United Community Banks, Inc. Reports 16 Percent Gain in Diluted Earnings per Share for Fourth Quarter 2006

Jan 23, 2007
United Community Banks, Inc. Reports 16 Percent Gain in Diluted Earnings per Share for Fourth Quarter 2006
HIGHLIGHTS:
-- Record Fourth Quarter Earnings
     Diluted Earnings per Share of 44 cents -- Up 16 Percent
     Net Income of $18.4 Million -- Up 21 Percent
     Return on Tangible Equity of 17.49 Percent
     Total Assets Surpass $7 Billion
-- Strong Loan and Deposit Growth Drive Performance
-- Completed Acquisition of Southern National Bank
-- Banking Offices Surpass 100 -- De Novo Opportunities Continue


United Community Banks, Inc. (NASDAQ: UCBI), Georgia's third-largest bank holding company, today announced record financial results for the fourth quarter of 2006. Compared with the fourth quarter of 2005, the company achieved an 18 percent increase in total revenue, a 21 percent rise in net income and a 16 percent gain in diluted earnings per share.

For the fourth quarter of 2006, net income was $18.4 million compared with $15.2 million for 2005. Diluted earnings per share increased to 44 cents from 38 cents a year ago. Total revenue, on a taxable equivalent basis, was $72.1 million compared with $61.3 million for the fourth quarter of 2005. Return on tangible equity was 17.49 percent and return on assets was 1.10 percent, compared with 18.20 percent and 1.05 percent, respectively, a year ago.

For the year, net income increased $12.1 million to a record $68.8 million, up 21 percent from $56.7 million for 2005. Diluted earnings per share of $1.66 increased 23 cents, or 16 percent, from $1.43 for 2005. Total revenue, on a taxable equivalent basis, was $272.4 million, up 18 percent from $230.8 million a year ago. Return on tangible equity was 17.52 percent and return on assets was 1.09 percent, compared with 18.99 percent and 1.04 percent, respectively, a year ago.

"The fourth quarter of 2006 and year were outstanding by all measures for United Community Banks," said Jimmy Tallent, president and chief executive officer. "Loans increased $411 million during the fourth quarter, including $267 million in loans received through our recent acquisition of Southern National Bank. Excluding acquired loans, organic loan growth was 16 percent for the year and grew $144 million, or 12% on an annualized basis, from last quarter. The growth in loans was the key driver of the increase in net interest revenue this quarter along with a five basis point expansion in our net interest margin as compared to the fourth quarter of 2005. We continued to fund our loan growth with customer deposits, adding $213 million this quarter plus $286 million that was added through the Southern National acquisition. At December 31, 2006, total loans were $5.4 billion, up $978 million, or 22 percent, from a year ago. Our strong core loan growth and the acquisition pushed total assets to $7.1 billion, a 21 percent increase from a year ago."

"Organic growth, with an uncompromising focus on sound credit quality, is at the foundation of our balanced growth strategy. This is further supported by our focused de novo expansion and selective acquisitions," Tallent said. "We find the right people and build around them. During the fourth quarter, our de novo office expansion continued and we opened two banking offices in western North Carolina in Hendersonville and Blowing Rock. Also, we opened our 100th banking office in Commerce, Georgia, located along the heavily traveled Interstate 85 corridor. Those new locations follow four other banking offices that were opened earlier in 2006 in Oakwood, Cumming, Jasper and Savannah, Georgia as well as the formation of our 25th community bank in Cleveland, Tennessee," added Tallent. "We continue to look for opportunities to expand our franchise through de novo locations in both new and existing markets."

Tallent continued, "Our balanced growth strategy also includes selective acquisitions. In December, by completing the acquisition of Southern National Bank we added two new locations in Marietta and Canton, Georgia with approximately $370 million in assets. The Southern National acquisition significantly leverages our presence in northern metro Atlanta, especially Cherokee County, which is one of the fastest-growing large counties in the country," Tallent said. "United Community Bank - Cherokee became our 26th community bank with deposit market share in the county increasing from fifteenth to ninth. We have a great opportunity to significantly expand our franchise in this high-growth market. Also, with the addition of Southern National's Marietta office we gained a key location and increased our deposit market share from fourteenth to seventh in Cobb County. We now have five locations in Cobb County, the fourth largest by population of 28 counties the Atlanta MSA."

For the fourth quarter of 2006, net interest revenue of $62.6 million was up $9.1 million, or 17 percent, from the fourth quarter of 2005. Net interest margin for the fourth quarter was 3.99 percent, compared with 3.94 percent a year ago and 4.07 percent last quarter. "We benefited from rising rates over the past year, which expanded our margin by five basis points as compared to a year ago," stated Tallent. "The decline in the margin from the third quarter was due primarily to several programs focused at generating deposits in our new markets that concluded in the fourth quarter as well as higher costs of wholesale borrowings. During the fourth quarter of 2006, the company elected to reclassify loan origination fees previously included in net interest revenue with an offsetting amount of direct loan origination costs that had been included in salaries and employee benefits," added Tallent. "United's net interest revenue and operating expenses as well as net interest margin and operating efficiency ratio decreased as a result of those reclassifications for the fourth quarter and prior periods. However, the reclassifications had no impact on net income or equity in any of the reported periods."

