• the results of our most recent internal stress test may not accurately predict the impact on our financial condition if the economy were to continue to deteriorate;

• the condition of the banking system and financial markets;

• our limited ability to raise capital or maintain liquidity;

• we may not be able to raise capital consistent with our capital plan;

• our ability to access other sources of funding;

• changes in the cost and availability of funding;

• our business is subject to the success of the local economies in which we operate;

• our concentration of residential and commercial construction and development loans is subject to unique risks that could adversely affect our earnings;

• changes in prevailing interest rates may negatively affect our net income and the value of our assets;

• if our allowance for loan losses is not sufficient to cover actual loan losses, earnings would decrease;

• we may be subject to losses due to fraudulent and negligent conduct of our loan customers, third party service providers or employees;

• the adverse effects on future earnings resulting from non-cash charges for goodwill impairment;

• we may not fully realize our deferred tax asset balances;

• competition from financial institutions and other financial service providers may adversely affect our profitability;

• the United States Department of Treasury ("Treasury") may change the terms of our Series B Preferred Stock;

• we may face risks with respect to future expansion and acquisitions;

• conditions in the stock market, the public debt market and other capital markets deteriorate;

• financial services laws and regulations change;

• the failure of other financial institutions;

• a special assessment imposed by the FDIC on all FDIC-insured institutions, which will decrease our earnings in 2009, and any additional special assessments that the FDIC may impose in the future;

• we are subject to a board resolution proposed to us by the Federal Reserve Bank of Atlanta, and we may become subject to an informal memorandum of understanding or formal enforcement action; and

• unanticipated regulatory or judicial proceedings or enforcement actions occur, or any such proceedings or enforcement actions are more severe that we anticipate.

All written or oral forward-looking statements attributable to us or any person acting on our behalf made after the date of this prospectus supplement are expressly qualified in their entirety by the risk factors and cautionary statements contained in and incorporated by reference into this prospectus supplement and the accompanying prospectus. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date of this prospectus supplement or to reflect the occurrence of unanticipated events.

GAAP Reconciliation and Explanation
This Form 10-Q contains non-GAAP financial measures determined by methods other than in accordance with GAAP. Such non-GAAP financial measures include, among others the following: operating revenue, operating expense, operating
(loss) income, operating earnings (loss) per share and operating earnings
(loss) per diluted share. Management uses these non-GAAP financial measures because it believes it is useful for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes these non-GAAP financial measures provides users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies. A reconciliation of these operating performance measures to GAAP performance measures is included in on the table on page 26. Acquisition
On June 19, 2009, United Community Bank ("Bank") acquired the banking operations of Southern Community Bank ("SCB") from the Federal Deposit Insurance Corporation ("FDIC"). The Bank acquired $378.2 million of assets and assumed $366.8 million of liabilities. The Bank and the FDIC entered loss sharing agreements regarding future losses incurred on loans and foreclosed loan collateral existing at June 19, 2009. Under the terms of the loss sharing agreements, the FDIC will absorb 80 percent of losses and share in 80 percent of loss recoveries on the first $109 million of losses, and absorb 95 percent of losses and share in 95 percent of loss recoveries on losses exceeding $109 million. The term for loss sharing on residential real estate loans is ten years, while the term for loss sharing on all other loans is five years. The SCB acquisition was accounted for under the purchase method of accounting in accordance with the Financial Accounting Standards Board's Accounting Standards Codification, Topic 805, Business Combinations ("ASC 805"). United recorded a gain totaling $11.4 million in the second quarter of 2009 resulting from the acquisition, which is a component of fee revenue on the consolidated statement of income. The amount of the gain is equal to the amount by which the fair value of assets purchased exceeded the fair value of liabilities assumed. See Note 2 of the Notes to unaudited Consolidated Financial Statements for additional information regarding the acquisition.
The results of operations of SCB are included in the consolidated statement of income from the acquisition date of June 19, 2009. Overview
The following discussion is intended to provide insight into the results of operations and financial condition of United and its subsidiaries and should be read in conjunction with the consolidated financial statements and accompanying notes.
United is a bank holding company registered with the Federal Reserve under the Bank Holding Company Act of 1956 that was incorporated under the laws of the state of Georgia in 1987 and commenced operations in 1988. At September 30, 2009, United had total consolidated assets of $8.4 billion, total loans of $5.4 billion, excluding the loans acquired from Southern Community Bank that are covered by loss sharing agreements, total deposits of $6.8 billion and stockholders' equity of $1.0 billion.
United's activities are primarily conducted by its wholly owned Georgia banking subsidiary (the "Bank") and Brintech, Inc., a consulting firm providing professional services to the financial services industry. The Bank operations are conducted under a community bank model that operates 27 "community banks" with local bank presidents and boards in north Georgia, the Atlanta metropolitan statistical area ("MSA"), the Gainesville MSA, coastal Georgia, western North Carolina, and east Tennessee.
United reported a net loss of $68.7 million for the third quarter of 2009, which included a non-recurring, non-cash charge of $25 million for goodwill impairment. United's net operating loss, which excludes the goodwill impairment charge, was $43.7 million for the third quarter of 2009. This compared with a net loss of $39.9 million for the third quarter of 2008. Diluted operating loss per common share was $.93 for the third quarter of 2009, compared with a diluted loss per common share of $.84 for the third quarter of 2008. The goodwill impairment charge represented $.50 of loss per share for the third quarter of 2009, increasing the net loss per diluted share to $1.43. The third quarter of 2009 operating loss reflects the continuing recessionary economic environment and credit losses primarily resulting from the weak residential construction and housing market.
For the nine-month period ended September 30, 2009, United reported a net loss of $188.5 million, including an $11.4 million gain from the acquisition of Southern Community Bank, $95 million in goodwill impairment charges recognized in the third and first quarters and a $2.9 million charge for a reduction in workforce recognized in the first quarter. United's net operating loss for the first nine months of 2009, which excludes the gain on acquisition, goodwill impairment and severance costs, was $98.8 million, compared to a net operating loss for the first nine months of 2008 of $16.7 million. Diluted operating loss per common share was $2.17 for the nine months ended September 30, 2009, compared with a diluted operating loss per common share of $.35 for the same period in 2008. The gain on acquisition, goodwill impairment and severance costs represented $.15 of earnings per share, $1.95 of loss and $.04 of loss, respectively, for the year, bringing the net loss per common share to $4.01. Operating loss and operating loss per diluted share are non-GAAP performance measures. United's management believes that operating performance is useful in analyzing the company's financial performance trends since it excludes items that are non-recurring in nature. A reconciliation of these operating performance measures to GAAP performance measures is included in the table on page 26.

