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United Community Banks, Inc. Reports Earnings of $230 Million for Second Quarter 2013

Jul 25, 2013

BLAIRSVILLE, GA -- (Marketwired) -- 07/25/13 -- United Community Banks, Inc. (NASDAQ: UCBI)

  • Net income of $230 million, or $3.90 per share
  • Earnings reflect impact of reversal of valuation allowance on deferred tax asset and accelerated sales of classified assets
  • Credit measures now at pre-credit crisis levels
  • Capital levels remain strong

United Community Banks, Inc. (NASDAQ: UCBI) today reported net income of $230 million, or $3.90 per share, for the second quarter of 2013, and $242 million, or $4.05 per share, for the first six months of 2013. The results reflect the impact of two very significant events during the second quarter -- the reversal of the valuation allowance on United's net deferred tax asset and higher provision for loan losses and foreclosed property expenses from the accelerated sales of classified assets.

"The second quarter events mark the final phase of our recovery from the financial crisis that has affected so many banks throughout the country and especially within our footprint," said Jimmy Tallent, president and chief executive officer. "With the reversal of our valuation allowance and the accelerated sales of classified assets, the lingering effects of the credit crisis are behind us. We can now devote full attention toward growing our business and increasing the value of our shareholders' investments."

Tallent noted that the reduction in loans resulting from the accelerated classified loan sales masked an otherwise solid quarter of loan growth. Though the company sold loans with a carrying amount of $151 million, total loans were only down $5 million from the first quarter.

"Achieving quality loan growth remains a top priority despite continued challenges with the sluggish economy," Tallent said. "We are accomplishing this objective by adding lenders strategically, including in our vibrant new markets of Greenville, South Carolina and Nashville, Tennessee."

The second quarter provision for loan losses was $48.5 million compared with $11 million in the first quarter and with $18 million in the second quarter of 2012. The increase reflects the higher level of charge-offs associated with the accelerated classified loan sales. Second quarter net charge-offs were $72.4 million compared with $12.4 million in the first quarter and $18.9 million a year ago. The $48.5 million provision reflects the difference between the $72.4 million in net charge-offs offset by a $24 million reduction in the allowance for loan losses.

"We believed the time was right to take the final step toward putting the financial crisis behind us by selling our stress-related classified assets, including a bulk sale of $131 million," Tallent said. "We have cleansed our balance sheet of legacy problem credits and are turning full attention to strategic initiatives to grow our business and shareholder value."

Nonperforming assets at quarter-end were $31.8 million, representing .44 percent of total assets. This total is down from $113 million, or 1.65 percent, at March 31, 2013, and $146 million, or 2.16 percent, at June 30, 2012. The classified asset ratio, which is the ratio of classified assets to Tier 1 regulatory capital plus the allowance for loan losses, declined to 27 percent from 49 percent at March 31 and from 62 percent a year ago.

Second quarter taxable equivalent net interest revenue totaled $54.6 million, down $97,000 from the first quarter and down $2.27 million from the second quarter of 2012. "The decrease reflects the ongoing trend of lower yields on our loan and investment securities portfolios," said Tallent. "The lower loan portfolio yield reflects competitive pricing pressure on new and renewed loans and new retail product offerings with low introductory rates. Introductory rates on the new retail products will begin to expire and approximately $50 million will reset to a market rate in the third quarter of 2013. The lower investment securities yield is due to reinvestment of cash flows at record low rates. We continue to look for reinvestment opportunities, with a focus on floating-rate securities, to alleviate market and duration risk. At quarter-end, floating-rate securities accounted for 39 percent of the total investment securities portfolio compared to 34 percent last quarter. The higher proportion improves our overall interest sensitivity position by reducing exposure to rising interest rates."

The second quarter taxable equivalent net interest margin was 3.31 percent, down seven basis points from the first quarter and 12 basis points from a year ago. "Our net interest margin will remain under pressure as long as interest rates hold at these unprecedented low levels," stated Tallent. "To offset the impact on net interest revenue, we remain sharply focused on growing the loan portfolio in the mid-single digit range by focusing on retail loans and continuing to add commercial lenders in key markets."

Second quarter fee revenue was $16.3 million, compared to $12.8 million in the first quarter and $12.9 million a year ago. Contributing to these increases were higher mortgage, advisory services and interchange fee revenue, as well as two non-core items in other fee revenue. Mortgage fee revenue increased $348,000 from the first quarter and $681,000 from a year ago, to $3.0 million. Closed mortgage loans totaled $95.2 million in the second quarter, compared with $69.8 million in the first quarter and $79.8 million in the second quarter of 2012.

The two non-core items that contributed to the increase in other fee revenue were a $1.37 million recovery on a bank-owned life insurance policy and a $468,000 gain from the sale of low-income housing tax credits. In addition, other fee revenue included customer derivative fees of $488,000 compared with $252,000 in the first quarter of 2013. These fees are from the company's newly rolled-out loan swap program for commercial loan customers.