The fourth quarter provision for loan losses was $3.7 million, an increase of $200,000 from a year earlier and equal to the third quarter of 2006. Annualized net charge-offs to average loans was 15 basis points for the fourth quarter, compared with 16 basis points for the fourth quarter of 2005 and 11 basis points for the third quarter of 2006. At year-end, non-performing assets totaled $13.7 million, compared with $13.0 million a year ago and $9.3 million at the end of the third quarter of 2006. Non-performing assets as a percentage of total assets was 19 basis points at year-end, compared with 22 basis points at December 31, 2005 and 14 basis points at September 30, 2006. "We have been at historic low levels of non-performing assets through most of 2006. Even with the slight rise at year-end, we are still operating below our long-term range of 20 to 35 basis points and well below peer banks," Tallent stated. "Strong credit quality, rooted with our guiding principle of securing loans with hard assets, is essential to our balanced growth strategy and overall success."

Fee revenue of $13.2 million grew 1.8 million, or 16 percent, from $11.4 million for the fourth quarter of 2005. Service charges and fees on deposit accounts increased $448,000 to $7.1 million, primarily due to growth in transactions and new accounts resulting from core deposit programs and higher ATM and debit card usage fees. Mortgage fees rose $416,000 to $2.2 million due to higher volumes and pricing of mortgages sold -- mortgage loans closed during the fourth quarter were $103 million compared with $96 million for 2005. Consulting fees were up $430,000, or 26 percent, from a year ago reflecting strong growth in the risk management and advisory service practices.

Operating expenses increased $5.5 million to $42.5 million, a 15 percent increase from the fourth quarter of 2005. Of that increase, the Southern National acquisition added $670,000 in expenses, including $132,000 in non-recurring integration charges. Salaries and employee benefit costs of $26.5 million increased $4.4 million, or 20 percent, from the fourth quarter of 2005, due to the increase in staff to support our expansion activities and business growth as well as higher health care costs and expensing of stock options in 2006. Communications and equipment expenses increased $525,000 to $4.1 million due to further investments and upgrades in technology equipment to support business growth and additional banking offices. Occupancy expense increased $133,000 to $2.8 million reflecting the increase in cost to operate additional banking offices. Postage, printing and supplies expense rose $209,000 to $1.6 million primarily due to business growth and marketing campaigns. Professional fees increased $251,000 to $1.3 million reflecting the cost of various corporate initiatives.

"We had positive operating leverage of three percent this quarter," Tallent said. "Also, our operating efficiency ratio of 55.93 percent was below our long-term efficiency goal of 56 to 58 percent. This reflects the continued strength of our existing franchise, strong revenue growth and disciplined expense controls, which more than offset the cost of reinvesting for the future through our significant de novo expansion efforts."

"Our outlook for 2007 is for earnings per share growth within our long-term goal of 12 to 15 percent," Tallent said. "We anticipate core loan growth for 2007 to be within our normal range of 10 to 14 percent. For 2007, we expect our net interest margin to improve slightly from the current level due to the maturity of higher priced wholesale borrowings and swaps. This outlook assumes stable economic and rate environments and continued strong credit quality."

"We had outstanding performance for 2006, which reflected the hard work of our exceptional team of bankers who always put their customers first," Tallent concluded. "We are committed to excellent customer service, solid credit quality, and building shareholder value through consistent, sustained double-digit growth in earnings per share while expanding our franchise."

Conference Call

United Community Banks will hold a conference call on Tuesday, January 23, 2007, at 11 a.m. ET to discuss the contents of this news release, as well as business highlights for the quarter and the financial outlook for 2007. The telephone number for the conference call is (866) 510-0705 and the pass code is "UCBI." The conference call will also be available by web cast within the Investor Relations section of the company's web site at www.ucbi.com.

About United Community Banks, Inc.

Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $7.1 billion and operates 26 community banks with 101 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the company's web site at www.ucbi.com.

