SOURCE: United Community Banks, Inc.

October 23, 2007 08:00 ET

United Community Banks, Inc. Reports 10 Percent Gain in Diluted Earnings per Share for Third Quarter 2007

BLAIRSVILLE, GA--(Marketwire - October 23, 2007) - United Community Banks, Inc. (NASDAQ: UCBI)


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

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 111th 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.


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information


                                                     2007
                                     -------------------------------------
(in thousands, except per share         Third       Second        First
 data; taxable equivalent)             Quarter      Quarter      Quarter
                                     -----------  -----------  -----------
INCOME SUMMARY
Interest revenue                     $   144,884  $   136,237  $   129,028
Interest expense                          73,203       68,270       63,923
                                     -----------  -----------  -----------
    Net interest revenue                  71,681       67,967       65,105
Provision for loan losses (1)              3,700        3,700        3,700
Fee revenue                               15,615       16,554       14,382
                                     -----------  -----------  -----------
   Total operating revenue                83,596       80,821       75,787
Operating expenses                        48,182       47,702       44,841
                                     -----------  -----------  -----------
    Income before taxes                   35,414       33,119       30,946
Income taxes                              12,878       12,043       11,601
                                     -----------  -----------  -----------
   Net operating income                   22,536       21,076       19,345
Fraud loss provision, net of tax (1)           -        9,165            -
                                     -----------  -----------  -----------
   Net income                        $    22,536  $    11,911  $    19,345
                                     ===========  ===========  ===========
OPERATING PERFORMANCE (1)
  Earnings per common share:
    Basic                            $       .47  $       .47  $       .45
    Diluted                                  .46          .46          .44
  Return on tangible equity (2)(3)(4)      17.54%       17.52%       17.18%
  Return on assets (4)                      1.11         1.12         1.11
  Dividend payout ratio                    19.15        19.15        20.00
GAAP PERFORMANCE MEASURES
  Per common share:
    Basic earnings                   $       .47  $       .26  $       .45
    Diluted earnings                         .46          .26          .44
    Cash dividends declared                  .09          .09          .09
    Book value                             17.53        16.98        14.83
    Tangible book value (3)                10.82        10.44        11.06
  Key performance ratios:
    Return on equity (2)(4)                10.66         7.05        12.47
    Return on assets (4)                    1.11          .64         1.11
    Net interest margin (4)                 3.89         3.94         3.99
    Efficiency ratio                       55.34        56.59        56.56
    Dividend payout ratio                  19.15        34.62        20.00
    Equity to assets                       10.32         8.94         8.80
    Tangible equity to assets (3)           6.65         6.65         6.66
ASSET QUALITY (5)
  Allowance for loan losses          $    90,935  $    92,471  $    68,804
  Non-performing assets                   63,337       43,601       14,290
  Net charge-offs                          5,235        2,124        1,462
  Allowance for loan losses to loans        1.53%        1.54%        1.27%
  Non-performing assets to total
   assets                                    .77          .54          .20
  Net charge-offs to average loans (4)       .35          .15          .11
AVERAGE BALANCES
  Loans                              $ 5,966,933  $ 5,619,950  $ 5,402,860
  Investment securities                1,308,192    1,242,448    1,153,208
  Earning assets                       7,332,492    6,915,134    6,599,035
  Total assets                         8,083,739    7,519,392    7,092,710
  Deposits                             6,246,319    5,945,633    5,764,426
  Shareholders' equity                   834,094      672,348      624,100
  Common shares - basic                   48,348       44,949       43,000
  Common shares - diluted                 48,977       45,761       43,912
AT PERIOD END
  Loans                              $ 5,952,749  $ 5,999,093  $ 5,402,198
  Investment securities                1,296,826    1,213,659    1,150,424
  Total assets                         8,180,600    8,087,667    7,186,602
  Deposits                             6,154,308    6,361,269    5,841,687
  Shareholders' equity                   833,761      828,731      638,456
  Common shares outstanding               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.
(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.
(5)  Asset Quality measures for the third quarter, second quarter and
first nine months of 2007 include $23.6 million in nonperforming
loans that relate to two real estate developments.  Additionally,
in the second quarter of 2007, United recorded a $15 million
special provision for loan losses for expected losses related to
this matter. This fraud-related matter was isolated and considered
to be non-recurring. Excluding the non-recurring amounts, the
allowance for loan losses would be $75,935 and $77,471, the
allowance for loan losses to loans ratio would be 1.28% and 1.29%,
non-performing assets would be $39,749 and $19,968, and the ratio
of non-performing assets to total assets would be .49% and .25% at
September 30, 2007 and June 30, 2007, respectively.



UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information


                                                                    Third
                                                   2006            Quarter
                                         ------------------------   2007-
(in thousands, except per share            Fourth        Third      2006
 data; taxable equivalent)                 Quarter      Quarter    Change
                                         -----------  -----------  -------
INCOME SUMMARY
Interest revenue                         $   123,463  $   116,304
Interest expense                              60,912       55,431
                                         -----------  -----------
    Net interest revenue                      62,551       60,873       18%
Provision for loan losses (1)                  3,700        3,700
Fee revenue                                   13,215       12,146       29
                                         -----------  -----------
   Total operating revenue                    72,066       69,319       21
Operating expenses                            42,521       41,441       16
                                         -----------  -----------
    Income before taxes                       29,545       27,878       27
Income taxes                                  11,111       10,465
                                         -----------  -----------
   Net operating income                       18,434       17,413       29
Fraud loss provision, net of tax (1)               -            -
                                         -----------  -----------
   Net income                            $    18,434  $    17,413       29
                                         ===========  ===========
OPERATING PERFORMANCE (1)
  Earnings per common share:
    Basic                                $       .45  $       .43        9
    Diluted                                      .44          .42       10
  Return on tangible equity (2)(3)(4)          17.49%       17.29%
  Return on assets (4)                          1.10         1.09
  Dividend payout ratio                        17.78        18.60
GAAP PERFORMANCE MEASURES
  Per common share:
    Basic earnings                       $       .45  $       .43        9
    Diluted earnings                             .44          .42       10
    Cash dividends declared                      .08          .08       13
    Book value                                 14.37        13.07       34
    Tangible book value (3)                    10.57        10.16        6
  Key performance ratios:
    Return on equity (2)(4)                    13.26        13.22
    Return on assets (4)                        1.10         1.09
    Net interest margin (4)                     3.99         4.07
    Efficiency ratio                           55.93        56.19
    Dividend payout ratio                      17.78        18.60
    Equity to assets                            8.21         8.04
    Tangible equity to assets (3)               6.46         6.35
ASSET QUALITY (5)
  Allowance for loan losses              $    66,566  $    60,901
  Non-performing assets                       13,654        9,347
  Net charge-offs                              1,930        1,307
  Allowance for loan losses to loans            1.24%        1.23%
  Non-performing assets to total assets          .19          .14
  Net charge-offs to average loans (4)           .15          .11
AVERAGE BALANCES
  Loans                                  $ 5,134,721  $ 4,865,886       23
  Investment securities                    1,059,125    1,029,981       27
  Earning assets                           6,225,943    5,942,710       23
  Total assets                             6,669,950    6,350,205       27
  Deposits                                 5,517,696    5,085,168       23
  Shareholders' equity                       547,419      510,791       63
  Common shares - basic                       41,096       40,223
  Common shares - diluted                     42,311       41,460
AT PERIOD END
  Loans                                  $ 5,376,538  $ 4,965,365       20
  Investment securities                    1,107,153      980,273       32
  Total assets                             7,101,249    6,455,290       27
  Deposits                                 5,772,886    5,309,219       16
  Shareholders' equity                       616,767      526,734       58
  Common shares outstanding                   42,891       40,269


(1)  Excludes effect of special $15 million fraud related provision for
loan losses recorded in the second 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.
(5)  Asset Quality measures for the third quarter, second quarter and first
nine months of 2007 include $23.6 million in nonperforming loans that
relate to two real estate developments. Additionally, in the second
quarter of 2007, United recorded a $15 million special provision for loan
losses for expected losses related to this matter. This fraud-related
matter was isolated and considered to be non-recurring. Excluding the
non-recurring amounts, the allowance for loan losses would be $75,935 and
$77,471, the allowance for loan losses to loans ratio would be 1.28% and
1.29%, non-performing assets would be $39,749 and $19,968, and the ratio of
non-performing assets to total assets would be .49% and .25% at September
30, 2007 and June 30, 2007, respectively.



UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information


                                               For the Nine          YTD
                                               Months Ended         2007-
(in thousands, except per share          ------------------------   2006
 data; taxable equivalent)                   2007         2006     Change
                                         -----------  -----------  -------
INCOME SUMMARY
Interest revenue                         $   410,150  $   323,232
Interest expense                             205,396      147,903
                                         -----------  -----------
    Net interest revenue                     204,754      175,329       17%
Provision for loan losses (1)                 11,100       10,900
Fee revenue                                   46,551       35,880       30
                                         -----------  -----------
   Total operating revenue                   240,205      200,309       20
Operating expenses                           140,725      119,549       18
                                         -----------  -----------
    Income before taxes                       99,480       80,760       23
Income taxes                                  36,523       30,379
                                         -----------  -----------
   Net operating income                       62,957       50,381       25
Fraud loss provision, net of tax (1)           9,165            -
                                         -----------  -----------
   Net income                            $    53,792  $    50,381        7
                                         ===========  ===========
OPERATING PERFORMANCE (1)
  Earnings per common share:
    Basic                                $      1.38  $      1.25       10
    Diluted                                     1.36         1.22       11
  Return on tangible equity (2)(3)(4)          17.42%       17.54%
  Return on assets (4)                          1.11         1.09
  Dividend payout ratio                        19.57        19.20
GAAP PERFORMANCE MEASURES
  Per common share:
    Basic earnings                       $      1.18  $      1.25       (6)
    Diluted earnings                            1.16         1.22       (5)
    Cash dividends declared                      .27          .24       13
    Book value                                 17.53        13.07       34
    Tangible book value (3)                    10.77        10.16        6
  Key performance ratios:
    Return on equity (2)(4)                    10.04        13.29
    Return on assets (4)                         .95         1.09
    Net interest margin (4)                     3.94         4.07
    Efficiency ratio                           56.14        56.33
    Dividend payout ratio                      22.88        19.20
    Equity to assets                            9.39         8.01
    Tangible equity to assets (3)               6.65         6.27
ASSET QUALITY (5)
  Allowance for loan losses              $    90,935  $    60,901
  Non-performing assets                       63,337        9,347
  Net charge-offs                              8,821        3,594
  Allowance for loan losses to loans            1.53%        1.23%
  Non-performing assets to total assets          .77          .14
  Net charge-offs to average loans (4)           .21          .10
AVERAGE BALANCES
  Loans                                  $ 5,665,314  $ 4,688,512       21
  Investment securities                    1,235,183    1,036,092       19
  Earning assets                           6,951,573    5,760,055       21
  Total assets                             7,568,910    6,158,147       23
  Deposits                                 5,987,225    4,848,848       23
  Shareholders' equity                       710,950      493,307       44
  Common shares - basic                       45,452       40,156
  Common shares - diluted                     46,235       41,327
AT PERIOD END
  Loans                                  $ 5,952,749  $ 4,965,365       20
  Investment securities                    1,296,826      980,273       32
  Total assets                             8,180,600    6,455,290       27
  Deposits                                 6,154,308    5,309,219       16
  Shareholders' equity                       833,761      526,734       58
  Common shares outstanding                   47,542       40,269


(1)  Excludes effect of special $15 million fraud related provision for
loan losses recorded in the second 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.
(5)  Asset Quality measures for the third quarter, second quarter and first
nine months of 2007 include $23.6 million in nonperforming loans that
relate to two real estate developments. Additionally, in the second
quarter of 2007, United recorded a $15 million special provision for loan
losses for expected losses related to this matter. This fraud-related
matter was isolated and considered to be non-recurring. Excluding the
non-recurring amounts, the allowance for loan losses would be $75,935 and
$77,471, the allowance for loan losses to loans ratio would be 1.28% and
1.29%, non-performing assets would be $39,749 and $19,968, and the ratio of
non-performing assets to total assets would be .49% and .25% at September
30, 2007 and June 30, 2007, respectively.



