SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

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

United Community Banks, Inc.

(Exact name of registrant as specified in its charter)

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

63 Highway 515, P.O. Box 398
Blairsville, Georgia 30512
(Address of principal executive offices)

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

Not applicable
(Former name or former address, if changed since last report)

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

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

 

 

Item 2.02		Results of Operation and Financial Condition

		On January 24, 2006, United Community Banks, Inc. (the “Registrant”) issued a news release announcing its financial results for the fourth quarter ended December 31, 2005 (the “News Release”). The News Release, including financial schedules, is attached as Exhibit 99.1 to this report. In connection with issuing the News Release, on January 24, 2006 at 11:00 a.m. EST, the Registrant intends to hold a conference call/webcast to discuss the News Release.
		The News Release contains a description of the Registrant’s earnings excluding merger-related expenses (referred to as “Operating Earnings”, “Net Operating Income”, “Diluted Operating Earnings Per Share”) related to the June 1, 2004 acquisition of Fairbanco Holding Company, Inc., headquartered in Fairburn, Georgia; the November 1, 2004 acquisition of Eagle National Bank, headquartered in Stockbridge, Georgia; and the December 1, 2004 acquisition of Liberty National Bancshares, Inc., headquartered in Conyers, Georgia. Management believes that a presentation of the Registrant’s earnings excluding merger-related expenses as a financial measure provides useful information to investors because it provides information about the Registrant’s financial performance from its ongoing business operations. The merger-related expenses are principally related to equipment lease termination, legal and other professional fees and systems conversion costs.

Item 9.01		Financial Statements and Exhibits

	(a)		Financial statements: None
	(b)		Pro forma financial information: None
	(c)		Exhibits:

99.1

Press Release, dated January 24, 2006

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
12% GAIN IN DILUTED OPERATING EARNINGS PER SHARE
FOR FOURTH QUARTER 2005

HIGHLIGHTS:

•

Record Fourth Quarter Earnings       Diluted Operating Earnings Per Share of $.38 — Up 12%       Net Operating Income of $15.2 Million — Up 18%       Return on Tangible Equity of 18.20%

•

Strong Loan Demand, Rise in Net Interest Margin and Fee Revenue Drove Performance

BLAIRSVILLE, GA, January 24, 2006 — United Community Banks, Inc. (Nasdaq: UCBI), Georgia’s third largest bank holding company, today announced record financial results for the fourth quarter of 2005. Compared with the fourth quarter of 2004, the company achieved a 20% increase in total revenue, an 18% rise in net operating income and a 12% gain in diluted operating earnings per share.

For the fourth quarter of 2005, net operating income rose to $15.2 million compared with $12.9 million a year earlier. Diluted operating earnings per share increased to $.38 from $.34 a year ago. Total revenue, on a taxable equivalent basis, was $64.8 million compared with $54.1 million for the fourth quarter of 2004. Return on tangible equity was 18.20% and return on assets was 1.05%, compared with 19.96% and 1.07%, respectively, a year ago.

“Loan and deposit growth was strong across all markets,” said Jimmy Tallent, President and Chief Executive Officer of United Community Banks. “Total assets at year-end were $5.9 billion, a 15% increase from a year ago. Loans increased $144 million during the fourth quarter, or 14% on an annualized basis, and helped drive the increase in net interest revenue. Our net interest margin rose to 4.20%, up 15 basis points from a year ago and up three basis points from last quarter, as increasing short-term interest rates continued to positively affect our slightly asset-sensitive balance sheet. Fee revenue, excluding securities losses taken in the fourth quarter of 2005, was up 12%, reflecting increases in nearly every category.”

