2 0 1 1 A N N U A L R E P O R T
United Community Banks, Inc.
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(in millions, except per share data)
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
Bulk Loan Sale costs
Reclassification of pension costs
Severance
Hedge ineffectiveness
Securities gains, net
Loss on prepayment of borrowings
Gain on sale of low income housing tax credits
Income tax benefit (expense)
Net operating loss
Noncash goodwill impairment charges
Partial recovery of 2007 fraud loss
Loss 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
Non-performing assets to total assets
Tangible 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
2011
2010
$ 235.7
44.2
180.3
99.6
(251.0)
(78.9)
-
(5.6)
2.3
(1.1)
5.0
.8
(.8)
.7
2.3
(226.7)
-
-
-
-
(226.7)
(11.9)
$ (238.6)
$
(5.97)
(5.97)
6.62
6.47
$ 243.1
45.6
176.9
111.8
(234.8)
(65.7)
(45.4)
-
-
-
1.6
2.5
(2.2)
.7
(73.2)
(304.7)
(210.6)
11.7
(.1)
1.3
(502.4)
(10.3)
$ (512.7)
$ (16.64)
(27.09)
15.40
14.80
3.44 %
2.79
2.30
8.13
13.69
3.56 %
3.79
4.42
6.29
9.81
$ 4,1 1 0
2,120
6,983
6,098
575
57,561
16,900
1,754
106
$ 4,604
1,490
7,276
6,469
469
18,937
18,000
1,817
106
L ETTER T O Sh AR E h OL d ER S
Dear Fellow Shareholders,
In my letter to you last year, I shared a bold plan
to accelerate our return to profitability by raising
a significant amount of capital and disposing
of our most troubled assets. Reflecting back a
year later, those two key events remain etched
in my mind as the turning point that placed
United Community Banks squarely on the path
to recovery.
While 2011 brought with it a new set of
challenges, I am happy to report our capital
transaction and problem asset disposition plan
were successful in accomplishing their intended
objectives.
• We restored compliance with the
memorandum of understanding with
regulators;
• we resumed dividend and interest
payments on our preferred stock and trust
preferred securities;
• we significantly reduced our balance
sheet risk profile by disposing of our most
challenging assets; and
• we returned to profitability with two
profitable quarters in 2011 and the
expectation this trend will continue
throughout 2012 and beyond.
It’s a different world today than it was just a year
ago. This company is much stronger because of
the actions we took early in 2011. Our complete
focus today is on creating sustainable profitability
thereby increasing the value of your investment.
Of course, we are not getting much help from the
economy. Real estate values have yet to stabilize
and unemployment remains high. Many expect
a long and slow recovery, and the past few years
certainly support that belief.
As I said, we have made progress but we’re
still not where we need to be. At some point
a company must draw a line in the sand and
declare that it is time to make a paradigm shift.
A company must pronounce that it is time to
do some serious soul searching and to do the
things that will make the company strong and
profitable. For United Community Banks, that
time is now.
To this end, we have established measurable,
specific goals for 2012 and 2013. While the
actions of 2011 were a positive turning point
on the path to recovery, the actions of 2012 are
designed to move us forward down that path
toward superior financial performance.
Core Deposit Growth
Core transaction deposits are the lifeblood of
our company and an important component of
our overall franchise value. The past three years
have been very favorable in this regard, and 2011
was no exception: We attracted $266 million in
net new core transaction deposits, added more
than 15,600 net new core deposit accounts and
welcomed thousands of new customers. Nearly
70 percent of the new deposits were in non-
interest-bearing accounts, providing a low-cost
funding source which is key to maximizing our net
interest margin. For 2012, our goal is to grow core
transaction deposits eight percent. Keep in mind,
these accounts also provide a great opportunity
to cross-sell other products and services.
