United Community Banks, Inc. Reports Earnings of $15.5 Million for Third Quarter 2013

BLAIRSVILLE, GA--(Marketwired - Oct 24, 2013) - United Community Banks, Inc. (NASDAQ: UCBI)

• Net income of $15.5 million, or 21 cents per share

• Operating efficiency ratio improves to 58.6 percent reflecting lower expenses

• Loans up $78 million, or 7 percent annualized

• Core transaction deposits up $94 million, or 11 percent annualized

• All capital ratios strengthened

United Community Banks, Inc. (NASDAQ: UCBI) today reported it continued to achieve substantial momentum in positioning itself to build the long-term value of its franchise. For the third quarter and nine months ended September 30, 2013 net income was $15.5 million, or 21 cents per share, and $257.2 million, or $4.24 per share, respectively. The year-to-date results include the impact of two significant events during the second quarter -- the reversal of the valuation allowance on United's net deferred tax asset and the higher provision for loan losses and foreclosed property costs from the accelerated sales of classified assets.

"I am very pleased with the important progress we are making in growing our business and improving operating efficiency," said Jimmy Tallent, president and chief executive officer. "We achieved good loan and deposit growth while at the same time lowering operating expenses. This is particularly demonstrated by the improvement in our efficiency ratio to 58.6 percent, the lowest level since 2007. This is a tribute to the great effort of our dedicated team of bankers."

The third quarter provision for loan losses was $3.0 million compared with $48.5 million in the second quarter and $15.5 million in the third quarter of 2012. The second quarter provision was elevated by higher charge-offs associated with the accelerated classified loan sales. The resulting reduction in classified loans led to lower net charge-offs in the third quarter and a lower provision. Third quarter net charge-offs were $4.47 million compared with $72.4 million in the second quarter and $20.6 million a year ago.

Nonperforming assets at quarter-end were $30.6 million, representing .42 percent of total assets, down from $31.8 million or .44 percent of assets at June 30, 2013, and from $142 million or 2.12 percent of assets a year ago. The classified asset ratio, which is the ratio of classified assets to Tier 1 regulatory capital plus the allowance for loan losses, declined to 26 percent from 27 percent at the end of second quarter and 55 percent a year ago.

Third quarter taxable equivalent net interest revenue totaled $54.3 million, down $224,000 from the second quarter and down $3.03 million from the third quarter of 2012. "The decrease generally reflects the ongoing lower yields on our loan and investment securities portfolios," said Tallent. "The lower loan portfolio yield reflects competitive pricing pressure on new and renewed commercial loans and on new retail loan offerings with low introductory rates. Introductory rates on $45 million of these retail loans rolled over to a market rate of prime-plus in the third quarter with another $40 million due to reset to market rates in the fourth quarter. The lower investment securities yield compared to a year ago is due to reinvestment of cash flows at record low rates. We continue to look for reinvestment opportunities to alleviate market and duration risk. Our focus has been on floating-rate securities, which at quarter-end accounted for 39 percent of the total investment securities portfolio, up one percent from last quarter."

The third quarter taxable equivalent net interest margin was 3.26 percent, down five basis points from the second quarter and 34 basis points from a year ago. "Our margin continues to reflect the unprecedented low interest rate environment," stated Tallent. "We could see further compression in the near term, though we believe at a slower pace. To offset the impact of a lower margin on net interest revenue, we are concentrating on growing the loan portfolio in the mid-single digit range by focusing on retail loans and continuing to add commercial lenders in key markets."

"Third quarter fee revenue of $14.1 million was down slightly compared to second quarter and up approximately $1.0 million from a year ago when certain non-core items are excluded," commented Tallent. Second quarter fee revenue of $16.3 million was elevated due to non-core items, which included a $1.37 million recovery on a bank-owned life insurance policy, a $468,000 gain from the sale of low-income housing tax credits, and $369,000 in hedge ineffectiveness gains. Similarly, year ago fee revenue of $13.8 million included hedge ineffectiveness gains of $608,000.

Service charges and fees on deposit accounts were up $484,000 from the second quarter and up $760,000 from a year ago reflecting strong growth in debit card interchange fees. Brokerage fees were up $211,000 from the second quarter and up $565,000 from a year ago, which shows a renewed focus on this line of business. Mortgage fees were down $449,000 from the second quarter and down $246,000 from a year ago reflecting slower mortgage refinancing activity resulting from rising long-term interest rates. Closed mortgage loans totaled $76.6 million in the third quarter compared with $95.2 million in the second quarter and $107.9 million in the third quarter of 2012.

Operating expenses, excluding foreclosed property costs, were $39.9 million for the third quarter compared to $43.7 million in the second quarter of 2013 and $41.1 million a year ago. The decrease from both periods reflects a reduction in loan workouts and collections costs as well as lower severance costs. Third quarter severance costs were $405,000 compared with $1.56 million and $401,000 for the second quarter of 2013 and the third quarter of 2012, respectively.

Foreclosed property costs were $194,000 in the third quarter compared to $5.15 million in the second quarter and $3.71 million a year ago. The higher second quarter costs reflect $4.31 million in net losses and write-downs related to the accelerated foreclosed property sales and $837,000 for maintenance. The third quarter 2012 foreclosed property costs included $2.74 million in net losses and write-downs and $962,000 for maintenance.

