SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):
April 17, 2007

United Community Banks, Inc.

(Exact name of registrant as specified in its charter)

Georgia		No. 0-21656		No. 58-180-7304
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

63 Highway 515, P.O. Box 398

Blairsville, Georgia 30512
(Address of principal executive offices)

Registrant’s telephone number, including area code:
(706) 781-2265

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

 

 

Item 2.02 Results of Operation and Financial Condition

On April 17, 2007, United Community Banks, Inc. (the “Registrant”) issued a news release announcing its financial results for the first quarter ended March 31, 2007 (the “News Release”). The News Release, including financial schedules, is attached as Exhibit 99.1 to this report. In connection with issuing the News Release, on April 17, 2007 at 11:00 a.m. EST, the Registrant intends to hold a conference call/webcast to discuss the News Release.

Item 9.01 Financial Statements and Exhibits

	(a)		Financial statements: None
	(b)		Pro forma financial information: None
	(c)		Exhibits:
			99.1 Press Release, dated April 17, 2007

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 hereunto duly authorized.

		/s/ Rex S. Schuette   Rex S. Schuette
		Executive Vice President and
April 17, 2007		Chief Financial Officer

Exhibit 99.1

For Immediate Release

For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com

UNITED COMMUNITY BANKS, INC. REPORTS
13 PERCENT GAIN IN DILUTED EARNINGS PER SHARE
FOR FIRST QUARTER 2007

HIGHLIGHTS:

•

Record First Quarter Earnings           Diluted Earnings per Share of 44 Cents — Up 13 Percent           Net Income of $19.3 Million — Up 21 Percent

•

Loan and Fee Revenue Growth Drive Performance

•

Completed Circling of Atlanta with Announcement of Gwinnett Acquisition

•

Opened Two De Novo Offices

•

Added to Standard & Poor’s SmallCap 600 Index

BLAIRSVILLE, GA, April 17, 2007 — United Community Banks, Inc. (Nasdaq: UCBI) today announced record financial results for the first quarter of 2007. Compared with the first quarter of 2006, the company achieved an 18 percent increase in total revenue, a 21 percent rise in net income and a 13 percent gain in diluted earnings per share.

Net income was $19.3 million for the first quarter of 2007, compared with $16.0 million for the same period of 2006. Diluted earnings per share increased to 44 cents from 39 cents a year ago. Total revenue on a taxable equivalent basis was $75.8 million compared with $64.2 million for the first quarter of 2006. Return on tangible equity was 17.18 percent and return on assets was 1.11 percent, compared with 17.66 percent and 1.09 percent, respectively, a year ago.

“United Community Banks delivered another quarter of record earnings for our shareholders,” said Jimmy Tallent, president and chief executive officer. “We are especially pleased to report strong performance in light of a challenging operating environment.”

Loans increased $818 million, or 18 percent, from a year ago, including $267 million from the acquisition of Southern National Bank that closed in December 2006. Excluding acquired loans, organic loan growth was 12 percent. “Year-over-year loan growth was strong, but we experienced a slower pace during the first quarter of 2007,” Tallent said. “The slowdown was further impacted by a higher level of prepayments due to sales of customer businesses, construction developments and competitive pricing. With the slower loan growth, we have lowered our targeted range to 6 to 10 percent for the remainder of the year.”

“At the same time, we look ahead with optimism,” Tallent added. “We have a presence in 19 of the 100 fastest growing counties in the country and in four of the top 10. The population demographics are strong across our markets and employment opportunities are growing at a rapid pace in metro Atlanta.”

Tallent noted that the company more than funded first quarter loan growth with core customer deposits, adding $137 million in transaction, savings and money market accounts while allowing more expensive time deposits to run off.

Also during the first quarter, United moved to fill an important gap in its metro Atlanta footprint by signing a definitive agreement to acquire Gwinnett Commercial Group, Inc. and its wholly owned subsidiary First Bank of the South. “First Bank of the South has an exceptional banking team and is the perfect partner for our company,” Tallent said. “Its Gwinnett County presence allows us to fulfill our goal of completely encircling metro Atlanta. First Bank of the South also has locations in DeKalb, north Fulton and Walton counties, which are new metro Atlanta markets for United.”

