SOURCE: United Community Banks, Inc.

United Community Banks, Inc.

July 26, 2012 05:30 ET

United Community Banks, Inc. Reports Earnings of $6.5 Million for Second Quarter 2012

BLAIRSVILLE, GA--(Marketwire - Jul 26, 2012) - United Community Banks, Inc. (NASDAQ: UCBI)

  • Net income of $6.5 million, or six cents per share
  • Balance sheet restructuring includes $6.5 million of securities gains, mostly offset by wholesale funding prepayment charges
  • Nonperforming assets decline $15.8 million, or 10 percent, from first quarter
  • Core transaction deposits up $163 million year-to-date, or 11 percent annualized

United Community Banks, Inc. (NASDAQ: UCBI) today reported net income of $6.5 million, or six cents per share, for the second quarter of 2012; and $18.0 million, or 21 cents per share, year-to-date. The results for the second quarter and first six months of 2012 reflect strong core transaction deposit growth, increases in fee revenue and lower operating expenses compared with the same periods a year ago.

"Our lower operating expenses reflect ongoing efforts to meaningfully increase operating efficiency, while at the same time remaining focused on improving credit measures," said Jimmy Tallent, president and chief executive officer. "Our credit measures continue their positive trend, with nonperforming assets down $15.8 million, or 10 percent, from the first quarter. The second quarter marks our fourth profitable quarter following our 2011 capital transaction and the execution of our problem asset disposition plan. Looking forward, we expect profitability to continue from improved efficiency, revenue enhancements and expense reductions while growing and improving our business mix of loans and deposits."

Total loans were $4.12 billion at quarter-end, down slightly from the first quarter and down $44 million from a year earlier. "While loans declined slightly in the second quarter they remain up year-to-date. We expect some volatility in balances due to the ongoing sluggish economy. We are prudently growing the portfolio by focusing on full-service relationships with small-to-medium-sized businesses. During the second quarter we added $132 million in new loan commitments, of which $87 million were funded by quarter-end. The majority were commercial loans."

"Growing quality loan and deposit relationships remains a key focus for 2012," Tallent commented. "The highly competitive market for quality lending opportunities keeps pressure on loan pricing. At the same time our success attracting core transaction deposits has continued, with balances increasing $12 million in the second quarter and an especially strong $151 million in the first quarter. Annualized, the growth rate is 11 percent."

The second quarter provision for loan losses was $18 million, up from $11 million a year ago and $15 million in the first quarter. Second quarter net charge-offs were $18.9 million, compared to $16.5 million in the second quarter of 2011 and $15.9 million in the first quarter of 2012.

"Nonperforming assets of $145.8 million were down $15.8 million from the first quarter," Tallent said. "Nonperforming asset levels are impacted significantly by the inflow of new nonperforming loans and our ability to liquidate foreclosed properties. In the second quarter, the inflow of new nonperforming loans slowed to $29.4 million from $32.4 million in the first quarter. Also, loans past due 30 to 89 days declined from .86 percent of outstanding loans in the first quarter to .65 percent in the second quarter. We expect our overall credit trends to continue to improve during 2012, although not necessarily in a linear fashion."

Taxable equivalent net interest revenue declined $2.0 million from the first quarter of 2012, and $2.1 million from the second quarter of 2011, to $56.8 million. Said Tallent, "The decrease from the first quarter was primarily due to the lower yield on the securities portfolio, which was significantly impacted by heavy prepayment activity in the mortgage market. This activity accelerated the amortization of bond purchase premiums, suppressing the securities portfolio yield. Further, the yields at which the proceeds were reinvested fell short of those of the bonds they replaced. Consequently, our net interest margin was down 10 basis points from the first quarter, to 3.43 percent. It was up two basis points, however, from the second quarter of 2011."

Fee revenue was $12.9 million in the second quarter, compared to $15.4 million in the first quarter and $13.9 million a year ago. The decline in fee revenue from the first quarter of 2012 and second quarter of 2011 was primarily due to nonrecurring revenue items noted below. Service charges and fees were $7.8 million, similar to the first quarter and up $208,000 from the second quarter of 2011. The increase in service charges and fees from a year ago reflects new fees on deposit accounts that became effective in the first quarter of 2012, which more than offset lower overdraft fees.

Fee revenue for the quarter included $6.5 million of securities gains reflecting the sale of $175 million in fixed rate securities. As part of the balance sheet restructuring, $75 million of fixed rate wholesale funding was prepaid, resulting in prepayment charges of $6.2 million. "Overall, the deleveraging of our balance sheet should improve our margin and interest rate sensitivity, while maintaining the level of net interest revenue," stated Tallent.

Mortgage fee revenue of $2.3 million reflected a $223,000 increase from the first quarter and $1.4 million from a year ago. Comparisons to prior periods are influenced significantly by the interest rate environment and refinancing activities. Closed mortgage loans totaled $79.8 million in the second quarter of 2012 compared with $81.7 million in the first quarter and $50.5 million in the second quarter of 2011. Other fee revenue was down $3 million from both the first quarter of 2012 and the fourth quarter of 2011, to $1.6 million. The first quarter of 2012 included $1.1 million in interest on a prior year's federal tax refund, $728,000 in gains from the sale of low income housing tax credits, and $115,000 in hedge ineffectiveness gains. The second quarter of 2011 included $2.8 million in hedge ineffectiveness gains, in contrast with $180,000 in hedge ineffectiveness losses in the second quarter of 2012.