Compared to a year ago, operating earnings for the quarter and year-to-date decreased primarily as a result of a higher provision for loan losses related to the deteriorating credit conditions and resulting increase in charge-offs within the loan portfolio. Margin compression due to an increase in non-performing assets, competitive deposit pricing and the ongoing effect of efforts to maintain liquidity also contributed to lower earnings, although much progress has been made in restoring the margin after falling to 2.70% in the fourth quarter of 2008. The net interest margin of 3.39% for the third quarter of 2009 is up 22 basis points from the third quarter of 2008 and up 69 basis points from the fourth quarter of 2008, reflecting improvement in loan and deposit pricing. Housing sales remain at low levels, leaving a surplus of finished housing and lot inventory in our markets, most notably in the Atlanta MSA. This decline in housing sales negatively affects both the cash flows of our residential construction and land development customers, and the demand for foreclosed developed real estate held by United.
Nonperforming assets of $415 million, which excludes assets of SCB that were covered by the loss sharing agreements with the FDIC, increased to 4.91% of total assets as of September 30, 2009, compared to 2.19% as of September 30, 2008 and 2.92% as of December 31, 2008. This increase was primarily the reflection of the continuing effects of declining home sales in United's markets.
Operating fee revenue increased $2.6 million, or 19%, and decreased $856,000, or 2%, from the third quarter and first nine months of 2008, respectively. The key contributors to the increase over the third quarter of 2008 were higher mortgage fees resulting from the higher level of refinancing activity brought on by historically low mortgage rates, higher consulting fees due to the completion of internally focused projects, a higher level of net securities gains and a higher level of earnings on United's deferred compensation plan and bank owned life insurance assets. These increases were offset by lower brokerage fees due to the weak market and declining value of assets under management and slightly lower deposit service charges.
Operating expenses, excluding the $25 million non-recurring goodwill impairment charge, decreased $3.4 million, or 6%, from the third quarter of 2008. Decreases occurred in most expense categories with the exception of occupancy expense which includes the cost of the additional branch locations resulting from the acquisition of SCB, professional fees which include higher legal costs resulting from loan workouts and foreclosure activity, FDIC assessments and regulatory charges which reflects an increase in deposit insurance assessments that began in January of 2009, amortization of intangibles which includes the amortization of core deposit intangibles resulting from the SCB acquisition in the second quarter of 2009 and other expense which is due to a number of items including higher insurance costs. All other operating expense categories decreased from the third quarter of 2008. The decrease in salaries and employee benefits reflects the reduction in force that occurred earlier in the year and a decrease in annual incentives. The decrease in advertising and public relations expense reflects tighter control of discretionary spending. Foreclosed property expense was also down from a year ago but remains at an elevated level due to the higher level of nonperforming assets. For the first nine months of 2009, operating expenses, excluding non-recurring items, of $161.5 million is up $7.3 million from the same period of 2008. The key drivers of the increase are the special FDIC assessment of approximately $3.7 million that was expensed in the second quarter and a higher level of foreclosed property costs. Critical Accounting Policies
The accounting and reporting policies of United are in accordance with accounting principles generally accepted in the United States of America ("GAAP") and conform to general practices within the banking industry. The more critical accounting and reporting policies include United's accounting for the allowance for loan losses, intangible assets and income taxes. In particular, United's accounting policies related to allowance for loan losses, intangibles and income taxes involve the use of estimates and require significant judgment to be made by management. Different assumptions in the application of these policies could result in material changes in United's consolidated financial position or consolidated results of operations. See "Asset Quality and Risk Elements" herein for additional discussion of United's accounting methodologies related to the allowance.
Results of Operations
United reported a net operating loss of $43.7 million for the third quarter of 2009. This compared to a net operating loss of $39.9 million for the same period in 2008. The 2009 net operating loss excludes a non-recurring, non-cash charge of $25 million for goodwill impairment. Including the goodwill impairment charge, the net loss for the third quarter of 2009 was $68.7 million. The third quarter 2009 diluted operating loss per share was $.93. This compared to diluted operating loss per share of $.84 for the third quarter of 2008. The diluted operating loss for the third quarter of 2009 excludes the goodwill impairment charge. Including the goodwill impairment charge, the third quarter 2009 net loss per diluted share was $1.43.
For the first nine months of 2009, United reported a net operating loss of $98.8 million, which excluded the $11.4 million gain on acquisition, non-recurring, non-cash goodwill impairment charges of $95 million and non-recurring severance costs of $2.9 million. Net operating loss for the same period in 2008 was $16.7 million. Diluted operating loss per share for the nine months ended September 30, 2009 was $2.17, which excluded $.15 in earnings per share related to the gain on acquisition and $1.95 and $.04 in loss per share related to the goodwill impairment charges and severance costs, respectively. This compared to diluted operating loss per share of $.35 for the first nine months of 2008. The net operating losses in 2009 and 2008 reflect higher provisions for loan losses related to the continuing effect of the economic recession and the weak residential construction and housing markets. Including the non-recurring items, the net loss and net loss per diluted share for the first nine months of 2009 was $188.5 million and $4.01, respectively. Operating loss, operating loss per share and other operating performance measures are non-GAAP performance measures. United's management believes that operating performance is useful in analyzing the company's financial performance trends since it excludes items that are non-recurring in nature. A reconciliation of these operating performance measures to GAAP performance measures is included in the table on page 26.

