SOURCE: United Community Banks, Inc.

April 24, 2008 05:30 ET

United Community Banks, Inc. Reports Diluted Earnings per Share of 34 Cents for First Quarter 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Conference Call

United Community Banks will hold a conference call on Thursday, April 24, 2008, at 11 a.m. ET to discuss the contents of this news release, as well as share business highlights for the quarter. The telephone number for the conference call is (877) 660-8922 and the pass code is "UCBI." The conference call will also be available by web cast within the Investor Relations section of the company's web site at www.ucbi.com.

About United Community Banks, Inc.

Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. United Community Banks has assets of $8.4 billion and operates 27 community banks with 109 banking offices located throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the company's web site at www.ucbi.com.

Safe Harbor

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


UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information



                                         2008               2007
                                     -----------  ------------------------
(in thousands, except per share         First       Fourth        Third
data; taxable equivalent)              Quarter      Quarter      Quarter
                                     -----------  -----------  -----------
INCOME SUMMARY
Interest revenue                     $   129,041  $   140,768  $   144,884
Interest expense                          62,754       71,038       73,203
                                     -----------  -----------  -----------
  Net interest revenue                    66,287       69,730       71,681
Provision for loan losses (1)              7,500       26,500        3,700
Fee revenue                               14,197       16,100       15,615
                                     -----------  -----------  -----------
  Total operating revenue                 72,984       59,330       83,596
Operating expenses                        47,529       49,336       48,182
                                     -----------  -----------  -----------
  Income before taxes                     25,455        9,994       35,414
Income taxes                               9,377        3,960       12,878
                                     -----------  -----------  -----------
  Net operating income                    16,078        6,034       22,536
Fraud loss provision, net of tax (1)           -        1,833            -
                                     -----------  -----------  -----------
  Net income                         $    16,078  $     4,201  $    22,536
                                     ===========  ===========  ===========

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

GAAP PERFORMANCE MEASURES
  Per common share:
    Basic earnings                   $       .34  $       .09  $       .47
    Diluted earnings                         .34          .09          .46
    Cash dividends declared                  .09          .09          .09
    Book value                             18.50        17.70        17.51
    Tangible book value (3)                11.76        10.92        10.81

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

ASSET QUALITY
  Allowance for loan losses          $    89,848  $    89,423  $    90,935
  Net charge-offs (1)                      7,075       13,012        5,236
  Non-performing loans                    67,728       28,219       46,783
  OREO                                    22,136       18,039       16,554
                                     -----------  -----------  -----------
    Total non-performing assets           89,864       46,258       63,337
  Allowance for loan losses to loans
   (1)                                      1.51%        1.51%        1.28%
  Net charge-offs to average loans
   (1)(4)                                    .48          .87          .35
  Non-performing assets to loans and
   OREO                                     1.50          .78         1.06
  Non-performing assets to total
   assets                                   1.07          .56          .77

AVERAGE BALANCES
  Loans                              $ 5,958,296  $ 5,940,230  $ 5,966,933
  Investment securities                1,485,515    1,404,796    1,308,192
  Earning assets                       7,491,480    7,424,992    7,332,492
  Total assets                         8,305,621    8,210,120    8,083,739
  Deposits                             6,051,069    6,151,476    6,246,319
  Shareholders' equity                   855,659      837,195      834,094
  Common shares - basic                   46,966       47,203       48,348
  Common shares - diluted                 47,272       47,652       48,977

AT PERIOD END
  Loans                              $ 5,967,839  $ 5,929,263  $ 5,952,749
  Investment securities                1,508,402    1,356,846    1,296,826
  Total assets                         8,386,255    8,207,302    8,180,600
  Deposits                             6,175,769    6,075,951    6,154,308
  Shareholders' equity                   871,452      831,902      833,761
  Common shares outstanding               47,004       46,903       47,542

