United Community Banks
Annual Report 2010

Plain-text annual report

2010 Annual Report United Community Banks, Inc. Financial Highlights (in millions, except per share data) 2010 2009 Core Earnings Summary Net interest revenue Core fee revenue Core operating expenses Core earnings (pre-tax, pre-credit) Provision for loan losses Foreclosed property costs Loss on sale of non-performing assets FDIC special assessment Bank-owned life insurance adjustments Securities gains, net Loss on prepayment of borrowings Gain on sale of low income housing tax credits Income tax benefit Net operating loss Gain from acquisition Non-cash goodwill impairment charges Partial recovery of 2007 fraud loss Severance costs (Loss) income from discontinued operations Gain from sale of subsidiary Net loss Preferred dividends and discount accretion Net loss available to common shareholders Per Common Share Diluted operating loss from continuing operations Diluted loss Book value Tangible book value Performance Measures Net interest margin Allowance for loan losses to loans Tangible common equity to assets (year-end) Tier I risk-based capital ratio (year-end) As of Year-End Loans Investment securities Total assets Deposits Shareholders’ equity Common shares outstanding (thousands) Shareholders Employees Banking offices $ 243.1 47.5 177.2 113.4 (234.8) (65.7) (45.3) - - 2.5 (2.2) .7 88.0 (143.4) - (210.6) 7.2 - (.1) 1.3 (345.6) (10.3) $ (355.9) $ 245.2 47.5 182.9 109.8 (310.0) (32.3) - (3.8) 2.0 2.8 - .7 91.7 (139.1) 7.1 (95.0) - (1.8) .5 - (228.3) (10.2) $ (238.5) $ (1.62) (3.76) 4.84 4.76 $ (2.47) (3.95) 8.36 6.02 3.56 % 3.79 6.08 9.67 3.29 % 3.02 7.30 12.41 $ 4,604.1 1,490.2 7,443.2 6,469.2 635.5 94,685 18,000 1,817 106 $ 5,151.5 1,530.0 7,999.9 6,627.8 962.3 94,046 17,500 1,818 107 Letter to Shareholders Dear Shareholder, This is an extraordinary time in the history of our company. When I wrote last year’s annual report letter, I fully expected that by now we would be through the recession, that our troubled asset values would have stabilized and that 2011 would be a year of more normal growth and reduced unemployment. I was wrong. The economic downturn continues in our markets. Unemployment remains at historical highs. Real estate asset values have not stabilized, and in some of our markets they continue to decline. Despite these challenging conditions, 2010 was a year of progress and achievement for United Community Banks. I hope 2011 will be better, but we know that business decisions cannot be based solely on hope. I believe it is important, therefore, to focus this letter largely on one specific and significant action – our recent capital transaction – because it deserves the full attention and understanding of each shareholder. First, some perspective. As you know, the entire banking industry was severely impacted by the deep recession and collapse of the real estate market, and United certainly was no exception. Residential real estate in our metro Atlanta, north Georgia, coastal Georgia and western North Carolina markets has suffered disproportionately. I say that as background, not as an excuse: I accept full responsibility for the decisions and performance of this company, regardless of environment. I will add that United has known only success for most of its six decades, and the adversity of the past three years has been foreign, difficult and unforgiving. It has been said that adversity builds character and leaves you stronger, and I firmly believe this to be the case with United Community Banks. We have made aggressive efforts over the past two years to resolve credit issues, restore our net interest margin, increase core transaction deposits and grow relationships with small businesses and other commercial enterprises. I have regulatory challenges. We considered three detailed to you our commitment to reduce alternatives: (1) maintaining the status quo costs and improve efficiency through process and letting time and economic conditions improvements and workforce reduction. I heal our problems, (2) selling common or have outlined the opportunities we’ve pursued preferred stock in public or private offerings, to preserve and enhance capital, including and (3) selling the company to a larger aggressive actions such as participation in the