United Community Banks (UCB) 8-K Results of Operations and Financial Condition

Exhibit 99.1

For Immediate Release

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

UNITED COMMUNITY BANKS, INC. REPORTS
EARNINGS OF $7.6 MILLION OR EIGHT CENTS PER SHARE
FOR SECOND QUARTER 2011

• Profitable quarter driven by core earnings and lower credit losses

• Nonperforming assets continue to improve; down $19 million, or 14 percent, from last quarter to 1.60 percent of assets

• Allowance for loan losses remains strong at 3.07 percent of loans

• Core transaction deposits up 10 percent on an annualized basis

• Completed conversion of preferred stock to common and reverse stock split

BLAIRSVILLE, GA – July 28, 2011 – United Community Banks, Inc. (NASDAQ: UCBI) today reported net income of $7.6 million, or 8 cents per diluted share, for the second quarter of 2011. The year-to-date net loss of $135 million reflects the significant credit losses in the first quarter incurred in connection with the Problem Asset Disposition Plan which was announced last quarter in conjunction with the raising of $380 million in new capital.

“The de-risking of our balance sheet and capital transaction, coupled with the execution of the Problem Asset Disposition Plan in the first quarter allowed us to return to profitability much sooner than would have otherwise been feasible,” stated Jimmy Tallent, president and chief executive officer. “While we still have work to do in this difficult economic environment, our credit trends show improvement by every measure and we expect that positive trend to continue.”

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Total loans were $4.2 billion at quarter-end, down $31 million from the end of the first quarter and $710 million from a year earlier. “The $31 million decrease from last quarter is actually a very encouraging sign in that it is the smallest quarterly decrease in loan balances since the first quarter of 2008,” stated Tallent. “We believe the slowing attrition in the loan portfolio marks the approach of an inflection point upon which we can once again begin to grow our loan portfolio. We were pleased with our new loans made during the second quarter that included $136 million of loan commitments with $105 million funded of which the majority were commercial loans. Our pipeline of new business continues to gain momentum and we continue to add commercial lenders to our metro markets across our footprint. I’m encouraged by the direction in which we are heading. I can’t overemphasize the importance of restoring modest growth to our loan portfolio and growing net interest revenue.”

Taxable equivalent net interest revenue of $58.9 million was up $2.6 million from the first quarter due mostly to the impact last quarter of a $2 million interest reversal on the performing classified loans that were included in the bulk loan sale. Compared with the second quarter of 2010, net interest revenue was $2.7 million lower, primarily due to the $745 million reduction in average loan balances that was offset partially by lower rates on our deposits. Net interest margin was 3.41 percent for the second quarter of 2011, down 19 basis points from a year ago and equal to the first quarter after adding back the $2 million interest reversal in the bulk loan sale.

“Growing loans and deposits is the key to building core earnings,” Tallent commented. “We are making steady progress on the lending side and grew core transaction deposits in the second quarter by $69 million, or 10 percent, on an annualized basis. This was the tenth consecutive quarter of core deposit growth.”

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Operating fee revenue was $13.9 million in the second quarter of 2011, compared to $11.6 million a year ago and $11.8 million last quarter. Service charges and fees were $7.6 million, down $385,000 from a year ago, due primarily to lower overdraft fees resulting from regulatory changes last year that required customers to provide consent before using overdraft services. Partially offsetting this reduction in overdraft fees was an increase in ATM and debit card usage fees. Service charges and fees were up $888,000 from last quarter due to the increase in ATM and debit card usage fees. Mortgage fees of $952,000 were down $649,000 from a year ago and down $542,000 from last quarter due to the lower level of refinancing activities. Other fee revenue of $4.7 million reflected an increase of $3.3 million from a year ago and $1.8 million from the first quarter primarily due to the accelerated recognition of deferred gains relating to the ineffectiveness of terminated cash flow hedges on certain prime-based loans. Gains recognized in the second quarter were $2.8 million compared with $1.3 million in the first quarter of 2011 and $239,000 in the second quarter of 2010.

Excluding foreclosed property costs and the loss on sale of nonperforming assets in 2010, the second quarter operating expenses were $46.8 million, flat with the first quarter and $3.1 million higher than a year ago. Salary and benefit costs totaled $26.4 million and increased $2.8 million from last year and $1.5 million from first quarter. Severance costs for eliminated staff positions account for $1.2 million of the increase from both periods. Also contributing to the increase from a year ago were $717,000 in higher incentive costs, lower deferred direct loan origination costs of $518,000 and a $288,000 change in the value of our deferred compensation liability.

Foreclosed property costs for the second quarter of 2011 were $1.9 million as compared to $64.9 million last quarter and $14.5 million a year ago. For the second quarter of 2011, these costs were for maintenance of foreclosed properties. For the first quarter of 2011, foreclosed property costs included $60.6 million of write downs and losses on accelerated sales related to the asset disposition plan and $4.3 million of maintenance costs. Second quarter 2010 included $11.2 million of write downs and losses and $3.3 million for maintenance costs.

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The effective tax rate for the second quarter of 2011 was 40 percent, equal to the first quarter of 2011. The effective tax rate for the balance of 2011 will continue in the 40 percent range due to year-to-date net losses and will return to a normal range of 35 to 36 percent with expected profitability for 2012.

As of June 30, 2011, the capital ratios for United were as follows: Tier 1 Risk Based of 13.9 percent; Tier 1 Leverage of 8.7 percent; and, Total Risk Based of 16.4 percent. The quarterly average tangible equity-to-assets ratio was 11.1 percent. As of quarter-end, tangible common equity-to-assets ratio was 8.9 percent compared to the quarterly average of 4.8 percent which was distorted by the late-quarter timing of the conversion of the mandatorily convertible preferred stock that occurred late in the quarter. The quarter-end tangible common equity to assets ratio of 8.9 percent is more representative of United’s current capital strength.