Excluding foreclosed property costs, second quarter 2012 operating expenses were $42.5 million compared to $43.1 million for the first quarter and $46.8 million a year ago. Lower staff levels and related costs were the primary drivers of the decrease from both periods, with 93 fewer staff positions compared to the first quarter and 153 fewer from a year ago. Most other expense categories were down as well, reflecting efforts to improve operating efficiency by lowering costs. The decrease in operating expenses from a year ago also reflects a $1.1 million decrease in the FDIC assessment due to a lower assessment rate.

Foreclosed property costs for the second quarter of 2012 were $1.9 million, compared to $3.8 million in the first quarter and $1.9 million a year ago. Second quarter 2012 costs included $1.1 million for maintenance and $739,000 in net losses and write-downs. For the first quarter, foreclosed property costs included $1.6 million in maintenance and $2.2 million in net losses and write-downs. Second quarter 2011 costs included $2.0 million in maintenance and $100,000 in net gains from sales.

As of June 30, 2012, capital ratios were as follows: Tier 1 Risk-Based of 14.2 percent; Tier 1 Leverage of 9.1 percent; and Total Risk-Based of 15.9 percent. The Tier 1 Common Risk-Based ratio was 8.7 percent and the tangible equity-to-assets ratio was 8.2 percent.

Conference Call
United will hold a conference call today, Thursday, July 26, 2012, 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 97692673. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of the 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 $6.7 billion and operates 27 community banks with 104 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. 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 web site 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 2011 Annual Report on Form 10-K under the section 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  
                               
                               
    2012     2011  
(in thousands, except per share data; taxable equivalent)   Second
Quarter
    First
Quarter
    Fourth
Quarter
    Third
Quarter
    Second
Quarter
 
INCOME SUMMARY                                        
Interest revenue   $ 66,780     $ 70,221     $ 71,905     $ 74,543     $ 76,931  
Interest expense     9,944       11,357       12,855       15,262       17,985  
    Net interest revenue     56,836       58,864       59,050       59,281       58,946  
Provision for loan losses     18,000       15,000       14,000       36,000       11,000  
Fee revenue     12,867       15,379       12,667       11,498       13,905  
    Total revenue     51,703       59,243       57,717       34,779       61,851  
Operating expenses     44,310       46,955       51,080       46,520       48,728  
    Income (loss) before income taxes     7,393       12,288       6,637       (11,741 )     13,123  
Income tax expense (benefit)     894       760       (3,264 )     (402 )     1,095  
    Net income (loss)     6,499       11,528       9,901       (11,339 )     12,028  
Preferred dividends and discount accretion     3,032       3,030       3,025       3,019       3,016  
Net income (loss) available to common shareholders   $ 3,467     $ 8,498     $ 6,876     $ (14,358 )   $ 9,012  
                                         
PERFORMANCE MEASURES                                        
  Per common share:                                        
    Diluted income (loss)   $ .06     $ .15     $ .12     $ (.25 )   $ .16  
    Book value     6.61       6.68       6.62       6.77       7.11  
    Tangible book value (2)     6.48       6.54       6.47       6.61       6.94  
                                         
  Key performance ratios:                                        
    Return on equity (1)(3)     3.51 %     8.78 %     7.40 %     (15.06) %     42.60 %
    Return on assets (3)     .37       .66       .56       (.64 )     .66  
    Net interest margin (3)     3.43       3.53       3.51       3.55       3.41  
    Efficiency ratio     63.84       63.31       71.23       65.73       66.88  
    Equity to assets     8.33       8.19       8.28       8.55       8.06  
    Tangible equity to assets (2)     8.24       8.08       8.16       8.42       7.93  
    Tangible common equity to assets (2)     5.45       5.33       5.38       5.65       1.37  
    Tangible common equity to risk- weighted assets (2)     8.37       8.21       8.25       8.52       8.69  
                                         
ASSET QUALITY *                                        
  Non-performing loans   $ 115,340     $ 129,704     $ 127,479     $ 144,484     $ 71,065  
  Foreclosed properties     30,421       31,887       32,859       44,263       47,584  
    Total non-performing assets (NPAs)     145,761       161,591       160,338       188,747       118,649  
  Allowance for loan losses     112,705       113,601       114,468       146,092       127,638  
  Net charge-offs     18,896       15,867       45,624       17,546       16,483  
  Allowance for loan losses to loans     2.74 %     2.75 %     2.79 %     3.55 %     3.07 %
  Net charge-offs to average loans (3)     1.85       1.55       4.39       1.68       1.58  
  NPAs to loans and foreclosed properties     3.51       3.88       3.87       4.54       2.82  
  NPAs to total assets     2.16       2.25       2.30       2.74       1.66  
                                         
AVERAGE BALANCES ($ in millions)                                        
  Loans   $ 4,156     $ 4,168     $ 4,175     $ 4,194     $ 4,266  
  Investment securities     2,145       2,153       2,141       2,150       2,074  
  Earning assets     6,665       6,700       6,688       6,630       6,924  
  Total assets     6,993       7,045       7,019       7,000       7,363  
  Deposits     5,853       6,028       6,115       6,061       6,372  
  Shareholders' equity     583       577       581       598       594  
  Common shares - basic (thousands)     57,840       57,764       57,646       57,599       25,427  
  Common shares - diluted (thousands)     57,840       57,764       57,646       57,599       57,543  
                                         
