EX-99.1 2 c03710exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(UNITED COMMUNITY BANKS INC. LOGO)
For Immediate Release
For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com
UNITED COMMUNITY BANKS, INC. REPORTS
NET OPERATING LOSS FOR SECOND QUARTER 2010
   
Completed sale of $103 million of nonperforming assets that resulted in a non-cash charge of $45.3 million
   
Nonperforming assets decline 17 percent from last quarter
   
Provision for loan losses was $61.5 million, down $13.5 million from last quarter
   
Allowance-to-loans ratio increases to 3.57 percent
   
Margin improves 11 basis points to 3.60 percent
BLAIRSVILLE, GA — July 23, 2010 — United Community Banks, Inc. (NASDAQ: UCBI) today reported a net operating loss from continuing operations of $59.5 million, or 66 cents per diluted share, for the second quarter of 2010. The second quarter operating loss included a non-cash charge of $45.3 million, or $30.0 million after-tax, resulting from the transaction with Fletcher International (“Fletcher”) to dispose of nonperforming assets. The charge increased the net loss for the quarter by 32 cents per diluted share.
United’s net operating losses from continuing operations for the first six months of 2010 and 2009 were $94.0 million, or $1.05 per diluted share, and $55.3 million, or $1.24 per diluted share, respectively. In the attached schedules, the results of operations for all periods presented have been restated to show earnings from continuing operations, which excludes Brintech’s fee revenue and operating expenses during the periods it was owned by United and the gain from the sale. The net income or loss from Brintech’s discontinued operations is reported as a separate line in the consolidated statement of

 

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income. Also, the net operating loss from continuing operations for the first six months of 2009 excludes a $70 million non-cash charge for impairment of goodwill and $1.8 million in severance costs, net of taxes, relating to a reduction in work force, both of which were incurred during the first quarter and the $7.1 million gain, net of taxes, on the acquisition of Southern Community Bank in the second quarter. These charges and gains were considered non-recurring items and therefore were excluded from operating earnings. Including these non-recurring items, United’s net loss for the first six months of 2010 and 2009 was $92.8 million, or $1.04 per diluted share, and $119.8 million, or $2.57 per diluted share, respectively.
“We made steady progress during the second quarter,” stated Jimmy Tallent, president and chief executive officer. “We completed the sale of $103 million of our most illiquid non-performing loans and foreclosed properties with the granting of a warrant and an option to purchase capital. This transaction was a giant step forward in clearing our books of the more difficult problem assets while at the same time preserving capital. We still see credit challenges ahead of us and elevated levels of charge-offs through the balance of 2010. We are pursuing every opportunity to resolve them in the best interests of our shareholders and return to profitability in early 2011.”
Total loans were $4.9 billion at quarter-end, down $119 million from the end of the first quarter and $640 million from a year earlier. As of quarter-end, residential construction loans were $820 million, or 17 percent of total loans, down $140 million from the prior quarter-end and down $495 million from a year ago. This decline was net of new lending during the quarter that totaled $101 million, primarily commercial and small business loans in metropolitan Atlanta and north Georgia.
Taxable equivalent net interest revenue of $61.6 million was $745,000 higher than the second quarter of 2009. The net interest margin was 3.60 percent for the second quarter 2010, up 32 basis points from a year ago and up 11 basis points from the first quarter. “By staying focused on deposit and loan pricing, we’ve been able to steadily increase our net interest margin and hold net interest revenue above $60 million despite continuing attrition in the loan portfolio,” Tallent said.

 

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“We had our sixth consecutive quarter of core transaction deposit growth, with an increase of $94 million from the first quarter, or 16 percent, on an annualized basis,” Tallent continued. “That compares to core deposit growth of $53 million for the first quarter of 2010 and $224 million from a year ago. We believe this growth is related to disruption in the banking industry and the favorable perception of United as a strong bank with strong service. We are emphasizing these positive attributes, which are always valuable and especially so during difficult times in our industry. We believe this message is being heard and responded to with our successful core deposit program.”
The second quarter 2010 provision for loan losses decreased to $61.5 million from $75 million in the first quarter. Net charge-offs were up $4.7 million from first quarter 2010 and $3.0 million from the second quarter of 2009. Non-performing assets decreased to $348 million at quarter-end from $417 million at March 31, 2010, the lowest level since the first quarter of 2009. The ratios of non-performing assets to total assets at the end of the second and first quarters of 2010 were 4.55 percent and 5.32 percent, respectively. The decrease in non-performing assets and improvement in the ratio of non-performing assets to total assets reflected the sale of $103 million of nonperforming assets early in the second quarter.
The transaction with Fletcher resulted in an after-tax charge of $30.0 million, or $45.3 million pre-tax, primarily due to the recognition of the value of warrant and the option to purchase convertible preferred stock that were granted as part of the sale of the non-performing assets. United recorded the equity instruments at a fair value of $39.8 million that resulted in an increase to capital surplus within shareholders’ equity, which more than offset the $30 million after-tax charge to expenses.
“Even though this transaction resulted in a higher net loss for the quarter, the importance of the strategic objective achieved was very significant,” stated Tallent. “We likely would have carried these illiquid nonperforming assets for many quarters and incurred considerable foreclosure and carrying costs.”

