United Community Banks
Annual Report 2012

Plain-text annual report

2012 Annual Report United Community Banks, Inc. United Community Banks, Inc. Financial Highlights (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 Bulk Loan Sale costs Reclassification of pension costs Severance costs Hedge ineffectiveness gains, net Securities gains, net Loss on prepayment of borrowings Provision for litigation settlement Gain on sale of low income housing tax credits Interest on federal tax refund Income tax (expense) benefit Net income (loss) Preferred dividends and discount accretion Net income (loss) available to common shareholders Per Common Share Diluted income (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 2012 2011 $ $ $ $ 229.1 53.5 166.1 116.5 (62.5) (14.0) - - (2.3) .7 7.1 (6.7) (4.0) .7 1.1 (2.7) 33.9 (12.2) 21.7 0.38 6.67 6.57 3.50 % 2.57 5.60 14.16 4,175 2,079 6,802 5,952 581 57,741 15,000 1,590 105 $ $ $ $ 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) (11.9) (238.6) (5.97) 6.62 6.47 3.44 % 2.79 5.35 13.69 4,110 2,120 6,983 6,098 575 57,561 16,900 1,754 106 LETTER TO SHAREHOLDERS Dear Fellow Shareholders, Before reviewing 2012 and a promising outlook for 2013, I want to begin with this: The past 12 months have been among the most positive United Community Banks has experienced in years. We closed the year with our fifth consecutive profitable quarter, and our sixth out of the past seven, solidly on the path to our goal of sustained profitability. You well know that the past five years have been uncharted territory for all banks, with no map or rulebook through the economic environment. However, United has a skilled, experienced and dedicated management team and board to lead the way. These men and women have been, and continue to be, our compass and true north. In last year’s annual report I described our objectives in 2012. In this letter I will review our record toward accomplishing those objectives. 2011 ended on a good note with a profitable quarter, our second of the year after 13 consecutive quarterly losses. The first quarter of 2012 followed suit with what would be the first of four profitable quarters, and the highest pre-tax, pre-credit earnings since the fourth quarter of 2009. Setting the stage for these results, and pivotal for this company, was the March 2011 execution of our capital transaction and problem asset disposition plan. Our 2011 annual report outlined key areas of concentration for 2012: core deposit growth, loan growth, credit quality, margin, fee revenue, expense reductions, customer service and profitability. We have made significant progress. CORE DEPOSIT GROWTH After attracting an impressive $266 million in net new core transaction deposits in 2011, we set an ambitious goal to grow these deposits again in 2012, this time by 8 percent. As it turned out we exceeded this goal with growth of 11 percent, or $311 million, most of it in noninterest-bearing demand deposits. United employees opened a record 37,072 new core deposit accounts and sold 15,306 new services in 2012 as part of our highly successful United Express campaign. Over the past four years, United Express has provided a financial incentive to bring in new business, but we have found that the primary driving force for our bankers is not extra money but a point of pride. They want to help this company return to sustained success, in this case by providing a steady source of new core deposits. To be perfectly clear, they have delivered with growth of $1.1 billion over the past four years while adding thousands of new customers. 2 LOAN GROWTH Despite a continued struggling economy in 2012, business lending continued to produce favorable results. We introduced a fixed-rate commercial we had positive annual loan growth for the first loan product that meets a customer need without time since 2007. In the first quarter we recorded exposing United to interest rate risk. Our back- our first linked-quarter loan growth since 2008, to-back interest rate swap program enables us and in the third quarter we achieved our first to compete effectively with product offerings of 12-month loan growth since the downward much larger financial institutions. We gained good economic cycle began in 2007. traction with this product in 2012, adding to fee revenue. Driving the