SOURCE: United Community Banks, Inc.

July 26, 2005 08:00 ET

United Community Banks, Inc. Reports 13% Gain in Diluted Earnings per Share for Second Quarter 2005

BLAIRSVILLE, GA -- (MARKET WIRE) -- July 26, 2005 -- United Community Banks, Inc. (NASDAQ: UCBI)

HIGHLIGHTS:

--  Record Second Quarter Earnings
       Diluted Operating Earnings Per Share of 35 Cents - Up 13%
       Net Operating Income of $13.8 Million - Up 21%
       Return on Tangible Equity of 19.21%
--  Strong Loan Demand and Rise in Net Interest Margin and Fee Revenue
    Drove Performance
--  Significant Entry into the Gainesville MSA Expands Franchise
    
United Community Banks, Inc. (NASDAQ: UCBI), Georgia's third largest bank holding company, today announced record second quarter 2005 results that included a 21% rise in net operating income, a 13% gain in diluted operating earnings per share and a 29% increase in total revenue from the second quarter of 2004.

For the quarter, net operating income rose to $13.8 million from $11.4 million a year earlier. Diluted operating earnings per share of $.35 increased $.04 from $.31 a year ago. Total revenue, on a taxable equivalent basis, was $60.6 million compared with $47.1 million for the second quarter of 2004. Return on tangible equity was 19.21% and return on assets was 1.03%, compared with 19.70% and 1.07%, respectively, a year ago.

"Our financial performance in the second quarter of 2005 was outstanding by all measures," said Jimmy Tallent, President and Chief Executive Officer. "Total assets at quarter-end surpassed $5.5 billion, an increase of more than $1 billion, or 22%, from a year ago. Loan growth continued at a record pace, increasing $195 million during the quarter, or 20% on an annualized basis, which helped drive the increase in net interest revenue. Our net interest margin rose to 4.12%, up 17 basis points from a year ago as increasing short-term interest rates positively affected our slightly asset-sensitive balance sheet. Fee revenue increased in every category and was up 26% over 2004. With this growth in revenue and operating earnings, United Community Banks remains on track to meet our performance goals of double-digit earnings per share growth and a return on tangible equity above 18% for 2005."

For the six months, net operating income of $27.2 million increased $4.9 million, or 22%, from $22.3 million for the first half of 2004. Diluted operating earnings per share of $.69 increased $.08, or 13%, from $.61 for the first six months of 2004. Total revenue, on a taxable equivalent basis, totaled $116.7 million, up 26% from $92.4 million a year ago. Return on tangible equity was 19.52% and return on assets was 1.04%, compared with 19.79% and 1.07%, respectively, a year ago.

Net operating income excludes pre-tax merger-related charges in 2004. For the second quarter of 2004 and for the first six months of 2004, merger-related charges were $464 thousand resulting from the acquisition of 1st Community Bank, completed on June 1, 2004. Including these merger-related charges for the second quarter and first six months of 2004, reported net income was $11.0 million and $22.0 million, respectively; reported diluted earnings per share was $.30 and $.60, respectively; and, reported return on equity 14.40% and 14.63%, respectively.

At June 30, 2005, total loans were $4.1 billion, up $735 million, or 22%, from a year ago. Organic growth, excluding acquisitions, was $528 million, or 16%. "Loan demand has remained consistent across all our markets, providing significant growth opportunities," Tallent said. "Organic loan growth, accomplished through disciplined step-by-step execution and accompanied by an uncompromising focus on sound credit quality, is essential to our balanced growth strategy."

