United Community Banks, Inc.
Jul 24, 2014

United Community Banks, Inc. Reports Earnings of $16.4 Million for Second Quarter 2014

BLAIRSVILLE, GA -- (Marketwired) -- 07/24/14 -- United Community Banks, Inc. (NASDAQ: UCBI)

United Community Banks, Inc. (NASDAQ: UCBI) ("United") today reported net income of $16.4 million, or 27 cents per diluted share, for the second quarter of 2014. Earnings per share were up 8 percent from the first quarter, reflecting growth in net interest revenue and fee revenue, a lower provision for loan losses and the elimination of preferred stock dividends. For the first six months, United reported net income of $31.8 million, or 52 cents per diluted share.

"I am very pleased with our second quarter progress in growing our business and earnings," said Jimmy Tallent, president and chief executive officer. "We have had four consecutive quarters of steady earnings per share growth since the classified asset sales a year ago and are focused on continuing that trend."

Second quarter taxable equivalent net interest revenue totaled $55.0 million, up $781,000 from the first quarter and the same as the second quarter of 2013. The taxable equivalent net interest margin was 3.21 percent, equal to the first quarter and down 12 basis points from a year ago.

"Preserving our net interest margin and growing net interest revenue while also managing our exposure to changes in interest rates are top priorities for continued growth in earnings per share," said Tallent. "We remain sharply focused on growing loans and core deposits to increase net interest revenue. During the second quarter we completed certain balance sheet restructuring activities that included the reduction/restructuring of the securities portfolio, interest rate hedges and wholesale borrowings. The consequential changes in our securities portfolio, wholesale borrowings and interest rate hedges allowed us to maintain our margin at 3.21 percent and prevent further margin decline in 2014, while maintaining our interest rate risk and sensitivity levels. We sold $237 million in investment securities at a gain of $4.4 million, which was offset by a similar charge from the repayment of $44 million in costly structured wholesale borrowings."

The second quarter provision for credit losses was $2.2 million, down $300,000 from the first quarter and down $46.3 million from the second quarter of 2013. Second quarter net charge-offs were $4.18 million, compared with $4.04 million in the first quarter and $72.4 million a year ago. Nonperforming assets at quarter-end were $23.7 million, down 23 percent from the first quarter and representing .32 percent of total assets. This compares to .42 percent at the end of the first quarter, and .44 percent at the end of the second quarter of 2013.

Second quarter fee revenue totaled $14.1 million, up $1.97 million from the first quarter with increases in every category. When compared to a year earlier, fee revenue was down $1.80 million primarily due to lower mortgage fees and a $1.37 million gain last year on a bank-owned life insurance policy. Service charges and fees were up approximately $600,000 from both the first quarter and a year ago due to strong debit card transaction volume and new service fees effective January 1. Mortgage fees were up $523,000 from the first quarter but down $1.13 million from a year ago, the decrease reflecting slower mortgage refinancing activity. Closed mortgage loans totaled $68.5 million in the second quarter, compared with $46.0 million in the first quarter and $95.2 million in the second quarter of 2013. Customer swap fees included in other fee revenue were up $357,000 from the first quarter due to an increase in commercial lending activities. Also included in other fee revenue were gains on the sale of SBA loans of $744,000. "Going forward, our new focus on growing our SBA business includes selling loans and taking the related gains, while retaining servicing on the loans sold," commented Tallent.

Operating expenses, excluding foreclosed property costs, were $40.4 million in the second quarter compared to $38.9 million in the first quarter and $43.7 million a year ago. Decreases in nearly every expense category from a year ago reflect successful efforts to control operating costs. The $1.48 million increase from the first quarter was mostly in advertising and public relations, professional fees and other expenses that included a number of non-core costs. The increase in advertising and public relations primarily reflects the cost for new products and updating brochures and other branded materials. The increase in professional fees is due to higher legal and consulting costs resulting from corporate initiatives. The increase in other expenses primarily reflects higher lending support costs and a $367,000 loss from the consolidation and sale of a branch facility.

Foreclosed property costs were $102,000 in the second quarter compared to $116,000 in the first quarter and $5.15 million a year ago. These costs were elevated in the second quarter of 2013 by the accelerated sales of classified assets.

On June 30, 2014, capital ratios were as follows: Tier 1 Risk-Based of 11.8 percent; Total Risk-Based of 13.0 percent; Tier 1 Common Risk-Based of 10.7 percent; Tier 1 Leverage of 8.3 percent; and Tangible Equity-to-Assets of 9.6 percent.

"We had a solid start in 2014 and continued to build momentum through the second quarter," Tallent said. "Stabilizing our net interest margin and growing loans, deposits and fee revenue will drive earnings growth. To that end, we continue to expand our business capabilities and have added senior people to our commercial and specialized lending groups. In the second quarter we completed the acquisition of a specialty SBA business in Columbia, South Carolina, and added a newly formed SBA national sales team led by Rich Bradshaw, who has a long record of success in SBA and other specialized lending areas. This team will significantly strengthen our SBA and USDA lending capabilities within and beyond our existing footprint. I am excited about the opportunities ahead and remain convinced we are on track to achieve our business targets and financial goals for the year."

Conference Call
United will hold a conference call today, Thursday, July 24, 2014, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 60193841. The conference call also will be webcast and can be accessed by selecting "Calendar of Events" within the Investor Relations section of United's website at www.ucbi.com.

