SOURCE: United Community Banks, Inc.

January 24, 2006 08:00 ET

United Community Banks, Inc. Reports 12% Gain in Diluted Operating Earnings Per Share for Fourth Quarter 2005

BLAIRSVILLE, GA, -- (MARKET WIRE) -- January 24, 2006 -- United Community Banks, Inc. (NASDAQ: UCBI)

HIGHLIGHTS:

--  Record Fourth Quarter Earnings
      Diluted Operating Earnings Per Share of $.38 - Up 12%
      Net Operating Income of $15.2 Million - Up 18%
      Return on Tangible Equity of 18.20%
--  Strong Loan Demand, Rise in Net Interest Margin and Fee
     Revenue Drove Performance
United Community Banks, Inc. (NASDAQ: UCBI), Georgia's third largest bank holding company, today announced record financial results for the fourth quarter of 2005. Compared with the fourth quarter of 2004, the company achieved a 20% increase in total revenue, an 18% rise in net operating income and a 12% gain in diluted operating earnings per share.

For the fourth quarter of 2005, net operating income rose to $15.2 million compared with $12.9 million a year earlier. Diluted operating earnings per share increased to $.38 from $.34 a year ago. Total revenue, on a taxable equivalent basis, was $64.8 million compared with $54.1 million for the fourth quarter of 2004. Return on tangible equity was 18.20% and return on assets was 1.05%, compared with 19.96% and 1.07%, respectively, a year ago.

"Loan and deposit growth was strong across all markets," said Jimmy Tallent, President and Chief Executive Officer of United Community Banks. "Total assets at year-end were $5.9 billion, a 15% increase from a year ago. Loans increased $144 million during the fourth quarter, or 14% on an annualized basis, and helped drive the increase in net interest revenue. Our net interest margin rose to 4.20%, up 15 basis points from a year ago and up three basis points from last quarter, as increasing short-term interest rates continued to positively affect our slightly asset-sensitive balance sheet. Fee revenue, excluding securities losses taken in the fourth quarter of 2005, was up 12%, reflecting increases in nearly every category."

For the year, net operating income totaled $56.7 million, a 20% increase compared with $47.2 million for 2004. Diluted operating earnings per share of $1.43 increased 13% from $1.27 last year. Total revenue, on a taxable equivalent basis, was $245.4 million, up 25% from $196.5 million a year ago. Return on tangible equity was 18.99% and return on assets was 1.04%, compared with 19.74% and 1.07% a year ago, respectively. "Once again we met our performance goals of double-digit earnings per share growth and a return on tangible equity above 18% for the year," Tallent said. "This year was exceptional. We took an opportunity to leverage our strong earnings performance by making strategic investments in the future growth of our company through a significant de novo expansion. We grew deposits faster than loans while expanding our margin. We raised additional capital through a very successful equity offering during the fourth quarter. And most importantly, this was all done while continuing to meet our primary financial goals," added Tallent.

Net operating income excludes merger-related charges. In the fourth quarter of 2004, pre-tax merger charges of $406,000 were incurred related to the acquisitions of Eagle National Bank and Liberty National Bank. Including these merger-related charges, reported net income for the fourth quarter of 2004 was $12.6 million, diluted earnings per share was $.33 and return on equity was 14.15%. For the full year 2004, pre-tax merger-related charges were $870,000, which also included $464,000 related to the second quarter acquisition of 1st Community Bank. For the year, reported net income was $46.6 million, diluted earnings per share was $1.25, and return on equity was 14.39%.

During the fourth quarter, United Community Banks completed the sale of 1,552,500 shares of common stock in a secondary offering that raised $40.5 million of capital. "This is a significant milestone and our first public equity offering," stated Tallent. "We're very pleased with the investor community's positive response. This additional capital will allow us to continue to pursue and execute our successful balanced growth strategy."

At December 31, 2005, total loans were $4.4 billion, up $663 million, or 18%, from a year ago. All of the loan growth for 2005 was organic, which included growth from a significant de novo expansion in Hall County, Georgia. "Loan demand continues to be strong across all markets, leading to excellent growth opportunities," Tallent said. "Organic growth, with an uncompromising focus on sound credit quality, is at the core of our balanced growth strategy and is further supported by our focused geographic expansion. We find the right people and build around them, usually adding two to four de novo offices a year." Tallent continued, "Earlier this year, we entered Gainesville by partnering with three local and highly respected banking executives to form United Community Bank - Hall County. Since opening for business in May, this team has added more than $245 million in loans and $130 million in deposits. We now have 78 staff and four banking offices, including the main office located in downtown Gainesville, and plan to open the fifth banking office by early 2006."