For the year, net operating income totaled $56.7 million, a 20% increase compared with $47.2 million for 2004. Diluted operating earnings per share of $1.43 increased 13% from $1.27 last year. Total revenue, on a taxable equivalent basis, was $245.4 million, up 25% from $196.5 million a year ago. Return on tangible equity was 18.99% and return on assets was 1.04%, compared with 19.74% and 1.07% a year ago, respectively. “Once again we met our performance goals of double-digit earnings per share growth and a return on tangible equity above 18% for the year,” Tallent said. “This year was exceptional. We took an opportunity to leverage our strong earnings performance by making strategic investments in the future growth of our company through a significant de novo expansion. We grew deposits faster than loans while expanding our margin. We raised additional capital through a very successful equity offering during the fourth quarter. And most importantly, this was all done while continuing to meet our primary financial goals,” added Tallent.

Net operating income excludes merger-related charges. In the fourth quarter of 2004, pre-tax merger charges of $406,000 were incurred related to the acquisitions of Eagle National Bank and Liberty National Bank. Including these merger-related charges, reported net income for the fourth quarter of 2004 was $12.6 million, diluted earnings per share was $.33 and return on equity was 14.15%. For the full year 2004, pre-tax merger-related charges were $870,000, which also included $464,000 related to the second quarter acquisition of 1^st Community Bank. For the year, reported net income was $46.6 million, diluted earnings per share was $1.25, and return on equity was 14.39%.

During the fourth quarter, United Community Banks completed the sale of 1,552,500 shares of common stock in a secondary offering that raised $40.5 million of capital. “This is a significant milestone and our first public equity offering,” stated Tallent. “We’re very pleased with the investor community’s positive response. This additional capital will allow us to continue to pursue and execute our successful balanced growth strategy.”

At December 31, 2005, total loans were $4.4 billion, up $663 million, or 18%, from a year ago. All of the loan growth for 2005 was organic, which included growth from a significant de novo expansion in Hall County, Georgia. “Loan demand continues to be strong across all markets, leading to excellent growth opportunities,” Tallent said. “Organic growth, with an uncompromising focus on sound credit quality, is at the core of our balanced growth strategy and is further supported by our focused geographic expansion. We find the right people and build around them, usually adding two to four de novo offices a year.” Tallent continued, “Earlier this year, we entered Gainesville by partnering with three local and highly respected banking executives to form United Community Bank — Hall County. Since opening for business in May, this team has added more than $245 million in loans and $130 million in deposits. We now have 78 staff and four banking offices, including the main office located in downtown Gainesville, and plan to open the fifth banking office by early 2006.”

“In the fourth quarter, we also opened a de novo banking office in Trion located in Chatooga County which complements our Summerville Bank. This followed the third quarter’s expansion of our Fairburn Bank where we opened de novo banking offices in Tyrone and Newnan Lakes located on the southside of metro Atlanta in Fayette and Coweta counties. It is a testimony to the success and strength of our existing franchise that we were able to absorb such a significant de novo undertaking and still deliver on our primary financial goals of consistent, sustainable double-digit growth in earnings per share,” Tallent stated.

“The fourth quarter was outstanding for deposit growth. We added $281 million of deposits, nearly doubling the level needed to fund our strong loan growth of $144 million,” Tallent said. “Our relentless focus on the highest level of customer service has generated customer satisfaction scores that continue to exceed 90%, well above the comparable industry average of

75%. This is invaluable in building deposits through customer referrals while also maintaining and growing long-term relationships with existing customers.”

For the fourth quarter, taxable equivalent net interest revenue of $56.9 million was $11.6 million higher, or 26%, than the fourth quarter of 2004. Acquisitions completed in late 2004 added approximately $1.8 million to net interest revenue leaving the core growth rate at 22%. Taxable equivalent net interest margin for the fourth quarter was 4.20% as compared with 4.05% a year ago and 4.17% for the third quarter of 2005. “Our balance sheet remains asset sensitive, which allowed us to benefit modestly from the rise in interest rates that produced a slight margin expansion throughout 2005,” Tallent said.