"This strategy also includes focused expansion with the right people through de novo offices," Tallent explained. "An excellent example of this strategy was our May entry into the Gainesville market. In May, we partnered with three experienced local banking executives to form a de novo bank, United Community Bank - Hall County. This new bank is managed by Chairman Rich White, CEO Dick Valentine, and President Burton Stephens -- all of whom are long-time bankers in the Gainesville market. Shortly after joining, they hired 55 experienced bankers from this market and by the end of the second quarter the bank had grown to more than $90 million in loans and $50 million in new deposits. Our current plans include opening a main office location in downtown Gainesville within 90 days and two banking offices in the surrounding Gainesville MSA within the next 30 days. We also plan to open two additional banking offices in this market in early 2006. The Gainesville MSA, which encompasses all of Hall County, is the 7th fastest growing MSA in the country with over 100,000 in population," Tallent added. "It's 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 double-digit earnings per share growth and a return on tangible equity above 18%."

Taxable equivalent net interest revenue of $51.3 million for the second quarter rose $12.0 million, or 31%, from the same period a year ago. Recent acquisitions added approximately $3.8 million to net interest revenue, resulting in a core growth rate of 21%. Taxable equivalent net interest margin for the second quarter was 4.12% as compared with 3.95% a year ago and 4.05% last quarter. "We have maintained our net interest margin near the 4% level for the past 11 quarters and expect it to remain at that level through 2005," Tallent said. "Our balance sheet is slightly asset sensitive, which is allowing us to benefit modestly from a rising interest rate environment."

The second quarter provision for loan losses was $2.8 million and was up $1 million from a year earlier and increased $400,000 from the first quarter of 2005. Net charge-offs to average loans were 14 basis points for the second quarter, compared with 12 basis points for the first quarter of 2005 and 10 basis points for the second quarter of 2004. At quarter-end, non-performing assets totaled $13.5 million compared with $13.7 million at the end of the first quarter of 2005 and $8.8 million a year ago. Non-performing assets as a percentage of total assets were 24 basis points at quarter-end, compared with 26 basis points at March 31, 2005, and 19 basis points at June 30, 2004.

Commenting on asset quality, Tallent said, "Our level of non-performing assets compares very favorably with our peer banks and is well within our tolerance level. At this low level, we expect volatility in comparisons to prior periods, even while our credit quality remains sound. Strong credit quality remains essential to our high performance and growth. United's credit quality success is rooted in our bedrock strategy of securing loans with hard assets."

Fee revenue of $12.2 million rose $2.5 million, or 26%, from $9.6 million a year ago with strong growth in every category. "We increased fee revenue by growing deposits through our core deposit program and cross-selling other products and services," Tallent said. "We also experienced healthy increases in consulting, mortgage and brokerage fees." Service charges and fees on deposit accounts increased $968,000 to $6.3 million, primarily due to growth in transactions and new accounts resulting from the core deposit program. Consulting fees of $1.7 million rose $283,000, or 20%, due to continued growth in risk management and financial-service practices as well as strong growth across existing consulting services. Brokerage fees of $768,000 increased $253,000, or 49%, due to strong market activity. Other fee revenue of $1.7 million was up $873,000, due primarily to $530,000 in gains on the sale of two former banking office locations and $235,000 in gains on the sale of SBA loans.

"We remain sharply focused on growing core deposits and related fee revenue," Tallent said. "We continued to promote our very successful 'Refer-a-Friend' core deposit program that rewards our many satisfied customers for referring their friends and family members to us. Our relentless focus on providing the highest level of customer service has generated customer satisfaction scores that continue to exceed 90%, well above the comparable industry average of 75%. Our high level of customer satisfaction helps us build our deposit base through customer referrals while also maintaining long-term relationships with existing customers. During the quarter, our core deposit program, along with other initiatives, added 12,000 accounts and $75 million in balances."