Loan Growth
Developing quality loan growth is a significant
challenge in a struggling economy, with intense
competition for a smaller pool of attractive
lending opportunities. Much of our future
growth will come from customers moving their
business – both loans and deposits – to United
Community Bank. We believe they have good
reasons to do that: our competitive personal
products, business solutions, experienced people
and, most of all, our legendary service.
1
Over the past year United has successfully
recruited experienced commercial relationship
managers who can add significant loan and
deposit relationships in markets with the best
opportunities. In addition, we have strengthened
our competitive position by bringing expertise
with loan products that are typically available
only at much larger financial institutions.
As a result of these and other efforts, in 2011 we
added $542 million in new loan commitments,
of which we funded $392 million. Momentum
increased as the year progressed and despite
the weak economy, the fourth quarter of 2011
was our first linked quarter of loan growth since
the first quarter of 2008. Our goal for 2012 is to
show positive loan growth for the year for the
first time since 2007.
Loan Diversification
Diversification of our loan portfolio is critical
to improving our risk profile. Since 2007,
we have focused on reducing residential
construction loans while increasing loans to
small and medium sized businesses in a wide
range of industries. Residential construction
loans accounted for just under 11 percent of our
portfolio at the end of 2011, compared to almost
34 percent in 2007. While we always seek to
serve the full range of our communities’ credit
needs, our focus is on a balanced portfolio of
banking relationships with consumers and small
to medium sized businesses.
Credit
We have committed ourselves throughout the
economic downturn to aggressively manage our
credit challenges. This was demonstrated in part
by the large classified asset sale in April, 2011,
which significantly improved our credit metrics.
Non-performing assets have been reduced by
half, classified loans are down 34 percent, and
our provisioning for loan losses was down 61
percent in the fourth quarter of 2011 compared
to 2010. Make no mistake, we still have much
work to do in this area. Credit metrics are still
well short of our long-term goals, yet we believe
we can address these remaining challenges while
maintaining profitability.
Margin
Following the liquidity crisis that plagued the
financial services industry in 2008, we began
rebuilding our net interest margin by focusing
intently both on loan and deposit pricing and on
growing core transaction deposits. Consequently
we increased the net interest margin from a low
of 2.70 percent in the fourth quarter of 2008 to
3.51 percent in the fourth quarter 2011.
Maintaining and improving upon our margin
will be challenging, with interest rates expected
to remain at historic lows for an extended
time period. Competition for limited lending
opportunities will keep pressure on loan rates –
not just for new business but also for preserving
existing business. With deposit rates nearly as
low as they can go, opportunities will be limited
for substantial margin improvement from lower
funding costs. However, with each basis point
on our margin representing nearly $700,000
in annual pre-tax earnings, even incremental
improvements can have a meaningful impact.
Our goal for 2012 is to maintain the margin
above 3.50 percent and make incremental
increases by continuing to improve the deposit
mix while capitalizing on opportunities that
become available with wholesale borrowings and
short-term investments.
Fee Revenue
Over the past few years we have seen numerous
challenges to our main sources of fee revenue.
Among them are the “opt-in” requirements for
courtesy overdraft services in 2010, and the
more recent limitation on interchange fees in
October, 2011. Today the interchange fee limits
apply only to banks with more than $10 billion
in assets, so they do not directly affect United.
We believe, however, that ongoing competition
and further regulation may eventually drive
these limits to include all banks. Protecting
and growing fee revenue will, therefore, remain
challenging for all banks going forward.
To restore the revenue lost to these regulatory
changes, in the fourth quarter of 2011 we
implemented service fees on demand deposit
accounts when balances fall below a given
2
amount at any time during the month. The
decision to charge a service fee after years of
free checking was difficult and followed lengthy
review and consideration. The good news is
that although we have seen some account
consolidation, we continue to see growth in
balances, putting us on track to realize an
increase in service fee revenue for 2012.
Restoring the Deferred Tax Asset
In January 2012, we announced that we would
restate our previously reported financial results
for year-end 2010 and the first three quarters
of 2011 to establish a full valuation allowance
against our net deferred tax asset, effective as
of December 31, 2010. Accounting for deferred
income taxes is highly subjective and judgmental,
and therefore differences of opinion can occur.
