Diluted earnings per share of 35 cents, up 25 percent from second quarter 2015 Excluding merger-related charges, diluted operating EPS of 36 cents, up 13 percent
  • Return on assets of 1.04 percent (1.07 percent, excluding merger-related charges)
  • Loan growth of $181 million from first quarter, or 12 percent annualized
  • Fee revenue of $23.5 million increased $4.9 million, or 26 percent from the first quarter
  • Efficiency ratio of 59.0 percent (57.8 percent, excluding merger-related charges)
  • Board approved an increase in the third quarter dividend to eight cents per share

BLAIRSVILLE, GA, July 27, 2016 (GLOBE NEWSWIRE) -- United Community Banks, Inc. (NASDAQ:UCBI) ("United") today announced continuing momentum with second quarter 2016 results reflecting strong fee revenue and loan growth, as well as solid credit quality and capital management.  Net income was $25.3 million, or 35 cents per diluted share, compared with $17.8 million, or 28 cents per diluted share, for the second quarter of 2015.  For the first six months of 2016, net income was $47.6 million, or 66 cents per diluted share. This compares with $35.5 million, or 57 cents per diluted share, for the first six months of 2015.

On an operating basis, which excludes pre-tax merger-related charges of $1.18 million in the second quarter of 2016 and $3.17 million in the second quarter of 2015, operating net income was $26.0 million for the second quarter of 2016 compared with $20.0 million for the second quarter of 2015.  On a per diluted share basis, operating net income was 36 cents for the second quarter of 2016 compared to 32 cents for the second quarter of 2015.  For the first six months of 2016, operating net income was $49.9 million, or 69 cents per diluted share, compared with $37.6 million or 61 cents per diluted share for the first six months of 2015.

At June 30, 2016, preliminary regulatory capital ratios were as follows: Tier 1 Risk-Based of 11.4 percent; Total Risk-Based of 12.4 percent; Common Equity Tier 1 Risk-Based of 11.4 percent; and, Tier 1 Leverage of 8.5 percent.

"Our second quarter results are perhaps the best demonstration to date of the successes of our investments in new businesses and markets as well as our acquisition strategy - all with a focus on increasing returns to our shareholders," said Jimmy Tallent, chairman and chief executive officer.  "Our SBA lending and mortgage banking businesses each produced record quarterly results which led to a 36 percent increase in fee revenue from a year ago.  We also achieved 12 percent annualized linked-quarter loan growth in the second quarter while maintaining top-quartile credit quality and operating expense discipline.  This strong performance is reflected in our 1.07 percent operating return on assets which puts us well on our way to achieving our goal of 1.10 percent for the fourth quarter of 2016." Including merger-related charges of $1.18 million, the second quarter return on assets was 1.04 percent.

"Second quarter loan production was a record $662 million," Tallent added.  "Linked-quarter growth was $181 million, or 12 percent annualized, above our 2016 target of a mid-to-upper-single-digit increase.  Our community banks originated $433 million in loans while our specialized lending area, which includes commercial real estate, middle market, SBA, builder finance and asset-based lending, had $188 million in loan production."

Second quarter net interest revenue totaled $74.9 million, level with the first quarter and up $13.9 million from the second quarter of 2015.  The increase from the second quarter of 2015 primarily reflects net interest revenue from the Palmetto acquisition in the third quarter of 2015.

The taxable-equivalent net interest margin of 3.35 percent reflected a six basis point decrease from the first quarter. The decrease resulted mostly from lower discount accretion on purchased loans and continued loan pricing competition.  This offset most of the positive impact on net interest revenue in the second quarter attributed to strong loan growth.

The second quarter provision for credit losses was a recovery of $300,000 compared with a provision recovery of $200,000 during the first quarter and a provision charge of $900,000 during the second quarter of 2015.  The second quarter negative provision reflects continued strong credit quality and a low overall level of net charge-offs.  "Our credit quality indicators are very favorable," Tallent said. "Our outlook is for this to continue for the balance of 2016, which will result in continued low provision levels while slightly decreasing our required allowance for loan losses."

Second quarter net charge-offs totaled $1.7 million compared with $2.1 million in the first quarter, and $978,000 in the second quarter of 2015.  Strong recoveries of previously charged-off loans continue to contribute to the low level of net charge-offs.  Nonperforming assets were .28 percent of total assets at June 30, 2016, compared with .28 percent at March 31, 2016 and .26 percent at June 30, 2015.

Second quarter fee revenue totaled $23.5 million, an increase of $4.89 million from the first quarter and up $6.23 million from a year ago. The increases from both prior periods were mostly in mortgage fees and gains from sales of SBA government guaranteed loans ("SBA loans").  Mortgage fees were up $1.16 million from first quarter and $741,000 from a year ago.  The increase reflects United's investment in growing its mortgage business by adding mortgage lenders in areas of our footprint where we see opportunities to gain market share.

Gains from sales of SBA loans were up $1.56 million from first quarter and $1.31 million from a year ago.  Higher production drove the increase as United continues to focus on growing this business.  During the second quarter of 2016, United sold $33 million in SBA loans.  This compares with sales of $13 million during the first quarter, and sales of $15 million during the second quarter of 2015.

Operating expenses were $58.1 million for the second quarter compared with $57.9 million for the first quarter and $48.4 million for the second quarter of 2015.  Included in operating expenses were merger-related charges of $1.18 million, $2.65 million and $3.17 million, for each period respectively.  Excluding the merger-related charges, second quarter operating expenses were $56.9 million compared with $55.2 million for the first quarter and $45.2 million a year ago.  The increase from a year ago reflects additional operating expenses following the acquisition of The Palmetto Bank and First National Bank.