Operating expenses increased $9.4 million, or 32%, to $38.8 million from the second quarter of 2004. Nearly $5.3 million of this increase related to operating expenses of the three banks acquired in 2004 that were not included in last year's results and the operating costs of the de novo expansion into Gainesville during the quarter. Salaries and employee benefit costs of $25.3 million increased $6.6 million, or 35%, with approximately $3.9 million resulting from acquisitions and the recent de novo expansion. The balance of the increase was due to an increase in staff to support business growth and related hiring costs and higher commissions related to the increase in mortgage and brokerage fee revenue. Communications and equipment expenses of $3.1 million increased $438,000, or 16%, due to the acquisitions and investments in technology equipment to support business growth. Advertising and marketing expense of $1.7 million rose $708,000, reflecting the higher program costs of initiatives to raise core deposits and marketing campaigns to generate brand recognition in new markets. Occupancy expense of $2.7 million increased $445,000 reflecting the cost of operating additional banking offices added through acquisitions and de novo expansion. Professional fees of $1.1 million were up $276,000, due to higher costs related to the volume of new loans generated and overall business growth. The increase in all other operating expense categories was related to the recent acquisitions and business growth. "Our operating efficiency ratio of 61.18% for the quarter was slightly above our long-term efficiency goal of 58% to 60%, reflecting the higher operating costs of our recent de novo expansion into Gainesville," Tallent said.

"Looking forward, we believe United Community Banks is on target to achieve operating earnings per share growth during 2005 within our long-term goal of 12% to 15%, and will likely remain at the lower end of the range this year due to the significant expansion in the Gainesville market," Tallent said. "We anticipate core loan growth will continue slightly above the high end of our targeted range of 10% to 14% and net interest margin will come down slightly from our current level, but remain above 4% for 2005. Our outlook is based on a continued, stable economic environment in our markets combined with maintaining strong credit quality. We are well positioned for additional increases in short-term interest rates and should benefit modestly if, and when, they occur."

"We remain committed to excellent customer service, superior operating performance and solid credit quality as we continue to grow our franchise," Tallent added. "Pursuing a balanced-growth strategy focused on strong internal growth in existing markets, complemented by selective de novo offices and mergers in other attractive markets, will remain the foundation on which we continue to build superior performance and long-term shareholder value."

Conference Call

United Community Banks will hold a conference call on Tuesday, July 26, 2005, at 11:00 a.m. ET to discuss the contents of this news release, as well as business highlights for the quarter and the financial outlook for the remainder of the year. The telephone number for the conference call is (800) 659-1966 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. United Community Banks has assets of $5.5 billion and operates 24 community banks with 85 banking offices located throughout north Georgia, metro Atlanta, coastal Georgia, western North Carolina and east Tennessee. The company specializes in providing personalized community banking services to individuals and small to mid-size businesses in its markets. United Community Banks also offers the convenience of 24-hour access to its services through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq National Market under the symbol UCBI. Additional information may be found at the company's web site, ucbi.com.

Safe Harbor

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


UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three and Six Months Ended June 30, 2005

(in thousands, except
per share data; taxable                  2005         2005        2004
 equivalent)                            Second        First      Fourth
                                        Quarter      Quarter     Quarter
                                     ----------   ----------   ----------
INCOME SUMMARY                       (Unaudited)  (Unaudited)  (Unaudited)
Interest revenue                     $   80,701   $   73,649   $   66,761
Interest expense                         29,450       25,367       21,448
                                     ----------   ----------   ----------
    Net interest revenue                 51,251       48,282       45,313
Provision for loan losses                 2,800        2,400        2,000
Fee revenue                              12,179       10,200       10,757
                                     ----------   ----------   ----------
   Total revenue                         60,630       56,082       54,070
Operating expenses (1)                   38,808       34,779       33,733
                                     ----------   ----------   ----------
    Income before taxes                  21,822       21,303       20,337
Income taxes                              8,049        7,862        7,427
                                     ----------   ----------   ----------
   Net operating income                  13,773       13,441       12,910
 Merger-related charges, net of tax           -            -          261
                                     ----------   ----------   ----------
    Net income                       $   13,773   $   13,441   $   12,649
                                     ==========   ==========   ==========