Our expectation was, and still remains, that we
will have continued future earnings. However,
when we compared our earnings outlook to
our significant loss carryforward position at the
end of 2010, we determined that the negative
evidence of the recent losses outweighed the
positive outlook for future earnings. That being
the case, we recorded a full valuation allowance
for our net deferred tax asset.
For the most part, our net deferred tax asset
represents the tax benefits from prior years’
net operating losses that will be used to offset
the tax liabilities resulting from future earnings.
Simply put, when we make a profit, we pay taxes.
When we have a loss, we carry the tax benefit
forward to offset taxes on future profits. In most
cases, we can carry those tax benefits forward
20 years and report them as an asset in our
financial statements.
While we no longer show a deferred tax asset
balance in our financial statements as a result
of our full valuation allowance, those underlying
tax benefits are just as valuable to us today as
they were before. Once we establish a pattern
of several quarters of profitability and show
meaningful improvement in our credit measures,
we believe the weight of evidence will shift
and we can reverse the valuation allowance.
We already have two quarters of profitability
behind us and we expect to remain profitable
throughout 2012.
Customer Service
United Community Bank’s customer satisfaction
rating continued to rise in 2011, reaching an all-
time high of 95 percent for the year: the best in
the nation. Exceptional customer service is our
point of differentiation, the core of our strategy,
our foundation for growth, and the right way to
do business. We go to great lengths to maintain
and improve this superior level of customer
service.
Keeping our current customers is less costly
than finding new ones, and a satisfied customer
is the best form of advertising. United bankers
throughout this organization work hard to
achieve our extraordinary level of customer
satisfaction, and deserve tremendous credit.
Maintaining superior customer satisfaction
scores and remaining the bank of choice in our
markets will continue to be a top priority in the
years to come.
Expense Reduction
To achieve superior financial performance, we
must be lean and efficient. This will be a key
focus in 2012 and beyond. Our costs have been
roughly unchanged over the past three years,
yet revenues have decreased with the shrinking
loan portfolio. Since we can’t count on revenue
growth alone to achieve our performance goals,
we must closely examine all of our internal
processes and expenses to reduce costs.
Earlier this year I convened a team of 75 United
leaders and charged them with this evaluation. I
wanted to ensure that we had full representation
from every functional area and process within this
company – from bank presidents to department
managers – and we do. We will use consultants
on a limited basis to help us “think outside the
box,” but the evaluation will be done mostly
by our own people. They are well underway
identifying processes that can be streamlined
and made more efficient. Effectively leveraging
technology will be one key to savings initiatives.
3
Profitability
All of the goals I have laid out so far have
one common thread, and that is improving
profitability and the value of your investment in
United Community Banks. Long-term growth
in shareholder value requires that we increase
profitability quarter after quarter – and you
should expect nothing less.
To this end, we have made a commitment to you
and our board to improve our annualized pre-
tax, pre-credit earnings by $10 million through
expense reductions, increasing revenue or both.
Achieving this annualized $10 million run-rate
goal by the fourth quarter of 2012 is not optional;
how we achieve it is.
Let me stress, however, as I have with our
directors, leaders and employees: these changes
will not be made at the expense of our culture or
customer service. Family spirit, personal care of
customers and pride in United Community Banks
have served us well over the years, and I will not
allow them to be sacrificed.
Our people are aware of the harsh reality that
there will be fewer employees when this process
is completed. It is our hope, however, that
attrition and redistribution of our resources
will account for much of this reduction in
employment.
Before I close, I want to recognize three people
who have made a lasting mark on United
Community Banks, and who have chosen to
retire.
First is Guy Freeman, a man who truly has been a
pillar in the success of this company. Guy retired
at the end of 2011 after 45 years in banking and
17 years of service to United Community Banks.