"The effective tax rate for the third quarter was elevated from 35 percent to 38 percent by a $.6 million net charge to tax expense," stated Tallent. "The net charge reflects a state income tax rate reduction in North Carolina that lowered the rate at which a portion of our net deferred tax asset will be recovered. The resulting charge was partially offset by the release of tax reserves for tax returns that had expired."

As of September 30, 2013, capital ratios were as follows: Tier 1 Risk-Based of 14.2 percent; Total Risk-Based of 15.5 percent; Tier 1 Common Risk-Based of 9.1 percent; and Tangible Equity-to-Assets of 9.0 percent. The Tier 1 Leverage ratio was 10.0 percent.

Tallent concluded, "Going forward, we are focused strategically on loan and fee-based service growth in existing and newer markets to provide United with further momentum in building its value to our shareholders. We are looking ahead with confidence driven by our progress, our business opportunities and the best customer satisfaction in our industry."

Conference Call

United will hold a conference call today, Thursday, October 24, 2013, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 76304427. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of United's website at www.ucbi.com.

About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks, Inc. is the third-largest bank holding company in Georgia. United has assets of $7.2 billion and operates 103 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and western South Carolina. United specializes in providing personalized community banking services to individuals and small to mid-size businesses and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United's common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United's website at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by federal securities laws, including statements about United's financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United's filings with the Securities and Exchange Commission including its 2012 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the second quarter of 2013 under the sections entitled "Forward-Looking Statements" and "Risk Factors." Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

UNITED COMMUNITY BANKS, INC.

Financial Highlights

Selected Financial Information

				2013												2012
(in thousands, except per share data; taxable equivalent)				Third Quarter				Second Quarter					First Quarter			Fourth Quarter				Third Quarter				Third Quarter 2013-2012 Change
INCOME SUMMARY
Interest revenue				$	61,363			$	61,693				$	62,134		$	64,450			$	65,978
Interest expense					7,025				7,131					7,475			8,422				8,607
		Net interest revenue			54,338				54,562					54,659			56,028				57,371			(5	)%
Provision for loan losses					3,000				48,500					11,000			14,000				15,500
Fee revenue					14,144				16,312					12,826			14,761				13,764			3
	Total revenue				65,482				22,374					56,485			56,789				55,635
Operating expenses					40,097				48,823					43,770			50,726				44,783			(10	)
		Income (loss) before income taxes			25,385				(26,449	)				12,715			6,063				10,852			134
Income tax expense (benefit)					9,885				(256,413	)				950			802				284
		Net income			15,500				229,964					11,765			5,261				10,568			47
Preferred dividends and discount accretion					3,059				3,055					3,052			3,045				3,041
Net income available to common shareholders				$	12,441			$	226,909				$	8,713		$	2,216			$	7,527			65
PERFORMANCE MEASURES
	Per common share:
		Diluted income		$	.21			$	3.90				$	.15		$	.04			$	.13			62
		Book value			10.99				10.90					6.85			6.67				6.75			63
		Tangible book value (2)			10.95				10.82					6.76			6.57				6.64			65
	Key performance ratios:
		Return on equity (1)(3)			7.38	%			197.22	%				8.51	%		2.15	%			7.43	%
		Return on assets (3)			.86				13.34					.70			.31				.63
		Net interest margin (3)			3.26				3.31					3.38			3.44				3.60
		Efficiency ratio			58.55				68.89					64.97			71.69				62.95
		Equity to assets			11.80				11.57	(4)				8.60			8.63				8.75
		Tangible equity to assets (2)			11.76				11.53	(4)				8.53			8.55				8.66
		Tangible common equity to assets (2)			9.02				8.79	(4)				5.66			5.67				5.73
		Tangible common equity to risk- weighted assets (2)			13.34				13.16					8.45			8.26				8.44
ASSET QUALITY *
	Non-performing loans			$	26,088			$	27,864				$	96,006		$	109,894			$	115,001
	Foreclosed properties				4,467				3,936					16,734			18,264				26,958
		Total non-performing assets (NPAs)			30,555				31,800					112,740			128,158				141,959
	Allowance for loan losses				80,372				81,845					105,753			107,137				107,642
	Net charge-offs				4,473				72,408					12,384			14,505				20,563
	Allowance for loan losses to loans				1.88	%			1.95	%				2.52	%		2.57	%			2.60	%
	Net charge-offs to average loans (3)				.42				6.87					1.21			1.39				1.99
	NPAs to loans and foreclosed properties				.72				.76					2.68			3.06				3.41
	NPAs to total assets				.42				.44					1.65			1.88				2.12
AVERAGE BALANCES ($ in millions)
	Loans			$	4,250			$	4,253				$	4,197		$	4,191			$	4,147			2
	Investment securities				2,178				2,161					2,141			2,088				1,971			11
	Earning assets				6,615				6,608					6,547			6,482				6,346			4
	Total assets				7,170				6,915					6,834			6,778				6,648			8
	Deposits				5,987				5,983					5,946			5,873				5,789			3
	Shareholders' equity				846				636					588			585				582			45
	Common shares - basic (thousands)				59,100				58,141					58,081			57,971				57,880
	Common shares - diluted (thousands)				59,202				58,141					58,081			57,971				57,880
AT PERIOD END ($ in millions)
	Loans *			$	4,267			$	4,189				$	4,194		$	4,175			$	4,138			3
	Investment securities				2,169				2,152					2,141			2,079				2,025			7
	Total assets				7,243				7,163					6,849			6,802				6,699			8
	Deposits				6,113				6,012					6,026			5,952				5,823			5
	Shareholders' equity				852				829					592			581				585			46
	Common shares outstanding (thousands)				59,412				57,831					57,767			57,741				57,710

(1) Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized. (4) Calculated as of period-end.

* Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information
				For the Nine Months Ended September 30,
(in thousands, except per share data; taxable equivalent)				2013				2012				YTD 2013-2012 Change
INCOME SUMMARY
Interest revenue				$	185,190			$	202,979
Interest expense					21,631				29,908
		Net interest revenue			163,559				173,071			(5	)%
Provision for loan losses					62,500				48,500
Fee revenue					43,282				42,010			3
	Total revenue				144,341				166,581
Operating expenses					132,690				136,048			(2	)
		Income (loss) before income taxes			11,651				30,533			(62	)
Income tax expense (benefit)					(245,578	)			1,938
		Net income			257,229				28,595			800
Preferred dividends and discount accretion					9,166				9,103
Net income available to commonshareholders				$	248,063			$	19,492			1,173
PERFORMANCE MEASURES
	Per common share:
		Diluted income		$	4.24			$	.34			1,147
		Book value			10.99				6.75			63
		Tangible book value (2)			10.95				6.64			65
	Key performance ratios:
		Return on equity (1)(3)			64.29	%			6.57	%
		Return on assets (3)			4.93				.53
		Net interest margin (3)			3.32				3.52
		Efficiency ratio			64.19				63.36
		Equity to assets			9.91				8.42
		Tangible equity to assets (2)			9.85				8.32
		Tangible common equity to assets (2)			7.04				5.50
		Tangible common equity to risk-weighted assets (2)			13.34				8.44
ASSET QUALITY *
	Non-performing loans			$	26,088			$	115,001
	Foreclosed properties				4,467				26,958
		Total non-performing assets (NPAs)			30,555				141,959
	Allowance for loan losses				80,372				107,642
	Net charge-offs				89,265				55,326
	Allowance for loan losses to loans				1.88	%			2.60	%
	Net charge-offs to average loans (3)				2.84				1.80
	NPAs to loans and foreclosed properties				.72				3.41
	NPAs to total assets				.42				2.12
AVERAGE BALANCES ($ in millions)
	Loans			$	4,234			$	4,157			2
	Investment securities				2,160				2,089			3
	Earning assets				6,590				6,569			-
	Total assets				6,974				6,894			1
	Deposits				5,972				5,890			1
	Shareholders' equity				691				580			19
	Common shares - basic (thousands)				58,443				57,826
	Common shares - diluted (thousands)				58,444				57,826
AT PERIOD END ($ in millions)
	Loans *			$	4,267			$	4,138			3
	Investment securities				2,169				2,025			7
	Total assets				7,243				6,699			8
	Deposits				6,113				5,823			5
	Shareholders' equity				852				585			46
	Common shares outstanding (thousands)				59,412				57,710

(1) Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized.

* 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
		2013												2012
(in thousands, except per share data; taxable equivalent)		Third Quarter				Second Quarter				First Quarter				Fourth Quarter				Third Quarter
Interest revenue reconciliation
Interest revenue - taxable equivalent		$	61,363			$	61,693			$	62,134			$	64,450			$	65,978
Taxable equivalent adjustment			(370	)			(368	)			(365	)			(381	)			(419	)
Interest revenue (GAAP)		$	60,993			$	61,325			$	61,769			$	64,069			$	65,559
Net interest revenue reconciliation
Net interest revenue - taxable equivalent		$	54,338			$	54,562			$	54,659			$	56,028			$	57,371
Taxable equivalent adjustment			(370	)			(368	)			(365	)			(381	)			(419	)
Net interest revenue (GAAP)		$	53,968			$	54,194			$	54,294			$	55,647			$	56,952
Total revenue reconciliation
Total operating revenue		$	65,482			$	22,374			$	56,485			$	56,789			$	55,635
Taxable equivalent adjustment			(370	)			(368	)			(365	)			(381	)			(419	)
Total revenue (GAAP)		$	65,112			$	22,006			$	56,120			$	56,408			$	55,216
Income (loss) before taxes reconciliation
Income (loss) before taxes		$	25,385			$	(26,449	)		$	12,715			$	6,063			$	10,852
Taxable equivalent adjustment			(370	)			(368	)			(365	)			(381	)			(419	)
Income (loss) before taxes (GAAP)		$	25,015			$	(26,817	)		$	12,350			$	5,682			$	10,433
Income tax expense (benefit) reconciliation
Income tax expense (benefit)		$	9,885			$	(256,413	)		$	950			$	802			$	284
Taxable equivalent adjustment			(370	)			(368	)			(365	)			(381	)			(419	)
Income tax expense (benefit) (GAAP)		$	9,515			$	(256,781	)		$	585			$	421			$	(135	)
Book value per common share reconciliation
Tangible book value per common share		$	10.95			$	10.82			$	6.76			$	6.57			$	6.64
Effect of goodwill and other intangibles			.04				.08				.09				.10				.11
Book value per common share (GAAP)		$	10.99			$	10.90			$	6.85			$	6.67			$	6.75
Average equity to assets reconciliation
Tangible common equity to assets			9.02	%			8.79	%			5.66	%			5.67	%			5.73	%
Effect of preferred equity			2.74				2.74				2.87				2.88				2.93
Tangible equity to assets			11.76				11.53				8.53				8.55				8.66
Effect of goodwill and other intangibles			.04				.04				.07				.08				.09
Equity to assets (GAAP)			11.80	%			11.57	%			8.60	%			8.63	%			8.75	%
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets			13.34	%			13.16	%			8.45	%			8.26	%			8.44	%
Effect of other comprehensive income			.49				.29				.49				.51				.36
Effect of deferred tax limitation			(4.72	)			(4.99	)			-				-				-
Effect of trust preferred			1.09				1.11				1.15				1.15				1.17
Effect of preferred equity			4.01				4.11				4.22				4.24				4.29
Tier I capital ratio (Regulatory)			14.21	%			13.68	%			14.31	%			14.16	%			14.26	%

