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 October 23, 2007, United Community Banks, Inc. (the “Registrant”) issued a news release announcing its financial results for the first quarter ended September 30, 2007 (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 October 23, 2007 at 11:00 a.m. EST, the Registrant intends to hold a conference call/webcast to discuss the News Release.

The presentation of the Registrant’s financial results included net operating income, which is a measure of performance determined by methods other than in accordance with generally accepted accounting principles, or GAAP. Management included non-GAAP net operating income because it believes it is useful for evaluating the Registrant’s operations and performance over periods of time, and uses net operating income in managing and evaluating the Registrant’s business and intends to use it in discussions about the Registrant’s operations and performance. Net operating income excludes the pre-tax effect of the special $15 million fraud related provision for loan losses recorded in the second quarter of 2007 because management feels that the events leading to the taking of the special provision were isolated, non-recurring events and do not reflect overall trends in the Registrant’s earnings. Management believes this non-GAAP net operating income may provides users of the Registrant’s financial information with a meaningful measure for assessing the Registrant’s financial results and comparing those financial results to prior periods.

Net operating income should be viewed in addition to, and not as an alternative or substitute for, the Registrant’s reported net income determined in accordance with GAAP, and is not necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Item 9.01 Financial Statements and Exhibits

(a) Financial statements: None

(b) Pro forma financial information: None

(c) Exhibits:

     99.1 Press Release, dated October 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
		Executive Vice President and
October 23, 2007		Chief Financial Officer

Exhibit 99.1

For Immediate Release

For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
Rex_Schuette@ucbi.com

UNITED COMMUNITY BANKS, INC. REPORTS
10 PERCENT GAIN IN DILUTED EARNINGS PER SHARE
FOR THIRD QUARTER 2007

HIGHLIGHTS:

•

Third Quarter Earnings

			Diluted Earnings per Share of 46 Cents — Up 10 Percent
			Net Income of $22.5 Million — Up 29 Percent

•		Loan and Fee Revenue Growth Drive Performance
•		Opened De Novo Office in Savannah

BLAIRSVILLE, GA, October 23, 2007 — United Community Banks, Inc. (NASDAQ: UCBI) today announced diluted earnings per share of 46 cents for the third quarter of 2007, a 10 percent increase from 42 cents a year ago. Total revenue on a taxable equivalent basis was $83.6 million for the quarter compared with $69.3 million for the third quarter of 2006, a 21 percent increase. Net income for the third quarter of 2007 was $22.5 million, compared with $17.4 million for the same period of 2006, up 29 percent. Return on tangible equity was 17.54 percent and return on assets was 1.11 percent for the third quarter, compared with 17.29 percent and 1.09 percent a year ago, respectively.

“We are pleased to report solid year-over-year performance, especially as the slow down in the residential real estate market makes this a challenging time for community banks,” said Jimmy Tallent, president and chief executive officer. “We will continue to face challenges in the

quarters to come; however, we are well-prepared to overcome obstacles that may come our way.”

For the first nine months, diluted operating earnings per share increased 11 percent to $1.36 compared with $1.22 for the first nine months of 2006. Year-to-date taxable equivalent operating revenue increased 20 percent to $240.2 million versus $200.3 million for 2006. Net operating income for the first nine months of 2007 was $63.0 million, up 25 percent, compared with $50.4 million for 2006. Earnings measures for the first nine months of 2007 are presented on an operating basis that excludes a second quarter $15 million special provision for loan losses relating to two failed residential real estate developments near Spruce Pine, North Carolina. Because this provision was the result of a fraud-related matter that is considered an isolated and non-recurring event, management believes the presentation of operating earnings is useful for understanding underlying core earnings trends.

Loans increased by $987 million, or 20 percent, from a year ago. This increase included $267 million from the Southern National Bank acquisition in December 2006 and $534 million from the First Bank of the South acquisition in June 2007. Excluding acquired loans, core loan growth was 4 percent for the past 12 months and down slightly from the second quarter. “We have seen a softening in residential construction loans and the housing markets, particularly in the Atlanta region,” Tallent said. “Last quarter, we targeted loan growth for the remainder of 2007 to be in the range of 4 to 8 percent annualized. Given the uncertainties and slow down in the housing market, we expect that loan growth during the fourth quarter will be below our targeted range.”