The fourth quarter provision for loan losses was $3.5 million, up $1.5 million from a year earlier and up $100,000 from the third quarter of 2005. Annualized net charge-offs to average loans were 16 basis points for the fourth quarter, compared with 13 basis points for the third quarter of 2005 and 13 basis points for the fourth quarter of 2004. At year-end, non-performing assets totaled $13.0 million compared with $13.6 million at the end of the third quarter of 2005 and $8.7 million a year ago. Non-performing assets as a percentage of total assets were 22 basis points at year-end, compared with 24 basis points at September 30, 2005 and 17 basis points at December 31, 2004. “During the fourth quarter, we resolved several non-performing assets, which slightly increased net charge-offs while lowering non-performing assets,” Tallent said. “Asset quality continues to compare favorably with peer banks and remains well within our tolerance levels. 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 $11.4 million reflected an increase of $616,000, or 6%, from $10.8 million for the fourth quarter of 2004. “Excluding securities losses in the fourth quarter of 2005, core fee revenue growth from a year ago was $1.3 million, or 12%, with steady growth achieved in nearly every category,” Tallent stated. “Service charges and fees on deposit accounts increased $970,000 to $6.6 million, primarily due to growth in transactions and new accounts resulting from core deposit program and the cross-selling of other products and services. Brokerage fees increased 85% to $789,000 due to strong market activity. Consulting fees of $1.7 million were

down slightly, due to the timing of work completed last year for the documentation and testing of internal controls in our risk management practice,” Tallent added.

Operating expenses of $40.5 million increased $6.8 million, or 20%, from the fourth quarter of 2004. Approximately $4.0 million of this increase related to operating expenses of two banks acquired in the fourth quarter of 2004 and de novo expansion in 2005. Salaries and employee benefit costs of $25.6 million increased $4.0 million, or 19%, from the fourth quarter of 2004 with $2.8 million resulting from acquisitions and de novo expansion. The balance was due to an increase in staff to support business growth and related hiring costs and higher commissions related to the increase in brokerage revenue. Communications and equipment expenses increased $683,000 to $3.6 million due to the acquisitions last year and further investments in technology equipment to support business growth. Advertising and marketing expense rose $463,000 to $2.0 million reflecting the cost of successful initiatives to raise core deposits and continued efforts to generate brand awareness in new markets. Occupancy expense increased $342,000 to $2.7 million reflecting the increase in cost to operate additional banking offices added through acquisitions and de novo expansion. Postage, printing and supplies expense increased $328,000 to $1.4 million reflecting the higher cost of office supplies and courier costs resulting from the growing franchise. The increase in other operating expense was due to acquisitions, losses incurred in the disposal of other real estate and business growth. “Our operating efficiency ratio of 58.80% for the quarter is within our long-term efficiency goal of 58% to 60%, reflecting the success of our recent expansion efforts and the continued strength of our existing franchise,” Tallent said.

On January 19, 2006, the Board of Directors declared a regular first-quarter 2006 cash dividend of $.08 per common share payable April 3, 2006, to shareholders of record as the close of business on March 15, 2006. “This represents an annual cash dividend of $.32 per share and an increase of $.04 per share, or 14%, over the dividends paid for 2005,” Tallent said. “This increase reflects our continued strong performance and commitment to deliver value to our shareholders.”

“Our outlook for 2006 is for operating earnings per share growth within our long-term goal of 12% to 15%, but at the lower end of the range due to the expected dilution related to the equity offering completed during the fourth quarter,” Tallent said. “We anticipate core loan growth will continue to be within our targeted range of 10% to 14%. Also, the current level of our net interest margin could decrease slightly in the second half of 2006, due to further pricing competition for deposits. Our outlook assumes a stable economic environment and continued strong credit quality.”

“We are committed to excellent customer service, superior operating performance and solid credit quality as we continue our efforts to build shareholder value through our balanced growth strategy of strong internal growth, complemented by selective de novo and merger expansion,” Tallent added.

