Reverse Stock Split

Information Required Pursuant to Internal Revenue Code and Regulations for 1-for-5 Reverse Stock Split of United Community Banks, Inc. Common Stock

Federal Regulations require United Community Banks, Inc. (UCBI) to provide the following information to its shareholders affected by the June 17, 2011 1-for-5 Reverse Stock Split of United's common stock.

Pursuant to Treasury Regulation §1.6045B-1(a)(3), UCBI reports the following information with respect to the aforementioned organizational action:

  1. Reporting issuer:
    United Community Banks, Inc. (FEIN: 58-1807304);

  2. Security identifier:
    Security: Common Stock
    Ticker Symbol: UCBI
    Pre-Reverse Split CUSIP: 90984P105
    Post-Reverse Split CUSIP: 90984P303

  3. Contact at reporting issuer:
    Jan Heaton
    (866) 270-5900
    Investor_Relations@ucbi.com
    United Community Banks, Inc.
    125 Highway 515 East
    Blairsville, GA 30512

  4. Information about the action:
    UCBI approved a 1 for 5 reverse stock split on both its voting and non-voting common shares, effective after the close of trading on June 17, 2011. UCBI common stock began trading on a split adjusted basis at the opening of trading on June 20, 2011. Each 5 shares of issued and outstanding UCBI common stock were reclassified into one issued and outstanding share of common stock and each 5 shares of issued and outstanding UCBI non-voting common stock were reclassified into one issued and outstanding share of non-voting common stock. No fractional shares were issued; shareholders who would otherwise hold a fractional share received a cash payment in lieu of such fractional share.

  5. Effect of the action on the basis of the stock in the hands of a United States taxpayer:
    The tax basis of each whole share received in the exchange will equal the tax basis of the five shares surrendered in the exchange. A shareholder who receives cash in lieu of a fractional share should recognize gain or loss in an amount equal to the difference between the amount of cash received and the holder's tax basis in the shares of stock surrendered that is allocated to such fractional share. The reportable tax year is 2011.

    The basis of shares received must be allocated to the individual shares received in accordance with Treasury Regulation §1.358-2(a). Since fewer shares of UCBI common stock were received than shares surrendered, the basis of the shares surrendered must be allocated to the shares of stock received in a manner that reflects, to the greatest extent possible, that a share of stock received is received in respect of shares of stock that were acquired on the same date and at the same price. To the extent it is not possible to allocate basis in this manner, the basis of the shares surrendered must be allocated to the shares of stock received in a manner that minimizes the disparity in the holding periods of the surrendered shares whose basis is allocated to any particular share received. This could result in a single share of stock having a split basis and a split holding period. See Example (14) of Treasury Regulation §1.358-2(c) for an illustration of this principle.

    Each UCBI shareholder should consult its tax advisor with respect to the treatment and calculation of its basis in the UCBI common shares and the gain or loss, if any, to be recognized as a result of receiving any cash in lieu of fractional shares.

    Tax treatment of the reverse stock split is based on the following Internal Revenue Code (IRC) sections : 354(a), 358(a), and 368(a). See also Treasury Regulation §1.358-2(a) and (c).