AT PERIOD END ($ in millions)                                        
  Loans *   $ 4,119     $ 4,128     $ 4,110     $ 4,110     $ 4,163  
  Investment securities     1,984       2,202       2,120       2,123       2,188  
  Total assets     6,737       7,174       6,983       6,894       7,152  
  Deposits     5,822       6,001       6,098       6,005       6,183  
  Shareholders' equity     576       580       575       583       603  
  Common shares outstanding (thousands)     57,641       57,603       57,561       57,510       57,469  
                                         
(1) Net loss 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.  
                                         
* 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
 
 
 
    
    
Second Quarter
 
 
 
 
 
 
Second
Quarter
2012-2011
 
 
 
 
 
 
    
For the Six
Months Ended
 
 
 
 
 
 
 
YTD
2012-2011
 
 
 
data; taxable equivalent)   2012     2011     Change     2012     2011     Change  
INCOME SUMMARY                                            
Interest revenue   $ 66,780     $ 76,931           $ 137,001     $ 152,896        
Interest expense     9,944       17,985             21,301       37,558        
    Net interest revenue     56,836       58,946     (4 )%     115,700       115,338     - %
Provision for loan losses     18,000       11,000             33,000       201,000        
Fee revenue     12,867       13,905     (7 )     28,246       25,743     10  
    Total revenue     51,703       61,851             110,946       (59,919 )      
Operating expenses     44,310       48,728     (9 )     91,265       163,999     (44 )
    Income (loss) before income taxes     7,393       13,123             19,681       (223,918 )      
Income tax expense (benefit)     894       1,095             1,654       1,390        
    Net income (loss)     6,499       12,028     (46 )     18,027       (225,308 )      
Preferred dividends and discount accretion     3,032       3,016             6,062       5,794        
Net income (loss) available to common shareholders   $ 3,467     $ 9,012     (62 )   $ 11,965     $ (231,102 )      
                                             
PERFORMANCE MEASURES                                            
  Per common share:                                            
    Diluted income (loss)   $ .06     $ .16     (63 )   $ .21     $ (10.52 )      
    Book value     6.61       7.11     (7 )     6.61       7.11     (7 )
    Tangible book value (2)     6.48       6.94     (7 )     6.48       6.94     (7 )
                                             
  Key performance ratios:                                            
    Return on equity (1)(3)     3.51 %     42.60 %           6.12 %     (345.86) %      
    Return on assets (3)     .37       .66             .52       (6.16 )      
    Net interest margin (3)     3.43       3.41             3.48       3.36        
    Efficiency ratio     63.84       66.88             63.56       116.28        
    Equity to assets     8.33       8.06             8.26       7.11        
    Tangible equity to assets (2)     8.24       7.93             8.16       7.00        
    Tangible common equity to assets (2)     5.45       1.37             5.39       2.05        
    Tangible common equity to risk- weighted assets (2)     8.37       8.69             8.37       8.69        
                                             
ASSET QUALITY *                                            
  Non-performing loans   $ 115,340     $ 71,065           $ 115,340     $ 71,065        
  Foreclosed properties     30,421       47,584             30,421       47,584        
    Total non-performing assets (NPAs)     145,761       118,649             145,761       118,649        
  Allowance for loan losses     112,705       127,638             112,705       127,638        
  Net charge-offs     18,896       16,483             34,763       248,057        
  Allowance for loan losses to loans     2.74 %     3.07 %           2.74 %     3.07 %      
  Net charge-offs to average loans (3)     1.85       1.58             1.70       11.46        
  NPAs to loans and foreclosed properties     3.51       2.82             3.51       2.82        
  NPAs to total assets     2.16       1.66             2.16       1.66        
                                             
AVERAGE BALANCES($ in millions)                                            
  Loans   $ 4,156     $ 4,266     (3 )   $ 4,162     $ 4,432     (6 )
  Investment securities     2,145       2,074     3       2,149       1,851     16  
  Earning assets     6,665       6,924     (4 )     6,682       6,913     (3 )
  Total assets     6,993       7,363     (5 )     7,019       7,371     (5 )
  Deposits     5,853       6,372     (8 )     5,940       6,465     (8 )
  Shareholders' equity     583       594     (2 )     580       524     11  
  Common shares - basic (thousands)     57,840       25,427             57,803       21,965        
  Common shares - diluted (thousands)     57,840       57,543             57,803       21,965        
                                             
AT PERIOD END($ in millions)                                            
  Loans *   $ 4,119     $ 4,163     (1 )   $ 4,119     $ 4,163     (1 )
  Investment securities     1,984       2,188     (9 )     1,984       2,188     (9 )
  Total assets     6,737       7,152     (6 )     6,737       7,152     (6 )
  Deposits     5,822       6,183     (6 )     5,822       6,183     (6 )
  Shareholders' equity     576       603     (4 )     576       603     (4 )
  Common shares outstanding (thousands)     57,641       57,469             57,641       57,469        
                                             
(1) Net loss 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.  
                                             
* 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               
                               
                               
    2012     2011  
(in thousands, except per share data; taxable equivalent)  
 
Second
Quarter
 
 
 
 
First
Quarter
 
 
 
 
Fourth
Quarter
 
 
 
 
Third
Quarter
 
 
 
 
Second
Quarter
 
 
                                         
