United Community Banks Announces Update On Credit Environment and 2007 Earnings

The Mountain Life Team Blogger December 27, 2007

Ucbi_logoI found this to be an interesting article based upon an announcement pertaining to the housing industry and how it has affected this large community bank based in Blairsville Georgia right here in the North Georgia Mountains. You can find the article in its entirity here along with other related articles concerning the North Georgia Real Estate Market and surrounding states that United Community Banks are located within.

BLAIRSVILLE, GA, Dec 27, 2007 (MARKET WIRE via COMTEX) — United Community Banks, Inc. (NASDAQ: UCBI: 15.26, -2.47, -13.93%) today announced an updated outlook for credit and earnings for the fourth quarter of 2007. Continued deterioration in the housing and construction markets has placed negative pressure on certain of United’s key credit indicators, requiring an increase to the provision for loan losses — including a $3 million, or 4 cents per-share, special fraud-related provision for the Spruce Pine development — and a charge for other real estate expense. United now expects fourth quarter operating earnings per share of 12 to 14 cents and GAAP earnings per share of 8 to 10 cents, below previously issued guidance.

Balance“Based on our extensive and regular review of loans, the fourth quarter will reflect a higher level of negative credit migration within our risk grades,” stated Jimmy Tallent, president and chief executive officer of United. “As we aggressively move problem loans and assets off our balance sheet, we expect a higher level of loan charge-offs than discussed in our third quarter conference call and a further write-down of other real estate assets. We anticipate fourth quarter loan charge-offs of approximately $13 million and write-downs of other real estate assets of $3 million. In addition, we charged-off $18 million of loans related to the Spruce Pine development in North Carolina. We made a special $15 million fraud-related provision for loan losses in the second quarter of 2007 for the Spruce Pine loans and will provide an additional $3 million fraud-related provision in the fourth quarter. We expect the aggregate fourth quarter provision for loan losses to be $29.5 million.”

Tallent continued, “Again, we made the strategic decision to aggressively write-down problem loans and assets and to increase the provision for loan losses due to uncertainties in the residential housing and construction market — especially in the Atlanta region. We believe we are well positioned to cover problem loans in our portfolio as we continue working through this difficult credit cycle during 2008. We expect total non-performing assets at year-end, including $5 million for Spruce Pine, to be in the range of $50 million to $55 million.”

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See What Others Are Saying

  1. Chad – To me, that sounds like a lot of loss. I hope more banks are wise enough to consider their losses early enough in the process as it seems this bank is doing.

  2. Happy Holidays Paula,

    It is a big loss! This is a strong bank within our community and state. It is the third largest holding bank in the state of Georgia. They are an incredible “hometown” community bank. I just feel that they really got snookered with the deal in North Carolina. Thanks for your comments as always.


  3. That and they actually hold loans. Companies that just resold loans did’t get left holding the bad paper. Another old adage- loan to who you know- would that have helped in the Spruce Pine deal? Or did they know them and just go bad? Terry McDonald

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