10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2013

OR

o     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________ to ___________

Commission file number 001-35095

UNITED COMMUNITY BANKS, INC.

(Exact name of registrant as specified in its charter)

Georgia	58-1807304
(State of Incorporation)	(I.R.S. Employer Identification No.)

125 Highway 515 East
Blairsville, Georgia	30512
Address of Principal Executive Offices	(Zip Code)

	(706) 781-2265
(Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x  NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES x  NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

YES o  NO x

Common stock, par value $1 per share 43,363,414 shares voting and 14,474,810 shares non-voting outstanding as of July 31, 2013.

1

INDEX

PART I - Financial Information
	Item 1.	Financial Statements.
		Consolidated Statement of Income (unaudited) for the Three and Six Months Ended  June 30, 2013 and 2012	3
		Consolidated Statement of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2013 and 2012	4
		Consolidated Balance Sheet (unaudited) at June 30, 2013, December 31, 2012 and June 30, 2012	5
		Consolidated Statement of Changes in Shareholders’ Equity (unaudited) for the Six Months Ended June 30, 2013 and 2012	6
		Consolidated Statement of Cash Flows (unaudited) for the Six Months Ended June 30, 2013 and 2012	7
		Notes to Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	37
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	60
	Item 4.	Controls and Procedures.	60
PART II - Other Information
	Item 1.	Legal Proceedings.	61
	Item 1A.	Risk Factors.	61
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	62
	Item 3.	Defaults Upon Senior Securities.	62
	Item 4.	Mine Safety Disclosures.	62
	Item 5.	Other Information.	62
	Item 6.	Exhibits.	63

2

Part I – Financial Information

Item 1 – Financial Statements

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Operations (Unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except per share data)	2013			2012			2013			2012
Interest revenue:
Loans, including fees	$	50,728		$	54,178		$	101,662		$	109,937
Investment securities, including tax exempt of $210, $262, $422 and $512		9,681			11,062			19,646			24,066
Deposits in banks and short-term investments		916			1,096			1,786			2,108
Total interest revenue		61,325			66,336			123,094			136,111
Interest expense:
Deposits:
NOW		419			503			873			1,140
Money market		534			661			1,096			1,302
Savings		36			38			72			75
Time		2,924			5,073			6,150			11,232
Total deposit interest expense		3,913			6,275			8,191			13,749
Short-term borrowings		522			904			1,038			1,949
Federal Home Loan Bank advances		30			390			49			856
Long-term debt		2,666			2,375			5,328			4,747
Total interest expense		7,131			9,944			14,606			21,301
Net interest revenue		54,194			56,392			108,488			114,810
Provision for loan losses		48,500			18,000			59,500			33,000
Net interest revenue after provision for loan losses		5,694			38,392			48,988			81,810
Fee revenue:
Service charges and fees		7,972			7,816			15,375			15,599
Mortgage loan and other related fees		3,003			2,322			5,658			4,421
Brokerage fees		1,063			809			1,830			1,622
Securities gains, net		-			6,490			116			7,047
Loss from prepayment of debt		-			(6,199	)		-			(6,681	)
Other		4,274			1,629			6,159			6,238
Total fee revenue		16,312			12,867			29,138			28,246
Total revenue		22,006			51,259			78,126			110,056
Operating expenses:
Salaries and employee benefits		24,734			24,297			48,326			49,522
Communications and equipment		3,468			3,211			6,514			6,366
Occupancy		3,449			3,539			6,816			7,310
Advertising and public relations		1,037			1,088			1,975			1,934
Postage, printing and supplies		894			916			1,757			1,895
Professional fees		2,499			1,952			4,865			3,927
Foreclosed property		5,151			1,851			7,484			5,676
FDIC assessments and other regulatory charges		2,505			2,545			5,010			5,055
Amortization of intangibles		491			730			1,196			1,462
Other		4,595			4,181			8,650			8,118
Total operating expenses		48,823			44,310			92,593			91,265
Net (loss) income before income taxes		(26,817	)		6,949			(14,467	)		18,791
Income tax (benefit) expense		(256,781	)		450			(256,196	)		764
Net income		229,964			6,499			241,729			18,027
Preferred stock dividends and discount accretion		3,055			3,032			6,107			6,062
Net income available to common shareholders	$	226,909		$	3,467		$	235,622		$	11,965
Earnings per common share - basic / diluted	$	3.90		$	.06		$	4.05		$	.21
Weighted average common shares outstanding - basic / diluted		58,141			57,840			58,111			57,803

See accompanying notes to consolidated financial statements.

3

UNITED COMMUNITY BANKS, INC.

Consolidated Statement of Comprehensive Income (Unaudited)

(in thousands)	Three Months Ended June 30,									Six Months Ended June 30,
2013	Before- tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before- tax Amount			Tax (Expense) Benefit			Net of Tax Amount
Net (loss) income	$	(26,817	)	$	256,781		$	229,964		$	(14,467	)	$	256,196		$	241,729
Other comprehensive income (loss):
Unrealized (losses) gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period		(15,358	)		5,798			(9,560	)		(13,717	)		5,177			(8,540	)
Reclassification adjustment for gains included in net income		-			-			-			(116	)		45			(71	)
Adjustment of valuation allowance for the change in deferred taxes arising from unrealized gains and losses on available-for-sale securities and release of valuation allowance		-			(3,526	)		(3,526	)		-			(2,950	)		(2,950	)
Net unrealized gains (losses)		(15,358	)		2,272			(13,086	)		(13,833	)		2,272			(11,561	)
Amortization of gains included in net income on available-for-sale securities transferred to held-to-maturity		(271	)		103			(168	)		(590	)		227			(363	)
Adjustment of valuation allowance for the change in deferred taxes arising from the amortization of gains included in net income (loss) on available-for-sale securities transferred to held-to-maturity and release of valuation allowance		-			1,415			1,415			-			1,293			1,293
Net unrealized losses		(271	)		1,518			1,247			(590	)		1,520			930
Amounts reclassified into net income on cash flow hedges		(306	)		119			(187	)		(844	)		328			(516	)
Unrealized losses on derivative financial instruments accounted for as cash flow hedges		11,672			(4,540	)		7,132			12,102			(4,707	)		7,395
Adjustment of valuation allowance for the change in deferred taxes arising from unrealized gains and losses and amortization of gains included in net income on cash flow hedges and release of valuation allowance		-			13,740			13,740			-			13,698			13,698
Net unrealized losses		11,366			9,319			20,685			11,258			9,319			20,577
Net actuarial loss on defined benefit pension plan		-			-			-			(415	)		161			(254	)
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan		133			(52	)		81			265			(103	)		162
Adjustment of valuation allowance for the change in deferred taxes arising from reclassification of unamortized prior service cost and actuarial losses and amortization of prior service cost and actuarial losses and release of valuation allowance		-			110			110			-			-			-
Net defined benefit pension plan activity		133			58			191			(150	)		58			(92	)
Total other comprehensive income (loss)		(4,130	)		13,167			9,037			(3,315	)		13,169			9,854
Comprehensive income	$	(30,947	)	$	269,948		$	239,001		$	(17,782	)	$	269,365		$	251,583
2012
Net (loss) income	$	6,949		$	(450	)	$	6,499		$	18,791		$	(764	)	$	18,027
Other comprehensive income (loss):
Unrealized (losses) gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period		4,264			(1,645	)		2,619			924			(277	)		647
Reclassification adjustment for gains included in net income		(6,490	)		2,425			(4,065	)		(7,047	)		2,631			(4,416	)
Valuation allowance for the change in deferred taxes arising from unrealized gains and losses on available-for-sale securities		-			(780	)		(780	)		-			(2,354	)		(2,354	)
Net unrealized gains (losses)		(2,226	)		-			(2,226	)		(6,123	)		-			(6,123	)
Amortization of gains included in net income on available-for-sale securities transferred to held-to-maturity		(400	)		151			(249	)		(813	)		308			(505	)
Valuation allowance for the change in deferred taxes arising from the amortization of gains included in net income (loss) on available-for-sale securities transferred to held-to- maturity		-			(151	)		(151	)		-			(308	)		(308	)
Net unrealized losses		(400	)		-			(400	)		(813	)		-			(813	)
Amortization of gains included in net income on terminated derivative financial instruments that were previously accounted for as cash flow hedges		(714	)		278			(436	)		(2,314	)		900			(1,414	)
Unrealized losses on derivative financial instruments accounted for as cash flow hedges		(4,855	)		1,889			(2,966	)		(4,855	)		1,889			(2,966	)
Valuation allowance for the change in deferred taxes arising from unrealized gains and losses and amortization of gains included in net income on cash flow hedges		-			(2,167	)		(2,167	)		-			(2,789	)		(2,789	)
Net unrealized losses		(5,569	)		-			(5,569	)		(7,169	)		-			(7,169	)
Net actuarial loss on defined benefit pension plan		-			-			-			-			-			-
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan		154			(60	)		94			308			(120	)		188
Valuation allowance for the change in deferred taxes arising from reclassification of unamortized prior service cost and actuarial losses and amortization of prior service cost and actuarial losses					60			60						120			120
Net defined benefit pension plan activity		154			-			154			308			-			308
Total other comprehensive income (loss)		(8,041	)		-			(8,041	)		(13,797	)		-			(13,797	)
Comprehensive income	$	(1,092	)	$	(450	)	$	(1,542	)	$	4,994		$	(764	)	$	4,230

See accompanying notes to consolidated financial statements.

4

UNITED COMMUNITY BANKS, INC. Consolidated Balance Sheet (Unaudited)
	June 30,			December 31,			June 30,
(in thousands, except share and per share data)	2013			2012			2012
ASSETS
Cash and due from banks	$	62,564		$	66,536		$	50,596
Interest-bearing deposits in banks		141,016			124,613			133,857
Short-term investments		57,000			60,000			120,000
Cash and cash equivalents		260,580			251,149			304,453
Securities available-for-sale		1,937,264			1,834,593			1,701,583
Securities held-to-maturity (fair value $226,695, $261,131 and $299,791)		214,947			244,184			282,750
Mortgage loans held for sale		19,150			28,821			18,645
Loans, net of unearned income		4,189,368			4,175,008			4,119,235
Less allowance for loan losses		(81,845	)		(107,137	)		(112,705	)
Loans, net		4,107,523			4,067,871			4,006,530
Assets covered by loss sharing agreements with the FDIC		35,675			47,467			65,914
Premises and equipment, net		167,197			168,920			172,200
Bank owned life insurance		82,276			81,867			81,265
Accrued interest receivable		19,279			18,659			20,151
Goodwill and other intangible assets		4,315			5,510			6,965
Foreclosed property		3,936			18,264			30,421
Net deferred tax asset		272,287			-			-
Unsettled securities sales		-			5,763			-
Other assets		38,206			29,191			46,229
Total assets	$	7,162,635		$	6,802,259		$	6,737,106
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand	$	1,349,804		$	1,252,605		$	1,150,444
NOW		1,225,664			1,316,453			1,196,507
Money market		1,167,889			1,149,912			1,117,139
Savings		247,821			227,308			219,077
Time:
Less than $100,000		982,009			1,055,271			1,164,451
Greater than $100,000		664,112			705,558			764,343
Brokered		374,530			245,033			210,506
Total deposits		6,011,829			5,952,140			5,822,467
Short-term borrowings		54,163			52,574			53,656
Federal Home Loan Bank advances		70,125			40,125			125,125
Long-term debt		124,845			124,805			120,265
Accrued expenses and other liabilities		72,370			51,210			39,598
Total liabilities		6,333,332			6,220,854			6,161,111
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		217			217			217
Series B; $1,000 stated value; 180,000 shares issued and outstanding		179,323			178,557			177,814
Series D; $1,000 stated value; 16,613 shares issued and outstanding		16,613			16,613			16,613
Common stock, $1 par value; 100,000,000 shares authorized;
43,356,492, 42,423,870 and 41,726,509 shares issued and outstanding		43,356			42,424			41,727
Common stock, non-voting, $1 par value; 30,000,000 shares authorized;
14,474,810, 15,316,794 and 15,914,209 shares issued and outstanding		14,475			15,317			15,914
Common stock issuable; 271,215, 133,238 and 94,657 shares		4,705			3,119			2,893
Capital surplus		1,057,931			1,057,951			1,056,819
Accumulated deficit		(473,531	)		(709,153	)		(718,896	)
Accumulated other comprehensive loss		(13,786	)		(23,640	)		(17,106	)
Total shareholders’ equity		829,303			581,405			575,995
Total liabilities and shareholders’ equity	$	7,162,635		$	6,802,259		$	6,737,106

See accompanying notes to consolidated financial statements.

5

UNITED COMMUNITY BANKS, INC. Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) For the Six Months Ended June 30,
																					Accumulated
	Preferred Stock								Non-Voting			Common									Other
(in thousands, except share	Series		Series		Series		Common		Common			Stock			Capital			Accumulated			Comprehensive
and per share data)	A		B		D		Stock		Stock			Issuable			Surplus			Deficit			Income (Loss)			Total
Balance, December 31, 2011	$	217	$	177,092	$	16,613	$	41,647	$	15,914		$	3,233		$	1,054,940		$	(730,861	)	$	(3,309	)	$	575,486
Net loss																			18,027						18,027
Other comprehensive loss																						(13,797	)		(13,797	)
Common stock issued to
dividend reinvestment plan
and employee benefit plans
(60,982 shares)								61								440									501
Amortization of stock options
and restricted stock awards																946									946
Vesting of restricted stock
(15,790 shares issued,
8,399 shares deferred)								16					(151	)		206									71
Deferred compensation plan,
net, including dividend
equivalents													101												101
Shares issued from deferred
compensation plan
(2,637 shares)								3					(290	)		287									-
Preferred stock dividends:
Series A																			(6	)					(6	)
Series B				722															(5,222	)					(4,500	)
Series D																			(834	)					(834	)
Balance, June 30, 2012	$	217	$	177,814	$	16,613	$	41,727	$	15,914		$	2,893		$	1,056,819		$	(718,896	)	$	(17,106	)	$	575,995
Balance, December 31, 2012	$	217	$	178,557	$	16,613	$	42,424	$	15,317		$	3,119		$	1,057,951		$	(709,153	)	$	(23,640	)	$	581,405
Net income																			241,729						241,729
Other comprehensive income																						9,854			9,854
Common stock issued to
dividend reinvestment
plan and to employee
benefit plans (35,667
shares)								35								348									383
Conversion of non-voting
common stock to voting
(841,984 shares)								842		(842	)
Amortization of stock options
and restricted stock awards																1,359									1,359
Vesting of restricted stock,
net of shares surrendered
to cover payroll taxes
(50,450 shares issued,
133,914 shares deferred)								50					1,934			(2,161	)								(177	)
Deferred compensation plan,
net, including dividend
equivalents													91												91
Shares issued from deferred
compensation plan
(4,521 shares)								5					(439	)		434									-
Preferred stock dividends:
Series A																			(6	)					(6	)
Series B				766															(5,266	)					(4,500	)
Series D																			(835	)					(835	)
Balance, June 30, 2013	$	217	$	179,323	$	16,613	$	43,356	$	14,475		$	4,705		$	1,057,931		$	(473,531	)	$	(13,786	)	$	829,303

See accompanying notes to consolidated financial statements.

6

UNITED COMMUNITY BANKS, INC. Consolidated Statement of Cash Flows (Unaudited)
	Six Months Ended
	June 30,
(in thousands)	2013			2012
Operating activities:
Net income	$	241,729		$	18,027
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		14,574			16,511
Provision for loan losses		59,500			33,000
Stock based compensation		1,359			946
Deferred income tax benefit		(258,987	)		-
Securities gains, net		(116	)		(7,047	)
Losses and write downs on sales of other real estate owned		5,460			2,943
Loss on prepayment of borrowings		-			6,681
Changes in assets and liabilities:
Other assets and accrued interest receivable		12,872			22,783
Accrued expenses and other liabilities		19,487			(6,754	)
Mortgage loans held for sale		9,671			5,236
Net cash provided by operating activities		105,549			92,326
Investing activities:
Investment securities held-to-maturity:
Proceeds from maturities and calls		33,141			45,741
Purchases		(4,993	)		-
Investment securities available-for-sale:
Proceeds from sales		15,751			371,103
Proceeds from maturities and calls		260,967			289,985
Purchases		(397,907	)		(580,652	)
Net increase in loans		(203,903	)		(58,765	)
Proceeds from note sales		91,913			-
Collections from FDIC under loss sharing agreements		3,714			5,054
Proceeds from sales of premises and equipment		1,547			664
Purchases of premises and equipment		(4,488	)		(2,581	)
Proceeds from sale of other real estate		21,815			14,620
Net cash (used in) provided by investing activities		(182,443	)		85,169
Financing activities:
Net change in deposits		59,689			(275,516	)
Net change in short-term borrowings		1,589			(53,401	)
Proceeds from Federal Home Loan Bank advances		485,000			1,489,000
Settlement of Federal Home Loan Bank advances		(455,000	)		(1,406,701	)
Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans		383			501
Cash dividends on preferred stock		(5,336	)		(5,341	)
Net cash provided by (used in) financing activities		86,325			(251,458	)
Net change in cash and cash equivalents		9,431			(73,963	)
Cash and cash equivalents at beginning of period		251,149			378,416
Cash and cash equivalents at end of period	$	260,580		$	304,453
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest	$	16,768		$	23,222
Income taxes		2,355			(27,105	)
Unsettled securities purchases		1,582			-
Transfers of loans to foreclosed property		9,433			9,319

See accompanying notes to consolidated financial statements.

7

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1 – Accounting Policies

The accounting and financial reporting policies of United Community Banks, Inc. (“United”) and its subsidiaries conform to accounting principles generally accepted in the United States of America (“GAAP”) and general banking industry practices.  The accompanying interim consolidated financial statements have not been audited.  All material intercompany balances and transactions have been eliminated.  A more detailed description of United’s accounting policies is included in its Annual Report on Form 10-K for the year ended December 31, 2012.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods.

Certain 2012 amounts have been reclassified to conform to the 2013 presentation.  The 2012 reclassifications were not material to the financial statement presentation.

Note 2 –Accounting Standards Updates and Recently Adopted Standards

In January 2013, the FASB issued Accounting Standards Update No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.  This ASU limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting agreement.  The disclosure requirements were effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods.  This guidance did not have a material impact on United’s financial position or results of operations, and resulted in additional disclosures.

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.  The amendments in this update require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component and by the respective line items of net income. The standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2012.  This guidance did not have a material impact on United’s financial position or results of operations, and resulted in additional disclosures.

In July 2013, the FASB issued Accounting Standards Update No. 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.  The amendments in this update permit the Fed Funds Effective Swap Rate (OIS) to be used as a benchmark interest rate for hedge accounting in addition to UST and LIBOR. The amendments also remove the restriction on using different benchmark rates for similar hedges. The standard is effective prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013.  This guidance did not have a material impact on United’s financial position, results of operations or disclosures.

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward exists. This ASU provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Since United has both unrecognized tax benefits and net operating loss and tax credit carryforwards, this ASU could have an impact on United's financial position, results of operations or disclosures. United is currently in the process of quantifying this impact.

Note 3 – Offsetting Assets and Liabilities

United enters into reverse repurchase agreements in order to invest short-term funds.  In addition, United enters into repurchase agreements and reverse repurchase agreements with the same counterparty in transactions commonly referred to as collateral swaps that are subject to master netting agreements under which the balances are netted in the balance sheet in accordance with ASC 210-20, Offsetting.

United also enters into derivative transactions that are subject to master netting arrangements; however there were no offsetting positions at June 30, 2013, December 31, 2012 or June 30, 2012.

8

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents a summary of amounts outstanding under master netting agreements as of June 30, 2013 and December 31, 2012, and June 30, 2012 (in thousands).

	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet					Gross Amounts not Offset in the Balance Sheet
June 30, 2013							Net Asset Balance		Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	400,000		$	(350,000	)	$	50,000	$	-	$	-	$	50,000
Derivatives		9,017			-			9,017		-		-		9,017
Total	$	409,017		$	(350,000	)	$	59,017	$	-	$	-	$	59,017
Weighted average interest rate of reverse repurchase agreements		1.09	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	350,000		$	(350,000	)	$	-	$	-	$	-	$	-
Derivatives		29,330			-			29,330		-		18,198		11,132
Total	$	379,330		$	(350,000	)	$	29,330	$	-	$	18,198	$	11,132
Weighted average interest rate of repurchase agreements		.25	%
	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		Gross Amounts not Offset in the Balance Sheet
December 31, 2012									Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	325,000		$	(265,000	)	$	60,000	$	-	$	-	$	60,000
Securities lending transactions		50,000			(50,000	)		-		-		-		-
Derivatives		658			-			658		-		-		658
Total	$	375,658		$	(315,000	)	$	60,658	$	-	$	-	$	60,658
Weighted average interest rate of reverse repurchase agreements		1.18	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	265,000		$	(265,000	)	$	-	$	-	$	-	$	-
Securities lending transactions		50,000			(50,000	)		-		-		-		-
Derivatives		12,543			-			12,543		-		11,493		1,050
Total	$	327,543		$	(315,000	)	$	12,543	$	-	$	11,493	$	1,050
Weighted average interest rate of repurchase agreements		.43	%
	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		Gross Amounts not Offset in the Balance Sheet
June 30, 2012									Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	320,000		$	(200,000	)	$	120,000	$	-	$	-	$	120,000
Derivatives		223			-			223		-		-		223
Total	$	320,223		$	(200,000	)	$	120,223	$	-	$	-	$	120,223
Weighted average interest rate of reverse repurchase agreements		1.27	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	200,000		$	(200,000	)	$	-	$	-	$	-	$	-
Derivatives		6,142			-			6,142		-		5,405		737
Total	$	206,142		$	(200,000	)	$	6,142	$	-	$	5,405	$	737
Weighted average interest rate of repurchase agreements		.41	%

9

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4 – Securities

Realized gains and losses are derived using the specific identification method for determining the cost of securities sold. The following table summarizes securities sales activity for the three and six month periods ended June 30, 2013 and 2012 (in thousands).

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Proceeds from sales	$	-	$	265,992	$	15,751	$	371,103
Gross gains on sales	$	-	$	6,490	$	116	$	7,047
Gross losses on sales		-		-		-		-
Net gains on sales of securities	$	-	$	6,490	$	116	$	7,047
Income tax expense attributable to sales	$	-	$	2,425	$	45	$	2,631

Securities with a carrying value of $1.30 billion, $1.40 billion, and $1.29 billion were pledged to secure public deposits and other secured borrowings at June 30, 2013, December 31, 2012 and June 30, 2012, respectively.  Substantial borrowing capacity remains available under borrowing arrangements with the FHLB with currently pledged securities.

Securities are classified as held-to-maturity when management has the positive intent and ability to hold them until maturity.  Securities held-to-maturity are carried at amortized cost.

The amortized cost, gross unrealized gains and losses and fair value of securities held-to-maturity at June 30, 2013, December 31, 2012 and June 30, 2012 are as follows (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of June 30, 2013	Cost		Gains		Losses		Value
State and political subdivisions	$	51,757	$	4,332	$	4	$	56,085
Mortgage-backed securities (1)		163,190		7,658		238		170,610
Total	$	214,947	$	11,990	$	242	$	226,695
As of December 31, 2012
State and political subdivisions	$	51,780	$	5,486	$	-	$	57,266
Mortgage-backed securities (1)		192,404		11,461		-		203,865
Total	$	244,184	$	16,947	$	-	$	261,131
As of June 30, 2012
State and political subdivisions	$	51,801	$	5,586	$	-	$	57,387
Mortgage-backed securities (1)		230,949		11,635		-		242,584
Total	$	282,750	$	17,221	$	-	$	299,971
(1)     All are residential type mortgage-backed securities

10

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The cost basis, unrealized gains and losses, and fair value of securities available-for-sale at June 30, 2013, December 31, 2012 and June 30, 2012 are presented below (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of June 30, 2013	Cost		Gains		Losses		Value
State and political subdivisions	$	22,369	$	1,112	$	41	$	23,440
Mortgage-backed securities (1)		1,410,189		15,935		13,538		1,412,586
Corporate bonds		260,464		1,585		8,181		253,868
Asset-backed securities		242,690		2,645		491		244,844
Other		2,526		-		-		2,526
Total	$	1,938,238	$	21,277	$	22,251	$	1,937,264
As of December 31, 2012
State and political subdivisions	$	27,717	$	1,354	$	19	$	29,052
Mortgage-backed securities (1)		1,408,042		22,552		2,092		1,428,502
Corporate bonds		169,783		1,052		7,173		163,662
Asset-backed securities		209,411		1,894		749		210,556
Other		2,821		-		-		2,821
Total	$	1,817,774	$	26,852	$	10,033	$	1,834,593
As of June 30, 2012
U.S. Government agencies	$	43,618	$	256	$	-	$	43,874
State and political subdivisions		25,704		1,462		7		27,159
Mortgage-backed securities (1)		1,408,047		25,723		339		1,433,431
Corporate bonds		119,198		-		9,160		110,038
Asset-backed securities		85,090		-		592		84,498
Other		2,583		-		-		2,583
Total	$	1,684,240	$	27,441	$	10,098	$	1,701,583
(1)   All are residential type mortgage-backed securities

The following table summarizes held-to-maturity securities in an unrealized loss position as of June 30, 2013 (thousands).  As of December 31, 2012 and June 30, 2012, there were no held-to-maturity securities in an unrealized loss position.

	Less than 12 Months				12 Months or More				Total
As of June 30, 2013	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
State and political subdivisions	$	374	$	4	$	-	$	-	$	374	$	4
Mortgage-backed securities	$	4,715	$	238	$	-	$	-		4,715		238
Total unrealized loss position	$	5,089	$	242	$	-	$	-	$	5,089	$	242

11

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table summarizes available-for-sale securities in an unrealized loss position as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

	Less than 12 Months				12 Months or More				Total
As of June 30, 2013	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
State and political subdivisions	$	3,645	$	39	$	10	$	2	$	3,655	$	41
Mortgage-backed securities		636,449		13,538		-		-		636,449		13,538
Corporate bonds		97,501		4,635		77,404		3,546		174,905		8,181
Asset-backed securities		56,817		208		32,495		283		89,312		491
Total unrealized loss position	$	794,412	$	18,420	$	109,909	$	3,831	$	904,321	$	22,251
As of December 31, 2012
State and political subdivisions	$	3,674	$	17	$	10	$	2	$	3,684	$	19
Mortgage-backed securities		326,485		2,092		-		-		326,485		2,092
Corporate bonds		21,248		136		93,903		7,037		115,151		7,173
Asset-backed securities		82,188		749		-		-		82,188		749
Total unrealized loss position	$	433,595	$	2,994	$	93,913	$	7,039	$	527,508	$	10,033
As of June 30, 2012
State and political subdivisions	$	5,696	$	3	$	11	$	4	$	5,707	$	7
Mortgage-backed securities		104,644		332		19,436		7		124,080		339
Corporate bonds		16,500		3,500		93,488		5,660		109,988		9,160
Asset-backed securities		74,097		592		-		-		74,097		592
Total unrealized loss position	$	200,937	$	4,427	$	112,935	$	5,671	$	313,872	$	10,098

At June 30, 2013, there were 111 available-for-sale securities and four held-to-maturity securities that were in an unrealized loss position.  United does not intend to sell nor believes it will be required to sell securities in an unrealized loss position prior to the recovery of their amortized cost basis.  Unrealized losses at June 30, 2013, December 31, 2012 and June 30, 2012 were primarily attributable to changes in interest rates, however the unrealized losses in corporate bonds also reflect downgrades in the underlying securities ratings since the time of acquisition.  The bonds remain above investment grade and United does not consider them to be impaired.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, among other factors.  In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports.  No impairment charges were recognized during the three or six months ended June 30, 2013 or 2012.

12

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The amortized cost and fair value of held-to-maturity and available-for-sale securities at June 30, 2013, by contractual maturity, are presented in the following table (in thousands).

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
State and political subdivisions:
Within 1 year	$	1,830	$	1,868	$	-	$	-
1 to 5 years		14,572		15,460		10,860		11,724
5 to 10 years		5,119		5,207		25,594		27,728
More than 10 years		848		905		15,303		16,633
		22,369		23,440		51,757		56,085
Corporate bonds:
1 to 5 years		38,183		38,451		-		-
5 to 10 years		211,517		205,234		-		-
More than 10 years		10,764		10,183		-		-
		260,464		253,868		-		-
Asset-backed securities:
1 to 5 years		40,537		40,644		-		-
5 to 10 years		153,281		155,038		-		-
More than 10 years		48,872		49,162		-		-
		242,690		244,844		-		-
Other:
More than 10 years		2,526		2,526		-		-
		2,526		2,526		-		-
Total securities other than mortgage-backed securities:
Within 1 year		1,830		1,868		-		-
1 to 5 years		93,292		94,555		10,860		11,724
5 to 10 years		369,917		365,479		25,594		27,728
More than 10 years		63,010		62,776		15,303		16,633
Mortgage-backed securities		1,410,189		1,412,586		163,190		170,610
	$	1,938,238	$	1,937,264	$	214,947	$	226,695

Expected maturities may differ from contractual maturities because issuers and borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

13

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 5 – Loans and Allowance for Loan Losses

Major classifications of loans as of June 30, 2013, December 31, 2012 and June 30, 2012, are summarized as follows (in thousands).

	June 30,			December 31,			June 30,
	2013			2012			2012
Commercial (secured by real estate)	$	1,748,145		$	1,813,365		$	1,836,477
Commercial & industrial		436,988			458,246			450,222
Commercial construction		132,562			154,769			169,338
Total commercial		2,317,695			2,426,380			2,456,037
Residential mortgage		1,278,559			1,214,203			1,128,336
Residential construction		331,681			381,677			408,966
Consumer installment		261,433			152,748			125,896
Total loans		4,189,368			4,175,008			4,119,235
Less allowance for loan losses		(81,845	)		(107,137	)		(112,705	)
Loans, net	$	4,107,523		$	4,067,871		$	4,006,530

The Bank makes loans and extends credit to individuals and a variety of firms and corporations located primarily in counties in north Georgia, the Atlanta, Georgia metropolitan statistical area, the Gainesville, Georgia metropolitan statistical area, coastal Georgia, western North Carolina, east Tennessee and the Greenville, South Carolina metropolitan statistical area.  Although the Bank has a diversified loan portfolio, a substantial portion of its loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market.

Changes in the allowance for loan losses for the three and six months ended June 30, 2013 and 2012 are summarized as follows (in thousands).

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Balance beginning of period	$	105,753	$	113,601	$	107,137	$	114,468
Provision for loan losses		48,500		18,000		59,500		33,000
Charge-offs:
Commercial (secured by real estate)		26,740		4,418		32,194		8,346
Commercial & industrial		15,932		888		17,755		1,644
Commercial construction		6,305		88		6,350		452
Residential mortgage		6,718		4,014		9,074		9,781
Residential construction		18,530		9,846		21,512		15,475
Consumer installment		565		408		1,272		1,161
Total loans charged-off		74,790		19,662		88,157		36,859
Recoveries:
Commercial (secured by real estate)		1,274		69		1,485		300
Commercial & industrial		356		113		678		200
Commercial construction		10		-		59		30
Residential mortgage		209		152		418		544
Residential construction		24		283		33		598
Consumer installment		509		149		692		424
Total recoveries		2,382		766		3,365		2,096
Net charge-offs		72,408		18,896		84,792		34,763
Balance end of period	$	81,845	$	112,705	$	81,845	$	112,705

14

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During the second quarter of 2013, United executed a plan to accelerate the disposition of classified assets including performing classified loans, nonperforming loans and foreclosed properties.  The purpose of the accelerated classified asset disposition plan was to clean up legacy credit problems remaining from the recent financial crisis and to accelerate the improvement of United’s credit measures toward pre-crisis levels.  The classified asset sales included individual note and foreclosed property sales and a large bulk sale of classified assets to a single investor.  The bulk sale included performing and nonperforming classified loans and foreclosed properties.  The assets were divided into four separate pools that were bid for separately by potential buyers.  A single purchaser was the high bidder for each of the four pools.  The table below shows the allocation among impaired loans, loans that were not considered impaired and foreclosed properties, including United's recorded investment in those assets, the sales proceeds and the resulting net charge offs of assets sold in the bulk sale transaction (in thousands).

	Recorded Investment		Net Sales Proceeds		Net Charge-Off
Loans considered impaired	$	96,829	$	56,298	$	(40,531	)
Loans not considered impaired		25,687		15,227		(10,460	)
Foreclosed properties		8,398		5,933		(2,465	)
Total assets sold	$	130,914	$	77,458	$	(53,456	)

The loans considered impaired in the table above were assigned specific reserves of $6.86 million in the most recent analysis of the allowance for loan losses prior to the sale. Because the assets were sold at liquidation prices in a bulk transaction with no recourse, the sales price was generally lower than the appraised value of the foreclosed properties and loan collateral.  Although the classified asset sales increased charge-offs during the second quarter of 2013, they accomplished management’s goal of moving classified asset levels toward the pre-crisis range.

United considers all loans that are on nonaccrual with a balance of $500,000 or greater and all troubled debt restructurings (“TDRs”) to be impaired.  In addition, United reviews all accruing substandard loans greater than $2 million to determine if the loan is impaired.  A loan is considered impaired when, based on current events and circumstances, it is probable that all amounts due, according to the contractual terms of the loan, will not be collected.  All TDRs are considered impaired regardless of accrual status.  Impairment is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.  A specific reserve is established for impaired loans for the amount of calculated impairment.  Interest payments received on impaired nonaccrual loans are applied as a reduction of the outstanding principal balance.  For impaired loans not on nonaccrual status, interest is accrued according to the terms of the loan agreement.  Loans are evaluated for impairment quarterly and specific reserves are established in the allowance for loan losses for any measured impairment.

Each quarter, United’s management prepares an analysis of the allowance for loan losses to determine the appropriate balance that measures and quantifies the amount of loss inherent in the loan portfolio.  The allowance is comprised of specific reserves which are determined as described above, general reserves which are determined based on historical loss experience as adjusted for current trends and economic conditions and an unallocated portion.  United uses eight quarters of historical loss experience weighted toward the most recent quarters to determine the loss factors to be used.  Eight quarters has been determined to be an appropriate time period as it is recent enough to be relevant to current conditions and covers a length of time sufficient to minimize distortions caused by nonrecurring and unusual activity that might otherwise influence a shorter time period.  The weighted average is calculated by multiplying each quarter’s annualized historical net charge-off rate by 1 through 8, with 8 representing the most recent quarter and 1 representing the oldest quarter.  United uses annualized charge-off rates under the broad assumption that losses inherent in the loan portfolio will generally be resolved within twelve months.  Problem loans that are not resolved within twelve months are generally larger loans that are more complex in nature requiring more time to either rehabilitate or work out of the bank.  These credits are subject to impairment testing and specific reserves.

The weighted loss factor results for each quarter are added together and divided by 36 (the sum of 1, 2, 3, 4, 5, 6, 7 and 8) to arrive at the weighted average historical loss factor for each category of loans.  United calculates loss factors for each major category of loans (commercial real estate, commercial & industrial, commercial construction, residential construction and consumer installment) except residential real estate loans which are further divided into home equity first lien, home equity junior lien and all other residential real estate loans and a loss factor is calculated for each category.

Management carefully reviews the resulting loss factors for each category of the loan portfolio and evaluates whether qualitative adjustments are necessary to take into consideration recent credit trends such as increases or decreases in past due, nonaccrual, criticized and classified loans, acceleration or delays in timing of recognition of losses that may render the use of annualized charge-off rates to be inappropriate, and other macro environmental factors such as changes in unemployment rates, lease vacancy rates and trends in property values and absorption rates.

To validate the results, management closely monitors the loan portfolio to determine the range of potential losses based upon probability of default and losses upon default for each major loan category.  The potential range of losses resulting from this analysis is compared to the resulting loss factors for each major loan category to validate the loss factors and determine if qualitative adjustments are necessary.  United’s management believes that its method of determining the balance of the allowance for loan losses provides a reasonable and reliable basis for measuring and reporting losses that are inherent in the loan portfolio as of the reporting date.

15

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents the balance and activity in the allowance for loan losses by portfolio segment and the recorded investment in loans by portfolio segment based on the impairment method as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

Six Months Ended June 30, 2013	Commercial (Secured by Real Estate)			Commercial & Industrial			Commercial Construction			Residential Mortgage			Residential Construction			Consumer Installment			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	27,847		$	5,537		$	8,389		$	26,642		$	26,662		$	2,747		$	9,313		$	107,137
Charge-offs		(32,194	)		(17,755	)		(6,350	)		(9,074	)		(21,512	)		(1,272	)		-			(88,157	)
Recoveries		1,485			678			59			418			33			692			-			3,365
Provision		25,670			19,594			2,177			2,041			12,139			223			(2,344	)		59,500
Ending balance	$	22,808		$	8,054		$	4,275		$	20,027		$	17,322		$	2,390		$	6,969		$	81,845
Ending allowance attributable to loans:
Individually evaluated for impairment	$	2,862		$	129		$	440		$	1,197		$	417		$	12		$	-		$	5,057
Collectively evaluated for impairment		19,946			7,925			3,835			18,830			16,905			2,378			6,969			76,788
Total ending allowance balance	$	22,808		$	8,054		$	4,275		$	20,027		$	17,322		$	2,390		$	6,969		$	81,845
Loans:
Individually evaluated for impairment	$	52,297		$	5,738		$	12,955		$	18,393		$	14,095		$	337		$	-		$	103,815
Collectively evaluated for impairment		1,695,848			431,250			119,607			1,260,166			317,586			261,096			-			4,085,553
Total loans	$	1,748,145		$	436,988		$	132,562		$	1,278,559		$	331,681		$	261,433		$	-		$	4,189,368
December 31, 2012
Allowance for loan losses:
Ending allowance attributable to loans:
Individually evaluated for impairment	$	6,106		$	490		$	2,239		$	2,165		$	625		$	19		$	-		$	11,644
Collectively evaluated for impairment		21,741			5,047			6,150			24,477			26,037			2,728			9,313			95,493
Total ending allowance balance	$	27,847		$	5,537		$	8,389		$	26,642		$	26,662		$	2,747		$	9,313		$	107,137
Loans:
Individually evaluated for impairment	$	104,409		$	51,501		$	40,168		$	22,247		$	34,055		$	430		$	-		$	252,810
Collectively evaluated for impairment		1,708,956			406,745			114,601			1,191,956			347,622			152,318			-			3,922,198
Total loans	$	1,813,365		$	458,246		$	154,769		$	1,214,203		$	381,677		$	152,748		$	-		$	4,175,008
Six Months Ended June 30, 2012
Beginning balance	$	31,644		$	5,681		$	6,097		$	29,076		$	30,379		$	2,124		$	9,467		$	114,468
Charge-offs		(8,346	)		(1,644	)		(452	)		(9,781	)		(15,475	)		(1,161	)		-			(36,859	)
Recoveries		300			200			30			544			598			424			-			2,096
Provision		6,288			1,061			4,662			6,471			13,712			1,183			(377	)		33,000
Ending balance	$	29,886		$	5,298		$	10,337		$	26,310		$	29,214		$	2,570		$	9,090		$	112,705
Ending allowance attributable to loans:
Individually evaluated for impairment	$	8,544		$	753		$	2,476		$	1,389		$	4,188		$	20		$	-		$	17,370
Collectively evaluated for impairment		21,342			4,545			7,861			24,921			25,026			2,550			9,090			95,335
Total ending allowance balance	$	29,886		$	5,298		$	10,337		$	26,310		$	29,214		$	2,570		$	9,090		$	112,705
Loans:
Individually evaluated for impairment	$	130,838		$	57,747		$	42,833		$	19,844		$	41,906		$	511		$	-		$	293,679
Collectively evaluated for impairment		1,705,639			392,475			126,505			1,108,492			367,060			125,385			-			3,825,556
Total loans	$	1,836,477		$	450,222		$	169,338		$	1,128,336		$	408,966		$	125,896		$	-		$	4,119,235

When a loan officer determines that a loan is uncollectible, he or she is responsible for recommending to the local bank president that the loan be charged off.  Full or partial charge-offs may also be recommended by the Collections Department, the Special Assets Department and the Foreclosure / OREO department.  Nonaccrual real estate loans that are collateral dependent are generally charged down to 80% of the appraised value of the underlying collateral at the time they are placed on nonaccrual status.

A committee consisting of the Chief Risk Officer, Senior Risk Officer and the Senior Credit Officers meets monthly to review charge-offs that have occurred during the previous month.  The 10 largest charge-offs are reported quarterly to the Board of Directors.

Generally, closed-end retail loans (installment and residential mortgage loans) past due 120 cumulative days are charged-off unless the loan is well secured and in process of collection (within the next 90 days).  Open-end (revolving) retail loans which are past due 180 cumulative days from their contractual due date are generally charged-off.

At June 30, 2013, December 31, 2012 and June 30, 2012, loans with a carrying value of $2.00 billion, $1.90 billion and $1.61 billion, respectively, were pledged as collateral to secure FHLB advances and other contingent funding sources.

16

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The average balances of impaired loans and income recognized on impaired loans while they were considered impaired is presented below for the three and six months ended June 30, 2013 and 2012 (in thousands).

	2013						2012
Three Months Ended June 30,	Average Balance		Interest Revenue Recognized During Impairment		Cash Basis Interest Revenue Received		Average Balance		Interest Revenue Recognized During Impairment		Cash Basis Interest Revenue Received
Commercial (secured by real estate)	$	52,191	$	631	$	665	$	125,419	$	1,414	$	1,476
Commercial & industrial		5,804		63		70		48,984		191		700
Commercial construction		13,034		114		115		41,242		217		304
Total commercial		71,029		808		850		215,645		1,822		2,480
Residential mortgage		18,950		205		193		19,645		255		297
Residential construction		14,058		178		147		51,596		336		431
Consumer installment		246		4		4		450		8		8
Total	$	104,283	$	1,195	$	1,194	$	287,336	$	2,421	$	3,216
Six Months Ended June 30,
Commercial (secured by real estate)	$	74,233	$	1,577	$	1,665	$	112,633	$	2,665	$	2,817
Commercial & industrial		27,277		219		699		49,922		309		1,310
Commercial construction		27,983		265		347		36,109		484		761
Total commercial		129,493		2,061		2,711		198,664		3,458		4,888
Residential mortgage		20,179		446		416		25,060		480		558
Residential construction		29,374		504		575		59,866		737		949
Consumer installment		263		10		10		391		13		13
Total	$	179,309	$	3,021	$	3,712	$	283,981	$	4,688	$	6,408

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

	June 30, 2013						December 31, 2012						June 30, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial (secured by real estate)	$	27,851	$	17,640	$	-	$	74,066	$	62,609	$	-	$	105,788	$	95,453	$	-
Commercial & industrial		3,809		3,809		-		74,572		49,572		-		81,036		56,036		-
Commercial construction		809		659		-		23,938		17,305		-		22,491		21,372		-
Total commercial		32,469		22,108		-		172,576		129,486		-		209,315		172,861		-
Residential mortgage		8,676		6,843		-		10,336		8,383		-		13,994		11,578		-
Residential construction		8,476		4,992		-		35,439		19,093		-		46,589		30,094		-
Consumer installment		203		102		-		-		-		-		185		185		-
Total with no related allowance recorded		49,824		34,045		-		218,351		156,962		-		270,083		214,718		-
With an allowance recorded:
Commercial (secured by real estate)		34,741		34,657		2,862		44,395		41,800		6,106		35,348		35,295		8,544
Commercial & industrial		2,091		1,929		129		2,170		1,929		490		1,711		1,711		753
Commercial construction		12,376		12,296		440		23,746		22,863		2,239		21,461		21,461		2,476
Total commercial		49,208		48,882		3,431		70,311		66,592		8,835		58,520		58,467		11,773
Residential mortgage		11,794		11,550		1,197		14,267		13,864		2,165		8,458		8,266		1,389
Residential construction		9,411		9,103		417		15,412		14,962		625		11,886		11,812		4,188
Consumer installment		244		235		12		441		430		19		335		326		20
Total with an allowance recorded		70,657		69,770		5,057		100,431		95,848		11,644		79,199		78,871		17,370
Total	$	120,481	$	103,815	$	5,057	$	318,782	$	252,810	$	11,644	$	349,282	$	293,589	$	17,370

There were no loans more than 90 days past due and still accruing interest at June 30, 2013, December 31, 2012 or June 30, 2012.  Nonaccrual loans include both homogeneous loans that are collectively evaluated for impairment and individually evaluated impaired loans.  United’s policy is to place loans on nonaccrual status when, in the opinion of management, the principal and interest on a loan is not likely to be repaid in accordance with the loan terms or when the loan becomes 90 days past due and is not well secured and in the process of collection.  When a loan is classified on nonaccrual status, interest previously accrued but not collected is reversed against current interest revenue.  Principal and interest payments received on a nonaccrual loan are applied to reduce outstanding principal.

17

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents the recorded investment (unpaid principal less amounts charged-off) in nonaccrual loans by loan class as of June 30, 2013, December 31, 2012 and June 30, 2102 (in thousands).

	Nonaccrual Loans
	June 30, 2013		December 31, 2012		June 30, 2012
Commercial (secured by real estate)	$	7,237	$	22,148	$	19,115
Commercial & industrial		548		31,817		34,982
Commercial construction		504		23,843		18,175
Total commercial		8,289		77,808		72,272
Residential mortgage		14,338		12,589		16,631
Residential construction		4,838		18,702		25,530
Consumer installment		399		795		907
Total	$	27,864	$	109,894	$	115,340
Balance as a percentage of unpaid principal		62.6%		69.5%		68.8%

The following table presents the aging of the recorded investment in past due loans as of June 30, 2013, December 31, 2012 and June 30, 2012 by class of loans (in thousands).

	Loans Past Due								Loans Not
As of June 30, 2013	30 - 59 Days		60 - 89 Days		> 90 Days		Total		Past Due		Total
Commercial (secured by real estate)	$	3,541	$	696	$	2,136	$	6,373	$	1,741,772	$	1,748,145
Commercial & industrial		1,123		500		145		1,768		435,220		436,988
Commercial construction		1,128		235		196		1,559		131,003		132,562
Total commercial		5,792		1,431		2,477		9,700		2,307,995		2,317,695
Residential mortgage		10,543		3,993		5,639		20,175		1,258,384		1,278,559
Residential construction		2,037		335		1,261		3,633		328,048		331,681
Consumer installment		893		183		30		1,106		260,327		261,433
Total loans	$	19,265	$	5,942	$	9,407	$	34,614	$	4,154,754	$	4,189,368
As of December 31, 2012
Commercial (secured by real estate)	$	8,106	$	3,232	$	7,476	$	18,814	$	1,794,551	$	1,813,365
Commercial & industrial		1,565		429		867		2,861		455,385		458,246
Commercial construction		2,216		-		4,490		6,706		148,063		154,769
Total commercial		11,887		3,661		12,833		28,381		2,397,999		2,426,380
Residential mortgage		12,292		2,426		4,848		19,566		1,194,637		1,214,203
Residential construction		2,233		1,934		5,159		9,326		372,351		381,677
Consumer installment		1,320		245		289		1,854		150,894		152,748
Total loans	$	27,732	$	8,266	$	23,129	$	59,127	$	4,115,881	$	4,175,008
As of June 30, 2012
Commercial (secured by real estate)	$	7,053	$	1,342	$	11,996	$	20,391	$	1,816,086	$	1,836,477
Commercial & industrial		663		1,496		389		2,548		447,674		450,222
Commercial construction		3,555		133		950		4,638		164,700		169,338
Total commercial		11,271		2,971		13,335		27,577		2,428,460		2,456,037
Residential mortgage		12,636		2,980		6,756		22,372		1,105,964		1,128,336
Residential construction		4,781		1,189		11,096		17,066		391,900		408,966
Consumer installment		971		325		398		1,694		124,202		125,896
Total loans	$	29,659	$	7,465	$	31,585	$	68,709	$	4,050,526	$	4,119,235

18

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of June 30, 2013, December 31, 2012, and June 30, 2012, $4.34 million, $9.50 million and $10.3 million of specific reserves were allocated to customers whose loan terms have been modified in TDRs.  United committed to lend additional amounts totaling up to $35,000, $689,000 and $490,000 as of June 30, 2013, December 31, 2012 and June 30, 2012, respectively, to customers with outstanding loans that are classified as TDRs.

The modification of the terms of the TDRs included one or a combination of the following:  a reduction of the stated interest rate of the loan or an extension of the amortization period that would not otherwise be considered in the current market for new debt with similar risk characteristics; a permanent reduction of the principal amount; a restructuring of the borrower’s debt into an A/B note structure where the A note would fall within the borrower’s ability to pay and the remainder would be included in the B note, or a mandated bankruptcy restructuring.

The following table presents additional information on TDRs including the number of loan contracts restructured and the pre- and post-modification recorded investment as of June 30, 2013, December 31, 2012 and June 30, 2012 (dollars in thousands).