The $1.65 million increase in operating expenses from the first quarter, excluding merger-related charges, was primarily in salaries and employee benefits expense, up $510,000; advertising and other marketing related expenses, up $459,000; and professional fees, up $489,000.  The increase in salaries and benefits expense reflects higher incentives following the record performance in the SBA and mortgage lending businesses as well as incentives for the overall strong performance for the second quarter.  Additionally, annual merit increases and an increase in 401K matching contributions went into effect on April 1, further contributing to the increase.  These increases, as well as the additional investment in 29 new revenue producers in the first and second quarters, more than offset the cost savings from the elimination of staff positions late in the first quarter following the Palmetto systems conversion.

The increase in advertising and marketing related expenses primarily reflects the cost of United's annual customer appreciation day and new marketing campaigns.  Professional fees were up from the first quarter reflecting ongoing projects for process and compliance improvements and increased scalability as growth continues organically and through acquisitions.

On July 1, United completed its previously announced merger with Tidelands Bancshares, Inc., the holding company for Tidelands Bank which serves coastal South Carolina with banking offices in Charleston, Hilton Head and Myrtle Beach.  "I'm very excited to have Tidelands join us as a key part of our coastal South Carolina banking team," Tallent said.  "Tidelands Bank merged into United Community Bank on July 1 and is operating under the Tidelands brand until systems conversions are completed in mid-November.  At that time, the Tidelands branches will operate under the United Community Bank brand.

"Our second quarter results have strengthened our optimism and led the Board of Directors to increase our dividend to eight cents per share beginning in the third quarter," stated Tallent.  "That is 14 percent higher than our current dividend and a 33 percent increase from a year ago. 

"We expect our strong momentum to continue throughout the remainder of 2016 as we maintain a high-quality balance sheet, generate growth and increase profitability. All of this is a testament to our talented bankers who are carrying out our plans while providing customer service that is second to none," Tallent concluded.

Conference Call

United will hold a conference call today, Wednesday, July 27, 2016, at 11 a.m. ET to discuss the contents of this earnings release and to share business highlights for the quarter.  To access the call, dial (877) 380-5665 and use the conference number 42056034.  The conference call also will be webcast and available for replay for 30 days by selecting "Events & Presentations" within the Investor Relations section of United's website at www.ucbi.com.

About United Community Banks, Inc.United Community Banks, Inc. (NASDAQ:UCBI) is a registered bank holding company based in Blairsville, Georgia, with $10.4 billion in assets.  The company's banking subsidiary, United Community Bank, is one of the Southeast region's largest full-service banks, operating 140 offices in Georgia, North Carolina, South Carolina and Tennessee.  The bank specializes in providing personalized community banking services to individuals, small businesses and corporations.  Services include a full range of consumer and commercial banking products, including mortgage, advisory, and treasury management.  United Community Bank is consistently recognized for its outstanding customer service by respected national research firms.  In 2014 and 2015, United Community Bank was ranked first in customer satisfaction in the southeast by J.D. Power and again in 2016 was ranked among the top 100 on the Forbes list of America's Best Banks.  Additional information about the company and the bank's full range of products and services can be found at www.ucbi.com.

Non-GAAP Financial MeasuresThis News Release contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP.  This financial information includes certain operating performance measures, which exclude merger-related and other charges that are not considered part of recurring operations, such as "operating net income," "operating net income per diluted share," "tangible book value," "operating return on common equity," "operating return on tangible common equity," "operating return on assets," "operating dividend payout ratio," "operating efficiency ratio," "average tangible equity to average assets," "average tangible common equity to average assets" and "tangible common equity to risk-weighted assets."  These non-GAAP measures are included because United believes they may provide useful supplemental information for evaluating United's underlying performance trends.  These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.  To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included with the accompanying financial statement tables.

Safe HarborThis 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 2015 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                          
                           
                     
    2016       2015   Second
                    Quarter
(in thousands, except per share data) Second Quarter   First Quarter   Fourth  Quarter     Third  Quarter   Second Quarter 2016-2015Change
INCOME SUMMARY                          
Interest revenue $ 81,082     $ 80,721     $ 79,362     $ 70,828     $   65,808          
Interest expense   6,164       5,769       5,598       5,402         4,817          
Net interest revenue   74,918       74,952       73,764       65,426         60,991       23   %  
Provision for credit losses   (300 )     (200 )     300       700         900          
Fee revenue   23,497       18,606       21,284       18,297         17,266       36      
Total revenue   98,715       93,758       94,748       83,023         77,357       28      
Expenses   58,060       57,885       65,488       54,269         48,420       20      
Income before income tax expense   40,655       35,873       29,260       28,754         28,937       40      
Income tax expense   15,389       13,578       11,052       10,867         11,124       38      
Net income   25,266       22,295       18,208       17,887         17,813       42      
Preferred dividends   -       21       25       25         17          
Net income available to common shareholders     25,266         22,274         18,183         17,862           17,796       42      
Merger-related and other charges   1,176       2,653       9,078       5,744         3,173          
Income tax benefit of merger-related and other charges   (445 )     (1,004 )     (3,486 )     (1,905 )       (997 )        
Net income available to common   shareholders - operating (1) $ 25,997     $ 23,923     $ 23,775     $ 21,701     $   19,972       30      
                           
PERFORMANCE MEASURES                          
Per common share:                          
Diluted net income - GAAP $ .35     $ .31     $ .25     $ .27     $   .28       25      
Diluted net income - operating  (1)   .36       .33       .33       .33         .32       13      
Cash dividends declared   .07       .07       .06       .06         .05          
Book value   14.80       14.35       14.02       13.95         12.95       14      
Tangible book value (3)   12.84       12.40       12.06       12.08         12.66       1      
                           