Operating expenses, excluding foreclosed property costs, were $43.7 million in the second quarter of 2013 compared to $41.4 million for the first quarter of 2013 and $42.5 million a year ago. The increase from both periods was due mostly to higher severance costs; second quarter 2013 severance costs were $1.56 million compared with $360,000 and $1.16 million for the first quarter of 2013 and the second quarter of 2012, respectively. Also contributing to the increase in operating expenses were higher mortgage and brokerage incentives related to the higher revenue levels and higher consulting fees associated with various revenue enhancement and efficiency projects.

Foreclosed property costs were $5.15 million in the second quarter of 2013 compared to $2.33 million in the first quarter and $1.85 million a year ago. The higher total reflects losses incurred on the accelerated sales of foreclosed properties. Included in second quarter 2013 costs were $4.31 million in net losses and write-downs and $837,000 for maintenance. For the first quarter of 2013, foreclosed property costs included $1.15 million in net losses and write-downs and $1.19 million in maintenance. Second quarter 2012 foreclosed property costs included $739,000 in net losses and write-downs and $1.11 million in maintenance.

As of June 30, 2013, capital ratios were as follows: Tier 1 Risk-Based of 13.7 percent; Total Risk-Based of 15.2 percent; Tier 1 Common Risk-Based of 8.5 percent; and, Tangible Equity-to-Assets of 11.5 percent. The average Tier 1 Leverage ratio was 9.8 percent at June 30, 2013.

"With credit quality now well under control, our attention is focused on growing our business and improving earnings performance," concluded Tallent. "In a competitive landscape, we must work more efficiently to achieve our goals, all while maintaining the best customer satisfaction scores in the industry. This team is more than up to the challenge and fully committed."

Conference Call
United will hold a conference call today, Thursday, July 25, 2013, 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 11766770. 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.
Headquartered in Blairsville, United Community Banks, Inc. is the third-largest bank holding company in Georgia. United has assets of $7.2 billion and operates 103 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and western South Carolina. United specializes in providing personalized community banking services to individuals and small to mid-size businesses and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United's common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United's website 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 2012 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
2013 2012
(in thousands, except per share data; taxable equivalent) Second
Quarter		 First
Quarter		 Fourth
Quarter		 Third
Quarter		 Second
Quarter		 Second
Quarter
2013-
2012
Change
INCOME SUMMARY
Interest revenue $ 61,693 $ 62,134 $ 64,450 $ 65,978 $ 66,780
Interest expense 7,131 7,475 8,422 8,607 9,944
Net interest revenue 54,562 54,659 56,028 57,371 56,836 (4 )%
Provision for loan losses 48,500 11,000 14,000 15,500 18,000
Fee revenue 16,312 12,826 14,761 13,764 12,867 27
Total revenue 22,374 56,485 56,789 55,635 51,703
Operating expenses 48,823 43,770 50,726 44,783 44,310 10
(Loss) income before income taxes (26,449 ) 12,715 6,063 10,852 7,393
Income tax (benefit) expense (256,413 ) 950 802 284 894
Net income 229,964 11,765 5,261 10,568 6,499
Preferred dividends and discount accretion 3,055 3,052 3,045 3,041 3,032
Net income available to common shareholders $ 226,909 $ 8,713 $ 2,216 $ 7,527 $ 3,467
PERFORMANCE MEASURES
Per common share:
Diluted income $ 3.90 $ .15 $ .04 $ .13 $ .06
Book value 10.90 6.85 6.67 6.75 6.61 65
Tangible book value (2) 10.82 6.76 6.57 6.64 6.48 67
Key performance ratios:
Return on equity (1)(3) 197.22 % 8.51 % 2.15 % 7.43 % 3.51 %
Return on assets (3) 13.34 .70 .31 .63 .37
Net interest margin (3) 3.31 3.38 3.44 3.60 3.43
Efficiency ratio 68.89 64.97 71.69 62.95 63.84
Equity to assets 11.57 (4 ) 8.60 8.63 8.75 8.33
Tangible equity to assets (2) 11.53 (4 ) 8.53 8.55 8.66 8.24
Tangible common equity to assets (2) 8.79 (4 ) 5.66 5.67 5.73 5.45
Tangible common equity to risk-weighted assets (2) 13.16 8.45 8.26 8.44 8.37
ASSET QUALITY *
Non-performing loans $ 27,864 $ 96,006 $ 109,894 $ 115,001 $ 115,340
Foreclosed properties 3,936 16,734 18,264 26,958 30,421
Total non-performing assets (NPAs) 31,800 112,740 128,158 141,959 145,761
Allowance for loan losses 81,845 105,753 107,137 107,642 112,705
Net charge-offs 72,408 12,384 14,505 20,563 18,896
Allowance for loan losses to loans 1.95 % 2.52 % 2.57 % 2.60 % 2.74 %
Net charge-offs to average loans (3) 6.87 1.21 1.39 1.99 1.85
NPAs to loans and foreclosed properties .76 2.68 3.06 3.41 3.51
NPAs to total assets .44 1.65 1.88 2.12 2.16
AVERAGE BALANCES ($ in millions)
Loans $ 4,253 $ 4,197 $ 4,191 $ 4,147 $ 4,156 2
Investment securities 2,161 2,141 2,088 1,971 2,145 1
Earning assets 6,608 6,547 6,482 6,346 6,665 (1 )
Total assets 6,915 6,834 6,778 6,648 6,993 (1 )
Deposits 5,983 5,946 5,873 5,789 5,853 2
Shareholders' equity 636 588 585 582 583 9
Common shares - basic (thousands) 58,141 58,081 57,971 57,880 57,840
Common shares - diluted (thousands) 58,141 58,081 57,971 57,880 57,840
AT PERIOD END ($ in millions)
Loans * $ 4,189 $ 4,194 $ 4,175 $ 4,138 $ 4,119 2
Investment securities 2,152 2,141 2,079 2,025 1,984 8
Total assets 7,163 6,849 6,802 6,699 6,737 6
Deposits 6,012 6,026 5,952 5,823 5,822 3
Shareholders' equity 829 592 581 585 576 44
Common shares outstanding (thousands) 57,831 57,767 57,741 57,710 57,641
(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 to reflect the full impact of the reversal of the valuation allowance on United's deferred tax asset. The period-end ratio is more indicative of the ratio going forward.
* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information