OPERATING PERFORMANCE (1)
 Earnings per common share:
    Basic                            $      .36   $      .35   $      .35
    Diluted                                 .35          .34          .34
  Return on tangible equity (2)(3)(4)     19.21 %      19.86 %      19.96 %
  Return on assets (4)                     1.03         1.06         1.07
  Efficiency ratio                        61.18        59.47        60.20
  Dividend payout ratio                   19.44        20.00        17.14

GAAP PERFORMANCE
  Per common share:
    Basic earnings                   $      .36   $      .35   $      .34
    Diluted earnings                        .35          .34          .33
    Cash dividends declared                 .07          .07          .06
    Book value                            10.86        10.42        10.39
    Tangible book value (3)                7.85         7.40         7.34

  Key performance ratios:
    Return on equity (2)(4)               13.46 %      13.68 %      14.15 %
    Return on assets (4)                   1.03         1.06         1.05
    Net interest margin (4)                4.12         4.05         4.05
    Dividend payout ratio                 19.44        20.00        17.65
    Equity to assets                       7.65         7.71         7.54
    Tangible equity to assets (3)          5.62         5.58         5.75

ASSET QUALITY
  Allowance for loan losses          $   49,873   $   48,453   $   47,196
  Non-performing assets                  13,495       13,676        8,725
  Net charge-offs                         1,380        1,143        1,183
  Allowance for loan losses
   to loans                                1.22 %       1.25 %       1.26 %
  Non-performing assets
   to total assets                          .24          .26          .17
  Net charge-offs to average loans (3)      .14          .12          .13

AVERAGE BALANCES
  Loans                              $3,942,077   $3,797,479   $3,572,824
  Investment securities                 996,096      946,194      805,766
  Earning assets                      4,986,339    4,819,961    4,456,403
  Total assets                        5,338,398    5,164,464    4,781,018
  Deposits                            3,853,884    3,717,916    3,500,842
  Stockholders' equity                  408,352      398,164      360,668
  Common shares outstanding:
    Basic                                38,270       38,198       37,056
    Diluted                              39,436       39,388       38,329

AT PERIOD END
  Loans                              $4,072,811   $3,877,575   $3,734,905
  Investment securities                 990,500      928,328      879,978
  Earning assets                      5,161,067    4,907,743    4,738,389
  Total assets                        5,540,242    5,265,771    5,087,702
  Deposits                            3,959,226    3,780,521    3,680,516
  Stockholders' equity                  415,994      398,886      397,088
  Common shares outstanding              38,283       38,249       38,168


UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three and Six Months Ended June 30, 2005
                                                                  Second
                                       2004             2004      Quarter
(in thousands, except per share        Third           Second    2005-2004
 data; taxable equivalent)            Quarter          Quarter     Change
                                    ----------       ----------   --------
INCOME SUMMARY                      (Unaudited)      (Unaudited)
Interest revenue                    $   61,358       $   56,680
Interest expense                        19,142           17,432
                                    ----------       ----------
   Net interest revenue                 42,216           39,248       31 %
Provision for loan losses                2,000            1,800
Fee revenue                              9,857            9,647       26
                                    ----------       ----------
   Total revenue                        50,073           47,095       29
Operating expenses (1)                  31,296           29,363       32
                                    ----------       ----------
    Income before taxes                 18,777           17,732       23
Income taxes                             6,822            6,379
                                    ----------       ----------
   Net operating income                 11,955           11,353       21
 Merger-related charges, net of tax          -              304
                                    ----------       ----------
    Net income                      $   11,955       $   11,049       25
                                    ==========       ==========

OPERATING PERFORMANCE (1)
  Earnings per common share:
    Basic                           $      .33       $      .32       13
    Diluted                                .32              .31       13
  Return on tangible equity (2)(3)(4)    19.41 %          19.70 %
  Return on assets (4)                    1.05             1.07
  Efficiency ratio                       60.11            60.05
  Dividend payout ratio                  18.18            18.75

GAAP PERFORMANCE
  Per common share:
    Basic earnings                  $      .33       $      .31       16
    Diluted earnings                       .32              .30       17
    Cash dividends declared                .06              .06       17
    Book value                            9.58             9.10       19
    Tangible book value (3)               7.28             6.77       16

