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		(Commission File Number)		(IRS Employer
incorporation)				Identification No.)

63 Highway 515, P.O. Box 398

(Address of principal executive offices)

Registrant’s telephone number, including area code:

(706) 781-2265

(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 23, 2007, United Community Banks, Inc. (the “Registrant”) issued a news release announcing its financial results for the fourth quarter ended December 31, 2006 (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 23, 2007 at 11:00 a.m. EST, the Registrant intends to hold a conference call/webcast to discuss the News Release.

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 23, 2007

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.

		/s/ Rex S. Schuette
		Rex S. Schuette
January 23, 2007		Executive Vice President and Chief Financial Officer

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
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

BLAIRSVILLE, GA, January 23, 2007 – 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 100^th 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 25^th

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 26^th 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.

(Tables Follow)

UNITED COMMUNITY BANKS, INC.
Selected Financial Information

																						Fourth
		2006																2005				Quarter				For the Twelve								YTD
(in thousands, except per share		Fourth				Third				Second				First				Fourth				2006-2005				Months Ended								2006-2005
data; taxable equivalent)		Quarter				Quarter				Quarter				Quarter				Quarter				Change				2006				2005				Change
																										(unaudited)
INCOME SUMMARY
Interest revenue		$	123,463			$	116,304			$	107,890			$	99,038			$	91,997							$	446,695			$	324,225
Interest expense			60,912				55,431				49,407				43,065				38,576								208,815				127,426
Net interest revenue			62,551				60,873				58,483				55,973				53,421				17	%			237,880				196,799				21	%
Provision for loan losses			3,700				3,700				3,700				3,500				3,500								14,600				12,100
Fee revenue			13,215				12,146				11,976				11,758				11,373				16				49,095				46,148				6
Total revenue			72,066				69,319				66,759				64,231				61,294				18				272,375				230,847				18
Operating expenses			42,521				41,441				39,645				38,463				37,052				15				162,070				140,808				15
Income before taxes			29,545				27,878				27,114				25,768				24,242				22				110,305				90,039				23
Income taxes			11,111				10,465				10,185				9,729				9,012								41,490				33,297
Net income		$	18,434			$	17,413			$	16,929			$	16,039			$	15,230				21			$	68,815			$	56,742				21
PERFORMANCE MEASURES
Per common share:
Basic earnings		$	.45			$	.43			$	.42			$	.40			$	.39				15			$	1.70			$	1.47				16
Diluted earnings			.44				.42				.41				.39				.38				16				1.66				1.43				16
Cash dividends declared			.08				.08				.08				.08				.07				14				.32				.28				14
Book value			14.37				13.07				12.34				12.09				11.80				22				14.37				11.80				22
Tangible book value (2)			10.57				10.16				9.50				9.25				8.94				18				10.57				8.94				18
Key performance ratios:
Return on tangible equity (1)(2)(3)			17.49	%			17.29	%			17.68	%			17.66	%			18.20	%							17.52	%			18.99	%
Return on equity (1)(3)			13.26				13.22				13.41				13.25				13.30								13.28				13.46
Return on assets (3)			1.10				1.09				1.10				1.09				1.05								1.09				1.04
Net interest margin (3)			3.99				4.07				4.07				4.06				3.94								4.05				3.85
Efficiency ratio			55.93				56.46				56.27				56.79				56.61								56.35				57.77
Dividend payout ratio			17.78				18.60				19.05				20.00				17.95								18.82				19.05
Equity to assets			8.21				8.04				7.95				8.04				7.69								8.06				7.63
Tangible equity to assets (2)			6.46				6.35				6.22				6.24				5.82								6.32				5.64
ASSET QUALITY
Allowance for loan losses		$	66,566			$	60,901			$	58,508			$	55,850			$	53,595							$	66,566			$	53,595
Non-performing assets			13,654				9,347				8,805				8,367				12,995								13,654				12,995
Net charge-offs			1,930				1,307				1,042				1,245				1,793								5,524				5,701
Allowance for loan losses to loans			1.24	%			1.23	%			1.22	%			1.22	%			1.22	%							1.24	%			1.22	%
Non-performing assets to total assets			.19				.14				.14				.14				.22								.19				.22
Net charge-offs to average loans (3)			.15				.11				.09				.11				.16								.12				.14
AVERAGE BALANCES
Loans		$	5,134,721			$	4,865,886			$	4,690,196			$	4,505,494			$	4,328,613				19			$	4,800,981			$	4,061,091				18
Investment securities			1,059,125				1,029,981				1,039,707				1,038,683				1,004,966				5				1,041,897				989,201				5
Earning assets			6,225,943				5,942,710				5,758,697				5,574,712				5,383,096				16				5,877,483				5,109,053				15
Total assets			6,669,950				6,350,205				6,159,152				5,960,801				5,769,632				16				6,287,148				5,472,200				15
Deposits			5,517,696				5,085,168				4,842,389				4,613,810				4,354,275				27				5,017,435				4,003,084				25
Shareholders’ equity			547,419				510,791				489,821				478,960				443,746				23				506,946				417,309				21
Common shares outstanding:
Basic			41,096				40,223				40,156				40,088				39,084								40,393				38,477
Diluted			42,311				41,460				41,328				41,190				40,379								41,575				39,721
AT PERIOD END
Loans		$	5,376,538			$	4,965,365			$	4,810,277			$	4,584,155			$	4,398,286				22			$	5,376,538			$	4,398,286				22
Investment securities			1,107,153				980,273				974,524				983,846				990,687				12				1,107,153				990,687				12
Earning assets			6,565,730				6,012,987				5,862,614				5,633,381				5,470,718				20				6,565,730				5,470,718				20
Total assets			7,101,249				6,455,290				6,331,136				6,070,596				5,865,756				21				7,101,249				5,865,756				21
Deposits			5,772,886				5,309,219				4,976,650				4,748,438				4,477,600				29				5,772,886				4,477,600				29
Shareholders’ equity			616,767				526,734				496,297				485,414				472,686				30				616,767				472,686				30
Common shares outstanding			42,891				40,269				40,179				40,119				40,020								42,891				40,020