Key performance ratios:                          
Return on common equity - GAAP (2)(4)   9.54   %   8.57   %   7.02   %   7.85   %     8.83   %      
Return on common equity - operating (1)(2)(4)   9.81       9.20       9.18       9.54         9.90          
Return on tangible common equity - operating (1)(2)( 3)(4)   11.56       10.91       10.87       10.29         10.20          
Return on assets - GAAP (4)   1.04       .93       .76       .82         .89          
Return on assets - operating (1)(4)   1.07       1.00       .99       1.00         1.00          
Dividend payout ratio - GAAP   20.00       22.58       24.00       22.22         17.86          
Dividend payout ratio - operating (1)   19.44       21.21       18.18       18.18         15.63          
Net interest margin (fully taxable equivalent) (4)   3.35       3.41       3.34       3.26         3.30          
Efficiency ratio - GAAP   59.02       61.94       68.97       64.65         61.63          
Efficiency ratio - operating  (1)   57.82       59.10       59.41       57.81         57.59          
Average equity to average assets   10.72       10.72       10.68       10.39         10.05          
Average tangible equity to average assets (3)   9.43       9.41       9.40       9.88         9.91          
Average tangible common equity to   average assets (3)   9.43       9.32       9.29       9.77         9.83          
Tangible common equity to risk-weighted   assets (3)(5)   12.87       12.77       12.82       13.08         13.24          
                           
ASSET QUALITY                          
Nonperforming loans $ 21,348     $ 22,419     $ 22,653     $ 20,064     $   18,805       14      
Foreclosed properties   6,176       5,163       4,883       7,669         2,356       162      
Total nonperforming assets (NPAs)   27,524       27,582       27,536       27,733         21,161       30      
Allowance for loan losses   64,253       66,310       68,448       69,062         70,129       (8 )    
Net charge-offs   1,730       2,138       1,302       1,417         978       77      
Allowance for loan losses to loans   1.02   %   1.09   %   1.14   %   1.15   %     1.36   %      
Net charge-offs to average loans (4)   .11       .14       .09       .10         .08          
NPAs to loans and foreclosed properties   .44       .45       .46       .46         .41          
NPAs to total assets   .28       .28       .29       .29         .26          
                           
AVERAGE BALANCES                          
($ in millions)                          
Loans $ 6,151     $ 6,004     $ 5,975     $ 5,457     $   5,017       23      
Investment securities   2,747       2,718       2,607       2,396         2,261       21      
Earning assets   9,037       8,876       8,792       8,009         7,444       21      
Total assets   9,809       9,634       9,558       8,634         8,017       22      
Deposits   7,897       7,947       8,028       7,135         6,669       18      
Shareholders' equity   1,051       1,033       1,021       897         806       30      
Common shares - basic (thousands)   72,202       72,162       72,135       66,294         62,549       15      
Common shares - diluted (thousands)   72,207       72,166       72,140       66,300         62,553       15      
                           
AT PERIOD END                          
($ in millions)                          
Loans $ 6,287     $ 6,106     $ 5,995     $ 6,024     $   5,174       22      
Investment securities   2,677       2,757       2,656       2,457         2,322       15      
Total assets   9,928       9,781       9,616       9,404         8,237       21      
Deposits   7,857       7,960       7,873       7,897         6,800       16      
Shareholders' equity   1,060       1,034       1,018       1,013         827       28      
Common shares outstanding (thousands)   71,122       71,544       71,484       71,472         62,700       13      
                           
(1)  Excludes merger-related charges and fourth quarter impairment losses on surplus bank property.  (2)  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).  (3)  Excludes effect of acquisition related intangibles and associated amortization.  (4)  Annualized.  (5)  Second quarter 2016 ratio is preliminary.  
                           

 
UNITED COMMUNITY BANKS, INC.                
Financial Highlights                
Selected Financial Information                
                 
    For the Six      
    Months Ended   YTD  
    June 30,   2016-2015  
(in thousands, except per share data)     2016       2015       Change  
INCOME SUMMARY                
Interest revenue   $ 161,803     $ 128,342          
Interest expense     11,933       10,109          
Net interest revenue     149,870       118,233       27   %  
Provision for credit losses     (500 )     2,700          
Fee revenue     42,103       32,948       28      
Total revenue     192,473       148,481       30      
Expenses     115,945       91,481       27      
Income before income tax expense     76,528       57,000       34      
Income tax expense     28,967       21,517       35      
Net income     47,561       35,483       34      
Preferred dividends     21       17          
Net income available to common shareholders       47,540         35,466       34      
Merger-related and other charges     3,829       3,173          
Income tax benefit of merger-related and other charges     (1,449 )     (997 )        
Net income available to common   shareholders - operating (1)   $ 49,920     $ 37,642       33      
                 
PERFORMANCE MEASURES                
Per common share:                
Diluted net income - GAAP   $ .66     $ .57       16      
Diluted net income - operating  (1)     .69       .61       13      
Cash dividends declared     .14       .10          
Book value     14.80       12.95       14      
Tangible book value (3)     12.84       12.66       1      
                 
Key performance ratios:                
Return on common equity - GAAP (2)(4)     9.06   %   9.08   %          
Return on common equity - operating (1)(2)(4)     9.51       9.63          
Return on tangible common equity - operating (1)(2)(3)(4)   11.24       9.84          
Return on assets - GAAP (4)     .98       .92          
Return on assets - operating (1)(4)     1.03       .97          
Dividend payout ratio - GAAP     21.21       17.54          
Dividend payout ratio - operating (1)     20.29       16.39          
Net interest margin (fully taxable equivalent) (4)     3.38       3.30          
Efficiency ratio - GAAP     60.44       60.44          
Efficiency ratio - operating  (1)     58.45       58.34          
Average equity to average assets     10.72       9.96          
Average tangible equity to average assets (3)     9.42       9.87          
Average tangible common equity to   average assets (3)     9.38       9.83          
Tangible common equity to risk-weighted   assets (3)(5)     12.87       13.24          
                 