Deposits increased $845 million, or 16 percent, from a year ago due to acquisitions. “Total deposits, excluding acquired deposits, decreased by less than $50 million from the prior year due to our banks intentionally letting non-relationship time deposits run off as loan demand declined,” commented Tallent. “Excluding these time deposits, our customer deposits were up about $192 million from the prior year and down $41 million from the second quarter. We believe this is temporary. The number of customer relationships continue to increase and our customer satisfaction scores remain above 90 percent and at historical highs.”

United added its 111^th banking office during the third quarter with the opening of a third location in Savannah, Georgia. “We have slowed our expansion efforts from previous levels as we monitor loan growth trends in our markets,” commented Tallent.

For the third quarter of 2007, taxable equivalent net interest revenue of $71.7 million reflected an increase of $10.8 million, or 18 percent, from the third quarter of 2006. The year-to-date increase was $29.4 million, or 17 percent, compared to the first nine months of 2006. Taxable equivalent net interest margin was 3.89 percent for the third quarter, compared with 3.94 percent for the second quarter of 2007 and 4.07 percent for the third quarter of 2006. “Consistent with the industry, our net interest margin continues to be under pressure due to the inverted interest rate curve and competitive pricing,” stated Tallent. “The decrease over the past two quarters was primarily due to the higher level of non-accrual loans and a slight change in the mix of earning assets.”

The third quarter provision for loan losses was $3.7 million. Net charge-offs were $5.2 million compared with $2.1 million for the second quarter and $1.3 million a year ago. Annualized net charge-offs to average loans was 35 basis points for the third quarter compared to 15 basis points for the second quarter and 11 basis points for the third quarter of 2006. “Two thirds of the charge-offs this quarter related to two credits that we actively worked to move out of the bank,” Tallent said. “One of the credits was sold prior to quarter-end and the other is under contract for sale in the fourth quarter. We are adequately reserved to handle this level of charge-offs and will continue to aggressively move non-performing credits off of our balance sheet.”

At quarter-end, non-performing assets totaled $63.3 million, including $23.6 million of fraud-related loans associated with the Spruce Pine developments. Excluding Spruce Pine loans, non-performing assets were $39.8 million, compared with $20.0 million at June 30, 2007 and $9.3 million a year ago. Excluding the Spruce Pine loans, non-performing assets as a percentage of total assets was 49 basis points at quarter-end compared with 25 basis points at June 30, 2007 and 14 basis points at September 30, 2006. The Spruce Pine non-performing assets as a percentage of total assets was 29 basis points. “We continued negotiations with borrowers during the third quarter and have been in contact with all of the borrowers or their counsel,”

commented Tallent. “We have not taken any charge-offs on these loans; however, we expect to begin the foreclosure process in the fourth quarter, as necessary, if ongoing negotiations fail to produce an acceptable outcome. We continue to believe that the $15 million special provision last quarter will be adequate.”

“Non-performing assets, until recently, were at unsustainably low levels and at the lower end of our historic 20 to 35 basis point range,” Tallent said. “During this quarter, excluding the Spruce Pine loans, non-performing assets increased above this range to 49 basis points. Most of the rise was construction-related due to softening in the market. Overall, our credit quality this quarter is a reflection of the current environment. Our markets are affected by the slow down in housing and construction and we continue to see a buildup of lot inventory in the Atlanta region and a standstill in new construction lending. Although we don’t know the length of this current cycle, it may be several quarters before we return to our historical range of non-performing assets. Even with the rise in non-performers, our credit quality ratios compare favorably to our peers and we have an experienced team to handle these issues.”

Fee revenue of $15.6 million for the third quarter reflected an increase of $3.5 million, or 29 percent, from $12.1 million for the third quarter of 2006. Service charges and fees on deposit accounts of $7.9 million increased $941,000, or 14 percent, from the third quarter of 2006 due to growth in transactions and new accounts and higher ATM and debit card usage. Consulting fees increased $341,000 to $2.4 million, 17 percent from a year ago and a record quarter, reflecting strong growth in the advisory services practice. Other fee revenue of $2.1 million included $720,000 of earnings from bank-owned life insurance that was added in the second quarter of 2007.