Safe Harbor

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward Looking Statements" on page 4 of United Community Banks, Inc.'s annual report filed on Form 10-K with the Securities and Exchange Commission.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
                                                     2006
                                     -------------------------------------
(in thousands, except per share        Fourth        Third       Second
data; taxable equivalent)              Quarter      Quarter      Quarter
                                     -----------  -----------  -----------
INCOME SUMMARY
Interest revenue                     $   123,463  $   116,304  $   107,890
Interest expense                          60,912       55,431       49,407
                                     -----------  -----------  -----------
    Net interest revenue                  62,551       60,873       58,483
Provision for loan losses                  3,700        3,700        3,700
Fee revenue                               13,215       12,146       11,976
                                     -----------  -----------  -----------
   Total revenue                          72,066       69,319       66,759
Operating expenses                        42,521       41,441       39,645
                                     -----------  -----------  -----------
    Income before taxes                   29,545       27,878       27,114
Income taxes                              11,111       10,465       10,185
                                     -----------  -----------  -----------
   Net income                        $    18,434  $    17,413  $    16,929
                                     ===========  ===========  ===========
PERFORMANCE MEASURES
  Per common share:
    Basic earnings                   $       .45  $       .43  $       .42
    Diluted earnings                         .44          .42          .41
    Cash dividends declared                  .08          .08          .08
    Book value                             14.37        13.07        12.34
    Tangible book value (2)                10.57        10.16         9.50
  Key performance ratios:
    Return on tangible equity
     (1)(2)(3)                             17.49%       17.29%       17.68%
    Return on equity (1)(3)                13.26        13.22        13.41
    Return on assets (3)                    1.10         1.09         1.10
    Net interest margin (3)                 3.99         4.07         4.07
    Efficiency ratio                       55.93        56.46        56.27
    Dividend payout ratio                  17.78        18.60        19.05
    Equity to assets                        8.21         8.04         7.95
    Tangible equity to assets (2)           6.46         6.35         6.22
ASSET QUALITY
  Allowance for loan losses          $    66,566  $    60,901  $    58,508
  Non-performing assets                   13,654        9,347        8,805
  Net charge-offs                          1,930        1,307        1,042
  Allowance for loan losses to loans        1.24%        1.23%        1.22%
  Non-performing assets to total
   assets                                    .19          .14          .14
  Net charge-offs to average loans
   (3)                                       .15          .11          .09
AVERAGE BALANCES
  Loans                              $ 5,134,721  $ 4,865,886  $ 4,690,196
  Investment securities                1,059,125    1,029,981    1,039,707
  Earning assets                       6,225,943    5,942,710    5,758,697
  Total assets                         6,669,950    6,350,205    6,159,152
  Deposits                             5,517,696    5,085,168    4,842,389
  Shareholders' equity                   547,419      510,791      489,821
  Common shares outstanding:
    Basic                                 41,096       40,223       40,156
    Diluted                               42,311       41,460       41,328
AT PERIOD END
  Loans                              $ 5,376,538  $ 4,965,365  $ 4,810,277
  Investment securities                1,107,153      980,273      974,524
  Earning assets                       6,565,730    6,012,987    5,862,614
  Total assets                         7,101,249    6,455,290    6,331,136
  Deposits                             5,772,886    5,309,219    4,976,650
  Shareholders' equity                   616,767      526,734      496,297
  Common shares outstanding               42,891       40,269       40,179
(1)  Net income available to common shareholders, which excludes preferred
stock dividends, divided by average realized common equity, which excludes
accumulated other comprehensive income (loss).
(2)  Excludes effect of acquisition related intangibles and associated
amortization.
(3)  Annualized.
                                         2006         2005       Fourth
                                     -----------  -----------    Quarter
(in thousands, except per share         First       Fourth      2006-2005
data; taxable equivalent)              Quarter      Quarter      Change
                                     -----------  -----------  -----------
INCOME SUMMARY
Interest revenue                     $    99,038  $    91,997
Interest expense                          43,065       38,576
                                     -----------  -----------
    Net interest revenue                  55,973       53,421           17%
Provision for loan losses                  3,500        3,500
Fee revenue                               11,758       11,373           16
                                     -----------  -----------
   Total revenue                          64,231       61,294           18
Operating expenses                        38,463       37,052           15
                                     -----------  -----------
    Income before taxes                   25,768       24,242           22
Income taxes                               9,729        9,012
                                     -----------  -----------
   Net income                        $    16,039  $    15,230           21
                                     ===========  ===========
PERFORMANCE MEASURES
  Per common share:
    Basic earnings                   $       .40  $       .39           15
    Diluted earnings                         .39          .38           16
    Cash dividends declared                  .08          .07           14
    Book value                             12.09        11.80           22
    Tangible book value (2)                 9.25         8.94           18
  Key performance ratios:
    Return on tangible equity
     (1)(2)(3)                             17.66%       18.20%
    Return on equity (1)(3)                13.25        13.30
    Return on assets (3)                    1.09         1.05
    Net interest margin (3)                 4.06         3.94
    Efficiency ratio                       56.79        56.61
    Dividend payout ratio                  20.00        17.95
    Equity to assets                        8.04         7.69
    Tangible equity to assets (2)           6.24         5.82
ASSET QUALITY
  Allowance for loan losses          $    55,850  $    53,595
  Non-performing assets                    8,367       12,995
  Net charge-offs                          1,245        1,793
  Allowance for loan losses to loans        1.22%        1.22%
  Non-performing assets to total
   assets                                    .14          .22
  Net charge-offs to average loans
   (3)                                       .11          .16
AVERAGE BALANCES
  Loans                              $ 4,505,494  $ 4,328,613           19
  Investment securities                1,038,683    1,004,966            5
  Earning assets                       5,574,712    5,383,096           16
  Total assets                         5,960,801    5,769,632           16
  Deposits                             4,613,810    4,354,275           27
  Shareholders' equity                   478,960      443,746           23
  Common shares outstanding:
    Basic                                 40,088       39,084
    Diluted                               41,190       40,379
AT PERIOD END
  Loans                              $ 4,584,155  $ 4,398,286           22
