United Community Banks Inc (UCBIO) 2004 Q4 法說會逐字稿

Good morning and welcome to United Community Banks' fourth quarter 2004 conference call. Hosting the call is Jimmy Tallent, president and chief executive officer of United Community Banks, and Rex Schuette, United's chief financial officer. Rex Schuette will begin the conference call by reviewing United's forward-looking statement. Mr. Schuette?

Thank you. During this call, we may make certain forward-looking statements. These include all statements that are not statements of historic fact or that are statements regarding the intent, belief or expectation of United Community Banks and its management with respect to trends affecting the company's operations, its financial, economic and market conditions, and its growth and operating strategies.

Specifically, of course, earnings expectations and estimates are forward-looking statements. During this call we may refer to non-GAAP financial measures, which we provide because we believe that they are helpful in analyzing core performance trends at United Community Banks. Our news release explains the difference between non-GAAP earnings measures and measures calculated under GAAP.

We filed our news release on Form 8-K this morning and urge you to review the sections of our most recent Forms 10-K and 10-Q that describe the factors that may affect the future results of our operations. Any forward-looking statements made today or contained in other public statements of United or made by its management should be considered in light of those factors.

And now we will begin our conference call with Jimmy Tallent, president and chief executive officer of United Community Banks. Jimmy?

Thank you, Rex, and good morning, ladies and gentlemen. Thank you for joining United Community Banks' fourth quarter conference call.

Once again I'm pleased to report that our team of community bankers delivered another strong performance, another record performance for our company and its shareholders. During 2004, we met our long-term goals of achieving sustained double-digit growth in operating earnings per share and a return on tangible equity in excess of 18%.

We also achieved strong performance and growth in our key profitability measures. As the news release points out, our total revenue grew 23% for the fourth quarter and 15% for the year, net operating income increased by 22% for the fourth quarter and 19% for the year. Diluted operating earnings per share rose by 17% in the fourth quarter and 13% for the year. Return on tangible equity was 20% for the quarter and 19.7% for the year.

I'm very proud of that performance. The key to our record performance in 2004 is exactly the same thing that has driven United Community Banks to record performances for the past decade. We've developed a growth strategy that works and we're focused when it comes to implementing it. We call it our balanced growth strategy and, as we've explained on previous calls, it has 2 primary elements; first, organic growth.

For the past 10 years, about two-thirds of our overall growth has been organic, which we define as internal growth, as well as growth from de novo offices. While acquisitions can be effectively used to expand into new markets and we've used them mainly in that way, we don't think buying growth makes good business sense over a long period of time. As Rex will point out in just a few minutes, we delivered strong organic growth on virtually every front during 2004.

The second element of our growth strategy is selective mergers, with the emphasize on the word selective. We're a community bank and we believe that leveraging our community banking business model provides a significant competitive advantage in the unique footprint that we serve.

So if we find a bank and bankers that share our passion for customer service and our commitment to community banking and if adding that bank to United Community Banks strengthens this company, its footprint and its competitiveness and will be accretive to earnings in a relatively short period of time, then we'll use mergers and acquisitions as a component of growth for our company.

We used this strategy to complete 3 selective mergers in metro Atlanta during 2004, including 2 that closed in the fourth quarter. Underlying all of this, of course, is a constant focus on monitoring and controlling operating expenses. I'll let Rex walk you through our results for the fourth quarter and the year in just a moment. But let me highlight 2 major milestones for our company in the fourth quarter.

At year-end, United Community Banks' total assets exceeded $5 billion, an increase of 25% from last year. Also at year-end, our market capitalization, the value of this company to its owners, crossed over the $1 billion mark. Keep in mind that less than 3 years ago, we listed on NASDAQ with a market cap of $417 million. We're extremely proud of the success of our strategies to build shareholder value, and we're excited about the growth opportunities ahead of us, and our plans to deliver consistent double-digit growth in operating earnings per share while growing our franchise, which will ultimately build shareholder value for the future.

