United Community Banks, Inc.

Good morning and welcome to United Community Bank's fourth quarter 2020 earnings call. Hosting the call today are Chairman and Chief Executive Officer Lynn Harten, Chief Financial Officer Jefferson Harrelson, Chief Banking Officer Rich Bradshaw, and Chief Risk Officer Rob Edwards. United's presentation today includes references to operating earnings, pre-tax, pre-credit earnings, and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release, as well as at the end of the investor presentation. Both are included on the website at ucbi.com. Copies of the fourth quarter's earnings release and investor presentation were filed last night on Form 8K with the SEC, and a replay of this call will be available in the investor relations section of the company's website at ucbi.com. Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statement should be considered in light of risks and uncertainties described on page 3 of the company's 2019 Form 10-K, as well as other information provided by the company in its filings with the SEC and included on its website. At this time, I'll turn the call over to Lynn Hartin.

Good morning, and thank you all for joining our call. Results this quarter were driven both by strong underlying business performance and a very successful start to PPP forgiveness. EPS came in at 66 cents on a gap basis and 68 cents on an operating basis, both representing solid improvements over both last quarter and last year. Our return on assets of 1.3% drove a return on common equity of 12.4%. On an operating basis, our return on assets was 1.34%, and we reached 16.3% in our return on tangible common equity. These numbers include a discretionary $8.5 million contribution to the United Community Bank Foundation. Excluding this, our operating ROA was 1.49%, and our earnings per share was 75 cents. For some time, I've wanted to take a more strategic approach to our charitable giving, and in doing so, make an even greater positive impact in our communities. Having the one-time gain from PPP fees seemed like the perfect opportunity to launch that initiative. I believe this will be a win-win for all of our constituents. It certainly will be good for our communities as we focus on improving the vitality of our markets. Our employees are excited about having support from the foundation for the local charitable events and boards that they have served on for many years. It will also enhance our brand as the bank that Service built and continue to differentiate us in our markets from the banks we compete with. Our teams continue to deliver strong loan and deposit growth with 8% core loan growth and 13% annualized core transaction deposit growth. We are continuing to drive down deposit cost, which fell to 17 basis points this quarter, down 8 basis points from last quarter. The low rate environment has pressured the margin, which without PPP fees would have declined about 10 basis points. Credit continues to perform well. Net charge-offs were five basis points for the quarter, and non-performing assets were 55 basis points of total loans. We are seeing increases in criticized and classified loan levels, as you would expect, driven by COVID-impacted segments. Our allowance was essentially flat for the quarter as improving economic forecasts offset the provisions needed for loan growth. This was a strong quarter for the company, and it reflects great efforts by our teams throughout the bank to maintain focus and continue to take care of our customers. For more details, I'll turn it over to the team here, and I'll start with Rob.

Thank you, Lynn. I will start my comments on page 7. We were pleased with our loan growth in the quarter. Excluding PPP loans, we had $243 million in loan growth, which translates into 8% annualized growth in the quarter. Growth was well distributed across different portfolios from residential to equipment finance to commercial to real estate. We were also pleased with the progress we made in helping our PPP borrowers achieve forgiveness, with just over half of our PPP loans being forgiven in Q4. On page 8, we also feel good about our credit quality given the stress in the economy and the high degree of uncertainty. Our net charge-offs were very low in the quarter at just five basis points, with the benefit of strong recoveries again this quarter. NVIDA's net charge-offs were also relatively low in the fourth quarter at 75 basis points, which is the best number that unit has reported since the third quarter of 2019. Our loan loss provision was $2.9 million this quarter and totaled $80.4 million for the full year. as we significantly built the reserve as the economic forecast deteriorated with the pandemic. On page nine, we give you some more detail on credit. Loan deferrals were $1.85 billion at June 30th, as we took care of our customers at the start of the pandemic. But as the pandemic continued, the impact of the stress became more clearly identified in specific sub-portfolios. So deferrals have come all the way down to $71 million at year end, but as you would expect, we did downgrade some loans, which drove increases in our criticized and classified loans, about $207 million that mostly came from our hotel and senior care portfolios. I will remind you that both our hotel and senior care books have significant equity. The average occupancy of the hotel portfolio is 51%. and is being pulled down by the urban limited service subcategory, which carries a 42% occupancy. We provide greater detail on both portfolios in the appendix. Our NPAs increased $12 million and stand at 55 basis points of total loans. All said, we feel good about where we are on credit and where our reserve is. Page 10 shows a walk-up on the reserve in Q4. We put $3.3 million into the reserve in Q4 due to loan growth, but our economic forecast improved a bit, which resulted in $2.2 million coming out of the reserve. You also see a $3.1 million increase from specific reserves, which corresponds with the C&I increase of NPAs in the quarter that you saw on the previous page. Net-net, excluding PPP loans, our reserve percentage was basically flat at 1.38%. With that, I'll pass it over to Jefferson.