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





UNITED COMMUNITY BANKS, INC.
Financial Highlights
Selected Financial Information


                                                                  First
                                               2007              Quarter
                                     ------------------------
(in thousands, except per share        Second        First      2008-2007
data; taxable equivalent)              Quarter      Quarter      Change
                                     -----------  -----------  -----------
INCOME SUMMARY
Interest revenue                     $   136,237  $   129,028
Interest expense                          68,270       63,923
                                     -----------  -----------
  Net interest revenue                    67,967       65,105            2%
Provision for loan losses (1)              3,700        3,700
Fee revenue                               16,554       14,382           (1)
                                     -----------  -----------
  Total operating revenue                 80,821       75,787           (4)
Operating expenses                        47,702       44,841            6
                                     -----------  -----------
  Income before taxes                     33,119       30,946          (18)
Income taxes                              12,043       11,601
                                     -----------  -----------
  Net operating income                    21,076       19,345          (17)
Fraud loss provision, net of tax (1)       9,165            -
                                     -----------  -----------
  Net income                         $    11,911  $    19,345          (17)
                                     ===========  ===========

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

GAAP PERFORMANCE MEASURES
  Per common share:
    Basic earnings                   $       .26  $       .45          (24)
    Diluted earnings                         .26          .44          (23)
    Cash dividends declared                  .09          .09            -
    Book value                             16.96        14.82           25
    Tangible book value (3)                10.43        11.05            6

  Key performance ratios:
    Return on equity (2)(4)                 7.05%       12.47%
    Return on assets                         .64         1.11
    Net interest margin (4)                 3.94         3.99
    Efficiency ratio                       56.59        56.56
    Tangible equity to assets (3)           6.65         6.66

ASSET QUALITY
  Allowance for loan losses          $    92,471  $    68,804
  Net charge-offs (1)                      2,124        1,462
  Non-performing loans                    30,849       12,319
  OREO                                    12,752        1,971
                                     -----------  -----------
    Total non-performing assets           43,601       14,290
  Allowance for loan losses to loans
   (1)                                      1.29%        1.27%
  Net charge-offs to average loans
   (1)(4)                                    .15          .11
  Non-performing assets to loans and
   OREO                                      .73          .26
  Non-performing assets to total
   assets                                    .54          .20

AVERAGE BALANCES
  Loans                              $ 5,619,950  $ 5,402,860           10
  Investment securities                1,242,448    1,153,208           29
  Earning assets                       6,915,134    6,599,035           14
  Total assets                         7,519,392    7,092,710           17
  Deposits                             5,945,633    5,764,426            5
  Shareholders' equity                   672,348      624,100           37
  Common shares - basic                   44,949       43,000
  Common shares - diluted                 45,761       43,912

AT PERIOD END
  Loans                              $ 5,999,093  $ 5,402,198           10
  Investment securities                1,213,659    1,150,424           31
  Total assets                         8,087,667    7,186,602           17
  Deposits                             6,361,269    5,841,687            6
  Shareholders' equity                   828,731      638,456           36
  Common shares outstanding               48,781       43,038

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





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




                                   2008                  2007
                                ---------- --------------------------------
                                  First      Fourth     Third      Second
(in millions)                    Quarter    Quarter    Quarter   Quarter(1)
                                ---------- ---------- ---------- ----------
LOANS BY CATEGORY
Commercial (sec. by RE)         $    1,526 $    1,476 $    1,441 $    1,461
Commercial construction                548        527        527        509
Commercial & industrial                437        418        408        421
                                ---------- ---------- ---------- ----------
  Total commercial                   2,511      2,421      2,376      2,391
Residential construction             1,791      1,830      1,939      2,013
Residential mortgage                 1,491      1,502      1,459      1,413
Consumer / installment                 175        176        179        182
                                ---------- ---------- ---------- ----------
  Total loans                   $    5,968 $    5,929 $    5,953 $    5,999
                                ========== ========== ========== ==========


LOANS BY MARKET
Atlanta Region                  $    2,393 $    2,402 $    2,451 $    2,518
North Georgia                        2,071      2,060      2,026      2,032
Western North Carolina                 816        806        834        816
Coastal Georgia                        439        416        402        396
East Tennessee                         249        245        240        237
                                ---------- ---------- ---------- ----------
  Total loans                   $    5,968 $    5,929 $    5,953 $    5,999
                                ========== ========== ========== ==========