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

(in thousands, except per share data;																						5 Year
taxable equivalent)		2006				2005				2004				2003				2002				CAGR (4)
			(unaudited)
INCOME SUMMARY
Interest revenue		$	446,695			$	324,225			$	227,792			$	198,689			$	185,498
Interest expense			208,815				127,426				74,794				70,600				76,357
Net interest revenue			237,880				196,799				152,998				128,089				109,141				19	%
Provision for loan losses			14,600				12,100				7,600				6,300				6,900
Fee revenue			49,095				46,148				39,539				38,184				30,734				14
Total revenue			272,375				230,847				184,937				159,973				132,975				18
Operating expenses (1)			162,070				140,808				110,974				97,251				80,690				16
Income before taxes			110,305				90,039				73,963				62,722				52,285				20
Income taxes			41,490				33,297				26,807				23,247				19,505
Net operating income			68,815				56,742				47,156				39,475				32,780				19
Merger-related charges, net of tax			—				—				565				1,357				—
Net income		$	68,815			$	56,742			$	46,591			$	38,118			$	32,780				20
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic		$	1.70			$	1.47			$	1.31			$	1.15			$	1.02				14
Diluted			1.66				1.43				1.27				1.12				.99				14
Return on tangible equity (2)(3)			17.52	%			18.99	%			19.74	%			19.24	%			17.88	%
Return on assets			1.09				1.04				1.07				1.06				1.11
Efficiency ratio			56.35				57.77				57.65				58.39				57.72
Dividend payout ratio			18.82				19.05				18.32				17.39				16.34
GAAP PERFORMANCE
Per common share:
Basic earnings		$	1.70			$	1.47			$	1.29			$	1.11			$	1.02				15
Diluted earnings			1.66				1.43				1.25				1.08				.99				15
Cash dividends declared (rounded)			.32				.28				.24				.20				.17				19
Book value			14.37				11.80				10.39				8.47				6.89				19
Tangible book value (3)			10.57				8.94				7.34				6.52				6.49				14
Key performance ratios:
Return on equity (2)			13.28	%			13.46	%			14.39	%			14.79	%			16.54	%
Return on assets			1.09				1.04				1.05				1.02				1.11
Net interest margin			4.05				3.85				3.71				3.68				3.95
Dividend payout ratio			18.82				19.05				18.60				18.02				16.34
Equity to assets			8.06				7.63				7.45				7.21				7.01
Tangible equity to assets (3)			6.32				5.64				5.78				6.02				6.60
ASSET QUALITY
Allowance for loan losses		$	66,566			$	53,595			$	47,196			$	38,655			$	30,914
Non-performing assets			13,654				12,995				8,725				7,589				8,019
Net charge-offs			5,524				5,701				3,617				4,097				3,111
Allowance for loan losses to loans			1.24	%			1.22	%			1.26	%			1.28	%			1.30	%
Non-performing assets to total assets			.19				.22				.17				.19				.25
Net charge-offs to average loans			.12				.14				.11				.15				.14
AVERAGE BALANCES
Loans		$	4,800,981			$	4,061,091			$	3,322,916			$	2,753,451			$	2,239,875				21
Investment securities			1,041,897				989,201				734,577				667,211				464,468				16
Earning assets			5,877,483				5,109,053				4,119,327				3,476,030				2,761,265				19
Total assets			6,287,148				5,472,200				4,416,835				3,721,284				2,959,295				19
Deposits			5,017,435				4,003,084				3,247,612				2,743,087				2,311,717				20
Stockholders’ equity			506,946				417,309				329,225				268,446				207,312				24
Common shares outstanding:
Basic			40,393				38,477				36,071				34,132				32,062
Diluted			41,575				39,721				37,273				35,252				33,241
AT PERIOD END
Loans		$	5,376,538			$	4,398,286			$	3,734,905			$	3,015,997			$	2,381,798				22
Investment securities			1,107,153				990,687				879,978				659,891				559,390				19
Earning assets			6,565,730				5,470,718				4,738,389				3,796,332				3,029,409				21
Total assets			7,101,249				5,865,756				5,087,702				4,068,834				3,211,344				21
Deposits			5,772,886				4,477,600				3,680,516				2,857,449				2,385,239				22
Stockholders’ equity			616,767				472,686				397,088				299,373				221,579				26
Common shares outstanding			42,891				40,020				38,168				35,289				31,895

