Jimmy Tallent - President and Chief Executive Officer David Shearrow - Executive Vice President and Chief Risk Officer Rex Schuette - Executive Vice President and Chief Financial Officer

Kevin Fitzsimmons - Sandler O'Neill Christopher Marinac - FIG Partners Michael Rose - Raymond James Jefferson Harralson - Keefe, Bruyette & Woods, Inc. Operator: Good morning and welcome to United Community Banks' First Quarter Conference Call. Hosting the call today are President and Chief Executive Officer, Jimmy Tallent; Chief Financial Officer, Rex Schuette; and Chief Risk Officer, David Shearrow. United's presentation today includes references to operating earnings and other non-GAAP financial information. United has provided a reconciliation of these measures to GAAP in the financial highlight section of the news release included on their website at www.ucbi.com. A copy of today's earnings release was filed on Form 8-K with the SEC and a replay of this call will be available on the company's Investor Relations page at www.ucbi.com. Please be aware that during this call forward-looking statements may be made about United Community Banks, and these forward-looking statements should be considered in light of risks and uncertainties described on page four of the company's Form 10-K and other information provided by the company in its filings with SEC and included on its website. At this time, we will begin the conference call with Jimmy Tallent.

Good Morning everyone and thanks for joining us on our call this morning. Let me begin by discussing the key events and results for the first quarter of 2009. As you know, the economy continued to be challenging during the quarter. Let me get right to the heart of things and summarize the key events. We provided $65 million for loan losses. We had net charge-offs of $43 million. We strengthened our loan loss reserve by $22 million, bringing it to 2.56% of loans. We saw non-performing assets increase to $334 million, up from $250 million in the prior quarter. Our net operating loss for the quarter was $32 million or a loss of $0.71 per share. Also after thorough review, we reduced staff levels across the company by 10%. About three-fourth of the reductions were effective at the end of the quarter with the remainder expected by year end. As a result of this reduction, we incurred severance costs of $2.9 million or $0.04 per share. We expect annul savings of approximately $10 million by the end of the year. At the end of 2008, we completed our annual goodwill impairment test, and the result showed no impairment. However, we felt an update was appropriate in the first quarter in light of the steep decline of our stock price. This new test resulted in a non-cash goodwill impairment charge of $70 million or $1.45 per share. With the addition of the goodwill impairment charge and the severance cost, both of them non-recurring items, our net loss for the quarter was $2.20 per share. Our margin increased 38 basis points this quarter to 3.08%, due to improved loan and deposit pricing. Our bankers have done an outstanding job on these two fronts and played a key role in our significant progress during the quarter. Finally, our tangible common equity to asset ratio at the end of the quarter was 6.1%, and our regulatory capital ratios remain significantly above the well capitalized level. Total loans were $5.6 billion at the end of the first quarter, down $72 million from the fourth quarter. Of that, residential construction is down $49 million and residential mortgage is down $22 million. At quarter-end, total deposits were $6.6 billion, down $387 million from last quarter. Of that, $250 million was a single municipal cap that we plan to let run off. Additionally, we let $180 million of half-priced CDs and broker deposits run off this quarter, which was a planned part of our effort to lower deposit cost. We are also pleased with the progress of several initiatives to grow our core customer deposits. Checking, NOW, savings and money market accounts, which increased $63 million in the first quarter. Now, I would like to turn the call over to David, who will discuss credit and then Rex will share details about our financials. David?

Thank you, Jimmy and good morning. The recession continue to negatively impact our credit quality in the first quarter. While the Atlanta residential construction portfolio was again the hardest hit, we also saw a migration of credit issues into other areas of our portfolio. To-date, most of this migration is centered in residential construction, due to the housing slowdown's more recent impact on our other markets. However, we are seeing some continued softening in other loan types as well. As a result, in the first quarter, we provided $65 million for loan losses and charged off $43 million in loans. As Jimmy noted, we saw a rise in non-performing assets to $334 million compared to $250 million last quarter. This increase was driven largely by continued deterioration in housing markets and softened demand from buyers. Non-performing assets included $259 million in non-performing loans and $75 million in OREO. We did not have any loans accruing over 90 days past due. The ratio of non-performing assets to total assets was 411 basis points. That compares to 294 of last quarter and 107 a year ago. The market to sell foreclose properties to investors remain soft in the first quarter, as bids reflected investor pessimism on the projected timing for a recovery. As a result, we chose to sell OREO until the market demonstrates more stability. We sold 22.4 million in OREO in the first quarter versus 24 million in the fourth quarter of 2008. The good news is, we continue to have steady activity on the sale of completed houses to end users at acceptable pricing. Net charge-offs were $43 million for the quarter compared to $74 million on a linked quarter basis. We have continued to aggressively recognize losses, in fact at quarter-end, our 75 million of OREO had been…