 

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Operating fee revenue was $11.6 million for the second quarter of 2010, compared to $11.3 million a year ago. Service charges and fees of $8.0 million were up $436,000, due primarily to new accounts and an increase in ATM and debit card transactions. Mortgage loan fees of $1.6 million were down $1.2 million due to lower refinancing activities. Other fee revenue increased $262,000 to $1.4 million, due primarily to the gain recognized on ineffectiveness of terminated cash flow hedges on a certain portion of United’s prime-based loans.
Second quarter operating expenses of $58.3 million, excluding the $45.3 million charge for the sale the non-performing assets, increased $4.6 million compared to last year. Foreclosed property costs more than doubled to $14.5 million compared to $5.7 million in the second quarter of 2009. Foreclosed property costs in the second quarter of 2010 included $3.3 million for maintenance, property taxes and other related costs, compared to $2.5 million last year. In addition, write-downs relating to the sale of properties totaled $5.1 million and write-downs of other foreclosed properties totaled $6.1 million, both to help expedite sales of foreclosed properties. Salary and benefit costs totaled $23.6 million, a decrease of $2.7 million from last year due primarily to the 10 percent reduction in workforce in 2009.
“We continued to focus on reducing expenses, and most controllable costs were flat or down compared to a year ago,” commented Tallent. “Last year included the FDIC industry-wide assessment that cost us $3.8 million and a recovery in other expenses of $2.0 million for the reversal of bank owned life insurance surrender charges.”
Excluding the tax effect of the charge from the transaction with Fletcher and a $1.3 million increase in the valuation allowance for deferred tax assets, the effective tax rate for the second quarter of 2010 was 40 percent, which was consistent with the prior quarter. The effective tax rate for the remainder of 2010 is expected to be 40 percent, slightly higher than the effective tax rate for the full year 2009.

 

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As of June 30, 2010, United’s capital ratios were as follows: Tier I Risk Based Capital of 11.1 percent; Leverage of 7.7 percent; and, Total Risk Based Capital of 13.8 percent. The quarterly average tangible equity-to-assets ratio was 9.3 percent and the tangible common equity-to-assets ratio was 6.9 percent.
“We are not where we want to be yet and the economy continues to be stubborn, but we are making important progress,” Tallent said. “Aside from the non-cash loss on the sale of nonperforming assets this quarter, our net operating loss from continuing operations has declined for three consecutive quarters. Residential construction loans, where most of the problems have been, have decreased from a high of 35 percent to 17 percent of total loans at quarter end. We have widened our net interest margin by growing core deposits for six consecutive quarters and obtaining more favorable loan and time deposit pricing. All the while, our customer satisfaction scores lead the industry.”
Conference Call
United Community Banks will hold a conference call today, Friday, July 23, 2010, 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 password ‘85745611.’ The conference call also will be webcast and can be accessed by selecting ‘Calendar of Events’ within the Investor Relations section of the company’s website at www.ucbi.com.
About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $7.7 billion and operates 27 community banks with 106 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the company’s web site at www.ucbi.com.

 

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Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward-Looking Statements” on page 3 of United Community Banks, Inc.’s annual report filed on Form 10-K with the Securities and Exchange Commission.
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UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
                                                                         
                                            Second              
    2010     2009     Quarter     For the Six     YTD  
(in thousands, except per share   Second     First     Fourth     Third     Second     2010-2009     Months Ended     2010-2009  
data; taxable equivalent)   Quarter     Quarter     Quarter     Quarter     Quarter     Change     2010     2009     Change  
INCOME SUMMARY
                                                                       
Interest revenue
  $ 87,699     $ 89,849     $ 97,481     $ 101,181     $ 102,737             $ 177,548     $ 206,299          
Interest expense
    26,072       28,570       33,552       38,177       41,855               54,642       88,005          
 
                                                         
Net interest revenue
    61,627       61,279       63,929       63,004       60,882       1 %     122,906       118,294       4 %
Provision for loan losses
    61,500       75,000       90,000       95,000       60,000               136,500       125,000          
Operating fee revenue (1)
    11,579       11,666       14,447       13,389       11,305       2       23,245       23,128       1  
 
                                                         
Total operating revenue (1)
    11,706       (2,055 )     (11,624 )     (18,607 )     12,187       (4 )     9,651       16,422       (41 )
Operating expenses (2)
    58,308       54,820       60,126       51,426       53,710       9       113,128       105,498       7  
Loss on sale of nonperforming assets
    45,349                                       45,349                
 
                                                         
Operating loss from continuing operations before taxes
    (91,951 )     (56,875 )     (71,750 )     (70,033 )     (41,523 )     (121 )     (148,826 )     (89,076 )     (67 )
Operating income tax benefit
    (32,419 )     (22,417 )     (31,687 )     (26,252 )     (18,394 )             (54,836 )     (33,815 )        
 
                                                         
Net operating loss from continuing operations (1)(2)
    (59,532 )     (34,458 )     (40,063 )     (43,781 )     (23,129 )     (157 )     (93,990 )     (55,261 )     (70 )
Gain from acquisition, net of tax expense
                            7,062                     7,062          
Noncash goodwill impairment charges
                      (25,000 )                         (70,000 )        
Severance costs, net of tax benefit
                                                (1,797 )        
(Loss) income from discontinued operations
          (101 )     228       63       66               (101 )     222          
Gain from sale of subsidiary, net of income taxes and selling costs
          1,266                                 1,266                
 
                                                         
Net loss
    (59,532 )     (33,293 )     (39,835 )     (68,718 )     (16,001 )     (272 )     (92,825 )     (119,774 )     22  
Preferred dividends and discount accretion
    2,577       2,572       2,567       2,562       2,559               5,149       5,113          
 
                                                         
Net loss available to common shareholders
  $ (62,109 )   $ (35,865 )   $ (42,402 )   $ (71,280 )   $ (18,560 )           $ (97,974 )   $ (124,887 )        
 
                                                         
 
                                                                       
PERFORMANCE MEASURES
                                                                       
Per common share:
                                                                       
Diluted operating loss from continuing operations (1)(2)
  $ (.66 )   $ (.39 )   $ (.45 )   $ (.93 )   $ (.53 )     (25 )   $ (1.05 )   $ (1.24 )     15  
Diluted loss from continuing operations
    (.66 )     (.39 )     (.45 )     (1.43 )     (.38 )     (74 )     (1.05 )     (2.58 )     59  
Diluted loss
    (.66 )     (.38 )     (.45 )     (1.43 )     (.38 )     (74 )     (1.04 )     (2.57 )     60  
Stock dividends declared (6)
                    1 for 130     1 for 130                   2 for 130          
Book value
    7.71       7.95       8.36       8.85       13.87       (44 )     7.71       13.87       (44 )
Tangible book value (4)
    5.39       5.62       6.02       6.50       8.85       (39 )     5.39       8.85       (39 )
 
