United Community Banks turns slight fourth quarter profit

By J. Scott Trubey

The Atlanta Journal-Constitution

The third-largest bank based in Georgia turned a slight profit in the fourth quarter, noting some improvement in credit trends.

Blairsville-based United Community Banks said its net income available to common shareholders was $6.9 million in fourth quarter 2011, or 12 cents per share, compared to a net loss of $175.7 million, or $9.25 per share in fourth quarter 2010. Profit for the quarter was buoyed by one-time gains of $5.7 million.

Loans leveled off at $4.1 billion from third quarter 2011 after nearly four years of declines.

The bank recently restated earnings for several quarters, including fourth quarter and full year 2010 and for the first three quarters of 2011.

Securities regulators disagreed with United over its treatment of deferred tax assets, which are like tax credits companies can accrue for periods of losses. These can later be used by companies to reduce taxes after reaching sustained profitability.

United lost $238.6 million, or $5.97 per share for all of 2011, an improvement over its 2010 loss of $512.7 million, or $16.64 per share.

Loans charged-off were $45.6 million, slightly down from fourth quarter 2010, but up from $17.5 million in third quarter 2011. The increase from third quarter related largely to soured debt held by United's biggest borrower.

Non-performing assets, those loans foreclosed or no longer earning interest, were $160 million, about half the level of fourth quarter 2010.

Jefferson Harralson, bank analyst with Keefe Bruyette & Woods, said profitability was encouraging and credit is slowly getting better.

“On the negative side, the new problem loans are still higher than I’d like to see,” he said, citing $45.7 million in new problem loans.

The bank also said it plans to cut $10 million in annual operating expenses out of a base of about $170 million through internal efficiency gains.