ASSET QUALITY                
Nonperforming loans   $ 21,348     $ 18,805       14      
Foreclosed properties     6,176       2,356       162      
Total nonperforming assets (NPAs)     27,524       21,161       30      
Allowance for loan losses     64,253       70,129       (8 )    
Net charge-offs     3,868       3,540       9      
Allowance for loan losses to loans     1.02   %   1.36   %      
Net charge-offs to average loans (4)     .13       .15          
NPAs to loans and foreclosed properties     .44       .41          
NPAs to total assets     .28       .26          
                 
AVERAGE BALANCES ($ in millions)                
Loans   $ 6,077     $ 4,872       25      
Investment securities     2,733       2,232       22      
Earning assets     8,956       7,258       23      
Total assets     9,721       7,818       24      
Deposits     7,922       6,520       22      
Shareholders' equity     1,042       778       34      
Common shares - basic (thousands)     72,187       61,730       17      
Common shares - diluted (thousands)     72,191       61,734       17      
                 
AT PERIOD END ($ in millions)                
Loans   $ 6,287     $ 5,174       22      
Investment securities     2,677       2,322       15      
Total assets     9,928       8,237       21      
Deposits     7,857       6,800       16      
Shareholders' equity     1,060       827       28      
Common shares outstanding (thousands)     71,122       62,700       13      
                 
(1)  Excludes merger-related charges and fourth quarter impairment losses on surplus bank property.  (2)  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).  (3)  Excludes effect of acquisition related intangibles and associated amortization.  (4)  Annualized.  (5)  Second quarter 2016 ratio is preliminary.  
                 

 
UNITED COMMUNITY BANKS, INC.                    
Non-GAAP Performance Measures Reconciliation                    
Selected Financial Information                    
                     
                     
    2016       2015    
    Second       First       Fourth       Third       Second    
(in thousands, except per share data) Quarter   Quarter   Quarter   Quarter   Quarter  
                     
Expense reconciliation                    
Expenses (GAAP) $ 58,060     $ 57,885     $ 65,488     $ 54,269     $ 48,420    
Merger-related and other charges   (1,176 )     (2,653 )     (9,078 )     (5,744 )     (3,173 )  
Expenses - operating $ 56,884     $ 55,232     $ 56,410     $ 48,525     $ 45,247    
                     
Net income reconciliation                    
Net income (GAAP) $ 25,266     $ 22,295     $ 18,208     $ 17,887     $ 17,813    
Merger-related and other charges   1,176       2,653       9,078       5,744       3,173    
Income tax benefit of merger-related and other charges   (445 )     (1,004 )     (3,486 )     (1,905 )     (997 )  
Net income - operating $ 25,997     $ 23,944     $ 23,800     $ 21,726     $ 19,989    
                     
Net income available to common shareholders reconciliation                    
Net income available to common shareholders (GAAP) $ 25,266     $ 22,274     $ 18,183     $ 17,862     $ 17,796    
Merger-related and other charges   1,176       2,653       9,078       5,744       3,173    
Income tax benefit of merger-related and other charges   (445 )     (1,004 )     (3,486 )     (1,905 )     (997 )  
Net income available to common shareholders - operating $ 25,997     $ 23,923     $ 23,775     $ 21,701     $ 19,972    
                     
Diluted income per common share reconciliation                    
Diluted income per common share (GAAP) $ .35     $ .31     $ .25     $ .27     $ .28    
Merger-related and other charges   .01       .02       .08       .06       .04    
Diluted income per common share - operating $ .36     $ .33     $ .33     $ .33     $ .32    
                     
Book value per common share reconciliation                    
Book value per common share (GAAP) $ 14.80     $ 14.35     $ 14.02     $ 13.95     $ 12.95    
Effect of goodwill and other intangibles   (1.96 )     (1.95 )     (1.96 )     (1.87 )     (.29 )  
Tangible book value per common share $ 12.84     $ 12.40     $ 12.06     $ 12.08     $ 12.66    
                     
Return on tangible common equity reconciliation                    
Return on common equity (GAAP)   9.54   %   8.57   %   7.02   %   7.85   %   8.83   %
Merger-related  and other charges   .27       .63       2.16       1.69       1.07    
Return on common equity - operating   9.81       9.20       9.18       9.54       9.90    
Effect of goodwill and other intangibles   1.75       1.71       1.69       .75       .30    
Return on tangible common equity - operating   11.56   %   10.91   %   10.87   %   10.29   %   10.20   %
                     
Return on assets reconciliation                    
Return on assets (GAAP)   1.04   %   .93   %   .76   %   .82   %   .89   %
Merger-related  and other charges   .03        .07       .23       .18       .11    
Return on assets - operating   1.07   %   1.00   %   .99   %   1.00   %   1.00   %
                     
Dividend payout ratio reconciliation                    
Dividend payout ratio (GAAP)   20.00   %   22.58   %   24.00   %   22.22   %   17.86   %
Merger-related and other charges   (.56 )     (1.37 )     (5.82 )     (4.04 )     (2.23 )  
Dividend payout ratio - operating   19.44   %   21.21   %   18.18   %   18.18   %   15.63   %
                     
Efficiency ratio reconciliation                    
Efficiency ratio (GAAP)   59.02   %   61.94   %   68.97   %   64.65   %   61.63   %
Merger-related and other charges   (1.20 )     (2.84 )     (9.56 )     (6.84 )     (4.04 )  
Efficiency ratio - operating   57.82   %   59.10   %   59.41   %   57.81   %   57.59   %
                     
Average equity to assets reconciliation                    
Equity to assets (GAAP)   10.72   %   10.72   %   10.68   %   10.39   %   10.05   %
Effect of goodwill and other intangibles   (1.29 )     (1.31 )     (1.28 )     (.51 )     (.14 )  
Tangible equity to assets   9.43       9.41       9.40       9.88       9.91    
Effect of preferred equity   -       (.09 )     (.11 )     (.11 )     (.08 )  
Tangible common equity to assets   9.43   %   9.32   %   9.29   %   9.77   %   9.83   %
                     