United also continued de novo expansion during the quarter with the opening of a second office in Cleveland, Tennessee and a third office that is located on the south side of Forsyth County in

northern metro Atlanta. In addition, the company converted a loan production facility to a full-service office in the resort town of Blowing Rock in the North Carolina mountains. “We will continue to look for opportunities to expand our franchise in both new and existing markets, but at a slower pace in the near-term as we monitor trends in loan growth,” Tallent said. “De novo expansion is a key component of our balanced growth strategy for building long-term shareholder value.”

For the first quarter of 2007, taxable equivalent net interest revenue of $65.1 million reflected an increase of $9.1 million, or 16 percent, from the first quarter of 2006. Net interest margin was 3.99 percent for the first quarter of 2007 and the fourth quarter of 2006, compared with 4.06 percent for the first quarter of 2006. “Rising interest rates positively impacted our prime-rate loan portfolio over the past year,” Tallent said. “However, this impact was offset by rising wholesale borrowing costs and higher costs associated with deposit generating programs in our new markets. These successful deposit programs concluded in the fourth quarter.”

The first quarter provision for loan losses was $3.7 million, an increase of $200,000 from a year earlier and equal to the fourth quarter of 2006. Annualized net charge-offs to average loans was 11 basis points for the first quarter, equal to the first quarter of 2006 and down from 15 basis points for the fourth quarter of 2006. At quarter-end, non-performing assets totaled $14.3 million, compared with $8.4 million a year ago and $13.7 million at the end of the fourth quarter of 2006. Non-performing assets as a percentage of total assets was 20 basis points at quarter-end, compared with 19 basis points at December 31, 2006 and 14 basis points at March 31, 2006.

“Throughout most of 2006 we were at unsustainably low levels of non-performing assets,” Tallent said. “Even with the slight rise at quarter-end, we continue to operate at the lower end of our long-term historic range of 20 to 35 basis points and well below peer banks. Strong credit quality, rooted in our guiding principle of securing loans with hard assets, is essential to our balanced growth strategy and overall success.”

Fee revenue for the first quarter grew by $2.6 million, or 22 percent, to $14.4 million from $11.8 million for the first quarter of 2006. Service charges and fees on deposit accounts increased

$900,000 to $7.3 million, primarily due to growth in transactions and new accounts resulting from core deposit programs and higher ATM and debit card usage fees. Mortgage fees rose $710,000 to $2.2 million due to higher volumes and pricing of mortgages sold. Mortgage loans closed during the first quarter were $109 million compared with $77 million for the first quarter of 2006. Consulting fees were up $163,000, or 10 percent, from a year ago reflecting strong growth primarily in the advisory services practice.

Operating expenses increased $6.4 million to $44.8 million, a 17 percent increase from the first quarter of 2006. The Southern National acquisition accounted for approximately $1.2 million of the increase. Salaries and employee benefit costs were $28.3 million, $4.4 million higher than in the first quarter of 2006. This 19 percent increase was due to the increase in staff to support expansion activities and business growth, as well as higher health care costs. Communications and equipment expenses increased $436,000 to $3.8 million due to further investments and upgrades in technology and equipment to support business growth and additional banking offices. Occupancy expense increased $259,000 to $3.2 million reflecting the increase in costs to operate additional banking offices. Postage, printing and supplies expense rose $144,000 to $1.7 million primarily due to business growth and marketing campaigns. Professional fees increased $318,000 to $1.5 million reflecting higher legal fees and the cost of various corporate initiatives.

“Our operating efficiency ratio of 56.56 percent was within our long-term efficiency goal of 56 to 58 percent,” Tallent said. “The continued strength of our existing franchise, strong revenue growth and disciplined expense controls are more than offsetting the cost of reinvesting for the future through our significant de novo expansion efforts.”

Also of note during the first quarter, United Community Banks was added to Standard and Poor’s SmallCap 600 index. The index is designed to be an efficient portfolio of companies that meet specific inclusion criteria to ensure they are investable and financially viable. “We are pleased to be included in this index as it reflects our commitment to deliver superior financial performance, including solid earnings for our shareholders,” said Tallent.