Interest revenue reconciliation                                        
Interest revenue - taxable equivalent   $ 66,780     $ 70,221     $ 71,905     $ 74,543     $ 76,931  
Taxable equivalent adjustment     (444 )     (446 )     (423 )     (420 )     (429 )
  Interest revenue (GAAP)   $ 66,336     $ 69,775     $ 71,482     $ 74,123     $ 76,502  
                                         
Net interest revenue reconciliation                                        
Net interest revenue - taxable equivalent   $ 56,836     $ 58,864     $ 59,050     $ 59,281     $ 58,946  
Taxable equivalent adjustment     (444 )     (446 )     (423 )     (420 )     (429 )
  Net interest revenue (GAAP)   $ 56,392     $ 58,418     $ 58,627     $ 58,861     $ 58,517  
                                         
Total revenue reconciliation                                        
Total operating revenue   $ 51,703     $ 59,243     $ 57,717     $ 34,779     $ 61,851  
Taxable equivalent adjustment     (444 )     (446 )     (423 )     (420 )     (429 )
  Total revenue (GAAP)   $ 51,259     $ 58,797     $ 57,294     $ 34,359     $ 61,422  
                                         
Income (loss) before taxes reconciliation                                        
Income (loss) before taxes   $ 7,393     $ 12,288     $ 6,637     $ (11,741 )   $ 13,123  
Taxable equivalent adjustment     (444 )     (446 )     (423 )     (420 )     (429 )
  Income (loss) before taxes (GAAP)   $ 6,949     $ 11,842     $ 6,214     $ (12,161 )   $ 12,694  
                                         
Income tax (benefit) expense reconciliation                                        
Income tax (benefit) expense   $ 894     $ 760     $ (3,264 )   $ (402 )   $ 1,095  
Taxable equivalent adjustment     (444 )     (446 )     (423 )     (420 )     (429 )
  Income tax (benefit) expense (GAAP)   $ 450     $ 314     $ (3,687 )   $ (822 )   $ 666  
                                         
Book value per common share reconciliation                                        
Tangible book value per common share   $ 6.48     $ 6.54     $ 6.47     $ 6.61     $ 6.94  
Effect of goodwill and other intangibles     .13       .14       .15       .16       .17  
  Book value per common share (GAAP)   $ 6.61     $ 6.68     $ 6.62     $ 6.77     $ 7.11  
                                         
Average equity to assets reconciliation                                        
Tangible common equity to assets     5.45 %     5.33 %     5.38 %     5.65 %     1.37 %
Effect of preferred equity     2.79       2.75       2.78       2.77       6.56  
  Tangible equity to assets     8.24       8.08       8.16       8.42       7.93  
Effect of goodwill and other intangibles     .09       .11       .12       .13       .13  
  Equity to assets (GAAP)     8.33 %     8.19 %     8.28 %     8.55 %     8.06 %
                                         
Tangible common equity to risk-weighted assets reconciliation                          
Tangible common equity to risk-weighted assets     8.37 %     8.21 %     8.25 %     8.52 %     8.69 %
Effect of other comprehensive income     .28       .10       (.03 )     (.29 )     (.42 )
Effect of trust preferred     1.19       1.15       1.18       1.19       1.15  
Effect of preferred equity     4.35       4.23       4.29       4.33       4.20  
  Tier I capital ratio (Regulatory)     14.19 %     13.69 %     13.69 %     13.75 %     13.62 %
                                           
                                           
         
         
UNITED COMMUNITY BANKS, INC.        
Non-GAAP Performance Measures Reconciliation  
Selected Financial Information            
             
             
    For the Six
Months Ended
 
(in thousands, except per share  
data; taxable equivalent)   2012     2011  
                 
Interest revenue reconciliation                
Interest revenue - taxable equivalent   $ 137,001     $ 152,896  
Taxable equivalent adjustment     (890 )     (864 )
  Interest revenue (GAAP)   $ 136,111     $ 152,032  
                 
Net interest revenue reconciliation                
Net interest revenue - taxable equivalent   $ 115,700     $ 115,338  
Taxable equivalent adjustment     (890 )     (864 )
  Net interest revenue (GAAP)   $ 114,810     $ 114,474  
                 
Total revenue reconciliation                
Total operating revenue   $ 110,946     $ (59,919 )
Taxable equivalent adjustment     (890 )     (864 )
  Total revenue (GAAP)   $ 110,056     $ (60,783 )
                 
Income (loss) before taxes reconciliation                
Income (loss) before taxes   $ 19,681     $ (223,918 )
Taxable equivalent adjustment     (890 )     (864 )
  Income (loss) before taxes (GAAP)   $ 18,791     $ (224,782 )
                 
Income tax (benefit) expense reconciliation                
Income tax (benefit) expense   $ 1,654     $ 1,390  
Taxable equivalent adjustment     (890 )     (864 )
  Income tax (benefit) expense (GAAP)   $ 764     $ 526  
                 
Book value per common share reconciliation                
Tangible book value per common share   $ 6.48     $ 6.94  
Effect of goodwill and other intangibles     .13       .17  
  Book value per common share (GAAP)   $ 6.61     $ 7.11  
                 
Average equity to assets reconciliation                
Tangible common equity to assets     5.39 %     2.05  
Effect of preferred equity     2.77       4.95  
  Tangible equity to assets     8.16       7.00  
Effect of goodwill and other intangibles     .10       .11  
  Equity to assets (GAAP)     8.26 %     7.11  
                 