Tangible common equity to risk-weighted assets reconciliation (1)                        
Tier 1 capital ratio (Regulatory)   11.44   %   11.32   %   11.45   %   11.40   %   11.86   %
Effect of other comprehensive income   (.06 )     (.25 )     (.38 )     (.23 )     (.28 )  
Effect of deferred tax limitation   1.63       1.85       2.05       2.24       2.49    
Effect of trust preferred   (.08 )     (.08 )     (.08 )     (.08 )     (.63 )  
Effect of preferred equity   -       -       (.15 )     (.15 )     (.17 )  
Basel III intangibles transition adjustment   (.06 )     (.07 )     (.10 )     (.13 )     (.06 )  
Basel III disallowed investments   -       -       .03       .03       .03    
Tangible common equity to risk-weighted assets   12.87   %   12.77   %   12.82   %   13.08   %   13.24   %
                     
(1)  Second quarter 2016 ratios are preliminary.                    
                     

 
UNITED COMMUNITY BANKS, INC.          
Non-GAAP Performance Measures Reconciliation          
Selected Financial Information          
           
           
      For the Six Months Ended June 30,    
     
(in thousands, except per share data)     2016       2015    
           
Expense reconciliation          
Expenses (GAAP)   $ 115,945     $ 91,481    
Merger-related and other charges     (3,829 )     (3,173 )  
Expenses - operating   $ 112,116     $ 88,308    
           
Net income reconciliation          
Net income (GAAP)   $ 47,561     $ 35,483    
Merger-related and other charges     3,829       3,173    
Income tax benefit of merger-related and other charges     (1,449 )     (997 )  
Net income - operating   $ 49,941     $ 37,659    
           
Net income available to common shareholders reconciliation          
Net income available to common shareholders (GAAP)   $ 47,540     $ 35,466    
Merger-related and other charges     3,829       3,173    
Income tax benefit of merger-related and other charges     (1,449 )     (997 )  
Net income available to common shareholders - operating   $ 49,920     $ 37,642    
           
Diluted income per common share reconciliation          
Diluted income per common share (GAAP)   $ .66     $ .57    
Merger-related and other charges     .03       .04    
Diluted income per common share - operating   $ .69     $ .61    
           
Book value per common share reconciliation          
Book value per common share (GAAP)   $ 14.80     $ 12.95    
Effect of goodwill and other intangibles     (1.96 )     (.29 )  
Tangible book value per common share   $ 12.84     $ 12.66    
           
Return on tangible common equity reconciliation          
Return on common equity (GAAP)     9.06   %   9.08   %
Merger-related  and other charges     .45       .55    
Return on common equity - operating     9.51       9.63    
Effect of goodwill and other intangibles     1.73       .21    
Return on tangible common equity - operating     11.24   %   9.84   %
           
Return on assets reconciliation          
Return on assets (GAAP)     .98   %   .92   %
Merger-related  and other charges     .05       .05    
Return on assets - operating     1.03   %   .97   %
           
Dividend payout ratio reconciliation          
Dividend payout ratio (GAAP)     21.21   %   17.54    %
Merger-related and other charges     (.92 )     (1.15 )  
Dividend payout ratio - operating     20.29   %   16.39    %
           
Efficiency ratio reconciliation          
Efficiency ratio (GAAP)     60.44   %   60.44    %
Merger-related and other charges     (1.99 )     (2.10 )  
Efficiency ratio - operating     58.45   %   58.34    %
           
Average equity to assets reconciliation          
Equity to assets (GAAP)     10.72   %   9.96    %
Effect of goodwill and other intangibles     (1.30 )     (.09 )  
Tangible equity to assets     9.42       9.87    
Effect of preferred equity     (.04 )     (.04 )  
Tangible common equity to assets     9.38   %   9.83    %
           
Tangible common equity to risk-weighted assets reconciliation (1)          
Tier 1 capital ratio (Regulatory)     11.44   %   11.86    %
Effect of other comprehensive income     (.06 )     (.28 )  
Effect of deferred tax limitation     1.63       2.49    
Effect of trust preferred     (.08 )     (.63 )  
Effect of preferred equity     -       (.17 )  
Basel III intangibles transition adjustment     (.06 )     (.06 )  
Basel III disallowed investments     -       .03    
Tangible common equity to risk-weighted assets     12.87   %   13.24    %
           
(1)  Second quarter 2016 ratios are preliminary.          
           

 
UNITED COMMUNITY BANKS, INC.            
Financial Highlights                    
Loan Portfolio Composition at Period-End            
                     
                     
      2016       2015  
      Second       First       Fourth       Third       Second  
(in millions)   Quarter   Quarter   Quarter   Quarter   Quarter
LOANS BY CATEGORY                    
Owner occupied commercial RE   $ 1,450     $ 1,434     $ 1,494     $ 1,479     $ 1,266  
Income producing commercial RE     919       880       824       818       689  
Commercial & industrial     926       855       785       890       793  
Commercial construction     384       354       342       319       238  
Total commercial     3,679       3,523       3,445       3,506       2,986  
Residential mortgage     1,035       1,032       1,029       1,062       935  
Home equity lines of credit     623       604       598       585       491  
Residential construction     351       348       352       334       299  
Consumer installment     599       599       571       537       463  
Total loans   $ 6,287     $ 6,106     $ 5,995     $ 6,024     $ 5,174  
                     
