United Community Banks 8K Results of Operations and Financial Condition | UCB 26 Jul 12

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 $6.5 MILLION FOR SECOND QUARTER 2012

·	Net income of $6.5 million, or six cents per share

·	Balance sheet restructuring includes $6.5 million of securities gains, mostly offset by wholesale funding prepayment charges

·	Nonperforming assets decline $15.8 million, or 10 percent, from first quarter

·	Core transaction deposits up $163 million year-to-date, or 11 percent annualized

BLAIRSVILLE, GA – July 26, 2012 – United Community Banks, Inc. (NASDAQ: UCBI) today reported net income of $6.5 million, or six cents per share, for the second quarter of 2012; and $18.0 million, or 21 cents per share, year-to-date. The results for the second quarter and first six months of 2012 reflect strong core transaction deposit growth, increases in fee revenue and lower operating expenses compared with the same periods a year ago.

“Our lower operating expenses reflect ongoing efforts to meaningfully increase operating efficiency, while at the same time remaining focused on improving credit measures,” said Jimmy Tallent, president and chief executive officer. “Our credit measures continue their positive trend, with nonperforming assets down $15.8 million, or 10 percent, from the first quarter. The second quarter marks our fourth profitable quarter following our 2011 capital transaction and the execution of our problem asset disposition plan. Looking forward, we expect profitability to continue from improved efficiency, revenue enhancements and expense reductions while growing and improving our business mix of loans and deposits.”

Total loans were $4.12 billion at quarter-end, down slightly from the first quarter and down $44 million from a year earlier. “While loans declined slightly in the second quarter they remain up year-to-date. We expect some volatility in balances due to the ongoing sluggish economy. We are prudently growing the portfolio by focusing on full-service relationships with small-to-medium-sized businesses. During the second quarter we added $132 million in new loan commitments, of which $87 million were funded by quarter-end. The majority were commercial loans.”

“Growing quality loan and deposit relationships remains a key focus for 2012,” Tallent commented. “The highly competitive market for quality lending opportunities keeps pressure on loan pricing. At the same time our success attracting core transaction deposits has continued, with balances increasing $12 million in the second quarter and an especially strong $151 million in the first quarter. Annualized, the growth rate is 11 percent.”

The second quarter provision for loan losses was $18 million, up from $11 million a year ago and $15 million in the first quarter. Second quarter net charge-offs were $18.9 million, compared to $16.5 million in the second quarter of 2011 and $15.9 million in the first quarter of 2012.

“Nonperforming assets of $145.8 million were down $15.8 million from the first quarter,” Tallent said. “Nonperforming asset levels are impacted significantly by the inflow of new nonperforming loans and our ability to liquidate foreclosed properties. In the second quarter, the inflow of new nonperforming loans slowed to $29.4 million from $32.4 million in the first quarter. Also, loans past due 30 to 89 days declined from .86 percent of outstanding loans in the first quarter to .65 percent in the second quarter. We expect our overall credit trends to continue to improve during 2012, although not necessarily in a linear fashion.”

Taxable equivalent net interest revenue declined $2.0 million from the first quarter of 2012, and $2.1 million from the second quarter of 2011, to $56.8 million. Said Tallent, “The decrease from the first quarter was primarily due to the lower yield on the securities portfolio, which was significantly impacted by heavy prepayment activity in the mortgage market. This activity accelerated the amortization of bond purchase premiums, suppressing the securities portfolio yield. Further, the yields at which the proceeds were reinvested fell short of those of the bonds they replaced. Consequently, our net interest margin was down 10 basis points from the first quarter, to 3.43 percent. It was up two basis points, however, from the second quarter of 2011.”

Fee revenue was $12.9 million in the second quarter, compared to $15.4 million in the first quarter and $13.9 million a year ago. The decline in fee revenue from the first quarter of 2012 and second quarter of 2011 was primarily due to nonrecurring revenue items noted below. Service charges and fees were $7.8 million, similar to the first quarter and up $208,000 from the second quarter of 2011. The increase in service charges and fees from a year ago reflects new fees on deposit accounts that became effective in the first quarter of 2012, which more than offset lower overdraft fees.

Fee revenue for the quarter included $6.5 million of securities gains reflecting the sale of $175 million in fixed rate securities. As part of the balance sheet restructuring, $75 million of fixed rate wholesale funding was prepaid, resulting in prepayment charges of $6.2 million. “Overall, the deleveraging of our balance sheet should improve our margin and interest rate sensitivity, while maintaining the level of net interest revenue,” stated Tallent.

