SEC Filing | United Community Banks, Inc.

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t62504_8k.htm

UNITED STATES

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

Date of Report (Date of earliest event reported):

April 24, 2008

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

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 April 24, 2008, United Community Banks, Inc. (the “Registrant”) issued a news release announcing its financial results for the quarter ended March 31, 2008 (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 April 24, 2008 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 operating performance measures, which are measures of performance determined by methods other than in accordance with generally accepted accounting principles, or GAAP. Management included non-GAAP operating performance measures because it believes it is useful for evaluating the Registrant’s operations and performance over periods of time, and uses operating performance measures in managing and evaluating the Registrant’s business and intends to use it in discussions about the Registrant’s operations and performance. Operating performance measures exclude the effects of a special $15 million fraud related provision for loan losses recorded in the second quarter of 2007, an additional $3 million provision for loan losses recorded in the fourth quarter of 2007, and $18 million in fraud related charge offs recorded in the fourth quarter of 2007 because management feels that the events leading to the taking of the special provisions and charge offs were isolated, non-recurring events and do not reflect overall trends in the Registrant’s earnings. Management believes these non-GAAP performance measures may provide 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. Operating performance measures should be viewed in addition to, and not as an alternative or substitute for, the Registrant’s performance measures 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 April 24, 2008

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
April 24, 2008	Chief Financial Officer

ex99-1.htm

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

DILUTED EARNINGS PER SHARE OF 34 CENTS FOR

FIRST QUARTER 2008

BLAIRSVILLE, GA. - April 24, 2008 – United Community Banks, Inc. (NASDAQ: UCBI) today announced diluted earnings per share of 34 cents for the first quarter of 2008, compared to 44 cents for the first quarter of 2007. Total revenue on a taxable equivalent basis was $73.0 million for the quarter, compared to $75.8 million for the first quarter of 2007. Net income was $16.1 million, compared with $19.3 million in the first quarter of 2007. Return on tangible equity was 13.16 percent and return on assets was .78 percent for the first quarter of 2008, compared with 17.18 percent and 1.11 percent a year ago, respectively.

“Continued weakness in the residential construction and housing markets and uncertainty in the general economy made for a very challenging quarter,” said Jimmy Tallent, president and chief executive officer. “We expect the business environment to remain difficult for 2008. However, we are confident that our business model, strong high-growth markets, and customer service focus will continue to create the foundation for future growth over the longer term.”

Loans were up $566 million, or 10 percent, from the first quarter of 2007 due primarily to the acquisition of First Bank of the South in the second quarter of 2007. “Excluding acquisitions, loans were basically flat year over year,” Tallent said. “During the first quarter, total loans were up $39 million, or 3 percent on an annualized basis. Commercial loans during the quarter saw growth of $90 million, or 15 percent annualized. This was offset partially by a $39 million decrease in our residential construction loan portfolio. We are actively pursuing high-quality borrowers in all of our markets, with an emphasis on small business and commercial lending. Through these efforts, we have been able to reduce residential construction loans over the past year from 35 percent to 30 percent of our total loan portfolio.”

Total deposits increased $334 million, or 6 percent, from a year ago due to the acquisition of First Bank of the South. Excluding acquired deposits, total deposits decreased by $234 million primarily due to the run-off of higher-rate certificates of deposits. We elected not to compete for these high cost deposits without other customer relationships. “While overall account balances are lower, the number of customer relationships has continued to increase and our customer satisfaction scores continue to be at record levels,” Tallent said. “This bodes well for us when the economy rebounds.”

Taxable equivalent net interest revenue of $66.3 million reflected an increase of $1.2 million from the first quarter of 2007. Taxable equivalent net interest margin was 3.55 percent, compared with 3.73 percent for the fourth quarter of 2007 and 3.99 percent for the first quarter of 2007. “Our net interest margin continues to be under pressure on two fronts,” Tallent said. “One is competitive deposit pricing that has kept us from lowering rates on our deposits as quickly as we repriced our prime based loans. The second is the increase in the level of non-performing assets this quarter. We expect these conditions to continue to put pressure on our margin as financial institutions compete for liquidity and as we aggressively move non-performing assets off of our books.”