"In the fourth quarter, we also opened a de novo banking office in Trion located in Chatooga County which complements our Summerville Bank. This followed the third quarter's expansion of our Fairburn Bank where we opened de novo banking offices in Tyrone and Newnan Lakes located on the southside of metro Atlanta in Fayette and Coweta counties. It is a testimony to the success and strength of our existing franchise that we were able to absorb such a significant de novo undertaking and still deliver on our primary financial goals of consistent, sustainable double-digit growth in earnings per share," Tallent stated.

"The fourth quarter was outstanding for deposit growth. We added $281 million of deposits, nearly doubling the level needed to fund our strong loan growth of $144 million," Tallent said. "Our relentless focus on the highest level of customer service has generated customer satisfaction scores that continue to exceed 90%, well above the comparable industry average of 75%. This is invaluable in building deposits through customer referrals while also maintaining and growing long-term relationships with existing customers."

For the fourth quarter, taxable equivalent net interest revenue of $56.9 million was $11.6 million higher, or 26%, than the fourth quarter of 2004. Acquisitions completed in late 2004 added approximately $1.8 million to net interest revenue leaving the core growth rate at 22%. Taxable equivalent net interest margin for the fourth quarter was 4.20% as compared with 4.05% a year ago and 4.17% for the third quarter of 2005. "Our balance sheet remains asset sensitive, which allowed us to benefit modestly from the rise in interest rates that produced a slight margin expansion throughout 2005," Tallent said.

The fourth quarter provision for loan losses was $3.5 million, up $1.5 million from a year earlier and up $100,000 from the third quarter of 2005. Annualized net charge-offs to average loans were 16 basis points for the fourth quarter, compared with 13 basis points for the third quarter of 2005 and 13 basis points for the fourth quarter of 2004. At year-end, non-performing assets totaled $13.0 million compared with $13.6 million at the end of the third quarter of 2005 and $8.7 million a year ago. Non-performing assets as a percentage of total assets were 22 basis points at year-end, compared with 24 basis points at September 30, 2005 and 17 basis points at December 31, 2004. "During the fourth quarter, we resolved several non-performing assets, which slightly increased net charge-offs while lowering non-performing assets," Tallent said. "Asset quality continues to compare favorably with peer banks and remains well within our tolerance levels. Strong credit quality, rooted with our guiding principle of securing loans with hard assets, is essential to our balanced growth strategy and overall success."

Fee revenue of $11.4 million reflected an increase of $616,000, or 6%, from $10.8 million for the fourth quarter of 2004. "Excluding securities losses in the fourth quarter of 2005, core fee revenue growth from a year ago was $1.3 million, or 12%, with steady growth achieved in nearly every category," Tallent stated. "Service charges and fees on deposit accounts increased $970,000 to $6.6 million, primarily due to growth in transactions and new accounts resulting from core deposit program and the cross-selling of other products and services. Brokerage fees increased 85% to $789,000 due to strong market activity. Consulting fees of $1.7 million were down slightly, due to the timing of work completed last year for the documentation and testing of internal controls in our risk management practice," Tallent added.

Operating expenses of $40.5 million increased $6.8 million, or 20%, from the fourth quarter of 2004. Approximately $4.0 million of this increase related to operating expenses of two banks acquired in the fourth quarter of 2004 and de novo expansion in 2005. Salaries and employee benefit costs of $25.6 million increased $4.0 million, or 19%, from the fourth quarter of 2004 with $2.8 million resulting from acquisitions and de novo expansion. The balance was due to an increase in staff to support business growth and related hiring costs and higher commissions related to the increase in brokerage revenue. Communications and equipment expenses increased $683,000 to $3.6 million due to the acquisitions last year and further investments in technology equipment to support business growth. Advertising and marketing expense rose $463,000 to $2.0 million reflecting the cost of successful initiatives to raise core deposits and continued efforts to generate brand awareness in new markets. Occupancy expense increased $342,000 to $2.7 million reflecting the increase in cost to operate additional banking offices added through acquisitions and de novo expansion. Postage, printing and supplies expense increased $328,000 to $1.4 million reflecting the higher cost of office supplies and courier costs resulting from the growing franchise. The increase in other operating expense was due to acquisitions, losses incurred in the disposal of other real estate and business growth. "Our operating efficiency ratio of 58.80% for the quarter is within our long-term efficiency goal of 58% to 60%, reflecting the success of our recent expansion efforts and the continued strength of our existing franchise," Tallent said.

On January 19, 2006, the Board of Directors declared a regular first-quarter 2006 cash dividend of $.08 per common share payable April 3, 2006, to shareholders of record as the close of business on March 15, 2006. "This represents an annual cash dividend of $.32 per share and an increase of $.04 per share, or 14%, over the dividends paid for 2005," Tallent said. "This increase reflects our continued strong performance and commitment to deliver value to our shareholders."