“It is of course good to once again report positive earnings,” Tallent said. “The last three years have been extremely challenging in our industry, and challenges remain as the economy continues to struggle. We have laid out our strategy and now we are about the business of implementation. Our company has completed the capital transaction, de-risked our balance sheet through the Problem Asset Disposition Plan, executed the reverse stock split, and achieved profitability. We are on the right track but by no means satisfied; there is more work to do on credit quality, commercial loans, core deposits, customer service, and organic growth. We are moving forward with determination and optimism.”

Conference Call
United Community Banks will hold a conference call today, Thursday, July 28, 2011, 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 78907241. The conference call also will be webcast and can be accessed by selecting ‘Calendar of Events’ within the Investor Relations section of the company’s website at www.ucbi.com.

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About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $7.4 billion and operates 27 community banks with 106 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. The Company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the Company’s web site at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial United’s outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Risk Factors” of United Community Banks, Inc.’s annual report filed on Form 10-K with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.

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UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information

																Second
	2011						2010									Quarter			For the Six						YTD
(in thousands, except per share	Second			First			Fourth			Third			Second			2011-2010			Months Ended						2011-2010
data; taxable equivalent)	Quarter			Quarter			Quarter			Quarter			Quarter			Change			2011			2010			Change
INCOME SUMMARY
Interest revenue	$	76,931		$	75,965		$	81,215		$	84,360		$	87,699					$	152,896		$	177,548
Interest expense		17,985			19,573			21,083			24,346			26,072						37,558			54,642
Net interest revenue		58,946			56,392			60,132			60,014			61,627			(4	)%		115,338			122,906			(6	)%
Operating provision for loan losses(1)		11,000			190,000			47,750			50,500			61,500						201,000			136,500
Fee revenue (2)		13,905			11,838			12,442			12,861			11,579			20			25,743			23,245			11
Total operating revenue(1)(2)		61,851			(121,770	)		24,824			22,375			11,706						(59,919	)		9,651
Operating expenses (3)		48,728			115,271			64,918			64,906			58,308			(16	)		163,999			113,128			45
Loss on sale of nonperforming assets		—			—			—			—			45,349						—			45,349
Operating income (loss) from continuing operations before income taxes		13,123			(237,041	)		(40,094	)		(42,531	)		(91,951	)		114			(223,918	)		(148,826	)
Operating income tax expense (benefit)		5,506			(94,555	)		(16,520	)		(16,706	)		(32,419	)					(89,049	)		(54,836	)
Net operating income (loss) from continuing operations (1)(2)(3)		7,617			(142,486	)		(23,574	)		(25,825	)		(59,532	)		113			(134,869	)		(93,990	)		(43	)
Noncash goodwill impairment charges		—			—			—			(210,590	)		—						—			—
Partial reversal of fraud loss provision, net of income tax		—			—			7,179			—			—						—			—
Loss from discontinued operations, net of income tax		—			—			—			—			—						—			(101	)
Gain from sale of subsidiary, net income tax		—			—			—			—			—						—			1,266
Net income (loss)		7,617			(142,486	)		(16,395	)		(236,415	)		(59,532	)		113			(134,869	)		(92,825	)		(45	)
Preferred dividends and discount accretion		3,016			2,778			2,586			2,581			2,577						5,794			5,149
Net income (loss) available to common shareholders	$	4,601		$	(145,264	)	$	(18,981	)	$	(238,996	)	$	(62,109	)				$	(140,663	)	$	(97,974	)
PERFORMANCE MEASURES
Per common share:
Diluted operating income (loss) from continuing operations (1)(2)(3)	$	.08		$	(7.87	)	$	(1.38	)	$	(1.50	)	$	(3.29	)		102		$	(6.40	)	$	(5.25	)		(22	)
Diluted income (loss) from continuing operations		.08			(7.87	)		(1.00	)		(12.62	)		(3.29	)		102			(6.40	)		(5.25	)		(22	)
Diluted income (loss)		.08			(7.87	)		(1.00	)		(12.62	)		(3.29	)		102			(6.40	)		(5.19	)		(23	)
Book value		11.59			14.78			24.18			25.70			38.55			(70	)		11.59			38.55			(70	)
Tangible book value (5)		11.47			14.44			23.78			25.26			26.95			(57	)		11.47			26.95			(57	)
Key performance ratios:
Return on equity (4)(6)		5.34	%		(147.11	)%		(17.16	)%		(148.04	)%		(35.89	)%					(76.07	)%		(27.87	)%
Return on assets (6)		.40			(7.61	)		(.89	)		(12.47	)		(3.10	)					(3.57	)		(2.39	)
Net interest margin (6)		3.41			3.30			3.58			3.57			3.60						3.36			3.55
Operating efficiency ratio from continuing operations (2)(3)		66.88			169.08			89.45			89.38			141.60						116.28			108.48
Equity to assets		11.21			8.82			8.85			11.37			11.84						10.02			11.87
Tangible equity to assets (5)		11.13			8.73			8.75			9.19			9.26						9.94			9.32
Tangible common equity to assets (5)		4.79			5.51			6.35			6.78			6.91						5.15			7.02
Tangible common equity to risk-weighted assets (5)		14.26			6.40			9.05			9.60			9.97						14.26			9.97
ASSET QUALITY *
Non-performing loans	$	71,065		$	83,769		$	179,094		$	217,766		$	224,335					$	71,065		$	224,335
Foreclosed properties		47,584			54,378			142,208			129,964			123,910						47,584			123,910
Total non-performing assets (NPAs)		118,649			138,147			321,302			347,730			348,245						118,649			348,245
Allowance for loan losses		127,638			133,121			174,695			174,613			174,111						127,638			174,111
Operating net charge-offs(1)		16,483			231,574			47,668			49,998			61,323						248,057			117,991
Allowance for loan losses to loans		3.07	%		3.17	%		3.79	%		3.67	%		3.57	%					3.07	%		3.57	%
Operating net charge-offs to average loans (1)(6)		1.58			20.71			4.03			4.12			4.98						11.46			4.75
NPAs to loans and foreclosed properties		2.82			3.25			6.77			7.11			6.97						2.82			6.97
NPAs to total assets		1.60			1.73			4.32			4.96			4.55						1.60			4.55
AVERAGE BALANCES($ in millions)
Loans	$	4,266		$	4,599		$	4,768		$	4,896		$	5,011			(15	)	$	4,432		$	5,091			(13	)
Investment securities		2,074			1,625			1,354			1,411			1,532			35			1,851			1,525			21
Earning assets		6,924			6,902			6,680			6,676			6,854			1			6,913			6,969			(1	)
Total assets		7,624			7,595			7,338			7,522			7,704			(1	)		7,609			7,825			(3	)
Deposits		6,372			6,560			6,294			6,257			6,375			—			6,465			6,472			—
Shareholders’ equity		854			670			649			855			912			(6	)		763			929			(18	)
Common shares — basic(thousands)		25,427			18,466			18,984			18,936			18,905						21,965			18,891
Common shares — diluted(thousands)		57,543			18,466			18,984			18,936			18,905						21,965			18,891
AT PERIOD END($ in millions)
Loans *	$	4,163		$	4,194		$	4,604		$	4,760		$	4,873			(15	)	$	4,163		$	4,873			(15	)
Investment securities		2,188			1,884			1,490			1,310			1,488			47			2,188			1,488			47
Total assets		7,410			7,974			7,443			7,013			7,652			(3	)		7,410			7,652			(3	)
Deposits		6,183			6,598			6,469			5,999			6,330			(2	)		6,183			6,330			(2	)
Shareholders’ equity		860			850			636			662			904			(5	)		860			904			(5	)
Common shares outstanding(thousands)		57,469			20,903			18,937			18,887			18,856						57,469			18,856