Tangible common equity to risk-weighted assets reconciliation  
Tangible common equity to risk-weighted assets     8.37 %     8.69  
Effect of other comprehensive income     .28       (.42 )
Effect of trust preferred     1.19       1.15  
Effect of preferred equity     4.35       4.20  
  Tier I capital ratio (Regulatory)     14.19 %     13.62  
                   
                   
 
 
UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
                     
                     
    2012   2011
    Second   First   Fourth   Third   Second
(in millions)   Quarter   Quarter   Quarter   Quarter   Quarter
LOANS BY CATEGORY                              
Commercial (sec.by RE)   $ 1,837   $ 1,843   $ 1,822   $ 1,771   $ 1,742
Commercial & industrial     450     440     428     429     428
Commercial construction     169     167     164     169     195
    Total commercial     2,456     2,450     2,414     2,369     2,365
Residential mortgage     1,128     1,131     1,135     1,150     1,177
Residential construction     409     436     448     474     502
Consumer installment     126     111     113     117     119
    Total loans   $ 4,119   $ 4,128   $ 4,110   $ 4,110   $ 4,163
                               
LOANS BY MARKET                              
North Georgia   $ 1,387   $ 1,408   $ 1,426   $ 1,478   $ 1,500
Atlanta MSA     1,252     1,239     1,220     1,192     1,188
North Carolina     576     588     597     607     626
Coastal Georgia     369     366     346     316     325
Gainesville MSA     259     262     265     272     275
East Tennessee     276     265     256     245     249
    Total loans   $ 4,119   $ 4,128   $ 4,110   $ 4,110   $ 4,163
                               
RESIDENTIAL CONSTRUCTION                        
Dirt loans                              
  Acquisition & development   $ 78   $ 86   $ 88   $ 97   $ 105
  Land loans     45     57     61     60     62
  Lot loans     203     204     207     216     218
    Total     326     347     356     373     385
                               
House loans                              
  Spec     49     57     59     64     74
  Sold     34     32     33     37     43
    Total     83     89     92     101     117
Total residential construction   $ 409   $ 436   $ 448   $ 474   $ 502
                               
RESIDENTIAL CONSTRUCTION - ATLANTA MSA                  
Dirt loans                              
  Acquisition & development   $ 14   $ 17   $ 17   $ 19   $ 20
  Land loans     9     13     14     15     16
  Lot loans     22     22     22     22     22
    Total     45     52     53     56     58
                               
House loans                              
  Spec     24     27     27     28     30
  Sold     7     7     6     8     9
    Total     31     34     33     36     39
Total residential construction   $ 76   $ 86   $ 86   $ 92   $ 97
                               
(1) Excludes total loans of $41.5 million, $47.2 million, $54.5 million, $57.8 million and $70.8 million as of June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
 
 
                 
                 
UNITED COMMUNITY BANKS, INC.                
Financial Highlights                        
Loan Portfolio Composition at Period-End (1)                
                         
                         
    2012   2011   Linked Quarter Change     Year over Year Change  
    Second   First   Second  
(in millions)   Quarter   Quarter   Quarter  
LOANS BY CATEGORY                                  
Commercial (sec.by RE)   $ 1,837   $ 1,843   $ 1,742   $ (6 )   $ 95  
Commercial & industrial     450     440     428     10       22  
Commercial construction     169     167     195     2       (26 )
    Total commercial     2,456     2,450     2,365     6       91  
Residential mortgage     1,128     1,131     1,177     (3 )     (49 )
Residential construction     409     436     502     (27 )     (93 )
Consumer installment     126     111     119     15       7  
    Total loans   $ 4,119   $ 4,128   $ 4,163     (9 )     (44 )
                                   
LOANS BY MARKET                                  
North Georgia   $ 1,387   $ 1,408   $ 1,500     (21 )     (113 )
Atlanta MSA     1,252     1,239     1,188     13       64  
North Carolina     576     588     626     (12 )     (50 )
Coastal Georgia     369     366     325     3       44  
Gainesville MSA     259     262     275     (3 )     (16 )
East Tennessee     276     265     249     11       27  
    Total loans   $ 4,119   $ 4,128   $ 4,163     (9 )     (44 )
                                   
RESIDENTIAL CONSTRUCTION                            
Dirt loans                                  
  Acquisition & development   $ 78   $ 86   $ 105     (8 )     (27 )
  Land loans     45     57     62     (12 )     (17 )
  Lot loans     203     204     218     (1 )     (15 )
    Total     326     346     385     (21 )     (59 )
                                   
House loans                                  
  Spec     49     57     74     (8 )     (25 )
  Sold     34     32     43     2       (9 )
    Total     83     89     117     (6 )     (34 )
Total residential construction   $ 409   $ 436   $ 502     (27 )     (93 )
                                   
RESIDENTIAL CONSTRUCTION - ATLANTA MSA                      
Dirt loans                                  
  Acquisition & development   $ 14   $ 17   $ 20     (3 )     (6 )
  Land loans     9     13     16     (4 )     (7 )
  Lot loans     22     22     22     -       -  
    Total     45     52     58     (7 )     (13 )
                                   
House loans                                  
  Spec     24     27     30     (3 )     (6 )
  Sold     7     7     9     -       (2 )
    Total     31     34     39     (3 )     (8 )
Total residential construction   $ 76   $ 86   $ 97     (10 )     (21 )
                                   
(1) Excludes total loans of $41.5 million, $47.2 million, $54.5 million, $57.8 million and $70.8 million as of June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.  
   
