United Community Banks, Inc. (UCB) Earnings Call Transcript & Summary

Welcome to the 2021 Annual Meeting for United Community Banks, Inc. Our host for today's call is Lynn Harton, Chairman, President and CEO. [Operator Instructions] I'll now turn the call over to your host, Mr. Harton, you may now begin, sir.

Well, thank you, and good afternoon, everyone. Welcome to the 2021 Annual Shareholders Meeting of United Community Banks, Inc. It is certainly my pleasure to welcome you here. As you all know, these have been and continue to be interesting and challenging times, but one side benefit of all this is I think we've become much better at virtual meetings. And so we're glad to be hosting with you virtually today. This format allows us all to not only save travel time for you, but allows us to reach a greater number of our shareholders. We have shareholders attending both via the web portal and the 800 number that we have provided, and we'll conduct the business portion of our meeting first and answer questions at the end of the meeting. So now to call it to order. And keeping with the digital approach to this year's meeting, it is announced shortly after 3:00 p.m. Eastern Standard Time on May 12, and this meeting is officially called to order. And now I'd like to introduce the other executive officers present at today's meeting; Jefferson Harralson, Chief Financial Officer; Rob Edwards, Chief Risk Officer; Melinda Davis Lux, General Counsel and Corporate Secretary; Rich Bradshaw, President and Chief Banking Officer of the Bank; Mark Terry, Chief Information Officer. And now I would like to introduce the other members of the Board present in person or virtually at today's meeting. Bob Blalock, Jim Clements, Cathy Cox, Ken Daniels, Lance Drummond, Jen Mann, Tom Richlovsky, David Shaver, Tim Wallis and David Wilkins. We are also joined here today by PricewaterhouseCoopers, our independent auditors. They will be available during the question-and-answer session after the meeting to respond to any appropriate questions. And finally, the company has appointed Louis Larsen to act as inspector of election. Mr. Larsen, a representative of Broadridge, is with us today and has taken the oath of inspector of election earlier today. Now it is my pleasure to introduce our General Counsel and Corporate Secretary, Melinda Davis Lux, who will act as Secretary of today's meeting.

Thank you, Lynn. After the formal meeting has been adjourned, we will provide time for general questions. [Operator Instructions] The Board of Directors fixed March 15, 2021, as a record date for determining shareholders entitled to vote at this meeting. An affidavit has been delivered, attesting to the fact that either a notice of Internet availability of the notice of the meeting, the proxy statement and the 2020 annual report to shareholders or the documents themselves, were mailed on or about March 30, 2021, to all shareholders as of the record date, and will be incorporated into the minutes of this meeting. The shareholder list shows that as of the record date, there were 86,774,637 shares of common stock, outstanding and entitled to vote at this meeting. We are informed by the inspector of election that they are represented in person or by proxy, shares of common stock representing 79,633,938 votes or approximately 92% of the voting power on the record date. Because this represents more than a majority of the voting power on all issued and outstanding stock entitled to vote on the record date, a quorum is present for purposes of transacting business. Now I will present the matters to be voted upon. We will give shareholders an opportunity to comment on the proposals themselves after all of the proposals have been presented. Proposal 1 is the election of Directors. The current Board has nominated Bob Blalock, Jim Clements, Cathy Cox, Ken Daniels, Lance Drummond, Lynn Harton, Jen Mann, Tom Richlovsky, David Shaver, Tim Wallis and David Wilkins for election as Directors to hold office until the 2022 Annual Meeting of Shareholders or until their successors are duly elected and qualified. No other nominations have been submitted. In accordance with the company's bylaws, I declare nominations closed. Proposal 2 is the vote to approve an amendment to our restated articles of incorporation as amended to increase the number of shares of our $1 par value voting common stock available for issuance from 150 million to 200 million. Proposal 3 is the advisory vote to approve the compensation of our named executive officers as described in the proxy statement. This vote is often called a say-on-pay vote. Last year, the shareholders voted that their preference was to hold a say-on-pay vote on an annual basis, and the Board elected to do so. It is a nonbinding vote, although the Talent and Compensation Committee and the Board will take the results of the vote into account when making future compensation decisions. Proposal 4 is the vote to ratify the appointment of PricewaterhouseCoopers as our independent registered public accountants for 2021. This is also an advisory vote. However, an adverse vote will be considered a direction to the Audit Committee to consider other auditors for the following year. If any shareholder would like to make a comment regarding any of the proposals, please submit your comments through the web portal now. Okay. There are no comments. It is now 3:07 p.m. Eastern Time on May 12, 2021, and the polls are now open. Any shareholder who hasn't yet voted or wishes to change his or her vote may do so by clicking on the voting button on the web portal and following the instructions there. Shareholders who have sent in proxies or voted by telephone or internet and do not want to change their vote, do not need to take any further action. We'll pause to allow for voting. [Voting]