                                                                       
Key performance ratios:
                                                                       
Return on equity (3)(5)
    (35.89 )%     (20.10 )%     (22.08 )%     (45.52 )%     (11.42 )%             (27.87 )%     (36.20 )%        
Return on assets (5)
    (3.10 )     (1.70 )     (1.91 )     (3.32 )     (.78 )             (2.39 )     (2.93 )        
Net interest margin (5)
    3.60       3.49       3.40       3.39       3.28               3.55       3.18          
Operating efficiency ratio from continuing operations (1)(2)
    141.60       75.22       78.74       68.35       73.68               108.48       74.38          
Equity to assets
    11.84       11.90       11.94       10.27       10.71               11.87       11.20          
Tangible equity to assets (4)
    9.26       9.39       9.53       7.55       7.96               9.32       8.10          
Tangible common equity to assets (4)
    6.91       7.13       7.37       5.36       5.77               7.02       5.93          
Tangible common equity to risk-weighted assets (4)
    9.97       10.03       10.39       10.67       7.49               9.97       7.49          
 
                                                                       
ASSET QUALITY *
                                                                       
Non-performing loans
  $ 224,335     $ 280,802     $ 264,092     $ 304,381     $ 287,848             $ 224,335     $ 287,848          
Foreclosed properties
    123,910       136,275       120,770       110,610       104,754               123,910       104,754          
 
                                                         
Total non-performing assets (NPAs)
    348,245       417,077       384,862       414,991       392,602               348,245       392,602          
Allowance for loan losses
    174,111       173,934       155,602       150,187       145,678               174,111       145,678          
Net charge-offs
    61,323       56,668       84,585       90,491       58,312               117,991       101,593          
Allowance for loan losses to loans
    3.57 %     3.48 %     3.02 %     2.80 %     2.64 %             3.57 %     2.64 %        
Net charge-offs to average loans (5)
    4.98       4.51       6.37       6.57       4.18               4.75       3.64          
NPAs to loans and foreclosed properties
    6.97       8.13       7.30       7.58       6.99               6.97       6.99          
NPAs to total assets
    4.55       5.32       4.81       4.91       4.63               4.55       4.63          
 
                                                                       
AVERAGE BALANCES ($ in millions)
                                                                       
Loans
  $ 5,011     $ 5,173     $ 5,357     $ 5,565     $ 5,597       (10 )   $ 5,091     $ 5,636       (10 )
Investment securities
    1,532       1,518       1,529       1,615       1,771       (13 )     1,525       1,742       (12 )
Earning assets
    6,854       7,085       7,487       7,401       7,442       (8 )     6,969       7,486       (7 )
Total assets
    7,704       7,946       8,287       8,208       8,212       (6 )     7,825       8,291       (6 )
Deposits
    6,375       6,570       6,835       6,690       6,545       (3 )     6,472       6,662       (3 )
Shareholders’ equity
    912       945       989       843       879       4       929       923       1  
Common shares — basic (thousands)
    94,524       94,390       94,219       49,771       48,794       94       94,453       48,560       95  
Common shares — diluted (thousands)
    94,524       94,390       94,219       49,771       48,794       94       94,453       48,560       95  
 
                                                                       
AT PERIOD END ($ in millions)
                                                                       
Loans *
  $ 4,873     $ 4,992     $ 5,151     $ 5,363     $ 5,513       (12 )   $ 4,873     $ 5,513       (12 )
Investment securities
    1,488       1,527       1,530       1,533       1,817       (18 )     1,488       1,817       (18 )
Total assets
    7,652       7,837       8,000       8,444       8,477       (10 )     7,652       8,477       (10 )
Deposits
    6,330       6,488       6,628       6,821       6,849       (8 )     6,330       6,849       (8 )
Shareholders’ equity
    904       926       962       1,007       855       6       904       855       6  
Common shares outstanding (thousands)
    94,281       94,176       94,046       93,901       48,933       93       94,281       48,933       93  
     
(1)   Excludes the gain from acquisition of $11.4 million, (income tax expense of $4.3 million) in the second quarter of 2009 and revenue generated by discontinued operations in all periods presented.
 
(2)   Excludes goodwill impairment charges of $25 million and $70 million in the third and first quarters of 2009, respectively, severance costs of $2.9 million, (income tax benefit of $1.1 million) in the first quarter of 2009 and expenses relating to discontinued operations for all periods presented.
 
(3)   Net loss available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss).
 
(4)   Excludes effect of acquisition related intangibles and associated amortization.
 
(5)   Annualized.
 
(6)   Number of new shares issued for shares currently held.
 
*   Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.

 

 


 

UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
Selected Financial Information
                                                         
    2010     2009     For the Six  
(in thousands, except per share   Second     First     Fourth     Third     Second     Months Ended  
data; taxable equivalent)   Quarter     Quarter     Quarter     Quarter     Quarter     2010     2009  
 
                                                       
Interest revenue reconciliation
                                                       
Interest revenue — taxable equivalent
  $ 87,699     $ 89,849     $ 97,481     $ 101,181     $ 102,737     $ 177,548     $ 206,299  
Taxable equivalent adjustment
    (500 )     (493 )     (601 )     (580 )     (463 )     (993 )     (951 )
 
                                         
Interest revenue (GAAP)
  $ 87,199     $ 89,356     $ 96,880     $ 100,601     $ 102,274     $ 176,555     $ 205,348  
 
                                         
 
                                                       
Net interest revenue reconciliation
                                                       
Net interest revenue — taxable equivalent
  $ 61,627     $ 61,279     $ 63,929     $ 63,004     $ 60,882     $ 122,906     $ 118,294  
Taxable equivalent adjustment
    (500 )     (493 )     (601 )     (580 )     (463 )     (993 )     (951 )
 
                                         
Net interest revenue (GAAP)
  $ 61,127     $ 60,786     $ 63,328     $ 62,424     $ 60,419     $ 121,913     $ 117,343  
 
                                         
 