   
         
         
UNITED COMMUNITY BANKS, INC.        
Financial Highlights                  
Credit Quality(1)                  
                   
                   
    Second Quarter 2012  
    Non-performing     Foreclosed     Total  
(in thousands)   Loans     Properties     NPAs  
NPAs BY CATEGORY                        
Commercial (sec.by RE)   $ 19,115     $ 10,586     $ 29,701  
Commercial & industrial     34,982       -       34,982  
Commercial construction     18,175       2,732       20,907  
  Total commercial     72,272       13,318       85,590  
Residential mortgage     16,631       5,591       22,222  
Residential construction     25,530       11,512       37,042  
Consumer installment     907       -       907  
  Total NPAs   $ 115,340     $ 30,421     $ 145,761  
  Balance as a % of Unpaid Principal     68.8 %     39.3 %     59.4 %
                         
NPAs BY MARKET                        
North Georgia   $ 77,332     $ 13,546     $ 90,878  
Atlanta MSA     17,593       8,651       26,244  
North Carolina     10,657       3,287       13,944  
Coastal Georgia     5,822       785       6,607  
Gainesville MSA     991       2,998       3,989  
East Tennessee     2,945       1,154       4,099  
  Total NPAs   $ 115,340     $ 30,421     $ 145,761  
                         
                         
NPA ACTIVITY                        
Beginning Balance   $ 129,704     $ 31,887     $ 161,591  
Loans placed on non-accrual     29,364       -       29,364  
Payments received     (15,027 )     -       (15,027 )
Loan charge-offs     (19,382 )     -       (19,382 )
Foreclosures     (9,319 )     9,319       -  
Capitalized costs     -       415       415  
Note / property sales     -       (10,461 )     (10,461 )
Write downs     -       (1,008 )     (1,008 )
Net gains (losses) on sales     -       269       269  
  Ending Balance   $ 115,340     $ 30,421     $ 145,761  
                         
(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.  
   
   
         
         
UNITED COMMUNITY BANKS, INC.        
Financial Highlights                  
Credit Quality(1)                  
                   
                   
    First Quarter 2012  
    Non-performing     Foreclosed     Total  
(in thousands)   Loans     Properties     NPAs  
NPAs BY CATEGORY                        
Commercial (sec.by RE)   $ 26,081     $ 10,808     $ 36,889  
Commercial & industrial     36,314       -       36,314  
Commercial construction     23,319       3,266       26,585  
  Total commercial     85,714       14,074       99,788  
Residential mortgage     18,741       5,882       24,623  
Residential construction     24,341       11,931       36,272  
Consumer installment     908       -       908  
  Total NPAs   $ 129,704     $ 31,887     $ 161,591  
  Balance as a % of Unpaid Principal     70.6 %     36.1 %     59.4 %
                         
NPAs BY MARKET                        
North Georgia   $ 81,117     $ 14,559     $ 95,676  
Atlanta MSA     22,321       7,647       29,968  
North Carolina     15,765       4,650       20,415  
Coastal Georgia     5,622       1,268       6,890  
Gainesville MSA     2,210       3,387       5,597  
East Tennessee     2,669       376       3,045  
  Total NPAs   $ 129,704     $ 31,887     $ 161,591  
                         
                         
NPA ACTIVITY                        
Beginning Balance   $ 127,479     $ 32,859     $ 160,338  
Loans placed on non-accrual     32,437       -       32,437  
Payments received     (5,945 )     -       (5,945 )
Loan charge-offs     (14,733 )     -       (14,733 )
Foreclosures     (9,534 )     9,534       -  
Capitalized costs     -       329       329  
Note / property sales     -       (8,631 )     (8,631 )
Write downs     -       (2,111 )     (2,111 )
Net gains (losses) on sales     -       (93 )     (93 )
  Ending Balance   $ 129,704     $ 31,887     $ 161,591  
                         
(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.  
   
   
         
         
UNITED COMMUNITY BANKS, INC.        
Financial Highlights                  
Credit Quality(1)                  
                   
                   
    Fourth Quarter 2011  
    Non-performing     Foreclosed     Total  
(in thousands)   Loans     Properties     NPAs  
NPAs BY CATEGORY                        
Commercial (sec.by RE)   $ 27,322     $ 9,745     $ 37,067  
Commercial & industrial     34,613       -       34,613  
Commercial construction     16,655       3,336       19,991  
  Total commercial     78,590       13,081       91,671  
Residential mortgage     22,358       6,927       29,285  
Residential construction     25,523       12,851       38,374  
Consumer installment     1,008       -       1,008  
  Total NPAs   $ 127,479     $ 32,859     $ 160,338  
  Balance as a % of Unpaid Principal     71.3 %     35.9 %     59.3 %
                         
NPAs BY MARKET                        
North Georgia   $ 88,600     $ 15,136     $ 103,736  
Atlanta MSA     14,480       6,169       20,649  
North Carolina     15,100       5,365       20,465  
Coastal Georgia     5,248       1,620       6,868  
Gainesville MSA     2,069       3,760       5,829  
East Tennessee     1,982       809       2,791  
  Total NPAs   $ 127,479     $ 32,859     $ 160,338  
                         
                         
NPA ACTIVITY                        
Beginning Balance   $ 144,484     $ 44,263     $ 188,747  
Loans placed on non-accrual     45,675       -       45,675  
Payments received     (1,884 )     -       (1,884 )
Loan charge-offs     (44,757 )     -       (44,757 )
Foreclosures     (16,039 )     16,039       -  
Capitalized costs     -       141       141  
Note / property sales     -       (20,651 )     (20,651 )
Write downs     -       (3,893 )     (3,893 )
Net gains (losses) on sales     -       (3,040 )     (3,040 )
  Ending Balance   $ 127,479     $ 32,859     $ 160,338  
                         
(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.  
   