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


                                             2007                2006
                                    ----------------------- ---------------
                                    Third   Second  First   Fourth  Third
                                    Quarter Quarter Quarter Quarter Quarter
(in millions)                                 (1)             (2)
                                    ------- ------- ------- ------- -------
LOANS BY CATEGORY
Commercial (sec. by RE)             $ 1,441 $ 1,461 $ 1,227 $ 1,230 $ 1,158
Commercial & industrial                 408     421     315     296     272
                                    ------- ------- ------- ------- -------
     Total commercial                 1,849   1,882   1,542   1,526   1,430
Construction & land dev               2,466   2,522   2,336   2,334   2,065
Residential mortgage                  1,459   1,413   1,353   1,338   1,300
Consumer / installment                  179     182     171     179     170
                                    ------- ------- ------- ------- -------
     Total loans                    $ 5,953 $ 5,999 $ 5,402 $ 5,377 $ 4,965
                                    ======= ======= ======= ======= =======


LOANS BY MARKET
Atlanta Region                      $ 2,451 $ 2,518 $ 2,015 $ 2,005 $ 1,696
North Georgia                         2,026   2,032   2,010   2,034   1,984
Coastal Georgia                         402     396     372     358     343
Western North Carolina                  834     816     782     773     752
East Tennessee                          240     237     223     207     190
                                    ------- ------- ------- ------- -------
     Total loans                    $ 5,953 $ 5,999 $ 5,402 $ 5,377 $ 4,965
                                    ======= ======= ======= ======= =======

(1)  Acquired Gwinnett Commercial Group on June 1, 2007 with total loans of
     $534 million in the Atlanta Region:
     commercial (secured by RE) of $219 million; commercial & industrial of
     $91 million; construction & land development of $193 million;
     residential mortgage of $27 million and consumer / installment of $4
      million.
(2)  Acquired Southern Bancorp on December 1, 2006 with total loans of $267
     million in the Atlanta Region:
     commercial (secured by RE) of $38 million; commercial & industrial of
     $6 million; construction & land development of $192 million;
     residential mortgage of $25 million and consumer / installment of $7
     million.
(3)  Annualized.



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


                                       Linked
                                       Quarter
                                      Change(3)     Year over Year Change
                                     ----------   ------------------------
                                                                Excluding
(in millions)                          Actual       Actual      Acquired
                                     ----------   -----------  ----------
LOANS BY CATEGORY
Commercial (sec. by RE)                      (5)%          24 %         2 %
Commercial & industrial                     (12)           50          14
     Total commercial                        (7)           29           5
Construction & land dev                      (9)           19           1
Residential mortgage                         13            12           8
Consumer / installment                       (7)            5          (1)
     Total loans                             (3)           20           4


LOANS BY MARKET
Atlanta Region                              (11)%          45 %        (3)%
North Georgia                                (1)            2           2
Coastal Georgia                               6            17          17
Western North Carolina                        9            11          11
East Tennessee                                5            26          26
     Total loans                             (3)           20           4


(1)  Acquired Gwinnett Commercial Group on June 1, 2007 with total loans of
     $534 million in the Atlanta Region:
     commercial (secured by RE) of $219 million; commercial & industrial of
     $91 million; construction & land development of $193 million;
     residential mortgage of $27 million and consumer / installment of $4
     million.
(2)  Acquired Southern Bancorp on December 1, 2006 with total loans of $267
     million in the Atlanta Region:
     commercial (secured by RE) of $38 million; commercial & industrial of
     $6 million; construction & land development of $192 million;
     residential mortgage of $25 million and consumer / installment of $7
     million.
(3)  Annualized.



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


                                                             Nine Months
                                                Second          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                              42,863    34,694    126,467     89,679
                                ---------- ---------  ---------  ---------
   Total deposit interest
    expense                         60,464    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            73,204    55,431    205,397    147,903
                                ---------- ---------  ---------  ---------
  Net interest revenue              71,208    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        67,508    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