He served as executive vice president and chief
operating officer, but no title can describe the
depth of his impact, influence or legacy. We
all owe Guy a huge debt of gratitude, and I
personally will miss his counsel and insight.
I also want to recognize and thank Director Hoyt
Holloway and Director Emeritus Zell Miller for
their many years of dedicated service. Both will
be retiring from our board at the end of their
terms this year. In addition, we greatly appreciate
the guidance of Director Peter Raskind, who
leaves our board to join the Capital One Financial
Corporation Board. I’d like to thank all of them
for their exceptional contribution and leadership.
Also, I’m pleased to announce the addition of
our three newest directors: Cliff Brokaw, Steven
Goldstein and Thomas Richlovsky.
Cliff Brokaw has extensive experience in the
financial services industry, serving as managing
director of Corsair Capital, LLC, since 2007.
Mr. Brokaw also serves as a member of the
Investment Committee and leads the quarterly
valuation process. He was managing director
in the Financial Institutions group at Goldman
Sachs & Co. from 1999 to 2007, worked in the
Mergers and Acquisition group of J.P. Morgan
from 1996 to 1999, and currently serves as a
director of Torus Insurance Holdings. He has
a great deal of experience with banks and
insurance companies involving demutualization,
initial public offerings, mergers, acquisitions,
and capital offerings. Cliff brings tremendous
strategic insight to our board of directors.
Steven Goldstein has wide experience in the
financial services industry having served in
senior executive positions in finance and risk
management at major banking and regulatory
organizations. He most recently was executive
vice president and chief financial officer of The
Federal Home Bank of Atlanta from 2007 to
2011. His responsibilities included financial and
regulatory reporting, Sarbanes-Oxley compliance,
accounting operations, oversight of financial
modeling, and enterprise risk management. Mr.
Goldstein was senior vice president and chief
financial officer of Royal Bank of Canada’s U.S.
and International division from 2001 to 2006
following its acquisition of Centura Banks,
Inc. where he had been chief financial officer
from 1997 to 2001. He previously held senior
management roles with financial services
consulting firms and was deputy director of
the Office of Public and Economic Research
at the Federal Home Loan Bank Board in
Washington, D.C.
4
I do not want to sell short the wisdom, foresight
and strategic thinking of our management team
but, in many cases, the burden of execution was
laid at the feet of our people. Our company’s
stabilization and return to profitability are a
testament to the passion and commitment of
this amazing team.
For this reason, as a fellow employee and friend,
I simply say thank you to the United team.
Together we will meet the goals set out in this
letter, and we will build on the foundation of 2011
to grow long-term, sustainable profitability and
value.
And to you, our shareholders, I want to express
my sincere gratitude for your continued patience
and support. Last year was a turning point. By
continuing to navigate our way through this
economy and staying focused on our goals, we
will continue the trend to sustained profitability
and increased shareholder value.
Jimmy Tallent
President and Chief Executive Officer
Thomas Richlovsky also has extensive
experience in the financial services industry,
having served in senior executive positions
in finance, accounting and treasury at major
banking organizations. He most recently was
executive vice president at PNC Financial
Services Group Inc. from 2009 to 2011 and was
chief financial officer, treasurer and principal
accounting officer of National City Corporation
at the time of its acquisition by PNC. During his
30-year tenure with National City, he assumed
progressively greater responsibilities and gained
extensive financial, accounting, and treasury
expertise.
I welcome Cliff, Steve and Tom to our board,
and I look forward to their contribution as we
undertake this exciting period in our company’s
history. Their experience and expertise will
provide valuable perspectives for our board.
In closing, I want to recognize another group of
people who have been integral to our progress
and will propel us to meet the targets I’ve laid
out in this letter. These are the 1,700 people
who proudly call themselves United Community
Banks employees.
I opened by describing our achievements in
2011, but the work to get us to this point started
five years ago at the beginning of the economic
downturn. It was critical that our employees
recognized and fully understood the issues and
strengthened their backs for the long haul. They
did that, and then some. They have not shied
away from a single challenge.
