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

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)		(Zip Code)

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

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 23, 2009, United Community Banks, Inc. (the “Registrant”) issued a news release announcing its financial results for the quarter ended March 31, 2009 (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 23, 2009 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 for the first quarter of 2009 exclude the effects of a $70 million non-cash goodwill impairment charge and $2.9 million in non-recurring severance charges related to a reduction in workforce because management feels that the two expense items are non-recurring in nature 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 23, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit
Number				Description
	99.1			Press Release, dated April 23, 2009

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
NET OPERATING LOSS FOR FIRST QUARTER 2009

•

Provision for loan losses of $65 million exceeded charge-offs by $22 million

•

Allowance-to-loans ratio of 2.56 percent, up from 2.14 percent last quarter

•

Non-cash goodwill impairment charge of $70 million, or $1.45 per diluted share, primarily due to stock price decline

•

Severance costs of $2.9 million, or 4 cents per diluted share, related to reduction in work force

•

Margin improvement of 38 basis points this quarter to 3.08 percent

•

Capital levels remain strong

BLAIRSVILLE, GA — April 23, 2009 — United Community Banks, Inc. (NASDAQ: UCBI) today reported a net operating loss of $32 million, or 71 cents per diluted share, for the first quarter of 2009. The net operating loss was primarily driven by higher credit costs, including the $22 million build-up in the allowance for loan losses. Net operating loss does not reflect a $70 million non-cash charge for impairment of goodwill and $2.9 million in severance costs relating to a reduction in work force, both of which are considered non-recurring expenses and therefore excluded from operating earnings. Including these non-recurring expenses the net loss for the quarter was $103.8 million, or $2.20 per diluted share.

“The $70 million goodwill impairment charge is a non-cash accounting adjustment to the company’s balance sheet that does not affect cash flow or liquidity and has no impact on our regulatory or tangible capital ratios,” stated Jimmy Tallent, president and chief executive officer. “During the fourth quarter our stock price traded well above tangible book value, and our goodwill test indicated no impairment at year-end. However, our stock price declined sharply during the first quarter, as did those of most financial services companies. When we updated our impairment test as of March 31, 2009, we had impairment of $70 million driven primarily by the stock price decline.”

“The recession and its effect on the housing and construction markets, particularly in Atlanta, continued to drive credit quality issues in our loan portfolio,” added Tallent. “A rise in the level of classified and non-performing assets, and deterioration in property valuations, led us to increase our allowance by $22 million over net charge-offs. While we remain committed to moving through this credit cycle as quickly as possible, our efforts have been hindered by this difficult environment.”

Loans were $5.6 billion at quarter end, down $335 million from a year ago and down $72 million on a linked-quarter basis, reflecting the company’s continued efforts to reduce exposure to the residential construction market. At March 31, 2009, residential construction loans were $1.4 billion, or 25 percent of total loans, a decrease of $361 million from a year ago and $49 million from the fourth quarter of 2008.

Taxable equivalent net interest revenue of $57.4 million reflected an increase of $5.5 million from last quarter and a decrease of $8.9 million from a year ago. The taxable equivalent net interest margin was 3.08 percent compared with 2.70 percent for the fourth quarter of 2008, and 3.55 percent for the first quarter of 2008.

“In the latter part of the fourth quarter, we were able to take several steps that contributed to the expansion in our first quarter margin,” stated Tallent. “We improved our loan pricing and credit spreads, decreased deposit interest rates and, with an overall improvement in liquidity, we were able to let higher-cost time deposits and brokered deposits run off. We will continue to actively pursue strategies to improve our margin, while balancing liquidity needs with our goal of maximizing pre-tax, pre-provision earnings.”

“Core deposits, excluding public funds, increased in every category this quarter reflective of our new initiatives and programs for customer referrals and cross selling,” stated Tallent. “We added 21,918 new services this quarter, an annual growth rate of 11 percent, that expanded customer relationships and we opened 3,585 net new customer accounts.”