  Investment securities                  983,846      990,687           12
  Earning assets                       5,633,381    5,470,718           20
  Total assets                         6,070,596    5,865,756           21
  Deposits                             4,748,438    4,477,600           29
  Shareholders' equity                   485,414      472,686           30
  Common shares outstanding               40,119       40,020
(1)  Net income available to common shareholders, which excludes preferred
stock dividends, divided by average realized common equity, which excludes
accumulated other comprehensive income (loss).
(2)  Excludes effect of acquisition related intangibles and associated
amortization.
(3)  Annualized.
                                          For the Twelve
(in thousands, except per share            Months Ended            YTD
data; taxable equivalent)            ------------------------   2006-2005
                                         2006         2005       Change
                                     -----------  -----------  -----------
                                     (unaudited)
INCOME SUMMARY
Interest revenue                     $   446,695  $   324,225
Interest expense                         208,815      127,426
                                     -----------  -----------
    Net interest revenue                 237,880      196,799           21%
Provision for loan losses                 14,600       12,100
Fee revenue                               49,095       46,148            6
                                     -----------  -----------
   Total revenue                         272,375      230,847           18
Operating expenses                       162,070      140,808           15
                                     -----------  -----------
    Income before taxes                  110,305       90,039           23
Income taxes                              41,490       33,297
                                     -----------  -----------
   Net income                        $    68,815  $    56,742           21
                                     ===========  ===========
PERFORMANCE MEASURES
  Per common share:
    Basic earnings                   $      1.70  $      1.47           16
    Diluted earnings                        1.66         1.43           16
    Cash dividends declared                  .32          .28           14
    Book value                             14.37        11.80           22
    Tangible book value (2)                10.57         8.94           18
  Key performance ratios:
    Return on tangible equity
     (1)(2)(3)                             17.52%       18.99%
    Return on equity (1)(3)                13.28        13.46
    Return on assets (3)                    1.09         1.04
    Net interest margin (3)                 4.05         3.85
    Efficiency ratio                       56.35        57.77
    Dividend payout ratio                  18.82        19.05
    Equity to assets                        8.06         7.63
    Tangible equity to assets (2)           6.32         5.64
ASSET QUALITY
  Allowance for loan losses          $    66,566  $    53,595
  Non-performing assets                   13,654       12,995
  Net charge-offs                          5,524        5,701
  Allowance for loan losses to loans        1.24%        1.22%
  Non-performing assets to total
   assets                                    .19          .22
  Net charge-offs to average loans
   (3)                                       .12          .14
AVERAGE BALANCES
  Loans                              $ 4,800,981  $ 4,061,091           18
  Investment securities                1,041,897      989,201            5
  Earning assets                       5,877,483    5,109,053           15
  Total assets                         6,287,148    5,472,200           15
  Deposits                             5,017,435    4,003,084           25
  Shareholders' equity                   506,946      417,309           21
  Common shares outstanding:
    Basic                                 40,393       38,477
    Diluted                               41,575       39,721
AT PERIOD END
  Loans                              $ 5,376,538  $ 4,398,286           22
  Investment securities                1,107,153      990,687           12
  Earning assets                       6,565,730    5,470,718           20
  Total assets                         7,101,249    5,865,756           21
  Deposits                             5,772,886    4,477,600           29
  Shareholders' equity                   616,767      472,686           30
  Common shares outstanding               42,891       40,020
(1)  Net income available to common shareholders, which excludes preferred
stock dividends, divided by average realized common equity, which excludes
accumulated other comprehensive income (loss).
(2)  Excludes effect of acquisition related intangibles and associated
amortization.
(3)  Annualized.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Years Ended December 31,
(in thousands, except per share
 data; taxable equivalent)               2006         2005         2004
                                     -----------  -----------  ------------
                                     (unaudited)
INCOME SUMMARY
 Interest revenue                    $   446,695  $   324,225  $    227,792
 Interest expense                        208,815      127,426        74,794
                                     -----------  -----------  ------------
     Net interest revenue                237,880      196,799       152,998
 Provision for loan losses                14,600       12,100         7,600
 Fee revenue                              49,095       46,148        39,539
                                     -----------  -----------  ------------
    Total revenue                        272,375      230,847       184,937
 Operating expenses (1)                  162,070      140,808       110,974
                                     -----------  -----------  ------------
     Income before taxes                 110,305       90,039        73,963
 Income taxes                             41,490       33,297        26,807
                                     -----------  -----------  ------------
    Net operating income                  68,815       56,742        47,156
 Merger-related charges, net of tax            -            -           565
                                     -----------  -----------  ------------
    Net income                       $    68,815  $    56,742  $     46,591
                                     ===========  ===========  ============
OPERATING PERFORMANCE  (1)
  Earnings per common share:
    Basic                            $      1.70  $      1.47  $       1.31
    Diluted                                 1.66         1.43          1.27
  Return on tangible equity (2)(3)         17.52%       18.99%        19.74
  Return on assets                          1.09         1.04          1.07
  Efficiency ratio                         56.35        57.77         57.65
  Dividend payout ratio                    18.82        19.05         18.32
GAAP PERFORMANCE
  Per common share:
    Basic earnings                   $      1.70  $      1.47  $       1.29
    Diluted earnings                        1.66         1.43          1.25
    Cash dividends declared
     (rounded)                               .32          .28           .24
    Book value                             14.37        11.80         10.39
    Tangible book value (3)                10.57         8.94          7.34
  Key performance ratios:
    Return on equity (2)                   13.28%       13.46%        14.39
    Return on assets                        1.09         1.04          1.05
    Net interest margin                     4.05         3.85          3.71
    Dividend payout ratio                  18.82        19.05         18.60
    Equity to assets                        8.06         7.63          7.45
    Tangible equity to assets (3)           6.32         5.64          5.78
ASSET QUALITY
   Allowance for loan losses         $    66,566  $    53,595  $     47,196
   Non-performing assets                  13,654       12,995         8,725