Operating expenses of $48.2 million reflected an increase of $6.7 million, or 16 percent, from the third quarter of 2006. Salaries and employee benefit costs totaled $29.7 million, which was $3.6 million, or 14 percent, higher than the third quarter of 2006. Acquisitions accounted for approximately $2 million of the increase, with the rest primarily due to staffing new banking office locations. Professional fees increased $982,000 to $1.9 million, reflecting higher fees associated with corporate initiatives, loan work-outs and foreclosures. Occupancy expense

increased $672,000 to $3.6 million attributable to the higher costs of operating additional banking offices. Other expenses of $5.2 million were $1.4 million higher than a year ago; half of this increase was due to higher FDIC insurance premiums beginning in the third quarter of 2007 and the balance was primarily from acquisitions and new banking offices.

“Our operating efficiency ratio of 55.3 percent for the quarter was better than our long-term efficiency target range of 56 to 58 percent,” Tallent said. “This ratio shows that despite the environmental difficulties, we have been able to maintain disciplined expense controls.”

“Last quarter, the Board of Directors increased the level of our stock purchase program to 2 million shares,” noted Tallent. “During the third quarter, we purchased 1.3 million shares at an average cost of $24.43. With our stock price at its current level and slower balance sheet growth, we believe that purchasing our stock is an attractive use of capital. Therefore, the Board has authorized an increase in the stock purchase program to 3 million shares through December 2008. We will continue to monitor our stock price and purchase shares to demonstrate our commitment to enhancing shareholder value.”

“We remain committed to building long-term shareholder value through our ability to deliver strong growth in earnings per share, to expand the franchise and to provide superior customer service,” said Tallent. “With the continued slower pace of loan growth, the outlook for the full year of 2007 is for operating earnings per share growth of 9 to 11 percent.”

“Although these are very challenging times for financial institutions, every economic cycle is temporary,” stated Tallent. “At the same time, we recognize that our outlook for 2008 will be tempered by the slower pace of loan growth. We will provide an update to this outlook with our year-end results during the January conference call. The current conditions in the banking industry and our overall performance confirm that our operating model works and will enable us to manage through this cycle. The structure, principles and philosophies that brought us to where we are today remain in place. We are always committed to the unparalleled service that our customers have come to expect from us.”

Conference Call

United Community Banks will hold a conference call on Tuesday, October 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) 202-3109 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 $8.2 billion and operates 27 community banks with 111 banking offices located throughout north Georgia, the Atlanta region, 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 some 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.
Financial Highlights
Selected Financial Information