growth were new loan products that further diversified the portfolio. These include In total, during the year we funded $505 million targeted new retail products that have enabled in new loans compared to $392 million in 2011. us to meet customer needs better and create Our continuing focus is on growing commercial a much more efficient delivery channel. Our business that results in new full-service service continues to be unmatched, and we have relationships. To support this effort, over the leveraged our high customer satisfaction scores past 18 months we have added 15 experienced to attract new customers to these products and lenders who are established within our existing services. and expanded metro markets. Additionally in late 2012, we opened a commercial loan office in One of our new retail products is a home equity Greenville, South Carolina, expanding our reach line of credit (HELOC) that is allowing us to into this new and robust market. achieve a more favorable balance in our overall loan mix. From its introduction in the summer of 2012 through year-end, the product generated CREDIT QUALITY A staunch commitment throughout the economic $100 million in new loan balances. It has brought downturn has been aggressive management of in new customers and deepened relationships our credit challenges. I am pleased to report that with existing customers who have strong credit our credit quality measures have significantly metrics. The success of these HELOC loans has improved, especially in the latter half of the year. had a slight negative impact on our margin in the short term due to the introductory interest By year-end many of these measures were rate of 1 percent APR for the first year. The product has a floating rate that will reset to prime beginning to return to pre-downturn levels. Fourth quarter net charge-offs of $14.5 million were plus beginning in mid-2013 and help minimize at the lowest level since the second quarter exposure to rising rates in the future. In January, 2013, we rolled out our of 2008. The inflow of new non-performing loans was $20.2 million, the lowest since this economic cycle began. Our year-end balance of ‘SmarterMortgage’ product with competitive foreclosed property was $18.3 million, the lowest closing costs and low monthly payments. This is since the end of 2007. Past due loans were .65 an attractive alternative for customers who want percent of total loans, well below our pre-credit their mortgage and servicing to remain with their cycle target of 1 percent. Clearly we are making local United bank. important progress on the credit front. On the commercial side, our focus on owner- occupied commercial real estate and small 3 MARGIN Our net interest margin for the full year of 2012 requiring that we be more efficient. Our steady focus on efficiency and expense reductions was 3.50 percent, slightly higher than 3.44 resulted in a $14 million decrease in core percent in 2011. Growth in core transaction operating expenses during 2012, including an $8 deposits has helped to lower funding costs, but million decline in core personnel costs. the unprecedented low interest rate environment shows no sign of changing near term, and will We also saw significant decreases in occupancy continue to create pricing headwinds and natural expenses and our FDIC insurance assessment. margin compression throughout 2013. We Occupancy expenses were down $1.34 million continue to see competitive pressures on loan reflecting our efforts to control our utilities pricing, as well as low reinvestment rates for our and insurance costs, lower property taxes as a securities portfolio. result of challenging our assessments and lower depreciation charges. The lower FDIC insurance I will add that this rate environment has produced assessment reflects a lower assessment rate some good news: Our mortgage business has resulting from our improving credit and capital thrived and produced fee revenue growth that metrics as well as the FDIC’s change to an asset- has offset most of the decrease in net interest based assessment in early 2011 that was more revenue. favorable to United. FEE REVENUE We made great progress on the fee revenue side Among ongoing efficiency and cost reduction efforts, we closed two underperforming bank early in 2012, partially due to