(in thousands, except per share data; taxable equivalent)		 For the Six
Months Ended
June 30,
YTD
2013-2012
2013 2012 Change
INCOME SUMMARY
Interest revenue $ 123,827 $ 137,001
Interest expense 14,606 21,301
Net interest revenue 109,221 115,700 (6 )%
Provision for loan losses 59,500 33,000
Fee revenue 29,138 28,246 3
Total revenue 78,859 110,946
Operating expenses 92,593 91,265 1
(Loss) income before income taxes (13,734 ) 19,681
Income tax (benefit) expense (255,463 ) 1,654
Net income 241,729 18,027
Preferred dividends and discount accretion 6,107 6,062
Net income available to common shareholders $ 235,622 $ 11,965
PERFORMANCE MEASURES
Per common share:
Diluted income $ 4.05 $ .21
Book value 10.90 6.61 65
Tangible book value (2) 10.82 6.48 67
Key performance ratios:
Return on equity (1)(3) 108.34 % 6.12 %
Return on assets (3) 7.09 .52
Net interest margin (3) 3.34 3.48
Efficiency ratio 66.98 63.56
Equity to assets 8.90 8.26
Tangible equity to assets (2) 8.83 8.16
Tangible common equity to assets (2) 5.99 5.39
Tangible common equity to risk-weighted assets (2) 13.16 8.37
ASSET QUALITY *
Non-performing loans $ 27,864 $ 115,340
Foreclosed properties 3,936 30,421
Total non-performing assets (NPAs) 31,800 145,761
Allowance for loan losses 81,845 112,705
Net charge-offs 84,792 34,763
Allowance for loan losses to loans 1.95 % 2.74 %
Net charge-offs to average loans (3) 4.07 1.70
NPAs to loans and foreclosed properties .76 3.51
NPAs to total assets .44 2.16
AVERAGE BALANCES ($ in millions)
Loans $ 4,225 $ 4,162 2
Investment securities 2,151 2,149 -
Earning assets 6,578 6,682 (2 )
Total assets 6,875 7,019 (2 )
Deposits 5,964 5,940 -
Shareholders' equity 612 580 6
Common shares - basic (thousands) 58,111 57,803
Common shares - diluted (thousands) 58,111 57,803
AT PERIOD END ($ in millions)
Loans * $ 4,189 $ 4,119 2
Investment securities 2,152 1,984 8
Total assets 7,163 6,737 6
Deposits 6,012 5,822 3
Shareholders' equity 829 576 44
Common shares outstanding (thousands) 57,831 57,641
(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 to reflect the full impact of the reversal of the valuation allowance on United's deferred tax asset. The period-end ratio is more indicative of the ratio going forward.
* 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