																						Third
		2007												2006								Quarter				For the Nine								YTD
(in thousands, except per share		Third				Second				First				Fourth				Third				2007-2006				Months Ended								2007-2006
data; taxable equivalent)		Quarter				Quarter				Quarter				Quarter				Quarter				Change				2007				2006				Change
INCOME SUMMARY
Interest revenue		$	144,884			$	136,237			$	129,028			$	123,463			$	116,304							$	410,150			$	323,232
Interest expense			73,203				68,270				63,923				60,912				55,431								205,396				147,903
Net interest revenue			71,681				67,967				65,105				62,551				60,873				18	%			204,754				175,329				17	%
Provision for loan losses (1)			3,700				3,700				3,700				3,700				3,700								11,100				10,900
Fee revenue			15,615				16,554				14,382				13,215				12,146				29				46,551				35,880				30
Total operating revenue			83,596				80,821				75,787				72,066				69,319				21				240,205				200,309				20
Operating expenses			48,182				47,702				44,841				42,521				41,441				16				140,725				119,549				18
Income before taxes			35,414				33,119				30,946				29,545				27,878				27				99,480				80,760				23
Income taxes			12,878				12,043				11,601				11,111				10,465								36,523				30,379
Net operating income			22,536				21,076				19,345				18,434				17,413				29				62,957				50,381				25
Fraud loss provision, net of tax (1)			—				9,165				—				—				—								9,165				—
Net income		$	22,536			$	11,911			$	19,345			$	18,434			$	17,413				29			$	53,792			$	50,381				7
OPERATING PERFORMANCE (1)
Earnings per common share:
Basic		$	.47			$	.47			$	.45			$	.45			$	.43				9			$	1.38			$	1.25				10
Diluted			.46				.46				.44				.44				.42				10				1.36				1.22				11
Return on tangible equity (2)(3)(4)			17.54	%			17.52	%			17.18	%			17.49	%			17.29	%							17.42	%			17.54	%
Return on assets (4)			1.11				1.12				1.11				1.10				1.09								1.11				1.09
Dividend payout ratio			19.15				19.15				20.00				17.78				18.60								19.57				19.20
GAAP PERFORMANCE MEASURES
Per common share:
Basic earnings		$	.47			$	.26			$	.45			$	.45			$	.43				9			$	1.18			$	1.25				(6	)
Diluted earnings			.46				.26				.44				.44				.42				10				1.16				1.22				(5	)
Cash dividends declared			.09				.09				.09				.08				.08				13				.27				.24				13
Book value			17.53				16.98				14.83				14.37				13.07				34				17.53				13.07				34
Tangible book value (3)			10.82				10.44				11.06				10.57				10.16				6				10.77				10.16				6
Key performance ratios:
Return on equity (2)(4)			10.66				7.05				12.47				13.26				13.22								10.04				13.29
Return on assets (4)			1.11				.64				1.11				1.10				1.09								.95				1.09
Net interest margin (4)			3.89				3.94				3.99				3.99				4.07								3.94				4.07
Efficiency ratio			55.34				56.59				56.56				55.93				56.19								56.14				56.33
Dividend payout ratio			19.15				34.62				20.00				17.78				18.60								22.88				19.20
Equity to assets			10.32				8.94				8.80				8.21				8.04								9.39				8.01
Tangible equity to assets (3)			6.65				6.65				6.66				6.46				6.35								6.65				6.27
ASSET QUALITY (5)
Allowance for loan losses		$	90,935			$	92,471			$	68,804			$	66,566			$	60,901							$	90,936			$	60,901
Non-performing assets			63,337				43,601				14,290				13,654				9,347								63,337				9,347
Net charge-offs			5,235				2,124				1,462				1,930				1,307								8,821				3,594
Allowance for loan losses to loans			1.53	%			1.54	%			1.27	%			1.24	%			1.23	%							1.53	%			1.23	%
Non-performing assets to total assets			.77				.54				.20				.19				.14								.77				.14
Net charge-offs to average loans (4)			.35				.15				.11				.15				.11								.21				.10
AVERAGE BALANCES
Loans		$	5,966,933			$	5,619,950			$	5,402,860			$	5,134,721			$	4,865,886				23			$	5,665,314			$	4,688,512				21
Investment securities			1,308,192				1,242,448				1,153,208				1,059,125				1,029,981				27				1,235,183				1,036,092				19
Earning assets			7,332,492				6,915,134				6,599,035				6,225,943				5,942,710				23				6,951,573				5,760,055				21
Total assets			8,083,739				7,519,392				7,092,710				6,669,950				6,350,205				27				7,568,910				6,158,147				23
Deposits			6,246,319				5,945,633				5,764,426				5,517,696				5,085,168				23				5,987,225				4,848,848				23
Shareholders’ equity			834,094				672,348				624,100				547,419				510,791				63				710,950				493,307				44
Common shares — basic			48,348				44,949				43,000				41,096				40,223								45,452				40,156
Common shares — diluted			48,977				45,761				43,912				42,311				41,460								46,235				41,327
AT PERIOD END
Loans		$	5,952,749			$	5,999,093			$	5,402,198			$	5,376,538			$	4,965,365				20			$	5,952,749			$	4,965,365				20
Investment securities			1,296,826				1,213,659				1,150,424				1,107,153				980,273				32				1,296,826				980,273				32
Total assets			8,180,600				8,087,667				7,186,602				7,101,249				6,455,290				27				8,180,600				6,455,290				27
Deposits			6,154,308				6,361,269				5,841,687				5,772,886				5,309,219				16				6,154,308				5,309,219				16
Shareholders’ equity			833,761				828,731				638,456				616,767				526,734				58				833,761				526,734				58
Common shares outstanding			47,542				48,781				43,038				42,891				40,269								47,542				40,269