Now let me hand the call over to Rex, who will walk you through the numbers in more detail. Following Rex's comments, I'll offer some additional perspective on our performance and guidance for 2005 and then open the call to your questions. Rex?

Thank you, Jimmy. For the fourth quarter and the year 2004, United Community Banks again achieved record performance for net operating income and diluted operating earnings per share. For the quarter, net operating income rose 22% to a record 12.9 million, up from 10.6 million a year ago. Diluted operating earnings per share was 34 cents, up 17% from 29 cents for the same period last year. And total revenue on a tax equivalent basis was 54.1 million, up 23% from 44.1 million for the fourth quarter of 2003.

For the year, net operating income increased 19% to a record 47.2 million, up from 39.5 million last year. Diluted operating earnings per share was $1.27, up 13% from $1.12 last year. And total revenue on a tax equivalent basis was 196.5 million, up 15% from last year's 170.6 million.

On an operating basis, fourth quarter return on tangible equity was 19.96% compared to 19.72% a year ago. Return on assets was 1.07% for the quarter compared to 1.06% last year. For the full year, return on tangible equity was 19.74%, up from 19.24% for 2003. Return on assets was 1.07% compared to 1.06% for 2003.

Net operating income for the fourth quarter and the full year 2004 excluded merger related charges. You'll find a full reconciliation of these charges in the release, but briefly, including merger related charges, our reported net income for this year's fourth quarter was $12.6 million, up 24% from 10.2 million in the fourth quarter of 2003. For the full year, reported net income, including merger related charges, was 46.6 million, up 22% from the 38.1 million for 2003.

The 2004 merger related charges were incurred as a result of 3 acquisitions, all in the fast-growing metropolitan Atlanta area. Let's look more closely at operating earnings and other key elements of our record performance for the fourth quarter. Tax equivalent net interest revenue of 45.3 million rose 8.5 million, or 23%, from last year's fourth quarter.

As Jimmy mentioned, we acquired 3 growing community banks in metro Atlanta during 2004. Two of these mergers were in the fourth quarter. And while acquisitions added approximately 2.6 million to net interest revenue in the fourth quarter, when you exclude acquisitions, we still enjoyed strong growth in core net interest revenue of $6 million, or 16%. And on a consecutive quarter basis, excluding these acquisitions, net interest revenue was up 1.9 million, or 4%, which equates to 18% on an annualized basis.

Looking at net interest margin for the fourth quarter, it increased to 4.05% compared to 3.96% a year ago and 3.99% for the third quarter of 2004. With our balance sheet being asset sensitive, this allowed us to benefit slightly from the 2 Fed rate increases during the fourth quarter and we've benefited from the full quarterly affect of the 2 rate increases in the third quarter of 2004. That said, we have maintained an interest margin near the 4% level for the past 9 quarters, and we expect that we'll remain at or slightly above the 4% level through 2005.

Loan balances at the end of the fourth quarter were $3.7 billion, up 719 million, or 24%, from last year-end. Again, you can see the effectiveness of our balanced growth strategy. Our acquisitions accounted for approximately 284 million of the year-over-year increase. Excluding these acquisitions, core loans increased by 14% during the year. That strong growth came across all of our markets.

Let me provide some additional detail on the 719 million increase in loan balances compared to a year ago, first by geographic region. North Georgia had growth of 139 million, western North Carolina had growth of 86 million, coastal Georgia growth was up 51 million, east Tennessee increased 37 million, and metro Atlanta increased 406 million, 122 million organically and the balance, 284 million, from the 3 acquisitions completed during 2004.

That included 79 million from 1st Community Bank in Fairburn, 51 million from Eagle National Bank in Stockbridge, and 154 million from Liberty National Bank in Conyers. Looking at consecutive quarters, loans increased by $296 million. Excluding the Liberty and Eagle acquisitions in the fourth quarter, loans increased by $92 million, or 11%, on an annualized basis.