                                                       
Fee revenue reconciliation
                                                       
Operating fee revenue
  $ 11,579     $ 11,666     $ 14,447     $ 13,389     $ 11,305     $ 23,245     $ 23,128  
Gain from acquisition
                            11,390             11,390  
 
                                         
Fee revenue (GAAP)
  $ 11,579     $ 11,666     $ 14,447     $ 13,389     $ 22,695     $ 23,245     $ 34,518  
 
                                         
 
                                                       
Total revenue reconciliation
                                                       
Total operating revenue
  $ 11,706     $ (2,055 )   $ (11,624 )   $ (18,607 )   $ 12,187     $ 9,651     $ 16,422  
Taxable equivalent adjustment
    (500 )     (493 )     (601 )     (580 )     (463 )     (993 )     (951 )
Gain from acquisition
                            11,390             11,390  
 
                                         
Total revenue (GAAP)
  $ 11,206     $ (2,548 )   $ (12,225 )   $ (19,187 )   $ 23,114     $ 8,658     $ 26,861  
 
                                         
 
                                                       
Expense reconciliation
                                                       
Operating expense
  $ 103,657     $ 54,820     $ 60,126     $ 51,426     $ 53,710     $ 158,477     $ 105,498  
Noncash goodwill impairment charge
                      25,000                   70,000  
Severance costs
                                        2,898  
 
                                         
Operating expense (GAAP)
  $ 103,657     $ 54,820     $ 60,126     $ 76,426     $ 53,710     $ 158,477     $ 178,396  
 
                                         
 
                                                       
Loss from continuing operations before taxes reconciliation
                                                       
Operating loss from continuing operations before taxes
  $ (91,951 )   $ (56,875 )   $ (71,750 )   $ (70,033 )   $ (41,523 )   $ (148,826 )   $ (89,076 )
Taxable equivalent adjustment
    (500 )     (493 )     (601 )     (580 )     (463 )     (993 )     (951 )
Gain from acquisition
                            11,390             11,390  
Noncash goodwill impairment charge
                      (25,000 )                 (70,000 )
Severance costs
                                        (2,898 )
 
                                         
Loss from continuing operations before taxes (GAAP)
  $ (92,451 )   $ (57,368 )   $ (72,351 )   $ (95,613 )   $ (30,596 )   $ (149,819 )   $ (151,535 )
 
                                         
 
                                                       
Income tax benefit reconciliation
                                                       
Operating income tax benefit
  $ (32,419 )   $ (22,417 )   $ (31,687 )   $ (26,252 )   $ (18,394 )   $ (54,836 )   $ (33,815 )
Taxable equivalent adjustment
    (500 )     (493 )     (601 )     (580 )     (463 )     (993 )     (951 )
Gain from acquisition, tax expense
                            4,328             4,328  
Severance costs, tax benefit
                                        (1,101 )
 
                                         
Income tax benefit (GAAP)
  $ (32,919 )   $ (22,910 )   $ (32,288 )   $ (26,832 )   $ (14,529 )   $ (55,829 )   $ (31,539 )
 
                                         
 
                                                       
Diluted loss from continuing operations per common share reconciliation
                                                       
Diluted operating loss from continuing operations per common share
  $ (.66 )   $ (.39 )   $ (.45 )   $ (.93 )   $ (.53 )   $ (1.05 )   $ (1.24 )
Gain from acquisition
                            .15             .15  
Noncash goodwill impairment charge
                      (.50 )                 (1.45 )
Severance costs
                                        (.04 )
 
                                         
Diluted loss from continuing operations per common share (GAAP)
  $ (.66 )   $ (.39 )   $ (.45 )   $ (1.43 )   $ (.38 )   $ (1.05 )   $ (2.58 )
 
                                         
 
                                                       
Book value per common share reconciliation
                                                       
Tangible book value per common share
  $ 5.39     $ 5.62     $ 6.02     $ 6.50     $ 8.85     $ 5.39     $ 8.85  
Effect of goodwill and other intangibles
    2.32       2.33       2.34       2.35       5.02       2.32       5.02  
 
                                         
Book value per common share (GAAP)
  $ 7.71     $ 7.95     $ 8.36     $ 8.85     $ 13.87     $ 7.71     $ 13.87  
 
                                         
 
                                                       
Efficiency ratio from continuing operations reconciliation
                                                       
Operating efficiency ratio from continuing operations
    141.60 %     75.22 %     78.74 %     68.35 %     73.68 %     108.48 %     74.38 %
Gain from acquisition
                            (9.96 )           (5.53 )
Noncash goodwill impairment charge
                      33.22                   45.69  
Severance costs
                                        1.89  
 
                                         
Efficiency ratio from continuing operations (GAAP)
    141.60 %     75.22 %     78.74 %     101.57 %     63.72 %     108.48 %     116.43 %
 
                                         
 
                                                       
Average equity to assets reconciliation
                                                       
Tangible common equity to assets
    6.91 %     7.13 %     7.37 %     5.36 %     5.77 %     7.02 %     5.93 %
Effect of preferred equity
    2.35       2.26       2.16       2.19       2.19       2.30       2.17  
 
                                         
Tangible equity to assets
    9.26       9.39       9.53       7.55       7.96       9.32       8.10  
Effect of goodwill and other intangibles
    2.58       2.51       2.41       2.72       2.75       2.55       3.10  
 
                                         
Equity to assets (GAAP)
    11.84 %     11.90 %     11.94 %     10.27 %     10.71 %     11.87 %     11.20 %
 
                                         
 
                                                       
Actual tangible common equity to risk-weighted assets reconciliation
                                                       
Tangible common equity to risk-weighted assets
    9.97 %     10.03 %     10.39 %     10.67 %     7.49 %     9.97 %     7.49 %
Effect of other comprehensive income
    (.87 )     (.85 )     (.87 )     (.90 )     (.72 )     (.87 )     (.72 )
Effect of deferred tax limitation
    (2.47 )     (1.75 )     (1.27 )     (.58 )     (.22 )     (2.47 )     (.22 )
Effect of trust preferred
    1.03       1.00       .97       .92       .90       1.03       .90  
Effect of preferred equity
    3.41       3.29       3.19       3.04       2.99       3.41       2.99  
 