At the outset they took the immediate action
required to address our most urgent needs, and
they also applied the skill, care and drive needed
for our long-term recovery. From growing core
deposits at a record pace to performing more
work with fewer people, our United family – both
in the banks and behind the scenes – stepped up
because of their passion for this company. Most
importantly they worked their way through these
difficult years and still managed to increase
customer satisfaction to record levels. This is
unheard of.
5
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(in thousands, except per share data)
2011
2010
2009
INTEREST REvENuE:
Loans, including fees
Investment securities:
Taxable
Tax exempt
Federal funds sold, commercial paper, reverse repurchase agreements 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
Losses on prepayment of borrowings
Gain from acquisition
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) expense
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
Loss from continuing operations per common share - basic / diluted
Loss per common share - basic / diluted
Weighted average common shares outstanding - basic / diluted
$ 239,056
$ 277,904
$ 322,509
55,251
1,009
2,321
297,637
58,821
1,137
3,260
341,122
3,998
5,456
234
39,1 5 1
48,839
4,250
2,042
10,544
65,675
231,962
251,000
(19,038)
29,1 1 0
5,419
2,986
842
(791)
-
12,342
49,908
30,870
100,095
13,1 3 5
15,645
4,291
4,256
9,727
78,905
14,259
3,016
-
-
-
18,270
261,599
(230,729)
(3,983)
(226,746)
-
-
(226,746)
11,838
$ (238,584)
$
(5.97)
(5.97)
39,943
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)
71,217
(503,509)
(101)
1,266
(502,344)
10,3 16
$ (512,660)
$ (27.15)
(27.09)
18,925
76,048
1,322
2,950
402,829
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
13,2 10
314,948
(319,499)
(90,659)
(228,840)
513
-
(228,327)
10,242
$ (238,569)
$
(19.80)
(19.76)
12,075
6
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(in thousands, except per share data)
2011
2010
ASSETS
Cash and due from banks
Interest-bearing deposits in banks
Federal funds sold, commercial paper, reverse repurchase agreements and short-term investments
$
Cash and cash equivalents
Securities available for sale
Securities held to maturity (fair value $343,531 and $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
53,807
139,609
185,000
378,416
1,790,047
330,203
23,8 8 1
4,109,614
114,468
3,995,146
78,1 4 5
175,088
20,693
8,428
32,859
150,51 4
$
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
183,160
Total assets
$ 6,983,420
$ 7,276,259
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
Unsettled securities purchases
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
Series D, $1,000 stated value; 16,613 shares issued and outstanding
Common stock, $1 par value; 100,000,000 shares authorized;
41,647,100 and 18,937,001 shares issued and outstanding
Common stock, non-voting $1 par value; 30,000,000 shares authorized;
15,914,209 shares issued and outstanding
Common stock issuable; 93,681 and 67,287 shares
Capital surplus
Accumulated deficit
Accumulated other comprehensive (loss) income
Total shareholders’ equity
$
992,109
1,509,896
1,038,778
199,007
1,332 ,394
847,1 5 2
178,647
6,097,983
102,577
40,625
120,225
10,325
36,199
$
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
-
32,1 7 1
6,407,934
6,807,681
217
177,092
16,6 1 3
217
175,7 1 1
-
41,647
18,937
15,914
3,233
1,054,940
(730,861)
(3,309)
-
3,894
741,244
(492,276)
20,851
575,486
468,578
Total liabilities and shareholders’ equity