Here's the breakdown of growth by market. 16 million in north Georgia, 231 million in metro Atlanta, which includes 26 million organically and 205 million for Eagle and Liberty mergers, 15 million in western North Carolina, 30 million in coastal Georgia, and 6 million in east Tennessee. Our loan growth clearly reaffirms the strength of United Community Banks' unique footprint and this strong growth reflects the broad based economic strength of our marketplace.

Looking at our growth by loan categories, let's first review the year-over-year comparisons. Construction and land development loans grew by 377 million, bringing the total to 1,305,000,000, commercial loans increased by 212 million to 1,178,000,000, and residential mortgages increased by 120 million to 1,102,000,000. Looking at these same categories on a consecutive quarter basis, construction and land development loans increased by 116 million, commercial loans increased by 142 million and residential mortgages increased by 29 million.

Next, let me update you on the interest rate sensitivity of our balance sheet at year-end. At just under 3% of net interest revenue on a 200 basis point ramp up scenario, our asset sensitivity is down slightly from last year and last quarter. During the fourth quarter we entered into received fixed slots with a total notional value of $125 million, primarily to replace maturing slots that were hedging prime-based floating rate loans.

We also purchased fixed rate investment securities that were funded with floating rate liabilities to further neutralize our exposure to the changing interest rates. At year-end, we are in a position to benefit slightly from further expected Fed rate increases, but expect to continue to manage toward a neutral to slightly asset sensitive position.

Moving to fee revenue, for the fourth quarter, total fee revenue of 10.8 million was up $1.7 million from a year ago, primarily due to the growth in service charges and fees on deposit accounts and higher consulting fees. Approximately 370 million of this increase was the result of recent acquisitions, but we were also very successful at increasing fee revenue by cross-selling other products and services.

As you know, 2004's first 3 quarters faced difficult fee revenue comparisons, primarily because we were comparing mortgage fee revenue growth against quarters in 2003 that benefited from heavy rate-driven mortgage refinancing activities and the related higher fee revenue.

We now have crossed over the record quarters of last year. For the fourth quarter, mortgage loan and related fees were $1.7 million, essentially flat with last year's fourth quarter. Service charges and fees on deposit accounts were $5.6 million for the quarter, up $600,000.

A significant portion of this increase reflects the continued success of the Refer-A-Friend core deposit program that we began in early 2004. This effort, which leverages the extremely high customer satisfaction scores we earned from customers quarter after quarter, helped us grow core deposits by more than 175 million during 2004, adding 38,000 new accounts.

Consulting fees totaled $1.8 million, up about $750,000, or 74%, from a year earlier, primarily due to the strong growth in our risk management and financial services practices and increased demand for general consulting services. During the quarter, we had net investment security gains of $34,000. Included in this amount was a 450,000 impairment charge recorded on a $5 million Freddie Mac investment security that was offset by gains on the sale of other investment securities.

The loss on the Freddie Mac securities was considered to be other than temporary as defined by accounting pronouncements. You may have noticed several of the banks taking similar write-downs in the past 2 quarters.

Next, let me talk about operating expenses. Total operating expenses for the fourth quarter were $33.7 million, up 6.2 million, or 22%, from the fourth quarter of 2003. In 2004, we were able to absorb the cost of 5 de novo offices while still producing a positive operating leverage. This was further challenged by offsetting a higher provision for loan losses and lower mortgage fee revenue that I commented on earlier.

Let's review the key components of the fourth quarter's operating expenses. Salaries and employee benefit costs totaled 21.6 million, up 4.2 million, or 24%. Approximately 2 million of this increase resulted from acquisitions and de novo offices in 2004 and for temporary personnel used in the fourth quarter to support the growth in consulting services.

At December 31st, 2004, total staff was 1,532, an increase of 187 compared to last year. More than 75% of that increase, or 142 staff, related to the staff added for this year's acquisitions and de novo offices. That leaves our core staff growth year-over-year of about 3%. The balance of the growth in salary and benefit costs were due to merit increases and other normal year-end adjustments.