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information
			For the Nine Months Ended September 30,
(in thousands, except per share data; taxable equivalent)			2013				2012
Interest revenue reconciliation
Interest revenue - taxable equivalent			$	185,190			$	202,979
Taxable equivalent adjustment				(1,103	)			(1,309	)
	Interest revenue (GAAP)		$	184,087			$	201,670
Net interest revenue reconciliation
Net interest revenue - taxable equivalent			$	163,559			$	173,071
Taxable equivalent adjustment				(1,103	)			(1,309	)
	Net interest revenue (GAAP)		$	162,456			$	171,762
Total revenue reconciliation
Total operating revenue			$	144,341			$	166,581
Taxable equivalent adjustment				(1,103	)			(1,309	)
	Total revenue (GAAP)		$	143,238			$	165,272
Income (loss) before taxes reconciliation
Income (loss) before taxes			$	11,651			$	30,533
Taxable equivalent adjustment				(1,103	)			(1,309	)
	Income (loss) before taxes (GAAP)		$	10,548			$	29,224
Income tax expense (benefit) reconciliation
Income tax expense (benefit)			$	(245,578	)		$	1,938
Taxable equivalent adjustment				(1,103	)			(1,309	)
	Income tax expense (benefit) (GAAP)		$	(246,681	)		$	629
Book value per common share reconciliation
Tangible book value per common share			$	10.95			$	6.64
Effect of goodwill and other intangibles				.04				.11
	Book value per common share (GAAP)		$	10.99			$	6.75
Average equity to assets reconciliation
Tangible common equity to assets				7.04	%			5.50	%
Effect of preferred equity				2.81				2.82
	Tangible equity to assets			9.85				8.32
Effect of goodwill and other intangibles				.06				.10
	Equity to assets (GAAP)			9.91	%			8.42	%
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets				13.34	%			8.44	%
Effect of other comprehensive income				.49				.36
Effect of deferred tax limitation				(4.72	)			-
Effect of trust preferred				1.09				1.17
Effect of preferred equity				4.01				4.29
	Tier I capital ratio (Regulatory)			14.21	%			14.26	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
				2013									2012
(in millions)				Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
LOANS BY CATEGORY
Owner occupied commercial RE				$	1,129		$	1,119		$	1,130		$	1,131		$	1,126
Income producing commercial RE					614			629			674			682			693
Commercial & industrial					457			437			454			458			460
Commercial construction					137			133			152			155			161
		Total commercial			2,337			2,318			2,410			2,426			2,440
Residential mortgage					888			876			850			829			833
Home equity lines of credit					421			402			396			385			341
Residential construction					318			332			372			382			389
Consumer installment					303			261			166			153			135
		Total loans		$	4,267		$	4,189		$	4,194		$	4,175		$	4,138
LOANS BY MARKET
North Georgia				$	1,262		$	1,265		$	1,363		$	1,364		$	1,383
Atlanta MSA					1,246			1,227			1,262			1,250			1,238
North Carolina					575			576			575			579			579
Coastal Georgia					421			397			398			400			380
Gainesville MSA					253			256			259			261			256
East Tennessee					277			282			282			283			283
South Carolina					47			34			-			-			-
Other (2)					186			152			55			38			19
		Total loans		$	4,267		$	4,189		$	4,194		$	4,175		$	4,138
RESIDENTIAL CONSTRUCTION
Dirt loans
	Acquisition & development			$	40		$	42		$	57		$	62		$	71
	Land loans				35			36			42			46			41
	Lot loans				167			173			188			193			196
		Total			242			251			287			301			308
House loans
	Spec				30			34			40			41			44
	Sold				46			47			45			40			37
		Total			76			81			85			81			81
Total residential construction				$	318		$	332		$	372		$	382		$	389