   Net charge-offs                         5,524        5,701         3,617
   Allowance for loan losses to
    loans                                   1.24%        1.22%         1.26
   Non-performing assets to total
    assets                                   .19          .22           .17
   Net charge-offs to average loans          .12          .14           .11
AVERAGE BALANCES
   Loans                             $ 4,800,981  $ 4,061,091  $  3,322,916
   Investment securities               1,041,897      989,201       734,577
   Earning assets                      5,877,483    5,109,053     4,119,327
   Total assets                        6,287,148    5,472,200     4,416,835
   Deposits                            5,017,435    4,003,084     3,247,612
   Stockholders' equity                  506,946      417,309       329,225
   Common shares outstanding:
     Basic                                40,393       38,477        36,071
     Diluted                              41,575       39,721        37,273
AT PERIOD END
   Loans                             $ 5,376,538  $ 4,398,286  $  3,734,905
   Investment securities               1,107,153      990,687       879,978
   Earning assets                      6,565,730    5,470,718     4,738,389
   Total assets                        7,101,249    5,865,756     5,087,702
   Deposits                            5,772,886    4,477,600     3,680,516
   Stockholders' equity                  616,767      472,686       397,088
   Common shares outstanding              42,891       40,020        38,168
(1) Excludes pre-tax merger-related and restructuring charges totaling $.9
million, or $.02 per diluted common share, recorded in 2004 and $2.1
million, or $.04 per diluted common share, recorded in 2003.
(2) Net income available to common stockholders, which excludes preferred
stock dividends, divided by average realized common equity which excludes
accumulated other comprehensive income (loss).
(3) Excludes effect of acquisition related intangibles and associated
amortization.
(4) Compound annual growth rate.
UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Years Ended December 31,
(in thousands, except per share
  data; taxable equivalent)                                      5 Year
                                         2003         2002       CAGR (4)
                                     -----------  -----------  -----------
INCOME SUMMARY
 Interest revenue                    $   198,689  $   185,498
 Interest expense                         70,600       76,357
                                     -----------  -----------
     Net interest revenue                128,089      109,141           19%
 Provision for loan losses                 6,300        6,900
 Fee revenue                              38,184       30,734           14
                                     -----------  -----------
    Total revenue                        159,973      132,975           18
 Operating expenses (1)                   97,251       80,690           16
                                     -----------  -----------
     Income before taxes                  62,722       52,285           20
 Income taxes                             23,247       19,505
                                     -----------  -----------
    Net operating income                  39,475       32,780           19
 Merger-related charges, net of
  tax                                      1,357            -
                                     -----------  -----------
    Net income                       $    38,118  $    32,780           20
                                     ===========  ===========
OPERATING PERFORMANCE  (1)
  Earnings per common share:
    Basic                            $      1.15  $      1.02           14
    Diluted                                 1.12          .99           14
  Return on tangible equity (2)(3)         19.24%       17.88%
  Return on assets                          1.06         1.11
  Efficiency ratio                         58.39        57.72
  Dividend payout ratio                    17.39        16.34
GAAP PERFORMANCE
  Per common share:
    Basic earnings                   $      1.11  $      1.02           15
    Diluted earnings                        1.08          .99           15
    Cash dividends declared
     (rounded)                               .20          .17           19
    Book value                              8.47         6.89           19
    Tangible book value (3)                 6.52         6.49           14
  Key performance ratios:
    Return on equity (2)                   14.79%       16.54%
    Return on assets                        1.02         1.11
    Net interest margin                     3.68         3.95
    Dividend payout ratio                  18.02        16.34
    Equity to assets                        7.21         7.01
    Tangible equity to assets (3)           6.02         6.60
ASSET QUALITY
   Allowance for loan losses         $    38,655  $    30,914
   Non-performing assets                   7,589        8,019
   Net charge-offs                         4,097        3,111
   Allowance for loan losses to
    loans                                   1.28%        1.30%
   Non-performing assets to total
    assets                                   .19          .25
   Net charge-offs to average
    loans                                    .15          .14
AVERAGE BALANCES
   Loans                             $ 2,753,451  $ 2,239,875           21
   Investment securities                 667,211      464,468           16
   Earning assets                      3,476,030    2,761,265           19
   Total assets                        3,721,284    2,959,295           19
   Deposits                            2,743,087    2,311,717           20
   Stockholders' equity                  268,446      207,312           24
   Common shares outstanding:
     Basic                                34,132       32,062
     Diluted                              35,252       33,241
AT PERIOD END
   Loans                             $ 3,015,997  $ 2,381,798           22
   Investment securities                 659,891      559,390           19
   Earning assets                      3,796,332    3,029,409           21
   Total assets                        4,068,834    3,211,344           21
   Deposits                            2,857,449    2,385,239           22
   Stockholders' equity                  299,373      221,579           26
   Common shares outstanding              35,289       31,895
(1) Excludes pre-tax merger-related and restructuring charges totaling $.9
million, or $.02 per diluted common share, recorded in 2004 and $2.1
million, or $.04 per diluted common share, recorded in 2003.
(2) Net income available to common stockholders, which excludes preferred
stock dividends, divided by average realized common equity which excludes
accumulated other comprehensive income (loss).
(3) Excludes effect of acquisition related intangibles and associated
amortization.
(4) Compound annual growth rate.
UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (unaudited)
                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
 (in thousands, except per
  share data)                      2006      2005       2006       2005
                                ---------  ---------  ---------  ---------
                                                     (unaudited)
Interest revenue:
 Loans, including fees          $ 109,869  $  80,138  $ 394,907  $ 279,396
 Investment securities:
  Taxable                          12,488     10,651     47,149     40,195
  Tax exempt                          472        514      1,969      2,087
 Federal funds sold and
  deposits in banks                   117        249        802        911
                                ---------  ---------  ---------  ---------
   Total interest revenue         122,946     91,552    444,827    322,589
                                ---------  ---------  ---------  ---------
Interest expense:
 Deposits:
  NOW                               9,120      5,228     30,549     16,390
  Money market                      2,527        873      7,496      2,804
  Savings                             248        226        928        791
  Time                             40,645     21,288    130,324     66,968