The first quarter provision for loan losses was $7.5 million. Net charge-offs for the first quarter were $7.1 million compared with $13.0 million for the fourth quarter of 2007 (excluding the Spruce Pine fraud-related charge-offs), and $1.5 million for the first quarter of 2007. Annualized net charge-offs to average loans was 48 basis points for the first quarter of 2008 compared to 87 basis points for the fourth quarter of 2007 and 11 basis points for the first quarter of 2007.

“In the fourth quarter, we identified problem credits, aggressively took charge-offs and write-downs, and increased our allowance for loan losses to prepare for the challenges of 2008,” Tallent said. “We continued this process in the first quarter and provided $7.5 million for loan losses. This enables us to maintain our allowance for loan losses at an appropriate level for the current credit environment. We will continue to closely monitor our credit quality and the loan portfolio to ensure that we remain adequately reserved.”

At quarter-end, non-performing assets totaled $89.9 million, compared with $46.3 million at December 31, 2007 and $14.3 million at March 31, 2007. The ratio of non-performing assets to total assets at the end of each quarter was 1.07, .56 and .20 percent, respectively.

“United’s credit quality indicators reflected the national trend of rising delinquencies and foreclosures in the housing and residential construction markets,” stated Tallent. “We will remain diligent in managing through the challenges, taking whatever steps are necessary to put problem credits behind us. Although we remain guarded in our credit quality outlook, we are cautiously optimistic that the traditionally higher-sales months in the spring and summer will bring buyers back into the housing market, providing some welcome relief.”

Fee revenue of $14.2 million was down slightly from $14.4 million for the first quarter of 2007, primarily due to nonrecurring revenue in the first quarter of 2007. Service charges and fees on deposit accounts of $7.8 million increased $560,000, or 8 percent, from the first quarter of 2007 due to growth in transactions and new accounts as well as higher ATM and debit card usage. Brokerage fees were up $149,000 to $1.1 million due to strong retention efforts and new customer outreach. Other fee revenue of $1.5 million was down $487,000 due to a gain on the sale of property and a recovery of overpaid brokered deposit interest in the first quarter of 2007.

Operating expenses of $47.5 million reflected an increase of $2.7 million, or 6 percent, from the first quarter of 2007. Salaries and employee benefit costs of $28.8 million were $437,000, or 2 percent, higher than the first quarter of 2007. The acquisition in the second quarter last year added approximately $1.4 million, which was more than offset by lower incentive compensation in 2008. Occupancy expense increased $525,000 to $3.7 million due to the cost of operating additional banking offices. Professional fees increased $442,000 to $1.9 million, reflecting higher fees associated with loan work-outs and foreclosures. Other expenses of $5.6 million were $1.8 million higher than a year ago due to $911,000 of additional write-downs and related costs on foreclosed properties and an increase in FDIC insurance premiums of $923,000.

“The efficiency ratio for the first quarter of 59.05 percent was above our long-term target range of 56 to 58 percent,” Tallent said. “This was driven primarily by higher legal costs and write-downs on foreclosed property. We continue to remain disciplined on expense controls.”

The Board of Directors approved the second quarter 2008 dividend of 9 cents per share, which is the same dividend level that was paid in 2007. “At quarter-end, all of our regulatory capital ratios were above the ‘well-capitalized’ level and our tangible equity-to-assets ratio was 6.73 percent,” Tallent said. “Our core earnings have allowed us to build capital, improve ratios and provide strength for current and future challenges. We are intently focused on maintaining capital at a level appropriate for the economic environment.

