SCHEDULE 14A INFORMATION
             Proxy  Statement Pursuant to Section 14(a)
               of the Securities Exchange Age of 1934



Filed by the Registrant [X]

Filed by a Party other than the Registrant   [ ]

Check the appropriate box:

[ ]  Preliminary Proxy Statement

[ ]  Confidential, for Use of the Commission Only (as permitted by
     Rule 14a-6(6)(2)

[X]  Definitive Proxy Statement

[ ]  Definitive Additional Materials

[ ]  Soliciting Material Pursuant to Section 240.14a-11(c) orSection
     240.14a-12

                    UNITED COMMUNITY BANKS, INC.
          (Name of Registrant as Specified in Its Charter)
                                  
                                                         
             (Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1)(4)
     and 0-11.

     (1)  Title of each class of securities to which transaction
          applies:



     (2)  Aggregate number of class of securities to which transaction
          applies:



     (3)  Per unit price or other underlying value of transaction
          computed pursuant to Exchange Act Rule 0-11 (set forth the
          amount on which the filing fee is calculated and state how
          it was determined):

<PAGE>
[ ]  Check box if any part of the fee is offset as provided by
     Exchange Act Rule O-11(a)(2) and identify the filing for which
     the offsetting fee was paid previously.  Identify the previous
     filing by registration statement number, or the Form or Schedule
     and the date of its filing.

     1)   Amount Previously Paid:

                                             

     2)   Form, Schedule or Registration Statement No.:

                                             

     3)   Filing Party:

                                             

     4)   Date Filed:

<PAGE>
                 [UNITED COMMUNITY BANKS, INC. LOGO]
                                  
                                  

                    Notice of 1998 Annual Meeting
                                  
                                  
                                  
                                  
                                  
                          _________________
                                  
                           Proxy Statement
                          _________________
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                    Annual Financial Statements 
                      and Review of Operations
                                  

<PAGE>

                          Table of Contents


                                                                 Page
Notice of Annual Meeting of Shareholders                           i
Proxy Statement                                                    1
     Voting Securities and Principal Holders                       2
     Nomination and Election of Directors                          2
     Information About Nominees for Director                       3
     Executive Compensation                                        5
     Section 16(a) Beneficial Ownership Reporting Compliance       7
     Compensation Committee Interlocks and Insider Participation   7
     Joint Report on Executive Compensation                        8
     Shareholder Return Performance Graph                          9
     Meetings and Committees of the Board of Directors            10
     Information Concerning United's Accountants                  10
     Shareholder Proposals                                        10
     Other Matters that May Come Before the Meeting               10
Appendix:  Annual Report to Shareholders                         A-1
     General Description of the Business                         A-2
     Selected Financial Data                                     A-3
     Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                    A-4
     Quantitative and Qualitative Disclosures 
          About Market Risk                                     A-20
     Market and Dividend Data                                   A-21
     Report of Independent Certified Public Accountants         A-22
     Consolidated Balance Sheets - December 31, 1997 and 1996   A-23
     Consolidated Statements of Earnings - 
          For the Years Ended December 31, 1997 and 1996        A-24
     Consolidated Statements of Changes in Stockholders'
          Equity - For the Years Ended December 31, 1997, 
          1996 and 1995                                         A-25
     Consolidated Statements of Cash Flows - 
          For the Years Ended December 31, 1997, 1996 and 1995  A-26
     Notes to Consolidated Financial Statements                 A-27

<PAGE>
 
                                                     March 24, 1998


Dear Shareholder: 

     It is my pleasure to invite you to attend the 1998 Annual
Meeting of Shareholders of United Community Banks, Inc. which
will be held April 16, 1998 at The Brasstown Valley Resort,
Trackrock Amphitheater, Highway 515, Young Harris, Georgia at
2:30 p.m.  The accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement describe the items of business
which will be discussed during the meeting.  A report to
shareholders, containing certain financial information, is
included as an appendix to the Proxy Statement.

     To be sure that your vote is counted, we urge you to
carefully review the Proxy Statement and vote your choices on the
enclosed proxy card as soon as possible.  If you wish to attend
the meeting, any ballot that you submit at the meeting will
supersede your proxy.

     On behalf of the management, employees and directors of
United Community Banks, Inc., I want to thank you for your
continued support.

                                Sincerely, 



                                Jimmy C. Tallent, 
                                President and Chief Executive Officer


<PAGE>


                    UNITED COMMUNITY BANKS, INC.
                           59 Highway 515
                            P.O. Box 398
                     Blairsville, Georgia  30512
                                  
         ___________________________________________________
                                  

              NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
         ___________________________________________________
                                  
                    To be Held on April 16, 1998


     The annual meeting of shareholders of United Community
Banks, Inc. ("United") will be held on April 16, 1998 at 2:30
p.m. at The Brasstown Valley Resort, Trackrock Amphitheater,
Highway 515, Young Harris, Georgia, for the purposes of
considering and voting upon:

          1.   The election of eleven directors to constitute the
     Board of Directors to serve until the next annual meeting and
     until their successors are elected and qualified; and

          2.   Such other matters as may properly come before the
     meeting or any adjournment thereof.

     Only shareholders of record at the close of business on
March 18, 1998 will be entitled to notice of and to vote at the
meeting or any adjournment thereof.

     A Proxy Statement and a Proxy solicited by the Board of
Directors are enclosed herewith.  Please sign, date and return
the Proxy promptly in the enclosed business reply envelope.  If
you attend the meeting you may, if you wish, withdraw your Proxy
and vote in person.

     Also enclosed as an appendix to the Proxy Statement is a
report to shareholders, including United's audited annual
financial statements, management's  discussion and analysis of
financial condition and results of operations, selected financial
data, market and dividend data and certain other matters. 

                              By Order of the Board of Directors,



                              Jimmy C. Tallent,
                              President and Chief Executive Officer

M
arch 24, 1998


[BOXED ITEM]
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT
YOUR VOTE MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND
PERSONALLY.

<PAGE>


                    UNITED COMMUNITY BANKS, INC.
                                  
                           59 Highway 515
                            P.O. Box 398
                     Blairsville, Georgia  30512
                        _____________________
                                  
                           PROXY STATEMENT
                        _____________________
                                  
     This Proxy Statement is furnished in connection with the
solicitation of Proxies by the Board of Directors of United
Community Banks, Inc. ("United" or the "Company") for use at the
Annual Meeting of Shareholders of United to be held on April 16,
1998, and any adjournment thereof, for the purposes set forth in
the accompanying notice of the meeting.  The expenses of this
solicitation, including the cost of preparing and mailing this
Proxy Statement, will be paid by United.  Copies of solicitation
materials may be furnished to banks, brokerage houses and other
custodians, nominees and fiduciaries for forwarding to beneficial
owners of shares of United's common stock, and normal handling
charges may be paid for such forwarding services.  In addition to
solicitations by mail, directors and regular employees of United
may solicit Proxies in person or by telephone.  It is anticipated
that this Proxy Statement and the accompanying Proxy will first
be mailed to shareholders on approximately March 25, 1998.

     The record of shareholders entitled to vote at the Annual
Meeting was taken as of the close of business on March 18, 1998. 
On that date, United had outstanding and entitled to vote
7,385,105 shares of common stock, par value $1.00 per share (the
"Common Stock").

     Any Proxy given pursuant to this solicitation may be revoked
by any shareholder who attends the meeting and gives oral notice
of his or her election to vote in person, without compliance with
any other formalities.  In addition, any Proxy given pursuant to
this solicitation may be revoked before the meeting by delivering
an instrument revoking it or a duly executed Proxy bearing a
later date to the Secretary of United.  If the Proxy is properly
completed and returned by the shareholder and is not revoked, it
will be voted at the meeting in the manner specified thereon.  If
the Proxy is returned but no choice is specified thereon, it will
be voted for all the persons named below under the caption
"Information About Nominees For Director".

     The percentages outstanding of Common Stock are based on
7,646,209 shares of Common Stock, including 140,000 shares deemed
outstanding pursuant to United's prime plus 1/4% Convertible
Subordinated Payable-in-Kind Debentures due December  31, 2006
("2006 Debentures") and presently exercisable options to acquire
121,604 shares.

     United will furnish without charge a copy of its Annual
Report on Form 10-K filed with the Securities and Exchange
Commission (the "SEC") for the fiscal year ended December 31,
1997, including financial statements and schedules, to any shareholder
of record or any beneficial owner of its Common Stock as of March 18, 1998
who requests a copy of such report.  Any request for the Form
10-K should be in writing and addressed to:

                             Lois Jones
                           59 Highway 515
                            P.O. Box 398
                     Blairsville, Georgia  30512

     If the person requesting the report was not a shareholder of
record on March 18, 1998, the request must include a
representation that the person was a beneficial owner of United's
Common Stock on that date.  Copies of any exhibits to the Form
10-K will also be furnished on request and upon the payment of
United's expense in furnishing the exhibits.

<PAGE>

               VOTING SECURITIES AND PRINCIPAL HOLDERS

     The following table sets forth as of December 31, 1997,
beneficial ownership of United's Common Stock by each "person"
(as that term is defined by the SEC) known by United to be the
beneficial owner of more than 5% of United's voting securities
and all directors and executive officers of United as a group.


<TABLE>
<CAPTION>
N
ame and Address                          Number of Shares             Percent
of Beneficial Owner                      Owned Beneficially            of Class
- -------------------                      ------------------            --------
<S>                                       <C>                           <C>
Robert L. Head, Jr.
Blairsville Highway
Blairsville, Georgia  30512                 725,000 (1)                  9.5%

W. C. Nelson, Jr.
P.O. Box 127
Blairsville, Georgia  30512                 689,783 (2)                  9.0%
 
All directors and executive
   officers as a group (19 persons)       2,507,126 (3)                 32.9%
</TABLE>

____________________
(1)  Includes 50,758 shares beneficially owned by Mr. Head as
     custodian for his children and 10,000 shares owned pursuant to
     the 2006 Debentures.  Does not include 16,965 shares owned by Mr.
     Head's wife, for which he disclaims beneficial ownership.
(2)  Includes 11,250 shares beneficially owned by a trust over which
     Mr. Nelson has voting power and 10,000 shares owned pursuant to
     the 2006 Debentures.  Does not include 10,150 shares owned by Mr.
     Nelson's wife, for which he disclaims beneficial ownership.
(3)  Includes presently exerciseable options to acquire 81,802 shares
     and 132,000 shares beneficially owned pursuant to the 2006
     Debentures. 

                NOMINATION AND ELECTION OF DIRECTORS
                            (Proposal 1)

     The Bylaws of United provide that the number of directors
may range from eight to fourteen directors.  The board of
Directors of United has set the number of directors at eleven. 
The number of directors may be increased or decreased from the
foregoing from time to time by the Board of Directors by
amendment of the Bylaws, but no decrease shall have the effect of
shortening the term of an incumbent director.  The terms of
office for directors continue until the next annual meeting and
until their successors are elected and qualified.

     Each Proxy executed and returned by a shareholder will be
voted as specified thereon by the shareholder.  If no
specification is made, the Proxy will be voted for the election
of the nominees named below to constitute the entire Board of
Directors.  In the event that any nominee withdraws or for any
reason is not able to serve as a director, the Proxy will be
voted for such other person as may be designated by the Board of
Directors as a substitute nominee, but in no event will the Proxy
be voted for more than eleven nominees.  Management of United has
no reason to believe that any nominee will not serve if elected. 
All of the nominees are currently directors of United.

     Directors are elected by a plurality of the votes cast by
the holders of the shares entitled to vote in an election at a
meeting at which a quorum is present.  A quorum is present when
the holders of a majority of the shares outstanding on the record
date are present at a meeting in person or by proxy.  An
abstention and a broker non-vote would be included in determining
whether a quorum is present at a meeting, but would not have an
effect on the outcome of a vote.

<PAGE>
               INFORMATION ABOUT NOMINEES FOR DIRECTOR


     The following information as of December 31, 1997 has been
furnished by the respective nominees for director.  Except as
otherwise indicated, each nominee has been or was engaged in his
present or last principal employment, in the same or a similar
position, for more than five years.




<TABLE>
<CAPTION>
                                                                                                  Number of Shares
                                                     Information                                 Owned Beneficially
Name (Age)                                          About Nominee                                (Percent of Class)
- ----------                                          -------------                                ------------------
<S>                       <C>                                                                     <C>
Jimmy C. Tallent          President, Chief Executive Officer and Director of                      148,672 (1.9%) (1)
   (45)                   Union County Bank ("UCB") since 1984 and of United since 1987. 
                          Director of Carolina Community Bank, Murphy, North Carolina
                          ("Carolina") since 1990, of Peoples Bank of Fannin County
                          ("Peoples") since 1992, of White County Bank ("White") since
                          1995, and of First Clayton Bank and Trust ("Clayton") since 1997. 
                          Chairman of the Board of Towns County Bank ("Towns") since 1992
                          and Chairman of the Board of White since 1995.  Director of
                          United Family Finance Co. ("Finance") since 1997.


Billy M. Decker           Senior  Vice  President  and  Cashier  of  UCB from                     134,767 (1.8%) (2)
   (54)                   1986 to 1990, Mr. Decker became President, Chief Executive
                          Officer and a Director of Carolina in 1990.  He has been a
                          Director of United since 1988, a Vice President of United since
                          1992 and a Director of UCB since 1980.  He has been Secretary of
                          United since 1988.

Thomas C. Gilliland       A Director  of  United  since 1992 and  Vice Chairman                   177,650 (2.3%) (3)
   (49)                   of the Peoples' Board since 1986, Mr. Gilliland became President
                          and Chief Executive Officer of Peoples and Vice President of
                          United in 1993 and was named Executive Vice President of United
                          in 1994.  Chairman of the Board of Finance since 1997.

Robert L. Head, Jr.       Chairman of the Board of Directors of  United since                     725,000 (9.5%) (4)
   (58)                   1988, Mr. Head has served as a Director of UCB since 1973.  Mr.
                          Head operates Head Construction Company, a general construction
                          firm, and Head-Westgate Corp., a construction and real estate
                          development firm in Blairsville, Georgia.  He also owns Mountain
                          Building Supply in Blairsville, Georgia.

<PAGE>
Charles E. Hill           A Director of United since 1988 and of UCB since 1972,                  170,977 (2.2%) (5)
   (60)                   Mr. Hill is the Director of Pharmacy at Union General Hospital in
                          Blairsville, Georgia.

Hoyt O. Holloway          A Director of United since 1993 and of Peoples since                     48,085* (6)
   (58)                   1986, Mr. Holloway owns H&H Farms, a poultry farm in Blue Ridge,
                          Georgia.

P. Deral Horne            A Director of Carolina since 1988 and of United since                    30,000* (7)
   (71)                   1992, Mr. Horne owns Mountain and Valley Properties, a land
                          development and sales business in Murphy, North Carolina.

John R. Martin            A Director of United since 1997, a Director of Clayton since             48,378*
   (48)                   1990, and Chairman of the Board of Directors of Clayton since
                          1996, Mr. Martin is also the owner of John Martin Construction
                          and of several mini-warehouse facilities in northeast Georgia and
                          western South Carolina, as well as being a registered pharmacist.

Clarence W. Mason, Sr.    Chairman of the Board of Directors of Peoples since                      82,340 (1.1%) (8)
   (61)                   1986 and a Director of United since 1992, Mr. Mason owns Mason
                          Tractor, a retail equipment sales operation in Blue Ridge,
                          Georgia.

W. C. Nelson, Jr.         A Director of United since 1988 and of UCB since 1975,                  689,763 (9.0%) (9)
   (54)                   Mr. Nelson is Vice Chairman of the United Board of Directors and
                          owns Nelson Tractor Company, a retail equipment sales firm in
                          Blairsville, Georgia.

Charles E. Parks          A retired businessman, Mr. Parks is the former owner of
   (68)                   Parks Lumber Co., a retail building supply firm located in
                          Murrayville, Georgia.                                                   102,109 (1.3%) (10)
</TABLE>

________________

  *  Less than one percent.
(1)  Includes 10,000 shares beneficially owned by Mr. Tallent pursuant
     to the 2006 Debentures and 17,750 shares beneficially owned by
     Mr. Tallent pursuant to currently-exercisable options. 
(2)  Includes 10,000 shares beneficially owned by Mr. Decker pursuant
     to the 2006 Debentures and 7,100 shares beneficially owned by Mr.
     Decker pursuant to currently-exercisable options. Does not
     include 9,613 shares owned by Mr. Decker's wife, for which he
     disclaims beneficial ownership.
(3)  Includes 6,270 shares beneficially owned by Mr. Gilliland as
     custodian for his children, 10,000 shares beneficially owned
     pursuant to the 2006 Debentures and 12,750 shares beneficially
     owned pursuant to currently exercisable stock options.
(4)  Includes 50,758 shares beneficially owned by Mr. Head as
     custodian for his children and 10,000 shares owned pursuant to
     the 2006 Debentures.  Does not include 16,965 shares owned by Mr.
     Head's wife, for which he disclaims beneficial ownership.
(5)  Includes 10,000 shares beneficially owned by Mr. Hill pursuant to
     the 2006 Debentures.  Does not include 88,932 shares owned by Mr.
     Hill's wife, for which he disclaims beneficial ownership.

<PAGE>
(6)  Includes 10,000 shares beneficially owned pursuant to the 2006
     Debentures and 35,565 beneficially owned by Holloway Motors,
     Inc., a company 100% owned by Mr. Holloway.  Does not include 485
     shares owned by Mr. Holloway's wife, for which he disclaims
     beneficial ownership.
(7)  Includes 10,000 shares beneficially owned pursuant to the 2006
     Debentures.
(8)  Includes 10,000 shares beneficially owned pursuant to the 2006
     Debentures.
(9)  Includes 11,250 shares beneficially owned by a trust over which
     Mr. Nelson has voting power and 10,000 shares owned pursuant to
     the 2006 Debentures; does not include 10,150 shares owned by Mr.
     Nelson's wife, for which he disclaims beneficial ownership.
(10) Includes 10,000 shares beneficially owned pursuant to the 2006
     Debentures.

     There are no family relationships between any director,
executive officer or nominee for director of United or any of its
subsidiaries.


                       EXECUTIVE COMPENSATION

     The table below sets forth the annual and other compensation
paid by United and its bank subsidiaries to the following persons
who served in the designated offices during 1997:  Jimmy C.
Tallent, President and Chief Executive Officer of United and UCB,
Billy M. Decker, Senior Vice President of United, Guy Freeman,
President and Chief Executive Officer of Carolina and Senior Vice
President of United, Thomas C. Gilliland, President and Chief
Executive Officer of Peoples and Executive Vice President of
United, Christopher J. Bledsoe, Senior Vice President and Chief
Financial Officer of United and UCB (individually a "Named
Executive Officer, collectively, the "Named Executive Officers").


