KBRA Comments on United Community Banks, Inc.’s Proposed Subordinated Note Issuance

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Kroll Bond Rating Agency (KBRA) currently maintains BBB+ senior unsecured and BBB subordinated debt ratings for United Community Banks, Inc. (NASDAQ: UCBI) (“the Company”); the holding company for Blairsville, Georgia based, United Community Bank, which is rated A- at the senior unsecured level. The Outlook for all long-term ratings is Stable. Having announced the acquisition of Navitas Credit Corp (“Navitas”), an equipment finance company, on January 8, UCBI’s proposed public offering of subordinated notes is projected to be utilized primarily to fund the cash portion (65%) of the estimated $130 million purchase price. In addition to supplementing UCBI’s suite of commercial product offerings, the proposed Navitas merger complements its other nationwide product in the form of its SBA business. However, with approximately $350 million in loans, as compared to UCBI’s $7.2 billion loan portfolio, the Navitas merger is projected to have only a modest impact on UCBI’s bottom line and strategic direction.

With the Navitas transaction expected to close during the first quarter of 2018, UCBI’s capital ratios are expected to decline by approximately 50 bps in the first quarter of 2018. This follows a smaller anticipated fourth quarter 2017 slippage resulting principally from the reduction of the company’s deferred tax asset that is estimated to be in the $37 - $41 million range. UCBI management currently anticipates rebuilding capital during the balance of 2018 to levels similar to those exhibited in recent periods, which include a tangible common equity ratio in the 9% range.

As a reminder, in February 2017, KBRA upgraded UCBI’s senior unsecured and subordinated debt ratings, as well as its short-term debt rating, owing principally to improved operating performance, which among other drivers, has benefitted from favorable asset quality, as well as the company’s low-cost core deposit base. Ratings are also reflective of KBRA’s positive perspective surrounding UCBI’s experienced management team and risk management infrastructure.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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Business Wire: 17:36 GMT Tuesday 9th January 2018

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