United Community Banks, Inc. Reports Earnings of $230 Million for Second Quarter 2013
(firmenpresse) - BLAIRSVILLE, GA -- (Marketwired) -- 07/25/13 -- United Community Banks, Inc. (NASDAQ: UCBI)
Net income of $230 million, or $3.90 per share
Earnings reflect impact of reversal of valuation allowance on deferred tax asset and accelerated sales of classified assets
Credit measures now at pre-credit crisis levels
Capital levels remain strong
United Community Banks, Inc. (NASDAQ: UCBI) today reported net income of $230 million, or $3.90 per share, for the second quarter of 2013, and $242 million, or $4.05 per share, for the first six months of 2013. The results reflect the impact of two very significant events during the second quarter -- the reversal of the valuation allowance on United's net deferred tax asset and higher provision for loan losses and foreclosed property expenses from the accelerated sales of classified assets.
"The second quarter events mark the final phase of our recovery from the financial crisis that has affected so many banks throughout the country and especially within our footprint," said Jimmy Tallent, president and chief executive officer. "With the reversal of our valuation allowance and the accelerated sales of classified assets, the lingering effects of the credit crisis are behind us. We can now devote full attention toward growing our business and increasing the value of our shareholders' investments."
Tallent noted that the reduction in loans resulting from the accelerated classified loan sales masked an otherwise solid quarter of loan growth. Though the company sold loans with a carrying amount of $151 million, total loans were only down $5 million from the first quarter.
"Achieving quality loan growth remains a top priority despite continued challenges with the sluggish economy," Tallent said. "We are accomplishing this objective by adding lenders strategically, including in our vibrant new markets of Greenville, South Carolina and Nashville, Tennessee."
The second quarter provision for loan losses was $48.5 million compared with $11 million in the first quarter and with $18 million in the second quarter of 2012. The increase reflects the higher level of charge-offs associated with the accelerated classified loan sales. Second quarter net charge-offs were $72.4 million compared with $12.4 million in the first quarter and $18.9 million a year ago. The $48.5 million provision reflects the difference between the $72.4 million in net charge-offs offset by a $24 million reduction in the allowance for loan losses.
"We believed the time was right to take the final step toward putting the financial crisis behind us by selling our stress-related classified assets, including a bulk sale of $131 million," Tallent said. "We have cleansed our balance sheet of legacy problem credits and are turning full attention to strategic initiatives to grow our business and shareholder value."
Nonperforming assets at quarter-end were $31.8 million, representing .44 percent of total assets. This total is down from $113 million, or 1.65 percent, at March 31, 2013, and $146 million, or 2.16 percent, at June 30, 2012. The classified asset ratio, which is the ratio of classified assets to Tier 1 regulatory capital plus the allowance for loan losses, declined to 27 percent from 49 percent at March 31 and from 62 percent a year ago.
Second quarter taxable equivalent net interest revenue totaled $54.6 million, down $97,000 from the first quarter and down $2.27 million from the second quarter of 2012. "The decrease reflects the ongoing trend of lower yields on our loan and investment securities portfolios," said Tallent. "The lower loan portfolio yield reflects competitive pricing pressure on new and renewed loans and new retail product offerings with low introductory rates. Introductory rates on the new retail products will begin to expire and approximately $50 million will reset to a market rate in the third quarter of 2013. The lower investment securities yield is due to reinvestment of cash flows at record low rates. We continue to look for reinvestment opportunities, with a focus on floating-rate securities, to alleviate market and duration risk. At quarter-end, floating-rate securities accounted for 39 percent of the total investment securities portfolio compared to 34 percent last quarter. The higher proportion improves our overall interest sensitivity position by reducing exposure to rising interest rates."
The second quarter taxable equivalent net interest margin was 3.31 percent, down seven basis points from the first quarter and 12 basis points from a year ago. "Our net interest margin will remain under pressure as long as interest rates hold at these unprecedented low levels," stated Tallent. "To offset the impact on net interest revenue, we remain sharply focused on growing the loan portfolio in the mid-single digit range by focusing on retail loans and continuing to add commercial lenders in key markets."
Second quarter fee revenue was $16.3 million, compared to $12.8 million in the first quarter and $12.9 million a year ago. Contributing to these increases were higher mortgage, advisory services and interchange fee revenue, as well as two non-core items in other fee revenue. Mortgage fee revenue increased $348,000 from the first quarter and $681,000 from a year ago, to $3.0 million. Closed mortgage loans totaled $95.2 million in the second quarter, compared with $69.8 million in the first quarter and $79.8 million in the second quarter of 2012.
The two non-core items that contributed to the increase in other fee revenue were a $1.37 million recovery on a bank-owned life insurance policy and a $468,000 gain from the sale of low-income housing tax credits. In addition, other fee revenue included customer derivative fees of $488,000 compared with $252,000 in the first quarter of 2013. These fees are from the company's newly rolled-out loan swap program for commercial loan customers.
Operating expenses, excluding foreclosed property costs, were $43.7 million in the second quarter of 2013 compared to $41.4 million for the first quarter of 2013 and $42.5 million a year ago. The increase from both periods was due mostly to higher severance costs; second quarter 2013 severance costs were $1.56 million compared with $360,000 and $1.16 million for the first quarter of 2013 and the second quarter of 2012, respectively. Also contributing to the increase in operating expenses were higher mortgage and brokerage incentives related to the higher revenue levels and higher consulting fees associated with various revenue enhancement and efficiency projects.
Foreclosed property costs were $5.15 million in the second quarter of 2013 compared to $2.33 million in the first quarter and $1.85 million a year ago. The higher total reflects losses incurred on the accelerated sales of foreclosed properties. Included in second quarter 2013 costs were $4.31 million in net losses and write-downs and $837,000 for maintenance. For the first quarter of 2013, foreclosed property costs included $1.15 million in net losses and write-downs and $1.19 million in maintenance. Second quarter 2012 foreclosed property costs included $739,000 in net losses and write-downs and $1.11 million in maintenance.
As of June 30, 2013, capital ratios were as follows: Tier 1 Risk-Based of 13.7 percent; Total Risk-Based of 15.2 percent; Tier 1 Common Risk-Based of 8.5 percent; and, Tangible Equity-to-Assets of 11.5 percent. The average Tier 1 Leverage ratio was 9.8 percent at June 30, 2013.
"With credit quality now well under control, our attention is focused on growing our business and improving earnings performance," concluded Tallent. "In a competitive landscape, we must work more efficiently to achieve our goals, all while maintaining the best customer satisfaction scores in the industry. This team is more than up to the challenge and fully committed."
Conference Call
United will hold a conference call today, Thursday, July 25, 2013, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 11766770. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of United's website at .
About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks, Inc. is the third-largest bank holding company in Georgia. United has assets of $7.2 billion and operates 103 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and western South Carolina. United specializes in providing personalized community banking services to individuals and small to mid-size businesses and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United's common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United's website at .
Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United's filings with the Securities and Exchange Commission including its 2012 Annual Report on Form 10-K under the sections entitled "Forward-Looking Statements" and "Risk Factors." Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
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Datum: 25.07.2013 - 03:30 Uhr
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