"Our outlook for 2006 is for operating earnings per share growth within our long-term goal of 12% to 15%, but at the lower end of the range due to the expected dilution related to the equity offering completed during the fourth quarter," Tallent said. "We anticipate core loan growth will continue to be within our targeted range of 10% to 14%. Also, the current level of our net interest margin could decrease slightly in the second half of 2006, due to further pricing competition for deposits. Our outlook assumes a stable economic environment and continued strong credit quality."

"We are committed to excellent customer service, superior operating performance and solid credit quality as we continue our efforts to build shareholder value through our balanced growth strategy of strong internal growth, complemented by selective de novo and merger expansion," Tallent added.

Conference Call

United Community Banks will hold a conference call on Tuesday, January 24, 2006, 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 2006. The telephone number for the conference call is (866) 383-7998 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.

About United Community Banks, Inc.

Headquartered in Blairsville, United Community Banks is the third-largest bank holding company in Georgia. As of December 31, 2005, United Community Banks had assets of $5.9 billion and operated 24 community banks with 90 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses. 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 National Market under the symbol UCBI. Additional information may be found at the company's web site, 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 factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward Looking Statements" on page 4 of United Community Banks, Inc. annual report filed on Form 10-K with the Securities and Exchange Commission.

UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three and Twelve Months Ended December 31, 2005

                                                     2005
                                    --------------------------------------
(in thousands, except per share       Fourth        Third         Second
data; taxable equivalent)             Quarter       Quarter       Quarter
                                    ----------    ----------    ----------
INCOME SUMMARY
Interest revenue                    $   95,465    $   89,003    $   80,701
Interest expense                        38,576        34,033        29,450
                                    ----------    ----------    ----------
    Net interest revenue                56,889        54,970        51,251
Provision for loan losses                3,500         3,400         2,800
Fee revenue                             11,373        12,396        12,179
                                    ----------    ----------    ----------
   Total revenue                        64,762        63,966        60,630
Operating expenses (1)                  40,520        41,294        38,808
                                    ----------    ----------    ----------
    Income before taxes                 24,242        22,672        21,822
Income taxes                             9,012         8,374         8,049
                                    ----------    ----------    ----------
   Net operating income                 15,230        14,298        13,773
Merger-related charges, net of tax           -             -             -
                                    ----------    ----------    ----------
   Net income                       $   15,230    $   14,298    $   13,773
                                    ==========    ==========    ==========
OPERATING PERFORMANCE  (1)
  Earnings per common share:
    Basic                           $      .39    $      .37    $      .36
    Diluted                                .38           .36           .35
  Return on tangible equity
   (2)(3)(4)                             18.20%        18.90%        19.21%
  Return on assets (4)                    1.05          1.01          1.03
  Efficiency ratio                       58.80         61.16         61.18
  Dividend payout ratio                  17.95         18.92         19.44

GAAP PERFORMANCE
  Per common share:
    Basic earnings                  $      .39    $      .37    $      .36
    Diluted earnings                       .38           .36           .35
    Cash dividends declared                .07           .07           .07
    Book value                           11.80         11.04         10.86
    Tangible book value (3)               8.94          8.05          7.85

  Key performance ratios:
    Return on equity (2)(4)              13.30%        13.42%        13.46%
    Return on assets (4)                  1.05          1.01          1.03
    Net interest margin (4)               4.20          4.17          4.12
    Dividend payout ratio                17.95         18.92         19.44
    Equity to assets                      7.69          7.46          7.65
    Tangible equity to assets (3)         5.82          5.53          5.62

ASSET QUALITY
  Allowance for loan losses         $   53,595    $   51,888    $   49,873
  Non-performing assets                 12,995        13,565        13,495
  Net charge-offs                        1,793         1,385         1,380
  Allowance for loan losses to
   loans                                  1.22%         1.22%         1.22%
  Non-performing assets to total
   assets                                  .22           .24           .24
  Net charge-offs to average
   loans (4)                               .16           .13           .14

AVERAGE BALANCES
  Loans                             $4,328,613    $4,169,170    $3,942,077
  Investment securities              1,004,966     1,008,687       996,096
  Earning assets                     5,383,096     5,239,195     4,986,339
  Total assets                       5,769,632     5,608,158     5,338,398
  Deposits                           4,354,275     4,078,437     3,853,884
  Stockholders' equity                 443,746       418,459       408,352
  Common shares outstanding:
    Basic                               39,084        38,345        38,270
    Diluted                             40,379        39,670        39,436

AT PERIOD END
  Loans                             $4,398,286    $4,254,051    $4,072,811
  Investment securities                990,687       945,922       990,500
  Earning assets                     5,470,718     5,302,532     5,161,067
  Total assets                       5,865,756     5,709,666     5,540,242
  Deposits                           4,477,600     4,196,369     3,959,226
  Stockholders' equity                 472,686       424,000       415,994
  Common shares outstanding             40,020        38,383        38,283


(1) Excludes pre-tax merger-related charges totaling $406,000 or $.01 per
 diluted common share and $870,000 or $.02 per diluted common share in the
 fourth quarter and full year of 2004, respectively.