Communication and equipment expenses totaled 2.9 million, up $600,000, or 27%, due to acquisitions and investments in technology equipment to support business growth and enhance operating efficiency. Advertising and public relations totaled $1.5 million, up 900,000, reflecting the higher program costs of our very successful initiative to raise core deposits.

Occupancy expense totaled 2.4 million, up 200,000, reflecting the cost of adding 15 new locations in the past 5 quarters for the 3 bank acquisitions and 5 de novo offices. And professional fees totaled 1.1 million, up 150,000, mainly due to fees incurred in connection with documenting and testing internal controls for the SOX 404 certification project. Other expense categories were flat compared to a year ago, except for the amortization of intangibles related to recent acquisitions.

Now let's review credit quality, a priority for United Community Banks. The fourth quarter provision for loan losses was $2 million, up 200,000 from last year and level with the third quarter of 2004. The allowance to loan ratio was 1.26%, down slightly from 1.28% a year ago and from last quarter's 1.27%. Net charge-offs for the quarter were $1.2 million compared to 900,000 in last year's fourth quarter and $1 million in the previous quarter.

Net charge-offs to average loans were 13 basis points for the fourth quarter compared to 12 basis points for both the fourth quarter of 2003 and third quarter 2004. Non-performing assets totaled $8.7 million, up 1.1 million from a year ago, but down 1.8 million from the third quarter of 2004. The current quarter's total includes 8 million of non-performing loans and 700,000 of other real estate owned.

Non-performing assets as a percentage of total assets were 17 basis points at year-end compared to 19 basis points at December 31st, 2003, and 23 basis points at September 30th, 2004. Our allowance to non-performing loan coverage was 588% at year-end compared to 583% at December 31st, 2003, and 476% at September 30th, 2004.

I think there are several important takeaways from our credit quality numbers. First, our overall credit quality remains excellent. Our proven strategy of securing loans with hard assets, primarily real estate, remains critical to our credit quality success. Second, we're continuing to maintain strong credit quality while generating significant loan growth. We increased loans by 719 million from year-end 2003, yet we saw only a 1.1 million increase in non-performing assets during the same period.

And finally, let me underscore a point we've made on previous calls. We are very pleased with our credit quality ratios, but at these low levels, you will see volatility from quarter to quarter that is not necessarily indicative of a negative trend, but a result of operating at such low levels of non-performing assets. And while net charge-offs were only 13 basis points for the fourth quarter, they were up slightly from the last 3 quarters, but remain below our historic average of 17 basis points for the past 5 years and still well below industry averages. Our overall credit quality remains and will remain a bedrock priority for United Community Banks.

At the end of the fourth quarter, all of our capital ratios for regulatory purposes are above the well-capitalized level. Our internal guidelines continue to remain at 100 basis points above these regulatory well-capitalized levels. Our average tangible equity to assets for the fourth quarter was 5.75%, down slightly from our 5.78% average for the year.

That concludes my overview of our financial performance for the fourth quarter and full-year 2004. Now let me turn the call back to Jimmy.

Thanks, Rex. We just completed another very successful quarter and year at United Community Banks. We can attribute our performance to our balanced growth strategy that continues to generate strong loan growth, as well as solid deposit and fee revenue growth, both organically and through our selective mergers. Of course, these growth measures have a positive ripple effect such as asset growth, increased market capitalization, record earnings and increased shareholder value.

Back in 2002 when we listed on NASDAQ, we had $2.7 billion in assets. During the fourth quarter of 2004 we passed the $5 billion mark, almost doubling our size in just 3 years. We've crossed over the $1 billion mark in market capitalization at year-end. As I mentioned earlier, our total market cap was just over $400 million when we listed on NASDAQ.