                                         
Tier I capital ratio (Regulatory)
    11.07 %     11.72 %     12.41 %     13.15 %     10.44 %     11.07 %     10.44 %
 
                                         

 

 


 

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
                                                         
    2010     2009     Linked     Year over  
    Second     First     Fourth     Third     Second     Quarter     Year  
(in millions)   Quarter(1)     Quarter(1)     Quarter(1)     Quarter(1)     Quarter(1)     Change     Change  
LOANS BY CATEGORY
                                                       
Commercial (sec. by RE)
  $ 1,780     $ 1,765     $ 1,779     $ 1,787     $ 1,797     $ 15     $ (17 )
Commercial construction
    342       357       363       380       379       (15 )     (37 )
Commercial & industrial
    441       381       390       403       399       60       42  
 
                                             
Total commercial
    2,563       2,503       2,532       2,570       2,575       60       (12 )
Residential construction
    820       960       1,050       1,185       1,315       (140 )     (495 )
Residential mortgage
    1,356       1,390       1,427       1,461       1,470       (34 )     (114 )
Consumer / installment
    134       139       142       147       153       (5 )     (19 )
 
                                             
Total loans
  $ 4,873     $ 4,992     $ 5,151     $ 5,363     $ 5,513       (119 )     (640 )
 
                                             
 
                                                       
LOANS BY MARKET
                                                       
Atlanta MSA
  $ 1,373     $ 1,404     $ 1,435     $ 1,526     $ 1,605       (31 )     (232 )
Gainesville MSA
    343       372       390       402       413       (29 )     (70 )
North Georgia
    1,808       1,814       1,884       1,942       1,978       (6 )     (170 )
Western North Carolina
    738       756       772       786       794       (18 )     (56 )
Coastal Georgia
    356       388       405       440       455       (32 )     (99 )
East Tennessee
    255       258       265       267       268       (3 )     (13 )
 
                                             
Total loans
  $ 4,873     $ 4,992     $ 5,151     $ 5,363     $ 5,513       (119 )     (640 )
 
                                             
 
                                                       
RESIDENTIAL CONSTRUCTION
                                                       
Dirt loans
                                                       
Acquisition & development
  $ 214     $ 290     $ 332     $ 380     $ 413       (76 )     (199 )
Land loans
    110       124       127       159       159       (14 )     (49 )
Lot loans
    311       321       336       336       369       (10 )     (58 )
 
                                             
Total
    635       735       795       875       941       (100 )     (306 )
 
                                             
 
                                                       
House loans
                                                       
Spec
    125       153       178       218       268       (28 )     (143 )
Sold
    60       72       77       92       106       (12 )     (46 )
 
                                             
Total
    185       225       255       310       374       (40 )     (189 )
 
                                             
Total residential construction
  $ 820     $ 960     $ 1,050     $ 1,185     $ 1,315       (140 )     (495 )
 
                                             
 
                                                       
RESIDENTIAL CONSTRUCTION - ATLANTA MSA
                                                       
Dirt loans
                                                       
Acquisition & development
  $ 52     $ 66     $ 76     $ 100     $ 124       (14 )     (72 )
Land loans
    32       43       43       61       63       (11 )     (31 )
Lot loans
    39       47       52       54       81       (8 )     (42 )
 
                                             
Total
    123       156       171       215       268       (33 )     (145 )
 
                                             
 
       
House loans
                                                       
Spec
    50       58       68       91       127       (8 )     (77 )
Sold
    10       14       16       22       29       (4 )     (19 )
 
                                             
Total
    60       72       84       113       156       (12 )     (96 )
 
                                             
Total residential construction
  $ 183     $ 228     $ 255     $ 328     $ 424       (45 )     (241 )
 
                                             
     
(1)   Excludes total loans of $80.8 million, $79.5 million, $85.1 million, $104.0 million and $109.9 million as of June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.

 

 


 

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality
(1)
                                                                         
    Second Quarter 2010     First Quarter 2010     Fourth Quarter 2009  
    Non-performing     Foreclosed     Total     Non-performing     Foreclosed     Total     Non-performing     Foreclosed     Total  
(in thousands)   Loans     Properties     NPAs     Loans     Properties     NPAs     Loans     Properties     NPAs  
NPAs BY CATEGORY
                                                                       
Commercial (sec. by RE)
  $ 56,013     $ 13,297     $ 69,310     $ 45,918     $ 21,597     $ 67,515     $ 37,040     $ 15,842     $ 52,882  
Commercial construction
    17,872       11,339       29,211       23,556       14,285       37,841       19,976       9,761       29,737  
Commercial & industrial
    7,245             7,245       3,610             3,610       3,946             3,946  
 
                                                     
Total commercial
    81,130       24,636       105,766       73,084       35,882       108,966       60,962       25,603       86,565  
Residential construction
    88,375       74,444       162,819       147,326       74,220       221,546       142,332       76,519       218,851  
Residential mortgage
    53,175       24,830       78,005       57,920       26,173       84,093       58,767       18,648       77,415  
Consumer / installment
    1,655             1,655       2,472             2,472       2,031             2,031  
 
                                                     
Total NPAs
  $ 224,335     $ 123,910     $ 348,245     $ 280,802     $ 136,275     $ 417,077     $ 264,092     $ 120,770     $ 384,862  
 
                                                     
 
                                                                       
NPAs BY MARKET
                                                                       
Atlanta MSA
  $ 74,031     $ 30,605     $ 104,636     $ 81,914     $ 36,951     $ 118,865     $ 106,536     $ 41,125     $ 147,661  
Gainesville MSA
    10,730       2,750       13,480       17,058       3,192       20,250       5,074       2,614       7,688  
North Georgia
    102,198       60,597       162,795       109,280       63,128       172,408       87,598       53,072       140,670  
Western North Carolina
    22,776       11,473       34,249       31,353       8,588       39,941       29,610       5,096       34,706  
Coastal Georgia
    8,341       16,548       24,889       33,438       21,871       55,309       26,871       17,150       44,021  
East Tennessee
    6,259       1,937       8,196       7,759       2,545       10,304       8,403       1,713       10,116  
 
