United Community Banks, Inc. Reports Net Loss of $6.2 Million for Third Quarter 2011
(firmenpresse) - BLAIRSVILLE, GA -- (Marketwire) -- 10/27/11 -- United Community Banks, Inc. (NASDAQ: UCBI)
Special $25 million loan loss provision drove net loss
Excluding this special provision, net income was $8.8 million, or 10 cents per share
Net interest margin rose 14 basis points on lower deposit pricing
Core transaction deposits up 16 percent on an annualized basis
United Community Banks, Inc. (NASDAQ: UCBI) today reported a net loss of $6.2 million, or 16 cents per share, for the third quarter of 2011. The third quarter net loss resulted from a special loan loss provision of $25 million, or 26 cents per share, recorded in connection with the nonaccrual classification of United's largest loan relationship, which was announced earlier. Excluding this special provision, net income was $8.8 million, or 10 cents per share.
The year-to-date net loss of $141 million primarily reflects significant credit costs in the first quarter incurred in connection with the Company's problem asset disposition plan. The plan was executed in conjunction with raising $380 million of new capital on March 30, 2011.
"We believe the loss was an isolated situation that does not reflect deterioration in the remainder of our loan portfolio," stated Jimmy Tallent, president and chief executive officer. "Aside from this one relationship, which we have been watching closely for several quarters, our credit quality continued to improve and stabilize in the third quarter."
Total loans were $4.1 billion at quarter-end, down $53 million from the end of the second quarter and down $650 million from a year earlier. "The $53 million decrease during the third quarter was up from the $31 million decrease during the second quarter, but still represents the second lowest quarterly decrease in loan balances since the first quarter of 2008," stated Tallent. "We remain confident that soon we can once again begin to grow our loan portfolio. We are encouraged to have $141 million of new loan commitments, with $88 million funded, during the third quarter. The majority were commercial loans."
The third quarter provision for loan losses was $36 million, up from $11 million in the second quarter, but down from $50.5 million a year ago. Included in the third quarter provision was the previously announced $25 million special provision for the Company's largest lending relationship. Net charge-offs for the third quarter were $17.5 million, compared to $16.4 million for the second quarter but down from $50.0 million a year ago. Second quarter net charge-offs included a $7.3 million recovery from an April 18 bulk loan sale transaction. Excluding that recovery, third quarter net charge-offs declined $6.2 million from last quarter.
Nonperforming assets increased $70 million to $189 million at quarter-end. The increase reflects placing the previously mentioned $76.6 million loan on nonaccrual.
Taxable equivalent net interest revenue of $59.3 million increased $335,000 from the second quarter. Compared with the third quarter of 2010, net interest revenue declined $733,000, primarily due to a $702 million reduction in average loan balances that was significantly offset by lower funding costs and deposit rates. Net interest margin was 3.55 percent for the third quarter of 2011, down two basis points from a year ago and up 14 basis points from the second quarter.
"Growing loans and deposits are key initiatives to further building core earnings," Tallent commented. "The weak economy has created a highly competitive environment for good, quality loans and we are working diligently to get our share. We have had tremendous success in gathering core transaction deposits -- increasing the balance $112 million from the second quarter, or 16 percent on an annualized basis. This was the eleventh consecutive quarter of growth in core transaction deposits, which now represents 48 percent of total deposits compared to 30 percent at the end of 2008."
Fee revenue was $11.5 million in the third quarter of 2011, compared to $12.9 million a year ago and $13.9 million last quarter. Service charges and fees were $7.5 million, down $114,000 from a year ago, due primarily to lower overdraft fees of $886,000 resulting from regulatory changes last year that required customers to provide consent before using overdraft services. Mostly offsetting this reduction in overdraft fees was an increase of $785,000 in ATM and debit card usage fees. Mortgage fees of $1.1 million were down $923,000 from a year ago and up $196,000 from last quarter. The decrease from last year was due to the lower level of refinancing activities. Other fee revenue of $2.0 million reflected a decrease of $173,000 from a year ago and $2.7 million from the second quarter. The decrease from the second quarter was primarily due to the accelerated recognition of deferred gains relating to the ineffectiveness of terminated cash flow hedges on certain prime-based loans. Hedge ineffectiveness gains recognized in the third quarter were $575,000 compared with $2.8 million in the second quarter of 2011 and $336,000 in the third quarter of 2010. Also contributing to the decrease in other fee revenue from the second quarter and a year ago was a change in the market value of deferred compensation plan assets which accounted for $393,000 and $657,000 of the decrease in other fee revenue from the second quarter of 2011 and the third quarter of 2010, respectively.