We've continued to generate consistent double-digit growth in operating earnings per share and we reinvested for the future by opening de novo offices and adding selective mergers and acquisitions. We've strengthened our position in our existing markets and we've moved aggressively into attractive new markets like Atlanta, where 3 strategic partnerships significantly expanded our presence during 2004. We now have 8 banks with 27 locations and $1.4 billion in assets in metro Atlanta.

I think, too, that our 2004 performance gives you a strong indication of just how resilient this company's balanced growth strategy really is. Throughout the year we faced several challenges, ranging from a significant reduction in mortgage refinancing activities and related fee revenue to absorbing the cost of 5 de novo offices and acquiring and integrating 3 community banks.

Even with these challenges, we continued to achieve the strong financial performance we've targeted. We achieved it while maintaining excellent credit quality, which is the bedrock of our business model. And we also achieved it while maintaining our commitment to community banking to provide customers, as we put it, with the products and services of a $5 billion bank and by delivering through 23 community banks the personal service and the local decision making and presence that only a community bank can offer.

Looking into 2005, we're on target to deliver again double-digit growth and operating earnings per share within our long-term goal of 12 to 15% for 2005. We believe that core loan growth will continue in the range of 10 to 14% and that our net interest margin will remain near or slightly above the 4% level. This outlook, of course, is based on a continued stable economic environment in our market, combined with continued strong credit quality. We are well positioned for additional increases in short term interest rates and should benefit slightly if and when they occur.

To summarize then, we've established the right growth strategy for this company, built the right team of community bankers to implement it, and in 2004, acted effectively to address the challenges and opportunities facing us in the marketplace. The result was another record year for the shareholders of United Community Banks made possible because of the most important assets of United, our team of 1,532 people.

With that, let me thank you for your continued interest in United Community Banks and now open the call to your questions.

Thank you.

[OPERATOR INSTRUCTIONS].

Your first question comes from Christopher Marinac of FIG Partners. Please proceed, sir.

I wanted to get a little more color on metro Atlanta and particularly, is there any change in strategy in terms of you getting deeper into the city or do you still want to stay suburban in this coming year or 2 in the future?

Chris, our strategy has been to kind of stay on the fringes of Atlanta. We don't have immediate plans of actually going inside the city. Our strategy has been for a long time to stay just on the outskirts. Here in 2004 we basically have accomplished a lot of that. We still have the Gwinnett County area that we don't have a bank in and I think what you'll probably see is that we will continue to backfill even in some of those contiguous communities because all of those are experiencing a very strong population growth.

Okay. And then as you look at various acquisitions that might be in front of you for the future, do you get any sense about the Sarbanes-Oxley issues being a sort of challenge or a burden for a smaller company? Is that perhaps a driver of additional (inaudible) in the future?

Well, Chris, it certainly comes up now. I think here in 2005 when the last wave of banks that are having to comply with those issues is something that is foreign and something that concerns them given the pressures on the margin and limited lending ability relative to size. The Sarbanes-Oxley issue is just another add-on and I know a couple of banks that we've talked to, that has certainly come to the forefront.

Okay. And then the last question is would a new state in your footprint be something you'd like to see this next year or 2 or is this not necessarily a goal?

I'm sorry. Repeat that.

Would a new state to the footprint for United Community be something you'd like to see over the next year or 2?

A new state?

Correct.

As we've said, within our strategy we basically have identified the states. As we build out the coast of Georgia, there's always that possibility of tiptoeing into Florida. I mean we're there in St. Simons, the Brunswick market, certainly we have an interest getting on down into the same areas which would be a logical entrance into a Jacksonville market. If that were to come to pass, it would have to meet very rigid guidelines by our company. But at this point, that would be the only add-on and we have stated that, of course, in the past as well.

Your next question comes from Scott Alaniz of Sandler O'Neill.

A couple of questions. First, Jimmy, could you talk about how many de novos you have planned for this year? And secondly, maybe talk a little bit about how some of your recent de novos are performing?

Sure. Scott, this year currently we have 3 planned de novos for '05. Again, as we often say, this is a people-driven decision and opportunity. But right now that's what we have, is 3 on the game plan. What was the other part of your question?