new service charges offices in the first quarter of 2013. that allowed us to make low-balance deposit relationships profitable. Very little attrition resulted Lowering headcount is extremely painful. Such as most customers were able to avoid the fees by decisions are unquestionably the most difficult maintaining higher balances. We also renegotiated I have had to make in my career. While these our debit card and ATM service provider tough measures have been necessary, we have contracts, resulting in increased fee revenue that been very careful to conduct them in a caring and more than offset lower fees brought about by dignified way to soften the landing with fair and regulatory changes. Overall, deposit service fee appropriate severance packages. Bottom line, revenue increased $2.6 million during the year. we have reduced core operating expense by $14 million over the past year. As mentioned above we saw solid growth in mortgage fees as a result of the record low interest rate environment and our bankers’ CUSTOMER SERVICE In light of the challenges faced and changes outstanding efforts to grow market share. made, it is a testimony to our people that Refinancing activities also helped boost this customer satisfaction has not suffered one bit. source of fee revenue. EXPENSE REDUCTIONS The rising cost of doing business and the United Community Bank has been the bank of choice in our communities for more than 60 years and continues to be so today. We are blessed with dedicated bankers who are completely weak economy makes it a very challenging focused on the number one task: creating the environment for new growth opportunities, finest banking experience anywhere. 4 Our bankers remain as successful as ever at this task, earning customer satisfaction ratings LOOKING FORWARD While we see more consistently profitable that consistently remain above 95 percent – times ahead, some obstacles still remain. The the highest in the industry. When asked to sluggish economy and record low interest support new promotions or incentives, there rate environment are expected to continue, they are again, stepping up to meet and exceed presenting loan growth challenges and net expectations. And I want to emphasize that I also interest margin pressures. We see margin am recognizing the many employees who do not compression continuing throughout 2013. directly serve external customers, but provide critical support to internal customers – their fellow On the positive side, we expect a continuing employees – in ways that allow them to do their trend of improving credit metrics that should jobs so well. This is an incredible group of people. translate into lower levels of charge-offs and PROFITABILITY All of our 2012 initiatives were aimed at one overarching goal: improving profitability and the related provision expense. We also see, and are acting upon, opportunities to expand our mortgage and advisory service businesses. long-term value of your investment in United We believe we can overcome the challenges of Community Banks. This is an ongoing priority a slow economy and grow our loan portfolio in that drives everything we do. That is why a year the mid-single digit range. We can do this, in part, ago I made a pledge to you and to our Board of by continuing to add commercial lenders in key Directors to improve our quarterly core pre-tax, markets while also growing retail loans through pre-credit earnings on an annualized basis by $10 our new product offerings. We will continue to million through fee revenue growth and expense reduce costs and increase efficiency, while being reductions. We set the fourth quarter of 2011 as careful to do so in ways that preserve our unique our base, and the fourth quarter of 2012 as our culture of superior service. target. We have again set a goal for the coming year: to I am extremely pleased to report that we increase our annualized run rate of core pre-tax, achieved this $10 million goal for the fourth pre-credit earnings by $10 million, using the quarter of 2012. Our annualized run rate in fourth quarter of 2012 as our benchmark. We core operating expenses declined by $9 million compared to 2011, and our annualized core fee will focus on fee revenue, loan and core deposit growth and operating efficiency. revenue run rate increased by over $12 