Table 1 - Financial Highlights
Selected Financial Information

Third 2009 2008 Quarter For the Nine YTD (in thousands, except per share Third Second First Fourth Third 2009-2008 Months Ended 2009-2008 data; taxable equivalent) Quarter Quarter Quarter Quarter Quarter Change 2009 2008 Change INCOME SUMMARY
Interest revenue(1) $ 101,181 $ 102,737 $ 103,562 $ 108,434 $ 112,510 $ 307,480 $ 358,535 Interest expense 38,177 41,855 46,150 56,561 53,719 126,182 171,704

Net interest revenue(1) 63,004 60,882 57,412 51,873 58,791 7 % 181,298 186,831 (3 )% Provision for loan losses 95,000 60,000 65,000 85,000 76,000 220,000 99,000 Operating fee revenue(1) 15,671 13,050 12,846 10,718 13,121 19 41,567 42,423 (2 )

Total revenue (16,325 ) 13,932 5,258 (22,409 ) (4,088 ) 299 2,865 130,254 (98 ) Operating expenses(1) 53,606 55,348 52,569 52,439 56,970 (6 ) 161,523 154,260 5

Operating loss before taxes (69,931 ) (41,416 ) (47,311 ) (74,848 ) (61,058 ) (158,658 ) (24,006 ) Income tax benefit (26,213 ) (18,353 ) (15,335 ) (28,101 ) (21,184 ) (59,901 ) (7,303 )

Net operating loss(1) (43,718 ) (23,063 ) (31,976 ) (46,747 ) (39,874 ) (98,757 ) (16,703 ) Gain from acquisitions, net of tax
expense - 7,062 - - - 7,062 - Noncash goodwill impairment charge (25,000 ) - (70,000 ) - - (95,000 ) - Severance costs, net of tax benefit - - (1,797 ) - - (1,797 ) -

Net loss (68,718 ) (16,001 ) (103,773 ) (46,747 ) (39,874 ) (188,492 ) (16,703 ) Preferred dividends and discount
accretion 2,562 2,559 2,554 712 4 7,675 12