	June 30, 2013						December 31, 2012						June 30, 2012
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial (sec by RE)		77	$	45,874	$	42,366		96	$	80,261	$	75,340		96	$	87,104	$	82,325
Commercial & industrial		34		3,091		2,929		32		7,492		7,250		29		3,972		3,972
Commercial construction		14		13,185		12,956		25		37,537		33,809		23		42,796		41,677
Total commercial		125		62,150		58,251		153		125,290		116,399		148		133,872		127,974
Residential mortgage		110		17,772		16,381		117		20,323		19,296		110		17,613		16,950
Residential construction		51		11,895		9,908		67		25,822		23,786		72		25,123		22,178
Consumer installment		42		447		337		51		1,292		1,282		47		521		511
Total loans		328	$	92,264	$	84,877		388	$	172,727	$	160,763		377	$	177,129	$	167,613

Loans modified under the terms of a TDR during the three and six months ended June 30, 2013 and 2012 are presented in the table below.  In addition, the following table presents loans modified under the terms of a TDR that became 90 days or more delinquent during the three and six months ended June 30, 2013 and 2012 that were initially restructured within one year prior to the three and six months ended June 30, 2013 and 2012 (dollars in thousands).

New Troubled Debt Restructurings for the Three Months Ended June 30, 2013	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Three Months Ended June 30, 2013
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		9	$	6,523	$	6,523	$	-	$	-
Commercial & industrial		-		-		-		-		-
Commercial construction		-		-		-		-		-
Total commercial		9		6,523		6,523		-		-
Residential mortgage		2		649		505		1		40
Residential construction		2		339		339		-		-
Consumer installment		-		-		-		-		-
Total loans		13	$	7,511	$	7,367		1	$	40

19

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

New Troubled Debt Restructurings for the Six Months Ended June 30, 2013	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Six Months Ended June 30, 2013
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		17	$	10,091	$	10,091	$	1	$	432
Commercial & industrial		9		815		709		1		35
Commercial construction		-		-		-		2		1,454
Total commercial		26		10,906		10,800		4		1,921
Residential mortgage		13		2,764		2,620		2		108
Residential construction		7		1,123		994		2		117
Consumer installment		4		21		21		3		20
Total loans		50	$	14,814	$	14,435		11	$	2,166

New Troubled Debt Restructurings for the Three Months Ended June 30, 2012	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Three Months Ended June 30, 2012
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		10	$	7,815	$	7,728	$	3	$	2,307
Commercial & industrial		7		598		598		1		5
Commercial construction		7		7,702		7,702		-		-
Total commercial		24		16,115		16,028		4		2,312
Residential mortgage		20		5,288		5,112		1		27
Residential construction		20		7,638		6,361		1		121
Consumer installment		8		210		210		1		6
Total loans		72	$	29,251	$	27,711		7	$	2,466

New Troubled Debt Restructurings for the Six Months Ended June 30, 2012	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Six Months Ended June 30, 2012
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		34	$	22,914	$	21,469	$	3	$	2,307
Commercial & industrial		17		3,322		3,322		2		48
Commercial construction		14		28,483		28,483		2		4,174
Total commercial		65		54,719		53,274		7		6,529
Residential mortgage		44		10,567		10,385		4		400
Residential construction		34		11,389		9,550		4		1,597
Consumer installment		15		270		265		1		6
Total loans		158	$	76,945	$	73,474		16	$	8,532

20

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Collateral dependent TDRs that subsequently default and are placed on nonaccrual are charged down to the fair value of the collateral consistent with United’s policy for nonaccrual loans.  Impairment on TDRs that are not collateral dependent continues to be measured on discounted cash flows regardless of whether the loan has subsequently defaulted.

As of June 30, 2013, December 31, 2012 and June 30, 2012, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands).

					Substandard				Doubtful /
As of June 30, 2013	Pass		Watch		Performing		Nonaccrual		Loss		Not Rated		Total
Commercial (secured by real estate)	$	1,595,141	$	67,017	$	78,750	$	7,237	$	-	$	-	$	1,748,145
Commercial & industrial		418,354		5,716		11,458		548		-		912		436,988
Commercial construction		104,185		12,107		15,766		504		-		-		132,562
Total commercial		2,117,680		84,840		105,974		8,289		-		912		2,317,695
Residential mortgage		1,185,658		27,341		51,222		14,338		-		-		1,278,559
Residential construction		292,116		18,096		16,631		4,838		-		-		331,681
Consumer installment		257,563		966		2,505		399		-		-		261,433
Total loans	$	3,853,017	$	131,243	$	176,332	$	27,864	$	-	$	912	$	4,189,368
As of December 31, 2012
Commercial (secured by real estate)	$	1,592,677	$	80,997	$	117,543	$	22,148	$	-	$	-	$	1,813,365
Commercial & industrial		401,606		5,404		18,477		31,817		-		942		458,246
Commercial construction		104,296		7,345		19,285		23,843		-		-		154,769
Total commercial		2,098,579		93,746		155,305		77,808		-		942		2,426,380
Residential mortgage		1,102,746		33,689		65,179		12,589		-		-		1,214,203
Residential construction		292,264		32,907		37,804		18,702		-		-		381,677
Consumer installment		147,214		1,086		3,653		795		-		-		152,748
Total loans	$	3,640,803	$	161,428	$	261,941	$	109,894	$	-	$	942	$	4,175,008
As of June 30, 2012
Commercial (secured by real estate)	$	1,596,876	$	72,067	$	148,419	$	19,115	$	-	$	-	$	1,836,477
Commercial & industrial		393,894		4,652		15,916		34,982		-		778		450,222
Commercial construction		107,199		6,088		37,876		18,175		-		-		169,338
Total commercial		2,097,969		82,807		202,211		72,272		-		778		2,456,037
Residential mortgage		999,323		39,105		73,277		16,631		-		-		1,128,336
Residential construction		290,804		47,182		45,450		25,530		-		-		408,966
Consumer installment		121,166		1,117		2,706		907		-		-		125,896
Total loans	$	3,509,262	$	170,211	$	323,644	$	115,340	$	-	$	778	$	4,119,235

Risk Ratings

United categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current industry and economic trends, among other factors.  United analyzes loans individually by classifying the loans as to credit risk.  This analysis is performed on a continuous basis.  United uses the following definitions for its risk ratings:

Watch.  Loans in this category are presently protected from apparent loss; however, weaknesses exist that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities.  These loans require more than the ordinary amount of supervision. Collateral values generally afford adequate coverage, but may not be immediately marketable.

Substandard.  These loans are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged.  Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios.  The loan may be past due and related deposit accounts experiencing overdrafts.  There is the distinct possibility that United will sustain some loss if deficiencies are not corrected. If possible, immediate corrective action is taken.

Doubtful.  Specific weaknesses characterized as Substandard that are severe enough to make collection in full highly questionable and improbable.  There is no reliable secondary source of full repayment.

Loss.  Loans categorized as Loss have the same characteristics as Doubtful; however, probability of loss is certain.  Loans classified as Loss are charged-off.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Loans listed as not rated are generally deposit account overdrafts that have not been assigned a grade.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 6 – Foreclosed Property

Major classifications of foreclosed properties at June 30, 2013, December 31, 2012 and June 30, 2012 are summarized as follows (in thousands).

	June 30,			December 31,			June 30,
	2013			2012			2012
Commercial real estate	$	847		$	6,368		$	11,639
Commercial construction		376			2,204			2,732
Total commercial		1,223			8,572			14,371
Residential mortgage		1,931			5,192			5,868
Residential construction		4,384			11,454			22,054
Total foreclosed property		7,538			25,218			42,293
Less valuation allowance		(3,602	)		(6,954	)		(11,872	)
Foreclosed property, net	$	3,936		$	18,264		$	30,421
Balance as a percentage of original loan unpaid principal		31.6	%		39.7	%		39.3	%

In the second quarter of 2013, United completed the accelerated sales of classified assets including performing and nonperforming classified loans and foreclosed properties.  The classified asset sales resulted in a much lower balance of foreclosed property costs at June 30, 2013 and elevated losses from sales.

Activity in the valuation allowance for foreclosed property for the three and six months ended June 30, 2013 and 2012 is presented in the following table (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Balance at beginning of period	$	4,979		$	17,746		$	6,954		$	18,982
Additions charged to expense		1,369			1,008			2,410			3,119
Disposals		(2,746	)		(6,882	)		(5,762	)		(10,229	)
Balance at end of period	$	3,602		$	11,872		$	3,602		$	11,872

Expenses related to foreclosed assets for the three and six months ended June 30, 2013 and 2012 is presented in the following table (in thousands).

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013		2012			2013		2012
Net loss on sales	$	2,945	$	(269	)	$	3,050	$	(176	)
Provision for unrealized losses		1,369		1,008			2,410		3,119
Operating expenses		837		1,112			2,024		2,733
Total foreclosed property expense	$	5,151	$	1,851		$	7,484	$	5,676

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 7 – Reclassifications Out of Accumulated Other Comprehensive Income

The following table presents the details regarding amounts reclassified out of accumulated other comprehensive income for the three and six months ended June 30, 2013 (in thousands).

	Amounts Reclassified from Accumulated Other Comprehensive Income
Details about Accumulated Other Comprehensive Income Components	For the Three Months Ended June 30, 2013			For the Six Months Ended June 30, 2013			Affected Line Item in the Statement Where Net Income is Presented
Unrealized (losses) gains on available-for-sale securities:
	$	-		$	116		Securities gains, net
		-			(45	)	Tax (expense) or benefit
	$	-		$	71		Net of tax
Amortization of gains included in net income on available-for-sale securities transferred to held to maturity:
	$	271		$	590		Investment securities interest revenue
		(103	)		(227	)	Tax (expense) or benefit
	$	168		$	363		Net of tax
Gains included in net income on derivative financial instruments accounted for as cash flow hedges:
Effective portion of interest rate contracts	$	303		$	840		Loan interest revenue
Ineffective portion of interest rate contracts		3			4		Other fee revenue
		306			844		Total before tax
		(119	)		(328	)	Tax (expense) or benefit
	$	187		$	516		Net of tax
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan
Prior service cost	$	(91	)	$	(181	)	Salaries and employee benefits expense
Actuarial losses		(42	)		(84	)	Salaries and employee benefits expense
		(133	)		(265	)	Total before tax
		52			103		Tax (expense) or benefit
	$	(81	)	$	(162	)	Net of tax
Total reclassifications for the period	$	274		$	788		Net of tax
Amounts shown above in parentheses reduce earnings

Note 8 – Earnings Per Share

United is required to report on the face of the consolidated statement of income, earnings per common share with and without the dilutive effects of potential common stock issuances from instruments such as options, convertible securities and warrants. Basic earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share.

During the three and six months ended June 30, 2013 and 2012, United accrued dividends on preferred stock, including accretion of discounts, as shown in the following table (in thousands).

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
Series A - 6% fixed	$	3	$	3	$	6	$	6
Series B - 5% fixed until December 6, 2013, 9% thereafter		2,636		2,614		5,266		5,222
Series D - LIBOR plus 9.6875%, resets quarterly		416		415		835		834
Total preferred stock dividends	$	3,055	$	3,032	$	6,107	$	6,062
All preferred stock dividends are payable quarterly.
Series B preferred stock was issued at a discount. Dividend amounts shown include discount accretion for each period.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The preferred stock dividends were subtracted from net income in order to arrive at net income available to common shareholders.  There were no dilutive securities outstanding for the three and six months ended June 30, 2013 and 2012.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2013 and 2012 (in thousands, except per share data).

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Net income available to common shareholders	$	226,909	$	3,467	$	235,622	$	11,965
Weighted average shares outstanding:
Basic		58,141		57,840		58,111		57,803
Effect of dilutive securities
Convertible securities		-		-		-		-
Stock options		-		-		-		-
Warrants		-		-		-		-
Diluted		58,141		57,840		58,111		57,803
Income per common share:
Basic	$	3.90	$	.06	$	4.05	$	.21
Diluted	$	3.90	$	.06	$	4.05	$	.21

At June 30, 2013, United had the following potentially dilutive stock options and warrants outstanding: a warrant to purchase 219,909 common shares at $61.40 per share issued originally to the U.S. Treasury in conjunction with the issuance of United’s fixed rate cumulative preferred perpetual stock, Series B; 129,670 common shares issuable upon exercise of warrants attached to trust preferred securities with an exercise price of $100 per share; 407,372 common shares issuable upon exercise of stock options granted to employees with a weighted average exercise price of $100.90; 393,785 shares issuable upon completion of vesting of restricted stock awards; 1,411,765 common shares issuable upon exercise of warrants exercisable at a price equivalent to $21.25 per share granted to Fletcher International Ltd. (“Fletcher”) in connection with a 2010 asset purchase and sale agreement; and 1,551,126 common shares issuable upon exercise of warrants granted in connection with United’s tax benefits preservation plan, exercisable at $12.50 per share.

Note 9 – Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

United is exposed to certain risks arising from both its business operations and economic conditions.  United principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. United manages interest rate risk primarily by managing the amount, sources, and duration of its investment securities portfolio and wholesale funding and through the use of derivative financial instruments.  Specifically, United enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  United’s derivative financial instruments are used to manage differences in the amount, timing, and duration of United’s known or expected cash receipts and its known or expected cash payments principally related to United’s loans, wholesale borrowings and deposits.

In conjunction with the FASB’s fair value measurement guidance, United made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The table below presents the fair value of United’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

Derivatives accounted for as hedges under ASC 815

		Fair Value
Interest Rate	Balance Sheet	June 30,		December 31,		June 30,
Products	Location	2013		2012		2012
Asset derivatives	Other assets	$	8,017	$	23	$	68
Liability derivatives	Other liabilities	$	28,325	$	11,900	$	5,987

Derivatives not accounted for as hedges under ASC 815

		Fair Value
Interest Rate	Balance Sheet	June 30,		December 31,		June 30,
Products	Location	2013		2012		2012
Asset derivatives	Other assets	$	1,000	$	635	$	155
Liability derivatives	Other liabilities	$	1,005	$	643	$	155

Derivative contracts that are not accounted for as hedges under ASC 815, Derivatives and Hedging are between United and certain commercial loan customers with offsetting positions to dealers under a back-to-back swap program.

Cash Flow Hedges of Interest Rate Risk

United’s objectives in using interest rate derivatives are to add stability to net interest revenue and to manage its exposure to interest rate movements. To accomplish this objective, United primarily uses interest rate swaps as part of its interest rate risk management strategy.  At June 30, 2013, United’s interest rate swaps designated as cash flow hedges involve the payment of fixed-rate amounts to a counterparty in exchange for United receiving variable-rate payments over the life of the agreements without exchange of the underlying notional amount.  United’s current cash flow hedges are for the purpose of converting variable rate deposits and wholesale borrowings to a fixed rate to protect United in a rising rate environment.  The swaps are forward starting and do not become effective until 2014 and 2015.  United had three swap contracts outstanding with a total notional amount of $200 million that were designated as cash flow hedges of future issuances of brokered deposits and three swap contracts outstanding with a total notional amount of $375 million that were designated as cash flow hedges of indexed money market accounts at June 30, 2013.  At December 31, 2012 and June 30, 2012, United had three swap contracts outstanding with a notional amount of $200 million that were designated as cash flow hedges of future issuances of brokered deposits and two swap contracts outstanding with a total notional amount of $200 million that were designated as cash flow hedges of indexed money market accounts.

The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense when the swaps become effective in 2014 as interest payments are made on United’s LIBOR based variable-rate wholesale borrowings and indexed deposit accounts.  At June 30, 2013, a portion of the amount included in other comprehensive income represents deferred gains from terminated cash flow hedges where the forecasted hedging transaction is expected to remain effective over the remaining unexpired term of the original contract.  Such gains are being deferred and recognized over the remaining life of the contract on a straight line basis.  During the three and six months ended June 30, 2013, United accelerated the reclassification of $3,000 and $4,000, respectively, in gains from terminated positions as a result of the forecasted transactions becoming probable not to occur.  For the same periods in 2012, those amounts were gains of $43,000 and $124,000, respectively.  During the next three months, United estimates that the remaining $58,000 of the deferred gains on terminated cash flow hedging positions will be reclassified as an increase to loan interest revenue.  In addition, United’s forward starting active cash flow hedges of floating rate liabilities will begin to become effective over the next twelve months.  United recognized $79,000 in hedge ineffectiveness gains on active cash flow hedges in the second quarter of 2013.  No such hedge ineffectiveness gains or losses were recognized on active cash flow hedges in 2012.  United expects that $862,000 will be reclassified as an increase to deposit interest expense over the next twelve months related to these cash flow hedges.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Fair Value Hedges of Interest Rate Risk

United is exposed to changes in the fair value of certain of its fixed rate investments and obligations due to changes in interest rates. United uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in interest rates.  Interest rate swaps designated as fair value hedges of fixed rate obligations involve the receipt of fixed-rate amounts from a counterparty in exchange for United making variable rate payments over the life of the agreements without the exchange of the underlying notional amount.  Interest rate swaps designated as fair value hedges of fixed rate investments involve the receipt of variable-rate amounts from a counterparty in exchange for United making fixed rate payments over the life of the instrument without the exchange of the underlying notional amount.  At June 30, 2013, United had 25 interest rate swaps with an aggregate notional amount of $335 million that were designated as fair value hedges of interest rate risk.  Eight of the interest rate swaps outstanding at June 30, 2013 with an aggregate notional amount of $86 million were receive-variable / pay-fixed swaps that were used for the purpose of hedging changes in the fair value of fixed rate corporate bonds resulting from changes in interest rates.  The other 17 were pay-variable / receive-fixed swaps hedging changes in the fair value of fixed rate brokered time deposits resulting from changes in interest rates.  At June 30, 2012, United had seven interest rate swaps with an aggregate notional amount of $104 million that were designated as fair value hedges of fixed rate brokered time deposits.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. United includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related derivatives.  During the three and six months ended June 30, 2013, United recognized net gains of $289,000 and $203,000, respectively, and during the three and six months ended June 30, 2012, United recognized net losses of $223,000 and $189,000, respectively, related to ineffectiveness of the fair value hedging relationships.  United also recognized a net reduction of interest expense of $1.20 million and $2.27 million, respectively, for the three and six months ended June 30, 2013 and a net reduction of interest expense of $550,000 and $828,000, respectively, for the three and six months ended June 30, 2012 related to United’s fair value hedges of brokered time deposits, which includes net settlements on the derivatives.  United recognized a $283,000 and $295,000 reduction of interest revenue on securities during the second quarter and first six months of 2013 related to United’s fair value hedges of corporate bonds.

Tabular Disclosure of the Effect of Derivative Instruments on the Income Statement

The tables below present the effect of United’s derivative financial instruments on the consolidated statement of operations for the three and six months ended June 30, 2013 and 2012.

Derivatives in Fair Value Hedging Relationships (in thousands).

Location of Gain (Loss)	Amount of Gain (Loss) Recognized in					Amount of Gain (Loss) Recognized in
Recognized in Income	Income on Derivative					Income on Hedged Item
on Derivative	2013			2012		2013		2012
Three Months Ended June 30,
Other fee revenue	$	(10,980	)	$	2,087	$	11,269	$	(2,310	)
Six Months Ended June 30,
Other fee revenue	$	(13,056	)	$	823	$	13,259	$	(1,012	)

In most cases, the estate of deceased brokered certificate of deposit holders may put the certificate of deposit back to the issuing bank at par upon the death of the holder.  When these death puts occur, a gain or loss is recognized for the difference between the fair value and the par amount of the deposits put back.  The change in the fair value of brokered time deposits that are being hedged in fair value hedging relationships reported in the table above includes gains and losses from death puts and such gains and losses are included in the amount of reported ineffectiveness gains or losses.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Derivatives in Cash Flow Hedging Relationships (in thousands).

	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)					Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)
	2013		2012			Location	2013		2012
Three Months Ended June 30,
						Interest revenue	$	303	$	671
						Other income		3		43
Interest rate products	$	11,672	$	(4,855	)	Total	$	306	$	714
Six Months Ended June 30,
						Interest revenue	$	840	$	2,190
						Other income		4		124
Interest rate products	$	12,102	$	(4,855	)	Total	$	844	$	2,314

Other Derivatives Not Accounted for as Hedges (in thousands).

Location of Gain (Loss)	Amount of Gain (Loss) Recognized in
Recognized in Income	Income on Customer Derivatives
on Derivative	2013		2012
Three Months Ended June 30,
Other fee revenue	$	488	$	(1	)
Six Months Ended June 30,
Other fee revenue	$	740	$	68

Credit-risk-related Contingent Features

United manages its credit exposure on derivatives transactions by entering into a bilateral credit support agreement with each counterparty.  The credit support agreements require collateralization of exposures beyond specified minimum threshold amounts.  The details of these agreements, including the minimum thresholds, vary by counterparty.  As of June 30, 2013, collateral totaling $18.2 million was pledged toward derivatives in a liability position.

United’s agreements with each of its derivative counterparties contain a provision where if either party defaults on any of its indebtedness, then it could also be declared in default on its derivative obligations.  The agreements with derivatives counterparties also include provisions that if not met, could result in United being declared in default.  United has agreements with certain of its derivative counterparties that contain a provision where if United fails to maintain its status as a well-capitalized institution or is subject to a prompt corrective action directive, the counterparty could terminate the derivative positions and United would be required to settle its obligations under the agreements.

Change in Valuation Methodology

As of January 1, 2013, United changed its valuation methodology for over-the-counter derivatives to discount cash flows based on Overnight Index Swap (“OIS”) rates.  Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value.  Uncollateralized or partially collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e. LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk.  United changed its methodology to better align its inputs, assumptions and pricing methodologies with those used in its principal market by most dealers and major market participants.  The changes in valuation methodology are applied prospectively as a change in accounting estimate and are not material to United’s financial position or results of operations.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 10 – Stock-Based Compensation

United has an equity compensation plan that allows for grants of incentive stock options, nonqualified stock options, restricted stock and restricted stock unit awards (also referred to as “nonvested stock” awards), stock awards, performance share awards or stock appreciation rights.  Options granted under the plan can have an exercise price no less than the fair market value of the underlying stock at the date of grant.  The general terms of the plan include a vesting period (usually four years) with an exercisable period not to exceed ten years.  Certain option and restricted stock and restricted stock unit awards provide for accelerated vesting if there is a change in control (as defined in the plan).  As of June 30, 2013, 1,214,000 additional awards could be granted under the plan. Through June 30, 2013, incentive stock options, nonqualified stock options, restricted stock and restricted stock unit awards, base salary stock grants and performance share awards have been granted under the plan.

The following table shows stock option activity for the first six months of 2013.

Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinisic Value ($000)
Outstanding at December 31, 2012		482,528		$	97.73
Forfeited		(935	)		30.23
Expired		(74,221	)		81.21
Outstanding at June 30, 2013		407,372			100.90		3.2	$	12
Exercisable at June 30, 2013		399,597			102.64		3.2		3

The fair value of each option is estimated on the date of grant using the Black-Scholes model.  No stock options were granted during the six month period ended June 30, 2013.  Recent decreases in United’s stock price have rendered most of its outstanding options severely out of the money and potentially worthless to the grantee.  Therefore, historical exercise patterns do not provide a reasonable basis for determining the expected life of new option grants.  United therefore uses the formula provided by the SEC in Staff Accounting Bulletin No. 107 to determine the expected life of options.

Compensation expense relating to stock options for the six months ended June 30, 2013 was a reduction of expense of $60,000 due to the reversal of previously recognized expense on grants that did not vest.  Compensation expense relating to stock options of $131,000 was included in earnings for the six months ended June 30, 2012.  The amount of compensation expense for both periods was determined based on the fair value of the options at the time of grant, multiplied by the number of options granted that are expected to vest, which was then amortized over the vesting period.  The forfeiture rate for options is estimated to be approximately 3% per year.  No options were exercised during the first six months of 2013 or 2012.

The table below presents the activity in restricted stock and restricted stock unit awards for the first six months of 2013.

Restricted Stock	Shares			Weighted- Average Grant- Date Fair Value
Outstanding at December 31, 2012		485,584		$	10.72
Granted		80,938			11.24
Excercised		(157,071	)		13.59
Cancelled		(15,666	)		9.14
Outstanding at June 30, 2013		393,785			9.75
Vested at March 31, 2013		54,238			11.20

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Compensation expense for restricted stock and restricted stock units is based on the fair value of restricted stock and restricted stock unit awards at the time of grant, which is equal to the value of United’s common stock on the date of grant.  The value of restricted stock and restricted stock unit grants that are expected to vest is amortized into expense over the vesting period.  For the six months ended June 30, 2013 and 2012, compensation expense of $1.23 million and $815,000, respectively, was recognized related to restricted stock and restricted stock unit awards.  In addition, for the six months ended June 30, 2013, $93,000 was recognized in other operating expense for restricted stock units granted to members of United’s board of directors.  The total intrinsic value of restricted stock and restricted stock units was $4.89 million at June 30, 2013.

As of June 30, 2013, there was $2.73 million of unrecognized compensation cost related to non-vested stock options and restricted stock and restricted stock unit awards granted under the plan.  That cost is expected to be recognized over a weighted-average period of 1.72 years.  The aggregate grant date fair value of options and restricted stock and restricted stock unit awards that vested during the six months ended June 30, 2013, was $2.37 million.

Note 11 – Common and Preferred Stock Issued / Common Stock Issuable

United sponsors a Dividend Reinvestment and Share Purchase Plan (“DRIP”) that allows participants who already own United’s common stock to purchase additional shares directly from the Company.  The DRIP also allows participants to automatically reinvest their quarterly dividends in additional shares of common stock without a commission.  The DRIP is currently suspended.

United’s 401(k) retirement plan regularly purchases shares of United’s common stock directly from United.  In addition, United has an Employee Stock Purchase Program (“ESPP”) that allows eligible employees to purchase shares of common stock at a 5% discount, with no commission charges.  For the six months ended June 30, 2013 and 2012, United issued 35,667 and 60,982 shares, respectively, and increased capital by $383,000 and $501,000, respectively, through these programs.

United offers its common stock as an investment option in its deferred compensation plan.  The common stock component of the deferred compensation plan is accounted for as an equity instrument and is reflected in the consolidated financial statements as common stock issuable.  The deferred compensation plan does not allow for diversification once an election is made to invest in United stock and settlement must be accomplished in shares at the time the deferral period is completed. At June 30, 2013 and 2012, 271,215 and 94,657 shares, respectively, were issuable under the deferred compensation plan.

Note 12 – Income Taxes

The valuation allowance on deferred tax assets was $4.96 million, $270 million and $277 million, respectively, at June 30, 2013, December 31, 2012 and June 30, 2012.  Management assesses the valuation allowance recorded against deferred tax assets at each reporting period.  The determination of whether a valuation allowance for deferred tax assets is appropriate is subject to considerable judgment and requires an evaluation of all the positive and negative evidence.

In 2010, United established a full valuation allowance on its deferred tax asset due to the realization of significant losses and uncertainty about United’s future earnings forecasts.

At June 30, 2013, United remained in a three-year cumulative loss position, which represents negative evidence.  However, based on the assessment of all the positive and negative evidence, management has concluded that it is more likely than not that $272 million of the net deferred tax asset will be realized based upon future taxable income and therefore reversed $272 million of the valuation allowance.  The valuation allowance of $4.96 million at June 30, 2013 is related to specific state income tax credits that have short carryforward periods and are expected to expire unused.  The positive evidence considered by management in arriving at the conclusion to remove the valuation allowance included six consecutive profitable quarters beginning with the fourth quarter of 2011, the strong pre-crisis earnings history and growth in pre-tax, pre-credit earnings, which demonstrate demand for United’s products and services, and the significant improvement in credit measures, which improve both the sustainability of profitability and management’s ability to forecast future credit losses.  The negative evidence considered by management includes the fact that the company remains in a three-year cumulative loss position and the Memorandums of Understanding with the banking regulatory agencies.

United expects to realize the $272 million in net deferred tax assets well in advance of the statutory carryforward period.  At June 30, 2013, $39.7 million of existing deferred tax assets were not related to net operating losses or credits and therefore, have no expiration date.  Approximately $200 million of the remaining deferred tax assets relate to federal net operating losses which will expire in annual installments beginning in 2029.  Additionally, $27.7 million of the deferred tax assets relate to state net operating losses which will expire in annual installments beginning in 2023.  Tax credit carryforwards at June 30, 2013 include federal alternative minimum tax credits totaling $2.94 million which have an unlimited carryforward period.  Other federal and state tax credits at June 30, 2013 total $7.14 million and will expire beginning in 2013.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The valuation allowance could fluctuate in future periods based on the assessment of the positive and negative evidence.  Management’s conclusion at June 30, 2013 that it is more likely than not that the net deferred tax assets of $272 million will be realized is based upon management’s estimate of future taxable income.  Management’s estimate of future taxable income is based on internal forecasts which consider historical performance, various internal estimates and assumptions, as well as certain external data all of which management believes to be reasonable although inherently subject to significant judgment.  If actual results differ significantly from the current estimates of future taxable income, even if caused by adverse macro-economic conditions, the valuation allowance may need to be increased for some or all of the deferred tax asset.  Such an increase to the deferred tax asset valuation allowance could have a material adverse effect on United’s financial condition and results of operations.

United is subject to income taxation in the United States and various state jurisdictions.  United’s federal and state income tax returns are filed on a consolidated basis.  Currently, no years for which United filed a federal income tax return are under examination by the IRS, and there are no state tax examinations currently in progress.  United is no longer subject to income tax examinations from state and local income tax authorities for years before 2009.  Although United is unable to determine the ultimate outcome of future examinations, United believes that the liability recorded for uncertain tax positions is appropriate.

At June 30, 2013, December 31, 2012 and June 30, 2012, unrecognized income tax benefits totaled $5.18 million, $5.07 million and $6.33 million, respectively.

Note 13 – Assets and Liabilities Measured at Fair Value

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability.  As a basis for considering market participant assumptions in fair value measurements, the Financial Accounting Standards Board’s Accounting Standards Codification Topic 820 (“ASC 820”) Fair Value Measurements and Disclosures establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Fair Value Hierarchy

Level 1 Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that United has the ability to access.

Level 2 Valuation is based upon quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

Level 3 Valuation is generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. United’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following is a description of the valuation methodologies used for assets and liabilities recorded at fair value.

Securities Available-for-Sale

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Deferred Compensation Plan Assets and Liabilities

Included in other assets in the Consolidated Balance Sheet are assets related to employee deferred compensation plans. The assets associated with these plans are invested in mutual funds and classified as Level 1. Deferred compensation liabilities, also classified as Level 1, are carried at the fair value of the obligation to the employee, which mirrors the fair value of the invested assets and is included in other liabilities in the consolidated balance sheet.

Mortgage Loans Held for Sale

Mortgage loans held for sale are carried at the lower of cost or market value. The fair value of mortgage loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics.  Generally, book value approximates fair value.

Loans

United does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, a creditor may measure impairment based on a loan’s observable market price, or the fair value of the collateral if repayment of the loan is dependent upon the sale of the underlying collateral.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. In accordance with ASC 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, United records the impaired loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, United records the impaired loan as nonrecurring Level 3.

Foreclosed Assets

Foreclosed assets are adjusted to fair value, less cost to sell, upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, United records the foreclosed asset as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, United records the foreclosed asset as nonrecurring Level 3.

Goodwill and Other Intangible Assets

Goodwill and identified intangible assets are subject to impairment testing. United’s approach to testing goodwill for impairment is to compare the business unit’s carrying value to the implied fair value based on multiples of earnings and tangible book value for recently completed merger transactions.  In the event the fair value is determined to be less than the carrying value, the asset is recorded at fair value as determined by the valuation model. As such, United classifies goodwill and other intangible assets subjected to nonrecurring fair value adjustments as Level 3.

Derivative Financial Instruments

United uses interest rate swaps and interest rate floors to manage its interest rate risk.  The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.  The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments.  The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates fell below the strike rate of the floors.  The variable interest rates used in the calculation of projected receipts on the floor are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.  To comply with the provisions of ASC 820, United incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.  In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, United has considered the effect of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Although United has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.  However, as of June 30, 2013, United had assessed the significance of the effect of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.  As a result, United has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The table below presents United’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013, December 31, 2012 and June 30, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).

June 30, 2013	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
State and political subdivisions	$	-		23,440	$	-	$	23,440
Mortgage-backed securities		-		1,412,586		-		1,412,586
Corporate bonds		-		253,518		350		253,868
Asset-backed securities		-		244,844				244,844
Other		-		2,526		-		2,526
Deferred compensation plan assets		3,074		-		-		3,074
Derivative financial instruments		-		9,017		-		9,017
Total assets	$	3,074	$	1,945,931	$	350	$	1,949,355
Liabilities:
Deferred compensation plan liability	$	3,074	$	-	$	-	$	3,074
Brokered certificates of deposit		-		261,288		-		261,288
Derivative financial instruments		-		29,330		-		29,330
Total liabilities	$	3,074	$	290,618	$	-	$	293,692

December 31, 2012	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale
State and political subdivisions	$	-	$	29,052	$	-	$	29,052
Mortgage-backed securities		-		1,428,502		-		1,428,502
Corporate bonds		-		163,312		350		163,662
Asset-backed securities		-		210,556		-		210,556
Other		-		2,821		-		2,821
Deferred compensation plan assets		3,101		-		-		3,101
Derivative financial instruments		-		658		-		658
Total assets	$	3,101	$	1,834,901	$	350	$	1,838,352
Liabilities:
Deferred compensation plan liability	$	3,101	$	-	$	-	$	3,101
Brokered certificates of deposit		-		154,641		-		154,641
Derivative financial instruments		-		12,543		-		12,543
Total liabilities	$	3,101	$	167,184	$	-	$	170,285

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2012	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
U.S. Government agencies	$	-	$	43,874	$	-	$	43,874
State and political subdivisions		-		27,159		-		27,159
Mortgage-backed securities		-		1,433,431		-		1,433,431
Corporate bonds		-		109,688		350		110,038
Asset-backed securities		-		84,498				84,498
Other		-		2,583		-		2,583
Deferred compensation plan assets		2,895		-		-		2,895
Derivative financial instruments		-		223		-		223
Total assets	$	2,895	$	1,701,456	$	350	$	1,704,701
Liabilities:
Deferred compensation plan liability	$	2,895	$	-	$	-	$	2,895
Brokered certificates of deposit		-		102,879		-		102,879
Derivative financial instruments		-		6,142		-		6,142
Total liabilities	$	2,895	$	109,021	$	-	$	111,916

The following table shows a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs that are classified as Level 3 values (in thousands).

	Securities Available for Sale				Securities Available for Sale
	Three Months Ended				Six Months Ended
	June 30,				June 30,
Securities Available for Sale	2013		2012		2013		2012
Balance at beginning of period	$	350	$	350	$	350	$	350
Amounts included in earnings		-		-		-		-
Paydowns		-		-		-		-
Balance at end of period	$	350	$	350	$	350	$	350

United has two securities that have Level 3 valuations.  They are trust preferred securities in community banks that have shown deteriorating financial condition during the financial crisis, and both are currently deferring interest payments.  Since both investments are not actively traded, there is no recent trade activity upon which to assess value.  The values assigned to the investments are based on sales price estimates from brokers.  Both investments have a par amount of $1 million.  One was considered impaired in 2010 and was written down to $50,000 with a $950,000 impairment charge to earnings.  The other is carried at its original cost basis of $1 million with a $700,000 negative mark to fair value through other comprehensive income.  United does not consider this investment to be other than temporarily impaired, as the community bank was recapitalized by a private equity investment that management believes will result in full payment at maturity.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

United may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis.  These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period.  The table below presents United’s assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2013, December 31, 2012 and June 30, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).

June 30, 2013	Level 1		Level 2		Level 3		Total
Assets
Loans	$	-	$	-	$	74,685	$	74,685
Foreclosed properties		-		-		3,802		3,802
Total	$	-	$	-	$	78,487	$	78,487
December 31, 2012
Assets
Loans	$	-	$	-	$	165,751	$	165,751
Foreclosed properties		-		-		14,788		14,788
Total	$	-	$	-	$	180,539	$	180,539
June 30, 2012
Assets
Loans	$	-	$	-	$	160,266	$	160,266
Foreclosed properties		-		-		25,253		25,253
Total	$	-	$	-	$	185,519	$	185,519

Loans that are reported above as being measured at fair value on a non-recurring basis are generally impaired loans that have either been partially charged off or have specific reserves assigned to them.  Nonaccrual impaired loans that are collateral dependent are generally written down to 80% of appraised value which considers the estimated costs to sell.  Specific reserves are established for impaired loans based on appraised value of collateral or discounted cash flows.  Foreclosed properties that are included above as measured at fair value on a nonrecurring basis are those properties that resulted from a loan that had been charged down or have been written down subsequent to foreclosure.  Foreclosed properties are generally recorded at the lower of 80% of appraised value or 90% of the asking price which considers the estimated cost to sell.

Assets and Liabilities Not Measured at Fair Value

For financial instruments that have quoted market prices, those quotes are used to determine fair value.  Financial instruments that have no defined maturity, have a remaining maturity of 180 days or less, or reprice frequently to a market rate, are assumed to have a fair value that approximates the reported book value, after taking into consideration any applicable credit risk.  If no market quotes are available, financial instruments are valued by discounting the expected cash flows using an estimated current market interest rate for the financial instrument.  For off-balance sheet derivative instruments, fair value is estimated as the amount that United would receive or pay to terminate the contracts at the reporting date, taking into account the current unrealized gains or losses on open contracts.

The short maturity of United’s assets and liabilities results in having a significant number of financial instruments whose fair value equals or closely approximates carrying value.  Such financial instruments are reported in the following balance sheet captions: cash and cash equivalents, mortgage loans held for sale and short-term borrowings.  The fair value of securities available-for-sale equals the balance sheet value.  Due to the short-term settlement of accrued interest receivable and payable, the carrying amount closely approximates fair value.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect the premium or discount on any particular financial instrument that could result from the sale of United’s entire holdings.  Because no ready market exists for a significant portion of United’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include the mortgage banking operation, brokerage network, deferred income taxes, premises and equipment and goodwill.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Off-balance sheet instruments (commitments to extend credit and standby letters of credit) are generally short-term and at variable rates.  Therefore, both the carrying amount and the estimated fair value associated with these instruments are immaterial.

The carrying amount and fair values for other financial instruments that are not measured at fair value on a recurring basis in United’s balance sheet at June 30, 2013, December 31, 2012, and June 30, 2012 are as follows (in thousands).

	Carrying		Fair Value Level
June 30, 2013	Amount		Level 1		Level 2		Level 3		Total
Assets:
Securities held to maturity	$	214,947	$	-	$	226,695	$	-	$	226,695
Loans, net		4,107,523		-		-		4,048,174		4,048,174
Mortgage loans held for sale		19,150		-		19,511		-		19,511
Liabilities:
Deposits		6,011,829		-		5,986,591		-		5,986,591
Federal Home Loan Bank advances		70,125		-		70,125		-		70,125
Long-term debt		124,845		-		-		123,650		123,650
December 31, 2012
Assets:
Securities held to maturity	$	244,184	$	-	$	261,131	$	-	$	261,131
Loans, net		4,067,871		-		-		3,957,669		3,957,669
Mortgage loans held for sale		28,821		-		29,693		-		29,693
Liabilities:
Deposits		5,952,140		-		5,988,743		-		5,988,743
Federal Home Loan Bank advances		40,125		-		40,125		-		40,125
Long-term debt		124,805		-		-		118,626		118,626
June 30, 2012
Assets:
Securities held to maturity	$	282,750	$	-	$	299,971	$	-	$	299,971
Loans, net		4,006,530		-		-		3,830,187		3,830,187
Mortgage loans held for sale		18,645		-		19,223		-		19,223
Liabilities:
Deposits		5,822,467		-		5,863,885		-		5,863,885
Federal Home Loan Bank advances		125,125		-		125,125		-		125,125
Long-term debt		120,265		-		-		114,679		114,679

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 14 – Commitments and Contingencies

United and its wholly-owned subsidiary, United Community Bank, (“the Bank”) are parties to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of their customers. These financial instruments include commitments to extend credit and letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of these instruments reflect the extent of involvement the Bank has in particular classes of financial instruments.  The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. United uses the same credit policies in making commitments and conditional obligations as it uses for underwriting on-balance sheet instruments. In most cases, collateral or other security is required to support financial instruments with credit risk.

The following table summarizes, as of June 30, 2013, December 31, 2012 and June 30, 2012, the contractual amount of off-balance sheet instruments (in thousands):

	June 30, 2013		December 31, 2012		June 30, 2012
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	600,841	$	313,798	$	438,615
Letters of credit		15,631		13,683		16,210

United, in the normal course of business, is subject to various pending and threatened lawsuits in which claims for monetary damages are asserted.  Although it is not possible to predict the outcome of these lawsuits, or the range of any possible loss, management, after consultation with legal counsel, does not anticipate that the ultimate aggregate liability, if any, arising from these lawsuits will have a material adverse effect on United’s financial position or results of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), about United and its subsidiaries. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, and can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “projects”, “plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”, “seeks”, “intends”, or “anticipates”, the negative thereof or comparable terminology. Forward-looking statements include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of various transactions or events, and statements about the future performance, operations, products and services of United and its subsidiaries. We caution our shareholders and other readers not to place undue reliance on such statements.

Our businesses and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experiences may differ materially from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experiences to differ from those projected include, but are not limited to, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2012, as well as the following factors:

● our ability to maintain profitability;

● our ability to fully realize our deferred tax asset balances, including net operating loss carry-forwards;

● the condition of the banking system and financial markets;

● our ability to raise capital as may be necessary;

● our ability to maintain liquidity or access other sources of funding;

● changes in the cost and availability of funding;

● the success of the local economies in which we operate;

● our concentrations of residential and commercial construction and development loans and commercial real estate loans are subject to unique risks that could adversely affect our earnings;

● changes in prevailing interest rates may negatively affect our net income and the value of our assets;

● the accounting and reporting policies of United;

● if our allowance for loan losses is not sufficient to cover actual loan losses;

● losses due to fraudulent and negligent conduct of our loan customers, third party service providers or employees;

● competition from financial institutions and other financial service providers;

● risks with respect to future expansion and acquisitions;

● if the conditions in the stock market, the public debt market and other capital markets deteriorate;

● the impact of the Dodd-Frank Act and related regulations and other changes in financial services laws and regulations;

● the failure of other financial institutions;

● a special assessment that may be imposed by the FDIC on all FDIC-insured institutions in the future, similar to the assessment in 2009 that decreased our earnings;

● the costs and effects of litigation, examinations, investigations, or similar matters, or adverse facts and developments related thereto, including possible dilution;

● regulatory or judicial proceedings, board resolutions, informal memorandums of understanding or formal enforcement actions imposed by regulators that may occur, or any such proceedings or enforcement actions that is more severe than we anticipate;

● the risk that we may be required to increase the valuation allowance on our deferred tax asset in future periods; and

● the risk that we could have an “ownership change” under Section 382 of the Internal Revenue Code, which could impair our ability to timely and fully realize our deferred tax asset balance.

Additional information with respect to factors that may cause actual results to differ materially from those contemplated by such forward-looking statements may also be included in other reports that United files with the Securities and Exchange Commission (the “SEC”).  United cautions that the foregoing list of factors is not exclusive and not to place undue reliance on forward-looking statements.  United does not intend to update any forward-looking statement, whether written or oral, relating to the matters discussed in this Form 10-Q.

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Overview

The following discussion is intended to provide insight into the results of operations and financial condition of United Community Banks, Inc. (“United”) and its subsidiaries and should be read in conjunction with the consolidated financial statements and accompanying notes.

United is a bank holding company registered with the Board of Governors of the Federal Reserve under the Bank Holding Company Act of 1956 that was incorporated under the laws of the state of Georgia in 1987 and commenced operations in 1988.  At June 30, 2013, United had total consolidated assets of $7.16 billion and total loans of $4.19 billion (excluding the loans acquired from Southern Community Bank (“SCB”) that are covered by loss sharing agreements).  United also had total deposits of $6.01 billion and shareholders’ equity of $829 million.

United’s activities are primarily conducted by its wholly-owned Georgia banking subsidiary, United Community Bank (the “Bank”).  The Bank’s operations are conducted under a community bank model that operates 27 “community banks” with local bank presidents and boards in north Georgia, the Atlanta-Sandy Springs-Roswell, Georgia metropolitan statistical area, the Gainesville, Georgia metropolitan statistical area, coastal Georgia, western North Carolina, east Tennessee and the Greenville-Anderson-Mauldin, South Carolina metropolitan statistical area.

Included in management’s discussion and analysis are certain non-GAAP (accounting principles generally accepted in the United States of America (“GAAP”)) performance measures.  United’s management believes that non-GAAP performance measures are useful in analyzing United’s financial performance trends and therefore this section will refer to non-GAAP performance measures.  A reconciliation of these non-GAAP performance measures to GAAP performance measures is included in the table on page 41.

United reported net income of $230 million for the second quarter of 2013.  This compared to net income of $6.50 million for the second quarter of 2012. Diluted earnings per common share was $3.90 for the second quarter of 2013, compared to diluted earnings per common share of $.06 for the second quarter of 2012.

For the six months ended June 30, 2013, United reported net income of $242 million.  This compared to net income of $18.0 million for the first six months of 2012.  Diluted earnings per common share was $4.05 for the six months ended June 30, 2013, compared to diluted earnings per common share of $.21 for the six months ended June 30, 2012.

Second quarter and year-to-date 2013 earnings were significantly impacted by the reversal of the valuation allowance on United’s net deferred tax asset and the sales of classified assets including a large bulk sale transaction.  The classified asset sales resulted in a pre-tax loss of $26.8 million for the quarter which was more than offset by a significant credit to income tax expense resulting from the removal of most of the valuation allowance on United’s deferred tax assets.  The income statement lines affected by these two significant events was a significant increase in the provision for loan losses and foreclosed property expense from the classified asset sales and the recognition of a tax benefit in the income tax line from the valuation allowance reversal.

Taxable equivalent net interest revenue was $54.6 million for the second quarter of 2013, compared to $56.8 million for the same period of 2012.  The decrease in net interest revenue was primarily the result of the lower yields on the loan and securities portfolios, which were due to loan pricing competition and reinvestment of maturing securities proceeds at record low rates.  The impact of the decrease in average earning asset yield was mostly offset by lower deposit rates.  Net interest margin decreased from 3.43% for the three months ended June 30, 2012 to 3.31% for the same period in 2013.  For the six months ended June 30, 2013, taxable equivalent revenue was $109 million, compared to $116 million for the same period of 2012.  Net interest margin decreased from 3.48% for the six months ended June 30, 2012, to 3.34% for the same period in 2013.

United’s provision for loan losses was $48.5 million for the three months ended June 30, 2013, compared to $18.0 million for the same period in 2012.  Net charge-offs for the second quarter of 2013 were $72.4 million, compared to $18.9 million for the second quarter of 2012.  For the six months ended June 30, 2013, United’s provision for loan losses was $59.5 million, compared to $33.0 million for the same period of 2012.  The sales of approximately $151 million in classified loans in the second quarter resulted in a $53.5 million increase in net charge-offs as well as the $30.5 million increase in the provision for loan losses from the second quarter of 2012.

As of June 30, 2013, United’s allowance for loan losses was $81.8 million, or 1.95% of loans, compared to $113 million, or 2.74% of loans, at June 30, 2012.  Nonperforming assets of $31.8 million, which excludes assets of SCB that are covered by loss sharing agreements with the FDIC, decreased to .44% of total assets at June 30, 2013 from 2.16% as of June 30, 2012, due to the second quarter 2013 classified asset sales. During the second quarter of 2013, $13.2 million in loans were placed on nonaccrual compared with $29.4 million in the second quarter of 2012.

Fee revenue of $163 million increased $3.45 million, or 27%, from the second quarter of 2012, and for the first six months of 2013, totaled $29.1 million, an increase of $892,000, or 3%, from the first six months of 2012. The quarterly increase was due primarily to an increase in mortgage loan and related fees and gains from hedge ineffectiveness.  Also contributing to the increase was a $1.37 million death benefit on a bank-owned life insurance policy as well as $468,000 in gains from the sale of low income housing credits.  In addition, other fee revenue included an increase of $489,000 related to customer derivative fees from our commercial loan swap program. The year-to-date increase in fee revenue resulted primarily from mortgage loan and related fees.

38

For the second quarter of 2013, operating expenses of $48.8 million were up $4.51 million from the second quarter of 2012.  The increase was primarily related to $3.30 million more in foreclosed property expense, driven by higher losses in conjunction with the classified asset sales.  Higher salary and employee benefits accounted for $437,000 of the increase, and included severance costs of $1.56 million compared with $1.16 million a year ago.  Professional fees increased $547,000 from the second quarter of 2012, due to legal costs and consulting services. For the six months ended June 30, 2013, operating expenses of $92.6 million were up $1.33 million from the same period of 2012, mainly due to the same factors that contributed to the quarterly increase. Management continues its efforts to reduce costs and improve operating efficiency.

Recent Developments

In June of 2013, United reversed $272 million of its deferred tax asset valuation allowance.  The DTA valuation allowance recovery was the result of United’s sustained profitability and improving credit quality that has led to significantly lower credit costs which provided positive objective evidence that outweighed the prior negative evidence and allowed United to reverse its valuation allowance.  Also in June 2013, United sold classified assets which included performing classified loans, non-performing loans and foreclosed properties, and helped lower United’s non-performing assets to $31.8 million as of June 30, 2013, or .44% of total assets.

Critical Accounting Policies

The accounting and reporting policies of United are in accordance with GAAP and conform to general practices within the banking industry.  The more critical accounting and reporting policies include United’s accounting for the allowance for loan losses, fair value measurements, and income taxes which involve the use of estimates and require significant judgments to be made by management.  Different assumptions in the application of these policies could result in material changes in United’s consolidated financial position or consolidated results of operations.  See “Asset Quality and Risk Elements” herein for additional discussion of United’s accounting methodologies related to the allowance for loan losses.