About United Community Banks, Inc.
United Community Banks, Inc. (UCBI) is a bank holding company based in Blairsville, Georgia, with $7.4 billion in assets. The company's banking subsidiary, United Community Bank, is one of the Southeast's largest full-service banks, operating 103 offices in Georgia, North Carolina, South Carolina and Tennessee. The bank specializes in personalized community banking services for individuals, small businesses and corporations. A full range of consumer and commercial banking services includes mortgage, advisory, treasury management and other products. National survey organizations consistently recognize United Community Bank for outstanding customer service. Additional information about the company and the bank's full range of products and services can be found at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United's filings with the Securities and Exchange Commission including its 2013 Annual Report on Form 10-K under the sections entitled "Forward-Looking Statements" and "Risk Factors." Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
 
                Second
    2014     2013     Quarter
(in thousands, except per share   Second     First     Fourth     Third     Second     2014-2013
data; taxable equivalent)   Quarter     Quarter     Quarter     Quarter     Quarter     Change
INCOME SUMMARY                                                
Interest revenue   $ 61,783     $ 60,495     $ 61,695     $ 61,426     $ 62,088          
Interest expense     6,833       6,326       5,816       7,169       7,157          
    Net interest revenue     54,950       54,169       55,879       54,257       54,931       - %
Provision for credit losses     2,200       2,500       3,000       3,000       48,500          
Fee revenue     14,143       12,176       13,519       14,225       15,943       (11 )
    Total revenue     66,893       63,845       66,398       65,482       22,374          
Operating expenses     40,532       39,050       41,614       40,097       48,823       (17 )
  Income (loss) before income taxes     26,361       24,795       24,784       25,385       (26,449 )        
Income tax expense (benefit)     10,004       9,395       8,873       9,885       (256,413 )        
    Net income     16,357       15,400       15,911       15,500       229,964          
Preferred dividends and discount accretion     -       439       2,912       3,059       3,055          
Net income available to common shareholders   $ 16,357     $ 14,961     $ 12,999     $ 12,441     $ 226,909          
                                                 
PERFORMANCE MEASURES                                                
  Per common share:                                                
    Diluted income   $ .27     $ .25     $ .22     $ .21     $ 3.90          
    Book value     11.94       11.66       11.30       10.99       10.90       10  
    Tangible book value (2)     11.91       11.63       11.26       10.95       10.82       10  
                                                 
  Key performance ratios:                                                
    Return on common equity (1)(3)     8.99 %     8.64 %     7.52 %     7.38 %     197.22 %        
    Return on assets (3)     .88       .85       .86       .86       13.34          
    Net interest margin (3)     3.21       3.21       3.26       3.26       3.33          
    Efficiency ratio     58.65       59.05       60.02       58.55       68.89          
    Equity to assets     9.61       9.52       11.62       11.80       11.57     (4)    
    Tangible equity to assets (2)     9.58       9.50       11.59       11.76       11.53     (4)    
    Tangible common equity to assets (2)     9.58       9.22       8.99       9.02       8.79     (4)    
    Tangible common equity to risk- weighted assets (2)     13.92       13.63       13.18       13.34       13.16          
                                                 
ASSET QUALITY *                                                
  Non-performing loans   $ 20,724     $ 25,250     $ 26,819     $ 26,088     $ 27,864          
  Foreclosed properties     2,969       5,594       4,221       4,467       3,936          
    Total non-performing assets (NPAs)     23,693       30,844       31,040       30,555       31,800          
  Allowance for loan losses     73,248       75,223       76,762       80,372       81,845          
  Net charge-offs     4,175       4,039       4,445       4,473       72,408          
  Allowance for loan losses to loans     1.66 %     1.73 %     1.77 %     1.88 %     1.95 %        
  Net charge-offs to average loans (3)     .38       .38       .41       .42       6.87          
  NPAs to loans and foreclosed properties     .54       .71       .72       .72       .76          
  NPAs to total assets     .32       .42       .42       .42       .44          
                                                 
AVERAGE BALANCES ($ in millions)                                                
  Loans   $ 4,376     $ 4,356     $ 4,315     $ 4,250     $ 4,253       3  
  Investment securities     2,326       2,320       2,280       2,178       2,161       8  
  Earning assets     6,861       6,827       6,823       6,615       6,608       4  
  Total assets     7,418       7,384       7,370       7,170       6,915       7  
  Deposits     6,187       6,197       6,190       5,987       5,983       3  
  Shareholders' equity     713       703       856       846       636       12  
  Common shares - basic (thousands)     60,712       60,059       59,923       59,100       58,141          
  Common shares - diluted (thousands)     60,714       60,061       59,925       59,202       58,141          
                                                 
AT PERIOD END ($ in millions)                                                
  Loans *   $ 4,410     $ 4,356     $ 4,329     $ 4,267     $ 4,189       5  
  Investment securities     2,190       2,302       2,312       2,169       2,152       2  
  Total assets     7,352       7,398       7,425       7,243       7,163       3  
  Deposits     6,164       6,248       6,202       6,113       6,012       3  
  Shareholders' equity     722       704       796       852       829       (13 )
  Common shares outstanding (thousands)     60,139       60,092       59,432       59,412       57,831          
                                                 
(1) Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized. (4) Calculated as of period-end.
 