Conference Call
United Community Banks will hold a conference call on Tuesday, January 24, 2006, 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 2006. The telephone number for the conference call is (866) 383-7998 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. As of December 31, 2005, United Community Banks had assets of $5.9 billion and operated 24 community banks with 90 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 National Market under the symbol UCBI. Additional information may be found at the company’s web site, 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. 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, 2005

																						Fourth
		2005																2004				Quarter				For the Twelve								YTD
(in thousands, except per share		Fourth				Third				Second				First				Fourth				2005-2004				Months Ended								2005-2004
data; taxable equivalent)		Quarter				Quarter				Quarter				Quarter				Quarter				Change				2005				2004				Change
INCOME SUMMARY
Interest revenue		$	95,465			$	89,003			$	80,701			$	73,649			$	66,761							$	338,818			$	239,386
Interest expense			38,576				34,033				29,450				25,367				21,448								127,426				74,794
Net interest revenue			56,889				54,970				51,251				48,282				45,313				26	%			211,392				164,592				28	%
Provision for loan losses			3,500				3,400				2,800				2,400				2,000								12,100				7,600
Fee revenue			11,373				12,396				12,179				10,200				10,757				6				46,148				39,539				17
Total revenue			64,762				63,966				60,630				56,082				54,070				20				245,440				196,531				25
Operating expenses (1)			40,520				41,294				38,808				34,779				33,733				20				155,401				122,568				27
Income before taxes			24,242				22,672				21,822				21,303				20,337				19				90,039				73,963				22
Income taxes			9,012				8,374				8,049				7,862				7,427								33,297				26,807
Net operating income			15,230				14,298				13,773				13,441				12,910				18				56,742				47,156				20
Merger-related charges, net of tax			—				—				—				—				261								—				565
Net income		$	15,230			$	14,298			$	13,773			$	13,441			$	12,649				20			$	56,742			$	46,591				22
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic		$	.39			$	.37			$	.36			$	.35			$	.35				11			$	1.47			$	1.31				12
Diluted			.38				.36				.35				.34				.34				12				1.43				1.27				13
Return on tangible equity (2)(3)(4)			18.20	%			18.90	%			19.21	%			19.86	%			19.96	%							18.99	%			19.74	%
Return on assets (4)			1.05				1.01				1.03				1.06				1.07								1.04				1.07
Efficiency ratio			58.80				61.16				61.18				59.47				60.20								60.15				60.05
Dividend payout ratio			17.95				18.92				19.44				20.00				17.14								19.05				18.32
GAAP PERFORMANCE
Per common share:
Basic earnings		$	.39			$	.37			$	.36			$	.35			$	.34				15			$	1.47			$	1.29				14
Diluted earnings			.38				.36				.35				.34				.33				15				1.43				1.25				14
Cash dividends declared			.07				.07				.07				.07				.06				17				.28				.24				17
