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):

July 27, 2004

United Community Banks, Inc.

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

Table of Contents

SIGNATURES

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

EXHIBIT 99.1

For Immediate Release

For more information:

Rex S. Schuette
Chief Financial Officer
(706) 781-2265
Rex_Schuette@ucbi.com

UNITED COMMUNITY BANKS, INC. REPORTS
15% GAIN IN OPERATING EARNINGS
FOR SECOND QUARTER 2004

HIGHLIGHTS:

BLAIRSVILLE, GA, July 27, 2004 – United Community Banks, Inc. (Nasdaq: UCBI), Georgia’s third largest bank holding company, today announced second quarter 2004 results that included a 15% rise in net operating income, an 11% gain in diluted operating earnings per share, and an 8% increase in total revenue from the same period last year.

For the quarter, net operating income rose to a record $11.4 million from $9.9 million a year earlier. Diluted operating earnings per share of $.31 increased 11% from $.28 for the second quarter a year ago. Total revenue, on a taxable equivalent basis, was $47.1 million compared with $43.6 million for the second quarter of 2003. Also, on an operating basis, return on tangible equity was 19.70% compared with 19.54% a year ago and return on assets was 1.07% compared with 1.06% a year ago.

For the first six months, net operating income was $22.3 million, up 20% from the same period a year ago. Diluted operating earnings per share of $.61 rose 13% from $.54 for the first half of

2003. Taxable equivalent total revenue was $92.4 million, up $11.1 million, or 14%, from $81.3 million a year ago. On an operating basis, return on tangible equity was 19.79%, up from 18.69% a year ago and return on assets was 1.07% compared with 1.06% a year ago.

Net operating income for the second quarter of 2004 and 2003 excludes pre-tax merger-related charges of $464 thousand and $668 thousand, respectively. Merger-related charges recorded in the second quarter of 2004 related to the acquisition of Fairbanco Holding Company (“1st Community Bank”) completed on June 1, 2004. Charges recorded in the second quarter of 2003, related to the acquisition of First Georgia Holding (“First Georgia Bank”) completed on May 1, 2003. The first quarter of 2003, also included pre-tax merger-related charges of $840 thousand related to the acquisition of First Central Bancshares, Inc. (“First Central Bank”) completed on March 31, 2003, bringing total merger-related charges for the first six months of 2003 to $1.5 million.

The merger-related charges for these acquisitions were for legal, investment advisor and other professional fees, as well as the termination of equipment leases and conversion costs. Including those merger-related charges, net income for the second quarter of 2004 was $11.0 million or $.30 per diluted share and for the second quarter of 2003 was $9.5 million or $.27 per diluted share. For the first six months of 2004, net income and diluted earnings per share were $22.0 million and $.60, respectively, and for 2003 were $17.5 million and $.51, respectively.

As previously announced, effective April 28, 2004, United Community Banks completed a three-for-two split of its common stock. All comparative per share amounts presented in this press release and accompanying schedules have been adjusted to reflect the stock split as if it had occurred prior to the earliest period presented.

“For United Community Banks, the second quarter results continued our track record of outstanding performance,” said Jimmy Tallent, president and chief executive officer. “Loan demand remained strong across all our markets, providing significant growth opportunities.” At June 30, 2004, total loans were $3.3 billion, up 14% from last year excluding acquisitions. “This core loan growth was achieved in a disciplined, step-by-step process throughout the year,

without compromising credit quality,” Tallent added. “I’m especially pleased to report that, due to the overwhelming success of our efforts to grow deposits, we were able to fund a significant portion of this loan growth with core deposits.”

“For the second quarter, we again achieved our stated goals of sustained double-digit growth in operating earnings per share and a return on tangible equity above 18%,” Tallent said. “For 2004, our earnings per share target is a range of 12% to 15% and, for the first half, we are on track to meet that goal,” added Tallent. Return on tangible equity excludes the effects of merger charges and acquisition-related intangibles.

“Our ability to serve the needs of our customers, combined with the strength of our markets, helped increase core loans by $387 million, or 14%, from a year ago,” Tallent said. “In addition, the acquisitions of three banking offices in western North Carolina and 1st Community Bank in metro Atlanta contributed $90 million in new loans, bringing our total loan growth to $477 million, or 17%, from a year ago.”

Taxable equivalent net interest revenue for the second quarter of 2004 rose $4.5 million, or 13%, to $39.2 million from the same period a year ago. Taxable equivalent net interest margin for the second quarter was 3.95% versus 3.99% a year ago. “Our core business growth remains strong. We have maintained a net interest margin near the 4% level for the past seven quarters and expect our margin to remain at this level through 2004,” Tallent said. “With our balance sheet slightly asset sensitive, we are well positioned for a rising interest rate environment.”

The second quarter provision for loan losses was $1.8 million, up $300 thousand from a year earlier and unchanged from the first quarter of 2004. Net charge-offs to average loans were .10% for the second quarter, compared with ..16% for the second quarter of 2003 and .08% for the first quarter. Non-performing assets totaled $8.8 million, up $600 thousand from a year ago, while loans increased $477 million over that same period. Non-performing assets as a percentage of total assets were .19% at June 30, 2004, compared with .19% at December 31, 2003 and .21% at June 30, 2003.