GAAP Reconciliation and Explanation

This Form 10-Q contains non-GAAP financial measures, which are performance measures determined by methods other than in accordance with GAAP. Such non-GAAP financial measures include, among others the following: taxable equivalent interest revenue, taxable equivalent net interest revenue, tangible book value per share, tangible equity to assets, tangible common equity to assets and tangible common equity to risk-weighted assets.  Management uses these non-GAAP financial measures because it believes they are useful for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies.  A reconciliation of these operating performance measures to GAAP performance measures is included in on the table on page 41.

39

Table 1 - Financial Highlights
Selected Financial Information
																Second			For the Six
	2013						2012									Quarter			Months Ended						YTD
(in thousands, except per share	Second			First			Fourth			Third			Second			2013-2012			June 30,						2013-2012
data; taxable equivalent)	Quarter			Quarter			Quarter			Quarter			Quarter			Change				2013			2012		Change
INCOME SUMMARY
Interest revenue	$	61,693		$	62,134		$	64,450		$	65,978		$	66,780					$	123,827		$	137,001
Interest expense		7,131			7,475			8,422			8,607			9,944						14,606			21,301
Net interest revenue		54,562			54,659			56,028			57,371			56,836			(4	) %		109,221			115,700			(6	) %
Provision for loan losses		48,500			11,000			14,000			15,500			18,000						59,500			33,000
Fee revenue		16,312			12,826			14,761			13,764			12,867			27			29,138			28,246			3
Total revenue		22,374			56,485			56,789			55,635			51,703						78,859			110,946
Operating expenses		48,823			43,770			50,726			44,783			44,310			10			92,593			91,265			1
(Loss) income before income taxes		(26,449	)		12,715			6,063			10,852			7,393						(13,734	)		19,681
Income tax (benefit) expense		(256,413	)		950			802			284			894						(255,463	)		1,654
Net income		229,964			11,765			5,261			10,568			6,499						241,729			18,027
Preferred dividends and discount accretion		3,055			3,052			3,045			3,041			3,032						6,107			6,062
Net income available to common     shareholders	$	226,909		$	8,713		$	2,216		$	7,527		$	3,467					$	235,622		$	11,965
PERFORMANCE MEASURES
Per common share:
Diluted income	$	3.90		$	.15		$	.04		$	.13		$	.06					$	4.05		$	.21
Book value		10.90			6.85			6.67			6.75			6.61			65			10.90			6.61			65
Tangible book value (2)		10.82			6.76			6.57			6.64			6.48			67			10.82			6.48			67
Key performance ratios:
Return on equity (1)(3)		197.22	%		8.51	%		2.15	%		7.43	%		3.51	%					108.34	%		6.12	%
Return on assets (3)		13.34			.70			.31			.63			.37						7.09			.52
Net interest margin (3)		3.31			3.38			3.44			3.60			3.43						3.34			3.48
Efficiency ratio		68.89			64.97			71.69			62.95			63.84						66.98			63.56
Equity to assets		11.57	(4)		8.60			8.63			8.75			8.33						8.90			8.26
Tangible equity to assets (2)		11.53	(4)		8.53			8.55			8.66			8.24						8.83			8.16
Tangible common equity to assets (2)		8.79	(4)		5.66			5.67			5.73			5.45						5.99			5.39
Tangible common equity to risk-         weighted assets (2)		13.16			8.45			8.26			8.44			8.37						13.16			8.37
ASSET QUALITY *
Non-performing loans	$	27,864		$	96,006		$	109,894		$	115,001		$	115,340					$	27,864		$	115,340
Foreclosed properties		3,936			16,734			18,264			26,958			30,421						3,936			30,421
Total non-performing assets (NPAs)		31,800			112,740			128,158			141,959			145,761						31,800			145,761
Allowance for loan losses		81,845			105,753			107,137			107,642			112,705						81,845			112,705
Net charge-offs		72,408			12,384			14,505			20,563			18,896						84,792			34,763
Allowance for loan losses to loans		1.95	%		2.52	%		2.57	%		2.60	%		2.74	%					1.95	%		2.74	%
Net charge-offs to average loans (3)		6.87			1.21			1.39			1.99			1.85						4.07			1.70
NPAs to loans and foreclosed properties		.76			2.68			3.06			3.41			3.51						.76			3.51
NPAs to total assets		.44			1.65			1.88			2.12			2.16						.44			2.16
AVERAGE BALANCES ($ in millions)
Loans	$	4,253		$	4,197		$	4,191		$	4,147		$	4,156			2		$	4,225		$	4,162			2
Investment securities		2,161			2,141			2,088			1,971			2,145			1			2,151			2,149			-
Earning assets		6,608			6,547			6,482			6,346			6,665			(1	)		6,578			6,682			(2	)
Total assets		6,915			6,834			6,778			6,648			6,993			(1	)		6,875			7,019			(2	)
Deposits		5,983			5,946			5,873			5,789			5,853			2			5,964			5,940			-
Shareholders’ equity		636			588			585			582			583			9			612			580			6
Common shares - basic (thousands)		58,141			58,081			57,971			57,880			57,840						58,111			57,803
Common shares - diluted (thousands)		58,141			58,081			57,971			57,880			57,840						58,111			57,803
AT PERIOD END ($ in millions)
Loans *	$	4,189		$	4,194		$	4,175		$	4,138		$	4,119			2		$	4,189		$	4,119			2
Investment securities		2,152			2,141			2,079			2,025			1,984			8			2,152			1,984			8
Total assets		7,163			6,849			6,802			6,699			6,737			6			7,163			6,737			6
Deposits		6,012			6,026			5,952			5,823			5,822			3			6,012			5,822			3
Shareholders’ equity		829			592			581			585			576			44			829			576			44
Common shares outstanding (thousands)		57,831			57,767			57,741			57,710			57,641						57,831			57,641

(1)  Net income available to common shareholders, which is net of preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss).  (2)  Excludes effect of acquisition related intangibles and associated amortization.  (3)  Annualized.  (4)  Calculated as of period-end to reflect the full impact of the reversal of the valuation allowance on United’s deferred tax asset.

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

40

Table 1 Continued - Non-GAAP Performance Measures Reconciliation
Selected Financial Information
	2013						2012									For the Six Months Ended
(in thousands, except per share	Second			First			Fourth			Third			Second
data; taxable equivalent)	Quarter			Quarter			Quarter			Quarter			Quarter			2013			2012
Interest revenue reconciliation
Interest revenue - taxable equivalent	$	61,693		$	62,134		$	64,450		$	65,978		$	66,780		$	123,827		$	137,001
Taxable equivalent adjustment		(368	)		(365	)		(381	)		(419	)		(444	)		(733	)		(890	)
Interest revenue (GAAP)	$	61,325		$	61,769		$	64,069		$	65,559		$	66,336		$	123,094		$	136,111
Net interest revenue reconciliation
Net interest revenue - taxable equivalent	$	54,562		$	54,659		$	56,028		$	57,371		$	56,836		$	109,221		$	115,700
Taxable equivalent adjustment		(368	)		(365	)		(381	)		(419	)		(444	)		(733	)		(890	)
Net interest revenue (GAAP)	$	54,194		$	54,294		$	55,647		$	56,952		$	56,392		$	108,488		$	114,810
Total revenue reconciliation
Total operating revenue	$	22,374		$	56,485		$	56,789		$	55,635		$	51,703		$	78,859		$	110,946
Taxable equivalent adjustment		(368	)		(365	)		(381	)		(419	)		(444	)		(733	)		(890	)
Total revenue (GAAP)	$	22,006		$	56,120		$	56,408		$	55,216		$	51,259		$	78,126		$	110,056
(Loss) income before taxes reconciliation
(Loss) income before taxes	$	(26,449	)	$	12,715		$	6,063		$	10,852		$	7,393		$	(13,734	)	$	19,681
Taxable equivalent adjustment		(368	)		(365	)		(381	)		(419	)		(444	)		(733	)		(890	)
(Loss) income before taxes (GAAP)	$	(26,817	)	$	12,350		$	5,682		$	10,433		$	6,949		$	(14,467	)	$	18,791
Income tax (benefit) expense reconciliation
Income tax (benefit) expense	$	(256,413	)	$	950		$	802		$	284		$	894		$	(255,463	)	$	1,654
Taxable equivalent adjustment		(368	)		(365	)		(381	)		(419	)		(444	)		(733	)		(890	)
Income tax (benefit) expense (GAAP)	$	(256,781	)	$	585		$	421		$	(135	)	$	450		$	(256,196	)	$	764
Book value per common share reconciliation
Tangible book value per common share	$	10.82		$	6.76		$	6.57		$	6.64		$	6.48		$	10.82		$	6.48
Effect of goodwill and other intangibles		.08			.09			.10			.11			.13			.08			.13
Book value per common share (GAAP)	$	10.90		$	6.85		$	6.67		$	6.75		$	6.61		$	10.90		$	6.61
Average equity to assets reconciliation
Tangible common equity to assets		8.79	%		5.66	%		5.67	%		5.73	%		5.45	%		5.99	%		5.39	%
Effect of preferred equity		2.74			2.87			2.88			2.93			2.79			2.84			2.77
Tangible equity to assets		11.53			8.53			8.55			8.66			8.24			8.83			8.16
Effect of goodwill and other intangibles		.04			.07			.08			.09			.09			.07			.10
Equity to assets (GAAP)		11.57	%		8.60	%		8.63	%		8.75	%		8.33	%		8.90	%		8.26	%
Tangible common equity to risk-weighted assets reconciliation
Tangible common equity to risk-weighted assets		13.16	%		8.45	%		8.26	%		8.44	%		8.37	%		13.16	%		8.37	%
Effect of other comprehensive income		.29			.49			.51			.36			.28			.29			.28
Effect of deferred tax limitation		(4.99	)		-			-			-			-			(4.99	)		-
Effect of trust preferred		1.11			1.15			1.15			1.17			1.19			1.11			1.19
Effect of preferred equity		4.11			4.22			4.24			4.29			4.35			4.11			4.35
Tier I capital ratio (Regulatory)		13.68	%		14.31	%		14.16	%		14.26	%		14.19	%		13.68	%		14.19	%

41

Results of Operations

United reported net income of $230 million for the second quarter of 2013.  This compared to net income of $6.50 million for the same period in 2012.  For the second quarter of 2013, diluted earnings per common share was $3.90 compared to $.06 for the second quarter of 2012.  For the six months ended June 30, 2013, United reported net income of $242 million compared to net income of $18.0 million for the same period in 2012.  Diluted earnings per common share was $4.05 for the six months ended June 30, 2013, compared to diluted earnings per common share of $.21 for the six months ended June 30, 2012.  Net income and earnings per share for the three and six months ended June 30, 2013 are elevated by the recognition of United’s substantial tax benefits with the reversal of United’s deferred tax asset valuation allowance.  The effect of the tax benefit on net income was partially offset by higher net charge-offs and a pre-tax loss resulting from the accelerated disposition of classified assets in the second quarter of 2013.

Net Interest Revenue (Taxable Equivalent)

Net interest revenue (the difference between the interest earned on assets and the interest paid on deposits and borrowed funds) is the single largest component of total revenue.  United actively manages this revenue source to provide optimal levels of revenue while balancing interest rate, credit and liquidity risks.  Taxable equivalent net interest revenue for the three months ended June 30, 2013 was $54.6 million, down $2.27 million, or 4%, from the second quarter of 2012.  The decrease in net interest revenue for the second quarter of 2013 compared to the second quarter of 2012 was mostly due to lower yields on loan and securities portfolios and a smaller average balance of interest-earning assets.  United continues its intense focus on loan and deposit pricing in an effort to maintain a steady level of net interest revenue.

While average loans increased $97.7 million, or 2%, from the second quarter of last year, the yield on loans decreased 46 basis points. The decreasing balances in the loan portfolio stabilized in 2012 and United began achieving modest loan growth; however, there is a high level of competition for quality lending relationships, which continues to put pressure on loan pricing. The increase in residential real estate loans is primarily the result of the promotion of a new home equity line product in mid-2012 and the introduction of a new low-cost mortgage product in early 2013; however, the low introductory rate on these products also contributed to the lower yield on average loans.

Average interest-earning assets for the second quarter of 2013 decreased $57.5 million, or 1%, from the same period in 2012, due primarily to the decrease in reverse repurchase agreements included in average short-term investments.  The average yield on interest-earning assets for the three months ended June 30, 2013 was 3.74%, down 29 basis points from 4.03% for the same period of 2012.  For the second quarter of 2013, the yield on loans decreased 46 basis points due to competitive loan pricing pressures and the yield on securities decreased 27 basis points from the same period a year ago, as management was unable to reinvest the cash proceeds of maturing securities at yields comparable to those of the securities they replaced.  Partially offsetting the lower loan and securities yields was a higher average yield on other interest-earnings assets due to the use of reverse repurchase agreements including collateral swap transactions where United enters into a repurchase agreement and reverse repurchase agreement simultaneously with the same counterparty subject to a master netting agreement.  In these transactions, the offsetting balances are netted on the balance sheet.

Average interest-bearing liabilities decreased $315 million, or 6%, from the second quarter of 2012 due to the rolling off of higher-cost brokered deposits and certificates of deposit as noninterest bearing demand deposits increased $204 million and overall funding needs decreased.  The average rate on interest-bearing liabilities for the second quarter of 2013 was .58% compared to .76% for the same period of 2012, reflecting United’s concerted efforts to reduce deposit pricing.  Also contributing to the overall lower rate on interest-bearing liabilities was a shift in the mix of deposits away from more expensive time deposits toward lower-rate transaction deposits.  United was able to reduce the rate on brokered deposits in the second quarter of 2013 to a negative .05% by swapping the fixed rate on brokered time deposits to LIBOR minus a spread.

The banking industry uses two ratios to measure relative profitability of net interest revenue.  The net interest spread measures the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities.  The interest rate spread eliminates the effect of non-interest-bearing deposits and gives a direct perspective on the effect of market interest rate movements.  The net interest margin is an indication of the profitability of a company’s balance sheet, and is defined as net interest revenue as a percent of average total interest-earning assets, which includes the positive effect of funding a portion of interest-earning assets with customers’ non-interest-bearing deposits and stockholders’ equity.

For the three months ended June 30, 2013 and 2012, the net interest spread was 3.16% and 3.27%, respectively, while the net interest margin was 3.31% and 3.43%, respectively.  The decline in both ratios is due to lower yields on securities and loans, which were not completely offset by the decrease in rates paid for deposits and other interest bearing liabilities.

For the first six months of 2013, net interest revenue was $109 million, a decrease of $6.48 million, or 6%, from the first six months of 2012.  Average earning assets decreased $105 million, or 2%, during the first six months of 2013, compared to the same period a year earlier.  The yield on earning assets decreased 33 basis points from 4.12% for the six months ended June 30, 2012, to 3.79% for the six months ended June 30, 2013, due to declining loan and securities yields. The lower loan portfolio yield reflects competitive pricing pressure on new and renewed loans and new retail product offerings with low introductory rates. The lower investment securities yield was due to reinvestment of cash flows at record low rates. The rate on interest bearing liabilities over the same period decreased 21 basis points.  The combined effect of the lower yield on interest earning assets, which was not completely offset by a reduction in rates paid on interest bearing liabilities resulted in the net interest margin decreasing 14 basis points from the six months ended June 30, 2012 to the six months ended June 30, 2013.

42

The following table shows the relationship between interest revenue and expense, and the average amounts of interest-earning assets and interest-bearing liabilities for the three months ended June 30, 2013 and 2012.

Table 2 - Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
	2013									2012
	Average						Avg.			Average					Avg.
(dollars in thousands, taxable equivalent)	Balance			Interest			Rate			Balance			Interest		Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)	$	4,253,361		$	50,806			4.79	%	$	4,155,619		$	54,296		5.25	%
Taxable securities (3)		2,139,221			9,471			1.77			2,121,053			10,800		2.04
Tax-exempt securities (1)(3)		21,597			344			6.37			24,242			429		7.08
Federal funds sold and other interest-earning assets		193,370			1,072			2.22			364,099			1,255		1.38
Total interest-earning assets		6,607,549			61,693			3.74			6,665,013			66,780		4.03
Non-interest-earning assets:
Allowance for loan losses		(106,417	)								(115,955	)
Cash and due from banks		63,457									51,907
Premises and equipment		168,272									173,792
Other assets (3)		181,987									218,347
Total assets	$	6,914,848								$	6,993,104
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	1,245,301			419			.13		$	1,279,686			503		.16
Money market		1,306,522			534			.16			1,132,548			661		.23
Savings		245,211			36			.06			216,175			38		.07
Time less than $100,000		1,000,511			1,568			.63			1,183,845			2,520		.86
Time greater than $100,000		674,200			1,380			.82			778,477			2,063		1.07
Brokered time deposits		195,182			(24	)		(.05	)		150,449			490		1.31
Total interest-bearing deposits		4,666,927			3,913			.34			4,741,180			6,275		.53
Federal funds purchased and other borrowings		72,139			522			2.90			97,134			904		3.74
Federal Home Loan Bank advances		58,916			30			.20			278,971			390		.56
Long-term debt		124,838			2,666			8.57			120,256			2,375		7.94
Total borrowed funds		255,893			3,218			5.04			496,361			3,669		2.97
Total interest-bearing liabilities		4,922,820			7,131			.58			5,237,541			9,944		.76
Non-interest-bearing liabilities:
Non-interest-bearing deposits		1,315,812									1,112,128
Other liabilities		40,603									60,726
Total liabilities		6,279,235									6,410,395
Shareholders’ equity		635,613									582,709
Total liabilities and shareholders’ equity	$	6,914,848								$	6,993,104
Net interest revenue				$	54,562								$	56,836
Net interest-rate spread								3.16	%							3.27	%
Net interest margin (4)								3.31	%							3.43	%
(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $17.7 million in 2013 and $25.7 million in 2012 are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

43

The following table shows the relationship between interest revenue and expense, and the average amounts of interest-earning assets and interest-bearing liabilities for the six months ended June 20, 2013 and 2012.

Table 3 - Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
	2013									2012
	Average						Avg.			Average					Avg.
(dollars in thousands, taxable equivalent)	Balance			Interest			Rate			Balance			Interest		Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)	$	4,225,215		$	101,805			4.86	%	$	4,162,030		$	110,138		5.32	%
Taxable securities (3)		2,129,208			19,224			1.81			2,124,422			23,554		2.22
Tax-exempt securities (1)(3)		21,665			691			6.38			24,840			839		6.76
Federal funds sold and other interest-earning assets		201,478			2,107			2.09			371,044			2,470		1.33
Total interest-earning assets		6,577,566			123,827			3.79			6,682,336			137,001		4.12
Non-interest-earning assets:
Allowance for loan losses		(108,667	)								(116,879	)
Cash and due from banks		63,873									53,286
Premises and equipment		168,773									174,321
Other assets (3)		173,168									226,013
Total assets	$	6,874,713								$	7,019,077
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	1,274,144			873			.14		$	1,368,900			1,140		.17
Money market		1,282,101			1,096			.17			1,101,103			1,302		.24
Savings		239,691			72			.06			210,789			75		.07
Time less than $100,000		1,020,000			3,317			.66			1,227,599			5,546		.91
Time greater than $100,000		684,320			2,857			.84			799,821			4,478		1.13
Brokered time deposits		185,210			(24	)		(.03	)		155,892			1,208		1.56
Total interest-bearing deposits		4,685,466			8,191			.35			4,864,104			13,749		.57
Federal funds purchased and other borrowings		72,148			1,038			2.90			99,696			1,949		3.93
Federal Home Loan Bank advances		46,064			49			.21			208,672			856		.82
Long-term debt		124,827			5,328			8.61			120,246			4,747		7.94
Total borrowed funds		243,039			6,415			5.32			428,614			7,552		3.54
Total interest-bearing liabilities		4,928,505			14,606			.60			5,292,718			21,301		.81
Non-interest-bearing liabilities:
Non-interest-bearing deposits		1,278,875									1,076,358
Other liabilities		55,639									70,330
Total liabilities		6,263,019									6,439,406
Shareholders’ equity		611,694									579,671
Total liabilities and shareholders’ equity	$	6,874,713								$	7,019,077
Net interest revenue				$	109,221								$	115,700
Net interest-rate spread								3.19	%							3.31	%
Net interest margin (4)								3.34	%							3.48	%
(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued and loans that are held for sale.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $17.4 million in 2013 and $24.7 million in 2012 are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.

44

The following table shows the relative effect on net interest revenue for changes in the average outstanding amounts (volume) of interest-earning assets and interest-bearing liabilities and the rates earned and paid on such assets and liabilities (rate).  Variances resulting from a combination of changes in rate and volume are allocated in proportion to the absolute dollar amounts of the change in each category.

Table 4 - Change in Interest Revenue and Expense on a Taxable Equivalent Basis
(in thousands)
	Three Months Ended June 30, 2013									Six Months Ended June 30, 2013
	Compared to 2012									Compared to 2012
	Increase (decrease)									Increase (decrease)
	Due to Changes in									Due to Changes in
	Volume			Rate			Total			Volume			Rate			Total
Interest-earning assets:
Loans	$	1,253		$	(4,743	)	$	(3,490	)	$	1,650		$	(9,983	)	$	(8,333	)
Taxable securities		92			(1,421	)		(1,329	)		53			(4,383	)		(4,330	)
Tax-exempt securities		(44	)		(41	)		(85	)		(103	)		(45	)		(148	)
Federal funds sold and other interest-earning assets		(744	)		561			(183	)		(1,415	)		1,052			(363	)
Total interest-earning assets		557			(5,644	)		(5,087	)		185			(13,359	)		(13,174	)
Interest-bearing liabilities:
NOW accounts		(14	)		(70	)		(84	)		(75	)		(192	)		(267	)
Money market accounts		91			(218	)		(127	)		192			(398	)		(206	)
Savings deposits		5			(7	)		(2	)		10			(13	)		(3	)
Time deposits less than $100,000		(352	)		(600	)		(952	)		(839	)		(1,390	)		(2,229	)
Time deposits greater than $100,000		(253	)		(430	)		(683	)		(587	)		(1,034	)		(1,621	)
Brokered deposits		112			(626	)		(514	)		191			(1,423	)		(1,232	)
Total interest-bearing deposits		(411	)		(1,951	)		(2,362	)		(1,108	)		(4,450	)		(5,558	)
Federal funds purchased & other borrowings		(205	)		(177	)		(382	)		(466	)		(445	)		(911	)
Federal Home Loan Bank advances		(199	)		(161	)		(360	)		(414	)		(393	)		(807	)
Long-term debt		93			198			291			186			395			581
Total borrowed funds		(311	)		(140	)		(451	)		(694	)		(443	)		(1,137	)
Total interest-bearing liabilities		(722	)		(2,091	)		(2,813	)		(1,802	)		(4,893	)		(6,695	)
Increase in net interest revenue	$	1,279		$	(3,553	)	$	(2,274	)	$	1,987		$	(8,466	)	$	(6,479	)

Provision for Loan Losses

The provision for loan losses is based on management’s evaluation of losses inherent in the loan portfolio and corresponding analysis of the allowance for loan losses at quarter-end.  The provision for loan losses was $48.5 million and $59.5 million for the second quarter and first six months of 2013, compared to $18.0 million and $33.0 million for the same periods in 2012.  The amount of provision recorded in each period was the amount required such that the total allowance for loan losses reflected the appropriate balance, in the estimation of management, that was sufficient to cover inherent losses in the loan portfolio.  The second quarter of 2013 loan loss provision was $30.5 million higher than the second quarter of 2012 provision, due to increased level of charge-offs associated with the second quarter 2013 classified asset disposition.  For the three and six months ended June 30, 2013, net loan charge-offs as an annualized percentage of average outstanding loans were 6.87% and 4.07%, respectively, compared to 1.85% and 1.70%, respectively, for the same periods in 2012.

Over the past two years, we have seen a significant improvement in credit quality and corresponding credit measures.  The second quarter of 2013 included the sales of classified assets totaling approximately $172 million, including a bulk sale of $131 million.  The classified asset sales and a general improving trend reduced United’s non-performing assets to $31.8 million as of June 30, 2013.  Additional discussion on credit quality and the allowance for loan losses is included in the Asset Quality and Risk Elements section of this report on page 51.

45

Fee Revenue

Fee revenue for the three and six months ended June 30, 2013 was $16.3 million and $29.2 million, respectively, an increase of $3.45 million, or 27%, compared to the second quarter of 2012, and an increase of $892,000, or 3%, from the year-to-date period of 2012. The following table presents the components of fee revenue for the second quarters and first six months of 2013 and 2012.

Table 5 - Fee Revenue

(in thousands)

	Three Months Ended											Six Months Ended
	June 30,					Change						June 30,					Change
	2013		2012			Amount			Percent			2013		2012			Amount			Percent
Overdraft fees	$	3,032	$	3,232		$	(200	)		(6	)	$	6,023	$	6,477		$	(454	)		(7	)
Debit card and interchange fees		3,639		3,242			397			12			6,866		6,344			522			8
Other service charges and fees		1,301		1,342			(41	)		(3	)		2,486		2,778			(292	)		(11	)
Service charges and fees		7,972		7,816			156			2			15,375		15,599			(224	)		(1	)
Mortgage loan and related fees		3,003		2,322			681			29			5,658		4,421			1,237			28
Brokerage fees		1,063		809			254			31			1,830		1,622			208			13
Securities gains, net		-		6,490			(6,490	)					116		7,047			(6,931	)
Losses from prepayment of debt		-		(6,199	)		6,199						-		(6,681	)		6,681
Hedge ineffectiveness		369		(180	)		549						284		(65	)		349
Other		3,905		1,809			2,096			116			5,875		6,303			(428	)		(7	)
Total fee revenue	$	16,312	$	12,867		$	3,445			27		$	29,138	$	28,246		$	892			3

Service charges and fees of $7.97 million were up $156,000, or 2%, from the second quarter of 2012.  For the first six months of 2013, service charges and fees of $15.4 million were down $224,000, or 1%, from the same period in 2012. The quarterly increase resulted from higher debit card and interchange fees. The year-to-date decrease was primarily due to a decline in overdraft fees resulting from decreased utilization of our courtesy overdraft services as well as a decline in other account service fees.  United began assessing fees on low balance demand deposit accounts in January 2012.  Customers have been able to avoid these fees by maintaining higher balances in their accounts which has led to a decline in fee revenue since the fees were first introduced.

Mortgage loans and related fees for the second quarter and first six months of 2013 were up $681,000, or 29%, and $1.24 million, or 28%, respectively, from the same periods in 2012. In the second quarter of 2013, United closed 608 loans totaling $95.2 million compared with 507 loans totaling $79.8 million in the second quarter of 2012.  Year-to-date mortgage production in 2013 amounted to 1,072 loans totaling $165 million, compared to 1,024 loans totaling $161 million for the same period in 2012.

United recognized net securities gains of $116,000 for the six months ended June 30, 2013.  No securities gains or losses were recognized in the second quarter of 2013.  Net securities gains totaled $6.49 million and $7.05 million, respectively, for the second quarter and first six months of 2012.  United also recognized $6.20 million and $6.68 million, respectively, in charges from the prepayment of Federal Home Loan Bank advances and structured repurchase agreements in the second quarter and first six months of 2012.

In the second quarter of 2013, United recognized $369,000 in net gains from hedge ineffectiveness compared with $180,000 in net losses in the second quarter of 2012.  For the first six months of 2013, United recognized $284,000 in net gains from hedge ineffectiveness compared with $65,000 in losses for the same period of 2012.  In 2012 and 2013, most of the hedge ineffectiveness gains and losses resulted from ineffectiveness on fair value hedges of brokered deposits.

Other fee revenue of $3.91 million for the second quarter of 2013 was up $2.10 million from the second quarter of 2012.  For the first six months of 2013, other fee revenue of $5.88 million was down $428,000, or 7%, from the same period in 2012.  During the second quarter of 2013, United recorded a $1.37 million death benefit on a bank-owned life insurance policy as well as $468,000 in gains from the sale of low income housing tax credits.  In addition, the second quarter of 2013 other fee revenue included an increase of $236,000 related to customer derivative fees from our commercial loan swap program.  The first six months of 2012 included $1.10 million of interest on a prior period tax refund and a $728,000 gain from the sale of low income housing tax credits.

46

Operating Expenses

The following table presents the components of operating expenses for the three and six months ended June 30, 2013 and 2012.

Table 6 - Operating Expenses

(in thousands)

	Three Months Ended											Six Months Ended
	June 30,					Change						June 30,					Change
	2013		2012			Amount			Percent			2013		2012			Amount			Percent
Salaries and employee benefits	$	24,734	$	24,297		$	437			2		$	48,326	$	49,522		$	(1,196	)		(2	)
Communications and equipment		3,468		3,211			257			8			6,514		6,366			148			2
Occupancy		3,449		3,539			(90	)		(3	)		6,816		7,310			(494	)		(7	)
Advertising and public relations		1,037		1,088			(51	)		(5	)		1,975		1,934			41			2
Postage, printing and supplies		894		916			(22	)		(2	)		1,757		1,895			(138	)		(7	)
Professional fees		2,499		1,952			547			28			4,865		3,927			938			24
FDIC assessments and other regulatory charges		2,505		2,545			(40	)		(2	)		5,010		5,055			(45	)		(1	)
Amortization of intangibles		491		730			(239	)		(33	)		1,196		1,462			(266	)		(18	)
Other		4,595		4,181			414			10			8,650		8,118			532			7
Total excluding foreclosed property expenses		43,672		42,459			1,213			3			85,109		85,589			(480	)		(1	)
Net losses on sales of foreclosed properties		2,945		(269	)		3,214						3,050		(176	)		3,226
Foreclosed property write downs		1,369		1,008			361						2,410		3,119			(709	)
Foreclosed property maintenance expenses		837		1,112			(275	)		(25	)		2,024		2,733			(709	)		(26	)
Total operating expenses	$	48,823	$	44,310		$	4,513			10		$	92,593	$	91,265		$	1,328			1

Operating expenses for the second quarter of 2013 totaled $48.8 million, up $4.51 million, or 10%, from the second quarter of 2012.  The increase mostly reflects higher foreclosed property losses and write downs associated with the classified asset sales in the second quarter of 2013.  For the six months ended June 30, 2103, operating expenses totaled $92.6 million, up $1.33 million, or 1%, from the same period in 2012.  Excluding foreclosed property costs, total operating expenses were $43.7 million and $85.1 million, respectively, for the three and six months ended June 30, 2013, up $1.21 million, or 3%, from the second quarter of 2012, and down $480,000, or 1%, from the first six months of 2012.

Salaries and employee benefits for the second quarter of 2013 were $24.7 million, up $437,000, or 2%, from the same period of 2012. The increase was due to higher severance costs as well as higher mortgage and brokerage incentives in the second quarter of 2013.  For the first six months of 2013, salaries and employee benefits of $48.3 million were down $1.20 million, or 2%, from the first six months of 2012.  The decrease was due to reduced staffing levels.  Headcount totaled 1,500 at June 30, 2013, compared to 1,614 at June 30, 2012, a decrease of 114 positions.

Communications and equipment expense of $3.47 million for the second quarter of 2013 was up $257,000, or 8%, from the second quarter of 2012.  For the first six months, communications and equipment expense was up $148,000 from a year ago.  The increases reflect higher software costs resulting from new technology solutions to improve operating efficiency and customer service as well as higher telecommunications charges.

Occupancy expense of $3.45 million and $6.82 million, respectively, for the second quarter and first six months of 2013 was down $90,000, or 3%, and down $494,000, or 7%, respectively, compared to the same periods of 2012.  The decrease was primarily related to lower depreciation charges partially due to the closing of underperforming branches.

Professional fees for the second quarter of 2013 of $2.50 million were up $547,000, or 28%, from the same period in 2012.  For the six months ended June 30, 2013, professional fees of $4.87 million were up $938,000, or 24%.  The increases for both quarterly and year-to-date periods were primarily due to legal costs associated with the classified asset sales and other initiatives and consulting services related to several efficiency projects that are in process.

Amortization of intangibles continues to decrease as core deposit intangibles related to past acquisitions become fully amortized.

Other expense of $4.60 million for the second quarter of 2013 increased $414,000 from the second quarter of 2012.  Year-to-date, other expense of $8.65 million increased $532,000 from the first six months of 2012. The increase for the quarter was primarily due to higher appraisal and lending support costs.

Net losses on sales of foreclosed property totaled $2.95 million for the second quarter of 2013, compared to net gains on sale of $269,000 for the second quarter of 2012. For the six months ended June 30, 2013, net losses on sales were $3.05 million, compared to net gains on sales of $176,000 for the same period of the prior year.  The increase in losses was due to the classified asset sales. Foreclosed property write-downs for the second quarter and first six months of 2013 were $1.37 million and $2.41 million, respectively, compared to $1.01 million and $3.12 million, respectively, a year ago.  Foreclosed property maintenance expenses include legal fees, property taxes, marketing costs, utility services, maintenance and repair charges and totaled $837,000 and $2.02 million, respectively, for the second quarter and first six months of 2013 compared with $1.11 million and $2.73 million, respectively, a year ago.  These costs continue to decline with the decrease in the number of foreclosed properties held by United.

47

Income Taxes

Income tax benefit for the second quarter of 2013 was $257 million as compared with income tax expense of $450,000 for the second quarter of 2012.  The second quarter 2013 income tax benefit was primarily due to the income tax benefit recognized during the quarter related to the reversal of $272 million of the deferred tax asset valuation allowance.  Income tax expense for the second quarter of 2012 mostly represents adjustments to its reserve for uncertain tax positions and amounts payable under the Federal Alternative Minimum Tax.  For the remainder of the year, United expects to record income tax expense at an effective tax rate of approximately 35%.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and their respective tax bases including operating losses and tax credit carryforwards.  Net deferred tax assets (deferred tax assets net of deferred tax liabilities and valuation allowance) are reported in the consolidated balance sheet as a component of total assets.

Accounting Standards Codification Topic 740, Income Taxes, requires that companies assess whether a valuation allowance should be established against their deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard.  The determination of whether a valuation allowance for deferred tax assets is appropriate is subject to considerable judgment and requires an evaluation of all positive and negative evidence with more weight given to evidence that can be objectively verified.  Each quarter, management considers both positive and negative evidence and analyzes changes in near-term market conditions as well as other factors which may impact future operating results.

At December 31, 2012 and June 30, 2012, United reported no net deferred tax asset due to full valuation allowances of $270 million and $277 million, respectively. At June 30, 2013, based on the weight of all the positive and negative evidence at such date, management concluded that it was more likely than not that $272 million of the net deferred tax assets will be realized based upon future taxable income and therefore, reversed $272 million of the valuation allowance.  Thus, at June 30, 2013, United reported a net deferred tax asset of $272 million, net of a valuation allowance of $4.96 million. The remaining valuation allowance of $4.96 million at June 30, 2013 relates to specific state income tax credits that have short carryforward periods and therefore are expected to expire before they can be utilized.  The reversal of the valuation allowance resulted in an income tax benefit of $257 million, or $4.42 per diluted common share for the second quarter of 2013, and an increase in tangible book value per common share of $4.69 at June 30, 2013.

United remains in a three-year cumulative loss position that resulted from significant credit losses incurred during the recent financial crisis.  A three-year cumulative loss position is considered to be negative evidence that is difficult to overcome.  However, the deferred tax asset valuation allowance was reversed in the second quarter of 2013 following the achievement of seven consecutive quarters of positive operating results, excluding the impact of the discretionary sale of classified assets in the second quarter of 2013.  The recent positive earnings results and improving credit measures provide an objective basis for a conclusion that profitability is sustainable and improving.  In addition, the second quarter 2013 sale of classified assets improved United’s ability to project credit costs and forecast profitability going forward by removing the assets that were most likely to drive future credit losses.  As a result of this discretionary distressed asset sale, United’s classified asset ratio (classified assets as a percentage of Tier 1 Capital and the allowance for loan losses) improved to 27% at June 30, 2013 compared with 49% at March 31, 2013 and 50% at December 31, 2012.

With continuous improvements in credit quality, quarterly earnings for the past seven quarters have closely followed management’s forecast for these periods, excluding the impact of the discretionary sales of classified assets in the second quarter 2013.  The improvement in management’s ability to produce reliable forecasts, continuous and significant improvements in credit quality, and a sustained period of profitability were given appropriate weighting in our analysis, and such evidence was considered sufficient to overcome the weight of the negative evidence related to the significant operating losses in prior years.  Based on all evidence considered by management as of June 30, 2013, our net deferred tax asset is more likely than not to be realizable.

As noted above, other positive evidence at June 30, 2013 included United’s significantly improved credit risk profile and the continued improving trends in credit quality and profitability.  United has also reduced the amount of credit risk inherent in its loan portfolio by reducing its concentration of construction loans and improving its overall loan portfolio diversification.  These changes place United in a strong position to manage through the ongoing weakness in the economy.  United also has a long record of positive earnings and accurate earnings forecasts prior to the recent economic downturn and is currently in a strong capital position and conservatively expects to exit the three-year cumulative loss position in the first quarter of 2014.  These factors, as well as a demonstrated ability to generate sufficient amounts of future taxable income, support the reversal of the valuation allowance and the realization of $272 million of United’s net deferred tax asset at June 30, 2013.

Management expects to generate higher levels of future taxable income which management expects will allow for full utilization of its net operating loss carryforwards within five to seven years, which is well within the statutory carryforward periods.  In determining whether management’s projections of future taxable income are reliable, management considered objective evidence supporting the forecast assumptions as well as recent experience which demonstrates management’s ability to reasonably project future results of operations.  Further, while the banking environment is expected to remain challenging due to economic and other uncertainties, management believes that it can confidently forecast future taxable income at sufficient levels over the future period of time that United has available to realize its June 30, 2013 deferred tax asset.

48

As of February 22, 2011, United adopted a tax benefits preservation plan designed to protect its ability to utilize its substantial tax assets.  Those tax assets include net operating losses that it could utilize in certain circumstances to offset taxable income and reduce its federal income tax liability and the future tax benefits from potential net unrealized built in losses.  United’s ability to use its tax benefits would be substantially limited if it were to experience an ownership change as defined under Section 382.  In general, an ownership change would occur if United’s “5-percent shareholders,” as defined under Section 382, collectively increase their ownership in United by more than 50% over a rolling three-year period.  The tax benefits preservation plan is designed to reduce the likelihood that United will experience an ownership change by discouraging any person or group from becoming a beneficial owner of 4.99% or more of United’s common stock then outstanding.

Additional information regarding income taxes, including a reconciliation of the differences between the recorded income tax provision and the amount of income tax computed by applying the statutory federal income tax rate to income before income taxes, can be found in Note 16 to the consolidated financial statements filed with United’s Annual Report on Form 10-K for the year ended December 31, 2012.

49

Balance Sheet Review

Total assets at June 30, 2013, December 31, 2012 and June 30, 2012 were $7.16 billion, $6.80 billion and $6.74 billion, respectively.  Average total assets for the second quarter of 2013 were $6.91 billion, down from $6.99 billion in the second quarter of 2012.

The following table presents a summary of the loan portfolio.

Table 7 - Loans Outstanding (excludes loans covered by loss share agreements)
(in thousands)
	June 30,			December 31,			June 30,
	2013			2012			2012
By Loan Type
Commercial (secured by real estate)	$	1,748,145		$	1,813,365		$	1,836,477
Commercial & industrial		436,988			458,246			450,222
Commercial construction		132,562			154,769			169,338
Total commercial		2,317,695			2,426,380			2,456,037
Residential mortgage		1,278,559			1,214,203			1,128,336
Residential construction		331,681			381,677			408,966
Consumer installment		261,433			152,748			125,896
Total loans	$	4,189,368		$	4,175,008		$	4,119,235
As a percentage of total loans:
Commercial (secured by real estate)		42	%		43	%		45	%
Commercial & industrial		10			11			11
Commercial construction		3			4			4
Total commercial		55			58			60
Residential mortgage		31			29			27
Residential construction		8			9			10
Consumer installment		6			4			3
Total		100	%		100	%		100	%
By Geographic Location
North Georgia	$	1,265,109		$	1,363,723		$	1,387,204
Atlanta MSA		1,227,352			1,249,470			1,242,318
North Carolina		575,425			579,085			576,141
Coastal Georgia		397,182			400,022			369,280
Gainesville MSA		255,510			261,406			258,916
East Tennessee		282,860			282,863			275,554
South Carolina		33,720			-			-
Other (indirect auto)		152,210			38,439			9,822
Total loans	$	4,189,368		$	4,175,008		$	4,119,235

Substantially all of United’s loans are to customers located in the immediate market areas of its community banks in Georgia, North Carolina, Tennessee and South Carolina, including customers who have a seasonal residence in United’s market areas.  More than 80% of the loans are secured by real estate.  At June 30, 2013, total loans, excluding loans acquired from SCB that are covered by loss sharing agreements with the FDIC, were $4.19 billion, an increase of $70 million, or 2%, from June 30, 2012.  Despite the weak economy and lack of loan demand, United has continued to pursue lending opportunities.  The increase from a year ago in residential mortgage reflects a successful home equity line promotion that has gained traction in United’s footprint and a new low closing cost mortgage product that began being offered early in the first quarter of 2013.  The increase in consumer installment loans reflects purchases of approximately $156 million in indirect auto loans over the last four quarters.

50

Asset Quality and Risk Elements

United manages asset quality and controls credit risk through review and oversight of the loan portfolio as well as adherence to policies designed to promote sound underwriting and loan monitoring practices.  United’s credit administration function is responsible for monitoring asset quality and Board-approved portfolio limits, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures among all of the community banks.  Additional information on the credit administration function is included in Item 1 under the heading Loan Review and Non-performing Assets in United’s Annual Report on Form 10-K for the year ended December 31, 2012.

United classifies performing loans as “substandard” when there are well-defined weaknesses that jeopardize the repayment by the borrower and there is a distinct possibility that United could sustain some loss if the deficiency is not corrected.

United’s home equity lines, which are a component of the residential mortgage portfolio, generally require the payment of interest only for a set period after origination.  After this initial period, the outstanding balance begins amortizing and requires the payment of both principal and interest.  At June 30, 2013, December 31, 2012 and June 30, 2012, the funded portion of home equity lines totaled $402 million, $385 million, and $294 million, respectively.

Approximately 3% of the home equity loans at June 30, 2013 were amortizing.  Of the $401 million in balances outstanding at June 30, 2013, $251 million, or 63%, were first liens.  The balance at June 30, 2013 represents 62% of the total committed lines.

United monitors the performance of its home equity loans and lines secured by second liens similar to other consumer loans and utilizes assumptions specific to these loans in determining the necessary allowance.  United also receives notification when the first lien holder is in the process of foreclosure and upon that notification, United obtains valuations to determine if any additional charge-offs or reserves are warranted.

The table below presents performing substandard loans for the last five quarters.

Table 8 - Performing Substandard Loans

(dollars in thousands)

	June 30,		March 31,		December 31,		September 30,		June 30,
	2013		2013		2012		2012		2012
By Category
Commercial (secured by real estate)	$	78,750	$	128,120	$	117,543	$	126,332	$	148,418
Commercial & industrial		11,458		20,320		18,477		18,740		15,916
Commercial construction		15,766		18,462		19,285		27,180		37,876
Total commercial		105,974		166,902		155,305		172,252		202,210
Residential mortgage		51,222		64,103		65,179		72,198		73,277
Residential construction		16,631		37,882		37,804		35,170		45,450
Consumer installment		2,505		2,794		3,653		2,886		2,706
Total	$	176,332	$	271,681	$	261,941	$	282,506	$	323,643
By Market
North Georgia	$	68,272	$	107,798	$	105,851	$	116,871	$	121,358
Atlanta MSA		48,574		74,064		77,630		79,242		105,647
North Carolina		23,440		30,391		28,657		34,998		38,049
Coastal Georgia		8,391		17,496		17,421		12,998		20,164
Gainesville MSA		19,734		28,514		19,251		21,219		20,524
East Tennessee		7,921		13,418		13,131		17,178		17,901
Total loans	$	176,332	$	271,681	$	261,941	$	282,506	$	323,643

At June 30, 2013, performing substandard loans totaled $176 million and decreased $95.3 million from the prior quarter-end, and decreased $147 million from a year ago.  The decrease from the first quarter of 2013 and from June 30, 2012 reflects the classified loan sales and a general declining trend.  Performing substandard loans had been on a downward trend as credit conditions have continued to improve and problem credits are resolved.

Reviews of substandard performing and non-performing loans, troubled debt restructures, past due loans and larger credits, are conducted on a quarterly basis with management and are designed to identify risk migration and potential charges to the allowance for loan losses.  These reviews are presented by the responsible lending officers and specific action plans are discussed along with the financial strength of borrowers, the value of the applicable collateral, past loan loss experience, anticipated loan losses, changes in risk profile, the effect of prevailing economic conditions on the borrower along with other factors specific to the borrower and its industry.  In addition to United’s internal loan review, United also uses external loan review to ensure the independence of the loan review process.

51

The following table presents a summary of the changes in the allowance for loan losses for the three and six months ended June 30, 2013 and 2012.

Table 9 - Allowance for Loan Losses

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Balance beginning of period	$	105,753		$	113,601		$	107,137		$	114,468
Provision for loan losses		48,500			18,000			59,500			33,000
Charge-offs:
Commercial (secured by real estate)		26,740			4,418			32,194			8,346
Commercial & industrial		15,932			888			17,755			1,644
Commercial construction		6,305			88			6,350			452
Residential mortgage		6,718			4,014			9,074			9,781
Residential construction		18,530			9,846			21,512			15,475
Consumer installment		565			408			1,272			1,161
Total loans charged-off		74,790			19,662			88,157			36,859
Recoveries:
Commercial (secured by real estate)		1,274			69			1,485			300
Commercial & industrial		356			113			678			200
Commercial construction		10			-			59			30
Residential mortgage		209			152			418			544
Residential construction		24			283			33			598
Consumer installment		509			149			692			424
Total recoveries		2,382			766			3,365			2,096
Net charge-offs		72,408			18,896			84,792			34,763
Balance end of period	$	81,845		$	112,705		$	81,845		$	112,705
Total loans: *
At period-end	$	4,189,368		$	4,119,235		$	4,189,368		$	4,119,235
Average		4,226,952			4,112,995			4,196,756			4,115,315
Allowance as a percentage of period-end loans		1.95	%		2.74	%		1.95	%		2.74	%
As a percentage of average loans (annualized):
Net charge-offs		6.87			1.85			4.07			1.70
Provision for loan losses		4.60			1.76			2.86			1.61
Allowance as a percentage of non-performing loans		294			98			294			98
* Excludes loans covered by loss sharing agreements with the FDIC

The provision for loan losses charged to earnings was based upon management’s judgment of the amount necessary to maintain the allowance at a level appropriate to absorb losses inherent in the loan portfolio at the balance sheet date.  The amount each quarter is dependent upon many factors, including growth and changes in the composition of the loan portfolio, net charge-offs, delinquencies, management’s assessment of loan portfolio quality, the value of collateral, and other macro-economic factors and trends.  The evaluation of these factors is performed quarterly by management through an analysis of the appropriateness of the allowance for loan losses.  The decreases in the provision and the level of the allowance for loan losses compared to the previous periods reflects stabilizing trends in substandard loans, along with the de-risking of the balance sheet through the accelerated classified asset sale, leading to an expectation that charge-off levels will continue to decline.  Further, the declining balance of the allowance for loan losses over the last several quarters reflects an overall improving trend in credit quality of the loan portfolio.

At June 30, 2013, the allowance for loan losses was $81.8 million, or 1.95% of loans, compared with $107 million, or 2.57% of loans, at December 31, 2012 and $113 million, or 2.74% of loans, at June 30, 2012.

Management believes that the allowance for loan losses at June 30, 2013 reflects the losses inherent in the loan portfolio.  This assessment involves uncertainty and judgment; therefore, the adequacy of the allowance for loan losses cannot be determined with precision and may be subject to change in future periods.  The amount of any changes could be significant if management’s assessment of loan quality or collateral values change substantially with respect to one or more loan relationships or portfolios. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require adjustments to the provision for loan losses in future periods if, in their opinion, the results of their review warrant such additions.  See the “Critical Accounting Policies” section for additional information on the allowance for loan losses.

52

Nonperforming Assets

The table below summarizes nonperforming assets, excluding SCB’s assets covered by the loss-sharing agreements with the FDIC.  Those assets have been excluded from nonperforming assets, as the loss-sharing agreements with the FDIC and purchase price adjustments to reflect credit losses effectively eliminate the likelihood of recognizing any losses on the covered assets.

Table 10 - Nonperforming Assets
(in thousands)
	June 30,			December 31,			June 30,
	2013			2012			2012
Nonperforming loans*	$	27,864		$	109,894		$	115,340
Foreclosed properties (OREO)		3,936			18,264			30,421
Total nonperforming assets	$	31,800		$	128,158		$	145,761
Nonperforming loans as a percentage of total loans		.67	%		2.63	%		2.80	%
Nonperforming assets as a percentage of total loans and OREO		.76			3.06			3.51
Nonperforming assets as a percentage of total assets		.44			1.88			2.16
*          There were no loans 90 days or more past due that were still accruing at period end.