Net loss available to common
shareholders $ (71,280 ) $ (18,560 ) $ (106,327 ) $ (47,459 ) $ (39,878 ) $ (196,167 ) $ (16,715 )

PERFORMANCE MEASURES
Per common share:
Diluted operating loss(1)              $      (.93 )    $      (.53 )    $      (.71 )    $      (.99 )    $      (.84 )                   $     (2.17 )    $      (.35 )
Diluted loss                                 (1.43 )           (.38 )          (2.20 )           (.99 )           (.84 )                         (4.01 )           (.35 )
Cash dividends declared                          -                -                -                -                -                               -              .18
Stock dividends declared(4)              1 for 130        1 for 130        1 for 130        1 for 130        1 for 130                       3 for 130        1 for 130
Book value                                    8.85            13.87            14.70            16.95            17.12             (48 )          8.85            17.12              (48 )
Tangible book value(1)                        6.50             8.85             9.65            10.39            10.48             (38 )          6.50            10.48              (38 )
Key performance ratios:
Return on equity(2)(3)                      (45.52 )%        (11.42 )%        (58.28 )%        (23.83 )%        (19.07 )%                       (39.11 )%         (2.69 )%
Return on assets(3)                          (3.32 )           (.78 )          (5.03 )          (2.19 )          (1.94 )                         (3.05 )           (.27 )
Net interest margin(3)                        3.39             3.28             3.08             2.70             3.17                            3.25             3.35
Operating efficiency ratio(1)                69.15            74.15            75.15            81.34            79.35                           72.72            67.43
Equity to assets                             10.27            10.71            11.56            10.04            10.26                           10.84            10.29
Tangible equity to assets(1)                  7.55             7.96             8.24             6.56             6.64                            7.92             6.71
Tangible common equity to assets(1)           5.36             5.77             6.09             6.21             6.64                            5.74             6.70
Tangible common equity to
risk-weighted assets(1)                      10.33             7.49             8.03             8.34             8.26                           10.33             8.26

ASSET QUALITY *
Non-performing loans (NPLs)            $   304,381      $   287,848      $   259,155      $   190,723      $   139,266                     $   304,381      $   139,266
Foreclosed properties                      110,610          104,754           75,383           59,768           38,438                         110,610           38,438

Total non-performing assets (NPAs)         414,991          392,602          334,538          250,491          177,704                         414,991          177,704
Allowance for loan losses                  150,187          145,678          143,990          122,271          111,299                         150,187          111,299
Net charge-offs                             90,491           58,312           43,281           74,028           55,736                         192,084           77,124
Allowance for loan losses to loans            2.80 %           2.64 %           2.56 %           2.14 %           1.91 %                          2.80 %           1.91 %
Net charge-offs to average loans(3)           6.57             4.18             3.09             5.09             3.77                            4.60             1.74
NPAs to loans and foreclosed
properties                                    7.58             6.99             5.86             4.35             3.03                            7.58             3.03
NPAs to total assets                          4.91             4.63             4.09             2.92             2.19                            4.91             2.19

AVERAGE BALANCES
Loans                                  $ 5,565,498      $ 5,597,259      $ 5,675,054      $ 5,784,139      $ 5,889,168              (5 )   $ 5,612,202      $ 5,926,731               (5 )
Investment securities                    1,615,499        1,771,482        1,712,654        1,508,808        1,454,740              11       1,699,522        1,482,397               15
Earning assets                           7,400,539        7,442,178        7,530,230        7,662,536        7,384,287               -       7,457,173        7,451,017                -
Total assets                             8,208,199        8,212,140        8,372,281        8,487,017        8,164,694               1       8,263,605        8,262,853                -
Deposits                                 6,689,948        6,544,537        6,780,531        6,982,229        6,597,339               1       6,671,340        6,370,753                5
Shareholders' equity                       843,130          879,210          967,505          851,956          837,487               1         896,159          849,912                5
Common shares - basic                       49,771           48,794           48,324           47,844           47,417                          48,968           47,210
Common shares - diluted                     49,771           48,794           48,324           47,844           47,417                          48,968           47,210

AT PERIOD END
Loans                                  $ 5,362,689      $ 5,513,087      $ 5,632,705      $ 5,704,861      $ 5,829,937              (8 )   $ 5,362,689      $ 5,829,937               (8 )
Investment securities                    1,532,514        1,816,787        1,719,033        1,617,187        1,400,827               9       1,532,514        1,400,827                9
Total assets                             8,443,617        8,477,355        8,171,663        8,591,933        8,113,961               4       8,443,617        8,113,961                4
Deposits                                 6,821,306        6,848,760        6,616,488        7,003,624        6,689,335               2       6,821,306        6,689,335                2
. . .