(1)	Excludes the partial reversal of a previously established provision for fraud-related loan losses of $11.8 million, net of tax expense of $4.6 million in the fourth quarter of 2010. Operating charge-offs also exclude the $11.8 million related partial recovery of the previously charged off amount.
(2)	Excludes revenue generated by discontinued operations in the first quarter of 2010.
(3)	Excludes the goodwill impairment charge of $211 million in the third quarter of 2010 and expenses relating to discontinued operations in the first quarter of 2010.
(4)	Net loss available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss).
(5)	Excludes effect of acquisition related intangibles and associated amortization.
(6)	Annualized.
*	Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.

UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
Selected Financial Information

	2011						2010
(in thousands, except per share	Second			First			Fourth			Third			Second			For the Six Months Ended
data; taxable equivalent)	Quarter			Quarter			Quarter			Quarter			Quarter			2011			2010
Interest revenue reconciliation
Interest revenue — taxable equivalent	$	76,931		$	75,965		$	81,215		$	84,360		$	87,699		$	152,896		$	177,548
Taxable equivalent adjustment		(429	)		(435	)		(497	)		(511	)		(500	)		(864	)		(993	)
Interest revenue (GAAP)	$	76,502		$	75,530		$	80,718		$	83,849		$	87,199		$	152,032		$	176,555
Net interest revenue reconciliation
Net interest revenue — taxable equivalent	$	58,946		$	56,392		$	60,132		$	60,014		$	61,627		$	115,338		$	122,906
Taxable equivalent adjustment		(429	)		(435	)		(497	)		(511	)		(500	)		(864	)		(993	)
Net interest revenue (GAAP)	$	58,517		$	55,957		$	59,635		$	59,503		$	61,127		$	114,474		$	121,913
Provision for loan losses reconciliation
Operating provision for loan losses	$	11,000		$	190,000		$	47,750		$	50,500		$	61,500		$	201,000		$	136,500
Partial reversal of special fraud-related provision for loan loss		—			—			(11,750	)		—			—			—			—
Provision for loan losses (GAAP)	$	11,000		$	190,000		$	36,000		$	50,500		$	61,500		$	201,000		$	136,500
Total revenue reconciliation
Total operating revenue	$	61,851		$	(121,770	)	$	24,824		$	22,375		$	11,706		$	(59,919	)	$	9,651
Taxable equivalent adjustment		(429	)		(435	)		(497	)		(511	)		(500	)		(864	)		(993	)
Partial reversal of special fraud-related provision for loan loss		—			—			11,750			—			—			—			—
Total revenue (GAAP)	$	61,422		$	(122,205	)	$	36,077		$	21,864		$	11,206		$	(60,783	)	$	8,658
Expense reconciliation
Operating expense	$	48,728		$	115,271		$	64,918		$	64,906		$	103,657		$	163,999		$	158,477
Noncash goodwill impairment charge		—			—			—			210,590			—			—			—
Operating expense (GAAP)	$	48,728		$	115,271		$	64,918		$	275,496		$	103,657		$	163,999		$	158,477
Income (loss) from continuing operations before taxes reconciliation
Operating income (loss) from continuing operations before taxes	$	13,123		$	(237,041	)	$	(40,094	)	$	(42,531	)	$	(91,951	)	$	(223,918	)	$	(148,826	)
Taxable equivalent adjustment		(429	)		(435	)		(497	)		(511	)		(500	)		(864	)		(993	)
Noncash goodwill impairment charge		—			—			—			(210,590	)		—			—			—
Partial reversal of special fraud-related provision for loan loss		—			—			11,750			—			—			—			—
Income (loss) from continuing operations before taxes (GAAP)	$	12,694		$	(237,476	)	$	(28,841	)	$	(253,632	)	$	(92,451	)	$	(224,782	)	$	(149,819	)
