SECURITIES AND EXCHANGE COMMISSION

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):
October 26, 2004

United Community Banks, Inc.

63 Highway 515, P.O. Box 398
Blairsville, Georgia 30512

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

Not applicable

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

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Table of Contents

Item 2.02 Results of Operation and Financial Condition

Item 9.01 Financial Statements and Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT 99.1

For Immediate Release

For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2265
Rex_Schuette@ucbi.com

UNITED COMMUNITY BANKS, INC. REPORTS
15% GAIN IN OPERATING EARNINGS
FOR THIRD QUARTER 2004

HIGHLIGHTS:

BLAIRSVILLE, GA, October 26, 2004 – United Community Banks, Inc. (Nasdaq: UCBI), Georgia’s third largest bank holding company, today announced record third quarter 2004 results that included a 15% rise in net operating income, a 10% gain in diluted operating earnings per share, and an 11% increase in total revenue from the third quarter last year.

For the quarter, net operating income rose to $12.0 million from $10.4 million a year earlier. Diluted operating earnings per share of $.32 increased $.03 from $.29 a year ago. Total revenue, on a taxable equivalent basis, was $50.1 million compared with $45.2 million for the third quarter of 2003. Also, on an operating basis, return on tangible equity was 19.41% compared with 19.94% a year ago and return on assets was 1.05% compared with 1.06% a year ago.

For the first nine months, net operating income was $34.2 million, up 19% from the same period a year ago. Diluted operating earnings per share of $.93 rose $.10, or 12%, from $.83 for the first nine months of 2003. Total revenue was $142.5 million, up $16.0 million, or 13%, from

$126.5 million a year ago. On an operating basis, return on tangible equity was 19.67%, up from 19.12% a year ago and return on assets was 1.07% compared with 1.06% a year ago.

Net operating income for the first nine months of 2004 and 2003 excludes pre-tax merger-related charges of $.5 million and $1.5 million, respectively. Merger-related charges in the first nine months of 2004 were due to the acquisition of 1st Community Bank completed on June 1, 2004. Charges in the first nine months of 2003 related to the acquisitions of First Georgia Bank completed on May 1, 2003, and First Central Bank completed on March 31, 2003. The merger-related charges for these acquisitions were for legal, investment advisor and other professional fees, as well as for the termination of equipment leases and conversion costs. Including those merger-related charges, reported net income for the first nine months of 2004 was $33.9 million or $.92 per diluted share and for 2003 was $27.9 million or $.80 per diluted share.

“Once again, our outstanding team of bankers delivered exceptional results,” said Jimmy Tallent, United Community Banks’ President and Chief Executive Officer. At September 30, 2004, total loans were $3.4 billion, up 15% from last year excluding acquisitions. “Loan demand remained strong across all our markets, providing significant growth opportunities. This core loan growth is part of our balanced growth strategy. That strategy is driven by strong internal growth, supplemented by focused expansion with the right people in new markets through de novo offices and selective acquisitions. Strong organic loan growth, accomplished with disciplined execution in a step-by-step process throughout the year without compromising credit quality, is essential to be a successful growth company.” Tallent added.

“For the first nine months, net operating income was up 19% and diluted operating earnings per share grew 12% over 2003. We again achieved our stated goals of sustained double-digit growth in operating earnings per share and a return on tangible equity above 18%,” Tallent said. “We are well on track to complete another outstanding year for 2004, with growth in operating earnings per share within our targeted range of 12% to 15%,” added Tallent.

Taxable equivalent net interest revenue of $42.2 million for the third quarter of 2004 rose $5.9 million, or 16%, from the same period a year ago. Recent acquisitions added approximately $1.7

million to net interest revenue, resulting in a core growth rate of 12%. Taxable equivalent net interest margin for the third quarter was 3.99% versus 3.97% a year ago. “Our core business growth remains strong. We have maintained a net interest margin near the 4% level for the past eight quarters and expect to remain at this level for the fourth quarter of 2004 and through 2005,” Tallent said. “Our balance sheet is somewhat asset sensitive, allowing us to benefit slightly from this rising interest rate environment.”

The third quarter provision for loan losses was $2.0 million, up $500 thousand from a year earlier and up $200 thousand from the second quarter of 2004. Net charge-offs to average loans were .12% for the third quarter, compared with .15% for the third quarter of 2003 and .10% for the second quarter of 2004. Non-performing assets totaled $10.5 million, up $2.5 million from a year ago, while loans increased $520 million over the same period. Non-performing assets as a percentage of total assets were .23% at September 30, 2004, compared with .19% at December 31, 2003 and .20% at September 30, 2003. “Our excellent credit quality continues to be one of the key drivers of our high performance and growth,” Tallent said. “It remains sound thanks to the tireless efforts of our exceptional bankers. And our proven strategy of securing loans with hard assets remains critical to our credit quality success.”

Fee revenue of $9.9 million for the third quarter was down $500 thousand from $10.4 million a year ago due to the decline in mortgage refinancing activities from record levels last year. Mortgage loan and related fees of $1.7 million were down $1.4 million from a year ago. “The decline in volume and revenue was anticipated,” stated Tallent. “Refinancing activities and related fee revenue declined from prior year levels with the rise in long-term interest rates late last year. We added new products and mortgage originators to offset some of the decline in revenue and so far the results have been positive,” Tallent added. “Additionally, we were able to grow fee revenue by successfully cross-selling other products and services. Service charges and fees on deposit accounts were $5.6 million, up $550 thousand with approximately $200 thousand due to acquisitions and the remainder coming from growth in transactions and new accounts resulting from our efforts to increase core deposits. Consulting fees of $1.4 million were up more than $300 thousand, or 31%, from a year ago.” Tallent commented.