(in thousands, except per share data; taxable equivalent)		 2013 2012
Second
Quarter		 First
Quarter		 Fourth
Quarter		 Third
Quarter		 Second
Quarter
Interest revenue reconciliation
Interest revenue - taxable equivalent $ 61,693 $ 62,134 $ 64,450 $ 65,978 $ 66,780
Taxable equivalent adjustment (368 ) (365 ) (381 ) (419 ) (444 )
Interest revenue (GAAP) $ 61,325 $ 61,769 $ 64,069 $ 65,559 $ 66,336
Net interest revenue reconciliation
Net interest revenue - taxable equivalent $ 54,562 $ 54,659 $ 56,028 $ 57,371 $ 56,836
Taxable equivalent adjustment (368 ) (365 ) (381 ) (419 ) (444 )
Net interest revenue (GAAP) $ 54,194 $ 54,294 $ 55,647 $ 56,952 $ 56,392
Total revenue reconciliation
Total operating revenue $ 22,374 $ 56,485 $ 56,789 $ 55,635 $ 51,703
Taxable equivalent adjustment (368 ) (365 ) (381 ) (419 ) (444 )
Total revenue (GAAP) $ 22,006 $ 56,120 $ 56,408 $ 55,216 $ 51,259
(Loss) income before taxes reconciliation
(Loss) income before taxes $ (26,449 ) $ 12,715 $ 6,063 $ 10,852 $ 7,393
Taxable equivalent adjustment (368 ) (365 ) (381 ) (419 ) (444 )
(Loss) income before taxes (GAAP) $ (26,817 ) $ 12,350 $ 5,682 $ 10,433 $ 6,949
Income tax (benefit) expense reconciliation
Income tax (benefit) expense $ (256,413 ) $ 950 $ 802 $ 284 $ 894
Taxable equivalent adjustment (368 ) (365 ) (381 ) (419 ) (444 )
Income tax (benefit) expense (GAAP) $ (256,781 ) $ 585 $ 421 $ (135 ) $ 450
Book value per common share reconciliation
Tangible book value per common share $ 10.82 $ 6.76 $ 6.57 $ 6.64 $ 6.48
Effect of goodwill and other intangibles .08 .09 .10 .11 .13
Book value per common share (GAAP) $ 10.90 $ 6.85 $ 6.67 $ 6.75 $ 6.61
Average equity to assets reconciliation
Tangible common equity to assets 8.79 % 5.66 % 5.67 % 5.73 % 5.45 %
Effect of preferred equity 2.74 2.87 2.88 2.93 2.79
Tangible equity to assets 11.53 8.53 8.55 8.66 8.24
Effect of goodwill and other intangibles .04 .07 .08 .09 .09
Equity to assets (GAAP) 11.57 % 8.60 % 8.63 % 8.75 % 8.33 %
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets 13.16 % 8.45 % 8.26 % 8.44 % 8.37 %
Effect of other comprehensive income .29 .49 .51 .36 .28
Effect of deferred tax limitation (4.99 ) - - - -
Effect of trust preferred 1.11 1.15 1.15 1.17 1.19
Effect of preferred equity 4.11 4.22 4.24 4.29 4.35
Tier I capital ratio (Regulatory) 13.68 % 14.31 % 14.16 % 14.26 % 14.19 %
UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
For the Six
Months Ended
(in thousands, except per sharedata; taxable equivalent) 2013 2012
Interest revenue reconciliation
Interest revenue - taxable equivalent $ 123,827 $ 137,001
Taxable equivalent adjustment (733 ) (890 )
Interest revenue (GAAP) $ 123,094 $ 136,111
Net interest revenue reconciliation
Net interest revenue - taxable equivalent $ 109,221 $ 115,700
Taxable equivalent adjustment (733 ) (890 )
Net interest revenue (GAAP) $ 108,488 $ 114,810
Total revenue reconciliation
Total operating revenue $ 78,859 $ 110,946
Taxable equivalent adjustment (733 ) (890 )
Total revenue (GAAP) $ 78,126 $ 110,056
(Loss) income before taxes reconciliation
(Loss) income before taxes $ (13,734 ) $ 19,681
Taxable equivalent adjustment (733 ) (890 )
(Loss) income before taxes (GAAP) $ (14,467 ) $ 18,791
Income tax (benefit) expense reconciliation
Income tax (benefit) expense $ (255,463 ) $ 1,654
Taxable equivalent adjustment (733 ) (890 )
Income tax (benefit) expense (GAAP) $ (256,196 ) $ 764
Book value per common share reconciliation
Tangible book value per common share $ 10.82 $ 6.48
Effect of goodwill and other intangibles .08 .13
Book value per common share (GAAP) $ 10.90 $ 6.61
Average equity to assets reconciliation
Tangible common equity to assets 5.99 % 5.39 %
Effect of preferred equity 2.84 2.77
Tangible equity to assets 8.83 8.16
Effect of goodwill and other intangibles .07 .10
Equity to assets (GAAP) 8.90 % 8.26 %
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets 13.16 % 8.37 %
Effect of other comprehensive income .29 .28
Effect of deferred tax limitation (4.99 ) -
Effect of trust preferred 1.11 1.19
Effect of preferred equity 4.11 4.35
Tier I capital ratio (Regulatory) 13.68 % 14.19 %
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
2013 2012
(in millions) Second
Quarter		 First
Quarter		 Fourth
Quarter		 Third
Quarter		 Second
Quarter
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,119 $ 1,130 $ 1,131 $ 1,126 $ 1,140
Income producing commercial RE 629 674 682 693 697
Commercial & industrial 437 454 458 460 450
Commercial construction 133 152 155 161 169
Total commercial 2,318 2,410 2,426 2,440 2,456
Residential mortgage 876 850 829 833 834
Home equity lines of credit 402 396 385 341 294
Residential construction 332 372 382 389 409
Consumer installment 261 166 153 135 126
Total loans $ 4,189 $ 4,194 $ 4,175 $ 4,138 $ 4,119
LOANS BY MARKET
North Georgia $ 1,265 $ 1,363 $ 1,364 $ 1,383 $ 1,387
Atlanta MSA 1,227 1,262 1,250 1,238 1,242
North Carolina 576 575 579 579 576
Coastal Georgia 397 398 400 380 369
Gainesville MSA 256 259 261 256 259
East Tennessee 282 282 283 283 276
South Carolina 34 - - - -
Other (2) 152 55 38 19 10
Total loans $ 4,189 $ 4,194 $ 4,175 $ 4,138 $ 4,119
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 42 $ 57 $ 62 $ 71 $ 78
Land loans 36 42 46 41 45
Lot loans 173 188 193 196 203
Total 251 287 301 308 326
House loans
Spec 34 40 41 44 49
Sold 47 45 40 37 34
Total 81 85 81 81 83
Total residential construction $ 332 $ 372 $ 382 $ 389 $ 409
(1) Excludes total loans of $25.7 million, $28.3 million, $33.4 million, $37.0 million and $41.5 million as of June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, 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)