Income tax expense (benefit) reconciliation
Operating income tax expense (benefit)	$	5,506		$	(94,555	)	$	(16,520	)	$	(16,706	)	$	(32,419	)	$	(89,049	)	$	(54,836	)
Taxable equivalent adjustment		(429	)		(435	)		(497	)		(511	)		(500	)		(864	)		(993	)
Partial reversal of special fraud-related provision for loan loss		—			—			4,571			—			—			—			—
Income tax expense (benefit) (GAAP)	$	5,077		$	(94,990	)	$	(12,446	)	$	(17,217	)	$	(32,919	)	$	(89,913	)	$	(55,829	)
Diluted earnings (loss) from continuing operations per common share reconciliation
Diluted operating earnings (loss) from continuing operations per common share	$	.08		$	(7.87	)	$	(1.38	)	$	(1.50	)	$	(3.29	)	$	(6.40	)	$	(5.25	)
Noncash goodwill impairment charge		—			—			—			(11.12	)		—			—			—
Partial reversal of special fraud-related provision for loan loss		—			—			.38			—			—			—			—
Diluted earnings (loss) from continuing operations per common share (GAAP)	$	.08		$	(7.87	)	$	(1.00	)	$	(12.62	)	$	(3.29	)	$	(6.40	)	$	(5.25	)
Book value per common share reconciliation
Tangible book value per common share	$	11.47		$	14.44		$	23.78		$	25.26		$	26.95		$	11.47		$	26.95
Effect of goodwill and other intangibles		.12			.34			.40			.44			11.60			.12			11.60
Book value per common share (GAAP)	$	11.59		$	14.78		$	24.18		$	25.70		$	38.55		$	11.59		$	38.55
Efficiency ratio from continuing operations reconciliation
Operating efficiency ratio from continuing operations		66.88	%		169.08	%		89.45	%		89.38	%		141.60	%		116.28	%		108.48	%
Noncash goodwill impairment charge		—			—			—			290.00			—			—			—
Efficiency ratio from continuing operations (GAAP)		66.88	%		169.08	%		89.45	%		379.38	%		141.60	%		116.28	%		108.48	%
Average equity to assets reconciliation
Tangible common equity to assets		4.79	%		5.51	%		6.35	%		6.78	%		6.91	%		5.15	%		7.02	%
Effect of preferred equity		6.34			3.22			2.40			2.41			2.35			4.79			2.30
Tangible equity to assets		11.13			8.73			8.75			9.19			9.26			9.94			9.32
Effect of goodwill and other intangibles		.08			.09			.10			2.18			2.58			.08			2.55
Equity to assets (GAAP)		11.21	%		8.82	%		8.85	%		11.37	%		11.84	%		10.02	%		11.87	%
Actual tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets		14.26	%		6.40	%		9.05	%		9.60	%		9.97	%		14.26	%		9.97	%
Effect of other comprehensive income		(.65	)		(.58	)		(.62	)		(.81	)		(.87	)		(.65	)		(.87	)
Effect of deferred tax limitation		(5.04	)		(5.10	)		(3.34	)		(2.94	)		(2.47	)		(5.04	)		(2.47	)
Effect of trust preferred		1.14			1.12			1.06			1.06			1.03			1.14			1.03
Effect of preferred equity		4.17			5.97			3.52			3.51			3.41			4.17			3.41
Tier I capital ratio (Regulatory)		13.88	%		7.81	%		9.67	%		10.42	%		11.07	%		13.88	%		11.07	%
Net charge-offs reconciliation
Operating net charge-offs	$	16,483		$	231,574		$	47,668		$	49,998		$	61,323		$	248,057		$	117,991
Subsequent partial recovery of fraud-related charge-off		—			—			(11,750	)		—			—			—			—
Net charge-offs (GAAP)	$	16,483		$	231,574		$	35,918		$	49,998		$	61,323		$	248,057		$	117,991
Net charge-offs to average loans reconciliation
Operating net charge-offs to average loans		1.58	%		20.71	%		4.03	%		4.12	%		4.98	%		11.46	%		4.75	%
Subsequent partial recovery of fraud-related charge-off		—			—			(1.00	)		—			—			—			—
Net charge-offs to average loans (GAAP)		1.58	%		20.71	%		3.03	%		4.12	%		4.98	%		11.46	%		4.75	%