$ 6,983,420
$ 7,276,259
7
(in millions, except per share data; taxable equivalent)
2011
4th q
3rd q
2nd q
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CORE EARNINGS SuMMARY
Net interest revenue (1)
Core fee revenue (2)
Core revenue (1)(2)
Core operating expenses (3)
Core earnings (pre-tax, pre-credit) (1)(2)(3)
Operating provision for loan losses (4)
Foreclosed property costs:
$
$
59.1
11.4
70.5
43.9
26.6
(14.0)
Write downs and losses from sales
Other expenses
Bulk Loan Sale costs
Reclassification of pension prior service cost and actuarial losses
Severance cost
Hedge ineffectiveness
Securities gains, net
Loss on prepayment of borrowings
Gain on sale of low income housing tax credits
Income tax benefit (expense)
Net operating income (loss) (5)
Partial reversal of fraud loss provision, net of tax expense
Net income (loss)
Preferred dividends and discount accretion
Net income (loss) available to common shareholders
$
PERFORMANCE MEASuRES
Per common share:
Diluted operating earnings (loss) (5)
Diluted earnings (loss)
Book value
Tangible book value (6)
Key performance ratios:
Net interest margin (7)
Tangible equity to assets (period-end) (6)
Tangible common equity to assets (period-end) (6)
ASSET quALITY *
Non-performing loans
Foreclosed properties
Total non-performing assets (NPAs)
Allowance for loan losses
Operating net charge-offs (4)
Allowance for loan losses to loans
Operating net charge-offs to average loans (4)(7)
NPAs to loans and foreclosed properties
NPAs to total assets
AT PERIOD END
Loans *
Investment securities
Total assets
Deposits
Shareholders’ equity
Common shares outstanding
$
$
$
(6.9)
(2.4)
-
2.3
-
.3
-
-
.7
3.3
9.9
-
9.9
3.0
6.9
.12
.12
6.62
6.47
3.51 %
8.1 3
5.35
127.5
32.8
160.3
114.5
45.6
2.79 %
4.39
3.87
2.30
4,1 1 0
2,120
6,983
6,098
575
57.6
$
$
$
$
$
$
$
$
$
$
$
$
59.3
11.3
70.6
44.1
26.5
(36.0)
(1.0)
(1.8)
-
-
-
.6
-
-
-
.4
(11.3)
-
(11.3)
3.0
(14.3)
(.25)
(.25)
6.77
6.61
58.9
11.1
70.0
45.6
24.4
(11.0)
.1
(2.0)
-
-
(1.1)
2.7
.8
(.8)
-
(1.1)
12.0
-
12.0
3.0
9.0
.16
.16
7.11
6.94
3.55 %
8.34
5.53
3.41 %
8.30
5.59
$
$
144.5
44.2
188.7
146.1
17.5
3.55 %
1.68
4.54
2.74
4,1 1 0
2,123
6,894
6,005
583
57.5
71.0
47.6
118.6
127.6
16.5
3.07 %
1.58
2.82
1.66
4,163
2,188
7,152
6,183
603
57.5
2010
4th q
60.1
11.2
71.3
44.1
27.2
(47.8)
(15.8)
(4.8)
-
-
-
.4
-
-
.7
(144.8)
(184.9)
11.8
(173.1)
2.6
(175.7)
(9.87)
(9.25)
15.40
14.80
$
$
$
58.4
10.4
68.8
46.7
22.1
(190.0)
(60.6)
(4.3)
(5.6)
-
-
1.4
-
-
-
(.3)
(237.3)
-
(237.3)
2.9
(240.2)
(13.00)
(13.00)
2.20
1.69
3.30 %
7.47
.46
3.58 %
6.29
3.87
$
$
83.7
54.4
138.1
133.1
231.6
3.17 %
20.71
3.25
1.79
4,194
1,884
7,709
6,598
586
20.9
179. 1
142.2
321.3
174.7
47.7
3.79 %
4.03
6.77
4.42
4,604
1,490
7,276
6,469
469
18.9
(1) Includes the add back of $2.0 million in reversed interest on performing loans included in the Bulk Loan Sale in 2011. (2) Excludes net securities gains and losses, losses from the prepayment of borrowings,
gains from the sale of low income housing tax credits and hedge ineffectiveness gains. (3) Excludes foreclosed property costs, Bulk Loan Sale costs, reclassification of prior service cost and actuarial losses on
Modified Retirement Plan to other comprehensive income and severance cost. (4) Excludes an $11.75 million partial recovery of a 2007 fraud-related loan loss and the reversal of the related provision for loan
losses. (5) Excludes the partial recovery of a 2007 fraud-related loan loss, which was considered to be a non-operating item and was therefore excluded from operating earnings.