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End

		2007												2006								Linked Quarter Change(3)				Year over Year Change
		Third				Second				First				Fourth				Third												Excluding
(in millions)		Quarter				Quarter(1)				Quarter				Quarter(2)				Quarter				Actual				Actual				Acquired
LOANS BY CATEGORY
Commercial (sec. by RE)		$	1,441			$	1,461			$	1,227			$	1,230			$	1,158				(5	)%			24	%			2	%
Commercial & industrial			408				421				315				296				272				(12	)			50				14
Total commercial			1,849				1,882				1,542				1,526				1,430				(7	)			29				5
Construction & land dev			2,466				2,522				2,336				2,334				2,065				(9	)			19				1
Residential mortgage			1,459				1,413				1,353				1,338				1,300				13				12				8
Consumer / installment			179				182				171				179				170				(7	)			5				(1	)
Total loans		$	5,953			$	5,999			$	5,402			$	5,377			$	4,965				(3	)			20				4
LOANS BY MARKET
Atlanta Region		$	2,451			$	2,518			$	2,015			$	2,005			$	1,696				(11	)%			45	%			(3	)%
North Georgia			2,026				2,032				2,010				2,034				1,984				(1	)			2				2
Coastal Georgia			402				396				372				358				343				6				17				17
Western North Carolina			834				816				782				773				752				9				11				11
East Tennessee			240				237				223				207				190				5				26				26
Total loans		$	5,953			$	5,999			$	5,402			$	5,377			$	4,965				(3	)			20				4

UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
(in thousands, except per share data)

		Second				Nine Months Ended
		Quarter				September 30,
		2007				2007
Special provision for fraud related loan losses		$	15,000			$	15,000
Income tax effect of special provision			5,835				5,835
After-tax effect of special provision		$	9,165			$	9,165
Net Income Reconciliation
Operating net income		$	21,076			$	62,956
After-tax effect of special provision			(9,165	)			(9,165	)
Net income (GAAP)		$	11,911			$	53,791
Basic Earnings Per Share Reconciliation
Basic operating earnings per share		$	.47			$	1.38
Per share effect of special provision			(.21	)			(.20	)
Basic earnings per share (GAAP)		$	.26			$	1.18
Diluted Earnings Per Share Reconciliation
Diluted operating earnings per share		$	.46			$	1.36
Per share effect of special provision			(.20	)			(.20	)
Diluted earnings per share (GAAP)		$	.26			$	1.16

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income (unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands, except per share data)		2007				2006				2007				2006
Interest revenue:
Loans, including fees		$	127,213			$	103,190			$	361,085			$	285,038
Investment securities:
Taxable			16,637				11,822				46,081				34,661
Tax exempt			428				474				1,313				1,497
Federal funds sold and deposits in banks			134				365				272				685
Total interest revenue			144,412				115,851				408,751				321,881
Interest expense:
Deposits:
NOW			12,046				8,100				34,143				21,429
Money market			5,002				2,155				11,082				4,969
Savings			553				226				1,236				680
Time			42,862				34,694				126,467				89,679
Total deposit interest expense			60,463				45,175				172,928				116,757
Federal funds purchased, repurchase agreements, & other short-term borrowings			4,738				2,254				10,226				5,814
Federal Home Loan Bank advances			5,902				5,828				15,738				18,837
Long-term debt			2,100				2,174				6,505				6,495
Total interest expense			73,203				55,431				205,397				147,903
Net interest revenue			71,209				60,420				203,354				173,978
Provision for loan losses			3,700				3,700				26,100				10,900
Net interest revenue after provision for loan losses			67,509				56,720				177,254				163,078
Fee revenue:
Service charges and fees			7,855				6,914				23,083				20,095
Mortgage loan and other related fees			2,118				1,928				6,817				5,149
Consulting fees			2,381				2,040				6,369				5,196
Brokerage fees			895				784				3,031				2,430
Securities gains (losses), net			225				(382	)			1,818				(385	)
Losses on prepayment of borrowings			—				(346	)			(1,164	)			(636	)
Other			2,141				1,208				6,597				4,031
Total fee revenue			15,615				12,146				46,551				35,880
Total revenue			83,124				68,866				223,805				198,958
Operating expenses:
Salaries and employee benefits			29,698				26,087				88,037				74,440
Communications and equipment			3,936				3,863				11,593				10,970
Occupancy			3,617				2,945				10,124				8,793
Advertising and public relations			1,537				1,882				5,651				5,718
Postage, printing and supplies			1,479				1,379				4,819				4,184
Professional fees			1,920				938				5,409				3,168
Amortization of intangibles			771				503				1,968				1,509
Other			5,224				3,844				13,124				10,767
Total operating expenses			48,182				41,441				140,725				119,549
Income before income taxes			34,942				27,425				83,080				79,409
Income taxes			12,406				10,012				29,289				29,028
Net income		$	22,536			$	17,413			$	53,791			$	50,381
Net income available to common shareholders		$	22,532			$	17,408			$	53,777			$	50,366
Earnings per common share:
Basic		$	.47			$	.43			$	1.18			$	1.25
Diluted			.46				.42				1.16				1.22
Dividends per common share			.09				.08				.27				.24
Weighted average common shares outstanding:
Basic			48,348				40,223				45,452				40,156
Diluted			48,977				41,460				46,235				41,327