“We are focused on growing core deposits and related fee revenue,” Tallent added. “Early in the first quarter of 2004, we began a company-wide initiative to increase our deposit base by engaging our loyal customer base in the process. Our community-banking style of providing the highest level of customer service has generated customer satisfaction scores exceeding 90%, well above the industry average of 75%. This has allowed us to leverage our ‘Refer a Friend’ core deposit program, along with other initiatives, to grow core deposits by $185 million in the first nine months of 2004 and adding over 29,000 new accounts.”

Operating expenses were $31.3 million, up $2.6 million, or 9%, from the third quarter of 2003. Nearly two-thirds of the increase was the result of operating expenses from new banking offices and a recently acquired bank that were not included in last year’s results. Salaries and employee benefit costs of $19.6 million increased $1.6 million, or 9%, with approximately $850 thousand of this increase resulting from these new offices and the acquisition. The balance was due to normal merit increases for staff that were partially offset by lower incentive compensation associated with the slowdown in mortgage refinancing activities. Communications and equipment expenses of $2.8 million increased $500 thousand, or 22%, due to acquisitions and investments in technology equipment to support business growth and enhance operating efficiency. Advertising and marketing expense of $1.1 million rose $350 thousand, reflecting the higher program costs of our initiative to raise core deposits. All other operating expense categories were held flat with a year ago, except for amortization of intangibles related to the recent acquisitions.

“We continue to diligently monitor and control operating expenses while growing our customer base and revenue,” Tallent said. “Total revenue for the quarter increased 11% while operating expenses rose 9%. This positive 2% operating leverage contributed to our 15% growth in net operating income for the third quarter. We were able to sustain our earnings momentum by carefully managing our expenses while at the same time growing revenue in other areas,” commented Tallent. “We are especially pleased with this performance in light of adding five de novo offices, increasing our provision for loan losses, and offsetting the decline in mortgage refinancing activities. Our operating efficiency ratio was 60.11% compared with 61.34% a year

ago. We are striving for a long-term efficiency ratio in the range of 58% to 60%, which we believe is reasonable given our service-oriented community banking model,” Tallent added.

“In the second quarter, United Community Banks completed its merger with 1st Community Bank located on the south side of metropolitan Atlanta in Fairburn, Georgia,” Tallent said. 1st Community Bank has assets of $190 million with five full-service banking offices in Peachtree City (Fayette County), Newnan (Coweta County), and Fairburn, Union City and Palmetto (south Fulton County). During the third quarter, United announced two mergers that will strengthen its position in the fast-growing Atlanta market. The first was Eagle National Bank, headquartered in Stockbridge. Eagle National Bank has assets of $64 million and operates two full-service banking offices in Stockbridge and McDonough, both in Henry County on the south-east side of metro Atlanta. The second was Liberty National Bancshares, Inc., the parent company of Liberty National Bank, headquartered in Conyers. Liberty has assets of $180 million and operates three full-service banking offices on the east side of metro Atlanta. Two of its offices are in Conyers and one is in Covington, located in Rockdale and Newton counties, respectively. The mergers with Eagle and Liberty are expected to be completed in the fourth quarter subject to shareholder and regulatory approval.

“We’re excited about our growth opportunities with 1st Community, Eagle and Liberty. This will allow us to further expand our franchise in these excellent markets within metropolitan Atlanta while we continue to serve our new customers with the same high level of customer service,” said Tallent. “Adding these new banks to our franchise will establish United Community Banks on the attractive east and south sides of Atlanta and will provide us with great opportunities to grow organically and add selective de novo banking offices. By the end of this year, we will operate 8 community banks with 27 offices and have assets totaling $1.4 billion in the metro Atlanta area,” Tallent added. “We’re becoming a growing factor in this major market, and we’re doing it using our balanced growth strategy and our community banking model. These three banks are the latest example of using strategic acquisitions as part of this strategy – one that has permitted us to achieve superior growth and performance while building shareholder value,” Tallent explained.

“Looking forward, we believe United Community Banks is on target to achieve operating earnings per share growth for 2004, as well as for 2005, within our long-term goal of 12% to 15%,” Tallent said. “For the balance of 2004 and next year, we anticipate core loan growth will continue in the range of 10% to 14% and that our net interest margin will remain near the 4% level. Our outlook is based on a continued, stable economic environment in our markets combined with maintaining strong credit quality. We are well positioned for additional increases in short-term interest rates and should benefit slightly if and when they occur. We remain committed to providing excellent customer service and delivering superior operating performance while maintaining solid credit quality and growing our franchise,” added Tallent. “In growing our franchise, we will continue to execute our balanced growth strategy – by focusing on strong internal growth within our existing markets while expanding in other high growth markets through selective de novo offices and mergers. This is the foundation for our growth and profitability that builds long-term shareholder value.”

Conference Call

United Community Banks will hold a conference call on Tuesday, October 26, 2004 at 11:00 a.m. ET to discuss the contents of this news release, as well as business highlights for the quarter and the financial outlook for the remainder of 2004 and next year. The telephone number for the conference call is (888) 266-1047. The conference call will also be available by web-cast within the Investor Relations section of the company’s web site.

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 $4.6 billion and operates 21 community banks with 78 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 in its markets. United Community Banks also offers the convenience of 24-hour access to its services through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq National Market under the symbol UCBI. Additional information may be found at the company’s web site, 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. annual report filed on Form 10-K with the Securities and Exchange Commission.

(Tables Follow)

UNITED COMMUNITY BANKS, INC.

UNITED COMMUNITY BANKS, INC.

Consolidated Statement of Income
For the Three and Nine Months Ended September 30,

UNITED COMMUNITY BANKS, INC.

Consolidated Balance Sheet
For the period ended