million – a core earnings improvement of $21 million. A question for 2013 is United’s plans for the $180 million in preferred stock issued to the Even though net margin compression offset U.S. Treasury in 2008. In March, 2013, the more than half of these earnings improvements, Treasury elected to remarket our stock to other we were able to meet our goal. These results investors as they have done in the past with are impressive by any measure and represent a many other banks. We believe this reflects our significant achievement for this banking team. positive progress through the credit cycle and our I cannot imagine a team anywhere rising to the sustained earnings over the past seven quarters. challenge and working harder to achieve goals The Treasury was able to remarket its investment than this one did in 2012. under very favorable terms, and the institutional investors demonstrated their confidence by acquiring our stock. 5 This transaction is a win-win for both United and Over the past few years we have experienced a the Treasury. The Treasury was paid back, in fact, long and sometimes rocky ride with its share of more than their original investment when including detours. But in 2012 we made the critical turn dividends over the past four years. United is now that begins our ascent to sustained profitability free from the restrictions of the Troubled Asset and solid returns. Relief Program (TARP), but retains the valuable regulatory capital. In the future when prudent, we Our employees have been inspiring along this will consider alternative solutions to repurchase journey. Your company could not and would or refinance in a manner that best serves our not have achieved the progress we have made common shareholders. without these dedicated and talented people. Many others, maybe even understandably, would Before closing I want to make you aware of recent have thrown up their hands and surrendered to changes in our leadership. the challenges we’ve experienced. Many would have quit or bided their time clinging to their On our management team, I am very pleased to jobs. Not the United family. Just when you think announce that Lynn Harton has joined United as they can’t give any more, they do. When you Chief Operating Officer, succeeding Guy Freeman think their spirit is surely going to break, it’s there who retired at the beginning of 2012. Lynn, a native stronger than ever, and they rally around United of North Carolina, brings 29 years of executive more vigorously than ever before. banking experience. He already has made some very valuable and exciting contributions. I cannot thank these people enough. They are the heart of United Community Banks. Each On our holding company Board of Directors, I report management team member, each director with much regret the retirement of John D. Stephens, and each shareholder owes them a debt of who has been a valued member of the United gratitude. I certainly do. And, this management Community Banks Board since 2007. His 44 years of team is laser focused on creating value for our business and industrial experience have provided a shareholders. Because of them, I look forward most unique perspective and background that we will with optimism. greatly miss. I know I speak for the entire Board and United family when I say, “Thank you so very much, John, for your guidance, wisdom and friendship all these many years.” Sincerely, Additionally, Bob Head has decided to retire from the Board at the end of his current term. Bob was Chairman of the holding company Board from 1988 (when our Jimmy Tallent holding company was formed) to 2012. He also has served for 40 years on the Board of United Community Bank. Bob was at the helm through a period of much change, outstanding growth and great challenge, and he led our Board with valuable discernment, a steady hand and keen vision. There is no way I can adequately express my appreciation to Bob for his years of faithful service and outstanding leadership and we will continue to seek his advice and counsel. 