(6) Excluded the effect of acquisition-related intangible assets. (7) Annualized. * Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
8
(in millions, except per share data; taxable equivalent)
2011
2010
2009
2008
2007
y
r
a
m
m
u
S
e
r
o
C
l
a
u
n
n
A
-
a
t
a
D
l
a
i
i
c
n
a
n
F
d
e
t
c
e
l
e
S
CORE EARNINGS SuMMARY
Net interest revenue (1)
Core fee revenue (2)
Core revenue (1)(2)
Core operating expenses (3)
Core earnings (pre-tax, pre-credit) (1)(2)(3)
Operating provision for loan losses (4)
Foreclosed property costs:
Write downs and losses from sales
Other expenses
Bulk Loan Sale costs
Reclassification of pension prior service cost and actuarial losses
Severance cost
Loss on sale of non-performing assets
FDIC special assessment
Bank-owned life insurance adjustments
Hedge ineffectiveness
Securities gains, net
Loss on prepayment of borrowings
Gain on sale of low income housing tax credits
Income tax benefit (expense)
Net operating (loss) income from continuing operations (5)
Gain from acquisition, net of tax
Noncash 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
PERFORMANCE MEASuRES
Per common share:
Diluted operating (loss) earnings from continuing operations (5)
Diluted (loss) earnings from continuing operations
Diluted (loss) earnings
Cash dividends declared (rounded)
Stock dividends declared (7)
Book value
Tangible book value (6)
Key performance ratios:
Net interest margin
Tangible equity to assets (6)
Tangible common equity to assets (6)
ASSET quALITY *
Non-performing loans
Foreclosed properties
Total non-performing assets (NPAs)
Allowance for loan losses
Operating net charge-offs (4)
Allowance for loan losses to loans
Operating net charge-offs to average loans (4)
NPAs to loans and foreclosed properties
NPAs to total assets
AT YEAR-END
Loans *
Investment securities
Total assets
Deposits
Shareholders’ equity
Common shares outstanding
$
$
$
$
$
$
$
$
$
$
235.7
44.2
279.9
180.3
99.6
(251.0)
(68.4)
(10.5)
(5.6)
2.3
(1.1)
-
-
-
5.0
.8
(.8)
.7
2.3
(226.7)
-
-
-
-
-
-
(226.7)
11.9
(238.6)
(5.97)
(5.97)
(5.97)
-
-
6.62
6.47
3.44 %
7.62
3.74
127.5
32.8
160.3
114.5
3 1 1.2
2.79 %
7.33
3.87
2.30
4,110
2,120
6,983
6,098
575
57.6
243.1
45.6
288.7
176.9
111.8
(234.8)
(49.3)
(16.4)
-
-
-
(45.4)
-
-
1.6
2.5
(2.2)
.7
(73.2)
(304.7)
-
(210.6)
-
1 1.7
(.1)
1.3
(502.4)
10.3
(512.7)
$
$
245.2
47.4
292.6
182.4
110.2
(310.0)
(18.1 )
(14.2)
-
-
-
-
(3.8)
2.0
(.4)
2.8
-
.7
91.7
(139.1)
7.1
(95.0)
(1.8)
-
.5
-
(228.3)
10.2
(238.5)
$
$
238.7
47.9
286.6
179.8
106.8
(184.0)
(12.4)
(6.7)
-
-
-
-
-
(2.0)
.1
1.3
(2.7)
-
35.7
(63.9)
-
-
-
-
.4
-
(63.5)
.7
(64.2)
$
$
$
$
$
(16.64)
(27.15)
(27.09)
-
-
15.40
14.80
$
(12.37)
(19.80)
(19.76)
-
3 for 130
41.78
30.09
$
(6.82)
(6.82)
(6.77)
.87
2 for 130
84.75
51.93
3.56 %
8.88
6.52
179.1
142.2
321.3
174.7
215.7
3.79 %
4.42
6.77
4.42
4,604
1,490
7,276
6,469
469
18.9
$
$
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
18.8
$
$
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
9.6
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
7.36
6.18
6.22
1.73
-
88.52
54.62
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
9.4
(1) Includes the add back of $2.0 million in reversed interest on performing loans included in the Bulk Loan Sale in 2011. (2) Excludes net securites gains and losses, losses from the prepayment of borrowings,