Mortgage fee revenue of $2.3 million reflected a $223,000 increase from the first quarter and $1.4 million from a year ago. Comparisons to prior periods are influenced significantly by the interest rate environment and refinancing activities. Closed mortgage loans totaled $79.8 million in the second quarter of 2012 compared with $81.7 million in the first quarter and $50.5 million in the second quarter of 2011. Other fee revenue was down $3 million from both the first quarter of 2012 and the fourth quarter of 2011, to $1.6 million. The first quarter of 2012 included $1.1 million in interest on a prior year’s federal tax refund, $728,000 in gains from the sale of low income housing tax credits, and $115,000 in hedge ineffectiveness gains. The second quarter of 2011 included $2.8 million in hedge ineffectiveness gains, in contrast with $180,000 in hedge ineffectiveness losses in the second quarter of 2012.

Excluding foreclosed property costs, second quarter 2012 operating expenses were $42.5 million compared to $43.1 million for the first quarter and $46.8 million a year ago. Lower staff levels and related costs were the primary drivers of the decrease from both periods, with 93 fewer staff positions compared to the first quarter and 153 fewer from a year ago. Most other expense categories were down as well, reflecting efforts to improve operating efficiency by lowering costs. The decrease in operating expenses from a year ago also reflects a $1.1 million decrease in the FDIC assessment due to a lower assessment rate.

Foreclosed property costs for the second quarter of 2012 were $1.9 million, compared to $3.8 million in the first quarter and $1.9 million a year ago. Second quarter 2012 costs included $1.1 million for maintenance and $739,000 in net losses and write-downs. For the first quarter, foreclosed property costs included $1.6 million in maintenance and $2.2 million in net losses and write-downs. Second quarter 2011 costs included $2.0 million in maintenance and $100,000 in net gains from sales.

As of June 30, 2012, capital ratios were as follows: Tier 1 Risk-Based of 14.2 percent; Tier 1 Leverage of 9.1 percent; and Total Risk-Based of 15.9 percent. The Tier 1 Common Risk-Based ratio was 8.7 percent and the tangible equity-to-assets ratio was 8.2 percent.

Conference Call

United will hold a conference call today, Thursday, July 26, 2012, 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 97692673. The conference call also will be webcast and can be accessed by selecting ‘Calendar of Events’ within the Investor Relations section of the United’s website at www.ucbi.com.

About United Community Banks, Inc.

Headquartered in Blairsville, United Community Banks, Inc. is the third-largest bank holding company in Georgia. United has assets of $6.7 billion and operates 27 community banks with 104 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. United specializes in providing personalized community banking services to individuals and small to mid-size businesses and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United’s common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at United’s web site at www.ucbi.com.

Safe Harbor

This news release contains forward-looking statements, as defined by federal securities laws, including statements about United’s financial outlook and business environment. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. For a discussion of some of the risks and other factors that may cause such forward-looking statements to differ materially from actual results, please refer to United’s filings with the Securities and Exchange Commission including its 2011 Annual Report on Form 10-K under the section 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

																Second
	2012						2011									Quarter			For the Six						YTD
(in thousands, except per share	Second			First			Fourth			Third			Second			2012-2011			Months Ended						2012-2011
data; taxable equivalent)	Quarter			Quarter			Quarter			Quarter			Quarter			Change				2012			2011		Change
INCOME SUMMARY
Interest revenue	$	66,780		$	70,221		$	71,905		$	74,543		$	76,931					$	137,001		$	152,896
Interest expense		9,944			11,357			12,855			15,262			17,985						21,301			37,558
Net interest revenue		56,836			58,864			59,050			59,281			58,946			(4	) %		115,700			115,338			-	%
Provision for loan losses		18,000			15,000			14,000			36,000			11,000						33,000			201,000
Fee revenue		12,867			15,379			12,667			11,498			13,905			(7	)		28,246			25,743			10
Total revenue		51,703			59,243			57,717			34,779			61,851						110,946			(59,919	)
Operating expenses		44,310			46,955			51,080			46,520			48,728			(9	)		91,265			163,999			(44	)
Income (loss) before income taxes		7,393			12,288			6,637			(11,741	)		13,123						19,681			(223,918	)
Income tax expense (benefit)		894			760			(3,264	)		(402	)		1,095						1,654			1,390
Net income (loss)		6,499			11,528			9,901			(11,339	)		12,028			(46	)		18,027			(225,308	)
Preferred dividends and discount accretion		3,032			3,030			3,025			3,019			3,016						6,062			5,794
Net income (loss) available to common shareholders	$	3,467		$	8,498		$	6,876		$	(14,358	)	$	9,012			(62	)	$	11,965		$	(231,102	)