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet

		September 30,				December 31,				September 30,
(in thousands, except share and per share data)		2007				2006				2006
		(unaudited)				(audited)				(unaudited)
ASSETS
Cash and due from banks		$	162,710			$	158,348			$	130,038
Interest-bearing deposits in banks			75,745				12,936				16,032
Cash and cash equivalents			238,455				171,284				146,070
Securities available for sale			1,296,826				1,107,153				980,273
Mortgage loans held for sale			23,717				35,325				21,522
Loans, net of unearned income			5,952,749				5,376,538				4,965,365
Less allowance for loan losses			90,935				66,566				60,901
Loans, net			5,861,814				5,309,972				4,904,464
Premises and equipment, net			174,918				139,716				129,217
Accrued interest receivable			67,385				58,291				47,336
Goodwill and other intangible assets			326,080				167,058				120,430
Other assets			191,405				112,450				105,978
Total assets		$	8,180,600			$	7,101,249			$	6,455,290
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand		$	737,357			$	659,892			$	666,891
NOW			1,464,956				1,307,654				1,104,516
Money market			495,092				255,862				236,469
Savings			195,132				175,631				167,531
Time:
Less than $100,000			1,595,278				1,650,906				1,523,843
Greater than $100,000			1,358,302				1,397,245				1,248,738
Brokered			308,191				325,696				361,231
Total deposits			6,154,308				5,772,886				5,309,219
Federal funds purchased, repurchase agreements, and other short-term borrowings			502,081				65,884				56,026
Federal Home Loan Bank advances			519,381				489,084				412,572
Long-term debt			107,996				113,151				111,869
Accrued expenses and other liabilities			63,073				43,477				38,870
Total liabilities			7,346,839				6,484,482				5,928,556
Shareholders’ equity:
Preferred stock, $1 par value; $10 stated value; 10,000,000 shares authorized; 25,800, 32,200 and 32,200 shares issued and outstanding			258				322				322
Common stock, $1 par value; 100,000,000 shares authorized; 48,809,301, 42,890,863 and 40,268,604 shares issued and outstanding			48,809				42,891				40,269
Common stock issuable; 66,366, 29,821 and 22,741 shares			1,954				862				638
Capital surplus			462,499				270,383				199,773
Retained earnings			347,478				306,261				291,281
Treasury stock; 1,266,935 shares as of September 30, 2007, at cost			(30,969	)			—				—
Accumulated other comprehensive loss			3,732				(3,952	)			(5,549	)
Total shareholders’ equity			833,761				616,767				526,734
Total liabilities and shareholders’ equity		$	8,180,600			$	7,101,249			$	6,455,290