“With the uncertainty of the economy and the ongoing credit issues in the housing and residential construction market, 2008 will not be an easy year for banks,” Tallent concluded. “I want to thank our employees for their dedication and focus: no matter the economic cycle they continue to deliver the highest customer satisfaction scores in the industry. True to form, they are maintaining and enhancing the kind of deep customer relationships that will drive United’s growth and success when the economy improves.”

Conference Call

United Community Banks will hold a conference call on Thursday, April 24, 2008, at 11 a.m. ET to discuss the contents of this news release, as well as share business highlights for the quarter. The telephone number for the conference call is (877) 660-8922 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 $8.4 billion and operates 27 community banks with 109 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
																First
	2008			2007												Quarter
(in thousands, except per share	First			Fourth			Third			Second			First			2008-2007
data; taxable equivalent)	Quarter			Quarter			Quarter			Quarter			Quarter			Change
INCOME SUMMARY
Interest revenue	$	129,041		$	140,768		$	144,884		$	136,237		$	129,028
Interest expense		62,754			71,038			73,203			68,270			63,923
Net interest revenue		66,287			69,730			71,681			67,967			65,105			2	%
Provision for loan losses (1)		7,500			26,500			3,700			3,700			3,700
Fee revenue		14,197			16,100			15,615			16,554			14,382			(1	)
Total operating revenue		72,984			59,330			83,596			80,821			75,787			(4	)
Operating expenses		47,529			49,336			48,182			47,702			44,841			6
Income before taxes		25,455			9,994			35,414			33,119			30,946			(18	)
Income taxes		9,377			3,960			12,878			12,043			11,601
Net operating income		16,078			6,034			22,536			21,076			19,345			(17	)
Fraud loss provision, net of tax (1)		-			1,833			-			9,165			-
Net income	$	16,078		$	4,201		$	22,536		$	11,911		$	19,345			(17	)

OPERATING PERFORMANCE (1)
Earnings per common share:
Basic	$	.34		$	.13		$	.47		$	.47		$	.45			(24	)
Diluted		.34			.13			.46			.46			.44			(23	)
Return on tangible equity (2)(3)(4)		13.16	%		5.06	%		17.54	%		17.52	%		17.18	%
Return on assets (4)		.78			.29			1.11			1.12			1.11
Dividend payout ratio		26.47			69.23			19.15			19.15			20.00

GAAP PERFORMANCE MEASURES
Per common share:
Basic earnings	$	.34		$	.09		$	.47		$	.26		$	.45			(24	)
Diluted earnings		.34			.09			.46			.26			.44			(23	)
Cash dividends declared		.09			.09			.09			.09			.09			-
Book value		18.50			17.70			17.51			16.96			14.82			25
Tangible book value (3)		11.76			10.92			10.81			10.43			11.05			6

Key performance ratios:
Return on equity (2)(4)		7.85	%		2.01	%		10.66	%		7.05	%		12.47	%
Return on assets		.78			.20			1.11			.64			1.11
Net interest margin (4)		3.55			3.73			3.89			3.94			3.99
Efficiency ratio		59.05			57.67			55.34			56.59			56.56
Tangible equity to assets (3)		6.73			6.58			6.65			6.65			6.66

ASSET QUALITY
Allowance for loan losses	$	89,848		$	89,423		$	90,935		$	92,471		$	68,804
Net charge-offs (1)		7,075			13,012			5,236			2,124			1,462
Non-performing loans		67,728			28,219			46,783			30,849			12,319
OREO		22,136			18,039			16,554			12,752			1,971
Total non-performing assets		89,864			46,258			63,337			43,601			14,290
Allowance for loan losses to loans (1)		1.51	%		1.51	%		1.28	%		1.29	%		1.27	%
Net charge-offs to average loans (1)(4)		.48			.87			.35			.15			.11
Non-performing assets to loans and OREO		1.50			.78			1.06			.73			.26
Non-performing assets to total assets		1.07			.56			.77			.54			.20

