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United Community Banks, Inc. Announces Second Quarter Earnings

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 Measures
This 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 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 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
2016-2015
Change
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 $8,016,595
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW$1,755,726 444 .10 $1,419,142 348 .10
Money market 1,866,913 1,206 .26 1,607,665 806 .20
Savings 497,973 30 .02 335,093 26 .03
Time 1,205,066 675 .23 1,249,098 1,273 .41
Brokered time deposits 187,481 68 .15 276,073 (378)(.55)
Total interest-bearing deposits 5,513,159 2,423 .18 4,887,071 2,075 .17
Federal funds purchased and other borrowings 11,000 93 3.40 47,698 82 .69
Federal Home Loan Bank advances 589,246 983 .67 289,707 454 .63
Long-term debt 164,020 2,665 6.53 113,901 2,206 7.77
Total borrowed funds 764,266 3,741 1.97 451,306 2,742 2.44
Total interest-bearing liabilities 6,277,425 6,164 .39 5,338,377 4,817 .36
Non-interest-bearing liabilities:
Non-interest-bearing deposits 2,383,894 1,782,405
Other liabilities 96,067 90,091
Total liabilities 8,757,386 7,210,873
Shareholders' equity 1,051,167 805,722
Total liabilities and shareholders' equity$9,808,553 $8,016,595
Net interest revenue (FTE) $75,161 $61,317
Net interest-rate spread (FTE) 3.23% 3.20%
Net interest margin (FTE) (4) 3.35% 3.30%
(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 $12.3 million in 2016 and $18.9 million in 2015 are included in other assets for purposes of this presentation. (4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
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)$6,077,111 $127,529 4.22% $4,872,112 $102,946 4.26%
Taxable securities (3) 2,704,309 32,306 2.39 2,211,293 23,756 2.15
Tax-exempt securities (FTE) (1)(3) 28,590 516 3.61 20,987 555 5.29
Federal funds sold and other interest-earning assets 146,192 1,965 2.69 153,597 1,786 2.33
Total interest-earning assets (FTE) 8,956,202 162,316 3.64 7,257,989 129,043 3.58
Non-interest-earning assets:
Allowance for loan losses (67,289) (71,596)
Cash and due from banks 90,278 78,069
Premises and equipment 181,350 163,737
Other assets (3) 560,813 389,874
Total assets$9,721,354 $7,818,073
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW$1,821,100 929 .10 $1,447,370 742 .10
Money market 1,853,749 2,314 .25 1,537,678 1,479 .19
Savings 489,106 59 .02 317,814 46 .03
Time 1,232,378 1,492 .24 1,240,450 2,661 .43
Brokered time deposits 210,347 (107)(.10) 274,708 (657)(.48)
Total interest-bearing deposits 5,606,680 4,687 .17 4,818,020 4,271 .18
Federal funds purchased and other borrowings 22,953 180 1.58 41,953 180 .87
Federal Home Loan Bank advances 467,708 1,716 .74 264,584 846 .64
Long-term debt 164,720 5,350 6.53 120,782 4,812 8.03
Total borrowed funds 655,381 7,246 2.22 427,319 5,838 2.76
Total interest-bearing liabilities 6,262,061 11,933 .38 5,245,339 10,109 .39
Non-interest-bearing liabilities:
Non-interest-bearing deposits 2,315,468 1,702,140
Other liabilities 101,694 92,138
Total liabilities 8,679,223 7,039,617
Shareholders' equity 1,042,131 778,456
Total liabilities and shareholders' equity$9,721,354 $7,818,073
Net interest revenue (FTE) $150,383 $118,934
Net interest-rate spread (FTE) 3.26% 3.19%
Net interest margin (FTE) (4) 3.38% 3.30%
(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 $7.28 million in 2016 and $14.8 million in 2015 are included in other assets for purposes of this presentation. (4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

For more information: Rex S. Schuette Chief Financial Officer (706) 781-2266 Rex_Schuette@ucbi.com

Source:United Community Banks, Inc.