6 Consolidated Statement of Operations (in thousands, except per share data) 2012 2011 2010 $ 217,140 $ 239,056 $ 277,904 INTEREST REVENUE: Loans, including fees Investment securities: Taxable Tax exempt Deposits in banks and short-term investments Total interest revenue INTEREST EXPENSE: Deposits: NOW Money market Savings Time Total deposit interest expense 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 Other Total fee revenue Total revenue OPERATING EXPENSES: Salaries and employee benefits Occupancy Communications and equipment FDIC assessments and other regulatory charges Professional fees Postage, printing and supplies Advertising and public relations Amortization of intangibles Foreclosed property Goodwill impairment Loss on sale of nonperforming assets Other Total operating expenses Income (loss) from continuing operations before income taxes Income tax expense (benefit) Net income (loss) from continuing operations Loss from discontinued operations, net of income taxes Gain from sale of subsidiary, net of income taxes and selling costs Net income (loss) Preferred stock dividends Net income (loss) available to common shareholders 43,657 956 3,986 265,739 2,049 2,518 150 19,518 24,235 2,987 907 10,201 38,330 227,409 62,500 164,909 31,670 10,483 3,082 7,078 (6,681) 11,139 56,771 221,680 55,251 1,009 2,321 297,637 3,998 5,456 234 39,151 48,839 4,250 2,042 10,544 65,675 231,962 251,000 (19,038) 29,110 5,419 2,986 842 (791) 12,342 49,908 30,870 96,026 14,304 12,940 10,097 8,792 3,899 3,855 2,917 13,993 - - 19,951 186,774 34,906 1,050 33,856 - - 33,856 12,148 21,708 $ 100,095 15,645 13,135 14,259 9,727 4,256 4,291 3,016 78,905 - - 18,270 261,599 (230,729) (3,983) (226,746) - - (226,746) 11,838 $ (238,584) 58,821 1,137 3,260 341,122 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 15,394 13,781 13,747 9,254 4,072 4,625 3,160 65,707 210,590 45,349 16,594 498,891 (432,292) 71,217 (503,509) (101) 1,266 (502,344) 10,316 $ (512,660) $ (27.15) (27.09) 18,925 Income (loss) from continuing operations per common share - basic / diluted Income (loss) per common share - basic / diluted Weighted average common shares outstanding - basic / diluted $ .38 .38 57,857 $ (5.97) (5.97) 39,943 7 Consolidated Balance Sheet (in thousands, except per share data) ASSETS Cash and due from banks Interest-bearing deposits in banks Short-term investments Cash and cash equivalents Securities available for sale Securities held to maturity (fair value $261,131 and $343,531) 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 Bank-owned life insurance Accrued interest receivable Goodwill and other intangible assets Foreclosed property Other assets $ 2012 66,536 124,613 60,000 251,149 1,834,593 244,184 28,821 4,175,008 (107,137) 4,067,871 47,467 168,920 81,867 18,659 5,510 18,264 34,954 $ 2011 53,807 139,609 185,000 378,416 1,790,047 330,203 23,881 4,109,614 (114,468) 3,995,146 78,145 175,088 80,599 20,693 8,428 32,859 69,915 Total assets $ 6,802,259 $ 6,983,420 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Deposits: Demand NOW Money market Savings Time: Less than $100,000 Greater than $100,000 Brokered Total deposits 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, 42,423,870 and 41,647,100 shares issued and outstanding Common stock, non-voting $1 par value, 30,000,000 shares authorized, 15,316,794 and 15,914,209 shares issued and outstanding Common stock issuable, 133,238 and 93,681 shares Capital surplus Accumulated deficit Accumulated other comprehensive loss Total shareholders’ equity $ 1,252,605 1,316,453 1,149,912 227,308 1,055,271 705,558 245,033 5,952,140 52,574 40,125 124,805 - 51,210 6,220,854 217 178,557 16,613 42,424 15,317 3,119 1,057,951 (709,153) (23,640) 581,405 $ 992,109 1,509,896 1,038,778 199,007 1,332,394 847,152 178,647 6,097,983 102,577 40,625 120,225 10,325 36,199 6,407,934 217 177,092 16,613 41,647 15,914 3,233 1,054,940 (730,861) (3,309) 575,486 Total liabilities and shareholders’ equity $ 6,802,259 $ 6,983,420 8 Selected Financial Data - Quarterly Core Summary (in millions, except per share data; taxable equivalent) Q-4 Q-3 Q-2 Q-1 Q-4 2012 2011 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) Provision for loan losses Foreclosed property costs: Write downs and losses from sales Other expenses Reclassification of pension prior service cost and actuarial losses Severance costs Hedge ineffectiveness gains (losses), net Securities gains, net Loss on prepayment of borrowings Provision for litigation settlement Gain on sale of low income housing tax credits Interest on federal tax refund Income tax (expense) benefit