AVERAGE BALANCES
Loans	$	5,958,296		$	5,940,230		$	5,966,933		$	5,619,950		$	5,402,860			10
Investment securities		1,485,515			1,404,796			1,308,192			1,242,448			1,153,208			29
Earning assets		7,491,480			7,424,992			7,332,492			6,915,134			6,599,035			14
Total assets		8,305,621			8,210,120			8,083,739			7,519,392			7,092,710			17
Deposits		6,051,069			6,151,476			6,246,319			5,945,633			5,764,426			5
Shareholders’ equity		855,659			837,195			834,094			672,348			624,100			37
Common shares - basic		46,966			47,203			48,348			44,949			43,000
Common shares - diluted		47,272			47,652			48,977			45,761			43,912

AT PERIOD END
Loans	$	5,967,839		$	5,929,263		$	5,952,749		$	5,999,093		$	5,402,198			10
Investment securities		1,508,402			1,356,846			1,296,826			1,213,659			1,150,424			31
Total assets		8,386,255			8,207,302			8,180,600			8,087,667			7,186,602			17
Deposits		6,175,769			6,075,951			6,154,308			6,361,269			5,841,687			6
Shareholders’ equity		871,452			831,902			833,761			828,731			638,456			36
Common shares outstanding		47,004			46,903			47,542			48,781			43,038

(1) Excludes effect of special $15 million fraud related provision for loan losses recorded in the second quarter of 2007, an additional $3 million provision in the fourth quarter of 2007, and $18 million of related loan charge-offs recorded in the fourth quarter of 2007.
(2) Net income available to common shareholders, which excludes preferred stock dividends, divided by average realized common equity, which excludes accumulated other comprehensive income (loss).
(3) Excludes effect of acquisition related intangibles and associated amortization.
(4) Annualized.

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Loan Portfolio Composition at Period-End
											Linked
											Quarter
	2008		2007								Change(2)			Year over Year Change
	First		Fourth		Third		Second		First								Excluding
(in millions)	Quarter		Quarter		Quarter		Quarter(1)		Quarter		Actual			Actual			Acquired
LOANS BY CATEGORY
Commercial (sec. by RE)	$	1,526	$	1,476	$	1,441	$	1,461	$	1,227		14	%		24	%		7	%
Commercial construction		548		527		527		509		462		16			19			14
Commercial & industrial		437		418		408		421		315		18			39			4
Total commercial		2,511		2,421		2,376		2,391		2,004		15			25			8
Residential construction		1,791		1,830		1,939		2,013		1,874		(9	)		(4	)		(14	)
Residential mortgage		1,491		1,502		1,459		1,413		1,353		(3	)		10			9
Consumer / installment		175		176		179		182		171		(2	)		2			(2	)
Total loans	$	5,968	$	5,929	$	5,953	$	5,999	$	5,402		3			10			1


LOANS BY MARKET
Atlanta Region	$	2,393	$	2,402	$	2,451	$	2,518	$	2,015		(1	) %		19	%		(8	) %
North Georgia		2,071		2,060		2,026		2,032		2,010		2			3			3
Western North Carolina		816		806		834		816		782		5			4			4
Coastal Georgia		439		416		402		396		372		22			18			18
East Tennessee		249		245		240		237		223		7			12			12
Total loans	$	5,968	$	5,929	$	5,953	$	5,999	$	5,402		3			10			1


RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development	$	583	$	593	$	596	$	602	$	580		(7	) %		1	%		(8	) %
Land loans		130		126		125		113		122		13			7			4
Lot loans		406		407		403		393		362		(1	)		12			5
Total		1,119		1,126		1,124		1,108		1,064		(2	)		5			(2	)

House loans
Spec		460		473		539		596		533		(11	) %		(14	) %		(26	) %
Sold		212		231		276		309		277		(33	)		(23	)		(35	)
Total		672		704		815		905		810		(18	)		(17	)		(29	)
Total residential construction	$	1,791	$	1,830	$	1,939	$	2,013	$	1,874		(9	)		(4	)		(14	)


