UNITED COMMUNITY BANKS, INC.
Table of Contents

 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 11-K

[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ___________________

Commission file number 0-21656

A.      Full title of the Plan and address of the Plan, if different
from that of the issuer named below:

United Community Banks, Inc.

Profit Sharing Plan

B.      Name of the issuer of the securities held pursuant to the plan and
the address of the principal executive office:

United Community Banks, Inc.
63 Highway 515, PO Box 398
Blairsville, GA 30512

 
 

 


TABLE OF CONTENTS

Statements of Net Assets Available for Plan Benefits
Statement of Changes in Net Assets Available for Plan Benefits
Notes to Financial Statements
SIGNATURE
EXHIBIT INDEX
EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS


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UNITED COMMUNITY BANKS, INC.
PROFIT SHARING PLAN

Financial Statements and Supplemental Schedule

December 31, 2004 and 2003

(with Independent Accountants’ Report thereon)

Certified Public Accountants

 
Suite 1800 * 235 Peachtree Street NE * Atlanta, Georgia 30303 * Phone 404-588-4200 * Fax 404-588-4222 * www.pkm.com

 


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(PORTER KEADLE MOORE LOGO)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
United Community Banks, Inc. Profit Sharing Plan
Blairsville, Georgia

We have audited the accompanying statements of net assets available for plan benefits of United Community Banks, Inc. Profit Sharing Plan as of December 31, 2004 and 2003, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 2004. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of United Community Banks, Inc. Profit Sharing Plan as of December 31, 2004 and 2003, and the changes in its financial status for the year ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

Our audit of the Plan’s financial statements as of and for the year ended December 31, 2004, was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets Held for Investment Purposes is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management and has been subjected to the auditing procedures applied in our audit of the basic financial statements for the year ended December 31, 2004, and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

(-S- Porter Keadle Moore, LLP)

Atlanta, Georgia
May 6, 2005

Certified Public Accountants

 
Suite 1800 * 235 Peachtree Street NE * Atlanta, Georgia 30303 * Phone 404-588-4200 * Fax 404-588-4222 * www.pkm.com

 


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UNITED COMMUNITY BANKS, INC. PROFIT SHARING PLAN

Statements of Net Assets Available for Plan Benefits

December 31, 2004 and 2003

                 
    2004     2003  
Assets:
               
Cash
  $ 87,968       4,999  
Investments at fair value:
               
Common stock of United Community Banks, Inc.
    21,540,526       16,438,649  
Shares of registered investment company mutual funds
    31,041,191       25,868,049  
 
           
Total investments
    52,581,717       42,306,698  
 
           
Receivables:
               
Employees’ contributions
    141,439       110,608  
Employer’s contributions
    1,265,670       1,125,053  
Accrued dividends
    90,579       43,040  
Due from brokers
    6,716        
 
           
Total receivables
    1,504,404       1,278,701  
 
           
Total assets
    54,174,089       43,590,398  
 
           
Liabilities:
               
Amounts due to brokers
    4,264       4,706  
Benefit claims payable
    59,634       1,348  
 
           
Total liabilities
    63,898       6,054  
 
           
Net assets available for plan benefits
  $ 54,110,191       43,584,344  
 
           

See accompanying notes to financial statements.

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UNITED COMMUNITY BANKS, INC. PROFIT SHARING PLAN

Statement of Changes in Net Assets Available for Plan Benefits

For the Year Ended December 31, 2004

         
Additions to net assets attributable to:
       
Investment income:
       
Interest and dividends
  $ 752,866  
Net appreciation in fair value of investments
    5,838,385  
 
     
Total investment income
    6,591,251  
 
     
Contributions:
       
Employer discretionary
    2,240,475  
Employer match
    747,026  
Employee deferrals
    3,416,737  
Employee rollovers
    380,369  
Other
    6,135  
 
     
Total contributions
    6,790,742  
 
     
Total additions
    13,381,993  
 
     
Deductions from net assets attributable to:
       
Distributions paid to participants
    2,615,495  
Administrative expenses
    240,651  
 
     
Total deductions
    2,856,146  
 
     
Increase in net assets available for plan benefits
    10,525,847  
Net assets available for plan benefits:
       
Beginning of year
    43,584,344  
 
     
End of year
  $ 54,110,191  
 
     

     See accompanying notes to financial statements

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UNITED COMMUNITY BANKS, INC. PROFIT SHARING PLAN

Notes to Financial Statements

(1)   Description of the Plan
 
    The following description of United Community Banks, Inc. Profit Sharing Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
 