“We are committed to our unique brand of customer service, solid credit quality, and building shareholder value by expanding our franchise while delivering consistent double-digit growth in earnings per share,” Tallent said. “Our 2007 outlook is for earnings per share growth at the lower end of our long-term goal of 12 to 15 percent. We anticipate loan growth to be in the range of 6 to 10 percent for the balance of 2007 and our net interest margin at the current level of four percent. This outlook assumes stable economic and rate environments and continued strong credit quality.”

Conference Call
United Community Banks will hold a conference call on Tuesday, April 17, 2007, at 11 a.m. ET to discuss the contents of this news release, as well as business highlights for the quarter and the financial outlook for 2007. The telephone number for the conference call is (866) 543-6408 and the pass code is “UCBI.” The conference call will also be available by web cast within the Investor Relations section of the company’s web site at www.ucbi.com.

About United Community Banks, Inc.
Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $7.2 billion and operates 26 community banks with 103 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the company’s web site at www.ucbi.com.

Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance

involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward Looking Statements” on page 4 of United Community Banks, Inc.’s annual report filed on Form 10-K with the Securities and Exchange Commission.

(Tables Follow)

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three Months Ended March 31, 2007

																						First
		2007				2006																Quarter
(in thousands, except per share		First				Fourth				Third				Second				First				2007-2006
data; taxable equivalent)		Quarter				Quarter				Quarter				Quarter				Quarter				Change
INCOME SUMMARY
Interest revenue		$	129,028			$	123,463			$	116,304			$	107,890			$	99,038
Interest expense			63,923				60,912				55,431				49,407				43,065
Net interest revenue			65,105				62,551				60,873				58,483				55,973				16	%
Provision for loan losses			3,700				3,700				3,700				3,700				3,500
Fee revenue			14,382				13,215				12,146				11,976				11,758				22
Total revenue			75,787				72,066				69,319				66,759				64,231				18
Operating expenses			44,841				42,521				41,441				39,645				38,463				17
Income before taxes			30,946				29,545				27,878				27,114				25,768				20
Income taxes			11,601				11,111				10,465				10,185				9,729
Net income		$	19,345			$	18,434			$	17,413			$	16,929			$	16,039				21
PERFORMANCE MEASURES
Per common share:
Basic earnings		$	.45			$	.45			$	.43			$	.42			$	.40				13
Diluted earnings			.44				.44				.42				.41				.39				13
Cash dividends declared			.09				.08				.08				.08				.08				13
Book value			14.83				14.37				13.07				12.34				12.09				23
Tangible book value (2)			11.06				10.57				10.16				9.50				9.25				20
Key performance ratios:
Return on tangible equity (1)(2)(3)			17.18	%			17.49	%			17.29	%			17.68	%			17.66	%
Return on equity (1)(3)			12.48				13.26				13.22				13.41				13.25
Return on assets (3)			1.11				1.10				1.09				1.10				1.09
Net interest margin (3)			3.99				3.99				4.07				4.07				4.06
Efficiency ratio			56.56				55.93				56.46				56.27				56.79
Dividend payout ratio			20.00				17.78				18.60				19.05				20.00
Equity to assets			8.80				8.21				8.04				7.95				8.04
Tangible equity to assets (2)			6.66				6.46				6.35				6.22				6.24
ASSET QUALITY
Allowance for loan losses		$	68,804			$	66,566			$	60,901			$	58,508			$	55,850
Non-performing assets			14,290				13,654				9,347				8,805				8,367
Net charge-offs			1,462				1,930				1,307				1,042				1,245
Allowance for loan losses to loans			1.27	%			1.24	%			1.23	%			1.22	%			1.22	%
Non-performing assets to total assets			.20				.19				.14				.14				.14
Net charge-offs to average loans (3)			.11				.15				.11				.09				.11
AVERAGE BALANCES
Loans		$	5,402,860			$	5,134,721			$	4,865,886			$	4,690,196			$	4,505,494				20
Investment securities			1,153,208				1,059,125				1,029,981				1,039,707				1,038,683				11
Earning assets			6,599,035				6,225,943				5,942,710				5,758,697				5,574,712				18
Total assets			7,092,710				6,669,950				6,350,205				6,159,152				5,960,801				19
Deposits			5,764,426				5,517,696				5,085,168				4,842,389				4,613,810				25
Shareholders’ equity			624,100				547,419				510,791				489,821				478,960				30
Common shares outstanding:
Basic			43,000				41,096				40,223				40,156				40,088
Diluted			43,912				42,311				41,460				41,328				41,190
AT PERIOD END
Loans		$	5,402,198			$	5,376,538			$	4,965,365			$	4,810,277			$	4,584,155				18
Investment securities			1,150,424				1,107,153				980,273				974,524				983,846				17
Earning assets			6,640,564				6,565,730				6,012,987				5,862,614				5,633,381				18
Total assets			7,186,602				7,101,249				6,455,290				6,331,136				6,070,596				18
Deposits			5,841,687				5,772,886				5,309,219				4,976,650				4,748,438				23
Shareholders’ equity			638,456				616,767				526,734				496,297				485,414				32
Common shares outstanding			43,038				42,891				40,269				40,179				40,119