The first quarter provision for loan losses was $65 million, compared with $85 million for the fourth quarter of 2008. Net charge-offs for the first quarter were $43.3 million compared with $74 million for the fourth quarter of 2008. At quarter-end, non-performing assets totaled $334.5 million compared with $250.5 million at December 31, 2008. The ratio of non-performing assets to total assets at the end of the first and fourth quarters was 4.11 percent and 2.94 percent, respectively. The allowance for loan losses to total loans was 2.56 percent and 2.14 percent.

“The recession continued to negatively affect our credit quality, particularly within our Atlanta residential construction portfolio,” Tallent said. “Although we have seen some deterioration in other loan categories and markets, our principal challenge remains in the residential construction portfolio. The rise in non-performing assets was driven primarily by continued weakness in the Atlanta housing and construction markets, and to softened demand from buyers. We expect the challenges to continue in 2009 and the level of charge-offs and non-performing assets to be elevated over historical levels. However, we will aggressively work through our problem credits and pursue the best economic outcome for our company in each instance.”

Fee revenue of $12.8 million was up $2.1 million from the fourth quarter, but down $1.4 million from the first quarter of 2008. Service charges and fees on deposit accounts of $7.0 million reflected a $779,000 decrease from a year ago due to lower activity and fewer transaction charges. Consulting fees were down $786,000 from last year primarily due to the consulting assistance provided to United for a company-wide initiative to improve efficiency and profitability. Consulting fees were further affected by weakness in the financial services industry that hindered sales efforts and delayed consulting contracts. Mortgage loan fees of $2.7 million were up $688,000 due to a record high level of refinancing activity.

Operating expenses, before the recognition of goodwill impairment and severance costs, were $52.6 million reflecting an increase of $5.0 million from the first quarter of 2008 and at the same level as the fourth quarter of 2008. The increase year over year was primarily due to higher foreclosed property costs of $3.4 million and an increase in FDIC insurance premiums of $1.4 million. For the first quarter of 2009, salaries and employee benefit costs of $28.8 million were at the same level as a year ago. First quarter 2009 staff costs did not reflect the reduction in work force of 191 staff, since most of the reduction in work force occurred at the end of the quarter with the remainder transitioning through the year-end. Severance and related benefit costs of $2.9 million were related to the reduction in staff.

“The decision to reduce staff was among the most difficult in my 25 years at United,” commented Tallent. “Unfortunately, their departure came as a result of economic conditions that were not within our control, but had a powerful influence on our business decision for the reduction in staff. We expect to save $10 million in annual staff and benefit costs. Also, we have completed a company-wide performance improvement project with fee revenue enhancements and expense savings of $7 million annually that should be fully implemented by year-end. We expect to realize over half of the $17 million of annual savings this year.”

The effective tax rate for the first quarter of 2009 was 14 percent, compared to 35.5 percent for the first quarter of 2008. “The tax rate was lower this quarter because goodwill and the related impairment charge are not recognized, nor deductible, for tax reporting purposes,” stated Tallent. “Also affecting the first quarter tax rate was a $2.3 million net reserve for deferred tax assets relating to state tax credits that are expected to expire unused. The projected effective tax rate for the balance of 2009 is 38 percent.”

United continues to maintain a strong capital position. At March 31, 2008, the company’s regulatory capital ratios were as follows: Tier I Risk-Based Capital of 10.9 percent; Leverage of 7.9 percent; and, Total Risk-Based of 13.6 percent. Also, the average tangible equity to assets ratio was 8.3 percent and the average tangible common equity to assets ratio was 6.1 percent.