LOANS BY MARKET                    
North Georgia   $ 1,097     $ 1,097     $ 1,125     $ 1,130     $ 1,155  
Atlanta MSA     1,314       1,257       1,259       1,266       1,275  
North Carolina     543       543       549       546       533  
Coastal Georgia     541       543       537       506       499  
Gainesville MSA     240       248       254       252       257  
East Tennessee     509       495       504       511       525  
South Carolina     862       821       819       783       35  
Specialized Lending     706       628       492       609       538  
Indirect auto     475       474       456       421       357  
Total loans   $ 6,287     $ 6,106     $ 5,995     $ 6,024     $ 5,174  
                     

 
UNITED COMMUNITY BANKS, INC.          
Financial Highlights                  
Loan Portfolio Composition at Period-End          
                   
                   
      2016       2015   Linked Quarter Change   Year over Year Change
      Second       First       Second    
(in millions)   Quarter   Quarter   Quarter  
LOANS BY CATEGORY                  
Owner occupied commercial RE   $ 1,450     $ 1,434     $ 1,266   $ 16     $ 184  
Income producing commercial RE     919       880       689     39       230  
Commercial & industrial     926       855       793     71       133  
Commercial construction     384       354       238     30       146  
Total commercial     3,679       3,523       2,986     156       693  
Residential mortgage     1,035       1,032       935     3       100  
Home equity lines of credit     623       604       491     19       132  
Residential construction     351       348       299     3       52  
Consumer installment     599       599       463     -       136  
Total loans   $ 6,287     $ 6,106     $ 5,174     181       1,113  
                   
LOANS BY MARKET                  
North Georgia   $ 1,097     $ 1,097     $ 1,155   $ -     $ (58 )
Atlanta MSA     1,314       1,257       1,275     57       39  
North Carolina     543       543       533     -       10  
Coastal Georgia     541       543       499     (2 )     42  
Gainesville MSA     240       248       257     (8 )     (17 )
East Tennessee     509       495       525     14       (16 )
South Carolina     862       821       35     41       827  
Specialized Lending     706       628       538     78       168  
Indirect auto     475       474       357     1       118  
Total loans   $ 6,287     $ 6,106     $ 5,174     181       1,113  
                   

 
UNITED COMMUNITY BANKS, INC.            
Financial Highlights                  
Credit Quality                  
                   
                   
    Second Quarter 2016
      Nonperforming       Foreclosed       Total  
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY            
Owner occupied CRE   $ 6,681     $ 3,096     $ 9,777  
Income producing CRE     1,017       1,554       2,571  
Commercial & industrial     949       -       949  
Commercial construction     199       -       199  
Total commercial     8,846       4,650       13,496  
Residential mortgage     8,667       1,160       9,827  
Home equity lines of credit     1,308       83       1,391  
Residential construction     1,578       283       1,861  
Consumer installment     949       -       949  
Total NPAs   $ 21,348     $ 6,176     $ 27,524  
Balance as a % of                    
Unpaid Principal     69.6 %     40.2 %     59.8 %
                   
NONPERFORMING ASSETS BY MARKET              
North Georgia   $ 6,219     $ 1,086     $ 7,305  
Atlanta MSA     1,140       2,041       3,181  
North Carolina     4,762       224       4,986  
Coastal Georgia     1,186       168       1,354  
Gainesville MSA     234       -       234  
East Tennessee     3,616       247       3,863  
South Carolina     1,271       2,410       3,681  
Specialized Lending     2,108       -       2,108  
Indirect auto     812       -       812  
Total NPAs   $ 21,348     $ 6,176     $ 27,524  
                   
                   
NONPERFORMING ASSETS ACTIVITY              
Beginning Balance   $ 22,419     $ 5,163     $ 27,582  
Acquisitions     -       (497 )     (497 )
Loans placed on non-accrual     6,786       -       6,786  
Payments received     (4,201 )     -       (4,201 )
Loan charge-offs     (1,803 )     -       (1,803 )
Foreclosures     (1,853 )     2,722       869  
Capitalized costs     -       98       98  
Property sales     -       (1,424 )     (1,424 )
Write downs     -       (73 )     (73 )
Net gains (losses) on sales     -       187       187  
Ending Balance   $ 21,348     $ 6,176     $ 27,524  
                   

 
UNITED COMMUNITY BANKS, INC.            
Financial Highlights                  
Credit Quality                  
                   
                   
    First Quarter 2016
      Nonperforming       Foreclosed       Total  
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY            
Owner occupied CRE   $ 6,775     $ 2,864     $ 9,639  
Income producing CRE     2,959       -       2,959  
Commercial & industrial     978       -       978  
Commercial construction     266       152       418  
Total commercial     10,978       3,016       13,994  
Residential mortgage     8,037       1,587       9,624  
Home equity lines of credit     1,198       125       1,323  
Residential construction     1,122       435       1,557  
Consumer installment     1,084       -       1,084  
Total NPAs   $ 22,419     $ 5,163     $ 27,582  
Balance as a % of                    
Unpaid Principal     69.3 %     38.2 %     60.1 %
                   
NONPERFORMING ASSETS BY MARKET              
North Georgia   $ 5,353     $ 1,233     $ 6,586  
Atlanta MSA     2,796       902       3,698  
North Carolina     4,860       559       5,419  
Coastal Georgia     1,696       121       1,817  
Gainesville MSA     250       -       250  
East Tennessee     3,470       351       3,821  
South Carolina     935       1,997       2,932  
Specialized Lending     2,186       -       2,186  
Indirect auto     873       -       873  
Total NPAs   $ 22,419     $ 5,163     $ 27,582  
                   
                   
NONPERFORMING ASSETS ACTIVITY              
Beginning Balance   $ 22,653     $ 4,883     $ 27,536  
Acquisitions     -       -       -  
Loans placed on non-accrual     4,771       -       4,771  
Payments received     (1,812 )     -       (1,812 )
Loan charge-offs     (1,679 )     -       (1,679 )
Foreclosures     (1,514 )     1,590       76  
Capitalized costs     -       -       -  
Property sales     -       (1,524 )     (1,524 )
Write downs     -       (7 )     (7 )
Net gains (losses) on sales     -       221       221  
Ending Balance   $ 22,419     $ 5,163     $ 27,582  
                   