(1) Excludes total loans of $23.3 million, $25.7 million, $28.3 million, $33.4 million and $37.0 million as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End (1)
				2013						2012
(in millions)				Third Quarter			Second Quarter			Third Quarter			Linked Quarter Change				Year over Year Change
LOANS BY CATEGORY
Owner occupied commercial RE				$	1,129		$	1,119		$	1,126		$	10			$	3
Income producing commercial RE					614			629			693			(15	)			(79	)
Commercial & industrial					457			437			460			20				(3	)
Commercial construction					137			133			161			4				(24	)
		Total commercial			2,337			2,318			2,440			19				(103	)
Residential mortgage					888			876			833			12				55
Home equity lines of credit					421			402			341			19				80
Residential construction					318			332			389			(14	)			(71	)
Consumer installment					303			261			135			42				168
		Total loans		$	4,267		$	4,189		$	4,138			78				129
LOANS BY MARKET
North Georgia				$	1,262		$	1,265		$	1,383			(3	)			(121	)
Atlanta MSA					1,246			1,227			1,238			19				8
North Carolina					575			576			579			(1	)			(4	)
Coastal Georgia					421			397			380			24				41
Gainesville MSA					253			256			256			(3	)			(3	)
East Tennessee					277			282			283			(5	)			(6	)
South Carolina					47			34			-			13				47
Other (2)					186			152			19			34				167
		Total loans		$	4,267		$	4,189		$	4,138			78				129
RESIDENTIAL CONSTRUCTION
	Dirt loans
	Acquisition & development			$	40		$	42		$	71			(2	)			(31	)
	Land loans				35			36			41			(1	)			(6	)
	Lot loans				167			173			196			(6	)			(29	)
		Total			242			251			308			(9	)			(66	)
House loans
	Spec				30			34			44			(4	)			(14	)
	Sold				46			47			37			(1	)			9
		Total			76			81			81			(5	)			(5	)
Total residential construction				$	318		$	332		$	389			(14	)			(71	)