“While we continue to aggressively dispose of problem credits and improve our margin, we have been pursuing ways to build on the growth opportunities identified throughout our markets,” Tallent said. “A key part of this plan was recently launched with the reorganization of our Atlanta region that enables us to more efficiently pursue, and better meet the needs of, small business and commercial customers. This new structure and redeployed team will not only increase and deepen our current customer relationships, but also expand our commercial and small business lending capabilities. Also, they will contribute to additional core deposits as well as further rebalance our loan portfolio, while reducing our exposure to any one segment of the market. Even though we will be using considerable resources to address the credit challenges for the remainder of the year, we will continue to plan ahead and position ourselves to capitalize on new opportunities across our footprint as the economy improves.”

Conference Call

United Community Banks will hold a conference call today, Thursday, April 23, 2009, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. The telephone number for the conference call is (877) 741-4240 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 $8.1 billion and operates 27 community banks with 107 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 3 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
		2009				2008																Quarter
		First				Fourth				Third				Second				First				2009-2008
(in thousands, except per share data; taxable equivalent)		Quarter				Quarter				Quarter				Quarter				Quarter				Change
INCOME SUMMARY
Interest revenue		$	103,562			$	108,434			$	112,510			$	116,984			$	129,041
Interest expense			46,150				56,561				53,719				55,231				62,754
Net interest revenue			57,412				51,873				58,791				61,753				66,287				(13)	%
Provision for loan losses			65,000				85,000				76,000				15,500				7,500
Fee revenue			12,846				10,718				13,121				15,105				14,197				(10	)
Total revenue			5,258				(22,409	)			(4,088	)			61,358				72,984			NM
Operating expenses (1)			52,569				52,439				56,970				49,761				47,529				11
Operating (loss) income before taxes			(47,311	)			(74,848	)			(61,058	)			11,597				25,455			NM
Income tax (benefit) expense			(15,335	)			(28,101	)			(21,184	)			4,504				9,377
Net operating (loss) income (1)			(31,976	)			(46,747	)			(39,874	)			7,093				16,078			NM
Noncash goodwill impairment charge			70,000				—				—				—				—
Severance costs, net of tax benefit			1,797				—				—				—				—
Net (loss) income			(103,773	)			(46,747	)			(39,874	)			7,093				16,078			NM
Preferred dividends			2,554				712				4				4				4
Net (loss) income available to common shareholders		$	(106,327	)		$	(47,459	)		$	(39,878	)		$	7,089			$	16,074			NM
PERFORMANCE MEASURES
Per common share:
Diluted operating (loss) earnings (1)		$	(.71	)		$	(.99	)		$	(.84	)		$	.15			$	.34			NM
Per share impact of goodwill impairment charge			(1.45	)			—				—				—				—
Per share impact of severance costs			(.04	)			—				—				—				—
Diluted (loss) earnings			(2.20	)			(.99	)			(.84	)			.15				.34			NM
Cash dividends declared			—				—				—				.09				.09
Stock dividends declared (5)		1 for 130				1 for 130				1 for 130					—				—
Book value			14.70				16.95				17.12				17.75				18.50				(21	)
Tangible book value (3)			9.65				10.39				10.48				11.03				11.76				(18	)
Key performance ratios:
Return on tangible equity (2)(3)		NM		%		NM		%		NM		%			5.86	%			13.16	%
Return on equity (2)(4)		NM				NM				NM					3.41				7.85
Return on assets (4)		NM				NM				NM					.34				.78
Net interest margin (4)			3.08				2.70				3.17				3.32				3.55
Operating efficiency ratio (3)			79.29				81.34				79.35				65.05				59.03
Equity to assets			11.64				10.08				10.28				10.33				10.30
Tangible equity to assets (3)			8.30				6.59				6.65				6.77				6.73
Tangible common equity to assets (3)			6.13				6.23				6.65				6.77				6.73
ASSET QUALITY
Net charge-offs		$	43,281			$	74,028			$	55,736			$	14,313			$	7,075
Non-performing loans (NPLs)			259,155				190,723				139,266				123,786				67,728
Foreclosed properties			75,383				59,768				38,438				28,378				22,136
Total non-performing assets (NPAs)			334,538				250,491				177,704				152,164				89,864
Allowance for loan losses			143,990				122,271				111,299				91,035				89,848
Allowance for loan losses to loans			2.56	%			2.14	%			1.91	%			1.53	%			1.51	%
Net charge-offs to average loans (4)			3.09				5.09				3.77				.97				.48
NPAs to loans and foreclosed properties			5.86				4.35				3.03				2.55				1.50
NPAs to total assets			4.11				2.94				2.20				1.84				1.07
AVERAGE BALANCES
Loans		$	5,675,054			$	5,784,139			$	5,889,168			$	5,933,143			$	5,958,296				(5	)
Investment securities			1,712,654				1,508,808				1,454,740				1,507,240				1,485,515				15
Earning assets			7,530,230				7,662,536				7,384,287				7,478,018				7,491,480				1
Total assets			8,312,648				8,449,097				8,146,880				8,295,748				8,305,621				—
Deposits			6,780,531				6,982,229				6,597,339				6,461,361				6,051,069				12
Shareholders’ equity			967,505				851,956				837,487				856,727				855,659				13
Common shares — basic			48,324				47,844				47,417				47,158				47,052
Common shares — diluted			48,324				47,844				47,417				47,249				47,272
AT PERIOD END
Loans		$	5,632,705			$	5,704,861			$	5,829,937			$	5,933,141			$	5,967,839				(6	)
Investment securities			1,719,033				1,617,187				1,400,827				1,430,588				1,508,402				14
Total assets			8,140,909				8,520,765				8,072,543				8,264,051				8,386,255				(3	)
Deposits			6,616,488				7,003,624				6,689,335				6,696,456				6,175,769				7
Shareholders’ equity			888,853				989,382				816,880				837,890				871,452				2
Common shares outstanding			48,487				48,009				47,596				47,096				47,004