                                ---------  ---------  ---------  ---------
   Total deposit interest
    expense                        52,540     27,615    169,297     86,953
 Federal funds purchased,
  repurchase agreements, &
  other short-term borrowings       1,505      1,581      7,319      5,304
 Federal Home Loan Bank
  advances                          4,677      7,230     23,514     26,633
 Long-term debt                     2,190      2,150      8,685      8,536
                                ---------  ---------  ---------  ---------
  Total interest expense           60,912     38,576    208,815    127,426
                                ---------  ---------  ---------  ---------
  Net interest revenue             62,034     52,976    236,012    195,163
 Provision for loan losses          3,700      3,500     14,600     12,100
                                ---------  ---------  ---------  ---------
  Net interest revenue after
   provision for loan losses       58,334     49,476    221,412    183,063
                                ---------  ---------  ---------  ---------
Fee revenue:
 Service charges and fees           7,064      6,616     27,159     25,137
 Mortgage loan and other
  related fees                      2,154      1,738      7,303      7,330
 Consulting fees                    2,095      1,665      7,291      6,609
 Brokerage fees                       653        789      3,083      2,570
 Securities losses, net              (258)      (654)      (643)      (809)
 Other                              1,507      1,219      4,902      5,311
                                ---------  ---------  ---------  ---------
  Total fee revenue                13,215     11,373     49,095     46,148
                                ---------  ---------  ---------  ---------
  Total revenue                    71,549     60,849    270,507    229,211
                                ---------  ---------  ---------  ---------
Operating expenses:
 Salaries and employee benefits    26,524     22,136    100,964     84,854
 Communications and equipment       4,101      3,576     15,071     13,157
 Occupancy                          2,839      2,706     11,632     10,835
 Advertising and public
  relations                         1,905      1,988      7,623      6,733
 Postage, printing and supplies     1,564      1,355      5,748      5,501
 Professional fees                  1,274      1,023      4,442      4,306
 Amortization of intangibles          523        503      2,032      2,012
 Other                              3,791      3,765     14,558     13,410
                                ---------  ---------  ---------  ---------
  Total operating expenses         42,521     37,052    162,070    140,808
                                ---------  ---------  ---------  ---------
 Income before income taxes        29,028     23,797    108,437     88,403
 Income taxes                      10,594      8,567     39,622     31,661
                                ---------  ---------  ---------  ---------
  Net income                    $  18,434  $  15,230  $  68,815  $  56,742
                                =========  =========  =========  =========
  Net income available to
   common shareholders          $  18,430  $  15,225  $  68,796  $  56,719
                                =========  =========  =========  =========
Earnings per common share:
 Basic                          $    0.45  $    0.39  $    1.70  $    1.47
 Diluted                             0.44       0.38       1.66       1.43
Dividends per common share           0.08       0.07       0.32       0.28
Weighted average common shares
 outstanding:
 Basic                             41,096     39,084     40,393     38,477
 Diluted                           42,311     40,379     41,575     39,721
UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
                                      December 31,     December 31,
 (in thousands, except share and         2006             2005
  per share data)                   ---------------  ---------------
                                      (unaudited)
 ASSETS
   Cash and due from banks          $       158,348  $       121,963
   Interest-bearing deposits in
    banks                                    12,936           20,607
                                    ---------------  ---------------
       Cash and cash equivalents            171,284          142,570
   Securities available for sale          1,107,153          990,687
   Mortgage loans held for sale              35,325           22,335
   Loans, net of unearned income          5,376,538        4,398,286
        Less allowance for loan
         losses                              66,566           53,595
                                    ---------------  ---------------
               Loans, net                 5,309,972        4,344,691
   Premises and equipment, net              139,716          112,887
   Accrued interest receivable               58,291           37,197
   Goodwill and other intangible
    assets                                  167,058          118,651
   Other assets                             112,450           96,738
                                    ---------------  ---------------
       Total assets                 $     7,101,249  $     5,865,756
                                    ===============  ===============
 LIABILITIES AND SHAREHOLDERS'
  EQUITY
 Liabilities:
   Deposits:
        Demand                      $       659,892  $       602,525
        NOW                               1,307,654        1,113,827
        Money market                        255,862          151,120
        Savings                             175,631          175,453
        Time:
             Less than $100,000           1,650,906        1,218,277
             Greater than $100,000        1,397,245          895,466
             Brokered                       325,696          320,932
                                    ---------------  ---------------
                 Total deposits           5,772,886        4,477,600
    Federal funds purchased,
     repurchase agreements, & other
     short-term borrowings                   65,884          122,881
    Federal Home Loan Bank advances         489,084          635,616
    Long-term debt                          113,151          111,869
    Accrued expenses and other
     liabilities                             43,477           45,104
                                    ---------------  ---------------
         Total liabilities                6,484,482        5,393,070
                                    ---------------  ---------------
 Shareholders' equity:
     Preferred stock, $1 par value;
      $10 stated value; 10,000,000
      shares authorized; 32,200 and
      32,200 shares issued
      and outstanding                           322              322
     Common stock, $1 par value;
      100,000,000 shares
      authorized; 42,890,863 and
      40,019,853 shares issued
      and outstanding                        42,891           40,020
     Common stock issuable; 29,821
      and 9,948 shares                          862              271
     Capital surplus                        270,383          193,355
     Retained earnings                      306,261          250,563
     Accumulated other
      comprehensive loss                     (3,952)         (11,845)
                                    ---------------  ---------------
         Total shareholders' equity         616,767          472,686
         Total liabilities and      ---------------  ---------------
          shareholders' equity      $     7,101,249  $     5,865,756
                                    ===============  ===============
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended December 31,
                                           2006
                              -------------------------------
                                 Average                 Avg.
(dollars in thousands, taxable   Balance      Interest   Rate
 equivalent)                  -----------  ------------  -----
Assets:
Interest-earning assets:
  Loans, net of unearned
   income (1)(2)               $ 5,134,721  $    109,756  8.48 %
  Taxable securities (3)         1,014,959        12,488  4.92