PERFORMANCE MEASURES
Per common share:
Diluted income (loss)	$	.06		$	.15		$	.12		$	(.25	)	$	.16			(63	)	$	.21		$	(10.52	)
Book value		6.61			6.68			6.62			6.77			7.11			(7	)		6.61			7.11			(7	)
Tangible book value (2)		6.48			6.54			6.47			6.61			6.94			(7	)		6.48			6.94			(7	)

Key performance ratios:
Return on equity (1)(3)		3.51	%		8.78	%		7.40	%		(15.06	) %		42.60	%					6.12	%		(345.86	)%
Return on assets (3)		.37			.66			.56			(.64	)		.66						.52			(6.16	)
Net interest margin (3)		3.43			3.53			3.51			3.55			3.41						3.48			3.36
Efficiency ratio		63.84			63.31			71.23			65.73			66.88						63.56			116.28
Equity to assets		8.33			8.19			8.28			8.55			8.06						8.26			7.11
Tangible equity to assets (2)		8.24			8.08			8.16			8.42			7.93						8.16			7.00
Tangible common equity to assets (2)		5.45			5.33			5.38			5.65			1.37						5.39			2.05
Tangible common equity to risk- weighted assets (2)		8.37			8.21			8.25			8.52			8.69						8.37			8.69

ASSET QUALITY *
Non-performing loans	$	115,340		$	129,704		$	127,479		$	144,484		$	71,065					$	115,340		$	71,065
Foreclosed properties		30,421			31,887			32,859			44,263			47,584						30,421			47,584
Total non-performing assets (NPAs)		145,761			161,591			160,338			188,747			118,649						145,761			118,649
Allowance for loan losses		112,705			113,601			114,468			146,092			127,638						112,705			127,638
Net charge-offs		18,896			15,867			45,624			17,546			16,483						34,763			248,057
Allowance for loan losses to loans		2.74	%		2.75	%		2.79	%		3.55	%		3.07	%					2.74	%		3.07	%
Net charge-offs to average loans (3)		1.85			1.55			4.39			1.68			1.58						1.70			11.46
NPAs to loans and foreclosed properties		3.51			3.88			3.87			4.54			2.82						3.51			2.82
NPAs to total assets		2.16			2.25			2.30			2.74			1.66						2.16			1.66

AVERAGE BALANCES ($ in millions)
Loans	$	4,156		$	4,168		$	4,175		$	4,194		$	4,266			(3	)	$	4,162		$	4,432			(6	)
Investment securities		2,145			2,153			2,141			2,150			2,074			3			2,149			1,851			16
Earning assets		6,665			6,700			6,688			6,630			6,924			(4	)		6,682			6,913			(3	)
Total assets		6,993			7,045			7,019			7,000			7,363			(5	)		7,019			7,371			(5	)
Deposits		5,853			6,028			6,115			6,061			6,372			(8	)		5,940			6,465			(8	)
Shareholders’ equity		583			577			581			598			594			(2	)		580			524			11
Common shares - basic (thousands)		57,840			57,764			57,646			57,599			25,427						57,803			21,965
Common shares - diluted (thousands)		57,840			57,764			57,646			57,599			57,543						57,803			21,965

AT PERIOD END ($ in millions)
Loans *	$	4,119		$	4,128		$	4,110		$	4,110		$	4,163			(1	)	$	4,119		$	4,163			(1	)
Investment securities		1,984			2,202			2,120			2,123			2,188			(9	)		1,984			2,188			(9	)
Total assets		6,737			7,174			6,983			6,894			7,152			(6	)		6,737			7,152			(6	)
Deposits		5,822			6,001			6,098			6,005			6,183			(6	)		5,822			6,183			(6	)
Shareholders’ equity		576			580			575			583			603			(4	)		576			603			(4	)
Common shares outstanding (thousands)		57,641			57,603			57,561			57,510			57,469						57,641			57,469

(1) 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). (2) Excludes effect of acquisition related intangibles and associated amortization. (3) Annualized.