Book value			11.80				11.04				10.86				10.42				10.39				14				11.80				10.39				14
Tangible book value (3)			8.94				8.05				7.85				7.40				7.34				22				8.94				7.34				22
Key performance ratios:
Return on equity (2)(4)			13.30	%			13.42	%			13.46	%			13.68	%			14.15	%							13.46	%			14.39	%
Return on assets (4)			1.05				1.01				1.03				1.06				1.05								1.04				1.05
Net interest margin (4)			4.20				4.17				4.12				4.05				4.05								4.14				4.00
Dividend payout ratio			17.95				18.92				19.44				20.00				17.65								19.05				18.60
Equity to assets			7.69				7.46				7.65				7.71				7.54								7.63				7.45
Tangible equity to assets (3)			5.82				5.53				5.62				5.58				5.75								5.64				5.78
ASSET QUALITY
Allowance for loan losses		$	53,595			$	51,888			$	49,873			$	48,453			$	47,196							$	53,595			$	47,196
Non-performing assets			12,995				13,565				13,495				13,676				8,725								12,995				8,725
Net charge-offs			1,793				1,385				1,380				1,143				1,183								5,701				3,617
Allowance for loan losses to loans			1.22	%			1.22	%			1.22	%			1.25	%			1.26	%							1.22	%			1.26	%
Non-performing assets to total assets			.22				.24				.24				.26				.17								.22				.17
Net charge-offs to average loans (4)			.16				.13				.14				.12				.13								.14				.11
AVERAGE BALANCES
Loans		$	4,328,613			$	4,169,170			$	3,942,077			$	3,797,479			$	3,572,824				21			$	4,061,091			$	3,322,916				22
Investment securities			1,004,966				1,008,687				996,096				946,194				805,766				25				989,201				734,577				35
Earning assets			5,383,096				5,239,195				4,986,339				4,819,961				4,456,403				21				5,109,053				4,119,327				24
Total assets			5,769,632				5,608,158				5,338,398				5,164,464				4,781,018				21				5,472,200				4,416,835				24
Deposits			4,354,275				4,078,437				3,853,884				3,717,916				3,500,842				24				4,003,083				3,247,612				23
Stockholders’ equity			443,746				418,459				408,352				398,164				360,668				23				417,309				329,225				27
Common shares outstanding:
Basic			39,084				38,345				38,270				38,198				37,056								38,477				36,071
Diluted			40,379				39,670				39,436				39,388				38,329								39,721				37,273
AT PERIOD END
Loans		$	4,398,286			$	4,254,051			$	4,072,811			$	3,877,575			$	3,734,905				18			$	4,398,286			$	3,734,905				18
Investment securities			990,687				945,922				990,500				928,328				879,978				13				990,687				879,978				13
Earning assets			5,470,718				5,302,532				5,161,067				4,907,743				4,738,389				15				5,470,718				4,738,389				15
Total assets			5,865,756				5,709,666				5,540,242				5,265,771				5,087,702				15				5,865,756				5,087,702				15
Deposits			4,477,600				4,196,369				3,959,226				3,780,521				3,680,516				22				4,477,600				3,680,516				22
Stockholders’ equity			472,686				424,000				415,994				398,886				397,088				19				472,686				397,088				19
Common shares outstanding			40,020				38,383				38,283				38,249				38,168								40,020				38,168

