United Community Banks, Inc.
63 Highway 515
Blairsville, Georgia 30512
Telephone: (706) 781-2265
Toll Free: (866) 270-7200
Fax: (706) 745-8960
Web site: http://www.ucbi.com
Total Assets: $8.2 billion (2007)
Stock Exchanges: NASDAQ
Ticker Symbol: UCBI
NAICS: 522110 Commercial Banking
United Community Banks, Inc. (UCB), is a NASDAQ-listed multibank holding company based in Blairsville, Georgia, located about 90 minutes north of Atlanta and close to southeastern Tennessee and the western edge of North Carolina—excellent growth markets that, along with acquisitions, have helped grow the business at a steady rate. With assets of $8.4 billion, UCB is Georgia's third largest traditional bank holding company. All told, UCB controls 27 banks with a total of 109 branches in the metropolitan Atlanta, Georgia, area; rural north Georgia; the Georgia coast; western North Carolina; and eastern Tennessee.
UCB takes a decentralized approach to running its banks. Although they share the same logo, each bank is locally managed, with its own chief executive and board of directors. While an expensive way to conduct business, UCB believes this hands-off policy allows local initiative and helps foster friendly customer relationships associated with small town banks, leading to customer retention. Not only are local banks involved in community affairs and fund-raising, each spring they give out tomato plants, and in the fall award a prize for the largest tomato. Employees from the different branches also put on an annual variety show, the proceeds of which are donated to charity. Employees own about one-third of the company.
FOUNDING BANK OPENS DOORS: 1950
UCB grew out of a single-location bank, Union County Bank, which was chartered in Blairsville, Georgia, in 1949 and a year later became operational with just $25,000 in capital. It was still a small-town operation in 1984 when UCB's longtime chief executive officer, Jimmy C. Tallent, arrived as the new 32-year-old president after serving as senior vice-president of Atlanta's Fidelity Bank. Tallent had been raised in Clarksville, Georgia, in Habersham County. After attending Young Harris College, Gainesville Junior College, and Piedmont College, he eventually graduated from the Georgia Banking School in Athens, Georgia. He began his banking career in his hometown at the Habersham Bank, where one day he paid a visit to borrow $400 for an engagement ring and also came away with a part-time job. The bank's president, Julian Hester, played a key role in Tallent's approach to banking, teaching him the value of customer service, a lesson he Page 418 | Top of Articlewas determined to apply as president of Union County Bank.
Union County Bank had just $42 million in assets when Tallent took charge in 1984. He wasted little time in building strong customer relations. In the spring of the following year his tellers handed out tomato plants to every customer. At the end of the summer, the person who grew the largest tomato received a $100 prize. Tallent believed it was a good promotion from a number of angles. "Most everyone I know likes a tomato, particularly in the summertime," he explained to USBanker in 2004. "Every time someone eats one of those tomatoes, they think of United Community Bank." The plant giveaway evolved into a customer appreciation weekend, during which participating branches gave customers as many as six tomato plants as well as hot dogs and sodas while providing country bands for entertainment. In the first year UCB distributed fewer than 7,000 plants. By 2004 that number had swelled to 173,000.
HOLDING COMPANY FORMED: 1987
In 1987 Tallent formed a bank holding company, United Community Banks, Inc. (UCB), which a year later acquired Union County Bank. The $100 million in assets mark was reached in 1989. It was not until 1990 that Tallent completed his first acquisition to begin expanding UCB, purchasing Citizens Bank of Murphy, North Carolina, located about 25 miles from Blairsville. It was a bank that needed rehabilitation, and Tallent was able to build the business and then use his pair of healthy banks to begin acquiring others. Tallent's strategy was to focus on buying small banks, content to take his time while purposely trying to avoid undue attention. Two banks were added in 1992, one in north Georgia and the other in Towns County, Georgia. Three years passed before UCB completed another acquisition, adding White County Bank in Cleveland, Georgia. Also in 1995 UCB's North Carolina bank acquired assets to add three branches, located in Andrews, Franklin, and Waynesville, North Carolina.