At June 30, 2013, nonperforming loans were $27.9 million, compared to $110 million at December 31, 2012 and $115 million at June 30, 2012.  Nonperforming loans have steadily decreased in dollar amount and as a percentage of total loans following the classification of United’s largest lending relationship in the third quarter of 2011.  In addition, the second quarter of 2013 sales of classified assets further reduced non-performing assets. Nonperforming assets, which include nonperforming loans and foreclosed real estate, totaled $31.8 million at June 30, 2013, compared with $128 million at December 31, 2012 and $146 million at June 30, 2012.  United sold $18.0 million of foreclosed properties during the second quarter of 2013, however these sales of foreclosed properties were offset by $9.43 million in new foreclosures for the quarter.

United’s policy is to place loans on nonaccrual status when, in the opinion of management, the principal and interest on a loan is not likely to be repaid in accordance with the loan terms or when the loan becomes 90 days past due and is not well secured and in the process of collection.  When a loan is classified on nonaccrual status, interest previously accrued but not collected is reversed against current interest revenue.  Principal and interest payments received on a nonaccrual loan are applied to reduce outstanding principal.

The following table summarizes non-performing assets by category and market.  As with Tables 7, 8, 9 and 10, assets covered by the loss-sharing agreements with the FDIC related to the acquisition of SCB are excluded from this table.

Table 11 - Nonperforming Assets by Quarter (1)
(in thousands)
	June 30, 2013									December 31, 2012									June 30, 2012
	Nonaccrual			Foreclosed			Total			Nonaccrual			Foreclosed			Total			Nonaccrual			Foreclosed			Total
	Loans			Properties			NPAs			Loans			Properties			NPAs			Loans			Properties			NPAs
BY CATEGORY
Commercial (sec. by RE)	$	7,237		$	547		$	7,784		$	22,148		$	5,479		$	27,627		$	19,115		$	10,586		$	29,701
Commercial & industrial		548						548			31,817			-			31,817			34,982			-			34,982
Commercial construction		504			376			880			23,843			2,204			26,047			18,175			2,732			20,907
Total commercial		8,289			923			9,212			77,808			7,683			85,491			72,272			13,318			85,590
Residential mortgage		14,338			1,443			15,781			12,589			4,753			17,342			16,631			5,591			22,222
Residential construction		4,838			1,570			6,408			18,702			5,828			24,530			25,530			11,512			37,042
Consumer installment		399			-			399			795			-			795			907			-			907
Total NPAs	$	27,864		$	3,936		$	31,800		$	109,894		$	18,264		$	128,158		$	115,340		$	30,421		$	145,761
Balance as a % of
Unpaid Principal		62.6	%		31.6	%		55.8	%		69.5	%		39.7	%		62.8	%		68.8	%		39.3	%		59.4	%
BY MARKET
North Georgia	$	12,830		$	1,617		$	14,447		$	69,950		$	8,219		$	78,169		$	77,332		$	13,546		$	90,878
Atlanta MSA		3,803			1,197			5,000			18,556			3,442			21,998			17,593			8,651			26,244
North Carolina		6,512			295			6,807			11,014			2,579			13,593			10,657			3,287			13,944
Coastal Georgia		2,588			627			3,215			3,810			1,609			5,419			5,822			785			6,607
Gainesville MSA		1,008			-			1,008			903			556			1,459			991			2,998			3,989
East Tennessee		1,123			200			1,323			5,661			1,859			7,520			2,945			1,154			4,099
South Carolina		-			-			-			-			-			-			-			-			-
Total NPAs	$	27,864		$	3,936		$	31,800		$	109,894		$	18,264		$	128,158		$	115,340		$	30,421		$	145,761
(1)         Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of SCB.

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Nonperforming assets in the residential construction category were $6.41 million at June 30, 2013, compared with $37.0 million at June 30, 2012, a decrease of $30.6 million, or 83%.  Commercial nonperforming assets decreased from $85.6 million at June 30, 2012 to $9.21 million at June 30, 2013.  Residential mortgage non-performing assets of $15.8 million decreased $6.44 million from June 30, 2012.  The second quarter of 2013 classified asset sales contributed to the decreases in all categories of non-performing assets.

At June 30, 2013, December 31, 2012, and June 30, 2012, United had $84.9 million, $161 million and $168 million, respectively, in loans with terms that have been modified in a troubled debt restructuring (“TDR”).  Included therein were $7.05 million, $38.0 million and $26.0 million, respectively, of TDRs that were not performing in accordance with their modified terms and were included in nonperforming loans.  The remaining TDRs with an aggregate balance of $77.8 million, $123 million and $142 million, respectively, were performing according to their modified terms and are therefore not considered to be nonperforming assets.

At June 30, 2013, December 31, 2012, and June 30, 2012, there were $104 million, $253 million and $294 million, respectively,of loans classified as impaired under the definition outlined in the Accounting Standards Codification.  Included in impaired loans at June 30, 2013, December 31, 2012 and June 30, 2012, was $34.0 million, $157 million and $215 million, respectively, that did not require specific reserves or had previously been charged down to net realizable value.  The balance of impaired loans at June 30, 2013, December 31, 2012 and June 30, 2012, of $69.8 million, $95.8 million and $78.9 million, respectively, had specific reserves that totaled $5.06 million, $11.6 million and $17.4 million, respectively.  The average recorded investment in impaired loans for the second quarters of 2013 and 2012, was $104 million, and $287 million, respectively.  For the first six months of 2013 and 2012, the average recorded investment in impaired loans was $179 million and $284 million, respectively.  For the three and six months ended June 30, 2013, United recognized $1.20 million and $3.02 million, respectively, in interest revenue on impaired loans, compared to $2.42 million and $4.69 million for the same periods of the prior year. United’s policy is to discontinue the recognition of interest revenue for loans classified as impaired under ASC 310-10-35, Receivables, when a loan meets the criteria for nonaccrual status.  Impaired loans decreased 65% from June 30, 2012 to June 30, 2013, due to the second quarter 2013 classified asset sales.

The table below summarizes activity in non-performing assets by quarter.  Assets covered by loss sharing agreements with the FDIC, related to the acquisition of SCB, are not included in this table.

Table 12 - Activity in Nonperforming Assets by Year
(in thousands)
	Second Quarter 2013 (1)									Second Quarter 2012 (1)
	Nonaccrual			Foreclosed			Total			Nonaccrual			Foreclosed			Total
	Loans			Properties			NPAs			Loans			Properties			NPAs
Beginning Balance	$	96,006		$	16,734		$	112,740		$	129,704		$	31,887		$	161,591
Loans placed on non-accrual		13,200			-			13,200			29,364			-			29,364
Payments received		(47,937	)		-			(47,937	)		(15,027	)		-			(15,027	)
Loan charge-offs		(23,972	)		-			(23,972	)		(19,382	)		-			(19,382	)
Foreclosures		(9,433	)		9,433			-			(9,319	)		9,319			-
Capitalized costs		-			55			55			-			415			415
Property sales		-			(17,972	)		(17,972	)		-			(10,461	)		(10,461	)
Write downs		-			(1,369	)		(1,369	)		-			(1,008	)		(1,008	)
Net losses on sales		-			(2,945	)		(2,945	)		-			269			269
Ending Balance	$	27,864		$	3,936		$	31,800		$	115,340		$	30,421		$	145,761

	First Six Months 2013 (1)									First Six Months 2012 (1)
	Nonaccrual			Foreclosed			Total			Nonaccrual			Foreclosed			Total
	Loans			Properties			NPAs			Loans			Properties			NPAs
Beginning Balance	$	109,894		$	18,264		$	128,158		$	127,479		$	32,859		$	160,338
Loans placed on non-accrual		22,865			-			22,865			61,801			-			61,801
Payments received		(54,746	)		-			(54,746	)		(20,972	)		-			(20,972	)
Loan charge-offs		(34,428	)		-			(34,428	)		(34,115	)		-			(34,115	)
Foreclosures		(15,721	)		15,721			-			(18,853	)		18,853			-
Capitalized costs		-			109			109			-			744			744
Property sales		-			(24,698	)		(24,698	)		-			(19,092	)		(19,092	)
Write downs		-			(2,410	)		(2,410	)		-			(3,119	)		(3,119	)
Net losses on sales		-			(3,050	)		(3,050	)		-			176			176
Ending Balance	$	27,864		$	3,936		$	31,800		$	115,340		$	30,421		$	145,761
(1)         Excludes non-performing loans and foreclosed properties covered by the loss-sharing agreement with the FDIC, related to the acquisition of SCB.

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Foreclosed property is initially recorded at fair value, less estimated costs to sell.  If the fair value, less estimated costs to sell at the time of foreclosure, is less than the loan balance, the deficiency is charged against the allowance for loan losses.  If the lesser of fair value, less estimated costs to sell or the listed selling price, less the costs to sell, of the foreclosed property decreases during the holding period, a valuation allowance is established with a charge to foreclosed property expense.  When the foreclosed property is sold, a gain or loss is recognized on the sale for the difference between the sales proceeds and the carrying amount of the property.  Financed sales of foreclosed property are accounted for in accordance with ASC 360-20, Real Estate Sales.  For the second quarter of 2013, United transferred $25.0 million of loans into foreclosed property through foreclosures.  During the same period, proceeds from sales of foreclosed property were $33.6 million, which includes $1.89 million in sales that were financed by United.

Investment Securities

The composition of the investment securities portfolio reflects United’s investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of revenue.  The investment securities portfolio also provides a balance to interest rate risk and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds, furnishing liquidity, and supplying securities to pledge as required collateral for certain deposits.  Total investment securities at June 30, 2013 increased $168 million from a year ago.

At June 30, 2013, United had securities held-to-maturity with a carrying amount of $215 million and securities available-for-sale totaling $1.94 billion. At June 30, 2013, December 31, 2012, and June 30, 2012, the securities portfolio represented approximately 30%, 31% and 29% of total assets, respectively.

The investment securities portfolio primarily consists of U.S. government sponsored agency mortgage-backed securities, non-agency mortgage-backed securities, corporate bonds, municipal securities and asset-backed securities.  Mortgage-backed securities rely on the underlying pools of mortgage loans to provide a cash flow of principal and interest.  The actual maturities of these securities will differ from contractual maturities because loans underlying the securities can prepay.  Decreases in interest rates will generally cause an acceleration of prepayment levels.  In a declining or prolonged low interest rate environment, United may not be able to reinvest the proceeds from these prepayments in assets that have comparable yields.  In a rising rate environment, the opposite occurs -   prepayments tend to slow and the weighted average life extends.  This is referred to as extension risk which can lead to lower levels of liquidity due to the delay of cash receipts and can result in the holding of a below market yielding asset for a longer period of time.  United’s asset-backed securities include securities that are backed by student loans and collateralized loan obligations.

Other Intangible Assets

Other intangible assets, primarily core deposit intangibles representing the value of United’s acquired deposit base, are amortizing intangible assets that are required to be tested for impairment only when events or circumstances indicate that impairment may exist.  There were no events or circumstances that led management to believe that any impairment exists in United’s other intangible assets.

Deposits

United initiated several programs in early 2009 to improve core earnings by growing customer transaction deposit accounts and lowering overall pricing on deposit accounts to improve its net interest margin and increase net interest revenue.  The programs were successful in increasing core transaction deposit accounts and allowing for the reduction of more costly time deposit balances as United’s funding needs decreased due to lower loan demand.  United has continued to pursue customer transaction deposits by stressing its high customer satisfaction scores.

Total customer deposits, excluding brokered deposits, as of June 30, 2013 were $5.64 billion, an increase of $25.3 million from June 30, 2012.  Total core deposits (demand, NOW, money market and savings deposits, excluding public funds deposits) of $3.32 billion increased $256 million, or 8%, from a year ago.  Total non-interest-bearing demand deposit accounts of $1.35 billion increased $199 million, or 17%, due to the success of core deposit programs.  Also impacted by the programs were NOW, money market and savings accounts of $2.64 billion, which increased $109 million, or 4%, from June 30, 2012.

Total time deposits, excluding brokered deposits, as of June 30, 2013 were $1.65 billion, down $283 million from June 30, 2012.  Time deposits less than $100,000 totaled $982 million, a decrease of $182 million, or 16%, from a year ago.  Time deposits of $100,000 and greater totaled $664 million as of June 30, 2013, a decrease of $100 million, or 13%, from June 30, 2012.  United continued to offer low rates on certificates of deposit, allowing balances to decline as United’s funding needs declined due to weak loan demand and a shift to lower cost transaction account deposits.

Brokered deposits totaled $375 million as of June 30, 2013, an increase of $164 million from a year ago.  We have actively added long-term deposits which are swapped to LIBOR minus a spread to diversify our deposit base with low cost funding.

Wholesale Funding

The Bank is a shareholder in the Federal Home Loan Bank (“FHLB”) of Atlanta.  Through this affiliation, FHLB secured advances totaled $70.1 and $125 million, respectively, as of June 30, 2013 and 2012.  United anticipates continued use of this short and long-term source of funds.  Additional information regarding FHLB advances is provided in Note 12 to the consolidated financial statements included in United’s Annual Report on Form 10-K for the year ended December 31, 2012.

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At June 30, 2013 and 2012, United had $54.2 million and $53.7 million, respectively, in other short-term borrowings outstanding. United takes advantage of these additional sources of liquidity when rates are favorable compared to other forms of short-term borrowings, such as FHLB advances and brokered deposits.

Contractual Obligations

There have not been any material changes to United’s contractual obligations since December 31, 2012.

Interest Rate Sensitivity Management

The absolute level and volatility of interest rates can have a significant effect on United’s profitability.  The objective of interest rate risk management is to identify and manage the sensitivity of net interest revenue to changing interest rates, in order to achieve United’s overall financial goals.  Based on economic conditions, asset quality and various other considerations, management establishes tolerance ranges for interest rate sensitivity and manages within these ranges.

United’s net interest revenue, and the fair value of its financial instruments, are influenced by changes in the level of interest rates.  United limits its exposure to fluctuations in interest rates through policies developed by the Asset/Liability Management Committee (“ALCO”) and approved by the Board of Directors.  ALCO meets periodically and has responsibility for formulating and recommending asset/liability management policies to the Board of Directors, formulating and implementing strategies to improve balance sheet positioning and/or earnings, and reviewing United’s interest rate sensitivity.

One of the tools management uses to estimate and manage the sensitivity of net interest revenue to changes in interest rates is an asset/liability simulation model.  Resulting estimates are based upon a number of assumptions for each scenario, including the level of balance sheet growth, loan and deposit re-pricing characteristics and the rate of prepayments.  ALCO periodically reviews the assumptions for accuracy based on historical data and future expectations; however, actual net interest revenue may differ from model results.  The primary objective of the simulation model is to measure the potential change in net interest revenue over time using multiple interest rate scenarios.  The base scenario assumes rates remain flat and is the scenario to which all others are compared in order to measure the change in net interest revenue.  Policy limits are based on immediate rate shock scenarios, as well as gradually rising and falling rate scenarios, which are all compared to the base scenario.  Another commonly analyzed scenario is a most-likely scenario that projects the expected change in rates based on the slope of the forward yield curve.  Other scenarios analyzed may include delayed rate shocks, yield curve steepening or flattening, or other variations in rate movements.  While the primary policy scenarios focus on a twelve month time frame, longer time horizons are also modeled.  All policy scenarios assume a static balance sheet.

United’s policy is based on the 12-month impact on net interest revenue of interest rate shocks and ramps that increase or decrease from 100 to 300 basis points from the base scenario.  In the shock scenarios, rates immediately change the full amount at the scenario onset.  In the ramp scenarios, rates change by 25 basis points per month.  United’s policy limits the change in net interest revenue over the first 12 months to a 5% decrease for each 100 basis point change in the increasing and decreasing rate ramp and shock scenarios.   Historically low rates on June 30, 2013 and 2012 made use of the down scenarios problematic.  The following table presents United’s interest sensitivity position at June 30, 2013 and 2012.

Table 13 - Interest Sensitivity
	Increase (Decrease) in Net Interest Revenue from Base Scenario at
	June 30,
	2013						2012
Change in Rates	Shock			Ramp			Shock			Ramp
200 basis point increase		3.7	%		4.4	%		4.5	%		1.2	%
25 basis point decrease		(1.9	)		(1.9	)		(1.2	)		(1.2	)

Interest rate sensitivity is a function of the repricing characteristics of the portfolio of assets and liabilities.  These repricing characteristics are the time frames within which the interest-earning assets and interest-bearing liabilities are subject to change in interest rates either at replacement, repricing or maturity during the life of the instruments.  Interest rate sensitivity management focuses on the maturity structure of assets and liabilities and their repricing characteristics during periods of changes in market interest rates.  Effective interest rate sensitivity management seeks to ensure that both assets and liabilities respond to changes in interest rates on a net basis within an acceptable timeframe, thereby minimizing the effect of interest rate changes on net interest revenue.

United may have some discretion in the extent and timing of deposit repricing depending upon the competitive pressures in the markets in which it operates.  Changes in the mix of earning assets or supporting liabilities can either increase or decrease the net interest margin without affecting interest rate sensitivity.  The interest rate spread between an asset and its supporting liability can vary significantly even when the timing of repricing for both the asset and the liability remains the same, due to the two instruments repricing according to different indices.  This is commonly referred to as Basis risk.

56

In order to manage interest rate sensitivity, United periodically enters into off-balance sheet contracts that are considered derivative financial instruments.  Derivative financial instruments can be a cost-effective and capital-effective means of modifying the repricing characteristics of on-balance sheet assets and liabilities.  These contracts generally consist of interest rate swaps under which United pays a variable rate (or fixed rate, as may be the case) and receives a fixed rate (or variable rate, as may be the case).

United’s derivative financial instruments are classified as either cash flow or fair value hedges.  The change in fair value of cash flow hedges is recognized in other comprehensive income.  Fair value hedges recognize currently in earnings both the effect of the change in the fair value of the derivative financial instrument and the offsetting effect of the change in fair value of the hedged asset or liability associated with the particular risk of that asset or liability being hedged.

In addition to derivative instruments, United uses a variety of balance sheet instruments to manage interest rate risk such as Investment Portfolio holdings, wholesale funding, and bank-issued deposits.

The following table presents United’s active derivative contracts used for hedging purposes.

Table 14 - Derivative Financial Instruments Designated as Hedges (in thousands)

Hedge

Current

Trade

Effective

Maturity

Fair Value (D)

Type of Instrument

Designation

Hedged Item

Notional

Date

Date

Date

Pay Rate

Receive Rate

Asset

Liability

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

$

15,000

10/12/11

11/10/11

11/10/31

3 mo. LIBOR - 60 bps

Steepener (A)

$

-

$

1,901

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

17,000

02/14/12

02/27/12

08/27/27

3 mo. LIBOR - 45 bps

2.00% to 10.00% (B)

-

751

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

15,500

03/05/12

03/23/12

09/23/27

3 mo. LIBOR - 45 bps

2.25% to 10.00% (B)

-

651

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

12,500

05/16/12

06/08/12

06/08/32

3 mo. LIBOR - 43 bps

2.25% to 10.00% (B)

-

735

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

13,000

06/12/12

06/28/12

06/28/32

3 mo. LIBOR - 38.5 bps

2.30% to 10.00% (B)

-

913

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

12,500

07/03/12

07/27/12

07/27/32

3 mo. LIBOR - 38.5 bps

2.25% to 10.00% (B)

-

894

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

12,000

08/01/12

08/23/12

08/23/32

3 mo. LIBOR - 38.25 bps

2.30% to 11.00% (B)

-

1,127

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

10,000

08/29/12

09/24/12

09/24/12

3 mo. LIBOR - 38 bps

2.40% to 11.00% (B)

-

806

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

12,000

10/05/12

10/19/12

11/19/32

3 mo. LIBOR - 38 bps

2.40% to 11.00% (B)

-

991

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

12,000

10/15/12

11/08/12

11/08/32

3 mo. LIBOR - 40 bps

2.30% to 11.00% (B)

-

1,111

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

12,500

11/14/12

11/30/12

11/30/32

3 mo. LIBOR - 38 bps

2.20% to 11.00% (B)

-

1,284

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

12,000

11/28/12

12/27/12

12/27/32

3 mo. LIBOR - 38 bps

2.25% to 11.00% (B)

-

1,213

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

10,000

12/27/12

01/25/13

12/25/28

3 mo. LIBOR - 20.5 bps

2.15% to 8.00% (B)

-

807

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

13,000

01/17/13

02/15/13

02/15/23

3 mo. LIBOR - 20 bps

1.50% to 5.50% (B)

-

707

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

10,000

01/25/13

02/28/13

02/28/28

3 mo. LIBOR - 20.5 bps

2.20% to 8.00% (B)

-

719

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

10,000

01/25/13

02/21/13

02/21/18

3 mo. LIBOR - 20.5 bps

.50% to 2.75% (B)

-

197

Receive Fixed Cancellable Swap

Fair Value

Brokered CD

50,000

06/04/13

06/28/13

06/28/33

3 mo. LIBOR - 67.5 bps

Steepener (C)

8,518

Pay Fixed Swap

Fair Value

Corporate Bond

11,000

03/13/13

03/18/13

02/13/23

3.45000%

3 mo. LIBOR

380

-

Pay Fixed Swap

Fair Value

Corporate Bond

10,000

03/15/13

03/20/13

02/09/23

3.10000%

3 mo. LIBOR

599

-

Pay Fixed Swap

Fair Value

Corporate Bond

10,000

04/19/13

04/24/13

09/07/22

3.15000%

3 mo. LIBOR

525

-

Pay Fixed Swap

Fair Value

Corporate Bond

10,000

04/22/13

04/25/13

01/24/22

5.75000%

3 mo. LIBOR

1,203

Pay Fixed Swap

Fair Value

Corporate Bond

10,000

04/25/13

05/01/13

05/01/23

3.37500%

3 mo. LIBOR

728

Pay Fixed Swap

Fair Value

Corporate Bond

10,000

05/29/13

06/03/13

01/24/22

5.70000%

3 mo. LIBOR

-

1,294

Pay Fixed Swap

Fair Value

Corporate Bond

10,000

05/30/13

06/04/13

01/14/22

4.50000%

3 mo. LIBOR

-

598

Pay Fixed Swap

Fair Value

Corporate Bond

15,000

06/18/13

06/21/13

06/15/23

3.62500%

3 mo. LIBOR

440

-

Pay Fixed Swap

Cash Flow

Short-Term, Fixed Rate Debt

50,000

04/02/12

04/07/14

04/07/17

1.69500%

3 mo. LIBOR

-

620

Pay Fixed Swap

Cash Flow

Short-Term, Fixed Rate Debt

50,000

04/02/12

04/21/14

04/21/17

1.72125%

3 mo. LIBOR

-

617

Pay Fixed Swap

Cash Flow

Short-Term, Fixed Rate Debt

100,000

04/10/12

03/03/14

03/01/17

1.43750%

3 mo. LIBOR

-

668

Pay Fixed Swap

Cash Flow

Money Market Deposts

100,000

05/02/12

05/01/14

05/01/19

1.88750%

1 mo. LIBOR

378

-

Pay Fixed Swap

Cash Flow

Money Market Deposts

100,000

05/31/12

07/01/14

07/01/18

1.39250%

1 mo. LIBOR

1,424

-

Pay Fixed Swap

Cash Flow

Money Market Deposts

175,000

04/04/13

04/01/15

06/30/13

1.61830%

1 mo. LIBOR

3,543

-

Total Hedging Positions

$

910,000

$

8,017

$

28,325

(A) Receive rate is fixed at 5.00% to November 10, 2012, then 4 * ((10-year Constant Maturity Swap rate - 2-year Constant Maturity Swap rate) - 50 basis points), capped at 5.00% and floored at 0.00%.  Swap is callable by counterparty on November 10, 2012 and quarterly thereafter on the 10th with 15 calendar days notice.

(B) Rate steps up at set periodic intervals throughout term.  Swap is callable by counterparty generally from six months to one year following the effective date.

(C) Receive rate is fixed at 7.00% to 6/28/14 then 4 * ((30-year Constant Maturity Swap rate - 5-year Constant Maturity Swap rate) - 70 basis points), capped at 7.00% and floored at 0.00%.  Swap is callable by counterparty on June 28, 2014 and quarterly thereafter on the 28th with 15 calendar days notice.

(D) Fair value does not include accrued interest.

From time to time, United will terminate swap or floor positions when conditions change and the position is no longer necessary to manage United’s overall sensitivity to changes in interest rates.  In those situations where the terminated contract was in an effective hedging relationship at the time of termination and the hedging relationship is expected to remain effective throughout the original term of the contract, the resulting gain or loss is amortized over the remaining life of the original contract.  For swap contracts, the gain or loss is amortized over the remaining original contract term using the straight line method of amortization.  At June 30, 2013, United had $58,000 in gains from terminated derivative positions included in other comprehensive income that will be amortized into earnings over their remaining original contract terms.  All of the $58,000 is expected to be reclassified into interest revenue over the next three months.  In addition, United’s forward starting active cash flow hedges of floating rate liabilities will begin to become effective over the next twelve months.  United expects that $862,000 will be reclassified as an increase to deposit interest expense over the next twelve months related to these cash flow hedges.

57

United’s policy requires all non-customer facing derivative financial instruments be used only for asset/liability management through the hedging of specific transactions or positions, and not for trading or speculative purposes.  Management believes that the risk associated with using derivative financial instruments to mitigate interest rate risk sensitivity is minimal and should not have any material unintended effect on our financial condition or results of operations.  In order to mitigate potential credit risk, from time to time United may require the counterparties to derivative contracts to pledge securities as collateral to cover the net exposure.

Liquidity Management

The objective of liquidity management is to ensure that sufficient funding is available, at a reasonable cost, to meet the ongoing operational cash needs and to take advantage of revenue producing opportunities as they arise.  While the desired level of liquidity will vary depending upon a variety of factors, it is the primary goal of United to maintain a sufficient level of liquidity in all expected economic environments.  Liquidity is defined as the ability to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities.  Liquidity management involves maintaining United’s ability to meet the daily cash flow requirements of the Bank’s customers, both depositors and borrowers.  In addition, because United is a separate entity and apart from the Bank, it must provide for its own liquidity.  United is responsible for the payment of dividends declared for its common and preferred shareholders, and interest and principal on any outstanding debt or trust preferred securities.

Substantially all of United’s liquidity is obtained from subsidiary service fees and dividends from the Bank, which are limited by applicable law and an informal memorandum of understanding with the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance (the “Bank MOU”).  United currently has internal capital resources to meet these obligations.

Two key objectives of asset/liability management are to provide for adequate liquidity in order to meet the needs of customers and to maintain an optimal balance between interest-sensitive assets and interest-sensitive liabilities to optimize net interest revenue.  Daily monitoring of the sources and uses of funds is necessary to maintain a position that meets both requirements.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments and the maturities and sales of securities, as well as the ability to use these as collateral for borrowings on a secured basis.  We also maintain excess funds in short-term interest-bearing assets that provide additional liquidity.  Mortgage loans held for sale totaled $19.2 million at June 30, 2013, and typically turn over every 45 days as the closed loans are sold to investors in the secondary market.

The liability section of the balance sheet provides liquidity through interest-bearing and noninterest-bearing deposit accounts.  Federal funds purchased, Federal Reserve short-term borrowings, FHLB advances and securities sold under agreements to repurchase are additional sources of liquidity and represent United’s incremental borrowing capacity.  These sources of liquidity are generally short-term in nature and are used as necessary to fund asset growth and meet other short-term liquidity needs.

At June 30, 2013, United had cash and cash equivalent balances of $261 million and had sufficient qualifying collateral to increase FHLB advances by $1.16 billion and Federal Reserve discount window capacity of $616 million.  United also has the ability to raise substantial funds through brokered deposits.  In addition to these wholesale sources, United has the ability to attract retail deposits at any time by competing more aggressively on pricing.

As disclosed in United’s consolidated statement of cash flows, net cash provided by operating activities was $106 million for the six months ended June 30, 2013.  The net income of $242 million for the six month period included the deferred income tax benefit of $260 million, and non-cash expenses for the following: provision for loan losses of $59.5 million; depreciation, amortization and accretion of $14.6 million and losses and write downs on foreclosed property of $5.46 million.  In addition, other assets decreased $13.7 million primarily due to amounts received on assets covered by loss sharing agreements.  Mortgage loans held for sale decreased $9.67 million.  Net cash used in investing activities of $182 million consisted primarily of a $204 million increase in loans and purchases of securities totaling $403 million partially offset by the proceeds from sales, maturities and calls of securities of $310 million, proceeds from note sales of $91.9 million and proceeds from sales of foreclosed properties of $21.8 million.  Net cash used in financing activities of $86.3 million consisted primarily of a $59.7 million increase in deposits and a $30 million net increase in FHLB advances.  In the opinion of management, United’s liquidity position at June 30, 2013, was sufficient to meet its expected cash flow requirements.

58

Capital Resources and Dividends

Shareholders’ equity at June 30, 2013 was $829 million, an increase of $248 million from December 31, 2012.  Accumulated other comprehensive loss, which includes unrealized gains and losses on securities available-for-sale, the unrealized gains and losses on derivatives qualifying as cash flow hedges and unamortized prior service cost and actuarial gains and losses on United’s modified retirement plan, is excluded in the calculation of regulatory capital adequacy ratios.  Excluding the change in the accumulated other comprehensive income, shareholders’ equity increased $238 million from December 31, 2012.

United accrued $3.06 million and $6.11 million, respectively, in dividends, including accretion of discounts, on Series A, Series B and Series D preferred stock in the second quarter and first six months of 2013.

United granted a warrant to Fletcher International Ltd. (“Fletcher”) to purchase common stock equivalent junior preferred stock that would be convertible into 1,411,765 common shares exercisable at a price equivalent to $21.25 per share.  United has received purported partial warrant exercise notices from Fletcher with respect to its warrants that include incorrect calculations of the number of settlement shares Fletcher would receive upon exercise.  On June 17, 2011, United completed a reclassification of its common stock in the form of 1-for-5 reverse stock split, or recombination.  United believes that any current exercise of Fletcher’s warrant would not result in the issuance of any settlement shares because the warrant may only be exercised for net shares via a cashless exercise formula, and the reverse stock split-adjusted market price component of that formula does not exceed the exercise price to yield any net shares. United responded to Fletcher with United’s calculations related to the warrant.

In November 2011, United entered into an informal memorandum of understanding with the Federal Reserve Bank and the Georgia Department of Banking and Finance (the “Holding Company MOU”).  The Holding Company MOU provides that United may not incur additional indebtedness, pay cash dividends, make payments on our trust preferred securities or subordinated indebtedness or repurchase outstanding stock without prior approval of the Federal Reserve.  The Federal Reserve and the Georgia Department of Banking and Finance have also asked that United seek their approval prior to paying interest on our senior indebtedness.  Additionally, the Holding Company MOU requires, among other things, that United ensures that the Bank functions in a safe and sound manner.  United believes it is in compliance with all requirements of the Holding Company MOU.

The Bank is currently subject to the Bank MOU.  The Bank MOU requires, among other things, that the Bank maintain its Tier 1 leverage ratio at not less than 8% and its total risk-based capital ratio at not less than 10% during the life of the Bank MOU. Additionally, the Bank MOU requires, among other things, that prior to declaring or paying any cash dividends to United, the Bank must obtain the written consent of its regulators.  The Bank believes it is in compliance with all requirements of the Bank MOU.

United’s common stock trades on the Nasdaq Global Select Market under the symbol “UCBI”.  Below is a quarterly schedule of high, low and closing stock prices and average daily volume for 2013 and 2012.

Table 15 - Stock Price Information

	2013								2012
							Avg Daily								Avg Daily
	High		Low		Close		Volume		High		Low		Close		Volume
First quarter	$	11.57	$	9.59	$	11.34		195,803	$	10.30	$	6.37	$	9.75		142,987
Second quarter		12.94		10.15		12.42		184,922		9.77		7.76		8.57		145,132
Third quarter										8.82		6.12		8.39		329,475
Fourth quarter										9.49		8.01		9.44		202,871

The Board of Governors of the Federal Reserve has issued guidelines for the implementation of risk-based capital requirements by U.S. banks and bank holding companies.  These risk-based capital guidelines take into consideration risk factors, as defined by regulators, associated with various categories of assets, both on and off-balance sheet.  Under the guidelines, capital strength is measured in two tiers that are used in conjunction with risk-weighted assets to determine the risk-based capital ratios.  The guidelines require an 8% total risk-based capital ratio, of which 4% must be Tier I capital.  However, to be considered well-capitalized under the guidelines, a 10% total risk-based capital ratio is required, of which 6% must be Tier I capital.

Under the risk-based capital guidelines, assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral.  The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with the category.  The resulting weighted values from each of the risk categories are added together, and generally this sum is the company’s total risk weighted assets.  Risk-weighted assets for purposes of United’s capital ratios are calculated under these guidelines.

A minimum leverage ratio is required in addition to the risk-based capital standards and is defined as Tier I capital divided by average assets adjusted for goodwill and deposit-based intangibles.  Although a minimum leverage ratio of 3% is required, the Federal Reserve Board requires a bank holding company to maintain a leverage ratio greater than 3% if it is experiencing or anticipating significant growth or is operating with less than well-diversified risks in the opinion of the Federal Reserve Board.  The Federal Reserve Board uses the leverage and risk-based capital ratios to assess capital adequacy of banks and bank holding companies.

59

The following table shows United’s capital ratios, as calculated under regulatory guidelines, at June 30, 2013, December 31, 2012 and June 30, 2012.

Table 16 - Capital Ratios

(dollars in thousands)

	Regulatory						United Community Banks, Inc.
	Guidelines						(Consolidated)									United Community Bank
				Well			June 30,			December 31,			June 30,			June 30,			December 31,			June 30,
	Minimum			Capitalized			2013			2012			2012			2013			2012			2012
Risk-based ratios:
Tier I capital		4.0	%		6.0	%		13.68	%		14.16	%		14.19	%		14.20	%		14.48	%		14.30	%
Total capital		8.0			10.0			15.23			15.73			15.93			15.46			15.74			15.56
Leverage ratio		3.0			5.0			9.80			9.64			9.09			10.15			9.86			9.16
Tier I capital							$	653,590		$	652,692		$	634,811		$	677,694		$	666,585		$	638,823
Total capital								727,587			724,915			712,422			737,615			724,738			695,369

United’s Tier I capital excludes other comprehensive income, and consists of shareholders’ equity and qualifying capital securities, less goodwill and deposit-based intangibles.  Tier II capital components include supplemental capital items such as a qualifying allowance for loan losses and qualifying subordinated debt.  Tier I capital plus Tier II capital components is referred to as Total Risk-Based capital.

Effect of Inflation and Changing Prices

A bank’s asset and liability structure is substantially different from that of an industrial firm in that primarily all assets and liabilities of a bank are monetary in nature with relatively little investment in fixed assets or inventories.  Inflation has an important effect on the growth of total assets and the resulting need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio.

United’s management believes the effect of inflation on financial results depends on United’s ability to react to changes in interest rates, and by such reaction, reduce the inflationary effect on performance.  United has an asset/liability management program to manage interest rate sensitivity.  In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

There have been no material changes in United’s quantitative and qualitative disclosures about market risk as of June 30, 2013 from that presented in the Annual Report on Form 10-K for the year ended December 31, 2012.  The interest rate sensitivity position at June 30, 2013 is included in management’s discussion and analysis on page 56 of this report.

Item 4. Controls and Procedures

United’s management, including the Chief Executive Officer and Chief Financial Officer, supervised and participated in an evaluation of the Company’s disclosure controls and procedures as of June 30, 2013.  Based on, and as of the date of that evaluation, United’s Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective in accumulating and communicating information to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures of that information under the SEC’s rules and forms and that the disclosure controls and procedures are designed to ensure that the information required to be disclosed in reports that are filed or submitted by United under the Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no significant changes in the internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

60

Part II. Other Information

Item 1. Legal Proceedings

In the ordinary course of operations, United and the Bank are defendants in various legal proceedings.  Additionally, in the ordinary course of business, United and the Bank are subject to regulatory examinations and investigations.  Based on our current knowledge and advice of counsel, in the opinion of management there is no such pending or threatened legal matter in which an adverse decision could result in a material adverse change in the consolidated financial condition or results of operations of United.

Item 1A.         Risk Factors

There have been no material changes from the risk factors previously disclosed in United’s Annual Report on Form 10-K for the year ended December 31, 2012, except for the following:

The short-term and long-term impact of the changing regulatory capital requirements is uncertain.

On July 2, 2013, the Federal Reserve approved a final rule to implement the recommendations of the Basel Committee on Banking Supervision. These regulatory capital standards, known as Basel III, create a new regulatory capital standard based on tier 1 common equity and increase the minimum leverage and risk-based capital ratios applicable to all banking organizations.

The final rule includes new minimum risk-based and leverage ratios, and modifies capital and asset definitions for purposes of calculating these ratios. Among other things, the Basel III rules will impact regulatory capital ratios of banking organizations in the following manner, when fully phased in: create a new requirement to maintain a ratio of common equity tier 1 capital to total riskweighted assets of not less than 4.5%; increase the minimum leverage capital ratio to 4.0% for all banking organizations (currently 3.0% for certain banking organizations); increase the minimum tier 1 risk-based capital ratio from 4.0% to 6.0%; and maintain the minimum total risk-based capital ratio at 8.0%. In addition, the final rules subject a banking organization to certain limitations on capital distributions and discretionary bonus payments to executive officers if the organization does not maintain a capital conservation buffer of common equity tier 1 capital in an amount greater than 2.5% of its total risk-weighted assets. The effect of the capital conservation buffer will be to increase the minimum common equity tier 1 capital ratio to 7.0%, the minimum tier 1 risk-based capital ratio to 8.5% and the minimum total risk-based capital ratio to 10.5%, for banking organizations seeking to avoid the limitations on capital distributions and discretionary bonus payments to executive officers. As long as a banking organization has total consolidated assets of less than $15 billion, such banking organization may include in tier 1 and total capital the banking organization’s trust preferred securities that were issued on or before May 19, 2010.

The final rules also change the capital categories for insured depository institutions for purposes of prompt corrective action. Under the final rules, to be categorized as “well capitalized,” an insured depository institution will be required to maintain a minimum common equity tier 1 capital ratio of at least 6.5%, a tier 1 risk-based capital ratio of at least 8.0%, a total risk-based capital ratio of at least 10.0%, and a leverage capital ratio of at least 5.0%. In addition, the final rule establishes more conservative standards for including an instrument in regulatory capital and imposes certain deductions from and adjustments to the measure of common equity tier 1 capital.

While the Basel III rules result in generally higher regulatory capital standards with an increased focus on common equity, it is difficult at this time to predict the effect these new standards will have on United and the Bank. The application of more stringent capital requirements for United and the Bank could, among other things, result in lower returns on invested capital, require the raising of additional capital, and result in additional regulatory actions if we are unable to comply with such requirements. Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets. Implementation of changes to asset risk weightings for risk-based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in us modifying our business strategy and could limit our ability to make dividends.

Our ability to use our deferred tax asset balances may be materially impaired.

At June 30, 2013, management concluded that it was more likely than not that $272 million of our net deferred tax asset will be realized based upon future taxable income and therefore, reversed its previously established valuation allowance.  As a result, as of June 30, 2013, our net deferred tax asset balance was $272 million, net of a remaining valuation allowance of $4.96 million related to state tax credits with short carry-forward periods that management believes will expire unused.

Our ability to use such assets, including the reversal or partial release of the valuation allowance, is dependent on our ability to generate future earnings within the operating loss carry-forward periods, which are generally 20 years. If we do not realize taxable earnings within the carry-forward periods, our deferred tax asset would be permanently impaired. Additionally, our ability to use such assets to offset future tax liabilities could be permanently impaired if cumulative common stock transactions over a rolling three-year period resulted in an ownership change under Section 382 of the Internal Revenue Code.  Under Section 382, a corporation experiencing an ownership change generally is subject to an annual limitation on its utilization of pre-change losses and certain post-change recognized built-in losses equal to the value of the stock of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate (subject to certain adjustments).  The annual limitation is increased each year to the extent that there is an unused limitation in a prior year.  The annual limitation also effectively provides a cap on the cumulative amount of pre-change losses and certain post-change recognized built-in losses that may be utilized.  Pre-change losses and certain post-change recognized built in losses in excess of the cap are effectively unable to be used to reduce future taxable income.

61

While we have taken measures to reduce the likelihood that future transactions in our stock will result in an ownership change, there can be no assurance that an ownership change will not occur in the future or that a there will not be a change in applicable law that may result in an ownership change. More specifically, while our Tax Benefits Preservation Plan provides an economic disincentive for any one person or group to become a Threshold Holder (as defined in the plan) and for any existing Threshold Holder to acquire more than a specified amount of additional shares, there can be no assurance that the Tax Benefits Preservation Plan will deter a shareholder from increasing its ownership interests beyond the limits set by the plan. Such an increase could adversely affect our ownership change calculations.

Our deferred tax assets in the future could become subject to additional future valuation allowances

Accounting Standards Codification Topic 740, Income Taxes, requires that companies assess whether a valuation allowance should be established against their deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard.  The determination of whether a valuation allowance for deferred tax assets is appropriate is subject to considerable judgment and requires an evaluation of all positive and negative evidence with more weight given to evidence that can be objectively verified.

At June 30, 2013, based on the weight of all the positive and negative evidence at such date, management concluded that it was more likely than not that $272 million of our net deferred tax assets will be realized based upon future taxable income and therefore, reversed $272 million of its previously established valuation allowance.  However, each quarter, management considers both positive and negative evidence and analyzes changes in near-term market conditions as well as other factors which may impact future operating results.  In addition, valuation allowances related to deferred tax assets can be affected by changes to tax laws, statutory tax rates, and future taxable income levels and based on input from our auditors, tax advisors or regulatory authorities.  As a result, the valuation allowance could fluctuate in future periods.  Management’s estimate of future taxable income is based on internal projections which consider historical performance, various internal estimates and assumptions, as well as certain external data, all of which management believes to be reasonable although inherently subject to significant judgment. If actual results differ significantly from the current estimates of future taxable income, even if caused by adverse macro-economic conditions, the valuation allowance may need to be increased for some or all of the deferred tax asset.  Such an increase to the deferred tax asset valuation allowance would have a material adverse effect on our financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds – None

Item 3. Defaults upon Senior Securities – None

Item 4. Mine Safety Disclosures – None

Item 5. Other Information – None

62

Item 6. Exhibits

Exhibit No.	Description
10.1	Form of Asset Purchase and Sale Agreement, dated June 26, 2013, between United Community Bank and Great Oak Pool I LLC.
31.1	Certification by Jimmy C. Tallent, President and Chief Executive Officer of United Community Banks, Inc., as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Rex S. Schuette, Executive Vice President and Chief Financial Officer of United Community Banks, Inc., as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

63

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITED COMMUNITY BANKS, INC.

/s/ Jimmy C. Tallent

Jimmy C. Tallent

President and Chief Executive Officer

(Principal Executive Officer)

 /s/ Rex S. Schuette

Rex S. Schuette

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

	/s/ Alan H. Kumler
	Alan H. Kumler
	Senior Vice President and Controller
	(Principal Accounting Officer)
	Date: August 2, 2013
64

EX-31.1

Exhibit 31.1

I, Jimmy C. Tallent, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of United Community Banks, Inc. (the “Registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Jimmy C. Tallent
	Jimmy C. Tallent
	President and Chief Executive Officer
	of the Registrant
Date:  August 2, 2013

EX-31.2

Exhibit 31.2

I, Rex S. Schuette, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of United Community Banks, Inc. (the “Registrant”);

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Rex S. Schuette
	Rex S. Schuette
	Executive Vice President and Chief Financial Officer
	of the Registrant
Date:  August 2, 2013

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of United Community Banks, Inc. (“United”) on Form 10-Q for the period ending June 30, 2013 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jimmy C. Tallent, President and Chief Executive Officer of United, and I, Rex S. Schuette, Executive Vice President and Chief Financial Officer of United, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of United.

By:	/s/ Jimmy C. Tallent
	Jimmy C. Tallent
	President and Chief Executive Officer

By:	/s/ Rex S. Schuette
	Rex S. Schuette
	Executive Vice President and
	Chief Financial Officer
Date: August 2, 2013

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Assets and Liabilities Measured at Fair Value (Details Textual) (USD $)	6 Months Ended	12 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2010 First Investment	Jun. 30, 2013 First Investment	Jun. 30, 2013 Second Investment	Jun. 30, 2013 Level 3 Security
Fair Value (Textual) [Abstract]
Number of securities					2
Par value of investment			$ 1,000,000	$ 1,000,000
Written down value of investment		50,000
Impairment charges of investment		950,000
Negative mark to fair value				$ 700,000
Fair Value (Additional Textual) [Abstract]
Maximum remaining maturity of financial instruments having no defined maturity	180 days
Percentage of written down in appraisal value of nonaccrual impaired loans	80.00%
Percentage of written down in appraisal value of foreclosed properties	80.00%
Percentage of written down in asking price of foreclosed properties	90.00%

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Earnings Per Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Note 8 – Earnings Per Share

United is required to report on the face of the consolidated statement of income, earnings per common share with and without the dilutive effects of potential common stock issuances from instruments such as options, convertible securities and warrants. Basic earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share.

During the three and six months ended June 30, 2013 and 2012, United accrued dividends on preferred stock, including accretion of discounts, as shown in the following table (in thousands).

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
Series A - 6% fixed	$	3	$	3	$	6	$	6
Series B - 5% fixed until December 6, 2013, 9% thereafter		2,636		2,614		5,266		5,222
Series D - LIBOR plus 9.6875%, resets quarterly		416		415		835		834
Total preferred stock dividends	$	3,055	$	3,032	$	6,107	$	6,062
All preferred stock dividends are payable quarterly.
Series B preferred stock was issued at a discount. Dividend amounts shown include discount accretion for each period.

The preferred stock dividends were subtracted from net income in order to arrive at net income available to common shareholders.  There were no dilutive securities outstanding for the three and six months ended June 30, 2013 and 2012.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2013 and 2012 (in thousands, except per share data).

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Net income available to common shareholders	$	226,909	$	3,467	$	235,622	$	11,965
Weighted average shares outstanding:
Basic		58,141		57,840		58,111		57,803
Effect of dilutive securities
Convertible securities		-		-		-		-
Stock options		-		-		-		-
Warrants		-		-		-		-
Diluted		58,141		57,840		58,111		57,803
Income per common share:
Basic	$	3.90	$	.06	$	4.05	$	.21
Diluted	$	3.90	$	.06	$	4.05	$	.21

At June 30, 2013, United had the following potentially dilutive stock options and warrants outstanding: a warrant to purchase 219,909 common shares at $61.40 per share issued originally to the U.S. Treasury in conjunction with the issuance of United’s fixed rate cumulative preferred perpetual stock, Series B; 129,670 common shares issuable upon exercise of warrants attached to trust preferred securities with an exercise price of $100 per share; 407,372 common shares issuable upon exercise of stock options granted to employees with a weighted average exercise price of $100.90; 393,785 shares issuable upon completion of vesting of restricted stock awards; 1,411,765 common shares issuable upon exercise of warrants exercisable at a price equivalent to $21.25 per share granted to Fletcher International Ltd. (“Fletcher”) in connection with a 2010 asset purchase and sale agreement; and 1,551,126 common shares issuable upon exercise of warrants granted in connection with United’s tax benefits preservation plan, exercisable at $12.50 per share.