<TABLE>
<CAPTION>
                                                                                                Long-Term
                                                         Annual Compensation                   Compensation
                                              ---------------------------------------------     Securities       All
Name and Principal Offices                                                                      Underlying      Other
      Held During 1997                        Year        Salary       Bonus          Other       Options   Compensation
- ---------------------------                   ----        ------       -----          -----     ----------  ------------
<S>                                           <C>        <C>          <C>          <C>            <C>         <C>
Jimmy C. Tallent                              1997       $215,000     $90,000      $32,875(1)      8,750      $27,058(2)
     President and Chief Executive            1996       $188,650     $65,000      $10,000(1)      8,750      $23,781
     Officer of United and UCB                1995       $167,200     $57,000      $ 9,000(1)     12,500      $21,085

Thomas C. Gilliland                           1997       $157,500     $42,500      $ 5,400(1)      5,250      $13,388(3)
     President and Chief Executive            1996       $142,188     $35,000      $ 6,400(1)      5,250      $12,086
     Office of Peoples; Executive             1995       $132,563     $30,000      $ 5,400(1)      7,500      $ 6,628
     Vice President of United

Billy M. Decker                               1997       $117,700     $30,000      $18,600(1)      3,500      $14,359(3)
     Senior Vice and Secretary of United      1996       $107,500     $35,500      $10,000(1)      3,500      $13,115
                                              1995       $ 98,010     $30,000      $ 8,100(1)      5,000       11,957
Guy W. Freeman
     President and Chief Executive            1997       $139,200     $40,000        7,000(1)     10,000      $16,982(3)
     Officer of Carolina; Senior              1996       $117,500     $20,000        3,850(1)      3,500      $14,335
     Vice President of United                 1995       $ 87,929(4)  $10,000        1,400(1)      5,000           --
    
Christopher J. Bledsoe(5)                     1997       $102,500     $25,000           --         3,500      $12,505(3)
     Senior Vice President and Chief          1996       $ 91,500     $20,500           --         3,500      $11,163
     Financial Officer of United and UCB      1995       $ 80,000     $17,000           --         5,000      $ 9,760

</TABLE>

___________________________
(1)  Directors' fees for service on United's bank subsidiaries' boards
     of directors.  Other perquisites do not meet the Securities and
     Exchange Commission threshold for disclosure.
(2)  Represents a contribution by United of $26,230 on behalf of Mr.
     Tallent to United's Profit Sharing Plan and insurance premiums of
     $828 paid by UCB on behalf of Mr. Tallent on a life insurance
     policy.
(3)  Represents United's contribution on behalf of the named
     individual to United's Profit Sharing Plan. 

<PAGE>
(4)  Mr. Freeman commenced employment with United and its subsidiaries
     in March 1995.  Mr. Freeman beneficially owns 26,618 shares of
     Common Stock.
(5)  Mr. Bledsoe beneficially owns 18,886 shares of Common Stock. 

     United has never granted restricted stock, stock appreciation
rights or similar awards to any of its present or past executive
officers, other than awards of stock options under the United
Community Banks Key Employee Stock Option Plan.

     Directors of United, other than a President or Vice
President of a bank subsidiary who serves on United's Board of
Directors, received $1,000 per board meeting attended during
1997.  Certain members of United's Board of Directors also serve
as members of one or more of the Boards of Directors of United's
bank subsidiaries, for which they are compensated by the bank
subsidiaries.

Option Grants In Last Fiscal Year

     The following table sets forth information concerning stock
options granted to the Named Executive Officers under the Plan
during fiscal year 1997 and the projected value of those options
at assumed annual rates of appreciation.


<TABLE>
 
                                                                      Potential Realizable Value
                                                                        at Assumed Annual Rates
                                                                      of Stock Price Appreciation
                               Individual Grants                           for Option Term(2)
                        Securities      Percent of Total                   ------------------
                        Underlying      Options Granted
                         Options        to Employees in        Expiration
     Name                Granted(1)       Fiscal Year             Date         0%       5%         10%
     ----              ------------     ----------------       -----------     --      ---         ---
<S>                       <C>                 <C>                <C>           <C>   <C>        <C>
Jimmy C. Tallent           8,750              16%                1/1/07        $0    $121,100   $306,775
Thomas C. Gilliland        5,250               9%                1/1/07        $0    $ 72,660   $184,065
Billy M. Decker            3,500               6%                1/1/07        $0    $ 48,440   $122,710
Guy W. Freeman            10,000              18%                1/1/07        $0    $138,400   $350,600
Christopher J. Bledsoe     3,500               6%                1/1/07        $0    $ 48,440   $122,710
</TABLE>

__________________________
(1)  20% of the options were vested at the date of grant and an
     additional 20% vest at each of the first four anniversaries of
     the date of grant. Exercise price of the options is $22.00 per
     share, the fair market value on the date of grant of the options.
(2)  "Potential Realizable Value" is disclosed in response to SEC
     regulations that require such disclosure for illustration only. 
     The values disclosed are not intended to be, and should not be
     interpreted as, representations or projections of the future
     value of United's Common Stock or of the stock price.  Amounts
     are calculated at 0%, 5% and 10% assumed appreciation of the
     value of the Common Stock (compounded annually over the option
     term) and are not intended to forecast actual expected future
     appreciation, if any, of the Common Stock.  The potential
     realizable value to the optionee is the difference between the
     exercise price and the appreciated stock price at the assumed
     annual rates of appreciation multiplied by the number of shares
     underlying the options.

<PAGE>
Option Fiscal Year-End Values

     Shown below is information with respect to unexercised
options to purchase the Common Stock granted under the Plan to
the Named Executive Officers and held by them at December 31,
1997.  No options were exercised during 1997 by a Named Executive
Officer.


                    Fiscal Year-End Option Values


<TABLE>
<CAPTION>
                                 Number of Unexercised
                               Options at Fiscal Year End             Value of Unexercised in the Money
      Name                      Exercisable/Unexercisable (#)         Options at  Fiscal Year End ($)(1)
      ----                     ---------------------------            ----------------------------------
<S>                                  <C>                                             <C>
Jimmy C. Tallent                     17,750/12,250                                   $306,000
Thomas C. Gilliland                  10,650/7,350                                    $183,600
Billy M. Decker                       7,100/4,900                                    $122,400
Guy W. Freeman                        8,400/10,100                                   $132,800
Christopher J. Bledsoe                7,100/4,900                                    $122,400
</TABLE>

____________________
(1)  Based on $30.00 per share, the last sale price known to United
     during 1997.  United's Common Stock is not publicly traded.

 
      SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Stephen L. Cockerham, Senior Vice President and Chief Credit
Officer of the Company and United, inadvertently failed to file
on a timely basis a Form 4 reporting the purchase of Company
Common Stock.

 
    COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Board of Directors of United reviewed the compensation
of Messrs. Tallent, Gilliland, Freeman, Decker and Bledsoe and of
United's other executive officers for the 1997 fiscal year. 
Although all members of the Board of Directors participated in
deliberations regarding the salaries of executive officers, none
of such officers participated in any decisions regarding his own
compensation as an executive officer.

     UCB and Carolina have retained the services of a
construction company operated by Robert L. Head, Jr., who is
Chairman of the Board of Directors of United and a director of
UCB.  During 1997, UCB and Carolina made payments of
approximately $1.2 million to such construction company

     The Banks have had, and expect to have in the future,
banking transactions in the ordinary course of business with
directors and officers of United and their associates, including
corporations in which such officers or directors are
shareholders, directors and/or officers, on the same terms
(including interest rates and collateral) as those prevailing at
the time for comparable transactions with unaffiliated third
parties.  Such transactions have not involved more than the
normal risk of collectability or presented other unfavorable
features.

<PAGE>

               JOINT REPORT ON EXECUTIVE COMPENSATION

General

     Under rules established by the SEC, United is required to
provide certain information with respect to compensation provided
to United's President and Chief Executive Officer and to United's
other executive officers.  The SEC regulations require a report
setting forth a description of United's executive compensation
policy in general and the considerations that led to the
compensation decisions affecting Mr. Tallent, Mr. Gilliland, Mr.
Decker, Mr. Freeman and Mr. Bledsoe.  In fulfillment of this
requirement, the Board of Directors and Compensation Committee
has prepared the following report for inclusion in this Proxy
Statement.

     The fundamental policy of United's compensation program is
to offer competitive compensation and benefits for all employees,
including the President and Chief Executive Officer and the other
officers of United, in order to compete for and retain talented
personnel who will lead United in achieving levels of financial
performance which enhance shareholder value.  United's executive
compensation package historically has consisted of salary, annual
incentive compensation, matching profit sharing contributions and
other customary fringe benefits.  The grant of stock options
under the Plan is also a part of United's compensation package
for certain executive officers, including the Named Executive
Officers.

Salary

     All members of the Board of Directors of United participated
in deliberation regarding salaries of executive officers. 
Although subjective in nature, factors considered by the Board in
setting the salaries of executive officers (other than Mr.
Tallent) were Mr. Tallent's recommendations, compensation paid by
comparable banks to their executive officers (although such
information was obtained informally and United did not attempt to
pay any certain percentage of salary for comparable positions
with other banks), each executive officer's performance,
contribution to United, tenure in his or her position, and
internal comparability considerations.  The Board of Directors
set the salary of Mr. Tallent based on Mr. Tallent's salary
during the preceding fiscal year, his tenure, the salaries of
chief executive officers of comparable banks (although such
information was obtained informally and United did not attempt to
pay any certain percentage of salary for a comparable position
with other banks) and the increase in earnings of United in
recent years.  The Board did not assign relative weights to the
factors considered in setting salaries of executive officers,
including Mr. Tallent.

Annual Incentive Compensation

     Annual incentive compensation for 1997, paid in the form of
a cash bonus during the fourth quarter of the fiscal year, was
based on annual financial results of United's bank subsidiaries,
including general targets with respect to net earnings and return
on average assets.  Cash bonuses were granted by the Board to Mr.
Tallent, and the Board set a range of bonuses (based on a
percentage of salary) for all employees other than Mr. Tallent,
within which range Mr. Tallent determined each officer's bonus,
based on individual performance.

Key Employee Stock Option Plan

     Options to acquire 79,704 shares of Common Stock were
awarded under the Plan in fiscal 1997, including options to
acquire 31,000 shares of Common Stock awarded to the Named
Executive Officers by the Compensation Committee.


           United Community Banks, Inc. Board of Directors

     Jimmy C. Tallent                   Hoyt O. Holloway 
     Billy M. Decker                    P. Deral Horne
     Thomas C. Gilliland                John R. Martin
     Robert L. Head, Jr.                Clarence W. Mason, Sr.
     Charles E. Hill                    W. C. Nelson, Jr.
                                        Charles E. Parks 

          Compensation Committee of the Board of Directors

     Robert L. Head, Jr.                John R. Martin
     Charles E. Hill                    Clarence W. Mason, Sr.
     Hoyt O. Holloway                   W. C. Nelson, Jr.
     P. Deral Horne                     Charles E. Parks


                SHAREHOLDER RETURN PERFORMANCE GRAPH

     Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareholder return on
United's Common Stock against the cumulative total return on The
Nasdaq Stock Market (U.S. Companies) Index and The Nasdaq Bank
Stocks Index for the period commenced on June 28, 1993, the date
on which United's Common Stock was registered under the
Securities Exchange Act of 1934, as amended, and ended on
December 31, 1997.  United's Common Stock is not publicly traded;
therefore, the total shareholder return is based on stock trades
known to United during the period presented.

[PERFORMANCE GRAPH GOES HERE]

<TABLE>
<CAPTION>
                                                     Cumulative Total Return
                                     -------------------------------------------------------------
                                     6/93        12/93      12/94       12/95     12/96      12/97
                                     ----        -----      -----       -----     -----      -----
<S>                                 <C>          <C>        <C>        <C>        <C>        <C>
UNITED COMMUNITY BANKS INC.         100.00       118.96     186.79     300.79     396.57     569.36
NASDAQ STOCK MARKET (U.S.)          100.00       110.56     108.07     152.84     187.99     230.69
NASDAQ BANK                         100.00       106.65     106.26     158.25     208.93     352.97
</TABLE>


          MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS


     The United Board of Directors held four meetings during
1997.  All of the directors attended at least seventy-five
percent (75%) of the meetings of the Board and meetings of the
committees of the Board on which they sat that were held during
their tenure as directors.

     The Board of Directors does not have a standing audit or
nominating committee.  The compensation committee of the Board of
Directors is comprised of all members of the Board who are not
employees of the bank subsidiaries of United.  The compensation
committee makes compensation decisions for executive officers and
key employees and administers the Plan.


             INFORMATION CONCERNING UNITED'S ACCOUNTANTS

     Porter Keadle Moore, LLP ("Porter Keadle") was the principal
independent public accountant for United during the year ended
December 31, 1997.  Representatives of Porter Keadle are expected
to be present at the annual meeting and will have the opportunity
to make a statement if they desire to do so and to respond to
appropriate questions.  United anticipates that Porter Keadle
will be United's accountants for the current fiscal year. 

                        SHAREHOLDER PROPOSALS

     Proposals of shareholders intended to be presented at
United's 1999 annual meeting must be received by December 12,
1998, in order to be eligible for inclusion in United's Proxy
Statement and Proxy for that meeting.

           OTHER MATTERS THAT MAY COME BEFORE THE MEETING

     Management of United knows of no matters other than those
stated above that are to be brought before the meeting.  If any
other matters should be presented for consideration and voting,
however, it is the intention of the persons named as proxies in
the enclosed Proxy to vote in accordance with their judgment as
to what is in the best interest of United.


                                 By Order of the Board of Directors,



                                 Jimmy C. Tallent
                                 President and Chief Executive Officer

<PAGE>

                             APPENDIX A

<PAGE>

                 GENERAL DESCRIPTION OF THE BUSINESS

     United Community Banks, Inc. ("United") was incorporated
under the laws of Georgia in 1987 and commenced operations in
1988 by acquiring 100% of the outstanding shares of Union County
Bank ("UCB").  United is a registered bank holding company.  All
of United's activities are currently conducted by its
wholly-owned subsidiaries, UCB, which was organized as a Georgia
banking corporation in 1950, Carolina Community Bank, Murphy,
North Carolina ("Carolina"), which United acquired in 1990,
Peoples Bank, Blue Ridge, Georgia ("Peoples"), which United
acquired in 1992, Towns County Bank, Hiawassee, Georgia
("Towns"), which United also acquired in 1992, White County Bank,
Cleveland, Georgia ("White"), which United acquired in 1995, and
First Clayton Bancshares, Inc. ("First Clayton"), which United
acquired in 1997.

     UCB, Carolina, Peoples, Towns, White and First Clayton
(collectively, the "Banks") are community-oriented, with an
emphasis on retail banking, and offer such customary banking
services as customer and commercial checking accounts, NOW
accounts, savings accounts, certificates of deposit, lines of
credit, Mastercard and VISA accounts, money transfers and trust
services.  The Banks finance commercial and consumer
transactions, make secured and unsecured loans, including
residential mortgage loans, and provide a variety of other
banking services.  UCB also offers travel agency services for the
Banks' customers. 

     The Mortgage People Company ("MPC"), a division of UCB, is a
full-service mortgage lending operation approved as a
seller/servicer for Federal National Mortgage Association and
Federal Home Mortgage Corporation.  MPC was organized to provide
fixed and adjustable-rate mortgages.  United Family Finance
Company is a traditional consumer finance company which is based
in Blue Ridge, Georgia and also has been granted a license to
conduct business in Hiawassee, Georgia and Murphy, North
Carolina.

<PAGE>
                    UNITED COMMMUNITY BANKS, INC.



<TABLE>
SELECTED FINANCIAL DATA

                                      1997             1996         1995         1994         1993
                                      ----             ----         ----         ----         ----
                                                   (in thousands except per share data)

<S>                                <C>             <C>          <C>          <C>          <C>
FOR THE YEAR
Net interest income                $   43,232         33,815       25,015       20,067       16,024
Provision for loan losses               2,634          1,597        1,116          998          931
Noninterest income                      6,980          5,666        4,523        3,962        3,918
Noninterest expense                    32,077         24,843       19,204       15,125       12,810
Income taxes                            4,766          4,114        2,549        2,205        1,592
Net earnings                           10,735          8,927        6,669        5,701        4,609

PER COMMON SHARE
Net earnings                             1.47           1.29         1.03         0.91         0.74
Net earnings - assuming dilution         1.46           1.26         1.01         0.89         0.72
Cash dividends declared                  0.10           0.10         0.08         0.09         0.06
Book value                              10.17           8.14         7.09         5.56         4.76

AT YEAR END
Loans                                 816,934        633,176      480,360      366,916      305,398
Earning assets                      1,049,159        824,476      659,548      458,446      399,674
Assets                              1,153,367        886,103      712,298      496,527      427,483
Deposits                              977,079        773,300      637,832      427,998      378,920
Stockholders' equity                   75,113         57,675       49,207       34,871       29,876
Common shares outstanding           7,385,105      7,084,621    6,945,081    6,274,903    6,278,900

AVERAGE BALANCES
Loans                                 737,889        551,043      423,953      332,793      270,199
Earning assets                        960,346        723,994      565,523      429,152      365,711
Assets                              1,024,730        783,509      607,877      464,767      393,541
Deposits                              894,200        695,391      538,518      408,645      351,526
Stockholders' equity                   66,333         53,472       42,110       32,463       27,539
Weighted average shares 
  outstanding                       7,300,874      6,919,437    6,499,264    6,275,014    6,235,452

KEY PERFORMANCE RATIOS
Return on average assets                 1.05%          1.14%        1.10%        1.23%        1.17%
Return on average stockholders' 
  equity                                16.18%         16.69%       15.84%       17.56%       16.74%
Net interest margin, taxable 
  equivalent                             4.64%          4.85%        4.64%        4.93%        4.63%
Efficiency ratio                        64.43%         62.93%       65.01%       62.92%       64.24%
Dividend payout ratio                    6.51%          7.58%        8.82%        9.89%        8.11%
Average equity to average assets         6.47%          6.82%        6.93%        6.98%        7.00%
</TABLE>


<PAGE>

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS


General

     United was incorporated under the laws of Georgia in 1987
and commenced operations in 1988 by acquiring 100% of the
outstanding shares of UCB.  United is a registered bank holding
company.  All of United's activities are currently conducted by
its wholly-owned subsidiaries, UCB, which was organized as a
Georgia banking corporation in 1950, Carolina, which United
acquired in 1990, Peoples, which United acquired in 1992, Towns,
which United also acquired in 1992, White which United acquired
in 1995 and First Clayton, which United acquired in 1997.
 
     The following discussion focuses on significant changes in
the financial condition and results of operations of United and
the Banks during the three years ended December 31, 1997.  The
discussion and analysis is intended to supplement and highlight
and should be read in conjunction with information contained in
the accompanying consolidated financial statements.

Year 2000 Considerations

     The Company is aware of the issues associated with the
programming code in existing computer systems as the millennium
(year 2000) approaches.  The "year 2000" (Y2K) issue is pervasive
and complex as virtually every computer operation will be
affected in some way by the rollover of the two-digit value to
00.  The issue is whether computer systems will properly
recognize date-sensitive information when the year changes to
2000.  Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail.

     The Company is utilizing both internal and external
resources to identify, correct or reprogram, and test the systems
for Y2K compliance.  It is anticipated that all mainframe systems
will be Y2K certified no later than the third quarter of 1998,
allowing adequate time for testing during 1999.  To date,
confirmation has been received from the Company's primary
processing vendors that plans are being developed to address
processing of transactions in the year 2000.

