United Community Banks announced continuing momentum with second quarter 2016 results

OREANDA-NEWS. 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.