financial institution. After considering these U.S. Treasury’s Capital Purchase Program and alternatives, the board concluded that an a capital infusion in 2009. Other actions – optimal business plan would have to meet the such as removing $103 million in problem following objectives: assets by partnering with a private equity firm – improved our balance sheet. Our financial • raise additional capital; and credit performance improved in the third • demonstrate a meaningful reduction in and fourth quarters of 2010, and we have non-performing assets to strengthen and seen further improvement in the first quarter de-risk the balance sheet; of 2011. • address concerns over any potential write-down of deferred tax assets; Progress has not come swiftly or strongly • show a clear and defined path back enough, however, and as we turned the to sustainable profitability within a 2 calendar to 2011 our classified assets were still relatively short time period; and too high in relation to capital. Regulators • allow us to take advantage of follow this ratio closely as they assess the opportunities, such as potentially health and strength of our bank, and we entering new markets and acquiring knew that pressure from their direction would branches and other assets of other increase until we resolved this situation. financial institutions through negotiated Regulators can place controls on a bank’s purchases, mergers and FDIC-assisted growth and activities, and a bank that is not transactions. in good standing can find it difficult to take advantage of growth opportunities. This is an We determined that the best way to explanation, not a complaint; regulators have accomplish these objectives was to sell a a job to do and we respect that. significant amount of stock to institutional investors in a private offering. This strategy Under these circumstances, management would enable us to recapitalize the company and the board of directors evaluated strategic at a favorable price to market, and use a alternatives to address our credit, financial and portion of the capital to divest a substantial 3 amount of our classified and most risky assets. of our outstanding voting and non-voting This course would serve both short and long- common stock. term interests of our existing shareholders, employees, customers and communities As part of the capital investment, we also because it would: announced plans to significantly improve our balance sheet by selling and disposing of • restore the bank’s compliance with its approximately $435 million in substandard memorandum of understanding with performing and non-performing loans and regulators; foreclosed properties, by the end of the second • allow us to resume dividend and interest quarter. By the time you receive this letter, payments on our preferred stock and most of the asset disposition will already have trust preferred securities; been accomplished. • allow us to avoid more serious regulatory enforcement actions; The recapitalization, loan sale and disposition • provide a significant level of capital to of foreclosed properties are perhaps the most de-risk our balance sheet by disposing of significant developments in the recent history riskier assets; of our company. They will result in a stronger • return the company quickly to organization that is better positioned to focus profitability; and on the many growth opportunities in our • allow us to take advantage of growth markets – opportunities that can drive our opportunities. success for years to come. On March 30, 2011, we completed a capital Corsair, the lead investor, is a multinational transaction with Corsair Capital, LLC private equity firm with a long and successful (“Corsair”) and seven other institutional track record of partnering strategically with, and investors. They provided $380 million of investing in, banks and financial institutions capital by purchasing a combination of our worldwide. I strongly believe they are an ideal common stock at a price of $1.90 per share partner for United and our shareholders. and preferred stock that will be converted into common stock, mandatorily, at a conversion All eight of the investors know our industry price of $1.90 per share after shareholder and have examined our company in detail. approval. When