(in thousands, except share and   September 30, December 31, September 30,
 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 & 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
                                          --------------------------------
(dollars in thousands, taxable              Average                  Avg.
 equivalent)                                Balance      Interest    Rate
                                          -----------  ------------ ------
Assets:
Interest-earning assets:
  Loans, net of unearned income (1)(2)    $ 5,966,933  $    126,992   8.44%
  Taxable securities (3)                    1,266,609        16,637   5.25
  Tax-exempt securities (1)(3)                 41,583           704   6.77
  Federal funds sold and other
   interest-earning assets                     57,367           551   3.84
                                          -----------  ------------
     Total interest-earning assets          7,332,492       144,884   7.85
                                          -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses                   (93,832)
  Cash and due from banks                     141,536
  Premises and equipment                      173,605
  Other assets (3)                            529,938
                                          -----------
     Total assets                         $ 8,083,739
                                          ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
   NOW                                    $ 1,431,168  $     12,046   3.34
   Money market                               496,005         5,002   4.00
   Savings                                    201,031           553   1.09
   Time less than $100,000                  1,624,698        20,151   4.92
   Time greater than $100,000               1,391,139        18,193   5.19
   Brokered                                   358,614         4,519   5.00
                                          -----------  ------------
       Total interest-bearing deposits      5,502,655        60,464   4.36
                                          -----------  ------------
 Federal funds purchased and other
  borrowings                                  348,472         4,738   5.39
 Federal Home Loan Bank advances              474,555         5,902   4.93
 Long-term debt                               119,596         2,100   6.97
                                          -----------  ------------
      Total borrowed funds                    942,623        12,740   5.36
                                          -----------  ------------
      Total interest-bearing liabilities    6,445,278        73,204   4.51
                                                       ------------
Non-interest-bearing liabilities:
  Non-interest-bearing deposits               743,664
  Other liabilities                            60,703
                                          -----------
     Total liabilities                      7,249,645
Shareholders' equity                          834,094
                                          -----------
     Total liabilities and shareholders'
      equity                              $ 8,083,739
                                          ===========
Net interest revenue                                   $     71,681
                                                       ============
Net interest-rate spread                                              3.34%
                                                                    ======
Net interest margin (4)                                               3.89%
                                                                    ======

(1)  Interest revenue on tax-exempt securities and loans has been increased
     to reflect comparable interest on taxable securities and loans. The
     rateused 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 losses of $13.3 million in 2007 and $21.6 million in 2006
     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.



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


                                                        2006
                                          --------------------------------
(dollars in thousands, taxable              Average                  Avg.
 equivalent)                                Balance      Interest    Rate
                                          -----------  ------------ ------
Assets:
Interest-earning assets:
  Loans, net of unearned income (1)(2)    $ 4,865,886  $    103,061   8.40%
  Taxable securities (3)                      984,189        11,822   4.80
  Tax-exempt securities (1)(3)                 45,792           780   6.81
  Federal funds sold and other
   interest-earning assets                     46,843           641   5.47
                                          -----------  ------------
     Total interest-earning assets          5,942,710       116,304   7.77
                                          -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses                   (60,606)
  Cash and due from banks                     116,004
  Premises and equipment                      125,423
  Other assets (3)                            226,674
                                          -----------
     Total assets                         $ 6,350,205
                                          ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
   NOW                                    $ 1,094,911  $      8,100   2.94
   Money market                               216,131         2,155   3.96
   Savings                                    170,079           226    .53
   Time less than $100,000                  1,446,388        16,503   4.53
   Time greater than $100,000               1,162,207        14,382   4.91
   Brokered                                   340,301         3,809   4.44
                                          -----------  ------------
       Total interest-bearing deposits      4,430,017        45,175   4.05
                                          -----------  ------------
 Federal funds purchased and other
  borrowings                                  162,372         2,254   5.51
 Federal Home Loan Bank advances              438,875         5,828   5.27
 Long-term debt                               111,869         2,174   7.71
                                          -----------  ------------
      Total borrowed funds                    713,116        10,256   5.71
                                          -----------  ------------
      Total interest-bearing liabilities    5,143,133        55,431   4.28
                                                       ------------
Non-interest-bearing liabilities:
  Non-interest-bearing deposits               655,151
  Other liabilities                            41,130
                                          -----------
     Total liabilities                      5,839,414
Shareholders' equity                          510,791
                                          -----------
     Total liabilities and shareholders'
      equity                              $ 6,350,205
                                          ===========
Net interest revenue                                   $     60,873
                                                       ============
Net interest-rate spread                                              3.49%
                                                                    ======
Net interest margin (4)                                               4.07%
                                                                    ======

(1)  Interest revenue on tax-exempt securities and loans has been increased
     to reflect comparable interest on taxable securities and loans. The
     rateused 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 losses of $13.3 million in 2007 and $21.6 million in 2006
     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.