hedge ineffectiveness gains and losses, gain from the acquisition of Southern Community Bank and gains from the sale of low income housing tax credits. (3) Excludes foreclosed property costs, goodwill
impairment charges, severance costs, the special FDIC assessment in 2009, the loss from the sale of nonperforming assets to Fletcher International in 2010, the reclassification of unamortized prior service
cost and actuarial losses related to United’s Modified Retirement Plan to Other Comprehensive Income, certain expenses related to the 2011 Bulk Loan Sale and a bank-owned life insurance expense item and
subsequent recovery. (4) 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.
(5) Excludes after-tax effect of goodwill impairment charges, 2009 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.
(6) Excludes the effect of acquisition-related intangible assets. (7) Number of new shares issued for shares currently held. * Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC.
9
n
o
i
t
a
m
r
o
f
n
I
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a
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o
p
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o
C
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
2011
2010
quarter
High
Low Close
Average
Daily
volume
High
Low Close
Average
Daily
volume
1st
2nd
3rd
4th
$ 11.85 $ 5.95 $ 11.65
227,321
$ 25.00 $ 16.05 $ 22.05
176,585
14.65
9.80
10.56
139,741
31.00
19.30
19.75
169,997
11.33
7.67
8.49
214,303
20.50
10.20
11.20
162,032
8.90
6.22
6.99
202,024
13.00
5.50
9.75
216,916
The stock price information shown above has been adjusted to reflect United’s 1 for 5 reverse
stock split as though it had occured at the beginning of the earliest reported period.
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.
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
Independent Registered Public
Accountants
Porter Keadle Moore, LLC
Atlanta, Georgia
Legal Counsel
Kilpatrick Townsend & Stockton LLP
Atlanta, Georgia
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. © 2012.
Tim R. Wallis
President and
Chief Executive Officer
Wallis Printing Company
Zell b. Miller
Director Emeritus
Retired U.S. Senator
board of Directors
Robert L. Head, Jr.
Chairman
Owner, Head Westgate
W.C. Nelson, Jr.
Owner, Nelson Tractor
Company
Jimmy C. Tallent
President and
Chief Executive Officer
L. Cathy Cox
President, Young Harris
College
Steven J. Goldstein
Retired Chief Financial
Officer, Federal Home
Loan Bank of Atlanta
Hoyt O. Holloway
Owner, H and H Farms
Robert H. blalock
Owner, Blalock Insurance
Agency, Inc.
Clifford v. brokaw
Managing Director
Corsair Capital
Thomas A. Richlovsky
Retired Chief Financial
Officer and Treasurer
National City Corporation
John D. Stephens
Partner, Stephens MDS, LP
Executive Officers
Jimmy C. Tallent
President and
Chief Executive Officer
Rex S. Schuette
Executive Vice President
Chief Financial Officer
David P. Shearrow
Executive Vice President
Chief Risk Officer
Craig Metz
Executive Vice President
Retail Banking and
Corporate Marketing
bill M. Gilbert
Regional President
North Georgia and
Coastal Georgia
Tim Schools
Regional President
North Carolina and
Tennessee
Glenn S. White
Regional President
Atlanta
United Community Banks, Inc. | 125 Highway 515 East | Blairsville, Georgia 30512
706.781.2265 | 866.270.7200 | ucbi.com