 
UNITED COMMUNITY BANKS, INC.            
Financial Highlights                  
Credit Quality                  
                   
                   
    Fourth Quarter 2015
      Nonperforming       Foreclosed       Total  
(in thousands)   Loans   Properties   NPAs
NONPERFORMING ASSETS BY CATEGORY            
Owner occupied CRE   $ 7,036     $ 2,652     $ 9,688  
Income producing CRE     2,595       -       2,595  
Commercial & industrial     892       -       892  
Commercial construction     328       437       765  
Total commercial     10,851       3,089       13,940  
Residential mortgage     8,555       1,242       9,797  
Home equity lines of credit     851       80       931  
Residential construction     1,398       472       1,870  
Consumer installment     998       -       998  
Total NPAs   $ 22,653     $ 4,883     $ 27,536  
Balance as a % of                    
Unpaid Principal     71.4 %     34.2 %     59.8 %
                   
NONPERFORMING ASSETS BY MARKET              
North Georgia   $ 5,167     $ 1,612     $ 6,779  
Atlanta MSA     3,023       625       3,648  
North Carolina     5,289       183       5,472  
Coastal Georgia     2,079       -       2,079  
Gainesville MSA     307       -       307  
East Tennessee     3,448       157       3,605  
South Carolina     323       2,306       2,629  
Specialized Lending     2,231       -       2,231  
Indirect auto     786       -       786  
Total NPAs   $ 22,653     $ 4,883     $ 27,536  
                   
                   
NONPERFORMING ASSETS ACTIVITY              
Beginning Balance   $ 20,064     $ 7,669     $ 27,733  
Acquisitions     -       (1,585 )     (1,585 )
Loans placed on non-accrual     10,768       -       10,768  
Payments received     (4,893 )     -       (4,893 )
Loan charge-offs     (1,813 )     -       (1,813 )
Foreclosures     (1,473 )     1,497       24  
Capitalized costs     -       -       -  
Property sales     -       (2,968 )     (2,968 )
Write downs     -       11       11  
Net gains (losses) on sales     -       259       259  
Ending Balance   $ 22,653     $ 4,883     $ 27,536  
                   

 
UNITED COMMUNITY BANKS, INC.                                    
Financial Highlights                                          
Credit Quality                                          
                                           
                                           
    Second Quarter 2016   First Quarter 2016   Fourth Quarter 2015
        Net Charge-         Net Charge-         Net Charge-  
          Offs to           Offs to           Offs to  
      Net       Average       Net       Average       Net       Average  
(in thousands)   Charge-Offs   Loans (1)   Charge-Offs   Loans (1)   Charge-Offs   Loans (1)
NET CHARGE-OFFS BY CATEGORY                                      
Owner occupied CRE   $ 564     .16   %   $ 304     .08   %   $ 861     .23   %
Income producing CRE     (23 )   (.01 )       211     .10         (35 )   (.02 )  
Commercial & industrial     (392 )   (.18 )       283     .14         (719 )   (.34 )  
Commercial construction     22     .02         286     .33         253     .31    
Total commercial     171     .02         1,084     .13         360     .04    
Residential mortgage     829     .32         50     .02         (120 )   (.05 )  
Home equity lines of credit     253     .17         632     .43         194     .13    
Residential construction     (8 )   (.01 )       (103 )   (.12 )       415     .48    
Consumer installment     485     .33         475     .33         453     .33    
Total   $ 1,730     .11       $ 2,138     .14       $ 1,302     .09    
                                           
                                           
NET CHARGE-OFFS BY MARKET                                      
North Georgia   $ 428     .16   %   $ 913     .33   %   $ 1,011     .36   %
Atlanta MSA     1     -         (25 )   (.01 )       496     .16    
North Carolina     575     .43         382     .28         426     .31    
Coastal Georgia     177     .13         196     .15         47     .04    
Gainesville MSA     (87 )   (.14 )       98     .16         (340 )   (.54 )  
East Tennessee     346     .28         378     .31         (326 )   (.26 )  
South Carolina     49     .02         (16 )   (.01 )       (474 )   (.24  
Specialized Lending     (18 )   (.01 )       4     -         253     .18    
Indirect auto     259     .22         208     .19         209     .19    
Total   $ 1,730     .11       $ 2,138     .14       $ 1,302     .09    
                                       
(1)  Annualized.
                                           

 
UNITED COMMUNITY BANKS, INC.                  
Consolidated Statement of Income (Unaudited)                  
                   
    Three Months Ended   Six Months Ended  
    June 30,   June 30,  
(in thousands, except per share data)     2016       2015       2016       2015    
                   
Interest revenue:                  
Loans, including fees   $ 63,472     $ 52,976     $ 127,448     $ 102,640    
Investment securities, including tax exempt of $149, $181, $315 and $339     16,833       12,037       32,621       24,095    
Deposits in banks and short-term investments     777       795       1,734       1,607    
Total interest revenue     81,082       65,808       161,803       128,342    
                   
Interest expense:                  
Deposits:                  
NOW     444       348       929       742    
Money market     1,206       806       2,314       1,479    
Savings     30       26       59       46    
Time     743       895       1,385       2,004    
Total deposit interest expense     2,423       2,075       4,687       4,271    
Short-term borrowings     93       82       180       180    
Federal Home Loan Bank advances     983       454       1,716       846    
Long-term debt     2,665       2,206       5,350       4,812    
Total interest expense     6,164       4,817       11,933       10,109    
Net interest revenue     74,918       60,991       149,870       118,233    
Provision for credit losses     (300 )     900       (500 )     2,700    
Net interest revenue after provision for credit losses     75,218       60,091       150,370       115,533    
                   
