* Q2 EPS $0.06 vs est. $0.16
* Bad loan provisions up 64 percent
* Shares down 11 percent
July 26 United Community Banks Inc's second-quarter profit m issed Wall Street estimates by a wide margin, as the Southeastern U.S. lender set aside more money to cover future bad loans.
Shares of the Blairsville, Georgia-based bank, which have fallen 28 percent in the last year, were down 11 percent at $6.68 in morning trade on the Nasdaq.
A large part of United Community's portfolio of commercial real estate loans went bad when the financial crisis hit.
In 2010, it sold a quarter of itself to private equity firm Corsair Capital and offloaded $435 million in bad assets to get back to profitability.
Net income available to common shareholders fell to $3.5 million, or 6 cents per share, from $9 million, or 16 cents per share, a year earlier.
Analysts on average had expected the lender to earn 16 cents per share, excluding items, according to Thomson Reuters I/B/E/S.
The bank's bad loan provision rose 64 percent to $18 million.
"This is why the stock is down, because there is now uncertainty about why the credit costs suddenly went up, and whether they can go down," Sandler O'Neill analyst Kevin Fitzsimmons said.
The bank also posted its lowest level of interest revenue in five quarters, as rock-bottom interest rates and low loan demand pressure margins.
United Community received a subpoena from U.S. Securities and Exchange Commission in May related to its deferred tax valuation allowances. The SEC also issued a notice of formal investigation to the company.