Thank you, David. As Jimmy stated earlier, it was a challenging quarter. We had a net loss of $103.8 million or $2.20 per share for the first quarter. This reported loss included non-recurring expenses for a goodwill impairment charge and severance costs. Excluding these non-recurring costs, we had a net operating loss of $32 million or $0.71 per share. In our supporting schedules to the earnings release, we have shown separately operating expenses excluding goodwill and severance costs and have provided separate disclosure for our net operating loss, which we believe are better indicators of our performance trends. This morning, I will comment on several key items impacting our net operating loss and on actions we have taken to improve core earnings. One of our key 2009 initiatives has been to get our margin back on track and heading in the right direction. We have made significant progress this quarter with a 38 basis point improvement. There were three primary drivers behind this strong expansion. First, implementing better loan pricings. We have increased our credit spreads and established much higher floors on our prime-based loans. In fact, since December, our average new and renewed loan pricing has been around 6%. Each month, we have approximately 230 million in new and renewed loans that we re-price. So as we continue with this improved pricing, it will have a positive effect on our margin throughout 2009. Second, lowering deposit rates. The pricing and competitive environment started to change late in the fourth quarter, allowing us to begin reducing rates. Already we have lowered rates on new and renewed CDs five times in the past 120 days, bringing down the pricing on these CDs by 170 basis points since October. We also have let some higher price CDs run off and replaced them…

Thanks, Rex. This morning, we've talked about our focus on improving pre-tax, pre-provision earnings. We feel good about the progress that we have made so far. Our margin has improved 38 basis points, which equals about $28 million annually. We have identified and are implementing $7 million in improvements identified to our We are United initiative. And we will see another $10 million in annual saving with our recent workforce reduction. Needless to say, the decision to reduce our workforce was a very tough decision, one of the most difficult of my career. But it was also necessary to ensure our long-term viability and strength. We expect that the combination of our margin improvement, our We are United program and the workforce reduction will improve our annualized pre-tax, pre-provision earnings by 45 million. We are very excited by the results of another initiative, United Express, an incentive-based program that encourages and rewards employees for attracting new core deposits and cross-selling additional products and services to new and existing customers. The results in only one quarter have been just outstanding, with 21,918 net new services generated. Of that, 3,585 net new core deposit accounts were added. This new business drove the $63 million increase in our customer deposits. A final initiative I want to address was launched in January, and it's focused on improving service forward and growing relationships with our commercial customers in metro-Atlanta. At this stage of our growth in this market, we decided to begin serving commercial customers along the lines of business such as seeing our lending commercial real estate and business banking. We believe this restructuring has put us in a better position to capitalize on the tremendous opportunities available in the Atlanta market, while preserving our community banking model and serving our retail customer base.…

(Operator Instructions). First we will go to Kevin Fitzsimmons with Sandler O'Neill.

Good morning, everyone.

Hi Kevin,

Just wondering if you can give a little more color on the whole disposal of NPA effort. It seem like I heard kind of a mixed message. It seemed like you are... I heard David say the market to sell the foreclosed properties remains pretty soft but yet you feel you made good progress on the front of disposal. And we just heard last night, Synovus talk about that has been soft this past quarter, but they were either encouraged that it's getting better or they've just embraced the fact that they just have to get out there and take whatever hits are coming in and sell much more aggressively. Where are you on that front? Are you... is it wait for the market to get better or just really surge ahead and try to take that, get that non-performing number down? And then separately, if you could just talk about the government programs that are out there and whether they represent any kind of potential benefit from you all based on what you know now? Thanks.