  Tax-exempt securities (1)
   (3)                              44,166           777  7.03
  Federal funds sold and other
   interest-earning assets          32,097           442  5.51
                               -----------  ------------
     Total interest-earning
      assets                     6,225,943       123,463  7.87
                               -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses        (64,301)
  Cash and due from banks          121,276
  Premises and equipment           133,364
  Other assets (3)                 253,668
                               -----------
     Total assets              $ 6,669,950
                               ===========
Liabilities and Shareholders'
 Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
    NOW                        $ 1,181,578         9,120  3.06
    Money market                   248,530         2,527  4.03
    Savings                        170,079           248   .58
    Time deposits less than
     $100,000                    1,578,369        19,072  4.79
    Time deposits greater than
     $100,000                    1,330,375        17,366  5.18
    Brokered deposits              353,133         4,207  4.73
                               -----------  ------------
       Total interest-bearing
        deposits                 4,862,457        52,540  4.29
                               -----------  ------------
    Federal funds purchased &
     other borrowings              105,650         1,505  5.65
    Federal Home Loan Bank
     advances                      334,217         4,677  5.55
    Long-term debt                 112,923         2,190  7.69
                               -----------  ------------
      Total borrowed funds         552,790         8,372  6.01
                               -----------  ------------
      Total interest-bearing
       liabilities               5,415,247        60,912  4.46
                                            ------------
Non-interest-bearing
 liabilities:
  Non-interest-bearing
   deposits                        655,239
  Other liabilities                 52,045
                               -----------
     Total liabilities           6,122,531
Shareholders' equity               547,419
                               -----------
     Total liabilities
        and shareholders'
         equity                $ 6,669,950
                               ===========
Net interest revenue                        $     62,551
                                            ============
Net interest-rate spread                                  3.41 %
                                                          ====
Net interest margin (4)                                   3.99 %
                                                          ====
(1) Interest revenue on tax-exempt securities and loans has been increased
    to reflect comparable interest on taxable securities and loans.
    The rate used was 39%, reflecting the statutory federal tax rate and
    the federal tax adjusted state tax rate.
(2) Included in the average balance of loans outstanding are loans where
    the accrual of interest has been discontinued.
(3) Securities available for sale are shown at amortized cost.  Pretax
    unrealized losses of $12.7 million and $10.5 million in 2006 and 2005,
    respectively, are included in other assets for purposes of this
    presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided
    by average interest-earning assets.
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended December 31,
                                                           2005
                                          -----------  ------------ ------
                                            Average                  Avg.
(dollars in thousands, taxable equivalent)  Balance      Interest    Rate
                                          -----------  ------------ -------
Assets:
Interest-earning assets:
  Loans, net of unearned income (1)(2)    $ 4,328,613  $     79,904   7.32%
  Taxable securities (3)                      957,389        10,651   4.45
  Tax-exempt securities (1) (3)                47,577           845   7.10
  Federal funds sold and other
   interest-earning assets                     49,517           597   4.82
                                          -----------  ------------
     Total interest-earning assets          5,383,096        91,997   6.79
                                          -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses                   (53,763)
  Cash and due from banks                     125,882
  Premises and equipment                      109,449
  Other assets (3)                            204,968
                                          -----------
     Total assets                         $ 5,769,632
                                          ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
    NOW                                   $ 1,057,157  $      5,228   1.96
    Money market                              155,908           873   2.22
    Savings                                   176,672           226    .51
    Time deposits less than $100,000        1,169,382        10,126   3.44
    Time deposits greater than $100,000       839,624         8,420   3.98
    Brokered deposits                         311,493         2,742   3.49
                                          -----------  ------------
       Total interest-bearing deposits      3,710,236        27,615   2.95
                                          -----------  ------------
    Federal funds purchased & other
     borrowings                               153,839         1,581   4.08
    Federal Home Loan Bank advances           668,022         7,230   4.29
    Long-term debt                            111,869         2,150   7.62
                                          -----------  ------------
      Total borrowed funds                    933,730        10,961   4.66
                                          -----------  ------------
      Total interest-bearing liabilities    4,643,966        38,576   3.30
                                                       ------------
Non-interest-bearing liabilities:
  Non-interest-bearing deposits               644,039
  Other liabilities                            37,881
                                          -----------
     Total liabilities                      5,325,886
Shareholders' equity                          443,746
                                          -----------
     Total liabilities
        and shareholders' equity          $ 5,769,632
                                          ===========
Net interest revenue                                   $     53,421
                                                       ============
Net interest-rate spread                                              3.49%
                                                                    =======
Net interest margin (4)                                               3.94%
                                                                    =======
(1)  Interest revenue on tax-exempt securities and loans has been increased
     to reflect comparable interest on taxable securities and loans.
     The rate used was 39%, reflecting the statutory federal tax rate and
     the federal tax adjusted state tax rate.
(2)  Included in the average balance of loans outstanding are loans where
     the accrual of interest has been discontinued.
(3)  Securities available for sale are shown at amortized cost.  Pretax
     unrealized losses of $12.7 million and $10.5 million in 2006 and 2005,
     respectively, are included in other assets for purposes of this
     presentation.
(4)  Net interest margin is taxable equivalent net-interest revenue divided
     by average interest-earning assets.
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Twelve Months Ended December 31,
                                                         2006
                                          -----------  ---------- -----
                                            Average               Avg.
(dollars in thousands, taxable equivalent)  Balance     Interest  Rate
                                          -----------  ---------- -----