In 1996 Georgia banking laws were changed to allow subsidiary banks of Georgia bank holding companies to open three new locations over the following two years, followed by statewide branching. As a result, UCB began adding branches to its subsidiary banks in addition to acquiring new operations. In 1996 Union County Bank became United Community Bank and opened a branch in Dahlonega, in Lumpkin County, Georgia. Later in the year the subsidiary bank purchased the assets of a bank located in Cornelia, in Habersham County, Georgia, to add another branch. Another acquisition followed in 1997 when UCB acquired First Clayton Bank and Trust in Clayton, Georgia, which brought with it $73 million in assets.
TALENT SHOW DEBUTS: 1995
Although UCB was growing into a regional player, it did not lose sight of its small-town persona. In 1995 the company held its first employee talent show, The Bankers Hour, the idea furnished by employee Gail Nichols Day. At first the show, featuring a Grand Ole Opry format, was intended to entertain bank customers. By all accounts it was not particularly impressive entertainment, mostly consisting of lip-sync acts, although the free Cokes and Goo Goo Clusters proved popular. As the show improved in the ensuing years, so too did interest pick up, and soon the general public was invited to attend what became a Hee Haw-themed show and later a generalized variety show. Although admission was free, suggested donations raised more than $10,000 each year for local charities. Following a single rehearsal, two performances were given at the home of the show, the Georgia Mountain Fairgrounds' Anderson Music Hall in Haiwassee, Georgia, which more than 6,000 people attended each year.
As the 1990s came to a close, UCB acquired Bank of Adairsville and First Floyd Bank. In addition, United Community Capital Trust was formed in 1998. UCB began the 21st century with a pair of acquisitions. North Point Bancshares, Inc., a Dawson County, Georgia, single-bank holding company was purchased, as was Independent Bancshares, Inc., which controlled Independent Bank & Trust of Marietta, Georgia. Independent Bank had three branches and provided UCB with entry into the metropolitan Atlanta market. Also in 2000 UCB acquired a Florida-based consulting firm, Brintech, Inc., and sold the assets of its consumer finance company subsidiaries.
With eight banks in the fold and $2.5 billion in assets, UCB was poised for even greater growth. Not only did the customer-service orientation help to add Page 419 | Top of Articlecustomers, unlike some bank holding companies that bought local banks only to see an erosion in the customer base, but UCB also enjoyed an advantage due to a population shift to Sun Belt states. During the previous decade UCB's Georgia markets experienced a 40 percent population increase and its North Carolina market grew more than 20 percent. As a result, UCB could enjoy strong growth by simply retaining current customers, cross-selling products to them, and welcoming new customers that resulted from the growing population.
Tallent recognized that UCB had reached an important juncture in its history. To take the holding company to the next level he would need the help of experienced banking executives. Over the next year he hired several banking veterans, including Chief Financial Officer Rex Schuette, the former controller of Boston-based State Street Bank and Trust; Ray Williams, risk management, from BankSouth; and Craig Metz, marketing, also from BankSouth. As part of the new approach to growing UCB, all of the company's community banks began operating under the United Community Bank name with a logo that relied on the same design and color scheme. Some economies of scale were also achieved by consolidating much of the back-office and loan underwriting functions. While the bulk of growth came internally, acquisitions remained an important part of UCB's strategy. In 2001 the $85 million Peoples Bank of West Georgia was added to the United Community family.
STOCK LISTED ON NASDAQ: 2002
After years of trading on a pink sheet basis, UCB in March 2002 was listed on the NASDAQ, a move required to continue growing the business. As part of the transaction, UCB awarded each of its 1,247 employees five shares of stock. The company's timing was especially fortuitous because in that same month Atlanta's Eagle Bancshares, a rival community bank holding company in the region, was removed as competition when it was acquired by Royal Bank of Canada.
UCB began making use of its stock to make acquisitions in 2003. Lenoir City, Tennessee-based First Central Bank was acquired, bringing seven branches in the Knoxville area. First Georgia Holding Inc. was also acquired, taking UCB into the affluent Georgia coastal region with six branches. An office was then opened in Savannah, Georgia, to supplement these holdings. In North Carolina UCB expanded its footprint by acquiring three offices in Avery, Graham, and Mitchell counties, and then opened new offices in Mitchell and Yancey counties. UCB then had 18 branches in western North Carolina and 72 overall.