2013
2012
(in millions) Second
Quarter		 First
Quarter		 Second
Quarter		 Linked
Quarter
Change		 Year
over
Year
Change
LOANS BY CATEGORY
Owner occupied commercial RE $ 1,119 $ 1,130 $ 1,140 $ (11 ) $ (21 )
Income producing commercial RE 629 674 697 (45 ) (68 )
Commercial & industrial 437 454 450 (17 ) (13 )
Commercial construction 133 152 169 (19 ) (36 )
Total commercial 2,318 2,410 2,456 (92 ) (138 )
Residential mortgage 876 850 834 26 42
Home equity lines of credit 402 396 294 6 108
Residential construction 332 372 409 (40 ) (77 )
Consumer installment 261 166 126 95 135
Total loans $ 4,189 $ 4,194 $ 4,119 (5 ) 70
LOANS BY MARKET
North Georgia $ 1,265 $ 1,363 $ 1,387 (98 ) (122 )
Atlanta MSA 1,227 1,262 1,242 (35 ) (15 )
North Carolina 576 575 576 1 -
Coastal Georgia 397 398 369 (1 ) 28
Gainesville MSA 256 259 259 (3 ) (3 )
East Tennessee 282 282 276 - 6
South Carolina 34 - - 34 34
Other (2) 152 55 10 97 142
Total loans $ 4,189 $ 4,194 $ 4,119 (5 ) 70
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development $ 42 $ 57 $ 78 (15 ) (36 )
Land loans 36 42 45 (6 ) (9 )
Lot loans 173 188 203 (15 ) (30 )
Total 251 287 326 (36 ) (75 )
House loans
Spec 34 40 49 (6 ) (15 )
Sold 47 45 34 2 13
Total 81 85 83 (4 ) (2 )
Total residential construction $ 332 $ 372 $ 409 (40 ) (77 )
(1) Excludes total loans of $25.7 million, $28.3 million, $33.4 million, $37.0 million and $41.5 million as of June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, 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 2013

(in thousands)		 Non-performing
Loans		 Foreclosed
Properties		 Total
NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $ 5,283 $ 547 $ 5,830
Income producing CRE 1,954 - 1,954
Commercial & industrial 548 - 548
Commercial construction 504 376 880
Total commercial 8,289 923 9,212
Residential mortgage 12,847 1,303 14,150
Home equity lines of credit 1,491 140 1,631
Residential construction 4,838 1,570 6,408
Consumer installment 399 - 399
Total NPAs $ 27,864 $ 3,936 $ 31,800
Balance as a % of Unpaid Principal 62.6 % 31.6 % 55.8 %
NONPERFORMING ASSETS BY MARKET
North Georgia $ 12,830 $ 1,617 $ 14,447
Atlanta MSA 3,803 1,197 5,000
North Carolina 6,512 295 6,807
Coastal Georgia 2,588 627 3,215
Gainesville MSA 1,008 - 1,008
East Tennessee 1,123 200 1,323
South Carolina - - -
Other (3) - - -
Total NPAs $ 27,864 $ 3,936 $ 31,800
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $ 96,006 $ 16,734 $ 112,740
Loans placed on non-accrual 13,200 - 13,200
Payments received (47,937 ) - (47,937 )
Loan charge-offs (23,972 ) - (23,972 )
Foreclosures (9,433 ) 9,433 -
Capitalized costs - 55 55
Property sales - (17,972 ) (17,972 )
Write downs - (1,369 ) (1,369 )
Net losses on sales - (2,945 ) (2,945 )
Ending Balance $ 27,864 $ 3,936 $ 31,800
(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 2013