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

UNITED COMMUNITY BANKS, INC.
Non-GAAP Performance Measures Reconciliation
Selected Financial Information

	2012						2011									For the Six Months Ended
(in thousands, except per share	Second			First			Fourth			Third			Second			For the Six Months Ended
data; taxable equivalent)	Quarter			Quarter			Quarter			Quarter			Quarter			2012			2011

Interest revenue reconciliation
Interest revenue - taxable equivalent	$	66,780		$	70,221		$	71,905		$	74,543		$	76,931		$	137,001		$	152,896
Taxable equivalent adjustment		(444	)		(446	)		(423	)		(420	)		(429	)		(890	)		(864	)
Interest revenue (GAAP)	$	66,336		$	69,775		$	71,482		$	74,123		$	76,502		$	136,111		$	152,032

Net interest revenue reconciliation
Net interest revenue - taxable equivalent	$	56,836		$	58,864		$	59,050		$	59,281		$	58,946		$	115,700		$	115,338
Taxable equivalent adjustment		(444	)		(446	)		(423	)		(420	)		(429	)		(890	)		(864	)
Net interest revenue (GAAP)	$	56,392		$	58,418		$	58,627		$	58,861		$	58,517		$	114,810		$	114,474

Total revenue reconciliation
Total operating revenue	$	51,703		$	59,243		$	57,717		$	34,779		$	61,851		$	110,946		$	(59,919	)
Taxable equivalent adjustment		(444	)		(446	)		(423	)		(420	)		(429	)		(890	)		(864	)
Total revenue (GAAP)	$	51,259		$	58,797		$	57,294		$	34,359		$	61,422		$	110,056		$	(60,783	)

Income (loss) before taxes reconciliation
Income (loss) before taxes	$	7,393		$	12,288		$	6,637		$	(11,741	)	$	13,123		$	19,681		$	(223,918	)
Taxable equivalent adjustment		(444	)		(446	)		(423	)		(420	)		(429	)		(890	)		(864	)
Income (loss) before taxes (GAAP)	$	6,949		$	11,842		$	6,214		$	(12,161	)	$	12,694		$	18,791		$	(224,782	)

Income tax (benefit) expense reconciliation
Income tax (benefit) expense	$	894		$	760		$	(3,264	)	$	(402	)	$	1,095		$	1,654		$	1,390
Taxable equivalent adjustment		(444	)		(446	)		(423	)		(420	)		(429	)		(890	)		(864	)
Income tax (benefit) expense (GAAP)	$	450		$	314		$	(3,687	)	$	(822	)	$	666		$	764		$	526

Book value per common share reconciliation
Tangible book value per common share	$	6.48		$	6.54		$	6.47		$	6.61		$	6.94		$	6.48		$	6.94
Effect of goodwill and other intangibles		.13			.14			.15			.16			.17			.13			.17
Book value per common share (GAAP)	$	6.61		$	6.68		$	6.62		$	6.77		$	7.11		$	6.61		$	7.11

Average equity to assets reconciliation
Tangible common equity to assets		5.45	%		5.33	%		5.38	%		5.65	%		1.37	%		5.39	%		2.05	%
Effect of preferred equity		2.79			2.75			2.78			2.77			6.56			2.77			4.95
Tangible equity to assets		8.24			8.08			8.16			8.42			7.93			8.16			7.00
Effect of goodwill and other intangibles		.09			.11			.12			.13			.13			.10			.11
Equity to assets (GAAP)		8.33	%		8.19	%		8.28	%		8.55	%		8.06	%		8.26	%		7.11	%

Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets		8.37	%		8.21	%		8.25	%		8.52	%		8.69	%		8.37	%		8.69	%
Effect of other comprehensive income		.28			.10			(.03	)		(.29	)		(.42	)		.28			(.42	)
Effect of trust preferred		1.19			1.15			1.18			1.19			1.15			1.19			1.15
Effect of preferred equity		4.35			4.23			4.29			4.33			4.20			4.35			4.20
Tier I capital ratio (Regulatory)		14.19	%		13.69	%		13.69	%		13.75	%		13.62	%		14.19	%		13.62	%

UNITED COMMUNITY BANKS, INC.

Financial Highlights

Loan Portfolio Composition at Period-End (1)


	2012				2011						Linked Quarter Change			Year over Year Change
	Second		First		Fourth		Third		Second
(in millions)	Quarter		Quarter		Quarter		Quarter		Quarter
LOANS BY CATEGORY
Commercial (sec.by RE)	$	1,837	$	1,843	$	1,822	$	1,771	$	1,742	$	(6	)	$	95
Commercial & industrial		450		440		428		429		428		10			22
Commercial construction		169		167		164		169		195		2			(26	)
Total commercial		2,456		2,450		2,414		2,369		2,365		6			91
Residential mortgage		1,128		1,131		1,135		1,150		1,177		(3	)		(49	)
Residential construction		409		436		448		474		502		(27	)		(93	)
Consumer installment		126		111		113		117		119		15			7
Total loans	$	4,119	$	4,128	$	4,110	$	4,110	$	4,163		(9	)		(44	)