RESIDENTIAL CONSTRUCTION
Dirt loans
  Acquisition & development     $      583 $      593 $      596 $      602
  Land loans                           130        126        125        113
  Lot loans                            406        407        403        393
                                ---------- ---------- ---------- ----------
    Total                            1,119      1,126      1,124      1,108
                                ---------- ---------- ---------- ----------

House loans
  Spec                                 460        473        539        596
  Sold                                 212        231        276        309
                                ---------- ---------- ---------- ----------
    Total                              672        704        815        905
                                ---------- ---------- ---------- ----------
Total residential construction  $    1,791 $    1,830 $    1,939 $    2,013
                                ========== ========== ========== ==========


RESIDENTIAL CONSTRUCTION - ATLANTA REGION
Dirt loans
  Acquisition & development     $      305 $      311 $      312 $      336
  Land loans                            55         54         53         50
  Lot loans                            129        131        135        140
                                ---------- ---------- ---------- ----------
    Total                              489        496        500        526
                                ---------- ---------- ---------- ----------

House loans
  Spec                                 279        286        328        378
  Sold                                  76         82        112        140
                                ---------- ---------- ---------- ----------
    Total                              355        368        440        518
                                ---------- ---------- ---------- ----------
Total residential construction  $      844 $      864 $      940 $    1,044
                                ========== ========== ========== ==========


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





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


                                        Linked
                                        Quarter
                                2007   Change(2)    Year over Year Change
                             --------- ---------   ----------------------
                               First                            Excluding
(in millions)                Quarter     Actual      Actual     Acquired
                             --------- ---------   ---------   ----------
LOANS BY CATEGORY
Commercial (sec. by RE)      $   1,227        14 %        24 %          7 %
Commercial construction            462        16          19           14
Commercial & industrial            315        18          39            4
                             ---------
  Total commercial               2,004        15          25            8
Residential construction         1,874        (9)         (4)         (14)
Residential mortgage             1,353        (3)         10            9
Consumer / installment             171        (2)          2           (2)
                             ---------
  Total loans                $   5,402         3          10            1
                             =========


LOANS BY MARKET
Atlanta Region               $   2,015        (1)%        19 %         (8)%
North Georgia                    2,010         2           3            3
Western North Carolina             782         5           4            4
Coastal Georgia                    372        22          18           18
East Tennessee                     223         7          12           12
                             ---------
  Total loans                $   5,402         3          10            1
                             =========


RESIDENTIAL CONSTRUCTION
Dirt loans
  Acquisition & development  $     580        (7)%         1 %         (8)%
  Land loans                       122        13           7            4
  Lot loans                        362        (1)         12            5
                             ---------
    Total                        1,064        (2)          5           (2)
                             ---------

House loans
  Spec                             533       (11)%       (14)%        (26)%
  Sold                             277       (33)        (23)         (35)
                             ---------
    Total                          810       (18)        (17)         (29)
                             ---------
Total residential
 construction                $   1,874        (9)         (4)         (14)
                             =========


RESIDENTIAL CONSTRUCTION - ATLANTA REGION
Dirt loans
  Acquisition & development  $     317        (8)%        (4)%        (19)%
  Land loans                        52         7           6            -
  Lot loans                        113        (6)         14           (8)
                             ---------
    Total                          482        (6)          1          (14)
                             ---------

House loans
  Spec                             298       (10)%        (6)%        (28)%
  Sold                             124       (29)        (39)         (65)
                             ---------
    Total                          422       (14)        (16)         (38)
                             ---------
Total residential
 construction                $     904        (9)         (7)         (25)
                             =========