“Our excellent credit quality continues to be one of the key drivers of our high performance and growth,” Tallent said. “Credit quality remains sound thanks to the tireless efforts of our exceptional team of bankers, and our strategy of securing loans with hard assets remains critical to our credit quality success.”

Fee revenue of $9.6 million for the second quarter was down $700 thousand from $10.3 million a year ago due to a decline in mortgage refinancing activities that were at record levels last year. Mortgage loan and related fees of $1.6 million were down $1.8 million from a year ago. “The decline in volume and revenue was anticipated,” stated Tallent. “We have had lower levels of refinancing activities since the rise in long-term interest rates late last year. We have added new products and mortgage originators to help offset some of the decline in revenue and so far the results have been positive. On a consecutive quarter basis, mortgage revenue is up $300 thousand,” Tallent added. “Additionally, we were able to grow fee revenue in other products and services. Service charges and fees on deposit accounts were $5.3 million, up $600 thousand due to acquisitions and the growth in transactions and new accounts resulting from our efforts to increase core deposits and consulting fees of $1.4 million were up $250 thousand,” Tallent commented.

“We are focused on growing core deposits and related fee revenue,” Tallent added. “Early in the first quarter of 2004, we began a company-wide initiative to increase our deposit base by engaging our loyal customer base in the process. Our community-banking focus on customer service has generated customer satisfaction scores exceeding 90 percent, well above the industry average of 75 percent. This has allowed us to leverage our “Refer a Friend’ core deposit program, along with other initiatives, to grow core deposits by $125 million in the first half of 2004 and adding over 23,000 new accounts.”

Operating expenses were $29.4 million, up $1.7 million, or 6%, from the second quarter of 2003. Salaries and employee benefits of $18.7 million increased $1.1 million, or 6%, with approximately $800 thousand of this increase resulting from acquisitions. The balance was due to normal merit increases for staff that were partially offset by lower incentive compensation associated with the slowdown in mortgage refinancing activities. Communications and

equipment expenses of $2.7 million increased $600 thousand, or 27%, due to acquisitions and investments in technology equipment to support business growth and enhance operating efficiency. Increases in all other operating expense categories were primarily due to acquisitions and business growth.

“We continue to diligently monitor and control operating expenses while growing our customer base and revenue,” Tallent said. “Total revenue for the quarter increased 8% while operating expenses rose 6%. This positive operating leverage contributed to our 11% growth in diluted operating earnings per share for the second quarter. We are especially pleased with this performance in light of the decline in mortgage refinancing activities. We were able to sustain our earnings momentum by carefully managing our expenses while at the same time growing revenue in other areas. Our operating efficiency ratio was 60.05% compared with 61.40% a year ago. We are striving for a long-term efficiency ratio in the range of 58% to 60%, which we believe is reasonable given our service-oriented community banking model,” Tallent added.

“On June 1, we completed our merger with Fairbanco Holding Company, Inc., the parent company of 1st Community Bank located on the south side of metro Atlanta in Fairburn, Georgia,” Tallent said. “1st Community Bank had assets of $190 million with five full-service banking offices in Peachtree City in Fayette County, Newnan in Coweta County, and Fairburn, Union City and Palmetto in south Fulton County.”

“Looking forward, we believe United Community Banks is on target for 2004 to achieve operating earnings per share growth within our long-term goal of 12% to 15%,” Tallent said. “For the balance of 2004, we anticipate core loan growth will continue in the range of 10% to 14% and that our net interest margin will remain near the 4% level. Our outlook is based on a continued, stable economic environment in our markets combined with maintaining strong credit quality. We are well positioned for additional increases in short-term interest rates and should benefit slightly if and when they occur. We remain committed to providing superior customer service and operating performance while maintaining solid credit quality and growing our franchise – both internally and through selective de novo offices and mergers.”

Conference Call

United Community Banks will hold a conference call on Tuesday, July 27, 2004 at 11:00 a.m. ET to discuss the contents of this news release, as well as business highlights and the financial outlook for the remainder of 2004. The telephone number for the conference call is (888) 266-1047. The conference call will also be available by web-cast within the Investor Relations section of the company’s web site.

About United Community Banks, Inc.

Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $4.5 billion and operates 21 community banks with 78 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses in its markets. United Community Banks also offers the convenience of 24-hour access to its services through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq National Market under the symbol UCBI. Additional information may be found at the company’s web site, ucbi.com.

Safe Harbor

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward Looking Statements” on page 4 of United Community Banks, Inc. annual report filed on Form 10-K with the Securities and Exchange Commission.

(Tables Follow)

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three and Six Months Ended June 30, 2004

UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income
For the Three and Six Months Ended June 30, 2004 and 2003

UNITED COMMUNITY BANKS, INC.

Consolidated Balance Sheet
For the period ended