United Community Banks, Inc. Reports Earnings of $7.6 Million or Eight Cents per Share for Second Quarter 2011
(firmenpresse) - BLAIRSVILLE, GA -- (Marketwire) -- 07/28/11 -- United Community Banks, Inc. (NASDAQ: UCBI)
Profitable quarter driven by core earnings and lower credit losses
Nonperforming assets continue to improve; down $19 million, or 14 percent, from last quarter to 1.60 percent of assets
Allowance for loan losses remains strong at 3.07 percent of loans
Core transaction deposits up 10 percent on an annualized basis
Completed conversion of preferred stock to common and reverse stock split
United Community Banks, Inc. (NASDAQ: UCBI) today reported net income of $7.6 million, or 8 cents per diluted share, for the second quarter of 2011. The year-to-date net loss of $135 million reflects the significant credit losses in the first quarter incurred in connection with the Problem Asset Disposition Plan which was announced last quarter in conjunction with the raising of $380 million in new capital.
"The de-risking of our balance sheet and capital transaction, coupled with the execution of the Problem Asset Disposition Plan in the first quarter allowed us to return to profitability much sooner than would have otherwise been feasible," stated Jimmy Tallent, president and chief executive officer. "While we still have work to do in this difficult economic environment, our credit trends show improvement by every measure and we expect that positive trend to continue."
Total loans were $4.2 billion at quarter-end, down $31 million from the end of the first quarter and $710 million from a year earlier. "The $31 million decrease from last quarter is actually a very encouraging sign in that it is the smallest quarterly decrease in loan balances since the first quarter of 2008," stated Tallent. "We believe the slowing attrition in the loan portfolio marks the approach of an inflection point upon which we can once again begin to grow our loan portfolio. We were pleased with our new loans made during the second quarter that included $136 million of loan commitments with $105 million funded of which the majority were commercial loans. Our pipeline of new business continues to gain momentum and we continue to add commercial lenders to our metro markets across our footprint. I'm encouraged by the direction in which we are heading. I can't overemphasize the importance of restoring modest growth to our loan portfolio and growing net interest revenue."
Taxable equivalent net interest revenue of $58.9 million was up $2.6 million from the first quarter due mostly to the impact last quarter of a $2 million interest reversal on the performing classified loans that were included in the bulk loan sale. Compared with the second quarter of 2010, net interest revenue was $2.7 million lower, primarily due to the $745 million reduction in average loan balances that was offset partially by lower rates on our deposits. Net interest margin was 3.41 percent for the second quarter of 2011, down 19 basis points from a year ago and equal to the first quarter after adding back the $2 million interest reversal in the bulk loan sale.
"Growing loans and deposits is the key to building core earnings," Tallent commented. "We are making steady progress on the lending side and grew core transaction deposits in the second quarter by $69 million, or 10 percent, on an annualized basis. This was the tenth consecutive quarter of core deposit growth."
Operating fee revenue was $13.9 million in the second quarter of 2011, compared to $11.6 million a year ago and $11.8 million last quarter. Service charges and fees were $7.6 million, down $385,000 from a year ago, due primarily to lower overdraft fees resulting from regulatory changes last year that required customers to provide consent before using overdraft services. Partially offsetting this reduction in overdraft fees was an increase in ATM and debit card usage fees. Service charges and fees were up $888,000 from last quarter due to the increase in ATM and debit card usage fees. Mortgage fees of $952,000 were down $649,000 from a year ago and down $542,000 from last quarter due to the lower level of refinancing activities. Other fee revenue of $4.7 million reflected an increase of $3.3 million from a year ago and $1.8 million from the first quarter primarily due to the accelerated recognition of deferred gains relating to the ineffectiveness of terminated cash flow hedges on certain prime-based loans. Gains recognized in the second quarter were $2.8 million compared with $1.3 million in the first quarter of 2011 and $239,000 in the second quarter of 2010.
Excluding foreclosed property costs and the loss on sale of nonperforming assets in 2010, the second quarter operating expenses were $46.8 million, flat with the first quarter and $3.1 million higher than a year ago. Salary and benefit costs totaled $26.4 million and increased $2.8 million from last year and $1.5 million from first quarter. Severance costs for eliminated staff positions account for $1.2 million of the increase from both periods. Also contributing to the increase from a year ago were $717,000 in higher incentive costs, lower deferred direct loan origination costs of $518,000 and a $288,000 change in the value of our deferred compensation liability.
Foreclosed property costs for the second quarter of 2011 were $1.9 million as compared to $64.9 million last quarter and $14.5 million a year ago. For the second quarter of 2011, these costs were for maintenance of foreclosed properties. For the first quarter of 2011, foreclosed property costs included $60.6 million of write downs and losses on accelerated sales related to the asset disposition plan and $4.3 million of maintenance costs. Second quarter 2010 included $11.2 million of write downs and losses and $3.3 million for maintenance costs.
The effective tax rate for the second quarter of 2011 was 40 percent, equal to the first quarter of 2011. The effective tax rate for the balance of 2011 will continue in the 40 percent range due to year-to-date net losses and will return to a normal range of 35 to 36 percent with expected profitability for 2012.
As of June 30, 2011, the capital ratios for United were as follows: Tier 1 Risk Based of 13.9 percent; Tier 1 Leverage of 8.7 percent; and, Total Risk Based of 16.4 percent. The quarterly average tangible equity-to-assets ratio was 11.1 percent. As of quarter-end, tangible common equity-to-assets ratio was 8.9 percent compared to the quarterly average of 4.8 percent which was distorted by the late-quarter timing of the conversion of the mandatorily convertible preferred stock that occurred late in the quarter. The quarter-end tangible common equity to assets ratio of 8.9 percent is more representative of United's current capital strength.
"It is of course good to once again report positive earnings," Tallent said. "The last three years have been extremely challenging in our industry, and challenges remain as the economy continues to struggle. We have laid out our strategy and now we are about the business of implementation. Our company has completed the capital transaction, de-risked our balance sheet through the Problem Asset Disposition Plan, executed the reverse stock split, and achieved profitability. We are on the right track but by no means satisfied; there is more work to do on credit quality, commercial loans, core deposits, customer service, and organic growth. We are moving forward with determination and optimism."
Conference Call
United Community Banks will hold a conference call today, Thursday, July 28, 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 78907241. 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 $7.4 billion and operates 27 community banks with 106 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 "Risk Factors" of United Community Banks, Inc.'s annual report filed on Form 10-K with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.
For more information:
Rex S. Schuette
Chief Financial Officer
(706) 781-2266
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Datum: 28.07.2011 - 03:30 Uhr
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