(in thousands)		 Non-performing
Loans		 Foreclosed
Properties		 Total
NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $ 8,142 $ 4,750 $ 12,892
Income producing CRE 9,162 834 9,996
Commercial & industrial 29,545 - 29,545
Commercial construction 22,359 3,027 25,386
Total commercial 69,208 8,611 77,819
Residential mortgage 10,901 3,463 14,364
Home equity lines of credit 916 - 916
Residential construction 14,592 4,660 19,252
Consumer installment 389 - 389
Total NPAs $ 96,006 $ 16,734 $ 112,740
Balance as a % of Unpaid Principal 66.3 % 45.0 % 62.0 %
NONPERFORMING ASSETS BY MARKET
North Georgia $ 63,210 $ 6,616 $ 69,826
Atlanta MSA 17,380 3,524 20,904
North Carolina 8,519 2,533 11,052
Coastal Georgia 3,523 1,449 4,972
Gainesville MSA 911 370 1,281
East Tennessee 2,463 2,242 4,705
South Carolina - - -
Other (3) - - -
Total NPAs $ 96,006 $ 16,734 $ 112,740
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $ 109,894 $ 18,264 $ 128,158
Loans placed on non-accrual 9,665 - 9,665
Payments received (6,809 ) - (6,809 )
Loan charge-offs (10,456 ) - (10,456 )
Foreclosures (6,288 ) 6,288 -
Capitalized costs - 54 54
Property sales - (6,726 ) (6,726 )
Write downs - (1,041 ) (1,041 )
Net losses on sales - (105 ) (105 )
Ending Balance $ 96,006 $ 16,734 $ 112,740
(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 2012

(in thousands)		 Non-performing
Loans		 Foreclosed
Properties		 Total
NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE $ 12,599 $ 4,989 $ 17,588
Income producing CRE 9,549 490 10,039
Commercial & industrial 31,817 - 31,817
Commercial construction 23,843 2,204 26,047
Total commercial 77,808 7,683 85,491
Residential mortgage 11,151 4,753 15,904
Home equity lines of credit 1,438 - 1,438
Residential construction 18,702 5,828 24,530
Consumer installment 795 - 795
Total NPAs $ 109,894 $ 18,264 $ 128,158
Balance as a % of Unpaid Principal 69.5 % 39.7 % 62.8 %
NONPERFORMING ASSETS BY MARKET
North Georgia $ 69,950 $ 8,219 $ 78,169
Atlanta MSA 18,556 3,442 21,998
North Carolina 11,014 2,579 13,593
Coastal Georgia 3,810 1,609 5,419
Gainesville MSA 903 556 1,459
East Tennessee 5,661 1,859 7,520
South Carolina - - -
Other (3) - - -
Total NPAs $ 109,894 $ 18,264 $ 128,158
NONPERFORMING ASSETS ACTIVITY
Beginning Balance $ 115,001 $ 26,958 $ 141,959
Loans placed on non-accrual 20,211 - 20,211
Payments received (6,458 ) - (6,458 )
Loan charge-offs (11,722 ) - (11,722 )
Foreclosures (7,138 ) 7,138 -
Capitalized costs - 201 201
Property sales - (12,845 ) (12,845 )
Write downs - (1,438 ) (1,438 )
Net losses on sales - (1,750 ) (1,750 )
Ending Balance $ 109,894 $ 18,264 $ 128,158
(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 2013 First Quarter 2013 Fourth Quarter 2012



(in thousands)

Net
Charge-Offs		 Net Charge-
Offs to
Average
Loans (2)

Net
Charge-Offs		 Net Charge-
Offs to
Average
Loans (2)