     Management has not yet fully determined the Y2K compliance
expense and related potential effect on the Company's earnings;
however, direct costs are not expected to be material to the
consolidated results of operations and will be expensed as
incurred.  Expenses in 1997 related to the Y2K issue were not
material to the financial results of operations.

Restatement of Financial Statements and Management's Discussion
and Analysis

     Effective September 12, 1997, United completed the
acquisition of First Clayton Bancshares, Inc., the parent company
of the $73 million First Clayton Bank and Trust in Clayton,
Georgia.  United issued 646,257 shares of its common stock and
paid approximately $7,000 for fractional shares in connection
with this acquisition.  The acquisition was accounted for as a
pooling of interests and accordingly, the consolidated financial
statements and management's discussion and analysis for all
periods have been restated to include the financial position and
results of operations as if the combination had occurred at the
beginning of the earliest period presented.

Financial Highlights

     Year Ended December 31, 1997.  Net earnings totaled over
$10.7 million for the year ended December 31, 1997, an increase
of 20% from the $8.9 million earned in 1996.  Net earnings per
common share were $1.47    for 1997 compared to $1.29 reported
for 1996, an increase of 14%.  Return on average assets and
return on average equity for the year ended December 31, 1997,
were 1.05% and 16.18%, respectively.  The 1996 return on average
assets and return on average equity were 1.14% and 16.69%,
respectively.

     United's balance sheet grew 30% during the year as assets
ended the year at $1.2 billion.  Net loans increased 30% during
the year and deposits grew over 26%.  The increases in both loans
and deposits reflect a strong economic environment as well as
market share gains from competition. Stockholders' equity
increased to $75.1 million and represented 7% of year end assets.

Capital Issues

     In March 1997, United completed an offering to the public of
300,000 shares of United common stock registered under the
Securities Act of 1933, pursuant to which $6.5 million in
additional capital was raised after deducting certain issuance
costs.  United used the proceeds of the offering primarily to
invest additional capital in UCB, Carolina and Towns to support
the asset growth that the banks are experiencing.

     On December 31, 1996, United completed a private placement
of convertible subordinated payable-in-kind debentures due
December 31, 2006 (the "2006 Debentures").  The 2006 Debentures
bear interest at the rate of one quarter of one percentage point
over the prime rate per annum as quoted in the Wall Street
Journal, payable on April 1, July 1, October 1 and January 1 of
each year commencing on April 1, 1997, to holders of record at
the close of business on the 15th day of the month immediately
preceding the interest payment date.  Interest is computed on the
basis of the actual number of days elapsed in a year of 365 or
366 days, as applicable.

     The 2006 Debentures may be redeemed, in whole or in part
from time to time on or after January 1, 1998, at the option of
United upon at least 20 days and not more than 60 days notice, at
a redemption price equal to 100% of the principal amount of the
Debentures to be redeemed plus interest accrued and unpaid as of
the date of redemption.  The holders of the 2006 Debentures not
redeemed will have the right, excercisable at any time up to
December 31, 2006, to convert such debenture at the principal
amount thereof into shares of Common Stock of United at the
conversion price of $25 per share, subject to adjustment for
stock splits and stock dividends.

     In August 1995, United completed an offering to the public
of 215,515 shares of United Common Stock registered under the
Securities Act of 1933 pursuant to which $2,434,000 in additional
capital was raised.  United used the proceeds of the offering
primarily to invest additional capital in Carolina and Towns. 
The additional capital for Towns was used to support the asset
growth experienced by Towns.  The additional capital for Carolina
was necessitated by Carolina's asset growth and the acquisition
of the Franklin and Waynesville branch banking offices.

<PAGE>
Expansions during 1997

     In addition to the purchase of First Clayton, other United
subsidiaries expanded in their respective surrounding areas. 
Carolina created de novo branch offices in the Western North
Carolina cities of Bryson City, Brevard and Cashiers.  Subsequent
to December 31, 1997, Carolina has applied for and has received
approval to open a branch in Etowah, North Carolina.  Peoples
entered into a purchase and assumption agreement to acquire
certain assets and assume certain liabilities of a branch of
another bank located in Ellijay (Gilmer County), Georgia.  The
Ellijay branch purchase was consummated in January of 1998. 

     Effective January 30, 1998, United's subsidiary, Peoples,
assumed deposits totaling $23 million and purchased certain
assets totaling $4 million of a branch in Ellijay, Georgia.

Expansions prior to 1997

     Effective July 1, 1996, the Georgia bank branching laws were
amended to permit subsidiary banks of Georgia bank holding
companies to branch in an aggregate of three additional locations
prior to July 1, 1998, after which time statewide branching will
be permitted.  On July 1, 1996, UCB changed its name from Union
County Bank to United Community Bank and established a branch
office in Dahlonega, Lumpkin County, Georgia.  UCB simultaneously
filed a tradename filing to permit it to conduct its operations
in Union County, Georgia under the tradename Union County Bank. 
On September 28, 1996, UCB assumed deposits of $23.7 million and
purchased assets of $33.2 million in Cornelia, Habersham County,
Georgia, from a banking institution which sold off its operations
in the county.  In Habersham County, UCB operates under the trade
name of First Bank of Habersham, and in Lumpkin County, UCB does
business as United Community Bank.  On July 1, 1996, Carolina
opened a loan production office in Sylva, North Carolina.

     In 1995, United's subsidiary, Carolina, assumed deposits
totaling $32 million and purchased certain assets totaling $12
million of three branch banks in the Western North Carolina
cities of Andrews, Franklin and Waynesville.

     Effective August 31, 1995, United completed the acquisition
of White County Bancshares, Inc., the parent company of the $71
million asset, White County Bank in Cleveland, Georgia.  United
issued 455,400 shares of its common stock in addition to a
previously issued exchangeable payable in kind debenture for all
of the issued and outstanding shares of White.  This transaction
was accounted for as a purchase.

Net Interest Income

     Net interest income (the difference between the interest
earned on assets and the interest paid on deposits and
liabilities) is the single largest component of United's
operating income.  United actively manages this income source to
provide the largest possible amount of income while balancing
interest rate, credit, and liquidity risks.

     Net interest income, on a taxable equivalent basis, was
$44.6 million in 1997, compared to $35.1 million in 1996 and
$26.2 million in 1995.  The 27% increase in 1997 was primarily
the result of increased volume of net earning assets. 

     Interest income increased over 32% in 1997 and 27% in 1996. 
The increase in 1997 was again primarily a result of an increase
in interest and fees on loans of over $18.6 million.  Interest on
investment securities and other earning assets increased $3.3
million or 29%.

     Average earning assets in 1997 increased 33% when compared
to 1996 due to increases in average loans of $186.8 million and
average investment securities of $41.0 million.  An increase in
average earning assets of 28% was experienced in 1996 over 1995
primarily due to increases in average loans of $127.1 million. 
Table 1 represents net interest income, yields and rates on a
taxable-equivalent basis and average balances for the years 1997,
1996 and 1995.

<PAGE>

Table 1   -    Consolidated Average Balances, Interest and Rates
               Taxable Equivalent Basis
               (dollars in thousands)


<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                                   ------------------------
                                            1997                              1996                         1995
                              -----------------------------      ---------------------------   -------------------------
                              Average                 Yield/     Average              Yield/   Average            Yield/
                              Balance     Interest     Rate      Balance    Interest   Rate    Balance   Interest   Rate
                              -------     --------    ------     -------    --------  ------   -------   -------- ------
<S>                          <C>            <C>        <C>       <C>         <C>      <C>      <C>        <C>      <C>
ASSETS
Interest earning assets:
     Federal funds sold      $   29,741      1,642      5.52%     20,303      1,096    5.40%    20,903     1,315   6.29%
     Interest bearing 
          deposits with 
          other banks                --         --        --         918        102   11.11%       286         4   1.40%
     Investment securities:
          Taxable               148,390      9,097      6.13%    115,480      6,735    5.83%    87,378     5,354   6.13%
          Tax-exempt             44,326      3,514      7.93%     36,250      3,022    8.34%    33,003     2,894   8.77%
                             ----------     ------               -------     ------            -------    ------        
     Total investment 
        securities              192,716     12,611      6.54%    151,730      9,757    6.43%   120,381     8,248   6.85%
                             ----------     ------               -------     ------            -------     -----        
     Loans:
          Taxable               733,655     76,452     10.42%    544,247     57,495   10.56%   418,015    44,196  10.57%
          Tax-exempt              4,234        408      9.64%      6,796        732   10.77%     5,938       653  11.00%
                             ----------     ------               -------     ------            -------    ------        
          Total loans           737,889     76,860     10.42%    551,043     58,227   10.57%   423,953    44,849  10.58%
                             ----------     ------               -------     ------            -------    ------
Total interest earning 
   assets                       960,346     91,113      9.49%    723,994     69,182    9.56%   565,523    54,416   9.62%
Allowance for loan losses        (9,304)                          (7,530)                       (5,678)
Cash and due from banks          28,542                           21,396                        17,374
Premises and equipment           23,194                           18,097                        15,032
Other assets                     21,952                           27,552                        15,626
                             ----------                          -------                       -------
     Total assets            $1,024,730                          783,509                       607,877
                             ==========                          =======                       =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
     Deposits:
          Demand             $  176,054      6,712      3.81%    169,811      5,445    3.21%   104,403     3,833   3.67%
          Savings                43,286      1,190      2.75%     41,834      1,147    2.74%    35,236     1,100   3.12%
          Time                  579,398     34,966      6.03%    410,656     25,569    6.23%   345,144    21,396   6.20%
     Federal funds purchased      3,229        184      5.70%        947         51    5.39%       975        56   5.74%
     FHLB advances               39,615      2,382      6.01%     17,237        981    5.69%    11,889       899   7.56%
     Notes payable               10,803        810      7.50%     10,291        808    7.85%     9,537       820   8.60%
     Convertible subordinated
          debentures              3,500        304      8.69%      1,000         90    9.00%     1,000        90   9.00%
                             ----------     ------               -------     ------            -------    ------
     Total interest bearing 
       liabilities              855,885     46,548      5.44%    651,776     34,091    5.23%   508,184    28,194   5.55%
                             ----------     ------               -------     ------            -------    ------
Noninterest bearing demand
     deposits                    95,462                           73,090                        53,735
Other liabilities                 7,050                            5,171                         3,848
Stockholders' equity             66,333                           53,472                        42,110
                             ----------                          -------                       -------
Total liabilities and
   stockholders' equity      $1,024,730                          783,509                       607,877
                             ==========                          =======                       =======
Net interest income                         44,565                           35,091                       26,222
                                            ------                           ------                       ------
Net interest spread                                     4.05%                          4.33%                       4.07%
                                                        ====                           ====                        ====
Net interest margin                                     4.64%                          4.85%                       4.64%
                                                        ====                           ====                        ====
Taxable equivalent 
  adjustments:                             
     Loans                                     138                              249                          223
     Investment securities                   1,195                            1,027                          984
                                            ------                           ------                       ------
     Total taxable 
        equivalent
        adjustments                          1,333                            1,276                        1,207
                                            ------                           ------                       ------
Net interest income                        $43,232                           33,815                       25,015
                                           =======                           ======                       ======
</TABLE>


Consolidated Average Balances, Interest and Rates

     The banking industry uses two key ratios to measure relative
profitability of net interest income.  The net interest rate
spread measures the difference between the average yield on
earning assets and the average rate paid on interest bearing
sources of funds.  The interest rate spread eliminates the impact
of non-interest bearing deposits and gives a direct perspective
on the effect of market interest rate movements.  The net
interest margin is defined as net interest income as a percent of
average total earning assets and takes into account the positive
impact of investing non-interest bearing deposits.

     The net interest spread was 4.05% in 1997, 4.33% in 1996 and
4.07% in 1995, while the net interest margin was 4.64% in 1997,
4.85% in 1996 and 4.64% in 1995.  The decrease in the margin and
spread are primarily due to a decrease in core deposits relative
to total funding sources.  Core deposits represent approximately
33% of total deposits in 1997, a decrease from 39% in 1996. Table
2 shows the change in net interest income for the past two years
due to changes in volumes and rate.


<PAGE>
Table 2   -    Rate/Volume Variance Analysis
               Taxable Equivalent Basis
               (dollars in thousands)


<TABLE>
                                             1997 Compared to 1996                       1996 Compared to 1995
                                     Increase (decrease) due to changes in       Increase (decrease) due to changes in 
                                     -------------------------------------       -------------------------------------
                                                       Yield/        Net                       Yield/        Net
                                         Volume         Rate       Change         Volume        Rate       Change
                                         ------        ------      ------         ------       ------      ------
     <S>                                 <C>            <C>        <C>           <C>            <C>        <C>   
     Interest earned on:
     Federal funds sold                  $   511           35         546        $   (32)       (186)        (218)
     Interest bearing deposits
     with other banks                       (101)          --        (101)            70          28           98
     Investment securities:
          Taxable                          1,935          427       2,362          1,639        (257)       1,382
          Tax-exempt                         687         (195)        492            271        (143)         128

     Loans:
          Taxable                         19,998       (1,041)     18,957         13,335         (36)      13,299
          Tax-exempt                        (272)         (52)       (324)            92         (13)          79   
                                         -------       ------      ------         ------        ----       ------ 

          Total interest income           22,758         (826)     21,932         15,375        (607)      14,768
                                         -------       ------      ------         ------        ----       ------

Interest paid on:
     Deposits:
          Demand                             275          992       1,267          2,097        (485)       1,612
          Savings                             39            4          43            181        (134)          47
          Time                            10,605       (1,208)      9,397          4,079          94        4,173
     Federal funds purchased                 123           10         133             (2)         (3)          (5)
     FHLB advances                         1,280          121       1,401            304        (222)          82
     Notes payable                           130         (128)          2             59         (71)         (12)
     Convertible subordinated debentures     225          (11)        214             --          --           --
                                         -------       ------      ------        -------        ----       ------

               Total interest expense     12,677         (220)     12,457          6,718        (821)       5,897
                                         -------       ------      ------        -------        ----       ------

          Net interest income            $10,081         (606)      9,475          8,657         214        8,871
                                         =======       ======      ======        =======        ====       ======
</TABLE>


<PAGE>
Noninterest Income

     Noninterest income consists primarily of revenues generated
from service charges and fees on deposit accounts, mortgage loan
and related fees and profits earned through sales of credit life
insurance.  In addition, gains or losses realized from the sale
of investment portfolio securities are included in noninterest
income.  Total noninterest income for 1997 increased 23% or $1.3
million, with $439 thousand of the increase due to an increase in
gains recognized on sales of investment securities during 1997
and a $515 thousand increase in service charges on demand
deposits.  Noninterest income for 1996 increased 25% or $1.1
million, more than $823 thousand of which was contributed as a
result of an increase in service charges on demand deposits.

     The growth in non-interest income was the result of United's
continuing efforts to build stable sources of fee income, which
includes services charges on deposits and mortgage loan and
related fees.  This growth is being accomplished through the
building of customer market share and expansion of United's
locations.

     The primary contributor to non-interest income growth in
both 1997 and 1996 was the continued growth in service charges on
deposits.  Fee income from service charges on deposit accounts
increased over 17% in 1997 following a 38% increase in 1996.  The
growth in the number of accounts due to the branch expansions
into new markets was the primary contributor to the increased
levels of income for both years.

     Net gains on sales of investment securities in 1997
increased $439 thousand from 1996 levels as management liquidated
more investment securities to meet loan demand.

     Mortgage loan and related fee income decreased 26% or $409
thousand during 1997 as compared to 1996 as the volume of loans
originated and serviced decreased significantly from prior years.

Noninterest Expense

     Noninterest expenses for 1997 increased 29% following an
increase of 29% in 1996.  The increase was primarily due to the
start up costs in new markets.  Salaries and employee benefits
increased 32% in 1997 compared to 1996 due to employee additions
resulting from the branch expansions together with the increases
required to maintain continued growth. 

     Occupancy expense increased over $1.2 million or 32% in 1997
following a 21% increase in 1996.  The increase for both years is
due to the new physical locations associated with the new
branches.  

     Other non-interest expenses, including advertising and
stationery and supplies, increased $1.8 million or 22% compared
to a 37% increase in 1996.  Increases in both years are generally
associated with expansion into new markets by branching. 
Management continues to emphasize the importance of expense
management and productivity throughout United in order to further
decrease the cost of providing expanded banking services to a
growing market base.

<PAGE>
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 income.  The investment 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.

     During 1997, gross investment securities sales were $32.1
million as compared to $18.1 million during 1996.  Maturities and
paydowns were $40.5 and $54.6 million, representing 21% and 36%,
respectively, of the average total portfolio for the year.  Net
gains associated with the sales were approximately $426 thousand
during 1997 with net losses of $13 thousand during 1996,
accounting for less than 10% of non-interest income.  Gross
unrealized gains in the total portfolio amounted to approximately
$2.8 million at December 31, 1997, and gross unrealized losses
amounted to approximately $189 thousand.

     Total average investment securities, including those
available for sale, increased 27% during 1997.                    
  Average investment securities during 1996 increased 26% from
the 1995 average levels.

     Table 3 reflects the carrying amount of the investment
securities portfolio for the past three years.

Table 3 - Carrying Value of Investments 
(dollars in thousands)                                          

<TABLE>
                                                                December 31,
                                                -------------------------------------------
                                                1997                1996               1995
                                                ----                ----               ----
<S>                                           <C>                 <C>                <C>
Securities held to maturity:
     U.S. Treasuries                          $    500              2,368              7,124
     U.S. Government agencies                   22,361             34,804             42,488
     State and political subdivisions           42,330             33,036             28,055
     Mortgage backed securities                  4,368              7,118              7,937
                                              --------            -------            -------
                                                69,559             77,326             85,604
                                              --------            -------            -------
Securities available for sale:                         
     U.S. Treasuries                            46,945             12,841             25,776
     U.S. Government agencies                   45,552             38,953             30,634
     State and political subdivisions           11,860              6,833              6,595
     Mortgage backed securities                 33,347             18,635              4,290
     Other                                       6,190              4,002              2,855
                                              --------            -------            -------
                                               143,894             81,264             70,150
                                              --------            -------            -------
     Total                                    $213,453            158,590            155,754
                                              ========            =======            =======
</TABLE>


<PAGE>
Carrying Value of Investments

     The December 31, 1997, market value of securities held to
maturity, as a percentage of amortized cost was 102%, up from
100% at December 31, 1996.  The market value of the portfolio of
securities held to maturity will change as interest rates change
and such unrealized gains or losses will not flow through the
financial statements unless the related securities are called at
prices which differ from the carrying value at the time of call.

     United utilizes its investment portfolio to offset some of
the natural mismatch of interest rate risk inherent in the loan
and deposit portfolios.  United experienced strong loan demand at
all the Banks so there was little need for investments solely to
augment income or utilize uninvested deposits.  

     United's investment portfolio consists of U.S. Government
and agency securities, municipal securities, various equity
securities and Government agency sponsored mortgage-backed
securities.  A mortgage-backed security relies on the underlying
mortgage pools of loans to provide a cash flow of principal and
interest.  The actual maturities of these securities will differ
from the contractual maturities because these borrowers may have
the right to prepay obligations with or without prepayment
penalties.  Decreases in interest rates will generally cause
prepayments to accelerate.  In a declining interest rate
environment, United may not be able to reinvest the proceeds from
these prepayments in assets which have comparable yields. 
However, because the majority of the mortgage-backed securities
have adjustable rates, the negative effects of changes in
interest rates on earnings and the carrying values of these
securities are mitigated.  At December 31, 1997, United had 18%
of its total investment portfolio in mortgage-backed pass-through
securities, all of which are issued or backed by Federal
agencies.  At December 31, 1997, United did not have securities
of any issuer in excess of  10% of equity.