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Loans and Allowance for Loan Losses - Risk category of loans by class of loans (Details 10) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Risk category of loans by class of loans
Total loans	$ 4,189,368	$ 4,175,008	$ 4,119,235
Loans Receivable
Risk category of loans by class of loans
Total loans	4,189,368	4,175,008	4,119,235
Loans Receivable | Pass
Risk category of loans by class of loans
Total loans	3,853,017	3,640,803	3,509,262
Loans Receivable | Watch
Risk category of loans by class of loans
Total loans	131,243	161,428	170,211
Loans Receivable | Performing Substandard
Risk category of loans by class of loans
Total loans	176,332	261,941	323,644
Loans Receivable | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	27,864	109,894	115,340
Loans Receivable | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Not Rated
Risk category of loans by class of loans
Total loans	912	942	778
Loans Receivable | Residential mortgage
Risk category of loans by class of loans
Total loans	1,278,559	1,214,203	1,128,336
Loans Receivable | Residential mortgage | Pass
Risk category of loans by class of loans
Total loans	1,185,658	1,102,746	999,323
Loans Receivable | Residential mortgage | Watch
Risk category of loans by class of loans
Total loans	27,341	33,689	39,105
Loans Receivable | Residential mortgage | Performing Substandard
Risk category of loans by class of loans
Total loans	51,222	65,179	73,277
Loans Receivable | Residential mortgage | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	14,338	12,589	16,631
Loans Receivable | Residential mortgage | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Residential mortgage | Not Rated
Risk category of loans by class of loans
Total loans
Loans Receivable | Residential construction
Risk category of loans by class of loans
Total loans	331,681	381,677	408,966
Loans Receivable | Residential construction | Pass
Risk category of loans by class of loans
Total loans	292,116	292,264	290,804
Loans Receivable | Residential construction | Watch
Risk category of loans by class of loans
Total loans	18,096	32,907	47,182
Loans Receivable | Residential construction | Performing Substandard
Risk category of loans by class of loans
Total loans	16,631	37,804	45,450
Loans Receivable | Residential construction | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	4,838	18,702	25,530
Loans Receivable | Residential construction | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Residential construction | Not Rated
Risk category of loans by class of loans
Total loans
Loans Receivable | Consumer installment
Risk category of loans by class of loans
Total loans	261,433	152,748	125,896
Loans Receivable | Consumer installment | Pass
Risk category of loans by class of loans
Total loans	257,563	147,214	121,166
Loans Receivable | Consumer installment | Watch
Risk category of loans by class of loans
Total loans	966	1,086	1,117
Loans Receivable | Consumer installment | Performing Substandard
Risk category of loans by class of loans
Total loans	2,505	3,653	2,706
Loans Receivable | Consumer installment | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	399	795	907
Loans Receivable | Consumer installment | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Consumer installment | Not Rated
Risk category of loans by class of loans
Total loans
Loans Receivable | Commercial
Risk category of loans by class of loans
Total loans	2,317,695	2,426,380	2,456,037
Loans Receivable | Commercial | Pass
Risk category of loans by class of loans
Total loans	2,117,680	2,098,579	2,097,969
Loans Receivable | Commercial | Watch
Risk category of loans by class of loans
Total loans	84,840	93,746	82,807
Loans Receivable | Commercial | Performing Substandard
Risk category of loans by class of loans
Total loans	105,974	155,305	202,211
Loans Receivable | Commercial | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	8,289	77,808	72,272
Loans Receivable | Commercial | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Commercial | Not Rated
Risk category of loans by class of loans
Total loans	912	942	778
Loans Receivable | Commercial | Commercial (secured by real estate)
Risk category of loans by class of loans
Total loans	1,748,145	1,813,365	1,836,477
Loans Receivable | Commercial | Commercial (secured by real estate) | Pass
Risk category of loans by class of loans
Total loans	1,595,141	1,592,677	1,596,876
Loans Receivable | Commercial | Commercial (secured by real estate) | Watch
Risk category of loans by class of loans
Total loans	67,017	80,997	72,067
Loans Receivable | Commercial | Commercial (secured by real estate) | Performing Substandard
Risk category of loans by class of loans
Total loans	78,750	117,543	148,419
Loans Receivable | Commercial | Commercial (secured by real estate) | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	7,237	22,148	19,115
Loans Receivable | Commercial | Commercial (secured by real estate) | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Commercial | Commercial (secured by real estate) | Not Rated
Risk category of loans by class of loans
Total loans
Loans Receivable | Commercial | Commercial & industrial
Risk category of loans by class of loans
Total loans	436,988	458,246	450,222
Loans Receivable | Commercial | Commercial & industrial | Pass
Risk category of loans by class of loans
Total loans	418,354	401,606	393,894
Loans Receivable | Commercial | Commercial & industrial | Watch
Risk category of loans by class of loans
Total loans	5,716	5,404	4,652
Loans Receivable | Commercial | Commercial & industrial | Performing Substandard
Risk category of loans by class of loans
Total loans	11,458	18,477	15,916
Loans Receivable | Commercial | Commercial & industrial | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	548	31,817	34,982
Loans Receivable | Commercial | Commercial & industrial | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Commercial | Commercial & industrial | Not Rated
Risk category of loans by class of loans
Total loans	912	942	778
Loans Receivable | Commercial | Commercial construction
Risk category of loans by class of loans
Total loans	132,562	154,769	169,338
Loans Receivable | Commercial | Commercial construction | Pass
Risk category of loans by class of loans
Total loans	104,185	104,296	107,199
Loans Receivable | Commercial | Commercial construction | Watch
Risk category of loans by class of loans
Total loans	12,107	7,345	6,088
Loans Receivable | Commercial | Commercial construction | Performing Substandard
Risk category of loans by class of loans
Total loans	15,766	19,285	37,876
Loans Receivable | Commercial | Commercial construction | Nonaccrual Substandard
Risk category of loans by class of loans
Total loans	504	23,843	18,175
Loans Receivable | Commercial | Commercial construction | Doubtful / Loss
Risk category of loans by class of loans
Total loans
Loans Receivable | Commercial | Commercial construction | Not Rated
Risk category of loans by class of loans
Total loans

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Consolidated Statement of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statement Of Comprehensive Income (Loss) [Abstract]
Net income (loss) from continuing operations, Before-tax Amount	$ (26,817)	$ 6,949	$ (14,467)	$ 18,791
Net income (loss) from continuing operations, Tax (Expense) Benefit	256,781	(450)	256,196	(764)
Net income (loss) from continuing operations, Net of Tax Amount	229,964	6,499	241,729	18,027
Unrealized (losses) gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period, Before-tax Amount	(15,358)	4,264	(13,717)	924
Unrealized holding gains (losses) arising during period, Tax (Expense) Benefit	5,798	(1,645)	5,177	(277)
Unrealized holding gains (losses) arising during period, Net of Tax Amount	(9,560)	2,619	(8,540)	647
Reclassification adjustment for gains included in net income (loss), Before-tax Amount		(6,490)	(116)	(7,047)
Reclassification adjustment for gains included in net income, tax (expense) or benefit		2,425	45	2,631
Reclassification adjustment for gains included in net income (loss), Net of Tax Amount		(4,065)	(71)	(4,416)
Valuation allowance for the change in deferred taxes arising from unrealized gains and losses on available for sale securities, Tax (Expense) Benefit	(3,526)	(780)	(2,950)	(2,354)
Valuation allowance for the change in deferred taxes arising from unrealized gains and losses on available for sale securities, Net of tax Amount	(3,526)	(780)	(2,950)	(2,354)
Net unrealized gains (losses), Before-tax Amount	(15,358)	(2,226)	(13,833)	(6,123)
Net unrealized gains (losses), Tax (Expense) Benefit	2,272		2,272
Net unrealized gains (losses), Net of Tax Amount	(13,086)	(2,226)	(11,561)	(6,123)
Amortization of gains included in net income (loss) on available-for-sale securities transferred to held-to-maturity, Before-tax Amount	(271)	(400)	(590)	(813)
Amortization of gains included in net income on available-for-sale securities transferred to held to maturity, investment securities interest revenue, tax (expense) or benefit	103	151	227	308
Amortization of gains included in net income (loss) on available-for-sale securities transferred to held-to-maturity, Net of Tax Amount	(168)	(249)	(363)	(505)
Adjustment of valuation allowance for the change in deferred taxes arising from unrealized gains and losses and amortization of gains included in net income on cash flow hedges and release of valuation allowance, Tax (Expense) Benefit	1,415	(151)	1,293	(308)
Adjustment of valuation allowance for the change in deferred taxes arising from unrealized gains and losses and amortization of gains included in net income on cash flow hedges and release of valuation allowance, Net of Tax Amount	1,415	(151)	1,293	(308)
Net unrealized losses, Before-tax Amount	(271)	(400)	(590)	(813)
Net unrealized losses, Tax (Expense) Benefit	1,518		1,520
Net unrealized losses, Net of Tax Amount	1,247	(400)	930	(813)
Amounts reclassified into net income on cash flow hedges, Before-tax Amount	(306)	(714)	(844)	(2,314)
Amounts reclassified into net income on cash flow hedges, tax (expense) or benefit	119	278	328	900
Amounts reclassified into net income on cash flow hedges, net of tax	(187)	(436)	(516)	(1,414)
Unrealized losses on derivative financial instruments accounted for as cash flow hedges, Before-tax Amount	11,672	(4,855)	12,102	(4,855)
Unrealized losses on derivative financial instruments accounted for as cash flow hedges, Tax (Expense) Benefit	(4,540)	1,889	(4,707)	1,889
Unrealized losses on derivative financial instruments accounted for as cash flow hedges, Net of Tax Amount	7,132	(2,966)	7,395	(2,966)
Valuation allowance for the change in deferred taxes arising from unrealized gains and losses and amortization of gains included in net income (loss) on cash flow hedges, Tax (Expense) Benefit	13,740	(2,167)	13,698	(2,789)
Valuation allowance for the change in deferred taxes arising from unrealized gains and losses and amortization of gains included in net income (loss) on cash flow hedges, Net of Tax Amount	13,740	(2,167)	13,698	(2,789)
Net unrealized losses, Before-tax Amount	11,366	(5,569)	11,258	(7,169)
Net unrealized losses, Tax (Expense) Benefit	9,319		9,319
Net unrealized losses, Net of Tax Amount	20,685	(5,569)	20,577	(7,169)
Net actuarial loss on defined benefit pension plan, Before-tax Amount			(415)
Net actuarial loss on defined benefit pension plan, Tax (Expense) Benefit			161
Net actuarial loss on defined benefit pension plan, Net of Tax Amount			(254)
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan, Before-tax Amount	133	154	265	308
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan, Tax (Expense) Benefit	(52)	(60)	(103)	(120)
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan, Net of Tax Amount	81	94	162	188
Adjustment of valuation allowance for the change in deferred taxes arising from reclassification of unamortized prior service cost and actuarial losses and amortization of prior service cost and actuarial losses and release of valuation allowance, Tax (Expense) Benefit	110	60		120
Adjustment of valuation allowance for the change in deferred taxes arising from reclassification of unamortized prior service cost and actuarial losses and amortization of prior service cost and actuarial losses and release of valuation allowance, Net of Tax Amount	110	60		120
Net defined benefit pension plan activity, Before-tax Amount	133	154	(150)	308
Net defined benefit pension plan activity, Tax (Expense) Benefit	58		58
Net defined benefit pension plan activity, Net of Tax Amount	191	154	(92)	308
Total other comprehensive loss, Before-tax Amount	(4,130)	(8,041)	(3,315)	(13,797)
Total other comprehensive loss, Tax (Expense) Benefit	13,167		13,169
Total other comprehensive loss, net of tax amount	9,037	(8,041)	9,854	(13,797)
Comprehensive income (loss), Before-tax Amount	(30,947)	(1,092)	(17,782)	4,994
Comprehensive income (loss), Tax (Expense) Benefit	269,948	(450)	269,365	(764)
Comprehensive income (loss), Net of Tax Amount	$ 239,001	$ (1,542)	$ 251,583	$ 4,230

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Accounting Policies

6 Months Ended

Jun. 30, 2013

Summary Of Significant Accounting Policies [Abstract]

Accounting Policies

Note 1 – Accounting Policies

The accounting and financial reporting policies of United Community Banks, Inc. (“United”) and its subsidiaries conform to accounting principles generally accepted in the United States of America (“GAAP”) and general banking industry practices.  The accompanying interim consolidated financial statements have not been audited.  All material intercompany balances and transactions have been eliminated.  A more detailed description of United’s accounting policies is included in its Annual Report on Form 10-K for the year ended December 31, 2012.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods.

Certain 2012 amounts have been reclassified to conform to the 2013 presentation.  The 2012 reclassifications were not material to the financial statement presentation.

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Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Summary Of Significant Accounting Policies [Abstract]

Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities

In January 2013, the FASB issued Accounting Standards Update No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.  This ASU limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting agreement.  The disclosure requirements were effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods.  This guidance did not have a material impact on United’s financial position or results of operations, and resulted in additional disclosures.

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.  The amendments in this update require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component and by the respective line items of net income. The standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2012.  This guidance did not have a material impact on United’s financial position or results of operations, and resulted in additional disclosures.

Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes

In July 2013, the FASB issued Accounting Standards Update No. 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.  The amendments in this update permit the Fed Funds Effective Swap Rate (OIS) to be used as a benchmark interest rate for hedge accounting in addition to UST and LIBOR. The amendments also remove the restriction on using different benchmark rates for similar hedges. The standard is effective prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013.  This guidance did not have a material impact on United’s financial position, results of operations or disclosures.

Presentation of unrecognized tax benefit when net operating loss carryforward similar tax loss, or tax credit carryforward exists

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward exists. This ASU provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Since United has both unrecognized tax benefits and net operating loss and tax credit carryforwards, this ASU could have an impact on United's financial position, results of operations or disclosures. United is currently in the process of quantifying this impact.

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Stock-Based Compensation - Stock option activity (Details) (Stock Options, USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Stock Options
Shares
Outstanding at December 31, 2012	482,528
Forfeited	(935)
Expired	(74,221)
Outstanding at June 30, 2013	407,372
Exercisable at June 30, 2013	399,597
Weighted-Average Exercise Price
Outstanding at December 31, 2012	$ 97.73
Forfeited	$ 30.23
Expired	$ 81.21
Outstanding at June 30, 2013	$ 100.90
Exercisable at June 30, 2013	$ 102.64
Weighted-Average Remaining Contractual Term (Years), Outstanding	3 years 2 months 12 days
Weighted-Average Remaining Contractual Term (Years), Exercisable	3 years 2 months 12 days
Aggregate Intrinsic Value, Outstanding	$ 12
Aggregate Intrinsic Value, Exercisable	$ 3

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Foreclosed Property - Activity in the valuation allowance for foreclosed property (Details 1) (USD $) In Thousands, unless otherwise specified				3 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Jun. 30, 2013 Foreclosed Property	Jun. 30, 2012 Foreclosed Property	Jun. 30, 2013 Foreclosed Property	Jun. 30, 2012 Foreclosed Property
Activity in the valuation allowance for foreclosed property
Balance at beginning of year	$ 3,602	$ 6,954	$ 11,872	$ 4,979	$ 17,746	$ 6,954	$ 18,982
Additions charged to expense				1,369	1,008	2,410	3,119
Disposals				(2,746)	(6,882)	(5,762)	(10,229)
Balance at end of year	$ 3,602	$ 6,954	$ 11,872	$ 3,602	$ 11,872	$ 3,602	$ 11,872

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Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2013

Derivatives and Hedging Activities [Abstract]

Derivatives and Hedging Activities

Note 9 – Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

United is exposed to certain risks arising from both its business operations and economic conditions.  United principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. United manages interest rate risk primarily by managing the amount, sources, and duration of its investment securities portfolio and wholesale funding and through the use of derivative financial instruments.  Specifically, United enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.  United’s derivative financial instruments are used to manage differences in the amount, timing, and duration of United’s known or expected cash receipts and its known or expected cash payments principally related to United’s loans, wholesale borrowings and deposits.

In conjunction with the FASB’s fair value measurement guidance, United made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

The table below presents the fair value of United’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

Derivatives accounted for as hedges under ASC 815

		Fair Value
Interest Rate	Balance Sheet	June 30,		December 31,		June 30,
Products	Location	2013		2012		2012
Asset derivatives	Other assets	$	8,017	$	23	$	68
Liability derivatives	Other liabilities	$	28,325	$	11,900	$	5,987

Derivatives not accounted for as hedges under ASC 815

		Fair Value
Interest Rate	Balance Sheet	June 30,		December 31,		June 30,
Products	Location	2013		2012		2012
Asset derivatives	Other assets	$	1,000	$	635	$	155
Liability derivatives	Other liabilities	$	1,005	$	643	$	155

Derivative contracts that are not accounted for as hedges under ASC 815, Derivatives and Hedging are between United and certain commercial loan customers with offsetting positions to dealers under a back-to-back swap program.

Cash Flow Hedges of Interest Rate Risk

United’s objectives in using interest rate derivatives are to add stability to net interest revenue and to manage its exposure to interest rate movements. To accomplish this objective, United primarily uses interest rate swaps as part of its interest rate risk management strategy.  At June 30, 2013, United’s interest rate swaps designated as cash flow hedges involve the payment of fixed-rate amounts to a counterparty in exchange for United receiving variable-rate payments over the life of the agreements without exchange of the underlying notional amount.  United’s current cash flow hedges are for the purpose of converting variable rate deposits and wholesale borrowings to a fixed rate to protect United in a rising rate environment.  The swaps are forward starting and do not become effective until 2014 and 2015.  United had three swap contracts outstanding with a total notional amount of $200 million that were designated as cash flow hedges of future issuances of brokered deposits and three swap contracts outstanding with a total notional amount of $375 million that were designated as cash flow hedges of indexed money market accounts at June 30, 2013.  At December 31, 2012 and June 30, 2012, United had three swap contracts outstanding with a notional amount of $200 million that were designated as cash flow hedges of future issuances of brokered deposits and two swap contracts outstanding with a total notional amount of $200 million that were designated as cash flow hedges of indexed money market accounts.

The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense when the swaps become effective in 2014 as interest payments are made on United’s LIBOR based variable-rate wholesale borrowings and indexed deposit accounts.  At June 30, 2013, a portion of the amount included in other comprehensive income represents deferred gains from terminated cash flow hedges where the forecasted hedging transaction is expected to remain effective over the remaining unexpired term of the original contract.  Such gains are being deferred and recognized over the remaining life of the contract on a straight line basis.  During the three and six months ended June 30, 2013, United accelerated the reclassification of $3,000 and $4,000, respectively, in gains from terminated positions as a result of the forecasted transactions becoming probable not to occur.  For the same periods in 2012, those amounts were gains of $43,000 and $124,000, respectively.  During the next three months, United estimates that the remaining $58,000 of the deferred gains on terminated cash flow hedging positions will be reclassified as an increase to loan interest revenue.  In addition, United’s forward starting active cash flow hedges of floating rate liabilities will begin to become effective over the next twelve months.  United recognized $79,000 in hedge ineffectiveness gains on active cash flow hedges in the second quarter of 2013.  No such hedge ineffectiveness gains or losses were recognized on active cash flow hedges in 2012.  United expects that $862,000 will be reclassified as an increase to deposit interest expense over the next twelve months related to these cash flow hedges.

Fair Value Hedges of Interest Rate Risk

United is exposed to changes in the fair value of certain of its fixed rate investments and obligations due to changes in interest rates. United uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in interest rates.  Interest rate swaps designated as fair value hedges of fixed rate obligations involve the receipt of fixed-rate amounts from a counterparty in exchange for United making variable rate payments over the life of the agreements without the exchange of the underlying notional amount.  Interest rate swaps designated as fair value hedges of fixed rate investments involve the receipt of variable-rate amounts from a counterparty in exchange for United making fixed rate payments over the life of the instrument without the exchange of the underlying notional amount.  At June 30, 2013, United had 25 interest rate swaps with an aggregate notional amount of $335 million that were designated as fair value hedges of interest rate risk.  Eight of the interest rate swaps outstanding at June 30, 2013 with an aggregate notional amount of $86 million were receive-variable / pay-fixed swaps that were used for the purpose of hedging changes in the fair value of fixed rate corporate bonds resulting from changes in interest rates.  The other 17 were pay-variable / receive-fixed swaps hedging changes in the fair value of fixed rate brokered time deposits resulting from changes in interest rates.  At June 30, 2012, United had seven interest rate swaps with an aggregate notional amount of $104 million that were designated as fair value hedges of fixed rate brokered time deposits.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. United includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related derivatives.  During the three and six months ended June 30, 2013, United recognized net gains of $289,000 and $203,000, respectively, and during the three and six months ended June 30, 2012, United recognized net losses of $223,000 and $189,000, respectively, related to ineffectiveness of the fair value hedging relationships.  United also recognized a net reduction of interest expense of $1.20 million and $2.27 million, respectively, for the three and six months ended June 30, 2013 and a net reduction of interest expense of $550,000 and $828,000, respectively, for the three and six months ended June 30, 2012 related to United’s fair value hedges of brokered time deposits, which includes net settlements on the derivatives.  United recognized a $283,000 and $295,000 reduction of interest revenue on securities during the second quarter and first six months of 2013 related to United’s fair value hedges of corporate bonds.

Tabular Disclosure of the Effect of Derivative Instruments on the Income Statement

The tables below present the effect of United’s derivative financial instruments on the consolidated statement of operations for the three and six months ended June 30, 2013 and 2012.

Derivatives in Fair Value Hedging Relationships (in thousands).

Location of Gain (Loss)	Amount of Gain (Loss) Recognized in					Amount of Gain (Loss) Recognized in
Recognized in Income	Income on Derivative					Income on Hedged Item
on Derivative	2013			2012		2013		2012
Three Months Ended June 30,
Other fee revenue	$	(10,980	)	$	2,087	$	11,269	$	(2,310	)
Six Months Ended June 30,
Other fee revenue	$	(13,056	)	$	823	$	13,259	$	(1,012	)

In most cases, the estate of deceased brokered certificate of deposit holders may put the certificate of deposit back to the issuing bank at par upon the death of the holder.  When these death puts occur, a gain or loss is recognized for the difference between the fair value and the par amount of the deposits put back.  The change in the fair value of brokered time deposits that are being hedged in fair value hedging relationships reported in the table above includes gains and losses from death puts and such gains and losses are included in the amount of reported ineffectiveness gains or losses.

Derivatives in Cash Flow Hedging Relationships (in thousands).

	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)					Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)
	2013		2012			Location	2013		2012
Three Months Ended June 30,
						Interest revenue	$	303	$	671
						Other income		3		43
Interest rate products	$	11,672	$	(4,855	)	Total	$	306	$	714
Six Months Ended June 30,
						Interest revenue	$	840	$	2,190
						Other income		4		124
Interest rate products	$	12,102	$	(4,855	)	Total	$	844	$	2,314

Other Derivatives Not Accounted for as Hedges (in thousands).

Location of Gain (Loss)	Amount of Gain (Loss) Recognized in
Recognized in Income	Income on Customer Derivatives
on Derivative	2013		2012
Three Months Ended June 30,
Other fee revenue	$	488	$	(1	)
Six Months Ended June 30,
Other fee revenue	$	740	$	68

Credit-risk-related Contingent Features

United manages its credit exposure on derivatives transactions by entering into a bilateral credit support agreement with each counterparty.  The credit support agreements require collateralization of exposures beyond specified minimum threshold amounts.  The details of these agreements, including the minimum thresholds, vary by counterparty.  As of June 30, 2013, collateral totaling $18.2 million was pledged toward derivatives in a liability position.

United’s agreements with each of its derivative counterparties contain a provision where if either party defaults on any of its indebtedness, then it could also be declared in default on its derivative obligations.  The agreements with derivatives counterparties also include provisions that if not met, could result in United being declared in default.  United has agreements with certain of its derivative counterparties that contain a provision where if United fails to maintain its status as a well-capitalized institution or is subject to a prompt corrective action directive, the counterparty could terminate the derivative positions and United would be required to settle its obligations under the agreements.

Change in Valuation Methodology

As of January 1, 2013, United changed its valuation methodology for over-the-counter derivatives to discount cash flows based on Overnight Index Swap (“OIS”) rates.  Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value.  Uncollateralized or partially collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e. LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk.  United changed its methodology to better align its inputs, assumptions and pricing methodologies with those used in its principal market by most dealers and major market participants.  The changes in valuation methodology are applied prospectively as a change in accounting estimate and are not material to United’s financial position or results of operations.

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Loans and Allowance for Loan Losses - Loans individually evaluated for impairment by class of loans (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Loans individually evaluated for impairment by class of loans
Recorded Investment	$ 130,914
Loans Receivable
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	49,824	218,351	270,083
Unpaid Principal Balance, With an allowance recorded	70,657	100,431	79,199
Unpaid Principal Balance	120,481	318,782	349,282
Recorded Investment, With no related allowance recorded	34,045	156,962	214,718
Recorded Investment, With allowance recorded	69,770	95,848	78,871
Recorded Investment	103,815	252,810	293,589
Allowance for loan losses allocated with allowance	5,057	11,644	17,370
Amount of allowance for loan losses allocated	5,057	11,644	17,370
Loans Receivable | Commercial (secured by real estate)
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	27,851	74,066	105,788
Unpaid Principal Balance, With an allowance recorded	34,741	44,395	35,348
Recorded Investment, With no related allowance recorded	17,640	62,609	95,453
Recorded Investment, With allowance recorded	34,657	41,800	35,295
Allowance for loan losses allocated with allowance	2,862	6,106	8,544
Amount of allowance for loan losses allocated	2,862	6,106	8,544
Loans Receivable | Commercial & industrial
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	3,809	74,572	81,036
Unpaid Principal Balance, With an allowance recorded	2,091	2,170	1,711
Recorded Investment, With no related allowance recorded	3,809	49,572	56,036
Recorded Investment, With allowance recorded	1,929	1,929	1,711
Allowance for loan losses allocated with allowance	129	490	753
Amount of allowance for loan losses allocated	129	490	753
Loans Receivable | Commercial construction
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	809	23,938	22,491
Unpaid Principal Balance, With an allowance recorded	12,376	23,746	21,461
Recorded Investment, With no related allowance recorded	659	17,305	21,372
Recorded Investment, With allowance recorded	12,296	22,863	21,461
Allowance for loan losses allocated with allowance	440	2,239	2,476
Amount of allowance for loan losses allocated	440	2,239	2,476
Loans Receivable | Commercial
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	32,469	172,576	209,315
Unpaid Principal Balance, With an allowance recorded	49,208	70,311	58,520
Recorded Investment, With no related allowance recorded	22,108	129,486	172,861
Recorded Investment, With allowance recorded	48,882	66,592	58,467
Allowance for loan losses allocated with allowance	3,431	8,835	11,773
Loans Receivable | Residential mortgage
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	8,676	10,336	13,994
Unpaid Principal Balance, With an allowance recorded	11,794	14,267	8,458
Recorded Investment, With no related allowance recorded	6,843	8,383	11,578
Recorded Investment, With allowance recorded	11,550	13,864	8,266
Allowance for loan losses allocated with allowance	1,197	2,165	1,389
Amount of allowance for loan losses allocated	1,197	2,165	1,389
Loans Receivable | Residential construction
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	8,476	35,439	46,589
Unpaid Principal Balance, With an allowance recorded	9,411	15,412	11,886
Recorded Investment, With no related allowance recorded	4,992	19,093	30,094
Recorded Investment, With allowance recorded	9,103	14,962	11,812
Allowance for loan losses allocated with allowance	417	625	4,188
Amount of allowance for loan losses allocated	417	625	4,188
Loans Receivable | Consumer installment
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance, With no related allowance recorded	203		185
Unpaid Principal Balance, With an allowance recorded	244	441	335
Recorded Investment, With no related allowance recorded	102		185
Recorded Investment, With allowance recorded	235	430	326
Allowance for loan losses allocated with allowance	12	19	20
Amount of allowance for loan losses allocated	$ 12	$ 19	$ 20

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Foreclosed Property - Expenses related to foreclosed assets (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Expenses related to foreclosed assets
Net loss on sales	$ 2,945	$ (269)	$ 3,050	$ (176)
Provision for unrealized losses	1,369	1,008	2,410	3,119
Operating expenses	837	1,112	2,024	2,733
Total foreclosed property expense	$ 5,151	$ 1,851	$ 7,484	$ 5,676

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Securities - Cost basis, unrealized gains and losses, and fair value of securities available for sale (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended				12 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Dec. 31, 2012
Investment securities available-for-sale:
Amortized Cost	$ 1,938,238		$ 1,684,240		$ 1,817,774
Gross Unrealized Gains	21,277		27,441		26,852
Gross Unrealized Losses	22,251		10,098		10,033
Fair Value	1,937,264		1,701,583		1,834,593
U.S. Government agencies
Investment securities available-for-sale:
Amortized Cost			43,618
Gross Unrealized Gains			256
Gross Unrealized Losses
Fair Value			43,874
State and political subdivisions
Investment securities available-for-sale:
Amortized Cost	22,369		25,704		27,717
Gross Unrealized Gains	1,112		1,462		1,354
Gross Unrealized Losses	41		7		19
Fair Value	23,440		27,159		29,052
Mortgage-backed securities
Investment securities available-for-sale:
Amortized Cost	1,410,189	[1]	1,408,047	[1]	1,408,042	[1]
Gross Unrealized Gains	15,935	[1]	25,723	[1]	22,552	[1]
Gross Unrealized Losses	13,538	[1]	339	[1]	2,092	[1]
Fair Value	1,412,586	[1]	1,433,431	[1]	1,428,502	[1]
Corporate bonds
Investment securities available-for-sale:
Amortized Cost	260,464		119,198		169,783
Gross Unrealized Gains	1,585				1,052
Gross Unrealized Losses	8,181		9,160		7,173
Fair Value	253,868		110,038		163,662
Asset-backed securities
Investment securities available-for-sale:
Amortized Cost	242,690		85,090		209,411
Gross Unrealized Gains	2,645				1,894
Gross Unrealized Losses	491		592		749
Fair Value	244,844		84,498		210,556
Other
Investment securities available-for-sale:
Amortized Cost	2,526		2,583		2,821
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	$ 2,526		$ 2,583		$ 2,821

[1] All are residential type mortgage-backed securities

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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2013

Loans and Allowance For Loan Losses [Abstract]

Schedule of classifications of loans

	June 30,			December 31,			June 30,
	2013			2012			2012
Commercial (secured by real estate)	$	1,748,145		$	1,813,365		$	1,836,477
Commercial & industrial		436,988			458,246			450,222
Commercial construction		132,562			154,769			169,338
Total commercial		2,317,695			2,426,380			2,456,037
Residential mortgage		1,278,559			1,214,203			1,128,336
Residential construction		331,681			381,677			408,966
Consumer installment		261,433			152,748			125,896
Total loans		4,189,368			4,175,008			4,119,235
Less allowance for loan losses		(81,845	)		(107,137	)		(112,705	)
Loans, net	$	4,107,523		$	4,067,871		$	4,006,530

Schedule of changes in the allowance for loan losses

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Balance beginning of period	$	105,753	$	113,601	$	107,137	$	114,468
Provision for loan losses		48,500		18,000		59,500		33,000
Charge-offs:
Commercial (secured by real estate)		26,740		4,418		32,194		8,346
Commercial & industrial		15,932		888		17,755		1,644
Commercial construction		6,305		88		6,350		452
Residential mortgage		6,718		4,014		9,074		9,781
Residential construction		18,530		9,846		21,512		15,475
Consumer installment		565		408		1,272		1,161
Total loans charged-off		74,790		19,662		88,157		36,859
Recoveries:
Commercial (secured by real estate)		1,274		69		1,485		300
Commercial & industrial		356		113		678		200
Commercial construction		10		-		59		30
Residential mortgage		209		152		418		544
Residential construction		24		283		33		598
Consumer installment		509		149		692		424
Total recoveries		2,382		766		3,365		2,096
Net charge-offs		72,408		18,896		84,792		34,763
Balance end of period	$	81,845	$	112,705	$	81,845	$	112,705

Schedule of United's recorded investment in asset

	Recorded Investment		Net Sales Proceeds		Net Charge-Off
Loans considered impaired	$	96,829	$	56,298	$	(40,531	)
Loans not considered impaired		25,687		15,227		(10,460	)
Foreclosed properties		8,398		5,933		(2,465	)
Total assets sold	$	130,914	$	77,458	$	(53,456	)

Schedule of allowance for loan losses and recorded investment in loans by portfolio segment based on impairment method

Six Months Ended June 30, 2013	Commercial (Secured by Real Estate)			Commercial & Industrial			Commercial Construction			Residential Mortgage			Residential Construction			Consumer Installment			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	27,847		$	5,537		$	8,389		$	26,642		$	26,662		$	2,747		$	9,313		$	107,137
Charge-offs		(32,194	)		(17,755	)		(6,350	)		(9,074	)		(21,512	)		(1,272	)		-			(88,157	)
Recoveries		1,485			678			59			418			33			692			-			3,365
Provision		25,670			19,594			2,177			2,041			12,139			223			(2,344	)		59,500
Ending balance	$	22,808		$	8,054		$	4,275		$	20,027		$	17,322		$	2,390		$	6,969		$	81,845
Ending allowance attributable to loans:
Individually evaluated for impairment	$	2,862		$	129		$	440		$	1,197		$	417		$	12		$	-		$	5,057
Collectively evaluated for impairment		19,946			7,925			3,835			18,830			16,905			2,378			6,969			76,788
Total ending allowance balance	$	22,808		$	8,054		$	4,275		$	20,027		$	17,322		$	2,390		$	6,969		$	81,845
Loans:
Individually evaluated for impairment	$	52,297		$	5,738		$	12,955		$	18,393		$	14,095		$	337		$	-		$	103,815
Collectively evaluated for impairment		1,695,848			431,250			119,607			1,260,166			317,586			261,096			-			4,085,553
Total loans	$	1,748,145		$	436,988		$	132,562		$	1,278,559		$	331,681		$	261,433		$	-		$	4,189,368
December 31, 2012
Allowance for loan losses:
Ending allowance attributable to loans:
Individually evaluated for impairment	$	6,106		$	490		$	2,239		$	2,165		$	625		$	19		$	-		$	11,644
Collectively evaluated for impairment		21,741			5,047			6,150			24,477			26,037			2,728			9,313			95,493
Total ending allowance balance	$	27,847		$	5,537		$	8,389		$	26,642		$	26,662		$	2,747		$	9,313		$	107,137
Loans:
Individually evaluated for impairment	$	104,409		$	51,501		$	40,168		$	22,247		$	34,055		$	430		$	-		$	252,810
Collectively evaluated for impairment		1,708,956			406,745			114,601			1,191,956			347,622			152,318			-			3,922,198
Total loans	$	1,813,365		$	458,246		$	154,769		$	1,214,203		$	381,677		$	152,748		$	-		$	4,175,008
Six Months Ended June 30, 2012
Beginning balance	$	31,644		$	5,681		$	6,097		$	29,076		$	30,379		$	2,124		$	9,467		$	114,468
Charge-offs		(8,346	)		(1,644	)		(452	)		(9,781	)		(15,475	)		(1,161	)		-			(36,859	)
Recoveries		300			200			30			544			598			424			-			2,096
Provision		6,288			1,061			4,662			6,471			13,712			1,183			(377	)		33,000
Ending balance	$	29,886		$	5,298		$	10,337		$	26,310		$	29,214		$	2,570		$	9,090		$	112,705
Ending allowance attributable to loans:
Individually evaluated for impairment	$	8,544		$	753		$	2,476		$	1,389		$	4,188		$	20		$	-		$	17,370
Collectively evaluated for impairment		21,342			4,545			7,861			24,921			25,026			2,550			9,090			95,335
Total ending allowance balance	$	29,886		$	5,298		$	10,337		$	26,310		$	29,214		$	2,570		$	9,090		$	112,705
Loans:
Individually evaluated for impairment	$	130,838		$	57,747		$	42,833		$	19,844		$	41,906		$	511		$	-		$	293,679
Collectively evaluated for impairment		1,705,639			392,475			126,505			1,108,492			367,060			125,385			-			3,825,556
Total loans	$	1,836,477		$	450,222		$	169,338		$	1,128,336		$	408,966		$	125,896		$	-		$	4,119,235

Schedule of average balances of impaired loans and income recognized on impaired loans

	2013						2012
Three Months Ended June 30,	Average Balance		Interest Revenue Recognized During Impairment		Cash Basis Interest Revenue Received		Average Balance		Interest Revenue Recognized During Impairment		Cash Basis Interest Revenue Received
Commercial (secured by real estate)	$	52,191	$	631	$	665	$	125,419	$	1,414	$	1,476
Commercial & industrial		5,804		63		70		48,984		191		700
Commercial construction		13,034		114		115		41,242		217		304
Total commercial		71,029		808		850		215,645		1,822		2,480
Residential mortgage		18,950		205		193		19,645		255		297
Residential construction		14,058		178		147		51,596		336		431
Consumer installment		246		4		4		450		8		8
Total	$	104,283	$	1,195	$	1,194	$	287,336	$	2,421	$	3,216
Six Months Ended June 30,
Commercial (secured by real estate)	$	74,233	$	1,577	$	1,665	$	112,633	$	2,665	$	2,817
Commercial & industrial		27,277		219		699		49,922		309		1,310
Commercial construction		27,983		265		347		36,109		484		761
Total commercial		129,493		2,061		2,711		198,664		3,458		4,888
Residential mortgage		20,179		446		416		25,060		480		558
Residential construction		29,374		504		575		59,866		737		949
Consumer installment		263		10		10		391		13		13
Total	$	179,309	$	3,021	$	3,712	$	283,981	$	4,688	$	6,408

Schedule of recorded investments in individually evaluated impaired loans

	June 30, 2013						December 31, 2012						June 30, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial (secured by real estate)	$	27,851	$	17,640	$	-	$	74,066	$	62,609	$	-	$	105,788	$	95,453	$	-
Commercial & industrial		3,809		3,809		-		74,572		49,572		-		81,036		56,036		-
Commercial construction		809		659		-		23,938		17,305		-		22,491		21,372		-
Total commercial		32,469		22,108		-		172,576		129,486		-		209,315		172,861		-
Residential mortgage		8,676		6,843		-		10,336		8,383		-		13,994		11,578		-
Residential construction		8,476		4,992		-		35,439		19,093		-		46,589		30,094		-
Consumer installment		203		102		-		-		-		-		185		185		-
Total with no related allowance recorded		49,824		34,045		-		218,351		156,962		-		270,083		214,718		-
With an allowance recorded:
Commercial (secured by real estate)		34,741		34,657		2,862		44,395		41,800		6,106		35,348		35,295		8,544
Commercial & industrial		2,091		1,929		129		2,170		1,929		490		1,711		1,711		753
Commercial construction		12,376		12,296		440		23,746		22,863		2,239		21,461		21,461		2,476
Total commercial		49,208		48,882		3,431		70,311		66,592		8,835		58,520		58,467		11,773
Residential mortgage		11,794		11,550		1,197		14,267		13,864		2,165		8,458		8,266		1,389
Residential construction		9,411		9,103		417		15,412		14,962		625		11,886		11,812		4,188
Consumer installment		244		235		12		441		430		19		335		326		20
Total with an allowance recorded		70,657		69,770		5,057		100,431		95,848		11,644		79,199		78,871		17,370
Total	$	120,481	$	103,815	$	5,057	$	318,782	$	252,810	$	11,644	$	349,282	$	293,589	$	17,370

Schedule of recorded investment in nonaccrual loans by loan class

	Nonaccrual Loans
	June 30, 2013		December 31, 2012		June 30, 2012
Commercial (secured by real estate)	$	7,237	$	22,148	$	19,115
Commercial & industrial		548		31,817		34,982
Commercial construction		504		23,843		18,175
Total commercial		8,289		77,808		72,272
Residential mortgage		14,338		12,589		16,631
Residential construction		4,838		18,702		25,530
Consumer installment		399		795		907
Total	$	27,864	$	109,894	$	115,340
Balance as a percentage of unpaid principal		62.6%		69.5%		68.8%

Schedule of aging of the recorded investment in past due loans

	Loans Past Due								Loans Not
As of June 30, 2013	30 - 59 Days		60 - 89 Days		> 90 Days		Total		Past Due		Total
Commercial (secured by real estate)	$	3,541	$	696	$	2,136	$	6,373	$	1,741,772	$	1,748,145
Commercial & industrial		1,123		500		145		1,768		435,220		436,988
Commercial construction		1,128		235		196		1,559		131,003		132,562
Total commercial		5,792		1,431		2,477		9,700		2,307,995		2,317,695
Residential mortgage		10,543		3,993		5,639		20,175		1,258,384		1,278,559
Residential construction		2,037		335		1,261		3,633		328,048		331,681
Consumer installment		893		183		30		1,106		260,327		261,433
Total loans	$	19,265	$	5,942	$	9,407	$	34,614	$	4,154,754	$	4,189,368
As of December 31, 2012
Commercial (secured by real estate)	$	8,106	$	3,232	$	7,476	$	18,814	$	1,794,551	$	1,813,365
Commercial & industrial		1,565		429		867		2,861		455,385		458,246
Commercial construction		2,216		-		4,490		6,706		148,063		154,769
Total commercial		11,887		3,661		12,833		28,381		2,397,999		2,426,380
Residential mortgage		12,292		2,426		4,848		19,566		1,194,637		1,214,203
Residential construction		2,233		1,934		5,159		9,326		372,351		381,677
Consumer installment		1,320		245		289		1,854		150,894		152,748
Total loans	$	27,732	$	8,266	$	23,129	$	59,127	$	4,115,881	$	4,175,008
As of June 30, 2012
Commercial (secured by real estate)	$	7,053	$	1,342	$	11,996	$	20,391	$	1,816,086	$	1,836,477
Commercial & industrial		663		1,496		389		2,548		447,674		450,222
Commercial construction		3,555		133		950		4,638		164,700		169,338
Total commercial		11,271		2,971		13,335		27,577		2,428,460		2,456,037
Residential mortgage		12,636		2,980		6,756		22,372		1,105,964		1,128,336
Residential construction		4,781		1,189		11,096		17,066		391,900		408,966
Consumer installment		971		325		398		1,694		124,202		125,896
Total loans	$	29,659	$	7,465	$	31,585	$	68,709	$	4,050,526	$	4,119,235

Schedule of additional information on troubled debt restructurings

	June 30, 2013						December 31, 2012						June 30, 2012
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial (sec by RE)		77	$	45,874	$	42,366		96	$	80,261	$	75,340		96	$	87,104	$	82,325
Commercial & industrial		34		3,091		2,929		32		7,492		7,250		29		3,972		3,972
Commercial construction		14		13,185		12,956		25		37,537		33,809		23		42,796		41,677
Total commercial		125		62,150		58,251		153		125,290		116,399		148		133,872		127,974
Residential mortgage		110		17,772		16,381		117		20,323		19,296		110		17,613		16,950
Residential construction		51		11,895		9,908		67		25,822		23,786		72		25,123		22,178
Consumer installment		42		447		337		51		1,292		1,282		47		521		511
Total loans		328	$	92,264	$	84,877		388	$	172,727	$	160,763		377	$	177,129	$	167,613

Schedule of loans modified under the terms of TDR

New Troubled Debt Restructurings for the Three Months Ended June 30, 2013	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Three Months Ended June 30, 2013
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		9	$	6,523	$	6,523	$	-	$	-
Commercial & industrial		-		-		-		-		-
Commercial construction		-		-		-		-		-
Total commercial		9		6,523		6,523		-		-
Residential mortgage		2		649		505		1		40
Residential construction		2		339		339		-		-
Consumer installment		-		-		-		-		-
Total loans		13	$	7,511	$	7,367		1	$	40

New Troubled Debt Restructurings for the Six Months Ended June 30, 2013	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Six Months Ended June 30, 2013
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		17	$	10,091	$	10,091	$	1	$	432
Commercial & industrial		9		815		709		1		35
Commercial construction		-		-		-		2		1,454
Total commercial		26		10,906		10,800		4		1,921
Residential mortgage		13		2,764		2,620		2		108
Residential construction		7		1,123		994		2		117
Consumer installment		4		21		21		3		20
Total loans		50	$	14,814	$	14,435		11	$	2,166

New Troubled Debt Restructurings for the Three Months Ended June 30, 2012	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Three Months Ended June 30, 2012
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		10	$	7,815	$	7,728	$	3	$	2,307
Commercial & industrial		7		598		598		1		5
Commercial construction		7		7,702		7,702		-		-
Total commercial		24		16,115		16,028		4		2,312
Residential mortgage		20		5,288		5,112		1		27
Residential construction		20		7,638		6,361		1		121
Consumer installment		8		210		210		1		6
Total loans		72	$	29,251	$	27,711		7	$	2,466

New Troubled Debt Restructurings for the Six Months Ended June 30, 2012	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Six Months Ended June 30, 2012
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		34	$	22,914	$	21,469	$	3	$	2,307
Commercial & industrial		17		3,322		3,322		2		48
Commercial construction		14		28,483		28,483		2		4,174
Total commercial		65		54,719		53,274		7		6,529
Residential mortgage		44		10,567		10,385		4		400
Residential construction		34		11,389		9,550		4		1,597
Consumer installment		15		270		265		1		6
Total loans		158	$	76,945	$	73,474		16	$	8,532

Schedule of risk category of loans by class of loans

					Substandard				Doubtful /
As of June 30, 2013	Pass		Watch		Performing		Nonaccrual		Loss		Not Rated		Total
Commercial (secured by real estate)	$	1,595,141	$	67,017	$	78,750	$	7,237	$	-	$	-	$	1,748,145
Commercial & industrial		418,354		5,716		11,458		548		-		912		436,988
Commercial construction		104,185		12,107		15,766		504		-		-		132,562
Total commercial		2,117,680		84,840		105,974		8,289		-		912		2,317,695
Residential mortgage		1,185,658		27,341		51,222		14,338		-		-		1,278,559
Residential construction		292,116		18,096		16,631		4,838		-		-		331,681
Consumer installment		257,563		966		2,505		399		-		-		261,433
Total loans	$	3,853,017	$	131,243	$	176,332	$	27,864	$	-	$	912	$	4,189,368
As of December 31, 2012
Commercial (secured by real estate)	$	1,592,677	$	80,997	$	117,543	$	22,148	$	-	$	-	$	1,813,365
Commercial & industrial		401,606		5,404		18,477		31,817		-		942		458,246
Commercial construction		104,296		7,345		19,285		23,843		-		-		154,769
Total commercial		2,098,579		93,746		155,305		77,808		-		942		2,426,380
Residential mortgage		1,102,746		33,689		65,179		12,589		-		-		1,214,203
Residential construction		292,264		32,907		37,804		18,702		-		-		381,677
Consumer installment		147,214		1,086		3,653		795		-		-		152,748
Total loans	$	3,640,803	$	161,428	$	261,941	$	109,894	$	-	$	942	$	4,175,008
As of June 30, 2012
Commercial (secured by real estate)	$	1,596,876	$	72,067	$	148,419	$	19,115	$	-	$	-	$	1,836,477
Commercial & industrial		393,894		4,652		15,916		34,982		-		778		450,222
Commercial construction		107,199		6,088		37,876		18,175		-		-		169,338
Total commercial		2,097,969		82,807		202,211		72,272		-		778		2,456,037
Residential mortgage		999,323		39,105		73,277		16,631		-		-		1,128,336
Residential construction		290,804		47,182		45,450		25,530		-		-		408,966
Consumer installment		121,166		1,117		2,706		907		-		-		125,896
Total loans	$	3,509,262	$	170,211	$	323,644	$	115,340	$	-	$	778	$	4,119,235

XML

Securities (Tables)

6 Months Ended

Jun. 30, 2013

Investment Securities [Abstract]

Schedule of securities sales activity with realized gains and losses derived using specific identification method

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Proceeds from sales	$	-	$	265,992	$	15,751	$	371,103
Gross gains on sales	$	-	$	6,490	$	116	$	7,047
Gross losses on sales		-		-		-		-
Net gains on sales of securities	$	-	$	6,490	$	116	$	7,047
Income tax expense attributable to sales	$	-	$	2,425	$	45	$	2,631

Schedule of amortized cost, gross unrealized gains and losses and fair value of securities held to maturity

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of June 30, 2013	Cost		Gains		Losses		Value
State and political subdivisions	$	51,757	$	4,332	$	4	$	56,085
Mortgage-backed securities (1)		163,190		7,658		238		170,610
Total	$	214,947	$	11,990	$	242	$	226,695
As of December 31, 2012
State and political subdivisions	$	51,780	$	5,486	$	-	$	57,266
Mortgage-backed securities (1)		192,404		11,461		-		203,865
Total	$	244,184	$	16,947	$	-	$	261,131
As of June 30, 2012
State and political subdivisions	$	51,801	$	5,586	$	-	$	57,387
Mortgage-backed securities (1)		230,949		11,635		-		242,584
Total	$	282,750	$	17,221	$	-	$	299,971
(1)     All are residential type mortgage-backed securities

Schedule of cost basis, unrealized gains and losses, and fair value of securities available for sale

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of June 30, 2013	Cost		Gains		Losses		Value
State and political subdivisions	$	22,369	$	1,112	$	41	$	23,440
Mortgage-backed securities (1)		1,410,189		15,935		13,538		1,412,586
Corporate bonds		260,464		1,585		8,181		253,868
Asset-backed securities		242,690		2,645		491		244,844
Other		2,526		-		-		2,526
Total	$	1,938,238	$	21,277	$	22,251	$	1,937,264
As of December 31, 2012
State and political subdivisions	$	27,717	$	1,354	$	19	$	29,052
Mortgage-backed securities (1)		1,408,042		22,552		2,092		1,428,502
Corporate bonds		169,783		1,052		7,173		163,662
Asset-backed securities		209,411		1,894		749		210,556
Other		2,821		-		-		2,821
Total	$	1,817,774	$	26,852	$	10,033	$	1,834,593
As of June 30, 2012
U.S. Government agencies	$	43,618	$	256	$	-	$	43,874
State and political subdivisions		25,704		1,462		7		27,159
Mortgage-backed securities (1)		1,408,047		25,723		339		1,433,431
Corporate bonds		119,198		-		9,160		110,038
Asset-backed securities		85,090		-		592		84,498
Other		2,583		-		-		2,583
Total	$	1,684,240	$	27,441	$	10,098	$	1,701,583
(1)   All are residential type mortgage-backed securities

Schedule of held to maturity securities in an unrealized loss position

	Less than 12 Months				12 Months or More				Total
As of June 30, 2013	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
State and political subdivisions	$	374	$	4	$	-	$	-	$	374	$	4
Mortgage-backed securities	$	4,715	$	238	$	-	$	-		4,715		238
Total unrealized loss position	$	5,089	$	242	$	-	$	-	$	5,089	$	242

Schedule of available for sale securities in an unrealized loss position

	Less than 12 Months				12 Months or More				Total
As of June 30, 2013	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
State and political subdivisions	$	3,645	$	39	$	10	$	2	$	3,655	$	41
Mortgage-backed securities		636,449		13,538		-		-		636,449		13,538
Corporate bonds		97,501		4,635		77,404		3,546		174,905		8,181
Asset-backed securities		56,817		208		32,495		283		89,312		491
Total unrealized loss position	$	794,412	$	18,420	$	109,909	$	3,831	$	904,321	$	22,251
As of December 31, 2012
State and political subdivisions	$	3,674	$	17	$	10	$	2	$	3,684	$	19
Mortgage-backed securities		326,485		2,092		-		-		326,485		2,092
Corporate bonds		21,248		136		93,903		7,037		115,151		7,173
Asset-backed securities		82,188		749		-		-		82,188		749
Total unrealized loss position	$	433,595	$	2,994	$	93,913	$	7,039	$	527,508	$	10,033
As of June 30, 2012
State and political subdivisions	$	5,696	$	3	$	11	$	4	$	5,707	$	7
Mortgage-backed securities		104,644		332		19,436		7		124,080		339
Corporate bonds		16,500		3,500		93,488		5,660		109,988		9,160
Asset-backed securities		74,097		592		-		-		74,097		592
Total unrealized loss position	$	200,937	$	4,427	$	112,935	$	5,671	$	313,872	$	10,098