  Key performance ratios:
    Return on equity (2)(4)              14.20 %          14.40 %
    Return on assets (4)                  1.05             1.04
    Net interest margin (4)               3.99             3.95
    Dividend payout ratio                18.18            19.35
    Equity to assets                      7.50             7.30
    Tangible equity to assets (3)         5.76             5.74

ASSET QUALITY
  Allowance for loan losses         $   43,548       $   42,558
  Non-performing assets                 10,527            8,812
  Net charge-offs                        1,010              789
  Allowance for loan losses
   to loans                               1.27 %           1.27 %
  Non-performing assets
   to total assets                         .23              .19
  Net charge-offs to average loans (3)     .12              .10

AVERAGE BALANCES
  Loans                             $3,384,281       $3,235,262       22
  Investment securities                762,994          715,586       39
  Earning assets                     4,215,472        3,991,797       25
  Total assets                       4,521,842        4,274,442       25
  Deposits                           3,351,188        3,178,776       21
  Stockholders' equity                 338,913          311,942       31
  Common shares outstanding:
    Basic                               36,254           35,633
    Diluted                             37,432           36,827

AT PERIOD END
  Loans                             $3,438,417       $3,338,309       22
  Investment securities                726,734          739,667       34
  Earning assets                     4,280,643        4,172,049       24
  Total assets                       4,592,655        4,525,446       22
  Deposits                           3,341,525        3,339,848       19
  Stockholders' equity                 347,795          330,458       26
  Common shares outstanding             36,255           36,246


UNITED COMMUNITY BANKS, INC.
Selected Financial Information
For the Three and Six Months Ended June 30, 2005

                                            For the Six             YTD
(in thousands, except per share             Months Ended         2005-2004
 data; taxable equivalent)             2005             2004       Change
                                    ----------       ----------   --------
INCOME SUMMARY                      (Unaudited)      (Unaudited)
Interest revenue                    $  154,350       $  111,267
Interest expense                        54,817           34,204
                                    ----------       ----------
    Net interest revenue                99,533           77,063       29 %
Provision for loan losses                5,200            3,600
Fee revenue                             22,379           18,925       18
                                    ----------       ----------
   Total revenue                       116,712           92,388       26
Operating expenses (1)                  73,587           57,539       28
                                    ----------       ----------
    Income before taxes                 43,125           34,849       24
Income taxes                            15,911           12,558
                                    ----------       ----------
   Net operating income                 27,214           22,291       22
 Merger-related charges, net of tax          -              304
                                    ----------       ----------
    Net income                      $   27,214       $   21,987       24
                                    ==========       ==========

OPERATING PERFORMANCE (1)
  Earnings per common share:
    Basic                           $      .71       $      .63       13
    Diluted                                .69              .61       13
  Return on tangible equity (2)(3)(4)    19.52 %          19.79 %
  Return on assets (4)                    1.04             1.07
  Efficiency ratio                       60.36            59.94
  Dividend payout ratio                  19.72            19.05

GAAP PERFORMANCE
  Per common share:
    Basic earnings                  $      .71       $      .62       15
    Diluted earnings                       .69              .60       15
    Cash dividends declared                .14              .12       17
    Book value                           10.86             9.10       19
    Tangible book value (3)               7.85             6.77       16

  Key performance ratios:
    Return on equity (2)(4)              13.57 %          14.63 %
    Return on assets (4)                  1.04             1.06
    Net interest margin (4)               4.09             3.97
    Dividend payout ratio                19.72            19.35
    Equity to assets                      7.68             7.38
    Tangible equity to assets (3)         5.60             5.81

ASSET QUALITY
  Allowance for loan losses         $   49,873       $   42,558
  Non-performing assets                 13,495            8,812
  Net charge-offs                        2,523            1,424
  Allowance for loan losses
   to loans                               1.22 %           1.27 %
  Non-performing assets
   to total assets                         .24              .19
  Net charge-offs to average loans (3)     .13              .09