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
 
  For the Six    
  Months Ended   YTD
(in thousands, except per share June 30,   2014-2013
data; taxable equivalent) 2014   2013   Change
INCOME SUMMARY                
Interest revenue $ 122,278   $ 124,202      
Interest expense   13,159     14,697      
    Net interest revenue   109,119     109,505   - %
Provision for credit losses   4,700     59,500      
Fee revenue   26,319     28,854   (9 )
    Total revenue   130,738     78,859      
Operating expenses   79,582     92,593   (14 )
    Income (loss) before income taxes   51,156     (13,734 )    
Income tax expense (benefit)   19,399     (255,463 )    
    Net income   31,757     241,729      
Preferred dividends and discount accretion   439     6,107      
Net income available to common shareholders $ 31,318   $ 235,622      
                 
PERFORMANCE MEASURES                
  Per common share:                
    Diluted income $ .52   $ 4.05      
    Book value   11.94     10.90   10  
    Tangible book value (2)   11.91     10.82   10  
                 
  Key performance ratios:                
    Return on common equity (1)(3)   8.82 %   108.34 %    
    Return on assets (3)   .87     7.09      
    Net interest margin (3)   3.21     3.35      
    Efficiency ratio   58.85     66.98      
    Equity to assets   9.56     8.90      
    Tangible equity to assets (2)   9.54     8.83      
    Tangible common equity to assets (2)   9.40     5.99      
    Tangible common equity to risk- weighted assets (2)   13.92     13.16      
                 
ASSET QUALITY *                
  Non-performing loans $ 20,724   $ 27,864      
  Foreclosed properties   2,969     3,936      
    Total non-performing assets (NPAs)   23,693     31,800      
  Allowance for loan losses   73,248     81,845      
  Net charge-offs   8,214     84,792      
  Allowance for loan losses to loans   1.66 %   1.95 %    
  Net charge-offs to average loans (3)   .38     4.07      
  NPAs to loans and foreclosed properties   .54     .76      
  NPAs to total assets   .32     .44      
                 
AVERAGE BALANCES ($ in millions)                
  Loans $ 4,366   $ 4,225   3  
  Investment securities   2,323     2,151   8  
  Earning assets   6,844     6,578   4  
  Total assets   7,401     6,875   8  
  Deposits   6,192     5,964   4  
  Shareholders' equity   708     612   16  
  Common shares - basic (thousands)   60,386     58,111      
  Common shares - diluted (thousands)   60,388     58,111      
                 
AT PERIOD END ($ in millions)                
  Loans * $ 4,410   $ 4,189   5  
  Investment securities   2,190     2,152   2  
  Total assets   7,352     7,163   3  
  Deposits   6,164     6,012   3  
  Shareholders' equity   722     829   (13 )
  Common shares outstanding (thousands)   60,139     57,831      
                 
(1) Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized. (4) Calculated as of period-end.
                 
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
 
 
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
 
 
  2014   2013  
(in thousands, except per share Second   First   Fourth   Third   Second  
data; taxable equivalent) Quarter   Quarter   Quarter   Quarter   Quarter  
                               
Interest revenue reconciliation                              
Interest revenue - taxable equivalent $ 61,783   $ 60,495   $ 61,695   $ 61,426   $ 62,088  
Taxable equivalent adjustment   (377 )   (357 )   (380 )   (370 )   (368 )
  Interest revenue (GAAP) $ 61,406   $ 60,138   $ 61,315   $ 61,056   $ 61,720  
                               
Net interest revenue reconciliation                              
Net interest revenue - taxable equivalent $ 54,950   $ 54,169   $ 55,879   $ 54,257   $ 54,931  
Taxable equivalent adjustment   (377 )   (357 )   (380 )   (370 )   (368 )
  Net interest revenue (GAAP) $ 54,573   $ 53,812   $ 55,499   $ 53,887   $ 54,563  
                               
Total revenue reconciliation                              
Total operating revenue $ 66,893   $ 63,845   $ 66,398   $ 65,482   $ 22,374  
Taxable equivalent adjustment   (377 )   (357 )   (380 )   (370 )   (368 )
  Total revenue (GAAP) $ 66,516   $ 63,488   $ 66,018   $ 65,112   $ 22,006  
                               
Income (loss) before taxes reconciliation                              
Income (loss) before taxes $ 26,361   $ 24,795   $ 24,784   $ 25,385   $ (26,449 )
Taxable equivalent adjustment   (377 )   (357 )   (380 )   (370 )   (368 )
  Income (loss) before taxes (GAAP) $ 25,984   $ 24,438   $ 24,404   $ 25,015   $ (26,817 )
                               
Income tax expense (benefit) reconciliation                              
Income tax expense (benefit) $ 10,004   $ 9,395   $ 8,873   $ 9,885   $ (256,413 )
Taxable equivalent adjustment   (377 )   (357 )   (380 )   (370 )   (368 )
  Income tax expense (benefit) (GAAP) $ 9,627   $ 9,038   $ 8,493   $ 9,515   $ (256,781 )
                               
Book value per common share reconciliation                              
Tangible book value per common share $ 11.91   $ 11.63   $ 11.26   $ 10.95   $ 10.82  
Effect of goodwill and other intangibles   .03     .03     .04     .04     .08  
  Book value per common share (GAAP) $ 11.94   $ 11.66   $ 11.30   $ 10.99   $ 10.90  
                               
Average equity to assets reconciliation                              
Tangible common equity to assets   9.58 %   9.22 %   8.99 %   9.02 %   8.79 %
Effect of preferred equity   -     .28     2.60     2.74     2.74  
  Tangible equity to assets   9.58     9.50     11.59     11.76     11.53  
Effect of goodwill and other intangibles   .03     .02     .03     .04     .04  
  Equity to assets (GAAP)   9.61 %   9.52 %   11.62 %   11.80 %   11.57 %
                               