Schedule of amortized cost and fair value of held to maturity and available for sale securities by contractual maturity

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
State and political subdivisions:
Within 1 year	$	1,830	$	1,868	$	-	$	-
1 to 5 years		14,572		15,460		10,860		11,724
5 to 10 years		5,119		5,207		25,594		27,728
More than 10 years		848		905		15,303		16,633
		22,369		23,440		51,757		56,085
Corporate bonds:
1 to 5 years		38,183		38,451		-		-
5 to 10 years		211,517		205,234		-		-
More than 10 years		10,764		10,183		-		-
		260,464		253,868		-		-
Asset-backed securities:
1 to 5 years		40,537		40,644		-		-
5 to 10 years		153,281		155,038		-		-
More than 10 years		48,872		49,162		-		-
		242,690		244,844		-		-
Other:
More than 10 years		2,526		2,526		-		-
		2,526		2,526		-		-
Total securities other than mortgage-backed securities:
Within 1 year		1,830		1,868		-		-
1 to 5 years		93,292		94,555		10,860		11,724
5 to 10 years		369,917		365,479		25,594		27,728
More than 10 years		63,010		62,776		15,303		16,633
Mortgage-backed securities		1,410,189		1,412,586		163,190		170,610
	$	1,938,238	$	1,937,264	$	214,947	$	226,695

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Loans and Allowance for Loan Losses - Balance and activity in allowance for loan losses by portfolio segment and recorded investment in loans by portfolio segment (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Allowance for loan losses:
Balance beginning of period			$ 107,137
Charge-offs			53,456
Balance end of period	81,845	112,705	81,845	112,705
Ending allowance attributable to loans:
Total ending allowance balance	81,845	112,705	81,845	112,705
Loans:
Total loans	4,189,368	4,119,235	4,189,368	4,119,235	4,175,008
Loans Receivable
Allowance for loan losses:
Balance beginning of period	105,753	113,601	107,137	114,468
Charge-offs	(74,790)	(19,662)	(88,157)	(36,859)
Recoveries	2,382	766	3,365	2,096
Provision	48,500	18,000	59,500	33,000
Balance end of period	81,845	112,705	81,845	112,705
Ending allowance attributable to loans:
Individually evaluated for impairment	5,057	17,370	5,057	17,370	11,644
Collectively evaluated for impairment	76,788	95,335	76,788	95,335	95,493
Total ending allowance balance	81,845	112,705	81,845	112,705
Loans:
Individually evaluated for impairment	103,815	293,679	103,815	293,679	252,810
Collectively evaluated for impairment	4,085,553	3,825,556	4,085,553	3,825,556	3,922,198
Total loans	4,189,368	4,119,235	4,189,368	4,119,235	4,175,008
Loans Receivable | Commercial (secured by real estate)
Allowance for loan losses:
Balance beginning of period			27,847	31,644
Charge-offs	(26,740)	(4,418)	(32,194)	(8,346)
Recoveries	1,274	69	1,485	300
Provision			25,670	6,288
Balance end of period	22,808	29,886	22,808	29,886
Ending allowance attributable to loans:
Individually evaluated for impairment	2,862	8,544	2,862	8,544	6,106
Collectively evaluated for impairment	19,946	21,342	19,946	21,342	21,741
Total ending allowance balance	22,808	29,886	22,808	29,886
Loans:
Individually evaluated for impairment	52,297	130,838	52,297	130,838	104,409
Collectively evaluated for impairment	1,695,848	1,705,639	1,695,848	1,705,639	1,708,956
Total loans	1,748,145	1,836,477	1,748,145	1,836,477	1,813,365
Loans Receivable | Commercial & industrial
Allowance for loan losses:
Balance beginning of period			5,537	5,681
Charge-offs	(15,932)	(888)	(17,755)	(1,644)
Recoveries	356	113	678	200
Provision			19,594	1,061
Balance end of period	8,054	5,298	8,054	5,298
Ending allowance attributable to loans:
Individually evaluated for impairment	129	753	129	753	490
Collectively evaluated for impairment	7,925	4,545	7,925	4,545	5,047
Total ending allowance balance	8,054	5,298	8,054	5,298
Loans:
Individually evaluated for impairment	5,738	57,747	5,738	57,747	51,501
Collectively evaluated for impairment	431,250	392,475	431,250	392,475	406,745
Total loans	436,988	450,222	436,988	450,222	458,246
Loans Receivable | Commercial construction
Allowance for loan losses:
Balance beginning of period			8,389	6,097
Charge-offs	(6,305)	(88)	(6,350)	(452)
Recoveries	10		59	30
Provision			2,177	4,662
Balance end of period	4,275	10,337	4,275	10,337
Ending allowance attributable to loans:
Individually evaluated for impairment	440	2,476	440	2,476	2,239
Collectively evaluated for impairment	3,835	7,861	3,835	7,861	6,150
Total ending allowance balance	4,275	10,337	4,275	10,337
Loans:
Individually evaluated for impairment	12,955	42,833	12,955	42,833	40,168
Collectively evaluated for impairment	119,607	126,505	119,607	126,505	114,601
Total loans	132,562	169,338	132,562	169,338	154,769
Loans Receivable | Residential mortgage
Allowance for loan losses:
Balance beginning of period			26,642	29,076
Charge-offs	(6,718)	(4,014)	(9,074)	(9,781)
Recoveries	209	152	418	544
Provision			2,041	6,471
Balance end of period	20,027	26,310	20,027	26,310
Ending allowance attributable to loans:
Individually evaluated for impairment	1,197	1,389	1,197	1,389	2,165
Collectively evaluated for impairment	18,830	24,921	18,830	24,921	24,477
Total ending allowance balance	20,027	26,310	20,027	26,310
Loans:
Individually evaluated for impairment	18,393	19,844	18,393	19,844	22,247
Collectively evaluated for impairment	1,260,166	1,108,492	1,260,166	1,108,492	1,191,956
Total loans	1,278,559	1,128,336	1,278,559	1,128,336	1,214,203
Loans Receivable | Residential construction
Allowance for loan losses:
Balance beginning of period			26,662	30,379
Charge-offs	(18,530)	(9,846)	(21,512)	(15,475)
Recoveries	24	283	33	598
Provision			12,139	13,712
Balance end of period	17,322	29,214	17,322	29,214
Ending allowance attributable to loans:
Individually evaluated for impairment	417	4,188	417	4,188	625
Collectively evaluated for impairment	16,905	25,026	16,905	25,026	26,037
Total ending allowance balance	17,322	29,214	17,322	29,214
Loans:
Individually evaluated for impairment	14,095	41,906	14,095	41,906	34,055
Collectively evaluated for impairment	317,586	367,060	317,586	367,060	347,622
Total loans	331,681	408,966	331,681	408,966	381,677
Loans Receivable | Consumer installment
Allowance for loan losses:
Balance beginning of period			2,747	2,124
Charge-offs	(565)	(408)	(1,272)	(1,161)
Recoveries	509	149	692	424
Provision			223	1,183
Balance end of period	2,390	2,570	2,390	2,570
Ending allowance attributable to loans:
Individually evaluated for impairment	12	20	12	20	19
Collectively evaluated for impairment	2,378	2,550	2,378	2,550	2,728
Total ending allowance balance	2,390	2,570	2,390	2,570
Loans:
Individually evaluated for impairment	337	511	337	511	430
Collectively evaluated for impairment	261,096	125,385	261,096	125,385	152,318
Total loans	261,433	125,896	261,433	125,896	152,748
Loans Receivable | Unallocated
Allowance for loan losses:
Balance beginning of period			9,313	9,467
Charge-offs
Recoveries
Provision			(2,344)	(377)
Balance end of period	6,969	9,090	6,969	9,090
Ending allowance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment	6,969	9,090	6,969	9,090	9,313
Total ending allowance balance	6,969	9,090	6,969	9,090
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Total loans

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of contractual amount of off-balance sheet instruments

	June 30, 2013		December 31, 2012		June 30, 2012
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	600,841	$	313,798	$	438,615
Letters of credit		15,631		13,683		16,210

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Securities - Summary of available for sale securities in unrealized loss position (Details 4) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Summary of available for sale securities in an unrealized loss position
Fair Value, Less than 12 Months	$ 794,412	$ 200,937	$ 433,595
Unrealized Loss, Less than 12 Months	18,420	4,427	2,994
Fair Value, 12 Months or More	109,909	112,935	93,913
Unrealized Loss, 12 Months or More	3,831	5,671	7,039
Fair Value, Total	904,321	313,872	527,508
Unrealized Loss, Total	22,251	10,098	10,033
State and political subdivisions
Summary of available for sale securities in an unrealized loss position
Fair Value, Less than 12 Months	3,645	5,696	3,674
Unrealized Loss, Less than 12 Months	39	3	17
Fair Value, 12 Months or More	10	11	10
Unrealized Loss, 12 Months or More	2	4	2
Fair Value, Total	3,655	5,707	3,684
Unrealized Loss, Total	41	7	19
Mortgage-backed securities
Summary of available for sale securities in an unrealized loss position
Fair Value, Less than 12 Months	636,449	104,644	326,485
Unrealized Loss, Less than 12 Months	13,538	332	2,092
Fair Value, 12 Months or More		19,436
Unrealized Loss, 12 Months or More		7
Fair Value, Total	636,449	124,080	326,485
Unrealized Loss, Total	13,538	339	2,092
Corporate bonds
Summary of available for sale securities in an unrealized loss position
Fair Value, Less than 12 Months	97,501	16,500	21,248
Unrealized Loss, Less than 12 Months	4,635	3,500	136
Fair Value, 12 Months or More	77,404	93,488	93,903
Unrealized Loss, 12 Months or More	3,546	5,660	7,037
Fair Value, Total	174,905	109,988	115,151
Unrealized Loss, Total	8,181	9,160	7,173
Asset-backed securities
Summary of available for sale securities in an unrealized loss position
Fair Value, Less than 12 Months	56,817	74,097	82,188
Unrealized Loss, Less than 12 Months	208	592	749
Fair Value, 12 Months or More	32,495
Unrealized Loss, 12 Months or More	283
Fair Value, Total	89,312	74,097	82,188
Unrealized Loss, Total	$ 491	$ 592	$ 749

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Loans and Allowance for Loan Losses - Recorded investment in nonaccrual loans by loan class (Details 6) (Loans Receivable, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	$ 27,864	$ 109,894	$ 115,340
Balance as a percentage of unpaid principal	62.60%	69.50%	68.80%
Commercial (secured by real estate)
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	7,237	22,148	19,115
Commercial & industrial
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	548	31,817	34,982
Commercial construction
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	504	23,843	18,175
Commercial
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	8,289	77,808	72,272
Residential mortgage
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	14,338	12,589	16,631
Residential construction
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	4,838	18,702	25,530
Consumer installment
Recorded investment in nonaccrual loans by loan class
Nonaccrual Loans	$ 399	$ 795	$ 907

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Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2013

Derivatives and Hedging Activities [Abstract]

Schedule of derivative financial instruments on consolidated balance sheet

Derivatives accounted for as hedges under ASC 815

		Fair Value
Interest Rate	Balance Sheet	June 30,		December 31,		June 30,
Products	Location	2013		2012		2012
Asset derivatives	Other assets	$	8,017	$	23	$	68
Liability derivatives	Other liabilities	$	28,325	$	11,900	$	5,987

Derivatives not accounted for as hedges under ASC 815

		Fair Value
Interest Rate	Balance Sheet	June 30,		December 31,		June 30,
Products	Location	2013		2012		2012
Asset derivatives	Other assets	$	1,000	$	635	$	155
Liability derivatives	Other liabilities	$	1,005	$	643	$	155

Schedule of effect of fair value hedging derivative financial instruments on the consolidated statement of operations

Location of Gain (Loss)	Amount of Gain (Loss) Recognized in					Amount of Gain (Loss) Recognized in
Recognized in Income	Income on Derivative					Income on Hedged Item
on Derivative	2013			2012		2013		2012
Three Months Ended June 30,
Other fee revenue	$	(10,980	)	$	2,087	$	11,269	$	(2,310	)
Six Months Ended June 30,
Other fee revenue	$	(13,056	)	$	823	$	13,259	$	(1,012	)

Schedule of effect of cash flow hedging derivative financial instruments on other comprehensive income

	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)					Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)
	2013		2012			Location	2013		2012
Three Months Ended June 30,
						Interest revenue	$	303	$	671
						Other income		3		43
Interest rate products	$	11,672	$	(4,855	)	Total	$	306	$	714
Six Months Ended June 30,
						Interest revenue	$	840	$	2,190
						Other income		4		124
Interest rate products	$	12,102	$	(4,855	)	Total	$	844	$	2,314

Schedule of other derivatives not accounted for as hedges

Location of Gain (Loss)	Amount of Gain (Loss) Recognized in
Recognized in Income	Income on Customer Derivatives
on Derivative	2013		2012
Three Months Ended June 30,
Other fee revenue	$	488	$	(1	)
Six Months Ended June 30,
Other fee revenue	$	740	$	68

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Derivatives and Hedging Activities - Derivatives in Cash Flow Hedging Relationships (Details 2) (Cash flow hedging, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Effect of cash flow hedging derivative financial instruments on other comprehensive income
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	$ 306	$ 714	$ 844	$ 2,314
Interest revenue
Effect of cash flow hedging derivative financial instruments on other comprehensive income
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Interest revenue	Interest revenue	Interest revenue	Interest revenue
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	303	671	840	2,190
Other income
Effect of cash flow hedging derivative financial instruments on other comprehensive income
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Other income	Other income	Other income	Other income
Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	3	43	4	124
Interest rate products
Effect of cash flow hedging derivative financial instruments on other comprehensive income
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative (Effective Portion)	$ 11,672	$ (4,855)	$ 12,102	$ (4,855)

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Assets and Liabilities Measured at Fair Value - Assets and liabilities measured at fair value on recurring basis (Details) (Recurring, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Level 1
Assets:
Assets, fair value	$ 3,074	$ 3,101	$ 2,895
Liabilities:
Liabilities, fair value	3,074	3,101	2,895
Level 1 | Deferred compensation plan liability
Liabilities:
Liabilities, fair value	3,074	3,101	2,895
Level 1 | Brokered certificates of deposit
Liabilities:
Liabilities, fair value
Level 1 | Derivative financial instruments
Assets:
Assets, fair value
Liabilities:
Liabilities, fair value
Level 1 | U.S. Government agencies
Assets:
Assets, fair value
Level 1 | State and political subdivisions
Assets:
Assets, fair value
Level 1 | Mortgage-backed securities
Assets:
Assets, fair value
Level 1 | Corporate bonds
Assets:
Assets, fair value
Level 1 | Asset-backed securities
Assets:
Assets, fair value
Level 1 | Other
Assets:
Assets, fair value
Level 1 | Deferred compensation plan assets
Assets:
Assets, fair value	3,074	3,101	2,895
Level 2
Assets:
Assets, fair value	1,945,931	1,834,901	1,701,456
Liabilities:
Liabilities, fair value	290,618	167,184	109,021
Level 2 | Deferred compensation plan liability
Assets:
Assets, fair value
Liabilities:
Liabilities, fair value
Level 2 | Brokered certificates of deposit
Liabilities:
Liabilities, fair value	261,288	154,641	102,879
Level 2 | Derivative financial instruments
Assets:
Assets, fair value	9,017	658	223
Liabilities:
Liabilities, fair value	29,330	12,543	6,142
Level 2 | U.S. Government agencies
Assets:
Assets, fair value			43,874
Level 2 | State and political subdivisions
Assets:
Assets, fair value	23,440	29,052	27,159
Level 2 | Mortgage-backed securities
Assets:
Assets, fair value	1,412,586	1,428,502	1,433,431
Level 2 | Corporate bonds
Assets:
Assets, fair value	253,518	163,312	109,688
Level 2 | Asset-backed securities
Assets:
Assets, fair value	244,844	210,556	84,498
Level 2 | Other
Assets:
Assets, fair value	2,526	2,821	2,583
Level 2 | Deferred compensation plan assets
Assets:
Assets, fair value
Level 3
Assets:
Assets, fair value	350	350	350
Liabilities:
Liabilities, fair value
Level 3 | Deferred compensation plan liability
Assets:
Assets, fair value
Liabilities:
Liabilities, fair value
Level 3 | Brokered certificates of deposit
Liabilities:
Liabilities, fair value
Level 3 | Derivative financial instruments
Assets:
Assets, fair value
Liabilities:
Liabilities, fair value
Level 3 | U.S. Government agencies
Assets:
Assets, fair value
Level 3 | State and political subdivisions
Assets:
Assets, fair value
Level 3 | Mortgage-backed securities
Assets:
Assets, fair value
Level 3 | Corporate bonds
Assets:
Assets, fair value	350	350	350
Level 3 | Asset-backed securities
Assets:
Assets, fair value
Level 3 | Other
Assets:
Assets, fair value
Level 3 | Deferred compensation plan assets
Assets:
Assets, fair value
Total
Assets:
Assets, fair value	1,949,355	1,838,352	1,704,701
Liabilities:
Liabilities, fair value	293,692	170,285	111,916
Total | Deferred compensation plan liability
Liabilities:
Liabilities, fair value	3,074	3,101	2,895
Total | Brokered certificates of deposit
Liabilities:
Liabilities, fair value	261,288	154,641	102,879
Total | Derivative financial instruments
Assets:
Assets, fair value	9,017	658	223
Liabilities:
Liabilities, fair value	29,330	12,543	6,142
Total | U.S. Government agencies
Assets:
Assets, fair value			43,874
Total | State and political subdivisions
Assets:
Assets, fair value	23,440	29,052	27,159
Total | Mortgage-backed securities
Assets:
Assets, fair value	1,412,586	1,428,502	1,433,431
Total | Corporate bonds
Assets:
Assets, fair value	253,868	163,662	110,038
Total | Asset-backed securities
Assets:
Assets, fair value	244,844	210,556	84,498
Total | Other
Assets:
Assets, fair value	2,526	2,821	2,583
Total | Deferred compensation plan assets
Assets:
Assets, fair value	$ 3,074	$ 3,101	$ 2,895

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Derivatives and Hedging Activities - Derivatives in Fair Value Hedging Relationships (Details 1) (Fair value hedging of interest rate risk, Other fee revenue, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair value hedging of interest rate risk | Other fee revenue
Effect of fair value hedging derivative financial instruments on the consolidated statement of operations
Location of Gain (Loss) Recognized in Income on Derivative	Other fee revenue	Other fee revenue	Other fee revenue	Other fee revenue
Amount of Gain (Loss) Recognized in Income on Derivative	$ (10,980)	$ 2,087	$ (13,056)	$ 823
Amount of Gain (Loss) Recognized in Income on Hedged Item	$ 11,269	$ (2,310)	$ 13,259	$ (1,012)

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Loans and Allowance for Loan Losses - Major classifications of loans (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Classifications of loans
Total loans	$ 4,189,368		$ 4,175,008	$ 4,119,235
Less allowance for loan losses	(81,845)		(107,137)	(112,705)
Loans, net	4,107,523		4,067,871	4,006,530
Loans Receivable
Classifications of loans
Total loans	4,189,368		4,175,008	4,119,235
Less allowance for loan losses	(81,845)	(105,753)	(107,137)	(112,705)	(113,601)	(114,468)
Loans, net	4,107,523		4,067,871	4,006,530
Loans Receivable | Commercial (secured by real estate)
Classifications of loans
Total loans	1,748,145		1,813,365	1,836,477
Less allowance for loan losses	(22,808)		(27,847)	(29,886)		(31,644)
Loans Receivable | Commercial & industrial
Classifications of loans
Total loans	436,988		458,246	450,222
Less allowance for loan losses	(8,054)		(5,537)	(5,298)		(5,681)
Loans Receivable | Commercial construction
Classifications of loans
Total loans	132,562		154,769	169,338
Less allowance for loan losses	(4,275)		(8,389)	(10,337)		(6,097)
Loans Receivable | Commercial
Classifications of loans
Total loans	2,317,695		2,426,380	2,456,037
Loans Receivable | Residential mortgage
Classifications of loans
Total loans	1,278,559		1,214,203	1,128,336
Less allowance for loan losses	(20,027)		(26,642)	(26,310)		(29,076)
Loans Receivable | Residential construction
Classifications of loans
Total loans	331,681		381,677	408,966
Less allowance for loan losses	(17,322)		(26,662)	(29,214)		(30,379)
Loans Receivable | Consumer installment
Classifications of loans
Total loans	261,433		152,748	125,896
Less allowance for loan losses	$ (2,390)		$ (2,747)	$ (2,570)		$ (2,124)

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Stock-Based Compensation (Details textual) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional award granted under plan	1,214,000
Vesting period	4 years
Exercisable period	10 years
Unrecognized compensation cost	$ 2,730,000
Recognition period for unrecognized compensation cost related	1 year 8 months 19 days
Aggregate grant date fair value	2,370,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reduction of compensation expenses due to reversal of recognized expense on grants	60,000
Compensation expense		131,000
Estimated forfeiture rate of award	3.00%
Restricted Stock and Restricted Stock Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,230,000	815,000
Total intrinsic value	$ 4,890,000
Other operating expense for restricted stock units granted	$ 93,000

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Offsetting Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

Offsetting [Abstract]

Schedule of assets outstanding under master netting agreements

	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet					Gross Amounts not Offset in the Balance Sheet
June 30, 2013							Net Asset Balance		Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	400,000		$	(350,000	)	$	50,000	$	-	$	-	$	50,000
Derivatives		9,017			-			9,017		-		-		9,017
Total	$	409,017		$	(350,000	)	$	59,017	$	-	$	-	$	59,017
Weighted average interest rate of reverse repurchase agreements		1.09	%
	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		Gross Amounts not Offset in the Balance Sheet
December 31, 2012									Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	325,000		$	(265,000	)	$	60,000	$	-	$	-	$	60,000
Securities lending transactions		50,000			(50,000	)		-		-		-		-
Derivatives		658			-			658		-		-		658
Total	$	375,658		$	(315,000	)	$	60,658	$	-	$	-	$	60,658
Weighted average interest rate of reverse repurchase agreements		1.18	%
	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		Gross Amounts not Offset in the Balance Sheet
June 30, 2012									Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	320,000		$	(200,000	)	$	120,000	$	-	$	-	$	120,000
Derivatives		223			-			223		-		-		223
Total	$	320,223		$	(200,000	)	$	120,223	$	-	$	-	$	120,223
Weighted average interest rate of reverse repurchase agreements		1.27	%

Schedule of liabilities outstanding under master netting agreements

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	350,000		$	(350,000	)	$	-	$	-	$	-	$	-
Derivatives		29,330			-			29,330		-		18,198		11,132
Total	$	379,330		$	(350,000	)	$	29,330	$	-	$	18,198	$	11,132
Weighted average interest rate of repurchase agreements		.25	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	265,000		$	(265,000	)	$	-	$	-	$	-	$	-
Securities lending transactions		50,000			(50,000	)		-		-		-		-
Derivatives		12,543			-			12,543		-		11,493		1,050
Total	$	327,543		$	(315,000	)	$	12,543	$	-	$	11,493	$	1,050
Weighted average interest rate of repurchase agreements		.43	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	200,000		$	(200,000	)	$	-	$	-	$	-	$	-
Derivatives		6,142			-			6,142		-		5,405		737
Total	$	206,142		$	(200,000	)	$	6,142	$	-	$	5,405	$	737
Weighted average interest rate of repurchase agreements		.41	%

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Consolidated Balance Sheet (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Held to maturity, fair value	$ 226,695	$ 261,131	$ 299,971
Preferred stock, par value	$ 1	$ 1	$ 1
Preferred stock, shares authorized	10,000,000	10,000,000	10,000,000
Common stock, par value	$ 1	$ 1	$ 1
Common stock, shares authorized	100,000,000	100,000,000	100,000,000
Common stock, shares issued	43,356,492	42,423,870	41,726,509
Common stock, shares outstanding	43,356,492	42,423,870	41,726,509
Common stock issuable, shares	271,215	133,238	94,657
Series A Preferred Stock
Preferred stock, par value	$ 10	$ 10	$ 10
Preferred stock, shares issued	21,700	21,700	21,700
Preferred stock, shares outstanding	21,700	21,700	21,700
Series B Preferred Stock
Preferred stock, par value	$ 1,000	$ 1,000	$ 1,000
Preferred stock, shares issued	180,000	180,000	180,000
Preferred stock, shares outstanding	180,000	180,000	180,000
Series D Preferred Stock
Preferred stock, par value	$ 1,000	$ 1,000	$ 1,000
Preferred stock, shares issued	16,613	16,613	16,613
Preferred stock, shares outstanding	16,613	16,613	16,613
Non-Voting Common Stock
Common stock, par value	$ 1	$ 1	$ 1
Common stock, shares authorized	30,000,000	30,000,000	30,000,000
Common stock, shares issued	14,474,810	15,316,794	15,914,209
Common stock, shares outstanding	14,474,810	15,316,794	15,914,209

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Consolidated Statement of Changes in Shareholders' Equity (Unaudited) (Parentheticals)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statement Of Changes In Shareholders' Equity [Abstract]
Common stock issued to dividend reinvestment plan and employee benefit plans	35,667	60,982
Conversion of non-voting common stock to voting shares	841,984
Vesting of restricted stock, shares issued	50,450	15,790
Vesting of restricted stock, shares deferred	133,914	8,399
Shares issued from deferred compensation plan	4,521	2,637

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Accounting Standards Updates and Recently Adopted Standards

6 Months Ended

Jun. 30, 2013

Accounting Standards Updates [Abstract]

Accounting Standards Updates and Recently Adopted Standards

Note 2 –Accounting Standards Updates and Recently Adopted Standards

In January 2013, the FASB issued Accounting Standards Update No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.  This ASU limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting agreement.  The disclosure requirements were effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods.  This guidance did not have a material impact on United’s financial position or results of operations, and resulted in additional disclosures.

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.  The amendments in this update require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component and by the respective line items of net income. The standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2012.  This guidance did not have a material impact on United’s financial position or results of operations, and resulted in additional disclosures.

In July 2013, the FASB issued Accounting Standards Update No. 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.  The amendments in this update permit the Fed Funds Effective Swap Rate (OIS) to be used as a benchmark interest rate for hedge accounting in addition to UST and LIBOR. The amendments also remove the restriction on using different benchmark rates for similar hedges. The standard is effective prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013.  This guidance did not have a material impact on United’s financial position, results of operations or disclosures.

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward exists. This ASU provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Since United has both unrecognized tax benefits and net operating loss and tax credit carryforwards, this ASU could have an impact on United's financial position, results of operations or disclosures. United is currently in the process of quantifying this impact.

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Assets and Liabilities Measured at Fair Value - Assets and liabilities measured at fair value (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Assets measured at fair value on recurring basis using significant unobservable inputs
Balance at beginning of period	$ 350	$ 350	$ 350	$ 350
Amounts included in earnings
Paydowns
Balance at end of period	$ 350	$ 350	$ 350	$ 350

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Consolidated Statement of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating activities:
Net income	$ 241,729	$ 18,027
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	14,574	16,511
Provision for loan losses	59,500	33,000
Stock based compensation	1,359	946
Deferred income tax benefit	(258,987)
Securities gains, net	(116)	(7,047)
Losses and write downs on sales of other real estate owned	5,460	2,943
Loss on prepayment of borrowings		6,681
Changes in assets and liabilities:
Other assets and accrued interest receivable	12,872	22,783
Accrued expenses and other liabilities	19,487	(6,754)
Mortgage loans held for sale	9,671	5,236
Net cash provided by operating activities	105,549	92,326
Investment securities held-to-maturity:
Proceeds from maturities and calls	33,141	45,741
Purchases	(4,993)
Investment securities available-for-sale:
Proceeds from sales	15,751	371,103
Proceeds from maturities and calls	260,967	289,985
Purchases	(397,907)	(580,652)
Net increase in loans	(203,903)	(58,765)
Proceeds from note sales	91,913
Collections from FDIC under loss sharing agreements	3,714	5,054
Proceeds from sales of premises and equipment	1,547	664
Purchases of premises and equipment	(4,488)	(2,581)
Proceeds from sale of other real estate	21,815	14,620
Net cash (used in) provided by investing activities	(182,443)	85,169
Financing activities:
Net change in deposits	59,689	(275,516)
Net change in short-term borrowings	1,589	(53,401)
Proceeds from Federal Home Loan Bank advances	485,000	1,489,000
Settlement of Federal Home Loan Bank advances	(455,000)	(1,406,701)
Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans	383	501
Cash dividends on preferred stock	(5,336)	(5,341)
Net cash provided by (used in) financing activities	86,325	(251,458)
Net change in cash and cash equivalents	9,431	(73,963)
Cash and cash equivalents at beginning of period	251,149	378,416
Cash and cash equivalents at end of period	260,580	304,453
Cash paid (received) during the period for:
Interest	16,768	23,222
Income taxes	2,355	(27,105)
Unsettled securities purchases	1,582
Transfers of loans to foreclosed property	$ 9,433	$ 9,319

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Securities - Amortized cost and fair value of held to maturity and available for sale securities (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012		Jun. 30, 2012
Available for Sale - Amortized Cost and Fair Value
Available for Sale, Amortized Cost	$ 1,938,238		$ 1,817,774		$ 1,684,240
Securities available-for-sale	1,937,264		1,834,593		1,701,583
Held to Maturity - Amortized Cost and Fair Value
Held to Maturity, Amortized Cost	214,947		244,184		282,750
Held-To-Maturity, Fair value	226,695		261,131		299,971
State and political subdivisions
Available for Sale - Amortized Cost and Fair Value
Available for Sale, Amortized Cost, Within 1 year	1,830
Available for Sale, Fair Value, Within 1 year	1,868
Available for Sale, Amortized Cost, 1 to 5 years	14,572
Available for Sale, Fair Value, 1 to 5 years	15,460
Available for Sale, Amortized Cost, 5 to 10 years	5,119
Available for Sale, Fair Value, 5 to 10 years	5,207
Available for Sale, Amortized Cost, More than 10 years	848
Available for Sale, Fair Value, More than 10 years	905
Available for Sale, Amortized Cost	22,369
Securities available-for-sale	23,440
Held to Maturity - Amortized Cost and Fair Value
Held to Maturity, Amortized Cost, Within 1 year
Held to Maturity, Fair Value, Within 1 year
Held to Maturity, Amortized Cost, 1 to 5 years	10,860
Held to Maturity, Fair Value, 1 to 5 years	11,724
Held to Maturity, Amortized Cost, 5 to 10 years	25,594
Held to Maturity, Fair Value, 5 to 10 years	27,728
Held to Maturity, Amortized Cost, More than 10 years	15,303
Held to Maturity, Fair Value, More than 10 years	16,633
Held to Maturity, Amortized Cost	51,757		51,780		51,801
Held-To-Maturity, Fair value	56,085		57,266		57,387
Corporate bonds
Available for Sale - Amortized Cost and Fair Value
Available for Sale, Amortized Cost, 1 to 5 years	38,183
Available for Sale, Fair Value, 1 to 5 years	38,451
Available for Sale, Amortized Cost, 5 to 10 years	211,517
Available for Sale, Fair Value, 5 to 10 years	205,234
Available for Sale, Amortized Cost, More than 10 years	10,764
Available for Sale, Fair Value, More than 10 years	10,183
Available for Sale, Amortized Cost	260,464
Securities available-for-sale	253,868
Held to Maturity - Amortized Cost and Fair Value
Held to Maturity, Amortized Cost, 1 to 5 years
Held to Maturity, Fair Value, 1 to 5 years
Held to Maturity, Amortized Cost, 5 to 10 years
Held to Maturity, Fair Value, 5 to 10 years
Held to Maturity, Amortized Cost, More than 10 years
Held to Maturity, Fair Value, More than 10 years
Held to Maturity, Amortized Cost
Held-To-Maturity, Fair value
Asset-backed securities
Available for Sale - Amortized Cost and Fair Value
Available for Sale, Amortized Cost, 1 to 5 years	40,537
Available for Sale, Fair Value, 1 to 5 years	40,644
Available for Sale, Amortized Cost, 5 to 10 years	153,281
Available for Sale, Fair Value, 5 to 10 years	155,038
Available for Sale, Amortized Cost, More than 10 years	48,872
Available for Sale, Fair Value, More than 10 years	49,162
Available for Sale, Amortized Cost	242,690
Securities available-for-sale	244,844
Held to Maturity - Amortized Cost and Fair Value
Held to Maturity, Amortized Cost, 1 to 5 years
Held to Maturity, Fair Value, 1 to 5 years
Held to Maturity, Amortized Cost, 5 to 10 years
Held to Maturity, Fair Value, 5 to 10 years
Held to Maturity, Amortized Cost, More than 10 years
Held to Maturity, Fair Value, More than 10 years
Held to Maturity, Amortized Cost
Held-To-Maturity, Fair value
Other
Available for Sale - Amortized Cost and Fair Value
Available for Sale, Amortized Cost, More than 10 years	2,526
Available for Sale, Fair Value, More than 10 years	2,526
Available for Sale, Amortized Cost	2,526
Securities available-for-sale	2,526
Held to Maturity - Amortized Cost and Fair Value
Held to Maturity, Amortized Cost, More than 10 years
Held to Maturity, Fair Value, More than 10 years
Held to Maturity, Amortized Cost
Held-To-Maturity, Fair value
Total securities other than mortgage-backed securities
Available for Sale - Amortized Cost and Fair Value
Available for Sale, Amortized Cost, Within 1 year	1,830
Available for Sale, Fair Value, Within 1 year	1,868
Available for Sale, Amortized Cost, 1 to 5 years	93,292
Available for Sale, Fair Value, 1 to 5 years	94,555
Available for Sale, Amortized Cost, 5 to 10 years	369,917
Available for Sale, Fair Value, 5 to 10 years	365,479
Available for Sale, Amortized Cost, More than 10 years	63,010
Available for Sale, Fair Value, More than 10 years	62,776
Held to Maturity - Amortized Cost and Fair Value
Held to Maturity, Amortized Cost, Within 1 year
Held to Maturity, Fair Value, Within 1 year
Held to Maturity, Amortized Cost, 1 to 5 years	10,860
Held to Maturity, Fair Value, 1 to 5 years	11,724
Held to Maturity, Amortized Cost, 5 to 10 years	25,594
Held to Maturity, Fair Value, 5 to 10 years	27,728
Held to Maturity, Amortized Cost, More than 10 years	15,303
Held to Maturity, Fair Value, More than 10 years	16,633
Mortgage-backed securities
Available for Sale - Amortized Cost and Fair Value
Available for Sale, Amortized Cost	1,410,189
Securities available-for-sale	1,412,586
Held to Maturity - Amortized Cost and Fair Value
Held to Maturity, Amortized Cost	163,190	[1]	192,404	[1]	230,949	[1]
Held-To-Maturity, Fair value	$ 170,610	[1]	$ 203,865	[1]	$ 242,584	[1]

[1] All are residential type mortgage-backed securities

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Foreclosed Property (Tables)

6 Months Ended

Jun. 30, 2013

Foreclosed Property [Abstract]

Schedule of classifications of foreclosed properties

	June 30,			December 31,			June 30,
	2013			2012			2012
Commercial real estate	$	847		$	6,368		$	11,639
Commercial construction		376			2,204			2,732
Total commercial		1,223			8,572			14,371
Residential mortgage		1,931			5,192			5,868
Residential construction		4,384			11,454			22,054
Total foreclosed property		7,538			25,218			42,293
Less valuation allowance		(3,602	)		(6,954	)		(11,872	)
Foreclosed property, net	$	3,936		$	18,264		$	30,421
Balance as a percentage of original loan unpaid principal		31.6	%		39.7	%		39.3	%

Schedule of activity in the valuation allowance for foreclosed property

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Balance at beginning of period	$	4,979		$	17,746		$	6,954		$	18,982
Additions charged to expense		1,369			1,008			2,410			3,119
Disposals		(2,746	)		(6,882	)		(5,762	)		(10,229	)
Balance at end of period	$	3,602		$	11,872		$	3,602		$	11,872

Schedule of expenses related to foreclosed assets

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013		2012			2013		2012
Net loss on sales	$	2,945	$	(269	)	$	3,050	$	(176	)
Provision for unrealized losses		1,369		1,008			2,410		3,119
Operating expenses		837		1,112			2,024		2,733
Total foreclosed property expense	$	5,151	$	1,851		$	7,484	$	5,676

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of stock option activity

Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinisic Value ($000)
Outstanding at December 31, 2012		482,528		$	97.73
Forfeited		(935	)		30.23
Expired		(74,221	)		81.21
Outstanding at June 30, 2013		407,372			100.90		3.2	$	12
Exercisable at June 30, 2013		399,597			102.64		3.2		3

Schedule of activity in restricted stock and restricted stock unit awards

Restricted Stock	Shares			Weighted- Average Grant- Date Fair Value
Outstanding at December 31, 2012		485,584		$	10.72
Granted		80,938			11.24
Excercised		(157,071	)		13.59
Cancelled		(15,666	)		9.14
Outstanding at June 30, 2013		393,785			9.75
Vested at March 31, 2013		54,238			11.20

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Income Taxes (Details Textual) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Income Tax Disclosure [Abstract]
Valuation allowance on deferred tax assets	$ 4.96	$ 270.00	$ 277.00
Period for Cumulative loss position	3 years
Net deferred tax asset realized based upon future taxable income	272
Reversal of the valuation allowance	272
Deferred tax assets not related to net operating losses or credits	39.70
Remaining deferred tax assets relate to federal net operating losses	200
Deferred tax assets relate to state net operating losses	27.70
Federal alternative minimum tax credits	2.94
Other federal and state tax credits	7.14
Unrecognized income tax benefits	$ 5.18	$ 5.07	$ 6.33

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Securities - Amortized cost, gross unrealized gains and losses and fair value of securities held to maturity (Details 1) (USD $) In Thousands, unless otherwise specified	6 Months Ended				12 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Dec. 31, 2012
Held-to-maturity Securities, Unclassified [Abstract]
Amortized Cost	$ 214,947		$ 282,750		$ 244,184
Gross Unrealized Gains	11,990		17,221		16,947
Gross Unrealized Losses	242
Fair Value	226,695		299,971		261,131
State and political subdivisions
Held-to-maturity Securities, Unclassified [Abstract]
Amortized Cost	51,757		51,801		51,780
Gross Unrealized Gains	4,332		5,586		5,486
Gross Unrealized Losses	4
Fair Value	56,085		57,387		57,266
Mortgage-backed securities
Held-to-maturity Securities, Unclassified [Abstract]
Amortized Cost	163,190	[1]	230,949	[1]	192,404	[1]
Gross Unrealized Gains	7,658	[1]	11,635	[1]	11,461	[1]
Gross Unrealized Losses	238	[1]		[1]		[1]
Fair Value	$ 170,610	[1]	$ 242,584	[1]	$ 203,865	[1]

[1] All are residential type mortgage-backed securities

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Common and Preferred Stock Issued / Common Stock Issuable (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Common Stock Issued and Issuable and Preferred Stock Issued [Abstract]
Discount rate to purchase shares of common stock	5.00%
Number of shares issued	35,667	60,982
Amount of shares issued	$ 383,000	$ 501,000
Number of shares issuable under the deferred compensation plan	271,215	94,657

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Foreclosed Property - Major classifications of foreclosed properties (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Classifications of foreclosed properties
Total foreclosed property	$ 7,538	$ 25,218	$ 42,293
Less valuation allowance	(3,602)	(6,954)	(11,872)
Foreclosed property, net	3,936	18,264	30,421
Balance as a percentage of original loan unpaid principal	31.60%	39.70%	39.30%
Commercial real estate
Classifications of foreclosed properties
Total foreclosed property	847	6,368	11,639
Commercial construction
Classifications of foreclosed properties
Total foreclosed property	376	2,204	2,732
Commercial
Classifications of foreclosed properties
Total foreclosed property	1,223	8,572	14,371
Residential mortgage
Classifications of foreclosed properties
Total foreclosed property	1,931	5,192	5,868
Residential construction
Classifications of foreclosed properties
Total foreclosed property	$ 4,384	$ 11,454	$ 22,054

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Loans and Allowance for Loan Losses - Aging of recorded investment in past due loans (Details 7) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Aging of the recorded investment in past due loans
Total loans	$ 4,189,368	$ 4,175,008	$ 4,119,235
Loans Receivable
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	19,265	27,732	29,659
Loans Past Due, 60 - 89 Days	5,942	8,266	7,465
Loans Past Due, Greater than 90 Days Past Due	9,407	23,129	31,585
Loans, Total Past Due	34,614	59,127	68,709
Loans Not Past Due	4,154,754	4,115,881	4,050,526
Total loans	4,189,368	4,175,008	4,119,235
Loans Receivable | Commercial (secured by real estate)
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	3,541	8,106	7,053
Loans Past Due, 60 - 89 Days	696	3,232	1,342
Loans Past Due, Greater than 90 Days Past Due	2,136	7,476	11,996
Loans, Total Past Due	6,373	18,814	20,391
Loans Not Past Due	1,741,772	1,794,551	1,816,086
Total loans	1,748,145	1,813,365	1,836,477
Loans Receivable | Commercial & industrial
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	1,123	1,565	663
Loans Past Due, 60 - 89 Days	500	429	1,496
Loans Past Due, Greater than 90 Days Past Due	145	867	389
Loans, Total Past Due	1,768	2,861	2,548
Loans Not Past Due	435,220	455,385	447,674
Total loans	436,988	458,246	450,222
Loans Receivable | Commercial construction
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	1,128	2,216	3,555
Loans Past Due, 60 - 89 Days	235		133
Loans Past Due, Greater than 90 Days Past Due	196	4,490	950
Loans, Total Past Due	1,559	6,706	4,638
Loans Not Past Due	131,003	148,063	164,700
Total loans	132,562	154,769	169,338
Loans Receivable | Commercial
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	5,792	11,887	11,271
Loans Past Due, 60 - 89 Days	1,431	3,661	2,971
Loans Past Due, Greater than 90 Days Past Due	2,477	12,833	13,335
Loans, Total Past Due	9,700	28,381	27,577
Loans Not Past Due	2,307,995	2,397,999	2,428,460
Total loans	2,317,695	2,426,380	2,456,037
Loans Receivable | Residential mortgage
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	10,543	12,292	12,636
Loans Past Due, 60 - 89 Days	3,993	2,426	2,980
Loans Past Due, Greater than 90 Days Past Due	5,639	4,848	6,756
Loans, Total Past Due	20,175	19,566	22,372
Loans Not Past Due	1,258,384	1,194,637	1,105,964
Total loans	1,278,559	1,214,203	1,128,336
Loans Receivable | Residential construction
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	2,037	2,233	4,781
Loans Past Due, 60 - 89 Days	335	1,934	1,189
Loans Past Due, Greater than 90 Days Past Due	1,261	5,159	11,096
Loans, Total Past Due	3,633	9,326	17,066
Loans Not Past Due	328,048	372,351	391,900
Total loans	331,681	381,677	408,966
Loans Receivable | Consumer installment
Aging of the recorded investment in past due loans
Loans Past Due, 30 - 59 Days	893	1,320	971
Loans Past Due, 60 - 89 Days	183	245	325
Loans Past Due, Greater than 90 Days Past Due	30	289	398
Loans, Total Past Due	1,106	1,854	1,694
Loans Not Past Due	260,327	150,894	124,202
Total loans	$ 261,433	$ 152,748	$ 125,896

XML

Loans and Allowance for Loan Losses - Summary of net charge offs of assets sold in bulk sale transaction (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 130,914
Net Sales Proceeds	77,458
Net Charge-offs	(53,456)
Impaired Loans Considered
Financing Receivable, Impaired [Line Items]
Recorded Investment	96,829
Net Sales Proceeds	56,298
Net Charge-offs	(40,531)
Impaired Loans Not Considered
Financing Receivable, Impaired [Line Items]
Recorded Investment	25,687
Net Sales Proceeds	15,227
Net Charge-offs	(10,460)
Foreclosed Properties
Financing Receivable, Impaired [Line Items]
Recorded Investment	8,398
Net Sales Proceeds	5,933
Net Charge-offs	$ (2,465)

XML

Consolidated Statement of Operations (Unaudited) (Parentheticals) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Investment securities tax exemption	$ 210	$ 262	$ 422	$ 512

XML

Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2013

Loans and Allowance For Loan Losses [Abstract]

Loans and Allowance for Loan Losses

Note 5 – Loans and Allowance for Loan Losses

Major classifications of loans as of June 30, 2013, December 31, 2012 and June 30, 2012, are summarized as follows (in thousands).

	June 30,			December 31,			June 30,
	2013			2012			2012
Commercial (secured by real estate)	$	1,748,145		$	1,813,365		$	1,836,477
Commercial & industrial		436,988			458,246			450,222
Commercial construction		132,562			154,769			169,338
Total commercial		2,317,695			2,426,380			2,456,037
Residential mortgage		1,278,559			1,214,203			1,128,336
Residential construction		331,681			381,677			408,966
Consumer installment		261,433			152,748			125,896
Total loans		4,189,368			4,175,008			4,119,235
Less allowance for loan losses		(81,845	)		(107,137	)		(112,705	)
Loans, net	$	4,107,523		$	4,067,871		$	4,006,530

The Bank makes loans and extends credit to individuals and a variety of firms and corporations located primarily in counties in north Georgia, the Atlanta, Georgia metropolitan statistical area, the Gainesville, Georgia metropolitan statistical area, coastal Georgia, western North Carolina, east Tennessee and the Greenville, South Carolina metropolitan statistical area.  Although the Bank has a diversified loan portfolio, a substantial portion of its loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market.

Changes in the allowance for loan losses for the three and six months ended June 30, 2013 and 2012 are summarized as follows (in thousands).

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Balance beginning of period	$	105,753	$	113,601	$	107,137	$	114,468
Provision for loan losses		48,500		18,000		59,500		33,000
Charge-offs:
Commercial (secured by real estate)		26,740		4,418		32,194		8,346
Commercial & industrial		15,932		888		17,755		1,644
Commercial construction		6,305		88		6,350		452
Residential mortgage		6,718		4,014		9,074		9,781
Residential construction		18,530		9,846		21,512		15,475
Consumer installment		565		408		1,272		1,161
Total loans charged-off		74,790		19,662		88,157		36,859
Recoveries:
Commercial (secured by real estate)		1,274		69		1,485		300
Commercial & industrial		356		113		678		200
Commercial construction		10		-		59		30
Residential mortgage		209		152		418		544
Residential construction		24		283		33		598
Consumer installment		509		149		692		424
Total recoveries		2,382		766		3,365		2,096
Net charge-offs		72,408		18,896		84,792		34,763
Balance end of period	$	81,845	$	112,705	$	81,845	$	112,705

During the second quarter of 2013, United executed a plan to accelerate the disposition of classified assets including performing classified loans, nonperforming loans and foreclosed properties.  The purpose of the accelerated classified asset disposition plan was to clean up legacy credit problems remaining from the recent financial crisis and to accelerate the improvement of United’s credit measures toward pre-crisis levels.  The classified asset sales included individual note and foreclosed property sales and a large bulk sale of classified assets to a single investor.  The bulk sale included performing and nonperforming classified loans and foreclosed properties.  The assets were divided into four separate pools that were bid for separately by potential buyers.  A single purchaser was the high bidder for each of the four pools.  The table below shows the allocation among impaired loans, loans that were not considered impaired and foreclosed properties, including United's recorded investment in those assets, the sales proceeds and the resulting net charge offs of assets sold in the bulk sale transaction (in thousands).

	Recorded Investment		Net Sales Proceeds		Net Charge-Off
Loans considered impaired	$	96,829	$	56,298	$	(40,531	)
Loans not considered impaired		25,687		15,227		(10,460	)
Foreclosed properties		8,398		5,933		(2,465	)
Total assets sold	$	130,914	$	77,458	$	(53,456	)

The loans considered impaired in the table above were assigned specific reserves of $6.86 million in the most recent analysis of the allowance for loan losses prior to the sale. Because the assets were sold at liquidation prices in a bulk transaction with no recourse, the sales price was generally lower than the appraised value of the foreclosed properties and loan collateral.  Although the classified asset sales increased charge-offs during the second quarter of 2013, they accomplished management’s goal of moving classified asset levels toward the pre-crisis range.

United considers all loans that are on nonaccrual with a balance of $500,000 or greater and all troubled debt restructurings (“TDRs”) to be impaired.  In addition, United reviews all accruing substandard loans greater than $2 million to determine if the loan is impaired.  A loan is considered impaired when, based on current events and circumstances, it is probable that all amounts due, according to the contractual terms of the loan, will not be collected.  All TDRs are considered impaired regardless of accrual status.  Impairment is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.  A specific reserve is established for impaired loans for the amount of calculated impairment.  Interest payments received on impaired nonaccrual loans are applied as a reduction of the outstanding principal balance.  For impaired loans not on nonaccrual status, interest is accrued according to the terms of the loan agreement.  Loans are evaluated for impairment quarterly and specific reserves are established in the allowance for loan losses for any measured impairment.