AVERAGE BALANCES
  Loans                             $3,870,177       $3,165,569       22
  Investment securities                971,283          684,226       42
  Earning assets                     4,903,610        3,900,337       26
  Total assets                       5,251,913        4,179,664       26
  Deposits                           3,786,276        3,067,251       23
  Stockholders' equity                 403,286          308,434       31
  Common shares outstanding:
    Basic                               38,234           35,477
    Diluted                             39,412           36,655

AT PERIOD END
  Loans                             $4,072,811       $3,338,309       22
  Investment securities                990,500          739,667       34
  Earning assets                     5,161,067        4,172,049       24
  Total assets                       5,540,242        4,525,446       22
  Deposits                           3,959,226        3,339,848       19
  Stockholders' equity                 415,994          330,458       26
  Common shares outstanding             38,283           36,246

(1)  Excludes pre-tax merger-related charges totaling $406,000 or $.01 per
     diluted common share and $464,000 or $.01 per diluted common share in
     the fourth and second quarters, respectively, of 2004.

(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.
Consolidated Statement of Income
For the Three and Six Months Ended June 30, 2005 and 2004

                            Three Months Ended       Six Months Ended
(in thousands, except            June 30,                June 30,
 per share data)             2005        2004        2005        2004
                           ---------   ---------   ---------   ---------
Interest revenue:         (Unaudited) (Unaudited) (Unaudited) (Unaudited)
  Loans, including fees    $  69,446   $  49,326   $ 132,913   $  96,748
  Federal funds sold and
   deposits in banks             150          66         409         177
  Investment securities:
    Taxable                   10,190       6,339      19,204      12,408
    Tax exempt                   528         545       1,053       1,111
                           ---------   ---------   ---------   ---------
      Total interest
       revenue                80,314      56,276     153,579     110,444
                           ---------   ---------   ---------   ---------

Interest expense:
  Deposits:
    Demand                     4,379       1,920       7,906       3,714
    Savings                      174          93         342         176
    Time                      15,019       9,773      28,027      19,070
  Federal funds purchased      1,106         499       1,977         770
  Other borrowings             8,772       5,147      16,565      10,474
                           ---------   ---------   ---------   ---------
    Total interest expense    29,450      17,432      54,817      34,204
                           ---------   ---------   ---------   ---------
    Net interest revenue      50,864      38,844      98,762      76,240
Provision for loan losses      2,800       1,800       5,200       3,600
                           ---------   ---------   ---------   ---------
    Net interest revenue
     after provision for
     loan losses              48,064      37,044      93,562      72,640
                           ---------   ---------   ---------   ---------

Fee revenue:
  Service charges and fees     6,280       5,312      11,894      10,335
  Mortgage loan and other
   related fees                1,742       1,585       3,225       2,865
  Consulting fees              1,685       1,402       3,167       2,529
  Brokerage fees                 768         515       1,210       1,223
  Securities losses, net          (2)          -          (2)         (4)
  Other                        1,706         833       2,885       1,977
                           ---------   ---------   ---------   ---------
    Total fee revenue         12,179       9,647      22,379      18,925
                           ---------   ---------   ---------   ---------
    Total revenue             60,243      46,691     115,941      91,565
                           ---------   ---------   ---------   ---------
Operating expenses:
  Salaries and employee
   benefits                   25,274      18,662      47,509      36,788
  Occupancy                    2,718       2,273       5,386       4,555
  Communications and
   equipment                   3,115       2,677       6,097       5,224
  Postage, printing
   and supplies                1,369       1,068       2,720       2,210
  Professional fees            1,071         795       2,109       1,632
  Advertising and public
   relations                   1,699         991       3,062       1,755
  Amortization of
   intangibles                   503         395       1,006         766
  Merger-related charges           -         464           -         464
  Other                        3,059       2,502       5,698       4,609
                           ---------   ---------   ---------   ---------
    Total operating
     expenses                 38,808      29,827      73,587      58,003
                           ---------   ---------   ---------   ---------
  Income before income
   taxes                      21,435      16,864      42,354      33,562
Income taxes                   7,662       5,815      15,140      11,575
                           ---------   ---------   ---------   ---------
    Net income             $  13,773   $  11,049   $  27,214   $  21,987
                           =========   =========   =========   =========