(1) Excludes total loans of $23.3 million, $25.7 million, $28.3 million, $33.4 million and $37.0 million as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank. (2) Includes purchased indirect auto loans that are not assigned to a geographic region.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
			Third Quarter 2013
			Non-performing				Foreclosed				Total
(in thousands)			Loans				Properties				NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE			$	6,358			$	591			$	6,949
Income producing CRE				1,657				139				1,796
Commercial & industrial				609				-				609
Commercial construction				343				376				719
	Total commercial			8,967				1,106				10,073
Residential mortgage				11,335				1,679				13,014
Home equity lines of credit				1,169				475				1,644
Residential construction				4,097				1,207				5,304
Consumer installment				520				-				520
	Total NPAs		$	26,088			$	4,467			$	30,555
	Balance as a % of Unpaid Principal			61.6	%			41.5	%			57.6	%
NONPERFORMING ASSETS BY MARKET
North Georgia			$	13,652			$	1,726			$	15,378
Atlanta MSA				3,096				1,026				4,122
North Carolina				5,680				762				6,442
Coastal Georgia				995				928				1,923
Gainesville MSA				1,036				-				1,036
East Tennessee				1,629				25				1,654
South Carolina				-				-				-
Other (3)				-				-				-
	Total NPAs		$	26,088			$	4,467			$	30,555
NONPERFORMING ASSETS ACTIVITY
Beginning Balance			$	27,864			$	3,936			$	31,800
Loans placed on non-accrual				9,959				-				9,959
Payments received				(3,601	)			-				(3,601	)
Loan charge-offs				(5,395	)			-				(5,395	)
Foreclosures				(2,739	)			2,739				-
Capitalized costs				-				7				7
Property sales				-				(2,534	)			(2,534	)
Write downs				-				(329	)			(329	)
Net gains (losses) on sales				-				648				648
	Ending Balance		$	26,088			$	4,467			$	30,555
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
			Second Quarter 2013
			Non-performing				Foreclosed				Total
(in thousands)			Loans				Properties				NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE			$	5,283			$	547			$	5,830
Income producing CRE				1,954				-				1,954
Commercial & industrial				548				-				548
Commercial construction				504				376				880
	Total commercial			8,289				923				9,212
Residential mortgage				12,847				1,303				14,150
Home equity lines of credit				1,491				140				1,631
Residential construction				4,838				1,570				6,408
Consumer installment				399				-				399
	Total NPAs		$	27,864			$	3,936			$	31,800
	Balance as a % of Unpaid Principal			62.6	%			31.6	%			55.8	%
NONPERFORMING ASSETS BY MARKET
North Georgia			$	12,830			$	1,617			$	14,447
Atlanta MSA				3,803				1,197				5,000
North Carolina				6,512				295				6,807
Coastal Georgia				2,588				627				3,215
Gainesville MSA				1,008				-				1,008
East Tennessee				1,123				200				1,323
South Carolina				-				-				-
Other (3)				-				-				-
	Total NPAs		$	27,864			$	3,936			$	31,800
NONPERFORMING ASSETS ACTIVITY
Beginning Balance			$	96,006			$	16,734			$	112,740
Loans placed on non-accrual				13,200				-				13,200
Payments received				(47,937	)			-				(47,937	)
Loan charge-offs				(23,972	)			-				(23,972	)
Foreclosures				(9,433	)			9,433				-
Capitalized costs				-				55				55
Property sales				-				(17,972	)			(17,972	)
Write downs				-				(1,369	)			(1,369	)
Net gains (losses) on sales				-				(2,945	)			(2,945	)
	Ending Balance		$	27,864			$	3,936			$	31,800
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
			First Quarter 2013
			Non-performing				Foreclosed				Total
(in thousands)			Loans				Properties				NPAs
NONPERFORMING ASSETS BY CATEGORY
Owner occupied CRE			$	8,142			$	4,750			$	12,892
Income producing CRE				9,162				834				9,996
Commercial & industrial				29,545				-				29,545
Commercial construction				22,359				3,027				25,386
	Total commercial			69,208				8,611				77,819
Residential mortgage				10,901				3,463				14,364
Home equity lines of credit				916				-				916
Residential construction				14,592				4,660				19,252
Consumer installment				389				-				389
	Total NPAs		$	96,006			$	16,734			$	112,740
	Balance as a % of Unpaid Principal			66.3	%			45.0	%			62.0	%
NONPERFORMING ASSETS BY MARKET
North Georgia			$	63,210			$	6,616			$	69,826
Atlanta MSA				17,380				3,524				20,904
North Carolina				8,519				2,533				11,052
Coastal Georgia				3,523				1,449				4,972
Gainesville MSA				911				370				1,281
East Tennessee				2,463				2,242				4,705
South Carolina				-				-				-
Other (3)				-				-				-
	Total NPAs		$	96,006			$	16,734			$	112,740
NONPERFORMING ASSETS ACTIVITY
Beginning Balance			$	109,894			$	18,264			$	128,158
Loans placed on non-accrual				9,665				-				9,665
Payments received				(6,809	)			-				(6,809	)
Loan charge-offs				(10,456	)			-				(10,456	)
Foreclosures				(6,288	)			6,288				-
Capitalized costs				-				54				54
Property sales				-				(6,726	)			(6,726	)
Write downs				-				(1,041	)			(1,041	)
Net gains (losses) on sales				-				(105	)			(105	)
	Ending Balance		$	96,006			$	16,734			$	112,740
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality(1)
			Third Quarter 2013						Second Quarter 2013						First Quarter 2013
(in thousands)			Net Charge-Offs			Net Charge- Offs to Average Loans(2)			Net Charge-Offs			Net Charge- Offs to Average Loans(2)			Net Charge-Offs				Net Charge- Offs to Average Loans(2)
NET CHARGE-OFFS BY CATEGORY
Owner occupied CRE			$	1,641		.58	%		$	16,545		5.85	%		$	1,922			.69	%
Income producing CRE				216		.14				8,921		5.45				3,321			1.99
Commercial & industrial				136		.12				15,576		13.91				1,501			1.34
Commercial construction				133		.39				6,295		17.53				(4	)		(.01	)
	Total commercial			2,126		.36				47,337		7.96				6,740			1.14
Residential mortgage				693		.31				5,469		2.52				1,635			.79
Home equity lines of credit				382		.37				1,040		1.04				512			.53
Residential construction				1,072		1.31				18,506		20.91				2,973			3.22
Consumer installment				200		.28				56		.10				524			1.35
	Total		$	4,473		.42			$	72,408		6.87			$	12,384			1.21
NET CHARGE-OFFS BY MARKET
North Georgia			$	2,090		.66	%		$	59,102		17.20	%		$	4,868			1.45	%
Atlanta MSA				1,013		.33				9,986		3.21				3,295			1.07
North Carolina				704		.49				1,952		1.36				2,249			1.59
Coastal Georgia				139		.14				480		.49				821			.85
Gainesville MSA				97		.15				123		.19				430			.67
East Tennessee				359		.51				711		1.01				679			.98
South Carolina				-		-				-		-				-			-
Other (3)				71		.17				54		.24				42			.39
	Total		$	4,473		.42			$	72,408		6.87			$	12,384			1.21
(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.
(2) Annualized.
(3) Includes purchased indirect auto loans that are not assigned to a geographic region.