Kevin, this is David. Let me address the front part of that first. In terms of the first quarter activity, our overall sales activity, we had little over $22 million of OREO that we sold in the quarter, which is down a little bit from 24 last quarter. We, in the first quarter and then continuing on, on the housing front, completed houses; we have really had consistently pretty good activity. Of course, the winner is always a little bit slower seasonally. So what we are seeing now on particularly on the housing side is pretty good activity in all of our markets, North Georgia as well as Atlanta in moving that. So I'm encouraged and hopeful that the pace will continue to pick up as we are here in the second quarter. On the larger pieces of land, in that, we did move some of that albeit, in time, in my comments I may have mentioned the fact that really beginning in the fourth quarter of last year and then it just continued in the first, some of the pricing that we are seeing from investors remain real soft. And I think it's a function of few things. Lot of things we've heard more recently as some of our accounts had little bit of a chill because they're kind of wait and see with these government programs may bring, and so that I think delayed some of the bidding. So, really given that, and as we've said, while historically we have also been very aggressive in moving this out and we want a keep doing that. We have also identified there are... some of these land tracks closer in particularly in the Atlanta area and then in some isolated cases in North Georgia, where we think that the current pricing from investors is just well below what a fairly short term turnaround price would be, and we are being more patient on some of those. That's what will continue to put upward pressure on our NPAs really for the rest of the year. Is that helpful?

Yeah. That is helpful. And then just in terms of the government proposed like legacy loan programs, is that something you just have to wait and see or if there is any indications on that?

Yeah. From what we've gathered, it's really too early at this point. Most of what we've seen come out of these programs, we haven't found to be really all that helpful. Having said that, there is a lot of investors that are looking into those, in how that would play out in terms of the government guarantee and their potential returns, I am hopeful if they do it right, that create more buyers and hopefully that will push up pricing. But it's really too early to tell at this point.

Okay thank you

We will take our next telephone question from Christopher Marinac with FIG Partners.

Thanks, good morning. Jimmy, wanted to ask you about capital and sort of how you see that shaping up now for the rest of this year, but sort of as the rest of the cycle unfolds in the future?

Well Chris, obviously we are monitoring that very closely. I think the appropriate start would be to back and look at our stress test that we have shared with you. The 200 million in '08, I'm sorry, the 200 million in '09, 200 million in '010 and if you look at the 150 million that we did in '08, that will give you I guess a prime of reference. That's over 10% of the portfolio. Assuming all that does occur, our capital ratios still are we feel reasonably solid. All regulatory ratios are above well capitalized, all the way through that scenario, tangible common equity would still be in the 4% range. Now as we get deeper into the recession and certainly the unknowns and uncertainties, we look at alternatives, you know you have the TARP 2 that has now been proposed, still there is a lot of things about that or be unclear. We initially had said that we possibly would apply and then make the decision in November. I'm not so sure if that's where we are today as again we continue to drill in and find out all the details. Now, I would say this as well. Certainly, the investor market were contacted on a regular basis, as recently as yesterday, so I think access to capital is there, but at the same time, it would be dilutive. Based on our stress test, based on where we are today, and we what we view today, we still are comfortable with our capital position.

Jimmy, if you were able to write off or if you do write off the 400 quarter million this year and next year combined, would that have the commensurate drop in risk weighted assets?

Yes.

Okay. So that would then affect you there as well.

Yes, it would.

And then do you have any thoughts about repaying TARP, not necessarily immediately but as time evolves, for next two years?

I have thought every day. But the practicality of that, Chris, is first, we are pleased that we've got the TARP funds. Those have certainly strengthened our balance sheet in these times of uncertainty. We will continue to move forward and find the exit strategy at the appropriate time. Again, we feel we do or that we will have choices at the appropriate time. But quite honestly, that's not the priority with our company today, is to continue to move through our credit challenges, improve pre-tax, pre-provision, get our earnings back to a respectful level, and I think repaying the TARP at that time will be a fairly easy decision.

Got you, great. Just one more follow-up on... if I would on for David. To what extend do are restructuring of loans and problems used as a work out strategy? Was there anything meaningful done on that this last quarter that would have impacted NPAs one way or the other?

We obviously work... we try to work with any of our customers, if they have some challenges and trying to find an acceptable solution. If it's in terms of did it affect NPAs this past quarter, there are a couple that we continue to work with, requested on NPA and are continuing to work through the challenges with them. Usually, if we do that, it would be because it's a... well, for example, give you an example, if a builder who is still active, there are still keeping all the leans off of their product, they've still got a marketing organization that's able to move the product and we think they can realize a better return in kind of like an orderly liquidation first that we were to foreclose. I wish I had... we had more of those, unfortunately there aren't a lot of those. But we do have a few that we've been working with. If we had more challenges came up and we have those kinds of folks, we would continue to work with them. But that kind of thing does not huge bearing on our NPAs this quarter.