Loans

     During 1997, average net loans increased $186.8 million, or
34% and represented 77% of average interest earning assets and
72% of average total assets.  This growth generally occurred
proportionally among the various loan categories and can be
attributed to additional products and services marketed to
existing customers and business development efforts which
resulted in market share gains from competitors.



     The level of loans, when compared to the level of deposits,
has been relatively strong over the last three years.  The
average loan to deposit ratio was 83%, 79% and 79% in 1997, 1996
and 1995, respectively.  

     Table 4 breaks down the composition of the loan portfolio
for each of the past five years while Table 5 shows the amount of
loans outstanding for selected categories as of December 31,
1997, with maturities based on the remaining scheduled repayments
of principal.

<PAGE>
Table 4 - Loan Portfolio
(dollars in thousands)


<TABLE>
                                                              December 31,
                        1997                 1996                 1995                  1994                   1993
                  ------------------   -----------------     -----------------     -----------------     ------------------
                            Percent               Percent              Percent               Percent               Percent
                  Amount    of Total   Amount    of Total    Amount    of Total    Amount    of Total    Amount    of Total
                  ------    --------   ------    --------    ------    --------    ------    --------    ------    --------
<S>             <C>         <C>       <C>        <C>         <C>       <C>         <C>        <C>        <C>        <C>  
Commercial, 
  financial 
  and agri-
  cultural      $105,462      12.8%   100,538      15.8%      64,727     13.6%      65,521      18.5%     49,192    16.9%
Real estate - 
  construction    78,699       9.6%    51,425       8.1%      30,065      6.3%      20,274       5.7%     22,104     7.6%
Real estate -
  mortgage       523,629      63.6%   380,681      60.0%     294,724     62.1%     203,270      57.3%    163,940    56.2%
Consumer         115,534      14.0%   101,930      16.1%      85,341     18.0%      65,456      18.5%     56,551    19.3%
                 -------     -----    -------     -----      -------    -----      -------     -----     -------    -----
    Total 
     loans       823,324     100.0%   634,574     100.0%     474,857    100.0%     354,521     100.0%    291,787    100.0%

Less: Allowance 
  for loan
  losses          10,352                8,125                  6,884                 4,230                 3,464     
                --------              -------                -------               -------               -------
                $812,972              626,449                467,973               350,291               288,323   
                ========              =======                =======               =======               =======
</TABLE>

     Table 5 - Loan Portfolio Maturity
     (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                  Rate Structure for Loans 
                                          Maturity                                 Maturing Over One Year
                    ----------------------------------------------------       ------------------------------
                                    Over One Year                                                 Floating or
                    One Year          Through       Over Five                  Predetermined       Adjustable
                    or Less          Five Years       Years        Total       Interest Rate          Rate
                    --------        -------------   ---------      -----       --------------     -----------
<S>                 <C>                <C>          <C>           <C>              <C>              <C>
Commercial, 
  financial 
  and agri-
  cultural          $ 62,826           34,486         8,150       105,462          26,861           15,775
Real estate - 
  construction        70,226            3,773         4,700        78,699             494            7,979
                    --------           ------        ------       -------          ------           ------
                    $133,052           38,259        12,850       184,161          27,355           23,754
                    ========           ======        ======       =======          ======           ======
</TABLE>


Provision and Allowance for Loan Losses

     United manages asset quality and controls risk through
diversification of the loan portfolio and the application of
policies designed to foster sound underwriting and loan
monitoring practices.  United's loan administration function is
charged with monitoring asset quality, establishing credit
policies and procedures, and enforcing the consistent application
of these policies and procedures across United.

<PAGE>
     The provision for loan losses is the annual cost of
providing an adequate allowance for anticipated potential future
losses on loans.  The amount each year is dependent upon many
factors including loan growth, net charge-offs, changes in the
composition of the loan portfolio, delinquencies, management's
assessment of loan portfolio quality, the value of collateral,
and economic factors and trends.

     Reviews of non-performing, past due loans and larger
credits, designed to identify potential charges to the allowance
for loan losses, as well as determine the adequacy of the
allowance, are made on a regular basis during the year.  These
reviews are made by the responsible lending officers, as well as
a separate credit administration department, and consider such
factors as the financial strength of borrowers, the value of the
applicable collateral, past loan loss experience, anticipated
loan losses, growth in the loan portfolio, and other factors,
including prevailing and anticipated economic conditions.

     Whenever a loan, or portion thereof, is considered by
management to be uncollectible, it is charged against the
allowance for loan losses.  Management believes that the
allowance for loan losses is adequate.  While management uses
available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in
economic conditions.  In addition, various regulatory agencies,
as an integral part of their examination process, periodically
review the Banks' allowance for loan losses.  Such agencies may
require the Banks to recognize additions to the allowances based
on their judgments about information available to them at the
time of their examination.

     The provision for loan losses increased  65% in 1997
compared to 1996 and increased 43% in 1996 compared to 1995.  The
allowance for loan losses as a percentage of total loans remained
stable at 1.26% at December 31, 1997 compared to 1.28% at
December 31, 1996.  The increase in the provision for loan losses
is a result of the large increase in loans outstanding during
1997.

     Net loan charge-offs for 1997 increased 14% compared to
1996, although the average balance of loans increased 34%. 
United does not currently allocate the allowance for loan losses
to the various loan categories.  Net charge-offs during 1998 are
expected to approximate those experienced during 1997.

     Table 6 sets forth information with respect to United's
allowance for loan losses for each of the last five years.

<PAGE>

<TABLE>
<CAPTION>
Table 6 - Analysis of the Allowance for Loan Losses    
(dollars in thousands)  
                                                                           Years Ended December 31,
                                                                           ------------------------
                                                        1997           1996         1995          1994           1993
                                                        ----           ----         ----          ----           ----
<S>                                                   <C>             <C>          <C>            <C>            <C>
Allowance for loan losses at beginning of year        $ 8,125         6,884        4,231          3,465          2,776
Charge-offs:                       
     Commercial, financial and agricultural                73           329          148             27              6
     Real estate - construction                            --            --           24             --             --
     Real estate - mortgage                                99            13          337             49             54
     Consumer                                             625           353          192            262            286
                                                      -------         -----        -----          -----         ------
          Total charge-offs                               797           695          701            338            346
                                                      -------         -----        -----          -----         ------
Recoveries:
     Commercial, financial and agricultural               22            251          157              6              1
     Real estate - construction                           --             --           --             --             --
     Real estate - mortgage                              224             39          188              1             28
     Consumer                                            144             49           80             99             75
                                                      ------          -----        -----          -----          -----
          Total recoveries                               390            339          425            106            104
                                                      ------          -----        -----          -----          -----
          Net charge-offs                                407            356          276            232            242
                                                      ------          -----        -----          -----          -----
Provisions charged to earnings                         2,634          1,597        1,116            998            931
Allowance for loan losses acquired from White             --             --        1,813             --             --
                                                      ------          -----        -----          -----          -----
Balance at end of year                               $10,352          8,125        6,884          4,231          3,465
                                                      ======          =====        =====          =====          ===== 
Ratio of net charge-offs to average loans 
outstanding during the period                           0.06%          0.06%        0.07%          0.07%          0.09%
</TABLE>


<PAGE>
Asset Quality

     Non-performing assets, comprised of nonaccrual loans, other
real estate owned and loans for which payments are more than 90
days past due totaled $1.4 million compared to $1.7 million at
year end 1996.  

     It is the general policy of the Banks to stop accruing
interest income and place the recognition of interest on a cash
basis when a loan is placed on nonaccrual status and any interest
previously accrued but not collected is reversed against current
income unless the collateral for the loan is sufficient to cover
the accrued interest or a guarantor assures payment of interest. 
Loans made by the Banks to facilitate the sale of other real
estate are made on terms comparable to loans of similar risk.  An
adequate investment by the buyer is required prior to the removal
of other real estate from non-performing assets.

     There were no commitments to lend additional funds on
nonaccrual loans at December 31, 1997.  Table 7 summarizes
United's non-performing assets for each of the last five years.


<TABLE>
Table 7 - Risk Elements 
(dollars in thousands) 
                                                                 December 31,
                                                                 ------------
                                      1997            1996           1995          1994         1993
                                      ----            ----           ----          ----         ----
<S>                                  <C>             <C>             <C>          <C>          <C>
Loans on nonaccrual                  $  515            984           2,017          569          585
Loans 90 days past due                  536            487             291          102          219
Other real estate                       386            210              65           --           --
                                     ------          -----           -----        -----        -----
Total non-performing assets          $1,437          1,681           2,373          671          804
                                     ======          =====           =====        =====        =====
Total non-performing loans as a 
     percentage of loans               0.13%          0.23%           0.49%        0.19%        0.28%
Loans 90 days past due as a 
     percentage of loans               0.07%          0.08%           0.06%        0.03%        0.08%
</TABLE>

Risk Elements

     There may be additional loans within United's portfolio that
may become classified as conditions dictate; however, management
was not aware of any such loans that are material in amount at
December 31, 1997.  At December 31, 1997, management was unaware
of any known trends, events or uncertainties that will have, or
that are reasonably likely to have a material effect on United's
liquidity, capital resources or operations.

Deposits

     All major categories of average interest bearing deposits
increased during 1997.  The largest dollar increase in average
interest bearing deposits was in the time deposit category,
rising over $168.7 million or 41% during 1997 as compared to 1996
followed by the increase in average interest bearing demand
deposits of $6.2 million or 4%.  Average non-interest bearing
demand deposits increased $22.4 million or 31% after increasing
36% during 1996.  The increases were primarily a result of
internally generated growth, as well as the previously discussed
expansions.  Savings deposits, interest bearing demand deposits
and non-interest bearing demand deposits comprised 35% of total
average deposits during 1997.  For 1996, these lower cost
deposits comprised 41% of total average deposits.  The maturities
of time deposits of $100,000 or more issued by the Banks at
December 31, 1997, are summarized in the following table:

Table 8 - Maturities of Time Deposits Over $100,000
(dollars in thousands) 
     Three months or less                               $ 49,895
     Over three months through six months                 41,867
     Over six months through twelve months                36,577
     Over twelve months                                   28,464
                                                        --------
                                                        $156,803
                                                        ========

<PAGE>
     At December 31, 1997, five of the Banks were shareholders in
the Federal Home Loan Bank of Atlanta.  Through this affiliation,
advances totaling $43.3 million were outstanding at rates
competitive with time deposits of like maturities.  United
anticipates continued utilization of this short and long term
source of funds to minimize interest rate risk and provide
competitive, long-term fixed rate loans to its customers.

Interest Rate Sensitivity Management

     The absolute level and volatility of interest rates can have
a significant impact on United's profitability.  The objective of
interest rate risk management is to identify and manage the
sensitivity of net interest income 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.

     During 1997 and 1996, United used derivative financial
instruments to a limited extent in its interest rate risk
management.  Interest rate swap contracts with an aggregate
notional amount of $35 million extending through various dates in
1998 and 1999 were executed to effectively convert certain fixed
rate liabilities to variable rates.  From October 1, 1996,
through December 1997, United converted the effective interest
rate of certain deposit liabilities from 7.25% to 6.46% with the
execution of the swap agreements.  Additionally, United entered
into an interest rate floor contract for the notional amount of
$50 million extending through January 1998.  For a one time
premium upon the execution of the contract, the floor agreement
reduces United's interest rate risk in the event of rate declines
below a predetermined level.  Notional amounts of the swap and
floor contracts only represent the basis for exchange of the cash
flows and do not represent credit risk.  Credit risk is limited
to the positive market value of the derivative at a given date. 
United anticipates continued use of derivative interest rate
contracts when appropriate in its asset-liability rate
management.

     United uses income simulation modeling as the primary tool
in measuring interest rate risk and managing interest rate
sensitivity.  Simulation modeling considers not only the impact
of changing market rates of interest on future net interest
income, but also such other potential causes of variability as
earning asset volume, mix, yield curve relationships, customer
preferences and general market conditions.
     
     Interest rate sensitivity is a function of the repricing
characteristics of United's portfolio of assets and liabilities. 
These repricing characteristics are the time frames within which
the interest bearing assets and 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 within an
acceptable timeframe, thereby minimizing the effect of interest
rate movements on net interest income. Interest rate sensitivity
is measured as the difference between the volumes of assets and
liabilities in United's current portfolio that are subject to
repricing at various time horizons:  immediate, one to three
months, four to twelve months, one to five years, over five
years, and on a cumulative basis.  The differences are known as
interest sensitivity gaps.  Table 9 shows interest sensitivity
gaps for these different intervals as of December 31, 1997.

<PAGE>


<TABLE>
<CAPTION>
Table 9 - Interest Rate Sensitivity Analysis  
(dollars in thousands) 
                                                                        December 31, 1997
                                                                        -----------------
                                                            One          Four        One       Over Five
                                                          Through      Through     Through     Years and
                                                           Three        Twelve      Five        Non-Rate
                                           Immediate       Months       Months      Years      Sensitive        Total
                                           ---------      -------      -------     ------      ----------       -----
<S>                                        <C>            <C>          <C>         <C>          <C>          <C>
Interest earning assets:       
     Federal funds sold                    $  8,420            --           --          --           --          8,420
     Investment securities                       --         6,464       21,334     115,965       69,690        213,453
     Mortgage loans held for sale                --         3,962           --          --           --          3,962
     Loans                                       --       355,427      309,540     135,157       23,200        823,324
                                           --------       -------      -------     -------      -------      --------- 
          Total interest earning assets       8,420       365,853      330,874     251,122       92,890      1,049,159
                                           --------       -------      -------     -------      -------      ---------
Interest bearing liabilities:
     Deposits:
     Demand                                      --       189,280           --          --           --        189,280
     Savings                                     --            --       45,280          --           --         45,280
     Time                                        --       191,524      321,404     120,381           --        633,309
     FHLB advances                           31,736            72        2,386       7,855        1,272         43,321
     Notes payable                           12,722           352          995          --           --         14,069
     Convertible subordinate debentures          --            --           --          --        3,500          3,500
                                           --------       -------      -------     -------      -------      ---------
          Total interest bearing 
            liabilities                      44,458       381,228      370,065     128,236        4,772        928,759
                                           --------       -------      -------     -------      -------      ---------
Noninterest bearing sources of funds - net       --            --           --          --      109,210        109,210
                                           --------       -------      -------     -------      -------      ---------
Interest sensitivity gap                    (36,038)      (15,375)     (39,191)    122,886      (21,092)        11,190
                                           --------       -------      -------     -------      -------      ---------
Cumulative interest sensitivity gap        $(36,038)      (51,413)     (90,604)     32,282       11,190             --
                                           ========       =======      =======     =======      =======      =========
</TABLE>

     As seen in the preceding table, for the first 365 days 86%
of earning liabilities funding sources will reprice compared to
67% of all interest earning assets.  Changes in the mix of
earning assets or supporting liabilities can either increase or
decrease the net interest margin without affecting interest rate
sensitivity.  In addition, the interest rate spread between an
asset and its supporting liability can vary significantly while
the timing of repricing for both the asset and the liability
remains the same, thus impacting net interest income.  This
characteristic is referred to as basis risk and generally relates
to the possibility that the repricing characteristics of
short-term assets tied to United's prime lending rate are
different from those of short-term funding sources such as
certificates of deposit.

     Varying interest rate environments can create unexpected
changes in prepayment levels of assets and liabilities which are
not reflected in the interest rate sensitivity analysis report. 
These prepayments may have significant effects on United's net
interest margin.  Because of these factors an interest
sensitivity gap report may not provide a complete assessment of
United's exposure to changes in interest rates.

     Table 9 indicates United is in a liability sensitive or
negative gap position at twelve months.  This liability 
sensitive position would generally indicate that United's net
interest income would decrease should interest rates rise and
would increase should interest rates fall.  Due to the factors
cited previously, current simulation results indicate only
minimal sensitivity to parallel shifts in interest rates. 
Management also evaluates the condition of the economy, the
pattern of market interest rates and other economic data to
determine the appropriate mix and repricing characteristics of
assets and liabilities required to produce an optimal net
interest margin.  Also see "Quantitative and Qualitative
Disclosures about Market Risk" included elsewhere herein.

<PAGE>
     Table 10 represents the expected maturity of the total
investment securities by maturity date and average yields based
on amortized cost (for all obligations on a fully taxable basis
assuming a 34% tax rate) at December 31, 1997.  It should be
noted that the composition and maturity/repricing distribution of
the investment portfolio is subject to change depending on rate
sensitivity, capital needs, and liquidity needs.

Table 10 - Expected Maturity of Investment Securities
(dollars in thousands)

<TABLE>


 
                                            After One But        After Five But
                        Within One Year     Within Five Years    Within Ten Years   After Ten Years
                        ----------------    -----------------    ----------------   ---------------
                        Amount     Yield    Amount     Yield     Amount    Yield    Amount    Yield     Totals
                        ------     -----    ------     -----     ------    -----    ------    -----     -------
<S>                    <C>         <C>     <C>         <C>       <C>       <C>      <C>       <C>       <C>
Securities held to 
   maturity:  
        
U.S. Treasury 
   securities          $   500     7.12%        --       --          --      --         --      --          500
U.S. Government 
   Agencies             17,817     5.57%     4,544     6.11%         --      --         --      --       22,361
State and political
     subdivisions        1,739     8.20%    17,132     7.37%     18,819    7.56%     4,640    8.11%      42,330
Mortgage backed 
   securities              621     5.11%     1,721     6.65%        860    6.16%     1,166    7.89%       4,368
                       -------     ----     ------     ----      ------    ----      -----    ----       ------
                        20,677     5.81%    23,397     7.07%     19,679    7.50%     5,806    8.07%      69,559
                       -------     ----     ------     ----      ------    ----      -----    ----       ------ 
Securities available 
   for sale:          
U.S. Treasury 
   securities            2,242     6.09%    42,573     6.20%      1,489    6.05%        --      --       46,304
U.S. Government 
   agencies              8,150     5.77%    33,269     6.31%      3,898    6.17%        --      --       45,317
State and political 
     subdivisions        2,569     9.03%     3,019     8.21%      4,103    7.02%     1,984    7.26%      11,675
Mortgage backed 
   securities            2,499     6.93%    15,062     6.46%      7,416    6.24%     7,993    6.48%      32,970
Other                       --       --         --       --          --      --      6,256    5.18%       6,256
                       -------     ----     ------     ----      ------    ----      -----    ----       ------
                        15,460     6.55%    93,923     6.35%     16,906    6.40%    16,233    6.07%     142,522
                       -------     ----     ------     ----      ------    ----      -----    ----       ------
Total                  $36,137     6.13%   117,320     6.49%     36,585    6.99%    22,039    6.60%     212,081
                       =======     ====    =======     ====      ======    ====     ======    ====      =======
</TABLE>


<PAGE>
Liquidity Management

     The objective of liquidity management is to ensure that
sufficient funding is available, at reasonable cost, to meet the
ongoing operational cash needs of United and to take advantage of
income 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 high level of
liquidity in all economic environments.  Liquidity is defined as
the ability of a company 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 day to day cash flow
requirements of the Banks' customers, whether they are depositors
wishing to withdraw funds or borrowers requiring funds to meet
their credit needs.  Without proper liquidity management, United
would not be able to perform the primary functions of a financial
intermediary and would, therefore, not be able to meet the needs
of the communities it serves.