Tangible common equity to risk-weighted assets reconciliation                    
Tangible common equity to risk-weighted assets   13.92 %   13.63 %   13.18 %   13.34 %   13.16 %
Effect of other comprehensive income   .53     .36     .39     .49     .29  
Effect of deferred tax limitation   (3.74 )   (3.92 )   (4.26 )   (4.72 )   (4.99 )
Effect of trust preferred   1.04     1.03     1.04     1.09     1.11  
Effect of preferred equity   -     -     2.39     4.01     4.11  
  Tier I capital ratio (Regulatory)   11.75 %   11.10 %   12.74 %   14.21 %   13.68 %
 
 
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
 
 
  For the Six Months  
(in thousands, except per share Ended June 30,  
data; taxable equivalent) 2014   2013  
             
Interest revenue reconciliation            
Interest revenue - taxable equivalent $ 122,278   $ 124,202  
Taxable equivalent adjustment   (734 )   (733 )
  Interest revenue (GAAP) $ 121,544   $ 123,469  
             
Net interest revenue reconciliation            
Net interest revenue - taxable equivalent $ 109,119   $ 109,505  
Taxable equivalent adjustment   (734 )   (733 )
  Net interest revenue (GAAP) $ 108,385   $ 108,772  
             
Total revenue reconciliation            
Total operating revenue $ 130,738   $ 78,859  
Taxable equivalent adjustment   (734 )   (733 )
  Total revenue (GAAP) $ 130,004   $ 78,126  
             
Income (loss) before taxes reconciliation            
Income (loss) before taxes $ 51,156   $ (13,734 )
Taxable equivalent adjustment   (734 )   (733 )
  Income (loss) before taxes (GAAP) $ 50,422   $ (14,467 )
             
Income tax expense (benefit) reconciliation            
Income tax expense (benefit) $ 19,399   $ (255,463 )
Taxable equivalent adjustment   (734 )   (733 )
  Income tax expense (benefit) (GAAP) $ 18,665   $ (256,196 )
             
Book value per common share reconciliation            
Tangible book value per common share $ 11.91   $ 10.82  
Effect of goodwill and other intangibles   .03     .08  
  Book value per common share (GAAP) $ 11.94   $ 10.90  
             
Average equity to assets reconciliation            
Tangible common equity to assets   9.40 %   5.99 %
Effect of preferred equity   .14     2.84  
  Tangible equity to assets   9.54     8.83  
Effect of goodwill and other intangibles   .02     .07  
  Equity to assets (GAAP)   9.56 %   8.90 %
             
Tangible common equity to risk-weighted assets reconciliation  
Tangible common equity to risk-weighted assets   13.92 %   13.16 %
Effect of other comprehensive income   .53     .29  
Effect of deferred tax limitation   (3.74 )   (4.99 )
Effect of trust preferred   1.04     1.11  
Effect of preferred equity   -     4.11  
  Tier I capital ratio (Regulatory)   11.75 %   13.68 %
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
 
 
  2014   2013
  Second   First   Fourth   Third   Second
(in millions) Quarter   Quarter   Quarter   Quarter   Quarter
LOANS BY CATEGORY                            
Owner occupied commercial RE $ 1,163   $ 1,142   $ 1,134   $ 1,129   $ 1,119
Income producing commercial RE   598     624     623     614     629
Commercial & industrial   554     495     472     457     437
Commercial construction   160     148     149     137     133
    Total commercial   2,475     2,409     2,378     2,337     2,318
Residential mortgage   861     866     875     888     876
Home equity lines of credit   451     447     441     421     402
Residential construction   302     318     328     318     332
Consumer installment   321     316     307     303     261
    Total loans $ 4,410   $ 4,356   $ 4,329   $ 4,267   $ 4,189
                             
LOANS BY MARKET                            
North Georgia $ 1,175   $ 1,205   $ 1,240   $ 1,262   $ 1,265
Atlanta MSA   1,305     1,290     1,275     1,246     1,227
North Carolina   555     563     572     575     576
Coastal Georgia   426     425     423     421     397
Gainesville MSA   257     262     255     253     256
East Tennessee   270     272     280     277     282
South Carolina / Corporate   206     131     88     47     34
Other (2)   216     208     196     186     152
    Total loans $ 4,410   $ 4,356   $ 4,329   $ 4,267   $ 4,189
                             
RESIDENTIAL CONSTRUCTION                        
Dirt loans                            
  Acquisition & development $ 34   $ 37   $ 39   $ 40   $ 42
  Land loans   36     37     38     35     36
  Lot loans   151     159     166     167     173
    Total   221     233     243     242     251
                             
House loans                            
  Spec   19     19     23     30     34
  Sold   62     66     62     46     47
    Total   81     85     85     76     81
Total residential construction $ 302   $ 318   $ 328   $ 318   $ 332
                             
(1) Excludes total loans of $3.1 million, $19.3 million, $20.3 million, $23.3 million and $25.7 million as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
 
 
  2014   2013   Linked
Quarter
Change
  Year over
Year
Change
  Second   First   Second    
(in millions) Quarter   Quarter   Quarter    
LOANS BY CATEGORY                                
Owner occupied commercial RE $ 1,163   $ 1,142   $ 1,119   $ 21     $ 44  
Income producing commercial RE   598     624     629     (26 )     (31 )
Commercial & industrial   554     495     437     59       117  
Commercial construction   160     148     133     12       27  
    Total commercial   2,475     2,409     2,318     66       157  
Residential mortgage   861     866     876     (5 )     (15 )
Home equity lines of credit   451     447     402     4       49  
Residential construction   302     318     332     (16 )     (30 )
Consumer installment   321     316     261     5       60  
    Total loans $ 4,410   $ 4,356   $ 4,189     54       221  
                                 