LOANS BY MARKET
North Georgia	$	1,387	$	1,408	$	1,426	$	1,478	$	1,500		(21	)		(113	)
Atlanta MSA		1,252		1,239		1,220		1,192		1,188		13			64
North Carolina		576		588		597		607		626		(12	)		(50	)
Coastal Georgia		369		366		346		316		325		3			44
Gainesville MSA		259		262		265		272		275		(3	)		(16	)
East Tennessee		276		265		256		245		249		11			27
Total loans	$	4,119	$	4,128	$	4,110	$	4,110	$	4,163		(9	)		(44	)

RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development	$	78	$	86	$	88	$	97	$	105		(8	)		(27	)
Land loans		45		57		61		60		62		(12	)		(17	)
Lot loans		203		204		207		216		218		(1	)		(15	)
Total		326		347		356		373		385		(21	)		(59	)

House loans
Spec		49		57		59		64		74		(8	)		(25	)
Sold		34		32		33		37		43		2			(9	)
Total		83		89		92		101		117		(6	)		(34	)
Total residential construction	$	409	$	436	$	448	$	474	$	502		(27	)		(93	)

RESIDENTIAL CONSTRUCTION - ATLANTA MSA
Dirt loans
Acquisition & development	$	14	$	17	$	17	$	19	$	20		(3	)		(6	)
Land loans		9		13		14		15		16		(4	)		(7	)
Lot loans		22		22		22		22		22		-			-
Total		45		52		53		56		58		(7	)		(13	)

House loans
Spec		24		27		27		28		30		(3	)		(6	)
Sold		7		7		6		8		9		-			(2	)
Total		31		34		33		36		39		(3	)		(8	)
Total residential construction	$	76	$	86	$	86	$	92	$	97		(10	)		(21	)

(1) Excludes total loans of $41.5 million, $47.2 million, $54.5 million, $57.8 million and $70.8 million as of June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, 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 2012									First Quarter 2012									Fourth Quarter 2011
(in thousands)	Non-performing Loans			Foreclosed Properties			Total NPAs			Non-performing Loans			Foreclosed Properties			Total NPAs			Non-performing Loans			Foreclosed Properties			Total NPAs
NPAs BY CATEGORY
Commercial (sec.by RE)	$	19,115		$	10,586		$	29,701		$	26,081		$	10,808		$	36,889		$	27,322		$	9,745		$	37,067
Commercial & industrial		34,982			-			34,982			36,314			-			36,314			34,613			-			34,613
Commercial construction		18,175			2,732			20,907			23,319			3,266			26,585			16,655			3,336			19,991
Total commercial		72,272			13,318			85,590			85,714			14,074			99,788			78,590			13,081			91,671
Residential mortgage		16,631			5,591			22,222			18,741			5,882			24,623			22,358			6,927			29,285
Residential construction		25,530			11,512			37,042			24,341			11,931			36,272			25,523			12,851			38,374
Consumer installment		907			-			907			908			-			908			1,008			-			1,008
Total NPAs	$	115,340		$	30,421		$	145,761		$	129,704		$	31,887		$	161,591		$	127,479		$	32,859		$	160,338
Balance as a % of
Unpaid Principal		68.8	%		39.3	%		59.4	%		70.6	%		36.1	%		59.4	%		71.3	%		35.9	%		59.3	%

NPAs BY MARKET
North Georgia	$	77,332		$	13,546		$	90,878		$	81,117		$	14,559		$	95,676		$	88,600		$	15,136		$	103,736
Atlanta MSA		17,593			8,651			26,244			22,321			7,647			29,968			14,480			6,169			20,649
North Carolina		10,657			3,287			13,944			15,765			4,650			20,415			15,100			5,365			20,465
Coastal Georgia		5,822			785			6,607			5,622			1,268			6,890			5,248			1,620			6,868
Gainesville MSA		991			2,998			3,989			2,210			3,387			5,597			2,069			3,760			5,829
East Tennessee		2,945			1,154			4,099			2,669			376			3,045			1,982			809			2,791
Total NPAs	$	115,340		$	30,421		$	145,761		$	129,704		$	31,887		$	161,591		$	127,479		$	32,859		$	160,338