     The primary function of asset and liability management is
not only to assure adequate liquidity in order for United to meet
the needs of its customer base, but to maintain an appropriate
balance between interest-sensitive assets and interest-sensitive
liabilities so that the Company can also meet the investment
requirements of its shareholders.  Daily monitoring of the
sources and use of funds is necessary to maintain an acceptable
cash position that meets both requirements.  In a banking
environment, both assets and liabilities are considered sources
of liquidity funding and both are, therefore, monitored on a
daily basis.

     The asset portion of the balance sheet provides liquidity
primarily through loan principal repayments, maturities of
investment securities and, to a lesser extent, sales of
securities.  Installment loan payments are becoming an
increasingly important source of liquidity for United as this
portfolio continues to grow.  Mortgage loans held for sale
totaled just over $3.9 million at December 31, 1997, and
typically turn over every 45 days.  Real estate-construction and
commercial, financial and agricultural loans that mature in one
year or less amounted to $133 million or 16% of the total loan
portfolio at December 31, 1997.  Investment securities maturing
in the same time frame totaled $36 million or 17% of the total
investment securities portfolio at year end 1997.  Other
short-term investments such as federal funds sold and maturing
interest bearing deposits with other banks are additional sources
of liquidity funding. 

     The liability portion of the balance sheet provides
liquidity through various customers' interest bearing and
non-interest bearing deposit accounts.  Federal funds purchased
and securities sold under agreements to repurchase are additional
sources of liquidity and basically represent United's incremental
borrowing capacity.  These sources of liquidity are short-term in
nature and are used as necessary to fund asset growth and meet
short-term liquidity needs.

     As disclosed in United's Consolidated Statements of Cash
Flows included elsewhere herein, net cash provided by operating
activities was approximately $14.0 million during 1997.  The
major sources of cash provided by operating activities are net
income and changes in other assets and other liabilities. Net
cash used in investing activities of $252.2 million consisted
primarily of a net increase in loans of $189.1 million and
securities purchased of $125.9 million funded largely by sales,
maturities and paydowns of investment securities of $72.6
million. These changes resulted from management's continued
efforts to reinvest new funds in higher-yielding loans rather
than investment securities.  Net cash provided by financing
activities provided the remainder of funding sources for 1997. 
The $254.4 million of net cash provided by financing activities
consisted primarily of a $203.8 million net increase in deposits
coupled with a net increase in Federal Home Loan Bank advances of
$8.2 million and federal funds purchases of $33.0 million at year
end.

     Management considers United's liquidity position at December
31, 1997, to be sufficient to meet its foreseeable cash flow
requirements.  Reference should be made to the Consolidated
Statements of Cash Flows appearing in the Consolidated Financial
Statements for a three-year analysis of the changes in cash and
cash equivalents resulting from operating, investing and
financing activities.

Capital Resources and Dividends

     Stockholders' equity at December 31, 1997, increased 30%
from December 31, 1996.  Net earnings after dividends for 1997
provided $10.0 million of the increase in stockholders' equity
while an offering of 300,000 shares of common stock offering
added $6.5 million.

     Dividends of $699 thousand or $.10 per share were declared
on the Common Stock in 1997 and 1996.  United has historically
retained the majority of its earnings in order to keep pace with
the rate at which assets have grown.

     Average stockholders' equity as a percentage of total
average assets is one measure used to determine capital strength. 
The ratio of average stockholders' equity to average assets for
1997 and 1996 was 6.47% and 6.82%, respectively. United's asset
growth has continued to exceed the rate at which capital has been
retained.  Table 11 summarizes these and other key ratios for
United for each of the last three years.


<TABLE>
Table 11 - Equity Ratios
                                              Years Ended December 31,
                                              ------------------------

                                    1997                1996              1995
                                    ----                ----              ----
<S>                                 <C>                 <C>             <C>

Return on average assets             1.05%               1.14%           1.10%
Return on average equity            16.18%              16.69%          15.84%
Dividend payout ratio                6.51%               7.58%           8.82%
Average equity to average assets     6.47%               6.82%           6.93%
</TABLE>

     The Board of Governors of the Federal Reserve System 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 which are
used in conjunction with risk adjusted 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.

     United's Tier I capital, which consists of stockholders'
equity less goodwill and deposit-based intangibles, amounted to
$68.2 million at December 31, 1997.  Tier II capital components
include supplemental capital components 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 and was $81.6 million at December 31, 1997.
The percentage ratios, as calculated under the guidelines, were
8.59% and 10.28% for Tier I and Total Risk-based Capital,
respectively, at December 31, 1997.

     A minimum leverage ratio is required in addition to the
risk-based capital standards and is defined as period end
stockholders' equity adjusted for goodwill and deposit-based
intangibles divided by average assets adjusted for goodwill and
deposit-based intangibles.  Although a minimum leverage ratio of
4% is required for the highest-rated bank holding companies which
are not undertaking significant expansion programs, the Federal
Reserve Board requires a bank holding company to maintain a
leverage ratio greater than 4% 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 ratio in
tandem with the risk-based capital ratios to assess capital
adequacy of banks and bank holding companies.  United's leverage
ratios at December 31, 1997 and 1996 were 5.76% and 5.98%,
respectively.

     Further analysis regarding the actual and required capital
ratios of United and the Banks is provided in note 12 to the
consolidated financial statements. 

     All three of the capital ratios of United and each bank
currently exceed the minimum ratios required in 1997 as defined
by federal regulators.  United monitors these ratios to ensure
that the company  and the bank subsidiaries remain within
regulatory guidelines.  Increased regulatory activity in the
financial industry as a whole will continue to impact the
structure of the industry; however, management does not
anticipate any negative impact on the capital resources or
operations of United.

Income Tax Expense

     Income tax expense increased 16% in 1997 as compared to 1996
and 61% in 1996 as compared to 1995.  The effective tax rate as a
percentage of pretax income was 31% in 1997 and 32% in 1996.
These tax rates are lower than the statutory Federal tax rate of
34% primarily due to interest income on tax exempt loans and
securities.  See United's consolidated financial statements for
an analysis of income taxes.

     Impact of Inflation and Changing Prices.  A bank's asset and
liability structure is substantially different from that of an
industrial company in that primarily all assets and liabilities
of a bank are monetary in nature and therefore differ greatly
from most commercial and industrial companies that have
significant investments in fixed assets or inventories. 
Inflation does have an important impact 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 impact of inflation on
financial results depends on United's ability to react to changes
in interest rates and, by such reaction, reduce the inflationary
impact on performance.  United has an asset/liability management
program which attempts to manage United's interest rate
sensitivity position.  In addition, periodic reviews of banking
services and products are conducted to adjust pricing in view of
current and expected costs.  Cost cutting and cost controlling
measures have been implemented, including the constant search for
technological advancements in order to improve efficiency and
productivity.


     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     United's net interest income, and the fair value of its
financial instruments, are primarily influenced by changes in the
level of interest rates.  United manages its exposure to
fluctuations in interest rates through policies established by
its Asset/Liability Management Committee (the "ALCO").  The ALCO
meets regularly and has the responsibility for approving
asset/liability management policies, formulating and implementing
strategies to improve balance sheet positioning and/or earnings
and reviewing the interest rate sensitivity of United and the
Banks.

     Management utilizes an interest rate simulation model to
estimate the sensitivity of United's net interest income to
changes in interest rates.  Such estimates are based upon a
number of assumptions for each scenario, including the level of
balance sheet growth, interest-bearing accounts repricing
characteristics and the rate of prepayments.

     The estimated impact on United's net interest income
sensitivity over a one-year time horizon is shown below.  Such
analysis assumes an immediate and sustained parallel shift in
interest rates, no balance sheet growth and United's estimate of
how interest-bearing transaction accounts will reprice in each
scenario.

<TABLE>

                                        Principal/Notional         Percentage Increase (Decrease) in 
                                        Amounts of Earning           Interest Income/Expense Given 
                                     Assets, Interest Bearing          Immediate and Sustained
                                           Liabilities               Parallel Interest Rate Shifts
                                           and Swaps at              Down 100              Up 100
                                         December 31, 1997         Basis Points         Basis Points
                                         -----------------         ------------         ------------
                                                           (in thousands)
<S>                                         <C>                     <C>                 <C>  
Assets which reprice in:   
     One year or less                          705,147  
     Over one year                             344,012  
                                            ----------
                                            $1,049,159               (4.79%)               4.72%
                                            ----------
Liabilities which reprice in:   
     One year or less                          795,751  
     Over one year                             133,008  
                                            ----------
                                            $  928,759               (7.36%)               7.23%
                                            ----------     
     Non-trading swaps                          35,000              102.42%             (102.42%)
                                            ----------                     
     Net interest income sensitivity                                 (1.51%)               1.52%

</TABLE>

     The ALCO policy, with which United complies, is based on the
same assumptions as the above table and provides that a 100 basis
point increase or decrease in interest rates should not reduce
net interest income by more than five percent (5%).  Certain
financial instruments have been excluded from the above analysis
because of the no-growth assumption, including letters of credit
and the commitments to extend credit.

     United enters into various interest rate contracts to manage
United's interest rate sensitivity.  Such contracts generally
have a fixed notional principal amount and include interest rate
swaps where a company typically receives or pays a fixed rate and
a counterparty pays or receives a floating rate based on a
specific index, generally prime rate or London Interbank Offered
Rate ("LIBOR") and interest rate floors purchased where the
Company receives interest if the specific index falls below the
floor rate.  The interest rate risk factor in these contracts is
considered in the overall interest management strategy of
United's interest risk management program.  The income or expense
associated with these interest rate derivatives is ultimately
reflected as adjustments to interest income or expense.  Changes
in the estimated fair value of interest rate protection contracts
are not reflected in the financial statements until realized.

<PAGE>

                      MARKET AND DIVIDEND DATA


     Stock.  There is no established public trading market for
United's Common Stock.  At December 31, 1997, there were 2,534
holders of record of Common Stock.

     Dividends.  United paid cash dividends of $.10 per share of
Common Stock to shareholders of record in 1997 and 1996.  United
intends to pay cash dividends on a quarterly basis.  However, the
amount and frequency of dividends will be determined by United's
Board of Directors in light of the earnings, capital requirements
and the financial condition of United, and no assurance can be
given that dividends will be paid in the future.

<PAGE>

            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
                                  
                  Consolidated Financial Statements
                                  
                  December 31, 1997, 1996 and 1995
                                  
           (with Independent Accountants' Report thereon)

<PAGE>
                   [PORTER KEADLE MOORE, LLP LOGO]
                                  

         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





The Board of Directors and Stockholders
United Community Banks, Inc.
Blairsville, Georgia

We have audited the consolidated balance sheets of United
Community Banks, Inc. and subsidiaries as of December 31, 1997
and 1996 and the related statements of earnings, changes in
stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of United Community Banks, Inc. and subsidiaries as of
December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted
accounting principles.

     
     \s\ PORTER KEADLE MOORE, LLP




Atlanta, Georgia
March 6, 1998

<PAGE>

<TABLE>
<CAPTION>
                                     UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
                                              Consolidated Balance Sheets
                                              December 31, 1997 and 1996
                                                        Assets

                                                                                      1997                1996
                                                                                      ----                ----
                                                                                           (In Thousands)
<S>                                                                                <C>                   <C>
Cash and due from banks, including reserve requirements
     of $11,000 and $6,234                                                         $   60,414             28,085
Federal funds sold                                                                      8,420             24,585
                                                                                   ----------             ------

                    Cash and cash equivalents                                          68,834             52,670
                                                                                   ----------             ------
Securities held to maturity (estimated fair value of $70,845 and $77,625)              69,559             77,326
Securities available for sale                                                         143,894             81,264
Mortgage loans held for sale                                                            3,962              6,727

Loans                                                                                 823,324            634,574
     Less:      Allowance for loan losses                                              10,352              8,125
                                                                                   ----------            -------

                    Loans, net                                                        812,972            626,449
                                                                                   ----------            -------
Premises and equipment, net                                                            27,737             20,108
Accrued interest receivable                                                            10,985              8,559
Other assets                                                                           15,424             13,000
                                                                                   ----------            -------
                                                                                   $1,153,367            886,103
               
                                         Liabilities and Stockholders' Equity
Deposits:           
     Demand                                                                        $  109,210             82,138
     Interest-bearing demand                                                          189,280            167,372
     Savings                                                                           45,280             41,963
     Time                                                                             476,506            346,838
     Time, in excess of $100,000                                                      156,803            134,989
                                                                                   ----------            -------

                    Total deposits                                                    977,079            773,300
                                                                                   ----------            -------

Accrued expenses and other liabilities                                                  7,274              6,101
Federal funds purchased                                                                33,011                 --
FHLB advances                                                                          43,321             35,074
Notes payable                                                                          14,069             10,453
Convertible subordinated debentures                                                     3,500              3,500
                                                                                   ----------            -------

                    Total liabilities                                               1,078,254            828,428
                                                                                   ----------            -------
Commitments

Stockholders' equity: 
     Preferred stock                                                                       --                 -- 
     Common stock, $1 par value; 10,000,000 shares authorized;
          7,385,105 and 7,084,621 shares issued and outstanding                         7,385              7,085
     Capital surplus                                                                   24,699             18,516
     Retained earnings                                                                 42,198             32,162
     Net unrealized gain (loss) on securities available for sale, net of tax              831                (88)
                                                                                   ----------            -------

                    Total stockholders' equity                                         75,113             57,675
                                                                                   ----------            -------

                                                                                   $1,153,367            886,103
                                                                                   ==========            =======
</TABLE

See accompanying notes to consolidated financial statements. 

<PAGE>

</TABLE>


<TABLE>
<CAPTION>
                                     UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
                                          Consolidated Statements of Earnings
                                 For the Years Ended December 31, 1997, 1996 and 1995

                                                                             1997               1996             1995
                                                                             ----               ----             ----
                                                                                (In Thousands Except Per Share Data)

<S>                                                                         <C>                <C>              <C>
Interest income:
     Interest and fees on loans                                             $76,722            57,978            44,626
     Interest on deposits with other banks                                       --               102                 4
     Interest on federal funds sold                                           1,642             1,096             1,315
     Interest on investment securities:
          U.S. Treasury & U.S. Government agencies                            9,097             6,735             5,354
          State and political subdivisions                                    2,319             1,995             1,910
                                                                            -------            ------            ------

                    Total interest income                                    89,780            67,906            53,209
                                                                            -------            ------            ------

Interest expense:
     Interest on deposits:
          Demand                                                              6,712             5,445             3,833
          Savings                                                             1,190             1,147             1,100
          Time                                                               34,966            25,569            21,396
                                                                            -------            ------            ------

                                                                             42,868            32,161            26,329
Notes payable, subordinated debentures,

     federal funds purchased and FHLB advances                                3,680             1,930             1,865
                                                                            -------            ------            ------

                    Total interest expense                                   46,548            34,091            28,194
                                                                            -------            ------            ------

                    Net interest income                                      43,232            33,815            25,015
Provision for loan losses                                                     2,634             1,597             1,116
                                                                            -------            ------            ------

                    Net interest income after provision for loan losses      40,598            32,218            23,899

Noninterest income:
     Service charges and fees                                                 3,505             2,990             2,167
     Gain (loss) on sales of investment securities                              426               (13)                4
     Mortgage loan and other related fees                                     1,157              1,566            1,582
     Other noninterest income                                                 1,892              1,123              770
                                                                            -------             ------           ------

                    Total noninterest income                                  6,980              5,666            4,523
                                                                            -------             ------           ------

Noninterest expense:
     Salaries and employee benefits                                          17,695             13,373           10,504
     Occupancy                                                                4,726              3,570            2,948
     Other noninterest expense                                                9,656              7,900            5,752
                                                                            -------             ------           ------

                    Total noninterest expense                                32,077             24,843           19,204
                                                                            -------             ------           ------

                    Earnings before income taxes                             15,501             13,041            9,218
Income taxes                                                                  4,766              4,114            2,549 
                                                                            -------             ------           ------

                    Net earnings                                            $10,735              8,927            6,669
                                                                            =======             ======           ======
Earnings per common share                                                   $  1.47               1.29             1.03
                                                                            =======             ======           ======
Earnings per common share  - assuming dilution                              $  1.46               1.26             1.01
                                                                            =======             ======           ======
</TABLE>


See accompanying notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
                                     UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
                              Consolidated Statements of Changes in Stockholders' Equity
                                 For the Years Ended December 31, 1997, 1996 and 1995

                                                                                                     Net Unrealized 
                                                                                                      Gain (Loss)
                                                                                                     On Securities
                                                                                                       Available
                                                             Common Stock          Capital   Retained   for Sale
                                                          Shares       Amount      Surplus   Earnings  Net of Tax  Total
                                                          ------       ------      -------   --------  ----------  -----
                                                                  (In Thousands Except Share and Per Share Data)

<S>                                                      <C>            <C>        <C>       <C>        <C>      <C>
Balance, December 31, 1994, as previously reported       5,589,365      $5,589     7,474     17,363    (209)     30,217
Adjustment in connection with pooling of interests         685,240         686     3,550        468     (56)      4,648
                                                         ---------      ------    ------     ------    ----      ------

Balance, December 31, 1994, as restated                  6,274,605       6,275    11,024     17,831    (265)     34,865
Issuance of common shares for bank acquisition             455,400         455     4,828         --      --       5,283
Proceeds from common stock offering, 
     net of offering cost                                  215,515         216     2,218         --      --       2,434
Change in unrealized gain (loss) on securities 
     available for sale, net of tax                             --          --        --         --     545         545
Cash dividends declared, ($.08 per share)                       --          --        --       (588)     --        (588)
Purchase and retirement of treasury stock of 
     pooled entity                                            (737)         (1)       (6)        --      --          (7)
Net earnings                                                    --           --       --      6,669      --       6,669
                                                         ---------      -------    -----     ------    ----      ------

Balance, December 31, 1995                               6,944,783        6,945   18,064     23,912     280      49,201
Change in unrealized gain (loss) on securities                                  
     available for sale, net of tax                             --           --        --        --    (368)       (368)
Cash dividends declared, ($.10 per share)                       --           --        --      (677)     --        (677)
Common stock issued in conversion of debentures            178,568          179       821        --      --       1,000
Purchase and retirement of treasury stock of 
     pooled entity                                         (38,730)         (39)     (369)       --      --        (408)
Net earnings                                                    --           --        --     8,927      --       8,927
                                                         ---------      -------    ------    ------    ----      ------
Balance, December 31, 1996                               7,084,621        7,085    18,516    32,162     (88)     57,675
Change in unrealized gain (loss) on securities                                  
     available for sale, net of tax                             --           --        --        --     919         919
Cash dividends declared, ($.10 per share)                       --          --        --       (699)     --        (699)
Net earnings                                                    --          --        --     10,735      --      10,735
Proceeds from common stock offering, 
     net of offering cost                                  300,000         300     6,177         --      --       6,477
Proceeds from resale of treasury stock of 
     pooled entity                                             484          --         6         --      --           6
                                                         ---------      ------     -----     ------    ----      ------

Balance, December, 31, 1997                              7,385,105      $7,385    24,699     42,198     831      75,113
                                                         =========      ======    ======     ======    ====
</TABLE>
                                   

See accompanying notes to consolidated financial statements. 