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

		2009				2008																Linked				Year over
		First				Fourth				Third				Second				First				Quarter				Year
(in millions)		Quarter				Quarter				Quarter				Quarter				Quarter				Change(1)				Change
LOANS BY CATEGORY
Commercial (sec. by RE)		$	1,779			$	1,627			$	1,604			$	1,584			$	1,526				37	%			17	%
Commercial construction			377				500				509				522				548				(98	)			(31	)
Commercial & industrial			387				410				425				417				437				(22	)			(11	)
Total commercial			2,543				2,537				2,538				2,523				2,511				1				1
Residential construction			1,430				1,479				1,596				1,745				1,791				(13	)			(20	)
Residential mortgage			1,504				1,526				1,528				1,494				1,491				(6	)			1
Consumer / installment			156				163				168				171				175				(17	)			(11	)
Total loans		$	5,633			$	5,705			$	5,830			$	5,933			$	5,968				(5	)			(6	)
LOANS BY MARKET
Atlanta MSA		$	1,660			$	1,706			$	1,800			$	1,934			$	1,978				(11)	%			(16	)%
Gainesville MSA			422				420				426				422				415				2				2
North Georgia			2,014				2,040				2,066				2,065				2,071				(5	)			(3	)
Western North Carolina			808				810				815				819				816				(1	)			(1	)
Coastal Georgia			460				464				458				436				439				(3	)			5
East Tennessee			269				265				265				257				249				6				8
Total loans		$	5,633			$	5,705			$	5,830			$	5,933			$	5,968				(5	)			(6	)
RESIDENTIAL CONSTRUCTION
Dirt loans
Acquisition & development		$	445			$	484			$	516			$	569			$	583				(32	)%			(24	)%
Land loans			155				153				142				139				130				5				19
Lot loans			390				358				385				401				406				36				(4	)
Total			990				995				1,043				1,109				1,119				(2	)			(12	)
House loans
Spec			317				347				393				450				460				(35	)%			(31	)%
Sold			123				137				160				186				212				(41	)			(42	)
Total			440				484				553				636				672				(36	)			(35	)
Total residential construction		$	1,430			$	1,479			$	1,596			$	1,745			$	1,791				(13	)			(20	)
RESIDENTIAL CONSTRUCTION — ATLANTA MSA
Dirt loans
Acquisition & development		$	148			$	167			$	185			$	232			$	252				(46	)%			(41	)%
Land loans			52				56				47				50				50				(29	)			4
Lot loans			98				86				103				117				117				56				(16	)
Total			298				309				335				399				419				(14	)			(29	)
House loans
Spec			164				189				227				271				271				(53	)%			(39	)%
Sold			33				40				49				58				71				(70	)			(54	)
Total			197				229				276				329				342				(56	)			(42	)
Total residential construction		$	495			$	538			$	611			$	728			$	761				(32	)			(35	)