(2) Net income available to common stockholders, which excludes preferred
 stock dividends, divided by average realized common equity, which excludes
 accumulated other comprehensive income.

(3) Excludes effect of acquisition related intangibles and associated
 amortization.

(4) Annualized.


UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three and Twelve Months Ended December 31, 2005

                                         2005          2004       Fourth
                                     -----------   -----------   Quarter
(in thousands, except per share         First        Fourth     2005-2004
data; taxable equivalent)              Quarter       Quarter      Change
                                     -----------   -----------   -------
INCOME SUMMARY
Interest revenue                     $    73,649   $    66,761
Interest expense                          25,367        21,448
                                     -----------   -----------
    Net interest revenue                  48,282        45,313        26%
Provision for loan losses                  2,400         2,000
Fee revenue                               10,200        10,757         6
                                     -----------   -----------
   Total revenue                          56,082        54,070        20
Operating expenses (1)                    34,779        33,733        20
                                     -----------   -----------
    Income before taxes                   21,303        20,337        19
Income taxes                               7,862         7,427
                                     -----------   -----------
   Net operating income                   13,441        12,910        18
Merger-related charges, net of tax             -           261
                                     -----------   -----------
   Net income                        $    13,441   $    12,649        20
                                     ===========   ===========
OPERATING PERFORMANCE  (1)
  Earnings per common share:
    Basic                            $       .35   $       .35        11
    Diluted                                  .34           .34        12
  Return on tangible equity
   (2)(3)(4)                               19.86%        19.96%
  Return on assets (4)                      1.06          1.07
  Efficiency ratio                         59.47         60.20
  Dividend payout ratio                    20.00         17.14

GAAP PERFORMANCE
  Per common share:
    Basic earnings                   $       .35   $       .34        15
    Diluted earnings                         .34           .33        15
    Cash dividends declared                  .07           .06        17
    Book value                             10.42         10.39        14
    Tangible book value (3)                 7.40          7.34        22

  Key performance ratios:
    Return on equity (2)(4)                13.68%        14.15%
    Return on assets (4)                    1.06          1.05
    Net interest margin (4)                 4.05          4.05
    Dividend payout ratio                  20.00         17.65
    Equity to assets                        7.71          7.54
    Tangible equity to assets (3)           5.58          5.75

ASSET QUALITY
  Allowance for loan losses          $    48,453   $    47,196
  Non-performing assets                   13,676         8,725
  Net charge-offs                          1,143         1,183
  Allowance for loan losses to
   loans                                    1.25%         1.26%
  Non-performing assets to total
   assets                                    .26           .17
  Net charge-offs to average loans
   (4)                                       .12           .13

AVERAGE BALANCES
  Loans                              $ 3,797,479   $ 3,572,824        21
  Investment securities                  946,194       805,766        25
  Earning assets                       4,819,961     4,456,403        21
  Total assets                         5,164,464     4,781,018        21
  Deposits                             3,717,916     3,500,842        24
  Stockholders' equity                   398,164       360,668        23
  Common shares outstanding:
    Basic                                 38,198        37,056
    Diluted                               39,388        38,329

AT PERIOD END
  Loans                              $ 3,877,575   $ 3,734,905        18
  Investment securities                  928,328       879,978        13
  Earning assets                       4,907,743     4,738,389        15
  Total assets                         5,265,771     5,087,702        15
  Deposits                             3,780,521     3,680,516        22
  Stockholders' equity                   398,886       397,088        19
  Common shares outstanding               38,249        38,168


(1)  Excludes pre-tax merger-related charges totaling $406,000 or
$.01 per diluted common share and $870,000 or $.02 per diluted common
share in the fourth quarter and full year of 2004, respectively.

(2)  Net income available to common stockholders, which excludes
preferred stock dividends, divided by average realized common equity,
which excludes accumulated other comprehensive income.

(3)  Excludes effect of acquisition related intangibles and associated
amortization.

(4)  Annualized.


UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three and Twelve Months Ended December 31, 2005

                                       For the Twelve                YTD
(in thousands, except per share         Months Ended              2005-2004
data; taxable equivalent)             2005         2004             Change
-------------------------------    ----------   ----------        ---------
INCOME SUMMARY
Interest revenue                   $  338,818   $  239,386
Interest expense                      127,426       74,794
                                   ----------   ----------
  Net interest revenue                211,392      164,592              28%
Provision for loan losses              12,100        7,600
Fee revenue                            46,148       39,539              17
                                   ----------   ----------
  Total revenue                       245,440      196,531              25
Operating expenses (1)                155,401      122,568              27
                                   ----------   ----------
    Income before taxes                90,039       73,963              22
Income taxes                           33,297       26,807
                                   ----------   ----------
  Net operating income                 56,742       47,156              20
Merger-related charges, net
 of tax                                     -          565
                                   ----------   ----------
  Net income                       $   56,742   $   46,591              22
                                   ==========   ==========
OPERATING PERFORMANCE (1)
  Earnings per common share:
    Basic                          $     1.47   $     1.31              12
    Diluted                              1.43         1.27              13
  Return on tangible
   equity (2)(3)(4)                     18.99%       19.74%
  Return on assets (4)                   1.04         1.07
  Efficiency ratio                      60.15        60.05
  Dividend payout ratio                 19.05        18.32

GAAP PERFORMANCE
  Per common share:
    Basic earnings                 $     1.47   $     1.29              14
    Diluted earnings                     1.43         1.25              14
    Cash dividends declared               .28          .24              17
    Book value                          11.80        10.39              14
    Tangible book value (3)              8.94         7.34              22

  Key performance ratios:
    Return on equity (2)(4)             13.46%       14.39%
    Return on assets (4)                 1.04         1.05
    Net interest margin (4)              4.14         4.00
    Dividend payout ratio               19.05        18.60
    Equity to assets                     7.63         7.45
    Tangible equity to assets (3)        5.64         5.78

ASSET QUALITY
  Allowance for loan losses        $   53,595   $   47,196
  Non-performing assets                12,995        8,725
  Net charge-offs                       5,701        3,617
  Allowance for loan losses to loans     1.22%        1.26%
  Non-performing assets to total
   assets                                 .22          .17
  Net charge-offs to average
   loans (4)                              .14          .11

AVERAGE BALANCES
  Loans                            $4,061,091   $3,322,916              22
  Investment securities               989,201      734,577              35
  Earning assets                    5,109,053    4,119,327              24
  Total assets                      5,472,200    4,416,835              24
  Deposits                          4,003,083    3,247,612              23
  Stockholders' equity                417,309      329,225              27
  Common shares outstanding:
    Basic                              38,477       36,071
    Diluted                            39,721       37,273

AT PERIOD END
  Loans                            $4,398,286   $3,734,905              18
  Investment securities               990,687      879,978              13
  Earning assets                    5,470,718    4,738,389              15
  Total assets                      5,865,756    5,087,702              15
  Deposits                          4,477,600    3,680,516              22
  Stockholders' equity                472,686      397,088              19
  Common shares outstanding            40,020       38,168


(1) Excludes pre-tax merger-related charges totaling $406,000 or $.01 per
    diluted common share and $870,000 or $.02 per diluted common share in
    the fourth quarter and full year of 2004, respectively.

(2) Net income available to common stockholders, which excludes preferred
    stock dividends, divided by average realized common equity, which
    excludes accumulated other comprehensive income.

(3) Excludes effect of acquisition related intangibles and associated
    amortization.

(4) Annualized.


UNITED COMMUNITY BANKS, INC.
 Selected Financial Information
 For the Years Ended December 31,

(in thousands,
 except per share
 data; taxable
 equivalent)            2005          2004          2003          2002
                    ------------  ------------  ------------  ------------

INCOME SUMMARY
Interest revenue    $    338,818  $    239,386  $    209,338  $    195,932
Interest expense         127,426        74,794        70,600        76,357
                    ------------  ------------  ------------  ------------
  Net interest
   revenue               211,392       164,592       138,738       119,575
Provision for loan
 losses                   12,100         7,600         6,300         6,900
Fee revenue               46,148        39,539        38,184        30,734
                    ------------  ------------  ------------  ------------
  Total revenue          245,440       196,531       170,622       143,409
Operating
 expenses (1)            155,401       122,568       107,900        91,124
                    ------------  ------------  ------------  ------------
  Income before
   taxes                  90,039        73,963        62,722        52,285
Income taxes              33,297        26,807        23,247        19,505
                    ------------  ------------  ------------  ------------
  Net operating
   income                 56,742        47,156        39,475        32,780
Merger-related
 charges, net of
 tax                           -           565         1,357             -
                    ------------  ------------  ------------  ------------
  Net income        $     56,742  $     46,591  $     38,118  $     32,780
                    ============  ============  ============  ============