RESIDENTIAL CONSTRUCTION - ATLANTA REGION
Dirt loans
Acquisition & development	$	305	$	311	$	312	$	336	$	317		(8	) %		(4	) %		(19	) %
Land loans		55		54		53		50		52		7			6			-
Lot loans		129		131		135		140		113		(6	)		14			(8	)
Total		489		496		500		526		482		(6	)		1			(14	)

House loans
Spec		279		286		328		378		298		(10	) %		(6	) %		(28	) %
Sold		76		82		112		140		124		(29	)		(39	)		(65	)
Total		355		368		440		518		422		(14	)		(16	)		(38	)
Total residential construction	$	844	$	864	$	940	$	1,044	$	904		(9	)		(7	)		(25	)


(1) Acquired Gwinnett Commercial Group on June 1, 2007 with total loans of $534 million in the Atlanta Region:
(2) Annualized.

UNITED COMMUNITY BANKS, INC.
Operating Earnings to GAAP Earnings Reconciliation
(in thousands, except per share data)
	First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter
	2008			2007			2007			2007

Special provision for fraud related loan losses	$	-		$	3,000		$	-		$	15,000

Income tax effect of special provision		-			1,167			-			5,835
After-tax effect of special provision	$	-		$	1,833		$	-		$	9,165

Net Income Reconciliation
Operating net income	$	16,078		$	6,034		$	22,536		$	21,076
After-tax effect of special provision and merger-related charges		-			(1,833	)		-			(9,165	)
Net income (GAAP)	$	16,078		$	4,201		$	22,536		$	11,911

Basic Earnings Per Share Reconciliation
Basic operating earnings per share	$	.34		$	.13		$	.47		$	.47
Per share effect of special provision and merger-related charges		-			(.04	)		-			(.21	)
Basic earnings per share (GAAP)	$	.34		$	.09		$	.47		$	.26

Diluted Earnings Per Share Reconciliation
Diluted operating earnings per share	$	.34		$	.13		$	.46		$	.46
Per share effect of special provision and merger-related charges		-			(.04	)		-			(.20	)
Diluted earnings per share (GAAP)	$	.34		$	.09		$	.46		$	.26

Provision for Loan Losses Reconciliation
Operating provision for loan losses	$	7,500		$	26,500		$	3,700		$	3,700
Special provision for fraud related loan losses		-			3,000			-			15,000
Provision for loan losses (GAAP)	$	7,500		$	29,500		$	3,700		$	18,700

Nonperforming Assets Reconciliation
Nonperforming assets excluding fraud-related assets	$	85,182		$	40,956		$	39,761		$	19,968
Fraud-related loans and OREO included in nonperforming assets		4,682			5,302			23,576			23,633
Nonperforming assets (GAAP)	$	89,864		$	46,258		$	63,337		$	43,601

Allowance for Loan Losses Reconciliation
Allowance for loan losses excluding special fraud-related allowance	$	89,848		$	89,423		$	75,935		$	77,471
Fraud-related allowance for loan losses		-			-			15,000			15,000
Allowance for loan losses (GAAP)	$	89,848		$	89,423		$	90,935		$	92,471

Net Charge Offs Reconciliation
Net charge offs excluding charge off of fraud-related loans	$	7,075		$	13,012		$	5,236		$	2,124
Fraud-related loans charged off		-			18,000			-			-
Net charge offs (GAAP)	$	7,075		$	31,012		$	5,236		$	2,124

Allowance for Loan Losses to Loans Ratio Reconciliation
Allowance for loan losses to loans ratio excluding fraud-related allowance		1.51	%		1.51	%		1.28	%		1.29	%
Portion of allowance assigned to fraud-related loans		-			-			.25			.25
Allowance for loan losses to loans ratio (GAAP)		1.51	%		1.51	%		1.53	%		1.54	%