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





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


                                                          First    Fourth
                                                         Quarter   Quarter
                                                          2008      2007
                                                        --------  --------
Special provision for fraud related loan losses         $      -  $  3,000
                                                        --------  --------
Income tax effect of special provision                         -     1,167
                                                        --------  --------
    After-tax effect of special provision               $      -  $  1,833
                                                        ========  ========
Net Income Reconciliation
Operating net income                                    $ 16,078  $  6,034
After-tax effect of special provision and
 merger-related charges                                        -    (1,833)
                                                        --------  --------
  Net income (GAAP)                                     $ 16,078  $  4,201
                                                        ========  ========
Basic Earnings Per Share Reconciliation
Basic operating earnings per share                      $    .34  $    .13
Per share effect of special provision and
 merger-related charges                                        -      (.04)
                                                        --------  --------
  Basic earnings per share (GAAP)                       $    .34  $    .09
                                                        ========  ========
Diluted Earnings Per Share Reconciliation
Diluted operating earnings per share                    $    .34  $    .13
Per share effect of special provision and
 merger-related charges                                        -      (.04)
                                                        --------  --------
  Diluted earnings per share (GAAP)                     $    .34  $    .09
                                                        ========  ========
Provision for Loan Losses Reconciliation
Operating provision for loan losses                     $  7,500  $ 26,500
Special provision for fraud related loan losses                -     3,000
                                                        --------  --------
  Provision for loan losses (GAAP)                      $  7,500  $ 29,500
                                                        ========  ========
Nonperforming Assets Reconciliation
Nonperforming assets excluding fraud-related assets     $ 85,182  $ 40,956
Fraud-related loans and OREO included in nonperforming
 assets                                                    4,682     5,302
                                                        --------  --------
  Nonperforming assets (GAAP)                           $ 89,864  $ 46,258
                                                        ========  ========
Allowance for Loan Losses Reconciliation
Allowance for loan losses excluding special
 fraud-related allowance                                $ 89,848  $ 89,423
Fraud-related allowance for loan losses                        -         -
                                                        --------  --------
  Allowance for loan losses (GAAP)                      $ 89,848  $ 89,423
                                                        ========  ========
Net Charge Offs Reconciliation
Net charge offs excluding charge off of fraud-related
 loans                                                  $  7,075  $ 13,012
Fraud-related loans charged off                                -    18,000
                                                        --------  --------
  Net charge offs (GAAP)                                $  7,075  $ 31,012
                                                        ========  ========
Allowance for Loan Losses to Loans Ratio Reconciliation
Allowance for loan losses to loans ratio excluding
 fraud-related allowance                                    1.51%     1.51%
Portion of allowance assigned to fraud-related loans           -         -
                                                        --------  --------
  Allowance for loan losses to loans ratio (GAAP)           1.51%     1.51%
                                                        ========  ========
Nonperforming Assets to Total Assets Ratio
 Reconciliation
Nonperforming assets to total assets ratio excluding
 fraud-related assets                                       1.02%      .50%
Fraud-related nonperforming assets                           .05       .06
                                                        --------  --------
  Nonperforming assets to total assets ratio (GAAP)         1.07%      .56%
                                                        ========  ========
Net Charge Offs to Average Loans Ratio Reconciliation
Net charge offs to average loans ratio excluding
 fraud-related loans                                         .48%      .87%
Charge offs of fraud-related loans                             -      1.20
                                                        --------  --------
  Net charge offs to average loans ratio (GAAP)              .48%     2.07%
                                                        ========  ========





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


                                                          Third    Second
                                                        Quarter   Quarter
                                                          2007      2007
                                                        --------  --------
Special provision for fraud related loan losses         $      -  $ 15,000
                                                        --------  --------
Income tax effect of special provision                         -     5,835
                                                        --------  --------
          After-tax effect of special provision         $      -  $  9,165
                                                        ========  ========
Net Income Reconciliation
Operating net income                                    $ 22,536  $ 21,076
After-tax effect of special provision and
 merger-related charges                                        -    (9,165)
                                                        --------  --------
     Net income (GAAP)                                  $ 22,536  $ 11,911
                                                        ========  ========

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

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

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

Nonperforming Assets Reconciliation
Nonperforming assets excluding fraud-related assets     $ 39,761  $ 19,968
Fraud-related loans and OREO included in nonperforming
 assets                                                   23,576    23,633
                                                        --------  --------
     Nonperforming assets (GAAP)                        $ 63,337  $ 43,601
                                                        ========  ========

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

Net Charge Offs Reconciliation
Net charge offs excluding charge off of fraud-related
 loans                                                  $  5,236  $  2,124
Fraud-related loans charged off                                -         -
                                                        --------  --------
     Net charge offs (GAAP)                             $  5,236  $  2,124
                                                        ========  ========