NPA ACTIVITY
Beginning Balance	$	129,704		$	31,887		$	161,591		$	127,479		$	32,859		$	160,338		$	144,484		$	44,263		$	188,747
Loans placed on non-accrual		29,364			-			29,364			32,437			-			32,437			45,675			-			45,675
Payments received		(15,027	)		-			(15,027	)		(5,945	)		-			(5,945	)		(1,884	)		-			(1,884	)
Loan charge-offs		(19,382	)		-			(19,382	)		(14,733	)		-			(14,733	)		(44,757	)		-			(44,757	)
Foreclosures		(9,319	)		9,319			-			(9,534	)		9,534			-			(16,039	)		16,039			-
Capitalized costs		-			415			415			-			329			329			-			141			141
Note / property sales		-			(10,461	)		(10,461	)		-			(8,631	)		(8,631	)		-			(20,651	)		(20,651	)
Write downs		-			(1,008	)		(1,008	)		-			(2,111	)		(2,111	)		-			(3,893	)		(3,893	)
Net gains (losses) on sales		-			269			269			-			(93	)		(93	)		-			(3,040	)		(3,040	)
Ending Balance	$	115,340		$	30,421		$	145,761		$	129,704		$	31,887		$	161,591		$	127,479		$	32,859		$	160,338

	Second Quarter 2012						First Quarter 2012					Fourth Quarter 2011
				Net Charge-					Net Charge-					Net Charge-
				Offs to					Offs to					Offs to
	Net			Average			Net		Average			Net		Average
(in thousands)	Charge-Offs			Loans (2)			Charge-Offs		Loans (2)			Charge-Offs		Loans (2)
NET CHARGE-OFFS BY CATEGORY
Commercial (sec.by RE)	$	4,349			.95	%	$	3,697		.81	%	$	4,962		1.09	%
Commercial & industrial		775			.70			669		.62			18,940		17.47
Commercial construction		88			.21			334		.81			3,318		7.88
Total commercial		5,212			.86			4,700		.78			27,220		4.51
Residential mortgage		3,862			1.38			5,375		1.91			5,887		2.04
Residential construction		9,563			9.14			5,314		4.84			12,090		10.36
Consumer installment		259			.88			478		1.72			427		1.47
Total	$	18,896			1.85		$	15,867		1.55		$	45,624		4.39


NET CHARGE-OFFS BY MARKET
North Georgia	$	12,474			3.58	%	$	9,022		2.56	%	$	34,970		9.46	%
Atlanta MSA		2,307			.75			2,729		.89			4,195		1.37
North Carolina		3,634			2.52			1,679		1.14			3,180		2.10
Coastal Georgia		211			.23			1,329		1.53			335		.41
Gainesville MSA		(187	)		(.29	)		883		1.35			2,572		3.84
East Tennessee		457			.68			225		.34			372		.59
Total	$	18,896			1.85		$	15,867		1.55		$	45,624		4.39

(1) Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of Southern Community Bank.

(2) Annualized.

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)	2012			2011			2012			2011

Interest revenue:
Loans, including fees	$	54,178		$	60,958		$	109,937		$	122,065
Investment securities, including tax exempt of $262, $251, $512 and $510		11,062			14,792			24,066			28,396
Federal funds sold, reverse repurchase agreements, commercial paper and deposits in banks		1,096			752			2,108			1,571
Total interest revenue		66,336			76,502			136,111			152,032

Interest expense:
Deposits:
NOW		503			1,036			1,140			2,360
Money market		661			1,499			1,302			3,527
Savings		38			64			75			141
Time		5,073			10,995			11,232			22,727
Total deposit interest expense		6,275			13,594			13,749			28,755
Federal funds purchased, repurchase agreements and other short-term borrowings		904			1,074			1,949			2,116
Federal Home Loan Bank advances		390			570			856			1,160
Long-term debt		2,375			2,747			4,747			5,527
Total interest expense		9,944			17,985			21,301			37,558
Net interest revenue		56,392			58,517			114,810			114,474
Provision for loan losses		18,000			11,000			33,000			201,000
Net interest revenue after provision for loan losses		38,392			47,517			81,810			(86,526	)

Fee revenue:
Service charges and fees		7,816			7,608			15,599			14,328
Mortgage loan and other related fees		2,322			952			4,421			2,446
Brokerage fees		809			691			1,622			1,368
Securities gains, net		6,490			783			7,047			838
Loss from prepayment of debt		(6,199	)		(791	)		(6,681	)		(791	)
Other		1,629			4,662			6,238			7,554
Total fee revenue		12,867			13,905			28,246			25,743
Total revenue		51,259			61,422			110,056			(60,783	)