Net income Preferred dividends and discount accretion Net income available to common shareholders PERFORMANCE MEASURES Per common share: Diluted earnings Book value Tangible book value (3) Key performance ratios: Net interest margin (4) Return on assets (4) Return on common equity (4)(5) Tangible equity to assets (3) Tangible common equity to assets (3) ASSET QUALITY* Non-performing loans Foreclosed properties Total non-performing assets (NPAs) Allowance for loan losses Net charge-offs Allowance for loan losses to loans Net charge-offs to average loans (4) NPAs to loans and foreclosed properties NPAs to total assets AT PERIOD END Loans* Investment securities Total assets Deposits Shareholders’ equity Common shares outstanding $ $ $ $ $ $ $ $ 56.0 14.6 70.6 41.5 29.1 (14.0) (3.2) (1.4) - (.5) .1 - - (4.0) - - (.8) 5.3 3.1 2.2 .04 6.67 6.57 57.4 $ 13.0 70.4 40.5 29.9 (15.5) (2.7) (1.0) - (.4) .6 - - - - - (.3) 10.6 3.1 7.5 $ 56.8 $ 12.8 69.6 41.3 28.3 (18.0) (.7) (1.1) - (1.2) (.2) 6.5 (6.2) - - - (.9) 6.5 3.0 3.5 $ 58.9 $ 13.1 72.0 42.7 29.3 (15.0) (2.2) (1.6) - (.2) .1 .6 (.5) - .7 1.1 (.8) 11.5 3.0 8.5 $ 59.1 11.4 70.5 43.9 26.6 (14.0) (6.9) (2.4) 2.3 - .3 - - - .7 - 3.3 9.9 3.0 6.9 $ .13 6.75 6.64 $ .06 6.61 6.48 .15 $ 6.68 6.54 .12 6.62 6.47 3.44 % .31 2.15 8.55 5.67 3.60 % .63 7.43 8.66 5.73 3.43 % .37 3.51 8.24 5.45 $ 109.9 18.3 128.2 107.1 14.5 2.57 % 1.39 3.06 1.88 $ 4,175 2,079 6,802 5,952 581 57.7 $ 115.0 27.0 142.0 107.6 20.6 2.60 % 1.99 3.41 2.12 $ 4,138 2,025 6,699 5,823 585 57.7 $ 115.4 30.4 145.8 112.7 18.9 2.74 % 1.85 3.51 2.16 $ 4,119 1,984 6,737 5,822 576 57.6 3.53 % .66 8.78 8.08 5.33 129.7 $ 31.9 161.6 113.6 15.9 2.75 % 1.55 3.88 2.25 4,128 $ 2,202 7,174 6,001 580 57.6 3.51 % .56 7.40 8.16 5.38 127.5 32.8 160.3 114.5 45.6 2.79 % 4.39 3.87 2.30 4,110 2,120 6,983 6,098 575 57.6 (1) Excludes net securities gains and losses, losses from the prepayment of borrowings, gains from the sale of low income housing tax credits, hedge ineffectiveness gains and interest on a federal tax refund. (2) Excludes foreclosed property costs, reclassification of prior service cost and actuarial losses on Modified Retirement Plan to other comprehensive income, severance costs and a provision for litigation settlement. (3) Excluded the effect of acquisition-related intangible assets. (4) Annualized. (5) Net income available to common shareholders, which is net of preferred dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss). * Excludes loans and foreclosed properties covered by loss sharing agreements with the FDIC. 9 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 2012 2011 Average Daily Volume Low Close Average Daily Low Close Volume High Quarter High 1st 2nd 3rd 4th $ 10.30 $ 6.37 $ 9.75 142,987 $ 11.85 $ 5.95 $ 11.65 227,321 9.77 8.82 9.49 7.76 6.12 8.01 8.57 8.39 9.44 145,132 329,475 202,871 14.65 11.33 8.90 9.80 10.56 139,741 7.67 6.22 8.49 6.99 214,303 202,024 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 433 S. Carlton Ave. Wheaton, Illinois 60187 (630) 480-0393 Independent Registered Public Accountants PricewaterhouseCoopers LLP Atlanta, Georgia Legal Counsel Troutman Sanders 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. © 2013. Board of Directors W.C. Nelson, Jr. Chairman Owner, Nelson Tractor Co. Jimmy C. Tallent President and Chief Executive Officer Robert H. Blalock Owner, Blalock Insurance Agency, Inc. Executive Officers Jimmy C. Tallent President and Chief Executive Officer H. Lynn Harton Chief Operating Officer Clifford V. Brokaw Managing Director Corsair Capital L. Cathy Cox President, Young Harris College Steven J. Goldstein Retired Chief Financial Officer, Federal Home Loan Bank of Atlanta Robert L. Head, Jr. Owner, Head Westgate Thomas A. Richlovsky Retired Chief Financial Officer and Treasurer National City Corporation John D. Stephens Partner, Stephens MDS, LP Tim R. Wallis President and Chief Executive Officer Wallis Printing Company Rex S. Schuette Executive Vice President Chief Financial Officer David P. Shearrow Executive Vice President Chief Risk Officer Bill M. Gilbert Director of Banking Tim Schools Chief Strategy Officer United Community Banks, Inc. 125 Highway 515 East | Blairsville, Georgia 30512 706.781.2265 | 866.270.7200 | ucbi.com ucbi.com 

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