UCB reached the $5 billion mark in assets in 2004. Total revenues also increased 15 percent to $196.5 million and net operating income reached a record $47.2 million, a 19 percent improvement over the prior year. In addition, the company increased its presence in the key Atlanta market, acquiring three new banks: First Community Bank, Eagle National Bank, and Liberty National Bank. One-quarter of UCB's assets then came from the metro Atlanta market.
FIRST PUBLIC STOCK OFFERING: 2005
UCB made it first stock offering available to the public in 2005, raising $40.5 million. During that year, UCB also expanded its existing operations by opening a number of new branches, including Hall County where UCB spurred growth by hiring three executives from Regions Bank who in turn attracted about 50 other employees to join them. In a matter of eight months the new Hall County banks took in $132 million in deposits, generated $246 million in loans, and opened three offices to supplement UCB's existing office in the area. A fifth office was to open early in the following year. Also in 2005, UCB opened new offices in metro Atlanta in Fayette and Coweta counties. In northwest Georgia, the Summerville bank added an office in Chattooga County, and the Newton/Rockdale bank opened a commercial loan office.
UCB completed a pair of acquisitions in 2006. Two banks in Sylva, North Carolina, were bought from First Charter Corporation. After they were combined, UCB had 19 banking offices in 12 western North Carolina counties. Later in the year UCB closed on the acquisition of Southern National Bank, which had banking of- Page 420 | Top of Articlefices in Canton and Marietta, Georgia, both in the metro Atlanta market. Also in 2006 UCB expanded its presence in east Tennessee by opening a full-service bank in Cleveland, located about 30 miles northeast of Chattanooga. It was UCB's 25th bank acquisition. During 2006 UCB also opened its 100th location, achieving another notable mark, and ending the year with 102 locations. Total revenues also continued to grow, improving 18 percent to $272.4 million in 2006, while net income reached a record $68.8 million.
UCB experienced difficulties in 2007 and 2008, resulting in reduced earnings and a significant drop in price of the company's stock. The causes were manifold, including interest rates drops that lowered loan rates and hurt margins, an uncertain economy, and a drop in real estate lending because the supply of homes and lots outpaced demand. Moreover, UCB was one of a dozen banks that were victimized by a fraudulent residential development lending scheme in the Village of Penland in the mountains of North Carolina. UCB made $23.8 million in loans related to 83 different mortgages that were connected to the Penland fraud. Nevertheless, UCB fared better than many comparable banking companies and continued to grow revenues 10 percent to nearly $300 million, and in 2007 assets topped the $8 billion milestone. UCB was also able to add its 27th bank in 2007, acquiring First Bank of the South and its five branches. First Bank allowed UCB to complete the circle around the metropolitan Atlanta market. Although continued weakness in the residential construction and housing markets led to further diluted earnings in 2008, the long-term prospects for UCB remained positive.
Brintech, Inc.; United Community Bank; Union Holdings, Inc.; Union Investments, Inc.; United Community Mortgage Services, Inc.; United Community Development Corporation.
Bank of America Corporation; SunTrust Banks Inc.; Wachovia Corporation.
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Jordan, Meredith, "He Has a ‘Tallent’ for Banking," Atlanta Business Chronicle, December 1, 2003.
Krebsbach, Karen, "Mr. Tomato Head and Other Tales of Success," USBanker, October 2004, p. 76.
Luke, Robert, "The Georgia 100: No. 7: United Community Banks: Country Bank Has Amassed Big-City Clout," Atlanta Journal-Constitution, May 19, 2002, p. 8.
Milligan, Jack, "Does M&A Still Matter?" Bank Director, Third Quarter 2005.
Paul, Peralte C., "United Community Banks: N.C. Land Scam May Be Costly Setback," Atlanta Journal-Constitution, June 13, 2007, p. C1.
Thompson, Laura K., "United of Ga. Says It's Ready for Close-Up," American Banker, April 15, 2002, p. 5.
Gale Document Number: GALE|CX3273800096