Excluding foreclosed property costs and the goodwill impairment charge in 2010, third quarter 2011 operating expenses were $43.7 million, down from both the second quarter of 2011 and third quarter of 2010 by $3.1 million and $1.4 million, respectively. The decreases were mostly in FDIC assessments and the other expense category. FDIC assessments and other regulatory charges of $2.6 million were down $1.0 million from the second quarter and $653,000 from a year ago primarily due to the new asset based formula and a lower assessment rate. The decrease in the other expense category was mostly due to lower collections costs. Salary and benefit costs totaled $25.3 million, a $371,000 increase from last year and a $1.2 million decrease from the second quarter due to staff reductions and related severance costs.
Foreclosed property costs for the third quarter of 2011 were $2.8 million as compared to $1.9 million last quarter and $19.8 million a year ago. The third quarter of 2011 included $1.8 million for maintenance of foreclosed properties and $1.0 million in net losses and write-downs on properties. For the second quarter of 2011, foreclosed property costs were almost entirely for maintenance costs. The third quarter of 2010 included $14.2 million of net write-downs and losses and $5.6 million of maintenance costs.
The effective tax rate for the third quarter of 2011 was 49 percent, up from the 40 percent effective tax rate for the first and second quarters of 2011. The tax benefit in the third quarter includes the release of approximately $1.1 million in reserves for uncertain tax positions relating to state tax returns whose limitations have expired. Excluding the reserve release, the third quarter effective tax rate would have been 40 percent. The effective tax rate is expected to return to a normal range of 35 to 36 percent with expected profitability for 2012.
As of September 30, 2011, the capital ratios for United were as follows: Tier 1 Risk-Based of 14.0 percent; Tier 1 Leverage of 9.0 percent; and Total Risk-Based of 15.8 percent. The quarterly average tangible equity-to-assets ratio was 11.8 percent, and the tangible common equity-to-assets ratio was 9.1 percent.
"Reporting a third quarter loss after achieving profitability last quarter is disappointing, but must be put into context," Tallent said. "Our objective is to deal aggressively and decisively with credit issues as they are identified. The large classification during the quarter was an isolated situation that we do not believe indicates a trend. Excluding this one item, our credit metrics continued to improve and we are on the right path to be profitable next quarter and into 2012."
Tallent added, "United has been working diligently with the SEC to resolve comments regarding our net deferred tax asset made during their review of two resale registration statements and related periodic reports. The SEC has inquired as to the necessity of an additional deferred tax asset valuation allowance. We continue to believe an additional valuation allowance is not required based on our expectation that, more likely than not, we will realize all of our net deferred tax assets many years prior to their expiration. However, considering the SEC's inquiry, it is possible we could be required to record a valuation allowance."
Conference Call
United Community Banks will hold a conference call today, Thursday, October 27, 2011, at 11 a.m. ET to discuss the contents of this news release and to share business highlights for the quarter. To access the call, dial (877) 380-5665 and use the conference number 14298726. The conference call also will be webcast and can be accessed by selecting 'Calendar of Events' within the Investor Relations section of the company's website at .
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 $7.2 billion and operates 27 community banks with 105 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina and east Tennessee. The Company specializes in providing personalized community banking services to individuals and small to mid-size businesses. United Community Banks also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United Community Banks common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. Additional information may be found at the Company's web site at .
Safe Harbor
This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial United's 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 anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled.
For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
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Datum: 27.10.2011 - 09:30 Uhr
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