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End⁽¹⁾

	2011				2010						Linked			Year over
	Second		First		Fourth		Third		Second		Quarter			Year
(in millions)	Quarter		Quarter		Quarter		Quarter		Quarter		Change			Change
LOANS BY CATEGORY
Commercial (sec. by RE)	$	1,742	$	1,692	$	1,761	$	1,781	$	1,780	$	50		$	(38	)
Commercial construction		195		213		297		310		342		(18	)		(147	)
Commercial & industrial		428		431		441		456		441		(3	)		(13	)
Total commercial		2,365		2,336		2,499		2,547		2,563		29			(198	)
Residential construction		502		550		695		764		820		(48	)		(318	)
Residential mortgage		1,177		1,187		1,279		1,316		1,356		(10	)		(179	)
Consumer / installment		119		121		131		133		134		(2	)		(15	)
Total loans	$	4,163	$	4,194	$	4,604	$	4,760	$	4,873		(31	)		(710	)
LOANS BY MARKET
Atlanta MSA	$	1,188	$	1,179	$	1,310	$	1,365	$	1,373		9			(185	)
Gainesville MSA		275		282		312		316		343		(7	)		(68	)
North Georgia		1,500		1,531		1,689		1,755		1,808		(31	)		(308	)
Western North Carolina		626		640		702		719		738		(14	)		(112	)
Coastal Georgia		325		312		335		345		356		13			(31	)
East Tennessee		249		250		256		260		255		(1	)		(6	)
Total loans	$	4,163	$	4,194	$	4,604	$	4,760	$	4,873		(31	)		(710	)
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development	$	105	$	116	$	174	$	190	$	214		(11	)		(109	)
Land loans		62		69		99		104		110		(7	)		(48	)
Lot loans		218		228		275		303		311		(10	)		(93	)
Total		385		413		548		597		635		(28	)		(250	)
House loans
Spec		74		88		97		109		125		(14	)		(51	)
Sold		43		49		50		58		60		(6	)		(17	)
Total		117		137		147		167		185		(20	)		(68	)
Total residential construction	$	502	$	550	$	695	$	764	$	820		(48	)		(318	)
RESIDENTIAL CONSTRUCTION - ATLANTA MSA
Dirt loans
Acquisition & development	$	20	$	22	$	30	$	34	$	40		(2	)		(20	)
Land loans		16		19		23		27		32		(3	)		(16	)
Lot loans		22		24		32		45		39		(2	)		(17	)
Total		58		65		85		106		111		(7	)		(53	)
House loans
Spec		30		34		38		42		48		(4	)		(18	)
Sold		9		11		10		11		10		(2	)		(1	)
Total		39		45		48		53		58		(6	)		(19	)
Total residential construction	$	97	$	110	$	133	$	159	$	169		(13	)		(72	)

⁽¹⁾ Excludes total loans of $70.8 million, $63.3 million, $68.2 million, $75.2 million and $80.8 million as of June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and June 30, 2010, respectively, that are covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality⁽¹⁾

	Second Quarter 2011									First Quarter 2011 (2)									Fourth Quarter 2010
	Non-performing			Foreclosed			Total			Non-performing			Foreclosed			Total			Non-performing			Foreclosed			Total
(in thousands)	Loans			Properties			NPAs			Loans			Properties			NPAs			Loans			Properties			NPAs
NPAs BY CATEGORY
Commercial (sec. by RE)	$	17,764		$	6,796		$	24,560		$	20,648		$	7,886		$	28,534		$	44,927		$	23,659		$	68,586
Commercial construction		2,782			6,764			9,546			3,701			11,568			15,269			21,374			17,808			39,182
Commercial & industrial		1,998			—			1,998			2,198			—			2,198			5,611			—			5,611
Total commercial		22,544			13,560			36,104			26,547			19,454			46,001			71,912			41,467			113,379
Residential construction		22,643			24,968			47,611			32,038			25,807			57,845			54,505			78,231			132,736
Residential mortgage		24,809			9,056			33,865			23,711			9,117			32,828			51,083			22,510			73,593
Consumer / installment		1,069			—			1,069			1,473			—			1,473			1,594			—			1,594
Total NPAs	$	71,065		$	47,584		$	118,649		$	83,769		$	54,378		$	138,147		$	179,094		$	142,208		$	321,302
Balance as a % of Unpaid Principal		64.5	%		32.6	%		46.3	%		57.3	%		30.3	%		42.4	%		67.2	%		64.4	%		65.9	%
NPAs BY MARKET
Atlanta MSA	$	14,700		$	11,239		$	25,939		$	21,501		$	16,913		$	38,414		$	48,289		$	41,154		$	89,443
Gainesville MSA		4,505			3,174			7,679			4,332			2,157			6,489			5,171			9,273			14,444
North Georgia		28,117			21,278			49,395			30,214			23,094			53,308			83,551			66,211			149,762
Western North Carolina		15,153			8,953			24,106			18,849			7,802			26,651			25,832			11,553			37,385
Coastal Georgia		5,357			2,564			7,921			5,847			3,781			9,628			11,145			11,901			23,046
East Tennessee		3,233			376			3,609			3,026			631			3,657			5,106			2,116			7,222
Total NPAs	$	71,065		$	47,584		$	118,649		$	83,769		$	54,378		$	138,147		$	179,094		$	142,208		$	321,302
NPA ACTIVITY
Beginning Balance	$	83,769		$	54,378		$	138,147		$	179,094		$	142,208		$	321,302		$	217,766		$	129,964		$	347,730
Loans placed on non-accrual		35,911			—			35,911			54,730			—			54,730			81,023			—			81,023
Payments received		(7,702	)		—			(7,702	)		(3,550	)		—			(3,550	)		(7,250	)		—			(7,250	)
Loan charge-offs		(18,888	)		—			(18,888	)		(43,969	)		—			(43,969	)		(47,913	)		—			(47,913	)
Foreclosures		(22,025	)		22,025			—			(17,052	)		17,052			—			(61,432	)		61,432			—
Capitalized costs		—			20			20			—			270			270			—			170			170
Note / property sales		—			(28,939	)		(28,939	)		(11,400	)		(44,547	)		(55,947	)		(3,100	)		(33,509	)		(36,609	)
Loans held for sale		—			—			—			(74,084	)		—			(74,084	)		—			—			—
Write downs		—			(3,118	)		(3,118	)		—			(48,585	)		(48,585	)		—			(8,031	)		(8,031	)
Net losses on sales		—			3,218			3,218			—			(12,020	)		(12,020	)		—			(7,818	)		(7,818	)
Ending Balance	$	71,065		$	47,584		$	118,649		$	83,769		$	54,378		$	138,147		$	179,094		$	142,208		$	321,302