Net
Charge-Offs		 Net Charge-
Offs to
Average
Loans (2)
NET CHARGE-OFFS BY CATEGORY
Owner occupied CRE $ 16,545 5.85 % $ 1,922 .69 % $ 4,997 1.76 %
Income producing CRE 8,921 5.45 3,321 1.99 1,153 .67
Commercial & industrial 15,576 13.91 1,501 1.34 135 .12
Commercial construction 6,295 17.53 (4 ) (.01 ) 1,688 4.25
Total commercial 47,337 7.96 6,740 1.14 7,973 1.30
Residential mortgage 5,469 2.52 1,635 .79 3,254 1.55
Home equity lines of credit 1,040 1.04 512 .53 445 .49
Residential construction 18,506 20.91 2,973 3.22 2,435 2.52
Consumer installment 56 .10 524 1.35 398 1.10
Total $ 72,408 6.87 $ 12,384 1.21 $ 14,505 1.39
NET CHARGE-OFFS BY MARKET
North Georgia $ 59,102 17.20 % $ 4,868 1.45 % $ 4,458 1.29 %
Atlanta MSA 9,986 3.21 3,295 1.07 3,977 1.27
North Carolina 1,952 1.36 2,249 1.59 2,032 1.39
Coastal Georgia 480 .49 821 .85 574 .60
Gainesville MSA 123 .19 430 .67 1,331 2.04
East Tennessee 711 1.01 679 .98 2,117 2.98
South Carolina - - - - - -
Other (3) 54 .24 42 .39 16 .19
Total $ 72,408 6.87 $ 12,384 1.21 $ 14,505 1.39
(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 Operations (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share data) 2013 2012 2013 2012
Interest revenue:
Loans, including fees $ 50,728 $ 54,178 $ 101,662 $ 109,937
Investment securities, including tax exempt of $210, $262, $422 and $512 9,681 11,062 19,646 24,066
Deposits in banks and short-term investments 916 1,096 1,786 2,108
Total interest revenue 61,325 66,336 123,094 136,111
Interest expense:
Deposits:
NOW 419 503 873 1,140
Money market 534 661 1,096 1,302
Savings 36 38 72 75
Time 2,924 5,073 6,150 11,232
Total deposit interest expense 3,913 6,275 8,191 13,749
Short-term borrowings 522 904 1,038 1,949
Federal Home Loan Bank advances 30 390 49 856
Long-term debt 2,666 2,375 5,328 4,747
Total interest expense 7,131 9,944 14,606 21,301
Net interest revenue 54,194 56,392 108,488 114,810
Provision for loan losses 48,500 18,000 59,500 33,000
Net interest revenue after provision for loan losses 5,694 38,392 48,988 81,810
Fee revenue:
Service charges and fees 7,972 7,816 15,375 15,599
Mortgage loan and other related fees 3,003 2,322 5,658 4,421
Brokerage fees 1,063 809 1,830 1,622
Securities gains, net - 6,490 116 7,047
Loss from prepayment of debt - (6,199 ) - (6,681 )
Other 4,274 1,629 6,159 6,238
Total fee revenue 16,312 12,867 29,138 28,246
Total revenue 22,006 51,259 78,126 110,056
Operating expenses:
Salaries and employee benefits 24,734 24,297 48,326 49,522
Communications and equipment 3,468 3,211 6,514 6,366
Occupancy 3,449 3,539 6,816 7,310
Advertising and public relations 1,037 1,088 1,975 1,934
Postage, printing and supplies 894 916 1,757 1,895
Professional fees 2,499 1,952 4,865 3,927
Foreclosed property 5,151 1,851 7,484 5,676
FDIC assessments and other regulatory charges 2,505 2,545 5,010 5,055
Amortization of intangibles 491 730 1,196 1,462
Other 4,595 4,181 8,650 8,118
Total operating expenses 48,823 44,310 92,593 91,265
Net (loss) income before income taxes (26,817 ) 6,949 (14,467 ) 18,791
Income tax (benefit) expense (256,781 ) 450 (256,196 ) 764
Net income 229,964 6,499 241,729 18,027
Preferred stock dividends and discount accretion 3,055 3,032 6,107 6,062
Net income available to common shareholders $ 226,909 $ 3,467 $ 235,622 $ 11,965
Earnings per common share - basic / diluted $ 3.90 $ .06 $ 4.05 $ .21
Weighted average common shares outstanding - basic / diluted 58,141 57,840 58,111 57,803
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet

(in thousands, except share and per share data)		 June 30,
2013
December 31,
2012
June 30,
2012
(unaudited) (audited) (audited)
ASSETS
Cash and due from banks $ 62,564 $ 66,536 $ 50,596
Interest-bearing deposits in banks 141,016 124,613 133,857
Short-term investments 57,000 60,000 120,000
Cash and cash equivalents 260,580 251,149 304,453
Securities available for sale 1,937,264 1,834,593 1,701,583
Securities held to maturity (fair value $226,695, $261,131 and $299,971) 214,947 244,184 282,750
Mortgage loans held for sale 19,150 28,821 18,645
Loans, net of unearned income 4,189,368 4,175,008 4,119,235
Less allowance for loan losses (81,845 ) (107,137 ) (112,705 )
Loans, net 4,107,523 4,067,871 4,006,530
Assets covered by loss sharing agreements with the FDIC 35,675 47,467 65,914
Premises and equipment, net 167,197 168,920 172,200
Bank owned life insurance 82,276 81,867 81,265
Accrued interest receivable 19,279 18,659 20,151
Goodwill and other intangible assets 4,315 5,510 6,965
Foreclosed property 3,936 18,264 30,421
Net deferred tax asset 272,287 - -
Other assets 38,206 34,954 46,229
Total assets $ 7,162,635 $ 6,802,259 $ 6,737,106
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 1,349,804 $ 1,252,605 $ 1,150,444
NOW 1,225,664 1,316,453 1,196,507
Money market 1,167,889 1,149,912 1,117,139
Savings 247,821 227,308 219,077
Time:
Less than $100,000 982,009 1,055,271 1,164,451
Greater than $100,000 664,112 705,558 764,343
Brokered 374,530 245,033 210,506
Total deposits 6,011,829 5,952,140 5,822,467
Short-term borrowings 54,163 52,574 53,656
Federal Home Loan Bank advances 70,125 40,125 125,125
Long-term debt 124,845 124,805 120,265
Accrued expenses and other liabilities 72,370 51,210 39,598
Total liabilities 6,333,332 6,220,854 6,161,111
Shareholders' equity:
Preferred stock, $1 par value; 10,000,000 shares authorized;
Series A; $10 stated value; 21,700 shares issued and outstanding 217 217 217
Series B; $1,000 stated value; 180,000 shares issued and outstanding 179,323 178,557 177,814
Series D; $1,000 stated value; 16,613 shares issued and outstanding 16,613 16,613 16,613
Common stock, $1 par value; 100,000,000 shares authorized; 43,356,492, 42,423,870 and 41,726,509 shares issued and outstanding 43,356 42,424 41,727
Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 14,474,810, 15,316,794 and 15,914,209 shares issued and outstanding 14,475 15,317 15,914
Common stock issuable; 271,215, 133,238 and 94,657 shares 4,705 3,119 2,893
Capital surplus 1,057,931 1,057,951 1,056,819
Accumulated deficit (473,531 ) (709,153 ) (718,896 )
Accumulated other comprehensive loss (13,786 ) (23,640 ) (17,106 )
Total shareholders' equity 829,303 581,405 575,995
Total liabilities and shareholders' equity $ 7,162,635 $ 6,802,259 $ 6,737,106
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
2013 2012