    General
 
    The Plan is a defined contribution plan, and was formed to provide benefits exclusively for the employees of United Community Banks, Inc. and its subsidiaries (the “Company”). Employees are eligible to participate in the Plan on the next immediate enrollment date following employment, but are eligible to participate in the matching portion of the Plan after the completion of one year of service with the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
 
    Contributions
 
    Employees of the Company participating in the Plan are entitled to make pre-tax contributions to the Plan in amounts from 2% to 30% of their annual compensation. The Company’s matching contribution is up to 5% of a participant’s annual compensation for those who have completed at least one year of service and have elected to make deferred contributions. The Company may also make an additional discretionary contribution in any Plan year. Contributions are subject to certain limitations.
 
    Vesting
 
    Participants are immediately vested in their voluntary contributions to the Plan. Participants vest in the Company’s contributions according to the following schedule:
                 
Years of Service     Percentage  
Less than
1           0 %
 
2           33 %
 
3           66 %
More than
3           100 %

    Participants automatically become 100% vested upon death or disability while still an active employee of the Company. Upon termination of employment, amounts not vested will be forfeited with such forfeitures reducing administrative expenses paid from the Plan. Forfeitures during 2004 totaled $13,070.
 
    Payment of Benefits
 
    Upon retirement, a participant is entitled to receive 100% of his vested account balance in a lump-sum distribution or periodic payments over a predetermined period. Upon the death of a participant, the designated beneficiary is entitled to receive 100% of the participant’s account in a lump-sum distribution or periodic payments over a predetermined period. In addition, disabled participants are entitled to 100% of their account balance. Plan participants who are terminated for reasons other than retirement, death or disability are entitled to receive only the vested portion of their account. The Plan also allows for certain hardship withdrawals prior to termination of employment.
 
    Administrative Expenses
 
    The Plan pays all administrative expenses.

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UNITED COMMUNITY BANKS, INC. PROFIT SHARING PLAN

Notes to Financial Statements, continued

(1)   Description of the Plan, continued
 
    Plan Termination
 
    Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. The participants affected by the termination or discontinuance of contributions will immediately become 100% vested in their accounts.
 
(2)   Summary of Significant Accounting Policies
 
    Basis of Accounting
 
    The accompanying financial statements have been prepared on the accrual basis of accounting and present the net assets available for benefits and changes in those assets of the Plan. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for plan benefits and changes therein, and disclosure of contingent assets and liabilities. Accordingly, actual results may differ from those estimates.
 
    Investment Valuation
 
    The Plan’s investments are stated at fair value. The Company’s stock trades on the NASDAQ exchange, and the value of UCBI stock at December 31, 2004 is based on a quoted market price. Investments in mutual funds are valued at fair value based on quoted market prices of the underlying fund securities.
 
    The Plan provides for investments in various investment securities, which are exposed to various risks such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits.
 
    The net gain/(loss) from investment activity includes realized and unrealized gains and losses from investment activity as well as earnings on investments. Unrealized gains/(losses) are calculated as the difference between the current value of securities as of the end of the plan year and either the current value at the end of the preceding year or the actual cost if such investments were purchased during the current year. Realized gains or losses on sales of investments are calculated as the difference between sales proceeds and the current value of investments at the beginning of the year or the actual cost if such investments were purchased during the year. Earnings on investments include interest and dividends received on the Company’s common stock and mutual fund shares.
 
    Securities transactions are recorded on the trade date. Dividend income is recorded on the ex-dividend date.

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UNITED COMMUNITY BANKS, INC. PROFIT SHARING PLAN
Notes to Financial Statements, continued

(3)   Investments
 
    The following table represents investments at December 31, 2004 and 2003.
                 
    2004     2003  
Cash
  $ 87,968       4,999  
 
           
United Community Banks, Inc. Common Stock (800,116 and 750,167 shares at December 31, 2004 and 2003, respectively)
  $ 21,540,526       16,438,649  
 
           
INTRUST Funds:
               
AI Money Market Fund
  $ 1,516,616       1,245,769  
Federated – U.S. Treasury Cash Reserves Fund
          885  
Amcent Equity Income Fund
    510,747       276,757  
AI Nestegg 2040 Fund
    4,587,035       3,969,356  
AI Nestegg 2030 Fund
    4,369,335       3,595,491  
AI Nestegg 2020 Fund
    8,734,351       7,664,069  
AI Nestegg 2010 Fund
    3,301,064       2,904,715  
AI Nestegg Capital Preservation Fund (formerly Nestegg 2000 Fund)
    1,704,153       1,691,169  
American Independence International Multi-Manager Stock Fund
    368,809       168,987  
Baron Growth Fund
          205,780  
Federated Stock Trust Fund
    952,194       936,234  
Federated Max-Cap Fund
    915,884       669,923  
Franklin Strategic Small MIDCAP Growth Fund
    633,589       477,764  
Janus Growth & Income Fund
          638,173  
Vanguard Explorer
    460,864        
Royce Fund
    485,772       142,336  
American Century Ultra
    761,404        
Pimco Total Return Bond Fund
    1,739,374       1,280,641  
 