the preferred stock is They concluded that we are a quality converted, and assuming all of the proposals franchise with strong management supported are approved at the annual meeting, these by extraordinarily dedicated and talented investors will own approximately 70 percent employees. They saw that United has a proven successful business model, an unmatched a more balanced portfolio with increased focus record of customer satisfaction and significant on small business and commercial loans. The opportunities for profitability and growth in new capital will enable us to place additional the short and long term. In their opinion, commercial loan officers in our metropolitan which is considerable, all of these attributes markets. While taking no pleasure from made United an attractive investment. the problems of other banks, we will be in a position to attract new customers and We recognize that this transaction is dilutive employees from weaker financial institutions. to existing shareholders. I know you don’t like that and neither do I, nor do the other Further, our new lead investor – Corsair directors, all of whom are significant United – provides a level of comfort because its shareholders. We could have perhaps interests are in line with those of our other struggled through with smaller amounts shareholders. When Corsair benefits, all of capital along the way, returned to good shareholders benefit proportionally. As standing with our regulators in a few years, part of this partnership, we are proud to and found selected growth opportunities still gain an excellent new board member, Peter available. We would have had less dilution Raskind. Peter has a very impressive resume, as shareholders, but of a smaller, sleepy including past service as CEO of National City 4 institution. We rejected that course because Corporation. We look forward to the benefit we don’t believe high-initiative employees can of his banking history, experience with public be attracted and retained where opportunity companies and many other strong attributes. is lacking. We don’t believe communities will thrive to their full potential without the active, Our increased capital also is consistent creative and stable financial support of locally with the guidance from regulators, freeing focused banks. We don’t believe we can live the us to concentrate on productive things like United golden rule – treating our customers the operating, strengthening and growing the way we want to be treated – without sufficient company we have all worked so very hard to strength to fully support the people providing create and sustain. the service. What we do believe is we should actively control our destiny to the highest While recognizing that the economy has its possible extent, rather than passively wait for inevitable impact on every company, I look to events to determine our future. the future with optimism. The fundamentals We are also shifting our risk profile from a place – in fact, they are stronger than ever concentration on residential real estate loans to before. Core deposit growth is the best in that built this great organization are still in our history. People are moving business to United at a rate higher than we have ever seen. Our customer satisfaction is nothing less than the best among U.S. banks; we have been recognized as such by Customer Service Profiles, an independent research firm. In addition, J.D. Power and Associates included United on its distinguished “Customer Service Champion” list, which includes only 39 other companies and no other banks. This follows our 2010 J. D. Power award for ‘Highest Customer Satisfaction in Retail Banking in the Southeast Region.’ What a record. I believe we have the best bankers in the industry. In fact, there has never been a more passionate group of people, nor one that responds to need with a greater sense of professional urgency, than United Community Bank employees. They have remained steadfast; not for a moment have they taken their eye off the ball. Our ability to attract world-class investors is a testament to these talented people, and the high threshold to which they have raised our company. I congratulate and thank them. 5 I also thank you, for your patience and dedication to United. Your trust has allowed us to secure a course of action that puts us in position to return to profitability more quickly. With our people, vision, strategy, drive, and now capital, we are in a much better position to seize the opportunities before us. That is what we intend to do. Sincerely, Jimmy Tallent President and Chief Executive Officer United Community Banks, Inc. Consolidated Statement of Income (in thousands, except per share data) 2010 2009 2008 $ 277,904 59,958 3,260 341,122 $ 322,509 77,370 2,950 402,829 $ 385,959 75,869 2,880 464,708 Interest Revenue Loans, including fees Investment securities Federal funds sold, commercial paper and deposits in banks Total interest revenue Interest Expense: Deposits: NOW Money market Savings Time Total deposit interest expense Federal funds purchased, repurchase agreements and other short-term borrowings Federal Home Loan Bank advances Long-term debt Total interest expense Net interest revenue Provision for loan losses Net interest revenue after provision for loan losses Fee Revenue: Service charges and fees Mortgage loan and other related fees Brokerage fees Securities gains, net Gain from acquisition Losses on prepayment of borrowings Other Total fee revenue Total revenue Operating Expenses: Salaries and employee benefits Communications and equipment Occupancy Advertising and public relations Postage, printing and supplies Professional fees Foreclosed property FDIC assessments and other regulatory charges Amortization of intangibles Goodwill impairment Loss on sale of non-performing assets Severance costs Other Total operating expenses Loss from continuing operations before income taxes Income tax benefit Net loss from continuing operations (Loss) income from discontinued operations, net of income taxes Gain from sale of subsidiary, net of income taxes and selling costs Net loss Preferred stock dividends Net loss available to common shareholders 6,966 7,552 331 66,883 81,732 4,235 3,355 10,749 100,071 241,051 223,000 18,051 30,127 7,019 2,662 2,552 - (2,233) 8,421 48,548 66,599 96,618 13,781 15,394 4,625 4,072 9,254 65,707 13,747 3,160 210,590 45,349 - 16,594 498,891 (432,292) (85,492) (346,800) (101) 1,266 (345,635) 10,316 (355,951) $ 11,023 9,545 483 120,326 141,377 2,842 4,622 10,893 159,734 243,095 310,000 (66,905) 30,986 8,959 2,085 2,756 11,390 - 6,178 62,354 (4,551) 101,568 14,676 15,653 3,950 5,040 11,480 32,365 16,004 3,104 95,000 - 2,898 13,210 314,948 (319,499) (90,659) (228,840) 513 - (228,327) 10,242 $ (238,569) Loss per common share - Basic / Diluted Cash dividends per common share Weighted average common shares outstanding - Basic / Diluted $ (3.76) $ (3.95) - 94,624 - 60,374 6 28,626 10,643 764 158,268 198,301 7,699 13,026 9,239 228,265 236,443 184,000 52,443 31,683 7,103 3,457 1,315 - (2,714) 5,237 46,081 98,524 104,056 15,139 14,862 5,695 6,243 9,191 19,110 6,020 3,009 - - - 17,010 200,335 (101,811) (37,912) (63,899) 449 - $ $ (63,450) 724 (64,174) (1.35) .18 47,369 Consolidated Balance Sheet (in thousands, except share data) 2010 2009 Assets Cash and due from banks Interest-bearing deposits in banks Federal funds sold, commercial paper and short-term investments Cash and cash equivalents Securities available for sale Securities held to maturity (fair value $267,988) Mortgage loans held for sale Loans, net of unearned income Less allowance for loan losses Loans, net Assets covered by loss sharing agreements with the FDIC Premises and equipment, net Accrued interest receivable Goodwill and other intangible assets Foreclosed property Other assets $ 95,994 111,901 441,562 649,457 1,224,417 265,807 35,908 4,604,126 174,695 4,429,431 131,887 178,239 24,299 11,446 142,208 350,097 $ 126,265 120,382 129,720 376,367 1,530,047 - 30,226 5,151,476 155,602 4,995,874 185,938 182,038 33,867 225,196 120,770 319,591 Total assets $ 7,443,196 $ 7,999,914 7 Liabilities and Shareholders’ Equity Liabilities: Deposits: Demand NOW Money market Savings Time: Less than $100,000 Greater than $100,000 Brokered Total deposits Federal funds purchased, repurchase agreements and other short-term borrowings Federal Home Loan Bank advances Long-term debt Accrued expenses and other liabilities Total liabilities Commitments and contingencies Shareholders’ equity: Preferred stock, $1 par value; 10,000,000 