(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) $ 4,253,361 $ 50,806 4.79 % $ 4,155,619 $ 54,296 5.25 %
Taxable securities (3) 2,139,221 9,471 1.77 2,121,053 10,800 2.04
Tax-exempt securities (1)(3) 21,597 344 6.37 24,242 429 7.08
Federal funds sold and other interest-earning assets 193,370 1,072 2.22 364,099 1,255 1.38
Total interest-earning assets 6,607,549 61,693 3.74 6,665,013 66,780 4.03
Non-interest-earning assets:
Allowance for loan losses (106,417 ) (115,955 )
Cash and due from banks 63,457 51,907
Premises and equipment 168,272 173,792
Other assets (3) 181,987 218,347
Total assets $ 6,914,848 $ 6,993,104
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,245,301 419 .13 $ 1,279,686 503 .16
Money market 1,306,522 534 .16 1,132,548 661 .23
Savings 245,211 36 .06 216,175 38 .07
Time less than $100,000 1,000,511 1,568 .63 1,183,845 2,520 .86
Time greater than $100,000 674,200 1,380 .82 778,477 2,063 1.07
Brokered time deposits 195,182 (24 ) (.05 ) 150,449 490 1.31
Total interest-bearing deposits 4,666,927 3,913 .34 4,741,180 6,275 .53
Federal funds purchased and other borrowings 72,139 522 2.90 97,134 904 3.74
Federal Home Loan Bank advances 58,916 30 .20 278,971 390 .56
Long-term debt 124,838 2,666 8.57 120,256 2,375 7.94
Total borrowed funds 255,893 3,218 5.04 496,361 3,669 2.97
Total interest-bearing liabilities 4,922,820 7,131 .58 5,237,541 9,944 .76
Non-interest-bearing liabilities:
Non-interest-bearing deposits 1,315,812 1,112,128
Other liabilities 40,603 60,726
Total liabilities 6,279,235 6,410,395
Shareholders' equity 635,613 582,709
Total liabilities and shareholders' equity $ 6,914,848 $ 6,993,104
Net interest revenue $ 54,562 $ 56,836
Net interest-rate spread 3.16 % 3.27 %
Net interest margin (4) 3.31 % 3.43 %
(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 $17.7 million in 2013 and $25.7 million in 2012 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,
2013 2012

(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) $ 4,225,215 $ 101,805 4.86 % $ 4,162,030 $ 110,138 5.32 %
Taxable securities (3) 2,129,208 19,224 1.81 2,124,422 23,554 2.22
Tax-exempt securities (1)(3) 21,665 691 6.38 24,840 839 6.76
Federal funds sold and other interest-earning assets 201,478 2,107 2.09 371,044 2,470 1.33
Total interest-earning assets 6,577,566 123,827 3.79 6,682,336 137,001 4.12
Non-interest-earning assets:
Allowance for loan losses (108,667 ) (116,879 )
Cash and due from banks 63,873 53,286
Premises and equipment 168,773 174,321
Other assets (3) 173,168 226,013
Total assets $ 6,874,713 $ 7,019,077
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW $ 1,274,144 873 .14 $ 1,368,900 1,140 .17
Money market 1,282,101 1,096 .17 1,101,103 1,302 .24
Savings 239,691 72 .06 210,789 75 .07
Time less than $100,000 1,020,000 3,317 .66 1,227,599 5,546 .91
Time greater than $100,000 684,320 2,857 .84 799,821 4,478 1.13
Brokered time deposits 185,210 (24 ) (.03 ) 155,892 1,208 1.56
Total interest-bearing deposits 4,685,466 8,191 .35 4,864,104 13,749 .57
Federal funds purchased and other borrowings 72,148 1,038 2.90 99,696 1,949 3.93
Federal Home Loan Bank advances 46,064 49 .21 208,672 856 .82
Long-term debt 124,827 5,328 8.61 120,246 4,747 7.94
Total borrowed funds 243,039 6,415 5.32 428,614 7,552 3.54
Total interest-bearing liabilities 4,928,505 14,606 .60 5,292,718 21,301 .81
Non-interest-bearing liabilities:
Non-interest-bearing deposits 1,278,875 1,076,358
Other liabilities 55,639 70,330
Total liabilities 6,263,019 6,439,406
Shareholders' equity 611,694 579,671
Total liabilities and shareholders' equity $ 6,874,713 $ 7,019,077
Net interest revenue $ 109,221 $ 115,700
Net interest-rate spread 3.19 % 3.31 %
Net interest margin (4) 3.34 % 3.48 %
(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 $17.4 million in 2013 and $24.7 million in 2012 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
Email Contact

Source: United Community Banks, Inc.

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