Operating expenses:
Salaries and employee benefits		24,297			26,436			49,522			51,360
Communications and equipment		3,211			3,378			6,366			6,722
Occupancy		3,539			3,805			7,310			7,879
Advertising and public relations		1,088			1,317			1,934			2,295
Postage, printing and supplies		916			1,085			1,895			2,203
Professional fees		1,952			2,350			3,927			5,680
Foreclosed property		1,851			1,891			5,676			66,790
FDIC assessments and other regulatory charges		2,545			3,644			5,055			9,057
Amortization of intangibles		730			760			1,462			1,522
Other		4,181			4,062			8,118			10,491
Total operating expenses		44,310			48,728			91,265			163,999
Net income (loss) before income taxes		6,949			12,694			18,791			(224,782	)
Income tax expense		450			666			764			526
Net income (loss)		6,499			12,028			18,027			(225,308	)
Preferred stock dividends and discount accretion		3,032			3,016			6,062			5,794
Net income (loss) available to common shareholders	$	3,467		$	9,012		$	11,965		$	(231,102	)

Earnings (loss) per common share - Basic	$	.06		$	.35		$	.21		$	(10.52	)
Earnings (loss) per common share - Diluted		.06			.16			.21			(10.52	)
Weighted average common shares outstanding - Basic		57,840			25,427			57,803			21,965
Weighted average common shares outstanding - Diluted		57,840			57,543			57,803			21,965

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
	June 30,			December 31,			June 30,
(in thousands, except share and per share data)	2012			2011			2011
	(unaudited)			(audited)			(unaudited)
ASSETS
Cash and due from banks	$	50,596		$	53,807		$	163,331
Interest-bearing deposits in banks		133,857			139,609			41,863
Federal funds sold, reverse repurchase agreements, commercial paper and short-term investments		120,000			185,000			174,996
Cash and cash equivalents		304,453			378,416			380,190
Securities available for sale		1,701,583			1,790,047			1,816,613
Securities held to maturity (fair value $299,971, $343,531 and $379,231)		282,750			330,203			371,578
Mortgage loans held for sale		18,645			23,881			19,406
Loans, net of unearned income		4,119,235			4,109,614			4,163,447
Less allowance for loan losses		112,705			114,468			127,638
Loans, net		4,006,530			3,995,146			4,035,809
Assets covered by loss sharing agreements with the FDIC		65,914			78,145			95,726
Premises and equipment, net		172,200			175,088			178,208
Bank owned life insurance		81,265			80,599			80,134
Accrued interest receivable		20,151			20,693			21,291
Goodwill and other intangible assets		6,965			8,428			9,922
Foreclosed property		30,421			32,859			47,584
Other assets		46,229			69,915			95,834
Total assets	$	6,737,106		$	6,983,420		$	7,152,295
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand	$	1,150,444		$	992,109		$	899,017
NOW		1,196,507			1,509,896			1,306,109
Money market		1,117,139			1,038,778			989,600
Savings		219,077			199,007			197,927
Time:
Less than $100,000		1,164,451			1,332,394			1,508,444
Greater than $100,000		764,343			847,152			981,154
Brokered		210,506			178,647			300,964
Total deposits		5,822,467			6,097,983			6,183,215
Federal funds purchased, repurchase agreements, and other short-term borrowings		53,656			102,577			103,666
Federal Home Loan Bank advances		125,125			40,625			40,625
Long-term debt		120,265			120,225			150,186
Unsettled securities purchases		-			10,325			35,634
Accrued expenses and other liabilities		39,598			36,199			36,368
Total liabilities		6,161,111			6,407,934			6,549,694
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		177,814			177,092			176,392
Series D; $1,000 stated value; 16,613 shares issued and outstanding		16,613			16,613			16,613
Common stock, $1 par value; 100,000,000 shares authorized;
41,726,509, 41,647,100 and 41,554,874 shares issued and outstanding		41,727			41,647			41,555
Common stock, non-voting, $1 par value; 30,000,000 shares authorized;
15,914,209 shares issued and outstanding		15,914			15,914			15,914
Common stock issuable; 94,657, 93,681 and 83,575 shares		2,893			3,233			3,574
Capital surplus		1,056,819			1,054,940			1,052,482
Accumulated deficit		(718,896	)		(730,861	)		(723,378	)
Accumulated other comprehensive (loss) income		(17,106	)		(3,309	)		19,232
Total shareholders’ equity		575,995			575,486			602,601
Total liabilities and shareholders’ equity	$	6,737,106		$	6,983,420		$	7,152,295