shares authorized; Series A, $10 stated value; 21,700 shares issued and outstanding Series B, $1,000 stated value; 180,000 shares issued and outstanding Common stock, $1 par value; 200,000,000 shares authorized; 94,685,003 and 94,045,603 shares issued Common stock issuable; 336,437 and 221,906 shares Capital surplus (Accumulated deficit) retained earnings Accumulated other comprehensive income Total shareholders’ equity $ 793,414 1,424,781 891,252 183,894 1,496,700 1,002,359 676,772 6,469,172 101,067 55,125 150,146 32,171 6,807,681 217 175,711 94,685 3,894 665,496 (335,567) 31,079 635,515 707,826 $ 1,335,790 713,901 177,427 1,746,511 1,187,499 758,880 6,627,834 101,389 114,501 150,066 43,803 7,037,593 217 174,408 94,046 3,597 622,034 20,384 47,635 962,321 Total liabilities and shareholders’ equity $ 7,443,196 $ 7,999,914 Selected Financial Data - Quarterly Core Summary (in millions, except per share data; taxable equivalent) 2010 4th Q 3rd Q 2nd Q 1st Q Core Earnings Summary Net interest revenue Core fee revenue (1) Core revenue (1) Core operating expenses (2) Core earnings (pre-tax, pre-credit) (1)(2) Operating provision for loan losses (3) Foreclosed property costs Write downs and losses from sales Other expenses Loss on sale of non-perfoming assets Securities gains, net Loss on prepayment of borrowings Gain on sale of low income housing tax credits Income tax benefit Net operating loss from continuing operations (4) Non-cash goodwill impairment charges Partial reversal of fraud loss provision, net of tax expense (Loss) income from discontinued operations Gain from sale of subsidiary, net of income taxes and selling costs Net loss Preferred dividends and discount accretion Net loss available to common shareholders Performance Measures Per common share: Diluted operating loss from continuing operations (4) Diluted loss from continuing operations Diluted loss Book value Tangible book value (5) Key performance ratios: Net interest margin (6) Tangible equity to assets (period-end) (5) Tangible common equity to assets (period-end) (5) Asset Quality* Non-performing loans Foreclosed properties Total non-performing assets (NPAs) Allowance for loan losses Operating net charge-offs (1) Allowance for loan losses to loans Operating net charge-offs to average loans (1)(6) NPAs to loans and foreclosed properties NPAs to total assets At Period End Loans* Investment securities Total assets Deposits Shareholders’ equity Common shares outstanding $ $ $ $ $ $ $ $ $ $ 60.1 11.8 71.9 44.3 27.6 (47.8) (15.8) (4.8) - - - .7 16.5 (23.6) - 7.2 - - (16.4) 2.6 (19.0) (.28) (.20) (.20) 4.84 4.76 3.58 % 8.45 6.08 179.1 142.2 321.3 174.7 47.7 3.79 % 4.03 6.77 4.32 4,604 1,490 7,443 6,469 636 94.7 2009 4th Q $ $ $ 61.3 11.6 72.9 44.0 28.9 (75.0) (8.1) (2.7) - .1 - - 22.4 (34.4) - - (.1) 1.3 (33.2) 2.6 (35.8) (.39) (.39) (.38) 7.95 5.62 63.9 11.7 75.6 45.7 29.9 (90.0) (9.6) (4.8) - 2.0 - .7 31.7 (40.1) - - .2 - (39.9) 2.6 (42.5) (.45) (.45) (.45) 8.36 6.02 3.49 % 9.27 6.98 3.40 % 9.54 7.30 8 $ $ $ 60.0 12.6 72.6 45.2 27.4 (50.5) (14.2) (5.5) - 2.5 (2.2) - 16.7 (25.8) (210.6) - - - (236.4) 2.6 (239.0) (.30) (2.52) (2.52) 5.14 5.05 61.6 11.6 73.2 43.8 29.4 (61.5) (11.2) (3.3) (45.3) - - - 32.4 (59.5) - - - - (59.5) 2.6 (62.1) (.66) (.66) (.66) 7.71 5.39 3.57 % 9.35 6.84 3.60 % 9.22 6.86 $ $ $ $ $ $ 217.8 129.9 347.7 174.6 50.0 3.67 % 4.12 7.11 4.96 4,760 1,310 7,013 5,999 662 94.4 224.3 123.9 348.2 174.1 61.3 3.5 % 4.98 6.97 4.55 280.8 136.3 417.1 173.9 56.7 3.48 % 4.51 8.13 5.32 $ 4,873 1,488 7,652 6,330 904 94.3 4,992 1,527 7,837 6,488 926 94.2 $ $ 264.1 120.8 384.9 155.6 84.6 3.02 % 6.37 7.30 4.81 5,151 1,530 8,000 6,628 962 94.0 (1) Excludes net securities gains and losses, losses from the prepayment of borrowings and gains from the sale of low income housing tax credits. (2) Excludes foreclosed property costs, goodwill impairment charges and the loss on the sale of non-performing assets to Fletcher International. (3) Excludes an $11.75 million partial recovery of a 2007 fraud related loan loss and the reversal of the related provision for loan losses. (4) Excludes after-tax effect of the goodwill impairment charge and the partial recovery of a 2007 fraud related loan loss, both of which were considered to be non-operating items and are therefore excluded