Each quarter, United’s management prepares an analysis of the allowance for loan losses to determine the appropriate balance that measures and quantifies the amount of loss inherent in the loan portfolio.  The allowance is comprised of specific reserves which are determined as described above, general reserves which are determined based on historical loss experience as adjusted for current trends and economic conditions and an unallocated portion.  United uses eight quarters of historical loss experience weighted toward the most recent quarters to determine the loss factors to be used.  Eight quarters has been determined to be an appropriate time period as it is recent enough to be relevant to current conditions and covers a length of time sufficient to minimize distortions caused by nonrecurring and unusual activity that might otherwise influence a shorter time period.  The weighted average is calculated by multiplying each quarter’s annualized historical net charge-off rate by 1 through 8, with 8 representing the most recent quarter and 1 representing the oldest quarter.  United uses annualized charge-off rates under the broad assumption that losses inherent in the loan portfolio will generally be resolved within twelve months.  Problem loans that are not resolved within twelve months are generally larger loans that are more complex in nature requiring more time to either rehabilitate or work out of the bank.  These credits are subject to impairment testing and specific reserves.

The weighted loss factor results for each quarter are added together and divided by 36 (the sum of 1, 2, 3, 4, 5, 6, 7 and 8) to arrive at the weighted average historical loss factor for each category of loans.  United calculates loss factors for each major category of loans (commercial real estate, commercial & industrial, commercial construction, residential construction and consumer installment) except residential real estate loans which are further divided into home equity first lien, home equity junior lien and all other residential real estate loans and a loss factor is calculated for each category.

Management carefully reviews the resulting loss factors for each category of the loan portfolio and evaluates whether qualitative adjustments are necessary to take into consideration recent credit trends such as increases or decreases in past due, nonaccrual, criticized and classified loans, acceleration or delays in timing of recognition of losses that may render the use of annualized charge-off rates to be inappropriate, and other macro environmental factors such as changes in unemployment rates, lease vacancy rates and trends in property values and absorption rates.

To validate the results, management closely monitors the loan portfolio to determine the range of potential losses based upon probability of default and losses upon default for each major loan category.  The potential range of losses resulting from this analysis is compared to the resulting loss factors for each major loan category to validate the loss factors and determine if qualitative adjustments are necessary.  United’s management believes that its method of determining the balance of the allowance for loan losses provides a reasonable and reliable basis for measuring and reporting losses that are inherent in the loan portfolio as of the reporting date.

The following table presents the balance and activity in the allowance for loan losses by portfolio segment and the recorded investment in loans by portfolio segment based on the impairment method as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

Six Months Ended June 30, 2013	Commercial (Secured by Real Estate)			Commercial & Industrial			Commercial Construction			Residential Mortgage			Residential Construction			Consumer Installment			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	27,847		$	5,537		$	8,389		$	26,642		$	26,662		$	2,747		$	9,313		$	107,137
Charge-offs		(32,194	)		(17,755	)		(6,350	)		(9,074	)		(21,512	)		(1,272	)		-			(88,157	)
Recoveries		1,485			678			59			418			33			692			-			3,365
Provision		25,670			19,594			2,177			2,041			12,139			223			(2,344	)		59,500
Ending balance	$	22,808		$	8,054		$	4,275		$	20,027		$	17,322		$	2,390		$	6,969		$	81,845
Ending allowance attributable to loans:
Individually evaluated for impairment	$	2,862		$	129		$	440		$	1,197		$	417		$	12		$	-		$	5,057
Collectively evaluated for impairment		19,946			7,925			3,835			18,830			16,905			2,378			6,969			76,788
Total ending allowance balance	$	22,808		$	8,054		$	4,275		$	20,027		$	17,322		$	2,390		$	6,969		$	81,845
Loans:
Individually evaluated for impairment	$	52,297		$	5,738		$	12,955		$	18,393		$	14,095		$	337		$	-		$	103,815
Collectively evaluated for impairment		1,695,848			431,250			119,607			1,260,166			317,586			261,096			-			4,085,553
Total loans	$	1,748,145		$	436,988		$	132,562		$	1,278,559		$	331,681		$	261,433		$	-		$	4,189,368
December 31, 2012
Allowance for loan losses:
Ending allowance attributable to loans:
Individually evaluated for impairment	$	6,106		$	490		$	2,239		$	2,165		$	625		$	19		$	-		$	11,644
Collectively evaluated for impairment		21,741			5,047			6,150			24,477			26,037			2,728			9,313			95,493
Total ending allowance balance	$	27,847		$	5,537		$	8,389		$	26,642		$	26,662		$	2,747		$	9,313		$	107,137
Loans:
Individually evaluated for impairment	$	104,409		$	51,501		$	40,168		$	22,247		$	34,055		$	430		$	-		$	252,810
Collectively evaluated for impairment		1,708,956			406,745			114,601			1,191,956			347,622			152,318			-			3,922,198
Total loans	$	1,813,365		$	458,246		$	154,769		$	1,214,203		$	381,677		$	152,748		$	-		$	4,175,008
Six Months Ended June 30, 2012
Beginning balance	$	31,644		$	5,681		$	6,097		$	29,076		$	30,379		$	2,124		$	9,467		$	114,468
Charge-offs		(8,346	)		(1,644	)		(452	)		(9,781	)		(15,475	)		(1,161	)		-			(36,859	)
Recoveries		300			200			30			544			598			424			-			2,096
Provision		6,288			1,061			4,662			6,471			13,712			1,183			(377	)		33,000
Ending balance	$	29,886		$	5,298		$	10,337		$	26,310		$	29,214		$	2,570		$	9,090		$	112,705
Ending allowance attributable to loans:
Individually evaluated for impairment	$	8,544		$	753		$	2,476		$	1,389		$	4,188		$	20		$	-		$	17,370
Collectively evaluated for impairment		21,342			4,545			7,861			24,921			25,026			2,550			9,090			95,335
Total ending allowance balance	$	29,886		$	5,298		$	10,337		$	26,310		$	29,214		$	2,570		$	9,090		$	112,705
Loans:
Individually evaluated for impairment	$	130,838		$	57,747		$	42,833		$	19,844		$	41,906		$	511		$	-		$	293,679
Collectively evaluated for impairment		1,705,639			392,475			126,505			1,108,492			367,060			125,385			-			3,825,556
Total loans	$	1,836,477		$	450,222		$	169,338		$	1,128,336		$	408,966		$	125,896		$	-		$	4,119,235

When a loan officer determines that a loan is uncollectible, he or she is responsible for recommending to the local bank president that the loan be charged off.  Full or partial charge-offs may also be recommended by the Collections Department, the Special Assets Department and the Foreclosure / OREO department.  Nonaccrual real estate loans that are collateral dependent are generally charged down to 80% of the appraised value of the underlying collateral at the time they are placed on nonaccrual status.

A committee consisting of the Chief Risk Officer, Senior Risk Officer and the Senior Credit Officers meets monthly to review charge-offs that have occurred during the previous month.  The 10 largest charge-offs are reported quarterly to the Board of Directors.

Generally, closed-end retail loans (installment and residential mortgage loans) past due 120 cumulative days are charged-off unless the loan is well secured and in process of collection (within the next 90 days).  Open-end (revolving) retail loans which are past due 180 cumulative days from their contractual due date are generally charged-off.

At June 30, 2013, December 31, 2012 and June 30, 2012, loans with a carrying value of $2.00 billion, $1.90 billion and $1.61 billion, respectively, were pledged as collateral to secure FHLB advances and other contingent funding sources.

The average balances of impaired loans and income recognized on impaired loans while they were considered impaired is presented below for the three and six months ended June 30, 2013 and 2012 (in thousands).

	2013						2012
Three Months Ended June 30,	Average Balance		Interest Revenue Recognized During Impairment		Cash Basis Interest Revenue Received		Average Balance		Interest Revenue Recognized During Impairment		Cash Basis Interest Revenue Received
Commercial (secured by real estate)	$	52,191	$	631	$	665	$	125,419	$	1,414	$	1,476
Commercial & industrial		5,804		63		70		48,984		191		700
Commercial construction		13,034		114		115		41,242		217		304
Total commercial		71,029		808		850		215,645		1,822		2,480
Residential mortgage		18,950		205		193		19,645		255		297
Residential construction		14,058		178		147		51,596		336		431
Consumer installment		246		4		4		450		8		8
Total	$	104,283	$	1,195	$	1,194	$	287,336	$	2,421	$	3,216
Six Months Ended June 30,
Commercial (secured by real estate)	$	74,233	$	1,577	$	1,665	$	112,633	$	2,665	$	2,817
Commercial & industrial		27,277		219		699		49,922		309		1,310
Commercial construction		27,983		265		347		36,109		484		761
Total commercial		129,493		2,061		2,711		198,664		3,458		4,888
Residential mortgage		20,179		446		416		25,060		480		558
Residential construction		29,374		504		575		59,866		737		949
Consumer installment		263		10		10		391		13		13
Total	$	179,309	$	3,021	$	3,712	$	283,981	$	4,688	$	6,408

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

	June 30, 2013						December 31, 2012						June 30, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial (secured by real estate)	$	27,851	$	17,640	$	-	$	74,066	$	62,609	$	-	$	105,788	$	95,453	$	-
Commercial & industrial		3,809		3,809		-		74,572		49,572		-		81,036		56,036		-
Commercial construction		809		659		-		23,938		17,305		-		22,491		21,372		-
Total commercial		32,469		22,108		-		172,576		129,486		-		209,315		172,861		-
Residential mortgage		8,676		6,843		-		10,336		8,383		-		13,994		11,578		-
Residential construction		8,476		4,992		-		35,439		19,093		-		46,589		30,094		-
Consumer installment		203		102		-		-		-		-		185		185		-
Total with no related allowance recorded		49,824		34,045		-		218,351		156,962		-		270,083		214,718		-
With an allowance recorded:
Commercial (secured by real estate)		34,741		34,657		2,862		44,395		41,800		6,106		35,348		35,295		8,544
Commercial & industrial		2,091		1,929		129		2,170		1,929		490		1,711		1,711		753
Commercial construction		12,376		12,296		440		23,746		22,863		2,239		21,461		21,461		2,476
Total commercial		49,208		48,882		3,431		70,311		66,592		8,835		58,520		58,467		11,773
Residential mortgage		11,794		11,550		1,197		14,267		13,864		2,165		8,458		8,266		1,389
Residential construction		9,411		9,103		417		15,412		14,962		625		11,886		11,812		4,188
Consumer installment		244		235		12		441		430		19		335		326		20
Total with an allowance recorded		70,657		69,770		5,057		100,431		95,848		11,644		79,199		78,871		17,370
Total	$	120,481	$	103,815	$	5,057	$	318,782	$	252,810	$	11,644	$	349,282	$	293,589	$	17,370

There were no loans more than 90 days past due and still accruing interest at June 30, 2013, December 31, 2012 or June 30, 2012.  Nonaccrual loans include both homogeneous loans that are collectively evaluated for impairment and individually evaluated impaired loans.  United’s policy is to place loans on nonaccrual status when, in the opinion of management, the principal and interest on a loan is not likely to be repaid in accordance with the loan terms or when the loan becomes 90 days past due and is not well secured and in the process of collection.  When a loan is classified on nonaccrual status, interest previously accrued but not collected is reversed against current interest revenue.  Principal and interest payments received on a nonaccrual loan are applied to reduce outstanding principal.

The following table presents the recorded investment (unpaid principal less amounts charged-off) in nonaccrual loans by loan class as of June 30, 2013, December 31, 2012 and June 30, 2102 (in thousands).

	Nonaccrual Loans
	June 30, 2013		December 31, 2012		June 30, 2012
Commercial (secured by real estate)	$	7,237	$	22,148	$	19,115
Commercial & industrial		548		31,817		34,982
Commercial construction		504		23,843		18,175
Total commercial		8,289		77,808		72,272
Residential mortgage		14,338		12,589		16,631
Residential construction		4,838		18,702		25,530
Consumer installment		399		795		907
Total	$	27,864	$	109,894	$	115,340
Balance as a percentage of unpaid principal		62.6%		69.5%		68.8%

The following table presents the aging of the recorded investment in past due loans as of June 30, 2013, December 31, 2012 and June 30, 2012 by class of loans (in thousands).

	Loans Past Due								Loans Not
As of June 30, 2013	30 - 59 Days		60 - 89 Days		> 90 Days		Total		Past Due		Total
Commercial (secured by real estate)	$	3,541	$	696	$	2,136	$	6,373	$	1,741,772	$	1,748,145
Commercial & industrial		1,123		500		145		1,768		435,220		436,988
Commercial construction		1,128		235		196		1,559		131,003		132,562
Total commercial		5,792		1,431		2,477		9,700		2,307,995		2,317,695
Residential mortgage		10,543		3,993		5,639		20,175		1,258,384		1,278,559
Residential construction		2,037		335		1,261		3,633		328,048		331,681
Consumer installment		893		183		30		1,106		260,327		261,433
Total loans	$	19,265	$	5,942	$	9,407	$	34,614	$	4,154,754	$	4,189,368
As of December 31, 2012
Commercial (secured by real estate)	$	8,106	$	3,232	$	7,476	$	18,814	$	1,794,551	$	1,813,365
Commercial & industrial		1,565		429		867		2,861		455,385		458,246
Commercial construction		2,216		-		4,490		6,706		148,063		154,769
Total commercial		11,887		3,661		12,833		28,381		2,397,999		2,426,380
Residential mortgage		12,292		2,426		4,848		19,566		1,194,637		1,214,203
Residential construction		2,233		1,934		5,159		9,326		372,351		381,677
Consumer installment		1,320		245		289		1,854		150,894		152,748
Total loans	$	27,732	$	8,266	$	23,129	$	59,127	$	4,115,881	$	4,175,008
As of June 30, 2012
Commercial (secured by real estate)	$	7,053	$	1,342	$	11,996	$	20,391	$	1,816,086	$	1,836,477
Commercial & industrial		663		1,496		389		2,548		447,674		450,222
Commercial construction		3,555		133		950		4,638		164,700		169,338
Total commercial		11,271		2,971		13,335		27,577		2,428,460		2,456,037
Residential mortgage		12,636		2,980		6,756		22,372		1,105,964		1,128,336
Residential construction		4,781		1,189		11,096		17,066		391,900		408,966
Consumer installment		971		325		398		1,694		124,202		125,896
Total loans	$	29,659	$	7,465	$	31,585	$	68,709	$	4,050,526	$	4,119,235

As of June 30, 2013, December 31, 2012, and June 30, 2012, $4.34 million, $9.50 million and $10.3 million of specific reserves were allocated to customers whose loan terms have been modified in TDRs.  United committed to lend additional amounts totaling up to $35,000, $689,000 and $490,000 as of June 30, 2013, December 31, 2012 and June 30, 2012, respectively, to customers with outstanding loans that are classified as TDRs.

The modification of the terms of the TDRs included one or a combination of the following:  a reduction of the stated interest rate of the loan or an extension of the amortization period that would not otherwise be considered in the current market for new debt with similar risk characteristics; a permanent reduction of the principal amount; a restructuring of the borrower’s debt into an A/B note structure where the A note would fall within the borrower’s ability to pay and the remainder would be included in the B note, or a mandated bankruptcy restructuring.

The following table presents additional information on TDRs including the number of loan contracts restructured and the pre- and post-modification recorded investment as of June 30, 2013, December 31, 2012 and June 30, 2012 (dollars in thousands).

	June 30, 2013						December 31, 2012						June 30, 2012
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial (sec by RE)		77	$	45,874	$	42,366		96	$	80,261	$	75,340		96	$	87,104	$	82,325
Commercial & industrial		34		3,091		2,929		32		7,492		7,250		29		3,972		3,972
Commercial construction		14		13,185		12,956		25		37,537		33,809		23		42,796		41,677
Total commercial		125		62,150		58,251		153		125,290		116,399		148		133,872		127,974
Residential mortgage		110		17,772		16,381		117		20,323		19,296		110		17,613		16,950
Residential construction		51		11,895		9,908		67		25,822		23,786		72		25,123		22,178
Consumer installment		42		447		337		51		1,292		1,282		47		521		511
Total loans		328	$	92,264	$	84,877		388	$	172,727	$	160,763		377	$	177,129	$	167,613

Loans modified under the terms of a TDR during the three and six months ended June 30, 2013 and 2012 are presented in the table below.  In addition, the following table presents loans modified under the terms of a TDR that became 90 days or more delinquent during the three and six months ended June 30, 2013 and 2012 that were initially restructured within one year prior to the three and six months ended June 30, 2013 and 2012 (dollars in thousands).

New Troubled Debt Restructurings for the Three Months Ended June 30, 2013	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Three Months Ended June 30, 2013
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		9	$	6,523	$	6,523	$	-	$	-
Commercial & industrial		-		-		-		-		-
Commercial construction		-		-		-		-		-
Total commercial		9		6,523		6,523		-		-
Residential mortgage		2		649		505		1		40
Residential construction		2		339		339		-		-
Consumer installment		-		-		-		-		-
Total loans		13	$	7,511	$	7,367		1	$	40

New Troubled Debt Restructurings for the Six Months Ended June 30, 2013	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Six Months Ended June 30, 2013
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		17	$	10,091	$	10,091	$	1	$	432
Commercial & industrial		9		815		709		1		35
Commercial construction		-		-		-		2		1,454
Total commercial		26		10,906		10,800		4		1,921
Residential mortgage		13		2,764		2,620		2		108
Residential construction		7		1,123		994		2		117
Consumer installment		4		21		21		3		20
Total loans		50	$	14,814	$	14,435		11	$	2,166

New Troubled Debt Restructurings for the Three Months Ended June 30, 2012	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Three Months Ended June 30, 2012
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		10	$	7,815	$	7,728	$	3	$	2,307
Commercial & industrial		7		598		598		1		5
Commercial construction		7		7,702		7,702		-		-
Total commercial		24		16,115		16,028		4		2,312
Residential mortgage		20		5,288		5,112		1		27
Residential construction		20		7,638		6,361		1		121
Consumer installment		8		210		210		1		6
Total loans		72	$	29,251	$	27,711		7	$	2,466

New Troubled Debt Restructurings for the Six Months Ended June 30, 2012	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Modified Within the Previous Twelve Months that Have Subsequently Defaulted During the Six Months Ended June 30, 2012
							Number of Contracts		Recorded Investment
Commercial (secured by real estate)		34	$	22,914	$	21,469	$	3	$	2,307
Commercial & industrial		17		3,322		3,322		2		48
Commercial construction		14		28,483		28,483		2		4,174
Total commercial		65		54,719		53,274		7		6,529
Residential mortgage		44		10,567		10,385		4		400
Residential construction		34		11,389		9,550		4		1,597
Consumer installment		15		270		265		1		6
Total loans		158	$	76,945	$	73,474		16	$	8,532

Collateral dependent TDRs that subsequently default and are placed on nonaccrual are charged down to the fair value of the collateral consistent with United’s policy for nonaccrual loans.  Impairment on TDRs that are not collateral dependent continues to be measured on discounted cash flows regardless of whether the loan has subsequently defaulted.

As of June 30, 2013, December 31, 2012 and June 30, 2012, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands).

					Substandard				Doubtful /
As of June 30, 2013	Pass		Watch		Performing		Nonaccrual		Loss		Not Rated		Total
Commercial (secured by real estate)	$	1,595,141	$	67,017	$	78,750	$	7,237	$	-	$	-	$	1,748,145
Commercial & industrial		418,354		5,716		11,458		548		-		912		436,988
Commercial construction		104,185		12,107		15,766		504		-		-		132,562
Total commercial		2,117,680		84,840		105,974		8,289		-		912		2,317,695
Residential mortgage		1,185,658		27,341		51,222		14,338		-		-		1,278,559
Residential construction		292,116		18,096		16,631		4,838		-		-		331,681
Consumer installment		257,563		966		2,505		399		-		-		261,433
Total loans	$	3,853,017	$	131,243	$	176,332	$	27,864	$	-	$	912	$	4,189,368
As of December 31, 2012
Commercial (secured by real estate)	$	1,592,677	$	80,997	$	117,543	$	22,148	$	-	$	-	$	1,813,365
Commercial & industrial		401,606		5,404		18,477		31,817		-		942		458,246
Commercial construction		104,296		7,345		19,285		23,843		-		-		154,769
Total commercial		2,098,579		93,746		155,305		77,808		-		942		2,426,380
Residential mortgage		1,102,746		33,689		65,179		12,589		-		-		1,214,203
Residential construction		292,264		32,907		37,804		18,702		-		-		381,677
Consumer installment		147,214		1,086		3,653		795		-		-		152,748
Total loans	$	3,640,803	$	161,428	$	261,941	$	109,894	$	-	$	942	$	4,175,008
As of June 30, 2012
Commercial (secured by real estate)	$	1,596,876	$	72,067	$	148,419	$	19,115	$	-	$	-	$	1,836,477
Commercial & industrial		393,894		4,652		15,916		34,982		-		778		450,222
Commercial construction		107,199		6,088		37,876		18,175		-		-		169,338
Total commercial		2,097,969		82,807		202,211		72,272		-		778		2,456,037
Residential mortgage		999,323		39,105		73,277		16,631		-		-		1,128,336
Residential construction		290,804		47,182		45,450		25,530		-		-		408,966
Consumer installment		121,166		1,117		2,706		907		-		-		125,896
Total loans	$	3,509,262	$	170,211	$	323,644	$	115,340	$	-	$	778	$	4,119,235

Risk Ratings

United categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current industry and economic trends, among other factors.  United analyzes loans individually by classifying the loans as to credit risk.  This analysis is performed on a continuous basis.  United uses the following definitions for its risk ratings:

Watch.  Loans in this category are presently protected from apparent loss; however, weaknesses exist that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities.  These loans require more than the ordinary amount of supervision. Collateral values generally afford adequate coverage, but may not be immediately marketable.

Substandard.  These loans are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged.  Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios.  The loan may be past due and related deposit accounts experiencing overdrafts.  There is the distinct possibility that United will sustain some loss if deficiencies are not corrected. If possible, immediate corrective action is taken.

Doubtful.  Specific weaknesses characterized as Substandard that are severe enough to make collection in full highly questionable and improbable.  There is no reliable secondary source of full repayment.

Loss.  Loans categorized as Loss have the same characteristics as Doubtful; however, probability of loss is certain.  Loans classified as Loss are charged-off.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Loans listed as not rated are generally deposit account overdrafts that have not been assigned a grade.

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Consolidated Balance Sheet (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
ASSETS
Cash and due from banks	$ 62,564	$ 66,536	$ 50,596
Interest-bearing deposits in banks	141,016	124,613	133,857
Short-term investments	57,000	60,000	120,000
Cash and cash equivalents	260,580	251,149	304,453
Securities available-for-sale	1,937,264	1,834,593	1,701,583
Securities held-to-maturity (fair value $226,695, $261,131 and $299,791)	214,947	244,184	282,750
Mortgage loans held for sale	19,150	28,821	18,645
Loans, net of unearned income	4,189,368	4,175,008	4,119,235
Less allowance for loan losses	(81,845)	(107,137)	(112,705)
Loans, net	4,107,523	4,067,871	4,006,530
Assets covered by loss sharing agreements with the FDIC	35,675	47,467	65,914
Premises and equipment, net	167,197	168,920	172,200
Bank owned life insurance	82,276	81,867	81,265
Accrued interest receivable	19,279	18,659	20,151
Goodwill and other intangible assets	4,315	5,510	6,965
Foreclosed property	3,936	18,264	30,421
Net deferred tax asset	272,287
Unsettled securities sales		5,763
Other assets	38,206	29,191	46,229
Total assets	7,162,635	6,802,259	6,737,106
Deposits:
Demand	1,349,804	1,252,605	1,150,444
NOW	1,225,664	1,316,453	1,196,507
Money market	1,167,889	1,149,912	1,117,139
Savings	247,821	227,308	219,077
Time:
Less than $100,000	982,009	1,055,271	1,164,451
Greater than $100,000	664,112	705,558	764,343
Brokered	374,530	245,033	210,506
Total deposits	6,011,829	5,952,140	5,822,467
Short-term borrowings	54,163	52,574	53,656
Federal Home Loan Bank advances	70,125	40,125	125,125
Long-term debt	124,845	124,805	120,265
Accrued expenses and other liabilities	72,370	51,210	39,598
Total liabilities	6,333,332	6,220,854	6,161,111
Commitments and contingencies
Shareholders' equity:
Common stock	43,356	42,424	41,727
Common stock issuable; 271,215, 133,238 and 94,657 shares	4,705	3,119	2,893
Capital surplus	1,057,931	1,057,951	1,056,819
Accumulated deficit	(473,531)	(709,153)	(718,896)
Accumulated other comprehensive loss	(13,786)	(23,640)	(17,106)
Total shareholders' equity	829,303	581,405	575,995
Total liabilities and shareholders' equity	7,162,635	6,802,259	6,737,106
Series A Preferred Stock
Shareholders' equity:
Preferred stock	217	217	217
Total shareholders' equity	217	217	217
Series B Preferred Stock
Shareholders' equity:
Preferred stock	179,323	178,557	177,814
Total shareholders' equity	179,323	178,557	177,814
Series D Preferred Stock
Shareholders' equity:
Preferred stock	16,613	16,613	16,613
Total shareholders' equity	16,613	16,613	16,613
Non-Voting Common Stock
Shareholders' equity:
Common stock	14,475	15,317	15,914
Total shareholders' equity	$ 14,475	$ 15,317	$ 15,914

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Reclassifications Out of Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Other Comprehensive Income Note [Line Items]
Unrealized (losses) gains on available-for-sale securities, securities gains, net, before tax		$ 6,490	$ 116	$ 7,047
Reclassification adjustment for gains included in net income, tax (expense) or benefit		(2,425)	(45)	(2,631)
Unrealized (losses) gains on available-for-sale securities, securities gains, net of tax		4,065	71	4,416
Amortization of gains included in net income on available-for-sale securities transferred to held to maturity, investment securities interest revenue, before tax	271	400	590	813
Amortization of gains included in net income on available-for-sale securities transferred to held to maturity, investment securities interest revenue, tax (expense) or benefit	(103)	(151)	(227)	(308)
Amortization of gains included in net income (loss) on available for sale securities transferred to held to maturity, Net of Tax Amount	168	249	363	505
Gains included in net income on derivative financial instruments accounted for as cash flow hedges, before tax	306	714	844	2,314
Gains included in net income on derivative financial instruments accounted for as cash flow hedges, tax (expense) or benefit	(119)	(278)	(328)	(900)
Gains included in net income on derivative financial instruments accounted for as cash flow hedges, tax (expense) or benefit, net of tax	187	436	516	1,414
Prior service cost	(91)		(181)
Actuarial losses	(42)		(84)
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan, total before tax	(133)		(265)
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan, tax (expense) or benefit	52		103
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan, net of tax	(81)		(162)
Total reclassifications for the period	274		788
Interest Rate Contracts | Loan interest revenue
Other Comprehensive Income Note [Line Items]
Gains included in net income on derivative financial instruments accounted for as cash flow hedges, before tax	303		840
Interest Rate Contracts | Other fee revenue
Other Comprehensive Income Note [Line Items]
Gains included in net income on derivative financial instruments accounted for as cash flow hedges, before tax	$ 3		$ 4

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Consolidated Statement of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest revenue:
Loans, including fees	$ 50,728	$ 54,178	$ 101,662	$ 109,937
Investment securities, including tax exempt of $210, $262, $422 and $512	9,681	11,062	19,646	24,066
Deposits in banks and short-term investments	916	1,096	1,786	2,108
Total interest revenue	61,325	66,336	123,094	136,111
Deposits:
NOW	419	503	873	1,140
Money market	534	661	1,096	1,302
Savings	36	38	72	75
Time	2,924	5,073	6,150	11,232
Total deposit interest expense	3,913	6,275	8,191	13,749
Short-term borrowings	522	904	1,038	1,949
Federal Home Loan Bank advances	30	390	49	856
Long-term debt	2,666	2,375	5,328	4,747
Total interest expense	7,131	9,944	14,606	21,301
Net interest revenue	54,194	56,392	108,488	114,810
Provision for loan losses	48,500	18,000	59,500	33,000
Net interest revenue after provision for loan losses	5,694	38,392	48,988	81,810
Fee revenue:
Service charges and fees	7,972	7,816	15,375	15,599
Mortgage loan and other related fees	3,003	2,322	5,658	4,421
Brokerage fees	1,063	809	1,830	1,622
Securities gains, net		6,490	116	7,047
Loss from prepayment of debt		(6,199)		(6,681)
Other	4,274	1,629	6,159	6,238
Total fee revenue	16,312	12,867	29,138	28,246
Total revenue	22,006	51,259	78,126	110,056
Operating expenses:
Salaries and employee benefits	24,734	24,297	48,326	49,522
Communications and equipment	3,468	3,211	6,514	6,366
Occupancy	3,449	3,539	6,816	7,310
Advertising and public relations	1,037	1,088	1,975	1,934
Postage, printing and supplies	894	916	1,757	1,895
Professional fees	2,499	1,952	4,865	3,927
Foreclosed property	5,151	1,851	7,484	5,676
FDIC assessments and other regulatory charges	2,505	2,545	5,010	5,055
Amortization of intangibles	491	730	1,196	1,462
Other	4,595	4,181	8,650	8,118
Total operating expenses	48,823	44,310	92,593	91,265
Net (loss) income before income taxes	(26,817)	6,949	(14,467)	18,791
Income tax (benefit) expense	(256,781)	450	(256,196)	764
Net income	229,964	6,499	241,729	18,027
Preferred stock dividends and discount accretion	3,055	3,032	6,107	6,062
Net income available to common shareholders	$ 226,909	$ 3,467	$ 235,622	$ 11,965
Earnings per common share - basic / diluted (in dollars per share)	$ 3.90	$ 0.06	$ 4.05	$ 0.21
Weighted average common shares outstanding - basic / diluted (in shares)	58,141	57,840	58,111	57,803

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Loans and Allowance for Loan Losses - TDRs and pre and post-modification recorded investment (Details 8) (Loans Receivable, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013 Contract	Dec. 31, 2012 Contract	Jun. 30, 2012 Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts	328	388	377
Pre-Modification Outstanding Recorded Investment	$ 92,264	$ 172,727	$ 177,129
Post-Modification Outstanding Recorded Investment	84,877	160,763	167,613
Residential mortgage
Financing Receivable, Modifications [Line Items]
Number of Contracts	110	117	110
Pre-Modification Outstanding Recorded Investment	17,772	20,323	17,613
Post-Modification Outstanding Recorded Investment	16,381	19,296	16,950
Residential construction
Financing Receivable, Modifications [Line Items]
Number of Contracts	51	67	72
Pre-Modification Outstanding Recorded Investment	11,895	25,822	25,123
Post-Modification Outstanding Recorded Investment	9,908	23,786	22,178
Consumer installment
Financing Receivable, Modifications [Line Items]
Number of Contracts	42	51	47
Pre-Modification Outstanding Recorded Investment	447	1,292	521
Post-Modification Outstanding Recorded Investment	337	1,282	511
Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts	125	153	148
Pre-Modification Outstanding Recorded Investment	62,150	125,290	133,872
Post-Modification Outstanding Recorded Investment	58,251	116,399	127,974
Commercial | Commercial (secured by real estate)
Financing Receivable, Modifications [Line Items]
Number of Contracts	77	96	96
Pre-Modification Outstanding Recorded Investment	45,874	80,261	87,104
Post-Modification Outstanding Recorded Investment	42,366	75,340	82,325
Commercial | Commercial & industrial
Financing Receivable, Modifications [Line Items]
Number of Contracts	34	32	29
Pre-Modification Outstanding Recorded Investment	3,091	7,492	3,972
Post-Modification Outstanding Recorded Investment	2,929	7,250	3,972
Commercial | Commercial construction
Financing Receivable, Modifications [Line Items]
Number of Contracts	14	25	23
Pre-Modification Outstanding Recorded Investment	13,185	37,537	42,796
Post-Modification Outstanding Recorded Investment	$ 12,956	$ 33,809	$ 41,677

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Assets and Liabilities Measured at Fair Value - Fair values for other financial instruments that are not measured at fair value on recurring basis (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Assets:
Securities held to maturity	$ 226,695	$ 261,131	$ 299,971
Loans, net	4,107,523	4,067,871	4,006,530
Level 1
Assets:
Securities held to maturity
Loans, net
Mortgage loans held for sale
Liabilities:
Deposits
Federal Home Loan Bank advances
Long-term debt
Level 2
Assets:
Securities held to maturity	226,695	261,131	299,971
Loans, net
Mortgage loans held for sale	19,511	29,693	19,223
Liabilities:
Deposits	5,986,591	5,988,743	5,863,885
Federal Home Loan Bank advances	70,125	40,125	125,125
Long-term debt
Level 3
Assets:
Securities held to maturity
Loans, net	4,048,174	3,957,669	3,830,187
Mortgage loans held for sale
Liabilities:
Deposits
Federal Home Loan Bank advances
Long-term debt	123,650	118,626	114,679
Total
Assets:
Securities held to maturity	226,695	261,131	299,971
Loans, net	4,048,174	3,957,669	3,830,187
Mortgage loans held for sale	19,511	29,693	19,223
Liabilities:
Deposits	5,986,591	5,988,743	5,863,885
Federal Home Loan Bank advances	70,125	40,125	125,125
Long-term debt	123,650	118,626	114,679
Carrying Amount
Assets:
Securities held to maturity	214,947	244,184	282,750
Loans, net	4,107,523	4,067,871	4,006,530
Mortgage loans held for sale	19,150	28,821	18,645
Liabilities:
Deposits	6,011,829	5,952,140	5,822,467
Federal Home Loan Bank advances	70,125	40,125	125,125
Long-term debt	$ 124,845	$ 124,805	$ 120,265

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Reclassifications Out of Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2013

Reclassifications Out Of Accumulated Other Comprehensive Income [Abstract]

Schedule of reclassifications out of accumulated other comprehensive income

	Amounts Reclassified from Accumulated Other Comprehensive Income
Details about Accumulated Other Comprehensive Income Components	For the Three Months Ended June 30, 2013			For the Six Months Ended June 30, 2013			Affected Line Item in the Statement Where Net Income is Presented
Unrealized (losses) gains on available-for-sale securities:
	$	-		$	116		Securities gains, net
		-			(45	)	Tax (expense) or benefit
	$	-		$	71		Net of tax
Amortization of gains included in net income on available-for-sale securities transferred to held to maturity:
	$	271		$	590		Investment securities interest revenue
		(103	)		(227	)	Tax (expense) or benefit
	$	168		$	363		Net of tax
Gains included in net income on derivative financial instruments accounted for as cash flow hedges:
Effective portion of interest rate contracts	$	303		$	840		Loan interest revenue
Ineffective portion of interest rate contracts		3			4		Other fee revenue
		306			844		Total before tax
		(119	)		(328	)	Tax (expense) or benefit
	$	187		$	516		Net of tax
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan
Prior service cost	$	(91	)	$	(181	)	Salaries and employee benefits expense
Actuarial losses		(42	)		(84	)	Salaries and employee benefits expense
		(133	)		(265	)	Total before tax
		52			103		Tax (expense) or benefit
	$	(81	)	$	(162	)	Net of tax
Total reclassifications for the period	$	274		$	788		Net of tax

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 14 – Commitments and Contingencies

United and its wholly-owned subsidiary, United Community Bank, (“the Bank”) are parties to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of their customers. These financial instruments include commitments to extend credit and letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of these instruments reflect the extent of involvement the Bank has in particular classes of financial instruments.  The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. United uses the same credit policies in making commitments and conditional obligations as it uses for underwriting on-balance sheet instruments. In most cases, collateral or other security is required to support financial instruments with credit risk.

The following table summarizes, as of June 30, 2013, December 31, 2012 and June 30, 2012, the contractual amount of off-balance sheet instruments (in thousands):

	June 30, 2013		December 31, 2012		June 30, 2012
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	600,841	$	313,798	$	438,615
Letters of credit		15,631		13,683		16,210

United, in the normal course of business, is subject to various pending and threatened lawsuits in which claims for monetary damages are asserted.  Although it is not possible to predict the outcome of these lawsuits, or the range of any possible loss, management, after consultation with legal counsel, does not anticipate that the ultimate aggregate liability, if any, arising from these lawsuits will have a material adverse effect on United’s financial position or results of operations.

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Loans and Allowance for Loan Losses - Changes in allowance for loan losses (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period			$ 107,137
Charge-offs:
Total loans charged-off			(53,456)
Recoveries
Balance end of period	81,845	112,705	81,845	112,705
Loans Receivable
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period	105,753	113,601	107,137	114,468
Provision for loan losses	48,500	18,000	59,500	33,000
Charge-offs:
Total loans charged-off	74,790	19,662	88,157	36,859
Recoveries
Total recoveries	2,382	766	3,365	2,096
Net charge-offs	72,408	18,896	84,792	34,763
Balance end of period	81,845	112,705	81,845	112,705
Loans Receivable | Commercial (Secured By Real Estate)
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period			27,847	31,644
Provision for loan losses			25,670	6,288
Charge-offs:
Total loans charged-off	26,740	4,418	32,194	8,346
Recoveries
Total recoveries	1,274	69	1,485	300
Balance end of period	22,808	29,886	22,808	29,886
Loans Receivable | Commercial & industrial
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period			5,537	5,681
Provision for loan losses			19,594	1,061
Charge-offs:
Total loans charged-off	15,932	888	17,755	1,644
Recoveries
Total recoveries	356	113	678	200
Balance end of period	8,054	5,298	8,054	5,298
Loans Receivable | Commercial construction
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period			8,389	6,097
Provision for loan losses			2,177	4,662
Charge-offs:
Total loans charged-off	6,305	88	6,350	452
Recoveries
Total recoveries	10		59	30
Balance end of period	4,275	10,337	4,275	10,337
Loans Receivable | Residential Mortgage
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period			26,642	29,076
Provision for loan losses			2,041	6,471
Charge-offs:
Total loans charged-off	6,718	4,014	9,074	9,781
Recoveries
Total recoveries	209	152	418	544
Balance end of period	20,027	26,310	20,027	26,310
Loans Receivable | Residential construction
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period			26,662	30,379
Provision for loan losses			12,139	13,712
Charge-offs:
Total loans charged-off	18,530	9,846	21,512	15,475
Recoveries
Total recoveries	24	283	33	598
Balance end of period	17,322	29,214	17,322	29,214
Loans Receivable | Consumer installment
Financing Receivable, Allowance For Credit Losses [Line Items]
Balance beginning of period			2,747	2,124
Provision for loan losses			223	1,183
Charge-offs:
Total loans charged-off	565	408	1,272	1,161
Recoveries
Total recoveries	509	149	692	424
Balance end of period	$ 2,390	$ 2,570	$ 2,390	$ 2,570

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Commitments and Contingencies - Contractual amount of off-balance sheet instruments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Commitments to extend credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amount of off-balance sheet instruments	$ 600,841	$ 313,798	$ 438,615
Letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contractual amount of off-balance sheet instruments	$ 15,631	$ 13,683	$ 16,210

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Loans and Allowance for Loan Losses (Details Textual) (USD $)	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Loans and Allowance for Loan Losses (Additional Textual) [Abstract]
Criteria amount for evaluation of impairment	$ 500,000
Accruing substandard relationship	2,000,000
Impaired loans considered assigned for specific reserves	6,860,000
FHLB
Loans and Allowance for Loan Losses (Textual) [Abstract]
Pledged as collateral to secure FHLB advances	2,000,000,000	1,900,000,000	1,610,000,000
Loans and Allowance for Loan Losses (Additional Textual) [Abstract]
Specific reserves	4,340,000	9,500,000	10,300,000
Loans outstanding classified as troubled debt restructurings	$ 35,000	$ 689,000	$ 490,000

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Derivatives and Hedging Activities - Other derivatives not accounted for as hedges (Details 3) (Derivatives not accounted for hedges, Other fee revenue, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Derivatives not accounted for hedges | Other fee revenue
Derivative Instruments, Gain (Loss) [Line Items]
Location of Gain (Loss) Recognized in Income on Derivative	Other fee revenue	Other fee revenue	Other fee revenue	Other fee revenue
Amount of Gain (Loss) Recognized in Income on Customer Derivatives	$ 488	$ (1)	$ 740	$ 68

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Securities - Summary of held to maturity securities in unrealized loss position (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Summary of held to maturity securities in an unrealized loss position
Fair Value, Less than 12 Months	$ 5,089
Unrealized Loss, Less than 12 Months	242
Fair Value, 12 Months or More
Unrealized Loss, 12 Months or More
Fair Value, Total	5,089
Unrealized Loss, Total	242
State and political subdivisions
Summary of held to maturity securities in an unrealized loss position
Fair Value, Less than 12 Months	374
Unrealized Loss, Less than 12 Months	4
Fair Value, 12 Months or More
Unrealized Loss, 12 Months or More
Fair Value, Total	374
Unrealized Loss, Total	4
Mortgage-backed securities
Summary of held to maturity securities in an unrealized loss position
Fair Value, Less than 12 Months	4,715
Unrealized Loss, Less than 12 Months	238
Fair Value, 12 Months or More
Unrealized Loss, 12 Months or More
Fair Value, Total	4,715
Unrealized Loss, Total	$ 238

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Offsetting Assets and Liabilities - Summary of amounts outstanding under master netting agreements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Offsetting [Abstract]
Repurchase and reverse repurchase agreements gross amounts of recognized assets	$ 400,000	$ 325,000	$ 320,000
Repurchase and reverse repurchase agreements gross amounts offset on balance sheet assets	(350,000)	(265,000)	(200,000)
Repurchase and reverse repurchase agreements net assets balance	50,000	60,000	120,000
Repurchase and reverse repurchase agreements gross amounts not off set in balance sheet assets of financial instruments
Repurchase and reverse repurchase agreements gross amounts not off set in balance sheet assets of collateral received
Repurchase and reverse repurchase agreements net assets	50,000	60,000	120,000
Securities lending transactions, gross amounts of recognized assets		50,000
Securities lending transactions, gross amounts offset on balance sheet assets		(50,000)
Securities lending transactions, net assets balance
Securities lending transactions, gross amounts not off set in balance sheet assets of financial instruments
Securities lending transactions, gross amounts not off set in balance sheet assets of collateral received
Securities lending transactions, assets
Derivative, gross amounts of recognized assets	9,017	658	223
Derivative, gross amounts offset on balance sheet
Derivatives asset net balance	9,017	658	223
Derivative, gross amounts not off set in balance sheet assets of financial instruments
Derivative, gross amounts not off set in balance sheet assets of collateral received
Derivative asset	9,017	658	223
Offsetting assets gross amounts of recognized assets	409,017	375,658	320,223
Offsetting assets gross amounts offset on balance sheet	(350,000)	(315,000)	(200,000)
Offsetting assets net asset balance	59,017	60,658	120,223
Offsetting assets gross amounts not offset in balance sheet of financial instruments
Offsetting assets gross amounts not offset in the balance sheet of collateral received
Offsetting assets net amount	59,017	60,658	120,223
Weighted average interest rate of reverse repurchase agreements assets	1.09%	1.18%	1.27%
Repurchase and reverse repurchase agreements gross amounts of recognized liabilities	350,000	265,000	200,000
Repurchase and reverse repurchase agreements gross amounts offset on balance sheet liabilities	(350,000)	(265,000)	(200,000)
Repurchase and reverse repurchase agreements net liabilities balance
Repurchase and reverse repurchase agreements gross amounts not off set in balance sheet liabilities of financial instruments
Repurchase and reverse repurchase agreements gross amounts not off set in balance sheet liabilities of collateral pledged
Repurchase and reverse repurchase agreements net liabilities
Securities lending transactions, gross amounts of recognized liabilities		50,000
Securities lending transactions, gross amounts offset on balance sheet		(50,000)
Securities lending transactions, net liabilities balance
Securities lending transactions, gross amounts not offset in balance sheet of financial instruments
Securities lending transactions, gross amounts not offset in the balance sheet of collateral pledged
Securities lending transactions, liability
Derivative liability, gross amounts of recognized liabilities	29,330	12,543	6,142
Derivative liability, gross amounts offset on balance sheet liabilities
Derivative liability, net liabilities balance	29,330	12,543	6,142
Derivative liability, gross amounts not off set in balance sheet liabilities of financial instruments
Derivative liability, gross amounts not off set in balance sheet liabilities of collateral pledged	18,198	11,493	5,405
Derivative liability	11,132	1,050	737
Offsetting liabilities gross amounts of recognized liabilities	379,330	327,543	206,142
Offsetting liabilities gross amounts offset on balance sheet	(350,000)	(315,000)	(200,000)
Offsetting liabilities, net liabilities balance	29,330	12,543	6,142
Offsetting liabilities gross amounts not offset in balance sheet of financial instruments
Offsetting liabilities gross amounts not offset in the balance sheet of collateral pledged	18,198	11,493	5,405
Offsetting liabilities net amount	$ 11,132	$ 1,050	$ 737
Weighted average interest rate of reverse repurchase agreements liabilities	0.25%	0.43%	0.41%

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Securities - Summary of securities sales activity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Investment Securities [Abstract]
Proceeds from sales		$ 265,992	$ 15,751	$ 371,103
Gross gains on sales		6,490	116	7,047
Gross losses on sales
Net gains on sales of securities		6,490	116	7,047
Income tax expense attributable to sales		$ 2,425	$ 45	$ 2,631

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Securities

6 Months Ended

Jun. 30, 2013

Investment Securities [Abstract]

Securities

Note 4 – Securities

Realized gains and losses are derived using the specific identification method for determining the cost of securities sold. The following table summarizes securities sales activity for the three and six month periods ended June 30, 2013 and 2012 (in thousands).

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Proceeds from sales	$	-	$	265,992	$	15,751	$	371,103
Gross gains on sales	$	-	$	6,490	$	116	$	7,047
Gross losses on sales		-		-		-		-
Net gains on sales of securities	$	-	$	6,490	$	116	$	7,047
Income tax expense attributable to sales	$	-	$	2,425	$	45	$	2,631

Securities with a carrying value of $1.30 billion, $1.40 billion, and $1.29 billion were pledged to secure public deposits and other secured borrowings at June 30, 2013, December 31, 2012 and June 30, 2012, respectively.  Substantial borrowing capacity remains available under borrowing arrangements with the FHLB with currently pledged securities.

Securities are classified as held-to-maturity when management has the positive intent and ability to hold them until maturity.  Securities held-to-maturity are carried at amortized cost.

The amortized cost, gross unrealized gains and losses and fair value of securities held-to-maturity at June 30, 2013, December 31, 2012 and June 30, 2012 are as follows (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of June 30, 2013	Cost		Gains		Losses		Value
State and political subdivisions	$	51,757	$	4,332	$	4	$	56,085
Mortgage-backed securities (1)		163,190		7,658		238		170,610
Total	$	214,947	$	11,990	$	242	$	226,695
As of December 31, 2012
State and political subdivisions	$	51,780	$	5,486	$	-	$	57,266
Mortgage-backed securities (1)		192,404		11,461		-		203,865
Total	$	244,184	$	16,947	$	-	$	261,131
As of June 30, 2012
State and political subdivisions	$	51,801	$	5,586	$	-	$	57,387
Mortgage-backed securities (1)		230,949		11,635		-		242,584
Total	$	282,750	$	17,221	$	-	$	299,971
(1)     All are residential type mortgage-backed securities

The cost basis, unrealized gains and losses, and fair value of securities available-for-sale at June 30, 2013, December 31, 2012 and June 30, 2012 are presented below (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
As of June 30, 2013	Cost		Gains		Losses		Value
State and political subdivisions	$	22,369	$	1,112	$	41	$	23,440
Mortgage-backed securities (1)		1,410,189		15,935		13,538		1,412,586
Corporate bonds		260,464		1,585		8,181		253,868
Asset-backed securities		242,690		2,645		491		244,844
Other		2,526		-		-		2,526
Total	$	1,938,238	$	21,277	$	22,251	$	1,937,264
As of December 31, 2012
State and political subdivisions	$	27,717	$	1,354	$	19	$	29,052
Mortgage-backed securities (1)		1,408,042		22,552		2,092		1,428,502
Corporate bonds		169,783		1,052		7,173		163,662
Asset-backed securities		209,411		1,894		749		210,556
Other		2,821		-		-		2,821
Total	$	1,817,774	$	26,852	$	10,033	$	1,834,593
As of June 30, 2012
U.S. Government agencies	$	43,618	$	256	$	-	$	43,874
State and political subdivisions		25,704		1,462		7		27,159
Mortgage-backed securities (1)		1,408,047		25,723		339		1,433,431
Corporate bonds		119,198		-		9,160		110,038
Asset-backed securities		85,090		-		592		84,498
Other		2,583		-		-		2,583
Total	$	1,684,240	$	27,441	$	10,098	$	1,701,583
(1)   All are residential type mortgage-backed securities

The following table summarizes held-to-maturity securities in an unrealized loss position as of June 30, 2013 (thousands).  As of December 31, 2012 and June 30, 2012, there were no held-to-maturity securities in an unrealized loss position.

	Less than 12 Months				12 Months or More				Total
As of June 30, 2013	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
State and political subdivisions	$	374	$	4	$	-	$	-	$	374	$	4
Mortgage-backed securities	$	4,715	$	238	$	-	$	-		4,715		238
Total unrealized loss position	$	5,089	$	242	$	-	$	-	$	5,089	$	242

The following table summarizes available-for-sale securities in an unrealized loss position as of June 30, 2013, December 31, 2012 and June 30, 2012 (in thousands).