LOANS BY MARKET                                
North Georgia $ 1,175   $ 1,205   $ 1,265     (30 )     (90 )
Atlanta MSA   1,305     1,290     1,227     15       78  
North Carolina   555     563     576     (8 )     (21 )
Coastal Georgia   426     425     397     1       29  
Gainesville MSA   257     262     256     (5 )     1  
East Tennessee   270     272     282     (2 )     (12 )
South Carolina / Corporate   206     131     34     75       172  
Other (2)   216     208     152     8       64  
    Total loans $ 4,410   $ 4,356   $ 4,189     54       221  
                                 
RESIDENTIAL CONSTRUCTION                            
Dirt loans                                
  Acquisition & development $ 34   $ 37   $ 42     (3 )     (8 )
  Land loans   36     37     36     (1 )     -  
  Lot loans   151     159     173     (8 )     (22 )
    Total   221     233     251     (12 )     (30 )
                                 
House loans                                
  Spec   19     19     34     -       (15 )
  Sold   62     66     47     (4 )     15  
    Total   81     85     81     (4 )     -  
Total residential construction $ 302   $ 318   $ 332     (16 )     (30 )
                                 
(1) Excludes total loans of $3.1 million, $19.3 million, $20.3 million, $23.3 million and $25.7 million as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.  
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
 
 
    Second Quarter 2014
    Non-performing   Foreclosed   Total
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY      
Owner occupied CRE   $ 2,975     $ 653     $ 3,628  
Income producing CRE     1,032       242       1,274  
Commercial & industrial     1,102       -       1,102  
Commercial construction     95       -       95  
  Total commercial     5,204       895       6,099  
Residential mortgage     10,201       1,426       11,627  
Home equity lines of credit     510       128       638  
Residential construction     4,248       520       4,768  
Consumer installment     561       -       561  
  Total NPAs   $ 20,724     $ 2,969     $ 23,693  
  Balance as a % of                        
    Unpaid Principal     66.5 %     50.4 %     63.9 %
                         
NONPERFORMING ASSETS BY MARKET                  
North Georgia   $ 8,216     $ 1,392     $ 9,608  
Atlanta MSA     3,883       510       4,393  
North Carolina     5,314       615       5,929  
Coastal Georgia     782       80       862  
Gainesville MSA     921       49       970  
East Tennessee     1,218       323       1,541  
South Carolina / Corporate     -       -       -  
Other (3)     390       -       390  
  Total NPAs   $ 20,724     $ 2,969     $ 23,693  
                         
                         
NONPERFORMING ASSETS ACTIVITY                  
Beginning Balance   $ 25,250     $ 5,594     $ 30,844  
Loans placed on non-accrual     9,529       -       9,529  
Payments received     (4,027 )     -       (4,027 )
Loan charge-offs     (8,341 )     -       (8,341 )
Foreclosures     (1,687 )     1,687       -  
Capitalized costs     -       -       -  
Property sales     -       (4,430 )     (4,430 )
Write downs     -       (305 )     (305 )
Net gains (losses) on sales     -       423       423  
  Ending Balance   $ 20,724     $ 2,969     $ 23,693  
                         
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.  
(2) Annualized.  
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.  
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
 
 
    First Quarter 2014
    Non-performing   Foreclosed   Total
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY      
Owner occupied CRE   $ 3,868     $ 1,167     $ 5,035  
Income producing CRE     1,278       1,645       2,923  
Commercial & industrial     822       -       822  
Commercial construction     479       -       479  
  Total commercial     6,447       2,812       9,259  
Residential mortgage     13,307       2,146       15,453  
Home equity lines of credit     1,106       362       1,468  
Residential construction     3,805       274       4,079  
Consumer installment     585       -       585  
  Total NPAs   $ 25,250     $ 5,594     $ 30,844  
  Balance as a % of                        
    Unpaid Principal     65.8 %     53.9 %     63.2 %
                         
NONPERFORMING ASSETS BY MARKET                  
North Georgia   $ 12,166     $ 2,058     $ 14,224  
Atlanta MSA     2,916       904       3,820  
North Carolina     6,501       866       7,367  
Coastal Georgia     800       1,607       2,407  
Gainesville MSA     1,145       -       1,145  
East Tennessee     1,428       159       1,587  
South Carolina / Corporate     -       -       -  
Other (3)     294       -       294  
  Total NPAs   $ 25,250     $ 5,594     $ 30,844  
                         
                         
NONPERFORMING ASSETS ACTIVITY                  
Beginning Balance   $ 26,819     $ 4,221     $ 31,040  
Loans placed on non-accrual     9,303       -       9,303  
Payments received     (1,666 )     -       (1,666 )
Loan charge-offs     (4,839 )     -       (4,839 )
Foreclosures     (4,367 )     4,367       -  
Capitalized costs     -       -       -  
Property sales     -       (3,238 )     (3,238 )
Write downs     -       (277 )     (277 )
Net gains (losses) on sales     -       521       521  
  Ending Balance   $ 25,250     $ 5,594     $ 30,844  
                         
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.  
(2) Annualized.  
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.  
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
 
 
    Fourth Quarter 2013
    Non-performing   Foreclosed   Total
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY      
Owner occupied CRE   $ 5,822     $ 832     $ 6,654  
Income producing CRE     2,518       -       2,518  
Commercial & industrial     427       -       427  
Commercial construction     361       -       361  
  Total commercial     9,128       832       9,960  
Residential mortgage     11,730       2,684       14,414  
Home equity lines of credit     1,448       389       1,837  
Residential construction     4,264       316       4,580  
Consumer installment     249       -       249  
  Total NPAs   $ 26,819     $ 4,221     $ 31,040  
  Balance as a % of                        
    Unpaid Principal     65.3 %     44.5 %     61.4 %
                         