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (Unaudited)
					Three Months Ended							Nine Months Ended
					September 30,							September 30,
(in thousands, except per share data)					2013			2012				2013				2012
Interest revenue:
	Loans, including fees				$	50,114		$	53,868			$	151,776			$	163,805
	Investment securities, including tax exempt of $202, $225, $624 and $737					9,872			10,706				29,518				34,772
	Deposits in banks and short-term investments					1,007			985				2,793				3,093
		Total interest revenue				60,993			65,559				184,087				201,670
Interest expense:
	Deposits:
		NOW				413			447				1,286				1,587
		Money market				545			599				1,641				1,901
		Savings				37			37				109				112
		Time				2,486			4,612				8,636				15,844
			Total deposit interest expense			3,481			5,695				11,672				19,444
	Short-term borrowings					525			514				1,563				2,463
	Federal Home Loan Bank advances					16			26				65				882
	Long-term debt					3,003			2,372				8,331				7,119
		Total interest expense				7,025			8,607				21,631				29,908
		Net interest revenue				53,968			56,952				162,456				171,762
	Provision for loan losses					3,000			15,500				62,500				48,500
		Net interest revenue after provision for loan losses				50,968			41,452				99,956				123,262
Fee revenue:
	Service charges and fees					8,456			7,696				23,831				23,295
	Mortgage loan and other related fees					2,554			2,800				8,212				7,221
	Brokerage fees					1,274			709				3,104				2,331
	Securities gains, net					-			-				116				7,047
	Loss from prepayment of debt					-			-				-				(6,681	)
	Other					1,860			2,559				8,019				8,797
		Total fee revenue				14,144			13,764				43,282				42,010
		Total revenue				65,112			55,216				143,238				165,272
Operating expenses:
	Salaries and employee benefits					23,090			22,918				71,416				72,440
	Communications and equipment					3,305			3,254				9,819				9,620
	Occupancy					3,379			3,539				10,195				10,849
	Advertising and public relations					962			934				2,937				2,868
	Postage, printing and supplies					644			954				2,401				2,849
	Professional fees					2,650			2,180				7,515				6,107
	Foreclosed property					194			3,706				7,678				9,382
	FDIC assessments and other regulatory charges					2,405			2,537				7,415				7,592
	Amortization of intangibles					427			728				1,623				2,190
	Other					3,041			4,033				11,691				12,151
		Total operating expenses				40,097			44,783				132,690				136,048
		Net income before income taxes				25,015			10,433				10,548				29,224
	Income tax expense (benefit)					9,515			(135	)			(246,681	)			629
		Net income				15,500			10,568				257,229				28,595
	Preferred stock dividends and discount accretion					3,059			3,041				9,166				9,103
		Net income available to common shareholders			$	12,441		$	7,527			$	248,063			$	19,492
Earnings per common share
	Basic				$	.21		$	.13			$	4.24			$	.34
	Diluted					.21			.13				4.24				.34
Weighted average common shares outstanding
	Basic					59,100			57,880				58,443				57,826
	Diluted					59,202			57,880				58,444				57,826

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
(in thousands, except share and per share data)						September 30, 2013				December 31, 2012				September 30, 2012
						(unaudited)				(audited)				(audited)
ASSETS
	Cash and due from banks					$	70,986			$	66,536			$	57,270
	Interest-bearing deposits in banks						131,147				124,613				119,355
	Short-term investments						62,000				60,000				45,000
		Cash and cash equivalents					264,133				251,149				221,625
	Securities available for sale						1,963,424				1,834,593				1,761,994
	Securities held to maturity (fair value $214,651, $261,131 and $281,336)						205,613				244,184				262,648
	Mortgage loans held for sale						11,987				28,821				30,571
	Loans, net of unearned income						4,267,067				4,175,008				4,137,845
		Less allowance for loan losses					(80,372	)			(107,137	)			(107,642	)
			Loans, net				4,186,695				4,067,871				4,030,203
	Assets covered by loss sharing agreements with the FDIC						31,207				47,467				53,070
	Premises and equipment, net						165,993				168,920				170,532
	Bank owned life insurance						80,537				81,867				81,574
	Accrued interest receivable						18,199				18,659				19,133
	Goodwill and other intangible assets						3,888				5,510				6,237
	Foreclosed property						4,467				18,264				26,958
	Net deferred tax asset						269,784				-				-
	Other assets						37,366				34,954				34,690
		Total assets				$	7,243,293			$	6,802,259			$	6,699,235
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
	Deposits:
		Demand				$	1,418,782			$	1,252,605			$	1,210,703
		NOW					1,279,134				1,316,453				1,184,341
		Money market					1,197,495				1,149,912				1,126,312
		Savings					249,044				227,308				222,431
		Time:
			Less than $100,000				925,089				1,055,271				1,123,672
			Greater than $100,000				624,019				705,558				731,766
		Brokered					419,344				245,033				223,474
				Total deposits			6,112,907				5,952,140				5,822,699
	Short-term borrowings						53,769				52,574				53,243
	Federal Home Loan Bank advances						125				40,125				50,125
	Long-term debt						129,865				124,805				120,285
	Unsettled securities purchases						11,610				-				24,319
	Accrued expenses and other liabilities						82,800				51,210				43,309
		Total liabilities					6,391,076				6,220,854				6,113,980
Shareholders' equity:
	Preferred stock, $1 par value; 10,000,000 shares authorized;
		Series A; $10 stated value; 21,700 shares issued and outstanding					217				217				217
		Series B; $1,000 stated value; 180,000 shares issued and outstanding					179,714				178,557				178,183
		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; 45,222,839, 42,423,870 and 42,393,319 shares issued and outstanding						45,223				42,424				42,393
	Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 14,189,006, 15,316,794 and 15,316,794 shares issued and outstanding						14,189				15,317				15,317
	Common stock issuable; 242,262, 133,238 and 129,270 shares						3,979				3,119				3,247
	Capital surplus						1,077,536				1,057,951				1,056,998
	Accumulated deficit						(461,090	)			(709,153	)			(711,369	)
	Accumulated other comprehensive loss						(24,164	)			(23,640	)			(16,344	)
		Total shareholders' equity					852,217				581,405				585,255
		Total liabilities and shareholders' equity				$	7,243,293			$	6,802,259			$	6,699,235