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (unaudited)
For the Three Months Ended March 31,

		Three Months Ended
		March 31,
(in thousands, except per share data)		2007				2006
Interest revenue:
Loans, including fees		$	114,073			$	86,606
Investment securities:
Taxable			13,968				11,318
Tax exempt			447				514
Federal funds sold and deposits in banks			58				158
Total interest revenue			128,546				98,596
Interest expense:
Deposits:
NOW			10,627				5,987
Money market			2,540				1,200
Savings			309				228
Time			41,625				25,386
Total deposit interest expense			55,101				32,801
Federal funds purchased, repurchase agreements, & other short-term borrowings			1,817				1,482
Federal Home Loan Bank advances			4,801				6,629
Long-term debt			2,204				2,153
Total interest expense			63,923				43,065
Net interest revenue			64,623				55,531
Provision for loan losses			3,700				3,500
Net interest revenue after provision for loan losses			60,923				52,031
Fee revenue:
Service charges and fees			7,253				6,353
Mortgage loan and other related fees			2,223				1,513
Consulting fees			1,747				1,584
Brokerage fees			944				850
Securities gains (losses), net			207				(3	)
Other			2,008				1,461
Total fee revenue			14,382				11,758
Total revenue			75,305				63,789
Operating expenses:
Salaries and employee benefits			28,317				23,884
Communications and equipment			3,812				3,376
Occupancy			3,191				2,932
Advertising and public relations			2,016				1,888
Postage, printing and supplies			1,660				1,516
Professional fees			1,479				1,161
Amortization of intangibles			564				503
Other			3,802				3,203
Total operating expenses			44,841				38,463
Income before income taxes			30,464				25,326
Income taxes			11,119				9,287
Net income		$	19,345			$	16,039
Net income available to common shareholders		$	19,341			$	16,034
Earnings per common share:
Basic		$	.45			$	.40
Diluted			.44				.39
Dividends per common share			.09				.08
Weighted average common shares outstanding:
Basic			43,000				40,088
Diluted			43,912				41,190