OPERATING
 PERFORMANCE  (1)
Earnings per
 common share:
  Basic             $       1.47  $       1.31  $       1.15  $       1.02
  Diluted                   1.43          1.27          1.12           .99
Return on tangible
 equity (2)(3)             18.99%        19.74%        19.24%        17.88%
Return on assets            1.04          1.07          1.06          1.11
Efficiency ratio           60.15         60.05         60.89         60.66
Dividend payout
 ratio                     19.05         18.32         17.39         16.34

GAAP PERFORMANCE
Per common share:
  Basic earnings    $       1.47  $       1.29  $       1.11  $       1.02
  Diluted earnings          1.43          1.25          1.08           .99
  Cash dividends
   declared
   (rounded)                 .28           .24           .20           .17
  Book value               11.80         10.39          8.47          6.89
  Tangible book
   value (3)                8.94          7.34          6.52          6.49

Key performance
 ratios:
  Return on
   equity (2)              13.46%        14.39%        14.79%        16.54%
  Return on assets          1.04          1.05          1.02          1.11
  Net interest
   margin                   4.14          4.00          3.99          4.33
  Dividend payout
   ratio                   19.05         18.60         18.02         16.34
  Equity to assets          7.63          7.45          7.21          7.01
  Tangible equity to
   assets (3)               5.64          5.78          6.02          6.60

ASSET QUALITY
  Allowance for loan
   losses           $     53,595  $     47,196  $     38,655  $     30,914
  Non-performing
   assets                 12,995         8,725         7,589         8,019
  Net charge-offs          5,701         3,617         4,097         3,111
  Allowance for loan
   losses to loans          1.22%         1.26%         1.28%         1.30%
  Non-performing
   assets to total
   assets                    .22           .17           .19           .25
  Net charge-offs
   to average
   loans                     .14           .11           .15           .14

AVERAGE BALANCES
  Loans             $  4,061,091  $  3,322,916  $  2,753,451  $  2,239,875
  Investment
   securities            989,201       734,577       667,211       464,468
  Earning assets       5,109,053     4,119,327     3,476,030     2,761,265
  Total assets         5,472,200     4,416,835     3,721,284     2,959,295
  Deposits             4,003,084     3,247,612     2,743,087     2,311,717
  Stockholders'
   equity                417,309       329,225       268,446       207,312
  Common shares
   outstanding:
    Basic                 38,477        36,071        34,132        32,062
    Diluted               39,721        37,273        35,252        33,241

AT PERIOD END
  Loans             $  4,398,286  $  3,734,905  $  3,015,997  $  2,381,798
  Investment
   securities            990,687       879,978       659,891       559,390
  Earning assets       5,470,718     4,738,389     3,796,332     3,029,409
  Total assets         5,865,756     5,087,702     4,068,834     3,211,344
  Deposits             4,477,600     3,680,516     2,857,449     2,385,239
  Stockholders'
   equity                472,686       397,088       299,373       221,579
  Common shares
   outstanding            40,020        38,168        35,289        31,895


(1)  Excludes pre-tax merger-related and restructuring charges totaling
     $.9 million, or $.02 per diluted common share, recorded in 2004;
     $2.1 million, or $.04 per diluted common share, recorded in 2003;
     $1.6 million, or $.03 per diluted common share, recorded in 2001;
     and $10.6 million, or $.23 per diluted common share, recorded in 2000.
(2)  Net income available to common stockholders, which excludes preferred
     stock dividends, divided by average realized common equity which
     excludes accumulated other comprehensive income.
(3)  Excludes effect of acquisition related intangibles and associated
     amortization.
(4)  Compound annual growth rate.


UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Years Ended December 31,

(in thousands, except per share                                  5 Year
 data;  taxable equivalent)           2001          2000        CAGR (4)
                                  ------------  ------------  ------------
INCOME SUMMARY
Interest revenue                  $    210,036  $    213,115
Interest expense                       100,874       116,591
                                  ------------  ------------
  Net interest revenue                 109,162        96,524            17%
Provision for loan losses                6,000         7,264
Fee revenue                             25,267        18,867            20
                                  ------------  ------------
  Total revenue                        128,429       108,127            18
Operating expenses (1)                  83,906        74,043            16
                                  ------------  ------------
  Income before taxes                   44,523        34,084            21
Income taxes                            16,208        12,337
                                  ------------  ------------
  Net operating income                  28,315        21,747            21
Merger-related charges, net of tax       1,084         7,230
                                  ------------  ------------
  Net income                      $     27,231  $     14,517            31
                                  ============  ============