Assets:
Interest-earning assets:
  Loans, net of unearned income (1)(2)    $ 4,800,981  $  394,439  8.22%
  Taxable securities (3)                      995,172      47,149  4.74
  Tax-exempt securities (1) (3)                46,725       3,240  6.93
  Federal funds sold and other
   interest-earning assets                     34,605       1,867  5.40
                                          -----------  ----------
     Total interest-earning assets          5,877,483     446,695  7.60
                                          -----------  ----------
Non-interest-earning assets:
  Allowance for loan losses                   (59,376)
  Cash and due from banks                     122,268
  Premises and equipment                      123,865
  Other assets (3)                            222,908
                                          -----------
     Total assets                         $ 6,287,148
                                          ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
    NOW                                   $ 1,115,434  $   30,549  2.74
    Money market                              202,477       7,496  3.70
    Savings                                   172,698         928   .54
    Time deposits less than $100,000        1,410,869      61,676  4.37
    Time deposits greater than $100,000     1,134,414      54,304  4.79
    Brokered deposits                         334,243      14,344  4.29
                                          -----------  ----------
       Total interest-bearing deposits      4,370,135     169,297  3.87
                                          -----------  ----------
    Federal funds purchased & other
     borrowings                               140,544       7,319  5.21
    Federal Home Loan Bank advances           465,820      23,514  5.05
    Long-term debt                            112,135       8,685  7.75
                                          -----------  ----------
      Total borrowed funds                    718,499      39,518  5.50
                                          -----------  ----------
      Total interest-bearing liabilities    5,088,634     208,815  4.10
                                                       ----------
Non-interest-bearing liabilities:
  Non-interest-bearing deposits               647,300
  Other liabilities                            44,268
                                          -----------
     Total liabilities                      5,780,202
Shareholders' equity                          506,946
                                          -----------
     Total liabilities
        and shareholders' equity          $ 6,287,148
                                          ===========
Net interest revenue                                   $  237,880
                                                       ==========
Net interest-rate spread                                           3.50%
                                                                  =====
Net interest margin (4)                                            4.05%
                                                                  =====
(1)  Interest revenue on tax-exempt securities and loans has been increased
     to reflect comparable interest on taxable securities and loans.
     The rate used was 39%, reflecting the statutory federal tax rate and
     the federal tax adjusted state tax rate.
(2)  Included in the average balance of loans outstanding are loans where
     the accrual of interest has been discontinued.
(3)  Securities available for sale are shown at amortized cost.  Pretax
     unrealized losses of $17.5 million in 2006 and $2.7 million in 2005
     are included in other assets for purposes of this presentation.
(4)  Net interest margin is taxable equivalent net-interest revenue
     divided by average interest-earning assets.
UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Twelve Ended December 31,
                                                         2005
                                          -----------  ---------- -----
                                            Average               Avg.
(dollars in thousands, taxable equivalent)  Balance    Interest   Rate
                                          -----------  ---------- -----
Assets:
Interest-earning assets:
  Loans, net of unearned income (1)(2)    $ 4,061,091  $  278,158  6.85%
  Taxable securities (3)                      940,411      40,195  4.27
  Tax-exempt securities (1) (3)                48,790       3,433  7.04
  Federal funds sold and other
   interest-earning assets                     58,761       2,439  4.15
                                          -----------  ----------
     Total interest-earning assets          5,109,053     324,225  6.35
                                          -----------  ----------
Non-interest-earning assets:
  Allowance for loan losses                   (50,710)
  Cash and due from banks                     105,488
  Premises and equipment                      105,433
  Other assets (3)                            202,936
                                          -----------
     Total assets                         $ 5,472,200
                                          ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
    NOW                                   $   978,046  $   16,390  1.68
    Money market                              162,848       2,804  1.72
    Savings deposits                          175,648         791   .45
    Time deposits less than $100,000        1,066,734      32,334  3.03
    Time deposits greater than $100,000       708,081      25,083  3.54
    Brokered deposits                         319,372       9,551  2.99
                                          -----------  ----------
       Total interest-bearing deposits      3,410,729      86,953  2.55
                                          -----------  ----------
    Federal funds purchased & other
     borrowings                               157,137       5,304  3.38
    Federal Home Loan Bank advances           750,841      26,633  3.55
    Long-term debt                            111,869       8,536  7.63
                                          -----------  ----------
      Total borrowed funds                  1,019,847      40,473  3.97
                                          -----------  ----------
      Total interest-bearing liabilities    4,430,576     127,426  2.88
                                                       ----------
Non-interest-bearing liabilities:
  Non-interest-bearing deposits               492,355
  Other liabilities                            31,960
                                          -----------
     Total liabilities                      5,054,891
Shareholders' equity                          417,309
                                          -----------
     Total liabilities
        and shareholders' equity          $ 5,472,200
                                          ===========
Net interest revenue                                   $  196,799
                                                       ==========
Net interest-rate spread                                           3.47%
                                                                  =====
Net interest margin (4)                                            3.85%
                                                                  =====
(1)  Interest revenue on tax-exempt securities and loans has been increased
     to reflect comparable interest on taxable securities and loans.
     The rate used was 39%, reflecting the statutory federal tax rate and
     the federal tax adjusted state tax rate.
(2)  Included in the average balance of loans outstanding are loans where
     the accrual of interest has been discontinued.
(3)  Securities available for sale are shown at amortized cost.  Pretax
     unrealized losses of $17.5 million in 2006 and $2.7 million in 2005
     are included in other assets for purposes of this presentation.
(4)  Net interest margin is taxable equivalent net-interest revenue divided
     by average interest-earning assets.


For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2265
Contact via http://www.marketwire.com/mw/emailprcntct?id=73A155D4700A0872




SOURCE: United Community Banks, Inc.