	Second Quarter 2011 (3)					First Quarter 2011(3)					Fourth Quarter 2010(4)
			Net Charge-					Net Charge-					Net Charge-
			Offs to					Offs to					Offs to
	Net		Average			Net		Average			Net		Average
(in thousands)	Charge-Offs		Loans (5)			Charge-Offs		Loans (5)			Charge-Offs		Loans (5)
NET CHARGE-OFFS BY CATEGORY
Commercial (sec. by RE)	$	3,259		.76	%	$	48,607		11.07	%	$	6,493		1.45	%
Commercial construction		869		1.70			49,715		76.95			3,924		5.12
Commercial & industrial		523		.49			4,040		3.64			2,891		2.54
Total commercial		4,651		.79			102,362		16.66			13,308		2.09
Residential construction		6,629		5.04			92,138		58.20			24,497		13.28
Residential mortgage		4,589		1.55			36,383		11.62			9,176		2.80
Consumer / installment		614		2.04			691		2.16			687		2.06
Total	$	16,483		1.58		$	231,574		20.71		$	47,668		4.03
NET CHARGE-OFFS BY MARKET
Atlanta MSA	$	2,920		.99	%	$	56,489		17.86	%	$	15,222		4.48	%
Gainesville MSA		2,318		3.36			8,616		11.93			3,434		4.37
North Georgia		6,575		1.72			123,305		29.66			18,537		4.26
Western North Carolina		3,522		2.21			26,447		15.61			5,154		2.87
Coastal Georgia		815		1.02			12,003		14.80			3,670		4.27
East Tennessee		333		.54			4,714		7.47			1,651		2.53
Total	$	16,483		1.58		$	231,574		20.71		$	47,668		4.03

(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)	The NPA activity shown for the first quarter of 2011 is presented with all activity related to loans transferred to the loans held for sale classification on one line as if those loans were transferred to held for sale at the beginning of the period.
(3)	Includes charge-offs on loans related to United’s previously announced asset disposition plan. Such charge-offs severely distorted charge off rates for the first and second quarters of 2011. A separate schedule has been included in this earnings release presenting the components of net charge-offs by loan category and geographic market for the first and second quarters of 2011.
(4)	North Carolina residential construction net charge-offs for the fourth quarter of 2010 exclude a $11.8 million partial recovery of a 2007 fraud-related charge-off.
(5)	Annualized.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Net Charge-Off Summary⁽¹⁾

	Second Quarter 2011							First Quarter 2011						First Six Months 2011
			Problem							Problem						Problem
			Asset							Asset						Asset
			Disposition							Disposition						Disposition
(in thousands)	Other		Plan			Total		Other		Plan		Total		Other		Plan		Total
BY CATEGORY
Commercial (sec. by RE)	$	4,972	$	(1,713	)	$	3,259	$	2,842	$	45,765	$	48,607	$	7,814	$	44,052	$	51,866
Commercial construction		2,201		(1,332	)		869		1,146		48,569		49,715		3,347		47,237		50,584
Commercial & industrial		639		(116	)		523		513		3,527		4,040		1,152		3,411		4,563
Total commercial		7,812		(3,161	)		4,651		4,501		97,861		102,362		12,313		94,700		107,013
Residential construction		9,471		(2,842	)		6,629		10,643		81,495		92,138		20,114		78,653		98,767
Residential mortgage		5,844		(1,255	)		4,589		4,989		31,394		36,383		10,833		30,139		40,972
Consumer / installment		625		(11	)		614		383		308		691		1,008		297		1,305
Total	$	23,752	$	(7,269	)	$	16,483	$	20,516	$	211,058	$	231,574	$	44,268	$	203,789	$	248,057
BY MARKET
Atlanta MSA	$	4,875	$	(1,955	)	$	2,920	$	3,296	$	53,193	$	56,489	$	8,171	$	51,238	$	59,409
Gainesville MSA		2,576		(258	)		2,318		954		7,662		8,616		3,530		7,404		10,934
North Georgia		10,360		(3,785	)		6,575		8,544		114,761		123,305		18,904		110,976		129,880
Western North Carolina		4,263		(741	)		3,522		6,749		19,698		26,447		11,012		18,957		29,969
Coastal Georgia		1,206		(391	)		815		341		11,662		12,003		1,547		11,271		12,818
East Tennessee		472		(139	)		333		632		4,082		4,714		1,104		3,943		5,047
Total	$	23,752	$	(7,269	)	$	16,483	$	20,516	$	211,058	$	231,574	$	44,268	$	203,789	$	248,057

⁽¹⁾ This schedule presents net charge-offs by loan type and geographic market separated between those charge offs related to United’s first quarter 2011 Problem Asset Disposition Plan including losses on loans sold in the bulk loan sale transaction that closed on April 18, 2011 and all other charge-offs. The charge-offs on the bulk loan sale recognized in the first quarter were estimated based on indicative bids from prospective buyers. Actual losses were less than estimated resulting in an adjustment to the loss in the second quarter.