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended September 30,

		2007												2006
		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)		$	5,966,933			$	126,992				8.44	%		$	4,865,886			$	103,061				8.40	%
Taxable securities (3)			1,266,609				16,637				5.25				984,189				11,822				4.80
Tax-exempt securities (1) (3)			41,583				704				6.77				45,792				780				6.81
Federal funds sold and other interest-earning assets			57,367				551				3.84				46,843				641				5.47
Total interest-earning assets			7,332,492				144,884				7.85				5,942,710				116,304				7.77
Non-interest-earning assets:
Allowance for loan losses			(93,832	)											(60,606	)
Cash and due from banks			141,536												116,004
Premises and equipment			173,605												125,423
Other assets (3)			529,938												226,674
Total assets		$	8,083,739											$	6,350,205
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW		$	1,431,168			$	12,046				3.34			$	1,094,911			$	8,100				2.94
Money market			496,005				5,002				4.00				216,131				2,155				3.96
Savings			201,031				553				1.09				170,079				226				.53
Time less than $100,000			1,624,698				20,151				4.92				1,446,388				16,503				4.53
Time greater than $100,000			1,391,139				18,192				5.19				1,162,207				14,382				4.91
Brokered			358,614				4,519				5.00				340,301				3,809				4.44
Total interest-bearing deposits			5,502,655				60,463				4.36				4,430,017				45,175				4.05
Federal funds purchased and other borrowings			348,472				4,738				5.39				162,372				2,254				5.51
Federal Home Loan Bank advances			474,555				5,902				4.93				438,875				5,828				5.27
Long-term debt			119,596				2,100				6.97				111,869				2,174				7.71
Total borrowed funds			942,623				12,740				5.36				713,116				10,256				5.71
Total interest-bearing liabilities			6,445,278				73,203				4.51				5,143,133				55,431				4.28
Non-interest-bearing liabilities:
Non-interest-bearing deposits			743,664												655,151
Other liabilities			60,703												41,130
Total liabilities			7,249,645												5,839,414
Shareholders’ equity			834,094												510,791
Total liabilities and shareholders’ equity		$	8,083,739											$	6,350,205
Net interest revenue						$	71,681											$	60,873
Net interest-rate spread											3.34	%											3.49	%
Net interest margin (4)											3.89	%											4.07	%

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Nine Months Ended September 30,

		2007												2006
		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)		$	5,665,314			$	360,430				8.51	%		$	4,688,512			$	284,683				8.12	%
Taxable securities (3)			1,192,815				46,081				5.15				988,504				34,661				4.68
Tax-exempt securities (1) (3)			42,368				2,160				6.80				47,588				2,463				6.90
Federal funds sold and other interest-earning assets			51,076				1,479				3.86				35,451				1,425				5.36
Total interest-earning assets			6,951,573				410,150				7.89				5,760,055				323,232				7.50
Non-interest-earning assets:
Allowance for loan losses			(78,541	)											(57,716	)
Cash and due from banks			130,816												122,603
Premises and equipment			159,674												120,664
Other assets (3)			405,388												212,541
Total assets		$	7,568,910											$	6,158,147
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW		$	1,378,200			$	34,143				3.31			$	1,093,145			$	21,429				2.62
Money market			371,716				11,082				3.99				186,957				4,969				3.55
Savings			187,693				1,236				.88				173,448				680				.52
Time less than $100,000			1,631,243				59,925				4.91				1,354,421				42,604				4.21
Time greater than $100,000			1,383,004				54,000				5.22				1,068,376				36,938				4.62
Brokered			342,162				12,541				4.90				327,877				10,137				4.13
Total interest-bearing deposits			5,294,018				172,927				4.37				4,204,224				116,757				3.71
Federal funds purchased and other borrowings			255,115				10,226				5.36				152,303				5,814				5.10
Federal Home Loan Bank advances			430,151				15,738				4.89				510,168				18,837				4.94
Long-term debt			115,390				6,505				7.54				111,868				6,495				7.76
Total borrowed funds			800,656				32,469				5.42				774,339				31,146				5.38
Total interest-bearing liabilities			6,094,674				205,396				4.51				4,978,563				147,903				3.97
Non-interest-bearing liabilities:
Non-interest-bearing deposits			693,207												644,626
Other liabilities			70,079												41,651
Total liabilities			6,857,960												5,664,840
Shareholders’ equity			710,950												493,307
Total liabilities and shareholders’ equity		$	7,568,910											$	6,158,147
Net interest revenue						$	204,753											$	175,329
Net interest-rate spread											3.38	%											3.53	%
Net interest margin (4)											3.94	%											4.07	%