NONPERFORMING ASSETS BY MARKET                  
North Georgia   $ 12,352     $ 2,494     $ 14,846  
Atlanta MSA     2,830       684       3,514  
North Carolina     6,567       683       7,250  
Coastal Georgia     2,342       173       2,515  
Gainesville MSA     928       -       928  
East Tennessee     1,800       187       1,987  
South Carolina / Corporate     -       -       -  
Other (3)     -       -       -  
  Total NPAs   $ 26,819     $ 4,221     $ 31,040  
                         
                         
NONPERFORMING ASSETS ACTIVITY                  
Beginning Balance   $ 26,088     $ 4,467     $ 30,555  
Loans placed on non-accrual     11,043       -       11,043  
Payments received     (1,688 )     -       (1,688 )
Loan charge-offs     (4,621 )     -       (4,621 )
Foreclosures     (4,003 )     4,003       -  
Capitalized costs     -       -       -  
Property sales     -       (4,684 )     (4,684 )
Write downs     -       (326 )     (326 )
Net gains (losses) on sales     -       761       761  
  Ending Balance   $ 26,819     $ 4,221     $ 31,040  
                         
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.  
(2) Annualized.  
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.  
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality (1)
 
 
    Second Quarter 2014   First Quarter 2014   Fourth Quarter 2013
      Net Charge-     Net Charge-     Net Charge-
        Offs to       Offs to       Offs to
    Net   Average   Net   Average   Net   Average
(in thousands)   Charge-Offs   Loans (2)   Charge-Offs   Loans (2)   Charge-Offs   Loans (2)
NET CHARGE-OFFS BY CATEGORY                          
Owner occupied CRE   $ (1,836 )   (.64 )%   $ 278   .10 %   $ 1,638     .57 %
Income producing CRE     435     .29       205   .13       320     .21  
Commercial & industrial     662     .52       421   .35       (149 )   (.13 )
Commercial construction     131     .34       -   -       (9 )   (.02 )
  Total commercial     (608 )   (.10 )     904   .15       1,800     .30  
Residential mortgage     2,509     1.17       1,515   .71       1,426     .64  
Home equity lines of credit     466     .42       993   .90       417     .38  
Residential construction     1,671     2.13       212   .27       327     .40  
Consumer installment     137     .18       415   .54       475     .62  
  Total   $ 4,175     .38     $ 4,039   .38     $ 4,445     .41  
                                         
                                         
NET CHARGE-OFFS BY MARKET                                  
North Georgia   $ (741 )   (.25 )%   $ 1,272   .42 %   $ 1,603     .51 %
Atlanta MSA     1,481     .46       1,232   .39       636     .20  
North Carolina     2,161     1.55       577   .41       1,104     .76  
Coastal Georgia     116     .11       512   .49       345     .33  
Gainesville MSA     797     1.23       141   .22       346     .54  
East Tennessee     288     .42       239   .35       323     .46  
South Carolina / Corporate     -     -       -   -       -     -  
Other (3)     73     .14       66   .14       88     .20  
  Total   $ 4,175     .38     $ 4,039   .38     $ 4,445     .41  
                                         
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.
 
 
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income  (Unaudited)
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
(in thousands, except per share data)   2014   2013   2014   2013
                                 
Interest revenue:                                
  Loans, including fees   $ 48,261     $ 50,730     $ 95,949     $ 101,665  
  Investment securities, including tax exempt of $193, $210, $381 and $422     12,165       10,074       23,772       20,018  
  Deposits in banks and short-term investments     980       916       1,823       1,786  
    Total interest revenue     61,406       61,720       121,544       123,469  
                                 
Interest expense:                                
  Deposits:                                
  NOW     411       419       851       873  
  Money market     757       534       1,320       1,096  
  Savings     21       36       41       72  
  Time     2,018       2,950       3,789       6,241  
    Total deposit interest expense     3,207       3,939       6,001       8,282  
  Short-term borrowings     908       522       1,748       1,038  
  Federal Home Loan Bank advances     80       30       138       49  
  Long-term debt     2,638       2,666       5,272       5,328  
    Total interest expense     6,833       7,157       13,159       14,697  
    Net interest revenue     54,573       54,563       108,385       108,772  
  Provision for credit losses     2,200       48,500       4,700       59,500  
    Net interest revenue after provision for credit losses     52,373       6,063       103,685       49,272  
                                 
Fee revenue:                                
  Service charges and fees     8,527       7,972       16,425       15,375  
  Mortgage loan and other related fees     1,877       3,003       3,231       5,658  
  Brokerage fees     1,245       1,063       2,422       1,830  
  Securities gains, net     4,435       -       4,652       116  
  Loss from prepayment of debt     (4,446 )     -       (4,446 )     -  
  Other     2,505       3,905       4,035       5,875  
    Total fee revenue     14,143       15,943       26,319       28,854  
    Total revenue     66,516       22,006       130,004       78,126  
                                 