                                                     
Total NPAs
  $ 224,335     $ 123,910     $ 348,245     $ 280,802     $ 136,275     $ 417,077     $ 264,092     $ 120,770     $ 384,862  
 
                                                     
 
                                                                       
NPA ACTIVITY
                                                                       
Beginning Balance
  $ 280,802     $ 136,275     $ 417,077     $ 264,092     $ 120,770     $ 384,862     $ 304,381     $ 110,610     $ 414,991  
Loans placed on non-accrual
    155,007             155,007       139,030             139,030       174,898             174,898  
Payments received
    (12,189 )           (12,189 )     (5,733 )           (5,733 )     (26,935 )           (26,935 )
Loan charge-offs
    (62,693 )           (62,693 )     (58,897 )           (58,897 )     (88,427 )           (88,427 )
Foreclosures
    (66,994 )     66,994             (49,233 )     49,233             (79,983 )     79,983        
Capitalized costs
          305       305             320       320             981       981  
Note / property sales
    (69,598 )     (68,472 )     (138,070 )     (8,457 )     (25,951 )     (34,408 )     (19,842 )     (61,228 )     (81,070 )
Write downs
          (6,094 )     (6,094 )           (4,579 )     (4,579 )           (2,209 )     (2,209 )
Net losses on sales
          (5,098 )     (5,098 )           (3,518 )     (3,518 )           (7,367 )     (7,367 )
 
                                                     
Ending Balance
  $ 224,335     $ 123,910     $ 348,245     $ 280,802     $ 136,275     $ 417,077     $ 264,092     $ 120,770     $ 384,862  
 
                                                     
                                                 
    Second Quarter 2010     First Quarter 2010     Fourth Quarter 2009  
            Net Charge-             Net Charge-             Net Charge-  
            Offs to             Offs to             Offs to  
    Net     Average     Net     Average     Net     Average  
(in thousands)   Charge-Offs     Loans (2)     Charge-Offs     Loans (2)     Charge-Offs     Loans (2)  
NET CHARGE-OFFS BY CATEGORY
                                               
Commercial (sec. by RE)
  $ 9,757       2.21 %   $ 1,964       .45 %   $ 3,896       .86 %
Commercial construction
    1,460       1.67       2,206       2.48       4,717       5.03  
Commercial & industrial
    867       .85       4,110       4.31       153       .15  
 
                                         
Total commercial
    12,084       1.91       8,280       1.33       8,766       1.36  
Residential construction
    41,515       18.71       43,100       17.32       67,393       23.87  
Residential mortgage
    6,517       1.90       4,551       1.31       7,026       1.93  
Consumer / installment
    1,207       3.53       737       2.12       1,400       3.83  
 
                                         
Total
  $ 61,323       4.98     $ 56,668       4.51     $ 84,585       6.37  
 
                                         
 
                                               
NET CHARGE-OFFS BY MARKET
                                               
Atlanta MSA
  $ 16,926       4.85 %   $ 15,545       4.32 %   $ 43,595       12.07 %
Gainesville MSA
    2,547       3.01       1,675       1.92       2,273       2.49  
North Georgia
    28,100       6.19       29,747       6.51       18,057       3.57  
Western North Carolina
    7,194       3.86       3,695       1.96       10,091       5.11  
Coastal Georgia
    5,581       6.07       5,649       5.74       8,109       7.72  
East Tennessee
    975       1.53       357       .55       2,460       3.67  
 
                                         
Total
  $ 61,323       4.98     $ 56,668       4.51     $ 84,585       6.37  
 
                                         
     
(1)   Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Annualized.

 

 


 

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(in thousands, except per share data)   2010     2009     2010     2009  
Interest revenue:
                               
Loans, including fees
  $ 70,611     $ 81,691     $ 142,826     $ 163,571  
Investment securities, including tax exempt of $295, $309, $606 and $628
    15,829       20,485       32,032       41,237  
Federal funds sold, commercial paper and deposits in banks
    759       98       1,697       540  
 
                       
Total interest revenue
    87,199       102,274       176,555       205,348  
 
                       
 
                               
Interest expense:
                               
Deposits:
                               
NOW
    1,745       2,843       3,599       6,180  
Money market
    1,829       2,269       3,586       4,506  
Savings
    83       121       167       248  
Time
    17,718       32,064       37,916       68,117  
 
                       
Total deposit interest expense
    21,375       37,297       45,268       79,051  
Federal funds purchased, repurchase agreements and other short-term borrowings
    1,056       595       2,094       1,148  
Federal Home Loan Bank advances
    974       1,203       1,951       2,277  
Long-term debt
    2,667       2,760       5,329       5,529  
 
                       
Total interest expense
    26,072       41,855       54,642       88,005  
 
                       
Net interest revenue
    61,127       60,419       121,913       117,343  
Provision for loan losses
    61,500       60,000       136,500       125,000  
 
                       
Net interest revenue after provision for loan losses
    (373 )     419       (14,587 )     (7,657 )
 
                       
 
                               
Fee revenue:
                               
Service charges and fees
    7,993       7,557       15,440       14,591  
Mortgage loan and other related fees
    1,601       2,825       3,080       5,476  
Brokerage fees
    586       497       1,153       1,186  
Securities losses, net
          (711 )     61       (408 )
Gain from acquisition
          11,390             11,390  
Other
    1,399       1,137       3,511       2,283  
 
                       
Total fee revenue
    11,579       22,695       23,245       34,518  
 
                       
Total revenue
    11,206       23,114       8,658       26,861  
 
                       
 
                               
Operating expenses:
                               