OPERATING PERFORMANCE  (1)
Earnings per common share:
  Basic                           $        .89  $        .70            16
  Diluted                                  .87           .69            16
Return on tangible equity (2)(3)         18.19%        16.74%
Return on assets                          1.10           .89
Efficiency ratio                         62.52         64.15
Dividend payout ratio                    14.98         14.29

GAAP PERFORMANCE
Per common share:
  Basic earnings                  $        .86  $        .47            26
  Diluted earnings                         .84           .46            25
  Cash dividends declared
   (rounded)                               .13           .10            23
  Book value                              5.98          4.93            19
  Tangible book value (3)                 5.40          4.49            15

Key performance ratios:
  Return on equity (2)                   16.08%        10.04%
  Return on assets                        1.05           .59
  Net interest margin                     4.51          4.16
  Dividend payout ratio                  15.50         21.28
  Equity to assets                        6.81          5.58
  Tangible equity to assets (3)           6.18          5.49

ASSET QUALITY
  Allowance for loan losses       $     27,124  $     24,698
  Non-performing assets                  9,670         6,716
  Net charge-offs                        4,578         2,976
  Allowance for loan losses to
   loans                                  1.35%         1.38%
  Non-performing assets to total
   assets                                  .35           .27
  Net charge-offs to average
   loans                                   .25           .18

AVERAGE BALANCES
  Loans                           $  1,854,968  $  1,683,403            19
  Investment securities                489,332       586,222            11
  Earning assets                     2,419,080     2,319,389            17
  Total assets                       2,585,290     2,453,250            17
  Deposits                           2,010,105     1,941,496            16
  Stockholders' equity                 176,144       136,810            25
  Common shares outstanding:
    Basic                               31,691        30,900
    Diluted                             32,624        31,791

AT PERIOD END
  Loans                           $  2,007,990  $  1,792,055            20
  Investment securities                470,176       508,266            14
  Earning assets                     2,554,530     2,352,475            18
  Total assets                       2,749,257     2,528,879            18
  Deposits                           2,116,499     1,995,865            18
  Stockholders' equity                 194,665       158,388            24
  Common shares outstanding             32,266        31,542


(1)  Excludes pre-tax merger-related and restructuring charges totaling
     $.9 million, or $.02 per diluted common share, recorded in 2004;
     $2.1 million, or $.04 per diluted common share, recorded in 2003;
     $1.6 million, or $.03 per diluted common share, recorded in 2001; and
     $10.6 million, or $.23 per diluted common share, recorded in 2000.
(2)  Net income available to common stockholders, which excludes preferred
     stock dividends, divided by average realized common equity which
     excludes accumulated other comprehensive income.
(3)  Excludes effect of acquisition related intangibles and associated
     amortization.
(4)  Compound annual growth rate.


UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Income
For the Three and Twelve Months Ended December 31,

                                Three Months Ended    Twelve Months Ended
(in thousands, except per           December 31,          December 31,
 share data)                      2005       2004       2005       2004
                                --------   --------   --------   --------

Interest revenue:
  Loans, including fees         $ 83,607   $ 57,800   $293,990   $207,571
  Investment securities:
    Taxable                       10,651      7,769     40,195     27,431
    Tax exempt                       513        536      2,086      2,161
  Federal funds sold and
   deposits in banks                 249        260        911        618
                                --------   --------   --------   --------
      Total interest revenue      95,020     66,365    337,182    237,781
                                --------   --------   --------   --------

Interest expense:
  Deposits:
    Demand                         6,101      2,689     19,194      8,554
    Savings                          226        129        791        403
    Time                          21,288     11,524     66,968     41,202
                                --------   --------   --------   --------
      Total deposit interest
       expense                    27,615     14,342     86,953     50,159
  Federal funds purchased,
   repurchase agreements, &
   other short-term borrowings     1,516        727      5,101      2,119
  Federal Home Loan Bank
   advances                        7,230      4,264     26,633     14,237
  Long-term Debt                   2,215      2,115      8,739      8,279
                                --------   --------   --------   --------
    Total interest expense        38,576     21,448    127,426     74,794
                                --------   --------   --------   --------
    Net interest revenue          56,444     44,917    209,756    162,987
Provision for loan losses          3,500      2,000     12,100      7,600
                                --------   --------   --------   --------
    Net interest revenue after
     provision for loan losses    52,944     42,917    197,656    155,387
                                --------   --------   --------   --------