           
Total INTRUST Funds
  $ 31,041,191       25,868,049  
 
           

    During 2004, the Plan’s investments (including investments bought, sold, and held during the year) appreciated in value by $5,838,385 as detailed below:
         
    Year Ended  
    December 31, 2004  
Net Change in Investments at Fair Value as Determined by Quoted Market Price
       
Mutual Funds
  $ 1,921,514  
United Community Banks, Inc. Common Stock
    3,916,871  
 
     
Net change in Fair Value
  $ 5,838,385  
 
     

Single investments representing more than 5% of the Plan’s net assets as of December 31, 2004 and 2003, are separately identified.

                 
    December 31  
    2004     2003  
United Community Banks, Inc. Common Stock
    21,540,526       16,438,649  
AI Nestegg 2040 Fund
    4,587,035       3,969,356  
AI Nestegg 2030 Fund
    4,369,335       3,595,491  
AI Nestegg 2020 Fund
    8,734,351       7,664,069  
AI Nestegg 2010 Fund
    3,301,064       2,904,715  

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UNITED COMMUNITY BANKS, INC. PROFIT SHARING PLAN
Notes to Financial Statements, continued

(4)   Tax Status
 
    The Plan obtained its latest determination letter on October 4, 2002, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code (“IRC”). The Plan sponsor and the Plan’s tax counsel believe the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
 
(5)   Party-In-Interest Transactions
 
    The Plan received cash dividends of $178,138 on its investment in United Community Banks, Inc. common stock during 2004.

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UNITED COMMUNITY BANKS, INC. PROFIT SHARING PLAN

Schedule of Assets Held for Investment Purposes

December 31, 2004

Employer Identification Number: 58-0554454

Plan Number: 001

                     
    Identity of issuer            
    or similar party           Fair
(a)   (b)   Description of assets (c)   Cost (d)   Value (e)
 
  * United Community Banks, Inc.   Common stock — 800,116 shares   N/A   $ 21,540,526  
 
  INTRUST   AI Money Market Fund — 1,516,616 shares   N/A     1,516,616  
 
  INTRUST   AMCENT Equity Income Fund – 62,977 shares   N/A     510,747  
 
  INTRUST   AI NESTEGG 2040 Fund – 441,061 shares   N/A     4,587,035  
 
  INTRUST   AI NESTEGG 2030 Fund – 419,725 shares   N/A     4,369,335  
 
  INTRUST   AI NESTEGG 2020 Fund – 847,173 shares   N/A     8,734,351  
 
  INTRUST   AI NESTEGG 2010 Fund – 312,897 shares   N/A     3,301,064  
 
  INTRUST   AI NESTEGG Capital Preservation Fund -
162,921 shares
  N/A     1,704,153  
 
  INTRUST   AI International Multi-Manager Stock Fund -
26,610 shares
  N/A     368,809  
 
  INTRUST   Vanguard Explorer Fund – 6,180 shares   N/A     460,864  
 
  INTRUST   Federated Stock Trust Fund – 25,610 shares   N/A     952,194  
 
  INTRUST   Federated Max-Cap Fund – 37,383 shares   N/A     915,884  
 
  INTRUST   Franklin Strategic Small MIDCAP Growth Fund
- 18,548 shares
  N/A     633,589  
 
  INTRUST   Royce Fund – 31,688 shares   N/A     485,772  
 
  INTRUST   American Century Mutual Funds Inc Ultra Fund
Investor - 25,810 shares
  N/A     761,404  
 
  INTRUST   PIMCO Total Return Bond Fund — 119,574 shares   N/A     1,739,374  

      Party in interest

N/A — Due to Plan being fully participant directed, such values are not applicable.

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SIGNATURE

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

United Community Banks, Inc.
Profit Sharing Plan

By :          /s/ John Goff           

Title : Vice President and Trust Officer INTRUST BANK, N.A.

Date :           June 24, 2005          

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EXHIBIT INDEX

     
Exhibit No. Description
23
  Consent of Independent Registered Public Accountants

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