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Operations(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except per share data)	2011			2010			2011			2010
Interest revenue:
Loans, including fees	$	60,958		$	70,611		$	122,065		$	142,826
Investment securities, including tax exempt of $251, $295, $510 and $606		14,792			15,829			28,396			32,032
Federal funds sold, commercial paper and deposits in banks		752			759			1,571			1,697
Total interest revenue		76,502			87,199			152,032			176,555
Interest expense:
Deposits:
NOW		1,036			1,745			2,360			3,599
Money market		1,499			1,829			3,527			3,586
Savings		64			83			141			167
Time		10,995			17,718			22,727			37,916
Total deposit interest expense		13,594			21,375			28,755			45,268
Federal funds purchased, repurchase agreements and other short-term borrowings		1,074			1,056			2,116			2,094
Federal Home Loan Bank advances		570			974			1,160			1,951
Long-term debt		2,747			2,667			5,527			5,329
Total interest expense		17,985			26,072			37,558			54,642
Net interest revenue		58,517			61,127			114,474			121,913
Provision for loan losses		11,000			61,500			201,000			136,500
Net interest revenue after provision for loan losses		47,517			(373	)		(86,526	)		(14,587	)
Fee revenue:
Service charges and fees		7,608			7,993			14,328			15,440
Mortgage loan and other related fees		952			1,601			2,446			3,080
Brokerage fees		691			586			1,368			1,153
Securities gains, net		783			—			838			61
Loss from prepayment of debt		(791	)		—			(791	)		—
Other		4,662			1,399			7,554			3,511
Total fee revenue		13,905			11,579			25,743			23,245
Total revenue		61,422			11,206			(60,783	)		8,658
Operating expenses:
Salaries and employee benefits		26,436			23,590			51,360			47,950
Communications and equipment		3,378			3,511			6,722			6,784
Occupancy		3,805			3,836			7,879			7,650
Advertising and public relations		1,317			1,352			2,295			2,395
Postage, printing and supplies		1,085			765			2,203			1,990
Professional fees		2,350			2,178			5,680			4,121
Foreclosed property		1,891			14,540			66,790			25,353
FDIC assessments and other regulatory charges		3,644			3,566			9,057			7,192
Amortization of intangibles		760			794			1,522			1,596
Other		4,062			4,176			10,491			8,097
Loss on sale of nonperforming assets		—			45,349			—			45,349
Total operating expenses		48,728			103,657			163,999			158,477
Income (loss) from continuing operations before income taxes		12,694			(92,451	)		(224,782	)		(149,819	)
Income tax expense (benefit)		5,077			(32,919	)		(89,913	)		(55,829	)
Net income (loss) from continuing operations		7,617			(59,532	)		(134,869	)		(93,990	)
Loss from discontinued operations, net of income taxes		—			—			—			(101	)
Gain from sale of subsidiary, net of income taxes and selling costs		—			—			—			1,266
Net income (loss)		7,617			(59,532	)		(134,869	)		(92,825	)
Preferred stock dividends and discount accretion		3,016			2,577			5,794			5,149
Net income (loss) available to common shareholders	$	4,601		$	(62,109	)	$	(140,663	)	$	(97,974	)
Earnings (loss) from continuing operations per common share — Basic	$	.18		$	(3.29	)	$	(6.40	)	$	(5.25	)
Earnings (loss) from continuing operations per common share — Diluted		.08			(3.29	)		(6.40	)		(5.25	)
Earnings (loss) per common share — Basic		.18			(3.29	)		(6.40	)		(5.19	)
Earnings (loss) per common share — Diluted		.08			(3.29	)		(6.40	)		(5.19	)
Weighted average common shares outstanding — Basic		25,427			18,905			21,965			18,891
Weighted average common shares outstanding — Diluted		57,543			18,905			21,965			18,891

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet

	June 30,			December 31,			June 30,
(in thousands, except share and per share data)	2011			2010			2010
	(unaudited)			(audited)			(unaudited)
ASSETS
Cash and due from banks	$	163,331		$	95,994		$	115,088
Interest-bearing deposits in banks		41,863			111,901			105,183
Federal funds sold, commercial paper and short-term investments		174,996			441,562			148,227
Cash and cash equivalents		380,190			649,457			368,498
Securities available for sale		1,816,613			1,224,417			1,165,776
Securities held to maturity (fair value $379,231, 267,988 and $327,497)		371,578			265,807			322,148
Mortgage loans held for sale		19,406			35,908			22,705
Loans, net of unearned income		4,163,447			4,604,126			4,873,030
Less allowance for loan losses		127,638			174,695			174,111
Loans, net		4,035,809			4,429,431			4,698,919
Assets covered by loss sharing agreements with the FDIC		95,726			131,887			156,611
Premises and equipment, net		178,208			178,239			180,125
Accrued interest receivable		21,291			24,299			29,650
Goodwill and other intangible assets		9,922			11,446			223,600
Foreclosed property		47,584			142,208			123,910
Net deferred tax asset		261,268			166,937			111,485
Other assets		172,074			183,160			249,057
Total assets	$	7,409,669		$	7,443,196		$	7,652,484
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand	$	899,017		$	793,414		$	779,934
NOW		1,306,109			1,424,781			1,326,861
Money market		989,600			891,252			756,370
Savings		197,927			183,894			185,176
Time:
Less than $100,000		1,508,444			1,496,700			1,575,211
Greater than $100,000		981,154			1,002,359			1,093,975
Brokered		300,964			676,772			611,985
Total deposits		6,183,215			6,469,172			6,329,512
Federal funds purchased, repurchase agreements, and other short-term borrowings		103,666			101,067			104,127
Federal Home Loan Bank advances		40,625			55,125			104,138
Long-term debt		150,186			150,146			150,106
Unsettled securities purchases		35,634			—			20,941
Accrued expenses and other liabilities		36,368			32,171			39,243
Total liabilities		6,549,694			6,807,681			6,748,067
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		176,392			175,711			175,050
Series D; $1,000 stated value; 16,613 shares issued and outstanding		16,613			—			—
Common stock, $1 par value; 100,000,000 shares authorized; 41,554,874, 18,937,001 and 18,856,185 shares issued and outstanding		41,555			18,937			18,856
Common stock, non-voting, $1 par value; 30,000,000 shares authorized; 15,914,209 shares issued and outstanding		15,914			—			—
Common stock issuable; 83,575, 67,287 and 56,954 shares		3,574			3,894			3,898
Capital surplus		1,051,607			741,244			739,261
Accumulated deficit		(476,230	)		(335,567	)		(77,590	)
Accumulated other comprehensive income		30,333			31,079			44,725
Total shareholders’ equity		859,975			635,515			904,417
Total liabilities and shareholders’ equity	$	7,409,669		$	7,443,196		$	7,652,484