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income

		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		$	.45			$	.39			$	1.70			$	1.47
Diluted			.44				.38				1.66				1.43
Dividends per common share			.08				.07				.32				.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 per share data)		2006				2005
			(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												2005
		Average								Avg.				Average								Avg.
(dollars in thousands, taxable equivalent)		Balance				Interest				Rate				Balance				Interest				Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)		$	5,134,721			$	109,756				8.48	%		$	4,328,613			$	79,904				7.32	%
Taxable securities (3)			1,014,959				12,488				4.92				957,389				10,651				4.45
Tax-exempt securities (1) (3)			44,166				777				7.03				47,577				845				7.10
Federal funds sold and other interest-earning assets			32,097				442				5.51				49,517				597				4.82
Total interest-earning assets			6,225,943				123,463				7.87				5,383,096				91,997				6.79
Non-interest-earning assets:
Allowance for loan losses			(64,301	)											(53,763	)
Cash and due from banks			121,276												125,882
Premises and equipment			133,364												109,449
Other assets (3)			253,668												204,968
Total assets		$	6,669,950											$	5,769,632
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW		$	1,181,578				9,120				3.06			$	1,057,157				5,228				1.96
Money market			248,530				2,527				4.03				155,908				873				2.22
Savings			170,472				248				.58				176,672				226				.51
Time deposits less than $100,000			1,578,369				19,072				4.79				1,169,382				10,126				3.44
Time deposits greater than $100,000			1,330,375				17,366				5.18				839,624				8,420				3.98
Brokered deposits			353,133				4,207				4.73				311,493				2,742				3.49
Total interest-bearing deposits			4,862,457				52,540				4.29				3,710,236				27,615				2.95
Federal funds purchased & other borrowings			105,650				1,505				5.65				153,839				1,581				4.08
Federal Home Loan Bank advances			334,217				4,677				5.55				668,022				7,230				4.29
Long-term debt			112,923				2,190				7.69				111,869				2,150				7.62
Total borrowed funds			552,790				8,372				6.01				933,730				10,961				4.66
Total interest-bearing liabilities			5,415,247				60,912				4.46				4,643,966				38,576				3.30
Non-interest-bearing liabilities:
Non-interest-bearing deposits			655,239												644,039
Other liabilities			52,045												37,881
Total liabilities			6,122,531												5,325,886
Shareholders’ equity			547,419												443,746
Total liabilities and shareholders’ equity		$	6,669,950											$	5,769,632
Net interest revenue						$	62,551											$	53,421
Net interest-rate spread											3.41	%											3.49	%
Net interest margin (4)											3.99	%											3.94	%