UNITED COMMUNITY BANKS, INC.
Financial Highlights
Credit Quality

		First Quarter 2009												Fourth Quarter 2008												Third Quarter 2008
		Nonaccrual								Total				Nonaccrual								Total				Nonaccrual								Total
(in thousands)		Loans				OREO				NPAs				Loans				OREO				NPAs				Loans				OREO				NPAs
NPAs BY CATEGORY
Commercial (sec. by RE)		$	18,188			$	3,811			$	21,999			$	15,188			$	2,427			$	17,615			$	9,961			$	854			$	10,815
Commercial construction			6,449				2,948				9,397				1,513				2,333				3,846				2,924				375				3,299
Commercial & industrial			12,066				—				12,066				1,920				—				1,920				1,556				—				1,556
Total commercial			36,703				6,759				43,462				18,621				4,760				23,381				14,441				1,229				15,670
Residential construction			187,656				58,327				245,983				144,836				48,572				193,408				102,095				32,453				134,548
Residential mortgage			33,148				10,297				43,445				25,574				6,436				32,010				21,335				4,756				26,091
Consumer / installment			1,648				—				1,648				1,692				—				1,692				1,395				—				1,395
Total NPAs		$	259,155			$	75,383			$	334,538			$	190,723			$	59,768			$	250,491			$	139,266			$	38,438			$	177,704
NPAs BY MARKET
Atlanta MSA		$	131,020			$	48,574			$	179,594			$	105,476			$	42,336			$	147,812			$	80,805			$	27,011			$	107,816
Gainesville MSA			17,448				694				18,142				16,208				1,110				17,318				15,105				648				15,753
North Georgia			66,875				20,811				87,686				31,631				12,785				44,416				20,812				8,337				29,149
Western North Carolina			21,240				3,067				24,307				18,509				2,986				21,495				13,432				1,509				14,941
Coastal Georgia			15,699				1,286				16,985				11,863				138				12,001				3,682				601				4,283
East Tennessee			6,873				951				7,824				7,036				413				7,449				5,430				332				5,762
Total NPAs		$	259,155			$	75,383			$	334,538			$	190,723			$	59,768			$	250,491			$	139,266			$	38,438			$	177,704

		First Quarter 2009								Fourth Quarter 2008								Third Quarter 2008
						Net Charge-								Net Charge-								Net Charge-
						Offs to								Offs to								Offs to
		Net				Average				Net				Average				Net				Average
(in thousands)		Charge-Offs				Loans (1)				Charge-Offs				Loans (1)				Charge-Offs				Loans (1)
NET CHARGE-OFFS BY CATEGORY
Commercial (sec. by RE)		$	826				.20	%		$	4,460				1.10	%		$	257				.06	%
Commercial construction			54				.05				1,442				1.14				225				.17
Commercial & industrial			873				.89				3,416				3.24				1,018				.96
Total commercial			1,753				.28				9,318				1.46				1,500				.24
Residential construction			37,762				10.52				57,882				14.93				50,228				11.94
Residential mortgage			2,984				.80				5,852				1.52				3,332				.88
Consumer / installment			782				1.99				976				2.34				676				1.58
Total		$	43,281				3.09			$	74,028				5.09			$	55,736				3.77
NET CHARGE-OFFS BY MARKET
Atlanta MSA		$	26,228				6.16	%		$	49,309				10.80	%		$	48,313				10.08	%
Gainesville MSA			1,105				1.18				7,994				8.60				1,470				1.49
North Georgia			8,208				1.64				9,872				1.91				4,567				.88
Western North Carolina			3,669				1.83				2,371				1.16				855				.42
Coastal Georgia			3,229				2.84				3,150				2.70				249				.22
East Tennessee			842				1.28				1,332				2.02				282				.43
Total		$	43,281				3.09			$	74,028				5.09			$	55,736				3.77