Salaries and employee benefits
    23,590       26,305       47,950       53,618  
Communications and equipment
    3,511       3,571       6,784       7,217  
Occupancy
    3,836       3,818       7,650       7,587  
Advertising and public relations
    1,352       1,125       2,395       2,169  
Postage, printing and supplies
    765       1,288       1,990       2,463  
Professional fees
    2,178       3,195       4,121       6,476  
Foreclosed preoperty
    14,540       5,737       25,353       10,056  
FDIC assessments and other regulatory charges
    3,566       6,810       7,192       9,492  
Amortization of intangibles
    794       739       1,596       1,478  
Other
    4,176       1,122       8,097       4,942  
Loss on sale of nonperforming assets
    45,349             45,349        
Goodwill impairment
                      70,000  
Severance costs
                      2,898  
 
                       
Total operating expenses
    103,657       53,710       158,477       178,396  
 
                       
Loss from continuing operations before income taxes
    (92,451 )     (30,596 )     (149,819 )     (151,535 )
Income tax benefit
    (32,919 )     (14,529 )     (55,829 )     (31,539 )
 
                       
Net loss from continuing operations
    (59,532 )     (16,067 )     (93,990 )     (119,996 )
(Loss) income from discontinued operations, net of income taxes
          66       (101 )     222  
Gain from sale of subsidiary, net of income taxes and selling costs
                1,266        
 
                       
Net loss
    (59,532 )     (16,001 )     (92,825 )     (119,774 )
Preferred stock dividends and discount accretion
    2,577       2,559       5,149       5,113  
 
                       
Net loss available to common shareholders
  $ (62,109 )   $ (18,560 )   $ (97,974 )   $ (124,887 )
 
                       
 
                               
Loss from continuing operations per common share — Basic / Diluted
  $ (.66 )   $ (.38 )   $ (1.05 )   $ (2.58 )
Loss per common share — Basic / Diluted
    (.66 )     (.38 )     (1.04 )     (2.57 )
Weighted average common shares outstanding — Basic / Diluted
    94,524       48,794       94,453       48,560  

 

 


 

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
                         
    June 30,     December 31,     June 30,  
(in thousands, except share and per share data)   2010     2009     2009  
    (unaudited)     (audited)     (unaudited)  
ASSETS
                       
Cash and due from banks
  $ 115,088     $ 126,265     $ 110,943  
Interest-bearing deposits in banks
    105,183       120,382       70,474  
Federal funds sold, commercial paper and short-term investments
    148,227       129,720        
 
                 
Cash and cash equivalents
    368,498       376,367       181,417  
 
                       
Securities available for sale
    1,165,776       1,530,047       1,816,787  
Securities held to maturity (fair value $327,497)
    322,148              
Mortgage loans held for sale
    22,705       30,226       42,185  
Loans, net of unearned income
    4,873,030       5,151,476       5,513,087  
Less allowance for loan losses
    174,111       155,602       145,678  
 
                 
Loans, net
    4,698,919       4,995,874       5,367,409  
 
                       
Assets covered by loss sharing agreements with the FDIC
    156,611       185,938       230,125  
Premises and equipment, net
    180,125       182,038       178,983  
Accrued interest receivable
    29,650       33,867       41,405  
Goodwill and other intangible assets
    223,600       225,196       251,821  
Foreclosed property
    123,910       120,770       104,754  
Other assets
    360,542       319,591       262,469  
 
                 
Total assets
  $ 7,652,484     $ 7,999,914     $ 8,477,355  
 
                 
 
                       
LIABILITIES AND SHAREHOLDERS’ EQUITY
                       
Liabilities:
                       
Deposits:
                       
Demand
  $ 779,934     $ 707,826     $ 714,630  
NOW
    1,326,861       1,335,790       1,273,368  
Money market
    756,370       713,901       573,463  
Savings
    185,176       177,427       180,368  
Time:
                       
Less than $100,000
    1,575,211       1,746,511       1,992,056  
Greater than $100,000
    1,093,975       1,187,499       1,351,527  
Brokered
    611,985       758,880       763,348  
 
                 
Total deposits
    6,329,512       6,627,834       6,848,760  
 
                       
Federal funds purchased, repurchase agreements, and other short-term borrowings
    104,127       101,389       252,493  
Federal Home Loan Bank advances
    104,138       114,501       283,292  
Long-term debt
    150,106       150,066       150,026  
Accrued expenses and other liabilities
    60,184       43,803       87,512  
 
                 
Total liabilities
    6,748,067       7,037,593       7,622,083  
 
                 
 
                       
Shareholders’ equity:
                       
Preferred stock, $1 par value; 10,000,000 shares authorized;
                       
Series A; $10 stated value; 21,700 shares issued and outstanding
    217       217       217  
Series B; $1,000 stated value; 180,000 shares issued and outstanding
    175,050       174,408       173,785  
Common stock, $1 par value; 200,000,000 shares authorized;
                       
94,280,925, 94,045,603 and 48,933,383 shares issued and outstanding
    94,281       94,046       48,933  
Common stock issuable; 284,771, 221,906 and 182,041 shares
    3,898       3,597       3,383  
Capital surplus
    663,836       622,034       450,514  
(Accumulated deficit) retained earnings
    (77,590 )     20,384       136,624  
Accumulated other comprehensive income
    44,725       47,635       41,816  
 
                 
Total shareholders’ equity
    904,417       962,321       855,272  
 
                 
Total liabilities and shareholders’ equity
  $ 7,652,484     $ 7,999,914     $ 8,477,355  
 
                 

 

 


 

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis

For the Three Months Ended June 30,
                                                 
    2010     2009  
    Average             Avg.     Average             Avg.  
(dollars in thousands, taxable equivalent)   Balance     Interest     Rate     Balance     Interest     Rate  
Assets:
                                               
Interest-earning assets:
                                               
Loans, net of unearned income (1)(2)
  $ 5,010,937     $ 70,640       5.65 %   $ 5,597,259     $ 81,567       5.85 %
Taxable securities (3)
    1,503,162       15,534       4.13       1,742,620       20,176       4.63  
Tax-exempt securities (1)(3)
    28,920       482       6.67       28,862       506       7.01  
Federal funds sold and other interest-earning assets
    311,475       1,043       1.34       73,437       488       2.66  
 
                                       
 
                                               
Total interest-earning assets
    6,854,494       87,699       5.13       7,442,178       102,737       5.53  
 