Okay. And under that scenario, David, that still stays as an NPA when you do and work out like that?

Yes.

Great, thank you very much.

Thank you. Operator: From Raymond James, we will take a question from Michael Rose.

Hi, good morning. I'm Michael. Sorry, if I missed this, but how sustainable is the nice increase you had in mortgage loans fees like the rest of the industry? How sustainable is that going into the back half of the year?

Well, we are very much encouraged, when we look at our, what we call our locks and applications, certainly looks strong going into the second quarter. I think as long as the rates are in the range where we are seeing those today at the mid fours, I think the refi will continue. Hopefully, we will see some new purchases that will be taking advantage of that. So on the short term view, I think it will continue to be very strong.

Okay. And secondarily Jimmy, can you give an update on the lot inventory in Atlanta?

I can. The lot inventory Michael is basically been, it's been flat. It's been flat now for well over a year. I think there is 149,000 lots available. Again, the closings certainly far exceed the starts; that has been the results now over two years. So we are beginning to continue to see the housing inventory of sort. There is still way, way, way too many lots. But we have actually heard from a couple of our builders that basically said, if the sales continues as they are seeing that they likely will be out of inventory toward the end of the year. Again, you know now that's encouraging, but we'll have to wait and see.

Okay. And finally, if I may, back to your stress test that you've laid out, what unemployment rate is that based on both and how sensitive it is to changes in the unemployment rate?

Well, the unemployment rate, we often ask where do we see that going particularly in Georgia. If I had to choose a number, I'd say probably 10% that I think it was flat in March to February. But I think we have adequately included our expectation of unemployment in our stress test.

Thank you.

And a question now from Jefferson Harralson at KBW. Jefferson Harralson - Keefe, Bruyette & Woods, Inc.: Yes.

Hi Jefferson, good morning. Jefferson Harralson - Keefe, Bruyette & Woods, Inc.: Jimmy, you mentioned that in going through... it seem like you are saying that going through the details like cap program made you less interested on other things. What did you see in terms of that or you just talking from that you think you have other access to capital that will be a better deal if you went down that road in the cap program?

I think probably Jefferson, the details as far as the cap and the what seems to be the ever changing requirements, certainly if we had to access additional capital, I don't think it would be any secret. We would prefer from the investor world just because we just say that we'll be the more appropriate thing. The other thing quite honestly is, the TARP initially was provided with banks, I mean as I've said many times, or treasury called us, we do not call them. What was initially perceived as banks with strength, the public perception today is just the opposite, and so certainly we prefer to if assuming we had to access additional capital, would be to go with the investor world. Jefferson Harralson - Keefe, Bruyette & Woods, Inc.: And is there anything else there besides the warrants that would and the government ownership that was in addition to those two remains the torrents that you found out more recently?

I can't think of anything in particular. I guess I'm speaking more from just a general standpoint. Assuming we had to go forward with additional capital, the first thing would be is what would be the very best for the company and what is the least dilutive impact on our shareholders and that's kind of the way that we would approach it. Jefferson Harralson - Keefe, Bruyette & Woods, Inc.: That makes sense. Thank you. Operator: We will next go to Bill Wait (ph) at SMT Capital.

Oh, yes, thanks. Almost all of mine have been answered. I wondered if you guys could go back to the 7 million in savings from We are United and talk about where you see that going forward. I mean, the similar savings when you combine savings and revenue generation over the next couple of years, do you expect it to diminish, do you expect it to grow hugely, thinks like that?

Well, I think Bill we will certainly see that the 7 million, I think we will continue to see improvement over time. One of the things, I'm extremely proud of with our people is the focus and just the consciousness of both of those, by involving all of our people and getting 2000 ideas, this is not a flash of the pan, a one shot kind of a process. We have plans to make this a continuing part of this company. We have people today that certainly are first of all, I think we have made it clear and provided a platform for our people to stand up, step forward and say, let's consider this, let's consider that. So, I think, we will find that more in our everyday D&A going forward, it certainly not a start and stop process, it's something that we'll build on hopefully forever.

Okay, thanks.

At this time, I would like to tell the conference back over to the company for any additional or closing remarks.

We would just like to say thank you for being on the call this morning. Thank you for interest in the company. We certainly look forward to talking with you again in July and giving you our second quarter results. Again, we hope you have a great day. Thanks.

Once again, ladies and gentlemen, this concludes today's teleconference. We do thank you for your participation.