Fee revenue:
  Service charges and fees         6,616      5,646     25,137     21,540
  Mortgage loan and other
   related fees                    1,738      1,712      7,330      6,324
  Consulting fees                  1,665      1,794      6,609      5,749
  Brokerage fees                     789        427      2,570      2,027
  Securities (losses) gains,
   net                              (654)        34       (809)       428
  Loss on prepayments of
   borrowings                          -          -          -       (391)
  Other                            1,219      1,144      5,311      3,862
                                --------   --------   --------   --------
    Total fee revenue             11,373     10,757     46,148     39,539
                                --------   --------   --------   --------
    Total revenue                 64,317     53,674    243,804    194,926
                                --------   --------   --------   --------

Operating expenses:
  Salaries and employee
   benefits                       25,604     21,571     99,447     77,995
  Communications and
   equipment                       3,576      2,893     13,157     10,945
  Occupancy                        2,706      2,364     10,835      9,271
  Advertising and public
   relations                       1,988      1,525      6,733      4,403
  Postage, printing and
   supplies                        1,355      1,027      5,501      4,451
  Professional fees                1,023      1,057      4,306      3,724
  Amortization of intangibles        503        466      2,012      1,674
  Merger-related charges               -        406          -        870
  Other                            3,765      2,830     13,410     10,105
                                --------   --------   --------   --------
    Total operating expenses      40,520     34,139    155,401    123,438
                                --------   --------   --------   --------
  Income before income taxes      23,797     19,535     88,403     71,488
Income taxes                       8,567      6,886     31,661     24,897
                                --------   --------   --------   --------
    Net income                  $ 15,230   $ 12,649   $ 56,742   $ 46,591
                                ========   ========   ========   ========

    Net income available to
     common stockholders        $ 15,225   $ 12,649   $ 56,719   $ 46,582
                                ========   ========   ========   ========

Earnings per common share:
  Basic                         $    .39   $    .34   $   1.47   $   1.29
  Diluted                       $    .38        .33   $   1.43       1.25
Weighted average common shares
 outstanding (in thousands):
  Basic                           39,084     37,056     38,477     36,071
  Diluted                         40,379     38,329     39,721     37,273


UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
For the period ended
                                                   ----------  ----------
                                                     December    December
                                                          31,         31,
(in thousands, except per share data)                    2005        2004
                                                   ----------  ----------

ASSETS

 Cash and due from banks                           $  121,963  $   99,742
 Interest-bearing deposits in banks                    20,607      35,098
                                                   ----------  ----------
  Cash and cash equivalents                           142,570     134,840

 Securities available for sale                        990,687     879,978
 Mortgage loans held for sale                          22,335      37,094
 Loans, net of unearned income                      4,398,286   3,734,905
   Less - allowance for loan losses                    53,595      47,196
                                                   ----------  ----------
     Loans, net                                     4,344,691   3,687,709

 Premises and equipment, net                          112,887     103,679
 Accrued interest receivable                           37,197      27,923
 Intangible assets                                    118,651     121,207
 Other assets                                          96,738      95,272
                                                   ----------  ----------
  Total assets                                     $5,865,756  $5,087,702
                                                   ==========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
 Deposits:
  Demand                                           $  602,525  $  532,879
  Interest-bearing demand                           1,264,947   1,055,192
  Savings                                             175,453     171,898
  Time                                              2,434,675   1,920,547
                                                   ----------  ----------
     Total deposits                                 4,477,600   3,680,516

 Federal funds purchased, repurchase agreements,
  & other short-term borrowings                       122,881     132,931
 Federal Home Loan Bank advances                      635,616     737,947
 Long-term debt                                       111,869     111,869
 Accrued expenses and other liabilities                45,104      27,351
                                                   ----------  ----------
  Total liabilities                                 5,393,070   4,690,614
                                                   ----------  ----------

Stockholders' equity:
 Preferred stock, $1 par value; $10 stated value;
  10,000,000 shares authorized; 32,200 and 44,800
  shares issued and outstanding in 2005 and 2004,
  respectively                                            322        448
 Common stock, $1 par value; 100,000,000 shares
  authorized; 40,019,853 and 38,407,874 shares
  issued in 2005 and 2004, respectively                40,020      38,408
 Common stock issuable; 9,948 shares in 2005              271           -
 Capital surplus                                      193,355     155,076
 Retained earnings                                    250,563     204,709
 Treasury stock; 240,346 shares in 2004, at cost            -      (4,413)
 Accumulated other comprehensive (loss) income        (11,845)      2,860
                                                   ----------  ----------
  Total stockholders' equity                          472,686     397,088
                                                   ----------  ----------
  Total liabilities and stockholders' equity       $5,865,756  $5,087,702
                                                   ==========  ==========

Contact Information

  • For more information:
    Rex S. Schuette
    Chief Financial Officer
    (706) 781-2265
    Email Contact