                                       
Non-interest-earning assets:
                                               
Allowance for loan losses
    (193,998 )                     (147,691 )                
Cash and due from banks
    100,931                       101,830                  
Premises and equipment
    181,064                       179,446                  
Other assets (3)
    761,803                       636,377                  
 
                                           
Total assets
  $ 7,704,294                     $ 8,212,140                  
 
                                           
 
                                               
Liabilities and Shareholders’ Equity:
                                               
Interest-bearing liabilities:
                                               
Interest-bearing deposits:
                                               
NOW
  $ 1,325,099     $ 1,745       .53     $ 1,258,134     $ 2,843       .91  
Money market
    746,039       1,829       .98       521,989       2,269       1.74  
Savings
    186,628       83       .18       178,435       121       .27  
Time less than $100,000
    1,605,308       7,887       1.97       1,894,071       15,342       3.25  
Time greater than $100,000
    1,110,010       6,102       2.20       1,325,757       11,513       3.48  
Brokered
    642,954       3,729       2.33       686,070       5,209       3.05  
 
                                       
Total interest-bearing deposits
    5,616,038       21,375       1.53       5,864,456       37,297       2.55  
 
                                       
 
                                               
Federal funds purchased and other borrowings
    104,637       1,056       4.05       220,376       595       1.08  
Federal Home Loan Bank advances
    107,948       974       3.62       309,962       1,203       1.56  
Long-term debt
    150,097       2,667       7.13       151,019       2,760       7.33  
 
                                       
Total borrowed funds
    362,682       4,697       5.19       681,357       4,558       2.68  
 
                                       
 
                                               
Total interest-bearing liabilities
    5,978,720       26,072       1.75       6,545,813       41,855       2.56  
 
                                           
Non-interest-bearing liabilities:
                                               
Non-interest-bearing deposits
    758,558                       680,081                  
Other liabilities
    54,931                       107,036                  
 
                                           
Total liabilities
    6,792,209                       7,332,930                  
Shareholders’ equity
    912,085                       879,210                  
 
                                           
Total liabilities and shareholders’ equity
  $ 7,704,294                     $ 8,212,140                  
 
                                           
 
                                               
Net interest revenue
          $ 61,627                     $ 60,882          
 
                                           
Net interest-rate spread
                    3.38 %                     2.97 %
 
                                           
 
                                               
Net interest margin (4)
                    3.60 %                     3.28 %
 
                                           
     
(1)   Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
 
(2)   Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued.
 
(3)   Securities available for sale are shown at amortized cost. Pretax unrealized gains of $43.6 million in 2010 and $14.7 million in 2009 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.

 

 


 

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
                                                 
    2010     2009  
    Average             Avg.     Average             Avg.  
(dollars in thousands, taxable equivalent)   Balance     Interest     Rate     Balance     Interest     Rate  
Assets:
                                               
Interest-earning assets:
                                               
Loans, net of unearned income (1)(2)
  $ 5,091,445     $ 142,859       5.66 %   $ 5,635,942     $ 163,316       5.84 %
Taxable securities (3)
    1,495,447       31,426       4.20       1,712,778       40,609       4.74  
Tax-exempt securities (1)(3)
    29,482       991       6.72       29,453       1,028       6.98  
Federal funds sold and other interest-earning assets
    352,683       2,272       1.29       107,788       1,346       2.50  
 
                                       
 
                                               
Total interest-earning assets
    6,969,057       177,548       5.13       7,485,961       206,299       5.55  
 
                                       
Non-interest-earning assets:
                                               
Allowance for loan losses
    (190,662 )                     (138,297 )                
Cash and due from banks
    102,728                       103,113                  
Premises and equipment
    181,493                       179,470                  
Other assets (3)
    762,014                       661,520                  
 
                                           
Total assets
  $ 7,824,630                     $ 8,291,767                  
 
                                           
 
                                               
Liabilities and Shareholders’ Equity:
                                               
Interest-bearing liabilities:
                                               
Interest-bearing deposits:
                                               
NOW
  $ 1,343,297     $ 3,599       .54     $ 1,307,865     $ 6,180       .95  
Money market
    734,817       3,586       .98       499,780       4,506       1.82  
Savings
    183,555       167       .18       175,587       248       .28  
Time less than $100,000
    1,648,739       16,778       2.05       1,918,349       32,559       3.42  
Time greater than $100,000
    1,132,767       12,872       2.29       1,359,286       24,338       3.61  
Brokered
    689,717       8,266       2.42       735,844       11,220       3.07  
 
                                       
Total interest-bearing deposits
    5,732,892       45,268       1.59       5,996,711       79,051       2.66  
 
                                       
 
                                               
Federal funds purchased and other borrowings
    103,355       2,094       4.09       185,639       1,148       1.25  
Federal Home Loan Bank advances
    111,150       1,951       3.54       257,742       2,277       1.78  
Long-term debt
    150,088       5,329       7.16       151,009       5,529       7.38  
 
                                       
Total borrowed funds
    364,593       9,374       5.18       594,390       8,954       3.04  
 
                                       
 
                                               
Total interest-bearing liabilities
    6,097,485       54,642       1.81       6,591,101       88,005       2.69  
 
                                           
Non-interest-bearing liabilities:
                                               
Non-interest-bearing deposits
    738,876                       665,170                  
Other liabilities
    59,605                       112,382                  
 
                                           
Total liabilities
    6,895,966                       7,368,653                  
Shareholders’ equity
    928,664                       923,114                  
 
                                           
Total liabilities and shareholders’ equity
  $ 7,824,630                     $ 8,291,767                  
 
                                           
 
                                               
Net interest revenue
          $ 122,906                     $ 118,294          
 
                                           
Net interest-rate spread
                    3.32 %                     2.86 %
 
                                           
 
                                               
Net interest margin (4)
                    3.55 %                     3.18 %
 
                                           
     
(1)   Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
 
(2)   Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued.
 
(3)   Securities available for sale are shown at amortized cost. Pretax unrealized gains of $43.4 million in 2010 and $12.7 million in 2009 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.