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

	2012								2011
	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)	$	4,155,619		$	54,296		5.25	%	$	4,266,211		$	60,958		5.73	%
Taxable securities (3)		2,121,053			10,800		2.04			2,048,683			14,541		2.84
Tax-exempt securities (1)(3)		24,242			429		7.08			25,044			411		6.56
Federal funds sold and other interest-earning assets		364,099			1,255		1.38			583,832			1,021		.70
Total interest-earning assets		6,665,013			66,780		4.03			6,923,770			76,931		4.45
Non-interest-earning assets:
Allowance for loan losses		(115,955	)							(139,744	)
Cash and due from banks		51,907								119,801
Premises and equipment		173,792								178,949
Other assets (3)		218,347								280,204
Total assets	$	6,993,104							$	7,362,980

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	1,279,686			503		.16		$	1,310,441			1,036		.32
Money market		1,132,548			661		.23			979,432			1,499		.61
Savings		216,175			38		.07			195,946			64		.13
Time less than $100,000		1,183,845			2,520		.86			1,541,909			4,990		1.30
Time greater than $100,000		778,477			2,063		1.07			988,810			3,873		1.57
Brokered time deposits		150,449			490		1.31			473,161			2,132		1.81
Total interest-bearing deposits		4,741,180			6,275		.53			5,489,699			13,594		.99

Federal funds purchased and other borrowings		97,134			904		3.74			103,156			1,074		4.18
Federal Home Loan Bank advances		278,971			390		.56			52,735			570		4.34
Long-term debt		120,256			2,375		7.94			150,178			2,747		7.34
Total borrowed funds		496,361			3,669		2.97			306,069			4,391		5.75

Total interest-bearing liabilities		5,237,541			9,944		.76			5,795,768			17,985		1.24
Non-interest-bearing liabilities:
Non-interest-bearing deposits		1,112,128								882,151
Other liabilities		60,726								91,353
Total liabilities		6,410,395								6,769,272
Shareholders’ equity		582,709								593,708
Total liabilities and shareholders' equity	$	6,993,104							$	7,362,980

Net interest revenue				$	56,836							$	58,946
Net interest-rate spread							3.27	%							3.21	%

Net interest margin (4)							3.43	%							3.41	%

(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 $25.7 million in 2012 and $32.2 million in 2011 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,

	2012								2011
	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)	$	4,162,030		$	110,138		5.32	%	$	4,431,617		$	122,028		5.55	%
Taxable securities (3)		2,124,422			23,554		2.22			1,825,322			27,886		3.06
Tax-exempt securities (1)(3)		24,840			839		6.76			25,434			835		6.57
Federal funds sold and other interest-earning assets		371,044			2,470		1.33			630,384			2,147		.68
Total interest-earning assets		6,682,336			137,001		4.12			6,912,757			152,896		4.45
Non-interest-earning assets:
Allowance for loan losses		(116,879	)							(154,347	)
Cash and due from banks		53,286								127,031
Premises and equipment		174,321								179,150
Other assets (3)		226,013								306,495
Total assets	$	7,019,077							$	7,371,086

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	1,368,900			1,140		.17		$	1,341,618			2,360		.35
Money market		1,101,103			1,302		.24			954,128			3,527		.75
Savings		210,789			75		.07			191,708			141		.15
Time less than $100,000		1,227,599			5,546		.91			1,541,130			10,441		1.37
Time greater than $100,000		799,821			4,478		1.13			989,840			8,024		1.63
Brokered time deposits		155,892			1,208		1.56			585,103			4,262		1.47
Total interest-bearing deposits		4,864,104			13,749		.57			5,603,527			28,755		1.03

Federal funds purchased and other borrowings		99,696			1,949		3.93			102,132			2,116		4.18
Federal Home Loan Bank advances		208,672			856		.82			53,923			1,160		4.34
Long-term debt		120,246			4,747		7.94			150,169			5,527		7.42
Total borrowed funds		428,614			7,552		3.54			306,224			8,803		5.80

Total interest-bearing liabilities		5,292,718			21,301		.81			5,909,751			37,558		1.28
Non-interest-bearing liabilities:
Non-interest-bearing deposits		1,076,358								861,864
Other liabilities		70,330								75,083
Total liabilities		6,439,406								6,846,698
Shareholders' equity		579,671								524,388
Total liabilities and shareholders’ equity	$	7,019,077							$	7,371,086

Net interest revenue				$	115,700							$	115,338
Net interest-rate spread							3.31	%							3.17	%

Net interest margin (4)							3.48	%							3.36	%

(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 $24.7 million in 2012 and $29.7 million in 2011 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 (UCB) 8-KResults of Operations and Financial Condition