from operating earnings. Also excludes earnings (loss) from discontinued operations and the gain from the sale of Brintech. (5) Excluded the effect of acquisition related intangible assets. (6) Annualized. * Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC. Selected Financial Data - Annual Core Summary (in millions, except per share data; taxable equivalent) 2010 2009 2008 2007 2006 Core Earnings Summary Net interest revenue Core fee revenue (1) Core revenue (1) Core operating expenses (2) Core earnings (pre-tax, pre-credit) (1)(2) Operating provision for loan losses (3) Foreclosed property costs Write downs and losses from sales Other expenses Loss on sale of non-performing assets FDIC special assessment Bank-owned life insurance adjustments Securities gains (losses), net Loss on prepayment of borrowings Gain on sale of low income housing tax credits Income tax benefit Net operating (loss) income from continuing operations (4) Gain from acquisition, net of tax Non-cash goodwill impairment charges Severance cost, net of tax benefit Fraud loss provision and subsequent recovery, net of tax benefit Net (loss) income from discontinued operations Gain from sale of subsidiary, net of income taxes and selling costs Net (loss) income Preferred dividends and discount accretion Net (loss) income available to common shareholders 9 Performance Measures Per common share: Diluted operating (loss) earnings from continuing operations (4) Diluted (loss) earnings Cash dividends declared (rounded) Stock dividends declared (6) Book value Tangible book value (5) Key performance ratios: Net interest margin Tangible equity to assets (5) Tangible common equity to assets (5) Asset Quality* Non-performing loans Foreclosed properties Total non-performing assets (NPAs) Allowance for loan losses Operating net charge-offs (3) Allowance for loan losses to loans Operating net charge-offs to average loans (3) NPAs to loans and foreclosed properties NPAs to total assets At Year End Loans* Investment securities Total assets Deposits Shareholders’ equity Common shares outstanding $ $ $ $ $ $ $ $ $ $ 243.1 47.5 290.6 177.2 113.4 (234.8) (49.3) (16.4) (45.3) - - 2.5 (2.2) .7 88.0 (143.4) - (210.6) - 7.2 (.1) 1.3 (345.6) 10.3 (355.9) (1.62) (3.76) - - 4.84 4.76 3.56 % 9.15 6.80 179.1 142.2 321.3 174.7 215.7 3.79 % 4.42 6.77 4.32 4,604 1,490 7,443 6,469 636 94.7 245.2 47.5 292.7 182.9 109.8 (310.0) (18.1) (14.2) - (3.8) 2.0 2.8 - .7 91.7 (139.1) 7.1 (95.0) (1.8) - .5 - (228.3) 10.2 (238.5) (2.47) (3.95) - 3 for 130 8.36 6.02 $ $ 3.29 % 8.33 6.15 264.1 120.8 384.9 155.6 276.7 3.02 % 5.03 7.30 4.81 5,151 1,530 8,000 6,628 962 94.0 $ $ $ $ 238.7 47.5 286.2 179.3 106.9 (184.0) (12.4) (6.7) - - (2.0) 1.3 (2.7) - 35.7 (63.9) - - - - .4 - (63.5) .7 (64.2) (1.36) (1.35) .18 2 for 130 16.95 10.39 3.18 % 6.67 6.57 190.7 59.8 250.5 122.3 151.2 2.14 % 2.57 4.35 2.92 5,705 1,617 8,592 7,004 989 48.0 $ $ $ $ $ $ $ $ $ 274.5 52.7 327.2 177.3 149.9 (37.6) (1.5) (2.9) - - - 3.2 (2.2) - (40.3) 68.6 - - - (11.0) .4 - 58.0 - 58.0 1.47 1.24 .36 - 17.73 10.94 3.88 % 6.63 6.63 28.2 18.1 46.3 89.4 21.8 1.51 % .38 .78 .56 5,929 1,357 8,207 6,076 832 46.9 237.9 42.9 280.8 154.3 126.5 (14.6) (.5) (.5) - - - (.6) (.6) - (41.3) 68.4 - - - - .4 - 68.8 - 68.8 1.65 1.66 .32 - 14.37 10.57 4.05 % 6.32 6.32 12.5 1.2 13.7 66.6 5.5 1.24 % .12 .25 .19 5,377 1,107 7,101 5,773 617 42.9 (1) Excludes net securities gains and losses, losses from the prepayment of borrowings, gain from the acquisition of Southern Community Bank and gains from the sale of low income housing tax credits. (2) Excludes foreclosed property costs, goodwill impairment charges, severance costs, the special FDIC assessment in 2009, the loss from the sale of non-performing assets to Fletcher International in 2010 and a bank-owned life insurance expense item and subsequent recovery. (3) Excludes fraud-related provision for loan losses and related charge-offs of $18 million in 2007 and the subsequent partial recovery and provision reversal of $11.75 million in 2010. (4) Excludes after-tax effect of goodwill impairment charges, severance costs, gain from the acquisition of Southern Community Bank and fraud-related loan losses and subsequent partial recovery, all of which are considered to be non-operating items and are therefore