<PAGE>

<TABLE>
<CAPTION>
                                     UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
                                         Consolidated Statements of Cash Flows
                                                           
                                 For the Years Ended December 31, 1997, 1996 and 1995

                                                                           1997               1996             1995
                                                                           ----               ----             ----
                                                                                         (In Thousands)
<S>                                                                     <C>                  <C>             <C>
Cash flows from operating activities:                  
     Net earnings                                                       $  10,735              8,927           6,669
     Adjustments to reconcile net earnings to net cash  provided                
          by operating activities:                
               Depreciation, amortization and accretion                     2,448              2,347           1,882
               Provision for loan losses                                    2,634              1,597           1,116
               Provision for deferred income tax expense (benefit)           (404)                82             (95)
               (Gain) loss on sale of securities available for sale          (426)                13              (4)
               Change in assets and liabilities, net of effects                 
                    of purchase acquisitions:                    
                         Interest receivable                               (2,426)            (1,430)         (1,831)
                         Interest payable                                   1,340                267           1,370
                         Other assets                                      (2,020)                (9)          1,003
                         Accrued expenses and other liabilities              (659)             1,059          (1,335)
               Change in mortgage loans held for sale                       2,765              5,321             347
                                                                        ---------            -------         -------
                              Net cash provided by operating 
                                    activities                             13,987             18,174           9,122
                                                                        ---------            -------         -------
Cash flows from investing activities, net of effects                  
   of purchase acquisitions:                 
               Cash acquired from acquisitions and branch purchases            --              2,650          25,867
               Proceeds from maturities and calls of securities 
                    held to maturity                                       18,009             21,920          14,317
               Purchases of securities held to maturity                   (10,418)           (13,762)        (29,075)
               Proceeds from sales of securities available for sale        32,105             18,065          17,520
               Proceeds from maturities and calls of securities
                    available for sale                                     22,470             32,652          11,299
               Purchases of securities available for sale                (115,501)           (62,631)        (64,143)
               Net increase in loans                                     (189,157)          (140,507)        (68,874)
               Purchases of premises and equipment                         (9,702)            (3,143)         (2,236)
                                                                        ---------           --------         -------

                              Net cash used in investing activities      (252,194)          (144,756)        (95,325)
Cash flows from financing activities, net of effects                  
   of purchase acquisitions:                 
               Net change in demand and savings deposits                   52,297             49,312          23,824
               Net change in time deposits                                151,482             62,394          92,333
               Net change in federal funds purchased                       33,011                 --          (8,300)
               Proceeds from convertible subordinated debentures               --              3,500              --
               Proceeds from notes payable                                  4,747                 --           2,539
               Proceeds from FHLB advances                                 15,636             29,375           8,596
               Repayments of notes payable                                 (1,131)              (856)           (630)
               Repayments of FHLB advances                                 (7,389)            (3,302)        (11,744)
               Proceeds from sale of common stock                           6,477                 --           2,434
               Purchase of treasury stock of pooled entity                     --               (408)             (7)
               Proceeds from resale of treasury stock of pooled entity          6                 --              --
               Cash paid for dividends                                       (765)              (677)           (588)
                                                                        ---------            -------         -------

                              Net cash provided by financing activities   254,371            139,338         108,457
                                                                        ---------            -------         -------

Net change in cash and cash equivalents                                    16,164             12,756          22,254
Cash and cash equivalents at beginning of period                           52,670             39,914          17,660
                                                                        ---------            -------         -------

Cash and cash equivalents at end of period                              $  68,834             52,670          39,914
                                                                        =========            =======         =======
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting principles followed by United Community
Banks, Inc. (United or the Company) and its subsidiaries and the
methods of applying these principles conform with generally
accepted accounting principles and with general practices within
the banking industry. The following is a description of the more
significant of those policies.

Organization and Basis of Presentation
United is a six bank holding company whose business is
conducted by its wholly-owned bank subsidiaries. United is
subject to regulation under the Bank Holding Company Act of 1956.
The consolidated financial statements include the accounts of
United Community Banks, Inc. and its wholly-owned commercial bank
subsidiaries, United Community Bank, Blairsville, Georgia (UCB),
Carolina Community Bank (Carolina), Peoples Bank, Blue Ridge,
Georgia (Peoples), Towns County Bank, Hiawassee, Georgia (Towns)
White County Bank, Cleveland, Georgia (White) and First Clayton
Bank and Trust Company, Clayton, Georgia (Clayton) (collectively,
the "Bank Subsidiaries") and United Family Finance Company, Inc.
(Finance), a finance company subsidiary. All significant
intercompany accounts and transactions have been eliminated in
consolidation. Certain items in prior years' financial statements
have been reclassified to conform with the current financial
statement presentations.

The Bank Subsidiaries are commercial banks which serve
markets throughout North Georgia and Western North Carolina and
provide a full range of customary banking services. The Bank
Subsidiaries are insured and subject to the regulation of the
Federal Deposit Insurance Corporation. 
     
In preparing the financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the
balance sheet and revenues and expenses for the period. Actual
results could differ significantly from those estimates.

Material estimates that are particularly susceptible to
significant change relate to the determination of the allowance
for loan losses and the valuation of real estate acquired in
connection with foreclosures or in satisfaction of loans. In
connection with these valuations, management obtains independent
appraisals for significant properties.

A substantial portion of United's loans are secured by real
estate located in North Georgia and Western North Carolina.
Accordingly, the ultimate collectibility of a substantial portion
of United's loan portfolio is susceptible to changes in the real
estate market conditions of this market area.

Investment Securities
United classifies its securities in one of three categories:
held to maturity, available for sale, or trading. Trading
securities are bought and held principally for the purpose of
selling them in the near term. United does not have investments
classified in the trading category. Held to maturity securities
are those securities for which United has the ability and intent
to hold until maturity. All other securities are classified as
available for sale.

Available for sale securities are recorded at fair value.
Held to maturity securities are recorded at cost, adjusted for
the amortization or accretion of premiums or discounts.
Unrealized holding gains and losses, net of the related tax
effect, on securities available for sale are excluded from
earnings and are reported as a separate component of
stockholders' equity until realized. Transfers of securities
between categories are recorded at fair value at the date of
transfer. Unrealized holding gains or losses associated with 
transfers of securities from held to maturity to available for
sale are recorded as a separate component of stockholders'
equity. The unrealized holding gains or losses included in the
separate component of stockholders' equity for securities
transferred from available for sale to held to maturity are
maintained and amortized into earnings over the remaining life of
the security as an adjustment to yield in a manner consistent
with the amortization or accretion of premium or discount on the
associated security.

<PAGE>


            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
                                  
        Notes to Consolidated Financial Statements, continued


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Investment Securities, continued
A decline in the market value of any available for sale or
held to maturity investment below cost that is deemed other than
temporary is charged to earnings and establishes a new cost basis
for the security.

Premiums and discounts are amortized or accreted over the
life of the related security as an adjustment to the yield.
Realized gains and losses for securities classified as available
for sale and held to maturity are included in earnings and are
derived using the specific identification method for determining
the cost of securities sold.

Mortgage Loans Held for Sale
Mortgage loans held for sale are carried at the lower of
aggregate cost or market value. The amount by which cost exceeds
market value is accounted for as a valuation allowance. Changes
in the valuation allowance are included in the determination of
net earnings of the period in which the change occurs. No market
valuation allowances were required at December 31, 1997 or 1996.

Loans and Allowance for Loan Losses
All loans are stated at principal amount outstanding.
Interest on loans is primarily calculated by using the simple
interest method on daily balances of the principal amount
outstanding.

Accrual of interest is discontinued on a loan when
management believes, after considering economic and business
conditions and collection efforts, that the borrower's financial
condition is such that collection of interest is doubtful. When a
loan is placed on nonaccrual status, previously accrued and
uncollected interest is charged to interest income on loans.
Generally, payments on nonaccrual loans are applied to principal.

A loan is impaired when, based on current information and events,
it is probable that all amounts due according to the contractual
terms of the loan will not be collected. Impaired loans are
measured based on the present value of expected future cash
flows, discounted at the loan's effective interest rate, or at
the loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent.  Interest income
on impaired loans is recognized using the cash-basis method of
accounting during the time within the period in which the loans
were impaired. The Bank Subsidiaries had no material amounts of
impaired loans at December 31, 1997 or 1996.

The allowance for loan losses is established through a
provision for loan losses charged to expense. Loans are charged
against the allowance for loan losses when management believes
that the collectibility of the principal is unlikely. The
allowance represents an amount which, in management's judgment,
will be adequate to absorb probable losses on existing loans that
may become uncollectible. Management's judgment in determining
the adequacy of the allowance is based on evaluations of the
collectibility of loans. These evaluations take into
consideration such factors as changes in the nature and volume of
the loan portfolio, current economic conditions that may affect
the borrower's ability to pay, overall portfolio quality, and
review of specific problem loans.

Management believes that the allowance for loan losses is
adequate. While management uses available information to
recognize losses on loans, future additions to the allowance may
be necessary based on changes in economic conditions. In
addition, various regulatory agencies, as an integral part of
their examination process, periodically review United's allowance
for loan losses. Such agencies may require United to recognize
additions to the allowance based on their judgments of
information available to them at the time of their examination.

Premises and Equipment
Premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using primarily the
straight-line method over the estimated useful lives of the
related assets. Costs incurred for maintenance and repairs are
expensed currently. The range of estimated useful lives for
buildings and improvements is 15 to 40 years, and for furniture
and equipment, 3 to 10 years.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Goodwill and Deposit-Based Intangibles
Goodwill , arising from the excess cost over the fair value
of net assets acquired of purchased bank subsidiaries, is
amortized on a straight-line basis over periods not exceeding 25
years. Deposit assumption premiums paid in connection with the
branch bank purchases are being amortized over 15 years, the
estimated life of the deposit base acquired. On an ongoing basis,
management reviews the valuation and amortization periods of
goodwill and the deposit assumption premiums to determine if
events and circumstances require the remaining lives to be
reduced.

Mortgage Servicing Rights
United's mortgage banking division accounts for mortgage
servicing rights as a separate asset regardless of whether the
servicing rights are acquired through purchase or origination.
United's mortgage servicing rights represent the unamortized cost
of purchased and originated contractual rights to service
mortgages for others in exchange for a servicing fee and
ancillary loan administration income. Mortgage servicing rights
are amortized over the period of estimated net servicing income
and are periodically adjusted for actual and anticipated
prepayments of the underlying mortgage loans. Impairment analysis
is performed quarterly after stratifying the rights by interest
rate. Impairment, defined as the excess of the asset's carrying
value over its current fair value, is recognized through a
valuation allowance. At December 31, 1997 and 1996, no valuation
allowances were required for United's mortgage servicing rights.

United recognized approximately $15,000, $137,000 and $790,000 in
servicing assets during 1997, 1996 and 1995, respectively, and
recognized amortization expense relating to servicing assets of
approximately $144,000, $267,000, and $283,000 during 1997, 1996
and 1995, respectively.  During 1996, United sold mortgage loan
servicing rights with a net book value of approximately
$1,254,000.  No such sales occurred during 1997 or 1995. 

Income Taxes
Deferred tax assets and liabilities are recorded for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Future tax benefits,
such as net operating loss carryforwards, are recognized to the
extent that realization of such benefits is more likely than not.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which the assets and liabilities are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income tax expense in the
period that includes the enactment date.

In the event the future tax consequences of differences
between the financial reporting bases and the tax bases of
United's assets and liabilities results in deferred tax assets,
an evaluation of the probability of being able to realize the
future benefits indicated by such asset is required. A valuation
allowance is provided for the portion of the deferred tax asset
when it is more likely than not that some portion or all of the
deferred tax asset will not be realized. In assessing the
realizability of the deferred tax assets, management considers
the scheduled reversals of deferred tax liabilities, projected
future taxable income and tax planning strategies.

Interest Rate Risk Management
As part of United's overall interest rate risk management,
interest rate swaps and interest rate floors are utilized. These
contracts are designated by United as hedges of interest rate
exposures, and interest income or expense derived from these
contracts is recorded over the life of the contract as an
adjustment to interest income or expense of the instruments
hedged.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Recent Accounting Pronouncements
In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 127 "Deferral of
the Effective Date of Certain Provisions of SFAS No. 125" ("SFAS
127"), Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130") and Statement of
Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131").
SFAS 127 simply defers, until January 1, 1998, the effective date
of selected provisions of a previously issued accounting and
disclosure standard. SFAS 130 establishes standards for the
reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. SFAS 131
specifies the presentation and disclosure of operating segment
information reported in the annual report and interim reports
issued to stockholders. The provisions of SFAS 130 and 131 are
effective for fiscal years beginning after December 15, 1997. The
management of the Company believes that the adoption of these
statements will not have a material impact on the Company's
financial position, results of operations, or liquidity.

Earnings Per Common Share
SFAS No. 128 "Earnings Per Common Share" ("SFAS 128") became
effective for the Company for the year ended December 31, 1997.
This new standard specifies the computation, presentation and
disclosure requirements for earnings per common share and is
designed to simplify previous earnings per common share standards
and to make domestic and international practices more compatible.
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 earnings per common share-assuming dilution. All
earnings per common share amounts have been restated to conform
to the provisions of SFAS 128.

SFAS 128 requires earnings per common share with and without the
dilutive effects of potential common stock issuances from
instruments such as options, convertible securities and warrants
to be presented on the face of the statements of earnings.
Additionally, the new statement requires the reconciliation of
the amounts used in the computation of both earnings per common
share and earnings per common share-assuming dilution. Earnings
per common share amounts for the years ended December 31, 1997,
1996 and 1995 are as follows (dollars in thousands, except for
per share data):

<PAGE>

<TABLE>
<CAPTION>
                                                 For the Year Ended December 31, 1997

                                                                  Weighted
                                                                   Average
                                                Net Earnings    Common Shares     Per Share
                                                (Numerator)     (Denominator)       Amount
                                                ------------    -------------     ---------

<S>                                                <C>             <C>              <C>
Earnings per common share                          $10,735         7,300,874        $1.47
                                                                                    =====
Effect of dilutive securities:                 
Stock options                                           --            46,680    
Convertible debentures                                 189           140,000      
                                                   -------         ---------

Earnings per common share - assuming dilution      $10,924         7,487,554        $1.46
                                                   =======         =========        =====
</TABLE>
                    


            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Earnings Per Common Share, continued


<TABLE>
<CAPTION>
                                         For the Year Ended December 31, 1996
          
                                                                     Weighted
                                                                      Average
                                                 Net Earnings     Common Shares   Per Share
                                                 (Numerator)      (Denominator)     Amount
                                                 ------------     -------------   ----------
<S>                                                <C>              <C>             <C>
Earnings per common share:                         $ 8,927          6,919,437       $1.29
                                                                                    =====
Effect of dilutive securities:                 
     Stock options                                      --             30,098    
     Convertible debentures                             56            161,311       
                                                   -------          ---------
                    
Earnings per common share - assuming dilution      $ 8,983          7,110,846       $1.26
                                                   =======          =========       =====
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                         For the Year Ended December 31, 1995

                                                                     Weighted
                                                                      Average
                                                 Net Earnings      Common Shares  Per Share
                                                  (Numerator)      (Denominator)    Amount
                                                 ------------      -------------  ---------
<S>                                                <C>              <C>             <C>
Earnings per common share                          $ 6,669          6,499,264       $1.03
                                                                                    =====
Effect of dilutive securities:
     Stock options                                      --              6,897
     Convertible debentures                             56            178,568
                                                   -------          ---------

Earnings per common share - assuming dilution      $ 6,725          6,684,729       $1.01
                                                   =======          =========       =====
</TABLE>

(1)  Mergers and Acquisitions
     Effective September 12, 1997, the Company acquired, for 646,257
     shares of its $1 par value common stock and approximately $7,000
     paid for fractional shares, all of the outstanding common stock
     of First Clayton Bancshares, Inc., a $73 million one bank holding
     company, located in Clayton, Georgia. The acquisition was
     accounted for as a pooling of interests and accordingly, the
     consolidated financial statements for all periods presented have
     been restated to include the financial position and results of
     operations as if the combination had occurred on January 1, 1995.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


(1)  Mergers and Acquisitions, continued
     The following is a reconciliation of the amounts of net interest
     income and net earnings previously reported with the restated
     amounts (in thousands):


<TABLE>
<CAPTION>
                                                       1997            1996           1995
                                                       ----            ----           ----
<S>                                                  <C>              <C>            <C>
Net interest income:                    
The Company, as previously reported                    
     in 1996 and 1995                                $40,288          31,368         22,919
                    
Clayton                                                2,944           2,447          2,096
                                                     -------          ------         ------
                    
As restated                                          $43,232          33,815         25,015
                                                     =======          ======         ======
                    
Net earnings:                 
The Company, as previously reported                    
     in 1996 and 1995                                $ 9,974           8,201          6,051
                    
Clayton                                                  761             726            618
                                                     -------          ------         ------
                    
As restated                                          $10,735           8,927          6,669
                                                     =======          ======         ======
</TABLE>


     On September 28, 1996, UCB assumed deposits of $23.7 million and
     purchased certain assets totaling $33.2 million of a branch in
     Cornelia, Georgia.

     On August 31, 1995, United acquired all the outstanding common
     stock of White County Bancshares, Inc., (White Bancshares) the
     parent company of White County Bank, Cleveland, Georgia. United
     issued 455,400 shares of its common stock and approximately
     $10,000 in cash for fractional shares, in exchange for all the
     outstanding common shares of White Bancshares. Additionally,
     United exercised its option to convert the exchangeable payable
     in kind debenture previously acquired during 1994, and the
     related accrued interest into a majority interest in White County
     Bank. At the date of acquisition, White County Bank had total
     assets of $71 million and liabilities of $63 million. The
     original purchase price was allocated to assets and liabilities
     acquired based on their fair values at the date of acquisition.
     This transaction was accounted for as a purchase and, therefore,
     is not included in United's results of operations or statements
     of financial position prior to the date of acquisition. 
     
(2)  Cash Flows
     United paid approximately $45 million, $34 million and $27
     million in interest on deposits and other liabilities during
     1997, 1996 and 1995, respectively. In connection with United's
     1995 acquisition of White, assets having a fair value of $71
     million were acquired and liabilities totaling $63 million were
     assumed.