   
   
   
UNITED COMMUNITY BANKS, INC.  
Financial Highlights  
Credit Quality(1)  
                                 
                                 
    Second Quarter 2012     First Quarter 2012     Fourth Quarter 2011  
 
 
 
(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                
Commercial (sec.by RE)   $ 4,349     .95 %   $ 3,697   .81 %   $ 4,962   1.09 %
Commercial & industrial     775     .70       669   .62       18,940   17.47  
Commercial construction     88     .21       334   .81       3,318   7.88  
  Total commercial     5,212     .86       4,700   .78       27,220   4.51  
Residential mortgage     3,862     1.38       5,375   1.91       5,887   2.04  
Residential construction     9,563     9.14       5,314   4.84       12,090   10.36  
Consumer installment     259     .88       478   1.72       427   1.47  
  Total   $ 18,896     1.85     $ 15,867   1.55     $ 45,624   4.39  
                                       
                                       
NET CHARGE-OFFS BY MARKET                                
North Georgia   $ 12,474     3.58 %   $ 9,022   2.56 %   $ 34,970   9.46 %
Atlanta MSA     2,307     .75       2,729   .89       4,195   1.37  
North Carolina     3,634     2.52       1,679   1.14       3,180   2.10  
Coastal Georgia     211     .23       1,329   1.53       335   .41  
Gainesville MSA     (187 )   (.29 )     883   1.35       2,572   3.84  
East Tennessee     457     .68       225   .34       372   .59  
  Total   $ 18,896     1.85     $ 15,867   1.55     $ 45,624   4.39  
                                       
(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.  
   
   
                         
                         
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)   2012     2011     2012     2011  
                                 
Interest revenue:                                
  Loans, including fees   $ 54,178     $ 60,958     $ 109,937     $ 122,065  
  Investment securities, including tax exempt of $262, $251, $512 and $510     11,062       14,792       24,066       28,396  
  Federal funds sold, reverse repurchase agreements, commercial paper and deposits in banks     1,096       752       2,108       1,571  
      Total interest revenue     66,336       76,502       136,111       152,032  
                                 
Interest expense:                                
  Deposits:                                
    NOW     503       1,036       1,140       2,360  
    Money market     661       1,499       1,302       3,527  
    Savings     38       64       75       141  
    Time     5,073       10,995       11,232       22,727  
      Total deposit interest expense     6,275       13,594       13,749       28,755  
  Federal funds purchased, repurchase agreements and other short-term borrowings     904       1,074       1,949       2,116  
  Federal Home Loan Bank advances     390       570       856       1,160  
  Long-term debt     2,375       2,747       4,747       5,527  
    Total interest expense     9,944       17,985       21,301       37,558  
    Net interest revenue     56,392       58,517       114,810       114,474  
  Provision for loan losses     18,000       11,000       33,000       201,000  
    Net interest revenue after provision for loan losses     38,392       47,517       81,810       (86,526 )
                                 
Fee revenue:                                
  Service charges and fees     7,816       7,608       15,599       14,328  
  Mortgage loan and other related fees     2,322       952       4,421       2,446  
  Brokerage fees     809       691       1,622       1,368  
  Securities gains, net     6,490       783       7,047       838  
  Loss from prepayment of debt     (6,199 )     (791 )     (6,681 )     (791 )
  Other     1,629       4,662       6,238       7,554  
    Total fee revenue     12,867       13,905       28,246       25,743  
    Total revenue     51,259       61,422       110,056       (60,783 )
                                 
Operating expenses:                                
  Salaries and employee benefits     24,297       26,436       49,522       51,360  
  Communications and equipment     3,211       3,378       6,366       6,722  
  Occupancy     3,539       3,805       7,310       7,879  
  Advertising and public relations     1,088       1,317       1,934       2,295  
  Postage, printing and supplies     916       1,085       1,895       2,203  
  Professional fees     1,952       2,350       3,927       5,680  
  Foreclosed property     1,851       1,891       5,676       66,790  
  FDIC assessments and other regulatory charges     2,545       3,644       5,055       9,057  
  Amortization of intangibles     730       760       1,462       1,522  
  Other     4,181       4,062       8,118       10,491  
    Total operating expenses     44,310       48,728       91,265       163,999  
    Net income (loss) before income taxes     6,949       12,694       18,791       (224,782 )
Income tax expense     450       666       764       526  
    Net income (loss)     6,499       12,028       18,027       (225,308 )
Preferred stock dividends and discount accretion     3,032       3,016       6,062       5,794  
    Net income (loss) available to common shareholders   $ 3,467     $ 9,012     $ 11,965     $ (231,102 )
                                 