excluded from operating earnings. Also excludes earnings (loss) from discontinued operations and the gain from the sale of Brintech. (5) Excludes the effect of acquisition-related intangible assets. (6) Number of new shares issued for shares currently held. * Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC. Corporate Information Financial Information Analysts and investors seeking financial information should contact: Rex S. Schuette Executive Vice President and Chief Financial Officer (706) 781-2265 rex_schuette@ucbi.com This Annual Report contains forward- looking statements that involve risk and uncertainty and actual results could differ materially from the anticipated results or other expectations expressed in the forward-looking statements. A discussion of factors that could cause actual results to differ materially from those expressed in the forward-looking statements is included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission. This Annual Report also contains financial measures that were prepared on a basis different from accounting principles generally accepted in the United States (“GAAP”). References to operating earnings, pre-tax, pre-credit earnings and core earnings are non-GAAP financial measures. Management has included such non-GAAP financial measures because such non-GAAP measures exclude certain non-recurring revenue and expense items and therefore provide a meaningful basis for analyzing financial trends. A reconciliation of these measures to financial measures determined using GAAP is included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission. Stock Price United Community Banks, Inc.’s common stock is traded on the Nasdaq Global Select market under the symbol UCBI. Quarterly stock prices for 2010 and 2009 are provided in the following table. 2010 2009 Quarter High Low Close Average Daily Volume High Low Close Average Daily Volume 1st 2nd 3rd 4th $ 5.00 $ 3.21 $ 4.41 882,923 $ 13.87 $ 2.28 $ 4.16 524,492 6.20 3.86 3.95 849,987 4.10 2.60 2.04 1.10 2.24 810,161 1.95 1,084,578 9.30 8.00 5.33 4.01 4.80 3.07 5.99 244,037 5.00 525,369 3.39 1,041,113 Account Consolidation If you receive duplicate statements from United and wish to discontinue such mailings, or would like to consolidate your accounts, contact Shareholder Relations at (866) 270-5900 or investor_relations@ucbi.com. This will enable United to avoid unnecessary cost for duplication and mailing. Independent Registered Public Accountants Porter Keadle Moore, LLP Atlanta, Georgia Legal Counsel Kilpatrick Townsend & Stockton LLP Atlanta, Georgia Shareholders seeking information on stock- transfer requirements, lost certificates, dividends and other shareholder matters, should contact Shareholder Relations. Transfer Agent and Registrant IST Shareholder Services 209 West Jackson Blvd., Suite 903 Chicago, Illinois 60606 (312) 427-2953 Equal Opportunity Employer United Community Banks is an equal opportunity employer. All matters regarding recruiting, hiring, training, compensation, benefits, promotions, transfers and other personnel policies will remain free from discriminatory practices. United Community Banks, Inc. © 2011. Board of Directors Robert L. Head, Jr. Chairman Owner, Head Westgate W.C. Nelson, Jr. Vice Chairman Owner, Nelson Tractor Company Jimmy C. Tallent President and Chief Executive Officer Robert H. Blalock Owner, Blalock Insurance Agency, Inc. Cathy Cox President, Young Harris College Hoyt O. Holloway Owner, H and H Farms Peter E. Raskind Principal JMB Consulting LLC John D. Stephens Partner, Stephens MDS, LP Tim Wallis President and Chief Executive Officer Wallis Printing Company Zell B. Miller Director Emeritus Retired U.S. Senator Executive Officers Jimmy C. Tallent President and Chief Executive Officer Guy W. Freeman Executive Vice President Chief Operating Officer Rex S. Schuette Executive Vice President Chief Financial Officer David P. Shearrow Executive Vice President Chief Risk Officer Craig Metz Executive Vice President Corporate Marketing Bill M. Gilbert Senior Vice President Retail Banking Glenn S. White President, Atlanta Region United Community Banks, Inc. | 125 Highway 515 East | Blairsville, Georgia 30512 706.781.2265 | 866.270.7200 | ucbi.com 

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