<TABLE>
                                                                                   For the Years Ended December 31,
                                                                                   --------------------------------
                                                                               1997             1996             1995
                                                                               ----             ----             ----
<S>                                                                           <C>               <C>            <C>
Schedule of noncash investing and financing activities (in thousands):
     Conversion of subordinated debentures into 178,568 shares                  
          of common stock                                                     $  --             1,000              --
     Common stock issued and conversion of exchangeable payable                 
          in kind debenture in connection with the acquisition of White       $  --                --           8,384
     Change in unrealized gain (loss) on securities available for sale,                    
          net of tax                                                          $ 919              (368)            545
     (Decrease) increase in dividends payable                                 $ (66)               --              --
</TABLE>


<PAGE>

            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


(3)  Investment Securities
     Investment securities at December 31, 1997 and 1996 are as
     follows (in thousands):


<TABLE>
<CAPTION>
                                                                  December 31, 1997
                                               ------------------------------------------------------
                                                                Gross          Gross        Estimated
                                               Amortized      Unrealized     Unrealized       Fair
                                                 Cost           Gains          Losses        Value 
                                               ---------      ----------     -----------    ---------
<S>                                             <C>             <C>              <C>         <C>
Securities Available for Sale: 
     U.S. Treasuries                           $ 46,304           642              1          46,945
     U.S. Government agencies                    45,317           268             33          45,552
     State and political subdivisions            11,675           189              4          11,860
     Mortgage-backed securities                  32,970           387             10          33,347
     Other                                        6,256            --             66           6,190
                                               --------         -----            ---         -------
                         
     Total                                     $142,522         1,486            114         143,894
                                               ========         =====            ===         =======

Securities Held to Maturity:                      
     U.S. Treasuries                           $    500             6             --             506
     U.S. Government agencies                    22,361            35             57          22,339
     State and political subdivisions            42,330         1,211              8          43,533
     Mortgage-backed securities                   4,368           109             10           4,467
                                               --------         -----            ---         -------
                         
          Total                                $ 69,559         1,361             75          70,845
                                               ========         =====            ===         =======
</TABLE>


<TABLE>
<CAPTION>
                                                                  December 31, 1997
                                               ------------------------------------------------------
                                                                Gross          Gross        Estimated
                                               Amortized      Unrealized     Unrealized       Fair
                                                 Cost           Gains          Losses        Value 
                                               ---------      ----------     -----------    ---------
<S>                                             <C>             <C>              <C>         <C>
Securities Available for Sale:                         
     U.S. Treasuries                            $ 12,771           71              1         12,841
     U.S. Government agencies                     39,169           59            275         38,953
     State and political subdivisions              6,685          162             14          6,833
     Mortgage-backed securities                   18,644           46             55         18,635
     Other                                         4,104           --            102          4,002
                                                --------        -----           ----         ------
                         
          Total                                 $ 81,373          338            447         81,264
                                                ========        =====           ====         ======

Securities Held to Maturity:                      
     U.S. Treasuries                            $  2,368            6             --          2,374
     U.S. Government agencies                     34,804           42            301         34,545
     State and political subdivisions             33,036          646            173         33,509
     Mortgage-backed securities                    7,118          103             24          7,197
                                                --------        -----           ----         ------

          Total                                 $ 77,326          797            498         77,625
                                                ========        =====           ====         ======
</TABLE>

     The amortized cost and estimated fair value of the securities
     portfolio at December 31, 1997, by contractual maturity, is
     presented in the following table. Expected maturities may differ
     from contractual maturities because borrowers have the right to
     call or prepay obligations with or without call or prepayment
     penalties.

<PAGE>

            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(3)  Investment Securities, continued

<TABLE>

                                                            Securities Held            Securities Available
                                                              to Maturity                     for Sale
                                                            December 31, 1997            December 31, 1997
                                                       ------------------------      -------------------------
                                                       Amortized      Estimated      Amortized      Estimated
                                                          Cost        Fair Value       Cost         Fair Value
                                                       ---------      ----------     ----------     ----------
<S>                                                     <C>             <C>           <C>            <C>
U.S. Treasuries:                        
     Within 1 year                                      $   500            506          2,242          2,247
     1 to 5 years                                            --             --         42,573         43,184
     5 to 10 years                                           --             --          1,489          1,514
                                                        -------         ------        -------        ------- 
                         
                                                        $   500            506         46,304         46,945
                                                        =======         ======        =======        =======

U.S. Government agencies:                         
     Within 1 year                                      $17,817         17,801          8,150          8,150
     1 to 5 years                                         4,544          4,538         33,269         33,495
     5 to 10 years                                           --             --          3,898          3,907
                                                        -------         ------        -------        -------

                                                        $22,361         22,339         45,317         45,552
                                                        =======         ======        =======        =======
                         
State and political subdivisions:                      
     Within 1 year                                      $ 1,739          1,753          2,569          2,582
     1 to 5 years                                        17,132         17,516          3,019          3,103
     5 to 10 years                                       18,819         19,452          4,103          4,169
     More than 10 years                                   4,640          4,812          1,984          2,006
                                                        -------         ------        -------        ------- 
                         
                                                        $42,330         43,533         11,675         11,860
                                                        =======         ======        =======        =======
                         
Other:                        
     More than 10 years                                 $    --             --          6,256          6,190
                                                        =======         ======        =======        =======
                         
Total securities other than mortgage-backed                      
  securities:                      
     Within 1 year                                      $20,056         20,060         12,961         12,979
     1 to 5 years                                        21,676         22,054         78,861         79,782
     5 to 10 years                                       18,819         19,452          9,490          9,590
     More than 10 years                                   4,640          4,812          8,240          8,196
Mortgage-backed securities                                4,368          4,467         32,970         33,347
                                                        -------         ------        -------        ------- 
                         
                                                        $69,559         70,845        142,522        143,894
                                                        =======         ======        =======        =======
</TABLE>

                         

     There were no sales of securities held to maturity during 1997,
     1996 and 1995. Proceeds from sales of securities available for
     sale during 1997, 1996 and 1995 were $ 32 million, $18 million
     and $18 million, respectively. Gross gains of $451,000, $53,000
     and $113,000 for 1997, 1996 and 1995,  respectively, along with
     gross losses of $25,000, $66,000 and $109,000 for 1997, 1996 and
     1995,  respectively, were realized on those sales.

     Securities with a carrying value of $65 million and $52 million
     at December 31, 1997 and 1996, respectively, were pledged to
     secure public deposits as required by law.


<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


(4)  Loans and Allowance for Loan Losses
     Major classifications of loans at December 31, 1997 and 1996 are
     summarized as follows (in thousands):


<TABLE>
<CAPTION>
                                                         1997            1996
                                                         ----            ----
<S>                                                    <C>              <C>
Commercial, financial and agricultural                 $105,462         100,538
Real estate - construction                               78,699          51,425
Real estate - mortgage                                  523,629         380,681
Consumer                                                115,534         101,930
                                                       --------         -------
               
          Total loans                                   823,324         634,574
               
Less:  Allowance for loan losses                         10,352           8,125
                                                       --------         -------
               
          Loans, net                                   $812,972         626,449
                                                       ========         =======
</TABLE>
               

     The Bank Subsidiaries grant loans and extensions of credit to
     individuals and a variety of firms and corporations located
     primarily in counties in northern Georgia and western North 
     Carolina. Although the Bank Subsidiaries have diversified loan
     portfolios, a substantial portion of the loan portfolios is
     collateralized by improved and unimproved real estate and is
     dependent upon the real estate market. 

     During 1997 and 1996, certain executive officers and directors of
     United and its Bank Subsidiaries, including their immediate
     families and companies with which they are associated, maintained
     a variety of banking relationships with the Bank Subsidiaries.
     Total loans outstanding to these persons at December 31, 1997 and
     1996 amounted to $15,811,000 and $13,520,000, respectively. The
     change from December 31, 1996 to December 31, 1997 reflects
     payments amounting to $8,408,000 and advances of $10,699,000.
     Such loans are made in the ordinary course of business at normal
     credit terms, including interest rate and collateral
     requirements, and do not represent more than normal credit risk. 

     Changes in the allowance for loan losses are summarized as
     follows (in thousands):


<TABLE>
<CAPTION>
                                                            1997          1996        1995
                                                            ----          ----        ----
<S>                                                       <C>            <C>         <C>
Balance at beginning of year                              $ 8,125        6,884       4,231
Allowance for loan losses acquired from White                  --           --       1,813
Provisions charged to earnings                              2,634        1,597       1,116
Loans charged off                                            (797)        (695)       (701)
Recoveries of loans previously charged off                    390          339         425
                                                          -------        -----       -----
                    
Balance at end of year                                    $10,352        8,125       6,884
                                                          =======        =====       =====
</TABLE>

                    

     United serviced approximately $103.5 and $117.4 million of
     mortgage loans for others at December 31, 1997 and 1996,
     respectively.


<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(5)  Premises and Equipment
     Premises and equipment at December 31, 1997 and 1996 are
     summarized as follows (in thousands):


<TABLE>
<CAPTION>
                                          1997      1996
                                          ----      ----
<S>                                     <C>        <C>
Land and land improvements              $ 6,102     4,770
Building and improvements                14,001    12,667
Furniture and equipment                  15,018    10,771
Construction in progress                  2,919       167
                                        -------    ------
               
                                         38,040    28,375
Less: Accumulated depreciation           10,303     8,267
                                        -------    ------

                                        $27,737    20,108
                                        =======    ======
</TABLE>

     Depreciation expense was approximately $2.1 million, $1.6 million
     and $1.4 million in 1997, 1996 and 1995, respectively.
     
(6)  Time Deposits
     At December 31, 1997, contractual maturities of time deposits are
     summarized as follows ( in thousands):

     Maturing In:        
               
          1998                                   $509,837
          1999                                     92,144
          2000                                     15,482
          2001                                     13,394
          2002 and thereafter                       2,452
                                                 -------- 
                                                 $633,309
                                                 ========

(7)  FHLB Advances
     The Bank Subsidiaries have advances from the Federal Home Loan
     Bank (FHLB) with monthly interest payments and principal payments
     due at various maturity dates and interest rates ranging from
     5.51% to 7.81% at December 31, 1997. The majority of the advances
     represent draws to fund mortgage loans to customers over payment
     terms longer than those normally given. The FHLB advances are
     collateralized by first mortgage loans, FHLB stock and other U.S.
     agency securities.

     Advances from FHLB outstanding at December 31, 1997 mature as
     follows ( in thousands):

     Year      
          
     1998                                          $24,468
     1999                                           15,033
     2000                                              808
     2001                                              307
     2002                                            1,432
     2003 and thereafter                             1,273
                                                   -------
                                                   $43,321
                                                   =======

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(8)  Notes Payable
     Notes payable at December 31, 1997 and 1996 consisted of the
     following (in thousands):


<TABLE>
<CAPTION>
                                                                                                  1997           1996
                                                                                                  ----           ----
<S>                                                                                             <C>             <C>
Note payable, due in quarterly installments of $321,455, plus interest, through 
     January 2005, secured by common stock of the Bank Subsidiaries.  Interest 
     is variable based on the prime rate less 1.25%. The loan agreement contains 
     covenants and restrictions pertaining to the maintenance of certain financial 
     ratios, limitations on the incurrence of additional debt, and the declaration of 
     dividends or other capital transactions.                                                   $12,722         10,453
               
Commercial paper of Finance, due at maturity during 1998 and unsecured.
     Interest is from 7.15% to 7.25% and is payable monthly.                                      1,347             --
                                                                                                -------         ------
                                                                                                $14,069         10,453
                                                                                                =======         ======
</TABLE>

     Aggregate maturities required on the notes payable at December
     31, 1997 are as follows:

     1998                                                      $ 2,633
     1999                                                        1,286
     2000                                                        1,286
     2001                                                        1,286
     2002                                                        1,286
     2003 and thereafter                                         6,292
                                                               -------
                                                               $14,069
                                                               =======

(9)  Convertible Subordinated Debentures
     On December 31, 1996, the holders of convertible debentures of
     the Company due July 1, 2000 (the "2000 Debentures"), which bore
     interest at a fixed rate of 9% per annum, converted the 2000
     Debentures into an aggregate of 178,568 shares of common stock in
     accordance with their terms and pursuant to an additional six
     month period for conversion extended by the Company in order to
     comply with certain obligations of the Company to provide the
     holders with notice of the conversion termination date.

     On December 31, 1996, United also completed a private placement
     of convertible subordinated debentures due December 31, 2006 (the
     "2006 Debentures"). The 2006 Debentures bear interest at the rate
     of one quarter of one percentage point over the prime rate per
     annum, payable in quarterly installments commencing on April 1,
     1997. The 2006 Debentures may be redeemed, in whole or in part,
     on or after January 1, 1998, at the option of United upon at
     least 20 days and not more than 60 days notice, at a redemption
     price equal to 100% of the principal amount of the Debentures to
     be redeemed plus interest accrued and unpaid as of the date of
     redemption. The holders of the 2006 Debentures not called for
     redemption will have the right, exercisable at any time up to
     December 31, 2006, to convert such Debenture at the principal
     amount thereof into shares of common stock of United at the
     conversion price of $25 per share, subject to adjustment for
     stock splits and stock dividends.

     Certain directors and executive officers of United held
     convertible debentures totaling $3,025,000 at December 31, 1997
     and 1996.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(10) Income Taxes
     During 1997, 1996 and 1995, United made income tax payments of
     approximately $5.5 million, $4.0 million and $2.7 million,
     respectively. 

     The components of income tax expense for the years ended December
     31, 1997, 1996 and 1995 are as follows (in thousands):


<TABLE>
<CAPTION>
                                                     1997      1996       1995
                                                     ----      ----       ----
     <S>                                            <C>        <C>       <C>
     Current                                        $5,170     4,032     2,644
     Deferred (reduction)                             (404)       82       (95)
                                                    ------     -----     -----
                                                    $4,766     4,114     2,549
                                                    ======     =====     =====
</TABLE>

     The differences between the provision for income taxes and the
     amount computed by applying the statutory federal income tax rate
     (34 percent) to earnings before income taxes are as follows (in
     thousands):
     

<TABLE>
<CAPTION>
                                                     1997       1996      1995
                                                     ----       ----      ----
<S>                                                 <C>        <C>       <C>
Pretax income at statutory rates                    $5,270     4,434     3,134
Add (deduct):                 
     Tax-exempt interest income                       (878)     (828)     (789)
     Nondeductible interest expense                    147       127       130
     Other                                             227       381        74
                                                    ------     -----     -----
                                                    $4,766     4,114     2,549
                                                    ======     =====     =====
</TABLE>

     The following summarizes the sources and expected tax
     consequences of future taxable deductions (income) which comprise
     the net deferred tax asset at December 31, 1997 and 1996 (in
     thousands):


<TABLE>
<CAPTION>
                                                                1997      1996
                                                                ----      ----
<S>                                                            <C>        <C>
Deferred tax assets:
     Allowance for loan losses                                 $3,531     2,549
     Net operating loss and credit carryforwards                   42       349
     Unrealized loss on securities available for sale              --         6
     Other                                                         32       172    
                                                               ------     -----
          Gross deferred tax assets                             3,605     3,076
                                                               ------     -----

Deferred tax liabilities:
     Premises and equipment                                    (1,326)   (1,159)
     Unrealized gain on securities available for sale            (541)       --
     Other                                                        (65)     (101)
                                                               ------    ------
          Gross deferred tax liabilities                       (1,932)   (1,260)
                                                               ------    ------
          Net deferred tax asset                               $1,673     1,816
                                                               ======    ======
</TABLE>

     At December 31, 1997, United has a loss carryforward of
     approximately $1 million for state income taxes which will begin
     to expire in 2008. The use of this carryforward is limited to
     future taxable earnings of United and to annual limitations
     imposed by the tax code.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


(11) Employee Benefit Plans
     United has contributory employee benefit plans covering
     substantially all employees, subject to certain minimum service
     requirements. United's contribution to the plans is determined
     annually by the Board of Directors and amounted to approximately
     $803,000, $583,000 and $566,000 in 1997, 1996, and 1995,
     respectively.

(12) Regulatory Matters 
     The Bank Subsidiaries are subject to various regulatory capital
     requirements administered by the federal banking agencies. 
     Failure to meet minimum capital requirements can initiate certain
     mandatory, and possibly additional discretionary, action by
     regulators that, if undertaken, could have a direct material
     effect on the Bank Subsidiaries' financial statements. Under
     capital adequacy guidelines and the regulatory framework for
     prompt corrective action, the Bank Subsidiaries must meet
     specific capital guidelines that involve quantitative measures of
     the Bank Subsidiaries' assets, liabilities, and certain
     off-balance sheet items as calculated under regulatory accounting
     practices.  The Bank Subsidiaries' capital amounts and
     classification are also subject to qualitative judgments by the
     regulators about components, risk weightings, and other factors. 

     Quantitative measures established by regulation to ensure capital
     adequacy require the Bank Subsidiaries to maintain minimum
     amounts and ratios of total and Tier 1 capital (as defined) to
     risk-weighted assets (as defined), and of Tier 1 capital (as
     defined) to average assets (as defined).  Management believes, as
     of December 31, 1997,  that the Bank Subsidiaries meet all
     capital adequacy requirements to which they are subject. 

     Minimum ratios required by the Bank Subsidiaries to ensure
     capital adequacy are 8% for total capital to risk weighted assets
     and 4% each for Tier 1 capital to risk weighted assets and Tier 1
     capital to average assets. Minimum ratios required by the Bank
     Subsidiaries to be well capitalized under prompt corrective
     action provisions are 10% for total capital to risk weighted
     assets, 6% for Tier 1 capital to risk weighted assets and 5% for
     Tier 1 capital to average assets. Minimum amounts required for
     capital adequacy purposes and to be well capitalized under prompt
     corrective action provisions are presented below for United and
     its most significant subsidiaries (in thousands). Prompt
     corrective action provisions do not apply to bank holding
     companies.


<TABLE>
<CAPTION>
                              Minimum                  Minimum                 Minimum
                          Total Risk Based        Tier 1 Risk Based        Tier 1 Leverage
                         ------------------      --------------------    ---------------------
                                     Prompt                   Prompt                  Prompt
                        Capital    Corrective     Capital   Corrective   Capital    Corrective
    1997                Adequacy     Action      Adequacy     Action     Adequacy     Action
    ----                --------   ----------    --------   ----------   --------   ----------
<S>                     <C>          <C>           <C>        <C>         <C>         <C>
Consolidated            $63,520        N/A         31,777       N/A       47,374        N/A
UCB                      24,391      30,488        12,195     18,293      15,503      19,379
Carolina                 17,213      21,516         8,606     12,910      12,980      16,226
                                   
    1996                               
                                   
Consolidated            $48,893        N/A         24,446       N/A       34,159        N/A
UCB                      19,746      24,682         9,873     14,809      12,401      15,502
Carolina                 11,736      14,670         5,868      8,802       8,870      11,807
</TABLE>


<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


(12) Regulatory Matters, continued
     Actual capital amounts and ratios for United and its most
     significant subsidiaries as of December 31, 1997 and 1996 are as
     follows (in thousands):


<TABLE>
<CAPTION>
                              Actual                   Actual                   Actual
                         Total Risk Based         Tier 1 Risk Based        Tier 1 Leverage
                         -----------------        ------------------      -----------------
                         Actual                    Actual                 Actual
     1997                Amount      Ratio         Amount     Ratio       Amount      Ratio
     ----                ------      -----         ------     -----       ------      -----
<S>                     <C>          <C>           <C>        <C>         <C>         <C>   
Consolidated            $81,614      10.28%        68,184      8.59%      68,184       5.76%
UCB                      33,303      10.92%        29,733      9.75%      29,733       7.67%
Carolina                 23,260      10.81%        20,566      9.56%      20,566       6.34%

     1996
     ----
Consolidated            $62,241      10.18%        51,102      8.36%      51,102       5.98%
UCB                      25,036      10.14%        22,518      9.12%      22,518       7.26%
Carolina                 17,052      11.62%        15,259     10.40%      15,259       6.88%
</TABLE>

     As of December 31, 1997 and 1996, the most recent notification
     from the Federal Deposit Insurance Corporation categorized each
     Bank subsidiary as well capitalized under the regulatory
     framework for prompt corrective action.