Well, where are those...?

Okay, the de novos that we did over the last year, the 5 that you were talking about?

Yes, if you could talk just generally about how your recent de novos have performed.

Sure. Those 5, the last 5, we've been very pleased. Two of those are now profitable. We have the other 2 that's either breakeven or just slightly profitable, and a fifth one that we still have a ways to go. But those 5, what they have contributed to the overall balance sheet has been in excess of $50 million in deposits and in excess of $100 million in loans. So those will really start taking traction in 2005 and we're excited about the opportunities where these banks are located.

I see. Secondly, 2004 was obviously a great year for your core deposit gathering efforts. Do you plan to continue spending from an advertising standpoint at the same level or throttle it forward or back? Talk a little bit about what your strategy is there.

Well, we will certainly continue the program in 2005 that was so successful in '04. A lot of the marketing expense is driven based on the success of that program. We certainly hope that that will continue, quite honestly, because that is just increasing the core deposit strength of this company. We also look to deepen that in 2004 and 5. The existing program is aimed very specifically at the basic retail market. We think there's a real opportunity in business checking accounts and core deposit services that we certainly will be focusing on as well.

Why do you think there's so much opportunity?

Well, I think it's our markets. We've said many times that's where we're operating in today is a $50 billion deposit market and we've got to out-bank the competition. We've got to be nimble enough and clever enough to figure out our niches and where our strengths are. And we've got to go to the public and through our 1,532 people and convince them why they need to bank with us.

I see, okay. And, Rex, just a quick question for you on the securities. I saw that at the end of the period the securities was about -- bumped up from 17% in the third quarter to about 18.5% of earning assets. Can you tell me a little bit about what your strategy is with the securities portfolio and if that bump up was temporary?

Sure, Scott. When you look at our securities on a year-over-year basis, when we look at it compared to assets overall, it was 16% last year and 17 this year. When you compare to earning assets, it would be just about a percent higher than that, but it has been fairly consistent over the past 3 or 4 years. During the fourth quarter we looked at truing out some of our interest rate sensitivity.

As I mentioned, we were just below 3% at quarter-end. Last quarter-end we were about 4%. And in doing that, we added some slots, about 125 million of slots, as well as we added about 130 million of securities portfolio to tighten up a little bit on our interest rate sensitivity. And that will continue probably at the same level we're at right now for the balance of '05. We don't plan on increasing that in '05. And there was an additional about 20 million that came from the acquisitions in the fourth quarter.

Your next question comes from Sam Caldwell (ph) of KBW.

My question specifically relates to the consulting business. Obviously that ramped up very nicely in '04. Are you guys continuing to hire people and expand that business or is it just a pickup in business or kind of what's your sense of that in '05?

As I noted earlier in the call, the consulting fees did step up in the fourth quarter. We were about 1.8 million almost in the fourth quarter and about 1.4 last. And in doing that, part of that is through temporary personnel, Sam, that we have and we did have a pickup in company personnel in the fourth quarter to staff some of the projects.

Going into '05, we're going to switch some of those over as the 2 business practices, the risk management and financial services, continue to expand. And as the business continues to grow we'll add staff to support that. And we monitor that, similar to how we monitor our staffing at the bank also that we add staff where appropriate. And as those practices build, we'll look at hiring them full time.

Very Good, thank you.

Your next question comes from John Pandtle of Raymond James & Associates.

Rex, a housekeeping question to start and I apologize if I missed this. The margin increase fourth quarter over third quarter, how much of that would you assign to the 2 acquisitions?

I would say it really is more driven by the rate increases in the third and fourth quarter. We have the full effect of the third quarter rate increases and a part in the fourth quarter. Through those increases, we only had to increase basically our core deposits 1 time. The CDs have had a little more pressure where the CD rates have increased each of the 2 past quarters when you look at consecutive quarters. (inaudible) of the acquisitions are relatively small that came in and only for a part quarter. Didn't have a significant impact on the margin.