Earnings (loss) per common share - Basic   $ .06     $ .35     $ .21     $ (10.52 )
Earnings (loss) per common share - Diluted     .06       .16       .21       (10.52 )
Weighted average common shares outstanding - Basic     57,840       25,427       57,803       21,965  
                                 
Weighted average common shares outstanding - Diluted     57,840       57,543       57,803       21,965  
                   
                   
UNITED COMMUNITY BANKS, INC.                  
Consolidated Balance Sheet                  
                   
 
(in thousands, except share and per share data)
 
 
June 30,
2012
 
 
 
 
December 31,
2011
 
 
 
 
June 30,
2011
 
 
    (unaudited)     (audited)     (unaudited)  
ASSETS                        
  Cash and due from banks   $ 50,596     $ 53,807     $ 163,331  
  Interest-bearing deposits in banks     133,857       139,609       41,863  
  Federal funds sold, reverse repurchase agreements, commercial paper and short-term investments     120,000       185,000       174,996  
    Cash and cash equivalents     304,453       378,416       380,190  
  Securities available for sale     1,701,583       1,790,047       1,816,613  
  Securities held to maturity (fair value $299,971, $343,531 and $379,231)     282,750       330,203       371,578  
  Mortgage loans held for sale     18,645       23,881       19,406  
  Loans, net of unearned income     4,119,235       4,109,614       4,163,447  
    Less allowance for loan losses     112,705       114,468       127,638  
      Loans, net     4,006,530       3,995,146       4,035,809  
  Assets covered by loss sharing agreements with the FDIC     65,914       78,145       95,726  
  Premises and equipment, net     172,200       175,088       178,208  
  Bank owned life insurance     81,265       80,599       80,134  
  Accrued interest receivable     20,151       20,693       21,291  
  Goodwill and other intangible assets     6,965       8,428       9,922  
  Foreclosed property     30,421       32,859       47,584  
  Other assets     46,229       69,915       95,834  
    Total assets   $ 6,737,106     $ 6,983,420     $ 7,152,295  
LIABILITIES AND SHAREHOLDERS' EQUITY                        
Liabilities:                        
  Deposits:                        
    Demand   $ 1,150,444     $ 992,109     $ 899,017  
    NOW     1,196,507       1,509,896       1,306,109  
    Money market     1,117,139       1,038,778       989,600  
    Savings     219,077       199,007       197,927  
    Time:                        
      Less than $100,000     1,164,451       1,332,394       1,508,444  
      Greater than $100,000     764,343       847,152       981,154  
    Brokered     210,506       178,647       300,964  
        Total deposits     5,822,467       6,097,983       6,183,215  
  Federal funds purchased, repurchase agreements, and other short-term borrowings     53,656       102,577       103,666  
  Federal Home Loan Bank advances     125,125       40,625       40,625  
  Long-term debt     120,265       120,225       150,186  
  Unsettled securities purchases     -       10,325       35,634  
  Accrued expenses and other liabilities     39,598       36,199       36,368  
    Total liabilities     6,161,111       6,407,934       6,549,694  
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     177,814       177,092       176,392  
    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; 41,726,509, 41,647,100 and 41,554,874 shares issued and outstanding     41,727       41,647       41,555  
  Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 15,914,209 shares issued and outstanding     15,914       15,914       15,914  
  Common stock issuable; 94,657, 93,681 and 83,575 shares     2,893       3,233       3,574  
  Capital surplus     1,056,819       1,054,940       1,052,482  
  Accumulated deficit     (718,896 )     (730,861 )     (723,378 )
  Accumulated other comprehensive (loss) income     (17,106 )     (3,309 )     19,232  
    Total shareholders' equity     575,995       575,486       602,601  
    Total liabilities and shareholders' equity   $ 6,737,106     $ 6,983,420     $ 7,152,295  
                             
                             
                 
                 
UNITED COMMUNITY BANKS, INC.                
Average Consolidated Balance Sheets and Net Interest Analysis      
For the Three Months Ended June 30,                
                 
          2012      

(dollars in thousands, taxable equivalent)
  Average
Balance
   
Interest
  Avg.
Rate
 
Assets:                    
Interest-earning assets:                    
  Loans, net of unearned income (1)(2)   $ 4,155,619     $ 54,296   5.25 %
  Taxable securities (3)     2,121,053       10,800   2.04  
  Tax-exempt securities (1)(3)     24,242       429   7.08  
  Federal funds sold and other interest-earning assets     364,099       1,255   1.38  
                     
    Total interest-earning assets     6,665,013       66,780   4.03  
Non-interest-earning assets:                    
  Allowance for loan losses     (115,955 )            
  Cash and due from banks     51,907              
  Premises and equipment     173,792              
  Other assets (3)     218,347              
    Total assets   $ 6,993,104              
                     
Liabilities and Shareholders' Equity:                    
Interest-bearing liabilities:                    
  Interest-bearing deposits:                    
    NOW   $ 1,279,686       503   .16  
    Money market     1,132,548       661   .23  
    Savings     216,175       38   .07  
    Time less than $100,000     1,183,845       2,520   .86  
    Time greater than $100,000     778,477       2,063   1.07  
    Brokered time deposits     150,449       490   1.31  
      Total interest-bearing deposits     4,741,180       6,275   .53  
                     
    Federal funds purchased and other borrowings     97,134       904   3.74  
    Federal Home Loan Bank advances