Now that everyone has had the opportunity to vote, I now declare the polls for the 2021 United Community Bank, Inc. Annual Shareholder Meeting closed at 3:08 p.m. Eastern Time on May 12, 2021. We have been informed by the inspector of election that the preliminary vote report shows that the nominees for election to the Board have been duly elected; the amendment to our restated articles of incorporation, as amended, to increase the number of shares of our voting common stock available for issuance from 150 million to 200 million have been approved; the compensation of the named executive officers has been approved by advisory vote; and the selection of PricewaterhouseCoopers as the company's independent accounting firm has been approved.

Thank you, Melinda. There being no further business to come before the meeting, the 2021 Annual Meeting of Shareholders of United Community Banks, Inc. is now adjourned. And I'll make a few remarks followed by a question-and-answer session. We all know that 2020 was highly unusual and full of challenges. We have all been focused on keeping safe, caring for friends and family, and in our case, as an essential business, remaining open while the pandemic raged. And while challenging in many ways, this was a very rewarding time for our teams. United has a servant's heart, and we were energized by the opportunity to make a difference for our customers during this time. Some examples of that were, we approved and funded over 17,000 PPP loans for more than $1.9 billion to help our small businesses survive this crisis. We've also assisted over 10,000 of our PPP customers, representing approximately $1 billion in obtaining full forgiveness to date. We provided deferrals to our customers, representing $1.9 billion in outstandings when times were uncertain. I'm glad to report that due to the recovery of the economy and the resilience of our customers, our deferrals are now down to only $48 million. We increased electronic banking limits for our customers to make it easier for them to bank remotely. We increased our communication informing our customers of ways to navigate the crisis and keeping our employees connected with our strategies and goals. We added call center capacity from across the branch network to handle the increased volume of calls that we have experienced during this time. We also increased our social media awareness and reach to continue to stay in front of those we serve. And finally, we created the United Community Bank Foundation and seeded it with a $10 million contribution to amplify the community service efforts of our teams across our footprint. We entered this crisis in excellent financial shape with strong levels of profitability, with a pretax preprovision return on assets of 2%, which is 20% higher than the KRX peer median. We entered with high capital levels with a Tier 1 risk-based capital ratio over 13%, 108 basis points better than our peer medians. And with abundant liquidity with higher DDA balances as a percentage of deposits, lower reliance on wholesale funding, a lower loan-to-deposit ratio and lower overall deposit costs, all when compared to peers. Today, we are even stronger. In 2020, we earned $1.98 per share on an operating basis, even while building a reserve by $75 million, and making the previously mentioned $10 million contribution to the United Community Bank Foundation. Excluding PPP loans, our organic loan growth was 8% and our organic deposit growth was 36%. Mortgage revenue set new records with $76 million in fee income, an increase of 180%. Our first quarter results were also strong with a return on assets of 1.65% and a return on tangible common equity of 19.7%. Our financial strength helps us weather storms, but it is our people that are our greatest asset. Once again, in both 2020 and just 2 weeks ago in 2021, the United team for the seventh time out of the past 8 years, earned the honor of being named by J.D. Power as providing the best retail customer satisfaction in the southeast. Our teams are no strangers to recognition as they have consistently earned awards from Customer Service Profiles, Greenwich Associates and Forbes for their passion for service. As we enter a new decade and emerge from the pandemic, we are proud to have built one of the best financial institutions in the south. The ability of our team to come together, pursue a common purpose has given us a foundation of which I am extremely proud. And as we continue to navigate continuing changes in our environment in our industry, we rely on our fundamental belief that we can add to our long-term value by focusing on the people that make us great, our employees and our customers. With great people leading the way of providing class-leading service to our customers, we are confident we can continue to provide strong returns to our shareholders. And we know that we'll make a significant positive impact in our communities. Thank you for your support. And once again, congratulations to the 2,441 United employees that make this company great.

[Operator Instructions] During this portion of the meeting, as many questions as time allows will be answered. But only questions that are germane to the meeting will be addressed.

Okay. That concludes the question-and-answer portion of today's meeting. And on behalf of the Board of Directors and our team, thank you for your continued support of the bank that service built. We appreciate your attendance in today's meeting.