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

		Three Months Ended
		March 31,
(in thousands, except per share data)		2009				2008
Interest revenue:
Loans, including fees		$	81,880			$	109,266
Investment securities, including tax exempt of $319 and $394			20,752				19,022
Federal funds sold, commercial paper and deposits in banks			442				222
Total interest revenue			103,074				128,510
Interest expense:
Deposits:
NOW			3,337				8,587
Money market			2,237				2,913
Savings			127				227
Time			36,053				38,884
Total deposit interest expense			41,754				50,611
Federal funds purchased, repurchase agreements and other short-term borrowings			553				4,318
Federal Home Loan Bank advances			1,074				5,745
Long-term debt			2,769				2,080
Total interest expense			46,150				62,754
Net interest revenue			56,924				65,756
Provision for loan losses			65,000				7,500
Net interest revenue after provision for loan losses			(8,076	)			58,256
Fee revenue:
Service charges and fees			7,034				7,813
Mortgage loan and other related fees			2,651				1,963
Consulting fees			1,021				1,807
Brokerage fees			689				1,093
Securities gains, net			303				—
Other			1,148				1,521
Total fee revenue			12,846				14,197
Total revenue			4,770				72,453
Operating expenses:
Salaries and employee benefits			28,839				28,754
Communications and equipment			3,729				3,832
Occupancy			3,807				3,716
Advertising and public relations			1,109				1,351
Postage, printing and supplies			1,182				1,592
Professional fees			2,293				1,921
Foreclosed preoperty			4,319				911
FDIC assessments and other regulatory charges			2,682				1,266
Amortization of intangibles			739				767
Other			3,870				3,419
Goodwill impairment			70,000				—
Severance costs			2,898				—
Total operating expenses			125,467				47,529
(Loss) income before income taxes			(120,697	)			24,924
Income tax (benefit) expense			(16,924	)			8,846
Net (loss) income			(103,773	)			16,078
Preferred stock dividends			2,554				4
Net (loss) income available to common shareholders		$	(106,327	)		$	16,074
(Loss) earnings per common share:
Basic		$	(2.20	)		$	.34
Diluted			(2.20	)			.34
Weighted average common shares outstanding:
Basic			48,324				47,052
Diluted			48,324				47,272

UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet

		March 31,				December 31,				March 31,
(in thousands, except share and per share data)		2009				2008				2008
		(unaudited)				(audited)				(unaudited)
ASSETS
Cash and due from banks		$	103,707			$	116,395			$	169,538
Interest-bearing deposits in banks			5,792				8,417				13,417
Federal funds sold, commercial paper and short-term investments			24,983				368,609				—
Cash and cash equivalents			134,482				493,421				182,955
Securities available for sale			1,719,033				1,617,187				1,508,402
Mortgage loans held for sale			43,161				20,334				28,451
Loans, net of unearned income			5,632,705				5,704,861				5,967,839
Less allowance for loan losses			143,990				122,271				89,848
Loans, net			5,488,715				5,582,590				5,877,991
Premises and equipment, net			178,980				179,160				180,746
Accrued interest receivable			45,514				46,088				59,585
Goodwill and other intangible assets			251,060				321,798				324,041
Other assets			279,964				260,187				224,084
Total assets		$	8,140,909			$	8,520,765			$	8,386,255
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand		$	665,447			$	654,036			$	690,028
NOW			1,284,791				1,543,385				1,523,942
Money market			500,261				466,750				431,623
Savings			177,001				170,275				187,911
Time:
Less than $100,000			1,911,627				1,953,235				1,535,742
Greater than $100,000			1,350,190				1,422,974				1,375,000
Brokered			727,171				792,969				431,523
Total deposits			6,616,488				7,003,624				6,175,769
Federal funds purchased, repurchase agreements, and other short-term borrowings			158,690				108,411				532,896
Federal Home Loan Bank advances			260,125				235,321				615,324
Long-term debt			151,006				150,986				107,996
Accrued expenses and other liabilities			65,747				33,041				82,818
Total liabilities			7,252,056				7,531,383				7,514,803
Shareholders’ equity:
Preferred stock, $1 par value; 10,000,000 shares authorized;
Series A; $10 stated value; 25,800 shares issued and outstanding			258				258				258
Series B; $1,000 stated value; 180,000 shares issued and outstanding			173,480				173,180				—
Common stock, $1 par value; 100,000,000 shares authorized; 48,809,301 shares issued			48,809				48,809				48,809
Common stock issuable; 161,807, 129,304 and 90,505 shares			3,270				2,908				2,410
Capital surplus			452,277				460,708				463,095
Retained earnings			158,201				265,405				359,248
Treasury stock; 322,603, 799,892 and 1,805,078 shares, at cost			(5,992	)			(16,465	)			(41,351	)
Accumulated other comprehensive income			58,550				54,579				38,983
Total shareholders’ equity			888,853				989,382				871,452
Total liabilities and shareholders’ equity		$	8,140,909			$	8,520,765			$	8,386,255

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

		2009												2008
		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)		$	5,675,054			$	81,749				5.84	%		$	5,958,296			$	109,252				7.37	%
Taxable securities (3)			1,682,603				20,433				4.86				1,448,224				18,628				5.15
Tax-exempt securities (1)(3)			30,051				522				6.95				37,291				648				6.95
Federal funds sold and other interest-earning assets			142,522				858				2.41				47,669				513				4.30
Total interest-earning assets			7,530,230				103,562				5.56				7,491,480				129,041				6.92
Non-interest-earning assets:
Allowance for loan losses			(128,798	)											(92,025	)
Cash and due from banks			104,411												154,706
Premises and equipment			179,495												181,355
Other assets (3)			627,310												570,105
Total assets		$	8,312,648											$	8,305,621
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW		$	1,358,149			$	3,337				1.00			$	1,462,116			$	8,587				2.36
Money market			477,325				2,237				1.90				439,049				2,913				2.67
Savings			172,708				127				.30				184,812				227				.49
Time less than $100,000			1,942,897				17,217				3.59				1,553,313				18,223				4.72
Time greater than $100,000			1,393,188				12,825				3.73				1,365,307				16,370				4.82
Brokered			786,171				6,011				3.10				374,402				4,291				4.61
Total interest-bearing deposits			6,130,438				41,754				2.76				5,378,999				50,611				3.78
Federal funds purchased and other borrowings			150,517				553				1.49				551,812				4,318				3.15
Federal Home Loan Bank advances			204,941				1,074				2.13				661,498				5,745				3.49
Long-term debt			150,997				2,769				7.44				107,996				2,080				7.75
Total borrowed funds			506,455				4,396				3.52				1,321,306				12,143				3.70
Total interest-bearing liabilities			6,636,893				46,150				2.82				6,700,305				62,754				3.77
Non-interest-bearing liabilities:
Non-interest-bearing deposits			650,093												672,070
Other liabilities			58,157												77,587
Total liabilities			7,345,143												7,449,962
Shareholders’ equity			967,505												855,659
Total liabilities and shareholders’ equity		$	8,312,648											$	8,305,621
Net interest revenue						$	57,412											$	66,287
Net interest-rate spread											2.74	%											3.15	%
Net interest margin (4)											3.08	%											3.55	%