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Years Ended December 31,

(in thousands, except per share data;																										5 Year
taxable equivalent)		2005				2004				2003				2002				2001				2000				CAGR (4)
INCOME SUMMARY
Interest revenue		$	338,818			$	239,386			$	209,338			$	195,932			$	210,036			$	213,115
Interest expense			127,426				74,794				70,600				76,357				100,874				116,591
Net interest revenue			211,392				164,592				138,738				119,575				109,162				96,524				17	%
Provision for loan losses			12,100				7,600				6,300				6,900				6,000				7,264
Fee revenue			46,148				39,539				38,184				30,734				25,267				18,867				20
Total revenue			245,440				196,531				170,622				143,409				128,429				108,127				18
Operating expenses (1)			155,401				122,568				107,900				91,124				83,906				74,043				16
Income before taxes			90,039				73,963				62,722				52,285				44,523				34,084				21
Income taxes			33,297				26,807				23,247				19,505				16,208				12,337
Net operating income			56,742				47,156				39,475				32,780				28,315				21,747				21
Merger-related charges, net of tax			—				565				1,357				—				1,084				7,230
Net income		$	56,742			$	46,591			$	38,118			$	32,780			$	27,231			$	14,517				31
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic		$	1.47			$	1.31			$	1.15			$	1.02			$	.89			$	.70				16
Diluted			1.43				1.27				1.12				.99				.87				.69				16
Return on tangible equity (2)(3)			18.99	%			19.74	%			19.24	%			17.88	%			18.19	%			16.74	%
Return on assets			1.04				1.07				1.06				1.11				1.10				.89
Efficiency ratio			60.15				60.05				60.89				60.66				62.52				64.15
Dividend payout ratio			19.05				18.32				17.39				16.34				14.98				14.29
GAAP PERFORMANCE
Per common share:
Basic earnings		$	1.47			$	1.29			$	1.11			$	1.02			$	.86			$	.47				26
Diluted earnings			1.43				1.25				1.08				.99				.84				.46				25
Cash dividends declared (rounded)			.28				.24				.20				.17				.13				.10				23
Book value			11.80				10.39				8.47				6.89				5.98				4.93				19
Tangible book value (3)			8.94				7.34				6.52				6.49				5.40				4.49				15
Key performance ratios:
Return on equity (2)			13.46	%			14.39	%			14.79	%			16.54	%			16.08	%			10.04	%
Return on assets			1.04				1.05				1.02				1.11				1.05				.59
Net interest margin			4.14				4.00				3.99				4.33				4.51				4.16
Dividend payout ratio			19.05				18.60				18.02				16.34				15.50				21.28
Equity to assets			7.63				7.45				7.21				7.01				6.81				5.58
Tangible equity to assets (3)			5.64				5.78				6.02				6.60				6.18				5.49
ASSET QUALITY
Allowance for loan losses		$	53,595			$	47,196			$	38,655			$	30,914			$	27,124			$	24,698
Non-performing assets			12,995				8,725				7,589				8,019				9,670				6,716
Net charge-offs			5,701				3,617				4,097				3,111				4,578				2,976
Allowance for loan losses to loans			1.22	%			1.26	%			1.28	%			1.30	%			1.35	%			1.38	%
Non-performing assets to total assets			.22				.17				.19				.25				.35				.27
Net charge-offs to average loans			.14				.11				.15				.14				.25				.18
AVERAGE BALANCES
Loans		$	4,061,091			$	3,322,916			$	2,753,451			$	2,239,875			$	1,854,968			$	1,683,403				19
Investment securities			989,201				734,577				667,211				464,468				489,332				586,222				11
Earning assets			5,109,053				4,119,327				3,476,030				2,761,265				2,419,080				2,319,389				17
Total assets			5,472,200				4,416,835				3,721,284				2,959,295				2,585,290				2,453,250				17
Deposits			4,003,084				3,247,612				2,743,087				2,311,717				2,010,105				1,941,496				16
Stockholders’ equity			417,309				329,225				268,446				207,312				176,144				136,810				25
Common shares outstanding:
Basic			38,477				36,071				34,132				32,062				31,691				30,900
Diluted			39,721				37,273				35,252				33,241				32,624				31,791
AT PERIOD END
Loans		$	4,398,286			$	3,734,905			$	3,015,997			$	2,381,798			$	2,007,990			$	1,792,055				20
Investment securities			990,687				879,978				659,891				559,390				470,176				508,266				14
Earning assets			5,470,718				4,738,389				3,796,332				3,029,409				2,554,530				2,352,475				18
Total assets			5,865,756				5,087,702				4,068,834				3,211,344				2,749,257				2,528,879				18
Deposits			4,477,600				3,680,516				2,857,449				2,385,239				2,116,499				1,995,865				18
Stockholders’ equity			472,686				397,088				299,373				221,579				194,665				158,388				24
Common shares outstanding			40,020				38,168				35,289				31,895				32,266				31,542

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income
For the Three and Twelve Months Ended December 31,