Fee revenue:                  
Service charges and fees     10,515       8,375       20,641       15,990    
Mortgage loan and other related fees     4,448       3,707       7,737       6,462    
Brokerage fees     1,117       1,232       2,170       2,783    
Gains from sales of government guaranteed loans     2,801       1,494       4,038       2,635    
Securities gains, net     282       13       661       1,552    
Loss from prepayment of debt     -       -       -       (1,038 )  
Other     4,334       2,445       6,856       4,564    
Total fee revenue     23,497       17,266       42,103       32,948    
Total revenue     98,715       77,357       192,473       148,481    
                   
Operating expenses:                  
Salaries and employee benefits     33,572       27,961       66,634       54,407    
Communications and equipment     4,393       3,304       8,683       6,575    
Occupancy     4,538       3,415       9,261       6,693    
Advertising and public relations     1,323       1,127       2,187       1,877    
Postage, printing and supplies     1,298       993       2,578       1,931    
Professional fees     3,189       2,257       5,889       4,176    
FDIC assessments and other regulatory charges     1,517       1,298       3,041       2,507    
Amortization of intangibles     987       447       1,997       689    
Merger-related and other charges     1,176       3,173       3,829       3,173    
Other     6,067       4,445       11,846       9,453    
Total operating expenses     58,060       48,420       115,945       91,481    
Net income before income taxes     40,655       28,937       76,528       57,000    
Income tax expense     15,389       11,124       28,967       21,517    
Net income     25,266       17,813       47,561       35,483    
Preferred stock dividends and discount accretion     -       17       21       17    
Net income available to common shareholders   $ 25,266     $ 17,796     $ 47,540     $ 35,466    
                   
Earnings per common share:                  
Basic   $ .35     $ .28     $ .66     $ .57    
Diluted     .35       .28       .66       .57    
Weighted average common shares outstanding:                  
Basic     72,202       62,549       72,187       61,730    
Diluted     72,207       62,553       72,191       61,734    
                   

 
UNITED COMMUNITY BANKS, INC.        
Consolidated Balance Sheet (Unaudited)        
         
    June 30,   December 31,
(in thousands, except share and per share data)     2016       2015  
         
ASSETS        
Cash and due from banks   $ 107,606     $ 86,912  
Interest-bearing deposits in banks     100,036       153,451  
Cash and cash equivalents     207,642       240,363  
Securities available for sale     2,335,511       2,291,511  
Securities held to maturity (fair value $356,740 and $371,658)     341,951       364,696  
Mortgage loans held for sale     30,152       24,231  
Loans, net of unearned income     6,286,527       5,995,441  
Less allowance for loan losses     (64,253 )     (68,448 )
Loans, net     6,222,274       5,926,993  
Premises and equipment, net     181,349       178,165  
Bank owned life insurance     105,784       105,493  
Accrued interest receivable     25,879       25,786  
Net deferred tax asset     157,689       197,613  
Derivative financial instruments     26,880       20,082  
Goodwill and other intangible assets     146,124       147,420  
Other assets     147,238       94,075  
Total assets   $ 9,928,473     $ 9,616,428  
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities:        
Deposits:        
Demand   $ 2,386,857     $ 2,204,755  
NOW     1,730,313       1,975,884  
Money market     1,641,980       1,599,637  
Savings     502,134       471,129  
Time     1,183,943       1,282,803  
Brokered     412,267       338,985  
Total deposits     7,857,494       7,873,193  
Repurchase agreements     -       16,640  
Federal Home Loan Bank advances     735,125       430,125  
Long-term debt     164,066       163,836  
Derivative financial instruments     34,930       28,825  
Accrued expenses and other liabilities     77,121       85,524  
Total liabilities     8,868,736       8,598,143  
Shareholders' equity:        
Preferred stock, $1 par value; 10,000,000 shares authorized;        
Series H; $1,000 stated value; 0 and 9,992 shares issued and outstanding     -       9,992  
Common stock, $1 par value; 150,000,000 shares authorized;        
69,863,008 and 66,198,477 shares issued and outstanding     69,863       66,198  
Common stock, non-voting, $1 par value; 26,000,000 shares authorized;        
1,258,792 and 5,285,516 shares issued and outstanding     1,259       5,286  
Common stock issuable; 486,753 and 458,953 shares     6,651       6,779  
Capital surplus     1,279,383       1,286,361  
Accumulated deficit     (293,424 )     (330,879 )
Accumulated other comprehensive loss     (3,995 )     (25,452 )
Total shareholders' equity     1,059,737       1,018,285  
Total liabilities and shareholders' equity   $ 9,928,473     $ 9,616,428  
         

 
UNITED COMMUNITY BANKS, INC.                        
Average Consolidated Balance Sheets and Net Interest Analysis                  
For the Three Months Ended June 30,                        
                         
  2016   2015  
(dollars in thousands, fully taxable equivalent (FTE )) Average Balance     Interest   Avg. Rate     Average   Balance       Interest    Avg. Rate    
Assets:                        
Interest-earning assets:                        
Loans, net of unearned income (FTE) (1)(2) $ 6,150,654     $ 63,485   4.15 %   $ 5,017,306     $ 53,081   4.24 %  
Taxable securities (3)   2,720,061       16,684   2.45       2,235,561       11,856   2.12    
Tax-exempt securities (FTE) (1)(3)   27,434       244   3.56       25,685       296   4.61    
Federal funds sold and other interest-earning assets   138,622       912   2.63       165,643       901   2.18    
                         
Total interest-earning assets (FTE)   9,036,771       81,325   3.62       7,444,195       66,134   3.56    
Non-interest-earning assets:                        
Allowance for loan losses   (66,104 )             (71,006 )          
Cash and due from banks   94,920               77,124            
Premises and equipment   182,609               167,926            
Other assets (3)   560,357               398,356            
Total assets $ 9,808,553