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

Nonperforming Assets to Total Assets Ratio
 Reconciliation
Nonperforming assets to total assets ratio excluding
 fraud-related assets                                        .49%      .25%
Fraud-related nonperforming assets                           .28       .29
                                                        --------  --------
     Nonperforming assets to total assets ratio (GAAP)       .77%      .54%
                                                        ========  ========

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





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


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

Interest revenue:
 Loans, including fees                                  $ 109,266 $ 114,073
 Investment securities:
  Taxable                                                  18,628    13,968
  Tax exempt                                                  394       447
 Federal funds sold and deposits in banks                     222        58
                                                        --------- ---------
   Total interest revenue                                 128,510   128,546
                                                        --------- ---------
Interest expense:
 Deposits:
  NOW                                                       8,587    10,627
  Money market                                              2,913     2,540
  Savings                                                     227       309
  Time                                                     38,884    41,625
                                                        --------- ---------
   Total deposit interest expense                          50,611    55,101
 Federal funds purchased, repurchase agreements,
  and other short-term borrowings                           4,318     1,817
 Federal Home Loan Bank advances                            5,745     4,801
 Long-term debt                                             2,080     2,204
                                                        --------- ---------
  Total interest expense                                   62,754    63,923
                                                        --------- ---------
  Net interest revenue                                     65,756    64,623
 Provision for loan losses                                  7,500     3,700
                                                        --------- ---------
  Net interest revenue after provision for loan losses     58,256    60,923
                                                        --------- ---------
Fee revenue:
 Service charges and fees                                   7,813     7,253
 Mortgage loan and other related fees                       1,963     2,223
 Consulting fees                                            1,807     1,747
 Brokerage fees                                             1,093       944
 Securities gains, net                                          -       207
 Other                                                      1,521     2,008
                                                        --------- ---------
  Total fee revenue                                        14,197    14,382
                                                        --------- ---------
  Total revenue                                            72,453    75,305
                                                        --------- ---------
Operating expenses:
 Salaries and employee benefits                            28,754    28,317
 Communications and equipment                               3,832     3,812
 Occupancy                                                  3,716     3,191
 Advertising and public relations                           1,351     2,016
 Postage, printing and supplies                             1,592     1,660
 Professional fees                                          1,921     1,479
 Amortization of intangibles                                  767       564
 Other                                                      5,596     3,802
                                                        --------- ---------
  Total operating expenses                                 47,529    44,841
                                                        --------- ---------
 Income before income taxes                                24,924    30,464
 Income taxes                                               8,846    11,119
                                                        --------- ---------
  Net income                                            $  16,078 $  19,345
                                                        ========= =========
Earnings per common share:
 Basic                                                  $     .34 $     .45
 Diluted                                                      .34       .44
Dividends per common share                                    .09       .09
Weighted average common shares outstanding:
 Basic                                                     46,966    43,000
 Diluted                                                   47,272    43,912





UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet


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

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

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

   Premises and equipment, net           180,746      180,088      150,332
   Accrued interest receivable            59,585       62,828       60,677
   Goodwill and other intangible
    assets                               324,041      325,305      166,073
   Other assets                          224,084      194,768      111,882
                                     -----------  -----------  -----------
       Total assets                  $ 8,386,255  $ 8,207,302  $ 7,186,602
                                     ===========  ===========  ===========
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
   Deposits:
        Demand                       $   690,028  $   700,941  $   675,969
        NOW                            1,523,942    1,474,818    1,406,287
        Money market                     431,623      452,917      277,184
        Savings                          187,911      186,392      176,891
        Time:
             Less than $100,000        1,535,742    1,573,604    1,619,865
             Greater than $100,000     1,375,000    1,364,763    1,366,360
             Brokered                    431,523      322,516      319,131
                                     -----------  -----------  -----------
                      Total deposits   6,175,769    6,075,951    5,841,687

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

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

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





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



                                                      2008
                                     -----------  ------------ -----------
(dollars in thousands, taxable         Average                     Avg.
 equivalent)                           Balance      Interest       Rate
                                     -----------  ------------ -----------
Assets:
Interest-earning assets:
  Loans, net of unearned income
   (1)(2)                            $ 5,958,296  $    109,252        7.37%
  Taxable securities (3)               1,448,224        18,628        5.15
  Tax-exempt securities (1)(3)            37,291           648        6.95
  Federal funds sold and other
   interest-earning assets                47,669           513        4.30
                                     -----------  ------------