	Less than 12 Months				12 Months or More				Total
As of June 30, 2013	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
State and political subdivisions	$	3,645	$	39	$	10	$	2	$	3,655	$	41
Mortgage-backed securities		636,449		13,538		-		-		636,449		13,538
Corporate bonds		97,501		4,635		77,404		3,546		174,905		8,181
Asset-backed securities		56,817		208		32,495		283		89,312		491
Total unrealized loss position	$	794,412	$	18,420	$	109,909	$	3,831	$	904,321	$	22,251
As of December 31, 2012
State and political subdivisions	$	3,674	$	17	$	10	$	2	$	3,684	$	19
Mortgage-backed securities		326,485		2,092		-		-		326,485		2,092
Corporate bonds		21,248		136		93,903		7,037		115,151		7,173
Asset-backed securities		82,188		749		-		-		82,188		749
Total unrealized loss position	$	433,595	$	2,994	$	93,913	$	7,039	$	527,508	$	10,033
As of June 30, 2012
State and political subdivisions	$	5,696	$	3	$	11	$	4	$	5,707	$	7
Mortgage-backed securities		104,644		332		19,436		7		124,080		339
Corporate bonds		16,500		3,500		93,488		5,660		109,988		9,160
Asset-backed securities		74,097		592		-		-		74,097		592
Total unrealized loss position	$	200,937	$	4,427	$	112,935	$	5,671	$	313,872	$	10,098

At June 30, 2013, there were 111 available-for-sale securities and four held-to-maturity securities that were in an unrealized loss position.  United does not intend to sell nor believes it will be required to sell securities in an unrealized loss position prior to the recovery of their amortized cost basis.  Unrealized losses at June 30, 2013, December 31, 2012 and June 30, 2012 were primarily attributable to changes in interest rates, however the unrealized losses in corporate bonds also reflect downgrades in the underlying securities ratings since the time of acquisition.  The bonds remain above investment grade and United does not consider them to be impaired.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, among other factors.  In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports.  No impairment charges were recognized during the three or six months ended June 30, 2013 or 2012.

The amortized cost and fair value of held-to-maturity and available-for-sale securities at June 30, 2013, by contractual maturity, are presented in the following table (in thousands).

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
State and political subdivisions:
Within 1 year	$	1,830	$	1,868	$	-	$	-
1 to 5 years		14,572		15,460		10,860		11,724
5 to 10 years		5,119		5,207		25,594		27,728
More than 10 years		848		905		15,303		16,633
		22,369		23,440		51,757		56,085
Corporate bonds:
1 to 5 years		38,183		38,451		-		-
5 to 10 years		211,517		205,234		-		-
More than 10 years		10,764		10,183		-		-
		260,464		253,868		-		-
Asset-backed securities:
1 to 5 years		40,537		40,644		-		-
5 to 10 years		153,281		155,038		-		-
More than 10 years		48,872		49,162		-		-
		242,690		244,844		-		-
Other:
More than 10 years		2,526		2,526		-		-
		2,526		2,526		-		-
Total securities other than mortgage-backed securities:
Within 1 year		1,830		1,868		-		-
1 to 5 years		93,292		94,555		10,860		11,724
5 to 10 years		369,917		365,479		25,594		27,728
More than 10 years		63,010		62,776		15,303		16,633
Mortgage-backed securities		1,410,189		1,412,586		163,190		170,610
	$	1,938,238	$	1,937,264	$	214,947	$	226,695

Expected maturities may differ from contractual maturities because issuers and borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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Derivatives and Hedging Activities - Derivatives accounted for as hedges under ASC 815 (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Other assets
Derivatives accounted for as hedges under ASC 815
Derivatives accounted for as hedges, Interest Rate Products, Balance Sheet Location	Other assets	Other assets	Other assets
Derivatives accounted for as hedges, Asset derivatives. Fair Value	$ 8,017	$ 68	$ 23
Derivatives not accounted for as hedges under ASC 815
Derivatives not accounted for as hedges, Interest Rate Products, Balance Sheet Location	Other assets	Other assets	Other assets
Derivatives not accounted for as hedges, Asset derivatives, Fair Value	1,000	155	635
Other liabilities
Derivatives accounted for as hedges under ASC 815
Derivatives accounted for as hedges, Interest Rate Products, Balance Sheet Location	Other liabilities	Other liabilities	Other liabilities
Derivatives accounted for as hedges, Liability derivatives, Fair Value	28,325	5,987	11,900
Derivatives not accounted for as hedges under ASC 815
Derivatives not accounted for as hedges, Interest Rate Products, Balance Sheet Location	Other liabilities	Other liabilities	Other liabilities
Derivatives not accounted for as hedges, Liability derivatives, Fair Value	$ 1,005	$ 155	$ 643

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of accrued dividends on preferred stock, including accretion of discounts

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
Series A - 6% fixed	$	3	$	3	$	6	$	6
Series B - 5% fixed until December 6, 2013, 9% thereafter		2,636		2,614		5,266		5,222
Series D - LIBOR plus 9.6875%, resets quarterly		416		415		835		834
Total preferred stock dividends	$	3,055	$	3,032	$	6,107	$	6,062

Schedule of computation of basic and diluted loss per share

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Net income available to common shareholders	$	226,909	$	3,467	$	235,622	$	11,965
Weighted average shares outstanding:
Basic		58,141		57,840		58,111		57,803
Effect of dilutive securities
Convertible securities		-		-		-		-
Stock options		-		-		-		-
Warrants		-		-		-		-
Diluted		58,141		57,840		58,111		57,803
Income per common share:
Basic	$	3.90	$	.06	$	4.05	$	.21
Diluted	$	3.90	$	.06	$	4.05	$	.21

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Securities (Details Textual) (USD $) In Billions, unless otherwise specified	Jun. 30, 2013 Security	Dec. 31, 2012	Jun. 30, 2012
Investment Securities [Abstract]
Carrying value of secure public deposits, FHLB advances and other secured borrowings	$ 1.30	$ 1.40	$ 1.29
Number of available for sale securities in unrealized loss position	111
Number of held to maturity securities in unrealized loss position	4

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Reclassifications Out of Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2013

Reclassifications Out Of Accumulated Other Comprehensive Income [Abstract]

Reclassifications Out of Accumulated Other Comprehensive Income

Note 7 – Reclassifications Out of Accumulated Other Comprehensive Income

The following table presents the details regarding amounts reclassified out of accumulated other comprehensive income for the three and six months ended June 30, 2013 (in thousands).

	Amounts Reclassified from Accumulated Other Comprehensive Income
Details about Accumulated Other Comprehensive Income Components	For the Three Months Ended June 30, 2013			For the Six Months Ended June 30, 2013			Affected Line Item in the Statement Where Net Income is Presented
Unrealized (losses) gains on available-for-sale securities:
	$	-		$	116		Securities gains, net
		-			(45	)	Tax (expense) or benefit
	$	-		$	71		Net of tax
Amortization of gains included in net income on available-for-sale securities transferred to held to maturity:
	$	271		$	590		Investment securities interest revenue
		(103	)		(227	)	Tax (expense) or benefit
	$	168		$	363		Net of tax
Gains included in net income on derivative financial instruments accounted for as cash flow hedges:
Effective portion of interest rate contracts	$	303		$	840		Loan interest revenue
Ineffective portion of interest rate contracts		3			4		Other fee revenue
		306			844		Total before tax
		(119	)		(328	)	Tax (expense) or benefit
	$	187		$	516		Net of tax
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan
Prior service cost	$	(91	)	$	(181	)	Salaries and employee benefits expense
Actuarial losses		(42	)		(84	)	Salaries and employee benefits expense
		(133	)		(265	)	Total before tax
		52			103		Tax (expense) or benefit
	$	(81	)	$	(162	)	Net of tax
Total reclassifications for the period	$	274		$	788		Net of tax
Amounts shown above in parentheses reduce earnings

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Assets and Liabilities Measured at Fair Value - Assets and liabilities measured at fair value on nonrecurring basis (Details 2) (Nonrecurring, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Level 1
Presentation of United's assets and liabilities measured at fair value on nonrecurring basis
Loans
Foreclosed properties
Total assets
Level 2
Presentation of United's assets and liabilities measured at fair value on nonrecurring basis
Loans
Foreclosed properties
Total assets
Level 3
Presentation of United's assets and liabilities measured at fair value on nonrecurring basis
Loans	74,685	165,751	160,266
Foreclosed properties	3,802	14,788	25,253
Total assets	78,487	180,539	185,519
Total
Presentation of United's assets and liabilities measured at fair value on nonrecurring basis
Loans	74,685	165,751	160,266
Foreclosed properties	3,802	14,788	25,253
Total assets	$ 78,487	$ 180,539	$ 185,519

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Offsetting Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Offsetting [Abstract]

Offsetting Assets and Liabilities

Note 3 – Offsetting Assets and Liabilities

United enters into reverse repurchase agreements in order to invest short-term funds.  In addition, United enters into repurchase agreements and reverse repurchase agreements with the same counterparty in transactions commonly referred to as collateral swaps that are subject to master netting agreements under which the balances are netted in the balance sheet in accordance with ASC 210-20, Offsetting.

United also enters into derivative transactions that are subject to master netting arrangements; however there were no offsetting positions at June 30, 2013, December 31, 2012 or June 30, 2012.

The following table presents a summary of amounts outstanding under master netting agreements as of June 30, 2013 and December 31, 2012, and June 30, 2012 (in thousands).

	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet					Gross Amounts not Offset in the Balance Sheet
June 30, 2013							Net Asset Balance		Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	400,000		$	(350,000	)	$	50,000	$	-	$	-	$	50,000
Derivatives		9,017			-			9,017		-		-		9,017
Total	$	409,017		$	(350,000	)	$	59,017	$	-	$	-	$	59,017
Weighted average interest rate of reverse repurchase agreements		1.09	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	350,000		$	(350,000	)	$	-	$	-	$	-	$	-
Derivatives		29,330			-			29,330		-		18,198		11,132
Total	$	379,330		$	(350,000	)	$	29,330	$	-	$	18,198	$	11,132
Weighted average interest rate of repurchase agreements		.25	%
	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		Gross Amounts not Offset in the Balance Sheet
December 31, 2012									Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	325,000		$	(265,000	)	$	60,000	$	-	$	-	$	60,000
Securities lending transactions		50,000			(50,000	)		-		-		-		-
Derivatives		658			-			658		-		-		658
Total	$	375,658		$	(315,000	)	$	60,658	$	-	$	-	$	60,658
Weighted average interest rate of reverse repurchase agreements		1.18	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	265,000		$	(265,000	)	$	-	$	-	$	-	$	-
Securities lending transactions		50,000			(50,000	)		-		-		-		-
Derivatives		12,543			-			12,543		-		11,493		1,050
Total	$	327,543		$	(315,000	)	$	12,543	$	-	$	11,493	$	1,050
Weighted average interest rate of repurchase agreements		.43	%
	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		Gross Amounts not Offset in the Balance Sheet
June 30, 2012									Financial Instruments		Collateral Received		Net Amount
Repurchase agreements / reverse repurchase agreements	$	320,000		$	(200,000	)	$	120,000	$	-	$	-	$	120,000
Derivatives		223			-			223		-		-		223
Total	$	320,223		$	(200,000	)	$	120,223	$	-	$	-	$	120,223
Weighted average interest rate of reverse repurchase agreements		1.27	%
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		Gross Amounts not Offset in the Balance Sheet
									Financial Instruments		Collateral Pledged		Net Amount
Repurchase agreements / reverse repurchase agreements	$	200,000		$	(200,000	)	$	-	$	-	$	-	$	-
Derivatives		6,142			-			6,142		-		5,405		737
Total	$	206,142		$	(200,000	)	$	6,142	$	-	$	5,405	$	737
Weighted average interest rate of repurchase agreements		.41	%

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Consolidated Statement of Changes in Shareholders' Equity (Unaudited) (USD $) In Thousands, unless otherwise specified	Series A Preferred Stock	Series B Preferred Stock	Series D Preferred Stock	Non-Voting Common Stock	Common Stock	Common Stock Issuable	Capital Surplus	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2011	$ 217	$ 177,092	$ 16,613	$ 15,914	$ 41,647	$ 3,233	$ 1,054,940	$ (730,861)	$ (3,309)	$ 575,486
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)								18,027		18,027
Other comprehensive loss									(13,797)	(13,797)
Common stock issued to dividend reinvestment plan and to employee benefit plans					61		440			501
Amortization of stock options and restricted stock awards							946			946
Vesting of restricted stock					16	(151)	206			71
Deferred compensation plan, net, including dividend equivalents						101				101
Shares issued from deferred compensation plan					3	(290)	287
Preferred stock dividends:
Series A								(6)		(6)
Series B		722						(5,222)		(4,500)
Series D								(834)		(834)
Balance at Jun. 30, 2012	217	177,814	16,613	15,914	41,727	2,893	1,056,819	(718,896)	(17,106)	575,995
Balance at Dec. 31, 2012	217	178,557	16,613	15,317	42,424	3,119	1,057,951	(709,153)	(23,640)	581,405
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)								241,729		241,729
Other comprehensive loss									9,854	9,854
Common stock issued to dividend reinvestment plan and to employee benefit plans					35		348			383
Conversion of non-voting common stock				(842)	842
Amortization of stock options and restricted stock awards							1,359			1,359
Vesting of restricted stock					50	1,934	(2,161)			(177)
Deferred compensation plan, net, including dividend equivalents						91				91
Shares issued from deferred compensation plan					5	(439)	434
Preferred stock dividends:
Series A								(6)		(6)
Series B		766						(5,266)		(4,500)
Series D								(835)		(835)
Balance at Jun. 30, 2013	$ 217	$ 179,323	$ 16,613	$ 14,475	$ 43,356	$ 4,705	$ 1,057,931	$ (473,531)	$ (13,786)	$ 829,303

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Loans and Allowance for Loan Losses - Loans modified under terms of TDR (Details 9) (Loans Receivable, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 Contract	Jun. 30, 2012 Contract	Jun. 30, 2013 Contract	Jun. 30, 2012 Contract
Loans modified under the terms of a TDR
Number of Contracts	13	72	50	158
Pre-Modification Outstanding Recorded Investment	$ 7,511	$ 29,251	$ 14,814	$ 76,945
Post Modification Outstanding Recorded Investment	7,367	27,711	14,435	73,474
Number of Contracts	1	7	11	16
Recorded Investment	40	2,466	2,166	8,532
Residential mortgage
Loans modified under the terms of a TDR
Number of Contracts	2	20	13	44
Pre-Modification Outstanding Recorded Investment	649	5,288	2,764	10,567
Post Modification Outstanding Recorded Investment	505	5,112	2,620	10,385
Number of Contracts	1	1	2	4
Recorded Investment	40	27	108	400
Residential construction
Loans modified under the terms of a TDR
Number of Contracts	2	20	7	34
Pre-Modification Outstanding Recorded Investment	339	7,638	1,123	11,389
Post Modification Outstanding Recorded Investment	339	6,361	994	9,550
Number of Contracts		1	2	4
Recorded Investment		121	117	1,597
Consumer installment
Loans modified under the terms of a TDR
Number of Contracts		8	4	15
Pre-Modification Outstanding Recorded Investment		210	21	270
Post Modification Outstanding Recorded Investment		210	21	265
Number of Contracts		1	3	1
Recorded Investment		6	20	6
Commercial
Loans modified under the terms of a TDR
Number of Contracts	9	24	26	65
Pre-Modification Outstanding Recorded Investment	6,523	16,115	10,906	54,719
Post Modification Outstanding Recorded Investment	6,523	16,028	10,800	53,274
Number of Contracts		4	4	7
Recorded Investment		2,312	1,921	6,529
Commercial | Commercial (secured by real estate)
Loans modified under the terms of a TDR
Number of Contracts	9	10	17	34
Pre-Modification Outstanding Recorded Investment	6,523	7,815	10,091	22,914
Post Modification Outstanding Recorded Investment	6,523	7,728	10,091	21,469
Number of Contracts		3	1	3
Recorded Investment		2,307	432	2,307
Commercial | Commercial & industrial
Loans modified under the terms of a TDR
Number of Contracts		7	9	17
Pre-Modification Outstanding Recorded Investment		598	815	3,322
Post Modification Outstanding Recorded Investment		598	709	3,322
Number of Contracts		1	1	2
Recorded Investment		5	35	48
Commercial | Commercial construction
Loans modified under the terms of a TDR
Number of Contracts		7		14
Pre-Modification Outstanding Recorded Investment		7,702		28,483
Post Modification Outstanding Recorded Investment		7,702		28,483
Number of Contracts			2	2
Recorded Investment			$ 1,454	$ 4,174

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Loans and Allowance for Loan Losses - Average balances of impaired loans and income recognized on impaired loans (Details 4) (Loans Receivable, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	$ 104,283	$ 287,336	$ 179,309	$ 283,981
Interest Revenue Recognized During Impairment	1,195	2,421	3,021	4,688
Cash Basis Interest Revenue Received	1,194	3,216	3,712	6,408
Commercial (Secured By Real Estate)
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	52,191	125,419	74,233	112,633
Interest Revenue Recognized During Impairment	631	1,414	1,577	2,665
Cash Basis Interest Revenue Received	665	1,476	1,665	2,817
Commercial & industrial
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	5,804	48,984	27,277	49,922
Interest Revenue Recognized During Impairment	63	191	219	309
Cash Basis Interest Revenue Received	70	700	699	1,310
Commercial construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	13,034	41,242	27,983	36,109
Interest Revenue Recognized During Impairment	114	217	265	484
Cash Basis Interest Revenue Received	115	304	347	761
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	71,029	215,645	129,493	198,664
Interest Revenue Recognized During Impairment	808	1,822	2,061	3,458
Cash Basis Interest Revenue Received	850	2,480	2,711	4,888
Residential Mortgage
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	18,950	19,645	20,179	25,060
Interest Revenue Recognized During Impairment	205	255	446	480
Cash Basis Interest Revenue Received	193	297	416	558
Residential construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	14,058	51,596	29,374	59,866
Interest Revenue Recognized During Impairment	178	336	504	737
Cash Basis Interest Revenue Received	147	431	575	949
Consumer installment
Financing Receivable, Allowance for Credit Losses [Line Items]
Average Balance	246	450	263	391
Interest Revenue Recognized During Impairment	4	8	10	13
Cash Basis Interest Revenue Received	$ 4	$ 8	$ 10	$ 13

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Assets and Liabilities Measured at Fair Value (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value [Abstract]

Schedule of assets and liabilities measured at fair value on a recurring basis

June 30, 2013	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
State and political subdivisions	$	-		23,440	$	-	$	23,440
Mortgage-backed securities		-		1,412,586		-		1,412,586
Corporate bonds		-		253,518		350		253,868
Asset-backed securities		-		244,844				244,844
Other		-		2,526		-		2,526
Deferred compensation plan assets		3,074		-		-		3,074
Derivative financial instruments		-		9,017		-		9,017
Total assets	$	3,074	$	1,945,931	$	350	$	1,949,355
Liabilities:
Deferred compensation plan liability	$	3,074	$	-	$	-	$	3,074
Brokered certificates of deposit		-		261,288		-		261,288
Derivative financial instruments		-		29,330		-		29,330
Total liabilities	$	3,074	$	290,618	$	-	$	293,692

December 31, 2012	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale
State and political subdivisions	$	-	$	29,052	$	-	$	29,052
Mortgage-backed securities		-		1,428,502		-		1,428,502
Corporate bonds		-		163,312		350		163,662
Asset-backed securities		-		210,556		-		210,556
Other		-		2,821		-		2,821
Deferred compensation plan assets		3,101		-		-		3,101
Derivative financial instruments		-		658		-		658
Total assets	$	3,101	$	1,834,901	$	350	$	1,838,352
Liabilities:
Deferred compensation plan liability	$	3,101	$	-	$	-	$	3,101
Brokered certificates of deposit		-		154,641		-		154,641
Derivative financial instruments		-		12,543		-		12,543
Total liabilities	$	3,101	$	167,184	$	-	$	170,285

June 30, 2012	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
U.S. Government agencies	$	-	$	43,874	$	-	$	43,874
State and political subdivisions		-		27,159		-		27,159
Mortgage-backed securities		-		1,433,431		-		1,433,431
Corporate bonds		-		109,688		350		110,038
Asset-backed securities		-		84,498				84,498
Other		-		2,583		-		2,583
Deferred compensation plan assets		2,895		-		-		2,895
Derivative financial instruments		-		223		-		223
Total assets	$	2,895	$	1,701,456	$	350	$	1,704,701
Liabilities:
Deferred compensation plan liability	$	2,895	$	-	$	-	$	2,895
Brokered certificates of deposit		-		102,879		-		102,879
Derivative financial instruments		-		6,142		-		6,142
Total liabilities	$	2,895	$	109,021	$	-	$	111,916

Schedule of assets measured at fair value on a recurring basis using significant unobservable inputs

	Securities Available for Sale				Securities Available for Sale
	Three Months Ended				Six Months Ended
	June 30,				June 30,
Securities Available for Sale	2013		2012		2013		2012
Balance at beginning of period	$	350	$	350	$	350	$	350
Amounts included in earnings		-		-		-		-
Paydowns		-		-		-		-
Balance at end of period	$	350	$	350	$	350	$	350

Schedule of presentation of united's assets and liabilities measured at fair value on nonrecurring basis

June 30, 2013	Level 1		Level 2		Level 3		Total
Assets
Loans	$	-	$	-	$	74,685	$	74,685
Foreclosed properties		-		-		3,802		3,802
Total	$	-	$	-	$	78,487	$	78,487
December 31, 2012
Assets
Loans	$	-	$	-	$	165,751	$	165,751
Foreclosed properties		-		-		14,788		14,788
Total	$	-	$	-	$	180,539	$	180,539
June 30, 2012
Assets
Loans	$	-	$	-	$	160,266	$	160,266
Foreclosed properties		-		-		25,253		25,253
Total	$	-	$	-	$	185,519	$	185,519

Schedule of carrying amount and fair values for other financial instruments that are not measured at fair value on a recurring basis

	Carrying		Fair Value Level
June 30, 2013	Amount		Level 1		Level 2		Level 3		Total
Assets:
Securities held to maturity	$	214,947	$	-	$	226,695	$	-	$	226,695
Loans, net		4,107,523		-		-		4,048,174		4,048,174
Mortgage loans held for sale		19,150		-		19,511		-		19,511
Liabilities:
Deposits		6,011,829		-		5,986,591		-		5,986,591
Federal Home Loan Bank advances		70,125		-		70,125		-		70,125
Long-term debt		124,845		-		-		123,650		123,650
December 31, 2012
Assets:
Securities held to maturity	$	244,184	$	-	$	261,131	$	-	$	261,131
Loans, net		4,067,871		-		-		3,957,669		3,957,669
Mortgage loans held for sale		28,821		-		29,693		-		29,693
Liabilities:
Deposits		5,952,140		-		5,988,743		-		5,988,743
Federal Home Loan Bank advances		40,125		-		40,125		-		40,125
Long-term debt		124,805		-		-		118,626		118,626
June 30, 2012
Assets:
Securities held to maturity	$	282,750	$	-	$	299,971	$	-	$	299,971
Loans, net		4,006,530		-		-		3,830,187		3,830,187
Mortgage loans held for sale		18,645		-		19,223		-		19,223
Liabilities:
Deposits		5,822,467		-		5,863,885		-		5,863,885
Federal Home Loan Bank advances		125,125		-		125,125		-		125,125
Long-term debt		120,265		-		-		114,679		114,679

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Derivatives and Hedging Activities (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013 Contract	Jun. 30, 2012 Contract	Jun. 30, 2013 Contract	Jun. 30, 2012 Contract	Dec. 31, 2012 Contract
Credit risk
Derivatives and Hedging Activities (Textual) [Abstract]
Collateral pledged toward derivatives	$ 18,200,000		$ 18,200,000
Fair value hedging of interest rate risk
Derivatives and Hedging Activities (Textual) [Abstract]
Number of derivative contracts outstanding	25	7	25	7
Derivative instruments outstanding	8		8
Recognized net gain (loss) related to ineffectiveness of the fair value hedging relationships	289,000	(223,000)	203,000	(189,000)
Net reduction of interest expense	283,000		295,000
Remaining number of derivative held	17		17
Derivatives and Hedging Activities (Additional Textual) [Abstract]
Aggregate notional amount designated as fair value hedges of interest rate risk	335,000,000	104,000,000	335,000,000	104,000,000
Aggregate notional amount designated as fair value hedges of interest rate risk on outstanding swap	86,000,000		86,000,000
Cash flow hedging
Derivatives and Hedging Activities (Textual) [Abstract]
Number of derivative contracts outstanding	3	2	3	2	3
Recognized net gain (loss) related to ineffectiveness of the fair value hedging relationships			79,000
Deferred gains on terminated cash flow hedging	3,000	43,000	4,000	124,000
Estimated additional amount of deferred gains reclassified to interest revenue			58,000
Increase to deposit interest expense			862,000
Derivatives and Hedging Activities (Additional Textual) [Abstract]
Total notional amount designated as cash flow hedges	200,000,000		200,000,000
Aggregate notional amount designated as fair value hedges of interest rate risk on outstanding swap	375,000,000	200,000,000	375,000,000	200,000,000	200,000,000
Interest expense | Fair value hedging of interest rate risk
Derivatives and Hedging Activities (Textual) [Abstract]
Net reduction of interest expense	$ 1,200,000	$ 550,000	$ 2,270,000	$ 828,000

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Earnings Per Share - Preferred stock dividends (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accrued dividends on preferred stock, including accretion of discounts
Total preferred stock dividends	$ 3,055	$ 3,032	$ 6,107	$ 6,062
Series A - 6% fixed
Accrued dividends on preferred stock, including accretion of discounts
Total preferred stock dividends	3	3	6	6
Series B - 5% fixed until December 6, 2013, 9% thereafter
Accrued dividends on preferred stock, including accretion of discounts
Total preferred stock dividends	2,636	2,614	5,266	5,222
Series D - LIBOR plus 9.6875%, resets quarterly
Accrued dividends on preferred stock, including accretion of discounts
Total preferred stock dividends	$ 416	$ 415	$ 835	$ 834

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock-Based Compensation

Note 10 – Stock-Based Compensation

United has an equity compensation plan that allows for grants of incentive stock options, nonqualified stock options, restricted stock and restricted stock unit awards (also referred to as “nonvested stock” awards), stock awards, performance share awards or stock appreciation rights.  Options granted under the plan can have an exercise price no less than the fair market value of the underlying stock at the date of grant.  The general terms of the plan include a vesting period (usually four years) with an exercisable period not to exceed ten years.  Certain option and restricted stock and restricted stock unit awards provide for accelerated vesting if there is a change in control (as defined in the plan).  As of June 30, 2013, 1,214,000 additional awards could be granted under the plan. Through June 30, 2013, incentive stock options, nonqualified stock options, restricted stock and restricted stock unit awards, base salary stock grants and performance share awards have been granted under the plan.

The following table shows stock option activity for the first six months of 2013.

Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinisic Value ($000)
Outstanding at December 31, 2012		482,528		$	97.73
Forfeited		(935	)		30.23
Expired		(74,221	)		81.21
Outstanding at June 30, 2013		407,372			100.90		3.2	$	12
Exercisable at June 30, 2013		399,597			102.64		3.2		3

The fair value of each option is estimated on the date of grant using the Black-Scholes model.  No stock options were granted during the six month period ended June 30, 2013.  Recent decreases in United’s stock price have rendered most of its outstanding options severely out of the money and potentially worthless to the grantee.  Therefore, historical exercise patterns do not provide a reasonable basis for determining the expected life of new option grants.  United therefore uses the formula provided by the SEC in Staff Accounting Bulletin No. 107 to determine the expected life of options.

Compensation expense relating to stock options for the six months ended June 30, 2013 was a reduction of expense of $60,000 due to the reversal of previously recognized expense on grants that did not vest.  Compensation expense relating to stock options of $131,000 was included in earnings for the six months ended June 30, 2012.  The amount of compensation expense for both periods was determined based on the fair value of the options at the time of grant, multiplied by the number of options granted that are expected to vest, which was then amortized over the vesting period.  The forfeiture rate for options is estimated to be approximately 3% per year.  No options were exercised during the first six months of 2013 or 2012.

The table below presents the activity in restricted stock and restricted stock unit awards for the first six months of 2013.

Restricted Stock	Shares			Weighted- Average Grant- Date Fair Value
Outstanding at December 31, 2012		485,584		$	10.72
Granted		80,938			11.24
Excercised		(157,071	)		13.59
Cancelled		(15,666	)		9.14
Outstanding at June 30, 2013		393,785			9.75
Vested at March 31, 2013		54,238			11.20

Compensation expense for restricted stock and restricted stock units is based on the fair value of restricted stock and restricted stock unit awards at the time of grant, which is equal to the value of United’s common stock on the date of grant.  The value of restricted stock and restricted stock unit grants that are expected to vest is amortized into expense over the vesting period.  For the six months ended June 30, 2013 and 2012, compensation expense of $1.23 million and $815,000, respectively, was recognized related to restricted stock and restricted stock unit awards.  In addition, for the six months ended June 30, 2013, $93,000 was recognized in other operating expense for restricted stock units granted to members of United’s board of directors.  The total intrinsic value of restricted stock and restricted stock units was $4.89 million at June 30, 2013.

As of June 30, 2013, there was $2.73 million of unrecognized compensation cost related to non-vested stock options and restricted stock and restricted stock unit awards granted under the plan.  That cost is expected to be recognized over a weighted-average period of 1.72 years.  The aggregate grant date fair value of options and restricted stock and restricted stock unit awards that vested during the six months ended June 30, 2013, was $2.37 million.

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Foreclosed Property

6 Months Ended

Jun. 30, 2013

Foreclosed Property [Abstract]

Foreclosed Property

Note 6 – Foreclosed Property

Major classifications of foreclosed properties at June 30, 2013, December 31, 2012 and June 30, 2012 are summarized as follows (in thousands).

	June 30,			December 31,			June 30,
	2013			2012			2012
Commercial real estate	$	847		$	6,368		$	11,639
Commercial construction		376			2,204			2,732
Total commercial		1,223			8,572			14,371
Residential mortgage		1,931			5,192			5,868
Residential construction		4,384			11,454			22,054
Total foreclosed property		7,538			25,218			42,293
Less valuation allowance		(3,602	)		(6,954	)		(11,872	)
Foreclosed property, net	$	3,936		$	18,264		$	30,421
Balance as a percentage of original loan unpaid principal		31.6	%		39.7	%		39.3	%

In the second quarter of 2013, United completed the accelerated sales of classified assets including performing and nonperforming classified loans and foreclosed properties.  The classified asset sales resulted in a much lower balance of foreclosed property costs at June 30, 2013 and elevated losses from sales.

Activity in the valuation allowance for foreclosed property for the three and six months ended June 30, 2013 and 2012 is presented in the following table (in thousands).

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Balance at beginning of period	$	4,979		$	17,746		$	6,954		$	18,982
Additions charged to expense		1,369			1,008			2,410			3,119
Disposals		(2,746	)		(6,882	)		(5,762	)		(10,229	)
Balance at end of period	$	3,602		$	11,872		$	3,602		$	11,872

Expenses related to foreclosed assets for the three and six months ended June 30, 2013 and 2012 is presented in the following table (in thousands).

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2013		2012			2013		2012
Net loss on sales	$	2,945	$	(269	)	$	3,050	$	(176	)
Provision for unrealized losses		1,369		1,008			2,410		3,119
Operating expenses		837		1,112			2,024		2,733
Total foreclosed property expense	$	5,151	$	1,851		$	7,484	$	5,676

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Stock-Based Compensation - Activity in restricted stock and restricted stock unit awards (Details 1) (Restricted Stock and Restricted Stock Unit, USD $)	6 Months Ended
	Jun. 30, 2013
Restricted Stock and Restricted Stock Unit
Shares
Outstanding at December 31, 2012	485,584
Granted	80,938
Exercised	(157,071)
Cancelled	(15,666)
Outstanding at June 30, 2013	393,785
Vested at June 30, 2013	54,238
Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2012	$ 10.72
Granted	$ 11.24
Exercised	$ 13.59
Cancelled	$ 9.14
Outstanding at June 30, 2013	$ 9.75
Vested at June 30, 2013	$ 11.2

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Assets and Liabilities Measured at Fair Value

6 Months Ended

Jun. 30, 2013

Fair Value [Abstract]

Assets and Liabilities Measured at Fair Value

Note 13 – Assets and Liabilities Measured at Fair Value

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability.  As a basis for considering market participant assumptions in fair value measurements, the Financial Accounting Standards Board’s Accounting Standards Codification Topic 820 (“ASC 820”) Fair Value Measurements and Disclosures establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Fair Value Hierarchy

Level 1 Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that United has the ability to access.

Level 2 Valuation is based upon quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

Level 3 Valuation is generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. United’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following is a description of the valuation methodologies used for assets and liabilities recorded at fair value.

Securities Available-for-Sale

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Deferred Compensation Plan Assets and Liabilities

Included in other assets in the Consolidated Balance Sheet are assets related to employee deferred compensation plans. The assets associated with these plans are invested in mutual funds and classified as Level 1. Deferred compensation liabilities, also classified as Level 1, are carried at the fair value of the obligation to the employee, which mirrors the fair value of the invested assets and is included in other liabilities in the consolidated balance sheet.

Mortgage Loans Held for Sale

Mortgage loans held for sale are carried at the lower of cost or market value. The fair value of mortgage loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics.  Generally, book value approximates fair value.

Loans

United does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established.  Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, a creditor may measure impairment based on a loan’s observable market price, or the fair value of the collateral if repayment of the loan is dependent upon the sale of the underlying collateral.  Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. In accordance with ASC 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, United records the impaired loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, United records the impaired loan as nonrecurring Level 3.

Foreclosed Assets

Foreclosed assets are adjusted to fair value, less cost to sell, upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, United records the foreclosed asset as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, United records the foreclosed asset as nonrecurring Level 3.

Goodwill and Other Intangible Assets

Goodwill and identified intangible assets are subject to impairment testing. United’s approach to testing goodwill for impairment is to compare the business unit’s carrying value to the implied fair value based on multiples of earnings and tangible book value for recently completed merger transactions.  In the event the fair value is determined to be less than the carrying value, the asset is recorded at fair value as determined by the valuation model. As such, United classifies goodwill and other intangible assets subjected to nonrecurring fair value adjustments as Level 3.

Derivative Financial Instruments

United uses interest rate swaps and interest rate floors to manage its interest rate risk.  The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.  The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments.  The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates fell below the strike rate of the floors.  The variable interest rates used in the calculation of projected receipts on the floor are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.  To comply with the provisions of ASC 820, United incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.  In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, United has considered the effect of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although United has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.  However, as of June 30, 2013, United had assessed the significance of the effect of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.  As a result, United has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The table below presents United’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013, December 31, 2012 and June 30, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).

June 30, 2013	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
State and political subdivisions	$	-		23,440	$	-	$	23,440
Mortgage-backed securities		-		1,412,586		-		1,412,586
Corporate bonds		-		253,518		350		253,868
Asset-backed securities		-		244,844				244,844
Other		-		2,526		-		2,526
Deferred compensation plan assets		3,074		-		-		3,074
Derivative financial instruments		-		9,017		-		9,017
Total assets	$	3,074	$	1,945,931	$	350	$	1,949,355
Liabilities:
Deferred compensation plan liability	$	3,074	$	-	$	-	$	3,074
Brokered certificates of deposit		-		261,288		-		261,288
Derivative financial instruments		-		29,330		-		29,330
Total liabilities	$	3,074	$	290,618	$	-	$	293,692

December 31, 2012	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale
State and political subdivisions	$	-	$	29,052	$	-	$	29,052
Mortgage-backed securities		-		1,428,502		-		1,428,502
Corporate bonds		-		163,312		350		163,662
Asset-backed securities		-		210,556		-		210,556
Other		-		2,821		-		2,821
Deferred compensation plan assets		3,101		-		-		3,101
Derivative financial instruments		-		658		-		658
Total assets	$	3,101	$	1,834,901	$	350	$	1,838,352
Liabilities:
Deferred compensation plan liability	$	3,101	$	-	$	-	$	3,101
Brokered certificates of deposit		-		154,641		-		154,641
Derivative financial instruments		-		12,543		-		12,543
Total liabilities	$	3,101	$	167,184	$	-	$	170,285

June 30, 2012	Level 1		Level 2		Level 3		Total
Assets:
Securities available for sale:
U.S. Government agencies	$	-	$	43,874	$	-	$	43,874
State and political subdivisions		-		27,159		-		27,159
Mortgage-backed securities		-		1,433,431		-		1,433,431
Corporate bonds		-		109,688		350		110,038
Asset-backed securities		-		84,498				84,498
Other		-		2,583		-		2,583
Deferred compensation plan assets		2,895		-		-		2,895
Derivative financial instruments		-		223		-		223
Total assets	$	2,895	$	1,701,456	$	350	$	1,704,701
Liabilities:
Deferred compensation plan liability	$	2,895	$	-	$	-	$	2,895
Brokered certificates of deposit		-		102,879		-		102,879
Derivative financial instruments		-		6,142		-		6,142
Total liabilities	$	2,895	$	109,021	$	-	$	111,916

The following table shows a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs that are classified as Level 3 values (in thousands).

	Securities Available for Sale				Securities Available for Sale
	Three Months Ended				Six Months Ended
	June 30,				June 30,
Securities Available for Sale	2013		2012		2013		2012
Balance at beginning of period	$	350	$	350	$	350	$	350
Amounts included in earnings		-		-		-		-
Paydowns		-		-		-		-
Balance at end of period	$	350	$	350	$	350	$	350

United has two securities that have Level 3 valuations.  They are trust preferred securities in community banks that have shown deteriorating financial condition during the financial crisis, and both are currently deferring interest payments.  Since both investments are not actively traded, there is no recent trade activity upon which to assess value.  The values assigned to the investments are based on sales price estimates from brokers.  Both investments have a par amount of $1 million.  One was considered impaired in 2010 and was written down to $50,000 with a $950,000 impairment charge to earnings.  The other is carried at its original cost basis of $1 million with a $700,000 negative mark to fair value through other comprehensive income.  United does not consider this investment to be other than temporarily impaired, as the community bank was recapitalized by a private equity investment that management believes will result in full payment at maturity.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

United may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis.  These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period.  The table below presents United’s assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2013, December 31, 2012 and June 30, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).

June 30, 2013	Level 1		Level 2		Level 3		Total
Assets
Loans	$	-	$	-	$	74,685	$	74,685
Foreclosed properties		-		-		3,802		3,802
Total	$	-	$	-	$	78,487	$	78,487
December 31, 2012
Assets
Loans	$	-	$	-	$	165,751	$	165,751
Foreclosed properties		-		-		14,788		14,788
Total	$	-	$	-	$	180,539	$	180,539
June 30, 2012
Assets
Loans	$	-	$	-	$	160,266	$	160,266
Foreclosed properties		-		-		25,253		25,253
Total	$	-	$	-	$	185,519	$	185,519

Loans that are reported above as being measured at fair value on a non-recurring basis are generally impaired loans that have either been partially charged off or have specific reserves assigned to them.  Nonaccrual impaired loans that are collateral dependent are generally written down to 80% of appraised value which considers the estimated costs to sell.  Specific reserves are established for impaired loans based on appraised value of collateral or discounted cash flows.  Foreclosed properties that are included above as measured at fair value on a nonrecurring basis are those properties that resulted from a loan that had been charged down or have been written down subsequent to foreclosure.  Foreclosed properties are generally recorded at the lower of 80% of appraised value or 90% of the asking price which considers the estimated cost to sell.

Assets and Liabilities Not Measured at Fair Value

For financial instruments that have quoted market prices, those quotes are used to determine fair value.  Financial instruments that have no defined maturity, have a remaining maturity of 180 days or less, or reprice frequently to a market rate, are assumed to have a fair value that approximates the reported book value, after taking into consideration any applicable credit risk.  If no market quotes are available, financial instruments are valued by discounting the expected cash flows using an estimated current market interest rate for the financial instrument.  For off-balance sheet derivative instruments, fair value is estimated as the amount that United would receive or pay to terminate the contracts at the reporting date, taking into account the current unrealized gains or losses on open contracts.

The short maturity of United’s assets and liabilities results in having a significant number of financial instruments whose fair value equals or closely approximates carrying value.  Such financial instruments are reported in the following balance sheet captions: cash and cash equivalents, mortgage loans held for sale and short-term borrowings.  The fair value of securities available-for-sale equals the balance sheet value.  Due to the short-term settlement of accrued interest receivable and payable, the carrying amount closely approximates fair value.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect the premium or discount on any particular financial instrument that could result from the sale of United’s entire holdings.  Because no ready market exists for a significant portion of United’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include the mortgage banking operation, brokerage network, deferred income taxes, premises and equipment and goodwill.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Off-balance sheet instruments (commitments to extend credit and standby letters of credit) are generally short-term and at variable rates.  Therefore, both the carrying amount and the estimated fair value associated with these instruments are immaterial.

The carrying amount and fair values for other financial instruments that are not measured at fair value on a recurring basis in United’s balance sheet at June 30, 2013, December 31, 2012, and June 30, 2012 are as follows (in thousands).

	Carrying		Fair Value Level
June 30, 2013	Amount		Level 1		Level 2		Level 3		Total
Assets:
Securities held to maturity	$	214,947	$	-	$	226,695	$	-	$	226,695
Loans, net		4,107,523		-		-		4,048,174		4,048,174
Mortgage loans held for sale		19,150		-		19,511		-		19,511
Liabilities:
Deposits		6,011,829		-		5,986,591		-		5,986,591
Federal Home Loan Bank advances		70,125		-		70,125		-		70,125
Long-term debt		124,845		-		-		123,650		123,650
December 31, 2012
Assets:
Securities held to maturity	$	244,184	$	-	$	261,131	$	-	$	261,131
Loans, net		4,067,871		-		-		3,957,669		3,957,669
Mortgage loans held for sale		28,821		-		29,693		-		29,693
Liabilities:
Deposits		5,952,140		-		5,988,743		-		5,988,743
Federal Home Loan Bank advances		40,125		-		40,125		-		40,125
Long-term debt		124,805		-		-		118,626		118,626
June 30, 2012
Assets:
Securities held to maturity	$	282,750	$	-	$	299,971	$	-	$	299,971
Loans, net		4,006,530		-		-		3,830,187		3,830,187
Mortgage loans held for sale		18,645		-		19,223		-		19,223
Liabilities:
Deposits		5,822,467		-		5,863,885		-		5,863,885
Federal Home Loan Bank advances		125,125		-		125,125		-		125,125
Long-term debt		120,265		-		-		114,679		114,679

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Common and Preferred Stock Issued / Common Stock Issuable

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Common and Preferred Stock Issued / Common Stock Issuable

Note 11 – Common and Preferred Stock Issued / Common Stock Issuable

United sponsors a Dividend Reinvestment and Share Purchase Plan (“DRIP”) that allows participants who already own United’s common stock to purchase additional shares directly from the Company.  The DRIP also allows participants to automatically reinvest their quarterly dividends in additional shares of common stock without a commission.  The DRIP is currently suspended.

United’s 401(k) retirement plan regularly purchases shares of United’s common stock directly from United.  In addition, United has an Employee Stock Purchase Program (“ESPP”) that allows eligible employees to purchase shares of common stock at a 5% discount, with no commission charges.  For the six months ended June 30, 2013 and 2012, United issued 35,667 and 60,982 shares, respectively, and increased capital by $383,000 and $501,000, respectively, through these programs.

United offers its common stock as an investment option in its deferred compensation plan.  The common stock component of the deferred compensation plan is accounted for as an equity instrument and is reflected in the consolidated financial statements as common stock issuable.  The deferred compensation plan does not allow for diversification once an election is made to invest in United stock and settlement must be accomplished in shares at the time the deferral period is completed. At June 30, 2013 and 2012, 271,215 and 94,657 shares, respectively, were issuable under the deferred compensation plan.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013 Voting Common Stock	Jul. 31, 2013 Non-Voting Common Stock
Entity Registrant Name	UNITED COMMUNITY BANKS INC
Entity Central Index Key	0000857855
Trading Symbol	ucbi
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		43,363,414	14,474,810
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 – Income Taxes

The valuation allowance on deferred tax assets was $4.96 million, $270 million and $277 million, respectively, at June 30, 2013, December 31, 2012 and June 30, 2012.  Management assesses the valuation allowance recorded against deferred tax assets at each reporting period.  The determination of whether a valuation allowance for deferred tax assets is appropriate is subject to considerable judgment and requires an evaluation of all the positive and negative evidence.

In 2010, United established a full valuation allowance on its deferred tax asset due to the realization of significant losses and uncertainty about United’s future earnings forecasts.

At June 30, 2013, United remained in a three-year cumulative loss position, which represents negative evidence.  However, based on the assessment of all the positive and negative evidence, management has concluded that it is more likely than not that $272 million of the net deferred tax asset will be realized based upon future taxable income and therefore reversed $272 million of the valuation allowance.  The valuation allowance of $4.96 million at June 30, 2013 is related to specific state income tax credits that have short carryforward periods and are expected to expire unused.  The positive evidence considered by management in arriving at the conclusion to remove the valuation allowance included six consecutive profitable quarters beginning with the fourth quarter of 2011, the strong pre-crisis earnings history and growth in pre-tax, pre-credit earnings, which demonstrate demand for United’s products and services, and the significant improvement in credit measures, which improve both the sustainability of profitability and management’s ability to forecast future credit losses.  The negative evidence considered by management includes the fact that the company remains in a three-year cumulative loss position and the Memorandums of Understanding with the banking regulatory agencies.

United expects to realize the $272 million in net deferred tax assets well in advance of the statutory carryforward period.  At June 30, 2013, $39.7 million of existing deferred tax assets were not related to net operating losses or credits and therefore, have no expiration date.  Approximately $200 million of the remaining deferred tax assets relate to federal net operating losses which will expire in annual installments beginning in 2029.  Additionally, $27.7 million of the deferred tax assets relate to state net operating losses which will expire in annual installments beginning in 2023.  Tax credit carryforwards at June 30, 2013 include federal alternative minimum tax credits totaling $2.94 million which have an unlimited carryforward period.  Other federal and state tax credits at June 30, 2013 total $7.14 million and will expire beginning in 2013.

The valuation allowance could fluctuate in future periods based on the assessment of the positive and negative evidence.  Management’s conclusion at June 30, 2013 that it is more likely than not that the net deferred tax assets of $272 million will be realized is based upon management’s estimate of future taxable income.  Management’s estimate of future taxable income is based on internal forecasts which consider historical performance, various internal estimates and assumptions, as well as certain external data all of which management believes to be reasonable although inherently subject to significant judgment.  If actual results differ significantly from the current estimates of future taxable income, even if caused by adverse macro-economic conditions, the valuation allowance may need to be increased for some or all of the deferred tax asset.  Such an increase to the deferred tax asset valuation allowance could have a material adverse effect on United’s financial condition and results of operations.

United is subject to income taxation in the United States and various state jurisdictions.  United’s federal and state income tax returns are filed on a consolidated basis.  Currently, no years for which United filed a federal income tax return are under examination by the IRS, and there are no state tax examinations currently in progress.  United is no longer subject to income tax examinations from state and local income tax authorities for years before 2009.  Although United is unable to determine the ultimate outcome of future examinations, United believes that the liability recorded for uncertain tax positions is appropriate.

At June 30, 2013, December 31, 2012 and June 30, 2012, unrecognized income tax benefits totaled $5.18 million, $5.07 million and $6.33 million, respectively.

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Earnings Per Share (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2013
Fletcher International Ltd
Class of Stock [Line Items]
Exercise of price warrants	21.25
Shares issuable upon the exercise of warrants	1,411,765
Elm Ridge Parties
Class of Stock [Line Items]
Exercise of price warrants	12.50
Shares issuable upon the exercise of warrants	1,551,126
Series B - 5% fixed until December 6, 2013, 9% thereafter
Class of Stock [Line Items]
Exercise of price warrants	61.40
Shares issuable upon exercise of grants	219,909
Fixed percentage of dividend rate on preferred stock	5.00%
Future percentage of dividend rate on preferred stock	9.00%
Trust preferred securities
Class of Stock [Line Items]
Exercise of price warrants	100
United's Series B preferred stock issued	129,670
Employees
Class of Stock [Line Items]
Shares issuable upon exercise of grants	407,372
Weighted average exercise price of stock options granted to employees	$ 100.90
Restricted Stock
Class of Stock [Line Items]
Vesting of restricted stock awards	393,785
Series A - 6% fixed
Class of Stock [Line Items]
Fixed percentage of dividend rate on preferred stock	6.00%
Series D - LIBOR plus 9.6875%, resets quarterly
Class of Stock [Line Items]
LIBOR variable percentage of dividend rate on preferred stock	9.6875%

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Earnings Per Share - Computation of basic and diluted earnings per share (Details 1) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Computation of basic and diluted loss per share
Net income available to common shareholders	$ 226,909	$ 3,467	$ 235,622	$ 11,965
Weighted average shares outstanding:
Basic	58,141	57,840	58,111	57,803
Effect of dilutive securities
Convertible securities
Stock options
Warrants
Diluted	58,141	57,840	58,111	57,803
Income per common share:
Basic	$ 3.9	$ 0.06	$ 4.05	$ 0.21
Diluted	$ 3.9	$ 0.06	$ 4.05	$ 0.21