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,
					2013											2012
(dollars in thousands, taxable equivalent)					Average Balance				Interest				Avg. Rate			Average Balance				Interest			Avg. Rate
Assets:
Interest-earning assets:
	Loans, net of unearned income (1)(2)				$	4,249,892			$	50,217			4.69	%		$	4,147,220			$	53,963		5.18	%
	Taxable securities (3)					2,157,448				9,670			1.79				1,947,780				10,481		2.15
	Tax-exempt securities (1)(3)					20,913				331			6.32				22,895				368		6.43
	Federal funds sold and other interest-earning assets					186,544				1,145			2.46				227,950				1,166		2.05
		Total interest-earning assets				6,614,797				61,363			3.69				6,345,845				65,978		4.14
Non-interest-earning assets:
	Allowance for loan losses					(83,408	)										(112,034	)
	Cash and due from banks					63,890											51,705
	Premises and equipment					166,906											171,608
	Other assets (3)					407,912											190,439
		Total assets			$	7,170,097										$	6,647,563
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
	Interest-bearing deposits:
		NOW			$	1,222,334				413			.13			$	1,176,087				447		.15
		Money market				1,328,661				545			.16				1,157,655				599		.21
		Savings				248,937				37			.06				221,186				37		.07
		Time less than $100,000				952,320				1,369			.57				1,144,103				2,260		.79
		Time greater than $100,000				644,264				1,229			.76				750,828				1,876		.99
		Brokered time deposits				233,842				(112	)		(.19	)			176,114				476		1.08
			Total interest-bearing deposits			4,630,358				3,481			.30				4,625,973				5,695		.49
		Federal funds purchased and other borrowings				67,292				525			3.10				55,994				514		3.65
		Federal Home Loan Bank advances				32,082				16			.20				44,473				26		.23
		Long-term debt				144,601				3,003			8.24				120,276				2,372		7.85
			Total borrowed funds			243,975				3,544			5.76				220,743				2,912		5.25
			Total interest-bearing liabilities			4,874,333				7,025			.57				4,846,716				8,607		.71
Non-interest-bearing liabilities:
	Non-interest-bearing deposits					1,356,792											1,163,471
	Other liabilities					93,247											55,607
		Total liabilities				6,324,372											6,065,794
Shareholders' equity						845,725											581,769
		Total liabilities and shareholders' equity			$	7,170,097										$	6,647,563
Net interest revenue									$	54,338										$	57,371
Net interest-rate spread													3.12	%									3.43	%
Net interest margin (4)													3.26	%									3.60	%
(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized losses of $10.6 million in 2013 and pretax unrealized gains of $22.9 million in 2012 are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Nine Months Ended September 30,
					2013											2012
(dollars in thousands, taxable equivalent)					Average Balance				Interest				Avg. Rate			Average Balance				Interest			Avg. Rate
Assets:
Interest-earning assets:
	Loans, net of unearned income (1)(2)				$	4,233,531			$	152,022			4.80	%		$	4,157,057			$	164,101		5.27	%
	Taxable securities (3)					2,138,725				28,894			1.80				2,065,112				34,035		2.20
	Tax-exempt securities (1)(3)					21,411				1,022			6.36				24,187				1,207		6.65
	Federal funds sold and other interest-earning assets					196,445				3,252			2.21				322,998				3,636		1.50
		Total interest-earning assets				6,590,112				185,190			3.76				6,569,354				202,979		4.13
Non-interest-earning assets:
	Allowance for loan losses					(100,154	)										(115,252	)
	Cash and due from banks					63,879											52,755
	Premises and equipment					168,144											173,410
	Other assets (3)					252,275											214,068
		Total assets			$	6,974,256										$	6,894,335
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
	Interest-bearing deposits:
		NOW			$	1,256,684				1,286			.14			$	1,304,159				1,587		.16
		Money market				1,297,792				1,641			.17				1,120,091				1,901		.23
		Savings				242,807				109			.06				214,280				112		.07
		Time less than $100,000				997,193				4,686			.63				1,199,563				7,806		.87
		Time greater than $100,000				670,821				4,086			.81				783,370				6,354		1.08
		Brokered time deposits				201,599				(136	)		(.09	)			162,682				1,684		1.38
			Total interest-bearing deposits			4,666,896				11,672			.33				4,784,145				19,444		.54
		Federal funds purchased and other borrowings				70,512				1,563			2.96				85,022				2,463		3.87
		Federal Home Loan Bank advances				41,352				65			.21				153,539				882		.77
		Long-term debt				131,491				8,331			8.47				120,256				7,119		7.91
			Total borrowed funds			243,355				9,959			5.47				358,817				10,464		3.90
			Total interest-bearing liabilities			4,910,251				21,631			.59				5,142,962				29,908		.78
Non-interest-bearing liabilities:
	Non-interest-bearing deposits					1,305,133											1,105,607
	Other liabilities					68,312											65,390
		Total liabilities				6,283,696											6,313,959
Shareholders' equity						690,560											580,376
		Total liabilities and shareholders' equity			$	6,974,256										$	6,894,335
Net interest revenue									$	163,559										$	173,071
Net interest-rate spread													3.17	%									3.35	%
Net interest margin (4)													3.32	%									3.52	%
(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $7.96 million in 2013 and pretax unrealized gains of $24.1 million in 2012 are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.