Operating expenses:                                
  Salaries and employee benefits     24,287       24,734       48,683       48,326  
  Communications and equipment     3,037       3,468       6,276       6,514  
  Occupancy     3,262       3,449       6,640       6,816  
  Advertising and public relations     1,139       1,037       1,765       1,975  
  Postage, printing and supplies     804       894       1,580       1,757  
  Professional fees     2,172       2,499       3,599       4,865  
  Foreclosed property     102       5,151       218       7,484  
  FDIC assessments and other regulatory charges     1,425       2,505       2,778       5,010  
  Amortization of intangibles     361       491       748       1,196  
  Other     3,943       4,595       7,295       8,650  
    Total operating expenses     40,532       48,823       79,582       92,593  
    Net income (loss) before income taxes     25,984       (26,817 )     50,422       (14,467 )
  Income tax expense (benefit)     9,627       (256,781 )     18,665       (256,196 )
    Net income     16,357       229,964       31,757       241,729  
  Preferred stock dividends and discount accretion     -       3,055       439       6,107  
    Net income available to common shareholders   $ 16,357     $ 226,909     $ 31,318     $ 235,622  
                                 
Earnings per common share:                                
  Basic   $ .27     $ 3.90     $ .52     $ 4.05  
  Diluted     .27       3.90       .52       4.05  
Weighted average common shares outstanding:                                
  Basic     60,712       58,141       60,386       58,111  
  Diluted     60,714       58,141       60,388       58,111  
 
 
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet (Unaudited)
 
    June 30,   December 31,   June 30,
(in thousands, except share and per share data)   2014   2013   2013
                         
ASSETS                        
  Cash and due from banks   $ 91,791     $ 71,230     $ 62,564  
  Interest-bearing deposits in banks     100,270       119,669       141,016  
  Short-term investments     47,999       37,999       57,000  
    Cash and cash equivalents     240,060       228,898       260,580  
  Securities available for sale     1,741,268       1,832,217       1,937,264  
  Securities held to maturity (fair value $458,864, $485,585 and $226,695)     448,752       479,742       214,947  
  Mortgage loans held for sale     14,918       10,319       19,150  
  Loans, net of unearned income     4,410,285       4,329,266       4,189,368  
    Less allowance for loan losses     (73,248 )     (76,762 )     (81,845 )
      Loans, net     4,337,037       4,252,504       4,107,523  
  Assets covered by loss sharing agreements with the FDIC     3,595       22,882       35,675  
  Premises and equipment, net     161,614       163,589       167,197  
  Bank owned life insurance     80,922       80,670       82,276  
  Accrued interest receivable     19,141       19,598       19,279  
  Intangible assets     2,731       3,480       4,315  
  Foreclosed property     2,969       4,221       3,936  
  Net deferred tax asset     233,149       258,518       272,287  
  Derivative financial instruments     22,024       23,833       9,017  
  Other assets     43,886       44,948       29,189  
    Total assets   $ 7,352,066     $ 7,425,419     $ 7,162,635  
LIABILITIES AND SHAREHOLDERS' EQUITY                        
Liabilities:                        
  Deposits:                        
    Demand   $ 1,519,635     $ 1,388,512     $ 1,349,804  
    NOW     1,334,883       1,427,939       1,225,664  
    Money market     1,245,912       1,227,575       1,167,889  
    Savings     279,203       251,125       247,821  
    Time:                        
      Less than $100,000     805,289       892,961       982,009  
      Greater than $100,000     554,310       588,689       664,112  
    Brokered     424,313       424,704       374,530  
      Total deposits     6,163,545       6,201,505       6,011,829  
  Short-term borrowings     76,256       53,241       54,163  
  Federal Home Loan Bank advances     175,125       120,125       70,125  
  Long-term debt     129,865       129,865       124,845  
  Derivative financial instruments     36,545       46,232       29,330  
  Unsettled securities purchases     7,264       29,562       1,582  
  Accrued expenses and other liabilities     41,497       49,174       41,458  
    Total liabilities     6,630,097       6,629,704       6,333,332  
Shareholders' equity:                        
  Preferred stock, $1 par value; 10,000,000 shares authorized;                        
    Series A; $10 stated value; 0, 0 and 21,700 shares issued and outstanding     -       -       217  
    Series B; $1,000 stated value; 0, 105,000 and 180,000 shares issued and outstanding     -       105,000       179,323  
    Series D; $1,000 stated value; 0, 16,613 and 16,613 shares issued and outstanding     -       16,613       16,613  
  Common stock, $1 par value; 100,000,000 shares authorized;                        
    50,058,295, 46,243,345 and 43,356,492 shares issued and outstanding     50,058       46,243       43,356  
  Common stock, non-voting, $1 par value; 26,000,000 shares authorized;                        
    10,080,787, 13,188,206 and 14,474,810 shares issued and outstanding     10,081       13,188       14,475  
  Common stock issuable; 314,039, 241,832 and 271,215 shares     4,649       3,930       4,705  
  Capital surplus     1,091,780       1,078,676       1,057,931  
  Accumulated deficit     (418,583 )     (448,091 )     (473,531 )
  Accumulated other comprehensive loss     (16,016 )     (19,844 )     (13,786 )
    Total shareholders' equity     721,969       795,715       829,303  
    Total liabilities and shareholders' equity   $ 7,352,066     $ 7,425,419     $ 7,162,635  
   
   
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Three Months Ended June 30,  
                               
  2014   2013
(dollars in thousands, taxable equivalent) Average
Balance
    Interest   Avg.
Rate
    Average
Balance
    Interest   Avg.
Rate
 
Assets:                                      
Interest-earning assets:                                      
  Loans, net of unearned income (1)(2) $ 4,376,174     $ 48,435   4.44 %   $ 4,253,361     $ 50,808   4.79 %
  Taxable securities (3)   2,306,457       11,972   2.08       2,139,221       9,864   1.84  
  Tax-exempt securities (1)(3)   19,592       316   6.45       21,597       344   6.37  
  Federal funds sold and other interest-earning assets   158,418       1,060   2.68       193,370       1,072   2.22  
                                       