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,

	2011								2010
	Average					Avg.			Average					Avg.
(dollars in thousands, taxable equivalent)	Balance			Interest		Rate			Balance			Interest		Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)	$	4,266,211		$	60,958		5.73	%	$	5,010,937		$	70,640		5.65	%
Taxable securities (3)		2,048,683			14,541		2.84			1,503,162			15,534		4.13
Tax-exempt securities (1)(3)		25,044			411		6.56			28,920			482		6.67
Federal funds sold and other interest-earning assets		583,832			1,021		.70			311,475			1,043		1.34
Total interest-earning assets		6,923,770			76,931		4.45			6,854,494			87,699		5.13
Non-interest-earning assets:
Allowance for loan losses		(139,744	)							(193,998	)
Cash and due from banks		119,801								100,931
Premises and equipment		178,949								181,064
Other assets (3)		540,943								761,803
Total assets	$	7,623,719							$	7,704,294
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	1,310,441			1,036		.32		$	1,325,099			1,745		.53
Money market		979,432			1,499		.61			746,039			1,829		.98
Savings		195,946			64		.13			186,628			83		.18
Time less than $100,000		1,541,909			4,990		1.30			1,605,308			7,887		1.97
Time greater than $100,000		988,810			3,873		1.57			1,110,010			6,102		2.20
Brokered		473,161			2,132		1.81			642,954			3,729		2.33
Total interest-bearing deposits		5,489,699			13,594		.99			5,616,038			21,375		1.53
Federal funds purchased and other borrowings		103,156			1,074		4.18			104,637			1,056		4.05
Federal Home Loan Bank advances		52,735			570		4.34			107,948			974		3.62
Long-term debt		150,178			2,747		7.34			150,097			2,667		7.13
Total borrowed funds		306,069			4,391		5.75			362,682			4,697		5.19
Total interest-bearing liabilities		5,795,768			17,985		1.24			5,978,720			26,072		1.75
Non-interest-bearing liabilities:
Non-interest-bearing deposits		882,151								758,558
Other liabilities		91,353								54,931
Total liabilities		6,769,272								6,792,209
Shareholders’ equity		854,447								912,085
Total liabilities and shareholders’ equity	$	7,623,719							$	7,704,294
Net interest revenue				$	58,946							$	61,627
Net interest-rate spread							3.21	%							3.38	%
Net interest margin (4)							3.41	%							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 gains of $32.2 million in 2011 and $43.6 million in 2010 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,

	2011								2010
	Average					Avg.			Average					Avg.
(dollars in thousands, taxable equivalent)	Balance			Interest		Rate			Balance			Interest		Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)	$	4,431,617		$	122,028		5.55	%	$	5,091,445		$	142,859		5.66	%
Taxable securities (3)		1,825,322			27,886		3.06			1,495,447			31,426		4.20
Tax-exempt securities (1)(3)		25,434			835		6.57			29,482			991		6.72
Federal funds sold and other interest-earning assets		630,384			2,147		.68			352,683			2,272		1.29
Total interest-earning assets		6,912,757			152,896		4.45			6,969,057			177,548		5.13
Non-interest-earning assets:
Allowance for loan losses		(154,347	)							(190,662	)
Cash and due from banks		127,031								102,728
Premises and equipment		179,150								181,493
Other assets (3)		544,625								762,014
Total assets	$	7,609,216							$	7,824,630
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	1,341,618			2,360		.35		$	1,343,297			3,599		.54
Money market		954,128			3,527		.75			734,817			3,586		.98
Savings		191,708			141		.15			183,555			167		.18
Time less than $100,000		1,541,130			10,441		1.37			1,648,739			16,778		2.05
Time greater than $100,000		989,840			8,024		1.63			1,132,767			12,872		2.29
Brokered		585,103			4,262		1.47			689,717			8,266		2.42
Total interest-bearing deposits		5,603,527			28,755		1.03			5,732,892			45,268		1.59
Federal funds purchased and other borrowings		102,132			2,116		4.18			103,355			2,094		4.09
Federal Home Loan Bank advances		53,923			1,160		4.34			111,150			1,951		3.54
Long-term debt		150,169			5,527		7.42			150,088			5,329		7.16
Total borrowed funds		306,224			8,803		5.80			364,593			9,374		5.18
Total interest-bearing liabilities		5,909,751			37,558		1.28			6,097,485			54,642		1.81
Non-interest-bearing liabilities:
Non-interest-bearing deposits		861,864								738,876
Other liabilities		75,083								59,605
Total liabilities		6,846,698								6,895,966
Shareholders’ equity		762,518								928,664
Total liabilities and shareholders’ equity	$	7,609,216							$	7,824,630
Net interest revenue				$	115,338							$	122,906
Net interest-rate spread							3.17	%							3.32	%
Net interest margin (4)							3.36	%							3.55	%

(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 $29.7 million in 2011 and $43.4 million in 2010 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.