.5 % 6.5 % 11.60 % 11.98 % 13.19 % 12.93 % Tier I capital 6.0 8.0 11.94 12.24 13.19 12.93 Total capital 8.0 10.0 13.83 13.06 13.88 13.63 Leverage ratio 4.0 5.0 9.31 9.44 10.27 9.98 Common equity tier 1 capital $ 1,074,861 $ 1,053,983 $ 1,220,098 $ 1,135,728 Tier I capital 1,106,311 1,076,465 1,220,098 1,135,728 Total capital 1,281,909 1,149,191 1,284,064 1,196,954 Risk-weighted assets 9,267,868 8,797,387 9,252,050 8,781,177 Average total assets 11,887,877 11,403,248 11,885,069 11,385,716 20172018 and 2016. 2017 2016 High Low Close Avg Daily
Volume High Low Close Avg Daily
Volume First quarter $ 30.47 $ 25.29 $ 27.69 459,018 $ 19.27 $ 15.74 $ 18.47 440,759 Second quarter 28.57 25.39 27.80 402,802 20.60 17.07 18.29 771,334 Third quarter 29.02 24.47 28.54 365,102 21.13 17.42 21.02 379,492 Fourth quarter 30.22 20.26 29.62 532,944 62 2018 2017 High Low Close High Low Close First quarter $ 33.60 $ 27.73 $ 31.65 529,613 $ 30.47 $ 25.29 $ 27.69 459,018 Second quarter 34.18 30.52 30.67 402,230 28.57 25.39 27.80 402,802 Third quarter 29.02 24.47 28.54 365,102 Fourth quarter 29.60 25.76 28.14 365,725 United'sUnited’s ability to react to changes in interest rates, and by such reaction, reduce the inflationary effect on performance. United has an asset/liability management program to manage interest rate sensitivity. In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs.Item 3.Quantitative and Qualitative Disclosure About Market RiskSeptemberJune 30, 20172018 from that presented in the Annual Report on Form 10-K for the year ended December 31, 2016.2017. The interest rate sensitivity position at SeptemberJune 30, 20172018 is included in Table 13 in management’s discussion and analysis on page 59 of this report.Item 4.Controls and ProceduresSeptemberJune 30, 2017.2018. Based on, and as of the date of that evaluation, United’s Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective in accumulating and communicating information to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures of that information under the SEC’s rules and forms and that the disclosure controls and procedures are designed to ensure that the information required to be disclosed in reports that are filed or submitted by United under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.63Part II.Other InformationItem 1.Legal ProceedingsItem 1A.Risk Factors2016.2017. (Dollars in thousands, except for per share amounts) April 1, 2018 - April 30, 2018 — — — 36,342 May 1, 2018 - May 31, 2018 — — — 36,342 June 1, 2018 - June 30, 2018 — — — 36,342 Total — $ — — $ 36,342 Item 2.Unregistered Sales of Equity Securities and Use of ProceedsOn March 22, 2016, United announced that its Board of Directors had authorized a program to repurchase up to $50 million of United’s outstanding common stock through December 31, 2017. Under the program, the shares may be repurchased periodically in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The actual timing, number and value of shares repurchased under the program depends on a number of factors, including the market price of United’s common stock, general market and economic conditions, and applicable legal requirements. As of September 30, 2017, the remaining authorization was $36.3 million. In November of 2017, the Board of Directors extended this program through December 31, 2018.The following table contains information for shares repurchased during the third quarter of 2017.(Dollars in thousands, except for per share
amounts) Total
Number of
Shares
Purchased Average
Price Paid
per Share Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs Maximum Number (or
Approximate Dollar Value)
of Shares that May Yet Be
Purchased Under the
Plans or Programs July 1, 2017 - July 31, 2017 - $ - - $ 36,342 August 1, 2017 - August 31, 2017 - - - 36,342 September 1, 2017 - September 30, 2017 - - - 36,342 Total - $ - - $ 36,342 Item 3.Defaults upon Senior Securities – NoneExhibit No. Item 4.Mine Safety Disclosures – NoneDescriptionItem 5.Other Information – None 64 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document UNITED COMMUNITY BANKS, INC. /s/ H. Lynn Harton H. Lynn Harton Chief Executive Officer (Principal Executive Officer) /s/ Jefferson L. Harralson Jefferson L. Harralson Executive Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Alan H. Kumler Alan H. Kumler Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) Date: August 6, 2018 Item 6.ExhibitsExhibit No.Description31.1Certification by Jimmy C. Tallent, Chairman and Chief Executive Officer of United Community Banks, Inc., pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2Certification by Jefferson L. Harralson, Executive Vice President and Chief Financial Officer of United Community Banks, Inc., pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INSXBRL Instance Document101.SCHXBRL Taxonomy Extension Schema Document101.CALXBRL Taxonomy Extension Calculation Linkbase Document101.DEFXBRL Taxonomy Extension Definition Linkbase Document101.LABXBRL Taxonomy Extension Label Linkbase Document101.PREXBRL Taxonomy Extension Presentation Linkbase Document65SignaturesPursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.UNITED COMMUNITY BANKS, INC./s/ Jimmy C. TallentJimmy C. TallentChairman and Chief Executive Officer(Principal Executive Officer)/s/ Jefferson L. HarralsonJefferson L. HarralsonExecutive Vice President andChief Financial Officer(Principal Financial Officer)/s/ Alan H. KumlerAlan H. KumlerSenior Vice President andChief Accounting Officer(Principal Accounting Officer)Date: November 3, 201766