Nonperforming Assets to Total Assets Ratio Reconciliation
Nonperforming assets to total assets ratio excluding fraud-related assets		1.02	%		.50	%		.49	%		.25	%
Fraud-related nonperforming assets		.05			.06			.28			.29
Nonperforming assets to total assets ratio (GAAP)		1.07	%		.56	%		.77	%		.54	%

Net Charge Offs to Average Loans Ratio Reconciliation
Net charge offs to average loans ratio excluding fraud-related loans		.48	%		.87	%		.35	%		.15	%
Charge offs of fraud-related loans		-			1.20			-			-
Net charge offs to average loans ratio (GAAP)		.48	%		2.07	%		.35	%		.15	%

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

	Three Months Ended March 31,
(in thousands, except per share data)	2008		2007

Interest revenue:
Loans, including fees	$	109,266	$	114,073
Investment securities:
Taxable		18,628		13,968
Tax exempt		394		447
Federal funds sold and deposits in banks		222		58
Total interest revenue		128,510		128,546

Interest expense:
Deposits:
NOW		8,587		10,627
Money market		2,913		2,540
Savings		227		309
Time		38,884		41,625
Total deposit interest expense		50,611		55,101
Federal funds purchased, repurchase agreements, & other short-term borrowings		4,318		1,817
Federal Home Loan Bank advances		5,745		4,801
Long-term debt		2,080		2,204
Total interest expense		62,754		63,923
Net interest revenue		65,756		64,623
Provision for loan losses		7,500		3,700
Net interest revenue after provision for loan losses		58,256		60,923

Fee revenue:
Service charges and fees		7,813		7,253
Mortgage loan and other related fees		1,963		2,223
Consulting fees		1,807		1,747
Brokerage fees		1,093		944
Securities gains, net		-		207
Other		1,521		2,008
Total fee revenue		14,197		14,382
Total revenue		72,453		75,305

Operating expenses:
Salaries and employee benefits		28,754		28,317
Communications and equipment		3,832		3,812
Occupancy		3,716		3,191
Advertising and public relations		1,351		2,016
Postage, printing and supplies		1,592		1,660
Professional fees		1,921		1,479
Amortization of intangibles		767		564
Other		5,596		3,802
Total operating expenses		47,529		44,841
Income before income taxes		24,924		30,464
Income taxes		8,846		11,119
Net income	$	16,078	$	19,345


Earnings per common share:
Basic	$	.34	$	.45
Diluted		.34		.44
Dividends per common share		.09		.09
Weighted average common shares outstanding:
Basic		46,966		43,000
Diluted		47,272		43,912

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet

	March 31,			December 31,			March 31,
(in thousands, except share and per share data)	2008			2007			2007
	(unaudited)			(audited)			(unaudited)
ASSETS

Cash and due from banks	$	169,538		$	157,549		$	159,543
Interest-bearing deposits in banks		13,417			62,074			22,644
Cash and cash equivalents		182,955			219,623			182,187

Securities available for sale		1,508,402			1,356,846			1,150,424
Mortgage loans held for sale		28,451			28,004			31,633
Loans, net of unearned income		5,967,839			5,929,263			5,402,198
Less allowance for loan losses		89,848			89,423			68,804
Loans, net		5,877,991			5,839,840			5,333,394

Premises and equipment, net		180,746			180,088			150,332
Accrued interest receivable		59,585			62,828			60,677
Goodwill and other intangible assets		324,041			325,305			166,073
Other assets		224,084			194,768			111,882
Total assets	$	8,386,255		$	8,207,302		$	7,186,602

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand	$	690,028		$	700,941		$	675,969
NOW		1,523,942			1,474,818			1,406,287
Money market		431,623			452,917			277,184
Savings		187,911			186,392			176,891
Time:
Less than $100,000		1,535,742			1,573,604			1,619,865
Greater than $100,000		1,375,000			1,364,763			1,366,360
Brokered		431,523			322,516			319,131
Total deposits		6,175,769			6,075,951			5,841,687