     Total interest-earning assets     7,491,480       129,041        6.92
                                     -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses              (92,025)
  Cash and due from banks                154,706
  Premises and equipment                 181,355
  Other assets (3)                       570,105
                                     -----------
     Total assets                    $ 8,305,621
                                     ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
     NOW                             $ 1,462,116  $      8,587        2.36
     Money market                        439,049         2,913        2.67
     Savings                             184,812           227         .49
     Time less than $100,000           1,553,313        18,223        4.72
     Time greater than $100,000        1,365,307        16,370        4.82
     Brokered                            374,402         4,291        4.61
                                     -----------  ------------
       Total interest-bearing
        deposits                       5,378,999        50,611        3.78
                                     -----------  ------------

     Federal funds purchased and
      other borrowings                   551,812         4,318        3.15
     Federal Home Loan Bank advances     661,498         5,745        3.49
     Long-term debt                      107,996         2,080        7.75
                                     -----------  ------------
      Total borrowed funds             1,321,306        12,143        3.70
                                     -----------  ------------

      Total interest-bearing
       liabilities                     6,700,305        62,754        3.77
                                                  ------------
Non-interest-bearing liabilities:
    Non-interest-bearing deposits        672,070
    Other liabilities                     77,587
                                     -----------
      Total liabilities                7,449,962
Shareholders' equity                     855,659
                                     -----------
      Total liabilities and
       shareholders' equity          $ 8,305,621
                                     ===========

Net interest revenue                              $     66,287
                                                  ============
Net interest-rate spread                                              3.15%
                                                               ===========

Net interest margin (4)                                               3.55%
                                                               ===========

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





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



                                                      2007
                                     -----------  ------------ -----------
(dollars in thousands, taxable         Average                     Avg.
 equivalent)                           Balance      Interest       Rate
                                     -----------  ------------ -----------
Assets:
Interest-earning assets:
  Loans, net of unearned income
   (1)(2)                            $ 5,402,860  $    113,868        8.55%
  Taxable securities (3)               1,109,847        13,968        5.03
  Tax-exempt securities (1)(3)            43,361           735        6.78
  Federal funds sold and other
   interest-earning assets                42,967           457        4.25
                                     -----------  ------------

     Total interest-earning assets     6,599,035       129,028        7.92
                                     -----------  ------------
Non-interest-earning assets:
  Allowance for loan losses              (68,187)
  Cash and due from banks                120,637
  Premises and equipment                 146,832
  Other assets (3)                       294,393
                                     -----------
     Total assets                    $ 7,092,710
                                     ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
  Interest-bearing deposits:
   NOW                               $ 1,322,818  $     10,627        3.26
   Money market                          261,753         2,540        3.94
   Savings                               175,275           309         .71
   Time less than $100,000             1,641,507        19,796        4.89
   Time greater than $100,000          1,385,401        17,916        5.24
   Brokered                              334,753         3,913        4.74
                                     -----------  ------------
       Total interest-bearing
        deposits                       5,121,507        55,101        4.36
                                     -----------  ------------

   Federal funds purchased and
    other borrowings                     139,256         1,817        5.29
   Federal Home Loan Bank advances       395,746         4,801        4.92
   Long-term debt                        113,234         2,204        7.89
                                     -----------  ------------
      Total borrowed funds               648,236         8,822        5.52
                                     -----------  ------------
      Total interest-bearing
       liabilities                     5,769,743        63,923        4.49
                                                  ------------

Non-interest-bearing liabilities:
  Non-interest-bearing deposits          642,919
  Other liabilities                       55,948
                                     -----------
     Total liabilities                 6,468,610
Shareholders' equity                     624,100
                                     -----------
     Total liabilities and
      shareholders' equity           $ 7,092,710
                                     ===========
Net interest revenue                              $     65,105
                                                  ============
Net interest-rate spread                                              3.43%
                                                               ===========
Net interest margin (4)                                               3.99%
                                                               ===========

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

Contact Information


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