    Total interest-earning assets   6,860,641       61,783   3.61       6,607,549       62,088   3.77  
Non-interest-earning assets:                                      
  Allowance for loan losses   (76,843 )                 (106,417 )            
  Cash and due from banks   63,853                   63,457              
  Premises and equipment   161,443                   168,272              
  Other assets (3)   408,768                   181,987              
    Total assets $ 7,417,862                 $ 6,914,848              
                                       
Liabilities and Shareholders' Equity:                                      
Interest-bearing liabilities:                                      
  Interest-bearing deposits:                                      
  NOW $ 1,356,141       411   .12     $ 1,245,301       419   .13  
  Money market   1,361,045       757   .22       1,306,522       534   .16  
  Savings   275,540       21   .03       245,211       36   .06  
  Time less than $100,000   818,048       933   .46       1,000,511       1,568   .63  
  Time greater than $100,000   563,489       865   .62       674,200       1,380   .82  
  Brokered time deposits   334,919       220   .26       195,182       2   .00  
    Total interest-bearing deposits   4,709,182       3,207   .27       4,666,927       3,939   .34  
                                       
Federal funds purchased and other borrowings   108,311       908   3.36       72,139       522   2.90  
Federal Home Loan Bank advances   154,795       80   .21       58,916       30   .20  
Long-term debt   129,865       2,638   8.15       124,838       2,666   8.57  
    Total borrowed funds   392,971       3,626   3.70       255,893       3,218   5.04  
                                       
    Total interest-bearing liabilities   5,102,153       6,833   .54       4,922,820       7,157   .58  
Non-interest-bearing liabilities:                                      
  Non-interest-bearing deposits   1,477,849                   1,315,812              
  Other liabilities   125,173                   40,603              
    Total liabilities   6,705,175                   6,279,235              
  Shareholders' equity   712,687                   635,613              
    Total liabilities and shareholders' equity $ 7,417,862                 $ 6,914,848              
                                       
Net interest revenue         $ 54,950                 $ 54,931      
Net interest-rate spread               3.07 %                 3.19 %
                                       
Net interest margin (4)               3.21 %                 3.33 %
                                       
(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate
used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.  
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $1.86 million in 2014 and pretax unrealized gains of $17.7 million
in 2013 are included in other assets for purposes of this presentation.     
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.   
   
   
UNITED COMMUNITY BANKS, INC.  
Average Consolidated Balance Sheets and Net Interest Analysis  
For the Six Months Ended June 30,  
   
  2014   2013
(dollars in thousands, taxable equivalent) Average
Balance
    Interest   Avg.
Rate
    Average
Balance
    Interest   Avg.
Rate
 
Assets:                                      
Interest-earning assets:                                      
  Loans, net of unearned income (1)(2) $ 4,365,930     $ 96,303   4.45 %   $ 4,225,215     $ 101,808   4.86 %
  Taxable securities (3)   2,303,404       23,391   2.03       2,129,208       19,596   1.84  
  Tax-exempt securities (1)(3)   19,881       624   6.28       21,665       691   6.38  
  Federal funds sold and other interest-earning assets   154,651       1,960   2.53       201,478       2,107   2.09  
                                       
    Total interest-earning assets   6,843,866       122,278   3.60       6,577,566       124,202   3.80  
Non-interest-earning assets:                                      
  Allowance for loan losses   (77,165 )                 (108,667 )            
  Cash and due from banks   62,958                   63,873              
  Premises and equipment   162,112                   168,773              
  Other assets (3)   409,466                   173,168              
    Total assets $ 7,401,237                 $ 6,874,713              
                                       
Liabilities and Shareholders' Equity:                                      
Interest-bearing liabilities:                                      
  Interest-bearing deposits:                                      
  NOW $ 1,385,964       851   .12     $ 1,274,144       873   .14  
  Money market   1,368,975       1,320   .19       1,282,101       1,096   .17  
  Savings   267,588       41   .03       239,691       72   .06  
  Time less than $100,000   847,707       1,946   .46       1,020,000       3,317   .66  
  Time greater than $100,000   570,799       1,783   .63       684,320       2,857   .84  
  Brokered time deposits   311,579       60   .04       185,210       67   .07  
    Total interest-bearing deposits   4,752,612       6,001   .25       4,685,466       8,282   .36  
                                       
  Federal funds purchased and other borrowings   110,436       1,748   3.19       72,148       1,038   2.90  
  Federal Home Loan Bank advances   140,014       138   .20       46,064       49   .21  
  Long-term debt   129,865       5,272   8.19       124,827       5,328   8.61  
    Total borrowed funds   380,315       7,158   3.80       243,039       6,415   5.32  
                                       
    Total interest-bearing liabilities   5,132,927       13,159   .52       4,928,505       14,697   .60  
Non-interest-bearing liabilities:                                      
  Non-interest-bearing deposits   1,439,447                   1,278,875              
  Other liabilities   120,943                   55,639              
    Total liabilities   6,693,317                   6,263,019              
Shareholders' equity   707,920                   611,694              
    Total liabilities and shareholders' equity $ 7,401,237                 $ 6,874,713              
                                       
Net interest revenue         $ 109,119                 $ 109,505      
Net interest-rate spread               3.08 %                 3.20 %
                                       
Net interest margin (4)               3.21 %                 3.35 %
                                       
(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate
used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized losses of $1.37 million in 2014 and pretax unrealized gains of $17.4 million
in 2013 are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com

Source: United Community Banks, Inc.

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