Federal funds purchased, repurchase agreements, and other short-term borrowings		532,896			638,462			77,367
Federal Home Loan Bank advances		615,324			519,782			464,072
Long-term debt		107,996			107,996			113,151
Accrued expenses and other liabilities		82,818			33,209			51,869
Total liabilities		7,514,803			7,375,400			6,548,146

Shareholders' equity:
Preferred stock, $1 par value; $10 stated value; 10,000,000 shares authorized;
25,800, 25,800 and 32,200 shares issued and outstanding		258			258			322
Common stock, $1 par value; 100,000,000 shares authorized;
48,809,301, 48,809,301 and 43,037,840 shares issued		48,809			48,809			43,038
Common stock issuable; 90,505, 73,250 and 35,154 shares		2,410			2,100			1,043
Capital surplus		463,095			462,881			273,575
Retained earnings		359,248			347,391			321,721
Treasury stock; 1,805,078 and 1,905,921shares, at cost		(41,351	)		(43,798	)		-
Accumulated other comprehensive income (loss)		38,983			14,261			(1,243	)
Total shareholders' equity		871,452			831,902			638,456

Total liabilities and shareholders' equity	$	8,386,255		$	8,207,302		$	7,186,602

UNITED COMMUNITY BANKS, INC.
Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended March 31,

	2008								2007
	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)	$	5,958,296		$	109,252		7.37	%	$	5,402,860		$	113,868		8.55	%
Taxable securities (3)		1,448,224			18,628		5.15			1,109,847			13,968		5.03
Tax-exempt securities (1)(3)		37,291			648		6.95			43,361			735		6.78
Federal funds sold and other interest-earning assets		47,669			513		4.30			42,967			457		4.25

Total interest-earning assets		7,491,480			129,041		6.92			6,599,035			129,028		7.92
Non-interest-earning assets:
Allowance for loan losses		(92,025	)							(68,187	)
Cash and due from banks		154,706								120,637
Premises and equipment		181,355								146,832
Other assets (3)		570,105								294,393
Total assets	$	8,305,621							$	7,092,710

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW	$	1,462,116		$	8,587		2.36		$	1,322,818		$	10,627		3.26
Money market		439,049			2,913		2.67			261,753			2,540		3.94
Savings		184,812			227		.49			175,275			309		.71
Time less than $100,000		1,553,313			18,223		4.72			1,641,507			19,796		4.89
Time greater than $100,000		1,365,307			16,370		4.82			1,385,401			17,916		5.24
Brokered		374,402			4,291		4.61			334,753			3,913		4.74
Total interest-bearing deposits		5,378,999			50,611		3.78			5,121,507			55,101		4.36

Federal funds purchased and other borrowings		551,812			4,318		3.15			139,256			1,817		5.29
Federal Home Loan Bank advances		661,498			5,745		3.49			395,746			4,801		4.92
Long-term debt		107,996			2,080		7.75			113,234			2,204		7.89
Total borrowed funds		1,321,306			12,143		3.70			648,236			8,822		5.52

Total interest-bearing liabilities		6,700,305			62,754		3.77			5,769,743			63,923		4.49
Non-interest-bearing liabilities:
Non-interest-bearing deposits		672,070								642,919
Other liabilities		77,587								55,948
Total liabilities		7,449,962								6,468,610
Shareholders' equity		855,659								624,100
Total liabilities and shareholders' equity	$	8,305,621							$	7,092,710

Net interest revenue				$	66,287							$	65,105
Net interest-rate spread							3.15	%							3.43	%

Net interest margin (4)							3.55	%							3.99	%


(1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate
used was 39%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued.
(3) Securities available for sale are shown at amortized cost. Pretax unrealized gains of $15.9 million in 2008 and pretax unrealized losses of $10.0
million in 2007 are included in other assets for purposes of this presentation.
(4) Net interest margin is taxable equivalent net-interest revenue divided by average interest-earning assets.