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


                                                        2007
                                          --------------------------------
(dollars in thousands, taxable              Average                  Avg.
 equivalent)                                Balance      Interest    Rate
                                          -----------  ------------ ------
Assets:
Interest-earning assets:
  Loans, net of unearned income (1)(2)    $ 5,665,314  $    360,429   8.51%
  Taxable securities (3)                    1,192,815        46,081   5.15
  Tax-exempt securities (1)(3)                 42,368         2,160   6.80
  Federal funds sold and other
   interest-earning assets                     51,076         1,479   3.86
                                          -----------  ------------
     Total interest-earning assets          6,951,573       410,150   7.89
                                          -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses                   (78,541)
  Cash and due from banks                     130,816
  Premises and equipment                      159,674
  Other assets (3)                            405,388
                                          -----------
     Total assets                         $ 7,568,910
                                          ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
   NOW                                    $ 1,378,200  $     34,143   3.31
   Money market                               371,716        11,082   3.99
   Savings                                    187,693         1,236    .88
   Time less than $100,000                  1,631,243        59,925   4.91
   Time greater than $100,000               1,383,004        54,000   5.22
   Brokered                                   342,162        12,541   4.90
                                          -----------  ------------
       Total interest-bearing deposits      5,294,018       172,927   4.37
                                          -----------  ------------
 Federal funds purchased and other
  borrowings                                  255,115        10,226   5.36
 Federal Home Loan Bank advances              430,151        15,738   4.89
 Long-term debt                               115,390         6,505   7.54
                                          -----------  ------------
      Total borrowed funds                    800,656        32,469   5.42
                                          -----------  ------------
      Total interest-bearing liabilities    6,094,674       205,396   4.51
                                                       ------------
Non-interest-bearing liabilities:
  Non-interest-bearing deposits               693,207
  Other liabilities                            70,079
                                          -----------
     Total liabilities                      6,857,960
Shareholders' equity                          710,950
                                          -----------
     Total liabilities and shareholders'
      equity                              $ 7,568,910
                                          ===========
Net interest revenue                                   $    204,753
                                                       ============
Net interest-rate spread                                              3.38%
                                                                    ======
Net interest margin (4)                                               3.94%
                                                                    ======

(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 losses of $10.4 million in 2007 and $19.1 million in 2006
     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.



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


                                                        2006
                                          --------------------------------
(dollars in thousands, taxable              Average                  Avg.
 equivalent)                                Balance      Interest    Rate
                                          -----------  ------------ ------
Assets:
Interest-earning assets:
  Loans, net of unearned income (1)(2)    $ 4,688,512  $    284,683   8.12%
  Taxable securities (3)                      988,504        34,661   4.68
  Tax-exempt securities (1)(3)                 47,588         2,463   6.90
  Federal funds sold and other
   interest-earning assets                     35,451         1,425   5.36
                                          -----------  ------------
     Total interest-earning assets          5,760,055       323,232   7.50
                                          -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses                   (57,716)
  Cash and due from banks                     122,603
  Premises and equipment                      120,664
  Other assets (3)                            212,541
                                          -----------
     Total assets                         $ 6,158,147
                                          ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
   NOW                                    $ 1,093,145  $     21,429   2.62
   Money market                               186,957         4,969   3.55
   Savings                                    173,448           680    .52
   Time less than $100,000                  1,354,421        42,604   4.21
   Time greater than $100,000               1,068,376        36,938   4.62
   Brokered                                   327,877        10,137   4.13
                                          -----------  ------------
       Total interest-bearing deposits      4,204,224       116,757   3.71
                                          -----------  ------------
 Federal funds purchased and other
  borrowings                                  152,303         5,814   5.10
 Federal Home Loan Bank advances              510,168        18,837   4.94
 Long-term debt                               111,868         6,495   7.76
                                          -----------  ------------
      Total borrowed funds                    774,339        31,146   5.38
                                          -----------  ------------
      Total interest-bearing liabilities    4,978,563       147,903   3.97
                                                       ------------
Non-interest-bearing liabilities:
  Non-interest-bearing deposits               644,626
  Other liabilities                            41,651
                                          -----------
     Total liabilities                      5,664,840
Shareholders' equity                          493,307
                                          -----------
     Total liabilities and shareholders'
      equity                              $ 6,158,147
                                          ===========
Net interest revenue                                   $    175,329
                                                       ============
Net interest-rate spread                                              3.53%
                                                                    ======
Net interest margin (4)                                               4.07%
                                                                    ======

(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 losses of $10.4 million in 2007 and $19.1 million in 2006
     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.

Contact Information

  • For more information:
    Rex S. Schuette
    Chief Financial Officer
    (706) 781-2266
    Email Contact