    Net income available
     to common
     stockholders          $  13,767   $  11,048   $  27,201   $  21,970
                           =========   =========   =========   =========

Earnings per common share:
  Basic                         0.36   $     .31        0.71   $     .62
  Diluted                       0.35         .30        0.69         .60
Weighted average common
 shares outstanding
 (in thousands):
  Basic                       38,270      35,633      38,234      35,477
  Diluted                     39,436      36,827      39,412      36,655


UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheet
For the period ended

($ in thousands,                   June 30,    December 31,    June 30,
 except share data)                  2005          2004          2004
                                 -----------   -----------   -----------

ASSETS
  Cash and due from banks        $   117,478   $    99,742   $   147,793
  Interest-bearing deposits
   in banks                           17,451        35,098        39,186
                                 -----------   -----------   -----------
    Cash and cash equivalents        134,929       134,840       186,979

  Securities available for sale      990,500       879,978       739,667
  Mortgage loans held for sale        34,095        37,094        18,610
  Loans, net of unearned income    4,072,811     3,734,905     3,338,309
    Less - allowance for loan
     losses                           49,873        47,196        42,558
                                 -----------   -----------   -----------
      Loans, net                   4,022,938     3,687,709     3,295,751

  Premises and equipment, net        105,469       103,679        92,497
  Accrued interest receivable         31,909        27,923        23,150
  Intangible assets                  119,617       121,207        87,657
  Other assets                       100,785        95,272        81,135
                                 -----------   -----------   -----------
    Total assets                 $ 5,540,242   $ 5,087,702   $ 4,525,446
                                 ===========   ===========   ===========

LIABILITIES AND STOCKHOLDERS'
 EQUITY
Liabilities:
  Deposits:
    Demand                       $   590,306   $   532,879   $   479,439
    Interest-bearing demand        1,141,115     1,055,192       935,489
    Savings                          177,822       171,898       160,550
    Time                           2,049,983     1,920,547     1,764,370
                                 -----------   -----------   -----------
      Total deposits               3,959,226     3,680,516     3,339,848

  Federal funds purchased and
   repurchase agreements             213,148       130,921       181,439
  Federal Home Loan Bank
   advances                          800,316       737,947       535,343
  Other borrowings                   117,939       113,879       113,877
  Accrued expenses and other
   liabilities                        33,619        27,351        24,481
                                 -----------   -----------   -----------
    Total liabilities              5,124,248     4,690,614     4,194,988
                                 -----------   -----------   -----------

Stockholders' equity:
  Preferred stock, $1 par value;
   $10 stated value; 10,000,000
   shares authorized; 37,200,
   44,800 and 48,300 shares
   issued and outstanding                372           448           483
  Common stock, $1 par value;
   100,000,000 shares
   authorized; 38,407,874,
   38,407,874 and 36,620,754
   shares issued                      38,408        38,408        36,621
  Capital surplus                    154,480       155,076       116,129
  Retained earnings                  226,546       204,709       184,572
  Treasury stock; 124,665,
   240,346 and 374,362 shares,
   at cost                            (2,517)       (4,413)       (6,393)
  Accumulated other
   comprehensive (loss) income        (1,295)        2,860          (954)
                                 -----------   -----------   -----------
    Total stockholders' equity       415,994       397,088       330,454
                                 -----------   -----------   -----------

    Total liabilities and
     stockholders' equity        $ 5,540,242   $ 5,087,702   $ 4,525,446
                                 ===========   ===========   ===========

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