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):
January 25, 2005

United Community Banks, Inc.

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))

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
17% GAIN IN DILUTED OPERATING EARNINGS PER SHARE
FOR FOURTH QUARTER 2004

HIGHLIGHTS:

BLAIRSVILLE, GA, January 25, 2005 – United Community Banks, Inc. (Nasdaq: UCBI), Georgia’s third largest bank holding company, today announced record fourth quarter 2004 results that included a 22% rise in net operating income, a 17% gain in diluted operating earnings per share and a 23% increase in total revenue from the fourth quarter of 2003.

For the quarter, net operating income rose to $12.9 million from $10.6 million a year earlier. Diluted operating earnings per share of $.34 increased $.05 from $.29 a year ago. Total revenue, on a taxable equivalent basis, was $54.1 million compared with $44.1 million for the fourth quarter of 2003. Also, on an operating basis, return on tangible equity was 19.96% compared with 19.72% a year ago and return on assets was 1.07% compared with 1.06% a year ago.

For the year, net operating income was $47.2 million, up $7.7 million, or 19% from $39.5 million a year ago. Diluted operating earnings per share of $1.27 rose $.15, or 13%, from $1.12 for 2003. Total revenue was $196.5 million, up $25.9 million, or 15%, from $170.6 million a year ago. On an operating basis, return on tangible equity was 19.74%, up from 19.24% a year ago and return on assets was 1.07% compared with 1.06% a year ago.

Net operating income excludes pre-tax merger-related charges. For the fourth quarters of 2004 and 2003, merger-related charges were $406 thousand and $580 thousand, respectively, and for the full years of 2004 and 2003 were $870 thousand and $2.1 million, respectively. Merger-related charges in 2004 resulted from the acquisitions of Liberty National Bank completed on December 1, 2004,Eagle National Bank completed on November 1, 2004 and 1^st Community Bank completed on June 1, 2004. Merger-related charges in 2003 were incurred in connection with the acquisitions of three branch locations in western North Carolina during the fourth quarter of 2003, First Georgia Bank on May 1, 2003 and First Central Bank on March 31, 2003. The merger-related charges for both years were primarily for legal, investment advisor and other professional fees, as well as for the termination of equipment leases and conversion costs related to the acquisitions. Including these merger-related charges, reported net income for the fourth quarters of 2004 and 2003 was $12.6 million and $10.2 million, respectively, and for the full years of 2004 and 2003 was $46.6 million and $38.1 million, respectively. Reported diluted earnings per share for the fourth quarters of 2004 and 2003 was $.33 and $.28, respectively, and for the full years of 2004 and 2003 was $1.25 and $1.08, respectively. Also, reported return on equity for the fourth quarters of 2004 and 2003 was 14.15% and 14.19%, respectively, and for the full year was 14.39% and 14.79%, respectively.

“In addition to our solid earnings performance for the fourth quarter and year, our Company achieved two very significant milestones,” said Jimmy Tallent, United Community Banks’ President and Chief Executive Officer. “At the end of 2004, total assets exceeded $5 billion and the value of our company surpassed $1 billion in market value for our shareholders. Both are significant accomplishments for our company and further affirmation that our balanced growth strategy has been successful in delivering consistent financial performance. Over the past ten

years, our compounded annual growth rate for total assets was 22% with about two-thirds of that growth generated internally, excluding the direct effects of acquisitions. In March 2002, we listed on the Nasdaq National Market with a market capitalization of $417 million. At year-end, we were above the one billion mark, while still providing the same level of customer service we did ten years ago. We are very proud of both of these accomplishments,” Tallent emphasized.

For the full year 2004, net operating income rose 19% and diluted operating earnings per share grew 13% 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 ended 2004 with strong earnings momentum that should carry us into 2005 and allow us to continue to achieve growth in operating earnings per share within our targeted range of 12% to 15%,” added Tallent.

At December 31, 2004, total loans were $3.7 billion, up $719 million, or 24% from last year-end and, up $433 million, or 14%, on a core basis when loans added by acquisitions are excluded. “Loan demand remains strong across all our markets, providing us with significant growth opportunities,” Tallent said. “Core loan growth is a key element of our balanced growth strategy. That strategy is driven by strong internal growth, supplemented by focused expansion with the right people in existing and 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 for a successful growth company.”

Taxable equivalent net interest revenue of $45.3 million for the fourth quarter of 2004 rose $8.5 million, or 23%, from the same period a year ago. Recent acquisitions added approximately $2.6 million to net interest revenue, resulting in a core growth rate of 16%. Taxable equivalent net interest margin for the fourth quarter was 4.05% as compared to 3.96% a year ago and 3.99% last quarter. “We have maintained a net interest margin near the 4% level for the past nine quarters and expect to remain at or slightly above that level through 2005,” Tallent said. “Our balance sheet is asset sensitive, allowing us to benefit slightly from a rising interest rate environment.”

The fourth quarter provision for loan losses was $2.0 million, up $200 thousand from a year earlier and level with the third quarter of 2004. Net charge-offs to average loans were 13 basis points for the fourth quarter, compared with 12 basis points for the fourth quarter of 2003 and 12 basis points for the third quarter of 2004. At year end, non-performing assets totaled $8.7 million, up $1.1 million from last year-end and down $1.8 million from the third quarter of 2004. Non-performing assets as a percentage of total assets were 17 basis points at year end, compared with 19 basis points at December 31, 2003 and 23 basis points at September 30, 2004. “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 $10.8 million for the fourth quarter of 2004 was up $1.7 million, or 18%, from $9.1 million a year ago primarily due to growth in service charges and fees on deposit accounts and higher consulting fees. “We were able to increase fee revenue by successfully growing core deposits through our core deposit program while cross-selling other products and services and adding new consulting services,” Tallent explained. “Service charges and fees on deposit accounts were $5.6 million, up $628 thousand primarily due to the growth in transactions and new accounts resulting from our efforts to increase core deposits. Consulting fees of $1.8 million were up $761 thousand, or 74%, due to developing new business practices for risk management and financial services as well as strong growth in our existing consulting services.”