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
For the period ended

		March 31,				December 31,				March 31,
(in thousands, except share and per share data)		2007				2006				2006
		(unaudited)				(audited)				(unaudited)
ASSETS
Cash and due from banks		$	159,543			$	158,348			$	150,378
Interest-bearing deposits in banks			22,644				12,936				12,259
Cash and cash equivalents			182,187				171,284				162,637
Securities available for sale			1,150,424				1,107,153				983,846
Mortgage loans held for sale			31,633				35,325				18,455
Loans, net of unearned income			5,402,198				5,376,538				4,584,155
Less allowance for loan losses			68,804				66,566				55,850
Loans, net			5,333,394				5,309,972				4,528,305
Premises and equipment, net			150,332				139,716				120,021
Accrued interest receivable			60,677				58,291				41,895
Goodwill and other intangible assets			166,073				167,058				118,149
Other assets			111,882				112,450				97,288
Total assets		$	7,186,602			$	7,101,249			$	6,070,596
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand		$	675,969			$	659,892			$	653,624
NOW			1,406,287				1,307,654				1,106,106
Money market			277,184				255,862				171,328
Savings			176,891				175,631				176,205
Time:
Less than $100,000			1,619,865				1,650,906				1,308,698
Greater than $100,000			1,366,360				1,397,245				1,029,464
Brokered			319,131				325,696				303,013
Total deposits			5,841,687				5,772,886				4,748,438
Federal funds purchased, repurchase agreements, and other short-term borrowings			77,367				65,884				167,369
Federal Home Loan Bank advances			464,072				489,084				510,602
Long-term debt			113,151				113,151				111,869
Accrued expenses and other liabilities			51,869				43,477				46,904
Total liabilities			6,548,146				6,484,482				5,585,182
Shareholders’ equity:
Preferred stock, $1 par value; $10 stated value; 10,000,000 shares authorized; 32,200, 32,200 and 32,200 shares issued and outstanding			322				322				322
Common stock, $1 par value; 100,000,000 shares authorized; 43,037,840, 42,890,863 and 40,119,288 shares issued and outstanding			43,038				42,891				40,119
Common stock issuable; 35,154, 29,821 and 16,549 shares			1,043				862				451
Capital surplus			273,575				270,383				195,382
Retained earnings			321,721				306,261				263,384
Accumulated other comprehensive loss			(1,243	)			(3,952	)			(14,244	)
Total shareholders’ equity			638,456				616,767				485,414
Total liabilities and shareholders’ equity		$	7,186,602			$	7,101,249			$	6,070,596

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended March 31,

		2007												2006
		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)		$	5,402,860			$	113,868				8.55	%		$	4,505,494			$	86,495				7.79	%
Taxable securities (3)			1,109,847				13,968				5.03				989,683				11,318				4.57
Tax-exempt securities (1) (3)			43,361				735				6.78				49,000				846				6.90
Federal funds sold and other interest-earning assets			42,967				457				4.26				30,535				379				4.96
Total interest-earning assets			6,599,035				129,028				7.92				5,574,712				99,038				7.19
Non-interest-earning assets:
Allowance for loan losses			(68,187	)											(54,825	)
Cash and due from banks			120,637												122,486
Premises and equipment			146,832												115,590
Other assets (3)			294,393												202,838
Total assets		$	7,092,710											$	5,960,801
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts		$	1,322,818			$	10,627				3.26			$	1,082,342			$	5,987				2.24
Money Market accounts			261,753				2,540				3.94				163,404				1,200				2.98
Savings deposits			175,275				309				.71				175,796				228				.53
Time deposits less than $100,000			1,641,507				19,796				4.89				1,270,078				12,035				3.84
Time deposits greater than $100,000			1,385,401				17,916				5.24				979,665				10,409				4.31
Brokered deposits			334,753				3,913				4.74				315,090				2,942				3.79
Total interest-bearing deposits			5,121,507				55,101				4.36				3,986,375				32,801				3.34
Federal funds purchased & other borrowings			139,256				1,817				5.29				128,602				1,482				4.67
Federal Home Loan Bank advances			395,746				4,801				4.92				586,722				6,629				4.58
Long-term debt			113,234				2,204				7.89				111,869				2,153				7.81
Total borrowed funds			648,236				8,822				5.52				827,193				10,264				5.03
Total interest-bearing liabilities			5,769,743				63,923				4.49				4,813,568				43,065				3.63
Non-interest-bearing liabilities:
Non-interest-bearing deposits			642,919												627,436
Other liabilities			55,948												40,837
Total liabilities			6,468,610												5,481,841
Shareholders’ equity			624,100												478,960
Total liabilities and shareholders’ equity		$	7,092,710											$	5,960,801
Net interest revenue						$	65,105											$	55,973
Net interest-rate spread											3.43	%											3.56	%
Net interest margin (4)											3.99	%											4.06	%