Okay. And on the deposit pricing side, your structure with having the local bank president (ph), have you seen that that's giving you any sort of pricing advantage versus if you were more of a transaction oriented larger bank?

Well, it really plays very well into our community banking business model, John, again. When you have the 23 COs out there that's motivating their staff and understands their local community, I think it plays very well in solidifying relationships, as well as obtaining new relationships from just a service standpoint and our reputation of service. So, certainly in the environment that we all work and live in today, when you can take these 23 banks and have those very focused and very motivated in growing that bank and certainly keeping that relationship happy, it's a pretty good combination.

And your next question comes from Peyton Green of FTN Midwest.

I was just wondering if you all could comment a little bit, it seems like the coastal Georgia number really ticked up in the quarter. And also, just in terms of thinking about the M&A activity in '05. But also, I guess beyond the M&A activity, do you get a sense that pricing is moving up or is the environment still good enough for the right deals to happen? And then, what would have to happen for the loan growth number to be at the high end of the range that you gave and what is kind of the feel of the economy versus your historical perspective telling you that it's going to be like?

Okay, let me start back, Peyton, with the coastal Georgia. We did experience very solid growth, loan growth in the fourth quarter there. It could be attributed to a number of things. Principally, we have been able to add a couple of additional lenders, local lenders that have very solid portfolios and has been in that market a long time. In addition to the fact I think having been there now for 2 years is certainly an advantage in getting our name and reputation out there. All of those things have continued to come together, so we're excited about that. and we're excited about the coast of Georgia because of just the continued growth.

In regards to mergers and acquisitions relative to pricing, certainly that's still very expensive. We've not really seen that come down any. Quite honestly, the 2 -- the last 2 banks that we truly had a very strong interest in because of all the characteristics that we look for, we lost out on price. Just the way that we could make it make business sense from an accretive standpoint, it was solidly dilutive. So we passed on both counts. There is still that element of lack of disciplined pricing and the sellers, of course, have been looking at the highest number possible. That just kind of goes with the territory.

Your last question, what needs to happen for loan growth to be at the high end of the estimate, let me first say that our loan growth has been consistent throughout all of our markets and, of course, 2004 brought us 14%. We expect again to be within that band or that range that we have talked about, in that 10 to 14%.

What could happen and one of the interests of being in that metro area is that the 3 banks that partnered up with United this year are in great growth areas and, depending on if that were to be accelerated in those markets, could certainly push that at the upper end of the band. And, of course, then the economy, that's the other area. If the economy continues to improve, then certainly I think with where we're positioned at, the geography that we cover, bodes very well as to where our bank is and the anticipated loan growth.

Okay. And I guess just to follow up, I mean you've been in the markets a long time in north Georgia and now metro Atlanta. What is this environment most like in terms of past expansions, I guess?

Well, again, the banks that we are partnered up with and the locations are not very far from -- as far as being different from our existing markets. Certainly there is a difference because of it being a metropolitan area, but our way of banking, our discipline on the -- on being a secured lender, and the types of loans that we are interested in making are the same whether it be in metro Atlanta or north Georgia or eastern Tennessee.

So, again, we just don't see that being that different given our underwriting standards and so forth. What we do feel is that's just a huge market and with our branding now, as we continue to expand, just a small slice of that market has a huge impact at United Community Banks.

Okay. I guess all I was just trying to get an idea is just do you feel like the economy is really accelerating in your markets or does it still feel pretty stable because it's held up so well?

Well, I think it's very stable. We have just not seen any significant drop at all across the board. When you look at whether it be commercial or construction or just pure residential, it has been very consistent. We feel like that we've kind of seen the bottom of the economy and certainly, going forward we're excited and anticipate that it'll only get better.

Gentlemen, you have no further questions at this time.

Okay. Let me say thank you for being with us today and thank you for your interest in United Community Banks. We look forward to speaking with you again in April and we hope each of you have a great day. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a good day.