(13) Commitments
     The Bank Subsidiaries 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, letters of
     credit and financial guarantees. These instruments involve, to
     varying degrees, elements of credit risk in excess of the amount
     recognized in the balance sheets. The contract amounts of these
     instruments reflect the extent of involvement the Bank
     Subsidiaries have 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 and financial guarantees written is
     represented by the contractual amount of these instruments. The
     Bank Subsidiaries use the same credit policies in making
     commitments and conditional obligations as for 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 December 31, the contract
     or notional amount of off-balance sheet instruments (in
     thousands): 


<TABLE>
<CAPTION>
                                                                                 1997           1996
                                                                                 ----           ----
     <S>                                                                       <C>             <C>
     Financial instruments whose contract amounts represent credit risk:               
          Commitments to extend credit                                         $106,040        64,091
          Standby letters of credit                                            $  2,520         1,721
          Interest rate contracts:
               Swap agreements                                                 $ 35,000        35,000
               Floors purchased                                                $ 50,000        50,000
</TABLE>
               

     Commitments to extend credit are agreements to lend to a customer
     as long as there is no violation of any condition established in
     the contract. Commitments generally have fixed expiration dates
     or other termination clauses and may require payment of a fee.
     Since many of the commitments may expire without being drawn
     upon, the total commitment amounts do not necessarily represent
     future cash requirements. The Bank Subsidiaries evaluate each
     customer's creditworthiness on a case-by-case basis. The amount
     of collateral obtained, if deemed necessary, upon extension of
     credit is based on management's credit evaluation. Collateral
     held varies but may include unimproved and improved real estate,
     certificates of deposit, personal property or other acceptable
     collateral.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(13) Commitments, continued
     Standby letters of credit and financial guarantees written are
     conditional commitments issued by the Bank Subsidiaries to
     guarantee the performance of a customer to a third party. Those
     guarantees are primarily issued to local businesses. The credit
     risk involved in issuing letters of credit is essentially the
     same as that involved in extending loan facilities to customers.
     The Bank Subsidiaries hold real estate, certificates of deposit,
     equipment and automobiles as collateral supporting those
     commitments for which collateral is deemed necessary. The extent
     of collateral held for those commitments  varies. 

     Derivative financial instruments include forwards, futures,
     swaps, options, and other instruments with similar
     characteristics. In general terms, derivative instruments are
     contracts or agreements whose value can be derived from interest
     rates, currency exchange rates and financial indices. The  Bank
     Subsidiaries use  interest rate contracts in balance sheet
     management activities, the objective of which is to minimize the
     risk inherent in the asset and liability interest rate structure.
     The Bank Subsidiaries do not use derivative financial instruments
     for trading purposes. Interest rate contracts include an
     agreement with a counterparty to exchange cash flow based on the
     movement of an underlying interest rate included such as the
     prime rate or the London International Borrowing Rate (LIBOR). A
     swap agreement involves the exchanges of a series of interest
     payments, either at a fixed or variable rate, based on a notional
     amount without the exchange of the underlying principal. An
     interest rate floor contract allows a party, for a purchase
     premium, to receive income if a predetermined interest rate falls
     below a predetermined level. Income or expense on interest rate
     contracts used by the Bank Subsidiaries to manage interest rate
     exposure is recorded on an accrual basis as an adjustment to the
     yield of the related interest earning asset or interest bearing
     liability over the period covered by the contracts. Amounts
     accrued relating to such contracts are included in accrued
     expenses and other liabilities as of the balance sheet date. 
    
     The Bank Subsidiaries' exposure from these interest rate
     contracts results from the possibility that one party may default
     on its contractual obligation (credit risk) or from the movement
     of interest rates (market risk). Credit risk is limited to the
     positive market value of the derivative, which is significantly
     less than its notional value since the notional amount only
     represents the basis for determining the exchange of the cash
     flows. Credit risk is minimized by performing credit reviews of
     the counterparties to the contract or by conducting activities
     through organized exchanges.

(14) Preferred Stock
     United may issue preferred stock in one or more series as
     established by resolution of the Board of Directors, up to a
     maximum of 10,000,000 shares. Each resolution shall include the
     number of shares issued, preferences, special rights and
     limitations as determined by the Board of Directors.  At December
     31, 1997 and 1996, there were no preferred shares issued or
     outstanding.

(15) Stockholders' Equity
     Dividends paid by the Bank Subsidiaries are the primary source of
     funds available to United for payment of dividends to its
     stockholders and other needs. Applicable federal and state
     statutes and regulations impose restrictions on the amount of
     dividends that may be declared by the Bank Subsidiaries. At
     December 31, 1997, approximately $12.9 million of the Bank
     Subsidiaries' net assets were available for payment of dividends
     without prior approval from the regulatory authorities. In
     addition to the formal statutes and regulations, regulatory
     authorities also consider the adequacy of each Bank Subsidiary's
     total capital in relation to its assets, deposits and other such
     items. Capital adequacy considerations could further limit the
     availability of dividends from the Bank Subsidiaries. 

     During 1997, United issued 300,000 shares of common stock for
     approximately $6,477,000, net of offering costs. The proceeds
     from this sale of stock were used to inject capital into the Bank
     Subsidiaries and for general corporate purposes. 

     During 1995, the Board of Directors adopted the Key Employee
     Stock Option Plan. Under this plan, options can be granted for up
     to 300,000 shares of United's common stock at a price equal to
     the fair market value at the date of grant. At December 31, 1997,
     128,296 shares were available for grant under this plan. No
     options were exercised in 1997, 1996 or 1995. 

<PAGE>

            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(15) Stockholder's Equity, continued
     SFAS No. 123, "Accounting for Stock-Based Compensation," became
     effective for the Company January 1, 1996.  This statement
     encourages, but does not require, entities to compute the fair
     value of options at the date of grant and to recognize such costs
     as compensation expense immediately if there is no vesting period
     or ratably over the vesting period of the options. The Company
     has chosen not to adopt the cost recognition principles of this
     statement.  No compensation expense has been recognized in 1997,
     1996 or 1995 related to the stock option plan.  Had compensation
     cost been determined based upon the fair value of the options at
     the grant dates consistent with the method of the new statement,
     the Company's net earnings and earnings per share would have been
     reduced to the pro forma amounts indicated below (in thousands,
     except per share data):



<TABLE>
<CAPTION>
                                                                             1997         1996         1995
                                                                             ----         ----         ----

     <S>                                             <C>                    <C>            <C>          <C>
     Net earnings                                    As reported            $10,735        8,927        6,669
                                                     Pro forma              $10,526        8,893        6,574

     Earnings per common share                       As reported            $  1.47         1.29         1.03
                                                     Pro forma              $  1.44         1.29         1.01

     Earnings per common share-assuming dilution     As reported            $  1.46         1.26         1.01
                                                     Pro forma              $  1.43         1.25          .99

</TABLE>

     The fair value of each option granted is estimated on the date of
     grant using the minimum value method with the following weighted
     average assumptions used for grants in 1997, 1996 and 1995,
     respectively: dividend yield of 1%, risk free interest rates of
     6%, 6% and 5%, and an expected life of 10 years.

     A summary of activity in the Company's stock option plan is
     presented below:



<TABLE>
<CAPTION>
                                                                   Weighted 
                                                                    Average          Range
                                                     Option       Option Price      of Price
                                                     Shares        Per Share       Per Share
                                                     ------       ------------     ---------
<S>                                                  <C>             <C>         <C>
Options outstanding at December 31, 1995              50,000         $10.00          $10.00
Options granted in 1996                               42,000         $18.00          $18.00
                                                     -------
Options outstanding at December 31, 1996              92,000         $13.65      $10.00 - 18.00
Options granted in 1997                               79,704         $22.15      $22.00 - 22.51
                                                     -------
Options outstanding at December 31, 1997             171,704         $17.60      $10.00 - 22.51
                                                     =======
</TABLE>


     Options on 102,104 and 58,400 shares were exercisable at December
     31, 1997 and 1996, respectively.  The weighted average grant-date
     fair value of options granted in 1997 and 1996 was $7.93 and
     $6.45, respectively. Such options have a weighted average
     remaining contractual life of approximately 8 years as of
     December 31, 1997.

(16) Supplemental Financial Data
     Components of other operating expenses in excess of 1% of total
     interest and other noninterest income for the years ended 
     December 31, 1997, 1996 and 1995 are as follows (in thousands):
     

                                               1997      1996    1995
                                               ----      ----    ----
     Stationery and supplies                 $  831     1,152     512
     Advertising                              1,486       704     646

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued
     
(17) United Community Banks, Inc. (Parent Company Only) Financial
     Information

<TABLE>
<CAPTION>
                           Balance Sheets
                                  
                     December 31, 1997 and 1996

                                                1997            1996
                                                ----            ----
                                                   (In thousands)

<S>                                            <C>             <C>
                               Assets

Cash                                           $   281           1,550
Investment in subsidiaries                      82,902          65,559
Other assets                                     8,995           5,455
                                               -------          ------

                                               $92,178          72,564
                                               =======          ======

                Liabilities and Stockholders' Equity

Other liabilities                              $   843             936
Notes payable                                   12,722          10,453
Convertible subordinated debentures              3,500           3,500
Stockholders' equity                            75,113          57,675
                                               -------          ------

                                               $92,178          72,564
                                               =======          ======
</TABLE>


<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(17) United Community Banks, Inc. (Parent Company Only) Financial
     Information, continued

                       Statements of Earnings
                                  
        For the Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                                             1997       1996         1995
                                                                             ----       ----         ----
                                                                                  (In thousands)


<S>                                                                       <C>           <C>         <C>  
Income:                  
     Dividends from Bank Subsidiaries                                     $ 1,150       5,361       1,680
     Other                                                                    730          87         170
                                                                          -------       -----       -----
          Total income                                                      1,880       5,448       1,850
                                                                          -------       -----       -----

Expenses:
     Interest on notes payable and subordinated debentures                  1,045         882         910
     Other                                                                  2,097       1,266         428
                                                                          -------       -----       -----
          Total expense                                                     3,142       2,148       1,338
                                                                          -------       -----       -----
                    
Earnings (loss) before income tax benefit and equity in
     undistributed earnings of subsidiaries                                (1,262)      3,300         512
Income tax benefit                                                            823         739         350
                                                                          -------       -----       -----
Earnings (loss) before equity in undistributed earnings of subsidiaries      (439)      4,039         862
                    
Equity in undistributed earnings of subsidiaries                           11,174       4,888       5,807
                                                                          -------       -----       -----
          Net earnings                                                    $10,735       8,927       6,669
                                                                          =======       =====       =====
</TABLE>


<PAGE>

            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


(17) United Community Banks, Inc. (Parent Company Only) Financial
     Information, continued

                      Statements of Cash Flows
                                  
        For the Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                                              1997            1996           1995
                                                                              ----            ----           ----
                                                                                         (In thousands)
<S>                                                                         <C>              <C>            <C>    
Cash flows from operating activities:       
     Net earnings                                                           $10,735           8,927          6,669
     Adjustments to reconcile net earnings to net cash                
          provided by (used in) operating activities:                 
               Equity in undistributed earnings of Bank Subsidiaries        (11,174)         (4,888)        (5,807)
               Depreciation, amortization and accretion                         300             203            185
               Change in:                    
                    Other assets                                             (2,567)            (33)          (205)
                    Accrued interest payable                                     27             (39)            39
                    Other liabilities                                           (54)           (263)           (18)
                                                                            -------          ------         ------
                         Net cash provided by (used in) operating 
                            activities                                       (2,733)          3,907            863
                                                                            -------          ------         ------
                    
Cash flows from investing activities:                  
     Purchase of premises and equipment                                      (1,273)             --             --      
     Cash paid in lieu of fractional shares                                      --              --            (10)
     Capital contributions to Bank Subsidiaries                              (5,250)         (4,275)        (4,500)
                                                                             ------          ------         ------
                         Net cash used in investing activities               (6,523)         (4,275)        (4,510)
                                                                             ------          ------         ------
                    
Cash flows from financing activities:                  
     Proceeds from convertible subordinated debentures                           --           3,500             --
     Proceeds from notes payable                                              3,400              --          2,539
     Repayments of notes payable                                             (1,131)           (856)          (630)
     Proceeds from sale of common stock                                       6,477              --          2,434
     Purchase and retirement of treasury stock of pooled entity                  --            (408)            (7)
     Proceeds from resale of treasury stock of pooled entity                      6              --             --
     Dividends paid                                                            (765)           (677)          (588)
                                                                            -------          ------         ------
                         Net cash provided by financing activities            7,987           1,559          3,748
                                                                            -------          ------         ------
                    
Net change in cash                                                           (1,269)          1,191            101
Cash at beginning of year                                                     1,550             359            258
                                                                            -------          ------         ------
Cash at end of year                                                         $   281           1,550            359
                                                                            =======          ======         ======
</TABLE>


<PAGE>
(18) Fair Value of Financial Instruments
     SFAS No. 107, "Disclosures about Fair Value of Financial
     Instruments," requires disclosure of fair value information about
     financial instruments, whether or not recognized on the face of
     the balance sheet, for which it is practicable to estimate that
     value. The assumptions used in the estimation of the fair value
     of United's financial instruments are detailed below. Where
     quoted prices are not available, fair values are based on
     estimates using discounted cash flows and other valuation
     techniques. The use of discounted cash flows can be significantly
     affected by the assumptions used, including the discount rate and
     estimates of future cash flows. The following disclosures should
     not be considered a surrogate of the liquidation value of United
     or its Bank Subsidiaries, but rather a good-faith estimate of the
     increase or decrease in value of financial instruments held by
     United since purchase, origination, or issuance.

<PAGE>

            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued

(18) Fair Value of Financial Instruments, continued 
     Cash and Cash Equivalents 
     For cash, due from banks and federal funds sold the carrying
     amount is a reasonable estimate of fair value.

     Securities Held to Maturity and Securities Available for Sale
     Fair values for investment securities are based on quoted market
     prices.

     Loans and Mortgage Loans Held for Sale
     The fair value of fixed rate loans is estimated by discounting
     the future cash flows using the current rates at which similar
     loans would be made to borrowers with similar credit ratings. For
     variable rate loans, the carrying amount is a reasonable estimate
     of fair value.

     Deposits
     The fair value of demand deposits, savings accounts and certain
     money market deposits is the amount payable on demand at the
     reporting date. The fair value of fixed maturity certificates of
     deposit is estimated by discounting the future cash flows using
     the rates currently offered for deposits of similar remaining
     maturities.

     Federal Funds Purchased
     The carrying amount of federal funds purchased is a reasonable
     estimate of fair value.

     FHLB Advances
     The fair value of United's fixed rate borrowings are estimated
     using discounted cash flows, based on United's current
     incremental borrowing rates for similar types of borrowing
     arrangements. For variable rate borrowings the carrying amount is
     a reasonable estimate of fair value. 

     Notes Payable and Convertible Subordinated Debentures
     Notes payable and convertible subordinated debentures are made
     using variable rates, thus, the carrying amount is a reasonable
     estimate of fair value.

     Interest Rate Swaps and Interest Rate Floors
     The fair value of interest rate swaps and interest rate floors is
     obtained from dealer quotes. These values represent the estimated
     amount United would receive to terminate the contracts or
     agreements, taking into account current interest rates and, when
     appropriate, the current creditworthiness of the counterparties. 

     Commitments to Extend Credit, Standby Letters of Credit and
     Financial Guarantees Written
     Because commitments to extend credit and standby letters of
     credit are made using variable rates, the contract value is a
     reasonable estimate of fair value. 

     Limitations
     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 any premium
     or discount that could result from offering for sale at one time
     United's entire holdings of a particular financial instrument.
     Because no 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.

<PAGE>
            UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
        Notes to Consolidated Financial Statements, continued


(18) Fair Value of Financial Instruments, continued
     The carrying amount and estimated fair values of United's
     financial instruments at December 31, 1997 and 1996 are as
     follows (in thousands):


<TABLE>
<CAPTION>
                                               December 31, 1997       December 31, 1996
                                            ---------------------    ---------------------
                                            Carrying    Estimated    Carrying   Estimated
                                              Amount    Fair Value    Amount    Fair Value
                                            --------    ----------    -------   ----------
<S>                                         <C>          <C>         <C>         <C>
Assets:
     Cash and cash equivalents              $ 68,834      68,834      52,670      52,670
     Securities held to maturity              69,559      70,845      77,326      77,625
     Securities available for sale           143,894     143,894      81,264      81,264
     Mortgage loans held for sale              3,962       3,962       6,727       6,727
     Loans, net                              812,972     814,855     626,449     629,107

Liabilities:
     Deposits                                977,079     981,580     773,300     778,068
     Federal funds purchased                  33,011      33,011          --          --
     FHLB advances                            43,321      43,087      35,074      34,863
     Notes payable                            14,069      14,070      10,453      10,453
     Convertible subordinated debentures       3,500       3,500       3,500       3,500

Unrecognized financial instruments:
     Commitments to extend credit            106,040     106,040      64,091      64,091
     Standby letters of credit                 2,520       2,520       1,721       1,721
     Swap agreements                              12         156          17          97
     Floors purchased                              3          --          33          21

</TABLE>


<PAGE>
[ATTACHMENT - PROXY CARD]

                            COMMON STOCK
                   OF UNITED COMMUNITY BANKS, INC.
                                  
               THIS PROXY IS SOLICITED BY THE BOARD OF
       DIRECTORS FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS.

     This undersigned hereby appoints Jimmy C. Tallent or Robert L.
Head, Jr. the proxy of the undersigned to vote the Common Stock
of the undersigned at the Annual Meeting of Shareholders of
UNITED COMMUNITY BANKS, INC. to be held on April 16, 1998, and
any adjournment thereof.

1.   [box]     FOR all nominees for director listed below (except as
               indicated to the contrary):

Jimmy C. Tallent; Billy M. Decker; Thomas C. Gilliland; Robert L.
Head, Jr.; Charles E. Hill; Hoyt O. Holloway; P. Deral Horne;
John R. Martin; Clarence W. Mason, Sr.; W. C. Nelson, Jr.;
Charles E. Parks

(Instruction:  To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below)
     

     [box]     WITHHOLD AUTHORITY to vote for all nominees listed
               above.

2.   In accordance with their best judgment with respect to any other
     matters that may properly come before the meeting.


THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION AS
DIRECTORS OF THE PERSONS NAMED IN THE PROXY AND UNLESS
INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED.


Please sign this Proxy exactly as name appears on the Proxy.

Note:  When signing as an attorney, trustee, administrator or
guardian, please give your title as such.  In the case of joint
tenants, each joint owner must sign.


Date: _________________________________