* 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 stock movement)
By Abhinav Sharma
BANGALORE, July 23 (Reuters) - 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 volume.
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 a statement. (Reporting by Abhinav Sharma in Bangalore; Editing by Anne Pallivathuckal, Roshni Menon)