* Q2 adj oper loss/shr $0.34 vs est loss/shr $0.23
* Operating expenses rise 9 pct
* Expects charge-offs to remain elevated for rest of 2010
(Recasts; adds analyst comments, conf call details, updates
By Abhinav Sharma
BANGALORE, July 23 United Community Banks Inc
(UCBI.O) posted an eighth straight quarterly loss, wider than
analysts' expectations, hurt by higher operating expenses, and
said it expects an upward pressure on non-performing assets
(NPAs), sending its shares down as much as 8 percent.
"We remain concerned about the difficulty of selling some
of the more illiquid land tracts in our non-Atlanta markets,
which puts upward pressure on our overall level of NPAs," Chief
Risk Officer David Shearrow said on a post-earnings call.
"I heard this quarter that (NPA) disposition activity has
slowed -- meaning -- buyers have kind of pulled back a little
bit," Raymond James analyst Michael Rose said.
The quarter had some positive trends in terms of credit
quality, analyst Rose said, while adding, "investors are
somewhat fearful that credit recovery for most banks in the
southeast has been pushed out a little bit."
NPAs decreased to $348 million from $417 million at March
31, mainly due to the sale of bad loans and other assets worth
$103 million to Fletcher International Ltd in April.
Shares of the company fell to a low of $3.00, before paring
some losses to trade down 2 percent at $3.20 Friday on Nasdaq.
Over 1.2 million shares had changed hands by 1400 ET, which is
45 percent higher than the stock's 50-day moving average
United, which expects charge-offs to remain elevated for
the rest of 2010, said further reductions in the loan portfolio
will put more pressure on its margin and net interest revenue.
Total loans for the second quarter were down to $4.9
billion from $5.5 billion last year.
The bank holding company said it reduced its exposure to
residential construction loans to 17 percent from 35 percent of
total loans, while extending $101 million in new loans
primarily to commercial and small businesses.
"North Georgia residential construction remains our most
stressed portfolio with $21.3 million in net charge-offs,"
Shearrow said. Total net charge-offs stood at $61.3 million.
Georgian banks have been facing credit issues after the
state's real estate market, especially in Atlanta, collapsed
under the weight of falling home prices.
For the second quarter, United posted a net operating loss
from continuing operations of $59.5 million, or 66 cents a
share, compared with a loss of $23.1 million, or 53 cents a
share, last year.
Excluding a non-cash charge of $45.3 million, the company
reported a loss of 34 cents a share.
Analysts expected the company to post a loss of 23 cents a
share, according to Thomson Reuters I/B/E/S.
Operating expenses rose about 9 percent to $58.3 million.
The non-cash charge of $45.3 million resulted from the sale
of bad loans to Fletcher in April. [ID:nSGE6300H7]
"This transaction was a giant step forward in clearing our
books of the more difficult problem assets while at the same
time preserving capital," Chief Executive Jimmy Tallent said in
(Reporting by Abhinav Sharma in Bangalore; Editing by Anne
Pallivathuckal, Roshni Menon)