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
(in thousands, except per share data)		2005				2004				2005				2004
Interest revenue:
Loans, including fees		$	83,607			$	57,800			$	293,990			$	207,571
Investment securities:
Taxable			10,651				7,769				40,195				27,431
Tax exempt			513				536				2,086				2,161
Federal funds sold and deposits in banks			249				260				911				618
Total interest revenue			95,020				66,365				337,182				237,781
Interest expense:
Deposits:
Demand			6,101				2,689				19,194				8,554
Savings			226				129				791				403
Time			21,288				11,524				66,968				41,202
Total deposit interest expense			27,615				14,342				86,953				50,159
Federal funds purchased, repurchase agreements, & other short-term borrowings			1,516				727				5,101				2,119
Federal Home Loan Bank advances			7,230				4,264				26,633				14,237
Long-term Debt			2,215				2,115				8,739				8,279
Total interest expense			38,576				21,448				127,426				74,794
Net interest revenue			56,444				44,917				209,756				162,987
Provision for loan losses			3,500				2,000				12,100				7,600
Net interest revenue after provision for loan losses			52,944				42,917				197,656				155,387
Fee revenue:
Service charges and fees			6,616				5,646				25,137				21,540
Mortgage loan and other related fees			1,738				1,712				7,330				6,324
Consulting fees			1,665				1,794				6,609				5,749
Brokerage fees			789				427				2,570				2,027
Securities (losses) gains, net			(654	)			34				(809	)			428
Loss on prepayments of borrowings			—				—				—				(391	)
Other			1,219				1,144				5,311				3,862
Total fee revenue			11,373				10,757				46,148				39,539
Total revenue			64,317				53,674				243,804				194,926
Operating expenses:
Salaries and employee benefits			25,604				21,571				99,447				77,995
Communications and equipment			3,576				2,893				13,157				10,945
Occupancy			2,706				2,364				10,835				9,271
Advertising and public relations			1,988				1,525				6,733				4,403
Postage, printing and supplies			1,355				1,027				5,501				4,451
Professional fees			1,023				1,057				4,306				3,724
Amortization of intangibles			503				466				2,012				1,674
Merger-related charges			—				406				—				870
Other			3,765				2,830				13,410				10,105
Total operating expenses			40,520				34,139				155,401				123,438
Income before income taxes			23,797				19,535				88,403				71,488
Income taxes			8,567				6,886				31,661				24,897
Net income		$	15,230			$	12,649			$	56,742			$	46,591
Net income available to common stockholders		$	15,225			$	12,649			$	56,719			$	46,582
Earnings per common share:
Basic		$	.39			$	.34			$	1.47			$	1.29
Diluted		$	.38				.33			$	1.43				1.25
Weighted average common shares outstanding (in thousands):
Basic			39,084				37,056				38,477				36,071
Diluted			40,379				38,329				39,721				37,273

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

		December 31,				December 31,
(in thousands, except per share data)		2005				2004
ASSETS
Cash and due from banks		$	121,963			$	99,742
Interest-bearing deposits in banks			20,607				35,098
Cash and cash equivalents			142,570				134,840
Securities available for sale			990,687				879,978
Mortgage loans held for sale			22,335				37,094
Loans, net of unearned income			4,398,286				3,734,905
Less — allowance for loan losses			53,595				47,196
Loans, net			4,344,691				3,687,709
Premises and equipment, net			112,887				103,679
Accrued interest receivable			37,197				27,923
Intangible assets			118,651				121,207
Other assets			96,738				95,272
Total assets		$	5,865,756			$	5,087,702
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand		$	602,525			$	532,879
Interest-bearing demand			1,264,947				1,055,192
Savings			175,453				171,898
Time			2,434,675				1,920,547
Total deposits			4,477,600				3,680,516
Federal funds purchased, repurchase agreements, & other short-term borrowings			122,881				132,931
Federal Home Loan Bank advances			635,616				737,947
Long-term debt			111,869				111,869
Accrued expenses and other liabilities			45,104				27,351
Total liabilities			5,393,070				4,690,614
Stockholders’ equity:
Preferred stock, $1 par value; $10 stated value; 10,000,000 shares authorized; 32,200 and 44,800 shares issued and outstanding in 2005 and 2004, respectively			322				448
Common stock, $1 par value; 100,000,000 shares authorized; 40,019,853 and 38,407,874 shares issued in 2005 and 2004, respectively			40,020				38,408
Common stock issuable; 9,948 shares in 2005			271				—
Capital surplus			193,355				155,076
Retained earnings			250,563				204,709
Treasury stock; 240,346 shares in 2004, at cost			—				(4,413	)
Accumulated other comprehensive (loss) income			(11,845	)			2,860
Total stockholders’ equity			472,686				397,088
Total liabilities and stockholders’ equity		$	5,865,756			$	5,087,702