“We remain 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 core deposits by engaging our loyal customers 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%. During 2004, this has allowed us to leverage our ‘Refer a Friend’ core deposit program, along with other initiatives, to add over 38,000 new accounts and grow core deposits by $175 million.”

Operating expenses were $33.7 million, up $6.2 million, or 22% from the fourth quarter of 2003. Nearly $2.1 million of this increase was related to the operating expenses of the three banks that were not included in last year’s results. Salaries and employee benefit costs of $21.6 million increased $4.2 million, or 24%, with approximately $2.0 million of this increase resulting from acquisitions and de novo activities and temporary personnel to support growth in consulting services. The balance was due to an increase in staff to support business growth, merit increases for staff and other year-end adjustments. Communications and equipment expenses of $2.9 million increased $606 thousand, or 26%, due to the acquisitions and investments in technology equipment to support business growth and enhance operating efficiency. Advertising and marketing expense of $1.5 million rose $896 thousand, reflecting the higher program costs of our initiatives to raise core deposits. Occupancy expense of $2.4 million increased $221 thousand reflecting the higher costs of adding 11 banking offices through acquisitions and de novo activities. Professional fees of $1.1 million were up $154 thousand partially due to accounting and consulting fees incurred in connection with documenting and testing of internal controls. All other operating expense categories were held flat with a year ago, except for amortization of intangibles related to the recent acquisitions. “Our operating efficiency ratio was slightly above 60% for the quarter and the year, within the range of our long-term efficiency goal of 58% to 60%. We believe this goal is reasonable given our service-oriented community banking model,” Tallent added.

Other Items

During the fourth quarter, United Community Banks completed two mergers. The first merger was with Eagle National Bank, headquartered in Stockbridge, Georgia on the south side of metropolitan Atlanta. “With assets of $70 million and two excellent full-service banking offices located in the cities of Stockbridge and McDonough in Henry County, Eagle National Bank adds key markets to our metropolitan presence on the south side of Atlanta,” Tallent said. “Henry County was the fourth fastest growing county in the United States during the 1990’s per the U.S. Census Bureau and that growth is expected to continue, making this a strategically important acquisition. I am extremely pleased to welcome Eagle National Bank to the United family.”

The second merger was with Liberty National Bancshares, Inc., parent company of Liberty National Bank, headquartered in Conyers, Georgia on the east side of metropolitan Atlanta. “Liberty National Bank adds $190 million in assets, a strong management team, and two full-service banking offices located in the cities of Conyers in Rockdale County and Covington in Newton County, further enhancing our presence in the metropolitan Atlanta market,” said Tallent. “Both of these mergers provide excellent opportunities to partner with outstanding bankers in some of the fastest growing markets in the country.”

“During the second quarter 2004, we completed the merger with 1^st Community Bank located on the south side of metropolitan Atlanta in Fairburn, Georgia,” Tallent said. 1^st Community Bank had assets of $190 million with five full-service banking offices in Peachtree City which is in Fayette County, Newnan in Coweta County, and Fairburn, Union City and Palmetto in south Fulton County.

“We’re excited about our growth opportunities with 1^st 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 establishes United Community Banks on the attractive east and south sides of Atlanta and provides us with great opportunities to grow organically and add selective de novo banking offices.”

“We now operate eight community banks with 27 offices and assets totaling $1.4 billion in the metro Atlanta area,” Tallent added. “With over a quarter of our total assets in metro Atlanta, we’re becoming more of a significant factor in this major metro market. And, we’re doing it by continuing to execute our balanced growth strategy and our community banking model. These three banks are the latest examples of using strategic acquisitions as part of this strategy – one that has permitted us to achieve superior growth and performance while building shareholder value.”

On January 20, 2005, the Board of Directors declared a regular first-quarter 2005 cash dividend of $.07 per common share, payable April 1, 2005, to shareholders of record as of the close of business on March 15, 2005. “This represents an annual cash dividend of $.28 per share and an

increase of $.04 per share, or 17%, over the dividends paid for 2004,” Tallent said. “This increase reflects our continued strong performance and commitment to deliver value to our shareholders.”

“Looking forward to 2005, we believe United Community Banks is on target to achieve operating earnings per share growth within our long-term goal of 12% to 15%,” Tallent said. “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 superior performance that builds long-term shareholder value.”

Conference Call

United Community Banks will hold a conference call on Tuesday, January 25, 2005 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 next year. The telephone number for the conference call is (800) 901-5213 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.

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 $5.1 billion and operates 23 community banks with 83 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.
SELECTED FINANCIAL INFORMATION
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2004

1

UNITED COMMUNITY BANKS, INC.
SELECTED FINANCIAL INFORMATION
FOR THE YEARS ENDED DECEMBER 31,

2

UNITED COMMUNITY BANKS, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31,

3

UNITED COMMUNITY BANKS, INC.
CONSOLIDATED BALANCE SHEET
FOR THE PERIOD ENDED

4